Archive for 2009

  • Zimbabwe removes 12 zeroes from currency
    , February 2nd, 2009 at 2:57 pm

    Here’s a way to cure inflation. Just divide everything by 1 trillion:

    Zimbabwe slashed 12 zeroes from its currency as hyperinflation continued to erode its value, the country’s central bank announced Monday.
    “Even in the face of current economic and political challenges confronting the economy, the Zimbabwe dollar ought to and must remain the nation’s currency, so as to safeguard our national identity and sovereignty. … Our national currency is a fundamental economic pillar of our sovereignty,” said Gideon Gono, governor of the Reserve Bank of Zimbabwe.
    “Accordingly, therefore, this monetary policy statement unveils yet another necessary program of revaluing our local currency, through the removal of 12 zeroes with immediate effect.”
    The move means that 1 trillion in Zimbabwe dollars now will be equivalent to one Zimbabwe dollar.
    The old notes — with the highest being 100 trillion dollars — not enough to buy a loaf of bread — will remain valid until June 30, after which they will cease to be legal tender. One U.S. dollar is trading above 300 trillion Zimbabwe dollars.
    This third attempt to lop off zeros comes barely six months after the Zimbabwe government last adjusted its currency as it continues to lose value.
    World-record inflation estimated to be in the billions of percent — but officially at 231 million percent as of July last year — has quickly eroded the currency’s value again and again. The highest note on the new set is 500 Zimbabwe dollars.
    Many Zimbabwean traders have stopped accepting the local currency, preferring foreign currency due to the hyperinflationary environment. Last week, the country’s acting finance minister, Patrick Chinamasa, allowed the use of foreign currency by everyone else.
    Despite the use of foreign currency, the Zimbabwe dollars are in acute shortage, resulting in many people sleeping outside their banks hoping to get money the following day.
    Regarding the cash shortages, Gono blamed Germany for dropping a contract that helped the country print money.
    “The country has suffered bouts of cash shortages, which have disadvantaged both the corporate and household sectors,” he said.
    “As a country, we have come to terms with this stubborn reality that we were put under economic sanctions by Germany, which unilaterally cut a 50-year-old contract to supply us with currency printing paper, machinery, spare parts and inks without notice in July last year.”

  • Daschle Is Disappointed
    , February 2nd, 2009 at 1:12 pm

    Former Senator and HHS-designate Tom Daschle has apologize for his tax errors: “I am deeply embarrassed and disappointed by the errors that required me to amend my tax returns.”
    I note this because “disappointed” seems to be his favorite word. A few years ago, Ben Pershing of Roll Call took a hilarious look at Daschle’s One-Word Lament:

    He rose from a small town in South Dakota to become Majority Leader of the United States Senate. He wrested control of the chamber away from the GOP and regularly squares off with President Bush. He is the most powerful Democrat in the country. Still, Thomas Daschle is disappointed.
    Amid all the ups and downs of politics and the rhetorical bombast of Washington, where lawmakers often verbally eviscerate their opponents for sport, Daschle has been consistent in his disappointment.
    On Nov. 28, he said he was “disappointed” with the White House’s “negative reaction” to his plans on supplemental spending.
    At a press conference the next day, Daschle was “disappointed” that the stimulus issue had become so “partisan” – so much so that he used the term twice in the same answer.

    (more…)

  • It Was 40 Years Ago Today….
    , January 30th, 2009 at 8:04 pm



  • Peter Schiff Responds
    , January 30th, 2009 at 7:51 pm

    Since I posted Mish’s take down of Peter Schiff, I feel obliged to posts Schiff’s response. The Wall Street Journal also weighs in.

  • Two More Earnings
    , January 30th, 2009 at 4:49 pm

    Yesterday, Eli Lilly (LLY) reported fourth-quarter earnings, after charges, of $1.07 a share, two cents more than expectations. That’s 19% growth although revenue growth was flat. The company sees 2009 earnings coming between $4.00 and $4.25 a share. That means the stock is going for less than 10 times this year’s earnings, plus it currently yields over 5%.
    SEI Investments (SEIC) reported Q4 earnings of 25 cents a share, three pennies below estimates. This will be a difficult year for SEIC, but I still think it’s a solid company.

  • Today’s GDP Report
    , January 30th, 2009 at 12:21 pm

    The GDP report for the fourth quarter was pretty ugly, though not as ugly as it could have been. Let’s also wait for the subsequent revisions, and revisions of those revisions. The initial report showed real growth of -3.8%.
    Since inflation has been so tame, I was curious to look at nominal growth which was -4.05%. That’s the first down quarter in 25 years and the worst quarter in 50 years.
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  • Poll: Super Bowl XLIII
    , January 29th, 2009 at 6:26 pm


    Let’s see how good my readers are.

  • Oh Charlie You Can’t Say That
    , January 29th, 2009 at 3:38 pm

    35 second mark.

  • Davos Love Fest
    , January 29th, 2009 at 3:30 pm

    Michael Dell asked Putin how we can help Russia expand its IT.
    Putin: “We don’t need help. We are not invalids.”
    Alrighty then….

  • The Case for Profits
    , January 29th, 2009 at 3:23 pm

    Arnold Kling argues that what really need right now is profits:

    A stimulus will work if and when it serves to increase profits, because profits are at the core of a free market system. The economy will recover if and when profits recover.
    Wages and salaries rose by 3%, while corporate profits fell by 9%, from the third quarter of 2007 through the third quarter of 2008, according to Commerce Department data. Fourth-quarter figures, which will be available in late February, are expected to show weakening in both types of income, with wages and salaries showing almost no increase, and profits falling by more than 15% relative to last year’s fourth quarter.
    The economy is in trouble today because of, pardon the pun, false profits. The financial sector reported as much as 40% of all profits in recent years. However, the reported profits on instruments such as mortgage-backed securities and the sale of credit default swaps did not reflect the long-term risks of those instruments. That is, the return on capital in the financial sector was artificially high because the amount of capital used to protect against risk was artificially low. Losses at many financial firms are inevitable. It is the market’s way of telling the bloated industry to contract, releasing capital and talent for use elsewhere in the economy.