July 29, 2013

Mistaking illness for a cure

Posted in Banks · 169 comments ·

Have you ever been in a situation where a family member is sick and some savant in the family goes off on a riff about the competence of the doctor rather than the health of the patient?

It can be a strange experience when the afflicted person’s health is deteriorating and the focus of the conversation is about the ability of the doctor who might treat him.

It has only happened to me once, but I will never forget it as an exercise in futility, wishful thinking and misappropriate concern. Sure, some surgeons might be better than others, but their ability to work unique magic while operating in the same system, with the same drugs with the same checks and balances must surely be broadly similar.

What matters is the health of the patient rather than the ability of the surgeon who can only do the best with what is presented to him or her and yet, hushed conversations about the quality of the doctor are happening all over the country today, when the determining factor is the health and strength of the patient which is often overlooked at critical moments.

Maybe it’s just human nature, but it has always struck me as a bit odd.

Watching developments in the global economy this week, I was reminded of the doctor and patient conversation again. In the world economy case, the doctors are the central banks who are trying to treat the patient, which is the ailing economy.

Right now, the global financial markets and politicians of every hue appear to have enormous confidence in the ability of the world’s central banks to engineer all sorts of conflicting objectives. In the US, the central bankers have to facilitate a recovery, yet in China, they have to achieve the opposite – a soft landing.

The most powerful doctor in the financial world – Ben Bernanke – is about to retire, and the resulting vacancy has the financial press jammed with stories about who may get the plum job. Much of the focus this week has been on the quality of the next surgeon general rather than the health of the patient.

This focus on the doctor rather than the patient has created a weird dilemma in global financial markets which is that, as the economy gets weaker, the sick markets rally. This makes no sense. Global stock markets should be driven by the underlying strength of the economy, which should drive company profits. So how come weaker data causes the markets to rally? How come bad news has become good news?

It’s because the worse the news, the more the doctors increase the dosage of monetary drugs – money printing – and the higher the stock markets go as a result. This is great news for banks and financial casinos, but it tells us little about the global economy other than that it is getting more fragile.

In order to find out what’s going on in the real economy, a good place to start is in the results of large companies. This evidence is usually much more timely and detailed than the general economic data that’s published and can be characterised by all sorts of measuring problems best left to statisticians.

Economic forecasting is fraught, but usually the more information you have and the wider you cast your net, the more likely you are to have a handle on what the future might look like in a world that is not only uncertain, but is obviously impossible to predict.

Last week, the evidence from companies made interesting reading. Caterpillar, the global truckmaker for construction and generally for moving big stuff from A to B – the staple of traditional economic activity – reported a 45 per cent fall in profits in the three months to July. If the world economy is recovering, Caterpillar should be seeing it.

But forget the old economy: surely the new economy is flying, isn’t it? Well, not really. Consider these technology companies – all of which have a significant presence in Ireland.

Google Q2 profits were up 16 per cent, but this was well short of forecasts. Then we had eBay, the online retailer, reporting profits down 7.5 per cent. Wall Street had estimated Microsoft profits of 75 cents per share, but the computer giant reported 66 cents per share profit.

And what about two of Ireland’s computer giants, IBM and Intel? Intel’s profits were down 29 per cent in the three months between March and end of June while IBM’s were 17 per cent down.

Now contrast the world’s big tech and traditional industrial companies with the banks and financial casinos.

Goldman Sachs’ net income rose to $1.86 billion from $927 million a year earlier. Citigroup saw a massive 41 per cent increase in quarterly profit. Meanwhile, Wells Fargo posted a 19 per cent increase in second-quarter profit.

You can see what is happening. The doctors apply the drugs because the patient is still weak, but this drives up stock markets because there is so much free cash about looking for a home. This is reflected in surging profits of the banks that make the money from the financial casino.

Now here is the truly worrying thing. Investors see share prices going up, they then plough more money into the frothy stock market thinking things are getting better.

But what if things are not getting better, but worse?

What if the stock markets are playing tricks on investors because while share prices are going up, the underlying profits of the companies – as we have just witnessed – are going down?

What if rising stock markets are a signal that the economies are contracting, not expanding; and the worse the contraction is, the more the doctors apply drugs giving the temporary impression that the patient is recovering when the signs of life are simply the response to stronger and stronger drugs?

If this is the case, it is a recipe for the most monumental financial markets’ crash, as stock prices fall back down to where company profits actually are.

This outcome is not in any way guaranteed, but when the world focuses on the doctor rather than the patient, there may be nasty surprises.

Something has to give, because you can’t have rising bank profits, rising stock markets and falling profits in the companies whose share prices are actually going up. This inconsistency doesn’t work, no matter how brilliant your doctors are.

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  1. Grey Fox

    One thing for sure is, the stock markets are playing tricks on the investors, history is a brief memory for most investors looking for the next best play. With the Bank’s holding the puppet strings there is always only one outcome…

  2. Dionysius

    This simply confirms we are in a deflationary part of the cycle. Until a reset occurs the cause/effect relationships will continue to remain distorted.

  3. NeilW

    It’s not free money that is chasing stocks.

    It’s borrowed money.

    Look at the figures for margin debt.

    We didn’t fix the banks in the last crash, so they are going to have to crash again by the look of it before there is the political will to fix them properly.

    • joe hack

      “We didn’t fix the banks in the last crash, so they are going to have to crash again by the look of it before there is the political will to fix them properly.”

      Near misses don’t result in news headlines – we trundle on sticking plasters on the rotten hull and bailing, bailing…

      The ship has to sink before there is investigation and an new ship is built. the new ship as is the norm will have more safety devices built in. We need to rock the boat so that it sink fast

  4. David,

    This is a great piece. I think a good point to make is that when you print money with abandon it distorts the traditional means of measuring economic health.

    It is very hard to say how the consequences of this policy will manifest. What is clear is that we will have inflation as so much money will bid up general prices. Cash holdings could well be decimated, hard assets should do better, but that depends where their yields come from.

    With inflation you can expect higher interest rates as officialdom try to deflate the asset bubbles that their money printing created. I am not convinced that inflation will reduce debt to income ratios as efficiently as some would hope. We could find ourselves in stagflation (low growth, high inflation) for a long time.

    I fear a series of bank bail-ins in the medium term, again a hit on cash.

    David can you ever see yourself advocating a modest allocation to gold, say 5 – 10%? When you consider the risks surely a measure of financial fat tail insurance is prudent.

    (Comments are by own)

  5. ex_pat_northerner

    While profits are one thing to look at, Revenues should also be checked. In general these are showing a downward trend in many companies which implies people simply aren’t spending. Worryingly in China things like electricity generation are also slowing rapidly, possibly giving lie to the fact that China is in for a soft landing.
    With regards to the financial casinos there is another aspect of deregulation that sees another web of power emerging eg. control of energy storage and distribution. http://wallstreetonparade.com/2013/07/should-wall-street-banks-own-hoard-oil-and-metal-sherrod-brown-drills-down-this-tuesday/

  6. Paul Divers

    Samsung announced record profits in Q2 and Apple sees profits fall for first time in a decade. http://tinyurl.com/kqjmkk9

    Red Hat, which provides open-source software products, has recorded strong sales growth in recent quarters. http://tinyurl.com/lv33fp6

    PC sales are plummeting and this probably explains IBM and Intel’s decline.

  7. 5Fingers

    Spot on. The game has changed for Microsoft, Apple and perhaps Intel for the worst. Could it be that the game is well and truly over for all who tried to charge premium pricing for what was effectively old rope. Open source is decently reliable and more accessible. Perhaps more mundanely we see how the Lidls and Aldis are also starting to make more sense with their no nonsense approach & decent quality products. Even Ryan Air continues to excel.

    Maybe we have entered the era of the no-frills economy. When money is tight, value is sought before brand acceptance.

    Perhaps too it may be said for the banks…definately a no-frills approach is needed here as well.

    • Bamboo

      I agree. I also think that the consumer in the western world slowly but surely coming to a point that they have done all their shopping, done all the travelling and can’t find anything to spend their money on.

    • Paul Divers

      Every second Microsoft operating system is a disaster, they think they know best and any time I hear anyone defending them I just think ‘yeah yeah’.

      I refuse to work with anything other than free and open source software that gives me a proper sense of shared ownership. It’s all about sharing.

      If I don’t like the direction my favourite open source projects are heading then I can fork the code base and say cheerio; add the features I need and if my version is superior people might join me in using it and driving it’s future development.

      With open source you can be lean and agile. No clutter and no junk (feature bloat) and god only knows what lurking in the background.

  8. 5Fingers

    Dear me David, I think the metaphor of Banker or Central Banker as Medical Doctor will have the Metallists and the Bonbons baying for blood. Even the medical profession might have a case of slander against you :)

    There is one profound difference between real Doctors and Bankers. At least the former have a long history of tried and tested methods with a massive body of diagnostic and treatment knowledge. Bankers on the other hand have never EVER shown any evidence of being able to diagnose anything and only have one method of treatment – supply of money.

    They have one thing in common….burying mistakes.

    • Except for the fact that this banker policy is deliberate and designed to fail. Nobody is stupid enough to repeat the same mistakes again and again if they are intent on an improvement.

      What is stupid is that we the common herd let the banksters get away with it for centuries.

  9. paddythepig

    Your best article in ages David. The actions of the central bankers are akin to pouring water into a leaky bucket, or pumping air into a football full of holes.

  10. CorkPlasticPaddy

    @5 Fingers,

    Sounds to me as though you’re another one that doesn’t know the difference between slander and libel???

  11. Bamboo

    Great article David.
    However, doctors don’t create sick patients. Bankers, financial engineers et al on the other hand, do create sick patients as well as entire sick systems and cultures. So I am not really 100% how the analogy fits in.

  12. Bamboo

    I meant to say: Bankers, financial engineers et al on the other hand, do create sick patients as well as entire sick systems and cultures. Now these same people want to become healers of the sickness they created.

  13. mcsean2163

    hmmm… no mention of facebook, apple or samsung.

    Samsung profits jumped 50%!!

    Not really a balanced article at all, everyone is aware of central bank stimulus and the bubbling bubble.

    The real question is the one David asks but does not answer.

  14. joe hack

    The following is a message from the Road Safety Authority:

    Doctors do differ and patients do die – antibiotic for everyone as prescribed by the indifferent doctors is more likely the issue.

    Will this car fit between the oncoming juggernaut and the hard rock? Two cars just won’t fit through the tunnel at molls gap but some keep trying to prove they will. Keeping your speed up and closing your eyes hoping it will or hoping the oncoming juggernaut will chicken out (the case for most drivers) as it seems to be the case for most economists and the politically blinkered politicians – wishful hoping is not a science but thankfully some Doctors do differ (I Hope?).

    Keep your eyes on the road and your and upon the wheel but really it is OK to stop and plan your next move it’s even OK to stop and let the other drive pass by safely but it not as trilling or as much fun, it’s a drug but the drugs don’t work.

  15. DavidIreland

    Hi David,

    The ability of different doctors is not at all “broadly similar”.

    In this they are just like economists, accountants, barristers, computer programmers, teachers, gardai, dentists, shop assistants and everybody else. Some doctors, for example, might always wash their hands before moving to the next patient, others might not always do this. Some might double, treble and quadruple-check before removing a damaged kidney, others might not and tragically the good kidney might be removed instead. Some patients might suffer needlessly because the doctor didn’t have the ability to see there an immediate need for some specific treatment. I’m sure there are millions of examples.

    In my view, the solution to the “hushed conversations” you mention in the article is to ensure that people are confident the system; that it is is open and transparent and that it does not try to hide or excuse any incompetence or inappropriate behaviour within it.

    Otherwise, I thought the article was good.

  16. The closest analogy for the central banks being doctors is that they are controlled by witch doctors, but are more like leach setters, and bloodletters, as they extract the life force from the victim who ails and dies.

    The problem is like most people, the economy is on the wrong diet. A poor diet leads to ill health. The diet of borrowed money and easy credit. It has lead to bloated stomachs and clogged arteries. This diet advocated, advertised and encouraged is pushed by the central banks. The intention is to kill the patient and make off with the assets.

    Now the doctors are also on the same diet and grows sick but the witch doctors jump up and down and tell the patient to get off the sick bed and go to work for the doctor. A little hard work will make you feel better!

    The same diet of easy credit is continued to be fed the patient. The patient obviously did not eat enough credit. Not only that but has stopped spending and now stashes the food off to one side. Those who eat a proper diet (no credit and save for a rainy day)for good health are castigated as leading a bad example, and being the cause of the ill health of the patient.

    Meanwhile the patient is wrapped up and hidden from the people. The only news comes from the court curriers and the spin doctors. Don’t worry, the patient is reviving and recovering. We have increased the diet.

    Now the patient’s lungs are filled with debt and he can not breath. The consciousness is failing as the interest throttles.

    The court jester frolics to distract the people. The press releases are outright lies to delude the people and a surrogate (a double)is produced to wave from the balcony to show the people the false recovered credit addict.

    The truth.
    Money is poured into the central banking system but is held as reserves and goes nowhere.
    The stock markets are manipulated by the Presidents group on Financial markets (aka The Plunge Protection Team). Higher prices are atificially produced on lower and lower volumes. A thinner and thinner real market.

    The central banks buy 70% plus of government debt issues to pay for unbalanced budgets. (some of this finds its way into the economy via government spending and creates the inflation. A vastly inflated bond market.

    The financial markets are deluded as the banks manipulate the interest rates to historical lows when the risk factor would suggest much higher rates. (The chances of getting your money back as a depositor as an investor are diminishing daily. Want to be bailed in?)

    The exchange rates are manipulated daily as each currency tries to lower itself in relation to others. (competitive devaluations to oblivion are occurring) It is a travesty to measure the value of a currency against each other as in the US dollar index. Where is the real measuring stick? The one being used is floating up and down with the rest.

    Well of course it also is under attack and attempted to be destroyed. However the people of the un-underdeveloped nations are not sophisticated enough to know the difference as they prefer real money rather than empty promises to pay.

    The Witchdoctor seeing this denies that gold is money while at the same time hoards supplies previously obtained. The witch doctor refuses to supply the one food that will enable the patient to recover. The patient need commodity money. The problem is that the patient will likely die if removed cold turkey from the credit addiction so must be weaned off the credit.

    The Witchdoctor casts spells on the commodity money and tries to cast it aside by nefarious means. An illegal(bare naked shorting) paper market is created and sold as the real thing until there are more than one hundred pieces of paper used as the real thing. This Drives the prices down to false lower levels. But commodity markets are being created in other parts of the world other than London and New York. Hong Kong, Shanghai, Singapore, Dubai etc. will be physical markets that do not deal in paper and recognize the real value of a proper diet.

    If the patient can get a doctor that will change the Credit diet to a proper full meal commodity based diet then there will be a chance of recovery. If not the demise of the patient is not far off.

    Meanwhile it is bread and circuses for the ignorant people.

  17. bonbon

    FT : New Glass-Steagall would help to keep lenders in line

    The Financial Times knows the medicine the banks need. Yet again it lays out the treatment. Yes DMcW, some doctors are better than others!

    Hey guys, never fear, let’s force banks to take a Hypocratic Oath ! Right now they are poisoning the economy, and out to kill large numbers, in a genocidal rage.

  18. dwalsh

    Hi David

    If the medical equivalent of Ben Bernanke was treating a member of my family I think it would be negligent to be indifferent to how the treatment was being conducted.

    Ditto with the global economy.

    However it actually makes no real difference who the next Fed chairman is. Whoever he or she is they will simply be doing the bidding of their masters; who are neither the people nor the government of the USA, but the controllers of the privately owned Federal Reserve system.

    It is clear that so-called free market capitalism is incompetent and incapable of managing a global economy; in a similar manner that the nobles of the Ancien Regime were incompetent and incapable of managing the emerging European nation states in the 18th century.

    Humanity must develop new systems of global economic management and governance if collapse and disaster are to be avoided and human civilisation is to prosper and move to the next level of development.

    Permitting the global economy to be managed by privately owned profit-seeking transnational organisations – essentially private global empires – is like having a doctor whose methodology is to prescribe the course of treatment which will be the most profitable for himself and the medical industry he represents.

    • Good one Mr Dwalsh, I agree
      Except this bit
      “It is clear that so-called free market capitalism is incompetent and incapable of managing a global economy”

      More correct to say that it is clear that the free market capitalism has not been allowed to function. The same crew operating the central banking system operate the cronyism that government function and big business operate hand in hand that together provide us with fascism.

      Markets no longer function and unless one is connected to the above there is no functioning economy that makes sense to the small and medium business.

      Mega banks and financial businesses pay huge bonuses after making huge profits after being bailed out by the tax payer.

  19. michaelcoughlan


    When I read this piece in the SBP I remember catching my breadth when I read the profits GSucks was making even though I know that this has been happening all along. Your piece is still naive in manny respects however. You still can’t see the wood from the trees but you are getting much better. Your piece is written from the perspective of a well trained economist with the underlying assumption that the policies being implemented are their to help the economy which they are NOT! THIS ARTICLE PROVES THAT. Since I’m not a conspiracy theorist let me enlighten you. GSucks are benefiting from these policies the most however it’s not for GSucks benefit alone that the policies are being implemented. The politicians have a devils alternative: help GSucks et al to make profits and repair their balance sheets even though we have massive unemployment and social exclusion OR let them implode and start a deflation of the speculative bubble in the hedge funds industry which is TWENTY times the size of the worlds GDP and face one revolution after another in one country after another? Remember Gorden Brown dumped the bank of England Gold WITH advanced warning some years back to save a banking system caught on the wrong disc of the trade.

    The other thought that crossed my mind when I read this in the SBP was finally McWilliams who wax right about the property bubble in Ireland and also the call on Anglo being a one way leveraged hedgefund net on property is tentatively applying his considderable acumen to analysing the BLATANT bubble in the stock markets and all you can come up with is a series of Questions?

    Have more confidence in your own ability. You HAVE a proven track record for success unlike the people in GSucks who are perpetual fuck up merchants.

    • cooldude

      I agree a much improved performance from David. The main problem with Qe and other forms of money creation is it does nothing for the real economy. All it does is prop up the insolvent banks and allows them to make large profits and pay massive bonuses from their gambling. Yet we the taxpayers and our children have to pick up the tab for bailing out these reckless gamblers. We need to get rid of these failed “doctors’ and their system of debt based money. Something has to give and it will give. The asset bubble that was created in the bond market looks likely to be the first thing to give way. This will eventually lead to the collapse of the present currency system. Along the way expect the gambling institutions to invoke their “bail in” medicine and come to rob our deposits.

      • michaelcoughlan

        Hi cooldude,

        I agree with your response thanks especially the bail in.

      • Talking about the real economy. how about the black or shadow economy.
        Currently I reside in a room on a farm. Pay no rent. Receive wifi, telephone, heat and light and some food in exchange for some work. I enjoy digging a garden and planting seeds etc. I feed the goats and get tired from the exercise. I sleep well and sometimes sleep in to 9 am. Non of my activity shows up on any stats.

        What is my standard of living? How does it rate. I have a small pension and get medical and health care and a few perks like free ferry transit on Mon-Thurs.
        I often get around on a bike but have a car and it is licensed and insured. I have a sail boat. Ditto as the car.

        How many others are similar?
        There are rooms to rent on the farm and there are trailers (caravans) on the land for rental. Interesting to see who floats by to stay a while. Most are low paying jobbers or on government assistance of one sort or another.

        Different world from my $1000 a day real estate career where my first $600 a day had to be made whether I worked or not. Do nothing for a day and take 3 days to break even again. take a vacation and that 600 dollar a day was still spent money.

        Then when I succeeded in getting ahead the government scooped 45,000-50,000 direct in income taxes. By the time I finished paying the household expenses and taxes I had barely enough to save for a pension plan.

        I calculated that after I paid my expenses I had 120,000 a year left and I could still barely make it as a single wage earner with a family of five.. I calculated that actually the government took over 66% of that 120,000. That is counting government dues and fee, taxes and vat.

        I directly controlled 34% of the money I earned after expenses. You think governments can make the correct decisions. I do not. No wonder our economies are headed down the toilet. Never mind all the other items I post about a lot.

        We are doomed. Protect yourself.

        PS I enjoy this other life better.
        I now take from the government more than I give back and live a healthy lifestyle. I contribute to the local community.

        It will be better yet when I get my piece of land in the right place and then I can please myself what to do tomorrow or indeed the following day.

        • michaelcoughlan

          Your preaching to the converted Tony. Amen to you. Same thing happening here. Big move towards self sufficiency. More and more really hard working people like you doing this and it’s a dead cert the established order will give way.

          Best of luck. Your life is really really getting better.


        • michaelcoughlan

          Hi Tony,

          Hi Tony, you don’t even need a piece of land. You can grow food in barrels or other containers.

          Read all you can about aquaponics. It will really open your eyes where food production is going. No land at all needed. You’ll make a living from a polytunnel using the techniques of aquaponics.


          • Pduberry

            Very interesting conversation about alternative lifestyles. I would love to learn more about aquaponics. Perhaps, Michael, you could point me in the right direction.


          • Yes Michael, I am familiar with the concept of aquaponics. I have also read about agraponics where a fish pond is added.

            first a fish pond and Feed the trout (With what I am not sure about in practice). Pass the water through your various crops and it is pure at the far end to be recycled to the pond again as fresh water. A constant flow cycle.

            Polytunnels at the early stage to grow early spring crops in winter and or something more exotic like semi tropical fruits. (Need added heat source here)

            That is why a piece of land is preferred as then all structures are permanent and owned rather than rented.

            You are correct that it is all a matter of scale and it can be inside an apartment (flat) starting with a goldfish bowl!! Progressing to mini flats of fresh food harvested next to the kitchen.

          • Paul Divers

            Sound like a pure idiot pal. Google it ffs. Jees. Where do you people come from?

            Is it so hard to expect people to do homework?

            You are lazy and deserve utter contempt.

            Now fuck off.

        • 5Fingers

          What’s all this “we are doomed protect yourself” stuff? Do you honestly think that if everything suddenly went bad you’d be safe in your bohemian idyll and the internet and the boat…life is indeed good. Did it ever occur to you that maybe were it not for the state and officials you so love to criticise that such idylls may not be available. It is nice when life is so predictable. Tell me, what is the purpose of life now? Grow veggies? For what? To live longer? For what? Who is benefiting?

          • No, when the financial system as constructed finally fails the world will not be a fun place to be. If middle class assets are wiped out then the bedrock of society is under great stress.
            Best place to be is as self sufficient as possible.
            do not leave your savings and assets in a banking system. Do not rely on government to solve all your problems, be self reliant as much as possible.

            Associate with likeminded people.

            Life is all about survival, followed by sufficiency, followed by leisure time.

            Most are still working on the first. Sufficiency is achieved by a few.
            Leisure time not so much.

            Many take leisure time by relying on the sufficiency of others. Those days are likely numbered.

            Back to the middle ages where reportedly there were 100 days a year off for celebration of one thing or another!!!??

            Benefiting my self first. Then I am fit and able to help others

            Community is about voluntary assistance to each other not about the coercion of the state which forcibly deducts from one to give to another, destroying volunteerism and encouraging indolence.

          • michaelcoughlan

            Brillian soliloquy Tony.

          • michaelcoughlan

            Hi fingers

            I suggest you contemplate the questions you ask yourself and you will find that asking someone else for the answer is a redundant exercise.

            When you are enlightened you will experience a sense of joy and contentment which is indescribable.

          • 5Fingers

            Complete nonsense…you are living off the hard work of others. You wander around a nicely prepped world with roads and air travel and internet and you have the arrogance to assume self sufficiency. Let us not get started with Electricity, heat etc.

            Yeah..the middle ages.. Average lifespan where you are old at 30.

            Tell me, ever do survival training?

          • Depends how one defines self sufficiency, and what day and age one lives in.
            Self sufficiency as in able to provide for ones own needs.
            The age of man has long been proclaimed as 3 score years and ten. Ancient peoples lived to advanced old age.

            Moses was 80 at the start of the exodus and 120 when he viewed the promised land. But he died before setting foot on his dream real estate. Such is life.

            The good life is now killing us off as the diseases ingested into our bodies from food and water create corrosive environments.

            Nobody suggests subsistence existence.
            No I have not done survival training but I imagine it would be something we should all be familiar with but are not of course.

            Optimism is preparing for the future with realism rather than hope.

            “Tell me, what is the purpose of life now? Grow veggies? For what? To live longer? For what? Who is benefiting?”

            One might ask this question of themselves all right. Many religions have been formed to give meaning to those questions. So what is your answer to your question?

          • Adelaide

            +1 This bunker mentality leaves me cold. It’s smart-alecky claptrap with a pinch of snobbery and a touch of disdain for your fellow humans. It’s fantasy nonsense peddled by insufferable narcissists.

          • Paul Divers

            Alelaide’s comment wins hands down.

            You sound like narcissists.

            It’s getting tiring and we need Col to come in and keep us all straight.

            God bless Col. Our moral saviour and one true friend.

            Haw haw haw

          • 5Fingers

            Purpose of life? To serve your fellow man. Love others as yourself. Engage and take risks so others may live better. Leadership.

            You engage in self referential pontificating dictat, prescribing from a position of comfort. Be self sufficient so you can walk away when the going gets tough.

            The 3 score and 10 so biblically described were for the well off. People died young from insult via war and disease and poverty in their zillions. The archeological evidence is there by the truckload.

            Anyway…so what if you live if all you do is exist and live in fear of the need to depend on others and afraid of debt? Is that not the point? the fear that you might be owing to someone and might be needing to return a favour? that is the belief system of a hermit. You fear equality and community because of the debt you will always incur.

          • Mr Five fingers

            Lots of unwarranted assumptions there. Pontificating on about that which you have no information.

          • michaelcoughlan

            Hi Adelaide,

            I’m always thankful when people makes posts which are challenging. The trouble with your last post is that there is no substance to it. It is a rant.

            Know what there is plenty of substance in? A plate full of organically grown beef and veg.

            Take care,


          • michaelcoughlan

            Hello 5fingers,

            Anyone driving a car pays road tax. My contribution is there for roads. Airfares are paid to the airline services used. I have a wood burning stove heating the water so my needs are met there as o harvest my own timber. Electricity comes from Airtricity renewable resource.

            As for “Did it ever occur to you that maybe were it not for the state and officials you so love to criticise that such idylls may not be available”
            Sounds like totalitarian China and we know the amount of bloodshed and starvation in countries dominated in such s manner. As it so happens I don’t need the state I’m almost self sufficient.

            Don’t miss the point though: the purpose of self sufficiency is to free a person to pursue worthy activities such as serving your fellow man or art or whatever you like yourself. Self surplusing would be more accurate.

        • Paul Divers

          It’s a fascinating tale Tony and thanks for sharing. Always good to hear someone who has lived a full life sharing their thoughts. It makes a difference

          I sense there is something missing. It sounds like you won’t feel complete until you get that little bit of land

          However you don’t need land. Just be happy and keep posting. Live in the moment and have all the cream teas it takes

          It’s a short journey and it’s over before we know it

          • You are correct about the land. I had it in the past and circumstances deprive me more than once.

            I will have it again. I am in the process to see if my body can handle it. Looking favourable as I work along side the youth with skill and effectiveness.
            I get tired but am stronger.

            70 is the start of a new life. I can outperform myself as I was at 17 but not as I was at 22!!What gives me hope is that the aches and pains of physical work are much like I remember them as it was when I was a teenager. Whether I improve from here is the question.

            While gold is immutable, I suspect I am not.

          • Paul Divers

            Tony you sound like you are alive at last and I didn’t know you were 70. Maybe you wished you’d found this kind of life sooner?

            Better late than never friend

            If you want a wee bit of land then go for it. If it’s your passion and makes you feel good then have it

            I identify with your reasons for wanting it and think ‘why not’

    • Paul Divers

      David McWilliams is leading the way and giving us all an example of how one man and his brain can be a leader and an employer outside the system. I find him inspiring because I know he is an outsider like many of us

      If I was into economics I’d rather attend his courses and buy his educational materials than attend college because I feel I would learn twice as much in half the time and that is a fact

      Information and Education is his business and after seeing the site he set up for selling his courses I am well impressed

      I’d love to do the same in my field by providing world class computing education. Low-fi and straight to the point. No bs from IT salesmen who I could piss all over

      Would he tell us how he did it?

      I don’t know.

      Would he be giving his edge away?
      Not at all.

      It’s the people behind a business that make or break it.

      If a leader works 14 hours a day and my income depends on him then I will work 16 hours.

      No clock watching and knocking off at 5 O’clock for my lads.

      You are either in or you are out.

  20. dwalsh

    @ Tony

    The system we have at the moment is what free market capitalism really is Tony….cronyism.

    Capitalists will always use every strategy and tactic to leverage their power and influence over markets and society. The regulations that might help to moderate their activities are absent in a completely free market; and thus plutocracy and corruption will naturally emerge.

    Getting rid of regulation will not get rid of human greed and corruption.

    What people mean by ‘free market’ is really a utopian rationalist myth.

    There are not and never have been free markets. Since civilisation began markets have always been controlled by elites. The best we can hope for is representative governments regulating (or restraining) the worst excesses of oligarchy and plutocracy and making markets fairer.

    Capitalism needs powerful regulating for its own good as well as society’s. Without regulation Capitalism will destroy its markets and itself; just as it has been doing in the USA in the past decades of deregulation. The industrial and productive power of the USA has been destroyed by its own industrial capitalist elites; and its working population has been indebted and impoverished by criminalized predatory finance capitalists on Wall St.

    All of this should be obvious; but it is not the primary reason I maintain that free market capitalism is incapable of meeting the needs of human civilisation today.

    The primary reason is the very nature of capitalism itself; its basis in greed. One of the gurus of free market capitalism, Milton Friedman, held that greed is the appropriate basis for human civilisation.

    Corporations in their very DNA seek to devour or destroy competition. They prefer to operate as a cartel or duopoly or monopoly if possible. To a corporation a free market is a market free of competitors; or a market that is ‘free’ to exploit.

    A corporation cannot act in the common good; only in its own corporate interests; it can only serve the enrichment of its owners and managers. A corporation systematically seeks to maximise profits and to minimise or externalise costs.

    As a basis for human society and civilisation in the dawning global era free market capitalism is by its very nature incapable of coherently managing a truly global economy; and incapable of fulfilling the utopian expectations placed upon it by free market ideologues.

    [I do not mean to say we must outlaw free enterprises or the capitalist spirit; only that we cannot leave the future development of our societies and human civilisation and our planet to capitalists and their CEOs.]

    • michaelcoughlan


    • cjmurray

      Great stuff. A spade called a spade at last. Crucial questions then are how much of the capitalist spirit is to be allowed, how to allow it, who whould decide etc. The obvious answer (to me) is to believe in democracy and allow people to vote directly on issues of pay and wealth, and a maximum income referendum is the place to start.

    • cjmurray

      I’d also point out, wearing my mini-capitalist hat (from the real markets – those that sell real stuff), that it’s not just down to evil, greedy capitalists wanting to make more money when they already have plenty, even if that is a major factor. However, it is also the case that in a capitalist system, your business absolutely MUST expand/”grow”, and thereby diminish or destroy the competition. If you don’t, your competitors will, and by increasing market share/economies of scale/cost advantage, destroy you.

      • dwalsh

        Thanks for that.

        It’s a Darwinian survival of the fittest thing. Which is all fine in a limited sense; but is no basis for a coherent and developing planetary society and civilisation.

        We need rational and humane economic and social policies; and the capitalist private sector by its very nature cannot provide them.

        • cjmurray

          Spot on. And the crucial thing is where to set the limits, and who sets them. I say the people should set them directly, rather than, egged on by millionaire media types, scratching a vote every five years for millionaire Tweedledum or millionaire Tweedledee or millionaire Tweedledumber.

      • Paul Divers

        which proves capitalism is a lie.
        probably the biggest con invented apart from religion?

    • I am afraid that everyone is spitting on capitalism which is exactly what you have been conditioned to do.

      Accurately describe the economy and it is controlled by crony fascism so say so and give it it’s rightful name.
      The small and medium business is capitalist and we all rely on the efficiencies of such a system as we all price and comparison shop.

      The controllers who are the fascists do want you to blame capitalism. True capitalism destroys fascism. Blaming the wrong source plays into the elites hands and diverts attention from their nefarious activities.

      Give a dog a bad name and it never recovers. Once a thief, always a thief, for example. Giving the source of energy, and the best in goods and services, a bad name will ensure that you will settle for second best.

      So do not confused people by using the incorrect descriptions.

  21. joe sod

    I dont think there is much wrong with the health of the global corporations, the last few years have seen a bonanza in corporate earnings. As for Microsoft and Intel yes their earnings did dissapoint but that was more to do with cyclical technology issues and also the market getting carried away with earnings expectations. As for caterpillar this is really about commodities and mining than the overall global economy although caterpillar and the australian economy might be closely related. Microsoft sits on an $80billion so i think its alot safer than leaving money in a bankrupt bank or buying bankrupt government bonds. US stocks are still below average long term price/eanings ratio even after the big increases over the last year. And European and Japanese stock markets are cheaper again, so i think we are still a long way from bubble territory. Also the US DOW only recently broke through the 14000 level it reached in the year 2000,

    • 5Fingers

      In recent years, a lot of global corps have certainly done well in the midst of falling revenue. Earnings remained high as costs fell due to an increasingly competitive (over capacity) market in labour particularly. But I think if revenue continues to fall, this method of increasing earnings will stall.

      I would guess Caterpillar’s issues points to the Chinese falloff in demand for raw materials.

      P/E never rising suggests institutional buyers are churning cheap money and never keep stocks for long. Revenue is stalling suggesting no growth. I could argue the bubble is still burst.

      With regard to Microsoft/Apple/ etc etc, I see these guys moving to cash grab mode (low cost) and dumping innovation in an effort to stave off competitors and maintain market share. It will work, but as people get used to old rope for cheaper prices, it’ll be difficult to see how they will ever climb back.

      I have my own pet theory about all of this (which is entirely circumstantial and biased) and it relates to the death of positive science fiction. Which I was a kid 50 yrs ago, a lot of what we have today was imagined. There were guys out there trying to make the stuff. There was a kind of pent up market PULL that I think started to be felt from the 80s onwards. SF was positive, rip roaring fun. Nowadays, as I scan the book shelves and movies most of it is dystopian, self loathing, dooms day horror. People have no sense of hope or innocence for techo positives. As an ardent tech watcher, I can tell you here and now, innovation (as “scientifically” measured by the differences in an average kitchen 30 years ago and now) has stalled and much of the innovation you are seeing now is around bio-tech and fear driven products that keep old fogies alive longer than they need to be than reaching out and putting our filthy boots on a planet whizzing round the next star.

      • michaelcoughlan

        Very very interesting insight.

      • cjmurray

        As an oldish fogey, even one who likes science fiction, I don’t like this too much. Nor do I think we should waste squillions we haven’t got sending would-be hero types off on their fantasy voyages, especially when there are billions of real, live, valuable human beings underemployed, billions living is sub-standard conditions, ten million starving every year, and financial, social and environmental holocausts looming. Apologies for the “negativity”. I call it facing reality. And we can surely find a positive, grown-up way of dealing with that reality that avoids SF escapism. Lewis Mumford accurately called the 1970′s proposals for space colonies “technological disguises for infantile fantasies”.

        • 5Fingers

          The moonshot gave use practically everything positive techwise we have today. Return on investment is well proven. CERN gave us the web interface – just one item. You are in danger of espousing the very dystopian views I see dominating in a lot of literature and media. We need hero’s and we need fantasy that pushes boundaries. If the world is old fogie driven we will die of regret rather than of trying.

        • joe sod

          yea i agree with your analysis, i dont think technology is now having as big a change as it did 30+ years ago when technology changes truly did change peoples lives. As you rightly say the kitchen of today is essentially no different to one from 30 years ago. As for communications technology i think the big tech players are like utilities now and have the cash and size to buy up new technology patents and companies, thats what microsofts been at for the last 10 years. I think there will be less google’s and facebook’s in the future because the internet is not a new technology anymore so it is easier for the big players to maintain their control of the technology and keep out competitors. The jury is still out on whether facebook can survive as a stand alone company.

      • dwalsh

        Good points.

        The decline of public science in favor of corporate patent & product development is another symptom.

        As you say below, public science gave us the moon and the internet; and so much else that private profit-driven science would never do.

        We need public science and academic freedom to inovate our way out of the multiple challenges we face.

        The notion that the maket is a sufficient driver for scientific & technological innovation is another free market myth.

        • Paul Divers

          Open Source Science. Science for every man.

          Can you imagine a world of closed science?

          It is too terrible to contemplate isn’t it?

          Creepy as hell.

      • joe hack

        to DWalsh, Right from my head, you took that right out of my head.


        The human condition whether we like it or not has to be policed anyone who thinks other wise is either naive or a fat cat tyrant corporation type and we know who has the money to sell the myths that suit their greed.

        Some of the politically blind not even those paid up members of the fatso club but the everyday do -gooder blind politician bend to the will of the corporate greed advisements that sell the myth of a free for all, sadly allot of people believe the sales pitch.

        Naivety -the unions have in the past been a sort of a police man but the fat sales man has faced them down they even paid more than the union rate (Intel an example) to attempt to prove unions were unnecessary.

        In fact It was the threat of the union which kept non unions wages up so we now are closer the feudalism of the past than ever before, freedom is not free and my freedom does not give me the right to take away yours -that is would be the logic of primitive.

        Individualism is the most destructive force that has come about in the last 30 years or so we are where we are as a result of it.

        • dwalsh

          Yes we are of like mind.

          The many forms of radical individualism and also anarchism which have emerged in recent times are a social poison and threat to our survival as a species.

          The propaganda assault on humanity has been intense and funded by the corporate elites. For instance the Rockefellers funded and promoted the infection of the American educational and political systems with Austrian economics….as toxic a brew of pseudo-science as ever there was.

          • BS Substitute Keynes for Austrian.

            “Yes we are of like mind”
            We are the Borg!

          • cooldude

            Tony is in fact correct. The ONLY form of economics being taught in the western world is the Keynesian brand. This is a pure and simple fact. The Austrian school of economics is totally ignored and is the polar opposite to what is being taught and practiced today. The Rockeller and other elite families have promoted this brand of economics because it inevitably leads to asset bubbles through the excessive money creation it promotes and this suits the elites as they can then come in and pick up the pieces cheaply. Also the Austrian school calls for the elimination of central banks and the constant interference and price fixing they bring to all sectors of the economy. They rightly point out that having a bank of last resort to bail out the reckless commercial banks only encourages them into even more reckless gambling. Also the modern Austrian view on money, as stated frequently by Ron Paul, is to allow for freedom of choice in what individuals want to use as money and let them decide themselves rather than be forced by fiat/decree on what to use.

            The only pseudo science being taught is the current one which has led us to this stage of debt saturation and oncoming global depression. It is no coincidence that the last century of central banking has also seen the rise of the massive military industry which is causing endless harm across the globe.

        • joe hack

          Tony should that be ‘I am Borg’ as we is plural after all.
          We the the hordes of ‘I’ should stick together just in case ‘I’ becomes selfless individuals or even wee minded.

          with love

      • I would guess Caterpillar’s issues points to the Chinese falloff in demand for raw materials.
        Chinese continue to acquire access to raw materials as far as I know. They buy mining interests around the world. The mines that are shutting down are the PM mines as the bullion prices are forced below replacement costs.

        Caterpillar is a major supplier of the heavy mining equipment needed to operate the PM mines. As such they were the first beneficiaries of the boom in PM prices in 2002.

  22. Shades of Bono

    What are you looking for ?

    GOLD …..continues to FALL …all the way DOWN

    Is a Dante Inferno

    • 5Fingers

      I am really missing your predictions. Any more wobbles coming around?

      By the way and in no way trying to demystify or be disrespectful. Was reading a little article in New Scientist the other day that they have discovered (statistically small sample across all age groups but significant findings) melatonin levels drop coming up to a full moon and people are more tired. Result…more accidents, cockups etc. Just goes to show, good old science still has its beginnings in observations – particularly if they keep repeating themselves.

    • Gold up yesterday and now up 5 bucks today. Up the last month. The eventual price in fiat money will be a moon shot far eclipsing the moon. Price will be infinity as the fiat goes to zero.
      The only inferno here is the smelter of gold producing real money!!

      • It is easy to fall hook line and sinker for the propaganda sheet of the banking cabal.
        Not a word of the 5 times gain over that last 12 years.
        Not a word of the fact that German gold suffered “Bailin” courtesy of the US. Germany lost 2000 tonnes, a hell of a lot, by theft as the US will not ever give it back as the gold is spent and long gone.

        Leased out and sold in the open market in the price suppression scheme operated by the cabal to squeeze the gold out of the central banks to be obtained by the Rothschilds of this world.

        Not a mention of the gold sold by the UK at 280 an ounce. Could be 1300 today

        There are many other examples but the propaganda is to dupe the ignorant into thinking that gold/silver is of no value.

        This article is a prime example. Do not fall for it.

    • Paul Divers

      You got to cry without weeping
      Talk without speaking
      Scream without raising your voice

    • Paul Divers

      I found it!
      Only recently but better late than never.

  23. cjmurray

    I studied science at school and university, and intermittently since. I watched the moon landings. I was elated by them. I watched “Star Trek” and numerous other SF shows, loved them all, and still anjoy SF. I read the debate on Space Colonies in the late 1970′s. I was all in favour until I read Wendell Berry’s devastating critique, particularly his crushing demolition of the whole “new frontier” mentality ( http://settlement.arc.nasa.gov/CoEvolutionBook/DEBATE.HTML#WENDELL BERRY and http://settlement.arc.nasa.gov/CoEvolutionBook/DEBATE3.HTML#THE DEBATE SHARPENS ).

    I’m not so sure about the ROI on the moonshot, vis a vis more direct attempts to solve the frying pan etc. problems. Further, each new “solution” to our problems seems to cause unintended side-effects – Teflon is poisonous, new tech causes massive unemployment etc. Texchnical fixes don’t work. Escapist fantasy doesn’t work.
    Trying for what? That’s the central issue. And who decides what we try for, and how, and how much cash should be spent, and especially who should pay (ultimately, ordinary people pay).

    Shooting for the stars is just a Roman circus diversion, offers only false hope. We need to learn from the moonshots. We need to be practical and efficient. If we have a problem, we need to address it honestly, discuss it and deal with it directly. We do not need to be bamboozled by some salesman into indulging and financing his nor her pet escapist fantasy, in the hope of some vague eventual spin-off.

    Leave out the ignorant ageism. Try? I do try. Sometimes I succeed. Maybe I’ll succeed in diverting someone away from following you on your Captain Ahab’s voyage. Do we try for yet another new flavour of ice cream (people’s relatively unchanging level of happiness/unhappiness in spite of all the improvements in society since the 1950′s is “well proven”)? Still another version of Windows? More unemployment? More obesity? Wasting more billions (while people actually starve to death) smashing particle together in the CERN giant car crash game for little boy scientists? More nuclear poison plants?

    We’ve had non-stop growth and techno-mania for decades and the problems are still there, may be about to get very much worse, and are a direct consequence of those obsessions with growth and technology, to the exclusion of other criteria. Yet, post-1960′s radicalism, post-feminisism, post-Green politics, post Capitalist crash, the debate is more impoverished than it was decades ago.

    Gung-ho techno-capitalism has won, has destroyed the world economy, is in the process of destroying everything else, and is totally, terrifyingly ignorant, unselfaware, and unrepentant. It is a criminal indictment of our educated elites (not just of convenient bogeymen like Fianna Fail or the bankers) that the future of civilisation on earth cannot be proofed against human stupidity and greed and ignorance. Our educated elites are a central part of the problem.

    Regrets? One is that, having left orthodox society decades ago, whenever I take a peep at what now passes for debate on the bigger issues, society seems filled with highly educated male naifs, more of them and even more clueless than when I left. But I remain positive. Women generally offer hope. Unfortunately there don’t seem to be too many of them around this board.

    Moonshots, space colonies, trips to the next star aatc circusesvct ), also Moonshots, How come we are at the brink Much of society is driven by escapism, escape from feeling mainly. I left orthodox society society to try to lead a good life, and succeeded.

    • 5Fingers

      I have a friend who retired a couple of years ago from a very orthodox life as it happens. Now lives in Palestine working for UN Peacekeeping groups acting as a chaperone for folks going through the border controls. He makes a difference.

      You ask who decides what we try? I’ll tell you who…guys like the one above who believe we need to push every day – not merely survive.

    • joe hack

      “I still have found what I am looking for” a driver – maybe for the human race allways looking always searching an unhappy beast even when the belly is full and the body is sheltered.

      The mind then needs to be simulate education and information help to simulate the well fed, the starving are simulated by the search for food. Knowledge has been stolen by those who want vast stores of food in their bank accounts. Education and discovery simulates and certainly a mutated from of human has used this knowledge to get excessively fat, money is their stimulant while mine a quite pint of black stuff black gold and or even a walk and chat.

      In star trek they do not have money – as for the amount public money used to develop a frying that allows my egg not to stick or pen that is able to defy gravity – write upside down- ‘the parker pen’ well the USSR solved this problem by using a pencil in space, it seems there was no profit for the corporate at the publics expense.

      Dev – he his dead now I hear – had some idea about a society after its belly was full certainly making stuff to help a economy is not clever. One day after I am long dead money will be seen as primitive – as is gold now -the gated communities’ myopic view – a motte and bailey approach to an economy.

      A well fed man needs to be stimulated which discovery does even if he is discovery what has already been discovered – an education based economy is progressive and it’s an old idea that capitalism fucked over with greed I blame the Romans now replace the USA…fear is the diver there and ‘they will never find what they are looking for’ they are homeless.

      • Paul Divers

        The landscapes of the northern counties are peppered with sad reminders of Dev’s time. They are still there and survived the boom.

        Anything that reminds us of those times should be razed and forgotten and quite right too.

        Maybe this one of the key motivators during the boom.

        You would not blame them for wanting to flatten the place and start again

    • joe sod

      alot of posts on this site degenerate into a debate about how bad times are now, is it capitalism or the monetary system or the dominance of corporations that is at fault. Society may not be as good today as it was in the 1960s or 1970s where it seemed we had the balance right but only in the free western world. If I was chinese my life is better now than it was in 1970 under Mao, if I was polish i have freedom now which i didnt have in 1970, if i was russian i dont have a super power but i have a better lifestyle than I did in 1970. Therefore for a great number of people their lives have improved a great deal since 1970. If things are so bad now would you choose to live in the Ireland of the nineteenth century, no of course not. You should live in the today and be glad of it even with all the faults, the system in ireland can easily be changed if the people really want it, we dont live in a totalitarian state

      • cjmurray

        It’s no good if even every single person on earth has a better lifestyle now than they did in 1970 if, as seems increasingly possible now that even China is committed to consumerism, the whole thing is fundamentally flawed and about to collapse disastrously. The point is that we are physically living in a finite world, but, as during the global credit bubble and our credit/housing bubble, psychologically (so far) unable to face that fact. We are living in a mindless “growth” bubble. We are like alcoholics, trying to face up to our beer addiction by drinking more beer, or by switching to lager. The consequences of the growth bubble bursting will be infinitely worse than the bursting of the credit bubble. Avoiding calamity requires clear vision and direct action, not naive faith in scientific or technological miracles. Human, social and moral problems require direct human, social and moral solutions, not blind repetition of outdated “growth”, “free market” and “new technology” mantras.

      • joe hack

        Some truths there some Joe and this could be debated in to the wee small hours and beyond.

        What was before Mao or what was before Lenin? Mao – Lenin – stepping stones maybe…what brought them into existence was excessive unbridled greed we appear in ways to be heading there again.
        The richest man ever to exist was the last Emperor and autocrat of all the Russia’s this while people were suffering and this it might ring a bell to day world an alarm bell…

        Some would argue that we let it things reverse and that we are heading backward in to a more feudal place (I agree) we need to be vigilant and not forgetful of the past.

        History has a habit of repeating -one step back but we must make sure its two steps forward – saying we are better off than under Mao or Attila the Hun does not mean all is fine -’ah sure’ – now that would be complacent.

        That the balance of wealth from west to east has shifted ?-well I for one am happy to see that but it is not as result Apple… exploitation of the Chinese it is in fact in spite of it.

        The cash in Apples accounts tell a story and it is vulgar in the extreme – does it ring bell -(the last Emperor and autocrat of all the Russia’s)

        • joe sod

          If I were to chose to live the life of queen victoria with all her wealth and posessions or the life of a middle class woman today on £35,000, i would chose to be a middle class woman of today, better food, better health care, better life. In other words the life of an ordinary middle class person today is better than the lives of the oligarchs and monarchs of the past.

          • joe hack

            That observation is obvious but has little to do with what you said previously in relation to corporations and capitalism.

            Progress would have benefited Vic too in fact the woman you selectively (middle class on 35,000? ‘Working poor’?) chose is most likely in debt while the value her home has collapsed.

            Feckless unbridled capitalist and corporations did not bring about changes for the befit of your middle class ‘woman’ for all her faults Vicky was a reformer and brought about changes ( such as Jails) which still reverberate around the world today but your Feckless unbridled capitalist and corporations are seeking to destroy those progress. The following link is a related (Vicky) and apt example of reckless greed…


            And it demonstrate the value system of corporation €%£$

          • cjmurray

            If that woman and anyone else on 35,000 is better off than Queen Victoria, well then, most people in the west have got it made, yes? So why do we need any more? More particularly, why do capitalists need such vast sums to motivate them? Preach at the rich and super-rich, Joe Sod. They’re already hundreds, thousands of times better off than Mrs. £35,000 a year and therefore Queen Victoria. When will they have enough? Does the concept of enough even exist for capitalists? If they lived in a bubble of their own and did not affect us, we could indulge them, but not when their stupidity and foolish, hopeless greed is wrecking the entire planet.

            What do we really want? Food, shelter, love, self-respect, the respect of others, a sense of belonging, sensuality, aliveness. Beyond a certain point, the need for money is a disease, a pathological and usually futile attempt to gain love, respect etc. indirectly.

            But the comparison with Victoria is of limited relevance. Foolish to look back so much – look at the oncoming train. The improvements of the last few centuries have in large part been bought by the relentless wholesale robbery and plunder of non-industrialised countries, and will in any case come to naught if the whole system now collapses. The real issue is how to stop billions of poor and not so poor people dying an agonizing death from starvation in the not too distant future, while the rich people on this board rabbit on about whether or not to buy gold.

  24. Wills

    Interesting data on Sachs in article.

    An economy pumped with steroids faking it is free market enterprise.

    And what do we get… mutant capitalism. I’ve TM’d it so I grant David permission to use it.

    And media spoof population mutant capitalism is real capitalism and we get Goldman Sachs, the Fed bailing out banking system to run more n more ponzi property bubbles and govt’s making deals in N.Korea for next military tech innovations (see CH4 news last week)! What else do we get in mutant capitalism? Well we get GM food wrecking the food ecology system. We get major waffling maniacs insisting everything must be monetized. We get truth switched for lies and the news delivering this shite into everyone’s home at t time threatening us all to shut the f up and follow the banking criminal line that we are all in this shite together and all responsible for the economic system turning into a slave plantation supporting the wild excesses of a power elite in competition for the latest and greatest super yacht! And we get celebrities on TV telling us to help the poor while they swan about in St.Tropez for the Summer.

    Meanwhile the regular folk who go about their daily work and actually DO something, actually produce something unlike the higher ups in the system who move paper and mug the camera keep a level of sanity going in the system preventing it from being flushed down the cosmic plug hole.

    • 5Fingers

      Wills, you have commented on this many times and given a solid an accurate summary of what is happening.

      How do you stop it? Where do you start? It seems systematic or it is in fact one thing that could be “spiked”. I fear myself it is systematic and unless some “virus of change” can be deployed, it will be the end of society as we know it.

    • An economy pumped with steroids faking it is free market enterprise
      Correct. Call it like it is. Crony capitalism aka fascism.
      Definitely not free market anything GS operate computer high speed algorithmic trading syphoning billions out of the economy. By illegal trading sanctioned by the regulators through lack of enforcement of the regulations. Never had a loosing quarter during this depression. Ask why??

      Corruption reigns.

      • Wills

        ‘An economy pumped with steroids faking it is free market enterprise’

        Should read:

        An economy pumped with steroids faking it as free market enterprise’.

    • Wills

      ‘An economy pumped with steroids faking it as free market enterprise’

      Should read as:

      ‘An economy pumped with steroids faking it as free market enterprise’.

  25. Primitive Mindsets

    Can you imagine how Jungle words can save mankind in these mutant morphing diplomacy called Austerity ?

    Wait no longer .

    All to be revealed soon.

    We have found our own new Emancipation ….and even Daniel O Connell could not locate this one.

    Deep inside the jungle man knew how to survive and….THINK ….

    This week various media have contacted me to reveal the ancient mystery …older than the Pyramids ……even ..Newsgrange …….and this is older than any ..written Word …because then man could not write ….and had just begun to communicate .Words then were few and had to be very productive .

    Take a Deep Breath and ………sigh

  26. TrackerMan

    Some may say that this QE was the lesser of two evils, what would one prefer after a massive withdrawal of private sector liquidity post 2008- (1) depression like the 1930′s US with closing banks or (2) pump the world high with cheap money to keep the whole thing afloat. This has now been replaced by high government borrowing in order to stop GDP / living standards falling off a cliff. I agree its replacing one form of debt (private) with public (Government)- not ideal by any means, but given the alternative – large scale demand destruction / even higher US / Euro unemployment, it would not have being politically palatable. Yes, we now have bubbles in many asset markets, however like many assets, their price is a partly a function of the underlying interest rate environment and market expectations as to how rates will evolve over the medium term.
    Yes, I believe that we are in a period before inflation begins to average, say 5% per annum for a period of 10 years, (and this is what is intended from current central bank policy), but throughout economic history this has traditionally resulted in an erosion of the debt burden (bringing down Govt debt / GDP ratio & eroding the real value and burden of private sector debt). What tends to happen then is wages rise by a level in excess of the rise in the general price level (inflation) and this in the medium term generates more income for consumers in general. This will reduce the share of economic income going to capital and increase the flow to workers in general. This will obviously impact the stock market (in the medium term) but not now and people should therefore concentrate on assets that are capital intensive rather than labour intensive in order to generate the greatest return.
    We lived in a period (pre 2007) of excess capital and liquidity floating around, the medium to longer term will not be like this, we are structurally moving to a higher interest rate environment (as a result of current central bank policies) the effect of which takes a long time to work its way into all corners of society. For long term asset allocation / decision making, this is something that must be taken into consideration.

    • joe hack

      You say what appears to be happening as has has in the past – jaws part 27… seen it – but I don’t like it, should we accept this or should we try shout stop and fix this destructive force or are the casualty’s worth it? You appear to be accepting this as an acceptably norm? I hope I am shooting a messenger?

      • joe hack

        I hope I am NOT shooting a messenger?

        • TrackerMan

          I try to deal with reality and the world as I see it, a destructive event has occurred (monetary system badly damaged) and needs to be repaired. It has had terrible consequences for millions and this is unfortunate. However we have to move on, I believe that the above probably represents a rough assessment as to where the world may head over the medium term from a high up macro level and as such ones investment decisions should be based on the most likely course of future events. I’m not saying it’s a course of events that everybody will benefit from, however if one wishes to benefit from the future, i believe it is optimal to have some view as to how it will most likely pan out. We all try to position ourselves, this is about positioning to make the best out of the most likely path of future events. Everybody has different opinions, but history has a tendency to repeat itself in different guises.

          • Paul Divers


            I know where I will be positioning myself in future and it won’t be between Adam and Oor Col. I see huge gaps where my talents and experience can fit in all thanks to modern technology

            I want to persuade others that they can flourish and grow world class businesses if they have the gumption to listen and work with a partner who tells home truths. Egos are out the window

            If they don’t listen then they are sunk and there is no point

            Only work with people who are committed and in it for the long game

      • Paul Divers

        Jaws 27?
        I thought they only made 26?

        • The jawing on this blog goes well over a hundred Paul

          • Paul Divers

            I would not know Tony and am too naive for my own good. And thank God.

            Everything will be grand when oor Col gets here.

            The Iceman Cometh

        • joe hack

          Did you not see ‘Jaws Begins’ the prequel? – Well it started out as goldfish but the gold went to it’s head and the fish went crazy with all that heavy metal in its head, then near the end of the movie the gold fish Jaws turned in to a man eating shark and thus a leg-end was born – a shark , a gold-bug , a banker – a vicious shark.

          • Here is a fine example of a rustic jawboning about whatever takes his fancy.
            None of it worth listening to, reading about or responding to.
            A fool and his money are soon parted.

  27. bonbon

    Dietary medicine anyone? How about this deadly doctor’s “suggestion” :

    The British Solution To the World Food Shortage: Eat One-Third Less

    July 29 (EIRNS)–The head of the British government-funded Global Food Security group in U.K., Tim Benton Leeds University, warned that food would become “the fundamental issue of the next half-century,” and that wars in the future would be fought over water and access to land for crops, as countries battle it out to feed their growing populations.

    According to a report due out later this Summer, as reported by today’s Daily Telegraph, Benton said it was no longer good enough for Ministers in the U.K. to think exclusively of ways the country could produce more food, through initiatives such as genetic modification; the government has to work harder on the “demand” side. In a report seen by the Daily Telegraph, Benton said calorie intake should ideally fall by a third! Portions and offerings must be cut.

    Supermarkets should cut pack sizes. They should ban buy-one-get-one free promotions. Restaurants should serve smaller portions.

    Other than jacking up the food prices to prevent people from buying the required amount, Benton also said governments needed to work more on demand–and specifically the problem of the food wasted in the West. “A lot of the discussion on food security in the U.K. has so far concentrated on the supply side, but as time goes on it becomes increasingly difficult to grow enough to meet demand,” he told the Telegraph.

    While there is no question that food production, by raising productivity, can be increased multifold, why is Benton saying that we could not meet the requirement? It is because the Global Food Security (GFS) group is one of the outfits that has stacked its Strategy Advisory Board with major power players in the food area such as Oxfam, Sainsbury and Unilever, to further the imperial objective of depopulation. GFS is funded outright by the British government, with the U.K. Chief Scientific Officer, Sir John Beddington, personally on the GFS Board. All these people assert that the Earth is overpopulated. They put forward various measures that could reduce burdensome, excess population, by getting rid of useless eaters.

    Sir John Beddington, and the British government are hyperactive on this in their own name right now, since the 2009 Copenhagen Climate Change Conference was such a relative flop as an international con job.

    Beginning Sept. 29, there will be the first-ever “International Global Food Conference” in The Netherlands, at which Beddington will be a plenary speaker. Among the conference funders are Monsanto and Unilever.

    On June 4, a report was issued by a British House of Commons International Development Commission, calling for reduction in demand for food–in particular, that people should eat far less meat, and this would free up some scarce food for the hungry and deprived. “The rate of increaes in global meat consumption is unsustainable…”

    The report was titled, “Global Food Security,” and contains testimony from Sir John Beddington and his ilk. The document was released a week before the G8 London meeting, and on the eve of a London food summit, led by Bill Gates and David Cameron, at which representatives from 27 nations came as window dressing. Cameron lauded his new campaign, “Enough Food for Everyone IF” [sic], which is now operating through 200 British and Ireland-based NGOs.

    The gist of their message in all this? Don’t have so much biofuels. Don’t waste food. Don’t be fat. Share the scarcity. Save the planet–by dying off in mass numbers.

  28. Also another way to hide the food price inflation ready marching to a store near you. Smaller packages. same PRICE.

    • joe hack

      Yep read that…

      I heard they are doing the same with gold an ounce is not worth what it once was, a double whammy if your shopping with gold today.

      with love

      • buys 4 time what it did 10 years ago. Can’t say anything else does.

        First annoy, Then ridicule, then rant, then fume.

        Too late the trains at the second stop of this bull Market and just moving from the station. It is a long trip.
        Final leg is the transfer to the moon rocket shot.
        Got a couple of stops yet before the launch pad is reached. Only one carriage out of 100 is occupied.
        The price goes up as time for the rocket launch arrives.
        unfortunately the rocket only takes a few people and the rocket is mostly already booked up.

  29. Ryu Hayabusa

    a crafty price increase packaged as a health initiative… just like those Nestlé bar stewards shrinking A Yorkie from 63gm to 55gms. Mutherfurkers!!! Price didn’t reduce though, MAN SIZE BAR MY ASS!! ~: it’s not right, expect to get all those fatty chunks i shell out for.

  30. joe hack




    • Paul Divers

      Nice one. Original and very simple.

      • Simple actions from simple minds.
        Nothing original about the style, design
        imputed action
        or sentiments.

        You should be paying careful attention to bonds and stocks and bank accounts . All are subject to bailin including your expected pension, private , corporate or public.

    • So is your standard of living.
      Guess which is going up first.
      Too busy being cute to see the bus about to run you down.
      Too bad.

      Read this a couple of times and take note. Otherwise your ignorance (defined above) will leave you bereft.


      I offer my opinion to try to benefit people and not to ridicule. You would not dare to do so to my face.

      I do not want to be given the opportunity to say “I told you so ” but you are setting yourself up for it.

    • michaelcoughlan

      Ever hear of “buy the dips sell the rallies”?

      Really really like your post. Very very original.

  31. Ryu Hayabusa

    How about a Doctor’s prescription for Goldman Sachs… a lethal injection! When they do inevitably go down it will be from a precarious height. It’s disgusting to see those figures when you see the role they played for example in cooking Greece’s books using cross currency swaps at ‘historical rates’ to conceal debt from their national balance sheet. Their rampant avarice and hubris foretell of their appointment with the reaper’s sickle.

  32. joe hack

    David, judging by the comments above you are way off with the choice of analogy as it is clear here that doctors do differ and patents might die as a result.

  33. http://campaign.r20.constantcontact.com/render?llr=n7vdaxbab&v=0011yfyIBi0NNqFlnjwVwkzOhlA2M_YwbumoraS4MI1lpkrh6izJGLwr9lDsj5QFrtjJAA2o8hkxX7rybzI5v7_V-HRaqlIjIIfXAqM7blJd_VwiiRUU-eCSajTxlQuIs0d


    “How many times can Jim Sinclair warn you to “Get Out of The System?; or for that matter, the authors of the Miles Franklin newsletter? How anyone could consider holding significant savings in a banking system that pays ZERO interest, is on the brink of insolvency (see 2008), and has vowed to steal your capital “if needed” is beyond me; particularly as rising rates threaten to annihilate whatever’s left of said banks’ capital.

    Per information released this weekend, it has now become OFFICIAL that depositors at Cyprus’ largest bank have had 47.5% of their funds “bailed-in”; compared to the 10.0% level initially proposed when the “Cyprus Crisis” commenced this Spring.

    By now, I don’t have to tell you that nearly all Western nations have discussed and/or enacted similar proposals “in case of” another banking crisis; which by the way, has never been more inevitable. Thus, it’s up to you to decide if you’d like to PROTECT your wealth – or have it STOLEN!
    Any Hoffman

    As I also keep saying. Protect yourself

    • pauloriain

      Bail-in’s, good or bad. Depends on which side of the Bail-in you are on and event then it’s could be good.

      I’ve no bank deposits or savings, so I won’t lose if the banks need to do a bail-in. I am however a tax payer and citizen. Bailing out the banks, I have to pay for that, yet I don’t have any money in the banks. How is that fair. Even for those with money in the banks e.g. Cyprus, they were losing their money, not all of it, they were being offered the choice between losing a proportion of it or all of it. They’d well in the end, they didn’t lose it all.

      What’s now got to be implemented is loses on all the investments and pension funds which are part and parcel of this big banking mess. What shouldn’t be happening is sticking the bill on ordinary Joe & Joesephine Soap’s, who have no savings, investments or pension and effectively landing them with the bill.

      If this is not done, then the other choices are to induce inflation and thereby getting the people with the savings, investments and pension to pay for it by eroding their wealth.

  34. michaelcoughlan


    Making ilness a virtue could be a better title. GSucks operate like a virus:

    Gain surreptitious control of a country or municipality through the currency, transfer all that is good to your self and when the host dies spread to the next host replicating the process.

    Of course mr Blankfein’s compensation this year is 70 FUCKING MLLION DOLLARS.

  35. TrackerMan

    This total fascination with Gold is truly astounding, fair enough I agree that a relatively small proportion of ones assets should be in metals as a diversifier, but to maintain that it is the best asset class and only store of long term wealth is bordering on the obsessive I believe. Reasonably priced property (in line with long term inflation – as over the long term this asset is highly correlated with the real price level)is an exmaple of another asset class, that will hedge your wealth. It will also provide an inflationary alligned income, which gold does not and its underlying price rises too. Make no mistake about it, central banks want & need inflation to erode the real value of global debt both private and public, this is essence amounts of unofficial stealing of money in peoples bank accounts, this being a better option of going in and directly taking it. I agree thaht banks in general need more capital and that this capital may indeed come from depositors via bail-in, but as long as one takes reasonable precautions (keeps money in banks that have high credit ratings and spreda money amongst institutions) the direct robbery of your cash should be contained. Sustained inflation will on the other hand indirectly sap the real purchasing power of your cash, unless you find a vehicle / instrument to hedge your cash exposure against. In any event only a small proportion of your wealth should be in cash or gold. It is better to take a balanced approach to all of this, the fanatical gold only / world will implode scenario analysis, serves no ones interest at the end of the day. It is a highly improbable Black Swan event, like a global world war, in which case as I said a relatively modest propportion of ones assets in gold would serve you well. However to worry about such scenarios on a daily basis is clearly self defeating and should not be done

    • michaelcoughlan

      Hi trackerman,

      Your points are very valid. Property can’t really be used as money. It’s gold function as money is what’s vitally important. It allows a person to trade. If you don’t have a product or skill to use gold to trade for then gold has no value but millions of people do which is why gold is so important.

    • joe hack

      It may also be the case that a new world reserve currency will be backed by gold but for most individuals buying for a ‘Black Swan event’ is not only both financially unfeasible but also impracticable, in that scenario a person needs to have the gold in there procession.

      The value of which will not be globally or locally fixed and ounce may only buy a tin of beans, it is madness and if large amounts of people were to buy gold it would be a self fulfilling prophecy that apocalypse is now.

      For those believing that the apocalypse is now it may be more prudent to buy beans Aldi were selling them at 13 cent a can a while back , when the ‘black swan’ comes looking to buy a tin the bean may be worth is weight.
      Different doctor may die!

  36. David,

    I think you’re aware the term ‘printing money’ is very misleading in today’s digital world. In fact the doctor creates money by typing new money into the banks’ reserve accounts and recording a matching debt.

    Indeed, we have a debt based money system in which every electronic euro starts life with a matching debt and is deleted again as the debt is repaid and, for me, this is the root cause of our debt problems.

    I wonder are you aware that the FED can only create the type of money which banks and Governments use, reserve-account-money? And that they leave the creation of the other type of money, bank-account-money, to the commercial banks. As such, the central banks aren’t as powerful as you seem to suggest.

    We clarify the distinction between the two types of money in our paper at the following link.

    • joe hack

      Paul you come across as if feds printing of money has no effect, if so why would they print money? It clearly does have an effect. It frees up the banks and it devalues the dollar no other country can act like the USA does not even the EURO.

      The dollar is not the Euro the dollar is the reserve currency the world buys with the dollar (oil) (that trust is fast declining and some are looking for discounts of 60%) the trust is fast disappearing and it is likely the dollar will not be the reserve currency and faster than we might imagine.

      The Chinese and others are pissed at the USA while the USA has the neck to say that the Chinese are manipulating there currency (Snowen might be hint there- pots calling kettles names)

  37. cooldude

    Quick question on this Paul. The Fed create $85 billion new digital dollars every month. $40 billion go to buy treasury bonds (monetize the debt) and $45 billion go to buy mortgage backed toxic crap off the commercial banks whose real market value is only half that if even that. Most of this money is being invested back with the Fed at low interest and does not go into circulation. This scheme sucks because not only are they getting full value for their damaged securities they also get paid interest on this money. The word corruption springs to my mind. But my question is can the commercial banks not circulate these new currency units if they want and would this not be an increase in the money supply?

    • My take is that the 40 billion used to buy Treasury bonds is money going into circulation as it is spent on government activity and goes on services rendered by government. Some of it will also be deposited in commercial banks and become the bank’s asset. Then the 90% of the money can be reloaned until the reserve balances back to 10% again.

      By all accounts commercial banks pass little through as they hold on to the fed money to bolster reserves, while as you say earning a contango on the interest. They can use fractional reserves policy to lend out newly created money if they wish.

      Central banks are plenty powerful as they provide the reserve to the commercial banks that can increase that amount 10 fold or more if they wish to lend out.

      Central banks withdrawing that reserve money can cause a major contraction of the money supply as they apply the reverse leverage to the commercial banks.

      • 5Fingers

        Yes, buying of bonds to fund gov services will inject money. But bonds have to be honoured eventually. If it so happens that economy is stimulated beyond say an infrastructure build (Say) then taxes collected to pay for services plus interest will not have as deflationary an effect.

        In the meantime bonds get traded and speculated more as risk or interest rates fall. There is skullduggery opportunity as there is when no real work is being done. Everyone for themselves in banking too you know! They do not love one another that much.

    • 5Fingers

      How do banks circulate the money? It has to be lent. Or maybe they stuff it digitally into everyone’s account…I do not think so…actually that’s happened in Germany.. Who is borrowing? No one, really cos they are in hock.

      Why do CBs bother? To cut interest rates to stimulate credit release which will not work if people too much in debt paying off 30yr mortgages with 2 incomes. And hence businesses fail etc.

      Why are stocks high? Cos banks find only buyers of debt are institutional buyers who can speculate at low risk.

      Banks lend to one another. But none of the resulting activity ever gets to ground level. It is a holding pattern of interbank rollover creation destruction recreation…but with no real borrowers it will crash. Buying assets and selling off with increasing frequency is all you will see happening. Gold, silver, you name it will be yo yo ing for the next while until the big splash unless of course some real business activity starts to dominate.

      Anyway…so much of this us so obvious and yet people still love to cling to the wacky idea that monetarism is the beginning and end of all. Economies are so so much more.

    • Hi Cooldude,

      There are two different types of money. The type which the central banks can create and delete is central-bank-money and it’s only banks and Governments which can use this type of money because only they have accounts at the central bank.

      The other type of money is bank-account-money and it’s the type that you or I would use.

      There can be an abundance of electronic money on the books at the central bank but it can’t be used by the real economy. So no, commercial banks cannot circulate these new currency units. They can only use them to trade with other banks and the Government.

      For more info on how the two types of money operate have a read of our guide to the monetary system at:

  38. joe hack

    “BONDS: ICICI follows Caterpillar back to Dim Sum
    18 June 2013 | By Nethelie Wong
    The return of two overseas issuers this week has underlined the appeal of the offshore renminbi as an alternative to the volatile global funding markets.”

  39. joe hack

    For to bash people with….

    “The normalcy bias, or normality bias, refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of governments to include the populace in its disaster preparations.”

    • joe hack

      For Tony to bash people with….

      “The normalcy bias, or normality bias, refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of governments to include the populace in its disaster preparations.”

      • Yes I have done a little bashing in my time.
        Marquis of Queensbury rules with ref and judges.
        Still seen the odd injustice. Bad decision etc. Been subjected to a couple.

        Next time knock the bugger out. No decision required!

        Still it teaches discipline under stress. If it isn’t working for you then instant change is required. Must think and not panic under such pressure. Good training.
        Getting in the ring is great fun. I’ll give you all the bashing you can handle, Joe. With love of course and due tender care.

        • Dorothy Jones

          Eh when finished with knocking peoples lights out with due care and advocating living within peoples means and all of that; you posted on this blog in detail about your own defaulting and giving x cent in the dollar.

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