Wednesday, October 21, 2009

Financial crisis – the benign interpretation

In this post I will partly play the devil’s advocate, to some extent arguing the case of the cornflake mainstream economist. Partly I will conclude the most benign interpretation of the financial debacle. This little exercise is meant to line out the most positive outlook for the coming years.

Re-capitalisation success
The stock market capitalisation of banks has recovered, to an enormous extent. The Keynesian experiment has in this aspect, at least temporarily, and only looking at capitalisation, been a success. When central bank money is almost free, sometimes financial institutes actually get paid to take money, prices of risky assets do recover and competitors disappeared or are weakened, making money is a relatively simple matter for the strong survivors.

What the bail-outs and cheep money has done is three-fold. It made the “to big to fail” into shopping machines i.e. they could go out buying assets, equities, companies and other financial institutes in a way that otherwise wouldn’t been possible. This is the main basic reason for the stock market recovery. It also lowered the risk somewhat comes to banks basic capital, more capital means they stay in business. And thirdly it has accumulated the financial sector into fewer hands because some banks were saved, some were not. Some banks were so far gone they couldn’t be saved or in such bad shape other banks could buy them up. All in all the competitive edge in this particular area have diminished.

But now, with the recession eased off, we are faced with a couple of problems. Most of the stimulus to financial institutes hasn’t really been put to use, the banks have horded some of the money and some banks have paid back to the state. This means that the recapitalisation of normal markets, getting people to borrow and shop again, have been a semi-failure. This have happened, but not really to the extent intended in the eyes of those in charge. This pose a problem, not only have purchases not been going up as much as the schemers projected, policymakers and central banks have also flooded countries with lots of money which have a built-in danger of future inflation and possible devaluing of currencies. With things fairly stable, the people who brought us this situation now need to, among other things, think about when and how much they are going to raise interest rates in order to keep inflation down and not get an run at the currency. The problem is how to do this without pulling the rug from under the financial market and get another dip in the economy. But not to do this or if they wait too long or don’t raise rates enough pretty soon, we’re possibly facing even worse problems ahead. And so big decisions are to be made by our benefactors, and pretty soon.

What they can hope for is that growth and jobs recover enough to pull us up far enough so when they do drag that rug out from under us, it has little effect. In the real world this is impossible; the math tells us that there is no actual recovery in sight so to withdraw the stimuli and heighten interest rates will have very negative effects. But if we make the benign interpretation and say that we soon can return to a more normal state in the economy, we are still faced with the question: have we really changed anything?

Another, more politically adverse effect, is that bonuses are back and that the shopping spree by large financial institutes has had a demoralising effect on the populace. Few are the politicians and policymakers that what to declare that, thanks to their efforts, the surviving bankers will be buying palaces, while humbler folk worry about their jobs and homes, and face decades of fiscal austerity. Watching financiers – beneficiaries of the most generous public rescue in history – returning to their old ways is the cause not so much of envy as sullen resentment. Why, many wonder, should the rigours of the market apply most brutally to those innocent of causing the catastrophe? And why would normal people, in effect, pay for bonuses and the lavish lifestyle of the rich?

The implications of this cannot be taken lightly, which is why we hear from the elite that they are going to impose regulations, raise taxes or even withdraw money back to the state. At least they need to show constituencies that they actually do something about this poor-paying-for-rich-peoples-mistake, what they do aren’t that important.

And then we have deficits and growing number of percentage measured in GDP that is debt. Some countries have grown towards a total debt accumulation - private, company plus state - of 350% or even more. The US and Sweden stand around 150% of GDP in total debt, which in comparison with many others isn’t that bad. However, the US in particular, has debt obligations that will triple that amount over the next decade or so. The ever souring debt that has grown during this crisis need to come to a halt. Even Keynesians know this. They felt it necessary to add to this pile of liability due to the financial instability and, according to them, they succeeded, the numbers are turning around. But, as said, this debt needs to be repaid, and it means that a growing amount of public spending goes to interest rates and repayment, and so there is less money over to help the needy or to found another stimulus if required.

What it all comes down to, no matter how you look at it, is that things need to start rolling again. We need to produce more, increase productivity and get people back to work. But the problems are overwhelming.

How can we keep credit for investments and shopping available when those actually, at least to a certain degree, need to be withdraw from the market? If they regulate or hinder the financial market too much, they will create more problems, if they don’t they risk their jobs or even violent protests. And how will they re-introduce a flexible and more diverse banking sector when there are fewer and more powerful financial institutes today? And how can they get people back to work when they cannot borrow or print more money to pay for government expenditures in that regard? Can they let the debt-GDP ratio continue to increase and what can they do about inflation versus deflation? The questions and the hardship for the mainstream policymaker are very tough at the moment, and seldom have cornflake economists been so busy coming up with solutions.

Let’s say they come up with some reasonable solutions, let’s also argue that people, to some extent, get back to work, and let’s assume that the market rally isn’t a dangerous fluke and that nothing out of the ordinary happens that can spoil the recovery. In such a situation, again, we are faced with the same question, have we really changed anything? The very essence of this crisis – is it gone or will more trouble come up ahead?

Can you see the status que? This is the best possible scenario; that nothing really changes, more questions arise and there are lots of possibilities for wrong decision-making.

If this is our future situation, what will happen if another crisis emerges? Or, even worse still, such a crisis pops up before a full recovery is here? What then?

I’ve offered an alternative solution before, but that is not really the popular one. So what other “solutions” have lawmakers and leaders, historically speaking, turned to when all else fails?

Well, basically there are two ways to go, often enough we have seen a combination of the two. Firstly they can move towards much more of the same. More socialisation, more regulations, more restrictions, more protectionism, and more debt and more use of the printing machine. In effect more stimuli, more bail-outs and more Keynesianism, but, as said, the questions regarding such endeavour, even if successful again, still remain.

Secondly, and the all time favourite of clueless under fire policymakers, is war.

And yes, this is the benign interpretation...

The Great Gorgon Speak again

Telegraph: Speaking at an international summit on climate change in London, Mr Brownie said that world leaders must agree a deal to stop global warming.
He said failure to tackle the problem would not only result in hundreds of thousands of deaths every year due to floods and droughts, but a greater economic crisis than the recent recession.

So the, hairy ape of a man who likes to wear floral print dresses and garter belts, and fantasises about being anally gangbanged in the showers by a football team, have issued another decree on his quest to make himself out to be the savior of the universe.

Of all the madmen destroying everything they touch that has been rulers throughout the ages Gorgon of UK need to be among the top five. In fact, you cannot go wrong if you listen to this one-eyed Scottish wanker and do and think the complete opposite.
Again, this cannot be said enough time. There isn’t a single evidence for manmade global warming, not one, zilch, zip, nada. It does not exist. All the facts, all the real scientists and all the common sense say the contrary. So why do the enemies of the people continue argue for this scam? Because of two things, taxation and power.

Taxation because most countries have already passed the limit, even modern day man have his limit what he is willing to pay into the black hole of government. Thus they need to come up with a new scheme to pick our pockets, and what better way than to argue they are going to save our children, save the poor and help lots of animals?

Power because if we are scared, if we buy the doomsday scenarios, if we turn to the government to save us, their power grows. If the solution to any problem is government, they hold all the cards. In this quest it does not matter of they are left or right, which is the reason why the unison is so strong among the elitists.

What you all need to understand is that the very existence of this trickery makes people die. If the proper amount of energy isn’t used, if machines aren’t used and if we ban lots of second-hand cars and other things of cheap price, we are making those with no margins into the losers. The poor people of this world need to use more energy, not less. Every time Gorgon Brownie or any other foe says that we should save energy, what they are actually saying is that they like to see more people die from starvation. And it is all based on lies!

Manmade global warming is the biggest scam of all time. It only seems fitting that the worst leader of our time act as spokesperson.

Speaking of lying deceitful bastards

It seems that some politicians have been caught sending in petitions and bills that has been formed, written and sent to them by lobbyists. Apparently this is considered to be “news”. Why?

MPs have speech writers, they have secretaries doing most of the work, and they have committees and departments forming their opinions. Unions and companies are constantly knocking on their door, and most of the elected frauds have their own personal agendas they have invested interest in. So if they can get someone to write things for them that looks good, why not? It frees another couple of hours to play golf or fly first class to some retreat where they will hold one lecture and then eat and dine for taxpayer money.

Most politicians actually do work hard, which is one reason we have a problem because most of the time we don’t really know for whom they work. We can say for certain that it’s not the electorate and it’s definitely not for the country. Mainly for themselves or some group that is important to them. Sometimes, when it suits their pocket or idle afternoons, they work for lobbyists. Some may complain over this fact, I don’t, I complain over the very fact that politicians can decide over things that may let the lobbyists be successful. That’s the real problem.

If we had a situation whereas politicians couldn’t decide over milk or oil, there would be no reason for such companies to even try to bribe or control officials. Socialists argue that more statism would solve this problem - no it wouldn’t. The only thing that would change is the name of the person and organization coming over to bribe and control. Instead of Volvo knocking on the door offering treats, it would be ‘the people’s laundry company’. Instead of big oil it would be big left shoes.

The way to get rid of corruption and to make it disappear, is done cutting legislatorial power. As long as that is not done, you’ll just haft to accept vice, fraud and corruption as a way of life among the elite. Well, maybe buy some vodka as well, also a way of coping…

Why would they not?

The best job in Sweden at the moment has got to be that of press officer for the Swedish Democrats (SD). Such an individual doesn't have to do a damn thing. He can party all night and sleep all day. The elite groups, along with their crusty little pet activists, are doing the job far better than any press office could ever manage.

Some genius “expert” commentator said the other day that SD is using the martyr-card to gain support. Next he will probably declare that gravity exists. But what that “expert” and many others are missing is that it’s not SDs fault, not really. They can just sit back and relax. Just send an article to a paper or sit in the morning sofa once a week, then they can lay back and let the mainstream pundits bash them into fame and parliament.

And both the government and the opposition have solemnly declared that they will never form a coalition with the “racists” and that they will cut them out as much as possible. In the meantime journalists are competing in the game of who can trash and ridicule SD the most.

What the public see in all this, those that don't react with the auto-responder permanently cranked up to 'racist-Nazi-bigot-neanderthal-thug' every time those two letters are mentioned. People who would not have dreamed of voting SD, who might otherwise have heard little to nothing of that party, are wondering what all the fuss is about. Why is the government so scared of them? Why are they so desperate to silence this small party? What do they offer that the government doesn't? And even more so, people that actually live in reality, in the real world where immigration and refugees actually pose a problem or at least some nuisance, those people see the government, the main parties and journalists ignoring the problems and when someone comes along with a supposed solution, they get cut down with every dirty trick in the book.

And so it doesn’t matter if journalists find criminals within SD, which party hasn’t criminals as members? Aren’t they all criminals? What if some article or pamphlet is riddled with holes? How many of the elitists aren’t lying to us each day? Are we supposed to care more because one party gets “caught” lying but not the other one?

What I see here is suppression of an alternative view. It's not my view that's being suppressed but if they get away with suppressing the SD, they'd have no trouble shutting me up. Or any other individual or small party. If they can once get away with thrashing one party or changing the law to exclude a political opponent they don't like, well…

Let's face it; so many people are so tired of our current MPs - all of them - that they would be interested in voting for any party that the nosegoblins say they shouldn't. They surely must see that when they set their elitist dogs on people who aren't actually causing any trouble, that the public are perfectly capable of determining who is having a march and who has turned up for a fight.

The establishment might as well start printing 'Vote SD' badges ready for the next election.

People are starting to wonder what would happen if the government took a dislike to them. They see the techniques aimed at a party they don't know much about because nobody will let the SD speak and they think, 'Well, they're doing that for no other reason than they don't like this bunch. So what will they do if they decide they don't like me?' Then they think about it a little more and they realize something important.

This post isn't actually about the SD, you see. So anyone currently suffering tinnitus and steam coming from their ears, chill out, have a smoke and a double brandy and relax. It is not a post in support of the SD nor is it a post attacking the SD. This is about what is happening to the SD so look again, and ask if it could happen to you.

Would your government take a view opposing yours and silence you, and those who would speak for you, and refuse to countenance any debate at all that would let you have a say? Would your government use lies and deceit to override anything you might want to do or say? Would your government use the law against you, demonise and punish you, encourage others to treat you as subhuman, for no other reason than they just don't like you?

Do you smoke? Drink? Drive? Are you a little on the portly side?

Can you see why the SD support is growing? It's not because people are all suddenly racist, it's not even because people are all suddenly in tune with all the policies on all the other things because they're pretty much the same policies as all the rest of them. The only real difference between SD and the social democrats is the more focus on the immigration and refugees issues.

People have seen the way the government are working on SD and they are thinking about that while they shiver outside for a smoke, while they queue in those bars for a overtaxed drink that comes with warning labels, while they hear talk about speed cameras that don't flash so you don't know whether you're fined until the letter arrives. They are reading about fat people beaten up for being fat, they are watching the information campaigns sending hateful messages against smokers, they are consoling children scared to death by the drowning puppies of the global warming religion, they are wondering why their government thinks they are all pedophiles, they are wondering why the government needs to poke around their computer and read their emails.

People aren't looking at the treatment of the SD and thinking 'They could do that to me'.

They are thinking 'They have done that to me'.

The elitists tell us that the SD are evil racists. Well, they've already told me I am personally evil because I use tobacco. I'm even more evil because I like a drink. I'm yet more evil because my salt and fat intake is nowhere near the recommended amounts. I'm a crazed 'global warming denier'. I will not take the vaccine, and I, oh gosh, don’t vote. Can you find a more evil person than me? Looking at the list of things this government calls me evil for being and doing, Satan had better watch out for his job. So when they call SD evil, I'm supposed to consider that a different type of evil or something?

I'm not going to vote SD. Too socialist, too controlling, too much as the rest of the bunch. But I'm not the only one classed as Satan's heir. There are millions out there who have been demonised far more than me. Why would they vote SD?

Why would they not?