AuthorTopic: Global Econo-Fiscal Crisis...  (Read 2191 times)

Offline Slogger

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Global Econo-Fiscal Crisis...
« on: January 20, 2015, 01:50:27 AM »

Off the keyboard of John Ward


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Published on The Slog on January 18, 2015


https://hat4uk.files.wordpress.com/2015/01/questmarks.png


The fiscal surrealism and economic mendacity of supranational globalism has abolished the right decision


Discuss this article at the Economics Table inside the Diner


…If nobody knows the truth, then nobody knows what to do. Now it’s your turn to have a go


I thought we might have a change this bright and sunny, freezing-cold windy Winter’s morning here in agrarian France. You see here – down among the agricultural equipment dealers, maize farmers and fruit orchards – most people are busy at the really important tasks in life: bringing up kids, feeding the soil, pruning trees, having a jolly good drink-up at the salle des fêtes, and evading tax. They don’t do derivatives, currency wars, open-market squeezing, spin, gold manipulation and Libor rates: they chop, they mow, they grow, they sow and they crop. It’s dead simple: plant, water, prune and collect.


The downside of all that is the failure of most conversations to move beyond rainfall, the Meteo, shooting things, and the price of tractor oil. But you do not need an IQ in four figures to work out why one decision is almost certainly better than another. The biggest, most life-changing drama they’ve had down here since the Second World War was the collapse in the tobacco market, and consequent switch from causing cancer to easing constipation. From the highest in the medical profession via the Mayor to the smallest orchard keeper, that was a bit of a no-brainer.


Compare and contrast this fundamentally boring but at times idyllic life with that of the benefit dependent, lab-rat, securities trader, marketing director, retired adman, politician, commodities consultant and business journalist archetypes out there trying to work out what to do “for the best” – given that even the best feels increasingly like the least appalling Hell on offer. Various of them could buy a house, sell a house, take money out of the bank, take it out of the markets and put it in the bank, buy gold, hold gold, pile into Bear notes, see eurozone QE as another bull to ride, get rid of the mortgage, extend the mortgage, take a casual job, take in a lodger, poison grandma, vote UKip, vote Tea Party, vote Pub Landlord, sell Sterling, sell euros, sell the Dollar, buy the Rouble, prepare for hyperinflation by hoarding tinned peas, or prepare for corrosive deflation by opening a market stall and selling tinned peas previously hoarded.


The vast majority of people do nothing, because both life and time are too short to decide whether one should be long in assets, or collecting cash ready for the big rates hike. When the Swiss Central Bank decoupled the CHF last week, something in excess of 40-50 million European citizens, businesses and bourse traders were caught out. All those Poles with Swissy mortgages, for instance, discovered overnight that they were going to fork out an awful lot more szlotys than previously advertised.


So the question I raise in order to ruin your digestion this morning is not to salute or fire at predictions on my part. Rather it is to present two things for real people around the world to propose and/or think about:


1. Do you know WTF is going on – and answers must be databased not insanely assertive.


2. Is this reality of permanently confused uncertainty a good or bad thing for greatest contentment of the greatest number?


I shall eschew the route of “pay attention – this is the real story”. The cacophony of crisis that follows is merely a guide to the stimulation of discussion and generation of serious interpretation.


1.THE SWISSY & THE EURO


While a big  me buys into the idea that Draghi, once he had the ECJ judgement firmly in his pocket (as opposed to up his sleeve) then contacted the Zurich Gnomes and told them to do “whatever it takes” (yawn) in order to leave his little bit of euro-printing for the easing of liquidity in the ezone – rather than for the fiscal-cleansing of those euros into CHFs.


But there are two bits I can’t get my brain around. First, investors don’t just go for income – they also follow rising valuations. The Swissy may well now be offering negative interest, but has already surged 35% since decoupling from the zero: I doubt very much if it has, as yet, dun surgin’. And second, I don’t accept Frances Coppola’s argument that the Swiss are massively outgunned here.


Hint: two rules in life. (a) never cross the Swiss, you’ll regret it; and (b) I cannot believe that such a ridiculously damaging CHF value (in export terms) will be tolerated for long inside the mountain cantons. Philanthropy is not a word in the normal lexicon of Swiss motives. My ex-wife is no doubt stockpiling Britain’s supplies of pre-surge Toblerone bars, but I can’t see this ‘deal’ holding.


Right now, Salvador Draghi looks like a very desperate man indeed. In short order, he has given the Bundesbank a bloody nose, and turned Swiss pockets upside down. Does he need to be more careful in his choice of enemies? Or does one take the view that Draghi wants a seat at the top table in a post-euro world: that he is, in fact, working for Wall Street’s Dollar – not the Frankfurt euro?


Discuss. Use both sides of the paper.


2. THE DOLLAR AND THE ANTIDOTE, GOLD AND ENERGY IN A GLOBAL SLUMP


Here’s a very simple double-axis of important things I constructed yesterday while not feeling terribly well:


DOLLARAXIS


It is, as I promised, very simple. The tricky bit is trying to work out what will happen to the relationships between them, given that (a) the Rublenimbi doesn’t exist yet, (b) gold is rising but so is the Dollar (c) oil should continue to fall because demand is falling but (d) if the Saudis decide to call it a day and Putin presses on with his pressure on EU gas supplies, it could rally and start to go up again and (e) the central banks still need gold to be cheap, so surely they’ll pile in/doctor the trackers to stop it rising away to infinity while (f) if the Rublenimbi gets born, the Dollar should fall and gold rise as a safe haven but (g) as China holds huge mountains of Dollar debt, she wouldn’t want the Dollar to be damaged by the Rublenimbi.


I left the Swissy out because if you include its decoupling in this diagram, it requires one to have a 3D-printer for a brain.


3. THE INDEFLATION THANG


Again, just simple thoughts:


The following are deflationary forces:


Rising currency valuation….depresses exports


Cheaper transport and heating costs


Sovereign debt bonds….bigger Sovereign debt begets bigger borrowing costs begets austerity


Cheaper borrowing costs ONCE DEFLATION HAS STARTED….because very quickly, people decide to hold off purchasing stuff – as next year, it’ll be cheaper. Reduced borrowing costs actually reduce borrowing in that context, because they further highlight worsening deflation – reducing consumer confidence. So once the slump gets a grip, people reduce all outgoings: a debt at even 2% is still a capital/interest sum to be paid each month.


Reduced workplace security….see above.


Reduced welfare…because that reduces demand at the lower end.


Poor export performance….because you need taxes to pay off deficits, and…


Higher taxation….because that too reduces demand across the board…which…


…stimulates buying of cheap imports (cf retail/elec growth foreign/chinese brands)


The UK coalition is doing all these things at the moment, yet claims to be keen on avoiding deflation. Um…


The following are inflationary forces:


Money printing


Falling  currency valuation….increases real import costs….especially when the Sovereign has a sizeable trade deficit and imports most of its food.


Government spending/investment increases based on money-printing (but not borrowing)


Wage rises


Rising interest rates (buy it now at a fixed rate)


Inflation itself – buy it now because next year it’ll cost more


Tax cuts at the lower end of the social scale….increases mass demand


The UK Coalition is adamant that it’s being jolly clever by avoiding all of these things. But there is an obvious argument here for doing the exact opposite. And bright sparks everywhere will have spotted that, in order to keep society vaguely glued together, reduce the time it takes to get to Manchester, and keep up the QE/OMT, the Government is being forced to borrow more and more….which, despite Giddy Frogspawn’s idiotic denials, is why the UK national debt continues to rise.


It has struck me several times over many months now that pretty much all of this last collection of Midas in Reverse is going on because there is a fundamental disconnect between what citizens need and bankers want. What does everyone else think?


4. THE RISE &  RISE OF THE CRAP OPPOSITION


It’s a funny thing missus, but whatever their political hue, very few Opposition Parties around the ‘democratic’ world really have any new answers to the confusion at all.


Why, for example, is Labour not saying, “F**k what the neoliberal pointy-heads say, this entire system is bollocks, and a combo of experience and instinct suggest Britain needs two things: massive investment in high-margin export manufacturing, and wholescale reflation. That is going to cost money, and so what we’re going to do is soak the rich, cut all taxes on the poor, and print the stuff willy-nilly without borrowing anything at all….which debt will be worth nothing at all by the time we’ve finished”?


Just forget 1923 for a minute and think: why not? Answers on a comment thread at this address.


Why in the US is the Republican Party not saying, “F**k this global policeman crap, let’s get back to entrepreurial isolation, farming subsidies and balancing the books: we don’t need anyone else if we can sell to ourselves, feed ourselves, and profitably export the excess”?


I’m not a Republican, but I’d vote for that. What about you?


Why in Japan is the anti-Abe axis not saying, “F**k the BoJ buying Buckingham Palace garden party bonds and Gruyere window shares, let’s give our consumers tax relief for buying more than 2000 yen of non-food stuff a week, and out-develop the US where they’re lazy: cars and really useful hitech”?


It sounds dangerous….but it is what made them winners in the first place.


Yours in continuing confusion and hapless search of the answers


Monsieur Le Slogfrog x


 



Offline Joseph McCafferty

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Re: Global Econo-Fiscal Crisis...
« Reply #1 on: January 25, 2015, 09:20:44 PM »
What is disappointing to me, is that I look at the English speaking western world, and the leaders of those countries could feasibly be exchanged for each other. You could have an exchange program and Obama becomes prime minister of Australia, Cameron becomes POTUS, Abbott becomes prime minister of Canada, and Harper becomes prime minister of the UK of A. They wouldn't have to change anything. They could carry on saying the same things and doing the same things, and nobody would even notice policy-wise. They are all acting for the same interest groups - banksters and corporations.

The same could be said for the opposition in these countries. You could swap out the leaders between the parties and no-one would have to change. Look at Bobby Jindal down there in the bible belt, "America needs a spiritual revival." He is just replicating the memes from a book of memes authored by corporate interests titled, "How To Become President." Step 1: go down south and say, "America needs a spiritual revival." Check.

We have leadershit issues.

Offline MKing

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Re: Global Econo-Fiscal Crisis...
« Reply #2 on: January 26, 2015, 07:14:07 AM »
We have leadershit issues.

No we don't. We have citizen issues. If citizens are stupid enough to install bad leadership, then they get what they deserve. So we are...and we do.
Sometimes one creates a dynamic impression by saying something, and sometimes one creates as significant an impression by remaining silent.
-Dalai Lama

Offline WHD

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Re: Global Econo-Fiscal Crisis...
« Reply #3 on: January 26, 2015, 09:42:55 AM »
We have leadershit issues.

No we don't. We have citizen issues. If citizens are stupid enough to install bad leadership, then they get what they deserve. So we are...and we do.

Citizens don't install the Fed board or chairman. Citizens don't install corporate boards or CEO's. Citizens do not install bank administration. Citizens do not install oligarchs or plutocrats. These people lie to citizens through the bought and paid for MSM every day. So MKing, what is your reasoning for putting it all on "stupid" citizens?

WHD

 

Offline MKing

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Re: Global Econo-Fiscal Crisis...
« Reply #4 on: January 26, 2015, 05:10:52 PM »
We have leadershit issues.

No we don't. We have citizen issues. If citizens are stupid enough to install bad leadership, then they get what they deserve. So we are...and we do.

Citizens don't install the Fed board or chairman.

What is so hard to understand about how a representative form of government works? Folks hire folks to do a job, and sure, those folks are expected to do a job. Like pick Feb board and chair folks. Fortunately, the Fed isn't doing near as half assed a job as those representatives are. So we start with the big problems first, and it ain't them.

Quote from: WHD
Citizens don't install corporate boards or CEO's.

True. But citizens buy their products and keep them in business. You do understand that oil and gas companies make LOADS of money because you, your friends and neighbors, your relatives, BUY those products, right? Stop already…be a smart citizen…change the world.

Quote from: WHD
Citizens do not install bank administration.

Right. They keep their money in the bank, allowing them to fashion in whatever manner they wish. Get your ass into a credit union already…be a part owner in your own bank. Didn't they TEACH you any of this kind of stuff in school?

This is AMERICA!!! You have the right to vote with your FEET and your DOLLARS. You have the right to convince as many people as you can or have the effort to do the same thing!! What is so hard about this?

Quote from: WHD
Citizens do not install oligarchs or plutocrats.

Well, now we are talking about countries other than us.

Quote from: WHD
These people lie to citizens through the bought and paid for MSM every day. So MKing, what is your reasoning for putting it all on "stupid" citizens?

WHD

Because they ALLOW it all to happen. They make STUPID decisions, they elect STUPID people, they demand things they have no right to expect and when people PRETEND to give it to them, they don't even notice they've been had. This entire theme of victimization is ridiculous, and for some reason, you more than nearly anyone else on this website seem to fall for it, hook line and sinker. Forget it already. It is nothing but yet another distraction to taking your own life…into your own hands..and DOING something about it. Victimization makes it possible to just sit around whining about how unfair everything is because you weren't first born of Bill Gates.
Sometimes one creates a dynamic impression by saying something, and sometimes one creates as significant an impression by remaining silent.
-Dalai Lama

Offline WHD

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Re: Global Econo-Fiscal Crisis...
« Reply #5 on: January 26, 2015, 05:33:07 PM »
Quote
This entire theme of victimization is ridiculous, and for some reason, you more than nearly anyone else on this website seem to fall for it, hook line and sinker. Forget it already. It is nothing but yet another distraction to taking your own life…into your own hands..and DOING something about it. Victimization makes it possible to just sit around whining about how unfair everything is because you weren't first born of Bill Gates.

MKing,

This is why I love to let you speak for yourself. Too bad I'm not around more. I mean seriously, Bill and Malinda want to turn Africa and south America into GMO plantations, except most of the people will be huddled in mega-city squalor, all the land controlled by NGOs and corporations financed by international financiers, and mega banks. Same for America, basically. LOL Patriot.

WHD

Offline MKing

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Re: Global Econo-Fiscal Crisis...
« Reply #6 on: January 26, 2015, 08:01:38 PM »
Quote
This entire theme of victimization is ridiculous, and for some reason, you more than nearly anyone else on this website seem to fall for it, hook line and sinker. Forget it already. It is nothing but yet another distraction to taking your own life…into your own hands..and DOING something about it. Victimization makes it possible to just sit around whining about how unfair everything is because you weren't first born of Bill Gates.

MKing,

This is why I love to let you speak for yourself.

I wasn't. I was tired of the entire issue in college, tired of the issue when the President went after welfare queens, when Ronny went after the air traffic controllers. Everyone complaining,  everyone a victim, the government trying to save all the victims and in the process enabling that many more. So now we have an entire country raised on the concept of being the victim, always someone else to blame, the hubris of Americans specifically and humans in general thinking they are owed something from the universe.

And when you mention or dare even suggest the near crap shoot Vegas odds nature of it all….they get this puzzled look on their face….stunned by the very idea that it might just be bad choices, bad luck, or ignorance that landed them on the square they now stand on. Good or bad.

Quote from: WHD
Too bad I'm not around more. I mean seriously, Bill and Malinda want to turn Africa and south America into GMO plantations, except most of the people will be huddled in mega-city squalor, all the land controlled by NGOs and corporations financed by international financiers, and mega banks. Same for America, basically. LOL Patriot.

WHD

Problems don't get solved by whining about them first, or blaming them on everyone else second. You don't like the world you are in, it makes you unhappy and cranky just thinking about it? Try another. Go all churchy like Ashvin maybe, or Mayan calendar imaginary gases like azozeo, if you really believe in your stance on oil and natural resources, try rewilding, that looks sort of cool.

But geez, DO something, you'll feel better in general, really. Nothing helps folks out of a mood like deceiving themselves that they have some measure of control over what happens to them next, even if it is WORSE, but they can face it head on, they won't be near so damn cranky all the time.
Sometimes one creates a dynamic impression by saying something, and sometimes one creates as significant an impression by remaining silent.
-Dalai Lama

 

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