Great Depression Online Archive Issue:

More Zeros To The Rescue

Great Depression Online
Long Beach, CA
July 22, 2008

Inside This Issue You Will Discover…

*** ‘Save Our Starbucks’
*** Are We Having Fun Yet?
*** More Zeros To The Rescue
*** And More

‘Save Our Starbucks’

In what must be, without a doubt, the most telltale sign to date of an economy on the wane, Starbucks has disclosed the locations of 600 of its coffee shops that it intends to close.  After 10-years pursuing the vision of a Starbucks on every corner, it seems the coffee giant is reneging on its implicit contract with America…and loyal Starbucks patrons are horrified.

“Online, several ‘Save Our Starbucks’ petitions have popped up for various stores across the country, including locations in San Diego, Dallas and New York City,” reports Janet Adamy and Anna Prior for the Wall Street Journal.

But that’s not all…

“In towns as small as Bloomfield, N.M., and metropolises as large as New York, customers and city officials are starting to write letters, place phone calls, circulate petitions and otherwise plead with the coffee giant to change its mind.”

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~~~~~~~~~~~~~~~~~~~~~~~~~

And here’s what the closures will mean…

“The closures will mean Starbucks will eliminate some 12,000 jobs, which comes out to 20 for every location it plans to shut.  In addition to creating jobs and generating revenue, Starbucks stores serve as key draws for other retailers, making the loss of one a blow to the surrounding area.”

Easy come, easy go.

Are We Having Fun Yet?

And then in another bizarre story we find that if you’re looking for a good time…don’t go to China for the Olympics.  It seems China’s security excess is on the verge of turning the Beijing Olympics into a total downer.

“Pre-Olympic jitters are almost a tradition but a Chinese visa crackdown that has sent visitor numbers plunging, heightened security checks, dire warnings of terrorist attack and curbs on Beijing nightlife have led to some observers dubbing the 2008 Olympics the ‘no-fun Games,’” says the Financial Times.

“Michael Payne, the International Olympic Committee’s head of marketing for the two decades to 2004, said that in meetings with top Beijing organisers [sic] he has stressed a single word of advice: smile.”

But sadly, China’s security obsession is not without merit.  For the world is a dangerous place, full of malevolent individuals…a fact that is both unpleasant and disagreeable. 

We got word from the Barbara Demick and the Los Angeles Times that, “Explosions this morning [Tuesday] in the southern Chinese city of Kunming killed at least two people and injured 14 in what appears to have been a coordinated terrorist attack.

“One explosion at 7:05 a.m. on a commuter bus was followed by another an hour later on a bus downtown.

“Chinese police have not yet given any explanation other than to say that the attacks were ‘sabotage,’ according to the New China News Agency.”

More Zeros To The Rescue

Here at the GDO we’re often critical of the Federal Reserve because they increase the money supply faster than the rate of economic growth.  While it may help keep the consumer consuming, it unfairly punishes the saver and the fixed income retiree by devaluing the currency.

That said…it could be much, much worse.  For example, try saving money when inflation’s running at a rate of 2.2 million percent.

Of course, as Freidman said, “Inflation is always and everywhere a monetary phenomenon.”  So for hyperinflation to get to 2.2 million percent there had to be some amazing and extraordinary fiddling with the money supply.

And when you have complete morons running things you get solutions like adding more zeros to the bank notes.  From AFP we find that…

“Zimbabwe, grappling with a record 2.2 million percent inflation, has introduced a new 100-billion-dollar bank note in a bid to tackle rampant cash shortages, the central bank said Saturday.

“In January, a 10-million-dollar note was issued, then a 50-million-dollar note in April.  In May, notes for 100 million and 250 million dollars were issued, swiftly followed by those for five billion, 25 billion and 50 billion.”

It appears that Zimbabwe’s strategy for dealing with higher prices is to inflate the money supply by adding notes with more zeros.  Naturally, this only perpetuates the problem.

“The southern African nation, currently gripped by a post-election crisis, has been ravaged by hyperinflation which shot up from 165,000 percent in February to 2.2 million in June.”

Regrettably, the product of this strategy is that, “Zimbabwe’s chronic economic crisis has left at least 80 percent of the population living below the poverty threshold and mass shortages of basic goods in shops.”

In case you were wondering, the new 100-billion-dollar bank note is only worth about $125 U.S. dollars.  But soon it will be worth much less…

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  Commodities offer the best opportunities to profit from the ongoing worldwide phenomenon of monetary inflation.  But if you’ve never traded commodities before, getting into these markets can seem a bit overwhelming.  Of course with a little education and expert analysis you can rapidly accelerate your learning curve.  Our friends at Elliott Wave International are offering expert commodity forecasting services for Free.  But don’t delay.  This offer expires at noon on Wednesday, July 23rd.  So take a look now.  You’ll have access to their new Futures Junctures video portal that combines all of EWI’s world-class commodities analysis onto one easy-to-navigate webpage.  Check it out here: Last Day for Free Commodities Forecasting.

 

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