..shows just how perilous and fragile the European banking system is....

..the analysis by Peston..

http://www.bbc.co.uk/news/business-16282463

..this is the bit i particularly like....

"Or to put it another way, the ECB is taking a double solvency risk: on the solvency of the bank to which it lends and on the interconnected solvency of the sovereign standing behind said bank, and to which said commercial bank has lent.

Yuk.

I put this to a senior European Central Bank official a few months ago. The eloquent reply? A shrug."

Not you as well.
An Eton boy no less.
If you, with all your social and political ( and " banking cartel " ?)  connections, can't see a way through all these current problems, then perhaps we really are in serious trouble.

egner/Muqbil, where the hell have you chaps been FFS? Finally a few intelligent posts, not just endless bombing raids of ignorance.

Excellent article by Peston - it would have been a candidate for article of the year had he explained in more detail the implications of "loosening collateral criteria" as well as address the little understood concept of sterilization by the ECB (the point being it's not). But overall, a very good job.

The answer to his question "why does the European Central Bank refuse to lend directly to eurozone governments in any size, for fear that's the road to monetary and fiscal ruin, but says it's OK for it to lend to eurozone banks" is......BECAUSE IT'S ILLEGAL. The LTRO is just yet another central banker scheme of getting around the law.

I totally agree with Peston, this will only buy some time, but I'll go a step further. I will emphatically state this will make matters way worse when the realization that forced austerity on already depressed economies leads to further economic depression and they already insolvent sovereigns are now truly and utterly are recognized as....INSOLVENT. That day of reckoning has a 2012 date stamped on it.

Egner
Btw trust me, I'm just pulling your chain.
No more no less.
Things are getting awfully serious and personal on here methinks.
You can take it can't you ?

The austerity being forced onto the lower masses is unavoidable unfortunately, but if if it accompanied by controlled and intelligent monetary stimulation, then the combination hopefully will work.
Uncontrolled bailing out of banks is not the answer, I totally agree with that.
At the moment there is an apparent orgy of bailing out, but that should end before too long, and things should settle down and improve. You cannot just pull the plug on everything as Menelaus seems to be promoting. That would be an unmitigated disaster. Totally unnecessary pain and destruction of global wealth and confidence.
But heads must roll for past mistakes, both unintended ones and deliberate ( criminal) ones.

HEALTH WARNING: posts part of the endless bombing raid on this forum made to appear as informed opinion are counterfeits and can leave a long lasting mind dumbing affect on the reader

My bombs are full of hope, Menelau's are full of despair.
That's the basic difference between us.
For example, he probably earns a very good salary, but he works too much and saves too liitle ( after tax ).
On the other hand, I retired at an obscenely young age to enjoy the fruits of my labours, live in a tax haven.
We're  both probably educated to similar levels ( not both economists though thankfully), but he has carried on living as an academic, pontificating and theorising ad nauseam, whilst I have gone on to achieve real material success. Though I hasten to add that material success is no real measure of intelligence or worth.
The point being that he is the one who should perhaps be least listened to in all these matters, as his views are the views of a bureaucrat, exactly the sort of person(s) screwing things up so much  ?

nice interview on the debtwatch blog (prob on youtube now also) at 14.00 with Steve Keen and Max Keiser if anyone's interested 

http://www.debtdeflation.com/blogs/

Thanks for the link gatespeed; the figures are a bit of an eye-opener!!

Did I hear this chap just say "money is created as debt"?

Is he totally bonkers, WTF is he talking about?

Who the feck is he anyways?

Quite an interesting link that. If it is true our debt to GDP ratio is really 600% then we are in for one almighty hard landing.

I must admit I found some of Keiser's remarks a bit insulting. Particularly what he said about Cameron, who is basically trying to find a way through the terrible mess left for us by the last government. I don't have a problem with him going after the bankers though.

The moral seems to be to hang on to your (allocated) gold. Anyone in their 20's would probably be best advised to move to Canada or Australia rather than stay to try to service the massive debts bequeathed to them. God help those in underfunded or completely unfunded pension schemes (eg the public sector).

wykhamist, you can't be serious mate, what "allocated" gold? Seriously, how do you "hang on" to something you can't get your hands on? How do you "hang on" to something that is in someone else's custody with all the implied counter-party risk? You must have more faith in this utterly corrupt, rotten to the core system than I do.

MF Global clients thought they owned "allocated" gold, complete with receipts and serial numbers. Gold which was their rightful property, which they paid in full including paying ongoing storage fees.  Until one morning they woke up and their "allocated" gold was stolen. Against the law, in violation of basic property rights but stolen in broad daylight nonetheless.

I said it before, and I'll say it again, if you can't wake up in the middle of the night and put your arms around it.....YOU.DON'T.OWN.IT.

You have to be prepared to take some risk. For me personally I would consider it an unacceptable risk to have bullion stored in my house. Better to have it stolen by financiers than have your family tied up and tortured by masked burglars in my view. I use bullionvault and have soverereigns in a safe deposit box in a local bank. Admittedly I do also have some unallocated gold in an ETF which I am trying to sell by using up my and the wife's CGT allowance each year. If I sell it all in one go I get robbed by HMRC.

Land is not much use to me either. I have no way I can practically defend it if law and order breaks down (and the riots showed us how much faith we can have in the police if that happens).

If I didn't have aged parents I would seriously consider upping sticks and heading abroad right now so that my kids could get a decent start somewhere else. It certainly makes sense to dispose of property here now while interests rates are still low. Remember the first rule of panics is always to be the first one to panic.

Is that really the first rule of panics ?
Maybe to you , but not to me.
Mine is " Don't panic ".
Probably the very worst deals or decisions you will ever make in your life, will be any ones you make in a panic.
In your case Wyk, you may very well end up thanking the fact that you have aged parents, which essentially stopped you from making the decision to flee.
But of course, as in all things, time will tell who is right.
Also it's all very well for me to say these things, as I am not in your particular situation.
But if I was, I don't honestly think I would be thinking quite along the extreme sort of lines you are.
Btw I agree with your point that you cannot possibly, in a practical sense, literally have all you own in the world in physical form in your arms, or within your immediate reach, at all times.
Unless of course you are that sorry bag man or woman we all too often see in the local subway.
Of course Menelaus would have you believe I am one of those, albeit presumably one with a 24/7 internet connection.

You have to be prepared to take some risk.

I thought that is *precisely* what one should avoid by buying gold. The absence of counter-party risk is what makes gold....well, gold.

For me personally I would consider it an unacceptable risk to have bullion stored in my house. Better to have it stolen by financiers than have your family tied up and tortured by masked burglars in my view

We've had many financial collapses in many countries around the world over the years, it's just that now the problem is global. Can you point me to any examples that people have been beaten and tortured by burglars stealing their gold? How about examples of financiers stealing people's wealth? I think you are basing your beliefs on false misconceptions and not actual research of history.

I use bullionvault and have soverereigns in a safe deposit box in a local bank

When the SHTF, good luck getting access to your safety deposit box. I continue to be amazed that people think they'll be an email send out that the sh1t is about to hit the fan. It will happen quickly and unexpectedly. Besides, what's the point in retrieving it, when those nasty burglars will kill you for it anyways // snark

Admittedly I do also have some unallocated gold

You don't own gold then, you own a piece of paper, worth about as much in a financial collapse scenario.


You are one of the nice guys on here and I wish you well. I was born and raised here and have family who fought and died for this country in both wars. I've lived in London all my life, our friends and things we like to do (theater, museums) are all here. I have two daughters that I need to educate, and I still happen to think this country offers the best high education anywhere. I'm not going anywhere. I have a second place of residence in the Loire so there's a bit of an exit avenue in case things get ugly beyond belief but it's quite likely things will be the same in every developed nation around the planet.

I've started doing some volunteer lecturing at the LSE in the hope of educating people on what this crisis in really all about, and motivate them to action in demanding change from the political establishment. The average standard of living in the UK will decline for a few generations, there's no way to avoid that. What I'm trying to prevent through activism is the historical bankers choice of solution when their system is collapsing around them and they are still trying to maintain power....WAR. Because I'm starting to fear that's where we are headed.

All the best and top of the season.

Do students at the LSE no less really need volunteers lecturing them on this particular subject matter ?
If so, I'm staggered.
But at least Menelaus has finally come out with his real personal fear, and dare I say some explanation of his motives in posting in such an incessant and strident manner on here.
He fears wars.
That in iteslf is at least a very worthy motivation, even if perhaps based on what I think are overly exaggerated fears and suspicions.
So at this point I will let matter rest.
I'm satisfied to have gotten to the root rationale of Menelaus'  posting, and will let others make up their minds as to whether he is being overly alarmist.
A merry Xmas to all, if that is at all appropriate to some ( I hope not most) on here.

I can't come out of my nuclear bunker for a second without having bombs of ignorance raining on my head.

For the last time, the "specials" forums debating X Factor is down the hall, keep walking until you find it. You don't belong on this forum. Even the most uninitiated eventually catch on that you are a bag of hot air. Epic ignorance. Epic fail.

The only skill you seem to have mastered is that of stalking someone on here. Get a life.

The UK is my preferred place to live honestly. But I have spent most of my career working in far-flung places abroad and some sunny cheap countries are not that bad as long as you don't get into trouble with the law there.

But if everything goes pear-shaped here, which I have a nasty feeling it might, then better to sell up now while one still can and set up elsewhere. It's a sort of Noah's ark type scenario: You have to endure ridicule before the flood happens and you look a bit stupid if it never happens at all. But your upside if the flood does happen is huge. It just comes down to weighing up the EV given the probabilities involved and having the courage to actually take action.

If there is a complete breakdown in law and order you are pretty well stuffed however you keep your investments. So unless you are considering taking any drastic action re relocation then you might as well just 'keep calm and carry on'.

Good luck and season's greeting whatever course you follow.

Very sensible Wyk.
I have a feeling, despite all Menelaus' rantings and ravings, that things might just turn out all right for you and all your fellow UK residents in the final analysis.
I certainly hope so, as the world is a small, extremely interconnected place now, and if the UK suffers terminally then I see no way that would not be the case almost everywhere else.
Finally ( and yes I do mean finally ) to Menelaus.
You're an extremely rude, arrogant, overbearing, intellectual snob of munificent proportions.
But I accept now that perhaps at least your motives are relatively pure, in that you feel the world is on a path to war and destruction, and that most of us are ignorant of this point in the extreme.
But it is just your opinion and not yet a fact. But perhaps we should thank you at least for highlighting the potential, if not the actual, dangers currently present and growing in the world.
Your arguments lose their strength and thus effectiveness because they seem too extreme, too intractable, too absolute. You would do well to moderate them, both in tone and content, if you wish to be listened to and believed more widely and deeply.
You have a place in any and all debates on such matters, but only to the point that you can see and accept that is always more than one vaild point of view, there are shades of grey in all things. It's never as  black or white as you seem to want to convey. And more to the point, not everyone who sees things slightly differently to you, is a complete and utter fool. That my friend is the height of ignorance, and perhaps your greatest failing, not only as a commentator, but perhaps as a person as well.

Menelaus (22 November 11 17.12) on Melv's "The decline and fall...." thread:
"Money is created as DEBT.
Debt is a claim upon future GROWTH.......that is what the interest is."

Menelaus (22 December 11 16.31) This thread -
"Did I hear this chap just say "money is created as debt"?
Is he totally bonkers, WTF is he talking about?"

Al Dente, there's good, bad and ugly to be found in your post. The good is that at least you are paying attention which means you might learn something. The bad is that your sarcasm meter is not working. The ugly is that you are probably the only one on the forum who didn't get that.

Menelaus
In your haste just to be plain ugly, I think you may have rather missed the point of Al Dente's last post, which was perhaps intended in fact to highlight your sarcasm for the sake of those who might not be totally familiar with your posting history.
I think you're always far too desirous of pulling the kneecap trigger too quickly and too often.
No good in you I'm afraid, just all bad and ugly.

Fine As

As an infrequent visitor I thought your comments about menelaus being a bureaucrat type were very interesting. I'm not here often enough to give a considered view but from what I have seen of his posting he comes across more as an anti bureaucrat given that the keep calm and carry on mantra is the one espoused by the bureaucrat. Menelaus seems to be in the, "this sucker is going down" camp which is very much against the, "lets keep the plates spinning in the hope something turns up" camp.

Just to clarify my own position. I'm hoping they do pull something decent off but preparing for the, in my view, more likely scenario of trouble ahead which increases with every intervention.

EO
You're probably right.
But tbh I've now got to the point where I just don't care what he says, be it right or wrong.
To me, he's just a thoroughly nasty piece of work, and so just best to ignore in totality.
However, I still think the world will pull through, a bit bruised and battered, but still relatively healthy and intact.
But perhaps it is best, as you seem to be saying, to prepare for the worst and hope for the best.

If the world pulls through I rather suspect it will be the world doing the pulling and not the west which is more into debauchery in its many forms. Perhaps that is what makes menelaus such an angry chap?

Eeternaloptimist, why do you bother with this windbag? The man, and I use the word loosely here, is an impostor. He's posting under a different name now, but the incessant trolling and the epic ignorance is STILL THE SAME. He knows as much about economics as I do about nuclear physics. I can spew a few words I picked up here and there over the years but anyone who really knows and understands nuclear physics will quickly realize I'm faking it. The man is a fake.

I work in M & A, posted as much on numerous occasions. The simpleton continues to think I work for an IH. The mug doesn't know the difference between the bonus I get which is based on work that produces real organic growth in the economy and the one bankers get through the creation of fictional paper wealth are vastly different. When one of my deals turns sour, I live with the implications and no one bails me out, least of all the UK taxpayer.

I have done nothing but consistently continue to expose the fraud the banking cartel really is in my posts on here, their endless chicanery, as well as the incredible ponzi scheme the monetary system is. But this mug continues to think I represent the bankers view on here, although somehow he still refuses to believe the existence of the banking cartel. Try and figure that one out.

I only get angry when people stalk me on here and it seems this pathetic creature has taken this on as a full time job. Scroll through all the threads on here and count how many of my posts have been immediately drowned by this clown posting on top of them. I'll save you the time. ALL OF THEM. While you are scrolling, also count how many times this obsessive mug refuted anything I posted with analysis. I'll save you the trouble again. NEVER.

His posts are a never ending flow of nothingness. "Blah, blah, blah, Menelaus is wrong, blah blah, blah, we'll muddle along, blah blah, blah". Not an iota of data and facts, not a morsel of analysis. Just some touchie feelie stuff he read somewhere and doesn't really understand and the rest is ignorance on steroids. He could fake it only for so long until I caught on that botty troll reinvented himself as froggy. So I said enough is enough and blocked him, although admittedly that hasn't detered him from continuing to stalk me.

The sad truth though is that he DOESN'T NEED TO KNOW. When your entire wealth is only a grossly devalued cabby hole in Spain you bought to retire in and your sustenance relies on receiving a monthly pension, YOU DON'T NEED TO KNOW. You are a slave to a failed system, you refuse to believe the system could collapse, you continue to spew "we'll muddle along" rubbish because you have no other choice. Ignorance in this case is truly bliss. Muddle along is not an option. Never has been, never will be. If you understood economics, you'd know that there hasn't been a single period of "muddle along" since man started walking the steppes erect. If you are a fake, YOU DON'T know that nor understand why.

Here's something for you now. Decoupling is a myth. There is no such thing as the developed economies ("the west") struggling but the rest of the world pulling out. That thinking is deeply flawed so don't propagate the myth, perhaps most important STOP believing it.

I suppose I could once again reply as to why I think Menelaus is not necessarily totally wrong in his observations and analyses, merely too absolute, but what would be the point ?
I suppose I could also post, as I have done on numerous occasions, that I don't live in Spain ( not that I have anything against Spain), my income comes from patent royalties, that my wealth is managed and invested in a diversified manner by advisers hopefully less one eyed than Menelaus, but what would be the point ?
This is not a p1ssing contest- never has been.
It's just one person getting slightly annoyed at the overwhelming superciliousness of another,who not only claims to know it all but is consistently being proven wrong by the market consensus day in day out.

And incidentally if any one is intrigued or concerned that I am replying far too quickly to Menelaus' last post, I would just like to point out that I am actually on BF tracking my betting ( some of us use BF for that non-soap box purpose).
And I'm mightily frustrated that Chelsea couldn't find a winner against Fulham.
Let's all get our priorities right on here after all.

Well perhaps you should both be a bit more grown up about the issue. If each of you think the other is an idiot remember the adage about not aeguing with one as people won't know the difference.

menelaus

I thought I made it clear that I don't believe in the decoupling theory which is why I am preparing for the worst. My point was that this was the only chance in my view and a slim one at that.

I will repeat EO what I have only ever essentially been saying, Menelaaus is not an idiot, he is just idiotically extreme.
As for my owm idiocy, past or present, quite frankly I don't think I would be where I am today without it.
And you can take that any way you wish to.

Eeternaloptimist Joined: 28 Jun 10
Replies: 7932 26 Dec 11 19:15 
menelaus

I thought I made it clear that I don't believe in the decoupling theory which is why I am preparing for the worst. My point was that this was the only chance in my view and a slim one at that.


ZERO chance, not a slim one. I don't have the faintest how you are "preparing" for the worst, I don't recall you ever elaborating on that not to say you didn't, but I wish you all the best anyways.

And just so I don't drop an emphatic ZERO CHANCE like a bomb and run, let me explain.

Beyond the obvious reliance on the well paid "not-saving" western consumer (particularly the American debt binging, "must have everything now" consumer) the emerging economies are not in a position to sustain their growth by themselves. This is the economic reality.

The real issue however is that the system is facing a monetary crisis first, and then an economic crisis. When Italian banks issue bonds, get a government guarantee on those bonds, buy back their own issued bonds, then pledge them to the ECB as collateral to get cash, we are waaaay beyond printing money out of thin air. We are in Alice in Wonderland money system territory.

And last I heard, emerging economies have central banks that are tied into the global money cartel. ZERO chance of emerging economies pulling the west out of anything.

I didn't say I disagreed. My point was that with the exception of death nothing is certain in life and have found that the more people espouse certainty about something the less their view should be trusted. FACT.

My own position is quite simple. I have weapons, land, gold, silver, water, lots of beans and live in the middle of nowhere. Just in case.

I have been giving a bit more thought to the idea of selling up in the UK now and retiring to somewhere like Malaysia (where I have lived before). Property is cheap there and the cost of living much lower. I would also avoid having to pay any tax on the pension I currently receive.

One thing that concerns me though is that my pension is denonimated in sterling and only guaranteed to be index-linked up to about 5%. So if we were to get hyperinflation in the UK it's purchasing power in foreign currency might severely diminish with time. And who can say for certain whether or not the Asian banking systems might not also freeze up. I can't quite decide if one is better off in a meltdown scenario being in one's base country or somewhere remote where heating is not a problem and locally-produced food is probably more plentiful.

Anyone have any ideas on this? I guess it depends on so many factors to do with the severity of downturn in the UK/Europe and contagion spreading around the world.

wyk, I can't comment about Malaysia, you know more about it than I do having lived there. In general however, for anyone believing this place will turn into hell in a worse case scenario, therefore looking to move elsewhere, I would give consideration to the following:
1. friendly locals accepting of foreigners - speaking the local language would be a big plus
2. food grown locally
3. locally concentrated economic activity
4. government respecting the law and property rights
5. moderate climate

One other comment I would make is that in a hyperinflation scenario (NOT just high inflation, but true hyperinflation) money dies. Your pension in the hyperinflated sterling would be worthless, index-linked or not.

Last word. Take your gold to Malaysia with you

And your beans. Don't forget the beans.

great thread.

I have a ???

If you live in Great Britain and had say a 20yo child. Would you advise them to move abroad for their working life?  Will they infact be paying for this generations mistake OR will it be a "lets wipe the slate clean and start again" scenario?

Malaysia have a special programme called MM2H which encourages wealthy expats to move there. You basically get an unlimited visa for you and dependants, amd can import anything duty-free. I was considering previously as a possible option without any thought of meltdown.

If I was to move there I would live in a gated compound with good security. I would get a safe and certainly keep as much gold as I could stored in it. You do make an important point though about the rule of law and property tights being upheld. This is one of the biggest advantages in the UK and one that many naive brits thing applies in other countries when it does not. It is actually specifically why I favour Malaysia over Thailand (where I have also lived and worked).

I went straight into international oil exploration after uni so it was easy for me to get out of the UK. For my kids (aged around 20) it's much harder for them to get decent jobs abroad. But I think if they can then they should leave the UK, at least for the next 10 years. If the slate does become wiped clean then eventually it might be worth returning.