I sat on my couch with my wife Koudoawaia Menatep (Her SL name of course) throughout the duration of the dropping of the great ball at Time's Square watching it on MSNBC and CNBC, yes.. NBC has me cornered as a viewer. While I sat there, enjoying the warmth and coziness of her snuggled to me, I kept thinking about all the magnificent structures in New York, and how much it must have taken to build them.
Someone had to take great risks, expending monumental amounts of resources, to build the icons of that landmark. They gambled a lot on their location and the features of the land. I'm sure not a few were scammed and cheated along the way before our society matured a little more from its pre-Black Friday dreams in the 1920s. I also think about how today I can't help hearing on the news about how sorely my nation (the United States) is burdened with debt. Consumer debt, National debt, mortgage debt. What happened to the good old Wealthy United States? The ones immigrants dreamed about with streets of gold and lady liberty shining in her brightness in the harbors of New York? Are we seeing the corrosion of the American Dream just as her copper was blighted by oxides?
I can't help feel that all this is tied into the failing moral fabric of our society. Traditions abandoned, rebellion against parents and guidance gone unchecked, a general lack of discipline in all mannerisms of life in the pursuit of ultimate freedom, which is supposedly meant to make one... "feel free." Yet to me, debt is a shackle. A shackle snapped on my wrist by a lack of discipline with my wallet.
Businesses are supposed to encourage you to spend your money. Advertisers are supposed to encourage you to spend your money. Predatory lenders love it when you spend. Tax collecting political stooges are supposed to encourage you to spend money for their special pet projects that you don't care about them appending to every pork barreled bill that passes through congress. Economists encourage you to spend money for the economy's sake so their historical record looks like a boom, not a bust. Your parents are supposed to teach you to survive the baiting of all these hawks by saving enough nuts in the tree for any harsh winter that may upon you beset. What happened? I think it's obvious. Rampant divorce rates, inattentiveness of modern parents to their children due to lifestyle and business changes, the continuing strain of the average American under the slaving collars of our corporate masters who have not put the breaks on spending regardless of the fact their customers may soon well be penniless.. and then where would that leave their profit margins? (I think Goldman Sachs, Citigroup, and a few other corporate giants are finding out the hard way.)
And with National Debt at an all time high, what happens.. when the economy suddenly runs into the wall of creditworthiness? What happens when there becomes a significant risk the U.S. Treasury Bill may actually fall out of the beautiful AAA status it has set upon so long? Okay, perhaps it won't get that bad, but it sure will likely feel that way with the mint printing money to try to keep up with obligations and inflation soaring to such levels that would make pre-world war 2 Germany look like an economy's safe haven... and all this at a time when fuel prices are hitting record levels.
I've made my New Years resolution my friends. Save.. save a lot. The winter upon is dark and I don't think there'll be many of us able to entirely escape the effects of the coming years.
I hate to be gloomy on the New Year, but when I don't think of the Financial world.. I have a lot towards which to look forward. After all, I have her, and she's worth more than all of Fort Knox. (*Hugs Koudoa softly..*) There's also technology and other sectors which are promising, but what is technology if there's a shortage of financing but an exercise in futility?
To you and yours, a safe, happy, spiritually, and financially sound 2008,
Maelstrom
PS. Getting National Debt down so that way pay less interest and then in the long term can have even lower taxes is a good thing, get your local political stooge to look into it or be very concerned about long term national and global security. A nation that saves and builds great works on the savings, not debt, will outlast one which does everything on the back of future cash flows. (Ask China, they're really good at this. Scares me sometimes; to the point in fact it's how I know the Pentagon has absolutely no say in how the civilian sector really runs save for their personal votes because our spending policy is very strategically unsound.)
PSS. Find a way to do this without the unbelievable bureaucracy and partisanship of the U.S. Government getting in the way in this day and age, and I will put you on a Plateau that surpasses FDR,Ike, and Lincoln, but not George Washington, in your abilities to Govern.
Tuesday, January 1, 2008
Welcome to 2008.
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When it comes to political economics, one of the few things that I am hawkish on is the budget deficit and hence the national debt. I can understand SOMETIMES having deficit spending, such as when FDR was President during the Depression and WWII, but there's no real excuse for it being a constant feature except for governmental fiscal irresponsibility. I rather wish that the Congress resolve to not attach pet project riders to unrelated bills, but that would be asking too much of them. When it comes time to evaluating Presidential candidates, how they intend to curtail deficit spending will be a major criterion of mine.
So is it greed or ambition? The universal acceptance of a financial vehicle that would go no where, ie the sub-prime mortgage.
A some what older article about this situation. "a bit long but worth the read"
Today's conversation concerns the manipulation of the stock market by the Plunge Protection Team, escalating monetary depreciation, the role of hedge funds in the buying up of European assets with dollars that soon won't be worth very much, the price of oil as it relates to a coming war with Iran, the housing market, the unstable dollar situation, the risk that pension funds take by investing in dollars, and the lack of investments in gold.
The housing market remains extremely important of course. It's going to put pressure on the American economy. Another important development that has become increasingly evident these past months: in order to offset the effects of the recession of 2002/2003, bankers drastically lowered global interest rates in order to stimulate people into borrowing more money. People thus responded en masse, and as a result the amount of new money grew by 10 to 15%. In Russia it's growing as much as 40% annually - every year they see a 40% increase in new money - but we're also seeing this growth in money crop up in India, China and Japan, and in Europe the amount of new money is increasing at a rate of 10% a year.
How is that new money is getting into circulation? Banks are money-creating institutions and can magically bring real money into existence. So when you qualify for a new mortgage or a new loan, that money is actually created on the spot by the bank in the computer. No money needs to be printed - you can see the money in your account balance. Most of my colleagues don't even believe that this is the way it works, but it really is the case. Banks are money-creating agencies which are permitted to create money out of nothing. Money hasn't been backed by gold for quite some time, so we've seen a huge mountain of extra money created each year throughout the entire world, with which a worldwide recovery has been fashioned in the past couple years. In this way things seem to be going just fine - and they are doing just fine - but the result is that there's a lot more money now and the sum total of raw materials is remaining constant, or is even shrinking somewhat every year due to consumption. So now raw materials are seeing a tremendous increase in their value relative to money. That's regardless of whether we're talking about zinc, oil or gold - all those prices are rising. This can also be seen in the rising prices for homes and land - we can't just all of a sudden create millions of extra houses. This would seem to be a very healthy development, but if you correct for the loss of buying power, then you realize that prices have risen nominally, though not in relative terms. A house that sells for 200,000 euros now has a totally different value then a house that sold for 200,000 euros back in 2000 (then 440,000 Dutch guilders). In 2000 you could buy a beer for 2 guilders, and now you pay 2 euros for the same thing (2.2 times as much). The loss in buying power is enormous, monetary depreciation is enormous, and I think that this depreciation in the value of money - due to the creation of more and more money - is one of the most important developments to come to grips with.
So actually we're finding ourselves in an inflationary situation in which more money is continually being created and monetary depreciation is going to increase. During inflationary times you're better off borrowing money than owning it, because if you have money sitting in the bank in savings it keeps decreasing in value, whereas on the other hand your mortgage is also decreasing in value, which is just fine.
Those who lived through the hyperinflationary days of the Weimar Republic of 1920's Germany - the likes of which by the way we're now seeing in Zimbabwe, with an annual inflation rate of 1000% - and who had money in savings, didn't have a single cent left over. And anybody who had borrowed money was in good shape because the value of the loan evaporated. So what at one time was a very expensive loan ends up being rather easy to pay back. What I always advise people to do if they have a good job: Just get an equity-plus mortgage, lock in a low, long-term interest rate, and you'll see that in such a scenario your mortgage will evaporate over the course of 30 years.
But to get back to the core concern of Maels post... it is indeed all about the education of the youth in these matters. They will be the future leaders whom will inherit these problems. Sure they get a solid education on how to be a commercial sucsess and make their company profitable, but get a terrible education on how to make a society liveble and humanely acceptable. Yes their parents teach them to be decent people with good values... until they are released into the economic battlefield of our society to fend for them selfs. From Sesamestreet into nightmare on Elm(Wall)street. Most of them simply become either victems or greedmongers overnight creating nothing more then the next generation that will continue to pile up more of the same problems.
(not the same anonymous as above)
Mael, your linkage of the US financial condition to a broader moral crisis is reminiscent of Robert Nisbet's Twilight of Authority. A more recent work in this vein is John Lukac's A New Republic. I highly recommend both of these books.
I will likely take up those books sometime in the next couple months. Somewhere in that article mentions that saving is not as prudent during periods of inflation and value depreciation. Depends on what you're saving.
Save in the international markets using foreign focused mutual funds or better yet even, Forex. That way, inflation will not eat your dollar.
All the years you guys have been making fun of us crazy northern canadians.
say what you like, but our happy nation of stoners, fishermen, and eskimos all named "joe" hasn't been doing to bad.
we haven't pissed off the world blowing places up.
we haven't pilled up trillions in debt (we run a surplus actually, and our taxes just got lowered again)
We have less people imprisioned nationaly than most single states do, and ALOT less crime accross the board.
We can provide essential services to all our citizens on a scale the states wishes they could figgure out (healthcare for instance)
My advice for americans.... be CANADIAN!
Ian Bakewell
http://www.workfromhometipster.com
ps.
welcome back mael :) hope your hollidays were great and your upcomming year prosperous.
I don't blame the average American. I strongly believe the corporations of this country have a strong role in its woes, particularly the ones being taken over by foreign powers.
It's a new strategic play. In a free state, with a free economy, buy lots of their assets and live of their wealth. Corporate slavery to the extreme, but legal if the nation allows it to happen.
Worse, the more the foreign bodies have access to financial controls in the country, the more access they have to political controls; which makes recovery from the situation neigh impossible.
This is the problem of a sleeping republic. The only solution to free its people in the position of such a state may be a war against its creditors; assuming its creditors do not have absolute control over the body politic through subversive Orwellian means by the time the people wake up.
Worse, the people of a corporate slave state may honestly believe they are obligated and responsible for their situation. In most cases they are, they sat at home, on their butts, and didn't vote.
Which republic is the best strategic target for economic conquest? The wealthiest ones of course.
In the end game it may appear like this (because the Chinese are smart enough to do it and actually to try it probanly).
1. Own the U.S. debt, which is a huge financial engine.. which lives off U.S. citizen obligations and....
2. The rest of the third world and lots of other parts of the world owe the U.S.
The U.S. becomes essentially a giant cash slurpee.
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