Monday, April 25, 2011

Wake Up, America! You’re Falling Behind!!

Note: The following is an edited portion of an interview with Kishore Mahbubani, the Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore. Mahbubani previously served for 33 years in Singapore’s diplomatic service and is the author of The New Asian Hemisphere, Can Asians Think? and Beyond the Age of Innocence.


Every time the United States or the West steps into an Islamic country it presents a major geopolitical gift to China. (When the U.S. decided to intervene in Libya) China was saying, “Great, go ahead! Go into more Islamic countries. Make my day.”

If you’re a logical, long-term, hard-headed geopolitical realist thinker from America it is very, very clear that the only country that can overtake the United States in absolute power - militarily, economically, in every sense - is China.

The Islamic world will not overtake America– not in my lifetime and not in your lifetime.  So America should be devoting 90% of its resources on managing China and 10% of its resources on managing the Islamic world.

Instead it is spending 90% of its resources getting involved in the Islamic world - whether it is Iraq or Afghanistan or Palestine or Libya– and 10% of its time managing China.

The U.S.should engage China more seriously and try to work out a long-term, viable, geopolitical partnership with China.  It should also give up its dream of achieving democracy in China.  It should stop believing that a “Jasmine Revolution” is on the way and realize that this government in China is going to survive and possibly do very well.

You may wish for all kinds of worst-case scenarios for China, but as a geopolitical planner you should plan for the best-case scenario.

China is going to go from strength to strength. And if China is going to go from strength to strength and you spend all your time either in the Islamic world or having this absolutely stupid domestic debate about how to cut the deficit, you’re just buying time for China.

A lot of my writings are intended to serve as a wake-up call to the West. I’m not anti-West nor am I anti-American - even though many people think I am. I’m actually just telling the West that you are acting against your own long-term geopolitical and economic interests in your policies towards the rest of the world. There was a time - and it lasted only 200 years - when the West could make decisions and the rest of the world had to comply. That era is gone, finished – poof!

Now the West has got to learn to understand what the rest of the world wants and pragmatically adjust. The biggest advantage that Asian countries have over the United States and other Western countries is that they’re very pragmatic and flexible and America has become ideological and dogmatic. America needs to become pragmatic and flexible too.

Unfortunately, American public intellectuals have an incestuous, self-referential discourse among themselves saying, “Aren't we the greatest in the world? Gee, aren't we wonderful?” And they don’t realize that Western power - American power - is receding steadily in the world.

Look at Southeast Asia.  After the U.S.won the Cold War, (Southeast Asia) was frankly an American lake. And then suddenly Americans became very arrogant and they said, “Hey, we don’t need the world; forget you.”

You do what you want to do and slowly, steadily,China is (advancing). I admire what the Chinese have done. It’s amazing how careful, deliberate, and systematic they are in their policies towards the rest of the world and how arrogant and ignorant American policies are.

If you want to learn about how to grow a country’s economy right, don’t go to Europe, don’t go to America; go to Asia.  Frankly, the best governed country in the world - and I can say this somewhat immodestly - is Singapore. Or even go to China.

Let me give you a very simple example. The most shocking thing I’ve learned recently for someone who lived in New York for 10 and a half years is that the Tappan Zee Bridge which carries thousands of cars can only survive another 10 years. Isn't that shocking? In the meantime, while you can't hold up one bridge across one river, guess what,China is building the world’s fastest trains and the world’s best airports.

I’ve flown several times, just by chance, directly from Shanghai to JFK (airport in New York). And when you fly from Shanghai airport to JFK, you’re flying from the first world to the third world. And yet Americans are not aware of how far they’ve fallen behind. The Americans cannot conceive of the idea that you can learn about governance from the rest of the world. Chinacan and Chinadoes. China spends so much time studying best practices in the rest of the world and America spends no time studying best practices in the rest of the world.

So my message to America is that the clock is ticking. Time is no more on your side. And fortunately even today there’s a huge reservoir of goodwill towards America in the world.  Try to figure out how you can use this reservoir of goodwill for the long-term benefit of America. Don’t waste it.

Thursday, April 21, 2011

Stingy Megabanks Swimming in Cash and Loaning Less Than Ever

After receiving billions in TARP money from YOU, these crooked megabanks now have enough "F**k You Money" to show Americans how they really feel. If Congress would have bailed out the public, the bankers would not have needed the bailout. And taxpayers would have been the ones telling the banks, F**K U!
Wake Up America! You are being SCREWED!!

If the megabanks are so big on lending, why do their loan books keep shrinking?

The biggest U.S. banks tell us they have spent the past quarter writing loans, renewing credit lines and generally being upstanding economic citizens. Bank of America (BAC) says it provided consumers and businesses with $144 billion in credit in the first quarter, Wells Fargo (WFC) ponied up $151 billion and JPMorgan Chase (JPM), swinging for the PR fences, claims to have lent out an improbable-looking $450 billion.

Yet loan balances actually shrank from a year ago at all three banks in the first quarter, just as they did at their old pal Citi (C). This at a time when the too-big-to-fail four are being drenched with new deposits (see chart).

All told, average loans outstanding at  the fearsome four dropped 7% from a year earlier – a decline of $210 billion -- even as deposits rose 5%.

If this is what the bailed-out captains of the financial sector call supporting the recovery, no wonder the economy is going nowhere fast.

The banks, of course, protest that there are good reasons that their loan balances are dropping even as they wrap themselves in the flag of credit extension.

Good customers aren't exactly banging down the door demanding loans, they say, and won't till the recovery really gets rolling. And making loans for the sake of it doesn't pay off, as we may have learned during the financial meltdown.

"We got to where we are today by making good loans and making sound credit decisions," Wells Fargo's chief financial officer, Tim Sloan, said in an interview Wednesday.

And yes, even with all that shrinkage there are pockets of loan growth at the banks. JPMorgan Chase says loans to midsize companies rose every month last year, and Wells points to strength in auto dealer and commercial lending, along with the oft-questioned commercial real estate sector. 

"We love that business," says Sloan.

But mostly, loans are shrinking. That's partly because banks must put the worst mistakes of the bubble era in the rearview mirror, by taking losses on bad loans and letting other low-quality portfolios run off. Both those moves lead to lower loans outstanding.

All four banks are taking their lumps on that front. BofA is running off loans from the beyond-lax Angelo Mozilo era at Countrywide, JPMorgan is dealing with the sales-at-any-cost (see a shining example, below right) mindset of Kerry Killinger & Co. at Washington Mutual, and Wells Fargo is trying to rid itself of the worst Pick-a-Pay dross it picked up in its acquisition of Wachovia. Citi, of course, has its own issues.


Still, it's clear the banks are not lending quite as freely as their press release claims would have you believe. And the declines are all the more striking because they come when the banks, like their perk-addicted CEOs, are swimming in cash.

Average deposits at the four biggest banks rose by $154 billion over the past year, with Bank of America breaking $1 trillion in deposits for the first time and JPMorgan falling just $4 billion short of that mark.

As a result, all the big banks now have at least $1.06 in deposits for every dollar in loans outstanding. At this time a year ago, only JPMorgan was above $1 in deposits for each dollar in loans.

There is something to be said for banks having a lot of cash on hand, of course. As everyone but Dick Fuld learned from the crisis, running out of money makes it hard to persuade others of your firm's franchise value. And of course it is hard to grow a business without reaching out to new users.

"We are glad to have a highly liquid balance sheet," says Sloan. "Deposit growth gives us a chance to bring in new customers and cross-sell our products."

Given the banks' penchant for cooking up rosy-looking credit creation numbers at a time when their loan books are actually shrinking, maybe those products should come with a grain of salt.

Tuesday, April 12, 2011

Bofa CEO: Owners Shouldn't Look At Home As An Asset

The CEO of Bank of America, one of the banks culpable for the housing bust, now tells Americans that their homes are not worthy of being considered an asset, but rather a "...great place to live."

Wake Up America!! 
You CAN do something about this mess you're in if you will only take hold of your rights and exercise them. Vote out the villainous traitors who allow these bankers free reign to destroy our economy!
  
Homeowners may need to look elsewhere for long-term investment returns as housing prices in some areas may not rebound long-term, Bank of America Corp Chief Executive Officer Brian Moynihan said on Tuesday.

Moynihan, CEO of the largest U.S. bank, said at a state attorneys general summit that low population growth in some regions of the country indicated that prices might not rise in the wake of the worst financial crisis since the Great Depression.

"It's sobering to think, but some people shouldn't be thinking of (their home) as an asset," Moynihan said at the 2011 National Association of Attorneys General conference. "They should be thinking of it as a great place to live."

Moynihan said the long-term average annual rise in post-war U.S. home prices of 4 percent owed much to the explosion in domestic population and, in more recent times, the relaxation of credit standards across the mortgage industry.


"The reality is that the population is not expected to grow the way it did post World War I and World War II," he said.


Moynihan noted an Ohio customers' complaint that his 100-year-old home was valued at $50,000. The home, Moynihan said, would be valued as "some multiples of that figure" if it were located elsewhere, but stagnant population levels in the state are driving demand and home prices lower.


The conference included many of the state attorneys general currently engaged in negotiations with BofA and other lenders about a broad settlement to allegations that the industry cut corners on foreclosures.


Moynihan said during his prepared remarks that he had spoken with the attorneys general about industry issues, but declined to comment further about the discussions.

Monday, April 11, 2011

Japanese Citizens Turning In Cash Found In Tsunami Zone

Does this scenario seem a little surreal to those of you living here in the US? We think so. 
Remember Katrina and the widespread looting? Hell..even a few cops there were caught on video looting a Wal-Mart. 
 How many victim's wallets (with the cash left inside) do you think were turned over to police stations in NOLA? 


A tsunami that followed a massive earthquake last month may have destroyed some of Japan's structures, but police say the honest practice of turning in lost items, especially cash, remains intact.

Residents have turned in lost cash across the tsunami zone at a much higher rate than usual, the Miyagi Prefectural Police Department tells CNN.

A police spokesman, who asked not to be identified, citing department policy, said he could not specify how much cash has been turned in to lost-and-found offices at police stations. But, he said, of the 24 police stations across Miyagi Prefecture, nine of them are on the Pacific coastline.

Between March 12, the day following the earthquake and tsunami, and March 31, those nine police stations collected 10 times the amount of lost cash collected at the other 15 stations combined.

Japanese children, from a young age, are taught to turn in any lost items, including cash, to police stations. The cultural practice of returning lost items and never keeping what belongs to a stranger has meant police departments like Tokyo's Metropolitan have an entire warehouse filled with lost shoes, umbrellas and wallets.

In the tsunami zone, where personal items lie amid miles of rubble, it's meant that lost valuables have often gone directly to police, rather than the pocket of the finder.

The lost cash hasn't been easy to handle, the Miyagi Prefectural Police Department says. Money found along with some identification is being returned, but officers have been able to return only 10% of the cash.

Cash that wasn't in a wallet is left unclaimed at the police station. After three months, the person who turned in the cash is able to collect that lost money. But police say people are already waiving their rights to claim the cash when they turn it in.

Unclaimed cash will eventually be sent to the Miyagi Prefectural Government, though police say they do not know how it will be used.

Also found: Hundreds of safes that can't be opened. If the prefectural government allocates funding for opening the safes, police will start doing so.

Prefectural police believe that these safes could contain not only currency, but bank books, stocks and land deeds, which could give a huge boost to the amount of lost money.