January 30, 2012

Punk Economics - Lesson 1

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Welcome to Punk Economics and new way looking at the economy based on the central idea that what is important is not complicated and what is complicated is never important. I hope you like it. More to come.


  1. Daithi Lacha

    Wow! Brilliant! So Euro skeptics like me will have our day. Love it.

  2. Patrick Devaney

    Excellent video. As you said yourself David, people will eventually have had enough of this farce and revolt. I for one can’t wait to finally rid ourselves of the banking debt, the euro and move on as a free nation once again!

    Pity RTÉ wouldn’t show this kind of stuff but they’re too scared to rock the boat. But is there any chance you can use your contacts with the state broadcaster in illustrating this and speeding up the process of the citizens reclaiming the country from the banks?

  3. NeilW

    Very, very good. High quality production. Spot on description of the issues.

  4. stiofanc02

    Send it to that dumbfuck on the blog eireannach! Maybe he will get it after watching!
    Interesting concept and kudos to the artist.

    • Eireannach

      These are inspired by the RSA Animate series. See You Tube.

      I don’t disagree with any of it, but then I’m not a builder like you.

      Builder!

  5. straboe1

    It suddenly occurred to me that instead of concentrating on the problems of rural septic tanks, that the we should see the countries problem as if it is a septic tank that has gone wrong. The solids have all come to the top. We badly need fresh air to be introduced everywhere so as to insure that the solids no longer polite our country.
    Brendan

  6. Very good communication piece.
    I would agree with almost everything in it except only one major on error.

    I have read Marx and his writings are pro worker reward with resorses & time for their work done(that is, Marx was anti-slavery & anti corporate profit. Mark’s writings are actualy anti sovie-style-communism where profit was not returned to the workers but instead was used by a dictatorship for the arms race etc.

  7. theguardian

    Good video!!! Should consider putting this video to TV3 for broadcast, if RTE don’t have the balls to tell the Truth. I think the govt should make a proposition/ Ultimatum to Merkel/ Sarkozy, if they don’t offer deeper haircuts on Anglo bonds, Ireland would commencing preparation for exiting the Euro. Obviously if the market get wind of this, all European exchanges would dropped dramatically. So it would in EU interest to reward Europe poster child, a better deal on the anglo bonds. And you are right, if Ireland default, the collapse would be much greater in Frankfurt than in Dublin. In Dublin, it’s would only be temporarily, but Frankfurt would suffer much more.

  8. Dorothy Jones

    Commit the lot of it to graphic form and add a dash of fun…this is great..:)
    The meaningful look at the start of the video has a touch of the Robert Smith about it! Out with the eyeliner David..:)

    • Dorothy Jones

      Graphics are great; really well put together.
      Who are the makers; do they have a website?
      Wonder if austerity cheerleaders will appreciate its artistic merit…?
      Axel Weber’s protestanism….lol:):)

  9. Rory

    Thanks for that, just posted it to facebook for my friends. Waiting for the day that we, the people, say no. Not holding my breath. In the meantime I am going door to door against the household charge. It is the first chance we have been given to resist. God knows our unions won’t give it to us.

  10. This is all very well David, but governments like those of Greece and Ireland have been totally irresponsible.
    Germany and France is not obliged to continue to pay for a bloated, overpaid civil service in any country.
    Debt forgiveness without foreign oversight of spending by such Gombeen governments as I mention, will just kick the same can down the road.
    Is the solution a severance from the Euro.The Irish government would quickly realize that they can no longer tax their remaining impoverished populace to pay for the golden circle of state and semi state employees.
    Just tonight a proposal has been put forward to allow NAMA to take over the responsibility for the payment of all underfunded pension schemes like those of Aer Lingus?
    This is total lunacy,in my opinion.
    What/who, is NAMA.?
    NAMA is another Quango.
    It is dependent on European money for its very survival.
    it is the greatest bloodsucker of them all, requiring the repayment of that money by innocent victims in Ireland.
    There is no blood left in our country to feed this quango monster and its paymasters in Europe.

  11. Adam Byrne

    Excellent, thanks. Looking forward to the next one.

    Adam.

  12. Thanks for all the nice comments re Punk Economics.

    Best

    David

  13. David, this is excellent. I’ll be punting this along to as many as possible, particularly my German friends and colleagues…

    You might consider the possibilities for having it subtitled in German, French, Greek… There is probably a way to have that done cheaply (or for free).

  14. JapanZone

    Love this presentation style – lots more thought-provoking animations like this from the RSA, at http://comment.rsablogs.org.uk/videos/.

    David, I was surprised but pleased to see you being so upbeat in the December CNN video about Dublin reinventing itself (especially as I’m moving home this summer after 23 years in Japan). It leads me to think that there are people in Dublin focused on progress, getting things done, positive stuff. But are they doing so in the hopes that the politicians or “somebody else” will deal with the bigger pan-European/global issues?

    It’s ironic that social media like Twitter and Facebook are given so much credit for the Arab spring and Occupy movements and yet, despite their being right on the doorstep, are not being used in any effective way to bring about change in Ireland. Or are there stirrings at home that I’m missing?

    • Grey Fox

      Excellent David,
      Very similar to the video’s which accompany all lessons on http://www.khanacademy.com, the lessons on Banking and economics are especially good and free.
      It is altogether likely that “Fiscal Compact” will make it into law but it does not make a damn bit of difference the end result will be the same as in the last step of your videom anybody who does not agree is worth listening to but I fear, ultimately dead wrong and apart from the further economic damage the current path will cause the damage to to the moral fibre of our little country and the actual health of its citizens will increase exponentially. If only our fearless leaders could see the folly of their ways we might then discover another natural resource, “Cop On” and who knows there might even be a export market for it!

      • Grey Fox

        and just to note, to the same fearless leaders, nobody is buying the “Cute Whore” crap they are peddling right now.

        • Grey Fox

          Portuguese 10 year bonds 17%,,,,do I hear 18 anybody anybody,,, 18 to the german in the corner…do I hear 19…..

          • Grey Fox

            Vincent brown was right last night, he will more than likely be reviewing the papers in German soon,(with english sub titles).

  15. 33square

    “what is important is not complicated and what is complicated is never important”

    never say never :D

    this is the pareto principle at work.

    the similarities between this and agile/lean software development should be noted…

  16. bretter

    Uuuh, David, seems so logical but in fact so many flaws that the whole thing ends in truthiness instead of truth. It starts being wrong at “the first 10 years of the Euro” – well, a lot of things went wrong. With the banks (very much so for instance in Ireland), with some of the governments, with companies and even with people (your innocent dogs aren’t innocent at all). It’s true that we better put Greece or Portugal to work let them loose their last opportunities – but it’s also true that this wouldn’t save those countries from bankruptcy if they refuse to see what put them into their unsustainable condition. Hint: It hasn’t been “the banks” who put them there. The whole Euro mess has been predicted even before the Euro has been launched – by non-punk economists, mostly British. Don’t just blame the banks because it’s the most convenient to do. Blame them all. Blame the politicians for buying votes by throwing money around. Blame the companies for always taking as much commissions and subsidies from the government as they can get. Blame the taxpayers who always shy away from their duties. Blame the people for sampling all kind of transfers and voting for those who promise them more transfers. Blame the bank for taking chances without being able to take the risk. We all – and I mean literally everybody – have our share for all those iresponsibilities that we were spreading over our economies and state budgets. And, yes, even blame all those economists of all flavors that never stopped calculating that of course the budgets could take more deficits forever. I do agree with some of your views but however I see also a lot of demagogism in your pseudological lecture.

    • BrianC

      Hi

      Can you explain one thing to me please as I am a little confused. Is it correct to convert private banking debt into sovereign. And while you are at it can you explain how Greece managed become a member of the EU.

      Also, have you ever heard about the 3C criteria applied to exercise due diligence in lending money. If private banks decided to over look such tried tested proven means of due diligence in pursuit of bonuses then how come I am personally made responsible for their losses.

      I must be missing something.

      • bretter

        Today, the private banking debt comes from … collapsing sovereigns. Take Dexia Bank (Belgium). They went bankrupt recently because they did what their government were begging for: “Please, keep those sovereigns in your books!” They did, collapsed and government had to rescue them. Take Unicredito. Nobody gives Unicredito any more money because they have to much sovereign debts in their books. In fact, it’s a circle, but in the beginning it’s about loosing faith in the ability of certain nations to pay their interests anymore. And when you await that they cannot pay interests anymore the private sector stops buying these sovereigns. The Euro crisis is a about deleveraging state budgets … with a recession blowing in your face.
        No, I cannot explain how Greece become a member of the Euro system. Basically, it has been an political decision. In the past, after WW II, Greece got what they needed because they were an important garrison against the commies. That’s why Greece has been the only western country where a communist party has been forbidden. And they got dictatorship 67-74. Guess why just then? They never got used to build up a strong administration because of their specific task in “cold war”. Lots of history behind the current mess …
        Yes, banks failed on “proven means of due diligence” with all those subprime stuff. With sovereigns, it’s different. Government gave them free hand. Government declared officially that government debt is absolutely risk free and banks don’t need core capital in order to take them in their books. TOday, we know that their is no such thing as risk free government debt.
        We as taxpayers will have to pay since we voted for those governments and cheered their policies of spending as big as you can and than some … It has been a system and we are part of it.

      • bonbon

        Greece became a Euro member because Goldman Sachs fiddled the books for a fee of $100′s millions contracted by Athens. This is very well documented. Now GS boys run Greece to sell it as a commodity!
        Due diligence, governance, replacing economics and elected government.

        Looking for Public Virtue in the Grumbling Hive of private Vice (Bernard Mandeville) is something only Sherlock Holmes would try.

    • Bretter,

      I do put the blame in most place, because you are right there was wholesale nonsense going on. But endangering the EU for the sake of a financial edifice which is beyond its sell by date appears to me to be plain silly.

      Best,

      David

      • RonF

        I’m afraid that I see a number of things wrong with this.

        1) “The Bankers” don’t own the money in the banks. It is not theirs. They just manage it. True, they take a healthy slice off the top for themselves, and the amount they get needs examination, but it’s nowhere near the total amount of debt, it’s a small fraction thereof. The money in the banks belongs to the depositors, which boils down to private citizens (whether individuals or corporations that individuals invest in). Banks take in other people’s money, loan it out, charge interest, take some of that interest as profits and pay the rest out to the people that put the money in as principle and interest. If Greece et. al. default on their debts then how are the people who put their money into the banks get repaid? And what happens to them when it is not?

        2) I don’t see you touch at all upon the question of how Greece and others got into all this debt in the first place. The answer is that their governments made promises they couldn’t keep. They grossly expanded social services and pensions (people retiring at 50 and 55 and immediately collecting lifetime pensions, for God’s sake) without making sure that they’d have enough income to pay for them. Why should people who were not even involved in those decisions have to make them good? And why shouldn’t the people who were involved in those decisions – the voters in those countries that blindly elected and re-elected officials that made promises that any fool could see couldn’t be kept – be held responsible? This you term “punishment”, as if holding someone responsible for their own actions is wrong. If I were German or French why should I work hard to pay some Italian hairdresser to retire at 50?

        3) Jesus forgives out of an inexhaustible font of grace. God is not diminished when He forgives. Banks – and the people who put their money in them – are.

        Modern life is impossible without banks. Where will governments get the money for building roads, fielding armies, etc. without being able to borrow from banks? What bank will be stupid enough to lend money if countries can simply run up debt and then default?

      • RonF

        I would say the answer is to blow up the EU. If I were the Germans or French I’d want to pull out immediately. Reform a union where the member states are required to maintain some kind of sane fiscal structure, and where they get thrown out if they don’t.

  17. common_thought

    The problem with the above narrative is that fiscal transfers are not politically sustainable in the EZ. So criticising Germany in the above way I think is both unfair to Germany and not presenting the whole picture. The *only* way fiscal union is politically sustainable is if there’s some sort a common electorate and even then it can be difficult.

    • bonbon

      The Euro project must be admitted all along to have been a corset to limit Germany after re-unification. Mundel’s original thesis goes back to the 60′s.
      As far as I see its a variant or test-run of Keynes’ “Bancor”.

      The key event leading up to Kohl signing on was the assassination of his friend Deutsche Bank chief Herrhausen. This is not a gentleman’s agreement!

      As such it inevitably leads Germany into a trap.

      Resistance to transfers now is being directly challenged by a coup against President Wulff which threatens Merkel. Its one thing to criticize, but this media witch-hunt takes the biscuit.
      Wulff slammed the banker “treff” in lindau last August. I posted his speech here for all to see the policy, as waiting for RTE…

  18. CorkPlasticPaddy

    Excellent concept of putting things across, David, but the trouble is some of the contributors to this site are ‘away with the birds’.We have a saying down here in Cork and that saying is ‘some people are to thick to be stupid’ and I’m sorry to say that this saying would have to apply to some of the contributors.
    Look, it’s very simple. Why should the Irish people have to pay for private debt??? The banks are private companies and all down through the years if a private company failed it went bankrupt and creditors of that company had to line up to get whatever they could of what they were owed by that company, but they never got 100% of what they were owed. they got a whole lot less than 100% and they were glad to get that!!! What is there not to understand about that concept!!! It’s as plain as the nose on your face!!!
    I had to laugh at Minister Leo Varadker’s comment in Mondays Irish Examiner about referenda ‘not being democratic’!!! How democratic is a referendum or a number of referenda??? It’s democracy in its purest form meaning that the citizens of a country get a chance to exercise their right to vote on one thing or another. I think the minister was refering to the idea that the Irish people shouldn’t be consulted in relation to this up and coming Fiscal Union. If the Irish people aren’t allowed to vote in a referendum on this then you can kiss goodbye to democracy, full stop!!! The minister and his colleagues both in cabinet and in government should be told in no uncertain terms to ‘FOXTROT OSCAR’.
    The Irish people have had enough!!! We should tell Merkozy and the rest of Europe to ‘stick it in their collective pipes and smoke it’.

  19. bretter

    “It’s very simple. Why should the Irish people have to pay for private debt???” Yes, it is this simple and this complicated. We have the same ego-simplicity all over Europe. Many Germans say: Why should we pay for the Greece? Or for the Irish (haven’t you got 113 bln $ bailout by the EU?)? Or for the Portugal? And the Greek people say, we didn’t do the damage … Everybody is saying I don’t wanna pay since I haven’t done anything bad. But it’s our system and EVERYBODY was making some money with it. For instance, the Irish have put up a clever tax system that lets US corporates like Google or Apple pass through their billions of profits by headquartering in Ireland and almost paying no tax anywhere in Europe, just tipping a little to the Irish waitress. However, we have to much simple views in Europe, while the whole story is much more complicated.
    I would like to see mandatory loans being put on anybody wealthy. The Greek rich should be forced to lend money to their governments instead taking it to Switzerland, and so on everywhere. Me as a not so wealthy German, I am okay taking a little more on my shoulders of that debt of Portugal or Greece as soon as I see that these nations are forcing their wealthy people to contribute by mandatory loans or other similar measures. Yes, why should I pay? I should pay because failure of the system would be much more expensive. Much more. We are all profiting of it by one way or the other.

    • Grey Fox

      It is nice to know that you as a “not so wealthy german” are willing to take a little more on your shoulders because the alternative is much more expensive, but here in Ireland we (the ordinary decent taxpayer) are being penalised out of existence, it is the natural duty of every parent to look after their family FIRST! and that means food on the table, clothes on their backs, shelter over their heads, and warmth to keep them healthy and that my friend is the end of the story!!!!
      But here in Ireland a huge section of society is failing in either 1 or more of these 4 basic human rights and it is not acceptable!!!
      I believe you are being a little more than naive in your comments and need to be careful that you don’t, soon find out that you yourself start to fail in one of the 4 basic human rights mentioned above, when that happen I guarantee I will see a change in your outlook and i beleive I will see that same degeneration in the not too distant future.
      WE CANNOT BORROW OUR WAY OUT OF THIS CRISIS!!! FACT
      PENAL AUSTERITY IS NOT THE SOLUTION !!!! FACT
      IT IS UNCONSCIENABLE AND TREASONOUS TO SOCIALISE PRIVATE DEBT IN THE NAME OF PROPER FISCAL POLICY!!! FACT
      SOONER OR LATER THE IRISH PEOPLE WILL WAKE UP TO THESE FACTS AND THIS GOVERNMENT AND EUROPE WILL REAM WHAT THEY SOW.
      WHEN YOU TAKE EVERYTHING FROM A MAN AND LEAVE HIM WITH NOTHING HE HAS NOTHING MORE TO LOSE, THEN AND ONLY THEN DOES HE BECOME DANGEROUS AND UNPREDICTABLE,
      THE FUTURE BECOMES TOTALLY AND UTTERLY UNCERTAIN AND THE FINAL BREAKDOWN IN SOCIETY BEGINS.
      While your gesture to pay more is in isolation, admirable, it is exactly the wrong approach, the machine is broken, it never worked in the first place, and was not fit for purpose and is therefore redundant, no attempt to revive, repair it will work no matter how well intentioned.

      • RonF

        “… here in Ireland we (the ordinary decent taxpayer) are being penalised out of existence, it is the natural duty of every parent to look after their family FIRST! and that means food on the table, clothes on their backs, shelter over their heads, and warmth to keep them healthy and that my friend is the end of the story!!!! But here in Ireland a huge section of society is failing in either 1 or more of these 4 basic human rights and it is not acceptable!!!”

        1) The government is not your parent. Once you leave your family nest at the proper age you, not the Government, are responsible for maintaining your life.
        2) The ability to pursue the attainment of food, shelter, clothing and warmth without interference from others because of your religion, race, etc. is a human right. But rights are not entitlements. You have a right to strive to attain these things. You are not entitled to have the Government take money from others by threat of force if necessary (“taxes”) and then pay for them for you. Rights are not entitlements.
        3) I quite agree with you that you cannot borrow your way out of this crisis. The solution is to get to work and produce enough that you don’t need to borrow the money – and to stop incurring debt by paying out huge amounts of money to people who are not productive. Understand that I do not mean that people who through disability cannot support themselves should not be supported. But there are large numbers of people who can support themselves but choose not to. They need to be given a stark choice – work or starve.

    • The Germans, in your example above, would be paying for the French, not the Greeks, and the Irish are paying mainly for the Germans, and a few Brits. But hey I live in Germany, so thanks for sending me your tax instead of building schools and hospitals with it, much appreciated! That goes doubly from the manager of the local branch of Deutsche Bank, and the Commerzbank down the road…

  20. [...] one of the clearest (and most optically pleasing) discussions of recent months, David McWiliams (of Punk Economics) succinctly explains how Europe has evolved from a democracy to a bankocracy, the implications of [...]

  21. sarsfieldabu

    Nice work David. Here’s something for the young people to know.

    To pay through the nose is to pay an exorbitant price for something. 9th century Danes (Vikings) were particularly strict with their tax laws, especially where “foreigners” were concerned. They levied a particular tax against the Irish called the “Nose Tax”; failure to pay was met by harsh punishment – the debtor had his nose slit open.

  22. [...] one of the clearest (and most optically pleasing) discussions of recent months, David McWiliams (of Punk Economics) succinctly explains how Europe has evolved from a democracy to a bankocracy, the implications of [...]

  23. [...] one of the clearest (and most optically pleasing) discussions of recent months, David McWiliams (of Punk Economics) succinctly explains how Europe has evolved from a democracy to a bankocracy, the implications of [...]

  24. Holland Mix

    Two mistakes in this way of reasoning:
    bail out of Greece or bail out of the banks are really not such different matters, since the banks created the money largely out of thin air, and the only real loss is the 3% they did not create. The 97% remaining are costs that the tax payers will pay in the form of inflation, it represents money brought in circulation. Normally a large group benefits or suffers because the creation of money, now the Greek are the main beneficiaries and victims. However, where the benefits stayed local, the inflation will spread trough out the Eurozone.
    Second injecting more money in the economy will just temporarely easy the situation. Because of the interest on loans in the fractional reserve banking system the money will keep flowing from governments and low income groups to the corporations and high income group, bringing the system out of balance, leading unevitably to a new and bigger crisis. The solution is money created by governments that is added to the economy without interest. Money is something with a fictional value, there is absolotely no justification why the one supplying it should take a commission over alll money in circlation. Please read and share following links:

    http://kennedy-bibliothek.info/data/bibo/media/GeldbuchEnglisch.pdf

    and

    http://www.youtube.com/watch?v=QuBy3BzCXwg

    for those without patience to read the 50 very interesting pages.

  25. Pedro Nunez

    Very ‘Amuigh Faoin Spéir’ David, think we’re showing our age?

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  29. rdill

    Was awesome! I couldn’t wait to see what the artist did next,very catchy. All made alot of sense, but no surprise there. BTW ,you do not look like David Caruso, not that he’s hideous or anything.

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  31. [...] banken er een potje van gemaakt hebben. De Ierse econoom David McWilliams, bekend geworden met zijn Punk Economics, legt in makkelijk begrijpbare filmpjes zoals hierboven uit wat er nou werkelijk achter [...]

  32. [...] banken er een potje van gemaakt hebben. De Ierse econoom David McWilliams, bekend geworden met zijn Punk Economics, legt in makkelijk begrijpbare filmpjes zoals hierboven uit wat er nou werkelijk achter [...]

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