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September 21, 2008

Sunday Insight

This week almost brought the house stockmarket down. What a week. It didn't worry me much. I don't have personal superannuation (pension plan), only work superannuation (and corporations, such as Telstra, or the division I worked in, are so tight - they require a proposal to pay for Christmas parties). I don't have a mortgage, and I'm not rich enough to have investments (for the value to take a tumble). Sometimes, living in the now (ie not ferreting funds for rainy days on a personal level) can have benefitis, but saving for a rainy day is beneficial for governments, and it can indicate which government is (ironically enough) managed better despite the negative media spin.

For example, we have all read about the US deficit or the 400 billion shlong of debt. However, that doesn't explain how the government is able to bail out financial institutions does it? Well, I call it 'rainy day money'. There is always a reported deficit (name a western country that is in the black?), but that doesn't mean that there aren't any other funds or emergency funds. The US government bails out insurance and banking institutions so they don't collapse, for the market to avoid disaster (because if it all collapsed now, it would be worse than the Great Depression and the 1987 Crash combined) - to minimize loss, which is an intelligent way to go about things. Compare the Australian government. Banks in Australia had billions wiped from their share value. Did the 'smart' (note: sarcasm) federal treasurer of the moment consider bailing out some banks with surplus or the 'rainy day slush fund?' Absolutely not. That, in my view, is a measure of the ineptitude of the current Australian federal government. I'm still pissed off with the fact that the Aussie dollar has decreased, which is a pain the butt on currency conversion. In other parts of the world, there was the huge Sotheby's art sale of 'art' (note: sarcasm) by David Hirst, that coincided with the stockmarket disasters. Auctions aren't definite sales; to me, they're like telethons. Money is quoted, but it hasn't changed hands, so for all we know the poor sods that made arty bids had millions wiped from the value of their investments. Wouldn't that be an amusing example of schadenfruede?

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I could go on about this shit infinitum, but I won't. Suffice to say that the arabs now own a goodly slice of many large banks and financial institutions in the good ole USA, and in quite a few other countries, compliments of oil dollars. No way they will allow their investments to flounder. London is still the financial capital of the world, and the USA is second best. A friend of mine works for Bank of Scotland, which at one time, a year or so ago, before all the recent crap, was the second largest bank in the world, and he and his wife had no trouble buying a refurb flat in Docklands in London for Three quarters of a million pounds sterling, cost him nearly a years' salary. That's without bonuses, of course. Multiply that by three to get Aussie dollars. When I visited him in London about seven years ago, a round of drinks (4 of us, beers, pints) cost Thirty aussie bucks, and it's probably more now. You get a few more beers for that in Aus. Maybe not in the nightclubs, but this was in a regular Pub. Did you see the banks go today?

I've gotta pop out, but I'll be back, because there is a lot I want to ask but my head is still sorting out questions, but all I'll say is that the financial realm is interesting. I've found it interesting but it's difficult to get my head around it sometimes because I think I need a book like 'The Idiot's Guide to Financial Markets,' because I'm bamboozled by the fluctuations and changes. But quickly, on the United States, I think that there are many people in other countries around the world that hope the economy will fail, but they don't realize that they'll be severely affected if the American economy does fail or come to a grinding halt, but that's quite unlikely. Sometimes I think that the vast development (and spending) in other countries, like Dubai, may have negative outcomes in the future. At the end of the day, countries like Dubai have to import a lot of their food, whereas the United States is large, grows its own food, and still enjoys a good standard of living. Most friends of mine that have lived in a country like England, have returned to Australia (if they couldn't find high paying jobs) due to the expense. The UK imports a lot of its fresh produce, and the expense is a reflection of this. A gf of mine, while living in London, remarked about the impossibility of buying an average bunch of grapes without breaking her weekly budget. They were triple the price of what she'd buy here in Australia.

Will the US survive? Absolutely, even if there is a big dose of socialism thrown into the mix. (See a previous comment on this issue) They are still the world's biggest economy, and probably still the most entrepreneurial. (Shit, I had trouble getting That spelling right). In a year or two, the memory will fade into something like.. 'Shit, that was bad, but it's over now.' That's my guess, anyway.

Name a Western Country in the black? Easy! Australia! Actually, Ana, the reason that the Government didn't throw money at the banks here, is that they don't need it. They are all doing just fine, despite falling share prices, which has more to do with short selling than anything else. Just as a 'by the way', watch the bounce in bank share prices on Monday. Naked short selling has just been banned in Australia, and has been outlawed on financial stocks in the USA and in Britain. At least for the moment. As of right now, the strongest banks in the world, with the possible exception of China, are right here in Aus.

In passing, the reason the Aussie Dollar has tanked, is the fall in the price of metals, which we export huge quantities of, and therefore will get less money for, but as most sales are denominated in $US, we are receiving the same amount for the sales, even though the $US price has fallen, because of the weakness of the $AU. Net result? We still win, unless you are trying to import a handbag from the USA right now. In a few months, the price of metals & oil will rise again, and the $AU will rise again. And so the money go round continues.

Gee, it's fun, isn't it? (A little sarcy here)

I swear, the more I read from people in different countries, the more I see that a serious economic crisis is actually worldwide, not just here. The only countries I don't hear about are North Korea and China - of course people there aren't allowed to have websites.

I guess Australia and America are really similar in greed, corruption and confusing politics. It's nice to know we're not the only ones lol!

The bailouts are like a band-aid and only delay the inevitable. We're scared over here. America is on the verge of a serious panic. I'm just going to live the best I can and write a lot while the web is still available.

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