Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19
The IPO Market Is Nowhere Near a Bubble - 9th Oct 19
US Stock Markets Trade Sideways – Waiting on News/Guidance  - 9th Oct 19
Amazon Selling Fake Hard Drives - 4tb WD Blue - How to Check Your Drive is Genuine  - 9th Oct 19
Whatever Happened to Philippines Debt Slavery?  - 9th Oct 19
Gold in the Negative Real Interest Rates Environment - 9th Oct 19
The Later United States Empire - 9th Oct 19
Gold It’s All About Real Interest Rates Not the US Dollar - 8th Oct 19
A Trump Impeachment Would Cause The Stock Market To Rally - 8th Oct 19
The Benefits of Applying for Online Loans - 8th Oct 19
Is There Life Left In Cannabis - 8th Oct 19
Yield Curve Inversion Current State - 7th Oct 19
Silver Is Cheap – And Getting Cheaper - 7th Oct 19
Stock Market Back to Neutral - 7th Oct 19
Free Market Capitalism: Laughably Predictable - 7th Oct 19
Four Fundamental Reasons to Buy Gold and Silver - 7th Oct 19
Gold and Silver Taking a Breather - 7th Oct 19
Check Engine Warning Light ECU Dealer Diagnostic Cost - Land Rover Discovery Sport - 6th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Black Hole Finance Debt Slavery - Black Swan Events

Politics / Global Debt Crisis Jul 25, 2011 - 10:48 AM GMT

By: Andrew_McKillop

Politics

Best Financial Markets Analysis ArticleTo the political and corporate elite, debt is the route to Federal Europe. That sounds grand and sombre, calculated and organized, but in fact federalizing European debts and deficits is nothing more than repeating the circus act of the present financial and monetary crisis. Europe has a black hole of public debt, swallowing all and any assets, and can only only deliver Black Swan events, that by definition are strange, unpredicted and unprecedented.


The debt playacting in Europe, as in the USA and Japan has a totally predictable result each time: big new handouts - of cash that doesn't exist but is printed and borrowed - to semi-nationalized "private" banks, insurers, bond traders and currency dealers, and others across the financial play space.

Lke in the USA since 2008 and Japan since the 1990s, Europe's so-called "high street banks" are already nationalized, or semi-nationalized. Many persons do not know that. Their debts and losses are nationalised but their profits, when they make profits, stay semi-private with plenty channelled back to Big Government both openly, in taxes, and under the table, as kickbacks to the kleptocratic politicians who bailed out the banks.

Government budget deficits are financed by the same process. Governments hand over printed and borrowed cash, to "save the banks", and these semi-nationalized banks then buy government debt to finance the deficits run up by governments. That is, they lend back to government some of the new money the governments handed to them. The banks then also lose some of the new money they received, especially if equity markets go down, and lose money on other operations like mortgages and insurance. When the next crisis hits, their losses get so big they have to be bailed out again.

In theory, but only in theory, somebody can pay for it all. This is taxpayers and consumers and users of government services, which are cut. The playact nature of this is shown by "austerity measures", in Greece for example, which are good for increasing misery among ordinary persons, but produce such tiny savings of national government spending, relative to national debt and its growth, that trying to cure the problem with austerity is a waste of time. The main role of austerity cures is symbolic; in theory they weld up society, together and united - but that is only true postwar - after a shooting war - when everybody really does work together. In a liberal economic competition-based society, austerity has no meaning except to pour oil on the fire and incite social tension.

DEBT SLAVERY To be sure, the average European is now a debt-slave. In some cases this is already extreme and delirious, starting with Greece, Portugal, Ireland and Spain. Debt serfdom is steadily spreading to all the other EU27 countries.

Greece, using the supposedly true numbers given by France's Nicolas Sarkozy in a July 21 press conference in Brussels, has increased its debt by at least 100 bilion euro in one year, and by 150 billion euro or more, over 2 years. Other ways of interpreting the numbers given by Europe's ECB, the European Commission, the so-called "private" banks and other data sources on Greek debt growth, over the last 2 years, place it much higher than that. It's debt possibly grew by 200 billion euro in 24 months. Almost as important as this delirious growth, getting the true numbers is difficult - because nobody knows, making it possible the debts will never be known, and by definition never repaid.

Showing what has happened to the debt crisis playact and why it will not last much longer, Greece has 11 million inhabitants, meaning its debt growth per capita is absolutely crazy.

We can call that slavery and serfdom, for sure, but serfs and slaves did not borrow billions. Taking the Greek debt blow-up (and blow out), if the amounts of new borrowing and  debt were equitably and fairly distributed amongst its population, they could simply give up all work of any kind. Each Greek household would receive around $ 60 000 (45 000 euro) per year.

Is that slavery ?

In one way it is. The playact says this money has to be paid back, sometime. In the new-new July bailout package for Greece, supposedly providing 135 billion euro of new and additional loans to Greece, the payback period is set at around 30 or 35 years. Anybody betting there is still a money called "the euro" in 35 years can also bet on flying saucers landing, well before then.

This means the debts wont be there anymore. So the slaves-who-werent can expect to be freed. This however what our great masters want - the political and corporate elite - so they make sure the gameplan is schizophrenic and unreal through the sombre playact of debt slavery. All Europeans now serve the banks and financial institutions as debt-serfs, in one way or another.

SOLVING DEBT WITH DEBT Europe is a continent of debt-serfs. When they arent indebted and indentured to the banks, they are preyed on by the governments which bailout the banks. The governments are indebted, the banks are indebted, and so the people can only be indebted - if you believe in paper money.

Reality is a whole lot more complex and vastly more schizoid. Behind the eurozone's phony facade of economic serfdom lies the fake ideal of "economic freedom." Freedom to pay somebody else's debt ?

We could simply jump up one level. The "high street banks" are all internationalized and corporatized and handle not only European debt, but US and Japanese debt, also. The total for so-called sovereign debt (and when, rather than if a country disappears, obviously its 'sovereign' debts go with it) of the USA, Europe and Japan is well above the total value of all money in circulation, worldwide.

If we took an approximate M1 count for the dollar equivalent of all money that exists and circlates on the planet - around 50 000 billion dollars - the "sovereign debt" of the US-Europe-Japan threesome is far ahead and larger - and growing much faster than world M1, which itself is growing fast. The comparison with black holes in space is clear: everything goes in and nothing comes out.

So who believes in the stark domination of the world's big banks operating a type of  Neo-Feudalism? Obviously, as 2008 showed, plenty were not Too Big To Fail, and needed big new sovereign public debts to make a playact of still being real and still in existence. Since the straight majority of the big international banks are European-based, owned or operated it is totally logical to find the heart of the crisis, what we can call the core crisis system, in Europe.

Today, there is only one agenda item for politicians in Europe: save the big European banks by saving the governments they lent money to. Everything else is low grade playacting, even designer wars over the horizon. The big playact takes the commanding role and slot, at every performance, nowadays.

The mechanisms in play count for little and anyway are cast in stone. Everything runs on debt. Simply since around the end of 2008, so many thousands of billions of new euro, new dollar and new yen debts have been created, or mutated out of older debts, that it - The Debt - can never be paid back. Knowing this and hearing it, openly and in public, will be the mega turning point.

AND BEFORE THEN ? In a non-feudal system like the one that is coming, probably fast, the answer is simple: something like 65% or 75% of the debt will be written off in one fell swoop. All banks, insurers and other rightly named "players"  whose assets have been wiped out will be declared insolvent and liquidated. New mutual-type smaller banks will be created, with no creative explosion of their numbers.  Remaining debts would be sized to the economic surplus of each debtor nation: when it cant pay, it doesnt. The era of slavery will be over, but naturally this is "impossible": Europe's political system (exactly like the US and Japanese) is based on the playact of servitude and privilege, is medieval minded, and can only be as corrupt as it is incompetent.

Political talk of it being  "a tragedy for Europe" if Greece goes down the tube and takes the euro money with it should alert us all to this being the real solution. In other words there is no tragedy for Europe when two-thirds or more of all sovereign debt in the Union is wiped off the books. Since the big banks are bad banks, now, every one of them, systematically locked together by open-ended liabilities to other banks so similar we can call them clones or carbon copies, and their real assets have collapsed, the real and dangerous tragedy is that they still exist. Like we know, and for sure, when the big European banks implode all other big banks would topple each other, domino style.

Keeping the dominos alive and toxic is very dangerous - but we are told to believe its our salvation !

We have to wait and hope for tragedy. What the media vassals to our political lords call a catastrophe, will in fact spell freedom for Europe's 500 million fake-debt serfs. It will be a glorious lifting of tyranny, well fitting a Medieval morality play and pageant.

The threat is well known to our ruling class kleptocrats. What they have not embezzled from state funds, they have wasted on worthless prestige projects, now entirely focussed on creating more debt and playacting its repayment and restructuring. The older veils of self-justification, of whining about public services, education, industrial invention or international aid are progressively disappearing, as the kleptocrats seek only to save their asse(t)s.

Talk of a "federal Europe" has been firstly translated into federalized debt. Since July, this includes 1 real debt finance institution, the European Central Bank (ECB), and two virtual institutions, called the European Monetary Fund (modelled on you guessed what), and the Financial Stability Facility (FSF). All of them are for printing or borrowing more euros to fund the illusion of solvency.

SLUMP INTO POVERTY Behind the European federal illusion is an even bigger black hole mechanism: servicing the trillions of euro debt pile is theorized, by the klpetocrats, as possible through skimming the economic surplus from the labor of Europe's debt-serfs. In fact this could or might have been possible if "the debt clock" had stopped 4 or 5 years ago, but like the expansion of the universe that wasn't possible.

The fatal weaknesses of this Grand Scheme are everywhere, and certainly include so-called European integration and federalism. For starters, all Europe's tax systems are different, but right behind that and whenever the subsidies are stripped away we find that Europe runs big and increasing trade deficits with the rest of  the world, in all kinds of sectors - from food to computers, oil and coal, metals and minerals and even fireworks for its Medieval pageants of the absurd !

If or when all tax systems in Europe were "harmonized", for the benefit of the kleptocrats, they would find the amounts they could siphon off to pay sovereign debt was always far behind the problem. One way out, therefore, and dictated by panic is to raise taxes, everywhere. The impact of this on "economic freedom", and Europe's low-or-no growth economy is surely and certainly negative, slowing economic growth, trimming tax receipts, raising debts once again.

The euro was intended to be the enforcement mechanism for economic federalism, but will be the mechanism for triggering a slump into poverty: poor serfs are even less able to pay big debts, than less-poor serfs. But the New Euro, which can replace the old one can use a part of the old one's real operating mode. The euro was conceived as enabling the big European banks to lend essentially unlimited sums to citizens and governments in a stable currency, with the banks guaranteed against loss because they would be repaid in that same currency regardless of the weakness of debtors. Cutting out the big bad banks of today, and operating the same mechanism with loans only to private citizens, could relaunch the economy, in theory at least.

This nice idea is rather likely to stay that way. Europe's big banks essentially "federalized" thir operations a long time ago, and jumped on the euro as a ticket for wide-screen superproduction loans,  but mainly to bankrupt states. As the new debtor nations fall apart, the banks declare themselves semi-bankrupt and blackmail their kleptocrat friends in government into handing them more printed cash - and cash the governments borrowed back from the big banks, after "saving" them the previous time.

This black hole mechanism and process has wildly overshot the carrying capacity of Europe's economy, by at least 1 trillion euro since early 2011. The debt load is now so enormous there is no way that skimming surpluses from the debt-serfs can do anything. So now we have austerity, rising taxes, falling economic growth, rising unemployment - in other words rising poverty.

The solution will be surprising, strange or unprecedented. Black hole debt-o-nomics in Europe, as well as in the USA and Japan has produced that situation. Welcome to the future !

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2011 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules