Slowly, patchily and incomprehensibly, Zirp (Z=Zero) has here and there become Nirp (N=Negative). Even ten years ago, such an idea might have made a stir as the subject of an extreme satirical critique of neoliberal monetarism. The idea of paying a bank or a sovereign to “look after” your money because there was nothing worth investing in is moronism not monetarism. But the idea becoming normalised and accepted while elsewhere investors in the stock markets were making huge returns….well, that zooms past moronic, and straight through the station marked ‘Insanity’ without stopping.
At the most basic level imaginable, it doesn’t add up
However, just when you thought you had this madness tagged and recorded, somebody reminds you that the stock markets themselves bear no relationship whatsoever to economic performance, because QE stimulation (using profits made on your money as a taxpayer) has been employed to buy back dumb things the banks bought while they were busy trading with each other – when they should’ve been lending money to finance stimulation of the capitalist economy. So the large multinational marketing companies no longer need financial stimulation from the banking sector because the stimulation is really a way of saving the bankers’ arses – and the happy side-effect of that is free money going straight to the bottom line of Big Business, which in turn means rising share values in the stock markets and thus lots of money for multinational shareholders.
Confused? Let me clarify…..
There are companies in the UK and US now – lots of them, as it happens – who haven’t created a single new product, forged a market share breakthrough or even kept their existing customer base static….because all they need to do is borrow money made directly cheap by Zirp, and indirectly cheap due to QE – and, despite risible sales performance – use investment to profit on ‘hot’ cheap money set against projected stock market inflation.
Put simply: once the whole scam gathers steam (ie, almost immediately) a quoted globalist company can borrow money at near to 0%, invest it conservatively on the world’s bourses – and then plonk it onto the bottom line at a near-zero cost of sales. Zirp provides the cheap loan, and QE delivers the profit on Zirp loans.
Next time you’re assessing your share portfolio, drill down into the detail and look at what percentage of the bottom line is listed as ‘investment income’. Then double it – because you can be near as damnit certain that jiggery accountancy pokery has been employed (often under ‘extraordinary items’ or ‘trading adjustments’) to hide one simple fact:
The company you’ve invested in is selling less, at lower and lower margins, but making more and more and more profit from not doing profitable business
Now in recent years, we’ve all become aware of the cliché “less is more”. But what I’m describing here is nothing to do with over-egging puddings: no, what I’m writing about is the idea that gigantic omelettes can feed the 5000, but use just one little egg. Whether you’re a literalist Christian Bible-basher or not, that is a preposterous idea.
And do you know what the silliest thing about all this is? Barack Obama, Janet Yellen, David Cameron, George Osborne, Mario Draghi and Shinzo Abe are all depicted by the mogul-owned media as fine, upstanding people trying their hardest to deal with a difficult situation…following which – God willing – things will return to normal….while they retire to write million quid-earning memoirs, and become national treasures. I, meanwhile, will be roundly condemned as a non-violent extremist out to do down all the finest virtues of western liberal democracy.
So let’s examine for a minute or two their shining contribution to a situation created almost entirely by their own peers.
President Obama said yes, he could join the élite (we couldn’t beat them) and that’s exactly what he did – appointing Tim Geithner to do a job that should’ve been done by Elizabeth Warren. He has knowingly presided – a Democrat in the White House – over an interregnum during which US labour lost 9% of its wage value, and wealth inequity in America worsened on every measurable dimension.
Janet Yellen promoted the ludicrous idea that – having dosed up the patient with crack cocaine for six years – just a few months recuperation would suffice for the former addict to climb the North Face of the Eiger.
David Cameron told us he had a long-term economic plan, and that it was working. But it didn’t seem to be lowering the National Debt, or creating contracted jobs, or raising the hours worked/hourly rates of those jobs.
George Osborne simply lied about everything – his ability to cut the UK trade deficit, Britain’s ability to repay longstanding debt, the impact of politically-postured austerity on the economy, the evidence of UK ‘recovery’, and the dysfunctional imbalance of the British economy in favour of financial services. To hide his incompetence, Osborne changed all the measurement criteria and launched a government subsidised property-purchase scheme designed to make the younger voter feel rich.
Mario Draghi broke every law and rule in the book: he subordinated shareholders in Greek bonds, illegally bullied Cypriot banks, used underhand menaces to destroy Greece’s democratic processes, and launched a legally dubious QE process in the eurozone….despite the obvious economic failure of the previous 13 attempts around the world.
Shinzo Abe is an anti-freedom fanatic whose policies have led to the Japanese economy now consisting of just 40% genuine activity – and 60% QE. Can you imagine how completely barmy that is going to seem to our adult grandchildren?
Such grandchildren are going to ask those younger than me (I’ll be dead) what smug, middle America/England grandpa did while the lunatics were dynamiting the asylum. I’m not sure most of them have thought about a suitable answer as yet. But thinking time is running out.