Stormy Weather

I was reading an article today about the difficulties faced by travelers during the recent snowstorms in the NE US and it occurred to me that the success the airlines have had in recent years with what appears from the outside observer to be extreme efficiencies in how they schedule flights, how many flights, what times, how to get occupancy loads over 80% consistently etc. is also responsible for some of the extreme difficulties faced by travelers who had 2-3 day delays in their schedules.

It seems that the entire industry from the FAA with it's often outdated technology barely able to keep up with the growth in traffic to the airports themselves having to completely reconfigure (many of them after substantial investment with an entirely different type of travel experience in mind) the terminals after 9/11 and are just barely able to service passengers in secure areas. Airports have lagged in investment in additional gates and are basically functioning on the edge of capacity. Then there is the airlines who have invested in reservation and scheduling systems that allow the most efficient booking of passengers using the same "just in time" philosophy exercised in the manufacturing industry where they are able to tweak the number and frequency of flights to match the demand of passengers to fascinating accuracy. I personally have not been on so many flights that were at least 85% full then in the last few years. It is a far cry from the days when scheduled flights would be 30% full and airlines would occasionally "break" a plane so they could combine the passengers from an earlier flight that was dismally empty with one that was at a later time.

So with all players in air travel operating at capacity / maximum efficiency we are faced with the reality that any "breaks" in the chain can and will cause total "production" to stop very quickly. Weather has that ability and over time, the passenger experience has degraded ever more as the industry constantly squeezes out "costs" of production.

Of course this reality came to a head back in the spring of 2010 when the Senate finally passed some legislation to address the treatment of passengers by the industry in cases when planes are stuck on the tarmac for hours (which makes absolutely no sense to me why this even happens). From this article the outline of the bill is:

-Require airlines to provide passengers with food, potable water, comfortable cabin temperature and ventilation, and adequate restrooms while a plane is delayed on the ground.
-Require airlines to offer passengers the option of safely deplaning once they have sat on the ground for three hours after the plane door has closed. This option would be provided every three hours the plane continues to sit on the ground.
-Require airports and airlines to develop contingency plans for delayed flights to be reviewed and approved by Department of Transportation. The bill also allows the DOT to fine air carriers and airports that do not submit or fail to comply with contingency plans.
-Direct the DOT to create a consumer complaint hotline so that passengers can alert the agency about delays.

What is amazing and telling of our impotent leaders in Washington is how simple this bill is, but to get such a simple (basically worthless when you consider it does absolutely nothing to alleviate the problem in the first place) bill passed it took THREE YEARS!! Yea, three years to pass a few lines saying people flying on planes had to be treated like human beings, but only if they are stuck on a plane.

In the case of a weather related airport shutdown, it is OK that people have to wait 2 1/2 hours for some lousy fried chicken and ration simple supplies like toilet paper while their baggage sits on a stranded plane. Oh, but to create any type of infrastructure and or rules to deal with human beings when they are stranded at an airport for whatever reason would be to create inefficiencies in the "system" and add cost to everyone involved so NEVER expect that to happen. The lobbing will be so intense against it our impotent, bought off government will never go in the direction of protecting it's citizens over the corporate sugar daddies. Expect to be treated evermore like industrial cattle in an ever efficient cog to get you where you are going at as little expense as possible and the highest profit as possible regardless of the impact on your humanity in the mean time.

Helmut Schmidt

From an excerpt at interview at Marketwatch.com

Schmidt: One of the weakest points in the global economy is that there is no control of the behavior of financial managers. You can divide mankind into three categories. In the first category are normal people like you and me. We may have once stolen an apple from a neighbor’s trees when we were boys, or we may have taken a bar of chocolate from a supermarket without paying for it. But otherwise we are dependable, normal human beings. Then secondly you have a small category of people with a criminal character. And thirdly you have investment bankers. That includes all the dealers and the deal makers. They all sail under different names, but they’re all the same.

I love this interview. After saying there is no leader in Europe strong enough to counter American influence he commits a sleight on America by saying:

...But I would say that, in general, Europe lacks leaders. It lacks people in high positions in the national states or in the European institutions with sufficient overview of domestic and international questions and sufficient power of judgment. There are a few exceptions such as [Prime Minister Jean-Claude] Juncker of Luxembourg, but Luxembourg is a bit too small to play a substantial role...

...If there was a president in Washington and he wanted to drop the atomic bomb on Tehran, the Europeans would be strong enough to say: “We are not part of it.” Right now, no one is strong enough in Europe to be in that position...

You get it? "If there was a president..." Yea you get it, he puts Obama in the same category with other European leaders, leaders without full understanding of the emergence of global money folks, "investment bankers", if you will. I prefer to call them parasites, unregulated, global parasites. He is more gentle with his language.

Gotta love this stuff.

Broken Financial Market

I have a desire to completely do away with “unregulated markets” of all kinds and “unregulated financial derivatives” of all kinds. In a world with over 6 Billion people, highly interconnected and mutually destined to live the same fate, there no longer exist any positive human element to Trillions of Dollars swathing around betting for or against any asset class or created asset class with the sole objective of raking as much money out of the global financial system as possible irrespective of the consequences of their actions on the lives, destinies or wellbeing of the human beings their actions touch.

These unregulated institutions function outside of the regulatory structures of any nation, global governing body, or regulated institutions, answer to no person or persons in any jurisdiction with which they operate and seek to make money irrespective of their impact on the human beings they may have positively or negatively. They need to be eliminated or regulated. They need all funding by regulated financial institutions to be terminated. Their products need to be liquidated. We need them no more.

All 401k accounts should go to cash now and stay in cash until the government fixes our vastly broken "free market" system. With thousands of people employing ever sophisticated technology with the sole purpose of taking as much cash out of the "free markets" and putting it in their pockets (clearly 60-80% of all volume in the "regulated markets" is being dictated by institutional traders, unregulated money), it is unwise for any hard working American to even contemplate putting money into this very broken system. I fear a entire generation of poverty stricken retirees within the next 5 years once again asking for a federal bail out of their worthless retirement accounts.

Lawmakers Cash In

There is nothing like a major reform bill to bring in the cash. Besides the fact that nothing in the way of financial reform has yet to emerge from Washington over two year from the collapse of Bear Stearns, the past few months have been a free for all money raising orgy as lawmakers head into election season. The financial lobby has uncorked all the expensive wine and is pouring it down to escape regulation of their industry gone amuck.

I just read this clip from a Reuters article:

U.S. House of Representatives Speaker Nancy Pelosi may wait until after the Memorial Day holiday to name negotiators to a bipartisan committee to resolve differences between House and Senate legislation to crack down on Wall Street, party aides said on Friday. Senate leaders are expected to appoint their conferees on Monday, Top U.S. Democratic lawmakers said they saw little difference between Wall Street reform bills passed by the House of Representatives and Senate and believe it will not take more than a month to reconcile the two.

Yea, its just two short sentences but they say it all. Drag this thing out to some time in June, maybe 4th of July so we can rake in lots more cash. The entire bill is looking more like a side show, full of goons and other spectacles to make the public think something is getting done. Meanwhile, the efforts to prop up the markets until this thing passed has failed miserably.

If we could only get just a bit more cash...

Some really serious stuff on Goldman

Greenspan's Perception 1

I just started reading "The Age of Turbulence" by Alan Greenspan. I only got to page 14 of the introduction when I could not believe what I was reading. He says, and I quote, "The decline of real (inflation-adjusted) long-term interest rates that has occurred in the past two decades has been associated with rising price-to-earnings rations for stocks, real estate and in fact all income-earning assets. The market value of assets worldwide between 1985 and 2006 as a consequence rose at a faster than that of nominal world GDP... This created a Major increase in world liquidity. Stock and bond prices, homes, commercial real estate, paintings, and most everything else joined in the boom. Homeowners in many developed nations were able to dip into their growing home equity to finance purchases beyond what their incomes could finance." and he goes on to glow about the annual rate of growth of the world economy from 2000-2006 of 3.2% per head adding that "Market capitalism, the engine that runs most of the world economy, seems to be doing it's job well."

Now I get it. Greenspan gloats for pages in his introduction, not about the American economy, which in my eyes from 1985-2006 had about 6 years of real growth (from 1994-2000 roughly), with the rest of the period either in recession, stagnation or outright "borrowed money asset inflation" just as he says, with NO REAL UNDERLYING GROWTH OR PROSPERITY, just a wholesale transfer of what wealth there was to the hands of those who orchestrated that transfer, but about the "global economy". It does not matter that we in the US had a serious and deep recession in the early 80's that did irreparable harm to our economy, that this recession was followed by a debt fueled asset bubble not unlike we just experienced that collapsed fantastically in the late 1980's resulting in the near melt-down of the US financial system, followed by a stagnant period of about 5 years with anemic growth (remember "It's the economy stupid" in 1992), declining standards of living, an implosion of our cities with drugs, crime and exodus, and the whole sale moving of our "productive" capacity out of the nation (accompanied with the gutting of the American education system creating a couple generations of useless ignorant graduates who were slaves to carbon and isolated from any means of economic advancement).

Greenspan is a complete globalist. He should be tried and convicted of NOT PERFORMING HIS DUTY AS HEAD OF THE FED ACCORDING TO THE OATH HE TOOK. It is obvious as hell his perceptions are global, not national. What do you do when the guy who runs the Fed in the US runs it as if he is running the "world economy" and makes no attempt to hide the fact that he measures his success at the Fed based on the success of the "world economy" not the US economy.

I get it now, I really get it now. The powerful multinational corporations and the success of their ability to exploit the rest of the planet for their profits is and has for some time WAY trumped the Fed's priorities of real growth, low inflation and full employment in the US. I have known since my undergraduate days at the University of Maryland that some 85% or more of the US "currency" in circulation was outside of the US. Now I understand, when we have a Fed Chairman like Greenspan running the Fed, this is how he sees his role, the US is about 15% of the economy he controls monetary policy over. What ignorant fool would think the Fed cares more than that about the American economy.

If you think I am off base, just read Greenspan's own introduction to his own book. You will get it. I need not say more.

Worthless Consultants and Overpaid Corporate Heads

I have frequently stressed how amazingly incompetent many folks who run major corporations are. Often they are part of a "club" of folks who are offered various posts leading major corporations in various capacities because they are in this "club". I wouldn't mention how one becomes part of this club but obviously it means you have access to the largest pools of money in the nation, corporate profits, cash flows, stock etc. and can rake millions out of the system.

So, occasionally I find an article that demonstrates how these incompetent executives make decisions by hiring consultants to make decisions for them instead of making themselves because well, they are incompetent or they have lawyers that tell them if they can point to a "professional consultant" as the cause of their disastrous decision that will protect them or whatever...

Here is a quote from an FT article I read today:

Citigroup’s disastrous foray into complex securities before the financial crisis was partly based on the recommendation of outside consultants hired to advise the bank’s leaders, a former senior manager revealed.

In testimony on Wednesday to an inquiry into the turmoil, Thomas Maheras, a former co-head of Citi’s investment bank, lifted the lid on a move that led to more than $50bn in losses and forced the US government to bail out the company.

Mr Maheras said that, following a study by a consulting firm – said by people close to the situation to be Oliver Wyman – in 2005, Citi decided to ramp up parts of its fixed income business, including in collateralised debt obligations. Oliver Wyman did not respond to a request for comment.

“Based in part on a careful study from outside consultants hired by our senior-most management, the company decided to expand certain areas of our fixed income business that we believed at the time offered opportunities for long-term growth,” Mr Maheras told the Financial Crisis Inquiry Commission, which was appointed by Congress.

Citi’s decision came when it was led by chief executive Chuck Prince, a lawyer who had served as general counsel and had relatively limited capital markets experience.

Need I say more?

Real Terrorism vs. Financial Terrorism

Within days of some terrorists flying some airplanes into buildings our government leapt into action passing legislation to restrict American freedoms so fast it is obvious that all of this legislation was sitting on the shelf waiting for the opportunity to be implemented. The Patriot Act was obviously a pre-conceived piece of legislation that had broad backing of industry and right wing elements of the US government for some time. It passes with flying colors, even overwhelmingly by the more liberal members of the government who bent over and allowed themselves to be bullied into passing the legislation less they be deemed “un-patriotic or un-American” during this knee-jerk time of American history.

Yet TWO YEARS after the first major financial firm’s collapse (Bear Sterns) and 18 months after the rest of the market’s collapse as a result of what could be called “financial terrorism”, the domination of the market by unregulated risky and toxic financial derivatives traded, financed and created by unregulated and regulated financial institutions alike, with abandon and with no sense of respect or responsibility to the financial system or lives of people who would be affected by their reckless actions, we have yet to have ONE IOTA of regulation passed to address this run-amok unregulated toxic industry.

In fact, this very industry is betting Billions of Dollars with financial derivatives designed to “pay out” if the finances of the nation of Greece collapses. Yet no-one is asking, “Who is going to pay out on these derivatives if Greece truly collapses and will the actions of these gamblers in Greece’s debt create winners and losers and another market tsunami that will inevitably result in Greece becoming the first domino in a cascade of nations which will ultimately have their finances also collapse under the pressure of these financial speculators?”

It seems clear to me who “owns” Washington and it is not the citizens of the United States, but the “corporate super citizens” who have our government in their pockets and have just been give the green light to spend an unlimited amount of money buying and selling the individual legislators who make the rules in this nation.

I don’t give a damn about the finances of Greece. I do give a damn about the lack of governance in the US and the rising fascist, corporate domination of the structure with which Americans now live and will be increasingly living under in the future.

I also have a desire to completely do away with “unregulated markets” of all kinds and “unregulated financial derivatives” of all kinds. In a world with over 6 Billion people, highly interconnected and mutually destined to live the same fate, there no longer exist any positive human element to Trillions of Dollars swathing around betting for or against any asset class or created asset class with the sole objective of raking as much money out of the global financial system as possible irrespective of the consequences of their actions on the lives, destinies or wellbeing of the human beings their actions touch.

These unregulated institutions function outside of the regulatory structures of any nation, global governing body, or regulated institutions, answer to no person or persons in any jurisdiction with which they operate and seek to make money irrespective of their impact on the human beings they may have positively or negatively. They need to be eliminated or regulated. They need all funding by regulated financial institutions to be terminated. Their products need to be liquidated. We need them no more.

TED and the disconnect between American Intelligentsia and the WAR

The time has come to recognize America is in crises. The Crises is not a financial one. It is not a political one. It is not a moral one. It is not a health crisis. America’s crises is one of a total disconnect between those who are fortunate enough to live in a constant 72 degree environment; attend well endowed schools; make their way through to higher education; take well paid positions in corporate America or government; have access to first class health care; and otherwise lead financially secure lives, and the masses, the other 70% of the nation who lives from poverty to working / middle class. These are the folks who make up our enlisted military, manufacturing work force, retail front liners, service sector personnel, maintenance / trades persons and transportation folks. They are the backbone of our nation and they increasingly live totally different lives with a totally different set of rules from the 30% who have access to those things that make what is commonly referred to as a First World lifestyle.

Our nation is at WAR. In fact we are in TWO WARS!! American’s intelligentsia / privileged classes are NOT at WAR. They are NOT connected in any way to the wars we are fighting other than through their pocketbook indirectly via their government’s expenditures. They know / knew the wars we are now in were / are knee jerk reactions to a lucky strike by some determined folks who came up with a plot to cause a brief mayhem in the US. None of these people truly believe in either one of the pointless wars we are now engaged in. The intelligentsia did not vote for G. W. Bush. They did not support his wars. There might have been a few moments after September 11, 2001 where all people in America, regardless of socioeconomic background felt a solidarity, like they were all on the same bus together for a moment and no way to get off. Very soon after this brief moment, the intelligentsia desired in intellectual approach to resolving what were obviously major grievances by other human beings on the planet to US policies around the world. They thought perhaps the point was made by these radical terrorists and we should wake up and learn about what we were / are doing to cause such a radical display of hatred.

Then there was the response of the government they did not vote for. A division of Americans (and the world for that matter) purposefully orchestrated in simplistic, pathetically rudimentary terms, “You are with us or you are against us.” Why should the intelligentsia fight the idiots who were making decisions at the time? Why should they bother stopping a couple of insane wars? Their way of protesting was to not participate. Focus on education. Keep oneself in the privileged class. That guarantees you don’t have to be a part of the WAR, the DEATH, the DESTRUCTION. They could live their lives with clear conscience, learning and becoming part of the “machine”, the same “machine” that IS what the destruction of the World Trade Centers were all about, but turned a blind eye. They stopped short of finding out why the attack happened and forcing some kind of global reconciliation. That was not accepted thinking so why should they pursue it? Why should they push back against the “machine” be it the “war machine” the “corporate machine” the “think tank machine” the “PR machine”? What was / is there to gain?

So here we are. I am frustrated daily by this reality. I attended a dinner party recently in Texas where folks there were all involved in the emerging “social media” phenomena that has been sweeping the Internet for some time now. They had written books, developed on line marketing strategies, built businesses around Internet 2.0 and otherwise managed to make a living out of various business or technology skills. It was great fun being around such folks for an evening until it hits me as I sit amongst them that they don’t have a care in the world about what is going on half way around the world in a couple underdeveloped countries full of sand or rocks where people live in mud huts in mountains. Why should they? They have no “skin in the game” so to speak. After a while I just get nauseas. America is falling further and further behind on just about every technology available to man except that geared toward destruction and here I am sitting around a bunch of people who really think they got their shit together cause they can scrape out a few dollars form the economy and build nice houses. They are clueless. Most of America is clueless. Strange thing is, the rest of the world is not so clueless. They are just fine with having a bunch of idiots form some other country fighting wars they see no point to other than as a training ground for their own militaries. In a way, that is really all these wars are. Neither nation had / has any technology to create war. Neither nation had / has any productive means to employ technology necessary to create war. Neither nation even has the wherewithal to govern themselves let alone create the massive organizations necessary to wage war.

I read this in a news bulletin recently:

…Afghanistan, killing seven Americans, the agency (CIA) has carried out 11 drone missile strikes in Pakistan's tribal-area militant strongholds in the most intensive drone warfare program to date. The Times said the reports did not mention many, if any, civilian casualties in the campaign, which reportedly have killed about 90 people suspected of being militants. The newspaper said the strikes included a Jan. 6 bombing on a North Waziristan mud fortress that killed 17 people and a South Waziristan assault that killed at least 20 people.

Note the words “mud fortress”. Yes, the idiot Americans are waging “war” against people who live in “mud fortresses” in 2010!

From edinformatics.com: The MQ-1 Predator is a system, not just an aircraft. The fully operational system consists of four air vehicles (with sensors), a ground control station (GCS), a Predator primary satellite link communication suite and personnel. The Predator's infrared camera with digitally enhanced zoom has the capability of identifying the heat signature of a human body from an altitude of 3 km (10,000 feet); they carry 2 Hellfire or 2 Stinger Missiles.

As of late 2007, producing one Hellfire cost about $68,000 each, the Predator itself costs somewhere around $5-8 Million each and with ground support, computer guidance gear, satellite and other necessary infrastructure a mission with one of these armed drones is quite and undertaking. So, it is always good to know we are spending all of these resources and technology to destroy “mud fortresses”.

So why do I digress from my original point to these mundane details about drone attacks? Because this IS where the story lies. Because America’s intelligentsia has removed itself from all involvement in our crazy two “wars” this kind of thought process is being lost. Had anyone really thought about the pure insanity of expending over $1.5 Trillion in highly advanced military and personal resources to wage war against people who live in “mud fortresses” perhaps we would remove ourselves from such madness.

There is another very troubling issue at hand with respect to the last 8+ years of pointless wars. That is nobody is trying in any concise way to explain exactly what the hell we are trying to “accomplish” with these wars. There is no defined objective. I would argue the main reason is these are NOT wars at all. They are military exercises designed to train our next generation of military fighters in various terrain using the latest weaponry. In addition, we had the opportunity to rid ourselves of stockpiles of older munitions that would have required quite expensive and painstaking disassembly to make room for the latest generations of weapons. The fact that people who live in “mud fortresses” have been so effective in creating real opposition has been our biggest headache and in our insane, pointless, destructive, inhumane, genocidal “wars” against these unindustrialized people we have managed to “create” an entire generation of hardened, battle worn, determined men who would like nothing more than see the US implode under it’s own weight and they are all to willing to push it along.

So back to the question, what are we trying to accomplish with these wars? Intelligentsia really does not give a hoot. As long as they are able to go about their trendy little lives, creating fun little “social entrepreneurial” businesses and build their little houses they are just fine with leaving the “point” of these multi-trillion dollar wars to the idiots who wage them. But I care. I lived the first 2/3 of my life with the “cold war” a daily feature of the news. I remember being indoctrinated with the propaganda of the Great Big Evil Empire determined to “bury” the West. That big lie was pushed down my throat for 20 years AFTER there was any real threat to any western nation from what we know now was the most dysfunctional, technologically backward, impoverished, and down right intoxicated “empire” that ever existed. They only “existed” because an entire ecosystem had evolved around the need for their existence. Any threat to the West was extinguished from the day they built a wall to hold their own citizens in. The failure to see this reality by the general populace at the time was something history must ask itself even more than how humanity managed to allow a supposedly advanced society managed to eliminate over 6 million human beings of a particular religious / ethnic group. To think or have thought that an “empire” that had to wall it’s own citizens in would somehow become a threat to anyone outside of those walls is / was a mystery only capable of being propagated by use of all the resources of mass media and miss-education possible at the time.

That “Cold War” ended two decades ago and what do we have to show for it? We are spending more now on our military than any time during the Cold War. We are being killed and killing more people than during any time of the Cold War outside of the Vietnam and Korean wars, neither of them which were “won”. Our “superior” economic system is in shambles. Our “superior” political models are completely incapacitated, impotent, dysfunctional and destructive to the rights of the citizens they have been sworn to uphold. Our entire physical infrastructure is in decay. We have ¼ of the manufacturing base we had during the Cold War. We have had a completely stagnant or declining standard of living for the past 3 decades, two of which were After the Cold War. And these are just our own issues. What happened to the hundred million or so people living in the “nations” of the Soviet Union that have gained their independence? The intelligentsia does not know, care, give a damn obviously. They never did. As I write this article, the first full, post Soviet Union generation is completing high school, entering the university or the workforce. They are full of hope and possibility while the economic system they were told was their salvation is in ruins. They are looking at massive unemployment, dysfunctional governments with no power to help their nations predicaments. They are looking at the West and saying, “I am here. I am what you fought for ½ a century for. I am the future of my nations possibilities. Here I am.” But nobody is listening. The number of people leaving those countries is staggering (see article below for example). They are failing nations. What did we do after we “won” the Cold War? Nothing. No “Marshal Plan”; No organized assistance to help them build solid government structures with individual, political and economic freedom; No strategy to help them retool their decadent manufacturing base so they could effectively sustain their economies. Western businesses went about their usual ways, steal what you can, buy or disassemble any potential competitive threat, lend until you create desperate poverty, create concentrated global dominance over their economy, exploit their labor, turn them into consumers of Mc Multi-national Oligopolistic chemically induced products.

Then find another “enemy” to justify the Military Industrial Welfare Complex to justify handing over trillions of dollars of the citizens current and future hard earned money to the wealthy, powerful, controlling, big brother corporations who are slowly but surely propagating the next fascist revolution in America. The intelligentsia be damned.

That article from the Express in the UK:

MOLDOVANS WILL WIN RIGHT TO LIVE IN BRITAIN

Moldovans at a rally in their capital, Chisinau.
Tuesday February 2,2010
By Nick Fagge (The Express, UK)
A NEW wave of immigration from Eastern Europe edged closer last night after Romania promised to fast-track a back-door route into Britain.
Tens of thousands of citizens from Moldova – Europe’s poorest country – will soon be granted rights to live and work in the UK and other EU states as part of a controversial Bucharest policy offering Romanian citizenship.
Romanian President Traian Basescu reaffirmed his earlier pledge to offer EU rights to Moldovans, due to historical links, during a state visit to the impoverished former Soviet state last week.
And he announced the creation of a new citizenship agency to fast track the one million applications the Romanian government has already received to go alongside a new nationality law granting citizenship in just five months.
He said: “The government will issue an emergency decree to set up a special Nationality Agency granting Romanian citizenship.”
Moldovans do not need a visa to live or work in Romania but prize a EU passport for the right to travel to richer states such as the UK to seek work.
However last night there was growing anger that Romania will release a new influx of migrant workers. Sir Andrew Green of Migration Watch UK described the Romanian policy as “outrageous”.
He said: “It’s high time the EU addressed the issue of who is entitled to an EU passport.
“At present it’s entirely in the hands of individual governments who can reach bizarre decisions, often for internal political reasons.
“The Romanians, Greeks, Spanish and Italians all seem to dish out passports to a wide range of people with historical, often tenuous, connections to their countries.”
UKIP Euro MP Nigel Farage said: “Any pretence that Britain can control its borders, or that immigration can be contained while we stay in the European Union is destroyed by this revelation.”
War Moldova was part of Romania until 1940 when it was annexed by the Soviet Union. It gained independence in 1991 and 80 per cent of the four million population is ethnic Romanian. However, Moldova is now Europe’s poorest country. Eighty per cent of the population struggles to survive on less than £1 a day (well really more like £15/day. I think the rooky that wrote this was using stats from Mongolia or Mozambique). And nine out of 10 young Moldovans plan to leave the country, according to a UN report.
Some 600,000 Moldovans already work abroad in Britain and other parts of Europe – legally and illegally. More than a million eastern Europeans came to the UK after Britain opened its doors to the so-called A8 countries – Poland, Estonia, Latvia, Lithuania, Slovakia, the Czech Republic, Hungary and Slovenia – when they joined the EU in 2004.
Tens of thousands more came from Romania and Bulgaria after they became EU members in 2007.

Porsche Bonuses to Employees Pale what was paid to CEO

Catching up on October news, I re-read an article I put aside about Porsche paying out bonuses to employees for 2009. The headline in the FT read "Porsche pays out bonuses to its workers" Nice huh? Well one quickly finds out the total bonus was Eur1,100 per each of it's 12,500 employees or Eur14 Million. The single "golden parachute" paid to it's exiting CEO, Wendelin Wiedeking, who left the company near bankruptcy, was Eur50 Million. 50 Million for one guy who nearly put 12,500 people out of work with his reckless behavior and we celebrate some bonus going to employees?

I have come to realize how flatly unjust the economic system we have is. When the CEO clubs of the world are raking $40 to $400 for every $1 paid to rank and file workers, the math really adds up. I would presume that many workers in many industries would have fully funded pensions and fully funded insurance if so much cash were not being stolen by the guys who run the companies that employ them. Theft is the only way to describe the outlandish pay packages awarded to each other. To argue somehow nobody would be willing to do these jobs without the pay is completely BS. People ran companies 30 years ago when the discrepancy was only a quarter of what it is today.

I also am nagged by the fact that I read every week the stock sales of "insiders" of major corporations in the US. In one recent listing of filings, the top 20 companies where insiders sold stock, the dollar value was $270 Million dollars worth. There were 64 people in this batch meaning the average amount raised by the 64 executives was about $4.2 Million each. These guys still hold substantial amounts of stock in their companies. This was just a recent filing of insider sales. This kind of thing happens all the time. Executives get "awarded" paper that can be sold for millions of dollars later. For what?

According to an article published in August 2009 by Emmanuel Saez "The top 1 percent incomes captured half of the overall economic growth over the period 1993-2007". This "income" is real income, real money in the banks of these folks. We talk about "money" being "lost" in the stock market etc. Well, the stock market "values" stocks at what people are willing to pay for them. This does not mean that at any one time the market is really worth the sum of all the stocks times what people are willing to pay because that much money does not "exist" at any one time to buy all the stock if everyone who held the stock wanted to sell. Witness what happened to the $600 Trillion derivative markets when nobody wanted to buy all of the sudden. Who has that much money to buy all that paper? Nobody.

So the "suckers" who loose money in the stock market paid hard cold cash for paper that became worth considerably less. But on the other end there are folks who are being "given" this same paper and being allowed to eventually "sell" it for cold hard cash to any willing sucker who will buy it. On any given day in the stock market a few thousand shares of any one company being sold are not even noticed but over time the cumulative effects of all this paper being "sold" by "insiders" adds up to real money, Tens of Billions of Dollars a year of real money going from the accounts of those who "bought" the stock (401k's, State Pensions etc.) to the accounts of those who "sold" it without ever having to "buy" it in the first place (or can buy it at a fraction of what they sold it for due to options valuations).

So 50% of the money "earned" in the US goes to 10% of it's people and all 12,500 workers combined at Porsche got 28% of the Bonus of one man. That is something to celebrate, yea they got bonuses! Let's party.

It is easy to see how completely out of wack our economic system has become and how absolutely unequal the US has become. We are in the same league as Brazil, Zambia, Venezuela, Uganda, Swaziland, Rwanda, Philippines, Mozambique, Guatemala... You get the picture.

GM Uses Off Shore Money to Bail out Daewoo

I found a good example (one of many) of how a regular business that was / is supposed to "produce" real products got so tied up with derivatives that the losses on the derivative bets alone have "bankrupt" the company.

GM rescued one such company in October with a cash injection of over $400 million. This from a company that has received billions of dollars in support by the American taxpayer. It is good to know that GM is only being audited by the Treasury for it's US operations isn't it? If they have $2 or $3 or $5 billion in the bank overseas, that just does not matter, they should only be shutting down the US operations without taxpayer help not overseas operations right? Keep them Koreans, Chinese, Indonesians, Brazilians or whoever employed cause for whatever reason, they can make money there, just not here in the US, the "previously" largest auto market in the world.

Yea, those poor folks at Daewoo (which was already 50.9% owned by GM) somehow managed to loose their "entire equity base", or lets say all of their cash / money / operating capital, you know, everything they need to pay bills with, by Won2,300bn of currency derivatives losses. That is nearly $2 Billion. What in God's name was an auto company doing with that kind of derivative exposure? With GM's 50.9% they basically "ran" the company right? Who the hell was running GM International operations at the time? Why wasn't he fired? Seems nobody was fired. Isn't that typical? Other major stake holders in Daewoo, Korea Development Bank, Shanghai Automotive of China and Suzuki had nothing to say. Hmm, well according the the FT article, Korea Development bank was Daewoo's largest lender. Think they were on the other side of that currency trade? This kind of information is just not available or talked about now is it?

What is almost comical is that Korea Development Bank (KDB) is asking for GM Daewoo to "share technology licenses for vehicles the jointly developer". Share with who? What the hell is that all about? China? I don't think KDB is going into the auto business any time soon, or do they own a substantial stake in some Chinese auto firm and want the technology to make cars in China? This is all a big mess. For Daewoo's largest creditor to make demands that are contrary to the interest in the company they own the stake in just does not make sense.

I still want to know what Daewoo was doing with Currency Derivative exposure that would allow them to loose $2 Billion and I want to know who bankrolled the trade and who was on the other side and why weren't a bunch of people fired?

Not much to ask...

Asia and Corruption Moving West

I think over the past 25 years I have been attentive to corporate / government governance, the same 25 years of the US's very rapidly evolving relationship with the economies of Asia, I have frequently thought American business / politics was learning some lessons from Asian business / governance.

The biggest lesson we seem to have learned is how to steal, lie, cheat and otherwise rake as much money out of our "system" be it corporate oligopolistic industries where CEO's have effectively stolen billions from the ever increasing "profits" of non competitive oligopolies or political figures figuring out how to transfer billions of dollars to their well connected "welfare" buddies or themselves through various creative "ventures".

Reading in the FT today about the $34 Billion (yes $34 Billion) of "misused funds in government accounts" in China reminds me that we still have a little way to go but not far, we are definitely catching up.

You can read the entire article here.