A belated tribute to Ursula le Guin

le-guin“If you cannot or will not imagine the results of your actions, there’s no way you can act morally or responsibly.”

When she died in January this year I did save the obituary published in the New York Times. I hadn’t read a lot of her work, but I have, over the years, read and re-read The Earthsea Trilogy – subsequently expanded, like Douglas Adams’s Galaxy Hitchhiker, into a quintology (I made that word up).

I’ve never been a big fan of science or fantasy fiction. I couldn’t progress past the second volume of “Lord of the Rings” – but Ursula le Guin had something else: a genuine belief that the world could be a better place. What’s more, she had definite ideas about how that could be brought about.

As the Turkish Lira plunges in the “money markets”, I’ve been increasingly forced to go hunting for free e-books online, and I’ve been delighted, if a little saddened, to find several of le Guin’s novels available.

earthseaSo, I’m reading “The Dispossessed”, according to the writer of the NY Times obituary “her most ambitious novel”, and I want to share a brief extract, on the subject of economics, banking and finance. Shevek, a theoretical physicist and the main character, from a planet colonised by socialist exiles from their home world where capitalism reigns supreme, has been brought to the latter by curious academics:

“[Shevek] tried to read an elementary economics text; it bored him past endurance, it was like listening to somebody interminably recounting a long and stupid dream. He could not force himself to understand how banks functioned and so forth, because all the operations of capitalism were as meaningless to him as the rites of a primitive religion, as barbaric, as elaborate, and as unnecessary. In a human sacrifice to a deity there might be at least a mistaken and terrible beauty; in the rites of the moneychangers, where greed, laziness and envy were assumed to move all men’s acts, even the terrible became banal. Shevek looked at this monstrous pettiness with contempt, and without interest.”

I can relate to that.

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Europe should react to US sanctions targeting Turkey, China, Russia: German FM

Germany’s foreign minister on Aug. 27 criticized U.S. President Donald Trump for imposing sanctions against trade partners like Turkey, China and Russia.

Heiko MaasSpeaking at the annual Ambassadors’ Conference in Berlin, Heiko Maas vowed to take measures to protect European firms from such unilateral sanctions.

“Washington’s sanctions policy forces us Europeans to formulate a response. Because it is affecting us, Germany and Europe, when the U.S. abruptly and unilaterally imposing often unspecified sanctions against Russia, China, Turkey and maybe in the future against our other important trading partners,” he stressed.

Maas argued that the European Union member states should take joint steps against the U.S. dominance in global finance, and proposed a European alternative to the U.S.-dominated SWIFT payment system.

“We have to further strengthen the autonomy and sovereignty of Europe in the fields of trade, economy and finance policies,” he stressed.

“It’s not going to be easy but we have already started working on it. We are working on proposals to establish independent payment channels and creating a European Monetary Fund,” he added.

Maas is scheduled to visit Turkey next month to discuss bilateral ties and regional issues.

During his two-day visit on Sept. 5-6, Heiko Maas is expected to meet his Turkish counterpart Mevlüt Çavuşoğlu and other senior officials in the capital Ankara.

Later the two top diplomats will travel to Istanbul for a celebration at the city’s German School marking its 150th anniversary.

Maas’ trip to Turkey comes ahead of Turkish President Recep Tayyip Erdoğan’s key visit to Germany on Sept. 28-29.

Over the past two years political relations between Ankara and Berlin have suffered setbacks, but in recent months both sides have taken steps towards improving ties.

EU heavyweight Germany remains Turkey’s main economic and trade partner, despite political disagreements between the governments on a number of issues.

http://www.hurriyetdailynews.com/europe-should-react-to-us-sanctions-targeting-turkey-china-turkey-german-fm-136189

http://english.almanar.com.lb/568742

Footprints of the Banking Conspiracy

proofIf you need evidence that transnational finance demons use their money power to control the world, read on:

International credit rating agency Standard and Poor has downgraded Turkey’s “sovereign debt rating” from BB/B to BB/B-, sending a loud, clear message to finance moguls of the world to stop lending the country money.

The action is a little surprising given that S&P reviews its ratings at regular intervals, and this is an unscheduled one-off move.  On the other hand, it may not be so surprising, considering the fact that Turkey’s much-criticised president, Recep Tayyip Erdoğan, has chosen to put his own credibility and that of his governing party on the line by calling an early general election on 24 June.

It is no secret that Mr Erdoğan has seriously upset just about everyone in the corridors and hidey holes of global power since his newly-formed AK Party swept into power out of the political blue in 2003. He and his team put a stop to Turkey’s chronic triple-digit inflation almost overnight. They managed to keep their country out of George Dubya Bush’s dishonest and disastrous invasion of Iraq despite strong US pressure to add Muslim credibility to their Christian crusade. Mr Erdoğan has repeatedly called out the United States, Israel and European big-wheels for their shameless aggression and hypocrisy. In spite of all the chaos in neighbouring countries, Mr Erdoğan’s government has transformed Turkey from an economic basket-case to one of the world’s growing power-houses, where, as even nay-sayers have to admit, most of the people are now in the middle-income rather than the dirt-poor bracket.

grasping bankersWhile serving as mayor of Istanbul back in the 1990s, Mr Erdoğan was actually convicted and jailed by Turkey’s financial-military elite, allegedly for his radical Islamist agenda. Since his party became the government they have had fifteen years to drag the country back to a mythical nightmare past of fundamentalist Shariah law – and have not yet done so. On the contrary, alcohol is freely consumed in public parks and street cafes even during the fasting month of Ramazan, and the range of available alcoholic beverages, local and imported, has broadened remarkably. Other Muslim countries and even non-Muslim South America are avid consumers of Turkish TV series showcasing life in contemporary Turkey.

In spite of a record that would see leaders of less fortunate countries lionised, beatified, or even deified, Mr Erdoğan has had to deal with a relentless barrage of criticism and worse from a significant minority of his own fellow citizens. In the early years he was successful in pulling the teeth of Turkey’s virtually omnipotent military which had overthrown four democratically elected governments from 1960 to 1997. In doing so he enlisted the assistance of Fethullah Gülen’s Hizmet organisation, whose tentacles had extended into every area of government. Possibly the Gülenists were disappointed at not being sufficiently rewarded for their cooperation, because subsequently they turned against Erdoğan and threw their weight behind the forces seeking to oust him.

cause of warThe climax of their efforts was an attempted military coup on 15 July 2016, whose success many of AK Party’s vociferously “democratic” opponents would somewhat perversely have welcomed. Not surprisingly, there has been an ongoing state of emergency and a roundup of suspects involved in the failed coup. Call it a witch hunt if you will – but France lived in a state of emergency for two years with much less justification; and security measures within Turkey are remarkably low-key and minimally disruptive of everyday life. I am more nervous at airports in New Zealand, Australia and the USA than on the streets of Istanbul – despite the warnings I regularly receive from my embassy in Ankara to avoid this city.

So why have S&Ps downgraded Turkey’s credit rating to virtual junk status? Well, first of all we should consider just how much credibility Messrs Standard and Poor really have in terms of evaluating risky investments. There is powerful evidence to indicate that they and other “reputable” credit rating agencies played a major role in the global financial crisis of 2007-08.

According to Wikipedia: “Credit ratings of AAA (the highest rating available) were given to large portions of even the riskiest pools of loans in the collateralized debt obligation (CDO) market. When the real estate bubble burst in 2007, many loans went bad due to falling housing prices and the inability of bad creditors to refinance. Investors who had trusted the AAA rating to mean that CDO were low-risk had purchased large amounts that later experienced staggering drops in value or could not be sold at any price. For example, institutional investors lost $125 million on $340.7 million worth of CDOs issued by Credit Suisse Group, despite being rated AAA by S&P.

credit ratersCompanies pay S&P, Moody’s and Fitch to rate their debt issues. As a result, some critics have contended that the credit ratings agencies are beholden to these issuers and that their ratings are not as objective as they ought to be, due to this ‘pay to play’ model.

In 2015, Standard and Poor’s paid $1.5 billion to the U.S. Justice Department, various state governments, and the California Public Employees’ Retirement System to settle lawsuits asserting its inaccurate ratings defrauded investors.”

So maybe Mr Erdoğan and his people have fallen behind in the payment of their protection money. Or maybe (more likely, in my opinion) there is something far more sinister going on.

The S&P mafia claim: “The downgrade reflects our concerns over a deteriorating inflation outlook and the long-term depreciation and volatility of Turkey’s exchange rate. The rating action also reflects our concerns over Turkey’s deteriorating external position and rising distress in the externally leveraged private sector.”

henry fordThe exchange rate of the Turkish Lira is indeed dropping against the $US, the Euro and £ sterling – none of which feature among the list of growing economies in the world; and what growth they do have is largely attributable to consumer spending and real estate prices. And of course, it’s a self-fulfilling prophecy: downgrade a country’s credit rating and their currency will lose value in the “money markets”. When a country’s currency loses value against the $US, imports inevitably become more expensive, pushing up the internal inflation rate.

What is surprising is that, despite the plunging exchange rate of the Turkish Lira, the government has managed to keep internal inflation relatively low and continue economic growth.

Well, one of my readers rightly upbraided me recently for seeming to champion unbridled economic growth on a finite planet (thanks Dr Bramhall), and she was absolutely right. Unfortunately, it is the United States of America that set(s) the standard for the rest of the world to follow. They flaunt their lifestyle and inspire others to climb the same dizzying heights of consumer-driven wealth. Does it occur to them that the world’s limited resources will be exhausted long before three billion Chinese and Indians get anywhere near the average US household income?

to big to feelA sad fact of life in today’s world is, if you don’t have a nuclear arsenal (eg Israel, North Korea), the United States will bully you unmercifully. Surely that’s what is behind Zionist Netanyahu’s recent war-mongering publicity stunt against Iran. “There’s only room for one nuclear power in the Middle East – and we’ll obliterate anyone who disagrees.”

I do continue to ride my bicycle to work, recycle our rubbish and take re-usable shopping bags to the supermarket. I fear, however, that I am in a dwindling minority, and I don’t hold out much hope for the long-term future of Planet Earth.

Do as you’re told, or we’ll destroy your economy!

The Turkish Lira has been taking a battering in the “money markets” recently. Could there be a connection between that and Turkey’s defiance of US plans in Syria? (That’s a rhetorical question) And , surprise, surprise, the only currency doing worse is the Russian ruble! The sooner the world escapes from the hegemony of the Yankee dollar, the better for all of us!

Erdoğan blasts investors amid tumbling Turkish Lira

shadow bankers[Turkey’s] President Recep Tayyip Erdoğan hit out at international investors on April 12, saying “no one could bring Turkey to heel using exchange rates,” casting the recent sharp drop in the value of the Turkish Lira as a conspiracy by outside powers. 

“Don’t worry, Turkey is continuing on its path with determined steps. Nobody can bring us to heel using exchange rates,” Erdoğan said in a speech in Ankara.

“The rise in exchange rates has no reasonable, logical or regular explanation,” he added.

His comments came as the lira took a breather after plumbing record lows for five straight trading days. 

Jacob RothschildThe lira, which has been highly sensitive to developments in neighboring Syria, recovered slightly to trade at 4.1010 per dollar after hitting a record low of 4.1920 on April 11, with investors’ anxiety over a threatened clash between Western powers and Russia in Syria easing.

The lira is down 2 percent so far this week, also hit by concern about high inflation and the country’s current account deficit.

The lira was the second worst performing emergency currency over the last month after Russian ruble with a nearly 7 percent loss in its value.

http://www.hurriyetdailynews.com/erdogan-blasts-investors-amid-tumbling-turkish-lira-130212

Jeremy Corbyn threatens to make bankers ‘servants of industry’ in fresh attack on the City

I don’t like Labour’s chances of winning power in the UK – and even if they do, they have a history of changing their tune once they take the reins of power – but this guy’s analysis of the problem is accurate, as far as it goes:

jeremy corbyn

But, has he got the guts and the backing to do anything about it?

“[UK Labour Party leader] Jeremy Corbyn has launched a fresh attack on the City of London by promising to make financiers “the servants of industry” if he becomes prime minister. 

[He] claimed in a speech to manufacturing leaders in London that the finance sector’s “destructive” dominance over “the real economy” and “undemocratic” control over politics needed to be tackled so that the economy can be rebalanced. 

Mr Corbyn told the EEF conference: “We will take decisive action to make finance the servant of industry not the masters of us all.

“For a generation, instead of finance serving industry, politicians have served finance. We’ve seen where that ends.”

robber barons

Cartoon published in “Puck” in 1889

[In fact, the problem goes back far beyond the current generation!]

In a speech that will send shivers through the banking industry, Mr Corbyn vowed that the next Labour government would be “the first in 40 years to stand up for the real economy” and combat the “financial wizardry” running through the City.

Mr Corbyn said: “When private debt is twice the size of the real economy, when traders no longer understand the products they’re trading, and banks are funding their own speculation rather than productive investment, something has gone grossly and badly wrong.” 

We need a fundamental rethink of whom finance should serve and how it should be regulated,” he said. “There can be no rebalancing of our distorted, sluggish and unequal economy without taking on the unfettered power of finance.”

[Actually, we need “a fundamental rethink” of how new money enters the economy – and I’m not convinced that Labour party leaders anywhere know how to implement that!]

Response from the Money marketeers – totally predictable, of course:

city bankers

City parasites making hay while the sun shines

Brexiteer Tory MP and former hedge fund manager Jacob Rees-Mogg hit back at the “ill-informed” comments that he said would hit industry.

Nicky Morgan, the Remain-backing chair of the Treasury select committee, told The Daily Telegraph that Mr Corbyn’s comments were “barmy” and displayed a lack of understanding. 

The business community spoke out in defence of British bankers on Tuesday. The Institute of Directors said that while it was true that the hangover of the financial crisis still loomed large, the City contributed huge amounts to the UK’s growth through jobs and taxes.

Meanwhile the Confederation of British Industry (CBI) added that the [finance] sector was the “lifeblood of Britain’s economy, enabling all other sectors to deliver jobs, develop, innovate and grow”.

Stephen Jones, the chief executive of industry trade association UK Finance, said the sector has “undertaken significant reform in the last 10 years to ensure that the taxpayer should never need to bail out a bank again”.

Source: The Telegraph

Where did the money go?

There will always be prophets of doom, I guess, forecasting the end of the world. The care-taker at the school where I work insists that the Koran tells of a war-to-end-all -wars in the Middle East, followed by the final Day of Judgment. Who knows? Turkey and the United States look to be on a collision course right now. Who’ll blink first, I wonder? Or will they actually come to blows?

But getting back to the economy, that is no doubt the biggest danger. Wars are generally a side effect of the uber-rich seeking new ways of grasping more of the world’s wealth to themselves and ensuring that the rest of us are kept in our place.

Dropped wallet

Bill Gates lost $2.25 billion!

Last Monday the US Dow Jones Industrial Average dropped more than 1,500 points, and I read that the fortunes of the world’s 500 richest people, including Warren Buffett, Mark Zuckerberg and Jeff Bezos, fell by $114 billion.

“Berkshire Hathaway Inc. chairman Warren Buffett, the world’s third-richest person, was hardest hit, losing $5.1 billion, according to the Bloomberg Billionaires Index.

“Facebook Inc. Chief executive officer Mark Zuckerberg’s fortune tumbled by $3.6 billion, the second-biggest decline.

“Even Amazon.com Inc. chief executive officer Jeff Bezos, the world’s richest person, wasn’t immune to the carnage. His fortune slipped $3.3 billion to $116.4 billion. Alphabet Inc.’s Larry Page and Sergey Brin each took hits of about $2.3 billion.”

pickpocket-barcelona

Sheldon Adelson lost $1.21 billion!

Time Magazine reported that nineteen people in the world managed to lose $1 billion or more each. See the list here.

Since, then, things seem to have settled down, and economist lackeys of the capitalist world are reassuring us that “what happened to the markets amounts to a correction rather than a crash.”

On the other hand, an aristocratic-sounding fellow writing in the UK’s Daily Telegraph, Ambrose Evans-Pritchard, says “The Fed and fellow central banks have stimulated a titanic expansion of debt over the last quarter century: an asymmetric policy of letting booms run their course while always intervening to prevent busts, culminating in the final throw of QE.

This has driven down the natural Wicksellian rate of interest and led to grievous intertemporal distortions. It has lifted the world debt ratio by 51 per cent of GDP to 327 per cent since the pre-Lehman peak, and led to a synchronised “everything bubble”, from bonds, equities, property, to art and Bitcoin.”

I confess I got lost with some of the jargon. The “natural Wicksellian rate of interest” and “intertemporal distortions” sound like things Douglas Adams might have invented, but Mr E-P does sound a little worried, doesn’t he! In fact, he began his analysis with the words, “Say your prayers”.

Well, I guess if you have $120 billion to start with, losing a paltry $3 billion is not going to worry you unduly. I’m wondering, however, if there weren’t a few people in the USA, outside the billionaire bracket, who took losses they couldn’t afford. I haven’t read anything about them, however, so I’m purely speculating.

But the real issue that concerns me here is not the small change of a few filthy rich planet-rapers, nor even ma and pa investor in homeland USA.

The question I want an answer to is: Where did that money go? It’s not as though young Mr Bezos left his wallet on the bus with $3.3 billion in it, and some lucky guy found it; or Warren B had an envelope stuffed with $5.1 billion in his back pocket, and someone snatched it. That I can understand. I lose money, you find it, lucky you.

Funny-Disney-Dollars-Picture

Just have faith, people, and everything will be fine!

But this money, as far as I understand, actually disappeared into thin air. No one is any better off as a result. How can this be? What does that say about what money actually is if it can just vanish without trace? And that, of course, begs the question, where did it come from in the first place?

Until we all start to focus on demanding answers to these questions, or maybe seeing the answer that is under our nose, instead of allowing ourselves to be distracted by red herring minority interest social issues, our world is surely on the road to Armageddon – and those uber-wealthy zillionaires and their lapdog economist experts are running out of Band-Aid solutions.

What is money, and where does it come from?

One thing I can tell you for sure – it doesn’t grow on trees! But that doesn’t really answer the question. An article in the New Zealand Herald today caught my eye:

Show me the money: Reserve Bank reveals the ins and outs of printing cash

There is about five and a half billion New Zealand dollars circulating at the moment – in the country and offshore – and hundreds of thousands of notes being destroyed every week.

In 2016, the Reserve Bank destroyed 43 million notes, with a value around $1 billion.

The money is “granulated” down into “very small sort of confetti-sized bits of bank notes” then sent away to a specialised company that recycles them into plastic items one might find at home.

All this money being transformed into plastic on a weekly basis must be replaced.

print money

Thank God for Canada!

New Zealand money is printed much less frequently than it is destroyed, and it’s done overseas.

The notes are printed in Canada because it is not financially viable to run a printing factory in New Zealand. With money only ordered once a year at most, such a factory would lie unused much of the time.

Despite the increased use of Eftpos cards and online banking, the amount of New Zealand cash circulating here and overseas is growing, something that “around the currency world gets discussed a fair bit”.

There are a few “industry theories” on why the around $5.5b in cash is growing. One is that low interest rates means it doesn’t “hurt as much” to hold on to cash.

“You’re not losing interest revenue by holding it to any extent.”

Other reasons could include that New Zealand money was popular overseas, people using cash to avoid taxation, and using cash in the “dark economy” for illegal dealings.

But another thought was simply that increased spending led to increased needs for cash.

One way or another, the Reserve Bank has so far always had enough to circulate, and didn’t have “masses of unused notes sitting around”.

_____________________________

Well, I don’t know about you, but for me, this article raised more questions than it answered.

moneypig

Everyone needs something to believe in

First of all, millions of dollars in “legal tender” are created and destroyed every year – so clearly those paper notes have no intrinsic value. In fact, they’re not worth the paper (or plastic) they’re printed on.

Second, NZ money is printed in Canada – and if that money factory is working all year round, I guess those Canadians must be printing money for a few other countries as well, yeah?

“New Zealand money is printed much less frequently than it is destroyed, [but despite this, and] “Despite the increased use of Eftpos cards and online banking, the amount of New Zealand cash circulating here and overseas is growing.” How so? Was there more cash in the past? And are people hoarding old banknotes? But the government keeps issuing new designs and the old ones become obsolete, so that can’t be true.

The Reserve Bank doesn’t have masses of unused notes sitting around but always has enough to circulate even at Christmas time when demand increases, and the “around $5.5b in cash is growing” all the time.

Smells fishy to me! Obviously, there’s something they’re not telling us. And it could be this:

It’s been estimated that notes and coins in all the world’s currencies represents about 8% of the total world money supply. What? Yes!

If you think you know what money is, and you’re happy now that you know it comes from Canada, I’ve got bad news for you. Even the best economist brains in the world can’t agree on what money is. But one thing I’m sure they will agree on – It doesn’t come from a printing factory in Canada.

What they’ll tell you, if you insist on a definition, is that there is a mysterious algebraic thing they call “M”. There used to be three of these things, M1, M2 and M3 – but now it seems another has been added: M0. Well, actually I think that was a con, because M0 is notes and coins, and all those other “M”s have actually been moved further up into the realms of virtual reality – bank overdrafts, credit card limits, futures, toxic mortgages, quantitative easings, and other stuff we mortals earning normal wages or salaries have no concept of.

How-to-Have-an-AWESOME-Marriage-when-drowning-in-debt

Borrow money from your friendly local banker 🙂

Let me give a simple example. Just before a big commercial shopping event like Christmas, my bank texts me to say there is $20,000 waiting for me. All I have to do is send a text reply to a four-digit number, that $20,000 will magically appear in my account, and I can get on with the business of spreading good cheer to relatives and friends.

I never ask for it – but I can’t help wondering: Is that $20,000 sitting at the bank in a bag waiting for me, or do they give it someone else? What if I change my mind later and ask for it? Do they say, “Sorry, buddy, we gave it to Joe Bloggs”?

And I also wonder, how many other people around the world got the same offer from their banks? A thousand? Ten thousand? A million? What if we all take up the offer? What if we all don’t? Will they print more? Or shred the unclaimed millions?

Then there’s the small matter of debt. The United States of America is proud possessor of the world’s largest economy. It also happens that they are the world’s largest debtor nation. According to Wikipedia, on November 7, 2016, US total gross national debt stood at $19.8 trillion (about 106% of the previous 12 months GDP). I checked the US online debt clock at 10.23 last night, and found that their figure is nearly $70 trillion. Clearly it depends who’s measuring, and how they measure it. Whichever figure you decide to run with, it’s a sizable heap of money!

Well, the next question that arises is, who do they owe it to? I asked a mate at work who seems to know a lot about politics, economics and world affairs. “China,” he asserted confidently, “and Japan.” So, I checked them out.

Turns out that China’s “national debt” as of March 2016 (the most recent figure I could find) stood at the equivalent of $4.3 trillion. The same source informed me that Japanese “public debt” in 2013 passed the quadrillion yen barrier in 2013 (about $10.5 trillion at that time).

Debt

Looks like a tricky situation – and he’s not alone.

Government debt in the UK (ie not counting private and commercial borrowings) amounted to £1.56 trillion, or 81.58% of total GDP, and the annual cost of servicing (paying the interest on) this debt amounted to around £43 billion. The Conservative government pledged in 2010 that they would eliminate the deficit by the 2015/16 financial year. However, “the target of a return to surplus at any particular time was finally abandoned by the then Chancellor of the Exchequer George Osborne in July 2016”. And sad to say, until they start running a surplus, that debt’s only going to get bigger.

Evidently none of the world’s biggest national economies is in any position to lend money to their insolvent neighbours. Fortunately, we have banks that can come to the rescue. Fractional-reserve banking is the current form of banking practised in most countries worldwide. In a nutshell, this system allows banks to lend up to 90% of the money they have in deposits.

The beauty of the system, from the banks’ point-of-view, is that they don’t have to apologise to you when you go to make a withdrawal: “Oh, sorry, we loaned your money to John Doe.” You can have yours, and he can keep his – and the bank can collect interest on the new money it created.

Rolling_Stone_Banksters

Happy bankers 🙂

But what if we all go and demand our deposits at the same time? Luckily every country has an LOLR – which apparently stands for “Lender of Last Resort”, not “Laughing Out Loud, Really”). This is normally the country’s central bank eg the US “Fed”, or the Bank of England, which guarantee to bail out the too-big-to-fail banks when they get caught out, as in 2008.

And since we are assured that those central banks don’t have large stocks of money in their cellars, and tax-payer dollars are already insufficient to balance their government’s books, I guess that means they have to borrow more money from the private banks.

Either that or go cap-in-hand to the money printing factory in Canada. Think about it.