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| Last Updated: Aug 15th, 2008 - 11:26:43 |
Newsletters
:
2007 Newsletters
:
21 September 2007
Thought for the Day
The profound words of Austrian School economist Ludwig von Mises drive right through the soft underbelly of fiat currency-based Keynesianism:
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
The Credit Crunch has started in the USA. Our Finance companies are feeling the pinch. It will get worse.
Sep 21, 2007, 09:15
Newsletters
:
2007 Newsletters
:
21 September 2007
Greenspan Was More Rock Star Than Feared Sage.
The lessons of history - do we ever learn?
Sep 18, 2007, 14:24
Newsletters
:
2007 Newsletters
:
21 September 2007
Gold and Economic Freedom
Those of you who have been following my stumblings through the current Economic Morass will be delighted to know that what I have discovered about Gold, Fiat Currencies and the Welfare State was well known by Alan Greenspan as he explains in this article.
Yes this is the famous Alan Greenspan, Federal Reserve Chairman for the USA and controller of the world currency - known as the mighty US dollar.
In 1966 he wrote the truth but under the influence of Washington political requirements he became the greatest issuer of credit the world has known, solving the periodic busts by printing more money - entirely unbacked by gold.
Alan explains the place of gold in society very clearly and shows why it was cast aside and why we are now suffering the problems of a world of fiat currencies.
Read this carefully and all the blocks will slip into place!
Sep 18, 2007, 13:53
Newsletters
:
2007 Newsletters
:
21 September 2007
Stopping a Crisis from Becoming a Catastrophe.
In the end fine economic judgments were swept aside by politics, calm deliberation by panic on the streets. Never mind that investors in Northern Rock, Britain's fifth-largest mortgage lender, had been assured their money was safe.
The television images of thousands queuing to empty their bank accounts the length and breadth of Britain were too much for Gordon Brown's government. Signs that the contagion was spreading to other leading banks risked a crisis turning into a catastrophe. Only a blanket guarantee would do.
Sep 18, 2007, 13:03
Newsletters
:
2007 Newsletters
:
21 September 2007
Bank of England Stripped of Independence, Ordered to Gush Cash
Governments claim, of course, that Central Banks are independent of political interference.
They are not.
Sep 17, 2007, 16:15
Newsletters
:
2007 Newsletters
:
21 September 2007
When Net Income Won't Cover Gross Habits
In a recent speech titled, "International Volatility and New Zealand Economy" Dr. Cullen had this to say:
**** **** ****
"Today I want to briefly give you an overview of my thoughts on the state of the economy, and update you on some recent developments. I want to bring you up to date on our priorities for locking in the underlying strength and resilience of the New Zealand economy. And I would like to comment briefly on the strong Trans-Tasman relationship we enjoy.
In recent weeks, the global financial system has been tested by a credit squeeze.
The shake-up was triggered by so-called sub-prime mortgages in the US, where some lenders found out the hard way they had been a little easy with the availability of credit in recent years.
This led to a wider re-pricing of risk, which is no bad thing. It is perfectly healthy for markets to move away from what has been very high risk activity in recent years to something approaching normality. But the growth of the derivatives industry has done such a good job of spreading risk, it is not entirely clear who is left holding which risks, creating some financial 'mist'. It will take some time for the mist to clear so there will still be some uncertainty and volatility in the short term.
There are some positives to take out of recent events too. The international financial system is in much better shape to cope than it was 10 years ago. And we saw major central banks assisting liquidity where need be.
Back in New Zealand, we don't have the same sub-prime mortgage problems - our banking system is sound. The riskier end of our financial sector is finance companies, where we have seen some troubles in the past year. But they make up a much smaller portion of the overall system than sub-prime mortgages do in America and there is no indication of the same sort of systemic issue. Of course, that is no comfort to those who have lost savings, and I do feel for those who have. The changes the government is proposing such as mandatory credit ratings should help make the risk/return profile of investments more apparent to investors in the future.
So New Zealand has been affected by the credit squeeze more indirectly through the re-pricing of risk. The danger, of course, is that the volatility in the short term through lack of liquidity can harm what are otherwise healthy firms. It was pleasing to see the NZX help reassure investors by seeking clarification from listed finance companies that they are complying with continuous disclosure regulations."
**** **** ****
I hope you are nicely relaxed, but as The Observer notes: "After hubris, nemesis."
Sep 17, 2007, 10:38
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