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101  Economy / Economics / Re: Learning from Imperial Rome on: June 12, 2016, 10:00:42 PM
There is a topic related to Imperial Rome that I still puzzle
over. Now, within the US Presidential campaigns, I may have found
a new perspective on the outcomes. The two quotes below are
enlightening:

Trump "I could stand in the middle of 5th Avenue and shoot somebody and I wouldn't lose voters,"
Clinton "Like with a cloth or something?"

Short on policy, long on Entertainment. Imperial Rome was famous
for its "Bread and Circuses" - just the sort of nebulous concept
that defies the ability to attach numbers. This made the true
importance and impact of this policy difficult to grasp, and
allowed it to escape its proper inspection.

Bread and Circuses flows from context: With the defeat of Antony
and Cleopatra, Rome's wealth and survival were assured. Uncertainty
was reduced to storms and floods and to political infighting. One
form of instability leads, I suggest, to a form of stability.

Thus Rome moved from a Republic to an Empire. But with Wars, and
Rumours of Wars gone as a topic of conversation, and little new
in the way of weather, and even political and religious structures
set in stone, what were the plebs, the Roman Mob, to do for
Entertainment?

The last thing an Emperor wanted was his policies on taxation and
welfare debated on the streets of Rome by a knowledgeable population.
Thus was born a social contract - "Bread and Circuses" - the plebs 
were provided with sufficient bread and entertainment and would
leave the running of the Empire to the Elite. For the bulk of the
population, the marginal economic utility of education fell to zero.

With these thoughts in mind, I can again ask myself these questions:
What was the real story behind Caligula?
Who was Catiline?
102  Economy / Economics / Re: Economic Totalitarianism on: June 12, 2016, 09:58:47 PM
Recent comments here on asset seizure seem wide of the mark.
The problem is political. If you want something done, other
than an arbitrary tax on bitcoin, publicly challenging
your local elected up close and personal - something like
"Hey Jimmy - where's my money?" - should work. 

A similar process is underway in Europe as I write. The
Germans (via Der Spiegel) have woken up to some of the
consequences of a Brexit. Which may help explain a sudden
20% increase in the price of bitcoin and a couple of
random memories seemingly related to the EC:

Back in the day, when school closed for summer, I spent
some time in an amusement arcade. One of the booths
played music. You dropped a coin in the slot, the
six or seven marionettes swayed, waved their arms and
beat the drums, and the music played for a while. Then
it stopped, waiting for another coin. The EU is much
the same, except the tune is "Hotel California".

Some years later, I had a new job, in a new town, and
my employer arranged a week's lodgings for me. I'd
got unpacked and went down to the TV room. A football
match was on the TV, everyone was very welcoming, and
I settled down to watch the rest of the match.
That's when the TV went off, shrinking to a small white
dot in the middle of the screen.
Everyone in the room turned and looked at me. I had
sort of noticed that there was something odd on the
side of the TV. It was now clear that this was a pay
per view arrangement, and as the "new guy" it was my
turn to pay. A coin the slot restored "normality".
Germany is waking up to the knowledge that once the UK
leaves, other nett contributors to the Bureaucracy
masquerading as Empire may want to form a disorderly
queue to exit. 
 
Even worse, Mr Cameron's Project Fear has opened the
Can of Worms marked "Pensions". Europeans may be about
to discover just how big the hole below the waterline is.

Quote from a young Analyst in 2015 "I don't expect my
pension to be there when I retire".
 
103  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: June 04, 2016, 09:16:05 PM
I really ought to write something on the origins of money, but
we live in interesting times, so, it's interest that I'm
thinking about. 

More precisely, a view on some implications of a rise in the
US Federal Funds Rate, initially, an increase to one percent.

In any normal economy an increase in rates would reflect the
pressures of growth within an economy, and the risk taken by
the investor. A rate rise to one percent suggests that a sick
economy is merely being taken off the critical list and that
it will take some time before normal service can be resumed.

Now that the idea of an abnormal economy is shimmering in the
distance like a mirage, let's approach a little closer and try
to see more clearly. Take a look at the money in your wallet.
The paper money bears a promise to pay. The "money" in your bank
account, not so much. When I think about it I realize that 99%
or so of the world's reserve currency looks very similar to a
gigantic alt cryptocurrency.

Now, imagine that you are the developer of the alt currency
known as the dollar. What about that rate rise mentioned
earlier? Holders of bonds and stocks are about to lose money
running into trillions. Still feel like raising interest rates?

Maybe that interest rate can be kept near zero a little
longer. But what happens to liquidity preference - money that
is easily traded carries a lower interest rate? That's the
reason people prefer dollars to gold, given similar rates of
interest paid - dollars are easier to exchange for goods.

Hmmmm ... soooo, what about bitcoin? It may not pay interest
but it's been appreciating faster than gold vs the US dollar?
Let me put it like this, if I lived in the Middle East and had
oil to sell, bitcoin would be my first preference ;-)

There's a lot more to be said about interest, and why profits
are not flowing into the pockets of savers, but that's a topic
for another day.
104  Economy / Economics / Getting the Economy Going on: May 29, 2016, 10:00:40 PM
If it was easy to get the world economy going, somebody would have managed
to do that already. There are two hurdles to get over.

The first hurdle is the financial system, aka Debt. The basics were known in ancient times,
brought about by interest paid on Debt. They built various ways of resolving the problem
into their legal and religious codes, the most well known is the Jubilee defined in Leviticus.
This prescribed fixed intervals for debt forgiveness and for the restoration of property
to its original condition and owner.

Today that would mean declaring every contract denominated in dollars, yen, pounds,
euro, etc null and void, and starting over with Bitcoin. Except that that would not
solve the problem, though the next financial crisis would not happen for 100 years or so.

The next hurdle is oil. That's an oversimplification. The reason there is a glut of oil
is that we cannot afford to burn it, in part because of the Debt problem. If the Debt
problem gets fixed by some "magic", oil production is set to decline at about
seven percent per year, and that will take the world economy down with it. Now,
I'd expect that collectively, we will do a bit better than that decline, but expecting
growth is beyond rational thought.

So there it is, that's my best guess. That's not financial advice, DYOR.   
105  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: May 29, 2016, 09:41:23 PM
Getting the economy going? That's partially answered by my post, above, but
I'll open a new topic. "Getting the Economy Going"
106  Economy / Economics / Re: Economic Totalitarianism on: May 29, 2016, 09:38:07 PM
I got into a conversation during the week with one on the brightest minds in
the UK: 1st Class Honours; highly placed in a national business exam; the
sort of person you expect to rise to the top. Here's the strange thing -
why wouldn't this person seek promotion up the management structure? Holding back
because of tax or student loans? So I had a look at their Student Loans
(http://www.bbc.co.uk/news/education-36388011) and take-home-pay.

Very rough summary: just below 42000 marginal nett income is (100-20-12-9)%
and above 42000 it is (100-40-2-9)% that is (Pay -tax -NI -Student Loan.)
The figures vary, depending, but you get the picture. I can't be certain, but
if things fell badly the marginal rate of deductions might rise as high as
61% for a narrow range of annual pay, not including deductions for pension etc.

It looks like the addition of student debt is just enough to move most graduate
jobs onto the wrong part of the Laffer curve. The trade off in stress, social life,
vs financial rewards isn't worth it. Which is why, I'd guess, that employers
are complaining about skill shortages. So, they either relax, enjoy life in an
undemanding job, or leave for the USA, and work 100 hours a week for a salary
well into six figures. Some choose one life, some another.

In the bigger picture, human resources, skills, and knowledge are what gives
nations compeditive advantages in the knowledge economy, so this is not going
to end well for the UK. How to fix it? I have no idea.

BTW, ask MA this question:
Why blame Socialism when Incompetence explains so much?
107  Economy / Economics / Re: Economic Totalitarianism on: May 28, 2016, 09:03:58 PM
If Only ...
http://anonhq.com/media-will-not-report-anonymous-shuts-new-york-stock-exchange-fed-reserve-world-bank-vatican/

also this ...

https://www.wired.com/2016/05/map-tracks-governments-hack-activists-reporters/
"An informal group of security researchers calling themselves the Digital Freedom Alliance this week launched a collaborative software project to <a href="https://digitalfreedom.io/map/" target="_blank">aggregate and map out/a> government hackers' attacks against journalists, activists, lawyers and NGOs around the world. The project, whose <a href="https://github.com/digitalfreedom/data-targetedthreats/blob/master/targetedthreats.csv" target="_blank">code is hosted on Github</a>, collects data about state-sponsored malware infections from public sources like the University of Toronto's <a href="https://citizenlab.org/">Citizen Lab</a>, <a href="https://targetedthreats.net/">TargetedThreats.net</a>, and security firms' research. It then organizes that data into a map that breaks down the attacks by date, target type, the family of malware used, as well as the location of the command and control server used to coordinate each malware campaign. "I was tired of the Hacking Team-types claiming that there are no solid evidences of abuses, when there are plenty," says Guarnieri. "You get most of them plotted in that map.""
108  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: May 28, 2016, 08:45:22 PM
The question about third party risks got me thinking about identifying
the risks that gold and bitcon face. Why prefer one over the other given
that they share similar adavantages and yet are so different physically?

One objective method is to look at the price volatility for each. More
volatility suggests higher risks. I haven't pursued this in any detail because
any derived figures will give a false sense of accuracy. There is enough
there though, IMHO, to suggest that both gold and bitcoin face similar
levels of risk. Despite their different track records, for example 3000 years
vs seven years in circulation, it seems probable that a big chunk of the risk
to their price, if not existence, comes from one part of the economic system
itself.[1]

To understand this threat, think about the purpose of money outside its
ability to provide a store of value. Its real value is its ability to
circulate, to act as the invisible hand that guides people to act in their
own best interests. It does this by providing a medium within which markets
have a near frictionless operation. Except that both gold and bitcoin
barely circulate as money - it seems that Gresham's law in in full flood
with bad money driving good coin out of circulation.  

At this point I will say that there are other risks to bitcoin and to
gold. All of these are the subject of daily speculation and chatter.
Here, this quotation seems particularly relevant "talk is cheap,
show me the code" - earlier I pointed to some banking practices that
bring serious problems, and to recent work in Complexity to try to
better understand these risks. Here I want to take a more global
view of the economy, the role of banking within this, and to get
a glimpse of The Powers That Be. Some links, but see the video:

https://www.youtube.com/embed/NgbqXsA62Qs

http://independenttrader.org/global-structure-of-ownership-result-of-4-year-long-research.html
"Some time ago I posted an article about methods used by banks to influence and govern the world. Some of you may have put that between conspiracy theories. For proving my point I got my hands on very interesting report. 'The Network of Global Corporate Control'. Prepared by Swiss organisation lead by James Glattfelder and Stefano Battistona. Since 2007 till 2011 they investigated capital connections from 43 thousand global corporations. Below I present their results."

http://www.wired.co.uk/news/archive/2014-06/03/james-glattfelder
"This is something that shouldn't be there if you look at standard or classical economic theory."

The phrase used by Glattfield to describe the network is "The Bow Tie".
This is not a particularly good or useful description, but the method has the
benefit of at least some mathematical certainty. The Bow Tie exists, and it is
both a risk and an opportunity for bitcoin, for gold and for assets with a
similar exposure to the vagaries of financial irresponsibility.

This is already old news, and the rabbit hole is getting deeper
all the time ...

[1] Yes, gold doesn't halve, cut me some slack here ...
109  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: May 22, 2016, 08:39:18 PM
Regarding gold and the Black death, to some extent it depends on whether
the contract was for a specific weight of gold or for, say, gold coin.
Hmmmm .... is an Act of God a "Third Party Risk"? I'd need to read the contract :-)

But the same thing could happen to Bitcoin. It's not a Third Party Risk.

BTW, I'm not a lawyer, and this is not legal advice.
110  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: May 22, 2016, 08:33:00 PM
If I agree to pay you a pound of silver, there are only two parties.
If I agree to pay you a pound of silver via a promissory note underwritten
by a third party, there are three parties to the contract. You and I rely
on the goodwill, reputation, full faith and credit etc of a third party in our
contract.
111  Economy / Economics / Political change in Austria on: May 22, 2016, 08:21:12 PM
It seems that Ing Hofer has a narrow lead in the election for President,
though postal votes yet to be counted could theoretically upset the
final tally.

Just another sign of discontent with the governance of the EU, and
likely to raise risks around the Euro, possibly increasing the
desire to hold gold or Bitcoin.
112  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: May 22, 2016, 08:11:30 PM
"Such risks are broadly defined as arising from a contract between parties where one (or more) party breaks the
contract."

Suppose I agree to pay you one pound of silver around 1850AD, and I give you a "Pound Note" payable
in 2016 by the British Government. Your "Third Party" is the British Government. Good luck suing them.

Ok, maybe I'm missing something, how do you counterfeit gold? Pass off 0.998 purity instead of 0.999?
I think you mean something else, and theft is theft whether by force or by fraud. I think once you try to
be specific, you will fail.

And you think that Bitcoin cannot be stolen by force or fraud, I think the risks are higher there.
 
113  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: May 22, 2016, 07:07:50 PM
Interesting questions - I might have asked these some years ago.

Regarding third party risks: Silver and gold are in the same asset class,
so (unless there is something I haven't thought out,) the answers for gold
will apply to silver.

Obviously, gold is gold, and tungsten is tungsten. A sufficiently good
attempt to deceive may succeed in passing on a quantity of tungsten
where gold was purchased or was stored. The end effect is much the same
as that achieved by the use of force: an illegal transfer of ownership
of the gold.

Herein lies the difference: third party risks generally do not give
rise to criminal charges. Such risks are broadly defined as arising
from a contract between parties where one (or more) party breaks the
contract. Hence, nobody goes to jail, and the Justice System has no
mandate to pursue the matter via the criminal courts.

Thus, though the effect on a bank balance may be equivalent, passing
off a toxic MBS as good collateral has less risk when compared to
selling tungsten disguised as gold. To the extent that these acts
seem to be the same reflects the confusion in most people's minds
regarding credit and money. This "confusion" was perhaps the basis
for the film "The Big Short".
114  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: May 21, 2016, 07:40:45 PM
This post resulted from a comment to the effect that global corporations
seemed to be beyond the ability of governments to control them. I was
struck by some similarities (and some differences) between today's trade
deficits, global industry and the story of the East India Company.
Some background history.
Following the defeat of the Spanish Armada, within months, merchants in
the City of London set up and received Royal Assent for an exclusive trade
agreement to the East Indies. This led to the setting up of the Crown
Corporation, and later the East India Company.
Some fifty years after the Royal Assent, The King, King Charles, decided
to solve his national debt problem by seizing (as a loan) gold stored
at the Royal Mint.
Nine years later King Charles was executed. Later, the Monarchy ceded
control of the City of London, and of the Crown Corporation to the Merchants.
The East India Company continued to expand, rivalling smaller nations in
its scope and power, until, in the mid 19th Century, it controlled half the
world's trade. Unsurprisingly, limits began to appear.
The East India Company was buying tea and silks in China, shipping these
to India, and from there shipping spices and finished goods to England and
Europe. 
For a while, the trade deficit could be filled by shipping precious metals,
mostly silver, to China. That couldn't last, and China was uninterested
in helping solve the problem by either importing goods of inferior quality
or by importing Western services. What to do?
It seems likely that any similarity between today's problems and those of
the mid nineteenth century ends at that point, but here's what happened. 
The East India Company began shipping opium in ever increasing quantities
to China. When the Emperor objected, British gunboats destroyed China's
Navy, and British and Indian troops seized China's cities.
Despite the military success, financial problems continued to plague the
East India Company, and over the next decades its resources and powers
were transferred to the Crown Corporation. In 1874 the East India
Company was dissolved.
An early form of Bail-In, and arguably an example of the parasite
destroying the host. 
Today, many global corporations do not seem fit for purpose, and bankruptcies
are on the rise.  The lesson to take away from all this is that when these
Corporations (and banks) fail, they cause a great deal of collateral damage
to those least able to bear it. This time the play may be different, but
it's difficult to see how the outcome can be changed. 
115  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: May 14, 2016, 09:30:18 PM
Not strictly about economics, banking or bitcoin, but
we'll see how this goes. The incoming vote within the
UK to decide to either remain in the European Union or
to exit, is not far off. I'll set out a few thoughts on
that but first "What has the EU ever done for us?"

The EU has improved the environment. The UK's standards of
cleanliness and control are often the subject of censure
and financial penalties by the EU, forcing Westminster
and local governments to clean up their acts.

The EU has championed privacy and free speech. Both the
Conservative and the Labour political establishments have
progressively suppressed dissenting voices to the point
of embarrassment. The EU has set the standards, pushing back
against worldwide surveillance and control.

The EU has acted as a restraint against unjust wars, while
the UK has almost without exception supported costly
and ineffective aggression, including the extra-judicial
killing of its own citizens.

With that background why leave the EU?

It may be a straight choice of identity : European or British.
Make no mistake here, the European Project is all about
subsuming national identities into a common view of the world.
That view gives every European the right and expectation to
be your neighbour, and to be welcomed as such.

European legislation is designed for Europe. Already some 60%+
of UK legislation is driven by decisions made by Brussels, and
if the UK decides to remain, that percentage will increase.
There are circumstances peculiar to the UK that are not shared
by the majority of the EU: the UK is an island nation; with a
maritime climate; English is an international language; and
the UK still has significant reserves of oil, gas and coal. 
 
Voting yes to remaining will make it difficult to resist further
integration within the EU both fiscal and political. Which
would you prefer for your monetary system: Greece or Iceland?

One of the arguments for Remain, is that the UK would be better
able to influence EU decisions and international matters as part
of a greater Europe. One need only look at the secret and
secretive processes surrounding the negotiations for the TTIP,
for every member of the European Union to realise the absurdity
of that argument. And the European Commission has done itself
no favours by it's recent decisions and standards such as
"When things get serious you have to lie".

More to the point, what would Brexit mean for Bitcoin?

A vote to stay in the EU, with its implicit decision toward
further integration, would suggest a diminishing role for
the pound sterling. Further, offshore UK supports Bitcoin,
and that would likely spread to the UK mainland with
increasing use of the Euro. With Brexit, not much would
change.

These are the rational arguments. For the irrational argument
see the scene from "Downfall" and a review of EC responses to
the migrants. Hitler addresses the Generals "What are you now
proposing we do?" A General "We plan to give every migrant
an IOU for Euro75,000.00 - that will solve the problems of
falling GDP growth, of deflation, and provide for the migrants
while they are within the EU until they find employment".
Hitler "Everyone not in the European Commission or the ECB
leave the room now"   
"What f****g use is an IOU? What difference is there between
that and a bundle of the Euro500 notes that you want to ban
because they can only used for criminal activities? The
banknotes would be better. If we just gave them the money
they might just **** off back where they came from".
And Scene

Note: Economists argue that economic migration is always good
for an economy. That argument ignores the fact that throughout
history migration (excluding invasion) was always subject
to controls. When it was not beneficial, immigration was stopped.
When it is uncontrolled it is called "invasion".
Just sayin'.
 
116  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: May 07, 2016, 08:58:24 PM
On QE and Money

Professor Steve Keen explains why QE doesn't cause inflation:
https://www.youtube.com/watch?v=d1Mug1EPaAo


There is a surprising lack of understanding of fiat money by bitcoiners eg
"Of course the current QE doesnt inject money, they just inject loans not money."

The difference between debt and money is that the liabilities go on the
left column in double entry book-keeping. Got it?

What we think of as money is a note that says something like
"I promise to pay the bearer on demand the sum of one pound"

The first thing to realise is that the government has no means of paying,
except via their monopoly of violence. So to deliver your pound, the
government simply points a tax (or gun) at somebody and demands a pound.
Or a dollar, since the US government is the gunslinger du jour,

And somewhere a pound gets deleted from the liabilities and from the
assets sides of a balance sheet. Got that? Good.

Maybe it's time to move on from ideas such as "Little girls are made
of sugar and spice and all things nice - little boys are made of snips
and snails and puppy dogs tails" and away from the politics of
Capitalism and Socialism and this artificial divide promoted by the MSM.

Money, essentially debit and credit, is both good and bad. To keep things
simple, think of the Roman Denarius in the early Roman Empire. This
provided a secure anonymous method of payment to the value of produce
anywhere in the empire. The cost of wheat in Rome and in Egypt could
be easily and accurately compared and investment decisions made.

The downside is that collapse is a feature of all monetary systems,
and is independent of whether it is labelled as Socialist, or Capitalist.
I'd guess this is something of a paradox to Martin Armstrong since
he understands the cyclic nature of our world, but is opposed to
"Socialism".   

Now, I'm going to move onto something I don't understand. I've found
that when something looks wrong, there's usually a good explanation.
This time, it's bank debt, specifically, inter-bank lending.

I've earlier referenced the interconnectedness of banks. On balance,
this seems to make the financial systems less stable. So what are the
incentives to become more connected?

I'm hoping that someone with direct knowledge can explain all the
factors. My guess is that bankers are incentivised to lend money.
Thus if bankerA in bankA lends $100 to bankerB at bankB, he gets a
bonus. If bankerB then lends $100 to bankerA at bankA, bankerB
also gets a bonus. Both bankerA and bankerB are happy, but bankA
is now connected to bankB, the leverage of both banks has increased,
and similarly so has GDP.

While the lending described above probably doesn't happen in real life,
what about lending via more than one intermediary? BankA to bankB to
bankC to bankD to bankA? Why not simply offset inter-bank loans
already on the books? Would cancelling these also destroy bonuses?
 
The result seems to be a network that self adjusts to cause the
maximum systemic damage when it fails. To quote Mr Bernanke,
"tanks in the street" but other Central Bankers offer much the same
sentiments.

This seems absurd. The financial sector is uninvolved in the
physical world. Theoretically, if every bank magically vanished
overnight, there is no reason why everyone else should not go to
work as normal the next day. So why do we allow this absurdity to
continue?

There has to be a better way. Bitcoin is a good start, but more
is needed for a workable system.
117  Economy / Economics / Re: Martin Armstrong Discussion on: May 02, 2016, 09:55:35 PM
"The inflation / deflation "recipe" the Elite are using is more advanced than single-dimensional classical analysis. They are inflating the debt-markets (otherwise they go bust by non-refinancing / non-rollover of debt) and deflating the small guy. Large debt markets get refunded and the small guy gets a liquidity crunch or a problematic daily costs / daily income ratio (if he doesn't own any loans)." - AlexGR

Great post.

I'd add that the Elite have less control than you suggest. They can front-run, mislead,
change the timing a little (otherwise MA would be wrong) but they cannot magically
increase productivity, nor can they revoke the laws of economies of scale. Eventually,
that's going to cause some pain.
118  Economy / Economics / Re: Economic Totalitarianism on: May 02, 2016, 09:46:10 PM
"QE does not inject money to the people."

Correct. Think of it as a pump that drains money from savers
via ultra low interest rates and sprays that money onto selected
banks' balance sheets.
119  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: April 21, 2016, 08:12:39 PM
Do you like Science Fiction? Can you imagine yourself standing on the
shore of some strange planet in a parallel universe, watching a wave
wash up at your feet, knowing that the wave comes from an asteroid that
has not yet hit the planet?

Welcome to the world called Finance :-)

Maybe it helps to know that you got here via a singularity called NIRP,
and that in this world, money is a liability. The more money you have,
the more interest you pay. In that world do you still want to be rich?

Whether banks can survive there is an interesting question, closely
followed by how to regulate them? Some interesting research is ongoing
here at the moment - see "Complexity Theory and financial regulation"
"In addition to data, understanding the effects of interconnections also relies on integrative quantitative metrics and concepts that reveal important network aspects, such as systemic repercussions of the failure of individual nodes. For example, DebtRank, which measures the systemic importance of individual institutions in a financial network (Cool, shows that the issue of too-central-to-fail may be even more important than too-big-to-fail."
http://science.sciencemag.org/content/351/6275/818.full

Such methods may work on some distant planet, but in this real world,
that's not how these things work. Bluntly - in a world where GDP
growth is negative, banks - all banks - become insolvent[1]. In case you
haven't noticed, it's been "all hands to the pumps" since 2008, all
busy pumping the interest that savings should have received into the
banks balance sheets to keep them afloat. That's on the premise that
"escape velocity" will be achieved and growth - aka inflation - will
resume.

An intravenous drip of monetary viagra and MSM opiates has merely
concealed the progress of systemic gangrene while keeping the
patient on the operating table.[2] As for growth - that's looking
quite limp[3]:
https://www.frbatlanta.org/-/media/Documents/cqer/researchcq/gdpnow/RealGDPTrackingSlides.pdf
 
When growth fails, there is a delay while TPTB move to higher ground,
trying to get there before the crisis floodgates open. Then when savings
and pensions and deposits are under threat, it's "do as we say or
"tanks in the street"." That means some banks get saved as the outcome of
a political process and not through the oversight of a privately owned
regulator via an objective risk assessment seeking the greater good of
the you or I.

So, what's in this for you? What's the trade? Should you buy or should
you sell?

Before considering that, a simple question : Have you sold everything
you own and given the money to the poor? [4]

Now, that's a whole different planet, isn't it?

[1] In Theory the regulators sould seize the banks before they become
insolvent. In practice that rarely happens. Banking depends on lending
long and borrowing short, and that tends to mean liabilities (eg bonds)
are fixed while assets (eg equity) vary with the fortunes of the economy.
Typically, an "adverse scenario" will model zero GDP growth over the
period with the intention of identifying individual bank weaknesses,
but this does not address the possibility of contagion and systemic failure.     

[2] search for  "The Risks From Further ECB and BOJ Easing" - Deutsche Bank.

[3] Unfortunately, once the true horror of the picture emerges, well,
Mr Nicholson put it thus: "You can't handle the truth". Which will be
interesting because the Atalanta FED already published how their
GDP forecasting model works.

[4] see Matthew 19:21

Some useful bank and complexity links:
 
"DebtRank: Too Central to Fail? Financial Networks, the FED and Systemic Risk"
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3412322/

https://financialresearch.gov/gsib-scores-chart/

https://financialresearch.gov/working-papers/files/OFRwp-2016-01_Stressed-to-the-Core.pdf

https://financialresearch.gov/from-the-management-team/2016/03/08/ofr-working-paper-shows-impact-of-credit-default-swap-stress-across-the-banking-system/

http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq415.pdf

http://www.zerohedge.com/news/2016-04-15/fed-sends-frightening-letter-jpmorgan-corporate-media-yawns
"How could one bank, even one as big and global as JPMorgan Chase, bring down the whole financial stability of the United States? Because, as the U.S. Treasury's Office of Financial Research (OFR) has explained in detail and plotted in pictures (see below), five big banks in the U.S. have high contagion risk to each other. Which bank poses the highest contagion risk? JPMorgan Chase."

For a primer on bank contagion see my post :
https://bitcointalk.org/index.php?topic=355212.msg12253705#msg12253705

120  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: April 13, 2016, 09:03:40 PM
A Modest Proposal : Double Liability and the Re-Capitalisation of Banks.

First, some history. Prior to the Wall Street Crash of 1929, there were
some interesting conditions attached to the ownership of US Banks.
Cognisant of the dangers of unfettered banking, and incentives before
the owners of the Banks, i.e. the Shareholders, the State placed an
additional burden on Equity.  

If the bank went into bankruptcy, not only did the Shareholders lose
their investment, they also had to make good the losses of the creditors
up to the original value of the Equity. Put simply, if a bank went
bankrupt, the investor lost twice his investment.

After the Wall Street Crash happened, "[t]he regime of bank double liability
was rejected and and abandoned on three grounds: (1) that it failed to protect
bank creditors; (2) that is did not maintain public confidence in the banking
system; and (3) that deposit insurance was a far preferable means for
accomplishing the regulatory objectives." [1]
"History shows that the Nation took a wrong turn when it abandoned double
liability for a system of governmentally administered deposit insurance."

The prosperous times of the 1920's encouraged widespread shareholding among
the US general public, and those with family or employment connections to a
bank purchased shares without insider knowledge or insight of their potential
liability in the event of bank failure. The result as noted in 1936 was that
"many innocent stockholders who have taken no part in the management or control
of the bank" became bankrupt. The legislation was progressively repealed
starting in 1933.  

Today's taxpayer is the one who makes good not only the Creditors but
also the Equity holders of these banks via the process of quantitative easing.
More recent news suggests that eight years on from the last crisis, the
necessary remedies are not yet in place.

https://www.fdic.gov/news/news/press/2016/pr16031.html
"The agencies have jointly determined that each of the 2015 resolution plans of Bank of America, Bank of New York Mellon, JP Morgan Chase, State Street, and Wells Fargo was not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code, the statutory standard established in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The agencies have issued joint notices of deficiencies to these five firms detailing the deficiencies in their plans and the actions the firms must take to address them. Each firm must remediate its deficiencies by October 1, 2016. If a firm has not done so, it may be subject to more stringent prudential requirements."

Put simply, under double liability, the bank's management is incentivised to
behave responsibly and to take the bank into voluntary insolvency before
depositors and creditors funds are put at risk. Further, those funding
margin lending and related activities are incentivised to monitor the
activities of their clients and to manage their lending appropriately.
It is too easy for a bank to lend funds to investors for the purchase of equity
in the bank.

[1]http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2677&context=fss_papers
http://www.jstor.org/stable/2673878
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