China Owns US

China's accumulation of foreign reserves (comprised largely of American debt) have increased by 1100%.

Inquiring minds are reading with much interest an article on CNBC entitled, “US Is ‘Practically Owned’ by China: Analyst” where Tom Winnifrith, CEO at financial services firm Rivington Street Holdings, told Monday that US supremacy as the top world economy will end sooner than many people believe. So Mr. Winnifrith believes gold is a better investment than the dollar despite it hitting a new record.

“America is practically owned by China,” he said.

He reminded of the fact that in 1900, sterling was the world’s reserve currency but by 1948, that was no longer the case as the British Empire collapsed.

“America is doing what Britain did,” Winnifrith said. “America spends much more than it can afford and it’s not addressing the issue.”

In 1832, China and India were the world’s two largest economies and by 2032, they will regain that status, he predicted.

“The 200 years when Britain and the US were the top two economies were an aberration and that will change,” Winnifrith said.

“The decline of empires has happened much faster than folks think. I believe that gold will be a far better bet in 20 years than the dollar,” he added.

And the culprit in all of this? This is shocking, to be sure, but:

The US trade deficit and debt continue to grow and the authorities are reluctant to address the problem, preferring to print money, Winnifrith said.

Once again, this societal co-dependency (aka “Political Correctness”) in killing this country. Dress for Success instead of Character, Governing by Exception and not the Typical, Feel-goodism, etc. is/has destroyed this country.

We need to understand that the economy grows when people put more effort in than they take out. A “consumer economy” is euphemism for a successful economy beginning the decline.


New Song: Irish Eyes Are Cryin’ (over deficit)

Inquiring minds are looking with trepidation at a new report on Ireland’s national debt. In the article “Ireland Prices Bank Rescue…“, Ireland comes off as a crack addict just looking to score one more time:

Ireland’s central bank has put a 34 billion euro price on bailing out stricken Anglo Irish Bank under a worst case scenario and said Allied Irish Banks needs to raise an additional 3 billion euros by the end of the year.

But this isn’t the first intervention by friends:

The government will announce later on Thursday plans to recapitalise Allied Irish Banks, the central bank said. Dublin already has a near 19 percent stake in the lender.

Ireland has already injected nearly 23 billion euros into Anglo Irish Bank.

The citizens of each country need to intervene and stop the addicts, er…politicians, before there is nothing left.

The country’s budget deficit will balloon to 32 percent of gross domestic product this year, but Ireland aims to cut it to the European Union-agreed 3 percent by 2014, the Finance Ministry said.

Irish borrowing costs have climbed to euro lifetime highs and triggered jitters across Europe over as investors craved some certainty about the bill to wind down Anglo Irish.

Ireland, call 1-800-TEA-PARTY

Revealed by UK: Wind Farm Power Twice as Costly as Gas or Coal

who could possilby think these monstrosities look nice?

Inquiring minds are chuckling now after reading the Daily Mail article on the cost of wind power.

The true cost of Britain’s massive expansion of wind farms has been revealed.

It costs nearly twice as much to generate electricity from an offshore wind farm as it does from a conventional power station, a scientific report has concluded.

And while the price of wind power is expected to fall in the coming decade, the researchers admit there is a slight chance it could rise even further.

The study comes amid Britain’s ‘dash for wind’ — one of the biggest engineering projects of the last few decades.

Over the next ten years, the Government wants up to 10,000 new wind turbines to be built at sea and on land to meet tough climate change targets.

The report, from the UK Energy Research Centre — a Government funded academic think tank — said the costs of offshore wind power were underestimated in the mid-2000s.

Instead of costs falling as predicted, in the last five years the cost of buying and installing turbines and towers at sea has gone up by 51 per cent.

Once the bill for building and maintaining an offshore wind farm is spread over the 25-year lifespan of a typical farm, each kilowatt hour of electricity now costs 15p.

That’s nearly twice as expensive as electricity from conventional coal and gas power stations, which costs 8p a unit, and more than nuclear, which costs 10p a unit.

Anyone with any common sense knows this intuitionally. The very fact that “Wind Farm Power” needs subsidies means that it is more expensive. And there is no more money for subsidizing anything anymore.

Experts Say July Uptick in Home Prices Won’t Last


Inquiring minds are seeing where the experts are realizing that housing hasn’t stablized. The LA Times, no less, has an article “July uptick in home prices won’t last…” where the vaunted Case-Shiller index once again shows a slight increase from June. Yet economists expect a looming glut of repossessed homes flooding the market to drag values down:

Economists said they expected weak growth in housing and a decline in home prices this year despite a report Tuesday indicating that home valuations crept up in July.

The Standard & Poor’s/Case-Shiller index of 20 metropolitan areas showed that prices of previously owned single-family homes rose 0.6% in July from June and 3.2% over July 2009.

The closely watched index encompasses data from May, June and July. Although sales plummeted in July they were bolstered by popular federal tax credits for buyers in May and June.

One economist says it bluntly:

Celia Chen, a housing economist for Moody’s, said she expects prices to fall as more banks step up their repossession of homes through foreclosure and put those properties back on the market. Lenders have been seizing houses at a record clip this year, taking back 95,364 U.S. properties in August, according to Irvine-based RealtyTrac, the highest monthly total in the research firm’s records.

“Eventually those homes are going to end up as discounted for-sale homes and will pull down prices,” Chen said. “So we are in for weakness.”

Most people ‘in the know’ in California feel that the market is ready for a drop between 25-45 percent. It is the opinion of this blog that housing prices will collapse and, in fact, lose around 45%. This is based partly on a time tested system that the price of a home is found simply enough by multiplying the monthly rent it would fetch on the open market by 100 on the low end and 125 on the high end. Therefore, a home that would rent for $2000 per month should sell for approximately $200,000-250,000. Older 50’s to 60’s “box” SFR’s in Huntington Beach typically rent for $2000 per month. But they sell for around $450,000. That simply is just not going to continue. The money isn’t available any longer.

Obama’s Stimulus Made Economic Crisis Worse

Inquiring minds are trying to laugh through these hard times. But it is getting harder with each passing day.

It is amazing how this country has created a system that is exactly opposite what is needed and works:

U.S. President Barack Obama and his administration weakened the country’s economy by seeking to foster growth instead of paying down the federal debt, said Nassim Nicholas Taleb, author of “The Black Swan.”

“Obama did exactly the opposite of what should have been done,” Taleb said yesterday in Montreal in a speech as part of Canada’s Salon Speakers series. “He surrounded himself with people who exacerbated the problem. You have a person who has cancer and instead of removing the cancer, you give him tranquilizers. When you give tranquilizers to a cancer patient, they feel better but the cancer gets worse.”

Today, Taleb said, “total debt is higher than it was in 2008 and unemployment is worse.”

But Taleb makes a very salient point about the free market. . Sins must be accounted for…

“Today there is a dependency on people who have never been able to forecast anything,” Taleb said. “What kind of system is insulated from forecasting errors? A system where debts are low and companies are allowed to die young when they are fragile. Companies always end up dying one day anyway.”

Taleb, a native of Lebanon who gave his speech in French to an audience of Quebec business people, said Canada’s fiscal situation makes the country a safer investment than its southern neighbor.

Canada has the lowest ratio of net debt to gross domestic product among the Group of Seven industrialized countries and will keep that distinction until at least 2014, the country’s finance department said in March. Canada’s ratio, 24 percent in 2007, will rise to about 30 percent by 2014. The U.S. ratio, now above 40 percent, will top 80 percent in four years, the department said, citing IMF data.

Same is Great Britain…Sell, sell, sell

Inquiring minds are reading about

Budget: Brussels and the Begging Bowl

Inquiring minds are looking on as the EU fights a losing battle to finance its increasingly wide range of roles and responsibilities. Member states reluctant to contribute to community institutions are being held to blame for an imminent cash flow crisis:

It may be in poor taste to kick Europe when it’s down, but the facts are plain to be seen. The EU appears to be increasingly irrelevant in global politics. Notwithstanding the spectacular face-off over the Roma issue, it is at best viewed with indifference by public opinion within its borders. But now the 27-member bloc has been overtaken by yet another malaise, Europe is on the verge of financial bankruptcy.The subject at issue is not the threat posed by sovereign debt accumulated by its member states, but the budget of the EU itself — the operating and investment budget. The cashbox in Brussels is all but empty!

This autumn, the struggle over the budget which will dominate the activity of the European Parliament will almost certainly draw plenty of blood in Brussels. For the first time, the issue will be decided in compliance with the rules of the Lisbon Treaty, which gives the last word to Parliament. And before the curmudgeons among you shout me down: if there is one area in which the EU continues to make progress, it is in the field of democratisation, and notably with regard to the powers granted to the 736-member parliament. At last we have a parliament worthy of the name: it is even votes on the budget.

A legislative giant with feet of clay

But the good news stops there. This summer the Commission presented a proposal for a 2011 budget of approximately 126.6 billion, or 1.02% of the EU’s GDP. Given the context of the sovereign debt crisis, it was an austerity budget which took into account the fact that the main priority for member states remains the restoration of national public finances, and that EU spending would have to take second place. But it was still too much for the European Council, which pared it down before passing it on to the European Parliament’s Finance Committee. “We have reached a point of deadlock over the budget,” remarks the Committee President, France’s Alain Lamassoure.

Lamassoure goes on to explain that the EU has now become “a legislative giant.” With each new treaty — Maastricht (1993), Amsterdam (1999), Nice (2003) and Lisbon (2009) — the European Council has charged the EU with more extensive responsibilities. Or put more simply, Europe’s national leaders have increased the number of tasks assigned to Brussels: which now include the development of policy for energy, the environment, higher education and research, and the creation of a 6,000-strong diplomatic service etc.

However, at the same time the Council has somewhat imperiously refused to provide the EU with the means to achieve these new goals. In fact, the EU’s budget has been progressively reduced: in the mid-1980s, it represented 1.28% of Europe’s GDP, in the 1990s this figure was scaled back to 1.02%. And who knows where it will be in the wake of this autumn’s debate?

As a result, the EU now appears to be a waning power whose summits are followed by the announcement of ambitious projects that never see the light of day. Can anyone remember the Lisbon summit where the Council decreed that Europe would shortly become “the world’s most dynamic knowledge economy?” It would be funny if it was not so sad, but how many patents have been lodged in Europe since then?

Finance ministers – formerly reluctant to pay, now unable

As Mr Lamassoure explains, Europe may well be a “legislative giant,” but it remains a “budgetary midget.” In its early years, with the treaty that established the European Coal and Steel Community (ECSC, 1951), it benefited from its own sources of revenue in the form of customs and excise duties (the common external tariff). However, this influx of funds progressively dried up in the course of major negotiations on the global dismantling of trade barriers. To refill the coffers in Brussels, in 1984, it was decided that revenues would temporarily be supplemented by contributions from member states to be calculated on the basis of their GDP and VAT revenue streams.

What began as a provisional measure became permanent, the supplement became the main course, and there have been no further decisions on EU funding since then. Today the bulk of the EU’s budget is still sourced from national contributions, and the EU still features as an expense in the financial provisions of its 27 member states, where it is regularly criticised by national representatives and continues to provoke the ire of the governments who pay the most.

This state of affairs has paved the way for a mentality that privileges a “return on investment” approach — i.e. that each member state should recover the cost of its contribution to Europe — which is the very antithesis of the community spirit of times gone by.

It is a situation that weighs heavily on Mr Lamassoure who remarks that in the past “finance ministers were reluctant to pay,” but today in the context of the current crisis, “they are unable to pay.” If the deadlock surrounding the European budget is to be broken, the first line of attack must target the chains that bind it to national contributions.

And that can only mean one thing: the allocation of specific European resources. The majority political party in the European Parliament, the European People’s party (EPP), is proposing to introduce a European tax on financial transactions or CO2 emissions. Mr Lamassoure favours a more inventive approach that will enable the EU to directly receive VAT for certain types of imported products (for example, from cars).