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The Bonds of State
Written by Gavin Chait
Hilary Clinton, US Secretary of State, visited China and “pleaded with her Chinese hosts to continue purchasing US bonds, of which China now holds close to $700 billion,” as the Asia Times put it.
Promises have been made and now governments have to figure out how to finance them.
An estimated $3 trillion of stimulus spending has been promised by governments around the world. That is an extremely large amount of money, and taxpayers will finance it over the long-term.
However, where does the money come from in the short-term?
When you spend money on your credit card, you borrow it from the bank immediately, and pay it yourself from your future income and over a period of time. But this crisis is caused by banks being unable to lend, so where are governments to get the money?
Read more: The Bonds of StateThe spectre of economic nationalism
Written by Gavin Chait
Many politicians are falling over themselves to draw parallels between the present economic crisis and the Great Depression of 1929 to around 1940.
The comparison should be more chilling than you realise. The original market collapse in 1929 was triggered then, as now, by highly over-inflated share prices. Then, as now, governments stepped into the breach to intervene.
One such intervention was signed into law in June 1930. It was the Smoot-Hawley Tariff Act. A petition signed by 1,028 of America’s top economists begged US president Herbert Hoover to veto the bill. JP Morgan's chief executive, Thomas Lamont, said he "almost went down on my knees to beg Herbert Hoover to veto the asinine Hawley-Smoot tariff."
Despite this, the Act was signed and the US raised tariffs on 20,000 imported items. Overnight, US imports from Europe declined from a 1929 high of $1,334 million to just $390 million in 1932. This was precisely what the protectionists had hoped for. However, protectionism doesn’t happen in a vacuum and European governments promptly instituted their own tariffs. US exports to Europe collapsed from $2,341 million in 1929 to $784 million in 1932.
Overall, world trade crashed by more than 66% between 1929 and 1934.
Read more: The spectre of economic nationalismMoney, Zimbabwe and the Credit Crisis
Written by Gavin Chait
Cheque-books used to be part of the normal flim-flam one would carry around. Very few places accept cheques these days and those that do want some serious ID and confirmation that there are funds supporting your signature.
A cheque really is a license to print your own money. It’s a printing press in your pocket. You could write out hundreds of cheques, as long as people are able to cash them.
The credit bonds issued by companies are a bit like post-dated cheques. Give me the goods today and I'll pay a higher price if I can postdate my cheque to next year. So, you write out a cheque for R100 dated one year ahead, and take goods worth R80. That person can hang on to the cheque, but what happens if they also want the money now? Well, if other people are confident in that cheque being paid, then he can sell it on. Maybe he takes R85 for it. The next person sells it for R90. And so on until someone eventually decides to keep it and wait for redemption.
And that is an alternative currency. You "invented" the money when you signed the cheque. But it is still representative of real value.
Read more: Money, Zimbabwe and the Credit CrisisYouTube can be a Star
Written by Gavin Chait
In June 2006, a 16-year-old girl by the name of Bree began posting short video clips of herself to YouTube, the extremely popular online video site. In that month alone, YouTube reported that 2.5 billion videos were being watched.
Bree should have been just another teenage girl with a video diary that hardly anyone bothered to keep track of. Instead, within a few months, hundreds of thousands of people were tuning in to watch the four or five diary entries she posted, as lonelygirl15, each week.
It helped that Bree is pretty and lively, but people were also fascinated by what appeared to be an evolving story. Bree was home-schooled and her parents belonged to a never-explained occult group. Her peculiar relationship with her best friend, Daniel, seemed to be the beginnings of a teen romance. The secrets that she felt her parents were keeping from her, the complexity of her life, had the feeling of a soap-opera. It was addictive watching.
Read more: YouTube can be a StarSteve Jobs, Apple and the CEO's Dilemma
Written by Gavin Chait
The images are striking. A line of figures dressed in identical blues and greys, marches through a tunnel, observed everywhere by cameras and televisions featuring the face of Big Brother. Through another tunnel, pursued by armed guards, races a young blonde woman, carrying a massive metal mallet.
We zoom in on an auditorium with a massive screen where Big Brother is declaring the power of authority over individual thought. As his voice rises to a crescendo, our heroine hurls the mallet through the screen, which fades to black.
"On January 24th, Apple Computer will introduce Macintosh. And you'll see why 1984 won't be like ‘1984’."
The “1984” advert catapulted Steve Jobs into the public domain. His determination to marry high technology to high design won him many fans, but his products were frequently too expensive, too far reaching.
Read more: Steve Jobs, Apple and the CEO's DilemmaPage 19 of 54
