Global Financial Meltdown - How Serious Is This ????

[The Night Shift]

This is one area I don't really follow closely. I understand the basics of the global credit crunch as they call it, but apparently with the rejection in the US Senate of the bailout, basically condemming themselves to apparently massive job losses and recession, what is the most likely outcome.

So does anyone have any idea what may happen and how will it affect australia, western australia, us...

Secondly, why would the Americans condemn their own pure capitilist system to doom ??? It dosen't make sense.. Please correct me if I'm wrong but why would their own elected officials choose to let their system collapse and choose to have recession, job lossess and all the shite that goes with it, than bail out the system they have been the global leaders. Do they not understand they may never get back their position of power ???

[freocuz]

Chances are the bill will be passed later on in the week, but the damage will be almost irreversible by then.

The Americans need more money, and fast. Ever heard the phrase "War makes money"? Don't be surprised to see an invasion shortly. I expect to hear further rumblings about Iran over the next few weeks.

[Walesy]

From my understanding of the average American, economics isn't their strong point.

As such, the prevailing thought seems to be - pfffffft, don't bail them out, let those fat wall street cats suffer.

What they don't follow is the run-on effects of reccession and job-loss and the rest affects on the average Joe.

Still doesn't explain why the elected officials are playing politics with it.

Potentially with My house damnit!

And it definitly doesn't explain why 44% of Americans are happy to vote back in the party that dug them into such a hole in the first place...

Dig up stupid!

[The Night Shift]

hmmmz.. invading Iran
it will be a worry if they did.
A stupidmove like that could start world war III....
It's a little bit of a scary situation...

[Walesy]

Chances are the bill will be passed later on in the week, but the damage will be almost irreversible by then.

The Americans need more money, and fast. Ever heard the phrase "War makes money"? Don't be surprised to see an invasion shortly. I expect to hear further rumblings about Iran over the next few weeks.

Isn't that the phrase that got them into all this trouble in the first place?

they've spent over 500 billion dollars on that war, fast approaching 600 billion.

Heck, I reckon if they were prepared to spend that, they could have individually bribed every Iraqi citizen in the first place and it would be over right now! :D

[Ripper]

Here is another take on it.

http://www.kitco.com/ind/katz/sep292008.html

http://www.kitco.com/images/commmentary/share/line_bg.gif
The "Crisis"
http://www.kitco.com/ind/Katz/images/katz.jpg By Howard Katz http://www.kitco.com/images/commmentary/bio.gif (javascript:biowindow('bio.html','BIO','top=50,left=200,widt h=575,height=420,scrollbars=1')) http://www.kitco.com/images/mailicon.gif (howardkatz@hotmail.com) http://www.kitco.com/images/printicon.gif (http://www.kitco.com/ind/katz/printerfriendly/sep292008.html)
Sep 29 2008 11:09AM
http://www.kitco.com/images/commmentary/share/bg_trans.gif www.thegoldbug.net (http://www.thegoldbug.net/)
At this writing, the nation is embroiled in a financial “crisis.” All of the newspapers and TV are screaming that the economy is on the edge of “systemic risk.” By this is meant that, if the people of American do not give $700 billion to certain Wall Street firms, our entire economic system will collapse. The source of this dire prediction is one man, Secretary of the Treasury Henry Paulson.
Mr. Paulson has been good to us gold bugs. He no sooner started shouting “systemic risk” than the price of gold exploded to the upside. But let us address the question, merely because one or two (or even a dozen) Wall Street Corporations go bankrupt does this mean that the whole system will collapse?
First, the whole system has never collapsed, neither in the history of the United States nor any other quasi-free economy. Second, if you understand the rudiments of economics, you know that economic systems do not collapse. It is only financial systems which collapse, and this is because of the special privilege given to bankers to create money and to make promises beyond their ability to keep. It is a fundamental principle of a free economy that you do not have to make a promise, but if you do, you are expected to keep it. Somehow, at the beginning, bankers were made an exception to this rule. The bank run is the classic example of instability in the financial sector, and all financial instability, including the current “crisis,” is related to it.
For example, the collapse of Black Tuesday 1929 was caused by Herbert Hoover, who directed the Federal Reserve to drive stock market speculators out of business. The Fed cracked down on the private banks, who stopped lending to people on margin. Brokers’ loan rates soared, and margin speculators were forced to sell. It was their selling which caused the 1929 crash.
The credit contraction mislabeled “The Great Depression” was caused by the Federal Reserve Bank itself, which created more money than it had gold to redeem with. When gold started to flow out of the Fed in the late ‘20s, it had to contract the money supply. In this case, a collapse in the financial system led to a disruption in the economic system. But the Great Depression was nowhere near as bad as the propaganda would have. Prices declined faster than wages, and this meant that real wages rose. This made all Americans who kept their jobs richer, and they showed this by eating significantly more meat, switching from margarine to butter and giving more to charity. (And oh yes, that story about people jumping out of windows? That is a complete lie. The suicide statistics from that day show no unusual number of suicides after the stock market crash of 1929.)
Well, in that case what is the evidence that the whole economic system is going to collapse if the Government does not take $700 billion from the people of America and give it to Wall Street? We turn to Secretary Paulson, who started this controversy, for his reasons.
Secretary Paulson has given no reasons.
So here is a man who wants to steal $700 billion from us, and he can’t give us any reasons. Further, anyone who has followed Secretary Paulson’s career knows that nothing he does seems to work, and very little that he says makes any sense. He is the Chicken Little of our day shouting, “The sky is falling.” But at least Chicken Little wasn’t hitting us up for money.
Neither has the media of this country distinguished itself by its ability to correctly predict the future. We all remember their campaign to frighten people out of the stock market in 1982 by touting Henry Kaufman (Dr. Doom). And of course there was their vicious attack on the leading gold bugs in the early 1970s and their refusal to apologize or acknowledge that we had been right in the late 1970s. In 2000, the New York Times and the Wall Street Journal teamed up to promote a book by James K. Glassman and Kevin A. Hassett entitled, “Dow 36,000.” This book predicted, in 1999, that the DJI would reach 36,000 between 2002 and 2004.
I could go on and on. The establishment in this country does not know its front end from its rear end, and the vast majority of their predictions prove wrong. (Do you remember when AIDS was just about to spread to the heterosexual community? Do you remember the various flues which surface every third spring with dire predictions of a mass pandemic by the summer? None of these things ever happened.)
So why should we get alarmed when Henry Paulson, George Bush, Jr. and Barney Frank agree on the proposition that our entire economy is going to collapse?
What we have before us is a crude attempt to steal from the American people to bail out Wall Street, and the principal question is, do the American people have enough spunk to stand up and vote against this monster? After all, all we have to do is vote. The Founding Fathers were not allowed to vote against the King of England. They had to fight. It is because of them that we get to vote.
What does this mean for the price of gold? Notice that, although there is much talk of a taxpayer bailout of Wall Street, none of the proposed versions of the bill contain a tax increase. So, quite frankly, nobody involved with this bailout intends to take the money from the taxpayer. They will get the money in the time-honored way by having the Federal Reserve counterfeit it. The Fed will print up $700 billion. This will cause the value of the dollar to decline, and average goods and services will go up.
This is why gold exploded over $140 (interday) on Sept. 17 and 18. And it is why the U.S. dollar fell by three full points on Sept. 17-22.
If this bill passes, there will be another rise in gold and fall in the dollar. Unfortunately, the entire establishment is for the bailout. And in my experience the establishment does not lose. Notice that it is being pushed by an alliance of the Bush Administration and the congressional Democratic leadership. Notice that both presidential candidates are for it. If you wanted to protest the bailout, you would have to vote for Bob Barr (on the Libertarian ticket) or write in Ron Paul.
So as much as I want the bailout to fail, my political savvy tells me that it will be passed in some form. The establishment has too many weapons. They can threaten a recalcitrant congressman. In 1776, Americans risked their lives. Today they are afraid to risk their perks. The establishment knows how the system works. At this writing, the House vote has been set for Monday and the Senate vote for Wednesday. The bill only finalized over the weekend so this is not enough time for any member of Congress to read it, but they will vote for it without reading it. These are the people we elect to represent us.
In a few months (or weeks) another giant company will come hat in hand to Washington asking it to steal money from the people and shouting “the sky is falling.” But this time the precedent will have been set. What can be done once can always be repeated. Unless the American people turn around and show some spunk, this is a very dark day for America.
If you want to hear more about the disastrous policies now being followed by our leaders and the consequences for gold and the financial markets, then my website, www.thegoldbug.net (http://www.thegoldbug.net/), (no charge) discusses political and social issues. The 9-29-08 blog will discuss the ongoing economic “crisis.” My newsletter, The One-handed Economist, ($300 per year) discusses the financial consequences and how you can best profit from the greed and stupidity of the establishment. It is a black day for America, and we are all sad, but we must continue to live our lives and function as best we can, and this means making the rational (versus the irrational) decision. Many people flew for “safety” into T-bills, accepting a nominal interest rate of close to 0 and a real interest rate sharply negative, but your only haven is gold. Those foolish people who believe the establishment propaganda will be the first ones they eat.
Howard S. Katz

[dominguez]

Why has our dollar gone down compared to a few months ago even though their economy seems to be getting worse? We got up to around 95c to the US dollar in May/June but it's now around 80c. It can't be purely based on interest rates?

[Walesy]

This made all Americans who kept their jobs richer

This is the qualifier though. Recessions by nature create job losses.

If you can keep employed thoughout it, then :thumbsu: you'll do great.

If you're one of the many unluckiest that can't, then sorry mate, keys to your house please.

[Lach72]

Quite interesting

http://thegoldbugnet.blogspot.com/

The unfolding economic “crisis” is so important that I am once again postponing the discussion of Christian Government. The fate of America hangs in the balance.

To summarize from last week: There is no system risk. Whenever a large corporation fails, its stockholders lose their money, and sometimes the bondholders (and other creditors) lose their money as well. But there is no threat to the economic system. Anybody who understands the ABCs of economics knows that economic systems are very stable. As noted, there have been thousands of failures of large corporations throughout American history, and through most of this time the nation prospered. “You will live better than we do” my parents (and the parents of my generation) told us. They were wrong.

You can understand just how stable an economy is by thinking back to how our present economy evolved from the self-sufficient economy. To get a picture of the self-sufficient economy, go back in time to Plymouth Colony in 1624. The Pilgrims abolished communism in two steps. In 1623, each family had been given the right to the crop which they could grow on a given piece of land. This resulted in a big increase in food production and saved the colony from starvation. (In celebration of this, they declared the first Thanksgiving, which is the basis for our modern holiday.) In 1624, each family was given the right of ownership, not only of the food which they grew, but of the land on which they grew it. They therefore had an incentive to improve the soil, and there was a further increase in production.

The self-sufficient economy meant that each family produced all the economic goods it needed by itself. The husband chopped down trees to build a house (and the furniture which went in it). The wife sewed and made the clothing for the family. The husband grew most of the food, and the wife turned it into their daily meals. The next family was doing the same thing, etc. In this economy, there could be no crash or economic crisis. The worst that could happen was that Joe felt lazy (or came home drunk) and did not do any work one day. Therefore, that family was a bit poorer. But that very poverty was a stimulus to go back to work the next day. In that economy, he who did not work did not eat. Considering the whole economy some people would work harder and some would slack off, but the chances of a serious economic collapse were extremely small. For this to occur most of the people in that society would have to feel in a lazy mood for several months and do no work. It is possible, but it has never happened.

The next step occurred when people began to specialize. For example, you turned out to be very good at growing potatoes, and your neighbor turned out to be very good at making shoes. Further, you liked growing potatoes, and he hated it. So he made a deal with you. I’ll make a pair of shoes for your daughter in exchange for two sacks of potatoes. Agreed. Both of you are happy. Soon the whole community is specializing, each doing what he does best, and then the goods are exchanged by mutual consent. Later it turns out that reaching these agreements is easier when one good becomes a medium of exchange. (In 17th century Plymouth, corn was the first medium of exchange.)

Again there can be no economic collapse in this society because the continual desire for greater wealth is working continually on all its members. Think of a herd of horses. Their work consists of eating grass. Their economic prosperity is the amount of grass they can eat. Can this horse economy collapse? Not unless all the horses simply stop eating and ignore their hunger pains, and that of course is not going to happen.

What then about Black Tuesday of 1929? What about Black Monday of 1987? What about the event (mis)named the Great Depression? Doesn’t our society have a great deal of experience with economic collapse?

No. The distinction that has to be made is between an economic collapse and a financial collapse. Collapses of the financial system are quite possible, and all of these collapses stem from one fact. There is something inherently wrong with our banking system and with the way it was created.

The ancestors of our modern banks were goldsmiths in 17th century England. They got into banking because people asked these goldsmiths to store their gold. The goldsmith would then issue a gold receipt just like the baggage receipt you get at the airport for your luggage or the ticket you get from the hat check girl. The idea is that, when you present the ticket, you get your property back.

But gold receipts soon began to circulate as money, just like the gold for which they stood. And this gave some of the goldsmiths an evil idea. These goldsmiths issued more gold receipts than they had gold. They lent the extra receipts out and received interest on the loan. This was banking, but it was a strange kind of banking. These goldsmith-bankers did not lend their own money (which is legitimate), and they did not relend money which they had borrowed (like a savings bank, also legitimate). No, they created paper receipts promising to redeem each of them in gold but not having enough gold. This promise was a fraud. Unfortunately, because of the Christian bias, even in that society, and the resulting ignorance of interest and lending this fraud was accepted as a practical necessity. The banker did not put the newly created money into his own pocket (like a counterfeiter); but he did pocket the interest on the loan which he made with the new money.

There thus grew up two kinds of banks in the 18th century: the savings bank (founded on the correct principle of drawing in deposits by paying interest and then relending the money at a higher interest rate) and the commercial bank (which paid no interest to depositors, created money out of nothing and made promises it could not keep). (The well-known movie, “It’s a Wonderful Life” starring Jimmy Stewart is actually banker propaganda. It depicts a bank run, the bane of commercial bankers, but on a savings bank. However, savings banks do not have runs. Their depositors have agreed to leave their money on deposit for a definite time. Frank Capra simply decided that a small town savings banker would be a more sympathetic figure than a big city commercial banker and changed the facts accordingly.)

Our current financial system is quite unstable, and all of this instability results from the commercial banks. (In 1981, the savings banks and S&Ls finally got the commercial bank privilege of creating money out of nothing. This led directly to the S&L collapse of 1989 and to the Keating Five, one of whom was John McCain.)

The so-called business cycle of the 19th century in America resulted from the fact that all of the commercial banks were expanding their money and making more loans. If a bank started out with a 1:1 ratio against gold and expanded to a 4:1 ratio, it would find itself in a position in which a bank run was a possibility. Therefore it would reduce its lending. When the banks as a whole got too over-expanded, the most exposed bank would be hit with a run. The other banks would see this and reduce their loans. Then there would be a cycle of loan contraction. These cycles of loan expansion and contraction were incorrectly attributed to the nature of a free economic system. This is not true. In a free economy, each person must keep his promises, and the privileges accorded to commercial banks of making promises and then not having to keep them are a violation of a free market.

Note that these were cycles of money and credit expansion, but since they were good for the bankers, those economists sympathetic to the bankers called them economic growth. Correspondingly, the cycle of money and credit contraction was called a recession or a depression by the banker-economists. The implication here is that what is good for the banker is good for the whole country, and what is bad for the banker is bad for the country. But this is an outrageous lie. When the banker expands money and credit, there is a rise in prices, and everyone else in society has to pay higher prices for the necessities of life. When the banker is contracting, things are reversed, and the average person benefits. So the basic concepts upon which the modern economic discussion is based are false. There are no periods of economic growth or booms, and there are no recessions or depressions. This means that 99.99% of all economists are idiots, and 99.99% of the entire economic discussion is nonsense.

The people of the early 19th century were a lot smarter than the people of today, and there was a political movement to eliminate the privilege of commercial bankers to break their promises. The full expression of this principle was found in a group called the LocoFocos. A compromise version of the LocoFoco movement developed into the Democratic Party and in 1828 won the presidential election with Andrew Jackson as its candidate. In 1832, Jackson vetoed the charter renewal of the second central bank, and this set the stage for the greatest economic growth of any nation in the history of the world.

The central bank did not return until J.P. Morgan and Woodrow Wilson teamed up in 1913 to create the Federal Reserve. The original idea was that it would be a banker’s bank and lend to the commercial banks when they had gotten up to the dangerous 4:1 ratio. If the Fed could expand up to 4:1 to the commercial banks and they could expand by 4:1 to the public, then the bankers as a whole could get a credit expansion of 16:1 – more money for the bankers and their big loan customers. The creation of the Fed led to the money/credit expansion of WWI and the 1920s, and this was offset by the money/credit contraction of the 1930s.

But this was small potatoes compared with the very first action F.D.R. took after assuming office in March 1933. In one day, he rammed through Congress a bill which gave the Federal Reserve the power to create money out of nothing. Instead of multiplying money by 16 this made it possible to multiply it infinitely. The nation started out on one giant money/credit expansion which continues today.

At first, the expansion was slowed down by the conservatives with their old fashioned idea that the budget should be balanced. The Fed is the lender to the Government and requires a Government deficit to do its evil work. But Reagan converted the conservatives to Keynesian economics (using the names “supply side” and “Reaganomics”); and since that time the money/credit expansion has increased its speed.

In a free market economy, the stock market moves sideways. The companies whose products gain the public’s favor go up, and the companies which lose favor go down. The stock averages move sideways. Measuring from the first Dow stock index, in 1885 to 1932, one finds that the market moved sideways. The 18-fold stock market gain from 1982-2007 was due to 2 factors: 1) As the Reagan Fed lowered interest rates, the competitive stock yield was also lowered; but the only way to accomplish this is by stock P:E ratios going up. 2) As the interest rate declined, the debt burden of these companies went down; lower costs mean higher profits. The combination of higher earnings and higher P:E ratios made for much higher stock prices.

So over the past 26 years a class of very rich has been created. Unlike the traditional American rich these people do nothing to earn their enormous salaries and bonuses. They are pure and simple beneficiaries of the money and credit expansion engineered by the Federal Reserve Bank and the nation’s private banks.

Corresponding to the gains of this class of rich there are corresponding losses to the vast majority of Americans. For example, real wages fell by 18% from 1972-2002. That has never happened to any generation in American history, not since 1623.

Now the fall in real wages is an economic crisis. And the rise in housing prices of 1997-2007 (which made homes unaffordable to the average person) is another crisis. But both of these real crises are ignored by the nation’s media. Indeed, the media is now bending every effort to convince people that the fall in housing prices which began in 2007 is a crisis.

No, the crisis you read about in the newspapers is a crisis for the bankers and their associated vested interests (loan customers, debtors in general, etc.). You see, interest rates started out at 16% (nominal T-bill) and have declined to virtually 0 (T-bill nominal) and badly negative in real terms. Negative real interest rates are a concept so absurd that they perfectly illustrate the insanity of our age. A negative interest rate means that, if you take a loan, there is no interest charge; instead they pay you for the privilege of lending to you. A negative 5% rate of interest means that, if you borrow $1000, then at the end of a year when you repay the loan, they give you $50.

Why would anybody lend under such terms? And yet the people who created these conditions are designated as economic experts by the media.

But the handwriting is on the wall for the bankers and their friends. Things just went too far, and unthinking conservatism is bringing it to a halt. In 2004, with the T-bill rate at 1%, the New York Times suggested a tightening of credit. Greenspan, always anxious to please the Times, complied. The small tightening of 2004-06 cut the paper aristocracy to the quick. Over the quarter century, they had gotten soft. Profits had come too easy. Just a tiny bit of tightness, and several big Wall Street firms were driven to the wall.

But these people have never had to work for their money. They expect to be made rich by big daddy government. And so they go running, hat-in-hand to big daddy. And that is the source of the current “crisis.” It is a pack of lies made up by Henry Paulson (the stupidest man in the country) to the effect that the whole economic system (whatever that means) will collapse unless the government robs from the American people and bails out Paulson’s Wall Street friends.

Here is the challenge for the American people of our day. Faced with a similar challenge in the early 19th century the American people rallied behind Andrew Jackson and fought the bankers. They were largely successful, and America became the greatest economy in the world. What will Americans do today? Will they accept the word of Henry Paulson on faith? Will they pay his demanded $17,000? (Actually no one knows the exact figure.) If they do, there will be another demand on them tomorrow, and Americans will sink into a form of economic slavery to their new masters.

The medieval aristocracy was formed because a greedy class of bureaucrats fastened themselves on the people and began to systematically steal their wealth. When the people rebelled, the aristocracy banned free speech and political activity. But it began with economics.

# # #

Howard S. Katz can be visited at http://www.thegoldbug.net.
Posted by theGoldBug.net at 3:53 AM 1 comments

[FreoAzz]

This is quite a scary scenario isn't it?
I don't know much about the whole situation, but whispers have been going around for a while now.

The American Government is using oil to artificially inflate the market and stop the share market from completely bottoming out. Apparently Iran is the next target because they have been stockpiling oil in huge amounts and America is getting worried.

Iran is apparently going to flood the market with extrememly cheap oil, delivering one final blow to the American economy which will send it completely into recession.

Ofcourse having said this, if none of this comes to fruition then the whispers will be made to look stupid and farcical.

Not long ago there was a statement released from the US Reserve advising citizens to stock pile food because a recession was likely to happen.

[The Night Shift]

stockpiling food...
that is rather serious....
Who ever wins the next presidential election in the US is going to adopt a a nation in disarray...
Would it be safe to say that this republican presidency of George W Bush would be the worst ever in US history ...?

[Belnakor]

let them fall over. The banks who didn't have such irresponsible lending patterns aren't effected.

[bigkev bleeds purple]

Well before I entered this thread, I was thinking that the bailout was a stupid idea. Where is the accountability for risks taken and decisions made if the taxpayers are forced to bail out the banks when the shit hits the fan?

But after hearing that the bailout will push the USD south, the selfish side of me says bring on the bailout! Bigkev may be able to afford a pair of twin-tip fatties as well as some all mountain mid fats for his upcoming ski season in Montana if the US dollar weakens considerably :thumbsu:

[FreoAzz]

Well before I entered this thread, I was thinking that the bailout was a stupid idea. Where is the accountability for risks taken and decisions made if the taxpayers are forced to bail out the banks when the shit hits the fan?

But after hearing that the bailout will push the USD south, the selfish side of me says bring on the bailout! Bigkev may be able to afford a pair of twin-tip fatties as well as some all mountain mid fats for his upcoming ski season in Montana if the US dollar weakens considerably :thumbsu:


But there are side affects to this aswell. USA are printing more money without actually having it. That is going to cause inflation and prices over there to increase.

So, you may get more USD for your AUD but with the price increases which are imminent it will counteract whatever gain you had in the first place.

[dominguez]

With everyone struggling the drugs and hookers will be dirt cheap though BigKev!!!!

[prattsta]

Welcome to the end of the publicly funded stadium (http://sports.espn.go.com/espn/page2/story?page=keown/080930)

We're always trying to make sports stand for something bigger, or to explain its escapist qualities, or otherwise relate it to the world at large. Most of the time, the world outside sports is what we ignore to enjoy the game.

But what if it can't be ignored? What if the real events of the world -- for instance, a world financial crisis -- threaten to intrude on the unreality of our games?

It's inevitable that the credit/real estate crisis will have an impact on sports, as it will or has on every business. In fact, for the foreseeable future it might have a huge impact -- and not an entirely negative one, either.

I'm thinking about the age-old game franchise owners have played to get what they want. You know the drill: Court a different city to give you the palace you want in order to extort it from your current home. Get the politicians to run interference by tossing out the term "civic treasure" at the right intervals and you're pretty much assured to be drowning in tax dollars and sipping the good stuff in a suite safely removed from the folks who paid the bill.

http://assets.espn.go.com/photo/2008/0930/pg2_a_steinbrenner_300.jpg (http://sports.espn.go.com/espn/page2/story?page=keown/080930#)
When Forbes says your franchise is worth $1.2 billion, of course you need hundreds of millions of public dollars.

But now what? The events of the real world are threatening to put a big dent in the blackmail game.

Take the example of the Oakland A's, a team that is understandably underwhelmed by its current stadium. Managing general partner Lew Wolff has tossed out some old-school threats in the past few weeks. He wants to move his team to Fremont, that Barcelona of the East Bay, as part of a deal that mostly involves real estate and partly involves baseball. The stadium site makes little sense from a new-school transportation standpoint; it's away from the population centers and not convenient to mass transit.

It's just kind of … Fremont. Nothing wrong with that, but it's not what you'd call a destination. Wolff, a real-estate magnate who thinks a few thousand houses and a strategically placed Target can cure all ills, thinks he can make it work in Fremont. With luxury boxes, of course.

When Wolff was asked at an A's booster luncheon whether his team could thrive in Fremont without a BART (mass transit) station, he said, "If we can, we will. If we can't, we won't. Of course, then we wouldn't be in California anymore."

Ah, the great threat. He's gonna move, so we have to step up and build him what he wants, regardless of cost. Otherwise he's going to move to Las Vegas -- it'll surely give him what he wants -- and we'll all have to watch the Giants.

It's the oldest trick in the book; the owner's equivalent of turning over the locker room spread after a bad game. The problem is, it's lost a little of its power over the past 10 years, ever since the Giants built their ballpark without public funds. (They built theirs on credit, which is another story entirely right now.) Still, as you can tell by Lew Wolff, hope springs eternal.

But maybe no more. Maybe one of the positive outcomes of the current financial crisis -- someone has to be positive, right? -- could be the unlikely awakening of the taxpayer when it comes to subsidizing the mega-wealthy who own professional sports franchises. (Of course, an eventual government bailout of irresponsible financial institutions would be another version of public money morphing into private profit, but we can only fight one battle at a time here on Page 2.)

I can't imagine a tougher sell in a community right now than a sports palace. The most recent numbers (http://yonkerstribune.typepad.com/yonkers_tribune/2008/09/the-house-that.html) indicate New York taxpayers will end up being charged between $550 and $850 million for the new Yankee Stadium. A report issued by New York assemblyman Richard Brodsky contends the city of New York toyed with the assessed value of the stadium to provide the Yankees with further tax breaks. The Yankees, as a thank-you, have raised ticket prices significantly for next season.

In Washington, D.C., the taxpayers have to pick up more than $1 million in security costs for the stadium. Wouldn't it be great to own a business where you didn't have to pay for the building or the security to police that building?

In Indianapolis, construction of Lucas Oil Stadium, new home of the Colts, went far beyond its original estimates, forcing the city to funnel more tax dollars toward the project. And then, after completion, it was revealed that it will cost the city $20 million a year -- twice the original estimate -- just to operate the damned thing. The Colts have been good, we'll grant you that, but are they worth a $700 million stadium and $20 million a year for roughly 10 annual dates?

Taxpayer-funded sports palaces have never made sense. If you can't make money owning a team in the NFL or Major League Baseball or the NBA, with all the income tributaries, you have more problems than a new stadium can solve.

And now, the real world has decided to intervene. Crisis to the rescue. Any city that accedes to the blackmail at this stage better plan on spending some of those tax dollars to quell the mutiny on the streets. And the owners of the Yankees and Colts and Mets and Oklahoma City Thunder can make a theatrical wipe of the brow and give thanks. They got in just under the wire.

Tim Keown is a senior writer for ESPN The Magazine. Sound off to Tim here (http://sports.espn.go.com/espn/page2/story?page=mailform/keown).Interesting take on things from a US perspective. Given we are looking to build a stadium here in WA i thought it was somewhat relevant.

[dominguez]

Thanks for the link Prattsta. The situation is a little different in that our clubs are owned by the WAFC, which was set up by the government.

I still find it strange that a city the size of Perth can't have a decent outdoor venue. Glasgow has les than half the population of Perth but has 3 stadiums (Hampden Park, Ibrox and Parkhead) on a similar scale to the new one we were promised.

[MadMac]

Thanks for the link Prattsta. The situation is a little different in that our clubs are owned by the WAFC, which was set up by the government.

I still find it strange that a city the size of Perth can't have a decent outdoor venue. Glasgow has les than half the population of Perth but has 3 stadiums (Hampden Park, Ibrox and Parkhead) on a similar scale to the new one we were promised.
Keep in mind that it's only Hampden Park that is owned by the state/city/government.
The other two are privately owned by their respective clubs. [of course that applies to 95% of clubs in Europe]

[bigkev bleeds purple]

http://docs.google.com/TeamPresent?revision=_latest&fs=true&docID=ddv7hj34_03774hsc7&skipauth=true (http://docs.google.com/TeamPresent?revision=_latest&fs=true&docID=ddv7hj34_03774hsc7&skipauth=true)

Very topical and very funny: Subprime Explained :thumbsu: