Goldman Sachs Enabled Greek Debts Just Like US Debts

As Greece slides down the slippery toboggan slope to bankruptcy, the US and UK stand poised to follow suit.  Already we saw Iceland fly out of the chute and slam into the pillars at 90 mph.  Now we see in a recent NYT story how Goldman Sachs greased Greece’s glide to oblivion: it is exactly the same things they are doing to us here.  The same fake solutions to too much credit creation and living beyond our means.  All of this is most important to understand since this is old, old news.  Namely, this whole thing has happened repeatedly in the past.  I see no new elements at work here.  Understanding that we are repeating history is most important.

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ΩΩThe importance is obvious: we can’t avoid crashes from tobogganing too fast if we insist we should do this in the first place.  Recognizing the landscape and understanding the utility of brakes on anything hurtling in any direction is most important.  Humans hate limits on anything. Since we can imagine the infinite, we want it.  The ability to desire infinity is a grave danger to all humans. All other living things want to have enough.  We are not happy with enough.  We always want more.

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Wall St. Helped Greece to Mask Debt Fueling Europe’s Crisis – NYTimes.com

Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts….

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These debts were not hidden at all, actually.  The hiding was technical.  Namely, if both you and your lender know that you are overspending all the time, both parties also know that if there is more credit extended, this overspending will only get worse.  The more credit, the more overspending. Someone has to say ‘no’.  Without this, we have a final rush to infinity as the debtor piles on more debt ever more frantically mostly to pay for previous debts.  Japan, for example, is in this trap.  Despite ZIRP, Japan is now helplessly piling on debts faster and faster.

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…Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.

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The bankers, led by Goldman’s president, Gary D. Cohn, held out a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards….

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…In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come.

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ΩΩHere in the US, all of these fake solutions are being used. The US has mortgaged many money raising systems like lotteries and airports as well as shipping centers to foreigners.  Often, quite hostile foreign powers are buying up our systems so all the revenues will flow to them, not to us.  In return, we get these damn loans!  Which we are never able to pay off or discharge!

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ΩΩThese are piling up massively.  Greece is smaller than the US, UK or Japan so it has less capital to tie up in debt.  But the big three financial powers have driven themselves fatally into debt traps requiring eternal ZIRP rates to maintain.  If interest rates rise even slightly back to ‘normal’ ranges of 3-4%, these past debts will have to be rolled over and instead of being super-cheap, will see the interest rate overhead shoot upwards at the same time the GDP will drop.

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ΩΩNow, a country with infinite growth can have infinite debt.  But the minute the growth stops or goes negative, the debt to GDP ratio will suddenly shoot upwards. A country running say, a debt to GDP ratio of 60-80% can suddenly find itself in a 200% GDP value range. This is fatal. Indeed, this is where Japan sits right now.  Japan’s GDP has stagnated for years while government spending has risen. When their GDP fell last year, the differentials shot upwards to the red zone.  That is, countries with a 200% GDP to debt ratio goes bankrupt.  Japan hasn’t only because most of this debt is owed to the Japanese people, not foreign powers.

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ΩΩThe US, UK and Greece all owe to foreign powers.  This means all will be bankrupted by their creditors if they fail to pay up.  Here is a thumbnail history of the death of the Spanish Empire which came right on the heels of Spain gaining the vast seas of gold and silver from the New World.  The collapse of Spain’s internal economic and tax systems was a complete catastrophe for them and Spain only lost power over the following 300 years:

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The economic problems of Spain

Philip was forced heavily to rely on taxes in Spain and in 1561 the servicio tax was made a regular one, the excusado was introduced in 1567 and the crusada tax, together were known as the “Three Graces” reaching as much as 1.4 million ducats per year in the 1590’s. However this was still not enough money and the Cortes had to be persuaded to grant the millones tax in 1590. The end result of all this taxation resulted in a tax increase of 430% between the years 1559 and 1598. This hit the Spanish peasantry hard, since the nobility were tax exempt. Between the same time the average wage only increased 80% and so the Spaniards witnessed a tax revolution as well as a price revolution….

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The Crusada tax was a holy war tax.  Like the present US/UK wars against all Muslims, this was a war against all Muslims.  This involved internal witchhunts (the Spanish Inquisition) as well as crushing all dissent at home, imposing a police state on the intellectuals who all fled the kingdom as well as preventing any commerce with the northern Protestants.

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The wars with the Protestants sucked down immense sums as well as killing commerce.  The commerce from the Muslims fell like a rock due to Portugal and Spain circumnavigating the globe and thus, breaking the back of the Silk Road/Indian Ocean trade that had to pass through the hands of the Islamic empires before going into Europe.

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This, in turn, unleashed a flood of manufactured goods from both China and India which flowed like a tsunami into Europe and which incidentally, destroyed Spain’s domestic manufacturing.

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Also note in the above, all taxes and penalties were shoved onto the working masses while the rich evaded taxes….exactly like today.  Today, Goldman Sachs and others use Elizabeth’s pirate islands to evade taxes.

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. ….During the later stages of Philip’s reign bullion began to pour in from America. In the first half of the C16 American bullion had numbered 200,000 ducats per year. In the 1560’s this quadrupled and by the 1590’s this amount had increased fourfold.

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However, more often than not this money went straight to Philip’s war efforts. In 1587 he was paying more than 100,000 men. Philip’s wars did not bring the benefits they were expected. Firstly they were not self-financing. From 1567 to 1600, over 80 million ducats was sent to the Netherlands but also Philip’s troops (in Italy, France and the Netherlands) spent their money there and those countries received the benefits of the soldiers pay.

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In other words, the ‘production’ of gold and silver wealth thanks to brutal military occupation and enslavement of the Indians of the New World couldn’t keep up with the war spending in the Protestant and Muslim wars run by Philip’s Pentagon. Like imperial Spain, our NATO and other bases as well as our distant wars means that our military spending is far away, not here. True, we produce our weapons here…except we have to share this with NATO countries and the actual production here has declined since WWII and not is less than 50% even as our own country is rapidly being deindustrialized just like Spain thanks to imports from Asia.

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Throughout Philip’s reign there was also a massive shortage in industry; 80% of the arms used to suppress the Moricos revolt of 1568 were imported. The war with the Netherlands made the markets unstable and deterred potential investors who preferred to invest into Philip’s debt buying bonds from him and gaining interest. Philip’s selling of these juros (bonds) was costly since it provided immediate cash but at the price of mortgaging the future economy. Philip also sold land – allowing nobles to have jurisdiction over the alcabala tax which also proved costly in the long run….

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Our sick government boasts that all our trade rivals and enemies love to buy our public debts.  Great.  I hope someone someday reads some history.  The parties internal and external that are buying up our public debts use this to bankroll take overs of property, industry and banking.  While dumping all the garbage into the central bank that is bankrolling government overspending on wars.

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….. As the reign went on Spain’s economic problems grew worse and eventually Spain had amassed a debt of 85.5 million ducats whilst his average annual income was 9.7 million.

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Debt that is 8 times income is bad.  The only thing keeping Spain afloat was the New World gold and silver.  Everyone wanted a cut of this and the Asian trade deals.  Of course, part of the problem for Spain was that pirates of hostile nations were raiding the Spanish Main and eating into profits.

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The economic problem of the lack of investment in industry was to cause serious problems later in Philip’s reign, since many foreign competitors seized the monopoly Spain had once had in trade with America and provided them with cheaper prices. The successes of places such as Seville was not as it seemed at the time. It was, in fact, superficial prosperity and more an account of foreign investment than a mark of any real Spanish success….

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HAHAHAHA…..sigh. We not only allowed what happened to Spain to happen to us, worse, we destroyed our own shipping industry!  We now sit passively while aliens control all our ports and use all our infrastructure to expand their own economic powers while draining our own system dry!

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….The economic problems of Spain were also serious in relation to Philip’s military; not just the effect of fighting wars on three fronts but also the lack of good local militia. Raids on Cadiz in 1587 and 1596 cost Philip an estimated 20 million ducats. The example of the Moriscos revolt had shown Philip how poor his militia was and he tripled expenditure on them and fortified many Spanish ports as well as building up his navy between 1560-1574 at a cost of 3.5 million ducats.

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ΩΩNow on to some real analysis here: 9/11 was a complete catastrophe for the US.  Bin Laden’s plan was to lure the US into attacking Afghanistan and then going bankrupt like Russia did earlier.  This plan worked 100% and will be recognized in history as the greatest gambit ever pulled off by a person using an army of 17 warriors.  So long as the US public and leaders recognize this, the better.  But of course, this is now impossible thanks to ideological problems besetting us at every possible level.  So we can’t see our failures clearly.

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ΩΩThe US is, LIKE SPAIN, engaged in many wars: economic wars as well as religious wars.  Nothing kills a nation quicker than to get bogged down in religious wars.  The Spanish wars in Europe led to a long series of wars between Protestants and Catholics that devastated Central Europe to an extreme degree.  These wars bankrupted all the major empires: England, France, Germany, Austria, Spain, all of Italy, etc.  These wars were fueled by extreme amounts of gold and silver suddenly flowing like a river into Europe.

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ΩΩExcess money didn’t create industry, IT DESTROYED INDUSTRY.  The capital base created by immense loot that was gained via war didn’t strengthen Spain, it destroyed Spain!  The more the Spanish doubloon was used for international trade, the weaker Spain became due to too much debt!  Minting all that silver and gold from the New World didn’t help Spain whatsoever.

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ΩΩWe could think of the Federal Reserve and the National Debt as New World silver and gold: we mint the money used by our dire rivals but we don’t control it nor is it benefitting us. All our debts we took on did was gild many lilies and gave us many mansions and lots of fun places like that economic death spiral, Las Vegas.  But it didn’t improve our industrial base nor did it make us solvent in any way, shape or form.  All it did was unleash a swarm of cockroaches and termites inside of our financial system who, like the nobles of Spain, viewed their country as a looting expedition.

News Analysis – Afghan Offensive Is New War Model – NYTimes.com

For the first time, NATO and Afghan officials have assembled a large team of Afghan administrators and an Afghan governor that will move into Marja the moment the shooting stops. More than 1,900 police are standing by. Setting up a government in this impoverished country is no small task. Across Afghanistan, the Afghan government and its police are reviled for their inefficiency and corruption.

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“We want to show people that we can deliver police, and services, and development,” said Lt. Gen. Mohammed Karimi, the deputy chief of staff of the Afghan Army. “We want to convince the Afghans that the government is for them.”

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HAHAHAHA….send  our troops to Detroit!  Send them to any of the cities in the Central Valley of California. Send them to the Mexico/US border towns!    Send them to NYC.  HAHAHA.  Here in my own isolated non-Taliban valley the State removed the troopers so we have no more cops.  And services are being cut.  I see signs all over the small communities here screaming, ‘Save our schools’ as state aid for schools is cut and schools are closing.

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Meanwhile, we are spending $100 billion to bring modern police, services and DEVELOPMENT to isolated Afghani villages….WHICH THEY DON’T WANT!  This is the definition of ‘dying empire’.  We are spending a fortune building schools in Afghanistan…which will be burned down the minute we depart…while closing schools in the US…which are badly needed here!

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….“We are trying to take away any hope of victory,” General McChrystal said. That would set the stage for a political settlement that General McChrystal believes is the only way the war will end.

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ΩΩBin Laden didn’t need any stupid bombs in the WTC to lure the US into war in Afghanistan.  He wanted us to come and we came.  If he used a pea shooter to get us to come, he would have used it.  The fact remains: the US public is convinced, if we spend all our loot on Afghanistan, no one would ever attack us.  But the list of future enemies is very long!  And gets longer, the more we deindustrialize.

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ΩΩThe insane general who has hijacked AIPAC Obama and AIPAC Clinton believes that if we show the Afghanis they can’t win, they will have a ‘political’ settlement on our terms.  Unfortunately, History shows clearly, this is not possible.  The Afghanis will happily have a political solution as soon as they get what the Vietnamese got: all US troops out with tails between their legs.

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ΩΩThe Vietnamese never attacked the US.  But they did force us off the gold standard.  Most economic thinkers refuse to think about how Ho Chi Minh’s strategy of weakening our economic system by draining our Treasury think that Nixon cut the gold standard for other, more mysterious and conspiratorial reasons.

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ΩΩThe sad fact is, we were going bankrupt back then.  And fixed this by destroying our monetary base. This pushed the economic costs into the future. During the period of 1971-2010, our entire industrial base and economic systems have run in the red.  Bit by bit, we took on more and more debt while losing more and more sovereignty.  Bin Laden knows that all we need now is that small push and down the economic bankruptcy toboggan run we go! At well over 90mph.  And in the next hairpin turn, we will have our heads ripped off.

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Econbrowser: Bernanke on the Fed’s balance sheet

ΩΩBernanke blathered about how the Fed elephant will back out of holding all the bad debts created by the bankers.  But this is impossible.  Goldman Sachs and JP Morgan and the international bankers all saved themselves by temporarily dumping their paper in the Fed when AIG’s bankruptcy revealed the Derivatives Beast to be a monster that eats wealth.  Now, they took back all their paper work leaving the Fed to bankroll all real estate losses.

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ΩΩNow, these losses were the responsibility of the bankers that were saved in September, 2008.  Now, they are back to being profitable while parking all this mess in the Fed which is seeing the value of these papers decline as US workers lose jobs and go bankrupt and can’t pay off debts.  Student debts are bad, too, since students graduate and can’t get jobs!  And of course, the industrial jobs dropped from being 24% of US employment to about 2% of US employment.

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ΩΩAnd of these, most are for either the military/industrial complex or foreign owners.  There is nothing Bernanke can manipulate that will fix any of this.  The obvious solutions are not raised, of course: to protect our own industries and this means we repudiate most of our trade deals and since these are all bad anyway, we may as well do this.  Instead, the hope was to kill the dollar so people can’t compete with us.  This is like winning a battle by committing suicide.

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Queen could help prevent future credit crunch – Telegraph

The idea has been suggested by a group of leading economists, who believe The Queen, could act as a vital buffer against unforeseen financial disaster….

. …The letter states: “If you, your majesty, were to ask for a monthly economic and financial horizon scanning summary, from say, the cabinet office, it could hardly be refused…and if this were to happen, the spirit of your LSE question would suffuse still more of those of your crown servants tasked to defend, preserve and enhance the economic wellbeing of your country.”

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ΩΩHAHAHA….my ancestors, the Bardi, went bankrupt lending to the Kings of England!  Throughout history, no one is more irresponsible than royalty when it comes to spending!  This is why we have revolutions!  Indeed, the Founding Fathers discussed this a great deal and agreed that no one was worse at finances than kings!  And history agrees.  Anyway, this is how desperate people are: trusting a bunch of worthless, useless inbred idiots to figure out how to budget money! HAHAHAHA.

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ΩΩThis is the Mail, a right wing rag.  HAHAHA.  The Tories will cut social spending.  The Tories don’t want to stop the pirate island deals.  They think England, once a major manufacturing power, is better off a banking power via these pirate islands using London as their home base thanks to the protections of the Queen of England who is looting the peasants so she and her banking buddies can live in fancy palaces.  And the royals are a royal pain in the ass, too. As corrupt at the politicians in Kabul the US and UK are protecting at great cost:

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Kazakh tycoon’s secret deal on Prince Andrew’s house – Times Online

Timur Kulibayev, the son-in-law of the Kazakh president and worth an estimated £1.7 billion in 2008, admitted this weekend that he is the owner of the Ascot mansion. He bought it from Andrew for £3m above the asking price, even though there were no other bidders.

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His admission comes after nearly three years of secrecy over the building’s ownership. Kulibayev only acknowledged his role after The Sunday Times painstakingly unravelled the chain of offshore companies he had used to obscure the 2007 purchase.

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ΩΩHAHAHA.  The stupid Queen’s family knew they were influence peddling.  They knew of the deal. They knew all the secrets. And do note that pirate islands run under the aegis of Her Majesty were involved in this obvious attempt at bribery and influence peddling.  Perhaps the English can imitate the Chinese and mete out proper punishments…off with Her Head!  And we can eat cake while doing this, too.  Or the Brits can sit idle while being enslaved.  Everyone has choices every day. As information comes in, we can figure out, from history, what we can do about all of this.

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