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
FOMC Minutes Reveal an Important Shift That’s Key for Gold, Too - 22nd Nov 19
Adaptive Predictive Modeling Suggests Stock Market Weakness Into 2020 - 22nd Nov 19
Why You Should “Follow the Money” on The Yellow (and Silver) Brick Road - 22nd Nov 19
This Invisible Tech Stock Threatens Amazon with 800,000+ Online Stores - 21st Nov 19
Crude Oil Price Begins To Move Lower - 21st Nov 19
Cracks Spread in the Precious Metals Bullion Banks’ Price Management System - 21st Nov 19
Why Record-High Stock Prices Mean You Should Buy More - 20th Nov 19
This Invisible Company Powers Almost the Entire Finance Industry - 20th Nov 19
Zig-Zagging Gold Is Not Necessarily Bearish Gold - 20th Nov 19
Legal Status of Cannabis Seeds in the UK - 20th Nov 19
The Next Gold Rush Could Be About To Happen Here - 20th Nov 19
China's Grand Plan to Take Over the World - 19th Nov 19
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble - 19th Nov 19
Plethora of Potential Financial Crisis Triggers - 19th Nov 19
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

Europe Migrant Crisis - For a Few Dollars More

Politics / Euro-Zone Apr 24, 2015 - 12:11 PM GMT

By: Tom_Naysburn


The migrant crisis in the Mediterranean is symptomatic of the wider malaise afflicting Europe, the new Wild West.  As Sergio Leone put it " where life has no value, death, sometimes, had its price. That's why the bounty hunters appeared".  Today, after the Euribor finally went negative, it seems quite plausible and legitimate to update the phase to "where Euros have little less value, death, sometimes, has its price, that's why the people traffickers appeared".  When banks and governments are being paid to borrow Euros you have to ask the question: has this inverted perversion of classical economic theory hastened the beginning of the end for the Euro experiment?

The process of lending something must have a positive value in all but the shortest of timeframes otherwise a profit is impossible and everything must therefore end up free.  If a car hire firm pays the customer to rent the car a) nobody would ever buy a car and b) as long as the business has other costs in doing business (excluding the fact that interest rates may be zero) such as staff costs or rent on premises, they will be a loss making and unsustainable business quick smartish. It all sounds, and is, an utter nonsense.

Mr Draghi wants the banks to lend, or another way of looking at it, to take on more risk, or another way of looking at it, believe in the inflation trend and ignore the likelihood of the tightening cycle. The banks don’t want to lend to the real economy because they know its a terrible trade so they have dumped everything into the corporates and the interbank market resulting in yesterdays new lows.

Mr Draghi is trying to fix (and not in a good way) the competitive game. To bend the hand of the market and cui bono to his will to preserve the political project, but without the necessary fiscal union. The problem is when you fix a game you may find nobody turns up to play it.  Therein lies his problem. If, for example, everyone knew the 3.10 at Perth was fixed nobody would turn up to the racecourse and nobody would place a bet on the race. He wants to bully the market with his tower of chips when everyone else just wants a stable stack.

Thomas Jefferson said two hundred years ago that “banks are more dangerous than standing armies” and that “speculators sweep away the fortunes and morals of the people”. With the Euro losing values at this rate soon everything the EU does will be free. Negative nominal and real interest rates are a plausible possibility and before we know it the banks will have to subsidize their debtors. They might call it a “loyalty bonus”, borrow 20,000 Euros at zero cost for a car and receive 1,000 Euros cash back every year of the loan. It sounds crazy yet worryingly possible in this brave new world.

Back to the life and death of real lives, migrants flooding into southern Europe are only operating rational self interest by trying to balance risks against benefits. They hear that the magical Eurolands (and the UK) are paved with gold where everything from housing, employment subsidies, unemployment benefit, medical provision, to name but a few, are all free on demand from conception to grave. Who wouldn’t take a punt for that and to escape the savages of the Islamic State?

By Tom Naysburn is a news, views and commentary site, incorporating an alternative view of the headlines, providing financial intelligence and attempting to show a sustainable way to reason.

© 2015 Copyright Tom Naysburn - 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 - 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