Stacy Summary: In this episode, we look at the scandals of financial wiseguys that ‘know nothing,’ including famed ‘value investor,’ Warren Buffett who says he knows nothing about his investments and nothing about how ratings contributed to the housing bubble. In the second half of the show, Max interviews economist Michael Hudson about the Latvian economy and real liberal economics.
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Posted in Headlines
Tagged latvia, michael hudson, moody's, rating agencies, warren buffett
Stacy Summary: Alas, it seems we need a deep, long, painful depression before people will give up their frenzied speculative herd mentality. Bad news for those that aren’t part of the speculative herd. Despite the collapse detailed in the Baltic piece, their markets there are booming this year (after falling heavily last year), with Latvia up the most.
Cost per sq.m has dropped from €1,611 (£1,455) to €669 since April 2007, according to Ober-Haus Real Estate Advisors. Swedbank says up to 30pc of its mortgages in Estonia are in negative equity. Recent loans are in euros – not the local kroon.
Professor Ülo Ennuste from Tallinn University says the private net wealth of Estonia’s people has fallen below zero. I know of no other country in the world where this has occurred, though Latvia may be deeper in hock. Estonia’s foreign debt is 116pc of GDP, second highest in Eastern Europe.
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Stacy Summary: I guess the blonde parade didn’t work then. It’s all very sad what is happening to Latvia. I’m sure someone or some group will pick it all up on the cheap. If Latvia and their currency crumble . . . watch out for Lithuania and Estonia and Hungary, Ukraine . . . and then?
Update (especially for Mike2liverpool):
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Stacy Summary: Losing one’s fifteen minutes of fame seems to be a tough thing this week. And THE blonde parade happened yesterday (image below). Any coincidence that the headlines today, however, are that property prices declined in Latvia by more than anywhere else in the world? An astonishing 30 percent in the first quarter. Considering that Latvians just took a 15 pc pay cut as part of the IMF bailout conditions, it makes sense. I wonder how much of that has been lost by British property speculators? And, how long before Australia’s market is allowed to be free to follow the laws of economic physics?
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Posted in Headlines
Tagged abu dhabi, barclays, blondes, israeli comedian, latvia, property market
Stacy Summary: Okay, so the blonde Latvian story may be a bit frivolous on the surface. Is it, however, any more ridiculous (or dangerous) than Bernanke’s attempts to revive the economy through rigging house prices?
Stacy summary: Note that the IMF loan to Latvia is for 7.5 billion euro to a population of only 2.3 million; that is €3260 (USD$4566) for every man, woman and child . Also note that GDP per capita is US$11,985 in 2007. This sounds like the conditions that led Germany down their own celebrating blondes path.
“We could be nearing the end-game for the US dollar but the Fed has little choice at this point. We’re in a vicious circle where any policy aimed at supporting the US economy must be at the expense of the dollar.”
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Rick Ackerman
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