Showing posts with label soverign debt. Show all posts
Showing posts with label soverign debt. Show all posts

Tuesday, January 1, 2013

Ruminating Thoughts On The Coming Year

The Sun will continue to rise and set. Basically I expect a slightly worse version of this year.

Taxes- Taxes will go up. Part of this will be strait forward rate increases but most of it will be increases in 'fees', eliminations of various loopholes and such. The bottom line is that more money will flow from your pocket to multiple levels of government.

The Economy- I am not sure about our economy. My initial thought is that the lost decade our current jobless, non housing inflation and cheap money fueled recovery will continue. In this regard I expect a bit worse version of 2012. Then again who knows.

The European Sovereign Debt issue could well reemerge. With China's unsustainable growth rates turning to inflation and the economy slowing the US may well be one of the better looking horses in the glue factory this coming year.

I suspect artificial manipulation of gold and silver prices to continue. Silver will probably continue to be a pretty good buy over the coming year. Once our food storage goals are met we will put away some more PM's for sure.

Inflation- Hidden inflation will continue. The current CPI calculation seems manipulated to suit political aims inaccurate on how inflation affects normal folks. Most of this inflation will be covered up by smaller packages, less food by weight and the usual tricks. Expect your income to purchase fewer goods and services than before. 

Gun Control- I think that gun control could go many ways.  Were I forced to take a guess something will probably happen next year. The Dem's will do something, potentially via executive order if needed, to get a symbolic victory. It could be as benign as mandatory reporting of certain behaviors by medical professionals and maybe import limitations on certain guns like Siaga 12 shotguns and AK's or could be worse.

Crime- It ain't gonna get better. The flat lined economy will push some marginal folks towards crime. Also as state and county agencies try to make budgets work they are going to continue or increase prisoner releases. Yes these folks will generally have been arrested for nonviolent offenses but that is just what they were caught for. Plenty of violent criminals are incarcerated for various minor offenses and some of them will inevitably be released.

Down here in the South West I think the Reconquista downward spiral of drug/ cartel violence and unchecked illegal immigration will continue.

I wish that it wasn't my opinion that the partisan nature of politics in the US will get worse. Identity politics and hate mongering to suit various agendas will continue. There is potential for short flashes of localized violence being orchestrated to suit specific purposes. Think twitter flash mobs against political opponents.

Afghanistan- It isn't going to get better. The writing is on the wall that we are leaving. Expect limited conflict to support political goals. Think 'Nam in about 1971.

Wellthose are, for whatever they are worth, my thoughts on what is coming in 2013. Hopefully they give you something to think about. Again in closing I expect it to be a lot like last year but a bit worse.  Good luck,

What are your thoughts on the coming year?

Ryan




Friday, November 4, 2011

Picture of the Day


When the news guys talk about those big numbers it sounds made up to me. Sort of like a kid on the playground yelling "I hate you a gazillion" to another kid. Broken down into numbers that make sense and equate to a family budget it is quite scary.

Tuesday, September 6, 2011

Book Review: Reinventing Collapse: The Soviet Example and American prospects by Dimitry Orlov

This book discusses the Soviet collapse (loosely moving between the end of the USSR and their economic hyperinflationary collapse a few years later, more on this in a bit). It compares and contrasts what could be called the Soviet model with current and possible future events in America. In doing so the book looks at where we may be going. I read it on my kindle but am sure you can get it in a physical format if you so desire. Anyway let us get onto the usual format.

The Good: It was a quick, easy read. The author did a bang up job of speaking on complicated issues in clear language without jargon or scienceinese (the language scientists speak and none of the rest of us understand).  Somebody smart once said that if you can’t explain an idea to an average man on the street then you do not really understand it. By that standard Dimitry Orlov really understands the themes and ideas that make up the subject matter for this book. For a nonfiction book it reads rather casually, part because of the clear simple language used and part because it is interwoven with stories of his experiences and anecdotal tales. In the closing comments he said (more of less) that he tried to keep it light and enjoyable and I would say he did a great job. The information on the Soviet economy and collapse was outstanding. Also the way it was written hit the man on the street angle as well as the bigger picture of what was happening. This balancing act was probably hard and he did a great job of it. I learned a lot about how the Soviet economy worked, failed to work and fell apart in this book.

The Bad: It is abundantly clear to me that the author looks at the Soviet union through some rose colored glasses. I don’t know a ton about the USSR/ Russia’s history but he seemed to have an awful positive memory. Furthermore I found him willing to sweep America with a broadly critical brush that is probably not deserved. The words “if you liked it so much then why didn’t you stay there” came to mind and maybe out of my mouth a few times. If he would have been glowing or rough to both sides it would have made a lot more sense. This almost discredited an otherwise quality book for me.
The author could not seem to make up his mind between talking about the fall of the USSR and the Russian economic collapse a few years later. Of course both events were linked but the way he talked about them flipping back and forth randomly was confusing and in my mind not particularly logical. I’m not sure if he was trying to pad the book a bit, in any case it was distracting.

The Ugly: At points I found the book to be full of contradictions. He can’t seem to decide if there is going to be an economic collapse and hyperinflation or if things are going to go all Mad Max and stick with one idea. Much of his claim rests on peak oil theory which is, while not as discredited as global warming, certainly a subject that could be debated. This goes back to the point before that the events he is claiming will or are happening do not seem to logically lead to the conclusion he goes to. Maybe my reading missed something.
More so than any comparable book (Kustner, FerFAL, etc) I found this to be depressingly low on concrete ideas to prepare for the scenario the author lays out. He mentions how you might want to buy some compact tangibles such as soap and razor blades and that having a home with a bit of land to grow a garden that is paid off is a good idea. Aside from a few vagaries the book is awful long on problem and short on solution.  I’ve been told never to bring somebody a problem without an idea for a solution, apparently Dimitry Orlov hasn’t heard that one.

Now for some discussion in no particular order:
-One compelling and disturbing point was brought up. A significant reason the Russian economic collapse was so calm was that everyone’s residence was owned by the state so nobody got evicted. Sure they shared an apartment with a 12 member 3 generation family but at least they had a roof and walls that was not tied to any need for income. In America pretty much everyone’s residence is tied to a need for continued income, if just to pay the property taxes. That kept their homeless population to a real minimum which contributed a lot to stability. I do not know a lot of people in America who would still be in their home after a year or two if their savings/ investments were wiped away and their job lost. I am not sure what would happen if America had that sort of structurally high unemployment. However if our current situation is any indicator it would favor banksters and large residential property owners (who are typically quite well off) not average down on his luck Joe 6 pack. Massive homelessness would be a huge tragedy for a lot of people and cause significant instability. When people think (maybe accurately) that they have nothing to lose they are very dangerous.
- I think it is not possible to make a lot of comparison’s in an ‘apples to apples’ way because so much was going on in the USSR and Russia during that period. All of the events happening make direct cause and effect impossible in some cases, at least IMO. I would say a lot of the chaos and the rise of a massive criminal underworld was the result of communism or the wild west collapse of communism. Unless there are significant tariff’s, price controls or truly punitive taxes put into place I do not see the kind of massive underworld that appeared in Russia happening. There is no need to buy $25 soap from a sketchy dude in an alley when you can get it from the neighborhood store.  The existence of a relatively free market and its inherent ability to adapt readily negates some points the author made.
- Also for a lot of reasons I do not see the kind of massive corruption that took place in Russia happening, it just is not part of our culture, well except maybe Dem’s in Illinois. I do believe we could fall a rung down the proverbial corruption ladder but not to where Russia was/ is.
-As for the idea of a lot of laws and regulations being almost removed by the default of non enforcement I am not so sure. Unfortunately I think the answer is that laws will stay on the books and either every once in awhile somebody will get hammered for running an unlicensed business, dodging taxes, etc. This is not a huge deal as the odds of it being you are low. Another possibility is that laws will just be enforced selectively based upon various personal and political motives. Given the way the pendulum has swung recently that would be bad for most people who read this blog, especially the ones who are publicly outspoken. That the New Black Panthers can openly and brazenly intimidate white voters with weapons and face no consequences but an active conservative type will get hammered for a parking ticket or the like could be seen as a glimpse into the future.
In closing I do think this book is worth reading even though it does have some rough spots. The info and background on the Russian collapse was very interesting and though provoking. Heck I would go as far as to say it is worth paying retail price for if you can’t borrow a copy.

Sunday, July 17, 2011

4th of July

Well it is the 4th of July. A pretty quiet day here. Obviously we need to maintain security, provide some basic services as well as maintain C2, however on the whole it is as light of a day as possible.No beer or fireworks but there was a pretty good spread of food which I vigerously ate my way through. I've got to hand it to our cooks. They really cook the heck out of what they are given. Having eaten in facilities that are outstanding and others which are horrible I can attest to their knowhow and care of preparation being the difference between something that will (or in extreme cases won't) fill your stomach and fuel you for a few hours and an enjoyable meal that raises your spirits. Those guys work insane hours in probably the least sexy job in the military and deserve more credit than they get. Anyway today leaves me somewhat reflective about a lot of things. I am not going to wax about history or philosophy. Birthday's are a great time for an azmith check. Our country isn't in a substantially different place than a year ago. However we were not in a great place, by any measure, a year ago. The drama in the Eurozone has at a minimum shown a possible direction we could be headed in. We probably have a lot more electronic money floating around than a year ago, but some time back those numbers started sounding like made up ones little kids would use to taunt eachother on the playground so I stopped paying attention. We are getting out of Iraq which is a good thing. I truly hope the best for that nation but the next chapter is going to have to be written by it's own citizens. We are also, at least in theory starting to phase out of Afghanistan. Probably for the best. By this point, a decade into this war, if we have not achieved a desired endstate it is time to take a good hard look at how much more blood and money we are willing to put into meeting our goals. The general concensus is not very much. The hard truth is that the Afghan government is going to have to stand on it's own feet pretty soon. We seem to be involved in Libya and I am not at all sure what to say about that one. Is there a way we can keep a good record of ordinance that is about to go past it's lifespan and just measure that up with a list of countries what have pissed us off? Some logisticial could just allocate the 500 scuds which go bad in a few months toward whomever is currently pissing us off. It would be cheaper than using newer ordinance.

I am concerned about the problems on our border with Mexico. Also the rise of no knock warrants against average people going wrong bothers me a lot. There has got to be some way cops can retain that tool they genuinely need but use enough discretion that normal, fundamentally decent, folks aren't getting killed all the time. If this keeps up a lot of folks may start to reevaluate their stance on cops. Cops might find themselves aweful alone in a big scary world if this keeps up for much longer.

I do not think all is lost. America is a big, strong country with a lot of productive power. Sort of like an exceptionally big/ strong man in a fight, even when we are getting the worst of it a solid punch landed can totally change a fight. A governing body that decided to fuel growth and took some (I'm not talking fixing every entitlement problem over night) reasonable steps to get spending under control could change things in a hurry. That would let us stop borrowing like crazy and be on a more even trading field with China. Businesses having the confidence to spend their on hand cash and people being willing to expand their businesses or start new ventures would radically change the employment situation. These problems could be solidly in our rear view mirror in a few years. I know that outlook is a bit rosy but I want to break us all out of the doom and gloom group think. Anyway I hope you have a good Independence Day

Thursday, February 17, 2011

Entitlements and Gender Roles; Alternate Title How To Upset Every Reader In A Single Post

This morning I was able to watch the news while doing some cardio which is something I enjoy now and then. The topic of entitlements was big this morning on the news. It has become abundantly clear to me that, even in this typically open and rational venue entitlements are a topic on which a rational conversation cannot be had.

We are at or past the point where it is becoming abundantly clear to any rational person that the numbers do not work. Unfortunately we are long past the point where there are easy, gradual and relatively painless options to make them work. The window in which there are viable options with only moderately painful and economically damaging outcomes is probably closing fast. I fear that by the time we are willing to make genuine moves to deal with this problem things will be at the point where there are few, if any (likely just choosing who gets the shortest end) choices left. You would be well advised to think about how this could play out and prepare for what you see coming.

Patrice over at Rural Revolution has been talking about gender roles for awhile. It is my observation that pretty much everyone wants to pick and choose among different traits to get some sort of a hybrid that suits their desires. The normal life part of this is just finding a mate that suits us and figuring out a division of labor that suits both parties. However sometimes the hypocrisy is so problematic or blatant that it is worth talking about. It pretty much goes without saying that feminists think they should be able to do whatever they want but men should act in certain ceremonal ways. For example I would wager a hundred dollars that if I was in a car driving down the highway with four feminists on a cold stormy night and a tire blew out it's this guy that would change it. Furthermore if my feminist buddies and I got to our destination, went to sleep and woke up at 3am to a wierd loud noise in the living room I bet it would be me going to investigate. Now it is time to take a crack at us guys.

Many men want to have our cake and eat it too. We live a lifestyle (wives do of course have a role in this too) that requires most women to work full time outside of the home but still expect them to be homemakers. Somehow they are supposed to keep the house clean and tidy as well as cooking dinner and numerous other tasks. We wonder why the house is a bit messy, dinner is some pre packaged junk and kids are poorly behaved. The answer is that instead of taking care of that stuff, cooking a good meal and raising kids they are at work and kids are in daycare 50 hours a week.

If there is anybody I haven't upset just know your state smells bad and the local sports team is a bunch of whimps.

Have a good day

Wednesday, January 12, 2011

Jim's Quote of the Day

I know some of you, for whatever reason do not read Survivalblog so now and again I try to hilight things from there which pop out at me. Jims Quote of the Day is one of them so read it.

Sunday, December 12, 2010

"There are only two ways to destroy a nation one is with a sword, the second is with Debt."
-John Adams

Saturday, November 13, 2010

America's Debt Crisis

It is nice to start things off with a quote. This one sums the situation up pretty succinctly.

"Right now, it doesn’t look like anybody up there can add, whether they’ve got an R or a D."

-Dave Ramsey

I am seriously concerned about America's debt. There are all kinds of worst case scenarios that are maybe's but THIS IS HAPPENING. I know we are past the point of a painless fix. At some point we will get to a place where there isn't a fix.

You can read a draft of the proposed report here. I appreciate that it is a slide show type presetation versus a dry and wordy mess. It doesn't take too long to look through. There were all kinds of ideas; some of which were pretty blah and others were more interesting. Huffington Post highlighted  some of them.

Roll discretionary spending back to FY2010 levels for FY2012, requires 1% cut in discretionary budget authority every year from FY2013 though 2015;


•Fully offset the cost of the "Doc Fix" by asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth;

•Reduce farm subsidies by3 billion per year by reducing direct payments and other subsidies;

•Achieve 100 billion in Illustrative Defense Cuts;

•Index retirement age for Social security to increases in longevity. "This option is projected to increase the age by one month every two years after it reaches 67 under current law, meaning the normal retirement age would reach 68 in about 2050 and 69 in about 2075." There will be a "hardship exemption" for those unable to work beyond 62;

•Give retirees the choice of collecting half their benefits early and the other half at a later age to minimize impact of actuarial reduction and support phased retirement options;

•Reduce corporate tax rate to 26% and permanently extend the research credit;


•Gradually increase gas tax to fund transportation spending.


There were definitely some good parts to this whole thing. First and probably most significantly we are actually talking about our deficit problem in a broad and public venue. Next I really enjoyed that this effort was at least fairly bipartisan. Both sides of Congress and the parties they represent and really ever national level elected official except Ron Paul is to blame. You could even argue that Ron Paul shares some blame for not doing a good enough job of convincing his co workers to get on board with sound monetary/ economic policies. More significantly the suggestions which stemmed from this Commission seem to me pretty bipartisan. It suggests cuts in just about everything and is sure to have an idea or two which makes just about everybody annoyed.

Americans have a serious issue of wanting services and social type support networks but not wanting to pay for them. We want first class infrastructure and the benefits of a psuedo welfare state but want to pay the taxes of a your on your own Carribean tax haven. Americans as a group need to come to terms with the simple fact that we are going to get the government, services and benefits that we pay for.

The real issue isn't so much coming up with ideas but making those ideas palitable to enough people and actually getting them implimented. Politicians hate the idea of losing the earmarks which let them bring bacon to their home districts and keep the businesses which fund their campaigns happy. Just about every group of citizens has some pet tax credit or another which to them is untouchable such as "earned" income credit, mortgage interest deduction, capital gains, etc.

I am not an economist or an accountant or a financial genius. However like most other people I have had to balance budgets and deal with bills and all that. Like anyone else I have had times when I didn't pay attention or made mistakes and lived beyond my means. I think the first and most significant step is realizing you have a problem, if just a temporary one. Next you look at what kind of income you have coming in. You put your expenses and obligations onto a list in terms of priority. WHAT DO YOU REALLY NEED? A place to live, utilties, fuel and food are quite important. After that you pay whatever bills you have. Additional money can be used to try and pay off debt and have a little bit of fun.

What does this have to do with anything? The same train of thought could be made in terms of our national budget. We need to cut out fancy stuff like foreign aid, farm subsidies and meddling in health care and focus on basic services, reasonable defense and just plain getting our house in order. The situation is that we need to get our own house in order and that might mean we can't do all kinds of things we like doing.


Personally I have some thoughts on how to deal with our debt. In no particular order:
  • It is absolutely imperative that we get entitlements under control. I say again, it is absolutely imperative that we get entitlements under control. While a few hundred million for this project or a billion for a bailout catch headlines but Social Security, Medicare and Medicade are going to bankrupt us. At the same time we need to honor our promise to individuals already recieving these benefits and those who will start to collect them soon. However those under a certain age (somewhere around 52-55) have time to adjust their plans. Then some smart people could sit down with an actuary table and figure out how to fund benefits for those who were close to collecting. We have to bend the bell curve or it is going to destroy us.
  • We need to have a serious discussion about if we can afford to continue our overseas adventures; particularly Iraq and Afghanistan. Without even talking about if these wars are good or meaningful we need to talk about how to pay for them. The idea that we can fight wars and not actually pay for them just doesn't mesh with reality.  Our overseas footprint in general should also be up for serious articulate discussion. Having some strategic bases as well as prepositioned logistics makes sense. I would be willing to would wager that we could dramatically decrease our overseas presence at little or no cost to our real military capabilities.  Europe and Asia can afford to pay for their own defense and if they should choose not to well that might play out badly for them. I am stationed in Germany and I hate to tell you but the Russians aren't storming through the Fulda Gap any time soon. North Korea doesn't have the fuel and rations to invade anybody and why should we care if they invade South Korea anyway?
  • We need to motivate businesses, particularly the kind of manufacturing that provides decent paying jobs in medium to large numbers to stay in or move to America and make things which people want to buy. This will go a long way toward fixing our import/export problem. This whole idea of an information or finance or service economy isn't working well. Of course all those things occur in any economy but we have just got to start making stuff that people in other nations want to buy. At least if we ever want to fix our trade situation.
  • We need to admit that we cannot afford to continue foreign aid on anywhere near the current scale. Buying a few million pounds of rice so hundreds of thousands of people in some crappy African country do not starve to death is to me acceptable and in the big scheme of things isn't a drop in the bucket. However we do not need to be giving money to nations like Russia, India, Egypt and Indonesia. We just can't afford it.
  • Farm subsidies in the USA are just rediculous. If I were in charge I would cancel them all immediately. At a minimum we need to stop paying massive agri businesses a whole bunch of money that was meant for small family farms. Also the idea of paying people essentially not to produce food on a given piece of land is rediculous. I mean heaven forbid we piss off Iowa because they have the first primaries and all but this is just completely and totally stupid.
 Maybe we can fix this and maybe we won't. I sort of suspect we will fix it but it is just a question of how painfull it will be. I would say that my outlook is slightly optomistic but I am of course hedging my bets with precious metals, ammo and assorted other stuff.

Monday, September 20, 2010

Who Would Lose A Trade War?

Chinese think tank warns US it will emerge as loser in trade war. 

I think this quote has some merit "They are utterly wrong," said Gabriel Stein from Lombard Street Research. "The lesson of the 1930s is that surplus countries with structurally weak domestic demand come off worst in a trade war."

China needs to sell the goods it produces lest their production will by necessity shrink rapidly to meet just domestic demand. If they have even a small dip in sales it leads to tons of lost jobs, closed factories and social unrest. While they are diversifying their markets it isn't happening anywhere as fast as they would like. Their free economy (well free except for real big players) and totalitarian state approach works so long as the economy is booming and people are happy with that. Iran has been trying the same thing and when the economy slowed they got problems. 

At the same time right now we are dependent on the Chinese buying debt to pay for this meth binge of debt fueled spending we are on (drunken sailor's is a poor analogy because late in the night or early in the morning they pass out/ fall asleep and it ends, unlike this epic economic fail we are experiencing which is more akin to a meth/ crack head who stays up for days on end).

If we got our spending under control then we could tell China to suck it. That would really be great. However we don't seem to want to live within our means. 

Interesting times for sure. 

 


Saturday, July 31, 2010

The Debt Trap

Some time ago I heard the phrase "debt trap". A nation falls into the debt trap when they get into debt so far that they are borrowing more to service their old debt. Pretty quickly their lenders realize things are getting bad and jack up the interest rates. With the huge amounts of money we are talking about a point or two is a real problem and beyond that. A nation can then choose to deflate their way out (Argentina and Russia), default on the debt (pretty much every country in Africa and Central/ South America at some point or another), go to war (Germany) or do some combination of the three.

I think there is a debt trap of sorts for individuals. This trap is when you have so many payments that it is basically impossible to pay cash for anything. All your income is going to basic life expenses (food, shelter, etc) or to payments. You can't buy a damn toaster without financing it. How does it end? One option is that something happens and the whole apple cart is knocked over. When you have no savings and the whole paycheck has to go to pay for junk you already have it doesn't take much to have a real problem. The good news is that there is another way out. Go to the library and get a copy of Dave Ramsey's book and read it. Check out Suze Orman's stuff also. Make your own decisions about what is important. Get some discipline and come up with a plan that gives your finances some order, cuts expenses drastically and improve your situation.

Don't fall into the debt trap. If you are closer to the debt trap than you care to admit then start improving your situation. If you are in a good place then do not become complacent and continue to improve.

Saturday, July 3, 2010

quote of the day

"It's time for this state and the country to start living within it's means."
-Rick 
I am not going to say which state he is talking about but it applies to pretty much all of them.

Monday, June 14, 2010

Greek Debt Downgraded to Junk

Read about it. I have heard this called the year of sovereign risk. Will next be the year of sovereign default?

Saturday, April 10, 2010

A Late Night Conversation and Random Thoughts Theiron

I couple days ago I ended up pulling an all niter. Had a bunch of work that needed to get done so I was working until about 1 o'clock. I had to wake up at 4 the following morning. Since I would have the opportunity to take a nap the next day I just stayed up. Ended up having an interesting conversation with the night shift folks.

Personally I am not so sure about the security and stability of China. Their ability to keep totalitarian rule going is something I doubt. Buying people off with letting them own property, make money and such works OK as long as the economy is good. However if it gets too good they have problems. Right now their system works to a large part because the rural poor from the inland area are forcibly held in place. Also sooner or later rich people will want the same sort of social and political freedom as they have for the economy.

While there is was some debate on how bad things could get in the US the picture is bleak. At best I see a rather painful decade coming up. When people eventually get back to work and businesses grow and borrow and invest we are going to see inflation. I just can't see a way that when the massive amount of new money gets moving through the economy it will not decrease the value of currency. It might be catastrophic hyperinflation which could lead to war or a full on default. It could just be late 70's to early 80's style high inflation and interest rates. One fellow saw the Fed getting shut down and replaced with a true government currency. Avoiding adjustable rate interest debt like the plague and generally being financially fit is good advice. If you can afford it putting a few spare bucks into silver and gold isn't a bad idea either.

We were generally not enthusiastic or optimistic about this new health care bill. That it started by being billed as stopping big, evil insurance companies from hurting people and ended with people being forced to buy health insurance from big, evil insurance companies is sad, ironic and not at all surprising. Personally I think we the people are getting taken for a ride but soon enough government may well stick it to insurance companies. In general our government likes to start a program (special education is a great example) and then gradually remove funding but still under threat of something bad, force the program to continue.

There was significant concern voiced by one fellow that since the government is now in the health care business they can and probably will stick their nose further into people lives. Even aside from trying to centrally manage (or at least shot call) 1/6th of our economy it is a great excuse to get all up into peoples business. Think of it like the Commerce Clause but for personal behavior.  Since you doing X might arguably cost the government money via health care it is now taxed/ restricted/ banned could become a common summary of upcoming legislation and decree's.

In some ways the recent problems with the Euro were surprising to us. Then again if you really stop and think they shouldn't be. First of all the relatively recent times where the Euro has pwned the dollar have not been about the Euro's getting stronger but about the dollar getting weaker. Secondly lets look at Europe. In general northern Europe and particularly Germany have solid economies though now and then their socialist programs (they are expensive) cause issues. Southern Europe is a big financial mess. They have relatively similar socialist programs as the rest of Europe but without the economies to support them if things go less than perfectly. Europe is an expensive place to do business and especially the kind of business that employs lots of people. Those whose industry can be anywhere often avoid Europe's high wages and crazy powerful unions. The last couple years chaos has hurt them albeit slower and to a smaller degree than the US but I am not convinced these issues haven't been building for awhile.

There was some talk of the world reserve currency shifting away from the dollar. Personally I think that baring a complete economic melt down of the US, that is unlikely. I think this because there isn't any better option. The Euro certainly isn't as solid as it seemed not too long ago and in terms of managing it the Europeans have too hard of a time getting anything agreed on. I don't think anyone is stupid enough to go with the Chinese Yuan because of a lack of long term history and well, China is not the kind of government one would want to trust with something that big. The Japanese Yen is all over the place and their whole weird pseudo fascist system plus people still vividly remember their Lost Decade. The Pound Sterling is probably in some ways worse off than the Dollar. Russia is a totally unstable Gangsterocracy and heavily dependent on energy prices staying high. That whole "basket" idea seems unreliable and outright nutty. I have a hard time seeing enough nations being willing to buy into it. Then again it is so nutty and prone to manipulation that governments might love it. I see the dollar staying as the world reserve currency for the foreseeable future, if just because better options are not currently available.

 Also, at least for relatively short periods of time coffee helps you stay awake.

Lastly I have been enjoying The Drudge Report as of late. If I have just a 15 minute coffee break to get the news a glance there and one at the BBC News front page gets me up to date.

Since it is late I am going to bed now.

Thursday, March 25, 2010

Only as Strong as the Weakest Links

Portugals debt rating is downgraded to AA. The Euro is going down in value. Today it was at a 10 month low. Some sort of a vague potential last resort bail out for Greece is in the works. All of their cost cutting measures are not really equaling out the current higher costs of the borrowing necessary to feed their economy. Very interesting times.

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