Saturday, 24 January 2009

Comment of the Week

I have noticed that the best analysis and perspectives are written by the readers and not the journalists:


The Sterling collapse is not surprising - the idea that a government can buy christmas tree logs from Finland for 300 pounds and magically convert them into 3 billion pounds of paper "currency" by printing the head of the queen on it is laughable.

Sterling is worth nothing because it is backed by nuthin....

Comment by Johan Meulemeester

Everything else is is irrelevant or a distraction...... its not if but when.

Friday, 23 January 2009

Reykjavik on Thames

Don't worry.... everything will be all right.... the damage limitation boys are out in force today:

It's a bitter chill but Britain is not Iceland

The economy is in a bad way and government finances are in an awful state, but let's get a sense of perspective. The City is not Reykjavik on Thames. Britain is not Iceland. Sterling has fallen a long way and may fall further. But Britain is not bankrupt.

British banks did grow too big for the economy, which makes us more vulnerable to the banking meltdown than the Americans. But it is nowhere near as extreme as in the case of Iceland.

Not yet.... the PM has not resigned!

Wednesday, 21 January 2009

UK financial update

Things are starting to get interesting in the uk as the the following three stories show:

Pound falls further against dollar as bank shares suffer again

The pound slipped to $1.3716 in early trading on the currency exchanges, down almost 1.5 cents to a fresh seven-and-a-half-year low.

Barclays's shares plunged by 33% to 48p, their lowest level since 1985. Lloyds Banking Group also continued to suffer, down another 12% to 29.3p, after a senior Labour MP called for it to be nationalised.

The talk in the City yesterday was that the UK's credit rating could be downgraded, or that the IMF might have to step in – a suggestion denied by chancellor Alistair Darling.

Freefall: Dangers of a collapse

What happens if bank share prices keep falling?

The authorities will be concerned that confidence in the banking system has been eroded and that savers will be spooked enough to start withdrawing their deposits.

Time to turn out the lights on sterling?

Jim Rogers, a punchy international investor who once worked alongside George Soros, weighed in with his view: "I would urge you to sell any sterling you might have. It's finished. I hate to say it, but I would not put any money in the UK."

After a few weeks rest over christmas and the new year it looks like uk depositors should have their running shoes at the ready.

Alternative Money

An article attempting to explore some alternatives to the current financial system:

If the state can't save us, we need a licence to print our own money

I also know that most of the money in circulation is issued, through fractional reserve banking, in the form of debt. This means that you can't solve one problem (a lack of money) without causing another (a mountain of debt). There must be a better way than this.

As we confront the failure of the government's first bailout and the astonishing costs of the second, isn't it time we considered the alternatives?

Once again one needs to look in the comments section for real insight - and for a better understanding of the real problem behind the current financial crisis many posters refer to this video - Money as Debt. Watch it!

Monday, 19 January 2009

Bailout II

The UK's relentless drive to become the next Iceland has taken another step:

Darling warns of economic collapse without latest banking bail-out

Alistair Darling today insisted he was right to use hundreds of billions of taxpayers' money in a fresh bail-out of the banking sector, saying the recession would be much worse if he did not act.

But shares in the banking sector plunged despite the new support package. Royal Bank of Scotland lost more than 70% after it said it will make a loss of up to £28bn for 2008 - the biggest loss in UK corporate history.

"It may seem a very wet, miserable January morning, things out there look very grim, but we will get through this," Darling added.

How long will it take before "we will get through this"..... and come back asking for more money?

The readers comments at the end of the article... give a clearer perspective:

You've sussed it.

And why are we up the creak whichever way we turn? Because they have created a fiat and paper money system.

So let's just scrap it! Yes, we can do that. But it still leaves us with the gargantuan, and I mean gargantuan, problem, that those naughty old powers-that-be haven't stupidly carried out an advanced take-over-the-world money system. Oh no. They've gone and incorporated it into the way the entire system of commerce and business works. If we were back in the stone age we wouldn't have lost too much. Two pairs of sandals, a three-legged chair and the boy for the cow and chickens? But in todays world, where 99% of us do not have real skills, cannot make, mend or produce anything of use, most importantly food, and where we rely on external power sources for everything (electricity, petrol, gas), it is going to be a steep learning curve.

....Have you started learning yet?

Friday, 2 January 2009

zero tolerance to martial law

Zero percent interest rates are in the offing on both sides of the pond:

Savers facing accounts with no interest

More than 7 million people have saving accounts which already pay interest of 1 per cent or less. If a cut is passed on in full by banks, these accounts will dive towards negative territory for the first time on record.

Mark Dampier, of asset managers Hargreaves Lansdown, said: "It is a dire times for savers, especially for elderly people who rely on their income. They have already seen a sharp drop in excess of 50 per cent and can anyone tell me of someone in the public or private who would put up with a 50 per cent pay cut?"

A cut in interest rates raises the bizarre possibility that some savers may soon end up having to pay banks to keep money with them.

Savers pay already - bank charges and annual card fees for a start.... how much does it cost to keep your money under the mattress?

While in the US zero interest has global implications:

The Shadow Money Lenders: The Real Significance of The Fed’s Zero-Interest-Rate Policy (ZIRP)

To secure their global agenda, the shadow money-lenders needed a national base to first consolidate their power and to legislate laws that would secure their monopoly to issue money and credit. The target country was England and that is why the first central bank was the Bank of England. Almost all the laws that secured the money-lenders their unbridled economic and political power can be traced back to the legal basis for the establishment of the Bank of England as a central bank and their unfettered right to create “credits”.

The £ was the currency of choice for world conquest and the result was the mighty British Empire, where the sun never sets! It was an empire based on debt. When the £ Ponzi scheme unraveled, Britain outlived its usefulness and the shadow money-lenders relocated to structure another Ponzi scheme.

The next target country was the United States and the vehicle was the Federal Reserve System.

What is important to understand is that the shadow money-lenders are parasitic in nature and they have to feed on a continuous diet of debts. The financing of military adventures ensures a continuous stream of debts and compound interests. Debts beget more debts!

When the debts reach saturation point, the Ponzi scheme will collapse and hence, the need to revive and or re-establish another Ponzi scheme, failing which the shadow money-lenders’ financial empire cannot be sustained.


The Fed’s decision to cut the Fed Fund Rates to 0.25 percent means that the Fed has embarked on a Zero-Interest-Rate Policy (ZIRP) and to proceed with the policy of Quantitative Easing (QE) – to turn on the spigot for “limitless supply of credit”.

In layman’s jargon, to encourage more debts – mortgage debts, credit-card debts, car loans, and more importantly to revive the derivative casino, presently on life support. This was the drug addiction that sustained the global financial system in the last twenty years and more intensely in the last seven years!

The announced policy (ZIRP / QE) is the last bullet in the Fed’s arsenal or as I have stated earlier, using another analogy, the final gamble, the last chip on the betting table. There will be no more ammunition left after this.

This huge gamble will take six months to play out but it will end in failure as surely as the sun will rise in the East tomorrow.

But a more sinister aspect of the zero-interest-rate policy which has not been highlighted by any economist or financial commentator is that the United States under the present Bush regime has declared to the entire world that the United States cannot and will not service anymore interest payments on the nation’s outstanding debts amounting to trillions.

Bush has declared that the United States for all intent and purposes is bankrupt and have no means to service the interest due, what more the principal sum.

Bush, Bernanke and Paulson have therefore collectively agreed to give the “two-finger sign” to the world’s creditors and in no uncertain terms are saying that:

You creditors, you a@#holes, you can jerk off. You know, I know and the whole bloody world knows that the US of A have no income to even service the interest which amounts to a few hundred billion a year.
So let us stop the pretense. We owe trillions and interest on top of that runs to hundreds of billions, which when unpaid is capitalized. And every year we have to borrow from you guys just to pay the interest so as to avoid a call on default. There were so many occasions when we have defaulted, but you guys allowed us to roll over to maintain the fa├žade that the US of A is still floating.
We ain’t floating like a bee, but we are sinking fast! Let’s cut the crap and be real.
So this is the offer. And you jerks better listen good because this will be said once and once only.
You guys should be more than happy with so much interests already accruing on the outstanding. All these years, you guys have been only too happy to see us print the toilet papers in payment of your goods and to service the interests. It was an incredible con and what a free ride we had all these years. You guys were part of the con as well.
If you insist that I continue to pay you in toilet papers, why do you insist that we issue more toilet papers as interest payments? It is just more toilet papers. You guys are swarmed with toilet papers!
The toilet paper is worthless. So what is the point of paying “toilet paper interest” on outstanding toilet papers?
This is it! We are not paying anymore toilet paper interest. We are going to print more toilet papers to pay for whatever we want to purchase. If you want to sell to us, you will get toilet papers but with no interest. Period!

This is the greatest irony. The Fed, the world’s biggest money-lender and its partners-in-crime are telling their creditors to stuff it! When debtors cannot pay the exorbitant interests and the principal, these financial predators demand that the debtors give their pound of flesh in lieu of cash. But when they borrow, they repay in toilet paper money abd get away with it!

And now they even have the audacity to give an ultimatum:

We are the biggest buyers in town. If you don’t want toilet papers from us, that is fine by us. You can get tissue papers from the Europeans, bamboo papers from the Japanese and whatever that is on offer. Who is going to argue whether tissue paper would do a better job than plain toilet paper? Hey, this is a free market. Pick your choice!

This is the ultimate poker game. Bush, Bernanke and Paulson is betting that no one will call their bluff, turn away and stop selling anymore goods to the US of A. Bush is counting that the fear of recession and or social unrest in the creditors’ countries will force the creditors to capitulate.

Unfortunately, this gambit will fail. The reason is simple. The US cannot supply the goods that the American consumers want, even the most basic stuff. The manufacturing industries are all anemic, while others are on life support. Without imports, the United States will have to shut down within six months.

There will be massive riots all over the US, with people killing for food and other basic necessities. Basic raw materials, commodities for manufacturing etc. will be unavailable. There will be no more cars on the freeways! Millions of Americans licensed to carry arms will stalk the streets for whatever scrap they can get their hands on.

You can bet your bottom dollar, the Shadow Money-Lenders and its military partner will impose martial law.

From zero tolerance to martial law.... 2009 is sizing up to be an interesting year!