All Posts Tagged With: "bailouts"

To make matters even more unsettling, the world’s governments have pledged to reduce their countercyclical spending. They won’t get an argument from us on that score. They are doing the right thing. But if they follow through, it will result in the private sector and the public sector de-leveraging at the same time. This is highly deflationary.

The discouraging aspect of all this is that so much capital remains tied up in non-performing assets. To save the bankers, we have killed off the future prospects for entrepreneurs.

We would name the period between the fall of the Berlin Wall and the fall of Lehman Bros – a period of only 19 years – as the peak of US power and wealth. Of course, Americans were dreaming during those years.

And now comes the big American holiday – July 4th. Investors pack their suntan lotions and head off to the beach for Independence Day. With Jaws in a cage, they had judged it safe to go into the water. But then came Thursday’s news.

A bunch of turkeys have hijacked our monetary system and all they know is how to print money. Rather than let the market clear itself out, central banks continue to use taxpayers’ money to bail out insolvent institutions. This brilliant strategy has NEVER worked in the past and it will not work this time around. Instead of robbing innocent people of their savings, the establishment must allow the weak banks to go bust…

How exactly more credit and a cash binge will support asset values escapes us. But it’s possible that Australia is now in lock-step with every other central bank and government in the world, and that all monetary roads lead to Zimbabwe, where a brave but brittle paper currency has gone to its god like a soldier, to paraphrase Rudyard Kipling. Rest in peace, Zimbabwe dollar. Robert Mugabe and Gideon Gono have blown out your brains and gutted the Zimbabwe economy…