Saturday, 29 November 2008

Out of Africa - Zimbabwe

A guy goes shopping with a wheelbarrow full of Zimbabwe dollars. On the way to the shop, he is mugged – the muggers overturn the barrow, tip out the cash and make off with the wheelbarrow.

The financial situation in Zimbabwe has not changed much in the five years since this article was written.... in fact things have only gotten worse.

"Council has since resolved to offer free graves to those who have died of cholera since most people are finding it hard to get cash to pay for the graves," it quoted the town clerk as saying. A grave in Harare costs an average of $30, a teacher's monthly salary at the current exchange rate.

Free graves anyone?

Thursday, 27 November 2008

Background reading #2

The Five Stages of Collapse - a thought provoking article by someone who has studied the timeline of collapse in the USSR and has now seen the same thing happening across the world.

If the US government has to lend banks over 200 billion dollars a day just to keep the whole system from imploding, then the term "crisis" probably doesn't do justice to the situation. To keep this game going, the US government has to be able to sell the debt it is taking on, and what do you think the chances are that the world at large will be snapping up trillions of dollars of new debt, knowing that it is being used to prop up a shrinking economy? And if the debt can't be sold, then it has to be monetized, by printing money. And that will trigger hyperinflation. So, let's not quibble, and let us call what's happening what it looks like: "financial collapse".

Stages 2 and 3 - commercial and political collapse, are driven by financial collapse, and will overlap each other. Right now, it is unclear which one is farther along. On the one hand, there are signs that global shipping is grinding to a halt, and that big box retailers are in for a very bad time, with many stores likely to close following a disastrous Christmas season.

Shipping rates are down 99% and the stores are already closing ... welcome to stage 2.

In addition, it also makes sense to keep an eye out for signs of environmental collapse. This article about the 73% fall in zooplankton could have dramatic effect on those of us at the top of the food chain:

The ongoing disappearance of zooplankton, amphibians, butterflies, and bees is tied directly or indirectly to the continuing growth of our own species—both in population (there are nearly seven billion of us large-bodied omnivores, more than any other mammal) and in consumptive voracity (water, food, minerals, energy, forests—you name it).

The financial meltdown tells us these trends can't go on forever. How the mighty have fallen! - the Masters of the Universe reduced to begging for billion-dollar handouts in front of a television audience.

Next will come a human demographic collapse (resulting from the economic crisis, with poor folks unable to afford food or shelter), as mortality begins to exceed fertility.

Wednesday, 26 November 2008

Iceland - Latest

A near-riot and parliament besieged: Iceland boiling mad at credit crunch

One young man climbed on to the balcony of the Althing building, where the president appears upon inauguration and on Iceland's national day, and hung a banner reading: "Iceland for Sale: $2,100,000,000" – the amount of the loan the country is getting from the IMF.

A separate group of 200-300 people gathered in front of the city's main police station, throwing eggs and demanding the release of a young protester being held there. Police in riot gear used pepper spray to drive back an attempt to free the protester during which several windows at the police station were shattered.

Gudrun Jonsdottir, a 36-year-old office worker, said: "I've just had enough of this whole thing. I don't trust the government, I don't trust the banks, I don't trust the political parties, and I don't trust the IMF."

Could be a sign of things to come as the people realise that borrowing more money from the IMF won't solve anything. Iceland leads the way.... and others follow.

Tuesday, 25 November 2008

Debt is as dangerous as heroin

Is Britain going bankrupt?

The cost of insuring against the bankruptcy of the British state has broken out - upwards - over the last month. Yes, credit default swaps (CDS) are dodgy instruments, but they are the best stress barometer that we have.
Today they reached 86 basis points, near Portuguese debt in the league table. For good reason. Alistair Darling has had to admit that the British economy faces the most sudden economic collapse since World War Two, and the worst budget deficit of any major country in the world.
Ok, this is a lot lower than Iceland, Ukraine, Hungary, and other clients of the IMF, but is significantly higher than Germany (35), USA (43), and France (49).

As usual the the comments shed more light on the real state of the country than the article.

Sunday, 16 November 2008

fruitwood-smoked quail and a chanterelle-jussed tomato, fennel and eggplant fondue

Whats on the menu tonight?

Let the people eat cake

WASHINGTON (MarketWatch) -- The most powerful people in the world will dine on roasted rack of lamb, fruitwood-smoked quail and a chanterelle-jussed tomato, fennel and eggplant fondue, while millions of people around the world lose their jobs, their homes and their hopes.

Sounds nice... where's my recipe book..... eat (like) the rich!

Running in second place

The runners are picking up speed... keep an eye on them in the next few weeks!

Monday, 10 November 2008

Baltic Bank Bust

News of a run on a major bank in Latvia:

Latvia takes over Parex after run on bank

Parex, Latvia’s second largest bank with 3.1bn lats ($5.6bn) in assets, was forced to seek protection from the state after clients panicked and it lost 60m lats in deposits at the end of last week.

Wednesday, 5 November 2008

Walking in the Alps

Seems that even the prestigious swiss banks no longer provide a safe haven for depositors cash:

Customers pull their money out of ailing UBS

Switzerland's largest bank, UBS, has reported record outflows in the third quarter as clients seek security in other financial institutions.

UBS said outflows from its core wealth management business totalled a record SFr49.3 billion and a further SFr34.4 billion was taken out of its Global Asset Management business.