Monday, February 16, 2009

Over There, Then And Now

Just in case anyone thinks the grass is greener over yonder, i.e. across the Atlantic Pond (globalization having shrunk everything in size), here is an article by The Telegraph's eminent Ambrose Evans-Pritchard to remind us that "sudden debt" was how the world bubbled its economy to the bursting point. And the consequences.

Scary read to be found here: Failure to save East Europe will lead to worldwide meltdown.

We see that "in Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc." How about that? By comparison, US sub-prime loans appear almost benign and boring.

And.. "Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP."

I should remind everyone that after the 1929 stock market crash the global economy seemed to hold together - for a while. It was not until 1931 and the collapse of an international bank that the entire world spun into the Great Depression. Location of said bank? Yes, Austria*.

From today's stock market perspective, however, it is troubling that we have not yet seen any significant rebound from November's lows. The market is just going sideways, in a rather tight range.

By comparison, the Dow managed a near 50% jump in 1930.

DJIA 1929-1933

Which begs the question: is today's market action discounting the past (i.e. being scared of a repeat Great Depression) or is it discounting the future (i.e. hoping for a rather swift economic rebound)? I think it is doing both, which is why it is range-bound for nearly four months. Simply put, even professionals have no idea whatever which way the market will "break" (up or down) and are thus sitting on their hands.

Think deer, headlights, truck. But will the truck hit the long-horns or the short-horns? Beats me. But there IS an alternative possibility, derived from the maxim that "the market strives to make fools of the largest number of participants possible": the truck is stopped, albeit with the lights on. Oh dear...

In that case we will just have to scrape a living by selling volatility to both long- and short- horns.


* The Creditanstalt Bank failed in May 1931. It was closely linked to the global Rothchild network.


  1. Admittedly stale but since no one else seemed to take note:

    "Remember how people died of electocution (sic) a couple of years ago trying to steal copper from high voltage wires? It happened in the USA, not Upper Volta."

    It has been a quarter-century since the name was changed to Burkina Faso; so typical of an unabashed imperialist not to be bothered by a minor detail such as the name of the country he is indirectly denigrating.

  2. The economical weight of East Europe is not so important.
    So I don't think we need to do something.

  3. Before I moved to Madrid, I lived in Prague. So I feel comfortable saying that, debt aside, Eastern Europe is in a much better position than western europe. Should capitalism come tumbling down, the people are gonna revert to the skills they learned under Soviet fascism. Namely barter and trade in tight knit communities. That's what you do when there's no food on the supermarket shelf (which, based on our supply chain, would come quick).

    So, honestly, I wonder why I'm worrying anymore. I don't own a house, I don't own stock etc. I'm not even worried if the world falls into absolute anarchy because I've spent my life chasing and refining SKILLS, not chasing money. I can and have built a house from the ground up. I can and have built a motorcycle frame up (there's an engineering education for ya). Soon I'll be teaching myself how to grow vegetables in a small city surrounded by plentiful fresh water, wind, and blue collar friends who love me.

    So why should I care?

    I only say this because (again, in honor of Darwins birthday) I'd like to introduce the evolutionary concept of SELF SELECTION. It is our personal decisions (not our genes) which doom any individual to 'extinction'. May the wisest survive.

    and... (since it was Lincoln's birthday too), the best 'personal evolutionary' decision seems to have been NOT enslaving yourself by (willingly) latching on to the "slave boat" of capitalism (or whatever mob mentality may prevail), but by being the self sufficient pirate, using the system and feeding off it to be FREE from it's chains.

  4. Chill yoyomo...

    Didn't you get the volta-ge verbal joke?

  5. Just for info, I thought you would like to know that the former French colonies, now called DOM TOM (Guadeloupe, la Réunion, Martinique) now have barricades up, the general strike has paralyzed the economy, and the situation is deteriorating rapidly over the question of low salaries.
    The government has one big fear : that the metropole people in Western Europe, France, will figure out that we're all on the same side, and protesting for the same things : a decent wage and a way to put food on the table.
    Lots of angry people.
    It will be interesting to see how this evolves...
    Cottonbloggin, interesting comment. I already said that you were my idol, I'll repeat it, specially as I only have a few manual skills (knitting, cooking, etc...) Cheers, everyone.

  6. The reason we have not seen a rally is because the PPT has prevented capitulation. We need to plumb some multiple of the 2002 low of 7200 before a meaningfull rally can occurr.

    Once we see a DOW of around 5000 only then can we rally. I think we get capitulation over the next 2 months.

    Joe M.

  7. Well, the Post-Soviet Northern Europe country I'm living in is in pretty bad shape - no wonder, as it was managed so badly. With massive cuts on salaries, school and healhcare budgets shrunk, tax revenues falling, unemployement on the rise, and even daily fuel limits for the police. Daylight robberies are already happening every day, but it'll only get worse. While crysis has mostly spared me until now, most people are worse off - they can take some more, but only to a threshold - after that all hell will break loose. But from the standpoint of best national interests perhaps it's not all that bad - as people shed political indifference, lies, greed and folly of the 'elite' becomes even more apparent, dirty deals revealed and hatred growing every day. The hope is that, as the long-entrenched cleptocracy is shed, competent people can take their place and begin to actually solve the problems the country faces. Otherwise, no sane pro would risk his reputaton and standard of living to become pawn and scapegoat of the politically bankrupt.

  8. Sigh...
    The worst thing about the word "elite" is thinking about who it refers to :
    aristrocracy or
    plutocracy ?
    I personally fervently dislike the idea of attacking "the elite".
    Maybe because the "elite" that democratic, industrialized society has produced is just not in the same ballpark as the elite of the ancien regime ?
    In my book many people in the U.S. have been spitting on their New England heritage for too long now. (The cradle of the country, remember.)
    But I remember reading Henry Miller, the Air Conditioned Nightmare where Miller mourns the demise of the southern land-based aristocracy. I understand him. Too much finger pointing hysteria has been whipped up over the issue of slavery for the civil war. Too much propaganda spouted...
    I think that the merchants and moneylenders have taken control of the world, and that we need to wrest it away from them.

  9. Cottonbloggin: "So, honestly, I wonder why I'm worrying anymore. I don't own a house, I don't own stock etc. I'm not even worried if the world falls into absolute anarchy because I've spent my life chasing and refining SKILLS, not chasing money."

    Maybe you have a realistic fear of a stronger, larger group coming to take your home-grown veggies and motorcycle, unless your "blue collar" buddies have weapons, "skills", and motivation to protect you.

    One of the skills we seemingly lost in the Western world is the ability to form close-knit communities with political influence.

    We have been warned about this unraveling of our financial system for years by Hell and others, watched the tax rate for the richest go to 25% from 70%, and will probably sit by idly as social programs are slashed in "shared sacrifice."

    Good luck with your local loving anarchistic blue-collar plan.

  10. Marcus.

    I'm not an anarchist. If I was, I wouldn't be expounding (and harping on) the socialist direct democracy of the Iroquois Confederacy. It's a workable model, and... I live it.

    Maybe you're blind to it, but there's a hell of a lot of close knit communities with influence, just not political influence. (though political influence is worthless since there is zero trust between the individual members)

    Now, SOCIAL influence is a whole different story. One of the main reasons Obama got elected was because of this oft understood thing called 'grassroots'. Where do you think that came from? Do you think a bunch of worthless failures (and yes, that is how you see them) just decided to come together one day cause they were bored?

    Please look into Couchsurfing, and you will see a trust based community which relies on honest, personal references. And thru this, I'm lucky to say that I have friends (and these are people I've met, drank beer with, and still maintain regular contact with) from all over the world.

    And the reality of "home" for me is a very similar situation. So when I think about it, there isn't a more powerful or dangerous or numerous network of people out there. And we're already connected. Intimately.

    Mine are the skateboarders, the sneakerheads, and organic vegan farmers (and where I'm from the skateboarders ARE the organic vegan farmers). We are they who CREATE art and indy rock. We push your carts at the supermarket. We grout your floors and renovate your kitchens. We work to live, and gave up on your "king of the castle" games a long time ago. And (at least in my little urban community) we've nothing to hide from one another, cause we've all already slept together.

    Welcome to the future.

    And be very VERY afraid if the 'power players' asinine actions upset the REAL socio-cultural networks hiding underground. Because making music (for example) is WAY more addicting than making money or doing coke. And if you take it away, withdrawal will be a natural green revolution. Birthed on your blood.

  11. @Marcus,

    "One of the skills we seemingly lost in the Western world is the ability to form close-knit communities with political influence."

    Tribalism; it has its strong points but can be limiting to the point of circumscribing your choice of vocation and even spouse.

    I DID see the volta-ge connection but:

    1) it was too obvious (i.e. corny) to be funny,

    2) I thought you had more class than to joke about people (your own countrymen no less) losing their lives

    3) do you object to the imperialist label?

  12. Debra writes:

    "I think that the merchants and moneylenders have taken control of the world, and that we need to wrest it away from them."

    Exactly and they are called the elites. It's only semantics but they are firmly in control.

    The only way we will get rid of these parasites is through total collapse. They will NEVER give up their power willingly.

    Their cycle is over and we will enter into a new age of enlightenment but only after much suffering.

    Joe M.

  13. Deb- And if we did wrest it away, who (in your opinion) is worthy of handing that wrested power over to?

    And I still am having a hard time following your main point, am slower than everyone else in this regard. Could you spell it out in a way a 9 year old can understand?

    Yoyomo- Welcome back! :-)

    Is everything OK? I've read your occasional frustration at Hell's periodic (and selective) silence but I have never read you actually lash out at our illustrious bartender before. What's up? Whatever it is, I hope it passes.

    I didn't find any Darwin nominations for the American copper thief but the British certainly didn't waste any time nominating their own char broiled copper thief.

    Anyway, a regards from across the electronic ether.

    CB- Have you ever wondered whether the Iroquois model is at some level exactly the same thing as capitalism/socialism only its dressed up differently? Just thinking out loud but It seems to me the real difference with the Iroquois might have been that they were living much closer to the edge of existence and as such we simply unable to tolerate individuals with very expensive cost-benefit ratios. We of the Modern Western World have an awful lot of fat in our system.

  14. Cottonbloggin, I checked out couchsurfing out of curiosity.
    What's even more interesting than the fact that couchsurfing exists, is the fact that I (and presumably many others, because I do NOT have the arrogance to presume that I'm unique to that point) have been groping towards this kind of idea for a while. Almost instinctively, I feel like saying.
    It's like : giving up on going to shows in order to make your own music (or at least reducing the number of shows).
    Inviting actors with plays to come to your house, and give a performance for you and your friends.
    It's like : internet support group forums where people exchange ideas, and tips, and stuff like that.
    A revolution in the way that we're managing to bypass the (official ?) system ?
    Anytime you pass by through Grenoble, look me up.
    Homo Sarcasticus too, for that matter.

  15. Thai, mea culpa. What do you mean, my main point ? What one are you talking about ? I hope I have more than one...
    That last point about wresting power away, I think I got carried away, a lot. It sounded too good to miss. Words, remember ? Actually I don't think I believe in the idea of wresting power away. The system is collapsing, and you rightly pointed out that there is no one trustworthy enough to give power to. And power corrupts absolutely. Just like money.
    I try to live what I believe in. That's all. And it's pretty tough these days.
    And what I believe in changes, as I change.

  16. Hi Thai,

    This has nothing to do with selective silences, it's just that some of Hel's comments on $reserve status suggest to me that he is of the Manifest Destiny school of Imperialism and that he's copesetic with its continuation.

    If he is, I'd be interested in hearing his rationalization and if not how does he square that with his position that all the private guarantees the US govt made to foreign $holders to get them to buy US financial assets (usually under great pressure or threats) should not be honored. That sounds suspiciously like imperialist plunder to me.

    If I thought Hel were some lo-IQ moron that stance wouldn't bother me but I don't and it does so I look for little openings to rag him on it.

  17. Someone should alert Ambrose to the Irish situation...

    February 15, 2009
    Ireland ‘could default on debt’
    Iain Dey

    FEARS are mounting that Ireland could default on its soaring national debt pile, amid continuing worries about its troubled banking sector.

    The cost of buying insurance against Irish government bonds rose to record highs on Friday, having almost tripled in a week. Debt-market investors now rank Ireland as the most troubled economy in Europe.

    Simon Johnson, the former chief economist of the International Monetary Fund, called for this weekend’s meeting of G7 finance ministers to put Ireland’s troubles at the top of the agenda.

  18. The market is going to break down and hard between now and the middle of next month. The S&P will be very lucky if it stays above 700 in this next sell off.

    As for AEP, while I don't by any means dismiss his analysis, I am mindful that he is of the sort that very much does not want to see Great Britain give up any more of its independence to the E.U. than the precious little they have to date. This predilection influences him to play up chaos on the continent. In short, old Brosy will probably be right, but a part of him won't be all that sorry about it either.

    Cheers, mates.

  19. Dear yoyomo,

    It is interesting to see that one reader accuses me of being a communist and another of being an imperialist.

    An arbitration judge would say I'm doing something right!

    For the record, I do not SUPPORT the continuation of the Dollar Imperium. I just think it would be extremely surprising if the US WILLINGLY gives it up. That's why the current flood of dollars (aka quant easing) is so puzzling, from a policy perspective.

    For proof of non $ Imperium views see (and fully digest) my Greenback proposal.


  20. @ Thai:

    "Have you ever wondered whether the Iroquois model is at some level exactly the same thing as capitalism/socialism only its dressed up differently?"

    Um... yes? That's exactly it I believe. And certainly they were living closer to the edge of existence, BUT, so are all of the "vice magazine types" who are living the modern version. It's ALWAYS been paycheck to paycheck existence. It was necessary to feed our cultural habits. We therefore needed to rely on others to survive. And a workable modern day socialist network just happened to pop into existence.

    So, I had a moderately-famous mexican filmmaker stay with me in Praha. 6 months he slept in a nest of blankets in my kitchen. He never paid me. But we talked, and I grew as a person. (it's analogous to the GIFT based economy of TRUST and individualism which fueled the Iroquois nation...)

    To put it a different way... I am living in an fractal community which is ALREADY playing Tit for Tat. But in order to do so, we had to isolate ourselves from the "real" world which is still playing "king of the cash cow"

    It grew up naturally, and organically. It's non-violent, and honest and all those other things i mentioned. And it is so because we don't tolerate too much "fat around the edges". People do not survive in these social systems unless they give themselves over to its ideals. There is no hiding from the eye of society. There is no gaming the ungameable.

  21. Thank you Hel for the clarification but my assumption led from a prior post that expressed strong opposition and resentment toward honoring private guarantees made to foreign creditors who in some instances were pistol-whipped into buying US non-govt debt (Fannie & Freddie) i.e. Russ Winter's Godfather Protection Racket.

    If creditors were pressured into buying certain assets and prevented from buying others, shouldn't the guarantees have been honored? (I know, moot point now but not back then) If I misjudged your position I acknowledge the error of my ways.

  22. How come Rothschild's network bank lost money? I thought international bankers never lost

  23. More people die of measles in Burkina Faso than electrocution (or electocution)!

    What a country!

  24. I carefully read the link, and some of the very entertaining comments.
    Ironic, and perhaps premonitary that the collapse of the world economic situation in 1931 originated in Austria (if I am reading Hell's comments, and the original article correctly).
    I am continually fascinated by the still current backlash whipping us from the demise of the Austro-Hungarian empire.
    We are still suffering from this demise. If I couldn't see so far back it would be unbelievable, but it is STILL there.
    And most of us know nothing about it...