Category Archives: Money

Economic posts

Why Germany Has No Hope

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From Spiegel…..

In recent years, the photogenic mother of seven has pushed through a number of measures making child-bearing less of a financial burden, such as generous income support for both men and women taking parental leave.

The policies appear to be working. Germany’s birth rate, which had been in decline for years, rose slightly in both 2007 and, as recently released statistics suggest, 2008.

Lets put this success in context. From later on in the article…..

Von der Leyen pointed to the increase in the fertility rate in Germany, which rose to 1.37 children per woman in 2007 from 1.33 in 2004.

I am not trying to knock the Spiegel article. It is mostly about how economic problems endanger the recent “success” that Germany has had in raising its birth rate. But even if this “success” had continued on its current course, Germany still would not have any hope. The birth rate simply was not increasing fast enough even in good times to stave off disaster. And as everyone knows, good times do not last forever.

Everybody is in a panic over Europe

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From the New York Times….

Worries about the deteriorating financial situation in countries like Romania and Hungary led to a huge sell-off on Tuesday that began overseas and crashed ashore on Wall Street.

Every sector sank, with financial stocks leading the way and energy companies falling on tumbling oil prices. Rattled investors rushed to buy safer investments like gold and Treasury debt.

The losses on Wall Street were part of a global wave of selling that dragged down stock markets from Tokyo to London and Frankfurt to Brazil, highlighting fears about how banks, automakers — entire countries — will fare in a deepening global downturn.

The news helped send the Dow Jones industrial average to nearly the same low that it hit amid the credit crisis last fall. The Dow fell 297.81 points, or 3.8 percent, to 7,552.60, which was almost the same as the 7,552.29 close for the Dow on Nov. 20.

I will post more after I read through the stories that are swirling around today. Sufficient to note that what I said a while ago is coming true. We are done with major private failures and we are now entering into the era of sovereign failures.

I wish this was a joke

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From Felix Salmon……

I have to say I like the look of Obama’s housing-bailout plan. It’s quite elegant, and makes full use of the fact that Fannie and Freddie are now owned by the US government — which means they can be forced to offer 105% loan-to-value mortgages even when the borrower isn’t creditworthy at all.

This would be a great use of irony if Mr. Salmon had said this with his tongue firmly planted in his cheek. Unfortunately, he is being entirely serious. He really thinks that lending money to people who are not creditworthy is a good idea.

Failed State

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From Bloomberg….

California’s legislature adjourned from a marathon budget debate after falling one vote short of a $40 billion package of tax increases, spending cuts and borrowing aimed at reducing a record deficit.

Lawmakers went home at 9 p.m. yesterday after spending 28 hours in session while Republican Governor Arnold Schwarzenegger and Senate leaders worked to secure an additional Republican vote for the package of 27 bills. Schwarzenegger made rare appearances at closed-door party caucuses and urged a quick solution to the impasse.

“We are just searching for that one more vote that we need in order to get that budget done,” Schwarzenegger told reporters after the meeting.

Failure of the package would prolong a four-month stalemate over how to counter a record $42 billion deficit that drained California of cash, left it with the lowest credit rating among U.S. states, forced officials to delay paying bills totaling $3.7 billion and halted $3.8 billion of bond-financed construction on schools, roads and other public works.

The LA Times has more details on the fun and games that are going on.

Edit: This is just to good to pass up….

“I think I’ve already taken more financial risk than would be prudent, but I’ve been operating on the theory that we’re going to get this budget done,” California Department of Finance Director Mike Genest said in an interview. “I’ve probably been too hopeful and too optimistic for too long.”

Ya think?

We were young, then

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Can a torn-up application for a credit card still be used? Does posing the question betray the answer?

Thankfully, this is clearly an excess of easy credit from back in the days when banks didn’t know better.

I should note, though, that if credit card applications or banks in general insisted that you call from a phone traceable to a permanent residence, I would be unable to get credit despite my single place of residence and continuous gainful employment for over a year.

Who will be first?

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From the Times…

FEARS are mounting that Ireland could default on its soaring national debt pile, amid continuing worries about its troubled banking sector.

It is hard to tell, but I think an eastern European country will beat Ireland to the punch as far as defaulting goes. Still, it will be forever to Ireland’s shame if they default before one of the Mediterranean countries do. They are supposed to be the ones that are poorly governed.