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Brexit-Beleaguered Bankers Back to Begging for Bailouts!

By Lucian.amarii (Jup) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0) or GFDL (http://www.gnu.org/copyleft/fdl.html)], via Wikimedia Commons

Nothing is more shameless in a bedazzling sort of way than rich banksters standing on the public curb with their hands out. First, we had the admission this past week by a major French bank that Italian banks are so sick (and so too big to fail) they could cause systemic banking failure throughout Europe if not bailed out by over-taxed taxpayers.

Lorenzo Bini Smaghi — who was a member of the European Central Bank’s executive board and who is now Chair of French megabank Societe Generale — said the only way to save European banks, if they start to fall like dominoes due to Italy’s banking problems, is with taxpayer-funded bailouts.

 

Europe’s banking market faces the risk of a systemic crisis unless governments accept the idea of taxpayer money as the ultimate recourse in a crisis, Bini Smaghi said. Any intervention should be as swift as possible, he said. (Newsmax)

 

A French CEO says his massive bank and others could fall like dominoes due to Italy’s problems? That has to be good for his falling stocks. So, you ask yourself, why would he say something to spook an already scared stock market?

Then we had Italy’s prime minister, Matteo Renzi, pressuring Europe to bail out Italy’s banks by pointing out that Italian bank problems with bad loans pale in comparison to Deutsche Bank’s towering derivatives problem over in Germany.

 

“If this non-performing loan problem is worth one, the question of derivatives at other banks, at big banks, is worth one hundred. This is the ratio: one to one hundred,” Renzi said. (Zero Hedge)

 

Gee, you’d think they were trying to talk the EU into a panic … as if it weren’t already there. Considering that 17% of Italy’s bank loans have gone sour (which sounds monumental to me), Deutsche Bank must be bad beyond belief at a hundred times worse! That’d be an undoable 1700% bad, which is pretty dang bad!

Italian banks are deep into the sour apple bin because their solution to bad loans during the last crisis was to just roll them along by not foreclosing and hope that future economic growth would make the borrowers solvent again, but that kind of economic expansion never came. That left a lot of decay down in the apple bin after the Great Recession, and not too surprisingly the rot has spread. The amount of decay is now four times bigger than it was back then … and it was deadly then! As horrible as that sour mess is, Italy’s premier tells us Deutsche Bank is a hundred times more dangerous than that!

Why are banksters and politicians taking this beggar-thy-neighbor approach by pointing out how bad other European banks are — the Frenchy pointing at Italy, the Italian pointing at Germany? Statements like “Our own banks are so bad they need immediate bailouts, but they’re only a hundredth as bad as yours” are not statements that former central bankers, current megabuck megabank CEOs and prime ministers usually make when they all live or die under the same economy.

When you see a lot of rats like that scurrying together up the stairs of the ship, you might want to make a move for the lifeboats.

The answer must be that it’s a desperate play. European bankers are scared spitless at the abyss that is opening around them. They need to drive fear like a stake into the hearts of the masses and their fellow politicians in order to get the immediate bailouts they lust after if they are going to save themselves while keeping the masses from rebelling Brexit-style against them. These are desperate words from desperate rich guys who see their own money going down the drain if the public doesn’t rescue them.

Italy’s premier wants to inject state cash into failing Italian banks to recapitalize them. That’s because the banks can’t recapitalize by issuing stock when their stock is nearly worthless. I’m sure that sea chests full of state money would give his wealthiest friends nice chairs to sit above the waterline in the lifeboats, but public bailouts are now against the EU’s post-Great-Recession regulations so he’s trying to scare the EU into bending on the regs.

Shameless are the banksters and shameless are their political pals with their “your money or our lives” piggy bankster terror.

 

How close to falling off a cliff is the EU now that Brexit has kicked them in the ankles?

 

As  Jeff Gundlach said this week,

 

Watch Deutsche Bank shares go to single digits and people will start to panic… you’ll see someone say, ‘Someone is going to have to do something’. (Zero Hedge)

 

They’re not even waiting that long, Jeff. That is what these bankster and politician statements are all about. To keep the masses from revolting, everyone needs to be made intensely afraid of what will happen as the alternative if the dinosaur banks are not given public CPR, and in Deutsche Bank, they have much to be afraid of, as it towers over the world with over $70 trillion of derivatives exposure.

Let’s hope the public has had enough of putting its lips to the dinosaurs’.

 

Leave it to mega banksters to get the solutions entirely wrong … again

 

They never learn from their failures, and they’re hoping the public never learns either … or, at least, that the public can be scared beyond its learning curve. (A hope that failed with the brave British exit. So, the banksters are a little afraid now that the smell of revolt fill the air like gun smoke.)

The only solution to the failure of behemoth banks that bloated banksters can come up with is that taxpayers should bail them out in order to save themselves from having the banks collapse on them. It never enters their minds that, if these banks are already known to be too big to fail, the most obvious solution was to break them up a couple of years ago before the bad stuff hit so that they could be parted out in an organized manner. It’s a little late now, but it would still be better than additional conglomeration:

Smaghi wants to go further than just bailing out the failures. Instead of breaking the behemoths up so they don’t roll over and crush entire nations, Smaghi’s answer is to bail them out and make them bigger:

 

Both Italy and Germany have too many banks that are not profitable and more consolidation is needed, the chairman said.

 

You would think that, if ever there was a no-brainer for what not to do, making too-big-fail banks bigger would be it; but, as I wrote at the start of the Great Recession, even George Bush’s solution was to double down on the size of banks, which he was first to publicly call “too-big-to fail”:

 

Whenever one of our economic titans teetered on the edge of bankruptcy this past year, the peril from its collapse to everything in its shadow pressured the executive branch to create a deal over the weekend before the market opened again on Monday. The masterminds of mayhem rushed in to pump some “good” news into Wall Street ahead of the market opening to avert disaster. At every turn, the government’s answer to the risk of corporate obesity was to take two weak and wobbly mammoths and cobble them together into some bigger and more ungainly creature. Each resulting conglomeration came out looking like Frankenstein’s monster with all its seams showing. Thus, many of the following solutions were amalgamated during midnight hours in the board room laboratories of the Washington Wunderkind. (“Collapse of the Colossus“)

 

They’re too big to fail, so solve their problems by doubling them in size? I don’t know how you get any dumber than that even by hitting yourself over the head repeatedly with suitcases full of money. The solution advocated for busted banks that require taxpayer bailouts is, according to Bush back then and Smaghi now, to conglomerate the failing monstrosities into even larger institutions.

History is repeating itself in such a manner that I could just change the names of banks in my article and republish the same article today that I wrote about this nonsense years ago:

 

J.P. Morgan Chase and Company, a name that was already a mouthful of earlier conglomerations, gulped down a belly full of Bear. I guess that would make them the J.P. Morgan, Chase, Bear, Stearns, and Company company. The Federal Reserve helped prepare the Bear to make it more palatable for Morgan to eat. Apparently that role is the meaning behind their nickname “Fed.” Somehow the Fed thought a dying beast fed on Bear would be an improvement on the “too big to fail” scale.

Fat on Bear, you’d think the beast would have been satisfied for a little while, but within a month it felt the need to digest the largest bank failure in world history — Washington Mutual. Again, the Fed cooked the meal. I won’t even try to squeeze that addition into J.P.’s burgeoning name, except to say that the feeding frenzy was mutual. And with that, J.P and Companies acquired a bank that was even a different breed from itself. An investment bank consumed a consumer bank.

 

Sighs. We never learn a thing … even on the obvious stuff. The worst part is that nearly a decade on, the public keeps sucking this swill up. Well … until Brexit. Let’s hope Brits stay the course and others join their revolt.

Smaghi’s got a smoggy brain if he really believes his own solution, but that’s a group-think peril in the banking industry anyway. It’s ludicrous to believe you can make giant corporations more efficient by stuffing two of them into the same suit. It is far beyond merely ludicrous to think that you can take one extremely unhealthy supersized corporation and make it healthier by stuffing another dying giant inside of it! That’s like curing cancer by feeding the patient a diet of fried tumors.

At an early point, sure, making a business bigger creates economies of scale … if both of the businesses you marry together are reasonably healthy. At some point, however, that nasty old Law of Diminishing Returns I keep ragging about kicks in. The periphery of the corporation becomes too far removed from the center to be well managed. No one really understands everything the business is doing. Employees can hide among the masses to where no one knows someone is not working because no one even knows what that guy’s job is. One branch doesn’t know it is repeating the work of another branch. Etc.

If banksters like Smaghi really believe these banks cannot sink without capsizing all of Europe in their wake, then the responsible thing to do is to begin a “Ma Bell” on them — start tearing them down into smaller, more efficient, profitable companies. Time for reorganization. That way they the worst parts can crash safely on their own later on without any help from the rest of us.

The answer is certainly not to start rerevising all the newly revised regulations, as Smaghi and others are rapidly recommending. Why would we want to return to the starting point of the last massive crash?

 

Will the public be beggared or buggered … British style?

 

I wonder if European taxpayers are angry enough yet to revolt against Smaghi’s suggestion. The rest of Europe doesn’t seem as brave as the Brits. Take Greece, for example, which chose to stay in perpetual bondage to its German dominatrix. Even in the UK, the peasant revolt is dicey. Brexit was certainly a vote against this kind of elitist arrogance, but already many Brits are scrambling to find ways to overturn their own democratic decision because massive changes inevitably cause a volatile repositioning in markets. Revolts aren’t tidy.

You’d think after the Great Recession all central banks would have stopped allowing consolidation of the massive banks they oversee. Well, you’d think that if you believed they were really all that concerned about banks being too big to fail. That everything they do continues to make big banks bigger shows all they really care about is getting taxpayers to bail out their cronies.

Because taxpayers have not insisted on breaking up big banks for taxpayer protection, it has not happened. Until they demand it, as the Brits demanded Brexit, it never will happen! It is not a concept that would ever occur to imperial banksters. It is not the way their kept politicians think either.

After a decade of unbearable banking behavior that has spiraled right back to where we started … only higher up for a bigger fall, revolt could easily break out everywhere. But don’t expect the public to be smart. They’ve been completely blind while the banksters buggered them so far. Just expect them to be mad as hornets when you stir up their bin of rotten apples.

Brexit is an organized revolt with a clear objective of extraction from a bloated and failing enterprise, but it will still be incredibly messy. The domino affect of what fails because of the extraction will take months to play out. With surgery, there is blood and there is swelling, and there is pain.

I expect a growing number of simply angry revolts to occur from this point forward that will be far messier. They will look more like terrorist explosions than surgery because people don’t know the right answers. As a result, the public anger at getting raped again is not likely to have much helpful focus. People will be right to be angry — very right — but will they have any idea that size reduction is a big part of what really needs to happen? I think they will just be pushed by fear toward even greater globalization as the only answer big enough to save them.

Sadly, big is the problem.

 

So, back to my economic predictions

 

Anger may cause more nations to splinter off of Europe, but that depends on how messy Brexit becomes. If the dust settles in Europe in the next few months as it already has here in the US, other nations will be encouraged to break away. But I’m not so sure Europe will let the dust settle.

Right now banksters and politicians appear to be doing their best to kick the dust up into the air in order to terrorize everyone else into fear of breaking away and into giving their money to banksters. I think Europe will make the UK’s break as ugly of a divorce as possible in order to make all other nations afraid of doing the same thing — just as Germany did with Greece when Grexit was essentially being voted upon.

Whatever remains of Europe, you can be certain the central powers that be will use fear to tighten the reins of power. It may be a smaller Europe, but it will be even more centralized. Because of how trends are shaping up, I think we are about to repeat another devastating lesson from history: European power appears likely to become more Germanic, and that has never been a good thing.

For some reason that nation, more than any other, gravitates toward an obsessive-compulsive need to control Europe. Germany continually believes its ways are superior so that it SHOULD control Europe. While Germans may not be thinking of overt control, their thinking seems to run like this: “We must make them see that our ways are economically superior because then they will become as economically sound as we are,” Deutsche Bank not withstanding.

Thus, Merkel and her German kommandants push Germanic discipline on the rest of Europe like they are force-feeding broccoli to a baby. In doing so they appear completely blind to how they are stoking the fires of enraged rebellion. (For example, Merkel never saw that force-feeding immigration would empower the Brexit vote.) Merkel has already aggregated European power around herself. Even though she doesn’t hold Europe’s most powerful position, she wields more influence over Europe than anyone as she marches them all to the German way.

Ironically, a single bank in that fiscally disciplined nation — Deutsche Bank — appears most likely to be the force that takes the entire European shambles goose-stepping over the cliff:

 

Today, we got the most definitive confirmation yet that the noose is tightening not only around Italy, but Germany itself … when none other than David Folkerts-Landau, the chief economist of Deutsche Bank, has called for a multi-billion dollar bailout for European banks. Speaking to Germany’s Welt am Sonntag, the economist said European institutions should get fresh capital for a recapitalization following a similar bailout in the US. What he didn’t say is that the US bailout took place nearly a decade ago, in the meantime Europe’s financial sector was supposed to be fixed courtesy of “prudent” fiscal and monetary policy. It wasn’t…. “Europe is seriously ill and needs to address very quickly the existing problems, or face an accident,” said the chief economist. (Zero Hedge)

 

Yes, the most likely bank to bust first appears to be German, and it is monstrous in size … as Italy more than eagerly pointed out. But that’s what happens when centralized power becomes too disconnected from its periphery because of size. It pushes stubbornly for what the center wants, causing something like Brexit to break off the outer edge. That, in turn causes other fractures that run right back to the center.

David Folkerts-Landau, the chief economist of Deutsche Bank joins French bank CEO Smaghi and Italian Premier Renzi is saying that a bank bailout has become so quickly urgent that Europe must break its new banking regulations to allow a bailout immediately, or the crash will begin. His conclusion does not seem very Germanic:

 

Strictly adhering to the rules rules would cause greater harm than if they were suspended.

 

Rules that Germany championed may have to be broken if they hurt Germany, instead of periphery states like Greece. Apparently, the dominatrix loves to crack the whip but not receive it. I anticipate Merkel will put the whip away now that it appears its sting could snap her own behind, but she may be too slow in giving up her own ideas.

It’s all part of the next leg down in the Epocalypse — first Brexit, then European banking stocks collapse, then some major European bank gives Europe its Lehman Brüders moment … and over the cliff they all go.

Deutsche Bank stock is now worth just 8% of its peak 2007 value. It’s already been a loooong ride downhill for one of Europe’s most iconic banks, but Brexit kicked DB in the crotch because almost 20% of its revenues came from the UK, bringing its stock down to a groveling “crash value” now of $12.60 a share. One of the world’s largest and oldest banks looks ready to fall into the gaping abyss of the Epocalypse. No wonder European banksters are screaming “Bailout!”

Auf Wiedersehen.

 


While banks are falling, gold is rising. Here is how you can convert your 401K into physical gold:

 


  • Auldenemy

    Another superb article from the Monetary Master! Your stunning analogies always hit like arrows of truth.

    I read one reply to a Zero Hedge article from a guy who has lived in Spain for several years. He said the Spanish will never leave the EU because it would mean having to take responsibility for their nation, and they can’t stand the thought of that. He said they would rather be shackled to the EU teat than go it alone. He was emphatic about this. I can only presume that most EU countries refuse to accept the fact that the teat is withered and empty now.

    Yes, most UK politicians, big business and banking heads, the main stream media and the Luvvie brigade are still on and on and on about wanting to stay in the EU. I realised a few days after Brexit that the banking-political elites will do everything they can to turn Brexit into Fudgeit.

    I think the reason Italian banks, French banks and Deustche Bank will get their tax payer bail outs is because most of the European population don’t have a clue about the whole banking mess, let alone the totally corrupt monetary policies of central banks in the West to keep their private bankster chums in caviar and champagne. Fast cars, luxury cruisers, private villas on private islands, investments hidden all round the world etc etc means all that free money has to keep coming from Main St. Since 2008 more and more of Main St has got poorer due to the first round of massive bailouts and thus public cut backs. So round two will probably result in all of the EU turning into Greece. I suppose that won’t matter as long as Banksterville gets to stay open for business (as in more looting activities).

    I was amazed that Greece didn’t put two fingers up to the EU last year. Their country is now being asset stripped, with guess who, German companies buying up anything they can lay their smoked sausage loving fingers on. Personally I would rather die poor and be free of EUrocrat Land than die poor and owned by it. I think a lot of my fellow Brits feel the same. Sadly common sense never gets voted into office, so we are run by the UK branch of the Washington/EU banking-political elite, and the UK branch are furious that 52% of us put our fingers up to Angela Merkel’s Europe. Those who want to stay in it are mainly young and Left Wingers, all of whom regard the EUs free movement of people laws (no borders), as meaning it is a socialist Utopia. This is exactly what the banking-political rulers of the West encourage.

    So far there has not been a single BBC National news report on Deutsche bank and Italian banks in free fall. Basically we are constantly told we have made a huge mistake to vote to leave the EU. We are bombarded with pro EU propaganda still, also threats (apparently Sweden, France, Finland and Germany all want the UK to be excluded from any trade deals). Nose and spite comes to mind. After Germany, the UK is handing the biggest amount to the EU every year (£20 billion). I suppose for the poorer countries in Eastern and Southern Europe it all comes down to the big subsidies they get from the more prosperous Northern European countries. Germany is happy as long as it holds the reigns and France is happy as long as Germany lets it think it has one hand on the reigns. France has never forgiven the UK for liberating it, with the US of course, from Nazi Germany. Germany has never forgiven Britain for assisting in destroying the Nazis. Basically Britain doesn’t appear to be liked at all by most of Europe, so why bother staying in a dictatorship that governs it!

    • Thanks, Auldfriend. Right now I think you Brits are the only people who are smart enough and sturdy enough to stand up to the unified global establishment. I hope we will be, but right now I see Trump taking economic advice from Larry Kudlow, who is 100% Republican establishment. Trump, however, seems to be the only thing that is giving some angry people some focus for their anger now that Bernie is out of the way.

      You guys in the UK had a clear focus with Brexit — a specific goal that can be a game changer; but you are also going to be turned into the scapegoat for all of Europe’s problem. As Europe crashes due to its numerous flaws, they’ll say the tap that broke the fractured glass is the cause, not the numerous fractures in the glass.

      People here are getting angry at the establishment, too, but I don’t think their anger has a common focus as to which way the country should go as the British anger did.

      As one person pointed out on another site where this article was published, where are the voices of Merkel and Schauble now that Deutsche Bank is asking for a bailout. When Greece was demanding a bailout, Schauble and Merkel forced as much solve-it-yourself on Greece as they could. Why aren’t they shaking their finger at Deutsche Bank and lecturing it on the need for austerity and discipline? Seems like a missed opportunity for them.

      I like your comment that France is happy so long as it thinks Germany is letting it have one hand on the reigns. That’s exactly it. Germany runs the whole show, whether it has the official seat of power or not.

      –David

      • Auldenemy

        One thing I have noticed through the fraught journey of my own little life is that truly intelligent and perceptive people have compassion and humility. It is a shame there aren’t more. I have read buckets about the monetary polices of East and West since 2008, ditto the economic situations of the US, EU, China, Russia and Japan. It has had once fascinated me and appalled me. Sometimes I think back to pre 2008 when I had no knowledge at all of what central banks do, of how co-joined politics and big banking has become (and how in that marriage from hell both have become so deeply corrupt, leading the world not along the old principles of wealth by production, but wealth by debt). I think of, ‘their’ unimaginable greed for power and wealth and how, like the devils they are, they said to Main St. ‘You can join in. You can have what you want now. Take the money and pay later, need more, no problem. Don’t worry about the massive interest charges, just enjoy the party!’. That whole, ‘Have it NOW’ philosophy spewed out to the masses. The con of it all, but also the degradation of our Western societies by being over loaded with, ‘stuff’. No wonder there is a drug epidemic in the West, no wonder depression and suicide rates rise yearly among the young. That old way, of having a start and youth on your side and something to aim for. It was killed by, ‘Have it NOW’ from this foul banking-political elite.

        The very word, ‘old’ is used in a derogative way now. Yet history proves some things never become old; truth and lies, justice and in justice are as alive today as they were 3, 000 years ago. In this high tech age we are told even our thinking must be brand spanking new, must be the latest model of thinking, just like the latest iphone. Apart from its wars, history is all but ignored. The great innovators in science, engineering and the arts, the mass of humanity that toiled greatly but had far more dignity than we have in our lost societies of, ‘stuff’ and hopelessness. The shame of it all. The shame I have that I am writing this on an ipad, that although a 2011, first generation model, never the less was produced in China by someone working a 16 hour shift in a huge factory that has basic dormitories for the workers to sleep in. I didn’t know until after I acquired this gadget, that some of these young Chinese workers commit suicide because of course they are living lives that our ancestors endured, lives that by comparison to our spoilt, get everything on debt lives in the West are unimaginable to us. Our great banking-political elites handed us debt to live by and exported production to countries where people have to work for peanuts. I suppose what is unfolding now David, is pay back time, the chickens are well and truly coming home to roost.

        Yes, from now on Brexit will be blamed for everything that is wrong and going ever more wrong in Eurocrat Land. The insults are hurling towards us over the English Channel; we are, ‘Little Englanders’, ‘A backward looking nation which wants to live in the past’. We are, ‘racists’ (presumably for wanting to be able to control our now out of control immigration numbers). The EU mocks us, Juncker told us to, ‘Go! Leave!’, only hours after the Brexit vote came in. He also said, ‘This will not be an amicable divorce. Britain has never believed in the EU.’. He, Merkel, Hollande and the weaker EU nations who are firmly attached to the withered EU teat say they will discuss nothing with us about trade until we trigger article 50. I hope the new Prime Minister, Theresa May (who is about to replace David Cameron), has the courage to do just that, to press the EU exit button. If she doesn’t then quite rightly the UK will become the laughing stock of the world. If the enormous power of the banking-political establishment here in the UK and USA push her to do a Fudgeit rather than a Brexit, again we will be rightly condemned by the world. You mentioned Trump and the completely, 100% Republican Larry Kudlow giving him economic advice. So yes, even if Trump gets in, the Status Quo might simply carry on (Trump thinking empty rhetoric to Main St of, ‘Making America Great Again’, will shut them up). Words rather than positive deeds is all any of us seem to get from our politicians now. It is ironic that Brexiteers like myself are condemned as being, ‘insular and narrow minded’. For myself I feel a great affinity with Main St America and Main St. Europe, because right here, on Main St Britain we are having our economy destroyed, and in the process of that our lives, by the same people who are ruining the economy and lives of US citizens and EU citizens.

        Brexit for me was not about buying a Union Jack (lol), singing, ‘Land Of Hope And Glory’, and hoping the battles of Trafalgar and Waterloo can be repeated. I am no jingoist, I know and fully acknowledge the British Empire did bad things. The only thing I would say in the defence of my nation is that at that time in our history, most citizens here in the UK endured lives as hard as those in some of the British colonies. The proof of that hardship is born out by the first, brave settlers who left these shores from Ireland, Scotland, England and Wales, to escape grinding poverty, to escape the rule of an unjust, self enriching, aristocratic elite (the equivalent then of the banking-political elite the entire West appears to be ruled by today). America, Canada and Australia were born from those who left Britain with nothing and arrived in vast countries that had no free hand outs, no nothing. What they did have was huge potential farm land and mineral resources. Your nation was built literally on blood, sweat and tears. Americans quite rightly freed themselves from a German British King. I celebrate that massive victory of democracy over aristocracy. It guts me to see it dying in the West.

        Perhaps it is the awareness of the long struggle of ordinary people in this nation to gain democratic rights, which makes many of us distrust this political EU. It was fine when it was the EEC and it never should have grown itself into a political organisation, making laws for more and more nations (all with different histories, traditions and languages). Unfortunately, as you so superbly expressed, the French have a massive chip on their shoulder and the Germans have an obsession about controlling. It is a heady mix: French insecurity, the little guy who demands to be heard, and Germany, the big guy who WILL be heard!

        The British tend to be phlegmatic. We are neither sophisticated (which the French certainly are), nor do we love bureaucracy (which the Germans can never get enough of). We don’t have the beautiful passion of Italians, we are not as cold as the Swiss and the Swedish (because fortunately we get slightly more daylight). We have nothing to boast about but we do tend to see things through to what ever end. Or at least we used to see things through to the end and Brexit is the first real test of that since WWII. Can we do it? I don’t know. Better to try and fail than not bother, stick to an EU that is sinking in both debt and denial and go down with it. As I have said before, I would rather die poor in a country that makes its own democratic laws than die poor in a country that has handed its democracy over to a foreign power which is not democratic and thus unaccountable for its actions.

        I will end this monologue by returning to the beginning of it. I spoke of the compassion and humility of truly great minds. I don’t wish to embarrass you and I certainly don’t wish for you to think me a sycophant, but of all the writers out there on the global financial/economic mess we are in, (some of them extremely talented and respected like David Stockman, Martin Armstrong etc etc), for me you are the best. I remember the first time I came across your work (an article by you on Goldseek), and it was like a breath of mountain air. It is the clarity in the way you write that delights me. The very best writers, in all spheres of writing, have that same clarity. It is like clear blue water compared to swimming in murky, muddy water.

        Finally, where you really show your respect for your fellow men and women is the way you interact with those of us who comment on your articles. You are not afraid of either praise or criticism, you take both and respond with an open mind. So please, even when you might think no one cares, no one is listening, some of us are. Millions of ordinary people like me not only share your views but need your intelligence to ram those views home, to make them be heard. They are views born of facts, born of truth, born of your own desire for democracy and justice to survive. So here’s to you Sir David (for in fact far from being a knave, you are a true knight of democracy in a world run by very real knaves!).

        Multum In Parvo

        • While the majority of Brits had the courage to vote against all the fear mongering over Brexit, it was a slim majority; and that makes it hard ground to hold as some of those fears come true. It will be easy to look at the problems and say, “OH, the prophets of fear were right. What a horrible decisions we made, as things are now falling apart everywhere,” and the Eurocentrists will do their best to capitalize on that. But things are falling apart on the continent even worse. Brexit has just struck the many deep fractures that were already there and has driven them home. The falling apart happens sooner because of Brexit (both economic and political); but I’ve seen it as inevitable since the beginning of the EU and especially the Eurozone. Still, you’ll get the blame as a convenient scape goat, since your shock wave revealed where the cracks are.

          By a small margin, many of you had the wisdom to know, ‘Yes, it will be hard, but in the long run we will be worse off if we remain and continue to lose our freedoms to an autocratic EU.” I don’t know how the vote differed between the old and the young, but I suspect this was a case of the wisdom of the older crowd who had more to compare to so they could see how much their freedoms and their democracy have been eroded by the EU power.

          I’ve only had the opportunity to visit the UK once. I remember riding in a train from London to York, and a Brit sitting near me said, “I suppose you were surprised to find out how few people with British accents there are in London.” Actually, I was, and that had disappointed me a little, as I like nations to retain their own national culture. I encountered a lot of Indians, Jamaican’s and French waiters. They outnumbered the English and the Scots.

          The British people I met were very sociable like the guy on the train. Even in London they were, for the most part not at all snobbish. I remember one dapper man in a fine wool overcoat with a briefcase on his way to the office in the early morning seeing that I looked a bit lost at the Underground Station. He stopped in the midst of this fast stride for the train. Speaking in what sounded to me like one of the more sophisticated British accents, he asked if he could help me with direction. (Most people I think would not even notice someone who looked lost in a crowded subway station, but he did.) When I posed my question to him, he couldn’t figure it out either and said it was, indeed, puzzling. So, he guided me in person all the way across the crowded station to an information booth where rephrased my question to the subway attendant. Then he waited for the attendant’s answer and finally asked if the answer had helped me solve my problem. When I said it had, he wished me a good day went back on his way to work.

          I had been warned that the people of London are snobs; but I met lots of people — Scotts and English — with the kind of compassion and humility you’ve talked about who were more than glad to talk with a stranger. While I met a minuscule number of snobs with British accents who wished the dumb tourists would go away, most of the true snobs were people with accents from other countries who were working there — most notably the French. I had never really bought into the whole French snobbery thing, so it was quite an eye-opener for me as young man to find the British waiters all helpful and pleasant, but the French waiters (who seemed to occupy every high-end restaurant) almost consistently not caring to give you the time of day and seeming to frown on you for not already knowing the best selections. I decided the British must like to pay to be snubbed in their own country ; )

          That was a quarter of a century ago before all the immigration forced on the UK by the EU. (At that time, it was just the EEC, as you mention.) The commonwealth had turned London into quite an international city. I cannot imagine how much more social pressure London has had since then (and the rest of the UK), and it doesn’t surprise me that people encountering the snobbish or even hostile attitude of outsiders would say, “We’ve had enough of you. We want our country back.”

          I think its hard for people who are sociable by nature to face the scowls and contempt of others from outside the country on a daily basis and not get to a point where you say, “Then just go back home.” You’ve had, in my opinion, a lot of ungrateful guests. So, I don’t think it is racist at all to want that kind of company to end its stay.

          I remember thinking back then, as the more formal integration of the EU into the “United States of Europe” was already in the works, “This will never work. What farmer in Ireland is going to accept a price on his hops that is dictated by someone in Brussels?” I was glad the UK, at least, had the smarts to stay out of the Eurozone.

          So, now you will be reviled as racists, as a backwater current against the natural globalist flow of the world, as segregationists, and even as arrogant for thinking you can do better on your own. But really, you’ve just said, “Enough is enough!” The cramming together of people of diverse cultures under rules that they have little democratic say over has been an enormous pressure cooker. You’ve been the stew inside the pot for forty years now, and the worst of it happened AFTER I visited London.

          You have people pouring into your country who have NO appreciation for British culture and who want to change it as soon as they’re there and who look down on the people who were born there … and how are you in any way better off than you were a quarter of century ago when I visited? So, why wouldn’t you say to Europe, “This has proven to be a horrible experiment for us, and we wish now to end it?”

          Hats off to you for doing so! Stay the course, stiff upper lip and all!

          (And thank you for your gracious words and a second eloquent essay from your own experience of decades of change.)

          –David

          • steve jones

            Wow! I enjoy reading banter between Dave and Auld as much as Sir Dave’s brilliant posts. Auld, you certainly could do a fine blog of you own.
            I had the misfortune of playing golf with three British expats (I’m down under) the day after the Brexit vote. All are smart guys, who have done pretty well out of globalisation, but were certainly not part of the elite. All three displayed a type of “Stockholm syndrome” for their captors, and could not see past the supposed “insular, small minded and xenophobic” Brexit vote of their countrymen.
            I remember, pre-2008, when I too was a “too busy to understand the non MSM truth big bucks wage slave”. Sometimes I think it would be an easier life to go back to being one of the “sheeple” and just be oblivious to being herded into the slaughter house.

            • I know. I thought about making Auld’s post an article of his own on the site so that it doesn’t get missed (minus, of course, the encouraging comments at the end, which I’ll store at a more personal level). What do you think?

            • steve jones

              Well if Auld isn’t too modest, it’s worthy.

            • Auldenemy

              That is most kind of you Steve. To say I am not flattered by your kind comments and those of the Master himself (Sir Dave), would be false modesty indeed. That said I have no academic brain nor any background in business. I am an ordinary human being with nothing to boast about at all, in fact quite the opposite as my own life has been one of many failures on all fronts. Perhaps because I am unable to escape my own failures as a human being I expect those in high office and on lottery win salaries to conduct themselves with integrity. Of course I am a fool to expect that in an age where integrity and leadership are complete strangers. Still I will hope for it and encourage others to understand that if we the people don’t care about being run by an out of control, banking-political elite then our hard won Western democracies will die. This was surely the warning of George Orwell and Big Brother is all around us now in endless forms of surveillance and a determination to homogenise us into a mixed race, compliant mass too afraid to question the status quo. On the positive side, more and more people are waking up to this which in essence is why Trump has drawn so much support. I am not saying a President Trump will make anything better, but it shows the disdain in America at the same old Republican status quo politics, that someone like Trump has drawn so much support. The same is true on the other side of the coin, as in many Democrats being drawn to a Left Wing politician, Sanders and now he is out of the race so many Democrats understandably completely torn because while loathing Trump they know Hilary Clinton is completely corrupt and owned by Goldman Sachs.

              Sir Dave will sometimes say he got the timing wrong on some of his predictions. I respect him for that (most political/monetary/economic analysts seem to never think they are wrong). In fact I think Dave is too hard on himself. No one can ever be spot on about the future, we can only look at the past and the present for clues. Sir Dave is a Sherlock Holmes when it comes to digging out evidence and with his acute perception seeing what the evidence is doing to our countries and therefore where they are leading us to, as in financial collapse. George Orwell saw a future that at the time of him writing 1984 would have seemed absurd to most people. So yes, some traders making a pile of loot on the back of bankster rigged markets and think the party can go on for ever. Most of Main Street know little to nothing about the extreme mess of global monetary policies and endless debt. Main Street can play Pokemon until their brains melt and think all is well. Most won’t understand the path we are on until their local supermarket is closed along with their ATM. Perhaps that won’t happen for a good while, perhaps when it comes some kind of law and order can be maintained and people will accept food rationing like in WWII and just knuckle down to the end of abundance and the new age of hard times. I wouldn’t like to be in a large city though if there are food shortages. What ever is coming down the road, it is coming and it is going to be massive. Being wrong about when it will happen doesn’t negate the fact that it will.

              I actually think that if Clinton gets into power she might go out of her way to start a war in Europe with Putin. I am no lover of Putin but already America under Obama has begun poking the Russian bear in the eye. The entire Ukraine civil war is the product of USA backed insurgents. NATO is now putting more and more troops in countries that border Russia, along with weapon systems that can carry nuclear missiles. How would America feel if such weapon systems were being deployed at the Canadian border? This is sheer madness but would be typical of the Deep State that runs the US, UK and Europe. How do you deflect your own people away from holding you responsible for corrupt political and monetary policies that are gradually impoverishing more and more of your countrymen? One way is to create an enemy.

              The reason I find Dave the best writer on the sad state of Western politics and monetary policies, is because unlike most writers in this field he has no personal political bias. He exposes the political hypocrisy on both sides. Sweeping statements about socialism being a failure, the right wing and capitalism being a failure are pointless. There has been failure right across the spectrum of Western politics which is why there is rising social discord in both the US, UK and Europe.

              So no, I can’t come close to expressing the humbug, greed and failure of the Western world as it is now but Sir Dave can and that is why he must keep writing and people like you and me Steve must keep encouraging him.

              Multum In Parvo

            • Thank you, Auldfriend, for your thoughtful encouragement.

              Indeed, hard-won democracy may be easily lost in far less time than I would have thought imaginable now that college students care more that someone’s speech doesn’t upset anyone than they care about the right to speak freely. The generation before them failed in handing down that essential democratic value. (Don’t know if it is that way on your side of the pond, but there have been many articles about situations on this side where college professors are asked to step down for having said something politically incorrect.

              At the same time, we “hit the reset button with Russia,” but didn’t realize when Hillary said that she meant, “smack it hard enough to break it into fragments and rend it forever inoperable.” Nor did we know that a more transparent White House would mean a White House that even Democrats report as being the most opaque they’ve ever experienced. We didn’t know that having a president who got the Nobel Peace Prize just for getting Bush out of the oval office would mean starting new wars in Syria and Libya.

  • Donald Sergent

    And the S&P is a point below its peak. It truly is surreal. Like a nightclub with only one exit stalked by a team of sociopaths.

    Where does money go to die?
    Maybe it’s already dead, just being moved around to preserve the illusion of vitality. Weekend at Bennies.- ha!
    Maybe you can posit the “irrational markets hypothesis” -when money is just a cipher that has become detached from all economic utility and is a purely symbolic totem.

    • Wonderful question, giving me the opportunity to say something else that I was wanting to say: It appears money is migrating from Europe into US stocks because we’re still the best horse in the glue factory.

      If you look at the Stoxx Europe 600, for example, and compare it to the Stoxx America 600, you see that Stoxx Europe is down 12% for the year, but Stoxx America is up 0.26%. Both European indexes took a sharp drop down after Brexit, but the Stoxx America almost immediately recovered above its former peak just like American stock indexes recovered (since it is made up of American companies sold in an European exchange). Stoxx Europe, on the other hand, only recovered halfway to its former peak — the classic dead-cat bounce one would expect from an emotional crash.

      The money that was invested in companies that make up the Stoxx Europe 600 had to go somewhere. I suspect some of it migrated to American companies. So, right at the present it appears money comes to America to die!

      The smart money — like the money that belongs to the biggest sociopath of all, George Soros — knows to go to gold and has already moved aways from US stocks and even shorted European stocks, especially European banking stocks. Soros, who knows how to make bank off of bad times (and so foments bad times with his foundation) knows that what takes down Europe will take down America soon after because the banks are so interconnected.

      So, the second leg down globally into the Epocalypse is a temporary boon for US only because money has to go somewhere so the dumb money runs for what it thinks is the nearest refuge in the storm, not noticing in the rush that the refuge is perched on the edge of a dirt cliff and the ground in front of the door is cracked.

      Since fiat money is created out of thin air by decree, when it dies, it ultimately just evaporates into thin air. Banks write down their reserves, and the money simply doesn’t exist in the system anymore. Easy come, easy go.

      • Donald Sergent

        yep, the usual. Money chases returns until risk becomes clarified. We’re still the cleanest dirty shirt. Not smelling too good lately, but still…
        “Panics do not destroy capital—they merely reveal the extent to which it has previously been destroyed by its betrayal in hopelessly unproductive works.” John Stuart Mill

    • Auldenemy

      Brilliant comment!