F Dominicus Blog

A politically incorrect blog about matters of money, government, bureaucracy, freedom and sometimes something else.

April 2011 - Posts

Lybia and Syria
Well "nice" to see if two do the same it's not the same.

Ghadaffi kills his population and all but a few come with planes and bombs.

Assad kills his population and it's not even mentioned.

I wonder what will happen if the population will walk the streets in Germany and USA. Maybe in Germany we start another war for "freeing" the poor population?

One can not believe this. The most important thing yesterday has been some totally unimportant wedding but the killing of a few dozens or even hundreds. Who cares?

Reputation of the Fed
Well I just can conclude it sinks faster than ever for me.

Now they want to stick to their program of printing money. And well if you have savings you got robbed day by day, monthy by month year by year. The inflation raises (just remember: http://mises.org/Community/blogs/fdominicus/archive/2011/02/03/my-predictions.aspx. And more an more of them are getting real

We're not yet in the common over 4% inflation rate, but just in a few areas. The politicians start blaming whomever for "unfairness". Especially unfair are those more successfull ones. Subsedies are paid but do not yield the proper cash-flow. And the large corporations do whatever they can to not pay taxes (I wished everyone could afford the tax specialists of this corporations). And so the government does not get any earnings and starts printing money. With the "circle of "money"". The government issues bonds, the feds buys this bonds and the new money is spend in anything having some worse. Inflation raises and so on.

I doubt that ever in history a failure of a world champion has happened in such short time. In just 3 years the USA turns from a free system in a government controlled nightmare. They overextend their means and are now paying dearly, but currently the deledefs lovers "gain". And I'd not be suprised to see more of them buying land. I bet they are preparing for the after-crash. And then they will claim themselves to be the "true" americans. The question is are thieves the "true" americans or aren't they?

Maybe not all is lost at least some states remember what value means. And maybe this will save them. We just have to wait and see what the bureaucrats in washington and everywhere will do....

Oh yeah
That's an awful message:

http://blogs.law.harvard.edu/philg/2011/04/27/biggest-u-s-economic-story-of-the-year-federal-government-v-boeing/

You can not produce where you want any longer? Or how else does one has to understand it.

Well one can see it the US is deledefs land of plenty....

Maybe it's just an example on the how bad subsedie really are. I'm not sure, I can not see why the government should sink money in Boeing. But if they did and Boeing just tooks the money well then I can understand the troubles. But it would be easy to fix. Just ask Boeing to pay back the subsedies....

However one might see it. It's big business and big government and both usually are catastrophes in itself. Put them together and it's fourth as worse...

The three golden deledef rules
Translated from: http://fdominicus.blogspot.com/2011/04/das-mochte-ich-hier-festthalten.html

1) a politician never is guilty

2) if a politician is guilty 1) takes immediate precedence

3) if a politician is guilty an lying, it has to be blamed on the markets

Just have a look at a few entries on the mises log in the past few days: http://blog.mises.org/16587/when-in-doubt-blame-the-speculators-%E2%80%93-again/ Just an example from Germany, The taxes on fuel are well beyond 70% IIRC they are even near 80%. Who get's blamed the oil companies. Well they are responsible of 1/3 of the price but with every cent more the deledefs get 0.7 cent more robbed cents. That's the "truth" and no-one can deny it, but the deledefs do over and over again....

Keep that in mind and you have much easier times to understand, their actions.

I like it it subsumes everything nicely what's happening in EU or US country. Strange enough one does not hear such garbage from Neu Zealand, or Australia. Well the Japanese are similiar and the Chinese are well "different". We know the lie (but how does not) but they are culitvating their own bubbled. I can not see a city without population as a good investement.. See e.g: http://blog.mises.org/16436/the-inevitable-result-of-central-planning-chinas-ghost-cities-and-malls/

War in Lybia
Well someone pointed me to: http://econlog.econlib.org/archives/2011/04/applied_ignoran.html That's worth spreading and has to be considered.
The US creditability

Well how interesting that the verdict of the rating agents still is on AAA for the US. They just have a few trillions debt and they "just" another 1.4 trillion during this year. And still the blame the rating agents and call it a "politicial" decision. I wonder what does it mean? Is S&P a unknown party? Are the democrats and republicans not the only parties everywhere else.

Are the owners the democrats or the republicans or what?

No it's very easy the deledefs are fucking afraid. They know they are just playing on time and it seems there only desire is being pensioners if their own build card-house will collapse. They fire out money as mad and never hardly anytime in history there was such a fiat-money flood. Just in and around the finances are devastated. And this was all done by the politicians of the both parties.

If AAA gots lost the debtors can not count on getting money for nothing (and the taxes for free). No they will have to offer higher interest. And this means it will get more expensive and still there is no plan for "paying" back the debts. Just the "plan" to reduce the amount of new debts. So we translate this kind of saving into our world.

Problem 1. The debt of a rate is measured against GDP so there is no GDP for use. That's bad so we must calculate differently. I found this as "official" values for paying the debt. It's 10% of the budget we need to use it for the "income" of our family so let us assume our debt are as official told 50 000 ME (money equivalents (read dollar)) . So we'd have to pay pay (we are not the government so we have "real" interest of let's say 5%. BTW having this as interest rate would break the US.) So we'd have 2500 ME to pay for debs. So our budget is 2500 / 0.1 = 25 000 ME.

We are still lacking our GDP. So we need some help. Because the GDB is nearly exactly 100% of the debs we have GDP of 50000 ME. Great so we need new debts at or around 10% of it, that are 5000 ME. Just let us assume this stays for "let's say 3 years. Let's compare it with how much it is for our budget. The the 5000 ME are 20% of our budget we had before taking the debt. So in reality we'd just have 20 000 ME at our disposal (- the interest which we must pay) . But we spend 25 000.

So in three years we'd have a debt of around 65 000 ME and have to pay 3250 ME interest /year. Now how much does our budget grow? This is hard to tell, but I have calculated with constant 5000 ME extra debts each year. And so our budget still is the same 25 000 three years ago we'd have to pay 2500 for the debt (the 10%) and three years later 3250 / 25000 = 13% of our budget. We'd have not paid bake one cent of our debt and we still are spending 25 000 ME (which is not possible because we can not spend the amount we pay for interest. So in fact we are taking new debts to pay old debts. And that means we have pay on interest of interest of our debt and we extended our whole debt around 30% !!!

If you can see you can stand that. Well you're right. You can stand that for roughly 10 or so years, then you are fully broken. And well now see the US they are doing something similar for more than 10 years. And yet they still should have a rating of triple A? Hard to believe that something so obvious unsustainable should get a rating of "being" save....

You can see however how besides reality this kind of debt calculations are. We do not have any GDP which can help us, we can not tax away other. We just have our income as the "only" calculation base. I can not see and accept that this should be different for states. Just imagine the following all the pension payments are not covered in the budgets of today, although we know there will be some expenses in the future. In private you must save to have something, but the states do not do that. So the pension payments have to be beard from the current budgets, and you still have to pay for zillions of other things. There is nothing comparable in the private sector. (GM was broken by their pension plans BTW)

States should not be allowed to use GDP for calculations but their own budgets, and if they promised for pension payments this money has to be "saved". If that is not possible no pension promises can be given an the money should be left to the people… They have to take care that they have enough for later. If you think how different the rate is comparing GDP and budget. Now let's see what really is our income. We have a budget of 25 000. We have new debts of 5000 ME and 2500 ME interests payments. So that are 25000 - (5000 - 2500) = 17500 ME that's your "earned" money. And yes I have used official numbers, there are so many shadow budgets etc around that this may be just the tip of the iceberg... I write "earned" because the earning of states are in fact robbed. You have to pay tax and you have no choice..... With everyone else you pay what you ask for with governments you pay what you asked for and everything else also.....

Very interesting to read
Here on the Mises blog: http://mises.org/daily/5170/The-Myth-of-Japans-Lost-Decades

That is interesting and we can really build on it. Let's assume the production stays the same for one year. Let's say it#s 100 PP (Product Pieces) now we just have the amount of 100 (money units) for paying this services.

Now the "stimulius should" start with more "money" . Well we increase the amount of money to 105. nothing will happen to PP. So we have 105 MU for 100 PP and so what happens to the +5 MU? Well in the end the prices will have to rais to 1.05 MU/PP.

f

But in fact nothing more was produced. And still we'd an GDP growth of 5%. Which would imply that there are more goods. But it's just an illusion. We have the same products just more money so we did not get richer by any means. We could not have saved more nor could more be consumed.

I'm quite aware that the "illusion" of having more money makes a difference. If you think you have more money. You either consume more or of you are a producer you think about expanding your production. And here comes the base for the boom/bust. You invest in something under the impression that there is "really" more demand. But it's not there really. And you investements will make you more poor.

So our problem always is to figure out if there really is more demand or just more money. I have though about it today and written down my ideas here: http://fdominicus.blogspot.com/2011/04/welche-art-von-aufschwung-haben-wir.html Sorrry it's in German but I concluded from all the surrounding that we here in Germany see a boom driven mostly by thinking the demand is higher. It's not fully clear because our car makers produce much more than before, but you have to see they had a sharp decline the former years. I'M not fully sure if we are on the same level of production as in 2008. But even if we'd have we do not know if all the cars really get sold. So the above articles makes it very clear on how difficult this areas is. And it's getting worse with every other non-market driven action like tax reductions or tax raises or new laws for social security etc.

Anyways the link gives us an idea. We can take e.g the car output as measure. Cars are real and so we'd have at least some better base. If we than see the raise in the in money valued growth, We can see if we really got "richer" by the means of more production or the "production of" money.... From this I think one can draw better conclusions as from any money valued growth alone...

A few calculations II
"This time for the debt growth rate in Germany. I cite : "Als Zahl: 2.080.000.000! Die deutsche Statsverschuldung hat sich seit 1990 damit vervierfacht, von "

translation the overall debt id 2 080 000 000 000. Well that is high but more impressing we have four times the debts from just 21 years ago.

If we'd have in 21 year each year an expansion of 3.5% extra debts we just would have doubled our debts. So in fact the debts have risen around nearly 7%. And that is "more than" ugly.

And that are "official" numbers. Not included are the to be expected pension payments for public servants. Because this is unique just to states. They do not have to pay into some sort of pension funds. And so all the forthcoming pensions have to be paid from the current budget.

Even if the interest rates are on historical lows in nearly any developed country such kind of debt growth is "unbearable". If we calculate with an average of 2.5% BIP growth. The economy has grown at around 51 % but the debts have risen nearly 200%. So there is a gap and this gap will get larger and larger and the the day comes when this gap will be too big to be filled. The question is just when not "if" any longer....

good news?
I'm puzzling, Why is it good news that the US shutdown did not take place? They still have an insane budget deficit and the only thing they've agreed upon is written on some sheet of paper.

We're still talking about a deficit at or around 1 trillions. I calculated once how much this will cost in the future. And this money is not invested just "spend". Spend for the current obligations of government. There still are enormous amounts of money needed just to pay the "promises" like pension payments etc.

If we "break" it down to private people it's that they needed new credits just to pay their eating bills. And there's nothing left for uncertainties. You get ill or layed of? Well too bad, just ask for more credit. So I can not the the success. It does not show how desperate the situation really it is. It's just a message that everything goes on (bad) as usual.

Still all the money is sunk in diverse wars, and sunk into the most jails world-wide. The unemployment rate is not change "automagically" and people just get older and older. And just a few get all the money. So where's the good news really?

Next money too be burned

Now it's Portugal. http://citywire.co.uk/new-model-adviser/thursday-papers-portugal-appeals-for-eu-bail-out-money-and-other-news/a485095

The failout plans have not worked, do not work and never will work. It's not a problem of too less money and credit but too much of them both. One just hase to compare the money base expansion and output expansion. There's too much money and so the prices start raising. Portugal has accepted and asked for too much debts and the EC countries do not accept that. They want to provide them with more cheap money. And so the ones having taken risks (while buying bonds from portugal) will get all the money from those having not taken any risk. So there is no relationship between taking and earning and this will lead in the end to a crash unprecedented.

Suggestions for the investor. You have two just take care of one think Sell your bonds early enough if the EC runs out of money. Till then one can buy as much bonds as one like. All the tax payers in EC guarantee your interest... So I think short runners may be quite interesting. Try to get back what the governments steal from you.

Very interesting
http://www.huffingtonpost.com/2011/04/05/government-shutdown-threat-deal-unreached_n_845014.html

As I understand even if the government won' t pay you still have all our obligations. So you have to go to work and do whatever you did just for nothing. Wow that's nice for the government and bad for the government paid workers. I guess they will have to pay their bills. But no governments do not have to.

Do I find that disgusting? You can bet

I've something else for you http://thejjb.com/topic/669526/Bristol-Palin-Earns-262-000-as-Abstinence-Ambassador

You don't like it? Well you can bet, me too not. But that's "justice" the deledefs way. Lie and earn big, do wrong and earn big. akt irresonsible and earn big. And let the stupid citizens pay for you...

Now from where comes the money?
http://research.stlouisfed.org/fred2/series/BASE

Gives an answer. And because it can not be accepted what is the truth. This ponzi-scheme get's a great name it' s called quantitative easing.

For those among us, who can read. The Fed does buy bonds from the bond markets, takes that as assets and prints new money. Now this is a scheme everyone BUT Fed would go to jail. But hey you know they are so much "brighter". No physical barrier can hold them ;-( But yo know you can't fight natural barriers you can' t fight problems caues by too much money by making even more money. That's for sure.

New attacks on the markets
Oh, yes they are so endless stupid that it hurts anyone else. The politicians (sorry deledefs) have initiated the whole crisis stuff. Never were able to get along with their stolen money (read taxes) and never enough credit for whomever they deem worthwhile.

And now they did it again. No thinking just like animals in panic. One direction. We must have our daily/hourly/minutely/secondly credit. And everything who is not willing to give it to us, we'll feel our power.

Now the newest attacks on the markets. US Ratings should not hold any longer for Europeans. Agreed this rating agents have done wrong, but they are among those having made the point that the debts of some EU-countries are "bad". We know our deledefs see it differently and have taken all EC citizens as hostage. The name is safety chute or whatever, but mean working against the market because markets to fail. Yes markets do wrong sometimes and after recognizing this they correct that. But it is not allowed to swing into the direction "less" credit" , this is a no-go zone for any deledef. And so they fight the markets wherever they can, in the end they will fail

It's just the question whom they will take with them. And here no-one living e.g here in Germany will be spared. Those handling responsible will pay the bill. And deledefs will be the thieves,defrauders, bandits and even murderers.

I have written before what one should do. And I've acted accordingly. Money was taken out of the EU dictatorship and put elsewhere. A contract about a lend farm includes the option to get paid in food. And if the money will be gone some gold was "bought". The option leaving this country was chosen by me, but not beard by anyone else in the family and so we are stuck with the rat packs name politicians here in EC land....