Category: Economics

How big bankers became outlaws

[This is another Guest Post from Patrice Ayme which appeared on his Blog on the 28th April.  It has been slightly modified by me. Ed]


Celebrating Goldman Sachs, while acknowledging that it is far from being all their fault.

Point One: We are living in a state of law. Supposedly.

Point Two: That State is democracy, the rule of the demos, the people. It is not the rule of the bankers. Supposedly.

Point Three: Political leaders have recently given PRIVATE unelected individuals, the bankers, the means and the right to create money, the money everybody uses, through debt, ex nihilo, starting from PUBLIC funds  (Called, somewhat misleadingly, the fractional reserve banking system.)

Point Three contradicts the union of Point One and Point Two. Power is supposed to be exerted by the people, but money is power. Big bankers create money at will, with the complicity of the political leadership. So they create power at will.

Thus, the present system incites (big) MONEY CREATING BANKERS TO BECOME GANGSTERS, and then OUTLAWS.

It is as simple as that!

Thus one needs to get rid of the private fractional reserve PUBLICLY funded money creating system.  The situation has been rendered worse in the last decade by the blossoming of synthetic derivatives which are out-of-this-world bets which could not possibly be paid back.

Synthetic derivatives of derivatives transformed a 300 billion dollars loss in real mortgages into a potential exposure of 24,000 billion dollars, thanks to the leverage of the derivatives squared.

Then political leaders, accomplices with the bankers, offered to pay the 24,000 billion dollars, on behalf of taxpayers, leaving the economy in tatters.

Not all is lost: Goldman Sachs got its entire 2008 profit, 13 billion dollars, from taxpayers, through AIG, thanks to US politicians, and the USA loves a winner. Love and dove, there are still many a feather to pluck.

By Patrice Ayme

P.S. Synthetic derivatives are, mathematically and philosophically, a generalization of the license of the privately managed, publicly funded, fractional reserve system, thus proving further, if need be, how erroneous the latter can be.

P.P.S. The fractional reserve system ought to be kept, to provide the capital needed, simply it ought not to be anymore the province of a small private oligarchy gaming it.

Today’s Funny

The art of saying something and meaning something totally different.

I must confess to being a bit fed up with Greece.

In Anglo-Saxon language their attitude used to be called “taking the piss“.  Today’s “funny” (or if preferred take your pick from: tragic, surreal, ludicrous, ridiculous,bizarre, insane or indeed all of these at once) is something the Greek Prime Minister said. Admittedly he said it in February and I’ve only just picked up on it.

Here’s an extract from what was said:

‘We are a country which cannot alone deal with the speculation. So this has become a European problem, because if we do have a major problem, this could create a contagion for other countries too who are not to blame.’

Brilliant and I especially love the use of the word “speculation”.

This makes it seem as if it isn’t Greece’s fault at all; it’s all down to those nasty fat people in suits and sunglasses, the evil international financial mafia seeking to destabilize his country.

Then there is the “if” word. Now normally this is associated with a condition, but anyone who even in February thought that there was any conditionality involved in Greece’s meltdown must have been looney, or perhaps the Head of the International Monetary Fund (IMF) who said this on March 8th:

Greece will be able to deal with its own financial problems without needing a bailout, the head of the International Monetary Fund said today.

IMF managing director Dominique Strauss-Kahn said that Greece’s debt mountain is unlikely to spread to other eurozone countries with high levels of public debt.

And Mr Strauss-Kahn dismissed market speculation of potential default by other heavily indebted eurozone countries such as Portugal, Spain or Ireland as scare-mongering.

IMF Director Dominique Strauss-Kahn answers questions on a panel with Bob Geldof in Nairobi yesterday. Mr Strauss-Kahn has said he believes Greece will not need an IMF bailout .

Yes, this is the same DSK who is paid a vast salary and expenses and could be the next President of the EU.Of course he could have been lying to try to restore “confidence”. However, lying is lying, for whatever reason. Or he could have just been humungously wrong.

That’s the trouble with our leaders and financial experts these days; you never know whether they’re lying or just stupid; it’s usually one or the other and sometimes of course both.

And Papandreou’s quote continues: ” a contagion for other countries“. Indeed, Mr P. And what do we do with a “contagion” in the body? We destroy it and get rid of it …. and finally we have “other countries too who are not to blame“.

AHA! At last! Proof that my old Mum in the UK on her measly pension is not to blame. Thanks Mr P. At last some recognition fo the truth. Let’s have a bit more of that ….

As for the merits of Greece’s plea for funds, you only have to read this devastating article to feel your flabber gasting to breaking point.

No wonder the Germans are increasingly threatening to dump Greece, and so they should. Not the German government (all governments seem currently to lack the guts to do anything really necessary or serious).

No, this time it’s an economics professor threatening to take the EU to court if they allow this blatantly EU-illegal bailout, and public opinion is increasingly on his side.

It is a horrendous mess, but the only solution is for Greece to leave the euro. Bailing them out is a black hole. Does anyone in their right mind think the Greeks can really change their traditional practices and suddenly become honest, thrifty and hard-working?

Well, the answer is probably  “Yes”, but then cloud-cuckoo land is becoming seriously over-populated.

Which reminds me, I must get back to the British General Election Campaign ……

By Chris Snuggs

Well done, Bill Moyers!

A giant of US television retires from the screen

One of the fascinating aspects of my new American life is seeing how loud the volume of dissent is from the American

Bill Moyers

people about the shenanigans on Wall Street and the Too Big To Fail banks.  There is an intensity and passion that I can’t see happening on the other side of the Pond.  Maybe this is the cultural legacy of a people that just a short time ago, relatively speaking, were opening up this giant country seeking a better way of life than the ‘old countries’.

This intensity and passion is why, in the end, I believe that the solution to the huge crisis that still awaits us will start from this side of the Atlantic.  But it will get a whole lot worse before it gets better, such is the complexity and depth of the fraud that is being visited on decent, ordinary folks in this and many other fine countries.

Bill Moyers of the Bill Moyers Journal on PBS is retiring.  He’s approaching 76 and that’s a grand age to be dealing with the workload and stress of a weekly television presentation.  His last Journal was broadcast on the 23rd April, a week ago today airing two really important topics.  My only regret is that I haven’t been here sufficiently long to view many more of his Journals.

William K Black

In that last broadcast on the 23rd, Bill had two key interviews.  In this Post, I want to bring to your attention his first report, which was an interview with William K Black, now an academic but, just as importantly, a former bank regulator.  William Black really understands what is going on in banking.

The interview is both fascinating and captivating because, well to me anyway, it explains in terms that us laymen can understand, exactly what is going on and why it is so terribly important that legislation and regulations are brought into force to stop this fraud ever happening again.

This interview has not yet made it’s way onto YouTube so I can only post the link to the Bill Moyers website.

But, please, if you care about what is happening to us in whatever country you live in, click on this link and watch the interview.

And if you want to watch the earlier interview that Bill Moyers had with William Black then here it is.

By Paul Handover

Today’s Understatement of the Year

The EU Bailout!

German Chancellor Angela Merkel

German Chancellor Angela Merkel has questioned whether Greece should have been allowed into the eurozone in the first place.

She said the decision “may not have been scrutinised closely enough”.

Indeed, Angela. Indeed it may not, especially as Goldman Sachs organised some “credit swaps” (now illegal) that helped Greece disguise the size of its deficit.

Perhaps something is lost in translation, but why the “may”? Why can’t people bring themselves to call a spade a spade? The “may” is totally misplaced, isn’t it? So why say it?

See also this recent piece on the BBC.

By Chris Snuggs

The beginning of the end for the Eurozone?

A fateful day for the eurozone

…. is how Gavin Hewitt recently headed up a post on his BBC Europe blog.  The headline caught my eye and then when I read the full article it seemed as yet another piece of western civilisation was sliding into chaos.  Maybe it’s my age!

Gavin Hewitt

Gavin Hewitt is the BBC’s Europe Editor and as you can see from his bio, Gavin is a very experienced reporter.  Here’s how this Eurozone article starts:

Friday [April 23rd, Ed] will be remembered as the day the euro needed rescuing. Sure it is Greece that has asked to be bailed out but it was still a day that the architects of the single currency had never envisaged. For when it came to it, there were no plans to save a euro member in trouble.

You see what I mean about grabbing one’s attention!

In fact the article is so powerful that I am going to run the risk of incurring the wrath of the BBC’s legal department by republishing it in full.

Here it is:

Read the rest of this article

Mr Micawber Strikes Again

Stating the obvious? So why is the reality so different?

British Chancellor with his famous red budget box. Is he proud of his vast borrowing "requirement"? He seems happy enough .....

Like Greece, Portugal is terribly indebted. Not because dirt-poor Senora Tristeza who sells in the local market decided to vastly overborrow more than she could pay, but because her government did.

Likewise, I did not ask the Labour government of Britain to borrow vastly over our repayment possibilities so that my son will be in hock for decades to come.

What is this absolute rubbish about “the borrowing requirement”? The British Chancellor comes out with this glib statement every budget day as if there was some cosmic compulsion that there should be a “borrowing requirement”.

NO, there shouldn’t …. Nobody FORCES us to borrow money, except perhaps in wartime. No government, and especially the current one, EVER says “No, we can’t afford that, we haven’t got the money and NO, we’re not going to borrow it.”

They just up the “borrowing requirement” automatically to pay for all their pet schemes and shibboleths. It is NOT a “requirement”.

It is a giving way to cowardice and greed, taking the easy way out. It is trying to impress people by the clever way they spend our money. They “require” to borrow because they do not have to courage to say (particularly near to elections): “Sorry people – we just can’t afford X, Y or Z as the money just isn’t there. We must be patient and live within our means.”

But it is time everyone started living within their means.

Individuals have a hard time sometimes, especially those desperate to get a foot on the housing ladder or parents desperate to get their kid into a good school, but the government does not have these excuses. There is NO excuse for building up vast debt. You have to live within your means.

This is so stunningly-obvious I wonder why it has to be said, but vast borrowing has become so endemic people think it is normal. And the levels of borrowing involved here are absurd. What sort of endictment is it of capitalism that several European countries (on the richest continent on the planet!!) are in great danger of going bankrupt?

Or, to put it another way, of defaulting on the debts that they cannot afford to repay? And even if they CAN pay they are also paying staggering amounts of interest, all money down the drain to fat bankers somewhere …..

Borrow to build a new railway because you’ll get the benefits back in emissions and efficiency savings. OK.

But borrow to pay civil-service bonuses and index-linked public (but not private!!) pensions and £60 billion on unelected quangoes and you will never get the money back. Someone will have to earn it, but the milch camel is staggering.

We need wise, courageous and fair-minded government which thinks of the long term. What are our chances of getting it?

By Chris Snuggs

Greek Farce – Act IV, Scene III

P’sst!  Got a dime?

This bloke needs a reality check. If he is not going to ask for the dosh “formally” how IS he going to ask for it? Over a pint

George Papandreou

at the pub?

And what exactly are “preparatory moves”? A long sidle up to the Treasurer standing at the bar?  And how do you “prepare” to ask for 30 billion euros? Either you ask for it or you don’t? Oder?

Perhaps something is lost in translation ……

Greek Prime Minister George Papandreou has said his country is making “preparatory moves” to take advantage of a multi-billion euro rescue package.

He added, however, that Greece would not necessarily make a formal request for help.

STOP PRESS: Alex Brummer of “The Daily Mail” makes a very serious charge here in relation to Goldman Sachs and Greece’s financial status before entering the euro.

STOP PRESS TWO:  The BBC are reporting that Greece has formally asked for the dosh!

By Chris Snuggs

Today’s No-Brainer

Bottled water …..

… in developed countries is not only an insanity but also an obscenity.

  • It is no healthier than tapwater. If it were essential to health then how come we oldies survived before? Logically, the Human Race should have died out.
  • It tastes no different, unless you buy it fizzy – but you could add your own fizz at home.
  • It costs VASTLY more than tapwater.
  • It is VASTLY more profitable to producers than gasoline for oil companies.
  • It is VASTLY more expensive to produce – around 1500 times more than an equivalent quantity of tap water.
  • Its transportation produces significant amounts of harmful emissions.
  • It is VASTLY wasteful; water is scarce, yet it takes 7 litres of water to make a 1 litre bottle plus the contents.
  • It leads to VASTLY-INCREASED pollution. ‘see “Giant Rubbish Dump Accumulating in the Pacific“
  • It soaks up resources that could be better used, including to save lives of people dying from lack of or dirty water.

In short, it is absolute folly. What on earth is there going for it? At the same time, it is big business and very popular? Why?

  • Are people ignorant about all the above? That’s quite worrying …. not much future with so much ignorance about.
  • Are people paranoid about what comes out of their taps? Oh dear –  paranoia is not good for us.
  • Do people place their vanity and status-image before the above-mentioned points? Hmmmm …..
  • Are many people just suckers for slick advertising? I guess the answer to that one is a straight “Yes”.
  • Have millions of people no common-sense and/or social conscience? Oh dear, this time it’s a clear “No”.
This is pretty!

Bottled water is nonsense, except of course where there is no alternative.

If rich, fat Westerners really like bottled water they could export it to developing countries where millions die through lack of or poisoned/polluted water every year while at the same time pouring funds into building water infrastructure for these very same people.

Yes, I know the industry provides jobs, but so did making nerve-gas for the Nazis.

The point is, we should direct our energy and money into things which are not totally unnecessary and destructive. I’m not a great fan of the “nanny-state”, but in some areas – and this is one – the government should be taking a more forceful lead. Help us kick our silly, selfish, faddish and destructive addiction to bottled water.

Some excellent links on this topic:

By Chris Snuggs

Today’s Quiz

The British General Election is really hotting up, with mud flying in all directions.

Mr Pott. Your proposal to keep NI (National Insurance contributions for employers and employed)  as it is rather than putting it up as we propose (as usual) will leave a black hole in the country’s finances.

Mr Kettle: a Black hole? YOU are worried about a black hole??? Ha, Ha, Ha ……

Your quiz question: Who are the real Mr Pott and Mr Kettle?

Answers soon …..

Today’s Quickie

Thomas Friedman of the Intl Herald Tribune

“Son, your ego’s writing checks your body can’t cash.”

Well, this may be old hat for specialists but it surprised me. Is the same true for Britain? In either case, as Friedman says, it suggests we should explore more forcefully the ways we could aid business startups.

I always find Thomas Friedman excellent value for the time invested in reading him! See here:

“Here’s my fun fact for the day, provided courtesy of Robert Litan, who directs research at the Kauffman Foundation, which specializes in promoting innovation in America: “Between 1980 and 2005, virtually all net new jobs created in the U.S. were created by firms that were 5 years old or less,” said Litan. ‘That is about 40 million jobs. That means the established firms created no new net jobs during that period.’”

And if you want to know where the opening quote comes from, read the Friedman article!

By Chris Snuggs