Posts Tagged ‘corruption’

Event horizon approaching

March 24, 2011

The smell of criticality is becoming… well…. critical. Take your pick:

Monetary policy

Gold and silver availability

Geopolitcal turmoil

Nuclear disaster

Political crisis in Europe

Sovereign bankruptcy in the West

Unemployment in the West

Homelessnes in the West

Peak oil

Blatant and overt corruption in the West

Fascism in the West

 

 

Employment in an inflationary environment

March 22, 2011

This post is lifted from the blog of one of the best non-main stream commentators I know, Mike Shedlock whom I often reference anyway.

His post along with the articles that gave rise to the post are worthwhile reading. The jist of the whole thing is that in a debt based fiat monetary system, government must necessarily, if gradually, become the largest actor in the economy. And of this, more proof follows:

http://globaleconomicanalysis.blogspot.com/2011/03/current-decade-of-job-losses-vs-great.html

Follows entire article and graphs:

Current Decade of Job Losses vs. Great Depression; How Did Quasi-Public Jobs Fare? Who is Whining?

It may surprise you to learn that job losses in the most recent decade ending February 2011 are reasonably comparable to the job losses from 1929-1939. Moreover, if we exclude government and “quasi- government” jobs, the latest decade is the worst ever, by far.

Please consider A Decade of Labor Market Pain by Mike Mandel.

In February 2001, nonfarm payrolls hit their business cycle peak of 132.5 million. Ten years later, the latest data pegs February 2011 payrolls at 130.5 million, a 1.5% decline. To put this in perspective, the ten-year period of the Great Depression, 1929-39 saw a 2.3% decline in nonfarm employment, roughly the same magnitude.

But even that 1.5% understates the extent of the pain for most of the workforce. I divide the economy into two parts. On the one side are the combined public and quasi-public sectors, and on the other side is the rest of the economy. Public, of course, refers to government employees. ‘Quasi-public’, a term I just invented, includes the nominal private-sector education, healthcare, and social assistance industries. I call them ’quasi-public’ because these industries depend very heavily on government funding. For example, social assistance includes ‘child and youth services’ and ‘services for the elderly and disabled’, which are often provided under government contract.

The chart below shows employment growth in the public/quasi-public sector, compared to employment growth in the rest of the economy, with February 2001 set to 100. We can see that public/quasi-public employment rose steadily over the past ten years, and is now up 16%. By comparison, the rest of the private sector is down 8% in jobs over the past 10 years.

Once again, we look at the Great Depression for an analogy. From 1929 to 1939, government employment rose by about 30%. If we back that out, then private sector non-ag jobs fell by 6% over the Depression decade. That compares to the contemporary 8% decline in private non-ag non-quasi-public jobs since 2001. So by this measure, the past 10 years have been worse for the labor market than the decade of the Great Depression.

The first chart below is from the BLS, the second chart below is from Mandel.

Nonfarm Payroll Employment – Seasonally Adjusted Total

The above chart shows the 1.5% drop between February 2001 and February 2011. Note that nonfarm employment is below where it was 11 years ago dating back to February 2000.

The next chart is the one Mandel created.

Public and Quasi-Public Jobs vs. Everything Else

Please see Mandel’s article for a state-by-state breakdown.

Who is Doing all the Whining?

Who is doing all the whining and all the pissing and moaning? The answer of course is those who fared the best in the last decade: the police and fire unions, the teachers’ unions, transit unions, and public unions in general.

Many in private sector fields have been hammered silly with rapidly rising healthcare costs and lower paychecks (assuming they have a job at all). Meanwhile those with the most benefits and those who have suffered the least are the ones unjustifiably bitching to high heavens about how unfairly they are being treated.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

End article

 

Ireland; a post modernist hero…

February 27, 2011

Not quite yet but Ireland most certainly could turn out to be so.

http://www.telegraph.co.uk/news/worldnews/europe/ireland/8349497/Irelands-new-government-on-a-collision-course-with-EU.html

So many significant excerpts I’ll post the entire article and intersperse my comments throughout – emphasis added:

“Ireland’s new government is headed for confrontation with Brussels after the country’s ruling party was wiped out on Saturday by voters in a huge popular backlash against a European-IMF austerity programme.

Exit polls and early tallies from Ireland’s general election heralded political annihilation for Fianna Fail (FF), the party which has ruled Ireland for more than 60 years of the Irish Republic’s eight decades of independence.

The unprecedented and historic defeat, Fianna Fail’s worst result in 85 years, makes the Irish government the first eurozone administration to be punished by voters in the aftermath of the EU’s debt crisis. Voter turn-out was exceptionally high at more than 70 per cent, indicating public anger at the government and the EU.

Late last year, Ireland was forced to accept a £72 billion EU-IMF bailout to cover huge public debts that were ran up to save failed Irish banks.

The bail-out was designed to prevent financial contagion that threatened the existence of the euro, but according to economic forecasts, the cost of servicing Irish bank debt and the EU-IMF bank loans will consume 85 per cent of Ireland’s income tax revenue by 2012, a burden that a majority of voters find intolerable.

GUIDO COMMENT: The bailout was most certainly not designed to “prevent” contagion. If the banks in question did not enjoy preferential accounting and legal treatment they would have failed long ago thus never achieving the position that allows them to threaten the system. Also, the author of the article should be careful how he constructs his sentences. “Voters find intolerable” to pay 85% of fiscal revenue to service a debt that rightly does not belong to them? Really? Is it only the voters find it intolerable?

Brian Cowen, the Irish Prime Minister and Fianna Fail leader, who stood down last month rather than face furious voters, was also pressured into implementing a savage £13billion austerity programme of tax rises and spending cuts drawn up by the EU.

The cost of the EU-IMF bailout in extra taxes for an average Irish family has been estimated at over £3,900 a year. Other deeply unpopular measures include controversial reductions to the minimum wage, unprecedented cuts to public services and 90,000 jobs losses in a country where unemployment is already running at almost 14 per cent.

GUIDO COMMENT: The IMF and the World Bank are finally doing to the EU what they to date were only able to do to dinky fringe countries around the world. Namely, ride in under the guise of lending assistance and saddling society with un-payable debt thus finally and effectively achieving the ultimate transfer of wealth from society to a restricted band of bankers and politicians.

“When people are angry, when you’ve just cut their pay packets, you are not going to be top of the pops,” admitted Tony Killeen, Fianna Fail’s campaign director yesterday.

GUIDO COMMENT: Wrong mate!!! The people are not angry because you cut their pay packets you idiot. The people are angry because you sold them down the river you blathering nitwit. You and your acolytes have betrayed not only the trust of the people but you have betrayed a swathe of ideals that range from democracy to plain vanilla decency without even mentioning fiduciary duty. You, sir, along with your accomplices are the archetype of the worse possible kind of politician in an interpretation of politicians that cannot inherently ever be positive because your only sorry excuse to do what you do is that the political process needs politicians.

In Dublin, Fianna Fail won just eight per cent of the vote in an electoral decimation that called into question the future of previously unassailable politicians such Brian Lenihan, the Irish finance minister.

“However bad people thought it would get for Fianna Fail, nobody thought it would get this bad,” said Michael Marsh, professor of political politics at Trinity College Dublin. “That is highly significant.”

According to exit polling carried out by the Irish RTE broadcaster, Fine Gael (FG), Ireland’s main centre-right opposition, had won 36.1 per cent of the vote. Labour, traditional FG’s traditional coalition partner, took 20.5 per cent, its best result ever. Fianna Fail took just 15.1 per cent share of the vote, representing a loss of 58 seats.

Sinn Fein, usually outsiders in southern Irish politics, recorded its own best result with 10.1 per cent, up almost five per cent on the last 2007 election. The vote share for Greens, FF’s junior coalition partner, plummeted to 2.7 per cent, possibly robbing the party of MPs.

“The political landscape of Ireland is completely and utterly redrawn,” said Roger Jupp, the chairman of the Millward Brown Lansdowne pollsters which conducted the exit polls for RTE.

Enda Kenny, Fine Gael’s leader, will later on Sunday, start to form a new government, almost certainly with Labour, after full election results under Ireland’s complicated PR system come through.

Both Mr Kenny and Eamonn Gilmore, Labour’s leader, have promised Irish voters that they will renegotiate the EU-IMF austerity programme to reduce the burden for taxpayers and to force financial investors to shoulder some of the bank debts currently paid out of the public purse.

GUIDO COMMENT: Investors should not shoulder “some of the bank debts”. Investors should shoulder 100% of the bank debts. That’s what investors do in all other industries. Indeed, that is the very definition of investor. So far, all I can say is that End Kenny is the best of the worst of political choices. He may yet turn out to be the William Wallace of the situation but, so far, the indications are that he’s going to be a politician with a different slant… but only a slant… Enda Kenny would do well to have a chat with Iceland President Ólafur Ragnar Grímsson to get lessons in the use of moral compasses.

At a summit of centre-right EU leaders in Helsinki next Friday, Mr Kenny will use his position as Ireland’s new Prime Minister to beg the German Chancellor, Angela Merkel, and French President, Nicolas Sarkozy, for concessions ahead of an emergency March 11 Brussels summit to restructure the euro zone.

GUIDO COMMENT: The author of this article is out of his mind. “Beg”!!!??? Mr. Kenny is holding all the fucking cards. He needn’t beg anything. The only thing Mr. Kenny must do is decide whether he’s going to be a politician or whether he is going to grow a pair of balls and be a servant of the people thus acting in the best interest of the people that put him in power. Mr. B. Obama was in a similar position and he chose to be a politician. Mr. Kenny now has the opportunity to join other democratic luminaries like Vaclav Klaus, Ron Paul and Olafur Ragnar Grimsson to show what fiduciary duty means.

But neither the two European leaders nor the European Central Bank or EU will permit any substantial changes, despite the huge popular Irish revolt against the bailout.

Chancellor Merkel will tell Mr Kenny that if he wants to reduce the high, punitive 5.8 per cent interest rate charged on EU loans then Ireland will have to give up its low corporate tax rates – a measure regarded as vital to Ireland’s recovery and one of the few economic policies it has not yet handed over to Brussels or Frankfurt.

The new Irish premier will also be warned that there is no question of forcing privately-owned financial institutions to assume Ireland’s £85 billion bank debts because the resulting market panic would spread to Germany and France, tearing the euro single currency apart.

GUIDO COMMENT: The only appropriate response to the “two European leaders” whom the author evidently feels is a foregone conclusion as to whom they are, as well as to Merkel, the ECB, the EU or the IMF is a plain “no!’. Personally a more appropriate response would be to tell them to fudge cake but, though devoid of emotional charge, a simple “no” will do. The EU has no power to allow or forbid anything. Once again. Ireland holds all the cards. More prosaically, Ireland has the EU and the Euro by the balls. Moreover, Merkel has no business dictating what economic model anyone should follow. Indeed, this is the essence of economic freedom. It is true that just like Vaclav Klaus has warned long ago the EU is hard at work to destroy the last vestiges of personal and economic freedoms but for the time being, people and nations still have a degree of freedom in choosing what to run and how to run it. Enda Kenny has the power to re-assert those freedoms and he needs not beg anyone. Enda Kenny now has the mandate of his people to tell these idiots “how it is and how it’s going to be”!

As Irish voters headed for the polling booths on Friday, the European Commission bluntly declared that the terms of the EU-IMF bailout “must be applied” whatever the will of Ireland’s people or regardless of any change of government.

GUIDO COMMENT: And there you have it. In an unwitting moment of candor, the EU admits to being nothing but a bunch of fascist statists hell bent on subjugating the people: “whatever the will of Ireland’s people”. Notice here the similarities with the prevarication of the US Government upon the constitutional rights of the people as reported here for example and in many other posts on this blog.

“It’s an agreement between the EU and the Republic of Ireland, it’s not an agreement between an institution and a particular government,” said a Brussels spokesman.

GUIDO COMMENT: Yeah and???!!

A European diplomat, from a large eurozone country, told The Sunday Telegraph that “the more the Irish make a big deal about renegotiation in public, the more attitudes will harden”.

GUIDO COMMENT: Good!

“It is not even take it or leave it. It’s done. Ireland’s only role in this now is to implement the programme agreed with the EU, IMF and European Central Bank. Irish voters are not a party in this process, whatever they have been told,” said the diplomat.

GUIDO COMMENT: This idiot is reiterating that the political will of the people is of no consequence. How much more evidence do you need to realize that the Berlin wall may have come down but these traitors are hard at work to build a much more imposing wall this time encompassing the entire West?

In the face of the EU’s refusal to substantially renegotiate the austerity programme, Mr Kenny’s new government will face a grassroots campaign for a referendum.

Dessie Shiels, an independent candidate in Donegal, said: “People have not been given the basic right of deciding whether or not they should have their taxes increased in order to repay bondholders who have lent to the banks.

David McWilliams, an economist and former official at the Ireland’s Central Bank, has led calls for a popular vote under Article 27 of the Irish constitution, which requires on a matter of “such national importance that the will of the people ought to be ascertained”.

“We have to re-negotiate everything,” he said. “Obviously, the first way to do this is to make them aware that if they force us to pay everything, we will default and they will get nothing. So they had better get a little bit of something, than all of nothing. To make this financial pill easier to swallow, we must take the initiative politically. We can do this via a referendum.

“If the Irish people hold a referendum on the bank debts now, we can go to the EU with a mandate from the people which says No. This will allow our politicians to play hard-ball, because to do otherwise would be an anti-democratic endgame.”

Declan Ganley, the Irish businessman who led the 2008 No vote to the Lisbon Treaty, said Ireland must “have the balls” to threaten debt default and withdrawal from the single currency.

“We have a hostage, it is called the euro,” he said. “The euro is insolvent. The only question is whether Ireland should be sacrificed to keep the Ponzi scheme going. We have to have a Plan B to the misnamed bailout, which is to go back to the Irish Punt.””

GUIDO COMMENT: There evidently are some clear thinking people still around. Let’s all help the Irish do the right thing, the moral thing and the only thing that can ensure that a modicum of democracy is preserved.

Banking sector remains unchanged

February 1, 2011

Hat tip to Barry Ritholtz of The Big Picture

http://www.ritholtz.com/blog/2010/01/banking-sector-remains-literally-unchanged/

Jordan notes that the folks who run the major banks today — the senior executives, directors, managers, etc. — are essentially the same exact folks who ran them (into the ground) 5 and 10 years ago:

“The prospects for a robust prudently guided financial sector have been substantially clouded by the fact that the both the corporate governance structure and the executive leadership of the financial sector remain largely unchanged—92% of the management and directors of the top 17 recipients of TARP funds are still in office.”

What you can do

January 16, 2011

If you like many today, feel the Western democratic political process has failed you. If you, like many others, feel you have been taken advantage of by your leaders. If you, like many others, feel you are enslaved by an economic system that exploits you and gives nothing back. If you, like many others, feel there must be an alternative.

Here is what you can do and it won’t cost you any more than US$50. Not only that but it is also legal and safe. No need to take to the streets and risk being shot by an increasingly detached, tetchy and arrogant government.

Read on.

If you follow this blog you know I contend the monetary system is upstream of all human dynamics. Thus our entire socio/economic construct inscribes itself within our monetary system. Similarly, you will also know that the choice and management of the monetary system falls outside of the democratic process. Ergo, not only do politicians impose the system upon society but they also retain the right to manage it by decree.

So much for capitalism or, indeed, for our “open” societies based on democratic principles.

Western politicians have imposed a debt based fiat monetary system upon our societies. In the USA it started in 1913 and then from 1971 it gradually spread to all other countries.

The problem is that debt based fiat money is predicated on inflation. But inflation is a dynamic that conforms to the law of diminishing marginal utility so that greater degrees of inflation are progressively required in order to obtain the same result. In this case the “result” we seek is GDP expansion. So that in  order to keep GDP on a positive trajectory in a debt based fiat monetary system, government must necessarily induce progressively greater degrees of inflation in the economy.

But since inflation conforms to the law of diminishing marginal utility, it follows that the effect of inflation on GDP expansion must inherently be limited mathematically.

https://guidoromero.wordpress.com/2009/11/07/the-utility-of-a-fiat-monetary-system/

As the effect of inflation gradually wanes as it is mathematically true it will, government must necessarily intervene in the economy directly and at progressively greater and deeper degrees till government becomes the largest actor in the economy. This dynamic is accompanied by increasingly more severe and pervasive political crisis that is necessarily always accompanied by expedient politics, aberrant economic regulation and increasing degrees of corruption. As this dynamic evolves, social unrest becomes more pervasive and increasingly violent until it morphs into organized social unrest i.e. revolution.

History is replete with examples of what happens when a sovereign currency is debased.

The clearest indication that our current monetary system is pushing the mathematical limits is the endemic and pervasive corruption that permeates Western governments and institutions. It is clear today that the civic and political mechanisms that have made the West the envy of developing societies around the world have lost their intended function. Western governing elites no longer represent the aspirations and the hopes of their people and are instead beholden to select banks, corporations and unions in an attempt at maintaining the spending power of their office and that of their cronies in an attempt at perpetuating their own personal self interest.

I suppose that one of the clearest and most glaring examples of the incestuous and self serving nature of Western governments is given to us by none other than current US President Barak Hussein Obama whom, despite his pledge of change that carried him to the White House, just nominated another bank executive to the position of White House Staff thus not only reinforcing but also confirming and shouting it out loud from the roof tops that it is the banks that today pull the strings of puppet politicians.

But enough ranting.

Democratic politics is no longer a viable option for the common people. So, other than a violent uprising a la Tunisia, what can everyday folks do?

The easiest, most effective and devastating way to affect the political dynamic today LEGALLY is to exploit the weakness of the monetary system.

I say “legal” because it is still legal to suggest what I am about to suggest. However, beware! In Holland for example, a law is being debated that would criminalize the mere act of suggesting something similar to what I am about to suggest.

WHAT YOU CAN DO

Debt based fiat money is predicated on the constant expansion of inflation. Inflation can only be expanded if the credit markets can be expanded.

You want to bring down currently sitting politicians and institutions?

Then you can prevent the expansion of the credit markets.

The easiest way to do that is to start accumulating gold and silver ingots or coins. We are not talking large sums here. If every person on earth acquired one silver ingot/coin and one gold ingot/coin that would suffice to bring the whole house of cards down. We are talking of an investment of US$50 per person at the most. Fifty Dollars!!!

If every single citizen in the West were to purchase one ingot or coin in silver and/or gold, that would deal a very serious blow to the major global banks. Take down the banks and you’ve paralyzed the political process.

If you really wanted to push the boat out there are other things you could do. Once again. These are so far all absolutely legal ways to put a very quick stop to the entire farce that is our political process.

Withdraw all your savings from the major global banks. Open accounts in smaller banks or cooperatives or just hold on to the cash. By withdrawing your savings you force banks !

to curtail their leveraged exposure.

WARNING!!!

These are very simple but lethally effective ways to put a stop to our governments and their shenanigans. But like everything in life, each action has an equal reaction.

Taking down the banks and paralyzing the political process is easy. In fact it is so easy most people cannot believe it is possible. But it is.

The downside of taking down the banks is that we’ll create dislocations in a myriad sectors of the economy and life in general. Things like public transport or trash collection might be terminated for example. Fuel deliveries might be disrupted. Road and bridge maintenance could be adversely affected. Pension funds might blow up.

Any of the above is possible and more.

However, there is a rationale for taking bitter medicine now rather than letting things plod along as they are.

By letting things plod along, not only are our social services and social safety nets already compromised but there is a more than reasonable certainty that our “leaders” are going to plunge us into a world war.

Essentially, as the monetary system is hitting the buffers and politics have become incestuous and corrupt, social expenditure must be curtailed. Curtailing social expenditure at the same time that the governing elite is caught neck deep in corruption will lead to social unrest and eventually to revolution.

But I guarantee that our “leaders” will not let revolution happen in the “developed civilized” West. Before social unrest morphs into revolution, our leaders will have packaged a nice war somewhere to fight an evil empire that ostensibly threatens our way of life.

The choice today is: bring down the political system legally and lets take the consequences of the subsequent dislocation that is sure to follow … or … plod along as we are doing today and let our “leaders” send our children to the slaughter along with countless and nameless children of parents in faraway lands.

A bon entendeur…

Who do the IMF or the ECB really want to bailout?

November 17, 2010

As the mainstream press appears to steadily if hesitantly move towards a more objective role, the Wall Steet Journal today reports who the real beneficiaries of the bailouts really are.

Not news to us of course.

http://online.wsj.com/article/SB10001424052748704312504575618963922181240.html

All told, European banks were sitting on more than $650 billion of exposure to Ireland as of March 31, according to the Bank for International Settlements.”

[IRELAND]
And there you have it.
Banks are once again trying to skirt their primary legal and fiduciary responsibilities. Banks are businesses. Businesses make strategic decisions in an attempt to earn a profit. When decisions turn out to have been wrong, a business takes the loss or goes bankrupt. It is how it is supposed to work in open free economies.
But in our bank imposed, debt based, fiat monetary system, not only are banks perceived as indispensable to the normal functioning of the system but they have also placed themselves above the law. This would not be such a bad thing if it weren’t for the fact that banks have successfully maneuvered into this position with the ongoing connivance of the political, legislative, judicial and executive framework of presumably sovereign democratic countries.
Hence the reason banks can disregard entire swathes of accounting rules that apply to everyone else. Hence the reason banks enjoy selective legal treatment. Hence the reason banks get fined token amounts in cases where they have clearly and deliberately committed fraud, if not been criminally negligent, as is the case with the ongoing foreclosure debacle that incidentally is in the process of getting “settled” for yet more token amounts and where nobody will go to jail… yet again.
Mathematically, we’ve reached the limits of this monetary system. The upshot of this situation is that debt based fiat money conforms to the law of diminishing marginal utility so that as you reach the mathematical limits of the system, the progression accelerates till it implodes. We are literally 3 to 5 years away from total implosion.
You know my position. This implosion will bring global conflict just because neither our politicians nor, indeed, our electoral political systems are geared towards doing what needs to be done or taking responsibility for a crisis years in the making. Politicians and electoral politics are inherently expedient and short-termist in inspiration and in deed thus guaranteeing immunity from responsibility. A fall-guy will be found, a sacrificial lamb will be slaughtered and a war precipitated.
Ireland like Iceland before it, should tell the banks to go pack fudge. Bank bondholders should be forced to assume their roles as prescribed by law and take the loss. Public funds must no longer be used to safeguard bank’s deliberately reckless behavior. Bondholders must no longer be saved from the scheming ways of their own creation.
Someone has suggested recently that each citizen should buy a silver coin or a silver ingot. You needn’t spend much; less than US$50 will do. But each and every person in the world should buy a small quantity of physical silver either in coin form or in ingot form. Buy it and put it in your pocket; i.e. do not buy a certificate. Buy the real physical item. Whilst you are at it, you can do the same with gold. If every sentient and reasonable person in the world did so, the monetary authorities would be quickly brought under control. Help reason and decency prevail. Buy a little bullion.

Curtailing social expenditure…

August 18, 2010

I won’t bore you with more links to past posts. If you are interested in perusing some of numerous previous posts by the same title which should be read along all the posts titled “tic, toc…” you can to a search on this blog.

Countdown to war is still on… but I have a feeling it is accelerating…

Far from me to give any credence to or have respect for their operating model but I happen to agree with Moody’s take on the state of our sovereigns:

http://www.telegraph.co.uk/finance/economics/7950775/Time-is-running-out-for-the-West.html

Some excerpts (but it is worth reading the entirety of this short article) –

Genuinely adverse debt dynamics were only expected to materialise in 15 to 20 years. The crisis has ‘fast-forwarded’ history, eroding all the time available to adjust, ” said the group’s quarterly Sovereign Monitor.

Guido here: That’s right! Because inflation is inherently an accelerating dynamic. Hence the reason that since 1980 sovereign debt in the USA has progressed by 1200% but GDP only progressed by 100% in the same time period.

Countries that “fail to demonstrate the level of social cohesion required to stabilise debt” will lose their AAA rating. “Intra-generational” conflict between young and old requires careful handling. States that delay pension reform risk spiralling downwards. ”

Guido here: In plain English, the above means that social expenditure must be curtailed and that doing so will inevitably generate social unrest that must be managed (i.e. Greece).

This time the threat lies ahead as the aging crisis drives up pension and health costs on a static tax base. “While the current stock of debt is large, it is dwarfed by the accumulation of future liabilities if policies do not change.”

Guido here: As above. Social expenditure must be curtailed.

All the above results necessarily in things like this (of which you will find dozens of examples in previous posts):

http://www.telegraph.co.uk/news/newstopics/politics/7951203/Winter-fuel-payment-cuts-to-hit-millions-of-pensioners.html

The basic winter fuel payment, made to more than 12 million people, will also be cut by £50 for new recipients and £100 for the oldest.

No comment

June 28, 2010

Well, only two brief comments really….

Scaremongering

NHS suffering devastating cuts to jobs and services

http://www.telegraph.co.uk/health/healthnews/7858068/NHS-suffering-devastating-cuts-to-jobs-and-services-warns-BMA.html

Millions face incapacity benefit cuts

http://www.telegraph.co.uk/news/newstopics/politics/7858141/Millions-face-incapacity-benefit-cuts-as-welfare-reforms-speed-up.html

Reality

The great inertia sector (hat tip Michael Shedlock “Mish”)

http://www.dailymail.co.uk/news/article-1289702/Public-sector-inertia-council-office-employees-month-sickies.html#ixzz0s51Nv1j7

More scaremongering

http://www.telegraph.co.uk/news/worldnews/middleeast/iran/7857627/Iran-could-have-nuclear-weapons-by-2012-CIA-chief-warns.html

Reality

Psssst!!!… hey mister… Israel already has nuclear weapons and they are not signatories to the non proliferation treaty

More bailouts ergo more gravy for the political train

Obumma and Cameron agree BP must not collapse

http://www.telegraph.co.uk/finance/newsbysector/energy/7857981/Obama-and-Cameron-agree-BP-must-not-collapse.html

I stand by my prediction: global war by 2013 / 2015 latest

As to the reasons for pervasive corruption

April 16, 2010

I wrote an answer to one of the rare posters on my blog yesterday and, in hindsight, I liked the answer so much that I thought I should make it into a post in its own right.

Poster David, offered a link to a 60′ segment discussing the how and why of the crisis coming to the conclusion that it all happened because of corruption.

Below is my comment on the link only slightly amended from the original.



Hi David,
Those are great links. There is absolutely no doubt that corruption and criminal dereliction of duty on the part of our leaders and regulators has been established. Take your pick. Corruption has been evident going back a good many years but has become more evident as of the LTCM debacle and blatant as of the Enron fiasco. Not to mention that two years after the Enron spectacular, Fannie Mae announced it was unable to publish its books for a period of eighteen months… 18 months!!… and nobody thought of going in to take a closer look at what was happening… ? It beggars belief. And then Madoff… and then Skilling and his gang… and then … and now even Gordon Brown admits to having made “mistakes”… but considering that what he did was against the letter of the law, Gordon Brown should really be admitting guilt rather than mistakes… I think the trend is clear no?
Corruption has been proven beyond any reasonable doubt. But most people are still blind sided as to the how and the why this should have been allowed to happen.

Is it just corruption? Of course not. There must be something else at work. Considering the number of agencies and regulators that have a say in anything that is done, it is unlikely that corruption was the only enabler.  Rather, the enabler is the necessity to allow corruption to happen for the “sake” of the monetary system.

What it comes down to is the efficiency of money.

In a fiat monetary system, the system is predicated on inflation. However, as you by now know, inflation is exponential in character. Therefore, inflation conforms to the law of diminishing returns.

Now! If inflation is necessary (it is or else we would not need a fiat monetary system) but its effects wane over time, it follows that the system must regularly be allowed to be purged.

However, if the authorities do not wish to allow the system to reset naturally and insist on maintaining it on a constant expansionary trajectory, it follows that the authorities must employ unorthodox practices in order to short circuit the natural tendency of the system to purge itself. In this regard, bailouts and subsidies are the clearest and apparently most benign tactics to short circuit a fiat monetary system.

However, not only do bailouts and subsidies create overcapacity but they also lead to entities that become too big to fail thus become inherently corrupt. The direct result of overcapacity and too big to fail entities is that more economically viable entities are at best stifled or, in the worst case scenario, smothered at birth.

All this is perpetrated for the sake of the monetary system. That is because if the monetary system collapses then so does the state. Therefore, the monetary system is directly correlated to a sovereign’s raison d’etat.

Thus, the genius of a fiat monetary system is lost the minute it is subordinated to political expediency – and in a society based on personal and political freedoms, the monetary system will always and everywhere be subordinated to political logic. And by the way; political logic is no logic at all.

Hence in an unchecked fiat monetary system, corruption is an implicit instrument of state in order to maintain the system going.

This is also the reason why in a fiat monetary system government eventually becomes the largest actor in the economy (the largest employer and the largest spender). And this is why, in turn, in a fiat monetary system, the economy loses efficiency over time – ergo, towards the end of the inflationary cycle, financial value runs away from intrinsic value. In fact, large government is the hallmark of an under developed country that uses government as a way to buy political favor within society (think Mugabe as an extreme example).

What most people are omitting to see or do not want to discuss is this. If as is clearly evident the efficiency of money decreases over time, it is obvious that you can only keep the system going for a finite period of time. However, the longer you postpone the day of reckoning, the bigger the reckoning.

Fiat monetary systems should be allowed to purge regularly. If we insist on refusing to take small hits regularly, we are bound to one day take a big hit that will annihilate society and the social order.

I think we are there.

Criminal air marshals

April 10, 2010

I would be tempted to say that the terrorists have already won. Except that I am not at all convinced we are fighting any terrorist outside the borders of our respective Western countries. It can no longer be disputed today that our respective governments are the terrorists holding society hostage in the tragedy that is inherent in the logical evolution of our unchecked monetary system.

Like in the late 20s and the late 60s the monetary system has yet again reached evident mathematical limits that would bring about the demise of government. Hence the perceived necessity to concentrate power by any means while simultaneously attempting to revive the monetary system by traditional means i.e. trying to re-ignite inflation by creating and spending prodigious amounts of credit and money in any way possible. And of course, inculcating fear of terrorism in people’s heads is just the ticket.

http://www.lewrockwell.com/blog/lewrw/archives/55456.html