FUNDAMENTAL BASIS OF A CULTURE OF TRADERS. -- We have now an opportunity of watching the manifold growth of the culture of a society of which commerce is the soul, just as personal rivalry was the soul of culture among the ancient Greeks, and war, conquest, and law among the ancient Romans. The tradesman is able to value everything without producing it, and to value it according to the requirements of the consumer rather than his own personal needs. "How many and what class of people will consume this?" is his question of questions. Hence, he instinctively and incessantly employs this mode of valuation and applies it to everything, including the productions of art and science, and of thinkers, scholars, artists, statesmen, nations, political parties, and even entire ages: with respect to everything produced or created he inquires into the supply and demand in order to estimate for himself the value of a thing. This, when once it has been made the principle of an entire culture, worked out to its most minute and subtle details, and imposed upon every kind of will and knowledge, this is what you men of the coming century will be proud of -- if the prophets of the commercial classes are right in putting that century into your possession! But I have little belief in these prophets. -- F. Nietzsche
Ponzi schemes are at their basis fraud, with no connection to any real value. They are exclusively money operations in need of endless streams of new money to prop-up the fraud. Once new money dries up, or a small number of people withdraw their investment, the entire scheme is in danger of collapse. While our global financial system is not entirely a Ponzi scheme, it has vast elements which are. Many of the financial innovations of the past several decades were simply money operations, making money on money two or three levels removed from any connection to the real economy. The Ponzi aspects of the system require ever more new money, or liquidity, endangering the entire system with collapse once the liquidity dries up.
Starting in the summer of 2007, liquidity began to dry up. By the fall of 2008 it had reached crisis stage, not simply damaging the Ponzi aspects of the system, but the real economy aspects too. The initial stage of the Ponzi collapse was met several ways. First, the banks and Wall Street did take some losses, but not nearly enough. Secondly, and importantly, one of the smallest elements, was the implementation of the TARP. Next was the the massive extend and pretend effort, that remains in place, allowing the banks not to account the great losses they still hold on their books, in addition to the great transference of losses onto the public ledger through the Fed and GSE's(see Gretchen Morgenson's excellent piece on Fannie and Freddie). Finally, was the Fed's massive dumping of liquidity into the system with special programs, and most importantly, its zero interest rate policies.
For a time, all these efforts arrested the collapse of the Great Global Ponzi Finance Con. The American taxpayer, worker, and saver becoming the last pigeon, allowing, funnily enough, the return to the game of so-called "sophisticated" investors. Unfortunately, the Ponzi aspect of the system remained intact, waiting to collapse with a new drying up of liquidity, seemingly now well under way in Europe. Despite the Euro bailout and the Fed's opening of "swaps", cheaply lending more of your money to "Old Europe", rates are rising and the European Central Bank is increasingly the major short-term lender, providing liquidity of last resort. Call all this saving Ponzi Finance 2.0.
To show how increasingly ludicrous this can all quickly become, financial speculator Bob Janjuah calls for the Fed to provide ten-trillion more in liquidity! That's just a joke and should be considered exactly that, especially as Mr. Janjuah prophesizes from atop the great pile of financial garbage that is the Royal Bank of Scotland, which to date has received more bailout money than any other bank in the world. That's Failure with a capital F, thus begging the question what happened to the tight-fisted noble Scots? Obviously the answer is brought down from centuries of occupation, first of bloody English barbarism, and then, and much worse, contemporary English effeteness.
The only solution is to call and end to the Ponzi scheme and that means a massive destruction of Ponzi debt. Make no mistake, that will cause a little sacrifice everywhere, but it is the only real solution and necessary to free the economy so that it can restructure for the 21st century, ending the even greater Ponzi thinking of infinite growth on a finite planet. Yves Smith has a nice piece on the necessity of our beginning to tackle this thinking. When you talk about the culture of traders, our industrial economists whether they're Keynes on one side, Friedman the other, and Krugman et al lost hopelessly in the middle, they all agree on the doctrine of Ponzi growth, and that is species' suicide. We need to restructure our culture to consume less and produce less. Just as we evolved from an agrarian society to an industrial society, we must now evolve to a design society. We need to spend more time figuring out how to do better with less stuff, understanding in doing so, we can all have better lives.
Starting in the summer of 2007, liquidity began to dry up. By the fall of 2008 it had reached crisis stage, not simply damaging the Ponzi aspects of the system, but the real economy aspects too. The initial stage of the Ponzi collapse was met several ways. First, the banks and Wall Street did take some losses, but not nearly enough. Secondly, and importantly, one of the smallest elements, was the implementation of the TARP. Next was the the massive extend and pretend effort, that remains in place, allowing the banks not to account the great losses they still hold on their books, in addition to the great transference of losses onto the public ledger through the Fed and GSE's(see Gretchen Morgenson's excellent piece on Fannie and Freddie). Finally, was the Fed's massive dumping of liquidity into the system with special programs, and most importantly, its zero interest rate policies.
For a time, all these efforts arrested the collapse of the Great Global Ponzi Finance Con. The American taxpayer, worker, and saver becoming the last pigeon, allowing, funnily enough, the return to the game of so-called "sophisticated" investors. Unfortunately, the Ponzi aspect of the system remained intact, waiting to collapse with a new drying up of liquidity, seemingly now well under way in Europe. Despite the Euro bailout and the Fed's opening of "swaps", cheaply lending more of your money to "Old Europe", rates are rising and the European Central Bank is increasingly the major short-term lender, providing liquidity of last resort. Call all this saving Ponzi Finance 2.0.
To show how increasingly ludicrous this can all quickly become, financial speculator Bob Janjuah calls for the Fed to provide ten-trillion more in liquidity! That's just a joke and should be considered exactly that, especially as Mr. Janjuah prophesizes from atop the great pile of financial garbage that is the Royal Bank of Scotland, which to date has received more bailout money than any other bank in the world. That's Failure with a capital F, thus begging the question what happened to the tight-fisted noble Scots? Obviously the answer is brought down from centuries of occupation, first of bloody English barbarism, and then, and much worse, contemporary English effeteness.
The only solution is to call and end to the Ponzi scheme and that means a massive destruction of Ponzi debt. Make no mistake, that will cause a little sacrifice everywhere, but it is the only real solution and necessary to free the economy so that it can restructure for the 21st century, ending the even greater Ponzi thinking of infinite growth on a finite planet. Yves Smith has a nice piece on the necessity of our beginning to tackle this thinking. When you talk about the culture of traders, our industrial economists whether they're Keynes on one side, Friedman the other, and Krugman et al lost hopelessly in the middle, they all agree on the doctrine of Ponzi growth, and that is species' suicide. We need to restructure our culture to consume less and produce less. Just as we evolved from an agrarian society to an industrial society, we must now evolve to a design society. We need to spend more time figuring out how to do better with less stuff, understanding in doing so, we can all have better lives.
Agree with most of this, but as a Brit who you callin' effete? Coming from the country that wants to elect Orly Taitz as governor of California, watchoo talkin' about, Willis?
ReplyDeleteJon has a point. The USA clearly is the land of the prude.
ReplyDeleteForget Ponzi Finance, what we need is Fonzi Finance. Have the Fonz walk up, bang the global economy with his fist, and exclaim "Aaaaaaa!"
ReplyDeletehttp://www.truthout.org/article/louis-gilles-francoeur-the-rich-stand-accused
ReplyDelete".....Capitalism is the source of social and environmental crises....."
'..... What do global warming, pollution of the atmosphere, streams, rivers and oceans, the exhaustion of natural resources, the accelerated extinctions of species, deforestation, the liberation of GMO into the environment, and - coming soon - the infinitely small and practically undetectable pollution of nano-materials have in common? Capitalism and the oligarchy that profits from it, as first cause, answers Herv Kempf in a bombshell book published in Paris by ditions du Seuil....."