I hear you C2. So I have whacked SKF again, selling ANOTHER $60 million of it at around $127 having snoozed through most of the day [being night time here]. So now we are both all out of SKF [other than your lottery ticket] though I am committed to buying it again some time [preferably at about $103]
So now I've got $120 million short on SKF, and that's slightly underwater. Zim the Amazing should be around now.
This reminds me very much of 1987 in New Zealand. The USA didn't really experience the 1987 crash. Sure there was a market drop, but with Uncle Al waving his magic wand and there not being serious debts, within a couple of years it was all over and although things were soft into the early 1990s, there was no huge crunch.
In NZ however, the tightly regulated financial and economic system of socialist New Zealand had been turned loose in 1984 and people went wild and crazy borrowing and buying.
There was a huge 3 year boom.
We were living in London [England] in late 1986 and a neighbour was a financial institution banker. He would fly out to Australia and New Zealand and lend another $20 million or so. Mountains of debt were built in NZ.
In early 1986, my BP New Zealand colleagues would sneer at my boring investment in "making things" [like Qualcomm]. They explained to me how financial engineering was the way to invest, with financial relativity theory gurus swishing through balance sheets, restructuring them, refinancing and mumbo jumboing.
What they were all doing, it seemed to me, was pumping up puff balls with borrowed money and hope. My "making things" investment came through relatively unscathed. In fact I made money buying Brierley shares AFTER the crash and selling before the 1990 downturn.
So, when the inevitable happened, there was a very large crunch which carried on for a decade and the reverberations are still felt today with gun-shy "investors" having abandoned the stock market [relatively] and doing the same again on housing. Simply amazing to see it all happen again.
The housing crunch is just getting going in NZ but it'll be a doozy because productive people are fleeing the country at 700 a day leaving the welfare state bludgers to pay the bills. Bludgers of course are not good at paying bills so the trend is set towards Zimbabwe.
On Sunday, Tarken-san [son] and I drove to Zenbu servers at Maxnet through an industrial area [Albany]. Over half the buildings were for lease or sale. I haven't seen such a sight since 1989 when we came back from Europe and Auckland's skyline was full of cranes. Buildings were plastered in "for sale"
and "for lease" signs.
The bust from 1987 was continuing and more fortunes were lost as the property market went down the gurgler.
In 1987, in NZ, most people didn't own shares, so it was a relatively small crash, [in terms of life for most people in NZ], though plenty of people were wounded in bankruptcies and staff cuts.
Most people in NZ "own" houses and are mortgaged so this could be really icky.
Fortunately for the USA, the Biotelecosmictechdot.com crash was just a few years ago so there was a lot of clearing out then. It's "just" the housing market to be sorted out.
The energy stored in the Twin Towers was large and when they fell, it wasn't neatly. They brought down other buildings too [ignoring silly conspiracy theories] and spread the mess a long way. The financial energy stored in umpty million houses across the USA is very large. When that implodes ... stand well clear.
NZ is tiny so in 1987 there was a vast external economy which meant recovery was just a matter of tidying up here. But the USA is so large that the external economy is only a few times bigger. So China can't prop up the USA economically because it's too small economically and dependent itself on good USA economic performance.
This is the world's biggest ever financial re-engineering and we get to watch it up close and personal, with the benefit of cyberspace making it real time. In 1987, we had to wait for radio reports and news papers. Or go down to the stock exchange and watch the chalkies writing stock prices on a board while everyone shouted.
Now, back to the markets.
Mqurice |
