Category: Economy

Economy update - Recession Porn

These are some things that caught my attention in the past few days. I am really in a doom and gloom mood about the (economic) situation of the world. People have been referring to all the negative news and comments on the economy as "Recession Porn". Here is some to satisfy your needs:

  • Change Of Mindset - Andy Xie - Excellent read on the misconceptions about "stimulus"
  • John Mauldin - The Velocity of Money - Mr Mauldin is one of my favorite reads (every week)
  • Bubble, Bubble, Toil And Trouble -- TIME - Seems like very expensive real estate in Shanghai to me
  • John Lanchester · The Great British Economy Disaster - This sentence struck me the most: "It has been both the deepest and the longest downturn since records began. And yet, to be honest, it hasn’t quite felt like it." I feel a lot of people in the Netherlands share similar sentiments. This is probably the biggest crisis of our lifetime and yet we are still waiting for it to really hit us. Right now, everyone is starting to have this (false) sense of security again. I am in the camp that believes that we are only in the eye of the storm.

To close of, watch this short video on "off balance sheet" accounting. This sort of thing can really get me upset/angry. Especially in light of the recent stream of news events on Lehman Brother's accounting practices.

Frank Partnoy on Off-Balance Sheet Transactions (MMBM) from Roosevelt Institute on Vimeo.

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The true picture of the US Bailout

This video from MSNBC (Dylan Ratigan Show) sums up the true extent of the US Bailout very well. For those who believe that Obama is speaking the entire truth when he says: "We want our money back", this video should open your eyes. Oh, Politics! What a deceitful game they are playing on us (the ignorant public).

Visit msnbc.com for breaking news, world news, and news about the economy

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16 January 2010 • Economy, Finance, News, PoliticsComments (0)Permalink

Lessons we should have learned in 2009

At the end of 2009, I found this a good read. The article sums up the lessons that we should have learned from the past year very well. Unfortunately, I share the doubts that the author has about whether these lessons have come through with most people. In 2010 we might have to retake these harsh classes again.

Harsh lessons we may need to learn again - By Joseph E. Stiglitz (China Daily)

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31 December 2009 • Economy, Finance, NewsComments (0)Permalink

What happened to all that toxic talk about the Banks

Lately, I have been wondering why the US banks suddenly seemed "healed" from all there problems. You hear a lot of noise in the market that the banks have simply "written off" all their bad debt and are now able to look at a future with record profits on the horizon (for eternity). As I believe the economy in the US (and the rest of the world) is still deteriorating. Housing, commercial real-estate, business and private loans, and most other forms of lending have not stabilized yet (though in some areas things might be "bottoming" out slowly). So how is that these banks are suddenly turning record profits, paying out million dollar bonuses again, and are acting like the "sky is the limit" - continuing the same game that actually lead us (the whole world) into this mess. All that with a little bit of TARP money. Not to say that 700 billion is not a lot of money but it seems hardly enough to deal with all the toxic stuff that banks have on their balance sheets. Especially since those assets are still decreasing in value.

I know that the US government put some other things in place to support the financial system (mostly the Big banks). I also know that they conveniently decided to change the accounting rules last spring - something that somewhat coincided with the start of the stock market rally. Banks do have have to "mark-to-market" their assets anymore. They can now "mark-to-preference" their assets. Personally, I would call that lying and cheating. If someone asked you how much your house or car is worth, are you also prone to add about 40-60 percent to the actual value?

This week I finally found an article that explains more about the "total bail out" the banks received from the US taxpayers. A large chunk of it is in the form of "guarantees" and it will take years to figure out what the actual cost of these guarantees will be and for how much "risk" the taxpayers have been put on the line - without any compensation I must add. But still, the sum of this bail out is staggering. Yet it is all for the "greater good" is it not? Does it not benefit everyone if you make a bunch of rich people a lot richer on the accounts of the underprivileged, underpaid and under-insured? If I did not know better, I would think I am starting to sound like a socialist.

I advise everyone to read Meet the Hazzards.

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The largest white-collar crime

An interesting UCLA forum video about the IndyMac collapse and the bank crisis in general.

Some short excerpts:

Why it is that Obama is rescueing these people that have brought the global economy to the brink of collapse...
he could have cleaned house...All of the hope that was there - in the election hype - that is not going to happen...
Because Obama's primary economic advise comes from the people who helped create the crisis. And as long as you get your advise from people who don't want to admit that they were wrong about essentially everything they did in their professional lives.

Parts of this video summarized exactly how I feel about the US government and the Obama administration right now. It really does break my heart that all the promises of the Obama campaign are turning into big lies. How could Obama appoint people in his government to deal with the largest crisis of my lifetime, that were so intricately tied to the whole system that has caused the crisis.

In Europe, I am not much of a socialist. In the US I would join the people (tax payers) if they were going out for a march on Washington and Wall Street. Can't someone start sueing these people?

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18 August 2009 • Economy, Finance, InvestingComments (0)Permalink

Early stages of Depression - the real economy

I highly advise reading this interesting report from Eric Sprott: What if Mr Sprott is right? How many economists and stock analysts are going to actually admit how wrong they were about everything? My guess: very few... And somehow people tend to immediately forget about that. Sprott Comment July 2009
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Green shoots in the US Economy and the Perfect Storm

There is a lot of talk in the media about so-called "green shoots" in the US economy after (Helicopter) Ben Bernanke first mentioned how he was seeing these "green shoots" of economic recovery in mid-march. I think it is a little early to be considering any form of "new growth" unless Ben was referring to the enormous growth in the US government spending (and the Fed's own balance sheets). I do not know that much about gardening but what I do know is this: when all the plants in my garden have been dying for months now and then they are suddenly dying a little bit less - I would not yet call this a sign of "green shoots" or that anything in my garden is "blossoming". I do have to say that it feels like perfect orchestrating by the US government: fool the fools (in the market) that recovery is on its way and then let them capitalize the banks.

On a weekend get-away in Luxembourg these past couple of days, we ran into a nice cartoon(contest) exhibition with a "green economy" theme (environmental). A few of these reminded me very much of the current crisis and of these much debated "green shoots". Green Shoots on the US dollar

By Zarko Luetic from Croatia

The financial crisis has sometimes been referred to as the "Perfect Storm" and right now we might be in the "eye" of the storm. The drawing below at least visualizes the much-needed "deleveraging" of the financial system. Banks - Perfect Storm

By Dirk de Graef from Belgium

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24 May 2009 • Economy, Finance, InvestingComments (0)Permalink

Musical tribute to 2008 Wallstreet meltdown

In case you missed 2008 in terms of financial news (the BIG crisis), here is a musical overview to get you updated:

I recommend loading the song on your iPod for work-out memorization of the biggest meltdown in our lifetime.

This is actually a new version of a early 2008 video/song about the 2007 meltdown. Things got more interesting since then however and the quality of the video improved as well.

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28 February 2009 • Economy, Finance, InvestingComments (0)Permalink

The whole world is going down the drain

Another week of incredible news. Bad news that is. Yet it still feels that a lot of people are underestimating the severity of the crisis. I have to admit that initially I thought this crisis would mostly affect the USA. I knew that the rest of the world was going to be hit hard as well, but not 'as hard'. Now, it seems that the rest of the world is actually going to be hit harder. I can not help but feel that it all seems a little unfair. Not necessarily for Western Europe but mostly for the developing world.

At least we are living in very interesting times. Aside from all the doom and gloom, I am happy to be part of such a 'historically significant' time.

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28 February 2009 • Economy, FinanceComments (0)Permalink

Saturday morning reading

I spent a good deal of my Saturday morning reading an elaborate rant by James Quinn titled "The Burning Platform".

Here are some of my thoughts (while reading the article):

  • The disparity of wealth in the US always seemed enormous to me. Somehow the system seemed to sustain itself well in the past decades. Recently I have seriously started to question if the 'poor' in the US will put up with it much longer.
  • Illegal immigrants are really convenient when you want someone to landscape your garden, tile your roof or make you brunch in one of your favorite restaurants. Seeing tens of -- probably illegal immigrant -- day laborers waiting in vain along the streets of Berkeley last december, was a little disturbing. Fully aware -- as they were -- that they were not going to be picked up that day anymore. Now that things are seriously slowing down and even the California 'rich' (a lot of them with jobs that anywhere else in the world would only grant them a 'middle class' life have little interest in hiring day laborers (tax free) for a day, it makes you wonder what all these 'laborers' are now going to for a living.
  • Social unrest (and a upsurge in crime) cannot not be ruled out in the US. The same definitely applies to developing countries. China as the new world power will only happen if they can actually keep things together politically and socially.
  • Good to read that our health care system is not even that inefficient. Yet I still believe it is extremely inefficient.
  • I have always held the opinion that the US has become so wealthy (and pleasant country) partly because they were more inviting to immigrants. Immigrant were also happier to go there because they had a dream (the American Dream). Hard-working immigrants has always been a large part of the backbone of the US economy. These immigrants were the cheap laborers of the US economy. It is now interesting to see that one of the solutions for America's problems might be to let in highly educated immigrants. I have always supported similar ideas in Holland -> do not have strict immigration laws against highly skilled/educated petitioners. On a socialist level that might however touch some sensitive nerves because it stresses the fact that not every man is equal. How about this proposition: give anyone a US green card who has a Master's degree or higher and invests $500,000 or more in the US (buys a house for example).
  • The part about the military industrial complex it a little scary. I do not see the US downsizing it army personnel in the near future however. That would only add to the fast growing jobless mob.
  • This is an interesting quote: "The founding fathers envisioned representatives who did their civic duty for a short time and then went back to their real profession." A country that has a law that prevents anyone from become a full time politician might fare better. I agree that it would be wise to set a 6 to 8 year term limit for US Congressmen.
  • What is it with developed countries making their tax systems so extremely complicated. Why do I pay taxes for one thing and get refunds or deductibles for others things.
  • What a mess we find ourselves in. And yes, this crisis will effect every person on this planet -- if not directly, then indirectly.
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