April 4, 2012

Our bailed out banks are in process of going bust again

Posted in Banks · 135 comments ·
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Ernest Hemingway was once asked how did he go bankrupt. The great man thought for a second and then replied: “I went bankrupt in two ways, gradually and then suddenly.”

When we see the figures coming from the various banks, it is not difficult to see that something similar is happening in Ireland. Whether the banks end up bust again, the second time in three years, will depend on how the ECB reacts but it looks like the banks, having been bailed out and having received huge government capital injections, could now be in the process of going bust.

As Mr Hemingway observed, people and entities go bust gradually, at first — this is the phase we are in. Then they go bust overnight. History suggests that after that happens, the economy will recover because we have to start again.

Interestingly, the reason that the banks might be going bust gradually is because the ECB is giving them money at 1pc so that they can mask the inconsistencies in their business model for another year or two. But when that money runs out or the ECB’s policy reverses, which it must eventually, where will they get the cash to operate?

Figures for Irish Permanent released the other day reveal what similar figures for AIB and Bank of Ireland indicated in the past few weeks. The mortgage book is unravelling. The negative equity, which up to this was being shouldered by the population, is now forcing people to miss payments.

Obviously the place you are seeing this is in the “buy-to-let” portfolio where 25pc of Irish Permanent’s loans are not only in negative equity, but are actually non-performing. In other words, they have been defaulted on. The other part of its total loan book, the normal residential mortgage book, is deteriorating rapidly.

For example, close to 21,000 customers are in arrears of 90 days. This is up a quarter on last year to 12pc of all loans. The pace of deterioration in the loans book is alarming because it seems that bad loans have risen by 100pc in two years.

When you take a bit of altitude from the grim reality of a shrinking economy and too much debt and you look at the bank’s net position you can see the roads to penury even more evidently.

Irish Permanent’s loans-to-deposits ratio remains 227pc, down from 247pc last year. What this means is that the delinquent management of this bank borrowed so much in the boom to lend out that now — even after three years of contracting — for every €1 deposit the bank holds, it has lent out more than €2.27. For the bank to be viable, it has to get this ratio back to €1 of deposits equal to €1 of lending.

This implies that it has to aggressively cut lending or aggressively increase deposits or a combination of both.

Now, in order to attract in deposits the bank has to engage in a deposit war with the other banks. The only way to do that is to increase deposit rates on offer over and above what is available in the other banks.

Now here is the rub: banks make their money by borrowing money cheaply from me and you in the guise of deposits. The deposit is the only asset a bank actually has because it is money that is both cheap for the bank to get and it is also what is termed “sticky”, which means that it takes a lot for people to change banks or take out their money.

In contrast, other bank capital, like bonds or shares, can be easily sold by investors. This makes them liquid for the investor, but for the bank it makes them both an expensive and an unreliable source of capital.

If the bank gets into a deposit war at a time when there is no demand for loans because people and companies don’t want to borrow, it is toast.

Why? Because its cost of capital is likely to be greater than its return from that capital. That is how you go bust.

But why doesn’t this happen quickly and why is it more likely to follow the Hemingway dictum of gradual followed by sudden?

This is where the ECB comes in. The central bank’s job is to prop up banks in trouble. So it is providing a huge amount of liquidity at 1pc to all eurozone banks. The total of this quantitative easing now amounts to €1trn. All this money finds its way back into the banks because they offer dodgy collateral to the ECB and the ECB gives them cash at 1pc for three years.

So it is unlikely that Irish banks will go bust as long as this remains in place.

So gradually the banks will just become safe deposit boxes for the ECB, taking in money but not lending out because they have to get that loan/deposit ratio down to 100pc.

What does this mean for the Irish economy? It means a zombie banking system presiding over a zombie economy where credit conditions tighten progressively because they have to if the banks are to become functional again.

But there is the conundrum. The more credit the banks take out of the economy, the more house prices continue to fall and the higher negative equity becomes; therefore arrears get higher, and the greater the pace at which arrears translate into defaults.

This is how the gradual becomes sudden, because the gradual is making the sudden more and more likely.

The only way out of this is to default on many of the Irish banks’ creditors. But as much of the debt has already been turned into sovereign debt and as the ECB is the creditor, the ECB will need to be central to a deal.

The hardliners at the European Central Bank, who are obviously in the ascendancy now, would baulk at the ECB being involved as a broker in such a debt restructuring. But then again, in Greece, the ECB took a massive 50pc-plus haircut on its exposure to Greek bonds. So stranger things have happened.

Either way, the only way to avoid Hemingway’s law of finance is for the gradual to become sudden and the sudden to become gradual. The choice is ours.

For an easy way to understand economics check out the new Punk Economics 3 on YouTube.


  1. Grey Fox

    IS THIS WHY WE ARE HEARING CALLS FOR A BEEFING UP OF FIREWALLS TO ALMOST 2 TRILLION, WHEN DOES THIS CREATION OF MONEY STOP, NONE OF IT IS MAKING IT INTO THE REAL ECONOMY, IT JUST SWIRLS AROUND WITHIN THE BANKS, THE ONLY TERM I CAN COME UP WITH IS “TOTAL DELUSION”
    EVERY TIME THEY CREATE MORE MONEY IT JUST CREATES MORE DEBT, GOD! WHAT IS THE ULTIMATE PURPOSE? IT JUST MAKES NO SENSE! THE BANKS ARE GOING TO RUN OUT OF REAL CUSTOMERS, (YOU AND ME) AFTER WE HAVE ALL DEFAULTED ON OUR MORTGAGES AND LOST OUR JOBS WHAT NEED HAVE WE FOR BANKS??

    • C21living

      If we default on our mortgages and lose our jobs, Irish banks will just invest in Polish verture capital/property/etc, Mongolian, Chilean and Australian mines, Phosphates in Morocco or precious metals or wherever else the margins are.

      The banks business is to generate profit. In a globally integrated economy, with fairly free movement of both capital and labour, Irish banks might overlook investing in Ireland in the same way some universtiy graduates are emigrating without even looking for jobs here.

      Eventually, when we’re on our knees, we’ll be “competitive”, meaning cheap skilled labour. It’s a long, long way down yet, unfortunately for us.

      • Deco

        Irish banks will invest…?

        With what ? Hot air ? Optimistic statements ?

        Positive write ups in Irish newspapers ?

        It definitely will not be with money.

        • C21living

          I”m saying with whatever capital they can, they’ll invest wherever they can, in whatever they can, to get out of trouble.

          But the mounting buy-to-let and home mortgage arrears will sink them.

          Although I tend to think about the families those arrears will sink first, the divorce and mess coming down the line, rather than the technical matter of how it will effect the banks’ balance sheets.

          DMcW is right, our banks won’t be saved. The moment of truth is near.

    • Tony Brogan

      It is called control. There is always some one who wishes to be king kong.
      These guys are bright. They dont lead a charge into battle, they finance both sides of the conflict. They charge interest on what does not exist.
      They jerk the puppet strings. We jingle jangle and the money is shaken from our pockets.

      Best
      Tony

  2. tony_murphy

    The ECB took a 50% haircut.. on what? 1′s & 0′s on a computer? How nice of them.. The ECB loves us all !!

    from
    http://wealthcycles.com/blog/2012/04/03/european-unions-attempt-to-expand

    “Meanwhile, complicit Greek politicians agreed that if the new, even larger debt is not paid, they forfeit Greece’s gold to the bankers. Greece is only the first target of a nefarious strategy of quiet coup that is set up to be triggered all around the European Union (EU) today. Portugal is voted most likely to be next in the cross hairs, as its gold holdings to nominal debt ratio is very high.”

    So, they greedy globalist bankers want Greece’s gold, Portugal’s gold, Italy’s gold etc.. but they want to take it appearing like saviours! Not something you’ll read in the indo

    They want everyones savings and private property as well. I could go on…..

    Recommend watching the film IN TIME with Justin Timberlake. Believe it or not, you’ll see where all this could be heading.

  3. yeah… and at the same time you have economists – not David, not Constantin, not Brian etc. – but the academic Bullshitters, the handsomely paid yes men, jabbering about the “fiscal compact” to be the ultimate requirement for a solution…

    This is no longer about a financial crisis.

    This is about millions of PEOPLE suffering because BANKSTERS are not disemboweled and stripped bare arse naked, and a fascist plutonomy is enforced that will only survive by means of implementing neo feudal structures, the latter can only be achieved by PEOPLE accepting that to happen, and roll over – pun intended! -

  4. C21living

    I love these kind of articles by DMcW where you can read it and reread it, and it keeps giving.

    Thanks David, many of us digest the data you reveal and your interpretation of it, share these insights with others, quoting you and generating interest in your writing and in this way you are doing a service to the country.

    This is as alarming and urgent for the public to understand as when you were warning about the property bubble in the early 2000s.

  5. Peter20

    With KBC Bank advertising 3.25% on deposits and noticing an Ulster Bank employee clammering all over a window display earlier today putting up large 4.0 % on deposits posters , should we believe the deposit war is beginning ?..I see Davids predictions sadly coming to fruition by the summer ,

    • Tony Brogan

      Do not give your money to the banks, it only encourages them. All banks without exception are bankrupt. They will swallow you money and not even burp. Take a lesson from MF Global

      All the best peter20
      Regards
      Tony

  6. Adam Byrne

    subscribe.

  7. Deco

    We still have not reformed the Irish concept of management, or the Irish concept of authority.

    Therefore, the intellectual basis of the problem remains firmly in place.

    Excellent article. Excellent description of the unfolding mess. It answers the question “How is that Two Pillar Bank strategy working out ?”

    It is working out, exactly as any sceptic of the Irish concept of management, and any sceptic of the EU’s approach to this mess, should expect it to unravel.

    Actually, the real estate market is getting worse, because the market is walking out on it’s feet. Maybe some of that market might return when Australia’s boom ends. But it is all up in the air, whether or not they will have any money for houses when they return. (If they return).

    The mental model that Irish authority has created for each of Ireland’s citizens is found to be distinctly inadequate.

    But men (and women) will fight to the end rather than revise their mental model. They will engage in all sorts and forms of pointless, useless trajectories tring to sustain their “hope” and their concept of “entitlement” to a lifestyl which is becomming unsustainable. As evidenced by the Peak Oil scenario. Folks the Suburban dream is unravelling. Kunstler is being proven right. Things get ugly, when people have to do something other than cruise around all of the time to suburban malls, and live the lifestyle dream. They wake up and start thinking very differently. They might have to wake suddenly like the Greeks (bankrupt all at once) or slowly like the Irish and the Spanish (bankrupt over time).

    One thing is certain – the stupidity that got us here, will not get us out. Yet this is exactly what we see in the West, from the very top, all the way down.

    The EU has a response framework consisting of more of the same, bigger than before. The US has a response framework of pretend it is getting better. Absolute nonsense.

    To those that are reading this, make your own plans and ensure that you are neither ransacked or misled into disaster by those who need to be propped up.

    • Tony Brogan

      The policy that created the problem was deliberate. Not a mistake. Think in terms of a very bright ruthless adversary and then things make sense.

      It is not stupidity that got us here.

      All this is a deliberate long range plan to enslave the world under a one world authoritarian government. For our own good of course.

      We are controlled by the finances. Who controls the money? Investigate. A good start is “The Creature From Jekyll Island’ by G Edward Griffin.
      It is a must read

      cheers
      Tony

  8. redriversix

    Morning All

    Families first

    Do a budget

    Know were you stand,

    Put yourself and your family first

    Reduce all bank debt to 10 % of what you were paying

    Scrap fear

    If you are doing the best you can,you have nothing to worry about.

    It is okay to put yourself first.

    Today is the start of the rest of your life…

    You are morally and legally obliged to look after yourself and your family.

    Cannot ask for help if you do not help yourself first.

    Scrap stress and anxiety

    Banks are a business for making money, when they win,they win and when they lose,they run for a bailout.

    Who bailed you out ? is your family worth less then a Corporation ?

    Cannot solve debt with debt,never have,never will.

    Everybody in power is lying to us,they don’t worry about you,so you don’t worry about them.

    Have a great day and fcuk the banks.

    RR6
    Debt survivor

    • - don’t drink!

      - stay away from drugs or happy pills

      - if pressure too big to handle, talk to a friend, you need to talk!

      - if family in distress, focus on that first

      - if banks terrorize your world and you can not handle it, look for help

      - take care for yourself

      - spend time every day with things that make you happy

      - if you experience feelings of unworthiness, depression or worse, do not ignore these feelings, talk to someone who understands your situation and who you trust, of this does not help, talk to a professional and seek help

      - help people around you, even little things, regardless your situation, you can help other people too, you will feel better in yourself by doing this

      - last but not least, of there is any sense in life at all, it is to be happy, so be happy!

      Peace
      G

  9. Grey Fox

    I agree, and so when the cycle completes, its off we go again on another upward cycle, it is my belief that these cycles rely on the casualties of the previous downward cycle to be so damaged and the fight knocked out of them so much that they do not try to enlighten the next generation to the dangers of the up/down cycle and this allows the whole model to perpetually repeat itself, but the fly in the ointment this time is that I think the Banks/Central Banks have outdone themselves, they have hit this generation too early and while they have us down they do not have us out, I remember my fathers generation, when their struggles were in general aimed at government and social injustice manifested by the PAYE marches in the ’70′s, times were tough but that generation was not left with massive legacy debts which I had to pick up, this time it is different, because we are dealing with private corporations/banks who have no social conscience nor even a hint of regard for the welfare of man, put simply their god is greed, and so there is a gargantuan task ahead to defeat the banks and their usurious/dispicable intentions to enslave whole generations and future generations, who are we to say that every child in Ireland should already be in debt to the tune of €40,000 the very minute they are born, (reported today). I see so many people who have their heads in the sand, who have not been affected too much by this recession, who can still pay their bills, but they are so busy trying to maintain that position they do not see the train hurtling down the tracks at them, this train is shredding the fibre of moral and social conscience and the sponsorship stickers pasted on the side of this train all display the familiar names of IMF,ECB,EU,Irish Central Bank,AIB,BOI,PTSB,ULSTER BANK etc… in saying this I have hope that this generation will be the one remembered in history as the one which called a halt to the madness which is Central Banking, Fractional Reserve Banking, Mortgage Backed Securities and the Derivatives Market in general. Irish banks appear to be in a death roll where they are engaging in the movement of huge sums of money within the banking system in an attempt to survive (LTRO) while their real income pool (interest) is continually reducing with peoples inability to pay, but this (LTRO) money is not making it into the economy so it appears to me akin to sitting in a submarine on the bottom of the ocean recycling the same old air until it finally runs out and you ultimately succumb. I just worry that I don’t see a Movement, a Cataylst, a formation of likeminded people who can effect change, our Government and public Trustee’s are self serving so it is not going to be them, maybe the damage to the ordinary common man has to be so great and so widespread that there is no option but to force change, it would not be the first time in the history of either Ireland or the World!

    • Tony Brogan

      greyfox

      You are basically correct. The central bank system is the central cause of the problem. Issuance of currency as a loan is a permanent indebtedness that can never be repaid.
      enhanced and exagerated by the commercial banks creation of more debt based money by a factor of 10,20, 30 or 50 times to completely over load the system with credit and never ending debt.
      There must be political will to change the monetary system and that implies the support of the population.
      If the old established parties can not supply the reform then a new party will arise with the intention of doing just that. When it appears it must be supported by the people or the leaders will be annihilated or assasinated by the PTB.
      Education of the people is the key to change
      Best Regards
      Tony

  10. cooldude

    David this is a very interesting article. We are constantly being told that growth is the key to solving the financial mess that we are in in this country and the rest of the western world. You show where the real growth is.. the growth in negative equity and personal and business defaults and bankruptcies. This is the only growth going on that is real. Oh but you are being negative pointing this truth out.? Just like you and Morgan Kelly were accused of being negative by pointing out that the housing bubble would cause these exact type of problems. Default on our debts is now inevitable. Lets vote NO in May and start this process instead of living in cloud cuckoo land like Michael Noonan and pretending everything is ok.

  11. Alf

    The term ‘bailout’ needs to be revised. It sounds too charitable for what is actually happening. Ireland is self-destructing from this ‘bailout’. It is really some kind of financial martyrdom. ‘No bondholder left behind’ means they are shoved to the front. Sadly, Ireland’s lesson is not being learned. The EU solution is more of the same with the ‘fiscal’ compact (straight-jacket). The great solution for all this debt is to use Ireland’s solution and make all the citizens of the EU cover the banker/bondholder losses. The ESM will take our money and lend it back to us at interest, leveraged of course. The great thing about this is we are there to cover the ESM’s losses too. The magic of leveraging, like turning 17 billion of pension reserves into a loan of 85 billion.

    Where does it end? Are we really really in the position to be pledging to bailout foreign bondholders when we are already going to the IMF for our own? Our voting share is 1.6% which means we have no say, but means we have to come up with about 11 billion. Bankrupt Greece will come up with 19 billion (which it will have to borrow). This assumes the 700 billion (leveraged) will be enough. The problem is that nobody knows how much junk is hiding on the banks balance sheets, the losses could be 10 times that amount and taxpayers of the EU will be guaranteeing the whole thing. How does 110 billion sound?

    It is a banker/bondholder’s dream, unlimited backing with no strings attached. But dont worry, if Ireland can’t come up with it’s share, the others will temporarily cover for us and we will be charged penalising interest. This will lead to political posturing and what is left of our sovereignty will be signed away.

  12. I suppose poor old Ernest was being earnest.
    He went broke because he spent more than he brought in, a little like Ireland Inc.
    I’m getting the hang of this economics game.

    Now.
    Warnings today about those on trackers needing to demand a 25pc discount on their loans before surrendering said tracker.
    Pure econ-prop.
    No need to surrender the tracker at all and even if one did through a Brutus-like sense of honour and patriotism, surely the discount applied by NAMA should apply, that being in the order of 55pc. Then add in a say, 12pc penalty for mis-selling in many cases.
    Now that would be one quick way of relieving some personal debt.

    Back to David’s article.
    I had a huge sense of deja vous reading this. Shades of 2008.
    That hard-case Draghi isn’t helping. If the communal mantra is that we’re all in this together, he’s 4years behind the curve. Shut up and butt out else we’ll do an Iceland might form the basis of the phone call from Merrion St this morning.

    If David is even partially correct, then it’s lemming like to continue funding the banks and we need to put on our own lifejackets first.

    Et tu ECB?

    • Deco

      Well said Furrylugs.
      The whole thing is a charade, an attempt to fool the ordinary working stiffs that everything is fine.

      • The partisan, when he is engaged in a dispute, cares nothing about the rights of the question, but is anxious only to convince his hearers of his own assertions.
        Plato,
        Dialogues

        Same Old, Same Old, Deco

  13. Qr96UThjJT7j

    Great article David! David Malone over at Golem XIV has an even more frightening take on this current round of funding. Christ, is there nothing we can do to stop these people?!
    http://www.golemxiv.co.uk/2012/04/vulturecrats/

  14. DC

    After the tragic Suicide in Syntagma Square yesterday and the reference to Hemingway, I thought of John Donne’s Poem – For Whom the Bell Tolls

    The theme of this poem is the interconnectdeness of man (continent), and that when one piece is washed away the entire continent is affected.

    How many more clods must be washed away before we realise the entire continent is doomed, and why?
    To preserve the status quo of the banking and political elites. Surely this is our 21st century bubonic plague.

    No man is an island,
    Entire of itself.
    Each is a piece of the continent,
    A part of the main.
    If a clod be washed away by the sea,
    Europe is the less.
    As well as if a promontory were.
    As well as if a manor of thine own
    Or of thine friend’s were.
    Each man’s death diminishes me,
    For I am involved in mankind.
    Therefore, send not to know
    For whom the bell tolls,
    It tolls for thee.

    • Grey Fox

      The Return — A speech for Ireland and the World
      Our native lands speak in the darkness as we sleep
      From around the world all of our thoughts and hopes, our fears and dreams
      Collide and break apart like waves
      We all sense a movement
      A transformation on this earth
      And our world of chaos is ripping open the veil
      All that is broken will fall away
      All that is worn and filled with despair will dissolve
      All of our tiredness will die
      This has been a dark road
      But we did not walk alone
      Yet we could not see each other’s eyes
      And through the fog the shapes emerged
      Something like dignity and majesty
      Rise up and show us the way
      We have been hunted and burned
      We have been dead in our hearts
      And made to keep crawling in spite of our weariness
      Yet it ends now
      And for those alone and broken we will carry them
      Out of this suffering and loss
      We are not without power
      Our force will be a gentle exhalation of seven billion breathes
      Like the earth’s sigh
      For so long that held our terrible progress and vanity like a cross
      It ends now
      Drop away this weight in our hearts and be reborn
      Who will follow me
      We are the extraordinary yet ordinary people of the world
      We are the dreamers and workers and inheritors of the divine earth
      We are its longing and its magic and its wildness
      Who will follow me now on this road
      To something extraordinary and transcendent and simple
      Climbing steeply and painfully out of this withering hole
      And finally home unburdened and alive
      The return is coming
      A return to compassion
      A return to giving
      A return to becoming a part of
      Instead of being apart
      From all we have inherited
      A return to simple ways of living long forgotten
      But still awaiting our reclamation
      Who will follow me now before we are lost forever
      We are the many
      The few
      The one
      Peace to you all.
      Wild Irish Poet.

    • juniorjb

      It’s not a poem, it was part of a prose sermon. Where did you get that lineation from (it is not Donne’s own as far as I know and seems formally anachronistic in any case)? I wouldn’t mind knowing the source if you have it handy.

  15. Philip

    Last Tuesdays’ news about Peats Electronics going to the wall is for me…the end of the gradual. The sudden phase is starting to assert itself. Why pick this as my particular belwether? I grew up with it, it was a nerds hidey hole for like minded audio visual buffs and I really liked the staff. I think it was a mistake to expand…but everyone was at it. Peats was a kind of fixed point while all else rose and fell away. To see it go really brings it home.

    Still, I cannot help feeling that there are new business models (Harvey Normans, Currys etc) which support a new type of buyer – heavily informed by the internet. We’re super bargain hunters and there are no boundaries and so local business will suffer – particularly if you speak english and are using bygone business models. The heavily accented cheap haweker of hi tech wares will win every time. Pity that cannot happen to some other professions did I hear some say? Anyway, business is changing and becoming very rapidly super liquid. Take farmers…they need to have sold next years crop before they start work – it is that tricky. You win big or loose big. No inbetween…all driven by internet savvy models which delivers medocre value and destroys trust.

    And so we have a banking system that is not – entering its final death throes and taking the whole finaicial system with it. Banks got into a business model they never understood – where things happen very fast. It is all gone…the lot of it. No one trusts it anymore. Poeople are pulling all value out of it.

    Lots of things starting to happen suddenly of late.

    • C21living

      We need to brace ourselves for the shock of mass home mortgage default, the new bankruptcy laws, court summons letters in the post and the end of the moritorium on foreclosures/repossessions, all converging in a perfect storm before the end of 2012.

      That’ll shock everyone when it happens, like that poor old man committing suicide in Greece.

    • Dorothy Jones

      Peats…yes…one of the old guard alright. Interesting to hear that it was affected by the concept of ‘scan and scram’: the punters get information from the salespeople; scan it and buy on the internet. Salespeople were good. If Harvey Norman ever goes wallop, I hope they take their bloody ads with them.

    • Dilly

      I was in Peats last week and it was empty. I was looking at the staff thinking will any of them be let go. They are so helpful and always know their stuff. This is very sad news.

  16. Question:

    How can a bank that creates money out of thin air (fractional reserve) whenever it wants ever go bust?

    • Hi Josey,

      Banks create money quite directly these days by increasing the borrower’s account without decreasing any other depositor’s account.

      This new bank-account money is recorded as a liability of the bank. The debtor’s promise to repay is recorded as an asset of the bank.

      Since money is only ever created through the loan process it means every euro has a matching debt. This is the primary cause of the debt crisis.

      If a loan goes according to plan, the borrower’s bank-account money reduces in line with the reduction in debt and so banks cancel assets in line with their liability. The bank-account money used to repay the loan no longer exists once a debt is settled and this is why there’s less money during a recession.

      Banks can create bank-account money almost at will but they need a signature from a debtor to do it.

      Banks go ‘bust’ when someone defaults because they have to cancel an asset, while the bank-account money they created for the loan is still recorded as a liability somewhere in the banking sector.

      This is not a good way to run an economy. For an alternative way feel free to check us out at http://www.sensiblemoney.ie

  17. wills

    The banking system is a criminal operation which has sandwiched itself between all business and wealth creation by hijacking the paper people use to do transactions.

    Each person in a transaction carries the sovereign right to use their own paper to make a promise on a transaction with another individual.

    The banking system has not only removed this essential facet of paper use for making wealth out of the hands of the masses, BUT, also, like D’s article describes above the banks have built a hall of mirrors to obfuscate the use of currency / paper because the banks need the masses in the dark in order to continue with their criminal enterprise of hijacking the paper used to do business but then charging interest on their paper they issue to everyone else who makes wealth all the while as the banks which produce NO wealth yet manage to transfer most of the wealth made by masses and remove it to the powers at be who own the banking system.

  18. wills

    The loans the banks have issued to the loanees are debts the banks made out of nothing.

    So it is a win – win situation for the banks.

    The banks either get the asset the person put on the line as collateral OR the banks get the interest repayment on the loan.

    Or the banks rob the Treasury for cash to refill the depositers accounts because the deposits of their customers are robbed too by the banks to use to stretch the FRB ratios to the furthest point possible in the making of money out of thin air.

    The greatest bluff in history is underway and the hall of mirrors in which D’s article above covers really illustrates the scope of the deception the criminal banking system is engaging in to keep their making money out of thin air to get their paws on real asset wealth produced by the feudal class who the banks tricked into indentured servitude by playing the game above in article David cites.

    • cooldude

      Well said Wills. I think you have actually nailed it. If the money can be created for no value it will always return to it’s intrinsic value which is zero. these guys are trying to rob everyone of their sovereign rights. Vote NO to these NWO gobshites.

    • I always respect your sharp lucid opinions wills they are so real and those mirrors that obfuscate the reality are so dangerous to the social fabric of our society it blinds the people to prevent them from listening to what really matters .

      I am tempted to seek my own licence to operate a bank and join the wolves.

  19. Tony Brogan

    David

    There seems to be a total ignorance on the working of the fractional reserve banking scheme.
    We will not worry about other issues but look at this

    Most banks are allowed to operate at a ratio of 10:1
    That is roughly E10 loaned out for every E1 on deposit. in most countries it is legal.
    I tried to find out the ratio for Irish permnanent but there is no statement saying what it is. I am not skilled at decipering balance sheets but the equity / liability ratio for IP is about 2.5%.

    many banks in Europe and the US are reported to be at those kind of ratios

    how could this happen. Well the books ar cooked, there are off balance sheet activities and the problems are so great that it is cheaper to shovel money into the bank and try to keep them operating than it is to allow the bank to fail and then the government(taxpayers)have to guarantee every depositors money.

    suppose a bank is capitalized with normal deposits (before bailouts) and it then lends out to borrowers an amount that is 1000% of the deposits (10:1)

    This money is a paper or digital entry on a leger and does not exist but yet interest is charged and the borrower spends this currency which now goes into ciculation.
    The real estate market is booming but the bank has ,to coin a phrase, shot its load. It is up to the maximun ratio.
    Now comes the obscure off balance sheet work.
    All the mortgaes at hand are bundled up and sole as investments to a hedge fund with a guaranteed return (rate of interest. Back comes the cash to the bank and they can now lend it out again and they still show a 10;1 loan the deposit ratio. This second lot of mortgages is bundled like the first and sold and this process is repeated ad infunitem.
    The bank makes huge profits on processing the loans.

    We will stop the bank at the 10th time they do this sale of mortgages (known as mortgage backed securities). but in this process the euphoria allows anyone to qualify for financing any way it can be done . all in the process are currupt. Lenders, borrowers, mortgage brokers, lawers, bank namanagers, loans officers etc. People have two or three mortgages who properly did not qualify for one.
    I forgot the rating agencies who gave AAA ratings to these MBS.

    Now the bank has a 10×10:1 ratio or 100:1 loan to value ratio in effect as the bank guarnteed the rate of return to the hedge funds.

    Even on the London Bullion Exchange it has been acknowledged that there are 99 paper ounces of silver sold (that is, it does not exist) for ever ounce of silver bullion held.

    Back to the bank. The hedge funds have sliced and diced their holdings and taken who knows what hedges and the mortgage portfolios are held by who knows who. Basically scrambled together.

    now some start ot default as they could not make the payments. Others on introductory interest rates below the norm defaulted on renewal etc. The hedgefunds look to the banks for their agreed return and the banks have to use capital to make good or agree to take back the mortgages.

    The first was Bear Sterns who to recover some money had to offer and sell the MBS on the open market. TThey received bids of 15-25% of book value. within 24 hours the US government shut down BS and JP Morgan ((the govedrnments bank) assumed all the assets of BS including the realestate tha was worth more than the bank and the taxpayers assume the debt.

    What of the loan to value ratio.

    Assuming all the mortgages in the MBS were good then the banks loan to deposit ratio is still officially 10:1 and the central banks deem them solvent.

    What hapens if 20% of the mortgages hav a problem and of that 20% the market value onforclosure is 80% of face value.

    Remember that the bank now effectively is at a loan to deposit ratio of 100:1 of that 100 20 are suspect for a loss of 20% in face value whic is 4 times the amout of the deposit.

    The bank knows it has a problem but not where or how. The central bank knows there is a problem, all the other banks know they have a similar problem.

    Every bank knows that they all have an escalating problem. They are all royally fecked.
    nobody trusts anyone else. Henry Paulson strong arms the US Federal reserve for 850 billion that is shoveled to the banks.
    That money was swallowed wholesale and there was a credit crunch.

    you know the rest. The same problem in Europe and Ireland.

    The truth is no one knows what the Loan to deposit ratio for Irish Permanent is. They do not know and neither does the ECB

    So to give us figures that suggest the Iris Perm only has 2.5 euros in loans for 1 euro in deposit is totally wrong in my opinion a sthat would make them the strongest bank in the world.
    To suggeast that they have to return to a loan to deposit ratio of 100% as you put it or a ratio of 1:1 would make it unique in the word.
    To suggest that Irish Perm is broke again implies that a while ago it wasn’t is untrue as it has always been broke scince the mortge bubble and still is.

    This is why the problem can not be fixed because the derivative problem , unregulataed and obscure is a ponzi pyramid of Quadrillions.

    That is why the financial system is going dowm with every bank on the planet with all your savings you will never see agan, government guarantee or not.
    Ask the depositors at MF Global how much they have received .5th largest bankruptcy in the world and 1.2 to 1.6 billion in customer accouts vapourized.

    David I would love for you to be able to show me where the hell I am wrong.
    So I look forward to your rebuttle.

    best Regards

    Tony Brogan

    • Tony Brogan

      Apologies for lack of editing as I was anxious to post. My first redition went into the ether as I tried to submit and I was not wanting to lose the second effort.
      Regards
      Tony
      PS we all know that the fractional reserve system of banking has all the currency issued in to existence form nothing and as a debt instrument.
      It is hoe the central banks jerk us around but issuing funds to the chartered banks that are loaned out tenfold and increase the money supply. Boom goes a bubble andnobody knows where that will happen until it does. To “control ” inflation they themseves caused the central bank withdraws fundind form the chartered banks. FFor every un it withdrawn the charted bank has to withdrw 10 to keep the deposit /loan ratio in legal balance.

      The problen is so great that the regulators dare not regulate, polititions are hamstrung or bought and paid for, so nobody can solve the problem of debt consuming the world.

      We must close the central banking system. Return to commodity money as it can not be created out of thin air, ban fractional reserve banking.

      First thing to do it to immediately monetize siver coin by weight, and issue from the national mint,controled by treasury, and distributed by the post office.
      I HAVE A PLAN, WHO ELSE HAS? NOT MANY.
      time is short. This will be the biggest depression the world has ever seen. I don’t like it one bit but you better look the problem in the eye and prepare rather than ignore it or whimper and whine about it

      i am going sailing this weekend, to Otter Bay on Pender Island. I will meet 40 other people from the club and we will have pot luck lunches have morning coffee. There will be quizzes and gains etc. AND NOT ONE PERSON THERE WILL WANT TO TALK ABOUT ANYTHING LIKE I HAVE WRITTEN ABOUT. I’M ALL RIGHT JACK, I HAVE MY INVESTMENTS AND MY PENSIONS.
      We will see how much is left in 5 year from now.
      i will take my bike with me on the boat and go and ride around the island and see if I can find a mine farm for sale to go and hide on.

      Cheers
      Tony

      • bonbon

        Sounds like a Ron Paul drumbeat. Correct me if I am wrong, but is this Austrian School? Ron Paul is beyond reason on this theme (even if he is right about a lot of other stuff).

        • Tony Brogan

          Bonbon

          It will be any drum beat you want it to be. You will see what you want to see and hear what you want to hear.
          If you think it echos Ron Paul ……??????
          It is knowledge extracted from hours of reading and attending conferences and viewing videos.
          You are sticking another label on the presentation to avoid the debate on the facts at hand and the issues presented.
          So you disagree with something and agree with a lot of the other.
          Pray be specific, and then it can be discussed.

          Best Regards
          Tony

        • bonbon

          It was a question. An a-historic “plan” neither referring to National Banking, nor Glass-Steagall and FDR’s Recovery, seems to me slightly awry.

          The “fractonal reserve” and “fiat” currency focus actually avoids the physical economic reality.

          Getting rid of Central banking (including the Fed) is fine, but then what? Stamping coins will not do it.

          • Tony Brogan

            It is a fact of the monetary sytem is controled by the central banking system. There are many references in the past to the issue of a people allowing banks the right and the power to issue currency.
            The central problem of the debt based society we have is a direct result of the bankers policies.

            I agree it does not solve the immediate problem but like a good doctor goes to the cause of the disease instead of treating just the symptoms.

            any sovereign people must regain control of the monetary system. Ireland in the past has been serviant to policies of england and now the Europeans.
            All peoples are currently servient to the bankers.

            It is a dangerous game to oppose them as they kill if thwarted. That is why any change must come from the will of the people and not a couple of politicians easily disposed of. Garfield, Lincoln, Kennedy, Kennedy, Reagan, Saddam, Gadaffi are a few notable names.I am sure there are more.
            Eliminating fractional reserve banking, and the issuance of and control of money by the central banks IS THE CENTRAL ISSUE. IT IS THE ROOT PROBLEM.

            Going to a money system proven over millenia to be the best there is, is the wise thing to do.
            Hence the introduction of silver coin (un stamped with any monetary fiat value but only weight and fineness) is a start that runs parallel to the fiat system in use and begins the transition back to sound money.
            People will then choose what money they wish to save in and hold as a store of value.
            By employing the use of the Irish mint and the postoffice for distribution the banking system can be sidestepped.
            This does not help those people trapped in debt. The only real solution is a purging of the debt and a restart in a sound system.
            As far as the country is concerned All odious debt should be nulified as per precedent of international
            law. Odious debt is defined as debt accrued by a government or regime that is proven to be for private purposes and not the use of the people.
            All the debt used to bail out the banking system for the benefit of the banks can be revoked by a new government.
            Irelands National debt can the be reduced to a manageable amount and the auterity program aleviated to the benefit of all. There would be an expansion of jobs rather than a contraction.
            Then as the central bank is closed the issuance of currency is the prserve of treasury. currency (still fiat but now treasury notes not bank notes) can be earned into existance as a pro tem measure. This means there would be a national Irish currency born without debt, or interest.
            As silver coin is issued by the mint at a mandated monetary value at least 20% above the world spot price there is a seniorage earned by the state that is accumulated to the national reserves. As this bullion deposit grows it will form the basis of sound money backing the treasury notes and add to the strength of the national currency.

            This is to be done in stages to alow a seamless transition with as little disruption as possible.

            what is accomplished? Reduced debt, Austerity over, Return to economic growth patterns and the elimination of debt.

            Seems a good start to me and needs Ireland to leave the EUro and become a sovereign nation again.

            A people confident in its ability to manage its own affairs.

            I raised three children to do just that. We could do no less for the people of the Free state of Ireland.

            (I will be unavailable for the next few hours so I wish you a pleasant evening )

            Regards
            Tony

          • bonbon

            The Founding Fathers especially Hamilton knew all of this. Why not call it by name – the British Monetary System opposed by Hamiltonian National Banking for precisely the reasons above and then? The Central Banking model of the BofE is the root problem. Teddy Rooseveldt created the Fed on this model to break the Treasury. US patriots were “hit” every time they opposed Britain. FDR escaped 5 attempts! This is why JFK was killed. Below there is a youtube reference by @goldbug which is a Perkins interview, a modern economic hitman. He clearly states “jackals” are called in is a state does not buy into the scam.

            The important this to see in that interview is the US itself was hit, not just developing countries.

            We are dealing with Empire, in its last throes. Like a reptilian species at the KT boundary, it does not understand why it does not work. However it will kill us all unless we regulate it.

          • Tony Brogan

            Hi Bonbon
            so you have heard it all before and want to invoke names of the past as proof of your understanding. you may know but the majority do not. Saying it is the Hamitonion model is a form of elitism that leaves other wondering what you are talking about. It ia a sort of one upmanship.

            So knowing what the problem is and knowing that the the fed and central banks model thenselvevs on the B of E does not help.

            you say the”reptile must be regulated. Well how, what , who and why. What is your specific proposal.

          • bonbon

            Populism never works. Hamilton has been written out of popular school texts – try mentioning the name in the presence of Austrian School’ers! Applying Hamilton led FDR to his quick succession of steps to a recovery. OWS is not aware of this. We need to apply Hamiltonian banking now on a global scale, rapidly. Only elected governments can do this – bankers alone, even well intentioned ones, will not be able. But first we must impeach Obama before he applies the ultimate hit. With him safely playing basketball somewhere this can be pushed through.

  20. reindeerspotting

    This week’s article = tick vg

  21. Tony Brogan

    http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/30_Andrew_Maguire_%26_Adrian_Douglass.html

    Well worth listening to.
    Among the tid bits you will hear reference to the 100:1 ratio of paper gold and silver bullion transactions that are totally illegal but condoned by the regulators.

  22. bonbon

    As the entire transatlantic banking system implodes (Ireland being part) the extreme danger of war is so critical now that very strong taboo’s are being broken. The Iran/Syria cockpit (not to mention the DPRK satellite) are being used to start thermonuclear war. This alone should be a wake-up call for all those who think the system can be “fixed”, “band-aided”, or “saved”. No one believes it can.

    German Nobel Laureate Guenther Grass, reported worldwide, broke the taboo. Here is an English translation of his new poem which I hope Bibi reads :
    ——-
    WHAT MUST BE SAID

    Why am I silent, silent too long,
    About what is obvious and has been rehearsed
    In war games, at whose conclusion we as survivors
    Are footnotes at best.

    It is the claimed right of a first strike
    That could annihilate the Iranian people,
    Subjugated by a loudmouth
    And herded by organized jubilation,
    Because in this sphere of control, the construction
    Of an atom bomb is suspected.

    Yet why do I forbid myself
    To name the other nation
    In which for years — although kept secret –
    A growing nuclear potential is on hand
    But out of control, because no inspection
    May be made?

    The general silence on the evidence at hand,
    To which my silence owes obedience,
    I feel to be an incriminating lie,
    Coercion, where the penalty is announced
    The moment one missteps;
    The verdict “Antisemitism” is familiar.

    But now, because from my own land,
    Whose own crimes, fundamental
    And beyond compare,
    Time after time catch up with her and take her to task,
    On the other hand and purely businesslike, if also
    Declared with facile lips to be a reparation,
    Yet another submarine shall be furnished
    To Israel, whose specialty consists
    Of guiding all-annihilating warheads
    To that place, where the existence
    Of one single atom bomb remains unproven,
    Yet where suspicion becomes evidence,
    I’ll say what must be said.

    But why have I been silent up to now?
    Because I thought my origin,
    That bears a stigma, never to be redeemed,
    Forbade me to regard this fact as spoken truth
    About the land of Israel, to which I’m bound
    And will remain so.

    Why do I say now for the first time,
    Aged and with my last ink:
    The atomic might of Israel endangers
    The already fragile peace of the world?
    Because it must be said,
    What may be too late tomorrow;
    And because we — as Germans incriminated enough –
    Could become suppliers to a crime,
    That is foreseeable, which is why our complicity
    Were to be effaced by none of the usual
    Making of excuses.

    And let me say: I’ll be silent no more,
    Because the hypocrisy of the West
    Disgusts me; besides it is to be hoped
    That many others may be freed from silence,
    May ask those responsible for the evident danger
    To renounce the use of force and
    Likewise insist,
    That an unhindered and permanent control
    Of Israeli atomic potentials
    And Iranian nuclear compounds
    By an international authority
    Be allowed by the governments of both nations.

    Only so may all be helped, Israelis and Palestinians,
    And what is more, all people who live
    In this region occupied by delusion,
    Side by side yet hostile,
    And finally ourselves may be helped as well.
    ———–

    • Bonbon

      I don’t want to get into this because my connections to and familiarity with Israel are well known in Ireland. It is not something I hide, unlike Mr Grass’s SS past which he tried to hide for six decades. And you also know that this website has always been open to comments and criticisms but Id prefer if we stick to economics here. There is plenty room elsewhere for the rights and wrongs of the Middle East.

      Thanks
      David

      • bonbon

        I want to stick to economics/finance too. As long as no one blows up the planet we can solve the problems.

        Just that the very fact some German poet breaks the taboo shows we have a very serious financial-economic situation. The only way this taboo could be broken is that a very influential transatlantic grouping is very worried.

        As the Ha’aretz over the last year very openly reported, there is no sane reason Israel should be Obama’s or Britain’s “hand grenade”.

        Do not worry, Tel Aviv very well understands what is going on.

        Regards,
        bonbon

        • redriversix

          “The hypocrisy of our democracy”

          • bonbon

            At last WWIII’s immediate danger is being discussed in Germany, where it was impossible before Grass’ prose. The cat is out of the bag!
            Now everyone watches every move of the US pacific fleet and every statement from Netanyahu.

            I have not heard reaction from Putin yet, but this must confirm his clear expressed opinions of the immediate threat.

            Still the clear and present danger is Obama – he must be kept away from access to the Ohio-class fleet by impeachment, for which there is mounting evidence.

    • I share his view
      and in a way
      it is about economy
      the economics of war
      driven by insanity
      driven by fear
      driven by anything
      but love

      • Even the Financial Tomes in Germany discusses it David.

        Why your sudden desired exclusion here, what do you fear?

        Poll results on FTD this hour
        4555 Votes

        Grass’s Thesis is:

        Insane: 9%

        Dangerous: 4%

        Antisemite: 4%

        Worth discussing: 31%

        Right: 53%

        • 84% consider it not insane, dangerous, or anti semitic.

          There must be some healthy common sense out there….somewhere.

          • bonbon

            There is also common sense in Tel Aviv, and they need our support considering what they face on a daily basis in the Knesset and what is spouted by the AEI, AIPAC or even Britain who would of course like German complicity to blame.

            All of this just because an empire is collapsing.

          • Oh very much so, especially in Tel Aviv

    • bonbon

      Excellent! Reference to Ireland from an expert hitman. Notice his reference to Honduras/Panama where when they do not buy into the scam, the jackals take them out! In other words hitmen call up killers.

      Now to the Euro – they murdered Deutsche Bank chief Herrhausen to force Kohl to sign up that treaty.

      I wonder, really wonder, if the Dail are aware of this? Do they expect the same treatment? I would explain the about turn after elections!

      • cooldude

        Interesting take on Noonan’s complete reversal of policy. he is in total denial of his own statements pre election. Maybe he was threatened and he backed down. Leo (the lion) Varadkar has said that they were told a ” bomb would go off in Dublin” if we burnt the unsecured gamblers who recklessly bet on Anglo who were the most reckless bank in Europe. Guess who won the world bank of the year award at Davos in 2006 from all the Elite gobshites ?… yes none other than Anglo Irish Bank. And some people actually think these guys are trying to sort out this mess. They created the mess deliberately and if they get their ESM approved they will rob all the assets in our fair land. Listen to Perkins who worked in the system.

        • bonbon

          When I read Perkins’ book a while ago, it was clear the utter and complete idiocy of “free-marketeers”, Friedman, Hayek, and especially deregulation. There is no free-market. How can anyone discuss economics when hitmen are active? I’ll bet elected officials get very strange visitors and “proposals they can’t refuse”.

          All of this has been going on, but now the economics they have enforced is utterly bankrupt. Who will they hit then?

          Our species itself! The behavior of Obama, Blair and Co. in trying to ignite a thermonuclear war, the ultimate jackals to hit us after we as a species do not and cannot buy the scam, shows Perkins is only a small shadow.

          I say Obama is now the ultimate economic hitman. Putin and China know this in their own way. We have a “Perkins” in the White House with access to the Ohio-class fleet. I think Gen. Dempsey et all sense in some faint way they have to stop a hit. The attempt to use Israel in this genocidal mania is causing all kinds of uproar.

          • AndrewGMooney

            @bonbon I’m really struggling to follow your reasoning.

            You seem to be saying that Obama and Blair are involved in some plot/plan/conspiracy to unleash thermonuclear war. As far as I understand your views, you also think that the Bank of England effectively controls the United States of America via the Federal Reserve?

            Some say that Obama is unable to forgive the British treatment of his grandfather in the Kenyan resistance to British rule. Why then would he have any part in such a consipracy to start a nuclear war on Britain’s behalf?

            It’s not clear to me how Britain or the US (or anyone else) would profit from a nuclear war, unless it was strictly localised in an area outside the main zones of remaining fossil fuel reserves. For that reason, I cannot imagine a nuclear war in the Middle East.
            The West will learn to live with a nuclear Iran as it has done so with Pakistan and North Korea. And Israel.

            I can imagine a war between Pakistan and India or between North and South Korea, but it’s hard to see how anyone would benefit from such a conflict.

            As the reality of Peak Oil becomes irrefutable, I can forsee a desperate scramble for the remaining resources. I see that scramble as futile and counter-productive. I cannot see how anyone will benefit from a nuclear war, and it seems very unlikely that such a plot is in existence.

            regards

          • Tony Brogan

            “When I read Perkins’ book a while ago, it was clear the utter and complete idiocy of “free-marketeers”, Friedman, Hayek, and especially deregulation. There is no free-market. How can anyone discuss economics when hitmen are active”

            Your logic escapes me. Just because hit men are active does not make a policy right or wrong. The fact that there is currently no free market as you say, does not make a policy right of wrong.
            Just because hit men are active does not preclude economic discussion.

            That is, unless you think that articulating the correct policy will put you on a hit man’s list and you are afraid to die.
            It is only when one is unafraid that one is free.

          • bonbon

            The USA was hit, starting with JFK. Any economic discussion that avoids this is fantasy. The downturn in the transatlantic region followed this. Why and who could turn things this way must be discussed. Perkins is a minor player. JFK economics, and FDR’s were stopped, deliberately. What then is the strategic difference here? Economics is not about coins.

            Who could and would hit the USA? Not the UK but a true empire, knowing no national boundaries and now utterly and totally bankrupt. What is its instinct then? Consider it as reptilian, very predictable, and dangerous. It basically has declared war on the essence that makes us human. Grasp that before “struggling to follow reasoning acceptable to popular opinion”.
            Obama is repeatedly hitting the USA, with Obamacare, openly flaunting the Constitution, destroying NASA, stopping nuclear research, declaring war, assassinating US citizens with the NDAA. This hitman has a finger on the Ohio-class thermonuclear arsenal at a moment when his beloved empire is collapsing.

            Obama will hit humanity itself, that is the immediate danger. Clinton refuses to face this awful reality.

          • Tony Brogan

            Bonbon
            None of this is being avoided. I am fully aware of the powers behind the thrones. I am aware of the hit men active long before JFK. How about Lincoln and Garfield etc. I have already posted such statements.
            The extent of the hit mens opperations are world wide.
            Your focus on obama obscures the real power. Obama is a puppet, although a dangerous one.

            Still we must have a plan for the economy. Still it must be education for the people and then as a people changes can be effected.

            This war has been ongoing for over 300 years. It is now because of the internet being exposed for the common man to see.
            but then again it may be thousands of years old and an ongoing combat.
            “Money is the root of all evil” is an ancient quote and quite applicable to the situation today.

            I am quite sure you are aware Bonbon, but it is clarity of expression we need. We need to articulate a policy that works for today and not drape it with shrouds of the past.
            Having articulated a policy that is correct for the people then education of the situation to the people is the requirement to have the knowledge to confront the oppressive powers of evil manipulating us all from behind the curtain.
            Fear and ignorance prevail, knowledge and power is ascending.
            You, David, and all the fine posters here are the vanguard of the knowledge. We are the acolites, the apostles and must spread the message.
            Ireland is a microcosm of the words problems.
            Ireland solves its problem and it starts the process as an example to the world world.

            Any threat to any person should be publicized. Threats to politicians need to be made public.

            It is by the use of finances that we are controlled. It is by the use of paper money we are indebted. It is by reasserting the use of commodity money, often called honest Money , for good reason, that we regain our freedom.

            We must return the power to the people by giving back their private property. Provide commodity money and we break the chains that bind us.We remove the debt system.

            Inflation is the trap that lures us, then ensnares us.. Inflation is not a problem with commodity money.

            There is a way for the state to provide commodity money to the people very quickly and at little cost to the state. Let us embrace it.

            I can not change geopolitics but I can change what I do. I can persuade you to do the same and thus this is a grass roots solution.

            All the best
            Tony

          • bonbon

            Obama serves the British Empire, not the US Constitution. A puppet, with more firepower than Nero, with the same mentality. Empires tend to collect such.

            This must be dealt with, even if various currency ideas are good in themselves, or no economy can work. Hamilton wrote about this. I am right now getting the full history of that Banking idea – it takes some work.

            But we are dealing with Empire, maybe the 4th in a long line, a principle at work. A principled counter must be made, not a popular pragmatic one. Out of this will come a new financial system if Obama does not ignite he planet. Maybe those fellow boaters might respond differently if this was put on the pot-lunch table?

          • Tony Brogan

            Bonbon
            how did you know we had potluck suppers and lunches.

            “My fellow boaters are more clewed in than may be apparent. Many are aware of my opinions as I have expressed previously, perhaps for over 5 years.
            I walk around with Detlev Schlichters, Paper Money Collapse. It starts the odd conversation.

            Sunny and cool this morning.
            I must get outside and off this boat!!

            cheers
            Tony

          • bonbon

            So I was right all along – Austrian School hardcore.
            http://academy.mises.org/faculty/detlev-schlichter/

            I suspect this is why there is a reluctance to debate?

            And Ron Paul is beyond reason on this very topic.

          • bonbon

            Adam Smith, British Empire economics. What Hamilton, Carey, Lincoln, FDR, JFK, Garfield… all confronted.

            http://www.adamsmith.org/blog/economics/detlev-schlichter-on-paper-money-collapse

            And there is no empire? Invisible hand or more likely invisible economic hitmen. Indeed the sun has not yet set on it, but total bankruptcy!

          • Tony Brogan

            My good Bonbon,

            It is simply that Like Andrew Mooney I find you totally incomprehensible.

            Pasting names and ideologies on people as you try to score points is not at all fruitful.
            I find you a waste of my time.

            your absolute insistance on getting rid of Obama will change nothing. The powers behind the throne will jerk the puppet strings of the next president just as they do this one.

            I grow tired of your inanities.

          • bonbon

            Yer favorite book is rabid Austrian School. No wiggle room, exactly the Ron Paul dogma.
            Why not just say so? As I have pointed out over many threads here exactly the flaw of this “theory”, I can do it again if one wishes.

            Look at Hamilton to begin to see the huge error of the Von Mises, Hayek theory (nicely pinpointed by economist Simon even when he has problems also).

            And President Higgins went after precisely this “one great theory” at the London School of Economics this Spring.

          • Tony Brogan

            You are still a waste of time.
            I happen to be reading that book at this time.
            I have read Robin Hood and his Merry Men several times. Harold Hardraada too. The there is Lavengro and Romany Rye. Larousse geography encyclopedea, and a string of David Irving books and many hitory books.
            By your count I should be an outlaw, a Viking, an anti Papist, a geographer, and a Nazi.

            I have my own thoughts as to what makes sense and you definitely do not.
            Until you get specific and talk about a specific idea of policy re economics or finance I shall ignore you from now on.

    • bonbon

      Perkins was active in the 70′s on a huge scale. That was after they murdered JFK.
      Question : was JFK the first example of economic hitmen at work on the US economy. In other words ALL economies are hit. Soros hit the Sterling and Lire. Was Nixon threatened to drop the Bretton Woods?

      The only thing that could do that is an Empire – the British Empire, that even Alex Jones or Perkins are afraid go into.

      “The International” film goes after the BCCI (that created the Taliban). The hitman theme runs through it.

      • C21living

        Bonbon,

        Your views RE: British control of the US via the FED are clearly those of Lyndon LaRouche.

        With respect, might I propose to you to seek out “George Freidman” on Google videos, and his geopolitical think-tank STRATFOR. His colleague “Robert Kaplan” is another excellent geopolitical analyst.

        STRATFOR see a decline in relative power for the UK, a weakening of EU influence as it copes with its internal problems, the long-term rise to power of continental North America to dominance and the decline of Europe and the rise of a few regional powers, eg:
        Russia
        Turkey
        Iran
        Poland

        STRATFOR is excellent on the EU crisis, Ireland, the UK, the unstoppable rise of Turkey, and the fact that the US will soon engage Iran in a “Nixon in China” moment where the West simply accepts and accomodates Iranian power and influence. Meanwhile Iran and Turkey and KSA and Israel will all vie for influence in the Middle East, as they are currently doing in Syria.

        The one to watch is Turkey. Its military is larger than any in Europe, except the UK. The UK is not as influential as you assert – it is in decline, relatively speaking. Of course, the City of London remains very influential, but Tehran, Istanbul, Moscow, not to mention North American cities like Vancouver, are rising in power and influence.

        The UK has had less and less control over the direction of world affairs since WW1. The FED is simply an attempt to shore up this power, but it’s not working because the banking system is failing.

        • bonbon

          STRATFOR was involved in a major scandal recently. AFAIK RT’s M.Keiser had a report on that.

          Their analysis has a major flaw – it fails to grasp what empire means with the long reach of history. It fails to grasp the oligarchical principle at work.

          I never asserted the UK, rather the British Empire, that principle active, that STRATFOR an many others refuse to discuss.

        • C21L

          I pointed exactly that out two weeks after bon bon appeared here. I confronted him/her 3 times with this dangerous larouche pac propaganda, his/her reaction was always the same.

          Larouche pac ia s dangerous group in deed.

          Glad someone else took note!

          • AndrewGMooney

            @bonbon

            i’m really no wiser as to your worldview. it doesn’t help that you don’t clarify or distinguish entities, ie UK/GB/British Empire/Empire/Reptilian Conspiracy.

            are these your own private musings or are they, indeed, a rehash of LaRouche?

            i’ve just enjoyed reading a very different take on the relationship between the USA and the UK, discussing the transition of hegemeonic status to the USA.

            ‘America. The Eagle and The Lion’

            http://thearchdruidreport.blogspot.co.uk/

            It appears that the USA actively planned for a UK invasion of the USA from Canada and made war plans accordingly:

            http://en.wikipedia.org/wiki/War_Plan_Red

            Given this, it seems highly unlikely that the ‘British Empire’ still controls the United States. I hate to dismiss people as paranoid fantasists but you offer no credible framework for your thesis.

            best

        • bonbon

          Grasp the oligarchical principle in action. It is not really about finance as such, or its fascinating baubles. The talk here of coins, paper money is exactly that of the natives on the beach selling everything for glass beads. Oligarchy likes that. Empire is this. The natives have no word for such a power – it simply does not register. This has been the situation for millennia. Of course now is different, we are all educated. We live in a totally different age, don’t we? So clever with our toys.

          Heard that before.

        • bonbon

          Of course there was a Red Book. Have a look at the Blue Book.
          It is obvious to everyone, even if not conceptualized, the USA is no more a Constitutional Republic, rather a banksters scheme. Everyone says this. So what happened – it has been absorbed into something that Ireland also succumbed to. We all know something has gone totally wrong. Obama is openly flaunting the Constitution.
          To name this the British Empire, a true global empire, with a seat in London and Wall Street is correct – the long sweep of history and the oligarchical principle in action is not new. Ireland of all people’s knew what this was, and is now getting a taste again.

          The only dangerous thing around is this empire, imposing killer austerity. “Shoot the messenger” simply means some cultivate being good subjects.

      • cooldude

        Bonbon you are incorrect in stating there is any reluctance to debate. Many posters have problems understanding exactly what points you are trying to get across. I am a big fan of Detlev Schlicter and think he is one of the best commentators on finance and economics alive today. His core idea is that it is the unbacked money system which by its very nature is causing all the problems we are experiencing al across the globe presently. His contention is that only a return to “sound” money or money that is backed by a finite commodity will stop all these problems. I happen to believe he is correct. Every single time a system of unbacked paper money has been tried on this planet (and there have been hundreds of attempts) it has always ended in the exact type of problems with excessive debt that we are experiencing today. What happens next is increasing monetization of the debt which is inevitably followed by a collapse of the currency usually in a bout of extreme inflation. I have no problems having a mature debate with you or any other posters on this vital subject. In fact I think it is important that people discuss these important matters.

  23. cooldude

    Some great posts to a very interesting article. Great video of John Perkins from Goldbug. All the posts were honest and informative. Here is a movie which explores all of these important issues. The first 40 mins is stuff I know very little about but is fascinating nonetheless. The financial and economic issues are spot on in my book. The final stuff is what we are all up against. For discussion purposes..
    http://www.thrivemovement.com/the_movie

      • cooldude

        Hi Andrew, read the review and found it very dismissive. The reviewer is obsessed with climate change which is a very inexact science in itself. He ignores all the stuff on central banking and fractional reserve banking which is what interests me most. I believe the film is spot on in this area but I am well aware that these elite banking families will not give up their power easily. They control the mainstream media which is now mainly a channel for Big Brother to control how the people think.

        • AndrewGMooney

          Climate change research may be a necessarily ‘inexact science’ but this film is based on the rather unlikely premise that ‘free energy’ exists and that there is some conspiriacy to prevents its’ adoption.

          I watched the film impatiently, but when it linked the supression of ‘free energy’ to UFO sightings without any credible explanation: I was no longer prepared to waste my braincells on it.

          Central and fractional reserve baning are very interesting topics. Discussion of them is not illuminated by linking them to nonsensical stories about UFOs and ‘Free Energy’

          Rob Hopkins’ review was detailed, nuanced and hardly dismissive. I don’t agree with all he wrote, but he did well to actually sit through to the end of this.I imagine the ‘elite banking families’ would find this film completely unthreatening as it cannot be taken seriously.

          best

  24. A 17 years old chinese student sold his kidney
    to be able to buy an iPad

    Wang, 17 years form Anhui
    In the British Telegraph he found an advert
    20,000 Renminbi for 1 kidney

    He traveled to the clinic in Chenzhou
    Three days later he left with a kidney less

    This was a year ago
    Today 5 people were arrested
    Organ traders and Doctors

    This messages shocked the chinese public last year
    Thousands commented

    Last months
    The chinese “Southern Daily”
    Reported on people who sold an organ to pay back debts

  25. Tony Brogan

    Hello David
    i am somewhat shocked but not totally surprised that you do not seem to understand how banks make their money and in doing so use fractional banking.
    you do not seem to acknowledge that there is fracional banking or how it is used.

    No bank lends out only the money received on deposit and have not for hundreds of years.
    That is there is no 100% ratio ever in banking.

    More like 10% or 5% or even today negative 10 or 20%
    where there are no reserves as the bad loans exceed the deposits many times over.

    If you don’t know and yet it is evident that many of the bloggers here do, why is that??

    If you do know why do you describe banking as the business of lending out deposits at a rate of interes higher than that paid. As if giant profits and losses are made by such a system

    It is evident the banks use leverage of 10.20, 50 to 1 or higher knowing that if there is a bank run deposits will be guarnteed by the government er.. taxpayer.

    In my initial blog on this subject I went into detail of fractional reserve banking to no comment.

    If you do not understand the principals of fractional reserve banking then you should, as it is central(pun intended) to the whole problem of the debt of the nation and the busting of the banks. It is extended around the globe.

    It is not a mistake that you do not know as it indicates that it is not taught in economics classes. (I wouild not know as I have attended very few myself)

    I would like to know that you do understand and that your commentary was a simplification.

    Banks earn interest on money created by a ledger entry and comes into existence as debt in volumes 10,20, 30, or 50% higher than cash on deposit or in earlier times bullion as money on deposit.
    That is they earn interest on something that does not exist.
    wish that I had such a system at hand. Pity the banks as they only make such a low spread on the loans to deposit that they can barely afford the prime real estate in every city!!

    • moneydoesnotmatter

      Correct Tony.
      Let’s hope it was to illustrate the point and move on.
      It was a bit uncharacteristic of David though I have to agree.

      • Tony Brogan

        Hi MDNM

        nothing more to say on this point. Nothing
        more to do. Sometimes a silence speaks louder than words.
        It was and is misinformation. Without debate truth is harder to find.

        Happy Easter to you, It is the day of good news.

        Tony.

    • Hi Tony,

      Thanks for the comments. I do underatand fractional banking and I see the point you are making.

      The problem in a deleveraging situation is that the very amplification which drives up fractional lending in a boom, is applied in the opposite direction in the bust.

      All the best

      David

      • goldbug

        MORE MONEY NEEDED TO DELEVERAGE THAN CREATED BY FRACTIONAL RESERVE

        TO GUARANTEE INTEREST + PRINCIPAL….

        DELVERAGE -> MORE DEBT.

        • cooldude

          The average leverage for a European bank is 26/1. This means just a 4% drop in the value of the assets on their books makes them bankrupt. The whole banking system is insolvent. And don’t forget the $700 trillion derivative nightmare that is hanging over the whole system. These guys have messed up big time and their only focus is passing on the cost of their reckless behavour on the the tax payers. We have to resist this in every way we can.
          http://www.zerohedge.com/contributed/what-does-fed-know-we-don’t

          • Tony Brogan

            Another good comment. Cooldude.

            It is likely that some of the mortgages in default are so far under water that the market value of the MBS is many percentiles less than 100. It is likely as I have suggested that the banks heavy into development before the crash are negative 20 or 30% of their deposit base.
            This is a huge deflationary crash that is sucking down the economy.
            all the required printing(digitized) of money to alleviate the shortfall will eventually surface as hyper inflation. Long term bond rates will sour, the bond bubble will crash. The debt added to the taxpayer as the national debt will be suffocating. We will enter a hyperinflationary depression.
            Sound commodity money of any amount will help protect and a garden allotment or a small acreage will be invaluable. So convert savings to bullion and buy or rent a garden if you have not one.

      • Tony Brogan

        Hello David
        Thanks for your confirmation on the fractional reserve banking.

        you are totally correct about the effect of leverage in creating the economic booms and busts.

        The thing NOT articulated by you is that this is DELIBERATE policy.

        booms and busts are part of the policy of control exerted on to the people to steal the fruits of their labour.

        It is the use of this paper money system that allows the maninipulation as credit is expanded and contracted so easily.

        we must reudiate the current money system od irredeemable bank notes.

        We must return to a commodity monetary system that also banishes fractional reserve banking. The money in circulation must remain static.

        gold and silver have proven to have the best characteristics for this. We must return to gold and silver as the units of account and the medium of exchance.

        David you have remain silent on these two subjects.

        What is your opinion on the use of fiat paper irredeemable currency to CREATE deliberate booms and busts??

        What is your opinion on the return to gold and silver commodity money?

        Best regards

        Tony

  26. It’s curious David and just a personal observation from over the years, that when you publish a controversial article it generates oftentimes hundreds of comments.

    Conversely, as with this article, when you commit the plain and simple truth to paper, it stunts even the Trolls because there’s just nothing more to add.

    If I’m correct and you continue to tell it how it is without the Hyperbole, there’ll be me and John Allen remaining to discuss the Dun Aengus spaceship.

    Everyone else will have long disappeared to pastures new, far far away from this concentric little State.

    • Hi Furrylugs

      Hope all is well down there in Munster and you’ve eaten your Wheetabix for the clash with the Ulstermen today.

      Yes there is no doubt that lots of commentators have come and gone on the site over the years. It’s great that more and more people come in and comment and not surprising that others move on. Maybe the success of the site is that it was the first of its kind and now there are many other places people can go for their info and places they can vent their views.

      I am delighted that some of the old mates are still here. Nice to see you and A Mooney and J Allen back this week. Thanks for your support over the length of the campaign!

      All the best,

      David

      • AndrewGMooney

        Hey David!

        I read all the articles but only comment as and when i feel i have something worthwhile to add.

        The situation has certainly changed sinced i first plunged in ‘back in the day’.

        As for ‘the length of the campaign’: i wonder how long it will be? The vote on the fiscal compact seems to be another key milestone.

        Deco and Wills have remained resolute, researched and compulsively readable throughout.

        I used to be a bit of a piss-taker about Irish politics, but the situation is now altogether too solemn and sober.

        regards

        • Good to hear from you, how is Brummieland?

          Somewhere inside, I suspect that you quite fancied Punk in your day. Have a gander at the Punk Economics stuff. I’d like to do something on Peak Oil etc, you might give me a steer.

          Best

          David

          • Would it be fair to say that peak coal preceded peak oil and that we could draw some inferences from that?
            Peak nuclear has had a short half life (awful pun) following Fukashima so an entirely new universal source of mobile energy is needed. (http://en.wikipedia.org/wiki/Thorium)??

            In any case, of the 6bn souls in the world, the energy gobbling model currently in use by the “developed” part of that world is not feasible. Current thinking is that we are leaving the Holocene era, where nature held sway and entering the Anthropocene era where the activities of humans will shape the Earths ecosystems. http://en.wikipedia.org/wiki/Anthropocene

            Surely a pointer to the Law of Diminishing Returns?

            Peak Weetabix wasn”t much use, unfortunately, btw.

            Slan as Beal Atha.

          • AndrewGMooney

            David, Birmingham is still there, awaiting hi-speed rail and the construction of a ‘new city’:

            http://bit.ly/GCuVHq

            If only NAMA could ship those ghost estates to the English Midlands!

            The best analysis of ‘peak cheap oil’ i’ve read is by Eric Janszen.

            http://www.itulip.com/forums/showthread.php/12799-Peak-Cheap-Oil-Update-Part-I-The-glass-is-half-empty

            The key concept is EROEI (energy return on energy invested). Energy is the master resource which allows all other resource utilization. Classical economics posits price/scarcity and substitution as the inevitable answer. Unfortunately, there doesn’t appear to be a substitute on the event horizon.

            Here’s a sobering animation by Dermot O’Connor on Peak Oil, Peak Soil, Peak Everthing:

            ‘There’s No Tomorrow’

            http://www.incubatepictures.com/

            I’ll dig out a Ramones album and have a look at your punk rock movies….

            regards
            Andy
            ‘the artist formerly known as ‘Mad Paddy From Brum’

          • StephenKenny

            I visited the Culham fusion research centre (http://www.ccfe.ac.uk/) a year or two ago, and found that quite revealing.

            One thing that is very clear from there, is that even the comparatively meagre funding, the engineers (who significantly out number the scientists these days) are confident that a functioning commercial fusion reactor will happen.

            The funding (in hundreds of millions of dollars a year) has been falling ever since the oil scare of the 70s gave it a big boost, and it is a project that would be sped up by more funding.

            It seems that the energy used in the life of an average European would be generated by a bath tub full of water, and two laptop batteries.

            I would recommend a visit.

    • StephenKenny

      The interesting aspect to me is the growth of interest in the point of view that David represents: Websites, TV, youtube, books, and so on. The absolute numbers are one thing, but the trajectory is the really telling aspect.
      It is, after all, the last 5 minutes in which all the action happens – tipping points, etc.

    • You may have a point there Furrylugs. I would find it hard to fault with anything that David writes these days. Although I am now in the group you describe in your closing paragraph, there is direct and significant relevance in these articles for me, given that I cycle past the Bundestag and the finance ministry every morning on the way to the office. I share an apartment with a photographic and installation artist who’s work encompasses art, science and politics, and the networks that are formed not only between humans but between all living things. Nature survives, life continues, even if one species decides to go to war with itself. Its an interesting counterpoint to the work I do, which is all about making at least the physical networks work better.

      I don’t comment much anymore but I do read every article. Even though this is an economics blog, there are fundamental truths here. Weeding out the trolls is not difficult but does serve to highlight how so many people are driven by so many types of fear. Anyway, back to the spreadsheets, this internet won’t get faster all by itself.

  27. Congratulations DAVID on your new purchase in Dalkey . I read it on the ST today . Its nice to find a fantastic location near your home where your family had close associations with in another time .

    Initially I could not help but think that it was the local merchant shopkeepers that made all the money in Klondyke and not the gold diggers .

    I wish you the Best of Luck.

    John ALLEN

    • Grey Fox

      I echo the congratulations David, best of luck!

    • Hi John,

      Well I always have been a bit of a contrarion when it comes to buying and selling, so I am probably the only person to buy anything this year!! But that’s just me.

      But I think you get to a stage in your life when you like to walk to work with your dog, over the hill you played on as a kid and down the beach and arrive at a place where your own family were born in the 1920s.

      After many years of working in banks in steel and chrome and acres of glass or sitting on planes, I find it very theraputic to be working quietly in somewhere that my grandfather – who died many years ago inthe 1940s – sold his wares out of.

      I know you can relate to this.

      Best,

      David

      • You will find Duchas there David and even more inspiration. Tis all to do with the ages of man.
        Congrats.

        • Furry

          Re the Wheetabix – as I am married into deep Ulster rugby stock, its nice to see them doing well again. I was at their last victory in 1999 at Lansdowne and it was like a UVF day out. Lots of lads with God and Ulster tattoos and not an idea about how rugby is played down the “Free State” for a day of bragging. It was like a re-run of the twelfth, not at all the same Northerners who usually come down for the games.

          I wonder will it be like that again in a few weeks.

          David

          • I can empathise David.
            I’m married into deep Cork GAA stock with the Kerry border overlooking the house.
            Problem is, I’m originally from Mayo.

            Give me the red hand boys any day!!!

            Punk Econ #3 brilliant BTW.
            Is there any way you could sell the artwork as an Andy Warhol type poster??
            Just a thought.

      • Roots
        They run deep
        Into dark places
        Places no one has ever seen
        You can not see them either
        But they are here
        You can feel them
        If you have an open mind
        If you have an open heart
        Inexplicable facts of life

        Peace
        G

      • Adam Byrne

        Sincerest congratulations David.

  28. Tony Brogan

    Goodday David

    Here is a commentary to GATA about attitude and what can be done to remove the evil power that bind and controls.
    The GATA’s response by Chris Powell. Asumption of gold and silver as money is the road to liberty. It shows how the struggle in Ireland is echoed around the world. http://www.gata.org is foremost in that struggle. I hope you will take the time to read this and review the GATA archives.

    best Regards
    Tony

    Exposure of gold market manipulation is producing results

    Submitted by cpowell on 02:49PM ET Sunday, April 8, 2012. Section: Daily Dispatches
    6p ET Sunday, April 8, 2012

    Dear Friend of GATA and Gold:

    Our friend J.T. writes:

    “I’m sure you know by now, probably from all the e-mails and comments you’ve received from GATA members and other ‘gold bug’ types, that many if not most of us are so ‘up to here’ with all the information about gold market manipulation that at some level we don’t even want to hear it anymore.

    “We believe it. We know it. We’ve watched it for years. It’s part of our DNA by now.

    “But many if not most of us are way more than ready for you or someone else to start the new project of what to do about it.

    “I no longer find much information about the manipulation to be of use. I can watch the manipulation myself. I don’t need to be told anymore. I want to know what else we can do. What else is anyone else doing?

    “We know that the U.S. Commodity Futures Trading Commission and the Securities and Exchange Commission won’t do anything. Congress won’t do anything. So who will? Are we just waiting around for something to happen, waiting for the ‘delivery default’ that will set off the short squeeze that probably won’t happen because of either a declaration of ‘force majeure’ or some forced acceptance of fiat in exchange?

    “Your comment about finding the right ‘planet’ to keep our monetary metals on (http://www.gata.org/node/11223) isn’t helpful, as I know you know. It sounds fairly fatalistic, as though you’ve given up.

    “There has to be more than ‘physical trumps paper’ because in the end, if the system isn’t changed and the evil overlords are not removed from their positions of power, then ‘power trumps physical’ and everything else for that matter, and who cares about paper? We need to move toward freeing this country.

    “Yes, knowing about the manipulation was important, but it’s now on every level and increasing, not decreasing, as knowledge of it comes out. Knowledge alone has not ended the manipulation.

    “Don’t give up, please. GATA has the connections to start something or ramp up something that can help us all move to the next level of resistance. Others need to strap on the fatigues and weapons of truth and move out of the foxhole and join the freedom movement however we can. Knowledge is no longer enough. There must be a growing plan of action for resistance against the evil, or the evil in power will crush us and we’ll find ourselves back in prison trying to console ourselves with the fact that we were right, which will be no consolation at all.

    “God bless you and yours.

    “– J.T.”

    * * *

    Dear J.T.:

    Thanks for your thoughtful note.

    Yes, we in GATA are as tired of the ever-more-brazen manipulation of the markets as you are. And I agree that most people who closely follow the gold and silver markets are convinced of the manipulation or at least suspect it.

    But these people are still a very tiny portion of market participants — even a very small portion of gold and silver market participants. Otherwise nobody except government agents offering to sell would be trading the gold and silver futures markets in the West; all individual and institutional investors would have gotten out. I’m afraid that we still have many people to inform.

    And yet I also think that we have informed enough people already to make a big difference in the markets. Almost certainly the Russian and Chinese governments learned from GATA about the gold price suppression scheme and the general rigging of the currency markets, and probably some other governments did too, and governments and sovereign wealth funds are having a big impact on the market.

    The major acceleration of the gold price can be dated to GATA’s Gold Rush 21 conference in the Yukon in August 2005, just as the major acceleration of the silver price can be dated to the presentations made by GATA Chairman Bill Murphy and board member Adrian Douglas at the hearing of the U.S. Commodity Futures Trading Commission on March 25, 2010. The charts support this assertion and the evidence is that GATA’s distribution of information about the market rigging has been very productive to investors in the monetary metals. We figure that more distribution of information will productive too.

    After all, look how obvious the Western central banks have had to become in the last couple of years to keep the gold price down. They used to accomplish it largely surreptitiously, but no more. The last two big interventions — amid the devaluation of the Swiss franc last September and amid the great burst of European money printing on February 29 this year — probably alerted more people to the scheme than GATA has, and yet GATA’s alerting the first batch of people and governments likely required the market riggers to turn it up and risk exposing themselves if they were to have further effect.

    We agree that U.S. government regulatory agencies won’t do anything more — can’t do anything more against what is actually surreptitious government policy. But because of one courageous commissioner the CFTC did do something that proved crucial — it held the March 2010 hearing and let GATA be heard — heard, as it turned out, around the world.

    We agree that the underlying issue here is liberty — for Americans and for everyone else. Gold and silver are nothing to us as inert natural elements, mere pieces of metal; we are not idolaters. But as free-trading, independent, international currencies, they are essential means of achieving liberty, and there is probably less understanding of this than there is understanding of the price suppression scheme. So we still have to spread the word in this respect as well — and we will.

    In addition to the daily dispatches broadcast from GATA’s Internet site, our representatives continue to speak at major financial conferences around the world. Murphy will be speaking at the Las Vegas conference in May. We both expect to be at the Vancouver conference in early June. I’m planning to speak at three conferences in Asia later that month, and maybe two or three more in Asia if it can be arranged. Asia is especially promising territory for us, as investors and the news media there both are more understanding of gold and less influenced by the Western central banks.

    As GATA is a federally tax-exempt civil rights and educational corporation, we can’t get involved in politics directly or spend any substantial resources advocating legislation; with good reason such activities are against federal law for tax-exempt groups. But we hope that our work will engender good citizenship not just among Americans but among people everywhere — and if Americans are looking for a political movement to achieve free and transparent markets, particularly in the monetary metals, a prominent presidential candidate already has made this one of his major issues. People so inclined can join his campaign.

    We’ll keep doing what we can, even as people may forget that we’re really just a small, non-profit organization with no full-time staff. As the World Gold Council has declined to acknowledge much less resist government attacks on gold, it sometimes may seem that GATA has primary responsibility for the gold price and the gold cause. As no one else is upholding it, we can accept the latter responsibility for the time being, but people have to understand that we’re no stronger than they make us with their contribution of funds, information, and agitation. The more support we get — particularly financial support — the more we’ll do.

    We readily admit that we don’t have a sure-fire plan to liberate the world, that we don’t know how things will turn out, that they may turn out very badly, and that the power arrayed against us is vast. But we’ll keep fighting that power because it is based entirely on lies and succeeds only through deception and thus is critically vulnerable to exposure. For “ye shall know the truth, and the truth shall make you free.”

    CHRIS POWELL, Secretary/Treasurer
    Gold Anti-Trust Action Committee Inc.

    • bonbon

      It is time to study Hamilton. Washington knew that winning was not enough – the real fight only began then. It is the same fight. Today we have FDR’s Glass-Steagall and Bretton-Woods actions to count on. The primary obstacle to these now, immediately, is Obama. Plenty of evidence has accumulated for impeachment. Failure to address this concentrating on trinkets (idolatry alluded to above) is a guarantee to those currently running the bankrupt show. With Obama out of the White House, Congress will be able to push an immediate banking separation through. No non-profit agency can do this directly. OWS cannot do it. Even prayer cannot do it. The US Constitution Credit Clause is there for exactly this type of crisis.

      Hamilton knew precisely what finance is all about.

  29. AndrewGMooney

    @David McWilliams.

    David, here’s my essential guide to ‘cheap peak oil’.

    I believe the following speech will come to be regarded as one of the most important and prescient in human history. Unfortunately, it was completely ignored:

    “Energy resources and our future” – remarks by Admiral Hyman Rickover delivered in 1957
    by Rear Admiral Hyman G. Rickover, U.S. Navy

    Key quote: ‘Fossil fuels resemble capital in the bank. A prudent and responsible parent will use his capital sparingly in order to pass on to his children as much as possible of his inheritance. A selfish and irresponsible parent will squander it in riotous living and care not one whit how his offspring will fare.’

    http://www.theoildrum.com/node/2724

    Tom Murphy’s ‘Do The Math’ has a very clear overview of the predicament we face:

    http://physics.ucsd.edu/do-the-math/2011/11/peak-oil-perspective/

    Albert Bartlett: Arithmetic, Population and Energy

    http://www.chrismartenson.com/dr_albert_bartlett

    • bonbon

      To put Admiral Rickover in perspective, here is a very relevant report :
      China Proposes Nuclear Cargo Ships as Better and Cleaner
      December 4, 2009
      Nuclear reactors are “already onboard submarines, why not cargo ships” the head of China’s shipping giant Cosco told a global maritime forum in Shanghai this week. Captain Wei Jiafu said that he was already in discussions with China’s nuclear officials about developing nuclear ships.

      Seatrade Asia, which described Cosco as “the world’s largest shipping conglomerate,” called Wei’s announcement “extraordinary. Wei said that the motivation was in part a “green one,” reducing fuel emissions. At present shipping companies use super-slow steaming to save on fuel and emissions.

      The idea of nuclear ships is not new. Nuclear-powered ships were envisioned as a matter of course in the early days of the Atomic Age–just another contribution of the atom to advance mankind’s industry and economy, by removing the need for refueling stops and providing efficient power for heavy freight vessels.

      Work on sea-going nuclear reactors started in the 1940s. In the Cold War years, the initial nuclear vessels were submarines, where the capability to go long distances without refueling, and a powerful propulsion source were a strategic advantage. The USS Nautilus was launched in 1955, after a rigorous testing program for safety and performance under the command of Admiral Hyman Rickover.

      Today there are 150 nuclear-powered ships, most of them submarines; others are ice breakers and aircraft carriers. The first commercial U.S. ship, the NS Savannah, was launched in 1962. Russia’s first ice breaker, Lenin, was launched in 1959.

      • Tony Brogan

        I see nothing wrong with nuclear powered cars or trains although it could also be indirectly fueled by nuclear power in the use of electricity.

    • bonbon

      Compare that to Merkel’s hysterical 2011 atomic-exit. AFAIK one of the first nuclear ships, the Otto Hahn, was built in Germany.
      The insane refusal to provide nuclear power – a deficit of 6000GW exists now, is the problem. So called “fossil fuels” should be used as a chemical feed. Nuclear synthesis of methane has been on the design tables for decades.
      And just in case its forgotten, check non-biogenic origins.

  30. AndrewGMooney

    Actually, this article, like the last one, is also about the rising price of oil.

    Peak Oil/Peak Credit: two sides of a coin. Money is a claim on future work, work which can only profitably happen if cheap energy is available. Debts can only be repaid from surplus, although Germany / ECB seems to disagree with the adage ‘you can’t get blood from a stone’:

    ‘Figure 6 shows that the PIIGS countries are all very heavy importers of oil and natural gas. In fact, they are the five countries listed on the on the left of Figure 6, with the highest level of imports.’

    http://ourfiniteworld.com/2012/03/05/why-high-oil-prices-are-now-affecting-europe-more-than-the-us/

    ‘Bankers can print money, but they cannot print energy’. Liebig’s law of the minimum seems to apply to ‘peak cheap oil’: the Achilles heel that will crash the delocalised, globalised economy. And when it crashes: game over. For ever. Oil is the master resource and it‘s been squandered. Oh dear…..

    http://thearchdruidreport.blogspot.co.uk/2011/12/what-peak-oil-looks-like.html

    After reading those, it’s hard for me not to feel ‘discouraged’ about the future, but here’s a hopeful, optimistic film that goes from Devon to Ballydehob and back to the future. Ireland has multiple fractal futures ahead, the most surprising fractal may turn out to be ‘fossil fuel-free farming’! Rebecca Hosking:’Farm For The Future’

    http://bit.ly/UeDtu

    • bonbon

      Wonderful how, yet again, Ireland is presented with “fossil fuel-free farming” as its future.

      Remember Swift’s Academy? The professor kindly asking Gulliver for help so in 8 years he would have sunbeams from cucumbers? That was in the 1780′s !

      I expect any minute Swift’s Modest Proposal from such learned circles.

      • AndrewGMooney

        bonbon

        Your references to Swift are as inscrutable as all your other references.

        I wrote ‘Ireland has multiple fractal futures ahead, the most surprising fractal may turn out to be ‘fossil fuel-free farming’!’

        I did not say that Ireland faces a single ‘future’ that in any way resembles the monoculture apocalypse and Famine of its’ past.

        I am visioning a hopeful future of sustainable permaculture abundance in Ireland, a future which does not preclude other parallel complimentary futures, including leading-edge innovation in finance, science, technology and culture.

        I do not forsee a ‘Soylent Green’ or ‘Modest Proposal’ scenario for Ireland: I forsee an explosion of creative energy once the current impasse is breached.

        ‘A Pattern Language of Sustainability. Ecological design and Permaculture’ By Joanne Tippett

        http://www.holocene.net/dissertation.htm#11

        ‘While Swift’s satirical notion that sunbeams could be stored in cucumbers is a bit of a giggle, the truth that carbon is captured and stored in plant life isn’t. Trees in particular are our greatest carbon-capturer after the oceans. Trees are planet Earth’s great air-conditioners.’

        http://www.quadrant.org.au/magazine/issue/2008/10/sunbeams-from-cucumbers

        regards

  31. AndrewGMooney

    @StephenKenny

    Fusion research. Thanks for the link.

    ‘I became interested in energy because I sensed that we are approaching a phase change in society as the age of fossil fuels begins to ebb. So much of what we have become can be attributed to cheap and abundant surplus energy. Our energy future is highly uncertain. Commercial fusion may come along decades down the road–mid-century at the earliest–but even then it is yet another source of heat that we can use to make electricity. Another step (mobile storage) must accompany fusion development to replace petroleum functions, and even then at significant disadvantage in energy density using current technologies. So yeah–I hope it helps us out one day. But I’m not sure we can wait that long.’

    http://physics.ucsd.edu/do-the-math/2012/01/nuclear-fusion/

    regards

    • StephenKenny

      All Dr Murphy is saying is that given current funding, which, at about $250m per year in the US, is pretty trivial, it will take time. His view is that solar offers the best opportunity, and questions about batteries will apply equally there.

      For an the example of commercial solar proposals, a number of German companies are working on an interesting idea: http://www.desertec.org/

      And, by the way, anyone who says ‘mid-century’ in that off-hand way, is merely showing their age: 2050 is only 38 years away, and 38 years ago doesn’t seem much to me – I remember when 1999 was sci-fi land!

      • StephenKenny

        My take would be to tax financial services bonuses at 100%, and put the $40bn a year in to fusion and photovoltaic research.

        We’d probably have solutions by 2025!

  32. AndrewGMooney

    Having trawled the ‘doomer’ bibles regarding Peak Oil, i always like to reassure myself with some comforting Cornucopianism and a bar of chocolate before i retire to bed:

    ‘The transition away from oil will be entirely automatic, the result of basic market mechanisms. It will not require any preparation or forethought on the part of everyday consumers. All that will be required, is for consumers to respond to higher oil prices. As oil becomes more expensive, alternatives will become relatively cheaper, and consumers and firms will transition to alternatives at that time, merely by following economic incentives.’

    http://bountifulenergy.blogspot.co.uk/2010/10/peak-oil-wont-cause-collapse.html

    phew! thank goodness for that.

  33. jethromurphy

    We all know at this stage what the banking / economic problems are, but what of the solutions?

    Here are 2 things Irish people can do to start taking their power back from fraudulent, broke bankers and spineless politicians.

    These 2 things will certainly get the attention of our political and banking masters.

    We too have this power and we should use it. The ballot box is a hoax. Money talks.

    1)www.irishinnovation.ie/#/challenges/4569079078
    2)www.irishinnovation.ie/#/news-home/4569447557
    This type of action has been used before to force change at political levels…the 1832 Reform Act that forced the Duke of Wellington to enact electoral reforms springs to mind…the slogan used was “Stop the Duke, go for gold”.

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