The Commune

May 21, 2016

Worries about the global economy are on the increase and becoming more mainstream. Time Magazine regarded in many quarters as a bastion of conservatism, recently ran a lengthy article on the crisis in american capitalism(1).STOCK MARKET PLUNGE

“The U.S. system of market capitalism itself is broken. That problem, and what to do about it, is at the center of my book Makers and Takers: The Rise of Finance and the Fall of American Business, a three-year research and reporting effort from which this piece is adapted.”(Rana Foroohar is TIME’s assistant managing editor in charge of economics and business.”

” “Across all advanced economies, and the United States and the U.K. in particular, the role of the capital markets and the banking sector in funding new investment is decreasing.” Most of the money in the system is being used for lending against existing assets such as housing, stocks and bonds.”

Only about 15% of the money floating in financial markets today is used for investment in business, the rest is used to fund lending into stocks and shares and bonds and speculative investment in property.

Instead of banking and financial interests serving the economic needs of business development, business development is now on the periphery choked and suffocated by the economic concerns of financialisation.

Ironically Ireland is a global player in these financial markets with thousands of jobs in Ireland’s financial sector fuelled as well by Foreign Direct Investment(FDI) and the footprint here of global multinationals. Ireland feeds upon the very financialisation of the global economy that worldwide is of such growing concern.

Financialisation is at the heart of a new economics that prints money out of thin air using this money to finance a global casino of stocks and bonds and derivative financial instruments while real economic growth and GDP declines on a global scale.

How the illusory nature of the fungible relationship between real economic growth and the smoke and mirrors of ballooning debt levels for individuals, institutions and governments can continue, is anyone’s guess. Perhaps Quantitative Easing (QE) helicoptering of free money for Joe Soap instead of for the banks?

At the individual level, student lending, mortgage lending, credit card debt, and ever-increasing reliance on global financial markets to stimulate growth through bond creation and free QE for the rich has led to a mountain of debt that one pin may burst to see it crashing down in a global stock market crash that would see 2008 pale into insignificance.

IExit

Were you taken in by the last election? I was.

I gave FF the benefit of the doubt but no sooner were they in than abolish Irish Water became suspend Irish Water charges; no coalition with FG became support of a FG minority government.

We are left with a politics of pretence with Dail Eireann more akin to a Chinese commune committee system with jobs for everyone. Real decisions are handed down from the shadows.

Even the independents were for turning. In truth democracy is in decline across Europe and Brexit is an opportunity to prevent this decline and preserve some semblance of democracy on the European continent.

Government parties across Europe being mere doppelgänger proxies for their puppeteer masters in banking and financial circles from the ECB to national central banks across Europe. The experiment has been a disaster with banks crippled from Greece to Italy to Spain, Portugal and Ireland leading crises in homelessness, austerity and the pillaging of public services created in times of democracy.

Rueful ironies abound. Fianna Fail vote for Central Bank powers to impose lower variable rate mortgages when if truth be told the central bank supports the scalping by Irish banks of young mortgage holders to boost bank coffers.

It was too much of an ask to have Fianna Fail call for another election with Fine Gael on the ropes thrashing around uturn after uturn promising everything to all they courted for support.

In the end, risk of losing their already hard-won seats it was an easy option for Fianna Fail to uturn and support a minority Fine Gael government and join the  frenzy with abolition of Irish Water replaced with suspension of water charges for the moment.

I gave FF a vote hoping against hope, but already lesson learned. The Judgment of Solomon story from the Hebrew Bible no longer applies to these folks for whom conquering means dividing the spoils, compromise  a mask for hypocrisy and broken promises.

Lets put aside delusions and accept the fact we have a coalition Commune of the willing instead of a pretend minority government.

Meanwhile Brexit looms closer and the euro fans are out in force.

It’s not likely that we will leave Europe behind if but there are substantive arguments for Ireland leaving Europe behind, we should consider these primarily for the reason that media propaganda will not allow such arguments to be heard.

Unfortunately media enlightenment is censorious of such debate.

Trade agreements between Ireland and the UK and Nordic nations could lead to a more dynamic and prosperous future if Ireland were to join such a project.

With banks in Spain, Italy and Germany’s Deutsch Bank on the brink of insolvency, it’s arguable that the European monetary union has become the bad bank of the USA with little prospect of anything other than Japanese deflationary decline for the forseable future.

It’s a certainty the solvency of Germany’s Deutsch Bank is questionable with its exposure to default on derivatives and credit default swaps.

Ireland’s Celtic Tiger was built on unregulated lending from the ECB and instead of stability brought about economic collapse.

40% of losses shouldered by the emu due to the 2008-2010 financial collapse of satellite EMU countries was left to Ireland to shoulder.

The consequence has been descent into a proto banana republic with public services starved of investment; unprecedented divisions between the wealthy and the poor.

No austerity for the rich and a deteriorating democratic deficit nodding to a future oligarchy of financial institutions behind a puppet government keeping up the pretence of democracy, the Commune.

China

The election of a new leader Xi Jinping in 2012 has seen a clampdown on dissidents not seen since Tiananmen 27 years ago. What will happen when the ghost cities economically collapse is anyone’s guess.

We must have long passed peak debt. That is the point at which stock markets begin a bear market and sell no longer believing the real economy will grow but will instead fall into a deflationary spiral.

The manipulation of economic growth by central banks and a gargantuan and overwhelming financial sector is failing to bring economic growth. The consequence of debt levels too big to control is causing worldwide concern.

(1)”China is on track to create $4 trillion in new debt by the end of this year. As of Q1, they’ve already added $1 trillion.

To put it into perspective… if you take the amount of QE the U.S., Europe and Japan created at their peaks… it would only (I cringe at the word) come out to $3.3 trillion.

China is going to beat that in a year!”

(1)”Since the financial crisis, China has run a debt-to-GDP ratio of about 3:1. That’s twice the amount of any other major emerging country.” (Chris Cimorelli, Managing Editor, Economy & Markets)

But here in Ireland we live in a Lilliputian market paradise extolling the virtues of financialisation on an unprecedented growth spiral propelled by massive injections of bailout and Corporation Tax….

However, a global abyss of debt will not defy gravity forever as debt tsunamis gather.

 

till again…

 

  1. http://economyandmarkets.com/markets/foreign-markets/this-could-easily-become-the-worst-urban-crisis-in-history/
  2. http://time.com/4327419/american-capitalisms-great-crisis/?utm_source=nextdraft&utm_medium=email
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: