anothersta

When that happens, we will all use those 'lunchroom skills' and begin to barter for services.

First what will happen is skyrocketing prices which will eventually lead to money being worth nothing. Once folks figure out money's not worth the paper it's printed on, we will barter/trade for things we need. Most people tend to try and use the money system as long as possible

Anyone remember the pic of the guy with the wheelbarrel full of money to buy a loaf of bread? I can't remember which country it was, but I think it was Zimbabwe? (sp?)

Let's hope it doesn't come to that, but the potential is certainly there.

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SurferGirl

I remember that it was due to a redistribution of wealth.
Land was taken from the farmers and given away to others who didn't know how to farm.

anothersta

Yes, land was taken from EVERYBODY, then redistributed to EVERYONE evenly (unless you were pals with the gov, you got more if you were)

Everyone got 3/4 of an acre which wasn't enough to really do anything with. The country is still in shambles from that deal. Seems I heard a few weeks ago they were knocking all the zeros off their money, again (they've done this a couple of times) because of hyperinflation.

With everything going on in our country, I haven't paid as much attention to Zimbabwe as I use to.

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Jolie Rouge

Europe On the Ropes
by Niels Jensen
March 2, 2009

This week we look at the European bank markets through the eyes of my London partner Niels Jensen, head of Absolute Return Partners. I continue to believe that this is a brewing crisis which could have far more significant implications for the global economy than the Asian Crisis of 1998. In this week's Outside the Box, Niels has compiled a sobering set of data that suggests that only massive government involvement in Europe on a scale that is unprecedented will keep the wheels from coming off in Europe and the global economy.

I have worked closely with Niels for years and have found him to be one of the more savvy observers of the markets I know. You can see more of his work at http://www.arpllp.com


Policy mistakes 'en masse'

The last few weeks have had a profound effect on my view of politicians (as if it wasn't already dented). All this talk about capping salaries for senior bank executives is quite frankly ridiculous. It is Neanderthal politics performed by populist leaders. That Gordon Brown has fallen for it is hardly surprising but I am disappointed to see that Barack Obama couldn't resist the temptation. The mob wants blood and our leaders are delivering in spades. The stark reality is that we are all guilty of the mess we are now in. For a while we were allowed to live out our dreams and who was there to stop us? Policy mistakes – very grave mistakes – permitted the situation to spin out of control. From the U.S. Federal Reserve Bank under the stewardship of Alan Greenspan being far too generous on interest rates to the British Chancellor of the Exchequer -who now happens to be our Prime Minister - advocating 'Regulation Light'.

Policing must improve

If you really want to prevent a banking crisis of this magnitude from ever happening again, the focus should be on the way banks operate and not on how much they pay their staff. And, within that context, any discussion must start and end with how much leverage should be permitted. The French have actually caught onto that, but their narrow-mindedness has driven them to focus on hedge funds' use of leverage which is only a tiny part of the problem. It is the gung ho strategy of banks which brought us down and which must be better policed. And guess what; if banks were better policed - and leverage restricted - then profits, even at the best of times, would be much smaller and there would be no need to regulate bankers' compensation packages.

It is pathetic to watch our prime minister attacking the bonus arrangements of our banks when the UK Treasury, on his watch, spent £27 million pounds on bonuses last year as reward for delivering a public spending deficit of 4.5% of GDP at the peak of the economic cycle. Even my old mother understands that governments must deliver budget surpluses in good times, allowing them more flexibility to stimulate when the economy hits the wall. What Gordon Brown has done to UK public finances in recent years is nothing short of criminal.

So, with that in mind, let's take a closer look at the European banking industry. The following is not pretty reading. I have rarely, if ever, felt this apprehensive about the outlook.

So, if the crisis has made you depressed already, don't read any further.

What is about to come, will make your heart sink.

More leverage in Europe

Let's begin our journey by pointing out a regulatory 'anomaly' which has allowed European banks to take on much more leverage than their American colleagues and which now makes them far more vulnerable. In Europe, unlike in the US, it is only risk-weighted assets which matter to the regulators, not the total leverage ratio. European banks can therefore apply a lot more leverage than their US counterparties, provided they load their balance sheets with higher rated assets, and that is precisely what they have been doing.

That is fine as long as you buy what it says on the tin. But AAA is not always AAA as we have learned over the past 18 months. Asset securitisations such as CLOs proved very popular amongst European banks, partly because they offered very attractive returns and partly because Standard & Poors and Moodys were kind enough to rate many of them AAA despite the questionable quality of the underlying assets.

Now, as long as the economy chugs along, everything is dandy and the AAA-rated assets turn out to be precisely that. But we are not in dandy territory. Many asset securitisation programmes are in horse manure to their necks, so don't be at all surprised if European banks have to swallow further losses once the full effect of the recession is felt across Europe. The two largest sources of asset securitisation programmes are corporate loans and credit cards. Senior secured loans are still marked at or close to par on many balance sheets despite the fact they trade around 70 in the markets. The credit card cycle is only beginning to turn now with significant losses expected later this year and in 2010-11.

Not much of a cushion left

Citibank has calculated that it would only take a cumulative increase in bad debts of 3.8% in 2009-10 to take the core equity tier 1 ratio of the European banking industry down to the bare minimum of 4.5%1. By comparison, bad debts rose by a cumulative 7% in Japan in 1997-98. One can only conclude that European banks are very poorly equipped to withstand a severe recession. Seeing the writing on the wall, they are left with no option but to shrink their balance sheets. Despite talking the talk, banks will use every trick at their disposal to reduce the loan book. No prize for guessing what that will do to economic activity.

The wheels are coming off

But that is not the whole story. It is not even the most worrying part of the story. For the true horror to emerge, we need to turn to Eastern Europe for a minute or two. Nowhere has the credit boom been more pronounced than in Eastern Europe. And nowhere is the pain felt more now that credit has all but dried up. One measure of the credit fuelled bonanza is the deterioration of the current account across the region. Credit Suisse has calculated that in four short years, from 2004 to 2008, Eastern Europe's current account went from +6% to -6% of GDP2. That is a frightening development and is likely to cause all sorts of problems over the next few years.

Meanwhile Western European banks, eager to milk the opportunities in the East after the iron curtain came down, have acquired many of the region's banks (see chart 1). Now, with many Eastern European countries in free fall, ownership could prove disastrous for an already weakened banking industry in the West.







There is more .... http://www.investorsinsight.com/blog...the-ropes.aspx

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Laissez les bon temps rouler! Going to church doesn't make you a Christian any more than standing in a garage makes you a car.** a 4 day work week & sex slaves ~ I say Tyt for PRESIDENT! Not to be taken internally, literally or seriously ....Suki ebaynni IS THAT BETTER ?

Jolie Rouge

In his press conference today, President Obama talked about the cap-and-trade energy tax that the Democrats are trying to ram through Congress. Obama's nose grew a couple of inches as he uttered this howler:


The idea that the energy tax will come to rest with "polluters"--that is to say, power companies, manufacturers, agribusinesses, and so on--is absurd. The cost will be passed on to consumers, as Obama himself admitted during a moment of candor during the campaign, when he said that electricity costs would "skyrocket" under his cap-and-trade proposal.

Obama isn't dumb enough to believe that the many billions of dollars in costs that his proposal will impose on energy companies, etc., will somehow disappear thereafter. But he thinks you are.

Meanwhile, others are putting out information, rather than disinformation, on the disaster that is Waxman-Markey. Like the National Mining Association, which produced this map showing, state by state, how many millions of dollars in costs will be imposed on each state annually under the bill's allowance allocation formula.



Here in Minnesota, we can look forward to an additional $100 million+ in costs to be paid for annually by taxpayers and energy consumers. Go here to learn much more. http://www.nma.org/pdf/061909_2454_map.pdf

Waxman-Markey would be a very stupid bill even if it were true that 1) the earth is getting warmer, 2) human activity is mostly responsible for climate changes, and 3) a warmer earth would be a bad thing. Given that all three of these premises are false--we cannot, in fact, control the weather--Waxman-Markey is a suicidal monument to human folly.

SCOTT adds: And enacting Obamacare is mandatory in order to save money.

As I stated here, the Obama administratoin's operative political theory is that the American people are incredibly dumb. http://www.powerlineblog.com/archive.../06/023792.php

http://www.powerlineblog.com/archive.../06/023883.php


------

Conn Carroll does the math: http://blog.heritage.org/2009/06/22/...cap-and-trade/

Most problematic is their complete omission of economic damage from restricting energy use. Footnote three on page four reads, “The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap. The reduction in GDP would also include indirect general equilibrium effects, such as changes in the labor supply resulting from reductions in real wages and potential reductions in the productivity of capital and labor).” That’s a pretty big chunk of change to ignore. In The Heritage Foundation’s analysis of the Waxman-Markey climate change legislation, the GDP hit in 2020 was $161 billion (2009 dollars).

For a family of four, that is $1,870 that they ignore.


---

I note that Congress has exempted the gas passed by farm animals from any legislation on the “greenhouse gas” issue, as farmers have convinced them that this amounts to a “cow tax,” which it does. http://www.yahoo.com/ap/us_climate_bill_cow_tax

Why is it that Congress understands that imposing a tax on the emissions of cows (and pigs, and sheep) would lead to fewer of them, and thus higher prices on food (and leather, and wool), but, at the same time, fails to understand that taxing the emissions of power plants will lead to fewer of them, and hence less energy, and hence higher prices on everything?

__________________
Laissez les bon temps rouler! Going to church doesn't make you a Christian any more than standing in a garage makes you a car.** a 4 day work week & sex slaves ~ I say Tyt for PRESIDENT! Not to be taken internally, literally or seriously ....Suki ebaynni IS THAT BETTER ?

anothersta

They DO know this. The WHOLE reason they are doing this is to SKYROCKET energy prices to make 'green' energy look cheaper. Currently, it is VERY VERY expensive, VERY high maintenance.

Everyone thinks of wind and solar power as 'free'. When really, there are HUGE expenses and upkeep to converting that energy to electricity. With Cap and TAX, energy prices would (to quote BHO) NECCESARILY SKYROCKET

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mikej

Actually, the reason that we are switching to clean energy is that climate change is bad for human existence. Maybe Republicans think that wind and solar are free, but Democrats understand science.

Here's the cost as estimated be the CBO. http://www.cbo.gov/ftpdocs/103xx/doc...TradeCosts.pdf Trey reading it yourself rather than relying on Faux news' interpretation.

galeane29

I watch all news not just FOX and there are instances where even the other stations have things to say about what is going on so you cannot say that it is FOX news relaying wrongful information. They are the only ones with the balls enough to say it.

But we all know that since stations will start being aired inside the White House that it will be regulated because nobody will have the BALLS to tell the truth like they do it now anyways, right?

Our country cannot afford at this point to give a rats azz about going 'GREEN'. People cannot afford what they already have, jobs lost, businesses going under but yet our all mighty president wants to raise the raise taxes to pay off his deficit.

I don't place blame on him alone like some 'Democrats' think us 'Republicans' do, it's that he is going about this all wrong and at the worst time possible to be raising taxes. It looks to a lot of Americans that our Government is wanting this nation to be Government controlled because they are taking things out of our ( the citizens )hands.

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meltodd69

If our politicians would stop opening their mouths maybe global warming would slow LMAO.

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Grandma

SurferGirl

That does remind me that Chicago was called the windy city because of all the hot air from the politicians.

anothersta

That has never been proven. There's LOTS of propaganda out there, but no real facts. Global Warming is a THEORY that has made Al Gore and people like him rich!

The polar ice caps were suppose to melt and they are increasing in size. We caught the ocean temps being FUDGED last October to go with the global warming THEORY. There's never been a debate about whether it's true or not and there are just as many scientist that DISAGREE with the theory as agree. Although the ones who agree seem to find favor with the politicians...

One thing about Cap and Trade that people oughta know is that the Traders will be the ones who make the big money off this deal.

Enron lobbied for Cap and Trade

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