Saturday, 3 March 2012

Ponzi Capitalism - Is the Truth, the Truth? A Post from the Past (29/01/09)

"Interest rates are losing their potency to aid the economy" - Jennifer Ryan (Bloomberg).

"Government spending has converted a private sector problem into a public sector financing problem" - Satyajit Das.

"The Treasury has decided to turn itself, in effect, into a catastrophe insurer" - the Economist.

"This is undeniably grim. Two or three quarters more like this and you're talking about depression, not recession" - Stewart Robinson (Aviva Investors).

"Britain is facing the deepest recession of any big industrialised economy, the International Monetary Fund signalled on Wednesday, as it said that the UK economy would shrink 2.8% this year... and the world economy will suffer its worst performance for more than 60 years" - Financial Times.

"... a once-in-half-a-century, probably once-in-a-century type of event" - Alan Greenspan.

"We are building the foundation stones of a recovery plan" - Gordon Brown.

Look here, Slack Jaw, as a primary architect of the Permanent Depression, should you not have considered the impacts of your economic policies just a shade earlier?

And check out their optimism.

Slack Jaw, Jack Straw, Mandy and Darling don't have a recovery plan.
Slack Jaw et al don't even have the foundation stones available to reconstruct their hyperreal recovery programme.
For Slack Jaw is still building the very stones themselves.

Still, and here is where the unintended consequences of a downturn might work in his favour, there are masses of unemployed Polish construction workers willing to be paid less than the minimum wage to create these foundations of an eventual pseudo-recovery.

The International Labour Organisation envisage that between 18 and 30 million jobs will be lost worldwide if this is merely a Recession.
If, the more likely prognosis by some distance, it is a Depression, then we are looking at over 50 million losing their jobs globally.
That would be normal people rather than bankers, of course...

One of the most entertaining aspects of the Recession/ Depression/ Permanent Depression triptych of Real Probabilities, is the disappearance of publicly available information.
It morphs, in mysterious circumstances, into publicly available disinformation.
They are dissing us as well as robbing us blind.

Government data and statistics have been manipulated in both the US and Britain over the last year at highly disturbing levels. The US election was one reason and Britain being the most fucked industrialised country another.
But this is not all...
Market prices are influenced by systemic tilting eg the banning of short selling of financial companies, in addition to all the everyday shenanigans like insider trading and cornering markets.
But this is not all, at all...
Mervyn King, another primary architect of this state of affairs who, astonishingly, is still in his job of governor of the Bank of England despite his Titanicesque stewardship of the central bank, says that there is another option on the poker table.
Namely, officials could buy up securities in Britain to fakely bolster the market hyperreality into a truly neohyperreal illusion of some magnitude.

We've got news for you...
According to our analytical data, this process is already underway.
Selective purchases have been undertaken to establish a fake floor in the Depression.

Perhaps these are the foundation stones Slack Jaw was wobbling on about?
Well, they are fake too.
Although we must restrict what we disclose in this place for proprietary reasons, the already fake level of the FTSE 100, for example, has been inflated by approximately #% utilising ####################################################
Although Slack Jaw and the Spooky Transylvanian-Looking One have allowed illicit and, in effect, public support for the stock market, their reconstruction will not withstand the next phase of this Depression.

"... it won't last long. The most probable mechanism for collapse will be the bond market. The combination of reappearing inflationary trends and a soaring budget deficit will cause "buyers' strikes" at Treasury bond auctions, sending interest rates through the roof. Indeed, the first such buyers' strike has already occurred, in Germany, where a €6 billion 10-year issue on January 7th was only 85% covered by bids. The rise in long term interest rates will choke off economic recovery while the resurgence of inflation caused by excessive monetary growth will force the Fed to reverse its policy and increase short term rates to some margin above inflation" - the Economist.

"The economy will at this point go into a second decline. The second decline will be concentrated in the real economy" - Martin Hutchison.

"[If overseas investors seek to sell their bonds], they will not only ruin the US economy but the value of their existing portfolio as well... At some point, government bonds will surely suffer a horrendous bear market" - Nick Carn (Odey hedge-fund).

"For the government to run simultaneously, monetary and fiscal policies that are breathtaking in their expansionism and expect to escape unscathed is a triumph of wishful thinking" - Martin Hutchison.

"Banks are stockpiling the cash or using it to purchase government bonds" - Satyajit Das.

"It is difficult not to marvel at the imagination that was implicit in this gargantuan insanity" - JK Galbraith (talking about the 'Great Depression').

We are living in remarkable financial times.
We should expect continued volatility.
We should expect a complete lack of incrementalism.
We should expect more instability.
We should expect extensive underground secrecy courtesy of Dark Pools and Basel II.

And Slack Jaw, with his zombied hand gestures, keeps telling us that this is a global problem and, in a sense, he is correct. But the roots of this crisis are in the free market economies, and it is they who are suffering, and will continue to suffer, the most (in the allegedly developed world, of course).
Iceland went bust, not Sweden.
Britain is the most recessed industrialised country, not France.
America is one fucked hyperpower, not China.

Meanwhile, half the world away, it is the Chinese, whose banking system has been the least demolished, who hold all the aces now, boyo...

At Davos this week, Wen Jiabao, quoting the Financial Times, "made scathing comments about "inappropriate macroeconomic policies" of some unnamed countries and the "unsustainable model of development characterised by prolonged low savings and high consumption". He attacked financial institutions' "blind pursuit of profit" and their "lack of self discipline.""

ObamaWorld offers us no respite - Tim Geithner is the new Treasury secretary.
As Geithner was part of the team that entirely misallocated the government handouts to date, we should expect equally informal financing from the man in the future.
No change. No hope, just more of the same...

Still, as Mr Berlusconi capably noted this week, Obama is black and not just tanned. The racist US machine will put up whoever is necessary in order to be able to resell the message.

Net-geners should expect Eric "Respect My Authority" Cartmen and Stewie Griffin as future presidential candidates.

"Attempts to regulate finance to make it safe often lead to dangers as clever financiers work around the rules" - the Economist.

"Ronald Cass, a former dean of Boston University School of Law, has argued in the Wall St Journal that Mr Madoff looks as if he broke plenty of laws that are already in force. His ability to mislead everyone around him "illustrates the limits of the law", not the need for more of it" - the Economist.

Run that pair of nonsenses by me again...
Clever (sic) financiers working around the rules are the foundation of this crisis.
So, the regulatory system has failed.
Although, no doubt, future "clever financiers" will also seek to circumvent any restrictions on their personally profitable psychopathy, their endeavours may be made considerably more awkward and less profitable.

Twist the incentives.

After proper global regulation has been put in place, reward the regulators with million pound performance-related bonuses while market analysts, traders, brokers, investment bankers, hedge-funders etc have their salaries capped at a level of, say, £75,000 per annum.
With the incentives adjusted, we will experience markets that are semi-sustainable within eco-systemic pressures, to allow time to be bought to deliver a system that is open source, sustainable and made social for shared gain, rather than one that is privatised, patented and made proprietary for personal gain.

According to Eichengreen and Gordo, financial crises are twice as common as prior to 1914. This has absolutely nothing to do with the demise of the Gold Standard.
Nothing at all...
Ever since this date, capitalism has been one giant Ponzi scheme, no different in template from the one perpetrated by Mr Madoff.

Shareholder capitalism regressively redistributes assets "up the pyramid" by means of the boom-and-bust matrix of operation.

Consider yourself in three parallel hyperrealities...

In the first, your are an insider at a previous Davos, you attend all the right gatherings, and you are aware that a bull market cycle is to be engendered with immediate effect. The markets progress and profits are made by those who were "in the scheme" from the beginning. The second tier of participants are also financially rewarded, and word of mouth combined with a general state of financial bewilderment, results in more and more people buying into this fake market boom. Obviously, in the end, the really gullible individuals are buying overpriced assets that are guaranteed to decline in value.

In the second hyperreality, you set up a dodgy pyramid selling scheme in Albania. Poor people become stable financially within months, while the rich acquire fleets of the black Mercedes that populate Tirana's streets. Once again, the pyramid selling scheme implodes at the moment it reaches the most gullible.

The third hyperreality is Bernard Madoff...

If anybody is able to point out any operational differences between these situations, I'll gladly listen.

Swiss banks understand the Real value of money.
If you are one of the independently wealthy and you wish to store your financial assets in Switzerland, you are paid a negative rate of interest as the Swiss bankers understand that, eventually, all cash will be worthless - wheelbarrows of Deutschmarks buy loaves of bread, remember?
And, as this crisis deepens, Osmium Capital Management is offering to price in Gold for any clients wishing to sidestep the risk of the symbols of money.

As for the banks, pay me my money down.
The risks associated with Fat Wallets are greater than those linked with Stuffed Mattresses.

Everything is fake.
But we're bored of the fake and we need something more fake for stimulation.

The next bubble is in bonds, baby...
... government bonds.

And, besides all this stuff and nonsense, what's this whole truth thing anyway?

Football Is Fixed - We Reconstruct An Order On The Other Side Of Chaos :)