double dip or dip, deep, deeper ...

... into depression?

Last Friday night I attended a lecture on Scotland "after the recession"; well presented and lots of information on how and why Scotland - so far - managed to cope pretty well.

The quotation marks in the title expressed the lecturer's doubts obviously shared by the majority of the audience of where we really are; "in" a recession, “about to get out of one" or is this the beginning of what could be seismic changes?

Even though we talked about Scotland in Scotland the dominating influence of what happens outside tiny wee Scotland, in Europe, in fact in the world is mind-boggling and some of this is mirrored in the headlines about Greece and the EURO just these last days.

Take nothing for granted!
100 years ago this planet hosted little more than one billion people; little did they know what they were in for: lots of turmoil and drastic life style changes, WWI and II, almost No. III, but also mobile phones, cars, refrigerators, free markets, freedom to travel for many and then plenty of everything for most; mobility unlimited: long live capitalism.

My Grandma, born 1905, knew the last German Kaiser, saw Hitler come and kill, lost it all, started from scratch and lived until the years when all-German Chancellor Kohl celebrated the flourishing German landscapes dogmatising the has-to-be-EURO.

In homage of capitalism and to rope in a reunited Greater Germany Europe installed this distressed single currency called EURO - eight years later we now pick up the pieces.

Think to the end!
The EURO is history: it was to provide shelter for the export champion Germany, sharing the bed with the other European economies that were and are net importers, and until 2002 had had to devalue their former individual currencies regularly; one pole and lots of antipoles; however, the exchange market acted as the relief valve and balanced the imbalances. One Pound after the war was DM11.00, it would be DM2.30, now; Italy added zeros (on the left) to the old Lira prices only to then cut them off on the New-Lira notes and to print more of those; same in France and Spain and Portugal - nobody called anybody PIGS then - but the daily figures for buying bread and butter had just become too long and too complicated to only be spoken out before the bread was getting old. With the EURO in place the antipoles acted as importers of what Germany put out even better - alone, it was all based on the buyers' growing EURO debt levels and an increasing (trade-)imbalance amongst the EURO countries. It had to implode (and where it hasn't yet it will) as the basic problem remains unsolved no matter how many “rescue-packages” they will come up with.

Look beyond...
Keeping the shine and moving forward by just pumping more debts of deeply indebted economies into what are over indebted economies, anyway, while the global war for the weakest currency and the lowest production cost, i.e. export by hook or by crook, has only just begun ... how does this make sense? When all seek their Heil in exporting who is going to import, to pay …how … when? The white spots on the maps are long filled with colour and data, no more new emerging markets, we have addressed them all; growth finds its limit on the given surface of this planet.

... revisit ...
the alternative: new Drachma for Greece writing off huge chunks of its debts and shelving the rest until the pigs start to fly will make Greece the holy golden tourist land and at the same time provide cheap labour right at the European doorstep; no need to go to China for labour intensive production and more pressure and competition just around the corner of EUROland. But then, would not EURO-trapped Portugal, Spain, Italy, Ireland, even France and very likely any other leftover EURO country want to enter the same Greek path? Dump debts the fast and easy way, provide jobs for their workers and import hard currency through extensive tourism programmes? A card house’s collapse does not happen in slow motion.

At the end the EURO would be hard but brittle like glass until it had finally destroyed the one and only supporting leg of what once was an export champion's famous economy; then imports to Germany might become inexpensive and worthwhile had not the German masses' purchase power been destroyed long ago.

A vicious circle...
Indeed, it is the classic robbing Peter to pay Paul or vice versa decision. Actually, I do not believe in the politicians being able to solve this overwhelming problem at all - simply because they are the very same that led us into this situation not listening to those many experts that had predicted exactly what has happened so far and is going to happen now. It was just so easy to see it coming and they were told more than once by very competent people.

... and so downward this spiral …
With or without a decision for or against hanging in there, the Euro, in fact Europe has lost its momentum; it has lost its competitiveness, the Europeans are exploited, sedated and stuck in serious but then deflective problems such as migration and ageing of their population; the real challenges, opportunities and markets with still some growth potential from consuming to purchase power are found in Asia; a pity that those are pretty much protected by language and more so by political and social structures.

…tightening in on us!

After what was dreamt to be one free, unlimited global market this vicious spiral is very likely to take us back into what was called sectionalism, once; in 1815 38 independent states formed the “Deutsche Bund”, an early structure of Germany later entering the Treaty of Rome (1957). It is worthwhile mentioning that only in 1833 the “Zollverein” tried to harmonise weights and currencies to allow the “Deutsche Bund” to assimilate what was a pot of different currencies within its members – a long process that even today under European structures is still not finished – but was crowned eight years ago prematurely with a single currency lacking any kind of solid substructure.

And Scotland ...?
What will happen is all but in our Scottish hands; regional or national election will not make a blind bit of difference; however, since waiting for who, devil or Beelzebub, will be the winner offers no progress we might as well prepare ourselves for what will happen undoubtedly; devil and Beelzebub have in common that the “time after” will feel like somebody hit the reset button; the fight for labour and for competitive, hard currency collecting export goods will repeat 19th and 20th centuries’ headlines; at the same time access to resources will only be available for those who pay in advance with hard currency or utterly inflated paper money. Protectionism is around the corner when all is in short supply and needs fighting for.

If Scotland was considered a company, what would the management do? Would it not try to make the company as independent as possible from external influences? Would it not increase the level of self sufficiency? Would it not secure labour and stock up on any possible resource and raw material it needed in case of a crisis? So for Scotland this means to get much more independent – not politically but economically, i.e. its dependence on food, energy, all kinds of resources and at the same time secure labour and self-supply. The import of tourists' hard currency might become very difficult should the EURO and/or the Dollar decide to take a plunge; vice versa, imports of food and energy would become very difficult should the Pound be targeted as the next speculation victim – any of this can be better weathered if we made ourselves as independent as possible.

This might all be depressive news; but then, much better than a long, dark depression. So go for it.

Carpe diem!

re-pression is programme

Stock markets are running out of arguments where "all the money pumped into the economies" would pump the global party to new heights. While bank crunch has now turned into a credit crunch and soon will be a supply and demand crunch the global players gamble on all kinds of commodities, an artificial world they dream to live in and bound to bounce.

The wake up call will be ugly; it will be a fight for labour and energy enforced by neo-protecionism which will leave the neo-liberals homeless.

Not that charts tell you much other than memorising the past; obviously 1929/30 and last five years' FTSE look very similar - the challenging difference is that then we had lots of white spots on this planet and WWII was next while today we have many unsolved hot spots in a globalised over-populated world pressurised by the ongoing fights for labour, energy and any other resource.

And why does the GBP look so similar?


Carpe diem!

minus + minus = -?

Wall Street Journal: original article

-0.5 + -6.3 + -6.1 = -12.46[%]

The -12.46% stands for the shrinkage of the US economy since 01-07-08, so 3rd. and 4th. quarter 08 as well as 1st. quarter 09; nine months.

This is still quite an artificial number, far from being punchy.

You will find more numbers here, e.g. +0.4, -23.0, -51.8 which end up at 37.3% of what it was on July 1st last year, a recess of round about 63% representing the decrease of the 'gross private domestic investment'.

This is like a ship that under full steam drops anchor; like a complete economy going on strike; I guess tax revenue will mirror that.

Carpe diem!

Ownership comes with Responsibiliy

guardian

Bail Out, but to completion!

More and more articles and reports are accumulating: unemployment bankruptcies and insolvencies on the rise; companies in reverse, or closing down, many laying people off: the common denominator; lack of liquidity in the markets.

The government claims, it bailed out the banks; to me it is obvious that this solution has only been half baked; if that. There is the ongoing discussion about the installation of one or more "Bad Banks" - after all the months of pouring public money into the banks, the same politicians tell us we will need "at least"

£606bn of new debt over four years but they still refuse to think the disaster to its end and go the whole hog.

Clearly, this is putting at risk what was invested so far! Tax money that was used to "bail out" the banks (not in full as we have learned), this same money in the hands of the polluters is now denied to play its role - and this is not to say that irresponsible lending has to re-start. No, it is responsible lending that is now needed to help the economy recover from this bank crunch; the crunched rather want it to be a global economic crisis in order to distract from their own failures. This must be stopped.

So, we must go the full way, now, bail them out to completion, now!

Install this "Bad Bank" and put things straight. Why not call it what it is though, the "Good Bank" as it is the bad ones that desperately need the good one.

Otherwise this investment into owning the banks will only become toxic, bad debts.

Carpe diem!