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.

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Soner Cagaptay – Zionist Israeli Puppet?

Russian President Vladimir Putin visits Turkey

Friends again – that’s diplomacy

The headline on Time‘s news feed read: Political Scientist: How President Erdogan Is Turning Turkey into Putin’s Russia”.

Well, that’s a pretty strange claim for a number of reasons, but I live in Turkey, and if anyone is magically turning it into Russia, I want to know about it – so I took a look.

The “political scientist” writer is a Turkish guy, long-term resident in the United States, called Soner Cagaptay. That’s an unfortunate name for a start. He must experience a lot of problems with monolingual, monocultural Americans who struggle to pronounce English words – and have no interest at all in familiarising themselves with the marvellously phonetic Turkish alphabet. For your information, “Soner” doesn’t rhyme with “boner”, and his surname should be pronounced “Charp-tie”.

zionist puppetBut that’s his problem – or one of his problems. Another big problem for Mr Cagaptay must be reconciling his academic integrity with the political agenda of his paymasters. After all, his CV claims a PhD from Yale, and teaching posts at Princeton and other top universities in the USA. I assume you don’t scale those heights by churning out sensationalist propaganda based on unsupported assertions. “Political scientist” may be one of his jobs – but I suspect a good chunk of his income derives from the fat wallets of bankers and industrial tycoons with major interests in controlling the Middle East for their own profit.

So what does this guy have to say about Turkey?

He starts by claiming the country is profoundly polarised, governed by a right-wing regime funded by resources far outweighing those devoted to opposing him.

WRONG.These days, despite the tireless efforts of anti-Erdoğan forces, Turkey is less polarised than it ever was. One of the larger opposition parties has thrown its weight behind Mr Erdoğan’s campaign for re-election. If “left” and “right” have any political meaning, surely “left” means taking a serious interest in the plight of society’s poorer members – in which case Turkey’s AK Party government is more “left” than any in earlier decades. Furthermore, it is clear that significant resources are being channelled by forces outside Turkey to getting rid of the country’s popular president.

Cagaptay goes on to speak of Mr Erdoğan’s “surging authoritarianism”, which he attributes to the president’s desire for “the country’s educated and creative elites to pack their bags and leave.” “Erdogan,“he says, “knows that an opposition led by powerful elites poses a permanent threat to him.”

WRONG AGAIN. What Mr Erdoğan surely knows is that for twenty years well-educated types and liberal urban professionals” have been bleating and complaining about everything he has done for the country, without showing any ability to organise themselves into an opposition capable of achieving victory at the ballot box. Most of them would love to return to the good old days when military coups were staged regularly to overthrow democratically elected governments and restore power to those “elites”.

rich-cat-with-food-scotch3

What a terrible country! I need to get out now!

Many distinguished professors are said to be leaving the country, and their students are flocking away to Oxford University in “alarming”numbers. Among these are “many old-money Turks who espouse liberal values”. According to Cagaptay, in one of the few statistics he actually provides (though no source is given), in 2016 “Turkey was among the top five countries globally to experience the highest outflow of millionaires.”

Some truth here, perhaps. Certainly the biggest complainers I meet in Turkey are people living in nice houses, driving late-model cars, with well-paying jobs or private incomes – in short, people who you would think would be grateful for a government that has, Cagaptay admits, “made strides towards that goal [of making Turkey great again],by delivering economic growth. When he came to power in 2003, Turkey was country of mostly poor people. Now it is a country of mostly middle-income citizens.”In 2001, before the AK Party came to power, Turkey was, in fact, a country of millionaires, because it cost a million Turkish Lira to buy a newspaper or get on a city bus.

turkey economyBut those, I’m sure, are the real reasons Cagaptay and his money-masters oppose Recep Tayyip Erdoğan’s government so rabidly. They don’t want to see genuinely populist governments succeeding in their aim of creating a more egalitarian society. Why did the United States government oppose Fidel Castro’s Cuba for 50 years with such determined ferocity? Why have they repeatedly used military and economic power to overthrow elected socialist governments in Central and South America? Why did they use the CIA to overthrow Iran’s democratically elected Prime Minister in 1952? Why did they support the dictatorship of Egypt’s Hosni Mubarak for 30 years? Then support the ousting of Mohammed Morsi, elected democratically after Egypt’s Arab Spring?

The real goal of Cagaptay’s financial backers becomes clear in his closing paragraphs: “They want to transform Turkey from an economy that exports cars [and other real things] into one that is a hub for software, IT, finance, and services — in other words an information-based economy and a star power.” There you have it. An economy like the USA, the United Kingdom, New Zealand and other “First World” states where money rules, the country is governed by a wealthy elite with no patriotic loyalty, who have exported offshore their manufacturing sector, created systemic unemployment and keep most of their fellow citizens struggling to survive in a condition little removed from slavery.

How do I know this? Soner Cagaptay’s ubiquitous CV proudly boasts that he is the Beyer Family fellow and director of the Turkish Research Program at The Washington Institute for Near East Policy. ”So I took a look at their website. Now I want you to know that I am as liberalminded as the next guy. I have very few prejudices and I have never been anti-Semitic. I know, and have known some very nice members of the international Jewish community. Nevertheless, I couldn’t help noticing a striking feature of the WINEP’s Directors. Check the surnames: Kassen, Berkowwitz, Weinberg, Leventhal, Adler, Bernstein, Freidman . . . to cite just a few.

Well, that’s no big deal, you say – and maybe not. But I checked out some of the owners of those names:

President Shelly Kassen– chaired the religious school committee at The Conservative Synagogue, very active in the America Israel Public Affairs Committee, recipient of the United Jewish Appeal/Federation Community Service Award in 2007.

Her husband of 30 years, Michael Kassen, former president of the American Israel Public affairs Committee, America’s pro-Israel lobby; has always been involved in the Jewish community, since his childhood in Cleveland, where his parents were active in the local Jewish federation. The couple has always been involved in a Jewish federation, first in Boston and currently in New York and Westport. Check out this speech if you want to know his politics.

Chairman Martin Gross– president of Sandalwood Securities, Inc. of Roseland, New Jersey, which he founded in 1990. Gross began in fund management in 1983. Previously, Gross “practiced tax and corporate law in New York City, and worked in the corporate finance department of L.F. Rothschild, Unterberg, Towbin[1]. A member of the New Jersey and New York Bars, he has written numerous articles for The Wall Street Journal, Barron’s and other financial publications and often lectures at industry (what industry?)conferences.

Chairman Emeritus Howard P. Berkowitz – Chief Executive Officer and Managing Director at HPB Management LLC. Mr. Berkowitz was the Managing General Partner at Hpb Associates Lp since 1980 which he also founded. He has managed investment funds since 1967, when he was a Founding Partner at Steinhardt, Fine, Berkowitz & Company. He served as Managing Director of BlackRock, Inc. BlackRock, Inc. is an American global investment management corporation based in New York City. Founded in 1988, initially as a risk management and fixed income institutional asset manager.

Founding President and Chairman Emeritus Barbi Weinberg – Past vice-president of AIPAC, major contributor to the World Alliance for Israel Political Action Committee and the Women’s Pro-Israel National Political Action Committee.

Well, maybe Mr Cagaptay believe all the stuff he spouts about Turkey – but I have my doubts. Four short years ago, he was saying this about Turkey’s attitude towards a possible Kurdistan on its southern border: “The takeover of Mosul by the Islamic State of Iraq and Syria (ISIS) has cemented the rapprochement between Turkey and the region’s Kurds, casting them as best friends in the increasingly unstable Middle East. The relationship has improved so much that if the Kurds in Iraq were to declare independence, Turkey would be the first country to recognize Kurdistan.” I wonder what he is saying now, after Turkey criticised the US government for supplying weapons to its Kurdish “allies” in Syria, and has been carrying out a military operation to drive them out of the area.

democracyOur learned “political scientist” also boasts that he has provided private briefings about Turkey to such champions of democracy and world peace as US Vice President Joe Biden, Presidential Envoy in Syria, Brett McGurk, former US Ambassador to Ankara, John Bass (currently, I believe, in exile in Afghanistan), former Secretary of State, Hillary Rodham Clinton . . .

President Erdoğan is “turning Turkey into Putin’s Russia”? What does that even mean? One thing Mr Erdoğan does have in common with the Russian President is a total belief in the sovereign right of his own people to govern themselves free from outside interference. I only wish the leaders of my own country, New Zealand, had as much strength of character.

To end this piece, I want to share with you a delightful little clip I came across on Youtube: Vladimir Putin performing in public his own interpretation of Fats Domino’s great song, Blueberry Hill.

https://www.youtube.com/watch?v=IV4IjHz2yIo

That guy went way up in my estimation!

_______________________________________________________

[1] known for its merchant banking investments, particularly in high-technology companies. In the early 1980s, the firm emerged as the leading underwriter of initial public offerings, surpassing the elite investment banks (at the time, including Lehman Brothers, Goldman Sachs and Morgan Stanley).

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.

Thoughts on rioting

We had a work party last Friday evening. It was a fairly restrained affair, as festive season work parties go. We were a mixture of ages – but as the evening progressed, oldies began to dominate the music selection.  At one stage, we found ourselves listening to “House of the Rising Sun “a big hit in 1964 for the British band, The Animals.

Well, would you believe it? It emerged that one of our number had gone to school with Eric Burdon! And that her gran and Alan Price’s gran had been friends, in Newcastle, way back when! For those too young to know, Burdon became synonymous with The Animals, but Price had been the original founder, later leaving to start another band, more conventionally, if less modestly, named The Alan Price Set.

My memory of the latter band was limited to a couple of strangely memorable tracks, “Simon Smith and the Amazing Dancing Bear”, and “The House that Jack Built”. Our Geordie friends, however, were insistent that, in their part of the world, Price is better known for his 1974 ballad, “The Jarrow Song” – so I had to check it out.alan-price-jarrow-song-warner-bros-3

https://www.youtube.com/watch?v=198t_7lOjpg

It’s not great music, I’m sorry to say – but its cheery tune contrasts somewhat incongruously with its subject: an event that took place in October 1936 during the Great Depression, when two hundred men from Jarrow in the north-east of England, marched 500 km to London to draw attention to the plight of their families and fellow citizens in a town where unemployment had reached 70%.

Ellen Wilkinson, the local MP, later wrote that Jarrow at that time was:

“… utterly stagnant. There was no work. No one had a job except a few railwaymen, officials, the workers in the co-operative stores, and a few workmen who went out of the town… the plain fact [is] that if people have to live and bear and bring up their children in bad houses on too little food, their resistance to disease is lowered and they die before they should.’” (The Town that was Murdered, 1939)

The Jarrow marchers, in a gesture remarkably peaceful given the circumstances, presented a petition to the British Parliament – who more or less ignored it, possibly demonstrating that peaceful protests rarely achieve much in the way of meaningful change. Perhaps more surprisingly, the British Labour Party at the time refused to support the march for fear of being branded as Communist-sympathisers. Clearly, attempting to bring about change by working through the system has its limitations too.

BBC History writes that, “In Jarrow, a ship-breaking yard and engineering works were established in 1938 and the Consett Iron Company started a steelworks in 1939. However, in areas such as Jarrow the depression continued until World War Two, when industry prospered as a result of the country’s need for rearmament.”

Which exemplifies an important but often overlooked benefit of war in a capitalist economy.

Battle of Cable Street

London bobbies protecting pre-Fascist demonstrators, Cable Street, October, 1936

While doing a little background research on the Jarrow march, I came across a contemporaneous event: the Battle of Cable Street. Sir Oswald Mosley, a former Conservative MP in the British Parliament – later switching allegiance to the Labour Party – was an enthusiastic supporter of Benito Mussolini and Adolf Hitler, and apparently saw Fascism as the way forward for Britain. He founded and financially supported a para-military group, the Blackshirts, modelled on similar groups in Italy and Germany.

On October 4, 1936, he organised an event of his own, gathering 5,000 uniformed Blackshirts to march from the Tower of London to the poorer districts in the East End. Al-Jazeera writes that, On the day of the march, the response was the mobilisation of the immigrant communities of the East End, together with British trade unionists and leftists, to stand against Mosley with barricades, bottles, bricks and fists.”

They were met by “thousands of policemen, including many on horseback, swinging batons as they charged the crowds” since Mosley “had official permission to stage his demonstration.”

Daniel Tilles, a historian and specialist on British fascism in the 1930s, has written that “On the day itself, it was a great victory for the anti-fascists, who greatly outnumbered the Blackshirts and stopped them from marching through the East End of London.

“But Mosley’s deliberate aim had been to provoke counter-violence to what was a lawful demonstration. In a way, he got exactly what he wanted. It allowed him to portray what happened as immigrants, aliens, violent communists stopping British citizens from exercising their lawful right to demonstrate.

“In the months after Cable Street, British Jews suffered far greater violence, intimidation and abuse than they had beforehand, So Cable Street unleashed this wave of anti-Jewish violence and abuse and gave the fascists a boost in popularity.”

A well-tried technique of those in power: provoke a violent incident, then use it as a reason for forcefully suppressing groups expressing dissenting views.

Similar occurrences took place in New Zealand during the 1930s, although the Labour Government there, elected in 1935, still retained some remnants of a commitment to relieving the suffering of the poor and unemployed.

soup kitchen

A soup kitchen feeding unemployed men during the Great Depression in NZ

Predominantly a farming economy in those days, New Zealand was badly hit by the Great Depression, and its effects perhaps struck sooner than in industrialised countries. There were major riots in the main cities in 1932, the worst happening in April when a large crowd of unemployed relief workers joined Post and Telegraph Association members marching to a Town Hall meeting, swelling their numbers to around 15,000. Angry at being turned away from the overflowing hall, some demonstrators scuffled with the police barring the entrance. When a leader of the unemployed, Jim Edwards, rose to speak – apparently to urge calm – a policeman struck him down. The crowd erupted and surged down Queen St. Armed with fence palings and stones . . . they smashed hundreds of shop windows and looted jewellery, liquor, clothing and tobacco.“

Conventional reports of the incident tend to focus on the looting and window-smashing, while soft-pedalling on the poverty and misery caused by widespread unemployment; and implying that the felling of Jim Edwards may have been accidental. However, the presence of navy sailors and Territorial Army troops with rifles and bayonets, and a thousand mounted volunteer “special” constables” armed with clubs, suggest that the government was all-too-ready to meet protest with deterrent violence.

Several leading lights in New Zealand literature focused on the Depression and its attendant human suffering: among them, novelist John Mulgan, playwright Bruce Mason, and poets Denis Glover and ARD Fairburn. Glover’s poem, “The Magpies”, uses the call of the magpie to represent the heartlessness of an economic system that drives a hard-working couple to bankruptcy, insanity and death. Fairburn’s “Down on my Luck” pursues a similar theme of a man who loses job, woman and possessions as he struggles his way “to the end of his tether” and probably suicide.

social-credit-prognostications

Still going round in circles on the “tax, borrow and hope” road.

Unfortunately, attempts to perpetuate the memory of those days have been gradually forgotten, assisted on the road to oblivion by the capitalist propaganda machine that distorts and discredits their true significance.

Bruce Mason’s dramatic monologue, “The End of the Golden Weather”, was adapted to an award-winning film in 1991 – unfortunately omitting the act that described the Night of the Riots in Central Auckland. The financial strategy of CH Douglas, expounding a middle road between communism and capitalism, was undermined by JM Keynes’s legitimisation of deficit budgeting, and the financial “stimulus” of the Second World War.

As Alan Price sang, back in 1974:

“Well I can hear them an’ I can feel them
An’ it’s as just as if they were here today
I can see them, I can feel them
An’ I’m thinking nothing’s changed much today.”

 

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.

If you don’t think there’s a conspiracy, you’re not paying attention

An interesting article I came across in Time Magazine: “Why Smart People Still Believe Conspiracy Theories”

wall street conspiracyA coterie of academic stooges set out to prove that people who believe in “conspiracy theories” are of sub-normal intelligence. Unfortunately for them, their findings did not confirm their initial hypothesis – so they had to come up with another one, ie people believe what they want to believe. Which is probably equally true of people who insist that there is no conspiracy.

The researchers’ fundamental error was to assume that people who believe there is a conspiracy have no solid evidence to support their belief. Not true, guys and girls.

  • Take a look at the Roman Catholic Church. One huge international conspiracy to keep the poor in slavery.
  • Take a look at Wall Street and the world of international banking and finance. Another monumental conspiracy to hide the truth behind global economic imperialism.
  • Take a look at the United States political system. Another major conspiracy aimed at convincing poor Americans that they actually have a say in how their government rules the country.

trumps-favorite-mcdonalds-meal-is-a-catholic-conspiracyA few extracts from the Time article:

“Millions of Americans believe in conspiracy theories — including plenty of people who you might expect would be smart enough to know better.

Despite mountains of scientific evidence to the contrary, at least 20% of Americans still believe in a link between vaccines and autism, and at least 37% think global warming is a hoax*, according to a 2015 analysis. Even more of us accept the existence of the paranormal: 42% believe in ghosts and 41% in extrasensory perception. And those numbers are stable. A 2014 study by conspiracy experts Joseph Uscinski of the University of Miami and Joseph Parent of Note Dame University surveyed 100,000 letters sent to the New York Times and the Chicago Tribune from 1890 to 2010 and found that the percentage that argued for one conspiracy theory or another had barely budged over time.

Now, a study published online in the journal Personality and Individual Differences provides new insights into why so many of us believe in things that just aren’t true: In some cases, we simply want to believe.

The second study was similar but also sought to correlate belief in conspiracy theories and the paranormal with overall cognitive ability. To determine this, the people answered a number of questions that measured their numeracy — or basic mathematical skills — and their language abilities.

us democracyWhat’s most troubling — and a little mystifying — is the fact is that so many people in the studies score high on all of the rational and intellectual metrics and yet nonetheless subscribe to disproven theories. That’s the case in the real world too, where highly educated people traffic in conspiratorial nonsense that you’d think they’d reject. In these cases, the study concluded, the reason may simply be that they’re invested—emotionally, ideologically—in believing the conspiracies, and they use their considerable cognitive skills to persuade themselves that what’s untrue is actually true. If you want to believe vaccines are dangerous or that the political party to which you don’t belong is plotting the ruination of America, you’ll build yourself a credible case.”

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*Interestingly US presidents and CEOs of large corporations seem to subscribe to this one!

Economic gobbledegook – and why the world is going to hell on a fast train

This is by some guy called Ambrose Evans-Pritchard, writing in the UK’s Daily Telegraph. Well, with a name like that you wouldn’t imagine he’d have missed too many meals in his life. He’s probably right in picking that it’s not a good sign for the future of the world when someone can pay $450 million for a painting, even if Leonardo da Vinci did paint it. Reading between the lines of overblown pretentious verbiage, I reckon he’s saying the world is in for another major financial crash, engineered by the same grotesquely over-paid, grasping, selfish “financiers” that brought us the last one.

Cy twomble

$46 million painting by Cy Twombly

Leonardo da Vinci has special cachet. What is striking about the Christie’s soiree in New York last week was not so much the US$450m ($661m) paid for his rediscovered Salvator Mundi but the prices fetched by everyone else.

Buyers forked out $46m for vermilion spirals from the Bacchus series by Cy Twombly, executed 12 years ago with a paint-drenched brush on a pole. Soothing sands called Saffron by Mark Rothko fetched US$32m.

The week’s haul at Christie’s and Sotheby’s topped US$1.5 billion, with Asian buyers snapping up Monets. Fernand Leger’s abstract Contrastes de Formes fetched US$62m.

It screams late-cycle liquidity, recalling Japan’s impressionist fever in the late Eighties before the Nikkei collapsed and the bottom fell out of the art market.

092216-best-paidBitcoin clinches the argument. It has risen more than 1,200 per cent over the past year to more than US$8000 – five times an ounce of gold – on a “greater fool” presumption.

This is not a criticism of blockchain technology. It will flourish. But you cannot yet buy and sell things in any meaningful way with cryptocurrencies worth US$180b.

Bitcoin will end badly, either when the Chicago Mercantile Exchange launches its futures contracts in two weeks and allows traders to short it, or when the global cycle turns. A runaway asset boom can last a long time when the G4 central banks are holding real interest at minus 1.5 per cent and spending US$2 trillion a year soaking up “safe assets”

And here’sAcademic bulls say the stock of central bank assets is still growing. Market bears counter that the flow is falling, which matters more to them. Hence the recent rout in high-yield credit. Junk bond funds saw the biggest outflows since 2014 last week.

A parallel retreat is under way in East Asia where US$800m of bond sales in steel, solar and palm oil were cancelled. These are minor tremors. What threatens the universe of stretched asset values is the return of US inflation. The boom is built on the premise that the Fed will bathe the global system with ample liquidity.

banking-2015

2015 figures for the UK

Yet that is precisely what is now in doubt as US unemployment drops to a 17-year low and the dormant Phillips curve reawakens. The New York Fed’s underlying inflation gauge has jumped to a post-Lehman peak of 2.96 per cent.

All it will take from now on is a single piece of hard data to confirm this trend and the markets will reprice interest rate futures abruptly, shaking the whole edifice of global risk appetite.

Staccato rate rises by the Fed would ignite a dollar surge, squeezing an estimated US$10.7t of offshore dollar debt. There is a further US$14t of global dollar debt hidden in derivatives and FX swap contracts, pushing the total to US$25t.

The Wolf of Wall Street

“Watching with wolfish concentration . . . “

I didn’t want to upload the whole pretentious, jargon-loaded article – just give you a taste – but here’s Evans-Pritchard’s conclusion:

“Major players in the City are watching with wolfish concentration. Bank of America says the air is getting thinner for risk assets but tells clients to stay with the “Icarus trade” as long as you can still breathe.

Mark Haefele, investment chief at UBS, says it is too early to bail out but the coming inflection point is “something we think about a lot”.