ZOMBIE END GAME - The financial undead continue to drag us down.

The disjointed musings of the financial media support groups and the politicians desperation to patch up the emperor's new clothes again, serve notice that the final act has begun.

The banks have sucked the blood from their governments through a series of bailouts.
The governments have sucked away the lives of their peoples through ongoing and expanding programs of austerity.
They have stolen from multiple generations of the unborn through bond issuance and leveraging so called "stability funds".
Financial institutions are stealing from their depositors as they begin to panic at the glimmer of the bottom of the shiny trough.

The managed retreat has begun.
Treaties are hastily being re-written. Doubtless constitutions, bills of rights and human rights legislations will go a similar way.

All areas of the economy have been fatally wounded. And even the most optimistic commentators are now describing the future misery in terms of decades.

It's a zombie paradise.

WHO ARE THE ANTI CAPITALISTS ? - And who are the bad guys ?

Regardless of your opinions about the rights or wrongs of the capitalist system, it is the capitalists themselves that are behaving in an anti capitalist manner. Far more so than the so called anti capitalist protesters.

It's ANTI CAPITALIST to rig markets and pretend that we are living in a free market system.

It's ANTI CAPITALIST to save banks that are to big to fail.

It's ANTI CAPITALIST to allow banks to become too big to fail.

It's ANTI CAPITALIST to allow banks to create money out of thin air under the cover of the fractional reserve banking system.

It's ANTI CAPITALIST to have a shadow banking system that is unregulated and causes other parts of the financial system to behave chaotically.

It's ANTI CAPITALIST to have targeted import tariffs and limits.

It's ANTI CAPITALIST to set artificially lower interest rates.

It's ANTI CAPITALIST to deliberately allow inflation to take off in order to reduce the impact of commercial and sovereign debts.

It's ANTI CAPITALIST to effectively buy your own bonds through a convoluted system of central banks, shadow banks, monetary funds and rescue/stability funds.

Capitalism in its purest form could just work. The trading of goods and services equitably for other goods and services serve many barter only communities well.

Its time to think about just who the anti capitalists are.

99ers UPDATE - Maybe they'll all get on a bus to occupy Wall Street and join in the fun

About a year ago I posted a blog about the 99ers in the USA. In a nutshell, in the USA, unemployment benefits only pay out for 26 weeks. Then you're on your own with no state support.

Because of the 2008 financial crisis and the huge increase in unemployment numbers, the American government passed an emergency law to increase these benefit payments by a further 73 weeks in order to limit the number of visible destitutes that would end up on the streets of U.S. cities.

That emergency legislation was only allowed to be passed on the basis of a concession to the political right. And that concession was that the new arrangement would be time limited. That time limit is about to expire.

To make matters worse, there is an election coming up soon so it is unlikely that this extension will be kept via a new version of that legislation.

Further details can be seen in my previous blog entry - http://subsister.blogspot.com/2010/12/99ers-set-to-take-off.html

Now then.

If that extension is not forthcoming by the end of this year (about 10 weeks time), the number of 99ers is set to increase on a rapid scale.

By February 2012, the number of new 99ers with no state support will increase by a staggering 2,153,700 people.



What will these 2 million new disenfranchised people decide to do about it?

HOW MUCH DEBT IS OUT THERE? - How big will the crash be?

I've been looking at all of the debt figures that are floating around and one thing has become clear to me. Nobody actually knows how big it is. And that is exactly why the so called political experts cannot agree on how big any bailouts should be.

Here are just a few examples of the type of debt that is now out there.

Personal debt. i.e. debt that is tangible and that we actually know about. For instance mortgage plus loans plus student debt plus credit cards plus overdraught. This averages out to about £25,000 ($40,000) per person in the UK.

National debt. i.e. the amount a country owes. This amount is largely in the form of government paper (or bonds). That is to say money borrowed (or stolen) from the unborn. For the UK this currently stands at about $9,000,000,000,000 (9 trillion dollars). If you divide that by the population it equates to around $150,000 per person.

Global debt is the amount that the world owes. That is to say, the sum of all the national debts of sovereign nations. That figure is about $100,000,000,000,000 (100 trillion dollars). If you divide that by the entire human population it equates to about $15,000 per person on the planet. Seeing as the significant majority of the planet could not even imagine that amount of money or have any chance of ever paying back that amount, the debt share will have to be absorbed by 'wealthier' first world people.

Now, there is one more chunk of money that could be owed. It's a kind of insurance scheme known as the derivatives market. These debts never really come into being unless things start to go wrong.

Derivative global debt is thought to have been transacted at a nett value of $1,000,000,000,000,000 (1000 trillion dollars or 1 quadrillion dollars). If (or when) the bubble bursts this debt burden will be repatriated back down along the line to nation states and ultimately individuals.

This is where it gets scary. The sum of all the debts contained within the financial system divided by the world's economically active population is $1,000,000 per head (1 million dollars).

QE2 - In other words, You are being conned again.

Last week, the UK government announced a second phase of quantitative easing. Or to give it it's real name "printing lots more digital money."

It was publicised by the Bank of England as a mechanism to kick start the UKs flagging economy. The idea was that this new money would trickle down from the central bank, to the investment banks, then to the high street banks, then to small businesses as loans and finally to facilitating new jobs and new wages.

What a load of bollocks.

This new money will never trickle down. The sum announced was £75 billion. That equates to about £1,300 for each person in the UK. That new money is yet another lot of new money that will have to be paid back at some future date by you and me.

My guess is that if you are lucky and the usual 90% to 10% rule applies, then you might see about £115 of that new money in your pocket over the next year or two. The other £1,200 will disappear much further up the food chain. It might even be used to save a bank from collapse or just be gambled to zero by hapless city traders.

The point is, the only way to get people spending again, is to put real cash directly into the pockets of real people. Most people (the 90%) have to spend all of their income on basic living expenses plus a few luxuries once in a while. If the new money were directed to the poorest 10%, that money would be spent in the blink of an eye and would continue sloshing around in the lower economy for some time. This would create demand, jobs and compounding VAT revenues.

Either the people at the top just don't get it, because they are so far removed from the realities of ordinary peoples daily lives or they are just plain evil and are pursuing a deliberate program of enslavement.

I'll leave you to decide.

DEBT, DEBT AND MORE DEBT - Your enslavement by numbers.

Here is a list of the top 20 countries in order of their debt to GDP ratios. I have also added a couple of columns showing the average wage in each country and the payback time required if we all worked full time and paid all of our earnings in tax.

Click table to enlarge

Nearly all mainstream political and economic commentators have been making a big fuss about Portugal, Ireland, Italy, Greece and Spain (collectively known as the PIIGS).

Why this focus on these countries in particular. Is it a form of Northern European economic fascism?

Sure, Ireland is in big trouble. However there are some big players up there too. Why are they so quiet about UK, Switzerland, Holland, Sweden and even Germany to name a few.

Going back to the repayment terms, lets take the UK as an example.

George Osbournes austerity measures have caused an increase in tax take and a decrease in jobs and wages equivalent to about 6% (which is a lot for people to deal with). Therefore instead of the 3.34 years payback time the actual payback time is more like 55.7 years.

That 55 year target is coincidentaly the same period of time that people will have to work according the a recent independent actuarial audit on UK pensions. Mmmm! retirement at 73 years old.

The reason why the focus is not on the major Northern European countries is because the credit ratings agencies like Moody's, Fitch, Standard and Poors are in bed with their neo-con paymasters. Its just an illusion.

The war has started and it's almost over before we've even noticed.
Time to reset the clock.  Abandon all forms of capitalism now.

WHERE HAS ALL YOUR MONEY GONE ?

Just a quick graph showing 25 years of international economic growth and how the money has been distributed.

Who is stealing from who ?

HOW ARE YOU DOING ?

Just a quick graph showing an overview of what has happened to us during the first decade of the new millenium.

Pretty good if you're a corporation or a banker or a speculator or an oil company. Not so good if you're an average Joe who needs a job and uses a car.

A smaller number of employees drawing 5% less wages than 10 years ago has produced a 118% increase in corporate profits.

That's just greedy. Is it any wonder people are beginning to copy the fat cats and just take whatever they want whenever they can?

What's the difference between a politician making multiple expense claims for flat screen TVs and somebody looting a TV shop during a riot?

Answer : The politician gets delivery included.

ROLLING BACK THE LANGUAGE OF ECONOMICS - Part 4 : DEBT

Debt is among the most common words used in the English language today. But what exactly is debt?

That is a harder question than you might imagine.

Most people think of debt as an amount of money that is owed to another person or company. However, over recent decades the new reality of debt has permeated all aspects of our lives through a complex process of financial wheeling and dealings.

Because governments around the world decided to move away from the 'gold standard', all currencies around the world are now 'fiat currencies'. That is to say that the notes in your wallets are no longer backed by a promise to pay the bearers in gold. Currencies have become detached from real assets like precious metals and allowed to fluctuate in perceived value as 'the market' dictates.

This means that ultimately, the value of money only carries a worth equivalent to the confidence that every participant has in the scheme at any particular time.

After the gold standard was abandoned, currencies were allowed to float freely and competitively against each other. Over time, this detachment has caused a psychological disconnection between the value of money and the value of real things. This detachment process has been exacerbated by the introduction of digital money transactions and time stretched credit options.

We all know how easy it is to buy something using a credit card or a bank transfer or paypal. The detachment process has made everyone buy and sell in a new way. The reality only reappears periodically when we get statements, or letters from our banks or overdraft repayment requests or defaults or bankruptcies or credit crunches or sovereign debt crises or world economic meltdowns.

You see, what we were convinced was money is actually now being realised for what it is. Debt. This new reality is true for every layer of the world economy. From the IMF right down to the peasant in Mozambique.

Because we have all participated in the scheme (actively or in some contrived secondary processes), we have all fallen into the same trap. The trap that enslaves us all.

From the federal reserve bankers that print new money (both digitally and on paper) to the idiot buying the latest Justin Bieber merchandise on eBay, we have all just been participating in some form of ponzi scheme based on fractional reserve banking and fractional reserve spending.

Since the 1930's when the gold standard was abandoned the financial processes that have brought us to where we are today, have created a financial system where nobody can begin to calculate how much money is out there (real and digital) or how much debt is out there.

It is estimated that about 99% of all money is actually really debt. That would also account for why prices have increased about 100 fold since 1930. In other words, we are no richer, only 100 times more in debt.

The tipping point is so close now. The curve can go in one of two directions. Either fiat currencies will collapse under their own weight of debt or a rapid consolidation of debt repatriation demands will cause an equal and opposite degree of hyperinflation.

Which way will it go?

It matters not. Either scenario will be a disaster.

CROSSING THE RUBICON - A Paradigm Shift and The Engineer in Me.

Here are a few reasons as to why the world might be entering a permanent new economic reality that will not be pretty.

1. Up until sometime around the year 1800, all species (particularly ours) had little margin for error. Like all other animals we lived up to the limit of the food supply. The populations ebbed and flowed following simple differential equations bounded by the limits of supply of food and numbers of humans.

2. From around the year 1800, fossil fuel exploitation enabled us to rig the market through advances in mechanisation, production and fertilisation. This positive trend could only ever be a temporary one. It was inevitable that the population would increase to exploit this step change in maximum demand possibilities. All that has happened is that the ebbing and flowing wave has a higher amplitude and a shorter wavelength. In other words, things just happen harder and faster. Markets are exaggerated and rich/poor disparities are exacerbated to insane and ugly degrees.

3. Since around the year 1800, the population has increased from 0.8 billion to nearly 8.0 billion.

4. The high demands of 2 centuries of wealthy countries exploitative folly and the recent extraordinary demands of large, fast developing countries have applied a number of ramping functions and a number of extreme pulses to the system. Anybody who knows anything about control systems design or mathematical modelling fears such pulses.

5. Since 1960 the annualised growth in crop yields has fallen from 3.5% per year to 1.2% per year despite the use of oil based fertilisers having been increased significantly. All of this intense farming is clearly destroying the land's potential to re-mineralise itself through natural irrigation and precipitation processes.

6. Politicians and money-markets will never face up to any of the above truths.

7. From now on, price pressures and resource shortages will be a permanent feature of our lives.


All of the above contributed to the financial crisis of 2008 and the subsequent spikes in commodity prices like oil, energy, metals and foods.

Add the following list of potential tipping points to this and we could be looking at the perfect storm.


1. Events in Syria could be the most likely scenario to inflame a full scale war against Israel, in turn, dragging the whole of the middle east into turmoil.

2. It is highly likely that Israel or the USA will wage a war against Iran if Iran escalates its nuclear program.

3. Libya. Does it need an explaination?

4. As the weather warms in other middle eastern countries, more tensions, protests and revolutions are bound to occur. The tipping points have been attributed to democratic awakenings by western media groups. It is more likely to have manifested itself due to spikes in food prices. Spending on food in second and third world counties forms a much more significant share of a family's budget.

5. The tragic events in Japan and subsequent annihilation of the Fukushima nuclear industry has changed world energy policy forever. The abandoning of existing and future fission projects will add massively to the demand for hydrocarbon based fuels for energy conversion needs. The impact on one of the worlds largest economies is sending out financial shock waves across the globe. Economists will un-forget about peak-oil once more.

6. Energy expenditure in the USA has just exceeded 9% of GDP for the second time. The first time was in the summer of 2008, just before the 'global financial crisis'.

7. Austerity programs (you ain't seen nothin' yet) around the globe both nationally and locally are beginning to impact on the jobs economy. This will accelerate as the story unfolds.

8. The much talked about sovereign debt crisis is about to materialise in spectacular fashion. Who will be the first 'fall guy'? Almost certainly Greece, but much bigger names will be in the frame soon after. A tower of cards teetering. The fallout will be truly shocking.

9. The demise of the U.S dollar seems unlikely to most people but watch this space. China bought massive amounts of US treasuries over the last decade. It is now trying to dump these investments on unsuspecting world bond markets at a faster rate than it accumulated them and that was pretty damn quick.


The next few years (or months even) will be very interesting to say the least.

See you all on the other side.