Monday, December 8

IOU’s back in fashion.

California is the 8th largest ranking economy in the world and is about roughly the same size as Australia. I noticed its Governor Arnold Schwarzenegger recently warned about the likelihood of having to issue warrants (IOU’s) to temporarily satisfy amounts due to contractors for landscaping, carpet cleaning, construction and food services as cash reserves dwindle.

IOU’s were once popular measures to tide you over some difficult times but it then involved trifling amounts generally borrowed out of the Petty Cash tin. It reminds me of a time in the early eighties when I attended a conference is the south of England on behalf of my employer. Having a young family and lacking in financial resources I was delighted to be able to substitute one Business class air fare (because of the long journey) entitlement at no additional cost for 2 economy fares which enabled us to travel and enjoy a holiday afterwards. We found a suitable minder for our young children and left her with some initial money on the basis the balances would be settled when we returned.

But there must have been a misunderstanding since our minder tried valiantly to mange on that initial amount until such time it was realized the children were either going to starve to death or emergency funds would have to be sought; in this case a well orchested raid was made on the contents of the Petty Cash Tin at work. The children were all very relieved when we returned and I hurriedly made good the IOU in case my reputation, already tarnished as a ' skin flint’, become too firmly established.

The trip itself was one of the more memorable and as it turned out we did have a blissful holiday. I was rather busy beforehand and my preparation for the conference itself left a lot to be desired. Bear in mind at that time in the early eighties presentations were rather limited and even basics like power point presentations were unknown. So I was only armed with a hastily procured large map of Australia with few coloured pins for locations and butcher paper on which to scribble a few forlorn facts to my large audience. My concern was heightened to near panic when I was asked by the Communication Manager what technical assistance I needed. Some of the other presentations from other countries were stunning and I soon felt rather foolish. There was nothing left but to grin and bear it.

Fortunately I had heard a half decent joke about Aussies getting lost in a hotel the night before which provided an ideal opener and to my immense relief was greeted with hoots of laughter. I didn’t think many people would be so interested on the business side after that (I had been tipped off a few from the UK were interested in emigrating) and so I abandoned my previous presentation material and confined most of the session to vague discussions about Aussies, Ausssieland, business and all about the country in general combined with some questions and answers.
Nobody seemed to notice the presentation wasn’t about what it was supposed to be.

The rest of the stay was wonderful, scuttling around the south of England in a little Fiat I had borrowed from one of the UK divisions on the off touristy season whilst soaking up some of the best scenerary imaginable in a very pleasant autumn season.


Seraphine said...

california is already heavily iou'd. the state can't even sell municipal bonds into the market, because the yields are over 6% tax free, which is a measure of the illiquid market for the debt of the state of california. it's up to the legislators to make a budget. they should balance it. people have lost faith in iou's.

Cart said...

I just posted on the alleged threat to NSW's AAA rating. California makes NSW look an economic powerhouse.

susan said...

That was a lovely story about your trip to England and pretty funny that your child minder hadn't grasped your intention. I'm glad to know the children didn't starve :-)

Things are getting weirder here. The Chicago Tribune declared bankruptcy today and the NY Times is trying to obtain loans to keep their headquarters. Maybe they could hand out some IOU's for good news.

Seraphine said...

children should learn to eat bugs.

Seraphine said...

going anywhere on the "off-touristy season" is always better. the prices are better, one doesn't have to step over others to get to the water, the locals even smile at you. it's the best way to travel.
unless you're going to antarctica, maybe. i hate extremely cold weather.

Sarah J Clark said...

I've always wanted to speak with an Australian accent.

Sorry to be so shallow. When people start talking numbers and percentages and dollars, my head starts spinning, but I wanted to contribute to your comment section! =)

Zee said...

what do you make out of the last move of the FED's today to drop the prime rate to 0.25%? I mean, all the treasury bills of the US are now shedding any kind of interest to speak of.

Rachael Byrnes said...

Hi Dad, this is a classic story!!.. and I love the way you tell it. Thinking about you with some butchers paper and good jokes is a hoot!!

Gary said...

Great story Lindsay. Sounds like you had fun and found the secret to good presentations: Be yourself and tell stories.

Best to you.

Seraphine said...

'skin flint' is a curious phrase.

lindsaylobe said...

Hi Sera, Cart, Sarah, Susan, Gary, Rachael & Zee
Thanks for your visits; good advice Gary- be yourself and tell stories and Sarah – the Aussie accent helped!

Sera -A skinflint is one so miserly that he would “skin a flint”. A flint is a small piece of flintstone which used to used to strike a spark in a tinderbox. Today we don’t have lighters made of Flintstone, but rather of Ferrocerium but the saying persists. A ’skinflint’ is a person who simply hates spending money and alternatively might also be referred to as a ‘tightwad’, a ‘miser’, a ‘niggard’, a ‘piker’, or a ‘penny pincher’

Reference – Susan& Cart & Zee on the USA – it looks rather scary doesn’t it since I gather the Banks are using any spare cash to invest back in Treasuries rather than making business investment or maintaining support.

Hence the contraction is continuing on at full speed. A rate of .25% is crazy! due to the funds injected into the banking system returning in a full circle back into treasuries!

Rachael- glad you enjoyed this true tale. You were sick for some of the time when we were away.
Best wishes