Showing posts with label US banking system. Show all posts
Showing posts with label US banking system. Show all posts

14 February 2011

From Japan: An Interesting Comment On US Economic Planning, the Dollar, and Peak Cheap Oil



I shared a copy of this video with a friend in Japan earlier today.

Prof. Jeffrey Sachs of Columbia University on the Obama Budget

I received his reply, and it was much more interesting and insightful than I had hoped it would be.  Certainly a perspective that I have heard in none of the US based commentary today, a much longer term and more strategic view. 

I am sure there are plenty of problems which Japan faces that we could discuss.  It has an aging population, very low birth rates, heavy dependence on imports, and a weak military capability.  Its ability to attract and successfully assimilate immigrants is a challenge.  Every country has problems.

I am not quite sure I know the answers about peak cheap oil. But what I think I know is that the challenge to the US is an inability or an unwillingness to think and execute strategically, ie. long term, in non-military matters.  I believe this is a result of its system which is heavily oriented towards short term economic incentives, regional military conflicts, and financial speculation. 

The idea that you would allow what are essentially short term financial speculators to make important public policy decisions with far-reaching, long term consequences seems unusual or even lunatic in most parts of the world, and is certainly not a trend in historically successful organizations.

Within the metrics of energy and infrastructure, the US government is playing checkers in a game of Go.   Its greatest leverage now appears to be an ability to kick over the global economic playing table in an act of self-destruction.  And that threat is wearing thin.


A Japanese perspective on the US budget:
"Unfortunately, the risk of the whole ponzi scheme crashing sooner rather than later is going way up, rapidly.

They want the dollar to go down by 40%, but I think they are going to lose control, and they might wind up with a 90% panic drop in a few months.

As I said, Japan, around 1995, went into a full peak cheap oil panic. A lot of the government borrowing went to what is characterized as "building bridges to nowhere", but I would characterize it as building some bridges to nowhere, building some airports in nowhere, and fixing the entire rail and road infrastructure of the country.

All the bridges and tunnels have been steel plated reinforced, all the bridges are in perfect repair, and the Shinkansen system will next month be extended all the way from Aomori to Kagoshima.

In other words, I think they knew this 15 years ago and did everything that requires a lot of energy, such as steel, asphalt, cement, and completely the public transit infrastructure. The per capital floor space in Tokyo was doubled.

So, if we really do have a decade of serious energy problems coming, Japan has become about as energy efficient as it can be, with further improvements coming as appliances are replaced, etc.

The US has done nearly nothing, although I did note that the gasoline use declined by 7% in one year. There really is a lot of squandering going on. Now, however, the US needs to completely reconstruct its infrastructure, and it doesn't have the money or energy to do it.

This is why I have thought for more than a decade that the trigger for a really nasty collapse of the dollar would be peak cheap oil.

Do they realize that if the dollar drops by half that oil becomes $200 a barrel? Gasoline would be over $5, and the country would be paralyzed. If the dollar drops more than that, the existing infrastructure would become nearly useless and worthless.

I am afraid that the US has already passed the point of no return.  Had the cheap oil continued, the ponzi could have continued for a good while longer.

I think the realization that the cheap oil is gone is the primary motivation for the smash-and-grab behavior we are seeing in the US."

Perhaps, and it might also be the rationale for the increased military presence surrounding the largest known cheap oil reserves in the world.

27 August 2009

Where Are the World's Safest Banks?


The primary functions of the Federal Reserve Bank as a regulator is to maintain the integrity of the US banking system. It is also the responsibility of the Federal Open Market Committee to oversee the management of the United States Money Supply.

In this annual list by Global Finance, not one US bank is in the top 30 of the Safest Fifty Banks in the world.

It was the poor regulation of the banking system, and the reckless management of the money supply, that has brought the US, and by extension of the dollar contagion, a greater part of the world, to the financial crisis which threatens the global economy today.

Would this imply that we should give the Fed the latitude to regulate more elements of the US financial sector, elements with which it has little or no experience and certainly no successful track record?

The US must reform its financial system and restore a balance to its economy. The rest of the world must take strong measures to guard against a potentially disastrous currency crisis should the US fail to successfully reform.


Global Finance
The World's 50 Safest Banks


New York, August 25, 2009 — With bank stability still high on corporate and investor agendas,Global Finance publishes its 18th annual list of the world’s safest banks. After two tumultuous years that saw many of the world’s most respected banks drop out of the top-50 safest banks list, the dust appears to be settling. Those banks that kept an iron grip on their risk exposure before the financial crisis blew up have consistently topped the table and maintain their standing among the top echelon in this year’s ranking.

The Top Banks (until you find a US bank) Are:

1. KFW (Germany)
2. Caisse des Depots et Consignations (CDC) (France)
3. Bank Nederlands Gemeenten (BNG) (Netherlands)
4. Landwirtschaftliche Rentenbank (Germany
5. Zuercher Kantonalbank (Switzerland)
6. Rabobank Group (Netherlands)
7. Landeskreditbank Baden-Wuerttemberg-Foerderbank (Germany)
8. NRW. Bank (Germany)
9. BNP Paribas (France)
10. Royal Bank of Canada (Canada)
11. National Australia Bank (Australia)
12. Commonwealth Bank of Australia (Australia)
13. Banco Santander (Spain)
14. Toronto-Dominion Bank (Canada)
15. Australia & New Zealand Banking Group (Australia)
16. Westpac Banking Corporation (Australia)
17. ASB Bank Limited (New Zealand)
18. HSBC Holdings plc (United Kingdom)
19. Credit Agricole S.A. (France)
20. Banco Bilbao Vizcaya Argentaria (BBVA) (Spain)
21. Nordea Bank AB (publ) (Sweden)
22. Scotiabank (Canada)
23. Svenska Handelsbanken (Sweden)
24. DBS Bank (Singapore)
25. Banco Espanol de Credito S.A. (Banesto) (Spain)
26. Caisse centrale Desjardins (Canada)
27. Pohjola Bank (Finland)
28. Deutsche Bank AG (Germany)
29. Intesa Sanpaolo (Italy)
30. Caja de Ahorros y Pensiones de Barcelona (la Caixa) (Spain)
31. Bank of Montreal (Canada)
32. The Bank of New York Mellon Corporation (United States)

You may read the rest of the list, and the method by which safe banks were selected, here.