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The Entire Economy Is a Ponzi Scheme
Bill Gross, Nouriel Roubini, Laurence Kotlikoff, Steve Keen, Michel Chossudovsky, the Wall Street Journal and many others say that our entire economy is a Ponzi scheme.
Former Reagan budget director David Stockman just agreed:
So did a top Russian con artist and mathematician.
Even the New York Times’ business page asked, “Was [the] whole economy a Ponzi scheme?”
In fact – as we’ve noted for 4 years (and here and here) – the banking system is entirely insolvent. And so are most countries. The whole notion of one country bailing out another country is a farce at this point. The whole system is insolvent.
As we noted last year:
Nobel economist Joe Stiglitz pointed out the Ponzi scheme nature of the whole bailout discussion:
Europe’s plan to lend money to Spain to heal some of its banks may not work because the government and the country’s lenders will in effect be propping each other up, Nobel Prize-winning economist Joseph Stiglitz said.
“The system … is the Spanish government bails out Spanish banks, and Spanish banks bail out the Spanish government,” Stiglitz said in an interview.
***
“It’s voodoo economics,” Stiglitz said in an interview on Friday, before the weekend deal to help Spain and its banks was sealed. “It is not going to work and it’s not working.”
[The same is true of every other nation.]
Credit Suisse’s William Porter writes:
“Portugal cannot rescue Greece, Spain cannot rescue Portugal, Italy cannot rescue Spain (as is surely about to become all too abundantly clear), France cannot rescue Italy, but Germany can rescue France.” Or, the credit of the EFSF/ESM, if called upon to provide funds in large size, either calls upon the credit of Germany, or fails; i.e, it seems to us that it probably cannot fund to the extent needed to save the credit of one (and probably imminently two) countries that had hitherto been considered “too big so save” without joint and several guarantees.***
As Nouriel Roubini wrote in February:
[For] problems of that magnitude, there simply are not enough resources—governmental or super-sovereign—to go around.
As Roubini wrote in February:
“We have decided to socialize the private losses of the banking system.
***
Roubini believes that further attempts at intervention have only increased the magnitude of the problems with sovereign debt. He says, “Now you have a bunch of super sovereigns— the IMF, the EU, the eurozone—bailing out these sovereigns.”
Essentially, the super-sovereigns underwrite sovereign debt—increasing the scale and concentrating the problems.
Roubini characterizes super-sovereign intervention as merely kicking the can down the road.
He says wryly: “There’s not going to be anyone coming from Mars or the moon to bail out the IMF or the Eurozone.” [Others have made the same point.]
But, despite the paper shuffling of debt at the national level—and at the level of supranational entities—reality ultimately intervenes: “So at some point you need restructuring. At some point you need the creditors of the banks to take a hit —otherwise you put all this debt on the balance sheet of government. And then you break the back of government—and then government is insolvent.”
Peak Demographics?
Indeed, population may be the biggest ponzi scheme of all. Specifically – as we’ve pointed out for years – rapidly-aging populations in the developed world will exert a big drag on the economy.
The Global Mail notes:
Half the world, including almost all the developed world, now is reproducing at below replacement level. A generation from now, according to United Nations Population Division projections, less than a quarter of the world’s women – most of them in Africa and south Asia – will be reproducing at above replacement rate. And those UN forecasts are probably on the high side, for reasons we’ll come to later.
And as the birth rate has plunged in developed nations, and the native-born population has begun to shrink and rapidly age, governments and business have sought to make up the numbers by importing people to prop up their economies. It’s all they know how to do, for our economic system is, at its base, a giant Ponzi scheme, dependent on ever more people producing and consuming ever more stuff.
But what happens if that all stops? What happens when you get an ageing, shrinking population that consumes less?
“The answer to that question is that we don’t know because it’s never happened before,” says Peter McDonald, professor of demography and director of the Australian Demographic and Social Research Institute at the Australian National University.
***
“We’re certainly operating a Ponzi scheme in Australia,” says Dr Bob Birrell, an economist and migration expert from Monash University.
“Our growth is predicated on extra numbers… [and] more of our activity is going into city building and people servicing, which do not directly produce many goods that can be traded in overseas markets.
***
Half the world is facing the problem of low fertility, and Australia, with its massive program of importing people, is providing an extreme example of one approach to the conundrum.
In a nutshell, the problem is this: lower fertility rates mean older, less innovative and productive workforces. More importantly to the Ponzi economic order, older, stable or declining populations consume less. So growth requires either importing people, or exporting stuff, or a combination of the two. Orthodox economics simply can’t cope otherwise.
Europe as a whole has been reproducing at well below replacement rate for close to 40 years. The last period for which UN data showed Europe’s total fertility rate above the replacement rate was 1970-75.
Europe’s contemporary demographics give new meaning to the descriptor ‘the old world’. The continent’s average person is over 40 now. By 2050, if things continue on trend, the average European will be 45.7. If one takes the UN’s “low variant” projection, he/she will be over 50 years of age.
And the low variant now looks closer to the mark. Fertility rates had actually rebounded a little over recent years, the result of a bit of “catch-up” after a shift over several previous decades in which women delayed child-bearing. But the European recession has set fertility rates plunging again.
The recession’s effects will likely linger for decades, in lower rates of earnings and savings, and also in reduced fertility.
***
Last year, Forbes magazine, that most reliable voice of the economic orthodoxy, laid the blame for Europe’s economic decline squarely on its citizens’ failure to reproduce in adequate numbers, in an article headlined What’s Really Behind Europe’s Decline? It’s The Birth Rates, Stupid.
The Forbes piece was unequivocal: the biggest threat to the European Union was its low fertility rate.
***
The piece ended with a dire warning that unless Club Med managed to induce people to have more babies, catastrophic economic consequences would flow for all of Europe and maybe the world.
***
As Thomas Sobotka, one of the authors of a 2011 study on population trends by the Vienna Institute of Demography, told the Guardian newspaper, massive cuts in social spending would only exacerbate the problem.
“This may prolong the fertility impact of the recent recession well beyond its end. It could lead to a double-dip fertility decline,” he said.
But when it comes to fertility declines, Asia takes the cake.
Japan, Singapore, South Korea, Taiwan, Macau, Hong Kong, and most importantly China currently all have fertility rates lower than those of Europe.
***
China’s and Korea’s are about to start falling, if they haven’t already.
“I’m pretty pessimistic about the east-Asian situation,” says McDonald. “I think those countries find it very difficult move in the right direction of supporting work and family, in particular, reducing work hours.
“We are now talking about some 30 per cent of Japanese women not getting married.”
“I saw a couple of people from the Japanese government give a paper recently, essentially accepting this as an inevitability – a low birth rate forever,” he says.
It’s the same all over Asia.
***
Hong Kong has a birth rate of 1.09, which is on track to see its population almost halve in a generation. Taiwan is at 1.10; China, 1.55; Thailand, 1.66; Vietnam, 1.89. Even Indonesia’s fertility is just above replacement rate, at 2.23, and is falling fast. Malaysia and the Philippines are still growing pretty quickly, as are the south-Asian countries, which may give them a competitive edge for a few decades – and a growing export industry of people. But it is not projected to last more than a few decades.
Let’s return to America. The United States also is reproducing at below replacement rate, and its birthrate has declined sharply in recent years.
***
The US birth rate not only fell to its lowest level ever in 2011, but the greatest decline was among immigrant women.
***
In the longer term, the world will have to adjust its economic system to cope with the novel concept of less. Fewer people, less consumption, lowered need for resources, energy, housing, roads, you name it.
Indeed, smart curmudgeons like Jeremy Granthan and Chris Martensen think that we have not only “peak” demographics, but also peak resources.
There’s HOPE
The above is admittedly depressing. But the reality is that there’s hope.
We can have a very bright future, indeed … if we switch from the status quo to something smarter. For example, see this and this.
For example, we can cut out the middlemen in the banking and political realms … and prosper.
And as we’ve previously noted about energy:
The current paradigm is that energy is produced expensively by governments or large corporations through gigantic projects using enormous amounts of money, materials and manpower. Because energy can only be produced by the big boys, we the people must bow our heads to the powers-that-be. We must pay a lot of our hard-earned money to buy electricity from them, and we can’t question the methods or results of their energy production.
Our life will become much better when we begin to understand that energy is all around us – as an ocean of electromagnetic forces and as a byproduct of other processes in the form of heat, pressure, etc. – and all we need do is learn how to harvest it.
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Left to nature, man would abandon statism when ants abandon ant colonies.
Nature laid a curse on mankind with the alpha-male social hierarchy.
That curse will still be there after a collapse.
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Salvation through waste! Great! go out and consume, consume, consume so we can make MOAR waste!
I recall struggling with this (lack of) logic when people were promoting veggie-oil. Just help spawn more McDonalds and we'll be saved! Perpetual motion machine!
And the EROEI is? (and how many people die in the process?- this is key, else we could start touting something like Soylent Green and it would look really good until...)
not necessarily salvation but it seems like a better solution
than some existing urban solutions which amount to dumping
the waste water and solids into a river or a harbor, or paying
to have the solids transported to a compost site or land fill.
See - table 4.5 for all that need to be known about the Irish economy
We left the Sterling peg in 1979.
There is a immediate Euro Soviet push to increase productivity & keep wages static
Wages as a % of GDP
Y1980 : 70.1%
Y2002 : 46.3%
Y2011 : 51.7%
"The wage share is determined by capital intensity, technology and institutional factors.
Globally there has been a general decline in the wage share, but Ireland’s sharp decline
followed by partial recovery is unique"
http://www.nerinstitute.net/download/pdf/qef_spring_2013_web.pdf
When there is no rational wage demand / credit fills the surplus hole created.
But how do you know what is rational demand when you have no rational signal ?
This causes malinvestment on a huge............. and in Ireland a Titanic scale.
There "could be" hope but it will not happen, so expect it all to burn.
Three reason as to what caused this crisis:
1. The Banking system is a fraud that allows the centralization of productivity, assets of all classes, and all social energies, commodities and all social values to be focused with a few powerful family organizations, to manipulate at will,
2. The low standards of education that teach a priori, humans what to believe but not how to think, and which leads to popularization controlled and irrational political systems that in turn, allow the lowest common denominators (LCD) of society to be elected and or surreptitiously empowered with governance,
3 As Bastiat stated, when there is profit in Fraud by making Law, most people want to get in on the action and thereby ignore reform, crime, theft and lack of integrity.
The Global "leadership" that are the stewards of todays' global economic collapse, will not step down nor will they admit their incompetence and corruption. They will steadfastly preside over the global economy all the way to the bottom. There will be little or no chance of changing the mindset that has generated this global holocaust. We have arrived at the Global Leadership Collapse. Law trumped Reason and Power has trumped Law. The global community is not prepared as they cannot think; they can only believe - and believe "anything", they will.
Totally predictable but unnecessary: http://tinyurl.com/cbsh5lh
Ho hum
Well, we must be near the end...all of the top banner typistas here have run out of new things to say, and are reduced to either refining their subscription pitch, or. in cases like George's, acting as news aggregators to repeat what others have to say. The air is heavy with the sense of forthcoming disaster...but no real solutions - just 'how to profit from the apocalypse.'
So, we're left to think for ourselves...and since it's always more fun to do that of a weekend, when there's time for debate...for your consideration...
women 'produce' children: until the arrival of the full 'test tube' culture which humanistic scientificism envisages as our future, that simple truth will dictate all our futures...no woman no cry. And if all over the world, women are stepping back from the role of childbearer, there has to be a reason(above n beyond Bill Gates mass sterilization programs!) I'm of a mind to believe that they've been sold a bill of goods about their 'happiness' quotient and the path to fulfillment that is at the heart of the real 'ponzi' game being played out on human kind.
But I'd prefer to get the take on that from the persons most directly concerned, before offering further opinions of my own...
Ladies? Sometimes 'hope' comes from the most unexpected direction...
Bill Gates' "sterilization program" is operating in all the major Western countries? Didn't know that!
From Dire Straits' Industrial Disease:
The watchdog's got rabies the foreman's got fleas
And everyone's concerned about Industrial Disease
There's panic on the switchboard tongues are ties in knots
Some come out in sympathy some come out in spots
Some blame the management some the employees
And everybody knows it's the Industrial Disease
Naw, it couldn't be The System!
Our entire existence is a Ponzi. We are overrunning our environment and we're doing everything we can to sidestep acknowledging this FACT (blaming this, blaming that, blaming some of the most stupid-assed shit one can imagine- self-proclaimed "intelligent" people doing so [because they can identify others being stupid it means that they are somehow intelligent!]).
Per-capita consumption levels are highest with those producing less. This is the result not of abortion, not of homosexuals, but of CONSUMERIST programming. TPTB stay on top by promoting this, that is why they want there to be less people (more people means that the available per-capita income is lower, Bill's PC can't be purchased unless someone has a bigger chunk of income. Those lambasting Bill are accomplices- if you use PCs you've helped this entire thing along (if you've helped with automation at ALL you've done so- I raise my hand).
All was humming right along until the additional demand from the likes of China and India put massive downward pressure on over-all per-capita income (income dropped in other countries and spread out to these countries, across a greater population base, as well as eating up some jobs via robotics). We've been erroneously driving down commodities when it is they that are the only real things that have meaningful value. THAT is what controls growth, and it is That which is under massive pressure to start popping up; and when it does there will then be NO doubt that growth is dead.
Other species can modify their population sizes based on the ability of the environment to support their population. (many/most are controlled through predation)
My first wife was from a HUGE family. Her mother was massively overburdened, owing primarily to a piece of shit father who was never around (not supportive, not a family man). I have an idea, though I cannot KNOW without actually being a mother, what it's like to bear and care for MANY children. And in THIS society? which has all the kids captured to want/consume, consume, consume? It's a MASSIVE battle. And then see that there's a "better life" working in the factory... (which was necessary to increase over-all consumption- industrialists WIN!)
Wife number 2 is from here:
http://craigandange.com/?p=1965
Though she too came from a big family (a vastly more stable one than wife #1) she had only two children. She did so because she saw/knew what things were like with overpopulation.
Not enough planet.
Plenty of planet, its just mismanaged like the distribution of rsources...
Is that you, Mustafa Mond? Brave New World, Bitchez!
In the roots of our languages, Gnosis or GN... that is, wisdom is found in the Feminine GyN...
and all man contain this feminine principle - within. ProD is the wheel and is contained in the feminine principle, it is both the womb and the garden - "All the World is but a Stage... " Bacon was brilliant and he sought Pallas Athena to shake her spear at ignorance...
your preferences defines your destiny...
Ho hum
The depiction of Phoebe in your referenced blog is actually Artemis the hunter and Dementer should be spelled Demeter the goddess of grains
Just to be accurate.
thank you...
Dementer is the Goddess of Fiat.
Demeter is the Goddess of rice krispys.
a,
when it was said "all the world is a stage..."
was it to mean a stage as in a performance platform or
a stage as in a level of accomplishment?
Yes,
and one more level, that is:
"As you Like It".
or,
the choice is yours... always 3 levels of thought = the stream of consciosuness.
Ho hum
Actually, he agreed a long time ago. Suddenly, this is no longer embargoed information in the MSM, probably because a book publisher is involved.
That is what this issue needs - a tangible work by a recognized and respected figure to create a reference for discussion and a touch stone for an organized movement.
But, but, but, what is about Paul Krugman?! PK must is be right because is has Nobel Prize on fireplace! What, is Nobel just for good intention, idiocy notwithstanding!?
Must be over rated because Obama has one too...
Boris is aware! Yassir Arafat, AlGore, Jimmah Cahatah, and Our Dear Leader all b receive so-called "Nobel" "Prize".
Boris can calculate time between Our Dear Leader's ASSUMPTION of his IMMACULATION and the NOBEL Prize Committee's "decision" and make own conclusion.
- Ned
Da, tovarich
duh ;-)
To attain appropriate level of complete idiocy is no small task, few is to receive such prize.
As if those in power would ever let any such organized movement get any sort of traction. They'd be labelled terrorists and dealt with accordingly.
Some day - maybe soon, maybe not so soon, maybe before to prevent collapse, or after collapse -idiot economist and greedy banker is be put in jail with sycophant politician and brain dead MSM reporter. Until then, ZH is terrorist and put fear in heart of statist and globalist because we is think critical.
Ah yes, the native populations are shrinking argument, therefore we need to import 3rd worlders.
The reason the natives are failing to reproduce couldn't have anything to do with liberal abortion policies could it?
Oh well, we could promote the homosexual agenda, but what would human society look like in 200 years.
Probably like an ant colony where those that are born are female slave clones of the queen, and male drones are only allowed for sperm stock then killed.
Someone really needs to make up their mind: population reduction or population growth - can't just have both...
Not being a puppet for any religious or statist ideology I see "abortion policies" and "homosexual agenda" as being of no significant impact (only the those that we emotionally charged [which is why I stay away from groups/cults]).
"Homosexuals," for the umpteenth time, have ALWAYS existed and have always existed in various species in a pretty uniformly consistent numbers/percentages. THEY CANNOT MULTIPLY! Homophobia dismissed.
As far as abortions go, while I will not be stupid enough to argue that they do not alter population projections, they are in no way occurring in numbers that can have any effect on the overall population dynamic. <blank> dismissed.
The entire arguments that YOU people present are PURELY based on hate and POOR LOGIC. The people that take these stands will bitch about "illegals" (ignorantly tossing anyone who isn't white into this category) swelling in their ranks- either you're wanting to increase population sizes or you're not! AND, you people also tend to complain about all the welfare queens having all those govt dependents, but you then scream if they have abortions.
Fucking stupid mother-fucking hypocrites.
GROWTH IS DEAD. QUIT CRYING LIKE BABIES AND PINNING THE BLAME ON "OTHERS!"
Or, as Frank Herbert (gotta be among top 5 sci-fi writers of all time) sketched out: http://www.abebooks.com/servlet/SearchResults?sts=t&tn=white+plague
Or Malevil, or ...
but you raise a good point that Taranto has been talking about: aborting Democrat babies kills their electoral chances (so to speak).
- Ned
{recall that anti-planned parenthood billboard about killing all of the black babies...}
{{so we now have Shumer's efforts to import undocumented democratics vs. letting the babies live and grow up to be democratics.}}