Economics, Essays, historical perspectives, latest

Four Little Words

Frank Lee

The South Sea Bubble, a Scene in ‘Change Alley in 1720 (Edward MAtthew Ward, 1847)

The ruling global elites of our time are like the Bourbons before them: “Have Learnt nothing and forgotten nothing.” – Talleyrand

It was Sir John Templeton, the American-born British investor, banker, fund manager, and philanthropist, who sardonically observed that in business and finance the expression ‘this time it’s different’ represented the four most expensive words in the business lexicon. Today’s market fundamentalists seem fixated with the quasi-religious belief that (a) bubbles can go on inflating forever, or (b) I will take my profit just when the market tops out. But how many times have the investing herd had their collective snouts rubbed into the reality that there is no such thing as a free lunch? Unless of course you are on the inside. Whenever a market is oversold and seems to offer something for nothing, market participants behave like wildebeest herds on the plains of the Serengeti stampeding in precisely the wrong direction to the refrain of – ‘this time it’s different.’

Even Sir Isaac Newton, possibly the greatest mathematician/physicist who ever lived, was swept away in the euphoria of the South Sea Bubble[1]: In the spring of 1720, he owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he “could calculate the motions of the heavenly bodies, but not the madness of the people.”

Newton dumped his South Sea shares, pocketing a 100% profit totalling £7,000 – smart move. But just months later, again swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price – dumb move. He lost £20,000 (or more than $3 million in [2002-2003’s] money). For the rest of his life, he forbade anyone to speak the words ‘South Sea’ in his presence. Poor old Issy; alas, he should have known better. But it has ever been thus and will continue to be so.

Another salutary episode, this time from the 20th century, confirmed the emergence and path of bubble assets/markets to their inevitable dénouement. There had been feverish growth in US stock market in the run-up to 1929, and, as usual, all the talk was of economic miracles, new paradigms, and so forth. Typical were the words of President Coolidge in December 1928: “No Congress of the United States ever assembled on surveying the State of the Union, has met with a more pleasing prospect than that which appears at the present time…there is tranquillity and contentment…and the highest years of record prosperity.”

Speculators, traders and investors in New York’s financial district drove up the market to dizzying heights exhibiting the same frenzied, hivemind bubble-mania behaviour; an archetypal boom to bust chapter. Later in October 1929 the prominent Yale economist, Irving Fisher, opined that ‘Stock prices have reached what looks like a permanently high plateau.’ Hmmm, I seem to have heard this somewhere more recently.

Three weeks after this somewhat premature pronouncement the Dow Jones Industrial Average (the US stock market) was down by one third. By the summer of 1932 the Dow closed down nearly 90% lower than its 1929 pinnacle. Fisher and many others had made the mistake of thinking that the long bull-market of the 1920s (the roaring 20s) had assumed an unstoppable momentum and would go on rising forever. (An end to boom and bust if you will.) Throughout the 1920s the Dow Jones Industrial Average (DJIA) had risen inexorably; this was in part due to the new technologies and production methods which were allowing scope for considerable economies of scale and therefore increases in output so that a mass consumer society was to come into being. Moreover, modern management and marketing techniques could keep this consumer boom humming along in perpetuity, or so it was thought.

This situation of optimism and, as Keynes put it, rising animal spirits was conducive to the general propensity to invest in stocks and bonds. Everyone was playing the market; the party was in full swing even in this era of prohibition. Something of the flavour of the times is captured in the novels of F Scott Fitzgerald, The Great Gatsby or This side of Paradise.

Of course, the situation was never going to last; bubbles never do, no matter how big or irreversible they may seem at the time. It should also be noted that it is precisely when the bubble phenomenon and attendant growth levels reach their most febrile state that the correction becomes imminent. And so, it panned out.

The impact on the real economy of the stock market crash was that by 1933 unemployment had reached 25% of the American workforce and the economy had contracted by 30%. Worse still the catastrophe had spread to Europe – Germany being particularly affected with unemployment levels comparable to the United States. Now the writers of the age were John Steinbeck graphically illustrating the conditions of life in 1930s America in The Grapes of Wrath and Cannery Row. The UK also felt the chill winds of depression crossing the Atlantic as best expressed in the literature of Arthur Greenwood’s Love on the Dole, or Orwell’s The Road to Wigan Pier.

Thus the ‘jazz age’ ended and was superseded by a more egalitarian order: Franklin D. Roosevelt was elected US president in 1933 and immediately used active fiscal policy to create jobs and stimulate the economy as well as social reforms like relief for the unemployed and old age pensions. He did meet with partial success in that unemployment fell in the US up until 1938. However, there was a fresh recession and unemployment began to rise again. Eventually rearmament and the Second World War led the world out of the 30s depression.

As an interesting side-bar the structural changes in the US economy from 1941 was profound, albeit temporary.

The (US) war economy did not stimulate the private sector, it replaced the free market and capitalist investment for profit. Consumption did not restore economic growth as Keynesians should expect; instead it was investment in weapons of destruction.

In many industries corporate executives resisted conversion to military production because they did no want to lose consumer market share to competitors who did not want to convert. Conversion thus became a goal pursued by public officials and labour leaders. Auto companies only fully converted to military production in 1942 and only began substantially contributing to aircraft production in 1943. From the beginning of preparedness in 1939 to peak of production in 1944 the war economy could not be left to the capitalist sector to deliver. To organize the war economy and produce the goods needed for war the Federal Government created an array of mobilization agencies, which often purchased goods, closely directed the goods manufacture, and heavily influenced the operation of private companies and whole industries …

The Treasury Department introduced the first income tax in American history, and war bonds were sold to the public … the government extended income tax to virtually the whole citizenry and collected it at source by deductions from wages at source. Those subject to income tax increased from 4 million in 1939 to 43 million in 1945 … All told taxes provided about $136.8 million of the war’s total costs of $304 billion. To cover the other $167.2 billion the Treasury expanded its bond programme, which served as a valuable source of revenue for the government. By the time that the war bond sales had ended in 1946. Some 85 million Americans has purchased $185 billion worth of securities often through automatic deductions from their pay checks.[2]

Now tell me that socialism or a command economy would never work or even be entertained in the United States!

At the present time we are experiencing a double whammy of a financial and increasingly economic collapse. What gave rise to this was the biggest credit and property bubble in the history of capitalism. The boom from the early 90s until mid-2007 was essentially floated on a sea of debt. Mortgages were advanced to almost anyone who wanted them regardless of their ability to pay; individuals spent freely on credit cards without any thought for the morrow. Their debts could be rolled over or compensated by increasing asset prices (mainly property). So as consumers borrowed against the ongoing increase in their house prices, banks would lend them more. So, there was an upward spiral: the increasing level of credit led to an increase in property prices and the increase in property prices led to an increase in the availability and uptake of credit; the classic bubble scenario.

Worse still the mortgages held by the banks were repackaged (securitised) into new financial products, Mortgage Backed Securities (MBS) and Collateralised Debt Obligations (CDO) and often sold on to other financial institutions: Hedge Funds, Pension Funds, Insurance Companies and so forth. Okay so far, so good, the party roared on. However, the weak link in the chain was the American sub prime market. A group termed NINJAS – No Income, No Job, No Assets. This group predictably began to default, and the banks were found to be holding assets of very dubious value. This initial default was the detonator which burst the house price bubble in all of those countries which had experienced a property boom – the US, UK, Ireland, Spain and Australia.

The meltdown also started to affect countries who had not experienced a property boom but whose banks had foolishly purchased dreaded mortgage backed derivatives and collateralised Debt Obligations (MBSs and CDOs). Banks in Germany, Switzerland, the low countries, Iceland, and more especially Eastern Europe, began to feel the heat. Many banks (and even countries – Iceland) were now insolvent and had to be rescued by the governments or usurious loans from the International Monetary Fund (IMF).

Enter the credit crunch. Credit dried up even though property prices were falling. Since the US and UK economies had been essentially based upon the property market it was inevitable that the banking and property collapse would impinge very directly on the real economy. At the time of writing unemployment was rising very sharply, and deflation with falling (or static) prices and wages. Retailers were under the cosh with falling sales, and bankruptcies and boarded up shops are an increasingly common sight. We were already in a recession, if not the beginnings of a longer-term depression. Moreover, there are likely to be further eruptions to come in the murky world of Credit Default Swaps and Derivatives. These are totally unregulated and highly leveraged markets involving literally tens of trillions of dollars traded over the counter (OTC). The only question remaining is how long and how deep this financial/economic downturn was going to be. More important still perhaps were the possible political ramifications of this situation.

Such was the ignominious end to the fatuous claim of ‘no more boom and bust’. The shame was that it was all so predictable. And the shaming part was the extent that the government of the day colluded – in terms of bank deregulation and ease of credit creation – in and made possible this bubble creation by the financial and banking sector. This was a joint market/government failure.

Fast forward 10 years from the nadir of the 2008 bust and the portents are manifest and alarming. Global debt levels are unprecedented. In mid-2018 Global debt hit another high, climbing to $247 trillion in the first quarter of 2018, according to a report published Wednesday. Of that figure, the non-financial sector accounted for $186 trillion. The debt-to-GDP ratio has exceeded 318 percent, marking its first quarterly rise in two years.

As far as individual countries are counted, the US total debt is now 202% for private debt, (2017 figures), public debt has increased by 105%, so that total debt to debt-to-GDP is in the range of 300% plus or 3 times as large as GDP. China also has problems, mostly private debt, but total debt, when public is added to private is a cool $34 trillion. I suppose one consolation is that the debt is nominated in Yuan, but maybe that just clutching at straws. But China does hold large volumes of US dollar denominated assets, Treasuries, which it can dump any time.

Now if the two major global economies have big problems, one can only shudder for everyone else and think what might happen if both US and China hit the buffers at the same time!

In terms of vulnerability Europe and the EU seem prime candidates for the debt shock-waves emanating from both east and west. GDP growth in Euroland is stuttering between 1.5 and zero. These are almost depression figures. Interestingly enough the ‘big 4’ euro economies have experienced the following increases in most recent annual real output figures. As follows: UK 1.5%, France 0.9%, Germany 0.6% and Italy at 0.1%. For Euroland as a whole the figure stands at 1.2% (Source: Trading Economics). It is also worth noting that the UK Remainers might have a difficult time explaining why their dire predictions about the UK is somehow worse than the even more calamitous figures from mainland Europe? But, hey, let’s not let facts spoil the Remainer hysteria.

Another important indicator of what is to come is the P/E ratio. Price to earnings ratio – as reported in the financial press – is the prices of equities compared to their earnings. According to the Standard and Poor (S&P) composite index the average P/E ratio (market valuation) since 1871 has been 16.9, at the present time it is 28.5, that is to say well above the average. On only two occasions during the twentieth century has this figure been exceeded: 32.6 in 1929, and 44.2 in 2000. This means that the US stock-market is overvalued. Nothing can stay overvalued indefinitely, even if central banks and Treasury departments want it to. Their Herculean efforts notwithstanding, they have not and cannot invent a perpetual motion machine.

Additionally, there is the flattening of the long-term bond yield curve. Government bonds and notes are sold for different durations, from overnight to 50 years. In normal times the rate of interest on these securities varies with the length of their maturity. However, when investment in long-term bonds increasingly aligns with shorter term notes and bonds the long-term yield carve begins to flatten and even dip below short-term debt instruments. This is usually a sign of a coming recession, since investment in short term notes and bonds are exposed for shorter redemption dates in an unpredictable economic/financial environment. All of which makes jumpy investors wary about committing themselves to long-term bets.

Yield curve flattest since before financial crisis
3:48 PM ET Tue, 4 Dec 2018 | 02:35

One key recession indicator is flashing a warning signal to investors. The yield curve has flattened to its lowest level since June 2007 with the 10-year Treasury note yield only around 10 basis points above the 2-year note.

Joseph LaVorgna, chief economist of the Americas at Natixis, says the move has him “very worried” about what comes next.

“The yield curve has almost always forecasted the direction of trend growth, meaning when the curve flattens, growth with a lag tends to slow and vice versa when the curve steepens,” LaVorgna told CNBC’s Trading Nation on Tuesday.

The yield curve inverts when shorter-term Treasurys yield more than longer-term Treasury yields. The relationship between the 2-year and 10-year yields is often used as a barometer of investor expectations for economic growth.[3]

One of the consequences of the 2008 debacle and the great bank bail out was what followed in terms of income inequality and austerity. The banks were partially bailed out (there are still a number of basically insolvent banks out there – Deutsche Bank being number One). But what followed was a secondary corresponding bail-out of national economies by the imposition of austerity. Social welfare programmes were cut, as were wages, pensions, health and education, transport, interest rates on small savers, with other miscellaneous parts of government expenditure. This resulted in an income re-distribution upwards.

In short, the rich 1% got richer whilst most other cohorts either got poorer or trod water. So much is common knowledge. But the effects of a small group appropriating an increasingly large portion of national income means that their savings increase at a faster rate than their expenditures. This results in low growth or no growth and stagnation. In economist’s jargon the rich have a greater marginal propensity to save rather than marginal propensity to consume expressed as MPS>MPC, and the lower deciles have a greater marginal propensity to consume than to save, MPC>MPS.

Huge agglomerations of capital are therefore being effectively idled since the rich can’t spend their fortunes quickly or exhaustively enough whereas the other deciles of more modest means cannot effectively consume because they don’t have sufficient incomes, or, worse still, they are sinking into debt peonage which adds an additional impediment to growth.

We can say with some certainty that these austerity policies are never going to work, and I suspect that the elites know this. There will be no catching up by the dispossessed; this rising tide is not going to float all boats, on the contrary it will sink many. Yet the great bullshit mega-show issuing from the university academic economics departments, the financial press, the global institutions – IMF, WTO, WB, OECD, BIS – Treasury departments, Central Banks and Finance Ministries of governments around the world must go on. TINA (There Is No Alternative) the great courtesan of economic theory and policy is back in town. In fact, she never left.

Remembering the axioms of my youth I recall one in particular. “You don’t need a weatherman to see which way the wind blows.”[4] The canaries in the coal-mine are Brexit, Trump, the Yellow Vests, the awakening of Europe, east and west, and the emergence neo-nationalist and populist movements[5] in the struggle against globalization and for national sovereignty and democracy. Neoliberalism is increasingly under siege and the deepening of this crisis it is not going to stop.

Other economic policies and possibilities have always existed and still do. But don’t count on any policy other than the one already foisted on us. The PTB are guided by a learned ignorance. In a more profound sense, the question is not an inability to learn by our ‘betters’ but a determination not to. The PTB will not and cannot learn, and like the Bourbons they have learned nothing and forgotten nothing.

NOTES:-

  • South Sea Bubble 1720 – In the 1700s, the British empire spanned the entire globe. So, the South Sea Company had no problem attracting investors when, with an IOU to the government worth £10,000,000.00, the company purchased the “rights” to all trade in the South Seas. The first issue of stock didn’t even satiate the voracious appetite of the hardcore speculators, let alone the average investors who were assured of this company’s coming dominance. Eventually the management team of SSC took a step back and realized that the value of their personal shares in no way reflected the actual value of the company or its dismal earnings. So, they sold their stocks in the summer of 1720 and hoped no one would leak the failure of the company to the other shareholders. Like all bad news, however, the knowledge of the actions of SSC management spread, and the panic selling of worthless certificates ensued. A complete crash, which would be heralded by the folding of banks, was avoided due to the prominent economic position of the British Empire and the government’s help in stabilizing the banking industry. The British government outlawed the issuing of stock certificates, a law that was not repealed until 1825.
  • The Long Depression – Michael Roberts (p.57)
  • Trading Nation – 7:57 AM ET Wed, 5 Dec 2018
  • Bob Dylan
  • The Rise of neo-nationalism in the globalization era as a movement for national sovereignty; it has nothing to do with what we call the rise of Euro-fascism, mainly in the ex-Soviet bloc of countries in Eastern Europe (mainly Ukraine and the Baltics). The unifying element of the Euro-fascists is that they implicitly or explicitly accept the New World Order (NWO) of globalization, if not in their official ideology, then at least in their practise. This is the case for instance of Ukrainian Euro-fascists who were massacring in the Don Bass and Odessa under the EU flag (sometimes next to NATO banners and even swastikas) and were fully backed and funded by the Transnational Elites both by the EU as well as its US parts (Victoria Nuland, the US Assistant Secretary of State for European and Eurasian affairs seen together with US Ambassador to Ukraine, Geoffrey Pyatt, distributing cookies to Maidan Euro-fascists – Right Sector, Svoboda, Patriots of the Ukraine, as well as the fully militarised battalions such as the Azov brigade, all paid-for neo-nazi armed groups often in full Nazi regalia who had been funded, and trained for this by western special forces, in both Ukraine and Poland.” Takis Fotopoulos – New World Order in Action (p.90)

Frank Lee left school at age 15 without any qualifications, but gained degrees from both New College Oxford and the London School of Economics (it's a long story). He spent many years as a lecturer in politics and economics, and in the Civil Service, before retirement. He lives in Sutton with his wife and little dog.

34 Comments

  1. DunGroanin says

    Excellent, here is a link to the current Schiller Index – a bit of the mad highs but still well in danger zone of further correction.

    Also would have liked a bit more on how the taxpayers got shafted as the bankers pocketed all the war monies from all sides.

  2. Robbobbobin says

    Perhaps someone would care to explain to me any significant operational, ethical or political difference between holding stock in a company that is not local and/or in which one is not substantially employed, on the one hand, and “absentee ownership” or “absentee landlordism” on the other. In other words, in what way do joint-stock corporations not inherently constitute a blight on society, even before legal constucts of equivalence to natural persons, etc., turn them into cancers?

    • DunGroanin says

      Hmm, i’ll have a quick go.
      Do you drink tea or coffee?
      It wouldn’t have happened without joint stock companies.

      Does that help as a starter?

      • Robbobbobin says

        “Does that help as a starter?”

        Not yet. What wouldn’t have happened without joint stock companies?

        • DunGroanin says

          Traders wouldn’t have sailed to bring us sugar and spice and all things nice.

          The risk would have been too high.

          Sharing the risk and rewards is what made trade – including evil trade, slavery, opium – possible.

          There is difference too between the shared risk enterprise shareholders and the now bs stockexchange speculators, who have nothing to do with the underlying businesses they invest in.

          Take it from there and proceed to seperate the wheat from the chaff of commerce.

          • Robbobbobin says

            I thought it.was a trick question: you’re not offering to assuage my thirst at all, but you sure have drunk the capitalist Kool-Aid yourself. Given the age-old and still-ongoing spirit of unalloyed human endeavour, do you seriously believe that, with the sheer greed of the ugly, then-new bourgeois class called out for what it then was and still is, and so held in communal check, a different, socially ethical model of shared risk would and could not have emerged instead, to bring us to a better, safer, happier place, complete with Assam tea and civet coffee, than where we are now: on the road to imminent immolation?

            You are aware, aren’t you, that Adam Smith, himself, addressing only the most elementary form of privately owned joint-stock venture emerging in his time, considered it to present a socially unacceptable degree of moral hazard, and there’s not a half decent political economist since who has not scored subsequent joint-stock developments ever lower on the total-crock-of-shit scale?

  3. The stock market is a total fabrication.
    Look at any one day trading. One could follow the trends. Dark money or the PPT(plunge protection team) get in on the rises. Further more the so called algorithms that have played a large part in the way the stockmarket functions since the 2007 crash.
    Money has been created out of thin air just adding zeros to a computer. Fiat money has been basically been put on a road to irrelevance.
    The only countries with rising industrial capacity seem to be all the countries of the east including Russia.
    Russia seems to be the only country showing any fiscal responsible style economics. Increased investment be it via private and government sectors are aligned in modernizing infrastructure and preparing the next generation for the future.
    All western countries central banks have in my mind intentionally flood the world with cheap finance and to create the largest wealth gap since the Gilded age.It is all by design ,think of it this way while the masses are so engaged on their own wealth accumulation the 0,1 percent just keep on stealing humanities future.
    I definitely do not agree with the notion the the rich and wealthy plutocrats or oligarchs or whatever adjective one uses to describe the elite/ They no very well what they are doing and know very
    well that the masses have no power to change direction.
    UNO:Since 2008 the vast majority of the population has been impoverished. But everybody goes to work. gilet jauen every saturday for 16 weeks and the numbers are falling.
    DUE:Not one plutocrat has been brought to justice or discredited to the point he or she is a social pariah.
    TRE: The world economy has been showing signs of technical recession way b4 the yield curve divergence. Since 2016 full analysis of western industrial output were already showing signs the there was no steam in the QE economy.
    QUATTRO: Same as it always was and will be.
    CONCLUSION: Until the masses really stand up and are willing to be counted IE: full on rolling on strikes from all aspects of society from government employers to private employers start to mobilize and start to disrupt the status quo nufin will change.
    So buckle up stock up on ur popcorn and sit back while the elites steer us to the new economic reality where are whole monetary system becomes digitalized and the uberfication of humanity.
    Orwell fuses with Mussolini.

  4. stevehayes13 says

    Apparently only fifteen percent of members of the House of Commons know that the vast majority of money is created by private banks, never mind how they do it or what they then subsequently do with it or its effects on the real economy. https://positivemoney.org/2017/10/mp-poll/‎

    • Seamus Padraig says

      As Pepe Escobar used to call him: Fogh of War.

    • Martin Usher says

      (Someone should tell him that another (old) name for Belarus is “White Russia”.)

  5. Jim says

    “…A group termed NINJAS – No Income, No Job, No Assets…”

    “…Enter the credit crunch. Credit dried up even though property prices were falling…”

    “…And the shaming part was the extent that the government of the day colluded – in terms of bank deregulation and ease of credit creation – in and made possible this bubble creation by the financial and banking sector…”

    “…The banks were partially bailed out (there are still a number of basically insolvent banks out there – Deutsche Bank being number One)…”

    Wikipedia: “…On 15 August 1971, the United States unilaterally terminated convertibility of the US dollar to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a fiat currency…”, “…Fiat money is a currency without intrinsic value…”

    Excellent article, but…?

    Lets first take a look at the value of money? It is fiat currency made of paper. The intrinsic value of paper is “nil” (means “nothing”). What gives money then value? This happens when the banks distribute it through loans! The money is printed exclusively on very sophisticated printers for the banks, which they then use. As we know, our societies rely on loans. The banks manage that the states and individuals make loans. Napoleon and Wellington needed loans to be able to make war. Now comes the trick, thanks to the Bretton Woods system! The bank who can have only paper, not covered by gold. They manage to have a debt contract with the loaner, from that very moment, the loan is worth gold! The bank, when the money was only printed paper, had nothing, but with the contract, the loaner has a debt with the bank. With the use of the loan, for instance, served to buy a house, they can get the house in their procession, even if they did not the work to build it (We have seen that it is the contract that rules the behaviors!), this when the contract is broken. This can be a second reward for the bank, but then there are also the interests, this can be then also a triple reward. That some banks have not been serious with the money is beyond doubt. Why do they need to be bailed out otherwise and why do the states have to do it? That money is capital for the owners of the banks can too easily be understood.

    We live in a completely ill world with the use of money. Before, money was not as vital as it is today. Without money, nowadays, we have no water, no food, no shelter, no transport, most important of all, no freedom. It rules our world. But the debts owned to the banks are only contracts. If the banks are owned only by the state, as in China, by the fact that the bank have only signed papers belonging to the Chinese state, it stays only a state question and of their people, the state knows the real value of what they can have. In the Western World it is completely different, the private ownership of money rules the Western world, we may not forget the 0,001% instead of the 1% (That number is too overestimated and still not low enough, the very rich are very anecdotal, but their power exceed, because of their owned money, everything and can have no limit.) We have because of all this an ill distribution of money. A farmer knows, that by planting too big trees, the will dry up all the plants in their vicinity. It is the same with the rich, they can dry everything up.

    The very good news, nevertheless, is, that we do not use the bank papers to eat and live. With the modern technology, we can easily feed the world. It is the distribution or redistribution of money, which is the absolute problem. We have, today, proposals as universal allocation, which can bring the solution. But with it, we have ethical problems. Can we trust mankind? This, if we give money for free? We should! Otherwise, we contradict ourselves. Every day, live shows clearly that we should, but with the US, the country is ill with their use and manufacturing of weapons. It seems that all their money goes to it, also for the army. Very good customers for the banks. In Europe their bear no weapons and their thinking is not distracted by it. This also the reason why they have good social systems.

    Finally, a part of the distribution of money should be used again the pollution and all our energy should go to spend less energy or have renewal energy.

    As exchange for the goods, money is not the only possibility, stamps can be used also, as during wars. The poor in the US use it extensively.

    Today totally invisible is the use of electronic money.

  6. Threeedawgs says

    The only viable recourse to this is for the 3-5% of the citizens that are worth a shit, to organize into guerilla armies, and first kill and defeat the military personnel(the enforcement power), of this 100% Corrupt, Inverted-Totalitarian, Police-State. Then destroy and eradicate totally, this government’s institutions, and infrastructure, and finally, the torturing and killing of ALL the perps associated with the oppression, impoverishment, and murdering of mankind.

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  7. mark says

    Our glorious leaders now have the perfect excuse for anything and everything that goes wrong in Britain: Brexit.
    A factory closes, the pound falls, we get bad weather, and it’s all Brexit.
    The pound fell steadily from a level of just over $2.00 to $1.24. I think it’s about $1.30 now, I haven’t checked.
    What caused this fall is (1) a colossal amount of money printing, billions and trillions of pounds, backed up by absolutely nothing, and (2) zero percent and negative interest rates. These two things have caused a collapse in the currency, but “it’s all down to Brexit”, an all purpose scapegoat that will be trotted out again and again over the coming years.
    At least it makes a change from blaming the Russians.

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    • axisofoil says

      But wait…..The Russians are to blame for Brexit.

      11
      • Antonym says

        No Way: it wus the Zionists like the Rockefellers, Bezos, Gates or Buffets.

        2
        7
    • The Russo-phobia is merely another distraction. In fact the Russians are in the same boats now too and have been since the Yeltsin years. Elvira Nabiullina being an advocate of the Chicago school of economics.

      10
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  8. Fair dinkum says

    When the weight of corpulent greed drags the One Per Cent towards extinction
    When the smug middle class see only plastic in their reflections
    When those in poverty have less than nothing
    Then
    And no sooner
    Hell will break loose

    13
    • Yr Hen Gof says

      The trick the establishment play is to ensure that people have just enough to fear losing it. Once people have nothing to lose, they kick off.
      This trick has been played over and over again down the centuries, sometimes the establishment have misread the situation and sometimes, post WW1 and post WW2 come very close to. Realising at the last moment that without reform there would be revolution, not something they wanted in 1920 or the late 1940’s with a large number of well trained and battle hardened discontents.

  9. Austerity is a political choice. Nothing to do with sound economics.

    Recessions are a decline in spending. You can’t cure that by further removing spending.

    When the private sector reduces spending (saves), the government needs to step in with increased deficit spending.

    Mixing up sovereign government ‘debt’ with private debt is misleading.

    Long term bond yields are being suppressed by QE. That’s QEs main purpose.

    18
  10. Jen says

    Thanks very much to Frank Lee for expressing and explaining so much in such a succinct article.

    So much of our society thinks, behaves and operates as though it lives in an ahistorical vacuum and history is something that happens to other people. The past means nothing to us today and what we do now, we don’t stop to wonder whether it will affect us and our children and grandchildren in the future, or have consequences for others in the future.

    Not only are The Powers That (Should Be) guided by their ignorance and their determination to ignore all constraints (physical, historical, cultural, economic) but they are determined that we should not know more or better than they do, in case we try to hold them to account for their misdeeds.

    The only problem though is that as austerity drags down the rest of us into cultural regression and cannibalism, the elites are dragged down as well. But I suppose that’s a lesson they’ll refuse to learn as well.

    11
  11. Mikalina says

    The elites deliberately crash the economy at least twice a century in order to ‘get richer’ and to impoverish, starve, kill off the proles – it’s just your run of the mill culling…..

    16
    • Rhys Jaggar says

      Well, if they crash it again 2019, that will be three times in twenty years.

      • Mikalina says

        That’s to make up for the 22nd century which will be cancelled.

  12. Guy says

    Been watching this crazy show for some time now and it is very true ,few learn from their mistakes especially when the going is good.It is said that doing the same thing over and over again will not lead to new results.The big down turn is near and will affect us all.Who knows what machinations the economic gurus will use this time around.
    This article is well thought out and very explicitly shows why and it is the when that we wonder about and not if.
    Cheers.

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    • mark says

      Crash the system, buy up assets for pennies in the pound. Old as the hills. The IMF has been doing this for years across the Third World and Eastern Europe. The only difference now is that crapitalism is running out of countries to loot. So the exploitation and debt peonage is coming home.

      Western economies have been like zombies on life support (tens of trillions in money printing backed up by precisely sweet FA, plus negative interest rate free money for the well connected) since 2008. From 2010-5 the Cameron/ Cleggie double act doubled the national debt, £750 to £1,600 billion in 5 years, to bail out their bankster chums. It has since risen to its current £2,600 billion(partly due to the sinking pound.) The debt is exploding out of control. Even these figures are chicken feed compared with America. Nobody knows the true figure for the bail out (we are not allowed to know.) There was an early estimate of $23 trillion, but this is just a small part of the overall figure for the early stages.

      These colossal sums were just giveaways to the well connected 0.1% elite. There were no infrastructure, housing, healthcare, welfare programmes (apart from welfare for billionaires.) The looting kleptocracy of 2,400 billionaires doubled their wealth at the expense of the rest of humanity, who footed the bill through unprecedented austerity programmes.

      “There Is no alternative”, except in Iceland, which refused to dump bankster debts on ordinary people and jailed 25 banksters instead, much to the disgust of Gordon Brown, who threatened Iceland with terrorist legislation. Iceland quickly recovered and is doing just fine. Unlike Britain and similar countries, where debt has mushroomed and ballooned out of control, making another financial collapse on an infinitely greater scale than 1929 inevitable. It is only a question of when this happens.

      After 2008, the bankster elite should have been banned from ever having anything to do with other people’s money, like paedophiles are banned from going to children’s playgrounds. They could have been found productive work to do for the first time in their miserable lives, where they could do no harm, such as road sweepers and brussels sprout pickers.

      But don’t worry. Our billionaire friends have all acquired their post crash bolt holes in New Zealand to sit things out. I can sleep easy knowing that.

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  13. George Cornell says

    Bravura article. Short, focussed, and informative. My father told me to get a job where it matters not at all if the market is going up or down. One that profits either way as long as there are buyers and sellers. There always are. Stock broking fits the bill.

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