LIBORs and Libraries

QUIET PLEASE as I deliver today's metaphor.

Libraries have been lending books to huge numbers of people without library cards, many of who can't even read, and now they wonder why thier shelves are bare. Finally realizing this, they've put huge padlocks on thier doors and big signs saying "Please Fuck Off" to all borrowers.

Worse, since a couple of Libraries were burned to the ground by angry debt collectors from the book publishers, no-one wants to lend on the inter-library system.

To get books out to the public again, the Central Library is printing books as fast as they can and is delivering truckloads to local libraries, who then just use the books to fill the gaps on thier shelves! Once thier shelves are full they just put the overstock into a really secure storage facility, probably in the back lot of the central library! What they dont do is lend any more books to illiterate itinerents or to other flammable libraries. And that's understandable.

The only way that they can fix this is to let borrowers come into the central library to borrow books. It will be OK if they don't return them (perhaps they use them for heating fuel, who knows?) because the central library can just print more.......

Cheer up, it may never happen!

The "shoot the messenger" attitude that persists at the moment really irritates me, especially given that I am the equivalent of reuters when it comes to the message of doom. Grudginly, one has to concede (notice I change to from "I" to "one" when I use the word "concede") that sometimes it is far more comforting to wish for the best.

Suddenly I find myself wanting this all to go away after Wassup commented "isn't collapse inevitable?" yesterday. Because he's probably right. Huge car plants have ceased production in UK and the US. Countries, not banks, are failing now. Winter is closing in. Bernanke, famous scholar of the Great Depression, is about to become an expert on two depressions.

London's East End felt the brunt of Nazi terror bombing during the second world war. For those who have an American education, London is in Europe, the Nazis were like super taliban, and the bombing was like 9/11 10 times every night. Citizens were helpless in the face of mechanised genocide, however they coped by various means, including humour. People would say to each other "Cheer up - it may never happen!".

Perhaps we should cheer up? I mean, it's not like we're facing the specter of global facism. That came about because of a swing to the right after massive economic collapse, which... okay now I am depressing myself.

To all readers I say "Cheer up - it may never happen."

An easy way to explain the current situation

You have a wayward son who is still living at home at the age of 23. His income is about 30,000 dollars, but after doing a few sums you realise his outgoings must be at least 90,000 dollars given his spending habits.

You confront him on this situation and he explains that he has made up the difference by playing online poker using a clever "unbeatable" system. You don't really understand, but you take his word for it - he is a very clever guy.

One day you are putting his socks in his draw and you find a huge credit card bill! This must be it! This is the Bear Stearns moment.

You talk to his father and between you you decide how you are going to bail him out, but set him on the straight and narrow. When you go back upstairs to return the credit card bill into the draw you discover many more credit card bills at the back of the drawer. This is the Lehmans moment.

After much arguing, you come up with a plan. You will take out a second mortgage on the house and pay off his debts, and he will be so grounded he wont know what hit him. This is the Paulson Moment.

Finally you can breathe again. Yes you have a lot of debt, but you can just about manage if you cut back on vacations etc. Unfortunately what you don't know is he also has about three million in gambling debts, car loans and drug dealer payments to pay off. This is the current moment.

Public Choice Economics, son of Mr Ronald Reagan, is dead.

"Mr Kirk, come down to the stationhouse, your son is dead...."

"..... he died of an overdose."

Radio 4 ravers out there will be familiar with this tune, but the story should be familiar to all. Reagan begat public choice economics and then his public all chose to be rich whilst choosing not to actually have to earn the money first. It's is ironic really given that Reagan once said "You and I can live beyond our means by borrowing, but only for so long". He also said "Government is not the solution, government is the problem". Double irony!

That leaves the financial system in a bit of a conundrum. Viz;

I promise* to pay the bearer of this note

*Promise may vary from promise shown. The value of your promise may go down, but not up. This note does not suit all investors and we reccomend that you contact your economist before exchange. Past solvency is not an indicator of future solvency. This is regulated by the FSA, which should make you feel much better.

So thats the terminal public choice; not to pay thier debts.

We have reached the "Weekend at Bernies" moment

For those of you who have been living on the moon, "Weekend at Bernies" is about two guys who get invited to spend the weekend at thier bosses mansion in the Hamptons. Unfortunately when they arrive they find he has been murdered. So as not to spoil thier dream weekend, they have to continuously convince people that Bernie is still alive. Hilarious corpse-centric humour ensues.

Yesterday the financial system reached that moment.