Sign of Things to Come

World Agenda: riots in Iceland, Latvia and Bulgaria are a sign of things to come
Our third global political column explores the start of an age of rebellion over the financial crisis - beginning in Iceland

(Halldor Kolbeins/AFP/Getty Images)
Icelanders vented their fury at the political class's handling of the financial crisis by staging angry protests in Reykjavik
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Roger Boyes
Icelanders all but stormed their Parliament last night. It was the first session of the chamber after what might appear to be an unusually long Christmas break.

Ordinary islanders were determined to vent their fury at the way that the political class had allowed the country to slip towards bankruptcy. The building was splattered with paint and yoghurt, the crowd yelled and banged pans, fired rockets at the windows and lit a bonfire in front of the main door. Riot police moved in.

Now in the grand sweep of the current crisis, a riot on a piece of volcanic rock in the north Atlantic may not seem to add up to much. But it is a sign of things to come: a new age of rebellion.

The financial meltdown has become part of the real economy and is now beginning to shape real politics. More and more citizens on the edge of the global crisis are taking to the streets. Bulgaria has been gripped this month by its worst riots since 1997 when street power helped to topple a Socialist government. Now Socialists are at the helm again and are having to fend off popular protests about government incompetence and corruption.

In Latvia – where growth has been in double-digit figures for years – anger is bubbling over at official mismanagement. GDP is expected to contract by 5 per cent this year; salaries will be cut; unemployment will rise. Last week, in a country where demonstrators usually just sing and then go home, 10,000 people besieged parliament.

Iceland, Bulgaria, Latvia: these are not natural protest cultures. Something is going amiss.

The LSE economist Robert Wade – addressing a protest meeting in Reykjavik’s cinema – recently warned that the world was approaching a new tipping point. Starting from March-May 2009, we can expect large-scale civil unrest, he said. “It will be caused by the rise of general awareness throughout Europe, America and Asia that hundreds of millions of people in rich and poor countries are experiencing rapidly falling consumption standards; that the crisis is getting worse not better; and that it has escaped the control of public authorities, national and international.”

Ukraine could be the next to go. The gas pricing deal agreed with Moscow could propel the country towards a serious financial crisis. Russia, too, is looking wobbly. A riot in Vladivostok may have been an omen for things to come. What will happen when the wider economic crisis translates into higher food prices? Or if Gazprom has no choice but to increase domestic gas prices?

Governments have so far managed to deflect attention from their role in the crash, their slipshod monitoring, by declaring themselves to be indispensible to the solution. This may save the skins of politicians in wealthier countries who can credibly and expensively try to prop up banks and sickly industries. But it does not work in countries that are heavily indebted, with bloated and exposed financial sectors. There, the irate crowds are already beginning to demand: why hasn’t a single politician resigned? What has happened to ministerial responsibility? Who will investigate government failure?

Good questions, it seems to me, in these unquiet times.


source: World Agenda: riots in Iceland, Latvia and Bulgaria are a sign of things to come
http://www.timesonline.co.uk/tol/news/world/europe/article5559773.ece

SMILE !!! :-)

Fear is Back in the Market

Welcome 2009.

Getting right to the point.

In my opinion I beleive there is still some shake downs to come. Nortel just filed for bankruptcy protection but it ws doomed to go anyways. However, there are still many companies loaded with debt and burning cash fast. I still think there is one more big shock left to unfold. That is bullion certificate scheme. Yes, this where you buy gold on paper only. The looming currecy crisis is going to sweep the carpet below this monster.

Highly encourage you all to watch "The Ascent of Money " on PBS TV channel.

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Supreme Court Says No to Mortgage Interest Deduction

Link to court case:

Source: http://scc.lexum.umontreal.ca/en/2009/2009scc1/2009scc1.html

The Supreme Court of Canada has ruled against a couple that used a complex set of arrangements to make the interest paid on their mortgage tax-deductible.

The so-called Lipson case has been widely followed by tax professionals looking for guidance on how to advise clients to limit the amount of income tax they pay. One of the concerns was that the court would rule in such a way that would limit the ability of people to follow a strategy where they borrow against the value of their homes and invest the money in the markets, thereby making the interest they pay tax-deductible.


There's no clear indication yet on if/how this may affect the popular Smith Manoeuvre. The Smith Manoeuvre is different in many key respects but there is at least some overlap in principle