Bruce Krasting's picture

I got a laugh out of this headline:



Delta Airlines and the Pilots Association are suing the Exim bank for financing Air India. I think they have a great case. I hope they win.

Exim gives cheap money to India so it can buy Boeing planes. This story “sounds” good as exports mean jobs and business is booming at Boeing. You can count on Obama showing up in Seattle sometime, and crowing about all the jobs he has created thanks to the cheap money deals.

I wonder what he will be saying to the folks who work for the airlines. They don’t get cheap money, so they can’t buy the new aircraft they need to compete with the likes of Air India on the profitable transatlantic routes. (The basis for the suit.)

The only winners in this story will be the lawyers. The losers will be “us”. We will pay for it in the form of higher airfares, more debt and deficits.

Is this an example of an unintended consequences, or just stupidity?





A Greek, a Portuguese and a Spaniard are talking to god:

The Spaniard and the Portuguese ask, “When will our countries be free of debt?”

God answers, “In 100 years for Portugal and 150 years for Spain.”

The Iberians respond in dismay, “But, our children's children will be dead by then.”

When the Greek asks God the same question for his country, God answers, “I don't know — I'll be dead by then.”




Paper Money

Lee Adler at Wall Street Examiner has some interesting data on the amount of printed money outstanding:



Two things caught my eye. The recent percentage rate of increase has not been seen since the crisis days of 2008. The second thing is just the sheer amount of paper money “out there”.

I have only questions regarding the rate of increase. Are these 100-dollar bills ending up in the USA? Or are they going out of the country? Are they being used to transact business? Or are they being used as a store of wealth? I believe it is all of the above.

The $1.05 Trillion of outstanding currency comes to 7% of GDP. That is up from 5% in 2007. The increase of $300 Billion represents a 40% increase while the economy was basically flat. If this was all in 100-dollar bills it would stack up 700 miles high. Didn't Bernanke say the Fed wasn’t printing money?

He's increased that pile by 250 miles. He's printed enough to carpet all of D.C.

Gold has had a nice goose of late. There are many reasons for it to reprice higher. Deep in the corner of the demand is all this paper sloshing around. Sooner or later, it will seek  to hide somewhere safer than in paper under a mattress. I suspect some of it did today.


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NEOSERF's picture

How's that Euro short trade working for you...told you, you can't fight central banks desire to keep the status quo and that money has no where to go (thanks to central banks) but into the stock market no matter what the deterioration in fundamentals and earnings...this will go until something real happens

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Shigure's picture

Thanks for the Steve Bell cartoon - brilliant

johnQpublic's picture

who the fuck cares about the airlines?

i will never fly again while TSA inhabits our airports


and isn't that the point anyway?

do them thar theys really want us to travel any more ?

GoldmanSux's picture

Who is Exim Bank. Where are they from?

falak pema's picture

Japan MITI and its government run import-export bank, EXIM, creamed the world in the 70s. Everybody tried to copy them to link trade and export perks to improve balance of payments; a protective tool disguised as financial incentive and guarantees to encourage corporates to go oversees.

WTO looks down on them as unfair trade practice subsequently, in certain conditions, whence law suits in this instance against US Exim bank which benefit Boeing but hurt US international airlines. Apples n oranges, protectionism is Sophie's choice!

OldTrooper's picture

So, you mean it is somehow illegal for an agency or instrumentality of a government to bail out, make loans to or prop-up a stagnant or failing industry to the detriment of a foreign entity?  Is that really a precedent we really want to set?  And does anyone else see a parallel between US application of law and the Pirate's Code?

Dermasolarapaterraphatrima's picture



ECB has been doing its share...."immense expansion in the ECB balance sheet over the past few months." Take at look at this expansion in chart form by Murray Dawes:



Source: Sound Money. Sound Investments I would not be surprised if oil, gold, silver food and so on continue rising in price as the money supplies continue to expand. Imagine the prices when the ECB prints the next $500-to-$1000 Billion euros.  Great work Bruce. I really like the chart to supplement the wrticle and drive home the point of monetary expansion. Helps me understand on a deeper level somehow when I see the graph/chart. Thank you.


StychoKiller's picture

But pundits on CNBS have stated that Gold is THE bubble to worry about!  Bwahahaha!

ISEEIT's picture

We all have 'good fun' observing this 'transformation' eh?

What kills me is extending the timeline.

Pattern recognition is a bitch.

Stuck on Zero's picture

Real jobs could be created if the Fed would give Boeing money to build 747 freighters to haul the newly printed cash to Sikorsky.  Sikorsky could then drop the money all over.  Problem solved.

rlouis's picture

From various conversations with acquaintances over the last 4 months, those who can have put a fair amount of currency in SD boxes.  Watch out when it comes back into circulation again... it's not likely going to be due to increased confidence in the system.

chindit13's picture

The EXIM credits to Air India are kind of like a golf handicap, which just tries to level the playing field rather than give an unfair advantage to a foreign competitor.  India has a long running scandal where it has been discovered lots of commercial pilots, including many for Air India, falsified their training and flight records, meaning that on an Air India flight a passenger might be relying on someone barely out of a Cessna-152, if even that.  So long as every aircraft is WAAS enabled, has a great autopilot, lots of system back-ups and redundancies, and is going to land at a CAT III ILS equipped airport, in VFR conditions, all should be okay.

OldTrooper's picture

Very reassuring.  I'm almost tempted to consider maybe someday possibly getting on one of those planes.

disabledvet's picture

airline industry nationalization is right around the corner. so may be the nationalization of the trucking industry. if the Iranians decide to 'take a pot shot" at the Saudi oil fields well...

onlooker's picture

This is a grabber format Bruce, really nicely done.

ebworthen's picture


More lawyers?  Oh, that will help.

I've given up on the law and politics and society other than my own sphere of influence.

I've rasied the Jolly Roger for me and my kin.

booboo's picture

OH, GLASS!! turn the desert in to GLASS, I thought cash sounded kinda funny sir, well then we have a small problem.

Zer0head's picture

the screamer will go for $220m

you learned it here first

money badger's picture

You mean they didn't even have to break a window and we're still helping them buy new glass ??!!  In-freaking-credible.

Zero Govt's picture

"I have only questions regarding the rate of increase. Are these 100-dollar bills ending up in the USA?"

No the US Military "lost" the first tranche of pallets of $100 bills to Iraq The Fed had to print some more (bribe money)

Not a problem, nobody sacked in the US Military or US Defence Dept and no investigation under way (just like Rumsfelds 'missing' Billions)... these things 'just happen' you understand, all staff are highly competent and beyond question just like every other Dept of the US Govt for life (no matter how totally shit or corrupt you are) in Washington. No wonder the areas property is holding up throughout recession, there's probably pallets of cash under every house

oldman's picture


Some of it may be coming back from being washed in Mexico, Columbia, and Peru-------and some may be a bit of the 'counterfiet' printed from those plates that were lost about ten years ago----probably the same money-----I mean how does the govt. lose this stuff?

I'd write a fictional account of this comedy, but the real story has to be a whole lot more fun and unbelievable than a work of fiction.


can't make it up                   om

StychoKiller's picture

Hmm, those poppies in Afghanistan don't harvest themselves...

Stack Trace's picture

I caught my wife reading "End the Fed" and "Paper Money" this week. It gave me wood.

ihedgemyhedges's picture

Getting wood is a good thing.  But if you've been married long enough, you know that the axe will come out and chop down the tree prematurely and for no good reason................that's why a good forester works different tracts of land over his career to find out where the most receptive and fertile are........

OldTrooper's picture

Well said, Hedge.  Perhaps we have both learned that a magnificent stand of old-growth wood needs someone young and appreciative to tend it.  It cries out for someone unspoiled by years of hard labor with the ax, saw and chains to admire and nurture its majesty.  Find such a forester and fresh, gentle winds will lend new vigor to the already impressive wood.

prains's picture

Naah, they'll just cut it down,pulp it,make paper and print money you'll spend the rest of your life working to pay back

falak pema's picture

You have a penchant for woody wood peckers...I can see that. Smart birds. Nice feathers.