October 22, 2012

Moving Onwards and Upwards

Posted in Sunday Business Post · 153 comments ·
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This week, after yet another downbeat European summit – the 22nd since the crisis began – it would be easy to write about the interminable wrangling behind closed doors in Brussels and what measly crumbs we might be getting from the European table.

But no, the column is not going to do that. Instead, let’s look at the wider, more optimistic world that I engaged with last week while travelling extensively. We are going to talk about a world where money is not in short supply, where people say what they think and act rather than prevaricate, where inspiration and hard graft are available in equal measure and where innovation and risk-taking are the norm. In short, a world which is the polar opposite of Ireland right now.

This is a world that has dealt with its financial crisis and is moving on – and one thing is sure: it is moving ahead and not waiting for Ireland or Europe to sort out its financial house.

Last week, I flew to Arizona to speak at Google’s Zeitgeist conference. This was an extraordinary experience because on show was the best of America’s new economy, where the economics of abundance, rather than scarcity, dominate the discussions.

Flying home via New York, I met investors who argued that they had never been more confident about the state of the world.

Then last Friday, back in Dublin hosting a conversation with Bono about the One campaign, we spoke about how technology is changing the world of charity. This event in the Mansion House was at the wonderful F.ounders’ tech conference, established by Paddy Cosgrove. Cosgrove has managed to get the finest minds in the global tech world to come each year to Dublin, where investors and start-up companies looking for funds can network with each other and do business.

This is the new world where the only legacies are hangovers from the past, which are little or no impediment to growth in the future. The opportunities in this new world for Ireland will be there, whether we get a bank deal or not.
Given that we will have to default if we don’t get a bank deal with the EU, this is a good thing to be aware of. Legacy debts in this new world are an accounting, rather than an economic, problem. They are ‘notional’ problems on a balance sheet – and if we can’t do a deal with the EU, we have to restructure our debts. And that’s all there will be.

The people at F.ounders and Google Zeitgeist are interested in real economics, and real economics is driven by people, brainpower, innovation and enterprise – not whether a bank that didn’t deserve to get paid back has a plus or minus sign on its balance sheet or whether its debt ratio is sustainable or not.

Think about the following great periods of social and economic innovation that occurred when the debts and state of the innovative country couldn’t have been worse. Consider the amazing construction of the British welfare state equipped with the NHS and universal free education. This happened in the immediate post-war period when the national debt-to-GDP ratio of Britain was 170 per cent.
Or how do we explain that the greatest boom in German history came in the early 1950s when the country had defaulted on all its international debts and was using several different currencies?

Or think about the amazing innovations in Japanese technology in the past 20 years, when the country’s debt-to-GDP ratio was moving towards 200 per cent, its banks bust and its property market in freefall.

Or consider the explosive growth in Nokia which occurred after Finland devalued its currency – an act which, according to the present EU bosses, would have no long-term impact on the fortunes of a country. But it does.

These are some of the many examples of innovation occurring in times of great economic stress where mainstream thinking and conventional wisdom would suggest that economies can’t grow. If economies were run by accountants, then that might be the case, but thankfully economies are not run by accountants.
Economies make great leaps forward through technology, not banking and finance. When it comes to growth, only three things matter: availability of people, availability of capital and total factor productivity, which is the productivity of those people and that capital combined. The magic, the alchemy is the technology.

Ok, so we wasted billions of euro of capital on unproductive houses and land rather than productive technology, but the money is gone. Are we telling ourselves that whatever capital we have left, we are going to waste by paying back debt which is dead money, rather than deploying it in new technology and education? Ask yourself that.

This should be the government’s response on the bank debt and the deal. Enda Kenny should map this out and say: “Angela, do you really think we will spend our money on a promissory note when we know that total factor productivity is what makes an economy grow?”

At its most basic, technology is ‘resource-liberating’. It can make scarce things abundant. Think about the cost of telephony. Years ago trunk calls were expensive and now Viber makes communication free.

Years ago, access to information was a huge impediment to innovation because it was expensive to know how to do things. Now information is virtually free, downloadable and everywhere. The poorest farmer in Zimbabwe with a mobile smart phone has more access to information now than the head of the CIA had ten years ago.

And all this access to technology is spreading. At Google, engineer Peter Diamandis outlined that, today, there are two billion people on the net, connected with each other, talking, exchanging information.

But in eight years’ time, by 2020, there will be five billion people. This is three billion new minds, new ways of doing things and new ways of looking at the world which will come online and start making a difference. The possibilities through technology are truly vast.

At the F.ounders conference, Bono spoke about an anti-corruption website called ipaidabribe.com, which is a website used to expose petty corruption at source. Truck drivers and others who are forced to pay a bribe can register it anonymously and snare the corrupt official.

In the years ahead, these technologies will proliferate and undoubtedly change the world we live in. Now, just before you start to think I have gone all soft and infatuated with the elixir of the new and have forgotten the difficulties facing us, I have not.

But what I appreciated last week is that life has to go on. If we can’t pay the bank debts, we won’t. If we can’t get the ESM to pay them, we will default on this bank debt and life will go on.

More to the point, as we waste time and resources worrying about this, the world is moving ahead without us. We’d be better going to Europe with a note, saying something like this: “This is our bottom-line position. Please come back to us if you can do a deal. In the meantime, we’d like to go to work on the future, but you have our number if you want to call. We’ve been at 22 summits in four years, but nothing is sorted out. We just don’t have the time for this any more. The world is waiting; it’s not hanging about – and nor can we. Take it or leave it. All the best now, Ireland.”


  1. All makes perfect sense David, although their may be one tiny wee problem. Democracy. Together with the lack of courage & understanding among the electorate. Only when enough people have have really suffered and if they don’t DEMAND real change, nothing will.

    Sad, but true…

    • molly

      Yes you hit the nail on the head ,the Irish government can’t get that through there heads so its up to the people to revolt or be driven off the cliff.

  2. To read this article properly I advise everyone to do so with their full lungs ……and slowly ….and life returns again.

  3. [...] David McWilliam: Moving On Upward (DavidMcWilliams.ie) [...]

  4. Lord Jimbo

    Like a tale of two cities, there are two economies which are often talked about.

    There is economy of the old world: land, property, the professions, banks and their political supporters, which is currently on a taxpayer based life support.

    There is the economy of the new: risk, sometimes calcuated, sometimes not. Buzz words like ‘innovation’, ‘entrepreneur’, ‘new technologies’, ‘creativity’. Fortunately for the connected few, they either have the resources or are able to access them in order to explore this new world, to be fair it is pretty peripheral stuff which may or may not end up employing tens of thousands. But as Google and Facebook recently proved, it is a highly volatile area.

    For the majority of the world’s population there is the so called ‘real economy’. This is where incomes like jobs used to be pretty stable, where people are not seeking to be overnight millionaires or billionaires only to see their wealth wiped out by Friday lunchtime, where workers rights are respected, Unions exist, none of which impacts negatively on employers, it is a world of fairness, compromise and most of all sustainability.

    I would rather access to education, healthcare and housing than have the latest I-phone or e-tablet. Somehow we have to find this middle path economy because right now we live in a world of extremes which is heading for the wall, especially when you look at rising fuel and utility costs, price of oil and instability in almost every developing country, not to mention the ongoing financial crises in the so called developed world.

    • bonbon

      A Tale of 2 Cities, very good.

      And a Tale of 3 Curves :
      http://www.larouchepub.com/lar/2002/2903trip_curve.html

      There this “disconnect” is graphic. Your preferences are the physical-economy (which includes healthcare, education). One can see where “innovation comes from – the monetary curve “city”, or the “city” that we actually live in. Creativity is what changes that curve, as it must.

  5. JapanZone

    If I’d known about that event last Friday, I would have wanted to be there (assuming it was open to the general public). As it was, I went along to an Asia Trade Forum event focused on building an expanded and lasting trade relationship with Japan (from where I recently moved with my family). Much of the event was focused on educating Irish business people on the nuts and bolts of Japanese business etiquette and culture and there were a few too many dry statistics for my personal taste. Minister Phil Hogan was there to lend some official cred and humour to the event.

    But for me, what left me feeling that there had been some benefit from attending was a presentation by Glen Dimplex CEO Sean O’Driscoll. I’d only vaguely heard of his company and never heard of the man himself. But he spoke forcefully and eloquently about his intentions and determination to see Irish business greatly improve on their currently well-below-EU-average level of exports to the world’s second most important economy (he feels, and I agree, that China is decades from reaching the same level of maturity and importance). He gave several examples of how a lack of vision, leadership and professionalism from Irish politicians and businesses have led to general neglect of this relationship over the years. So he’s taken it on himself to do something about it. And he had at least this listener convinced that he has what it takes to accomplish it.

    And, whether he does or not, that presentation is the kind of thing we need to be hearing. Across town, the young and vibrant IT businesses and startups were busy just getting on with it at the Web Summit, focussed ruthlessly on creating rather than waiting for a better future.

    So keep it coming, David.

  6. Tony Brogan

    http://www.telegraph.co.uk/finance/comment/9623863/IMFs-epic-plan-to-conjure-away-debt-and-dethrone-bankers.html

    Interesting Article from Ambrose Evans Pritchard on an IMF paper suggesting the issuance of government money directly instead of the debt based money in current use could result in the removal of massive government debt and a return to suplus. One of the previsos is the removal of fractional reserve banking.

  7. Adelaide

    Subscribe to David’s viewpoint;
    but has anybody else noticed a definite recent trend amoung the late 30′s peer group of simplification of their tech-dominated lifestyles (and not because of personal finance but by choice)?

    Refer to: discarding personal technologies ie disposing of hardware (smart devices etc) and disengagement from online (facebook, twitter etc). And secondly, choosing to cycle than drive to work.
    Again, insufficient disposable income is not an issue with the people I’m referring to, these are lifestyle choices.

    I’ve met so many die-hard techies over the last few months who are turning their back on the wired world, it may be a blip or a fundamental change in people’s behaviour of a certain age.

    Has anyone else noticed this trend?

    • Philip

      Yes. Very definite trend to be “disconnected”. But that does not mean “Not Involved”. It is more selective and targeted towards utility and an awareness that sitting on your arse 7x24hr in front of a screen is bad for you and your relationships.

  8. Philip

    Nice upbeat article with all the usual caveats etc.

    When you look how various parts of the world bloomed out of nowhere – it is hard to imagine just how explosive and unexpected the nature of many of the rapid developments. The most amazing for me has been the fast knowledge acquisition to acquire such a competent industrial footing from near zero to a well educated workforce. Give people the lead and the incentive or hope and they perform.

    What could be troubling is the lack of renewal. Has Detroit rejuvenated? Has Belgium for all its wonderful infrastructure ever become noted for anything beyond a parking place for the EU. Has the Silicon Valley concept been ever replicated with long term success elsewhere? Yes, we see red bricked buildings industrial of the late 19th and early 20th century being turned into office parks etc and many are working from home as business processes become virtual.

    It all looks very subdued.

    There is of course an argument that headline type developments are all lost in the little developments and progress underway in Biotech, Nano Tech. Companies which needed billions to develop a new chip or drug are now being pushed aside by folks who can do it in a single office on a much shorter time scale and it shortly goes viral. Indeed it seems to closely replicate how nature works in reality – many avenues all evolving towards various solutions around food, health and energy etc.

    Download services where print off your own 3D version of what you want is now a reality. It is already starting to happen for spare parts. BioTech hacking in your Garage is a reality. Smart phones becoming the intelligence building block for most mechatronic apps from manufacturing automation to satellite control to driving your car automatically to running your home is a reality. It is a brave new world and remarkably, needs little in terms of resources or energy.

    With all the guys who have gone back to college and all the folks doing degrees in this that and the other, we’ll be the most educated workforce in 2-5 years time as the first grads hit the tarmac – post IMF. I choose to be optimistic.

    Bankers and Accountants, get ready for a new business model or be irrelevant.

    • Adelaide

      “The Technological Dark Ages. Future Global Poverty in a World of Virtual Richness and Automation”.

      Summarised as:
      “Gizza job” enquired Yosser.
      “What is a job?” replied the machine.

      Final Scene: Marx’s End of History.

      • bonbon

        Or Mel Gibson’s end of history (mad max…)?

        Have a look at a sane alternative :

        http://cecaust.com.au/main.asp?sub=policy&id=wamd.htm

        • Philip

          1950s view if the 21st Century. B Grade movie sci-fi. Give me a break. The reality always looks dystopian to those who refuse to accept what is an inevitable result of adopting technology.

      • Philip

        You better get involved or it will be difficult. I personally cannot see “normal” people being of any use in the new world unless they become enhanced. This enhancement has been happening for decades. Just look at how in the space of a few decades people have learned to use complex machines and trained themselves. Education is taking on new avenues. Automation merely ups the ante and yes, the reality is that these things are starting to out-think people and people are looking at upgrading. Stop thinking 19th Century and watch the teenagers.

        • bonbon

          You mean the Spanish teenagers, Greek, or Italian? Or how about the Tweeners leaving by the thousands?

          DMcW has not forgotten this, but a mere letter of cancellation, good in itself, is only the first step to real economics. A Dot-com revival, plus Facebook, and IT is just more Tiger echoes. That stratospheric monetary curve here, has indeed carried minds away with it.

          Reminds me of Gulliver’s Flying Island of Laputa…

        • Adelaide

          Philips says: “Bankers and Accountants, get ready for a new business model or be irrelevant.”

          Philips then says: “I personally cannot see “normal” people being of any use in the new world”

          Conclusion = people will become irrelevant in my brave new world, apart from tech-savvy me and my genius mates who will run the big machines. “I choose to be optimistic.”

          Good luck with that.

          • Philip

            As for “tech savvy me” and the so called Geniuses…fields look greener far away. Being in this business is like being a Mayfly. What you know today is irrelevant tomorrow.

            The reason I am optimistic is that opportunity is more prevalent at a much lower cost point. There are more artists and creators and thinkers working with one another than ever before. That has never happened before. In fact, the role of so called Geniuses and tech Savvy is exaggerated.

            With no money changing hands and lots of ideas being exchanged – exactly what role does a bank play? This is my point.

  9. molly

    Bank debt and enda .
    Enda and his government have proceeded on its agenda of reducing the debt and seek this from Germany , why Germany does Germany run Europe .
    Noonan said we are back in the bond markets why do we need to be , who are we paying out of this borrow money.
    It’s said that we need this money to keep the lights on , who’s lights.
    Why are we kissing Germany’s arse .
    It feels like we are back in 1939 and Germany is calling the shots.
    How can Germany corner such a position in 2012.

  10. Clare Leonard

    The country is full of smart and gifted people
    see link
    http://www.youtube.com/watch?v=mNxRwaF6iyo&feature=plcp

    • Tony Brogan

      First class commentary and great ideas.

      One comment to add.
      There is no requirement to add to the money supply within an economy in order to have a growing more productive economy. In fact it is preferable that the money supply remain constant. It is simply the means of exchange. It matters not what it is as long as it is trusted. Money is never consumed in the transaction and acts like a catylist.
      To eliminate violations of that trust most people have decided to use gold and silver as it is the least able to be added too.(It has other qualities esential to act as money) It is a given that in order for this trust to be maintained that any currency issued must be 100% redeamable for specie and that fractional reserve banking be outlawed. (as is stated in the presentation)
      Well done Barry FitzGerald

  11. The political sybaritical decisions of Noonan will invite nemesis before Angelas Ashes rise from the Dante Inferno .

    Only then will Time lead us once more .The Pain has not begun .There is a very long road to travel before we even think to lift our hearts .

  12. Dorothy Jones

    In contrast to the column inches given to the meaningless ‘Ireland is a Special Case’ waffle; little or no coverage has been given to the challenge taken against the ESM by Irish Independent TD Thomas Pringle. Why? Plenty of coverage in the German media.

    NAMA wine lake synopsises the challenge:
    http://namawinelake.wordpress.com/2012/10/21/crucial-esm-court-hearing-set-to-start-this-coming-tuesday/

    Live commentary and excellent background info by:
    http://taleoftwotreaties.tumblr.com/

    Out with the popcorn; this could be good…imagine if….

  13. Dorothy Jones

    Holy Moly…Gayle Killilea commenting on the coverage by NAMA wine lake on the US case development against the Dunnes. NWL said it was her when asked by Gavin Sheridan. Ever the shrinking voilet.

    http://namawinelake.wordpress.com/2012/10/21/nama-versus-the-dunner-us-court-case-starts-tomorrow/#comment-43452

  14. bonbon

    “Zeitgeist” is a sign of the times.

    What should be worrying everyone is what follows this “Zeitgeist”, “Volksgeist”, and we know what that means.

    We will have at least 9 billion, not five by 2020, with water, energy, food, power, transport needs that are very east to reckon. The Sign of the Times is that none of these are addressed by “innovation”, which is simply a controlled creativity to be spooned out by some elite. “Innovation” comes from the Schumpeter column of the Economist Mag. It is part of creative destruction which is under no circumstances ever intended to support 9 billion people.

    The creativity of infrastructure, jumping to a new higher economic platform, with NAWAPA XXI, Arctic routes, Eurasian Landbridge, immediately 6000GW of power at high density which means now nuclear, and greening deserts for modern agriculture are what will actually happen. Whether google considers this popular or not is irrelevant, but has actually held talks on some of this, believe it or not.

    The disconnect of economics from relative-potential population-density is to be expected in Tiger Ireland, and the USA, Europe, but also very firmly to be put on any discussion forum table. It is here economics meets human reality.

  15. molly

    The Irish government past and present have back there people into a Dead end.
    Our problem now is we can’t afford to live in this country.
    Is this the Ireland of no hope .
    We are going to have to stand up and make our own hope so stand up .

  16. BirdCourter

    “At its most basic, technology is ‘resource-liberating’.”

    David am delighted you wrote an article along these lines. Talking is important but action allied to purpose matters much much more. I came out of college and was sick at what I was seeing and hearing. Reaction: gave up reading newspapers, hadn’t a penny in my arse pocket but founded an online campaign to Tweet Twitter to set up jobs and a HQ in Dublin. Mobilised thousands of people and wrote a free ebook on how to use Twitter for start-up businesses (@BirdCourter & @Twindset) – Result: Twitter set up shop here in 2011 and cited the friendliness of the Irish people as their number one reason for coming here: http://bit.ly/t544mF

    Project 2: met the awesome CoderDojo founders very early on in Cork: Result set up a CoderDojo Galway City (@CoderDojoGalway) – Galway city is now the largest dojo worldwide teaching computer code and Chinese Mandarin to 300 kids weekly and hosting monthly workshops by SME’s in the creative industries. Again no money involved or required, just good will and people committed to real econmoics as opposed to report writing. As far as I am concerned CoderDojo is a fully fledged Irish multinational and a total gamechanger – 20+ countries and 6,000+ kids in under 2 years.

    Project 3: Pedagogy Plant (www.facebook.com/PedagogyPlant) – planting trees of creativity all over the world and this is just the start. First university we planted in: Aung San Suu Kyi’s Alma Mater, second uni: American University of Central Asia Kyrgyzstan. We have since gone on to plant with small businesses, families and people all over the world and we’re just starting. Budget: 400 Euro.

    Am saying this not to swell some silly ego or to sound impressive but rather to impress upon you, the readers and this excellent article that while we cannot per se control what happens to us; each and everyone of us can choose how we react to said circumstances. As I write this I am just home from a very positive meeting about a big-scale tourism project I am creating for Ireland. Again no budget. I could easily be dissuaded as I pitched this idea for free to government earlier in the year. Result: move on and act anyway – keep an eye out for us.

    • Adam Byrne

      Well said. Get on your bike and look for work.

      I’m a third year Business & Management (mature) student. In second year, I did a project on a local business (won’t bore you with the details). Have now turned it into a job for myself – paying 600 quid a week for about 20 hours, which I can do at home and space out during the week while completing my studies.

      My point is: there are tonnes of opportunities out there, as David says in this article. It’s a case of relentlessly seeking them out and working your arse off when you get half a chance. If you don’t know a particular aspect of a given job, get online, or in the library and bloody well find out. I can’t abide laziness but we are surrounded by it.

      • Tony Brogan

        Onward and upward and see you in Kilkenny. Coffee for you I think you said!!

      • Well done Adam,
        that’s great progress for you. I’ve tonnes of energy and drive but don’t know where to apply it…it’s the idea phase I’m stuck on…if I had the idea then I could go for it.

        • Adam Byrne

          You could look into Social Media promotion for small businesses Josey. Most such enterprises are not online at the moment, and if they are, they are not using it properly to market their products/services. It’s wide open at present and it’s not just playing around with Facebook and Twitter; you can increase football and revenue for businesses by huge percentages. Targeted Facebook Ads (at modest levels of expenditure) are particularly effective. Start with businesses close to you – for example, practice for free on a family/friend’s business and slowly expand locally from there. You don’t need high levels of IT skills either, but you need a basic understanding of marketing, which is easily researched and mostly common sense.

          • Adam Byrne

            ‘footfall’ not ‘football’ haha.

          • Tony Brogan

            As long as it is not a footpad!!as I read that a lot of money could be had that way.

          • Thanks for the tips Adam, my sister runs a great cafe in “powerscourt shopping centre”…I might try it out on her first but she’s that busy I’m not sure she needs it.

            Keep up the great work :)

          • Adam Byrne

            If she is operating at that location Josey, she is going to get a lot of people ‘checking-in’ on both Facebook and foursquare, because it’s a trendy part of Dublin to be and people like to let their friends know where they are, especially when they are spending money in posh shops.

            Set her up a foursquare place too but first check to see that there is one not already in existence (set up by a customer) and buy that one instead (you will get all its previous check-ins). That will cost 10 USD, I’m sure your sister will cover it.

            Your sister could run Facebook Offers or Foursquare for Merchants promotions, in the future. Internet savvy people get excited about such things and she might not always be busy. So it’s best to have all these social media tools in place now and be familiar with them instead of closing the stable door after the horse has bolted.

            The point of them is to improve your real sales, not for them to become the focus of the business and they do work. I’m seen business awareness and revenue go through the roof when it’s done properly. Good luck!

    • Philip

      A classic case of properly understanding the reality of the 21st Century. And there are more like you out there. Keep at it and let everyone learn. This is the nature of true game changers.

  17. Tony Brogan

    ‘Ok, so we wasted billions of euro of capital on unproductive houses and land rather than productive technology, but the money is gone. Are we telling ourselves that whatever capital we have left, we are going to waste by paying back debt which is dead money, rather than deploying it in new technology and education? Ask yourself that.’

    Good question. So you won’t mind if I hit you up for a loan to have a good time in Kilkenny, Then I’ll split and find another sucker?

  18. Tony Brogan

    Mark Lundeen

    What I find very suspicious is how the Dow Jones is within 6% of making a new all-time high in the face of collapsing trading volume (Green Plot Below). And then look at the Dow’s all-time high volume, it occurred during the very bottom of the Credit Crisis crash, March 2009. Everything is upside down.

    I fear that the stock exchanges may go out of business for lack of business before this bear market is over. For the most part, the public is out of the stock market. This exact thing happened during the Great Depression, and they didn’t come back until the late 1960s, some thirty years later when a generation entered the stock market with no living memory of the 1920s and 30s.

      • Tony Brogan

        Yes we have been talking about that for a few days now.If Germany can find the gold they think they own, as it is likely sold into the market already via gold swaps with the US.
        Remember possession is 9/10ths of the law.
        “Finders keepers, loosers weapers”
        A lot of Germany’s gold WAS in London and more in New York.

        • Dorothy Jones

          Tony

          Sorry it’s in German…but..for the most part…Germany’s gold reserves are not in Germany, but in ‘other locations’. It’s not clear and it’s also not clear why they don’t know or ask for them back.

          http://www.faz.net/aktuell/finanzen/devisen-rohstoffe/reserve-der-bundesbank-wo-steckt-das-gold-der-deutschen-11844207.html

          Do you know?

          • Tony Brogan

            Well yes and no!!
            Seems after the second world war there were not much reserves left in germany but I have no details.
            post war any nation having a trade surplus with the US could redeam the surplus US notes for gold. As the accounting was done it resulted in the US spending more than they earned and so the gold changed hands on an accounting basis. It seems a chunck of this gold was left in NY as why move it when the accounting noted how much was owed to whom.

            This went on until 1971 and Nixon said no more and reneged on that deal and so as they say the world went off the gold standard (or what was left of it).

            other nations also accumulated gold and the US stores depleted from in excess of 20,000 tonnes to 8,200 tonnes.

            also the cold war was in full effect and so it was prudent to put ones gold where a potential USSR invasion could not get it.

            Seems in Germany’s case there is I recollect 3400 tonnes accredited to them and it is stashed in frankfurt, Paris, London and New York.

            So what is the problem. Double, triple, ownership of the same gold!!!

            firstly it has not been audited for 50 years or more in Fort Knox. nobody knows what is there or if indeed there is enough to meet the demands of the registered owners.

            As I have posted on this theme there are gold leasing arrangements carried out at the behest of national governments and or national central banks.

            This gold is leased to the “favoured sons” or “bullion banks” on favourable terms on the understanding it will be sold into the open market and the proceeds invested in the national bonds.
            This is part of the operation of the US strong dollar policy. concurrent with the week gold price policy.
            Support the currency bash gold down.
            once sold in to the market the gold is difficult to buy back without adding to demand and driving the price up which of course is rising anyway. so a lot of the leased gold is not returned.

            Countries have engaged in gold swaps. Hey Germany, this is uncle sam. I need to get some gold leased out and would like you to do it for me into the european market. So lease out some of your stash and I’ll credit you with an equal amount of my stash over here.

            Thus gold in europe is owned by Germany but sold and replaced (swapped) by US gold in the US.

            These gold swap arrangements are secret and only alluded to here and there. (See GATA Archives and dispatches). These swaps are done with other countries but in the case of Germany there may have been some suasion re defense etc., I do not know the details.

            The net reult is nobody knows quite who owns what or wherte anymore. i suspect that trust is breaking dowm especially since MF Global stole allocated gold with impunity and the banking system has come up with tungsten filled gold bars and other irregularities. It is also known that there is only one ounce of gold in the London gold Pool available for delivery for every 100 ounces traded.

            corruption is rampant and as you know there is no honour amoungst friends.

            Auditing the holdings will lead to exposure of the fact that most of the western banks gold is gone. It is estimated at least 10-15,000 tonnes of the alleged 32,000 tonnes is no longer there.

            The double and treble ownership occurs when the gold is leased out.
            As it is leased it is still on the books as owned by that country. However because of a surrepticious sales program the gold can recirculate in another central bank holding such as russia or china etc.

            If the proper accounting and disclosure is made and therte is a shortfall then there will be a run on the banks for all holders of promises to pay gold and the price will spike to who knows where.

            It will collapse the financial system. So do not rock the boat Germany, trust me we will look after you.

            The German courts do not believe this it seems and so are pushing to see Germany has what she thinks she has.

            dispite opinions to the contrary gold is becoming the international currency, it used to be, once again.

          • Tony Brogan

            friends==thieves!!

          • Tony Brogan

            Der Spiegel
            BundesbankRechnungshof demands inventory of the gold reserves
            22 October 2012
            Berlin – Germany’s gold is safely kept in Central Bank vaults in Frankfurt am Main, New York, Paris and London. Apparently, nobody has verified that. The German General Accounting Office has now demanded a regular review and inventory of the huge gold reserves abroad by the Bundesbank.

            The Auditors justified this in a report to the Budget Committee of the Bundestag on Monday citing the “high value of the gold reserves”. The German gold reserves stored at other banks have never been audited by the Bundesbank itself, or by other independent auditors, that is, “physically tabulated and with their authenticity and weight verified.” Indeed, numerous conspiracy theories abide on the topic — the US gold reserves in Fort Knox were taken a long time ago.

            The Bundesbank has, after the United States, the second largest gold reserves in the world. At the end of 2011 it was 3396 tons worth 133 billion euros. After the soaring of price of gold, it should be realistically even about 142 billion euros. The gold bars are kept by the Bundesbank in safes in Frankfurt am Main and three storage places abroad: at the US Federal Reserve (Fed) in New York, the French National Bank in Paris, and the Bank of England in London.

            Bundesbank is retrieving tons of gold from New York

            The Court of Auditors has to ascertain, on behalf of the Bundestag, whether the Bundesbank is precisely scrutinizing the gold it is storing abroad. It is controversial whether the practice by the Bundesbank for years is sufficient, to only rely on a written confirmation as to the gold bars by the foreign central banks.

            The Court of Auditors therefore recommends that the Bundesbank negotiate a right to the physical examination of stocks with the three foreign banks. With the implementation of this recommendation the Bundesbank started according to the report. Also the bank has decided in the next three years to bring to Germany 50 tonnes of gold these from the Fed in New York, to make a detailed examination here. The report contains speculation in several passages. So is not clear from the paper, how much gold is exactly stored at which foreign Central Bank.

            The bullion held at the Bundesbank headquarters consist of 82.857 bars, mostly stored in sealed containers with 50 bars each, which, according to the report, are kept in four separately sealed safes. A part of them (6183 ingot) are outsourced in the so-called gold Chamber being stored on open shelves in a separate safe. To secure the gold, according to the report: “The safes external shutter is double, the internal closures and the gold Chamber is under a triple lock. “

          • Dorothy Jones

            Danke Tony; I was curious. Feel much happier now:):)

          • Tony Brogan

            your welcome

  19. I share David’s optimism for changing the current system simply because the current system is unsustainable.

    To keep the economy running smoothly we have to take on more debt than we repay. To date, this has been achieved through global population growth and mortgages taking longer and longer to repay. However the rate of increase in global population is declining and mortgages have reached their natural limit of duration. We simply can’t take on more debt than we repay for the foreseeable future.

    Monetary reform is gaining momentum in the mainstream media too. The Telegraph had an article on full reserve banking as a solution to the debt crisis a couple of days ago which can be read at;

    http://www.telegraph.co.uk/finance/comment/9623863/IMFs-epic-plan-to-conjure-away-debt-and-dethrone-bankers.html#

    It’s opens with ‘So there is a magic wand after all’.

    • This article is a Theory only that is untested and may not be pragmatic in a World of Power Struggle .

      Magic wands always deceive the public eye .That includes you and I .

      • Tony Brogan

        Central bankers will shoot to kill before giving up their cash cow.
        That is why change must come from the bottom up with the people in concert demanding the change.
        Hardly possible but has happened before.
        In the meantime take personal action to protect oneself from the coming financial debacle.

    • bonbon

      AEP of DT reports on the same item you posted here a couple of blogs ago:

      http://www.davidmcwilliams.ie/2012/09/13/this-exodus-of-our-women-is-a-disturbing-new-trend/comment-page-1#comment-123434

      The Fisher Plan Revisited, or rather the Chicago Plan Revisited. A little bit of research is in order, would’nt one think? Irving Fisher, discussed in that IMF paper, personally brought the Austrian School to Chicago. Today we have DMcW quoting Goolsbee of that school in the previous blog.

      Anyway since it is a plan from the 1930′s it is strange that that all the IMF can come up with a Plan that was never adopted by FDR, then. Instead he financed the New Deal with the Reconstruction Finance Corp, not being able to implement full Hamiltonian Banking against Wall Street opposition. Fisher’s plan has nothing to do with Hamiltonian methods, which means setting up the Third National Bank of the USA immediately to finance NAWAPA XXI with public Credit using the Credit Clause of the USA Constitution (Hamilton’s clause).

      That means the IMF decides nothing in a sovereign banking system, and should simply dissolve itself as being of no more use. Of course the IMF was created with the purpose of reconstruction but has long since abandoned it for Troika escapades.

      Strange how AEP says : “The Athenian leader Solon implemented the first known Chicago Plan/New Deal in 599 BC”, when the IMF paper clearly notes FDR ignored Fisher’s petitions. Then AEP rightly accuses metal-lovers of conflating gold with money, but yet himself conflates the New Deal with the Austrian School !?!

      All through AEP’s article runs the Credit Clause, the uniquely American discovery. That is actually the entire point. AEP says Fisher wanted to separate the “quantity of Credit” from the quantity of money. I wonder how AEP would measure the quantity of Credit – in monetary terms, perhaps ?!?

      Much better to separate investment banking from chartered commercial banking that try to go after the US Constitution. It seems to me this is a last ditch effort to avoid Glass-Steagall.

    • bonbon

      AEP : “Simons and Fisher were flying blind in the 1930s. They lacked the modern instruments needed to crunch the numbers, so the IMF team has now done it for them — using the `DSGE’ stochastic model now de rigueur in high economics, loved and hated in equal measure”.

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

      How much DSGE is now being used to push the economic policies which have utterly failed?

      AEP quotes Prof. Richard Werner in the same article, and here we have the actual statement of the Prof., inventor of Quantitive Easing :

      http://www.davidmcwilliams.ie/2012/08/23/austerity-cant-help-were-heading-for-mass-defaults/comment-page-1#comment-122136

      Read that if one dares!

      • Realist

        Why would anybody listen to you when you persist lying: “Irving Fisher, discussed in that IMF paper, personally brought the Austrian School to Chicago”

        Where is the proof of this lie?

        You cannot keep lying about Austrian economists forever bonbon.

        • Tony Brogan

          A quick read on Fisher and I can find no reference to any belief in “Austrian economics”.
          but I did find he favoured eugenics, and was a medical nut who insisted on physical operations to cure his daughters schizophrenia, that resulted in her death!!

        • bonbon

          We discussed all this before, here :
          http://www.davidmcwilliams.ie/2012/09/13/this-exodus-of-our-women-is-a-disturbing-new-trend/comment-page-1#comment-123492

          There details of who Irving Fisher was, ant it gets pretty bad, makes one wonder if the IMF is hoping no-one is awake. “Distancing” itself from this trial balloon IMF paper, is a sure sign they want to know is everyone is comatose. Well some are always comatose, all are sometimes comatose, but not all, all the time!

          • Tony Brogan

            Yes and you continue to not answer questions. How do you equate Fisher as being an Austrian economist?

          • bonbon

            What is nicely paradoxical, are claims of Fisher being Keynesian, and that Britannica article on the roots of the Austrian School. This is why I always show the common British roots of both, and why the American System of Hamiltonian Banking is the way to go. The IMF proposal is simply an attempted counter to the now widespread Hamiltonian current. From this perspective it is easy to see the flaws in the IMF proposal.

          • bonbon

            The Chicago Plan has been revived before, in the mid 1960s by Milton Friedman.

          • bonbon

            There is currently U.S. Congressional legislation which mirrors it exactly, sponsored by Democrats Dennis Kucinich and John Conyers, acting as a countergang piece to HR 1489 of Reps. Marcy Kaptur (D) and Walter Jones (R) to restore the Glass-Steagall Act. The IMF paper has greatly excited the American Monetary Institute group from which Kucinich got the legislation.

          • Realist

            Bonbon, you did not show the link of Fisher with Austrian economists!!!!!

            If you once more mention Fisher is Austrian you will be noted as ultimate liar.

          • bonbon

            “The Marginalist school culminated in the work of three men–P.H. Wickstead in England, Knut Wicksell in Sweden, and Irving Fisher in the United States. The last two especially gave the Austrian theory clear mathematical expression. Perhaps the greatest contribution of the Austrian theory was its recognition of the importance of the valuation problem in the relation of capital to interest.”

            Check the link I posted. The point being both Keynes and Hayek and Fisher, are all of the same stable. It seems we are talking pedigrees here anyway.

            The IMF balloon has brought all this up again, and is simply a countergang attack on Hamiltonian Credit Systems. FDR ignored the British stable entirely, we should too.

          • Realist

            So, from that sentence you concluded these two “facts” :
            1. “Irving Fisher, discussed in that IMF paper, personally brought the Austrian School to Chicago”.
            2. “The point being both Keynes and Hayek and Fisher, are all of the same stable.”

            Austrian economic school evolved over time and is not equal to Hayek or anybody else. Keynes and Fisher are nothing to do with it at all.

            Read this and educate yourself a bit:
            http://www.mises.org/daily/6254/The-Odyssey-of-Sound-Economics

            I am anyway more follower of Mises/Rothbard stream, but cannot grasp lies about anybody else.

            You just talk nonsense bonbon.

          • bonbon

            Even Soros’ Open Society writer, Oxford trained Palley, has it clearly. Fisher brought the Austrian School into “mainstream” America. It seems he used mathematical window dressing, which Britannica euphemistically refers to. Strange that Wiki seems to miss this point. And the IMF paper stresses the DGSE “Stochastic Equilibrium” number crunching to give it the same patina of credibility. Could the IMF have taken to reading Britannica?

    • bonbon

      Cryptic conclusion : AEP “One thing is sure. The City of London will have great trouble earning its keep if any variant of the Chicago Plan ever gains wide support. ”

      Hmmm, AEP is indeed the voice of the City, yet we all know the only way to deal with the City, is Glass-Steagall which FDR actually implemented while declining the Chicago Plan.

    • Realist

      While I agree with the idea of 100% reserve I am seeing a lot of crap in this IMF proposal too:

      1. Not backed by metal (gold, silver, …). This way again the problem with printing money as it is now stays

      2. Full government control. It means the same continues where the government is going to create inflation by their own printing of money, like they did not do that already ?
      Government managing inflation ???? What a bullshit from Chicago school as they still talk about aggregate demand and quantity theory of money. the government is indirectly anyway printing money by bonds ending in central bank vaults as deposits. What will be now? Governments will print money straight and sponsor themselves straight.

      3. What about central banks and IMF itself in this case. They should not be needed in this 100% full reserve banking environment ???

      4. Who will control 100% reserve and how? and 100% does not mater if these 100% of money becomes 120% next year by printing 20% more. Fiat is fiat, so crap to me regardless.

      I really do not see anything changing here apart from going to totalitarian state.
      What 100% of fiat money means ? nothing really if such money base can increase by a few politicians or central bankers.

      This is not the way Austrian proposal for 100% full reserve banking with gold(or basket of commodities) backing. The proposal also getting rid of central banks, IMF and all of those societal wasters.

      • bonbon

        To clear up a small matter, Keynes knew he could implement hs Grand Theory in a totalitarian state, and admitted it.
        von Hayek called for an international authority to enforce the rules of free-trade.

        Much of a muchness, I’d say, what?

        • Realist

          Bonbon, what you said is nothing to do with what I said above?

          • bonbon

            You said “going to totalitarian state”. I cleared the fog on that.

          • Realist

            Bonbon, I did not mention neither Hayek or Keynes in my argumentation above, so could not grasp your comment.

            Austrian school is not one man, e.g. Hayek.
            I am actually more fun of Mises/Rothbard stream (mises.org).

          • bonbon

            I know that. Yet the Road to Serfdom is quoted here all over the place…
            And the call for an “international authority” takes many forms, all imperial.

        • Tony Brogan

          “The Road to Serfdom is a book written by the Austrian-born economist and philosopher Friedrich von Hayek (1899—1992) between 1940—1943, in which he “warned of the danger of tyranny that inevitably results from government control of economic decision-making through central planning,”[1] and in which he argues that the abandonment of individualism, classical liberalism, and freedom inevitably leads to socialist or fascist oppression and tyranny and the serfdom of the individual. Significantly, Hayek challenged the general view among British academics that fascism was a capitalist reaction against socialism, instead arguing that fascism and socialism had common roots in central economic planning and the power of the state over the individual.”

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

          bon bon, your statement about Hayek is incorrect. You are often mistaken, misinformed, misguided or a complete lying manipulator.

          • bonbon

            Von Hayek’s 1944 book The Road to Serfdom (the title was an inside joke) set the tone for the “Conservative Revolution” which the new society championed–that of a return to feudalism: “We shall not rebuild civilisation on the large scale. It is no accident that on the whole there was more beauty and decency to be found in the life of the small peoples, and that among the large ones there was more happiness and content in proportion as they had avoided the deadly blight of centralisation.”

            Von Hayek cynically denounced the nation-state as “tyrannical,” even while he called for the establishment of a one-world empire: “An international authority which effectively limits the powers of the state over the individual will be one of the best safeguards of peace.”

            ———
            Decadence is the only way an “international authority” could limit the power of the Nation State. Hayek is simply calling for Empire, as Keynes did too – 2 imperial “economists”, and both rejected by US President Franklin Roosevelt for this very reason. As FDR told Churchill, the USA would not fight fascism to put the British Empire back in place. All imperial “authorities” including fascism are rejected.

  20. bonbon

    “This is our bottom-line position. Please come back to us if you can do a deal. In the meantime, we’d like to go to work on the future, but you have our number if you want to call. We’ve been at 22 summits in four years, but nothing is sorted out. We just don’t have the time for this any more. The world is waiting; it’s not hanging about — and nor can we. Take it or leave it. All the best now, Ireland.”

    Well, if FG do this, they have SF’s full support. Chasing rainbows at summits has not produced the pot of gold at the end, and it only rained on the parade. The EU has our number, but the Nobel Committee discovered no one knows what number to call the EU!

    With all the talk of rainbows, and now we are to be told there is a magic wand, remember Hybrasil!

  21. bonbon

    A Tale of Magic Wands and Wunderwaffen –

    Euro Wonder Weapon ESM Is a Flop

    Oct. 22 (EIRNS)–If there were ever any expectations that the ESM would be the super-solution to the euro’s bailout needs, the fund has not performed at all well, during its first two weeks: More than half of the bonds which it has sold so far, have been bought by Eurozone investors, whereas non-Eurozone investors are hesitant. Asians have so far only bought 25% of these bonds, Americans scarcely 6%, and the British even less. The idea behind the ESM however was that it would be most attractive to non-Eurozone investors, whose money would be used to do the multi-leveraging for the ESM so that it could hand out more than EU1 trillion.
    But that failure already occurred with the fund’s predecessor, the EFSF: In all of 2011 and in the first nine months of 2012, it has been able to mobilize no more than EU50 billion. Former EFSF director Klaus Regling, who was repeatedly met with closed doors in Beijing on his fundraising trips there, is the new director of the ESM. Good luck, Mr. Regling….

  22. Deco

    In the context of the article, I would not be so sure about the current technology bubble that is “social media”.

    Here is one example of why when there is media hype, and a critical mass of people carrying unresonable euphoria, there might well be a scam in place.

    http://www.marketoracle.co.uk/Article37146.html

    Now obviously Wayalat will not be flavour of the month with the Irish media, or with such wealthy movers and shakers as Paul Hewson. But, I think he is correct in his prognosis.

    Yes, there is new technology advancing, and it does signify great potential to make money. But be careful the new technology equivalent of apartments in Sunny Beach !!!

    • Tony Brogan

      Thanks, interesting read. I like the advice to invest only where one has expertise or has investigated for several years>

      • Realist

        Does this include government bonds :) ?

        If we want this fiasco to end up sooner, we should start moving away our pension and other investments from government bonds :)
        Unsure will it change anything as banks and central banks might just acquire more bonds instead.

        • Tony Brogan

          No doubt that the atificially depressed interest rates will move up as the market overpowers the manipulation.
          This makes government bonds the latest manefestation of the money printing induced bubbles.
          bond holders may or may not get their principal back as the bubble pops. They may if held to maturity but the interest paid is far below the current real inflation rate of 8%.

          Best to get out now while there is still any market and invest in tangibles. Farm land, gold and silver for inflation protection!!

          The largest holders of government bonds are the central banks as the debt is being monetized by the central banks.(gives the appearance of a market and the interest rates artificially low)

          The european bonds have no real market and member states are trying to bail each other out. Bankrupt states bankrupting themselves further to stave off a neighbours bankruptcy!!

          Half a pound of tuppeny rice , half a pound of treacle, round and round the money goes, Pop goes the weasel.

          • Realist

            Exactly Tony.
            Interest rates are not proper free market rates, formed by supply/demand of savers and borrowers, but rather central banks ariticial rate.

            I am seeing it not moral to invest in government bonds, to support the further distruction of wealth and black future for my children. Even they outperformed some other assets, I just cannot bear have them.

            ECB is 200:1 geared and that is telling you how bad it is.
            And who will save them, the sovereign states that were bailed by ECB in the first place. EU and euro is the best example for “tragedy of commons”.

  23. paddythepig

    The Finnish devaluation of 1990 had about as much to do with Nokia’s success, as Robbie Keane’s bootlaces had to do with Jonathon Walters goal against the Faroe Island.

    Next to nothing.

    If you look at the history of Nokia, it had been working on telecommunications products for years prior GSM taking off in the nineties. The hard work was done by their engineers and staff, who painstakingly developed the right expertise, and were fortunate to be well placed in a technology whose time had come.

    • Philip

      Nokia and indeed most industries like it are a case of necessity being the mother of invention. Mobile developments took off in Scandinavia because of the environment – try trenching out for phone cables in 2 meter permafrost – vast areas of remoteness and a need for excellent security and reliability in radio for military purposes. Ericsson and Nokia were driven to make that happen and it coincided with a global need.

      Did you know that Roman chariots determined the gauge of our railway tracks today and in turn the diameter of the rockets we send into space?

      It goes on… Makes we wonder if man does anything conscious – but merely reacts to what nature wants. Am looking at the financial cockup unfolding in the same way and there is little that suggest conscious effort by anyone…another stone rolling down a hill.

      • paddythepig

        Doesn’t stop economists claiming credit for something they had nothing to do with though. Taking the credit where it isn’t due – that is one thing that human beings excel at unfortunately.

        It is time for economists to admit their insignificance in the grander scheme of things. The world would be a better place.

    • Paddy

      I get your point about Nokia working in telecoms and converting a rubber manufacturing conglomerate into a telecoms giant, but the point is they did it and Finland did it after its devaluation because they were helped enormously by changing their local relative price overnight.

      David

      • Philip

        The Finnish recession nearly killed off Nokia. They had to dump much of their portfolio and got lucky merely because they has backed the right horse i.e. GSM Mobile – where Scandinavia in general had a massive lead for about a decade beforehand. It took about 3-5 years later before they really starting winning. Local pricing was irrelevant as most of the components could only be sourced overseas – there was a massive shortage.

      • Realist

        David,

        Let’s say that it is true that Nokia somehow benefited temporarily.
        What happens to the imports, assuming the country needed to import too?
        What about other sectors of industry?

        I think this is one of the biggest fallacies that you can inflate your currency (lower the value) and help the economy.
        Do you still believe in such?

  24. michaelcoughlan

    Hi David,

    When I read this article in the SBB I found myself on a number of occasion catching my breadth. The articles being produced recently are of such higher substantiative and qualitative content they are a pure pleasure to read. From reading the more recent articles its clearly obvious you have had a political awakening in such a short time frame it could only be describe as whirlwind like. Its like David McWilliams lost his political virginity just before he got on the plane to the USA and McWilliams, David got off it. The same person but a complete inflection of your view of the world.

    Breadth intake no.1;

    Gone is the always right, academic, condescending, stating the obvious economic results of the political realities of what the bankers and politicians are inflicting upon Europe. Instead in this article particularly is a treatise full of hope, vision, energy, application and such a positive mental attitude showing how WE THE PEOPLE will create wealth and expand our economy and prosperity no matter what the scum of the earth in charge of the banks do, and more or less tells them to F**K O*F and stop bothering us.

    Breadth intake no.2;

    The vision laid out for what a real economy and good capitalism is ie a collection of human beings driven to create wealth for the benefit, enjoyment, productive, and positive use of every human being on the planet (Just like what John Perkins articulates in the chapter “The Solution” in his book hoodwinked)

    Breadth intake no.3;

    An Taoiseach Enda Kenny being advised to tell Mrs Merkel that Ireland is going to take no more nonsense from Germany and of course he could point out that German Bankers in Hypo Real Estate located in the IFSC were part of the enormous mess that the German public now have to deal with by taking advantage of our weak and nonexistent regulation.

    Breadth intake no.4:

    Advising our negotiators to adopt a take it or leave it stance in their negotiations ie finally sending our representatives to Europe with their fists up instead of their hands out.

    I sincerely hope that Gurdadiv and Kelly are similarly enthused and energized after meeting with you hopefully in the not too distant future.

    P.S.

    By the way David if you remember I suggested a bout a year and a half ago that our politicians particularly Brian Lenihan knew we would default all along and had to keep up the pretense to keep the money flowing from Europe. It is worth reflecting that sometimes its in the interest of our great Republic for our politicians to go to Europe and lie through their teeth. No one can ever take away from Brian Lenihan the enormous courage and integrity he displayed when continuing to do such a stressful job in Ireland’s cause knowing it was killing him. A true patriot.

    • mediator

      Hi Michael,

      I usually enjoy your posts and I particularly like your last point. ie knowing we will eventually default and lying to keep things going

      However in cost benefit analysis terms I’m not sure it holds up (or maybe it does). In any case if our politicians are actually smarter than it appears and if they are just pretending to keep the funds flowing then on that basis we will stop pretending that the debt is sustainable when the benefits of doing so outweigh the costs.

      Costs = Economic and Social of Troikas dictats
      Benefits = Government funding continues

    • Michael

      Glad you are enthused.

      All the best
      David

  25. DarraghD

    Sure look flks, the kind of forward looking brave mentality that David is aspiring to, he as mush as said it himself, it couldn’t be more removed from the public sector “for the file” hopelessly lost “we need to have our arses covered in Europe” mentality that we see every day here in this country from the “leadership”.

    There isn’t even an acceptance in government that we cannot pay our banking debt back, it’s a bury your head in the sand mindset that refuses to even face up to the national injustice that has been heaped upon our backs, let alone then actually try to fix the injustice!

    Meanwhile, while we are fannying around scarpering for the crumbs that are being thrown at us from the EU top table, our domestic economy sinks a little further into the shíts with every passing day. I’ve never seen things so bad in terms of consumer sentiment and willingness to spend in this country as they are right now…

    • mediator

      As I said

      Costs are now outweighing (supposed) benefits. I think that the costs outweighed the benefits a few years ago but maybe there’s something i dont know

  26. Tony Brogan

    How can being in debt be so easily dismissed.
    It has brought major nations to it’s knees and will do again.
    Is it another tale of two economies??

    Jim’s Mailbox

    October 22, 2012, at 10:47 am
    by Jim Sinclair

    Eric,

    Russia and China have a plan. It is the exact plan that Volcker invented and initiated when he destroyed Communism as an economic entity.

    Russia and China intend to keep up the military threat pressure, not allowing the US to cut its military budget meaningfully. The USA is not the ball in international economics anymore and cannot afford to become weak by comparison to China and Russia. They plan to bleed the west dry and then buy NA at discounted prices.

    Jim

    Debt A Threat To National Interests CIGA Eric

    Debt, a threat to national interests positioned below as security, is the main reason why QE will be infinite and investors expecting a massive D-wave decline after the A-wave advance of the ABCD gold cycle will be severely disappointed.

    Headline: Why debt is a threat to national security

    The national debt is not on the official agenda for Monday’s presidential debate on foreign policy.

    But it may as well as be. A chorus of former military leaders, current administration officials and fiscal hawks have all labeled the country’s debt a threat to national security.

    “A nation with our current levels of unsustainable debt … cannot hope to sustain for very long its superiority from a military perspective, or its influence in world affairs,” Admiral Michael Mullen, former chairman of the Joint Chiefs of Staff, said last month.

    The concern: If the debt continues to grow unbridled, the U.S. government will be constrained in its ability to pay for what it wants to do militarily and diplomatically. And it could limit the country’s leverage with foreign powers.

    Source: finance.yahoo.com

    More…

    • bonbon

      LORD CHRISTOPHER MONCKTON PURCHASED A FULL PAGE AD IN THE WASHINGTON TIMES ON MONDAY ENTITLED: “IS THE PRESIDENT THE PRESIDENT? Do the Math. See the logic.” After detailing the odds against individual errors on the Obama’s birth certificate, he concludes that the odds that all of the errors occurred accidentally in one document are 1 in 75 sextillion. “The matter could be settled in five minutes if just one State’s electoral returning officer gets a court to order Hawaii to let independent forensic experts examine the Kapi’olani Hospital’s 1961 birth ledger and the bound volumes of original, long-form 1961 birth certificates.”

      According to Politico DONALD TRUMP SAID HE WILL REVEAL “VERY BIG” NEWS ABOUT PRESIDENT BARACK OBAMA by Wednesday. “Something very, very big concerning the President of the United States. It’s going to be very big.”
      —–

      The concern is that the USA and the world will not survive another Obama term. The JCS, voiced by General Dempsey are in full war-avoidance mode, as the civilians are incapable it seems of restraining Obama who is headed for full scale thermonuclear war, which any military will tell you is not survivable. Russia tested its full triad successfully this week for the world to see.

      Just to clear up any misunderstandings here in the economic stratosphere.

      • cooldude

        Romney will be even worse if that is possible. Another warmonger on the way. Wall Street may have decided to change their puppet. And David thinks everything is going to be great. not so sure myself but who knows.

      • stevedublin

        Obama’s religion maybe?

      • whatamess

        here is the economic stratosphere… that’s for sure !

        30 minutes countdown to Donald Trump’s ‘announcement’…. i can hardly wait ! if it’s the suspected lame divorce papers issue,i will be dissappointed BIG time ….feicfimid…tick tock

        • whatamess

          $5,000,000 for Obama to release college records and passport applications and records ….

          ” to my satisfaction” ( there was no need for that..it cheapened the whole affair i felt …egotistical

          Does Trump have info on Obama that he is very slowly releasing before we go to the Polls…maybe Trump,even with this ‘announcement’ is still ‘keeping his powder dry’ ?? Duz he have more info and putting an early shot across Obama’s bow ?? maybe it’s all a stunt …..i dunno… but it’s v.curious ,very suspect really,that Obama’s records etc are a grey area…

          “we know very little about our president” … what skeletons are in the proverbial closet i wonder…i’m amazed that the secret service/FBI or whoever are not saying that Trump is a threat to national security….if an ordinary Joe said this stuff,he may very well be ‘paid a visit…’

  27. Tony Brogan

    Bonds are no longer a safe investment havingbeen the superior performer the last 20 years

    http://www.drschoon.com/members/commentary/GoldDisappearinYield.pdf

  28. Tony Brogan

    As the paper manipulators lower the gold lease rates to negative territory. They even pay you to take the gold.(note the 1 month lease rate) How soon before the breakdown in currencies and the hyperinflationary event occurs. Nobody knows but it is a year closer than it was!!

    http://www.drschoon.com/members/commentary/GoldStage3.pdf

  29. Dorothy Jones

    Thomas Pringle: ‘If #ECJ rules in my favour will we get €508m back?’

    https://twitter.com/ThomasPringleTD

    Wishful thinking; maybe it will be the Kasus Knaksus and bring an end to this charade.

    • Dorothy Jones

      Wishful thinking…I hope that it will

    • Tony Brogan

      Kasus Knaksus ??

      Causus causans??

      • Dorothy Jones

        Tony

        Spelling also: Kasus Knaxus…It is a saying in German…it’s meaning can be somewhat compared to that of the old nursery rhyme:

        ‘For want of a nail the shoe was lost.
        For want of a shoe the horse was lost.
        For want of a horse the rider was lost.
        For want of a rider the message was lost.
        For want of a message the battle was lost.
        For want of a battle the kingdom was lost.
        And all for the want of a horseshoe nail.’

        …Describing a situation where permitting some small undesirable situation will allow gradual and inexorable worsening.

        I just thought that the case might finally get to the nub of the matter. It may do. I don’t know, but something must give and this may be it.

    • bonbon

      What is at stake here is a 500 BILLION-Euro bailout-for-austerity fund.

      Bloomberg article on Tom Pringle’s ESM challenge which was heard at the European Court today -
      The euro area’s 500 billion-euro ($652 billion) bailout fund faces another test as the European Union’s highest court weighs claims that the firewall violates EU law and should be banned in its current form.
      A complaint by Thomas Pringle, an independent member of the Irish parliament, has reached the EU Court of Justice, which has the power to topple the European Stability Mechanism, or ESM. Pringle, the European Commission and European Parliament as well as EU nations including Ireland, Germany and France attended a hearing at the court today. A ruling is possible as soon as the end of the year under a fast-track procedure.
      http://www.bloomberg.com/news/2012-10-22/euro-area-bailout-fund-faces-challenge-at-eu-s-highest-court.html

  30. padser

    David, Just like to say Thank You. Best article I have read in long time!

  31. Philip

    Back to David’s article. The big rage about social networks etc dominates a lot of popular so-called tech thinking. A friend of mine told me a story of 2 pigs in a barn chatting to one another…Tis great we have this lovely accommodation and grub for free it is not?…meaning if the product is free, then, maybe, you the user are the product.

    Reminds me of Freud’s view of the development of the individual. We go from needing to belong to being anally retentive to being a final genitally productive individual. If we are a product, we hunger to sell ourselves – as the anally retentive strive to save themselves by buying nothing. This is a rather worrying accurate analogy for our world today.

    So, youth of today!…Socialise so ye shall belong and be products unto one another so that the conservative among us can live from your meanderings in virtual space. And with that, the world ended cos no one cared.

    We need a few more pricks. Where’s Mick O’Leary and his ilk :)

  32. Deco

    Dot Com 2.0 with a crash also ?

    Have we another bubble based on low interest rates, and deluges of central bank provided credit ?

    http://blogs.telegraph.co.uk/technology/willardfoxton2/100008101/farmville-apocalypse-could-zynga-layoffs-mark-the-beginning-of-the-second-dotcom-crash/

    • Philip

      You know what is common to all of these blowouts. They expand rapidly due to funny money and they burn up a lot of poeple resources chasing digital fool’s gold. The result: Boiler house tactics saying it can never loose and then loads and loads of hindsight artists picking over the bones. Shattered dreams and share values 1 tenth of their original buy value.

      • Tony Brogan

        They areall funded by the expansion of debt based money. Rapidly loaned into existance by the fractional reserve route(10 to 50 times the amony of the deposit is loaned out and created simply by a ledger entry. Money supply exponentially increases and interest rates drop.
        This is the boom.

        next is the credit contraction and a rapid contraction of the money supply and usually rising interest rates.

        People can’t pay, bank seizes the asset which it does not want. sells it and recains cash and interest on loan. Individuals are busted untill the next round. Regularly milked and annually fleesed.

        TThis time is different. People are busted without the interest rate rising. Maybe the cow is drying and the sheep was fleesed too early in the year and is catching a cold.

        People are unable to borrow even if they have jobs. Tapped out and in the debt trap.
        Banks have not recovered their cash and reserves as property not able to be sold to recover funds. Banks have a reserve problem, liquidity dries up and unable to loan out.

        Result no money circulating and businesses are dieing around every town.

        • Some Experts are banking on the ‘absurd’ that Gold will go to $10,000 .

          Now if that happens all bank loans will evaporate and every property owner will be with a valuable asset .

          And after that …when the property needs a plumber he will not accept any worthless cash .Instead he wants a purse of gold .

          Where is Robin Hood ?

          • Tony Brogan

            You need to widen the horizon John.
            10,000 gold is just as absurb as 1650 was just 10 years ago with gold at 280. percentage wise less so!!

            Plumber will be dealing in silver certificates backed by bullion and maybe not using silver any longer as a solder!

            Who knows what the economy will look like with 10,000 gold as it could be the result of a hyperinflationary depression. Debts in place, high interest rates and deflation in all else. Worst of all worlds.

            Gold and silver will reflect the value of money and continue to buy what they always have.

      • Adam Byrne

        Spot on Philip:

        I ran this:

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

        What a white knuckle ride it was but never again!

        I was young, foolish and skint at the time!

        • bonbon

          Are you saying you ran the most infamous Ponzi scheme in the history of the Internet?

          “Stock Generation was a website that ran from 1998 to early 2000 and is now part of Internet lore as the longest-running, most infamous Ponzi scheme in the history of the Internet. Stock Generation allowed people to trade “virtual companies” using real money and promised enormous returns on investment”.

          Well, well, it was not far from George Soros’ Quantum Fund and the LTCM blowout (granted, a Royal stink) around that time. George Soros makes no apology, as he was young at the time too when he worked for the Economic Dept in Hungary, and in fact praises the experience as forming the character he has today!

          Why is it that Soros et al turn up in the Carribean? Something to do with British Empire tax-havens, perhaps?

          • Adam Byrne

            Yes I AM saying that Mr. bonbon. Wanna make something of it?!

            See you in Kilkenny…

            Just kidding…

            5 years in Hungary myself was also somewhat character forming – wouldn’t go back though, not now.

    • Adam Byrne

      Great find Deco, look at this story from June 2011:

      http://www.independent.ie/national-news/online-gaming-giant-opens-hq-in-capital-2672184.html

      Then Enda Kenny The Sycophant, all over Paddy Power like a rash two weeks ago:

      http://www.independent.ie/business/irish/video-bookie-paddy-power-creates-600-new-jobs-at-dublin-hq-3256543.html

      As if gambling every added to the sum total of human knowledge and achievement.

      Not a word mentioned about what Paddy Power actually do – encourage people to gamble their hard earned cash on meaningless ‘sport’ (sport – what a joke), sometimes at the expense of their families and mental health.

      The lunatics have taken over the asylum.

  33. Pat Flannery

    Glad to see that some of our American optimism rubbed off on you David. I was beginning to feel like I had landed in a bottomless pit of despair back here. Maybe Ireland should send more of its media to Arizona (or better still to my own city San Diego) for a few days every year. They really are a most depressing bunch, especially your fellow Irish Independent columnists. They seem to be the worst.

    • Deco

      There is a deficiency in the Irish media, in that they simply never cut to the chase and talk about how to turn matters around. Endless clowning around, a bit like the politicians.

      An intrinsic part of the intellectual demise of the West.

      Please support our advertising sponsors and believe everything that we tell you about them (because we need their money to say such things).

      • bonbon

        Look at this : an encouraging article from the IT — a scathing attack on the Govt for their cowardice over the bank bailouts -

        “It is clear the efforts of Enda Kenny and Michael Noonan will result in some easing of our predicament from the EU, almost certainly by way of an extension of the period over which we have to pay back the Anglo promissory notes and maybe the sale of the State’s share in AIB and Bank of Ireland for slightly more than they are worth at present.
        And there is the prospect that when the banks need a further recapitalisation, as seems more than likely, the ESM will inject funds and that would be welcome. This is more cosmetic than substantive but it is something and the Government deserves a modicum of credit for that.

        However, in spite of the clear pre-election commitment by the two parties now in government to seek burden-sharing on our bank debt, there is no evidence they ever pursued this in office, preferring ingratiation to tough bargaining (for instance refusing to pay the unsecured bondholders). But then ingratiation to our betters, especially our richer betters, is part of what we are”.
        http://www.irishtimes.com/newspaper/opinion/2012/1024/1224325624698.html
        ——
        It really is a question of reason breaking out, regardless of what statistics “predict”. That clip is interesting because who could possibly have “predicted” the IT journalists could have reason?

  34. Deco

    David is correct. Irrespective of the idiocy that is happening in the media/political/state system/banking nexus – innovation and progress still manages to happen.

    The problem for the bankers is finding a way to take the proceed from such endeavours and redirect them to bailout out their gambles gone wrong.

    I have to say, that the are doing a highly effective job of it.

    • bonbon

      DMcW is trying to take a break from the system, which remains in destruct mode. The “bankers” are not doing an effective job, there is simply no way their system can be saved, and they know it. Running cover for them is ridiculous.

      There is no innovation and progress mentioned in the lead when measured by the Triple Curve. That takes creativity to act upon, not the spooned out baby feed of “innovation”. And there is a metric for creativity – the relative potential population-density. It is a curved geometric metric, not the monetarists “ruler”. It is easy to show that “innovation” is precisely promoted to lower the relative potential population-density.

      And we know now what that means.

  35. I am home

    While my plane was delayed due to the French Airlines Strike I thought my train would have left without me .

    Alas , the train engine had broken down and it was delayed by an hour in Dublin so that a change of engine would arrive . I have learned since that many trains have broken down recently and long delays caused on other journeys .

    And two weeks ago they finally found ‘ a fund’ in Irish Rail to pay the wages to end of next month ….so whats next ?

    And. Today . I bought Davids New Book …now I will be busy for a while .

    Thats all for now folks.

  36. bonbon

    How Much Did Obama Offer Spain’s P.M. Rajoy to Draw a Nuclear Bullseye on Spain?

    Oct. 6 (LPAC)–Spain’s Vice-President Soraya Saenz de Santamaria announced yesterday, following a meeting of the cabinet, that the Spanish government had formally authorized a deal with the U.S. to participate in NATO’s anti-missile defense shield. The accord will be signed in Brussels on Oct. 10 by both countries’ defense ministers.
    Under the agreement, four U.S. destroyers equipped with missile interceptors and Aegis defense systems, along with 1,400 American military personnel, will be deployed in 2013 at a U.S. naval base in Rota, in southern Spain. According to the government statement, the main aim of the deployment will be to enhance defense capabilities “against the threat posed by the proliferation of ballistic missiles” and for the “protection of continental Europe, its population and Allied forces in Europe.”
    Under the terms of the accord, which was negotiated over the course of a year, the U.S. forces will also be used to support NATO deployments and activities of the U.S. Africa Command and Central Command. The U.S. currently has a base at Rota, capable of housing up to 4,250 troops and 1,000 civilians; and an air base in Moron (Seville), with a maximum presence of 500 military and 75 civilian personnel.
    But the presence of the U.S. destroyers with the Aegis system is a qualitative escalation. It directly associates Spain with the British Empire and Obama’s insane drive for thermonuclear war with Russia and China, which have both stated unequivocally that they view the deployment of the BMD system as a casus belli which could prompt a preemptive strike. The Spanish-U.S. accord de facto draws a big, nuclear bullseye on the country, and has already been denounced by the IU leftist coalition for making the country “a military target.”

    Did Obama offer Prime Minister Rajoy to bail out Spain from its onrushing bankruptcy, in exchange for the deal?

    ——
    Just to remind readers, Russia tested its full Triad of nuclear forces this week for the world to see, in the middle of the election and one hopes Spain got the message. But desperation and bankruptcy, bailouts and graft on a grand scale is the Transatlantic way today.

  37. TheGermanPublican

    Here’s a brutally frightening glimpse at Europe’s future. Societal breakdown, revolt and death. Here’s the stark reality of austerity on those least able to absorb the costs. Ireland is not far removed from the picture this article paints.
    http://www.nytimes.com/2012/10/25/world/europe/greek-unemployed-cut-off-from-medical-treatment.html?pagewanted=2&_r=0&ref=global-home

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