December 22, 2007

Unfortunately it's time to be serious.

Category: Economy — Cranky @

I’ve written about 250 entries on this space over the last couple of years. I’ve waxed expansive and egotistical on society, science, and religion. I’ve had Smokey the Bear shot to death masturbating in a fireworks factory, and I’ve stated my willingness to set fire to piles of baby otters. I’ve speculated on the nature of the universe, and I’ve lamented the changes in pornography. I’ve impressed my mother, and I’ve offended her.

So here is a warning. This article is by far the most unhappily serious one I have ever written. It’s undoubtedly long and boring, although I hope that some of you make it through to the end.

Today on CNN I watched somebody calmly say that hopefully last minute shoppers in the U.S. will give the economy a much-needed boost. Industry analysts predict 4% growth this year, down a full percentage point from the average of the last ten years.

I freely admit that I am not an economist. I didn’t go to school for finance. Hell, in over 20 years as a check-book bearing adult I have NEVER balanced mine. Sometimes, though, some things just seem too clear to be wrong. I must be missing something. That’s the only real possibility. It can’t really be as straight-forward as it seems.

One of the fundamental problems that are driving the U.S. to economic collapse is the over-extension of credit. Sub-prime mortgages are just one form. Credit card debt, bankruptcy and account delinquency are rising fast, and the mortgage situation has become so severe that Citigroup had to go cap in hand on a holiday weekend to the middle east to get what amounts to a $7.5 billion dollar loan at an unbelievable 11%.

Last time I checked into it, the U.S. economy is 70% consumer spending. If people reduce their spending, the economy is going to suffer. The problem is that Americans are already spending more than they are making. So really the economy is dependent on the average American getting further and further into debt.

I felt worried when I learned how the U.S. Federal Reserve has decided to combat the credit crunch. More than that, I felt ill. They have started a new type of action. They’re auctioning off $20 billion dollars to commercial banks at 4.67% interest. It’s the first of four loans to banks that could very well be insolvent when they are forced to really deal with the mortgage situation.

I would call that “throwing good money after bad”. The Federal Reserve is also likely to keep cutting rates to make credit cheaper so that the economy doesn’t collapse. This move is a clear sign of desperation. You cannot possibly push money into an economy without creating inflation. Otherwise we could just print money until everybody is a billionaire, and clearly that won’t work.

It cannot be possible to overspend your way out of an economic crisis. It just can’t. It makes no sense. 4% growth means that the American consumers are not learning any lessons. Unless I am missing something, the only end game to this process is a horrible collapse. And the longer it takes, the worse it will be.

I thought that a recession was coming. Now I think it’s much, much worse. And it goes way, way back. The American Dream is the culprit. The idea that everybody should be a homeowner, that cars should be leased or traded in every few years, that televisions and stereos should always get bigger, louder and shinier…  I’m a poster child for this type of consumerism, but I think I’ve been scared out of it now. The culture of uninhibited consumerism and irresponsible spending is going to destroy the economy of United States. The system that has been built has been slowly disintegrating for decades, and is completely unsustainable.

It’s possible the whole banking system could completely freeze up, and I have no idea how bad that would be for the global economy. It can’t be good. Domestically, the retirement investments of many people contain mortgage funds, directly or indirectly, and they are valued at what amounts to fictitious numbers. The actual value won’t be determined until the defaulted mortgages hit their balance sheets for real – when they are sold or re-evaluated –  and billions of dollars will vanish overnight. The money wasn’t actually there. It didn’t really exist. Try explaining that to people nearing retirement, though, when suddenly working as a Wal-Mart greeter is more likely than retiring on a golf course in Florida. Assuming, of course, that Wal-Mart survives the collapse.

Canada cannot be far behind the states because we have very similar patterns and our economy is tied directly to theirs. Where they go, we shall surely follow.

I don’t see the crash decades away. I don’t even put it years out. I think the crash will begin in earnest in 2008. I’m lucky enough to live in one of the best possible places to ride out an economic collapse, and I’m doubly lucky to work in a company that isn’t just important – it’s vital to North America, and perhaps the world. I’m triply lucky in that in the whole world I’m one of at most 8 people who could actually do my job at the moment, and I work in a role that is critical to the company. Untold thousands of people could begin to fill my role after 9 months of training. I’m there already, and I’m very good at it. How I came to be here is a blend of skill and luck, and I consider myself to have already won the lottery.

The scope of the crash is just creeping into my consciousness, though, and I’m genuinely scared.

Cranky

December 20, 2007

Not the stairs! That's madness!

Category: Entertainment — Cranky @

When someone has to design a sign that conveys some important idea in a single image, the task is not an easy one. Many signs out there are inscrutable until they are explained, and many others are simply dumb.

However, I have to hand it to the people who designed the sign that is on every floor of the building I work in. It’s a very simple concept.

“In Case of Fire Use Stairs. Do Not Use Elevators.”

Now that’s darned good advice. Fire plus elevator hardware probably equals a very bad time. But a sign needs an image, right? One that soldifies the message! Something simple, something elegant.

Here is the design they came up with.

Those stairs are clearly on fire. I’m taking the elevator.

Cranky

December 13, 2007

Cranky Has A New Hero!

Category: Political — Cranky @

This week Brian Mulroney, former Prime Minister of Canada, appeared before the Commons ethics committee. The inquiry centres around three payments of $75,000, totalling $225,000, that he accepted from former businessman and lobbyist Karlheinz Schrieber.

Mr. Mulroney accepted this money in cash, refused $1000 bills to eliminate $1000 transactions, and put the money in safe deposit boxes rather than in bank accounts that would leave a paper trail. He claims that he provided service and full reports to Schrieber, but the reports were “mostly oral” and therefore could not be produced. Schrieber, incidentally, is under a suspended extradition order to Germany where he faces charges of fraud.

Brian Mulroney is my new hero. The man can acknowledge these facts, and with a straight face he can maintain his complete innocence, even appearing indignant that his honesty could possibly be called into question.

If a politician is accepting $75,000 at a time in paper cash and stashing it in secrecy, he’s hiding something.

“When I look back on it today I realize I made a serious error of judgment in receiving a payment in cash for this assignment even though it was decidedly not illegal to do so. That mistake in judgment was mine alone. I apologize and I accept full responsibility for it.”

What wonderful double-speak. “I actually did nothing wrong, and I accept full responsibility for it.” Seriously, one man can’t be this awesomely corrupt. He must be a super-crook, made up of a whole set of lesser crooks.

Hey, Brian! You da man!

Cranky