Letter From Australia (About a Ruinous Government)

Cleaning Up The Unlucky Country

In hindsight it will likely be told that Australia, of all the developed countries, handled the Global Financial Crisis (GFC") the worst--and that, dear friends, from a country which went into the crisis positioned far better than most.  What caused the manufacture of such a crisis?

• A grandiose Prime Minister who cast himself in a Churchillian role
• An insecure Prime Minister who wanted to be seen as the Barack Obama of the Asia-Pacific Region
• An economically ignorant Prime Minister who thought that money could be borrowed ad infinitum.

The name of the one who is arguably Australia's worst Prime Minister?  Kevin Rudd.

Paul Sheehan, Sydney Morning Herald correspondent, fills in the details.

Letter From the UK (To British Expats in Europe)

Ukip urges Brits to withdraw their money from Spanish banks

Nigel Farage has urged British expatriates in Spain to pull their money out of the country’s banks. 

By Robert Watts, Deputy Political Editor

4:57PM GMT 23 Mar 201
The Telegraph

The UK Independence Party leader said that the European Union had “crossed a line” by trying to extract funds from savers under the terms of the abandoned Cypriot bail-out.Mr Farage said: “Even I didn’t think that they would stoop to actually stealing money from people’s bank accounts.

“There is going to be a big flight of money and that flight of money won’t just be from Cyprus, it will be from the other eurozone countries, too. There are 750,000 British people who own properties, or who live, many of them in retirement, down in Spain.  Now that we see the EU are prepared to resort to anything to keep alive their failing euro project, our advice to expats living down in the Mediterranean must be, 'Get your money out of there while you’ve still got a chance’.”

Modern Secular Capitalism

A Diet of Darwinian Dogs

All human actions are grounded in ethics, one way or the other.  There is no such thing as an amoral act or deed.  Christianity declares to the world the doctrine of the ubiquity of ethics.  This is a message that does not sit well with Unbelief.  Ever since the Fall men have been trying to wriggle out of being pinned to the wall and having to account by spiting out all the butt ends of their days and ways. 

One stratagem has been to claim vast realms of amorality where ethics and morality are deemed not to apply. But the Word of God is unequivocal: all things lie bare and exposed before the eyes of Him with Whom we have to deal (Hebrews 4:13).  What is done in the darkness will be proclaimed in the light.  Unbelief recoils at these truths.  It would assert that there are enormous swathes of human action which are so unimportant that they are sub-ethical.  It would claim, on  the other hand, that some things are so vast and big that "ordinary" ethics do not apply.  And when it comes to oneself, Unbelief asserts a host of mitigating circumstances and rationalisations to explain away any wrong doing, whilst deflecting blame on to others, or to circumstances. 

The dismal science of macro-economics is one example of a "big area" deemed too important to be subject to ethics.

Avoiding the Inevitable

Not a Pretty Sight

Only a fool tries to avoid the truly inevitable.  A wise man will face up sharply.  In our days we are governed by men who are fools.  They are trying desperately to avoid the inevitable.  Their one excuse is that the voters want them to.  They know full well that if they faced up to the real economic situation facing New Zealand and the rest of the developed world there would be riots in the streets and they would be voted out at the first opportunity.  

Their approach, therefore, has been to practise the equivalent of palliative care.  Maintain huge deficit spending increases, trim back at the edges, sell a few assets so we can temporarily pay off a bit of debt, make the patient feel as comfortable as possible, and wait.  Hope for a recovery that will allow us to trade our way out of the recession, thereby avoiding a genuine depression.  Kick the toxic can down the road for our children and grandchildren to deal with.

The Governor of the Reserve Bank, Dr Alan Bollard sounded almost plaintive yesterday as he lamented the parlous state of affairs.

Institutional Blinkers

Purblind Central Bankers

The causes of the Global Financial Crisis are complex and multi-valent--as expected.  One individual who shares a good deal of the blame, however, is Alan Greenspan, former chairman of the US Federal Reserve.  Greenspan deliberately kept interest rates low in the US (and thereby in much of the world) during the critical period of 2000 to 2004.  It was during this period that house prices began to inflate rapidly.

In May 2000 the US federal funds rate (set by the Federal Reserve) was 6.5 percent.  Then the dot-com crash happened.  Internet and IT companies had been a hot item on the stock market, trading well above their intrinsic value.  Suddenly, as is often the case, the mood of the market changed:

The Second Global Financial Crisis, Part III

Nursing our Malice

When the Global Financial Crisis hit many pundits argued that Western capitalism had failed.  They had a point.  Half a point.  Capitalism is essentially the private ( as opposed to government) manufacture and trading of goods and services.  But such a non-government, free trade system cannot survive unless it is built upon a foundation of integrity, honesty, and the prevention and punishment of theft. Capitalism only prospers and benefits the majority if it cares deeply about the sovereignty of other people's property, believing that what God has given, let not man take away.

The Second Global Financial Crisis, Part II

Meeting Obligations, Or Not

In a previous post we argued that little of any significance has been accomplished effectively to regulate investment banking.  There is no doubt whatsoever that global investment banking, which had been dominated by US companies, had been responsible for the Global Financial Crisis.  As a result of government actions, risk is now concentrated in that sector more than ever before.  If institutions then were too big to fail, there are bigger now investment banks.  Moreover there are less of them.  Risk is therefore exacerbated and arguably more acute than 2008.

Why do size and number of investment banks matter?

The Second Global Financial Crisis, Part I

Defalcation on a Unimaginable Scale 

We are nearly four years on from the Global Financial Crisis.  It has achieved the status of its own acronym (GFC)--a sure sign in modern parlance that it "means something".  Its effects are still with us and some assert they will ripple out for a further decade. Has the problem been solved?  Far from it.

In short the regulatory changes made, particularly in the United States, have been both inadequate and even those passed, ineffectually policed.  The causes of the original crisis were manifold; the solutions, however, appear straightforward.  They have largely been ignored.