07/07/11 Paris, France – Nothing much to write about in the markets. Dow up 56 points yesterday. Oil flat. Gold plus $16.
Moody’s downgraded Portuguese debt to junk status. The IMF says it will still take the debt as collateral until all four rating agencies downgrade it. Then, the banks holding it are out of luck. They won’t be able to borrow against it. The credits won’t be good. Not even at the IMF.
The prestigious IMF was run by Dominique Strauss-Kahn…until the man was accused of rape by a New York hotel maid. The judicial system panicked and put DSK in jail. And the whole US press corps leaped to point the finger and give a he-had-it-coming scowl.
On network news…
“Finally, one brave woman has stood up,” or words to that affect, said Diane Sawyer, approvingly.
But at least here at The Daily Reckoning we kept our heads. We take for granted that DSK is a cad and a bounder. But a rapist? Not likely.
And now the hotel maid has been revealed as a liar. It doesn’t mean she’s lying about the “affair DSK,” but it is a rare district attorney who will want to put a woman like that in front of a jury.
Soon, DSK will be a free man again…and now, another frog is at the head of the IMF, Christine Lagarde. She knows nothing about banking or money either. But at least she has a nice smile and is less likely to be accused of rape.
She’ll have to face the same problems. Only, now they’re worse. While her predecessor may or may not be a menace to the female part of the human race, he was surely a menace to its money. Lending at the IMF increased 10 times under DSK. Guess where that money went? That’s right – to borrowers who can’t pay it back. Such as Greece. And Portugal.
Meanwhile, America’s central bank, under the direction of Ben Bernanke, has taken the same approach. Got a problem? Lend it more money!
The authorities in Europe and in America face more or less the same situation. They are facing up to it in more or less the same way too – either by pretending it doesn’t exist…or hoping it will go away…and/or lending more money.
And for the moment, they’re having some success. Not success at fixing the problem…but success at pretending! For the moment, they can still finance their own debts…and still bailout others…at very low interest rates.
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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When I was a young buck I went to the bank. I had a dream, and idea and a plan to make money the old fashion way. Problem was I had no capital, the bank kicked me to the curb.
No problem, I picked myself up started slow and succeeded. Later, when the bank came to me and asked if I needed a loan to complete my projects, I kicked them to the curb.
The Fed keeps lending money to our government that has no dream, idea or plan to pay it back. Bad risk? You tell me!
Zimbabwe was not an exception, they were simply ahead of the curve when it comes to destroying the nations currency. Once every other nation has done the same, they can collectively go to the Zimbabwean’s for advice and guidance on what to do next. Which raises the obvious question, what did they do next? Lots of media attention while printing 100 trillion dollar notes, but now that the previous currency system has collapsed, nary a word about them in the press.