Tag Archives: bloomberg

June 8, 2014 · 10:13

17 or 70 trillion?

Even though we see so many ‘stories’ on how well the US is doing, we must ask ourselves on what value these numbers are trying to convince us of.

The thoughts I am about to phrase started a little after the following had been released (at http://blogs.marketwatch.com/capitolreport/2014/06/06/standard-poors-is-concerned-about-the-u-s-debt-burden/). “Standard & Poor’s Ratings Services put out research Friday confirming the AA+ rating of the U.S.“, so the US has dropped a notch on the credibility scale. This in itself should not be a reason for direct concern. The one part that does worry is that S&P was the only one doing this. The other part we should notice is the quote “The federal debt was $16.1 trillion at the end of fiscal year 2012, according to the Government Accountability office.” why are we not seeing a 2013 number, which according to some is over 17 trillion? How interesting is it to see the numbers game whilst the numbers quoted are not up to date?

The next part is the article from Bloomberg on April 29th 2014. Here we see the following “The drop in net marketable debt will be $78 billion in the April-June period, $38 billion more than the pay down projected three months ago, with an end-of-June cash balance of $130 billion, the Treasury said today in Washington. The improvement will be short lived — net borrowing of $169 billion is projected next quarter, with $130 billion in cash Sept. 30th“. Can anyone see the issue I have with this? The debt of well over 17,000 billion is getting met with a quarterly pay down of less than 0.4588%. How is this progress and even though we see that the US still has a high credit score, is the likelihood of a continued credit score even realistic?

That part can be seen in the Market watch quote “We believe that renewed debate over the debt ceiling could resume after the midterm elections in November 2014 under certain scenarios. While we expect the discussions about the debt ceiling to be ultimately resolved as they have been, we still see risks that these debates entail.” So, not only is there no solution to the current debt levels, the chance of any serious solutions occurring within this current administration is close to zero, which means that the next administration will inherit a debt closer to 20 trillion. I do find the headline about ‘US debt level concerns‘ hilarious. Many with me had raised these dangers for well over 2 years and now as the game is up, some are ‘raising’ concerns, whilst those in charge and those on the watchdogs of economy had long known that any level of lowering the debt had been a mere myth for over 2 years.

There are of course other views. One is from Chad Stone who wrote in US News (at http://www.usnews.com/opinion/economic-intelligence/2014/05/16/too-much-deficit-and-debt-reduction-too-soon-will-wreck-the-recovery) “now about $17.5 trillion, found on the ‘debt clocks’ that are so popular with debt hysterics. Gross debt (and its close cousin, ‘debt subject to limit’) is debt held by the public plus debt internal to the government“. This is fair enough, yet there is no information, not even any indication when this debt will start to lower. There is another side to consider. When we look at the IRS data book (at http://www.irs.gov/pub/irs-soi/13databk.pdf), consider that the IRS collected a net value of taxation of 2.4 trillion dollars. A slightly more accurate number is 2,490 billion.

When we consider all the numbers thrown at us, like the ‘% of the GDP’ and so on, even if we accept that the 17 trillion dollars debt is held on multiple level, compared to what the IRS collects, we see a number that reflects the tax collected, compared to the total debt. The US gets through taxation a mere 14% of where the debt is at. How is any of that realistic? So, the total collected taxation, before any other cost is taken into account (like paying government staff and utilities), it only amounts to 14%, after all that is done 0.1% is left if the US government gets a fitting budget (something that has not been achieved since president Clinton was in office).

My issue is not just with the US debt levels, it is also about the ‘blasé’ approach economists are throwing at the people stating that things are not that bad and that it will all work out. That part is a figment of THEIR imagination, because for things to resolve, actions must be taken and none are getting taken at present (or in the near future for that matter). My biggest issue with the Article of Chad Stone is seen at the end. His quote “Lowering the debt ratio comes at a cost, not only risking the recovery if it’s done too fast but also in burdening businesses and households with larger spending cuts, higher taxes or both to stabilize the debt ratio“. There is truth in that statement, yet the issue that the money should have NEVER been spent is an issue that is ignored. The culprits of this dangerous endeavour are not named, not held accountable and many of them walked away with millions in bonuses.

We are however nowhere near the end of this debacle. The articles give another view on the matter. An article was published in 2013 stating an entirely different matter of debt. The REAL total debt is set at 70 trillion (at http://www.foxnews.com/politics/2013/08/15/california-economist-says-real-us-debt-70-trillion-not-16-trillion-government/). The quote that matters is “Hamilton believes the government is miscalculating what it owes by leaving out certain unfunded liabilities that include government loan guarantees, deposit insurance, and actions taken by the Federal Reserve as well as the cost of other government trust funds. Factoring in those figures brings the total amount the government owes to a staggering $70 trillion”

Now we are off to an entirely different race, this only gets worse if we take the Bloomberg article into account from March 2014, which headlines as ‘Debt Exceeds $100 Trillion as Governments Binge‘ (at http://www.bloomberg.com/news/2014-03-10/debt-exceeds-100-trillion-as-governments-binge.html). Make sure you realise that this last article is about global debt and not about US debt.

This was already on my scope for another reason, but I will return to that shortly. I need to return to the Fox News article where it stated the view of Professor Hamilton, an economics professor from San Diego. The reason for this is because I try to stay fair and balanced (statement plagiarised from Fox News) and as such, as I found additional views from the professor, it is only fair that I mention that too. This all is linked to a paper he published in 2013 (at http://econweb.ucsd.edu/~jhamilton/Cato_paper.pdf), it is the starting quote “This paper examines the growth of federal liabilities that are not included in the officially reported numbers” which should grab your attention. Yes, we are talking about ‘off’ the book liabilities, which should make us all wonder whether ANY government should be allowed to be part of liabilities that are not on the books to begin with. If our job is to stem the tide of irresponsible spending, then keeping things ‘off the books‘ as the ‘kids’ seem to state, should not be allowed under any condition. If we look at the quote that was found in the Econ browser by professor Hamilton, we see “Similar calculations from the trustees reports for Medicare report Medicare’s net unfunded liabilities for current program participants to be $27.6 trillion. For more details see Table 4 and the accompanying discussion in my paper.” The floor should open to an entirely different debate and soon. I think it is high time that these events are properly mapped out and as such ALL governments need to adhere to a different level of ‘accounting’. Their books can no longer remain silent in regards to unfunded liabilities. Is it any wonder books are not in order in a massive amount of nations?

This now grabs back to other observations I made and more important the small revelation my data implied. On March 22nd 2013 I wrote the blog article ‘60% confiscated and counting in Cyprus!‘, here I quoted “If this is what frightens the US, then consider the consequences of a system like LIBOR being manipulated through the total value of trade. If that would have been off by 11.2%. Out of $1000T (UK and US combined) then that difference would be $112T“, I implied to some extent that not only were the percentages messed with, I had some reason to believe that someone had messed with the total trade value that LIBOR represents. Perhaps my mistake (to some extent) was thinking that it was ‘just’ manipulation. In my defence, I came up with these findings before Professor Hamilton had finished his paper, so as a non-economist I was slightly in the dark to begin with. Consider that some politicians could be overspending, whilst using the options of unfunded liabilities within LIBOR to excuse themselves for accountability? What will other governments say, when such events are brought to light (if that would be happening). More important, if my number was closer to the truth then many considered, the global economy is playing high stakes poker with debts twice the size then most realise and our cost of living is based partially upon the irresponsible spending of both Washington and Wall-Street. How are the people ever to get a fair shake at a happy life, when a group of no more than 3000 people have been spending the dreams and futures of well over 1 billion people? Most do not realise that this goes way past the borders of the US, if there is indeed an established group editing the total value of trade considering the manipulation of the LIBOR percentage, the established setting of unfunded liabilities, as well as the breaking up on loans as they might occur. For this example, I would like to point you towards www.lsta.org/WorkArea/DownloadAsset.aspx?id=2480, here we see a paper from Credit Suisse made by Julia Kingston in August 2006. The next part is just pure supposition on my side. Look at slide 35, here we see a term loan set in three parts. What happened when something falls over in 2 or 4 months? How many parts when Wall Street made its 8 trillion bungle was not written off? Is my consideration that the TOTAL LIBOR trade value has a massive amount of ‘entries’ that had remained hoping it would turn for the better? We have seen a multitude of financial advisors playing just such a card on many levels in the 2008-2011 periods. My question now becomes, was my implied 11.2% just the tip of the iceberg?

I am not claiming, nor do I pretend to have the actual answer here, My issue, as it was in the past is that ‘proclaimed’ Journalists sitting in the top newspapers have not taken a hard look at some elements. It is nice for them that Reuters does much of their work for them and many aspire, but will never come close to people like Paul Mason, Robert Peston or Deborah Hargreaves. Yet, how deep did they dig into LIBOR? Also linked (especially with the Guardian) was the claims that Jullian Assange made in regards to banking, they were never followed up (or so it seems), not even by the Guardian as far as I could tell. Consider the article the Guardian had on February 10th 2011 (at http://www.theguardian.com/media/2011/feb/10/julian-assange-wikileaks-book-claims). The quote “Asked about the ostensibly sensational bank leaks Assange keeps suggesting he is ready to release, Domscheit-Berg said the only banking documents he knew WikiLeaks had were ‘totally unspectacular’ is at the heart of this”. When it was ‘just’ about the US military there was some upheaval (especially by the US), yet when banking issues were raise (slightly mentioned in the Forbes interview in November 2010 at http://www.forbes.com/sites/andygreenberg/2010/11/29/wikileaks-julian-assange-wants-to-spill-your-corporate-secrets/). The interview gives us the following “Will we? Yes. We have one related to a bank coming up, that’s a mega leak. It’s not as big a scale as the Iraq material, but it’s either tens or hundreds of thousands of documents depending on how you define it. Is it a U.S. bank? Yes, it’s a U.S. bank. One that still exists? Yes, a big U.S. bank.”

After this the hunt for Jullian Assange really takes on additional energy. I have no idea what he found, or if it is even related, the issue is that there is a recorded atmosphere of unaccountability within the banks (on a global scale) which must stop, if not, not only will governments be allowed to continue in irresponsible ways, but the additional ‘myth‘ that banks and governments apply checks and balances need to be thrown out of the nearest window. A last quote from the Forbes interview is every bit as important “We’re still investigating. All I can say is: it’s clear there were unethical practices, but it’s too early to suggest there’s criminality. We have to be careful about applying criminal labels to people until we’re very sure.”

This is the part I had written about for some time, it was not just that the issue with Goldman Sachs imploded the financial industry; it was the issue that they, in black letter law, basically had not broken any laws. The people lost well over 8 trillion and no crime was committed even though their money was basically gambled away. It is that part, especially in the LIBOR sight, as well as the issue raised by Professor Hamilton in regards to unfunded liabilities. No laws are broken, but we are all kept in the dark in regards to the debts inflicted upon us, which in itself is a massive wrong.

1 Comment

Filed under Finance, Law, Media, Politics

Tagged as , , , , , , , , , , , , , , , , , , , , , ,

March 27, 2014 · 20:31

Setting the stage

The Ukrainian escalation is slowly seeing some events, but not in a good way. We have seen several speeches as well as actions against certain heavy weight big wigs in-crowd at the Kremlin. Will these actions hold weight? Time will tell. I went over several facts in the blog article ‘Strongarm, Intimidate, Terrorise‘ which I published on March 18th. I also made a coalition mention in my blog article ‘Foreign and Domestic‘ on September 12th 2013, where I stated at the very end “that view might partially depend on the steps the growing New World Order coalition of Russia, China and India will take“. In the last two days we saw the following events.

1. India, Russia to sign deal for anti-tank ammunition (source: The Indian Express, et al) for $2.4B.
2. Crimea Crisis Pushes Russian Energy to China from Europe (source: Bloomberg) for $350B.
3. Private Chinese firm to buy 100 regional Sukhoi jets (source: Reuters, et al) for $3.5B.
4. ONGC, Russia’s Rosneft may join forces on oil flows (source: Reuters).

This is just in the last two days. So, yes, we might think that we are putting economic pressure on Putin, but are we?
The last mention is that if we persist, there is every chance that the cheaper gas meant for Europe could be redirected to the Indian consumer. That is exactly the fear I voiced in the story involving the Crimea (Strongarm, Intimidate, Terrorise). The Reuters article also states “Rosneft said it had also agreed with ONGC they may join forces in Rosneft’s yet-to-be built liquefied natural gas plant in the far east of Russia to the benefit of Indian consumers”, which implies that Russia will get additional Dineros (aka loads of money) to build that plant, or at least parts of it.
Europe basically has agreed to a spitting contest which could cost them. There are still moral sides to consider, both sides states that they are correct and Crimean’s who saw a loss of income for thousands of households and desperately tried to save them to remain with Russia. The Ukrainian top really did not think that part through (as I see it). Did they think that forcing Russia to Novorossiysk, leaving the Crimea without one of their biggest consumers would not have an impact? I still have questions on the legality of the ‘transfer’ from Ukraine to Russia of the Crimea region, but I do not have a proper view on the legitimacy of the referendum as such (from a pure legal point). The fact that this is what the Crimea people themselves want (for a massive part) is largely ignored by the press. I will state that the NOS at least tried to talk to a few of these people and many wanted to return to their Russian past (they were also very assertive in not letting others talk on their Ukrainian view).
So what will happen next? Let’s face it, 4 deals do not make for a Chinese, Indian and Russian summer party, but these are massive deals and this shows that the coalition growth I expected is now showing more rapid growth, likely because of the Ukrainian events. For me, I am a business man and as such, I have downloaded the Sukhoi S-100 PDF’s and see if I can start a trainings company to train the Chinese crews on using the flight and navigation instruments of the Sukhoi S-100 (just me trying to get creative). 100 planes mean at least 400 crews, which is 800 pilots and 400 engineers, so 1200 prospective trainees to train. At $750 a day, I could be employed for at least 3 years. So that might be an option as life in Sydney is pretty expensive. People might snipe at this thought, but consider the ego contest we see growing in west versus east. There is every indication that energy prices are likely to rise by unacceptable amounts soon enough. We see that governments are more and more selling off their healthcare and other services to meet budgets, which means more costs for the consumer soon enough. A step by the way for which a government cannot get faulted, but we the consumer still get to pay the bill.
As unemployment rates are still growing to the extent it does, we will have to look at alternatives. If we are willing to work hard, then it is not the worst idea to consider Russian companies like Sukhoi and Chinese companies like Huawei. The next wave is for those who are willing to put in the hours and as several businesses want to grow into several domestic markets, which they will one way or the other.
So getting out there and set the wave so you can be there at the beginning and get to the higher level of the pyramid when it grows above the others is never a bad idea.
Should you get questioned on basis of morality of choice then consider the powerbrokers of Wall Street who got millions after the 2008 crash, The events around Silvio Berlusconi (not the intimate ones), Karolos Papoulias, President of Greece who was in office when the Goldman Sachs creative accounting event was discovered. It is not the question whether he knew what was going on, as president the Euro will stop at his desk in the end. The Finance ministers over that period were Georgios Alogoskoufis, Yannis Papathanasiou and Giorgos Papakonstantinou. Giorgos Papakonstantinou was the person revealing what had happened before he took the office and negotiated the initial 110 billion Euro loan, which makes his acts the one of high moral fibre. The list goes on and on and on. So, consider that many high elected holier than thou politicians have often taken the coin road as this was not illegal or criminal, it is just the cost of doing business. When it comes to businesses there are even more questions. When we see the bad deal the people at Boeing got, as reported by several media outlets in January 2014 as well as the technical issues we see popping up with the Boeing 787 Dreamliner. We have been looking at American companies for too long, perhaps it is time to look at areas where the runner up is hungry to become the biggest one, as they could be the source of your next good meal. So several elements are slowly setting the economic stage for 2014 and 2015.
If your livelihood is in jeopardy, where will you look next?

 

Leave a comment

Filed under Finance, Law, Military, Politics

Tagged as , , , , , , , , , , , , , , ,

February 14, 2014 · 18:11

A senseless merger?

OK, as stated in earlier blogs, I am not an economist; I do not have any degree in economy! Yet, the information that passed my eyes less than 2 hours before has me slightly baffled. I feel happy that this all is happening in the US and not anywhere in the Commonwealth, yet, the issues as presented makes me wonder when this will hit the Commonwealth borders.

The issue is that Comcast has decided to buy Time Warner Cable. (at http://news.sky.com/story/1210921/comcast-to-buy-time-warner-cable-for-45bn) This is not a huge thing, we are in a civilisation where the hyena and vulture rules, hence mergers happen a dime a dozen and many of them before most have had a chance to enjoy their first coffee. Comcast has 21 million viewers and they are acquiring Time Warner with 11 million viewers. This all seems to make sense. Now for the kicker! This deal will cost Comcast $45 billion dollars. Are we all awake now?

So, 45,000 million divided by 11 gives us a little more than $4000 per viewer. When you consider that Cable TV is set at an average of $30 a month, it could take 133 months just to break even (providing this is all borrowed at 0%, which it is never). So there might be a price hike for all 32 million users of that cable solution.

This is not a chance to become the large bully, as they were described by a consumer group, but you must admit that this is about a lot more than just ‘adding’ new customers. Oh and by the way, this is happening less than three years after Comcast bought NBC for a little less than $14 billion. (at http://www.bloomberg.com/news/2011-01-18/comcast-nbc-universal-deal-said-to-be-near-u-s-fcc-approval.html)

The Washington Post has an interesting mention, which was not found at Sky News “It’s worth remembering that Comcast limits how much data its customers are able to stream from the Internet, while Time Warner offers unlimited Internet plans.” (at http://www.washingtonpost.com/business/technology/comcast-time-warner-to-merge-what-happens-to-my-service/2014/02/13/b285f81e-94b4-11e3-83b9-1f024193bb84_story.html), so there are a few more kinks that the customer base might face as the merger goes through.

This all goes far beyond just Cable TV. It involves 30,000 community Wi-Fi spots (amongst several other elements); this entire picture becomes a lot more ‘interesting’ if we take the merger of Comcast and NBC in 2011. This is not just about TV; it is about digital media on an unparalleled level. The merger stipulates the 33 million cable users, yet, does that give a real view of the picture? In the first regard the 45 billion seems ludicrous, yet when we consider community Wi-Fi, broadband (or better stated digital media and networking), it becomes an entirely different picture, especially when we consider the following information from Reuters (at http://www.reuters.com/article/2013/12/02/comcast-ondemand-idUSL2N0JC1S120131202). Now we get an entirely different picture. If we consider this quote “The new technology is meant to give TV networks a way to earn ad dollars from earlier episodes. Currently, most advertisers only pay for ads watched live or within three days after a show airs. That could change if Comcast’s technology, which it developed in partnership with Nielsen, is widely adopted.” and add the following case study (at http://www.sierratechno.com/sites/default/files/Turning%20Data%20into%20Customer%20Insights%20for%20Comcast%20Cable_0.pdf) we now get another view. This is about data, plain and simple, when we consider the value of collected big data in long term planning, having a data warehouse filled with the acts of 33 million people, the 45 billion dollar deal is a steal at twice the price.

It is in my humble opinion really funny to see all these people nag, complain and cry on what the NSA is alleged to be doing, whilst at the same time, their cable provider seems to be tagging them with a ‘value’ price tag for marketing, sales and identification. So what is the cable value of a customer at Hunts point, the Bronx (ZIP:  10474)?

So it seems that Comcast is getting their value on several fields, yet I am still in the dark why Americans are so against the NSA trying to find the people endangering their citizens, whilst giving big business more than twice the powers that many bargained for. It seems that this is not a senseless merger at all, yet do both consumer groups realise the powers their cable provider (slash phone, slash internet provider) ends up with?

 

Leave a comment

Filed under Finance, IT, Media

Tagged as , , , , , , , , , ,

January 22, 2014 · 22:56

Cooking the books?

Sky News is bringing us another update on how good the economy seems to be. The reporters are so happy and so full of joy to voice the information on strong the economy is growing. It is a worrying turn of events. So, after the IMF had voiced on how George Osborne is playing with fire, now his vision will be bringing the UK a 2.4% improvement sending the UK back on par with the pre-crash numbers (at http://news.sky.com/story/1197837/imf-upgrades-uk-growth-forecast-above-rivals). The one part I do accept is that it is growing faster than its rivals, although, I do wonder how fast the German Economy would grow. Now personally I do believe that the status of the UK has always been correct (the fact that their economy was growing). My non-economic view had been in the area of 1%-1.5%, which would have been a pretty good result considering the mess most European nations were in.

In ‘A noun of non-profit‘ on May 15th 2013 I wrote “I personally join the group “Oh ye of little faith” on that one and if they are able to get the economy up to 0.2% positive in 2014 than they would have achieved quite the small miracle.” This was my view of the Dutch economy at that time. So far I am still to be proven wrong (at https://lawlordtobe.com/2013/05/15/a-noun-of-non-profit/).

The second quote in this regard is “It is the latest boost to the fortunes of the Chancellor, coming barely 24 hours after the Ernst & Young ITEM Club also increased its projection for UK economic growth this year. Although the Fund’s forecast for growth this year will be shy of the 2.7% predicted by the ITEM Club, the scale of the upgrade underlines how quickly sentiment about Britain’s economy has turned in recent months.”

I believe that we are being played! Let me be clear, the UK economy is getting back, it is stronger than most others and I think that this is a good thing. It is that 2.7% that I have a problem with. The number is way too high. I am not stating that the number is impossible, but it is extremely unlikely. (Feel free not to believe this non-economist blogger on this).

Why is this the view I have?

As I quoted in my blog ‘Cretan Independance‘ (on January 10th) “a senior policymaker in Brussels said: ‘The worst of the crisis is over. So the pressure to take tough measures is off. We’ve had enough of discipline, enough of sanctions, we’re sufficiently unpopular already. The worst is over, so let’s stop now.’”

This view seems to hold up, but when we consider the total of debts, whilst we consider the other debt issues I mentioned, we should consider that we are not out of the woods. The UK numbers seem too inflated to me. Even though there is general optimism (at http://news.sky.com/story/1198691/osborne-hails-new-imf-growth-forecast-for-uk), there is also too relaxed a view on the damage we are all still facing. The quote “The IMF forecasts that the world economy will grow by 3.7% in 2014, up from 3.6% in its last forecast.” is one of the most interesting ones.

There are two sides. The one side might mean that the economy is going up, which could be good. Yet, the negative side is the side of government overspending all over the place. Add to that the fact that big business still has way too many loopholes to fly through (avoiding the taxation the governments are already spending), which means that no matter how good the economy, government overspending means that you and me will end up with the combined tax invoice. As balance is lost in these matters, the economy looking up, does not mean that life will get any better for you and me for 16-24 months and even though BusinessWeek had ‘good’ numbers to mention in their article (at http://www.businessweek.com/news/2014-01-22/u-dot-k-dot-unemployment-drops-to-7-dot-1-percent-in-lurch-toward-boe-threshold). If we consider this quote “Unemployment measured by International Labour Organization methods declined to 7.1 percent in the three months through November from 7.4 percent in the quarter through October, the Office for National Statistics said in London today.” we could consider this as good news, yet, until the February numbers are known, any party-hat shown is for now one too many.

Do not get me wrong, I would love to be wrong in this instance. Yet, I have seen several outlets blasting away the good news left right and centre, and 2-3 months after that some unfortunate bad news is thrown our way. Some message like ‘we had expected slightly better news, yet it seems that the numbers for the immediate future will stagnate‘. At that point, you better believe that you are watching a bad news management routine. The UK is on the right track and that is really good, but to weaken resolve anywhere in 2014 is in my view a really bad idea. I prefer to see the UK coming out on top at the end of 2014. George Osborne has shown that his vision was right; I reckon that the UK will be a lot stronger at the end of 2014. There is additional supporting news in my favour in regards to the picture we are getting painted (at http://www.businessweek.com/articles/2014-01-09/investors-are-getting-hungry-for-pigs-debt-again).

It seems that the 4 biggest indebted nations are at it again. The quote “Europe’s having a bond rally and the PIGS are playing host. Portugal, Ireland, Spain—and even Greece, where Europe’s debt crisis began—are heading back to the bond markets and enjoying their lowest borrowing costs in years, as investors appear reassured that the region’s sickest economies are on the mend.” is a little colourful, but it seems to fit with the picture we are offered. First we see messages of the ‘sudden’ light at the end of the tunnel as well as the mention of easing from a senior policymaker in Brussels. I think it is all about the next wave. If these bonds fall through, who will bail others out? This is in my view the fear we should have and as such it is also the fear UKIP is playing on, which is why May 2014 could change the game for all concerned, because the Eurozone will see the shape of an entirely new nightmare, one that will haunt us all for a long time to come.

The Bloomberg article does bear a nice quote “The reduction in the risk perception, and this sort of market euphoria, is leading to a rerating of sectors and countries most penalized during the sovereign debt crisis.” This reads in two directions. The first is that it implies that perhaps the most penalized nations should not have been so and the reduction of risk perception. That is in my view the real fear. It is not just about the reduction that is implied, but the extra shifting of debts. But when payment is due, which will happen and payment needs to come from new debts, what will be left?

This is the one side no one wanted to deal with. Just move on! It just doesn’t work this way, because in the end the taxpayer gets that bill and as such we must make sure that the people realise that these games on the gambling green will cost us all. Politicians and corporations will not have to pay a dime of the debt they all happily bestow onto us, what will happen then?

The entire story becomes even more fun when we consider todays mention in the Guardian (at http://www.theguardian.com/business/2014/jan/21/imf-world-economic-recovery-outlook-weo). The second quote is “Blanchard confirmed the IMF had raised its UK growth forecast to 2.4% for this year, from a previous forecast of 1.9%. It was Blanchard, who last year warned Osborne has was playing with fire with his austerity drive, but the forecast for the UK is well ahead of Europe’s largest economy, Germany, where growth is forecast at 1.6%. France’s economy would grow by a much weaker 0.9% given ‘policy uncertainty is weighing on growth’, Blanchard said.” I stepped over the first quote on purpose. The events are not as they seem to me. The first quote was interesting “The global economic recovery will pick up pace this year but remains ‘weak and uneven’, the International Monetary Fund’s top economist has said.”

This is at the centre of my reasoning. The economy is weak, it is uneven and it will remain that way as long as nations keep their credit cards maxed out. That is at the centre of the issue. Those maxed out credit cards are great for the banks and great for the IMF, but you and me are only hurt by it as our utilities, our monthly costs will gain a rising momentum whilst our income rise remains nearly frozen.

Good for all except for us, the simple taxpayer! This is why I am so against the game that is getting played.

 

3 Comments

Filed under Finance, Media, Politics

Tagged as , , , , ,

December 23, 2013 · 22:44

Questions at this time

I have been fighting with myself in regards to certain issues that have been rising in this day and age. When we look at the definition of treason we see this statement “In law, treason is the crime that covers some of the more extreme acts against one’s sovereign or nation.”

The question is not just in regards to a nation as is the case with Edward Snowden, but what about the acts against the people? If we accept the following statement as an acceptable fact “Republicanism is the ideology of governing a society or state as a republic, where the head of state is a representative of the people who hold popular sovereignty rather than the people being subjects of the head of state.”

So, if that is true, then should we consider the acts or even the absence of acts that stops dangers to the people as an act of treason? I have written about some of these parts for some time now, as per 5 days ago the guardian is now a little more vocal about it (at http://www.theguardian.com/global-development/2013/dec/18/rich-countries-money-laundering-tax-evasion-oecd)

It seems that governments are FINALLY getting on the horse of action (as seen at http://www.reuters.com/article/2013/12/20/us-usa-tax-fatca-idUSBRE9BI13J20131220). Yet it seems that larger tax holes are still in existence in Ireland (at http://www.reuters.com/article/2013/10/15/us-ireland-tax-idUSBRE99E0PD20131015)

So should tax evasion be seen as a form of treason? I am not talking about the people left right and centre trying to find every possible tax hole. I am talking about the large corporations and their boards of directors (at http://www.businessspectator.com.au/article/2013/7/15/social-media/looking-beyond-apples-tax-evasion-tactics). If we accept the quote “Taxed at 0.004 per cent“, then how un-national (or in this case un-American) should these people be regarded? And it goes far beyond that part. This is shown in http://www.bloomberg.com/news/2013-01-23/yahoo-dell-swell-netherlands-13-trillion-tax-haven.html as we see a glimpse of the size of evasion. It is nice to see that the Netherlands are getting of the tax evasion horse, but consider this article from the Guardian (at http://www.theguardian.com/business/2011/oct/19/tax-avoidance-in-netherlands-becomes-focus-of-campaigners) shows that this horse had a very comfortable 3 years. Simon Goodley and Dan Milmo from The Guardian reported all this in October 2011, if we consider that then the words of President Obama sound even more hollow when we read “President Barack Obama presented a series of proposals in 2009 to curb offshore tax benefits“. Hollow? Yes, because only now at the end of his second reign is he making an effort, making it clear that keeping rich friends near you is all about re-election. So, when the hard times hit in the next term he can point the finger at the Republicans. The idea that we hold large corporation’s tax accountable does not seem such an option for either administration (Democrats and Republicans alike).

So, after all these years, as the US is getting in a financial state more and more desperate actions are finally taken, which in my view is well over half a decade too late. The issue remains, as people are hit harder and harder for taxation, not just in the US, big business seems to escape their share of taxation, giving them a massive advantage. In addition, in what I would call the ‘incestual’ relationship between a board of directors and their ‘ability’ to avoid taxation on a borderline of actual fraud (example HSBC to name but one). The game does change when we read that governments themselves start to offer assistance in this field (at http://www.cbc.ca/news/politics/jim-love-canadian-mint-chairman-helped-run-offshore-tax-avoidance-scheme-for-clients-1.2441347)

So, as we go towards Christmas and those high and mighty people do their ‘charity’ thing, then also consider that it is not impossible that they have been paying less taxation (like in +18% less), how very adult adults!

So if you want to cheer for anyone, cheer for that 60+ person, who after getting cut on life, living standards and retirement funds, this person is still doing over 20 hours a week in a community centre getting it all done for the people in their neighbourhood, because that is true charity and one more noble then I could actually muster at present.

If we get back to Republicanism, if it was all about ‘representing the people’ and consider that the fat cats are the chosen few (like 100,000 in a nation of 325,000,000), are these acts of non-accounting a form of treason too? Especially as tax evasion leaves a nation in a state of destitution? America seems to be clear evidence of that as its total debt will be roughly $60,680,485,000,000 on Christmas evening. Still think delaying acts against tax evasion was ever a good idea?

Leave a comment

Filed under Finance, Law, Media, Politics

Tagged as , , , , , , , , , , , , , , , , , , ,

October 21, 2013 · 01:33

The reality that wasn’t one

Until we all realise that the edge of the abyss is on the Americans, we all need to realise that what will topple the Americans, will have a massive effect on us all. Partly because we are linked, partially because the events that are in effect there are also in effect in the Commonwealth and both are not willing to change their ways.

The issues all start with an article in the Guardian (at http://www.theguardian.com/world/2013/oct/19/barack-obama-address-shutdown-debt-ceiling).

The first quote is: “There’s been a lot of discussion lately of the politics of this shutdown. But the truth is, there were no winners in this.“

Actually, there are. The banks! They are making a bundle and as things go, the US will be (pardon my French) the Bank’s Bitch for a long time to come. $17,000 Billion has that effect on them. The article by the LA Times, which I personally call laughable, can be found at http://touch.latimes.com/#section/-1/article/p2p-77819148/

The four points should be looked at.

1. The U.S. debt burden is starting to decline. That’s right – it’s going down, not up.

Really? $17,000 Billion remains that. The economy is not even close to being on par, and as long as the government is spending over a trillion a year more than they earn, the debt is not going anywhere. If we go from the T-Bill path, then the payable cost of T-bills (basically the discount value), for the entire amount would be $453 billion. This is of course not realistic; the number that is closer is based upon the annual deficit increase. These numbers were discussed in my blog ‘A new third World continent‘. So, when they do start to mature, an annual amount no less than $1,000 billion a year for no less ten 5 years would be needed. So, that debt burden is going nowhere, it will be there waiting for the people and it will come with additional bills.

2. China holds only a relatively small fraction of U.S. debt.

That is actually true, yet roughly 14% of $17,000 billion is still a massive amount, it just seems little. By the way, if they suddenly cash in, the chances of the US being able to pay it becomes smaller and smaller by the day. The debt ceiling is there and it would be instantly crossed.

3. The U.S. has had a national debt for almost its entire history.

Again that is also true for the most, yet in 2000 it was only 5 trillion (roughly), so in 13 years it grew by 12 trillion dollars, it grew from 5 to 9 trillion up to 2007 and the rest grew in the last 6 years.

4. Debt crises have marked American politics from the beginning.

Well, that is not entirely incorrect. The article starts with General George Washington. The guy who ran the American defence forces before Patton, roughly about 140 years before Patton. The debt remained under 1 trillion until the 80’s, so basically the US went through Independence Day 1 (1776, not the one with the aliens), WW1, WW2, the Cold War and the Vietnam war. All these elements involving massive amounts of politics, (except the Cold war, which was a contemporary event where Ivan Aleksandrovich Serov and Allen Dulles had a bit of fun, as well as their successors (boys will be boys).

The moral here is not about the marking of American politics, it is about Politics not doing what they were supposed to be doing. From my point of view, the right questions were not asked, hence the actions proceeded were of a game where open and clear communications were not in play (or this deficit would be a lot smaller).
There is plenty of blame to go around! Initial there was former President Clinton, even though the coffers actually had real cash in his era, the Silicon Valley crash started to leave its mark. It drove Gray Davis (former Governor of California) out of office and it was the beginning of a massive shift. After that the USA had former President Bush. He did a good job, but then 9/11 struck. The consequences had a major influence, it also changed the premise of many, instead of a true revamping of intelligence, 4 agencies were suddenly spending like there was no tomorrow. The military costs went up, which would really hurt the treasury coffers and lastly the financial crash of 2008 was one that had a long term consequence, especially as a building named America got prepped in the years 2003-2005, by the time the 2008 financial fire hit the house, there were no fire hydrants and there was no one able to actually fight that fire. The rest is the now and many are still reeling from those hits.

This takes us back to the article in the Guardian, where President Obama is quoted saying “First, we should sit down and pursue a balanced approach to a responsible budget, one that grows our economy faster and shrinks our long-term deficits further.“

That is a simple answer, stop spending too much. I understand that spending $5 to make $50 is perfectly sensible, but America has become a nation of entitlements and costs, not profits. When you as a nation allow for tax evasion and keep on postponing putting a stop to these acrobatics (the Tax evasion rule is not expected to become active until 2014). So the US is in an extremely fragile situation. It is basically what you hear of Fox News (people like Glenn Beck, Bill O’Reilly and John Stossel), is that view wrong? Well the Nanny state is an overprotective government. I am all for protection. We should protect the weak, the sick and so on. But when you are broke, you cannot pay the beggar with coins you do not have, you cannot feed the hungry with food you cannot pay for. When your money runs out, it runs out. So until the government gets their horses back on track, entitlements will (not should) suffer. Perhaps doing something about Corporations and their tax evasion? For Example, Google paid the UK $12M in taxation, whilst their UK revenue was $3,000M. That is less than 1/2% in taxation. They avoided $2B in taxation in the US, according to the Bloomberg article (at http://www.bloomberg.com/news/2012-12-10/google-revenues-sheltered-in-no-tax-bermuda-soar-to-10-billion.html)

So how much taxation is NOT going into the US coffers? That list of corporations using tax havens is long and they are all prosperous. So, when entitlements fall away, look at those places on why support is gone.

The only part remaining is an article that came to view as I was reading up on a few parts. It is at http://www.rawstory.com/rs/2013/03/25/economics-professor-smacks-down-bill-oreilly-he-has-no-idea-what-a-nanny-state-is/

And the story is about Professor Richard Wolff having a go at Bill O’Reilly. It was on ‘Democracy Now‘ so the idea that this is about a democrat having a go at a Republican should be clear.

The first part was in regards to “a clip of O’Reilly talking about the latest round of European bailouts, which O’Reilly said is happening ‘because they’re all nanny states’ that do not have enough workers to support ‘entitlements’.“

So what are the numbers? According to the site, http://apografi.yap.gov.gr/ where the Greek state currently employs 614,053 people, 15,000 jobs got axed in the first half of 2013. The Greek population is around 11 million; this gives us that just over 5.5% of the ENTIRE Greek population works for the state. There are reports that this used to be over 20% (in 2011), so how is that not a nanny state? According to the Oxford press it is stated as “a view that a government or its policies are overprotective or interfering unduly with personal choice.” when 1 in 5 works for the government, overprotective seems to be the case. The only part I do not agree with, in this case, with Mr O’Reilly is that Greece seems more and more the consequence of short sightedness and utter stupidity. In reflection, when a government asks Goldman Sachs to hide the size of their debt, I personally want to sail towards words like stupidity and irresponsibility.

Professor Wolff sees Germany and Sweden as Nanny States. That is not incorrect, however the next part “they’re the winners of the current situation. The unemployment rate in Germany is now below 5 percent.” is misrepresentation. First of all, when changes were needed (around 2009) Germany tightened the belt by A LOT! This is why it seems that they got off lighter, because they decided against borrowing (a lesson that the USA still has not learned). The second part is that Sweden has a different system. Yes, they do have a protective nanny state, but taxation is also higher. It is 57% at the highest tier; whereas the rich and playful in the US seem to pay only 29%. In addition, most Swedes are ‘proud’ (slightly overstated, I admit) to pay taxation. The more they pay, the higher their status. (Inwards they’ll sulk like nothing you’ll ever see).

So, Professor Wolff is missing his shares of facts too. In addition, Sweden had to deal with its own issues in 2003 as Ericsson dismissed thousands of people. They went from 85,200 staff members in 2001, to 51,600 in 2003. That is over 33000 in just 2 years. Try finding a job in IT in 2003. So as Sweden got itself back on its feet, they had moved themselves into a position to remain cautious. There is a good PDF file to read, it is called ‘Growth and renewal in the Swedish economy‘ It is by McKinsey and Company and worth reading. I wanted to add the link, but like Google’s ability to avoid taxation; they are getting better and better in avoiding clean links (just huge links full of Google statistics garbage). Although Sweden got through it all not too harmed, their current projections are not too good. Their deficit is likely to rise to 3% this year. One of the more noticeable incomes Sweden had was from Vattenfal and their nuclear power plant, the issues in the UK showed that Vattenfal has issues, some of their sites (outside of Sweden) were not panning out the way they were. www.vattenfall.com/en/file/Q2-report-2013_35251329.pdf has some interesting materials. So as they reported an operating profit of MINUS 25 billion (in Swedish kronor), they are still there, but that is an amount that hurts, and of course as they depreciated that much, it will affect the Swedish deficit. Let us not forget, they only have a population of 9.5 million and unlike Greece they are doing decently well. As for health care? The numbers from the OECD (Organisation for Economic Co-operation and Development) show us two interesting facts, percentage of government revenue spend on health gives us USA 18.5% (highest), whilst Sweden spend 13.6% (lowest), then look at the percentage of health costs paid by government which gives us USA with 45.1% (lowest) and Sweden with 81.4% (2nd highest). So, either the Swedes get a much better bang for their buck, or in comparison the American system is extremely flawed. There are ways to find out which, but compared to the UK, which is almost identical to Sweden in covered health costs, yet the slightly higher spending by the UK government leaves me with the thought that an overhaul of US healthcare was essential, but until I see the actual numbers on the new system, I will remain doubtful whether Obamacare would ever be a solution (but I refuse to judge until better numbers are known).

So in the end, the information by Professor Wolff reads less correct when you take another look at certain facts.

Leave a comment

Filed under Finance, Politics

Tagged as , , , , , , , , , , , , , , , , , , , , , , , ,

October 4, 2013 · 00:26

Glowing in the Dark

OK, for now enough of economies who are on their last legs. It is time to take a look at something completely different. Whenever I see any news on nuclear reactors, my first thought is on an old sketch by Benny Hill. “Would you like to see your children to glow in the dark? Feed them Windscale porridge!” I thought it was hilarious. Of course, as I was still growing up in the Netherlands, I did understand the nuclear reactor part, but what I did not know was that the joke was linked to the “Windscale accident, accident in 1957 at the Windscale nuclear reactor facility and plutonium-production plant in the county of Cumberland (now part of Cumbria), in north-western England, that was the United Kingdom’s most serious nuclear power accident.” (Source: Britannica).

But issues at present are not that funny. Less than 24 hours ago another leak was spotted at TEPCO’s famous new place called Fukushima. (At http://www.reuters.com/article/2013/10/03/japan-fukushima-water-idUSL4N0HT0BW20131003) Quoting Reuters, we get the following facts: “Leak probably flowed into Pacific after worker misjudged tank capacity” and “Tepco’s efforts to improve water handling not sufficient, govt says“. Really? The word ‘Misjudge‘ is used?

In addition there are these two quotes. “Tepco has been relying on hastily built tanks to hold excess cooling water flushed over damaged reactors at the Fukushima Daiichi site” and “Tepco said the water that leaked contained 200,000 becquerels per litre of beta-emitting radioactive isotopes, including strontium 90. The legal limit for strontium 90 is 30 becquerels per litre.”

Fortunately, I am a technologist and not an economist. Yet, when we judge the news article Reuters comes with, which was DEVOID of the name of whoever wrote it, then I have two issues.

1. Was TEPCO actually this stupid? (Until later in the article I was not completely convinced that this was the case).

2. The Reuters article contains ‘misjudge’, ‘hastily build tanks’ and ‘strontium-90’, I want to see a clear identity on the source. The partially implied information that the ocean is receiving 6666 times the acceptable dose of radiation is leaving me with too many questions. The article ‘implies’ I said, because the wording leaves in the middle what the exact radiation source is. In addition, the fact that they are relying on hastily build tanks 2.5 years after the event is not just unacceptable, in my eyes the non-acting by the Japanese government needs to be questioned on EVERY news station on this planet. Just in case Tim Burton was right, we need to transmit that newscast to Mars too! (Before it attacks)

I know it is ‘only’ a day old and covering bickering US politicians seems a lot more sexy then radiation leaks, the fact that both ‘event‘ and ‘news covering‘ is a little out of whack, the leak should get the spotlight it deserves.

Why is this an issue? Well, in 1945 the Japanese population was set at 71,000,000. After the bombs there, Japan had massive issues, especially food shortages (not sure how much was due to radiation). Now consider that Japan consists of 121 million people. Even though Fukushima in one place, it dumped radiation into the ocean and it seems there is nowhere near the needed levels of control in play to prevent long term damage to fishing waters.

TEPCO does not seem to have its game face on and Reuters implies that it will not change for the better any day soon. As soon as the government walks in, the TEPCO execs will clamp up and the Japanese people will not receive the answers they are entitled to. The implication from Reuters that hastily build tanks were never improved upon within 3 years, so this implies that the problems the Japanese face are long term and might include long term health issues.

What is so upsetting?

In my mind I see a few. First the fact that places like TEPCO did not learn anything from Tsernobyl. Even though nature was the reason for what happened in Fukushima and the damage to any solution due to the tsunami is not their fault, but when I see that people ‘misjudge’, that hastily build tanks were not replaced within mere weeks by a less hastily solution gives me the shivers. If we look at TEPCO’s 1st Qtr. earnings for 2013 (at http://www.tepco.co.jp/en/corpinfo/ir/tool/presen/pdf/130731_1-e.pdf)

We see a consolidated ‘Net income’ of almost 4.5 billion dollar, so the ‘hastily build’ tanks are no way an acceptable excuse.

Now, we must realise that the Reuters source is not known and no way to check who wrote this, but either it was written by someone now in his/her last week of journalism EVER! Or, the TEPCO board of directors need to be openly arrested and get immediately placed in front of the honourable Hironobu Takesaki, Chief justice of the Supreme Court of Japan, with every Japanese TV news camera in that same court. I would like to see the faces as they answer in regards to those hastily build tanks, misjudgement and still report a 4.5 billion dollar net income.

I could accept issues when the net income was ‘ZERO’. I would understand that they are facing a disaster due to natural causes. I would understand that they got financial support from the government in such events. I do not understand the combination of 4.5 billion and utterly lacking acts!

Perhaps it is just me!

The engineer in me understands the nightmare that these engineers face today. The impossible conditions, the lacking resources and no clear solution. But these lack of results in 2+ years draw all kinds of questions, many of them not very positive.

This is not about Japanese worker ethics; this is not about the size of the challenge. It is that the combination and the time passed give nowhere near the lack of results. I do not envy them and no matter what will be done, it will be an expensive and time consuming endeavour. Whether they look at a Dutch water dike system to insulate the area, place 2-3 tankers next to these hastily build tanks to collect water, whether they freeze it all solid with liquid nitrogen. Something else needs to be done.

Last week Bloomberg had a much better article. (At http://www.bloomberg.com/news/2013-08-25/russia-offers-to-help-clean-up-fukushima-as-tepco-calls-for-help.html)

“‘It was clear for a long time that TEPCO was not adequately coping with the situation’, Asmolov said. ‘It looks like TEPCO management were the last to realize this,’ he said. ‘Japan has the technologies to do this, but they lacked a system to deal with this kind of situation’.”

It seems that the implied blame towards TEPCO sounds more justified then I thought, and in this case Vladimir Asmolov is the man who runs the state owned Russian Nuclear Utility. So the man would know his non-glow in the dark solutions.

What the article shows is the one part that many might not know “Russia repeated an offer first made two years ago to help Japan clean up its accident-ravaged Fukushima nuclear station, welcoming Tokyo Electric Power Co.’s decision to seek outside help. ” So Russia was there to help, but (and I am assuming here), TEPCO had a pride issue for 2 years? I get that they will weigh it all for the first few days, even the first month, but the first 29 months? I reckon it is time to ask questions.

No matter how I feel, I do wonder how members of the board of TEPCO can get home safely every night from  Chiyoda, Tokyo, Japan to wherever they live, having to get past 9 million Tokyo residents and many of them with likely not that great an appreciation of these board members as they have to live with the consequences of that glow in the dark mess.

Perhaps we will see a new Sketch in Japan soon:
あなたは暗闇の中で輝きたいのですか？福島フィッシュ
Do you want to glow in the dark? Fukushima Fish. (Via Google Translate)

 

Leave a comment

Filed under Law, Science

Tagged as , , , , , , , , , , , , ,

October 3, 2013 · 21:50

The numbers we ignore?

Today is another day that the US government is in shutdown mode. This is not Episode 8 from season 5 of the West Wing by Aaron Sorkin (brilliant man). This is reality!

There is polarisation on many levels and even though we want to blame one side as we stand on the other side, there is a deadly reality playing out in the corridors of power. The Democrats refuse to cut their spending; the Republicans will not play soft or compromising. Today we see the Guardian with “Obama meets bank chiefs as economists warn of ‘deep and dark recession’” at http://www.theguardian.com/business/2013/oct/02/obama-bank-chiefs-economist-deep-recession. As we look at a few facts quoted “President Obama met bank executives including Goldman Sachs chief Lloyd Blankfein“. The firm that helped many lose their house. I admit that this is unfair towards Mr Lloyd Blankfein, but the sentiment behind it stays in valid form (I will get to that later on).

“A looming battle over the nation’s $16.7tn debt ceiling. Treasury secretary Jack Lew has warned that the US could default on its debts if the limit is not raised soon.”

The second part is why the republicans are not budging. The Democrats are raising and spending and leaving it all to the next one in office. There is enough evidence to state that it is likely that the Republicans will return to the White house. In that regard, they have ZERO interest in cleaning up the Democrat mess, which will take several administrations. The fact, that the Democrats are not willing to cut their spending, whilst they spend a lot more than their budget allows. It is almost hilarious how things are spun. They claim it is all about affordable healthcare, whilst this option is increasing the debt by $100 billion a year. Now, it there was money coming in on the other side, there might be some level of case, but that is not happening. This current administration has added over 5 trillion dollars in debt during his first term. That is an overspending by 3.4 billion dollars a day. With Obama care this will be even more. Now, this administration inherited a sour deal. The economy had collapsed; there were issues with some financial crash in Wall Street and so on. Yet, the debt he has added to in one term is a lot more than Bush added in two terms. (So both sides have some of the blame). The republicans are not blameless, but they will not accept the continued addition of debt which is currently getting pushed. The US national debt is now well over 100% of its GDP. This is the part many seem to ignore. So if all taxation (which is only 26.9% of the GDP) is used to pay for the loan, then it will take 4 years to get rid of their debt. That works ONLY if the US government pays no wages, fixes nothing, builds nothing, buys nothing and heals no one. So for 4 years Americans must make due with nothing at all. This is not a realistic approach, I admit that! So you can only use to pay what you have left, however the government has been spending 120%-145% of the money they received and with Obama Care spending will increase. America is currently, in my humble opinion bankrupt!

Do you doubt this? This would be a fair enough position to take, consider any company being allowed to spend 120% of their annual revenue. How long until any bank will close the tap? In addition, there should be overall outrage that a company would work 100% of the time just to pay the bank. There is 0% job security in that regard, for if the annual +5%-+15% cannot be made, they will cut the costs that are not desired. In that scenario there will be no healthcare of any kind, because the sick do not contribute to the future of profit. That dangerous situation currently exists!

The article by the Guardian has more “But he warned that would be nothing compared to the Pandora’s box that would be opened if no deal on the debt ceiling was done before 17 October deadline. Congress must agree to raise the US’s $16.7tn debt ceiling by that date or risk being unable to meet its obligations.”

That is the crux! The total debt will increase and the republicans will not stand for that. My earlier comparison to get rid of the debt in 4 years is not realistic, I said that. Only if spending is lower than American income can the debt be lowered. It will take more than 3 generations to get that done. Some disagreed with that number. This is fair enough. Yet, let us make a small calculation.

$17T is $17,000B. The interest due would be $340B (it is actually higher at http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm, but it is about the example).

If we believe the census (as shown in my Blog ‘Biased Journalism on USA shutdown?‘) then the interest due is 13% of ALL collected taxation. How can ANYTHING get done after the interest is paid? And that is only interest, no decrease of the actual loan. So consider that all amenities, support and expenditure of the US must decrease by at least 16% to get this done. How can that ever be a realistic situation? This is why the Republicans are not budging. The more important issue is that the Democrats knew this. They knew that the train would stop and they ignored this. Not unlike in the Netherlands where everyone stated that the SNS Bank was too big to fail, the Dutch government nationalised the bank. Why the Dutch as an example? Well, they are in some similar predicament. They are not able to lower spending. They need to cut an additional 6 billion whilst their GDP was 700 billion last year. If they cannot cut 1%, how will the US ever deal with their debt? There have been words on corporate taxation left right and centre, yet what they are not mentioning is the issue that the UK has seen this year. Big business, like Google has been pushing their own booked revenue to other places. This quote from Bloomberg “Google’s chairman says he is ‘proud’ of the way his company avoids paying taxes ”It’s called capitalism,” Eric Schmidt told Bloomberg in a…” So, whatever money the US treasury has coming in, it is not from the big boys of business. They have the right accountants and tax lawyers. So here we get back to Goldman Sachs chief Lloyd Blankfein.

When we see the acts of Google and how Goldman Sachs was involved in the Greek issues, people would wonder whether they (Goldman Sachs and the US government) are not working together in the same way. If so, then there are more questions on the entire setting of the article the Guardian published (from the link at the beginning). There is no way that someone like Mr Blankfein is not aware what the big boys of industry in America are doing. When we read in places like Forbes that Google is not alone in these acts, but that companies like Apple are doing the same thing, then raising a debt ceiling whilst the captains of industry are not paying anywhere near the tax they ‘should’ then we must ask other questions. All this becomes even more hilarious when we consider the information from the Financial Standard on July 15th (at http://www.financialstandard.com.au/news/view/33335431) where it is stated that “US delays tax avoidance law by 6 months“. So the big boys in that initial Guardian Article are all about gloom and doom, whilst the US treasury seems to be missing out on taxation by not acting on Tax evasion (which is actually not a crime at present). So they want to borrow more, but will not put in place legislation that would lessen the dangers of paying the due interest. That last part is shown in Forbes article last month by Steve Denning. (At http://www.forbes.com/sites/stevedenning/2013/09/12/alan-blinder-six-reasons-why-another-financial-crisis-is-still-inevitable/)

  1. Dodd-Frank Act of 2010 hasn’t been implemented.
  2. The $5 trillion banking assets in derivatives are still off-balance sheet and unregulated
  3. The rating agencies are “still hired and paid by the very companies whose securities they rate.”
  4. The Volcker Rule forbidding proprietary trading by banks has not been implementedAnd I add;
  5. US tax avoidance laws not implemented.

From these parts we could come to the conclusion that the Obama administration has failed the American people almost completely, whilst unable to get spending under control.

American politics is a lot more complex, so there are other factors, but it seems to me that Steve Denning is showing us several dangers that are currently not stopped. So when, not if, they happen, the people as they walk away with nothing left, can wonder how that expensive affordable healthcare is helping whilst they have no house, no job and no food.

It is a sad day for many people, because in the end, not only America seems to be unable to control their budgets, they are only, for now the most visible one.

Leave a comment

Filed under Finance, Politics

Tagged as , , , , , , , , , , , , , , , , , , , ,

August 8, 2013 · 13:32

The Jay-Z talk

Today’s inspiration comes from a source, slightly right of the middle. It was an interview that aired on Bill O’Reilly which he (or his team) placed on Facebook. Jay-Z was warning for the dangers of escalating violence as the gap between haves and have not’s increases. This is a viewpoint I agree with, especially as I had come to the same conclusion many months ago. More important, that is a reality that is in play in both the US and Europe.

What is to blame? Well, the Financial Institutions started it all and as such they need to be mentioned. I reckon you have all read enough of this, but down the track, this will issue will pop up again. More important are the issues that have been more and more visible over several months. The Obama administration might claim that they have added 175,000 jobs, yet as you would see, this level of misrepresentation will get an ironic side soon enough. The massive spin at present is coming from the industrials. If we see the Dow index, then we look at 30 companies who ‘seem’ to be setting the trend, especially my American readers, have you noticed how 1 out of 6 in America lost their house and an even larger population lost their savings? So, if the economy is so high, then how is it that the damage remains so severe? Well, I am about to answer that.

Those 175,000 jobs, well the bulk of them are only part-time and they are mostly minimum wage options only. To be honest in such a bad economy that could not be the worst, but from my viewpoint there is more, which makes this a lot worse.

It was a little while ago on how some expert spoke with a level of pride that the Dow was so strong, and remained growing due to an increase productivity managed by a declined workforce. So basically, a 90% workforce was achieving 110% result and no one questioned it? The fact that even though these companies are getting record results, no long term hiring has commenced?

Well, here it is. The view I have is that the banks allowed for a shift of policies, which has pretty much introduced a legalised form of slave labour (a harsh reality, but not false). It is a nice irony that this has occurred during the time of an African American president. The first question I should answer whether this assessment is fair. Yes it is!

The reason is that neither President Obama nor President Bush did ANYTHING truly successful to hold these Financial Institutions accountable for the damage they bestowed on the American population and the rest of the world. The fact that even today in most nations strong bank regulations are still not a fact means that this can all happen again. So, when we get to 2020 and we all think that we are back on track, these players could play the same game all over again and we go back to nothing overnight. We might not even have to wait that long as banks all over the EU are now trying to loosen up ties with those controlling pensions of people all over the world.

So Jay-Z is correct. The gap of those who have and ‘the others’ is widening and it is widening a lot faster than you all realise. Consider the enormous debt that the American people got stuck with, with the due compliments of companies like Freddie Mac and Fannie Mae. Do you remember on how ‘something’ was going to get done? Well consider the house resolutions

H.R.1227 Latest Title: GSE Risk and Activities Limitation Act of 2011
H.R.1225 Latest Title: GSE Debt Issuance Approval Act of 2011
H.R.1223 Latest Title: GSE Credit Risk Equitable Treatment Act of 2011
H.R.1221 Latest Title: Equity in Government Compensation Act of 2011
H.R.1182 Latest Title: GSE Bailout Elimination and Taxpayer Protection Act

All these bills have been left untouched since 2011. The story does get a little worse when we consider the article from Bloomberg as published on May 8th at http://www.bloomberg.com/news/2013-05-07/new-regulations-are-strangling-community-banks.html

The starting quote: “The wave of new banking regulations that Congress created to deter and punish Wall Street’s misdeeds is landing with much greater impact on the U.S.’s almost 7,000 community banks than on the too-big-to-fail lenders.”

This gives us the question whether there is a foul stench coming from the big boy enabling group, which is supported by the quote “Federal Deposit Insurance Corp. show that large banks have both the lowest credit quality and the lowest cost of funds in the industry.” If the American people depend on their day to day issues on those community banks, then why are these regulations pushed out in this way? Well, in my view the banks ‘own’ the politicians and the banks decided a let them all suffer until regulations are dropped again, so we can do this one more time approach. This is how I see it.

Yes, banks definitely need regulation and not only in America. However, the need to strangle certain services that caused the bulk of all the grief could be choked more efficiently without placing these community banks in a vice. That would make sense, unless those community banks go the wrong direction of course, so better options could have been found, which makes us wonder where political levels of competency currently are.

Supporting evidence can be found in this article at http://www.bloomberg.com/news/2013-06-20/bank-of-america-and-the-tragedy-of-foreclosure.html

It is as analysed as a he said/she said situation. I think it is a ‘they said’ and ‘it claimed’ situation, but let us not revert to a black letter wishy washy job.

Where the bank claimed “These allegations are absurd, patently false and contrary to Bank of America’s long-standing policy only to foreclose as a last resort when other available options to help keep people in their home have been exhausted,” can be read as true, but that does not give way that this tactic has likely been used and to include the tactic as quoted “stall applications for loan modifications“. One does not exclude the other and as such it seems to me that as more facts become visible, the failed regulations and more important a wrongful push to pressure the entirety of banking, instead of certain services and strangling certain monetary reward schemes (read bonus structures).

So again, Jay-Z has a point!

This goes beyond America. The Dutch SNS Reaal bank is still in levels of turmoil, as can be read at http://www.nrc.nl/nieuws/2013/06/06/sns-reaal-verliest-netto-972-miljoen-in-2012-16-miljard-in-eerste-kwartaal-2013  (Dutch source), it boils down to the last paragraph [translated] “The Netherlands must submit a plan within 6 months for restructuring the SNS. The real estate branch must be placed in a separate organisation. On these submissions the commission will take a final decision“. This was in February and the final decisions are due this month whilst political Netherlands is on vacation.

My prediction is that these politicians will make an 11th hour decision with the humble stance that includes ‘alas’ and ‘we are forced’ and ‘this is by far the best solution’ and they will then push the real estate branch into a bad bank, which basically mean that (please pardon my French) ‘Banking Wankers’ high and low got away with it again and the Dutch tax payers will end up coughing up another 2.4 billion Euro, which comes down to every Dutch tax paying citizen paying a 175 Euro each for a mess that politicians are unwilling to control on several levels. So, these politicians are allowed a vacation whilst there is such a mess? My vacations got cut short twice by two previous employers and these politicians go on vacation making twice as much? Talk about dedication (or lack thereof).

This all boils down to Financial Institutions and Industrials are given the leeway to widen the gap of ‘those-who-have’ and the others, yet politicians remain silently in the background showing the spine of a paperback, not one hardcover amongst them.

Let us to get back to Bill O’Reilly where today’s blog all started. Many do not agree, but I admire the man. He can be right, he can be wrong and I have not always agreed with him, but he has always shown clarity of what he thinks was right. No half-baked answers! The issue with him is that he is another item of proof on the US failing levels. You see, he has a website, a talk show and he has a good (read very good) income. He donates all the profits of those website sales to what he sees as worthy causes, mostly Veteran and serving military and I am all for that. Now, as stated, his income is really good, yet nowhere near what some get. This is clearly shown as annual bonuses on Wall Street rose to a total of $20,000,000,000 (20 Billion) in 2012. So the challenge for Bill O’Reilly is to find 100 people donating to the community on that level, whilst they are not allowed to make over 15 million a year to be allowed on that list, in a population of over 325 million he will fail. So basically he makes less than a mid-level banker and donates a truckload. This man stands almost alone!

That is the evidence, that even though one can be found, many are destitute beyond their control and the people in financial institutions keep on being enabled by the very people who should be protecting those in such an economic state of destitution.

Jay-Z spoke a true word!

When we see what people like Jay-Z, Will.i.am and Bill O’Reilly contribute to communities in such a degree there is evidence that there is still a level of humanity in this world. It would however be nice if the politicians in many nations step up to the plate to make their places a lot better without enabling greed.

Leave a comment

Filed under Finance, Law, Politics

Tagged as , , , , , , , , , , , , , , , ,

June 29, 2013 · 20:10

About that house you wanted!

It seems the Dutch are ready to take on the advice the Wijfels commission is giving. Even though not direct, it will end up that you have to pay 20% cash up front for any house or apartment you desire. And indeed, there was the subtle ‘line’ that if you do not have that kind of cash, you should address your pension funds. Interesting on how they are willing to open up pension funds to fund that.

Am I against it? There are two sides to this. On the one hand investing into your own future is perfectly sane. If only there was some level of certainty. You see, the fact that banks leave its taxpayers with their risky investments is one thing, the issue on your house is another.

How does this differ? Actually, it should not. A good house is a good house. However, consider some of the housing. How these houses are currently so much over any normal affordable income. It is nice to see a newscast in comparison with Germany; however, when we look at the quality and square meter price, then these prices are far from average. Of course, when seeking apartments in places like Munich, then yes, the prices might seem comparable. Yet, where we see average Munich prices, that is pretty an average price for living anywhere in the Netherlands. I agree that it is not fair that those factors are accountable to the banks, yet, they were at the centre of events when the prices were artificially pushed upwards.

As they sold mortgages no one cared too much about prices as the interest was tax deductable. When that 7%-9% is no longer part of tax deductibility, then we have a situation where the consumer now pays for it all. Add to that coming up with 20% (in due time) and someone slyly mentions the need to access ones retirement funds, we see another political play to get pensions into the banking equation. There is supporting evidence from all kind of sources. An interesting read was how on average house prices went down in US/UK and other places by well over 20%, whilst in the Netherlands the prices lowered less than 8%. It is unfair to just name one factor, as several economic factors had been in place in other nations too. The US crash never hit the European sides that hard, Europe might still fighting the backwash from those days, but on average Europe never had too much of the hardship the US faced. Another reason is the fact that the Netherlands is pretty much ‘full’. Whilst many nations have plenty of housing space outside of the great cities, the Netherlands has become a connection of large cities, with next to nothing to separate them.

Still this play as such to push people towards their retirement finds is slightly less than acceptable. There is however the other side that must be highlighted too. According to Ernst & Young, between 1996 and 2012, the outstanding mortgage has gone from 138 to 650 billion Euros, That means that outstanding mortgages currently have risen half a trillion Euro’s in just 15 years. Some might think that this is not a lot, yet, consider that that the Dutch population is under 17 million, which seems like the banks remain dealing with 100% of unpaid mortgages. If these numbers are correct, then it bears reason that these numbers should be looked at. Is that actually true? You see, feeling it is wrong, and knowing it is wrong (even with supporting evidence) seems nice from the writers point of view, however what about the reader?

There we get the issue that gives us the crux. When comparing apartments in the Netherlands and comparing them To Sweden and Germany, I noticed something. I lived in two of these locations, so I know what to look for. I compared the Dutch http://www.huizenzoeker.nl, Swedish http://www.bovision.se and German http://en.immostreet.com/germany. When comparing an apartment in Rotterdam and Kista (outskirts of Stockholm) we see a comparable raise of prices, yet overall we get a lot more apartment in Stockholm then in Rotterdam, for comparable prices (30%-40% more living space). This comparison takes an astute dive when we look at Germany, especially Bavaria; where all over the place we can buy 5 bedroom villa’s for a lot less than a two bedroom crinkly monkey apartment in Rotterdam. As such we get a first inkling; if we need 40K to buy a 5-bedroom villa is one thing, needing the same for a 2-bedroom apartment becomes a whole other matter. Interesting how this was not mentioned.

So why so much issues about the mortgage changes? We see a political engine too eagerly bowing to the needs of banks, bowing to a group that has visibly forsaken a population, a group that have left many billions in debts and we still bow to their ‘needs’? Now with the additional need to open up retirement finances that had remained relatively safe until now.

Yet, with the massive outstanding mortgages, what is left?
In addition, knowing that level of outstanding debts, are their demands out of proportions? That question becomes a whole lot more interesting when we consider the following from Bloomberg (source: http://www.bloomberg.com/news/2013-04-23/dutch-mortgage-bond-market-threatened-by-capital-rules-dsa-says.html).

This part throws a whole new hole in these issues. Banks are pushed to outside influences, and even though the government pretend to be fighting the good fight to protect this market, it is interesting that this part was not that visible on the news. It might be that the Wijfels report shows this, but I have not read it, so I cannot tell.

My issue is now with this part of the Bloomberg article “Dutch banks are the second-largest issuers of RMBS in Europe, relying on sales of the securities to help fill a 452 billion-euro funding gap between deposits and loans, Dutch central bank data show.” Excuse me?

Looking at some quick 2011 population numbers:
Germany 81.8 million , France 65.43 million, United Kingdom 62.74 million, Netherlands  16.69 million.

EXCUSE ME?

How (or better why) exactly are the Dutch banks the second largest in Residential mortgage-backed securities (RMBS)? Even if 100% of the Dutch population is now under mortgage (which is statistically impossible), those numbers are showing an enormous gap. What are we not told? Even if we consider the 25% difference in mortgage funding there are a few questions that should be asked out there. What have the banks been up to, and exactly what questions are not being asked, or better, what part are people and perhaps even politicians not getting information on? Half a trillion Euro funding gap reads like that there is a deficit of half a trillion Euro. That could never be covered by 6 billion in cut backs. Before you think that this has nothing to do with governments then think again, if that shortage is not addressed then that money will have to come from somewhere else. What are the odds that this needs to come from taxation in one way or another next?  More important is the news that people saw over the last year. What buffers do banks have, and if so, how come the Bloomberg (a respectable bringer of news) information was not part of the newscast?

Is this an orchestrate play? It seems to me that a clear yes is in play, however, there are sides to this that do not make sense and they are outside of government controlled sources, sources that currently seemed to remain largely unmentioned. To me it seems that both banks and politicians might need to publicly answer some questions in regards to some of these issues and it would be nice that this is done before banks are given any more leeway or options to shift certain finance issues around.

Leave a comment

Filed under Finance, Politics

Tagged as , , , , , , , , , , , , , , , , , , , ,