STUPID IS AS STUPID DOES

Here's a quick peak at our big picture. It's not pretty.

First up, it looks like London-based bank HSBC is going to pay out big bonuses to it's executives, in spite of reporting a 24% fall in pre-tax profits. This is going to happen in spite (or "because"?) of HSBC's U.S.-affiliate receiving at least $3.1 billion in "bailout" funds through AIG last year (again, whatever happened to linking performance to pay?).

For those of you confused about what's happening in Greece, and how the European Union is going to deal with their debt problems, check out this article from nakedcapitalism. One thing is certain, the Germans aren't too happy with what's going on with Greece, which doesn't bode well for Spain and Portugal. Will this lead to the break up of the EU, as some suggest could happen? Probably not. But if things don't get better with Europe's problem debtors, or if we enter into another economic collapse (possible because we're doing the same thing all over again), there's no guarantees on what might emerge from this mess.

Worse, the combined assets of the biggest banks in the U.S. now total 63% of total GDP! Just 15 years ago the combined assets of these banks - Citigroup, JP Morgan Chase, Bank of America, and Wells Fargo - totaled just 17% of GDP (what we produce and consume each year). No wonder Congress can't find the will to regulate these guys. They fear the people with the money. What this means is that the "too big to fail" banks are not only getting bigger, but their grip on the U.S. policy is all but assured. 

With China dumping dollars, record debt loads in America, and with our commitment to two expensive (and bungled) wars, there's no doubt that we're in for a bumpy economic ride long into the future (inflation at least; another deep recession, or market collapse, more likely).

What does this all mean? Real simple. Europe seems to be copying our stupidity ... we seem hell bent on repeating our past stupidity ... while China is starting to see through said stupidity. Some thing's got to give.

Stay tuned.

- Mark