Thoughts on the crisis, the elections and American habits

Image by jim.greenhill via Flickr

Spanish banks are now among the most valuable banks in the world. Santander and BBVA have market caps simiar to those of Bank of America and Citigroup. Telefonica in the meantime has valuations similar to those of AT&T or Verizon. What is so wrong with America? Or is Spain living in a fantasy and stocks will collapse here as well?

How can the Republicans be so much better than the Dems at managing their communications? Yesterdays Dems voted for the bail out bill, Republicans voted against it defying their own President, their own administration, and still McCain gets away with blaming Pelosi for the defeat. Either Republicans are communication geniuses or Dems are communications morons.

Why doesn´t Obama speak more as a representative of the Democratic Party and not as himself? Why didn´t he in the whole debate with McCain speak of what the Dems did for America in the 90s and what the Republicans did to screw America in the 00s? Doesn´t he understand that on a one to one with McCain on experience he loses? He has to stop the me, me, me rethoric and go for the us in the democratic party rethoric.

Is the Paulson plan the best plan to stop US banks from disappearing? Wouldn´t it be better to have a plan by which the US government inject equity in the banks like Buffet did with GS?

How can the Republicans, who inherit the country with a budget surplus and are leaving it with a financial black hole campaign on Reagan Bush Bush platform that the problems should not be fixed by the government but that government is the problem? How can a huge part of the American electorate believe this and not go for the more responsible public/private mix that Dems are proposing? We now know that the only formula that works for modern democracies is a balanced mix of government, NGOs, independant universities, private enterprise. Why can´t the Dems sell this message in the face of the obvious collapse of the unregulated markets doctrine?

Is there a possibility that the world is not as globalized as we all think and that while all markets fall these months USA falls more and harder? For example yesterday US stocks went down a $1.2 trillion in value but Asian and European stocks are flat today. This means that in one day the relative market caps of the Asian, European and American markets have shifted tremendously against the US markets. This has already happened with the collapsing dollar. When the dollar went from $1 equal 1 euros to $1.43 to the euro in dollar terms Europe´s GDP grew proportionately. So if we measure global gdp in dollars the proportion that USA represents has been shrinking as well even if euro economies grew slightly slower than USA´s economy in this decade. So my view is that we had the Latin American crisis in the 80s, the Asian crisis in the 90s and this is the decade of the American crisis.

What is going to happen next in this crisis? Will the Fed ease credit? Will the Fed take failing banks over? If the Fed keeps giving bad banks to better banks, will they all become bad banks? Will the Senate send a bill to the President? Will the Representatives reconsider the bill they just voted against as the markets keep falling? Will the markets keep falling?

Is this a buy or a sell opportunity? Like the Apple meltdown of yesterday. Apple went from $200 to $100 a share in less than a year while all of us in technology know that more and more people are using iPhones and Macs. Are the markets over reacting or are they predicting a severe recession? Are we losing the opportunity of a decade not to buy shares now?

Should we all take our life savings away from banks? I did. I took all my money away from banks in Europe and USA last week and put them into government bonds of different governments. I know this is almost paranoiac but then these are my life savings. How can I trust banks these days when I am only insured by the FDIC or euro equivalents for a tiny portion of my funds? But following the Categorical Imperative I know that I can´t wish for everyone else to do what I did because banks would disappear. But it doesn´t cost anything to move your funds from bank deposits to bonds that the banks cannot lend. Why not do it in this chaos? I think these days they only safe thing to own is stocks, bonds, and real estate all unleveraged so your net worth goes up or down 10%, 20% but not 50%, or 100% and you are wiped out.

How can the militaristic rethoric of McCain still sell in America? Are Americans so out of it? Don´t they see that what happened to the soviets is happening to them? That they are spending their way to oblivion? Why do they need to spend half of what the whole world spends in the military? How can McCain go to Columbia University and say that the military should be allowed to recruit on campus and think he can win votes saying that? Why do Americans mistrust so many people around the world they could work with? If America pulled out of Iraq it could save $10 billion per month. America simply needs the money. What America should do is protect itself from terrorism in collaboration with other nations, not try to run the Middle East nor the world.

Former communist nations pile up cash. USA bleeds cash. China owns so many US securities that they alone could do the $700bn bail out and end up owning all the biggest American banks. How long will the “i own your debt but keep my mouth shut as to how you run your country” policy go on? Don´t the Americans know that security starts with financial security? They Chinese learned their lessons and started piling up cash not debt. America has do delever big time to continue to be a super power.

When is America going to realize that high oil prices are actually good for America because it will force conservation, resizing of the transportation fleet, investment in alternative energy… America does not have oil period. Why be so resistant to change? Why have the Europeans adapt, the Japanese adapt and the “US Americans” haven´t? An American who changes an SUV for a Prius will cut its gasoline consumption by 70% more than making up for the gas price increases. Many started doing that but now that oil prices are collapsing its the time to tax gasoline so habit changes continue.

Well that´s all folks….