Jesus turning over the tables in Jerusalem, affronted by the excesses of the money lenders, is as much in the news as the protection of the Status Quo by the Pharisees. What has changed? Clearly not a lot, but let me remind you of Revelations 13 and the number 666, the sign of the beast; perhaps after all it was a prophetic number.
The recent meeting of European leaders was meant to save Greece, the Euro and other indebted European countries. But has it? Ther first test was the market's reaction on Thursday, which was favourable. The acid test was the market's reaction on friday after the sale of Italian Bonds. This was a disaster. Italian bond sales werre made at a much higher rate than hitherto, with the interest rate rising from 5.86% to 6.06%, blowing a hole in the rescue plan.
I appreciate that I'm being melodramatic, but when the rate rises to 6.66%, then perhaps the beast will devour the Euro.
Monday 31 October 2011
Tuesday 25 October 2011
The nature of Bubbles
I’m into week three of writing a blog and as I look into other blogs I become more aware of how much I don’t know, but I guess that is the nature of knowledge. I need to simplify the problem, so that I have some clue about what is taking place, and what I see is a fairly simple equation. The banks don’t print money; they lend money to people and organisations with the intention of making profit. They aim to lend to people who can themselves make profit or service their debt. At present, they have been seen to be guilty of making terrible lending decisions and their portfolio is riddled with potential bad debts from people, organisations and countries who cannot meet their obligations. As regards lending to countries (and Greece is very much in the news at present), Germany says that the banks must allow for the majority of their loans to Greece Greece
And so we come to the solution that will be agreed upon this week at the meeting of European leaders. The banks will be asked to increase their reserves, which effectively limits their lending and at the same time increases their cover against bad lending decisions. At the same time a European fund will be set up to help countries that have problems in repaying their debt. And how will this be achieved? The countries, Europe and the World will print more money so that Bank’s ratios can be improved and rescue funds set-up.
This is nothing less than another bubble that can only delay the inevitable and which is a continuation of the reason why the problem appeared in the first place. This problem is not being solved; it is being passed forward without thought to the future. The only way that a policy of this nature could possibly work would be where growth was equal or greater than the amount of money being invented. In the current climate, we are entering a recession, and the money created will end up, down the line, as further bad debts to the banks who made the loans in the first place.
If we have a soft landing now, then the ultimate landing will be that much harder.
Willie Giles 25/10/11
Thursday 20 October 2011
What's a Dodo?
John Vickers, Chair of the Independent Commission of Bankers, suggests that Investment banks should be ring-fenced and separated from the Lending/Saving bank function.
The banks say that this will seriously impair their ability to lend.
Vince Cable says the banks are being "disingenuous"
The decision on ring-fencing is being delayed until 2015.
With many others, I watched the tent village grow outside St Paul's Cathedral in support of the 99%. Whatever your beliefs, St Paul's is a potent symbol of National defiance and of hope for the future and there is a subtle difference between the "People" championing a cause by hijacking a symbol and betwen a government or state doing the same thing "In the name of the people". In fact, it is not even that subtle, many people just don't trust the government to say or do anything that is honest, because they are seen to be corrupt, egotistical and selfish.
To be fair, the bankers have their own perception of the world and may believe that they are doing an invaluable job in oiling the wheels of Industry and providing employment in the City of London. However, it is easy to be cynical and there is undoubtedly an element of self-interest. It was interesting to see on television the bewilderment from protesters and bankers, when trying to understand each other's point of view. It was in this vein that William Hague made condescending remarks about the importance of the Banking System and the time-wasting being shown by the protesters who would achieve nothing with their actions.
How difficult is it to understand? The Investment Banks are corrupt, greedy and discredited and should be outlawed. Their retention will surely lead to the collapse of the Banking System. It is in few people's interest to see a massive collapse in the world's financial systems with the related and inevitable social unrest and displacement and so action is needed now.
Another image that I liked was of a Chartered Accountant standing in solidarity with the protesters, showing the extent of the consensus of the 99%. There is a clarity of well-reasoned thought behind the bitter objections to the excesses of the Banking System that cannot be denied. Unless our Governments can come clean and "Change their spots", then like the Banking system they will become Dodo's.
The banks say that this will seriously impair their ability to lend.
Vince Cable says the banks are being "disingenuous"
The decision on ring-fencing is being delayed until 2015.
With many others, I watched the tent village grow outside St Paul's Cathedral in support of the 99%. Whatever your beliefs, St Paul's is a potent symbol of National defiance and of hope for the future and there is a subtle difference between the "People" championing a cause by hijacking a symbol and betwen a government or state doing the same thing "In the name of the people". In fact, it is not even that subtle, many people just don't trust the government to say or do anything that is honest, because they are seen to be corrupt, egotistical and selfish.
To be fair, the bankers have their own perception of the world and may believe that they are doing an invaluable job in oiling the wheels of Industry and providing employment in the City of London. However, it is easy to be cynical and there is undoubtedly an element of self-interest. It was interesting to see on television the bewilderment from protesters and bankers, when trying to understand each other's point of view. It was in this vein that William Hague made condescending remarks about the importance of the Banking System and the time-wasting being shown by the protesters who would achieve nothing with their actions.
How difficult is it to understand? The Investment Banks are corrupt, greedy and discredited and should be outlawed. Their retention will surely lead to the collapse of the Banking System. It is in few people's interest to see a massive collapse in the world's financial systems with the related and inevitable social unrest and displacement and so action is needed now.
Another image that I liked was of a Chartered Accountant standing in solidarity with the protesters, showing the extent of the consensus of the 99%. There is a clarity of well-reasoned thought behind the bitter objections to the excesses of the Banking System that cannot be denied. Unless our Governments can come clean and "Change their spots", then like the Banking system they will become Dodo's.
Sunday 16 October 2011
What a mess
Lets have a little question and answer session.
Why doesn't Barak Obama support a Palestinian State? Because he is seeking reelection next year and has caved into the Jewish lobby.
Why did the western world save the banks from collapse? Because the banks are an integral part of the globalized economy and the politicians take the view that the system should be saved at the expense of the people.
Why are the people in North Africa and the Middle East rebelling against their leaders? Because the leaders are corrupt and greedy and give the common man no chance to live a life without fear and with the possibility of pride in their achievements.
Why are the people of Greece going on strike? Because they are being made to pay for the mistakes of the banks and their political masters.
Why do our political leaders hold such store by Economic Growth? Because growth is an integral part of the globalized economy.
The western world is run by rules and systems that preserve the political and economic elite in their ruling position. They will not countenance a change to the system, despite the illogicality of many of their pronouncements. Clearly growth cannot continue for ever as resources are finite- fact. Equally Empires do not last for ever- fact, despite the leaders clinging onto their power for as long as possible.
An analysis of the reuirements of the International Economic Model, needs to address in the first instance, the systems that should support our requirements. Only in this way will sensible progress be made.
1. Economic growth cannot continue unabated.
2. Each country should have its own manufacturing base. China cannot continue to provide the world with cheap goods that they cannot afford and probably dont need. Production should not be exported by the West to the East because they have a lower unit cost of production.
3. Differentials of Pay between the top and the bottom should not only be reduced, but should reflect an accepted sense of worth, such that the Poor are not exploited for the benefit of the Rich. Within this narrowing of the wealth spectrum the powerful should become the servants of the weak and actively seek equality so that compassion can replace greed and humility replace power.
4. Education should emphasise helping others. Academic attainment has been too closely related to financial worth.
I think that economics should become a byword for the fair distribution of wealth and that commodities are only used where their environmental, social and economic benefit have been assessed by an elected panel that fairly represents these relevant interests. While the world players try to fiddle about with an Economic System that is broken and discredited, all they are achieving is a bad repair job that will inevitably break sooner or later. These breaks tend to be cataclysmic and unexpected and whilst they cannot be predicted , that they will occur is as certain as the fact that there will one day be another earthquake of Richter magnitude 9.5.
Why doesn't Barak Obama support a Palestinian State? Because he is seeking reelection next year and has caved into the Jewish lobby.
Why did the western world save the banks from collapse? Because the banks are an integral part of the globalized economy and the politicians take the view that the system should be saved at the expense of the people.
Why are the people in North Africa and the Middle East rebelling against their leaders? Because the leaders are corrupt and greedy and give the common man no chance to live a life without fear and with the possibility of pride in their achievements.
Why are the people of Greece going on strike? Because they are being made to pay for the mistakes of the banks and their political masters.
Why do our political leaders hold such store by Economic Growth? Because growth is an integral part of the globalized economy.
The western world is run by rules and systems that preserve the political and economic elite in their ruling position. They will not countenance a change to the system, despite the illogicality of many of their pronouncements. Clearly growth cannot continue for ever as resources are finite- fact. Equally Empires do not last for ever- fact, despite the leaders clinging onto their power for as long as possible.
An analysis of the reuirements of the International Economic Model, needs to address in the first instance, the systems that should support our requirements. Only in this way will sensible progress be made.
1. Economic growth cannot continue unabated.
2. Each country should have its own manufacturing base. China cannot continue to provide the world with cheap goods that they cannot afford and probably dont need. Production should not be exported by the West to the East because they have a lower unit cost of production.
3. Differentials of Pay between the top and the bottom should not only be reduced, but should reflect an accepted sense of worth, such that the Poor are not exploited for the benefit of the Rich. Within this narrowing of the wealth spectrum the powerful should become the servants of the weak and actively seek equality so that compassion can replace greed and humility replace power.
4. Education should emphasise helping others. Academic attainment has been too closely related to financial worth.
I think that economics should become a byword for the fair distribution of wealth and that commodities are only used where their environmental, social and economic benefit have been assessed by an elected panel that fairly represents these relevant interests. While the world players try to fiddle about with an Economic System that is broken and discredited, all they are achieving is a bad repair job that will inevitably break sooner or later. These breaks tend to be cataclysmic and unexpected and whilst they cannot be predicted , that they will occur is as certain as the fact that there will one day be another earthquake of Richter magnitude 9.5.
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