Guest Post: How Monetization Happens: Being at the Helm When the Ship Goes Down
Via Lew Spellman of the Spellman Report
How Monetization Happens: Being at the Helm When the Ship Goes Down
The consequences of excess debt are now facing the leaders of Europe head on, and a monumental decision must be made whether explicitly or implicitly. Excess debt leads to a long chain of D words: Deleveraging in an attempt to retire debt results in a depressed economy and declining asset prices. The depressed economy breeds private debt defaults that in turn produce distressed banks. The chain then runs through depositor flight from the banks, producing a financial crisis and in turn a devaluation of the currency as capital flees. When foreign goods become more expensive there is a declining standard of living as import prices rise faster than wages. Then in an effort to stop the government debt trap, there is a default on promised entitlements under an austerity program leading to the swift defeat of the political leaders. But ultimately there is a sovereign restructuring or a default of the government debt. Most, if not all, the D words are visiting Europe at the moment and its leaders are falling by the wayside.
There is not a precise science that tells us when the debt trap begins the downward spiral that takes the ship down, but there are some rough guidelines. Reinhart and Rogoff (This Time is Different) have found to the extent one can generalize when a country’s debt-to-income ratio reaches the 90 percent level the ship of state begins to list and currently the OECD aggregate of 30-country gross debt-to-income ratio is 105 percent.
The sustainability of a country’s stock of debt is assessed by the market relative to the income flows that will be taxed in order to support the overhead cost of interest, even assuming an endless capability to rollover principal. The unraveling occurs when the financial markets lose confidence that the debt problem will be resolved successfully through income growth, austerity, or both and the refinanced debt carries the new higher market yield.
At that point, the overhead cost of the debt load is ever more depleting of the income stream that must be taxed to pay the higher interest carry. Now on a daily basis, there is a market panic attack if the market yield on Italian sovereigns rises above 7 percent. (Note the yield was close to 5 percent earlier this year so sovereign default is indeed being priced.)
After holders of Greek debt “voluntarily” accepted an arm-twisted 50-percent haircut, the market now believes that a sovereign default by a Western democracy is no longer a fairy tale. Furthermore, the default can’t be reliably hedged by CDS contracts, which proved to be voidable at the whim of the government, thus converting hedged risks into naked risks for the holders of distressed government debt. To make matters even dicier, the BIS regulators are backing away from continuing to award capital shields to the holders of sovereign debt, as explained in my last blog (The Dumpster for Toxic Euro Sovereign Debt). Also, the market has come to believe the world is without remaining Rich Uncles willing to rescue the Poor Uncles of Europe. All these factors cause investors to revert back to pricing sovereign debt based on risk fundamentals rather than government pledges of invincibility or confidence in financial insurance.
At this point, the remaining options to avoid reaching the tipping point to the D chain explained above are few, and the decisions to be made are momentous. The options are: submit to what the market is doing to you; take the lead and offer a debt restructure at a fractional payout; or run the printing presses to purchase enough sovereign debt necessary to contain the market yields. Halfway measures such as strengthening the EFSF no longer buys even a day’s worth of market forbearance.
It certainly must be crossing the minds of the Euro leaders that there are consequences for being at the helm when the ship goes down. The alternative is to orchestrate your own departure, which was cleverly done by Papandreou in Greece by calling for an austerity referendum. In Italy, Silvio Berlusconi’s departure was orchestrated quite literally, as reported by Reuters:
“Italians sang, danced and drank champagne in the streets to celebrate the resignation of scandal-plagued billionaire Silvio Berlusconi, and an impromptu orchestra near the presidential palace played the Hallelujah chorus from Handel’s Messiah”.
Not even in my most Machiavellian thoughts had I conceived of the possible value of being “scandal-plagued” as a means to a back-door retreat from an uncomfortable situation. Given its frequency among politicians it seems to be an undervalued asset in politics. But the strategy doesn’t seem to fit Ms. Merkel, so she is stuck at the helm of the ship of state and is looking for a life raft.
And the consequence of being at the helm when all the D words cascade is more chilling when one witnesses what has happened to the Icelandic captain when his country’s ship went down. Iceland’s ex-premier is facing a formal indictment charging him with criminal violations against the laws of ministerial responsibility and “serious malfeasance of his duties as prime minister in the face of major danger looming over Icelandic financial institutions and the state treasury.” (See: Ex-Premier Charged)
We have reached the point where government bluff, bluster and promises no longer control the markets, and criminal indictments for those at the helm are threatening. If it is not possible to orchestrate an early exit, it would seem the only remaining life raft is the printing press — but that would not be easy for a German government to do out in the open, given their Weimar inflation history, as shown in the chart to the right.
The monetization of government debt is undoubtedly being 
conceived of as only a bridge to buy time to form a tighter Euro fiscal union with strict budget discipline. Indeed, this is being counseled by Joseph Ackermann, who seems to be the influential behind-the-scenes advisor.
But to keep things together until then, the ECB is no doubt on the job, if not directly purchasing Italian and other sovereigns, but lending to others who will purchase the same. But running the printing press does not stop with the ECB. Once QEs start for whatever reason and a number of countries are engaged, the very act of one major central bank printing to save a government drives capital offshore to perceived safer ports from inflation and a declining economy. This in turn sets up another dynamic that is well underway as other countries are driven to become sellers of their own currency in order to prevent its appreciation and maintain export market share. Thus, using the printing press to save the Euro debt leads to a global money race of competitive devaluations.
Now there is a confrontation of expectations in the markets, a bi-modal distribution if you will, of those believing the deflationary forces of the D chain above will dominate and those believing, now with greater justification, that the monetary produced inflationary route will be the Euro outcome.
Expect some inconsistent pricing in the market by those being moved to bet on inflation hedges side by side with those willing to bet on deflation hedges. What must be most maddening to a deflation hawk is the asset of choice in that circumstance, long-term government bonds, are at the very heart of the credit problem and are not the solution to protecting one’s portfolio. Nor is it the solution to the inflation hawks either. So the questionable sovereigns go begging among private investors with only the central bank as a friend.
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The Careless Whisper Saturday Update & Threadjacking
PIC OF THE DAY: Resisting Arrest At University Of California, Davis
http://www.eschatonblog.com/2011/11/teach-your-children-well.html
VIDEO OF THE DAY: OWS Displays Hi-Tech "Bat Signal" On Verizon HQ In Manhattan
http://www.youtube.com/watch?v=CxG4g62rnd8
David Tepper Becomes Mutha Fucka Global Shareholder To Taunt Corzine; Bought Corzine's Old House As A Tear-Down
http://www.nypost.com/p/news/business/vultures_pick_mf_carcass_EkuxrN5GV...
State (NJ) Takes Newborn Because It Doesn't Like Baby's Name
http://www.nypost.com/p/news/local/shock_newborn_couple_who_named_kids_s...
Cantor Analyst Fired For Telling Truth; Called Unprofessional
http://blogs.wsj.com/marketbeat/2011/11/18/annaly-cantor-analyst-gets-cr...
Miami "Doctor" Has "Pumping Parties"; Injects Cement In Womens' Butts
http://www.miamiherald.com/2011/11/18/2509172/doctor-accused-of-injectin...
China Obeys Big Pharma Pfizer; Death Penalty For Counterfeit Viagra
http://www.greenwichtime.com/news/article/Sex-pill-makers-jailed-as-Chin...
Miami Grand Jury Indicts Police Captain Alleging Ties To Drug Cartel
http://www.sun-sentinel.com/news/local/crime/fl-opa-locka-cop-arrest-fol...
Gallup Poll; No Surprise, US Trusts Auto Mechanics Three Times More Than Members Of Congress
http://www.gallup.com/poll/1654/Honesty-Ethics-Professions.aspx
VIDEO: Commercial Of The Day; Nasty Pig. Dominant Jeans.
http://www.youtube.com/watch?v=Sduf-7jcV8E
VIDEO: "Raw Dog" Rant - Bankers Have Raped You and Your Family
http://www.youtube.com/watch?v=RA88kcyQsLw#t=5m48s
Thanks for the links.
First link is great. Didn't know napalm came in those small cannisters.
Well, who would have thunk you can actually buy it:
http://www.napalm.net/
I clicked first link as well, i commend these protesters for showing restraint, and this is exactly why I can't join them as i would immediatley be arrested for atrocious assault on a police officer.
On that nazi losing custody of his children, thank god for the intervention by the state in this case...
Funny I'm in Jersey and didn't see this anywhere. where do you dig this shit up?
Seriously. How the fuck can you pepper spray someone who's just sitting there?
Same way the French army used to routinely murder people for just walking down the street in Algeria.
Makes you wonder, at what point do those stupid college kids defend themselves against an unprovoked assault?
after being conditioned for 20+ years that "violence is never the answer"?
LOL. How about in the year 20-never?
The OWS kids need to go beg on the free way ramp to gather up $20 and buy one of these police riot helmets with protector screen
http://www.ebay.com/itm/VINTAGE-APPROVED-HELMET-EVANSVILLE-POLICE-DEPT-M...
Or if use some ClingWrap and cover your face up:
http://farm1.static.flickr.com/138/318278342_4438947141.jpg?v=0
For anti-tazer clothing...
http://blockyourid.com/~gbpprorg/mil/taser/index.html
If they are getting sprayed in the face for just sitting at rest can you imagine what the cops would do if they actually in any way looked like they were going to resist?
That nasty pig jeans ad was just sad on so many levels. I know people have the freedom to choose to wreck their own bodies but it should be illegal to deface a human body of a minor that way. When they actually grow up and find out what consequences come with their acts it will be too late. Makes you wonder why a whole generation just universally decided they could not stand having white skin doesn't it?
Just imagine situation when somebody finds the way to their minds that peaceful is not the way and guerillas war is the most of the fun and excitement? New game police vs youth, and there won't be big, fat policeman spraying them with that shit without reaction, for now they're just kids with high ideals and if gamers join them to have real life thrill the fun will start.
http://civildiso.com/On_the_USA_front_.html
The model isn't a minor. He's 20 years old. As for the tattoos, you make some good points. But to each his own as they say.
The model is from Arizona and was working in a warehouse before becoming a model;
http://www.youtube.com/watch?v=w3Uw8Pf-oVo
dude, ghetto is cool, aintcha heard? Black culture is leading, because the powers that control media ADORE blacks.
And self-destruction is at the heart of their culture and always has been.
I've met girls as young as 26 trying to get this ink burnt off...good luck with that, morons.
white skin? Because there is an entire propaganda machine having conditioned everyone since the year the NAACP was founded that whiteness is equivalent to evil.
The tribe hammers that meme NONSTOP. To those who say oh that shit is rayciss or antisemitic, look up who runs/funds the SPLC and NAACP. Look at who coined the term "racism."
Thank goodness for the slavs; they don't give a fuck about any of this crap.
Makes me wonder when will they get a fucking clue and realize that nothing is free and you have to earn your way through life
Work through necessity. It gives you 20/20
No sympathies for these 60's timewarp idiots
You're the one that's a fucking idiot. Protests become incredibly effective when the protesters do not respond back, for the very reason that most of us feel strong emotions when we see that picture. The point of the protest is to show the cruelty and true nature of the rulers. This picture shows that, unequivically. Non violence shows the oppressors for who they are. That said, I'm always amazed that someone just doesn't pull a gun out and shoot the cop. You have to understand though, that is exactly what TPTB wants to happen. The protestors know this, and they are constantly coached to not respond, that there is much more power in taking the abuse.
The pen (or in this case, picture/video) is mightier than the sword.
you're a fucking moron.
nonviolent protests are USELESS. If nonviolence works, why the HELL did we bomb Libya?
nature says fight or flee.
nature doesn't give you wins for putting up with it.
the french lost.
I just thank God every day for the complete and total worldwide economic collapse. The collapse solves everything and gets the banksters and their lobbyists out of all our lives for good. Don't feel sorry for the oligarch and aristocrat families. They can ride the subway and eat tuna fish sandwiches or be dead.? It's their time to go bye bye.
Yeah but Ghandi won. And so did Mandela. And so did M L King. and so did the Egyptians.
And the Boston Massacre was the one event that most galvanized the colonies into real sustained resistance to the crown.
Gandhi didn't win; the English withdrew.
Most the other colonies got independence in 47, some without even doing jack for it.
Mandela didn't win, the powers in the major States like the US and UK, with their race hustling machines gave the nation over to Mandela's people to destroy.
The Egyptians fought back.
Nevermind the 100s of protests, like in Iran, which were totally and brutally CRUSHED. 50 years of Iron Curtain, but I guess you forgot that
morons like you are the problem who think the ends justify the means.
You empower a state to take someone else's kids, wait until they hear that YOU are teaching them all this seditious shit about the Federal Reserve and threatening assault on holy figures like the police.
Directed at me?
WTF are you talking about?
You really think that these kids were taken because of names? sure. wish there were more info regarding these wonderful parents. In Jersey police need to come to the home 3 times before a case worker is assigned.
I'm sure thier rap sheet speaks for itself
Another totally out of context link, but you knew that right? just nothing else to add but asshat commentary?
Again looking at the pic of the dad with the nazi flag in the backround I'll say it again good for the kids somebody stepped in to give them 1/2 a chance at life.
Stear clear of generalisms, you seem smarter than that and if not fuck off
you just said you can't join the protest because you would commit deadly assault against the holy police.
you are also on a website that preaches sedition about the government, its institutions, and the Federal Reserve.
Fuck the State taking children. I would much rather have people sterilized so that there is no needless suffering of the children of idiots.
If assualted BY the police for peaceful, lawful protest...then fuck yes
Sterilization to prevent suffering, I'll agree with you there...would that be state sanctioned sterilization?
Children of idiots..see I knew you would see the light.
I'm aware of what ZH represents. but in THIS case I'll side with the state
A lot of this is pure judgment calling, like the SCOTUS ruled re obscenity, we might not be able to define what is obscene but we know it when we see it. I for one like to know where the boundaries are spelled out in black and white lest the government use ambiguous or spurious interpretations of laws to effectively arrest anyone for any reason. They may find a definition hard to craft but they must craft it anyway. When cops can do as depicted in the videos then we have already lost any pretense to rights, they have become a goon squad that exists only to protect the property rights of the 1% just like all the other levers of our government.
Are you seriously saying that parents can't name their children what they want? Are you aware of the consequences of moving children into foster care?
Dude, for sure there is WAY more to the story
Aen't cops part of the 99%? They eat their own?
According to Palahniuk, in Fight Club, it's actually pretty easy to make.
equal parts with OJ.
Excess debt leads to a long string of 'D' words, all of which can be summarized in a single 'D' word - Duh.
It's impossible to print your way to prosperity. Printing does not create wealth.
The Euro zone has failed. There is no way to get all these different cultures into a tighter union. The first attempt to do that failed.
Prininting money will lead to hyper-inflation because the PIIGS will never fix the budget problems if they know the ECB will monetize every time they get into trouble.
Develop plans to go back to the original currencies. Accept the economic contraction and allow the system to clear itself.
The alternative is hyper-inflation, the total destruction of the European economies, and war.
The Euro has failed. Stop with the bullshit now.
again, it's not about that.
The creditmoney system is fatal...the math inherent in it makes it INEVITABLE that it will collapse just as soon as sufficient new borrowing does not meet the exponential growth needs built into ANY system of compound growth.
They CAN print their way out of massive default, sure...on a balance sheet. But, the notion of replacing what money really IS or was for the past 400 years since the inception of the BOE and its pattern of sovereign lending and issuance of credit in lieu of money...that will be one HELL of an adjustment.
Given a backdrop of aggregate CONTRACTION due to peak oil, what the fk is a promise of principal plus interest in the future worth? Even if we reduce this to a trivial case, in a zero coupon, when you have contraction, how can anyone expect the maturity to be worth what you think it is?
Bonds see this type of action all the time; when a company borrows X and says we will repay X+Y in the future, and suddenly their prospects of growing enough to do that become obviously junked, the bonds reprice to a market value commensurate with what they actually WILL be able to repay.
Debtmoney is in the throes of such an existential struggle. Even IF this paper money shit continues indefinitely, the value of any promise to pay is worth a lot less now than it was before growth ceased. This is how deflation in credit will accompany inflation in pure currency value and stock prices based upon presumptions of sustained worldwide growth at today's nominal currency values must go down.
Or, gas, oil, food, etc., real things, go up in ratio to the SP500 or the debtmoney denominators.
"Furthermore, the default can’t be reliably hedged by CDS contracts, which proved to be voidable at the whim of the government."
Not just insurance contracts that are arbitrary anymore..
GM and Chrysler "bonds" come to mind.
http://www.youtube.com/watch?v=hJ0MHWH-MOM&feature=related
Another example of the basic fact that all government bonds are Ponzi schemes.
yep,... just superimpose their follishness [?] to our printing 'your way' to prosperity here in the u.s. as to the Nth degree in magnitude - the u.s. has failed miserably, period!
i'd rather stay abroad in europe than face the 'Real Carnage' that will soon fall upon america's leaders in calling the kettle-black
This explanation doesn't take into consideration a credit bubble, take the UST for example.....
American exceptionalism.
We own all your punk asses.
Yes, yes, I know, it's different this time.
Great comeback.
sure it does...the idea is you just tax to pay the coupon. that's what austerity IS in its purest form. Keep motherfuckers paying you the interest forever, then their children, then their grandchildren.
The BOE invented this racket 400 years ago. These financiers have financed the overthrow even of Kings in the past, instituted colonial wars to seize collateral, and on and on. They busted out Argentina and Colombia even in the past 10 years. Foreign interests used debt spun from thin air as claims against entire nations. Now, those foreign interests have title to real land and real assets in S. America and they rent entire countries to the citizens there.
What income flows? In the case of UST's (& I'll include Gilts, Bunds etc) nobody gives a shit about income flows. What they give a shit about is profit in the form of rising bond prices - capital appreciation. Bond prices have been rising since 1980 & at the long end at least have a ways to go yet. Remember, for every halving of yields, bond prices double. Central banks ensure bond prices rise & will continue to do this until the day they can't, just like a credit bubble.
Just like a relentlessly rising stockmarket or HY or IG market, no one gives a fuck if the companies that issue these 'securities' produce anything. When the market is rising, they can roll their debt anyhow.
bond prices against what? Oil? Gold? LOL. Same as the SP500's imaginary price appreciation.
Sure the numbers are higher but so are the pricetags when I go to Safeway
Against dollars, or Pounds, Euro's, Yen etc.
Of course it doesn't make sense, that's what I'm saying, it's a credit bubble!
The 'profits' (take note of the quotation marks) have been so vast for 40 years that the game has continued, kind of like a Ponzi scheme.
True until Argentina, Iceland, Ecuador et al say No Mas and declare Odius Debt.
http://en.wikipedia.org/wiki/Odious_debt
Ecuador is a canary in the coal mine. Did an interesting Odius Debt analysis a couple of years ago and declared some billions of debt wracked up by former Ecuadorian governments as rebuked. Correa told the squid and the rest of the banking cabal to go jump in a lake. Have not seen any US or European gunboats invading in the past couple of years. Ecuador was temporarily shut out of international borrowing, but hey it just meant they had to live within their means. What a concept. The Chinese have been happy to step in and lend billions to Ecuador for hydro-electric infrastructure in exchange for oil export rights. Several Latin American and African countries have figured out that China can be a perfectly acceptable alternative for infrastructure funding. Ecuador and other oil exporters can sit and wait - the value of their oil in the ground is only going up. And Ecuador bought 30 tons of gold for the national treasury with the interest payments they did not make.
And Argentina has shown that after about five years bankers start showing up again to lend more money. A new cast of banking newbies wanting to close a sale - selling money is what they do. IMF leverage to enforce austerity is dwindling with the Chinese as an alternative borrowing source. And once more countries internalize what Ecuador did, Odius Debt will become more commonly applied. Sorry chumps - was not a good idea to lend money to the last crowd who stole most of it and sent it offshore to numbered Swiss bank accounts. We are not paying.
Ecuador President Correa has a PhD in Economics from the University of Illinois, so not a tinpot crackpot. I am not an Ecuadorean, but I have purchased some property there to get some of my assets outside of the US. Gas is $1.60 a gallon, and Ecuador exports good quality seafood, coffee and cocoa. Gas, coffee, chocolate - what more do I need?
people like China because they know China has no navy
China has no navy?
http://en.wikipedia.org/wiki/People%27s_Liberation_Army_Navy
Sometimes, your comments are just baffling trav...
this too, has been out there since 2008 - but perhaps long before it became public___ref: http://www.telegraph.co.uk.com/news/worldnews/asia/1917167/Chinese-nuclear-submarine-base.html
Double damn! Downright depressing.
Double D's turn out to be quite a mouthful.
had a chick with Gs...her bra looked more like a fucking engineering structure
WOW. Right on the Money. This guy Spellman's website is amazing. He's had it right the WHOLE way. Those kids at McCombs Business School are lucky.
Krug-man? is long the regime and fiat rules bitchez!
Partaay like it ain't 1984.
Gold and forest.
Forest is what the watermelons always adore after all. The 'Hit' meister had his forest crew.
Somethings never change & history is written by the winners.
This is America right?
Thanks, I thought for a moment that we had already been eliminated as 'inappropriate' and' counter productive'.
Maybe even "adverse to social justice", or complicit in the "destruction of our enviorment".
My bad.
I mistook liberty for freedom?
To complicated. Just give me farmville and promises of lethargic disingagment, TONS of T.V and (hopefully) lithium in my (their) water.
All is SWELL.
Hurray!!
A Black guy is President and we can all be happy now because OUR shit clearly works and the otherside lost!
Yippee!
ISEEIT
American forests are being sold to China everyday.
Whaaaat a country...
The chain then runs through depositor flight from the banks, producing a financial crisis and in turn a devaluation of the currency as capital flees.
I stopped reading after this sentence. Why post someone's nonsensical garbage on an otherwise reputable blog?
Where did capital flee to in 2008? USTs.
Which currency appressiate in value in 2008? USD.
What happened to CPI as a result of GFC in 2008? It went down.
The fact is that financial crisis was immediately preceded by rampant inflation and flight from USD.
yeah, and what almost happened in 2008? Systemic banking collapse. Even the Fed admits that.
If you actually think the flight into USTs would have been the final resting place of all that dollar slosh, then you're foolish...it was just moving up the quality ladder through increasingly constricting passageways.
See, given global financial integration, it's relatively easy to move from B to BB up to A to AAA, etc. Just point and click. Things get a lot harder after that point. A lot of money fled to USTs just like a lot of people ran up to the dry part of the Titanic as it sank. You see that a lot on sinking ships, a whole ton of people crowding the highside railing.
They were able to save the ship at that point...it's anybody's guess going forward. Talk to me when oil supply declines by 20%.
Oh, and capital wasn't really fleeing to USTs and USD, bud. USTs maybe. The dollar spike was caused by the redemption of foreign speculative positions against which USDs were lent. South Seas Bubble mechanics. Spare dollars were parked while people waited to see what would shake down.
And, what did? An epic printing operation by the Fed and an epic borrowing operation by the USG. The Gov'ts are the only actors who will or can continue to borrow; I said this to Douchinger prior to all this shit going down. If YOU will not borrow to continue to grow the credit system, the government WILL borrow on your behalf, at the point of a gun.
Trav is right - also ust is seen ad "safe-haven" cause it's backed by 300 million FED fiat sponsored tax-n-consumption slaves willing to sponsor US Empire militarism with bases in 120 countries securing pipelines and USD reserve status. It's simple - US is a mafia ponzi scheme selling protection against itself.
Also because mercantilist nations like Japan and China had to sell local currency and buy US$ via treasuries to hold down appreciation in yen and yuan and euro etc. or lose their coveted market shares. Race to the bottom.
when the sh*t goes down, you better be ready... http://www.youtube.com/watch?v=ThppEppMw5w&feature=youtube_gdata_player
der Fuhrer ... another D word
@"being at the helm.."
http://en.wikipedia.org/wiki/Essex_(whaleship)
.
After-math
.
"Captain George Pollard, Jr. returned to sea to captain the whaleship Two Brothers. After it was wrecked on the French Frigate Shoals during a storm off the coast of Hawaii on his first voyage, he retired from whaling and became Nantucket's night watchman. Every November 20, he would lock himself in his room and fast in memory of the men of the Essex.
First Mate Owen Chase wrote an account of the disaster, the Narrative of the Most Extraordinary and Distressing Shipwreck of the Whale-Ship Essex; this was used by Herman Melville as one of the inspirations for his novel Moby-Dick. Memories of the harrowing ordeal haunted Chase. He suffered terrible headaches and nightmares. Later in his life, Chase began hiding food in the attic of his Nantucket house on Orange Street and was eventually institutionalized.[3]
"
..
Will hiding food in the garage end in the same result? My....uhm, friend's wife wants to know.
jeez, i hope not. i will do what i can to
prevent anything like it. my hope is that
the land is and will remain more hospitable
than the the open sea can be to a few men lost
in a row boat.
Jend: Thanks for the knee slapping howler at 5:30 in the morning! My....um friends wife! ROTFLMAO.
I'll say it again :
If Governments printed their own debt-free money, rather than borrowing it from the International Central Banking system, headed by the B.I.S. ( who were tried in Nuernberg for financing war ), then National Debt would not exist , just a Currency Exchange Rate.
Why hasn't any Politician ( apart from RP ) gone this route to "save the world" from drowning in unrepayable Debt ?
Why ?
...because : without DEBT ... the Banksters and complicit Politicians would be out of office .. fast .
Credit is centralised money. Every transaction can be monitored and authorised, or not.
i.e. Power.
Bullshit. Printing leads to,first, hike in price of gold and PM and then to hike in all material goods, i.e. to inflation. US Dollar can stay indefinitely World reserve currency if monetization of US debt is eliminated. As a first step, shit Bernanke should be kicked out. US politicians should deal with debt and other financial obligations without Fed printng press. Then Marxist Obama will go. And then we will see if there are politicians in US who are willing to deal with fiscal realities. In theory, everything can go to hell with USD staying very strong under this scenario... Everybody who wants to avoid total collapse should stick to this scenario...
>> Then Marxist Obama
As soon as you whack jobs start with the marxist non-sense, you lose all credibility.
Consider that with 0% interest, that is essentially what has occured. It will continue, slowly replacing the 'old' system as reforms are adopted.
The problem in a utopian debt free greenbacker democratic mob rule world is that price inflation can get out of hand very quickly. This is why you see so much political theatre regarding the national debt as they try to come up with some way to pull it off without a hyper inflation occuring six months into it.
Decisions will not be left to the People when the People are allowed to simply print their money. It will be left to technocrats. Spending will be hard wired for years at a time with little means of recourse for voters. The worst part won't even be the high inflation, you'll be paying more tax too - instead of NO tax as the utopians have promised.
The 'old' parasitic system isn't going away, it's going supranational. The utopian notes of the individual nations will subordinate to an international fiat that is the world reserve currency.
When it is all settled, you will be enjoying the worst of both worlds.
Some interesting links to stories which have D written all over them. Spain is the starring actor in all of these.
http://www.reuters.com/article/2011/11/04/spain-rmbs-idUSL5E7M35B020111104
http://www.bbc.co.uk/news/business-15789385
http://www.bloomberg.com/news/2011-11-17/spain-s-unsellable-real-estate-...
Oh, almost forgot this one from Ireland. Strong smell of capital d there too.
http://namawinelake.wordpress.com/2011/11/18/ireland-mortgage-arrears-fo...
Dick D (all these D words) I had a look at the Irish link about the mortgage bomb. I had read this in the Times a few days ago but wanted to remind readers that in Ireland you cannot discharge mortgage debt in bankruptcy. Even if you lose the house in default you still owe the mortgage.
I'd never thought i'd live to see and be in such a mess...
And it's getting pretty darn scary to see it unfold!
obviously you were so deep into silver worship you didn't see the writing on the wall; it started in WS, it'll end in WS, the deflagration. From the halls of Montezuma to the shores of Tripoli we will see the wave unfurl.
You're actually right, but now it's more like a escape package for when our financial system totally breaks down and when governments really start to hunt down money to tax and take.
+1 Lew Spellman
This is priceless, 'Not even in my most Machiavellian thoughts had I conceived of the possible value of being “scandal-plagued” as a means to a back-door retreat from an uncomfortable situation. Given its frequency among politicians it seems to be an undervalued asset in politics.'
Everything is hinged on a bailout
They better hope some massive monetization/stimulization or some other crookery occurs soon in Europe.
Otherwise, all the "hard asset" speculators will go down in flames in 2011, and anyone holding dollars and U.S. Treasuries will be the ones "making their year"
Best thing would be to start cheering on the TPTB and hope they do something grand and spectacular.
I always said that QE III (???) would materialize when the people started begging for it...It's close...I can hear it--- but I can't see it
A spectacular something is spectacular dilution of Euros. If the Euro falls, so does the S&P, or so it has for months.
The bottom line here is private lenders are not going to put money into that disaster anymore. Austerity EU-wide has to be sharp, severe, and long lasting, and that will destroy their GDP, which in turn will cause a miss in tax revenues and thus deficit targets, forcing the EU to insist on even more austerity, as they lend them more bridge financing, the interest on which makes it all worse.
This is not a solution. Not even short term.
If they decide to fold it all up and let them default, the banks will just laugh at them. "We're not interested in your declaration of default. We will carry the paper on you until we can find an asset of yours to confiscate." Forever.
only one problem : the banks will die before the sovereigns do. No back up from FED will save them.
F-P is right. Banks, or at least some banks are going down. The politicians need a populist counterweight to austerity, the `we are all in this together` slant. The Uber connected Banks will feed on the dead ones. But in the choas many bank deposits will vanish.
Common stack holders in even surviving banks will not do well, only the fortunate few holding teir1 bank bonds will benefit-and probably only in the very long run.
dupe
Robo, one day soon you're gonna turn on cnbs and they're going to be talking about a gold buying panic.
Are you sure that CNBS would report a gold buying panic? I get the impression that they would have a static image of a CBS peacock and a SORRY THIS STATION TEMPORARILY OFF THE AIR sign broadcast all day. It would be as if they were forced to mention Ron Paul's name or something.
CLGC’s memo proposes that the ABA pay CLGC $850,000 to conduct “opposition research” on Occupy Wall Street in order to construct “negative narratives” about the protests and allied politicians. The memo also asserts that Democratic victories in 2012 would be detrimental for Wall Street and targets specific races in which it says Wall Street would benefit by electing Republicans instead.
According to the memo, if Democrats embrace OWS, “This would mean more than just short-term political discomfort for Wall Street. … It has the potential to have very long-lasting political, policy and financial impacts on the companies in the center of the bullseye.”
The memo also suggests that Democratic victories in 2012 should not be the ABA’s biggest concern. “… (T)he bigger concern,” the memo says, “should be that Republicans will no longer defend Wall Street companies.”
Two of the memo’s authors, partners Sam Geduldig and Jay Cranford, previously worked for House Speaker John Boehner, R-Ohio. Geduldig joined CLGC before Boehner became speaker; Cranford joined CLGC this year after serving as the speaker’s assistant for policy. A third partner, Steve Clark, is reportedly “tight” with Boehner, according to a story by Roll Call that CLGC features on its website.
Jeff Sigmund, an ABA spokesperson, confirmed that the association got the memo. “Our Government Relations staff did receive the proposal – it was unsolicited and we chose not to act on it in any way,” he said in a statement to "Up."
CLGC did not return calls seeking comment.
Boehner spokesman Michael Steel declined to comment on the memo. But he responded to its characterization of Republicans as defenders of Wall Street by saying, “My understanding is that President Obama is the single largest recipient of donations from Wall Street.”
http://openchannel.msnbc.msn.com/_news/2011/11/19/8884405-lobbying-firms-memo-spells-out-plan-to-undermine-occupy-wall-street
Has a CDS ever been triggered/paid?