A reader writes:
Eastern Europe is a mess. Many banks are probably insolvent if not for Government intervention. In addition, German and Austrian banks are in the … because of Eastern Eruope. The first link below is an awesome article from BW on this – the Germans/Austrians were at first all happy that they did not get invovled in subprime loans for housing. However, the ended up financing subprime countries!
Subprime countries? Doesn’t America want to become like Europe. Well maybe not, given how Der Spiegel describes its problems. Bureaucracy and state guidance are apparently no guarantees that the right economic choices will always be taken.
Not so long ago, Europeans thought they had dodged the worst of the financial meltdown. … “No one, including us, expected the crisis to be so severe,” says Siemens CEO Peter Löscher.
The Continent’s banks may not have written subprime mortgages, but it turns out they financed something worse: subprime countries. The former communist East is sinking into recession as Western banks choke off the easy credit that fueled Asian-style growth. Now, some pundits say, the former Soviet bloc countries are headed for a crisis on the scale of Asia’s in 1997 and 1998.
And how about subprime companies? European corporations are deeply in hock, with $801 billion in corporate debt maturing this year-nearly one-third more than in the U.S. Some, such as Munich-based chipmaker Qimonda and Swedish automaker Saab, say they are insolvent. A glut of debt-fueled private equity is proving to be a curse for others. Dutch petrochemical group LyondellBasell Industries sought bankruptcy protection for its U.S. operations on Feb. 9, just 14 months after buying Houston-based Lyondell Chemical in a $19 billion debt-financed deal. …
That’s not the way it was supposed to be. Europe’s economy was built for stability more than speed, and policymakers scoffed at the reckless Americans and their greedy bankers. Slower growth was a price Europeans were willing to pay for job protection and a generous safety net. “The German social market economy is a good model” for balancing free markets and social protections, German Chancellor Angela Merkel told the World Economic Forum in Davos, Switzerland, on Jan. 30.
And therein lies the rub: the social market model proved no better than American recklessness. To a large extent, the current global crisis is the result of a failure of information; those failures can’t be solved simply by the creation of ever-greater central bureaucracies. One of the unrecognized reasons why state intervention isn’t necessarily good is that it constraints actors from responding to new information optimally. As one German banker put it:
Deutsche Bank Chief Executive Josef Ackermann argues that, by refusing state aid, he will have more freedom to operate internationally than weakened rivals subject to government intervention. “We can determine our own fate,” Ackermann told reporters on Feb. 5.
That is to say, a bank free from government intervention is freer to act on what it regards as the right information than one which is beholden to the state. One of the things the market does best is react to facts as they unfold. The current economic crisis is largely driven by the recognition of past mistakes. But bankruptcy is now considered a bug, but to the extent that it punishes bad decisions, it’s a feature. And in the end, not all the government intervention in the world may be capable of saving Detroit or other bad economic actors. After all they’ve been given, Detroit is going under again. The Washington Post now says “GM, Chrysler Say Bankruptcy Is Imminent Without More Aid”. For the social modelers the answer is simple. Give it more money and more regulation. That fixes everything, doesn’t it? Gotta save those jobs.
Earlier today Michigan Gov. Jennifer Granholm met with the Obama administration’s auto task force to discuss the Detroit automakers’ future. Members have also summoned Fiat chief executive Sergio Marchionne to Washington later this week to talk about the Italian automaker’s potential alliance with Chrysler. … The automakers had hoped the stimulus package would boost sales in the second half of this year. But some of the stronger auto programs were killed — namely a “cash-for-clunkers” proposal from Sens. Dianne Feinstein (D-Calif.), Susan Collins (R-Maine) and Charles E. Schumer (D-N.Y.) that would encourage drivers to trade in vehicles for more fuel-efficient cars and trucks.
“Cash-for-clunkers”, eh. Were they talking about politicians? Confidence for confidence’s sake should never be invoked as an excuse to mandate a perception of the future. Nobody knows the future, not even the Lightworker.
Let all the poisons that lurk in the mud hatch out.
I’m interested in comments on this video:
TigerHawk TV: The financial crisis in a nutshell
It’s hard for me to avoid throwing my hands up in the air and thinking (loudly) to myself, “let it burn”.
For fifty years we’ve been expanding the size of the workforce, increasing productivity, increasing efficiency, increasing deliveries, increasing resource exploitation–not just here, but globally.
Abstractly, we do this because we want to have wealth. The only way to gain wealth is to produce more than you consume–so the world produces because it does not want to be poor.
In America, we’re too bound up in ‘having’ our wealth. We consume and invent new ways of ‘producing’ things that aren’t real, like the dot-com stocks or house values, to justify our consumption of useless things like the prius and solar panels, instead of doing real work and using wealth for useful things like nuclear power plants and robotics.
It’d be better to let every increase in efficiency and productivity result in ‘the workers’ worker fewer hours. At least then, once idle, there’d be no illusion that we were ‘producing’ and therefore entitled to consume.
“Slower growth was a price Europeans were willing to pay for job protection and a generous safety net. “The German social market economy is a good model” for balancing free markets and social protections, German Chancellor Angela Merkel told the World Economic Forum in Davos, Switzerland, on Jan. 30.”
They have 9 or 10 percent unemployment going into the recession. They can say they give job protection for every one who doesn’t lose their job. If they do lose their jobs they should blame the Americans. That Obama turned out to be no different than Bush. European Politicians and Wall Street Democrats can hum the same tune, but in different keys, of course.
It is ironic that Wall Street has dragged the world into an economic coma, and the dollar is still the refuge currency!
There has been a global collapse in demand, and the American consumer can’t pull the train any longer. We are tapped out and middle class purchasing power has been stagnant for 20 years. The only way the average family has been making it in the US for the last 20 years has been to work harder or go to a two-income family.
And now the American model of finance and capitalism has been flushed down the toilet by the people who ran it! They’ve literally gambled away other people’s money.
More tax cuts and less regulation aren’t going to solve any of this, kids.
Good luck with the Eastern Europe, though. Communism (on top of a history of fascism) really has left them with some very deep scares.
Hey!! Prius is not useless. My wife drives one and she loves it. Besides she was delighted when last summer she filled her tank for about $30+ while at the next pump someone was filling the big Tundra for a $100+.
Casca: But if we had real leadership, this would be the moment to turn things around.
It is not impossible at all. It just takes leadership to go out there and get it across.
Here in Florida, one county has hit upon the answer. 5 years ago Pt. St. Lucie was the county’s fastest growing small city. The population increased from 88K in 2000 to 151K in 2007. Then the bottom fell out of the real estate market. Thousands of homes are sitting empty or unfinished.
So one answer is to declare the county a disaster area, such as is done after a hurricane. A hurricane destroys houses. Well, then having too many houses is sorta the same thing, right?
By spending the hurricane fund to build MORE facilities that would help the local construction workers who are unemployed. But the problem is not that Pt. St. Lucie has this unexpected bounty in the form of empty homes. The problem is that it built an economy on building more homes. So it has to build more of something to get the ball rolling again.
Large and small, POTUS, or PM of Hungary, or a county commissioner in Florida, they all come up with the same answer.
BT: What nonsense.
It is ironic that Wall Street has dragged the world into an economic coma
Wrong, the EU has been in recession longer than we have. The problems in E. Europe have little to do with Wall St. Their problem is the same as ours though: A corrupt, interventionist, socialist political class monkeying around with markets and business.
We are tapped out and middle class purchasing power has been stagnant for 20 years
Wrong, wealth has increased in the last 20 years. Obama is purposefully destroying wealth at the moment. It need not be.
And now the American model of finance and capitalism has been flushed down the toilet by the people who ran it
Well the left is sure trying–something that you seem to agree with them on, but it will come back as it is the best system in the world. Here you give your game away.
And know, “the people that ran it” did not cause this. It was the Democrats in government that caused this. Also, Capitalism is hardly run by Wall Street. It is run by Main Street. Those banks were managing their capital quite well.
If fact it was not gambling that was the problem, it was making loans to people that could not afford them. If the government had just allowed these people to go broke last fall, we would be in much better shape now. It is government that did this, not business.
More tax cuts and less regulation aren’t going to solve any of this, kids.
Wow, you could not be more wrong.
If this were announced tomorrow, and the the stimulus package canceled, the markets would rebound in 2 months. The recession would last 4 quarter. Here you really tip your hand.
Good luck with the Eastern Europe, though. Communism (on top of a history of fascism) really has left them with some very deep scares
This one in unintelligible.
You were on another BC thread and made a comment almost as idiotic as this one.
You sound like a plant, a troll or a moby to me, and not a very clever one at that.
Funny how they show up when the Left is in danger of getting caught with their pants down.
Yes, AG. Your wife made it possible for me to put cheaper gas in my SUV, which I appreciate very much.
I am really disgusted that we’re bailing out AIG again so they can continue to prop up Eurotrash banks and governments who then turn around and blame the U.S. for the crisis. If we’re going to be punished for being uncaring anyway, why not at least be guilty of the crime?
How long will the Chinese sit by and watch this happen before voting no confidence? It is a definite conspiracy by elites around the globe. All this wealth, investment and savings built upon the house of cards that is the strong (and safe) greenback. Once the run on the dollar happens, and don’t stick your head in the sand, it is coming, AIG insurance and backing will be worthless and the banks of western Europe will implode.
AG: you realize that the tundra has a much larger gas tank, right?
Bureaucracy and state guidance are apparently no guarantees that the right economic choices will always be taken.
It’s not just the wrong choices we have to consider. It’s entirely possible to make all the right choices and still have things turn out badly. That’s life. And when things turn out badly – regardless of whether it results from bad decisions or just bad luck – someone has to take the blame for it. That’s politics. And that’s probably why bureaucracy and state guidance remain so deeply entrenched in Western life in spite of their obvious shortcomings: They provide convenient scapegoats when things go wrong, meaning no one else has to take responsibility. Of course, bureaucracy can’t serve this salutary purpose very well if it’s downsized or abolished outright, so the preferred solution is invariably to throw out the old scapegoats… and replace them with new scapegoats-to-be.
I would add, BT, that the family that has “had to” go to two incomes has often not done so in order to “make it” but to have two or three cars and cable TV and to send their kids to private schools rather than public. You make it sound like they would starve without those things.
That being said, there is the issue of our having plunged headlong into materialism, which got us all going too fast on the treadmill. Materialism, though, is the be all and end all of your lefty approach to life, which is why we are now in a free fall.
Well at least they could be honest about AIG. They are just using it as a cover to bail out their buddies.
I agree that it is an elite attack on the wealth of the world, but it may not be an overarching conspiracy, could just be another elite hustle. It may not work out for them as planned. This is massive hubris and arrogance. I really think that they have amply demonstrated what idiots they are.
That there is such quick and growing disillusionment with Obama gives me hope.
Those that think that without the USA as super power they will able to work their evil unfettered may be in for a shock at what comes to them.
I’m not following you, Joshua. Who is being scapegoated here?
I suspect that AIG is a cut-out for bailing major NATO partners out of trouble: their financial gearing is in orbit and so they used CDS via AIG to meet Tier 1 Capital/ its equivalent in foreign markets.
Recall that it was the French that placed the phone call last September 16 demanding that AIG be back-stopped.
Without it, France was about to fall.
Too strange: France’s largest bank owns First Hawaiian Bank, which was Grandma’s employer.
Those ENARCs really know how to cover their own.
Well at least Maurice Strong is happy…
Yet, if America gets ‘re-arranged’ you can zero out Canada. Well get a North American Union the classic way !
He should be much more careful of what he wishes.
I don’t think any system will work automatically, whether it is the European “social model” or the American system, any more than an automated system can make all the decisions for us without human intervention or constant redesign. Like or not, all social systems are designed to have men ‘in the loop’ because they’re about humans after all. That’s why eternal vigilance is the price of liberty — and the price of anything else either — because unless we watch the stove, all kinds of fires will start.
That’s the cheat when people argue ‘well, let us move to a European system’ because by itself that simply gives you a whole new set of issues. It’s not a panacea. Maybe you get more, probably you get less. But however that may be, what you get is a function of what you put in.
The BHO phenomenon appealed to a very basic human illusion: the idea we could renounce freedom and leave things to a benign lightworker. Go back to the days when we were children and trust in Father. The founders knew that there was only one entity you could trust and left Him out of politics into the bargain. But apart from the Creator, all men were created equal. Equally capable of good and equally capable of the okey-dokey.
Democracy and capitalism doesn’t guarantee against failure or mistakes. Rather it recognizes that they will be made. What it does is provide a way for each person to rise up again; to ensure that no stumble is automatically perpetual. But this comes at the price of our participation. At this stage of things, President Obama may be making mistakes. Somehow the public has to correct this, using the framework of laws and politics; and more, it has to feel its forward until it comes to the right solution to this crisis.
God has left us on earth free to chart our destiny. There’s no escape from that.
Blert #17
I would dearly love to see Fwance fall. I don’t really dislike Fwance, and I’m very fond of my Fwench friends and ex-comrades. I am irked with the posturing pomposity of their top political class. They’ve strutted their stuff for far longer than they’ve had any justified reason to. They should’ve packed up the world power act after 1815 instead of continuing to make promises they couldn’t keep.
The reason I would like to see Fwance implode is as a graphic and timely demonstration of where the path to socialism ultimately leads. If the polished jewel of socialism (such as it is) were to crumble as the world looked on it might serve to make voters and politicians throughout the rest of the first world face reality. It would be really rough for the world for a major second tier power like Fwance to collapse economically, but if they can save the U.S. by their example and sacrifice it would be worth it to the entire planet.
Comment @ Uppitywoman:
“Everyone knows that Washington is bailing out the auto companies because of the UAW. So, why not AIG?
Turns out that most of the teachers in the country have their retirements underwritten by AIG.
Imagine if the government let the company fail, their 401Ks may look like everyone else’s.“
Mongoose:
I know my posts kind of ramble, so many apologies.
But didn’t we have tax cuts and deregulation for 8 golden years? Conservative had full control of the government and you guys got a lot of those policies.
Oh wait, I know, we didn’t cut ENOUGH TAXES.
And I will let you know that I am a hardened cynic. ‘Democrats’ like the Kennedys and ‘Republicans’ like the Romneys suck up most of the national income and don’t have anything in common with a working stiff like me. It’s not really a partisan stance that I am taking. They serve the own interests, and have lovely little argruments with each other at the club. And yes they did bust the bank with their crappy bets. Perhaps I’m a communist.
Sam said…
“Despite the criticism, both of the President’s men defended the carbon tax, and the rest of the budget, saying it’s our best shot to right the ship.
Secretary Geithner laid out the defense in his opening statement.
“This is a moral imperative, it’s an economic imperative, and it’s a fiscal imperative for the country”, said Geithner, while Orszag chose to quote a song by country music star Toby Keith:
“There’s no right way to do the wrong thing.”
Federal Budget
Doug #20
That sounds like another great reason to let AIG fail. As it stands now, the administration is using my tax dollars to insulate their voter base from the consequences of their actions! It short circuits one of the critical self correcting mechanisms of our republic!
maineman #16: Take your pick. If you choose to blame the private sector, the solution is a stronger state bureaucracy to micromanage it. If you choose to blame the existing state bureaucracy, the solution is a different and “better” state bureaucracy.
Armeggedon Rex #19: If “Fwance” falls, what would replace it? I for one would take the Fifth Republic as it is today, warts, irritants and all, over the Islamic supremacist emirate that is most likely to replace it, not to mention inherit 5R’s nukes when it does.
AR…
Demographics is destiny…
And for France that means implosion.
Never forget the Parisian Car-Be-Ques !
It is interesting to note the extreme reluctance of Sarkzoy to follow the ‘Greenback Road’…
I believe it’s because he’s seen the books and realizes that France doesn’t have any margin of error.
He can’t export his currency.
Worse, his big exporters are absolutely $%^%*$(
Think Airbus: priced in dollars… this firm loses $ 1,000,000,000 on each one cent move of the Euro higher than the USD. Yiikes !
No wonder the ENARCs are furious at Peugeot for taking their capital into the Czech Republic. When you remember the love the Pols have towards each other…
I’d say France is deep in the hurt locker…
TIIA/ CREF is the fund that holds most of the teacher’s retirement funds.
I Know of no other entity that has anything like it.
AIG… they’re big into re-insurance, ultra-huge in fact.
So their policies very commonly back-stop municipalities all over America.
Things like bridges, stadiums, airports… etc.
Failure to maintain insurance on these little items would mean that the associated revenue bonds would go into default…. That’s millions of Munis defaulting in the few seconds after AIG files for bankruptcy.
That would completely lock up the muni market.
The exact same situation is to be found in the corporate bond market. AIG re-insurance is the back-stop to the collateral that maintains the bond.
Again, they all go under at the stroke of midnight: that’s a whole lot of pumpkins !
Now do you understand why the powers that be are unable to stop feeding AIG ?
http://en.wikipedia.org/wiki/TIAA-CREF
Sorry about the typo…
Wretchard: “The BHO phenomenon appealed to a very basic human illusion: the idea we could renounce freedom and leave things to a benign lightworker.”
“You cannot legislate the poor into freedom by legislating the wealthy out of freedom.” Dr. Adrian Rogers
“The state is a great fiction by which everyone tries to live at the expense of everyone else.” French economist Frederic Bastiat
@Mongoose,
Good smack-down of BT. I just saw Grover Norquist, who I m not a committed backer of, do a brilliant job responding to Gwen Ifill on the News Hour. She challenged him over Rush Limbaugh being the face of the Republican party calling for Obama to fail. Norquist took her apart. He said that Obama is not Louis XIV, he can not say l’etat cés moi and that his proposals were bad for America and the Republicans were offering a better alternative. The look on Ifill’s face was priceless. I doubt Norquist will see another invitation soon, and he doesn’t care.
http://abajournal.com/news/five_convicted_in_aig_reinsurance_scheme/
Try this link…
General Re is the biggest whale in the fish tank, by far.
France’s other export disaster: her best stuff is exactly what a hard pressed planet can do without: wines, cheeses, perfume, Citroens, (!)… you name it…
If France makes it, you don’t have to have it !
I wish there was an inverse ETF on the Fifth Republic.
Talk about a lock !
The question is what happens when Hungarian & etc. defaults, pulls the IMF and Austria down, and with it the EU becomes literally insolvent – although with the same kinds of cosmetic rhetoric and behavior by which everyone tries to convince the people that that corpse is just sleeping.
Seriously.
At some point soon it’s beginning to look like the illusory nature of the dollar may have to start calling in its ultimate asset: the US Armed Forces. But of course Ilyich Obama’s busy signing Brest-Litovsks all over the godd-mn place…
I sure hope my ignorance of grand economics makes me sound like an utter fool and everything is gonna be alright…
And now the American model of finance and capitalism has been flushed down the toilet by the people who ran it! They’ve literally gambled away other people’s money.
Well no. The drive for gain inevitably leads to bubbles. After the bubbles deflate what remains is the productive machinery. The dot com crash produced cheap high speed internet after all.
The crash of the railroad bubble still left us with railroads. The crash of the mechanized farming bubble of the 20s left us with the most productive agricultural system on earth. The crash of the radio bubble of the same era left us with a vibrant electronics industry.
If only the current crash had some techno/productive element. All we will have left from this bubble are a bunch of houses that people can’t afford. And yet housing is still a craft industry. We got very small productivity gains from this bubble. We did not get the makings of the next rise.
We are in a secular decline. The easy profits of the computing revolution have been extracted and there is nothing yet of sufficient magnitude to take its place.
What is to be done? More research. But that does not absorb mountains of cash or armies of people. And results can’t be predicted. Even if done reasonably well they are inevitable.
Dan our DoD is our Number One Export…
It’s the reason that we can export currency instead of something tangible.
The USG is an INSURANCE AGENCY, didn’t they tell you?
That’s the only reason that the USD is International Money/ Reserve Currency.
Only the dominant naval power gets to issue it. When GP lost her currency exports she had to roll up the Royal Navy. That works the other way, too. Shutting down East of Aden shut down currency exports.
Who would hold an alien currency from a power so weak it can’t send a battle fleet? The answer is NOBODY.
Blert #30:
Thanks for the link. That made interesting reading. I can readily see why the government should keep municipal bonds from failing. But, I would also like to see more local governments pay for their grandiose pet projects with cash or by raising taxes temporarily, with a hard and fast sunset date, through a referendum process.
With many government entities, it is currently the standard practice to float a bond or bonds to pay for some excessive projects (pick nearly any big city stadium built in the last 20 years, or the big dig in Boston, etc.). This allows politicians to pass out contracts (prizes) to their sycophants, relatives, or campaign contributors depending upon the municipality. I hope that limiting access to bonds for this type of boondoggle would reduce the size of government overall and prevent corruption if this type of edifice was funded through private business, with the government as much out of the loop as possible. Perhaps that is wishful thinking on my part, and would only redirect the machinations into the private enterprise sphere. But if we must have government, a clean one that deals equitably with all citizens is better than the corruption that seems impossible to separate from government with these projects
M Simon…
I beg to differ. The greatest profits from silicon are still ahead.
The next super boom is bio-engineering and the exploitation
of the fungal biota.
The latter will permit us to de-tox super fund sites for peanuts…
will permit us to control ants, roaches, termites with 100% effect…
will permit us to de-tox oil spills on the cheap…
The best is still in front of us.
The enemy is redistributionism…
Of which we are in a pandemic.
Materialism is a fact of human nature. Who do the women generally swoon for? On average they prefer the rich ugly guy to the poor cutie. There is a reason for that. Money makes it easier to raise children.
To pretend that materialism is an aberration is to misunderstand human nature.
I beg to differ. The greatest profits from silicon are still ahead.
I was part of the computer revolution since Jan of 1975. The days of 300% and 1,000% profits from the computerization of a function are not coming back. I do agree that biotech is a good candidate for the next jump. Or possibly nanotech. Or maybe light weight fusion reactors that can make space travel cheap:
Bussard’s IEC Fusion Technology (Polywell Fusion) Explained
Oh wait, I know, we didn’t cut ENOUGH TAXES.
So true. But the bigger failure was not holding the line on spending.
Dan #33 & Blert #35 re: U.S. military guarantor of world stability?
I regret to say that Obamassiah seems intent on replicating the Vietnam quagmire as entirely as possible in Afghanistan. I’ve worked on problems in that A.O.R. on and off for the last seven years, and the situation has taken a very nasty turn since late 2006. It really is one of the most challenging places (for the U.S.) one could pick to engage the U.S. military. Decades of our technological development, training and tactics advantages are minimized in landlocked, mountainous, uncivilized, central Asia. When you throw in a very tenuous supply situation, and safe havens for the enemy we’re unwilling to conquer, you have a recipe for a drawn out, high casualty low intensity conflict with no clear victory on the horizon.
The problem is that a lot of our brightest, best motivated, and most patriotic young men and women will be sent into a meat grinder. We may lose, cripple or embitter tens of thousands of folks we will need most when the excrement really hits the fan, and they will no longer be available. All this in service to a government that has no intention of achieving victory. A drawn out, bloody, and unsuccessful campaign could also destroy the reputations of any number of promising brilliant senior military leaders who might step forward to challenge Obamassiah politically at some point.
I’m afraid certain apparatchiks see this all as a feature, not a bug!
BT: I do not think that this forum is for you. You appear to be in over your head, and no one is buying the act. This is the Belmont Club, not recovery.com
BO is still acting like a community coordinator in Cabrini Green. I don’t think theat he will ever act like a president!
“If only the current crash had some techno/productive element. All we will have left from this bubble are a bunch of houses that people can’t afford.”
Well all these empty houses sure would make great Reparations Day presents, wouldn’t they?
LOFTM: Thanks.
About Grover Norquist, yes, he get get out there about some things, but when it comes to economic matters I am with him all the way, especially as they relate to Liberty.
This seems to be a hard thing to get across to Liberals. He is a valid and useful voice. It does not matter if they do not call him back, he has been a voice in the wilderness for decades, and sort of John the Baptist of responsible tax policy. he can take care of himself.
Is there a link to the interview?
—tax cuts and deregulation for 8 golden years—
Mindless lefty talking points. They bore as they make me want to vomit.
Yes, the tax cuts worked after 9/11 caused a trillion dollar hit on our economy. Bush had a good economy going until the Democrats took Congress. Bush made several mistakes, including buying into the notion that he could repeal the business cycle. He should have let this recession hit 18 months ago so it would have fixed itself and not gotten our first marxist president elected.
There was NO deregulation, Bush enacted tens of thousands of pages of regulations – as a “big government conservative”. He also tried to reform the Democratic black hole called Fannie Mae and Freddie Mac. Remember Barney Fwank called him racist for trying to fix it.
Joshua #24:
If the 5th republique were swept away and replaced with a budding caliphate this would provide an additional lesson to the remaining first world nations. Stop importing under-educated Muslims who breed like rats! Stop kow-towing to medieval religious zealots who want to destroy your society and enslave or murder your native population! The nuclear weapon issue is thorny! The submarine based warheads can be eliminated easily enough, but the aircraft launched weapons pose an entirely different problem. I concede you make an excellent point about what would become of the nuclear arsenal.
At any rate, I really meant a financial unraveling in Fwance. Where the government would default on loans, and pensions, and much of the stifling bureaucracy and half worthless civil service were told to go find useful jobs. I was not hoping for complete disintegration of the entire ancient society. There is much that was and is great there, and the Christian natives outside Paris are some of the finer, friendlier people I’ve met in the world.
M. Simon,
Too bad there was no money in the stimulus package for polywell fusion research. And I am not being sarcastic about that. I read your blog and links all the time, and the potential for vast, cheap clean energy is right in front of us (maybe). But it is certainly worth the risk of a few tens of millions of dollars, considering the amount of money that is being flushed down the comode.
Foolishness on a massive scale! President Obama and his circle of advisors are SURE they are correct, but perhaps they are…..mistaken? With more ARM’s financed at subprime rates about to reset to normal interest rates in the three years, the roll of losses, foreclosures and default on credit instruments is only going to cascade.
The foolishness of higher taxes on anyone now, cap and trade on CO2(increasing energy costs)that haven’t worked ANYWHERE in the world (oh, but this time it will be different!), the wasted billions on an ill-conceived stimulus plan.
The day is coming when the electricity is not going to come out of the socket when you plug something in. Flip the light switch and nothing will happen. What will Gwen Ifill think then?
“European corporations are deeply in hock, with $801 billion in corporate debt maturing this year-nearly one-third more than in the U.S.”
This is striking: you mean this hasn’t been well-known for some time? Sure, they could’ve missed $10 or even $100 billion – but $801 billion? All this year? That’s a pretty cataclysmic failure to communicate.
Dan…
What’s truly terrible: so much of that was spent on backing the export sectors of emerging markets.
They’ve followed our advice and the East Asian Export Model (R) … and it is blowing up !
Those outside the Euro are getting crushed by hot money flight and the end of capital infusions.
In effect, a run on the society with the logical dynamics of a bank run.
The gruesome over investment in iron and steel is particularly tragic.
Russia, China, Ukraine, India… they’re all getting killed.
@46
http://www.pbs.org/newshour/bb/politics/jan-june09/gop_03-03.html
Sorry, I meant @45
Blert #25 & #31:
I believe you are correct in your assessment of Fwances financial situation. So, since they don’t have the worlds most powerful military to back them up, and their banks are teetering, and they don’t produce very much that can’t be had elsewhere with higher quality for less money, why hasn’t Fwance defaulted on their loans yet? Why haven’t they furloughed 600,000 government apparatchiks in an attempt to balance their budget? How do they seem to still be operating as if everything were in perfect order?
I honestly believe that the USG is bailing France out.
Doing so is a primal error, IMHO…
I believe the mechanism is AIG to CDS to French financial institution/ corporatist entity.
I figure that it’s Airbus that’s on the other side of a lot of these swaps. The swaps permitted the financing of her aircraft.
Since Airbus is pan European, France is able to bring a concerted begging line to our door.
PS… Don’t tell Boeing.
Other big time French exporters used the CDS window at AIG London to hustle their export finance, too.
Don’t you notice the silence as to where the AIG pay drain is going too?
Armageddon Rex #53: Could it be because France skims the profits from recently-successful national EU economies, such as Ireland? I don’t know this to be the case–just wondering.
Armaggedon, mind your Karma, you wear such charged name, plus to utter bad wishes on us doesn’t show you’re a good American, cuz if we fall you will doubble fall too.
your problem is ignorance and idioty, you can’t help, the good infos will never reach your brain, that has already been washed out, uh you know the story of the baby and the bath water ? sorry to tell you, it’s all gone, just a big fat hole is left,
and see who is the less hurt in EU :
http ://news.bbc.co.uk/2/hi/business/7887659.stm
Ascat, yeah who is the robber, ??? where are the french WMD, you guis have such a big imagination, search in your slip, you’ll find more surely the truth
Marie Claude: No offense intended on my part–my apologies to you. I’d be interested to learn from you, or others, how profits and losses are shared among European nations via the Union.
@9 Mongoose
“Wrong, wealth has increased in the last 20 years. Obama is purposefully destroying wealth at the moment. It need not be.”
I agree that Obama and company are deliberately destroying wealth.
The question is why… my guess is that he and his leftist cohort understand that the greatest obstacle to the full implementation of his socialist vision is our vast, somewhat affluent, unflappable, self-reliant middle class. If they were anything like me in August of 2008, they had nice homes, well-paying jobs, self-funded health care, kids in private schools… and staggeringly large private investment accounts (retirement income) awaiting them when they hit 65.
Not the sort of person willing to give up any freedoms to the federal government in exchange for being “taken care of” by that government, because it’s against their very nature and they don’t need the “help”. Therefore, if BHO intends to fully implement his socialist vision, he must make a significant portion of the middle class dependent on govt for their very survival.
Tell me if this sounds familiar: I’ve been maxing my 401(k) contributions for over two decades now into a very aggressive portfolio… had the stock market not tanked, but rather continued to produce the same steady returns that it has averaged for decades, I would have found myself sitting on over 8 million bucks by 65. Besides living well in retirement, I had planned to endow each of my children with a gift of a million dollars when they reached the age of 30, in hopes that they would use it to start a business, etc…
Now, unless something happens whereby the market stages a rally as big as its present collapse has been, that goal will never be realized. And I’m quietly mad as hell about it, since the collapse represents the sort of theft for which there is no suitable compensation. Twenty years of playing by the rules, gone.
So, Strike One, billions saved by millions for retirement are gone. Hello, Social Security.
Strike Two, home values crash, leaving many owing more than their homes are subsequently worth.
Strike Three, confiscatory taxation goes ballistic, taking a significant portion of what’s left over…
Strike Four, single payer health care, a part of which will be a govt bureaucracy that decides if and when you get that vital MRI… guess who will be kissing whose @ss when that comes around…
There are probably more strikes I could note here, but it’s late and I’ve got to call it a night… but you get the picture.
A vast, somewhat affluent, unflappable, middle class, that neither wanted nor needed any “help” from the government now finds itself on the road to a paycheck-by-paycheck existence, extremely vulnerable to even the slightest ill wind… and, no doubt as these socialists intended, so freaked out that many will practically beg the government to do whatever is needed to protect then from further loss, even if it means surrendering some God-given freedoms to do so… and becoming dependent on the government as a result…
We are in danger, people – bigtime. Serfdom lies down this pathway.
God save us…
Triton
Marie Claude #57:
I apologize. I seem to have offended you. As I stated earlier in comments of this post, I wish no harm to the people of Fwan….France (Freudian slip). I do however despise the current government, and past governments since, well almost forever. It’s one of earth’s miracles that a nation so poorly governed for so long could make so many wonderful contributions to philosophy, science, cuisine, art, mathematics, and technology. I have a great respect for the native people of Fwan…..France (there I go again)! I served proudly with soldiers in L’ Armee De L’air during operation Desert Storm. They’ve been hamstrung by government restrictions ever since then, and were nearly worthless in Operation Enduring Freedom & Iraqi Freedom. They were, and are a highly trained, dedicated and professional group of warriors. I’ve friends in Avignon, Rouen, and Arles. I must say that my friends, and many of the soldiers I served with, seem to despise the political class in Paris nearly as much as me.
It appears that much of Western Europe is headed for the rocks, financially. I don’t believe there is much we can do in America to prevent the smash up of Paris, Berlin and Vienna banks at this point. Others have commented in this post that they believe the U.S. government is already spending tens of billions of dollars propping up Parisian banks. Either way. Since Fwa….France is going to crash and burn, financially anyway, perhaps we can learn from your harsh lesson instead of learning the hard way. Fwan…France holds a special place in the hearts of statists in the U.S. It is the shining example they hold up for the American public when they advocate for massive government intervention in the economy and for socialist benefits for all. Were it to fail financially, in a spectacular manner, now, it might slow our rapid slide into the pit of socialism as American voters and politicians viewed the financial carnage and stepped back from the cliffs edge.
Asscat
Frau Merkel at the begining of the crisis said “each one his/her own sh*t” before acknowledging that Germany was hurt too. After that she complied to agree with Sarkozy and other eurozone leaders that it was a common worry, then it was decided that each state ought to watch for its own recept to fight the crisis. This was before the collapse of the eastern republics that depended on the german and austrian investments, umm their groth rate officially still was about 5%, now that it is revealed failing, none in eurozone and or western EU wants to rescue them. Though some credits were opened from the BERD
http ://www.ebrd.com/
In the last EU sommit it was decided that some “bad banks” would be created to absorb the “toxic financial products” of the risky banks, though Sarko and Berlu refused to finance banks that had a fool policy in their own country.
« nous préférons encourager les banques à prêter aux entreprises et aux ménages plutôt qu’en transférant sur le budget de l’Etat des pertes liées à des investissements passés dans des actifs américains douteux ».
http ://www.euractiv.fr/euro-finance/article/sommet-resout-question-montant-actifs-toxiques-001432
So, this is the unknown, navigation is ” à vue” among the reefs, and probably the dream of the global administrative EU is questionned !
test, # 58
Frau Merkel at the begining of the crisis said “each one his/her own sh*t” before acknowledging that Germany was hurt too. After that she complied to agree with Sarkozy and other eurozone leaders that it was a common worry, then it was decided that each state ought to watch for its own recept to fight the crisis. This was before the collapse of the eastern republics that depended on the german and austrian investments, umm their groth rate officially still was about 5%, now that it is revealed failing, none in eurozone and or western EU wants to rescue them. Though some credits were opened from the BERD
http : //www.ebrd.com/
Armaggedon, Apologies accepted, though I would like to make a remark, the governments that we elected were democratly elected, thus represented/represent at least 50 % of the french population each time.
Now you don’t like them, I can respond this is the case here for your former government too !!! So, then we should agree on that one, that each country watches for its own interests, and it the big competition for surviving, the policy is “each one for itself”
Others have commented in this post that they believe the U.S. government is already spending tens of billions of dollars propping up Parisian banks.
see how the “tigers of the sky” were fun last time they met :
http ://mysoupis.blogspot.com/2009/01/tigers-inthe-sky-nato-comrades-are.html
I dunno where they hold such infos, it looks like they are rather rumors, to hide ones own weakness to overcome their own problems.
Now, in this crisis, France is less hurt than her euro partners, shown in the aboe BBC article. Though, I’m not telling it’s wonderful and that it is over, the worst is coming, as it will for the whole world, cuz all the economies are interpenetrated as far as their “global” financement, umm wild capitalism had prevailed in the last decades, it must be repeared and ruled with transparent means
how the “tigers” were having fun, should have been at the end of the post
sorry for the typo too : aboe =above
Marie Claude # 61: “Asscat”!! Good one. I am pleased that you took the time put the “-cat” at the end. Again, sorry for the offense. I never meant to step in your brie.
Mongoose@9
I would pray modify one of your statements:
Funny how they show up when the Left is in danger of getting caught with their pants down. I think it would be more accurate to say “the Left got caught with our pants down.”
They got caught with their pants down suggests embarrassment to them, while they got caught with our pants down defines a scenarion for rape and sodomy. Unveil the predators; see that they aren’t the slightest embarrassed by the discovery of their intentions.
Mongoose@12
!!!!ZING!!!!
@15 when do we replace “idiots” with “insidious, entirely evil SOBs? Does that switch change our take, alarm us more?
Wretchard,
I get the forgiveness part about what you’re calling mistakes. Benefit of the doubt, presumed innocence, et al. So, what may I ask do you call these actions when they’ve become obviously intentional, maliciously-motivated moves to deprive evey US citizen of their inalienable rights, as defined by a Constitution they clearly disregard, because it’s no longer relevant to them?
God must surely be our only slavation, if we continue to be duped into calling this mistaken behaviour. All tyrants appear beneficent at first, by design. Then it’s marketing at gunpoint.
BT@21
Nope, right now you’re just a socialist…and unwilling to grasp/accept reality, which is a common and coincident malady among all forms of Leftism.
If you want to move down to being a communist you must enjoy being forced to believe that Barney Frank will be the best overseer for all banks, Dodd for mortgage regulation and that some other appointed Czar will be better at running all the auto companies, than the current management. Get your isms straight.
Marie Claude @56,
“See who is the less hurt in EU.”
The BBC reports that, when compared to her cohorts, France is “less hurt.” It is telling that, in the end, France’s misery must be relative to her sister-states’ in the EU.
More and more, it looks as if France needs the EU more than the EU needs her.
-Steve
M. Simon said:
“If only the current crash had some techno/productive element. All we will have left from this bubble are a bunch of houses that people can’t afford. … We are in a secular decline. The easy profits of the computing revolution have been extracted and there is nothing yet of sufficient magnitude to take its place….”
This repeats my own thinking. We are in serious trouble.
M. Simon also said:
“Or maybe light weight fusion reactors that can make space travel cheap”
Nothing would please me more (I’m also a big fan of R.W. Bussard). Unfortunately I suspect the IEC fusion reactor concept is a no-starter. There are some fairly damning papers out there about it (follow the links from the Wikipedia article). There is a 1994 MIT Master Thesis by Todd H. Rider that raises a whole bunch of serious issue.
Blert,
Thanks for reminding me of my worst ever experience with an “automobile” (that’s Fwench, non?) – a brand new 1982 Peugeot 604S.
Sleek, racy, forward styling, nice interior, seemingly powerful turbo – alas anything that had to operate dependably, not so good…in the shop 7 months out the first 24. In the dictonary, next to the word lemon are pictures of Fwench cars.
M. Simon,
I could employ 1 million highly-skilled US workers tomorrow. Announce and start building and installing 500 small-footprint nuclear power stations, 1-20 in every state.
This move could drive oil down to under $20/bbl. in the meantime.
And, I’d make’em smart, scalable, as non-poluting as practicable, remotely monitored & controlled, and then I’d market’em worldwide to everyone (starting with our allies) at cost plus 10%, along with an exclusive maintenance contract. Recalling when you had to call Rolls to come fix your vehicle, if the sealed-engine unit ever did fail.
Then I’d start in on using these reactors for desalination, incineration, coal conversion, and any other power-hungry process that looked promising (cf, manufacturing solar panels).
I’d try to corner the world market on really cheap power by using high-volume, unique skills, advanced technologies and materials, and proprietary designs and processes.
Here’s our box…show US where to deliver it…you connect up here…and it runs 24/7/365. That’ll be a $5 million deposit with your order, for our starter model.
Next.
ag #6
If this sounds snarky, please accept my apology. It is meant to be a serious question to support or debunk a theory that I have.
Did your wife (or you; or both of you) vote for Obama?
Second point: You can buy a lot of gas with the premium you paid to drive a Prius.
Mongoose @ 42
Re: you comment to BT.
Are we not all in this together, trying to find our way through a pretty dark thicket? Who can claim to know the way for sure, even you–and I acknowledge having learned a lot from you here at Belmont Club. But being elitist, even about Belmont Club, is not likely to be either educational or persuasive.
Best wishes,
Jim
geoffgo,
Toshiba has that technology developed, and is working through their American subsidiary, Westinghouse Nuclear, to start a trial installation (a trial in Alaska, to replace expensive diesel generated electricity in a remote town in Alaska).
But as usual, the NRC is dragging their feet. The first installation is years away.2012, 2013.
Great idea, impeded by the bureaucrats. The death of rats.
How about mass production of hydropower plants ?
How about ultra-heavy lift via hot-helium dirigibles ?
Just put a couple of baby nukes on board and use water as ballast…
Such a device would permit awkward loads to be plopped in the sticks without tearing up the countryside.
Admittedly such a platform would also seem ideal for UAV swarm launches.
#70 Steve
The BBC reports that, when compared to her cohorts, France is “less hurt.” It is telling that, in the end, France’s misery must be relative to her sister-states’ in the EU.
More and more, it looks as if France needs the EU more than the EU needs her.
umm, you’d like that, it ain’t so, Italy would fit more your description, the UK and Spain are in the big panic, Ireland is joining them, The 2 stable economies were Germany and France that had better banks rules, investments focused more on enterprises than mortgages, where private sparing are priced.
But Germany just got trapped in Eastern republics
So Who need EU ? UK, Ireland, Spain, the eastern republics…
I’m going to have to bust your bubble Marie…
French and German banks are among the most highly geared institutions on the planet.
Right now they’re tearing their hair out.
They’re being swept up by events come what may.
The Euro may even come undone, it will surely be tested.
Nobody is out of the woods by a long shot.
I do agree that Ireland and the United Kingdom have effectively bankrupted themselves.
Switzerland also looks done for.
Austria is also ripe for collapse, it’s hard to see how she can pull through.
Expect to see rising tax revolts in all of these troubled lands.
Actually Berlusconi wished that the euro comes undone
Well, they can’t raise more tax, from whom ? the persons that live from administration ?
monday a bank in Lyon aeras was “hijacked” by an enterprise staff, they stay there until the bank paid what they owed to the enterprise.
Some times ago the enterprise debt was bought by an organism that is specialised in such transactions, normally the cheque should have been credited on the enterprise bank ; the bank, which is a scottish bank (umm british problems !!!), delayed and delayed to credit the enterprise. The enterprise was empeched to get stuff that it need to carry on its manufacturing. So the union decided to invest the bank ; first time I see an intelligent union intervention. I am sure this will be renewed.
blert said:
“Switzerland also looks done for.”
I find that hard to believe. Banking is the life blood of Switzerland. Sure, UBS has issues but it was my understaning that the rest of the Swiss banking system was okay.
Eggplant…
Unfortunately they’ve got a tad too much exposure in Eastern Europe.
She got caught up in the same group-think as the rest of the financial world.
It’s the extreme gearing that is killing these institutions.
Even a trivial level of defaults becomes brutal if the gearing is great enough.
It in the nature of banking that the players will hide their problems until compulsive events.
A contraction as severe as is now evident must exact a brutal toll on any highly geared institution.
Blert,
That’s bad news about Switzerland. I guess they can always fall back to selling munitions and wrist watches. No doubt there will be a brisk trade for the international arms industry in the very near future.