Bitcoin Forum
December 08, 2021, 01:11:15 AM *
News: Latest Bitcoin Core release: 22.0 [Torrent]
  Home Help Search Login Register More  
  Show Posts
Pages: « 1 2 3 4 [5] 6 7 8 9 10 11 12 13 14 »
81  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: September 24, 2016, 08:19:02 PM
"I will do such things, What they are, yet I know not; but they shall be
The terrors of the Earth." - King Lear,  Scene IV

That's how the old regimes see the approach of the new ....

As we approach the abyss, their loss of control appears in many guises, from
the European Union's desire to punish the UK for Brexit, to the USA's
machinations in the Middle East. This week, a US General, a character straight
out of Dr Strangelove, pointed out that declaring war on Syria, and Russia,
was above his pay grade. That approximates where we are now,
and it doesn't get much more terrifying than that.

In other news, from elsewhere on the Titanic, soap and towels are being
stolen from the washrooms ....
"Top Bank Fraud Expert: ALL of the Big Banks' Profits Come from FRAUD"

Physician, heal thyself ....
"A key gauge of credit vulnerability is now three times over the danger threshold
and has continued to deteriorate, despite pledges by Chinese premier Li Keqiang to
wean the economy off debt-driven growth before it is too late."
"While the BIS is making noise about China's GDP, government bonds and debt, it is
failing to look at the U.S. and European Union, both of which are in far worse
condition than China."

For something really scary, look at Ireland's national debt, and then Ireland's GDP.
No problem? Now look at Ireland's N Debt/GNP .... hmmmmm

It's going to be a while before "The Terrors of the Earth" are revealed, and I doubt
I can add much more to this thread until they appear, maybe not even then.
So, time to start a new thread? ;-)

PS: The latest news out of China is on the use of entangled photons for radar.
That may have some implications for quantum computing, and for bitcoin.
82  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: September 17, 2016, 07:59:19 PM
'The rule is, jam to-morrow and jam yesterday - but never jam to-day.'
The Red Queen - Alice through the Looking Glass.

Have you notice a dearth of year-on-year figures of late? Where almost always
a month-on-month figure is multiplied by 12 in its place? That's because the
facade is proving difficult to keep in place. So, when the US Census Bureau
announced a 5.2% increase in real (inflation-adjusted) median household income,
over the 2015 year, the absence of jam today got noticed.

It may be, by a couple of lucky concidences, that what the Census Bureau said
is actually true, but that's not the real story. Have a look at the graph here:
Nominal Median Household Income (Current US$) rose from $54,000 in mid 2014 to $57,000
in 2016, or about 5.5% over two years before allowing for inflation.

Also here :

There are many things that could be said about this and other attempts at perception
management. Put simply, it's beginning to fail. If you gleefully thought that
US inflation was going to take off next year amid rate rises by the FED, well,
you just got punk'd by the US Census Bureau. I'll still hold to my forecast of
five percent inflation at some time in 2017, though, just later in the 2017 year.

All of which neatly ties up a loose end from a few weeks ago.

Some other stuff that caught my eye this last week.

"Chinese growth 'all but disappeared' amid economic restructuring, heavy
flooding, factory closures ahead of G20 
Complete absenceˇ of y/y oil demand growth in 3Q16 China"

And this:
"To begin, I'll focus on the present consumers of 70% of the worlds crude,
the OECD+China+Russia+Brazil. And if we check the annual change to their
combined 0-64yr/old population (blue line in the chart below),
0-64yr/old population growth has decelerated 90% since the '88 peak
and cumulatively turns to outright annual declines by 2019.
The annual declines accelerate indefinitely from there.
I also show total 0-64yr/old annual global growth (black columns)
and 0-64 growth among the RoW or Rest of the World (red line)."

I keep hoping I'm wrong, but the news just keeps coming.
83  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: September 10, 2016, 07:48:49 PM
M-T "Everything falling into place?" OK maybe I need to work through this some more.

This isn't a great example, but it is recent.
"As one easily notices GDP on a per capita basis is more worrisome than when
viewed on a total basis as in the first two graphs. The economic growth rate
per person is currently below one half of one percent. More concerning,
it is below levels seen during the great financial crisis in 2008 and it is
still trending lower. This graph confirms our macroeconomic concerns and helps
explain, in part, why so many U.S. citizens feel like they are being left behind.
Factor in that many of the economic spoils are not evenly distributed, as
assumed in this analysis, but are largely accruing to the wealthy, and the problem
only worsens. As such, the growing social anxiety and trend towards populism,
be it conservative or liberal leaning, will not likely dissipate if the
aforementioned economic trends continue."

Begin by rethinking what the author says, and look at what happened post 2002
when Greenspan inflated the US housing bubble. Then note that graph of ten year
GDP growth rate per capita, and then note that today the figures are almost
certainly lower, and note that the graph is a crude approximation for productivity. 
Except that productivity needs to be measured as productivity per employee not
per capita. Thus as unemployment falls, employment numbers increase, and
productivity falls if GDP stays constant, so the graphed figures should be a
bit optimistic. 

As stated in my earlier post, as this trend continues, the US economy moves into
instability. There's a lot of noise in these figures, so deciding when things
like a phase change has happened can only be precisely defined in hindsight.
Maybe Armstrong's 2015.75 applies here, maybe not, the exact date is unimportant.
There are no precedents for this, and I sincerely hope that I have completely
misread the way things seem to be moving.

Japan and some parts of Europe are ahead of the USA. Emergent nations
with growing populations still have well-behaved economies. Think of all this as
an enormous hall with rows and rows of dominoes all falling into place. The
emergent nations' dominoes haven't started falling - yet.

So, when you read "It ain't working", or similar thoughts, know that it also
ain't fixable. But beware -  economists are like medieval doctors, if one bunch
of leeches hasn't worked, moar leeches will be applied.   

Is that any clearer? Maybe re-reading my last 3-4 posts will help?
84  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: September 03, 2016, 08:31:51 PM
"Be not afraid of greatness. Some are born great, some achieve greatness, and some have
greatness thrust upon them" - Shakespeare

A day or two back, I'm told that we are now in a "post-heroic Age". This in the context
that we are more likely to die in a household accident, such as falling off a chair,
than in a terrorist attack. Add to this threats such as organised crime, drug trafficking,
sex slavery, paedophilia, as headlined by the main stream media, and one would assume that
the mass of the population is traumatised into fear of its own shadow. Ever wondered
why they carry out polls to find out what scares you most?

It's time to raise your eyes from this dark path and stare into the abyss nearby. Does that
frighten you? Those of you still with me are probably asking. which abyss?
there are so many? This one: "Stability" ... OK, dive in.

For most of recorded history, 0 < beta + alpha. The population increased, and they found better
ways to make stuff. The economy grew. The times when that didn't happen were dark times:
the fall of the Roman Empire; the Black Death, ...  you get the picture. Hence the willingness
of politicians to talk about "growth" and "stability". Their audience translated this as
more jobs, and more money, and that's what they voted for: Infinite Growth.

But, Central Banks cannot create babies, nor even an increase in the economically active
population. They might have contributed to an increase in innovation and productivity by
ensuring that the most inefficient abusers of capital got pushed into creative destruction,
but signally failed to do that. They cannot directly improve productivity or innovation.
Which begs the question: Absent some magical event, what are the chances of both productivity
and population growth turning down in the none-too-distant future? Quite high, perhaps, see here:

The paper follows up work carried out 1972-1974 "Limits to Growth", finds that the "Business as
Usual" scenario is followed reasonably closely up to the date of publication (2014) and expects
a decline in world industrial production to begin soon. And if growth continues, the collapse
will be steeper and deeper.

I'm inclined to believe that the outcome will not be as dire as some forecast. However, the
point is made that we cannot expect 0 < beta + alpha to prevail much longer. What happens
as we transit this trajectory? The world's economies move into instability, with unpredictable
interactions. If the central banks were well prepared with low debt and plenty of munitions,
they might be of some help. Frankly, they look like a liability.

I'm thinking that this is hard to take in, that economics as we know it, free market capitalism,
could just stop working. Maybe one word will explain : RATIONING. Got it? Everything falling
into place? Good. Any Questions? Confirmations?

I do expect one or more financial "events" before we get to that point. Whether we get a repeat
of 2008, maybe better, maybe worse, remains to be seen. The last event saw a transfer of wealth
to the one percent. Next time there will be many more people with little to lose.

"Be not afraid of greatness", as this New Age of Heroes gets thrust upon our newest generation.
The New Heroic Age.
85  Economy / Economics / Re: Economic Totalitarianism on: August 27, 2016, 07:36:09 PM
Milosevic finally exonerated.
"It was blatantly ideological; at a notorious "peace conference" in Rambouillet in France, Milosevic was confronted by Madeleine Albright, the U.S. Secretary of State, who was to achieve infamy with her remark that the deaths of half a million Iraqi children were "worth it." Albright delivered an "offer" to Milosevic that no national leader could accept. Unless he agreed to the foreign military occupation of his country, with the occupying forces "outside the legal process," and to the imposition of a neo-liberal "free market," Serbia would be bombed. This was contained in an "Appendix B," which the media failed to read or suppressed. The aim was to crush Europe's last independent "socialist" state."
"The final count of the dead in Kosovo was 2,788. This included combatants on both sides and Serbs and Roma murdered by the pro-NATO Kosovo Liberation Front. There was no genocide. The NATO attack was both a fraud and a war crime."
"At the height of the bombing, the BBC's Kirsty Wark interviewed General Wesley Clark, the NATO commander. The Serbian city of Nis had just been sprayed with American cluster bombs, killing women, old people and children in an open market and a hospital. Wark asked not a single question about this, or about any other civilian deaths."
"Milosevic died of a heart attack in 2006, alone in his cell in The Hague, during what amounted to a bogus trial by an American-invented "international tribunal." Denied heart surgery that might have saved his life, his condition worsened and was monitored and kept secret by U.S. officials, as WikiLeaks has since revealed."
"The exoneration of a man accused of the worst of crimes, genocide, made no headlines. Neither the BBC nor CNN covered it. The Guardian allowed a brief commentary. Such a rare official admission was buried or suppressed, understandably. It would explain too much about how the rulers of the world rule."

Just to seek a second opinion:
"The Rambouillet Accord : A Declaration of War Disguised as a Peace Agreement"
"A 28,000 strong NATO occupation army, known as KFOR, would be authorised to "use necessary force to ensure compliance with the Accords".
"Kosovo has vast mineral resources, including he richest mines for lead, molybendum, mercury and other metals, in all of Europe."

With this kind of ruthlessness, when they are hunting for cash under your sofa, or down the back of your cushions,
even the cash in your child's piggy-bank will be a target.   
86  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: August 27, 2016, 07:23:40 PM
I'll summarize some of the points of these recent posts, because mainstream and
most alt-media reporting seems to skip over important background details.

Bucket shops were banned in 1929 because they were fraudsters. It was too easy
to suck clients in on a momentum trade, and at an appropriate moment, to short
the stock, causing a crash and wiping out clients trading on margin.

The Savings and Loan Crisis (1986-1995) sent many bankers to jail. There were two
other outcomes:
the US government seized toxic loans, and as a consequence of attempting to sell
these at a profit, forced unsafe practices onto the financial sector, and forced
the Ratings Agencies to underestimate risk.
the financial sector moved to protect itself from prosecution, seeking "deregulation"
and "light touch regulation". Besides the removal of Glass-Stegall, the prohibition
on "bucket shops" was removed. Fraud was now legal (again!).

While the deregulation issue was broadly internationally understood, the repricing
of risk and its effects was hidden. Financial instruments rated 'AAA' are
expected to default once in 10,000 years. That number suggests that it is pointless
to insure against default because your counterparty is more likely to fail than the
bond. Initially, there was no market for that insurance (CDO's) because the risk
was correctly priced. That changed, in part because of US government pressure,
beginning with sub-prime.[1]   

In 2004 the FBI was warning that mortgage fraud in America was endemic. 

In 2005, Washington Mutual was reducing its mortgage lending, and in doing so,
its profits suffered, weakening the bank.
"More backers piled in with time, and by May 2005, Mr. Burry closed the first deal on
subprime credit default swaps with Deutsche Bank."

In 2006 John Paulson took an artisan industry and industrialised it. Goldman Sachs,
satisfied itself with its cut of the trade between the buyers and the sellers of CDO's.

The lack of risk of going to jail, and the mispricing of risk mandated by US
government pressure and practice meant that the more toxic the debt, the greater
the likely profits all down the food chain.
"So it wasntt just that these speculators were harmful, and Lewis gave them a free pass.
He failed to clue in his readers that the actions of his chosen heroes drove the demand
for the worst sort of mortgages and turned what would otherwise have been a "contained"
problem into a systemic crisis."
"Both market participant estimates and repeated, conservative analyses indicate that
Magnetar's CDO program drove the demand for between 35% and 60% of toxic subprime bond demand."
"For the most part, the dealers themselves. Without going into mind-numbing detail, the apparent
risklessness of an AAA instrument hedged by an AAA counterparty (in this case, a monoline)
substantially reduced the capital a dealer needed to support a position. As a result,
holding AAA CDOs hedged by AAA guarantors was treated, on a profit and loss basis on the
relevant dealing desks, as vastly more attractive than finding investors to take the other
side of the trade. In other words, this was massive gaming of the banks' own bonus systems."

Think of it like this: If the government mandated fitting faulty brakes to cars, and then
repealed all the laws relating to speeding and traffic violations, would you be surprised
when a few accidents occur in good weather? followed by massive pileups on motorways when
winter sets in? (It's not just the US Government BTW, they had help).

[1] The Ratings Agencies agreed to change their models in 1997. Within ten years, problems
began to appear:
The sort of problem that, according to statistics, as Haldane comments "To provide some context,
assuming a normal distribution, a 7.26-sigma daily loss would be expected to occur once every
13.7 billion or so years. That is roughly the estimated age of the Universe."   
In good times failure rates can be fitted to a normal, gaussian distribution. That model
would seem to be optimistic by a factor of four when the hard times reappear - the "fat tail"
or power law distribution.
87  Economy / Economics / Re: Martin Armstrong Discussion on: August 20, 2016, 08:19:05 PM
Just a thought on the Economic Confidence model. When comedy gets to the mainstream,
how long before it's all over?

Bird and Fortune - the Subprime Crisis - The South Bank Show - The last Laugh - 14 October 2007
88  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: August 20, 2016, 08:15:24 PM
I hate lies. Lies get good people killed. That's lies, dammed lies and government statistics.
So, when some government statistics "got revised", something just didn't smell right.
I haven't, yet, worked out what is going on, but along the way I came across this:
"Below are two videos showing how the federal government (not wall street) caused 2008 Financial Crisis."
"1) Bundled toxic (subprime) loans into securities
2) Used financial alchemy to make risk "disappear"
3) Designed complex financial structures to hide the fraud
4) Developed insanely optimistic evaluation models to inflate ratings on toxic securities
5) Marketing these toxic securities to an unsuspecting public"
"1) Created the entire infrastructure necessary for the subprime market to function
2) Decimated state authority to regulate the financial sector
3) Shielded subprime lenders from prosecution
4) Encouraged banks to buy toxic CDOs and to get rid of safer assets"

I'll compress this into a few lines. Bucket shops began in the late 1800's, expanded
in the 1920's and were outright banned in the USA in 1929.
"In other words, they were fraudsters." - jmalmberg March 5, 2009
Then, after the USA's Savings and Loans crisis (1986-1995), parts of the US government
found toxic debt on their books - similar to the subprime stuff of 2008 that had 40%
delinquency rates, and to the 30% delinquency rates of the 1930's.
When you have a load of fish sitting in the sun, and nowhere to put them, what do you do?
In the case of this debt, the government cooked the books, then twisted the arms
of the Ratings Agencies to change their models, and, as if by magic, toxic debt
took on the appearance of investment grade government paper. 
Cue scene from "The Wolf of Wall Street", and a modern day bucket shop was born.
Contrary to the current "What Everybody Knows" the Government had to twist Wall Street's
arms pretty hard to get them to do their bidding. Even the US Justice Department
began to throw up when they found out about this.
In 2000, as part of the race to the bottom, this:
"This act shall supersede and preempt the application of any state
or local law that prohibits gaming or the operation of bucket shops"
"Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no."
"... it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers."

The above narrative fits the description of "Control Fraud" to a "T".
That's maybe not the best move when your economy depends on a fiat based currency. 

Eliot Spitzer Governor of New York resigned on March 17 2008 amid threats of impeachment.
Just. Another. Coincidence.

And my original query? It's still in play. And a couple of other things:

After you read up on the above, you may want to compare with this:
"the real causes of the economic crash"Huh
Also, an earlier post mentioned that the FED was a "monopoly purchaser
of lemons". Sounds like the hole RTC found itself in all those years ago.
89  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: August 13, 2016, 10:15:23 PM
I'm struggling to keep up with the flow of news. This is some weeks old, it's on
the IMF and the Greek economy - some background - I don't have
transcripts for some of this, so feel free to jump in:

Around 2009-2010 everyone knew that Greece was going to default on its debts.
Then, it got a bailout. And another, and another... In the midst of all this,
Yanis Varoufakis became the Greek Finance Minister, and began to put together
an economic plan.

We were spared the details of his proposals, as he quickly found that the Troika,
- the ECB, IMF and European Commission, none of whom were elected to any position
of power, (and in effect the council of Finance Ministers) - were diametrically opposed
to his proposals. The Troika wanted austerity, while at the same time imposing
conditions that almost certainly ensured that the objective would not be met,
despite, or perhaps because of, the likely collateral damage to the Greek economy
and the need for further bailouts.

Mr Varoufakis pressed the dozen or so key EU Finance Ministers and found that, in
private, the Ministers were quite knowledgeable, and acknowledged the strength of his
arguments. Singly, in private, they assured him of their support for his case, but as
soon as these Ministers appeared in public, their understanding disappeared, and they
were back onto the Troika's message.

More curiously, Mr Varoufakis had appealed for help in tacking corruption, a
widely publicised barrier to improving the Greek economy, and pursuing tax
payments, essential for achieving the Troika's stated objectives. No help
was forthcoming, despite dubious financial transactions with other EU member
state's banks. Thus Greece could use only its own resources to fix its problems,
despite a clear implication that other nations were benefiting from misdeeds.

I'll briefly mention that my recent earlier post highlighted the relationship
between government deficit spending and the profits of private companies. That
logic would suggest that a sudden drive for government budget surplus would
result in private, and public, companies running at a loss, and possibly
into bankruptcy. The Troika's policies made the Greek situation worse.

All the above suggests that, at best, the Troika's decisions were driven by
politics rather than economics. Other interpretation placed on the Torika's
motives could be much more concerning for the future of the Eurozone.

Recently, support for Greece and for Mr Varoufakis, now the exFinance Minister,
has appeared from an unexpected source - the IMF. 

"What the IEO report makes very clear is that the IMF should never have agreed,
as part of the Troika, to assist the EU in forcing austerity upon Greece without
insisting on significant debt relief, in the shape of a haircut, or
(a) debt writedown(s)....
The IMF's long established policy is that both MUST happen together."
"And Europe's grip on the IMF is exactly what the report is about,
in that it accuses Lagarde et al of bowing to EU pressure,
to the extent that it abandons its own guiding 'laws'.
It acted like it was the European Monetary Fund, not the international one."
"That would seem to leave the IMF just one option: to apologize profoundly to Greece,
to demand from the EU that all unjust measures be reversed and annulled,
and to set up a very large fund (how about $1 trillion) specifically to support
the Greek people, including retribution of lost funds, repair of the health care system,
reinstatement of a pension system that can actually keep people alive and so on and so forth."

So, what to take away from all this? That the IMF, the ECB, and the European Commission
are subservient to an unknown unelected body seemingly unconcerned by inter-national
corruption to the extent of hundreds of billions of Euros? If it were not for
prior art in the form of Operation Gladio, such a conspiracy theory would sound

If, after researching Operation Gladio, you can afford a further three hours,
see 'After Dark British Intelligence' - though it is off topic for this thread.
I'm mentioning this only as background material on the relationship between
an elected representative government and the notional Deep State.
90  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: August 06, 2016, 08:17:13 PM

An inhabitant of the Bank for International Settlements claims bankers are "Magic People"

Kuroda-San insists that if the Japanese people would only believe :
"I trust that many of you are familiar with the story of Peter Pan, in which it says,
'the moment you doubt whether you can fly, you cease forever to be able to do it,'"
all would be well with the Japanese economy.

What next? "attempts to kill goats by staring at them."? (and more)
"The Men Who Stare at Goats (2004) is a book by Jon Ronson concerning the U.S. Army's
exploration of New Age concepts and the potential military applications of the paranormal."

Maybe even "Helicopter Money"? - Seriously? - How might this work in practice?

Soooo, you have thought this through, and maybe created "Streetwalkers Inc",
(for the tax advantage.) While walking down main street, your corporation
finds a newly issued $1 bill. What do you do? You enter it into your P&L account:

Profit from walking down street : $1

Wonderful. Profits, unfortunately, do not just appear out of thin air.
How to even know that this is a profit? Let's simplify Levy's total profits equation:

TNP = TVI + t4b + t5b + t6b + cCr + aL - cCrl -cs + TpCNP + BT + BI - Tdp - ex -dep + ETC -vOt7 + vOt8

Yuck. But all we need from the equation is this :


TNP = Total Net Profits (all corporations)
TVI = change in the value of money over the time in examination.

Since the quantity of goods that can be bought is unchanged, the profit is
created by an increase - $1 - in the quantity of money. And, since the
quantity of goods is unchanged, there must be a loss somewhere. In this case,
the bank that printed and issued the money - it now has a loss to account for.

Thus, "Helicopter Money", in current parlance, will be paid out of the
pockets of the owners of the banks, most probably the owners of the
Central Bank - TPTB. About as likely as (1+1 ne 2) IMHO.[1]

So, if governments (ie, you, dear taxpayer) are not going to fund
"Helicopter Money" what is really going on? (Taxpayer funding makes as much
sense as some of the projects referred to earlier) - A non-mathematical,
non-economic, conspiracy-theory explanation should have the fewest assumptions.
"Occam's Razor : Among competing hypotheses, the one with the fewest assumptions
should be selected." The TPTB are involved, soooo, maybe this?

The World is being conditioned to drop its trousers and grab its ankles
anytime the phrase "Helicopter Money" is broadcast. Oh! One other thing:

Don't forget to say "Thank You Ben Bernanke!" [2][3]

If, by now, you are curious as the the competence and motivation of these monetary gods,
the concluding remarks of a report on the Lehman debacle may crystallize those doubts:
"Their explanations for their actions rest on flawed economic and legal reasoning and dubious factual claims."

[1] for example see "Exploring Complex Dynamic Systems" Cheng, Zhang
J System Simulation 2002 14(11): 1147-1149

[2] Feel free to substitute your choice of Central Banker.

[3] Your guess at what happens next?

91  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: July 30, 2016, 08:05:57 PM
"The tragedy of investment is that it causes crisis because it is useful.
Doubtless many people will consider this paradoxical. But it is not the theory
which is paradoxical, but its subject - the capitalist economy." Kalecki

As an example, see US net government lending, $Bn starting in 2007:
-354.9  -781.8  -1476.7 -1509.5 -1400.1 -1214.8 -698.3  -681.4  -602.3
So, from 2008 to 2012, some $2.7Tn of excess deficit went into the US economy.

"One of the more enlightening things you learn from a sound understanding of macro is the
Kalecki profits equation which shows that corporate profits are the result of the following equation:"
Profits = Investment - Household Savings - Government Savings - Foreign Savings + Dividends

That suggests that the $5.6Tn that the US government borrowed between 2008-2012,
if all other things were unchanged, became profit somewhere in the economy.
And the Stock Market soared. Since then, from 2013-2016, the Stock market has some $2Tn
less in government funded profits, and is presumably buoyed up only because the
Federal Reserve Bank is cornering the market for Lemons.
"American businesses earned profits at an annual rate of $1.659 trillion in the third quarter"
"Corporate profits have been doing extremely well for a while. Since their cyclical
low in the fourth quarter of 2008, profits have grown for seven consecutive quarters,
at some of the fastest rates in history. As a share of gross domestic product, corporate
profits also have been increasing, and they now represent 11.2 percent of total output.
That is the highest share since the fourth quarter of 2006, when they accounted for
11.7 percent of output.
This breakneck pace can be partly attributed to strong productivity growth - which
means companies have been able to make more with less - as well as the fact that
some of the profits of American companies come from abroad. Economic conditions in the
United States may still be sluggish, but many emerging markets like India and China
are expanding rapidly."

"This breakneck pace can be partly attributed to people getting fired" - FIFY.

Before moving on, note the borrowing requirement in 2007, $354.9Bn, the difference
between spending and taxation, in broad terms, and contrast the values for later years.  

You may be curious as to how borrowing got reduced 2013 - 2015? Here are the tax revenues:
2660.8   2505.7   2230.1   2391.7   2516.7   2663   3141.3   3265.2   3434.9 (US$Bn)
The change is accounted for neatly by an increase in taxation in one form or another,
rather than any reduction in government spending.

This seems to be a widespread paradox - "capitalist" economies whose profits are often
entirely funded by governments. Those 2010 accounts are entirely coincidental :-)

Any thoughts on "Helicopter Money" yet? We're getting to the endgame, and the equation above
provides a hint of things that just aren't gonna happen.  
92  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: July 24, 2016, 09:02:42 PM
Just to point the discussion on fraud in the right direction ...
"From Terry Frieden CNN Washington Bureau Friday, September 17, 2004 Posted: 2144 GMT (0544 HKT) Assistant FBI Director Chris Swecker said the booming mortgage market, fueled by low interest rates and soaring home values, has attracted unscrupulous professionals and criminal groups whose fraudulent activities could cause multibillion-dollar losses to financial institutions. "It has the potential to be an epidemic," said Swecker, who heads the Criminal Division at FBI headquarters in Washington. "We think we can prevent a problem that could have as much impact as the S&L crisis," he said."
"By issuing its new memorandum Thursday, the Justice Department is tacitly admitting that its experiment in refusing to prosecute the senior bankers that led the fraud epidemics that caused our economic crisis failed. The result was the death of accountability, of justice, and of deterrence. The result was a wave of recidivism in which elite bankers continued to defraud the public after promising to cease their crimes."

I'm shocked, shocked, to find that gambling is going on in these places.
But you knew all this already (I hope) and could have found these references
in a few seconds with a simple search.

I'm coming to the view that the biggest deception practiced by the banks is
that we need the banks, the bankers, and the financial sector.

There's a simple equation that suggests that TPTB will never allow helicopter money.
I'll post something later, but If you have any thoughts on that feel free to 

93  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: July 23, 2016, 09:59:28 PM
Maybe the time has come for ZIRP (Zero Interest Rate Policy). No, really, ZIRP!
As in nobody gets to charge interest. During the Middle Ages, that was they way
things worked. In those days, money was for trade, paying armies, and not much else.
Debasing the currency was a Capital offence, and without interest, banking and
moneylending were niche industries.

So, suppose the artificial divide between those who can and those who can't borrow
at zero interest rates disappears. Well, the first impact would be to credit card
companies and payday lenders. Their business model is trashed. Do dry your eyes
dear reader. There's more.

Banks would have a problem. Eighty percent of their business is mortgage lending,
that would be just before they package the toxic stuff with a wrapper of AA and
flog it to some "sophisticated" pension fund desperate for yield. Did I mention
Ratings Agencies might actually have to work for a living? House prices would fall,
and banks would be out of the mortgage business because they just could not afford
the risks they are currently financing. Banks would be one fifth their present
size, perhaps less, because business would have to replace large chunks of their
debts with equity. If, as a private lender, you get no return on a loan to a
business the loan will not be made, so business will be forced towards retained
earnings and equity.

All this may seem strange when compared with the world today. Companies are using
cheap debt to buy back their shares to boost P/E ratios to push up share prices
to increase the value of management's stock options irrespective of the long
term implications for shareholders. Similarly for other asset price inflation
such as real estate. That, dear reader, is the point. Central Banks are buying
up assets and putting it on your tab. If not onto your tax bill, certainly
out of your pension fund and savings account. They are moving from AAA rated
paper into toxic waste and into monkey dung. Best of all, if ZIRP wasn't just
for the rich and well-connected, there would be no need for a Central Bank.

OK, maybe just a tiny unrecognisable barbaric relic of a Central Bank. Maybe.

One final point: Interest on loans is, in most cases, a business expense. The
business does not pay tax on the interest. Unlike Dividends. So if you invest
in equity you get taxed twice, first by corporation tax, then by income tax.
And guess what, if you have an offshore account, a loan is the way to go.
BTW, I suspect US price inflation will be ~5% by mid 2017
I'm thinking I might go long popcorn, deckchairs, and bicycle clips.
94  Economy / Economics / Re: Economic Totalitarianism on: July 16, 2016, 08:44:26 PM
Paradox is awsome. The downside is that you to have to live with the knowledge
that 1+1 doesn't always equal 2, luckily, that probability is infinitely small.
Other, real-life paradox does matter, and finance and law are full of it.

Think about Central Banks this way: Would you like to have an imaginary friend
who gives you money? The USA did that in 1913, and the Brits did it waaay earlier.
Of course, logically, most banking is fraud, so the governments have to create
the legal fiction that Central Bank actions are fair and just, and also that
if ayone else attempts this they go straight to Jail. So if you and I decide
that we have an imaginary friend who gives us money, we not only go to Jail,
we probably get assessed for tax, KYC, AML, structuring, as well. Got that? Cool.

Pass enough laws, and eventually you get two mutually exclusive things that
must be true. This is meat and drink to the legal profession, and since the
Central Banking and financial systems are founded on legal fictions, it's
sorta a permanent open season - don't try this at home, to mix metaphors.
Which brings me to this:
"And the biggest irony: Steven Peikin, one of Coscia's lawyers, argued that high-frequency traders routinely canceled orders. He told the jury that Coscia's trading strategy was unique but not illegal. Wrong: it is illegal, but he is absolutely right that everyone does it, especially the HFTs. But doesn't matter - next year Coscia will be back in court to hear just how many years he will spend in prison."
Fast forward to today when Coscia's story gets its conclusion. As Bloomberg reports, Michael Coscia, the first person convicted of spoofing after it was made a crime under the Dodd-Frank Act, was sentenced to three years in prison by a federal judge in Chicago, less than half the time sought by prosecutors."
"His real crime? Taking on the HFTs, and Citadel, and winning. Now he gets to spend 3 years in prison thinking about it. And let that be a lesson to anyone else out there who dares to do the same."
There are many facets to this story, one is this: TPTB realised that this
was just another version of the "imaginary friend" and that if it was allowed
to continue, the entire Banking scam would fall apart. So, everybody knows
what's going on, they even complain to the regulators - but when they do
as others do, and are profitable, they get arrested.

You might conclude that trading is only allowed after the protection tax is paid,
but I couldn't possibly comment on that.

I'll admit I'm surprised that a jury would convict. After all, if they don't
understand what's going on, they have to acquit, don't they?

And if they thought bitcoin was a threat, we would all be in Jail.
95  Economy / Economics / Re: Economic Devastation on: July 09, 2016, 08:57:48 PM
'Let the jury consider their verdict,' the King said, for about the twentieth time that day.
'No, no!' said the Queen. 'Sentence first -  verdict afterwards.' From "Alice in Wonderland"

'Brexit' is seen as the cause of so much these days that it may be
timely to point out that: a) it hasn't yet happened; and b) not much
may actually change on the economics once things get underway.

So, what are we witness to? A ripple on the surface of things still to come?
Payback for 2008 when banks should have been allowed to exit via bankruptcy
and clear the bad debts built up from years of fraud and greed? What was
mortgaged into the future may now become due, and, in my opinion, the UK
sensed that if it was to manage its share in any collapse, it was best
done outside the control of the European Commission. And financial troubles,
being man-made, are manageable, however painful they might be, but you
have to have full freedom, at minimum, to act via your Central Bank.

Which in a way, brings me to the curious decision of the Bank of England to
suggest a cut in interest rates, some say from 0.5% to 0.25%. But before
getting down to the price of Bitcoin, lets think about the wider implications.

The announcement seemed to be a response to the market's clamour that
something, anything, must be done, which in itself was probably a
self-fulfilling result of Project Fear, and over-hyped falls in the value
of Sterling.

The BoE's mandate is for the operation of UK banks, and a cut in rates would
harm the profitability of that sector, hence the delay in taking action. So
who might profit from a cut in rates, apart fro the usual suspects who
profit from turmoil in the markets? In the long run, UK manufacturing, but
not enough to make a difference now. Property, including housing and
commercial real estate (CRE)? Since Financialisation the banks have been
bunged to the gills with this stuff. Well, thanks to government policy,
and the worldwide race toward NIRP, the rentier sector has reached altitudes
where oxygen starvation is a distinct possibility - witness the panic in
the UK property fund sector, with redemptions gated, and prices cutting back
several year's gains.
Hmmmm ... will it work? If debt increases, certainly yes. More debt boosts
GDP immediately, but has to be paid for later. But where will the money
come from? Usually interest rates are raised to bring money into the UK, and
it is a signal toward to instabilities in the present arrangements that
it can be suggested that cutting rates might boost sterling. Where might money
go if it wants out of the UK? Not Europe, probably not Japan, though
anything seems possible these days, Switzerland's negative rates? Hmmmm ...

The broader picture of worldwide declining interest rates has Central Banks
acting like beaters on a grouse moor, driving investors toward US corporate
debt to the benefit of global corporations such as Amazon. That has
implications best left for another day, and perhaps to another forum.

And the implications for Bitcoin? That may depend on where you live, and your view
of your currency. For the UK, it remains to be seen whether Mr Carney follows
through with a cut to interest rates. He seems to have played better than his
counterparts thus far, though as they say, past performance is no indication
of future returns. Given the turmoil of UK's politics, bitcoin may seem
attractive right now.

96  Economy / Economics / Re: Learning from Imperial Rome on: July 09, 2016, 08:44:49 PM
@STT - thanks for this:

Anyone who can crack jokes about Diocletian's Monetary
Polices deserves the applause and laughter from the audience.

I'd perhaps highlight the impact of inflation on the plebs and the legions,
and suggest that only a fraction of the relevant information can be found
by the use of gold as a monetary benchmark. Most of the action,
as the Professor did reveal happened in the silver and bronze or brass coinage.

Choices must be made when following history, the lives
of the Elite are not the lives of the common people, and cannot
be revealed together. Most historians are comfortable flipping
from one to the other, but only the best can fully convey what
they see.
97  Economy / Economics / Re: Economic Devastation on: July 01, 2016, 09:27:19 PM
Thanks CoinCube, though I have to admit that calling the Brexit
right was mostly cynicism of the MSM reporting rather than any
insight into the UK's political process. I'll point out that the
Westminster Village was 75% Remain, and 25% Leave, hence the 
ongoing disarray while they reform.

Some of what I'm about to say might be better said on my "Learning
form Imperial Rome" thread, but it's relevant here.

Rome was lucky. It took over 300 years, with crisis after crisis and
war upon war, until the debt finally crushed the structure. One
critical point pointed out by MA was the debasement of the currency.
Eventually a silver coin was less than 1% silver.

A dark reflection of "When things get serious, you have to lie" to
quote Mr Junker. Then lies get built upon lies until the entire
fabric of society and business is undermined.

Watching Mr Farage in Brussels I did wonder if from time to time
he feels like an extra in a scene from "Sixth Sense", "I see dead
people. I'm recalling the scene where the teenager has found his
father's gun and blown half his head off. For the EU that gun is Debt.
To Mr Farage's credit, he does seem to have a well-rounded view of
the risks within the EU and has two years to get through to those
MEP's still in denial.

I think the UK will do OK from here on. It will take a couple of
years for the Pound's devaluation to read through into enhanced
exports. Exporting means having products you can sell and that
takes time. For the EU, things look less certain.
"How did this happen so quietly under the table and without Merkel's blessing? WSJ says that the program was approved under the bloc's "extraordinary crisis rules for state aid.""
"Needless to say, for Italy's Prime Minister to be contemplating how to avoid "investor panic" and prevent a "run on deposits", then Italian banks must truly be on the verge of collapse. Finally, for those curious about timing and how soon until it all unravels, we quote the European Commission spokesman who said that 'there is no expectation that the need to use this scheme should arise.'"

Will the EU manage to do in 30 years or so, some things that
required over 300 years for others? We may soon find out.
98  Economy / Economics / Re: Learning from Imperial Rome on: June 25, 2016, 10:20:18 PM
Imperial Rome just is, or was. What matters, is who decides? and the
choices they make. Sometimes there is an unavoidable outcome.

You choose to use a fiat system and that brings rape and pillage as
a lifestyle choice, and forces the expansion of a small village into
an Empire in a winner takes all game of Monopoly. That, in turn,
expands language, law, and lending, all systems with Complexity,
as a net benefit to the community. I'd argue that it was Rome's
ability to engineer better weapons of war, civil, and industrial
systems that gave them the edge. Their habit of slaughtering
everything within cities opposed to their rule was consistent with
their need for growth at any cost. Debt can be a hard master.

Margaret Thatcher famously said that "The problem with socialism is that
eventually you run out of other people's money." Arguably, the same thing
happened to Imperial Rome, and they weren't socialists, were they? 
So, problems everywhere, why? 

Regarding Catiline, I would bracket him between Sulla and Julius Caesar.
Both Sulla and Julius Caesar staged successful coups, suggesting that there
was an underlying cause that promoted charismatic leaders to seize
power. Whether Catiline's rise to challenge the State and his summary
execution were inevitable remains in doubt. I'd also be cautious about
Catiline's character weaknesses because summary execution prevents any
examination of the case for the defence, and character assassination is
often a precursor to political murder. Cicero's actions suggest there was
more to the story than history has recorded. His actions re-wrote Roman Law
to simply read "Might is Right". But all this is for now, mere speculation
and suspicion, an intriguing possibility. All this was prior to Imperial
Rome, begging the question, what changed?   

The Romans were engineers without equal in their time. They built six
storey tenements among other civilian enterprises, an unsurpassed feat
until Otis introduced the safety elevator in 1853. Otis lifts enabled the
building of today's skyscrapers. What sets the old tenements aside from,
say, the Partheon, is the need for that kind of expertise within the
population. That skill, and language, and law, and lending, all require
an informed population.

My recent post suggested that the era of Bread and Circuses, brought
a time when hunger for knowledge was discouraged among the mass of the
Roman population. The Roman elite imported Greek tutors for their
education or spent time in Greece. I'd guess that Roman engineering
education was provided by the Army to their recruits only. Once
Rome's Army became deskilled the breadth of engineering knowledge fell also.

I'll quote Henry Ford in support of this:
"It is well enough that people of the nation do not understand our
banking and monetary system, for if they did, I believe there would
be a revolution before tomorrow morning."

Did Catiline attempt revolution?
99  Economy / Economics / Re: Unrestricted Banking and Problem Banking on: June 19, 2016, 10:40:38 PM
Now for something bitcoin excels at - Foreign Exchange:
"That means - for those who do not understand clearly - the Forex market itself is an interbank market where banks trade with other banks, and some non-bank participants such as Hotspot (now owned by BATS). That means, they don't have to worry about Reg NMS or other SEC rules, interpretations, comment letters, or policies. They need only worry about a big lawsuit - and when we say 'big' we mean "FX Big" - just one case so far the fines are up to over $5 Billion. One doesn't need a PhD degree from MIT in mathematics to calculate that if the banks have agreed to pay $5+ Billion in fines, the amount of money they are making in FX fleecing customers is 50x or 100x or 200x that. If you don't understand this logic, ask a class action law firm about settlement math, companies always agree to pay out settlements that are pennies on the dollar what their underlying business generates, otherwise it wouldn't make sense for them to do so."
"In the case of the United States, they practically made retail FX illegal - making it so difficult and cumbersome with so many rules and regulations that it makes any strategy barely profitable.  And since the regulators squeezed out decent FX brokers - the only ones left are semi-legit companies that even if there's no default risk, the chances of having a fair shot trading at these firms is minimal."

What would the numbers look like if bitcoin was functioning as the world's
reserve currency. It would need a market capitalisation of over US$21Tn.
That's over $1,000,000 per bitcoin.
What would that mean for transaction fees? Suppose, as an initial guess,
the fee was 0.001, or $1,000 per transaction. At the maximum theoretical
rate of 10 transactions per second, there would be over 300 million
transactions per year, that's $315Bn per year, and just under 1000
transactions per day, or about three times the current peak level.

How much electricity does $315Bn pa buy? At $0.03 per KWh, that's about
three China's. Or 1000x a rational level of electricity consumption.

Taking the above figures for FX, $5Bn x100 = $500Bn, so the transaction costs
are initially, kinda in the right ballpark. It looks like bitcoin could
bring honesty to the FX exchange market for much less than $1Bn per year
in transaction costs. Of course, that excludes the cost of compliance with
all government regulations, a not inconsiderable cost.

The other matter that becomes clear from the above is that bitcoin alone
cannot provide a complete cryptcocurrency solution to the world's needs.
For Bitcoin to succeed, newer solutions must be put in place. Further,
it seems likely that bitcoin will struggle to raise its price above
$1000 per coin. The reason for that is this: if in the example above,
bitcoin reaches $1,000,000 per coin and a market capitalisation of $21Tn,
control over that fortune would be exercised by a mere $300M of electricity
per annum. It would only take an antagonist with access to $1Bn or so to
subvert the entire process. Reduce that for lesser amounts.

It looks like that Bitcoin's role in FX will always be limited. 


100  Economy / Economics / Re: Economic Devastation on: June 18, 2016, 01:49:27 AM
Do you want a job where your first task is to write your
own job description? What would you suggest?

1. Immunity from prosecution
2. No Taxation
3. A Job for Life
4 ......

Ever thought of applying to the European Commission or
the ECB?

Don't get me wrong, I'm all in favour of 1, 2, and 3, and
I might even go for: 4. World Domination, except that I
wouldn't trust myself with that amount of power. I've
also got an inclination to take responsibilities seriously.

Which means that privilege - private laws - bothers me.
Too many good people have died defending democracy and
National Sovereignty to see those virtues lightly set
aside for the mirage of a European SuperState.

Let me make a couple of predictions here: That the UK will
vote "Leave" in a few days time. Following that, Europe
and the USA, and Mr Cameron will do their best to make
the UK's life Hell for the next two years after which
they will propose another vote.

This all supposes that Europe will still be there in two
years time, something that is not a given. Hard questions
are beginning to be asked. Why people need immunity
from prosecution would be a good place to start.

I think Europe self-destructs, at least to the extent that
the UK stays out.
Pages: « 1 2 3 4 [5] 6 7 8 9 10 11 12 13 14 »
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!