Posts Tagged ‘Europe’


Tuesday, October 9th, 2012

By Mark Rogers

There’s austerity and then some. Why did Chancellor Merkel decide to visit Athens? It certainly wasn’t to boost the revenues from tourism.

It is reported that some 7,000 police officers, secret agents, snipers and commandos were deployed against Greek demonstrators who defied bans on entering certain parts of Athens during her seven hour visit. To attempt to contain the demonstrators, some 50,000 of them apparently, tear gas and stun grenades were fired.

All these men and munitions cost money, a lot of it.

So why did the Chancellor try to boost the chances of the bail outs working by paying a very expensive visit to Athens? She knows that neither she nor her country are at all popular in Greece, in spite of the wish of much of the Greek population to stay in the euro, and therefore the Greeks’ ingratitude for the way in which the German government, against its own people’s wishes, has so far been bailing out the Greeks and keeping their decades’ long corrupt and dysfunctional welfare state and civil service going.

As Sky News reports today, 9 October 2012, online: “GSEE and ADEDY, the umbrella labour unions for private and public sector employees, have called for a three-hour strike across the greater Athens area from noon, bringing the country’s already anaemic economy to a fresh standstill.”

Yesterday, The Daily Telegraph reported that “Alexis Tsipras, who leads the opposition Syriza party in Greece, said: ‘She does not come to support Greece, which her policies have brought to the brink. She comes to save the corrupt, disgraced and servile political system. We will give her the welcome she deserves.’”

And what is Alexis Tsipras recommending in place of the “corrupt, disgraced and servile political system”? Why, the hiring of 100,000 more civil servants, free meals for students etc. – in other words more of the same bankrupt welfarist policies that have brought the Greeks to the brink, and which they managed all on their own.

Merkel’s visit belongs in the same category as the activities of those Greek “anarchists” who, in protest at austerity, set fire to a cinema and other private property in Athens: the effect of their actions, just as Chancellor Merkel’s, is to cause the unnecessary spending of more money when there is already no money.

Austerity, anyone, at all?

Well, yes as it happens, and in Greece too, by people who have actually understood what is happening and are quietly re-ordering their lives and, in doing so, are prepared for the worst… we met them here.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS 

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST


Sunday, October 7th, 2012

By Mark Rogers

The Euro: How to be Muddled

A short Reuter’s report of October 5th gives the gist of an article (published on Saturday 6th October in the Rheinische Post) by the head of the European Stability Mechanism, Klaus Regling. Perhaps unwittingly, its brief precis of Herr Regling’s concerns manages to encapsulate the extraordinary mixture of muddle and mendacity that occupy centre stage in trying to avoid the obvious when it comes to dealing with the euro crisis.

Herr Regling’s “biggest worry” concerns the problem that “some crisis-stricken countries do not have the political power to persevere with their painful but effective reform programs until the end”.

Muddle Number One: given that it is thought – in this case, with justice – that countries like Greece do not possess this political will, how can it be said, as they have not as of yet persisted until the end and indeed, in his opinion, cannot do so, that their reform programmes are “effective”. That would, by definition, only be apparent at “the end” and “the end” is presumably defined as arriving at a point where the reforms appear to have worked.

Herr Regling’s next item of concern is that a Greek exit would be the most costly solution.

Muddle Number Two: if he is right about the paralysis of political will, then the “costliness” or otherwise of a Greek exit is irrelevant: it would be the right, indeed, the only solution. What of course in this context is meant by “costly” is that once one country has pulled out of the euro (and remember, it might be Finland, a country that is not crisis-stricken), others would inevitably follow; “costly” in this sense is to be understood as: embarrassing to the projectors of the euro…

“He also said the euro zone’s crisis strategy was working better than many people acknowledged and that the region was more than halfway through national structural adjustments.”

Muddle Number Three: this is the usual habit of lying which is always fallen back on: having asserted that there is little to no political power to persevere to the end with “effective” but unworkable solutions, it is then announced that the solutions are working after all, and the only problem is that the critics of this whole boiling are not “acknowledging” that everything is in fact hunky-dory – or will be, perhaps, one day, if only everyone would stop complaining…

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS 

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST


Saturday, August 25th, 2012

By Mark Rogers

Now that the main Olympics are over and the daily newspapers have recovered their normal size and weight, it is possible to see what else is happening in the world. Surprise, surprise… while London was full of sportsmen and women doing their best to out-compete each other to make some sort of achievement, those other Olympians – the gods of the Eurozone – have got precisely nowhere. Which in practical terms means less than nowhere…as we have previously seen here.

The Greek Prime Minister has been smiling his way from Paris to Berlin – but it isn’t going to make much difference. The German government is under huge popular pressure not to make any more concessions to the Greeks, the idea being that as the Greeks have, again, failed to make progress to meet any of the commitments they had already made, where is the logic or reason in renegotiating?

The problem is simple, and is well understood by Chancellor Merkel: the only way in which Greece (and Italy? Spain? Portugal?) can be kept in the euro is by the Eurozone becoming a real fiscal union with Germany permanently underwriting the poorer countries’ debts. But this is completely unacceptable in Germany, and other northern European countries (Austria, the Netherlands and Finland) are equally opposed. Was this one of the original compromises made before the euro was launched? While knowing that the single currency might only succeed if the proper fiscal union was created ab initio, but also knowing that this would have been politically unacceptable, the politicians went ahead with their vanity project knowing that it would be botched…  No wonder they’re desperate to patch it up somehow, but their inability to do so, because of the impossible circumstances they have created, has led to this apparently never-ending stasis…

But perhaps not quite, because from a completely unanticipated direction a break-up of the eurozone may be on the cards sooner than anyone expects, except those who have prepared for it: the Finns.

The current issue of The Economist (August 25, leader) states: “efforts to shore up the euro might be scotched not in Berlin but in another austerity-minded northern capital: Helsinki.”

The Finns have already made contingency plans for the break-up of the euro. On July 6, 2012, the Finnish Finance Minister was quoted in The Daily Telegraph as saying:

“Finland is committed to being a member of the eurozone, and we think that the euro is useful for Finland,” Ms Urpilainen told financial daily Kauppalehti, adding though that “Finland will not hang itself to the euro at any cost and we are prepared for all scenarios”.  She went on: “Collective responsibility for other countries’ debt, economics and risks; this is not what we should be prepared for.”

It is worth keeping in mind that Finland is one of very few EU countries that has managed to maintain its triple-A credit rating; the finance minister therefore speaks with a good deal more authority than most other players in this wretched game: “We are constructive and want to solve the crisis, but not on any terms,” she said [my emphasis].

The Economist goes on to point out that “uniquely, Finland has demanded collateral for its part of Greece’s second bail-out and for the funds it underwrites to support Spain’s crippled banks. If a grand bargain on the mutualisation of debts is ultimately required to keep the euro together, the Finns could block it. A few observers even think a “Fixit” (a Finnish exit from the euro) is more likely than a Grexit.”

This is quite a turn around. It should be remembered that in the 1990s the Finns pulled out of a banking crisis entirely on their own, demanding no assistance from anyone: no wonder they are hostile to bail-outs!

The Economist says that the longer Chancellor Merkel prevaricates, hoping to come up with some grand unifying scheme, the more the cost of bail-outs will increase; but surely the real point is that while prevarication has prevailed, the money itself has run out.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS


Sunday, August 12th, 2012

The Gold Mine Effect by Rasmus Ankersen, published by Icon Books, London, July 2012

Reviewed by Mark Rogers

Rasmus Ankersen, the “High Performance Anthropologist”, is an enthusiast, driven by a “fierce curiosity”. Eliminated from a career as a footballer by a knee injury at the age of 19, he became a football coach.

Early in this career, while Mr Ankersen was coaching at a Danish football academy, he and his fellow coaches failed to spot potential in a young Danish footballer: they thought his talent insignificant, only taking him on because they needed to make up numbers. This player, Simon Kjaer, went on to a stellar career.

Mr Ankersen’s frustration over this failure “ultimately led to [him] selling everything [he] owned and setting off to travel the world for six months.” The result is this book: he selected six of the most astonishing Gold Mines in sports, to meet the coaches, to train with the athletes, to evaluate at first hand the training regimes, and discover the “secret” of high performance.

His first conclusion is that: “The secret is not a secret.”

It is important to recognise that while his book is about what motivates high achievers in sport, the lessons learned are applicable to other areas of achievement. While such discussions are kept to a minimum, once the reader has grasped the point it becomes easier to work out these applications, one of the most important being to education, which will be dealt with in due course.

The Gold Mines

The title of the book is only half metaphorical: the athletes and sportsmen and women he studies win inordinate numbers of Gold Medals at World Championships and the Olympics. Why?

Why is 70% of Kenya’s Gold Medals in world long distance championships won by athletes from the Kalenjin tribe, which numbers three million and constitutes just 10% of Kenya’s population?

Why has Russia in a mere few years become the source of 25 per cent of the players on the world women’s top 40 ranking list?

Why does a diesel burnt track, with a disintegrating gym and no facilities worth speaking of, in Kingston, Jamaica produce most of the world’s best sprinters?

And where do the great Brazilian footballers come from? “In the 2010/11 Champions League, the world’s finest club tournament, 79 Brazilians had time on the pitch, compared to only 25 Britons, 26 Germans and 49 Spaniards – and not a single Brazilian team takes part in the competition!”

The other two Gold Mines are South Korea, from whence come 35% of the world’s best female golfers, and Bekoji, an Ethiopian village, which turns out the world’s best middle distance runners.


Mr Ankersen’s researches in the field and in the literature prove the facile nature of many of the more magical explanations for these successes. Usain Bolt’s father claims his son’s achievements are rooted in the properties of the yellow yam that was Bolt’s favourite food as a child. The more ubiquitous genetic explanations get a sound drubbing: there are no African “running” genes, no South Korean “lady golfer” genes, no Brazilian “footballing” genes: in the case of the latter two, this ought to be obvious as golf was not invented in Korea nor football in Brazil.

The conceptual results of this adventure into the Gold Mines are highly illuminating: merely listing the concepts will give the reader a ready idea of how they apply on and off the sports field.

(1)   The secret is not a secret.

(2)   What you see is not what you get.

(3)   Start early or die soon.

(4)   We’re all quitters.

(5)   Success is about mindset, not facilities.

(6)   The successful coaches are more like godfathers.

(7)   Not pushing your kids is irresponsible.

(8)   Who wants it most.

The Most Interesting Concept…

 … is number (2). The mistake that many coaches make is a cause/consequence fallacy: the potential for future performance is deduced from current performance. Stephen Francis, the Jamaican sprinting coach, is adamant that this doesn’t work: he wants the story behind the performance. Current performance may only demonstrate that the runner is already operating at the limit of his abilities. Good coaching, constant training in an atmosphere of encouragement, contribute to current performance but are not a sufficient guide to potential achievement. Mr Francis is notorious for taking on athletes that everyone else gave up on – turning them into Gold devouring winners!

Asafa Powell, for example, had been turned down by every club he approached before he arrived at Mr Francis’s burnt out track of grass. The Maximizing Velocity and Power Track and Field Club was founded when Mr Francis (who is not an athlete but a statistician) sold practically everything to set it up: in the early days, in order to ensure that his athletes had enough to eat, he couldn’t afford running shoes – so they trained barefoot!

What Mr Francis saw in Asafa Powell was a person “who at the age of seventeen ran the 100m in 10.8 seconds. He’d been to a poor high school with a bad coach and hadn’t trained much at all. The training he had done consisted of him going over to G.C. Foster College in Kingston, looking at the way they trained, then going home and doing the same thing. ‘This told me that Asafa probably had considerable underexploited potential,’ Francis explains.”

Applied Insight

It is immediately apparent how this principle is widely applicable: it ought to set up an elementary early warning system for recruitment and promotion in any sphere of business. “As Capital One’s CEO, Richard Fairbank, put it … ‘At most companies, people spend 2 per cent of their time recruiting and 75 per cent managing their recruiting mistakes.’”

It is equally applicable to schools, which are historically notorious for misjudging or overlooking ability, though this wouldn’t apply to a musical academy in Berlin with a reputation for turning out pupils who go on to join the best orchestras or become supreme solo performers. This figures in the book because it was the venue of an experiment the results of which “would challenge the most fundamental conceptions of what leads to elite performances.” These results are also a vindication of the concept that the “secret is not a secret”. The crucial factor is: practice. This sounds obvious, but while for decades some mysterious innate talent, some welling of the subconscious or other arcane process as plumbed by psychoanalysis or other fashionable therapy-based analysis was thought to be the key, the obvious was ignored.

The violinists were divided into three groups for the experiment: the virtuoso best, the second best, not star material but still very good to the point of having a performance career, and the third who would probably only ever be teachers. What distinguished the three groups? Simply the amount of time they practised. That, however, still did not explain the difference between the very good and the very best. Further probing revealed that the very best not only practised harder than anyone else while at the academy, but had practised over the years before coming to the academy and had started much earlier.

Not Pushing Your Kids Is Irresponsible

Number seven in the list of concepts, this is the most controversial. Education, education, education… but for whom, how, where and what? For some twenty years the British state’s Qualification and Curriculum Authority has insisted that the primary purpose of education is the cultivation of self-esteem. Children must not be exposed to anything that could cause some children to succeed while others fall behind.

This also means that children must not be pushed: this is the whole meaning of “child centred education”, that children will be naturally drawn out over time, that talent and achievement however mundane are somehow “innate” and are therefore not allowed to appear early for fear of it withering on the bough (something that never worried Mozart or his parents) – this is the poisonous doctrine at the heart of the failure of state education. Formal rule-based learning is abolished under this doctrine on the fallacious reasoning that rules are straight-jackets rather than springboards. The claim is that those who are exposed to learning rules are then confined by them and learn only to hate what they have learned. But think: do those who have learned and practised the rules of cricket give up in disgust once they have mastered them?

The vicious fallacy behind this thinking is exposed throughout this book, and particularly in relation to the success of the Gold winners in tennis from Russia and in golf from South Korea, for these successes are founded on a group of people largely despised by the British education system: parents. These parents not only push their children, but give up everything to stand behind their children, following their training, keeping log books of practice at home – in short, getting involved. Indeed, so important was the parental input that Mr Ankersen discovered, he goes on to say that to be casual about their children’s success, to be indifferent to what it really takes to master anything, is the true parental sin. And the other crucial insight, the one that was also found at the Berlin academy, was that these children started very young, as young as five or six.  

The attitudes he discovered in Russia and South Korea are contrasted with tennis in Britain. So concerned that the Wimbledon Championships have failed to produce a winning Briton for so many decades, the government and the Lawn Tennis Association throw £60 million a year at the sport. State of the art training facilities with every luxury and comfort exist – to which bored parents bring their children and then sit waiting outside the practice courts, reading paperback fiction and willing the session to be over so that they can get to the hairdresser.

Facilities or Motivation?

Brazil’s footballers owe their success to one single factor: the endless dribbling and scoring that they engage in year in, year out on the street corners of the favellas from a very young age. High on the hills above and beyond the favellas sit the family homes that successful footballers have built to rescue their families from the slums, acting as an inspiration to the next generation of footballers. The godfather of Brazilian football, Eurico Miranda, asserts that “95% of them have been created on the street corners … This is the kind of head start that you can’t catch up with. The biggest mistake they make in Europe is being too well organised. Brazilian footballers are not the product of organised talent development. … Our academies … just have to make sure not to ruin the raw material they take in. The work has already been done for them.”

Stephen Francis, the coach of the Jamaican sprinters, declares that he will never change his training ground. For one thing, it eliminates, sometimes at the very beginning, those athletes who look for glory but aren’t prepared to work for it and expect to train with all the mod cons and comforts. The Kenyan runners live semi-monastic lives up in their mountains, running, eating, sleeping and running again.

The book is full of surprising and convincing insights, and the most important theme running through it is the problem of “innate” talent. A small but interesting experiment conducted at Hong Kong University puts this into perspective.

Organised by Carol Dweck, a psychologist at Stanford University, students were given several challenging tasks; once completed, half the students were praised for the effort put into them, and the other half were praised for their intelligence. As a result, subsequent tests produced interesting results. Those praised for intelligence became passive and reluctant to perform the most challenging assignments; those who had been praised for effort simply kept on improving.

Even more instructive was what happened next: the children were asked to write letters to those at another school describing “their perceptions and experiences of the tests they had undergone. … Forty per cent of the students who were praised for their intelligence had lied about their results in the tests. They claimed that their test results were better than they actually were.”

Subsequently, these children were offered a chance to improve their language abilities. All classes at the University of Hong Kong are conducted in English, so it was assumed that the children would jump at the opportunity. “It transpired, however, that the majority of the students who had been praised for their intelligence preferred to stay at home and abandon the course.” This is a fascinating insight into the sort of problems that may be caused by the “innate talent” assumption: it “shows what happens when people end up in an environment that exclusively celebrates their natural talent and not, say, their commitment and application. They begin to define themselves by that talent-description, and when times get tough and that self-image is threatened, they have difficulty with the consequences, to the point that they would rather lie than be exposed as untalented.”

There is no doubt that the High Performance Anthropologist knows how to get results – and goes about it in a highly original and thought-provoking manner: the book is pure Gold!

Readers curious as to why a gold investment website should be running articles of this nature should refer to this statement:  GOLDCOIN,ORG: MIXING POLITICS AND NUMISMATICS?


Wednesday, June 6th, 2012

By Mark Rogers

A Few Thoughts on the Democratic Consequences of a Constitutional Monarchy

In spite of the weather, the programme of events scheduled to celebrate the Queen’s reign of sixty years went ahead as millions of people turned out all over the country for occasions great and small.

The biggest was the river pageant in London. What is worthy of note is that the hundreds of boats were crewed by dedicated enthusiasts from all parts of the country, members of private trusts and museums and clubs established over many decades to preserve old boats. They are experts in what they do, knowing how to restore, care for and sail these boats. All over the country, there are the equivalents for trains, cars, steam engines, and all manner of engineering works. 

And all of these people knowingly work hard to keep their historical connections and interests alive and independent. In other words, there exists in this country not only the underclass of those who subsist on the benefits system and rely on the government for their needs, not only the excessive civil service, but also this parallel class of people from all sorts of backgrounds who, in a way, keep the ancient ethos of this country alive. It is they who turned out to salute the Queen on the river.

Another point of considerable importance in reflecting on the implications of the Jubilee weekend was that the events were paid for privately and were made possible through a massive infusion of voluntary effort. Only the security for the major events in London was paid for out of the public purse, which is as it should be.

What keeps the monarchy alive in Great Britain?

The immediate answer is the personality of the Queen herself which inspires affection. This affection may partly be induced by her longevity, and is also probably because of the way in which the public saw how the Queen quietly went about restoring the way in which the monarchy was seen after the disastrous period during which three of her children were divorced, accompanied by a media frenzy of “revelations” about the lifestyle of the Royals. She did so by manifestly not losing her head and by giving a few dignified speeches in which shortcomings were acknowledged.

But this is not, as it cannot be, all. The monarchy is sustained by a whole panoply of physical, historical arrangements: royal residences and their staff, and the armed forces, who owe their allegiance to the Queen as head of state, and in particular those elements specifically dedicated to the Royal Household.

And beyond these institutions, as the Queen Mother’s funeral, the Royal Wedding last year and this year’s Jubilee have demonstrated, there is the great mass of the British people, and beyond them the peoples of the Commonwealth.

“People Power” and the Monarch

Is it going too far to suggest that the body that is the strongest in underpinning the monarchy is the ordinary people of the realm? I do not think so: the great commentator and historian of the English Constitution, A.V. Dicey, temperamentally a conservative, had no hesitation in describing the power and validity of the constitution as ultimately deriving from the people: that the people are the ultimate source of sovereignty is what one would expect in a democracy, but it is indeed a lesson that has taken long in the learning. And Dicey wrote at a time when the reigning monarch was considerably more powerful than the present monarch.

In what does the power of the monarchy then consist? Is Walter Bagehot’s formulation correct? Bagehot famously divided the Constitution into its ceremonial and efficient parts, that is, the monarchy with all its lavish display and the workaday world of the politicians. This formula is probably a more accurate description of the present monarchy than it was during Victoria’s reign when Bagehot wrote. And of course the further one goes back into history, the less persuasive his formula becomes. This having been said, however, if one takes a Burkean view of these matters, the formula suddenly leaves much to be desired.

For what it leaves out is the historic dimension of the present, which is most vividly displayed in the ceremonies of monarchy – and which the British do so superbly! – which must be read as a symbol of what the monarchy embodies.

A Constitutional Monarchy

Historically considered, the monarchy has been slowly adapted and reformed to take its modern position as one of the branches of executive government. The others are the House of Lords, the House of Commons and the Judiciary, each with their separate competences and each sovereign in their own sphere. This is the origin of the checks and balances type of constitution, where each branch of the executive power acknowledges, at least in principle, a restraint on its powers in concert with the others.

If then the monarchy is seen as upholding this principle because of its historical acquiescence in these arrangements, it is but a short step to seeing how the monarch embodies the nation, at least in the sense of symbolising that history. Perhaps this can be most clearly seen in the deference paid to the symbols of Royalty in the courtrooms: when the Judge enters, the entire court rises and nods, not to him in his own person, but as the officiator at a tribunal presided over by the Royal crest on the wall behind his bench, and what is being acknowledged is the monarch as the upholder of the law because she herself is bound by the law and is not above it. This is the radical difference between the English Common Law and the civil law system of the Continent, derived from late Roman Republican Law, where to make law, it is considered necessary for the lawmakers to be above the law.

The great Lord Denning once declared of the Common Law: “Be you never so high, the law is above you.”

That the British monarch represents such a radical limitation of power is the foremost reason that the people respect the monarchy: it is an enduring historical symbol, alive in the present, of the system of laws and government that gave the British their liberties.

The ceremonial function of the Constitution is therefore to serve as a reminder of the centrality of that concept of government.

Is it then surprising that the people turn out in such great numbers to honour it, especially at a time when the other branches of government inspire considerably less loyalty, and even interest? In this year of Jubilee the idea has been seriously canvassed that those who fail to turn out to vote should be fined. Such is the desperation of the political class.

The gradual ceding of real powers by the monarchy, avidly campaigned for by politicians of various stripes ever since Lloyd George, has helped bring the other branches of the executive, especially the Commons, into increasing disrepute: the government of the day, sitting in Parliament as of right as elected MPs, able to control the House of Commons through its majority and its whips, and able to send its Cabinet members through the lobbies to vote on its own policies, disposes of more power than ever the Stuart kings did.

The Little Platoons

Edmund Burke knew that the health and constitutional vigour and reliability of our way of life was most manifest in what he called the little platoons of society: the family, private businesses, the private associations and clubs and trusts all of which formed the weft and warp of the national fabric. It was for this reason that he formulated his idea of the chain of being linking past, present and future. It was in disruptions to this chain and assaults on the little platoons that he feared lay the seeds of tyranny.

So the advent of all those voluntary associations on the Thames on Sunday afternoon was a heartening display by the little platoons; that it was to honour a well-loved Queen as well as the institution, suggests an historical bond between the sovereignty of the people and their sovereign which the political class would do well to heed.


Wednesday, May 9th, 2012

By Mark Rogers

One day.

The “sarkozy” in question? Bashing the City of London. So nothing has changed on the despising of the Anglo-Saxon economic model front, then. What else has changed as a result of the French and Greek elections?

While the Times has reported that there is a capital flight out of Greece (The Times, 8 May 2012) – which is hardly surprising – the answer to the above question is: nothing, politically.

The fireworks will be different colours after the French and Greek elections, but the unwillingness to recognise and to deal with the political death of Europe will continue: there is still no political will to recognise the failure of the euro and all the difficulties that that entails for the “union”. Not that there is much show of unity; there is little love lost on the continent for each other, but there is a determination to keep the bone of contention alive – not even the faux-radicals who have been elected to the Greek Parliament, while perfectly content to call their Northern neighbours barbarians, want to pull out of the euro! (Bloomberg here.)

“Voters shy from hard choices.” Thus Lexington in the Economist, April 28th 2012, page 42. “…voters everywhere … want many impossible things before breakfast, including low taxes and all the things that high taxes pay for.” He is, after a fashion, taking issue with Grover Norquist of Americans for Tax Reform, who concedes that the argument for small state-low tax politics is yet to be won: “Too many voters continue to like some of the things their taxes buy, such as entitlements and government jobs. If those things can be shrunk, [Mr Norquist] believes, so can their fondness for the state. Good luck with that, Mr Norquist.”

Well, Mr Norquist is perfectly entitled to point to Europe, where fondness for the state was invented and has become inbred, and in particular to Greece.

Greek voters wanted low taxes, so they simply didn’t bother to pay their taxes at all – and the tax collectors went on strike in sympathy – and they still wanted the things that high taxes pay for. A price system this is not.

The idea, fantastic as it seems, that tax collectors would go on strike against changes to their salaries would beggar belief were it not yet another strong reminder that those who advocate that the state simply pays it way out of trouble (which is what got us into the trouble in the first place) forget that the state has no money.

Even a recent editor of the Economist has advocated that the state in the UK should build more infrastructure (which, he says, “incidentally” provides more jobs) as a way of spending its way to recovery. This is the same Economist which considered the Socialist candidate, now victor, in the French presidential elections, M. Hollande, “rather dangerous” (April 28th) – even though he promises just such spending…

The tax collectors of Greece went on strike because they do not want their salaries cut, but in striking, i.e. refusing to do their job which is to collect the taxes out of which their salaries are paid, they are in effect cutting their incomes to zero.

The state has no money of its own: all that it spends is ultimately derived from the taxpayer: either directly, or by borrowing, which is then paid back by further despoliations of the taxpayer.

Ah! but what about Quantitative Easing? Apart from sounding like what Gargantua did after arriving in Paris, it has pretty much the same effect on the average saver: deluging the economy with printed money simply attacks the taxpayer from another angle – those who have saved see their savings and pensions eroded. Without savings, where is investment, and therefore growth, to come from?

Too much liquidity, and fake at that: QE seems to me to be essentially the government forging its own currency…


Thursday, February 23rd, 2012

By Mark Rogers

This street 观前街 Guan Qian Jie, in Suzhou, near Shanghai, is full of Gold shops

This street 观前街 Guan Qian Jie, in Suzhou, near Shanghai, is full of Gold shops

During the seven days of the Chinese New Year’s holidays, people have bought 3.62 billion yuan’s worth (0.5761 billion dollars) of gold in Beijing, 15.5% more than last year. It was also reported that just two shops in Beijing during this same period managed to shift 1.5 tonnes ( Chinese source). At we have previously reported on the expansive buying of gold in China in our article “Chinese queue at malls to beat Bernanke’s inflation with gold“.

John Stepek, editor of Money Week, recently pointed out that “Chinese citizens don’t have many options as far as saving their money goes – you can’t get an above-inflation return from your bank account, and the local stock market is a casino.”

What is happening? And why is it happening?

As with the eurozone, the flight – on this scale – into gold indicates extreme economic uncertainty and a desire to shore up one’s savings in the only real safe haven. Yet isn’t China supposed to be an economic powerhouse? Isn’t Beijing planning to float the renminbi (yuan), in an attempt to replace the dollar? Isn’t the Chancellor of the Exchequer actively working with the authorities in Hong Kong to make “sure that London is the western trading centre for the Chinese currency”, turning “the City into an offshore trading centre for the renminbi” (The Financial Times, 16 January, 2012)? The renminbi is about to become fully convertible this year – isn’t it?

Well, perhaps not: “capital account liberalization looks off the table … At the moment, the transfers out of China are manageable, but then again the economy has only begun to falter. No officials, even ones less obsessed about control than Beijing’s, would open up a capital account in a quickly deteriorating economic environment. Therefore, events are working against Zhou Xiaochuan [Governor of the People’s Bank of China], and so is Chen Deming, the boss of the Ministry of Commerce. Chen has tenaciously defended the interests of exporters by blocking currency liberalization, and with the country’s trade surplus set to decline—to about $150 billion last year from $183.1 billion in 2010 and $196.1 billion in 2009—it is unlikely that Chen will now let central bank reformers get their way. … If Beijing opens the currency wall and the markets are not ready, flows of investment cash could—and probably will—lead to a catastrophe. At this time, it will take years to get China’s banks and markets in shape for unregulated flows of currency. So don’t expect capital account convertibility this year or even next.” This is the analysis of Gordon Chang (author of The Coming Collapse of China, and Forbes contributor, here: “China says Yuan will be fully convertible soon”).

Declining demand for Chinese exports

Certainly the Chinese economy gives plenty of reasons for this degree of pessimism. One of the most important indicators of China’s burgeoning woes is the troubled eurozone: Europe was China’s biggest export market, but Europe has practically ceased importing. The immediate consequence of this is that recession is perceptibly looming in China, indeed there are, for example, reports that China’s steel industry is seriously struggling with the potential closure of many mills (The Economist, Jan. 23-Feb. 3, 2012). Add to this the optimism expressed at the recent Davos summit by American business leaders that the coming on stream of shale gas in the United States is going to dramatically reduce manufacturing energy costs there, thus enabling American manufacturers to repatriate production.

So does this explain the Chinese flight into gold?

Inside a typical gold retailer in Suzhou, China

Inside a typical gold retailer in Suzhou, China

See a previous article on called “1 Billion to buy gold as Chinese gold rush grows” for some facts and figures.

The figures are certainly impressive – not to say astonishing. But is it certain that these figures represent only concerned citizens anxious to preserve their wealth? The active encouragement of the People’s Bank of China, referred to in the cited article, that “1 Billion Chinese citizens buy gold as a way of preserving and protecting their wealth against inflation, economic crisis and the falling values of major currencies” could bear another interpretation: namely that the Chinese authorities are contemplating at some future tipping point to announce a patriotic handing over of individual gold holdings to the state – i.e. confiscation.

Moreover, let us look again at the declared intention of that same People’s Bank of China to make the renminbi fully convertible this year. The massive purchases of gold may have yet another interpretation: as a means of supporting the value of the renminbi when it floats in spite of the problems that both Mr Chang and Mr Stepek discuss in their articles cited above. And that raises another enigma.

China remains, politically, a Communist state, and remains fundamentally unfriendly to the Western powers – witness its recent active unwillingness to censure the Syrian butchers. That it has liberalised its economy since the reforms of Deng Xiaoping, and that this has opened trade barriers and brought prosperity to millions of Chinese is not to be doubted; but this has all taken place in terms of a closed political system that holds the whip hand over the economy, “state capitalism” interpreted in the interests of the Chinese Communist Party, that is, a fascist-corporatist economic model.

This raises intriguing possibilities in terms of those thousands of purchasers of gold. For while there are corporations that clearly function under the rubric of the Chinese State there are many more enterprises that appear to be private corporations but are in fact shells for the State (the Chinese corporate structure emulates in many ways the systems of incorporation that for a long time successfully hid the fact that ultimately it was the shameless and cruel King Leopold II of Belgium who owned the Congo Free State). And just as this operates at the corporate level, so may it operate at the individual level: there is simply no way of knowing how many of those individual or smaller-scale enterprises who are buying up gold may in fact be agents of the state.

A Chinese Gold Standard?

Remember that according to the World Gold Council and GFMS reports, China is the World’s largest producer of gold and is second only to India for gold consumption (but catching up fast). No coincidence here either!

So to answer the questions raised at the beginning of this article: What is happening? We don’t actually know. And why is it happening? One shudders to think….
…. But then imagine if one day the Chinese government “requires” private investors to place their gold in the People’s Bank for the good of the Nation – the national gold stock would swell considerably – maybe enough to back the Yuan with a Gold Standard and thus achieve its ambition to be the World’s Reserve currency?

A young investor contemplates the potential of gold

A young investor contemplates the potential of gold


Tuesday, February 21st, 2012

The Kurdish people have traditions in buying and using gold that are the same as the Indians of the sub-continent: the yellow metal forms an integral part of their marriage customs. Last year about 17 tons of gold were imported into Kurdistan, according to the Directorate for the quality control of gold in the Kurdistan region. The bulk of the gold imports came from Turkey and the United Arab Emirates, and this suggests that it was largely in the form of jewellery, essential for weddings.

However, this statistic for 2011 compares less favourably than the imports for 2010, which were more than 23 tons. By May 2011, the price of 21 carat gold had crept up from 228,000 dinars ($195 or £123) per ounce to 255,000 dinars ($218 or £138) per ounce. A consequence was that brides, who were the only people buying gold in 2011 (everyone else was selling), had dropped the amount purchased from about 50 ounces in 2009 to around 20 ounces in 2011.The rise in price has been attributed to the fall of the value of the dollar, encouraging more and more people in Kurdistan to move out of the dollar and into gold, with the consequence that prices were pushed up until only those intending to get married were purchasing it.

Another likely candidate for the rise in price, and increasingly so as the recent gold rush in Europe has proved, is the eurocrisis which has sent the price rocketing with no end in sight to its trajectory.

A custom in Kurdistan is to arrange for hundreds of marriages to take place on the same day; because of the organisation required, couples register with the agencies that arrange this in advance only to find that they have to postpone their weddings. The Kurdistan Regional Government had established a marriage loan for government employees, but because of the crisis caused by the rising price of gold, decided last year to extend the loans to all.

Gold and Oil Resources in Iraqi Kurdistan

Iraqi Kurdistan has had an annual growth rate of about 10%, which is similar to India’s, though Kurdistan has a much smaller population of course, around 4 million. This was spurred by the no-fly zone policy carried out by the RAF and USAF between 1992 and 2003. The main impact of this policy was to facilitate the development of Kurdistan’s oil fields: reserves are estimated at 45 billion barrels of oil, extraction of which was begun in 2007. There is so much oil that the revenue from it pays for infrastructure and there are no taxes.

A downside to the oil wealth is that although Kurdistan has gold deposits these are not mined because no one sees the point.
That may change of course with the rising price of gold – and the observation that the Iranian government is facilitating gold exploration in the neighbouring Iranian Kurdish province, one of the projects being in conjunction with Rio Tinto. More on this development in a later article.

by Mark Rogers

Buy Gold, be wise – it lets you take back control

Tuesday, January 10th, 2012

The twentieth century saw in both extreme (Nazism/Communism) and mild (the European-style welfare state) forms the strange phenomenon of governments repeatedly taking against their own peoples – in the name of the people. No longer was an independent citizenry to be trusted to look after itself, educate its children, defend its homes and families, and generally stand on its own feet: the munificent state was to do all that, and the end result is bankruptcy. And evasion: the bankrupt states of Europe are not prepared to be honest about where state intervention leads, even though the lessons have been spelled out twice in the twentieth century in draconian form: Nazi Germany and the Soviet Union.

As the eurocrisis deepens, measures antipathetic to savings are being mooted across the continent, involving amongst other things bans on the purchase of gold over certain amounts and bans on cash transactions. Any attempt by savers to convert increasingly worthless cash into solid investments like gold are to be thwarted, raising fears that a Franklin D. Roosevelt style confiscation of privately owned gold may be on the horizon.

Certainly measures proposed or drafted into law in the last quarter of 2011, in Italy, France and Austria, give cause for concern: in Austria there is a restriction on the purchase of more than 15,000 euros’ worth of gold; in France, all metal sales over 450 euros must be paid for by credit card or bank transfer; in Italy it is proposed to ban all cash transactions over (the figures vary) 300, 1,000 or 5,000 euros. The effect of these measures would be to render all significant purchases of precious metals recorded and therefore traceable to their owners.

It has been claimed that the various reasons for these measures are an attempt to rein in credit, to comply with U.S. requests for assistance in combating money laundering, or to help prevent the theft of ordinary metals: in the case of the latter there have been widespread spates in recent months of the theft of metals from anything ranging from telephone poles to industrial plant. While these may all be true goals (whether the proposed remedies will work is another matter – it always is), there is the significant problem that nowhere are the precious metals excluded from the measures. Hence the fears of confiscation.
Gold is a safe haven competitor against fiat money; this may not cause problems when economies are genuinely booming (i.e. the boom is not fuelled by easy expansions of credit). Yet when the fiat money system is collapsing and inflation is rampant the idea that people may protect their assets and their pensions by converting their cash into gold becomes a serious “problem” for the state: savings are seen as a threat.

We have seen how Keynes thought “wealth accumulation” a vice (Austerity for you – privileges for Politicians, December 16th, 2011). He further mockingly remarked: “The duty of ‘saving’ became nine-tenths of virtue and the growth of the cake the object of true religion.” Reckless governments are hardly likely to admire or condone prudence in their peoples; whatever the ultimate reason for this, such an attitude on the part of the authorities will only widen the gap between the political elite, unable to admit the error of its ways, and nervous private citizens wondering whether they have a future.

Finally, savings based in fiat currencies or related to debt-ridden financial institutions have the possibility to fall to zero in a crisis. Savings based in physical assets that you own help protect to preserve your accumulated wealth as they retain worth through a crisis.

The best physical asset to own during a crisis is gold which has proved its perennial purchasing power for over 6000 years – no fiat currency has ever existed that long to compare it and no other asset can compete with the value retention of gold. After all Gold can never be worth zero – it has intrinsic value, it is relatively rare on the planet and it has always been revered as precious because it is and has chemical and physical properties unmatched by any other metal.

By Mark Rogers

Are Bankers Greedy?

Monday, January 9th, 2012

It is taken for granted that to qualify as a banker one must be greedy. The proposition is so silly that it is distressing to note how widespread is its acceptance. Of course there are greedy bankers, just as there are greedy butchers, bakers and train drivers; yet if banking was based on greed, it couldn’t exist. (This is another example of the misunderstanding of self-interest: see  Austerity for you – privileges for Politicians, December 16th, 2011).
The web of trust that is banking could never have come into existence if it was driven by the unqualified greed of all those who tried to participate. Banking arose out of the need of merchants to protect their monetary assets from theft en route as they travelled about Europe trading. They established networks of trust, whereby assets, often gold, could be placed in a secure depository, and redeemed through paper pledges at other trusted depositories, thus ensuring that the merchant carried as little as possible of his wealth about with him. This web of trust is the basic principle which still governs modern banking, and without it the system would collapse.
Isn’t the system already collapsing; doesn’t this prove that governments and people no longer trust the bankers because they are greedy? And the answer to the problem? Legislation: there must be more regulations to fetter the bankers, and to make them pay.
The trouble is they already do. Take bonuses: they are taxed as bonuses, and not as part of income, at a 40-50% rate. The greater a banker’s earnings, the more he already “contributes”. The level of income even without bonuses ensures that the wealthiest people in the country pay a huge percentage of the nation’s taxes, which are largely wasted: the tax-funded welfare state is notoriously inefficient, and a main driver of inflation.

The curious aspect of the demand for regulation is that it is MPs who are to be the overseers of this legislative campaign against greed. There is a strange dichotomy in the democratic mind: nobody much trusts politicians (though like bankers there are eminently worthy men and women to be found amongst them); nevertheless we entrust our health, our education, and all manner of things the state really has no business being involved in, to just these unloved politicians.
The question arises as to whether playing to the masses, which is what democratic politics now largely consists of, is likely to produce viable policies to prevent another crisis. In an editorial in the London Evening Standard, 19 December 2011, concerning the likelihood that parliamentary and public pressure will force the Chancellor to accept the Vickers recommendation on banking reform that banks must separate their investment and retail banking operations, it was pointed out that “[s]ome of the banks most exposed to the sub-prime crash – notably Northern Rock – did not conduct investment bank-style ‘proprietary trading’. Conversely, Lehman Brothers conducted only such activity, having no retail arm. Then again, Barclays Capital, Barclays’ investment banking arm, survived the crisis.”
In other words a key recommendation is based on prejudice and not the facts. So much for financial probity!

By Mark Rogers

No Euro, No Union – No Surprise!

Friday, December 23rd, 2011

Is the Europen Union real?

The crisis of the Euro is demonstrating a fundamental lack of credibility in the institutions of the European Union. Throughout, the European Commission has consistently taken a back seat, as if it really had no idea what was going on, let alone what to do about it.

All parties to the state of the single currency share this lack of credibility and not least because the euro was never credible anyway. Its launch was deferred for a year because the poorer member nations were nowhere near the narrow margin either side of parity with the Deutsche Mark which was the fundamental condition for entry into the new currency.

That fact alone shows what a queer creature the Euro is. The Maastricht Treaty created the European Union to give Europe a single market, a single currency – to become a single State. That there are rules as to who was in the single currency already beggars the question as to what forms a cohesive state.

The rules were for a time adhered to; a year on from the original date of the launch, though nothing had changed, political ambition got the upper hand and the Euro was born: the claim was made that delaying any longer would only call the project’s credibility into doubt.

What was done, however, was incredible: this attempt to unite anyway widely disparate economies by breaking the first rule of admission generated an educated scepticism on the part of several British economists, who outlined the demise of the Euro, down to the detail that Greece would collapse first.

A week after the summit which agreed new fiscal rules (the problem with the old ones, apart from the whole air of unreality investing the project, was that they were never adhered to, a fault it is hard to see the new ones mending), a leader in The Times of London (16 December 2011) pointed out that “Mr Sarkozy secured his goal of framing the new fiscal rules as an inter-governmental agreement rather than a treaty backed by the European Union’s institutions.”

Eurozone Union?

This is even more incredible: in order to commit to more binding state-like ties, in order to chase that ever-elusive credibility, the Euro currency nations are going their own way outside the boundaries of the European Union’s institutions – yet still blithely calling it “The European Union”. What, in this light, is one to make of the European Central Bank’s position? What is the status of the Commission? What does the old cry “further and deeper union” mean now?

The other side of this coin is that there can now be no question that what is driving all this is the national interests of the two most powerful states, which are determined to pull the poorer nations, whether or not it is in their interests, after them, and in doing so divide the Union.

As with all advanced democracies, and this is something the euro crisis has exposed mercilessly, there is a further division within the nations between the political class and the ordinary public: the politicians persist in their unreal aspirations, risking jobs and investments.

The People decide while Politics prevaricates?

A little item of Christmas realism? Vendors at a Christmas market in at least one German town are advertising their willingness to accept – Deutsche Marks! (Exchange rate €1 = 2 DM)

by Mark Rogers

European interest rates to stay low

Friday, November 4th, 2011

Last May in an article with the heading “Has Jean Claude Trichet gone mad”, we explained why the move to increase interest rates initiated at that time had, in our eyes, little chance of being sustainable.

Confirmation came on November 3rd, 2011 with a fall in the official market rate of the European Central Bank, the ECB.

On taking up his post, its new governor, the Italian Mario Draghi, decided for his baptism of fire in the media to lower the interest rate by 0.25 points – this whilst he is supposed to give his first official press conference next Thursday.

What is necessary to understand by the taking of this decision that we had largely anticipated, is that Europe and generally all of the said developed countries have now fallen into the “trap of low rates”.

The best example to illustrate this phenomenon “of the trap of low rates” is of course Japan which for several decades now has been in the situation of financial impossibility with regard to increasing its interest rates.

To finance not the refunding of the debt but solely the interest on the debt, it is vital that the rates should be as close as possible zero. The slightest increase puts the public finances of all nations in danger.

The second reason it is not possible to raise rates is that there is quite simply no growth, nor return to growth, and that here too Japan perfectly illustrates this situation of lack of growth over the very long term.

This decision is excellent for gold. This news is excellent for the banks which will be able to increase their margins through cheaper recapitalization with the ECB and by lending at a higher price to their customers (reconstitution of margins). This news is good for companies because by lowering rates that can make it possible for the euro to drop slightly compared to the dollar giving some breathing space to our exporters. This news is excellent for borrowers at variable rates. This news is excellent to limit and support the risks of a new unavoidable recession (which the ECB expects) in Europe because of the massive austerity plans affecting almost all of the European countries.

The Italians had nicknamed Mario Draghi… super Mario! Our new governor of the ECB has only to finally announce an “unconventional program of quantitative easing” to ignite a bullish trend in the financial markets. This barbaric expression simply means that the ECB would use the money printing instrument according to needs. Like Switzerland. Like the USA. Like the United Kingdom.

The message communicated today by Mario Draghi is an important reorientation. We have from now on one certainty. Rates can no longer go up. We expect for the next few months that the money printing machines will be brought into use. If the attacks continue against Italy, it will be the only solution possible.

Until now the Germans totally reject this solution. If the situation worsens, they will have to accept the recourse for the printing of money, or… leave the euro.
Germany’s exit from the euro is the less considered scenario and yet for us it is the one that is most likely to occur.

It would undoubtedly be the best solution to put an end to the European psychodrama.

Translated from an article by Charles SANNAT
Director of
Economic studies

Greeks prepare a coup d’état ?

Wednesday, November 2nd, 2011

The problems for Greece just seem to get worse and with an insurmountable burden of debt, repayments and austerity measures there seems to be no reasonable or predictable way out for Greece for decades if not longer.
So they feel backed into a corner with little or no choice and therefore nothing much left to lose.
The announcement of a Greek referendum announced out of the blue by the Prime Minister seemed to surprise all the European Heads of State yet they have been in direct dialogue with him and each other constantly – so why haven’t they talked about it before?

Hidden agenda

Papandréou is gettin ready for action and implementation using the referendum as a smoke-screen.
It is no surprise therefore to learn that in the past couple of days the Greeks have replaced all of their senior military commanders; The Army, the Airforce and the Navy have all seen their chiefs sacked and replaced with officials much closer to the Papandréou cause – FACT. They have also removed various other members of the military hierarchy just below the Chiefs to ensure a thorough clearout of all positions of importance and their replacements are all hand picked partisans.

Referendum ou coup d’état?

So what lies behind his surprise decision to conduct a referendum of the people over the bailout proposals from the EU? Is it simply a return to democratic values, has he lost the plot? He has no other viable options?
In short he is preparing for a military coup d’etat which will impose strict marshall law on the streets, force people to work and result in Greece absolving itself of all known debt (how convenient), leaving the euro and the European Union. It is also possibly the only chance left to Greece which will otherwise be burdened with debt, austerity and a miserable existence for at least fifty years.

Think of it as logical – no more debt, no more EU rules, no more French and German rescue plans – just back to zero (which is better than where they are now at minus a Trillion euros and mounting with interest!)
This whole crisis has been a joke and the politicians and bankers continue to flood the media with lies that everything will be alright.
The Greeks are bust several times over and will never repay this debt , the interest or the loans it has received since the EU first bailed out their fraudulent, corrupt, chaotic, dishonest and shrinking economy.

It’s like someone having spent the night in a casino gambling away their fortune for their own private personal greed and gain nut because they didn’t win, lost everything the Casino says it’s OK and let’s you off with all the losses you owe them. Of course casinos are not this accommodating and you’ll end up crippled or worse for your troubles if you don’t honour your debt.
There again Greece, honour and debt appear here for the first time in a sentence otherwise they have no place together.

So what happens next?

Sarkozy and Merkel will continue to lie to the world that they have “the plan” to save everyone, Europe, the Greeks, the banks etc etc.
In reality their G20 is a scam and the promises they made last week to raise €1000 Billion for European bailouts to come is flawed – talk is so cheap with Sarkozy and he has a history of making great TV promises with a view to getting his face on TV a little more but the promises never arrive until he reiterates the same thing a year later as a new promise (usually most of the TV watching “sheep” have forgotten what he said before and of course the media play along with him as they must).

A military Junta in Europe

Greece will find it tough to go it alone but what other realistic chance does it have or does it deserve? None.
The problem does not end there because what will be the effect from the Billons of written-off Greek debt?
French banks will collapse, maybe British and German too. European states will have even more debt from the money they gave to bailout the Greeks which they will obviously never see again but still have to create / print / pretend to have had in the first place.
Once again their credibility will be demonstrated as none existant but they will continue to lie to anyone that listens – everything is alright! Yes, we remember they said that in 2008.

What is extraordinary is that the masses (or sheep) continue to believe in their politicians and bankers like it were some ordained right they have to tell us what to do. Fact is both will do anything they can to benefit themselves and very little to really help any of us. Their power and money are an addiction that needs feeding and they are forever hungry.

Don’t be a fool forever- make your own decisions and don’t believe everything fed to you by the TV.

Remember that it is not in the interest of governments to tell you the whole truth – they cannot afford for you to know that!

When crisis hits

No banks, no cash, no petrol, no shopping, no wages, no credit cards, no invices paid – what then – anarchy, civil unrest, violence, robbery?
It will be survival of the fittest and the protected.
What insurance do you have against a world in crisis, civil unrest and without paper or plastic money?
The only way to survive will be to barter with what you have – this works if you have something valuable to trade like silver coins or even gold. If you don’t have something valuable start planting seeds to grow the food you will need to live – that is of course if you have a garden.

Source AFP

Greek savers ditch Euros for Gold coins!

Wednesday, July 6th, 2011

The worsening crisis in Greece has prompted savers to empty their bank accounts to exchange their Euros for Gold coins.
Concern is growing over the stability of the Greek banking system and of course the astronomic sovereign debt which is crushing Greece.
The Prime Minister George Papandreou may well have persuaded the parliamentarians to back further austerity measures and have won the vote from them but that will not change the resolve of the Greek people.
Greece would need 12% growth annually for at least 30 years to come anywhere near having the means to repay its debts.
How likely is that?
The Greek economy does not have the means to recover and the fact that they have secured the next gigantic loan from the EU and IMF changes little in real terms. This money will only payback the Banks’ debts and therefore not stay in Greece. Surely the only way to help the Greek economy is to inject some funding into it. The only winner in this situation is the Banks who’ll feed their greed for profits and the loan sharks of the IMF and EU who obviously take their cut of interest.
The losers are the Greek people who will still have an impossible sovereign debt blighting their future whilst falling below the poverty line from increased austerity.
On top of this the Government has agreed to prostitute the future of Greece to the lowest bidders who have the cash to buy whatever “good” state assets they have.

A decision that Greece will regret

Without a doubt this line of action will never save the Greek economy or start to rebuild some confidence for a decent future. Greece will stay in Debt for generations. The Greek people will never accept this and their strong protests are understandable. Headlines talk of a possible Greek default – Why? Greece has been bankrupt for over a year, since it first asked for a “bailout”.

The only route to recovery is to restructure the debts or simply declare the country bankrupt. This would be the best solution for the Greeks but of course they’re in a weak position and all recent decisions, including the political waffle and rhetoric, have been taken to secure the European banks that are hugely exposed to the Greek debt. Be under no illusion that the only reason for this action is to appease the power brokers that support the European Governments. The politicians including the Greek government don’t care one iota for the regular people of Greece and why would they because they are all sufficiently immune to the deepening crisis because their deep pockets are lined with personal wealth that removes them from harm’s way and any sense of reality or empathy with those suffering the effects.

The people’s retribution

The one way Greek people have of preserving and protecting their personal wealth is to opt out of the normal system and there is evidence that they have started to empty their bank accounts (maybe à la Cantona – see Eric Cantona’s French Revolution).
Firstly they are taking retribution on the Banks by weakening them and also showing their distrust for reckless, uncaring institutions.
Secondly they are storing their wealth in something tangible and much more reliable than invented currency which could devalue or collapse anytime – they are buying gold coins as they did during the Second World War because they know that this will maintain real value and purchasing power through the difficulties ahead.
Here is some evidence provided recently in the Financial Times by Kerin Hope

ATHENS — Greek citizens are emptying savings accounts and buying gold as they brace themselves for the possibility of a sovereign default and a run on the banks.

Pledges by socialist Prime Minister George Papandreou that his government would “save the country” have been widely discounted by the public. However, parliament gave him a vote of confidence late on Tuesday night. The socialists have a six-seat majority in the 300-member house.

Sales of gold coins have soared as savers seek a safer and fungible source of value.

“When the global financial crisis started, our sales of coins to investors overtook bullion for the first time,” said Harry Krinakis, at Sepheriades, a Greek precious metals trader. “Now the sales ratio has reached five to one.”

Tomas, a computer technician, has exchanged his euro savings for gold coins: “I keep them at home just like my grandmother did in the Second World War.”
Monthly bank withdrawals were running at E1.5 billion-E2 billion in the first quarter. Last year, depositors withdrew E30 billion, equivalent to 12.3 per cent of total savings, according to the central bank. Greek deposits worth an estimated E8 billion were transferred to banks in Cyprus in 2010. But the flow has dried up this year amid fears that Cypriot banks could suffer contagion.

Andreas, a supermarket manager, transferred the family savings to Munich earlier this year. “The Swiss banks aren’t interested unless you’ve got several hundred thousand euros,” he said.

“We can’t trust the politicians to get us out of this mess [and] have to protect our families,” said Sakis, a garage owner, at an anti-austerity protest in Athens’ Syntagma Square. “A bank collapse has got to be in the cards.” He added he had withdrawn his savings and placed them in a bank safe deposit box “for security. Who cares about interest right now?”

Others put their savings into land when prices fell after Greece’s first European Union-led rescue last year. Angelos, a software specialist, bought a neighbour’s olive grove. “I grabbed the opportunity,” he said.
“A year ago I wouldn’t have considered making such an old-fashioned investment.”

It is no accident that other European countries, particularly Germany and France, have experienced dramatically increased investment in gold coins during the last three months. In France investors own more gold than the Bank of France and transactions in coins have increased by 35% (source since January. These countries have aan historical reference to gold coin investments and their benefits so it is no surprise to witness such an increase during periods of crisis. In fact one can determine the “temperature” of concern from this rising activity and people are seriously concerned about an impending crash on the horizon that will have global significance.

Countries like the UK are rather slow on the uptake and the gold investment market tends to be reserved for the extremely well-off and well-connected. What a shame so many people are misled by false information to detract them from participating or they are just ignorant of the facts.

Anyway their loss is someone else’s gain and come the day they will be left holding bits of paper good for burning while their European neighbours use their gold coins to pay for provisions and ultimately survival!

Remember that the signs of crisis were ignored by myopian political rhetoric pre-2008 leaving millions of ordinary folk open to its consequences. The signs of crisis have been with us ever since and still they pretend all will be well and their policies are “working”.

2008 was just the prelude and the worst is yet to arrive.
Be warned and be prepared or once again you will be hung out to dry!

An investment in gold is a survival kit for your future.

The chaos of a currency collapse

Thursday, June 16th, 2011

Last month Belarus witnessed the effects of a collapsed currency when the Government cut the rouble’s value against the US dollar by almost half. Previously 3155 roubles would buy a dollar but in the blink of an eye they decided 4930 would be needed. This was not even the reality because perception of the collapsing currency meant the situation was even worse as people scrambled for foreign exchange on the black market where you needed at least 6000 roubles to buy a dollar.

So what sparked this crisis?

President Lukashenko had promised to raise public sector wages by a third during his election campaign, which he duly carried out. This was sustainable only because of the support Belarus received from Moscow in terms of loans. However, as fears grew about the country’s finances, support from Russia waned and even near neighbours from the EU didn’t fancy the risk thus sparking a sharp drop in confidence in the currency.
To exacerbate the problem there was a shortage of foreign exchange currencies, dollars or euros, in the country.

The consequences of a collapse

Shelves quickly emptied of food and any "tangible asset" that would hold value better than their currency

Wide spread panic broke out as the economy effectively became paralyzed and people suddenly realised their currency was of diminishing worth. Shops were quickly emptied of everything that could be bought. Everyday food was snapped up at “luxury” style prices as people thought of survival but also they also bought electric goods like toasters, microwaves, canned goods and virtually anything that was for sale as they rushed to convert their currency into “any tangible assets” that were not losing value as quickly as their roubles.
The empty shelves throughout the towns seemed eerily reminiscent of the Soviet controlled days.
Shoppers knew that anything they could purchase could be more useful as a form of barter than the diminishing currency in their purses and wallets.

The human cost was quickly evident from the stories of employees sent on unpaid leave as companies also struggled to cope and comprehend the impact. Andrei, a computer company employee explained how he queued for a week in Minsk trying to buy dollars but didn’t even get one. “In just one month, I have been made bankrupt, the entire country is bankrupt” he said, adding that “even during the Soviet collapse we never suffered such a nightmare”.

There are many more stories of hardship, families without food or the means to buy any, shops without stock for them to buy even if they had the means.

Dmitry who is a 48 year old factory worker explained how he closed his bank account to get out 5 Million roubles in cash so he “could buy something before my money turns to dust”.

Tensions are growing as many people blame the President for mismanaging the economy.
Staple food supplies are now hoarded but people feel anxious that unrest is starting that could spill over into conflict at any time.
Revolution is always more likely when the population are starving.

Which country is next?

This may all seem so far away from wherever you are reading this but the causes of currency collapse may be closer to your doorstep than you think.

How many countries are in deep debt and reliant on support loans and bailouts right now?
Greece, Ireland, Portugal, Spain, Italy, Japan, USA, Belarus and virtually all of Eastern Europe and the Euro zone (only they never put it in the headlines!)

What happens when the support cannot be maintained?
Currency Collapse.

It could be the US Dollar, the Euro, the Yen who knows?
But even if it isn’t your currency that collapses what will be the knock on effects in every developed country if one of these currencies collapses?
The same as in Belarus.

Globalisation has been the buzz word for expanding Capitalism but it also means that economies are now inextricably linked and inter-twined to such an extent that when one sneezes they all catch a cold!

Remember the level of Sovereign Debt is spiralling out of control in the US, Greece, Ireland, Portugal and others are close behind such as Spain and the UK. Austerity measures in all countries are hurting normal folk badly – they are losing their jobs, suffering pay freezes, inflation and pension erosion. Social unrest and industrial action looms large across Europe and this will itself impact the recovery and debt repayment. This has already started in Greece, Portugal, Ireland and large scale protests in the UK are gathering momentum with the Autumn likely to be the boiling point of anger.

The discontent and despair of regular folk is understandable as they are bearing the brunt of all the hardship and it just isn’t fair.
Politicians spout their practiced rhetoric about how to fix things but the reality is they just don’t care that much as they are not the ones affected. They have means to isolate them from the hardships and many of them are actually responsible for producing the mess. How can they care about regular people or preach what we need to give up when they don’t – ever met a poor politician? Enough said!

There is now even talk of a “sub-prime” type problem in China because of over-indulgence in property speculation, leaving huge swathes of developments empty or under-occupied and therefore leaking money and ready to default.

We need more than lip service!

Mainstream news outlets are all controlled by self-interest groups (private and Governments) and they never provide the whole story about global economic frailty as there would be worldwide panic if they told the truth. The situation right now is on a knife edge and the next Belarus is not far away. Politicians won’t admit it but then again they won’t suffer like the rest of us as they’re all rich enough and well connected to see out any storm. They care too much for their own popularity to be honest.
Posh boys and rich kids rule the world and their assets are well protected in advance.

Remember what happened when panic struck in Belarus, people bought any tangible asset they could because it would maintain value better than their currency.
This phenomenon is happening daily – your bank account is the best place to keep currency if you want it to devalue!

Currency is not a means of preserving wealth because it has no inherent value especially when confidence is lost – then it is just a piece of paper.

The only real money available is a tangible asset that maintains its value whatever happens to printed bits of paper currency – and that is gold!

A lesson on Money and currency

We need to understand the difference between money and currency as one is real and the other a promise. Money can be defined as a medium of exchange and a store of value and until fairly recent times was in fact coins made out of precious metal with an intrinsic value or for ease of use, notes backed by precious metal.
Money, when considered as the fruit of many years’ industry, as the reward of labor, sweat and toil, as the widow’s dowry and children’s portion, and as the means of procuring the necessaries and alleviating the afflictions of life, and making old age a scene of rest, has something in it sacred that is not to be sported with, or trusted to the airy bubble of paper currency. Thomas Paine (1737 – 1809)
Currency is still a medium of exchange but is not a store of value as it only derives its value by government degree or “fiat”. It’s value is based on the issuing the authority’s guarantee to pay the stated (face) amount on demand, and not on any intrinsic worth or extrinsic backing. All national currencies in circulation, issued and managed by the respective central banks, are fiat currencies.

A days wages in Germany 1923

The problem is that fiat currency runs the risk of central bankers printing too much and causing large inflation or worse. The more that is printed the more the currency is debased just as the Fed is doing now with the dollar. This has been going on for decades with central banks indiscriminately creating money to cover expenditure and ever increasing debt. There are examples throughout history and in the 20th Century most of us are aware that in Germany in 1923 it would take a barrow load of Deutschmarks to buy a loaf of bread but an ounce of gold could buy a reasonable house and one dollar was worth 4 trillion marks.

This irresponsible printing of money has eaten away at the value of the world’s reserve currency the USD dollar and dollar based assets, to such an extent that they have lost 82% of value since 1971, the year the US cut links with the gold standard. The GBP has fared even worse that the USD losing around 85% of value since 1971. There are many illustrations of then and now and how owning gold with intrinsic value would have more purchasing pro rata than currency. E.g the latest model Cadillac Eldorado would have taken 180 ounces of gold at $42.02 to pay the showroom price of $7,546. This same 180 ounces is now worth over $200k and would buy two Cadillac convertibles with enough left over to fuel to first service. In the UK an average family car cost £1000 around 60 oz of gold and now the same would cost £17000 around 23 oz of gold. The 60 ounces would have bought the same family car for you a sports car for your wife and a hatchback for your son or daughter. Gold retains its purchasing power year after year.

Not long ago the gold standard imposed monetary discipline on countries as they had to hold enough gold to cover the money in circulation but this all changed with the Jamaica agreement in 1971 when the decision was taken by President Nixon on the 15th August 1971 to suspend the direct convertibility of dollars into gold, the keystone of the financial system created in July 1944 (the Bretton Woods Agreement). On the 1st October 1971 the general assembly of the IMF asked the board of trustees to study and propose a comprehensive reform. This would be adopted by member States during a meeting held in Kingston (Jamaica) on the 7th and 8th January 1976, and included a set of provisions which put an end to the reign of gold. The US money supply in 1971 was $776 billion and quickly became an upward curve which rose dramatically over the last decade where the US money supply doubled from below $7 trillion to $14.3 trillion indicating that spending is out of control.

The US National debt is now greater than this!

The US though still likes to play the rich kid on the block and bizarrely gives aid to those supporting its debt as a report in the Daily Mail of London illustrates:
The U.S. is providing hundreds of millions of dollars of foreign aid to some of the world’s richest countries – while at the same time borrowing billions back, according to report seen by Congress.

The Congressional Research Service released the report last month which shows that in 2010 the U.S. handed out a total of $1.4bn to 16 foreign countries that held at least $10bn in Treasury securities.

Four countries in the world’s top 10 richest received foreign aid last year with China receiving $27.2m, India $126.6m, Brazil $25m, and Russia $71.5m. Mexico also received $316.7m and Egypt $255.7m.

And yet despite the massive outgoings in foreign aid, the receiving countries hold trillions of dollars in U.S. Treasury bonds.

China is the largest holder with $1.1trillion as of March, according to the Treasury Department.

Brazil held $193.5bn, Russia $127.8bn, India $39.8bn, Mexico $28.1bn and Egypt had $15.3bn.
Maybe it’s just additional interest on the debt to keep them sweet!

Greece figures predominantly in the spotlight and unrest is growing – will the Government have to mortgage the Acropolis and Parthenon or even sell them off to pay their debts?
Clearly they can never work their way out of this debt because they would have to increase GDP by 12% a year for 30 years in order to grow their way out of debt.
The Sovereign Debt crisis is well and truly out of control and the only solution will be to default on the debts and devalue currencies.

As discussed in the example of Belarus, chaos ensues when currencies collapse and regular folk suffer badly as they don’t see it coming or refuse to believe it could happen to them.

Be warned: A currency collapse is coming near you.
Be prepared: don’t put faith in bits of paper which have no inherent value.
Protect yourself: Invest in tangible assets that hold real value at all times, especially during a crisis.
Remember: Real money has inherent value, it is worth something because of what it is not because of what is written on it.
Now you know why people buy gold to protect themselves from crisis – it always holds value and is the only real money.

In summary:
Currency is not money and its value can be changed by monetary policy makers
Currency can be created and printed at will with no substance to support it
• Currency depreciation in value is accelerating with subsequent loss of purchasing power
• National debt is increasing to disastrous levels with threat of sovereign debt default
• Confidence in the USD is waning and its use as a reserve currency is under threat
Countries and investors are shedding their dollar assets
Central Banks are diversifying into gold and out of dollar assets
Smart investors are diversifying their portfolios with a proportion of gold
• The value of gold has been consistent in retaining its purchasing power
Gold is insurance for your wealth
• Gold is the only real money

I rest my case!



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"For a mountaineer, the important things are the effort, the posture and the muscles. The rope that holds him serves no purpose when everything works but it gives him a sense of security. In the same way, all gold does is ensure confidence; it's a safe haven."