Showing posts with label banality of evil. Show all posts
Showing posts with label banality of evil. Show all posts

22 September 2021

Stocks and Precious Metals Charts - Sweet Nothings - Nothing Personal, It's Just Business

 

"One of the most disturbing facts that came out in the [Adolf] Eichmann trial was that a psychiatrist examined him and pronounced him perfectly sane.  I do not doubt it at all, and that is precisely why I find it disturbing.  If all the Nazis had been psychotics, as some of their leaders probably were, their appalling cruelty would have been in some sense easier to understand.  It is much worse to consider this calm, 'well-balanced,' unperturbed official conscientiously going about his desk work, his administrative job which happened to be the supervision of mass murder.  He was thoughtful, orderly, unimaginative.  He had a profound respect for system.

The sanity of Eichmann is disturbing.  We equate sanity with a sense of justice, with humaneness, with prudence, with the capacity to love and understand other people.  We rely on the sane people of the world to preserve it from barbarism, madness, destruction.  And now it begins to dawn on us that it is precisely the sane ones who are the most dangerous.

The whole concept of sanity in a society where spiritual values have lost their meaning is itself meaningless." 

Thomas Merton, Raids on the Unspeakable 

 

"One of the primary characteristics of narcissists is their exaggerated sense of entitlement.  It's hardly surprising then that so many politicians somehow think they 'deserve' to game the system.  After all, from their self-interested perspective, isn't that what the system is for?  In their heavily self-biased opinion, if they want something, by rights it should be theirs.  So, nothing if not opportunistic, they take from public and private coffers alike whatever they think they can get away with.  

And given their grandiose sense of self, they're inclined to believe they can get away with most anything.  Exploiting their privileged position in such a manner hardly leaves them plagued with guilt.  In general, guilt isn't an emotion they're prone to.  How could they be if they feel entitled to the objects of their desire? In their minds their very ability to attain something must certainly mean it was merited." 

Leon F. Seltzer

 

"There is no clean way to make a hundred million bucks. Somewhere along the line guys got pushed to the wall, nice little businesses got the ground cut out from under them. Decent people lost their jobs. Big money is big power, and big power gets used wrong. It's the system. The tragedy of life, Howard, is not that the beautiful die young, but that they grow old and mean." 

Raymond Chandler, The Long Goodbye

 

And so we had another FOMC announcement today.

The Fed is clearly teeing up a tapering of their bond purchases.

I think the focus will be on the September Jobs Report.

Gold was a little lower on the cross Dollar trade.

Silver edged up a bit with stocks, which rallied.

The market is trying to have this both ways.

I think the downside risks for equities will remain pronounced though to November.

Have a pleasant evening.

 

 



19 March 2020

Stocks and Precious Metals Charts - Quad Witch Tomorrow, Comex Metals Option Expiry Next Week


Moloch, God of Wealth and Child Sacrifice
"God whispers to us in our pleasures, speaks in our conscience, but shouts in our pain: it is His megaphone to rouse a deaf world."

C. S. Lewis


"We who lived in concentration camps can remember the men who walked through the huts comforting others, giving away their last piece of bread.  They may have been few in number, but they offer sufficient proof that everything can be taken from a man but one thing: the last of the human freedoms — to choose one's attitude in any given set of circumstances, to choose one's own way."

Victor Frankl, Man's Search for Meaning


“The real conflict is the inner conflict. Beyond armies of occupation and the catacombs of extermination camps, there are two irreconcilable enemies in the depth of every soul: good and evil, sin and love.  And what use are the victories on the battlefield if we are ourselves are defeated in our innermost personal selves?”

Maximilian Kolbe

Stocks managed to close nearly unchanged today, although there was still a fairly impressive range from top to bottom in the futures markets.

Gold closed lower, while silver managed a little rally.

The Dollar DX Index rally is amazing, a clear example of a flight to safety continuing. At the close it was hovering around 102.78.

Surgical masks are of limited effectiveness, mostly to prevent someone who is already affected from spreading the coronavirus by coughing or sneezing.  N95 masks, however, are effective and are worn by healthcare professionals who are working with patients.  But they are in short supply, which is shameful.  And are not necessary for most people, if they are practicing physical distancing and hand and surface washing.

Keep in touch with each other, and encourage and help one another. And for those who are so inclined, pray for each other.

The Madness serves None but Itself
The usual suspects and con men are mocking peoples' efforts to protect themselves and their families, often because they are negatively affecting the stock market.  Really?

And there are those who would sacrifice the lives of hundreds of thousands of individuals, in order to maintain their own exorbitant worldly privileges.

You might use this as an opportunity to see the quality and character of people who are speaking to you, where they are standing, whether knowingly or foolishly or hysterically.   Be careful what you allow into your minds, or even worse, what you spread around to your friends and family.

People whose hearts are sickened and minds are disordered enjoy shocking and manipulating other people.  It gives them a feeling of worth, and power.  And some of these jokers thrive on sensationalism and panic, without caring what damage they may do, in order to obtain 'clicks' and thrills.

And dare we say it, there are those who traffic in fear and hatred and lies, in order to manipulate people to maintain their power over them.   This is the great lesson we have seen from the aftermath of the Crash of 1929.

There is no need to panic. We have seen worse than this, or at the least our parents and grandparents have. And we will endure.  Act sensibly and responsibly, and keep your eyes on the prize.

Need little, want less, love more. For those who abide in love abide in God, and God in them.

Have a pleasant evening, and stay safe.



14 August 2019

Stocks and Precious Metals Charts - Risk Off! Rate Cuts! - As Makes the Angels Weep


The God of the Market
"Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population. Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy.

These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.

If allowed to continue, this process will turn the United States into a declining, unfair society with an impoverished, angry, uneducated population under the control of a small, ultrawealthy elite. Such a society would be not only immoral but also eventually unstable, dangerously ripe for religious and political extremism."

Charles Ferguson, Predator Nation


"Hot money seeks out the conscious mispricing of risk.  Capital, in the form of both money and personal talent, increasingly flows into malinvestment and the gaming of markets. 

The productive economy languishes, left wanting for the lack of creative resources and attention. The bubble rises to unsustainable valuations— and fails, and a nation's capital is consumed.

Are you not entertained?  As Egon von Greyerz noted, the next five years are not about winning, but surviving.   So, then let us then proceed."

Jesse, 5 August 2019


“During the Summer of 1929 the stock market was marked by wild swings, violent up and down price movements, that left market participants feeling dizzy and almost exhausted. Whatever may or may not come, now might be an excellent time to take inventory of your finances, and provisions for the future. And you may wish to order your affairs to be more resilient in the face of risks, both hidden and mispriced.”

Jesse, 10 August 2019


“But man, proud man,
Dress'd in a little brief authority,
Most ignorant of what he's most assur'd—
His glassy essence—like an angry ape
Plays such fantastic tricks before high heaven
As makes the angels weep..”

William Shakespeare, Measure for Measure


"O Nebuchadnezzar, we do not need to defend ourselves before you in this matter. If we are thrown into the blazing furnace, the God we serve is able to save us from it, and he will rescue us from your hand, O king.

But if not, even if he does not preserve us, we want you to know, O king, that we will not serve your gods or worship the images of gold you have set up and commanded us to worship."

Daniel 3:16-18

As a reminder, there will be a stock market option expiration on Friday.

I pray daily that God will give us the light, and the strength, to know His will, and to resist the temptation to join in the hatred, the madness, and the worship of the darkness of this world, that seems to possess so many of our countrymen, day by day.

'But if not, I will not bow, and God grant that we will never bow, before the gods of evil.'

Have a pleasant evening.





19 February 2019

Stocks and Precious Metals Charts - In the Garden of Beasts - Developing Gold Chart Formation Targets 1550


"Again the memory of those days swept over him like a nightmare— the people they had met travelling; then people who couldn't add a row of figures or speak a coherent sentence.  The little man Helen had consented to dance with at the ship's party, who had insulted her ten feet from the table; the women and girls carried screaming with drink or drugs out of public places—

—The men who locked their wives out in the snow, because the snow of twenty-nine wasn't real snow.   If you didn't want it to be snow, you just paid some money."

F. Scott Fitzgerald, Babylon Revisited, February 1931


"To the politician and administrator laissez-faire was simply a principle of the insurance of law and order, with the minimum cost and effort. Let the market be given charge of the poor, and things will look after themselves...

Hobbes had argued the need for a despot because men were like beasts; [Joseph] Townsend insisted that they were actually beasts and that, precisely for that reason, only a minimum of government was required.

The acceptance of near-indigency of the mass of the citizens as the price to be paid for the highest stage of prosperity was accompanied by very different human attitudes. Townsend righted his emotional balance by indulging in prejudice and sentimentalism [Dissertation on the Poor Laws].  The improvidence (lacking personal responsibility) of the poor was a law of nature, for servile, sordid, and ignoble work would otherwise not be done. (born to be vile?)  Also what would become of the fatherland unless we could rely on the poor? "For what is it but distress and poverty which can prevail upon the lower classes of the people to encounter all the horrors which await them on the tempestuous ocean or on the field of battle?"

Karl Polanyi, The Great Transformation, 1944


"Thus the elements are in place: a weak legislative body, a legal system that is both compliant and repressive, a party system in which one (I would in 2019 now say either) party, whether in opposition or in the majority, is bent upon reconstituting the existing system so as to permanently favor a ruling class of the wealthy, the well-connected and the corporate, while leaving the poorer citizens with a sense of helplessness and political despair, and, at the same time, keeping the middle classes dangling between fear of unemployment and expectations of fantastic rewards once the new economy recovers.

That scheme is abetted by a sycophantic and increasingly concentrated media; by the integration of universities with their corporate benefactors; by a propaganda machine institutionalized in well-funded think tanks and conservative foundations; by the increasingly closer cooperation between local police and national law enforcement agencies aimed at identifying terrorists, suspicious aliens and domestic dissidents."

Sheldon Wolin, Inverted Totalitarianism, 2003


“Each day we are becoming a creature of splendid glory, or one of unthinkable horror.”

C. S. Lewis

The financial spokesmodels were unnerved with the rally in gold today, which was in no doubt due in some part to the weakness of the Dollar, and the stress on the physical supply with the return of China to business from their long holiday week.

As noted previously there is a relative scarcity in the 'free float' of physical gold, and the tricks and forced exchanges, and soft confiscations from other countries can only go so far in the face of a steady, almost unrelenting, demand for the real thing.  With leverage of paper to bullion in the gaming markets estimated at 100 to 1, a disruption in the flow of physical supply could be rather impressive.

The concern of the financial commentators was that it is unusual for gold to rally in what appears to be a safe haven move, but with stocks also rising. Always the stock market, for this crowd.  That is their major concern, their first priority. The system is God, and damn the people whom it was designed to serve and support.

Stocks did back off markedly into the close after a rather robust showing during the day. We must put our best foot forward for the rest of the world after all.  And at the end of the day, we can relax the charade a bit, and pocket the grift.

Chart-wise, gold has begun to flesh out a new cup,  which if it succeeds in cmpleting the formation, and if it manages subsequentlyt to break out, will target $1550 at a minimum measuring objective on the chart.

As I noted in some posts over the holiday weekend, the long bear market in gold, which was sustained by managed selling of physical gold by central banks in order to manage the market has clearly ended around 2007.   The price of gold began to rally a few years earlier in anticipation of this sea change in selling and accumulation by the major players.

And so now, after a long consolidation which has followed the first leg of the new bull market, the price of gold appears to be attempting to begin its second leg, and move to take out the prior highs.  Let's see if it can maintain its momentem to the rim of the cup, so to speak.  At that point a retracement is often customary.  Perhaps a retracement now would not be unusual after a long quick run.

Longer term a higher price in gold is likely to be accompanied by social disruption and political uncertainty as one might expect on an examination of history.  Gold provides a safe harbor in troubled times.  And we do seem to be lurching towards some perversely desired rendezvous with destiny, taking it to the limit, so to speak.

If by some miracle of providence we could have what a good person might wish for, rather than what they might see coming despite all their efforts, our grandchildren might not be tempted to damn us for our willful foolishness and careless pride. 

We can take comfort in the undeniable fact that the future is an elusive mix of possibilities and probabilities, and that the eventual outcome is, in the final analysis, largely unknown but in the hands of Providence, as well as our own.

But beware the leaven of the Pharisees and of Herod.

Have a pleasant evening.






04 April 2018

William Pepper: Another Look at the Assassination of Martin Luther King


"I wound up being the last judge hearing the James Earl Ray matter: Did he in fact assassinate Dr. Martin Luther King?  And had he not died and his local attorney not died in close succession, it would have been my finding that he was not the gunman.  That Remington 760 Gamemaster they’ve got in the Civil Rights Museum is not the murder weapon. It’s not even close."

Judge Joe Brown

This is an interesting report that includes testimony from William Pepper, who is a lawyers, an anti-war journalist and friend of MLK and his family.

He is "noted for his efforts to prove government culpability and the innocence of James Earl Ray in the assassination of Martin Luther King, Jr., as well as the King family, in subsequent years. Pepper has also been trying to prove the innocence of Sirhan Sirhan in the assassination of Robert F. Kennedy."

I was intrigued by the testimony of a judge in the matter of James Earl Ray who says that it has been proven conclusively that Ray's rifle was not the murder weapon.  He says that he would have ruled to vindicate him based on this.  Judge Brown was removed from the case for 'bias against the prosecution.'

I have not investigated this particular version of events exhaustively and offer it only as something for thought.  It relies heavily on the credibility and veracity of William Pepper and the facts as he has assembled them.

I personally agree with the results of the King family's civil action that James Earl Ray was not a lone gunman in this action.

A transcript of this video is available at The Corbett Report.




03 April 2018

Remembering the 50th Anniversary of the Execution of Martin Luther King


"And some of us who have already begun to break the silence of the night have found that the calling to speak is often a vocation of agony, but we must speak.  We must speak with all the humility that is appropriate to our limited vision, but we must speak."

Martin Luther King, A Time to Break the Silence, Riverside Church, 4 April 1967


"It is a dark day in our nation when high-level authorities will seek to use every method to silence dissent.  But something is happening, and people are not going to be silenced."

Martin Luther King, 'Why I Am Opposed to the War in Vietnam',  Riverside Church, 30 April 1967


"But if not, I will not bow, and God grant that we will never bow, before the gods of evil."

Martin Luther King,  But If Not, Ebenezer Baptist Church,  5 November 1967


"We've got some difficult days ahead. But it really doesn't matter with me now, because I've been to the mountaintop.  And I don't mind.  Like anybody, I would like to live a long life — longevity has its place.

But I'm not concerned about that now.  I just want to do God's will.  And He's allowed me to go up to the mountain.  And I've looked over, and I've seen the Promised Land. I may not get there with you.  But I want you to know tonight, that we, as a people, will get to the promised land.

So I'm happy, tonight. I'm not worried about anything, I'm not fearing any man.  Mine eyes have seen the glory of the coming of the Lord."

Martin Luther King, Last Public Statement, 3 April 1968

The next day Dr. Martin Luther King, Jr. was murdered in Memphis, Tennessee, 4 April 1968, exactly one year to the day after speaking out against the Vietnam War in his sermon, A Time To Break the Silence.

This was not an isolated action—  this was a message, and one that presidential candidate Robert Kennedy refused to obey.  And it has had a transforming effect on American political consciousness.
"He’s afraid of what happened to Martin Luther King Jr. And I know from a good friend who was there when it happened, that at a small dinner with progressive supporters – after these progressive supporters were banging on Obama before the election, 'Why don’t you do the things we thought you stood for?' 

Obama turned sharply and said, 'Don’t you remember what happened to Martin Luther King Jr.?' That’s a quote, and that’s a very revealing quote."

Ray McGovern, former CIA analyst for Russian affairs


"For we wrestle not against flesh and blood, but against principalities and powers, against the rulers of the darkness of this world, against spiritual wickedness in high places."

Ephesians 6:12

Are we not exceptional?   Are you not entertained?





"Those who are at present so eager to be reconciled with the world at any price must take care not to be reconciled with it under this particular aspect: as the nest of The Unspeakable. This is what too few are willing to see….

Shall this be the substance of your message?  Be human in this most inhuman of ages; guard the image of man for it is the image of God.  You agree?  Good. Then go with my blessing. But I warn you, do not expect to make many friends."

Thomas Merton, Raids on the Unspeakable


"Do you think he is so unskillful in his craft, as to ask you openly and plainly to join him in his warfare against the truth? No; he offers you baits to tempt you... This is the way in which he conceals from you the kind of work to which he is putting you; he promises you illumination, he offers you knowledge, science, philosophy, enlargement of mind.  He scoffs at times gone by; he scoffs at every institution which reveres them.

He prompts you what to say, and then listens to you, and praises you, and encourages you. He bids you mount aloft. He shows you how to become as gods. Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."

J.H.Newman, The Antichrist

I will not bow, and God grant that we will never bow, before the gods of evil.

12 March 2018

Stocks and Precious Metals Charts - The Primacy of Conscience


"All my life I have been fighting against the spirit of narrowness and violence, arrogance, intolerance in its absolute, merciless consistency.   I have also worked to overcome this spirit with its evil consequences, such as nationalism in excess, racial persecution, and materialism.  In regards to this, the National Socialists are correct in killing me.

I have striven to make its consequences milder for its victims and to prepare the way for a change.  In that, my conscience drove me – and in the end, that is a man's duty."

Helmuth James Graf von Moltke,  Executed in Plötzensee Prison on 23 January 1945

As journalist activist Carl von Ossietzky put it, 'we cannot hope to affect the conscience of the world when our own conscience is asleep.'

Heroic virtue shines across the vast seas of history like beacons to those in the troubled waters of general deception.

Stocks were led by a narrow group of big cap tech related stocks, with the NDX 100 driving all the gains.

Tomorrow we will have the CPI data, which *could* move the market. Some of the yield related futures are pricing in a four rate hike year. A strong CPI number may encourage that.

Gold and silver showed some mild strength, not as a flight to safety, but mostly off a slightly weaker dollar.

When traded as currencies, the precious metals are decoupled from their fundamental supply and demand dynamics as commodities.

Next week will be Jay Powell's first FOMC meeting. The Fed is widely expected to decide on a 25 bp rate hike.

This Friday is a stock option expiration. We may see some shenanigans on the precious metals related stocks.

The CBOE put-call ratio is back to the pre-meltdown levels.

Corruption and deception remain the coin of the realm in the halls of power in New York and Washington.

Have a pleasant evening.


28 January 2016

Deep State: Inside Washington's Shadowy Power Elite


“Our plutocracy, whether the hedge fund managers in Greenwich, Connecticut, or the Internet moguls in Palo Alto, now lives like the British did in colonial India: ruling the place but not of it. If one can afford private security, public safety is of no concern; to the person fortunate enough to own a Gulfstream jet, crumbling bridges cause less apprehension, and viable public transportation doesn’t even compute. With private doctors on call and a chartered plane to get to the Mayo Clinic, why worry about Medicare?”

― Mike Lofgren, The Deep State: The Fall of the Constitution and the Rise of a Shadow Government


"Our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts. Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association, and a widespread (if still contested) franchise.

But we believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened."

Martin Gilens and Benjamin I. Page, Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens, Princeton 2014





"As a congressional staff member for 28 years specializing in national security and possessing a top secret security clearance, I was at least on the fringes of the world I am describing, if neither totally in it by virtue of full membership nor of it by psychological disposition.

But, like virtually every employed person, I became, to some extent, assimilated into the culture of the institution I worked for, and only by slow degrees, starting before the invasion of Iraq, did I begin fundamentally to question the reasons of state that motivate the people who are, to quote George W. Bush,  'the deciders.'

Cultural assimilation is partly a matter of what psychologist Irving L. Janis called groupthink,  the chameleon-like ability of people to adopt the views of their superiors and peers. This syndrome is endemic to Washington: The town is characterized by sudden fads, be it negotiating biennial budgeting, making grand bargains or invading countries. Then, after a while, all the town's cool kids drop those ideas as if they were radioactive.

As in the military, everybody has to get on board with the mission, and questioning it is not a career-enhancing move. The universe of people who will critically examine the goings-on at the institutions they work for is always going to be a small one. As Upton Sinclair said,  'It is difficult to get a man to understand something when his salary depends upon his not understanding it.'"

Mike Lofgren

11 July 2015

Behind Germany’s Refusal to Grant Debt Relief: Financial Eugenics and the Will to Power


"What is at stake is a rather heroic rebellion by a very beleaguered people against a doctrine which has been destroying their lives — the austerity doctrine and the whole neoliberal project. For the rest of us, what is at stake is whether we have the moral courage in the sense of ethical responsibility to stand up to it."

Jamie Galbraith, Greek Revolt Threatens Entire Neoliberal Project

It is probably less an issue of ethical responsibility and more an act of self-interest for most.  Having taken their fill of the Third World, and now working their way into the developed nations, why would anyone assume that Greece would be sufficient for the maw of neoliberal greed.

The above interview with Galbraith is worth reading.  For one thing it contains the seed of the current spin that Tsipras called the referendum in order to lose it, and to somehow save himself and betray the Greeks.   And for another you will be able to read what Jamie Galbraith really thinks, the parts that the friends of the financial establishment have carefully excluded from their versions of the story.

The calling of the referendum was politically brilliant, because it defused the notion of an extremist government standing irrationally against the Troika.  This derailed the path towards a 'color revolution' backed by the oligarchs, to take out these mad leftists who were not speaking for the people.  

Remember the economic decision involving Europe which provoked the recent coup d'état in the Ukraine?  In that case the government did not have the backing of the people, and it took hold, at least in the Western portions of the country.   Wash, rinse, repeat.

Of course the Greek referendum was famously too close to predict when first called by Syriza, and surprisingly late in the game for most everyone else as you may recall   And Tsipras called it to lose? How soon some choose to forget.  But it changed the course of events in a dramatic way.  As it was it did not help their bargaining position, but as Galbraith says they did not expect it to improve their bargaining position because their counterparts were implacable and not negotiating in good faith.

But it put the field of play into better terms if your goal is playing for survival, and time.  Syriza is knocking down all the rationales and excuses to visit harsh terms on Greece that the Troika and their enablers are using.  They are exposing the Eurocrats for what they really are.

Empires set on unsustainable foundations are like financial bubbles and Ponzi schemes.  They are inherently non-productive and consuming, so they must continue to grow, or choke on their own detritus.   Transferring wealth as your major economic policy requires a steady source of new supply.

Most of the American media has fallen into line with the neoliberal agenda. It might seem surprising, but power has its attraction under corporatism, even for people who would ordinarily consider themselves to be 'liberal.'

There are concerning things happening in the Western world, and a lack of traction towards individual freedom amongst 'the great democracies.'

We look with a sense of foreboding at Germany's growing desire to bring their version of order and efficient management of lands and people to the rest of Europe.

The growing militancy in Japan, and Abe's aggressive pushing aside of constitutional restraints, is undernoted in the West, but of great concern to those in Asia.

Greece would look to the US for assistance in vain, given that Obama's representative to the continent is Victoria Nuland, the bearer of color revolutions and the reaping of ancient lands and cultures for profit.  

No, even the developed nations of the West have been caught up in the will to power.

What is good? All that enhances the feeling of power, the Will to Power, and the power itself in man. What is bad? All that proceeds from weakness. What is happiness? The feeling that power is increasing--that resistance has been overcome. Not contentment, but more power; not peace at any price, but war; not virtue, but competence.

The first principle of our humanism is that the weak and the failures shall perish. And they ought to be helped to perish.   What is more harmful than any vice?  Active pity for all failure and weakness--- Christianity.

Friedrich Nietzsche
At least in this latest incarnation of the will to power some, including the Pope thank God, are speaking out early, publicly, and strongly against the rising tide of injustice, the senseless abuse and indifference towards people, especially the vulnerable and the weakest, and the impulse towards dehumanizing bureaucratic rule and neo-totalitarianism. 

How many human lives, how much misery, how much of the richness of the land, are we willing to sacrifice to the indifferent god of the markets and its insatiable Banks.

As always silence is complicity, and apathy is a comfort to something as old as Babylon, and evil as sin.

Behind Germany’s refusal to grant Greece debt relief


Tomorrow’s EU Summit will seal Greece’s fate in the Eurozone. As these lines are being written, Euclid Tsakalotos, my great friend, comrade and successor as Greece’s Finance Ministry is heading for a Eurogroup meeting that will determine whether a last ditch agreement between Greece and our creditors is reached and whether this agreement contains the degree of debt relief that could render the Greek economy viable within the Euro Area.

Euclid is taking with him a moderate, well-thought out debt restructuring plan that is undoubtedly in the interests both of Greece and its creditors. (Details of it I intend to publish here on Monday, once the dust has settled.) If these modest debt restructuring proposals are turned down, as the German finance minister has foreshadowed, Sunday’s EU Summit will be deciding between kicking Greece out of the Eurozone now or keeping it in for a little while longer, in a state of deepening destitution, until it leaves some time in the future.

The question is: Why is the German finance Minister, Dr Wolfgang Schäuble, resisting a sensible, mild, mutually beneficial debt restructure? The following op-ed just published in today’s The Guardian offers my answer. [Please note that the Guardian’s title was not of my choosing. Mine read, as above: Behind Germany’s refusal to grant Greece debt relief ). Click here for the op-ed or…

Greece’s financial drama has dominated the headlines for five years for one reason: the stubborn refusal of our creditors to offer essential debt relief. Why, against common sense, against the IMF’s verdict and against the everyday practices of bankers facing stressed debtors, do they resist a debt restructure? The answer cannot be found in economics because it resides deep in Europe’s labyrinthine politics.

In 2010, the Greek state became insolvent. Two options consistent with continuing membership of the eurozone presented themselves: the sensible one, that any decent banker would recommend – restructuring the debt and reforming the economy; and the toxic option – extending new loans to a bankrupt entity while pretending that it remains solvent.

Official Europe chose the second option, putting the bailing out of French and German banks exposed to Greek public debt above Greece’s socioeconomic viability. A debt restructure would have implied losses for the bankers on their Greek debt holdings.Keen to avoid confessing to parliaments that taxpayers would have to pay again for the banks by means of unsustainable new loans, EU officials presented the Greek state’s insolvency as a problem of illiquidity, and justified the “bailout” as a case of “solidarity” with the Greeks.

To frame the cynical transfer of irretrievable private losses on to the shoulders of taxpayers as an exercise in “tough love”, record austerity was imposed on Greece, whose national income, in turn – from which new and old debts had to be repaid – diminished by more than a quarter. It takes the mathematical expertise of a smart eight-year-old to know that this process could not end well.
Once the sordid operation was complete, Europe had automatically acquired another reason for refusing to discuss debt restructuring: it would now hit the pockets of European citizens! And so increasing doses of austerity were administered while the debt grew larger, forcing creditors to extend more loans in exchange for even more austerity.

Our government was elected on a mandate to end this doom loop; to demand debt restructuring and an end to crippling austerity. Negotiations have reached their much publicised impasse for a simple reason: our creditors continue to rule out any tangible debt restructuring while insisting that our unpayable debt be repaid “parametrically” by the weakest of Greeks, their children and their grandchildren.

In my first week as minister for finance I was visited by Jeroen Dijsselbloem, president of the Eurogroup (the eurozone finance ministers), who put a stark choice to me: accept the bailout’s “logic” and drop any demands for debt restructuring or your loan agreement will “crash” – the unsaid repercussion being that Greece’s banks would be boarded up.

Five months of negotiations ensued under conditions of monetary asphyxiation and an induced bank-run supervised and administered by the European Central Bank. The writing was on the wall: unless we capitulated, we would soon be facing capital controls, quasi-functioning cash machines, a prolonged bank holiday and, ultimately, Grexit.

The threat of Grexit has had a brief rollercoaster of a history. In 2010 it put the fear of God in financiers’ hearts and minds as their banks were replete with Greek debt. Even in 2012, when Germany’s finance minister, Wolfgang Schäuble, decided that Grexit’s costs were a worthwhile “investment” as a way of disciplining France et al, the prospect continued to scare the living daylights out of almost everyone else.

By the time Syriza won power last January, and as if to confirm our claim that the “bailouts” had nothing to do with rescuing Greece (and everything to do with ringfencing northern Europe), a large majority within the Eurogroup – under the tutelage of Schäuble – had adopted Grexit either as their preferred outcome or weapon of choice against our government.

Greeks, rightly, shiver at the thought of amputation from monetary union. Exiting a common currency is nothing like severing a peg, as Britain did in 1992, when Norman Lamont famously sang in the shower the morning sterling quit the European exchange rate mechanism (ERM). Alas, Greece does not have a currency whose peg with the euro can be cut. It has the euro – a foreign currency fully administered by a creditor inimical to restructuring our nation’s unsustainable debt.

To exit, we would have to create a new currency from scratch. In occupied Iraq, the introduction of new paper money took almost a year, 20 or so Boeing 747s, the mobilisation of the US military’s might, three printing firms and hundreds of trucks. In the absence of such support, Grexit would be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for liquidating all Greek capital stock and transferring it abroad by any means available.

With Grexit reinforcing the ECB-induced bank run, our attempts to put debt restructuring back on the negotiating table fell on deaf ears. Time and again we were told that this was a matter for an unspecified future that would follow the “programme’s successful completion” – a stupendous Catch-22 since the “programme” could never succeed without a debt restructure.

This weekend brings the climax of the talks as Euclid Tsakalotos, my successor, strives, again, to put the horse before the cart – to convince a hostile Eurogroup that debt restructuring is a prerequisite of success for reforming Greece, not an ex-post reward for it. Why is this so hard to get across? I see three reasons.
One is that institutional inertia is hard to beat. A second, that unsustainable debt gives creditors immense power over debtors – and power, as we know, corrupts even the finest. But it is the third which seems to me more pertinent and, indeed, more interesting.

The euro is a hybrid of a fixed exchange-rate regime, like the 1980s ERM, or the 1930s gold standard, and a state currency. The former relies on the fear of expulsion to hold together, while state money involves mechanisms for recycling surpluses between member states (for instance, a federal budget, common bonds). The eurozone falls between these stools – it is more than an exchange-rate regime and less than a state.

And there’s the rub. After the crisis of 2008/9, Europe didn’t know how to respond. Should it prepare the ground for at least one expulsion (that is, Grexit) to strengthen discipline? Or move to a federation? So far it has done neither, its existentialist angst forever rising. Schäuble is convinced that as things stand, he needs a Grexit to clear the air, one way or another. Suddenly, a permanently unsustainable Greek public debt, without which the risk of Grexit would fade, has acquired a new usefulness for Schauble.

What do I mean by that? Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.
 

16 February 2015

Modern Economics: Austerity


"In Greek mythology Sisyphus (Greek: Σίσυφος) was the king of Ephyra. He was punished by the gods for his chronic deceitfulness by being compelled to roll an immense boulder up a steep hill, only to watch it roll back down, over and over again."

In the modern mythology of bizarre economics, austerity can be described as 'the Reverse Sisyphus.'

The victims of systemic bank fraud and widespread cheating and manipulation of markets and laws are forced to pay the price, in an endless cycle of booms and busts, for the deceitfulness and injustice of the powerful financial interests and their privileged friends.
 
Related:  Bubblenomics
 
 

 
The NeoLiberal Colossus

"Keep, ancient lands, your human dignity!" cries she
With curling lips. "Give me your tired, your poor,
Your huddled masses, yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the weak, the homeless, the victims all to me,
And I will grind their bones, forevermore!"