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Trapped in a Bubble

When in a hole, stop digging. But when in a bubble, keep blowing.  –  Not very ancient proverb.

I think our ruling and wealthy elite are worried that they are  stuck in their own ponzi scheme or bubble and are suffering from the general problem of all ponzis and bubbles – how to get out.

You see bubbles and Ponzi’s are fine as long as they keep going. As long as there are ever more suckers to recruit and as long as enough of those already in, remain confident and choose to stay in, there is no real reason a ponzi cannot go on and on.  A perfect example is Madoff’s scheme. The weakness of all bubbles, ponzi or otherwise, is that all it takes is a rumour that it might be time to get out,  that it might soon get difficult to get out, or that someone ‘in the know’ wants out, and a ponzi scheme pops like a soap bubble. They are notoriously unstable.

So if you are in one how do you get out?

I think this question is worrying our wealthy Over Class because stock markets around the world are over-valued and its their wealth which is most  tied up in the markets. I think some of them are now rather worried that they have built themselves a luxury tower of paper wealth from which, when it catches fire, they will not all escape. I think they are right.

So, first, are the markets a bubble or ponzi?

Well if we look at the real economies of the West and then at the stock markets, the later have the look of a ponzi. I’m certainly not alone in thinking this. In Europe, the U.S. and Japan, over the last 6 years, in what we might call the ‘real economy’ of people making things, earning money and spending it to buy things other people have made, we have had either anaemic growth, no growth or outright contraction. And yet all the time the stock markets have roared ever higher. 

On the ‘real’ side of things lets look at Caterpillar (CAT), the american heavy construction equipment manufacturer. It is often seen as a bellwether. CAT, as recently reported over at ZeroHedgeis now in its 28th consecutive month of declining sales. 

CAT great depression 2_0

 

 

 

 

 

 

 

And yet its share price is $86 not far off its record highs, up from a low of $23 to which it fell in March 2009. $86 or thereabouts  ever since 2010 despite 28 months of declining sales. 

CATshares

CATshares

CATshares

 

 

 

 

 

 

 

 

 

Is this supply and demand? I think not. Part of an explanation for this levitating share price is, as the ZeroHedge article points out, that the corporation has been buying back its own shares.

Cat CapEx Buybacks 2013-2014_0

 

 

 

 

 

 

 

 

CAT had been using more and more of its cash (the red bar) to buy back its own shares inflating the apparent demand for them and therefore their price. It’s not illegal, but what does it do for the idea that share price indicates what a company is worth? And where was CAT getting the money with which to buy those shares?  I doubt it was from profits given the long cumulative decline in sales. More likely it was from selling bonds i.e. using borrowed money.  And indeed that seems to be the case. In May of 2014  CAT sold $2 billion of debt some of it dated as long as 50 years.

So let’s take a look at what we have. In May of 2014, despite having already suffered a year of declining sales, CAT shares were the second best performing shares on the Dow Jones. Who was so keen to buy all their shares? Who knows. But CAT itself had just spent 175 million in buying their own shares in the first quarter (when it was the second best performing share on the DOW) and in the last quarter of the year went on to buy another 250 million dollars worth. In fact, and perhaps most critically,  in January the CAT board had authorized $12 billion for buy-back. So the market know that a lot of shares were going to be bought up…by CAT.  And not at bargain basement price either. Take a look at the record of their share price above and you’ll see that the board had authorized using borrowed money to buy their shares at around the highest price they had ever been.  Hmm. Did buying all those shares encourage others to do likewise, especially knowing that CAT had a war chest of $12 billion earmarked for buying shares?  Any ‘investor’ would know there was a buyer in the market who would be ready and willing to buy them back from him. The upshot would be a guaranteed buoyant market in CAT shares at a time when without such a buoyant demand a year of declining sales might just possibly have led to a steep decline in share price.

Of course the official rationale for taking on debt to buy back shares is that debt costs are now low so its a good time to do it. The problem is that while in the short term it improves the look of the company’s share price and things like return on equity, it locks CAT, and any company that does the same, in to paying out interest on debt over the long term.

The systemic problem

If CAT were alone in being the only company whose share price looks to be over-valued based on actual profitability  it wouldn’t matter and we’d be fine. But it isn’t.

Here is what a recent note from Goldman Sachs chief equity strategist, David Kostin says – as reported at Zerohedge.

… in his latest weekly note to clients he said that “by almost any measure, US equity valuations look expensive.”

In other words almost everything looks over valued.

Mr Kostin goes on to suggest one reason for the inflated prices is that

Corporations have so far used record profits to return cash to shareholders. S&P 500 firms have spent more than $2 trillion repurchasing shares during the past five years.

The key for me is he puts share buy back and returning money to investors together. Companies buy back their shares. This keeps their share price inflated in a market that has forgotten to worry about underlying profit and is fixated instead on short term ‘what someone will pay me for this bit of paper’.  So the share price remain high and the experts tell us all is good. Wonderful in fact. But the money, some of it alt least, is being sucked out and given to those ‘investors’ who sold and cashed out. Now who are those people?  Well we know that the wealthiest 10% own about 75% of all measured wealth and that the bulk of that wealth is not physical stuff but held in the form of financial products

So it looks to me that as share prices are being kept high some are cashing out. Those who stay in are feeling happy because their shares keep going up in ‘value’. But of course its not that simple because someone has to keep buying in the market. So I suspect much of the cashed out money is still flowing back in to other shares to keep the market buoyant. Plus people will look at even a rigged market and say to themselves – “hey I’m missing out if I duck out of this bull market too early.” So they stay in even knowing the risks of a rigged market. Telling themselves there will be a better time later to cash out.

And therein lies their danger. As Mr Kostin notes,

In 2007, companies allocated more than one-third of their cash use to buybacks ($637 billion) just before the S&P 500 plunged by 40% during the following year.

Seems like this was a strategy they tried before. And it is not just CAT and a few others it is market wide. Mr Kostin one more time

We forecast buybacks will surge by 18% in 2015 exceeding $600 billion and accounting for nearly 30% of total cash spending.

I think that is a systemic problem. $600 billion keeping stock prices buoyant and above any profit based valuation.

And I’m not alone. Nobel laureate economist Robert Shiller of Yale University in a recent interview said, referring to the persistent bubble-like pricing in not just property but in stocks and various commodities,

“I call this this the ‘new normal’ boom — it’s a funny boom in asset prices because it’s driven not by the usual exuberance but by an anxiety,” said Shiller.

The fact that Schiller thinks this bubble is driven by anxiety is, to me, very significant. I think he is right of course. I do think there is a palpable anxiety driving this bubble rather than the exuberant ‘animal spirits’ that Greenspan so famously identified as the cause of bubbles.  Schiller goes on to say,

“This is an anxiety driven world — the whole world is driven by anxiety. It is anxiety about the aftermath of the global financial crisis, it’s anxiety about inequality and about computers replacing jobs,” he said.

I agree with all those sources of anxiety. But I think he is missing out on possibly the major source which, as I’ve argued, is the anxiety of keeping your money in the market so as to maintain the inflated share prices, while at the same time trying to figure out how to get out, again, without popping the bubble. So – maintain and get out at the same time – no wonder they’re anxious.

Round and round. Up and up.

If you can’t get out and you are afraid there are not enough new buyers to keep your ponzi/bubble going what do you do? I think the answer is you and your friends do the buying yourself. If you and your friends are big enough players with enough to lose that defecting is really dangerous, then you actually have a workable incentive to keep playing. You buy the shares I sell and I buy yours (It doesn’t just have to be just buy-backs as per the CAT example). And I think this is what has been happening.

Of course it only works of you are able, as a group, to have a really serious effect on the over all market. But if you think of the top 10% they certainly have that. I buy your shares and pay you your asking price. You do the same for me. Tomorrow we do it again and each time we ramp the price a little.

The limiting factor, of course, is that we will not have enough money to buy all the shares as their price goes up and up. But that little problem can be easily solved if we have a friendly banker who will accept our shares as collateral for a loan. If our banker will extend us a loan and increase that loan periodically in line with the increase in value of the shares then all is good. Because the bank can just magic new money in to existence.

And if anyone get a creeping feeling that the banks are getting stretched a little thin or their margins – the interest they charge us for our loans above what they pay for borrowing – are too small for their comfort, then we all just tell the central bank that some new very low interest money is needed to juice the whole system. And since most of them are former us (bankers and financiers) they will understand. Plus they don’t want a systemic crash. It’s bad for their reputation and their personal wealth.

So with help from bankers and central bankers our cash supply will keep pace with the bubble inflation. Let’s be clear the markets tell central bankers what is needed not the other way around. It is a myth that central bankers call the tune. They don’t. Certainly central bankers sit in their central banks board rooms and ‘make’ their decisions but it is what the private banks do, how much they loan, how much they inflate the credit supply, that has the whip hand in dictating what the central banks are obliged to do in order to keep the music playing.

Of course if everyone knows the whole thing is a bubble it might seem insane. But if your alternative is to see the bubble burst then its still a rational decision to keep playing. It will pop one day and all that paper will turn to ash. But if, in the mean time you have been siphoning off some wealth to buy up actual stuff then when the ash settles you will still own stuff. So keep playing.

I wonder if this is why there is such a political push in the US and Europe to privatize anything and everything still in public hands?

And this argument doesn’t even take in to account that the vast preponderance of the wealth of the top 10% is tied up in even more remote-from-reality paper. Certainly the wealthiest 10%, 5%, 1% 0.1% and 0.01% own mines and factories and land. But even those things are dwarfed by how much of the wealth is tied up in the paper wealth of derivatives, securities, loans, bonds piled on top of the inflated asset and share prices. You just have to think, for example, of the size of the OTC derivatives markets whose gross market value is somewhere around $21 trillion. A figure that is itself based upon the larger value of outstanding contracts which is about $630 Trillion. All of this would be dust, in a collapse that was not bailed out.

Is this actually happening?

Well price inflation certainly is. According to an article from AP a few days ago,

…professional investors are warning that companies are presenting misleading versions of their results….What’s worse, the financial analysts who are supposed to fight corporate spin are often playing along. “Companies are tilting the results,” says fund manager Tom Brown of Second Curve Capital, “and the analysts are buying it.”

How bad is it?

At one of every five companies, these “adjusted” profits were higher than net income by 50 percent or more….Quarter after quarter, the differences between the adjusted and bottom-line figures are adding up. From 2010 through 2014, adjusted profits for the S&P 500 came in $583 billion higher than net income.

At the same time leverage is again creeping up to unwise levels. Not in the banks this time (not officially at least) but in Hedge funds where it is up to 2004 levels. It is a truism that risk never goes away it just migrates to where the regulators can’t see it or have no power to do anything about it.

Even the slowest guys in the room, the regulators, are beginning to be worried. In March of this year,

The Office of Financial Research, the agency tasked with promoting financial stability and keeping an eye on markets, released a paper last week stating that the stock market is dangerously overpriced, and that excessive leverage will exacerbate the next market correction.

You can read the whole report here. The author presents good data showing inflated prices but then does his best to say it could all still be fine. Like I said, the slowest guys in the room.

The point, however, is that there is an air of conspiracy about it. The companies (which includes financial ones) are playing around on the border between creative accountancy and fraudulent misrepresentation and the analysts and auditors are not correcting them. Much as we saw in the figures for all the banks in the run up to the crash. All of the big 4 accountancy firms were signing off on the robust financial health of  banks sometimes mere weeks before said bank then collapsed. All of the big 4 auditors subsequently found themselves in court. So to suggest that companies, analysts and auditors might be not just allowing and enabling dangerous misrepresentations but even endorsing them is not really conspiracy theory, more painful experience.

Why is it happening?

Obviously my argument is that its happening because the wealth and power of the Global Over Class are stuck, as they have been for a decade and more,  in a bubble of inflated prices with not easy way out. I think the longer the Bull market of the last 6 years, goes on and the more decoupled it looks from the non-recovery in the rest of the economy(the employment economy) which the rest of us live in, the more it looks to me like something that is being engineered. And of course the longer it goes on and the more decoupled the bubble gets, the more those invested in it have to lose and the more stuck they feel.  I have suggested the mechanism for maintaining the bubble this long has become the wealthy buying the financial products they all own from each other over and over. Facilitated by banks providing the necessary money supply and complicit experts covering over the yawning gap between share prices and likely profits.

I am not suggesting an organized conspiracy so much as a system finding a new way to keep going. This might seem a herculean task of coordination till you remember that 147 companies own 40% of the wealth nominally owned by tens of thousands of companies. And 737 companies own 80%, And these are the companies that are owned and or run by the wealthiest 10 percent.

The result is a ponzi kept alive without new entrants. The new money being supplied by the banks back-stopped by us via endless QE and back door subsidises like ultra-low interest rates.

If this idea has any merit then our politics will now be bent to preserving this.

One last point for those who have not yet lost the will to live.

Price discovery

The basis of investing used to be Price discovery. And ‘Price discovery’ used to mean discovering how profitable a company was likely to be over the next year or so. That determined what you would pay for a share in that company.  Share price and the market in shares was a reflection of the underlying reality of companies and what they did.

But as speculation has gradually come to overshadow investing, what price discovery means has shifted.  Today, in the age of companies being worth billions one month and very little the next, share price has less and less to do with what profit the company expects to make and more to do with investing strategies (such as ‘buy the dip’), market momentum and above all the political decisions concerning how much easy money will or will not be injected in to the banks..sorry economy.  Value comes to be less about the company itself and the profit it might make and more to do with the collective beliefs and the herd behaviour of traders reacting to each other.

 As long as speculators keep looking at each other and forgetting any notion of profit based value then the  market ceases to be about any lasting physical basis of profitability and can be pulled so far from its old course of tracking ‘profit that price discovery ceases to be anything ‘real’. It becomes a fairly empty measure of …well of what?  Of market confidence? Of feeding frenzy?

What happens in a market dominated by speculation is that the ‘game’ aspect where shares are just a convention of chips in a game has come to dominate any notion of shares representing anything real outside the game.  This is what I think is increasingly what our stock markets are. No wonder they can be so massively manipulated.

120 Responses to Trapped in a Bubble

  1. Golem XIV June 10, 2015 at 8:02 pm #

    Just wanted to say sorry for the very long silence and to apologise in advance if the above combines being too long with not being my best effort. The longer I go without writing the more guilty I feel and the more nervous.

    • Jonathan June 10, 2015 at 10:18 pm #

      Glad to have you back at the keyboard. Be confident this is freshly insightful and very worth the read.

      “When the ash settles you will still own stuff” as a standalone observation is well worth the price of admission, and the paragraph around it makes an easy-to-swallow answer to the question, “Why would They blow up a system that serves Them so well?”

      I observe that elites appear to be concerned not just with privatizing/owning stuff, but with privatizing/owning the means of attestation to the ownership of stuff and debts (e.g. MERS), lest the peasants set about destroying land records and depriving Them of their special exclusionary privilege.

      • Dylan June 10, 2015 at 11:19 pm #

        Agreed. insightful. The language is accessible and brings so much together. Thanks

        • Golem XIV June 11, 2015 at 12:23 am #

          Thank you both, Dylan and Jonathan. Thank you.

    • Nicholas Shaxson June 11, 2015 at 9:01 am #

      No need to apologise. We’ve all been there. I’m the same. treasureislands.org

      BTW, if it’s US share buybacks you’re interested in, the guru in my opinion is Bill Lazonick. E.g. this harvard business review article of his is a cracker:
      https://hbr.org/resources/pdfs/comm/fmglobal/profits_without_prosperity.pdf

      • Golem XIV June 11, 2015 at 11:13 am #

        Brilliant Nicholas! Thanks. I hope you and yours are well. Shall we find a moment to catch up on Skype?

    • Roger G Lewis June 12, 2015 at 9:16 am #

      Welcome back David, Just in time for the S H 1 T hitting the fan. IMF throwing toys out of Pram over Greece, European Parliament postpone Vote on TTIP and Osbourne seeling off the Royal Mail in a Buddy Deal but its all great Keep Calm and Carry on. Anxious times indeed. I read Mish Shedlocks piece on the IMF and Greece today and got a sense that the phoney war was drawing to a close. Shame that your not addressing us from the House of Commons as a Green MP mate, but there we are I have decided the General election was as good as Rigged ( sour grapes on my part maybe). Big hug form Sweden good to hear you´re on form with the quill fella!

    • MrShigemitsu June 14, 2015 at 12:37 pm #

      Don’t worry – please just keep it up when you can – you are always informative and a treat to read!

  2. nowhere June 10, 2015 at 11:01 pm #

    Glad to see that you’re back!

    A great article that points to the rigged system, of which, we are all subjects. I only wish I was smart enough to figure out a way to grind it to a halt.

    “There’s a time when the operation of the machine becomes so odious, makes you so sick at heart, that you can’t take part! You can’t even passively take part! And you’ve got to put your bodies upon the gears and upon the wheels…upon the levers, upon all the apparatus, and you’ve got to make it stop! And you’ve got to indicate to the people who run it, to the people who own it, that unless you’re free, the machine will be prevented from working at all!” – Mario Savio

    • Golem XIV June 11, 2015 at 12:23 am #

      What a brilliant quote. There are ways but none of them easy.

  3. Phil June 10, 2015 at 11:37 pm #

    I thought your point re the weighting of investors versus speculators was an interesting one. I hadn’t considered that before.

    John Ward over at the Slog has offered some thoughts on how some of the investors may try to get out:

    https://hat4uk.wordpress.com/2015/06/09/credit-consumption-global-debt-why-fiat-currency-hyperinflation-is-now-a-certainty/

    I’m meeting Graham Brady, Chairman of the 1922 Committee in a few weeks. Anyone have questions to put to him?

    • John G June 11, 2015 at 2:54 am #

      There is zero risk of hyperinflation on any horizon. Hyperinflation requires a supply side collapse and we are in a demand crisis.

      A demand crisis caused by a chronic lack of government spending into the areas of the economy where jobs are created and maintained. And all the anti-labour policies inherent in neoliberalism that have led to declining real wages for those with jobs.

      • Phil June 11, 2015 at 1:48 pm #

        Makes sense. Thanks John

        • jsn June 11, 2015 at 5:14 pm #

          It’s a little more complicated. What David is describing in this post, share buy backs, is a form of liquidationism where the ponzi is sustained financially while the real productive capacity is monitized as profits.

          If it goes on far enough it can in fact lead to an inflationary episode as a shift in policy away from liquidationism to real demand support could quickly overwhelm a productive capacity starved of investment now for over a decade.

          We’re still a long way from this, maybe, but its hard to tell. The sooner the shift the less extreme the resulting inflation. The forms that capital takes in a productive real investment are integrated social and commercial relationships that aggregate human potential into productive plant. This stuff can’t be put back together easily once it is abstracted into “profit”.

          http://cobblehillbilly.blogspot.com/2010/08/deflation-vs-revulsion.html

  4. John G June 11, 2015 at 3:00 am #

    Welcome back David. Looks like the Tories are signing up to commit the UK to permanent depression if the Grauniad is right. Osborne is talking about mandatory fiscal surpluses.

    Where are the calls for fiscal stimulus?

    • Golem XIV June 11, 2015 at 8:36 am #

      What I find most interesting about Mr Osborne’s call for mandatory fiscal idiocy it is another example of a what I was writing about in The Next Crisis series. That is, the attempt to erect a framework of laws around democratic decisions.

      Mr Osborne is trying to put a law in place to say some future democratic choice is now illegal. It is the elevation of the rule of law above the will of the people.

      The idea is clearly there is international agreements. Many of which we would all agree with – war crimes laws etc. But is a very dangerous road to go down – saying that a body of law constrains the democratic wil of a people.

      But what the Globalist faction want is to tie nations to economic agreements and then say that once agreed to there is no going back or changing to a different idea. And things like ISDS arbitration are the attempt to erect supra-national – but critically also not international in any way which still leaves nations and their governments with any supervisory control – international but completely outside of the entire framework of governments.

      This is how the future is being constructed.

      • John G June 13, 2015 at 4:09 am #

        Indeed. We’ve seen this trend with so called independent central banks, parliamentary budget offices and the like. It’s all incrementally handing over democratic decision making to the guardians of rentier interests.

      • FallingLeaf June 17, 2015 at 2:21 pm #

        David

        Firstly, welcome back. As usual, a great deal of insight, and well written.

        Your response here highlights my ambivalence about the EU. One the one hand, it is in some ways the last vestige of workers’ rights in Europe. On the other hand, it has turned into a semi-tyrannical state-finance nexus seemingly intent on screwing people to the ground and creating its own break-up.

        I don’t buy for a second any of the stuff around it preventing wars (all Europe did in the mid to late 20th century was export its wars abroad through proxies – maybe an Engelsian theory of supranational conflict resolution! You can tell I studied politics, for my sins) and I think MAD is a ridiculous idea with no evidence behind it and some to the contrary.

        But I still cling on to this idea that with the structures in place, the EU can be a force for good if we can break up its alliance with high finance.

        Am I deluded here, David? Should I just go with the tide and we do away with the EU altogether?

  5. Spartacus Rex June 11, 2015 at 9:58 am #

    Great article David!

    This calls for West Ham United!

    https://www.youtube.com/watch?v=yvuOtlpSAeY

    Cheers,

    S. Rex

  6. Spartacus Rex June 11, 2015 at 10:48 am #

    ZeroHedge: Big Pharma Revealed As Puppetmaster Behind TPP Secrecy

    http://www.zerohedge.com/news/2015-06-10/profits-over-public-health-big-pharma-revealed-puppetmaster-behind-tpp-secrecy

  7. steviefinn June 11, 2015 at 2:46 pm #

    Well I had a few pieces of the jigsaw – thanks for adding a few more & putting all the pieces together in the right order.

    Puts me in mind of a snake that sometime ago started eating it’s own tail.

    No wonder the 500 or whatever corporate backers of TPP have lit a fire under Obama’s rear end.

    • Golem XIV June 11, 2015 at 3:39 pm #

      TPP, TTIP and TISA all for their benefit and our loss. Despite endless propaganda to the contrary.

      How are you Steviefinn? Well I hope.

      • steviefinn June 11, 2015 at 4:03 pm #

        GRAND……as they say over here.

  8. Jack Dunwell June 11, 2015 at 3:49 pm #

    Of course money has nowhere very safe to go at present. An increase in interest rates would drain investment in corporations. But generally, yes Europe has lost a lot of market share over the past 10 years. In the UK we seem to make money in gambling on changes in exchange rates. Personally I’m investing in my irrigation system and trees and generally working on a local basis as we wait for the dirty fuels corporations to implode. I’d certainly like to see links with Saharan Africa to provide a large part of our solar power. Perhaps we could offer rain from Rochdale in exchange.

    • tom kauser June 11, 2015 at 5:46 pm #

      the increase of short term interest rates by the Federal Reserve will signal the end of a presumed inflationary monetary policy and attract capital into this country and the statement that capital will flee is without merit?

  9. tom kauser June 11, 2015 at 4:44 pm #

    your just hoping for a risk free entry point and forgetting the pain and austerity associated with being correct and broke! Any future mistakes made by the Fed will be surrounded by a deflationary downturn that the elite would not want to personally experience and do everything to avoid(AGAIN)? the expectation that the investor being in cash and nimble could cleanup like say waterloo when the next end begins has not as yet bared fruit? After a 200% increase in stocks since 2007-08 the attitude is still the FED is broke or broken and is blindly doing stuff? when the FED steals your income before you make or spend it and houses its on its balance sheet to gain interest infinitum they are embracing the bubble and not fearing it? The amount of disinformation gained from the media is so comprehensively wrong doing the exact opposite of the narrative could be the best and only way to make money for the foreseeable future?

    • Golem XIV June 11, 2015 at 5:18 pm #

      Hello Tom Kauser,

      I am not usre what you’re saying. Perhaps I’m just being thick. Are you saying I have got this all wrong/ Which is quite possible. These are just thinking out loud thoughts after all.

      • tom kauser June 11, 2015 at 6:28 pm #

        trying to figure out this mess is never wrong and if at times you feel your wrong ask yourself against whom or what am I wrong. Chances are the gut will beat the expert in our post Hank Paulson economy!

  10. Jesse June 11, 2015 at 5:24 pm #

    Good to see you posting again.

    They do not have to be long posts, although that is what sometimes occurs when one waits for a long time and a thought has the time to reach full bloom.

    A note here and there, a comment about something that strikes you as interesting, is more than sufficient. It is like keeping in touch with friends. They are always glad to hear from you even if it is brief.

    • Golem XIV June 11, 2015 at 5:34 pm #

      You are right. short is aften better. And as you say friendlier. And I am lucky to have such friends. Thanks Jesse.

  11. tom kauser June 11, 2015 at 6:02 pm #

    The Fed is the out bidder of last resort? selling a small portion of the balance sheet would have destroyed this meme of pure mental masturbation many moons ago? The balance sheet at the Federal Reserve Bank of NEW YORK is full of American IOUs which pay interest until maturity and the Fed is going to give up this claim BEFORE maturity(mortgages first?)? DOUBLE NEGATIVE to the economy bigger than any bubble bursting? The Treasury should dissolve this monster and turn the balance sheet over to social security and cut the social security withholding from the company and the worker! there is so much free money waiting outside the discount window 300+millions American citizens could party forever and never have to lift a plow again?

  12. tom kauser June 11, 2015 at 6:35 pm #

    The Fed is fearing a quarter point rate increase because it will be too BULLISH for markets?

  13. tom kauser June 11, 2015 at 7:18 pm #

    there are trillions of unrealized gains on the Fed balance sheet and you pay more for your chips? so you forget about those unrealized gains and think your chips taste better because you pay more for the meal for no better reason than you want too? Knowing that once this situation of unrealized gains become realized your going to be gone(ers)? they say this money isn’t real but its more than real its deadly ?

  14. OT? June 11, 2015 at 7:35 pm #

    OT?.

    “Saatchi’s bill could harm thousands”

    https://www.opendemocracy.net/david-hills/saatchi%E2%80%99s-bill-could-harm-thousands

  15. hud June 11, 2015 at 7:41 pm #

    “EU/UK/US – Union, Dislocation, Reinvention: The Great Systemic Transformation of the West”

    http://geab.eu/en/euukus-union-dislocation-reinvention-the-great-systemic-transformation-of-the-west-2/

    I don’t know if I agree with the above article, but, the web site above has a good track record.

    • its not going to be somewhere nice June 12, 2015 at 10:48 am #

      Where are we going ?.

      https://hat4uk.wordpress.com/2015/06/09/credit-consumption-global-debt-why-fiat-currency-hyperinflation-is-now-a-certainty/

      We can be sure of one thing, its not going to be somewhere nice!.

      • paulmeli June 13, 2015 at 9:38 pm #

        Hyperinflation is caused by a sudden collapse in production, then trying to keep up with the rising prices by ‘printing’ more money (government spending mainly)…which is impossible, because well, you can’t buy more than is for sale.

        Printing money is the result of rather than a cause of hyperinflation.

        There have been two hyperinflations of note in modern history, Weimar Germany and Zimbabwe, and both were related to collapses in production, while Germany was saddled with the additional burden of crushing war reparations after WWI, whereby much of it’s production had to to be sold externally to acquire the gold required to repay it’s war debts.

        I can’t speak for the World, but for the U.S., private debt has not yet grown beyond the high of 2008…meaning it hasn’t grown at all. See here:

        http://research.stlouisfed.org/fred2/series/TCMDO

        TCMDO includes Debt Held by the Public (FYGFDPUN). Subtracting public debt from TCMDO gives us a high for private debt of $46.1T in 2008, and so far (Q12015) the difference is $45.9T.

        If governments are ‘printing’ too much money, then why do we have so much unemployment, which is a consequence of too little spending?

        • Kavy June 19, 2015 at 10:27 am #

          Some interesting points about money creation and inflation. The bankers have convinced everyone that if a public banks creates money it will lead to inflation, but private banks have a free reign and print £billions of the stuff causing massive house price inflation and that’s okay. Rents go up too, and then nobody has any spare money left over after paying their bills. Then there is nothing to spend in our real economy so businesses suffer, jobs get lost, wages stay low (because of a large pool of unemployed), etc., the economy stagnates. And many of those in work do long hours and are debt slaves.

          The conservative voting middleclass don’t know that they are being had. The big fish eat the little fish. They might have nice houses and good jobs but the bankers are taking most of it if they are new on the housing ladder. And if they have had their house for many years, their children will get clobbered at some stage, even though they probably have massive student loans already. Many parents sell their houses to help give their children the cash for a deposit on a home. Did voting Conservative really do anything for them? And New Labour was a load of right wing rubbish too.

  16. Kavy June 12, 2015 at 7:29 am #

    I write long detailed responses on people’s blogs too. When you know something quite well and can summarise it down quite smartly, then small details become important. But passion drives it too, I really want people to get it. But with responses keeping it short is good too, because I want people to read it all. I have to balance it up.

  17. Kavy June 12, 2015 at 7:43 am #

    Most people will find these sort of articles abstract. When I tell people at work how they are being scammed their eyes glaze over. They don’t understand, or believe, that banks can create money out of nothing and pump it into the housing market to force house prices right up sky high.The Right are always lecturing us about market forces, but making money out of nothing is a force outside of market forces.

    There’s only a finite supply of houses, but an infinite money supply. Bloom, two people bidding on a house will be able to bid as high as they can go, until they run out of the money they can borrow. They then become debt slaves: all work, and no play. “Anxiety drives the market’, they will then become scared in case they lose their jobs, and then their homes. That might end up putting their whole life into their job.

  18. Kavy June 12, 2015 at 8:25 am #

    My job took over my life too, and I was doing 60 hours a week on average, sometimes more. I was pleased with it to start with because it paid my mortgage, but then the 2008 crash and their was no more wage rises. Inflation was rising so my debt became more of a burden. Also, my job became more insecure as completion from other companies became stiffer. They were all suffering because of the crash. Jobs got cut, workloads got increased.

    I eventually had enough of it, there was no joy, just work. I broke down and was put on medication, but I don’t take it.

    I thought you might like this Ted video.

    Life is easy. Why do we make it so hard? By Jon Jandai | TEDx

    Jon Jadai lives in Thailand. As a child he was very happy, but his family got a TV. He saw what it was like to live like the middleclass. Better off people would come to his village and make him feel poor. So he went to Bangkok and went to university. University was very boring and he lived in room with 8 other people. Food was bad. He worked 8 hours a day which was gruesome. After 7 years he then saw the light and went back home. Now he only works 15 minutes a day in his garden, and that’s enough to grow all his food for his family of 6. And he has spare to sell at the market. He reckons he only works about two months a year, the rest of the time is for leisure and socialising.

    He built his house only doing two hours a work a day for three months. But his friend, who stayed in the city, will have to work 8 hours a day for the next 30 years to buy his house, and then he will probably need to buy a bigger one. Jon likes building houses so he has a number of them now. He doesn’t know which one to sleep in at night. They all look fabulous.

    https://www.youtube.com/watch?v=21j_OCNLuYg

    • Golem XIV June 12, 2015 at 8:58 am #

      Thanks Kavy,

      I always enjoy reading your thoughts. They make me think.

      • Kavy June 12, 2015 at 5:32 pm #

        Thanks David. My spell checker changes words and I sometimes don’t notice it, but I think most people understand what I mean.

    • Generalfeldmarschall von Hindenburg June 25, 2015 at 3:44 pm #

      That’s a good point and well made, but a grumpy fake German war hero would be remiss were he to miss an opportunity to point out that the happy person who works just long enough to make his own food and shelter and sit about whittling objets d’art will in most societies find himself confronted by a lavishly dressed man surrounded by grim faced men with weapons who will tell him he needs their protection and this means he must work harder to produce a surplus to feed those soldiers. And we’re off to the rat races.

  19. mat June 12, 2015 at 9:56 am #

    This is a very good piece

    I think I’m right in saying that share buy backs were illegal in the US from 1934 until the ’80s

    The question that arises is if governments were somehow persuaded to make them illegal again, would it provoke a huge crash, because companies and shareholders would have to face up to the fact they aren’t making much money in the ‘real economy’?

    So isn’t therefore the system immune to reform in a way? Because if you do try to reform or legislate for the iniquities it causes, you will provoke an almighty collapse. So more and more people, not just financiers or regulators, try to maintain the bubble for as long as possible.

    Is not the conclusion that real social progress will have wait until this huge bubble is popped? And how many politicians are brave enough to say that?

  20. steviefinn June 12, 2015 at 11:34 am #

    Just a thought – Could it be that Osborne’s proposed firesale of RBS & other similar events are in fact not really undervalued, but reflect a valuation that is probably much closer to the real mark – after all those buying are probably fully aware of the scam.

    • Rich June 12, 2015 at 4:04 pm #

      “fully aware of the scam”

      http://4.bp.blogspot.com/-dt2SaA691kE/VXinqo2lYyI/AAAAAAAAYDY/-VuOcV-k23g/s640/ec.jpg

      • steviefinn June 13, 2015 at 7:01 pm #

        Trickle down – What we get from above courtesy of the long worn out prostrate of the elite.

        • Kavy June 26, 2015 at 11:02 am #

          How did anyone fall for the trickle down theory? Do you think that the fabulously rich who spend every moment of their lives thinking about how they can make more money would ever let any of it trickle down?

  21. desmond June 12, 2015 at 10:41 pm #

    financial cannibalism where it runs out when nothing is left….

    • Kavy June 13, 2015 at 8:26 am #

      In this video Putin comes down very hard on these billionaire factory owners. It seems that they had closed the factory down to asset strip it. In the west billionaire oligarchs asset strip and loot companies all the time, and our elected politicians, who we voted for, praise them for their exceptional money making skills. In the west, during the past, entrepreneurs and investors put in a lot of hard work into building up these companies, now the financiers are just looting them: which is easy peasy money for them, with no real work involved.

      The British ICI was one of the biggest chemical companies in the world, and British people were proud of it, but it got torn apart and went bankrupt as a few private equity individuals looted it. Millions of good paying jobs went. If only we had politicians like Putin here?

      At the end of the video Putin notices that one of the oligarchs has not signed the agreement, and when asked, the oligarch says that he has, but Putin then calls him up to sign it and shoves the agreement towards him aggressively pointing to the paper and then he gives him a pen, the oligarch signs it and then walks off with the pen, but Putin abruptly asks for his pen back. I just love that bit.

      https://www.youtube.com/watch?v=flC—s2moA

    • Kavy June 26, 2015 at 11:10 am #

      According to Charles Ferguson, the mega wealthy don’t care about the collapse of western civilisation, because they make more money out of asset stripping it and destroying it. One day they believe they will be able to live in their guarded communities with all their money hidden in offshore tax havens. Until our wages falls to Chinese levels, they see the East as the place to invest, and Vietnam has some of the lowest wages now, so many companies are relocating there.

      • steviefinn June 26, 2015 at 12:21 pm #

        Try typing into to google – Steve Finney Bradwell Facebook – I should come up at the top as the Uncle Fester lookalike.

  22. Juli June 13, 2015 at 11:17 am #

    Yes, you’re back! I’ve missed you, terribly!

  23. Guidoamm June 14, 2015 at 6:17 am #

    Ponzi schemes collapse not because you run out of victims but because of the diminishing marginal utility inherent in these schemes. The diminishing marginal utility is brought about by the mismatch between what is taken in as investment and what is put out as production.
    Production presumes added value. In the absence of added value, you eventually end up owing more than you have taken in because prior investments have been consumed without creating anything of greater value.

    The shelf life of Ponzi or pyramid schemes is directly proportional to the size of the market that is taken in by the scheme.

    In this regard, the current monetary system is the ultimate and largest Ponzi.

    You have an arbitrary entity whose only role is to creates currency and induce credit expansion.

    This entity does not increase or decrease its activity according to economic conditions.

    This entity only increases money supply thereby inducing credit expansion regardless of the state of the underlying economy.

    If new money and credit entered the economy at all levels simultaneously, things would not be so bad.

    But money and credit enter the economy through defined gates (primary dealers and commercial banks) and gradually make their way through the economy.

    This dynamic creates a purchasing power asymmetry by the constant devaluation of the currency thus a constantly increasing cost of living.

    The asymmetry arithmetically transfers profit towards the entities that control the currency.

    As profit migrates towards the financial sphere of the economy, so does title.

    In this construct, electoral politics are a Godsend for an unrestrained monetary system.

    Politicians are free to promise what they will, regardless of the arithmetical soundness of the scheme.

    Electoral politics therefore results in expanding government.

    Expanding government engenders progressively more complex legislation which in turn fosters increasingly onerous fiscality.

    Legislation, fiscality and the inexorable increase in the cost of living, effectively monopolise the economy. This manifests through the emergence of large companies that enjoy government protection as well as first access to finance, whilst stifling the creation of new companies.

    The collusion of an unrestrained monetary system and electoral politics is therefore directly responsible for the diminishing marginal utility of the currency which in turn engenders a monopolised, protected but inefficient economy.

    This dynamic inevitably results in stifling the creation of new enterprise. Having stifled local economic growth, large companies are the only entities that have the means to move their activities and production off shore. This eventually results in increasing unemployment at home.

    http://www.citylab.com/work/2014/05/rate-new-business-formation-has-fallen-almost-half-1978/9026/

    http://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm

    http://www.washingtonpost.com/blogs/wonkblog/wp/2014/05/05/u-s-businesses-are-being-destroyed-faster-than-theyre-being-created

    As you approach the final denouement, both the monetary authority and government must resort to every greater and deeper interventions.

    The denouement manifests in the form of ever greater monetary manipulation which, as it fails with greater visibility, results in increasing regulatory complexity till, towards the end, the state moves towards fiscal repression.

    We are currently in the fiscal repression stage.

    The 3 Complex Systems Analysts from Zurich that worked out the global network of cross holdings have not understood what they stumbled upon. Gilens out of Princeton and Picketty in France too have noticed the reality although they have different approaches as to the how and why this should be so.

    If you think about it, two of the ostensibly fundamental pillars of Western society are the definition of the individual (right to self determination) and the right to private property.

    But then, someone, somewhere deemed it appropriate to mandate that all free individuals MUST interact using a vehicle which they have no control over.

    In this construct, ostensibly free individuals whom have the presumed right to private property, exchange something they own outright (their skills, time and ideas) for something they do not own and have no control over (money).

    This asymmetrical exchange is at the heart of the transfer of wealth. It is the exchange of something we own for something that we do not own that eventually brings about the destitution of large swathes of society with the concomitant concentration of wealth in the hands of those entities that are progressively closer to the entity that controls the currency.

    …. Guido… feeling prolix…

    • Guidoamm June 14, 2015 at 12:29 pm #

      The corollary of the above of course is that as the state digs a deeper fiscal hole for itself, eventually the confrontation shapes up in terms of The State vs The People with likely violent ramifications.

      People forget that the largest holders of Western sovereign debt are Westerners themselves through their pension, insurance and money market funds.

      The process of mopping up whatever savings are left in the system has already begun:

      The IMF leads the way
      https://www.imf.org/external/pubs/ft/sdn/2012/sdn1203.pdf
      .
      The UN are in charge of setting the international framework
      http://www.un.org/en/ga/search/view_doc.asp…
      .
      The US House Of Representatives proposes new legislation to apply to all states
      http://www.gpo.gov/…/BILLS-114hre…/pdf/BILLS-114hres41ih.pdf
      .
      In true European style this document is written in convoluted legalese but applies to all member states
      http://eur-lex.europa.eu/legal-content/EN/TXT/…
      .
      Similar to what The House of Reps is proposing in the USA, this is the first salvo at national level in Europe. It comes from the Austrian government. It is in German – use Yandex translate for a better translator than Google
      http://diepresse.com/…/Staat-zieht-sich-aus-der-Einlagensic…
      .
      If you are a citizen of the EU or the USA and/or if you contribute to a pension fund and/or if you bank with a European or US institution, this concerns you directly.

      Eventually however, a gradually worsening fiscal impasse along with whatever vestiges of the democratic process may be left in the system, may very well force the state to open a second front against the banks too.

      The next fiver years should be rather violent me thinks.

  24. Guidoamm June 14, 2015 at 6:54 am #

    In fact, ownership today is, or should be, quite the topic.

    Other than debating whether or not, in a monetary system that is arithmetically geared to devalue the currency, we actually ever own anything outright, the other problem is that so many individuals have been mandated to contribute to various social schemes either directly or indirectly.

    Today, after decades of increasing fiscal burdens and a gradually more oppressive regulatory framework, many individuals are finding that they have to divest of property to survive.

    But what is more worrying perhaps is the legal fate of those contributions that individuals have made to insurance and pension funds either because the state has mandated them to do so, or because individuals feel they have to contrast the increase in the cost of living (i.e. health insurance above what is purported to be offered by the state).

    Money that is invested whether directly into the stock market or through intermediaries such as banks or brokers should result in the issuing of certificates of ownership.

    In actual fact, as Raoul Pal has found out, the modern investment world gives us two major venues that pool the possessions of every single investor.

    When you, I or anyone “buys” a stock, or a bond, or a guilt, these purchases are cleared either through the Depository Trust Clearing Corporation or Euroclear.

    These titles are held in pools not dissimilar to the pools of unallocated gold offered by banks.

    Nobody today has access to the title of ownership of whatever they have invested in.

    Worse still, Raoul Pal suggests that these certificates can and, possibly, are used by the DTCC for their own trading activities i.e. re-hypotecating them.

    Personally, I am not clear on whether, subsequent to the purchase of a stock, individuals could ask for a physical certificate to be issued to them.

    This may be a subject you may wish to look into in greater detail David?

    • Golem XIV June 14, 2015 at 10:31 am #

      A little prolixity does you good! Glad to hear from you. I agree with both your posts concerning the built-in inflationary mechanism of our system and the huge problem of actual ownership. The possible re-hypothecation byeuroclear and DTCC is a really interesting one I had not thought of.

  25. steviefinn June 14, 2015 at 8:12 am #

    Seems to be a lot of soul searching going on in terms of Labour’s future – although judging by the popular candidates within the party, which includes Liz Kendall who appears to be a Tory in everything all but name – you wouldn’t think so. The grassroots beg to differ & support Jeremy Corbyn who probably wont get the 35 nominations needed to become a candidate, within a party that through that last fact – shows it is on the road to nowhere.

    Hard to cut the umbilical, but maybe those who still represent what the party used to stand for, need to break it to fix it.

    http://www.independent.co.uk/news/uk/politics/leftwinger-jeremy-corbyn-takes-surprise-lead-in-straw-poll-of-labour-grassroots-10316475.html

    • steviefinn June 14, 2015 at 8:47 am #

      Very good article from an interesting site on European matters – A study of where we are likely heading that combines ecological, financial, historical, archeological evidence & Mad Max.

      ” Of the nine vital to the functioning of borders “Earth system”, at least four have been violated by our industrial companies, with global warming, declining biodiversity or unsustainable pace of deforestation. Transgressing these boundaries is to risk our environment and our societies react “abruptly and unpredictably” , warn Pablo Servigne and Raphael Stevens, in their book “How everything could collapse.” Recalling all the scientific data and alerts increasingly alarming, the two authors call for out of denial. “Being alarmist, it is neither pessimism nor optimism is to be lucid” .

      http://www.bastamag.net/L-effondrement-qui-vient

    • harold wilson's pipe June 17, 2015 at 12:02 am #

      1) Welcome back again David.

      2) Corbyn got his 35 nominations!

      Now, if the media let us,the people just might see an interesting discussion on the (ir)relevance of austerity, and the (ir)relevance of the other leadership candidates’ near-invisible values and beliefs, the things which *should* distinguish them from the tories.

      Just how out of touch is the ‘modern’ PLP?

      Might the British public perhaps like the idea of an honest man with clear values and beliefs which are sometimes unpopular but which have frequently turned out to have been right? Islington voters certainly seem to think he does a good job.

      Or do the public want the usual discredited rent-a-soundbite career politicos with no visibly distinct values and beliefs, the kind of politician that has led to complete contempt for most politicians? Do we want “opposition” politicians who are so scared of opposing that they are afraid to turn up for an anti-austerity rally? Dp we really want politicians who (like Burnham and many many other MPs) have a nice income from buy-to-let property? Etc.

      It’s not that hard a decision, surely?

      I can’t make it to the march on Saturday, which is a shame.

    • harold wilson's pipe June 18, 2015 at 12:36 am #

      Wow.

      A comment on one of the Grauniad’s articles on tonight’s Labour leadership hustings in Nuneaton leads to a ten minute Jeremy Corbyn speech from 2013 in an Oxford Union Debating Society christmas special on “socialism does [not] work”. Other speakers include someone called John Redwood.

      Well worth ten minutes of your valuable time:
      https://www.youtube.com/watch?v=pZvAvNJL-gE

      He hasn’t got all the answers, and unlike some he probably wouldn’t mind admitting it.

      Needs to be made much more widely visible Real Soon Now. Any Twitterers out there?

  26. John Merryman June 14, 2015 at 6:47 pm #

    Isn’t life itself a bubble and nature deals with it by having individuals live and die, as the species moves on?
    I think the problem goes much deeper then financial machinations.
    What holds any group of people together are the normal interactions, connections, favors, reciprocity, etc. and since this only works for limited numbers of people, we have what amounts to an enormous voucher system, called money.
    The problem is that while it functions as a massive multiparty contract, we think of it as a commodity in and of itself. Now obviously every asset is another’s obligation, but few people, especially the vast majority of people who simply take it in trade, think of it as anything more than the asset it is to them.
    This naturally creates enormous demand for these notes and that is the basis of the power of the financial system, as it is tasked with manufacturing them. They can then apply pressure to the political system to grant them more authority.
    Now if people understand that money is not a form of personal property, but a public medium and one which has come to undermine and replace most other forms of social and economic obligation and that they don’t actually own those notes in their pockets, any more than they own the section of road they are driving on, then then they might become much more careful how much value they take from interpersonal relations and environmental resources, to trade in these notes.
    Now money is a very useful tool and it is the device by which enormous numbers of people can function as cooperative units, but it is designed as a rent extraction device, for the services it renders and that now that it has gone metastatic, it is time to go back and examine its very nature.
    When banking first started, they would create their own monetary system and rightfully earned the profits from maintaining its integrity, but now that money is based on public debt, having the profits continue to go to the private sector is not stable, as eventually all public assets will be paid to holders of this debt.
    So either we return to a fully private system, or we move onto a fully public banking system.
    There was a time when government was a private function as well, but when monarchs lost sight of their larger civil function, it was replaced by government as public trust.
    So we are now getting to that point with banking.
    With a voucher system, it is detrimental to create much more than is necessary for the system to function and as such, hoarding of these notes is destructive.
    The reason most people hoard money is for predictable expanses, health, housing, elder and child care, eduction etc. So other means of dealing with these issues could be constructed around communal systems of exchange and possibly localized voucher systems, that kept value with the local community and built up solid social structures, healthy environments and well built public and private architecture, as a fundamental store of value and not just in these debt based notes.
    It might not be the most frenetic economy, as we have now, but there is a time when everything has to slow a little.

    • Kavy June 20, 2015 at 7:49 am #

      I would love a slower system. I get up at half four on the morning. I like to have some breakfast and play for ten minutes on the guitar. This is because I might not get another chance aging that day. Sometimes I get up late and it’s rush, rush, rush. When I get to work at 5.30 there’s always a panic, red alert, some machines have broken down we’re losing money. And off it goes all day long. Tea breaks get missed, lunch gets missed, with an half stop in the afternoon for something to eat. Then it starts again.

      Everyday I’m allowed to go home at 2pm, but there’s so much work and I know it will just pile up the next day so I stay on. And if a factory is not productive enough, they will be close it down. Our company has an internal market so we compete amongst ourselves. The worst performing factories are threatened with closure. That keeps us on our toes. To lose the job would mean the loss of good pay, as I’ve been at the company for years. The thought of losing my home is terrifying. Millions of people are in the same state and yet they keep voting Tory.

  27. Patricia June 15, 2015 at 1:44 am #

    There is a very good article in this month’s Le Monde diplomatique (English versionon) on NAFTA explaining what happened under that and what will happen under TTPA and all the other such agreements. I can’t give you a reference because it is only available to subscribers. I used to subscribe to the Guardian weekly until I started reading Le Monde Diplomatique. So so much better. Does anyone else think the Guardian has deteriorated?

    • harold wilson's pipe June 17, 2015 at 12:14 am #

      “Does anyone else think the Guardian has deteriorated?”

      It is an appalling shadow of its former self, and what’s worse, it shows no sign of even understanding that it has a problem, and no sign that it is interested in where its readers (and prospective purchasers) might want the paper and its website to be headed.

      The website is frequently a mess of agency copy and pointless “listicles” (“Ten things ….”) with comments which mostly seem to be there as pure “clickbait”. Sponsored content is also increasingly common, e.g. an article on the trouble with microfinance, in a section sponsored by VISA. The sponsored stuff has got so bad it’s even featured in the current issue of Private Eye.

      Hard journalism, and in particular real analysis, especially even occasional coverage of the kind of stuff which can be read here, is increasingly hard to find. Not good. But not a surprise either – hard journalism and real analysis aren’t always exactly advertiser-friendly.

      Much of this has happened on Rusbridger’s watch, though I don’t know if it’s his fault. He’s gone now. Will the decline be reversed? I’m not holding my breath, but I am looking for good alternatives.

      • Kavy June 17, 2015 at 6:46 pm #

        I stopped reading it. When I was put on permanent moderation the fun went out of it for me. I would put out loads of links to sites that would prove my point, along with extracts from them too.

        There was an article once written in the Guardian by a very unpopular Russian politician. His party had once been big but its politicians had looted the country under Yeltsin. Now his party only had 3% support. This politician said that Russia had become a police state and freedom was being curbed. The Guardian is always bashing Putin.

        I wrote in with an article that showed that US cops has killed 5000 people since 2008. The article was written in 2013, and we know a lot more had been killed since then. The Guardian removed my article within a jiffy.

        • Phil June 18, 2015 at 11:46 pm #

          I’ve also stopped reading it. For me, aside from a few good journalists like Aditya Chakrabortty, Paul Mason and John Harris, it has become a parody of politically correct liberalism. One really gets the sense that many of its staffers loathe the Britain which exists outside of the M25. I look at the headlines across a range of outlets and work back the logic of their spin according to my own values.

          • Phil June 19, 2015 at 1:19 am #

            Right on cue, this article has the paper bang to rights. If you can see the full text, you see a break down of the lead writers’ backgrounds. Leigh Working Mens’ Club it isn’t.

            http://blogs.spectator.co.uk/steerpike/2015/06/if-the-guardian-dislikes-the-privately-educated-why-does-it-hire-so-many-of-them/

            Which is not to say that the Spectator is in anyway better. I loathe Fraser Nelson as much as I do Osbourne, but at least they have the decency to open about their agenda.

          • Kavy June 19, 2015 at 10:59 am #

            Yes, Aditya Chakrabortty, Paul Mason and John Harris, are very good. But most of the time I find the paper boring.

        • steviefinn June 19, 2015 at 11:06 am #

          Speaking as a Guardian accused paid Kremlin troll, who could do with some of those imaginary rublles, who like the majority of those who commented were so designated for simply questioning the line that Putin is like Hitler, who for no logical reason decided one day ( while presumably stroking his furry white cat ), to blow up MH 17 – was when I give up on the paper. Previous to that the prick known as Martin Kettle had annoyed me with his articles which preached the merits of austerity – for everyone else but himself & his class I imagine.

          I had a very good article which I unfortunately lost during a chrome re-boot, which gave details of the Scott trust Ltd – it’s tax avoidance & the fact that it relied more on advertising revenue from the big banks than the Torygraph.

          I use FB a lot as being an exile it helps me to keep in touch with family, but I have found it a useful tool for providing reading matter from the likes of the Automatic Earth, Common dreams, Alternet, the Reality party & many others. I enjoy picking fights on what seems to be to be the Blairite slanted New statesman & other people like Ian Fraser link to other good articles they have chosen. With this blog & about 3 others, it provides me with more info than I can cope with.

          • Kavy June 19, 2015 at 9:38 pm #

            I realised that the Guardian was traitor and a turncoat when I put out this video below and they removed it straight away. There is nothing controversial about this video, it’s just a 12 year old girl explaining how our banking system is robbing us and damaging our economy. By removing it I can only conclude that the Guardian is protecting bankers and the ruling class. Any moderate newspaper worth its salt would put this video on its front page. Well, at least it would on its on-line edition.

            12-Year Old Child Reveals One of the Best Kept Secrets in the World

            12-year old exposes the immorality of the global banking system and why sound money is essential to freedom and stopping the spread of misery on this planet.

            https://www.youtube.com/watch?v=JHQOX8EVNmE

        • pennybloater June 21, 2015 at 1:40 pm #

          Exactly the same as me Kavy; after reading it for 30 years I’m permanently banned for providing links to the (now withdrawn) EU commissioned research into the far-right in Ukraine and the official Senate document activating what is an ‘off-the-shelf’ war-plan to extensively intervene in Ukraine and provide 13 categories of lethal weapons. I also used Google Image Search to identify the original pic of a Russian tank claimed to be in Donbas (by Shaun Walker) which turned out to be taken in 2008.

          https://www.congress.gov/bill/113th-congress/senate-bill/2277/text

          http://www.academia.edu/2481420/_The_Return_of_the_Ukrainian_Far_Right_The_Case_of_VO_Svoboda_in_Ruth_Wodak_and_John_E._Richardson_eds._Analyzing_Fascist_Discourse_European_Fascism_in_Talk_and_Text_London_and_New_York_Routledge_2013_228-255

          It still has one or two great writers, but the most interesting material is usually always BTL. A very sad decline for a once great newspaper.

          • Kavy June 24, 2015 at 6:06 am #

            Yes, I was shocked when my posts started getting removed. I thought they would be against western imperialist propaganda. They did an excellent documentary called, James Steele, the US mystery Man in Iraq, and his mass torture campaign. This is one of the most hard hitting anti US government documentaries I have ever seen, but my stuff, which was far less harsh was being removed. But now they are pre moderating all my posts, so I’ve come back under an alias and write in a very different style. But really, I hardly bother with the paper nowadays.

            There are at least two blogs which keep a check on The Guardian war propaganda, below is a link to one of them.

            Guardian War Propaganda: Documenting War Propaganda and Media Bias on the Guardian Website.

            https://guardianwarpropaganda.wordpress.com/

          • steviefinn June 24, 2015 at 5:21 pm #

            I have found a link which features three articles – the first two by Glenn Greenwald & Seamus Milne that expose the bollocks of media neutrality & the best one in my opinion which is the one I lost – written by Nafeez Ahmed, who was sacked by the Guardian for work exposing how Israeli interests in Gaza’s natural resources drive that conflict, in which he describes the Guardian & Scott trusts ties with HSBC, amongst other things – well worth a read & I am glad I have found it so I can post it on those FB – please come & join the Guardian posts.

            http://www.jonathan-cook.net/blog/2015-03-03/hsbc-and-the-sham-of-guardians-scott-trust/

            Full article NA.

            https://medium.com/insurge-intelligence/death-drugs-and-hsbc-355ed9ef5316

          • Kavy June 25, 2015 at 8:43 am #

            Hi Stevie Finn, yes, they look like very good articles. In fact I emailed Jonathon Cook a few months back about the Guardian but I got no reply.

            I used to write a lot of posts in the readers section of My Catbird Seat. It’s a very ant-Zionist site but many of its articles are written by well meaning moderate left leaning liberals. There’s a lot of banker and neoliberal bashing going on there. Many of these articles are not written specifically for MCS, but are sourced from other places. Paul Craig Roberts turns up a lot. He’s one of my favourites.

            All my posts went through okay until I put one in attacking libertarianism. That went through but after that my posts would often not turn up, or only turn up 24 hours later, it seemed I was being pre moderated. Anyway, that stopped and my posts started going through okay again until very recently they started pre moderated my posts once more, so it seemed, after I wrote another anti-libertarianism article.

            MCS has articles written by people on the progressive right and the progressive left. But most are from the progressive left. Often there are articles written by libertarians, like the Ron Paul inspired Antiwar.com.

            MCS looks lavish but it never asks for donations. I’m wondering if it might have some very rich anti-Zionist backers, and maybe there’re libertarians, or certainly not on the left.

            I’m not comfortable with some of the public who write in on MCS, some of whom are anti-Semitic and pro Hitler. All posts my on MCS had been getting through okay until one day I laid into this Hitler lover. But my post never turned up. I ignored it because all my other posts went through okay.

            Then recently, many months after the last one, I wrote another post attacking libertarianism and once again and it just didn’t turn up. It was as if they had a filter on checking for the word libertarian in my posts. Now only one of my posts has got through out of the five or six that I have written, but it took two days to turn up. None of these posts had anything anti libertarianism written in them, but they were all very anti neoliberal, like most of my posts are. With all the facts I put in, I think I pack a strong punch.

            Maybe it’s just coincidence and is a server fault. It’s weird.

          • Kavy June 25, 2015 at 12:37 pm #

            That’s a good article written by By Nafeez Ahmed, Stevie Finn. I sometimes wonder if someone might sue me if I name a powerful person in one of my posts.

            This is a little off topic but some of you might like this. And I like writing.

            There are UK companies out there that make Hi-Fi accessories and they charge a fortune for the stuff and much of it is a con, in my opinion.

            One day bought a £1200 CD player from a highly regarded manufacturer and I thought it sounded marvellous. It had had an enormous massive sound which truly knocked me out, but sometimes I wondered if it might be a but hard sounding and aggressive, which is something I don’t like.

            So I set it up against my old budget CD player. My new one was powerful and jaw dropping, but my old one was gentler. Doing A to B I had trouble discerning which one was sweeter and nicer to listen to.. So I borrowed from friends some CD’s that I had so that I could play them side by side in the CD players together, swapping them over with the amp remote control. But nope, I could still not tell which one was the harshest.

            Luckily with my amp I could change the input sensitivities so that I could get all the inputs, like radio, tape, CD, to play at the same loudness. It is often the case that one CD player may be a bit louder than another, and the louder will sound better in A to B demonstrations in stores. But the quieter one will sound gentler, and some people prefer that, like me.

            After much work fiddling with my amp’s input sensitivities, I then got the CD players playing at exactly the same volume, but nope, I still had trouble figuring out which one sounded less aggressive. My new CD player sounded awesome, though, with a huge gigantic sound.

            I then decided to synchronise the CD players exactly together by repeatedly pressing the pause buttons until changing between the CD players was seamless, no clicks or pops. And then I heard it, there was absolutely no difference in sound between the CD players. Zilch. I listened to the bass, then the vocals, then the depth, then the high notes, but zilch, absolutely no difference. I then tried all my expensive interconnects from the cheap giveaway ones to the pure carbon state-of-the-art-ones I had. And nope, no difference between them at all. I felt conned.

            It was like the Wizard of Oz, where one CD player sounded gigantic and awesome and the other was ordinary, but when I was finally able to compare them side by side in a clinical scientific way, the magnificent sound from my new CD player just vanished before my ears. It was like magic of some sort, but I was very disappointed, because I had entirely imagined all of that amazing sound that I heard from coming from my new CD player. It had been just all in my head. But that’s the power of the mind, expectation and what you expect has a big effect, like those placebos, the dummy pills that cure. And like the fake operations that cure bad knees, where people start walking about fine.

            So I got my little £150 portable mini-disc recorder out and compared that with my new £12000 CD player, and nope, no difference at all. But my iPod wasn’t up to it, it sounded flat and lifeless compared to my CD players and my Sony mini-disc recorder.

            I got friends to listen as well, to check out it was not just me. I covered up the lights on my amp so they could not see which CD player I had selected. And nope, they couldn’t tell the difference. And the same thing for my mini-disc recorder.

            I have sold all my expensive leads now, and my expensive CD player. The new owner wrote back to me saying he was knocked out by it. But the real reason my £1200 CD player sounded so good was because I was just playing my Hi-Fi a lot louder because my CD was new and I was excited with it.

            Then I found a scientific report on the internet about audiophile interconnects, phono leads, and they found no difference between the cheapest ones are the dearest ones.

            Now these Hi-Fi accessory companies are huge, and they have loads of adverts in Hi-Fi magazines, and their interconnects get good write ups. And I’m amazed at what they sell: MK fuses that have been frozen down to very low temperatures for 30 minutes which sell for £3.50 each. Or you can pay £hundreds for one of their distribution sockets which are said to improve the sound (it’s just a four way destruction socket made with special copper), but to make them sound even better you can stick one of their wooden platforms underneath it. The prices for all this stuff can be astronomical, and some of these interconnects cost £thousands.

            Speaker cables do make a small difference to the sound, but I doubt if the ones that cost £thousands are all that more expensive to make than the ones that cost a few bob. But to improve the sound of your speaker cables even more, you can buy these little wooden cones to support them off the floor. The theory being is that they pick up less interference when they are off the floor. It’s apparently a very special type of wood they use for their Hi-Fi and distribution socket platforms, and the cones.

            I have written to a number of Hi-Fi manufactures and they all have told me that mains conditioners will not improve the sound. It’s easy to design Hi-Fi that keeps mains interference out. But what about rewiring your while house in special oxygen free copper cables for yet even more improved sound quality. Yep, Hi-Fi accessory companies sell that too, for a packet!

            I once bought an 6 way distribution socket for £135 which had a thick interwoven lead on it. It was said to give a very smooth sound. Then I bought the power cable from the same company that goes into the back of your CD player and it cost £100, but they sent a four way distribution socket by mistake, which also cost £100. Rather than send it back I opened it up to see if I could fit a IEC standard socket on it myself. When I looked inside I saw a standard socket with a small capacitor and inductor at the input end to suppress voltage spikes. I then realised that the only difference between the 6 way socket and the 4 way socket was a small amount of plastic and some copper, but the price difference was a whopping £35. What a con? In those days they were using standard MK sockets.

            And every year these Hi-Fi accessory companies come out with improved components which they say sound much better than the old ones, with crisper highs, more deeper basses, lower noise floors, blacker silences, and with a smoother sound, but at the same time they are said to sound even more exciting, etc.. A sort of contradiction in my view.

            Now if I ever name some of these Hi-Fi companies and say it is the biggest load of BS ever, I worry they might be able sue me. For some of these companies very big money that is involved indeed.

          • steviefinn June 25, 2015 at 5:48 pm #

            Kavy

            Nothing of what you say surprises me in terms of hi-fi. I still have a 17 year old technics system which I use & the only time I improved it’s sound was by setting it up in a room like it was a soundbox. I managed to get the bass so I could fel it moving through ny ribs, but to be honest I have found that my particular mood is much more important & the actual piece of music or whatever fidelity it is being played at.
            Back in the 60’s & 70’s as a kid when I first grew to love music, I got a huge amount of joy from transistor radios & very crap by today’s standards record players, gramaphones, stereos etc, but was disgusted by my Dad’s old 78’s while wondering how anyone could listen to such a bad quality reproduction.
            It took a long time for me to realise that it is about tuning to the essence & magic of a piece of music, which if you open enough, can bring joy through a simple whistle. For me it’s a kind of saving grace to realise that the so called better always seems to a certain extent to come with extra baggage. I remember when I would play imported Japanese jazz album masters on my then top ranked denon hi-fi. The slightest click or disturbance would destroy the mood, like a time at a concert of Faure’s requeim with incredible acoustics which was ruined for me by the coughing & clearing of throats of old ladies.
            I am starting to go a bit death these days & probably due to earlier over indulgence have varying levels of tinitus, but my brain somehow succeeds in balancing the sound, filling in what I can no longer in reality hear & I forget about the tinitus.Also I have learnt to expect unexpected disturbances, noises etc which has made me more tolerant & less likely to make things worse by throthing at the mouth.
            Anyway – we are very O/T but I would be with Bill Hicks on marketing & marketeers. I saw how it works in giftware & more lately in the Art world. It’s not about the product but about the best BS that can be said about it, in politics of course it is called spin. It was I think invented by American washing powder companies, in an effort to give virtually the same products from various companies an edge over each other – ‘ Whiter than white ‘ etc – kind of fits in well with the link from Penny Bloater’s last post.

          • Kavy June 25, 2015 at 10:02 pm #

            Thanks for your reply on my article on Hi-Fi, Stevie. And I have tinnitus too. Sadly my spell checker changed distribution socket to destruction socket without me realising.

            Yes, I figured that out too about music. My girlfriend loves listening to music on her little transistor radio, and the young lads at work will sing along to Kiss FM on their mobile phones. What happens is you just get into the song and taken up by the tune so you stop noticing the lack of bass, etc. Your brain compensates.

            And very good Hi-Fi’s can be very revealing, so your friends might come around to hear your new system and Pink Floyd sounds just fab, but then one of your friends asks you to put on the Chameleons whose first album had a very dreadful tinny sound and then everyone starts diving for cover behind the sofa.

          • steviefinn June 26, 2015 at 10:19 am #

            Kavy – It’s hard to stop me waffling about one of my true loves. You & any others are welcome to join me on FB where we could perhaps talk of other things besided the actions of those made from flint. Shoes & ships & sealing wax or whatever : https://www.facebook.com/steve.finney.39

          • Kavy June 26, 2015 at 10:57 am #

            Hi Stevie,

            About that link, Facebook said page not found.

          • justamug August 12, 2015 at 11:24 pm #

            Hi
            I wondered where you had got to. Now I know. Sorry you got ill-treated by the Guardian. Thankfully there are a number of decent blog’s like this one to engage with.

  28. Gaianne June 15, 2015 at 3:59 am #

    Good article Golem! Worth the wait!

    Came over from Naked Capitalism.

    Those of us who spent our youth–however casually–dealing drugs understand the importance of the underground economy. As the elites suck the life out of the legal or above-ground economy, getting your life off the radar becomes a prerequisite of survival. This is a process (It takes time) and it is not easy, and it is an art, but it is a necessity, and an art worth learning. In the context of your essay, I would say your essay explains why we must learn this art.

    But not how–which is a different matter. As a general rule the less you need to use money to secure your personal affairs, and the less money you need, the better off you will tend to be.

    No matter what you do or where you live or where you are placed in society, disaster lies in your future. Surviving disaster will be the primary art.

    –Gaianne

    • JayD June 15, 2015 at 6:59 am #

      . . . .and the most resilient response to the threat would be to build community. Unfortunately, many seem to hunker down in their bunkers!

      • Gaianne June 16, 2015 at 4:10 am #

        Oh, yes!

        But your community needs to understand implicitly the value of being off-radar. Too few get this.

        –Gaianne

  29. backwardsevolution June 16, 2015 at 8:07 am #

    Last Thursday, the U.S. Congress voted 219 to 211 in favor of providing fast-track authority to negotiate the Trans-Pacific Partnership trade deal.

    What did not pass was the TAA (Trade Adjustment Assistance), a federal program to reduce the damaging impact of imports felt by certain sectors of the U.S. economy; in other words, money for workers who WILL lose their jobs.

    Both pieces of legislation had to pass at the same time. Since one didn’t pass, the bill is held up. No doubt big money will be handed out to try and change people’s minds.

    President Obama says at 5:43 of the following video: “If I did not think that smart new trade deals were the right thing to do for working families, I wouldn’t be fighting for it.” But as Bill Still says at 6:16 of the same video: “If TPP is so great, why are we voting extra unemployment benefits to the millions of Americans who will be put out of work as a result? And where will the extra money come from? One guess: we will be borrowing it. So let’s get this straight. We will be borrowing money we don’t have from banks, who don’t have the money either (they just get to make it up). so that we can finance unemployment benefits to millions of Americans who will be thrown out of work as a result of the passage of the Trans-Pacific Partnership Treaty, despite its advocates claiming that no one will be thrown out of work, that it will actually result in more American jobs. Do we have that straight now?”

    https://market-ticker.org/akcs-www?post=230245

  30. backwardsevolution June 16, 2015 at 8:34 am #

    David – that was a brilliant post. Very well written. I too have suspected that something along those lines has been happening for a long time now, so it was very interesting to read your thoughts on the matter. It seems every country is trying to keep the ball in the air, even China.

    “Now the problem is that local governments borrowed so much the last seven years that, because they rely on land sales for revenue, they could only pay back what they owe as long as property prices were rising. They’re not now, though. In fact, housing prices are falling. It’s gotten bad enough that local governments have actually started buying land from themselves to try to prop up prices and keep revenues coming in. That’s quite literally moving money from your right hand to your left to make it look like you still have money coming in.”

    http://www.washingtonpost.com/blogs/wonkblog/wp/2015/05/04/this-is-how-china-is-trying-to-save-its-economy/?wprss=rss_business

    Buying land from themselves, similar to stock buy backs, all in an attempt to make themselves look better than they are – or to keep the ball in the air. I had a bunch of tabs open a few weeks ago (too many) regarding the largest shareholders of the Wall Street Banks: Vanguard and others. My mind was turning the same way your thinking was. It appeared to me (before my eyes glazed over) that — or at least the thought went through my mind — that they were buying each other’s stocks or trying to keep each other buoyed up. I closed the tabs, thinking I’d come back to it later.

    I really think you’re onto something. Excellent post.

  31. Neil53 June 16, 2015 at 2:26 pm #

    For a historical perspective on all this, here’s an interesting article by Wolfgang Streeck, the author of Buying Time: The Delayed Crisis of Democratic Capitalism (which increasingly seems like an oxymoron) (http://www.versobooks.com/books/1698-buying-time ).

    The final paragraph of the article (published in 2011) reads as follows:

    “Social science can do little, if anything, to help resolve the structural tensions and contradictions underlying the economic and social disorders of the day. What it can do, however, is bring them to light and identify the historical continuities in which present crises can be fully understood. It also can—and must—point out the drama of democratic states being turned into debt-collecting agencies on behalf of a global oligarchy of investors, compared to which C. Wright Mills’s ‘power elite’ appears a shining example of liberal pluralism. More than ever, economic power seems today to have become political power, while citizens appear to be almost entirely stripped of their democratic defences and their capacity to impress upon the political economy interests and demands that are incommensurable with those of capital owners. In fact, looking back at the democratic-capitalist crisis sequence since the 1970s, there seems a real possibility of a new, if temporary, settlement of social conflict in advanced capitalism, this time entirely in favour of the propertied classes now firmly entrenched in their politically unassailable stronghold, the international financial industry.”

    http://newleftreview.org/II/71/wolfgang-streeck-the-crises-of-democratic-capitalism

    • Neil53 June 16, 2015 at 2:37 pm #

      And here’s a review of Streeck’s original (German-language) book: https://thecurrentmoment.wordpress.com/2013/04/11/buying-time-and-running-out/ .

      The review starts with a useful summary: “Democratic capitalist societies have been “buying time” with money for the past four decades – first via inflation, then public debt, then privatised Keynesianism – but are running out of resources for postponing the inevitable crisis. As a result, we now find ourselves at a crossroads where capitalism and democracy part ways. That in a nutshell is the thesis of Wolfgang Streeck’s new book…”

  32. Shaun S June 17, 2015 at 5:20 pm #

    Lovely to see you back. I must admit to “taking a peek every now and then” at your site over a long period of time in the hope that you had written more.

    Totally off topic
    Here is something that you discussed many moons ago, Odious, illegal, and illegitimate debt.
    The Greek “truth committee” have come out fighting and this is probably what Varoufakis and Tsipiras were waiting for.
    http://www.zerohedge.com/news/2015-06-17/greek-debt-committee-just-declared-all-debt-illegal-illegitimate-and-odious
    Worth digging out of your archives and dusting off !
    (Although I seem to remember that there were four “conditions” that you mentioned)

    If the Greeks declare ALL of their debt to be illegal, that may well make bubbles pop all over the place – particularly derivatives.

    • steviefinn June 18, 2015 at 10:38 am #

      Hopefully Mish is right on this one : Icelandic style ?

      http://globaleconomicanalysis.blogspot.com.au/2015/06/greece-played-germany-like-violin.html?m=1

      • Shaun S June 20, 2015 at 9:42 pm #

        Thanks steviefinn.

        Very interesting – actually we are reaching the point that Mish mentions; that the ELA cutoff can be blamed fro the exit of Greece (and Merkel)
        Sorry I’m a bit late replying.
        The thought that the “game strategy” of Greece and Varoufakis is actually the one that is being followed – not the creditors version – shows that there is still hope for independence in this world.

        • steviefinn June 21, 2015 at 12:04 pm #

          I have read quite a lot of analysis on this poker game, but to be honest, a lot of it is like the maths I failed to learn at school on what, looking back seemed like endless sunny Friday afternnons, when the technicalities were so much blah, blah, blah, constantly interupted with more interesting brain food. I posted this as it appeared to be a positive sign that Syriza’s hand could be stronger than thought.

          Naked Capitalism has carried a huge amount of analysis – a lot of it contradictory – as well as some criticism of how Syriza has played it’s cards in this deadly game. I personally think the criticism is unfair considering they are in such a tough situation – Scylla & Charybdis comes to mind.

          They at least have tried their best for their people & have fought from a basis of morality, which is the total opposite of the rest of Europe’s leaders, who in my opinion are totally morally bankrupt. Whatever the outcome others at least might learn lessons from it as with much larger states such as Spain & Italy, that if push comes to shove can then play their much stronger cards more effectively.

          It’s a pity that the stereotyping of the Greeks with the help of our cock sucking media outlets have created the idea within other populations, that this is all down to their profligacy as they spend all their time driving mercedes down to the beach to play volleyball. They are aided though by the inclination of others to look down their noses at those they feel superior to. There are many out there who deserve little sympathy when it finally dawns on them that they too inhabit the same sinking hulk.

          Nobody should now have any allusions towars the Troika members. The ECB has exposed itself for the enemy of Democracy that it is – whereby it chooses to break it’s own rules in order to crush a people to serve the money grubbers. The IMF is a similar tool run for the same ends, who it seems is quite willing to bankroll the bankrupt Kiev gangsters in a similar crushing of a people & is working the opposite way in Greece to do the same. The finmins & various EU leaders are their whores, who unlike those out on the street, sell themselves out of pure unadulterated greed.

          I sincerely hope that Syriza can come up with something that will alleviate the misery of the Greeks, but the turds in high places seem bent on sowing the seeds which will result in David’s last post on Greece, becoming something of a prophecy.

          Part of me wants the hole rotton stinking pile of ponzi shite to collapse, but the other part of me is very scared of how it will turn out.

        • Guidoamm June 24, 2015 at 4:31 am #

          The “independence” you mention is merely borne of a situation Varoufakis has inherited that fortuitously puts him in the driver’s seat.

          I can credit Varoufakis for recognising the advantage he has inherited vis-a-vis the creditors.

          What remains to be seen is what he will do once the debt is repudiated and all the signs are that he will most certainly not return wealth to the people.

          Incidentally, Greek people overwhelmingly still wish to remain in the Euro… which does not bode well for their own wealth. So Varoufakis may appear to be a white knight but, in the final analysis, he may well turn out to be as much of a statist as the EU boondoggle.

          Frying pans and fires come to mind.

          • steviefinn June 24, 2015 at 5:02 pm #

            I suppose that the Greeks opinion on staying in the EZ hasn’t helped Syriza’s poker game & It doesn’t look like a deal is coming. Somebody suggested on NC that the Troika’s plan might be to create the circumstances that will force a new election – leading to business as usual with a bunch of lapdogs at the helm. Could work as the ECB could drip feed until they get the right result & they could also blame Syriza for everything, which I suspect would be accepted by the majority In Europe & elsewhere.

            The Greeks would then settle down, accept their chains & everything will be ticketty boo………………

    • Margaret Eleftheriou June 18, 2015 at 3:12 pm #

      The Truth Commission is reporting live right now on the Vouli (Parliament) Channel. Absolutely fascinating testimonies which should interest posters here.
      A small bit has been reported here.
      http://greece.greekreporter.com/2015/06/18/the-2009-deficit-was-artificially-inflated-former-elstat-official-tells-greek-parliament/

      • steviefinn June 18, 2015 at 5:39 pm #

        Thank you Margaret – the best of luck to you & yours.

        • Margaret Eleftheriou June 19, 2015 at 3:18 pm #

          Here is a link to the GreekTruth Commission website where there is an appeal that you can sign.
          http://greekdebttruthcommission.org/wp/

          • steviefinn June 19, 2015 at 5:20 pm #

            Done & passed on.

          • Andrea June 22, 2015 at 9:44 pm #

            Happy to see you back David, thanks for the clear article.

            If Greece is forced into an accidental default, damage to the euro project and to the EU’s image would be massive.

            From the article posted by Margaret.

            This aspect is more important than usually judged, as ppl are concentrated on tech. matters (various forms of Grexit, how many billions, etc.)

            This point is taken up by Jaques Sapir, brief in Eng. here (19 june) (Well respected French economist.)

            http://russeurope.hypotheses.org/3972

            longer and more elaborate on the same theme in French (22 june)

            http://russeurope.hypotheses.org/3978

            Grexit in any shape or form, or any further ‘collapse’ of Greece (been pretty much covered up until now in the MSM) will be devastating, as the ‘obligatory, positive, monolithic, rigid’ (European values!) aspect of the EU will be exposed to a large public.

            I.e. not just the oft mentioned ‘contagion’ (Portugal might also demand more bail-outs or renege on debts, etc.) which is again very-short sighted and limited to some parameters, considerations.

            My feeling (no links etc.) is also that the US (Obama) for a long time supported Greece, or rather keeping it in the EU / EZ, and pressured Merkel / ‘institutions’ to make concessions, but that is now over.

      • Golem XIV June 18, 2015 at 6:14 pm #

        Hello Margaret,

        Thank you for the link. What an indictment of the EU and the IMF. This attemtp to enslave the Greek people in order to protect banks is a crime and history will judge it so.

        I wish there was more I could say or do. I think we all feel that.

        • Margaret Eleftheriou June 18, 2015 at 6:55 pm #

          Thanks for the support which is much appreciated right now, vis-a-vis all the posturing going on in Brussels.
          The Truth Commission reporting is still being broadcast live. Zoe is amazing, a human rights lawyer who does not give up easily – if at all. She is just steadily wading ll through the evidence she has been able to uncover, often from people extremely reluctant to testify. And the EU has really been given a lambasting on its attitude to human rights. The human rights laws, and the labour laws embedded in European law just don’t apply to Greece, it seems.
          Here up in a little Cretan village, my 70-year-old neighbour just came by with a big load of Horta (delicious wild greens) and to ask us what we think. This 70-year old is growing enough food to feed the whole family so they will survive unless there is unexpected illness, or if there is no petrol. We are expecting power cuts, maybe no power at all. His younger son, a carpenter, has been out of work for 4 years, marriage broken up as one result. Another unexpected result is that they are now growing apples as a cash crop, taking advantage of the climate change here – more rain at 2000 feet. However, the sanctions imposed by the EU on Russian exports has really hit them hard as the price per kilo just tumbled last year.
          They remain solidly in support of Syriza because they say that this is the only government that has actually tried to fight for the people.
          ‘We are done for anyway, they say. Might as well go down fighting. This is Crete, of course. Where they also say. At the end of WW2, the Germans killed hundreds of young men, they blew up entire villages and they took all our food. We survived all that. Now we have our young men (more or less), we have our houses and we have our food. Of course we are going to survive.
          Sorry for the long post. Here is a link to another blogpost, this time from Scotland, which gives a very good summing up of the present situation. In my opinion of course.
          http://derekbateman.co.uk/2015/06/18/ode-to-joy/

  33. Phil June 19, 2015 at 1:21 am #

    Some of the human cost in the UK of all this.

    http://www.theguardian.com/commentisfree/2015/jun/18/further-education-lifeline-colleges-skills-cut

    Before you know it, employers will be complaining about a lack of skills. How will they make up the short fall? Take a wild guess.

    • Kavy June 20, 2015 at 7:39 pm #

      The Right talk about rugged individualism, but it’s all propaganda of course. Most of the rich inherit their wealth and so they have no need to care about anything. In the US the chief cause of bankruptcy is ill health. When people get chronically ill they might find that their insurance runs out after a while, or they find out that they were never fully covered in the first place. This means they will have to draw on their savings until it’s all gone, and then they go out of businesses.

      But in Europe health care is socialised and the government picks up the tab providing some of the best health care available. The person either gets better or is able to pass on his business to someone else, or his sons. The collective makes individuals strong. We are all stronger when we have the collective to fall back on when we need it. Right Wing Conservatism is out of balance with nature. But like I said, it is all propaganda and has nothing to do with everyday life: how the world really works.

      • Andrea June 22, 2015 at 10:26 pm #

        The Right talk about rugged individualism — Kavy.

        Reminded me…See the first 2 mins of this vid, E. Macron, FinMin of France (in eng.)

        http://www.anti-k.org/2015/06/20/le-projet-macron-ou-la-volonte-du-pouvoir-video/

        This discourse is exactly the same as that of Poroshenko, the same words even. (Goog his speeches for Western consumption.)

        — We need reform, we want, we can, we will make reforms, we are the only ones late in the game (paraphrase)

        “Nous avons la volonté, le désir, la passion … On a envie d’accèder à quelque chose d’autre…pour qu’il y a une force motrice pour avancer envers l’adversité…” etc.

        (We have the will, passion to move forwards against adversity, the person who strives might feel quite alone, etc. paraphrase..)

        As he can’t promise visas to Europe, as France is Europe, he says (see next segment in vid.):

        We need young people in France who dream of becoming billionaires!

  34. JZ June 20, 2015 at 6:56 pm #

    Dear David,

    You have be missed.
    This is clear and useful.
    Welcome back.

  35. steviefinn June 22, 2015 at 11:23 am #

    Trademark Tory arrogance – wouldn’t it be brilliant if this were to eventually blow up in their smug faces ? If Milliband was red – how are they & their prestitute friends going to make Jeremy sound much worse ? – call him Stalin ? Surely as more people get screwed especially more of those in the middle, they might realise that someone with a clear message is actually making sense ? The Blairite focus group created message seeks to please everybody & ends up pleasing no-one. Surely the ‘ Cry Wolf ‘ screaming will eventually be seen for what it is, when reality gives enough people a cognitive kick up the arse – After all Syriza & Podemos had to wait.

    http://www.telegraph.co.uk/news/politics/labour/11680098/Why-are-so-many-Tories-joining-Labour-after-Jeremy-Corbyns-leadership-announcement.html

    • Kavy June 23, 2015 at 8:59 am #

      Crikey! There is still a left in the Labour Party. Both Paul Craig Roberts and Michael Hudson warn us how the socialist parties of Europe are now more neoliberal than the Conservative parties. Let’s hope we can reclaim Labour back. But the ruling class own the media and it really does count what you read and watch. Imagine if this video turned up on prime time news TV. It wouldn’t take long before people were virulent anti the US government.

      Family suffered from the punishers shelling. Gorlovka

      “Every American should watch video. This should be broadcasted throughout the western world. The fascist US puppet regime in Ukraine has to stop shelling and killing civilians with impunity. The western MSM has to stop its compliance to these killings by its silence’

      https://www.youtube.com/watch?v=YgB2bhFfEtM

  36. Kavy June 23, 2015 at 9:29 am #

    I’ve just found this: Trapped in a Bubble. A physicist explains neoliberalism.

    Neoliberalism as a Water Balloon

    https://www.youtube.com/watch?v=XIUWZnnHz2g

  37. Debra June 24, 2015 at 6:40 pm #

    Very interesting.
    Nice insights. I’m checking to see if this will post before continuing…

  38. Debra June 24, 2015 at 7:07 pm #

    Good. Some comments about what you’ve written.
    Last weekend I told my mother in law that we are not in a good position in modern history to see what is important and what is not. And I told her that Bretton Woods, and the floating dollar was VERY important.
    Because the floating dollar introduces the idea of purely RELATIVE value to money (in our minds..). Value that has no.. foundation, we might say. We might even say… nothing (or nobody ?…) backing it up, opening the door to accounting, and accountability problems.
    If you look at what you’ve written above, you can see the way the numbers seem to multiply… exponentially. The dollar/currency/debt figures look a little bit like those numbers that the distance between stars in the universe is calculated in.
    Those are pretty mind boggling numbers, now, aren’t they ?
    And why do those numbers that our money has expanded into (you’re right, that’s real inflation there…) look so much like the numbers that modern science throws on the table for us ?
    Speculation…
    We have always been a speculating animal. It is part of our nature. Speculating with astronomical numbers (hé hé… that’s a good one), and speculating about metaphysics have a lot in common. (Speculating with numbers may bolster our.. identification with God, but speculating with language, i.e. metaphysics does the trick, too.)
    They are not… bad activities, and they are not to be minimized either, I… believe…
    And I believe that “we” have always managed to separate this kind of speculation from buying and selling… ON PHYSICAL MARKETS where people have material goods, and can see each others’ faces.
    On the Ponzi schemes… something becomes a Ponzi scheme when you, and others no longer HAVE FAITH IN IT.
    This is where I get to say that when you throw.. God out the door, he comes back in through the window, in a form where you possibly (even probably..) have a hard time recognizing him. Things are even worse when you need to… believe that there is a con artist behind every corner, and that every potential believer is a dumb jerk.
    Since man is a speculating, i.e… religious animal, he needs to have a circumscribed place to canalize his… religious behavior.
    In the absence of a LEGITIMATE place to do this, he will find another place to do it, without necessarily knowing what he is doing.
    And this is what we have been seeing.
    The inflated… paper, even if it belongs to the richest on the planet may be worth… diddly shit, particularly if it has no foundation, AND WE CEASE TO BELIEVE IN IT.
    Particularly in a world where we are rapidly burning our ecological bridges (great anxiety there, too).
    And having things is only a refuge storehouse of value if you can take care of them, or find someone who CAN take care of them for you.
    The bubble is making it harder to find competent people who can work correctly, as the value of work is eaten up by… speculation…
    Add to this explosive cocktail the fact that the baby boomer generation has finally discovered, many of us, that we are mortal, and that retirement will not pay for the cost of nursing care facilities, should we continue to hold on to life past our 80’s or 90’s (very probably, given all the.. benefits that modern science has bequeathed us….)
    These thoughts are VERY sobering… if not downright depressing..
    Lots of reasons, there, for wanting the roulette wheel to keep on spinning for as long as possible.

  39. pennybloater June 25, 2015 at 8:54 am #

    I really felt that I had to share this superb (long) chapter by Mikkel Bolt Rasmussen which attempts to update Marx and Lyotard’s positions on political economy to take into account the post 9/11 crisis in capitalism which itself came about due to a general crisis in hegemony emanating out of the social revolts of the 1960s.

    It probably overplays the idea of fragmentation and the declining rate of profit, but does well to coherently map the rise of the Arab spring, Occupy and the Indignados as a response to the crisis.

    While it is a theoretical based article, I feel that it does shed light on the likely trajectory taken by neoliberal globalisation in the wake of the on-going 2008 ‘event’ in a way that chimes with the arguments put forward in David’s blogs.

    It seems to me that its ideas on the role of technology, revolution, populist discourse and the declining rate of profit is spot on and can be identified in many contemporary phenomena from the tabloid press to events in Greece. It also suggests that the present political structures and cultures of ‘the West’, although hampered by cynicism and alienation, are now undergoing the beginnings of a radical transformation that challenges the neoliberal model.

    Probably the best article on globalisation that I’ve come across in the last few years. I would love to hear anyone’s comments on it.

    https://www.scribd.com/doc/269138670/Crisis-to-Insurrection-Notes-on-the-ongoing-collapse

    • steviefinn June 25, 2015 at 4:57 pm #

      Thanks Penny I am hooked after a few paragraphs – will read further when time allows.

      • Kavy June 26, 2015 at 8:58 am #

        The same with me, its looks good.

Trackbacks/Pingbacks

  1. Time to Panic? | The Enigma Chronicle - June 12, 2015

    […] an add-on, Golem XIV offers an interesting read — “Trapped in a Bubble”.  There is no price discovery in financial markets.  The market goes up and up, regardless of the […]

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    […] When in a hole, stop digging. But when in a bubble, keep blowing. – Not very ancient proverb. I think our ruling and wealthy elite are worried that they are stuck in their own ponzi scheme or bubble and are suffering from the general problem of all ponzis and bubbles – how to get out. You see bubbles and Ponzi’s are fine as long as they keep going. As long as there are ever more suckers to recruit and as long as enough of those already in, remain confident and choose to stay in, there is no real reason a ponzi cannot go on and on. A perfect example is Madoff’s scheme. The weakness of all bubbles, ponzi or otherwise, is that all it takes is a rumour that it might be time to get out, that it might soon get difficult to get out, or that someone ‘in the know’ wants out, and a ponzi scheme pops like a soap bubble. They are notoriously unstable. So if you are in one how do you get out?  […]

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