Although most commentators and practitioners involved in economic, fiscal and financial development will always try to suggest otherwise, the fundamental principles of diagnosis involved in assessing health or sickness are straightforward. For twelve years now, neoliberal globalist Bourse-funded capitalism has ignored the illness by denying or perverting the fundamentals. The Slog asks five key questions about the patient, and concludes he is dicing with death.
After returning from a long post-retirement holiday in 2002, I contacted the wealthier end of my friends and asked what they did about getting professional help with their financial management. A surprising number did their own, but three didn’t. So I went to see their advisers.
The experience literally changed my life. Although I’d had several banking clients in my career, for the first time I took a 360° view at what was going on – if you like, I studied ‘the system’ for the first time. Since then (with some refinement on the way) I have tried to keep going back to five core questions, and trying to answer them by access to the data and expert analysis available. These are the five:
1. Are the political regulators honest and objective?
2. Do they know what they’re doing when it comes understanding a diverse and devious banking system?
3. Is the production and distribution economy doing well in terms of real output and liquidity?
4. Is the energy sector showing genuine growth and profitable prices?
5. Do the stock markets reflect economic reality?
What follows are five answers from eight sources across the media spectrum. See what you think they’re saying.
aThe piece basically says that those in charge in the EU have personal and ideological agendas that force them to ignore econo-fiscal reality. Jean-Claude Juncker and self-appointed Troikanaut Minister Jeroen Dijsselbloem are in particular singled out as hypocritical bordering on crooked. The Slog has already run articles showing that the two main legislators involved (Schulz and Verhofstadt) are corrupt nonentities working on the mogul payroll.
Not only does this represent Reason #42 for Brexit, it also offers a loud “NO” to the first question. The extracts below paint a black picture.
‘…Juncker of all people, the very man who led Luxembourg for years, transforming it into an international tax haven, who is now presenting himself as spearheading the effort to put a stop to the tax tricksters sitting on the executive levels of multinational conglomerates.
But hardly a day passes in which the president of the European Commission, the EU’s executive branch, isn’t dogged by his past as prime minister of the business-friendly Grand Duchy. Before the end of this month, the European Parliament is seeking to approve the language of a report that will denounce all the dodgy arrangements Luxembourg’s tax authority has made over the years with multinationals like Amazon and Fiat — deals that served to push their corporate taxes down to almost nothing.’
‘Another important man at the top of an EU institution also now has some uncomfortable questions to answer: Dutch Finance Minister Jeroen Dijsselbloem. Even after ascending to his current position as head of the Euro Group, his country continued to block every call for change.’
Ian Fraser is a blogger specialising in financial fraud. I share some but not all of his politics, but I unreservedly admire his intelligence, journalistic honesty and accessible literary style.
One thing we do share 100% is the certainty that RBS should be facing fraud charges, and that we are not being given the full strength on the real (parlous) state of its finances. Three days ago Ian wrote an excellent piece on Steve Baker MP, a straight Tory MP with enough experience in banking to know a turkey when he sees one.
Again, these extracts are telling:
‘Baker said: “It is highly unlikely that RBS is in the state it appears to be in. … In such circumstances, the paying of dividends, which has been proposed, would be extremely unwise. I am extremely uncomfortable with the idea that we understand the true and fair position of RBS, or indeed any other banks, because of the imposition of IFRS accounting standards. Particularly in relation to RBS, that has meaningful consequences when it comes to thinking about selling the shares. There are also consequences that we should consider when any consideration is given to paying out dividends. I encourage the government to take all possible steps to establish the true position of RBS and the entire banking system, by comprehensively investigating the flaws in IFRS that have been well set out.”
In truth, RBS is but one bank among at least 30 around the world which is hiding un-netted derivatives and/or hugely over-leveraged. The system nearly came to grief in 2009 becuase of this core problem. Today, it remains unreformed but much worse. So that’s another resounding “NO” then.
I don’t always agree with this lot, but they’re well respected and sharp. In the article at this link, they are analysing what the OECD has to say about the real state of the global economy.
When the OECD uses phrases like ‘deeply concerning’, it means ‘desperate’. It does not buy into the Ambrose Evans-Pritchard optimism on growth, and point out that – while the past isn’t always a guide to the future – they rhyme enough to make global recession a certainty.
These extracts are damning of any optimism about the global economy
‘The Paris-based Organization for Economic Cooperation and Development says trade figures are “deeply concerning” because the stagnating or declining rates of trade this year “have, in the past, been associated with global recession.”
The OECD made the warning in an update to its world economic outlook Monday.
The OECD says in contrast to two years ago, when sluggish trade was blamed on advanced economies, now the fault centers on emerging markets such as China. As China transitions from massive infrastructure investment and manufacturing toward consumption and services, commodity prices have fallen, hurting exporters such as Australia, Brazil, Canada and Russia.’
In fact, take the con of all cons QE out of the equation, and my view remains that the world has been in recession since 2011, and is approaching a full-scale slump. Again, Evans-Pritchard is keen to point out that the liquidity/investment picture is improving, but there are many facets of liquidity, and for the new global driver China, the investment picture has gone into Italian fifth-gear reverse. In the chart below, Establishment publisher Bloomberg pulls all the threads together to paint another bleak landscape:
Real output and commodity prices are crashing and liquidity is shrinking. It has to be a third “NO”
Obviously, this one comes with the same health warning as an article emerging from Goldman Sachs about derivatives: RT does toe the Putin line, and does have a vested interest in claiming that the energy market outside Russia is also in deep doo-doo. Further, the US and the Saudis’ blatant crushing of the oil price is a factor.
But facts are facts….and the supporting source here is the IMF.
Whether one looks at the price of the Rouble, the mess the fracking sector is in, the decline in Russian energy exports or the plight of the Arabs, a good deal of the oil price has to be down to the demand factor by now. More disturbing observations:
“At the moment, a large share of fiscal and export revenues in the GCC come from oil. With oil prices having declined sharply since mid-2014, export revenues are expected to be nearly $275 billion lower in 2015 than in 2014,” she said, speaking at a meeting in Qatar with the finance ministers and central bank governors of the GCC.
“The fiscal and current account balances in the region are deteriorating sharply, with the fiscal balance projected by the IMF to be a deficit of 12.7 percent of GDP in 2015,” she added.’
Had the oil price collapse reflected only geopolitics, it would be back to $85 at the very last by now. But as of this morning, it sits uncomfortably at $47.13. The answer to Question 4 is “NOOOOWAAAY”
Today’s links at the search engine that allegedly does no evil speak for themselves:
Maybe the answer to Question 5 should be “OH NO!” although to be fair we are looking at a snapshot above. I think there are two clinchers here, however: look at what the markets do when the Fed says rates will go up “some time soon”; and second, observe the longer-term video rather than just the snapshot.
Whenever Janet Yellen talks rate hikes, the conversation rapidly turns to the Brics, and what the effect will be on them. Even with just tapering (and it isn’t really tapering, is it?) we see Brazil and China requiring huge and direct stock market support from the central bank just to avoid disaster. If the world economy really was “gearing up for the next leap” – as one lunatic rentagob on CNN said the week before last – nobody would be nervous. Everyone is very, very nervous.
As for the bourses, what we see is margin call squeezes requiring support from both the Fed and the PBOC in the US and China, commodity prices tumbling, out put falling and trade contracting. Even with the POBC hurling Yuan at stocks and passing draconian anti-selling legislation, the market has seen a massive correction….but still not what the reality would be without that.
Very few reality light-bulbs in this room. A momentary attack of China syndrome in September, but the US opinion-leaders look as if they’re still in the dark. Hard to see the light bulb, of course, when you’re standing under a Bull Elephant.
They aren’t really, of course: they’re just milking it for as long as Zirp stays in place. Are the bourses reflecting real growth in manufacturing, trade, banking solidity and genuine recovery? The answer has to be “NO, NO, and thrice NO”.
So: five NO’s on the Slogmatron, all its red lights flashing, all monies out of the markets, pension ringfenced and unexposed, buying assets like there was no tomorrow. I’ve been that way for two years now, but that’s just me: I tend to be early in and very early out. So I lose some money along the way: but how much faith do you have in fiat money? Do you think the gold price reflects reality? How much longer can Deutsche Bank avoid calamity? Do you think southern English, Sydney and San Francisco property prices are grounded or groundless?
We are heading for a Crash, and the speed indicator on ‘when’ will be the next FOMC minutes (assuming nothing else goes bang beforehand). If Yellen puts rates up in December, it’ll be obvious by February that confidence has gone. If she doesn’t, then confidence will be eroded during the First Half by events in one or more of Brazil, China, ClubMed, RBS, Deutsche Bank or Syria.