Laughing at the present/Thinking about the future

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Life in the Wrong Lane

 

Forked and twisted tongues

"I am determined to raise an agreement in the Middle East" said President Bush cryptically last week, arousing fears that he might be about to join the banks in begging for a loan. While this is the sort of Mrs Malaprop stuff we've come to expect from the Free World's leader, it was but a small proportion of the totally unintended utterances out there in televisionland.

Desperate to show that he too could become Republican Presidential material, John McCain gave an acceptance-of-defeat speech in which the GOP ever-hopeful said he "understood the need for Mexican voters to support their favourite son", a remark that didn't go down too well on account of him being in Michigan at the time.

Next up was a spoonerism from Mitt Romney, who claimed in turn "To know the concerns of the Wah Kerkers" in Motor City. This disease spread like filed wire, such that on CNN the Asia Markets correspondent stunned almost everyone by asking why "the Hang Kong Hong Seng index" had fallen so precipitously. Across the planet, analysts dug deep into their Googles in a vain attempt to work out why the King Kong Ming dynasty should go Hang, or not.

It could only be a matter of time before the spooner-evian/1+4=9 virus afflicted BBC World. Sure enough, within hours a quite delightful lady was telling us just how much local resistance there is to Brobal Glands. To complicate matters further, a Japanese correspondent chipped in to observe that Grobar Blands were leering.

We await signs that Clinton and Obama are about to fall victim to this deadly pandemic. In particular, I desperately want Hillary to pledge that she will introduce Unicycle Wealth Hair to the whole USA; and if that's not on offer, then I feel the least we can expect from Barack is a total commitment to complete Whoop-de-Trawl in Iraq. Listen, the troops out there need cheering up, and this could be the very thing.

The Merrill Lynch Mob and other madnesses

There has to be an awful lot of corporate greed knocking about before the shareholders get uppity about it - but in the case of Merrill Lynch, you can sort of see their point. Last quarter 2007 was the worst in Merrill's one hundred and one year history, and so to mark the event senior managers awarded themselves $40 billion in bonuses.

Bourse capitalism is going through another of its periodic attacks on poor ethics (especially other people's) but the hand-wringing what-to-do-what-to-do stuff is laughable. Make it illegal for any publicly quoted company to pay bonuses before paying the full shareholder dividend and/or after a lousy year and, um, it won't happen any more.

As we've seen many times before, the entire system of using stock-markets to raise capital is a lunatic asylum where the inmates have found the ecstasy stash. Add to this inane, popularity-obsessed government, and you get stuff like Bush's Rock.

What, you may ask, is Bush's Rock? A 'Rock' is a large amount of somebody else's money thrown at a problem when you're in a desperately hard place. It goes like this. The President wants to get the economy moving again and thus ensure that the unlucky Republicans trying to replace him have at least the glimmer of a chance to win the White House. So he asks very firmly that a $140 billion stimulus be pumped into the system. Why he should ask in the first place is odd given that he's the one with the lolly and the Congress is clearly up for it, but anyway - at the current exchange rate, a hundred and forty billion clams is seventy billion quid.

Now, if you tot up debt guarantees, professional charges, blank cheques and nationalisation costs (while at the same time reading the balance sheet properly, and the spaces between the lines of Darling's speeches) that is almost exactly what the Northern Rock fiasco has cost you, me and the bloke next door as taxpayers. This too, by the way, was done to shore up Gordon Gecko's reputation for genius at a time when an election seemed to be on the cards.

So here's the pay-off line: £140 billion is 1% of the USA's GDP. If it's not really that big, why does the Chimp think it'll work? And if this really is big bucks, why aren't Brown and Darling rotting in the Tower?

'Get out of that' as the irreplaceable Eric Morecambe used to say.

The Global Economy (No. 37)

The Dow has dropped 1200 points in eighteen sessions so far in 2008. So if the trend continues, it'll be at Ground Zero on April 2nd, some time after four pm EST. Two other factors also hove into view like a pair of dark, Melvillesque whales last week. The first was Credit Swap Deficits, wherein gamblers, sorry, banks, swap their bad debts in the hope that the other man's might be less disastrous. Can you believe this shit? Anyway, those in the know figure that's another $80 billion write-off waiting to happen.

The second is potentially much more serious, in that it involves the major bond insurers. The minnow brand lost it's triple-A rating the week before last, and as the second-biggest (Ambac) failed in a restructuring attempt last Thursday, it seems certain to be downgraded too - in fact insiders say it already has been.

Keeping this simple, if Banks can't get AAA insurance on bond exposure, they have to match said exposure with capital in hand. At the moment, the three favoured ways of raising capital (given the market is a crock) are Arabs, the Chinese and customers. This means bank charges will go up, and lending will get even tighter - for the last and final time, whatever the lending rates are. They'll also get trigger-happy about foreclosure. And worst of all, being bankers, it's highly likely they'll panic. None of this is good for wobbly housing markets and consumer PDI.

But as the Financial Times has been saying for some time now, the really big doodoo will spray in every direction from the whirling fan-blades when observers finally wake up to the fact that (within reason) whatever stupidities banks get up to in the never-ending pursuit of targets, it'll be as nought compared to the world economy itself being based on a false premise: that you can grow manufacturing and service turnover forever simply by persuading consumers to spend money they don't have on things they don't need.

Most US pundits, and all of Bush's 'advisors', clearly still haven't cottoned on to this reality. "Let's get money back into pockets" they insist - both tirelessly and tiresomely. So consumer debt can get bigger still, and banks can calm down and lend to Dorks, and more frothy retail concepts we don't need can be launched.

This is get-real time, guys: there's tons of dead wood out there, and much of the rest of the forest has Dutch Elm disease. There's going to be a shake-out - and much as Man always thinks he can stop everything, he can't. To quote the jargon of the day, capitalism needs a new business model.

Putinesca in the pipeline

President, Gazprom CEO and Prime Minister-to-be, Absolute Ruler of all the Russias and KGB agent Vladimir Rasputin pushed aside a couple of small satellite nations last week, and filled the remaining gaps in his Licence to Print Money & Do Nasty Blackmail Stuff. This means he has three gas pipelines in place to supply the West. The EU has one in progress for getting gas from Asia, which as you'd expect is, er, progressing rather more slowly than, aah, expected. Do you want to know what else the EU is doing to make us less dependent on Putogaz? I don't think you do really, but anyway the answer's nothing.

With one mighty leap...

....Bill Gates was free - just before the EU made it clear that they're not kidding about the anti-trust case against Microshaft.

If this comes to fruition, the Great European Project might just do something useful a mere fifty-three years after its inception. It's something to be cheery about on a Monday morning.

Enjoy the week.