Monday, December 8, 2008
Credit Market -> Currency Market
Er... I was waiting for someone else to write about this... but it seems either it hasn't occured to anyone else... or everyone is dismissing this... or... who knows.
Anyhow.
Governments are wondering when credit is going to unthaw. Well, on the consumer level, I guess it'll unthaw once everyone has cleared all their existing debts, or at least reduced them to manageable levels. If the average citizen was a company, no one would buy this coy. I mean, average short term debt would be around 6 months cashflow, long term debt is around 20 years cashflow, net current assets is a MASSIVE negative number, total assets - total liability is also bad...
For your information, I was asking my grandparents... during their time, debt levels were much MUCH MUCH lower compared to income/ cashflow/ expenditures.
On the corporate level... er... hello. Due to US Dollar being fiat money, and due to the RIDICULOUS uncertainty that America's bailout policies, deficit spending, world trade, etc etc have caused... no one dares to borrow or lend in USD anymore! I mean seriously, you might borrow/lend AUS 1 million today denominated in USD and find that it's turned into AUS 1.2 million/ 800k in 6 months time!
The American government does not understand something very very simple:
Volatility and uncertainty is bad for business.
Yes yes, this "shock and awe" technique seems to be propping up the market well and is stopping bankruptcies.
But in reality, America is causing a LARGE amount of global uncertainty, as everyone is wondering how all this national debt, printing money, interest rate cuts, bailouts, 0.1% yields on US Treasury notes... everyone is waiting for the next big movement to happen.
This is why, for decades upon decades, people LET inefficient companies go under, and did not prop up everything artificially. There always was a lot of damage done, but in truth, it allowed the TRUTH to come to light, and the rebuilding could begin.
In this case, we have near zero transparency. It's reached the point where no one knows what is going on anymore.
To use Buffet's analogy of the athlete who's collapsed... the current solution seems to be the star's manager putting a splint on his leg and letting him take part in a marathon.
Whereas normal logic would be to bring him to a hospital, get it x-rayed, set in a cast, and give him 3 months of rest and 3 months of physio.
Right now, the entire audience is waiting to see whether the bone is going to snap under the strain of being thrown back into competition.
Oh, and of course, the athlete's manager is screaming that his star athlete is perfectly fine, why won't anyone agree to sign up for this year's sponsorship deals, yada yada.
... gee. I wonder why.
Dumbasses.
Anyhow.
Governments are wondering when credit is going to unthaw. Well, on the consumer level, I guess it'll unthaw once everyone has cleared all their existing debts, or at least reduced them to manageable levels. If the average citizen was a company, no one would buy this coy. I mean, average short term debt would be around 6 months cashflow, long term debt is around 20 years cashflow, net current assets is a MASSIVE negative number, total assets - total liability is also bad...
For your information, I was asking my grandparents... during their time, debt levels were much MUCH MUCH lower compared to income/ cashflow/ expenditures.
On the corporate level... er... hello. Due to US Dollar being fiat money, and due to the RIDICULOUS uncertainty that America's bailout policies, deficit spending, world trade, etc etc have caused... no one dares to borrow or lend in USD anymore! I mean seriously, you might borrow/lend AUS 1 million today denominated in USD and find that it's turned into AUS 1.2 million/ 800k in 6 months time!
The American government does not understand something very very simple:
Volatility and uncertainty is bad for business.
Yes yes, this "shock and awe" technique seems to be propping up the market well and is stopping bankruptcies.
But in reality, America is causing a LARGE amount of global uncertainty, as everyone is wondering how all this national debt, printing money, interest rate cuts, bailouts, 0.1% yields on US Treasury notes... everyone is waiting for the next big movement to happen.
This is why, for decades upon decades, people LET inefficient companies go under, and did not prop up everything artificially. There always was a lot of damage done, but in truth, it allowed the TRUTH to come to light, and the rebuilding could begin.
In this case, we have near zero transparency. It's reached the point where no one knows what is going on anymore.
To use Buffet's analogy of the athlete who's collapsed... the current solution seems to be the star's manager putting a splint on his leg and letting him take part in a marathon.
Whereas normal logic would be to bring him to a hospital, get it x-rayed, set in a cast, and give him 3 months of rest and 3 months of physio.
Right now, the entire audience is waiting to see whether the bone is going to snap under the strain of being thrown back into competition.
Oh, and of course, the athlete's manager is screaming that his star athlete is perfectly fine, why won't anyone agree to sign up for this year's sponsorship deals, yada yada.
... gee. I wonder why.
Dumbasses.
Jasonred79 invested at
4:05 AM
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