"Another Crisis Is Certain", Warns Former BOE Chief

Tyler Durden's picture

“The global economy risks becoming trapped in a low growth, low inflation, low interest rate equilibrium,” BOE governor Mark Carney warned, in a speech at the G20 summit in Shanghai. “For the past seven years, growth has serially disappointed—sometimes spectacularly,” he added.

That’s a bit of unwelcome “truthiness” from one of the world’s most powerful central bankers and it comes as his predecessor, the incomparable Mervyn King, warns that a new financial crisis is “certain.”

Below, find an excerpt from King’s new book as originally published by The Telegraph.

*  *  *

From "Why Throwing Money At Financial Panic Will Lead As Into A New Crisis," by Mervyn King

The past 20 years in the modern world were the best of times and the worst of times.

It was a tale of two epochs – in the first growth and stability, followed in the second by the worst banking crisis the industrialised world has ever witnessed. The largest banks in the biggest financial centres in the advanced world failed, triggering a worldwide collapse of confidence and bringing about the deepest recession since the 1930s. How did this happen? Was it a failure of individuals, institutions or ideas?

Unless we go back to the underlying causes we will never understand what happened and will be unable to prevent a repetition and help our economies truly recover.

In the spring of 2011, I was in Beijing to meet a senior Chinese central banker. Over dinner in the Diaoyutai State Guesthouse, where we had earlier played tennis, we talked about the lessons from history for the challenges we faced, the most important of which was how to resuscitate the world economy after the collapse of the western banking system in 2008.

Bearing in mind the apocryphal answer of Premier Chou Enlai to the question of what significance one should attach to the French Revolution (it was '“too soon to tell”), I asked my Chinese colleague what importance he now attached to the Industrial Revolution in Britain in the second half of the 18th century.

He thought hard. Then he replied: “We in China have learnt a great deal from the West about how competition and a market economy support industrialisation and create higher living standards. We want to emulate that.”

Then came the sting in the tail, as he continued: “But I don’t think you’ve quite got the hang of money and banking yet.”

His remark was the inspiration for this book.

Since the crisis, many have been tempted to play the game of deciding who was to blame for such a disastrous outcome.

But blaming individuals is counterproductive – it leads you to think that if just a few, or indeed many, of those people were punished then we would never experience a crisis again. If only it were that simple.

The crisis was a failure of a system, and the ideas that underpinned it, not of individual policymakers or bankers, incompetent and greedy though some of them undoubtedly were. There was a general misunderstanding of how the world economy worked.

There is more to life than finance, and more to finance than the events of 2008. The world economy today seems incapable of restoring the prosperity we took for granted before the crisis.

Many of the problems that seem to overwhelm us – poverty, rising inequality, crumbling infrastructure, ethnic tensions within and between countries – would all be eased by rates of growth that before the crisis seemed quite normal. But economic growth has fallen back across the developed world.

Some blame this on a slowing of innovation and productivity as the information revolution proves less transformative than earlier technological revolutions. I see the issue differently – the struggle to revive the world economy is the result of the disequilibrium that led to the crisis itself.

Before the crisis, spending continued at unsustainably high levels in the United States, United Kingdom and some other countries in Europe, and at unsustainably low levels in Germany and China.

That created an imbalance within those countries, with spending either too high or too low relative to current and prospective incomes. And the imbalance between countries – large trade surpluses and deficits – grew. These developments were not irrational, but were the consequence of people struggling to behave rationally in a world of radical uncertainty, part and parcel of a market economy.

All this added up to a disequilibrium within and between major economies. There was neither internal nor external balance.

From the mid-1990s, international meetings settled into a pattern in which European officials would berate the United States for saving so little, American officials would lambast Europeans for failing to understand the need for a change in trade balances, and Japanese officials would remain knowingly silent. Chinese officials would report the latest historically high growth rate. But there seemed little understanding of how all these factors fitted together.

The disequilibrium in the world economy became increasingly serious. Real interest rates were distorted well below the likely expected return on capital investment in an economy growing at its normal rate, encouraging investment in areas where demand was subsequently revealed to be unsustainably high.

Real exchange rates were distorted, so creating unsustainable trade deficits and surpluses, along with a flow of capital from countries where returns on investment were high to countries where they were low. Bad investments were made – in housing in the US and some countries in Europe, in commercial property, such as shopping centres, in the UK, in construction in China and in the export sector in Germany.

The most obvious symptom of the current disequilibrium is the extraordinarily low level of interest rates which, since the crisis, have fallen further.

The consequences have been further rises in asset prices and a desperate search for yield as investors, from individuals to insurance companies, realise that the current return on their investments is inadequate to support their spending needs. Central banks are trapped into a policy of low interest rates because of the continuing belief that the solution to weak demand is further monetary stimulus.

They are in a prisoner’s dilemma: if any one of them were to raise interest rates, they would risk a slowing of growth and possibly another downturn.

If real interest rates remain close to zero, the disequilibrium in spending and saving will continue and the ultimate adjustment to a new equilibrium will be all the more painful. If real interest rates start to move back to more normal levels, markets will reassess their view of the future and asset prices could fall sharply. Neither prospect suggests a smooth and gradual return to a stable path for the economy. Further turbulence in the world economy, and quite possibly another crisis, are to be expected.

The epicentre of the next financial earthquake is as hard to predict as a geological earthquake. It is unlikely to be among banks in New York or London, where the aftershocks of 2008 have led to efforts to improve the resilience of the financial system.

But there are many places where the underlying forces of the disequilibrium in their economies could lead to cracks in the surface – emerging markets that have increased indebtedness, the euro area with its fault lines, China with a financial sector facing large losses, and the middle and near east with a rise in political tensions.

Since the end of the immediate banking crisis in 2009, recovery has been anaemic at best. By late 2015, the world recovery had been slower than predicted by policymakers, and central banks had postponed the inevitable rise in interest rates for longer than had seemed either possible or likely.

There was a continuing shortfall of demand and output from their pre-crisis trend path of close to 15pc. Stagnation – in the sense of output remaining persistently below its previously anticipated path – had once again become synonymous with the word capitalism. Lost output and employment of such magnitude has revealed the true cost of the crisis and shaken confidence in our understanding of how economies behave. How might we restore growth, and what could happen if we don’t?

Many countries can now see that they have taken monetary policy as far as it can go. The weakness of demand across the world means that many, if not most, countries can credibly say that if only the rest of the world were growing normally then they would be in reasonable shape. But since it isn’t, they aren’t.

So with interest rates close to zero, and fiscal policy constrained by high government debt, the objective of economic policy in a growing number of countries is to lower the exchange rate.

In countries as far apart as New Zealand, Australia, Japan, France and Italy, central banks and governments are becoming more and more strident in their determination to talk the exchange rate down. Competitive depreciation is a zero-sum game as countries try to “steal” demand from each other.

The experience of stubbornly weak growth around the world since the crisis has led to a new pessimism about the ability of market economies today to generate prosperity. One increasingly common view is that the long-term potential rate of economic growth has fallen. But the proposition that the era of great discoveries has come to an end because the major inventions, such as electricity and aeroplanes, have been made and humankind has plucked the low- hanging fruit is not convincing.

In areas such as information technology and biological research on genetics and stem cells we are living in a golden age of scientific discovery.

By definition, ideas that provide breakthroughs are impossible to predict, so it is too easy to fall into the trap of thinking that the future will generate fewer innovations than those we saw emerge in the past.

Over time, and with sufficient investment to support it, a move to a new equilibrium will enable economies to regain their pre-crisis path of productivity. To restore faith in capitalism will require bold action – to raise productivity, rebalance our economies, and reform our system of money and banking.

At present, the world’s finance ministers and central bank governors, well intentioned and hard working, meet regularly and issue communiqués rededicating themselves to achieving the objective of “strong, sustainable and balanced growth”.

Whatever can be said about the world recovery since the crisis, it has been neither strong, nor sustainable, nor balanced. There seems little political willingness to be bold, and so perhaps we should fear that the size of the ultimate adjustment will just go on getting bigger.

Dealing with the immediate symptoms of crises by taking short- term measures to maintain market confidence – usually by throwing large amounts of money at it – will only perpetuate the underlying disequilibrium.

Almost every financial crisis starts with the belief that the provision of more liquidity is the answer, only for time to reveal that beneath the surface are genuine problems of solvency.

*  *  *

King also says the following: "Without reform of the financial system, another crisis is certain, and the failure ... to tackle the disequilibrium in the world economy makes it likely that it will come sooner rather than later."

Why do central bankers always wait until after they've retired to tell the truth?

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lemontree2's picture

But I thought USA says EVERTHING is awsome

KesselRunin12Parsecs's picture

A Perpetual... NEVERENDING... series of 'crises' was destined to happen to the BOE when the jew Rothschild shystered control after the Battle of Waterloo in 1815... Not much else is different in the world even to this day... It's just a matter of who gets enslaved and who gets murdered...

 

It's NOT a coincidence that the War of 1812 (which, weirdly,  was fought after the 1st Bank of the United States chartered had expired), and the 2nd Bank of the United States (20 year Charter, starting in 1818), all fall within this timeframe...

 

It's neither a coincidence that the 2nd Bank of the United States Charted ended in 1838, (whereupon 2 assasination attempts were made on Andrew Jackson), & whereupon that failure, the US Civil War occurred, (& whereupon Lincoln was assasinated just before it's conclusion)...

 

It's just refreshing to know that jews like Rothschilds had nothing to do with this:

 

- or the fact that the US entered WWI directly after the establishment of the US FEDERAL RESERVE system, (barely AFTER Woodrow Wilson had promised to keep the US out of the war)

- or that the Balfour Declaration was crafted in this timeframe

- or the funding of Hitler & the Nazi war regime to start a 2nd World War by jew owned NY banks

- Or the United Nations, which followed up the Treaty of Versailles, & which, ushered in the State of Israel in 1947 upon the conclusion of WW2

- Or, the Kennedy assasination, Vietnam War, War on Terror, etc...

 

Yeah, just a bunch of TOTALLY UNRELATED historic happenings... Whereupon the Rothschild jews had ZERO to do with

greenskeeper carl's picture

There is no stopping another crisis from occuring. You can ay it has been inevitable since all currencies stopped being backed by anything. Even if thats not the case, its been inevitable since the 99/2000 downturn. Rather than letting people/entities go bankrupt, and letting mr market sort everything out, we doubled down with the housing bubble. Rather than letting bankruptcy clear out all the bad debt and insolvent institutions, the entire world tripled down by blowing a bubble in literally everything. Not much they will be able to do to reflate this one.

manofthenorth's picture

"At present, the world’s finance ministers and central bank governors, well intentioned and hard working, meet regularly and issue communiqués rededicating themselves to achieving the objective of “strong, sustainable and balanced growth”."

 

Well intentioned central bank governors !!!

 HA HA HA HA !

You have to be fucking kidding me !

Bunch of nonsense, dangerous mythology.

Aeneid's picture

Debt free money got Lincoln & Kennedy assinated!

The world needs to be slapped on side the head to knock some sense into it.

It looks like it's going to happen in the Middle East. But MSM isn't covering it. The MSM is concentrated on the "Circus" that is called the Presidential Primary/Election. Kiss our asses goodbye!

KnuckleDragger-X's picture

It's not another crisis, it's the same one on continuous loop....

Ham-bone's picture

The problem has been, still is, and will continue to be a system premised on infinite growth in a finite world...and its demographics that gave out before anything else.  The Fed's FFR, the BoJ, and CB's IR changes worldwide have been entirely correlated to the annual change in the US, Japanese, Chinese, EU, etc. working age total populations (the linked charts are really unambiguous on this point)...and slowing demographics in the US and worldwide will continue to push CB'ers hands and the not so invisible hands of "other organizations".

http://econimica.blogspot.com/2016/02/central-banking-for-dummies.html

and a closer look at the IR implicatons coming from US demographics...

http://econimica.blogspot.com/2016/02/fed-funds-rate-hike-cycle-is-complete.html

and the global view...

http://econimica.blogspot.com/2016/02/population-growth-and-consumption.html

manofthenorth's picture

Any rate of growth that continues in perpetuity is exponential, and exponential growth IS by its very irrefutable mathematical nature ABSOLUTELY unsustainable in the end.

These central planners know this and surely have a plan that accommodates this unavoidable truth.

I am quite certain that said plan leaves little room for the participation of very many of us peasants.

Hedge accordingly.

Ham-bone's picture

@ Man of the N...

I'm not sure it's a master plan or the entire lack of any plan?!?

Either way, I think the lack of discussion on the most obvious and clear issue affecting growth (slowing population growth) is telling.  CB actions against this are simply ludicrous.  ZH won't touch it and nor will any of the offcial or established information outlets.  This very visible and most impactul change is somehow off limits.  Why we aren't asking why nations like Japan, China, S. Korea, Taiwan, most of the EU with their youngest populations (<10yr/old populations) down up to  50% over more than a half century...this is a massive depopulation coming through and no amount of lower interest rates and credit can make up for the declining demand. 

It's always more telling what the press and blogosphere won't talk about than what they do.

teslaberry's picture

i disagree. 

 

when you look at dominant species in nature, they all COMPETE to reproduce amongst themselves. 

 

one of the signature attributes of a dominant species is that the members of the species spend more time and effort comeptitng against one another than they do worrying about external threats because the species is dominant as a whole. 

 

so , even though mankind has plenty of external problems like bad weather etc....the reality is the our civilization thrives on competition. there is no real lie that infinite growth is 'possible'. everyone knows it isn't. but the reality is that we embrace a boom bust cycle that is the result of COMPETITION TO DOMINATE AND WIN THE RESOURCES THAT ARE AVAILABLE WHICH NECESSITATES GREAT LOSSES AMONGST A MAJORITY OF THE COMPETITORS. 

the comptitors in this case are generally speaaking 99.99 percent of people. and yes, even amongst the .01% they have their own comptition going on but are insulated from the general competition with the masses. 

 

that said, no one really believes infinite growth. they believe in COMPETING TO WIN AVAILABLE RESOURCES. 

 

that is not the problem so much as the dillema of existence in large social civilizations. they are by their nature MEAT GRINDERS OF HUMAN EFFORT. and through this effort suffering and pain , there is born the fruit for both the current winners to enjoy, as well as the discoveries and culture for future generattions to benefit from. 

example ; alan turing died penniless and ruined, but our society enjoys the fruits of his effforts 50 years ago. 

that is the dillema. it's not about infinited growth. same as with money. competitive devaluations are not premised on any false assumptions of infinite growth. they are premised on the NEED TO COMPETE WITH OTHER CURRENCIES. IF YOU DON'T COMPETE YOU LOSE.

Soul Glow's picture

Economies are always - ALWAYS - led to ruin by people who wish to control them.  If a new economy runs a surplus, it is looted a few generations down the road.  The treasury gets spent, the gold coins shved down in spec, and the taxes raised on the working classes.

It happens everytime.  There are many instances of Kings and governments trying to reign in money, to avoid deflation and it led to a drop in wages ie deflation and the economy got hurt.  There are many instances of coinage being shaved down, by spending increasing, and it led to inflation.  

For every boom there is a bust.  It's damn near human behavior when considered on a larger scale.  Someone in control will fuck something up, and the people under him/her will go along with the promises.

KnuckleDragger-X's picture

Mankind has done it since civilization began, and nobody wants to change a tried and true script. Lather, rinse, repeat......

fxpmtrader's picture

Problem is not the system - problem are these relentless dumb and ignorant animals.

Since Stone age - nothing changed.

Neither among the ever greedy 0.01% nor among the relentless ignorant 99.99% which let it happen.

In the end it's all waste of time.

As I suppose 99% of these animals can never ever get enough.

As it would be the same as begging a hyeana to become mother Theresa.

It will never ever happen, as long as these animals have something to say here.

boattrash's picture

"The crisis was a failure of a system, and the ideas that underpinned it, not of individual policymakers or bankers, incompetent and greedy though some of them undoubtedly were."

The standard CYA Disclaimer...

Not our fault.

fxpmtrader's picture

The standard HUMAN excuse ...

Not my/our fault.

THE DORK OF CORK's picture

https://m.youtube.com/watch?v=141pMf9aVcE

 

Latvian land grabbing .

The central bank apparatus drains local jurisdictions of their money supply.....

People must then follow the money (in London)...

 

Net migration is now approaching nearly half of British births ( much of these births is inflated by past migrants)

Despite massive growth in British population - energy consumption is declining.

Energy consumption decline per capita is catastrophic .

 

This is because real goods must be transported vast distances 

A more local production / consumption economy is impossible in such a usurious economic ecosystem

Bioscale's picture

Moneychangers with zionists have fucked the world economy hard and now have started to spread some non-equilibrium bullshit on those fake GX meetings.

Wonder they haven't blamed Russians yet.

THE DORK OF CORK's picture

Latvia has become much like 19th century Ireland.
Including absentee landlords and "handy" farmers clamouring for export share.
Demographics is catastrophic of course.
Resident Latvians must fly back and forth to somehow balance their working , family and degraded spiritual life.
Watch the video above - it makes the darkly absurd capitalistic dynamics very clear.

To Hell In A Handbasket's picture

Capital is the key and control of the central bank by the citizens via the state, by elected and accountable politcians is the key. Once money printing and monetary policy is in the hands of an elite kabal, then what you see is what you get. The Latvian land grabbing is systematic across the 3rd and developing world, aided and abetted by the helpful IMF and World Bank. 

nmewn's picture

"Why do Keynesian central bankers always wait until after they've retired to tell the truth?"

Fixed!

THE DORK OF CORK's picture

https://m.youtube.com/watch?v=b7pZ8ro6raw

 

 

 

RUNWAY, Documentary about Latvians in London

ThroxxOfVron's picture

"At present, the world’s finance ministers and central bank governors, well intentioned and hard working, meet regularly and issue communiqués rededicating themselves to achieving the objective of “strong, sustainable and balanced growth”. "

'Well intentioned' aside; -how exactly is meeting regularly and issuing communiques to one another considered hard work?

 

"In the spring of 2011, I was in Beijing to meet a senior Chinese central banker. Over dinner in the Diaoyutai State Guesthouse, where we had earlier played tennis, we talked about the lessons from history for the challenges we faced, the most important of which was how to resuscitate the world economy after the collapse of the western banking system in 2008."

A nice game of tennis followed by a sumptuous gourmet dinner in luxurious party apparatchik hall...

Sounds like the Central Bankers are working themselves to death trying to 'resusitate' the economies that they and their fellow oh-so-well intentioned Debt Merchants and Usurers and Securitized 'dog-crap' Peddlers have destroyed.

 

" I asked my Chinese colleague what importance he now attached to the Industrial Revolution in Britain in the second half of the 18th century."

Thinking hard about today's crisis and how to solve it?

-By flying to the other side of the world for tennis, dinner -and to ask the Chinese vacation hosts their absolutely vital opinions on 18th century British industrialization and associated industrial labor suppression?

 

Somebody needs to shoot this tone-deaf self-absorbed elitist apologist globalist bureaucrat asshole.  In the face.  Thrice.

tarabel's picture

 

 

I very much appreciate your pitiless appraisal of the hypocrisy shown by this guy and his utter cluelessness as to what his real function in life was supposed to be-- or what hard work actually entails.

However, I remain opposed to the idea of shooting bankers on the grounds that this is far too merciful on them. One quick moment of alarm and then it is all over.

Far better to put them to a life of grinding manual labor under unpleasant conditions. With all other members of their families suffering right alongside.

It is not their life that you want to take but rather their sense of superiority and power. Rob them of that and they would far prefer a quick death.

wmbz's picture

"Almost every financial crisis starts with the belief that the provision of more liquidity is the answer, only for time to reveal that beneath the surface are genuine problems of solvency".

 

Really? No Shit? Dickhead!

These assholes that cause the fucking problems always at some point state the obvious, and try to distance themselves from it. Listen, some bad shit may/will happen, good thing a genius like me is here to warn you!

Two words...Fuck off!

Sandmann's picture

Central Banks work for Bankers.

Atomizer's picture

Perhaps, T minus 7 days. Read the conflicting stories. Quite funny. 

24 Feb/banks and European banking supervision

24 Feb/Simon M Potter: Money markets after liftoff - assessment to date and the road ahead

You cannot make this shit up. Counterbalancing deception to get caught in a mult international balancing act. Fucking unreal. 

 

Herdee's picture

Kinda like Greenspan telling everyone the truth about gold after he retired from the Fed.Just like his papers from years before when he was Chairman.What he's not saying or describing like King are the corrupt political and economic forces that they were exposed to or ordered to obey from the inner government within government.Until both really come out and tell the truth about what actually goes on ( like nobody knows already ),it seems like it is one big charade on behalf of NeoCons bent on bringing about endless war forever.

MoonSun's picture

In other words, central bankers are not sure if another technological breakthrough will arrive soon enough to fix the bureaucrats' money dope.

ThroxxOfVron's picture

It really meant that the Banksters are busy looting the world via globalist exploitation schemes associated with the use of targeted debt propigation leading to extreme mis-pricing of industrial energy production, the associated commodities complex -and human labor.

Of course human labor cannot compete with industrial energy; particularly when said industrial energy production is being propped/subsidized and diverted to localities where environmental damage is legally ignored -all while labor is being taxed at higher rates than industrial/corporate production and forced to pay for/absorb the environmental costs and other risks off-loaded by the corporate monopolies.

Atomizer's picture

Cough...yes. They created AI to rapidly.

The robots will end up repurchasing inventory under asset deprecation and redeployment to shift capital allocation to the second phase of failure. Let's try this fuck up concept again. This time, we need to penetrate advertisers to sell the muppets the idea.  

ThroxxOfVron's picture

IMHO, the Banksters DO NOT want to return to any sort of 'sound money' regime aka Gold Standard.

NOT because it precludes their Fractional Reserve Banking, Usury, Debt/Derivatives Pyramiding, etc..; but, because they realize that the whole world WILL/CAN NOT come along.  There isn't enough Gold/Silver for a global re-monetization.

Some would be made insanely wealthy and some would be utterly impobverished/bankrupted merely by the distribution of the known holdings of Gold.  

One might just as well wonder if it is any more reasoned that the Warlords/Emirs of Arabia deserve to receive the riches of the world for pumping crude out of their otherwise worthless deserts...

People who just watched their governments sell off decades/centuries of Gold holdings are NOT going to accept an arbitrary re-denomination of their wealth against a global monetization scheme -and the Central Bankers know this.

ANYONE that re-monetizes but cannot control capital flows stringently is going to see their currency rapidly siphoned away and debased ala the French queing up to the US Gold exchange window in 1971 and busting Bucky..

Sandmann's picture

Mervyn King was not a banker. Like Greenspan and Bernanke he was an economist. I doubt the disaster of the Blair-Brown Years would have occurred had Lord Cromer been Governor. Mervyn King so wanted the job after Eddie George went and lacked the hard edge to challenge the Labour Government as Lord Cromer had done or even as Jens Weidmann does inn Germany. King "went along to get along"

yogibear's picture

Central banksters are using failed models.

Maybe the H1b Indians can replace the central banksters with software.

THE DORK OF CORK's picture

Latvian capitalist retard or merely poor euro propaganda. (See bid below)

Notice the subsidized production rather then subsidized consumption via a compensated price......

Being from Cork - I know about beer.

Without punters having company tokens in their pockets they will not drink.........or in the Latvians case especially - reproduce..

 

https://m.youtube.com/watch?v=LsRou0JY1eA

Pareto's picture

CBs have only one course of action, IMO.  Buy all the debt with freshly printed FRNs, or, a $1T debt coin (Krugman).  Whatever.

Bottom line result - the price of "stuff" is going up.  Everything.  Everything except, of course, wages.

My choice de jour?

Land

Productive Assets

Materials

PMs

Since interest real interest rates are less than zero, and nominal rates in many places less than zero - means that it is no longer about return on capital, rather, it is about return OF capital.  Or simply, capital preservation.

I think the biggest challenge is finding convertibility.  The louder the war on cash gets, the more difficult, or perhaps meaningless it becomes to actually keep cash.  Not that it matters much since increasing erosion of wealth is occurring right off remittances to government - increasing payroll and income tax.

Its getting goofy - because its painfully obvious, but, nobody seems to be talking about it - confiscation of all forms of property rates are rising even in the face of a recession/depression.

I had no idea that i would be spending half my life trying to figure out what to do with what little shit that I have - to keep it safe from the intrusive reach of government.  If you wanted to, you could make it a full time occupation - and yet that still wouldn't be enough - would it.

Still 90% of people really haven't connected the dots yet - least not in my world.  Its still Bernie, Trump, Trudeau full steam ahead.

Best to just keep to oneself.  Lay low.  And whisper to yourself while quietly gathering your shit, "I was never here."

Pumpkin's picture

Is he trying to act surprised or something?

THE DORK OF CORK's picture

Latvia is the most extreme euro drone.
A farcical and dead inside place. , A mirror of Ireland.
The stark nature of its production and lack of consumption is hyperbolic .
In this video from last year we can see the real reason for Russian devaluation .
To direct the production of the euro colonies into deficit hungry London and the German production zone which supplies it with more advanced secondary goods.

https://m.youtube.com/watch?v=otR6YLDGHbk

Soul Glow's picture

Great video.  My favorite part was when a finance minister said, "China loves our products.  They recently took over one of our dairies."

tarabel's picture

 

 

A mirror of Ireland? Then what are you complaining about?

Take care of your own "farcical and dead inside place" and let the Latvians handle theirs in any way they prefer.

The world has plenty of problems and I would hardly rate the status of the Latvian economy as one of the primary ones.

Unless of course I was a Latvian. Even then, I would be old enough to remember what a truly dead inside place Latvia was when it was a slave state under the heel of the Soviets.

Batman11's picture

By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required to purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic over-supply the Capitalist system could produce. 

They knew that if wealth concentrated too much there would not be enough demand.

2014 – “85 richest people as wealthy as poorest half of the world”

2016– “Richest 62 people as wealthy as half of world's population”

Extrapolating into the near future – one person owns everything.

Doing the maths and assuming a straight line .......

5.4 years until one person is as wealthy as poorest half of the world

Why isn't there any demand?

(Come on students this is really easy).

Amun's picture

Back to basics - Surplus Value

and why is it that Surplus Value

is created by the 99% at the bottom

but is appropriated by the 62 richest people at the top?

smacker's picture

King is just projecting blame for the financial crises away from himself.

He had plenty of opportunities to restrain borrowing levels in the UK back in 2003 when house prices and personal borrowing went up thru the roof. He could easily have demanded Gordoom Brown gave the OK to raise rates but he didn't.

[Gordoom Brown at least could claim stupidity for his part in the crises because he is a gold-plated marxist nutter. Not so King]

King was further implicated in the huge Libor scandal. The notion that the BoE governor had no knowledge of it is risible.

King spent his time as BoE governor protecting his own personal interests. Now he's retired, he's telling us what went wrong.

Gee thanks.

johnnycanuck's picture

Virtually all analysis of what went wrong and how we got where we are is  focused on the premise of mistakes being made.  What if it isn't due to mistakes but a very clever and well orchestrated plan instead?  I think a viable argument can be made that it isn't so much about mistakes and more about ownership and control. 

 

Consider the IMF, World bank, Economic Hitman strategy and the history of Britain for example. Loading countries and people up with debt makes them easy prey for those who have benefited from each crash and can manipulate virtually any market so can they make money going up or down.  That has created some considerable war chests for the top of the money class to wage war on the rest and pillage their assets when they are beat down.

 

In Britain close to 65% of the real estate belongs to the same families that owned it 300 years ago.  Now that took some manuevering to maintain. (You thought Braveheart was just another movie?) Like Thatherism for example.  While the Thatcherites were busy righting Britain's financial ship on the strength of North Sea oil discoveries, they loudly touted austerity as their key to success and even went so far as to set about returning most of Public owned social housing to private hands.  Those 300 families in other words and Thatcher was marketed as the hero who saved jolly old England. As a result  of her gov'ts actions the Aristocracy threw the subjects a few more farthings so they could pay $30 a day to park their car in London or put  it in the gas meter. 

 

In the US the downward slide began with the many costs resulting from the Vietnam war, which included the beginings of the Army of Lobbyists. That was started by a disgruntled member of Nixon's inner circle who broke away to push the agenda of the far right.  Apparently he believed Nixon was too liberal.

 

Leaving the question are we here as a result of mistakes or by design? 

 

 

 

 

 

Amun's picture

"The past 20 years in the modern world were the best of times and the worst of times."

 

This is where you can stop reading the rest of the blurb about the phantasy world Mr. King lived in. 

Even "the economists" should know that economic and financial crisis of late 1980s - early 1990s https://www.fdic.gov/bank/historical/history/3_85.pdf

was put to a halt "20 years" ago by destroing economies of the Eastern block and their satelies in developing world. For them this "epochs of growth and stability" was nothing but misery and mass extermination on the scale unprecendented in the human history, and it came for the West exactly at expense of those in the East. Just go and ask farmers in Tanzania or doctors in Lybia.

The destruction of those economies provided a new and  enormous market for Western Imperialism , which was back then in in severe decline due to a systemic problem inherent and unseparable from the very nature of imperialist mode of production - "The tendency for the rate of profit to fall" and a constant, therefore, need for ever new markets, be it internal (privatising healthcare, education, destroying extended families, promoting GLBT) or external - "full spectrum military dominance" wars arounfd the world.

The incapability of the system to survive and its insatiable appetite for the world destruction in order to self-maintain a few at the top is clearly demonstrated by the fact that this enormous expansionist opportunity, opening of the half of another Earth to exploit, lasted for the system and kept it afloat for less (!) than 20 years.

Elimination of the East, as a sideeffect, gave the West the excuse to also eliminate all the stops on the level of exploitation of its own domestic populations (yes, folks, you had a good life in the 50s-70s because of the EAST and not inspite of it, and those times are over, forever, get used to that shitty little life on a $1 a day) and on destroying the standards of living in its own countries in the West, the rights and privileges  that were hard fought for for the last 100 years.

Financial Imperialism lost its last gap-stops with the abolition of Glass-Steagall Act. That abolition allowed financial imperialism to achieve a rate of exploitation (economic robbery) in one single transaction on the scale that an industrial capitalist would not have achieved in his entire lifetime.

 

Oh, and if you still think that Mr. King or any other "formally trained economist" will save the world, you know nothing about the absolute intellectual genocide in Economic schools and Faculties at the4 Universities around the "civilized" world.


 

To Infinity And Beyond's picture

Another fucktard spouting surprise and bewilderment at the current pile of shit they themselves created. It makes no sense to them that the lemmings just won't go back to spending like there's no tomorrow. History has given us great insight how these things end. Guillotines have regularly played a large part when things finally get corrected.

honestann's picture

This failure, and most other failures in human history are caused by humans not distinguishing what is real from fiction (what exists from what does not exist).

The following are fictions... they do not (and cannot) exist:

law
legal
state
nation
official
authority
corporation
government

The above is just the tip of the iceberg.  The number of fictions that most humans assume are real is huge.  Ultimately, the reason humans are a failed species is because humans don't have a clue how to operate their own consciousness.  And they don't seem to care... though the predators-that-be spend a fair amount of time and effort to make sure the masses don't care, or learn how to distinguish what is real versus fiction.

Fundamentally, only two ways exist for humans to interact:

#1:  ETERNAL PEACE and PROGRESS.
Each and every one of the 7-billion individuals on planet earth make their own choices, take their own actions, and enjoy/bare/suffer the consequences of those actions.

#2:  ETERNAL WARFARE and DESTRUCTION.
Each and every one of the 7-billion individuals on planet earth attempt to force the other 7-billion individuals on planet earth to make choices for the other 7-billion, require and forbid actions for the other 7-billion, shift negative consequences of actions onto others, and shift positive consequences of actions onto themselves.

This exhausts the possibilities.

Because virtually all humans are fundamentally insane (and incredibly stupid), virtually all humans advocate the second.

Anyone who thinks about this a little has to shake their head in disgust!

How can any sane being want 7-billion enemies fighting against them?

Yet that's what most humans choose... over peace and a good life.

Humans are a failed species.

Humans are insane.