Saturday, 13 December 2008

It's all a con ...

It's not a credit crunch, it's just rent-seeking:

The credit crunch is not nearly as severe as the U.S. authorities appear to believe and public data actually suggest world credit markets are functioning remarkably well, a report released on Thursday says.

As a result, governments are pumping masses of public money into the economy across the world because of the difficulties of a few big, vocal banks and industries such as car manufacturing, which would be in difficulty anyway, according to the report published by Celent, a financial services consultancy.

"It's just stabbing in the dark with trillions of dollars," Octavio Marenzi, report author and head of Celent, told Reuters in a telephone interview where he questioned the depth of the analysis that preceded numerous fiscal stimulus packages.

The report, much of which is based on U.S. Federal Reserve data, challenges a long list of assumptions one by one, arguing that there is indeed a financial crisis but that, on aggregate, the problems of a few are by no means those of the many when it comes to obtaining credit.

"It is startling that many of (Federal Reserve) Chairman (Ben) Bernanke and (Treasury) Secretary (Henry) Paulson's remarks are not supported or are flatly contradicted by the data provided by the very organizations they lead," said the report.

Perhaps the U.S. central bank and treasury department, and authorities in other countries by extension, know something they are not telling anyone and which is far more worrying than the public data shows, the report says.

Or, more plausibly, they were generalizing erroneously from the bad experience of a limited number of big banks and companies that are in any case in difficulty.

"I don't think they're fabricating stuff but what I think they are doing is taking the situation of a handful of institutions and generalizing that to the market as a whole, incorrectly," said Marenzi.

The picture appeared to be broadly similar in much of Europe and Japan, said the report, based on publicly available data on trends in bank lending to industry, households and among banks themselves in the so-called interbank markets.

So, really, what's going on here is that a couple of well-publicised business failures due to bad practices have not been allowed to be punished by the market and now governments are making it worse by actively throwing tax money around at anyone who asks.

And still the socialists claim that this was a market failure?

Stop the planet, I need to get off.


Mitch said...

Perhaps the politicians needed a "war" of some sort to make us all look the other way.
I always assume that they lie all the time then go looking for what they really want to do it serves me well.

Jack Maturin said...

The real problem is not the tax money they're throwing at this (though that is bad enough), but the money off the printing press that they're throwing at it. They have confused pieces of paper with real investment savings of hard physical wealth (factory made consumer products, commodities, and agricultural goods).

This is the Zimbabwe solution, and this is why the Dollar is going to zero value, probably dragging its most related currency, the Pound, along with it. (In fact, we may go first because the Pound is not the 'world reserve' currency.)

When the world wakes up and realises that the US and the UK cannot pay their debts in real hard concrete goods but can only pay them with paper (or its electronic equivalent), then both are going to go to less than 10% of their current values against real commodities, and gold is going to be over $5,000 possibly even $10,000 Dollars an ounce.

I think the Pound will be similarly shredded, because we do nothing in this country except borrow, print, and spend, plus make the odd kit car in small five-man factories. China makes virtually everything we consume in terms of goods, and we have virtually nothing in the way of a commodities or agricultural base, with what farmers we have left producing over-priced food and only supported in this by massive injections of EU welfare cheques.

Once the tax base has gone and the EU subsidies are paid to them in hyperinflating Greek Euros, the farmers will fold too, leaving us with no factories, no commodities, no agriculture, 20 million people "working" for the government (i.e. producing nothing and consuming everything) and a mountain of debt owed to China, Japan, and Saudi Arabia.

We, basically, to use the language of this web site, are quite royally fucked.

The best thing anybody in the UK can do is get all of their savings into gold, silver, gold mining stocks, high dividend bearing stocks in stable commodities-rich or heavy-agriculture countries (Australia, Canada, New Zealand et al) and relatively strong currencies such as the Swiss Franc, to retain enough liquidity to buy up even more of these high-dividend bearing commodity-related stock, when the rest of the world bails out in order to eat.

Gordon Brown is directly following the lessons of Robert Mugabe. The two men are virtually interchangeable, except Brown doesn't wear glasses yet. Both are arrogant stupid socialists who are wrecking their countries with government regulation, industrial and agricultural destruction, government borrowing, government spending, and government inflation.

Get out of the Pound and the Dollar while you still can. Both currencies are dead men walking.

The Euro is not so bad because at least Germany still has lots of factories and Poland produces lots of cheap agricultural goods, but as we can see with Greece and Spain, the Eurozone is not that clever, either.

No doubt Brown will try to bounce us into the Euro soon, thereby acknowledging that he has destroyed the Pound. The irony may be that the EU Zone doesn't take us.

What a banana. And all of it directly attributable to incompetent and stupid government. Particularly, Gordon Brown and all those fools who vote for him on the basis of his 'economic competence'.

We will find out soon enough, just what a joke this has been.

Matthew said...

Presumably the economic data is being 'manipulated' to make things seem worse than they are. Buy tinfoil!

Mark Wadsworth said...

Exactly, I thought everybody knew this.

Corporatism at its worst.

Jack M above seems to be hamming it up a tad, I present the contrarian view here.

JPT said...

So governments are throwing tax payers money at bad businesses run by bad businessmen who have lost all of their own money and now will presumably lose all of ours too?
Leave the bad businesses fail and we'll be okay but the bad businesses obviously won't be - or lose all our money failing to prop up the bad businesses and the bad businesses fail as do the finances of all the western governments?

No prizes for guessing which option our numpty leaders are taking!

Anonymous said...

Jack Maturin Thank you for the most concise and succinct analysis of the Gordon problem that I have yet read.
A bit more about America chucking money at its wankey old auto industry would be appreciated. It's like some old lush, squalidly drunk in his local, being given extra tick on his tab for yet more whisky.

Anonymous said...

There seems to be a trend happening where the fiinancial crisis is being questioned as in its existance!

I really do think that things are much worse than we think - We had a chance to knock this daftness on its head in 2003, and didn't.

The bust has to happen, and the longer it is held off with funny money, the higher we have to climb out of the pit we create.

I do however think that the answer might well be to let it all go mad - enter hyperinflation, wait until its at a level where all our personal debts have been wiped out, and then introduce a new currency.

Its not a good result for savers and those with money, but if you have money, you should be doing something useful with it, like buying gold, or Euros!