July 9, 2012

The World Slows & Euro Crisis Far From Over

Posted in Punk Economics · 39 comments ·
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A few thoughts on the state of the global economy: China Panics, US ‘Recovers’ and Germany Flinches.


  1. Adam Byrne

    Nice job. I would have liked a longer overall shot of the piece of art right at the end of the broadcast.

    When is the next article please?

    • Philip

      I am afraid to see what the next article is.

      This is not an economic problem anymore. This is down pure and simply to leadership and an unwillingness to change in a way which might affect the leaders future prospects. We all like to criticise the leadership of african states – but is the rest of the world any different now that serious choices have to be made.

      Very fine article David – and utterly terrifying.

      • Tony Brogan

        All politicians are controlled by the international banking cartel whether they like it or not. Very few will speak out. Nigel Farage and Ron Paul are a couple; but any, like them, who do are ridiculed by the MSM.

        It is an economic problem and cartel induced as they strip all people of their assets.

        The people are not understanding of what is occurring and do not want to hear it. Any people I talk to shut me down within two minutes by saying “Lets not go there, it is too depressing”. These are so called adults who refuse to face reality. They are too occupied living the good life they have worked a lifetime to attain.

        No leader can lead those who refuse to follow. When the people are ready a leader will apppear but let us hope it is before the clock strikes 12.

        • Adam Byrne

          They are muppets Tony and they are legion.

        • All politicians are controlled by the international banking cartel whether they like it or not. Very few will speak out.

          Oh, they do like it!

          Unfortunately, what you say here is no conspiracy theory material, and it would seem too many still this to come from this realm, but it is far from fiction, it is reality.

          Recent case in Germany highlights it, Dirk Notheis CEO Morgan Stanley Germany and Stefan Mappus TD Baden Wuertemberg, the Bankster literally told the TD what/when/ how to say/write and manipulate the system to get the deal done.

          I spare you the details, trust me it is massive, around 1/6 of the countries entire budget.

          This is not an exception, but the rule.

          Time for pitchforks and ropes.

          • Tony Brogan

            banking Corruption is endemic to all countries.
            Bankers control of the kind we have now started in the late 1600 with William of Orange; the new king of england needed money to fight his war in the netherlands. welcome to the formation of the Bank of england which financed a foreigners war but charged it to the unsuspecting taxpayer. not much change in 300 years.
            all central banks are modeled on the Bank of England and are a cancer on the back of society.
            All central banks must be abolished. All central bank originated debts repudiated. All odious debt discarded.
            give the people private money as private property just as it used to be.
            Put all bankers on a desert island and let them parasitize each other to extinction.

          • …and the legal system is designed and manipulated, so it will protect them.

            The average Joe Sixpack will swallow what the controlled media dish up, and J.6pack is the 99%.

            What J.6pack does not see is the reality behind the smoke screens, it is social re engineering of societal structures. This is not driven by politicians, of course not! New sets of accounting control fraud are designed to continue this game, the ESM is just one in the tool box.

            The people in charge right now, they will not solve this crisis, they are here to stay, and so is this “crisis”, it is a permanent installment now, the daily dose of “threats and fear”, on purpose to justify new measures to be put in place that will deeply change the very core of our societies, turning more totalitarian and ultimately dehumanize our citizens.

          • ….meanwhile on the beach….

            There is a little television set on this beach as well, but it does not work anymore and stands there disemboweled under a palm tree. Peacocks had made a nest in it, and they are now the 24/7 program to be watched.

            It is a strange happening indeed, the inhabitants of this beach gathering there every evening, in front of the TV, watching peacocks….

          • Tony Brogan

            Could not have said it any better myself Georg

    • Great Job, this article reminds me of the comments made by the great Anticancer Jew – Henry Kissinger. Europe is a great idea, but who do we call when things go wrong?
      made back in 1973, how prophetic

  2. Tony Brogan

    Hi David
    Good job.

    One comment about gold going down like oil.
    As you know gold is money and oil is not. All markets are manipulated. As c
    Chris Powell of GATA says “there is no such thing as a free market”.

    The world price of gold is manipulated downward just when it should be rising as result of economic coinditions. The PTB do not want gold making their currencies look worse than they already are. Of course the price of oil is manipulated upward by OPEC.

    The Libor scandal is the tip of the iceberg re financial fixing. The financial system is corrupt and rotton to the core. commentary below suggests it may last in its current form 6-12 months.(Who knows as most fiat currencies average 40 years and it is 40 years since Nixon reneged on the contract that a dollar was redeamable.

    Here is a dispatch from GATA

    Gold said to be in ‘lockdown’ as new financial system approaches

    Submitted by cpowell on 08:47PM ET Monday, July 9, 2012. Section: Daily Dispatches
    11:44p ET Monday, July 9, 2012

    Dear Friend of GATA and Gold:

    MineWeb’s Lawrence Williams today reports about market analyst Paul Mylchreest’s new Thunder Road Report, which describes gold as being in “lockdown,” presumably by central banks straining to maintain their market-rigging power.

    Williams says Mylchreest “believes we are heading into a truly mega-financial crisis. He foresees the financial decimation of the middle class and reckons the crisis is going to result in the transition to a new financial system as the current one implodes. His best guess is that it will be either happening or perfectly obvious that it’s going to happen within six to 12 months.”

    Williams’ report is headlined “‘Idiots’ Controlling the World’s Economies — Gold in Lockdown” and it’s posted at MineWeb here:

    http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=154699&sn=D

    Mylchreest’s new Thunder Road Report is titled “Death March: Approaching a New Financial System” and it’s posted at MineWeb here:

    http://www.mineweb.com/mineweb/action/media/downloadFile?media_fileid=20

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

  3. Deco

    Excellent.

    Germany (plus NL, FI, AT) will have to make a choice.

    The Finns are saying that they will leave the Euro, rather than get dragged into any more money sucking schemes.

    Because of Dick Roche’s diplomacy skills in 2007, they all know that corporate tax rate policy is an Irish vulnerability.

    Spain is getting more “support” in an effort to contain Spain.

    http://www.telegraph.co.uk/finance/debt-crisis-live/9388273/Debt-crisis-live.html

    Ultimately Germany will have to evaluate it’s firewall position. The problem is that everything is heavily interconnected – part of the legacy of political aspirations combined with banks having liberal lending policies between each other.

    I reckon, that with Hollande in power in France, that Merkel might decide on Germany plus agreeable parties (NL, FI, AT).

    David is correct. France is much weaker than we are being told by the broadcast media. In fact, I suspect that France might even be weaker than Italy.

    Within two years we shall find out. Hollande might be a much better President than Sarkozy, but he has a governing party that has a track record at making the French economy underperform, which is even more concerning than the French centre right.

    And all the time, there is the one Black Swan event that is coming down the track, that nobody is taking any notice of, at all.

    Belgium could be about to cause serious problems.

    • Philip

      The movie illustrates interconnection at a global level very suscinctly.

      Am looking at http://www.eugenelinden.com

      I have pulled a snippet from his latest musing (looks about 6 mths old) which references a book he wrote a while back…

      …The growing pool of modem-accessible workers may act as a cap on wages and job availability in the U.S. for years to come. A substantial percentage of America’s white-collar workers face an indefinite future of limited prospects.

      Limiter prospected are becoming zero prospects. This is a problem that sucessive leaderships around the world simply will not acknowledge. It is no surprise what is happening.

      Financial Markets being what they are only chase where the gains are. But they too are finding their prospects being limited as well as the generators of wealth (enterprise/workers) are being slowly turned off.

      Yesterday for me was an eyeopener to see bond offerings at negative rates of interest. This is the black swan. If the best you can get in terms of a return is less than what you put in, what is that really saying? Are we looking at a desperate attempt to swap money for hard soveriegn assets at any cost?

      Strange times indeed.

  4. george

    Absolutely brilliant analysis and production!!! Congratulations to all of you.

  5. Puschkin the Black and White Cat

    Emmm, well it seems to me there is some sort of a Catch 22 here (or is there?), the Chinese economy is slowing therefore Europe cannot export to them, in turn the Chinese economy cannot export to a weaker Europe.
    I guess the real problem may be that people have a much reduced appetite for the rubbish on sale, why replace a car every 3 years? Why go on holidays three times a year? Why get a new phone? In my own case I consider my time the only asset I have so I just don’t want to waste it on rubbish. I would rather consume less and earn less and have more time, time is all I was born with and it much more valuable than either gold or oil.
    Is this what is going on?? , could the effects of forty years of education be paying off?

    • Adam Byrne

      In a word Puschkin, NO. (In my opinion). Most people are as thick as two short planks, no matter how much education you shove down their throats and will remain so. Call me a pessimist.

    • Adam Byrne

      I fully agree on your opinions with regard to the accumulation of material shite and the preciousness of time. I take the same approach myself. If the vast majority of people want to wallow in the misery of their materialistic lives, then leave them to it is what I say. It’s not my job (or yours) to enlighten the stupid heaving masses.

  6. mediator

    Think a read of this might be interesting at this point in our time for many contributors. It steps outside the current authority paradigm and points out some root causes of our problems

    I had thought about many of these things myself but she writes it very well.

    Essentially she breaks up the world into productive and non-productive and if you look at our quasi communist and increasingly bureaucratic state you can see that in each generation the number of real unemployed (non productive citizens) including those in so called work, is increasing dramatically.

    http://mises.org/document/3197/The-Discovery-of-Freedom

    Enjoy

  7. Tony Brogan

    It is too late for repectable blog discussion. time has past for economic recovery of any kind.
    One is left with the only option to protect oneself as best you can.
    Be aware and react.
    15 years ago I forecast negative interest rates as a logical result of people living beyond their means to the point of debt satuation.Eventually nobody has the means of payment and so can borrow no more. Demand for credit dries up and interest rates will fall to the point where one is begged to borrow more when it is not possible to even repay principal never mind interest.
    you will be paid to borrow and charged to save. How bizarre is that, but true.

    fiat money is worthless, and soon that will be recognised. Fiat money will be shed and scorned. Hard assets will be the salvation of those who have any.
    Gold, Silver and land.

    now read Jeff Neilson. you don’t have time not to!!

    http://www.gold-eagle.com/editorials_12/nielson070512.html

    Crash Warning
    Jeff Nielson
    5 July 2012
    Regular readers of my work know that I have been outlining (and warning people about) two potential economic scenarios; as the West’s terminally-ill economies lurch towards their final collapse. These hollowed-out, debt-saturated economies would (will) either crash under the weight of their own insolvency; or our governments will create a hyperinflation death-spiral — in a last desperate attempt to avoid that bankruptcy event.

    While both paths represent utter, economic suicide; the road to ruin is much different in these two scenarios. This has severely limited the investment options and strategies for any prudent investor. Forced not only to “play defense” with our investing but to prepare for two more-or-less opposite events has made precious metals the one asset class which can protect investors from either of these fates.

    I’ve explained on multiple occasions in the past why precious metals will outperform other asset classes in both a debt-default crash or hyperinflation-spiral scenario. The purpose of this piece is not to repeat that analysis, but rather to point out that as of this moment the “crash” scenario has become not only the most likely scenario, but an imminent event.

    For those who have been paying attention recently as the West plummets deeper into Depression and the global economy teeters; the news that came out today was enough to send shivers down one’s spine. On a single day we hear that Europe’s interest rates have descended closer to the zero-percent graveyard already occupied by Japan and the U.S.; China has slashed its own interest rates again; and the (ridiculously inflated) U.S. “ISM” service sector measurement has reached its lowest level in 2 ½ years.

    Each of these news items has dire implications, and so I’ll spend a moment dissecting each of them. As I have detailed in past commentaries, any fiat-currency produced at zero cost (i.e. with interest rates set at 0%) is worthless as a basic tautology of logic and arithmetic. There can be no possible debate or equivocation here. Just as with the yen and the USD, the euro now lurches much closer to the same worthless status.

    Meanwhile we see China, the growth-engine of the 21st century global economy, again lowering its own interest rates. With China’s 1-year deposit rate on the renminbi now set at 3%, while the 1-year lending rate is now at 6%; China’s interest rates are still sane (unlike the West) – and it’s own paper is not (yet) officially worthless. However, China’s latest cut in its interest rates signals another deeply disturbing aspect to the economic carnage created by the reckless/greedy/incompetent Western banking cabal.

    What most other economic commentators still totally fail to grasp is that the terminal, economic death-spiral in which virtually all Western economies are now trapped bears absolutely no resemblance to any other deflationary collapse in the limited experience of these pseudo-experts. In a “normal” deflationary episode, by definition the value of the currency in circulation rises. This makes that currency an effective “safe haven”.

    Similarly, in previous deflationary episodes when our economies were still solvent, bonds also represented a safe haven: loaning money to the most reliable debtors, sovereign governments. Neither of these parameters exists today.

    As Western economies accelerate toward their debt-default crash (i.e. bonds going to zero), we see inflation raging all around us (i.e. currencies going to zero). “Official” numbers on inflation have become such absurd lies that they are now entirely irrelevant numbers. In the real world, inflation is now a double-digit plague in virtually every economy – and cutting interest rates stokes that inflation still further. Worse, because inflation (by definition) is the destruction of our purchasing power; such crippling inflation causes the collapse of these hollowed-out economies to accelerate. Thus we have a world where inflation and insolvency can and are simultaneously worsening.

    While Europe and China are stoking the inflationary side of this economic nightmare with their interest rate cuts, simultaneously we get more terrible news out of the world’s great, economic black-hole: the U.S. economy. While absurd statistical lies have transformed the U.S.’s Greater Depression into an “economic recovery” for the past 3 years, the short-term benefits of this propaganda campaign come at a terrible price.

    Deluded Americans who should have spent the last three years bolstering non-existent savings and paying down their extravagant debts have instead done the opposite: they have stopped saving, while once again piling on more debt which they have no hope of servicing over even the medium term.

    As usual, our greatest condemnation must be reserved for the mainstream media, a corporate propaganda machine which is entirely owned by a handful of Oligarchs. To protect the paper-empire of the felonious banking cabal, we have been fed an endless diet of “don’t worry, be happy” tripe from the shameless shills employed by these Oligarchs.

    News from the U.S. economy has been totally unequivocal, once realistic numbers on inflation are used to translate the economic fiction distributed by the U.S. government. Manufacturing has collapsed. The housing sector remains mired in the worst depression in U.S. history, and saturated with mortgage-fraud there is no prospect of this market healing during our lifetime.

    Several months of terrible retail sales numbers are being accompanied by a marked sag in the official readings for the U.S. services sector. With consumption directly or indirectly accounting for well over 80% of the U.S. economy; each percentage-point drop in this sector of the economy translates almost point-for-point into a decline in GDP. While the crippled economies of Europe at least attempted (suicidal) “austerity”; the U.S. economy is drowning in such extreme levels of debt that its cowardly two-party dictatorship has refused to even attempt to control the exponential explosion in U.S. debt.

    The U.S. economy is nothing but a credit card which is past the point of being “maxed-out”. The ludicrous notion that the U.S. can “print” its way out of insolvency is nonsense, for (among many) a reason which I’ve already provided: the U.S. dollar is already totally worthless. As a basic proposition of arithmetic, worthless paper cannot mitigate insolvency. However trying to do so is how governments produce hyperinflation.

    It is the act of attempting to ward-off bankruptcy by printing ever larger mountains of (worthless) paper currency which has always been the catalyst for hyperinflation; as such extreme/reckless conduct shatters the final delusion of the Sheep that this worthless paper actually has value.

    The analogy of a government which claims it can ward-off insolvency with a printing-press is a simple one. It is identical to the Deadbeat who assures a creditor that he can “resolve” the problem when one of his bad-cheques “bounces” by simply writing another (bad) cheque. It doesn’t matter if the Deadbeat writes one more bad-cheque or a million; none of his debts can be reduced, let alone repaid.

    So it is with Deadbeat Governments claiming they can “pay their bills” by simply printing more and more and more and more paper. It is not a question of “if” the Sheep finally and totally reject all of this fiat-paper. The only question which remains is how many months until this occurs?

    Understand that during the Panic of the crash which looms ahead of us that it is entirely possible that the (nominal) prices of our precious metals assets (whether bullion or the shares in the miners) could decline still further. This must not deter us, and above all we must not attempt to become “traders” in this extreme/insane environment.

    Those (amateur) investors who naively believe they can trade in and out of such markets overlook one, gigantic variable which can (will?) destroy them. As our economies collapse it is inevitable that both our banking system and markets will be forced to shut down – likely for extended periods.

    Those who sell their precious metals assets for the bankers’ “magic beans” (i.e. fiat paper currencies) risk being caught holding that paper when our banks and markets are closed. By the time the financial system re-opens there is the very real possibility that any/all paper in their possession will no longer have any value whatsoever. Instead of prospering through their trading, such people can/will annihilate themselves financially.

    Understand that what looms ahead of us is an economic cataclysm more severe than anything we have even read about in our history books, let alone experienced in our own lives. Understand what it means to “play defense”, and do so now – before it’s too late. Seats still remain in the Financial Lifeboats known as gold and silver, but the Titanic is sinking fast and the party is over.

    Jeff Nielson

    http://www.bullionbullscanada.com

  8. bonbon

    As pointed out above this is not anymore an economics problem, rather of leadership and specific action. The UK has made an astounding call for Glass-Steagall, starting on Jul-4, now reaching flood proportions, an amazing opportunity for political change, an assertion of leadership which is having major repercussions in the USA.

    Reich Says LIBOR Crimes Will Reach Wall Street, Repeats Demand for Glass-Steagall

    July 9, 2012 (EIRNS)–Robert Reich warns that the LIBOR case will hit Wall Street which he hopes will generate support for Glass-Steagall reform. Writing yesterday in Britain’s {Guardian} under the title “Wall Street’s Link to LIBOR,” Reich asserts that there are “two different LIBOR scandals.” One was the minipulation of LIBOR around 2007 “in order to disguise how much trouble they [Barclays and the banks] were in.” The second is “worse, and is likely to get the blood moving even among Americans who assume they’ve already seen all the damage Wall Street can do. It involves a more general practice — starting around 2005 and continuing until … who knows, it might still be going on — to rig the LIBOR in whatever way necessary to assure the banks’ bets on derivatives would be profitable. This is insider trading on a gigantic scale. It makes the bankers winners and the rest of us — whose money they’ve used to make their bets — losers and chumps….”

    If this were proven to be true he writes, “It would amount to a rip-off of almost cosmic proportions — trillions of dollars that average people would otherwise have received or saved on their lending and borrowing that have been going to the bankers instead.

    “It would make the other abuses of trust Americans have witnessed in recent years — predatory lending, fraud, excessively risky derivative trading with commercial deposits, and cozy relationships with credit-rating agencies — look like child’s play by comparison.”

    While Americans tend to be jaded about Wall Street’s
    misdoings, he concludes, “we may be reaching a tipping point where Americans move beyond outrage to political action. Recall that the bailout of Wall Street gave birth to both the Tea Partiers and Occupiers. Across America, one hears a growing demand that Glass Steagall be reinstituted and that the biggest banks be broken up. Not long ago, the Dallas branch of the Federal Reserve, hardly known as a bastion of radicalism, proposed that the biggest banks had become too big to regulate and should be shrunk.

    “The pertinent question here is whether the unfolding LIBOR scandal, which will soon hit these shores, will provide enough ammunition and energy to finally get the job done.”

    In a similar blog for the {Christian Science Monitor}, today (“Scandal of Scandals: Barclays Corruption Probe Digs Up New Dirt”), Reich concludes: “When it comes to Wall Street and the financial sector in general, most of us suffer outrage fatigue combined with an overwhelming cynicism that nothing will ever be done to stop these abuses because the Street is too powerful. But that fatigue and cynicism are self fulfilling; nothing will be done if we succumb to them.

    “The alternative is to be unflagging and unflinching in our demand that Glass-Steagall be reinstituted and the biggest banks be broken up. The question is whether the unfolding LIBOR scandal will provide enough ammunition and energy to finally get the job done.”

    • Tony Brogan

      Here is leadership for you.

      https://usjf.net/2012/07/arrogant-obama-warns-congress/?utm_source=USJF+List&utm_campaign=719e868848-RSS_EMAIL_CAMPAIGN&utm_medium=email

      The President decrees to congress to
      Deny basic rights of a civilized society.
      Remove habeus corpus, remove the right to trial, remove the right to a lawyer, incarcerate indefinitely,
      for any american citizen suspected of being a threat to the state! This in that bastion of freedom and free enterprise. It is in effect already.

      • bonbon

        That’s Obama all right. The NDAA and Obamacare should be clear enough indication, not to mention Drone breakfasts where he personally goes over photo’s to target.

        FDR, a Dem, showed what leadership means using the full scope of the Constitution for the Forgotten Man against Wall Street ( who organized a coup, whistle blown by General Smedley Butler ).

        • Tony Brogan

          Yes but FDR also stole the private property of individuals by confiscating gold and making it illegal for an American to own gold. Admittedly there was a payment for the seized gold of $22 plus but the rate was immediately set at $35 an ounce thereafter.
          This action did not support the constitution.Gold is private property and it was expropiated.
          It took President Ford (a Rep) to finally reverse that decision and allow ownership of gold again.

  9. Tony Brogan

    The coming chaos will be cataclysmic–John Embry, investment analyst for Sprott asset Management.

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/9_Embry_-_Hang_On_Because_The_Chaos_is_Going_to_Accelerate.html

  10. Dorothy Jones

    Well….we all should be outside palying instead of being at a computer….but…here’s a great graphic depicting Hollande’s vs. Merkels ‘World’….in today’s FAZ

    http://www.faz.net/aktuell/wirtschaft/europas-schuldenkrise/eu-gipfel-zur-schuldenkrise-merkels-welt-hollandes-welt-11760892.html

    • Tony Brogan

      Right on Dorothy
      I road 120 Km yesterday on my bike(round trip) to coach a local boxing club. Last weekend I sailed two single handed races aboard my sailboat plus I had to get there and back from here.20 km each way. lovely weekend of warm sunshine and cool evenings. good for the soul, good for the body, good for the health.
      This evening I was committee boat for the Wed night races. The race was abandoned because of a lack of wind. But it was glorious on the water, in the early evening sunshine.
      Now where was I. Ah, back to the computer!

  11. bonbon

    Hope the FAZ gets in line, as Financial Times Again Calls for Glass-Steagall

    July 10, 2012 (EIRNS)–In one of its three leading editorials, today’s {Financial Times} criticized Labour Party leader Ed Miliband’s policy statement in reaction to the LIBOR scandal, clearly stating, “Sadly Mr. Miliband reamins to vague on one of the biggest questions: Whether to force an outright Glass-Steagall type separation of retail from investment banking.

    This would go further than what was advocated by the Vickers Commission and has been adopted by the government. It is now clear that ringfencing is not enough.

    “The LIBOR scandal demonstrates that Britain needs a cultural as well as a policy revolution in banking. After a week of skirmishing Britain’s leading parties should show they have understood what is at stake.”

    In his statement Miliband said that the Vickers Commission and its ringfencing was only the starting point of Labour’s bank reform policy and mentioned nothing about Glass-Steagall. In fact, Ed Balls, Labour’s shadow finance minister, when asked about Glass-Steagall, expressed reservations about a “forced split,” adding that “there are lots of risks and complications and perverse outcomes.”

    Meanwhile Roger Bootle of Capital Economics, a regular commentator in the {Daily Telegraph}, penned a piece on July 8 in which he states that the ringfencing of the Vickers Commission goes to the question of separating retail from investment banking, “but not far enough,” and continues, “I suspect Vickers will prove to be only a staging post. What we need is the complete separation of institutions, thereby enshrining different cultures, in other words, the resurrection of the separation which was enforced in America by the Glass-Steagall Act.” He then says we have to go further and repeal some of the “Big Bang” reforms, referring to the stock market deregulation of October 1986; one of the most important of these was ending the “single capacity” which was the legal separation between stock brokers, who bought stocks for clients and did not take positions, and so- called stock “jobbers,” who could not directly deal with clients. This minimized conflicts of interest.

    It should be noted that Roger Bootle just won the £250,000 Wolfson Economics Prize on July 5, for a paper on how a country can withdraw from the euro, “Leaving the Euro: A Practical Guide.”

    —–
    Essential reading for FG!

    • bonbon

      Actually in the FAZ today, Professors Hans-Werner Sinn and Walter Krämer, the initiators of the Appeal against a Banking Union, which now has over 200 signers, addressed their critics. They strongly reject the accusation that the public was misled by their appeal, by quoting from the text of the Brussels Summit Declaration, which says clearly that the ESM could directly capitalize banks when there is functioning European control. They reiterate that the ESM secures not only debts of nations but also debts of banks. Furthermore, the fact is that the preliminary limit for the ESM’s volume is also not any safeguard, because the mechanism to increase it is already there. And this will be used, as we know from the history of the euro.

  12. Dorothy Jones

    http://maxkeiser.com/

    [KR312] Keiser Report: From Tommy Guns to Credit Guns

    from July 10 2012….all good, but just under 10mins in, goes to Ireland: IMF says banking bailout most expensive ever…lost in the Libor news….

    ok…back outside to play now..:):)

  13. Deco

    James Howard Kunstler, social and economic commentator in the Us has a book out.

    http://peakoil.com/generalideas/review-of-j-h-kunstlers-too-much-magic/

    We see some of the comments here about the suburban lifestyle ethic, with a life centred around the mall, persistent distraction from the flat screen TV, endless credit driven trajectories to absurdity, escapism, and nostalgia.

    And I ask myself, are we not on the same trajectory.

    Behaviour breeds results, and the east of the country spent ten years in the American dream, and maybe places like Cork or Galway had it for shorter time periods. Now we see the results.

    • Deco

      The Irish concept of lifestyle, is now up for compromise with reality. Young wans going to Austalia for month long binge drinking sessions, ESB workers driving swanky new motors, and office workers blowing a years savings on the worst soccer team in the tournament are about to meet some pretty serious hard science. Talking about “pride” is about to go from being an absurdity, to being completely ridiculous.

    • Adam Byrne

      This is a great review in itself, whoever the psychologist that wrote it is (couldn’t find a name). I think I’ll order a copy of the book. Cheers Deco.

  14. [...] a new way of looking at global economic trends, look at Punk Economics 5 on YouTube. tweetmeme_url = [...]

  15. Three points:

    1. James O’Reilly and his conflict of interests….seriouly WTF is he doing still in government????

    2. Adam Clayton using our legal system for free ( he pays no taxes here ) to get his accountant sent down for 7 yrs.

    3. Sean Quinn and co. off-shoring 500million euro to russian accounts…being held in contempt of court…..he walks free….again WTF???????

    A seriously enraged citizen!!!!

  16. Excellently presented piece again.

    I wouldn’t blame the shoppers by the way since they can expect our economists to look after the macro economy the same was they can expect our structural engineers to ensure the shopping centre doesn’t fall down.

    If buildings collapsed periodically, engineers would look to the foundations and when economies collapse periodically economics should be no different.

    At the foundation of the economy is the creation and destruction of the lifeblood of the economy – Money. It is our commercial banks which create money, as accounting entries, through loans and we cannot ignore the fact that every euro has a corresponding debt as a result. Our banks also destroy this money as loans are repaid which is why reducing our debts doesn’t leave us in a better position.

    Under this system the debt crisis can’t be resolved. If we get more money for growth, we have equally more debt. If we pay off our debts, the money no longer exists.

    The only way to keep this system going is for us to take on more debt from banks than we repay. In recent decades this has been achieved through mortgages taking longer and longer to repay. However, having reached their natural limit of taking two concurrent careers to repay we can no longer expect house buyers to prop up this system any longer.

    We could resolve the debt crisis overnight by restoring the money creation process to a public institution. We could also stop banks from deleting money a number of different ways.

  17. [...] This is well worth 8 minutes 9 seconds: http://www.davidmcwilliams.ie/2012/07/09/punk-economics-5-the-world-slows-euro-crisis-far-from-over [...]

  18. Tom

    Great notes, David, on China, the US, and EU – Germany & France.

    One big thing missing: too much spending by gov’t. The problem of deficits is 100% too much spending over the business cycle.

    Related point: politicians who promise more responsible spending, i.e. less spending, do NOT usually get elected. This is because voters want, and vote for, the “free lunch” goodies the (lying) politicians promise them. With support of the big-gov’t media.

    Until voters choose responsible small gov’t leaders, the excess debt problems will continue festering and being such a big problem there is little economic growth.

    Finally, every gov’t, including Greece & Germany, could reduce their “market” debt by paying bills with 1 year, 0% interest, Bearer Bonds. “Borrowing” from those who first receive gov’t benefits. They should include the caveat that such bonds will be accepted at 100% value as tax payments.

    Germany should do this, and then demand that Greece also does it; and all EU gov’ts could do this, to avoid external debt default. And, if the internal businesspeople are NOT required to accept these bonds as payment, the bonds are not “legal tender” in violation of the EUzone agreements.

    Yet, if the local business do accept them, at some 20% discount or so, the Bonds act a lot like base Money.

    I support a return to the Gold standard, but doubt it will happen and continually look for other, more realistic ways to constrain the overspending of gov’t.

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