Need money? Just Take it From Accounts in the Country’s Banks

Swine flu is in the headlines. They say 149 people have died of it in Mexico. Hardly a world-changing event so far, but epidemics have to begin somewhere.

Governments are swinging into action. They’re checking their stocks of vaccinations…and threatening to ‘shut down’ Mexico City.

Major epidemics come along about as often as new imperial currencies. The French currency – the gold Louis – was the money of choice in the 18th century. In the 19th, it was the pound sterling. The U.S. dollar dominated the 20th century, it took over at about the same time as the Spanish Flu ran wild. The epidemic of 1918-1921 killed 30 million to 100 million people. It was the worst ever.

But this flu seems to move too slowly to be a major threat. People are able to see it coming, and take precautions. The next major epidemic will probably move much faster. When you will see the TV news reporter drop dead in front of your eyes, you will know trouble is coming.

Yesterday, the Dow fell 51 points. Oil stayed at $50. Gold lost $5 to close at $908.

The mood of the market is fairly positive, at least as we hear it. The last few weeks have produced an upward trend on Wall Street. The press is reporting “early signs of a recovery.”

Of course, the crisis has to end sometime. But it seems much too early to us. Remember, this is a depression, not a recession. It is not a pause in an otherwise-healthy economic model. This time, the model itself is insolvent. Americans cannot continue going further and further into debt in order to provide huge bonuses for Wall Street and employment for China.

It’s over. Fini. Caput.

It will take time to destroy the industries, investments and lifestyles that depended on the old model. And it will take even more time to find new ones.

Corporate earnings this year are expected to come in 35% below last year.

The insiders seem to realize that the game is over. They’re selling into this rally – the highest level of insider selling in two years.

As Strategic Short Report’s Dan Amoss put it “the rally is getting tired.”

Zimbabwe, as long-suffering Dear Readers know, is a monetary pacesetter. It led the world in inflation – with a CPI estimated at 230 million percent. And then, it suddenly took the zeros off its currency – leading the world in deflation.

The latest report from that benighted land tells us that the chief of the Zimbabwe central bank, Gideon Gono, has found even more novel ways to get his economy rolling. Ben Bernanke, are you paying attention?

“Zimbabwe’s central bank head admits robbing private bank accounts,” says a headline.

Need money? Just take it directly from accounts in the country’s banks. Of course, thanks to Mr. Gono and his friends there isn’t a lot of money in Zimbabwe’s banks. Who would keep money in Zimbabwe’s banks, unless they had to? Still, a few international aid agencies had significant accounts – which Mr. Gono cleaned out. He said he only did it because he had to, in order to keep the economy functioning. Besides, he’s going to put the money back just as soon as Zimbabwe gets back on its feet.

Finally, we cast a nostalgic look backwards at Argentina, where we spent our recent vacation. Newsweek reports that Buenos Aires seems untouched by the global financial meltdown:

“Take the city of Buenos Aires, capital of an economy built on the export of food and leather, and acutely sensitive to downdrafts in global trade. The sprawling old neighborhood of Palermo and its subsections “Palermo Soho” and “Palermo Hollywood” see new clubs, bars and restaurants opening weekly. Hip spaces are filled nightly with the young and sleek, including young American and European expats with funds to spare.”

Bill Bonner
for Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.
Bill Bonner

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