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Richard Koo On Why Europe's Austerity Will Cause Deflationary Spiral

Tyler Durden's picture


While not new to our thoughts, Richard Koo, Nomura's Balance Sheet Recession guru, has penned a lengthy but complete treatise on why governments need to borrow and spend now or the world faces a deflationary spiral. The Real-World Economics Review posting makes it clear how his balance sheet recessionary perspective of the deleveraging and ZIRP trap we now live in means bigger and more Keynesian efforts are needed to pull ourselves out of the hole. While we agree wholeheartedly with his diagnosis of the problem, his belief in the solution...

At such times and at such times only, the government must borrow and spend the private sector’s excess savings, not only because monetary policy is impotent at such times but also because the government cannot tell the private sector not to repair its balance sheet. flawed in so much as the size and scale of additional government borrowing at this time of smaller and more risk averse balance sheets leaves the governments (of currency issuers and users alike) more anxious of bond vigilantes than ever before. Furthermore, the impact of a much-bigger-than-previously-believed shadow banking system deleveraging and de-hypothecating and the historical precedents now engraved in manager's minds leaves them thinking 'fool me once...'. His discussion of the cause and cure of the deflationary abyss we now stare into is useful for completeness but his thoughts on the political difficulties of such a borrow-and-spend solution and the 'when to exit this solution phase' is noteworthy in its timing (and cyclical perspective):

There will be plenty of time to pay down the accumulated public debt because the next balance sheet recession of this magnitude is likely to be generations away, given that those who learned a bitter lesson in the present episode will not make the same mistake again. The next bubble and balance sheet recession of this magnitude will happen only after we are no longer here to remember them.

He warns that perceptions of the recovery from the Lehman shock is NOT recovery from the balance sheet recession and has an interestingly xenophobic approach to solving Europe's problems.


In case you have not heard of balance sheet recessions before:

The key difference between an ordinary recession and one that can produce a lost decade is that in the latter, a large portion of the private sector is actually minimizing debt instead of maximizing profits following the bursting of a nation-wide asset price bubble. When a debt-financed bubble bursts, asset prices collapse while liabilities remain, leaving millions of private sector balance sheets underwater. In order to regain their financial health and credit ratings, households and businesses are forced to repair their balance sheets by increasing savings or paying down debt. This act of deleveraging reduces aggregate demand and throws the economy into a very special type of recession.

which inevitably leads to:

More importantly, when the private sector deleverages in spite of zero interest rates, the economy enters a deflationary spiral because, in the absence of people borrowing and spending money, the economy continuously loses demand equal to the sum of savings and net debt repayments. This process will continue until either private sector balance sheets are repaired or the private sector has become too poor to save (i.e., the economy enters a depression).


Its important to note that at all times, in our view, a deflationary shock will be met with an increasingly more powerful currency devaluation, no matter how many Japanese economists scream, after all its never been easier just to add a few zeros.



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Mon, 12/12/2011 - 15:40 | 1971230 Darkness
Darkness's picture


What would Ron Paul do?

Mon, 12/12/2011 - 15:41 | 1971243 Gully Foyle
Gully Foyle's picture



What would Ogami Itto do. Damn those Yagyu's!

Mon, 12/12/2011 - 15:47 | 1971274 Hippocratic Oaf
Hippocratic Oaf's picture



What would Robot Trader do?

Mon, 12/12/2011 - 15:51 | 1971298 dracos_ghost
dracos_ghost's picture


What would a wood chuck do.

Mon, 12/12/2011 - 18:29 | 1971831 Chupacabra-322
Chupacabra-322's picture

Know what I did?  Took my ass straight to my local coin shop and bought three 1oz American Silver Eagles and a 1/4oz American Gold Eagle.  Plus some more ammo for my beautiful newly bought Springfield Armory TRP 1911 .45acp.  Ahhhh, what a feeling. 

Mon, 12/12/2011 - 18:52 | 1971877 Jack Napier
Jack Napier's picture

Good call. I've already got my lead and metal, but I did pick up a good hunting knife this weekend.

This is a case where WWJD is perfectly appropriate. He flipped over the moneychangers' tables and booted them out of the temple. It looks like the Occupy crowd has already gotten the memo.

Mon, 12/12/2011 - 19:26 | 1971972 Chupacabra-322
Chupacabra-322's picture

@ Jack, " but I did pick up a good hunting knife this weekend." 

What a coincidence, I picked up the best hunting/self defense knife on the market, HAND-FORGED KHUKURIS BY THE FINEST CRAFTSMEN IN NEPAL.  Check out the 15" Ang Khola.  Can't go wrong with a military issued Ka-Bar either.  Here's the link:


Mon, 12/12/2011 - 20:07 | 1972103 Potemkin Villag...
Potemkin Village Idiot's picture

those 'throwing stars' look interesting to me...

Mon, 12/12/2011 - 20:32 | 1972153 poor fella
poor fella's picture

That's a good store. I have 12" & 9" khukuris and use them all the time in the garden. Hacking bamboo, cutting drip-line, etc. Nothing like having a knife-axe. They even threw in a 'History of the Gurkha' DVD and some Nepalese coins I use to pick up chics at the range. S&W TRP?    =/    jealous!

Mon, 12/12/2011 - 21:45 | 1972353 TruthHunter
TruthHunter's picture

Has it ever occured to you wierdos that it might be as valuable to have some actual friends?

Did you ever realize that a few favors and a little friendship might be better than a house full of metal?

For example, if you were on really good terms will your local heat, they just might give you a little forewarning when they come around to

pick up up the guns? Or it might be nice to have the farmer down the road trade a side of beef for one of your eagles instead of just turning you in?


"When I walk through the valley of the shadow of death I will fear no evil"  isn't followed by because I'm the meanest SOB in the valley.



Mon, 12/12/2011 - 23:05 | 1972583 DanDaley
DanDaley's picture

Right, all kinds of friends and acquaintances, and everything from seeds to ...well, other stuff.

Mon, 12/12/2011 - 15:54 | 1971311 Stack Trace
Stack Trace's picture

RobotTarder would BTFD then later revise history while he privately SHT (shits his trunks)

Mon, 12/12/2011 - 16:52 | 1971552 catacl1sm
catacl1sm's picture

Deflation in capital is needed. And then in consumer goods, and finally in wages. This will bring about equilibrium and bring employment up. The debt based economy needs to be returned to a savings based economy.

Mises FTW, bitchez!

Mon, 12/12/2011 - 18:29 | 1971828 TimmyB
TimmyB's picture

The last time we had world-wide deflation in capital, consumer goods and wages, it was called the "Great Depression."  A result of this Great Depression was something called "World War II." 

You do not seem to realize this, but for some people the Great Depression and World War II were not exactly the best of times.  As a result, some folks today believe that Great Depressions and World Wars are events we should try to prevent.                       




Mon, 12/12/2011 - 19:28 | 1971978 Seer
Seer's picture

Timah!  No, Timah!

Did it ever occur to you that the VERY reason why we're in this mess is because of the very "solution" you are championing has been the general rule?

If we wanted to really "prevent" wide-scale war we'd disarm all our govts' weapons and shoot all the bankers and politicians.

Don't confuse the messenger with the message.  That anyone here desires war is absolute BS.

Further, read history.  It tells you EXACTLY how these various paths unfold.  Again, I refer you to my "solution" above as to the way to prevent repeats of history (though this will likely NOT be done because dumb fucks out there still believe that they can get their govts to "fix" things).

Mon, 12/12/2011 - 20:07 | 1972102 TimmyB
TimmyB's picture

What "solution" have I been championing?  All I wrote was that a deflationary spiral was something we should perhaps avoid. because of the known effects of the last deflationary spiral we had.

I didn't propose any solution to this problem, nevermind champion one.  It seems obvious that we should try to avoid such forseeable catastrophes, but what do I know?

btw-Most any fool would realize that your "disarm the government and shoot the bankers and politicians" statement makes you seem a bit like a nut.  That fact that you did not is telling.             










Mon, 12/12/2011 - 20:12 | 1972114 Potemkin Villag...
Potemkin Village Idiot's picture

I didn't propose any solution to this problem, nevermind champion one.  It seems obvious that we should try to avoid such forseeable catastrophes, but what do I know?

Yeah... THAT's the solution... Let's just AVOID it...

Thanks for your help Timmy (in not proposing or championing any solution)... You're obviously qualified for political office...

Timmy for Congress!

Mon, 12/12/2011 - 21:35 | 1972322 TimmyB
TimmyB's picture

Your comment indicates that you failed to follow this thread.  I'll spell it out for you.  Try to follow along. 

catacl1sm wrote that a deflationary spiral was exactly what we need.

I responded that the last deflationary spiral we had didn't exactly work out so well. 

Seer, to my amazment, wrote that the solution that I championed was the cause of our problems, and added that we should disarm the government and shoot the bankers and politicians.

I responded to Seer that I hadn't mentioned any "solution" and noted that his writing about shooting bankers made him seem less than serious.

You respond by calling me a politician because I correctly pointed out to Seer that I hadn't proposed any solutions when I wrote that our last deflationary spiral didn't work out so well.

Like Seer, you are not making any sense at all.  However, at least you didn't write about your desire to shoot whole classes of people, so that's something.   

Mon, 12/12/2011 - 15:49 | 1971291 High Plains Drifter
High Plains Drifter's picture

the paul family has a extensive undergound emergency complex that was built a while ago on their large family farm near friendswood...:)

Mon, 12/12/2011 - 15:51 | 1971299 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Like many, Koo fails to acknowledge that the crux of the problem is a true Solvency crisis. As such, his solution has as much chance of working as his chances for getting a job with the administration.


His concept MIGHT have worked in or about 11/08, but that was the Event Horizon.


Very sad these types continue to chase their tails--its intentional blindness. Atleast chat up Anna Schwartz, Richard. Geez!

Mon, 12/12/2011 - 16:33 | 1971463 TheFourthStooge-ing
TheFourthStooge-ing's picture

But Koo's Magic 8-Ball has a PhD in economics.


Mon, 12/12/2011 - 18:54 | 1971881 fx
fx's picture

All the empirical evidence of the past 8 decades or so says clearly that Koo and his fellow Keynesians are so dead-wrong (I am sure Keynes would have aggreed to that 5 decades ago!). Still they keep spilling out their bs ad nauseum. Now go and tell any normal hard-working man or woman why these people continue to rake in tens of thousands or hundreds of thousands of $$$ every year for contributing essentially ZERO to society. Go figure.


Mon, 12/12/2011 - 16:00 | 1971327 bob_dabolina
bob_dabolina's picture

Darkness - 

what would Ron Paul do?

Collect 5 tons of food for charity? 

“We want to show the country that we don’t need the government to take care of people. Americans are the most generous people in the world. From the beginning of this country’s history, communities across America have always been willing to lend a hand to those who need it,"

Mon, 12/12/2011 - 16:41 | 1971495 SamAdams1234
SamAdams1234's picture

KEYNESIAN WAR in Iran. Senator Graham will get to play with his soldiers and the economy will hum.

Mon, 12/12/2011 - 20:53 | 1972202 philipat
philipat's picture

This is all great in (Classic economic) theory. The problem is today's political "Leaders" will NEVER stop spending and their Corporate masters will never allow them to increase revenues. At the heart of Keynsian economics was the idea of Central Government counter-cyclicality. That is, run surpluses during the up cycle and run defecits during the down. Can you imagine these clowns ever being able to run surpluses? Therein, Keynsian economics breaks down and the politicians just abuse the theory to support more unsustainable borrowing and spending. Aided and abetted by the Banksters and the Corporatocrcy.

Tue, 12/13/2011 - 00:30 | 1972764 economics1996
economics1996's picture

This is a BS analysis.  Let the MF burn to the ground and rebuild.  2 to 3 years, max. If we let the shit burn all the way down to the last ember.  Kill the Fed.  Let the federal government burn and go out of business.  Let the shit burn down and rebuild in a couple of years.  Fuck the Fed and Washington.

Mon, 12/12/2011 - 15:39 | 1971232 Gully Foyle
Gully Foyle's picture

Oh NO'S not a Deflationary spiral!

Thank God Automatic Earth have been predicting such for years now.


Mon, 12/12/2011 - 15:54 | 1971275 Popo
Popo's picture

..And Von Mises was right all along:  

There is no means of avoiding the final collapse of a boom brought about by credit expansion.

Tue, 12/13/2011 - 01:05 | 1972830 myne
myne's picture

There kinda is. But it will piss a lot of important people off.

The government has to coin currency without debt and hand it out to ALL of the the people directly.

They have the power to do this. They have the ability to print/stamp without borrowing from the banks. They are sovereign. The people give them this power.

The banks will be furious. But a large chunk of all debts will be erased from balance sheets.

It's strange that governments must borrow from external entities.

If inflation is a form of wealth tax, why not just introduce the inflation directly, without debt to the bottom of the system rather than at the top, on the bank's balance sheets?

It produces a similar result, in that it taxes the value of the existing coinage, but there is no interest payable.

Mon, 12/12/2011 - 15:43 | 1971253 Corn1945
Corn1945's picture

Another fade from a TBTF con-artist I wouldn't trust with two nickels.

Mon, 12/12/2011 - 15:43 | 1971256 Eally Ucked
Eally Ucked's picture

Richard Koo-Koo? Where was he few years back with enlightening advices and his deep analysis?


Mon, 12/12/2011 - 17:02 | 1971590 pemdas
pemdas's picture

He was "helping" Japan. And look whre they are! Debt/GDP about 240%

Mon, 12/12/2011 - 15:45 | 1971263 GeneMarchbanks
Mon, 12/12/2011 - 15:45 | 1971264 centerline
centerline's picture

The neo-classical economic bullshit never ends.  These guys haven't a clue about credit money... let alone see outside the moronic linear equations to the social intent of the current system and mathematical flaws.  Once again, it is proven that economics is nothing more than a tragic study in failure of confirmation bias.

Mon, 12/12/2011 - 16:04 | 1971305 GeneMarchbanks
GeneMarchbanks's picture


Social science. They keep trying to be physicists but predictably fail and then make new flawed models. It's just pathetic now.

Mon, 12/12/2011 - 16:05 | 1971355 Spastica Rex
Spastica Rex's picture

"Social science" is an oxymoron. I'm fond of saying that.

Mon, 12/12/2011 - 16:36 | 1971471 TheFourthStooge-ing
TheFourthStooge-ing's picture

I think you mean Financial Astrology.


Mon, 12/12/2011 - 16:59 | 1971577 kito
kito's picture

no way, i made a killing in the market when the new moon was seen to be uranus..............

Mon, 12/12/2011 - 15:59 | 1971332 Spastica Rex
Spastica Rex's picture

None of the common macro models/systems can accommodate a world of limited, zero, or negative growth. Not saying that's necessarily where we are, but if we are, don't look to these models to tell you much.

Mon, 12/12/2011 - 17:17 | 1971606 Zero Govt
Zero Govt's picture

Economics is as much bollocks as the science of the average man... the collective numbers, theories etc do not exist, they're barely a pale retrospective representation (snippet) of what's actually gone on

Business, trade, individual decisions cannot be averaged across a small retail street let alone a State, a nation or globally

Even Austrian economics i'm afraid is bollocks

the only thing that exists is the individual ...the rest is academic dysfunctional nonsense

Mon, 12/12/2011 - 17:17 | 1971627 Belarusian Bull
Belarusian Bull's picture

Austrian school is not bollocks. It views economy exactly as you said - a collective activity of deals(trades) between individuals.

One of the most prominent works of Mises is called "Human action"

Mon, 12/12/2011 - 17:56 | 1971742 ThreeTrees
ThreeTrees's picture

Might wanna read some of that bollocks Austrian economics a bit closer then.  Human Action perhaps; because you're paraphrasing Mises.

Mon, 12/12/2011 - 19:26 | 1971961 Zero Govt
Zero Govt's picture

Sorry Gents but i've read more Austrian economics than anything's the best of a bad bunch but it's still rubbish

Austrian still deals in the 'grande themes' and grande designs academics and other worthless windbags like to pigeon hole whole societies and countries in.

One of Von Mises greatest statements still repeated endlessly is after all great credit expansions there's no avoiding a credit contraction/implosion (words not verbatim). This is about as useful as saying icecream melts in the sun's a statement of the patently bloody obvious but is trotted out like it's some great scientific discovery over and over again (Zzzzzzz)

Austrian is not predictive, it cannot time, it is a bunch of generalised collective discriptives... like the average man number, useless at pinpointing anything.. it's next to worthless except to stretch out dinner party conversation after too much red wine and brandy


Mon, 12/12/2011 - 19:42 | 1972028 Seer
Seer's picture

I'm with you 100%.

Being giddy about being the best-looking horse at the glue factory- so fucking what!

Only two things to remember going forward:

1) Vertical hierarchies WILL result in concentration of power, which will in turn become oppressive, ultimately imploding;

2) This is a FINITE Planet, ANY system that cannot adapt to zero growth WILL FAIL: I'm still waiting to hear from people how their pet systems can meet this mark.

Mon, 12/12/2011 - 20:16 | 1972130 Potemkin Villag...
Potemkin Village Idiot's picture


Someone always thinks they can invent a perpetual motion machine...


Tue, 12/13/2011 - 09:04 | 1973302 Mr Shush
Mr Shush's picture

The last time I checked, the planet was not a closed system. It's true that whether the limits of the resources we could ultimately access are the solar system, the galaxy or the whole universe they are in all probability finite, but that's entirely consistent with them being really damn big and us being nowhere near them. Develop a good enough method of energy generation and a lot of other problems go away for a long time.

Mon, 12/12/2011 - 20:47 | 1972190 Nels
Nels's picture

it's a statement of the patently bloody obvious

To whom is it obvious?  Certainly not to the Krugmanns of this world.  The whole EU project is currently working on the assumption that the crackup can be avoided, as is Bernanke and the Fed.

That the emperor has no clothes, and there will be a crackup, is not yet obvious to the majority (of any population outside of a Mises Institute classroom).

Congratulate yourself for seeing the (now) obvious, and then get off your high horse.

Mon, 12/12/2011 - 21:15 | 1972250 Zero Govt
Zero Govt's picture

Austrian is far more realistic than Krugmans idealistic (socialist) nonsense.. Austrians use maths whereas socialists/marxists are completely fuking clueless (their concepts come entirely from the chips on their shoulders)

I'm not on a "high horse" ..i'm a strictly practical, human experience thinker.. does it work or not? What does human history show us? A realist.

The idealism of marxism, socialism, enviromentalism etc etc is their downfall.

Austrian is much more practical but still suffers the academic thinking of trying to amass randon individuals and business decsions into a glob like the staticians try with the average man. I'm not dissing austrian entirely i'm just saying it hasn't made a break-through in being predictive (worthwhile/usefull or of commercial value)

Only the commercial brain works (creates value)... idealism destroys value... Austrian is benign i'd say

Mon, 12/12/2011 - 21:53 | 1972380 sid farkas
sid farkas's picture

Holy shit, I think you're on the wrong site.

"The idealism of marxism, socialism, ..."

In what way does totalitarianism equal idealism?

"I'm not dissing austrian entirely i'm just saying it hasn't made a break-through in being predictive (worthwhile/usefull or of commercial value)"

Responding to this fragment of a complete thought is probably a waste of my time, but I thought I would at least point out that it was primarily austrian economists calling housing a bubble before it burst.

Austrian economics specifically predicts the death of fiat currency. Please enjoy the "commercial value" of this theory and exchange your fiat dollars for gold and silver.



Tue, 12/13/2011 - 00:31 | 1972767 StychoKiller
StychoKiller's picture

There's ONLY one prediction anyone can make with absolute certainty:  You WILL die!  Make your time...

Tue, 12/13/2011 - 04:35 | 1973037 Belarusian Bull
Belarusian Bull's picture

Indeed. Accusing Austrian Economics for the lack of timing is like accusing somebody who says you are going to die but doesn't mention the particular date.


Mon, 12/12/2011 - 15:46 | 1971269 css1971
css1971's picture


How does he explain Iceland?


Mon, 12/12/2011 - 15:47 | 1971273 CPL
CPL's picture

If you've noticed, Iceland doesn't exists anymore in the main stream.

Mon, 12/12/2011 - 15:54 | 1971310 BillyBoy22
BillyBoy22's picture

Anthony Bourdain says its a great vacation though.

Mon, 12/12/2011 - 16:00 | 1971335 css1971
css1971's picture

I did. Wondered about that a couple of weeks ago so looked it up.

4.7% growth last quarter.

Sssshhhhh! Don't mention Iceland!

Mon, 12/12/2011 - 19:48 | 1972047 Seer
Seer's picture

So, the very aim of it all is GROWTH?  Sorry, there's no IFs ANDs or BUTs, this WILL lead to collapse (finite planet, remember?).

This entire keynesian blunder is due to a notion of increasing growth.  Yet, people don't want to admit this because if they did they'd have to explain how their pet systems differs given that they (likely) are also predicated on perpetual growth.

Tue, 12/13/2011 - 00:33 | 1972770 StychoKiller
StychoKiller's picture

Conclusion:  The surface of a planet is NOT the correct place for an expanding, technological civilization!  Expand yer thinking.

Tue, 12/13/2011 - 00:49 | 1972804 myne
myne's picture

I sometimes wonder if we'll expand the planet one day. Physically make it bigger by physically making a solid decking above the surface, and then hollowing it out. I wonder if it is possible to find a point where centripital force overcomes gravity, and what would the effects be if the planet was say, 3x the circumference?

Mon, 12/12/2011 - 15:46 | 1971271 Carpathia
Carpathia's picture

Richard Koo has been through this before in Japan.  His diagnosis is correct.  But he can't accept that there really isn't a solution.  The idea that massive Keynsian intervention will restore equilibrium is a pipe dream.  We're entering the endgame.  This IS going to end very badly.

Mon, 12/12/2011 - 15:50 | 1971293 centerline
centerline's picture

Well put.

Tue, 12/13/2011 - 01:34 | 1972883 scratch_en_sniff
scratch_en_sniff's picture

He did not mention a "massive" intervention, rather just enough to offset private sector deleveraging, which in the UK's case is only another 0.7 of GDP. As for ZH's point of view that the bond vigilantes will lose the plot if the US and UK dont toe the austerity line, it should be clear now why Japan's yields were as low in 1997 as the UK's and US are today...maybe it wasn’t that much of a riddle after all, because perhaps the bond markets were, and are aware of the dynamics of balance sheet recessions and are only too willing to step in? But you can go right ahead and continue pissing your pants.

Mon, 12/12/2011 - 15:47 | 1971279 loveyajimbo
loveyajimbo's picture

Might work if we still had an industrial jobs base... BUT... we don't.  So no matter how much funny money Ben throws at the problem, we are screwed... the corporate greed has finally really broken the back of the country.  Nice job, Lloyd and friends... hope the mob takes care of ya soonest.

Mon, 12/12/2011 - 15:48 | 1971282 Matt
Matt's picture

FTA: "At such times and at such times only, the government must borrow and spend the private sector’s excess savings"

Umm .. the private sector has excess savings? really? I thought household debt was near an all-time high ... And corporate debt doesn't look too good either. Are they going to get Apple to buy some government bonds somehow?

Where, exactly, is this money going to come from? And how do you get the private sector to lend you the money? If you take it by force, its not borrowing.

Mon, 12/12/2011 - 15:53 | 1971306 css1971
css1971's picture

He means, "your last penny".

Mon, 12/12/2011 - 20:22 | 1972136 Potemkin Villag...
Potemkin Village Idiot's picture

If you take it by force, its not borrowing

Until they 're-write' the definition... Then, it's anything they want it to be...

Trust me... I'm NOT statutory raping your teenage daughter... I'm 'frontrunning erotic sexuality'...

Mon, 12/12/2011 - 21:00 | 1972217 Nobody special
Nobody special's picture

Oh it's borrowing alright. From your future. They're taking the pennies you will or would have earned, as they've already used up the ones that you had.

Mon, 12/12/2011 - 16:12 | 1971375 Mikehy
Mikehy's picture

Believe he is saying that premeditated inflationary monetary policy will have the same effect as taxing away "excess savings" which i assume he is defining as "any savings you have managed to scrape together"

Mon, 12/12/2011 - 16:19 | 1971406 RobD
RobD's picture


Mon, 12/12/2011 - 16:55 | 1971564 catacl1sm
catacl1sm's picture

wait until people out that their 401k funds were commingled with some firm that goes bankrupt. 401k Bank Run!

Mon, 12/12/2011 - 19:29 | 1971984 Deo vindice
Deo vindice's picture

I took everything out of every RRSP I had years ago.

It is much better to be in charge of your own retirement 'plan' which does not involve 3rd party risk.

Mon, 12/12/2011 - 20:12 | 1972113 Seer
Seer's picture

1. Who is the govt going to borrow from?

2. Didn't the govt already gobble up massive amounts of private debt?


Seems like Koo is reciting shit without actually mapping it to the situation today.

As I've been saying, the only game that these folks know is the very game that's collapsing.  STFU and get out of the way!  If we wish to grow as a species then we need to grow up and level with ourselves; this BS only obscures the facts (starting with the one that perpetual growth without collapse is IMPOSSIBLE).

Mon, 12/12/2011 - 15:49 | 1971284 PicassoInActions
PicassoInActions's picture

Guys we need to come up with few new rumormill at 3PM

i need the market to stay under -200

-199 is fine

can we get some help from FT or others circuses?

Mon, 12/12/2011 - 15:55 | 1971315 WonderDawg
WonderDawg's picture

Sorry to disappoint you, but I sold my Dec puts this morning, took the profits before the rumor mill could get cranked up. This bad news for you, because now the market will do the opposite of what it usually does and tank with the 3:00 rumor, rather than ramp.

Mon, 12/12/2011 - 16:30 | 1971448 PicassoInActions
PicassoInActions's picture

thanks for not putting me out of my missery. how nice.. will hold till tomorrow i guess.

wiuth this yo yo, it may get some little up tomorrow

Tough i am suprised they let 1200 level to be bridget. ( not that i care, just on the wrong side of the bet)


Mon, 12/12/2011 - 16:40 | 1971488 WonderDawg
WonderDawg's picture

Nah, you're fine, here comes the PPT to the rescue. Glad I sold my puts when I did. I actually played it right, which has been rare lately.

Mon, 12/12/2011 - 15:52 | 1971302 terryfuckwit
terryfuckwit's picture

totally of subject but my name should imply no surprises here... got a silver koala today and having collected quite a few coins now I must say the finish and artwork is the best i have seen.. bit more expensive but great to see and hold... had to share that

Mon, 12/12/2011 - 16:00 | 1971336 IrritableBowels
IrritableBowels's picture

Have you seen the 1 kg Silver Aztec Calender?

Mon, 12/12/2011 - 16:32 | 1971458 terryfuckwit
Mon, 12/12/2011 - 15:53 | 1971309 AldoHux_IV
AldoHux_IV's picture

More academia type talk that doesn't point to the causes of the problems but merely attempts to continue to make the same mistakes.

Debt destruction and [de]hypothecation needs to happen, but it doesn't mean that we will wind up in a depression as a result (the real economy already being in a depression). A healthy and proper functioning financial system and one without central banking can create the oxygen for the economy to recover, but it's tricky because those in power do not want to give it up regardless of the deflationary risks.  As a matter of fact Japan faced a lost decade because it never did anything to combat the imbalances within their economy not because it was a text book 'balance sheet' recession.

Mon, 12/12/2011 - 20:15 | 1972128 Seer
Seer's picture

"A healthy and proper functioning financial system"


Name one that will work in a zero growth environment.

Mon, 12/12/2011 - 15:54 | 1971313 Poetic injustice
Poetic injustice's picture

"government must borrow and spend the private sector’s excess savings"

Just call what it is. Nationalization.
Ahahaha, America you can do it. I mean, everybody who is against your actions is terrorist.

Mon, 12/12/2011 - 15:55 | 1971317 JW n FL
JW n FL's picture




UBS says Kyle Bass / ZeroHedge is RIGHT!! Guns, Gold and Canned Goods BITCHEZ!!

Uploaded by RussiaToday on Dec 12, 2011

Watch the full Keiser Report E222 on Tuesday. This week Max Keiser and co-host, Stacy Herbert, discuss virtual dollars and American plots and tinned goods and small calibre weapons. In the second half of the show, Max talks to Detlev Schlichter about elastic money and financial crises.


Mon, 12/12/2011 - 15:57 | 1971323 JW n FL
JW n FL's picture




DOHA, Dec 8 -- Hackers are bombarding the world's computer controlled energy sector, conducting industrial espionage and threatening potential global havoc through oil supply disruption.

Oil company executives warned that attacks were becoming more frequent and more carefully planned.

"If anybody gets into the area where you can control opening and closing of valves, or release valves, you can imagine what happens," said Ludolf Luehmann, an IT manager at Shell Europe's biggest company .

"It will cost lives and it will cost production, it will cost money, cause fires and cause loss of containment, environmental damage - huge, huge damage," he told the World Petroleum Congress in Doha.

Computers control nearly all the world's energy production and distribution in systems that are increasingly vulnerable to cyber attacks that could put cutting-edge fuel production technology in rival company hands.


Iran is getting some pay back, BITCHEZ!!

or is it Russia? playing with a new "Pricing Model"???


Mon, 12/12/2011 - 16:09 | 1971369 LawsofPhysics
LawsofPhysics's picture

or is it another excuse to run up oil prices and raise capital ahead of another war?

Mon, 12/12/2011 - 16:13 | 1971380 JW n FL
JW n FL's picture



could be..

the ways to fuck over We the People are too numerous to name all! LULZ!!

there is no good news for us!

just more anal fisting, when we are sleeping of course.. so that we dont see it coming!

Mon, 12/12/2011 - 16:33 | 1971461 Strut
Strut's picture

When will these dumb asses quit connecting thier "secure" networks to the "public" internet?


Mon, 12/12/2011 - 16:42 | 1971502 TheFourthStooge-ing
TheFourthStooge-ing's picture

You're expecting a lot; they still don't know that they're sharing their entire C drive on limewire.


Mon, 12/12/2011 - 16:59 | 1971578 catacl1sm
catacl1sm's picture

it doesn't have to be connected to the internet to be comprimised. Look at Stuxnet and Duqu.

Tue, 12/13/2011 - 00:53 | 1972812 myne
myne's picture

FIRST rule of a secure system is that it is not connected to the external world.

If this is a big issue, they're fucking idiots in every sense of the word.

Mon, 12/12/2011 - 15:55 | 1971318 DonutBoy
DonutBoy's picture

The counter argument in the United States is that the insolvency of the entire fiat currency system is exposed, and increased government deficit spending will result in an amplification of private-sector deleveraging.  Conversely, signs of adult management of debt at the federal level would encourage businesses and individuals to believe in the dollar's survival and therefore move some of them out of "asset preservation" mode back into generating wealth mode.  To quote another ZH member "relentless unprosecuted fraud" is most American's conception of how Wall St. is operating.  Send some people to jail, raise the interest rates, and cut government spending by 20% and this country would get off it's back.

Mon, 12/12/2011 - 15:56 | 1971320 CvlDobd
CvlDobd's picture

Im filling in for robo today.

Gold bugs better pray for QE3.

VMC up 17% where is the recession?

Sarc off/

Mon, 12/12/2011 - 15:59 | 1971333 Hulk
Hulk's picture

If you are going to fill in for Robo, you are going to have to be able to use "blowtorched" in a financial sentence...

Mon, 12/12/2011 - 16:09 | 1971361 bob_dabolina
bob_dabolina's picture

Gold bugs getting scorched once again as investors pile into Uncle Gorilla Paper like UST's and MCD.


Commodities bulls are puking blood wishing they piled into precious fiat. Don't fight the pigmen. was that?

Mon, 12/12/2011 - 16:14 | 1971387 Falcon15
Falcon15's picture

Close, but it is lacking a certain flavor of...of...of...ah, yes. Retardation.

Mon, 12/12/2011 - 16:15 | 1971393 JW n FL
JW n FL's picture



Buy Low!

and I would say NEVER SELL!

or at least until the World is right side up again.

Mon, 12/12/2011 - 16:28 | 1971443 Bold Eagle
Bold Eagle's picture

Not bad, but your forgot to mention that NFLX is on fire and the tape has never been this strong. S&P 500 will rise to 1,430 next year according to JPM.

Mon, 12/12/2011 - 16:44 | 1971511 TheFourthStooge-ing
TheFourthStooge-ing's picture

...and REITs for shopping malls are the place for smart money!!1!!!!1!


Mon, 12/12/2011 - 16:26 | 1971432 CvlDobd
CvlDobd's picture

Gold bugs are getting blowtorched worse than a naval officer at an Iranian whorehouse.

That work?

Mon, 12/12/2011 - 16:06 | 1971357 Falcon15
Falcon15's picture

Speaking of Robotard...conspicuous absence, anyone?

Mon, 12/12/2011 - 16:07 | 1971364 somethingisrotten
somethingisrotten's picture

Happens EVERY time we have a day like this.

Mon, 12/12/2011 - 15:58 | 1971328 Mark123
Mark123's picture

I love his closing thought...the people won't do bad things again since they have learned their lesson.


Ummm, let's see, we have spent trillions to protect the people who caused this mess from any real pain.  Yep...they learned their lesson - that the taxpayers will bail them out every time.  What a fool.


Mon, 12/12/2011 - 16:07 | 1971366 LawsofPhysics
LawsofPhysics's picture

He is no fool, he is in the club.  Fuck him, time to reward the savers and responsible behavior for a change.

Mon, 12/12/2011 - 16:13 | 1971377 Chump
Chump's picture

We'll reward ourselves, as always, by having saved Gold, Guns, and Tinned Goods.

Mon, 12/12/2011 - 15:59 | 1971330 orca
orca's picture

Apart from the beard this man is a Krugman clone. He should be awarded a Nobel prize for economic "sciences" too, but only after Nomura implodes. Poetic justice.

Mon, 12/12/2011 - 15:59 | 1971331 Yikes
Yikes's picture

I sure hope "The Bernank"  doesn't read Koo's writings.  We don't need anyone helping Ben along with his Keynesian dream. 

Mon, 12/12/2011 - 16:00 | 1971337 Mark123
Mark123's picture

off topic, but anyone notice that IWM and the Dow are moving almost on an inverse basis today?  Wierd.

Mon, 12/12/2011 - 16:03 | 1971338 floor
floor's picture

Boy oh boy, this is some clever guy, this is what a 16 year old learns at school about deflation. What they don't learn is that deflation can be very healthy. But this time governments messed up a bit to much.

Maybe the problem of this moment lies elswhere, like what happens if governments keep borrowing and spending. Right they cannot pay the interest on what they borrow any longer.

There is not going to be a happy end this time, it's payback time, happens every so many years and we better take the hit as soon as possible before all the citizens of Europe are in need of food stamps even if that means we are going into a deflationary spiral first.

Mon, 12/12/2011 - 16:02 | 1971339 Ropingdown
Ropingdown's picture

The Krugmanesque advocates of 'big spending right now but never again' are so focussed on the pain deflation brings that they are willing to risk their very survival to avoid that pain, a choice of possible suicide-in-effect, probability of .7 over probability of 1 pain.  They overlook the benefits of the pain culturally and they completely ignore what would be "learned" if big spending now worked over the short term. No?  Koo is no exception.

Mon, 12/12/2011 - 16:05 | 1971350 swabeyjw
swabeyjw's picture


More importantly, when the private sector deleverages in spite of zero interest rates, the economy enters a deflationary spiral because, in the absence of people borrowing and spending money, the economy continuously loses demand equal to the sum of savings and net debt repayments. This process will continue until either private sector balance sheets are repaired or the private sector has become too poor to save (i.e., the economy enters a depression).



Left our jobs two years ago to travel and do our part by both freeing up a couple of jobs and reducing our saving. Any ideas on what else we can do? And before you ask, we are not willing to borrow and spend. Still stuck on where will the money come from once we all get together and give it back to the banks.

Mon, 12/12/2011 - 16:06 | 1971358 LawsofPhysics
LawsofPhysics's picture

Fuck you Koo, bring on the deflation, reward the savers for a change.

Mon, 12/12/2011 - 16:10 | 1971373 GeneMarchbanks
GeneMarchbanks's picture

'Fuck you Koo'

Say that five times fast.

Mon, 12/12/2011 - 17:06 | 1971559 Zero Govt
Zero Govt's picture

Yes 5 times fast then what?!!

Mon, 12/12/2011 - 16:06 | 1971359 canuck
canuck's picture

Kool post, thanks.

Mon, 12/12/2011 - 16:07 | 1971363 The Count
The Count's picture

I am surprised that ZH did not bring the Latvia ATM run story. This happened yesterday, based on a rumor or proves people are getting increasingly desparate.



Mon, 12/12/2011 - 16:15 | 1971385 bob_dabolina
bob_dabolina's picture

ZH ran that story last night.

Come on man, gotta' keep up.

Mon, 12/12/2011 - 16:51 | 1971547 The Count
The Count's picture

Mea culpa, mea culpa, mea maxima culpa....

PS Thats latin. 

Mon, 12/12/2011 - 16:21 | 1971411 slewie the pi-rat
slewie the pi-rat's picture

LOL!!!  tyler ran it yesterday, yer lordship!

soybeans holding above $11 and cattle and hogs are green

so protein doesn't seem to be deflating

fat, either, altho, slewie isn't lQQking too bad

seasonally adjusted, of course...


Mon, 12/12/2011 - 16:26 | 1971423 Larry Darrell
Larry Darrell's picture

You need to scroll to the bottom of the home page, then click "next" a couple of times.

Oh fuck it, I'll make it easy for you


It was up yesterday.


Mon, 12/12/2011 - 16:10 | 1971372 walküre
walküre's picture

Rumor anyone? Anything to stop the blood letting? Pretty Pleeeeeeeeeeaaaaase!!!!

Mon, 12/12/2011 - 16:44 | 1971374 falak pema
falak pema's picture

thats the whole point, make the west lean and mean again! Merkel is doing it and the FED wants to stay fat and ugly. Its all a question of Kantian aesthetics and if we can't Kant, we don't deserve c**t. Its as simple as that.

Austerity makes the Kants go strong and the world go long women. 

Mon, 12/12/2011 - 16:15 | 1971376 Mr_Wonderful
Mr_Wonderful's picture

Germany understandably has very bad memories of money printing to solve economic problems. They will stay conservative no doubt.

Mainstream economic theory  is basically bankrupt at this point. It has been peddling the notion of shortages for 200 years now (the dismal science) with truly disastrous consequences. When you preach the idea of shortages into a world that is in a stupendous bubble of technological revolutions and productivity increases and oversupply it becomes over time merely a question of turnover and not returns. The result then becomes increasing wars and destruction to prop up turnover and steal resources from others (keep competitors from buying those resources) and when it eventually becomes almost impossible to defraud further wars going, those fruitcakes start talking about threats from outer space.

It´s hopeless to pay attention to those archaic theories anymore. We have to bite the bullet and let the market pop all those hopeless inflation bubbles. The market is on the right track since the price of money (debt) is close to a 100-year high. The dog hasn´t been allowing fleas to wag its tail. Just check the trading channel of the 10-yr bond for the last 25 years. It´ll definitely go to almost zero if needed.


Mon, 12/12/2011 - 17:03 | 1971593 Zero Govt
Zero Govt's picture

Funny but the US has 3 wars going on yet still is in economic decline

how many (illegal) wars does Paul Krugman want before the stimulation begins???

has this Nobel Winner thought through the legitimacy of killing on a foreign soil on the policy objective of stimulating your home economy? 

these are the thoughts only peanut brained pickled in social dysfunction socialists could puke out and ever imagine you were making a serious economic argument... bunch of tossers socialists

Mon, 12/12/2011 - 20:39 | 1972176 Seer
Seer's picture

I thougt fascists were the pro-war folks...

Mon, 12/12/2011 - 16:13 | 1971378 TK7936
TK7936's picture

And wich economy has ever colapsed from Deflation ?

Mon, 12/12/2011 - 16:13 | 1971381 Amused2Death
Amused2Death's picture

QE3 announcement tomorrow?

Mon, 12/12/2011 - 16:26 | 1971427 oddjob
oddjob's picture

Maybe, seems deflation speak is in full bubble mode.

Mon, 12/12/2011 - 16:14 | 1971386 stpioc
stpioc's picture

Germany shouldn't be that worried about hyperinflation. Quite unlikely:

However, Keynesianism is dead anyway:

Mon, 12/12/2011 - 16:14 | 1971388 Jlmadyson
Jlmadyson's picture

About a week away from Euro collapse? Not too much kicking that can be done at this point.

Mon, 12/12/2011 - 16:15 | 1971394 justanothernerd
justanothernerd's picture

Sorry, but at the first sign of deflation, won't the Fed just print...? 

Mon, 12/12/2011 - 16:27 | 1971436 Mr_Wonderful
Mr_Wonderful's picture

They´re out of ammo by now, leveraged 60-1 against their own capital. Otherwise they have no special reason to print, their QE´s have given their owners ample time to recapitalize or go belly up.

By now the most important task is to take down economic input costs to the US economy via a rising dollar. Build on the muddle through of the economy for the last three years if you will.

Mon, 12/12/2011 - 16:32 | 1971455 Yikes
Yikes's picture

They have plenty of QE Ammo.  Don't kid yourself.  How else are they gong to take down the dollar.

Mon, 12/12/2011 - 20:48 | 1972192 Seer
Seer's picture

What happens when people bail out of the Euro?

All is moot, however, as the REAL issue is VELOCITY.  Being that there are fewer and fewer big players it's becoming harder to shift huge amounts of money around: test this theory by becoming the ONLY player and see if you can out-compete yourself.

Let's step back to lesson one: You CANNOT push on a string.

Mon, 12/12/2011 - 16:15 | 1971396 Catullus
Catullus's picture

Chart gazing. Look at this line I drew on a piece of paper. We're in this dip here and the way out is to stimulate demand with spending until we get to the next dip. But don't worry that next dip is GENERATIONS (of ants) away. You won't even remember this current dip. And if you don't borrow and spend, this recession will never end. It'll spiral into lower prices for everyone. And they see prices dropping and decide saving money is the best for them and then that won't stimulate demand and prices will fall even further! And workers won't take pay decreases, they'll just fired, and businesses will close. It'll be horrible. Horrible.

The only solution is to have the governments around the world just spend on everything from penis pumps to porno scanners to lawyers who look at tranny porn all day. Anything. Promise the lifeguard at the local municipal pool a pension for life. Breast implants for 90 year old women. Tuition assistance to the part-time mcdonald's worker getting a degree in political science. Whatever. Just spend spend spend spend. No one wants a Japanification of their economy.

Mon, 12/12/2011 - 17:07 | 1971602 catacl1sm
catacl1sm's picture

I green'd you for 'breast implants', but I think it should be free (paid for by gov) for EVERY woman. Big boobs are a human RIGHT!

Mon, 12/12/2011 - 16:16 | 1971397 ffart
ffart's picture

I disagree that the banks have learned from this. Noone's learned a thing. Not. One. Fucking. Thing. The Lehman failure will repeat over and over until there's nothing left.

Mon, 12/12/2011 - 16:17 | 1971402 StockInsanity
StockInsanity's picture

A kenysian wet dream is Richard Koo's opinion

Mon, 12/12/2011 - 16:19 | 1971407 CapitalistRock
CapitalistRock's picture

This is a good time to remind people that no economy has ever failed due to a deflationary spiral and too little government spending. It is also good to remember all the failed economies in history that grew government spending bigger and bigger and went further and further into debt. Each time it was fully justified. Whether it was war or simply a misperception that government could spend more wisely than the people, the spending was justified right up to the end.

Mon, 12/12/2011 - 16:25 | 1971422 Strut
Strut's picture


Fortunately for Japan, they didn't have TeaBaggers and fiscal conservatives, not only preventing spending/stimulus, but making trillion dollar cuts.  We are setting ourselves up for the perfect storm that’s going to make 2008 look like a good year.

“There will be plenty of time to pay down the [debt] because the next balance sheet recession of this magnitude is likely to be generations away” “The next bubble and balance sheet recession of this magnitude will happen only after we are no longer here to remember them.”

I think the author has already forgotten about the commercial real estate, school loan, and CDS bubbles that haven’t quite popped yet.


Mon, 12/12/2011 - 16:28 | 1971441 beatus12
beatus12's picture

Carney just weighed in hugh and bluntly told

this delusional country to get our house in

order FAST...his frank message, the central

bankers and governments cannot fix this therefore,

get rid of household debt and corporatations start

innovating and striving for more global reach


Mon, 12/12/2011 - 17:14 | 1971619 walküre
walküre's picture

He's got no control over oil prices settling potentially lower than tar sands can afford to operate.

Oil being the greatest export Canada's economy is offering, I'd say Carney will print or Canada's budgets and therefore public service sector will die.

The idiot is quick to point out consumer's debt and lack of corporate innovation, but never addresses the huge government Canada is running!

Mon, 12/12/2011 - 21:02 | 1972221 Seer
Seer's picture

Looking at the breakdown of Canada's GDP should tell you that they're in trouble:

Clearly Tar Sands are small in the big Pie: and there's clearly no way that they could prop up Canada.

Real estate fuse is just starting to take off: as I've been calling it, this will really pick up speed as Chinese (esp students) return to China as China's growth starts to wane.

Mon, 12/12/2011 - 16:28 | 1971442 The trend is yo...
The trend is your friend's picture

I guess i should really be worried about inflation

Mon, 12/12/2011 - 16:34 | 1971457 Johnny B Good
Johnny B Good's picture

Here we go again with the Wall-Street Crack addicts looking for the next shot.


The Bundesbank has it exactly right. This may be a severe crisis, but if we learn our lesson and start living within our means, and especially free ourselves from the enslavement to the financial Sector, it will be the last crisis in this fashion.


Of course we can cure the withdrawal symptoms by just getting the next shot but after that we will still be addicted, still live our lifes like a raccoon in a dumpster and continue in our downward spiral. Shot for Shot in a vicious circle.

And to the Bankers out there: You better stop wondering where the next million is coming from and start worriing about what will happen if the people find out what you did to them for the last 3 years. Better start running while still ahaed, boys.

Mon, 12/12/2011 - 17:49 | 1971724 The Count
The Count's picture

Don't kid yourself. The banksters are not going quietly. They have most politicians in their pocket along with the military. Except for the top brass in the know, the rest thnk that they will fight 'terrorism' at home when the SHTF. It will take a full-fledged civil war (outcome uncertain) to remove this cancer from our society. 

Mon, 12/12/2011 - 21:07 | 1972235 Seer
Seer's picture

"They have most politicians in their pocket along with the military."

And now the National Guard has a seat at the Joint Chiefs of Staff table.  And all this talk about indefinite detainment of US citizens...  Yup.

Mon, 12/12/2011 - 16:37 | 1971468 Pool Shark
Pool Shark's picture



"There will be plenty of time to pay down the accumulated public debt because the next balance sheet recession of this magnitude is likely to be generations away..."

Yeah, that's worked out just great for Japan. Exactly how much of their QE-induced debt have they paid-off over the last two decades?...



Mon, 12/12/2011 - 16:42 | 1971499 FoieGras
FoieGras's picture

Where are all the idiots who were ripping Koo 2-3 years ago? He's been so absolutely right it's scary to think what may lie ahead.

Mon, 12/12/2011 - 16:50 | 1971533 Cthonic
Cthonic's picture

Didn't rate this article because any page mentioning the mental gymnastics of one Mr. Koo needs to have huge blinking warning gifs plastered all over it.  It's as if Satan himself had been invited into a rectory and the cassocked ones are sitting around casually discussing his latest eschatological musings.  Preaching to the choir must get old, but we don't need to go...there.

Mon, 12/12/2011 - 16:52 | 1971535 THE DORK OF CORK
THE DORK OF CORK's picture

 Koo is right at least for Ireland

 This can be seen on a micro level in the most recent Irish Budget......... in 2007 a new tax policey was introduced to favour lower emission cars , this along with the depression  had a dramatic effect on what type of cars  were bought.

Irish car numbers are falling for the first time since the early 80s albeit marginally.
From 2,497 thousand in 2008 to 2416 thousand in 2010.
 A change in the tax band system in favour of so called lower carbon vehicles has changed the type of cars purchased – in 2007 41% of cars purchased was in the more effecient A,B,C range , in 2011 so far its 95%.
Fuel efficiency for new petrol cars : 7.02 / 100 Km – 40 MPG in 2005
6.68 / 100Km – in 2008
6.28 / 100 km in 2009
5.77 / 100 km in 2010.
I think the european standard is more generous then the American so take that it account.
new diesel : 5.87 / 100 km in 2008
5.29 / 100 km in 2009
5.02 / 100 km in 2010.
These are fairly dramatic improvements although it will take another 10 years to replace the old fleet.
We will probally move to a Italian like small car fleet if we stay in the euro or depreciate the existing stock more efficiently much like the Cuban experience if we leave the currency.

New car sales 2007 : 181,571   /  total VRT tax 1,406 million    /  % of new cars purchased in top 3 emission bands 41.2 %

           sales      2008 :146 ,637  /    VRT tax 1,121 million  /      %..................................................................49.9%

           sales      2009 : 54,055  / VRT tax  375 million /           %..................................................................... 77.4%

           sales      2010 :85,264 / VRT tax   384 million /             %....................................................................90.8 %

           sales 2011OCT :86,004 / VRT tax  365 miilion /            %......................................................................95.7%

 Despite the success of this programme which partially reduced our fuel imports

 2007 Oil inputs (all imported) : 9047 KTOE

2010 : 7373KTOE.

The Goverment raised the car tax and now is seeking to raise the VRT tax because it has no money to spend - so it is willing to destroy the effectivness of a programme to raise revenue rather then print the stuff via defecit spending that could be used to replace the car fleet via public transport again improving our trade balance.

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