Catching On

Screen shot is from a website called PositiveMoney. More and more people are catching on that our current financial system is basically a debt machine which you can never pay off. I only briefly looked at the website and they have a few good ideas but I didn't see any real solution of the money creation. Money is still loaned out, probably at interest. And that is the debt machine.

Is There Such A Thing As Morals In Capitalism?

While millions starve on this planet, banks like Goldman Sachs make millions speculating with food prices. Read the article here. Maybe criticism of Ludwig von Mises' "economic calculation problem" should have an addendum called "the moral calculation problem."

Quote Of The Month

"People without homes will not quarrel with their leaders. This is well known among our principle men now engaged in forming an imperialism of capitalism to govern the world. By dividing the people we can get them to expend their energies in fighting over questions of no importance to us except as teachers of the common herd."

- J.P. Morgan

Two Faced Franky

Ran across this marble today. It turns out Frank de Grave, a politician belonging to the People's Party for Freedom and Democracy (VVD - Conservative Liberalism), said some outlandish things during a session of the Senate of the Netherlands last summer. He said the following;

"There's one situation where it's ok for ministers or politicians to lie, even in this parliament. And that is when it concerns the coin (Euro). When we had the Guilder, a politician was allowed to say A, while the next day B was to happen. In emergency situations this must be possible."

In other words, when it comes to financial matters that are utmost important a politician is allowed to lie and to hell with Freedom and Democracy. Perhaps it's not surprising that Frank de Grave not only spend many years in politics but also worked in the financial sector. What you often see in the United States also applies to this character. He was minister of Defense and after that stint he rolled into the position of Chief Financial Officer at the DSB Bank. Smooth transitions between positions in government and corporations. What's even more interesting is that De Grave didn't spend that much time at the DSB Bank. After just 2 months he left citing "incompatible working relationships." Not long after the DSB Bank went bankrupt. Did Franky knew about the poor situation at the bank? He did have a private talk with the Dutch Central Bank but no information was released.

Why am I not surprised about Frank de Grave? Well, if you watch the first half hour of Zeitgeist Addendum you would know that money is created out of thin air by banks and also immediately becomes debt that can only be paid back by new loans which creates even more debt. It's economic slavery. Banks are the enslavers. Franky here probably knows this. In order for this pyramid scheme to work people have to remain oblivious yet keep the economic faith. That's why he thinks it's a good thing when politicians lie in front of the public in order to keep them confident in money and the financial institutions that provide it. Otherwise that whole house of cards collapses.

Capitalism Breeds Corruption?

Greek Tragedy (2)

Holy crap, what's happening in Greece? On my way home this afternoon I ran into a friend who was waiting for the bus and he enlightened me about the 'crisis' in Europe. In another twist and turn Greece decided to let its people vote about the financial aid package (and subsequent austerity measures) through a referendum. This send shockwaves through both the markets and other nations that make up the European Union. Good chance of course that the Greek people will vote it down.

Watching a Dutch newspaper website which monitors the latest information regarding the Greek political situation it's evident that a lot of people are worried. It's also unclear at the moment if the referendum will proceed. There seems to be a great deal of political infighting in Greek parliament, and safe to say that isn't helping either.

Their situation can be described as followed. They are screwed, one way or the other. If they decline European help there's a good chance they will be ousted from the European Union. Should they accept, the financial situation of every citizen will drastically decline. Ironically, they have no one to blame but themselves. Although I'm no free market advocate I can see that 'the game' simply caught up with them and the simple axiom that everyone usually understands is that you can't spend more than you have.

There's a whole mechanism beyond politics and that is the money creation and immediate connected debt itself.

Governments that don't abide by the monetary rules are the first to feel its consequences. Greece has also been very deceiving and has proven to be an unreliable partner. When joining the European Union they presented false financial data. Their deficits where in reality much worse. Goldman Sachs was so kind to offer their assistance.

Greece failed to recognize the first monetary rule. Money is created in a bank, and has to go back to the bank. Failure to do so means foreclosure. Banks rule, not nations.

Beginning Of The End?

I guess most people have watched the news by now concerning the protests in New York. People are rising up against the system if you will. The wealth inequality and government policies that seemingly only help big business are at the root of this civil discontent. Police clamped down hard on the protesters and earlier this week 80 to 100 where arrested as they centered around Wall Street. Just yesterday 700 people got arrested as they marched over the Brooklyn Bridge towards lower Manhattan. Safe to say the police and authorities are keeping a watchful eye out.

Personally I salute the protesters. It has been clear to me for a while now that America hardly can be called a democracy anymore. The people there basically have a choice between 2 political parties and both cater the big wealthy business interests first and the American people second if at all. The U.S. is a society where money and wealth comes first, the top 10% possess 80% of all financial assets. Given the circumstances, do you really expect people to behave when it is clear their needs are secondary to an elite? Elites that prey off the majority of the people will fall sooner or later.

14 trillion dollars of public debt, 2.3 million people incarcerated, some 40+ million people on food stamps and 1 in 6 beneath the poverty line, how long do you think this game will last? Capitalism itself is at fault here although that is something most people don't want to hear. Likewise, Ron Paul and Austrian Economics are not going to save you. Trying to solve the problems of capitalism with more capitalism is just plain idiotic. The U.S. already gave the free market full reign and the present situation is what you get; the market regulating itself at the expense of everything else.

I fear the worst for America. The system can't perpetuate itself under these conditions. Seeing how law enforcement reacts to public protests yet stays catatonic when financial institutions plunge the country and world into a depression, I predict that this is a sign of things to come. Challenging the establishment is not encouraged. Action versus reaction. When the protests become more intense so will the response of the authorities who will try to protect the current state of affairs. Maintaining order is on the top of their list.

Yet the American spirit is build upon liberty and freedom, as such any violation of that notion is not tolerated. A vicious circle is what comes next with the likelihood of America transforming into a police state. America is on the verge of implosion and to be brutally honest this is a 'logical' consequence of the system that the people have supported for so long. If you let politicians be lobbied (bribed) by corporate interests than they are going to serve those interests. If you let a (partially) private Central Bank issue the currency of a nation than they are going to reward themselves and leave you hanging with the bill.

It's simple. Give the power of the people away to institutions and politicians who think of their own self interest first, the people are going to wind up with the short end of the stick. You've got to find a balance between what's good for you and the nation as a whole. Exclusively pursuing self interest will eventually create a massive imbalance. That is where the American society is at.
Perhaps in 20 years from now people will talk about America in similar fashion as they did regarding the collapse of the Soviet Union. Maybe they will fully realize that an elite deciding what's best for themselves first and what is good for the nation and its people second will always lead to revolution.

Highwayman Donner

Something hilarious just transpired in Dutch politics. Earlier this month on the 9th of September the Supreme Court in the Netherlands decided that upon requesting an ID card, which is done at the local town hall normally, no fee can be asked. The essence of the verdict by the court was that an ID card should be free of charge for every citizen and current legislation doesn't justify paying for it, yet it is normal practice that a town generates revenue with issuing passports, documents etc.

The court even decided that people who had paid for a card the last few months should get their money back. Needless to say that many people hurried to the town hall to request a new ID card. City officials got swamped with work.

Enter minister Piet Hein Donner from the Christian Democrat party (CDA). Just a few weeks have passed since this new approach was put in effect, the good Christian minister just forwarded a new bill today basically reinstating the previous arrangement and where people have to pay (generously) for their new ID cards. Just comical how money takes precedence in the political process seeing how fast these highwaymen, I mean politicians, react when it becomes impossible to rob the citizens of their cash.
Tax decreases 'have to be studied' but new tax legislation can be implemented with light speed so it seems. Donner also slaps the Supreme Court in the face by basically countermanding/overruling their decision. When legislation is quickly changed to suit the profit motive, you can ask yourself what democracy really means.

Greek Tragedy

This morning when I read the Dutch internet newspaper 'De Telegraaf' there were many articles dealing with Greece and their economy. For many months the Dutch government has been trying to support that country with loans and recommendations (austerity measures). The general consensus was, as far as the Dutch government was concerned, if we help out Greece (loan money) everything will eventually be fine. Greece just has to get their economy in order, privatize sectors, raise the retirement age, increase taxation etc.

Well, it turns out that all those measures are in vain. Reports have surfaced that several Dutch banks already have plans in effect for when Greece goes bankrupt and are more or less counting on it. Even the ministry of Finance along with the Bank of the Netherlands and (the Bank of) Germany and their politicians are having high-level talks, according to reliable sources. My point is, is that this scenario - the bankruptcy of Greece - was hardly mentioned in previous months as a realistic scenario. Instead, money should be pumped into Greece and they'll be back on their feet in a few years. That was the pretty picture.

House of cards is what comes to mind. If Greece goes bankrupt, and from the looks of it it will, all those measures and all that money loaned to Greece would have been pointless. And when you really think about it, the economy of a nation or the world for that matter, is seemingly highly unpredictable with (austerity) measures sometimes being inadequate. Both politicians and economists can't predict what will happen next and are basically just preachers of money value who hope to inspire trust in the markets.

Economy resembles religion. We should not lose faith in something like money which ironically is created out of thin air. Otherwise stocks would plummet, markets would crash which all have a relative value when you really think about it. The real fear of economists is when people become 'money-atheists,' that's why they keep pumping money in lost causes just to uphold the belief in an economy. Greece isn't the problem, the real tragedy is when the economy fails and people lose faith.

Money Volume

Check out this website in order to find how much volume there is in physical money that is being owed to banks (etc.) in the United States. While you're at it, it's also sobering to view the U.S. debt clock. Are we watching the end of capitalism?

Banc Jeu Zero

Yesterday I read an article on a Dutch newspaper website and it was both shocking and revealing. The article was about which countries owe Dutch banks money. It has more significance when you realize that after the credit crisis of 2008 2 major banks in the Netherlands were nationalized, meaning the government took them over and rescued them with taxpayer money. So in essence the money that's being owed to the Dutch banks, also belongs to the normal Dutch citizen if I can make that correlation. (Of course the government plans to privatize the banks again once they are solvable.)

The article reads as following. Ireland (13), Portugal (5), Spain (58) and Italy (34) owe 109 billion euros in total to Dutch banks, and to insurance companies and pension funds "dozens of billions." Dutch minister of finance Jan Kees de Jager reports this to parliament. The minister is also an advocate to loaning Greece more money since he fears that when that country goes bankrupt it will have a 'domino-effect' to other south European nations. However, the average man on the street is very much against that plan and fears that loaning money to Greece will be futile endeavor.

While these amounts may not seem much in comparison to bigger economies such as the U.S., for a small country such as Holland these figures way heavily, especially if taxpayer money is involved. In Holland the taxation on consumption is one of the highest in the world. We may have a decent social net for when you get sick or unemployed but this system is already stretched to the max under the current economic climate and austerity measures are high on the agenda. The Dutch government also jumped quickly on the new paradigm that people should work until they are 67 before they can retire and made it law.

Personally, I wonder how this system can last - considering that countries such as Spain, Italy and Portugal are doing much worse than Holland. I've come across information that suggests that Spain and Italy owe 1 trillion dollars in total, Greece and Ireland are between 3-400 billion dollars in total debt. Seriously, how can this have a 'happy ending?' Even if these economies recover it will take many years, decades even before they are in the green. You simply can't keep on borrowing, everyone knows that. That begs the question; 'Are we nearing the end of this system?' Wont you get to 'zero' at some point?

Nothingmen

Read an interesting article just this morning. It's about Bernie Madoff and his Ponzi scheme. As probably everyone knows Bernie was engaged in an investment fraud and many people lost their money. What probably not many people realize is that Madoff himself conducted his business through a bank. In this case JP Morgan. What the article mentions is that U.S. government officials are investigating what actions JP Morgan took in this matter, or more importantly didn't took. When you run a bank it's quite easy to see large amounts of money going on and off an account.
This is like first grade math to these guys. The issue comes up if they could have detected the fraud and if they should have reported it to the appropriate authorities. A number of employees of JP Morgan are under investigation. John Hogan, Matthew Zames and Carlos Hernandez seem to be the ones that are held accountable and all are part of the executive committee. According to the investigation these 3 men already discussed the Madoff situation in 2007 and suspected it was a Ponzi scheme. You know what these men did? Nothing! No warnings to shareholders or watchdogs. They did nothing.

Irish Bluntness

If you can't stand the f-word a lot then this video is best to be avoided. Otherwise, this Irish fellow speaks candidly about what a lot of folks are thinking. That they are being sold out by the governments and financial institutions who's main characteristic is unrestricted greed and where the accumulated debt is put on the working class. Just yesterday I saw in the news that in the U.K. VAT was increased from 17.5% to 20%. The government there wants to raise an additional 20 billion. Who were the responsible parties again for the credit crisis? Who's apparently paying for it?
I personally realized years ago that our modern day society is nothing else then an elaborate pyramid scheme. But in the words of George Carlin; 'Nobody seems to notice, nobody seems to care.' Most comments on CNN where the British people were interviewed about the massive tax raise responded in similar carelessness. We need more people like this Irish dude, not sheep.

Bank Run Stop - Politicians Make Me Pop

Some startling piece of legislation is in the works over here in Holland. Dutch ministers of the Finance and Justice departments, Opstelten and de Jager, are working on a new law that prohibits people from publicly calling for a 'bank run,' should they do so they can be fined (to a maximum of €19.000) or imprisoned (up to 4 years). The ministers argue that calling for a bank run can lead to situations that can't be controlled. The legislation is also aimed at public figures who have authority in the financial world. The main aim, according to the ministers, is to provide stability and a climate of trust for the banks.

Not strange in itself of course since a bank run equals bankruptcy, yet what is so woefully missing and what politicians conveniently leave out is why a bank is so vulnerable in the first place when a lot of people withdraw their cash. And the answer is very simple; they basically don't have that money. Banks are required to have 8% of their total amount of money in house, the rest is lend out. That means that when that amount of 8% is exceeded they are basically broke.

Most people know what the fallout of a bank run is. The money somehow simply evaporates, unless of course when the government steps in rescuing the bank with taxpayer money like we've seen a number of times during the credit crisis of 2008. What's even more startling is this; the banks didn't have the money to begin with because most of the banks credit is created out of thin air because of fractional reserve banking. Banks can create money out of nothing, they do lend money from central banks (at interest) but are free to create additional money should the need arise.

This is what really ticks me off. Banks have an enormous advantage, they create a great deal money from nothing, loan that money to costumers. The customer is hold fully accountable, no payments (on time) means loss of property. Here's a fair question in my opinion; does it work the other way around?
I don't think it does. Bank runs show that even the rumor of a financial institution failing will actually cause it to fail. How stable are banks really to begin with? What recent history has shown is that when banks fail the taxpayer gets the bill. Even in my own country, Holland, banks were bailed out with €35 billion in taxpayer money. Today it was abundantly clear once more that even our own politicians rather work with a bandaid and forbid people to use the word bank run in public instead of addressing the root causes of a bank's inherent instability, but seeing how many former politicians wind up as CEO's of banks I'm not that surprised.

Greedy Grabbers 4

Take a look at this mugshot. Well, it isn't really a mugshot but it could very well be. Meet director J. van Praet who got fired last February over a conflict with the company council. He headed an institution for the handicapped but got into conflict over an interest free loan, amounting up to €550.000. The board didn't like that. Just recently it became public knowledge (from the companies annual report) that the former director got off pretty well. He received a "golden handshake" worth 200K, a severance worth another 200K and another bonus worth 40K. I'm sure Mr. Praet is a happy man. Do you think he can explain why healthcare is getting more expensive each year?

Poor Rich Man

Well, it's in the news that BP exec Tony Hayward will probably resign from his post later on today. He's to be replaced by Bob Dudley who's in charge over the oil spill. You don't have to feel sorry for Tony, like always people in high places of industry leave with a big pile of money in their wake. (Which sets it apart of course since if you, I or any other blue-collar worker would do a piss-poor job of something, we get send off with no money whatsoever.) T has around 546.000 stock options and 2 million shares in BP which he will cash in upon leaving, and that will give him the sum of 11.8 million Pounds. Way to go Tony! On to the next 'fill your pockets no matter what' job.

P.S. Saw on the news yesterday that Hayward will receive a pension of $900.000 a year. From the looks of it I also reckon he would make a fine politician. . .

BP & The Real World

BP has been in the news a 'few' times lately. What's most fascinating, in my opinion, is how the oil spill is being handled and I'm not talking about the physical aspects such as capping the well. No, it's the damage control regarding public perception and the efforts in containing the financial fallout. BP released some photos of their crisis command center. What's funny is that there are a bunch of anomalies on those pictures which leads some people to assume that they are photoshopped. BP denied the charges but at the same time refuses to post high resolution version of the new 'original' photo. My take on it is that they probably 'enhanced' the photo in favor of public perception.

What's even more fascinating is that BP attempts to literally buy all the scientists and expert witnesses. Here's an article from the Huffington Post. The trick is that these expert witnesses have to sign a contract with BP and that there findings remain confidential. In essence, BP would have strict control over the information and the experts. These same experts couldn't testify in court because they are already legally connected to BP. Basically what BP is trying to do is buy their way out of trouble. It's the age old axiom of power corrupts, and absolute power - corrupts absolutely. It's all about money and power and BP demonstrates that beautifully. Welcome to the real world.

Greedy Grabbers 3

Yes, if you follow the news on a regular basis you'll find something like this almost every week. It came to light in Holland that the heads of the police department in Amsterdam make a lot of money. Way more then the norm the government itself advised. That's called the 'Balkenendenorm' and is set at €188.000. The idea is that managers in the public sector don't make more then that. In practice no such thing happens.
Chief commissioner Welten, executive chief Gorissen and head administration Schonfeld make respectively €262.841, €212.292 and €200.331. The city of Amsterdam also pays a large amount for Weltens villa in the village of Warmond! To top it off the Amsterdam police department is in the process of making cuts. The workers union of the police was naturally infuriated when this news came out and commented that they were working hard to avoid lay offs under the current economic situation.
It's really scandalous. Lots of businesses, institutions or government sectors are in financial turmoil and not functioning properly yet when you put them through a looking glass you'll often if not always find some greedy grabber at the top. The people who actually do the work often get paid a minimum and have the most risk of being fired. And with government institutions, eventually it's the taxpayer who always gets the bill. Don't you just love capitalism?

Greedy Grabbers 2

Here we go again. The Admiral de Ruyter hospital in Holland is in financial turmoil. Turns out the CEO (Pieter Vierhout) makes €367.000 a year. His colleague Vos makes €384.000. This is almost twice than what the Dutch Prime Minster makes. Do these gentlemen realize that their institution's financial disposition is certainly also caused by their salaries? If they care is another matter of course. Most people have a mortgage in those figures, and spend 20-30 years paying it off. No wonder that healthcare is getting more expensive every year.

Greedy Grabbers

Read something in the newspaper today that really makes me fume. The sad thing is, this isn't an exception. Corine Houtzagers a former member of a board of directors of a healthcare company, received a bonus (upon ending of her contract) of €410.000. She was with the company 'WWZ-Marienstaete-Valent' for 4.5 years. A spokesperson remarked that this is the normal practice and that because she got laid off she was entitled to it. Other former employees of that company were sent home with €248.000 and €42.400.

This is totally outrageous. Normal employees who do all the work - providing care - get paid the minimum or close to it. Managers get paid well but as you can see get massive amounts of money, even when they do a poor job! The company made a loss of 6.6 million euros last year! Add the poor quality of healthcare the company provided and it becomes a total mystery to me why so much money has to be paid for misfits. It's almost criminal in my point of view. Lots of people complained about that company. They were told that due to shortages there weren't enough personnel and that cutbacks were in order. Well duh! All the money flowed in to the pockets of the managers.

Groping make me sick.