Europe’s Cash-For-Trash LTRO-’Scam’ And The Indentured Servitude Of The Citizenry

Friday, February 24th, 2012

In a must-watch follow-up to his original Punk Economics Lesson, David McWilliams describes how the new bankocracy in Europe will lead to a massive injection of liquidity; blowing bubbles in financial assets while the citizenry is bled dry (ring any recent bells?). The banks again get all the money they need while the average citizen shoulders the burden. Specifically in the case of the Greeks, they are left with the uncertainty of a return to the Drachma or the certainty of decades of indentured servitude. Enter the ECB with their cash-for-trash deal. This is a scam, he proclaims correctly, insolvent banks lending to insolvent governments and we are calling it success? The banks can turn a tidy profit, but the straight-talking Irishmen asks the question every Greek citizen should be asking: “where does the profit come from?” The answer: the average tax-paying European citizen, and it is this that provides the comfort for the Germans to allow the Greeks to default without bringing down every bank in Europe in a contagious cascade of margin calls, un-hypothecation and deleveraging. Critically, the question is not if or when Greece will default but will they be allowed to default enough? The lesson for all is that to stay in the Euro, all European nations have to become more like Germany – which is very different from the community of equal nations that the Europeans signed up for 20 years ago at Maastricht. Don’t be fooled that the European debt story is over, it is not. In fact, he finishes – rather ominously, the interesting bit hasn’t even started yet.

While austerity is argued not to work, we think it can if countries manage to cut expenses while keeping a balance. We once again remind readers that alas, the balance is out of skew due to 30 years of runaway full-Keynesianism, which leads indeed to the problems that McWilliams so well espouses.

Tags: Austerity, Blowing Bubbles, Citizenry, David Mcwilliams, Drachma, ECB, European Citizen, Europeans, Financial Assets, Germans, Greek Citizen, Greeks, Hypothecation, Indentured Servitude, Insolvent Banks, Irishmen, Keynesianism, liquidity, Massive Injection, Tidy Profit
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Jim Rogers: Euro doomed but ‘I bought some recently’

Thursday, June 17th, 2010

BBC: On this question of the euro, no one else seems to want the euro at the moment, but you are thinking of buying it, have already bought it,

Rogers: When no one wants something, that should be a signal to you to think about buying it. If everybody sold it, the chances are its time to buy it now, at least for a rally, so yes I bought some recently.

BBC: So, are you buying them for the rally, or do you think the European government have got their act together and doing the right thing on Greece?

Jim Rogers: Let me get the rally first, and if I get the rally first, then I’ll answer the rest of the question. We’ll see. No, the European governments are not getting their acts together, not at all. But the euro can still go up if for nothing else but a rebound rally, and maybe because its less flawed than many other currencies.

The problem is these days, everything is flawed. All paper money is flawed, nearly every currency in the world.

BBC: But you have said with the situation with Greece, the best thing that could happen is for Greece to go bankrupt, and all the European countries are doing everything to prevent that.

Rogers on European credibility: “If Greece went bankrupt it would send the signal to the world, and to the rest of Europe – ok, we’re not going to let people lie about their finance anymore, we are not going to let them spend money they don’t have, we are going to run a tight ship. That means the euro would be an extremely sound currency, it would the old Deutsche Mark.”

On Keynesianism: “You can’t keep spending money you don’t have because eventually the whole thing collapse in a house of cards.”

On the transition to reality: “I am not suggesting it is going to be a good time, don’t get me wrong. But if you wait 5 years from now, 10 years from now, when there is nothing you can do, and the whole system collapses, then you have real chaos in the streets, then you have Greece never recovering. In the US we have had states go bankrupt, cities go bankrupt, counties go bankrupt. It didn’t end the US, it didn’t end the US dollar.” And on the flaws of our political system, which are just as applicable to our own president: “Greece is just trying to get through the next election, I am trying to figure out what’s good for country, what’s good for the world, what’s good for Europe, what’s good for the financial system.”

Tags: Advertisement, Chaos, China, Collapse, Commodities, Credibility, Currency, Deutsche Mark, Doing The Right Thing, Double Click, Euro, Europe, European Countries, European Government, European Governments, Finance, Financial Guru, Fortune, George Soros, Good Time, Greece, Hedge Fund, House Of Cards, James Rogers, Jim Rogers, Keynesianism, Marketer, Maverick, Paper Money, Rally, Rebound, Sarah Montague, Spending Money, Tight Ship, Time Don, Transition
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