Archive - Feb 3, 2013

I argue that Abe is lucky, but now needs to be smart. I made a proposal a few years ago that Japan should return a quarter of its reserves to the Japanese people. The proposal is more compelling now than then. The objections by BOJ officials can be overcome by the Abe government. Reserves are for a rainy day and it is continuing to rain in Tokyo.

A week ago we described the sad tale of one Mahmoud Bahmani, who until recently supervised the unilateral destruction of the Iranian Rial, which on Friday just hit an all time low against the dollar down 21% in two weeks, as head of the Iranian central bank. While his currency-crushing performance would have been enough to get Mahmoud the "congressional medal of inflating away the debt" (not to mention a lifetime corner office at a TBTF bank of his choosing) at any self-respecting "developed world" banana republic, all of which have just one goal - to crush their currencies as Iran just did, in Iran it had precisely the opposite effect and let to his prompt termination. Yet this story is merely a trifle compared to the recent developments surrounding his predecessor, Tahmasb Mazaheri's, who led the Iranian central bank for just one year until September 2008, at which point Ahmadinejad fired him to make way for the recently laid off Bahmani. It is this same Mazaheri, who had been off the world's radar for over 4 years, until he trimumphantly resurfaced yesterday, when German Bild reported that he was caught last month trying to enter Germany with a check for 300 million Venezuelan Bolivars (some $70 million USD) issued by the Venezuelan Central Bank.

Once a government becomes involved in “running” an economy, it invariably ends up running it into the ground. The only variables in this process are how long it takes and how prostrate a given economy becomes by the end of it. Because it always ends - sooner or later. Rational economic theory provides abundant proof of WHY this is the case. Economic and political history is absolutely unanimous in their verdict that it always DOES take place. There is no escape from this truth, no matter how many people wish it were not so and how fervently they ignore the evidence of their eyes and their brains.

So there's a politician from Groenlinks who had a few good one liners for PM Mark Rutte on the radio here Saturday in rain drenched Netherlands. He said Rutte insulted his own "Ministercrew" by offering big bucks to Gerard van Olphen to run now state owned SNS Reaal. Rutte says the market must continue to determine salaries(?). Rutte is from VVD which is not an STD but a political party standing slightly to the right of the jellyfish known as Dutch politics.