Robert Browne

Krugman's Wrong: U.S. Credit Problems Aren't Similar to Ireland's

There are similarities and very great similarities with Ireland. You are correct in stating that America has its own currency and a very well oiled printing press. As evidenced by the latest trillion dollar print run. However, like Ireland there are "Real" not just imaginary limits to Americas debt financing. The US can print a trillion or more fiat money to purchase its own debts and government backed securities/bonds. However, at what point does the US cease to have any credibility in having control over its financial affairs? This is where there is a very great similarity with Ireland. Ireland is a republic with a population of just over 4 million people. The Irish banks have wracked up losses (toxic asset) that are roughly equal to two times the current annual total of all tax receipts coming into our exchequer. Our government now wants to take this toxic mess off the banks balance sheets by paying approximately 65 billion Euro for it to deposit in a state bad bank or skip called NAMA. The state has further guaranteed out bank depositors to the tune of 400bn Euro and has recently had to dip into a state pension reserve funds to provide a stimulus of 3.5 billion Euro to each of our two main banks AIB (Allied Irish Bank) and BOI (Bank of Ireland). All this debt is washing over the Irish tax payer and putting them into debt slavery! Just as the US economy is in debt bondage! In 2006, the US economy reached a milestone in borrowing because in that year the marginal productivity of its debt went into negative territory for the first time ever. This presaged and heralded the current mess. In other words, for every dollar borrowed the dollar return is in the minus territory. Why does a country borrow money, surely it is to increase, not decrease GDP as a result of such borrowing? This is no longer the case with America and it is no longer the case with Ireland! Both countries have lived off of their capital bases, created huge bubbles and increased their standard of living by borrowing from countries more frugal than themselves! The day these debtor nations, such as China or Saudi Arabia, say "sorry" but we actually need our money for our own citizens to improve or maintain their standard of living is the death knell of both economies. Obviously America has a bigger problem because of its size but nonetheless it will be very bad news for Joe Six Pack and Paddy. Ireland and America must repent and reform and put the needs of their respective populations before the God of endless credit fixing scams. Mr. Obama promised the American people "Yes we can" so far, with Mr. Geitner the answer has been "no we can't".

China's Dollar Crocodile Tears

Debt monetization or printing dollars until the printing press starts to melt causes the Chinese government real worries, it makes them look foolish in the eyes of their own people. They would be idiots to stand idly by and have their bonds devalued by a FED which has not only failed to regulate the markets but is in fact addicted to credit itself. Even now the US government and the FED say they are helpless to stop AIG and other executives looting tax payer funds. If they cannot stop that why should anyone, anywhere including China have any confidence. The US can expect a currency crisis a lot sooner that it thinks!

Is Meredith Whitney Right About Citigroup?

Meridith Whitney will be remembered 100 years from now long after Lehman, Merill, Fanny and Freddie are long forgotten. Its December 9th now and I am hoping the penny or cent has dropped Mr. Tan!!!!