In Pound we trust?!

Miserere!

Some more details on the UK economy that are worthwhile sharing and noting - you can't do much more than note and watch the further development as this economy is obviously run by intelligence that tells us every day they knew what they are doing. A specific proof you can watch here. But for inflation see here. For DC's new economy see here.

These graphs below show our strength in imports and dependency. And strong we are:

The above shows the monthly trade deficit of the UK, the next one the same in reference to food, only.

more; all graphs are in English ink! Querschuesse

Should you make out some kind of trend over the 30 years: don't worry!

Once the Euro is history not only logically (that's the case since 1998) but also in the reality of such intelligence that came up with that crap in the first place and their naive heirs like Merkel and Sarkozy we will have to bury the Pound instantly; that is it will need dumping over night!

Let us hope our intelligence will understand that this burial must happen in an instant manner not being dragged over weeks, months or years really. The latter would destroy the last remains of any kind of UK (export) economy we have and would see us people starve and/or freeze to death despite a global climate change: many!

miserere: [lat] have mercy!

Carpe diem!

DC's concept for a foundation...

of a wise builder?



PM DC, 1:44 into the above video:

...I know that you can't see it or feel it right now. But think of it like this: the new economy we are building it is like building a house; the most important part is the part you can't see: the foundations. Slowly but surely we are laying solid foundations for a stronger future. And the vital point is this: if you don't stick with it it won't work.

A lot of can'ts, Mr. Prime Minister, but I like your metaphor: it is like building a house, isn't it:

²⁴ “Therefore everyone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock. ²⁵ The rain came down, the streams rose, and the winds blew and beat against that house; yet it did not fall, because it had its foundation on the rock. ²⁶ But everyone who hears these words of mine and does not put them into practice is like a foolish man who built his house on sand. ²⁷ The rain came down, the streams rose, and the winds blew and beat against that house, and it fell with a great crash.”

That's Matthew 7:24-27, known as "The Wise and Foolish Builders".

Yes, the foundation is very important; yet, in your speech it remains unclear what shall be build on this solid foundation: is it going to be a traditional construction, then, what would be new?

We need to tell the truth... you say, so is this new economy on what you describe as a solid foundation going to be like a Passiv Haus? Future-proof, healthy, comfortable and affordable?

I doubt it facing such basic but untackled problems like deficits and unemployment while I miss the strengthening or in some cases even rebuilding of the basic elements such like education, tuition, training, manufacturing and rational R&D into what will be the true elements of our future as well as setting any new standards for what you tell me I can't see or feel right now, Mr. Cameron.

All I see is more cuts and more debts or the same vice versa, trying to save banks, banksters, governments and incapacitated politicians just to preserve what can't be sustainable; is this all and again related to tradition or where and when will we see or feel any kind of learning effect coming in that will take us all forward?

Carpe diem!

in God we trust on knife's edge

arabianmoney: UK most indebted nation in the world reveals new study

It is not only a race for the weakest currency - to play along the praised export route while we trust in God; it also is a negative race towards who built up the biggest debts. And that is even less funny:

A new study from brokers Tullett Prebon called ‘Project Armageddon’ has established the true scale of borrowing in Britain which amounts to a truly staggering £5 trillion or $8.3 trillion.
...
Once pension fund liabilities and PFI contracts are included the total public debt is £2.46 trillion or 167 per cent of GDP. To that you have to add the £1.34 trillion in financial sector bailouts. The total public debt is therefore £3.6 trillion or 244 per cent of GDP or £135,000 per UK household.
...
Then there is £1.2 trillion in outstanding mortgage debt and £210 billion in unsecured mortgage credit. Together public and private sector debt amounts to £5 trillion, or 340 per cent of GDP.
...
‘Project Armageddon’ is actually pretty thin on predictions as to where this debt mountain will take the UK, apart from flagging up the inadequacies of current government policies, namely that they rely on the resumption of high rates of economic growth that are impossible with 70 per cent of the economy laden with debt.
...
You are left to draw your own conclusions about the merits of holding sterling-denominated assets with this sword of Damocles hanging over the economy. And the investment conclusion about the UK is surely don’t go there!

Of course, e.g. Germany's debts calculated on the same bases as above are also something like €8 to €10 trillion. But that makes the ice on which we all stand no thicker; the conclusion can hardly be leaning back watching Euroland implode or the Dollar's Greens grow over while hoping for the Pound's Phoenix-like recovery.

There is a huge risk, I bet it being only a fraction off from 100%, that with these currency turmoils happening the Pound will implode as well - that might be even a good point to get rid of those astronomical debts and restart the game, may be our only chance: so in the eve of these things happening I recommend to do anything possible to strengthen and support national economy and purchase power, attract and create jobs and - that is the most important point - invest big scale into all kinds of education and training very fast and very furious. Why not print money for all the before, now, instead for the moribund banksters and insolvent economies and their never-come-back-spirals? 

Cuts are definitely the wrong way forward and cosmetic corrections, only, at this point; it needs investment into our all future not cuts into old, rubbish balance sheets.

Our leaders are too beautiful, too young and far too much lobby- and shareholder value-oriented to understand the big picture; it is time that even the most ignorant should by now have grasped that there is no debt relief pill where debts are beyond r/belief.:

The Euro will implode and/or be something totally different, soon. The Pound no different! Shortly before that Big Ben will show an even bigger declination, the clock will be much longer and as it happened in all hard times before our hope and trust in God will be much bigger.

Carpe diem!

no wonder cuts are in

knife, fork, scissors, flames,
have no place in children's games

A couple of centuries ago, when I was born, I heard the above saying again and again, still I cut myself and had to learn, that flames are hot: all by myself!

Modern world's mainstream and cheap Lidl scissors in girly designs for the 18+, only, transformed cuts to be fiscal elements of ignorant politicians and political economists.

Carpe diem!

$ € £ ¥: it is forlon hope!

I know it seems like currency related topics are taking over, even this blog that would rather discuss solutions to our lives' sustainability issues than what is forlorn hope, anyway; but I should, at least, mention today being a special day for Germany and the rest of Europe.

As expected China does not miss any chance to stay on top of the game and therefore will help Greece with a €3.6bn fund designated to buy Chinese ships. Interest will be ultra low, so Greece will be able to undercut international shipping rates running the latest state-of-the-art-ships even more. China gets its money back which is nothing else but those USD bonds which the US are printing, printing and again printing - in what obviously are totally uncontrolled but desperate processes (from 3 minutes in the video becomes really painful for Madame Inspector General for the Federal Reserve Coleman!):

Yes, the video dates back to 2009, March; but yes, the ECB, the BoE and the BoJ are all busy sucking up (their own) bonds, approving dozens of Bad Banks while pressing return, return, return - nothing else but the modern, though very green alternative, of printing money ponziing the scheme!

That wouldn' bother me too much; what really bothers me is the fact that while some countries seek their rescue in printing, others print and at the same time implement cuts that threaten social peace while all the custs of this world won't catch up with what is thrown into black holes and banksters' pockets.

This could all be cut short: new banks, new money, corrected rules, all said already long ago! Alone, now it needs new currencies as well! So, what's next? The longer we wait the more damage will be done.

The human races' stupidity to not being able to keep pace learning while progressing is closing in on the worst case scenario.

But then there seems to be one country on the edge of a continent, far away, one human race, that understood the rules and regulations of what it was allowed and invited to play with faster and better than all the others combined: China! The one and only global player which has now, watching its rivals' disintegration, decided to spur domestic demand to stabilise economy.

The rest is putting funny text over aging generations' hymns.

Carpe diem!

the biggest nonsens in monetary history

Last weekend a conference was held in Berlin: "The EURO ante collapse"; it was completely ignored by the German, the European media; "Russia Today" odd enough, was the only programme reporting about it; here are two videos which will tell you why mainstream was switched off. On the conference's website you find more details.

Here is Professor Wilhelm Hankel explaining the problem, again, only covered by "Russia Today":

No coverage avoids disruption; mainstream is under total control, any and everywhere; a modern and more sophisticated form of what needed a Ministry of Public Enlightenment and Propaganda in former times!

Carpe diem!

the american dream has turned into a nightmare...

...what about (y)our dreams?

From self love to the Tea Party (19-07-2010):






Carpe diem!

the export power house's think tank

 

...warns the US ... and the rest of the world.

Ding Yifan, a policy guru at the Development Research Centre, said China could respond by selling holdings of US debt, estimated at over $1.5 trillion (£963bn). This would trigger a rise in US interest rates. 

China's authorities seem split over how to respond to moves on Capitol Hill for legislation to punish Beijing for holding down the yuan. The central bank has ruled out use of its "nuclear weapon", insisting that it would not exploit its $2.45 trillion of foreign reserves for political purposes. "The US Treasury market is a very important market for China," it said. 

These lines are part of an article in today's Telegraph on a Chinese think tank warning the US in case of a trade war to be the loser. It is almost as if the author is on a yellow payroll: or just naive: his lines read as if there was a democratic government in place in China right next to a totally independent Central Bank. Both is definitely not the case.

It is also misleading to talk about $1.5 or even $2.45 trillion as if those were stacked in a big bank's  treasury box. China has made extensive use of the huge surplus it worked so hard for by collecting hard currencies and defend its fancy paper money glued to the US currency's heels. Globalism allowed for one of its major participants to pay with rice and paper and suck up $s and €s; no wonder China's foreign investments jumped from $5.5bn in 2004 to $56.5bn in 2009 and is expected to reach $100bn in 2013; beware: those are the official figures not covering what China does not want us to know! And there is plenty of that.

China's path to lead the way  can be phased as follows: phase I, the time when China sucked up labour and offered cheapest products is dealt with, that is not to say it ever ended; phase II was to suck in know how and equipment under the cover of intensifying phase I; the neo-lib masterminds of all continents celebrated their bonanzas of soaring shareholder values by letting Chinese factories manufacture what then was sold with dream margins to the rest of the world. At the same time know how was not only given away, it was thrown at any Chinese face, interested or not!

Now China is entering phase III where the infrastructure and the resources are in place to run the show, become world market leader in producing more or less any of the mass and most of the future relevant products. High tech or low tech, anything. Just one example: railway.

And while Japan is desparate to devalue its currency (BBC) the Yuan is money to play with: play money..

Carpe diem!

in principle it is clear...

what went wrong!

This might be amusing in parts; it wraps up the truth though!






Carpe diem!

USA's AIG's AIA, part III...

... the end!

The deal is history! Pru's shareholders "went on strike"!

Now, as before, AIG could take AIA public; funny enough this would only make $12bn to $15bn the experts say - hopefully, that is.

So... what did I not get here: why did honorable Tidjane Thiam, Pru's boss, want to pay far more than twice as much? A payment of honor... to whom? How much?

See part I and part II, or the Telegraph and the Independent.

Carpe diem.

double dip or dip, deep, deeper ...

... into depression?

Last Friday night I attended a lecture on Scotland "after the recession"; well presented and lots of information on how and why Scotland - so far - managed to cope pretty well.

The quotation marks in the title expressed the lecturer's doubts obviously shared by the majority of the audience of where we really are; "in" a recession, “about to get out of one" or is this the beginning of what could be seismic changes?

Even though we talked about Scotland in Scotland the dominating influence of what happens outside tiny wee Scotland, in Europe, in fact in the world is mind-boggling and some of this is mirrored in the headlines about Greece and the EURO just these last days.

Take nothing for granted!
100 years ago this planet hosted little more than one billion people; little did they know what they were in for: lots of turmoil and drastic life style changes, WWI and II, almost No. III, but also mobile phones, cars, refrigerators, free markets, freedom to travel for many and then plenty of everything for most; mobility unlimited: long live capitalism.

My Grandma, born 1905, knew the last German Kaiser, saw Hitler come and kill, lost it all, started from scratch and lived until the years when all-German Chancellor Kohl celebrated the flourishing German landscapes dogmatising the has-to-be-EURO.

In homage of capitalism and to rope in a reunited Greater Germany Europe installed this distressed single currency called EURO - eight years later we now pick up the pieces.

Think to the end!
The EURO is history: it was to provide shelter for the export champion Germany, sharing the bed with the other European economies that were and are net importers, and until 2002 had had to devalue their former individual currencies regularly; one pole and lots of antipoles; however, the exchange market acted as the relief valve and balanced the imbalances. One Pound after the war was DM11.00, it would be DM2.30, now; Italy added zeros (on the left) to the old Lira prices only to then cut them off on the New-Lira notes and to print more of those; same in France and Spain and Portugal - nobody called anybody PIGS then - but the daily figures for buying bread and butter had just become too long and too complicated to only be spoken out before the bread was getting old. With the EURO in place the antipoles acted as importers of what Germany put out even better - alone, it was all based on the buyers' growing EURO debt levels and an increasing (trade-)imbalance amongst the EURO countries. It had to implode (and where it hasn't yet it will) as the basic problem remains unsolved no matter how many “rescue-packages” they will come up with.

Look beyond...
Keeping the shine and moving forward by just pumping more debts of deeply indebted economies into what are over indebted economies, anyway, while the global war for the weakest currency and the lowest production cost, i.e. export by hook or by crook, has only just begun ... how does this make sense? When all seek their Heil in exporting who is going to import, to pay …how … when? The white spots on the maps are long filled with colour and data, no more new emerging markets, we have addressed them all; growth finds its limit on the given surface of this planet.

... revisit ...
the alternative: new Drachma for Greece writing off huge chunks of its debts and shelving the rest until the pigs start to fly will make Greece the holy golden tourist land and at the same time provide cheap labour right at the European doorstep; no need to go to China for labour intensive production and more pressure and competition just around the corner of EUROland. But then, would not EURO-trapped Portugal, Spain, Italy, Ireland, even France and very likely any other leftover EURO country want to enter the same Greek path? Dump debts the fast and easy way, provide jobs for their workers and import hard currency through extensive tourism programmes? A card house’s collapse does not happen in slow motion.

At the end the EURO would be hard but brittle like glass until it had finally destroyed the one and only supporting leg of what once was an export champion's famous economy; then imports to Germany might become inexpensive and worthwhile had not the German masses' purchase power been destroyed long ago.

A vicious circle...
Indeed, it is the classic robbing Peter to pay Paul or vice versa decision. Actually, I do not believe in the politicians being able to solve this overwhelming problem at all - simply because they are the very same that led us into this situation not listening to those many experts that had predicted exactly what has happened so far and is going to happen now. It was just so easy to see it coming and they were told more than once by very competent people.

... and so downward this spiral …
With or without a decision for or against hanging in there, the Euro, in fact Europe has lost its momentum; it has lost its competitiveness, the Europeans are exploited, sedated and stuck in serious but then deflective problems such as migration and ageing of their population; the real challenges, opportunities and markets with still some growth potential from consuming to purchase power are found in Asia; a pity that those are pretty much protected by language and more so by political and social structures.

…tightening in on us!

After what was dreamt to be one free, unlimited global market this vicious spiral is very likely to take us back into what was called sectionalism, once; in 1815 38 independent states formed the “Deutsche Bund”, an early structure of Germany later entering the Treaty of Rome (1957). It is worthwhile mentioning that only in 1833 the “Zollverein” tried to harmonise weights and currencies to allow the “Deutsche Bund” to assimilate what was a pot of different currencies within its members – a long process that even today under European structures is still not finished – but was crowned eight years ago prematurely with a single currency lacking any kind of solid substructure.

And Scotland ...?
What will happen is all but in our Scottish hands; regional or national election will not make a blind bit of difference; however, since waiting for who, devil or Beelzebub, will be the winner offers no progress we might as well prepare ourselves for what will happen undoubtedly; devil and Beelzebub have in common that the “time after” will feel like somebody hit the reset button; the fight for labour and for competitive, hard currency collecting export goods will repeat 19th and 20th centuries’ headlines; at the same time access to resources will only be available for those who pay in advance with hard currency or utterly inflated paper money. Protectionism is around the corner when all is in short supply and needs fighting for.

If Scotland was considered a company, what would the management do? Would it not try to make the company as independent as possible from external influences? Would it not increase the level of self sufficiency? Would it not secure labour and stock up on any possible resource and raw material it needed in case of a crisis? So for Scotland this means to get much more independent – not politically but economically, i.e. its dependence on food, energy, all kinds of resources and at the same time secure labour and self-supply. The import of tourists' hard currency might become very difficult should the EURO and/or the Dollar decide to take a plunge; vice versa, imports of food and energy would become very difficult should the Pound be targeted as the next speculation victim – any of this can be better weathered if we made ourselves as independent as possible.

This might all be depressive news; but then, much better than a long, dark depression. So go for it.

Carpe diem!

more good news...

before it gets worse!

The rate national debts and related cost rocket versus the rate of shrinking GDPs, shrinking tax revenues and exploding social cost is just frightening:

source

Is it not wonderful Greece is now going to be saved? To finish off the rest will be a piece of cake! With cream, please.

Carpe diem!

banks lent $3.8trillion less since 2008...

accelerating the downward spiral:

ET The Economic Times:
Bank lending shrinks by 1.9 trillion in 2009: BIS

Lending fell by $1.9 trillion in 2009 and has contracted by $3.8 billion since September 2008 - or 11 percent - according to BIS, the coordinating body for the world's central banks. The statistics - the only ones to chart cross-border lending around the world - show it is taking time for lending to pick up.

Well, whether and when it ever will pick up again depends upon the banks' will to switch from gambling on currencies and commodities betting against themselves and the rest of the world and find their way back to the roots providing finance to industry and trade. As this is a boring business, margins are small, risky too (as no government backs it up, yet) it is much less attractive than the "fast buck" in the world's casinos.

The decrease in lending at such a rate is a killer to all systems that make our economies. At the same time Greece, even though it tried ever so hard, can no longer hold it off:

FT: Greece to seek activation of EU/IMF aid

So the EURO now breeches all the set rules, all laws once set in stone in Maastricht.

Carpe diem!

labour for less people and money...

... less jobs paying for more jobless?

Are we on the right path when we try to outsource labour to where it is cheapest and in parallel try to eliminate labour per se?

Carpe diem!

Greece, Portugal, but...

quo vadis Pound?

Telegraph: Portugal downgrade knocks Euro as Merkel imposes IMF solution for Greece

Well, nothing new under the EURO sun, things go to plan.

The EURO, as installed, will not survive. The downgrading of Portugal is opening the shooting range; Portugal is wounded, blood stains everywhere; Spain, Ireland, Italy and others are holding their breath.

A report by UBS entitled "How to Break up a Monetary Union" has been circulating like wildfire in financial centres. "It is relatively clear that the euro does not work. That is to say, parts of the Euro area would have been better off (economically) if they had never joined," it said.

With Merkel's suicidal stubbornness following the Maastricht doctrines which in fact forbids any bail-out of any member EURO-Europe will break apart, currency-wise; don't forget this just follows its cause, as economy-wise the EURO members couldn't be any more different.

So what will it be like?

The allegedly "weak" ones will become ugly competitors to the ones that gave the strong ones. The weaks' cost of labour will be most competitive, their tourism will boom, whatever they can export will be inexpensive; their EURO debts will have to be written off, protectionism will come back.

How good will that be for our Pound?

Carpe diem!

the truth is in global...

it just seems nobody dares to say so!

Cary pocket globe

Keeping yourself informed is easy. News nowadays are mostly dyed information but the wwweb's capacity, provided it is left uncensored and you are willing to dig deeper, helps to round up one's picture, one's views.

When it comes to our current problems there must be a certain level of agreement amongst global intelligence - referring to brains' capacities - which explains why very rarely the global scale of our crunch(es) makes the headlines.

Greece is discussed at length, the longer the more abstruse and offensive but with no solutions while sovereign debts of all global and definitely all wanna-be global players are way past comprehension; once the weakest link gives the rest will be waste paper.

UK's economic figures from growth to export, unemployment to imports are discussed same as bail out and stimulus packages as if we would live on an island in economic isolation (sorry, no jokes, please). At the same time Prudential purchases AIG's AIA (AIG's Asian business) and one of the first question is whether Pru's headquarter might be relocated to Asia.

Britain's Gilts lose Triple A lustre for investors hits the headline today accompanied by comments trying to comfort the readers with Britain's' level of debt and its servicing costs allegedly being more favorable than that of other triple A rated economies; tripe "A"? Who? We? Really? How much longer? What for? Why? What a relief!

Pound suffers sharpest fall in more than a year as prospect of hung parliament looms: is it really the British polls that make the currency tumble? Is it not rather the trust in a country and its economic strength? The trust that the global competitors are lacking? Or the rest of the trust the global gamblers are betting against? What is left of the City's corona and the nation's export strength - what of its political and economical influence?

The majority of all political systems and governments find themselves in economical gridlock; they all ran out of means, i.e. money, that simple. We lost the bailout battle as it was too little, too short but too many and above all too much. The spiral leads downwards! In fact the battles were programmed to be lost when we agreed to take part in a global game with faulty, unbalanced rules for some but the invitation for economic bonanzas for others. Hindsight is easy but foresight was blurred by $, € and £ cloud-cuckoo-land-dreams.

From global perspective - and that is what is the only one counting - the current delay in coming up with answers is an expression of the global incapability to solve any of the crunches and not the simple and rather naive attempt of single national governments to buy time for anything to turn to the better.

Global incapability not knowing where to move from here as any move more than likely will start the final meltdown.

Carpe diem!

euro's song of swan

EURO is history!

Its failure was programmed when this artificial currency was forced over so different economies such as the German and the Portuguese or the French and the Italian; during the last weeks there was not even the slightest hint that any or a certain group of the member states, the ECB or the EU is working on a plan to safe the currency by installing measurements that would allow economies of different levels and needs (!) gather under the same currency roof.

Not that I know all the answers and it very likely is long past 12 o’clock but it is obvious that there are no solutions to heal the programme’s failures.

To collect vast sums of money for filling a Greek hat (how often?) will see a number of other hats pop up, some larger, some smaller; the economies slipping almost on a global scale emphasising the battles for labour and commodities, also for weak currencies and low labour cost, this all inflamed by the banksters' egoism will all but protect the EURO.

So the question is: "What’s next?". Not so much a “how does this end?” but rather a “what will we be left with?” and “how will we go on?”.

Anyway, it might take a little or much longer; but an awful end might shorten an awful time!

Carpe diem!

what took you so long, oh lord?

telegraph: Lord Mandelson backs state investment bank plan

The Business Secretary believes that a state-run bank could create funding streams for sectors that traditional banks might otherwise ignore.

It took the politicians far more than 12 months to finally understand that the collapse and then absence of "traditional banking" in connection with the banksters' egoism is drying out the economy; now of all things the German kfw has been detected as the possible bank-business-model that could help supplying the markets with credit. That's a joke?! Just remember the IKB disaster!

1
By the way, the proposed €5bn that Germany has to throw into Greek's hat to collect the €25bn will be printed by the same kfw. What a career from the Marshall Plan to the "global economic crunch super print shop"?

2
kfw = "Kreditanstalt fuer Wiederaufbau" meaning something like the "bank institute for reconstruction".

3
Why seek far afield and go through all the expense to "learn" from kfW? We own the RBS where "RBS" could well stand for "Re-Build-from-Scratch"!


Carpe diem!

status quo - february 2010

I have little to add to GEAB's blunt analysis and summary of what has (not) been achieved and what we might see happening unless some smart people come up with even smarter ideas to cut that Gordian knot we - driven by our super smarties of politics and economics - have managed to get ourselves into.

For the article in German language (French, Spanish) please see here.

- - - - -

LEAP/E2020 is of the view that the effect of States’ spending trillions to « counteract the crisis » will have fizzled out. These vast sums had the effect of slowing down the development of the systemic global crisis for several months but, as anticipated in previous GEAB reports, this strategy will only have ultimately served to clearly drag States into the crisis caused by the financial institutions.

Therefore our team anticipates, in this 42nd issue of the GEAB, a sudden intensification of the crisis in the second half of 2010, caused by a double effect of a catching up of events which were temporarily « frozen » in the second half of 2009 and the impossibility of maintaining the palliative remedies of past years.

As a matter of fact, in February 2010, a year after us stating that the end of 2009 would mark the beginning of the phase of global geopolitical dislocation, anyone can see that this process is well established: states on the edge of bankruptcy, remorseless rise in unemployment, millions of people coming to the end of their social security benefits, falling wages and salaries, limiting of public services and disintegration of the global governance system (failure of the Copenhagen summit, growing Chinese/US confrontation, return of the risk of an Iran/Israel/USA conflict, wars worldwide… (1)). However, we are only at the start of this phase for which LEAP/E2020 will supply a likely timeframe in the next GEAB issue.

The sudden intensification of the global systemic crisis will be characterised by the acceleration and/or strengthening of five fundamental negative trends:

. the explosion of the bubble in public deficits and a corresponding increase in state defaults
. the fatal impact of the Western banking system with mounting debt defaults and the wall of debt coming to maturity
. the inescapable rise in interest rates
. the increase in issues causing international tension
. a growing social insecurity.

In this GEAB issue our team expands on the first three trends of these developments including an anticipation on Russia’s position in the face of the crisis, as well as, of course, our monthly suggestions.

In this public announcement, we have chosen to analyse the « Greek case », on the one hand because it seems indicative of what 2010 has in store for us, and on the other because it is a perfect illustration of the way in which news and information on the world crisis is moving towards « make-believe news » between blocs and interests which are increasingly in conflict. Clearly it is a « must » to learn how to decipher worldwide news and information in the months and years to come which will be a growing means of manipulatory activity.

Progression of the percentage of net new U.S. debt bought by China, net new U.S. government borrowing, percentage of outstanding U.S. Treasuries owned by China (2002-2009) – Sources: US Treasury, Haver Analytics, New York Times

The five characteristics which make up the « Greek case » into the tree with which one tries to hide the forest

Let’s take a look at the « Greek case » which has concerned the media and experts for several weeks now. Before entering into the detail of what is happening, there are five key points to our anticipation on the subject:

1. As we stated in our anticipations for 2010, which appeared in the last GEAB issue (GEAB N°41, the Greek problem will have disappeared from the international media’s radar several weeks from now. It is the tree used to hide both a forest of much more dangerous sovereign debt (to be precise that of Washington and London) and the beginning of a further fall in the world economy, led by the United States (2).

2. The Greek problem is an internal issue for the Eurozone and the EU, and the current situation provides, at last, a unique occasion for the Eurozone leaders to require Greece (a case of « failed enlargement » since 1982) to leave its feudal political and economic system behind. The other Eurozone countries, led by Germany, will do the necessary to make Greek leaders bring their country into the XXIst century in exchange for their help, at the same time making use of the fact that Greece only represents 2.5% of Eurozone GDP (3) to test the stabilisation mechanisms that the Eurozone needs in times of crisis (4).

3. Ango-Saxon leaders and media are using the current situation (just like last year with the so-called banking tsunami coming from Eastern Europe which was going to carry the Eurozone away with it (5)) to hide the catastrophic progression of their economies and public debt and attempt to weaken the attractiveness of the Eurozone at a time when the USA and the United Kingdom have increasing difficulty in attracting the capital which they so desperately need. At the same time Washington and London (which, since the coming into effect of the Lisbon Treaty is completely excluded from any management of the Euro) would be overjoyed to see the IMF, which they control completely (6), brought into Eurozone management.

4. Eurozone leaders are very happy to see the Euro fall to 1.35 against the Dollar. They well know that it won’t last because the current problem is the fall in the value of the Dollar (and the Pound Sterling), but they appreciate this « whiff of oxygen » for their exporters.

5. The speculators (hedge funds and others) and banks heavily involved with Greece (7), have a common interest in trying to bring about rapid Eurozone financial support for Greece, since otherwise the rating agencies will, unintentionally, pull a fast one on them if the Europeans refuse to dig into their pockets (like the scandalous actions of Paulson and Geithner over AIG and Wall Street in 2008/2009): indeed a lowering of Greece’s rating will plunge this small world into the throes of serious financial losses if, for the banks, their Greek loans are similarly devalued, or if their bets against the Euro don’t work out in due course (8).

2008 comparison of the deficits and Eurozone GDP of Portugal, Ireland, Greece, Spain, France and Germany – Source: Der Spiegel / European Commission, 02/2010

Goldman Sachs’ role in this Greek tragedy… and the next sovereign defaults

In the « Greek case », just like in every suspense story, a « bad guy » is needed (or, following the logic of an old-style tragedy, a « deus ex machina »). In this phase of the global systemic crisis, the role of the « bad guy » is usually played by one of Wall Street’s big investment banks, in particular by the leader of the gang, Goldman Sachs. The « Greek case » is no different as indeed this New York investment bank is directly implicated in the budgetary conjuring tricks which allowed Greece to qualify for Euro entry, whilst its actual budget deficits would have disqualified it. In reality it was Goldman Sachs who, in 2002, created one of its cunning financial models of which it holds the secret (9) and which, almost systematically resurfaces several years later, to blow up the client. But what does it matter, since GS (Goldman Sachs) profits were the beneficiary!

In the Greek case what the investment bank proposed was very simple: raise a loan which didn’t appear in the budget (a swap agreement which enabled a ficticious reduction in the size of the Greek public deficit (10). The Greek leaders at the time were, of course, 100% liable and should, in LEAP/E2020’s opinion, be subjected to Greek and European political and legal process for having cheated the EU and their own citizens within the framework of a major historic event, the creation of the single European currency.

But, let’s be clear, the liability of the New York investment bank (as an accomplice) is just as great, especially when one is aware of the fact that Goldman Sachs’ vice-president for Europe was, at the time, a certain Mario Draghi (11), currently President of the Italian Central Bank and a candidate (12) to succeed Jean-Claude Trichet at the head of the European Central Bank (13).

Without wishing to pre-judge Mr. Draghi’s role in the affair of the loan manipulating Greece’s statistics (14), one should ask oneself if it wouldn’t be worthwhile to question his involvement in the affair (15). In a democracy, the press (16), like parliaments (in this case Greek and European), are expected to take on this task themselves. Considering the importance of GS in world financial affairs these last few years, nothing that this bank does should leave governments and legislators indifferent. It is Paul Volcker, current head of Barack Obama’s financial advisors, who has become one of the strongest critics of Goldman Sachs’ activities (17). We already had the occasion to write, at the time of the election of the current US President, that he is the only person in his entourage having the experience and skills to push through tough measures (18) and who, at this moment, knows what, or rather whom, he is talking about.

With this same logic, on the issue of transparency in financial activities and state budgets and using the ill-fated role of Goldman Sachs and of the large investment banks in general as an illustration, LEAP/E2020 takes the view that it would be beneficial for the European Union and its five hundred million citizens, to exclude former managers of these investment banks (19) from any post of financial, budgetary and economic control (ECB, European Commission, National Central Banks). The mixing of these relationships can only lead to even greater confusion between public and private interests, which can only be to the detriment of European public interests. To begin with, the Eurozone should immediately require the Greek government to stop calling on the services of Goldman Sachs which, according to the Financial Times of 01/28/2010, it still uses.

If the head of Goldman Sachs believes he is « God » as he described himself in a recent interview (20), it would be prudent to consider that his bank, and its lookalikes, can seriously behave like devils, and it is therefore wise to draw all the consequences. This piece of advice, according to our team, is valid for the whole of Europe, as well as every other continent. There are « private services » which clash with « public interests »: just ask Greek citizens and American real estate owners whose houses have been repossessed by the banks!

To conclude, our team suggests a game to convince those who seek where the next sovereign debt crisis will surface: simply look for those states which have called upon Goldman Sachs’ services in the last few years and you will have a serious lead (21)!

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Notes:

(1) The recent statements of G. W. Bush’s Secretary to the Treasury, Hank Paulson, about the fact that Russia and China plotted to bring down Wall Street in the autumn of 2008 show the extent of the big global players’ paranoia. Source: Daily Mail, 01/29/2010

(2) During the last four years our team has regularly exposed the anomalies in calculating US GDP. We will make no further comment here on this very « Greek » aspect of American statistics. As to the development of the American economy over the next few months, it is sufficient to note that the Truck Tonnage Index went into freefall in January 2010, just as it did at the end of the first half of 2008. Source: USAToday, 02/11/2010

(3) See the chart below which puts the « Greek problem » into proportion against Eurozone GNP.

(4) For which GEAB has emphasized the necessity for four years, as well as the wide public support (an average of more than 90% according to GlobalEurometre monthly polls) a Eurozone economic governance could count on.

(5) As a reminder here, GEAB N°33 was one of the rare media sources which, in Spring 2008, revealed the dishonest and manipulative aspects of the big fear of a « banking tsunami » coming from Eastern Europe which was supposed to carry away the Eurozone banking system. At the time, the Euro had fallen to much lower levels than those seen today…only to rise again several weeks later. For those who wish to understand the current media position, we suggest a re-read of the GEAB N°33 public communiqué.

(6) The fact that a Frenchman is its head changes nothing.

(7) Source: Le Figaro, 02/12/2010

(8) That said, media manipulation in this area is remarkable. These last few days one has seen/read/heard almost everywhere that huge sums have been bet on a fall in the Euro, some eight billion US Dollars. In fact this « huge sum » is only a drop in the ocean of the world currency markets which turn over several hundred billion USD a day. Source: Financial Times, 02/08/2010

(9) With the same highly constructive regard for the countries where it operates as that which led it, in the United States in 2006/2007, to provoke a fall, for its own benefit, in the value real estate based financial products which it had sold to its own clients.

(10) Sources: Spiegel, 08/02/2010; Le Temps, 13/02/2010; Reuters, 09/02/2010

(11) During Italy’s preparation for Euro entry, he was Director General of the Italian Treasury. Sources: Bank of Italy; Wikipedia; Goldman Sachs.

(12) Very strongly supported by the London and American financial milieux, to which we have already alluded several months ago in one of our reports… and, of course, by Silvio Berlusconi. Source: Sharenet/Reuters, 02/10/2010

(13) His strongest adversary is Axel Weber, current head of the Bundesbank.

(14) What would be surprising is that the European head of the bank making a loan intended to hide a portion of a country’s public deficit, and himself the former Treasury head of a neighbouring country, should not be aware of such an undertaking.

(15) And, considering his past positions, one can only appreciate his sense of humour when he calls for a reinforcement of Eurozone economic management. Source: Les Echos, 02/13/2010.

(16) Which, for the present, satisfies itself by copying articles from the Anglo-Saxon press casting the Greek case in the role of « wrecker of world markets » repeating at length that the Euro will fall… whilst it trades at a level which the same media thought it impossible to achieve only four years ago.

(17) Source: Reuters, 02/12/2010

(18) He belongs to that generation of Americans who built the « post-war US empire », who know its weak points and exactly how it works, contrary to Summers, Geithner and others like Rubin. Our team rarely compliments Barack Obama, but if he continues to listen to the likes of Paul Volcker, he is definitely moving in the right direction.

(19) Our team knows, from first-hand knowledge, that there once was a time, thirty years or so ago, when investment bankers would take action having the long term interests of their clients at heart. This period is long gone and now they only act in their own short-term interests. From this, we should draw the inevitable conclusions and exclude them access to key posts in the public service, rather than try and reform their behavior. If there were child investment bankers (as there are child soldiers) one could, perhaps, hope to save a number of them from their addiction to short-term profits, but for adult investment bankers, it’s far too late.

(20) Source: Times, 11/08/2009

(21) For the private sector, ask Lehman Brothers, AIG…they will confirm its accuracy.

- - - - -

Carpe diem!

call for disaster...

"Greece! RAUS!"

Following the international media more and more people refer to expelling Greece from EUROland as the prime solution of a problem they skin deep link to the alleged way of Greek people being especially attentive to black markets, laziness, tax fraud or simply not paying taxes at all.

There probably is a true core in everything you read but then many other nations and economies are not really far from what Greece is like. That goes for the above but also for the levels of accrued debts over the past years, the way those countries were made part of EUROland and the methods they were taken advantage of by the banksters, not only lately, as GS is a prime example for.

So would such an exclusion work? Certainly, the easiest way and the one with a majority of the voters supporting it would be to return to the good, old Drachma. Fine.

And then? Would that help Greece, or the EURO, or the Pound, even?

It is easy to forecast that inflation would be the most dominant of all Greek imports; exports might boom for a while depending on how long Greece had anything on offer besides olives and sheep; tourism could also draw many people into the country, a summer long at least. But then imports such as energy, food, cars and any other commodities would cost stacks of good, old Drachma, lots of paper to be printed; at the same time trying to repay old debts would be the killer: then, as it is today; Greece's rating would be down from triple "A" to mono "-Z".

The very moment Greece would give up on the EURO or was forced to do so Greek creditors - not only banksters - would have a hell of a job to balance their sheets and currencies! That bailout could be called "Lehman II(GR)" with "Lehman III(x) " ... following right away.

By the way, one of those "Lehmans" will then go down in history as "x(UK)" even though nobody would need to shout "raus!". Here are more details on our "quarter of a trillion pound exposure"; so much on how clever it was to not join the EURO - or vice versa!? Clever?

So asking to expel Greece from the EURO is very simple but programmed suicide; it is rather naive and hardly a solution to be looking forward to.

Or, as one of those naive EU commissioners put it the other day in his English voice "ve ar oll sittin in one boot".

Carpe diem!