17 Banks since January 1, 2009 does not make a situation where you can claim banks are failing left and right. The fact is yes, there are more banks closing. But the closure of banks is more often a reflection of an FDIC insured bank not meting minimum standards. And in some cases as was the one the closed in Georgia a few weeks back, it was a case of the FDIC declaring that the bank "might" get into trouble due to a preponderance of CRA loans on its books.
It is certainly a faster clip than 2004 or 2007 4 and 3 respectively. But it isn't even remotely close to the failure rates of banks during the start of the Depression. It isn't the same as when FDR took office on March 4, 1933 and immediately declared a Bank Holiday to prevent dozens of banks failing every day. Nor is it even as bad as the Savings & Loan collapse.
The fact is the vast majority of FDIC insured state and local banks are fine and are in no need of even potential bailouts. The N.A. banks are shaky in so far as they are more exposed to the average national trend in real estate and commercial activity due to the very fact they are N.A. banks. As far as cash flows go there isn't much of an issue except when you get to the N.A. banks and the now non-existent investment charter banks. In fact, the shaky nature of the N.A. banks is almost directly a result of them snapping up the investment banks at bargain basement prices.
The issue is that the N.A. banks bought up their main rivals for commercial level banking at a really cheap price. But they didn't suspect the degree to which the mortgage backed securities were no longer fungible so the paper sheet balance was much worse than they suspected it would be.
Monday, March 16, 2009
Banking Crisis?
Thursday, October 9, 2008
Socialism or?
Hoover indeed felt that the economy was sound. What he also thought was that given enough time, those companies which were unable to function in the market would be replaced by those that could. What he could not forsee, because it had never been possible before in human economics, was the utter collapse and resultant hyper-inflation that occurred in Europe.
Consider, the French and English who had sought to redeem the costs of the war by essentially taxing the only Central Power left when the shooting stopped. Then also consider the nature of the former Austro Hungarian Empire states. It broke into several smaller nations with very weak and primitive economies. All of which had a very limited ability to function outside of the former system. Imperial Russia's collapse had huge shocks as well.
Then if you add to this the fact that rail rolling stock was limited in Europe after the war, the road networks were not sufficient to efficiently move and shift resources effectively, and the naval fleets that had formerly been sufficient to move goods globally in 1914 were now not capabale due to the tonnages sunk after 3 years- you suddenly have a case where the global economy which had been emerging under European Colonialisim was impossible to maintain.
The British compensated by sucking as much cash out of Germany as possible and also attempting to turn most of its colonial empire into unit markets, allowing each one to become specialized in goods or resources ideally suited to each colony. France sucked as much cash out of Germany as it could and turned to a brutal resources strip mining of its colonies- especially its North and West African ones. Italy simply imploded early as did the remainder of the Austro Hungarian Empire. Their economies became almost subsistence in nature. Russia withdrawing from the world markets for almost a decade meant that cheap resources suddenly stopped flowing into Eastern Europe and especially Germany.
Europe essentially ground to a halt. In the USA the buying of stocks on margin coupled with the utter exuberance of the nation after it had won a war, emerged almost unscathed, and saddled with a large returning army of very young men who had "seen the world" and were not content to return to the farm lead to an explosion of goods, companies, resources, and markets for all three. While the USA was not a relatively major player in terms of markets world wide before the war, after the war, America was almost over night the leader in almost all technologies and resources. And for a time the world readiliy bought and could afford the goods America was selling.
What brought it to a halt in America was when the Europeans simply collapsed in terms of currency purchasing power. Exports to the former combatants virtually ceased. Countries like Belgium teetered on bankruptcy and began simply exploiting their colonial possessions,
When the export market began collapsing, and the loans that had been made by the United States government to the European Allies ceased being paid, the capital markets in America were unable to absorb the loss of cash from both trade and war debt repayment. With the resultant slow down, the first uncoordinated attempt to keep the American economy running was in the form of margin purchases of stocks and options on goods/resources. It became an issue when the numbers of warehouses with filed capacity neared almost 100%. The excess goods and services on the market, represented by the options to trade bought on margin were now essentially worthless because there was neither doemestic nor international capacity to absorb these goods into the economy.
Hoover was right in that what should have been done was allow the options to buy to result in losses. That would have eventually brought both the commodity price down, as well as result in market set purchase options in the future in line with the actual value and the actual demands for goods in the future. The problem was the money needed to settle the options was huge. Hoover injected funds into the market in order to make availible dollars to cover the difference between the actual money that had been placed on margin options and the actual paper value of the contracts for those options.
Instead what happened was everyone began trying to dump their options and stocks- making the paltry funds Hoover had re;eased utterly useless. It set up the 1929 stock collapse as well as set up the currency runs in the banks.
Hoover was right in believing the only sound solution was one where the existing options sold at losses, the goods and resource production fell to the level the American economy could absorb, and companies unable to financially weather the environment were allowed to collapse of their own accord.
And in the end that is exactly what happened. The alphabet soup of programs, stimulus packages, socialist handouts, and federal government manipulations of all types of markets, not only continued the economic collapse we call the Depression, but it inadvertently extended it.
There was a cabinet meeting I learned about in early 1940 where the topic was actually Germany and Europe. I really don't remember much more than that about the meeting in detail, but one of FDR's advisors made the remark that at the rate they were going it would take a war to get America out of its economic mess because nothing they had done had worked so far.
Point is, much of what FDR tried did not work. Establishment of Social Security, grand projects like Boulder Dam, and the dozens of alphabet soup programs all had had a marginal effect. And he knew it.
With the start of war, FDR was able to instead drop the facade of "doing something" to actually fixing the problem by getting the government out of the economy.
FDR adopted laissez-faire, used the excuse of war time expedience to encourage volunteer efforts, and quietly shut down most of the alphabet soup programs in a matter of months. It was the result of this adoption of Hoover's plans as they had existed in Treasury Secretary Mellon's interpretation of what the government should have been doing beginning in 1929, that the American economy finally started to get going again.
What FDR did- with the exception of keeping Smoot Hawley on the books- was what Hoover had been doing. Hoover was ultimately correct- the government should only keep people from starving but not attempt to jump-start the economy by managed administration and cash injections. Whether Hoover actually believed that government interference would condition Americans to depend on the government is open to debate. But the reality is that the American people did indeed come to depend upon the federal government to a degree that caused the Depression to continue longer than it should have.
For example, in America unemployment was still over 15% in 1941 and the GNP was pretty flat still in spite of Lend Lease. FDR's economic plans were Keynsian and followed a model of executive administration of the economy. In Germany, the model was decidedly non-Keynsian and placed government in a role of hands off but supervisory administration of the economy.
1932 was the height of the World Depression. In 1936 the Germans were performing at or above the economic levels of 1928 with an unemployment rate of around 6%.
Under FDR, the Depression lasted another 6 years. In 1939 America's economic indicators were at or near the 1928 levels, with a 17% unemployment rate. It would not be until the end of the first quarter of 1942 that the American economy would universally exceed the 1928 levels and drop unemployment under 10%.
The difference? FDR installed socialist stimulus economic models. Hitler didn't install any stimulus packages based on socialism. He allowed the bad companies to collapse, allowed the market to regulate itself, and limit government intervention into industries and corporations only to the extent that undue replication of goods or services was not an artificial drag on export and import exchange.
In short, once the Germans stopped acting like socialists and Keynsians, the economy recovered.
That was what I was pointing out. Obama is pushing hard for Keynsian style stimulus. McCain isn't.
One method historically has worked, one has worked better when the economy is tanking.
The economy is tanking. Therefore the candidate you should support is the one who is advocating the plan which has a better track record of lifting an economy out of collapse.
Real easy decision.
Vote for the Keynsian plan= really bad economy.
Vote for the non-Keynsian plan= bad economy followed by an actual recover in a much shorter period of time.
Using FDR as an example- once he dropped Keynsian directed economy, it took about 16 months to recover fully.
The choice however is yours.
Thursday, October 11, 2007
German Industrial Tactics
Just some commentary I made over on AI Jane when I came across the most insipid thread I think I have ever read.
Taken from http://ai-jane.org/forums/viewtopic.php?p=76380&highlight=#76380
As to German economics. The German state went from being the most damaged and hyper-inflationary economy in either Europe or the Western Hemisphere to being the only state which entered World War II fully recovered from the World Depression. The numbers are simply staggering in terms of first recovering from the Depression, then to growing in every single sector of the economy prior to the war. The supposition that Germany did not have a good economic model is totally abrogated by the factual performance of the economy, even before September 1939. To put it in perspective 1939 GDP performance of Greater Germany was only duplicated again in post war Germany 1952- and that is in spite of the fact that post war West Germany had 10 million more people and the GDP comparison is adjusted for territorial loses.
Also astounding was the ability of the German economics during the war from September 1939 to May 1945. Unlike any of its adversaries, Germany did not even adopt a centralized war production management handled by the government until 1943. Despite this, Germany produced impressive gains in the military aspects of its economy- while still performing spectacularly in terms of civilian economic measures and benchmarks. The performance increases after 1943 were unequaled by even the Americans in terms of raw numbers and relative outputs. To say that the German war time economics were not efficient or functionally superior to its adversaries is inaccurate. Even at its greatest extent, Greater Germany still had only a fractional economic scale compared to its multiple enemies. Despite this, Germany managed to create one of the most efficient economic systems ever achieved during war time. The U.S.S.R., U.S.A., and Great Britain had vastly less able systems that compensated on the drawing of economic resources and scales afforded by vast land resources and colonial markets.
As to the actual military, man for man in actual engagements they were literally off the charts compared to everyone else except the Fins, and were only surpassed in performance in modern times by the performance of the Israelis. The only thing that the Allies had going for them was shear numbers. Especially on the Soviet fronts and to a lesser extent on the U.S.A.fronts, Allied commander's willingness to accept casualty rates of four Allied soldiers per every one dead German speaks greatly to this advantage in numbers and deficiency in tactical planning.
In terms of arms, the Germans were decades ahead of their enemies. Be it wire guided missiles, TV guided controlled bombs, propulsion systems, surface and sub-surface marine technology, rocketry, jet power, avionics, or even simple bombardment technology- the Germans had the best weapons. The only factors which limited the effectiveness was manpower shortages and the comparatively exposed and limited economic base.
In most battles that the Germans lost, the deciding factor was always numbers of enemies. Be it Kursk or even the Marshes outside Berlin, the defeats in battle usually resulted directly from the effect of the Allies being absolutely willing to throw troops against German fronts until the Germans ran out of shells and ammunition. It didn't matter for example that in Kursk many German Tank Commanders racked up 20-30 killed opposing tanks. The result in that battle was that most tank crews eventually had to abandon fully functional tanks simply because they ran out of fuel and munitions while fighting. Even by their own admission, the Soviets after action reports on Kursk reveal that most German tanks were not actually defeated or destroyed by Soviet fire. Rather they were abandoned in extreme placement by the Germans.
So again if you are saying the Germans were ineffectual or not even in the same class as its enemies in battle performance- you are woefully ignorant of the German's military condition.
And we aren't even touching tactics and doctrine. And what is more frightening is the fact that the Germans did what they did, as effectively as they did, despite being the only combatant in Europe who relied almost exclusively on horse drawn supply trains.
I could write, but won't write for hours on this subject. The noise ratio to content accuracy on this thread was just so bad that I wanted to point out that several of you are totally clueless and might want to do some research involving primary and secondary historical sources. These tertiary sources posted on this thread are essentially the equivalent of a grade schooler's introduction.
God what a crap thread.
While there can, and by default, has been an argument put forward that the German weapons systems were ineffectual or worse, that argument rests on assumptions made upon post war political viewpoint. For various reasons, the post war Allies had a vested interest in offering detractions towards their former enemies in Europe while at the same time aggrandizing their own accomplishments. The main political reason for this was that the Allies needed to portray their efforts as ones that were entirely productive and inherently superior to the efforts of either Germany or Italy. This often flew in the face of both facts available as well as eye-witness accounts that were made by actual people who faced the German war machine and its lesser Axis co-belligerants.
While the T-34 was indeed a very impressive tank in terms of basic design, its actual performance was individually best judged as one based upon opportunistic success rather than any particular merit inherent in its weapon system design. For example, much has been made about its performance against the "generic" German tank. And in such situations, yes the T-34 did very well. But like all statistical data, when you begin looking at what makes up the data, the details become examples of how misleading such claims really are. Against the Panzer Mark II, Mark III, and Mark IV tanks, the T-34 was quite impressive in combat. As well it should, considering it outclassed these Panzers by massive degrees. For example the Mark III Panzers were almost exclusively tanks that had started out in the Czechoslovakian Armed forces, with chassis designed in the mid 1930's, with less than a 6" average armour thickness, and main guns running somewhere between 47-57mm bores. With the T-34 you had a chassis that was less than three years old technology wise, with an average armour thickness of 8", the armour was also sloped, and its main gun was 76mm in bore in most cases.
In a head to head confrontation, you would hardly expect the lesser generic German tanks to last for even scant minutes. And while the T-34 did chalk up the majority of its kills against the lesser marks of the German tank fleet- the lesser German tanks managed to kill at least 1 T-34 for each 4 tanks the Germans lost. When you acknowledge that fact, the T-34 begins to look less like the superior weapons system it has been portrayed as. When you move up into the ranks of the production series that followed, including Panthers, Tigers, and King Tigers the T-34 becomes almost a suicidal system for its crew. At Kursk for example, where there was a fractional component of Panthers and Tigers, the loss rate of Soviet armour against these German platforms were staggering. With a longer range of fire, better velocity of shell, and superior tactics, Panther and Tiger crews literally demolished T-34 forces.
At Kursk, The German 9th Army fielded 600 lesser Mark tanks, i.e. Mark III and Mark IV. In addition they had another 200 tanks that would be best classified as field modified. or recovered combat vehicles of non-standard designs. They also held 100 Tiger tanks. Against this, General Rotmistrov had 900 tanks, the majority of which were T-34's to engage the Germans near Prokhorovka on July 12, 1943. It was a case of a centralized Soviet force made up of mostly front line standard tanks against a split German force made up of secondary line tanks. At the very least, one would have to assume that the advantage was entirely favored towards the Soviets.
In terms of combat starting on the 12th and going into the 14th, the Germans had lost over 300 tanks by the end of the first day. The Soviets had lost a staggering 600. By the end of the 13th, the Soviets had lost another 150. However, by the end of that day the Germans had begun running out of ordinance for the tanks. As time went on through the 14th the Germans although now facing a force of approximately 150 functional Soviet tanks, and still having 600 functional tanks of their own to use simply ran out of fuel and ammo. Combined Soviet Partisan and Armoured forces report that commencing on the evening of the 14th and lasting for two days, nearly 600 German tanks were destroyed by ground troops using demolition charges.
As it is commonly portrayed in history, nearly 1000 tanks met each other head on at Kursk. The popular history portrays a Soviet T-34 tank army meeting a German Tiger tank army and destroying 900+ while losing almost no Soviet tanks during the exchange. The reality however is that aside from some cherry picking gains on the first day, the Soviets were fundamentally ineffective against a numerically weaker foe fielding far less capable weapons systems. The fact remains that after the first 300 easy kills on day one followed by approximately 150 kills in combat on day two, the Soviets had managed to destroy only 450 German tanks vs the Germans having been able to destroy over 750 Soviet tanks- almost all of which were T-34s. The Soviet tactical victory only came after their enemy essentially ran out of fuel and shells. The T-34 based results amounted to only 450 kills, against a vastly inferior foe. While the Soviet ground troops managed 600 demolition kills against largely non-functional German tanks.
Its not the popular view, but the reality was that in the greatest tank battle of all time, the T-34 emerged victorious only due to shear numbers and a far greater effectiveness of ground troops with satchel charges. While many routinely point out the superiority of the T-34 based upon this single battle, most overlook the reality that the T-34 performed very poorly in the only measure that matters- combat effectiveness. Of the 100 Tigers in the battle you ask? They averaged 17 kills a piece. And of the 60 Tigers that were lost only five were lost to tank on tank action. The remaining 55 were abandoned in place and lost to demolition charges.
And that is just the case of the Soviet T-34 being popularly seen by people as an example of how superior Allied weapons systems were compared to Axis systems. The reality however is that these systems worked based upon a simple key factor- limitless supply. Similar performance can be seen with the American Sherman Tank- better known by its crews as "Ronsons" which refers to the Sherman's ability to go up in flames as reliably as the cigarette lighters made by Ronson in the 1940's. A common rule of thumb among Allied tank forces on the Western Front was that you had to have at least four Shermans before you considered taking on a Tiger. And you let the infantry take out any King Tiger. You would be correct in so far as the Ferdinand being a flop. But then they didn't even manage to make 90 of them. And at Kursk they performed extremely well- those that were destroyed were the result of infantry. But the Americans and British who latter faced them in Italy held them in great respect as adversaries. It would be more correct to say that the Ferdinand Tank Destroyer was a failure only in terms of how few of these weapons were built and deployed. Not because they were not effective weapons platforms.
In terms of the experimental systems, like the V-2 for example, in order to declare them useless requires a massive degree of compartmentalization in terms of judgement. For example were it not for Speer and Heisenburgh jointly deciding to mothball and prevent a nuclear weapon during the last year of the war, the V-2 could have been- and should have been- the most lethal weapon available. For that matter had Speer decided to allow the paradigm shift towards a nuclear weapon- one which Germany was well advanced towards- the V-2 would have effectively stopped the Western Allies. As it was Antwerp and London might disagree with your assessment that the V-2 wasn't effective. It is only because Speer had a moment of humanity that prevented him from allowing a nuclear weapon to be developed, that the V-2 was prevented from reaching its full potential.
And frankly the numbers of absolutely abysmal Allied weapons systems far outweighs the comparatively few ineffectual Axis systems. For example the British PIAT anti-tank weapon couldn't take out a canvas covered truck- yet they were made in the millions. The panzerschrek by comparison was almost always leathal when it hit its target yet only 15,000 were ever made. The Sten gun was a oft jamming, oft misfiring, and frequently broken weapon. Yet the Allies built millions of them. Compare that to the final Assault rifle variant the Germans came up with. The main difference between Allied failed and suspect weapons systems vs the German systems is almost always one of industrial production.
For example the 90 Ferdinand tanks are popularly judged to be failures because they were too few in number to have had much of an effect upon the shear numbers arrayed against them. Yet the Sherman- is a success simply because of numbers alone. One on one I'd rather be in a Ferdinand tank destroyer than in any Allied tank. The issue isn't effectiveness but rather odds. If I am in a Ferdinand, aside from a direct assault from behind by infantry, I am almost invincible to attack and can kill anything that is terrestrial based and survive even an air assault. In a Sherman, Patton, Lee, T-34 etc.. I am unlikely to be able to singularly defeat any of my most likely opponents in combat. In mass numbers then I might have a shot. But be honest with yourself would you want to go into battle in something known as a "King Tiger" or a "Ronson"?
The almost sole reason why Allied forces prevailed, is industrial numbers and a willingness to stick to evolutionary designs despite technical limitations. Why fix a Sherman tank's shortcomings if you can afford losing 4 Shermans to every one King Tiger you take out. You know there are around 1000 King Tigers and multiples of tens of thousands of Shermans. As long as you can afford to put crews in a Sherman, it doesn't matter how bad it is as a weapons system because shear numbers will eventually mathematically eliminate all the King Tigers.
And such examples go on. But I am out of time
_________________
GDL
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