Delta Airlines and the Pilots Association are suing the Exim bank for financing Air India. I think they have a great case. I hope they win.
Exim gives cheap money to India so it can buy Boeing planes. This story “sounds” good as exports mean jobs and business is booming at Boeing. You can count on Obama showing up in Seattle sometime, and crowing about all the jobs he has created thanks to the cheap money deals.
I wonder what he will be saying to the folks who work for the airlines. They don’t get cheap money, so they can’t buy the new aircraft they need to compete with the likes of Air India on the profitable transatlantic routes. (The basis for the suit.)
The only winners in this story will be the lawyers. The losers will be “us”. We will pay for it in the form of higher airfares, more debt and deficits.
Is this an example of an unintended consequences, or just stupidity?
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A Greek, a Portuguese and a Spaniard are talking to god:
The Spaniard and the Portuguese ask, “When will our countries be free of debt?”
God answers, “In 100 years for Portugal and 150 years for Spain.”
The Iberians respond in dismay, “But, our children's children will be dead by then.”
When the Greek asks God the same question for his country, God answers, “I don't know — I'll be dead by then.”
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Paper Money
Lee Adler at Wall Street Examiner has some interesting data on the amount of printed money outstanding:
Two things caught my eye. The recent percentage rate of increase has not been seen since the crisis days of 2008. The second thing is just the sheer amount of paper money “out there”.
I have only questions regarding the rate of increase. Are these 100-dollar bills ending up in the USA? Or are they going out of the country? Are they being used to transact business? Or are they being used as a store of wealth? I believe it is all of the above.
The $1.05 Trillion of outstanding currency comes to 7% of GDP. That is up from 5% in 2007. The increase of $300 Billion represents a 40% increase while the economy was basically flat. If this was all in 100-dollar bills it would stack up 700 miles high. Didn't Bernanke say the Fed wasn’t printing money? He's increased that pile by 250 miles. He's printed enough to carpet all of D.C.
Gold has had a nice goose of late. There are many reasons for it to repricing higher. Deep in the corner of the demand is all this paper sloshing around. Sooner or later, it will seek to hide somewhere safer than in paper under a mattress. I suspect some of it did today.
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Posts
Re: Cash
ReplyDeleteWell, we don't use credit cards and debit cards near like we used to for our small businesses. I know, that's myself, and quite a few other small biz types that I know.
We don't trust the banks, and sites like Ebay have turned away from their roots and simply become a marketing arm to try to compete against Amazon. There's more and more business being conducted over craigslist and other sites like it.
There's a real growth market out there, but it's disorganized - and that's it's beauty, because the taxing entities really have difficulty tracking the likes of us, and our fixed costs are very limited.
Think of it as a commerce version of the American Revolutionary War, circa 1780, after the battle of Camden, SC. Our local business (Revolutionary) forces have lost the battle and have been driven from the field, but as a result we're changing strategy and moving into different marketing environments where the big players are at a disadvantage.
Cash transactions are a big part of the entire process. And lots and lots of places are very happy to take cash.
It's not a perfect solution or even necessarily a good solution, but it's a growing trend. More and more small businesses and consumers are deciding that we don't need to fight on the banks and big companies turf.
There's other reasons the power elite and corporate interests were all pushing SOPA/PIPA. Nothing like having an additional tool in place to assist in 'controlling' elements of the marketplace that they currently don't control.
They never did get around to repealing that requirement that any business spending over $600 dollars with any one vendor file a 1099, did they? There was a firestorm of bipartisan outrage after the provision was discovered, but nothing ever happened. Funny how that works.
DeleteChuckles is a confectionery produced by Farley's & Sathers Candy Company, Inc. Chuckles are jelly candies coated with a light layer of sugar. They come in five flavors: cherry, lemon, lime, orange, and licorice.[1] Each package of Chuckles contains one piece of each flavor. The candies have always been packaged in the traditional log with six ribs. The candies are made with corn syrup, sugar, modified and unmodified cornstarch, and natural and artificial flavors and colors.sell Structured Settlement
ReplyDeleteas for the Greece, its 1-year bonds just hit 800% intra today, the package seems to work :)
ReplyDeletehttp://i.imgur.com/eKUiR.png
Regarding the sheer amount of paper money out there, GDP is simply money supply times the money velocity.
ReplyDeleteTen years ago money velocity was 2.0. Now, it it 1.6. So, the sher amount of money out there has kept us from going into a recession!
Don Levit
Were it true that real economic growth could be as simple as money supply times the money velocity, Zimbabwe would be a wealthy, stable and a model for economies all over the world.
DeleteNominal is just that -- nominal. 'GDP' is losing its meaning. Like Jim Grant said, the Fed is changing the ruler that measures economic growth.
I doubt there are many people who don't follow financial markets obsessively who feel better off now than they did three years ago.
An absurdity. They are right to file suit.
ReplyDeleteBut this is likely peanuts compared to the favoritism the government doles out to e.g. Indians via small business loans. Ever wondered why so many convenience stores and small hotels are owned/operated by Indians?
Indians and Asians are considered as minorities and get government perks.