Elaine Meinel Supkis
Lots of financial news today! The business about debt growth, the power of governments to ease the pain of economic contractions, global lending and global recessions are being heavily discussed in the news and online. Tying all things together is quite a struggle. But my key to all this is to understand military financing, fairy tales and human psychology. We are like that stupid TV show, 'Big Brother' which nearly had that flimsy McMansion of idle waste collapse on the heads of the goofy, useless drones inside.
The collapsing mortgage market continues and far from slowing down, is accelerating. The inability to understand all this on the part of the media and our financial officers in the Government is a scandal we will pay dearly for this isn't over at all. The witless mortgage companies writing bizarre mortgage contracts didn't stop last year, far from it, they are doing it not just last quarter but this quarter! They are still at it, madly writing bad contracts and watching the older ones go bad at the same time. Digging deeper and deeper into the hole, they enlarge it and now some of the biggest players in this game are going down into bankruptcy.
The fees these conmen culled from the herd of investors will seem puny in comparison to the loss of funds we are just now beginning to see. Every penny of these fees should be returned to the investors. These conmen then should be sent to prison. Every financial collapse has these features: previous geniuses and financial wizards see their wands break and they either commit suicide, go to prison or flee the country. Why can't we prevent this sort of madness?
It is simple: greed always wins. I remember when the right wing began their 'greed is good' campaign. This flies in the teeth of 99.9% of history. Interestingly, it flies in the face of nearly all fairy tales. There are so many of them! In many stories, the person is given the choice between a jeweled box or a golden bridle for a wild horse or some such thing and a plain, old, beat up box or bridle. The bad sister or evil brother will invariably choose the rich item and the kindly, loving sister or brother will always want the plain one. Then it turns out, the golden, rich item causes the death of the greedy brother or sister while the plain one leads to marriage and happiness.
And here is my cartoon from back then:
Normally, when the price of anything is bid too high, the market ceases to rise. This is quite simple and is the basis for all market functions. When people bidding on something have access to unlimited credit, they don't stop bidding up prices. This is classic inflationary cycles. When there are no bidders due to lack of lending, prices fall and we have a depression if jobs are lost as well as all asset values. Money creation can come to a complete halt. This is why our top central bankers are so very anxious to create constant credit out of thin air. They think they can evade all bad outcomes if only they can keep credit creation going.
This means there can never be any rest cycles from any inflationary cycle due to endless credit extended so people can bid up the price of various machines or entities. A good example is wars: so long as outsiders are willing to extend open-ended credit to the warring parties, they will fight to the death. We have many such situations, the most vicious example being WWI. All waring empires in that desperate mess were bankrupt after only one year. One empire, Russia, declared bankruptcy, collapsed, had a revolution, a failed counter-revolution and ended up with this 75 year depression whereby rationing was the norm. Since three of the warring empires, Germany, England and France were also the world's collective #1 economy, by far, they had lots and lots of potential credit to burn before declaring bankruptcy.
When the war stagnated into deadly, mass murder trench warfare that killed or wounded many millions of soldiers and yet, not move barely an inch, all parties cheerfully continued this murderous bidding war because they all had credit to burn. But after 4 years of this sort of insane ignoring of reality, Germany reached its credit limits while Britain and France finally got the US to declare war and enter the death pit. This way, both could withdraw and let the US take all the losses. The US, in turn, was 'rich' because both England and France not only had to give us their gold as collateral for this insane spending spree, they, in turn, made promises to the US that they would repay us.
To do that, they decided to make Germany pay for all of WWI. This, in turn, forced Germany into a series of bankruptcies that thoroughly disrupted international trade and banking. This, in turn, when Germany finally got fed up and simply stopped entirely the pretense of paying off these massive debts, caused the entire world to go bankrupt. This is because, if any banker is so stupid as to think that infinite credit won't be abused, gets hammered in the end as all debtors declare bankruptcy.
This week, a family who got one of those bloated, big McMansion 'Extreme Makeover' houses on that TV show went into bankruptcy and lost their freebie 'dream home'. This is because they got it as a gift and seeing that they went from a house worth only $50,000 to one worth over $450,000 due to telling their sob story on TV. They got this free house during the period I was building my own home by hand, mostly by myself, while living in a tent, just to show the difference between beggars whining and people taking care of themselves.....these deadbeats went to a local bank three years ago and instantly drove up a huge debt against the property. $450,000 was like honey to a destructive bear ripping apart a bee hive. They instantly lost every penny of this windfall.
THIS IS WHY BAIL OUTS ARE DANGEROUS. The burned hand learns. Europe learned from 1914-2008 that the US would bankroll any military or commercial insanity. Since there was no barrier between wishes and getting funding, Europe happily rolled along whatever road they wanted. A grave turn around came by 1970 in the US: we started thinking the same way. Why worry about increasing debts if Europe will bankroll us? Ditto, Japan! So this new system was created to allow the world's biggest economy to run entirely on red ink: Europe and Asia would fund our credit needs if we allowed them to flood our country with exports.
This is an exact reverse of the WWI-WWII system. Then, the US allowed endless credit but only if we could keep out their exports! England, for example, desperately wanted to export to us after WWI. But the US retaliated by passing tariffs and erecting barriers. Germany had to export to the US because they were paying the entire cost of WWI. But we couldn't let them do this, either. So a trade war between England, Germany and France tore apart Europe. Hyperinflation ravaged Germany but kept out French and English exports to Germany, just for example.
Indeed, please note the solution the US is using to keep out exports from Asia and Europe is exactly the same: devaluing the currency! HAHAHA. Um, gads, no one reads history upstairs in our government. We are behaving exactly like a defeated empire, not the world's #1 economy! Well, yesterday's big news, as far as I am concerned is simple: Europe and Asia have finally cooperated in a successful scheme to put the US back in the same dire situation Germany was in post-WWI. The Japanese carry trade is back with vengeance and Europe will pull out of the doldrums by exporting to the US as the euro falls against the dollar but NOT against the yen and yuan even though the biggest exporters to Europe are them, not the US. The US is Europe's RIVAL. For example, if the euro is weaker, the Europeans can underbid against Boeing in the jet markets, a huge goal of the European leaders. Now, on to today's news:
The Massachusetts Educational Financing Authority yesterday said it will not be able to provide student loans this fall for the first time in its 26-year history, leaving more than 40,000 families without an important source of tuition funds just weeks before college classes begin.
The nonprofit lending authority, which last school year provided $510 million in loans, said it has been unable to secure funding to provide private student loans due to the ongoing turmoil in the nation's credit markets. The agency had already disclosed in April that it would no longer offer federally backed student loans.
It is now contacting the tens of thousands of students to whom it has made loans in the past, urging them to seek other options.
Lending to our students is dying. It isn't causing problems due to higher interest rates that accurately reflect the rate of inflation, it is GONE. Nothing there. The banking system bankrolling student loans in Mass. is DEAD. The state is run by Mitt Romney who is an offshore pirate tax evader. Arrest him. When he was elected, he spent lots of money for power and promised to make everyone rich. Instead, he bankrupted the state systems. I hope he is charged like the Senator from Alaska. Corruption is everywhere and evading taxes while spending public money is criminal. Arrest Cheney, while we are at it. A war profiteer deserves a long stay behind bars and I don't mean drinking joints. I am talking about Utah dry bars!
Many doors will not shut in our faces. A degree is a necessity if one wishes to get a good job. Some people are lucky and can, without a degree, hack their own way through the world. But they are few and far between. The average person needs this or they are shoved aside. And I happen to be a fan of learning. There were two great periods of 'Free School' foundations: during the Great Depression and during the Stagflation Seventies. I participated in these schools. They may not have had the capacity of structure or systems that universities had but they were great stop-gaps for gaining skills and information. I suspect we may see yet another revival of this, only now we have the WONDERFUL tool of online learning.
The one problem is differentiating between flawed systems and working systems. It is easy to fall down various rabbit holes online. They are everywhere. If something is very appealing and seems simple, it is often a trap, not a door to advancing knowledge.
Gov. David A. Paterson, in a brief and rare live televised address, said Tuesday evening that New York is facing a fiscal crisis in the wake of Wall Street’s meltdown, and he called on the Legislature to return next month to grapple with a budget deficit that will grow to $26.2 billion over the next three years. “Our economic woes are so severe that I wanted to talk to you personally this evening about where we stand,” the governor said in a speech from the Capitol that lasted roughly five minutes. “The fact is, we confront harsh times. Let me be honest, this situation will get worse before it gets better.”
The state’s potentially staggering shortfall stems largely from the financial woes on Wall Street, which accounts for a fifth of the state’s revenue. A recent review by The New York Times of the latest statements by large financial firms based in New York said they were likely to hand out $18 billion less in pay and benefits this year than they did last year.
In his speech, the governor said taxes collected on 16 of the state’s largest banks fell 97 percent between June 2007 and June 2008, to $5 million from $173 million.
Now, I thought this would be headline news but the NYT, for example, had it far below the fold. I had to use Google to find it. The number of stories carrying this news were precious few and far between! I recall when Schwarzenegger did the same thing, it barely made waves. I would suggest the desire for people to be kept in the dark is responsible. Remember: none of our 'leaders' can talk to us if the news is kept out of sight and out of mind! When the media suddenly shuts of the lights, doesn't talk about something, we miss important opportunities to have a loud public discussion of what the hell is going on! Just like the blanket of silence that has muffled all talk about Iraq and Afghanistan and the wild, wild US spending there has prevented us from saving ourselves from disaster.
Just like endless US credit extended WWI fatally, the credit the US is getting so we can continue to bleed to death in Iraq and Afghanistan continues....maliciously. Everyone extending us this credit know perfectly well, it is killing US power. Note that the US government is not extending credit in useful places that make us stronger....lord forbid we use it to expand export markets! It will vanish and it has vanished when it is used for that purpose. Bit of news, by the way, the dumb Doha trade rounds collapsed. HAHAHA. Good.
Back to Patterson's hidden speech: he is forced to cut services, fire people and reduce grants. HE HAS NO CHOICE. He can't run off to trade rivals and beg for more credit. Unlike the President or Congress, he has to balance the state budget somehow. Instead of waiting passively for the fiscal red ink train to hit him, he is moving quickly to deal with the pain. Unfortunately. I keep saying, 'You put away in good times, stuff for rainy days'. Or as one of the very oldest Bible stories tell us, 'There are these 7 fat cows and 7 lean cows. The skinny cows ate the fat ones. Therefore, remember, you got to save during good harvests because you will be forced to eat the seed grain for the next harvest and this is very bad.'
Well, we ate all our seed corn for next year's sowing. During all the 'good' years, as our leaders boasted about our 'strong economy' I was roaring mad because the economy was running on red ink, not capital. We put no capital aside for the lean years. The bankers kept reserves laughably low and thus were not able to cope with bad years. The government ran deepest in the red during the good years and now will have to hammer us all in bad years because it is bankrupt.
Note that the ratio of lending to GDP gets much worse during depressions. A good ratio is when we were solvent from 1950-1970. Instead of maintaining this solvency, we chose to do what the big empires did in 1914: overspend military and social budgets for half a century. The deterioration between the GDP ratios and debt is double the mess during the Great Depression! This is very significant. Our growth in capital has lagged far, far behind our borrowing. This is why Bernanke was chosen to be our Fed chief: to supposedly deal with the looming confirmation that we are entering a depression. His solution is to shovel all our excess dollars into the central banks of our dire trade rivals who are destroying our industrial base. Thus, he is expected to restart the previous status quo which is leading us into quadrupling the red ink side of our ledger books.
Americans carry approximately $961.8 billion in revolving debt, according to the Federal Reserve Board. Delinquency rates on credit cards are at the highest levels since the end of 2002.
Even as consumers cut back on using credit cards, they're finding it harder to pay down their balances, says Javelin President James Van Dyke.
"In some cases they're out of work or perhaps their wages have been cut back, or maybe they had a variable rate which they have to pay more for than ever before," Van Dyke said. When people use their credit cards less, "this changes what goes on in the industry because credit card companies typically make a lot of their money on the fees they charge merchants."
The reduction in revenue from new purchases, combined
In other words, we are a trillion in debt to credit cards. In good times, one can ignore this sort of bad lending situations. But in bad times, it doubles the pain. When people go bankrupt, if the credit card guys hammer them for fees and funds as well as the mortgage lenders demand they get something, too, we end up with fiscal slavery. People can't pay off their obligations or get new loans. If they do get new loans and are allowed to merrily default on old ones, they will make this worse and worse as no one takes anything very seriously.
Why worry about how much you are being lent if you can run off and start all over again without breaking stride? People who are defaulting on excess lending are certain they will be extended credit in the future. This is a foolish notion. So long as the world needs the US to sop up all excess manufacturing at a high profit margin, we will be allowed this fatal boon. But when we can't perform this function, we go down, hard.
All solvent people are pulling back spending. Anticipating hard times, they are being prudent. This is wise. The government is supposed to run in the black and when things go wrong, fill in for the consumers who cut back when things go wrong. Instead, the US decided to run even more in the red when times were good. Now, they are also cutting back when consumers MUST cut back! We have no choice. We can't commit economic suicide because the government and many borrowers were stupid and reckless. Not to mention, greedy and irresponsible. If no one is responsible, we crash. As we see clearly today.
The central bank on Tuesday released the results of its most recent auction. It's part of an ongoing program started in December that seeks to ease financial turmoil and credit stresses. Those problems -- along with the deep housing slump -- have badly pounded the economy, forcing companies and people to hunker down.
In the latest auction, commercial banks paid an interest rate of 2.350 percent for the 28-day loans. There were 70 bidders. The Fed received bids for $90.56 billion worth of the loans. The auction was conducted on Monday with the results made public on Tuesday.
'Get your cheap lollipops here!' yells Bernanke. Wow, if we all get loans at 2.35% we would all cheerfully reset our debts! Imagine the wealth that would flow if we all paid credit cards with a 3% interest rate rather than the obviously usurious rate of over 21%. Now why can't Bernanke do this for us? This window of easy lending to the reckless bankers who created this whole debt bubble is stupid, wasteful and isn't being done after first arresting the bankers who were so irresponsible. And confiscating all their wealth.
These open windows will now stay open until January 30, 2009 which is six months from now. And you can bet, this won't be the final deadline. Financial lending systems set up in the Great Depression emergency are still running today and are bankrupting our government, after all.
Harkening back to those two speeches from Mr. Bernanke, it is very clear that he sees the role of the central bank as different in deflationary times than inflationary times. Specifically, in the speech on Japan, he said (my emphasis):
The Bank of Japan became fully independent only in 1998, and it has guarded its independence carefully, as is appropriate. Economically, however, it is important to recognize that the role of an independent central bank is different in inflationary and deflationary environments. In the face of inflation, which is often associated with excessive monetization of government debt, the virtue of an independent central bank is its ability to say "no" to the government. With protracted deflation, however, excessive money creation is unlikely to be the problem, and a more cooperative stance on the part of the central bank may be called for. Under the current circumstances, greater cooperation for a time between the Bank of Japan and the fiscal authorities is in no way inconsistent with the independence of the central bank, any more than cooperation between two independent nations in pursuit of a common objective is inconsistent with the principle of national sovereignty.
Again, I'm aware that he was speaking in the context of both goods and services price deflation and asset price deflation in Japan, not just asset price deflation. So the parallel is not complete with current circumstances in America, which involves elevated goods and services inflation in the context of asset price deflation. Conventional wisdom holds that when an economy faces a paradox of private thrift, it is appropriate for the sovereign to go the other way, borrowing money to spend directly or to cut taxes, taking up the aggregate demand slack. Indeed, that is precisely what Congress did earlier this year, sending out $100+ billion of rebate checks, funded with increased issuance of Treasury debt. Good ole fashioned Keynesian stuff!
Concurrently, conventional wisdom is struggling mightily with the notion that when the financial system is suffering from a paradox of deleveraging, the sovereign should lever up to buy or backstop deflating assets. But analytically, there is no difference: both the paradox of thrift and the paradox of deleveraging can be broken only by the sovereign going the other way.
Fortunately, Congress is finally grappling with this reality, as it moves towards passage of Mr. Paulson's plan for backstopping Fannie and Freddie with taxpayer funds. It's not a fun thing to do, particularly following the use of $29 billion of taxpayer funds to facilitate the merger of Bear Stearns into JPMorgan. But it is the right thing to do. And it is further the right thing that Congress is doing it, not the Fed under Section 13(3), except as a possible bridge to Treasury authority.
This guy is INSANE. First, the Bank of Japan has NO independence from the LDP which has had one party rule of Japan since WWII. Secondly, the Bank of Japan lies about many things just like the Federal Reserve. And the Bank of Japan conspires with the Bilderberger people to create a money creation system set up via the Japanese carry trade. A weak yen and a super-insane low interest rate set well, well below inflation benefits the wealthy who tap this Free Funny Money™ so they can bid against each other for great works of art or buy huge palaces and yachts, etc. And this pays for wars waged by the US.
Bailing out everyone after they flooded our Ship of State with red ink and using red ink to do this bailing out is PURE INSANITY. But so many powerful people love this. The investing community is happy to the point of tears that they will be bailed out via more and more red ink owed to Japan and China. By the way, Japan's 'deflation' was not a paradox: it was deliberate policy on the part of the LDP and the export manufacturing giants. They suppressed wages and cut government spending on the Japanese people who are now significantly poorer. If they manage to save any yen at all, they must invest overseas or lose all value as it earns literally 0% interest in banks. This wretched system has devastated internal Japanese commerce and whole sections of the nation is being depopulated as the birth rate plunges. Always, in depressions, births go down.
It has been calculated from the flow of funds accounts that the ratio of aggregate mortgage debt to residential real estate value reached a peak of 50% when the home price and home finance bubbles reached their peak at the end of 2006. But the flow of funds accounts do not capture second and third mortgages. They do not capture the home equity loans that are in portfolios other than those of the commercial banks. There is a large “other” household debt item in the flow of funds accounts which includes various such claims against residential real estate collateral. I encountered one ratio calculated by the housing finance industry that suggested that, at the home price peak at the end of 2006, the aggregate loan to value ratio was 57%.....
If home prices fall nationwide by 35%, it follows that the average loan to value ratio will exceed 90%. About 30% of all residential real estate in value terms is without a mortgage. For all real estate with a mortgage, the distribution of mortgage indebtedness is very skewed. With the average loan to value ratio rising to almost 90%, a huge share of almost all mortgage debt will be deeply underwater. All studies show that when mortgages are well underwater there are defaults and foreclosures. This applies to the majority of mortgage debt classified as prime as well as the margin of mortgage debt classified as subprime. If home prices mean revert, the odds are high that in the shakeout that will follow the total credit market debt to GDP ratio will finally fall from its moon shot trajectory.....
In other words, if all the people who have paid off their homes and owe nothing are taken out of the statistics, the overdebtedness of the people who do have loans is nearly total. They are pretty much bankrupt. Houses are, like cars, queer things. They can't simply be held and then sold. You have to pay annual taxes, fees, upkeep, repairs, insurance, etc. They might rise in value but if they fall in value, unlike say, stocks or bonds, they have a HUGE overhead that can't be ignored. This includes dangers like vandalism, fires, earthquakes and storms. This is why, treating the home as an ATM machine rather than a necessity, is not a good fundamental basis for an economy.
Congress and the media all hope the latest bail out bill for this mess will work. I am betting, it will only encourage people who are not in trouble to try to rejigger their debts. The mess here is astonishing. The solutions, nearly always require great losses of profits, values and money vanishing. This is because everything was grossly overpriced due to excessive bidding thanks to easy lending. Fixing the lending mess caused by excessive debts during WWI proved to be totally impossible. Every solution made something worse down the road so that after a mere 20 years, the only real solution was to blow up much of the planet's manufacturing and major trade centers. It was by sheer luck, the US wasn't blow to smithereens, too. If the other side got nukes, too, we would have been destroyed along with everyone else.
WWIII will take care of that, by the way. So we can't imagine we can go deeper into debt forever. We have to work our way out of this mess and it does not include shoving all the debt into the public purse: this leads to wars. We can go bankrupt and live in a tent, I did this once. But our government won't do that, it will struggle to destroy all trade partners the other way, via war.
Somehow, $4.4 billion just evaporated at Merrill Lynch. Less than two weeks ago, Merrill Lynch valued the toxic mortgage investments on its books at $11.1 billion. Now, it is selling those investments for $6.7 billion — and financing most of the purchase to boot.
The fire sale raises a troubling question for the nation’s battered financial industry: Have other banks with similar investments overestimated their values?
Still, financial stocks rallied on Tuesday, as investors hoped the deal at Merrill signaled the troubles plaguing banks’ balance sheets might be coming to an end.
“This is setting some sort of precedent for these prices,” said Stuart Plesser, an analyst with Standard & Poor’s Equity Research.
As wealth vanishes, everyone hopes it is all dead and gone and we can merrily go back to borrowing like crazy again. The price of oil drops, we think we can spend like fiends again. True, we will be able to shove into the future paying our debts off. But this future is not vanishing, it is a huge wall that grows bigger and more dangerous, the more we put off paying our bills and balancing our budgets. Last night, I watched the earthquake news on TV. At the very infantile show, 'Big Brother', the goody young people were lounging about this mad house, doing nothing constructive but preening themselves and socializing. They should all be out working to produce something useful, not babbling at each other!
Well, everything began to shake. They stared in amazement and didn't move at first. Then, they milled around helplessly and some had the bright idea of going outside. It reminded me of scenes from 'The Time Machine' when the people of the future were really all cows out to pasture, being fattened by the real rulers who were cannibals. We dearly love to imagine we can entertain each other, loll about on soft cushions and pay all our bills by winning game shows. But outside forces are at work.
As part of a sweeping financial restructuring, the company is dumping most of its remaining holdings in risky mortgage derivatives and tapping the Singapore government for an emergency $3.4bn cash infusion.
Existing shareholders will have their stakes in the company viciously diluted by the new share sale, and anger last night immediately focused on John Thain, chief executive since last November, who had promised on more than one occasion in recent months that Merrill did not need to raise new equity capital.
Instead, he had told shareholders he would raise money through selling assets, such as Merrill's 20 per cent stake in the Bloomberg financial information business, which it offloaded this month for $4.4bn.
Mr Thain gambled yesterday that the dramatic new moves to rid Merrill of its toxic mortgage portfolio would be enough to restore confidence, and that they would be seen as a once-and-for-all clean up of the company.
A portfolio of mortgage derivatives known as collateralised debt obligations (CDOs) that Merrill had valued at $11.1bn as recently as a fortnight ago, were offloaded last night for $6.7bn. Before the credit crisis struck, that portfolio had been worth $30bn.
Investors who trusted the gnomes who lie were all burned by Merrill Lynch. ML is grossly under capitalized. But no one can figure out what is going on if the guys running things, lie. Arrest Mr. Thain and charge him with fraud.
Senate Republicans blocked action yesterday on legislation proposed by the Democrats to curb speculation in energy markets and reduce record oil prices.
The measure, sponsored by Senate Majority Leader Harry Reid, didn't get the 60 votes required to end debate and bring it to a final vote. The tally was 50-43.
Republicans want to be able to debate numerous amendments to the legislation, including expanding offshore drilling for oil and natural gas. Reid, of Nevada, said the Republicans were trying to talk the legislation to death. He proposed limited amendments, with the goal of moving the measure before Congress leaves for its August break.
Well, the hell hounds and pirates can breath easy now. They have invested a lot in oil futures.
The Sunday Mail, a government mouthpiece, reported that central bank reserve governor Gideon Gono told an agricultural show Saturday he would introduce the new measures in the coming days to make sure cash shortages are a "thing of the past."
Zimbabwe's government says western sanctions _ tightened last week _ are mainly to blame. Critics blame mismanagement by President Robert Mugabe's government and a land-reform program that slashed the country's agricultural production.
The future Bernanke solution.
Hanover Finance - the country' third biggest operator - last week froze repayments to investors. The company said its "industry model has collapsed" as the housing market goes into a nose dive. Some 23 finance companies have gone bankrupt in New Zealand over the last year.
It is now clear that the Antipodes are tipping into a serious downturn. Australia's NAB business confidence index fell to its lowest level in seventeen years in June. New Zealand's central bank began to cut interest rates last week on fears that the economy may have contracted in the second quarter, and is now entering recession. Housing starts slumped 20pc in June to the lowest since 1986.
Gabriel Stein, from Lombard Street Research, said Australia could prove vulnerable once the global commodity cycle turns down. It has racked up a current account deficit of 6.2pc of GDP despite enjoying a coal, wheat, and metals boom, effectively spending its resources bonanza in advance. Household debt has reached 177pc of GDP, almost a world record.
"It is amazing that in the midst of the biggest commodity boom ever seen they have still been unable to get a current account surplus. They have been living beyond their means for 10 years. What worries me is that productivity growth has been very low: they have coasting after their reforms in the 1990s," he said.
"The easy money went straight into real estate," said Hans Redeker, currency chief at BNP Paribas.
"Australia will now have to generate 4pc of GDP to meet payments to foreign holders of its assets," he said. This is twice as high as the burden faced by the US.
We are in the exact same fix. So is England. All of the US/UK empire is in the same fix because we are all doing the same stupid things and because we underestimated the intelligence and malice of people we defeated in WWI, WWII and the Cold War. Not to mention, the Crimean War, etc. The exact same reliance on rising home values, the same super-cheap/sub-inflation rate lending. The same collapse in savings. Since this is GLOBAL and not local, we have to consider why it happened and see clearly that this easy lending to the US/UK empire was a TRAP. We all ran into the 'Big Brother' play pen and sat down to have fun and not manufacture much of anything and now we find out the producers of the show are all Morlocks sharpening their hatchets.
Some managers and some employees say they were called in the middle of the night. People got the calls at the stores, others were called at 1:00 in the morning at their homes. No one expected it.
Displaced employees wiped away tears outside the Bennigan's restaurant in Calumet City. They are among the thousands who lost their jobs when the restaurants closed.
"For them to tell us we don't have a job or anything, that's a hurtful thing, especially if you have kids," said former employee Tina Beacham.
The corporate-owned locations comprise about half the entire chain. The two locations in downtown Chicago, at 225 N. Michigan Ave. and 150 S. Michigan Ave., are both among them, and the doors to both were locked Tuesday morning.
Inside, neon signs remained lit, but the "closed for business" signs shooed passersby away. Managers said the mass-shutdown went into effect at midnight Monday night, and there was no warning.
We will see more and more similar news. One company sent everyone emails saying, if you got this email, you are fired. A one AM phone call is hideous, criminal, cruel, vicious and heartless. Sneaky, too. This is the new style of business: imitate Gollum and be invisible, sneaky and do things in the dead of night like strangling babies in cradles and eating them. Grrrr. We can't save stupid homeowners who get a free house from a TV station and then go immediately deep into debt and bankruptcy. But we can pass laws forbidding this sort of worker abuse when a business shuts down!