Shock, Horror: ECB Not as ‘Independent’ as it Claims – Report

Transparency International whacks at a central bank. The European Central Bank has found itself in the rare position of having to defend itself in the public arena following the release of a scathing report on its perceived lack of political independence. The report, published by anti-corruption watchdog Transparency International, argues that the institution has accrued new power and influence in the wake of the financial crisis but its code of conduct has not kept up with that newfound clout.
It even suggests that the ECB should withdraw from the Eurozone’s Troika of creditors, precisely at a time that calls are rising for the creation of a European Monetary Fund.
‘The extraordinary measures taken by the ECB since 2008 have tested the ECB’s mandate (to ensure price stability) to breaking point,’ Transparency International EU said. ‘The ECB’s accountability framework is not appropriate for the far-reaching political decisions taken by the Governing Council.’

This post was published at Wolf Street on Mar 29, 2017.

Macedonia Reject Soros & the EU Socialism

For 26-days straight, thousands of people have taken to the streets in order to send the message to Soros and European leaders that the people of Macedonia are a sovereign nation who utterly reject the left-wing agenda to divide the nation and bring a socialist-Muslim coalition to power. Johannes Hahn is an Austrian politician, who since November 2014 is Commissioner for European Neighbourhood Policy & Enlargement. He went to earlier last week to Skopje, in Macedonia, where he held talks with political representatives in a bid to contribute to a solution to the political deadlock there to get Macedonia to join the EU.
There was considerable corruption where the Prime Minister Nikola Gruevski was forced to resign in December 2015. The EU brokered elections in December 2016 to end the protests against the government of Gruevski. The December 2016 elections have left a transitional government was installed including from 20 October 20th, 2015 with the two main parties, VMRO-DPMNE and the Social Democratic Union (SDSM).

This post was published at Armstrong Economics on Mar 27, 2017.

European North v South

Dijsselbloem’s comments regarding the Southern Europe reflect the political bias – not the general public at large within Europe. There are different cultures throughout Europe. In some places people will not cross the street until a light changes even if there are no cars. Other parts are like New York, lights are optional. There are many cultural differences in general between north and south, but even more between members. Even in Germany there is a divide between north and south.
The blame does NOT lie in cultural differences, corruption, or even easier spending in the south and excessive pensions as in Greece. The problem that has pushed Europe to the brink is:
(1) this failed idea that ending European War can be achieved by federalizing Europe. That will not change the cultural differences. Even in the United States, there are cultural differences between the Bible Belt (anti-Abortion & anti-Gay Marriage) compared to California or New York. It is the Federalization of the United States and the attempt to impose one culture upon the whole every since the Great Depression that is causing tensions within the United States. The same is TRUE within Europe.

This post was published at Armstrong Economics on Mar 24, 2017.

Russian Billionaire Deripaska Responds To AP Story On Manafort Ties

In the latest attempt to stir the pot over allegations that Trump and members of his closest circle had ties to Russia, on Wednesday, the AP unearthed a 2005 memo from former Trump campaign manager Paul Manafort – who was let go by the Trump campaign in the summer to Russian billionaire Oleg Deripaska, who became Russia’s richest man under Putin and whose key asset is a 48% stake in Russian aluminum giant Rusal, according to which Manafort would boost Putin’s agenda and reportedly undermine anti-Russian opposition across Europe, the U. S. and former Soviet republics.
“We are now of the belief that this model can greatly benefit the Putin Government if employed at the correct levels with the appropriate commitment to success,” Manafort wrote, adding it “will be offering a great service that can re-focus, both internally and externally, the policies of the Putin government.”
As a reminder, Manafort worked as Trump’s unpaid campaign chairman last year from March until August. Trump asked Manafort to resign after AP revealed that Manafort had orchestrated a covert Washington lobbying operation until 2014 on behalf of Ukraine’s ruling pro-Russian political party.

This post was published at Zero Hedge on Mar 22, 2017.

New European Regulations Set To Crush Equity Research Budgets By $300 Million

Literally no one knows the true ‘value’ of equity research, not even the investment banks that are selling it. Up until now, equity research has been treated as a ‘freebie’ given away to institutional clients in return for trading commissions but that is all about to change thanks to the European Union’s MiFID II regulations, which require asset managers to separate trading commissions from investment-research payments.
Unfortunately, at least for the Investment Banks of the world, while the cost of generating equity research may be substantial, it turns out that the true ‘value’, as defined by institutional clients’ maximum willingness to pay for reports, may be much less. Which is shocking given the creativity required to constantly generate new variations of daily reports politely suggesting that you “Buy The Fucking Dip.”
As Bloomberg notes today, the regulatory change slated to take effect next January could cost the I-banks $300 million in fees.
Asset-managers in Europe and the U. S. will probably cut more than $300 million from research budgets in anticipation of regulations aimed at rooting out conflicts of interest in the market for investment information.
That’s according to a survey of 99 fund managers and traders conducted by consulting firm Greenwich Associates, which assessed the shake-up coming to the multi billion-dollar market for investment research over the next year.
The European Union’s MiFID II regulations, which require asset managers to separate trading commissions from investment-research payments, will have a ‘clearly negative’ impact on the amount of commission money that is spent on research and advisory services, according to the Stamford, Connecticut-based firm’s findings released Tuesday. While the budget cuts will be ‘relatively modest’ at individual asset-managers, research providers across the board fear the new law will prompt ‘a substantial decrease’ in buy-side spending.

This post was published at Zero Hedge on Mar 15, 2017.

All Washington blames Putin and calls for investigations of Russian villainy: John Batchelor interviews Stephen F. Cohen

The character of events from week to week, and as discussed by both Batchelor and Cohen, is manifestly worsening. While the proxy wars are stabilizing to some little extent, we see the political wars in governments as fall out of the New Cold War in a constant state of escalation. Cohen notes a New York Times piece by Charles Blow that coined a name for what is happening as an ‘Era of Suspicion’ and the author considered this a positive thing for the country – where all the interest groups are being forced by the hate and fear campaign to align with the anti-Russian narrative whether it serves their interests or not. This past week Batchelor brings up the news about the Estonian Ambassador, Eerik Marmei and the Ukrainian Minister of Foreign Affairs, Pavlo Klimkin who spoke to a Senate subcommittee about Russia disrupting elections in Europe, and the danger of cyber warfare by Russia. Also mentioned were the Trump charges that Obama had his Trump Tower ‘bugged’. Cohen then launched into what the consequences of this new ‘Era of Suspicion’ and the professor describes how the pressure to conform has influenced all the politicos (Flynn debacle) and the masters of industry in the United States, who want to have business dealings with Russia, into remaining cautiously silent. These and other efforts are being used to isolate Trump and neuter or redirect any chance of dtente or even honest discussion of serious geopolitical events. It is working too – with Republicans also becoming divided. Some Republicans are looking at Vice President Pence for the president’s position.
Cohen also discusses the role of ‘expert consultants on Russia’ in the media and their efforts to vilify Putin and the Kremlin. All interviews using these people are factually untrue. The most egregious of these, for example, maintained that Putin was ‘deliriously happy that Washington was in complete chaos over Russian policies’. Batchelor exclaims that this is ‘complete rubbish’. It was also Batchelor’s opinion that it was serious that Trump did not mention Russia in his address to Congress. What this indicates is that dtente is getting much less likely. Cohen also mentions the resurrection of McCarthyism with a Committee of Un-American Activity being formed and concludes that disorder is the contrived tenure of modern Western diplomacy. In my opinion Trump has to decide whether folding to the will of his opposition will stop this campaign to remove him or will it show weakness that will lead to escalation. His reticence to talk about Russia may be testing the waters, or be showing weakness. Senator Graham, who talked with the president, seems to think the latter and the US will ‘push back’ against Russia. I think Trump is folding too.
The push back will see more support for NATO and perhaps more military help for Ukraine. Cohen discusses the quasi NATO presence now in Ukraine, and he also brings up a potential increase in US troop presence in Syria. He discusses the dangers of a combined military presence of US and Russian assets in Syria. Cohen then discusses the simple solution to ease the danger, and it really is simple. Disengagement. But Putin needs Washington (Trump) to cooperate. But Cohen now considers this as unlikely as he thinks Trump is folding to his opposition in Washington. In Ukraine the political and economic situation is worse and where President Poroshenko is having no control over the ukronazis – who are now embargoing coal imports from the Donbass. This hurts Kiev, but also illuminates the reality of a failing central government. A personal question: Will NATO continue to base troops there? It would mean contending with or working with nazis in a failed state environment? But would most of the West hear about it? That’s where we are, living behind a virtual information wall that George Orwell would immediately recognize.
From my point of view the Military Industrial Complex has shown no sense of danger in supporting a ‘confrontation for profit’ policy against Russia, and now the people of the West are effectively ‘walled off’ from learning about critical realities by a systemic corruption of the MSM. Washington is creating its own “Iron Curtain”. Not even discussions at the highest levels of Washington are tolerated unless they support the narrative. One wonders how long this can go on with the Military Industries dependent on tax dollars, and the financial sector and other interests looting the economy and destroying that same tax base. This becomes another reason to impose that ‘Era of Suspicion’ on the whole country; if one cannot advise or discuss an argument against war dangers (or government policies) without censure, then war becomes more inevitable in spite of the fundamentals that work against it. One could say, ‘unleash the dogs of war’ but first hugely increase the fiscal deficit.

This post was published at Audioboom

The Unrevolutionary Revolution

February in Romania has brought 27 consecutive days of protests against the current government, at a scale unmatched since the Revolution in 1989. In a record day, more than 600,000 people gathered in the capital’s Victory Square and around the country to overturn a decision by the current ruling party to decriminalize some acts of corruption and abuse of office. This decision was especially self-serving given the high number of party members already serving suspended sentences for similar graft offenses. News outlets around the world have covered the events using flattering words, describing the peaceful riots as a ‘poetry of international resistance’ and a ‘massive political awakening.’
The resilience – and moderate success – of protesters, in spite of the government digging its heels in and the temperatures dropping, has been undeniably impressive, and has demonstrated an energetic interest in pursuing justice, which, rightly employed, could become the driver of a much needed change in Romanian politics.
Yet at the same time, amongst the shouting against totalitarian measures aimed at changing the penal and civil code, other voices emerged as well. Equally numerous, and sometimes belonging to the same people, they call for stronger ‘democratic’ processes and offer public displays of affection for the European Union. Unsurprisingly, there have also been no mass protests against another fairly recent economic policy which forces supermarkets to ensure at least 51% of their grocery offers are of Romanian provenance. In this regard, many protesters might decry the ‘thieving multinational corporations’, and ask for a government crackdown on tax evasions, in order to provide for socialized healthcare and education.

This post was published at Ludwig von Mises Institute on February 27, 2017.

Eastern Europe & World War III

Europe could become the site of a new global war in the East as tensions build there against refugees and the economic decline fosters old wounds. The EU is deeply divided over the refugee issue and thus it is fueling its own demise and has failed to be a stabilizing force. After five days of demonstrations, Romania’s month-old government backed down and withdrew a decree that had decriminalized some corruption offenses. They were still acting like typical politicians and looking to line their pockets. After one month, the people have rising up saying ‘We can’t trust this new government.’
On the eastern border of the EU, only a few hundred kilometers from Berlin as well as Vienna, there is a growing danger that the world will stumble into a global war primarily from through the incompetence of the politicians in the EU as well as in the East. The EU is more concerned about punishing Britain and trying to hold on to overpaid political jobs that to address the real issues facing Europe.

This post was published at Armstrong Economics on Feb 8, 2017.

Free Market Economics and Crony Capitalism

In my last post, I made light of British columnist George Monbiot’s absurd charge that today’s free market economists and libertarians are part of an establishment crony capitalist system. A “progressive” friend of mine responded by asking: “Doesn’t big business wrap itself in the mantle of free markets? If so, aren’t exponents of free markets supporting crony capitalism? Aren’t they therefore responsible for the crony capitalist practices that beset us today?
The short answer to this question is that free market economists and libertarians are no more responsible for the willful distortion and misuse of their doctrines than Jesus is responsible for the bloody wars of religion of 16th and 17th century Europe. Adam Smith pointed out two-hundred-and-fifty years ago that business owners, especially big business owners, are not generally supporters of free markets, whatever they may claim. They find its disciplines too onerous; they try to escape them through one means or another, and subverting government through crony capitalist techniques is the tried and true way to do it.
Nor is it correct to think that crony capitalism is a particular phenomenon of our own day. Yes, it has grown by leaps and bounds in recent decades, thanks to ample financing provided by world central banks. But it has always been with us.
As I pointed out to my friend, crony capitalism is as old as the human race. It is the economic system embedded in tribalism and as such has been the dominant system for all of human history. Through the ages, powerful cronies latch onto political and economic philosophies and distort them in the process, but this is just window dressing.

This post was published at Ludwig von Mises Institute on Jan 14, 2016.

Nationalism, the United States, and Cyclical Crises

In the coming year, the United States will remain the overwhelmingly dominant geopolitical power in the global system, and President-elect Donald Trump will be at the helm. His presidency will mark a turning point as the first significant shift towards nationalism at the center of the US political system.
As explained in our 2017 forecast, this rise in nationalism is a global trend, and one of three critical consequences of the 2008 financial crisis that will play a pivotal role in shaping geopolitics in 2017. (The other two are economic stagnation and instability in export-dependent countries.) Its rise stems from the rejection of the internationalist model that has dominated international relations since the end of World War II.
In places like Europe, it is easy to see why internationalism is losing favor. It is less obvious for the US. The European Union (EU) put in place policies and regulations that prioritized the Union’s survival over national interests, and this inherently creates conflicts of interest between the bloc and member states.
This was exacerbated by the 2008 financial crisis. Member countries saw their economies crash while their hands remained tied by Brussels, which was slow to act and offered a narrow range of Band-Aid solutions.

This post was published at Mauldin Economics on JANUARY 2, 2017.

“It’s Corruption On Steroids” – A Look Inside The El Monte, California Public Employee Pension

El Monte, California is a city of roughly 100,000 residents in East Los Angeles, many of whom struggle to make ends meet with a median household income of ~$39,000 and nearly 25% of people living below the poverty line. But while most of the people of El Monte struggle to meet monthly expenses, the city’s public employees are living the high life courtesy of one of the most egregious taxpayer funded pension plans in the country. Just ask the retired City Manager, James Mussenden, who told the LA Times that he gets paid $216,000 per year in retirement to tour the world on extravagant golf trips.
The retired city manager of El Monte collects more than $216,000 a year, plus cost-of-living increases and fully paid health insurance. ‘It’s giving me an opportunity to do a number of things I didn’t get to do when I was younger, like travel to Europe, take some things off my bucket list,’ Mussenden, 66, said recently. He even flew to Scotland to play the famed Old Course at St. Andrews, a mecca for golf enthusiasts.
Mussenden recognizes that few Americans have pensions anymore – least of all the El Monte taxpayers who are funding his retirement. So while he enjoys his monthly retirement check, he’s discreet about it.
‘The guys I play golf with, they get very angry about my pension because they don’t have anything like it,’ he said.

This post was published at Zero Hedge on Jan 1, 2017.

Italy Banking Crisis is Also a Huge Crime Scene

Toxic loans as a result of corruption, political kickbacks, fraud, and abuse.
The Bank of Italy’s Target 2 liabilities towards other Eurozone central banks – one of the most important indicators of banking stress – has risen by 129 billion in the last 12 months through November to 358.6 billion. That’s well above the 289 billion peak reached in August 2012 at the height of Europe’s sovereign debt crisis.
Foreign and local investors are dumping Italian government bonds and withdrawing their funding to Italian banks. The bank at the heart of Italy’s financial crisis, Monte dei Paschi di Siena (MPS), has bled 6 billion of ‘commercial direct deposits’ between September 30 and December 13, 2 billion of which since December 4, the date of Italy’s constitutional referendum.
Italy’s new Prime Minister Paolo Gentiloni, who took over from Matteo Renzi after his defeat in the referendum, said his government – a virtual carbon copy of the last one – is prepared to do whatever it takes to stop MPS from collapsing and thereby engulfing other European banks. His options would include directly supporting Italy’s ailing banks, in contravention of the EU’s bail-in rules passed into law at the beginning of this year. Though now, that push comes to shove, the EU seems happy to look the other way.
While attention is focused on the rescue of MPS, news regarding another Italian bank, Banca Erturia, has quietly slipped by the wayside.

This post was published at Wolf Street on Dec 18, 2016.

What Is Quitaly?

First there was Grexit, followed by Brexit, and now there’s Quitaly. What is Quitaly? It’s Italy’s referendum that could decide if the struggling country will change its constitution.
Today’s (Sunday) Quitaly vote for constitutional reform is deemed by many as the most significant European political event of 2016.
Behind today’s vote is Italy’s floundering economy. Over the last two decades, Italy has seen virtually no growth and sky-high unemployment. Plus, Italian goods have become less and less competitive in export markets.
Italy’s Prime Minister Matteo Renzi has campaigned for a ‘yes’ vote in today’s voting, which he says will make governing easier in the country.
Reforms being voted on today would remove some of the Senate’s power. That means proposed laws would only need approval from the lower house of parliament. Under the current system, both houses must approve laws.
In a bold move, Renzi is putting his political fate on the line. He has said he would leave office if the ‘yes’ vote loses.
Lobbying for ‘no’ is the populist party Five Star Movement (5SM). The 5SM’s goal is to block reforms that would streamline Italy’s public administration and leave the current checks required in place.

This post was published at Wall Street Examiner on December 4, 2016.

5 Questions, Answered about Italy’s Referendum

This Sunday, December 4th, Italy will hold a constitutional referendum.
And while this isn’t a referendum to remain or leave the European Union, like the United Kingdom’s referendum in June, it still matters. European markets, the future of trade, the economy and global relations all could shift depending on the outcome.
It behooves you to know what’s happening and what could happen as a result. You’d be forgiven, though, for not understanding what Sunday’s referendum is all about. One of the leading Italian research institutes, Demopolis, reported that nine out of ten Italians have not understood the upcoming referendum on constitutional reform.
***
What is the Italian Referendum and Why is it Important? Italy’s referendum will decide on a series of constitutional reforms that would considerably restrict the size and power of one out of the two houses of Italian parliament. This effort was drawn up to reform the country’s endemic corruption and inefficient systems of governing.
Italy’s current Prime Minister, Matteo Renzi, has lobbied strongly for a ‘yes’ vote, which would strengthen the central government, while weakening the regional provinces.. The Prime Minister has flip-flopped on his promise resign if voters in the country reject the referendum – but considerable speculation has indicated made Renzi’s exit still a possibility.

This post was published at Wall Street Examiner on December 3, 2016.

Modi’s Demonetization Is a Cure Worse Than the Disease

Next Tuesday will mark four weeks since Indian Prime Minister Narendra Modi made his surprise demonetization announcement that has sent shockwaves throughout the South Asian country’s economy. In an effort to combat corruption, tax evasion and counterfeiting, all 500 and 1,000 rupee banknotes are no longer recognized as legal tender.
I’ve previously written about the possible ramifications of the ‘war on cash,’ which is strengthening all over the globe, even here in the U. S. Many policymakers, including former Treasury Secretary Larry Summers, are in favor of axing the $100 bill. In May, the European Central Bank (ECB) said it would stop printing the 500 euro note, though it will still be recognized as legal currency. The decision to scrap the ‘Bin Laden’ banknote, as it’s sometimes called, hinged on its association with money laundering and terror financing.
Electronic payment systems are convenient, fast and easy, but when a government imposes this decision on you, your economic liberty is debased. In a purely electronic system, every financial transaction is not only charged a fee but can also be tracked and monitored. Taxes can’t be levied on emergency cash that’s buried in the backyard. Central banks could drop rates below zero, essentially forcing you to spend your money or else watch it rapidly lose value.
Inevitably, low-income and rural households have been hardest hit by Modi’s currency reform. Barter economies have reportedly sprung up in many towns and villages. Banks have limited the amount that can be withdrawn. Scores of weddings have been called off. Indian stocks plunged below their 200-day moving average.
Demonetization has also weighed heavily on the country’s manufacturing sector. The Nikkei India Manufacturing PMI fell to 52.3 in November from October’s 54.4. Although still in expansion mode, manufacturing production growth slowed, possibly signaling further erosion in the coming months.

This post was published at GoldSeek on 2 December 2016.

Foreign Governments Cutting off Funding for Hillary

Hillary supporters claimed that the Clinton Foundation was an innocent, ‘charitable’ organization. On his proposed first day to ‘Drain the Swamp,’ Trump will impose a LIFETIME BAN ON LOBBYING FOR FOREIGN GOVERNMENTS. Numerous foreign governments handed money to the Clintons purely for ‘influence.’ The corruption with Norway’s link to the Clinton Foundation extended to Obama. This was the reason Obama was given the Noble Peace Prize, and Jens Stoltenberg, who approved the half-billion donation from Norway to the Clintons, was made the head of NATO in Europe.
The Norwegian newspaper Hegnar reports that Norway is expected to slash their contributions to the Clinton Foundation now that Hillary has lost the presidency. Norway’s pay-off to the Clinton Foundation was strategic. According to local press, during the period 2007 to 2015, Norway sent 584 million to the Clinton Foundation. For the next three years, they promised the Clintons a further 92 million.

This post was published at Armstrong Economics on Nov 23, 2016.

European Temper Tantrumps: “A World Is Collapsing Before Our Eyes”

Submitted by Juduth Bergmann via The Gatestone Institute,
The arrogant claim to the moral high ground by European elites has no basis in reality. There is no respect for freedom and democracy on a continent where citizens, such as the politician Geert Wilders, are arrested and prosecuted by in a court of law for speaking their minds freely about topics that the authorities find it expedient not to debate in public. Freedom, respect for the rule of law, and people’s race, religion and gender have never been less respected and protected in Germany during the post-WWII era than under Merkel. German authorities have completely failed to protect women, Christians and others from the chaos unleashed by the mass, unvetted, immigration of mainly Muslim migrants from Africa and the Middle East. The rule of law is anything but “respected” in Germany. Not everyone is “panicking”. UK Foreign Secretary Boris Johnson, rejected the invitation and told his colleagues to end their “collective whinge-o-rama” about the U. S. election result. Critics of the U. S. election omitted, however, the runaway lawlessness, divisiveness and corruption that American voters declined to reinstate. “A world is collapsing before our eyes”, tweeted the French ambassador to the United States, Gerard Araud, as it became clear that Donald Trump had won the US presidential election. Although he later apparently deleted the tweet, the sentiment expressed in his tweet encapsulates the attitude of the majority of the European political establishment.

This post was published at Zero Hedge on Nov 15, 2016.

80,000 Catalans Gather Demanding Independence From Spain

After Brexit in the UK and Donald Trump’s election in the US, the political elites of the world are slowly waking up to the inevitability that the will of the people can not be ignored forever. In Northern Europe, the electorate has rebelled against political elites, like Angela Merkel, who have embraced “open borders” and the influx of refugees from war-torn areas in the mid-east that have brought with them increasing violence and terror attacks. In the U. S., the rebellion is the direct result of Americans being fed up with a federal government that is defined by cronyism and complete dysfunction.
Now, the latest demonstration of an electorate fighting back against its elected officials comes from Spain as 80,000 people rallied in Barcelona on Sunday in a show of support for Catalan leaders locked in a political battle with Madrid over an independence referendum. In Catalonia, separatists complain their relatively wealthy region is overtaxed by an oppressive central government in Madrid to subsidize poorer regions of the country.

This post was published at Zero Hedge on Nov 14, 2016.

Crony Communism: Hillary Clinton’s Game Plan For America

‘The goal of socialism is communism.’ Vladimir Lenin
Inferential Analytics (IA), the forecasting method we have created and use, has generated a new theme. IA themes define significant macro developments that are in progress. IA themes almost always become full-blown realities in time. This is our first article about the new theme, which is particularly threatening and disturbing.
If this theme develops as the IA model projects, the resulting new reality will have a profound effect on every United States citizen living either within or outside the country. (U. S. citizens are taxed no matter where in the world they reside.) While the entire American experience will be re-shaped by this new reality, citizens’ financial freedom, and therefore their overall liberty is particularly at risk. This theme extends beyond the United States, especially to Europe, but in this article we will focus on the U. S. situation.
Before introducing and detailing the new theme, here is some context.
Until now, the United States has been able to fund its massive, structural deficits and debts by leveraging its unique position as issuer of the world’s reserve currency, the dollar, frequently referred to as the petrodollar. The dollar’s reserve privilege has enabled the nation to artificially enhance America’s financial quality of life by creating out of nothing colossal quantities of the currency. By perpetuating a system that forces other nations to use the dollar, strong, unnatural demand has kept the currency from imploding in value despite its hyper-creation.

This post was published at Investment Research Dynamics on October 16, 2016.

Doug Casey: Why the Euro Is a Doomed Currency

For a long time, I’ve advocated that the world’s governments should default on their debt. I recognize that this is an outrageous-sounding proposal.
However, the debts accumulated by the governments of the U.S., Japan, Europe and dozens of other countries constitute a gigantic mortgage on the next two or three generations, as yet unborn. Savings are proof that a person, or a country, has been living below their means. Debt, on the other hand, is evidence that the world has been living above its means. And the amount of government debt and liabilities in the world is in the hundreds of trillions and growing rapidly, even with essentially zero percent interest rates. This brings up several questions: Will future generations be able to repay it? Will they be willing to? And, if so, should they? My answers are: No, no and no.
The ‘should they’ is one moral question that should be confronted. But I’ll go further. There’s another reason government debt should be defaulted on: to punish the people stupid enough, or unethical enough, to lend governments the money they’ve used to do all the destructive things they do.
I know it’s most unlikely you’ve ever previously heard this view. And I recognize there would be many unpleasant domino-like effects on today’s over-leveraged and unstable financial system. It’s just that, when a structure is about to collapse, it’s better to have a controlled demolition, rather than waiting for it to collapse unpredictably. That said, governments will perversely keep propping up the house of cards, and building it higher, pushing the nasty consequences further into the future, with compound interest.
With that in mind, a few words on the euro, the E.U. and the European Central Bank are in order.

This post was published at International Man