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Guest Post: A World Without Banks

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Submitted by Chindit13

A World Without Banks

Imagine a world without bankers. 

That thought either rattles you to the core of your being, or it brings on the kind of ecstasy heretofore only available in a Southeast Asian massage parlor.  If you are a Congressman, addicted to the effluent from the wallets of your owners on Wall Street and their lobbyists in Washington, if you are a real estate developer who believes no amount of office space and no amount of luxury condominiums is too much, or if you summer in the Hamptons and Nantucket, then you are clearly in the first camp.  If you are a typical ZH’er, spending your weekends at the range with your Beretta or sharpening the tines on your pitchfork, then welcome to SE Asia and the world of your wildest fantasy.

Yes, there is a country without banks as we know them, where no one knows the meaning of subprime, Alt-A, securitization, HFT, prop desks, insurance---portfolio or otherwise---CDS’, CDO’s, CDO^2’s, CLO’s or Too Big to Fail.  There is a country where the financial crisis went almost unnoticed, where no bank assets went toxic because there are no bank assets.  No depositors faced loss because there are few depositors.  Mortgages did not take a hit because there are no mortgages.  No car loans, student loans, or HELOC’s went bad.  The country is the Union of Myanmar, known to many in the West as Burma.  It is also called the Golden Land, which is entirely apropos given its wealth of natural resources.

Many reading this might have a political view on the country and its leadership, to which you are most welcome.  Other websites, other writers, and the activist community address that issue elsewhere and have been doing it almost as long and almost as successfully as America has been enforcing sanctions against Cuba.  I’ll leave politics to them, for this is not a political fluff piece; it is an economic fluff piece.

While much of what you will read here will seem odd, please don’t let the bizarre nature of this system scare you off.  What they have, albeit in a different form, is workable even in a large society.  If any of you find humor in this piece, then that is good enough, for at times like this humor is what keeps some of us going. More than that, however, I write this to attempt to counteract the fear mongering foisted upon us all by the likes of Hank Paulson, Timmy Geithner, Ben of the Inkjet Bernanke and that drooling, semi-embalmed cadaver who goes by the name of Representative Paul Kanjorski.

“We were that close”, so they told us ad nauseum in order that we accept the passage of TARP and all of the other alphabet soup of programs that shifted the wealth of America’s savers, elderly and Middle Class to the same people on Wall Street who nearly brought the system---their system---down.  Yes, the collapse of the financial system would have had dire consequences---for the ones who caused its near demise.  Their world almost did cease to exist, and it would have eviscerated them, one and all.  Sadly, we lost an opportunity.  Our world, on the other hand, though difficult, would have survived, and we would have found a way to continue.  Humans are resourceful.   Humans adapt.   Anarchy creates its own communities, its own bonds, out of necessity and the will to survive. Burma is an example.  Now I’ll tell you why.

Let me begin by getting a salient point right out front:  Burma’s economy probably grew 15% in 2009.  Fifteen percent.  Their currency was the world’s strongest currency in 2009, climbing against everything from the dollar to euro to swissie to loon.

Nobody really knows the actual GDP number, because no one really bothers to keep track.  Much of the economy is of the underground variety, and even the official economy is cloaked in secrecy.  Fifteen percent---which would be the top growth in the world amongst countries with a population  greater than 50 million souls---is my own estimation based on what I see, and comparing it to what I have seen there over the last fifteen years, or over the last thirty in places as diverse as Saudi Arabia, Japan, China, Thailand and Burma.  2009 was staggering in the amount of development, as anyone who spent time in the country could attest.  Why I am there and why I know this is a long story.  Suffice it to say I left a host of Wall Street prop desks when I thought my pockets were full enough, and when I wanted to try to find a way to add value in the world while I was still young.  As most of you believe, if not know for a fact, Wall Street adds precious little value to the greater good of the human species.  It’s a nice place to visit but I wouldn’t want to live there.  I mean Wall Street, not Burma.

It is possible not every country could do what Burma has done.  Few countries in the world have the breadth and depth of natural resources Burma has, which include economically significant deposits of gold, platinum group metals, silver, antimony, molybdenum, copper, nickel, iron ore, zinc, tin, uranium, chromite, rare earths and gypsum.  Burma also has approximately eighty-five percent of the world’s remaining tropical hardwoods, including the world’s best teak, plus stunningly beautiful woods such as padauk, pyinkado and yemane.  Burma has most of the world’s top jadeite, gobbled up to the tune of a billion dollars a year by the emerging Middle Kingdomites.  It has precious gemstones such as rubies, sapphires and spinels.  Its biggest source of wealth in recent years has been natural gas, plus some oil, which accounts for upwards of 80% of government revenues.  Major investors in the country---mostly in mining and oil/gas exploration---include China, (both public and private sector), Singapore, Thailand, India and Russia.  Also trying to exploit Burma's vast natural wealth are companies from Malaysia, Vietnam and Australia.  A gas pipeline run by France's Total and US Chevron (oddly exempt from the sanctions that prevent me from even buying a home-sewn shirt) is single handedly responsible for nearly 25% of total Myanmar Government revenues via a long term sales contract with Thailand.  As with the financial industry, lobbying Congress has its benefits, allowing Chevron privileges denied to you and me and the other lesser members of our egalitarian society.  TransOcean (RIG) is also allowed to lease drilling rigs, at $210,000/day, to a project controlled by a company called Asia World, run by a man name Lo Hsing Han and his Harvard MBA educated son Steven Law.  Google that and ask US Dept of Treasury, Office of Foreign Asset Control, why RIG gets an exemption.  I am not criticizing the Burmese here;  I am calling America a hypocrite nation, however.

At present China is constructing two new pipelines from the Arakan (Yakhine) Coast on Burma’s western side to Kunming in China's Yunnan Province.  One line will carry Burmese natural gas;  the other will carry oil obtained from the Middle East, enabling China to bypass the dangerous Straits of Malacca and save 14-20 days shipping costs.  Burma will reap billions from this, despite the odd fact that 35% of its standing army will be involved in guarding the two lines. India just paid $1.4 billion for gas exploration rights in an offshore block off Yakhine and for a 12.5% stake in the twin pipelines.  Of course that’s small money for a hedge fund type who bet on TBTF in America, but it’s enough to make it boom time in this all but bankless society.

Situated between the two largest populations on Earth---China and India---both of which are hungry for resources, has undoubtedly benefited Myanmar and helped it pass through the crisis the rest of the world experienced full bore.  Still, the other thing that helped it avoid financial calamity was its lack of banks, because people were always forced to pay as they went.  Lack of banks and insurance does not prevent dealmaking or trade, it just means that it must be self-financed and self-insured.  Projects are carried out only when they are paid for up front, and if a project fails, the loss is born by the owner.  Goods are moved with the acceptance that losses are possible, but goods are still moved, potential loss factored in to prices.  There’s trucks on the highway carrying manufactured goods, produce, and people.  Homes get built, as do office buildings, restaurants and shopping centers.  People only buy what they can afford because if they cannot afford it, nobody will sell to them.  Other than neighborhood loan sharks who charge upwards of 5% per month, there is almost no debt. Growth comes only from what one can pay for in the here and now.  That encourages saving, though most savings are of the cash-under-the-mattress variety. Business still gets done.  Banks can be an aid, but they are not a necessity.  Eating and having shelter are necessities, and these will happen with or without banks, whether it's in Burma or America.

In the end, rather than shift risk around the economy so that it eventually ends up in the hands of those least able to weather it (AIG), risk stays with the risk taker in a bankless/insurance-less world.  People, or firms, do not impose their own burdens or ineptitude on to others.  One might argue it’s a better form of capitalism.  It is certainly more fair than you and me paying for AIG’s FP Desk stupidity.

The Greeks used to say “everything in moderation”, though the last few months have shown the world that that belief is as decayed as the frescoes on the Parthenon (except for the ones ‘liberated’ by Lord Elgin).  Humans, if given the chance, will forever shy away from moderation.  Too much is never enough. Banks may occasionally do a little bit of God’s work in congregating and allocating capital, but they do much more of the devil’s work.  Bank profits come from Oscar Wilde-ing society (“the only thing I cannot resist is temptation”), whether it is in the form of indebted consumers or customers chasing yield (these are the ones Blankfein, in a bold faced lie in front of a Congressional hearing, called “sophisticated investors”.).  Easy credit encourages people to over consume, and over consumption always leads to obesity, either in body or in debt.  Americans are textbook examples of both:  fat and indebted.  They are addicted to immediate gratification, so much so that it is almost held up as entitlement.  The junkie, however, does not get rich;  the pusher does.  If the pusher becomes rich enough, he eventually owns society.

Banks also over consume, in that they continue to rope in consumers and institutional customers until the bank itself becomes obese.   Unbridled greed, or uncontrolled appetite, as we have come to learn all too well, leads to Too Big to Fail.  No limits on the consumer leads to no limits on the banks which then leads to the dire situation in which we find ourselves now.  Indebted consumers, however, lack the ability to manipulate our democracy.  Bankers do not.  That is why Goldman Sachs get bailed out and why you and me must pay for it. 

The Burmese, whose society lacks this negative feedback loop, are puzzled by what happened to us.  Exploding debt?  What’s that?  For them , it is buy what you need or want only when you can afford it.  Given the chance they would have become like us.  That lack of opportunity saved them from what we now have.

A change of lifestyle, necessitated by a sudden change in a society where debt is almost impossible to obtain, would not be easy for spendthrift Americans, but living on a pay-as-you-go basis imposes a kind of discipline most Americans need.  It would hurt, but it could be done.  Losing Bank of America, Goldman Sachs, JPMorgan, Citibank and Wells Fargo would not have destroyed America, though it would have given a kick in the teeth to Lloyd and Jamie and their ilk. Like the Burmese now do, however, we would have survived and found a way to deal with the new reality.  We might even be better off, rather than having to pay off---and having our offspring continue to pay off---the mistakes of the Blankfeins and Dimons and Fulds and Mozilos and McMansion buyers.  We will never know, because the powers that be did not allow us to see that alternative.  They tried to scare us, then ignored the vehement public opposition to TARP and passed it anyway.  And some criticize Burma for a lack of democracy!  Congress and the powers that be did not allow big bank failure, because for them the alternative would have been horrible in lost bonuses and lost contributions.  For the rest of us, we may well have been better off.  At the very least, we wouldn’t be working until May each year to fund, via our taxes, the bonuses and lifestyles and re-election campaigns of those who blew it.

Another plus is that if we as a society jumped off the over consumption bandwagon for a while, we might have had time to rediscover each other, which might also have necessitated that we all develop personalities again.  I'll end this segment with a curious observation.  I am two days out of Yangon at this moment and in Tokyo.  In Yangon I often take a break in a local tea shop, full of crowded tables where people are chatting, joking, romancing and just passing time with others of the same species.  In Tokyo today, which is a society very much like the US, I sat in a Starbucks and saw twenty people, all sitting alone, playing with their laptops, iPods, iPhones, Kindles and assorted other gadgetry that allows them to exist alone in their own soul-less world.  Is that what we really want?

If you wish to continue reading, it gets a little fluffy and travelogue-ish here, but you might find it amusing.  What the heck, have a read.

Now banks do exist in Burma, they just are not like any bank you know.  The best description is that they are glorified Western Union offices, since almost all bank business involves domestic cash money transfers.

I should mention here that Burma is a cash society.  Credit cards were tried for a period in the earlier part of the decade, but were just as quickly eliminated.  If you come here, forget your Visa, Mastercard or Amex;  they are not accepted.  All purchases are cash and none is on credit.  That includes real estate and cars. If you want to buy a house, you deliver the purchase price in physical cash to the seller.  The same thing for a car.

At first you might not think this is such a big deal, suspecting as you probably do that since Burma is a poor country (per capita income around $250/year), prices cannot be too high.  You would be wrong to think that, for two reasons.

The first reason is that up until very recently, the largest note in circulation in Burma was the one thousand kyat note (they just introduced a five thousand kyat note).  Converted to dollars, that makes the largest piece of fiat paper in circulation the equivalent (at current black market rates) of one US dollar.

The second reason you would be wrong is that both real estate, and car prices in particular, are quite high.  Real estate appreciation over the last seven years in some of the most sought after parts of the former capital city of Yangon (the new capital of Naypyidaw is only a few years old) approaches five thousand percent.  That is, a piece of land that sold for $100K in 2003 now sells for $5 million.  Car prices are worse, impacted by import restrictions that keeps the supply of vehicles significantly less than the demand.  How much below demand?  Try this:  a 1981 Toyota Corolla Station Wagon in white (until 2000 this vehicle represented approximately 80% of all road going passenger vehicles) currently sells for US$20,000.  A 1992 Toyota Mark II, the present fan favorite, fetches US$46,000.  Top-of-the-line Toyota Landcruisers recently went for US$540,000, though prices have come down a bit as of late.  These prices are not for pristine, cherry examples;  these are for all of a given make/model/year, as if it were a commodity.  The lack of internal upholstery, bare metal roofs and floors, hand-held windshield wipers operated by a long-armed front seat passenger (me)...none has any impact on the value.  One is as another.  My typical ride has four of six windows, which may or may not open, little or no side upholstery, and a hole in the floor through which I can see the passing road.  In some of them zero to sixty times are still being determined.

Banks do not make car loans, though one bank tried in the past and went bust.  Lessons were learned from that, as they should be in a capitalist system.  A car buyer must ferry the bales of cash to the seller before he or she can take delivery of the chariot, which creates a kind of barrier to entry for car ownership in that one almost needs to already own a car to carry all the cash required to buy one.

A real estate purchase is done the same way:  all cash, baled up and stuffed into the kind of nylon sacks migrant workers from developing countries carry their lives in when they return home.  Years ago another bank tried to introduce the concept of mortgage, or at least a home equity loan.  Many recipients did not know they had to repay, thinking that the loan was some kind of reward for owning a home.  (I guess Americans are not that much different from Burmese after all.)  That bank went bust, too.  Capitalism works if allowed to work.
 
A visit to the buildings known as banks is quite an experience, one from which I have yet to tire.  Some of the buildings are rather grand, while others look as if a good strong wind could bring the entire edifice down.  Inside one would be hard pressed to find a loan officer or even someone to open an account.  Indeed, I have never seen either one.  What they do have are facilitators who arrange for fund transfers, a slew of strong young men to lift the heavy sacks of money that get carried inside, and a gaggle of barely-out-of-their-teens women behind the counter, each manning a bill counting machine.

The banks are crowded and the atmosphere is hectic.  A flat panel TV hanging precariously from the ceiling blares out the latest local music video.  Children play around on the floor.  Bales of money are tossed about like medicine balls, often over the heads of the rows of customers sitting on primary color plastic chairs awaiting word that their money either arrived or was successfully sent.  There are no formal lines, but the crowd gushing around the counters seems to follow a natural law that allows first come first served.  Forms are filled out, ID cards shown, the obligatory stamps and signatures obtained, and the money is sent, arranged via a telephone call with the receiving branch.  A truck arrives in the front, and five barefoot young men pile out and begin tossing sacks of money passed the security guards into the bank lobby.  Customers make room, though there is not much free space.  Soon, the bags are ripped open and bales tossed on to the service desk, from which the women, faces smeared with yellow thanaka paste, then begin the long process of counting what might be fifty or even a hundred thousand pieces of fiat paper. If the money is part of a real estate deal, the number might be in the millions.  The whirr of the machines is constant, the women focused.  The scene has a simple beauty.

As the piles of money move from in front to behind the counter, a kind of makeshift furniture is formed which sometimes serves as a place for staff to sit and take a tea break.  Five money bricks for a seat, ten for a table.  When the money is counted, a receipt is given, and the customer walks out just in time for another truck of money to arrive.  It is mayhem.  Cacophony.  It certainly ain’t Bank Pictet, but it works.

Most of the banks have vaults where the excess from a day of inflows and outflows is stored.  Some banks do not have vaults.  I can only assume that with the denomination of the currency being as small as it is, it would take a robber so long to remove enough cash to make theft worthwhile, that by the time he finished, the work crew would be arriving for the new day and would catch him in the act.  It might also be that the people are pretty honest.

My favorite treat is to arrive early and watch the staff in banks where vaults do exist, unload cash into the counter area in preparation for customers’ arrivals.  In assembly line style, three or four men spread themselves out in a line, from vault to counter, and pile stacks of notes baled in thousand piece packs.  Ten of these packs are piled, but not bound, then tossed from man to man, bucket brigade style.  That’s $10K equivalent per toss, by the way.  In ten minutes perhaps a million dollars has been tossed from vault to floor, and not a single brick has been dropped.  Tinkers to Evers to Chance would play second fiddle to this display.  I seriously doubt Lloyd Blankfein could pull it off.  In things that excite and fire the soul, he is a man of lesser talents.

So there it is.  A world without banks.  It could have been us.

 


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Sun, 04/04/2010 - 01:00 | Link to Comment chumbawamba
chumbawamba's picture

Banks are superfluous in the US as well, if you try.  And you don't really have to try that hard.  I know this firsthand.

I am Chumbawamba.

Sun, 04/04/2010 - 14:21 | Link to Comment Gordon_Gekko
Gordon_Gekko's picture

Totally. 

Sun, 04/04/2010 - 01:14 | Link to Comment Shameful
Shameful's picture

Cool read, thanks for posting it up!  I might not be a world traveler but to my research a lot of the world does not have the insane credit system we do.  In these places the same thing must be done, you buy what you can afford and what you save for.  I would point out that if we allowed the system to flow our banks would also go bust and the system would purge itself.  Sadly the banks bought the politicians so they are really our rulers.  To get redress one would be better served to petition Dimon or Blankfein then their elected "representatives".

An interesting view from Burma, have to be honest have not heard much good out of the country except for it's vast natural resource wealth.

Sun, 04/04/2010 - 07:55 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"I might not be a world traveler but to my research a lot of the world does not have the insane credit system we do."

And in my view this is precisely why America and it's minions are aggressively and militarily expanding it's economic and cultural systems into every corner of the world. The undeveloped and underdeveloped world is a wet dream to the fiat paper credit pushers in the US. It's either spread the credit virus to keep the exponential growth of credit on track or die. Seen from this point of view, America's madness is just of matter of survival.

Where's the "super-bug" antibiotics for this particularly virulent strain of capitalism?

Sun, 04/04/2010 - 22:22 | Link to Comment ToNYC
ToNYC's picture

Myanmar/Burma is like a tiny pilot plant /test tube/ small, well-stirred reactor vessel that are totally useless on the scale-up that modern economic states need to operate. Do you need to be a Chem. E with a hard knocks-earned MBA to see whererthis desperate this Burmese wunderkind is going?

Sun, 04/04/2010 - 11:24 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

It is important to point out to those who will critisize Myanmar, that it is one of the two countries in the world, the other being the good and forward thinking US of A that still does not utilize the metric system.

Cheers mates

Sun, 04/04/2010 - 12:23 | Link to Comment dark pools of soros
dark pools of soros's picture

we are just too lazy to change

Sun, 04/04/2010 - 16:29 | Link to Comment velobabe
velobabe's picture

to stupid†

Sun, 04/04/2010 - 18:42 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Contextually, that is filled with irony

Sun, 04/04/2010 - 15:59 | Link to Comment Dirtt
Dirtt's picture

They have teak wood.  That is something I want from them but probably can't get.

Sun, 04/04/2010 - 01:29 | Link to Comment order6102
order6102's picture

its all good but wrong. Credit system exist. Its call loan sharks. Majority of them spread in Chinatown of Yangoon. Rates as high as 50% monthly and if you don't pay they going to kill your family as most of them linked into triads. In addition to it there are various types of colaterlized lending where interest rate depends on collateral type and can be as low as 10% monthly interest if you use land as collateral asset. So, get your fact straight please

Sun, 04/04/2010 - 01:41 | Link to Comment Hephasteus
Hephasteus's picture

That's the tier 2 banking system. It's the same system it's just a matter of using the tier two system to try to keep as many people as possible in the tier one system. The banks are an ugly abusive bastard. So they have to keep the even uglier and even more abusive system in place so that they look good by comparison. It's like the family guy where you hire an ugly person to walk around and look horrible so you look better by comparison.

Sun, 04/04/2010 - 03:38 | Link to Comment order6102
order6102's picture

+1. I fully agree, but any economy need banking in some shape and form and having tier 2 system without tier 1 system makes former even more uglier...

Sun, 04/04/2010 - 02:41 | Link to Comment chindit13
chindit13's picture

This is about banks, or lack thereof, not the loansharks (whom I mention in the piece).  Your comment is a little sensational.  One can find loansharks in NYC who might also charge 50% a month and are nasty if repayment is tardy, but that is hardly indicative of the cost of money throughout US society (though it's not far off current CC rates).  The reality for those who might want to borrow in Yangon is a bit different.  Rates (loansharks, as of last week) are 5% unsecured (per month), 3% if gold is put up or a deed pledged (this should warm the likes of Gordon Gekko) as collateral, 4% or so if diamonds or precious stones.  Some monasteries will accept things such as sewing machines, bicycles, clothes, etc, but they charge higher.  I once saw 17% per month out of a Mandalay monastery, and was told the senior monk was a "good businessman".

The data above comes from acquaintances who do this for a living.

As for the "killing your family" part, please provide some instances.  Yangon, despite its 5 million or so people, is a small community at heart.  The "go la ha la" (rumors) get passed around pretty quickly, and just about every murder is talked about in the tea shops hours after it happens.  The reason they are talked about is because there are so few.  I would guess every major US city has more in a week than Yangon has in a year.

 

Sun, 04/04/2010 - 03:34 | Link to Comment order6102
order6102's picture

first of all, sorry for sounding sensational. My rates kind of old, as last time I visited place (even its just few hours away from where I am), about 8month ago (have issues with visas, that its NOT easy to get. And you right - i have no indication of actual killing taking place, but I have seen treats to families if repayment will not be make on time and smashing of the cars and shop windows, so system works.

Issue is - there is very efficient shadow system with money transfered in and out Bangkok/Singapore/Hong Kong together with loans made and promisary notes written. Howevery,  due to lack of banking system charges/interest/cost can be much higher then for example in Thailand or Singapore where banking system exist side-by-side with shadow loan shark system due to competition. As you said - capitalism works and more competition is good.

Sun, 04/04/2010 - 05:30 | Link to Comment ShortStack
ShortStack's picture

You should probably change cards if youre anywhere close to 50% a month. Every state in the US, and every province in Canada, as well as all across Europe has regulations that keep the rate CC companies can charge far below that on an ANNUAL, not even monthly basis. 

If you want to look at a real representation of a lower-tier banking system in the West, just look at pawn shops. They charge upwards of 10% monthly interest and its the oldest form of banking there is. In places like the US this would be considered a tier-three system because of the already existing shadow banking system.

Sun, 04/04/2010 - 09:13 | Link to Comment jm
jm's picture

Chindit:

I have another SE asian example of a country without banks.  It was Pol Pot's Cambodia.

I hope you take this with a smile, as was meant.  But I do have point.  Without banks you cannot economize risk, and everything SSLLOOWWWSSS down.  A continuous near sudden stop.

How can Burma exploit a uranium mine and other resource wealth without credit financing on large scale?  They won't get that kind of financing from the neighborhood triads. 

Sun, 04/04/2010 - 10:02 | Link to Comment IBelieveInMagic
IBelieveInMagic's picture

The reality is that commercial credit for projects with reasonable chances of repayment from future cash flow is good to have. Unfortunately, we have a runaway consumer credit system that issues credit to borrowers for personal consumption (not investment) whose future cash flow is unlikely to ever support the interest and principal repayment.

Consumer credit depends on the credit rating system to keep him on the repayment track but that assumes that the person has a real income stream. 

Sun, 04/04/2010 - 13:12 | Link to Comment jm
jm's picture

I was being a bit sarcastic back at Mr Chindit's sarcasm.  Most posters do not consider him sarcastic at all. 

So no one is against business loans as such, but consumer credit is a different issue altogether.  Well, without consumer credit, I guess you'll have to save up a whole lot more to get that car.  Oh wait, you need a car to get a job.

Oh wait, you mean people can't buy Hummers or big screen TVs anymore because consumer finance is out of control. 

I've got a much more simple idea.  Why don't we give people to the freedom to do what they want with their money, and the freedom to fail? 

Otherwise, back to Pol Pot I guess. 

Sun, 04/04/2010 - 17:14 | Link to Comment Dburn
Dburn's picture

Speaking of credit ratings. Here's an article about Talx that handles 30% of the market for challenging unemployment claims mainly for the Fortune 500. They were bought out by Equinox. They must have seen some synergy there. This might be a good sample of the types of growth industry we can expect for this "recovery".

I'm sure states that are deep in the red give them a under the table type greeting so to speak as Corporate America works hard to make peoples life go from miserable to desperate as quickly as they can because that decreased unemployment insurance rates can only mean one thing: more bonuses.

Sun, 04/04/2010 - 18:48 | Link to Comment A Nanny Moose
A Nanny Moose's picture

How can Burma exploit a uranium mine and other resource wealth without credit financing on large scale? 

Rely on the eternally "altruistic" to provide it?

http://uscampaignforburma.org/

http://www.freeburmacoalition.org/


Sun, 04/04/2010 - 22:24 | Link to Comment jm
jm's picture

And I thought all those altruistic NGOs invested in whorehouses... 

Sun, 04/04/2010 - 06:43 | Link to Comment Bow Tie
Bow Tie's picture

sounds like a barbaric, criminal system. transparent though...

Sun, 04/04/2010 - 01:25 | Link to Comment tmosley
tmosley's picture

Banks are good, so long as they are free from government interference either for or against them.

See http://freedom-school.com/money/how-an-economy-grows.pdf for the reasons for having a bank, and how NOT to corrupt it.

Sun, 04/04/2010 - 01:43 | Link to Comment Hephasteus
Hephasteus's picture

Ya. I'm the same way. I'm really good and always do the right thing as long as you avoid policing me. I'm sure I'm not like those raping, speeding, hooker killing amabassadors with diplomatic immunity.

Sun, 04/04/2010 - 10:21 | Link to Comment tmosley
tmosley's picture

"Lack of regulation" doesn't mean "immune to law".  Without banks, large capital projects woud never get built (Myanmar doesn't even have paved roads, no skyscrapers, no aqueducts, no modern port facilities, no trains (unless they were built by outsiders), etc), and waste is introduced into the system as you force individuals to spend time and money doing their own investment research, rather than entrusting some person to look after their money in a responsible manner (read the comic I posted).

Understand that regulations on banks hurt small banks 100% of the time, and large banks ~0% of the time.  Subsidies help large banks ~100% of the time, and hardly touch small banks.  As such, banks are encouraged to grow ever larger.  Further, introduction of moral hazard by communo-fascist central bank guarantees encourages banks to make stupid decisions which lead to the mess we have now.

Or have you been under a rock for the last three years?

Mon, 04/05/2010 - 10:14 | Link to Comment mouser98
mouser98's picture

seems like you fail to see that the same law that prevents most people from being "raping, speeding, hooker killing" is the law that protects said ambassadors with diplomatic immunity from retribution by the victims or relatives of the victims.  and you don't need vigilante justice, just an unmonopolized system of law enforcement.

Sun, 04/04/2010 - 01:55 | Link to Comment Dicite justitiam
Dicite justitiam's picture

I'm with McCulley on the concept of enhanced liquidity, but we could do such a better job of it than we are.  Decentralized control and lower higher reserve ratios.  But then we have the problem of the 30's.  I don't know.  I'm not smart enough.  This is a paradox.

Sun, 04/04/2010 - 10:41 | Link to Comment tmosley
tmosley's picture

The banking problems of the 30's were caused by regulations limiting banks to a single branch.  These size limits meant that they were unable to withstand banking runs, and since they were vulnerable to them, their customers were more skittish than they would have been otherwise, resulting in more bank runs.  The government "solution" was to socialize the risk, which has lead us to our current dilemma.  The reason it took so long is because we did have some regulations preventing too much risk, but the regulations were removed, but that action was not balanced by removal of deposit insurance, which created the perverse incentive.

Deregulation only works when you also remove all the government goodies and "protections".

Sun, 04/04/2010 - 15:26 | Link to Comment Dicite justitiam
Dicite justitiam's picture

Then there should be a tiered reserve ratio system.  Have bullion banks with 100% reserves, tier 1 banks with a 50% reserve, tier 2, etc...  With different deposit insurance...

nah.  blah blah blah.  the clever will always promote their self-interest, even if we use beads or clams or whatever.  it just lowers the amplitude of both the risk and the liquidity.

it's zero sum.  if we try to insure away any economic risk, there is no liquidity left over.

Sun, 04/04/2010 - 17:11 | Link to Comment murray
murray's picture

The answer, as always, is the free market

Sun, 04/04/2010 - 02:07 | Link to Comment Cookie
Cookie's picture

Good piece Chindit, although certain Generals still need banks in Bangkok to launder drug money into property in Singapore.

Sun, 04/04/2010 - 02:18 | Link to Comment dumpster
dumpster's picture

also remember the late 80's.  open an account get a free toaster , banks need to get back to giving out stuff . even an occasional donut

Sun, 04/04/2010 - 02:47 | Link to Comment strannick
strannick's picture

Wonderful!

Sun, 04/04/2010 - 03:03 | Link to Comment dondonsurvelo
dondonsurvelo's picture

Transocean is a Swiss company.

Sun, 04/04/2010 - 03:38 | Link to Comment swamp
swamp's picture

Go into any little strip mall along Tully Road near 101 in San Jose, CA, near Silicon Valley. There's a large Asian primarily Vietnamese population, and most all the bakeries, hair salons, auto tint glass, restaurants and other shops for miles have signs on the door to the business: "cash only". 

Sun, 04/04/2010 - 04:13 | Link to Comment dumpster
dumpster's picture

"cash only". 

large Asian primarily Vietnamese

or gold and silver .. give it a try . i bet thats as good or better than cash . gold is money

Sun, 04/04/2010 - 04:14 | Link to Comment Rusty Shorts
Rusty Shorts's picture

My first taste of freedom.

http://www.youtube.com/watch?v=CAaOYjHb9K0

Sun, 04/04/2010 - 04:35 | Link to Comment Gordon_Gekko
Gordon_Gekko's picture

Seems to me like instead of the banks pillaging the people (using the government as an accomplice), it is simply the government directly pillaging them in Burma. 5000% inflation in property? 1000 kyat = $1? They gotta be printing a heck of a lot of fiat money pieces for sure (and looting the savers in the process). Plus we have restrictive import policies which ensure that people have to pay thru the nose (most of the money going to the government coffers) for basic amenities, hence lower standard of living (e.g. $20k for a 1981 car). The labels may change (i.e banks, government, etc.), but the essence remains the same - a few oligarchs looting the masses.

And then there is the question of where do the Burmese oligarchs get their money/power? Selling natural resources for - that's right - US Dollars - which they get from the US companies/other USD enabled oligarchical countries doing business with them - which they then proceed to keep for themselves instead of lifting the living standards of the populace. So basically the deal is - you sell your natural resources to us on the cheap instead of using them to lift your own countrymen's living standards and we'll keep you in power and flush with dollars which you can then use for your personal benefit. So, ultimately, it's not that Burma is untouched by banksters - it's just that they call them "the government" over there; not to mention that the rot in Burma is enabled by none other than that filthy bankster product - the fiat US Dollar.

Sun, 04/04/2010 - 04:42 | Link to Comment swamp
swamp's picture

That's some keen insight. 

Sun, 04/04/2010 - 07:49 | Link to Comment anony
anony's picture

Just like other natural resource-rich EXPORTING countries that think they are so much better off than the rest of the world.

They don't seem to realize that they are hollowing out their own country for the almighty dollar, directly selling out the ground from underneath their own feet.

Denial, stupidity, ignorance call it what you want but what's left when these countries have exceeded "peak" reserves and the wind down begins?

 

Sun, 04/04/2010 - 12:08 | Link to Comment Lionhead
Lionhead's picture

Precisely, they're selling out for pieces of paper that have no intrinsic value. It's amazing to me the stupidity of these globalised countries that they're that naive to sell tangible things with value for pieces of paper or electronic digits created as ledger accounts. Humans are strange what they believe in as advantageous somehow believing in the full faith & credit of Ben Bernanke. If I was a mining company in Myanmar selling rare elements, I would accept only gold bullion as payment, after assaying it for its fineness. No paper please.

Mon, 04/05/2010 - 02:53 | Link to Comment AnAnonymous
AnAnonymous's picture

Stupidity? Their resources are needed elsewhere in the world by countries that without them would know domestic unrest.

Taking the option of self preservation is not always stupid.

Sun, 04/04/2010 - 10:10 | Link to Comment chindit13
chindit13's picture

GG, perhaps you will get a kick of sorts out of this.  First, the biggest source of funds for the country is China.  China is the "neo-colonialist" buying up the natural resources of the country, and (in my view) is the biggest threat to the country's future independence.  Other than Chevron on the pipeline, US firms are non-existent (as I was corrected on RIG).  And here's the kicker:  about three years ago the government began carrying out its jade auctions priced in euros, not dollars.  While the dollar is still the second currency among the general populace, the government is trying to make it a kyat-yuan-euro based economy.  In other words, the generals of Burma just say "no" to the US Dollar and Ben and Timmy's printing and spending machine.

Sun, 04/04/2010 - 11:19 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Chindit and Gordon, you both are kind of making the same point: that almost any country has its points of corruption (vampire squids if you will.)

USA has its banks and .gov.

Burma has its generals running the show.

Some of the developing countries I know (though perhaps not really well) offer somewhat of a blend of Burmese (Myanmarese?) and the USA's models: banking is there, but credit is hard to get (Peru comes to mind).

Gordon makes the point that a vampire squid is always out there. 

Chindit makes the point that a colonial threat (China) will likely take Myanmar at some point.  They already are building a naval base in Myanmar.  And as you say, China is the asset stripper.

.....

I do not see personal liberty as any kind of priority there (at least some of us seek liberty here).  Further, since I do not speak the language, Myanmar is not on my list of places to invest or even visit.

Thank you for the piece from a place we read little about.  That is one of my favorite reasons for reading ZH, the insights people pass along from different places as well as from the little known cracks in our very own system here.

Sun, 04/04/2010 - 14:18 | Link to Comment Gordon_Gekko
Gordon_Gekko's picture

Don't take my comment the wrong way (I wouldn't write that long a comment if the post wan't worth it :-)) - I think the piece you wrote is just awesome - but by writing that comment I was also trying to clear some things in my head. I'll just say that cash and carry is good but it doesn't mean good things are happening for the people UNLESS the cash is not a fiat currency, in which case it is perfect. I think we're getting there as a society i.e. complete and total repudiation of fiat currencies all over the world with the subsequent reduction in oligarchical powers.

Sun, 04/04/2010 - 16:37 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

You can actually set up new co-op banks on an emergency basis in a NY second.

You need brave politicians with brass cojones. I hate to see so many talented politicians sell their souls to the devil where they could have been hailed as heroes.

Where are you brave ones? "We the people" will exhalt you to an apotheotic state of divinity and you legacy will be eternal. Where are you? Show yourselves. Glory and appreciation is higher than ill obtained riches.

All you have to do is appear on all TV shows and just tell the truth. Just say that you will close the evil big banks and either abolish or audit the FED. Turn the tide on the banksters.  

 

 

 

Sun, 04/04/2010 - 23:35 | Link to Comment dark pools of soros
dark pools of soros's picture

but Gordon, we all know they have to sell out or just get invaded

Mon, 04/05/2010 - 02:14 | Link to Comment Gordon_Gekko
Gordon_Gekko's picture

Yup - and we'll shove some much needed "freedom and democracy" down their throats...

Sun, 04/04/2010 - 06:13 | Link to Comment Ruth
Ruth's picture

Thank you Chindit, this brings music to my ears!  oh wait, that's marla and jana, sorry, but it did make my heart soar!

Sun, 04/04/2010 - 08:00 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

This is a correct statement that few outside ZH understand:

"Yes, the collapse of the financial system would have had dire consequences---for the ones who caused its near demise.  Their world almost did cease to exist, and it would have eviscerated them, one and all.  Sadly, we lost an opportunity." (italics added)

Had someone bold and not utterly in thrall to the bankers been in a position of power, in September -October 2008 we had the opportunity to reshape  the system - and I guarantee it could have been done with surprisingly less trauma than you might think. Think of the resources marshalled to put Humpty Dumpty back on the wall, and what could have been accomplished.

Sun, 04/04/2010 - 09:21 | Link to Comment Hansel
Hansel's picture

+1984, we can dream, but the reality still sucks.

Sun, 04/04/2010 - 12:43 | Link to Comment Miles Kendig
Miles Kendig's picture

Driving it home as Ned out does Tiger off the tee.

Sun, 04/04/2010 - 08:33 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

Speaking of the shooting range, there is no recession in the guns n ammo business. I now go shoot during the week to avoid the worst of the crowds. Even so, the place is packed, hardly a parking spot and lots of new shooters (which makes me nervous enough about being shot by a newbie that I now wear a bulletproof vest). I wonder where they get the money to burn through all that ammo.

I'm going to have to start going at 5 am.

Sun, 04/04/2010 - 12:15 | Link to Comment Isleman75
Isleman75's picture

no recession in the guns n ammo business

So much so that it has been hard to get components to even make our own ammo. People hoarding everything from primers to bullets and powder, combined with some companies operating at max capacity solely for the government machine results in the common man (me and many others without the luxury of infinite funds) having to pay out the wazoo when and if components become available...

Sun, 04/04/2010 - 23:31 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Tuesday is my day at the range with:

Mr. 9mm Beretta (stainless steel)

Mr. 7.62x39 AK-47

For every round I shoot, I'll buy two.  Building up my stock of ammo.  Sort of like I did with gold!

Sun, 04/04/2010 - 09:36 | Link to Comment Everyman
Everyman's picture

"THREE totally AWESOME quotes:

"If you are a typical ZH’er, spending your weekends at the range with your Beretta or sharpening the tines on your pitchfork, then welcome to SE Asia and the world of your wildest fantasy."

AND:

"Their world almost did cease to exist, and it would have eviscerated them, one and all.  Sadly, we lost an opportunity."

AND:

"As most of you believe, if not know for a fact, Wall Street adds precious little value to the greater good of the human species.  It’s a nice place to visit but I wouldn’t want to live there.  I mean Wall Street, not Burma."

 

BEAUTIFUL PIECE!

 

Sun, 04/04/2010 - 12:29 | Link to Comment Problem Is
Problem Is's picture

Agreed. Classic sarcasm.

Sun, 04/04/2010 - 09:39 | Link to Comment Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Funny, interesting piece.  thx

Sun, 04/04/2010 - 09:40 | Link to Comment Lndmvr
Lndmvr's picture

A loanshark may break a few bones and leave ya to be an example to the locals, but a banker will steal your future and and by ruining your credit rating make an example to the world.

Sun, 04/04/2010 - 13:32 | Link to Comment williambanzai7
williambanzai7's picture

Being in an Asian massage parlor flap jacker is just like being a banker for the following well documented reasons:

1. You work very late …
… Just like bankers.

2. They pay you to make the client happy…
… Just like bankers.

 

3. You are rewarded for fulfilling the client’s dreams…
… Just like a banker.

4. Your friendships fall apart and you end up hanging out with people in the same profession as you…
… Just like a banker.

5. When you have to meet the client you always have to be perfectly groomed…
… Just like a banker.

6. But when you go back home it seems like you are coming back from hell… … Just like a banker.

7. The client always wants to pay less but expects incredible things from you…
… Just like a banker.

8. When people ask you about your job, you have difficulties to explain it…
… Just like a banker.

9. Everyday when you wake up, you say: “I’m not going to spent the rest of my life doing this.”
… Just like a banker.

10. You both make a living screwing other people...

BTW: There is one salient similarity between our crony capitalist system and the regime in Burma, both forms of government allowed thousands of its citizens to drown and starve in the aftermath of giant tropical storms.


Sun, 04/04/2010 - 10:32 | Link to Comment taraxias
taraxias's picture

Thanks for posting this Chindit. Interesting and thought provoking piece although judging by some of the posted comments some have totally missed the point you were trying to make.

Sun, 04/04/2010 - 11:50 | Link to Comment chindit13
chindit13's picture

I see what you mean.

Sun, 04/04/2010 - 10:53 | Link to Comment MarketFox
MarketFox's picture

TD, scores another TD.

A developed country is a more levered country.

This relates to the fact of more liticiousness with regards to property rights, which at the end of the day, transalates into less freedom for the populous overall.

Do note that the less developed countries offer fewer financial freedoms, but more "everyday" types of personal freedoms.

As one relies more and more on their government, their price becomes loss of general human everyday freedoms.

Most developing countries do not even offer many credit cards, long term mortgage loans, easy auto loans: and thus do not have the means to over-lever themselves. However where over-levering is possible ie the governments themselves, they do just that.

In other words, if they can, they probably will.

 

So there are parts of the world without banks for individuals, but it is their governments which have access to outside banks that get them into financial trouble. Just another "weak hand" to be smacked at a later date by an interested "stronger hand".

 

Sun, 04/04/2010 - 10:55 | Link to Comment Reductio ad Absurdum
Reductio ad Absurdum's picture

"So there it is. A world without banks. It could have been us."

Really?? We could have been Burma?

What a moronic world view. You know what else doesn't exist in Burma? Freedom. "Burma remains under the tight control of the military-led State Peace and Development Council."

But it's the Peace Council! What could be bad about that?

For your moronic ramblings I hereby sentence you to live in Burma, sentence to be carried out immediately.

Sun, 04/04/2010 - 11:47 | Link to Comment chindit13
chindit13's picture

Yes, some people missed the point.  Thus, it bears repeating:  if we had let the big banks fail, the ones who suffered the most would have been the ones who caused the problems, but the society and people would have survived.  Seems fair, no?  The people who had saved and acted responsibly would have had the money to come in and pick up the pieces, and more importantly would not have had to pay for errors they did not make.  People might also have learnt that foregoing immediate gratification, especially when one cannot afford it, is simply prudent.

I used Burma as an example because it both lacks a modern banking system and has one of the harshest environments on the planet (plus I do live there).  Despite that, its economy has developed, and the standard of living---while not up to typical western standards---has climbed markedly over the last decade.  The US is infinitely further along in terms of infrastructure and ability to be competitive in the world, so absent the big banks the recovery could have been rapid, rather than the woeful end-of-the-world scenario those with much to lose used to scare us into opening our wallets.  The system would have re-invented itself after a period of dislocation, albeit having learned lessons.  Instead, we pulled out every stop to save the very same system and players that brought about the collapse.  That is simply stupid, and undoubtedly will come back to bite us on the arses again. 

So Burma is used as a means of contrast, and to offer an example of the power of the human spirit to exist under any and all circumstances.  Our leaders, sadly, would have us believe we would have all shriveled up and died if we let BAC and C and the rest of them go.

If me paying for AIG's, BAC's, Countrywide's, FNM's, etc., mistakes is "freedom", then I would like to see the menu again and make another selection.  But if you think that is a good thing, then I'll return the favor and hereby sentence you and your offspring to work the rest of your lives to support the lifestyle of Lloyd and Jamie and the next Angelo.

Sun, 04/04/2010 - 12:39 | Link to Comment Miles Kendig
Miles Kendig's picture

I would advocate that there is no such thing as a failureless system, regardless of how hard some may wish that this time is different. The failure to permit "systemic" failure has rendered far greater havoc than whatever the results of the failure would have been, then. All human systems eventually fail as human theory meets human conduct!

Sun, 04/04/2010 - 12:46 | Link to Comment Hulk
Hulk's picture

+1000

Excellent piece chindit13, as usual..

Sun, 04/04/2010 - 11:00 | Link to Comment bullchit
bullchit's picture

Cracking piece. Well done.

Regards.

Sun, 04/04/2010 - 11:12 | Link to Comment bullchit
bullchit's picture

You're as free as your MSMs tell you you are.

The USA (amongst others) is a big factory farm and you're the livestock.

Regards,

Sun, 04/04/2010 - 12:18 | Link to Comment bchbum
bchbum's picture

I've been to Burma many times.   There are no ATM machines there, since there are no banks.  The reason for this is that the military junta in charge believe that the kyat (jat) is worth a lot more than the rest of the world.  Banks are forced to use the govt's exchange rate and thus can't operate.  You have to go to a market and there are guys who exchange dollars or thai bhat into kyats.  The biggest bill there is less than a dollar.  Very poor and completely corrupt country.

Sun, 04/04/2010 - 12:26 | Link to Comment Problem Is
Problem Is's picture

Excellent informative post. +1

Facts and figures on the ground instead of a talking head talking out his ass... where the idiot "expert" has never been outside the NY studio or to the region he pontificates on ... think Lies-man.

" despite the odd fact that 35% of its standing army will be involved in guarding the two lines."

So Does 2/3 of the US Standing Army Abroad

So what is so odd about that? The plans for an Afghanistan pipeline have been on the drawing board with the neo-con-men/ oil lackeys for over a decade and well before before "9/11." US military invasion planning centered around securing Iraqi oil pipelines and installations as priority #1 (FOIA).

The US has at least 820 known military installations with at least 290k troops stationed in 135 countries (out of 192)...

The function of the US military abroad is to enforce US corporate rule and profits, not to protect you and me in spite the incessant propaganda to the contrary. And don't start that "US as world cop" crap.

US Corporations Should Pay for the US Military Abroad

The greatest externality of our life time. Massive $1 trillion a year military budget is comprised of corporate welfare to war contractors (GE et al) and installing US corporate rule abroad... the same US corporations that fuck US citizens on a daily, weekly, yearly, lifetime basis.

So why are US citizens footing the bill? Corporations should pay the US war bill through taxation since they are the ones that benefit.

If you want defense at home... I would suggest the classic Browning HP 9mm and the good ol' M1 Garand... But I digress...

Sun, 04/04/2010 - 12:43 | Link to Comment Rick64
Rick64's picture

As with anything in the hands of mankind greed will overcome any good. Banking in itself is not destructive, but if not used correctly becomes an destructive institution. I don't think credit is bad, but easy credit is very destructive as demonstrated by our government.

Sun, 04/04/2010 - 12:29 | Link to Comment darkpool2
darkpool2's picture

part of the problem is that the average person in the "developed" world has such a hard time thinking and imagining outside the box. "You" are indoctrinated beyond belief by the MSM and the political system. 

Sun, 04/04/2010 - 12:31 | Link to Comment Miles Kendig
Miles Kendig's picture

Chindit13 - I have enjoyed your contributions for some time and this effort at engaging & expanding the debate did not disappoint.

Sun, 04/04/2010 - 12:37 | Link to Comment brown_hornet
brown_hornet's picture

About 12 yrs ago, during a time of severe working capital shortage, I parted with my sanity and went into one of those "cash loans for car title" places.  Their deal was " we will loan you $2,000 today and in 30 days you will have to pay us back $2,500."  Twenty five percent per MONTH.

Needless to say, I explored other options.

Surely they would not have broken my legs if I didn't repay, but it made me think I would have a better chance with a loan shark.

Sun, 04/04/2010 - 12:41 | Link to Comment Miles Kendig
Miles Kendig's picture

Sounds like OECD member government funding...

Sun, 04/04/2010 - 13:14 | Link to Comment Frank Owen
Frank Owen's picture

Thanks Chindit13. Great insight into a place most of us have never seen. It's interesting to note that with an average income of $250/yr it would take 80 years to save up enough to buy that 30 year old Toyota wagon, and that is assuming they can save all their money without any expenses for 80 years which is unlikely to say the least.

Sun, 04/04/2010 - 15:35 | Link to Comment b_thunder
b_thunder's picture

$20K for a 30yr.old car?   With the average GDP per capita  $1200 according to CIA? https://www.cia.gov/library/publications/the-world-factbook/geos/bm.html  - most fascinating!

"Their currency was the world’s strongest currency in 2009" but they've just introduced 5000-kyat note? Even more fascinating! (or did you happen to use the "official" exchange rate to make a point how great non-banking economy can be, while in reality inflation is much higher?  Looks like you're  up to your old wall st. tricks, my dear!  Repo-105 stuff, you know?  )

Anyway, without arguing about benefits of the banks, I have  a question:  according to you, the whole economic growth deal is based on metal mining (extremely harmful for everyone who happens to live there, just google Norilsk nickel), energy resource extraction, and chopping down forests. 

This may very well be so, but traditionally and increasingly Burma is know for two other businesses, which also traditionally and incresingly involve western tourists and  ex-pats.  The same CIA web site, https://www.cia.gov/library/publications/the-world-factbook/geos/bm.html , describes them as the following:

"Burma is a source country for women, children, and men trafficked for the purpose of forced labor and commercial sexual exploitation; Burmese women and children are trafficked to East and Southeast Asia for commercial sexual exploitation, domestic servitude, and forced labor"  (BTW, is this what you mean by writing "welcome to SE Asia and the world of your wildest fantasy", 'cause so far I've yet to see any westerners except the journalists going to Burma for other reasons... and U R not a journo. )

and

"remains world's second largest producer of illicit opium with an estimated production in 2008 of 340 metric tons, an increase of 26%"  - yep, you sell 340 metric tons of heroin, sure as ehck you can afford $540K Lancruiser.

So, in which of these industries (stealing natural resources while poisoning the people, the "alternative" tourism or shipping dope to the West) do you, using your own words, "try to find a way to add value"? 

 

Sun, 04/04/2010 - 19:44 | Link to Comment chindit13
chindit13's picture

Again, Burma itself is secondary to the purpose of the post, as explained in an earlier comment.

That being said, let me relay a story that hits on some of the "facts" you note:

In 2003 the US imposed the first of its heavy sanctions against the country, banning the import of all goods produced there into the US, and prohibiting investment by US firms or citizens.  Various Congresspeople applauded themselves, as they are wont to do.

Immediately somewhere between 100K and 300K, mostly young women and young mothers, lost their jobs because they worked sewing clothing exported to the US.  The ostensible target of the sanctions---the Myanmar Government---was not impacted at all;  in fact, this move drove them closer to China.

Children were pulled from school because without the breadwinner working, families could no longer afford books, uniforms and fees.  Other children lost battles to easily curable diseases because the money needed to buy medicine was gone.  Far too many young women and girls used the only asset they had to try to earn money, which means many ended up in the brothels of Thailand, Malaysia, Macau, etc.  Sanctions were applauded in these places, too, for an obvious and mercenary commercial reason.

I remember speaking with a young mother, newly unemployed, distraught about not being able to pay for her kids school.  She asked, "Chindit, why does your government hate me?"

As noted in the piece, Chevron (then Unocal) received an exemption from the very same Congresspeople applauding themselves for their "belief in freedom and democracy", even though the combined textile plants might have put upwards of a few thousand dollars a year into government coffers while Unocal/Chevron's gas pipeline puts 25% of all revenues.

After the street protests of September 2007, the US further strengthened sanctions against the country.  Chevron, originally included in the bill, got itself exempted yet again.

As for men going there for the reasons you note, I rather regret one of my opening lines in the piece, which was in bad taste.  In point of fact, most come as tourists, some come on business (not every country has sanctions).  Many others come offering private donations to people and organizations trying to improve the lives of the average person there.

Incidentally, the US is continually trying to impose a morality or an economic discipline on the rest of the world that the US itself lacks.  The world calls bullshit.  China vs. Burma re sanctions.  Chevron.  Democracy demands in Burma vs. Saudi Arabia's monarchy and prohibition (with capital punishment for violators) against the practice of any religion other than Islam, Geithner's tenure at IMF and the 1997 Asian Finacial Crisis, Japan's 1990 collapse and the advice given by the USG, etc.

Sun, 04/04/2010 - 20:05 | Link to Comment seventree
seventree's picture

We've been trying to free the Cubans by starving their government for most of my lifetime. No luck yet but we will keep trying until it works.

Mon, 04/05/2010 - 01:20 | Link to Comment b_thunder
b_thunder's picture

Wow - this reply is far less euphoric than the original post.  And, it seems to me far more realistic.  I will agree 100 times out of 100 on the subject of american hypocrisy.  And the uselessness and criminality of the parts of our banking system. But is the USA the casue of all world problems?  There are so many examples where USA is being blamed, where in reality it's done nothing wrong.  Venezuela comes to mind.  The country will be totally destroyed before the next election (**if** there will be an election.) 

So if the USA/Burma sanctions caused new unemployment in 2003, how do you reconcile the booming business of nat. resources that you've described and what we're led to believe is China's istatiable "appetite"  for every kind of raw material, and dirt poor country which is rich in all commodities that sits right on the on the China's doorstep? Wouldn't the exporters to China hire all those unemployed? 

Burma wasn't exactly paradise before sanctions.  Let's use your excellent narrative skills to give fair picture, including military rule, drug trade, etc etc etc.

 

Sun, 04/04/2010 - 15:45 | Link to Comment John McCloy
John McCloy's picture

   An uncle of mine used to work for a private security firm here in New York that once a month would rotate to different boardrooms and work overnight sweeping for bugs, checking telephones and securing them for commission like meetings of all of the large Wall Street firms with roughly 25 people in attendance. Sometimes it was Bear, Morgan and Lehman. He told me this for the first time last night and said " it was at these meeting that they would carve up the world and nearly every event that occurred in the markets was orchestrated along with leaks to the media:.

Sun, 04/04/2010 - 17:07 | Link to Comment Double down
Double down's picture

More, please.

Sun, 04/04/2010 - 17:16 | Link to Comment buzzsaw99
buzzsaw99's picture

The world won't be safe until there's a million dollar bonus on all their asses.

Sun, 04/04/2010 - 17:51 | Link to Comment excellent
excellent's picture

Hehehe I do appreciate the time you spent writing this piece as I enjoyed it very much.

Sun, 04/04/2010 - 18:33 | Link to Comment Uncle Remus
Uncle Remus's picture

Splendid piece. Reminds me somewhat of my days in Thailand. As for the bankers, perhaps it is time to rethink Bladerunners.

Sun, 04/04/2010 - 18:33 | Link to Comment billwilson
billwilson's picture

Well....

 

Most of my dealings with "banks" in Myanmar were of the "black market" kind (often at gold jewellers). The true value of the currency has nothing to do with the posted rate.

 

As for the economic situation my mind still is engraved with the folks with their hammers knocking on rocks to make gravel for the new road, followed by women carrying said gravel to the road location in big baskets. My understnadingw as thta this "work" was "voluntary" .... menaing you did it or else.

 

I love the people of Myanmar ... there is no more "softer" place on this planet. But I cry for them as well as the current government is selling the country off to the Chinese who are in an awful big hurry to arpe the place of its rtesoucres at bargain prices before a "people centered" government emerges.

F^ck the generals, and F^ck the Chinese too!

Sun, 04/04/2010 - 19:33 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

STAND AGAINST THE BANKS!  THEY ARE THE ENEMY!

I want to say it will happen Tuesday, but these damn treasurie issuances are "M"asking the "M"arket; ISIS is VEILED, she is wearing pink lip gloss and listens to Lady "MA" GAGA on repeat.  I will go out on a limb and say HYPERINFLATION/HYPERDEFLATION will become apparent on Tuesday (FOUR SIX TEN, 4.6.10).  If this week goes the way the US "Government" (CORPERATION) wants, it will be delayed a week or so.  Judging from fundamentals/technicals, another massive issuance this week WILL most likely delay the imminent.  However, the apex is fast approaching.  OVERSTAND THIS; THIS ISSUE HAS MANY COMPONENTS.  They include; peak oil, PEAK ENERGY, peak gold, peak steel, peak silver, PEAK FOOD, PEAK WATER, the drug trade, devaluation of all currentseas, soveirgn debt, over priced real estate, the complacency of America, the greed of the oligarchs, and the dumbness of politicians.  Once the "HFI" hits, it's on.  America will think it knows how to play the game....it doesn't.  BE READY BY 4/20/10.  BE READY!

Sun, 04/04/2010 - 19:53 | Link to Comment velobabe
velobabe's picture

Isis, oh, Isis, you mystical child.
What drives me to you is what drives me insane.

bd

Sun, 04/04/2010 - 20:47 | Link to Comment Jim_Rockford
Jim_Rockford's picture

Chindit - Bravo!  Thouroughly enjoyed your style and substance.  I only hope you did not write this on your laptop while sitting at Starbucks.  You might have been mistaken for one of those seeming "to exist alone in their own soul-less world".  Harsh irony.  Rockford//OUT

Sun, 04/04/2010 - 21:35 | Link to Comment chindit13
chindit13's picture

Thanks.  By the way, used to love your show, especially Angel.

Nah, I'm old school.  I people watch, and when discretion allows, pay particular notice to those not of my gender.  Now that I think of it, maybe the tech addicts are actually more polite than me for ignoring everyone.

Sun, 04/04/2010 - 22:04 | Link to Comment velobabe
velobabe's picture

your visual has got my goat†

like the quarterhorse shepherding the thoroughbred to the race†


Sun, 04/04/2010 - 22:04 | Link to Comment chindit13
chindit13's picture

If you mean my avatar, it's Charles Orde Wingate.

The history of the Second World War in the Burma theater is full of characters like Wingate, Slim, Stilwell, Merrill, Cochrane, the AVG, the "Hump" flyers, and many others.  Having spent a good deal of time in the areas of former conflict there, I never ceased to be amazed at what the people who fought had to endure.  The environment is harsh enough, what with malaria, dengue, cobras and Russell's vipers, tigers and leopards, crocodiles, 45 degree heat and monsoons, impenetrable jungles...but being shot at, too, just makes it all too much.  It's a wonder anyone, especially a 56 year old like Stilwell, walked out alive (literally).

Mon, 04/05/2010 - 08:59 | Link to Comment velobabe
velobabe's picture

A highly religious man!

 

sorry, that really scares me, don't have the depth.

fuck you kinda sound like the buddha

also gained a reputation as a late payer of his bills

Wingate set off in September 1927 by bicycle - velo

ok you got my attention, now

Zionist leaders

Chindits and the first long-range jungle penetration mission

oh my god the visual is cracking me up

how the mind works'

a corrupted version of the name of a mythical Burmese lion

he would consume raw onions because he thought they were healthful,

oh my god i am really into this man†

AUDIos it is late

WHAT a fantasy†

A fictionalised version of Wingate called "P.P. Malcolm" appears in Leon Uris's novel Exodus.

his ex-wife, photographer Jill Uris, said today from her home in Aspen, Colo. uhm, i knew her slightly.

 

 

Sun, 04/04/2010 - 20:58 | Link to Comment buzzsaw99
Sun, 04/04/2010 - 23:38 | Link to Comment dark pools of soros
dark pools of soros's picture

gotta love Taibbi...  his days pissing off Russia with the eXile has given him the balls to attack GS, etc...  but will the sheeple ever act out?? I understand Mike Moore doesn't seem to inspire anyone even though his last movie had lots of eye openers, perhaps Taibbi can get involved with SOMETHING that can snowball into some action

Sun, 04/04/2010 - 23:58 | Link to Comment buzzsaw99
buzzsaw99's picture

They have the bribery on tape and yet only the locals go to jail. Amazing the "shit" those assholes get away with.

Sun, 04/04/2010 - 23:27 | Link to Comment laughing_swordfish
laughing_swordfish's picture

Chindit:

Great Piece. And I've been to Burma (as it used to be called pre-coup).

Beautiful country - beautiful people, but soon to be gobbled up by China.

And that wouldn't be the first time. Since you know your history, you know that the "Burma Road" was started pre-WWII by Chiang Kai-Shek, who used forced Chinese and Burmese labor to build it. His plan was to force the British out and take over the place, but the war intervened and you know the rest..

During WWII my father served as a liason officer to Mountbatten, met Wingate and Stilwell in the course of his duties, and was deeply impressed by the character and quality of these men. His chief regret is that the "system" in both the US and UK is no longer capable of producing their like any longer..

And, just as you use "Chindit" as your avatar to symbolize something brave and noble, so do I use "Das Boot", "Laughing Swordfish" and "9er U-Boote Flotille" in a similar manner.

 

KrvtKpt. laughing swordfish

shoreside for now

 

 

 

 

Mon, 04/05/2010 - 07:14 | Link to Comment ToNYC
ToNYC's picture

Public servants or regulators crossing to the other side; like nuns taking sabbaticals at whorehouses. Start with nobility, end up in the mud. You can tell the King because he is the only one without shi*t all over him.

Mon, 04/05/2010 - 00:02 | Link to Comment Narcolepzzzzzz
Narcolepzzzzzz's picture

Nice piece Chindit. Always enjoy your posts.

Look forward to more!

Mon, 04/05/2010 - 02:48 | Link to Comment AnAnonymous
AnAnonymous's picture

They have no banking system and a soil full of resources? Good. They will be funding the future of people who have an extended banking system and who can pour the world with money acquired through loans.
"Gimme your natural resources and I will give you the money I got through credit."

Tue, 04/06/2010 - 03:16 | Link to Comment fl3tch3r
fl3tch3r's picture


Up until 2004 we had a rapidly expanding private banking sector with Yoma Bank, Kanbawza Bank, Asia Wealth Bank rapidly expanding the number of branches, investing in VSAT networks to speed up the remittance process, debit cards and so on, but this all came to an end with a rumor that created a run on AWB and then spread to the others. The gov't then used this as an opportunity to close a number of the banks down, due to the owners involvement in the heroin business.

This does of course beg the questions as to why they were issued banking licenses in the first place, and whether or not there was outside pressure to close them down. None of the banks actually failed though, they were taken down. Since then the remaining banks are crippled whilst still having to pay interest on deposits, whilst at the same time being unable to make any loans.

An amusing story is that one of the banks was building their new head office, and after construction had started the owner wanted to move the vault from the basement to the 1st floor. However some quick calculations for the volume and weight of the bales of money indicated that the 1st floor would have collapsed long before the vault was full. So the vault remained in the basement as originally planned. The vault itself included a top of the line door built and installed by Chubb and providing the highest level of security. The only problem was the walls to the vault were originally built solely of brick and cement, although I hasten to add that this oversight was quickly corrected.

In terms of cars I believe we must be one of the only countries where cars are considered investments, and where their value goes up as they get older. It's taken me over a decade to get my head round that one.

BTW Chindit, ever drink at the Savoy?

Sat, 04/10/2010 - 05:42 | Link to Comment mark456
mark456's picture

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