The banks in South Africa adheres (or so they say) to the banking code of conduct of The Banking association of South Africa.
Full details available here: http://www.banking.org.za/consumer_info/code_of_banking/code_of_banking.aspx
Does this give clients a warm and fuzzy feeling ? Of course ! They just do not know that this is all a big BS story. It is Bull and the banks know it !
THE following has been copied from the introduction of the Code :
None of the provisions of this Code:
will be legally binding in any court of law;
may be used to influence the interpretation of the legal relationship between you and your bank;
will give rise to a trade custom or tacit contract or otherwise between you and your bank.
Still feeling warm and fuzzy ? If you do it is caused by the wool that has been pulled over your eyes.
Tuesday, November 2, 2010
Monday, November 1, 2010
The (un) human factor
It is a fact of life that humans (as we know them) like to think they are in control. The masters of the universe.
Of course we are, We even create our own universes and then these universes start controlling us.Banks are a classic in this regard. They create systems which is to be followed to the nth degree. Whether you are the client or the servant (just another name for staff member)
A case in question: Ask any bank employee (and I mean anyone) to explain to you how they calculate interest on what you owe them. In detail off course. I have not met one that can do that! "There is system sir.............You cannot challenge it, as it was created by the ultimate fundis! (sir). It is Dogma in the bank" (see definition of Dogma)
About systems . It will control every action of every staff member - there is just sooo much information that any bank employee can comprehend . No matter what the law says - do as the bank says! Rule one......The client is always right. Rule 2. Whenever a staff member is involved disregard rule one. Rule 3. When it seems that the client is actually right, see rule 2. Rule 4. When it seems that the client is really getting the best of the argument, act dumb and run like hell to get an expert(which does not exist in the bank anymore - so just do not come back till you find the elusive expert)
Full details of an actual case can be had by sending me an email ( email address : bankdumbness@brandow.co.za)
Of course we are, We even create our own universes and then these universes start controlling us.Banks are a classic in this regard. They create systems which is to be followed to the nth degree. Whether you are the client or the servant (just another name for staff member)
A case in question: Ask any bank employee (and I mean anyone) to explain to you how they calculate interest on what you owe them. In detail off course. I have not met one that can do that! "There is system sir.............You cannot challenge it, as it was created by the ultimate fundis! (sir). It is Dogma in the bank" (see definition of Dogma)
About systems . It will control every action of every staff member - there is just sooo much information that any bank employee can comprehend . No matter what the law says - do as the bank says! Rule one......The client is always right. Rule 2. Whenever a staff member is involved disregard rule one. Rule 3. When it seems that the client is actually right, see rule 2. Rule 4. When it seems that the client is really getting the best of the argument, act dumb and run like hell to get an expert(which does not exist in the bank anymore - so just do not come back till you find the elusive expert)
Full details of an actual case can be had by sending me an email ( email address : bankdumbness@brandow.co.za)
Sunday, October 3, 2010
BEWARE BANK ADVERTISEMENTS !
Never ever trust Banks. They do not have your well being at heart. This morning in the Rapport newspaper there was another article where the following came out : "Irrespective of the fact that I was negotiating with the bank (FNB) and during that process they attached and sold my house on auction" Is this an isolated incident? You can bet your life on it that is not. My own experience just last month is another. My bank (ABSA) was in possession of a bank guarantee from a buyer of my property (Please note a bank guarantee - not just the possibility of something - an actual guarantee! ) they still issued summons against me - resulting in me defending the action. Normally they would see this as a mistake but what do you think happened ? When I defended they tried to apply for immediate judgment. If I was just another ignorant client ( of which they have millions) I would have been the loser.
Suddenly the last few days the banks (apparently in conjunction with the National Credit regulator ) has started an advertising campaign inviting clients in distress with their debt to SPEAK TO THEIR BANKS!
Fall for this trick at your peril ! Beware what they ask you to sign - SIGN nothing ! and I mean Nothing! Do not make them promises that you know you cannot keep. Do not sign anything !
If you even consider speaking to them take a debt counselor or an attorney with you - Rather pay an attorney this one time - You will not be sorry.
If I had the money I would put full page advertisements in the Newspaper to warn people against this very evidently new trick to repossess, get quick judgements, defraud clients and I can think of a few other words actions of the BANKS.
Banks will have to clean up their acts before clients in distress can TRUST THEM !
Suddenly the last few days the banks (apparently in conjunction with the National Credit regulator ) has started an advertising campaign inviting clients in distress with their debt to SPEAK TO THEIR BANKS!
Fall for this trick at your peril ! Beware what they ask you to sign - SIGN nothing ! and I mean Nothing! Do not make them promises that you know you cannot keep. Do not sign anything !
If you even consider speaking to them take a debt counselor or an attorney with you - Rather pay an attorney this one time - You will not be sorry.
If I had the money I would put full page advertisements in the Newspaper to warn people against this very evidently new trick to repossess, get quick judgements, defraud clients and I can think of a few other words actions of the BANKS.
Banks will have to clean up their acts before clients in distress can TRUST THEM !
Thursday, September 30, 2010
O what a circus
The latest embarrassment for the government is the inability to launch two highly publicised pieces of legislation – the Companies’ Act and part of the Consumer Protection Act.
The musical “Evita” contains a song called “Oh what a circus” which contains a number of lines, apart from the title, that apply to this and other pieces of legislation which were pushed through with undue haste and total disregard for its wider impact:
Here's the quote from that song:
She didn’t say much but she said it loud (reminds me of someone else of the male persuasion who crawled out of the woodwork in the last year or so)
Falling over ourselves to get all of the misery right
As soon as the smoke from the funeral clears we're all gonna see and how, she did nothing for years
That's all they wanted, not much to ask for but in the end you could not deliver
That's a pretty bad state for a state to be in
Instead of government we had a stage
Quoted from Paul Kruger - Monstone compliance
The musical “Evita” contains a song called “Oh what a circus” which contains a number of lines, apart from the title, that apply to this and other pieces of legislation which were pushed through with undue haste and total disregard for its wider impact:
Here's the quote from that song:
She didn’t say much but she said it loud (reminds me of someone else of the male persuasion who crawled out of the woodwork in the last year or so)
Falling over ourselves to get all of the misery right
As soon as the smoke from the funeral clears we're all gonna see and how, she did nothing for years
That's all they wanted, not much to ask for but in the end you could not deliver
That's a pretty bad state for a state to be in
Instead of government we had a stage
Quoted from Paul Kruger - Monstone compliance
Sunday, September 19, 2010
Unwanted emails
S P A M - Where did the word come from ?
There is some debate about the source of the term, but the generally accepted version is that it comes from the Monty Python song, "Spam spam spam spam, spam spam spam spam, lovely spam, wonderful spam…" Like the song, spam is an endless repetition of worthless text. Another school of thought maintains that it comes from the computer group lab at the University of Southern California who gave it the name because it has many of the same characteristics as the lunchmeat Spam:
Nobody wants it or ever asks for it.
No one ever eats it; it is the first item to be pushed to the side when eating the entree.
Sometimes it is actually tasty, like 1% of junk mail that is really useful to some people.
I like the lunchmeat spam one - like it says some of these emails could actually be worth something if it came as something you asked for.
A case in question is the following : I received an email from a guy called Trevor Ketler from a company called Trevor Ketler Presentations. They might be good at what they do and reading through an article called "Ten steps to sell you" they go on to promote steps you can take to get people to take you seriously. Great stuff ! Except they did not take anything seriously by sending this to me in a SPAM mail.
O, it was disquised as a serious piece of mailing by inserting the following words:
1. Know the person:
Find out what the needs of the person are and why they want to deal with you.
(How can this happen if they do not even know who their audience is ?)
5. Have the right words for the right person:
Every person dealing with you has different needs – so ensure that you are pitching around those needs.
What needs ?
7. Get the person emotionally involved:
If it ’feels’ good to the person he/she will make the decision to buy-in to your ideas.
The only emotion the mail stirred in me was irritation - This was no better than the guy at the robot wanting very seriously for me to open my window to take his flyer.
Now take note of the following when you send out emails : If you do not know the person on the other side DO NOT SEND AN EMAIL. If you ever want to be taken seriously get to know the person on the other side - preferably in person. How do you do this _ Get involved in business networking - serious ones , not MLM ! Local Chambers of commerce has networking events - collect business cards - I am a serious collector and have around 1000 reasonably recent ones and have met every single person whose card I have. It is now very easy to say : Trevor , I met you at the cocktail on Thursday - here are some more details on what we do............" No offence given or taken - no spam - a personal email !
These and other serious marketing tips and tricks are going to be discussed at our Marketing workshop on the 6th in Centurion. - We have some great names in the marketing world that will discuss these and other serious marketing stuff ! You must be there to experience it ! Send me an email for an invite - Oh and please address me by my first name: JOHN!
There is some debate about the source of the term, but the generally accepted version is that it comes from the Monty Python song, "Spam spam spam spam, spam spam spam spam, lovely spam, wonderful spam…" Like the song, spam is an endless repetition of worthless text. Another school of thought maintains that it comes from the computer group lab at the University of Southern California who gave it the name because it has many of the same characteristics as the lunchmeat Spam:
Nobody wants it or ever asks for it.
No one ever eats it; it is the first item to be pushed to the side when eating the entree.
Sometimes it is actually tasty, like 1% of junk mail that is really useful to some people.
I like the lunchmeat spam one - like it says some of these emails could actually be worth something if it came as something you asked for.
A case in question is the following : I received an email from a guy called Trevor Ketler from a company called Trevor Ketler Presentations. They might be good at what they do and reading through an article called "Ten steps to sell you" they go on to promote steps you can take to get people to take you seriously. Great stuff ! Except they did not take anything seriously by sending this to me in a SPAM mail.
O, it was disquised as a serious piece of mailing by inserting the following words:
“You have recently being referred to us from past delegates or our referral system and we take pleasure in forwarding your first Newsletter”.
Now this is Bull... If there actually was such a person why would they not identify him/her ?
Why did they not address me by my first name in the first paragraph ?
Amongst the steps quoted in the article the following caught my eye ( Especially because they did not take cognisance of their own steps) :
1. Know the person:
Find out what the needs of the person are and why they want to deal with you.
(How can this happen if they do not even know who their audience is ?)
5. Have the right words for the right person:
Every person dealing with you has different needs – so ensure that you are pitching around those needs.
What needs ?
7. Get the person emotionally involved:
If it ’feels’ good to the person he/she will make the decision to buy-in to your ideas.
The only emotion the mail stirred in me was irritation - This was no better than the guy at the robot wanting very seriously for me to open my window to take his flyer.
Now take note of the following when you send out emails : If you do not know the person on the other side DO NOT SEND AN EMAIL. If you ever want to be taken seriously get to know the person on the other side - preferably in person. How do you do this _ Get involved in business networking - serious ones , not MLM ! Local Chambers of commerce has networking events - collect business cards - I am a serious collector and have around 1000 reasonably recent ones and have met every single person whose card I have. It is now very easy to say : Trevor , I met you at the cocktail on Thursday - here are some more details on what we do............" No offence given or taken - no spam - a personal email !
These and other serious marketing tips and tricks are going to be discussed at our Marketing workshop on the 6th in Centurion. - We have some great names in the marketing world that will discuss these and other serious marketing stuff ! You must be there to experience it ! Send me an email for an invite - Oh and please address me by my first name: JOHN!
Monday, September 6, 2010
How tax works
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
(Thanking Paul Kruger of Moonstone compliance for this wisdom !)
Suppose that every evening, 10 men go out for beer and the bill for all ten comes to R100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay R1.
The sixth would pay R3.
The seventh would pay R7.
The eighth would pay R12.
The ninth would pay R18.
The tenth man (the richest) would pay R59.
So, that's what they decided to do....... The 10 men drank in the bar every evening and were quite happy with the arrangement, until one day, the owner said, "Since you are all such good customers, I'm going to reduce the cost of your daily beer by R20".
Drinks for the 10 men would now cost just R80.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men, the paying customers - how could they divide the R20 windfall so that everyone would get his fair share? They realised that R20 divided by six is R3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
Therefore, the fifth man, like the first four, now paid nothing.
The sixth now paid R2 instead of R3 (33% saving).
The seventh now paid R5 instead of R7 (28% saving).
The eighth now paid R9 instead of R12 (25% saving).
The ninth now paid R14 instead of R18 (22% saving).
The tenth now paid R49 instead of R59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
"I only got a rand out of the R20 saving," declared the sixth man. He pointed to the tenth man, "but he got R10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a rand too. It's unfair - he got 10 times more benefit than me!"
"That's true!" shouted the seventh man. "Why should he get R10 back, when I got only R2? The wealthy always win!"
"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists, labour unions and government ministers, is how our tax system works. The people who pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.
David R. Kamerschen, Ph.D. Professor of Economics.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
For those who do not understand, no explanation is possible.
(Thanking Paul Kruger of Moonstone compliance for this wisdom !)
Suppose that every evening, 10 men go out for beer and the bill for all ten comes to R100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay R1.
The sixth would pay R3.
The seventh would pay R7.
The eighth would pay R12.
The ninth would pay R18.
The tenth man (the richest) would pay R59.
So, that's what they decided to do....... The 10 men drank in the bar every evening and were quite happy with the arrangement, until one day, the owner said, "Since you are all such good customers, I'm going to reduce the cost of your daily beer by R20".
Drinks for the 10 men would now cost just R80.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men, the paying customers - how could they divide the R20 windfall so that everyone would get his fair share? They realised that R20 divided by six is R3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
Therefore, the fifth man, like the first four, now paid nothing.
The sixth now paid R2 instead of R3 (33% saving).
The seventh now paid R5 instead of R7 (28% saving).
The eighth now paid R9 instead of R12 (25% saving).
The ninth now paid R14 instead of R18 (22% saving).
The tenth now paid R49 instead of R59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
"I only got a rand out of the R20 saving," declared the sixth man. He pointed to the tenth man, "but he got R10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a rand too. It's unfair - he got 10 times more benefit than me!"
"That's true!" shouted the seventh man. "Why should he get R10 back, when I got only R2? The wealthy always win!"
"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists, labour unions and government ministers, is how our tax system works. The people who pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.
David R. Kamerschen, Ph.D. Professor of Economics.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
Thursday, July 15, 2010
Grumpy people
I think it is time for some light heartedness- so let't talk about something lightly (is that the right phrase?- whatever.
I was going to say grumpy old men but then I remembered that women can also be grumpy and old . I was going to say grumpy old people and then it struck me : Nowadays it is the young(er) ones that can be grumpy as hell.
As one grow older (I did not say old) one finds that you get grumpy for all sorts of reasons. I find it in traffic and have to constantly talk to myself about this. Only this morning a woman in a BMW cut in front of me and I immediately got on the hooter. Now you have to hear the hooter on my car. It lifts you out of your seat even when you drive a BMW. (Oh I haven't said it yet - I despise BMW drivers because they think they own the road.) If you drive one and you get to sit on my rear end you are in for a treat. I will brake for no reason every few seconds until you find that I do not like you on my rear end. When the road is open you might find it hard to get past me (You might succeed if you have a really fast Beemer). Anyway - this poor women was scared out of her wits and in her panic nearly made an accident. This was when I realized : I am also a grumpy person ( also note that I didn't say "old" or "man" ) Even though the whole incident was actually her fault - she really cut in front of me with no indication whatever and if I didn't have all those fancy
anti-skid, abs and a few other things I just might have hit her. But beside the satisfaction of seeing her reaction to my hooting I could have caused an accident.
So what am I on about ? I will try not to be so grumpy in traffic anymore - anyway for now until tomorrow.
Isn't this how life works anyway ? Resolutions only last a few hours !
I was going to say grumpy old men but then I remembered that women can also be grumpy and old . I was going to say grumpy old people and then it struck me : Nowadays it is the young(er) ones that can be grumpy as hell.
As one grow older (I did not say old) one finds that you get grumpy for all sorts of reasons. I find it in traffic and have to constantly talk to myself about this. Only this morning a woman in a BMW cut in front of me and I immediately got on the hooter. Now you have to hear the hooter on my car. It lifts you out of your seat even when you drive a BMW. (Oh I haven't said it yet - I despise BMW drivers because they think they own the road.) If you drive one and you get to sit on my rear end you are in for a treat. I will brake for no reason every few seconds until you find that I do not like you on my rear end. When the road is open you might find it hard to get past me (You might succeed if you have a really fast Beemer). Anyway - this poor women was scared out of her wits and in her panic nearly made an accident. This was when I realized : I am also a grumpy person ( also note that I didn't say "old" or "man" ) Even though the whole incident was actually her fault - she really cut in front of me with no indication whatever and if I didn't have all those fancy
anti-skid, abs and a few other things I just might have hit her. But beside the satisfaction of seeing her reaction to my hooting I could have caused an accident.
So what am I on about ? I will try not to be so grumpy in traffic anymore - anyway for now until tomorrow.
Isn't this how life works anyway ? Resolutions only last a few hours !
Monday, May 17, 2010
Quo vadis USA ?
Not Just a Another Greek Tragedy
The Greek bond market crisis can be summed up quite simply - too much debt, too
much spending, not enough revenues. Riots, 15% interest rates and slashed budgets
are the results, so far. And the Greeks are not alone. Spain and Portugal just had
their debt downgraded by S&P and Italy and the UK are teetering. But we live in
America and problems like that don’t happen here... Right?
The US is more like Greece than you know...
The table at the bottom of this paraghraph is from a recent report entitled “The Future of Public Debt.” published by the Bank for International Settlements (BIS). It is an analysis of the
relationship between a country’s debt, their deficit and their GDP. The higher the
debt to GDP ratios, the worse the fiscal situation. This is because the cost of
servicing the debt can cause a drain on the economy.
Greece’s Fiscal Balance (Budget Deficit) is -9.80% of
GDP, while America’s is -10.70%. Of the countries listed,
only Ireland and the UK have worse Fiscal Balances than
the US for 2010. Most countries listed are expected to
reduce their deficits slightly in 2011.
Currently, Portugal and Spain are being targeted by the
bond vigilantes, even though they are in obviously better
fiscal condition than the US. One has to wonder when it
will be America’s turn to have to deal with an imploding
bond market. The BIS puts it more succinctly - “This leads
us to conclude that the question is when markets will start
putting pressure on governments, not if.”
By “putting pressure on governments”, what they mean is a
decline or collapse of the bond market. Interest rates
skyrocket, ballooning the cost of carrying the debt. This
forces a government, as it is with Greece, to face their fiscal problems and put their
house in order.
The reaction so far in Greece has not been a pleasant one. In fact, the people have
rioted. It seems they would prefer not to give up any of their government services,
nor would they like to pay more in taxes to pay for said services.
The Greek government’s and the EU’s response comes directly out of Greenspan’s
playbook - They are borrowing more money! They can’t afford the debt they
currently have, so adding more debt must be the solution!
Fiscal Situation and Prospects
as a percentage of GDP
Fiscal Balance Gen Govt Debt
2007 2010 2011 2007 2010 2011
Germany 0.2 -5.3 -4.6 65 82 85
Greece -4.0 -9.8 -10.0 104 123 130
Ireland 0.2 -12.2 -11.6 28 81 93
Italy -1.5 -5.4 -5.1 112 127 130
Portugal -2.7 -7.6 -7.8 71 91 97
Spain 1.9 -8.5 -7.7 42 68 74
U K -2.7 -13.3 -12.5 47 83 94
USA -2.8 -10.7 -9.4 62 92 100
Asia 0.1 -3.5 -3.6 37 40 41
Asia is China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philipines, Singapore and Thailand
Sources: IMF; World Economic Outlook, OECD, BIS; Format: CIS
1
Dollar Printing Press
The Federal Reserve has made it clear that their number one
solution to whatever ails an economy is more money, more
money and more money, in that order!
The Fed pumped trillions of dollars into the system (bailing out
banks, brokerages and mortgage companies) to try to keep the
economy from collapsing in 2008 and 2009. This influx of
liquidity filled holes in bank balance sheets and, thanks to some
questionable changes in accounting rules, banks get to keep poor
and non-performing loans on their books at fictitious valuations.
The Fed also gave away another few hundred billion to the
insurance companies. The FDIC has a blank check to bail out
anybody they see fit. The Fed gave the mortgage industry a
Christmas present when on Christmas Eve 2009, they gave
Fannie Mae and unlimited line of credit. The autos have
received hundreds of billions and who knows who is next
Since the beginning of the Financial Crisis, the Fed has
pumped almost $1.3 trillion into the banking system to keep
it from failing. About $500 billion went in after the official
end of the recession.
Source: Federal Reserve; Format: CIS
Get ready for inflation
Since the early 1980’s, inflation has been tame, so interest rates have been declining.
But now both internal and external forces are converging to create inflation like we
have never seen before.
Inflation can be caused by too many dollars chasing too few goods or raw materials.
America has created too many dollars thanks to the Fed’s actions, and global
consumption is driving up the cost of various hard assets and resources.
The BLS recently reported that that food and energy inflation was up 18.70% year
over year as of March 2010. Yet, the core inflation rate was only 1.30% for the same
period. Core inflation does not include food and energy. I guess the
BLS doesn’t consider them essentials. So those of you that were
concerned about the 18.70% increase in food and energy since
March 2009, you really have no worry, as long as you don’t use
either food or energy.
The global consumption boom, while not straight up, will likely
continue for several decades due to urbanization trends in many
emerging nations. Regardless of the economic situation in America,
the global demand for resources will likely continue unabated. This
should drive prices up for Americans, even in a slow growth or
recessionary domestic economy. America is not the driver of
commodity prices, it is foreign consumption.
Extracts from an article by
John J. Riley
Chief Strategist
johnr@cornerstoneri.com
Cornerstone Investment Services LLC
full text here:
http://api.ning.com/files/*a4r05MtyolrNBP2bKtJdVI2LoanRo1*dqCeONXnDOKBmXGHYTr1exq4i4dOwgwbx7pZlVP4pD0T7NlDGT1mQTAYGFRrh6NI/GreekTragedy.pdf
The Greek bond market crisis can be summed up quite simply - too much debt, too
much spending, not enough revenues. Riots, 15% interest rates and slashed budgets
are the results, so far. And the Greeks are not alone. Spain and Portugal just had
their debt downgraded by S&P and Italy and the UK are teetering. But we live in
America and problems like that don’t happen here... Right?
The US is more like Greece than you know...
The table at the bottom of this paraghraph is from a recent report entitled “The Future of Public Debt.” published by the Bank for International Settlements (BIS). It is an analysis of the
relationship between a country’s debt, their deficit and their GDP. The higher the
debt to GDP ratios, the worse the fiscal situation. This is because the cost of
servicing the debt can cause a drain on the economy.
Greece’s Fiscal Balance (Budget Deficit) is -9.80% of
GDP, while America’s is -10.70%. Of the countries listed,
only Ireland and the UK have worse Fiscal Balances than
the US for 2010. Most countries listed are expected to
reduce their deficits slightly in 2011.
Currently, Portugal and Spain are being targeted by the
bond vigilantes, even though they are in obviously better
fiscal condition than the US. One has to wonder when it
will be America’s turn to have to deal with an imploding
bond market. The BIS puts it more succinctly - “This leads
us to conclude that the question is when markets will start
putting pressure on governments, not if.”
By “putting pressure on governments”, what they mean is a
decline or collapse of the bond market. Interest rates
skyrocket, ballooning the cost of carrying the debt. This
forces a government, as it is with Greece, to face their fiscal problems and put their
house in order.
The reaction so far in Greece has not been a pleasant one. In fact, the people have
rioted. It seems they would prefer not to give up any of their government services,
nor would they like to pay more in taxes to pay for said services.
The Greek government’s and the EU’s response comes directly out of Greenspan’s
playbook - They are borrowing more money! They can’t afford the debt they
currently have, so adding more debt must be the solution!
Fiscal Situation and Prospects
as a percentage of GDP
Fiscal Balance Gen Govt Debt
2007 2010 2011 2007 2010 2011
Germany 0.2 -5.3 -4.6 65 82 85
Greece -4.0 -9.8 -10.0 104 123 130
Ireland 0.2 -12.2 -11.6 28 81 93
Italy -1.5 -5.4 -5.1 112 127 130
Portugal -2.7 -7.6 -7.8 71 91 97
Spain 1.9 -8.5 -7.7 42 68 74
U K -2.7 -13.3 -12.5 47 83 94
USA -2.8 -10.7 -9.4 62 92 100
Asia 0.1 -3.5 -3.6 37 40 41
Asia is China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philipines, Singapore and Thailand
Sources: IMF; World Economic Outlook, OECD, BIS; Format: CIS
1
Dollar Printing Press
The Federal Reserve has made it clear that their number one
solution to whatever ails an economy is more money, more
money and more money, in that order!
The Fed pumped trillions of dollars into the system (bailing out
banks, brokerages and mortgage companies) to try to keep the
economy from collapsing in 2008 and 2009. This influx of
liquidity filled holes in bank balance sheets and, thanks to some
questionable changes in accounting rules, banks get to keep poor
and non-performing loans on their books at fictitious valuations.
The Fed also gave away another few hundred billion to the
insurance companies. The FDIC has a blank check to bail out
anybody they see fit. The Fed gave the mortgage industry a
Christmas present when on Christmas Eve 2009, they gave
Fannie Mae and unlimited line of credit. The autos have
received hundreds of billions and who knows who is next
Since the beginning of the Financial Crisis, the Fed has
pumped almost $1.3 trillion into the banking system to keep
it from failing. About $500 billion went in after the official
end of the recession.
Source: Federal Reserve; Format: CIS
Get ready for inflation
Since the early 1980’s, inflation has been tame, so interest rates have been declining.
But now both internal and external forces are converging to create inflation like we
have never seen before.
Inflation can be caused by too many dollars chasing too few goods or raw materials.
America has created too many dollars thanks to the Fed’s actions, and global
consumption is driving up the cost of various hard assets and resources.
The BLS recently reported that that food and energy inflation was up 18.70% year
over year as of March 2010. Yet, the core inflation rate was only 1.30% for the same
period. Core inflation does not include food and energy. I guess the
BLS doesn’t consider them essentials. So those of you that were
concerned about the 18.70% increase in food and energy since
March 2009, you really have no worry, as long as you don’t use
either food or energy.
The global consumption boom, while not straight up, will likely
continue for several decades due to urbanization trends in many
emerging nations. Regardless of the economic situation in America,
the global demand for resources will likely continue unabated. This
should drive prices up for Americans, even in a slow growth or
recessionary domestic economy. America is not the driver of
commodity prices, it is foreign consumption.
Extracts from an article by
John J. Riley
Chief Strategist
johnr@cornerstoneri.com
Cornerstone Investment Services LLC
full text here:
http://api.ning.com/files/*a4r05MtyolrNBP2bKtJdVI2LoanRo1*dqCeONXnDOKBmXGHYTr1exq4i4dOwgwbx7pZlVP4pD0T7NlDGT1mQTAYGFRrh6NI/GreekTragedy.pdf
Tuesday, April 20, 2010
Up EVEREST
I Had the opportunity to sit next to Ronnie Muhl during a 3 day course recently and only found out the second day of his claim to fame: He has climbed Mount Everest to the Summit. He is now on his way up the mountain again but climbing the other side this time - I receive updates from him on an ongoing basis and will be posting them on this blog as I receive them. Apparently there has been more people on the moon than have climbed ~Everest on both sides !
Here is his post :
With the trekkers on their journey home, the climbing team, with Ronnie as leader, tackled the Khumbu Icefall for the first time last Tuesday to brush up on their ice climbing skills! Out came the crampons, and they got to work with fixed lines, ladder-balancing across crevasses, and abseiling! Everybody did a good job and that night they slept well while it snowed around them in temperatures of minus 10 degrees.
Wednesday was a rest day for them before leaving on Thursday to make a 3–4-hour push up Khumbu Icefall to about 5000 metres and back to BC as part of the acclimatisation process. This area deserves its reputation as one of the most treacherous sections of Everest and some massive seracs had recently crashed in the upper Icefall. A secrac is a huge block of ice formed on a glacier. Often house-sized or larger, they are dangerous to climbers as they can fall at any time. The fact that these seracs fell already is good news for our team as it means they won’t fall on them! They did, however, cross many a creaking crevasse on ladders and see seracs the size of cars looming over their route!
After that mini-adventure, the team needed a good rest, so on Friday, Saturday, yesterday and today they chilled in Base Camp. They had been due to push to Camp 1 yesterday, but this plan had to be postponed and this week they will push to Camp 1 and Camp 2 to acclimatise.
Have a great week, and keep an eye on that summit!
Ronnie Muhl
Here is his post :
With the trekkers on their journey home, the climbing team, with Ronnie as leader, tackled the Khumbu Icefall for the first time last Tuesday to brush up on their ice climbing skills! Out came the crampons, and they got to work with fixed lines, ladder-balancing across crevasses, and abseiling! Everybody did a good job and that night they slept well while it snowed around them in temperatures of minus 10 degrees.
Wednesday was a rest day for them before leaving on Thursday to make a 3–4-hour push up Khumbu Icefall to about 5000 metres and back to BC as part of the acclimatisation process. This area deserves its reputation as one of the most treacherous sections of Everest and some massive seracs had recently crashed in the upper Icefall. A secrac is a huge block of ice formed on a glacier. Often house-sized or larger, they are dangerous to climbers as they can fall at any time. The fact that these seracs fell already is good news for our team as it means they won’t fall on them! They did, however, cross many a creaking crevasse on ladders and see seracs the size of cars looming over their route!
After that mini-adventure, the team needed a good rest, so on Friday, Saturday, yesterday and today they chilled in Base Camp. They had been due to push to Camp 1 yesterday, but this plan had to be postponed and this week they will push to Camp 1 and Camp 2 to acclimatise.
Have a great week, and keep an eye on that summit!
Ronnie Muhl
Wednesday, March 31, 2010
Thursday, March 18, 2010
Amercian Health care
"Let me get this straight......we're trying to pass a health care plan written by a committee whose chairman says he doesn't understand it, passed by a Congress that hasn't read it but exempts themselves from it, to be signed by a president that also is exempt from it and hasn't read it and who smokes, with funding administered by a treasury chief who didn't pay his taxes, all to be overseen by a surgeon general who is obese, and financed by a country that's broke.
What could possibly go wrong?"
What could possibly go wrong?"
Tuesday, March 2, 2010
COMPARISONS ARE ODIOUS
At a recent computer expo (COMDEX),Bill Gates reportedly compared the computer industry with the auto industry and stated that, 'If GM had kept up with technology like the computer industry has, we would all be driving $25 cars that got 1,000 miles to the gallon.'
In response to Bill's comments, General Motors issued a press release stating:
If GM had developed technology like Microsoft, we would all be driving cars with the following characteristics:
1. For no reason whatsoever, your car would crash - twice a day.
2. Every time they repainted the lines in the road, you would have to buy a new car.
3. Occasionally your car would die on the freeway for no reason. You would have to pull to the side of the road, close all of the windows, shut off the car, restart it, and reopen the windows before you could continue. For some reason you would simply accept this.
4. Occasionally, executing a maneuver such as a left turn would cause your car to shut down and refuse to restart, in which case you would have to reinstall the engine.
5. Macintosh would make a car that was powered by the sun, was reliable, five times as fast and twice as easy to drive - but would run on only five percent of the roads.
6. The oil, water temperature, and alternator warning lights would all be replaced by a single 'This Car Has Performed an Illegal Operation' warning light.
7. The airbag system would ask 'Are you sure?' before deploying.
8. Occasionally, for no reason whatsoever, your car would lock you out and refuse to let you in until you simultaneously lifted the door handle, turned the key and grabbed hold of the radio antenna.
9. Every time a new car was introduced car buyers would have to learn how to drive all over again because none of the controls would operate in the same manner as the old car.
10. You'd have to press the 'Start' button to turn the engine off
. In response to Bill's comments, General Motors issued a press release stating:
If GM had developed technology like Microsoft, we would all be driving cars with the following characteristics:
1. For no reason whatsoever, your car would crash - twice a day.
2. Every time they repainted the lines in the road, you would have to buy a new car.
3. Occasionally your car would die on the freeway for no reason. You would have to pull to the side of the road, close all of the windows, shut off the car, restart it, and reopen the windows before you could continue. For some reason you would simply accept this.
4. Occasionally, executing a maneuver such as a left turn would cause your car to shut down and refuse to restart, in which case you would have to reinstall the engine.
5. Macintosh would make a car that was powered by the sun, was reliable, five times as fast and twice as easy to drive - but would run on only five percent of the roads.
6. The oil, water temperature, and alternator warning lights would all be replaced by a single 'This Car Has Performed an Illegal Operation' warning light.
7. The airbag system would ask 'Are you sure?' before deploying.
8. Occasionally, for no reason whatsoever, your car would lock you out and refuse to let you in until you simultaneously lifted the door handle, turned the key and grabbed hold of the radio antenna.
9. Every time a new car was introduced car buyers would have to learn how to drive all over again because none of the controls would operate in the same manner as the old car.
10. You'd have to press the 'Start' button to turn the engine off
"Odious is translated as 'haatlik' in Afrikaans - I am sure Bill Gates will agree.
With appreciation to Paul Kruger
This is life as I see it
I love this blogging hing ! I can really say what I like when I like it and really do not care what anyone thinks of it. At the time of writing it will be the truth. As time goes on it will become more truthful - what you make of that comment is up to you.
If it was not a bit distasteful I would have liked to copy something I was sent the other day on an email. It was referring to the male (thing) you know. All sorts of countries' typical ones were depicted in the photos
The last one was the South African one : It was a photo of the Prez
This is just the test run - watch this spot !
If it was not a bit distasteful I would have liked to copy something I was sent the other day on an email. It was referring to the male (thing) you know. All sorts of countries' typical ones were depicted in the photos
The last one was the South African one : It was a photo of the Prez
This is just the test run - watch this spot !
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