I really hate to say much about the developing condition of the USA USA
I repeat, our only way out is to reconstitute the mortgage foreclosure process as per earlier postings. I think though it is getting late. We must now suffer through a second wave of debt liquidation in the banking system. This will take us through to the next president.
Personal credit will be scarce at the end because of the complete lack of action by the government. This is a repeat of Hoover
A year ago we did not know how bad the situation was. The bills have been counted and we now know. The fraudsters have been uncovered and this includes Greece
Mr Obama has announced further actions on health care. He has forgotten that millions are out of work and will soon be on the street. They are becoming desperate. It is going to get ugly and congress bleating over health care is right up there with Marie Antoinette’s admonition to let them eat cake. This whole crowd is out of touch and clueless.
I still think it can all be put right. I just do not see anyone able to do it and most certainly not in the teeth of the attitudes of the nation’s politicians who live as though entitled. Here we have Charlie Munger trying to get someone to listen.
Buffett’s Partner: ‘It’s Over’ for U.S.
Monday, 22 Feb 2010 11:42 AM
by: Dan Weil
Charlie Munger, Warren Buffett’s longtime business partner in Berkshire Hathaway, warns in a new column that the U.S.
In an article penned for Slate.com, Munger uses the form of a parable to explain how Wall Street’s love affair with gambling has destroyed
The article leads with this headline: “Basically, It’s Over.”
The Berkshire Hathaway vice chairman describes the economic history of Basicland, which happens to match
Early in its history, debt is unknown except for home mortgages and some consumer loans, and people live within their means. Speculation is discouraged, and commodities markets are small and tightly regulated.
Under this rational system, economic growth skips merrily along at a steady 3 percent, Munger explains.
Taxes are limited and pay for only “essential services” like fire protection, courts, and defense. Most taxes are collected on imports, and government spending matches that tax income. Debt via government bonds is limited.
Then things take a turn for the worse.
“The extreme prosperity of Basicland had created a peculiar outcome: As their affluence and leisure time grew, Basicland’s citizens more and more whiled away their time in the excitement of casino gambling,” Munger writes.
Financial services soon grow to account for too big a portion of the economy, Munger says.
“The winnings of the casinos eventually amounted to 25 percent of Basicland’s GDP, while 22 percent of all employee earnings in Basicland were paid to persons employed by the casinos, many of whom were engineers needed elsewhere.”
Then, a shock: Imported energy costs rise, and low-cost labor competition from abroad appears, Munger writes.
“Suddenly Basicland had to come up with 30 percent of its GDP every year, in foreign currency, to pay its creditors,” Munger writes.
The
In the parable, Munger strongly suggests that the
“He suggested that Basicland should strongly discourage casino gambling, partly through a complete ban on the trading in financial derivatives, and it should encourage former casino employees — and former casino patrons — to produce and sell items that foreigners were willing to buy,” Munger writes.
As the parable ends, none of the politicians listen, and Basicland turned into “Sorrowland,” Munger concludes.
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