December 24, 2011

Last flight from Frankfurt

Posted in Euro · 79 comments ·
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The last flight from Frankfurt to Dublin last Thursday was jammed. I didn’t expect it. In fact I thought a 10.45pm flight from Germany would have been half empty. But, of course, the flight was jammed with returning young Irish people.

They are all on their way home, but they’re not coming from Germany; they are connecting here with flights from Australia via Hong Kong, Singapore and Dubai. Frankfurt is simply the last hub on their way home.
Listening to young lads in Leinster jerseys talking excitedly about being home in Portlaoise, Stradbally and Naas reinforces the reality of Christmas in a changed Ireland. It’s less a national holiday and more a national homecoming. The tribe is returning. But to what? And what prospects have its members of returning full time?

To answer that question, we have to start, not in Dublin, but down the road from the airport here in Frankfurt.

For the lucky bankers, Santa arrived early. Allegedly, Santa gives presents based on good behaviour over the year; for the banks it is the opposite. The European Central Bank (ECB) is providing unlimited low-interest financing to the banks for the next three years.

This plan was unveiled last Wednesday. The banks lapped it up – and why not? I’d love a bit of low interest rate financing around Christmas, wouldn’t you? So would the one in ten Irish mortgage holders who are behind with their payments.

But yet again, the large banks get special treatment while the average citizen gets nothing. The latest wheeze from the ECB is nothing more than high-octane refuelling of the debt Ponzi scheme in Europe.
Without proper debt restructuring, the latest liquidity moves will evaporate. But hey, it’s Christmas, so let’s not spoil the party by getting into the messy details. At least, the central bank has done something, which is better than nothing.

The new deal is the following: the EU banking system is broken, weighed down by bad sovereign debts, which won’t or can’t be paid. Growth is falling, so these bad debts are going to get worse. The sensible thing to do is to write them off and start again, but this would bankrupt the banks that hold the debt, so we are playing a big game of denial, hoping that something will turn up.

Traditionally, the central bank’s job is to intervene in such situations. But because the main problem is that sovereign debt is tanking, the easiest thing the ECB could do would be to buy up the sovereign debt and, in effect, lend directly to governments. But it doesn’t want to do that because it has rules that prevent it from propping up bust governments.

So what does it do? It props up the bust banks that
lent to these bust governments. And in so doing, it rewards the bust banks for their decision to lend to the bust governments in the first place.

The ECB’s Christmas present to the banks means that it is going to lend to the banks at 1 per cent so that they can in turn lend to distressed governments at 6 per cent. It is an amazing deal for the banks. In finance, this is called a “carry trade” or a free 5 per cent.
In this way, the ECB can lend to governments without actually lending directly to governments, and also subsidises the banks one more time. This is moral hazard on a monumental scale because the more trouble the bank is in – due to its own greed – the more it gets rewarded.

Imagine the uproar if we did something like that for mortgage holders.

Obviously such a subsidy to financial markets is driving all asset prices upwards. The yields on Italian and Spanish debt due in two years have fallen to their lowest levels since October.

Are Italy and Spain suddenly more creditworthy than they were a week ago? Of course not.

However, this trick will allow each distressed eurozone nation to tap for funding, making the banks and the governments look stronger – the banks make a fortune on the carry trade and the governments have a source of financing.

But it is only more of the same. Think about it: the new loans issued by the ECB are made against collateral, but what collateral have EU banks got other than worthless paper?

Ultimately, this is a continuation of the EU’s Ponzi-finance scheme. As long as there is more cash coming in at the bottom of the pyramid, the guys on the top are making money too. Never mind about the ability of borrowers actually to pay down debt.

This will do little for the economy. In fact, the reality is that it will make things worse – or at least it will make the pattern of the past few years, where the citizen pays and the bank wins, worse.
The evidence from Ireland and from the Troubled Asset Relief Programme (Tarp) in the US is that the money gets stuck in the banks and, by playing the carry trade, the banks rebuild their balance sheets, but that doesn’t help the consumer. So the financial markets rally and bankers get paid big bonuses, but this has no relevance for the real economy.

Worse still, this money is being lent “contingent” on more austerity, rather than debt write-off. So the citizen pays the bill for banks’ delinquency and this opens the taps for the banks to make more money on the carry trade where the banks are loan-sharking to the governments and making 5 per cent in the process. That 5 per cent margin comes from your taxes and cuts in your services. Just take that in for a second.

As I came through customs at 12.20am last Friday morning, the sight was reminiscent of the 1980s. There were dozens of mothers and fathers and younger brothers and sisters with huge, homemade ‘welcome home’ signs. I wondered how many years they would do this before the visits became less and less frequent and then eventually stopped altogether.

If we want to put an end to this, we in Ireland have to rethink our entire economic strategy in 2012. Maybe this is something to consider over Christmas. The ECB is standing up for the banks, but after all, that is its job.

Who is going to stand up for the people? Whose job is that?


  1. From: David McWilliams
    Date: 24 December 2011 21:42:56 GMT

    georg, i saw the opninion of me you posted on the site about being a
    journalist etc not economist self promoter… if this is what you
    think please desist from sending your ideas and articles and notion
    has clearly i have not got the brains to comprehent.

    happy christmas

    david

    No Problem!

    • Adam Byrne

      Everyone is having a few drinks at Christmas in relief that they can have a nice time with their families (the lucky ones that can).

      This is David’s site that he has generously set up for people to respond to his articles.

      As Furrylugs might say, ‘attack the ball, not the man’. No person can really fully understand another individual’s motivations nor thought processes. In fact, it’s hard enough to understand your own.

      The least we can do is to maintain a level of civility when involved in public discourse. If things get a lot worse in practical terms, then don’t worry, you will have an opportunity to express your most basest instincts in defensive and survivalist ways.

      I’m a stone cold atheist but I love Christmas and hope everyone has a good one. All the best, Adam.

    • Colin

      You deserved that Georg R. … been a long time coming.

  2. I suppose it’s the job of the Government to look after the people …

    • Emma Grace

      Ah yes and it is the people’s job to keep an eye on what the politicians are up to and not accept what the spindoctors say as gospel! Yes I am a cynic!

      • cameronTT

        Agreed. I think that the last people you want in public office are the people that actively seek it (with some exceptions) so the more oversight and regulation we have in public office the better.

  3. Adam Byrne

    In response to the last line of your article, it might be ‘your job’ David.

    • tony_murphy

      the people will just have to stand up for themselves! if they can first drag themselves off the couch away from the brain washing tv or the bar stool

      glad to see David exposing one of the enemies, central banking

      now just need to go a little further and tell everyone that the “debts” are to enslave the population, and that it’s a planned operation by the elite globalist bankers and their henchmen politicians

      as for what people should do, my recommendations are:
      1. Stop contributing to pensions
      2. Get your money out of managed funds etc
      3. Only use cash
      4. Take your money out of the banks
      5. Buy gold + silver – if nothing else, it’s the enemy of fiat currency
      6. Watch Max Keiser + Alex Jones

      • cameronTT

        I don’t know if you’ve noticed this but David McWilliams is a Capitalist and at no point does he advocate any of the kind of things you’re talking about. He criticises specific actions taken by EU, Governments and various players in the public life – there’s no revolutionary/anarchic aim here, this is all you reading too much into it.

        Debt “Enslavement”: what evidence do you have for this conspiracy?

        1) Pensions: Where will your income come from when you retire? Are are you saying that we should never retire?
        2) Managed Funds: These provide financing & liquidity to the economy by buying government and corporate bonds. How do you propose people should get money to start companies, if the banks that provide this money can’t themselves get the finance because there are no managed funds to provide the capital or the liquidity in the secondary market
        3) This is certainly possible (it requires a hell of a lot of printing though to convert all account balances to cash). What would be the point though?
        4) A universal bank run (which is what your proposing) will result in all banks collapsing will again raises the question of how your local shop will get credit to run, and how people will get finance to start up business without banks. How will we pay for houses without mortgages. Will deposit insurance be able to support people’s deposits (given that only a small amount of deposits are retained and the rest are lent out), will the taxpayer foot the bill for the uninsured overhang of people’s savings?
        5) Gold has no utility whatsoever, its value is totally based on psychology. What does this solve exactly? A global limited supply of cash (backed by a limited supply of gold) with a rising global population will result in hyperinflation over time.
        6) Why??

        • redriversix

          Debt enslavement evidence can be found over the last 15 years if you look for it,the lure of eazy money to people who normally would not have got it.

          Including Governments who availed of eazy money and Germany and France who lent it amongst others so not only are people enslaves to it, so are Countries and the Lenders use fear to get their money back which they lent irresponsibly in the first place,with the intent of ………oh for fucks sake Cameron , if this needs to be explained…..!!! do some homework and look outside the fcuking Box for a change……!!!!!!

          RR6

          • stuff01456

            Actually “debt enslavement” is a practice undertaken in ancient Greece and other cultures whereby a debtor unable to fulfil his debts is obliged to give payment-in-kind by becoming enslaved to his creditor (& doing the housework etc). I guess the term is being misused here to get emotive about the issue.

            Your comments about countries lending is quite strange. Overwhelmingly, pension funds and insurance companies lend money to countries by buying their bonds. Banks and companies equally issue bonds to the same investors, and any of these debtors may default at any point. There is no “enslavement” of any sort here only an obligation to repay your debts where possible – this obligation is rational where these are so-called “informed institutional investors”. I could go on explaining aspects of how the debt markets work in more detail since I’m unlucky enough to work in this field, but I’m boring myself already, and I think you’d be better off just doing your own reading & maybe being a little more humble and a little less rude especially when its clear to everyone that you haven’t a clue what you’re talking about. Its just as well this is anonymous so you can come across as a moron here fairly safely.

        • Colin

          “Where will your income come from when you retire? Are are you saying that we should never retire?”

          A great question. Answer is we should never retire. We should wind down, starting with working four days a week, then three, then two. The workplace should be able to accommodate this – no reason why it can’t. The older you are, the less likely you are to need the income you had when you were 40 years old or 50. It makes those unhappy with their career less happy, but those who love what they do are allowed to keep enjoying their work.

          • stuff01456

            I think this is a great idea. Lots of people don’t look forward to retirement. I’m not sure that this is what tony_murphy had in mind though – just more uninformed anarchist nonsense.

        • tony_murphy

          cameronTT, 6) why?? Max Keiser and Alex Jones will help you see what’s really going on. you will then understand why I’m right

  4. Emma Grace

    David, excellent article as always. It is a tad gloomy but then these are gloomy times. I have been ridiculed by my colleagues,from my BA in Public Admin in UL and a MSC in International Politics in Aberystwyth, for voting against the recent EU treaties and having some fairly bleak views about the EMU/Euro as I have some basic (very basic)knowledge of economics thanks to your books, articles and lecturers in UL. I hate the fact that this economic melt down is happening but I loath and despise the manner in which the Irish and other EU citizens have been conned into thinking that the EU/EMU can’t fail. It is failing and the ramifications will effect everyone.The @#$%$#@ bankers and the fact that the Irish and EU politicians who continue to bail out these damaged institutions make me violently ill. However the really scary part is that there probably isn’t any exit strategy being planned for the EMU members. Ireland will be back in the 1950′s and 1980′s. My father left Ireland in the 50′s for Canada and quite a few of my friends left Ireland in the 1980′s (I was a mature student in UL). Thankfully I was born in Canada and returned here about 18 months ago, but I know I am not alone as there are many Irish coming here again. The only differnce about Ireland in those long gone decades and now is that Irish people have expectation now which they didn’t have then. Should there be any referenda re the EU and further integration, I really, really hope that the Irish will stop being good little europeans and vote against the EU, again and again, and again (no doubt the govt of the day will insist on treating any referenda like an exam which should be redone until they get the answer they want). The sooner the fact that the EU is a failed PROJECT is recognised then the the European continent will be able to go back to the drawing board and stop trying to make a silk purse out of a sow’s ear!!

    • Hi Emma,
      I fully agree with you. To enlighten your holidays, please, watch this YouTube video of Michael (of Ryanair fame) O’Leary’s recent presentation at the EU Innovation Convention in Brussels, and try not to laugh!
      http://www.youtube.com/watch?feature=player_embedded&v=p4HYSsrlcq8

      Merry Christmas to you and every reader of this blog, and an informed 2012.

    • Deco

      Well it is good to have somebody with knowledge of Public Administration provide an analyis of the EU leadership efforts in regard to crisis handling.

      From the perspective of technical problem solving what the EU is doing is clueless. They have not even tried to define the problem. Before you define the solution, define the problem. They have done neither. It is all nonsense.

      There have been 19 different initiatives by the EU Commission in connection with the EU governments. And there has still has not been an honest assessment of the problem.

      But, just wait until we get told that we will have to agree to ant referenda, on the basis that it will “secure Europe’s future, and secure our membership of the Euro zone”. The alternative will be ‘irresponsible’, ‘unthinkable’, ‘idiotic’, ‘criminal’, ‘insular’, ‘befitting a euro-sceptic/tory/TEA party/loser/nutter/crinminal/whatever else the political scientists tell the government is unforgiveably wrong’, etc…..

      The usual nonsense from the puppets of the corporate concerns who control the media and the politics…

  5. Emma Grace

    Oops forgot to add – Happy Cristmas everyone. I hope that 2012 brings only good things!!

    • If it did it would be an Emmazing Grace, indeed.
      Be selective in what you allow yourself to pay attention to. Many a politician can show you how to attain the right attitude to ignore unwelcome bits of reality.

  6. wills

    An epic article tucked away at the back end of 2011.

    Merry Christmas!

  7. Happy Christmas to you.

    Thanks for all the posts and comments over the entire year – they keep me going.

    Best.

    David

    • Colin

      Many Happy Returns David.

      Keep up the great work.

      I took the coach/ferry back home. Never seen it so busy. But Irish ferries know a captive market when they see one, €12.50 for the worst and smallest and coldest Irish breakfast I’ve ever had. I thought they got rid of Irish staff and replaced them with cheaper Eastern Europeans so that they could offer better value. Apparently not. Mick O’Leary wasn’t much better, looking for nearly £200 to get home. It doesn’t put the returning emigrant in the right frame of mind regards spending a few quid in the national economy where apparently its badly needed.

      • Colin

        I should have added Aer Lingus in there too, who somehow manage to avoid flak for high air fares more than Mick O’Leary, so I need to be fair to Mick.

    • Willie C

      Happy Christmas David, and the general band of (*insert appropriate adjective) who hang around this site!

      Congrats again on 10 years posting and writing. I look forward to your articles each tuesday and thursday morning before I head to work. Second child about to be born here in Melbourne, your articles keep me connected and always wondering will me and the family ever have the chance to move back home.

      all the best for 2012

  8. Rory

    Happy Xmas, thanks for all the work throughout the year. Regards. Rory

  9. reindeerspotting

    Happy Christmas to all the McWilliams’s!

  10. bonbon

    Spot on the Sarko Carry Trade as it is called nearby. And they are simply printing collateral.
    How this is sold is simply beyond me. I can only think of desperation, or criminal negligence. Stark’s resignation shows the honest jump ship and the pirates take over. But navigation, as John Silver asked, which of them can read a map?

    • bonbon

      Further : We have already two-tier system upside down: investment expenses are counted as debt, while bank bailout is not! The most outrageous thing is that such government guarantees are not counted in the public debt figures.

      With this first three-year tender, the ECB has expanded its exposure to EMU bonds and banks to over EU1 trillion. A second tender is scheduled for Feb. 29, 2012.

  11. bonbon

    DMcW,
    Happy Christmas.
    Is there a report on your talk at Tel-Aviv Uni?

    Bonbon

  12. bonbon

    Some further news on the Christmas Present of Eu500 billion. They are playing with fire.
    ECB Bank Bailout Sinks Sovereign Debt–Intentionally?

    Mario Draghi’s Christmas present of half a trillion euros to bankrupt Eurozone banks resulted in a further collapse of sovereign debt values, which raises the question whether this was intentional or not, since the ECB abstained from buying sovereign bonds on the secondary market this week and EU banking authorities force banks to sell, instead of buying, bonds. Italian ten-years bond yields rose again above 7%. Spanish yields rose too, while German yields dropped.
    The ECB money injection was used by banks to rollover their financial debt and not, predictably, to buy Eurozone sovereign bonds. Banks are forced to value bonds at market and not at face value, due to new European Banking Authority regulations, and therefore do not buy them. EBA chair Enrico Enria’s answer to news service EIR, whether EBA was aware of aggravating the Italian debt crisis, was broadly covered in the Italian media yesterday.

    A prominent banking official said that Enria’s answer shows that “they are playing with fire”.

    A further Damocles’ Sword is hanging on the Eurozone: the Standard&Poor’s review of 15 countries expected in January.

  13. bonbon

    Related activity in Hungary (not too far away)
    Who Wants Hungary To Default? (From EIRNS Dec24)

    The EU Commission and the ECB warned the Hungarian government on Dec. 23, on the pretext of S&P’s decision to downgrade Hungary’s rating to BB+. The “possibility of a Hungarian default,” which is being talked about on the markets, is probably more propaganda, however, than reality, because the IMF, the ECB, and the EU Commission are at odds with the Budapest government of Viktor Orban, over new legislation Orban has planned to downsize the “independence” status of National Bank of Hungary, led by neo-liberal Andras Simor, an adversary of Orban’s economic and financial policy.
    If the central bank governor can in the future be appointed by the prime minister, in the context of making the central bank dependent on politics defined by the government, Simor would stay in office only as a vice-governor, and that only for a transition period until final replacement. Orban also wants to merge the central bank with the country’s financial market watchdog agency, which would tie the latter agency to political oversight, as well.
    The ECB and IMF have another conflict with Hungary, because it has refused to commit itself to the new super-bailout fund of EU200 billion, thereby strengthening the anti-bailout front of the other non-Eurozone countries of Britain, the Czech Republic, and Poland.

  14. bonbon

    DMcW,
    Writing off debt and splitting as in Two-Tier or Glass-Steagall will only destroy 5 or 6 of the TBTF too-bit-to-fail monsters. All other banks will do very nicely afterwards. Those 5 or 6 are not BANKS, rather cancerous tumors. We simply do not need them at all.

    ONLY after doing this have people any chance whatsoever of electing a representative gov’t that actually does serve their interest.

    It would be very good to start the ball rolling in partnership with Portugal, as they called for last week. I posted here their call for the South, but Ireland should join in. The debt weapon is very powerful if played right. Ireland must find allies, and be ready for the counter move.

    As I posted in “Empires”, Argentina is taking the full brunt right now. It should be clear this is very dangerous.

    Hamlet’s failure is repeated by the followship of FG/LP right now

    –But that the dread of something after death,
    The undiscovered country, from whose bourn
    No traveller returns, puzzles the will,

    And makes us rather bear those ills we have
    Than fly to others that we know not of?

    Thus conscience does make cowards of us all,

    And thus the native hue of resolution
    Is sicklied o’er with the pale cast of thought,

    And enterprise of great pitch and moment
    With this regard their currents turn awry

    And lose the name of action –

  15. Happy Christmas to one and all and especially to David and Family. Not easy being in the public eye going against the tide.

    After 7 years of recession, doom, gloom and disaster, I suppose we here can at least afford the net connection to share ideas. Spare a thought for the poor sods that are caught in this maelstrom, whether that be represented by the debt trap, enforced unemployment or those exiled to save the elite and their offspring.

    I’m of the opinion that 2012 will put Europe one way or the other. Going back to Taleb, I think all the elements are now in place for a Black Swan event, in some shape or form.
    “When things cannot go on, they stop” as the man said.

    The sovereign pot of money has effectively run dry, as far as making any tangible difference is concerned, so some new catalyst for change will surface.

    @Adam Byrne, thanks for the hat tip.
    We should indeed focus on the ball because the amount of agitprop floating around is purely designed to keep us at each others throats so the Paddyrati can continue in perpetuity.

    One of my resolutions for 2012 is to persuade David to come down this way for one of his talks.

    Anyway, I hope ye all have as good a festive break as ye can. I must go and shred a duck. Mrs Furry needs her feeding.
    All the best from the Furry farm.

    BTW, I’m sure John Allen supported by Deco will have something profound to say to ring out this hames of a year and ring the changes for the new.

  16. bonbon

    To reluctantly quote T.S.Eliot, but the oft-repeated “when things cannot go on they stop” is reminiscent of “this is the way the world ends, not with a bang but a whimper”.
    There is a ticking time-bomb, the financial system countdown started in july-2007 and those who have the most to loose are about to go bang – they fully intend to take us all with them and very soon.
    Look at Iran/Syria, maybe Korea, maybe Malvinas, and hear the ticking.
    Obama is looking at his watch.
    He must be impeached before he starts something. This is the only way to stop the countdown.

    Vast wars start in holidays when everyone feels cosy and are caught completely off guard. That’s just they way its calculated.

    Saying this is nothing compared to what Obama will unleash.

    • cameronTT

      1) How many wars do you know of were started during holidays? (and how many weren’t)
      2) What is it you think that Obama will do exactly and what is his motivation?

  17. crazy cat

    Some Christmas films found on returning to France :

    http://pear.ly/870T

    Cré-@ctivement votre

  18. crazy cat

    Merry Chrismas de #Occupy La Goutte d’Eau in France

    http://pear.ly/VroP

  19. bonbon

    China Invests Big In Portuguese Power; Is Success A Threat?

    China has made an investment in the Portuguese economy that total could as much as 8 billion Euro ($10.4 billion).
    China Three Gorges, the state owned power company that operates the dam and other similar projects in China, has purchased the Portuguese government’s 21 percent stake in Energias de Portugal (EDP) power company, Portugal’s largest company, for 2.7 billion euros ($3.5 billion). EDP is the main power producer both in Portugal and in Brazil.
    China Daily indicates that “more deals may follow as weakened European economies seek buyers to help solve their debt dilemmas. Theodoros Georgakelos, the Greek ambassador to China, said that his country’s privatization program offers investors opportunities. in sectors including tourism, clean-energy, biotechnology and ore mines.”

    • redriversix

      Morning Bonbon

      Its all about Resources.

      China will take over what it can and when it can if its not done with military force,then I suppose “its only business”

      It is alleged that the interest payments America pays to China is almost enough to fund their military budget every year,I won’t post the figure as I am not sure if it is correct.check out Mark Steyn.

      Big Government in the States seems to be a big problem and the only area of increased employment.

      I wonder would the Hoover Dam be built these days or would the project fail the environmental impact study ?

      18 months to build the Empire State building,yet it is taking over 10 years to replace Twin towers…?

      Kennedy said in 60,61 that he wanted a man on the Moon before the end of the Decade,now all NASA seems to do is receive school trips telling students how good they used to be…….?

      I wonder if Christopher Columbus had to deal with Health and Safety,would he have ever left port.?

      Government seems to stifle risk-taking,looking outside the box or simply taking a chance…..instead it just wants to follow the herd,even if its in a stampede and heading off a cliff…?

      Nobody wants thinkers or risk-takers anymore…just yes-men or women

      Its a good job General George S Patton was a wild card in WW11…!!

      If you wish to reply , please fill out the appropriate paperwork in order and await permission (4–6 weeks)

      Seasons Greetings to You and yours,David and thanks for the Articles,is Georg R the first German fired before the New year….!!!???

      Best wishes to everyone including you,Georg R..! and a have a very peaceful New year.

      Financial Strike now and Fcuk Fear

      Take care of your family,if you do not have one ,find one to help.

      Do one thing today,you don’t want to do.

      Compassion,Humility and Understanding…let’s build a Nation on that……..

      Kind Regards
      RR6

      • bonbon

        Shakespeare got it right with Hamlet, paraphrased:
        “Dread makes us rather bear those ills we have
        Than fly to others that we know not of?”
        ——-
        Columbus knew exactly what he was doing. Depardieu says it very well in “1492″ – he did it, not the Prince. He changed the world. Risk taker? They tried to murder him on-ship.
        Have a look at Gavin Menzies’ “1421″ – China sent 480 9-masted ships all over the planet, and Europe mustered only 3! China then burnt the ships. European culture spread to every corner (with good and bad).
        ———
        Banker cop Lagarde went begging for a Euro bailout in China and got smiles. Instead China is saving the economy, not the pirates. Our job is to give the pirates a rowing boat and some basic supplies to fend for themselves on the open sea.
        ———
        NASA was destroyed by Obama personally. Face it – he did worse than Bush! He bailed out much more. China will soon do a manned orbital docking, first step to the moon. Obama’s NASA has no manned capability now.

        Who does Obama serve in wrecking the USA? It looks awfully like European royalty, the same Columbus opposed. The same Nicolas de Cusa’s letter identified as the dying European culture, requiring a mission that Columbus carried out. Is Obama trying to undo 600 years of development?
        ———–

        • cameronTT

          What has any of this stuff got to do with ECB funding? Have you just got an axe to grind, and you don’t know anything about the subject matter?

        • redriversix

          U.S “Government” does not see it as undoing 600 years of development.

          They see it as progress.
          Stripping Citizens of their Constitutional rights….

          Making Healthcare so expensive,it will aid in “culling the herd”

          Employment in Big Government exploding yet no Stimulus for regular jobs

          Military and Industrial growing at a rate of knots,but with no accountability no matter who is in charge as their seems to be a agreement between Democrats and Republicans to continue the status quo.

          The growing instability in Iraq will fuel further instability in the Middle east which will lead to a slowing supply of Oil which will make Americas new enthusiasm for Using its own Oil more profitable.

          There is no shortage of Oil,just a shortage of good profits from it which they are addressing at the moment.

          • bonbon

            In the context of a financial and economic breakdown, every “issue” is leading to a major conflict : target Asia. I put this here to alert ordinary people to what is being prepared right now and for 2012. Everyone suspects the media of “confusion”. One would expect war-avoidance to be the first priority. One of the media outlets, Al-jazeera : what is it up to?

            http://www.haaretz.com/weekend/week-s-end/al-jazeera-covering-the-revolutions-or-fueling-them-1.401762

            The real power of Al Jazeera is not the Arabic language television network, piped into 70 million homes, but the autonomous English-language television network, Al Jazeera English, or AJE, piped into a growing 250 million homes in 130 countries worldwide. Eldar rightly calls Al Anstey who runs it, “one of the world’s most influential journalists.” (Not an Arab, “Al-Anstey,” but an Englishman named “Al.”)
            Anstey gave Eldar an interview. “Squirming uncomfortably,” he insisted that, “We report on events. Under no circumstances do we create events.”
            Who is Al Anstey? He is a lifelong Arab handler for the British, based for most of his career in Bahrain, where he headed up a multifaceted communications empire before briefly working for ITV in Britain and then joining Al Jazeera in 2006.
            A well-informed Washington intelligence source maintains that the British have by now milked the Arab-Israeli conflict for just about all they can get out of it. Their new cause is a religious war between Shi’a and Sunni Muslims. This is what Russian Foreign Minister Lavrov starkly warned of on Dec. 23, saying that he saw that conflict taking off, but that once it got going, it would be unstoppable. But this is exactly the way all the Arab revolts and pseudo revolts are now being steered,– among others by “Al Jazeera,” or more appropriately said, by Al Anstey and British Intelligence.
            The Washington source went on to say that this Thirty Years War-like religious mayhem was not intended mainly for Southwest Asia or the Middle East, so called. The Middle East is only the launching-ground; the target is Asia as such, with its billions comprising most of the world’s population.
            That is why Al Anstey went to New Delhi, India, this Nov. 17 for a gala meeting with Prime Minister Manmohan Singh, to inaugurate AJE’s grand entry into Indian television, with an initial audience of 150 million Indian homes.

  20. Juanjo R

    Great little article…heart-felt and to the point!

    Happy xmas.

  21. redriversix

    I understand your point,BonBon,

    However I don’t see it as Obama,him or any President Are,I believe, just Customer service agents and the Public relations officer.., although the interview process can be quite slack at times (see George Bush for Ref)for a greater Military/industrial Complex which appears to be growing out of Control.

    The Senate and Congress can have the same members for years who set up Committee’s to look after their chief interest groups.

    The pentagon appears to have very few people it has to answer to,even if Government changes the same work continues.
    C.I.A
    D.E.A
    A.T.F
    N.S.A
    Etc,etc,etc

    No accountability.

    Obama seems to have outspent Bush 2.0 although he talks austerity,Government and military spending has grown to monstrous proportions.

    The running of America does not change whether the Reps or Democrats or in charge.They seem to have agreed an agenda a long time ago to protect the top 20%.They just keep the seats warm for each other.

    They have created big Government and continually strip their citizens of rights and benefits also making a transition to a “police state”.

    The welfare/rights of U.S Citizens has slipped down the priority list over the last several years.

    Making health care more expensive and harder to access will assist in reducing the population.

    Historically,Wars have helped in cleaning up ghetto/poorer area,s particularly when their is a draft programme.

    I believe America may be returning to the ideals of isolationism.If their is any conflict in Europe I do not think America will come to her aid this time as mandated by N.A.T.O

    America pays for the bulk of Europe’s defense and I do not believe this can continue.

    America has returned to taking its own Oil out of the ground to such an extent,some analysts believe their is/will be a glut of Oil on the market.

    The U.S when it becomes self-sustaining in supplying Food,water and oil for its declining population will then[is] seek[ing] to encourage more unrest in the Mid-east with the goal of severely depleting the supply of Oil to the west.Thereby increasing the value of its own resources.It also seems to be losing its grip on South America as the Governments they have toppled over the last several years have been brought back to power by their own people aside from Honduras,which after U.S led coup in 2009,the “new”Government received a 150 million[billion] dollar loan from the IMF which the elected Government could not get…..America needs to gain control of its own backyard and bolster its operations with Afri-com.

    So they are trying to undo 600 years of development,but they see it as progress.!

    I see it as a “Bridge too far”

    The last years/days of any Empire always end badly,only time will tell.

    The U.K has no debt solution…
    The E.U has no debt solution…
    The U.S has no debt solution…

    The only solution I see and have repeatedly called for is a complete cancelling of all debt..

    Do not judge People in Debt or who have suffered due to the crisis……you may be next.
    There is a lot of “not yet’s”..out there so be clever and compassionate.

    Russia and China are waiting in the wings to see what happens……

    If China is going to act,it needs to do so soon as its male population is getting older and due to shortage of Partners because of the one-child policy and the preference of parents to “keep” Boy’s,their is a shortage of Women to produce a young male population in the future

    The U.N may prove this year that they have no power to police anywhere and may have to deal with a significant challenge that may end with its demise as an organisation..?

    Only time will tell

    Financial strike now !!

    Look after your families first

    Be nice…………….

    Best
    RR6

  22. redriversix

    I understand your point,BonBon,

    However I don’t see it as Obama,him or any President Are,I believe, just Customer service agents and the Public relations officer.., although the interview process can be quite slack at times (see George Bush for Ref)for a greater Military/industrial Complex which appears to be growing out of Control.

    The Senate and Congress can have the same members for years who set up Committee’s to look after their chief interest groups.

    The pentagon appears to have very few people it has to answer to,even if Government changes the same work continues.
    C.I.A
    D.E.A
    A.T.F
    N.S.A
    Etc,etc,etc

    No accountability.

    Obama seems to have outspent Bush 2.0 although he talks austerity,Government and military spending has grown to monstrous proportions.

    The running of America does not change whether the Reps or Democrats or in charge.They seem to have agreed an agenda a long time ago to protect the top 20%.They just keep the seats warm for each other.

    They have created big Government and continually strip their citizens of rights and benefits also making a transition to a “police state”.

    The welfare/rights of U.S Citizens has slipped down the priority list over the last several years.

    Making health care more expensive and harder to access will assist in reducing the population.

    Historically,Wars have helped in cleaning up ghetto/poorer area,s particularly when their is a draft programme.

    I believe America may be returning to the ideals of isolationism.If their is any conflict in Europe I do not think America will come to her aid this time as mandated by N.A.T.O

    America pays for the bulk of Europe’s defense and I do not believe this can continue.

    America has returned to taking its own Oil out of the ground to such an extent,some analysts believe their is/will be a glut of Oil on the market.

    The U.S when it becomes self-sustaining in supplying Food,water and oil for its declining population will then[is] seek[ing] to encourage more unrest in the Mid-east with the goal of severely depleting the supply of Oil to the west.Thereby increasing the value of its own resources.It also seems to be losing its grip on South America as the Governments they have toppled over the last several years have been brought back to power by their own people aside from Honduras,which after U.S led coup in 2009,the “new”Government received a 150 million[billion] dollar loan from the IMF which the elected Government could not get…..America needs to gain control of its own backyard and bolster its operations with Afri-com.

    So they are trying to undo 600 years of development,but they see it as progress.!

    I see it as a “Bridge too far”

    The last years/days of any Empire always end badly,only time will tell.

    The U.K has no debt solution…
    The E.U has no debt solution…
    The U.S has no debt solution…

    The only solution I see and have repeatedly called for is a complete cancelling of all debt..

    Do not judge People in Debt or who have suffered due to the crisis……you may be next.
    There is a lot of “not yet’s”..out there so be clever and compassionate.

    Russia and China are waiting in the wings to see what happens……

    If China is going to act,it needs to do so soon as its male population is getting older and due to shortage of Partners because of the one-child policy and the preference of parents to “keep” Boy’s,their is a shortage of Women to produce a young male population in the future

    The U.N may prove this year that they have no power to police anywhere and may have to deal with a significant challenge that may end with its demise as an organisation..?

    you know,it took Mayor Bloomberg 3 days to organize snow-ploughs in New York in 2010.If the Chinese had a infantry delivery system to get large amounts of troops on U.S Soil,they may be more successful than they think….for a while anyway

    Only time will tell

    Financial strike now !!

    Look after your families first

    Be nice…………….

    Best
    RR6

  23. whirmark

    David
    I think you’re being overcritical of the LTRO. I would agree it is not a problem solver but IT IS a time buyer, and judging by how EU/EMU have handled the crisis to date, lots more time is certainly required.
    The banks require funding (to continue normal operations in 2012) and are currently locked out of the primary markets due to (perceived) risks about their sovereign exposures weighing on spreads. The LTRO (or some other financing mechanism) is absolutely crucial to remove this crisis flashpoint next year which would otherwise certainly bring down the European economy. The carry-trade, as you say, IS the intended usage of this LTRO (thereby guaranteeing a primary sovereign market in 2012), however large European banks have spent the last six months running down “non-core” sovereign exposures as motivated by EBA disclosures and the aforementioned market concerns, so to start re-filling their books with sovereigns (even if cheaply financed) is not logical. Bank CEO’s are currently stating that they will more likely look use the LTRO funding to finance the real economy (Ghizzoni in Unicredit, and the French Bank CEOs privately). Indeed the difference between this situation and the TARP is that the sovereigns are the source of capital concern & ironically corporates (SMEs: “the real economy”) are the relative safe-haven in this situation, so it is not possible to strengthen your balance sheet by buying sovereigns. That said, the ultimate use of this money will be a mixture of carry-trade, private high-yield corporate financing and other.

    http://www.euromoney.com/Article/2952245/Category/17/ChannelPage/0/Monumental-uptake-of-ECB-LTRO-but-carry-trade-impact-unlikely.html
    http://www.ifre.com/banks-resist-european-pressure-to-buy-government-debt/1620695.article

    • redriversix

      Sure,a time buyer…that is exactly what we need.

      The term “kicking the can down the road”is probably what you did not want to use…..

      • whirmark

        Hi redriversix
        No, clearly a definitive solution is what is needed but given the hesitancy of the ECB to provide further supports, and the degree on brinkmanship in EU (which I believe will increase dramatically in 2012 with tax harmonization, financial transaction tax and the wide array of vested individual member-states interests being brought to the table in negotiations vis-a-vis fiscal integration) more time is simply crucial. Equally, bank funding is simply necessary and without the LTRO (or some other source), the economic system would simply collapse in 2012. No Eurozone bank has been able to issue debt in H2 2011 as they are locked out of the markets. We have seen only covered bonds issued but future recourse to covered bond issuance is limited due to the credit negative effect on unsecured debt which raises financing costs further. Also, BNP Paribas elected to issue a €5b daily-puttable-at-par FRN – this is an extraordinary funding option. This shows clearly the seriousness of the funding problem and that without a source of bank funding (LTRO or otherwise) in 2012 the Eurozone banking system would collapse and with it the economies of Eurozone. We can debate other aspects of the ineffectiveness of EU response of course – but honestly even then I’d probably still try to avoid the “can-kicking” media cliche.

        All the best,
        whirmark

    • Hi Whirmark,

      The points you make are valid, however, I feel that if I were a bank boss I’d just put on the carry trade and forget the real economy, amplifying the credit crisis, but rebuilding my balance sheet. Then what happens? The balance sheet looks better temporarily but the underlying asset – (the real economy) – is weaker and thus, the balance sheet long term is ruined.

      That’s my take, but it well worth revisiting this in a few months time, maybe you might be proved right.

      Best,

      David

      • whirmark

        Hi David
        Thanks for your comments. I do believe there will be a partial uptake of the carry-trade (but not as much as hoped by its proponents), and if the situation begins normalise (a scenario I can’t imagine at the moment), this trade will begin make more sense with then “risk-free” sovereigns (oxymoron intended). Until then, as you rightly say, this carry-trade is ultimately self-defeating if done at the expense of real-economy financing – maybe the pertinent question is “Have Bank CEO’s learnt anything??” (I’m sure this question will attract enthusiast remarks from other commentators here)

        I think the poor uptake of the long-term Italian auction today pays evidence to this reluctance to carry-trade as banks have instead elected to deposit the LTRO at ECB deposit facility (a 75bp negative carry trade) which some quarters seem to be panicking about – this seems natural to me with this amount of liquidity and no investment avenues over the holiday season.

        I very much liked your most recent piece on Leaving the Euro. The current government “strategy” is mind-boggling, and I find myself in the strange position of looking enviously at the Italian “technocrat” cabinet and hoping things get worse here so we might eventually pursue the same route and have a government emboldened to firm convictions and actions by virtue of their genuine understanding of economics and markets and a realisable vision for this country.
        All the best
        whirmark

  24. Cracking the Code

    It is obvious from recent contributions to this great site that we seem to have past our sell by date .Or at least that is how the responses indicate .They have become fewer and fewer when at this time of the year we were teeming to have our voices heard in earlier years.

    Collectively we as contributors have drowned in a sea of change that before was on the horizon and today its tail has just past by .Or has it ? I don’t believe it has .It is just arriving . Somehow we have lost the plot and our role as educators to the general public has waned .We have succumb to the mass of confusion and fudge generated by the troika and it looks like they have achieved their purpose to divide the philosophers and feed them to incinerators of thought processes that eventually become inert .

    The greatest change is ahead of us and its sheer size overshadows how we feel at present and we need to step up a gear to challenge this golden opportunity before the politicians take the credit for their political gain at the expense of the electorate .

    Lets Pinch Ourselves to deliver the pain of evolving saga as it unfolds next .

    Unless we are able to step up the ante we may find ourselves redundant in 2012 .

    • bonbon

      Its the Fog of War – in the back of everybody’s mind is the unspoken certainty something horrible is about to be unleashed, if one takes the time to ask. Things have gotten eerily calm. That strange silence is showing up here too.

      Put a name on it, and then look for all the warning signs – they are there.

  25. stuff01456

    “Somehow we have lost the plot and our role as educators to the general public has waned”. This is the second most pompous rubbish I have read on these article commentaries. How is it that you think you are educating the public exactly, the only messages on this page putting any facts up for an intelligent discussion are David and maybe whirmark above. I’d imagine that they are level-headed enough to know that they’re only posting messages on a website.

    The most pompous rubbish I’ve seen has to be “We have succumb[ED] to the mass of confusion and fudge generated by the troika and it looks like they have achieved their purpose to divide the philosophers and feed them to incinerators of thought processes that eventually become inert.”
    I guess the “philosopher” in this scenario is you, having your pearls-of-wisdom undermined by the dastardly troika – who seem to have taken on supernatural powers of subterfuge – and robbing the world of an education. Get a grip lad.

    • redriversix

      Thank you for your reply to post above,StuffO1456.

      I am not an Economist,nor do I work in the financial sector as you do.

      But I still know the difference between debits and credits and profit and loss.

      You think I am rude,…clearly you have not read many of my posts here,I, like many may get frustrated with people trying to complicate the issues at hand.But I am certainly not rude.

      Europe and America are Bankrupt their is no money there may be financial products as you point out but there is NO MONEY.

      As regards “being a moron”maybe I am,who knows ? and I am not afraid to speak or post what I feel or know whether anonymous or not.I would be delighted to meet you to share my experiences with you if that would assist you more.

      Have a happy and peaceful New year StuffO 1456

      Families First

      RR6

  26. cameronTT

    @stuff01456: Spot on – the amount of rubbish that is spouted on many of these is incredible, totally unresearched, unbalanced and uneducated pompous tripe. Its sad to think that these people have a vote

  27. bonbon

    @cameronTT
    I’m afraid you are not really reading what’s going on and posted here. The pompous idiots are Rompuy, Monti, Merkosy, Geithner, GS. This new carry-trade is the SARKO-trade get it? The “LTRO” will not work.
    Keep focused, lad.

    We have a 2-tier upside-down banking system which cannot possibly work. No funding trick they play can possibly work unless Glass-Steagall is forced through. The Transaction Tax is utter drivel – 20 years too late. Ring-Fencing is supposed to start in 2015 – are they joking?

    And just in case you are totally out of touch, a reminder. We stand right now in front of WWIII started by Obama precisely because the Transatlantic system cannot under any circumstances be saved. Do not attempt to tell us it is an ECB problem, when the FED is up to its ears ($29 trillion) in the bailout.

    Confusion is the Fog of War as always, and there is a thick fog right now of totally unbalanced madness from financial schizophrenics. And that is fully researched.

    I think this blog does help to clear the fog, and puts a headlight on the craziness. There will be no stone to hide this under.

    “Buying Time” from who? Who is selling? That’s the FG mantra. Securitized “time”? What a joke.

    Totally disconnected from reality.

    • cameronTT

      “SARKO”: – there’s nothing to get here really & nobody asked about this so I don’t know why you’re talking about it. The LTRO was to finance banks that can’t raise capital at current yields – it already has worked for this function for which it was designed so I don’t really see what you’re talking about. Buying time here means financing the banks so that at least this part (symptom) of the problem is patched so that the other parts of the problem can then be addressed over the next 3yrs – although a solution to the sov debt issues is no closer and I think a (partial) break-up of EU & EMU is likely.

      Glass-Steagall? This is 80yrs old so how can it be “pushed-through”, I guess you want to see Leach-Bliley provisions repealed again or are you talking about the enactment of the recommendations of UK Independent Commission on Banking? I guess only you know what you’re trying to say but you’re right to stick to being vague when you’re not able to genuinely debate the issues at hand.

      “We stand right now in front of WWIII started by Obama precisely because the Transatlantic system cannot under any circumstances be saved. ” What WWIII? where do you get this stuff? We’re a long way away from any WWIII & since several countries now have nuclear capabilities I really wouldn’t worry about it – even if it happens you won’t be around to worry or to rant about it. I’m happy to be “out of touch” with your “reality” lad, good luck with it.

      • bonbon

        Posted link above on the sarko-carry trade, the theme of this thread.

        Glass-Steagall repealed in 1999 setting off the end-game of the Transatlantic financial system. The various bill’s to “replace” it have more loopholes than Ementhaler cheese. That is all very easy to verify both in posts here and google.

        Every attempt to repair the system since jul-2007 has only far worsened the stability. We are now at the end of this. It is finished. The real danger is now war, precisely because Russia,China, USA have thermonuclear weapons. Sanity would apply if this was not really the end of a system. Every “issue” now leads to a major conflict if Obama is not impeached. That’s just the ways it is. “Experience” does not help here. The sheer madness of using these weapons is clear to all sane people in the street, but at the same time these very same people sense a real foreboding.

      • bonbon

        Here is something about The ECB Printing a Cool Half-Trillion in Three-Year Loans

        The ECB has launched the first of its two tenders for three-year unlimited loans to the banks. The ECB claims not to be the lender of last resort, but in reality is functioning as this – but only for banks, not for states. According to financial media, while the great experts expected that demands would reach EU250-300 billion, there has been a request for EU489 billion, coming from 523 banks.
        The ECB move has been named the “Sarko trade,” after President Sarkozy said that the liquidity will allow states to “turn to their banks” to sell their bonds. Whether banks will buy them remains to be seen. The banks are themselves in a squeeze. Together, EMU states and banks must raise EU720 billion over the first quarter of 2012.
        In order to get the money, banks must offer collateral, so either they have it, or they… PRINT it!
        Take the case of Italian banks: Thanks to an emergency law issued by the EU puppet Monti government, banks are allowed to issue new bonds with unlimited government guarantee. According to {Il Sole 24 Ore}, Italian banks have already produced EU50 billion worth of such new bonds. In the future, they could produce up to EU228 billion. Such a figure would guarantee a refinancing for the entirety of 2012, at a final cost of 2% (including costs for government guarantees).

        “Here is the new medicine, as artificial as the credit crunch,” wrote {Il Sole}’s Morya Longo. The most outrageous thing is that such government guarantees are not counted in the public debt figures.

        Thus, we have a two-tier system upside down: investment expenses are counted as debt, while bank bailout is not!

        With this first three-year tender, the ECB has expanded its exposure to EMU bonds and banks to over EU1 trillion. A second tender is scheduled for Feb. 29, 2012.

        ————
        Printing collateral is not good banking! And the ECB is acting as a lender of last resort only for banks. Public debt calculations? Wow.
        Exposure? Next tender?
        What kind of carry-on is this carry-trade?
        One must sense “something is rotten in Denmark”.
        This is hyperinflation, anathema to Germany.

      • redriversix

        Cameron,

        Banks cannot raise money because they are bust in any sense of the term,there fore they should have been closed down.

        How can you have capitalism for Banking Corporations and socialism for private citizens,..? that is the problem here and you cannot “patch up” this problem by just printing money.

        Gold has a value because of its rarity…

        The idea of WW111 comes from the fact of..
        A/ What is going on around the World financially

        B/ History teaches us that after every major Financial calamity to date,it has been followed by major conflict.

        Their is no conspiracy in asking questions and not accepting everything as Gospel that Governments and Media spin.

        It is all about debits and credits,you can or the FT can dress it up any way you/they like but the bottom line is their is no money to repay all the Worlds debt so their needs to be a complete cancellation of all debt and start with a clean slate otherwise you see nations using their might to attain Natural resources around the world which is what the U.S is doing with “AFRI-COM which Libya would not sign up to.

        These are not conspiracy’s,these are facts.

        The U.K owes 987 billion pounds and America owes over 15 trillion dollars and growing every month.

        ECB lends money to Banks at 1% and Banks lend to Governments at 6% when productivity is falling through the floor.

        2012 is going to be a terrible year for the man in the street so be prepared.

        There is a lot of people who have not suffered from this depression,……….not yet and we have to be mindful of the “not yets”

        So look after yourselves and your families as no Government will as has been clearly pointed out this year.

        David McWilliams being Capitalist is perfectly fine and quite obvious.

        Keep an open mind,nothing is ever as it seems……

        Best

        RR6

  28. Deco

    [
    It props up the bust banks that
    lent to these bust governments. And in so doing, it rewards the bust banks for their decision to lend to the bust governments in the first place.
    ]

    Sssshhhh – don’t tell Guenther !!!

  29. StephenKenny

    It is an interesting point that you two both make. The relevance of the various bits of the blogosphere and it’s adherents is difficult to judge. I just checked on Alexa. It doesn’t give the number of hits of course, but the stats are a little more impressive than I’d expected: This domain had a rating of 904 from Ireland and 166,000 globally, which means that it’s the 904th most popular site for internet users in Ireland (To the pedants out there, I know, it doesn’t quite mean that, but it does so roughly) which is high. The BBC domain is ranked over 2,000 from the UK.

    As to the importance or otherwise of the comments, it’s impossible to say, beyond the average stay on the site which looks like something over 3 minutes.

    For those who don’t want to go and look, the significant majority of readers are male, 35-44 and 55-65, hold post-graduate degrees, and have children.

    All this according to Alexa.

  30. bonbon

    To put this in perspective, derivatives, rarely ever mentioned here. Printing collateral for bonds as above reported is bad enough, but this takes the biscuit.

    Zombie Financial System Being Kept “Alive” With Derivatives

    It was by derivatives that the biggest financial bubble in history was created, and it was the collapse of mortgage-related derivatives which triggered the implosion of that bubble in mid-2007, taking the global financial system down with it. Under such circumstances, one might be tempted to think that the bankers and their regulators would have learned their lesson about tolerating derivatives, but the criminally insane rarely do. Rather than shrinking, the derivatives markets are larger than ever.

    During the first six months of 2011, the global derivatives market grew by $121 trillion (18%), to $790 trillion, according to the Bank for International Settlements (BIS). During the same period, the derivatives held by U.S. bank holding companies rose $35 trillion (12%) to $333 trillion.

    These figures are not comparable, as the BIS numbers are netted to eliminate double-counting between banks, and the OCC’s U.S. figures are the sum of all reported derivatives, without netting. There is also no reason to view these numbers as accurate; better to view them as “if this is what they admit, the truth is likely far worse.” That said, the changes in magnitude are indicative of an increase in derivatives activity to hide the bankruptcy of the system itself.

    Without the netting, the global growth reported by the BIS would presumably be in the range of $180-$240 trillion. Minus the $35 trillion in the U.S., that would leave some $145-$205 trillion unaccounted for.

    The most likely place to find them would be in EUROPE, and perhaps in some secret operations being run by the central banks.

    If one considers derivatives in a functional sense, rather than their narrow technical definitions, then it is clear that the bailout itself–in the U.S. as well as in Europe–is based upon derivatives. Off balance-sheet exposures and structures, the securitization of leveraged assets and income streams, structured finance, all the derivatives tricks used to create huge amounts of fictitious capital, to create the illusion of a functioning financial system. It is both criminally insane, and dangerously hyperinflationary.

    It is well past time that financial derivatives of all forms be outlawed. All existing contracts should be declared null and void, and no new contracts allowed.

    That is what Glass-Steagall is all about. Even Volcker admitted his “rule” was not as good.

  31. Paris75013

    Definitely agree that there is a lot of “pompous rubbish” to be read in some of the comments. Why are most the bloggers on this website in the 50 to 70 age group, who really don’t have any first hand experience of negative equity, and who just seem to have plenty of time to sit at home and write lengthy comments and feel they are educating the rest of us? I enjoy reading David’s articles but must admit that I just scroll down quickly through the comments.

    Anyhow David, I can picture what Dublin airport looked like on Xmas eve with so many Irish people coming home. There are also a lot of Irish people abroad for Xmas. I’m here with my family on the Costa del Sol and I really feel I’m back in Ireland. The hotel (and FBD resort) is full with Irish people enjoying the fantastic weather, and there’s no sign of the current economic climate! A lot of the Irish people who come here, actually come a few times a year! This resort is a home from home. Visiting towns like Cordoba, it’s hard to believe that unemployment is at 22% in Spain!

    • redriversix

      Hey Paris

      Hope you are enjoying your break,just for the record I am younger than 50 and I would be delighted to share my story with you some time but now is not the time,don,t want you weeping in to your paella (can’t spell paella !!!]

      Needless to say its a tale of rags to riches and back to rags and I have never been happier,I now know whats important and that everything passes,both good and bad.

      Have a great holiday and a very Happy New Year to you and yours.

      Best
      RR6

      • redriversix

        So the Banks borrow half a trillion in cheap loans and put 60% back on deposit with the ECB at Half a percent interest.

        Its a good job these Guys have are best interest at heart,otherwise I would start to get cynical…………….!!!!!!!

  32. D Clipse

    Can anyone remember their last experience of an eclipse and where they were at that time.Unless you were aware it was going to happen you might have not noticed it .When it happens it lasts only about 5 mins .The cause is usually when the moon passes between the sun and earth and blocks off the light from the sun.

    The visible signs are

    darkness
    cold air
    breeze/wind
    increase height of waves in sea and lakes

    Lets imagine the Sun is the ECB and the moon is an inability to pay our debts and the lenght of time is 5 years .

    What visible signs would happen in this case ? My guess is :

    No cash only newly home made denominated notes
    no transport because petrol will be rationed
    no imports because we cannot afford them
    no banks opened because of ministerial decree
    deposit accounts frozen
    ATMs empty and loss of connection with foreign ATMs

    And those who chosed to ignore the warning signs of this cash apocalypse have the most to loose .

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