May 292011
 

The Democrats and Republicans are slogging it out, trying to find a way to reduce the US debt. A laudable effort, but frankly, it’s pissing in the ocean. To see the big picture, we’ll take a look how the US government has been running its shop over the last century or so. Take the first half of that period, up until 1970, when the gold standard was abandoned. Notice that all numbers are in millions of dollars:

The second World War made a nasty dent in the finances, but that’s perfectly understandable. I’ve shaded the years where the books showed a ‘profit’ in green; there are precious few and the amounts are insignificant.

Since 1970, the picture changes drastically, we have to multiply the scale by a factor of 50’000; we’ve moved from millions to billions:

You might notice, correctly, that the debt in 2011 is shown around 9.6 trillion, when it is in fact 14.3 trillion. Presumably there’s another 5 trillion that was borrowed somewhere; a trifle that we’ll ignore.

The message to take away here is that the US government has balanced its books in 4 years out of the last 40. Perhaps more telling is that those 4 rare years are thanks solely to the dotcom bubble and the true value is directly correlated to the main thing it generated: hype.

The average American thus owes some 47’000$ on behalf of his government (and an average of 7’000$ on his credit card, but that’s another story).

Put in household terms, this is like earning 100’000 a year, spending 176’000 and borrowing a further 19’742 to pay the interest on the 657’864 that you borrowed in previous years.

Let’s zoom in on how the White House sees that debt evolving:

The dotcom money is put into perspective and we get to the part where I’m asking myself who’s been smoking something dubious. Remember, these are the numbers I obtained from the White House, which predicts that the debt will be reduced by 1’000’000’000’000$ in the next 4 years.

Thus, every American man, woman and child is going to reduce spending by 833$ every year, not to eliminate the debt, but simply to halve the yearly budget deficit.

The Americans are definitely in the shit; but the shit they’re in isn’t the shit that they’ve been smoking.

Oct 292008
 

The media are lathering us all up to the prespective of a great depression, matched only by 1929. Obama is just hanging in on page 4, and only because some deranged young idiot was supposedly plotting to assassinate him. As for McCain and Palin, they’ve completely dissapeared from the news radar, at least here in Switzerland.

I never cease to be amazed at how short peoples’ memory is. The stock market has gone through innumerable crises, the 1973-1974 wiped 45% off the DOW,  black Monday (1987) took 22.6% off the DOW and the .COM bubble in 2000 cost speculators (and others) about $5 trillion. The world’s banks employees, motivated by bonuses that bear no relation to their true added value have been playing the market for years and now we are at the day of reckoning. And so what? We’ve lived through them before, we’ll live through this one again, and in 3 years the autumn-2008 meltdown will be no more than a page on Wikipedia, like the others.

But. And there is a “but” this time round. The previous disasters were accompanied by liberal doses of “well, take your medecine”. This time it’s very different. Governments suddenly made billions available to ailing banks and in the same breath announced that money for all other causes was short. Here in Switzerland, where UBS was bailed to the tune of 68’000’000’000 CHF (about the same number of dollars), the minimum interest rate on pension funds was slashed simultaneously.

Let us take a step back. In 1974 (and 1987, and 2000), we were fed the same crap. In 2006-2007, everyone was back to worshipping the incredible economy.

Will we never learn?

Oct 152008
 

Quite astonishing that for once the European politicians have got their act together and addressed the financial cesspool that the banks have created. A shining performance by Sarkozy and Brown, from whom nobody expected such alacrity and cooperation.

On the other side of the pond (is Bush still president over there?), McCain is too busy slinging mud at Obama in a last-ditch effort and Paulson’s plan seems rather ineffectual by comparison to the Europeans’.

It seems that Europe is finally assuming the role it should take; with a population of some 450 million it’s about time.

May 312007
 

I was flabbergasted to learn that the price of car insurance in Switzerland is a function of your nationality. The surcharge can be as high as 97% if your unlucky enough to be from pretty well anywhere in the sourth-eastern Medditerranean area and, curiously, anywhere in north or south America (article in French).

The insurers argument is that drivers from certain countries statistically have more accidents. Now I can follow the reasoning, the problem is that each company has wildly differing prices for a given nationality, which to me smells of poor statistics. If the sample is large, the surcharges should be approximately the same.

What’s even worse is that the no-claims bonus is aplied on the surcharged price. This means that a driver from country X, whose initial policy has a 94% surcharge, who has no accidents for 10 years is penalised forever.

Legal as it may be, this practice stinks of racism. Shame on the Swiss; are they alone in doing this?