Friday, June 26, 2015
The world is falling apart. The slow moving train wreck continues. Seems each day another car slips the tracks careening down the ravine to its' destruction. In just over a week 700 die from heat in Pakistan. People shot and killed in Ukraine. ISIS bulls its' way back into Kobane (no report on casualties) and not a peep out of what's happening in Fukushima, Japan or Afghanistan. If you aren't being dried up like a raisin in the West or succumb to heat stroke in the desert of the Middle East., then it's flood waters to be dealt with in Texas or China or Russia.
Should we be surprised though? With the devolution of education (bet your resident spawn couldn't name the capitol of Turkey but they'd be embarrassed if the didn't know the runner up on American Idol. And no the answer isn't Istanbul it's Ankara.) what are we preparing the next generation for one might ask? No more steel mills or at least not many left and forget appliance manufacturers or clothing, they left a decade ago. What's left? Much of our "high tech" has been outsourced as well. Greeter at Walmart is not what you'd call a career ambition and if I'm not mistaken they eliminated that position anyway. Must face the facts that we've become too efficient for our own good.
Less is more until it no longer has the strength to hold up the bridge or building. And who forgot to read the architectural drawings along with the specs? Oh right, they used those cheap Chinese bolts cause they got such a deal. And the night shift forgot to tell the day shift to finish tightening the bolts. Too tired must have slipped their mind. At some point in the not too distant future we'll have robots doing all the work and only need one robot master to keep watch. Look no farther than military use of drones soon to be unmanned. And you thought "the terminator" was just a fantasy.
The Greek tragedy continues. Sure I'll give you a loan (debt) to pay off your loan (debt) and you'll be that much deeper in the hole. But they aren't the only ones facing the loan sharks. Portugal may be next up followed by Spain and Italy. Let us not forget Belgium in this mix. Will the dominoes fall? We'll have to wait and see. Time is running out lest they kick the can once more. So as you can see we're all in the same leaky boat. Oops wrong analogy, we're in one of the train cars waiting for our turn to careen off the cliff.
Side note: Our local regional experts on beavers http://www.martinezbeavers.org/wordpress/ informs me that many of the beaver photos I've posted are not in fact beavers but other members of the rodent family i.e. woodchucks, nutria, etc. We duly apologize for being misinformed.
No banks fails here this week but keep an eye on Greek banks. What will they do when there's nobody left to screw?
Friday, June 19, 2015
Beavers don't need home loans and you may not like the second act Mrs Lincoln.
Greece that ancient bastion of democracy is slowly crumbling along with the rest of the world. Question remains will it take everybody else down in the process? Democracy a system of government whereby the majority of people rule either directly or by representation. Demos = people Kratos = power or rule. And it's the only reason Greece has the government it does because neither the banks nor the corporations could buy off the government there.
What does it all mean one might ask? Banks are trying their best to steal, yes steal the wealth of the people. And prior governments had a hand in it by borrowing money then lowering taxes and letting the very rich hide their money off shore. Hum sound familiar? And now the bill comes due but there's no money left to pay it. It sits quietly in the Caymans collecting interest untouched and untaxed.
And what a Ponzi scheme we've created for ourselves. You take out a loan with interest which is created from money that never existed. Your friendly banker takes that loan and sells shares (leverages it) at around nine times its' value. The system works well until either somebody can't pay or too many want to cash in their shares. Then the system collapses. With a home loan the borrower loses his house and still must pay back any difference if the home value is less than the loan (known as due on default). The share holders lose by getting pennies on the dollar if that. The bank wins all around. It has possession of the home, the difference on the loan balance and can tell the shareholders to bugger off also charging them a fee to try and sell their shares. And let's not forget the fees which in some cases can amount to one third to one half the loan balance.
So getting back to Greece it's a safe bet whatever happens they're screwed. If they were to take the Euro deal their pensioners and public workers might as well take a poison pill. If they don't take the deal and have to go back to the Drachma then it would become basically worthless paper. After all who'd want to hold currency in a bankrupt country or buy a bond from it? And from the latest reports people aren't waiting around to see which way this is going. Money is flooding out of banks in millions of euros. Come and get it before it's gone.
All of this could have been avoided if all parties had looked at past history. You can't expect anyone in a tough financial situation to cough up more than they have. Germany for one seems to forget that they had much of their debt after WWII forgiven and the rest was financed over a 55 year period. They just finished paying their war debt in 2005 believe it or not.
And what banks failed this week? That's right they never really fail they just change their name and keep stealing. We'll look later...
Friday, June 12, 2015
Neither a borrower or a lender be.
Wise advice and older than dirt if you look at the world situation. China's economy is slowing, has been for some time now. After the housing bust there (remember there's entire cities that sit empty there) investors moved to stocks. One can only assume their markets are as inflated as the tulip fiasco a century plus back. There is the Greek tragedy playing out. We should know by months' end whether it will be default or the can gets kicked farther down the road, but you can only kick the can for so long. Eventually somebody wants paid but nobody wants to face up to the facts. Greece is broke and sucking more money from pensioners isn't going to help the GDP.
There's the Ukraine needing around $15 billion to stay afloat. So which loan shark will it be the east or the west? Putin would love nothing better than to take them under his wing just don't have any unkind words for him should you take the deal. Guess bribery and extortion were much easier in the old Soviet days.
Want to be a "bajillionare"? Then head to Zimbabwe. A dollar U.S. will get you $35 trillion Zimbabwean dollars. And we wonder why there's unrest in that part of the world.
Nigeria - A wonderful place with educated people and no opportunities unless of course you've invented something more creative than the dead prince scam. Bet there's 419 ways to say no to that. We're hearing the latest profession involves taking bribes from drug smugglers from South America so their cargo gets to Europe.
Somehow though in the grand scheme of things it all boils down to perceptions. What is the true value of an item? Take housing for example. Did you know that there are still 4 million people in the U.S. who are underwater with their mortgages. Their homes are worth less than what they owe. This to the tune of $579 billion according to Zillow. But the truth there is that people borrowed when the market was artificially high. A two bedroom condo in the suburbs is not worth a quarter of a million dollars. But if you believe that I just might be able to dig up some tulip bulbs for you. Just have your certified checks ready.
Bank fails later...
Saturday, June 6, 2015
We're getting to the point of diminishing returns. In all aspects of society. What do I mean by that you might ask? In so many things we've become too efficient for our own good. What used to take dozens of workers now takes two or three and many jobs have been replaced by one machine or robot automatically cranking out products like never before. All well and good for the bottom line and prices for some items have never been cheaper. I said some. A color TV used to cost several months' salary now can be had with just a few days' labor. And what was once hand made in a factory by dozens of workers can be done mostly without human hands touching the product. Such was the case with almonds. What once took an army of pickers days of work can now be done with a shaking machine that removes the nuts and captures them at the base of the tree. No need to hire Jose and the boys for that back breaking work.
Same thing with education, but in this case rather than resort to new methods to tackle an ever increasing work load it was easier just to eliminate entire subjects. Of course the American system never was quite up to wold standards, but it's gotten progressively worse. We now have high school graduates who can read at better than a third grade level if at all. Once we trained young people to work in a factory or go on to college, but the factories are gone and there only so many jobs left that require college. What's left are service jobs that require little education and don't pay very well so where's the incentive to do well in school? And who wants to be saddled with a massive student loan when there no guarantee you'll be able to pay it back. Imagine if you will if you had some thing akin to a mortgage after graduation and all the jobs pay minimum wage or a bit higher.
How did we get here? Base wages never kept pace with inflation. They haven't doubled in 35 years here while at the same time costs have nearly tripled and in some cases quadrupled. How did that happen? What used to be subsidized like colleges are no longer. Taxes on the wealthy used to pay for 2/3s of the costs for college. Taxes also built our roads and much of our infrastructure. Taxes at one time were 90% of everything over $100,000. The wealthy were still wealthy back then and didn't seem to complain.
Lastly there's the push for efficiency and savings. The lay off two workers and give that to one worker with a new job title but with little or no increase in pay. Cut that can of beans down to less than a pound and you increase the bottom line by millions. Airlines squeeze in another row of seats. And forget the free lunch or dinner. And don't get me started on the worthless paper that's being sold all over the world. Simply put they're just bets on debt. Speaking of which...
No Bank fails this week but keep an eye on Greece at the end of the month, it could get interesting.