Sunday, January 3, 2010

2010 starts where 2009 left off. Bailouts!!

Back from another whirlwind week.

Will have some additional thoughts coming in the near future but first an article from the Guardian.

If 2009 will be remembered for anything it may be remembered for when capitalism died. In its place was bailout after bailout. Well 2010 has literally started where 2009 ended.

From the UK Guardian:

Japanese authorities have thrown a lifeline to the crisis-struck Japan Airlines (JAL), the largest carrier in Asia, by doubling a state-sponsored credit line to £1.33bn.

JAL has been dogged by rumours that it could file for bankruptcy, causing its shares last week to plunge by more than a quarter. The national carrier is heading for its fourth annual loss in five years as a result of the slump in air travel, inefficiency and an unwieldy pension scheme. If it does file for bankruptcy it would be one of the largest failures in Japan's history.


Asia sold off the last day of 2009 partly based on JAL problems. The markets are rallying hard to start off the New Year partly because of these fresh new bailouts.

Once again, what this does is hurt everyone else. Instead of capacity being taken off line (everyone knows this needs to happen for the airlines), government intervention will ensure for the time being that liquidity is not an issue while solvency problems are not addressed playing kick the can down the road.

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