Genius Insight

Orderly coercive sovereign debt restructuring can be achieved without an SDRM or CACs via traditional out-of-court exchange offers.

This is a nugget of a ‘Tweet’ from the smartest man around, Nouriel Roubini. The ‘thing’ now is to find some people with the guts and the gumption to pick up this ball and run with it.

We live under a  Constitution that endows all citizens with property rights. The key word here is ‘ALL’. It is not just the property developers and it is not just the banks. In fact, the banks and the corporations that the property developers hide behind have fewer rights than the human beings who are the citizens of what is, for the time being, the sovereign state of the Republic of Ireland.

We have the right to extinguish the existence of corporations and we do so regularly. We have recently been taking extraordinary measures to keep alive a few bankrupt corporations at the probable cost of bankrupting the State, so as to save the ‘face’ of our political elite.  If the elite are perverting the norms of corporate laws and commercial practice there is absolutely no reason that the citizens should tolerate it or allow it to happen at their expense.

Damn it! The people can either stand up and exercise their constitutional rights or lie down and get crushed by the vanity of the ‘gombeens’. But will they follow if anyone shows the way?

The Banality of Evil

Last Saturday I attended a ‘Member’s Workshop’ of the Green Party, held in Mullingar. I came away dejected, nauseated and alarmed.

Dejected because after two years of crisis, misrepresentation and poorly concealed subterfuge the membership of the Green Party still have not woken up to the extent to which FF are running rings around them and the leadership of the Green Party. The talk was still of partnership even as members asked why the famously re-negotiated Programme for Government was being ignored while the ‘Croke Park Agreement’ is apparently sacrosanct.

Nauseated because the membership and leadership are engaged in self-deception and hypocrisy on many levels.

The membership present wanted to reject all cuts without offering any alternative strategy for funding ourselves short of more borrowing while at the same time failing to show any understanding of the mechanics of international bond markets and while happily describing those they wish to borrow from, to support the lifestyles they have come to believe themselves entitled to, as ‘speculators’.

The leadership described the 2011 Budget as a responsible and fiscally sophisticated measure that would convince the bond markets of our probity despite the fact that it has been described by many independent observers as ‘baloney’ and despite the fact that none of the Governments assertions over the last two years have lasted longer than 6 months. Further, NAMA was described ‘working’ despite the delays, the profit revisions, the changes of parameters, the rejection by the bankers and the imposition of tougher remits by the supervising authorities.

Alarmed by both the attempts of the organizers to silence or evade questions from critics, by means of changes of rules and abandonment of agendas, and by the docile acceptance of this by the majority of the attendees. In an organization that was famously unruly and outspoken, this was a sad sight to behold.

Hannah Arendt is rightly famous for her quote about the ‘banality of evil’. It is clear to all now that the good people of the USA have completely been brainwashed by their self-marketed ‘exceptionalism’, which allows them to believe that they are inherently a force for good in the world, and therefore that “it can’t be torture if we are doing it”.

It has taken me too long to realize that the membership of the Green Party suffer from the same affliction. They believe that they are good people who have everyone’s best interests at heart and who see the world as it truly is. Consequently,  they can cope with massive amounts of cognitive dissonance which allows them support and enable the bankrupting of the State and the debt enslavement of the next generation in order to maintain the ‘reputation’ of FF and the wealth of property speculators.

Many times have I heard the mantra “We are in Government and we are doing good things”. This may be true in their own departments but it comes at the cost of supporting and enabling wholesale theft and the murder of the hopes and dreams of several generations. Many times have I heard people say, with a straight face, in workshops and policy formation meetings, words to the effect of “I don’t know what I am talking about but I have a opinion on this…….”.

The other great line that the Greens trot out and which is a measure of the degree and speed of their seduction by FF is the one from the late Seamus Brennan about “playing Senior hurling now”. Clearly, sports are not the Green’s strong suit as they have completely failed to grasp the distinction between being ‘on the field’ and actually being ‘in the game’.

This country is accelerating towards the end of the line and the 450 Green Party members who could have stopped the theft last October in the RDS but who, through vanity, cupidity and stupidity, chose to stay on in Government and back NAMA will, wake up very soon from their power-crazed hallucination amidst the wreckage of  the State.

Only then will they realize that , like the Germans before them, they have blood on their hands.

Germany’s Gift – Part II

I blogged some time ago about the German talent for strategic retreat.

The particular retreat that I have in mind is the one where the Germans decide that the long term interests of the health of the Euro, the EU and the German economy can no longer carry all the burden of the assorted hangers-on, malfeasants and meddlers that make up the PIIGS and decide that a sacrificial victim to explore the mechanisms of working out a sovereign default without a devaluation is called for.

Napoleon occasionally executed a general “pour encouragez les autres”. Done sparingly it is a useful disciplinary exercise. The Irish (people, Government and banks) make a perfect candidate for just such an exercise for the Germans. We are peripheral in every possible context to the European project and have no friends in Europe after our rejection of the Lisbon Treaty and the precipitate issuance of the ‘Guarantee’. More so now that the bulk of our borrowings have been heaped upon the State rather than the more diffusely held and legally less secure obligations of the Irish banks.

I have been bending the ears of friends, colleagues and dogs in the street about the precariousness of our fiscal/monetary position and how it is an unlikely combination of being both up a creek without a paddle and out on a rotten limb. There are no more policy alternatives for the State. All our borrowing options are exhausted. In poker terms, the Government has gone all in hoping that there will be a global economic recovery that will restore growth and that this will restore some of the previously obtaining property price levels.

In the meantime, as the original Guarantee expired a lot of bonds and notes issued under its protection could no longer be rolled over in the markets and the Government and its client/pariah banks have been forced to go back to borrowing directly from the ECB. The resulting explosion in ECB borrowing puts us right back at early 2009 levels.

In this article, the redoubtable Karl Whelan points out that the Germans (the only part of the ECB authority with authority) has been carefully laying the groundwork for that retreat.

Neither he nor I would suggest that an EU change of mind (a ‘volte-face’ as the French would say) is inevitable or even probable.

But it speaks volumes that the ground is being prepared for just such a retreat.

MERS mess

Greetings, Dear Reader.

I haven’t blogged in a while as I was acting as roadie for the UK ‘Institute of Collapsonomics’ Irish road show. We had a blast while modelling the end of civilisation as we know it and doing some collateral liver damage at the same time.

Glad to see that while I was offline, that things have taken a turn for the worst, domestically.

Meanwhile, abroad, this news just in. The MERS fraud, that I wrote about a year ago, seems to have gone ‘mainstream’ now with several major banks having to cease foreclosures because they can no longer get away with outright fraud and forgery in their documentation.

I am not sure which is more amazing; that they banks’ lawyers were trying it on or that the defence lawyers took a year to cotton on to the fact that there was no evidence of anything – debt, ownership or payments.

America, once again revealed as the country that swallowed whole its own marketing ‘bull’ and believed it.

Anyway, the latest summary of the whole mess can be read here.

I expect it will take another year for the realisation that swathes of USA homes have no owners and no debtors to impinge on the tiny brains of the traders and wake everyone up to the fact that there is not likely to be a recovery  given this much uncertainty.

Sleep tight, my pretties – the world is falling apart….

Peak Debt, a parable

There are limits to debt-issuance and consequences for those who ignore them, even in the case of sovereign governments managing their own currencies.

The Japanese have long been cited as a example of why, as per Republican/USA ideology, deficits of any variety do not matter. In the long run, we are all dead said Keynes, but before then we have debts to pay. The long run has now caught up with the Japanese and is increasingly gaining on the rest of the OECD/developed world.

These two articles, linked, below explain this better than I can.

There is a short version of this, here and a long version, here.

This is compulsory reading for anyone who wants to understand why the path that most Govt’s have taken out of the recent crisis will most likely turn out to have lain the seeds of the next, the last and biggest crash.

Granted there are one or two factors that make Japan a more extreme example than other OECD state balance sheets but the principle and the problem are exactly the same.

Wisdom from the ‘tubes’..

If you are not paying for it, you’re not the customer; you’re the product being sold.

Brilliant insight….

Black is the new White-PartDeux

The swift and Swiftian guarantee, whereby a domestic minnow guaranteed three global whales, has ushered in a nuclear winter, whose first bites are now being felt.

But the good Brian, having mastered his Goebbel’s, inverts the reality and tells us the perfect fabrication – that he has prevented it.

This is perversion beyond anything that Karl Rove, the man who gave us the ‘swift-boating’ of an American hero.

This man is a truly Irish phenomenon, a Jonathan Swift-redux, a world-class manipulator of words. Sadly, history is repeating itself true to type – the first time was a farce/satire, this time it is a true tragedy.

We are eating our own now, condemning them, our children, to a lifetime of tax-servitude to foreign bondholders.

Black is the new white.

The Republican Party of the USA is rapidly becoming a theological culture. Given that they are 50% of the country, give or take a few points depending on the quality of your advertising and your incumbent, then the USA itself seems to be on the way to becoming one.

Any regular observer of US politics has been aware of this trend for some time now but today I came across some numbers that seem to copperfasten it.

In this survey, 80% of Republicans place the blame for the state of the US economy on Mr. Obama rather than on Mr. Bush, given the choice of only those two alternatives. Moreover, a large proportion of those citing no regular party affiliation indicated that they also blame Mr. Obama.

While Mr. Obama may be criticized for having campaigned as if hope and change alone would be sufficient to solve the USA’s woes, the people have no business thinking that anyone could solve the  problem of that seriousness with a wave of a magic wand or a lipstick.

They will shortly be in an unholy mess if they follow through on these ‘feelings’ and take control of the legislature away from the Democrats in November. Sadly, we are likely to be in that selfsame mess with them if they do.

The End of the World

The ever-insightful Dimitr Orlov has hit another long hard ‘home run’ with this piece.

http://www.culturechange.org/cms/content/view/674/66/

Nothing more to add to it, other than to say it is the best ‘crisis’ piece I have read all year.

The 4-bladed scissors

Mankind is better at creating problems rather than solving them.

We created plenty of pointless bloody wars. We now know that, inadvertently, we created the conditions that spread plagues amongst our own and other tribes and nations. In the previous century, we did solve a few problems. A stalemate that kept a nuclear war at bay was devised. Some very old plagues were eradicated, an achievement never dreamed of before, let alone accomplished.

But in the main, mankind is very poor at problem solving on a societal or cultural scale. We either endure, or throw enough resources to either overwhelm the ‘enemy’ or exhaust ourselves. In the main, our experience has been of tackling one problem at a time. The literature from Tainter, Diamond and others suggests that when more than one factor type problem besets a civilisation they often fail to cope.

We now have a vast array of tools for generating complex analysis about our dilemmas. We also have a very poor apparatus for deciding what to do about our problems. So we know more about what we are facing into but we are hamstrung from doing anything about it.

Some of the problem stems from the fact that we have a largely reductive science and our toolset currently reflects this state of affairs. We have only recently begun to tangle with the issues raised by dynamically interacting problem-spaces such as DNA-protein interactions, weather systems and networked autonomous computers.

Frankly, we are not good at seeing the wood for the trees. I would like to throw a ‘framework’ onto the bonfire of our vanities, to see if it helps at all.

First of all, our problems can be divided into categories of physical/real and cultural/artificial. Secondly, they can be divided in categories of what we want and what is available. These form Cartesian axes of Availability and Actuality.

Peak resources of all kinds (but principally, crude oil) fall into the category of negative or declining Availability but positive Actuality. Peak Population is positive for both Availability and Actuality.

Peak Debt is negative for both Availability and Actuality. A better way of thinking of Peak Debt might be in terms of an optimal ratio for debt/equity rations for a given technological/EROI situation; clearly, we are in negative territory WRT to global debt/equity ratios.

Peak information is clearly positive and increasing. Information and its hoped for corrolary, knowledge, are intangible and therefore on the ‘Artificial’ side of the graph but on the positive side of the Availability axis.

Cartesian axes of tangibility and rate of change.

From my point of view, masses of population and information are good things. But, it must not be forgotten that they both imply constraints. Information is not knowledge and it is most certainly not wisdom. It has to be managed and used creatively. Equally, a population has to be fed, watered and housed before it can start to produce anything, whether that be food, art or knowledge.

There are very real negatives in this picture that we are very well aware of.

You might well be asking where climate change is in all of this ‘graphology’. It is in amongst Peak Resources because I view the renewable output of the planet (food, air, water) as a ‘dividend’ of the physical wealth of the planet and, in the same way as we have damaged the debt/equity ratios of our imaginary/intangible assets, we have done the same to the ‘real assets’ and will face declining ‘real dividends’ until we repair the damage done.

Although I have classed Information and Population as ‘Positives’ they are not costless and they can be problems unless they are handled correctly.

Which leads me to my final and unhappy conclusion.

I started this article by saying that ‘Mankind’ had not shown much aptitude to date for handling problems, even if they came one at a time. Each of these four issues constitutes a serious problem for humanity. Worse, each of these represents a constraint on the other.

A blade can be a tool or a weapon. Two blades in opposition to each other is commonly called a scissors and is much more likely to be used as a tool than a weapon arising from its configuration. Humanity faces a ‘four bladed’ scissors, each blade of which cuts on the other.

Our information and our population mean that we are poised on the cusp of enormous potential. But our history tells us that we are likely to end up with bloody fingers before we get the hang of the ‘tool’.

This article was originally created for ‘The Future We Deserve’ project and be seen here.