One by one: understanding the tyranny of debt (at long last)

12-year-old Victoria Grant giving a lecture at a recent Public Banking Institute conference has spread via the Internet. In it, Grant talks about the history of the Canadian banking system and the effects of ‘collusion’ between governments and financial institutions.
Here is the direct link.

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5 Responses to One by one: understanding the tyranny of debt (at long last)

  1. Quinn Ronin says:

    Out of the mouth of babes!
    Now a bit of preaching to the choir:
    The Bernanke Put is very likely to be the underlying cause of the next economic collapse. By backstopping banks that it’s dubbed TBTF with unlimited amounts of free capital and putting investment banks in charge of the banking industry, the FED has encouraged the largest banks to make outsized directional bets with these funds which increase the structural risks to the entire global economic system.

    And will eventually bring it down if the TBTF’s are not reined in. But this isn’t very likely. That solution would slow the global economy, and a hard landing (which used to be the norm, but is now politically incorrect) could occur. Hard landings have gone completely out of political fashion, (After Alan Greenspan engineered the soft landing, circa 2000 forward, politicians and bankers alike saw a golden goose that allowed them the opportunity to be seen as heroes, constantly trying to rescuing the economy (and fatten their, and their friends, pocket books. ;^)

    Of course, soft landings, as with any extreme, come with a multiplicity of “unintended consequences!” But, hey, the blame for those can always be shifted to someone else! Politicians have a lifetime of experience doing that! ;^)

    Back to the economic risks and a recent case in point, the $2Bn loss at JPMorgan. In an article by Chriss Street, the former Treasurer for Orange County, CA (who’s claim to fame is that in 2007 he uncovered their true derivatives risk prior to the 2008 meltdown, and lowered the county’s derivative exposure, literally saving it’s financial neck!), he says:

    “Achilles Macris, J.P. Morgan’s CIO in their London office, began using the bank’s access to cheap capital from the Fed to amass a huge over-the-counter derivative gamble that high yield and sovereign debt interest rates would fall, after MF Global suffered a $1.2 billion loss on similar bets and was forced to file for bankruptcy last October 30th.”

    In the same article Mr. Street points out the outsized derivative exposure of the three largest banks, JPMorgan, Citibank, and Bank of America, which total an astounding $172+ Trillion, more than 11 times the U.S. economy and 2.7 times the entire economies of all nations on Earth. That’s a lot of exposure, trillions of dollars, to make billions of dollars, and even a slight hiccup can cause catastrophic losses, as both MF Global and JPM have shown. What will be the consequences of a more serious economic dislocation? Only God knows!

    To restate the obvious, this kind of “gambling with the house’s money because someone else is going to pick up the tab if you lose” is a direct result of the zero interest rates, and the unlimited access to funds, coupled with the guarantee that if you fail you will be bailed out (and get your outsized bonus even if you are the CEO, CFO, COO, CIO, or other CXX, responsible for that failure), and the investment bank’s coup de grace, being given ordinary bank status and access to unlimited FED funds.

    Bankers, along with multi-national corporations, have over the last couple of decades morphed into masters of spin and deception. One would think that someone would notice that the same banks that are benefitting from FED policy, actually own the FED (merely a cartel of private banks), and that every central banker’s action, disguised as helping the economy in general, is aimed at protecting and enriching the big bank members of the cartel.

    (Thinking has never been a high priority of the general population. Usually, it relies on “experts”, usually main stream media experts, to dole out the pablum that passes for serious news. Only when it’s faced with some sort of pain, financial, personal or physical, does it concern itself with underlying causes, and even then rarely, if ever, understands the true underpinnings of a large scale social, economic, or political disaster. But you got to Love them just the same! We are all working with what’s in our heads, after all! ;^)

    But one can be fairly certain that the central bankers of the world will not be held responsible for any mishaps! And in fact, they will likely be turned to as near flawless guides (which they profess to be), guiding the economies of the world through the Straits of Messina, between the Scylla of inflation and the Charybdis of economic malaise. What irony that they are relied on to solve the very problems that they, themselves, with their bank protecting/enriching policies, have created! ;^D

    However, since they have inveigled their way into seemingly invulnerable positions of ultimate power, both insulated from the risks of elections and the influence of election-based political power structures, the perception that they are some kind of heroes seems likely to stand! At least, for a while. ;^D

    An aside under the heading of A-S-S-U-M-E: Madoff, is pronounced like “made off”, as we all know. Wouldn’t you think that investors might be a little suspicious of a fund manager promising outsized returns with a name that sounds like made off (with your money?) ;^)

    What about an energy trading giant with continual (and unexplained) outsized returns with a name that sounds like End Run? ;^) Why wouldn’t anyone, at least, check the footnotes in their yearly financial report?

    More recently, Jamie Dimon sounds like a guy in a hard-boiled detective novel. Could be the protagonist, or the owner of the local cassino (where his client’s little sister has fallen into a black hole of gambling debt.) So, who does Dimon rely on for his scheme to risk $trillions to make $billions? Why, Achilles (as in Achilles Heel) Macris, of course. How did that work out for you, Jamie? ;^D

    Maybe The Big Guy Upstairs does have a sense of humor, after all! ;^D

  2. Joe Hartwick says:

    “Out of the mouth of babes!” Actually, no. This is right out of the mouth of her parents, probably the father who has done a fine job of rehearsing her to do this. There is no way that a 12 year old child understands any of this stuff, and I think that it is a shame that an intelligent child should be used like this.

    While I am commenting, I would like to say that I really enjoy reading your commentary on the markets. It is always informative and very insightful. Thank you very much.

  3. Quinn Ronin says:

    Of course, you’re right, Joe. Someone decided that it would be a novel way to deliver a message that might otherwise be ignored, I suppose. Whether it did real and permanent harm to the child is something that I don’t imagine we could really judge, but considering the amount of child abuse in the world, there may be more important issues to address in this area. If no harm was done, it would seem to me to be her parents responsibility.
    Best regards,

  4. Quinn Ronin says:

    And thank you for the kind words. ;^)

  5. Bruce says:

    “During times of universal deceit, telling the truth becomes a revolutionary act.” – George Orwell

    “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” – Napoleon Bonaparte

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