Russia: The World Forgot to Save For a Rainy Day!
Hello,
Just a thought today while drinking my morning cup of coffee.
For twelve days Japan has pumped a trillion yen into its financial markets, Europe has pumped billions of pounds and euros into its financial markets, Russia has pumped billions of rubles into its financial markets, Asia has pumped billions of ? (what ever currency they use) into their financial markets and America has pumped billions upon billions (Exceeding a trillion) dollars into its financial system. So the global market has in the last couple of weeks, an injection exceeding trillions of dollars of cash pumped into it and it seems to be just verily holding together.
I am starting to wonder if the patient (Financial System) might die!
What gets me more than these stupid humongous financial numbers that are floating around the world, is the fact that we still talk about aid to the poor in the terms of millions of dollars. We allow people to starve all over the world, they survive on pennies a day. Then we got a corporation and its shareholders crying about its loses. We have people dying everyday from hunger and curable diseases and we have Governments tossing trillions of dollars down the drain to save businesses and banks that have no right to stay in business if they can not manage their money.
I can remember when you never thought in terms of billions of dollars. I remember when a millionaire was rich. I remember. - But somewhere somehow profits became billions of dollars per quarter for companies like General Motors and Ford and now they are broke.
How can you be broke making billions of dollars in profit per quarter?
My Grandma would have said: "You must save money for a rainy day!"
It sure is a stormy rainy day. Did you save your money?
Kyle & Svet
comments always welcome.
Plus
Minus
Reset
It would be almost funny that so much money is being spent to increase the value of money, if it wasn't for the fact that governments just don't have billions of x currency lying around under the sofa's cushions.
All they are doing is borrowing more, secured against future income to pay off today's bills.
Now somehow, that sounds familiar - I'm sure I have heard how that happened recently. But it must be OK if everyone's doing it*
*For non-native speakers of British English, please read all of the above in a tone laced with cynicism, irony and above all astonishment!
Hey Matt,
I have a saying I use:
It is called, "Robbing Peter to pay Paul!" I am sure that saying most likely came from England?
It seems that Paul is having a good time right now but Peter has been mugged! :)
Kyle
That's fine until Peter defaults and Paul is left with lots of useless promisory notes.
Again this is what Russia did in the '96 default.
A russian (and probably international) saying
The first time is a joke
The second time is stupid
My addition to this - the third time becomes law
> It sure is a stormy rainy day. Did you save your money?
Nope. I never save anything. What for, if the inflation eventually slashes one zero after another from your savings? Lending money to the banks yields nothing. And even if it did, I just don't trust the banksters.
On the other hand, I never borrow money. Hate being in debt. Besides, my annual ten thousands bucks are enough to buy more or less healthy food for my family. Not that I don't want more, but that's enough.
What really worries me is the labor market :(
Ford and Chevy deserve all the money they need. They best car in world.
USA is king of world and don't forget it.
WB
When US destroys Russia then we will have lots of labor for you to work our plants and factories, Demetry.
Do not forget that US is greatest power on earth and no one will stand in our way.
You stirred my interest in the car company bail out. It seems while all this hoopla over the 700 billion. The US Government has been quietly approving lots more bail out and printing more money. The Big 3 car companies have money now to see them through the redevelopment stage of hybrid cars and 630 billion dollars have been sank out of site into the Wall Street world. This is on top of the smoke and cover of the 700 billion.
I see the 700 billion being passed now that it has billions more in pork fat attached to it to satisfy both parties.
Sam
US have biggest mouth in world,
Igor
Fungible: (esp. of goods) being of such nature or kind as to be freely exchangeable or replaceable, in whole or in part, for another of like nature or kind.
Congress is a manufacturer of stupidities, the latest being to raise limits on FDIC insurance.
If it were not so commonplace, we would realize that it is totally absurd (and no doubt unconstitutional) for Congress constantly to be changing the rules of the game! In finance, we have the concept of "noise", which is random variation induced for no good reason. Congress manufactures noise by the barrelful, but there is usually a reason relating to their own sinecures.
Large bank CDs now become more attractive, to the extent that the guarantee is credible. The weaker and weakest banks now can possibly attract more funds at the expense of the stronger and strongest banks (are there any?). Money is fungible. It flows from one place to another. The companies who issue commercial paper (a market already under pressure and declining) may now find that their market has worsened. Municipalities will find their market made worse, if money flows out.
Nothing is accomplished but to shore up already weak banks. Any deposit insurance is a direct subsidy to stockholders of the banks being insured and raises the moral hazard of their investment operations. This is already a problem, and Congress is making it worse. There are of course costs to the guarantee.
The depression is and will be worldwide, no matter what inane measures Congress adopts that worsen it. Europe is going down. China is going down, as its central bank is over-levered and as its mercantilistic policies flame out. Russia is going down. New spots of weakness will be appearing right along as time passes. Advertising will fall, the boom in the metals and metals fabrication industries is over. Oil and gas companies are dropping. Retailers are dropping like flies. Very few companies will not be affected.
This is going to be one for the history books.
Click, click, click, click.........
That's the sound of governments pressing the zero key while electronically printing money.
The latest comments I heard were a real gas. One official suggested that this credit would never be 'monetized' and therefore the dollar would not be devalued. (I want some of the stuff he's smoking)
Geez are we ever in for a ride!
I just hope the bit of cash that I've recently saved will buy me something in the future. Fortunately I live on a farm where I can and do grow some of my own food.
Excellent posting! Congratulations!!!
This is not Spam. It is a campaign against the abuse of children.
Thank you.
They added, to the bailout bill, a tax credit for the manufacturers of wooden arrows for children's bow and arrow sets. Is this some kind of sick joke?
I'm going to go crawl into a hole somewhere.
After the vote failed in the House, I believe it was Newt Gringich espousing the need for the US to drastically cut its dependence on foreign oil in order to retain some of the $850 billion it hemorrhages to foreign countries each year just for energy consumption. This would be one way to significantly help the economy and the US Treasury.
While I agree with Mr. Gingrich, his assumption is based on the profligate use of resources in the US. Which points to a fundamental issue that both the citizens and government alike are going to have to address from the bottom of their soul........Any sound economic system operates from the principle that all resources are limited in nature.
We consume a vast amount of resources in the US. It's a fact. There are a lot of reasons but I would submit that the largely suburban format of American cities is the single largest contributor to this arguably disgusting consumption pattern. Granted this is driven by factors such as education, safety and crime. But sooner rather than later these sprawling 'burbs' are going to have to condense.
I'm not seeing any changes to suggest that the citizen or political powers that be are recognizing this.
Back to Newt Gingrich's idea: While the US ecomomic/financial system is definitely running on borrowed money and time, it is still an awesome force. It's impressive that it can have such a huge trade imbalance and still function like it does. I think it speaks highly of the productivity of the average person.
By the way....What are the odds that Bush ends up on the board of directors for Goldman Sachs or one of the other Wall Street speculative corporations after his term is up?
> It sure is a stormy rainy day. Did you save your money?
Better question is:
Do have money you saved still some value? :)
Hey Rotus,
Yes it is! They have put measures that will effect states that have no sales tax. If the bill is not passed these states will have to change their sales tax issues. This is how they make the ones who vote no vote yes.
The news articles I've read about the $700 billion Senate bailout bill are focusing on the politics. They haven't offered much analysis of what's actually in it, except to say there's a Troubled Assets Relief Program (or TARP), that the FDIC account limits are raised to $250,000 and that the SEC is authorized to waive its mark-to-market accounting rule.
So I read the whole thing myself -- and found odd things like production credits for "marine renewables" and specifications for "residential top-loading clothes washers."
Procedural: The original Bush administration proposal was just two pages long and at least easy to understand. The latest Senate version has ballooned to an amazing 250 pages, including a huge chunk on energy-related regulations, with no hearings on the final draft and only hours for politicians to review something that's quite complex. This is the same rush-the-flawed-legislation-through process used for the Patriot Act seven years ago.
Loopholes: A financial institution can buy $50 billion of financial toxic waste in the form of subprime mortgages, declare bankruptcy, and the Treasury Department is permitted to buy the toxic waste for $60 billion. Or $100 billion. Even though the Treasury should be required to pay _less_ than the original purchase price, that requirement does not exist across the board in this bill. And you can bet that every financial lobbyist in town will be pressuring Congress and the administration to buy up their client's toxic financial assets for insanely high prices. The political process begins to crowd out the free market.
Making housing less affordable: The U.S. Treasury would be authorized to "guarantee" home mortgages, essentially becoming a co-signer, to eliminate foreclosures. If the home-owner stops paying his mortgage, taxpayers will be on the hook. The Treasury Department can also eliminate a "reasonable" amount of a home owner's mortgage debt. This slows the rate of house prices falling, preventing housing from becoming more affordable. And why should careful, frugal homeowners or renters -- who lived within their means -- bail out speculators who didn't? This is in Section 109.
Golden parachutes: There is no statutory dollar limit on how high executive salaries of TARP bailout recipients can be. Section 111 merely says the Treasury Department will come up with "appropriate standards," whatever that turns out to be. And only the top five executives will have their golden parachutes even theoretically limited. All the rest will remain untouched, even if their second-tier salaries and bonuses happen to be in the millions or tens of millions. It's also unclear whether stock options or grants will be covered, which is probably what led Sen. Bernie Sanders to say: "This bill does not effectively deal with the issue of executive compensation and golden parachutes."
Tax deduction: While salaries of failed executives would have no statutory limit, TARP-participating companies would lose a tax deduction if they pay their top executives more than $500,000 a year. But it's not clear how the cap applies to executives at privately-held companies. Chrysler is privately-held; what if its lending arm falters because of bad car loans and it signs up for TARP? In addition, the $500,000 limit only kicks in if the company offloads at least $300 million in assets through TARP.
$700 billion is not the limit: Section 115 of the bill says that the administration can, after notifying Congress and waiting 15 days, purchase and hold $700 billion of assets "at any one time." This is a remarkable loophole. It permits the Treasury Department to buy up, say, $700 billion in 2008, sell those assets off gradually over the next year at a (probable) loss, and repeat the same process in 2009. Losses to taxpayers, in other words, could exceed $700 billion.
Judicial review: Unlike the original Bush administration proposal, judicial review does exist. Sort of. The reality is that Section 119 sharply limits it, tilting the playing field toward the U.S. government if it ends up getting sued as a result of a TARP bailout. Judges cannot issue injunctions related to TARP except for "a violation of the Constitution" (fat chance) and the Feds get automatic halts to any injunctions related to other sections of the law.
The 2013 tax hike: If the TARP ends up costing taxpayers money, the president may ask Congress to consider enacting a law to recoup "from the financial industry an amount equal to the shortfall," presumably through higher taxes. But Congress is under no obligation to do anything; a mechanism to cover the shortfall does not exist in this bill. The other problem is that the firms that benefited the most from TARP may have disappeared five years from now. Why should new companies founded in 2013 pay higher taxes for a bailout that took place in 2008?
FDIC coverage: Even though FDIC coverage would be boosted from $100,000 to $250,000 per account through December 2009, premiums to banks may not take "into account" the higher account coverage. Premiums can't increase for that reason. That encourages more risky behavior on the part of banks.
It's true that is more oversight than in earlier versions, including $50 million to be spent on an inspector general, and a legislative branch "Oversight Panel" producing monthly reports. But even if you support the idea of a bailout in principle, there are plenty of reasons to oppose this particular bill.
H R 3997 RECORDED VOTE 29-Sep-2008 2:07 PM
QUESTION: On Concurring in Senate Amendment With An Amendment
BILL TITLE: To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes
Gotta love America,
Stan
Hey Rotus,
Looks like some one said Hi for me. I agree with you that this is starting to become a world wide fiscal and the USA needs to understand that the world is watching and talking now.
Just like Germany and Russia have just held talks and are discussing this very subject. In fact the word was no talk about South Ossetia or Abkhazia. The talk is about oil, gas, and USA issues.
How long can the world print money to cover this debt?
Is that hole big enough for me also?
Kyle & Svet
Hey ESO,
I saved money but looks like that paper stuff is going down hill. I also saved some gold and silver. Might come in handy...
Thank you very much for stopping by. Always a pleasure to have you.
Kyle & Svet
Hey Blackseabrew,
"speaks highly of the productivity of the average person." Yes it does, I have always said that America can out produce any one in the world if they want to. The problem I see is that the average person is getting ready to pay for all this crud. They are the ones who should not pay.
Knock the average person down to far and productivity will suffer and that will open a whole new can of worms.
You could be very correct about the "suburban format of American cities" I have thought about that for many years. I remember even in my era being bussed over 30 miles to go to a school, the country schools closed and you had to mingle with the city folks. :) Doing that kind of busing now would kill a school systems budget in nothing flat.
Kyle & Svet
Hey david santos,
Thanks and you have a good site.
I hope the link helps to spread the word about child abuse.
Kyle & Svet
Hey Matt,
You are correct!
Kyle & Svet
Hey Igor,
Thanks, I do have a big mouth.
Kyle
Hey Stan,
Thanks for the information.
Kyle & Svet
Hey Sam,
I think the pork fat just got a lot fatter.
Thanks for stopping by.
Kyle & Svet
Hey Anonymous,
Just keep taking your medications and you will be ok! The USA does not need to destroy Russia and make her people do labor. Is the a rock you belong under?
Kyle
Hey Dmitry,
I agree with the labor issue. Lets hope that gets better and stays better.
I trust no bank and have always been that way.
Sorry about the Anonymous comment.
Thanks for stopping by.
Kyle & Svet
Hey WB,
I really do not agree with the fact that General Motors and Ford are the best car companies in the world.
You also have issues when you proclaim that the USA is king of the world. That is the common attitude that I left behind in America.....
USA needs to be a world partner not world leader or king as you say.
Thanks for stopping by.
Kyle & Svet
Americans are Gods chosen people and you left to become one of the lesser people.
You are damned for life and eternity.
God chose America and God will defend America. America must control the World to stop evil.
Russia is an evil empire that has already spread to Britain and has corrupted Britain to become the wasted hole that it is.
The East as we call it shall become the starting point of the end of humanity so America must destroy that scum and slime on the Earth.
I am blessed to live in America and have the right to express myself with all my freedoms that are God given to me.
You have no freedoms and as such you will not be allowed to print the truth as given in this comment.
I pity the existence you have on that side of the world, only low life people cross the Ocean to live amongst the vermin that dwell in Europe.
America is Gods Land!
WB
"I pity the existence you have on that side of the world, only low life people cross the Ocean to live"
sorry - I can't resist that one.... How else did the majority of Americans arrive in the USA?
WB - I admire your sense of humour!
Hey Matt,
I do not think that some people understand that allot of Americans arrived from Europe. (Originally)
I let this comment go through because he did not cuss and get to far out of hand. I have sometimes 10 of these comments a day that degrade the world. Most of the time they threaten bodily harm to other readers and ourselves! They, 90% come from USA and Australia. The level of comments has gotten bad during this time of unrest in America. I think that it is a reaction to America issues and a faltering of society and her comforts being taken away. So those comments will not be catered to. They are an embarrassment. That is why I must moderate comments....
In America you are raised to believe that you are the greatest country in the world, bar none...
Seems to be a strong point in America, to proclaim that America is Gods Country. I heard it thousands of times in my life. In fact I remember being told by my minister when I was young, "Boy, America has been chosen by God to cleanse the Earth of evil." He then said, "Remember that boy, You are part of that future to stomp out the devil" He yelled this at me at Church Camp! I was caught with my elbows on the dinner table and had to endure this barrage of words that really succeeded in scaring me. I was about 9 years old.
I sense that WB is just blowing hot air or maybe he is a minister in America spreading the word. :)
Sad thing is though: I went to a University that was full of people that where just like WB, He is not a lone quack! He is one of many ducks in a row that believe in what they say.
Look at McCain running for president in the USA. He really has a strong hate for Russia. He is the age that really despised Communism. He remembers the McCarthyism era real well, I remember it too well and I am young compared to McCain. The blacklist in America was prominent for many years after it was to have been removed.
Now America has a new black list for terrorists. It never ends and people like WB make me sad. For the WB's are many in America.
Thanks for stopping by. It is always a pleasure when you stop by and add your two cents worth. (Or what ever you say in Britian)
Kyle
It's fine Kyle - I know I'm from God's country (I'm a Yorkshire man, and we know God comes from there!!!!) so I'm happy to indulge the one or two mistaken people in the world.
On a more serious note, I have respect for people who are prepared to stand up for their own country, providing they are also ready to justify their position in a reasoned way. Those who are just ignorant and act out of blindness are dangerous (think of fundamentalism of any kind). I love a good arguement, and am prepared to debate with anyone, but WB's views are the sort that are enforced with AK47's or F111 fighters :-(
Hi, I do not comment much. But this article has been busy. So I will say hello and I want to express something. I have learned more about the world since I found this blog a year ago. I always thought that Russia was the Soviet Union and that the Soviet Union was a communist country that was out to destroy the USA. My dad was a hard anti communist. When I grew up I was told that I would be shipped to Siberia if I was bad. I was called a commie if I balked at the rules of society. I have read this blog for a year almost and have about 30 friends that read it also. We are all from America.We do not always agree with the blog but it tells us things that we would never read about from within America. I just want to know where is Yorkshire the place that MattMacL is from? Please do not laugh at me. I really do not know and can not find the country Yorkshire! I found several cities in America called Yorkshire. But I do not think that MattMacL is from America. He seems too nice to be from the U.S. I also want to know if Blackseabrew is Kyle also. Seems they have alot of the same opinion but he seems younger. But then I have the same opinion lots of times also as you guys do. I think that Blackseabrew is from America but he has a different attitude than lots of people here at least expressing a attitude that is different. (People like my dad will hate you for questioning America) Now about WB and some of the others. I think WB is my dad, if he is not, then he could be. Do not laugh please. Sorry if I bothered anyone but I just wanted to say hello from someone who thinks that Russia might be a good place to visit one day.
Mary
Mary,
Thank you for having an open mind even though your father had a very harsh view of Soviet-era Russia. Frankly I have some of the same negative opinions based on what I've read about Stalin. We Americans can be proud and thankful our form of government helps to prevent despotism.
But at the same time I think it is better to continue to educate ourselves, especially in light of the acidic political dogma the west's leaders so readily espouse(think about what Secretary of State Condoleeza Rice has said recently). We, as westerners, now get to see the heritage and cultural aspects of Russia that were closed to us for so many years. So please, take advantage of this and go 'discover' Russia for yourself. I don't know how to describe my experience because I'm a novice on the subject of Russia. But it has been influential and humbling in a very positive way.
If you visit Russia, take the time to appreciate everything you see and learn. Even if you find something not to your taste. I would suggest not to look at Russia in black and white terms or perhaps I should say not to look at Russia from an American viewpoint. It is a complex and colorful country with an authentic culture. You will only do yourself and your host a disservice.
My own friends give me trouble for questioning America but my response is really quite simple. I do not question America! But rather our current political leadership's all too apparent partnership with a military/corporate complex that appears intent on fleecing the general public. The danger to the United States lies from within, NOT from Russia. With the recent passage of the bailout enslavement bill, they now understand and agree with me. Just google Thomas Jefferson quotes and you will understand my point.
Kyle and I are not the same person but it is interesting to note that we were raised in very similar circumstances and our hometowns are very close to each other(midwest region in US). Outside of this blog, Kyle and I don't know each other though. I am somewhat younger than he is as you thought.
MattMacL is from the UK. Yorkshire is a region located in northern England. He's got some respectable viewpoints.
On behalf of Kyle, I'll say thanks for visiting the website.
blackseabrew - thanks for the clarification. I must be getting really old if my views are being called "respectable".
Hey Blackseabrew,
Thanks for answer. I have not had much time to get to comments and am going to try today. while I have a little extra time on the Israel Trip.
Kyle