ashvin
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Reverse Engineer post=1665 wrote: [quote=ashvin post=1661]
In the end, someone/something always paysDisagreed. That which is mathematically impossible to repay will not be repaid.
In the End Ash, Monetary Systems DIE. Always.
RE
I did not question that all monetary systems eventually die, but that in no ways means that there is no payment, i.e. reduction/transfer of material wealth. Debts will be (are being) paid through one of the following methods or, more likely, a combination of them – debtor pays down the value in current currency savings, debtor pays down the value in current assets and future cash flows/assets, lender writes down the value of loans or the value of loans evaporates through currency devaluation. All of those methods are very destructive to fiat credit economies and will lead to prolonged depression, very high unemployment, violent social unrest, etc.. HI will arguably the most disruptive, as it completely wipes out the value of savings and makes it very difficult for most people to acquire critical resources (especially in a net energy importing nation), although deflation is no walk in the park either.When we add in the natural violent/repressive responses by both the people and the corporate governments…
how exactly can we say that no one is paying for these debts (I’d say death is the ultimate transfer of material wealth)?
The reason I think it’s important to make the distinction is that, through your argument, it makes it seem like there are no negative, long-term consequences to these students taking on boat loads of debts, or any other borrower for that matter. Yet, there they are.
RE,
Yes, I perused that book online last year. It’s a very interesting and unbiased perspective presented by Dr. Quiqley, with plenty of hard evidence for support. What’s even more interesting, IMO, is that Quigley himself has said on several different occasions that he was not making an argument for the types of all-encompassing, conspiratorial narratives that people who reference his work tend to support (especially those who believe in a NWO “communist” conspiracy).
“Skousen’s book (The Naked Capitalist) is full of misrepresentations and factual errors,” Professor Quigley said. “He claims that I have written of a conspiracy of the super-rich who are pro-Communist and wish to take over the world and that I’m a member of this group. But I never called it a conspiracy and don’t regard it as such. “I’m not an ‘insider’ of these rich persons,” Dr. Quigley continued, “although Skousen thinks so. I happen to know some of them and liked them, although I disagreed with some of the things they did before 1940.”
Skousen also claims, Dr. Quigley believes, the influential group of Wall Street financiers still exists and controls the country. “I never said that,” Dr. Quigley said flatly. “In fact, they never were in a position to ‘control’ it, merely to influence political events.”
The influential Wall Street group of which he wrote about 25 pages in Tragedy and Hope ceased to exist about 1940, Dr. Quigley claims. He also faults Skousen for saying that Tragedy and Hope’s intention was, in Dr. Quigley’s words, “to reveal anything, least of all a purely hypothetical controversy. My only desire was to present a balanced picture of the 70 years from 1895-1965. The book is based on more than 25 years of research.”
None Dare Call It Conspiracy, using Quigley’s data, attributed to the Round Table Group a lust for world domination. Its sympathies were pro-Communist, anti-Capitalist, said the Birch Society book.
“They thought Dr. Carroll Quigley proved everything.” Quigley says. “For example, they constantly misquote me to this effect: that Lord Milner (the dominant trustee of the Cecil Rhodes Trust and a heavy in the Round Table Group) helped finance the Bolsheviks. I have been through the greater part of Milner’s private papers and have found no evidence to support that.
“Further, None Due Call It Conspiracy insists that international bankers were a single bloc, were all powerful and remain so today. I, on the contrary, stated in my book that they were much divided, often fought among themselves, had great influence but not control of political life and were sharply reduced in power about 1931-1940, when they became less influential than monopolized industry.”
Also, there is no need for you to speculate on the various reasons why you will not be banned from TAE…
I already told you that you won’t be and why.
Reverse Engineer post=1658 wrote: As far as the borrowers are concerned, the reason they are not paying back the loans is they have no job. Said borrower is equally poor with the debt or without it, the only time it makes a difference is if he ever does get a paying job, which for many is highly unlikely at this point.
As far as the lenders are concerned, they will get paid by Da Goobermint. As far as Da Goobermint is concerned, they will roll another $27B or so a year into the deficit to cover the interest payments on the $270B pricipal owed here. Chump change! Nobody will notice another $27B/year as the liabilities climb into the Trillions/Quadrillions!
This is how it will go until the wheels fly off the bus. You are immersed in a system of irredeemable debt of essentially fictitious money to begin with. It can’t even be paid off with Slave Labor, because the Slaves are themselves a liability.
Disagree, especially with regards to student loan debt, which cannot be discharged and will be fully recourse for all practical purposes (unlike some mortgage debt). Even student borrowers without a job will have accumulated savings/assets that can be stripped of them, and/or parents who have acted as guarantors on the loan. Many of the students will be forced into low-wage corporate slavery that will be just enough to keep some portion of the debts current, or perhaps qualify for re-negotiated terms, i.e. re-formulated debt slavery.
Those debts which must be made completely or partially whole by the government will most certainly cost the taxpayer through higher taxes and reduced spending on public services, entitlements and social safety nets. Even if we assume that none of these trends will last long before the currency is hyperinflated and sociopolitical structures completely break down, that itself is a HUGE price to pay for all savers, debtors, workers and, generally, all citizens/residents who are not among the relatively insulated 1%.
In the end, someone/something always pays, and most likely it will be a combination of debtors, savers, workers, retirees and society as a whole over the course of a few decades. If the collective has taken on debts so excessive that they cannot be worked off even through asset forfeitures and slave labor before HI, anarchy and/or totalitarianism sets in, then it’s hard to argue that everyone in society is not being made to pay the ultimate price.
RE wrote: 27M students are not ging to be Debt Slaves for the rest of their lives, count on it. All the Banks will go up in flames long before the Repo Men can collect on that debt. These questions are not resolved in any other way than Violence, so I suggest in order for a more complete coverage you consider this a bit more carefully. JMHO.
I believe you raise some valid points, but you also raise the question – how long is the rest of our lives? At least, what is the chance that the average life expectancy for these borrowers will be the same as what it was for the previous generation? If we go straight from debt deflation into systemic social breakdown, some students may very well be paying off debt for the rest of their [meaningful] lives. Either way, borrowers and/or taxpayers will be forced to pay in one form or another for as long as its possible for the system to remain coherent, and that could be long enough to completely enslave/impoverish quite a few people.
Reverse Engineer post=1639 wrote: Here in this thread, it appears to me that EG has run afoul of the Mod staff, as personified in this case by Ashvin. The disputes also appear to go back in time some and predate my recent arrival on this scene, I won’t speculate on them just on what I see occuring here.
So the likelihood for el Gallinazo here is that if he persists, even WITH the multi-thread board he’s at least going to make some enemies, and at some point could get Banned as well. I know this, I BTDT on OPBs numerous times already.
If the forum moderation is personified by me, then no, he won’t be banned. I have already told him that I’m fine with discussion of absolutely any topics on the forum, by anyone who wants to raise those topics. The only thing that I am not fine with is fraudulent comments (not really an issue anymore) and constant spamming by trolls that are trying to disrupt the entire site. AFAIK, that has always been the only limitation to the comment section here.
The fact that “tin foil” issues don’t get as much play in the comments as, let’s say, infowars or godlikeproductions or whatever, is more a function of the readership and its desired conversation rather than any official moderation. Of course, we don’t spend much time writing about those issues on the front page, but, speaking for myself, that is NOT because I wish to remain “mainstream” in the eyes of readers, but rather because I genuinely disagree with many aspects of conspiratorial meta-narratives (those which attempt to fit almost every single significant occurrence on Earth into a story of coordinated takeover).
That’s not to say there are no legitimate criminal conspiracies out there. I am interested in exposing the truth and reality as much as the next guy (for ex., I am very skeptical of the official 9/11 story). OTOH, I don’t find it’s ever worth my time to reference people who cling to meta-narratives as support for any other assertions (these are typically the same people who believe in abiotic oil and think climate change is one big hoax). But, as I said before, that’s just me and others are free to reference whoever they like in their comments.
And just so you know, RE, you will not have to add TAE to the list of sites you are banned from, either for the topics you raise and link to or for plugging DD and trying to attract readers there. I understand how difficult it is to get a blog up and running, no matter how good the content is. As long as you continue contributing to the discussion as well, we are all good (otherwise, it would just be plain old spam!).
El G,
Your argument about an encroaching and oppressive police state is not something that goes ignored here. I recently wrote an entire series on debt slavery, which mainly focused on the growing unholy union of large corporations and federal governments (primarily in the US) that will attempt to maintain their wealth/power through enslavement of the masses. Perhaps indebtedness is not even required for such totalitarian control, but I believe it would serve as the most convenient means of transition, just as it did with African-Americans. I referenced the NDAA in that series.
So I really fail to see what more TAE should be doing to address these issues, especially considering the virtually unrestricted comment forum. The only difference is that we don’t spend all of our time considering those issues, like some other analysts out there, and we do not pretend to know exactly how either the police state issue or geopolitical ones will affect the economic/financial state of affairs for most people. It is certainly a threat, but, IMO, not an all-consuming one.
We also disagree about the extent to which many of the things occurring now are being coordinated by TPTB as a part of a long-running, overarching plan for the global population, but, like you said, that is somewhat unimportant to the discussion over best methods of dealing with that reality. One thing that I have consistently argued is that the collapse of complexity in human civilization, driven first by financial breakdown and then by lack of net energy as well as environmental issues, will be our best defense against totalitarian control.
After that, we must rely on increasing awareness, individual/family/community preparations, learning practical skills such as those referenced by RE (which are important no matter what happens). I believe those are all things that TAE has advocated, at least in general terms. More active resistance may eventually become necessary for some people in the totalitarian scenario, but that will be an extremely tough road to travel for most.
El G,
I’m surprised that you took such personal offense to my reply, but I’m not surprised that you completely failed to understand what I was saying, given your increasingly hostile position towards anyone who doesn’t believe in conspiratorial meta-narratives. I was generously assuming that everything you believe about the upcoming Stasi police state and the NWO plans in general are true (which I don’t agree with), and saying that I still would not be doing anything differently with my time on this site.
Perhaps your memory is failing you (that’s not meant as an insult, it’s something you have said publicly), but you are the one who has changed his MO on this site over time. You respond to every single argument made with “yeah, but, you aren’t going far enough to include the plans of TPTB, so what you are saying is irrelevant”. Maybe not in so many words, but that’s exactly how it comes off to me when I read your replies, and I’m sure it’s not just me.
On top of that, you say that it’s unfair for me to reference ZPE technology, even though that’s a significant part of your “big picture” perspective, which you say is lacking here. You have referenced ZPE many different times on the TAE forum, not just in private conversation. You want to augment TAE’s big picture with your carefully considered views, but only want to pick and choose what we can consider when responding? Please don’t insult me by acting like I was bringing it up to score points with readers who don’t believe in it. I was simply responding to your dismissive attitude towards the arguments made in my article.
You use, perhaps intentionally, a (false) logical fallacy to counter my position. I never said it was a choice between A or B. I maintain that one need pursue both A and B. More specifically, I have never voiced opposition to any of the nine points in Nicole’s lifeboat as far as it goes. And I have never argued against a huge economic collapse in the near future. Nor have I argued that the initial collapse will be deflationary while the debt defaults unwind. However, I do argue that the lifeboat strategies could well be insufficient if the USA falls into a Nazi, Mao, or Stalinist dictatorship completely devoid of any rule of law.
OK, great. Everything I said in my original reply to you still stands. I would love to see the rule of law upheld, especially at the local and state level. The only thing I said was that the US Constitution is not where I would focus my efforts, because I do not believe it was designed to prevent authoritarian rule, by and large, and that the few protections it does offer will not be enforced. I find it amazing that “Constitutionalists” can keep ignoring the document as a whole and only focus on the BoR, which was added as an appeasing afterthought to push through an agenda which centralizes authority away from the states.
My arguments and positions are not meant to disqualify TAE, but rather through constructive criticism and debate, strengthen whatever remedial courses are available to us. I do not doubt that our over all goals are the same, namely to allow the 99% to survive with minimal hardship the oncoming tsunami. However, honest argument as opposed to sophistry would aid in that endeavor.
So far, I have heard nothing from you about “remedial courses” to survive what you believe to occur in the future, above and beyond what is advocated at TAE. Once again, you are confusing your lack of understanding for sophistry.
el gallinazo post=1608 wrote: Any eighth grader can read it and understand it.
An eight grader can take a look at any number of factual scenarios involving suspicious behavior and determine whether “probable cause” exists for a search/seizure? Or exactly what legal procedures “due process” was meant to entail in any given situation? There are obviously blatant constitutional violations that are in practice today, as we are reaching an extreme level of oppression, but that doesn’t mean the vaguely defined framework of the Constitution is either perfect OR good.
The USA has already entered a state of fascist takeover by the global banking cartel as demonstrated by the NDAA on New Year’s Eve and Obama’s last executive order where he nationalized everything including sunshine. (Does that have any economic relevancy?) What remedy do you have to oppose this?
Between (a) personally doing what I can to withdraw support from these institutions, spread the message and prepare whatever lifeboats are possible to transition through a prolonged period of systemic and disorderly collapse, or (b) hoping and praying people like Alex Jones and Ron Paul will gallop in to the rescue through media/political action and “restore” the Constitution to a state in which democratic capitalism can thrive once again… I’m going to have go with (a). B is highly unlikely and also not that great of an outcome for the planet, anyway.
If we are to be shut down, then so be it. If the full force of the so-called NWO is to be unleashed in short order, and will sustain its all-encompassing oppression through top-down neo-feudal structures and access to ZPE technology, then there’s not a single thing I could do about it, except get myself on a terrorist watch list when the hammer comes down. If not, and words written about the nature of our global system (IMO) and decentralized preparations/initiatives actually will make a difference for the lives of other people, then I don’t want to regret missing that opportunity for the rest of my life.
el gallinazo post=1581 wrote: Thus I see it as a strange time for well meaning people to focus on the Constitution’s pimples and blemishes.
As you probably know, I am with RE (and SA) on this one. When you really delve into the structures that were created by the Constitution, the broad powers granted, etc., the ways in which this broad language has been interpreted over centuries, the resulting document is filled with much more than “pimples” or “blemishes” – more like full body-length scars.
The Bill of Rights stands as the singular and lonely spot of sunshine in all that mess, and even those protections have been twisted and turned in so many directions that they are essentially meaningless. Take the 10th amendment, for example. I’d say most constitutional attorneys would tell you that the fastest way to lose a case arguing for states’ rights over the federal government would be to invoke the 10A in your argument.
In short, we need to stop idealizing the Constitution as being something that it isn’t, and has not been for hundreds of years, with very few exceptions (the Warren Court comes to mind). Something that, arguably, it is not even capable of being in the current system. It protects the system of private property/markets, it establishes an illusory system of democratic representation and it gives the federal government carte blanche to exert authority over all lower level institutions and people. That’s what the so-called libertarian “Constitutionalists” never seem to understand about the document in its proper context.
And, let me add that if you are worried about a complete police state takeover of the U.S., elements of which are arguably already in place, then I don’t think you should find any comfort in the Constitution for protection. Between Congress’ unchecked and mind-numbingly broad power to “regulate interstate commerce” and the President’s unchecked role as “commander in chief” and to promote the “national security” of the nation, I’d say the Constitution could serve us all up to the globalists on a silver platter (already has in some ways).
What’s the BoR going to do about that? Allow us to stand outside and protest in small groups, as long as we don’t breach some arbitrary threshold at which our free speech turns into a threat to the public peace or national security? Or maybe it will guarantee that any searches of our person/homes/cars and seizures of our property will first be legitimized by some hack judge who determines “probable cause” and issues a warrant. How about our right to a trial, in which the masses are given the most incompetent and corrupted attorney that money can’t buy? They can’t inflict “cruel and unusual” punishment on us, but, hell, they can still waterboard us.
Reverse Engineer post=1579 wrote: I go on Record as being in favor of only LEGAL means of Retribution for Crimes Against Humanity. I just think we need an Upgrade of the Legal System here to account for some exceedingly EVIL VERMIN scurrying about our society at the moment. Public Executions of Banksters would be a good start here.
OK, but are we drawing the line at BoD, CEOs, CFOs, the 23yr old quant trader, where? And do we have to actually prove that they were intentionally involved in these horrendous practices, beyond a reasonable doubt in a court of law? I imagine we are going to have to make some fundamental exceptions to Constitutional protections in order to get that result, at least anytime in the near future. We could try to update the entire thing and make it easier for banksters to flow through the system and into the guillotine, but that’s bound to have some unintended consequences – ones that I’m not sure I’d want to live with.
TheTrivium4TW,
Did you try to post an image in your post? If so, that’s why it didn’t show up. If not, we will look into what else could be going on.
Please, people, just refrain from posting images for the time being…
RE – You’re right, it’s nothing new, but it’s much more deeply ingrained and just as under-emphasized as it ever was.
viva zapata post=1557 wrote: You can wave off the freedom and PEACE and growing prosperity of the world. You can point and exclaim that Iraq/Afghanistan/ Iran (your choice here) are misadventures, but what can possibly replace the US and its interventionism that is better? No Martians, no non-existent entities, no impossible conjunctions, please.
What could possibly be better for billions of people who have been and continue to be subjected to the imperial wealth/resource extraction and militarized brutality of the Western core of our global system, and primarily the U.S. over the last 60 years? Is that really what you are asking?
It seems that you have constructed some kind of alternate reality for your own convenience, where people around the world are living free and in peace and stability, thanks to Uncle Sam’s relentless military and economic interventions. Nothing could be further from the truth. If you don’t see that, then there’s nothing left to say.
Also, VZ, I find it supremely ironic that you keep referring to me, and presumably others who agree with me, as “progressives”. Perhaps you missed this part:
The more forceful divide has, unfortunately, become an internal one between “conservatives” and “liberals”; democrats and republicans.
The next few months before the 2012 elections will perhaps give us a glimpse into which faction of our oppositional identity will take precedence over the others going into the future.
viva zapata post=1546 wrote: ashvin
Did part of your response to me get cut off? All I see is your ‘bs’ verdict and a quote from my post. I’d like to see your reasons for trashing my opinion.
My opinion is that your opinion is ridiculously out of touch with reality on its face, and therefore requires no further explanation. The US maintains peace throughout the world with its military might? Please…
That being said, I never once said that the American empire was uniquely “evil”, that everything about its culture is bad or that it has never made positive contributions in the world. None of those things are going to halt its ongoing collapse, though.
BTW, posts that use the image tag (img) still do not show up. Our back-end man Dan has been busy, but he should be able to resolve it soon.
Gravity post=1528 wrote: The US constitution, however, resoundingly contains the most positive political identity for a citizenry ever formulated on paper. There is no more logically consistent and socially adaptive document of this sort currently in ‘use’.
OK, I’ll bite. Have you read the first three articles of the Constitution? “Logically consistent” is a bit of a stretch. In fact, I’d be more comfortable calling it “a bunch of vaguely authoritarian nonsense that virtually guarantees the American population will never be free”.
FrankRichards post=1527 wrote: BTW who’s the dude in the cravat? Where does he fit in the narrative?
Hegel.
Gravity,
Whether or not you agree with Hegel’s philosophy (I don’t), there is no denying that he did wonders with his dialectic method.
RE,
I guess great blogs think alike!?
VZ,
You need a different name…
The rest of your post is unadulterated BS, both misunderstanding what I wrote and the state of the world.
viva zapata wrote: Should we have allowed the USSR to seize Europe and the rest of the world unopposed? The results of our rejection of that scenario can be found in a quiescent Russia, a merchantilistic China, a prosperous SK and Japan, a friendly Vietnam, a free Eastern Europe, relative peace throughout the world and HOPE of prosperity in places like Africa and India.
It seems the forum is not reacting well to posts that contain pictures right now. Shouldn’t be too hard to remedy.
A few of the initial forum posts are coming up blank, but I very much doubt it is a hacker. Unless it’s someone upset with jal, because those are blank too. We’re looking into what might be the problem.
All of the original articles/commentaries are still accessible from the front page, though.
https://www.zerohedge.com/news/brent-126-israel-cabinet-votes-8-6-attack-iran
According to Israel’s NRG, in a just completed cabinet vote, for the first time Netanyahu has gotten a majority (8 over 6) supporting an Iran attack. NRG also notes that at this point Israel has decided to not wait until the US elections in November before proceeding with sending crude to the stratosphere. From NRG (google translated): “Israeli political sources believe that Prime Minister Benjamin Netanyahu a majority Cabinet support Israeli military action against Iran without American approval….He announced that he would not hesitate to perform the operation without the approval of President Obama mentioned the precedent of the decision to attack the Iraqi reactor, Prime Minister Menachem Begin, and with the comments heard yesterday some cabinet ministers say privately that “It sounds like a speech preparation for attack.” Political – Security Cabinet 14 ministers. According to estimates, at this stage tend to support Netanyahu and Barak’s approach eight ministers, and six against it (including the traditional opponents octet: Moshe Ya’alon, Dan Meridor, Benny Begin and Eli Yishai).”
Because, good things always happen when you follow the “precedents” set in Iraq… :huh:
Here is the full sentence that people seem to be upset with:
It seems pretty inevitable at this point that the executive branch of the global mafia, with a primary base in Israel, has decided to attack Iran in the near future.
While there is obviously reasonable room for disagreement about the timing of such plans, it is very hard to deny that there are elements within the Israeli government who are extremely intent on attacking Iran. They have admitted as much in public. To call the above statement, as well as off-hand references to NWO, “anti-semitic” or “jew-bashing” is patently ridiculous.
I am starting to work on an article titled “The Loyal Opposition,” where I detail where I part company on some very fundamental issues of big picture analysis from Ilargi, Nicole, and Ash. But even in retirement, I am lazy, so it may take a while. I bring it up from the standpoint that a total collapse of the world economy may be part of the NWO’s long term plan.
El G made it a point to state that his fundamental views may not be compatible with all of ours, and that he is working on fleshing the specifics out in more detail. Perhaps we should allow him to do so without pre-judging his views and putting them under some blanket, dismissive label of “conspiracy theory”, which I find is much too easy for some otherwise intelligent people to do.
Prices paid by manufacturers in NY has done a complete 180 from those paid in Philly and soared by record amounts, while the latter plummeted into a deflationary abyss. Perhaps the Empire State went back to colonial scrip without telling anyone else?
When the banksters came for Ireland, I called the Irish drunken fools and did nothing.
When the banksters came for Greece, I called the Greeks lazy socialists and did nothing.
When the banksters came for Spain, I called the Spaniards siesta-taking, salsa-dancing clowns and did nothing.
etc., etc.
jal wrote: Since joining the EU they have been receiving but have not been able to pay for any of it.
How exactly do you think the EU core populations have exported their way into such wealth? Why do you think they are trying so hard to keep a tiny country like Greece in? Please show me one other Western nation that is suffering like Greece is right now before you tell me they haven’t paid.
YesMaybe wrote: I don’t know, I think those assumptions are pretty severe (consider than in the aftermath of the 2008 crisis unemployment increased from 5% to 10%, which is comparable to if it were now to increase from 8% to 13%, and we can all agree the 2008 crisis and its fallout were severe)
The equity price decline is pretty severe, housing as well – although nothing close to what would have happened without massive intervention in 2008-09. And $540bn in losses along with 4 banks going under is something to write home about. I’d say the real unemployment rate when factoring in the true size of the labor force is closer to 11-12% right now, and when including under-employment were are talking closer to 20%. How the Fed decides to apply these assumptions to calculate losses across the banks (especially the unemployment increase) is another story.
The fact that markets rallied on the back of these results just indicates to me that, even now, some investors are more than willing to be manipulated, as long as they get a measure of statistical certainty about the future that is really impossible to have. Although, all of these people and robots are only in it for very short-term profits. Whatever medium to long-term suckers are still left will be squeezed out shortly. I don’t think any of the big players are actually buying into the story of a global or U.S.-decoupled recovery.
Candace wrote: So there’s a full global recovery expected?
I don’t get that last part either, but, no, there’s no full global recovery expected by anyone who has the least bit of awareness and common sense.
It’s sick.
$500bn officially spent by the U.S. (probably more than double that unofficially), countless more by other countries and tens of thousands of lives lost in Afghanistan alone, the longest running war in our nation’s history.
I am by no means attempting to excuse/justify/rationalize the actions of individual soldiers when I say this, but – that is the essence of war. Always has been, always will be. It is distilled, indiscriminate death and destruction.
Greenpa wrote: It all seems insanely stable
.
When similar thoughts pop into my mind, I try to remember all of the crap that has happened around the world over the span of… 4 years. Absolutely unprecedented policy measures, market uncertainty, episodes of systemic fear and sociopolitical conflagrations, to name a few. Centuries of siphoned wealth from colonialism, mercantilism, imperialism, etc. coming under threat from something as innocuous as the sub-prime housing bubble and the global financial crisis, morphed into sovereign debt crises. And that’s leaving aside all energy, environmental or geopolitical issues. None of it is stable, and when it appears to be, it is simply because we are adopting a misleading perspective.
El G,
As to the question of why, I think it’s quite simple. If they didn’t allow HFT front-running, manipulation, insider trading, etc., global markets would crash in a hurry as all of the instability built up from decades of unproductive credit creation comes home to roost, and they would be left without the second most efficient means of wealth extraction in human history.
https://www.youtube.com/watch?v=RKQ3LXHKB34&feature=player_embedded
Retail/pensions are not just leaving because they know it’s rigged, but also because they can’t make any money in the medium to long-term, and there’s a shit storm of volatility/risk even in the short-term now. Anyone who has been invested in U.S. equities since 2000 has lost quite a bit of money, especially when factoring in commissions, taxes, etc.
I agree it’s not all just serendipity that unregulated HFT has come to dominate the markets, but, OTOH, no explicit top-down planning is necessary for a complex system to lose its healthy variability over time, especially when the incentives and mentality needed for cheating, fraud, etc. are built into the very fabric of said system.
Some are reporting that the new menu item doesn’t show up in Google Chrome (and perhaps other browsers) until you hit F5 and/or restart the browser. So try that if you are not seeing the “Comments” menu.
It’s only one click to reach the main forum. Also one click to comment directly under articles. If you mean the open comment thread, yes, it’s 3 clearly-labeled clicks. But such is life right now. Be creative if you must – keep the window open.
(Telegraph)
20.40 Reuters is reporting that an unnamed Greek official has said the bond swap take-up has topped 85pc on debt under Greek law.
Meanwhile, SKAI TV (see 19.55) has clarified that its 95pc participation rate includes activation of CACs.
The bond swap dead line is apparently over and done with.
“Greece’s SKAI TV is reporting that PSI participation has passed 90pc, meaning €107bn will be slashed off debt. Into the last five minutes.” (Telegraph)
It is still entirely unclear whether a) this is accurate, b) everyone who participated is agreeing to the offer or c) this participation rate was achieved with the use of CACs or without them.
Probably won’t find out any of that until tomorrow.
ZH and Peter Tchir raise another way in which cheap LTRO liquidity makes solvency problems worse. The ECB’s requirement of variation margins on posted collateral creates the conditions for a “death spiral” in underlying asset markets if the collateral declines in value. Peripheral banks that receive margin calls from the ECB will generally have to sell assets (sovereign bonds) or pledge any remaining unencumbered assets, which makes it harder for peripheral governments to finance their deficits as well as the banks themselves, since it subordinates their unsecured creditors even further.
https://www.zerohedge.com/news/ltro-scratching-surface
Zerohedge pointed out a spike in additional collateral being posted at the ECB. According to some documents, the ECB is required to impose variation margins on its financing operations. This means that the collateral posted is not a one-time deal. If the collateral a bank has posted declines in value, the banks would have to post additional collateral. This is a big deal. Somehow the world seems to have an image that banks can borrow 3 year money at 1%, pledge an asset against it, and let the carry take effect with no other consequences. That is far from the truth if variation margins are being used.
Having to post variation changes the product a lot. Buying longer dated bonds becomes very risky. They remain volatile and although banks could hold them in non mark to market books to avoid that volatility hitting their P&L, it wouldn’t save them from posting variation margin if the holdings decline in value. That helps explain why the curves are so steep, and really will limit the ability of banks to hold down longer term yields if we get another round of weakness, the death spiral risk is too scary.
Portuguese banks should be of particular concern – again. The 2 year Portuguese bonds have jumped from a price in the low 80’s to the low 90’s. If banks bought these bonds as LTRO the potential for death spirals is on. As the bonds start declining in value, the banks would have to post collateral. Since the Portuguese banks are surviving almost exclusively on central bank money, their only choice would be to pledge some unpledged assets (if they have any), or sell the bonds and try and repay some of the LTRO. Selling bonds would put additional pressure on a then weak market. So the banks will pledge more assets. This does nothing to stop the slide in the underlying bonds, but would subordinate senior unsecured debt holders further. Senior unsecured debtholders will run for the hills again. They will see assets being taken out of the general pool – where they have a claim – and get shifted to the ECB, where ECB has the first rights.
YesMaybe,
The ECB’s deposit facility is separate from the banks’ reserve accounts. Basically, each bank within the EZ has an option of storing their unused cash (credits) in their reserve account or in the DF.
The Deposit Facility is an indicator of net borrowings from the ECB
Banks generally keep the minimum amount necessary in the reserve account. They just want to make sure that the daily balances average out to a number that is above the minimum reserve requirement over a specific time period. This makes the reserve amount “cyclical”
el gallinazo post=1000 wrote: Actually, it might be useful if you could give a step by step chart of how the credit and collateral moves and why the new net amount must inevitably wind up in the ECB excess reserves. Why it must start its fateful voyage on the ECB (now bloated) balance sheet it clear.
Here is a better explanation of the process – https://soberlook.com/2012/01/deposit-facility-is-indicator-of-net.html
The logic goes like this:
Bank A borrows some cash from the ECB and posts some junk as collateral. The loan + junk is listed as an asset for the ECB, while the cash credited to the bank’s excess reserve account is listed as the liability. Bank A then transfers most of that credited cash to the ECB’s deposit facility, simply because it pays a slightly higher rate than holding it as excess reserves (although it has to keep some minimum amount as ER). If Bank A decides to use the money to make a loan to a bank, corporation or individual within the Eurozone, instead of keeping it on deposit with the ECB, the money will almost always end up being deposited in the excess reserve account of another bank within the EZ (assuming whoever ends up with the money doesn’t keep it in cash). Bank B will usually end up transferring to the ECB’s deposit facility for the same reason as the original bank.
All of that being said, I don’t think the banks are actually lending out much of the money they borrow from the ECB. Some of LTRO1 was used for sub 3-year bonds of peripheral nations (perhaps longer if its an Italian bank lending to Italy), but probably not as much will be used from LTRO2. Mostly, they use it to pay off their own maturing bonds and keep it on deposit.
Greenpa,
I’d say they’d be willing to be screwed on the CDS if they thought the PSI actually had a chance of making Greece’s public debts sustainable, and that the EFSF/ESM could actually contain the crisis for the rest of the periphery. But it’s plain as day that’s not going to happen, and so some of the holdouts figure “what the hell”, might as well try to recover some of the inevitable losses through litigation and CDS while there’s still any money left to recover.
jonabark,
I would highly recommend you go through the Netherlands Report referenced and linked to in the article. It actually touches on a lot of the comparative issues you have raised. Although, your comments also raise another important issue for me.
The reason I used the word “their” in the title is because the article is meant to be only about how these conventional, mainstream institutions view the global economic situation, in terms of growth, costs, benefits, etc. Regardless of what we think of that perspective (most here would agree its very narrow and short-sighted), its undeniable that the views/actions of those in positions of power/influence will affect short-term economic/financial outcomes. That’s why it’s important to keep tabs on how their perspective is changing with time.
However, if you frame the question as you did at the end of your comment, i.e. what are the best choices for various countries when adopting a big picture perspective of the predicaments relating to a system that requires never-ending growth, then we would have to consider many more factors such as those relating to private debts, demographics, social issues, energy, the environment, geopolitics, etc.
In that sense, we can’t really say Sweden and Denmark are light years ahead of everyone else simply because they avoided the Euro, or Iceland simply because it defaulted on external debts. Nevertheless, both of those things have materially benefited their populations over the last decade and will expose them to fewer financial (and perhaps sociopolitical) risks in the near future.
mrawlings,
Personally, I think things could start unraveling for Greece as soon as Thursday if the PSI doesn’t go through as planned (95% participation). The PSI would have a higher chance of success if Greek creditors, mainly hedge funds that are holding out, thought that Greek would last more than a year or two with the bailout and debt restructuring. But I would consider them to be people who have been “paying attention”, and therefore they are certain that Greece won’t make it two more years. Their assumptions about Greece have worsened, and that feeds back into what actually happens.
Nassim,
Here is a very interesting article in that regard:
Sharman Apt Russell, in her survey of our primordial craving, Hunger: An Unnatural History, quotes a 4,000-year-old inscription on the tomb of an Egyptian noble: “All of Upper Egypt was dying of hunger to such a degree that everyone had come to eating his children.” Two-thirds of Italy, she reminds us, starved to death during the black plagues of the 14th century. Five-hundred years later, a microscopic potato fungus scythed down a million Irishmen (and women and children) and sent at least a million more into famished exodus. And proving once again that we humans are perhaps the worst crop of pestilence of all, she cites the 2 million to 3 million Ukrainians methodically starved to death by Stalin’s forced collectivization. A grim coda: The deadliest famine recorded — ever — was man-made and happened within living memory: The Great Leap Forward, Mao’s rush to industrialize the countryside, killed tens of millions of Chinese between 1958 and 1962. “Hunger,” Russell writes, “is as big as history.”
Regarding corporatist debt slavery + growing police state:
https://www.guardian.co.uk/uk/2012/mar/02/police-privatisation-security-firms-crime
https://www.opednews.com/populum/linkframe.php?linkid=146528
Among the central provisions of H.R. 347 is a section that would make it a criminal offense to “enter or remain in” an area designated as “restricted.”
The bill defines the areas that qualify as “restricted” in extremely vague and broad terms. Restricted areas can include “a building or grounds where the President or other person protected by the Secret Service is or will be temporarily visiting” and “a building or grounds so restricted in conjunction with an event designated as a special event of national significance.”
The Secret Service provides bodyguards not just to the US president, but to a broad layer of top figures in the political establishment, including presidential candidates and foreign dignitaries.
Even more sinister is the provision regarding events of “national significance.” What circumstances constitute events of “national significance” is left to the unbridled discretion of the Department of Homeland Security. The occasion for virtually any large protest could be designated by the Department of Homeland Security as an event of “national significance,” making any demonstrations in the vicinity illegal.
(all of the above courtesy of VK)
The international (now global) industrial capitalist system, a.k.a. the wage slave system, and its associated complexity made increasingly specialized work into a chore more than anything else. It alienates the laborer from the fruits of his/her labor, “skilled” or otherwise, and necessitates the divide between “work” and the rest of what it means to be alive. Most workers within the system have no sense of ownership over the greater portion of the hours in a day. That’s really why we find it so easy to differentiate between “work” and “leisure”. I’d say the very concept of “work” does not have a constant meaning over time and across populations, but evolves with the system.
