www.atimes.net/Global-Economy/nine-pins-from-09.html

"On that cheery note, happy investing for 2010"

thanks for that, although I agree with your sentiments, I still don't get the Keynesian thing. More like, central banking 101, i.e. keep this piece of sh*t afloat. Keeping money moving was the whole idea behind the Fed in the first place, having experienced the negative consequences of the various bank runs they created something to try and deal with them. It just unfortunate for our current crop of 'guys in charge' that the shadow banking system grew to its present size. All I'm seeing is a system effect, do something now to get you this result and something unintended pops up in the future.

Group think comes to mind first, central bankers all went to the same types of schools studied the similar stuff, they spend a lot of time together, They understand that the current system of international finance is an add hoc confluence of differing agenda’s. And that the sensible thing will likely get them fired or shot depending on who they represent, so they blunder along making compromises.

I’m thinking their next moves will be geared to bring offshore, OTC derivatives, margin trading, options and stuff to heal. The most stable states will probably hammer something out when it gets bad enough. In the mean time another fiscal kick at the can seems about all they have.

This is not the first financial crisis in history, nor the first one in my life, at one point in 1980 we were paying 27% interest on bridge financing. Try running a business under those conditions. It was the mid-90's before I was back to the level I was in 1977. Irony aside, this going to be bad for a lot of folks and probably going to negatively affect all of us to some degree.

Thanks Michael ... guess the key question above is, what the heck am I actually objecting to about the Keynesians besides their very existence?

Well I don't really care about what the Fed and ECB are TRYING to do ... that isn't my problem because I write for a publication called ASIA Times, so the key objective here really is to grab a bunch of these guys (by which I mean Asian politicians and central bankers) by the scruff of their necks and basically say

"Are you insane?"


And then when (or if) I calm down, the premise is - when you know that the US and Western Europe have basically brought their self destruct buttons down from the attic and are busy opening the package, why would you not do everything possible to stave off the effects of the inevitable? Ergo, sell every US/European government bond you have, get their currencies and exchange for fixed assets, commodities and so on. Leave them to their madness and let's see what end of history they end up ...

And yes, you are right: it's all group think in the corridors of the BoJ, SAFE, BoK, RBI etc. so to heck with all of them. As a friend who is a doctor (of medicine) said, you can't save people who don't want to live.

Capitalists like yourself - or indeed, any businessman who isn't trying to lean on the damn government for a bailout - are unfortunately a rarity in the schools of economics, funnily enough. The real tragedy is that all economists actually ASPIRE to be at a central bank or Wall Street firm rather than actually do a bit of work like running a business. No kidding.

CA

MY my, you two guys sound thoroughly jaundiced, pissed off. IT MAKES me glad that I AM living where I AM (big rasberry)!

WHILSt the article (link below) has been written by its author as critical of the Australian government for the lost opportunity for reform; the salient fact seems to be that Australia is today living proof that it is possible for a country to be similtaneously of the WEST AND solvent. THE global fiscal crisis and recession are things that here we only read about. Not part of our recent experience:

newsstore.smh.com.au/apps/viewDocument.a...SMH100116203F75H18OG

PS: last year the RUDD Labor government brought in a set of stimulous packages Keynesian in character that in our case seem to have worked. It did so without sending this country insolvent: CUurrently our government debt stands at only about 13% of GDP - compared to over 80% for USA and I believe around 200% for Japan.

AS I see it, Keynesian pump priming policies are well and good as long as these are used only selectively and as a temporary measure during times of severe recession. WHAT you guys seem to be objecting to is the routine abuse of such measures, even during bouyant times, for the purpose of enriching powerful vested interests?

I would not describe my feelings as jaundiced, just anxious. For the reasons that Chan outlined and my understanding of how groups think. I don't see the folks in charge as insane, they are simply out of ideas, which is probably worse.

Most business ventures take time, you need to initiate, plan, produce and close. A stable means of exchange is a must. You can't have currency, interest rate fluctuations, profit margins simply aren't big enough to absorb this. And I do not see any real effort on the part of the Central Banking Community to try and establish a stable currency situation.

They are simply maintaining the status quo, China needing to continue to absorb it still huge marginalized population, the Americans and Europeans having to kowtow to their electorates. Smaller resource producers like Canada and Australia totally dependent on the success of these other countries. A careful reading the article MW posted alludes to this.

this is a complex mess, made worse by casino banking practices, and a group of central bankers who will not or can not say what needs to be said.

Can't see them[American/European/Asian bankers] challenging themselves so they will probably take it out on the offshore, shadow banking world. This would only address a small part of the problem.

MW, it is fair that Australia has had it good - they are after all producing stuff (commodities) that at least some people want .. for now at least.

The point is that if China ever decides to reduce fiscal stimulus and especially infrastructure spending, the resultant drop in iron ore / coal / ferrous metal prices will be impossible to rectify .. and THEN the chickens come home to roost not just for Oz but also for other commodity producers.

What you really have to be thankful for is that Chavez isn't in charge (remember the Venezuela devaluation of last week - despite all the oil exports?) ... the point being that the old socialist nonsense / Keynesian policies always catch up. Granted that Chavez was extreme, but it is highly possible that we are only discussing a difference in degree rather than concept here.

And lastly, I see that Australia is actually increasing its resource dependence what with sundry criminal elements helping to reduce the future cash associated with education - Australia's third highest forex earner - with the recent spate of attacks.

CA

The article in atimes.com: atimes.com/atimes/Global_Economy/LA16Dj01.html

check the first post, you know I take care of details

Chan Akya wrote:
MW, it is fair that Australia has had it good - they are after all producing stuff (commodities) that at least some people want .. for now at least.

The point is that if China ever decides to reduce fiscal stimulus and especially infrastructure spending, the resultant drop in iron ore / coal / ferrous metal prices will be impossible to rectify .. and THEN the chickens come home to roost not just for Oz but also for other commodity producers.

What you really have to be thankful for is that Chavez isn't in charge (remember the Venezuela devaluation of last week - despite all the oil exports?) ... the point being that the old socialist nonsense / Keynesian policies always catch up. Granted that Chavez was extreme, but it is highly possible that we are only discussing a difference in degree rather than concept here.

And lastly, I see that Australia is actually increasing its resource dependence what with sundry criminal elements helping to reduce the future cash associated with education - Australia's third highest forex earner - with the recent spate of attacks.

CA


Chan, thank you for the reply. MY Earlier post may have seemed a little cocky but I AM Aware of just how much the wellbeing of our economy relys on external factors like demand for our bulk commodities. AWARE also of how crucial CHINA Has become.

I feel disquiet about the lopsided dependence on bulk commodities export we have developed. MUCh better OZ HAd a better spread of exports with more elaborately transformed manufactures and service export (LIKe we had a quarter century ago. BUT WHAT CAN we do? Bulk commodities are what the demand is currently for and we cannot afford to be choosy about what we sell abroad.

I read about CHAVEZ's devaluation with bemused fascination. Venezuela is about as far from here as you can get without leaving the planet and irrelevant from an Australian perspective. YET I STILL get the sneaky impression that Chavez's antics have more to do with a traditional LATINO Anti-gringo chip on the shoulder than any doctrinal, philosopical adiction to the creed. THEY are "socialist" by default because they are not very good at private enterprise - that's a gringo activity.
........................................

RE:Attacks on Indian students.

I made a vow that in these ATOL discussions I would not reveal my private interests. BUT in this case I have decided to make an expection. I have an indirect stake in the education of overseas students. I hold an interest in an investment property right on the threshold of AUSTRALIA'S ONly private enterprise university. WE RENT ROOMS OUT to students attending courses. THOUGH our renting is normally handled by an agent (ensuring anominity) I know from reports that in the time we have owned it our property has been tenanted by students from India, China, southeast Asia, Scandanavia, GERMANY AND THE United States. I HAVE undoubtedly missed some!

Not a report of a single attack on any students attending this university.

Virtually all of the attacks have occurred in just one city - MELBOURNE. My tenanted property is in Queensland.

They all seem to have been directed against INDIAN students. Our institutes of learning also accomodate CHINESE, THAI, INDonesian and other non-Indian Asians who would easily outnumber the Indians. YET no reported atacks against any of these,even in Melbourne.

I know Melbourne reasonably well; I was down there just a couple of months ago. THERE IS NOTHING obvious I CAN SEE ABOUT this town; not economic, social or otherwise that could explain this phenomium. A MYSTERY!

It is highly likely that next year AUSTRALIA WILL experience a big drop in our overseas students intake: BUT NOT BECause of racially motivated attacks but because the AUSSIE dollar has, over the past year, strengthened so much that it is making a course in AUSTRALIA too expenssive for many overseas students. THE causes of that unwonted 4x rise are high demand for our resources along with high (PROBABLY rising) interest rates resulting from revived economic activity here.

THAT bothers me: for regardless of whether our town house is tenanted or not, we still have to meet our repayment schedule to the bank.

Michael wrote:
check the first post, you know I take care of details

Yes, and I sure appreciate it. For boring tech reasons I had to post something via the atimes.net article page so as to integrate it with this thread, and I didn't see a link to the atimes.com version, only to the atimes.net version, which non-subscribing forum members cannot access, so ...

In an ideal world, we would have thousands of atimes.net subscribers all busily commenting via articles' webpages rather than via the forum, and I wouldn't have to do this.

MW, thanks for the post. Yes, I agree that there is more than meets the eye about Chavez; I am pretty sure that is true of all "socialist" spending across the world in varying degrees. Based on a recent trip in Europe it is fairly bad there as well - many people told me about the wasted spending and favoritism on political party lines for the stimulus; this is also what the Republicans allege about the Obama government (and of course it was a mere coincidence that Halli.. got all those contracts in the Bush-Cheney government before) ...

On the attacks on Indian students, I had a discussion with a few people and from what I can make out the biggest difference is that most other Asian students have their own communities in Melbourne (e.g. the Chinese and Thai communities) whereas Indians are more spread out without any area of concentration. I am not sure this is the case, but its what I was told. The implication of course is that Indians are thus more 'visible' and more prone to attack. It still doesnt explain some of the apparent police failures in these cases but that's a separate discussion in my opinion.

Thanks also for sharing your particular situation on student housing. Based on what you have described, and remember here that I have no locus standi to make such a recommendation, it appears that the best option is to sell out when you still can; or at least reduce the overall financial risk by cutting exposure.

Instinctively, your situation is similar to the commercial real estate situation in Manhattan and Chicago; a friend of mine has a "couple" of office buildings that have been securitized and now the creditors are grouping to take over the buildings. He asked for my opinion, and after looking at the cash flows (hint - they were really horrible), I told him not to fight it but instead to withdraw as much equity as possible which would accelerate the situation. I think he followed my advice in Chicago but not in Manhattan.

CA