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?

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.

ROLLING BACK THE LANGUAGE OF ECONOMICS - Part 2 : STIMULUS

Various Western governments have introduced stimulus plans. These measures have also been called 'quantitative easing' (QE) among other things but basically they amount to printing money.

The mirage created with QE is that the central banks created electronic money out of thin air and used that to buy their own government's bonds. These bonds are basically IOUs and in time the governments will have to repay those debts to the central banks with interest. When the payments are recovered the central banks will then electronically destroy the imaginary money.

This process of printing money causes a devaluation of the 'fiat currency' due to the laws of supply and demand. If you make more of it, each piece of it is worth less.

As the majority of all money 'exists' only in a digital form, it can also be argued that what is actually being printed is digital debt.

The problem with introducing a stimulus is that you have to maintain that stimulus for a significant period as global markets take time to react to the change in the economic system. By maintaining that stimulus, the system can become dependent on it. This happens when a sick person is treated with stimulus drugs. They can soon become addicted to the stimulus and side effects appear. The side effects can be harmful. Even more harmful than the original disease.

These unorthodox processes are hitherto untried and untested, and it is only because it is mathematicians offering these 'solutions' to governments and banks that any credibility at all can be given to the process.

WARNING !!! These are the same breed of mathematicians that sold the financial services industry the ideas of complex derivatives including 'securitization of mortgages' and 'credit default swaps'. Watch out for Global Banking Crisis II, coming to a town near you soon.

ROLLING BACK THE LANGUAGE OF ECONOMICS - Part 1 : INTEREST

This post will be the first in a series of posts that looks at how the use and perception of economic and political language have been changed over time.

INTEREST is a concept that we are all familiar with. Usually because we have to pay interest to banks, credit card companies, shops etc. Sometimes we receive interest on savings or other investments. The word interest comes from the notion that if you borrow for, say a house, your lender will charge you interest in order that you get to buy a house and the lender makes a profit. The lender also has an interest in your property. That is to say that he is interested because if you fail to complete the transaction at any point, that property may be sold. It may be sold for less than the outstanding value of the loan in which case the lender would make a loss. So it is no surprise that he is interested.

Compound interest means that interest is applied on an ongoing basis with respect to time. This causes problems for entities like governments where situations can occur such that the amount repaid in a given year is less than the interest due. In this case the interest will not only apply to the original debt, but it will also be applied to the interest too. Interest on interest.

Compound interest looks like this. If left unchecked, it runs away very quickly. This is due to the effect that compound interest has a mathematical function known as positive feedback.

It works in the same way as acoustic feedback. For instance if a microphone is placed too close to a speaker, the sound from the speaker goes back into the microphone, gets amplified and then comes out of the speaker a little louder. This new louder sound, goes back into the microphone and is amplified again and comes out of the speaker even louder. Effectively the amplifier adds compound interest to the sound each time. After a period if these repetitions, the noise becomes so chaotic and unbearable at which point somebody usually cuts the power to the system.

Another natural phenomenon that follows the same mathematical principle is sickness (i.e. diseases like cancers and viral infections).

As all financial services rely on the concept of interest to make profits, it is advisable to remember the analogies above.

Who's interested now?

It is interesting to note that the texts of the Christian, Jewish and Islamic faiths all expressly forbid the use of interest as the concept is seen as a levy on God's time. However, over time these ideas have been relaxed through a series of reinterpretations.

Nobody can be free of paying interest even if you save up for things before you buy them. Currently, due to the way interest has permeated through all aspects of the world economy via credit markets and commodities markets, about 45% of the price of all goods is used to service the interest on debt held in the supply chain.

Because of the invisible interest that has attached itself to the sales price of everything, most people are nett interest payers. In fact 85% of people are nett interest payers, about 5% of people are interest neutral and about 10% of people are nett interest receivers. In other words 10% of the people receive 90% of the interest that everyone else pays. Doesn't that sound like another more well known statistic. Yes, it is interest that is entirely responsible for the massively uneven distribution of wealth. How can you become a nett interest receiver. Well you just need to have a spare £500,000 hanging around that you don't need but you could invest.

Notwithstanding all of the above, the whole notion of interest is totally flawed. As an example, say that Jesus had deposited 1 penny into a bank account in the year 32AD with an account that would yield a typical long term interest rate of 5% per year. If he had returned in the year 2011 and gone to the bank to withdraw all of his money with interest, that amount would be

£8,582,678,794,222,570,000,000,000,000,000,000,000,000

That amount is difficult to imagine. However if the bank paid out in gold balls at today's gold value, it would amount to 44 trillion gold balls. Each gold ball would be the same weight as planet earth.

A great investment? Yes, but this financial model (INTEREST) cannot work in the long term.

SELF FULFILLING PROPHECIES - And other sheep based tomfoolery

The financial houses use complex mathematical models in a vain attempt to predict the direction of the markets.

These models spew out huge data streams and occasional fixed numbers known to economists as technical levels.

The markets get very excitable when these technical levels are approached, so much so that they buy or sell as these setpoints are neared.

The problem here is, when a significant basement technical level like S&P at 1040 is approached the sheep and the virtual sheep sell, sell, sell. The fear that ensues causes them to sell further as though this number signals the end of the world.

Recently a number of these technical levels have been skirted with and it is only a matter of time until the panic will develop to such a degree that the machines will set a new base technical level. The new level is arrived at by looking further back in 'data time' on the assumption that we have been here before so what happened next in the past is likely to happen again in the future - WRONG!

Unfortunately the algorithms, differential equations, fibonacci projects etc are about as sophisticated horoscope birth chart analysis. You only beleive or act on the bits you want to beleive in. The mathematics of economics is just plain flawed.

The closest real world phenomenon that could be compared to market sentiment and future gazing is Brownian Motion.

Sadly, brownian motion really is impossible to predict.

Trouble is, when the sheep wake up and realise this, they will all sell everything.

Should be fun watching though.

UK DEBT – Myth, legend and reality.

Everyone is being conned regarding the scale of our economic problems.

All political parties and the media constantly talk about the debt and the debt reduction plan.

The austerity budget has been sitting in Whitehall for a considerable time and would always have been implemented regardless of who had won the recent general election. But even that plan will barely scratch the surface.

The media and the politicians talk about a deficit of £163 billion pounds. They also talk about a budget plan to cut the debt by half in four years. THAT IS A LIE !

£163 billion is just THIS YEARS debt.

Their plan will only reduce the year on year debt to £85 billion by 2014.

The total outstanding debt is already £908 billion ( http://www.debtbombshell.com/ ) rising to £1375 billion by 2014.

That’s equivalent to £53,000 per tax payer.Imagine how long it will take the average person to save that.

Or imagine receiving a tax bill for that amount.

Just the interest on our debt for this year will be £43 billion. That's £1,900 for each and every household in the UK.

Remember this debt was largely created by bad practices in the Private financial services sector. All that has happened is that PLC debts have been transferred to Public Debt which will be addressed through 'Austerity Programs'.

PEAK OIL - A big story the media refuse to report on.

Unfortunately fuel prices will continue to rise and rise and rise.

Within the next few years (10 at most) the price will be out of reach for all but the wealthiest and elite classes around the globe.

We have already passed a significant milestone in the post 'gold standard' petro-economy. That point is known by economists as 'Peak Oil'.

Essentially when that point was reached, the world entered an era where the demand for and production of oil exceeded the volumes of newly discovered reserves.

Over time this problem will be compounded due to emerging market countries insatiable demand for energy.

It took 200 million years for the sun to convert carbon to plant and animal waste and subsequently to oil. It has taken just over 100 years for cars etc to reach the 'Peak Oil' point with a relatively gentle upward demand slope and a steep new reserves curve.

Looking at the numbers now, 10 years is actually optimistic regarding the affordability of the remaining reserves.

As we are probably as greedy as our parents and grandparents, I don't hold out much hope for an alternative scenario to emerge.

Google 'Peak Oil' for more information.

Comments welcomed and encouraged.





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