Guest Post: The Experiment Has Failed. Are You Ready?

Tyler Durden's picture

From Simon Black of Sovereign Man

The Experiment Has Failed. Are You Ready?

After about an hour’s worth of air traffic congestion delays around JFK airport, I finally departed New York City yesterday evening en route for Vilnius, Lithuania… one of my favorite inconspicuous corners of Europe.

The route took me through Helsinki, Finland for a brief connection, and I was on the ground long enough to witness something truly bizarre: a complete and utter lack of people.

I could practically count on two hands the number of passengers milling around the airport this morning during peak business hours… it was almost something out of a zombie movie.

Ordinarily I would have seen hundreds, thousands of people… and I have in the past as I’ve traversed this route many times before. And no, today was not a holiday.

Helsinki’s airport functions as a major transfer point, especially for European business travelers criss-crossing the continent or flying to Asia, which makes airport traffic an interesting proxy on the European economy (though not necessarily a reflection of Finland’s).

While a single example is not enough data to draw any significant conclusions, I mentally filed the observation as another snapshot of Europe’s deteriorating economic situation.

It reinforces what I observed here several months ago when I was last on the continent in April; it was as if a dark cloud was hanging overhead, and the general mood was absolutely sour. People seemed to be capitulating all hope and starting to make peace with the fact that their economic futures have been squandered by a stupid experiment.

Of course, I’m referring specifically to the ‘euro experiment’… however the euro is merely a symptom of a much larger experiment– that of fiat currency.

It wasn’t all that long ago that money was actually made of something scarce– a real asset that couldn’t be conjured at will by an appointed bureaucrat.

In time, money supplies grew to be controlled by governments and banking cartels in the form of worthless pieces of paper. Since then, it’s devolved further to strings of bits in a giant database; our money supply is nearly all digital.

As my friend Tim Price characterizes it, what passes as ‘money’ today is merely an abstraction of an abstraction of the real thing.

The euro experiment was merely a commingling of 17 different national fiat experiments… albeit a remarkably stupid one.

Under the normal fiat game, a country would at least have to stand on its own two feet and con(vince) the market that its particular brand of monopoly money was sound.

With the euro, even the trashiest economies in Europe were able to pass off Germany’s credibility as their own. And now, finally, after more than a decade, the market is calling that ridiculous bluff.

Spanish bond yields have risen to a euro-era record, well north of 7%. Italian bond yields are 6%. The talking heads on financial news are going bonkers… nobody can fathom these countries staying afloat with interest rates being so ‘high’. And they’re right.

What’s funny is that the 20-year average of Italian 10-year bond yields since 1993 is 5.9%. They’re currently priced at 6.06%. Italian bond yields aren’t spiking, they’re just reverting to the mean. The real spike hasn’t happened yet.

Italy is in such dismal shape that having to borrow funds at ‘average’ rates is going to push it into insolvency… the government can only limp along if it can borrow at absurdly low rates that don’t even keep pace with inflation.

Perhaps more than anything, this shows how truly broken the system has become… and what a colossal failure the experiment has been.

Of course, before things completely break down, they’ll resort to the same old tactics that bankrupt governments have relied on in the past–outright confiscation of wealth, capital controls, and financial repression.

It’s already happening across the continent, in fact.

In Greece, the government is helping itself to people’s savings at will, in their sole discretion… and forcing businesses to ‘prove’ the tax purity of their funds.

In Italy, the government has colluded with several banks (like BNI) to freeze customers out of their accounts with no warning or explanation.

ATM limits are being imposed at many banks across the continent, and Euro leaders are openly discussing more severe controls to stem potential capital flight.

The conclusion to draw from all of this is clear: finance the government, save the banks, screw the people. This reality, coming soon to a western civilization near you.

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Jack Sheet's picture

Is that where they dance naked and then attach themselves to an inflammable straw effigy?

ImnotPOTUS's picture

Was this visit during EuroCup game time? They might all have been in the Bar watching the paint dry in the 1-1 game.

You know which game I am talking about, right? Not the other 1-1 game.

Jack Sheet's picture

yeah - soccer is a great remedy for insomniacs

Mark123's picture

Rule #1 - Debt issued by banks that cannot be repaid must be absorbed by the population at large.

 

Rule #2 - The 99% that try to save for the future shall be stripped of their savings to keep government running (military, pork barrel and welfare)

 

marriedgeordie's picture

Yeah, screw IATA and DOT statistics registering passenger traffic increases - I was at HEL and it was empty, so Europe is finished. Good Lord, Tyler, hire an editor, you are losing credibility by posting everything that gets sent your way

TraderTimm's picture

I suggest anyone who has money in a large bank to put some of that somewhere else, either in the form of metals or other options. I suspect that when the bad news finally hits our shores in the form of a Eurodollar-breakup, things will get quite interesting, quickly.

I just don't trust the banks anymore - only keep the bare minimum to satisfy some monthly obligations, that's it.

poldark's picture

Tyler - do you ever sleep!

news printer's picture

Tyler it's EURO 2012 time, no wonder there is no people at the airport

Andy Lewis's picture

Whadda crocka chickenshit bullshit.  The problem is demand-killing austerity.  Neither fiscal nor monetary policy has any bearing on that.  We need a jobs policy.

WPA and CCC bitchez!!!!  FDR rides again.  Yee Haw!!!!!

Sudden Debt's picture

Never the less, their rates look mighty good on the 10yr and the country if full of minirals.
I've even been to heatHrow airpart where you had Terminals that where near empty for a moment. It's all in the scedules.
It also happend at HK airport once that it was like totally empty.
10 minutes later, they can be filled by thousands again.

Jack Sheet's picture

The new Willy Brandt international airport in Berlin is pretty empty too...

http://m.theatlanticcities.com/jobs-and-economy/2012/06/what-will-it-tak...

marriedgeordie's picture

that's quite unfortunate, that BER thing - i was hoping to land there on Wednesday, but no. TXL again for me, the Cold War era gateway to West Berlin

Paul451's picture

So, the airports are empty, huh? Do you think its because everything is coming to a grinding halt. A little late to the party, arent we?

First, the strip malls start closing; that was about 4 years ago. Then the main streets in Everytown, USA are just about empty unless its rush hour; that was about 3 years ago. Then gasoline hit $4+ a gallon and everyone stays home; more empty streets and comatose local businesses. Then, the restaurants and 'nightlife' joints start going empty and are only open three nights instead of five or six; that was 2 years ago. Last year everyone thought we had come out of it but very quickly realized that was total bullshit. This year? Everyone is sweating their job, supermarket prices are sky-high, and the unemployed have given up looking. Next year... I dont want to think about next year because there's no way in Hell it will be any better and I have every expectation it will be worse.

marriedgeordie's picture

nightlife is alive and very well here in newcastle

DutchRollMode's picture

Any zeroheads flying today? Lindbergh Field is packed. If anyone wants to enjoy a fizzy (perhaps Guiness) i'm flying to Dublin right now. if you want to join I'll be in Italy on Friday too and Greece for the next ten days after.

Cheers,
Dutch

HungrySeagull's picture

You mean KSTL? It would be packed because of the way the airlines stuff the planes through there. Hop hop hop hop... ugh.

I prefer direct.

I had a customer just an hour ago at the post office ran out of cash in the one envelope that happened to contained quite a bit of Lotto tickets and she reluctantly entered the gigantic bag under the arm (Purse) to dig out a fresh 10.

Lotto or Stamps? Lotto or Stamps?

Darn, no funds... now I have to dig into my medicine money.

I tell you this.

If the People stayed home and spent nothing, how is it possible to run a Country?

Nyet.

DutchRollMode's picture

Haven't pushed off yet and the captain just said the headwinds are stronger than normal from the east. Hopefully this old 757-200 can chug along in due pace though i dont have too mich hope. Hope is a thing some guy always pitched. Anways here's a toast to making my connection in Dulles with only 30 minutes.


We got rerouted.

Oh and not KSTL but San Diego.

marriedgeordie's picture

well, SAN is such a small airport, that it does not take too many people for it to feel crowded :)

TideFighter's picture

I went to the grocery store and didn't see hardly anybody. I think everyone stopped eating. We are all doomed. Wait a minute....it was 3 a.m.

HungrySeagull's picture

And that time Period has become a money pit.

I might go to a walmart at 3 am when it is super cool outside instead of burning up the car in the 130 degree day time heat. But always armed.

merizobeach's picture

Wow, it sounds like you already live in a Mad Max world.  And voluntarily, too, while the airports are stilll open!

lasvegaspersona's picture

I see my minus 4 (so far) indicates some disagreement. fine...it is not an easy thing to see. ZH often seems to prefer the conspiratorial to the simple but in this case I believe the answer is simple. The Euro was developed with a pupose. Why did the world NEED another currency? Why did the EZ not just set up a trade area without the complications of a single currency which predictably would cause the current problems? Was it really all just evil bankers setting 'em up just to lay 'em down? OR did a group of bankers get together and say "hey, the dollar is now a mere fiat (post the Nixon Shock) , we had best prepare for what will surely come".

Only time will allow us to see the truth in both my perception (not really mine but ...) and the success of the Euro. It seems to be happening NOW!

HungrySeagull's picture

Its not the need another currency. It is the fact that the Euro Headquarters resemble the Tower of Babel from our Bible. You can draw your own conclusion.

Jack Sheet's picture

The € was simply a continuation of the Treaty of Rome that created the "Common Market" in1958, and from the European Currency System in 1978. That fat slob Kohl hoped that a political union would result from the € currency union after 1991 but that failed dismally. For conspiracy theorists, the € would allow much more control of the member countries by the EUSSR elite and their banker controllers. Check how much Greek collateral has been sucked up by the IMF and ECB for example.

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Jack, the New World Order wants a one world wide digital currency.  You call it a conspiracy theory I call it a fact.  Good day to you sir.

 Tuco

Jack Sheet's picture

Agreed. Just in  case someone's watching.

 Jack

 

 

falak pema's picture

I call it factual constipation of fiat conspiracy, or illiquidity; I believe the ECB calls this sterilised LTRO. Before we hit hyperinflationary fiat shit-storm. And, the whole world's watching.

piliage's picture

I was in Barcelona on Wednesday, day in and out for work. Got to the airport at 6PM for a flight back home, the place was deserted. Ghost town. Had a choice of three restaurants for dinner to myself.

I will say this though, the new airport is stunning. At least we know where all the EU loans went.

http://3.bp.blogspot.com/-04kVxHB2sJU/TZ4FdpNsrtI/AAAAAAAAIOA/pP6Sr5rOl9...

 

Satan's picture

You should see our brand new airport in Valencia. Oh wait, no one has as not a single flight has taken off from it!

marriedgeordie's picture

NEW airport in Valencia!!! i thought VLC already had an adequate airport for a community of this size - i felt quite comfortable there two years ago.

falak pema's picture

you have to be a vrigin on virgin air or a spud on ryan air! 

deerhunter's picture

I saw my first fully closed for business shopping mall 3 years ago in Indianopolis.  Since,  many businesses are closed,  commercial real estate for sale/rent and empty billboards all over Chicagoland area.  New economic indicator there is the empty billboard meter.  Although some do rent for 4 grand a month depending on location. 

Au Shucks's picture

I think we're all being a bit over confident in our conclusions about where things are heading, and more importantly, why they are heading that way.

Before I continue, let me be clear.. there is NO WAY to prevent what is coming financially/economically, so my commentary is referring exclusively to can-kicking efforts, not fixes.

Caveat said, let's be intellectually honest for a moment and acknowledge that there is nothing truly holding governments/central banks around the globe from a coordinated "print" job to give this whole system another couple years.  Further, there is nothing preventing a global, coordinated debt forgiveness plan or any other type of (insert whatever plan you think will work here). 

The real question is much more scary to contemplate which is "why is there no urgency to preventing the coming global economic collapse, addressing Fukushima, cleaning up the gulf, environmental destruction, blah, blah, blah? 

The answer could well be that there is something else brewing.. something MUCH bigger in its impact than the financial collapse, and even bigger than the worst nuclear "accident" in the history of mankind which is growing worse BY THE MINUTE.  There is much debate and speculation as to what this event is, when it will be, and how impactful it will be, but ALL signs point to SOMETHING coming, coming VERY soon, and being HUGE.  Whatever it is, it must make the financial and societal and economic and environmental destruction that is unfolding around us all PALE by comparison.

This is the focus we should all be looking to, not the magicians' well practiced hands.

Obadiah's picture

So wtf is your prediction bro?

shovelhead's picture

Uh oh,

That Jeezus feller coming back to town again?

I heard that ain't good.

merizobeach's picture

Juan Enriquez says the answer to your question is "homo evolutis", and he makes a rather compelling argument.

http://www.ted.com/talks/juan_enriquez_shares_mindboggling_new_science.html

As an afterthought, I think the "Idiocracy Effect" is also real, and we are also seeing the simultaneous emergence of "homo devolutis".

rossbcan's picture

my post, after yours, by sheer coincidence answers your question of "what wicked this way comes"

rossbcan's picture

my post, after yours, by sheer coincidence answers your question of "what wicked this way comes"

Debugas's picture

talking about where austerity leads to - lithuania and latvia and to some degree estonia after implementing austerity measures many people fleed to the west in search of any jobs. This has eased the situation inside the baltic states that were used by the west as an experiment in austerity. Western economists present this case as a success story of austerity measures where in fact this story is about how hundreds of thousands were forced to leave their homelands (numbers higher than the number of people Stalin moved by force to siberia in the middle of the 20th century)

Poor Grogman's picture

FIAT cannot be "controlled" not before not now not in the future.

Unless you are talking about controlled as in " controlled demolition of society. "

Could it be that FIAT money is indeed the root of all evil?

Debugas's picture

i d like to add - there is a joke in lithuania which goes as follows (and it is real btw):

Q - what is the 3rd largest lithuanian city (by population) ?

A - London is (as the number of emmigrants living there form the 3rd largest population of lithuanians after two main local cities of Vilnius and Kaunas)

RichardENixon's picture

Why the fuck would anybody be in Helsinki? They're all in Poland or the Ukraine watching a bunch of multi millionaires kick a ball around a field. There's no austerity going on in Europe or anywhere else in the Western World. It's party time until the plug is pulled, the music stops, and a bunch of dumbfounded dipshits are standing there with their mouths handing open going "Huh? What?"

msjimmied's picture

Am I ready? Late last night I got dressed and went out to buy some bundles of bath soap, cos I got worried I only had 6 left. This is border line OCD behavior! There are times I positively dislike you guys. 

Uncle Remus's picture

Hey Simon, hows about a report from, say, Tashkent.

Plumplechook's picture

I went down to my local 7/11 last night and there were only a couple of people buying stuff.   I can therefore safely conclude that the world is ending and the 'fiat money' is on its last legs.   This guy Simon is a genius.

compound interest's picture

I normally like Sovereign Man's articles, but this is a weak one. The EUR is not a failed experiment - the EUR will survive intact, the banks won't. Yes, it is possible.

bshirley1968's picture

All I can say is this was a very, very good article.  Well said.

gold-is-not-dead's picture

I just got an sms notification that my atm limit is 500 eur/day... oh joy... bank run Par Excellence...

rossbcan's picture

"The Experiment Has Failed:"

You are talking about just one of a series of "experiments" which incorrectly implies that we are "lab rats" to the social / economic "scientists" attempting to get us to Pavlov react to achieve their false pretexts of "greater good". I (and history) give them no such benefit of a doubt. The "experiments" are really wealth redistribution frauds to STEAL from the productive, give crumbs to unproductive pawns (whose job is to riot when not appeased) and achieve major power / control commissions for slavers and their cronies whom propose / spin and manage the FRAUDS.

The basic fraud is that "somehow" you can point guns at and steal from the productive (under ANY pretext) and STILL have them be productive despite no security, no property rights nor motivation to invest their time and energy (lives) in being productive. Those whom forcefully maintain this sorry state of affairs must KNOW this, yet, they continue. THEIR goal can only be to possess (achieve title to) the stored wealth and property of civilization, collapse civilization (the rules by which we PEACEFULLY cooperate for MUTUAL self-interest), impose feudalism (THEM master, we serfs), and, as an added bonus achieve major de-industrialization and population reduction in the inevitable "war of all, against all" in response to the once resolved question of "who gets what", once answered by "those who EARN it". Now that the "answer" and the identities of those who impose it in in dispute, Pandoras Box is wide open. This is the long range goal of the Luddites and population reductionists whom appear to be in ultimate control.

As these and inevitable subsequent "experiments" (equals grand theft, civilization FRAUDS) continue to steal power and resources from the productive, civilization continues to collapse, BY DESIGN. This is not rocket science. ANY METHODOLOGY that steals from the productive demotivates the productive (those who produce more than they consume), empowers the GREEDY (those who consume more than they produce) and collapses civilization. This is EASILY proven by the grim reaper of "Mathematics of Rule", which has for all of history and IS NOW determining REAL outcome:

http://www.nazisociopaths.org/modules/article/view.article.php/c1/32

Any honest historian (good luck finding one) will unambiguously tell you: When peaceful division of labor for MUTUAL self-interest is no longer possible, neither is civilization.

Now, you KNOW. Do with it as you will.

The free market also KNOWS since the duration of "relief" of control freaks applying bandaids to the hemoragges in civilization is becoming shorter and shorter since the internet allows far greater and faster intellectual connections (analysis and conclusions) at lightspeed, faster and with far more intelligence than slavers and their hired manipulators in subverted acedemia / media can generate frauds.

The language of reason will not resolve this. Our slavers have no reason. Historically, "lock and load" has been the inevitable response. Then, once the survivors face universal impoverishment and non-survival (a position of equality), the sanity of "live and let live", peace and property rights is the ONLY OPTION, once called the "rule of law", before it was rationalized away by "predators on the bench":

http://www.nazisociopaths.org/modules/article/view.article.php/c1/34