Hungary pays off IMF debt, may eye EU exit

Many years ago when Alan Greenspan first proposed using monetary policy to control economies, the critics said this was far too broad a brush.  After the dot.com crash Alan Greenspan loosened monetary policy to get the economy going again. The broad brush effect stoked a housing boom.

When he tightened interest rates, to cool down the economy, the broad brush effect burst the housing bubble. The teaser rate mortgages unfortunately introduced enough of a delay so that cause and effect were too far apart to see the consequences of interest rate rises as they were occurring.

The end result 2008.  With this total failure of monetary policy to control an economy and a clear demonstration of the broad brush effect behind us, everyone decided to use the same idea after 2008.

Interest rates are at rock bottom around the globe, with trillions of QE pumped into the global economy.  The broad brush effect has blown bubbles everywhere. 

The underlying problem is that the global monetary system has failed with too much debt in existence.

The current monetary system has the following characteristics:

1) It is debt based, new money can only be created from new debt

2) It uses compound interest

Compound interest is an exponential function that, without prudent lending, will run away to infinity at some point.  When money creation lies with banks, there is always the over-whelming desire to increase profits by lending out more than would be prudent (their profit comes from the interest received).  The temptation of jam today, makes borrowers forget about the penury tomorrow.

The system relies on prudent lending by bankers who are purveyors of the debt products, e.g. loans, mortgages, etc ...

The Chinese economy has continued to struggle despite repeated efforts to stimulate activity, according to official data, raising the prospect of further measures from Beijing if the country is to reach its growth targets.  China's enormous manufacturing sector surprisingly contracted for the third consecutive month in October, while its services sector - the economy's growth engine - expanded at the slowest rate since 2008's financial crisis.  The figures raise new fears that growth in the world's second-biggest economy could fall below 7pc this year, after official data last month showed expansion of 6.9pc in the year to September. Weak demand in China has already had a huge effect on the world economy, potentially delaying interest rate rises and hitting commodity prices.  The country's central bank has repeatedly cut bank lending requirements in an attempt to boost growth and ward off deflation, but economists suggested the new figures could herald further measures. "As deflation risks intensify, a further RRR cut [the reserves a bank must hold against lending] before end of this year is still possible," economists at ANZ Bank said. Sunday's PMI figures from China's National Bureau of Statistics gave a reading of 49.8 for the country's manufacturing sector, below the 50 mark that separates contraction from expansion for the third month in a row. Markets had widely expected a rebound, with expectations set at 50..."Because of the recent weak recovery in the global economy and downward pressure in the domestic economy, manufacturers still face a severe import and export situation," Zhao Qinghe, a senior statistician at the NBS, said.  Meanwhile, the services sector, which has helped make up for disappointing factory output, saw its slowest growth for seven years. The non-manufacturing PMI fell from 53.4 in September to 53.1. China's official figures for economic growth, which are widely believed to over-estimate the true level, fell to 6.9pc in the third quarter of the year, the lowest pace of expansion since early 2009. This compares to a rough target of 7pc set by Beijing.

OOHHH - YESSS - Another step in the collapse of the euro....

Poland consolidated its rightwing shift on Sunday as exit polls showed voters had handed an absolute majority in its parliamentary election to Law and Justice, a Eurosceptic party that is against immigration, wants family-focused welfare spending and has threatened to ban abortion and in-vitro fertilisation.  The current ruling party, Civic Platform, conceded defeat following the first exit poll, published by Ipsos moments after polling stations closed at 9pm (8pm GMT), which gave the national conservative Prawo i Sprawiedliwość (Law and Justice party) 39.1% of the vote, putting it far ahead of Civic Platform on 23.4%.  Jarosław Kaczyński, Law and Justice’s chairman and the twin brother of Poland’s late president Lech, immediately declared victory...the result would give Law and Justice 242 seats in the 460-member lower house of parliament, meaning the party could govern alone and that its lead candidate, 52-year-old Beata Szydło, is likely to be appointed prime minister...“If Law and Justice end up governing alone with an allied president, Poland will become another Hungary,” said Prof Radosław Markowski of the Polish Academy of Sciences, a reference to the extremist rightwing views of the Hungarian prime minister, Viktor Orbán...Most of Europe is moving to the Right. Euroscepticism and anti-immigration feelings are running at an all-time high.  Even in liberal nations like Sweden where the politicians are grimly trying to maintain open door policies, the ordinary citizens are heading in another direction entirely, and showing their distaste for such policies by burning down refugee camps and (regrettably) going into schools and killing immigrants.  Merkel is becoming increasingly isolated and reviled - even by many German citizens.  If ever proof was needed that multiculturalism is a failed social experiment - we now have it writ large. I feel a BREXIT coming on. And it feels good....HAHAHA...Merkel should threaten Poland with Pexit until they learn to vote in the correct party.

Greece’s radical former prime minister Alexis Tsipras returned to office on Sunday night after his far-left Syriza party won a clear victory in Greece’s general election.  Despite a tepid campaign that saw Mr Tsipras’s personal popularity fall sharply, preliminary results showed the 41-year-old’s far-left Syriza party had won sufficient seats to form a coalition government in the coming days.

After a tight race, Syriza ran out comfortable winners, with initial projections showing them falling only five or six seats short of the 151 seats needed to govern. Greece's centre-right Independent Greeks confirmed they would again team up with Mr Tsipras, continuing their eight month coalition which is on course for a total of 155 seats. Terence Quick, a spokesman for the nationalist party (Anel) told The Telegraph that his party would form a coalition with Mr Tsipras. "Tsipras will be the PM and we will be the guarantee of stability," he said on the sidelines of a victory rally in Klafomonos Square in Athens.

THE ONLY HOPE  FOR GREECE IS TO LEAVE THE eu AND SCRAP THE EURO !!!!...
Once again I have to look at the Syrzia and ask 'What the hell was the point of this?' They were the ones that called for this election. My head is still trying to wrap itself around their ridiculous referendum. "We won't accept this deal. Vote no!" (all the while hinting that it would mean leaving the EU) ... "Okay, you voted no. We've turned downed that deal and accepted one that was much worse" (all because their floundering and referendum made the situation worse)
Its like they can't act with out approval from else where.