Winter 2008

Children with parents enjoying work of the king of winter.

Happy New Year

Today I read a short front page newspaper article which said that 20% of the Dutch doesn't celebrate New Year's eve. People seem to be tired of celebrating and doing things they don't want to do. It's the stress factor a page filling article in the same newspaper told. People can't handle more than a month planning for the party month December. When read it I thought of my situation. After December 5 (which is a family-day with presents for the children and grand children and poems) I was asked when I was coming to X-mas dinner with my mother. There are 2 days you must know, December 25 and 26. My mother told me that the 2nd day she would go to The Hague, to my brother and his girlfriend. So I had to go for X-mas dinner to my mum on December 25.

My sister with her 3 children would also be there. The party could begin. Pfff, I'm not used to children. I brought 3 bars fair trade, slave free, Tony chocolonely chocolate for the children with me. 2 ate some chunks of it and left it, because there was so much to do. The oldest one saved her bar though. That's what I would have done at her age.

Soon we'll have the last party of the year: December 31. I think I belong to the 20% minority.

Still I wish you a peaceful 2009!

Friedman's laisser faire

Milton Friedman on YouTube


Free markets, they make cars with names like KIA and they are sold.
Free markets are imperfect. Governmental interference is necessary.

Governmental interference is especially important nowadays in order to keep the economy running and cash flowing. The world economy comes to a halt if Governments don't support companies with works, like infrastructural works. It's like what happened in Germany in the '30 of the 20th century.

Hitler began to build the motorways, railroads and later huge war craft spending. It helped Germany. I'm not saying we need a third world war but we need Government to activate companies by for instance beginning infrastructural renewal earlier than scheduled. The same for city renewal, building new things. The Eiffel Tower boosted French economy in the 19th century. The world exhibition in Spain and Portugal in the 21st century did the same for the organizing cities. It's all public spending.

What the European Union does in new memberstates in Eastern Europe is also a kind of Governmental stimulus. What to think about Irish poverty before this country joined the EU and how it´s doing now. That island has value for the EU. First Governmental EU intevention had to stimulate companies to go Ireland.

In Holland we have a culture of mutual understanding between the social partners (Government, employers and employees). They must work together to get things done. For Instance, my country lies 5 metres below see level. Dikes keep the water out. That needs working together of the whole country, no one excluded, and that cannot be done by Friedman's -laisser faire, laissez aller- economic theory.
Also the social partners are working together in a bad economic situation to keep the negative effects (a rise in wages, extra inflation, dissatifaction of the people) as low as possible. We need mutual understanding and trust, that's called -het poldermodel-. Clinton knew it, the Dutch model, the poldermodel.

KIA means Killed In Action by the way. Would you drive a car named KIA or do you say what's in a name?
I'm sorry for those KIA and their relatives.

Salute Jeanette

Last night I got a phone call from a neighbor about my downstairs neighbor who is terminally ill. It's the cancer you know. It's affecting her liver. Tomorrow she'll be hospitalized in a so called hospice. She is at the end of her life. 13 Months after the final operation to remove the tumor she trows the towel. It's busy in her house, people come and go. Care isn't garantueed during the x-mas long holiday weekend. She fell in her house and is a little scared.

So, at noon tomorrow she will driven in an ambulance to the house where she will receive the attention and care she needs. It will be very emotional for her. It will probably her in her final descent in the house she lived in for more than 30 years. A descent on a stretcher, not even walking.

Salute Jeanette, you're a brave lady. Hopefully you don't suffer and have a fine X-mas and New Year's eve.

ABNAMRO, Fortis, stakeholders and even life on earth

Imagine yourself. On September 24 2008 you get into a coma and in December 2008 you awake. Bit by bit you start to remember and realize things that happened. It's now, less than a week before x-mas when you start to walk, talk and come to consciousness again. It's a whole different world.

No, it's not the hilarious movie Goodbye Lenin. It's what happened in our times in the past months.

Now it's December 20 and the World is completely different. Some banks went bankrupt,
Obama won the American presidential election, worldwide economy collapsed, the worldwide automotive industry is almost broke, Iceland is on the brink of bankruptcy.

In the Netherlands Governmental intervention prevented 2 banks (ABNAMRO-bank and Fortis-bank), which had to become one bank, to fall. The USA, the European Union, other European nations, Russia, the far east all face a real recession.

In the USA Bernard Madoff, the founder and president of Bernard L. Madoff Investment Securities , told the police about his fraud in his brokerage firm. The media claims that it's a fraud as high as $50bn. I don't think so, it might be higher, much higher. Also this is probably not the only fraud which becomes obvious together with the fall of the financial system.
This financial crisis might somehow be good for the world economy. It shakes up real life and stresses the values that are really important: The fundamentals of the economy, not the derivative economy.

An example, and I tell you it's not a complaint; I invested € 20.000 in bonds which give a higher revenue when the reference price of the underlying stocks is going up. 2007 Was a profitable year, in 2008 however the bond plunged to 80 or less while 100 or higher is be profitable. Till 2012 I'll have bonds which don´t pay, after 2012 the underlying value will be payed. What, if my bank went broke? Hopefully the Government will support the backbones of the economy. I dislike derivatives as put and call options on company-stocks, specialized products like bonds which are linked to many stocks on invisible markets. It's all not so transparent as you think it is.

These fundamentals are a certain demand on the market and supply of that demand. In fact the demand-factor and supply-factor are the 2 things needed to create a market.
Of course nowadays we need money to trade. However we could do without.
Let's say we need a sound financial system as a ceteris paribus.

Problem is the world has no sound financial system. Regulators fail in many aspects. Banks fail in their task being transparent. According to George Soros in the crisis in global capitalism knowledge of fail-ability of an actor in economy is in certain way positive because it makes the actor aware of his position and the his need to change. (GS. warned the world in 1998 for an unstable (financial) future). A summary of the book.

In a situation of instability of the markets the Children's Investment Fund (CIF) claims in January 2007 that ABNAMRO-bank made to little profit for it's shareholders and other stakeholders. They urged a break-up or sale. This was the start of the Dutch banking crisis which affected all stakeholders. Even today almost 2 years after the carousel started. It's in the worst situation you can imagine.

The stock value plunged from € 5.= to € 0.93, banking personnel is not amused with the uncertain situation, banking customers are not amused with the bad prospectives for their banks whether it is ABNAMRO-bank or Fortis-bank and stock owners are not happy at all. So the theory of CIF didn't stand. All stakeholders are ripped or got away before the crisis started.

I wish you all a merry Christmas, a lot of lights and a fine X-mas tree. Let's celebrate life on earth because there is hope.

sick

After being sick for 3 day's I went for a walk through the neighborhood and and bought the things I needed for a weekend. That means food and a newspaper. Tomorrow another day to stay inhouse and read the books.

It was cold outside, only 2 degrees and a northeast wind made me shiver. Walking made it better, made me warm. I took some pictures, which I haven't done for quite a while, of a new installed bridge. It took the builders 6 months to install, a fiasco for municipality. Also an early 20th century house with the advertising of those day's.

George Soros

Seems to be a filantrophe.

He's written a lot of books about the imperfect economy, about the imperfection of the financial marketsystem and the imperfections of the actors on those markets. The latest book (2008) is tittled the international creditcrisis, subtittle the future of the financial markets.

There must be change of that global financial system. We're not in the day's of Bretton Woods anymore. Europe is almost united in the EU and the far east plays another important role. The world isn't anymore what it used to be.

The EU has come to an agreement (under chairmanship of French president Sarkozy) on climate change, the credit crisis, the Irish no previous this year and other things.

While googling on some international English news about the EU-top, I found an artivle of Martin Kettle in the Guardian of 12 December 2008.

You should know that there are some tensions between the Anglo-American (Great Britain) and Rhineland bookkeepers (France, Germany, the Netherlands, etcetera) which model is adequate dealing with the present crisis. I think none of those models because of the reflexivity of the markets. Soros explained that in a 1998 book, tittled The crisis of global economy, subtittle the downfall of the free world.

The person who makes a model which explains the problems we face now, can earn a lot of money when he also knows the shortcomings of his model (because everything is liable to error as Soros said)

The sky over LA

Saw this linked to on another blog, and had to link too.

where did my money go?

Geert Wilders his movie Fitna still makes the world not save for him. Who cares?
The Dutch should because the threats against the nation are still there and those threats feel like a burden if you're sensitive for it.
A spokesman of his party was asked about Wilders' opinion. He referred to Wilders himself. He would not answer the question himself. According to a political satire it´s good not to express his opinion because to secure one man in today´s turmoil is expensive enough.
Maybe he's with Ayaan Hirshi Ali in the US. Nobody knows him in the US. ;-)

At work the question was raised where all the money went to due to the credit crisis.

Where did the money go to? If you take everything into consideration the international financial system lost 90 billion Euro.

My simplification:
Banks have had balance sheet values which didn't have the value after facing the sub prime loans affair. In the US banks collapsed directly due to this affair. Banks in Europe followed with serious financial problems.

Let's go back where it started. Let's suppose it started in the US, where people have dreams and where dreams can come true with hard work. Where people with small wages can buy a homes because of the sub prime loans.

Mortgage company lend money -> Real estate agents earn their fee -> People pimp their houses -> Stores earn money -> US have a trade surplus -> Exporting countries are doing well (Dutch export should rise too but the Euro became to expensive -> Flourishing labour market on US and Euro side of the Atlantic -> Bouncing industry and trade -> Citizen in US and Europe are doing well financially -> signs of weakness became obvious when the Internet bubble burst in 2000/2001 -> 7 years later, after excessive spending, the financial bubble burst.

Who has earned on these collapses? The people (= you & me) did in the past years.
Who is gonna pay for it? the people (you & me) will in the coming years.