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04 October 2010 @ 10:26 pm
We're Skint. Who, How, Why?  
IN AN INTEMPERATE BUT EVIDENCED EDITORIAL, THE SLOG CALLS TIME ON TAKING THE PISS.

In probably the craziest ever perversion of capitalism, drowning US taxpayers are about to fund a QE2 that won't work, struggling with ZIRP rates on which they cannot live, and watching in bewilderment as big business and banks get richer and richer. And it's not that different in Europe.


New data from the USA - and Europe presents the same picure in most major aspects of the scandal - demonstrate with damning clarity how big banking and business are pauperising the West's citizenry in the most flagrantly unfair example of extortion since the Sheriff of Nottingham started taxing firewood.

Corporate America finished the second quarter of 2010 with "near-historic" profits, largely by cutting costs, laying off employees and investing hoarded cash. This entirely patriotic and socially-aware set of bean-counter policies meant that profits in the S&P 500 soared 38% from the same period last year, hitting $189 billion - the sixth-highest quarterly total in US history. And here's the final lulu: analysts expect the trend to continue in the third quarter.

The robust state of corporate profits means, in reality (as The Slog has posted many times before) that companies won't spend their money until the economy improves, but the economy won't improve until they spend their money.

If we are going to have eclectic economic stimulation - and that's what we need, not more narrow QE to ease credit that nobody wants - then the cash-rich multinational public companies and top six banks need to fork out most of it: they have mountains more money than the Government, which as ever relies on taxes paid by the ordinary citizens. 

The New York Times reports that near-zero interest rates (ZIRP) have encouraged companies to borrow money and simply hoard it 'because they can'. The S&P big boys alone have $1.6 trillion in cash cash reserves today, representing the highest percentage of company assets since 1964.

Bank profits during the second quarter rose 21% to almost $22 billion, the highest level in three years. But the net worth of households and non-profits dropped 2.8% over the same period - the lowest since Q3 2009.

This same scam is going on in the UK and throughout the EU. This has to stop. This has to stop, and there have to be citizen Parties or Pressure Groups of some kind to stop it....before people with a whole other agenda start muscling in on the protests. Before things start to turn really nasty.

We need a Basel IV - one that says "clear up your own mess this time, because we're broke and innocent and you guys are rich and guilty".

Just think this through. Because the banking industry went on a binge of notional paper-money shuffling - a practice of no purpose whatsoever in the encouragement of entrepreneurial capitalism - the taxpayer had to bail them out: despite the fact the the surviving, flourishing bank sector had more than enough money to do that itself.

Why?

Despite the fact that this cost all of us $23 trillion globally, the survivors and the bailed out carried on just as before and within a year were paying themselves enormous bonuses again.

How?

In order to 'help' the economies these psychos had wrecked, the Irish taxpayer will be pauperised for a generation, 25% of all Western populations living on retirement investments have seen their meagre incomes destroyed by ZIRP, and well over $13 trillion of their money has been invested in 'QE' that has achieved nothing....except to allow big business to do M&A on the cheap, which enabled them to lay off and foreclose more of the people who stumped up the QE in the first place. 

Now Ben the banker wants Americans to do this all over again, despite the fact that the beneficiaries are richer than they were before we started this crazy ride. And this morning, the UK's once-rescued banks are already saying they're going to need more bailout.

Whaaaaat?

I mean, is Government putting valium in the water supply or something? Are we all completely mad? Have the folks who built the British Empire and the American Union, the Channel Tunnel and the Golden Gate, suddenly decided they like nothing better than having a Yardbrush rammed up their backsides twice a day and three times on Saturdays?
/continues


UK banks may require a government-funded bailout in 2011 due an emerging funding gap of £25bn a month, the New Economics Foundation warned.
The report, entitled Where did our money go?, found banks currently borrow £12bn a month, which will rise to £25bn a month next year as government-backed funding ends, the NEF said on Monday.
This vast "funding cliff" could force them to ask the state for aid, it warned.
The London-based think tank also lamented a “shocking” lack of information on the expenditure of £1.2 trillion already spent by the public sector on bank bail-outs.
“The public have already paid for the failure of the banks twice, first by bailing them out, and then by suffering a program of drastic cuts to public services,” Tony Greenham at the NEF said. “We need urgent reform of the banking system to ensure the bailed-out banks are not allowed to repeat their failures.” /continues

In the comments to the above, alfredo wrote -
This is a blatant scam. They got away clean with the proceeds of crime without so much as a proper investigation, so now they want to do it again. Let us get some context here: What we are witnessing is a little like the "ferrets in a sack analogy". Or put another way, all out financial warfare. Such warfare has a habit of turning into real warfare of the blood and bullets variety. More context: We pay with blood, while Bankers make money from the bullets. Back to the ferrets. Bankers are too busy buying up the bond issues of foreign banks to bank effectively. A more cynical man than myself might hold the view that these arrogant and criminal financial hoodlums are pushing the world towards war.
Well, are they? Quite likely, in my view.
The austerity brigade led by the man from Corfu (george osborne) are howling about the state of the nation. I remain of the view that England is a very rich nation and that we are being lied to in a massive way. The austerity is designed to pay the criminal banks more interest on there fiat currency,
A couple of facts to mull over.
1/...In 1970 the M2 money inthe US was 624 Billion dollars.
The US then moved away from the gold standard and embarked upon the ponzi scheme known the fiat banking system.
2/..As a result by 2008 the M2 money in the US rose to $8.2 trillion. A multiplier of 1314%.
Why? Primarily greed, the bankers who own the Federal Reserve such as NM Rothschilds get interest paid to them by the working classes on every banknote they print or introduce by the medium of "virtual banking". How corrupt is that? This interest through government collusion compounds radically until the nation owes mega Billions to a bunch of crooks whose only investment is a printing press. This is what the dishonest and craven coalition is selling us through its tame media machine.
It would be nice to think that people were getting thoroughly angry with this serial dishonesty from our illegitimate government. This austerity like AGW and all the eco frenzy IS a scam. Bailout Number Three.
Let these crooks fall or stand by their business acumen. That is the right thing to do.
It is worth noting that China's' holdings of US debt now has swollen to $24.5 trillion. Almost one half of the worlds GDP.
This is enormous damage. All manufactured by the Central Banks, and Wall st, and RBS, among others, Deutches Bank in particular.


Bank of England's Adam Posen calls for more quantitative easing

The Bank of England should restart the printing presses and pump more money into the economy to prevent a "lost decade" of low growth and high unemployment, one of its senior policymakers Adam Posen has said.
Mr Posen, an external member of the Bank's nine-strong Monetary Policy Committee, has called for a second round of quantitative easing (QE), on top of the £200bn already injected into the economy, to stave off the threat of a period of deflation to rival Japan and the Great Depression. /continues

Pumped into the economy or pumped into banks?

Bank of England policymakers are poised for a three-way battle over how best to steer the economic recovery as they meet before Thursday's bank rate decision.
Economists said unchanged interest rates and quantitative easing (QE) are likely to mask a three-way split if Mr Posen votes for more monetary easing, Mr Sentance keeps arguing for a rate hike, and the rest of the nine-strong MPC vote for no change /continues

Some suggest the borrowers and government are as guilty as the banks. Banks are supposed to advise people on finance and not lend imprudently as is their rule with 3rd world developing countries, they lend to government to lend to those unfortunates with little prospect of repayment.

Banks are supposed to invest wisely, derivatives have always been a risky gamble, hey but with the strength of the public purse behind them, do banks give a monkey's? As for government, low interest or giveaway loans against property to make eu lab look good in return for a guaranteed bail out when the bubble bursts. Brown kept to his word in that instance.

I would suggest to Cameron that now is a good time to encourage a spurt in council house building but for heaven's sake don't build estates for the unemployed. Shunting all the L'pool councils' undesirables to Kirkby was a disaster for example. It would at least give one industry a fillip and make a small dent in the unemployment statistics.

Separately
Green Hell (Steve Milloy) advises us that -
Sony, Kyocera bail out of violent climate video outfit
Sony and Kyocera Mita are no longer listed as sponsors of the violence-advocating 10:10 climate group. (h/t Paul Chesser)
Click here to see the letter we sent the companies last Friday.
In addition to Sony and Kyocera leaving 10:10, Caterpillar, ConocoPhillips, Deere & Co., Xerox and Marsh & McClennan have abandoned the U.S. Climate Action Partnership (USCAP). /more and comments here.