G20 Initiatives - Mythical Nonsense
If this week's markets rallied because of the G20 initiatives, we are in big trouble. Let me walk you through what the G20 boys and girls did . . . or didn't do. They created or saved nothing! Here's a walk through the main bragging points of the G20 love fest that created or saved nothing.
IMF Funding – The G20 agreed to give the dysfunctional and loosely regulated IMF more than a trillion dollars to hand out to countries facing financial problems. Here's the catch. First, only Japan, China and the EU actually agreed to provide funding. Japan and the EU committed to 0 billion that they don't have. And China, who has the funds to help the world, is going to kick in a paltry billion . . . maybe. You see they want a greater say in the running of the IMF as part of their measly billion. The US is said to be contemplating as much as 0 billion that we don't have. Even if all of these funds do come in . . . and that is a huge IF, the total only comes to 0 billion which is 0 billion short of their .1 trillion announcement. Obviously, too much love-fest, schmoozing, giggles and grins and pure nonsense . . . but it gets worse.
By the way, the IMF's track record stinks. Some say as much as 80% of IMF funds actually get sucked up by corrupt politicians, warlords and friends.
Global Quantitative Easing – It hasn't worked for us or the EU, so let's roll it out to the world. This one gets a bit tricky because the IMF is going to use their SDR program and increase this to 0 billion for each country. What is SDR – Special Drawing Rights. What is Quantitative Easing – Printing Money. So under this plan each country will have an allocation of a "shadow" IMF currency which they will call SDR. So what? This is a big so what, because the shadow currency can be converted to dollars, euros or sterling. The G20 just leveraged this program up ten-fold yesterday. If you're confused, so is the G20 and the IMF. They are taking QE to a level that has not explanation on planet earth.
Bag A Banker – Not exactly, but the G20 is going to "crackdown" on all forms of compensation to bankers. This proposal received unanimous approval, but it really isn't a proposal for anything other than to come up with a set of international rules to prohibit banks from paying executives big money for taking risk. Now get this . . . not only don't they have a plan on how to do this, and not only will it need to be accepted by everyone, but the initial outline says the regulators are going to assess the risk and the compensation. I swear . . . I'm not making this up. You couldn't make this stuff up if you tried.
So far we have three G20 initiatives . . . with none of them being anything more than Ka Ka de Poopy.
Toxic Assets – The G20 has decided they don't like toxic asses. That was a revelation. So each country has agreed to dispose of these toxic assets by setting up a bad bank or insuring the assets against default. I know . . . they were probably high on red wine by the time the figured this out. A bad bank? Okay, sounds good, but then what? Do we sell it to the Martians? And you gotta love the insured against default schtick. We are talking about bankrupt countries where there currency is worthless . . . and they are offering to insure the toxic debt. With what?
So the G20 could not come up with a single feasible plan for dealing with toxic assets. You see, there is no way to just ignore them. Eventually, these will destroy the financial markets. So instead of pushing them under the carpet, we need to line them up and pay the consequences for eliminating them. If that means thousands of banks fail, so be it.
Fiscal Stimulus – This was supposed to be the BIG KAHUNA of the entire conference. But we knew in advance that Merkel and Sarkozy were not going to spend anymore money on stimulus. So what do the G20 decide to do? They pulled an ObamaRamaLama and agreed to announce they had already pledge trillion collectively. Okay? We already knew that. Now what? Nothing. End discussion.
Secret Tax Havens – Actually, they're not a secret but they keep secrets. So the G20 decided to punish any countries that do not agree to cooperate. Gordon Brown declared . . . "The era of banking secrecy is over." Oh yeah? Who says? Because the G20 did not come up with a single plan for dealing with the tax haven. Moreover, they didn't even come up with a single sanction for a country that fails disclose. Please, no laughing. This is serious stuff.
Protectionism – Okay, I know you're going to laugh, so here goes. The G20 is adamantly against trade barriers and protectionism. They declared that is was protectionism during the 1930's that made the Great Depression truly depressing. But once again, no teeth, no regulations, no plans, no sanctions. In fact, the same countries agreed not to implement any protectionist policies back in November. Since then more than a dozen of them have put trade barriers in place. At the top of that list is the USA with huge bailouts to every industry except Larry Flynt. So far, Larry Flynt and the porn industry is the only one turned away from bail out money. Bail outs are trade barriers because we are subsidizing industries that compete with foreign industries. We didn't give any bail out dollars to Toyota or Honda, and they build cars here in the USA. In any event, this issue flopped just like every single other G20 initiative. Trust me . . . these idiots did nothing but smile for pictures, eat, drink and giggle.
International Financial Monitor - You'll not believe this, but it's true. They are going to rename the existing Financial Stability Forum. They are going to call it the Financial Stability Board. Actually, this was the only action they agreed upon that will be implemented. This is a global banking watchdog. Why did they rename it? Because the Financial Stability Forum was a total flop. Obviously, we would not be where we are today if they were doing their job. The new name will make it all better and we will all play nice. Not so fast. You see the FSB has no power to do anything to anyone. It's just a watchdog. It's a toothless watchdog at that. I kid you not.
Trade and Finance – They all agreed we need more trade and finance for more trade. So they agreed to create a fund of 0 billion at the World Bank to allow companies to access finance. No word on where the 0 billion will come from or even a hint at who or what will qualify for this financial assistance . . . and of course not a single word about terms.
And that my dear friends is one of the key reasons the markets rallied this week. Unfortunately, I don't think anyone bothered to listen to anything other than the ObamaRamaLama we heard. In fact, articles and videos about Michelle Obama's clothes are more popular on the Internet than just about any other story this week. Sad but true.
Hiç yorum yok:
Yorum Gönder