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Sunday 21 August 2016

The Olympian Debt Write-Off - #Rio2016

(This Draft Of K.Siva's "Geopolitic Strategy" Report Is Dedicated to Prescient Work of David Scott, Indousez WI Carr Economic Strategist in 1997 - Year of  Hong Kong Handover to China. Mr Scott elucidated the phenomenon of China exporting global deflation.

Economies of the world in slow transition is the likely cause of the stagnation in economic activity, as reflected by traditional measures since the financial crash of 2007-08. 

The effectiveness of the continuance of current #politiciansRcriminals monetary-stimulus policies have been considerably questioned for the sustained great inequality of wealth between people, the state and its "hidden hand". Is current monetary economics merely blowing small capital-markets related trading bubbles and consequent corrections - at the phenomenal cost to taxpayers via a monumental public debt-bomb? 

Perhaps just round the corner with Italy or 'PIIGs' debt default being catalyst for contagion of national debt defaults. Remember, sub-prime mortgage default was trigger for wave of write-downs of housing market securities valuations. FPM's more modest view is the prospect of debt devaluation via concerted and manipulated inflation index increases.

Some have argued that Government debt-financed stimulus spending since last orchestrated financial crash from 2007-08  caused a bubble in commodities and propped-up the unrealistic real estate / property asset  valuations, more than actually protect jobs and  other reputed public-interest effects conveyed by by complicit peculators in corporate-media. Free-market companies and economies are no longer able to grow evolve and founder on their own idiosyncatic risk i.e. as Schumpter's "Creative-Destruction" model of capitalism; instead they take propping-up with public money. These systemic risk companies have come about through globalisation and related deregulation of anti-trust and anti-monopoly policies. These safeguard policies diluted means globalisation and deregulation are dirty words. Despite moron economists and media lies.

The  big pharmaceuticals conglomerates corporations DO exactly the same with human lives - that is, help people live longer by being dependent on their medicines. Laissez-faire capitalism or branded widely as "Neoliberalism" policies since 1980's in all reality died a death in 2007-08. Yet the sovereign public debt in the major economies that have ballooned since that US-led housing and financial crisis is the result of policy failure to allow capital asset destruction. Financial and housing assets should have legitimately crashed, not just temporarily out of panic and ensuing fundamental bubble re-valuation, but without the State intervention with taxpayer money to uphold excessive notional valuation. The 1% of society's asset or wealth owners and the larger middle-class beneath them should have had their bubble-inflated assets wiped out - but for the benevolence of the "ragged-trousered philanthropists", the public!

For example, shareholders in Citigroup Inc  suffered at the height of the financial crisis when the global retail and corporate banking 'big bank' reflected distressed and insolvent fundamentals with share price trading as low as between USD 1 and USD 5 (before stock split). However, the American taxpayer has been burdened, not just the present generation but  future generations too, with Government policy supporting the 1% asset owners with multi-billion Dollar public money infusions and backing. US Treasury department's stated reason for the support was that Citigroup was a "systemically significant" bank and industry. The scale of the taxpayer support for a publicly held / listed company is shown from this excerpt: 

...Treasury in November 2008 gave Citigroup a $20 billion emergency infusion, on top of $25 billion received the prior month, from the $700 billion TARP fund. The government also backed about $300 billion of Citigroup assets, helping to prop up the New York-based bank as its share price plunged below $5 and some depositors withdrew funds. (Source Bloomberg, January 13, 2011 "Citigroup Bailout Based on ‘Fear of the Unknown’")  

This one example highlighting Citigroup of why the creative-destruction cycle was not permitted in a supposed free-market deregulated economy is the rub, that should cause repugnant revolt from the public about the 21st century con-trick of "neoliberalism": "Private Profits Public Losses" or "socialising losses". The systemic thieving from the public purse is not a new one; Governments of the day or #politiciansRcriminals have enforced prudent austere policies, such as public services cuts, on the greater mass of the public in the name of reigning-in national debt levels; while at the same time systemically allowing the capitalist-wealth class to accumulate private profits in staggering amounts. Evident by the wealth inequality in societies.

To complete FPM's geopolitic vision using the Citigroup example, is the price chart. This shows a story of euphoric excess and deflating stagnation. 

The Iceberg That Titanic Citigroup Inc Hit: Yet Not Sunk! (Source: FPM, Yahoo)
In a progressive outlook Citigroup is not a zombie economy constituent but a tell-tale of not allowing creative-destruction to run its course. As demonstrated the "big bank" model in all likelihood has lost its faithful followers and investor adherents; and subsequently exposed  the folly and sheer criminality of Government policy failures of flooding these financial bastions with public capital / debt. The new alternative media exposed multi-trillion financial criminality - fraud is too lesser word - has been described as the corrupt crony capitalism of neoliberalism, which engulfs the major profession of politics, judiciary, mains stream media, public relations and of course the banking cartel, all and more pulling the "hidden-hand" strings.    

Others suggest public funds used after reckless and scandalous corporate recessions, in the name of economic stability policies have artificially kept interest rates low, and prevented mass scale corporate insolvencies and debt default. Of the numerous "jackanory" stories, really truly it theft by robber barons. As one property builder once pronounced memorably for this author  at a builders' merchant store counter, while paying for his purchase: "You Ought To Wear Balaclava, That's Daylight Robbery!"

The systemic stealth transfer of wealth from public sector to private sector has been happening since Second World War on a "Lion-Zion" scale. Currently Dissembling As "Middle-East Regime Change" and "Privatization Of Government and Functions". (Source: FPM and Naomi Klein)  
In Great Britain yet another round of so-called “Quantitative Easing” was instigated by its Canadian-origin central bank governor Mark Carney. This monetary re-assurance was allegedly to support the expected slump following Britain's public national election to exit from the European Union globalisation project on June 23rd, 2016. In FPM geopolitical vision, this is simply the greatest transfer of public wealth to private concerns. 

No Smoke Without Fire: Of Reputation (#NSWF:Reputation) know who these private concerns are by historical reputation. To name two direct at hand, @richardbranson of Virgin Group (and FPM's financial honing of reputation @stevencohen of #SAC Capital et al.)

Stop Press! Opposition Leader Of UK Labour Party #Corbyn Encapsulates Re-Nationalisation, And Heads Into a #Train Crash With Billionaire Corporate Conglomerate Owner #Branson... (Source Twitter Date 25th Aug 2016)
FPM believes the economic-policy course needs to be re-directed towards real fiscal or Keynesian-driven expansion, and beyond only capital market support. The real economy or at least the public sector spending has been squeezed ie in recession and austerity; while financial markets and real estate and other selected sectors of the economy (military spending) have been taxpayer supported and still surviving. Once the directed will is there the way to a “sustainable new paradigm of economics” is possible.

The drivers for the new paradigm of sustainable economics; certainly a shift away from the current #neoliberal agenda are numerous:

a) stagnation state of trade and commerce in traditional sectors (eg fossil fuel energy exploration and production. Traditional industries hit i.e. Nasdaq outpacing Dow and Standard and Poor benchmarks of future corporate  valuations)
b) much needed overhaul in E.S.G principles (eg combatting systemic corporate corruption; Steven Cohen of leading hedge fund famously paid US$2 bn to settle with the US Governments and agents etc)
c) excessive public private and corporate debt and eventual need for debt destruction eg USA National Debtis US$ 19.5 Trillion now (Source: http://www.usdebtclock.org/)

The illustrious manager of Pimco’s bonds funds, Mr William Gross, stated that on a long-term basis, governments are likely to use financial repression, where the rate of inflation is higher than bond yields, to erode the value of sovereign debt over time. The late Barton Biggs, Morgan stanley strategist also stated in Mid-2011 that debt devaluation is less painful than debt destruction as a long-term course. (Source FPM; Bloomberg - 2011) 

d) public-policy led geopolitical agendas (eg competitive foreign exchange devaluations; nationalism spurning #globalisation – eg “Brexit”; et al)

e) climate change concerns changes everything ("redundant assets" i.e. oil reserves reported in oil company stock valuations)

f) loss of trust in politics spawning alternative leadership and policy direction (e.g. Trump in US, Corbyn in UK; etc)

g) An Olympian ideal of greatness which can only be locally inspired while thinking global. Brazil Rio 2016 Olympics about national pride for us in London #claphamCommonm #ProudBrit via #Brexit. 'Brits' were and are worldly without subscribing to clubs of nonsense to with pretext to unite nations (Once upon a time British Knights supported Teutonic German comrades to "crusade" Christianity! How did that turn out?). A little Britain just finished 2nd in the Olympic medal table.