Did I call Spain or what? Check it out. So, Spain got downgraded by a small ratings firm. That isn’t the death knell, but it does not bode well for when a larger ratings firm takes a look at it (and they all should be releasing stats soon. It’s second quarter now). Spain is leveraged at 70% of their GDP. That means that for every euro they own they also owe someone else 70 cents. This actually isn’t all that bad when you compare them to Greece who is leveraged 150% of GDP. For reference, the USA is leveraged at about 50% of GDP – the highest it has been since WWII.
Leverage is a funny animal. Basically, what it does is magnify gains or losses. So, when times are good and money is being made, leverage is great. When times are bad and money is being lost, leverage is terrible. Right now, Spain is losing money.
I’m guessing that in the next week, we will see lots of stories about how Italy is going to be next and soon. I don’t think that will happen. Instead, there will be a big focus on Italy while Spain slowly chokes to death and at the last instance their banks will be seized by the IMF – effectively giving the IMF monetary control over all of the EU.
After that – I’m not sure. The IMF can’t tax welfare recipients to refill its coffers. Perhaps they will try to pull the US in with the EU, and that would keep them afloat for a while, but not forever and then the same problem will still be there staring them in the face. The more I think about the IMF and the EU’s welfare programs, the more I envision a child hammering away at the square peg trying to get it through the round hole – it just isn’t going to work.
I saw this article the other day that has the headline Regarding climate change, Kerry should heed science. How naive. This bill isn’t about science or climate change. Those are just pretenses that they are using to cram the bill down our throats. Since 1988, socialists have completely hijacked the environmental movement and turned it into a farm of fear that can be harvested at a later date. The socialists now see that the world is cooling and so they are trying to pick what fruit they can, and that is what the Kerry bill is all about. Real science has nothing to do with this.
The global warming hysterics have been soundly disproved, the economy has tanked and people are getting tired of being told they have to be poor or else a fish is going to die. Time is of the essence for free-market hating socialists like Kerry. They are on the cusp of losing all they’ve worked for over the past 22 years and so they are pushing for several last projects, of which this bill is one.
The best thing our representatives can do right now is have the courage to vote to keep things the same. Don’t pass any new bills – especially ones that are based on shaky “scientific” findings like Climate Change.
A few weeks back I predicted that Spain would be the next country to fall – and we are on the eve of it happening.
May 24th it was announced that CajaSur had been nationalized. “Cajas” are savings banks, and their exposure to bad loan debt is only speculated upon; however, this one got nationalized and it is rumored that four more are either about to be nationalized or to undergo forced mergers.
Spain insists that they are fine and there is nothing to worry about, but I highly doubt that. I strongly feel they are trying to pull a fast one on us.
Why should we care?
Here’s why: Spanish banks are enormously influential. They are a large section of the backbone that holds up the Euro. Some of them also have a large presence in the USA (like BBVA). In a few days the credit ratings for countries will be coming out for the second quarter of 2010. If Spain gets downgraded because their banks are on the verge of failing, then a huge chunk of what makes the Euro valuable will evaporate. If the Euro tanks, then so will any business that trades in Euros because all of their Euro holdings will be essentially worthless.
How much does the US do in Foreign Direct Investment? For the period 2000 to 2007 it was a net of about $207bn. If all of that investment pans out to be a big loss… then I guess the joke’s on us – but it isn’t funny.
Let me give some perspective to you, the reader. Since yesterday, as of right now, according to Der Spiegel the Euro (EUR) has dropped 0.3% compared to the dollar (USD), but the value of the Euro has actually increased in value by about one USD penny. Seems backwards doesn’t it? How can the Euro LOSE against the dollar, yet be worth MORE? It’s because the EUR and the USD are related to each other and both economies are tanking compared to the rest of the world.
What might be in the future:
The USA is heavily invested in the International Monetary Fund (IMF). If the EUR becomes a failed currency, the USD will not be far behind it and the IMF will be bailing out both economies. This will put both economies under the rule of the same group.
Good bye sovereignty!
This is a big issue, so here’s the short version:
The little businesses are the ones that create the majority of the jobs in the USA. They are the ones that come up with new ideas, new technologies, new solutions for old problems and new solutions for new problems. Sometimes, we hear that large corporations are pushing the little businesses out of business – but that’s just a signal. That’s a signal that the real money makers (small businesses) are stagnating. Worse yet, if allowed to continue, the government gets involved and tries to play businessman.
The government is a big cannon that shoots wads of cash at problems that are like groups of flies. If, by the time the cannon is loaded and aimed the flies are still there, they will certainly be gone long before the shell ever arrives. To account for this failure, the government blames everyone else in the business world and instigates regulations to “punish” them. Rarely do those regulations ever really do anything other than fill the governmental coffers and push smaller businesses out of business.
Big corporations get blamed the most, and are the intended target of these regulations, but rarely do the regulations actually affect them. If you charge a mega-corp some amount of money, they just pay it and continue on their way, because they have more money. The only real way to make a corp like this hurt is to change the market by coming up with new products and services they don’t have. The only group that can do that are small businesses. Small businesses and the people they employ (the majority of people) are the real lions of the business world. Mega corps, the Government and Government’s best friend: Unions, make up the jackals and hyenas.
We small people are the lions and we need to remind the others about that. We need to do away with governmental regulations, welfare programs and their lackeys (unions). If they get their noses out of business, then the small businesses will be able to change the game on the corporations and the economy will once again begin to move forward.
Contact your congressmen and legislators. Let them know they need to repeal regulations on business. There are a lot of elections coming up soon for those offices – ask them all hard questions. Ask them what they’re going to do to make things easier on small businesses – if their answer isn’t “lower taxes and repeal regulation”, then ask them if they will support that. If they can’t or won’t give a definite “yes” to that – look for someone who will and vote for that person.
Ask them if they support expanding welfare. If they say “yes”, then ask them how they plan to pay for it – if they say more taxes and/or regulations, then find someone else that will not do that – even if it means less welfare. With more jobs, welfare will not be needed.
Check to see who the unions (any of them) support – when you find those people, check how much money the unions gave to them. If it’s more than a meager amount of money – that person has been bought and you should vote for someone else.
Don’t take this sitting down. Our economy is in a choke-hold by the government, and is dying. The only way to save the economy is to get the government away from it. The only way to do that is to elect people that can easily say “yes, I will repeal regulations and reduce taxes, while at the same time reducing government spending.”
Judge Oliver Wanger ruled in favor of humans over minnows in Californian Central Valley. Water will once again flow in the central valley!
I am sure you will see a Delta Smelt uprising soon enough.
Richard Lindzen brings up a good point:
The part that strikes me the most is:
As far as I can tell, skepticism involves doubts about a plausible proposition. I think current global warming alarm does not represent a plausible proposition.
Therefore, I propose the new name as “Climate Realists”, because so far the former skeptics have concentrated on empirical evidence and verifiable theories – you know, stuff that is real.
In addition, I suggest we begin referring to the Al Gore and EPA backers as “Climate Priests”, because they rely on belief and the magic of climate models to support their prognostications.
What proposed labels do you think we should use? Post them in the comments below.
I told my wife and son that I quit my job today so I could concentrate on my goal of becoming a interpretive dancer. I told my wife everything was going to be alright, Nancy Pelosi has my back! Pelosi wants me to focus on my dreams.
My wife asked me “how are we going to pay for the new home we just bought”… I said I don’t know… but don’t worry about it, because we got free healthcare!!! That is all we need!
Pelosi, I just want to say thank you! As a token of your neighbor’s appreciation, we’re going to shut your power off!