My Australian focus.....

Since I live Down Under, I will be looking at alternatives that are relevent to us here - and of course to other places as well. But a little background first.

In this time of instant communication and gratification, we are not isolated from the impending global economic carnage. It is even possible that our way-over-the-top property market might be a domino tumbler.
However, it really isn't much of an issue as to what the trigger event will be - the results will be what matter.

Remember last time in 2008 banks were bailed out?
A universally unpopular move with the public.
So, guess what the banksters and officialdom have up their sleeves for the GFC2?? A bail-in. Know what that is?
That's where the banks take depositors funds.....like in Cyprus in 2008.

I read an article recently by an Australian journalist describing bail-ins, who kept referring to "Bondholders" - what a clever way of managing to report without spelling anything out. Many people reading his article would say "oh, I don't have any bonds, so it doesn't apply to me".

Make no mistake - as a depositor in a bank you are an UNSECURED creditor of that institution. When they go under, you are low man on the totem pole for restitution.

Want to know a wonderful irony? The very people who helped create our current financial nightmares are the very ones who will have a "Preferred Creditor" status and will be paid out first!!! It's in the bail-in rules.
Is your blood boiling yet??

Many countries have already adopted the bail-in strategy in Law -even the Kiwis ....Australia very soon to follow. But even if it is not in Law - there are historical precedents here - even recently!! A couple of months ago the Federal Govt seized inactive bank accounts where there was no activity for 3 years.....by what right?? How did they even imagine that they had a claim to that fund of nearly $400 Million ??? So where's the hue and cry about that??

And let's not forget the Pyramid Building Society collapse. Greedy depositors were bailed out by a levy imposed on all Victorian Electricity accounts. So people who couldn't afford to invest bailed-out those who chose poorly with their investments.....  
What a crazy system...... time for better......

A dear friend once told me that you can only patch a leaky water tank so many times - better to go and invest in a new one. Buckminster Fuller said much the same when he stated that you don't try to change the system - rather start a new, better one and make the old one obsolete.

Which is the Higher Porpoise of this blog (have to keep my sense of humour somehow!!).

Next time I will give more detail on how things could happen here....and yes, there IS hope. But it will be a very different playing field to what we see now - so we all need to bite that bullet that's labelled "Change".
The very thing we don't like much.....and need to go flowly with.....

Pretty much says it all.....

Wealth Inequality Is Not A Problem, It’s A Symptom

 October 18, 2014  Posted by Raúl Ilargi Meijer at 8:12 pm Finance Tagged with: EU, IMF, inequality, NATO, power, UN, USA,wealth, World Bank

A comment on an article that comments on a book. I don’t think either provides, for the topic they deal with, the depth it needs and deserves. Not so much a criticism, more a ‘look further, keep digging, and ye shall find more’. And since the topic in question is perhaps the most defining one of our day and age, it seems worth it to me to try and explain.

The article in question is Charles Hugh Smith’s Why Nations (and organizations) Fail: Self-Serving Elites, and the book he references is Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu and James Robinson.

Charles starts off by saying:

The book neatly summarizes why nations fail in a few lines:

(A nation) is poor precisely because it has been ruled by a narrow elite that has organized society for their own benefit at the expense of the vast mass of people. Political power has been narrowly concentrated, and has been used to create great wealth for those who possess it.

The Amazon blurb for the book states that the writers “conclusively show that it is man-made political and economic institutions that underlie economic success (or lack of it)”, and continues with examples used such as ancient Rome, North Korea, Zimbabwe, the Congo, to make the point that some countries get rich and others don’t, because of differences in leadership structures. That in itself certainly seems true, but that doesn’t necessarily make it the whole story.

In the case of the Congo, for instance, the perhaps richest place on earth when it comes to resources, there’s not only the devastating history it’s had to endure with incredibly cruel Belgian colonial powers, there’s to this day a lot of western involvement aimed at keeping the region off balance, and feed different tribes and peoples with weaponry up the wazoo, in order to allow the west to keep plundering it. It’s not just about national goings-on, it’s – also – a supra-national thing.

That’s one of two shortcomings in the material, the breadth and width of why nations and organizations fail their people but serve their masters. In the present day, national boundaries, whether they are physical or merely legal/political, are not the best yardsticks anymore by which to measure and gauge events.

The second shortcoming, in my view, is that inequality, a theme so popular that even Janet Yellen addressed it this week in what can only be seen as her worst possible impression of Marie Antoinette, and expressed her ‘worry’ about wealth inequality in America. The very person publicly responsible for that inequality thinks it’s ‘just awful’. Go bake a cake, gramps.

Wealth inequality is but a symptom of what goes on. Charles Hugh Smith has a few graphs depicting just how bad wealth inequality has become in the US. We all know those by now. It’s bad indeed. But where does that come from? Charles touches on it, but still hits a foul ball:

I submit that this dynamic of failure – the concentrated power and wealth of self-serving elites – is scale-invariant, meaning that it is equally true of communities, towns, cities, states, nations and empires alike: all fail when they’re run for the benefit of a narrow elite. There is a bitter irony in the ease with which American pundits discern this dynamic in developing-world kleptocracies while ignoring the same dynamic in America.

One would imagine it would be easier to see the elites-inevitably-cause-failure in one’s home country, but the pundits by and large are members of the Clerisy Upper Caste, well-paid functionaries, apparatchiks, lackeys, factotums, toadies, sycophants and apologists for the very elites that are leading America down the path of systemic failure as the ontological consequence of their self-serving consolidation of wealth and power.

Here’s the thing: especially after WWII, though before that already as well, the western world woke up to the need for international co-operation. Dozens of organizations were established to structure that co-operation. But then, in yet another fountain of unintended consequences, something man is better at than just about anything else, we let those organizations loose upon the world without ever asking what happened to what they were intended for, or whether the original grounds for founding them still existed, and whether they should perhaps be abolished or put on a tight leash.

These are questions that should be asked about any large-scale organization. Be they multinational corporations, global banks, Google or indeed the United States of America. We can’t just assume these powers, which gather more power as time goes by, share and serve the purposes of the people. What if they gradually come to serve only their own purpose, and it contradicts that of the people? Should we not get that leash out?

Turns out, we never do. If someone would suggest today to break up the USA, because its present status contradicts that which the Founding Fathers had in mind (and there are plenty of arguments to be made that such contradictions exist in plain view), (s)he would not even be sent to a nuthouse, because no-one would take him/her serious enough to do so.

But wealth inequality still rises rapidly within America, and it doesn’t serve the people. So why does it happen, and why do we let it? Because the inequality that matters most is not wealth, but power. And we’ve been made to believe that we still have that power, but we don’t. Voting in elections has the same function today as singing around a Christmas tree: everyone feels a strong emotional connection, but it’s all just become one giant TV commercial.

Even if families are genuinely happy to meet up and exchange gifts and stories, it’s all modeled after the building blocks handed to us by chain stores. It isn’t really our story anymore, and Jesus certainly wasn’t born in a manger: he was born in a MacMansion and the first thing the child saw was his mom’s fake boobs, a wall-sized TV and an iPhone.

In that same vein, we lost the stories bitterly fought and suffered for by our grandparents through two world wars and the brutal invasions of Vietnam and Iraq, the stories of how we can best keep ourselves safe and out of – international – trouble. Not just military trouble, but economic and political trouble. These things are no longer our decision. We founded supra-national, indeed global, institutions for that. And then let them slip out of our sight.

The US is a bit of an outlier here, simply because it’s older. But the IMF, the World Bank, UN, NATO and the EU absolutely all fit the picture of organizations that have – happily – grown beyond our range of view, and that exhibit the exact same inverted pyramid characteristics we see on wealth inequality, only for these organizations it’s not wealth that floats and concentrates increasingly from the bottom to the top, it’s power.

Wealth comes after that. And one shouldn’t confuse that order. Because power buys wealth infinitely faster than wealth buys power.

All these supra-national institutions were established with good intentions – at least from some of the founders. But then we forgot, ignored, to check on them, and they accumulated ever more power when we weren’t watching (we were watching TV, remember?)

And what we see now is that any effort, any at all, to break up the IMF, World Bank, UN, NATO and EU would be met with the same derision that an effort to break up the USA would be met with. We have built, in true sorcerer’s apprentice or Frankenstein fashion, entities that we cannot control. And they have taken over our lives. They serve the interests of elites, not of the people. So why do we let them continue to exist?

What powers do we have left when it comes to bailing out banks, invading countries, making sure our young people have jobs when they leave school? We have none. We lost the decision making power along the way, and we’re not getting it back unless we quit watching the tube (or the plasma) and fight for it. Until we do, power will keep floating to the top like so much excrement; it’s a law of – human – nature.

That the people we voluntarily endow with such control over our lives would also use that control to enrich themselves, is so obvious it barely requires mentioning. But that doesn’t mean this is about wealth inequality, that’s not the main issue, in fact it’s not much more than an afterthought. It’s about the power we have over our lives. Or rather, the power we don’t have.

Don't just take my word for it.....

• BIS Warns On ‘Violent’ Reversal Of Global Markets (AEP)

The global financial markets are dangerously stretched and may unwind with shock force as liquidity dries up, the Bank of International Settlements has warned. Guy Debelle, head of the BIS’s market committee, said investors have become far too complacent, wrongly believing that central banks can protect them, many staking bets that are bound to “blow up” as the first sign of stress. In a speech in Sydney, Mr Debelle said: “The sell-off, particularly in fixed income, could be relatively violent when it comes. There are a number of investors buying assets on the presumption of a level of liquidity which is not there. This is not evident when positions are being put on, but will become readily apparent when investors attempt to exit their positions. “The exits tend to get jammed unexpectedly and rapidly.” Mr Debelle, who is also chief of financial markets at Australia’s Reserve Bank, said any sell-off could be amplified because nominal interest rates are already zero across most of the industrial world.

“That is a point we haven’t started from before. There are undoubtedly positions out there which are dependent on (close to) zero funding costs. When funding costs are no longer close to zero, these positions will blow up,” he said. The BIS warned earlier this summer that the world economy is in many respects more vulnerable to a financial crisis than it was in 2007. Debt ratios are now far higher, and emerging markets have also been drawn into the fire over the last five years. The world as whole has never been more leveraged. Debt ratios in the developed economies have risen by 20 percentage points to 275pc of GDP since the Lehman Brothers crash. The new twist is that emerging markets have also been on a debt spree, partly as a spill-over from quantitative easing in the West. This has caused a flood of dollar liquidity into these countries that they have struggled to control. It has pushed up their debt ratios by 20 percentage points to 175pc, and much of the borrowing has been at an average real rate of 1pc that is unlikely to last.

For more in-depth information.....

http://www.theautomaticearth.com/

GFC Mark II .....

Well here I am again.

6 years later, and not only haven't the lessons been learned from 2008 - but it is now MASSIVELY worse.
That's what happens when investor-greed and the banksters have free reign.

A total systemic collapse is imminent, and the spark can come from anywhere. It could be:

* China's property market collapse
* Australia's overheated property market collapse.
* Defaults by Eurozone countries - or more Sth American countries.
* Derivatives imploding ($700 TRILLION of them!!)
* Gross manipulation of the various markets
.....and so on.

Take your pick.
It really doesn't matter much what the trigger is, the entire Global Economy is hanging over our heads as the most enormous Sword of Damocles - EVER!!

But - I'm not going to bog people down with graphs, charts and technical analysis.....if you have seen the warning signs and sniffed the looming horizon then you have an idea what's coming.

So what's the world going to look like post economic apocalypse?
On the road to something better and more sustainable!!
I see everything shrinking more to a local level. We will be back to a quieter village-style life - this time with instant global communications.
And is getting off the frantic pace financial/survival treadmill such a bad idea??If there is still such a thing as investors, then for once they will invest locally - where they have a vested interest in the community doing well.


Naturally during the transition there is going to be a LOT of pain - much of it from our hopes/dreams/expectations tumbling down. In addition, many will panic, as all things familiar are suddenly no longer there - or so distorted as to be unrecognisable.

So what do you do to fare better in these tough times?

Our thinking needs to change. Simple.
Co-operation, not competition. How can we ALL live better, not just me??
Our lifestyles will change - we just have to accept that and become adaptable in the NEW.

With any luck, speculation will go the way of the Dodo. (How can one continually have economic "Growth" on a planet with finite resources???)
Many people have become hugely wealthy by shuffling bits of paper or electrons on a screen without producing anything constructive.
That needs to stop.

I strongly suspect there will be a resurgence of L.E.T.S (barter) systems or several other promising alternatives. Coupled with a resurgence of friendly relations with your neighbourhood. After all, you have a vested interest in a prosperous and harmonious street/area/village/town, don't you??
These are practical, grounded options.
Years ago I set-up such a system, and it eventually worked too well !! Everyone became friends through their trading interaction on the network, and simply stopped recording their trading activity - preferring to help new friends without thought of recompense !!
Oh for the simpler days.....:)))

Please understand I am not saying the above to scare the pants off you - just to give you a heads up as to what is coming down on us. So forewarned is forearmed. No more head in the sand of our lifestyles.
Look around and listen to what's going on........
And when we do, we see a lot of nasty things going on. But if we look beyond that, there is the glimmer of a beckoning future - a sustainable one. And wonder of wonders - a truly level playing field !!

May we all ride the waves as smoothly as possible......