ANALYSIS: Not interested in Japanese zeros? You will be when they start bombing the World


mesnipIt may have looked, last Tuesday, like just one more Japanese fiscal and economic stimulation crisis. But in reality, it has revealed that the monetary toolbag is empty. From here on, faith in government bonds must decline. The game’s up for financialised globalist neoliberal economics: fiscal disaster and hyperinflation lie ahead unless commitment to this mad model ends right now.

The News

With Japan’s Shinzo Abe going cold on bond-buying by the BoJ (and wheeling out more QE) there was a huge bond sell-off in Tokyo last week, in which yields spiked back to near-positive territory. With many investors now beginning to see the eurozone as a parallel hopeless case, this had a knock-on effect upon European interest rates.

A brief history of mad foreign debt investment motives

All over the world, increasing numbers of investors are holding debt that offers negative interest rates. Ergo, they are not really investors, because they are getting no return. In fact, the inability to capital to generate a lending return means that, officially, neoliberal globalism is no longer “capitalism” in any meaningful sense.

In some cases (notably Japan) the Zirp/Nirp bond investors are loyal domestic institutions doing what they perceive to be the right thing; in Japan, they hold about 29% in debt bonds. But in one additional case, ‘they’ are the Bank of Japan (BoJ) with a further 30% of the total bonds. So as well as hoovering up a whole pile of other dysfunctional ‘investment’ crap since the QE programme began in 2013, they account for almost a third of sovereign debt.

Thus, three-fifths of Japan’s ever-growing debt is owned by Japanese institutions. This – and the BoJ’s dominant role as a buyer in particular – is probably the cause of the policy failure. The idea was to drive yields lower to the point where investors left the market to invest in other assets that would more directly support growth and inflation – and reduce borrowing costs for business.

But even with negative rates, the bizarre view held (by investors who aren’t really investors, because they lose money on the deal) is that both the bonds and the currency are a safe haven…..because the BoJ is so heavily involved.

Now, Japan is left holding an expensive Yen that slows export demand….and borrowing costs that haven’t improved. And inflation going down, not up.

So Prime Minister Abe has returned to his favourite failure, QE. Last Tuesday, a new programme got under way. The markets were underwhelmed at first.

But then, when the more dingbatted traders finally caught on to the fact that Abenomics had gone full circle back to QE – effectively, from a newly failed policy to an old varietally failed policy – frenzied selling of Nipponese debt went viral.

This is what Abe had wanted them to do all along. But thus far (unless I’m missing something) what they haven’t done is invest elsewhere in Japan.

Effectively, Japan now has nowhere to go.

However, once you bring in the other major players, it gets a lot sillier. Because Japan also owns 7% of US sovereign debt bonds. Alongside China, it’s the biggest holder of US debt. These two buy US debt bonds in order to keep confidence in the US Dollar high, thus making their own currencies more export competitive. Except that (as we’ve already seen) the Japanese currency has strengthened since Nirp was introduced there.

The Chinese themselves are also covertly back down the rabbit hole of QE, with the Government lowering taxes, while continuing to spend freely on propping up the Shanghai index and improving the country’s infrastructure. But the relaxed bank lending there is heading out of control, with many banks now facing zero liquidity reserves in case of non-performing loans…..of which there are going to be a-plenty, because there always are.

So Beijing will have to print money in order to bail them out. That could reduce the Yuan’s value (a good thing) but also deter investors in the economy (a not so good thing).

In the US itself, both the national debt and the budget deficit continue to rise. Here too, the biggest buyers of debt bonds are domestically based: chiefly US government agencies, who use their excess income to buy US debt, and thus get a yield. But the yields are now close to zero. And the more China and Japan invest in the debt to benefit their currencies, the higher the demand and thus the lower those yields will be.

It all looks cosy for the US, until you consider that

  1. Almost half of US States are bankrupt
  2. Managing the US debt depends on infinite Zirp rates around the world
  3. Following the latest US jobs data, the Fed is now under pressure to raise rates
  4. Raising rates would put Emerging Nation holders of dollar denominated debt into trouble they don’t need.
  5. Recession among EMs cutting oil demand further would make the US oilcos’ financial position unsustainable, and increase the US trade deficit.

And so we turn to EM businesses with high dollar denominated debts. Because when US borrowing rates rise, so do the debt bills of struggling emergent companies.

Three months ago, Fitch Ratings showed that total private-sector business debt in big EMs rose to the equivalent of about 78% of gdp in 2015, up from 71% at the end of 2014. But just one tiny Fed rates rise was enough (said the Bank of International Settlements) to bring that lending to a halt in Q1 2016 among the seven Big EMs otuside China – Brazil, India, Indonesia, Mexico, Russia, South Africa and Turkey.

If EM business can’t borrow to invest and expand, then it can’t take on new staff. In the context of global recession (which is what we have, but it dare not speak its name) unemployment will almost certainly rise….and along with it, the cost of unemployment relief.

As Britain, France, ClubMed and now some Arab nations have rapidly reduced (or even abolished) certain dimensions of welfare, that will lead in turn to desperation among the poor. Desperation breeds anti-systemic radicalisation.

But desperation also applies to investors looking for yield.

And so – as Q2 came to an end – by early July, a whopping $11.5 trillion in bonds were trading at negative rates, with 58% of the Barclays US Aggregate Bond Index trading below 1%. So the dried-up EM investment returned to being a flow, and then a boiling river thundering through the valleys.

This was partly due to the Japanese move, plus copycat reductions – the latest being Carney at the Bank of England. Ironically, having now abandoned bond buying and gone back to QE, however, Abe set off a selling spree  there….I’d lay money that most of it went into EMs.

Apart from the bewildering chop-and-change mayhem, there are three problems with this:

  1. Given the economic state of the issuers, EM bonds are higher risk
  2. It leaves Japan with nowhere to go, and means yet more faith in monetary solutions has been lost
  3. As The Slog has been saying since 2011, if needs must, the devil will drive up rates/yields.

What the news really means for neoliberal globalism and you

As I posted last week, there are at least 14 trends that could turn global slump into catastrophic meltdown in the coming months. But the one that most obviously ran our of road last week was Abenomics in general, and negative rates in particular.

What we are looking at here is a systemic flaw in neoliberal  globalism. The pressure is on to get borrowing rates back to normal, and by so doing get – among many other things – better interest rates on their capital for older, debt-free consumers, and better margins for banks.

The risks of raising rates for world (especially EM) business are nevertheless myriad. The longer the rate dithering goes on, the more risk-positive financial advisors and their clients get for increased yield on the investment. And the more entrenched the global slowdown becomes – and alongside that, EM fiscal blows become more pressing – the more sovereigns desperate to plug the gap by borrowing will offer higher yields to attract the lenders.

For just over five years now, I have been saying that – with no World Central Bank to regulate all world economies – globally linked mercantilism (which can never be perfectly “in step”) must always lead to what we have today: a growing number of countries mulling higher rates – in effect, breaking ranks on Zirp.

Those countries, it has always been clear to me, are likely to be Brics and other rapidly emerging economies: that is, Sovereigns facing a fall-off in First World demand for EM products and services.These adolescent economies need money to keep workers happy and investment to raise their game when it comes to competing globally.

The pressure to chase higher rates comes from insurance and pension institutions – plus the vast proportion of the world now over 55 who have lost billions in rates income since 2009.

As and when Janet Yellen at the US Fed raises rates again, she’ll continue to be between two stools: not enough of a rise to produce economy-stimulating increases in pdi, but enough to make the EM position more desperate still.

At best, what she does will make no economic difference; at worst, she will make fiscal positions worse globally, and thus enhance the likelihood of further rate rises there.

We are very close now to the potential for Russia, China, Japan, Mexico, Brazil and Turkey to start competing for economic investment and fiscal ‘management’ borrowing. There are already signs that the four-decade Bull market in bonds is finally running out of steam.

The domino-effect that will impact upon all of us isn’t hard to foresee:

  • Rising Japanese yields exacerbate ECB/ClubMed fiscal crises
  • EM rate rises produce further drying up of eurozone investment
  • End of oil rally makes Russian fiscal position worse, spikes bond rates
  • US/UK flow of cheap borrowing reduced
  • South American EM economics worsen, increasing exposure of central/southern EU countries to non-performing loans – notably France and Spain
  • Likely eurobank collapses: Deutsche Bank, at least three Italian banks. Produces inter-bank liquidity freeze – exacerbating already parlous eurozone situation, in turn likely to make Spanish cajas unsustainable
  • US/UK deficits and Nat Debts increase at an accelerating pace, creating new unemployment and further reducing market for Asian goods
  • Chinese fiscal crisis, huge slowdown in raw material imports
  • Australian mining shares panic produces huge stock and property market corrections alongside complete collapse of Shanghai index
  • Global stocks selloff begins in US, UK and Europe
  • Too big to fail becomes too big to bail.

Neoliberal economics can only work if the mass consumers it needs become poorer.

They have to be rendered poorer because the connected, globalised market demands fierce mercantile price competition.

That competition between infected debtors is the direct result of globalist connectedness.

The poorer mass consumers become, the harder it is for them to consume.

The more the economic growth cycle thus fails, the fewer the welfare benefits the poor can be given. Even welfare rights – like State pensions – come under attack.

Neoliberal globalism has only lasted this long as a dysfunctional model because every company, institution, bank and citizen has been showered with cheap money. That vast ocean of debt has been funded by the electronic creation of unreal money, and the maintenance of zero rates that simply exacerbate the growing penury of the rapidly ageing older generation.

One day, the very increased rates that attract yield-starved investors will render those business and sovereigns who offer them too big a risk.

This is now a vicious circle heading inexorably towards hyperinflation.

Enjoy your Sunday lunch.

You read it here first: Why Nirp always looked like desperation

53 thoughts on “ANALYSIS: Not interested in Japanese zeros? You will be when they start bombing the World

  1. another good appraisal JW. neoliberal economics and most get poorer and banks turn into black holes.. this thing is going round faster and faster.. how long before we move into a very different stage??

    Liked by 2 people

  2. Perhaps they can keep things going long enough for a popular left wing movement to emerge and take power in Europe, then the collapse can be triggered and the populists can be blamed.

    Liked by 1 person

  3. On Saturdays Daily Telegraph, Ambrose Evans -Pritchard expounded on the need to invest in UK infrastructure projects by direct Govt investment, to the tune of a Trillion sterling. He surmises that now that interest rates/borrowing costs are low, this is a good time to stimulate the economy.
    He failed to mention, that it is pointless to invest in infrastructure, if the labour,.material resources and equipment are not of UK origin.
    This sourcing of home grown resources ensures that the wealth effect is distributed and employment created.
    He also omitted to mention, that it is Productive Industry investment that creates wealth and long term employment, with its distributive effect.
    This virtuos cycle is very much similar to that proposed by Jeremy Corbyns Labour Party.
    In economic circles it is known as Overt Fiscal Intervention.
    It would appear that AEP had strayed off the ranch of his handlers. The article was soon pulled from the online edition.
    It would be calumny to suggest there is an alternative to the failed QE policies of Central banks. The peons must be kept in ignorance.
    Central Banks version of capitalism,has failed and it is high time that its high priests of the IMF,World Bank and BIS were consigned to the trash can of history.

    Liked by 5 people

  4. It’s all much like when one flushes the lavatory ….. and I suspect that this is going to create a blockage of monumental proportions.


  5. it does make me laugh the position the neoliberals have put themselves,they can’t have alternative forms of economic models because i they would work better ii it would hasten their collapse but it means that when the final curtain falls they have no one else to blame!(although listening to the MSM you won’t belief that it will all be labours or the lefts fault) keeping unelectable Corbyn is a master piece,they need a Labour party that is electable to collapse it on their watch! (even though new labour is neoliberal) changing eduction finance from grants to debt did two things it showed the money wasn’t being generated in the economy to pay for it and it allowed them to print money and money that in effect can’t and won’t be paid back.


  6. ps the left have the problem that if they implement their policies it will collapse the neoliberal system,so they don’t really want want power either!

    Liked by 1 person

  7. All nations are in the same position just some more advanced than others, some if they can manipulating everything to pretend they are just fine to keep it all going. To keep it all going for one purpose though, the those most entitled in power to keep the freebie gravy train … failure is therefore not an option.

    Now Japan has a good 15 years + headstart on us (since the reality check) although I am not so sure if this is not just a contrived truth. The UK I feel do have the better liars and thieves good at hiding the unfunded liabilties and actually point blank will never discuss anything that would reveal it, such as a whole load of ladies from the 50’s are finding out.

    I also reckon the way they are controlling the system, Carney last week being a prime example and yet more QE is going to fuel the radicals far faster than any terrorist atrocity. On top of that what is the most lethal concept for an ordianry person?

    Would it be a terrorist? Or being forced into poverty by your own government? At the moment the terrorist concept shades it but only just! Give it a few years you are going to feel the government is your enemy much stronger and the terrorist just mere light entertainment.

    WW3 as the finality of the end draws near will be the last ditch hope by UK elites although I don’t reckon they realise there will be alot of people wanting them strung up for all they have done. You chose which side you are on and it is not the side of the population.


  8. https:/
    Mr Ward, in spite of comprehensive and credible in depth analysis from the great Mr Mike Shedlock, you are forecasting hyperinflation.
    For now, we can agree (I think), that central banks will respond with a vengeance to deflation threats, and gold has been and will be a beneficiary.


  9. John,
    Minor point, but the last time I read, the biggest holder of US debt was/is the Fed, not China or Japan.



  10. I may agree or disagree with this list and I am agnostic on the end of the bull market in bonds but one thing is certain. When interest rates really start to rise then everything changes.

    When I say really start to rise I mean against the wishes of the powers that be, or in other words bonds enter a long term bear market.

    An addendum or complication or hedge on that is it’s possible that soverign rates rise above the rates of major corporations. Which would muddy up what the results would be. I think it has always been the plan for corporate debt and equity paper to become the ultimate store of value. One can suppose the masses would rise up like with Brexit but so what. At least so what until anarchy rears its ugly head.


  11. It seems absolutely clear that the outstanding debts everywhere can never be paid off, and that ZIRP and NIRP are essential tools to keep the financial corpse from catastrophic rot. Any significant rise in interest rates will provoke an immediate crisis of defaults by debtors. If the US Federal Reserve raises interest rates, the US Dollar will rise and non-US entities that owe USD-denominated debts will face the double whammy of higher interest rates and adverse exchange rate costs. So, if central banks are to maintain any illusion of life in the financial corpse, they must extend and pretend with more QE and eternal NIRP and ZIRP. But what if the dreaded Black Swans appear and the house of cards collapses?
    IMHO, the key questions are: 1. Who will end up holding the creditor’s end of the debts when TSHTF?; 2. Will that creditors end up owning everything or will the debtors repudiate the debts and escape the bailiffs?; and 3. Will the 1%/One Bank end up owning and controlling the developed world like Medieval Lords while the 99% are relegated to their former status as serfs?

    Greece is the model.

    Liked by 1 person

  12. Al Tinfoil
    the problem with owning everything is being able to keep everything secure how on earth do you provide security for everything unless you give everything or almost everything away the secure what you really want or need?


  13. Debts or no debts, Japan, China – much of asia and parts of Europe still have functioning, productive economies.

    The problem for Britain especially – and to a slightly lesser degree, the US – is that their government income is well below zero, and their economies are no longer productive in terms of industry. Both Britain and the US have consciously exported their industries to Asia with the aim of higher profits for the owners. Their economic woes are entirely their own doing.

    And I do know that the MSM bangs on about Deutsche Bank as the bad boy.

    But that sells papers in countries whose economies are troubled…

    Liked by 2 people

  14. Fiat currency and Treasury bonds are just pieces of paper.Their value is enforced by Govt edict and power of the law
    When the SHTF, only tangible assets will have any value. We are fast approaching that point and the can kicking must inevitably end, probably in chaos.


  15. moi luvley woif says that only the oiro will be in trouble because the yen and the dollar and the pound can print forever.
    oi agree with this and then we and the us have fracking which makes us the new petro currencies of the future toims.


  16. johnson
    take that grass stalk out of your mouth and answer this:
    Which is heavier a ”tun of gas or a tun of devon clotted cream?”


  17. @Gemma True Gemma we have been,eyes wide shut,exporting our own jobs in the quest for higher profit , but let’s not forget our collective culpability in our desire to purchase cheap. As we sow,so shall we reap.


  18. Lampitt chicken or the egg! well i remember the tax cuts to the rich that allowed them to invest abroad not keep the money in the system that created it! this forced i wage restraint in these countries and ii cheaper more profitable goods from abroad! which meant on wage restrainers having to shop for cheaper items locking everyone into the spiral downwards until there was no returns on investment because there couldn’t be,their is a big difference between claiming that people wanted bargains and people needing bargains too survive! am afraid 90% of the blame is tax cuts to the rich not the poor hunting bargains!


  19. Lampitt

    “our collective culpability in our desire to purchase cheap”

    That is where conscious consideration comes in, doesn’t it? It was a while ago that I posted a comment to the effect of yours on a different blog, and the howls of derision that arose would have dampened Titanic’s siren!

    There are things one cannot buy without slave labour being involved at some point, electronic equipment for one. There are things we can all do that will support the local economy. For example we have two bakers in our village, buying from them is a choice one can make. Not buying from supermarkets is another – albeit that there are eight within 5km of where I live. The kind of regulations that would have stopped British money leaving these shores as mentioned by the Ghost are in force here in Europe. It means the big hypermarkets can’t suck the blood from small businesses.

    Which they can do because they’re cheaper…

    … but then, so are Aldi and Lidl, aren’t they? Britain really has been hoist with it’s own petard!!


  20. I looked in vain for a certain word in this article but it isn’t there. It’s the biggest word in the financial word and often avoided because numbers suddenly have an incomprehensible amount of zeros after them.


    It’s something you can only do with bank money which mimics state created cash but isn’t the same thing. It’s 97% of all money in circulation so it’s little wonder the banks consider it there money not ours. You leverage your capital via derivatives and in todays crazy world they amount to (guesstimate) 79 times the entire worlds GDP.

    So, basically the scary number you first thought of needs multiplying by 79. Fifty billion euros to bail out Italy’s banks? I think not, estimates vary from 1-3 trillion euros, but being the optimist I am I reckon a round trillion should do the trick. It just needs the sovereign state to create the money… Ooops Italy uses a foreign currency and can’t create money so they just need to borrow it from their banrupt banks instead.

    Neo liberalism really is that stupid. It needs rich consumers and badly paid workers. It needs monopolies, the police and judicary and above all the politicians, to usurp the sovereign nations money supply. capitalism was never meant to work like this and never has.

    Nick Hanuer understands and I probably listen to this ted talk at least once a week, I hope you listen too if you haven’t already

    PS. Goldbugs, owning gold will not help you if TSHTF.


  21. How have I become Anonymous? I’ll bill40 you the man with @. this is without doubt a conspiracy of worldwide proportions… (Dons tinfoil hat and continues for 27,876 words…).


  22. Bill 40 (posting anonymously)

    ” You leverage your capital via derivatives and in todays crazy world they amount to (guesstimate) 79 times the entire worlds GDP.”

    Please remember that most European banks – and this includes Deutsche, the Slog’s own bad boy – have wholly owned subsidiaries in London. This allows them to spin the plates that are known in the financial world as derivatives, because they aren’t allowed in most European countries any longer.

    I can understand the British government’s worry at having to bail out British banks that have Italian or German names, but it might just come to that if these London-based subsidiaries shout loud enough.

    After all, there are dimwits around here who think that Britain can print as much money as it likes – for all the reality of their not being able to, such as not having any money to invest in Hinkley Point. Britain might have to print more money to keep the City from eating itself alive.


  23. gemma ( not Höchenveld BUT Hoechenveld )
    ‘a lot cleverer than that’
    not sure how you can validate this remark.
    British staff, British farmers, British customers…..HQ in NUNEATON ENGLAND, currency GREAT BRITISH POUNDS£ – german name. Am I missing something?


  24. I’m told Aldi and Lidl work on cost plus as opposed to how much will the market stand and still private owned of course.


  25. If german strategy is ‘cost plus’ that is short term advantage leading to price war, supplier war, and ultimately third world war.
    No surprise there then….


  26. To add to my earlier post if the neoliberals had invested more fully in foreign countries that wouldn’t have been so bad! our 30% drop in wages would have boosted many other countries and led to markets we could export to,were people would see their country expanding(rather than forced into migration),you will hear the neoliberals bad maths once again claim that those countries wages have rising 30% or even 50% ,but 30% loss on a £1000pm is £300 a 50% rise on £100 (any many are/were on less than £50pm so actually rise to only£75)is £150 ,So where is the(generous assumption) £150 difference gone,OH yes into profiteering and hence the failure of the system!


  27. Hoechenveld

    “Am I missing something?” Yes, you are. What’s more, it’s standing in front of you when you shop at Aldi or Lidl.

    Which is why the established supermarkets are having a hard time: they can’t compete with discounters who have stripped the skeleton bare of any innecessary bones – like the skull and backbone. Who needs brains and who needs courage when all one needs is to get things done? They have stripped out all the different brands and sell only their own: reducing the range from (say) 40,000 items to a more reasonable 10,000 has obvious advantages.

    When it comes to the costs of supplying them, that is.

    The warehouses can be smaller, the computer systems less complex, the shelves themselves stacked with opened boxes that have arrived direct from the lorry. It all saves money, it all means fewer people that need paying – and that feeling of loss that a businessman feels when his money does not buy him something tangible and real.


    “If german strategy is ‘cost plus’ that is short term advantage leading to price war, supplier war, and ultimately third world war.” Who’s been believing what’s being peddled in the the mainstream newspapers? Just remember who is sending four (five?) divisions of their army to the now occupied Baltic states… and it isn’t Germany.

    Still Germany gets the blame because it sells papers, dunnit. They’ll blame Russia for the war, too… just as they did the last World War; after all, without US funding, Hitler wouldn’t have gotten anywhere in German politics.

    Lampitt “OTC derivatives ? Also banned ? Cos they’re unregulated aren’t they?” It’s how the City keeps the plates spinning. It all adds to the British GDP figures, and who cares what they’re made up of just so long as they’re better than last year’s. Spinning plates makes munny for big, greedy bankers who don’t pay any taxes.

    It’s why Deutsche’s derivatives are held in the City …and not Frankfurt.


  28. Actually I find Aldi crap these days. Their veg has gone downhill. I prefer Norma here in DE. Mind you the tramps shop there also. I don’t care.


  29. gemma
    Thank you for your comprehensive analysis of this difficult retail environment. I am impressed with your knowledge and wonder if you may be available for an important international assignment that I need to fill before the end of october.
    How do I contact you to arrange an in depth meeting?


  30. Gem’s, I totally agree with you that the fine German bankers and industrialists always act honestly and for the greater good of society. It must be the English and US fault that they practice dishonesty in the same markets.
    I mean, the Germans would never do anything that would be detrimental to their fellow human beings. You need to get your rose tinted specs off and grow up.
    Without the British, the Germans would be living in a Nazi utopia or under the control of the Russians.


  31. Anonymous.

    The Americans tried to buy the German elections of 1928, 1930 and 1932, but for all the money they poured into their favourite party, Hitler still couldn’t win control of the government. He would have been able to with the crazy voting system the British use…

    Take off your mirrored glasses, Mr Anonymous, and realize that your government – the British government – is being told what to do by the banking mafia.


  32. Gems, there was I under the illusion that Hitler gained power! Thanks for putting me straight that he would have done so with first past the post.


  33. Off topic

    John are you gonna comment on the Dem/Rep VP’s?

    Being a cynical person i think this election is secretly more about the VP’s. I don’t see either Hitlery and Mr Fart holding their Presendencies for two long. Who’s next in line?


  34. Anonymous,

    I posted a comment on this site indicating the manner by which Hitler seized power in Germany.

    <blockquote.I would like to take a look at Hitler’s rise to power, as there are – how can one say? – footprints of a certain kind at a certain point in the proceedings.

    In 1928, Hitler’s party achieved 2,6% of the vote, which gave him 12 seats in the Reichstag. It is a extremely important to note that he got seats with such a small proportion of the vote, for it could not have happened in Britain! Nigel Farage, gained 12,7% of the vote… and only one seat where he should have had around 75. The Liberals with 7,9% of the vote got 8 seats (they should by rights have had 51). These incongruities reflect a voting system that is not fit for purpose. But that is what democracy in Britain is all about.

    German democracy is not British, and never was. Which brings me to an important issue: Hitler only used democracy to further his own ends (and please do not think this of German politicians today, expenses-defrauding MPs they most certainly are not!)

    In the run-up to the elections in 1930, there was no small amount of violence, caused by the Nazis themselves and others who might (or might not) have been linked to them. Just as is the case in the USA today, such things can be employed by those who lack any scruples.

    In the succeeding elections, 1928, 1932 and November 1932, the Nazis increased their hold on power. In 1928 they got 18% of the vote, making them the second largest party in Germany. That will give you an idea of how confused the situation was, and given the amounts of money piled in from the USA (albeit that you cannot trace this kind of political funding) it’s not so surprising that Hitler was able to sway the voting public. In the 1932 election, the Nazis got 196 seats and 37% of the vote. So this wasn’t just the German middle classes who brought him to power by any means! Hitler would have gotten nowhere without the massive financing from his friends – and remember that Hitler went as far as to give Henry Ford a medal for his services to the Nazi party!

    Even so, 37% is not a landslide victory by any means, and certainly not the triumph where Thatcher, who had a little over 40% of the vote and a majority of 160 seats… compare this to Merkel at her prime, where she had 42% of the vote (CDU + CSU) and had to form a coalition government.

    Thatcher had no need to thwart parliament because the election system itself was broken.

    The upshot of all this meant the only way for Hitler to achieve power without a coalition government was to seize it.

    Which is what he did.

    Hitler was shackled by democracy, which he smashed in order to achieve his aims.

    Had he been in Britain, there would have been no need to; the election system would have given him power without any need for fraud. With 37% of the vote, there is every chance that he would have had a majority of the seats in parliament… what is certain is that he would have had enough seats to form a minority government.

    The British election system is in this respect, undemocratic at its very heart. Hitler would have loved it!


  35. ‘The game’s up for financialised globalist neoliberal economics: fiscal disaster and hyperinflation lie ahead unless commitment to this mad model ends right now.’ Not as far as its proponents are concerned. There is no limit to the amount of QE that can be implemented as Carney showed last week. Central banks can just keep on buying government debt as fast as the governments can issue it. And the new mantra is already being prepared! ‘Invest in the infrastructure needed to generate growth’. Carney and his like believe that they can control inflation without it getting out of control. They believe that they can use negative real interest rates to reduce the real value of their debts until the global economy has returned to equilibrium.

    Who is to pay? Depositors and pensioners of course. For those savers who have survived living on a diet of ZIRP will have to get used to the reduced rations that NIRP implies. Future pensioners had better get used to corporates defaulting on their pension fund commitments. The current pension fund deficits, which are down to QE, will never be made good, because, if corporates were to do so, they would cut investment and tip the world into recession. Today’s politicians don’t care. It’s tomorrow’s politicians who will have to come with the excuses. No doubt someone will think of: ‘We’re all in this together!”


  36. For most businessmen like Tom, their competition is the biggest challenge they will ever face. Today’s marketplace is like dog eat dog, big fish eats little fish, and any little fish will be swimming for its life. It is a real headache.

    In days gone by, things were nicer, more peaceful and there was less competition. Profits were higher, too.

    Tom has a business making nuts and bolts. Not your ordinary nuts and bolts, specialist things made of high quality steel and aluminium for military equipment manufacturers.

    The kind of thing the Europeans once excelled in. Now it has to be wondered how the Germans still manufacture these things, ordinary nuts and bolts made of chrome steel, given the stiff competition in the marketplace. What with China being so cheap, and the difference in quality imperceptible to Tom, he hasn’t a clue how they’ve done it.

    Mind you, Tom only makes them, he’s never used a nut or a bolt in his life.

    Even so, the Germans have to meet their customers just like he does. For Tom, it’s always an unpleasant experience, because they always want cheaper prices. When everybody’s selling the same thing, competition is going to be tough. It’s why Tom chose to supply the military industries, they want real quality. But they still want a keen price.

    What can Tom do? All he can do if he wants to maintain his levels of profits is to demand that they buy more. That way, he makes the same profit he did last year, even if he has to supply twelve pallets where he used to supply ten. But he can ask his transport company to deliver the twelve pallets for the same price as they did ten, so he can at least expect to make the same money. Of course, he will do this in the friendliest of ways, after all, they’ve had a friendly relationship for near on twenty years.

    P 603i Eddie Stobart TransportOh. They were bought out last year by Eddie Stobart, which means getting a good price is going to be harder now. Not just a round of golf at Tom’s club and a couple of whiskies at the bar.

    It was a response to this news, back in January now, that Tom asked a business advisor to take a look at his firm. They weren’t cheap, but they came with wonderful references from some prestigious national firms like Woolworths, HMV, Motor World and Brentano. Although Tom didn’t know who the latter was, he asked his wife Lizzie who they were, and she said that they’d been a shoe shop on the high street until last year.

    To Tom, this sounds good: they’d been in the high street, so the business advisors must be doing a good job. In the fierce world of competition, Tom needs a little help.

    In the report they sent him on the 15th of March, he was surprised, no, delighted to read that he was getting things right. They praised his moving his production to Shenzhen in China, his handling of the transport logistics and the manner in which he dealt with sales. The attached invoice was a lot less than they’d estimated, so he marked it for payment so that it would go through his accounting process faster.

    In fact, Tom was so pleased that he took the afternoon off and went to play a round of golf with his friend from the transport company, who retired in February.

    P 603i Tom’s Nuts and Bolts 2What surprised Tom was how friendly Steve was to him. Must be something to do with having sold the business and the lack of stress. Something for Tom to think about, what with the stresses of dealing with his competition. That thought alone meant he missed his stroke, with the ball flying off towards the rough.

    As they are searching for the ball, buried in the long grass, Tom really wonders if he should sell up. But then, the report was so filled with praise for his business methods that he finds it impossible to imagine selling his business. The thought of retirement – at the tender age of fifty four? After decades of owning a successful business?

    Later, as he sips his whisky in the warmth of the club bar, he remembers with horror, the missive from the Inland Revenue. It was a demand for payment, for his 2013 taxes. It was a lot of money, which Tom simply doesn’t have. His profits are slim enough as it is, without the tax authorities snapping at his heels.

    A funny thought springs to his mind. So funny he almost spits out the whisky he’s just sipped. Steve gives him a strange look, but to Tom it really was funny. Tom keeps quiet, but inwardly muses how funny it would be if he could just steal the products to order, rather than having all the fuss of production.

    It would be a solution, and one that is far better than retirement. Tom’s mood brightens, what with profit margins what they are, he could improve his profits by around fifty percent if he knocked off the odd container at Felixstowe docks. Who’d know what happened to the container? Was it washed overboard? The insurance would cover the costs, so nobody loses.

    What’s more, Steve’s in the know… they could go into business as a partnership, and Tom could keep all the money from the sale to Stainless Consolidated. They’ve been pressuring him for years, now. That’d be a solution to his tax problems, too.

    Tom puts down his empty glass of whisky, asks Steve if he wants another. It’s nearly six, after all. Maybe some dinner too?


  37. gemma
    ”Not just a round of golf at Tom’s club and a couple of whiskies at the bar”
    So this is an extract from the story above taken from your website.

    Hmm, I may be having some need for more time to think about this. You have a wonderful imagnation my dear but I’m not sure that doing deals for me in the hundreds of thousands of pounds would help me sleep at night – if you don’t take that personally ..
    Leave it with me, I can contact you on your website if needs be. Take care now.
    Kind regards,
    Larry Hoechenveld


  38. I live in Germany and I can tell you the richer people are the downright tighter they are also. It is no paradise. As pointed out above their freedom and standard of living came from Anglo(US blood.


  39. Jeremy Stocks,

    if you read my comment above, you would know that Germany’s freedom and standard of living were severely curtailed by floods of US money in the early 30s.

    The US crash of 1929 – caused by the American’s ability to form that toxic combination of greed and poor regulation – didn’t exactly help the German economy, did it? That aided the plans the US had for the leadership of Germany.

    The British and American blood you speak of would have been saved had you guys kept your flies done up.

    Larry, darling.
    When men are affronted by their need to compete with each other, I know it’s the moment for them to call time. Sell your business to the highest bidder and buy yourself a place in the sun. You’ll not regret it.

    Most men would prefer to tell themselves that they are right and will drive their business into the ground rather than admit the reality of what they are doing. You’re probably sitting on enough reserves to keep your business afloat for another few years… and all the time it’s making smaller and smaller ‘profits’. Just imagine what that kind of money would do if you took it for yourself and spent it on a nice air-conditioned mansion in the West Indies?

    It’s your choice: use that money to inflate your ego, or admit that your business is failing, get out and enjoy life! That was the moral of the story you copied and pasted – image descriptions and all!


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s