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?".

Sunday, 31 March 2013

Greg Pytel: I told you so... with a mafia twist


It may be a bit self indulging to write all the time "I told you so. I told you so many years ago". But what's the choice? The continued economic downturn in the UK is not surprising at all. At present the economy is managed which ensures that dire straights will continue. So no one should be surprised: simply await more bad news to come. The politicians' rhetoric about growth, prosperity, etc. can only be met with an ironic smirk. It looks they treat people if they were silly and would not see the obvious. Some even mainstream pundits have been arguing (privately) whether it is correct to treat the politicians as either devious or stupid. Or maybe there is a third choice? Whatever the answer is it does not change the real situation.

Readers of "The largest heist in history" would remember that the financial mess which resulted from the collapse of a giant global pyramid scheme was engineered in order to funnel the money out the economies to private individuals. Governments bail outs, financial stimuli, generating massive public debt, quantitative easing, and so on - all in direct contravention with free market principles, common sense and indeed many existing laws (unlawful subsidies to the industry, anti-competitive behaviour, etc) - are reaching the end of their practical capacity. Every financial pyramid has its limit. Now, after investments, endowments, pensions have been plundered, the time came for private savings and deposits. What happened in Cyprus was not a mess or a misjudgement. Cyprus, being a small island, is a test case. Firstly it is a tiny economy so any unpredicted overreaction can be contained. Secondly it is an island so things cannot spread physically easily.

Telling people that they can lose their deposits, even possibly below guaranteed amount (100,000 euros), which later was retracted, had not been a mistake. Firstly people realised and got used to the idea that such thing was no longer unthinkable. Secondly, by hitting deposits above 100,000 euros with up to 40% (or even maybe up to 60%) tax, it was made clear that such hit can be very hard indeed. Not some 6.75% or 9.9% as originally mooted: so now it is matter for the 'financial markets' to extend their target, below 100,000 euros. It is indeed a very primitive piece of social engineering and coaching people for the forthcoming loss. It is preparing psychologically all countries in Europe for the next step of the largest heist in history: direct and hard targeting of people's deposits.

There is also a rather ironic twist in the events in Cyprus. It has been widely reported that many billions of euros held in banks in Cyprus came from all sorts of dodgy businesses (Russia?). There is even a whispering subliminal propaganda designed to make it easier to accept this new phase of the largest heist in history. The message is that there is nothing wrong in stealing money from the thieves. Technically what happened there was that the billions of euros in cash deposited in Cyprus was used to redeem for a lot of toxic waste of the financial institutions (it is called 'making investments' in a financial language, with depositors cash). So, as expected, those who had cash ended up with nothing and those who held (and are still generating) zillions of toxic waste, got another tranche of their heist. The largest heist in history continues.

If it is true, as it is widely rumoured, that many billions of euros of mafia money have been kept in Cyprus and now something like 40% or even 60% are going to be lost, one could wonder whether European politicians, central bankers, who drive this process, e.g. finance ministers, or some other decision makers, even lower down the chain, are going to sleep comfortably. Or are they going to think more about their own and their families safety? Is mafia going to accept such multibillion euros loss? Or would they plan to teach a lesson in order to get their money back, to get a compensation for the current 'inconvenience' and mess and to make sure such a thing is unthinkable in the future. Mafia starts wars when there is big money at stake. And in Cyprus some powerful groups lost billions of euros. Therefore we can also look forward to listen to some interesting news. Don't be surprised. Despite being a mere speculation. This is as predictable - and even possibly engineered on purpose - as the current financial mess.

5 comments:

  1. So can/will this happen to uk depositors ?

    ReplyDelete
    Replies
    1. I do not know and I try not to think about that... but in the last 5 years or so many unthinkable happened. What are the facts? Firstly the financial pyramid exists in the UK. The fact that the banks in the UK need around £25bn extra capital simply proved that: http://www.bbc.co.uk/news/business-21948429 (this is one of the features of a pyramid: shortage of capital to satisfy obligations). Secondly the Treasury and the BoE cannot really keep subsidising the banks with more and more money, because the debt is already too high (so increasing public debt would simply result in rating - losing AAA was a warning - and the result would be counter productive (UK papers would start becoming toxic waste thereby de-capitalising the banks).

      As I wrote in "The largest heist in history":

      "Governments became the ultimate customers of pyramid purveyors with the hope that when they offer their custom it would somehow stop the giant pyramid scheme from collapsing. This is extremely naïve and very dangerous. The incredibly fast growth to infinity of pyramid schemes, which is only accelerating, will ensure that the government will not stand a chance to sustain it, unless this massive pyramid scheme is brought to a halt and liquidated."

      Hence the time came for private money. Writing off deposits and liabilities is another form to increase liquidity. I wrote in June last year about resolving the current crisis:

      "If it is not done by the deliberate political decision through negotiations, such or a very similar solution will be forced upon the world by the events. The later it happens, the worse, as the mountain of notional debt and liabilities keeps growing. Hence it will be more and more difficult to deal with that in an orderly fashion (i.e. notional losses will be bigger hence, even a greater room for conflict). "

      (http://gregpytel.blogspot.co.uk/2012/06/there-is-method-in-this-madness.html)

      Not many years ago people would not believe that their pensions, endowments, investments would be raided and become worthless. So there is nothing unthinkable these days and banks need more liquidity badly. So expect more 'financial innovations' in this department.

      Delete
  2. Wow thanks for the lengthy explanation.As you say who would have ever imagined that any of this could ever have happened but then as the whole sorry mess grows what was once remarkable becomes the norm. Most depressing is that the vast majority of the population have no idea what's happening with basic inflation yet alone a compounding debt and until they do i don't expect anything to change.



    ReplyDelete
  3. Thanks for this Greg.

    Blackburn,

    I get the feeling that most people, in the UK at least, do have some vague feeling that the high finance/elite banking sector is to blame for the current situation. Even if everyone were to loosley understand the mechanics of the global financial pyramid scheme, I find it difficult to imagine a British government with the theoretical & practical wherewithall to actually do anything about it. One suspects that the Oxbridge courses in economics that our leaders are drilled with as part of their expensive education, focus exclusivley on neo liberal orthadoxy - how to free up markets so that they function more efficiently. I have only read Lipsey once, however, I do not reacall the following chapter, "How to dismantle a global financial pyramid scheme wilst minimisising the economic turmoil experienced by the billions of real people that actually make up economies". Since, in addition, the banks we are talking about are enormous transnational organisations, bigger in many instances, that some nation states, presumbably any attempt to do anything significant would need to involve a level of international cooperation at least as big as that involved with going to war. As recent excursions into Iraq and Afghanistan have proved, this is possible. Big decesions are not out of the question. It seems though that correct big decisions are. As Greg says, we are often left wondering whether those in charge are incompetant or morally lazy - I expect it is the most unhealthy combination of both. The only thing that I would add is that, since these are our governments, we must also be to blame in part; but not just as the result of wilful ignorance, all too often, it is wilful apathy as well. I once talked about ecomomics to a friend of mine. She said, "Why do you even bother thinking about things like that?"

    Thanks again Greg & best,

    Manny.

    ReplyDelete
  4. "How to dismantle a global financial pyramid scheme wilst minimisising the economic turmoil experienced by the billions of real people that actually make up economies".
    Greg, I am aware that you have posted on this issue offering the steps needed to dismatle the pyramid and return to a non-criminal system. The UK Government is effectively host to the gangsters via the City of London, and the company registration of all the key players here and in the UK Protectorates, and through the Bank of England Nominees Limited. Assuming the key Privy Councillors know what is going on, they probably do not have the political capital to carry out the changes except by negotiation and stealth (if they are not in cahoots). Or through a popular uprising and demand mandate : but there is no sign of this among the greater population; and that ignorance and apathy is unlikely to be ended anytime soon. I guess we have to wait for the unfolding of the heist and its inevitable denouement. It is hard feeling powerless in the face of catastrophe and ruin pending.

    ReplyDelete