Friday, March 06, 2009

Bank of England announces it will begin printing money

The all time lowest interest rate

The Bank of England (BoE) has announced it will cut the lending rate with another 5 points to 0,05 percent. This is the lowest interest rate since the BoE's founding in 1694 by William III of Orange.

Last resort of the "lender of last resort"

This is the UK's last resort. If it does not work, there is nothing to stop the descent into a deep recession, with the attending DOUBLE DIGIT unemployment.

Lessons are not being learned

Quantum Fund co-founder Jim Rogers criticized the U.S. governments policy of bailing out of failing financial and other firms. The bail-outs are impairing the learning ability of the economic leadership and are morally wrong. Those institutions who took the biggest risks are bailed out at the taxpayers expense. Smarter, more prudent leaders are not reaping the benefits of being able to pick up the assets of the failing companies when they go broke.

Those who created the mess are sitting high and dry

Leaders of U.S. Industry who took criminal risks are now walking around with hundreds of millions of Dollars in their pockets, while the U.S. middle class is going to be squezed once taxes are raised to pay off the huge Debts the U.S. Government is incurring in order to spend its way out of the Debt crisis. Basically the U.S. is taking more of the poison that got it into this terrible spot in the first place.

"They all took huge, huge profits. Who was the head of Citigroup? Chuck Prince? I mean, how many hundreds of millions of dollars did Prince take out of the company? How many hundreds of millions of dollars did other Citibank execs take out of the company? Wall Street has paid something like $40 billion or $50 billion in bonuses in the past decade. Who was that guy who was the head of Merrill Lynch (MERR)?

Right, Stan O'Neal. He got $150 million for leaving, even though he ruined the company. Look at the guy at Fannie Mae (FNM), Franklin Raines. He did worse accounting than Enron. Fannie Mae and Freddie Mac (FRE) alone did nothing but pure fraudulent accounting year after year, and yet that guy's walking around with millions of dollars. What the hell kind of system is this?"

Global Social Unrest

Jim Rogers sees this Debt crisis as a global problem and forecasts global social unrest.

In my opinion this crisis will hit the nations with more ethnically and culturally diverse societies harder than more homogenous society. This crisis will do for the West what the Brezhnev years of stagnation did for the Soviet Union and Communism.

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