There's only a debt crisis because there is a growth crisis. The growth
crisis was a guaranteed result from the design of the Eurozone. Each country
has to be responsible for its own debt and high investment high productivity
Germany will always have the balance of payments surplus and the rest will have
the deficit. They can never hope to match German productivity which is based on a massive
investment over many years but are locked to the same currency. Hence they
continuously build up debt to pay for German products and year on year are
overpaying themselves because they have no chance ever of matching the
productivity.The increasing debt in turn reduces their economic growth because of the money that goes on interest charges which grows in parallel with the debt. For the Eurozone to work to the German design the PIIGS need to take large annual reductions in salaries and pensions. This can never work in a democracy because who is going to vote for a party that guarantees reduced salaries and wages year on year?...Therefore to preserve the Eurozone PIIGS democracy has to go as it stands in the way. Instead the commission have to implement these reductions year on year and democratic government taken out of the picture. If people weren't people this answer would work but I suspect people will remain as people and the EU elite and commission will become increasingly unpopular as they implement the policies necessary to preserve the Eurozone year in year out. A corollary of preservation of the EZ is high PIIGS unemployment especially for the young. I suspect the best and brightest will leave to get a life. Once established they are unlikely to to the EU because of its ageing demographics. This has to mean high taxation for the declining number of working age.
The EZ is having the effect of making the EUs ageing demographics worse as
it's the top 20% or so who are the movers and shakers who tend to be the
creators of new businesses that generate wealth.
5 comments:
In an exclusive interview with The Daily Telegraph, Mr Volcker said that plans to force banks in the UK to ring-fence their traditional retail arms from "casino" investment divisions would not work in the event of a bail out. Ringfencing, he said, would only work in "fair-weather" conditions but not when banks were under pressure.
"In my experience ring-fencing is not terribly effective," said Mr Volcker. "It only works in fair-weather. But doesn't work in foul weather. They have already run into problems and they are bound to run into more."
The criticism comes less than a month after the publication of Sir John Vickers' banking reform proposals.
The report, which was aimed at shaking up British banking, opted for ring fencing rather than a complete separation of retail banking from riskier investment banking divisions. The cost of ring-fencing is estimated to be between £4bn-£7bn, but many of its critics question whether it can adequately cordon off retail deposits, which are implicitly guaranteed by the
Like the pension industry , banking regulation will not in my view work , all it will do will be to increase the costs , reducing the the returns . Create an army of auditors etc.
For The subprime mortgage scandal of bundling mortgages for triple A ratings , this problem should have been identified at a general level rather than the individual specific contract level and I fear increase regulations would apply at the specific level rather than the overall general level ( where is the common sense which would have shown the error of the risk assumptions made by the rating agencies ? instead of blind acceptance of the rating agencies .A change of culture is required , computer simulation works on the gigo principle (garbage in garbage out) and it would seem that too many bankers forgot common sense in a belief in the computer.Would regulations save this shortcoming? No
If someone is determined to circumvent regulations and controls by manipulation the controls would the system be strong enough to detect the manipulations ? UBS have proved that it does not ?
How can you legislate for stupidity ?
The way to stop banks needing to be bailed out is to not bail them out. That is what both Barclays and HSBC told HM Treasury.
Lloyds sat in the fence and were duly conned into buying HBOS whilst doing no due diligence because they were being strong armed politically. Funnily enough the Sottish turd that was running the country at the time wanted the, bailed out. I wonder why ?
Volcker is putting into place rules that will cost the industry a fortune to implement that he admits will not achieve what he wants. Spectacular.
He truly is Obama is spirit. A nasty spiteful socialist with a hate complex of anything that doesn't fit his own warped view of society.
I guess it all comes down to trust. Do you trust all bankers at all times to run the retail banking division entirely separately from the gambling banking division, with safeguards to make sure that when the gambling entity goes belly up the retail part will be completely safe?
I doubt if you do which makes the Vickers report seem all the more strange. I doubt if he is comfortable with his own findings, and I wonder why he came up with them.
So Volcker is quite right, if you want to take deposits that are going to have a taxpayer guarantee, you cant have a part of the bank that gambles. I am not even sure you should have a bank that does anything overseas either.
That doesnt stop these banks from taking deposits mind you, but it should be made clear that such deposits have no taxpayer backing.
The international banksters have singlehandedly worked to destroy our world.
Their greed and general ignorance really do seem to have no actual bounds.
For me though, they are doing 'precisely' what they are meant to be doing in the bigger scheme of things (i.e. bringing an end to this world of contradiction, compromise, dishonesty, and injustice).
And of course, being terribly ignorant as they are, they do not know that is what they are really doing.
In truth, all is actually on track.
For were thing not mean't to be as they now are, well, then they would not be as they now are.
The truth is, ignorance can always be relied upon to bring about its own eventual demise.
Otherwise, how could we (as a species) eventually be free of it?
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