Академический Документы
Профессиональный Документы
Культура Документы
August 2012
The Flounder
www.IceCapAssetManagement.com
August 2012
The Flounder
Money
Printing
Bailing Out
Banks
Too Much
Debt
Too Much
Spending
Too
Expensive
to Borrow
Europe
Britain
USA
Japan
China
Canada
Source: IceCap Asset Management Limited
www.IceCapAssetManagement.com
August 2012
The Flounder
www.IceCapAssetManagement.com
August 2012
The Flounder
www.IceCapAssetManagement.com
August 2012
The Flounder
Italy GDP
4.00%
3.00%
4.00%
0.00%
2.00%
-2.00%
1.00%
-4.00%
0.00%
-6.00%
-1.00%
-8.00%
-2.00%
-3.00%
-10.00%
-4.00%
-12.00%
2.00%
Spain GDP
1.50%
1.00%
Britain GDP
2.0%
0.0%
0.00%
-0.50%
-1.0%
-1.00%
-2.00%
3.0%
1.0%
0.50%
-1.50%
Greece GDP
2.00%
Source: OECD
-2.0%
-3.0%
2010 2010
Q1
Q2
2010
Q3
2010
Q4
2011 2011
Q1
Q2
2011
Q3
2011
Q4
www.IceCapAssetManagement.com
2012
Q1
2012
Q2
August 2012
The Flounder
www.IceCapAssetManagement.com
August 2012
The Flounder
Imbalanced = Balanced
miracle is incorrect. The global economy is just that global. The
unquestioned slowdown in the US and Europe is also causing the
Chinese factories to slow which inevitably causes Chinas capital
investment machine to slow as well.
Unfortunately, the slowing of Chinas capital investment programs
stops the real estate and construction industries in their tracks. The
infamous Chinese ghost cities were not free. They absorbed billions
in capital investment and now Chinese investors, including banks are
sitting on a growing pile of non-performing assets.
The 1990s was also Canadas chance to shine on the Worlds austerity
stage. At that time, Canada finally fessed-up to its money problems
and dutifully raised taxes, cut spending and systematically pared
down its debt over time.
While the Western World would love to have this problem, saving too
much money is just as bad as saving too little money. It creates an
imbalanced economy where in Chinas case, growth has been
primarily supported by capital investment in roads, buildings and the
like. While initially good, this intensive capital spending spree
www.IceCapAssetManagement.com
August 2012
The Flounder
www.IceCapAssetManagement.com
August 2012
The Flounder
Deflating or Reflating
hope is that by printing money, the bad debt will be paid back over
time and the global economy will not decline. This process is referred
to as inflating or reflating the financial system.
Now, we fully admit that the entire deflation versus inflation concept
sells few newspapers and advertisements, yet this is the single most
important issue facing the financial World today.
There can only be two outcomes, and neither one is pleasant. Should
the deflationary wave prove too powerful, the global economy is
headed for a very deep and prolonged recession.
Should the inflationary wave overcome, one should expect the global
economy to produce low real growth but with hyper inflation.
At this point in the game, deflationary forces are overwhelming
reflationary efforts. In other words, the total losses from the ongoing
financial crisis continue to be greater than the total amount of money
printed. Considering we have had over $5 trillion in stimulus, this is
no laughing matter.
One thing is for certain, the central banks and governments of the
World are dead-set on reflating the global economy. As they are
presently behind the ball and losing the game, one must fully expect
to see plenty more money printing from the Americans, the
Japanese, the British and especially the Europeans. Europe is hanging
by a single financial thread called Germany. Ironically, despite the
www.IceCapAssetManagement.com
August 2012
The Flounder
Sonny Curtis
While Mr. Curtis is 75 years old, it certainly isnt his age that is
preventing him from travelling in private jets, drinking Bollinger and
dreaming up the latest elevator stories. Rather, it was one solitary act
from 1958 that has landed him on the never hire list. At the time,
he had no idea that writing the hit song I Fought the Law would
come back to haunt him.
While the lyrics make perfect sense, especially if you break the law
the latest bank scandal to create no moral outrage will certainly see
bankers everywhere rewrite Sonnys lyrics.
When it comes to banking, every bank in the World knows it is
illegal to launder money money printing is ok, but money
laundering is a no no. And, if you include the axis of evil (Iran, North
Korea and Libya) in the mix, well lets just say you are looking for
trouble.
Yet, none of this stopped British bank, Standard Chartered from
helping Iran launder over $250 billion between 2001 and 2007.
Naturally, this charade eventually came to light and one would think
that helping Americas enemy launder billions of dollars would bring
the wrath of the SEC, CIA, FBI, and the President. Nope, that would
be wrong.
In the end, there was no loss of their banking license, no one-way
tickets to Cuba, and no forced push-ups in Times Square. Instead,
Standard Chartered agreed to pay a $340 million fine. For most
www.IceCapAssetManagement.com
10
August 2012
The Flounder
www.IceCapAssetManagement.com
11