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Top 10 at 10: Zombie bank regrets; Crypto money printing; Dilberts
November 2nd, 2009Here are my Top 10 links from around the Internet at 10 am. I welcome your additions and comments below or please email suggestions for Tuesday’s Top 10 at 10 to bernard.hickey@interest.co.nz We have experience and hope in abundance at interest.co.nz
1. ‘I told you so’ – Nobel prize winner Joseph Stiglitz has emerged to say the US economy is suffering now because it failed to nationalise the biggest banks, Bloomberg reports. These zombies are failing to lend, he points out. It turns out Obama and Geithner are also now whingeing about the banks not lending. The fundamental problem is that the US economy has to deleverage. The collective decision to allow the zombies to live on last year means America now faces a Japanese-style lost decade (s). HT Alex
“If we had done the right thing, we would be able to have more influence over the banks,” Stiglitz told reporters at an economic conference in Shanghai Oct 31. “They would be lending and the economy would be stronger.”
U.S. Treasury Secretary Timothy Geithner, appearing yesterday on NBC’s “Meet the Press” program, said the country’s economic recovery hinges in part on banks taking more risk and restoring the flow of credit to businesses.
“The big risk we face now is that banks are going to overcorrect and not take enough risk,” Geithner said. “We need them to take a chance again on the American economy. That’s going to be important to recovery.”
President Barack Obama said on Oct. 24 that the nation’s lenders, supported by taxpayers in the crisis, need to “fulfill their responsibility” by lending to small businesses still struggling to get credit.
2. Failure Friday – US regulators closed 9 more banks over the weekend, taking the total closed since the financial crisis to 115, AP reported. This was the most closed in any one weekend since the crisis started. HT Gertraud via email.
Failures have been especially concentrated in California, Georgia and Illinois. While the pounding from losses on home mortgages may be nearing an end, delinquencies on commercial real estate loans remain a hot spot of potential trouble, regulators say. If the recession deepens, defaults on the high-risk loans could spike. Many regional banks, especially, hold large concentrations of these loans.
Also on Friday, agencies including the FDIC, the Federal Reserve and the Office of Thrift Supervision issued guidelines for banks modifying troubled commercial real estate loans. They emphasize the principle that modifying loans in a prudent manner is often in the best interest of both the bank and the creditworthy commercial borrower.
The 115 failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the federal deposit insurance fund more than $25 billion so far this year, and hundreds more bank failures are expected to raise the cost to around $100 billion through 2013.
To replenish the fund, the FDIC wants the roughly 8,100 insured banks and savings institutions to pay in advance about $45 billion in premiums that would have been due over the next three years.
3. ‘Seriously delinquent – Just in case anyone was wondering how much trouble the US economy and its financial system is still in, check out the ’seriously delinquent’ rate at Fannie Mae, the biggest home lender. Zerohedge has the story and the chart. HT Gertraud via email.
The FNM “seriously delinquent” rate has gone parabolic, increasing by roughly 5% sequentially and just under 300% YoY. As mere text will simply not do this metric justice, please enjoy this chart of the dataset from Blytic. It tells you all you need to know about the Fed’s containment of the housing problem.
4. New thought – George Soros is spending US$50 million to create a new Institute for Economic Thought, reports Anatole Kaletsky in the Times. HT Ross Palmer via email.
INET, funded with an initial commitment of $50 million from George Soros and backed by a phalanx of distinguished academic economists, could lead to a flowering of original thinking in a profession whose creativity has been stifled by the intellectual monopoly of orthodox academic funding bodies. It could promote a much more serious debate about what governments can and cannot do to regulate the market. Eventually it could re-create an academic discipline capable of explaining reality and offering useful advice to policymakers facing unexpected events.
The dirty little secret of modern economics is that the models created by central banks and governments to manage the economy say almost nothing about finance. Policymakers who turned to academic economists for guidance in last year’s crisis were told in effect: “The situation you are dealing with is impossible: our theories prove that it simply cannot exist.”
5. Profit share – Bank executive pay and bonuses are so crazily high because bank profits are a much bigger share of the US economy than before, Floyd Norris from the NYtimes writes.
Why were those profits so high? And did society get its money’s worth out of them? If those surging profits reflected the financial industry’s success in helping the real economy, we might be jealous but not contemptuous. You don’t hear a lot of carping about how Bill Gates and Steve Jobs became so wealthy.
There is no doubt that the allocation of credit — a primary function of the financial industry — is a crucial function, particularly in an economy undergoing change. If the finance business has done a great job of that, of directing money to where the new opportunities are, then there is no reason to begrudge them their wealth.
Unfortunately, there is little evidence that the financial industry’s success has done much for the rest of us. Capital was not well allocated during the recent bubbles, to say the least. The fact we had bubbles testifies to that.
Moreover, Robert Barbera, the chief economist of ITG, points out that in the middle of this decade there was a surge in borrowing by the rest of us — households and nonfinancial businesses — that was much larger than the simultaneous growth in the economy.
Norris says the best way to fix this is more competition and more capital.
Rather than have a pay czar try to determine fair compensation for bailed-out banks while others can do as they please, Congress could look at changing the environment that produced this mess. One way to do that is to encourage more competition. The impulse last year to have bigger banks take over failing big banks now looks exactly wrong, even before remembering that the regulators thought Citigroup and Bank of America were good acquirers with solid balance sheets.
The new regulatory system also needs to force banks to hold a lot more capital, and it needs to keep them from using tricks to take the same risks while appearing to need less capital. If the regulators can do that, it would reduce bank profits by tying up capital. One Wall Street executive I know suggests that would, in turn, bring down compensation by stimulating shareholders to demand more of the profits for themselves.
6. Watch Eastern Europe – Mish at Global Economic Analysis reckons Eastern Europe should be watched closely for the next big bang in the global economic crisis, citing Professor Mark Bloudek.
The Eastern European currencies (Ex. Hungarian Forint, Czech Krona, and Polish Zloty) remind me of the subprime loans of 2006. A crisis here likely will start a flu that will spread ultimately to the major countries. Why do I draw the analogy between Eastern Europe and subprime loans? Because subprime borrowers were the weakest type of borrowers and the least able to deal with adverse consequences (They defaulted first as a result).
This is similar to the Eastern European countries who are the most fragile countries in terms of staying power on the fiscal front right now (Witness the massive budget deficits in those countries).
7. The next big crash – Renowned (and aged) investors Wilbur Ross and Carl Icahn believe the next big crash will be in US commercial property, FTAlphaville points out.
“All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. “Occupancy rates are going down. Rent rates are going down and the capitalization rate — the return that investors are demanding to buy a property — are going up.”
8. ‘Crypto QE’ – Rolfe Winkler at Reuters points to something called ‘crypto QE’, which is where central banks force other banks to buy government bonds as part of capital adequacy or liquidity reforms. This essentially means banks are forced to pay high prices/lower yields than would otherwise be the case.
Some reform plans for the banking sector (so-called “narrow banking” being the most extreme) would have banks invest more deposits in government paper in order to keep them safe. To the degree such plans get traction, that could keep a lid on yields despite rising government spending.
Winkler points to some research at ‘Variant Perception’ which shows how disconnected 10 year government bond yields and commodity prices have become. Essentially, US government bond yields are not a true reflection of inflation expectations because banks are buying the bonds willy nilly.
Mandated purchases of government bonds by banks and other financial institutions – crypto-quantitative easing – could persist long after official QE comes to an end, keeping bond markets supported for longer than many think.
9. Happy Anniversary? – Steve Keen at Debtwatch points to eerily familar news reports coming out of the United States at about this time of the year in 1930, which suggested people thought the worst was over and the outlook was good…sound familar.
It seems that only in retrospect was it realised that 1929 was a watershed in world history: few living at the time actually understood that—and none of them had their prognostications published by the Wall Street Journal.
One year later, though the far-fetched had become somewhat harder to dismiss, the general tenor of economic and business commentary was that the worst of the crisis was over, and that 1931 would be a bumper year for the market and the wider economy.
Keen points out that, contrary to urban myth now, Hoover and the US Federal Reserve actually did a lot to boost the US economy in 1929 and 1930.
Yet the view that dominates conventional economic thinking today is that the Depression was caused by a disengaged government and bad monetary policy—if only the Fed hadn’t tightened in 1930, everything would have been fine. In fact, if the Fed did tighten—and the evidence on that is mixed—it was because they, like today’s Fed, believed they had already done enough to avert catastrophe.
Bollocks to that: the problem in 1930 wasn’t the tightening of fiat money, but the preceding failure to constrain the private debt bubble that financed Wall Street’s speculative excess of the 1920s. Yet armed with the misguided belief that there wouldn’t have been a Great Depression had the Fed not tightened in 1930, the Fed of the 1980s-2007 ignored an even bigger bubble in private debt than its predecessor ignored in the 1920s.
10. Bank run – These are two words financial journalists dread. Should you report them? Is it the chicken or the egg? It turns out there were big bank runs on some of the US banks that later collapsed. The Puget Sound Business Journal reported that Washington Mutual had a run in July 2008 it barely survived. Another one a few months later pushed it over the edge. HT Rolfe Winkler. The truth on what happened in September and October in New Zealand has also yet to be written. I personally believe we were not that far off some similar catastrophe and were only saved by Kevin Rudd’s intervention in mid October.
These interviews show that WaMu suffered through not one but two bank runs in its final months. The first run was many times larger than the run that felled California lender IndyMac in July 2008, though neither shareholders nor the public knew about it. WaMu survived that run, and the second run was tapering off when regulators moved in and shut the bank, citing the run as the reason.
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November 2nd, 2009 at 11:17 am
@1. I don’t think either of them are correct….the problem is not just “banks not lending” but also “customers not borrowing”. Japan’s past 15 years experience shows conclusively that when the economy is in a develeraging mood, no amount of cheap credit will temp borrowers to borrow….I believe the defaltion scenerio is well and truly entrenched in the US and also in most part of the western world…even Europe shows negative credit growth the last Q. Asian credit is only positive because of goverment mandate(which they will regret in due course). This shows simply that ” you cannot solve a problem of over indebtedness by forcing more debt on the debtor”.
@8. Crypto QE et al….Could it very possibiy be that banks are now leveraging into the commodity/equity market (causing it to rise excessively) as a way to compensate for their reduced profitiablity from enforced QE assistance? Don’t forget more than 60% of all banks profit the last quarter comes from “investment” ie trading activities ??
There is not going to be a good ending of this story…….
November 2nd, 2009 at 11:28 am
The history of the USA economy is littered with financial crisis . Bank failures are commonplace . Hardly a decade goes by without a bubble of some description ripping through the economy , and scaring the beegeezus out of the populance . The current turmoil is a doozy , but not without precedent .
November 2nd, 2009 at 11:32 am
@8 Isn’t forcing nationalisation of savings (which is what forcing banks to buy govt bonds really is) what South American govts get up to before their economies and currencies implode?
November 2nd, 2009 at 11:37 am
#10 Bernard, please expand on your comment re NZ banks.
November 2nd, 2009 at 11:40 am
‘US Dollar collapse’?? Not this week; it looks more likely to be an ‘every other dollar collapse’!!!!
We might just have another ‘financial crisis’ on out hands. (But I’ve been wrong before, of course.)
November 2nd, 2009 at 12:14 pm
Ruru
I’d love to, but don’t have enough detail to be specific. Senior bank execs have told me New Zealand was close to a run on a bank in early October. Won’t say which bank. There were heavy withdrawals of cash from ATMs. The RBNZ have already confirmed that. That’s as much as I can say with certainty.
cheers
Bernard
November 2nd, 2009 at 12:17 pm
@TumTeTum I find it “amusing” that when things look a bit wonky ppl run back to the USD as a “safe” currency…to me that’s like jumping back on the Titanic and paying upfront for a deckchair…like why?
@ruru: ANZ maybe….there were a few rumours around at the time….maybe there was more truth than a mere rumour.
@NevilleWC: not just SA countries….just about any that are due to or have, then the Govn Takes your $…its a last ditch before default….which I suspect we will see around us if not us in the coming decade or two as the price of oil causes implosions left right and centre.
regards
November 2nd, 2009 at 12:19 pm
“It’s patently clear Kiwi inventors are falling behind”
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10606482
It’s important for NZ to understand we are deluding ourselves to continue thinking we are so, so ‘innovative’ – on a systemic basis we are NOT. Sure it’d be good to remove bias toward property in our tax system – see Bernard’s Herald article, link below – however given where we are, don’t we also need to re-bias toward R&D and ‘winning behavours’ if we are to reverse this problem? That is, improve productivity.
Take into account the real likelihood of removing the property bias, (yeah right!) then doesn’t counter-balancing with incentives for ‘winning behaviours’ become more, not less important?
http://blogs.nzherald.co.nz/blog/show-me-money/2009/11/1/steps-ease-squeeze/?c_id=1502812&objectid=10606516
November 2nd, 2009 at 12:19 pm
I wonder how much the job unemplyment rate will drop here by 2011. Based on P Krugman’s comments then we need several years at 2.5% OCR and 3.5% GDP growth to see <5% unemployment again. Despite what ppl have said it would seem that spending money early to keep ppl in jobs might be more effective thn trying to spend later, better bang for the buck.
http://krugman.blogs.nytimes.com/2009/11/01/growth-and-jobs-the-lesson-of-the-clinton-years/
I still dont see why we should be optimistic….true optimism is based on something substantial….for me there is still a substantial risk of a double dip.
regards
November 2nd, 2009 at 12:55 pm
@Bernard: Bloody hell! What would happen if, hypothetically a big bank in NZ had a run on it? I mean, an awful lot of people have their wages put into a bank that holds their mortgage and also holds all their savings….doesn’t bear thinking about really.
November 2nd, 2009 at 12:56 pm
@Bernard – Are you referring to Oct 2008 or Oct 2009??
Also, as a general point, it would be good to reference all dates explicitly as a site policy (you can’t easily regulate comments I realise) since you get linked to a lot, and that kind of thing is simple to implement and quite valuable in the long run.
That includes avoiding seasonal references that are ambiguous (it is spring in NZ in Nov 2009, but it is autumn in London at the same time, so avoid ‘Spring 2009′ for example). I don’t recall you doing that, but I am just mentioning in case.
Alan.
November 2nd, 2009 at 12:59 pm
My money’s on betting against the “crypto QE” going on. Keep your eyes on that commodities index and plug your ears to the spin. Inflation is on the cards and those fixed rates are set to jump as more of us shift our loot offshore. To keep it here is to prop up the property bubble and we know where that’s heading. Meanwhile I wonder how many Kiwi are now trapped in a hole with decades of feeding a bank ahead of them.
November 2nd, 2009 at 1:02 pm
@ruru – Shhhhhhhh, don’t talk about bank runs in NZ!! LOL
Although, if my bank went under, I wouldn’t have to pay back my mortgage right???
Is that correct Bernard?
November 2nd, 2009 at 1:02 pm
Bernard – re bank failures at the weekend – you missed by far the biggest (though it was predicted). CIT went into bankcruptcy protection and its noteworthy that $2.3 BILLION of US tax payers money is now deemed to have gone with it:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3.t_GrxbL2U&pos=1
I guess in the greater scheme of things $2.3B is a mere bagatelle
November 2nd, 2009 at 1:05 pm
A new ailment…bank runs….should teach the pollies to wash their snouts after leaving the trough.
November 2nd, 2009 at 1:09 pm
If your Bank went under, Osty, the remnants would be sold to someone else, or there would be a forced marriage ; your mortgage responsibilites would transfer to another party.
November 2nd, 2009 at 1:43 pm
@TumTeTum & Steven
I find the run towards the USD when things look worse strange as well.
I think it is artifact of a historical mind set.
Just as NZers believe you never lose money in property, there is world view the USD is safer than your own currency or that ‘johnny-come-lately EUR.
You can see it on this site when people refer to the NZD strengthing against the USD, even when all currencies are moving up against the USD.
There are also the comments that a rising NZD, lowers the returns on our commodity exports that are priced in USD. I the past that was true but what we are starting to see is when the USD goes down, the commodity prices (in USD) go up.
This, I believe, is the begining of the breaking down of the reserve currency mindset.
November 2nd, 2009 at 1:49 pm
Item 10 – agree Bernard, but it will not be the banks first, we will see some big company failures first, as their finance companies fail spectacularly. Think 2008/09 was bad for finance companies but moratoriums are not as bad as total failure. And companies with finance companies will be the biggest failures. And I cannot see enough white knights out there to bail them out, and the Aussie banks will be running a mile away from the next mess.
Sorry but the late frost on Friday night has just burnt of the early green shoots….thats what often happens to early crops, but we are not out of this global mess yet.
On the bright side the snapper fishing is really great.
November 2nd, 2009 at 1:54 pm
If one has tragic debt, and still equity in a house, ultimately the house will be sold and the debt reduced/discharged.
Likewise, as USA debt spirals, foreign assets will be sold on a personal, coprporate and soverign basis, and the proceeds repatriated to address the mounting debt. Hence a short term rise in the US$. It’s after that repatriation time that the the real worry for the currency starts.
November 2nd, 2009 at 2:04 pm
Harriet : You have nailed exactly our situation in NZ since the mid – 1980’s ! Lack of home savings . Monster debts . Sell the silverware to foreigners . Time for the USA to secede power and assets to the Asian tigers ……….Ha Ha ! ( But the $US may have been over-sold , at this juncture . A partial bounce-back seems reasonable )
November 2nd, 2009 at 2:11 pm
@Harriet – So your funds in the bank would also be transferred and so you do not lose any “wealth” right? Say for example you had a $200k mortgage and $5k in the bank? If so, the only risk to a customer if the bank went under is the short term unavailability of the funds during the restructure/transfer right?
November 2nd, 2009 at 2:13 pm
It’s a head fake. Engineered by the FED. Who is buying the Dollar? Not I. These burps will be caused every time the FED smells a run on the Dollar. Controlled decline! Forget the US$, it’s toast. The smart money is heading into commodities, not gold so much but stuff that has a real use in the growth economies. Look to what Beijing is buying into and there is where you should go. Rare earths. Uranium. Iron ore. Copper. Oil and gas and quality coal. Top producing farm land. Cement. Nickel. Phosphate. And at the same time they are busting a gut to sell down their US toilet paper.
November 2nd, 2009 at 2:21 pm
I was talking October 2008.
Sorry but borrowers still have to pay the bank (or the receiver) the money back…
cheers
Bernard
November 2nd, 2009 at 2:28 pm
Had to be an Ozzie bank , Bernard ? ………. If it was one of ours’ it would be less of a ” run ” , more of a ” short-sprint ” on the bank .
November 2nd, 2009 at 2:33 pm
Wally – be careful on your commodities exposure at this point. There are powerful deflationary forces out there – if the US recovery is seen to be grinding to a halt (which I think it is) the whole commodities complex will come tumbling down in a re-run of late 2008/early 2009. If investors (misguidedly) run for the US$ (and there is incipent signs that they are starting to) the downward pressure on commodities will be magnified. I suspect the easy money in commodities has already been made in this part of the mini-cycle. I have no doubt there will be another run on commodities at some point in the non-too distant future but the downside risk is now predominant in my estimation. Just look at the Aussie stockmarket – commodities dominant and now down 8% in fairly short order.
November 2nd, 2009 at 2:39 pm
Osty i think you will find that you can lose your deposits, but the fine print on your mortage will be pretty tight, they dont call em banksters for nothing
November 2nd, 2009 at 2:42 pm
Alas, Osty, – not necessarily. Your mortgage is a ’stand alone’ contract with the Bank that states that They will lend you the money, and that You will repay it. If a Bank fails your contract remains “with someone”, but any of your deposited money would be subject to the realisation of assets ( that’s what the Government Guarantee is all about). ie: you would become a creditor to the extent that you have money on deposit, plus any unpaid interest to the date of failure.
Also, most mortgages state that the Bank can offset any deposit monies that you have with them against any default by you. They get first charge on your assets held by them, on account or as security.
November 2nd, 2009 at 2:53 pm
@ Bernard
Item #6 was my canary in the coal mine. I still think US commercial real estate is going to bust but Eastern Europe will be catalyst. I have been watching the eastern block currencies vs. the USD and the NZD. It’s not a pretty sight. There is going to be an announcement of a major default or currency debasing soon which will touch off a whole host of cascading problems.
You can think I’m crazy but I also called a major correction in the markets AND a stronger USD.
November 2nd, 2009 at 3:06 pm
andy hamilton : It is as if you have been reading my mind ………….. Get the lewd weekend with Beyonce stuff , as well as the boring money and commodities outlook ?
November 2nd, 2009 at 3:10 pm
@Troy: There are so many somethigns waiting to go first, then snowball after the first I wonder which.
rgards
November 2nd, 2009 at 3:17 pm
Ultimately I think the Govn can take your deposits.
November 2nd, 2009 at 3:30 pm
Some more downward pressure on the USD$
Iranian oil bourse is now selling oil in Euro’s…
http://www.tehrantimes.com/index_View.asp?code=206503
November 2nd, 2009 at 3:32 pm
@Steve
That is a strong point, but I feel most of those fires have been contained. I’m talking about the fires that can’t be contained (i.e. manipulated). Countries going bankrupt are usually outside the realm of market manipulators.
November 2nd, 2009 at 4:40 pm
Wally – are you going to shift your loot offshore to prop up another property bubble overseas? Risky either way I think. Holding a large portion of your wealth in cash in any currency/jurisdiction over the next decade will be risky in my opinion. Your copper stock will probably do better.
November 2nd, 2009 at 4:53 pm
No Ludwig..I still have milk in my coconut. Copper is my poison and it’s as a good a bet as any, especially with Goldman sending me the numbers.
November 2nd, 2009 at 5:14 pm
AEP on the problems facing Japan
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6480289/It-is-Japan-we-should-be-worrying-about-not-America.html
November 2nd, 2009 at 6:24 pm
Diid anyone else see this today:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10606420
So far it seems that dairy farmers in the entire EU, the UK and the USA are really struggling (despite subsidies etc). But here the prices are rising and production is in full flow.
Is there something that I am missing?
November 2nd, 2009 at 6:39 pm
Harriet, I’m sure it was you who was interested in Market activity on the Full moon. Tuesday 03/11 in the full moon ………… and Melbourne Cup day. There is certainly a bit of tension about. I wait with interest, interest that’s neither claimable or taxable .
November 2nd, 2009 at 7:06 pm
Did anyone read this?
http://theautomaticearth.blogspot.com/
November 2nd, 2009 at 8:08 pm
@Eva;
this is truely scary tuff. Thanks for the link, good sorce for the “Pro deflation ” camp.
November 2nd, 2009 at 8:10 pm
Yes Eva, compelling stuff for sure.
http://theautomaticearth.blogspot.com/2009/10/october-30-2009-interview-with.html
@NevilleWC,
watch for a breakdown – dollar and dow both going down, interest rates and commodities up = a loss of faith in the recovery and the dollar.
November 2nd, 2009 at 8:11 pm
Yes Eva, I read it over the weekend. An extremely persuasive arguement for the deflationista camp.
Stoneleigh is an excellent communicator – she started off in the peakoil area but has now gone on to cover the credit crunch and writes quite beautifully. The automatic earth deserves far more coverage than it gets.
November 2nd, 2009 at 8:37 pm
Yes, I am in “pro deflation camp”. I think it will be here – first. I am able to read economic news in five languages and I can’t see any real signs of an inflation. I hope I am mistaken.
November 2nd, 2009 at 8:40 pm
Yes, justathought. It was me. I mentioned it to Troy a week or two ago, and here we are; 3/11! Dow futures are looking up, but who knows? It’s really all just a matter of probability. Put enough ‘givens’ together, and they chances are they will give the same result.
November 2nd, 2009 at 8:57 pm
Agree. I moved out of equities last month, but hard to know which way things are going to fall from here… I think it could go either way – or perhaps one way first and then the other way immediately after.
Some scary charts on that link Eva.
November 2nd, 2009 at 9:14 pm
Re international bank regulators insisting commercial trading banks buy more Govt bonds as part of new regulations to increase their capital adequacy requirements:
Oct 28 2009 “Mandated purchases of government bonds by banks and other financial institutions – crypto-quantitative easing – could persist long after official QE comes to an end, keeping bond markets supported for longer than many think.”
http://blogs.reuters.com/rolfe-winkler/2009/10/28/bond-bears-beware-of-crypto-qe/
Oct 6 2009 “The UK financial sector is digesting new liquidity rules set out by the Financial Services Authority (FSA) yesterday, which mean banks and investment firms will have to increase their holdings of government bonds by a combined £110 billion in the first year of implementation.”
http://www.bankingtimes.co.uk/06102009-fsa-liquidity-rules-steer-banks-towards-government-bonds/
Sept 24 2009 “The AFR article reported the new discussion paper put out by the Australian Prudential Regulation Authority (APRA) which it took to mean that:
Banks could be forced to buy up billions of dollars of federal and state bonds under new rules designed to ensure they are in a strong position to weather any future financial crisis … [the] … consultation paper includes a proposal that would require banks to increase their holdings of government-issued bonds because international regulators have decided sovereign bonds are the most reliable source of liquidity, The Australian Financial Review reported.”
http://bilbo.economicoutlook.net/blog/?p=5158
We are being herded into the box cannon at an ever increasing pace. Government Bonds originate as certificates of indebtness, pledging repayment of the privately owned international banking networks loans out of the future taxes of nations. The Primary Bond Dealers, the select few who can bring them into creation before they are onsold on the secondary bond markets, are the only bond dealers who have the ability to monetize Govt Bonds by buying them with electronic computer entry created reserve currency(loans).
If what is outlined above is allowed to occur it is little short of cementing perhaps the greatest class system of economic domination(slavery) history has ever seen. Government bonds and those with great surpluses of capital who accumulate them, government co-operatives who collude with the central bankers to issue them, are all committing one of the greatest crimes against the masses history will ever witness.
Consider this given the fact that although the New York branch of the US Federal Reserve is currently portrayed as the back office of international banking and the Bank of International Settlements in Switzerland the home of the international banking Board Of Directors, it is becoming more evident that in fact the true home of the modern privately owned international banking network has never left London, it was only portrayed that way to take the heat off them when they have pulled off something particularly nasty, like financing all sides in a conflict, after which they would relocate the back office to make it appear their power had some how diminished:
” Often called The Square Mile, the City is a geographically defined area of the London metropolis. The City is not a London borough, and unbeknownst to almost everybody outside the UK (and to most British people) it has its own distinctive political representative body, the City of London Corporation, which in addition to holding some rather unusual powers – such as the power to organise its own police force – is probably the most powerful and self-interested political lobby in the world.” (especially take the time to read the recent speech from the Mayor re any attempt at Government regulation of the finance sector)
http://taxjustice.blogspot.com/2009/02/corporation-of-london-state-within.html
London is not very disimilar to the Vatican City as one of the former financial centres, treasury for the enforced international church tithing at a time when the Holy Roman Empire was at its height after infiltrating the anti money changers, anti slavery Christian movement and turning it into a commercial pyramid scam where the slaveminded administration deceived the basically decent masses until they cottoned on in the 1500s:
“The result was that finally the religious exertion of Roman Church became so intermingled with her monetary interests as to identify the former with the latter, so that very often one could see a bishop or a pope fulminate excommunication and anathema against individuals, guilds, cities, princes and kings, seemingly to preserve and defend the spiritual prerogatives of the Church, when in reality they did so exclusively to preserve, defend or expand the territorial, financial or even commercial benefits of a Church determined to retain, and indeed to add to, the wealth it already enjoyed.”
http://www.bibliotecapleyades.net/vatican/vatican_billions.htm
I am not a spiritually religious person, I believe Mans problems are man made and can be fixed by mortal men, but I do believe its time we follow the example of one Martin Luther who pinned a note of revelation to the church door in the fifteenth century saying in short that it is wrong the church lives in oppulence while the masses are dying in famine.
You see folks, thus far in human history the cause of most human upheaval has been the few conspiring to monopolise the money supply to achieve economic domination over the many, turning banking into a system of servitude as opposed to one of public service.
November 2nd, 2009 at 9:56 pm
You still got the problem of not enough loaves and not enough fishes anymore. Wally is on the right track – providing he can defend his stash!
November 2nd, 2009 at 10:27 pm
Just the merest indication in the past week or so of some decoupling of the rise in the gold price from the fall in the US$ (and vice versa); as a consequence the NZ$ price of gold is up $NZ60 or so in no time at all. There was a period early in the credit crunch when gold and the US$ both rose together (around Feb 2009 as I recall) – which is not which has been happening in the past months. Gold decoupling from the commodities complex? Far too early to say, but worth watching.
November 2nd, 2009 at 10:28 pm
I think the “pro deflation camp” under estimate central banks & governments ability to print money which they have commited themselves to doing with massive government deficits they are in way too deep now they simply will not and cannot allow deflation to happen they can print as much money as they like the USA, EU and Britian are already quantitive easing and it won’t be long before Japan is at it again they won’t stop now until the job is done. The biggest problem they face isn’t deflation its going to be reigning it all back in so there isn’t zimbabwe type inflation.
November 2nd, 2009 at 10:45 pm
Kieran – Japan has been fighting deflation for nearly 20 years. In the process it has racked up an unbeliveable public sector debt (see Ambrose’s article from the DTelegraph) as it has tried to print and spend its way out of deflation – yet deflation is getting worse in Japan. There are now grave doubts that they can continue to raise much more debt. I too used to think that the central banks etc would just be able to print their way out of deflation – however dont forget its a question of the velocity of money as much as the quantity. I am no longer so sure that they can succeed.
November 2nd, 2009 at 10:51 pm
Hmmm gold is now getting a bit excited priced in virtually all the main currencies:
http://www.goldprice.org/gold-price.html
As I mentioned above – worth watching, this is not the pattern we have seen in the past 6 months or so.
November 2nd, 2009 at 10:54 pm
Look no further than China openly encouraging its citizens to buy gold.
This week could be ugly for global markest with a sharp desent to test the March lows in quick order.
On bank runs – I am once again building up my stash of cash. I believe it is prudent to have a months expenses available in cash just in case…
November 2nd, 2009 at 10:56 pm
Andy – thanks for that link – very interesting indeed.
November 2nd, 2009 at 11:08 pm
Martin – glad its of use. Most people here in NZ dont realise that the price of gold in NZ$ hit its peak (around $NZ1950) much earlier in the year – as the NZ$ has strengthened the price here has actually fallen despite the US$ price rising above $1000. The same is true when you look at gold priced in a range of other currencies (ie the Pound stirling, the Aussie etc) which all comes back to the relationship between the falling US$ and the price of gold. If the gold price as measured in terms of non-US$ starts to rise synchronously I think you can safely say that some stresses are starting to build somewhere out there in globalfinancialand………..
However this is early days, and a few days movement does not a trend make.
November 2nd, 2009 at 11:14 pm
Very true – Have you seen the article on doctorhousingbubble.com where they talk about the option ARM mortgages that are coming due for recast. As we sit, 72% of them are underwater – meaning that the balance owed it greater than the value of the security – and these are due to explode higher, and must trigger some form of banking collapse part II in the us.
What happens to us in NZ when that happens?
November 3rd, 2009 at 7:36 am
Martin – this is what the Govt plans to do (from NZ Herlad website this morning):
………”More immigrants could be good for the Government’s coffers, because it would result in higher Government revenues, improving its balance and outweighing the impact on spending.
“The results combine to improve both real gross domestic product [GDP] and real GDP per capita.”
If the annual net inflow of 20,000 migrants was sustained, New Zealand would have a population of 4.5 million and annual GDP of $248 billion in 2021.
It would also yield an extra $28 billion in annual GDP over the period because the inflow of migrants at this level was estimated to be worth around $1.9 billion per year to GDP and $1000 per capita GDP in 2021.
Doubling the net inflow to 40,000 would add 6.1 per cent to the population to 4.8 million in 2021 and result in a 7.6 per cent rise in GDP.
But zero immigration could have a disastrous effect on the economy. “This scenario gives a New Zealand resident population of 4.1 million in 2021, 9.6 per cent below the 2021 baseline population … the labour available is 10.9 per cent below the baseline figure”……………
November 3rd, 2009 at 7:47 am
Jonkey’s mantra…..”it is better to do nothing than to do something I do not understand”…see, it explains everything. BH is doing his best to move the Jonkey with the stick but I fear it will take more than 4 inches.
November 3rd, 2009 at 7:58 am
Andy H – it is worth remembering that the Hubbert Curve applies to gold extraction too, and it has been claimed that ‘peak gold’ is long past…..
So you migh factor in a scarcity value as well?
It’s not like energy scarcity, of course. You can get by without gold.
November 3rd, 2009 at 8:21 am
Veedub – you are onto it – the immigration floodgates are about to be opened. This will add more pressure to house prices. Imagine 50,000 net migration gain each year for 5 years – that’s 250,000 extra people and very little new housing under construction to cope with the volume of people. New house construction is about to get more expensive as everyone has to be certified (not all can be) and we will lose constructiion industry staff to Australia when they too open the immigration gates.
November 3rd, 2009 at 8:35 am
For those who liked the ‘automatic earth’ link above, this is a goodie too:
http://europe.theoildrum.com/node/5917#more
November 3rd, 2009 at 8:36 am
So we add 50,000 new people to the 50,000 that this year will/have lost their jobs, and now squeeze those 100,000 house buying people into work as ……..Or we could get the Govt. to support them on welfare until such time as they can get a job as…..?
I’m not taking anyone on at the moment , or even planning to,BM, are you?
November 3rd, 2009 at 8:48 am
“The supreme purpose of statesmanship is to guard against preventable evils”. It was with those words that my countryman, Enoch Powell, began what is generally acknowledged as the most controversial British political speech of the twentieth century. Powell was, of course, talking about immigration into Britain that – in 1968 – was running at some 50,000 per year. In the intervening years all debate on immigration has effectively been proscribed in Western countries and, like a mantra, the establishment repeats that ‘it benefits the economy, it benefits the economy’. Yet even a cursory analysis of the main recipients of mass immigration – Britain, Western Europe, The United States, New Zealand, and even Australia reveals something at variance to the establishment’s propaganda. All these domiciles seem to share some similarities namely:
1) Massive and ultimately unsustainable deficits on the current account
The progressive erosion of civil liberties.
2) Chronic government deficits with flabbergasting levels of future unfunded liabilities.
3) Large scale erosion of manufacturing bases and declines in intellectual capital.
4) High levels of structural youth unemployment and even greater under-employment.
5) Hugely damaging misallocation of resources to residential housing speculation.
6) Chronic excessive money supply growth with associated erosion of real capital.
7) A culture of litigation and entitlement.
9) The vilifying of anyone who questions any aspect of immigration policy as ‘fascist’.
10) The use of poorly paid migrants as a subsidized workforce for ‘favoured interests’.
I am a migrant myself. Yet I am also someone who recognises that promulgating immigration policy on the basis of inflating house prices is a ‘preventible evil’ and those contemplating such activity should be condemned! Are we really so mad that we would willingly dash to replicate the unfolding urban tragedy of Britain in order to maintain – and inflate still further – house prices. When is it going to be understood that the only hope for New Zealand is to break our obsession with house prices and, however painful it may be, to see them return to the long-run average of perhaps 2-3 times annual income. Only when houses return to what they should be – something to live in – will the creative genius that lays dormant in this country re-emerge. Of course, the National Party wants house price inflation – its leader is a banker and it is a party that, long ago, abandoned the ideas of liberty and free market capitalism that men like Lord Acton & Adam Smith espoused. Indeed, it was Lord Acton who reminded us that we would ultimately have to confront the ideas of Men like John Key:
“The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”
To use immigration as an expedient to try and re-inflate house prices – at the very moment when it looked as though younger Kiwis were at last seeing some possibility of getting a ‘fair go’ – is a reminder of the selfish and myopic interests that I have seen ruining this wonderful country in the twenty years I have lived here. Maybe the time is coming for a genuinely liberal free market party in which anyone would be welcome – regardless of ethnicity. A party that would discriminate against, and robustly exclude, the ‘house price inflators, the fiat currency creators, the subsidised workforce demanders, and the corporatise the costs but privatise the profits fascists’. Are there any genuine capitalists and libertarians still out there?
November 3rd, 2009 at 9:01 am
Bernard – maybe posts should be limited to 200 characters.
November 3rd, 2009 at 9:05 am
I just spoke with a client on the phone this morning who says her parents back in the UK are reporting a growing acceptance within their circle that the GBP will be ditched in favour of the EUR. They seem to believe that it’s inevitable now.
November 3rd, 2009 at 9:13 am
… maybe posts should be limited to 200 characters.
Why succinct? Do you have attention deficit or something?
I enjoy the longer posts if they develop an argument well.
November 3rd, 2009 at 9:16 am
Immigration is a growth, and all growths hit the ceiling at some point.
More resources per head is better in the long term.
I’d say more but I’m being succinct
November 3rd, 2009 at 9:24 am
That would be dishearteneing, veedub. I suppose when a ‘business’ is on it’s last legs it’s best to sell it as a going concern, before it goes belly up. My guess is that Malcolm would see that eventuality as proof of the folly of the current monetary system.
November 3rd, 2009 at 9:29 am
Kieran – “I think the “pro deflation camp” under estimate central banks & governments ability to print money…” Yes you are right. But we had a ‘housing bubble’ – HB, ‘credit bubble’ – CB…..why not QE bubble? We will know soon, maybe this week after ECB, BoE and FED decision about their monetary policy.
Monetary eclipse
November 3rd, 2009 at 9:32 am
@Mark – “I enjoy the longer posts if they develop an argument well.”
Me too, but few do. Better if they include a link to the text – IMHO.
November 3rd, 2009 at 9:34 am
Im with you Eva, They may be able to print money but can the stop the currency being destroyed by their actions?
November 3rd, 2009 at 9:38 am
Set an example for all of us , keep your posts succinct , and we’ll monitor your progress . OK ?
November 3rd, 2009 at 9:40 am
Our current system requires growth. Harriet. If you can have that without chewing into the finite biosphere, fine.
I don’t see that happening. Virtual trading doesn’t cut the mustard stand-alone.
If a system requiring growth runs into the limits of possible extraction rates (note that isn’t ‘runs out of’) of stuff to grow on, it dies.
If that be the folly to which you refer, then folly it is.
There will always be ‘value’, ‘trading’ and ‘barter’, of course, but the construct that required everlasting exponential expansion ? No, that was a temporary paragidm. The current debt can’t be underwritten, and I don’t know where the Fed goes – loan money at less than zero % perhaps? Forgive the debt, and you make a mockery of ‘value’.
Interesting (sorry) conundrum. Wally is right – try and guess the commodity that will most be needed beyond the Thunderdome, and fill a shipping container with it.
November 3rd, 2009 at 9:42 am
Eva : Great link on your 7.06 p.m. post . That has gotta be Wally’s worst nightmare ! But an excellent argument from the contrarian ” deflation ” camp .
November 3rd, 2009 at 9:42 am
Our current system requires growth.
With a growing welfare and state sector that has to be covered, maybe, but a laissez faire capitalist system does not require growth to operate: it is simply a market system of free exchange without the intrusion of the State. (Though it is the one system that does promote growth).
November 3rd, 2009 at 9:42 am
Govt spending should not be considered part of GDP – as the Govt has no money aside from what it steals from the productive economy.
When you take the GDP – and remove Government spending you see the true state of the productive economy – a productive economy that has been in retreat for many years. We are starting to look like the second comong of Iceland… Personal Debt levels at record levels – Govt debt rising – and without our consumerism and housing debt fueled bubbles, no real economy to speak of.
Add to this high minimum wages and we have a disaster brewing. If we get into a deflationary situation, where the prices of all items fall, wages have to be allowed to fall too. This is the biggest proof in my opinion that deflation is not even worth considering. The Govt will make it illegal to deflate – then we have implosion to look forward to.
November 3rd, 2009 at 9:50 am
I’m refering to veedubs comment that the pound will be ditched in favour of the euro, powerdownkiwi. I have no idea what you are talking about in that regard.
November 3rd, 2009 at 9:51 am
The bobble heads ( Steve Liesman ) were panicking on CNBC this morning , that the US Gumnut now controlled 26 % of the nations’ GDP . Up from 25 % previously . They wailed that this increases the unproductive proportion of the GDP , and thereby acts to slow future GDP growth . Have we in NZ had Gumnut share of GDP anywhere near 25 % in recent memory ? Labour ratcheted it up to around 40 % . Helen and Michael love big Gumnut .
November 3rd, 2009 at 9:51 am
@powerdownkiwi
Its our debt based money that requires growth – than an the fact that we have had 80 years of compounding inflation. True capitalism should be deflationary as the free market prices goods semi efficently.
Check out this link which shows the effects of 80 years of inflation. As the inflation compounds, we get closer to the end game of currency collapse – a fate that has happened to every instance of paper money.
November 3rd, 2009 at 9:58 am
This is something betweeen defl. and infl.
http://www.youtube.com/watch?v=qd1WCcoDsvM&feature=player_embedded
November 3rd, 2009 at 9:58 am
For those who love a ” Global Warming ” story , NZIER have released another report this morning , rattling the cages of the greenies . Hope BH includes a synopsis in the ” 10 @ 10 ” . It was 11 ‘c in Loburn at 4 a.m. this morning , enough to convince me , will write a report , and get a gumnut or U.N. grant ( no need to work anymore , join the greenies , brilliant !!!!!! )
November 3rd, 2009 at 10:03 am
Martin wrote Govt spending should not be considered part of GDP – as the Govt has no money aside from what it steals from the productive economy.
Two great posts Martin.
In my understanding, GDP measures economic activity via consumption, including Government spending. Surely a far more accurate view of economic activity would be to measure only productive output in an economy: this would capture just the activity in the productive sector that drives everything else, and would give a far more realistic view of the health of an economy from a measure that could not be distorted by big spending governments (which in the long term crush productive activity).
November 3rd, 2009 at 10:09 am
Thought: Government employees should not be allowed to vote – as they actually pay no taxes because the Government has no money – All that happens is that the Govt pays your tax for you with a book entry…
Somehow I don’t think that this would fly – although the logic is sound, IMHO.
November 3rd, 2009 at 10:12 am
AndrewJ they can stop the currency being destroyed by hiking interest rates enough to keep all the QE money in the bank. It will be interesting to see what the ANZ commodity index does this afternoon the trend seems to be skywards. If we where going to have deflation surely we would of had it by now, the US and UK and most other housing bubbles around the world have deflated and bank and corporate losses have been paid for with printed money where is the deflation? why are medium term interest rates going up? If some of the QE money finds its way into global commodities and we have commodity driven inflation the CPI will have to be bought down, but what will an OCR hike in NZ bring down to get a desired lower CPI if commodity prices are shooting up? answer: Housing costs, Labour and Rents.
November 3rd, 2009 at 10:13 am
This is also interesting. What about Four Big? /Or Four Too Big To Fail?/
http://www.aol.co.nz/news/story/Frances-BNP-Paribas-closing-offices-in-tax-havens/2369183/index.html
November 3rd, 2009 at 10:16 am
Harriet – Naturally I see the tragic plight of Pound Sterling “as proof of the folly of the current monetary system”. Yet, fundamentally, the Euro is no better. What has to be understood is the deliberate bankrupting of Britain was a political expedient designed to ‘knock out’ – once and for all – the centre of opposition to an illuminist vision for Europe. There is nothing new in this. The Roman historian Tacitus recorded that Britain’s Druids (ahead of their extermination and the Iceni uprising) were feeding resistance to Imperial Rome throughout Europe. Hayek later reminded us of the great battle of ideas that was taking place in Europe – between the Anglo Saxon concepts of freedom and property rights, and the European socialism begat of Germany’s Chancellor Bismarck. In essence, despite its changing population, Britain has always been the bulwark against the deranged megalomania of Europe’s various crackpots.
The final inflection point for Britain is coming and the ending of Pound Sterling is an essential component of this. Just recently we have seen moves to arm the police with machine guns and this, occuring ahead of the effective coup d’état delivered by the Lisbon Treaty, is deeply alarming. Expect a fascist Europe within the anticipatable future – and this will not be delivered by the likes of the BNP but by mainstream politicians.
As regards to limiting posts to 200 characters (I assume this should actually be words) I would have thought that the strength of this site is that it allows for more intelligent debate. If people want the standard ’sound-bites’ then those ‘paragons of intellectual substance and objective analysis’ – New Zealand’s mainstream media – should suffice!
November 3rd, 2009 at 10:24 am
Reports from USA that the CIT bankruptcy may top that of ENRON . CIT have debts of $ 65 billion , and equity of $ 71 billion ( mark to market ? ) . And here in NZ the 104 y.o. TRUTH newspaper has finally expired , owing creditors > $ 600 thousand . As tragic as that is , it puts us in our place , compared to America’s woes . Vale the page 3 girlies .
November 3rd, 2009 at 10:34 am
Powerdownkiwi said: “You can get by without gold”.
Powerdownkiwi – all of history is against you for gold is the ultimate extinguisher of debts. The test for your hypothesis will be what happens is gold ultimately goes into irretrievable backwardation:
http://www.gata.org/node/7716
November 3rd, 2009 at 10:34 am
This just from Mish:
Representative Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been “gutted” while moving toward a possible vote in the Democratic-controlled House.
The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today.
“There’s nothing left, it’s been gutted,” he said in a telephone interview. “This is not a partisan issue. People all over the country want to know what the Fed is up to, and this legislation was supposed to help them do that.”
Paul, a member of the House Financial Services Committee, said Mel Watt, a Democrat from North Carolina, has eliminated “just about everything” while preparing the legislation for formal consideration. Watt is chairman of the panel’s domestic monetary policy and technology subcommittee.
Keith Kelly, a spokesman for Watt, declined to comment and said Watt wasn’t immediately available for an interview. Watt’s district includes Charlotte, headquarters of Bank of America Corp., the biggest U.S. lender.
November 3rd, 2009 at 10:35 am
Martin, you could easily extend that logic to only “workers” in the private sector should be allowed to vote ? Still wouldn’t fly though, sadly!
November 3rd, 2009 at 10:57 am
@Matt
Yeah can you imagine 40% of the population only eligable to vote…. That would wake the country up… nah – Dancing with the Stars is so much easier to cope with.
November 3rd, 2009 at 11:03 am
@Malcolm
Agree 100% – Gold is the only money that is not someone elses liability. True you can barter commodities, but its easier to carry around a one oz coin than 42 chickens…
November 3rd, 2009 at 11:25 am
Couple’a comments – gold has been the standard ‘flight to’, but there ain’t enough for everyone to fly there anymore.
And growth? You charge a ‘profit’ on one ‘go-round’. It is presumably capable of buying something. To underwrite it with something to buy, you need to grow the supply.
If you fail to grow the supply, you fail to underwrite the profit, which is the same as not making money.
The current debt just represents ‘overshoot’ between the ‘wished for’ and the ‘real’.
And it hasn’t been addressed because there is no answer. The historical investigation which would help, is the one finding out what Greenland Norse iron merchants did as their society collapsed, ot the Mayan corn traders, or the Roman firewood retailers. Sadly, it seems that the records get a little fragmented at that point – stress getting involved, perchance?
November 3rd, 2009 at 12:54 pm
As I have stated before, with the coming ratification of the Lisbon Treaty, expect Europe to descend into conditions of de-facto fascism. Do not expect that fascism to be draped in the Swastika – but in cynical pieties about social justice, democracy, and the war on terror.
http://www.guardian.co.uk/commentisfree/libertycentral/2009/nov/02/europe-surveillance-state
November 3rd, 2009 at 7:38 pm
Interesting that those with no political numbers and also scream about “freedom” are perfectly willing to take away the voting rights of others.
regards
November 3rd, 2009 at 7:43 pm
@Malcolm, gold is the future promise of energy….nothing more.
This is also where the peak oil deniers fall flat…its energy in v energy out not gold in v energy out….ie there is no point in extracting 1 barrel of oil if it costs one barrel or more to do so.
regards
November 3rd, 2009 at 8:30 pm
Steven, gold is simply a form of monetary ‘communication’. Within this it is the medium with the longest and (along with silver) most ubiquitous recognition. Its strength, as a monetary medium, lays in its unique physical properties and the fact that its supply is independent of bankers and politicians. It has nothing to do with energy – save for the fact that it is a useful vehicle for measuring how the real price of same has moved in recent decades. Within this, if we look at oil, we can conclude that the number of grams of gold required ‘per barrel’ has scarcely changed since December 1945. Obviously, if measured against paper money oil has increased in price by ‘orders of magnitude’.
Clearly, if it takes the energy of a barrel of oil to extract a barrel of oil this is non-viable. However, new technology is developing and the potential of the Thorium cycle for nuclear reactors is an encouraging example – in which much greater abundance than uranium combines with big potential advantages over proliferation and half-lives. Norway, I understand, has an estimated 180 000 tons of Thorium resource. I have seen a ‘value analysis’ which suggested – based on the oil price at the time – an ‘alternative’ energy resource worth some 250 thousand billion US$ from this Thorium. Apparently this figure is some 1000 times the Norwegian oil fund. The numbers sound incredible to me but, of course, the actually energy that can potentially be produced is extraordinary. One suspects, some time hence, future generations will laugh at oil and how much it occupied our minds.
In a sense the ‘peak oil hairshirts’ are rather like the ‘gold bug hairshirts’. Both seem to take a morbid pleasure in the thought of some nightmare scenario, without realizing that the destination they seem to wish for would be one of misery. If they are correct a decent vegetable garden and a friendly goat would probably be the best option!
November 3rd, 2009 at 8:36 pm
In a sense the ‘peak oil hairshirts’ are rather like the ‘gold bug hairshirts’. Both seem to take a morbid pleasure in the thought of some nightmare scenario, without realizing that the destination they seem to wish for would be one of misery. If they are correct a decent vegetable garden and a friendly goat would probably be the best option!
Well said Malcolm.
On this and in so many other issues discussed here, the cynical defeatism of the Socialists, and their constant glee in their doomsaying, is really starting to depress me. No wonder they always end up producing such grey and bleak societies.
November 3rd, 2009 at 8:58 pm
“Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery”.
Sir Winston Churchill, KG, OM, CH, TD, FRS, PC (Can). (Prime Minister 1940-1945, 1951-1955)
Thank you Mark, I can put it no better than Winston!!
November 3rd, 2009 at 10:20 pm
Sums up Labour , circa 1999-2008 . Thankyou Helen , Heather & Michael : Thankyou very bloody much !