There is one monstrous fact stalking Europe and no amount of debating will make it go away – there isn’t enough money to make the bank bail-out’s work.
There isn’t enough money in Europe’s bail out fund, the EFSF, despite this morning’s vote in the German parliament. The vote this morning was to ‘increase’ the EFSF not to what the banks and the Americans have already insisted it will need (read – what they want) – more than a trillion euros – but to what was ‘agreed’ some while ago and had to then be ratified by member states. The mainstream financial news outlets seem keen to give the impression that what was voted for in Germany was ‘it’, the final fix, the super-EFSF. This is NOT the case. What was agreed to in Germany is what Geithner and others had already said was woefully insufficient. That is why the vote has not heralded a massive rally in Europe or America. There has been a muted increase on exchanges because today’s vote is a step towards the Uber plan.
That plan will see the EFSF working with the ECB to create what amounts to a vast CDO (Collateralized Debt Obligation). This ‘CDO’, which the banks and the Fed want so badly, will be a supra-national version of the CDOs which brought us to this state in the first place. What I think would happen, is Greece would be forced to put up assets as collateral. These could be parts of Greece and its infrastructure and/or the income from them, and future tax receipts as well I imagine. This ‘income stream’ will be the promise written on new bonds/debt which the CDO will sell to investors. Those ‘investors’ will probably be the central banks and even the self same insolvent private banks who are being bailed out in Europe and beyond.
The trick is that the money paid will now not be a ‘bail out’ it will be an ‘investment’. We won’t be bailing out the banks, they’ll be bailing us out (with money we have given them and to asset strip the Greek people – but we won’t talk about that will we). We will have all been pulled through the financial looking glass. And better yet, the amount of return will not be simply what the banks could get by forcing Greece to flog its ‘assets’ today, but will be the whole future income from those assets as well. Rather than give Greece what it needs or even just force it to sell what you want as payment of its debts, even better is to force the nation and its people in to a long term debt peonage.
On this flimsy and unstable basis the CDO will be allowed to sell far more debt than any bail out could promise. What could not be bailed out will be leveraged out. Et voila – by the magic of leverage – the same leverage which created the magic growth and prosperity of the property bubble, whose fruits we have so enjoying these last years – we (for which you should read the wealthy 1-10%) will be saved again.
But that insanity hasn’t yet happened, and until it does we have the current rest stop, half way between nothing and nowhere. And in the present EFSF there’s simply not enough, not for Greece, not for Spain and certainly not for Italy. What there is, is just enough new suffering to stop any coagulation around the open wounds so that Greece can continue to bleed freely for Germany and France. This present ‘plan’ is not to ‘save’ Greece, let alone do anything positive for its people. It is about keeping Greece going so the Greeks can pay more taxes and keep the government in power long enough to sell to the banks or pledge as collateral to the banks everything of social value that the Greeks have worked for since WWII (and let’s not kid ourselves Greeks have worked and built a country out of the ashes of Military dictatorship) – and send the proceeds to France and Germany to prop up the French and German banks. Just keep it all going, keep the payments on French and German bank debts going, until the new order of debt peonage can be rammed through.
Germany isn’t debating bailing out Greece. Its debating bailing out French banks. Why do you think the French are so keen to expand the EFSF? Because they love the Greeks more than the Germans? No it’s because the French elite want the German elite to force German tax payers to help to save French banks, while the German elite is wondering if they might not be better off simply saving their own banks. Greece is just the pass-through so that foreigners can take the blame.
The bank lobby group says the European banks themselves don’t have enough money and won’t survive without much more help. Not only that but the bank lobby claims that if the banks are asked to ‘help’ by write down their loans to Greece by more than the agreed 21%, then, they warn, there could be a catastrophic cascade of one bank bringing down another. So while the people can be bled dry the banks must not be even discomfited. What about a cascade of civil unrest? A European winter? Until that seems like a real possibility our leaders will take the threats of the banks far more seriously and seek to appease the banks long before they think of helping us. We must make ourselves dangerous or we will be drowned like rats in a cage.
Have you ever drowned rats? You lure them in to the cage with the smell of food and once in you can take your time lowering the cage into a tub of water. You would not believe how desperately they bite at the steel bars and try to force themeslevs through the mesh as their last breath runs out and in goes the cold water to their lungs. But too late was the cry. They were doomed from the moment they walked so freely in. They just didn’t know it.
Even the IMF says it doesn’t have enough money and wants to be able to double its own funding. But how? From donations from the nations, like the US whose own debts are already out of control?
When banks didn’t have enough money in 2008, they pillaged nations. When nations had been thoroughly pillaged and they in turn ran out of money, the same leaders who had bankrupted them, then created super funds with which to continue the bail out the banks but now also to bail out the countries whose main job had been reduced to bailing out the banks.
The EFSF is one such fund. The TARP was another. The new lending provision of the IMF is another. Despite firm expert assurances each time a new bail out was needed, that this extra push, extra bail out, extra austerity measures, would be the last, the ones to see the job completed, none of them were. Instead each successive bail out proved to have to be larger than the previous. And today the banks need more money than they ever did. We are now told that far form having been improved by the immense pillaging of public finances, the entire banking system is in danger of systemic collapse unless yet more, and a great deal more, public money is pumped into them. And then as winter follows summer we will then be told there have to be even greater cuts made to compensate.
Once again we will be told that there is no money for fripperies like hospitals and care for the elderly or sick, but billions must be made available for the banks. We can print and borrow for teh banks but not we are warned for ourselves. Once again instead of spending money on things that would put people to work and invest in a long term future for us all, money will be poured into banks where it will remain. Filling the whole left by the rotting away of the banks’ ‘assets’ and loans.
The Geithners of this world talk about the need to take decisive action to maintain order. What order? I see no order unless you think an occupying army’s ransacking of a nation can be called ‘orderly’. Decisive action does need to be taken We need to have the courage to stand up and think for ourselves.
Golem,
I have been reading your blog for several months now, and enjoyed The Debt Generation. I find your analysis always to be spot on (I speak as a layman, but a layman with, I hope people who know me would agree, a grasp of common sense), and wish newspaper and television journalists would report truthfully the facts of the situation.
I too cannot see where all the money is coming from to fund yet more bail outs of the banks, and I worry about all our futures. I particularly worry about the future for my two young children, who are too young to appreciate that their futures are being stolen from them by people who don’t care a jot for them.
Still, I suppose we shouldn’t complain too much. After all, we should be prepared to sacrifice our pensions, pay, jobs and futures in order to keep the super-wealthy in the style to which they have become accustomed.
Keep up the good work.
Good post Jonahsdad73 … and good reply from Mr Golem below. I do so like this blog. I do so worry at the ineptitude of our mainstream media; they are letting us down so badly.
Jonahsdad73,
Welcome and thank you. Like you it is my children’s future I feel I must fight for.
If someone hit me in the face I might just turn the other cheek. If someone hit my child they had better run.
Agree with all you say, one thing though Greece (and the other club med nations) have lived beyond their means for the past twenty years. Just witness all the new infrastruture which has sprung up courtesy of the EU. These are basically agrarian/tourist economies with massive black economies on the side who want to have the Northern European standard of living with the ‘fun in the sun’ lifestyle and tax avoidance you cannot have both.
In some respects I don’t blame the Germans for getting angry why should they bail out these countries with Italians sitting on vast private savings, Greek shipping magnates untaxed in Kensington, etc while their Govts go cap in hand to the ECB (aka Bundesbank) to cover their borrowing all the while German society pays the price in reduced services. etc.
Yes, French and German banks need to be taken to task but the club med countries are as much to blame for this debacle
But the Greeks have already suffered a “haircut” on their standard of living approaching 50% and of course the wealthy shipping magnate’s have received help in moving their assets off shore from countries like ours
(Reposted below)
Jason,
It’s nowhere near as black and white as you suggest re the PIIGS. For a start, Ireland was +not+ living ‘beyond its means’ by much at all. And the truth for the others is far more nuanced too.
Right from the beginning of the EMU, it was widely accepted that some (Germany, Netherlands etc.) were already more competitive in their export capability. With the increased buying power of the Euro in the net importing countries, imbalances were guaranteed right from the off. This suited Germany & the other net exporting countries very well. Moreover, when the net importers could not find the cash locally to continue the game, Germany & the net exporters’ banks were more more than happy to ‘lend’, & keep ‘lending’ at an enormous rate. Germany & the net exporters were instrumental in setting up the EMU and it’s structure & institutions – or rather their politicians’ banking masters were.
Some economists, even in the mainstream, pointed out this obvious flaw of ‘sectoral balances’ that without some counter balancing mechanisms, would cetainly lead to a problem at some point. And, in the event of an economic downturn, these imbalances would make matters considerably worse.
But, no matter, the net exporting countries’ banks continued to lend their trade surpluses with abandon. Not a dicky bird from the ‘regulator’ (nice friendly Bilderberger he, but I digress), ECB or any other ‘authorities’ (Recall how often our politicians like to talk about ‘prudent’ economic management – bit of a joke eh?).
See any analogies yet with all those ‘NINJA’ sub-prime (control fraud!) loans yet, created and securitised in the trillions by our EU banksters US cousins?
If not, you should. This is the banksters (& their ‘institutional’ lackeys like IMF) modus operandi. They sucker people in to take on debt that cannot be afforded when economies turn down. Their business is the creation of money as debt, owing to them, with interest. (They call this ‘lending’, but it isn’t what we would call a loan – the money doesn’t exist before the bank credits the borrower’s account with a keyboard. Good game eh, our govs give the bamks free gratis?)
The banks don’t really care if the borrower can’t pay. They will foreclose & get some nice assets, or ‘lend’ you more money (that didn’t exist before). If the debts arte really big & banks’ really clever & have plenty of politicians in their pocket, then they get taxpayers to pay via their governments’……’borrowing’ more money…..that didn’t exist before….from….YES!….THE BANKS!
So, when you say the ‘club-med’ countries were ‘profligate’ you need to understand two things (at least):
‘Sectoral balances’ (this is accounting ‘identity’, not ‘economics theology’) means that there would inevitably be net exporters & net importers within the currency union & without any credit controls this would inevitably create net creditors and debtors.
AND, the ‘profligates’ had ‘help’ – a lot of it, cheap money thrown everywhere by banks. And the banks themselves played too, leveraged & ‘securitised’ to the hilt. Why not? They had structured themselves too big to fail, so why worry? (Shareholders be f*cked, we’re in charge, bring on the bonuses!)
Also, note that recessions, particularly in Greece, have been made infinitely worse by the ‘austerity’ conditions applied with the ‘pass-through’ bail outs.
For more on this read Bill Mitchell’s excellent commentary in his blogs.
Mike,
Really good to be reminded of the role of the bankers in creating the debt and encouraging people to drown themselves in it.
“… Greece would be forced to put up assets as collateral. These could be parts of Greece and its infrastructure …”
What value Corfu? Perhaps it could trigger an Austria Germany bidding war!
Jason,
I agree no one is blameless in this.
Hey Golem
Very pertinent post as ever.
I am having increasing trouble with the banker / Barroso / Obama argument that Europe needs to show political action to overcome the financial crisis, which seems totally oblivious to the fact that there may not be any democratic will in Europe to put in place such political reforms. I am a stalwart European, but I don’t want an EU treasury or an EU finance minister with control over national budgets until the day when I can vote and remove the EU government which the finance minister belongs to.
At present I can’t see much to stop the Eurozone and the EU imploding. If the solutions are political (federalism/ EU superstate) the UK, for one, is never going to vote through the treaties. So stalemate. THe UK asked to quit the EU ? Other countries too if they vote no?
It doesn’t matter if the UK is not in the Eurozone : the sort of reforms being discussed will mean the Constitutional Treaty is dead in the water and needs urgent replacement.
Do you have anything concrete on this Uberplan, Golem? I reported earlier on the outcome of a “wargames” exercise conducted by the Bruegel think tank (http://www.bruegel.org/publications/publication-detail/publication/606-resolving-the-european-debt-crisis-conference-summary/ , via Paul Mason) and there was a similar but separate “Eureca” plan issued by a group of strategy consultants (http://www.rolandberger.com/media/pdf/Roland_Berger_EURECA_project_20110927.pdf , via Zerohedge). But do we know whether either of these, or something similar, is being actively considered by European leaders?
Note that even the EFSF plan isn’t a done deal yet: Austria (which decides tomorrow), Estonia, Malta, the Netherlands and Slovakia have yet to agree.
There’s a danger of a North/South European divide, with Northern Europeans stereotyping Mediterraneans as feckless. Comments from Estonian MPs on the EFSF, echoing views expressed in the German popular press:
“Reform party MP Tarmo Leinatamm said:
‘It is very hard for me, and for all of us, to explain to Estonia’s inhabitants who earn many times less why we should support citizens from EU countries where people earn 2,500 or 2,600 euros a month.’ [see below]
Juku-Kalle Raid, an MP from the coalition’s junior party, Pro Patria and Res Publica Union, went one step further:
‘I think I will vote against it. It is really strange that Estonia, where incomes are lower than in Greece even after its cuts, should pay for these lazy losers.’
http://www.telegraph.co.uk/finance/financialcrisis/8782663/Debt-crisis-live.html (at !5:50)
– whereas a Brit resident in Greece reports on the case of a port policeman who only gets to see his family every six weeks:
“Working-class Greeks are happy to talk about their finances and Dimitris told me he had been earning 1,500 euros a month (£1,300, $2,000). I asked about the “had been”, and he told me the government had cut the salary of all public servants.
His pay, he said, had been reduced by 230 euros a month and from October this would be reduced by a further 70 euros.
I wondered what would happen in Britain or Germany if the police had their pay arbitrarily cut by close to £300 a month.”
[That’s a total pay cut of 20%, btw.]
http://www.bbc.co.uk/news/world-europe-15092454
See http://www.presseurop.eu/en/content/article/978261-financial-genocide (posted before) for a fuller picture.
Tell me about it – I’m a teacher in the UK, and we’ve had our wages frozen for two years. With inflation at 5% pa, I’ve had a pay cut of more than 10%… so it’s happening here too.
Thanks for those links Neil. I skimmed through the Brueghel document and noticed Soros’s comments. He was minuted as saying that the EFSF was an embryonic central treasury for Europe. He also recommended that it should become a fully fledged central treasury, recapitalise European banks (rather than leave that to nation states) and that it should also have the power to tax. My blood runs cold: the power to transfuse wealth directly from people to banks with minimal political intervention.
That makes interesting reading when read in light of the recent Zerohedge feature on the Boston’s Consulting Groups report which said that governments would be forced to introduce a one off tax on wealth to level the debt mountain.
http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis
The mathematics of it means it ends badly.But when?Those bankers are now moving targets for the future,perhaps near future.
Another great post David.
And on top of this you then have bankers complaining that the utterly sensible Basel III requirements are a ‘bit tough’ and (get this) ‘anti American’ – step forward Jamie Dimon (CEO JPM Chase). Hats off to Nomi Prins for the most eloquent summing up of the banking folly in the States I’ve seen in a long time: http://www.zerohedge.com/news/guest-post-jamie-dimon%E2%80%99s-shameful-spouting-about-%E2%80%98anti-american%E2%80%99-basel-iii-regulations
The Daily Mail are doing there best to piss off the middle classes with this news, concerning the rumours from Washington that the delightful Lagarde might be getting her war chest increased from 350 billion to 3.5 trillion, to use to bail-out Johnny foreigner at a cost of £5,000 per family.
http://www.dailymail.co.uk/news/article-2042186/European-debt-crisis-Families-face-5-000-bail-debt-stricken-nations.html
God help us, Nurse Ratchet in charge of the medicine cabinet.
I thought this article from Glenn Greenwald summed up the difficulties faced by the occupy Wall st. people & I think it also applies elsewhere in the West, how the supposedly progressive politicians have turned their backs on their principals & constituencies.
http://www.salon.com/news/opinion/glenn_greenwald/2011/09/28/protests/index.html
@ Golem, I will be hoping to be one, who in some small way can assist the one, who can add the straw that breaks the camels back, this is personal.
Neil,
I have no inside info I’m afraid.
But what I feel is obvious is that the plan centres on and even hinges on removing decision making power further from the people. The ruling financial elite I think have come to feel that for the sake of the smooth operation of global financial system which they feel is paramount, democracy has now to be ‘tempered’ with management by an expert elite, And of course they find that they are that expert elite.
We are at a perilous moment where the survival or corruption of democracy hangs in the balance. And we can look to no one to help us. The Chinese already have the system which our expert elite admires. Not too much democeacy. Not too much people power. Just enough for show but not too much to get in teh way of the ‘regretable,often painful, but so necessary’ decisions that have to be made of rthte good of the system.
The light of democracy and of freedom lies with us, here, now.
I’m sure you’re right. And I know, from your blog, your book and having attended two of your talks, that you are doing your level best to spread that light.
For those who have the time, here is another timely book: Debt: The First 5,000 Years, by the anarchist anthropologist David Graeber (http://en.wikipedia.org/wiki/David_Graeber )
http://www.amazon.co.uk/Debt-David-Graeber/dp/1933633867/ref=tmm_hrd_title_0
For those who don’t, here’s an article:
http://www.metamute.org/en/content/debt_the_first_five_thousand_years
Graeber has also appeared recently on the Keiser Report:
http://wallofcontroversy.wordpress.com/2011/09/20/david-graeber-on-debt-and-why-it-must-be-cancelled/ (includes videos)
I’ll try to make time to read the book you recommend Neil, my listening of choice the past few weeks in the evening whilst doing the washing up has been the excellent Planet Chomsky. Fascinating stuff always from the great man.
http://planetchomsky.com/
As always Golem whilst reading your Blog I always get a second inspiration from your wonderful readers comments and recommended articles and so forth
As the madness deepens I take heart from a wider presence on the internet of signs of a popular uprising. It has to come!
Golem,
The last stand was the Lisbon Treaty. We capitulated then. Other then violent rebellion, there is little left legally within our reach to defeat the banks and their politician puppets.
If indeed there should be gold confiscation or even just restriction in the works, then we will have nothing left but violent rebellion to break free… but by then, our leaders will have packaged a very convenient foreign evil somewhere whom ostensibly threatens our way of life… such as it is…
Rather worryingly, considering the influence of the Council on Foreign Relations, it has published an op ed on its website arguing that democracy might be too much of a good thing – preventing the relevant experts from dealing quickly enough with the financial crisis…
http://www.cfr.org/geoeconomics/too-much-good-thing/p25887
I think there was also a proposal by an American state governor that elections in her state should be delayed so that the experts could carry on with their solutions without interference over a period of years (2, as far as I recall).
Hang on, here’s the link through Denninger:
http://market-ticker.org/akcs-www?post=194955
The enemy is gathering its forces!
Absolutely. The whole drive of ‘democracy’ since the Reform Act of 1867 has been to concentrate power back in the hands of a very few and reduce the participation of the rest of us to a fatuous choice between Dee and Dum every 5 years. And this crisis is being used as an opportunity to rush through still more unaccountable EC integration. Ironically, I don’t think the Ancient Greeks would recognise our version of democracy as having anything to do with their idea of government by citizens…
We seem assailed by enemies within and without, our political elite has been groupthinked into the falsehoods of the neocon paradigm. Our media rehearses the arguments for and against but only within the bubbleworld of the same paradigm, and our bankers maintain an insouciant air of innocence about them that would get bambi blushing.
The french elite and their euroallies [piigs++] who have benefitted so much from eu largesse, [so often at our expense], have finally caught a glimpse of the tab they’ve run up and are now saying they’ve lost their wallets and can everyone have a whip round to save them.
The germans who so easily could have called the eu to account anytime in the last 25 years, and brought some realism into our joint political endevour, were too concerned with building their own manufacturing primacy to look around and see the encompassing kleptocracy being woven around them [or didn’t care], now wake up to find all about them insolvent and expectant. They need to rapidly decide how best to preserve their customer base whilst all about deafen them with a cacophony of advice, none of which is in their interest.
The american machine intent on rolling all before it cares little for any of the above players yet needs still to define the parameters of the media debate, which serves as a proxy for what in the end is possible for any of the players, most of all the play must go on until the only play left is the one they dictate.
China needs to keep the game active too since a collapse in their exports would create turmoil at home and who knows where that would lead, industrialists/bankers take over?
What we can be sure about is that every insult to our future will be spun and downplayed so that no single act provokes either enough people or enough anger to cause a general response, and we will all be picked on and picked off according to our allegiances. Perhaps whats worst is as yet there is no we, and though we are pawns most of the so called players are just the other peices on the board.
great post golem
Zerohedge’s summary of a report by global management consulting firm the Boston Consulting Group, which claims to be the world’s leading advisor on business strategy (http://en.wikipedia.org/wiki/Boston_Consulting_Group ):
“it is time to face the facts. What facts? The facts which state that between household, corporate and government debt, the developed world has $20 trillion in debt over and above the sustainable threshold by the definition of “stable” debt to GDP of 180%. The facts according to which all attempts to eliminate the excess debt have failed, and for now even the Fed’s relentless pursuit of inflating our way out this insurmountable debt load have been for nothing. The facts which state that the only way to resolve the massive debt load is through a global coordinated debt restructuring (which would, among other things, push all global banks into bankruptcy) which, when all is said and done, will have to be funded by the world’s financial asset holders: the middle- and upper-class, which, if BCS is right, have a ~30% one-time tax on all their assets to look forward to as the great mean reversion finally arrives and the world is set back on a viable path. But not before the biggest episode of “transitory” pain, misery and suffering in the history of mankind.”
http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis
A quote from the conclusion of the report itself:
“reaching consensus on such tough action might require an environment last seen in the 1930s.”
http://www.docstoc.com/docs/97122913/BCG_Back_to_Mesopotamia_Sep_11%5B2%5D
The report is only a wide-margined 15 pages long, and is, as Zerohedge puts it, an absolute must-read, though one thing it doesn’t address (among others, no doubt) is the problem of capital flight and tax havens.
See p. 7 for a chart of the one-off wealth tax that would be required for each major EU country and the US, with Ireland’s household financial assets being less than would be needed for debt reduction.
“Acknowledgement of the facts may be the biggest hurdle”, as the conclusion puts it. Our politicians and the mainstream media may be in denial, but at least we’re not. The report deserves the widest possible circulation and discussion.
@ Golem
Great post & agree with the stark terms of the situation.
I would like to add a little concerning the ‘this country, that country’ narrative that pervades the MSM & some political assemblies.
Talk of the Greeks this, Germans the other is simply another aspect of the divide & rule strategy of the elite. The MSM pundits seem to to love masturbating verbally over this at every opportunity.
There is only one real division that we need concern ourselves with – the wealthy ruling elite, epitomised by the banksters & all who make money from money to no productive purpose whatever (and their ‘gatekeepers’), versus the vast majority who work for a living (& including the poor sods for whom no job exists).
Now, before I’m accused of some ideoligical -ism or other (tho’ not likely by posters here!), if some entrepreneur has the drive & nous to set up a usefully productive business, employing people etc., I care not if they make millions from it. (Billions, I would care perhaps…) Some people can & should play on a larger stage, but no one with millions has any place in representing citizens in the democratic process. Those who purport to represent the majority must, broadly, live as they do. Simple, corruption removed at source. Time to do it.
Mike Hall.
The only thing I would accuse you of is clear thinking. Which is probably enough to put you on one watch list or another.
Johnm33,
That about sums it up.
Neil,
If only we had chosen the path of transitory pain in 2008 we would now be busy building a more open, fairer and more hopeful world that the dismal oppressed gulag into which we have been herded. Instead the transitory pain when it comes will be that much worse.
The (public) asset strippers are moving on Greece:
“There was once a country named Greece”
Bill Mitchell on a ‘secret’ plan to stitch up Greek public assets
http://bilbo.economicoutlook.net/blog/?p=16295
Ah yes, the Eureca plan I’ve posted about.
Somehow I think I prefer the Boston Consulting Group approach.
But that – as the BCG report itself suggests – assumes:
a) an acknowledgement of the facts;
b) a consensus unlikely to be reached until our collective backs are really against a 1930s-style wall;
c) policies and measures being implemented to ensure that it NEVER, EVER happens again.
Do we feel lucky? Or is this crisis going to go the same way as global warming?
My metaphor for the banks involves getting home after yet another day of back-breaking toil to find people in suits playing Monopoly. They claim this is their hard work. Their game uses the same money you get paid in and they just keep printing it to keep the game going.
I’ve lost sense of scale, not in the ‘trillions’ but in stuff like 3000 engineering jobs going in engine of death manufacture and that the exploitation of Bowland basin shale gas will create 5000 to7000 (no doubt with a service and supply chain multiplier) if it’s all true – in providing 64 years of UK energy supply. Quite how this will pan out is unsure but the scale of jobs in this field compared with stuff like one in nine Scottish jobs being in financial services (once) and agriculture at 4% of world GDP surely tells us that work that needs doing is a ridiculously low percentage.
I hardly use my bank at all (internet) and cold run a primitive one from my front room. Underlying the crisis are daft Idols people don’t understand. That we tip the world’s resources into the same few hands is denied by no one – but I don’t find this well understood ‘down the pub’. We are almost entirely uneducated. We should be on the streets across the West, yet we still believe we live in democracies. Part of the problem is realising what has been dearly held and fought for was a lie.
@Mike
I would disagree with you somewhat – sure trade imbalances caused by crazy credit creation created the crisis but the problem as a whole cannot be solved by more digital credit creation.
The honest thing to do if the shadow bank sector cannot be defaulted on is the printing of raw currency into the medium to clear the debt – monetization otherwise known as the creation of more debt will just not cut it for much longer.
The very sectoral imbalances created structural capital misallocation issues – and so therefore Ireland did indeed live beyond its means.
This has bankrupted the banks – but now as they are almost fully independent from states they can now pillage them internally rather then using one proxy state to pillage another.
Although to some extent the old sov state model of Central bank warfare is still in place – using Germany & France as the successful war states – but these units are shadows of what they once were even 20 years ago – they have just been decapitalised at a slower rate.
The banks will continue to extract capital in more imaginative ways to maintain consumption – chiefly their consumption and to a lesser extent ours until they reach a entropy brick wall me thinks.
I don’t believe I said I was in favour of more credit creation? Your second paragraph is my position too. ie stabilise the situation, get the debt off the backs of sovereigns & get some debt-free stimulation in there too – directly by job guarantee schemes. Then sort out the separation of high st. & casino banking, get proper regulation of the latter, position limits etc. (If we can’t do that within EMU – better off getting out imo.)
With respect to Ireland, I think it depends which Ireland. The property developers certainly lived (gambled) way beyond their means. Ordinary folk had to borrow big to buy a home, some got into buy-to-let. But I don’t think the high mortgage endebtedness, even where folks used their property equity as ATMs really constitutes significant living beyond means that cannot be placed at the door of reckless lending & surfeit of funds coming from the euro core.
Ireland did undergo significant growth in its real economy in the 90s, lot of FDI etc. It still has a net exports balance & didn’t have significant public sector borrowing. Indeed, if you take account of the pension fund surplus, it wasn’t far off balance. If we had not been forced into large austerity cuts, imo we would not be in bad shape – at least in relation to other countries. (Disregarding how wise the MNC operation might be in the long term.)
I see the ‘profligacy’ narrative in general to be an effort to deflect blame & responsibility from where it really lies. Individual borrowing decisions simply cannot be expected to bear aggregate responsibility. Ultimately this should be our governments & their economic advisers, but when they are ‘captured’ along with the MSM by banksters, where the blame really lies is pretty clear. (I’m sure you’d agree with that.)
Anyhow, nice to see another Corkman about, I always find your posts interesting!
Sorry if I misinterpreted you – but i was Just listening to Warren Buffet on zero hedge and he mentioned all that capital which he defines as dollars as just sitting on the sidelines just waiting for a enterprise.
I think he is picking up a lot of MMT as he clearly makes the point that raising taxes will not reduce the defecit – he just wants taxes on rich traders to survive politically I guess.
But the problem is once the velocity of those dollars increases rather then sitting down as excess reserves as they do now inflation will explode as the physical economy has been so decapitalised over the years – i.e. it is not strong enough to accept all those dollars , a bit like a starving man that is fed a steak – he will collapse and die from the shock of eating.
The rational & correct thing to do during 2008 was destroy much of those dollars in the money markets etc creating a deflation but countering that deflation with new dollars spent on the commons – but as we now know that is politically impossible given the structure of power.
Sorry to go off in a tangent but that is my core critique on MMT blogs such as Pragmatic Capitalism – Cullen Roche is a fine guy but he really believes Apple will save the world – I think the entire structure its too far gone now.
Its emaciated to the point of absurdity – the willingness to forgo food was a positive economic metric according to the monetarists and now its going to die no matter what is done – as people are only willing to step up to the plate when it is too late.
To finish I think Modern Keynesian’s (MMTers) want to provide defecits so people can save and prevent private lending from fucking up investment again – but the very low interest rates are a signal of near collapse in my opinion.
It will not work unless the shadow bank system which I define as anything but retail deposits and Goverment bonds is shut down & wiped out – not bailed out by extreme low interest rates on treasuries.
I think the domestic Irish situation can be solved easily if the commercial bank credit deposits are transfered to the post office and effectivally become goverment money and all private debt contracts are wiped out – this along with major consumption tax increases especially on imported oil will save the Irish Euro if you want to call it that as a default on loans will explode consumer inflation if no new taxes are raised.
But we know that many consider BoI & AIB as Ireland – anyway even if they were altrustic the situation is complicated by non irish sovergin banks still operating in this juristiction.
Given the free flow of capital and more importantly credit what would stop another bank supported by another CB from buying now cash price properties on the cheap – if the above plan were to work capital controls would have to be put in place first – but we Know from Governor Honoghans , the ICB & ECBs doctrine continues to be support of new credit / opium producing banks when and if the time / market is right (think last legs) – its a quite extraordinary exhibition of the modern CB war model now without armies or borders.
The #occupywallstreet protest continues to grow despite being largely ignored by the mainstream media. Perhaps this is the beginning of some stirring of the population, towards reclaiming some shred of democracy from the jaws of an enforced plutocracy?
see: http://youtu.be/Zgr3DiqWYCI
Sickening, they should be wearing brown shirts.
More of the same :-
http://dailybail.com/home/he-did-it-again-nypd-thug-anthony-bologna-pepper-sprays-phot.html
At the end of the day it is only us, the people, who can put a stop to this. The occupy Wall St. lot have the right idea, but the brutal treatment of the peaceful protesters by the NYPD looks like fascism to me. Despite the MSM ignoring it, its all over the internet and in particular UTube. I note from the telegraph article the Greeks are switching off from the MSM.
I’m afraid that the same measures that are causing chaos in Greece will be introduced here as well. And the backlash may well be just as strong. As Gerald Celente says; “When people loose everything, and have nothing left to loose, they loose it”. History shows us that the ruling elite can only squeeze the masses for so long, before there is a backlash. Eventually the public dont believe their lies any more and take matters into there own hands. This is particularly the case when the public knows where the blame lies. And I get the feel that a significant proportion do.
One other factor worth considering is the break up of the UK. Living north of the border, its clear that the SNP has a lot of support now. Independence is by no means guaranteed. But as the economy starts to collapse, it will be a perfect opportunity for the SNP to roll out their referendum, and use the negative backdrop to argue that an independent Scotland would be able to control its own destiny, rather than ‘be dragged down by England’. Nationalism often occurs in periods of economic chaos.
I think you have it right, keekster. I would add, though, that re-localisation so as to avoid the types of power concentrations represented by nation states and huge corporations is a must. The sort of direct democracy that is slowly finding its feet in public squares across the world now is the beginning of a new system. For example, in Berlin the Pirates (Die Piraten) gained 15 regional seats. They are also involved in writing internet-based software collectively know as Liquid Democracy, which is one part of this very lengthy process of The People ruling themselves directly.
We must–and this is going to be messy and frustrating–come together at the regional level, while remaining networked across the globe to learn from each other’s mistakes, and redefine everything. By that I don’t mean throwing the baby out with the bathwater, but taking a very cool look at e.g. money, education, ‘earning a living’, consumerism, wealth, power, oil, and so on.So though parties like the SNP will see an opportunity in the collapse, even they will be able to deliver nothing except more misery unless they address the cornerstones of capitalism as critically as we do here (and others elsewhere). An entire global paradigm is unraveling, which means no one can know–so follow no silver-tongued leader!–what the new paradigm will look like.
The old cliche is appropriate. It’s up to us…
If we are prepared to accept the realities of the financial situation we are in, as well as the political forces that are required for any coordinated action, what particular options or paths are actually available at this time, and with what degree of certainty can we place on the predicted consequences of each of those possibilities?
I think I am aware of the problems we face, and have an inkling of what a fairer system might look like, but I am much less certain of alternative paths from where we are right now and what the issues and impacts that these options will bring.
M. Jenkins – Just apply current accounting, commercial and criminal law. Let the banks fail and bond holders sustain the losses they should as contemplated by law.
If you really want to push the boat out, then change the monetary system too whilst you are at it.
Done. Nothing else required.
Sounds so simple 🙂
Are you saying that there is nothing fundamentally wrong with the existing system except for the lack of consistency in the application of law when applied to the financial institutions compared to the rest of the business world?
In that case, seems like the steps to get there are political in nature than financial then. Shame my faith in that particular process is at its lowest point, but it would give cause for hope if life is indeed this simple.
There is nothing wrong with a debt based fiat monetary system provided the authorities allow it to evolve naturally. DBFM like all systems has the inbuilt capacity to end. But DBFM also offers the easiest way to short circuit this natural tendency to end. Hence the reason the banks prefer it over any other monetary system and co-opt politicians to impose it on society.
But, if we were to apply the law consistently, banks would ultimately fail as would other non economically viable entities.
All we need do is to apply the law. Nothing more is required.
If our politicians are unwilling to apply the law, we the people can still force a resolution by crippling the expansion of credit markets thus bringing about a demise of DBFM thus paralyzing the political process.
That would involve the indictment of half of Wall St., and the bankruptcy of much of the banking sector. Had these laws been enforced decades ago it might have stemmed the tide, but saying that after the bailouts rather misses the point!
Not at all. Even after the bailouts, if the law were to be applied these entities would still fail. The bailouts did not resolve the fundamental problem which is solvency. Bailouts address liquidity which is not a problem. Even now, mark to market is still not enforced on banks. If it were, BAC, C, JPM and many others would blow up instantly…. as would the Federal Reserve…
Just apply the law… or let us cripple the credit markets.
The problem with this point of view is that it fails to recognise the extent of regulatory capture (See: Simon Johnson’s ‘The Quiet Coup’), and its ideological underpinning – the poacher is the gamekeeper; Congress is run from Wall Street and funded by K-Street. Greenspan famously declared that there was no necessity for fraud investigation because counter-party risk would filter it out – the market could police itself.
So it’s a bit rich for those who supported this system to pretend that proper regulation is all that’s required – particularly after much of the debt has been nationalized.
What you leave hanging in the air is what happens after the collapse of JPM/AIG/BoA, etc. – and by extension the world economy. That’s the interesting part.
Talk about ‘monstrous facts’ this crisis in Europe has been brought about as a direct result of the ‘Monster’ described in great detail by Michael Hudson in his book of the same name. The selling on of these ‘Securitized Assets’ to banks in Europe is the main reason for the crisis. It is NOT a failure of the Euro per se as many Americans would like to believe, it is their failure to control their own financial system. It is also to their disadvantage as much as everyone else’s. When are they going to wake up from their dreams of repaying impossible sums and realise that they were the result of massively fraudulent lending and that the only way out is to default on all such ‘debts’ and bring the perpetrators to justice?
True, of course, tho’ the poor structure of the euro/EMU has made it’s ‘users’ very vulnerable. Precisely what Randall Wray apparently said as early as 1994 (& quite a few others too before its introduction).
That, as you say, the crisis originated in the US raises some interesting points imo.
For a start, that point does not seem to have been mentioned much by the MSM or politicians in the EU. Which begs the question why given the present travais.
Well, for one thing, it looks like the US operations of some major EU banks, RBS (UK) and Deutches Bank (Germany) have been mentioned among others, were also up to their necks in what William K Black has called sub-prime/securitisation ‘control fraud’. Is it possible their EU parent banks didn’t know? Seems unlikely.
So, it could be concluded that US & EU banks were in it together from the start & that’s why the EU ‘masters’ are keeping quiet even whilst some (admittedly modest) legal moves are being made in US.
Hardly a revelation to readers here, but it does add further weight (were it needed) that representative ‘democracy’ has become pretty meaningless much anywhere faced with the global banking elites.
Presumably what ‘trader’ Mr Rastani was getting at when, in a (molecule in a universe) rare moment of MSM candour, he said “…Goldman Sachs rules the world..” (doubtless being a little ‘generic’ in fingering GS).
I don’t agree with the ‘violent’ part of Guido’s revolution (whilst I understand his feelings), but revolution as in very radical change is certainly what we need, & nothing less, in economics, politics & public service & news & factual media +all+.
Are we sure that the sovereign debt crisis is not control fraud as well.
I suppose if this latest bailout fund does what it says on the tin, the Northern European countries will be insulated for the time being from bank collapses. For the club med countries however, there will be more of the austerity medicine. I know from a friend on facebook that things are incredibly bad for the average person in Greece. It brings it home to have his personal perspective. If he is anything to go by, most Greeks are very confused, very scared & they don’t know which way to turn. It’s easy for me to advise default as the best option, but i don’t have to step off that cliff.
I am hoping that the peoples of Italy, Spain & Portugal when the austerity screw is inevitablly tightened there, realise that they will be going the same way as Greece & then organise themselves to fight against this. Meanwhile due to the insulation provided by the EFSF or whoever, the Northern Europeans will for the most part will still be able to look down their noses at the lazy feckless Southerners. I think this applies to the British in particular as there seems to me to be a feeling that this is all somebody elses mess. A kind of English channel mentality.
Personally I hope the bailout fails & everybody is forced to see the reality. Slovakia I hope might just throw a spanner in the works. We need to somehow build up some sort of organisational resistance, else like the Greeks we will become like lambs to the slaughter.Keep speading the word folks.
Meanwhile Barossa wants more power.
http://www.spiegel.de/international/europe/0,1518,789300,00.html
For thirty years a revolving door of Wall St. alumni have been tearing down regulations put in place after the last market failure. Ayn Rand disciple Alan Greenspan and his acolytes (Rubin, Summers, Geithner, Bernanke et al) brow-beat anyone (e.g. Brooksley Born) with the temerity to question whether markets were self-regulating, or if counter-party risk could be relied on as sufficient discipline when the counter-parties didn’t understand what they were buying. Credit controls were relaxed, leverage increased, feeding an asset-price feedback loop well described by Minsky. Despite the Savings and Loan collapse, the demise of Long-Term Capital Management, Enron, WorldCom, etc. the Efficient Market Hypothesis held sway – it was as if, after glancing off an iceberg and taking on water, the captain ordered full-steam ahead into the ice floes.
With securitisation of the mortgage industry – cutting the link between borrower and lender debt levels (and bonuses) exploded, based on the assumption of house prices rising to infinity and beyond.
When the inevitable mortgage defaults brought a cooling off the insanity of the system was laid bare. Neoliberalism lay in ruins. Even Greenspan admitted failure.
Then… Paulson, ex-ceo of Goldman Sachs hits on the idea of taking private debt onto the public accounts, the EU follows suit, plying the banks with taxpayers’ future earnings, and taking on the toxic waste.
The markets then castigate governments for holding too much sovereign debt and the ratings agencies who rated that debt triple AAA in the private sector now downgrade the same debt held on the public accounts – with the result that the government owes the banks even more for bailing them out.
Meanwhile, the mainstream media’s revisionism lays the blame for the crisis on too much public spending on health, education, social security and pensions – the fault lies at the door of the teaching unions, the cancer sufferer who manages to live longer than 12 months, the public sector worker retiring on £4,500 p.a., etc.
Neoliberalism rises from the grave the suck the last ounce of blood from the public sector corpse.
And when a trader comes on TV to say he’s looking forward to another Depression we seem surprised!
Excellent post Charles
great comment charles. to the point!
You hit the nail on the head, we’ve been had
I don’t accept that at all.
I have a professional insight on bad debt in the UK, and I promise you that the public sector has hardly suffered compared to the private sector.
Out of a hundred debtors who turn up in court in the UK you might find a few – 2 or 3 – who are employed in the public sector. The rest are guys who worked in construction, IT, manufacturing, printing, real estate. Plus divorce causes all kinds of havoc, but that is often triggered by the original debt problem.
Can’t be arsed dealing in terms like neoliberalism. The basic problem in my view is that labour is rewarded at an increasing discount while capital soaks up all the gains.
The public sector has been insulated from this, and my impression is that the gains made by public sector workers through their greedy collective bargaining have been invested in capital, whether through pension funds or buying commercial and residential property.
I accept that many public sector workers aren’t in on this deal, and I class them along with the ordinary joe trying to earn his way and who has had to take on unsustainable debt to maintain a standard of living.
If you want a simple model of this it is Mussolini’s fascism: big government scratching the back of big corporations scratching the back of big unions.
Charles,
That has to be one of the best short summaries of this crisis as we’re ever likely to read!
Note to self: must stop waffling in future!
Has anyone else read the Boston Consulting Group report (http://www.docstoc.com/docs/97122913/BCG_Back_to_Mesopotamia_Sep_11%5B2%5D ) yet?
It won’t take you long and I’d be interested in people’s reactions.
I’ve got a longer version if you want it!
You have a longer version of the Boston consultancy report
Where??
I think Charles means a longer version of https://www.golemxiv.co.uk/2011/09/the-monstrous-fact-from-bail-outs-to-debt-peonage/#comment-5896 .
Golem,
I have only just come across your blog and have purchased “The Debt Generation” on the strength of it.
Living in one of the so-called Piig nations (if there was was an acronym designed to make the citizens of a country feel worthless and subserviant, then this is it), it scares, angers, disappoints me that our politicians are so willing to give in to those institutions that caused the financial crisis in the first place. I am also disgusted with my own paralysis in relation to standing up to what is being inflicted on me and my fellow citizens.
The fact that our elected representatives can justify the repatriation of billions of Euro to foreign creditors at the expense of providing services for the people who elected them along with the possibilities of building a better future for our children on the basis that we won’t be able to borrow in the future highlights the paucity of thinking in Government today. The Banks gambled, they lost, end of story.
Greece is only the “clinical trial”. When the IMF/EU/ECB are convinced that they can destroy Greece without fear of retribution, then they will turn their attention to the other countries who have had to go cap in hand to them for a bail-out.
Goonermayo,
If you need help in persuading your fellow citizens of this economic attrocity, then look no further than this guide as to why it is the LENDING / LENDERS that is the problem, not the borrowers:
https://www.golemxiv.co.uk/2011/06/guest-post-by-hawkeye-irresponsible-borrowing-and-irresponsible-lending/
This explains that the lending is either: Irresponsible / Inequitable / Incompetent / Illegal / or down right Insidious.
Also available in Spanish:
http://toponium-es.blogspot.com/2011/07/endeudamiento-irresponsable-y-prestamos.html
Good luck and may the forces of Democracy and educated citizenry be with you!
Hi Hawkeye,
Thank you for the link to your guest article. It makes a simple but powerful point:
we are witnessing the most blatant wealth transfer in living memory and it is being carried out in broad daylight. Those in charge are using fear of the unknown to brow beat us into submission.
It is only through forums like this and through the gathering together of people who understand what is going on that we have a chance of fighting back (I mean in an intellectual rather than physical way).
I have attached a link to an article on my blog site. http://theserfsfightback.wordpress.com/2011/09/26/the-scam-that-is-austerity/
I would be interested in your thoughts if you have time to read through it.
goonermayo
And McLean and Nocera’s ‘All The Devil’s Are Here’ is very good on skewering the myth that the participants in this pillaging exercise didn’t understand what they were doing. Many US states and cities attempted to limit the activities of predatory lenders but were frustrated by federal ‘govt.’.
In short, the idea that nobody saw this coming is bunk.
Neil,
The interesting thing about the BCG paper is that an outfit so mainstream has essentially summarised what been said in the ‘margins’ for so long. It reads a bit like a combination of Steve Keen and David Graeber. My old bones remembered much of the old Labour investment talk from the 60s and phrases like ‘the gnomes of Zurich’. It’s short on solutions that protect wages (and a return to them in some senses) while we get on with the blindly obvious – or what would be if our ruling elite didn’t keep lying. What’s so disappointing in all this debate is that we aren’t ‘outing’ the need for a radical change in employment conditions and wealth accumulation – there is still an assumption that we ‘need’ to be motivated by fear and greed. Great lead for my students so thanks for that.
I was disturbed to see that it suggested (p.9) that wage cuts and high unemployment would be needed to make unit labour costs competitive not only in Greece (it’s happened already for state employees), Portugal and Spain (again, I know some pay cuts have happened already), but also in France and Italy. Unit labour costs in these countries are said to be 10 to 30% higher than in Germany.
On the other hand, it basically said that most banks, here and in the US, would have to be (temporarily) nationalized. The one-off wealth tax would need to be 25% in the US (where the real estate market would need special measures) and 30% in Europe, with a possible starting-point of 100,000 euros. (Would this include pension funds, I wonder?)
Needless to say, this would hardly be welcomed by those affected – and that is where the political difficulty arises.
It’s the old ‘fallacy of composition’ problem. Cut wages in Greece and you might conceivably make the Greek economy more competitive – cut wages across the EU and we’re all back where we started – but with lower demand, putting the pressure on prices and … wages. Meanwhile the developing nations follow suit and it’s the Great Depression Pt. II. At the same time levels of debt remain at their nominal level, increasing the burden on a lower paid workforce, leading to another round of bailouts, calls for more austerity … and repeat until cooked.!
At some point the debts (created out of thin air as the corollory of an overheated property market) will have to be written off.
It’s just a question of whether this is done before we wipe out civil society or after.
If you read the report, I think you’ll find that it goes for national, household *and* corporate (inc. financial sector) debt, amounting to a total of more than 6 trillion euros.
See pp. 6-7, which talk precisely about writing off, and the implication that most banks would need to be taken into state ownership as a result.
“… that most banks would need to be taken into state ownership as a result”
The Swedish option: http://goo.gl/AbzPY
Allcoppedout – what do you teach, at what level?
It’s good to know you’re keeping at least some of the younger generation up to speed with what’s happening.
The Gadarenes of Finance.
“we are a people possessed
like the madman of the Gadarenes
our souls howl with contempt
as greedy lips consume us
our “democracy”
silences the wise
our “prosperity”
impoverishes the meek
our “freedom”
imprisons the beloved
devoured by the Legion.”
Martin Gadaran.
: The People Business.
Intro.
This exercise is about us. All of us, the Homo sapiens that dominate this planet we call earth and the world we manufacture in order to pass our time on it.
As a species we are dominant. We have conquered land, sea and sky, beginning to probe into the universe and in most cases can choose either to decimate or manage every other species on earth from whale to virus – though the latter causes us the greater problems. Animal, vegetable or mineral we regard as resources dormant until we uncover their latent potentials, which are then ours for exploitation.
We are not unique in our exploitation. Viruses exploit anything that suits them in the animal and vegetable world, whales exploit the food of the oceans, plants the nutrients of sun, soil and rains, and minerals the geophysics created by change through the ages. However it is only our specie that can reason and understand these things. And even if we don’t understand, we know that there are others in our species that do and if the need arises, we can study their understanding and learn from them.
Even in this team learning approach we are not unique, though other species may use the suckling bribe in order in order to establish its practice. Nor are we unique in our flaws, the propensity to kill or intimate anger or violence is used through most if not all of the species. Even our ability to reason is not unique; a dog learns tricks or performs duties because it associates it with – probably in some, to it, mysterious way – a duty or game pleasing to its master. That’s still reasoning.
So in the natural sense we have no specifically unique qualities. We can’t dive like a whale, run at the speed of a cheetah or fly like a bird but by the development of our brain and its ability to construct abstract thought we can beat the abilities of the natural species in all these ventures. Now abstract thought isn’t inventiveness. Man didn’t invent fire; he witnessed it through some natural occurrence. Just as he noticed a round rock was easier to roll than a square one. The abstract was in seeing how both of these could be used to advantage.
This was the time when Homo sapiens began to exploit his nature; the foundation of civilization and the gestation of the People Business.
What won’t be included in this discourse are masses of dates, statistics, graphs or formula. Whether this genesis of abstract thought happened one hundred thousand, fifty or thirty thousand years ago is totally irrelevant.
As is recorded history; which in itself is a product of abstract thought – perhaps a fairly advanced thought, since the need was seen to hold an account of the past in order to explain the present and to try and shape the future – but in essence its only a sophistication of folk lore, tribal squabbles, a record of animal movement and numbers and the time to reap and sow. And as a record of account in The People Business it has proved to be flawed through the abilities to apply the same abstract capabilities to its construction, interpretation and exploitation.
So, dismissing all the yesterdays as irrelevant, how do we handle our day and hopefully our tomorrows, in what, by the sheer chance of birth, is the business we are thrust in to.
I suppose the first thing we must recognise is that ‘The People Business’ has a hierarchy. A hierarchy created sometimes by the same chances awarded by birth, at others by the environment we find ourselves in and the values that environment regards as our potential usefulness as a resource in the business.
Taking the above as a given surely we have to ask a question as to the purpose and objectives of this business that only death or imbecility (at times not even that) excuses us from participating in.
But before we do we have to consider how we are capable of asking it. Nature created this earth and every form of life that’s ever been on it and, while we may be capable of exploiting the elements of nature we are a long way off, if ever, of being able to claim dominion over them. Nature is by its nature a dictator. Perhaps generally benign, avuncular, acquiescent it never the less has no care whether we as a species choose to continue to thrive on its planet or be wiped out by nature itself or by self destruction. This is the irrevocable ‘given’ without which the gestation of ‘T he People Business’ would never have been formed and must be the primary factor on which the scales of values and solvency of the business is measured.
The role of Nature accepted, we then have to ask; whether in the affairs of humanity, any concept, system, practice or ideology which doesn’t improve the wellbeing, contentment, security and advancement of the majority of the species and its survival, has any claim to legitimacy or continuance by establishment or custom?
If the answer is no – we have gazillions of problems to sort out.
If the answer is yes – then life for most will continue to be a vale of tears waiting for a death date.
While I believe the answer to the question as posed would result in an overwhelming majority of No’s over the Yes’s, it leads us to ponder on what we actually mean by concepts such as wellbeing, contentment, security, advancement and how we tie these in with the species survival.
This is a problem that has exercised the minds of philosophers and thinkers throughout the ages. At the basic level they have divided it into two camps, called one Determinism, and the other Free Will. Again at the basic level Determinists maintain every happening in life or nature is preordained and humanity has no more control over its outcome than a rock can change into a horse; therefore humanity has no capacity for exercising or claiming the ability of true Free Will. We could call this the God camp.
Advocates of Free Will argue; we have to have free will because we have the ability to make choices. That while we may feel anger enough to kill in some circumstance, we choose not to and choose instead to adopt reason and apply restraint.
Throughout the ages these arguments have developed and formed sects then sub sects; some with a tentative toe in the other camp while others firmly straddle both while rejecting some of each, and so on. Candidly much of the argument is esoteric, often to the level of vanity, and could be summed up as an argument over whether a static ball bearing is downside up or upside down.
Yet the paradox of this hypothesis is not only how little consideration we give to it in our daily lives, it is the scale in which we use it to form our values, morality and our place in society. To clarify, I’ll give you an example – Scientists generally consider themselves free thinkers. While that may well be a true and honest belief, much of their work as scientist is to un-cover and understand inherent qualities and potentials in whatever subject or substance they’re working on. Whether their work proves true or false or they trip over the discovery of the millennium is entirely determined by the inherent qualities that have always existed in that subject or substance. So as individuals they practice free will, or think they do; but in work they’re controlled and measured by determinism.
Confused? Well aren’t we all, and that includes those who are devoting their lives to defining the solution. But take some heart, generally these people are looking for truth with no malicious intent or goal of global dominance; perhaps a little glory and personal comfort from a prize or two and again generally, they’re a pretty egalitarian lot who want to serve humanity.
So in order to define the purpose(s) of The People Business we have to accept another irrevocable truth.
a) God – is not an excuse.
b) gods – are not an excuse.
And beliefs are doubts that can only be truly dispelled by truths.
So the question facing us today is whether the beliefs being thrust on us by the Gadarenes of finance and their armies of acolytes does improve or offer any legitimate purpose to the life of our species or is it merely an element of control engineered as bulwarks of beliefs against blindingly obvious, and eventually, irrevocable truths?
Some time ago, in a forgotten article based on the financial meltdown and Browns stupid response to it, I posited the question – “Were governments acting as Human Resource Managers for the Global Conglomerates?”
At the time I was advocating the Banks should be resourced in order to meet their retail and genuine business functions – but all other activities should be placed in moratorium until such time as these have been forensically analysed and a true value awarded.
A few commentators agreed, but most got carried away on the lexicon of acronyms and the vanity of their ability, or belief, that they understood the complexities and labyrinthine formulas used in the alchemy’s of this most infinitely plastic of all commodities. In fact ‘plastic’ is too constricting – this commodity is the virtuoso of versatility. It can be used to buy or sell without ever having to be accounted for, it can lever its value up or down without ever having to produce a product or supply a service. Of late even the little it had to produce in order to prove its existence has been reduced to pieces of plastic for the minions or the production of digital zero digits for its acolytes – all together not a bad ‘miracle’ for these modern day Gadarenes to bring about.
Unfortunately there are another couple of adjectives beginning with V that we have to apply: the miracle like the substance it’s based on is without virtue – both are in essence ‘virtual’ and who has ever been troubled by a ‘virtual’ conscience?
The Gadarenes want to impose their virtual world on us, not because they believe it will lead to a better world – they know it won’t. But they slaver over the possibilities of global domination.
How’s that for an ambition based on an armoury of smoke, mirrors and propaganda? And could it be done without the contrivance of our politicians and governments?
(Extract from : The People Business.)
John Souter
30/09/11
http://www.bloomberg.com/news/2011-09-30/morgan-stanley-seen-as-risky-as-italian-banks-in-swaps-market.html
But that Muhammad Ali of the markets Reggie Middleton has the giant vampire squid* itself in his sights: http://www.zerohedge.com/contributed/im-hunting-big-game-todaythe-squid-spear-tip-part-1-introduction .
Great photo.
* Matt Taibbi’s choice epithet for Goldman Sachs, icydka (in case you didn’t know already).
@John Souter
John, is that an extract from a published book and if so where can I read more?
Google doesn’t seem to know anything of it if it is published but it has certainly got my attention.
@ Mike Hall & DofC
It’s good to see a bit of an Irish perspective on here, we all know what Irish mainstream media is like.
Cheers
Paulie – would it were – at the moment it’s a manuscript in intermittent and sometimes indeterminate progress.
Sometimes I get weary when something as patently nonsensical as the present financial idiocy is given legitimacy and awarded logic because its cloaked by complication So occasionally I raid it, or any other writing I’ve done for relevant comment.
Life’s too short and the opportunities it offers are too great to have it controlled by fraudsters and Shylocks.
Quite simply we’re fools if we allow that.
John –
You have a customer if you get published 😉
You have obviously given the current situation some thought and have separated yourself from this world so as to view it with such clarity of reason. We are controlled I think to some extent by shylocks and fraudsters whose “smoke, mirrors and propaganda” have fooled the masses into believing that their place in society is like that of a dog to its owner. That will probably never change as to some extent there will always be master and servant. For me its time to educate myself so that I don’t end up in either camp but rather one of my own choosing where my own destiny and that of my family can be shaped by my/our own actions rather than those of TPTB. I think a lot of people come to sites like this in search of the same “personal space” and the path to it.I think that the Engineers of The People Business have made huge iinroads to their final destination in the past 30 years and maybe whats needed now are a few ‘potholes’ to send them off course.
@John Souter “Life’s too short and the opportunities it offers are too great to have it controlled by fraudsters and Shylocks.
Quite simply we’re fools if we allow that.”
Excellent Post.
Thanks Golem. Your name sums up the spiritualess greed of these diseased ‘greed merchants’. Always look at the name for a clue (eg.Made Off!!). CDO’s are one of the main reasons we are in this mess in the first place – Collateral Damage OBLIGATION.
It’s another spin from the convoluted world of the derivative carpetbaggers – a sideshow solution offering your sister to save your mother that sucks further and deeper into the vortex of debt.
They will use the cross sell Pimpdom of Donkey (bonds) to sell to Jackass (broker) to yield their % on the way into the stable and on the way out. It’s the Goldman Sachs/Wall Street/Harvard model for slow learners – inflation selling lies as opportunity to the desperate and the clueless.
It is greed doing a three card trick on frugality. To them Democracy is weakness through obligation. The more honest you are the more you will pay. Ireland learned that.
Don’t feed the fungus – be like Iceland. Free(ze) it by letting it fail. All of it. Bankruptcy is the beginning; not the end. It is not going anywhere else anyway. The Pyramid Scheme is over.
Yours sincerely,
Attila the Stockbroker
Unless I’ve missed it, there doesn’t seem to have been any other comment on the alias Golem XIV, from the SF novel by Stanislaw Lem (see http://en.wikipedia.org/wiki/Golem_XIV ). But that in turn draws on the mythical Golem (http://en.wikipedia.org/wiki/Golem ).
Both interesting entries, but I digress.
I believe that national and supra national CDO’s are going to be the next asset bubble. Or weapon of mass financial destruction as it should be called. I don’t believe that the bankers know any limit to debt creation as long as it is digital for their benefit only.
As I have now persuaded my PC to tell the BBC that it’s in the UK I can get I Player, Did any of you watch This Week? You would have to assume he has political nous and knowledge. His moment of the week? Somebody explained to him that the Greek bailout was nothing but a bail out for French and German banks, and some EU politicians egos. This was Michal Portillo for God’s sake an ex MP and cabinet member, Sheesh!
He was suprised about it, it clearly came as a revelation to him. Someone should send him here. Thanks as ever for the great work golem.
ps and damn you posters for giving me so many class links. Mrs40 only lets me ignore her for so long!!
David Stockman interview on CNBC. Good interview, especially towards the end, where he lays out that most of the wealth in the last 30 years has not been from work, but speculative or “bubble wealth”. He blames the Federal Reserve for much of what is going wrong in the States, keeping interest rates low for two years, and then promising two more years, which only adds to more speculative activity.
http://video.cnbc.com/gallery/?video=3000048484
Brilliant clear post Golem …everyone should read this before they accept any more. Already I see the mainstream quietly pushing the idea that the Euro leaders are being merely difficult and lacking in decision-making ability , in other words typical bureaucrats as if they don’t get the absolute urgency to act etc etc….
when obviously a great deal has to do with their fear of their own electorates and their hesitant realization there is an absolute failure of democratic legitimacy. The real questions are not being put. What are we trying to actually save….?
As for Greece… in 1941 the Tanks.. in 2011 the Banks!
I’m an organisation theorist – but a lot of my teaching verges on economics – though I hope to move to writing soon. ‘Level’ is a bit scary these days – the easy answer is ‘too low’ whether under or post-grad! The’kids’ have no clue, but most with work experience know Golem-type stuff is about right.
Thanks.
Meanwhile in Greece, a long-term British resident concludes:
“The Communist calls for revolution don’t look nearly as far-fetched as they did six months ago. While civil war doesn’t look likely, a return to the military days must be a possibility. If the Greek people reject their entire political system and the state falls apart, what will be left? The great danger is that the people are being pushed so far that the unthinkable becomes possible.”
http://www.telegraph.co.uk/news/worldnews/europe/greece/8799364/Greece-is-slipping-into-the-abyss.html
– and in the US:
http://www.zerohedge.com/contributed/wall-street-protest-starting-look-egypt
And in the UK, the Guardian leads with this: http://www.guardian.co.uk/politics/2011/sep/30/city-conservatives-donations .
“Donations from finance account for half of payments to Tories since 2010 general election.”
@ Charles Wheeler October 1, 2011 at 11:24 am
Sorry to move this reply to the bottom of the blog but the “reply” button does not appear on your comment.
I don’t leave the question of what happens after the blow-up of JPM and company hanging in the air at all. Such are the constraints of the reply section on blogs.
I expand on this idea on my blog. Essentially, today our choice is to take bitter medicine now and start rebuilding our lives as of tomorrow or die of a thousand cuts and watch our children and the children of parents in far away lands be sent to the slaughter.
Paralyzing the banks will require significant sacrifice on our part. But we are only talking of material sacrifice. By doing nothing in hope to salvage whatever vestiges of entitlements we think we may have accumulated only allows banks to progressively divest society of whatever productive wealth is left after 40 years of DBFM in Europe and 100 years in the USA.
Taking down the banks will certainly create dislocation in society and the economy. But it will happen anyway and the longer we dither the more our suffering will be drawn out.
Ths Slog on “the quiet moves going on around the world to consolidate all types of bourses and exchanges into fewer and fewer hands”
http://hat4uk.wordpress.com/2011/10/01/saturday-essay-how-the-money-is-consolidating-its-grip-on-people-and-politics/
@guido
“… we are only talking of material sacrifice.”
But those being asked to make that material sacrifice to date have been those least able to bear it: the MS sufferer told she must sit padded up in her own excrement, the cancer sufferer who survives longer than 12 months, the severely disabled on time-limited benefit.
Having said that I don’t disagree that the banks need to be reconstituted before they suck the last vestiges of life from the productive economy. The problem is, those charged with the task are hostage (and suffering from Stockholm Syndrome) to the market until it implodes.
The Stockholm Syndrome observation is very astute and true.
The material sacrifice that needs to occur is to be borne by those that want to protest. Rather than joining street protests and risk the physical injury which in time will become a risk to life, the material sacrifice that needs to happen is any/all of the following:
– withdraw savings from major banks
– close lines of credit
– buy gold and silver
Withdrawing savings impacts the capital base of a bank. Given the leverage these entities operate at, even a single percentage dent in the capital base will suffice to bankrupt them.
Closing lines of credit impacts their asset and revenue base
Buying gold and silver decreases the velocity of circulation of the currency and hinders the expansion of the credit markets
Of course the above entails that if you have bought a car on credit for example, you sell it in order to pay off the debt. Same with a house. This is the type of sacrifice I am talking about. Material sacrifice now to avoid physical injury and/or death due to violent protest. Anyway, once protests will become widespread and connected across borders, a war will be precipitated and military service re-instituted.
Are you watching NYC? http://www.livestream.com/globalrevolution?utm_source=lsplayer&utm_medium=embed&utm_campaign=footerlinks
If you read the comment stream they have people looking for lifts to #OWS
Imagine all these slackers or people across the US who have lost their job who have nothing else to do but go to Wall St.
Imagine the road movies being played out live right now. The stories..
Now imagine the world chipping in for food etc for these people to keep them going in the middle of the big apple.
If enough of them are prepared to get beat up and maced and hold out..Gonna be a great livestream! 🙂
Seriously though, we could use them as our very own grubby peace army. The punch bags of the NYPD.
The more money they get for food the more will go there purely for a meal. The more famous people will go for a bit of street cred.
Imagine the human mic being repeated by tens of thousands rippling through NYC.
It’s starting to be a real possibility. 4,000 marched on NYPD last night.
Good luck to them, pity Radiohead didn’t make it but 5 large unions are going to according to a certain Bernie Sanders.
http://www.youtube.com/watch?feature=player_embedded&v=jmdmoA-dLo0
My misses bought me a Radiohead album once. I was reaching for a noose halfway through. Don’t you find them depressing and whiney?
Maybe it’s just me. Radio by and large is MSM.
MSMhead. lol
I’m biased these days. If you’re not singing about Blankfein’s head on a platter your part of the problem. Maybe they have though. I’ve only listened to half an album 😀
Just thinking of it from a publicity angle, I know what you mean about the music. Pity you can’t attend would be a great place to show off your headdress :
I think #OWS needs a Finney to visualise the dissent.
Would be fun. I think the ‘Death Squad’ part may spoil the peaceful protest angle though.
I’m off filming in the drunken center of town tonight. To be fair though drunks are great they dance when you say your filming a music video.
Maybe tonight we’ll get it right as time is ticking. It’s October.
Pinch, punch, first day of the month and all that.
No returns.
The Guardian – le guardien/the goalie – has moved the posts!
Just like Aunty did..
This article on the subject by Jonathan Cook might be of interest.
http://www.jkcook.net/Articles3/0573.htm#Top
At least we have Haaretz for a more balenced view from Israel.
Sorry if this would seem off subject.
But the financial crisis is one ‘tree’ in the invisable ‘forest’, in my opinion.
Full spectrum dominance, dont you know?
«Or how does a hegemon hang on to his power in so called democracies
with the next hegemon plainly in the arena?»
That’s the forest.
Sowing panic, fear and confusion so that nobody sees the
puppeteers pulling the strings of the next bogeyman, who would do such a thing?.
It was easier for Rome admittedly, they had nobody to answer
to.
We can be sure that the coming war that we didnt see coming will seem an ‘accident’ in which we will not be the aggressors, heaven forbid!.
You wont find Pepe ( Under the volcano) Escobar in the Guardian but you might find plenty of food for thought in his recent articles.
http://www.atimes.com/atimes/South_Asia/MI30Df01.html
Mordor’s on the march. ( Hear the drone?)
Thank you for this excellent blog.
Please excuse my straying off………must be the shit they put in my food to keep me stupid.
«Until late July 2011, the Air Force had a mandatory course on Nuclear Ethics and Nuclear Warfare for its missile officers, a course whose materials were recently obtained under the Freedom of Information Act by the Military Religious Freedom Foundation, whose president, Mikey Weinstein is an Air Force Academy graduate and a former Air Force Judge Advocate General. The course—as Weinstein summarizes it—“mandatorily teaches its nuclear missile launch officers that fundamentalist Christian theology is inextricably intertwined with the ‘correct’ decision to launch nukes….» http://www.bostonreview.net/BR36.5/elaine_scarry_nuclear_weapons.php
.
I can safely say I think that we collectively are the Royal Chairforce 😀
Good evening friends, I just thought I’d leave the links to the video footage we shot of David/ Golem when he came to speak to us in Manchester a couple of weeks ago. I hope it will be another tool in our understanding of this situation. As you will see he is a great speaker and it was a pleasure to have him over. The video is in three parts, the third of which is currently uploading. I will post the links again on the next blog piece.
Wishing you all well.
http://www.youtube.com/watch?v=shK9lHmg9x8&feature=related
http://www.youtube.com/watch?v=neSsyp-bfmI&feature=channel_video_title
oh and a quick plug for our Youtube channel inspired by the book the Spirit Level ; )
http://www.youtube.com/user/EqualityNorthWest
EMU, the EU, the EURO…. all dressed up as the coming together of Europe but what actually was happening throughout the whole period was that Banks were taking hold of and consuming the economy. Mainly through “offshore ” activities , exotic investment vehicles, derivatives trading and the massive issuance of credit and debt.Banks were happy to be creditors to profligate European Govt’s. Banks massively levered up to trade Trillions in exotic derivatives of all kinds- all under the eyes of Govt regulators who chose to do nothing.The Banks and the Finance industry actually answer to no one.
What has surprised many is the immense power Banks and the Finance Industry as a whole now have over society, through their influence over Govt’s. Banks are calling the shots on Europe’s and Europeans future, not the European people.Banks decide what is acceptable and what is not regarding management of debt, be it private or sovereign. Gov’ts just have to decide what , from the menu issued, they will accept.
What is the solution? Until the citizens take back control of their financial system, which means forming Govt’s that specifically have that mandate and mission, citizens have no or very little say in the matter. Gov’ts (on bended knees) and Creditor Banks will continue to make far reaching social decisions behind closed doors. The elite’s , in conclave, will decide the future of the people unless the People change this unholy paradigm.
… and that is the mathematical truth that underpins debt based fiat money. As inflation is induced aggressively and pervasively over decades, financial value progressively runs away from intrinsic value till profit concentrates in the finance industry. As the dynamic accelerates towards it’s logical conclusion, banks and particularly those banks that are closest to the creator of the currency (I.e. The Primary Dealers because they are the first users of each new unit of currency created) gradually come closer to wielding absolute power over all economic actors including government. This period of time is necessarily characterized by lax and arbitrary enforcement of the law and increasingly overt and blatant corruption.
Control can be taken back by crippling the credit markets and we can do that. It is legal (for now at least) and only requires material sacrifice. The alternative is violent confrontation and physical sacrifice if not the ultimate sacrifice as is sure to happen increasingly.
Stop feeding the credit markets and start hindering the circulation of the currency.
#OccupyWallStreet – ‘The Marines are Coming to PROTECT the Protestors’
The view of an unemployed manual labourer in Ireland, commenting on the Financial Times website: http://blogs.ft.com/the-a-list/2011/09/22/french-banks-could-tip-europe-back-into-recession-2#comment-1240866 .
If it weren’t a little too long, I’d copy and paste it in its entirety, but please don’t let that put you off.
Neil
I just read those posts, I would very much doubt that he is either Irish or a labourer, his use of language was that of someone more educated than a manual labourer. Im Irish, a Dubliner and heading for middle age and I have dealt with people in all walks of life, if he is a labourer then I’m the pope!
All of that aside he does make a couple of interesting statements, It is worth the read and I do wonder why he wrote the piece through the eyes of someone that he is not.
You may be right. I had suspicions myself, but gave him the benefit of the doubt. Whatever, it doesn’t detract from the power of his message.
And what about Will Self’s marvellously caustic Point of View on Party political membership, which I’ve just listened to on Radio 4? (I’ll post the text when it’s released.) Can’t wait to hear what he’ll say in the rest of his slot.
Here’s the link to the audio at least: http://www.bbc.co.uk/programmes/b0151xtb .
I’m not Irish but I am a labourer and have worked with many Irish labourer, many of them have been thoughtful and capable of coherent thought. While I would agree that it seems unlikely that this man is a labourer, it is not impossible
We are not all thick, you know
I wouldn’t dare suggest such a thing Richard, it was just my view on this guy and yes I could be totally wrong, I would not pigeonhole anyone because of their choice of employment, I guess I was thinking of the stereotypical labourer. Just it seems odd that someone so capable of thinking outside the box would be unemployment right now, things are not that bad yet if you are willing! I say that as an employer but apologies if I offended, it is not my intention at all.
@Neil
Thanks for the link, won’t play for me at the min, will try later, looking forward to it ;-p
David/Golem
I will do my best to make it to Dublin, again I will mail later on that and get a body or two with me
LIKE !!! cynical highlander.
@ Neil
paywall there :(…….meanwhile….more on the feral financial sector – commodities speculation this time.
Prof Randall Wray speaks about his study of activity in the key commodities markets – excellent piece
http://www.benzinga.com/content/1954634/stresses-seen-at-the-outer-surface-of-the-ballooning-commodities-complex/?#ixzz1ZScLDjkk
Warning from Wray for goldbugs or potential goldbugs:
“Commodities are a terrible hedge against inflation; just look at the price of gold. Even with this huge, speculative boom in the price of gold, in inflation adjusted terms, [gold] is still below where it was in 1980.”
No doubt goldbugs would counter this by saying that makes it cheap…
If we all buy gold, the price will rise, and we’ll all be better off.
Until we need to sell it, when the price will fall, and we’ll all be worse off.
@ Mike Hall
register with the FT for free and you get access to ten articles a month.
Those expecting a diversionary war may want to check out Pepe Escobar thoughts on Pakistan.
http://www.atimes.com/atimes/South_Asia/MI30Df01.html
@ Phil
Many thanks for having David speak in Manchester & posting up the videos.
@ Golem
You know, in listening to the videos (& in all your writing) I always enjoy your skill in cutting thru’ the cr@p to give us a clearer understanding of things. Not just in what you impart, but what else it gets me thinking about. So, a few thoughts from me….
What is the banks’ core business? Answer – create money as debt with a future debt service obligation (interest). As much as possible, as often as possible & with the highest possible interest rate. Everything else they do is either trivial or required activity to support this core business. The core business is +not+ ‘recycling’ money. It is creating ‘new’ money – as much as possible, with debt service obligation.
(Minor quibble on your talk in Manchester. You say banks ‘…have deposits, so they lend…’ This isn’t really true. When they make a decision to ‘lend’, they make no reference at all to whatever ‘deposit’ balances they have. The money is created from nothing, at a keyboard, & credited to the borrower’s account. I just think it’s important that the public realise this money creation privilege is what our governments, on our behalf, give these private corporations & super-wealthy, super-bonused executives.)
Now, over the last decade or so, having maxed out & loaded up (directly) debt on ordinary citizens by various deceitful means, with help from the variously deluded, captured or corrupt politicians, media & economists (joe public had no chance – lets all remember that), what other strategies have they?
Well, anywhere ‘leverage’ can be applied. ‘Leverage’ = debt creation = core business. So, doubtless those commodities markets. Privatisations will invlove ‘leverage’ when those public assets are sold.
But what about loading up sovereign ‘borrowing’? That gets really lucrative in a recession, right? Ergo, causing recessions is great for the core business. So is making them last as long as possible. Whats really great about sovereign debt is that governments have the legal right to tax – effectively guaranteeing maximum debt service extraction. Note, it’s the debt service that’s important – repaying the principle doesn’t really matter – the banks’ created it out of nothing & can always create more!
Of course, there are limits to the rate of interest where sovereigns +can+, if they wish create their own money, like US & UK. So maybe can’t push that too much?
But what if, oh, say, a monetary union was created among a bunch of countries, individually prohibiting their sovereigns from creating their own money? Even better if they don’t speak the same language & you can keep them distracted squabbling among themselves, blaming each other for the recession. Gotta be, oh, maybe 3 times the interest rate to be extracted there. Hey, is there a limit to how much the banks can extract? Well, test case Greece eh?
(I’ve seen it said that the Euro was a ‘Bilderberg’ project, but it would hardly need much of a ‘conspiracy’ to fool the muppets posing as ‘authorities’ I think.)
The other key ingredient for maxing debt (debt service) everywhere is to make sure as far as possible that default & debt write-off can’t happen – that’s totally against the core business. Not so much the actual losses mind, but the loss of debt service.
Interlinking all the counter party risk so that even a small default +could+ crash the entire system – or make the ‘fear’ of it sufficiently convincing.
Check. Game over, unless & until the serfs manage some miraculous epiphany & revolt.
All hail & pay tribute (direct debit compulsory) the New Kings of ‘Terra’ !
Quite mike! Interest is absolutely the monetary reward and it is the advantage that is gained immediately upon the creation of the very first unit of currency. But interest, like the inflation that drives it, is limited mathematically.
In a DBFM system, the productive capital of society is gradually financialised. To wit, GM stopped being a manufacturing company when they began losing money on each vehicle sold. Profit is generated by their finance arm GMAC to the point where they were financing real estate. Simens is first a bank hence their ability to deposit money directly with the ECB. Likewise GE is first and foremost a finance company as are most Western national champions.
But inflation conforms to the law of diminishing marginal efficiency so that there is a real mathematical limit to the interest that can be collected on the debt. At that point, the monetary authority and it’s acolytes appropriate the assets that had been pledged against the debt issued during the prior inflationary cycle… I.e Greece… But others too shall follow…
Cripple the credit markets now!
Yes I too see that crashing the banks is the priority.Perhaps the first, and only, practical strategy that we have.
To that end I have removed all my money. I’ve at last persuaded my sister to change her account from credit agricole to the banque postale. Credit agricole resisting like mad to relinquish their grip.
WE HAVE TO ACT not just write beautifully about the situation not that I’m not indebted to you all for my continuing education.
We all know the mathematics of the banks leverage and it will only take a relatively small amount of erosion of their capital base to destroy them.
I wake up every morning with the hope that dexia or BOA or somebody has lost their grip. I’m appalled by the tenacity of the banks or TPTB and I’m at a loss to explain what motivates Papendraeou, did they threaten his family or just excommunication from the top table.
You know guys, I think you draw an obvious conclusion. It’s certainly a delicious idea – would certainly send a message from the disenfranchised electorate that the present f*&^ers of the establishment are persona non grata!
I guess I’d like to see said electorate ready to demand either ‘positivemoney’ or MMT (both include ‘functional finance’) & mass resignations of incumbent politicians. Of course, the removal of the casino from high st banking (probably nationalised under these circumstances) which they both advocate. (I think we could figure out as we go whether some properly regulated fractional reserve or full reserve system is best from either starting position.)
But if we crash the (bank) system, we (as in the people) need to know what we want. Would you agree?
I’d be interested to hear your thoughts as to how such a transition from a deposit run might go? Could be a little trickier for us in euroland perhaps, as it’s already a beaurocratic nightmare? Any traction on this idea in Greece?
Would central banks just issue ‘liquidity’ as required? (They have for Ireland, ~ 150Billion.) (Note Wray’s calc of the Fed’s $29 trillion over 08, 09.)
Even if the CBs contained it, I can’t help thinking that within such a crisis might just be the catalyst for that public enlightenment that’s sorely needed.
We do need to get the corruption (money) out of democracy & news & factual media too. Otherwise we’d be back where we started a few decades from now. (Our failure to do this, in fairness perhaps due to much greater difficulty back then, 70 to 100 yrs ago, is arguably why we are where are now. Complete with the same cr@p mainstream economics that made the Great Depression 10x worse than it need have been.) (I have some pretty solid ideas for both these areas, but haven’t ever got much interest when I’ve posted them – disapponting.)
A few Sunday am musings from me….any more thoughts on this?
Time to get the entire ‘vision’, banking, economics, democracy, media, ecology, put into a film Golem, perhaps?
(I’ve long wanted to write a book, have the core ideas worked out, just don’t have the communication skills to do it properly…)
Can the mass of humanity leap to the next level?
Mike yes the voice of reason.I agree completely that we need to know what we want but we have a problem in that the status quo is maintained by the bankers politicians media gatekeepers crushing debate. We need an extraordinary event to galvanise the politisisation of the people.
Barging Into that breach with alternative ideas would seem to me our only chance when the big money is on the back foot.
I have no illusion how difficult this process will be but I feel that it will require a moment of peering over the precipice for all those comfortable western europeans who somehow feel that what is happening to the greeks will not could not happen to them.
The third and final part of David’s talk is taking forever to upload, sorry about that. We had a small Q&A section filmed too where David spoke about the fiction that it is the threat to private pensions. I will put that up asap aswell.
@Mike
Brilliant summary.
The important point is that:
When I ask my friendly local bank for a mortgage, they don’t take money from someone else’s account and lend it to me, they simply create new debt as the corollary of my agreement to pay a premium covering principle+interest over 25-30 years, with the property I’m buying as collateral. As credit limits are relaxed and my ability to borrow increases, so I am able to offer more for the property, the price rises, my borrowings increase, the housing market rises, increasing the value of my collateral, meaning I can borrow more – and this feedback loop can be maintained as long as more borrowers can be found.
The rocket fuel in the equation was the development of mortgage-backed securities which could be bundled into Collateralized Debt Obligations and sold on – breaking the link between the originator of the loan and the borrower. As a result, the originator only needed to be sure the borrower could make the payments for long enough for the debt (which is simply an income stream of premiums) to be sold on – and in a steadily rising market even low grade ‘sub-prime’ debt had the insurance of appreciating capital – if there was a foreclosure, the property would cover the cost of default.
With the advent of Credit Default Swaps even this residual risk could be neutralised (the fact that the issuers might not have the capital to honour the deal seemed moot given the remoteness of the possibility of widespread default).
This elimination of risk led to the creation of the CDO ‘squared’, as the low grade tranches of CDOs were bundled into new packages and the top layers relabelled AAA by ratings agencies paid by the issuers – thus was base metal was turned into gold.
The only limit was finding new borrowers – but when you’ve reached the level of selling teaser loans to people with No Income, No Job and no Assets, where does the supply come from?
Cue: ‘synthetic CDOs’ – no longer do you need to originate new loans to package up, just ‘reference’ existing loans into new packages in a financial Hall of Mirrors and voila – you have a device that allows the creation of CDOs into infinity.
The only problem: as debt servicing plateaus, the property market starts to cool. All that debt created by banks based on the view that it would be repaid over the term (or recovered from the sale of the collateral) looks less secure. As defaults increase the debt+compound interest equation kicks in with a vengeance. Debt created out of nothing is now unserviceable, but interest is accruing. Those with the least chance of repaying find their interest rates rising adding fuel to the fire.And pretty soon banks start to look again at what they’re holding – and assuming other banks are holding the same.
As those sub-prime chickens start to roost on the hen-house and defaults mount, it gets harder to refloat the repossessions (incidentally, the myth that has grown up that government efforts to force mortgage lenders to consider riskier loans because it helped the poor onto the housing ladder is exploded by the statistic that 80% of sub-prime mortgages went to existing home-owners using their property as an ATM). House prices slide with fewer new entrants into an over-heated market the asset-price feedback loop hits reverse.
But the interest on the debt, and the interest on the interest continues to accrue. So, while debt levels increase and income levels stagnate (or, in the current case of Greece in particular, are slashed), the maths no longer makes any sense. Pretty soon much of the debt created by banks out of thin air becomes unserviceable.
Defaults rise, the bubble starts to collapse. Banks are left holding CDOs which are virtually worthless. Calls on their Credit Default Swaps start to rise. CDS ‘underwriters’ like AIG realise they don’t have the capital to stay in business. Clients like Goldman Sachs know that if those payments aren’t made they will soon be underwater.
The banking system freezes as banks refuse to lend . . . to each other! Like traders on a market stall who have stacked the bottom of their baskets with rotten fruit, they know that those CDOs, which look so juicy on the surface, are well past their sell-by date. Trust, that essential lubricant of markets has evaporated.
The whole banking system is on the verge of collapse. Who you gonna call?
Then you remember, Hank Paulson, the US Secretary to the Treasury is an ex-CEO of Goldman Sachs. His friends in government, like James Rubin, Larry Summers and everyone’s favourite Ayn Rand disciple Alan Greenspan, are likewise Wall St. alumni.
What if you could persuade them to offload all that debt onto the public accounts? It doesn’t take much arm-twisting. Pretty soon the government is plying the banks with billions of taxpayers’ future income – like there’s . . . er . . . no tomorrow. They buy up the toxic assets, or insure the banks against future losses on those assets. It’s the only way to Save the World.
A sigh of relief all round.
Except . . .
All those debts that were unserviceable in the private sector now look unserviceable in the public sector. Well, say the banks, you should’ve thought of that. Yes, say the markets, it was totally irresponsible for government to hold so much debt – it amounts to a sovereign debt crisis.
That’s the problem, say the ratings agencies, government has too much debt – we’re going to have to downgrade your creditworthiness – as a result you will owe the banks even more money for bailing them out.
Well, say the heads of government in unison, then we’re just going to have to cut back on our profligate spending on healthcare, education and pensions to make more room for debt repayment. If it means raiding the incomes of the sick and disabled, well, these are tough times, calling for tough decisions. We’re all in this together, or, at least, YOU’RE all in this together.
Somehow, I don’t think there’s going to be a happy ending.
“Debts that cannot be repaid, won’t be repaid.” – Michael Hudson.
p.s. while it’s true that banks are required to hold a reserve of capital to cover default on the debt they create, many of the larger institutions were operating on levels as low as 2-3% – and this ignores the vexed question of how capital is defined and regulations enforced. Throw in the effect of the shadow banking system, hedge funds, and ‘offshore’ entities which had a more relaxed approach to capital reserves, and you can see how we were edging towards Alan Greenspan’s Holy Grail of reserveless banking (he saw capital requirements as an unnecessary brake on the efficiency of resource allocation in financial markets).
Great stuff, thanks Phil.
@ Charles (thanks!)
Re the unhappy ending, I’ve been thinking for a while that the steady state asypmtote, aiming point if you will, of the banking elites, well, looks something like India.
A kleptocratic core in a notional ‘democracy’, where 70% + of the citizens labour 24/7 for barely enough to feed themselves. Yet the ‘lid’ is managed to be kept in place.
Perhaps a logical (if psycho/sociopathic) response by the elites to a growing resource & ecological crisis?
Any thoughts on this or Guidoamm & Nigel’s responses re deposit run tactic?
Listening to Will Self’s Point of View on party political membership this morning (http://www.bbc.co.uk/programmes/b0151xtb#synopsis ) prompts me to post the conclusion to a piece by Slavoj Zizek on the riots, in the August edition of the London Review of Books:
“Today’s left faces the problem of ‘determinate negation’: what new order should replace the old one after the uprising, when the sublime enthusiasm of the first moment is over? In this context, the manifesto of the Spanish indignados, issued after their demonstrations in May, is revealing. The first thing that meets the eye is the pointedly apolitical tone: ‘Some of us consider ourselves progressive, others conservative. Some of us are believers, some not. Some of us have clearly defined ideologies, others are apolitical, but we are all concerned and angry about the political, economic and social outlook that we see around us: corruption among politicians, businessmen, bankers, leaving us helpless, without a voice.’ They make their protest on behalf of the ‘inalienable truths that we should abide by in our society: the right to housing, employment, culture, health, education, political participation, free personal development and consumer rights for a healthy and happy life.’ Rejecting violence, they call for an ‘ethical revolution. Instead of placing money above human beings, we shall put it back to our service. We are people, not products. I am not a product of what I buy, why I buy and who I buy from.’ Who will be the agents of this revolution? The indignados dismiss the entire political class, right and left, as corrupt and controlled by a lust for power, yet the manifesto nevertheless consists of a series of demands addressed at – whom? Not the people themselves: the indignados do not (yet) claim that no one else will do it for them, that they themselves have to be the change they want to see. And this is the fatal weakness of recent protests: they express an authentic rage which is not able to transform itself into a positive programme of sociopolitical change. They express a spirit of revolt without revolution.
The situation in Greece looks more promising, probably owing to the recent tradition of progressive self-organisation (which disappeared in Spain after the fall of the Franco regime). But even in Greece, the protest movement displays the limits of self-organisation: protesters sustain a space of egalitarian freedom with no central authority to regulate it, a public space where all are allotted the same amount of time to speak and so on. When the protesters started to debate what to do next, how to move beyond mere protest, the majority consensus was that what was needed was not a new party or a direct attempt to take state power, but a movement whose aim is to exert pressure on political parties. This is clearly not enough to impose a reorganisation of social life. To do that, one needs a strong body able to reach quick decisions and to implement them with all necessary harshness.”
http://www.lrb.co.uk/2011/08/19/slavoj-zizek/shoplifters-of-the-world-unite
I’m disturbed by Zizek’s call (in effect) for a Leninist revolutionary vanguard, with its anti-democratic, authoritarian and elitist overtones. Thus he stresses the limits of self-organization, the limits of “egalitarian freedom with no central authority to regulate it” and the limits of democratic debate, stating that “a movement whose aim is to exert pressure on political parties […] is clearly not enough to *impose* a reorganisation of social life”. The implication is that a new party is needed that would “mount a direct attempt to take state power” – the “strong body” that would organize and provide the “central authority” lacking in the protest movement. His talk of such a body taking quick decisions and implementing them “with all necessary harshness” sounds like a mirror-image of what the courts did with the rioters.
We haven’t got a Greek situation here yet. But Zizek does highlight a key problem: how to get from popular protest (when it comes) to radical socio-political transformation – from ‘revolt’ to ‘revolution’ in Zizek’s terms? How can this possibly be achieved without political organization, political leadership and mass support? Are we just expecting them to emerge spontaneously?
After the MPs expenses scandal, I had been hoping that the last election would see the election of some independent MPs, opening up at least a crack in the existing party system that might widen. It didn’t happen. Is it it time to think about starting a new party?
As Nigel said above, “WE HAVE TO ACT not just write beautifully about the situation”.
@ Neil
My main worry about the obvious political vacuum is that when the whole system collapses, as I am assuming it will, the void will be filled by a charismatic, individual who knows how to play, what would be by then, a huge angry & confused mob. The failure of the current mainstream political parties to address or even to acknowledge that there is a crisis, I think will leave the back door open to extremism from either the left or right. I think that a party should be set up to counter this possibility, as unfortunately it seems it would be the only way to try to inject some intelligence into the chaos that would result. I also think that the financial elite wouldn’t care what sort of regime was running a country as long as they played ball with them.
” Give me the power of the money & it will not matter anymore who is commanding ” Mayer Amschel Rothschild.
It might be useful to try and anticipate what positions and policies a manipulative populist leader/party might adopt in order to a) be able to argue against them; b) define better alternatives.
Certainly there will be extremists thinking about how best they can exploit the situation for their political advantage.
@ Neil & StevieFinn
This is the crux of the problem isn’t it? What structure/strategy can bring about change & what best structure/strategy can morph out of that to something enduring & robust?
Personally, I think political parties are part of the problem. Power within them so quickly becomes centralised toward a tyranny of mediocrity at best, corruption (small or large ‘c’) at worst. The Irish Greens are a classic case of the former – and I speak from personal experience. At the last election they lost every single TD (MP) & from what I gather, the ‘leaders’ have not the slightest notion why, still lost in their own bubble. The leadership was extraordinarliy weak as regards the economics issues & aquiesced into the neoliberal paradigm with barely a pause to consider its diammetric opposition to any ‘sustainable’ future they otherwise held dear. One or two of the TDs (all comprised the effective ‘leadership’) displayed some breathtaking ignorance & arrogance. Many members left long before the election. (I have good reason to believe that some wanted rid of finance spokesperson Dan Boyle, but no one else would put themselves forward. Boyle had nothing to offer except working with the status quo. AFAIK he still doesn’t ‘get it’. Apalling)
Anyhow, I think we should ban parties from parliaments & from giving direct backing to candidates’ election campaigns. Doubtless they would become something akin to lobby groups, but in my world would have only the same proscribed and regulated access to candidates/members as anyone else. MPs would likely form alliances, but I would make any formalisation, provision of common services or centralised control illegal & strictly enforced. A prime minister & cabinet could be elected by MPs directly from among their ranks. No ‘grace & favour’ appointments in an elective dictatorship. As I’ve suggested before, special employment conditions should apply – pretty much for life – to any persons in a public representation vocation. Principle among these is no other ‘business’ interests or attainment of wealth significantly above that of ordinary citizens. Tracking perhaps the incomes of the lowest paid. Public representation must be about an individual’s personal experience, judgment & conscience in consideration of the wellbeing of all the people they represent. We won’t get it perfect, but we are a million miles away from that now. We need to treat such positions with the proper degree of reverence & responsibility, not an alternative career path to wealth for people with little other skill than being good telegenic snake oil salespersons.
How to bring about such (& other) changes? Well, not by imposition from any ‘group’ or ‘ideology’ for sure. Time we moved on from all those mistakes. The only -ism of note should begin with ‘pragmat..’
I joined an Irish group formed last year, apolitical, trying to bring about something of the Icelandic approach, citizens’ assemblies, that kind of thinking. Both for a transitionary vehicle & perhaps with ongoing functions & making much greater use of referenda to confirm or backstop key policies. I wasn’t able, due to the difficulties/cost of travelling to participate in their developments. (I was also wanting to concentrate on the economics too.) They have just published their proposal for a citizens’ assembly to consider & draft reform, including changing the constitution as required. Not a bad effort I think, available here:
http://www.2nd-republic.ie/site/
Has some weaknesses perhaps, but I can’t think of a better way, in its general approach toward achieving the radical & wide-ranging change we desparately need?
I think the Indignados, OccupyWallStreet etc. (climate camp another resonable example) are edging in the right direction in the way they’re going about things – very encouraging. I would urge anyone considering getting involved to drop any previous affiliations or ‘baggage’, look to your own ethics & conscience & join in the synthesis of what follows, taking ideas from anywhere based on their merits to the situation.
Sadly, the general public, whilst angry (& perhaps somewhat fearful) are way behind the curve as yet. Of course, they’re getting massive help to maintain their ‘mushroom’ status.
@ Charles, thanks for your great clarity again & the links I’ll get to later.
That Second Republic site (http://www.2nd-republic.ie/site/ ) certainly provides a model for something more ambitious than the sort of money-focused pressure group mooted by Nigel below.
But the Irish situation is rather different from the UK.
In the meantime, there is a banking reform pressure group: http://goodbanking.org.uk/ .
This is a statement they invite people to sign up to:
“A good banking system is one that is useful and secure; as well as economically, socially and environmentally fit for purpose.
We believe that to build the foundations of such a good banking system we need:
– The full separation of retail and investment banking so as to better insulate and protect tax-payers against failure and provide depositors with safe institutions in which to keep their money.
– The creation of a genuinely mixed and plural banking sector with far more choice for people than the present one-size-fits-all model with its few ‘too big to fail’ banks. Such a sector would for example include flourishing building societies, local and regional banks, green banks, a post bank run through the post office network, co-operatives and mutuals so that all sections and needs of society and business are properly catered for.
– An independent, wide-ranging and extensive inquiry into the root causes of the worst banking crisis for over 60 years and the role of all relevant commercial, regulatory and political organisations in that failure. This inquiry should bring forward comprehensive proposals of the reforms needed to build a good banking system.”
I found this at http://www.compassonline.org.uk/ , which also hosts the broader-ranging (In the) Public Interest (http://action.compassonline.org.uk/page/s/public-interest ). But then Compass describes itself as a democratic left pressure group, which may not suit everyone.
There is a danger of People’s Front of Judea/Judean People’s Front here.
@Mike re:
“A kleptocratic core in a notional ‘democracy’, where 70% + of the citizens labour 24/7 for barely enough to feed themselves. Yet the ‘lid’ is managed to be kept in place.”
Michael Hudson in 2008:
“You have to realize that what they’re trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They’re not trying to make the economy more equal, and they’re not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom is not government sponsorship of economic progress and rising living standards, it’s the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.”
When Russia collapsed into oligarchy post the demise of the Soviet Union following a large dose of ‘neoliberalism’ (I’ll put it in quotes because in actuality the ideology has little to do with the kind of economic liberalism envisaged by Adam Smith), we seemed to think this was some kind of regression, from which a new form of democratic capitalism would emerge, phoenix-like from the ashes of Communism.
It now looks like it was a leap forward to a new post-democratic era of oligarchy to which we are destined – as the concentration of wealth and power inexorably shuts down the democratic process through the buying up of political parties, the domination of the media (even, as seems to be happening, the manipulation and censorship of the internet) by the plutocratic funders of think-tanks and lobby groups which overwhelm pluralist public discourse.
As for the possibility of concerted individual action – a sort of financial guerrilla resistance movement. It appeals, but the vast majority of individuals simply don’t have the financial muscle to make an impact. The steadily increasing concentration of income and wealth is making that less rather than more likely. But I would like to be convinced.
This article on the problems facing the ‘progressive’ movement, while a bit dispiriting, is thought-provoking. But, as ever, much stronger on analysis than solutions: http://goo.gl/sVnFP
Perhaps the best hope is that (as in the late 19th C.) those with wealth and power will start to realise their own best interests are not being served by the laissez-faire paradigm (see:http://goo.gl/SY5ZY)
After all, the growth in influence of social democracy was less a determined shift towards Socialism than an attempt by moderates to save capitalism from itself.
We’ve been down this road before. I would highly recommend this essay by Hobhouse, which reads uncannily contemporary:
http://goo.gl/eoIHf
100% Debt Discharge Decision In Greece Sets Troubling Precedent For Local Banks
A very disturbing precedent, for the already frayed domestic financial system, was set in Greece over the past few days, where as the linked story from On-News.gr explains, an unemployed Greek woman who owed a little over 26,000 euros to two banks, Eurobank and National, received a full debt discharge on her outstanding loans.
According to the Boston Consulting Group report cited earlier, “between household, corporate and government debt, the developed world has $20 trillion in debt over and above the sustainable threshold by the definition of “stable” debt to GDP of 180%” (http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis ).
A 2005 report by the Tax Justice Network, on the other hand, estimated that “the world’s High Net Worth Individuals (HNWIs) held around $11.5 trillion of assets offshore” (http://www.taxjustice.net/cms/front_content.php?idcat=103 ).
“This figure was considered extremely conservative: it did not include […] corporations, which reportedly pass more money through tax havens than individuals.”
Sounds as though there’d be enough money there to cover that $20 trillion of debt…
The Boston Consulting Group report says that “between household, corporate and government debt, the developed world has $20 trillion in debt over and above the sustainable threshold by the definition of “stable” debt to GDP of 180%” (http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis ).
In a 2005 report, meanwhile, the Tax Justice Network estimated that “the world’s High Net Worth Individuals (HNWIs) held around $11.5 trillion of assets offshore […].This figure was considered extremely conservative: it did not include […] corporations, which reportedly pass more money through tax havens than individuals.” (http://www.taxjustice.net/cms/front_content.php?idcat=103 )
I reckon that would comfortably cover the developed world’s $20 trillion of debt…
According to the Boston Consulting Group report, “between household, corporate and government debt, the developed world has $20 trillion in debt over and above the sustainable threshold by the definition of “stable” debt to GDP of 180%” (http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis ).
In a 2005 report, meanwhile, the Tax Justice Network estimated that “the world’s High Net Worth Individuals (HNWIs) held around $11.5 trillion of assets offshore […].This figure was considered extremely conservative: it did not include […] corporations, which reportedly pass more money through tax havens than individuals.” (http://www.taxjustice.net/cms/front_content.php?idcat=103 )
I reckon that would cover the developed world’s $20 trillion of debt…
Charles Wheeler
The USSR didn’t simply collapse into oligarchy, a number of apparatchiks arranged to buy the most valuable assets in exchange for roubles[by the suitcase] these deals were all set up to happen in parallel. Simultaneously an illegal deal was struck to buy billions of [newly printed]roubles for dollars[by the suitcase]. The dollars were swapped for the roubles the roubles for the prime assets and abracadabra 82%[orwasit87] of the best performing assets of the USSR were in the hands of 19[?] oligarchs the rouble plummeted in value, so many roubles chasing 18% [or was it 13] of the wealth. This was reported not long after the event [s times/observer] and more recently/sanitised in the new scientist, but 2 or more years ago,[ I stopped my subscription then due to their unequivocal support for gmo’s] No mention of who supplied the dollars was made.
The Boston Consulting Group report says that “between household, corporate and government debt, the developed world has $20 trillion in debt over and above the sustainable threshold by the definition of “stable” debt to GDP of 180%” (http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis ).
In a 2005 report, meanwhile, the Tax Justice Network estimated that “the world’s High Net Worth Individuals (HNWIs) held around $11.5 trillion of assets offshore […].This figure was considered extremely conservative: it did not include […] corporations, which reportedly pass more money through tax havens than individuals.” (http://www.taxjustice.net/cms/front_content.php?idcat=103 )
I reckon that would comfortably cover the developed world’s $20 trillion of debt…
Btw I’ve been trying to post the above for some time, but it didn’t work (cue paranoia).
The Boston Consulting Group report says that “between household, corporate and government debt, the developed world has $20 trillion in debt over and above the sustainable threshold by the definition of “stable” debt to GDP of 180%” (http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis ).
In a 2005 report, meanwhile, the Tax Justice Network estimated that “the world’s High Net Worth Individuals (HNWIs) held around $11.5 trillion of assets offshore […].This figure was considered extremely conservative: it did not include […] corporations, which reportedly pass more money through tax havens than individuals.” (http://www.taxjustice.net/cms/front_content.php?idcat=103 )
I reckon that would comfortably cover the developed world’s $20 trillion of debt…
Btw, I’ve been trying to post this several times, but it hasn’t been working. Cue paranoia?
The previously cited Boston Consulting Group report says that “between household, corporate and government debt, the developed world has $20 trillion in debt over and above the sustainable threshold by the definition of “stable” debt to GDP of 180%” (http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis ).
In a 2005 report, meanwhile, the Tax Justice Network estimated that “the world’s High Net Worth Individuals (HNWIs) held around $11.5 trillion of assets offshore […].This figure was considered extremely conservative: it did not include […] corporations, which reportedly pass more money through tax havens than individuals.” (http://www.taxjustice.net/cms/front_content.php?idcat=103 )
I reckon that would comfortably cover the developed world’s $20 trillion of debt…
Btw, I’ve been trying to post this several times (under my usual name), but it hasn’t been working. Cue paranoia?
Yes, it is true indeed that the USSR didn’t just ‘collapse’ – those on the inside could see the problems mounting and there was an already existing class of spivs just waiting to take over the state’s assets. Just as Marx predicted would be the result of a totalitarian form of communism a century before!
It struck me recently that while there are more and more people discovering the truth behind the banks, the bailouts and the debt crises they have to go looking for it. Osbourne is still using the ‘the banks will go elsewhere’ blackmail to prevent a Robin Hood tax and sooo many people take it at face value. As David said so eloquently in Manchester, ‘ok fine, leave. Good luck finding a country which will guarantee your trillions of toxic assets AND let you keep your bonuses.’
I think we should be more proactive in getting the real story out there. Is anyone interested in setting up a facebook page or even facebook person in order to reach out to people we know and further? We could set it up under one email and all administrate it. If anyone is interested – Mike Hall, Charles Wheeler (loved your short overview of the crisis) 24k etc then perhaps you could send your email address to David and we can link up off this forum.
Maybe I’m getting paranoid, but I’ve been trying to post this several times and it hasn’t been working.
The Boston Consulting Group report says that “between household, corporate and government debt, the developed world has $20 trillion in debt over and above the sustainable threshold by the definition of “stable” debt to GDP of 180%” (http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis ).
In a 2005 report, meanwhile, the Tax Justice Network estimated that “the world’s High Net Worth Individuals (HNWIs) held around $11.5 trillion of assets offshore […].This figure was considered extremely conservative: it did not include […] corporations, which reportedly pass more money through tax havens than individuals.” (http://www.taxjustice.net/cms/front_content.php?idcat=103 )
I reckon that would comfortably cover the developed world’s $20 trillion of debt…
I’m having real problems posting at the moment – is anyone else having the same problem?
I’m rephrasing what I was trying to post, because I get a message saying it duplicates a previous message, but that message didn’t get posted. Strange, that…
“[B]etween household, corporate and government debt, the developed world has $20 trillion in debt over and above the sustainable threshold by the definition of “stable” debt to GDP of 180%” (http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis , commenting on the Boston Consultancy Group report).
A 2005 report by the Tax Justice Network, on the other hand, estimated that “the world’s High Net Worth Individuals (HNWIs) held around $11.5 trillion of assets offshore […].This figure was considered extremely conservative: it did not include […] corporations, which reportedly pass more money through tax havens than individuals.” (http://www.taxjustice.net/cms/front_content.php?idcat=103 )
That would comfortably cover the developed world’s $20 trillion of debt…
I’ve been trying to post this several times, but it hasn’t been working. Cue paranoia?
The Boston Consulting Group report says that “between household, corporate and government debt, the developed world has $20 trillion in debt over and above the sustainable threshold by the definition of “stable” debt to GDP of 180%” (http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis ).
In a 2005 report, meanwhile, the Tax Justice Network estimated that “the world’s High Net Worth Individuals (HNWIs) held around $11.5 trillion of assets offshore […].This figure was considered extremely conservative: it did not include […] corporations, which reportedly pass more money through tax havens than individuals.” (http://www.taxjustice.net/cms/front_content.php?idcat=103 )
I reckon that would comfortably cover the developed world’s $20 trillion of debt…
I’ve been trying to post this several times, but it hasn’t been working. Worrying?
The Boston Consulting Group report says that “between household, corporate and government debt, the developed world has $20 trillion in debt over and above the sustainable threshold by the definition of “stable” debt to GDP of 180%” (http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis ).
In a 2005 report, meanwhile, the Tax Justice Network estimated that “the world’s High Net Worth Individuals (HNWIs) held around $11.5 trillion of assets offshore […].This figure was considered extremely conservative: it did not include […] corporations, which reportedly pass more money through tax havens than individuals.” (http://www.taxjustice.net/cms/front_content.php?idcat=103 )
I reckon that would comfortably cover the developed world’s $20 trillion of debt…
I am mightily impressed at the range and erudition above but as pragmatism is the only allowable ism perhaps the best strategy is to concentrate on a single thing that will give us the best chance. I am thinking of reform of money. The primacy of money, the hinge-point around which everything swings, (given that in fact we do already have a structure that works albeit with some notable dysfunction’s) in addressing that problem is clear to me. Corruption is now our biggest problem because our money has been corrupted. Removing the virtual element of money cuts the fuel supply stoking this madness. For an organization to campaign on the reform of money seems to fit the bill of not attacking the political establishment head on but forcing them once again to put their shoulder to the wheel in the common interest.
I agree that many of our precepts need reexamining but first we need to arrest the slide into totalitarianism and for that we need an achievable strategy that would be capable of capturing the publics imagination without being party political.
So yes that does mean a pressure group perhaps one where the thinking and decision making is on line and in public so as Phil suggests perhaps a facebook page is a good idea.
.
I’ve been getting messages about duplicates when the original post didn’t work – strange that…. My last post disappeared too. Has anyone else been having problems posting?
Neil 8.48pm the old prob of new posts clustering up thread seems to be sorted, just checking . Now testng your new one.
It is excellent to see increasingly meaty threads here, and I join Bill40 in almost complaining about the abundance of good links !
As for going viral on Facebook,( Phil 7.58pm) whatever, the message is “what” ?
I’ve been busy so the old head not yet around MMT,(nigel), so for now just spread the message that what is now being done is the biggest scam in the history of the world….
Yesterday my agricultural machinery mechanic already had an idea of what’s going on which was far in advance of what the politicians admit to.
testing frog2
Thanks Dave.
There’s already a pressure group focused on banking reform: see http://goodbanking.org.uk/ .
I found this on http://www.compassonline.org.uk/ (a “democratic left” pressure group which claims 40,000+ members), which also links to the Public Interest group http://action.compassonline.org.uk/page/s/public-interest .
The post I was trying to make went roughly as follows:
The report by the Boston Consulting Group states that the developed world has $20 trillion of debt above what is sustainable (180% of GDP)
(http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis ).
The Tax Justice Network, on the other hand, made a very conservative estimate in a 2005 report that around $11.5 trillion of assets were held offshore by the world’s High Net Worth Individuals. The amount held offshore by corporations is said to exceed this (http://www.taxjustice.net/cms/front_content.php?idcat=103 ).
Put the two together…
There’s already a pressure group focused on banking reform: see http://goodbanking.org.uk/ .
I found this on http://www.compassonline.org.uk/ (a “democratic left” pressure group which claims 40,000+ members), which also links to the Public Interest group http://action.compassonline.org.uk/page/s/public-interest .
The post I was trying to make went roughly as follows:
The report by the Boston Consulting Group states that the developed world has $20 trillion of debt above what is sustainable (180% of GDP)
(http://www.zerohedge.com/news/muddle-through-has-failed-bcg-says-there-may-be-only-painful-ways-out-crisis ).
The Tax Justice Network, on the other hand, made a very conservative estimate in a 2005 report that around $11.5 trillion of assets were held offshore by the world’s High Net Worth Individuals. The amount held offshore by corporations is said to exceed this (http://www.taxjustice.net/cms/front_content.php?idcat=103 ).
Put the two together…
Thanks Dave, but I just tried again, rephrasing the message to avoid it coming up as a duplicate or spam, and it didn’t work.
In the meantime, check out http://goodbanking.org.uk/ and http://action.compassonline.org.uk/page/s/public-interest , both via http://www.compassonline.org.uk/ .
Damn, it’s done it again!
From the Telegraph:
Buffett says bankers shun Obama campaign because they feel ‘unloved’
Wall Street bankers are withholding funds from Barack Obama’s re-election campaign because they believe they are unloved, Warren Buffett has warned.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8802799/Buffett-says-bankers-shun-Obama-campaign-because-they-feel-unloved.html
Qatari wealth fund plans $10bn gold buying spree
The Qatari Royal family plans to spend up to $10bn (£6.4bn) buying stakes in gold producers through their sovereign wealth fund
http://www.telegraph.co.uk/finance/personalfinance/investing/gold/8802793/Qatari-wealth-fund-plans-10bn-gold-buying-spree.html
Banking crisis set to trigger new credit crunch
The global financial system is on the edge of a new credit crunch as the cost of insuring the bonds of banks across the world hits new highs, analysts have said.
http://www.telegraph.co.uk/finance/financialcrisis/8802846/Banking-crisis-set-to-trigger-new-credit-crunch.html
Dexia, China, even Australia…
The Franco-Belgian bank Dexia – which Zerohedge has been saying for some time is doomed to be nationalized – holds “assets” (sic) equivalent to 180% of Belgian GDP.
Talk about a banking cuckoo in a country’s economic nest…
I’m puzzled as to why it is that governments have to bail banks out. Some banks are bigger than countries and I am told that the deriatives market is some 20 times the size of world GDP. So, why don’t the banks sell all this wonderful wealth and bail out governments?
Oh I’ve got it. Those deriatives are worth 10% of jack shit. But they’ll bleed the whole worl to pay for the pretence that they are.
I am really really starting to seriously hate the bastards.
Meanwhile a government advisor is suggesting we cut wages for young people beacause they are too much!! No I’m not making it up.
http://www.telegraph.co.uk/finance/jobs/8802890/Minimum-wage-harming-job-opportunities-for-young.html
I am feeling grumpy enough this morning and now this utter crap. Young people with the right connections work for nothing anyway how do you cut that?
Oh here’s an idea. Why don’t young people pay employers to work for them? We could even make a CDO from it. A bit like university fees but you pay for a job instead.
The government loans you 9k a year with which you pay the employer to work. If at the end of 3 years experience you don’t get retained tough. You’re in debt, which is an investment in your future and now experienced.
I’m a bloody genius I am
bill40,
Though counter intuitive and I know you are upset now, the minimum wage is a tool of inflation. Ergo, it is a tool of the monetary authority to induce circulation of the currency. The UN, the IMF and the World Bank are inflation conduits too.
The minimum wage is government intervention equivalent to subsidies to preferred entities. The minimum wage is one of the quid pro quos that government bestows upon unions in order to garner votes.
If you understand the DBFM dynamic, then you will also see that the minimum wage, as indeed numerous other “hard won” social entitlements, is nothing but a stratagem of the monetary authority to make society dependent on government.
Once society thinks government has its back, then economic actors do not feel the need to save. By depleting their savings economic actors contribute to the circulation of the currency. Once savings have been depleted and the currency is debased further, society needs to make use of debt. And presto! The monetary authority expands the credit markets making out like bandits at every mention of the words minimum wage.
Now, from there to expecting this government advisor to understand DBFM and the underlying reason for the minimum wage is a stretch. So, yes, in this particular case, this government advisor is suggesting scrapping the minimum wage for the wrong reasons.
Guido.
I believe you to be wrong on just about every count there. Low wages cause economic decline,stifle demand and impair ability to repay and service debt. Inflation rates are personal it depends on your income. According to Ambrose on the Torygraph there is TOO MUCH saving.
The DBFM dynamic depends on government debt and defecits when the non government sector saves. Government behaviour be the opposite to the non government sector.
As for nobbling government and regulation at this time, that is advocating madness. Private out of control banks and debt have brought us to where we are. Inflation is being driven by too much money at the top chasing a static amount of resources. Those at the bottom get squeezed out.
And government has failed the people also. I don’t like the coice but government is our only hope.
Oh dear. Government has screwed you, and yet you keep returning to it.
The state’s method is to ply the economy with spending money. They do it through tax credits and benefits. To the point were a Whitehouse spokesman recently laughed at a journalist from the Wall Street Journal because he didn’t understand that increasing unemployment benefits would increase employment.
We don’t need more regulation. We need enforcement of existing regulations. That’s all that was ever required, but the state refused to do it, refused to remove banking licences.
We are through the looking glass.
You must agree that there is a difference between wages and purchasing power. If you do, as surely you must empirically and mathematically, then you will also agree that there is absolutely no evidence that a minimum wage raises purchasing power.
Like price controls, a minimum wage raises the cost of labor but it does not necessarily raise the purchasing power of labor. On the contrary, as the currency is debased, nominally higher wages are still not enough to make ends meet. This is the reason a household could get by on one salary till the early fifties but then gradually not even two salaries are enough to make ends meet and individuals need to tap credit lines.
As an aside, a minimum wage hinders the resolution of a recession because those individuals whom may not be skilled enough to merit a minimum wage are denied the opportunity to work for less.
One could argue that a minimum wage in the absence of inflation might increase labor’s purchasing power. But even in this case, a minimum wage would relegate all those people that are not skilled enough to be paid that wage to never working.
Instituting artificial price levels by decree is very rarely a solution to efficiency.
Sorry Guido, we’ll have to agree to disagree on this. The lack of purchasing power is caused by the “trickle up effect” becoming a torrent up. MW may not be a perfect solution but I’ll not only defend it, I’ll advocate a living wage for all.
Until we change the system it’s a little given back.
While I would agree that the minimum wage is a distortion of the free market. I would say that it is an acceptable one because the free market solution to insufficient wages is a combination of petty thieving and fraud. The lower wages are the more pilfering which goes on inside businesses, of course if wages are low enough the other free market stabilizers come in to play for example burglary and mugging which British society was plagued with in the Victorian era
Bringing up the issue of the minimum wage is a bit like standing on the listing deck of the Titanic arguing about who should pay for the mini-bar bill. But it’s consistent with the general approach of the free marketeers to distract attention from their bankrupt ideology by putting the spotlight on the low paid, benefit claimants, public sector workers, asylum seekers, people who live too long, students . . . any group that can be scapegoated through misdirection while the root cause – the extreme polarization of wealth (from which the debt crisis was an inevitable corollary), and with it political and ideological power, are conjured out of the picture.
Charles,
I am not at all conjuring the polarization of wealth out of the picture. Were it not for DBFM, we wouldn’t even need to talk about the minimum wage.
You have to put the horse back in front of the cart. We cannot discuss minimum wage without discussing the monetary system first. DBFM brings about the polarization of wealth which in turn brings about the ostensible “need” of a minimum wage.
Minimum wage is not what we should be discussing.
Looks like Buffets tiger stripes are starting to show through.
Events appear to be rendering my panic academic and this time there will be no 16 trillion from Bernanke at 0% interest to save the banks asses see first ever GAO Audit Of The Federal Reserve
I’ll keep it brief because I’ve been having trouble posting this (presumably previous failed attempts led to renewed attempts being blocked as duplicates or spam).
Compass, a “democratic left” pressure group which claims over 40,000 members and supporters, links to two other relevant pressure groups: Public Interest and the Good Banking Forum. See http://www.compassonline.org.uk/ .
Regarding pressure groups, there is already one pushing for banking reform, the Good Banking Forum, http://goodbanking.org.uk/ .
(In the) Public Interest calls for reform of banking, politics, the media and the police, http://action.compassonline.org.uk/page/s/public-interest .
There are links to both of these on http://www.compassonline.org.uk/ , a “democratic left” pressure group which says it has over 40,000 members.
Briefly, the other message I’ve been trying to post:
The BCG report says the developed world has $20 trillion of unsustainable debt, yet the Tax Justice Network gave a very conservative estimate in 2005 that the world’s wealthiest people held more than $11 trillion offshore, and suggested that the figure was even higher for corporations. See http://www.taxjustice.net/cms/front_content.php?idcat=103 .
Well I never, that nice fella Jamie Dimon from J P Morgan donates 4.6 million to the NYPD.
http://stopforeclosurefraud.com/2011/10/01/quelle-surprise-j-p-morgan-chase-donates-4-6-million-to-nypd-occupywallstreet/
Avaaz petition, if you would like to sign & pass around.
http://www.avaaz.org/en/europe_people_vs_banks_1/?copy
According to an “extremely conservative estimate” in a 2005 Tax Justice Network report (http://www.taxjustice.net/cms/front_content.php?idcat=103 ), the world’s wealthiest people had more than $11 trillion offshore, with a much higher figure for corporations.
The BCG report quoted above, on the other hand, says that the developed world has $20 trillion of unsustainable debt.
Interesting, that…
The developed world has $20 trillion of unsustainable debt (Boston Consultancy Group report above).
An “extremely conservative estimate” by the Tax Justice Network in 2005 of money held offshore by High Net Worth individuals: $11 trillion. The figure for corporations was said to be much higher.
See http://www.taxjustice.net/cms/front_content.php?idcat=103.
http://www.zerohedge.com/news/nomura-explains-why-gold-went-down-and-why-it-going-back
Some interesting analysis as to why gold has dropped in recent weeks and some reasons as to why this trend is likely to reverse.
The Slog: Germany could leave euro before Greece (with sources, so it’s not just idle speculation, but a real possibility)
http://hat4uk.wordpress.com/2011/10/03/crash-2-analysis-germany-could-leave-euro-before-greece-sources/
@ Neil
They would want to keep that quiet you would think. i suppose they would have to announce one monday morning that it was done, in order to stop people turning euros into sterling or dollars to make money if the euro loses say 50%, potential chaos if enough people did that, I would think. If I was living in the Republic & had some spare cash, I would change it, I would bet on the pound, which is probably a good reason to bet on the dollar.
An Occupy the London Stock Exchange movement is making plans for 15 October, with a general assembly on 9 October:
http://www.facebook.com/event.php?eid=255151111189948
And according to zerohedge dexia is down and about to be nationalised by the non existanr Belgian government. 5 more to follow including SocGen and BNP.
Zerohedge actually says “done”, describing Dexia as “expiring”: http://www.zerohedge.com/news/dexia-done-here-who-next-visual-euro-bank-liquidity-vs-funding-exposure-matrix .
There’s another post on big falls for Citibank, Bank of America and Morgan Stanley: http://www.zerohedge.com/news/final-countdown
– while Reggie Middleton (if you can take him) continues to hunt the squid (Goldman Sachs): http://www.zerohedge.com/contributed/hunting-squid-part2-when-enough-derivative-exposure-blow-world-something-be-ignored .
Peston’s catching up, talking about Dexia and Morgan Stanley: http://www.bbc.co.uk/news/business-15160413 .
Telegraph on Dexia:
“The bank said today its board has “asked the CEO, in consultation with the relevant governments and the supervisory authorities, to prepare the necessary measures to resolve the structural problems.”
Dexia’s shares fell off a cliff this morning, dropping 38pc. The bank didn’t elaborate how it will fix its funding problems, but reports say it may set up a “bad bank” for its troubled assets and seek buyers for its Belgian and Turkish banks, as well as its asset-management division.”
Bruno Waterfield at the Telegraph:
“Dexia passed the EU’s round of stress tests in July:
This is what the bank said just two months ago: “Dexia’s strong capital base would enable it to weather the set of assumptions of the EBA stress tests, while still maintaining strong capital ratios, even if these assumptions look very conservative, notably for sovereigns, local authorities and the potential evolution of the funding costs.”
http://www.dexia.com/EN/journalist/press_releases/Documents/20110715_Dexia_EBA_stress_test_EN.pdf
Whether France or the eurozone likes it or not, the Dexia problem is going to raise wider questions about the strength of Europe’s banks.”
You don’t say.
The Slog:
“Dexia’s chief issue appears to be a colossal need to service short-term borrowing itself. A Dexia crash – now thought in most financial quarters to be inevitable without a massive bailout from Paris – will affect cities and towns in every region of the United States. Dexia is a major player in the $2.9 trillion market for municipal debt. (There’s that T-number again)
Dexia’s shares have fallen 23% this week alone. Said Jane Foley of Rabobank, “Dexia’s problems stress the point that for euro-zone leaders the Greek crisis is less about Greece, and more about the potential for it to spark a much more widespread banking and economic disaster”.
BNParibas and SocGen are also in the frame:
“While most banks have written off Greek debt to around half – although the increasing likelihood is that they’ll lose 100% of the amounts outstanding – Dexia (and France’s two biggest lenders) have only marked the losses down at 21%. Between them, this trio of clowns stand to lose 3 billion euros more than they told the regulators.”
http://hat4uk.wordpress.com/2011/10/04/crash-2-dexias-greek-debt-write-down-fears-spread-to-bnp-socgen-and-the-us/
Iceland – with one leap they were free
http://sacsis.org.za/site/article/728.1
found at maxkieser.com
I’m financially illiterate. I’m not proud of this fact, but it’s a cross I must bear. Me and a few other million people. As such, I understand the bail-outs in only the simplest terms. And someone correct me if I’m wrong, but this is how I boil it down in order to comprehend it, and none of makes any sense to me.
Say there’s this guy called Ted. Ted earns sod all. €15,000 a year. He borrows some money to get clothes and the occasional Robbie Williams CD (he has terrible taste in music) on the expectation that his income will rise. It was €13,000 last year, he’s on an upward trajectory at least.
But his income doesn’t rise. It falls. To €10,000. He’s in deep poop with the bank and owes them €10,000, all things considered. So the bank calls him in and says “Ted…Ted…Ted. What are we going to do with you?” Ted looks sheepishly at a spot on the floor and says “Dunno.”
So the bank manager says “Here’s what we’ll do Ted. We’ll give you a €10,000 loan that wraps all your debts up together and give you a few years to pay it back. Things’ll pick up. It’ll cost you €13,000 to borrow the €10,000 but it’ll be no problem to you over the long-term.” Both parties seem relieved.
12 months later, things haven’t picked up. Ted’s income has dropped to €9,000, he’s boiling shoe leather for soup and he can’t meet the payments. Back to the bank manager. “Ted…Ted…Ted” says the bank manager (who at least is good with names), “Here’s what we’ll do. We’ll give you a new loan to pay back the €13,000 you now owe us. It’ll cost you €16,000 to pay back the €13,000, but at some point soon everything will kick on and we’ll all be in gravy.” Ted’s beginning to get an even more uncomfortable feeling.
Fast forward 12 months. Ted’s now on €8,000 and living on tree bark. No pick up. No gravy. Bank manager. Ted. €20,000 to pay back the €16,000.
Continue ad infinitum. Unless Ted’s income picks up, this is just layering on increasing debt to someone who can’t pay it. But that can’t be true, can it? Because that would be really stupid and obviously counterproductive. For everyone.
Hi Raid Eddie! Long time no see. That about sums it up nicely me-thinks.
RapidEddie,
Welcome.
The manager sold the same line to entire nations.
Robert Peston on the beeb tonight: ‘This is a sovereign crisis that has become a banking crisis.’
Really? Really, truly Robert? I thought it was a banking criss, that never went away, that became a sovereign debt crisis that morphed back into a (visible) banking crisis!
Still Cameron has the answer. He’s told all UK households to pay off their credit cards. Yep that is right. If we just pay off our credit cards then we will be okay. I mean we won’t be able to spend in the shops and keep the old economy tickety boo – but if we do all suddenly make panicked payments to our credit cards, then that is a nice cash injection to the banking system, isn’t it? I am glad that we have a real leader in charge, with some excellent original thinking on this problem.
Great to see my old CiF friends RapidEddie and the PrincessCC together here.
Are you sure Peston spouted that rubbish about a sovereign debt crisis becoming a banking crisis ?
On second thoughts, not a bad ploy if Peston was working for the bankers.
WE all know that the opposite is true, that the banking crisis is expressly becoming a sovereign debt one.
Just thinking to myself, if Germany did leave the Euro, how would that effect Ireland in regards to the ( I think ) 70 billion that is still owing to bondholders. of whom (i think) most are German. If the euro devalued 40-50% & the cash was still paid back in euros, this would amount to a short back & sides for these bondholders. On the other hand if it had to be paid back in DM, it would be an added disaster for the Irish, & probably the Greeks.
Oh, my poor head.
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