Fools and your money

“Can’t anyone here play this game?” — Casey Stengel explaining his 120 game losing 1962 New York Mets.

October seems to be the time of year when financial news headlines are at their goriest. The Great Depression of 1929 started in that month; the biggest one day drop in the Dow was in Oct., 1987 and the most recent Lehman Bros. et al collapse happened this time of year too. The 2011 version is ominously on track with fears of the Eurozone meltdown leading to “worldwide financial contagion” whereby banks and governments will renege on their obligations. This spark will lead other banks to announce that, because of their stakes in each other’s assets, if one starts going down, they’ll domino and you and I will pay for these misdeeds through increased service charges, zero interest on savings and new fees on everything.

It doesn’t help that there are rogue traders making billion dollar losing bets at UBS, former executives pocketing multimillion dollar severances and bonuses, huge insurance and federal disaster relief costs due to wild weather and people building where mother nature is saying, “No, don’t.” Congress had to authorize another borrowing increase for storm damage and it almost shut down the U.S. government.

Borrowing money is the culprit in this scenario. In order to keep the Europeans partying like there’s no tomorrow, the Americans throwing trillions into playing war, and the Chinese building shoddy railways, the sums involved are mind-boggling. C. D. Howe, the famous Canadian finance minister once stated, “What’s a million?” Now President Obama can talk about a mild stimulus of $44.5 billion and nobody except the talking heads on TV pay much attention because we all know how effective the previous stimulus was or wasn’t. Apparently, as a nation we owe more money, per capita, than ever before and yet we’re not alone.

REM’s recent retirement gave their song, “It’s the end of the world as we know it,” lots of airtime, and rightly so, given that it’s the precise anthem for our particular zeitgeist. Politicians and financiers talk of numbers no one can really understand. The whole world has so many IOU’s outstanding it seems logical to go back to square one and start over. The U.S. has no hope of paying off upwards of $14.5 trillion federally, never mind many times that much when you add up household debt. Europe is in trouble because the Germans won’t pick up the tab for other countries because it’s facing internal pressures of its own. China has a fake banking system prone to inflation and Japan is falling off the cliff due to an aging, expensive population. Russia even with its Canadian-style resources can’t make a go of it, and is losing population because people feel there really is no tomorrow and won’t reproduce because it’s too expensive.

It’s a good thing ski season is starting soon because we need a distraction. So, when you’re trying to keep your skis together in the powder, banish from your mind how others are ringing up a tab at your expense.