My last or next to last comment for 2011. Last month I visited Harare on a Business Investment Assessment trip. Having lived there and left during the diaspora it added the after dimention to the system of financial collapse.
I believe the analogies to be important in that many people are running around like chickens without heads. Some think that hyperinflation is on the way or that the U$D is sound, but they all haven’t a clue what is in store for 2012. Frankly looking at the stats and human dynamics neither do I. The indicators are all over the place yet the vision out the cockpit is obscured by political clouds.
2012 is not going to be good unless a hero swoops in wearing his underwear over his tights, I presume to cut air resistance after saving ladies… At best it is going to be a long haul. We are going to have to be more creative and work smarter to have a fighting chance. Working harder won’t cut it most of the time.
Our biggest threat is hyperinflation of the U$D. Many people and societies have placed immense faith, and wealth in what amounts to be only a means of $ exchange for America. As such the world is exposed to the benefits and failures in America.
Faith is all important because most U$D is paper or electronic accounting, not real assets but backed by a promise. The promise of the world’s “center nation”, but a promise non the less. A promise relies on integrity and the ability to be carried out. The latter is important because what ever your intent, good or evil, if your ability to carry it out is reduced the promise becomes corroded.
“Economists differ in their explanation of how a country leaves simply galloping inflation and enters the stratosphere of hyperinflation…but all agree there is some inflation flashpoint at which people become convinced that prices will never stop rising and loose all confidence in their currency. At that time it appears that anything is better than holding money. People start putting everything into any tangible good they can find” Arthur Burns (Ex Fed Reserve Chairman) Time March 10 1980.
We have heard most of the fears and woes. However from the more recent Zimbabwe crash I was there two months ago to assess investment opportunities and form a report.
During the crash savings and pensions melted, people with windfalls bought cars, fridges or what ever was immediately available. Assets were sold to survive, bigger assets traded for smaller and cash to purchase the month’s food. This meant that the turn over of assets allowed further wealth stripping by government.
Hustlers, blackmarketiers and opportunists were in ascendancy. Development dwindled future planning shifted from years ahead to the here and now eliminating innovation. Manufacturing stagnated or died. No one would invest in new ideas if they were going to take time. This meant that industries lost ground to external competition, with the currency hassles they shut down.
Zimbabwe dropped it’s sovereign currency in favour of a basket of regional currencies and the U$D. The system is still lacking reasonable credit facilities and cashflow. Enourmous assets and potential they are working hard to make a come back, they may yet, but with the help of friends it may be sooner. It is going to be a long time.
Relevance is that American Dollar is based on a weakening faith of an economy burdened with regulations, social costs and opportunists. The Fed’s ongoing electronic creation of billions is freaking out many countries. Why is it still standing? Carter faced a melt down that was curbed by Reagan. It was curbed through stimulating real wealth creation and reduction of big government. We now are into Carter MKII and need that super hero, many people believe that it will be a last minute save, others are living day to day so their planning is already short term. There are millions who have planned and have assets to believe they are safe. Too many people so are far into debt they are blinding themselves and hope that inflation will save them. Americans don't have foreign currencies that Zimbabweans reached for (originally illegally) that helped erode the Z$D. When the shit hits the fan credit collapses and critical longterm cashflow and project funding vaporizes and what is left is internal investment, saving your profits for future expansion, so long as those are also not eroded……..
America has the Unions, Welfaeries and political opportunists that are taking yet crushing innovation and wealth creation. Credit is already critical construction industry a mess with innovation being exported and wealth creation dwindling.
Zimbabwe is a SHARP lesson for USA as it relies heavily on innovation and trade. Hyperinflation kills the former and encumbers the latter. The flip over from faith to loss in faith is fast and almost irreversible – but always catastrophic.
Zimbabwe has been using the U$D as a crutch, what will Uncle Sam reach for?
I believe the analogies to be important in that many people are running around like chickens without heads. Some think that hyperinflation is on the way or that the U$D is sound, but they all haven’t a clue what is in store for 2012. Frankly looking at the stats and human dynamics neither do I. The indicators are all over the place yet the vision out the cockpit is obscured by political clouds.
2012 is not going to be good unless a hero swoops in wearing his underwear over his tights, I presume to cut air resistance after saving ladies… At best it is going to be a long haul. We are going to have to be more creative and work smarter to have a fighting chance. Working harder won’t cut it most of the time.
Our biggest threat is hyperinflation of the U$D. Many people and societies have placed immense faith, and wealth in what amounts to be only a means of $ exchange for America. As such the world is exposed to the benefits and failures in America.
Faith is all important because most U$D is paper or electronic accounting, not real assets but backed by a promise. The promise of the world’s “center nation”, but a promise non the less. A promise relies on integrity and the ability to be carried out. The latter is important because what ever your intent, good or evil, if your ability to carry it out is reduced the promise becomes corroded.
“Economists differ in their explanation of how a country leaves simply galloping inflation and enters the stratosphere of hyperinflation…but all agree there is some inflation flashpoint at which people become convinced that prices will never stop rising and loose all confidence in their currency. At that time it appears that anything is better than holding money. People start putting everything into any tangible good they can find” Arthur Burns (Ex Fed Reserve Chairman) Time March 10 1980.
We have heard most of the fears and woes. However from the more recent Zimbabwe crash I was there two months ago to assess investment opportunities and form a report.
During the crash savings and pensions melted, people with windfalls bought cars, fridges or what ever was immediately available. Assets were sold to survive, bigger assets traded for smaller and cash to purchase the month’s food. This meant that the turn over of assets allowed further wealth stripping by government.
Hustlers, blackmarketiers and opportunists were in ascendancy. Development dwindled future planning shifted from years ahead to the here and now eliminating innovation. Manufacturing stagnated or died. No one would invest in new ideas if they were going to take time. This meant that industries lost ground to external competition, with the currency hassles they shut down.
Zimbabwe dropped it’s sovereign currency in favour of a basket of regional currencies and the U$D. The system is still lacking reasonable credit facilities and cashflow. Enourmous assets and potential they are working hard to make a come back, they may yet, but with the help of friends it may be sooner. It is going to be a long time.
Relevance is that American Dollar is based on a weakening faith of an economy burdened with regulations, social costs and opportunists. The Fed’s ongoing electronic creation of billions is freaking out many countries. Why is it still standing? Carter faced a melt down that was curbed by Reagan. It was curbed through stimulating real wealth creation and reduction of big government. We now are into Carter MKII and need that super hero, many people believe that it will be a last minute save, others are living day to day so their planning is already short term. There are millions who have planned and have assets to believe they are safe. Too many people so are far into debt they are blinding themselves and hope that inflation will save them. Americans don't have foreign currencies that Zimbabweans reached for (originally illegally) that helped erode the Z$D. When the shit hits the fan credit collapses and critical longterm cashflow and project funding vaporizes and what is left is internal investment, saving your profits for future expansion, so long as those are also not eroded……..
America has the Unions, Welfaeries and political opportunists that are taking yet crushing innovation and wealth creation. Credit is already critical construction industry a mess with innovation being exported and wealth creation dwindling.
Zimbabwe is a SHARP lesson for USA as it relies heavily on innovation and trade. Hyperinflation kills the former and encumbers the latter. The flip over from faith to loss in faith is fast and almost irreversible – but always catastrophic.
Zimbabwe has been using the U$D as a crutch, what will Uncle Sam reach for?
No comments:
Post a Comment