Posts Tagged ‘fascism’

Time for an “I told you so” re-post

March 25, 2011

What is going on – My opinion and not-so-improbable scenario

By guidoamm

You’ve read my rants and ravings and you are probably inclined to think I am a crank. After all, how can Guido be sitting there seeing things that the great and the good cannot see particularly considering that he avails himself of published data and news articles available to all. Entertaining though he may be occasionally, Guido mostly dramatizes for effect.

Bear with me. We know for a fact that the USA, Europe and England have officially borrowed in excess of US$3Trillion to ostensibly counter the crisis. This sum does not take into account the guarantees each government has put up. This is just the physical amount of money that has been requested, approved and is being transferred.

From a recent Bloomberg article we read: “If atonement is difficult, retribution may prove “brutally difficult,” Starwood Capital Group CEO Barry Sternlicht said in an interview in Davos. As Sternlicht sees it, “everyone wants a head, and that’s not reasonable. To do that, you’d need to take out the top 20 executives at the 300 biggest financial firms.”

Sternlicht gives us an estimate of 6000 people that are directly involved in this scandal – because it is a scandal.

Let’s take the 6000 people Sternlicht is talking about (300 biggest financial firms x 20 executives per firm) i.e. Thain, Trichet, Paulson, Bernanke, Cameron, Goodwin, Greenspan and so forth and lets assume they were the only and ultimate puppet masters. As puppet masters, they operated through a gaggle of minor figures a good number of whom were politicians. To be generous, let’s assume that Sternlicht’s 6000 top executives influenced and enacted policy through a gaggle of 10000 minions. So we now have an estimated gang of 16000 people involved in the scandal. Let’s round that number to 20000 to be generous.

So, we have a band of 20000 around the world that somehow genuinely did not, could not or did not want to see what was clearly suspect, undesirable if not criminal behavior in the past 15 years. Things like companies selling debt and using the proceeds to buy back their own company stock so as to artificially inflate the stock price. Things like Fannie Mae unable to publish its accounting books for a period of 18 months not 2 years after the Enron event. Things like GM no longer making money in its core business (vehicles) and making up the shortfall with suspiciously juicy profits from its finance arm GMAC. Things like banks making use of off-balance-sheet instruments called SIVs. Things like negative ammortization mortgages in the face of what was clearly a bubble… you get the drift… there was no shortage of red flags in the recent past and yet, apparently, nothing appeared to be out of whack for the world elite economists and politicians. Fine.

Of course, we can argue that professional economists also somehow completely failed to notice the long term decline in the velocity of money despite the fact that the rate of expansion of financial debt was outpacing GDP expansion at an accelerating rate for the past 20 years. But, let’s not get technical here.

So, we have a band of 20000 (twenty thousand) that thought nothing was amiss in the past ten, or even, the past five years.

Our leaders have now borrowed US$3Trillion (that’s twelve zeros) and it is likely that Obama this week will request another whopping amount as will the EU and England in the coming weeks. I estimate that before the year is out, we’ll be talking of amounts in excess of US$7Trillion… a large sum in and of itself but nothing compared to the sum it is supposed to off-set estimated by the BIS at well over US$500Trillion in various debt instruments world wide.

What is the use of pitting 7 Trillions against a potential default of 500 or even only 50 Trillions?

The answer is two fold. Our leaders are not attempting to counter the deleveraging of the debt mountain. If that were the case, they should be talking of sums that are ten, twenty or thirty times larger than US$7Trillion.

What our leaders are doing is to make whole the gang of 20000 that got us into this mess.

The 20000 are making out like bandits. They will plunge us in a world war which will presumably bring about the much talked about New World Order that Gordon Brown is so proud to discuss in public fora these days.

7 Trillion Dollars divvied up amongst the 20000 is a cool average of 350 Million each. In a deflationary environment, that’s a whole lotta moola.

These calculations are based only on the official numbers common mortals like you and me have access to. Undoubtedly, there are huge sums changing hands behind closed doors that we will never hear about.

Still think I am a crank?

Ireland; a post modernist hero…

February 27, 2011

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

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”.


“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.

Good tidings folks!

February 21, 2011

After having celebrated Iceland’s courageous stand against the IMF, the World Bank, the UK and Holland last year, a few days ago I feared the people of Iceland might yet again get screwed by the politicians. A piece of news I read reported that Iceland had agreed to a new repayment schedule that stretched out to 2046 and that “the people” supported the new plan.

Despondent as I was feeling after reading that piece of news, for days I wallowed in despair at the enormity of the task the people face at fighting this political/financial Leviathan that now dominates society having penetrated the fabric and individual strands of people’s lives.

But today hope once again peeks through the dark clouds and, once again, it is Iceland’s President to come to the rescue of the Icelanders:

For the second time, Iceland’s president vetoed a bid by the island nation’s Parliament to repay the U.K. and the Netherlands more than $5 billion lost by depositors in Iceland’s epic 2008 banking collapse—sending the matter to a referendum by a deeply skeptical public and complicating the country’s application to join the European Union.

Ireland should heed the goings on in Iceland. It is not too late for the Irish people to re-gain their sovereignty and their dignity and, if Irish did so, they might well spark a popular movement throughout the West encouraging people to force banks to eat the losses brought about by their own deliberately reckless and politically sanctioned behavior.

Let the banks fail.



And for the most recent “WTF!” moment…

February 12, 2011

This is right up there with the strange goings on in Sweden.

The single most popular internet search that leads to my blog is “most civilized country in the world”. This is due to a post I put online some two years ago chiding Sweden for betraying its status as most civilized country in the world when it decided to offer negative interest rates on saving accounts.

For a country of till then high moral standing, that was a decision I found to be out of character. Sweden eventually went on to do other peculiar things as, indeed, did Denmark when it was implicated in a carbon trading credit scandal of rather large proportions and whose instigator eventually went on to become EU Climate Commissioner. Nice work if you can get it.

One wonders what is happening with those beacons of morality and fairness that northern countries are usually known for.

And so it is that today it is Holland’s turn to act out of character. To be sure, Holland has already been acting strange in the recent past as attested by the attempt by two politicians to pass legislation that would criminalize the expression of comments that are deemed to lead to withdrawal of funds from a bank (which is exactly what I am suggesting in order to get out of this crisis and bring about a modicum of democracy again).

So now, for the most recent WTF moment,  Holland is at it again as the Dutch central bank orders a tiny pension fund to sell its gold holdings.

NB: On May 10th, 2011 I have updated the link to the press article. The original link I provided is no longer active. This is the new link:

Excerpt emphasis added:

The Vereenigde Glasfabrieken pension fund said Thursday it wants to keep the gold but a Rotterdam court sided with the bank in a ruling Tuesday.”

If you understand the implications of any of the above, you have to wonder what is going on with these countries that till recently were unmatched examples of tolerance, social justice, personal freedom and morality.

More specifically, in a presumed open and capitalist economy, economic actors are ostensibly free to operate as they see fit provided they operate within the bounds of the law. Moreover, in a debt based fiat monetary system where the authorities are hell bent on conveying the idea that gold is a barbarous relic, buying, holding or selling gold is not an activity that should be subject to state approval and, certainly, is not an activity that represents a particular threat to anyone thus should not be subjected to legislation.

If the central bank or the Rotterdam court feel that gold represents a particular investment risk I can only conclude that the head of the central bank and the judge of the court have taken a look at the performance of their own pension funds over the past ten years and threw an issy fit when they realized that this little pension fund did rather well for itself as compared to the average pension fund that has shunned gold.

But, seriously, at a time when the performance of traditional investment vehicles that are stocks or bonds has been disastrous for the past ten years, why condemn a little fund that has done well by blazing a trail in alternative investments? Indeed, innovation is the essence of capitalism. So, what’s going on? Why beat-up a small pension fund? And why is all this happening in these economically marginal countries? And why now? And, anyway; this pension fund’s investment in the precious metal is equivalent to only 10% of total money under management so that even if the price of gold went to zero, the fund would still survive and eventual losses do not even approximate what the fund has lost in bonds and stocks since the year 2000.

Here are some charts that tell the real story of what has happened to various investments during the past ten years.

The only thing I can think of is that small economies are being used as test ground by the monetary authorities like the ECB and the Fed to see what would happen if they were to push such aberrant legislation on larger countries.

These are likely tests for last ditch attempts to keep the current monetary system alive short of opting for the nuclear option of converting to a global currency.

In line with the spirit of this blog and as I have done so far, I am inclined to act in a manner that is contrary to what the authorities suggest and dictate.

A bon entendeur…

Banking sector remains unchanged

February 1, 2011

Hat tip to Barry Ritholtz of The Big Picture

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.”

Criminalizing everyone

December 23, 2010

An old press article that I had already posted at the time that shows how things progress. This ties in with just about anything you care to think of from the Patriot Act to Codex Alimentarius to travel restrictions to a general hardening of security law and the concomitant expansion of what is considered a crime and/or treason.

Full text emphasis added:

“You don’t need to know. You can’t know.” That’s what Kathy Norris, a 60-year-old grandmother of eight, was told when she tried to ask court officials why, the day before, federal agents had subjected her home to a furious search.

The agents who spent half a day ransacking Mrs. Norris’ longtime home in Spring, Texas, answered no questions while they emptied file cabinets, pulled books off shelves, rifled through drawers and closets, and threw the contents on the floor.

The six agents, wearing SWAT gear and carrying weapons, were with – get this – the U.S. Fish and Wildlife Service.

Kathy and George Norris lived under the specter of a covert government investigation for almost six months before the government unsealed a secret indictment and revealed why the Fish and Wildlife Service had treated their family home as if it were a training base for suspected terrorists. Orchids.

That’s right. Orchids.

By March 2004, federal prosecutors were well on their way to turning 66-year-old retiree George Norris into an inmate in a federal penitentiary – based on his home-based business of cultivating, importing and selling orchids.

Mrs. Norris testified before the House Judiciary subcommittee on crime this summer. The hearing’s topic: the rapid and dangerous expansion of federal criminal law, an expansion that is often unprincipled and highly partisan.

Chairman Robert C. Scott, Virginia Democrat, and ranking member Louie Gohmert, Texas Republican, conducted a truly bipartisan hearing (a D.C. rarity this year).

These two leaders have begun giving voice to the increasing number of experts who worry about “overcriminalization.” Astronomical numbers of federal criminal laws lack specifics, can apply to almost anyone and fail to protect innocents by requiring substantial proof that an accused person acted with actual criminal intent.

Mr. Norris ended up spending almost two years in prison because he didn’t have the proper paperwork for some of the many orchids he imported. The orchids were all legal – but Mr. Norris and the overseas shippers who had packaged the flowers had failed to properly navigate the many, often irrational, paperwork requirements the U.S. imposed when it implemented an arcane international treaty’s new restrictions on trade in flowers and other flora.

The judge who sentenced Mr. Norris had some advice for him and his wife: “Life sometimes presents us with lemons.” Their job was, yes, to “turn lemons into lemonade.”

The judge apparently failed to appreciate how difficult it is to run a successful lemonade stand when you’re an elderly diabetic with coronary complications, arthritis and Parkinson’s disease serving time in a federal penitentiary. If only Mr. Norris had been a Libyan terrorist, maybe some European official at least would have weighed in on his behalf to secure a health-based mercy release.

Krister Evertson, another victim of overcriminalization, told Congress, “What I have experienced in these past years is something that should scare you and all Americans.” He’s right. Evertson, a small-time entrepreneur and inventor, faced two separate federal prosecutions stemming from his work trying to develop clean-energy fuel cells.

The feds prosecuted Mr. Evertson the first time for failing to put a federally mandated sticker on an otherwise lawful UPS package in which he shipped some of his supplies. A jury acquitted him, so the feds brought new charges. This time they claimed he technically had “abandoned” his fuel-cell materials – something he had no intention of doing – while defending himself against the first charges. Mr. Evertson, too, spent almost two years in federal prison.

As George Washington University law professor Stephen Saltzburg testified at the House hearing, cases like these “illustrate about as well as you can illustrate the overreach of federal criminal law.” The Cato Institute’s Timothy Lynch, an expert on overcriminalization, called for “a clean line between lawful conduct and unlawful conduct.” A person should not be deemed a criminal unless that person “crossed over that line knowing what he or she was doing.” Seems like common sense, but apparently it isn’t to some federal officials.

Former U.S. Attorney General Richard Thornburgh’s testimony captured the essence of the problems that worry so many criminal-law experts. “Those of us concerned about this subject,” he testified, “share a common goal – to have criminal statutes that punish actual criminal acts and [that] do not seek to criminalize conduct that is better dealt with by the seeking of regulatory and civil remedies.” Only when the conduct is sufficiently wrongful and severe, Mr. Thornburgh said, does it warrant the “stigma, public condemnation and potential deprivation of liberty that go along with [the criminal] sanction.”

The Norrises’ nightmare began with the search in October 2003. It didn’t end until Mr. Norris was released from federal supervision in December 2008. His wife testified, however, that even after he came home, the man she had married was still gone. He was by then 71 years old. Unsurprisingly, serving two years as a federal convict – in addition to the years it took to defend unsuccessfully against the charges – had taken a severe toll on him mentally, emotionally and physically.

These are repressive consequences for an elderly man who made mistakes in a small business. The feds should be ashamed, and Mr. Evertson is right that everyone else should be scared. Far too many federal laws are far too broad.

Mr. Scott and Mr. Gohmert have set the stage for more hearings on why this places far too many Americans at risk of unjust punishment. Members of both parties in Congress should follow their lead.

Brian W. Walsh is senior legal research fellow in the Center for Legal and Judicial Studies at the Heritage Foundation.

End quote

Without wishing to be trite, it is absurd to commit this amount of material and human resources to investigating and criminally prosecuting what are obvious and clear cases that fall under civil law. These are as clear examples as can be made of the inevitable consequence of the end of a monetary system that is predicated on inflation that results inevitably in the expansion of government till government becomes the largest actor in the economy and, from that point onwards, must ensure its own survival and perpetuation – a beautiful argument for the sanctity of the raison d’etat.

It needs to be repeated

December 17, 2010

Permit me to issue and control the money of a nation, and I care not who makes its laws. (Mayer Amschel Rothschild)

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years. Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage. (This quote is generally attributed to one Alexander Tytler but evidence is scarce and inconclusive)

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved. ( Ludwig Von Mises)

“Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again.”
(Sir Josiah Stamp) [1880-1941] former Director, Bank of England

“The whole aim of practical politics is to keep the populace alarmed — and thus clamorous to be led to safety — by menacing it with an endless series of hobgoblins, all of them imaginary.”
H.L. Mencken

“Facts must be distorted, relevant circumstances concealed, and a picture presented which by its crude coloring will persuade the ignorant people that their Government is blameless, their cause is righteous, and that the indisputable wickedness of the enemy is beyond question.
A moment’s reflection would tell any reasonable person that such obvious bias cannot possibly represent the truth. But the moment’s reflection is not allowed; lies are circulated with great rapidity. The unthinking mass accept them and by their excitement sway the rest.
The amount of rubbish and humbug that pass under the name of patriotism in wartime in all countries is sufficient to make decent people blush when they are subsequently disillusioned.”
Arthur Ponsonby, Falsehood in Wartime, 1928

“It only stands to reason that where there’s sacrifice, there’s someone collecting the sacrificial offerings. Where there’s service, there is someone being served. The man who speaks to you of sacrifice is speaking of slaves and masters, and intends to be the master.”
Ayn Rand

“the individual is handicapped by coming face to face with a conspiracy so monstrous he cannot believe it exists.”
J. Edgar Hoover, 1956, speaking of communism

“The State is that great fiction by which everyone tries to live at the expense of everyone else.” Frederic Bastiat

“It is also important for the State to inculcate in its subjects an aversion to any “conspiracy theory of history;” for a search for “conspiracies” means a search for motives and an attribution of responsibility for historical misdeeds. If, however, any tyranny imposed by the State, or venality, or aggressive war, was caused not by the State rulers but by mysterious and arcane “social forces,” or by the imperfect state of the world or, if in some way, everyone was responsible (“We Are All Murderers,” proclaims one slogan), then there is no point to the people becoming indignant or rising up against such misdeeds. Furthermore, an attack on “conspiracy theories” means that the subjects will become more gullible in believing the “general welfare” reasons that are always put forth by the State for engaging in any of its despotic actions. A “conspiracy theory” can unsettle the system by causing the public to doubt the State’s ideological propaganda.”
Murray N. Rothbard, in The Anatomy of the State

“The terrible thing about the quest for truth is that you find it.”
Remy de Gourmont

Ignorance may be bliss only if you are aware of being so. Unawareness of one’s own ignorance is the truest definition of arrogance


Hallmarks of absurdity

December 12, 2010

Leave it to the politicians to lead the way.

The European Commission has been condemned for spending three million euros hosting a lavish anti-poverty development conference for 6,000 people in Brussels.

What is certain is that the days when “condemnation” was sufficient to dissipate political and social discontent are coming to an end. Ever larger numbers of dispossessed, unemployed, homeless and just plain pissed off people are inexorably beefing up the ranks of popular revolts in Greece, France, Spain, the UK and even in Germany where following seemingly unrelated political decisions to build a railway station and allow a nuclear waste convoy to proceed to its destination have inflamed the masses. In fact, German police were confronted with such pitched resistance that they eventually had to both call a truce with the protesters and ask for major league games to be suspended on a Sunday because they were outnumbered and exhausted by the protesters.

Countdown to global war is is now approaching “1” real fast.

The economic incompetence of the political class (Charles W. Kadlec)

December 9, 2010

It is human nature. We never give something much thought till something goes horribly wrong.

I often drive across Europe. I recently returned from just such trip and as I drove through the St Bernard’s tunnel I was discussing the inevitability of disaster in human endeavor with my passenger. By means of example, I told him, take these tunnels. Till the Mont Blanc tunnel did not suffer a devastating fire and killed scores, tunnel safety wasn’t really an issue. Then the fire happened and now going through the Mont Blanc is an experience akin to driving into the Starship Enterprise – there are sensors, multi-colored lights, markers, signs, cameras, there is a blanket radio signal that takes over your car radio and at the toll booth you are only allowed to enter the tunnel at some distance from other vehicles. But then, a few years later, the Gottard tunnel too suffered a devastating fire and, once again, scores were killed. Similarly, and despite the Mont Blanc precedent, Gottard’s tunnel security wasn’t really and issue till then.

As we were discussing these unique human traits of waiting for something to happen before we do something, not two days later the Frejus tunnel skirted disaster two weeks ago as a fire developed. Maybe because this is the oldest and least practical of all the trans alpine tunnels and is therefore not used by many or because of sheer luck, the fire was contained and no lives lost.

And through the soul searching, the hand wringing and the finger pointing during the aftermath of disaster, we are singularly incapable (or are we unwilling) to take preventive measures for situations that inherently breed disaster.

The opinion expressed by Mr. Kadlec in Forbes can be generally agreed with; “generally”. But of course, as is the case with Mr. Kadlec, we must ask where was the press and the punditry when all this was developing and when, by the year 2000, the trend was clear and unmistakable.

Here is the Forbes’ opinion piece with my comments interspersed:

The sovereign debt crisis now threatening Europe, as well as major American states and cities, discloses the sheer incompetence of a political class that has over-promised, under-delivered and squandered vast amounts of their citizens’ wealth.

Guido here: Right there from the get go I have to take exception. Politics, and electoral politics in particular, can only be manipulative thus expedient and self serving. It cannot be otherwise. The simple political dynamic requires that a politician must either convince or deceive people in order to acquire a base larger than his/her opponents. But in the particular case of the interaction of politics and the economy, no politician could  viably propose spending cuts or the termination of programs. Thus electoral politics will always and everywhere be devoted to increased spending because a case can always be made that change can be brought about without cutting any programs.

Greece, Ireland, Spain, Portugal, California, Illinois, Los Angeles and Chicago are simply the poster children for what happens when elected officials engage in reckless and irresponsible management of their economies, their banking system or their respective government’s public finances.

Guido here: if Mr. Kadlec were familiar with the variety of monetary system we currently employ in the West, he would realize that “mismanagement” of the system is built into the system as a necessity for the life of the system.

Greece’s debt stands at 144% of its gross domestic product, the highest in Europe. Ireland’s debt is 70% of GDP, due in large measure to the liabilities it assumed when it bailed out the Irish banking system. The just-announced European loan of 50 billion euros to Ireland is equal to nearly 50% of its GDP. Within the next year, Italy will have to borrow 20% of its GDP just to refinance its maturing debt.

California’s budget deficit has soared to $25 billion, or more than 25% of total spending. And, according to a recent study, the City of Chicago’s unfunded pension liabilities total $45 billion, or more than $40,000 per household.

Politicians may not be solely responsible for this fiscal mess. But they are responsible for using borrowed money to pay for current expenses until they had borrowed more than they now seem able to pay back. Furthermore, they agreed to generous pension plans without properly funding those future obligations. As a result, massive tax increases–or a renegotiation of those commitments–now seem unavoidable. Neither alternative is going to be very pleasant economically or politically.

Guido here: Politicians are absolutely and solely responsible for this crisis. It is the politicians that have allowed the banks to propose and impose this particular variety of monetary system. It is the politicians that then and now continually fail to inform themselves on the characteristics and ramifications of the use of one system over another. It is the politicians that have imposed this particular variety of monetary system on society unilaterally and arbitrarily. Finally, for the same reasons I outlined just above, it is the politicians that insist on curing any political or economic crisis with excess spending and excess debt.

Prior to the euro, the political class in Europe could cover up its incompetence through a devaluation of the country currency in question. The ensuing inflation reduced the real value of the debt, providing elected officials and their economic advisors a face-saving way to force lenders to take a “haircut” on the value of their government bonds.

But with the euro, devaluation is off the table, and capital markets are beginning to bring the political class–and the supporters of big government–to account. In fact, capital markets were further empowered to check government excess by an agreement among European leaders that after 2013, bondholders will face a loss of principal in the event of a financial rescue of a European state. Lenders, as well as taxpayers, will be at risk from wasteful government spending.

Guido here: devaluation of the Euro is alive and well. Mr. Kadlec is either not familiar with the concept of Floating Exchange Rates or he does not understand it. But the Euro has been grossly and steadily devalued against a bunch of other things. What Mr. Kadlec intends to say here, is that being members of the Euro monetary system, European countries cannot devalue “against each other”. For a graphic representation of devaluation, check my charts (link at right) on page 4, 5 and 6.

In the meantime, however, the European strategy of enabling more borrowing while imposing austerity plans, including higher tax rates, on overly leveraged countries may prove counterproductive. Increasing tax rates slows growth, reducing GDP, employment and the tax base necessary to service the debt.

A shrinking economy and rising unemployment also increase the demand for higher government spending to support failing businesses and the unemployed. Moreover, lenders are already demanding higher interest rates, increasing the cost of refinancing past debts, which are now coming due.

At some point, there is a risk that one or more European countries may be unable to avoid a de facto, if not de jure default on their debt, requiring a complete restructuring. And that creates the risk that the European Central Bank will be forced to bail out the political class by buying that country’s sovereign debt and devaluing the euro–hence the current weakness of the European currency.

Guido here: Correction. Corrections aplenty. Higher government spending is the de-facto natural inclination of government whether the economy is doing well or not. Why else would anyone choose to adopt a Debt Based Fiat Monetary System? Hence the reason that, for example, since 1980 in the USA, Federal debt increased well over 1000% but GDP barely doubled. Besides; we are already bailing out the political class as we are bailing out the banks quite successfully too for now I might add.

In the U.S. at least, the looming debt crisis among states and municipalities also reflects a lack of diligence on the part of the citizenry. This can be attributed in part to a naïve assumption by the electorate that those in government, freed from the profit motive, could be trusted to do what was “right” for the community as a whole.

Guido here: ooooohhh so wrong. The debt crisis is the result of government deliberately debasing the currency. When interest rates move inexhorably from the top left to the bottom right, individuals are put in a position whereby if they do not spend they stand to loose all their savings. When government constantly and repeatedly lowers interest rates and regularly spends in excess of what the economy could sustain, the individual cannot do otherwise but spend because saving makes no sense.

Instead, what we now can see is that elected officials, following a power motive, can be as greedy and irresponsible as anyone in the private sector. In many cases, officials from both parties have been captured by powerful interests, including public sector unions and recipients of transfer payments. As a consequence, they have willfully committed current and future taxpayer money to benefit those with political power at the expense of the community as a whole.

Guido here: yeah. That’s the political dynamic in an electoral context. In an ideal world, it is the degree of fiduciary duty the higher echelons of government are willing to extend to society that could make the difference. But, again. The electoral politics dynamic pretty much precludes that.

One lesson is that to live in liberty requires an elevated level of diligence, oversight and skepticism of our elected officials. Taxpayers and financial market regulators need to insist on more honest accounting and disclosure of the true costs of the government programs in general, and government employee pensions and benefits in particular.

Guido here: Indeed. Liberty does require diligence and, I might add, sacrifice. That and pundits that can inform themselves.

The sovereign debt crisis now encircling Europe may well prove to be a preview of what lies ahead for the political class in the U.S. Like their European counterparts, they may be participants in an end-game in which capital markets force a reassessment of debt-financed government spending, especially on transfer payments, government pensions and wealth-destroying investments in bridges to nowhere, green energy and other government boondoggles with negative rates of return.

Charles W. Kadlec is an author and the founder of the Community of Liberty. He can be reached at


November 23, 2010

Do not give up your sovereignty. More to the point DO NOT GIVE UP YOUR PRODUCTIVE ASSETS!!

At this particular junction, the choice is limited and very well defined.

Either you accept the bailout and ensure that a bunch of bankers are made whole whilst the rest of the population alone shoulders the costs of this debacle.

Or you default and ensure that banks’ bond holders too shoulder the cost of this debacle.

There is pain and hardship in store whatever we do. The least we can do is ensure that bank bondholders share with everyone.

… in an investor note this weekend, Société Générale in Paris, which helps sell Irish sovereign bonds for the government, said there were calls from around Europe for Ireland to stump up “collateral” in return for its bailout loans.

Follow Iceland’s example. Let the banks fail.

You, the Irish people, were our only and last hope against the Lisbon Treaty. Make your stand now against the banks. Let the banks fail.

For those of you that fear that failing banks will result in lost savings and pensions, here is the skinny.

Whatever happens next, social expenditure will be curtailed if not, in some cases, discontinued entirely. Your pension is already compromised.

With regards to savings, whatever savings there may be, bondholders’ capital is largely sufficient to make those up. That is how the dynamic should evolve as contemplated by law. Savers are first in line to be paid back in bankruptcy. Follow bond holders, followed by second lien bond holders and so on and so forth till the shareholders. Shareholders are the first to be wiped out. Bondholders ans savers are last. As was the case for Lehman Brothers, Western banks today have largely sufficient bondholder capital to cover most bankruptcies. Thus savers are covered.

Let the banks fail. Stop fascism in its tracks. We are hurtling towards a global war and you and me will pay the price whilst a select bunch of bank bondholders will sit back and reap the profits.

Let the banks fail.

Is it not enough that during this crisis that has variously been described as the deepest and the most severe since the Great Depression of the 30s, banks have been distributing the richest and most eye popping bonuses in history??

Let the banks fail.

And by the way. We’re only talking here about a handful of banks. It is always the usual suspects. Banks have failed before in history and the world kept turning. Let them fail and force banks to share in the hardship.