If you are new to this blog, you are invited to read first “The Largest Heist in History” which was accepted as evidence and published by the British Parliament, House of Commons, Treasury Committee.

"It is typically characterised by strong, compelling, logic. I loosely use the term 'pyramid selling' to describe the activities of the City but you explain in crystal clear terms why this is so." commented Dr Vincent Cable MP to the author.

This blog demonstrates that:

- the financial system was turned into a pyramid scheme in a technical, legal sense (not just proverbial);

- the current crisis was easily predictable (without any benefit of hindsight) by any competent financier, i.e. with rudimentary knowledge of mathematics, hence avoidable.

It is up to readers to draw their own conclusions. Whether this crisis is a result of a conspiracy to defraud taxpayers, or a massive negligence, or it is just a misfortune, or maybe a Swedish count, Axel Oxenstierna, was right when he said to his son in the 17th century: "Do you not know, my son, with how little wisdom the world is governed?".

Thursday, 9 August 2012

Greg Pytel: Disturbing news

Standard Chartered has been accused by the US authorities of busting the US sanctions against Iran by aiding the Iranian financial transactions in the US dollar. Is it a disturbing news? Not really, as expected and we can expect more news of this kind about the financial institutions in the future.

The Bank of England downgraded the growth forecast to 0% (no growth), from 2% growth predicted a year ago, for the year 2012. Is it a disturbing news? Not really, as expected and - considering the way the economy is run at the moment - it is unrealistic to expect any good news any time soon. People should get real and accept that the way the government manages the economy is precisely designed to produce such results. This is the fact, this is how it works, not a rhetorical statement.

The government's Funding for Lending initiative is initially expected to lend about £80bn at below-market rates to banks and building societies. Is it going to help the economy? Of course, not. Even if the banks lend the initial £80bn to households and companies this money will come back to the banks in the first cycle of the money circulation and will not be re-lent again (or very little of it). It will then be used by the banks to convert their toxic waste to it and, of course, to pay huge bonuses to those who will do it. It is glaringly obvious that the financial system works in a way that any cash injection done through the banks will eventually be plundered by them. Funding for Lending is another classic example of throwing good money after bad after rescuing the banks and QE. The financial system is below-rock bottom.

The disturbing news is that it appears that those who run the economy, the government and their advisors, and also the mainstream media who comment on it, do not have a clue about what they are doing. As the alternative news is even worse and rather improbable: that they are damaging the economy on purpose. But from logical perspective such option cannot be ruled out either.

[Since this article has been published this morning BBC reported that "the UK's trade gap widened sharply in June, to its worst level since comparable records began in 1997." Is it a disturbing news? I can only reiterate: not really, as expected and we can expect more news of this sort in the future. But, hey, does it really matter? We are really set for more medals in the Olympics and the government folk and the establishment have a time of their lives.]


  1. It's unbelievable but true. 'Funding for Lending' (FFL) is another euphemism for quasi-'Quantitative Easing' also a euphemistic construction, they must have psychologists making these terms up to make these toxic actions more palatable for general consumption. (Def: Euphemism is generally a harmless word to replace a more harmful one; says it all). This name-game subterfuge is just like QE, less effective with each round no matter how it is dressed up. FFL is Quasi-QE by another name, and in my opinion it is just Snake Oil.

    1. Hi Runaway

      You are right Funding for Lending effectively is the same as QE. However the purist may argue that in QE banks get the cash for their worthless toxic waste directly whilst in Funding for Lending banks have to circulate the cash at least once before they use it to redeem worthless toxic waste for it. But the effect will be the same. The government is simply a prime exemplification of the Einstein's definition of insanity: "doing the same thing over and over again and expecting different results".

      When I watched and listened (not the other way round) Mervyn King, I was under impression that he understands this insanity and is simply mortified by the current situation. At the same time he simply might be too afraid to say what he really thinks. Although by central bankers' standards Mervyn King says actually quite a lot these days.

      Best, Greg

  2. So the banks get to re-float themselves on the back of yet another bailout. How surprising! I wondered exactly how they were going to unwind all of this toxic debt without raising too many eyebrows and now we have at least part of the answer. With regard to, are they idiots or do they understand perfectly well what they are doing, I would say the latter. Conservatives have an ideology to sell us and it seems to hinge around the concept of disaster capitalism. While people are still frightened and disorientated it is still easy enough to manufacture consent for all kinds of societal adjustments. Of course without the concept of austerity on everyone's mind how can a government implement such savage policy that so benefit the super rich . No austerity, no radical change.