January 14, 2013

Why do markets 'love' us?

Posted in Sunday Business Post · 284 comments ·
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Today, this column is going to deploy two devices that writers often use to make themselves sound very intelligent. The first is the quote from a great thinker, which has to be both witty and knowing; and the second is exposing the classical origin of a well-known word, which only a man of either great scholarship or access to Google can appreciate.

With the aid of these two tools, we will look at the recent giddiness surrounding the prospect for the Irish government bond market, which has had the green jersey brigade bellowing out the economic equivalent of Ireland’s Call with all the patriotic vigour of the West Upper ahead of a showdown with England.

So here goes. Don’t say you haven’t been warned.

At the height of the Great Depression, when financial markets were bouncing around all over the place in search of a trend, Keynes observed: “These markets can remain irrational longer than you can remain solvent.”

Keynes, the great philosopher, economist and stock market gambler, was trying to make some sense of the short-term moments of the market, which were rallying on precious little real positive data, and then selling off dramatically on – again – precious little negative data.

This meant that the markets back then were being driven by irrational sentiment. It was this sentiment which Keynes feared, noting that the rational investor, who assesses the data and tries to make investments based on real evidence, could go bust waiting for the irrational markets to validate his analysis. This is the uncertainty – or the essential hazard – implicit in the financial markets.

Armed with this observation, let’s look at the etymology of this word hazard. Hazard comes from the Arabic game ‘az-zahr’. This was a highly popular pastime of the Moors of Andalucia before the Christians decided to kick them out of Spain. (This ethnic violation robbed Spain of its Arabic and Jewish business acumen, condemning Iberia – after a brief heyday of post-colonial gold looting – to become the economic backwater of Europe.)

Az-zahr comes from the Arabic for bone because knucklebones were used as dice in one of the first rudimentary gambling games. Skeletal knucklebones were rolled – the first roll of the dice – and people gambled on which side would show up in the same way as we gamble the numbers of the dice.

So hazard or risk, the currency of financial markets, comes from the ancient Arabic game of knucklebone-rolling. There is always risk because this is what makes the financial world go round.

The financial world is driven by sentiment, which Keynes understood so well, and the optimism of a gambler is normally also a function of how his run is going and what the rest of the herd is doing. When things are going well, he gets greedy, believing that his run of good luck will last, and when things are going badly, the opposite can occur. He oscillates between greed and fear.

Now what happens when everyone is greedy and no one is fearful? Asset prices, particularly risky assets like Irish government bonds, rise, because traders believe that risk has disappeared. They therefore take positions in risky – rather than secure – assets.

What is happening in today’s global financial markets? Something odd is happening, because perceptions of risk have collapsed at a time when there is still quite a bit of economic uncertainty.

Let’s use two indices to quantify how the irrational markets are not gripped by fear but pumped up by greed.

The first is the VIX index, which measures how the markets think the next 30 days is going to pan out through measuring bets taken today on what next month is going to look like. It is widely used in markets to gauge perceptions of risk. What we see from last week’s reading is that the markets are behaving as if risk has being eliminated worldwide.

The VIX index spikes upwards when the markets are fearful and when there is lots of risk, and downwards when something happens which causes the markets to believe risk has been reduced.

In the past two weeks, the VIX index has fallen by an enormous 37 per cent. It is now at its lowest level since 1991. This means traders are taking risky positions driven by their belief that risk is low.

The other index is a lovely little index used by CNN money. It aggregates seven specific indicators of market direction from the momentum of shares themselves to the gap between junk bonds (like Ireland) and safe bonds to the ratio of put options (options to sell) to call options (options to buy).

It aggregates these together to assess whether greed or fear is dominating the irrational sentiment that Keynes warned might remain so long after the traditional investor goes bust.

And guess what? The index is now showing extreme greed. Last week saw the highest level of greed ever recorded by CNN. It means the market sees no risk anywhere, skies are blue and the future is rosy.

Why could this be? The answer lies in the behaviour of world’s central banks and their zero-interest rate policy. The New Year was trumpeted by the Bank of Japan saying it would print as much money as it needed to facilitate the government’s aim of raising the rate of inflation in Japan. The markets know this means trillions of surplus yen are sloshing around, so why not borrow these yen at zero interest rates and buy other assets which yield higher and pocket the difference?

All across the world, central banks are doing the same. The Fed and the Bank of England are printing as if it is going out of fashion while, in Europe, the ECB’s “outright monetary transactions” policy means the central bank will buy almost any government bonds which, in this market, is simply encouraging the gamblers to follow suit. Free for all.

What has all this to do with the recent high-fiving that the green jersey brigade has been giving each other over the fall in Irish bond yields and the flogging of some Bank of Ireland bonds?

It implies that the markets worldwide are buying anything that offers yield, and Irish bonds offer yields. But does it mean that the economy here is improving, as suggested by the spin put out by the government? Clearly not. When you roll up all debts, we are still the most indebted country in Europe. The fall in Irish bond yields is a function of the global greed indicator being close to maxed out.
When you stand back, you can see the main risk in financial markets today is that there is no risk.
The collapse in bond yields is like the peaking of the housing market here in 2006. It is driven by a tsunami of cheap money looking for a home, rather than anything real.

Given this, I am sure that Michael Hasenstab, the US fund manager who owns large sections of our bond market, is now thinking of selling. So expect more glowing utterances from him, amplified by the echo chamber of spin and media cheerleading here.

Every time you hear this chorus, you can bet your bottom dollar that Hasenstab is now thinking of selling, not buying.
“Shoulder to shoulder” and all that jazz.

David McWilliams’ new book The Good Room is out now.


  1. Adam Byrne

    I think I might just SUBSCRIBE!

    Ah why not?

  2. Adam Byrne

    Sounds disastrous.

  3. Lius

    Hi David,

    I love to read all your analysis predictions on various issues / events; I’m a great follower of yours and even went to see The Insiders at the Abbey which I enjoyed.

    However, you have written in your articles many times about what you believed was the great success of the Argentine default. I would love to hear your explanation of the unfolding disasters in the economy in Argentina, did you get it wrong?

    • Luis

      What is happening in Argentina now, inflation and general mismanagement as well as huge contols on capital, has very little to do with the decision in 2002 to default. The default and devaluation allowed Argentina to recover and experience a 10 year period of growth.

      The problem is what Christina has been doing over the last four years.

      Best

      D

      • Lius

        David,

        Many thanks for the quick response. I must confess that I anticipated your response to some degree.

        I t appears that the Argentine experience tells us that unless Ireland had a really trustworthy Government in place to manage the growth after a default / restructuring, the default could have ruined this country also.

        Therefore are we are better off having the Troika run the country rather than the Muppets we elected????

      • Dorothy Jones

        Well Robert Koenigsberger; managing partner in Gramercy gets a page to himself in the FT supplement today P4: ‘A Review of the Fund Management Industry’:

        Hedge Fund Gentleman Wages Argentine War

        ‘At issue is whether Argentina should pay $1.33bn to a group of holders of debt on which the country defaulted in 2001.’

        Judgement pending; last November’s ruling [suspended currently] means that 92 of bondholders following restructuring, including Gramercy, risk not being paid.

        The article is still behind the FT paywall, will post when it’s released, but this’ll do for now:

        http://www.gramercy.com/default.aspx

          • Lius

            Thanks for the link Dorothy. The NY legal challenge brought by the 8% non-participating bond holders in the Argentinean debt default/restructuring deal is indeed fascinating.

            If the 8% win the case it brings the very concept of capitalism that David has heralded into question, Sovereign defaults/restructuring would no longer be an option for countries in financial trouble. It would in effect support the Angela Merkel form of capitalism where the gamblers get their money back whether they win or loose and the unfortunate taxpayers are forced to pay the bill. This is an even harder pill to swallow when the Sovereign has assumed debts from private banks and the citizens had no hand, act or part in the gamboling as in our poor country.

            So between Cristina Elisabet Fernández de Kirchner mismanaging the growth opportunity in the Argentinean economy after the default/restructuring, to the resulting civil unrest, to the possibility that the default/restructuring may not be overturned in the New York courts leaving the Argentineans liable to pay the bondholders the original debt, maybe Argentines default wasn’t such a great thing after all, what do you think David?

          • Dorothy Jones

            Yes Lius; Argentine President Kirchner is currently flying to other countries in a private jet to avoid the Government jet being imponded by what she describes as vulture funds.

            The following FT article back in Jan 2012 by Robert Rauch of Gramercy is on Greek debt deal negotiations; it also refers to parties who ‘will not come to the table’ :

            http://www.ft.com/intl/cms/s/0/137a416c-41eb-11e1-a1bf-00144feab49a.html#axzz2Hy0K3JeL

            Interesting to see in the article that even at that stage, Gramercy did not see the debt as being cheap enough :

            >Gramercy is one of numerous hedge funds that say they have avoided buying into Greek debt — even though it has been trading at huge discounts in recent months — because they still do not see it as cheap enough.<

            David; are you going to answer Lius' question?

  4. SMOKEY

    Hi David I sent you a p.m. on what looks to be a disturbing megatrend in a certain area of Irish sales for 2013.
    This, combined with the fact, FACT that there is less and less spending going on from Irish consumers for luxury and disposable income goods proves you are correct.
    Im still not so sure about more filthy fivers though.
    I think we will see the preverbial hitting the fan on or about Easter and a deepening crises will emerge after the shit deal to be announced on the debt.
    The sleepy finance minister will however be looking more and more rotund as he eats caviar while we eat home made brown soda bread. How bad?

  5. michaelcoughlan

    Hi David,

    I am sorry but I am unable to deny myself the gratification.

    It will all come down to who comes first the co%ksuc*ers (contemptible people) in the dail in paying back the promisery note or the irrumators (latin for one who forces another to give him oral sex) in the Troika in accepting a deal on Irish debt all puns intended!

    http://www.etymonline.com/index.php?term=cocksucker

  6. Dorothy Jones

    http://www.faz.net/aktuell/wirtschaft/europas-schuldenkrise/kritik-an-der-geldpolitik-gericht-stellt-ezb-klage-gegen-anleihekauf-zu-12021861.html

    Citizens challenge against the ECB policy of unlimited bond-buying in crisis countries through the European Court of Justice. These sort of challenges have not been successful thus far, but maybe this one’ll stick. Anyhows, judgement due in 2 months, one to watch.

  7. Why does the Market Love Us ? Its easy . They F*^K Us .

    Government Bonds/ Promissory Notes are just like the ‘sub-prime bubble’. ? The actions of the irrational markets is an ‘artificial market ‘ ignoring the ‘ underlying economic fundamentals ‘.

    Irish Sovereign Bonds are a ‘tick -the regulators box collateral’. ….with style and panache of an International President .

    When does it all end ? – Soon – When ?….Soon

    What happens then ? – Hyperinflation / Poverty

    • Certainly your most concise contribution, and no, I am not being cynical at all. In my view, YES, it is a bubble.

      BIS knows this, everyone knows this, and Hasenstab will learn this too, the hard way.

      Sovereign debt was led bullish by US treasuries since the 80s. Yields fell form over 15% to under 2.5%.

      Yes again, when this bubble bursts, it won’t be a pretty sight, look at Greece and you might get an idea about the results…and yes, soon!

  8. redriversix

    http://youtu.be/Su1fTP6w1rg

    Gerald Celente

    A week in money 6th January 2013

    Good Morning all

    A very happy Monday to each & every one of you

    peace

  9. whirmark

    Hi David
    Interesting article and I share your doubts about the longevity of the current rally. A few things maybe worth pointing out here:
    1) The market also has doubts about the longevity of the rally (looking forward to full-year filings, US debt ceiling, Italian & German elections) so this is not really news.
    2) The VIX is itself extremely volatile and you will note that an equivalent low was reached as recently as August of 2012.
    3) The Fear/Greed descriptor is a colourful measure of market sentiment and used frequently due its attention-grabbing sensationalism but the humdrum reality is that buy-side market participants don’t generally feel either (Lehman-type events notwithstanding). Sell-side market-makers (what you see on TV) are certainly more excitable but don’t generally care whether the market goes up or down as long as there are flows since they only earn spread on these flows.
    4) You frequently look to current fundamentals to explain/refute market behaviour but market participants are more driven by perceived likelihoods of future factors (frequently not fundamentals) and so the market is more forward-looking. Since perceptions & forecasts are as varied and flawed as individuals (just look at the variety of comments posted to your articles) and change over time, we unsurprisingly see periods of undue optimism (“greed”) and pessimism (“fear”) being reflected in prices and implied vols.

  10. It is people like Hasenstab, on whom I wrote here 2 years ago already, that represent the financial capitalist industry. – Before you try, as the search engine here will only consider entries by the host himself, you can not find my post. -

    However,he represents the very class of people who create nothing, produce nothing, but are the global gamblers who place bets. They are as useful for the real economy as a bone cancer for a marathon runner.

    .

    • whirmark

      Hi Georg
      The guys who work in your local Centra “create nothing, produce nothing”, your local GP creates nothing and produces nothing and I’d hazard a guess that many of your relatives & friends also “create nothing, produce nothing”.

      The “real economy” needs capital as I’m sure you’ll concede, but maybe you can tell me where this capital should come from & how we can remove people (fund managers like Hasebstab) from this process?

      Or maybe you could provide a date-reference for your previous post if you find that you’re repeating yourself.

      • The derivate bubble created by the parasite finanical capitalist industry did not grow linear but exponentially between 1989 and 2007, only this derivate bubble expanded 5x between 2002 and 2006 to 516 trillion USD and again, this is only one bubble, let alone the housing or food bubble. In comparison the global economic output by the REAL economy in 2008 was around 50 trillion.

        In a nutshell, what we witness is social engineering.

        The differentiation between real economy and parasite economy is widely accepted, I recommend Roland Bendikter / Stanford / Soical Banking Social Finance

        • whirmark

          You’re conveniently changing the subject from Hasenstab to Credit Derivatives since I guess you’ve realised the flaws in what you’re saying about Hasenstab.

          “However,he represents the very class of people who create nothing, produce nothing” – Hasenstab has absolutely nothing to do with the credit derivatives bubble, he is buying government bonds & whatever you think he “represents” is entirely in your own mind.

          On your detour to Credit Derivatives: Since the credit derivatives market was a new market it is reasonable that it should grow much faster than GDP – there is nothing wrong with this in and of itself (all new markets grow at exponential rates). The cause of the credit derivatives bubble is not the notional size of the derivatives market itself, but more the cynical & illegal mis-selling of products, poor/”light-touch” regulation, poorly considered remuneration packages for derivatives traders & originators, inadequate quantitative models assuming gaussian copulas … and more reasons which I can go into. Thank you for your references & I will look at these this afternoon (even if being “widely accepted” is a big exaggeration, and also not a proxy for being true [Greenspan's thesis was "widely accepted"]) but I would really suggest that you try to understand firstly what a credit derivative actually is first. Maybe you can try O’Kane (2008) isbn10:0470519282, Choudhry (2004) isbn10:075066262X.

          Some throwaway reference to a housing bubble there too – erm, yes, we had a housing bubble. Food bubble, erm, yes maybe … but still nothing to do with Hasenstab.

        • whirmark

          Is this about Social Banking or the “parasite economy” since I did a search for the word “parasite” and its note even in that article yet you offered it as a reference for the “differentiation between real economy and parasite economy”

      • dwalsh

        Very simple – shut down the financial markets aka as the “parasite economy”; and invest in people and the real productive economy.

        So long as the speculators are permitted to parasitise the real economy there can be no recovery; and it will only be a matter of time until they succeed in damaging the real economy to the extent that production and distribution of life support will begin to break down. This will be the begining of the end for our civilisation.

        As Georg says this is effectively global social engineering.

        • whirmark

          Hi dwalsh

          “Shut down the financial markets” – so if the CEO of CRH plc for example wants to raise capital to start a new plant buying machinery and employing people, he can’t raise equity because you’ve “shut down” the equity market, he can’t issue a corporate bond because you’ve shut that down to. Where does he go exactly? In fact CRH wouldn’t exist in the first place (for the same reasons) unless as a private comapny (in which case we’re talking about destroying economies of scale and masses of public wealth) or else as a nationalised company in which case we’re talking about full central planning (i.e. communism).

          Can you clarify exactly what alternative you’re advocating here?

        • …and long recognised by Bendikter and others as such, yes!

          The boomerang effect: 1. bailout private bank losses aka socialize debts 2. do NOT provide any structural changes required 3. start all over again

          The diciples of equilibrium and fre markets, the controlled media is mumbling this mantra 24×7 as well, it’s all BS and the end of it is either war, revolution as happened 1884 when the feudalists faced pitchforks and ropes, or and this is more likely than anything else, we enter a totalitarian Huxley-Orwellian Nightmare, matter of fact, we’re already smack in the middle of that.

          Simplicistic?

          Perhaps, but even John Seb. Goldbergvariations are simple – as in beautifully simple – if you analyse them.

          • whirmark

            you’re hilarious, rather than re-address your silly comments about Hasenstab, you launch into the comfort of the usual rant. You haven’t a single clue what you’re talking about lad, and fooling nobody with this

            Why don’t you run for election or get your pitchfork and storm the GPO instead of pebbling this tripe on the internet, I think we both know why.

        • paddythepig

          Jeez, there must have been no strife, no wars, and no bubbles before there were global financial markets so ?

    • bonbon

      Go direct google – you can find everything. Then post the comment address here to make it easier for others to.

      Just my two htmls.

    • bonbon

      That is an extremely relevant article. I quote with full attribution, author Taibbi, – everyone should have a read :
      “The result,” he continues, “is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.”

      It is clear what this should mean.

    • bonbon

      That is an extremely relevant article. I quote with full credit, author Taibbi, – everyone should have a read :
      “The result,” he continues, “is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.”

      It is clear what this should mean.

  11. redriversix

    So….I sell you some of my debt,which I borrowed at 2.5%

    I guarantee a return of 4% over 5 years

    My turnover has dropped over the last 5 years and my costs are spiraling….

    I took over debts from my old partners business and I am paying them back in full.

    My accountant produces a report stating my business will grow by 1.6 % this year.

    My historical debt “carried over”is 122% of my turnover.

    My business model is based on services & sub-contractors and I no longer produce enough of anything to add value to my business.

    My auditor says my business will only grow by 0.6% and is wary of signing of my books.

    Within the 5 years I have to pay you back,I have other Bonds falling due for payment ,so old debt bonds, which cost me 3% , I am going to use the new debtbond to pay these……Now I have lost another 1%…

    Question…”How come I am still in Business” ?

    “why have I not applied for Examinership”

    “why do I not liquidate this Albatross and start over”

    • Grey Fox

      Dare I say, because you have been bamboozled and smooched by the financial wizards who create nothing into thinking that the more you borrow the faster you will grow, the wealthier you will be etc.. instead of slow and steady, make a widget, sell a widget for more than it cost you to make and use the profit to support you and your family saving a little along the way to expand your business in a solid, sustained way.
      Or am I completely mad!!
      That said, the financial wizards are very very good at selling side of what they do, just look at the state of our little country, they just have no clue what the ramifications of their wonderous products are…or do they???

      • redriversix

        Bamboozled is a excellent term and very fitting to the financial garbage the market “produces”..Evening Grey Fox…..

  12. elamanamou

    Keynes model is flawed it only works in bull markets when everthing is all right,does not allow for natures law and social mood,and the economists are always wrong when the crash hits ,oh i did not see that coming,always late and wrong,after the horse has bolted,and will continue to be wrong, there are others models to economists to learn how many where u taught at uni/college sometimes it hard to admit keynes is wrong,thats how he lost money in the stock market, he could not perdict bear markets with his method

  13. ross81

    I love old Wall St sayings, even if their predictive qualities don’t work out a lot of the time. “Sell in May and go away”….funnily enough if you’d done that on the 1st of May last year you’d have made a tidy sum in these manipulated markets. The Dow Jones Ind Average lost over 1000 points in a month. On a similar selling theme, as David “when the VIX is low, it’s time to go”. The Dow and other indices look very toppish at the moment and I reckon they’re ripe for a hefty sell off, just after everyone is breathing easy following the Fiscal cliff fears.

  14. redriversix

    U.S Fiscal cliff problem not solved,just put a “plaster” on it… more major debt repayment due in March 13

  15. god

    Hi David

    Been watching you from afar!

    Yes, Volatility has collapsed but was lower from 2004-2007. have a look at your Bloomberg. Do you really think anyone cares about debt anymore?

    • Grey Fox

      I worry about it because I can’t pay my mortgage.

    • Dorothy Jones

      If yoyyou to type: ‘IMF’ into your phone with predictive text it appears as ‘GOD’…..just sayin’

    • joe hack

      “Been watching you from afar!” God confirms what Bette Midler sang about

      “God is watching us From a distance” Bette Midler

      God is Stalker his watching over David you or maybe Watch your back GOD could be out to get you…

      some Bettes words:
      From a distance
      You look like my friend
      Even though we are at war
      From a distance
      I just cannot comprehend
      What all this fightings for
      From a distance
      There is harmony
      And it echoes through the land
      And its the hope of hopes
      Its the love of loves
      Its the heart of every man

      God is watching us
      God is watching us
      God is watching us
      From a distance

  16. France plays the Military Tactic intervening in Mali . Does it have benefits both economically and politically for Holland & France ?

    How will the Markets view this ?

    • joe hack

      France plays god with another nation, why?

      Why not Russia or China, what would be the responses have been if they had played god?

      Does France want its old French speaking colony back under its wings?

      Cotton and cattle and the main resources of Mali?

      Maybe they care?
      The French could be philanthropic altruistic type that care so much they would risk the lives of their own people but this would be mean they are not being altruistic with own French people (solders)?

      The munitions factory will be back at work this year welcome to 2013…??????????????????????????????

      People will die and maybe many more then would have without the intervention of France as a GOD but it is the principal that counts when God is at work?????

      • ross81

        and there is the issue of France claiming it is intervening to stop hardcore Islamist forces from advancing, whilst apparently giving political support & ‘aid’ to Islamist fighters in Syria. My enemy’s enemy and all that.

        • redriversix

          French Military intervention is a smoke screen for the U.S

          The U.S provided aerial support for the failed rescue mission in Somalia…..7 dead french soldiers…18 dead Islamist soldiers..no hostage rescued

          This afternoon the U.S began providing drone support in Mali and to the Democratic republic of Congo.
          last year I posted here how Obama had sent 100 “Special Advisers” to the Congo.

          The U.S have their eyes on the rich palladium deposits in the Congo which is needed for ALL communication systems.

          No idea why France in Mali..apart from the Al cracker,Oops,sorry.. Al Qaeda theory….!

          • joe hack

            redriversix yep

            I don’t know maybe doing the work for the USA who don’t want to be seeing at war after bush era

            ya need a bad guy to blame everything no that USSR has gone
            Ned Kelly got blamed for every chicken that went missing in oz

          • ross81

            looks like the French have warmed to neocon ideas and unfortunately now suffer from the ‘regime rotation’ syndrome. No real difference between right & left governments.

    • bonbon

      Jacques Cheminade ran for French President in 2012, with backing from the Solidarité et Progrès party, which he founded in 1996. His statement in the original French on Mali is available on his website
      http://www.cheminade2012.fr/Mali-notre-intervention-
      militaire-doit-conduire-a-un-changement-de_00938}

      Cynics, a popular Tiger and anti-Tiger pastime, need to look at the physical economy of Africa before using clichee’s.

      • joe hack

        “Cynics, a popular Tiger and anti-Tiger pastime, need to look at the physical economy of Africa before using clichee’s.”
        Could explain please…

      • redriversix

        You calling me a cynic…?

        how about I go around their and take your sipee cup..!!!!

        Physical economy of Africa..?….cliche’s..?

        anti-tiger pastime..?

        Africa is a firing range for western armies….

        A test tube for western pharmaceutical Companies

        A Petra dish for big agricultural Companies like Monsanto.

        A financial business for America & China to fight over..

        Tigers……..FFS

        40 years ago we were given “TROCAIRE”Boxes in school to collect/save money for Africa…Today..they are still giving out “Trocaire” boxes….What am I missing..?

        Is never ending “crisis in Africa” always the goal of the West..?

        Is it also now our future..perpetual debt crisis..?

        • bonbon

          The reply was to the original post on Mali and France. Cheminade’s very interesting statement (English version I can post if necessary) puts a spotlight on the jaded transatlantic popular cynicism. Sure Nerobama or better, Obamaosama (he will intervene against his funded Al Qaeda), is well known. But Cheminade brings the real issue to the table, in spite of jaded opinion.

  17. elamanamou

    10/5/2012 at 16.03 at 13655 on the US30 / 4HR CHART is the time we enter into deflation depression mode,hows that for a old wall st saying ,

  18. dwalsh

    The very essence of the so-called ‘markets’ is irrationality and volatility. Of course the irrationality is only apparent; not actual; and the volatility is synthetic; not natural.

    We are not talking about a real market here; i.e. a place were real products and services are traded; what we mean is the parasitic casino markets aka known as the financial markets; the purpose of which is to suck wealth out of the real markets and economy and concentrate it in the bank accounts of a tiny parasitic elite.

    The irrationality is only apparent; not actual. It is apparent to those who presume the financial markets are somehow natural and beneficial to society. In other words, people naïve enough to believe speculators have honourable intentions; or that their virtual products actually do what it says on the tin. Neither of which is true.

    Volatility is essential to the parasitic financial markets and their virtual pseudo-economy. It is their stock in trade; it’s how their system functions. Financial markets actively promote volatility. Think of market volatility as the spinning of the roulette wheel; if the wheel didn’t spin their would be no gaming; and no gain.

    That the financial markets are neither natural nor beneficial to society is easy to see once you realise how their system works to actively destabilise real markets and the real economy in which people live and depend upon for life support. When you see this you realise that the interests of the financial markets and human society and civilisation are diametrically opposed.

    • Grey Fox

      Well Said!

    • very much so…they are weapon of choice to dismantle democratic structures and replace with financial tyranny. Political puppets and the legal class, they are well rewarded to play ball, preparing the ground for new “laws” and realities to be put in place.

      At the end, it is a global dominance war about ressources, people are collateral, in fact entire nations are.

      • dwalsh

        I agree with your implication that the crisis is intentional. The markets are being used as a weapon to attack the nation state system and replace it with a new transnational global governance system.

        The dark lords of the realm are reorganising their estates.

    • whirmark

      Are you confident enough in what you’re saying to be able to answer the very simple question I posed above. i.e. In your utopia, where do companies get capital from if you’ve “shut down” the markets as you say?

      • Grey Fox

        Maybe from the profit their efforts produce?????

        • dwalsh

          Bankers wont like that reckless and dangerous suggestion Grey Fox!!

        • whirmark

          So “Retained Earnings”, a valid response at least. There are a few problems with relying on this as a sole source of capital:

          1) Vast majority of companies make a loss at the start so if retained earning was their only source of capital, they wouldn’t get very far.
          2) For those companies that do manage to make a profit from the very start, they would only be able to grow at the same rate as their earnings growth so production, employment and as a result growth of the global economy would suffer severely
          3) Since companies would not be publically owned (i.e. listed on stock exchanges), they would controlled and owned only by wealthy individuals and the wealth gap would be much greater than it is today with no opportunity for the public to share in this wealth by buying equities.

          • Grey Fox

            I take your points my friend, I guess my point is, if a business has to borrow to cover everyday expenses, wages , rent etc.. it is not sustainable, borrowing for inventory, raw material when the end product is proven to be practical and profitable is understandable, I guess my other point is, where financial institutions exploit prudent business people by pushing unrequired debt on them, then securitising that debt again and again in a neverending debt spiral with absolutely no regard for anyone or anything until we arrive at the point we are at in virtually all developed countries, one finds it hard to dismiss theories of NWO and Elitist control. Financial sectors are out of control and we the people are becoming less and less able to reign them in without resorting to socially destructive methods especially when we have public trustee’s complicit in the madness. Time to call a halt and hit the reset button while instituting proper controls.

          • whirmark

            @Grey Fox’ comment below:
            Neither of your two points are in any way connected to the question raised on where companies should get capital from if – as some here propose – the financial markets should be shut down.

            1 “borrow to cover everyday expenses”, short-term debt is not only normal but an absolute necessity for many business sectors & SMEs. Where it becomes an issue is where it continues to grow and is refinanced by longerterm debt until equity is diluted precipitating bankruptcy.
            2 “financial institutions exploit prudent business people by pushing unrequired debt on them”, a prudent business-person (by definition of being “prudent”) wouldn’t accept this debt if it is unrequired. The miselling of loans (& securitzed debt products) to financially-naive people (with the intention of decieving them)on the other hand is obviously immoral. (What’s this got do do with the question on raising capital)

            Changing the subject if you can’t address an issue directly seems to be a common strategy for some here.

            I’ll happily listen to people’s ideas on an alternative financial system but unless those suggestions actually address real needs (like companies needing to raise capital), how can anyone take them seriously. Of course its much easier to keep the conversation abstract to avoid any inconvenient facts and to rant & gripe endlessly so keep it up.

      • Will you be able to buy milk and meat, or as is staple diet in other countries, maize, beans and bread?

        THAT is the question required to be put forward, the financing needs of your companies are on a differnet sheet.

        Next food riot around the corner is probably Zambia.

        I remember when AOL was capitalized higher than most industrial US manufacturers, I remember the dot.com bubble too well. This is about REAL capital vs. algorithmic capital – read: programs to manipulate markets before they even open – hence it is about PEOPLE… in my world that is.

    • Realist

      The only crap that should be banned on the market are government bonds and central bank credit expansion through fractional-reserve banking.

    • Realist

      “That the financial markets are neither natural nor beneficial to society”

      The markets are both natural and beneficial. The main problem is the state monopoly on them due to the monopoly on money creation and money distribution.

      As usual the tool (financial market) is blamed instead of the major players who are the root cause.

      States and their central banks are the main culprit of all economic (and other) problems on this world.

      • dwalsh

        Money creation and distribution is privately owned and controlled….it is not a state monopoly….at least not in most Western nations.

        • Realist

          Private means fully independent of the state control and can decide whatever is in its interest.
          You need to be fully blind to not see politicians “helping” central banks to decide what to do :)

          Explain to me:
          1. Who prints money and how ?
          This is how: http://mises.org/daily/5575

          2. Who controls the FED and ECB ?
          You ca read here about FED: http://mises.org/daily/4171

          3. Who brought central banks and fractional reserve banking to existence and why ?
          The states as it benefits them: http://mises.org/daily/5742/The-Origins-of-the-Fed

          4. Why ECB and FED are buying government bonds/securities in direct open market transactions directly creating money ?

          I am sure you can guess by now that they are not independent at all.

          • whirmark

            I don’t agree with everything you say but thank you for the dose of realism anyway.

            Some people seem to think that a misinformed view is just as good as an informed view if its strongly-held.

          • dwalsh

            Hi Realist

            You reify and personalise ‘government’ as if it is a coherent body of individuals with a unified intent to control and defraud the public. It isn’t.

            In fact government is a musical chairs charade of professional politicians who come and go. They are functionaries mostly; very few leaders among them. Obama is just a functionary serving his primary constituency — the bankers & plutocrats on Wall St who have funded and guided his career and ascent to the presidency.

            The coherent body of individuals which do approximate to your notion; and who do not come and go with the vagaries of public opinion; and who control the music (funding) of the political charade, are the merchants — most especially the private bankers and financial institutions who own and control the banking system and the production of money. This group have generational longevity and have amassed vast capital and power.

            The Federal Reserve for instance is independent of any and all other government agencies in America. It has government fiat due to the Federal Reserve Bill; but is independent of all government control. The fact that Congress could shut it down in the morning is irrelevant; because it wont happen. The important fact is that the Fed is not under political control; in fact it is the other way around.

            If you would like to know how the Fed came into existence as the scheme of the main banking interests in the USA and Europe read ‘The Creature from Jeckyll Island’.

            The fact that the congress passed the legislation is irrelevant. The important fact to know is who wrote it; and the answer to that is the bankers. This is normal procedure in America; just like the insurance industry wrote Obama Care; and the leading corporations of the world are currently writing the Trans-Pacific Partnership; which will seal their hegemony over governments globally.

            I know you guys in the Von Mises Institute see the world very differently from me; and good luck to you.

          • Realist

            Thanks whirmark,
            I agree that misinformed view is the worst.
            You can always argue with me and I will happily submit when proved wrong.

          • Realist

            What is the point of having leaders if they are useless and pointless.
            Governments (politicians) steal our money through taxes and money (bond) printing and inflation.
            I do not care if they are stupid and manipulated by bankers but they have all power in their hands.
            They have military, police and law behind and they can do anything they want.
            I am sure they can deal with a few fat bankers including central bankers if they want.
            But they will be cutting their own legs that way as nobody will be sponsoring their relentless spending and their big fat pensions.

            Maybe the problem is that they do not understand the economy and they still think central bank is working in harmony with government.

  19. dwalsh

    Hi whirmark

    [Your rude comments to Georg above disapoint. You dont merit a considered reply; but it's done so I'll post it for any interested parties]

    The financial markets and the real economy are not the same thing; nor are they extensions of each other. The financial markets are parasitic on the real economy and actively destructive of it. I say more about that below.

    I do not propose shutting down the real economy; the economy of real productive capital and economic activity. So the CEO of CRH would not be without capital.

    Nor do I propose full central planning. But I do propose a clear distinction between the public and private sectors.

    In my view money, or the currency, is part of the civil commons and therefore the management of it properly belongs to the public sector. I oppose the current privatisation and commodification of money.

    So far as I can tell I have similar views to Georg; and I agree with him:

    “It is only bits and bites…. computers…. shut it down… issue new currency, renew and rebuild social contracts.”

    The global crisis is not a natural or cyclical market event; and cannot be resolved by tinkering with the current massively dysfunctional financial systems. We are facing a crisis of civilisation; a real and present danger to human life itself. We will need to make very radical changes to how we do business if we are to resolve the crisis.

    • Grey Fox

      Well Said!!!

    • whirmark

      Hi dwalsh
      Don’t worry about Georg, he’s a big boy. There’s worse things than being rude & being full of sh1t is one of them in my view. Who knows he might even start thinking about why he’s wasting his time ranting on this page the whole time and some good could come from it. Any dissenting views in here are met only with repetion of a practised rant (which is very ill-informed) and there is very little engagement and the reason why is very clear … most of it is ill-informed spoof which is why you don’t see David McWilliams engaging in those comments (he selects a handful of relatively more sane ones).

      I disagree with your contention that there is a clear split between the “real economy” and the financial markets. To illusate how this is so I am trying to bring this into a more specific example. Above you say “I do not propose shutting down the real economy; the economy of real productive capital and economic activity. So the CEO of CRH would not be without capital.”

      I still have to ask, where exactly will its capital come from as I don’t see you mentioning any sources of capital (banks, investment angels, taxpayers??). By saying “clear distinction between the public and private sectors.” you are maybe implying that it should be nationalised, is this correct?

    • Realist

      1. “Nor do I propose full central planning.”
      2. “…the management of it properly belongs to the public sector.”
      3. “I oppose the current privatisation and commodification of money.”

      First 2 sentences are contradictory and 3rd is wrong as there is no current privatisation of money.
      Money creation is fully the state monopoly with their central bank agency.

      Global crisis is due to the central government and their central banking with credit expansion from fractional-reserve banking system, as simple as that.

      • dwalsh

        In the world I live in Realist the money system is privately owned and controlled. It is not a state monopoly. I have no idea where you get the notion it is.

        There is no contradiction in my statements. What there is, is a clear distinction between the public and the private sectors; and I place the money system in the public sector.

        • Realist

          It is private by definition, but not in reality.
          The state and central banks are working in cooperation otherwise so many trillions of $ and euro bonds will not be bought in open market transactions.

          The first beneficiaries of money printing are banks and the state and both of them are closing eyes to that fact as both benefits.

          The state created the central fractional-banking system in the first place and it controls it fiercily do not worry about that.

          You can continue living in the dream world as much as you can but people are sick of listening to political lies.

          • dwalsh

            I agree the ‘state’ – or those who happen to be representing it at any time – are complicit with the bankers; but I contend the source of the will or intent driving fiscal policy is predominantly with the bankers.

            The bankers use the instruments of state to promote their policies and wealth. But in my world the real power (especially in the USA & UK; less so in Eire) lies outside of public government. The real power lurks in the shadows behind the puppet thrones.

          • Realist

            Finally you are saying something correctly: “The bankers use the instruments of state”.

            Monopoly is only possible if granted by the state.
            And this money printing monopoly is the most important one.
            Why not get rid of money printing monopoly and have the proper competition as in many other sectors of industry (never perfect due to the state of course, but more free) ?

        • paddythepig

          Who created, and capitalised the ECB? Who owns the ECB capital?

    • ross81

      excellent comments….have you thought about entering politics? Seriously we need guys like you in government (preferably at the higher levels).

  20. conor

    Hi whirmark and others. I would suggest that you go to http://www.globalresearch.ca (It’s the Interest, Stupid! Why Bankers Rule the World) and pay particular attention to what the Bank of North Dakota has done with great success.

    Conor

    • whirmark

      hi conor, I searched for “Bankers” on that page but no mention, can you post link directly to article?

    • joe hack

      I read about that still will read more it seems that they have some common sense in North Dakota is the water diffident there than it is in South Dakota or the rest of the world for that mater.

  21. joe hack

    “TODAY, THIS COLUMN IS GOING TO DEPLOY TWO DEVICES THAT WRITERS OFTEN USE TO MAKE THEMSELVES SOUND VERY INTELLIGENT. THE FIRST IS THE QUOTE FROM A GREAT THINKER, WHICH HAS TO BE BOTH WITTY AND KNOWING; AND THE SECOND IS EXPOSING THE CLASSICAL ORIGIN OF A WELL-KNOWN WORD, WHICH ONLY A MAN OF EITHER GREAT SCHOLARSHIP OR ACCESS TO GOOGLE CAN APPRECIATE.” DAVID MCWILLIAMS (2013)

    McWilliams above brings attention to the origin of Conventional Opinion that has plagued our societal freedom and depleted our ability to think.

    The regurgitation of other toughs of the past appears to add weight to an opinion but in reality has led to the top of a fiscal pinnacle that is now so top heavy it is collapsing under us.

    There is nowhere to run from the edge of this fiscal cliff as this fiscal cliff has an ever decreasing circular plateau.

    A quote might very well make what you have to say have more weight at least that is the sheepish mentality that the college system bombards, you must reference your idea you cannot think for yourself.

    How dare you! How dare you have an original idea or even think you have balls to have an original idea – now that we have indoctrinated your economist thoughts like millions of others go forth and do what you are told to do.

    Common sense is not so common and is less common after you have passed thought the education System. (The emperor does not have any clothes on)

    Einstein was afraid to say that he thought the universe was expanding only when he heard other had similar thoughts did he publish. Darwin waited until he was old and then only published because the idea was already in published by others. Even if you believe these people are wrong their thoughts are important.

    What is the difference between a stock broker and a narcissist?

    Thanks for the giggle,
    References list:

    1. McWilliams D. (2013) Why do markets ‘love’ us?, [Online], Available: http://www.davidmcwilliams.ie/2013/01/14/why-do-markets-love-us [14 Jan 2013]

    • bonbon

      Einstein said the universe was finite but self-bounded. That is altogether something entirely different to the usual “big-bang” merchants. And Einstein said, after being asked about all the results he published “what are you looking for? The thoughts of God” was the answer.

      Darwin plagiarized everything from Malthus, published “On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life”, and nephew Galton carried on the family tradition to eugenics.

      A little homework is in order.

      • joe hack

        So it seem we agree on Darwin but to suggest he did no research of his own is nonsensical
        We also appear to agree that Einstein believed the universe was static “the greatest blunder of my life” but when he used his own maths to prove it was expanding as the Russian Friedmann had worked on and then later Hubble convinced, it was the great blunder of his life…
        So next you will be telling us that it was Einstein wife who did the work for him

        I don’t know answer the universe and everything but you seem to I do believe when I was small the universe was big now that I am bigger it looks smaller that it did…

        Infinity + 1 there is always one

        • bonbon

          Einstein never said the universe was “static”. He said it was finite and self-bounded spaceTIME don’t forget.

          He changed everything about time, space, matter, energy, light. He showed our senses which give those categories absolutely do not convey reality, a huge breakthrough in a long tradition. And when asked where his ideas come from, he said his violin!

          To get to know Einstein’s mind, a beautiful video :
          The Genius of Albert Einstein

  22. Grey Fox

    In reality, who cares if the markets love us or not!
    I live in the real world as does 99% of the Irish people and 100% of the people I know, we do not want to be Captains of Industry, Multi Millionaires, nor have the adulation of millions for our efforts, we simply want to live a decent comfortable life, pay our bills, raise our kids and love our partners.
    This is being stolen, eroded, squandered and given away by our political leaders,the financial institutions and faceless people in foreign lands, the sooner the Irish people and the Irish Government (whatever plonkers are in Kildare St) cop on and get on with the job at hand which is serving the people of Ireland the better we will all be, just speak the truth, do the job you are tasked with and live your life honestly, the rest will take care of itself.
    I sat and read last night, for the first time ever, the original 1919 Irish Constitution and from my eyes it was infinitely superior than anything we have had since. We could do a lot worse than returning to the words of wisdom of our fore fathers who’s foresight was uncanny.

    • joe hack

      Good stuff Conor

      The bank of North Dakota http://banknd.nd.gov/about_BND/index.html

      On the sad funny aside we have state owned banks here but not for the same reason.

      In seems the Chinese and Russia and the rest BRICS banking systems have similarities to North Dakota.

      I only heard of this yesterday from you-tube video interview of William T. Still. Can’t locate now William T. Still is the man who made a movie in 1996 called The Masters of Money he predicted the scenario that has unfolding now.

      Keep posted on this subject please

  23. Adelaide

    Phoney Bonds bought with Phoney Junk Money but they are not Phoney Bombs and Bullets.

    http://www.rte.ie/news/2013/0114/greece-shots-government.html

  24. bonbon

    After following the dialog above (sometimes rude) I think a little dose of reality is urgently needed :

    Liam Halligan: Glass-Steagall Seems Quickly to be Building a Head of Steam

    14.01.2013 (LPAC) Liam Halligan, chief economist of Prosperity Capital Management in London, has again taken to the pages of Britain’s Daily Telegraph to demand Glass-Steagall. In his column entitled, “At Last, Question Time for the Money Printers,” Halligan writes:

    “….The trouble is that both QE [Quantitative Easing, the Fed's term for the endless bailout] and ring-fencing are a disaster waiting to happen…. Until the zombified mega-banks are put out of their misery, the UK will grow only at an extremely sluggish pace, if at all. And without a Glass-Steagall style separation of commercial and investment banking, we’re doing nothing but lining ourselves up for another disastrous collapse…. ”

    The question of Credit above is easily solved – Hamiltonian Banking Restore Alexander Hamilton’s Bank, after Glass-Steagall of course clears up the zombie banks.

  25. joe hack

    Hasenstab he has got a honest face

    Has a stab at the Irish

    I believe fund management human resource offices actively seek out narcissistic characteristics

  26. Deco

    Alright, this is what I read into the current rating of the VIX.

    If the VIX is at an all time low….we are on the cusp of a massive market crash.

  27. redriversix

    yep..yep Yep…Deco.!

  28. bonbon

    Not as regards great thinkers, Keynes certainly not being one, even with the lipstick, economists should really consider their trade as something other than a sidewalk parade.
    How Adam Smith fooled you suckers!: MOST OF THE TIME

    There we have the sentiment, mentioned numerous times in the lead, of Adam Smith’s key (and Keynsian) edict :
    “To man is allotted a much humbler department …. Nature has directed us to the greater part of these by original and immediate instincts. Hunger, thirst,the passion which unites the two sexes, the love of pleasure,and the dread of pain, prompt us to apply those means for their own sakes, and without any consideration of their tendency to those beneficent ends which the great Director of nature intended to produce by them.”

    –Adam Smith Theory of Moral Sentiments–1759

    So much for eugenicist Keynes’ sentimental mentor.

    Now for “irrationality”, we have Austrian School’er Hayek’s entire thesis based on “unknowable” “spontaneous” public good, the general welfare, only possible from private vice – speculation ans usury.

    One can see Adam Smith’s invisible hand, the “magic of the markets” governing both Keynes and so-called arch twin Hayek. This is guaranteed to give aspiring economists a real headache.

    Do I see signs of rejecting Adam Smith entirely? A good Irish republican rejection of empire?

    • bonbon

      So the correct article heading should be – “Why does Adam Smith Love us”.

      I’ll leave readers to ponder the horrible thought.

      Shiver my timbers!

  29. Colin

    “This was a highly popular pastime of the Moors of Andalucia before the Christians decided to kick them out of Spain. (This ethnic violation robbed Spain of its Arabic and Jewish business acumen, condemning Iberia — after a brief heyday of post-colonial gold looting — to become the economic backwater of Europe.)”

    David, I take issue with your description above. The Christians as you call them were the natives, also known as Spaniards. Spain was violently invaded from across the Straits of Gibraltar by blood letting booty looting Arab-Afro combo in 710. They reached Northern Spain less than 10 years later, but there the tide turns, and slowly but surely the native Christians took their land back. They were 2nd class citizens under the yoke of Islam. Only the province of Granada remained to be re-taken by the mid 1200s. Granada finally fell in 1492. Defeated muslims didn’t want to hang around as they do not wish to live under Christian rule (its only after WW2 that muslims have decided its fine to move to and live in a Western Christian country.

    Now, regarding the Jews, well, you see the Jews were happy to assist the moors in their occupation of Spain. They were still 2nd class citizens in this muslim kingdom, but they had their ghettos and apart from the occasional slaughterings meated out to them by the muslims, they actually more or less di well for themselves. So, the Christian Spanish remembered which side the Jews took in their own hour of need, and remembered the Jews were not inclined to help liberate Spain from the muslim occupation, so the Jews were given a choice, leave or convert to Christianity, and most of them left for Constantinople.

    Islamic Occupied Spain was not some kind of golden age of Multiculturism as many liberal lefties try to make it out to be. It was a period of almost constant warfare littered with atrocities and cruelty meated out by uninvited muslim occupiers.

  30. cooldude

    Interesting article and comments. When it comes to the concept of hazard one sector in the financial markets stands out very clearly and that is the derivative market. This is basically a massive interbank casino where the size of the bets go way beyond any normal concepts of hazard. Unlike stocks and bonds a derivative is not an investment in anything of value but a “legal” bet on the performance of some market such as interest rates. The total value of this market is now in excess of $700 trillion and to give you some idea of how grotesque this casino has become total global GDP comes in at around $46 trillion. This is gambling pure and simple by these greedy bankers who are fully aware that they will be bailed if their bets go sour. To give an example of how exposed these too big too fail banks to this casino Goldman Sachs have total exposure to derivatives of $44.4 trillion based on total assets of $114.6 million which is 362 times the size of their assets. This WILL end very badly and when it does it will bring down the entire financial system. When this happens that VIX indicator will be off the charts. Of course this whole market should be banned and all existing bets declared null and void. But that would interfere with the massive bonuses these gangsters pay themselves so don’t expect any change.

    • bonbon

      Good description, but description is a hobby of the rich.
      Action, reasoned intervention, meaning The Three Point Plan That Congress Must Adopt Now is another thing entirely, not descriptive, not entertainment, nor populist.

      Liam Halligan of the DT, above, gets it right, but we must move quickly on the main plan.

      We will not be “loved” by the markets (shudder the thought), but that’s a good sign we are not parading on the sidewalk, what?

    • Tony Brogan

      Valid points Cooldude
      Divisive comments from some on the blog.
      Your statements needs to be said again and again despite the folly of those who seek to be devisive with cracks about the rich and parading the sidewalks.
      It is a good one to copy and paste twice a week!!

      • bonbon

        So now to action, we all know how bad it is. That has become relatively easy as the density of scandals reaches legendary proportions. Mainstream media and surprising calls for Glass-Steagall is catching on.

        Let’s give the unlovable markets a little taste of Hamiltonian Banking.

        • Realist

          We had Hamiltonian banking (central banking) for so long that we do not want it anymore.

          The core principle is that government should be used to benefit the rich and privileged, mostly through its power to print money and run financial scams. In this sense, Hamilton’s Curse has been visited upon the United States in the 2008 bailout of powerful investment banks.

          Hamilton was the master of the political lie. He used his rhetorical powers and elite connections to invent the myth of the Constitution’s “implied powers.” He established the imperial presidency. He devised a national banking system that imposes boom-and-bust cycles on the American economy. He saddled Americans with a massive national debt and oppressive taxation. He pushed economic policies that lined the pockets of the wealthy and created a government system built on graft, spoils, and patronage. He transformed state governments from Jeffersonian bulwarks of liberty to beggars for federal crumbs.

          • bonbon

            We had Hamiltonina banking untill Andrew Jackson destroyed the 2nd National Bank of the US. Since then central banking of the British model, especially Teddy Roosevelt’ FED.
            FDR put some Hamiltonian banking into action with the RFC, Reconstruction Finance Corp, heavily opposed by Wall Street. JFK also.

            Now let’s do it on a grand scale, all sovereign nations in coordination.

          • Tony Brogan

            AAA+++

          • bonbon

            Hamilton sure brings out the British stripes! Well he knew exactly what he was doing. The entire discussion is really about Hamilton, is’nt it?

            Let’s keep that on the table then- no straw dogs, no mesmerizing . The fundamental question of National Public Credit is the issue. Asserting this means Glass-Steagall, burn the bondholders, and getting on with Reconstruction, no matter what the empire hints.

          • Realist

            bonbon,

            To be clear here. I am fine with your idea to get rid of FED/central bank, but not to reinstantiate similar thing, e.g. national bank.
            I am also for default as there is not way out to pay the debt or continue the pain.

            Other things are crazy, like national bank and national projects.
            As I said clearly, no way anybody, any central body, or me or you or David to know what is the best to invest money in, to save or to consume !!!!!
            Only each of us, each person, can know that and nobody ELSE !!!!! this is how economy works, satisfying your most wanted means and this is what companies produce to satisfy that.

            Any mingling in such to distort what each person want is wrong, as simple as that.

  31. molly

    The troika are not running this country, FG,LAB are running this country and there lies the big problem ,if the troika where running things we might be better of,I don’t say this lightly.
    The Irish government can’t make the fair and proper cuts needed because simply they would have to take a 50 percent pay cut and they would them be in a better position to lead from the front and put a stop to the war on waste.
    It’s quite a mountain the waste mountain in fact it would turn your stomach .
    It’s quite funny that the government are advised to reduce pay ect ect and they choose the bits that suit them but they won’t cut there own pay and expense .
    We all read whats going on in this small country hell you would think we where Texas oil Barrons and the pay,pensions and perks,expences,hand outs dig outs,cop outs in all this what’s missing is cop ons enough is enough.
    So mister kenny start a proper war ,a war of fairness a new way of doing things and not the fairy tail way you and your party run this country for the chosen ones.

    • bonbon

      The troika are running the victims. Whether some take marching orders is another story.

      The garbage heap is not where the war is, except for those poor the Troika say should feed on waste food there.

      The war is against empire who will depopulate, stated extremely clearly. Come on, Ireland knows what this is all about.

      Burn the bondholders,now, radically. That is the first step. Then we need clear heads.

      • molly

        Yes burn the bond holders no the government are running the victims not the troika,the troika say you must cut cut there is no way the troika would be here if we burned the bond holders .
        This government wants to say goodby to the troika as soon as we can get back to the old ways of getting back to the borrowing of money ,money we don’t need and if we do need it why and who for.
        To borrow money for a system that’s protecting the wrong members of society is in its self a deeply flawed and the promised change will never happen.

  32. molly

    Ireland is like a box of Lego you spend your time making something good and along comes FG,LAB,FF and they destroy the good and systematicly are destroying this country for who or for what how can so many people be controlled by so few.

  33. Clare Leonard

    In 1965 Charles de Gaulle sent the French navy across the Atlantic to pick up French gold.
    2013 – Germany now asking for the return of their gold in the USA and Bank of England.
    Are we about to see a new gold backed DMark http://www.zerohedge.com/news/2013-01-14/it-begins-bundesbank-commence-repatriating-gold-new-york-fed

    http://directdemocracyireland.ie/question-for-michael-noonan/
    I think we are about to see major changes in the global monetary system.
    To bond or not to bond, too late to bother answering
    that question. J P Morgan increased their exposure to Irish debt, I wonder why========= suggestions on a post card please.

      • joe hack

        “A big part of the reason is technical. The Government, alas, was not selling shares in the bank. It was selling its contingent convertible capital notes — or CoCos — which are a different thing entirely”

        so says
        John McManus
        Business Editor at the IT

    • bonbon

      You are missing the point. Any changes that mean a British Gold Standard would cause the worst austerity ever seen and collapse the entire physical economy just when massive credit expansion is needed – after of course Glass-Steagall.
      We are getting just a taste of what austerity means – a blind (gold-bedazzled) lurch to a mythical system woul actually be genocidal.

      • Realist

        “just when massive credit expansion is needed — after of course Glass-Steagall”

        Massive credit expansion ?
        And you are talking bad about Keynes ?

        Do you realize how similar you and Keynes are?
        You both are telling us that we need to increase printing money, like all these trillions brought prosperity earlier.

        How many people agree with bonbon that we need massive credit expansion ?

        • bonbon

          You do not try to understand. Reconstruction of the totally depleted physical economy, as after a war, needs a type of Marshall Plan. First close the zombie bank departments, but then take off the monetary glasses and see the destruction austerity and bubbles has wrought.

          Hamiltonian national Credit, the basis of the US Constitution, a true republican answer to empire, must be unleashed to deal with huge programs such as NAWAPA 21.
          Forget the old “Soviet” boogey-man and the lipsticked Keynes. We are in a totally different world.

          • Realist

            So, tell me please what big plans you have for Ireland to restore the physical economy?

          • bonbon

            You apparently have none, right? After all Hayek followers firmly believe the Irish Economy will sprout wonderfully, just as long as “sound money” appears. This is precisely the point of Julian Simon’s Obituary, and why actually there is no economics whatsoever to be found in that Austrian School. It is monetarist, believes in money. The twin of Keynes, in a charming London School of Economics ballet.

            So back to the real world, taking NAWAPA 21 as a fine model for numerous other massive projects around the world, we have much to do.

          • Tony Brogan

            Delusions of grandeur. The ultimate in monetarism is your policy bon bon.Open the spigots and lets see what we can spend it on.
            Hamilton was a Rothschild family man. A central banker, and a statist taking orders from the british empire you pretend to hate. Based on the banking system of the Bank of England.
            Beware the shill of the cental bankers. Behold the bon bon. he will have you in debt up to your neck.

  34. Tony Brogan

    All talk of makets and decisions by market participants is futile and a waste of energy until it is understood that there is no such thing as a free market. There is only manipulation and so anyone making a decision for investment is the irrational one.
    central banks around the world want to lend as much money as possible. “Money makes the world go around”-Cabaret.
    The banking cabal, the powers behind the scenes engineered one coup d’etat after another. They acquired a monopoly on the production of money for the state in one country after another, and also persuaded the polititians to hand over the nations wealth (gold bullion deposits) for safe keeping.

    The charging of interest on all these loans made a handsome propit and the secrecy surrounding the gold allowed it to be leased, loaned, or hypothicated to extinction.www.gata.org .

    The debts and money manipulation have been the cause of the boom / bust scenario but now is the end game.

    The indebted can not afford to borrow except at lower and lower interest rates. This causes a higher and higher capital evaluation of long term debt. e.g. long bonds. Bonds are now the last 9Latest buble being pumped to a final big bang.

    In the meantime the bankers are consoliditing controls over goverment ensuring that they are bailed out and that auterity is imposed to squeeze blood from the stone. Authoritarian laws are already in place to depress an angry populace when the financial markets crash. Crash they will.

    Keynes statement about markets does noy recognise the manipulated markets. The market is rational if left alone but acts in an irrational manner when manipulated.

    government is also in the act of manipulation to delude the public. Reagan formed the Working group on financial markets http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets

    it is operaed at the highest levels of government and government banking. It direcly intervenes in the capital and stock markets. Originally thought of as being used for enercencies as denoted by the PTB it is now used on a daily basis.
    It inversts directly in the stock markets to keep the values up. It is involves in the suppression of the precious markets. It is invlved in the manipulation of currency values. It is suspected to be involved in the fudging of reports and numbsr that produce the cost of living index to keep it as low as posible.

    In short. There is no area of the economy or in social policy that is not a manipulation. As such all is floating on air. The fiscal cliff is an apt analogy but we are already over the edge and Wiley Coyote has yet to look down. When he does watch out.

    This time David has it right, but not because of greed and fear of the market participants but because of the greed and lust of those powers behind the thrones. They want it all, by hook or by crook.

    • bonbon

      There never was a “free-market”, and never will be. Even von Hayek called for an international agency to protect it – something that amounts to world gov’t of the markets, not very free, hmm.

      So why pursue this Will-o’-the-wisp? As Friedrich List showed Britain preached this abroad, and followed national intervention at home.

      • Realist

        We all hope it will be, as fascism/socialism always finished with crash.
        It is now just for this false unsustainable “democratic” society to die.

        I see no reason why consider people stupid and not allow them the only possible way to express themselves, by buying and consuming products and services without the force of the state.
        At the end what all of us want is so subjective that we will never agree what to be done on grande level.
        Grande (state) level always failed so why not just give back the freedom to people to decide, ecah of us, what to buy, what to consume.
        This is the only way to have prosperity in the economy as it is not the way of central body telling us what to do.

        • Tony Brogan

          Although sometimes characterized by his critics as a “conservative,” Hayek always maintained that he was in fact an old-fashioned liberal, a believer in individual liberty, constitutionally limited government, and the free market of ideas and of goods. A progressive society must always be open to innovation, at the same time that it rests on a stable foundation of rights and rules of just conduct.

          There is no justification for suggesting Hayek was a statist. Any repeat of that assertion is a lie. A lie repeated is propaganda. Propaganda has the aim to deceive. Deception means there is an ulterior motive.
          The propagandist here is a statist.

          Here are a few essays to view. Show me the evidence that backs the fallacious opinion that Hayek wanted and/or believed in state control.
          http://www.google.ca/search?q=state+control+and+hayek&rls=com.microsoft:en-us&ie=UTF-8&oe=UTF-8&startIndex=&startPage=1&rlz=1I7SKPT_enCA449

          • Tony Brogan

            “”Although sometimes characterized by his critics as a “conservative,” Hayek always maintained that he was in fact an old-fashioned liberal, a believer in individual liberty, constitutionally limited government, and the free market of ideas and of goods. A progressive society must always be open to innovation, at the same time that it rests on a stable foundation of rights and rules of just conduct.”"
            See above. This was a quote from an essay but my computer glitched before I could finish.

        • bonbon

          No one claimed Hayek was a statist, rather an imperialist. See the interview here, discussed in this blog, where he calls for an international agency to protect the “free-market”. He harkens back to the Hapsburg “golden era”.

          His straw-dog of the Soviet statist, really is aimed at the US being a republic with Hamiltonian Credit for the General Welfare, an enemy of the nation-state, now being destroyed from within, FG, and without, the Troika and the EU statist Commission of Barosso.

          • Realist

            LaRouche fascist site is not the place to read interviews.

            If you want to know who LaRouche is you can get it here:
            http://www.publiceye.org/larouche/nclc1.html

          • bonbon

            The interview is with Hayek himself in 1983, in hs own words, quite wide-ranging, and very revealing. In fact these Hayek himself, with only a little hinting, gets to the point – an international agency to protect global freedom. So no he is not a statist, rather an old-fashioned imperialist. Especially revealing is his admiration of the old Hapsburg imperial monarchy.

            One can dismiss this but the document remains and can be excerpted at any time to clear the fog so-to-speak.

          • bonbon

            To get to know Hayek, I read what Hayek himself wrote. I of course have now a knowledgeable opinion and see much better how the London School of Economics, Hayek’s employer actually operates.

            Thanks to Larouche putting Hamilton firmly on the table, we can see precisely what has been going on, and much more importantly, what to immediately do to get on with the future.

      • bonbon

        Someone is desperately needed to “allow” this, I wonder whom? A UN agency, the IMF, or the Troika? They all belive in “free-market”, the loving embrace of Adam Smith (from the grave, shudder).

        We the people will allow what all the people need, for the people, that is a functioning economy, a usefull banking system, and progress, exploration.

        • Realist

          No, we should believe in LaRouche fascism.

          • cooldude

            “All those who wish to stop the drift toward increasing government control should concentrate their efforts on monetary policy.”
            F A Hayek.
            Despite your ridiculous mutterings Bonbon it is blatantly obvious to anyone with even half a brain that Hayek believed in personal freedom allied with responsibility and the pursuit of personal happiness once you don’t infringe on anyone else’s rights. Why don’t you simply admit that the reason you dislike him so much is because he believed in small government and individual choice and freedom whilst your La Rouche fascists would have us all sent to Siberia to work on one of your crazy 5 year projects. Well you can stick your big projects and you can man up and admit this La Rouche stuff is big government , totalitarian, anti personal freedom and liberty propoganda. No thanks.

          • Tony Brogan

            Good shooting pardner

          • bonbon

            You quote Hayek. Let people read for themselves the 1983 interview – many issues surface.

            “I’d like to see a crash before I die”

            Of course Hayek was out to destroy the Nation State, an imperial policy, well underway now. His method was Mandeville’s. And your quote shows what a monetarist is all about.

          • bonbon

            Since you brought up fascism, The Legacy Of Friedrich Von Hayek: Fascism Didn’t Die With Hitler

            By Jeffrey Steinberg.

            there you will see what the “conservative Revolution” is all about.

  35. bonbon

    So there is no doubt where the marching orders come from :

    European Commission Insists Governments Must Bail Out Banks

    Jan. 14 (EIRNS)–The European Commission has reiterated its policy that governments must bail out their banks no matter how many of its citizens will die as a result. On its front page, under the title “EU Redrafts Plans for Bank Rescue Funding,” London’s Financial Times reveals a new proposal by the European Commission which would force national governments to bail out their banks, or receive no aid from the European Stability Mechanism (ESM).

    Governments would also have to guarantee any funds received from the ESM. Even the FT writes that this just reaffirms the policy that forces governments, as especially in the case of Ireland, to bail out local casino banks and then receive a EU bailout.

    The FT wrote, “In the case of a country that would face insolvency after a bank bailout, the national government would still have to ‘indemnify,’ or guarantee the ESM would get its money back.” This simply reaffirms the EU’s policy of genocide for the sake of saving the banks and the euro.

  36. Dorothy Jones

    http://brianmlucey.wordpress.com/2013/01/15/the-running-sore-that-is-anglo-part-2339/

    Little piece by Brian Lucey today 130115 on the pending payment of €3.1 bn Anglo Promisory Note in March. Nothing new but he cuts through the b******t

  37. Deco

    The great irony of it all, is that it is Keynesian economic policies that are about to crash the bond market.

    This is being conveniently forgotten in the present climate.

  38. Good writing David and loved the Keynes quote.

    You wrote about gambling recently and your visit to Paddy Power. The amount of gambling ads on tv has exploded in recent years and it seems that my suspicion that it would lead to social problems is coming to fruition

    Scots punters blow £4bn on betting machines branded ‘crack cocaine’ for gamblers

    http://www.dailyrecord.co.uk/news/scottish-news/scots-punters-blow-4bn-on-betting-1532216

    • Deco

      +1.

      A certain media personality seems to have charity bets from gambling services providers following him like rats following grain.

      What exactly is a charity bet ? A complete oxymoron. Even gambling is painting itself in moral pretence these days. And the media are fully bought up.

      • joe hack

        yes A complete oxymoron!
        lets help people but encouraging gambling

      • Hey Deco I wasn’t expecting replies as this article is far too technical for me but I have always known that gambling is a sickness and felt it would be helpful to post the link

        When I was younger I saw guys going home on a Friday without a shilling in their pocket and the message I took from my observations is that gamblers are highly irrational individuals who are selfish and don’t care about the consequences of their actions. We need to protect ourselves from gamblers

        A charity bet?

        Yes charity for the bookmakers!

  39. Deco

    This bond bust was brought to you by JM Keynes.

    • bonbon

      Well The Keynes-Hayek waltz – a sight to behold. The irrational embracing the – well let’s leave it at that.

      The pirouette sure has got economists in a spin!

      • Computer programs have no emotions HAL and ‘waltz’ is a meaningless word they have to look up in stored dictionaries

        We humans have soul and it is soul that makes us aware of the differnce between a tango and a waltz

        Tennesse Waltz – Patti Page, 1950

        http://www.youtube.com/watch?v=_Ek3eCbfqp0

        Hang on in there son. You will be home in a few days.

        • bonbon

          A bit of the irrational exuberance rubbing off there?

          • Not really. Just chilling on a Friday night like most normal people

          • Monday, Tuesday, Wedneday … doesn’t make any difference. Today feels like a friday so for all intents and purposes it can be Friday and why not?

            The spin doctors do this all the time

            If the Ministry of War can become the Ministry of Defence then I have every reason to reassign a Tuesday to a Friday when I see fit

      • Realist

        From the mouth of LaRouche fascist every word is true.

      • A waltz is a risky bet lol HAL, let me see. The money is oot the bank and in the wallet and she she has been telt : ‘hen I’ll see ya when I see ya doll. I am joe the toff to Lisbon and don’t bother yer wee heid waitin for me coming back!”

        Gie ma best tae yer wee maw!

        Spring of 67. Ten inch drainpipes, slick hair and sideburns. Mr 1967. Smart brown suede shoes and a sharp buttoned down shirt shirt adorned by a two tone Dustin Hoffman raincoat. Gallus as fuck and ready to take on the world

        But whit if it a’ goes wrang?
        Are ye thinkin straight man?

        Aye hen. I am fuckin thinking straight. Dinny wory yer heid aboot me hen. I’ll take ma chances because ye only get wan chance in this life and noo is the moment. My time!

        I’ll get a joab as a taxi driver. In 1977 Mr 1967 can speak portugese, owns a cafe and and never went hame. Came here with a Dustin Hoffman raincoat and suitcase containing the bare essentials of the single man on a mission

        Fuck it. It was the time of my life. I knew it would only come once and I went for it. Aye I think o her sometimes but whit the fuck?

        Any regrets Mr 1967?

        Nane nane a ta wee man. Regrettin is a mugs gemme

    • Were any of his contemporaries any better?

      • bonbon

        FDR rejected the loving embrace. Dexter-White at Bretton woods stopped every overture.

        That answers the question I think.

        • I know a dog called Dexter

          • Adam Byrne

            I know two Trinidadians called Dexter. I drove them both 2,500 miles around Germany in 2006 for their country’s first (and probably only) appearance in a World Cup finals. Trinis know how to have fun, they are probably the best in the world at it.

      • Tony Brogan

        Try Hayek for a quiet read and a few revelations.
        Mises too.

        • bonbon

          Fisher of the Chicago School, the Austrian Scholl spinoff, made amorous overtures, which apparently the IMF has dusted off now, and was also rejected by FDR.

          Strange I did not find that in Hayek’s or von Mises ramblings.

          • Realist

            Because they are different schools Bonbon.
            Austrian and Chicago schools are very different !!!!!!

            You never read any of them, you never learn about them, you have no clue about them, you have no intention to learn, you have no intention to stop it.

            Please stop trolling!!!!!!

        • Thanks Tony.
          I’ll start with Wikipedia and follow the trail.

  40. SFR Daniel

    For some more detail on what’s going on about these bonds, without the metaphors of David’s homily, here’s something:
    http://www.irishtimes.com/newspaper/finance/2013/0114/1224328802562.html

    • joe hack

      Oopsy daisy, I did not see your link until I pasted part of that story below.

      It seems these guys are been gifted money from the Irish tax payer again, we are been raped and we don’t even know it and by the same people as before and our government are in collusion them

  41. joe hack

    WHY DO MARKETS ‘LOVE’ US?

    “A big part of the reason is technical. The Government, alas, was not selling shares in the bank. It was selling its contingent convertible capital notes — or CoCos — which are a different thing entirely

    CoCos automatically convert into equity if the bank’s ratio of equity to loans falls below a certain level. However, if it doesn’t, the CoCo holders get their money back in 2016 plus 10 per cent-a-year interest”

    so says
    John McManus
    Business Editor at the IT

    REPLY

  42. A sober gambler is capable of causing much more pain than a drug inducing alcoholic

    • bonbon

      The sober gamblers of Wall Street and London are on meth. And they are causing a world of pain :

      To quote with full attribution, author Taibbi, Secrets And Lies Of The Bailout :
      “We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.”

      Glass-Steagall (and the rubber room for the addicted).

  43. This place is very bereft of humour today and everyone is being serious debating topics which by your own admission are highly irrational, unpredictable and most of all unnaccountable

    170 comments in the first 24 hours is impressive by any standards and a lesson to anyone thinking of becoming an online entrepreneur. It’s not easy

    Today is no time for the casual observer or someone who is new to the ‘intellectual’ (crackpot) bearpit of economic theories with all baggage of emotional and invested reputations that people have made careers out of but it will shine a beam of light into the mad mad world of money

    That is a question anyone thinking of contemplating a career on the web should ask themselves. Answering that question could be a wise investment and if you do so and lead by example then the world is your oyster. Myself and Adam will keep you right. Stop listening to shysters who produce nothing and do nothing

    Maybe the turnover will be so high that you will turn your back on the Financial Times for good and just enjoy life without counting every bean. Bean counting is a disease as pointless as the existence of alkies on inner city street corners waiting for the betting shop and the offie to open

    You have street ‘wasters’ and you have people in top univeristy professorships who not only feel like ‘wasters’ deep inside know it. At least the street waster is alive and it begs the question – who is the richer man and more likely to survive and retain their sanity?

    I’ve known serious academics in my time only because I was working at a uni but they are just as fallible as us all. I’ve seen professors take a drink and just want to have a few nips and talk to the janitor

    Meeting and developing feelings for such people taught me humanity and made me glad I know Burns. It made me rich

    Lighten up Irish Brothers and Sisters ffs. It’s only money and the sun still shines and we will always be able to drink beer and get a hug from those that are dear to us. The best things in life are cost effective and / or free!

    Maybe life itself is irrational and I have never to date stumbled across one iota of evidence proving otherwise. Maybe I think a lot of those clever people who talk banks and bond markets are seriously wasting their talents and would flourish if forced into a career that is more suited to their natures and abilities

    This article was inflammatory (for conservative Ireland at least, because elsewhere they don’t give a hoot) and it proves that you need well rounded skills to get somewhere in life. The writing skills are impressive and joined up lots of dots using a couple simple concepts and analogies

    You have to be good with words and if so you will find a job anywhere. Our Davido is great with words and he is one of the few media people that inspire with his refernces to the Green Jersey Brigade and Government folly

    The web is full of people who post links and quotes to make themselves appear educated and intellectually sharp but frankly I ask why can’t we come up with our quotes and try to discover our own genius with linguistic expression

    We are good at it and know how to turn out a phrase and one of the wittiest men in Ireland is Prof Jucey Lucey. That is one funny man

    I sit back and watch dumbfounded as computer algorithms like HAL start to argue the toss (Green Jersey condoms again) and perhaps want to go to war over small points of logic. Fuck it. Just chill out because there is nothing you can do or say that will make any difference to a moron or anyone who has not been much out the Half Parish. HP man and woman is perhaps our real enemy and not the bond holders

    HP sauce, it’s a great little sauce, do do, do do, do doo dah

    You don’t have to prove your intelligence David but I loved your opening parapgraphs

    Quotes are so ubiquitous these days that they bore me stupid and make me feel educated. Down with ubiquitous quotes!

    If I want a quote I will make one

    I know I am capable

    Good luck all

  44. Clare Leonard

    http://sgtreport.com/2013/01/jim-sinclair-german-gold-repatriation-is-the-most-significant-gold-event-in-50-years-beginning-of-the-end-of-the-us-dollar-as-reserve-currency/

    Jim Sinclair: German Gold Repatriation is the Most Significant Gold Event in 50 Years – It’s the Beginning of the End of the US Dollar As Reserve Currency

  45. Tony Brogan

    The, or a form of, gold standard is returning

    http://www.telegraph.co.uk/finance/personalfinance/investing/gold/9804444/Bundesbank-to-pull-gold-from-New-York-and-Paris-in-watershed-moment.html

    Germany reaffirms its affection for gold for good reason if the bond maket fails as expected.

    • bonbon

      The austerity now written into the Basic Law in Germany, if continued under any kind of British Gold Standard ( a lot of Austrian Schooler’s in the Bundestag ) will be catastrophic. Remember what this mentality did to Greece. It is perfectly capable of doing the same damage at home.

  46. Tony Brogan

    The Rule of Law.

    When money was corrupted the rest of society follows. The rule of law pertaining to financing and economic policy is abandoned. With no law then all must act in their own best interest. Social mayhem follows currupted money.

    http://blog.milesfranklin.com/the-rule-of-law

    • bonbon

      Glass-Steagall was repealed, on active advice of Greenspan, Summers et. al. IT was not simply abandoned, rather lobbied against for 25 years, or since the 1987 Black Tuesday when Greenspan got Volcker’s job.

      Since its repeal in 1999 pure mayhem has broken out, they are on meth as Taibbi above very nicely describes.

      • Realist

        YES, GS would help to die slower.
        On a positive note the removal of GS actually helped us to realize the wrongness in central bank wrongdoings faster.
        Stupid banking sector + government greed blinded them to not realize they are going to destroy their fractional-banking system faster then anticipated :)
        This just shows the same characteristics as anything public. What is not yours but rather everybody’s does not need to preserve too long, let’s exhaust it in my 4 years term and leave others to deal with the problems.

        With Glass-Steagall in place we will just be prolonging our death and starving longer, but will not help it in the long run anyway.

        This way it is almost sudden death. 20th century will be remembered for central banking fiasco, I hope 21st will be different, still a lot to go :)

        • Tony Brogan

          You will never get anywhere with bon bon
          he is a central banker stooge. He wants vast amounts of money issued for a government lead 5 year plan like chairman Mao.
          He disses all currencies that replace the fiat he is so fond of.
          He promotes what we all ready have that have lead to this financial disaster.
          He wants state action rather than private. He wants government plans rather personal freedom of choice. He does not believe in markets for price discovery,He believes in central banks and has never agreed to full reserve banking.
          We get inumerable quotes and passages from the LaRouche propaganda intelligence organization
          He is a central bank shill.
          And as has been noted by several, he can not deliver a straight answer to a simple question.

      • Tony Brogan

        BS bon bon
        Started with the central banking system.
        Solidified with the incorporation of the Federal Reserve
        The robbery of the peoplesgold by FDR
        The fixed price setting of the value of gold.
        The abandonment of the gold standard and the robbery of the people by the bankers under the guise of a TBTF bailout landed on the taxpayers.
        now moving in to high gear with QE to infinity to break the system, and the people at the same time
        Welcome to one world government as a solution to the catastrophe
        and you want to save it with another central bank and unlimited issued currency to pay for a grandious plan that has as much chance of success as every other 5 year plan by government.

      • Tony Brogan

        How does this post at all relateto the post above that discusses theloss ofthe rule of law.

        • joe hack

          The BRICS countries appear to be succeeding in removing the dollar as a reserve currency with the rise of China’s Renminbi (or even the euro) as an alternative to the dollar will the Russians win the cold war using USA tools (The Cold war part two)

          The rule of law? money can only be built on trust if people don’t trust it they don’t use that is clearly happening now with the dollar and USAs policy’s.
          Gold as you advocate will not fix it- trust will – it makes no difference if it is gold or sand or paper or the Tally Stick. the system that the brics use is more sustainable than what we have……………….

          • bonbon

            The BRIC is broke, it was based on the Brazil “carry trade”. Russia was fooled initially and then Putin fired Kudrin, a London brick.

          • Tony Brogan

            True Joe all relies on trust. One reason that gold id repeatedly used is that of all currencies it has the attributes most desired by most people. It is the most difficult to counterfeit and as such it retains the trust in it as money when all else is evaporated.

            when the rule of law is gone. There is no trust in lawful fiat currency. all that is left is gold. most of the world recognises this and is acting accordingly. They do not follow me, I observe them!

        • joe hack

          ignore the bonbon its not here to debate

        • bonbon

          Its not a “loss”, like someone misplaced a pair of shoes, but it an active, pursued policy by a small group including Greenpan.

          Someone did not “loose” that law on the Potomac.

          So bring back the law that worked. Regulate the investment arms of central banking to the history books.

          Simple!

          • Tony Brogan

            You are confused as usual. You equate central banks to investment banks. two different animals though related. A close relative but diffent again are the commercial banks.

            your BS baffles brains and likely because yours is in total disarray to start.

          • Tony Brogan

            Having another look. Possible algorithm reply

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