Greece is out of bailout money; Spain is locked out of bond markets

The New York Times is reporting today (June 6) that Greece is running out of money to pay its immediate obligations. This is mostly because they’re not getting enough bailout money because the bailer outers don’t know if Greece’s next government will agree to the terms of the bailout, and Greece doesn’t have a government yet because the Greeks couldn’t decide whether or not they want to agree to those terms. So another election is scheduled for the 17th, elections cost millions of Euros which the Greeks don’t have, and in the meantime they have no money left.

The terms, by the way, are that Greece must commit suicide if they are to be able to collect on their bailout.

The budget gap is widening as the so-called troika of lenders — the International Monetary Fund, the European Central Bank and the European Commission — withholds 1 billion euros in bailout money earmarked for government financing while it waits to see whether new leaders elected June 17 will honor Greece’s commitments.

Even if the troika delivers that money, Greece will struggle to cover its obligations. It underscored a harsh reality that is playing out in other troubled euro zone economies. Prolonged austerity is making it harder, not easier, for governments like Greece to become self-reliant again.

What the New York Times isn’t telling you is that the ECB is making a nice profit off the so-called Greek austerity, which is only inflating Greek debt all the more. Yanis Varoufakis calls it “ponzi austerity”.

Meanwhile, Spain is complaining that nobody wants to lend Spain money anymore. They warn that if that happens and nobody lends Spain money anymore, they won’t be able to pay back the money they owe to other people who lent them money in the past. So they need new money to pay back previous lenders.

The Ponzi scheme is about to end! Quick! Somebody print some Euros for the love of the Eurozone!

Tomorrow there’ll be something about Italy. Just end this thing already and put Europe out of her misery.

World War II was the Flood; the Eurozone is the Tower of Babel

The picture to the left is an actual Eurozone ad campaign.

The parallels are uncanny. In the 1930’s, Europe, led by Germany, descended into violent chaos. Everyone killed everyone for every reason. A flood came, the biggest war ever fought on planet Earth. 60 million were killed – 2.5% of the global population at the time. Then things calmed down for a bit. Then Europe wanted to unite, to build a giant monetary Tower of Babel, to secularize and to expel God from the continent. The European Union and the Eurozone were born…

Eurenesis, Chapter 11

1) And the whole of Europe was of one union and one purpose. 2) And it came to pass, as they journeyed to Germany, that they found a valley in the land of Frankurt am Main; and they dwelt there. 3) And they said one to another: ‘Come, let us make money, and distribute it thoroughly.’ And they had paper for money, and tokens had they for coins. 4) And they said: ‘Come, let us build a European Central Bank, and a currency with its top in heaven, and let us give it the name Euro; lest we be scattered abroad upon the face of the whole of Europe.’ 5) And the LORD came down to see the ECB and the Euro, which the children of Europe built.

6) And the LORD said: ‘Behold, they are one Union, and they have all one currency; and this is what they begin to do; and now nothing will be withheld from them, which they seek to do. 7) Come, let us go down, and there confound their Eurozone, that they may not understand one another’s currency.’ 8 ) So the LORD scattered them abroad from thence upon the face of all Europe; and they stopped using the Euro.

The sin of the Eurozone was that it was trying to control too much, to mold the world in its image and to expel God from the planet by replacing Him as Creator, to conquer the  economy through unity, just like the people of Babel did. But the project was too much for man to handle. Now Europe will fragment, and life will go on.

Austrian Keynesian parting of the ways: Jim Rogers and George Soros

It’s fascinating to see two financial giants have such spectacular success but have such differing views on economics, morality, and goals. George Soros and Jim Rogers are like two sides of the same coin. One is a radical leftist Keynesian, the other a free market Austrian. Both worked together in the 70’s on the Quantum Fund, a hedge fund that made both men spectacularly rich. After that, one retired to a quiet life of motorcycling around the planet and seeing the world. The other started doing mischief.

George Soros is known to many as a scary manipulator and radical leftist who has his hand up the world’s shirt, playing the Globe like a puppet master. He is said to have “broken the bank of England” though I have little idea what that actually means. The man believes in globalization, central planning, inflation, bailouts, and State control. He loves Obama and the Federal Reserve.

Jim Rogers is known to many as an affable guy who likes the Orient. He lives quietly and gets interviewed by this and that financial network about what investments to make. He talks about morality a lot, the immorality of bailouts, believes in sound money, gold, believes the Fed should be abolished, and loves Ron Paul.

The question is, how is it that these two men actually worked together on the Quantum Fund, split apart and developed such different ideas about macroeconomics and politics?

The answer, I believe is that they don’t actually have different beliefs. They have different goals. Soros wants to control as much as he can. This is why he is a Keynesian. Not because he believes it’s good for the people, but because once you’re on the top, inflation, government control, and centralization can only benefit you. Jim Rogers and George Soros both know that the free market is the only thing that works, and is the only thing that is moral. It’s just that George Soros would rather keep all the power for himself and fool people.

The point is this. Those at the top, in the Fed, at the helm, in the treasury, the ones actually in charge of the central plan that is killing us, all know very well that the whole thing is rotten. They just don’t care.

The battle between Keynesianism and free markets is not a battle between economic ideologies. It is a battle between freedom and slavery, good and evil.

The global economy is starting to remind me of Atlas Shrugged

“What more can the Federal Reserve do?” is a question that keeps cropping up, especially in the last few days. They’ve already purchased so many bonds that their balance sheet is now heavier than the entire mass of the solar system, and there are no more bonds to “twist”, meaning, they cannot exchange any more short term bonds for long term bonds, because they have no more short term bonds to exchange.

The only thing the Fed has a mandate from Congress to actually do is buy or sell bonds. If they buy bonds, they buy them with money they conjure out of nothing (read money they steal from you and me) and if they sell bonds, the obliterate the money they earn from those bonds out of existence. They are like a giant monstrous liquidity black hole that magically spits out and sucks in cash, in and out of existence.

But as many dollars as the Fed can vomit forth into the economy, there seems to be no stopping the recession. What you have here is a world that doesn’t know how to produce anymore because everyone is stealing money from everyone else. When money is stolen, wealth is not produced. Only transferred, and each country is trying to steal more and more money from every other country by borrowing without any intention of paying back, and inflating GDP numbers by printing currency. It’s like a bankrupt college kid trying to show his parents that he’s making more money because he’s borrowing more from his friends and having his powerful bully go around beating people up for their lunch money and calling it “stimulus”. Except, in our case presently, we the people are the parents, the powerful bully is the Fed, and the bankrupt kid is the global economy.

Atlas Shrugged is not a very well written book. Fun to read, but way too long, droned on forever. Ayn Rand was never known for her writing skill, but for her ideas. What happened in the book was this: as the government lost more and more control, they started issuing stricter and stricter economic edicts (regulations) to keep things from dying. At one point, the government issued an edict that no company or person was allowed to produce any more or less than he is now, so GDP would stay exactly the same and nothing would change. This is pretty much what Constantine did when he took over the Roman Empire when he forbade sons from pursuing any occupation different from their fathers. So there is precedent for governments to do such things.

The danger now is that while Keynesians are crying that the Fed can’t do anything more, they may just be tempted to tell the government to give the Fed more power, and, say, buy stocks straight up and inflate the stock market directly instead of indirectly by buying bonds and forcing money into equities by saturating the bond market as they are doing now with QE.

If God forbid that happens and the Fed gets even more power than it has now, then we are all going to suffer excruciatingly. A monetary black hole entering the stock market can do untold damage to everyone involved, and the entire capitalistic system as we know it will be in danger. I’m pretty gloomy on this blog, but the thought of the Fed being allowed to enter the market directly, quite frankly scares the daylights out of me.

After that, the government may, a la Atlas Shrugged, just issue an edict that no one is allowed to sell stocks at a loss anymore, thereby keeping prices inflated.

Regulations are already making it so unbelievably difficult for a company to go public and issue an IPO that only gargantuan companies can do so, at the point where they already have $100 billion market caps and there’s no point in buying them because they are already at their highs. (FACEBOOK FACEBOOK FACEBOOK) What stops the government from issuing a mandatory hiatus on selling stocks? They already issue bans on short-selling. The point of a company going public is not for a colossus to raise $100 billion for God’s sake. It’s so a small company can raise a few million to expand by offering shares to the public and hopefully grow and share the profits. But what do any of us know from real capitalism anymore. We’ve become the world of $100 billion IPO abortions and failed startups who can no longer attract capital because JPMorgan is sucking it all out of the economy.

Watch out for the cries for the Fed to be able to do more. These are the most dangerous of cries. The world is falling apart and people are terrified of any semblance of freedom. Very soon this planet is going to look like something out of an Ayn Rand horror story.

Who is Ron Paul?

I mean John Galt.

Shas and Israel Beiteinu will vote to destroy the Ulpana

Looks like Eli Yishai, my favorite coward and Hilul Hashem, will be voting for the Jewish homes in the Ulpana neighborhood to be destroyed. Looks like his partner, Housing Minister Ariel Attias, will also be voting to destroy the homes, because they both earn 41,000 shekels a month as government ministers and they like money and don’t want to get fired, and would rather have innocent families who don’t earn as much lose their homes and become homeless. It’s only fair.

Housing Minister Ariel Attias made clear in an interview with Army Radio that his party (Shas) will go along with the Prime Minister’s directive to vote against the Normalization Law. “We will not vote against the position of the coalition (read the position of Netanyahu), and we will not support the Normalization Law, certainly the Ministers will not,” he said. “This is not something to stir up a coalition crisis over.

Yeah, why endanger the coalition that pays you 41,000 shekels a month of my tax money and welfare to your voters when it’s just a few people’s houses at stake who don’t even vote for your party? It’s not like you’re the minister of housing or anything (as if there should even be a minister of housing in the first place, which there should not be).

I’m not angry. I didn’t expect anything more from anybody in Shas, or Israel Beiteinu for that matter, because they are both one-man parties and the Knesset Members don’t answer to any of their constituents, so no matter what they do, they’ll be voted back in if Rabbi Ovadiah Yosef or Avigdor Lieberman wants them back in the list next round.

There are no leaders in Shas or Israel Beiteinu, so they cannot go against Netanyahu. They are just money vacuums. They don’t care about what is right, only about what is profitable for themselves – including Rabbi Ovadiah Yosef.

We’ll see what happens in the Likud though, which does answer to the party members. Those who vote against the Normalization Law will have a very hard time keeping their jobs.

You cannot stand up to any pressure if you are not a leader. The only leader that exists is Netanyahu, and no one can stand up to him except Moshe Feiglin, who is the only one actually trying to replace him.

 

The gluttonous Israeli gov’t & the gluten-free subsidy

Every so often a flash of hope flickers past my eye and I think that maybe, just maybe in these times of global debt turmoil, the Israeli government is smart enough not to do too many idiotic things and get themselves in too much debt. And then I see stories like this one.

According to the proposal, the cost of gluten-free bread will be kept at a level that is never higher than that of standard bread. In addition, those who suffer from celiac disease will be reimbursed for up to NIS 500 per month per family for purchasing special food, and the income tax rates of companies that sell gluten-free food products will not go above 25 percent.

So now I have to pay for the gluten free bread of some guy with celiac who wants to eat a sponge. Beyond costing hundreds of millions of shekels a year, the program will:

  1. Waste every shekel that goes into it
  2. Disrupt market forces and the prices of other foods competing with the gluten free bread
  3. Raise the price of corn that goes into these gluten-free sponges
  4. Cause many many many more people who don’t even have celiac to be diagnosed with celiac just so they can get 500 shekels more a month from Uncle Shmuel
  5. Cause 20 more unintended consequences that the government will then have to regulate by force with committees who get government paychecks
  6. Be immoral, because I shouldn’t have to pay for the luxuries of a celiac, a luxury by the way that tastes like crap.

Before anyone objects to my heartlessness, I am also on a gluten free diet. Not because I am celiac, but because I subscribe to the Primal Blueprint diet and way of life. And I do not eat gluten-free bread either, because I do not eat corn. My food is much more expensive than someone’s who eats grains, and I’m not asking for other people to subsidize my shopping list.

It will be a long time coming before I will be able to convince anyone in this country that it is not the government’s role to take care of someone’s celiac, that it is immoral and unjewish to force someone to pay for someone else’s luxury. Israel is still a country deeply mired in Marxist ideology and is very statist.

I shiver to think that this is where our money is going while the finances of the entire western world are on fire.

Will the Likud ministers pass the Ulpana test?

Sometimes it just comes down to simple guts. Much like Ariel Sharon’s ministers all had a choice whether or not to vote for the disengagement and expulsion of Jewish families from Gaza, those who voted against Sharon’s wishes were fired, but their votes counted, and ultimately the one who was fired from the Likud was Sharon himself, whose party, Kadima, no longer exists in a real sense. Polls show that they are down to 3 seats from a current 28 ever since Shaul Mofaz heroically joined the government in fear of losing Kadima if he didn’t. What a brave man.

Now in Sharon’s place is Netanyahu, who is instructing his ministers to vote against the Normalization Law, which would prevent a neighborhood of Beit El from being destroyed.

Most likely, those ministers who vote for the law will be fired, but they will all be supported by the Likud members next election, and we will all know who they are when they vote on Wednesday.

We will simply vote for the ones who voted for this law, and not vote for the ones who did not. Nothing could be more straightforward.

Those who say the issue here regarding the Ulpana neighborhood is “complicated” are spinsters. The issue is very simple. Jews are living on their land, and Arabs want them off. There’s nothing complicated about it. The purpose of the Normalization Law which will make the Ulpana “legal” is simply a fiction. It’s a game of tennis. It means nothing. What the Knesset should really do is simply flip off the Supreme Court on the grounds that they are a self-elected dictatorship, throw them all out, and have the next supreme court elected by the Jewish Nation.

The Normalization Law is merely a symbol that the Jews actually believe the land of Israel is Jewish land.

If a Likud minister doesn’t really believe that, then he’ll prefer his job and his tax money salary. If he does believe it, he’ll prefer the truth. On Wednesday we’ll see who prefers his well earned tax money salary, and who prefers the truth.

We’ll see whose more scared of being fired by Netanyahu, or of being fired by Netanyahu’s boss – the Likud members.

Torah Economics: Austrian or Keynesian?

Most people today, even Jews (especially Jews) see Judaism as a religion rather than a national regime. The Jewish nation was not designed by God in order to roam the world and do strange rituals and not eat pork and take off Saturdays. We were designed to be a nation that lived in a certain place under a certain constitution. This constitution is the Torah, and it includes economic law as well as religious law. The question is, is Keynesianism, inflationism, and central bankism consistent with Torah Law?

The Mishnah, codified in the year 200 and the basis for the Jewish oral law, states in Perek HaZahav (the Gold chapter) of tractate Bava Metziah, in the very  first line of that chapter, “Gold buys silver. Silver does not buy gold.”

The statement if read on the surface is quite incomprehensible. Look at the commentaries through the centuries though, and it becomes clear. Gold buys silver means that if someone exchanges gold for silver, the silver becomes his once the gold leaves his hand and enters the hand of the other person. This is regardless of where the silver actually is at the time the gold changes hands. “Gold buys silver” means that the mere act of transferring gold from one hand to another automatically transfers the silver.

But silver does not buy gold. This does not mean that one cannot acquire gold by paying in silver for it. It means that silver does not automatically, by virtue of the fact that silver has changed hands, acquire gold. In order for silver to acquire gold, not only does the silver have to change hands. The gold does as well. The fact that the gold changed hands indicates that both parties agreed to the transfer.

In the case of gold buying silver, there was no need for a clear indication by both parties that they wanted the transfer. The fact that only gold was traded is enough. In the case of silver buying gold, both the parties must agree, and any one party can back out of the agreement before both metals transfer places.

Why is this? Because in Jewish law, there are two types of transactions. There is a barter transaction (Torat Chalifin – the law of exchange) and there is also a monetary transaction (Torat Damim – the law of money). Gold in Jewish law is not considered money. It is considered a commodity, which is higher than money and is more easily transacted. Silver, on the other hand, is considered “damim” or money. In order for a monetary transaction to be completed, both sides must agree by transferring the money for the commodity on both sides. In order for a barter transaction to be completed, the seller need only accept the commodity, and the transaction is completed even before the good is exchanged for the commodity.

This is the basis of Jewish monetary law. Where does paper money come in to the equation? In a Jewish economic regime, no king or president or political leader of the Jews would have the authority to demonetize silver, or de-commoditize gold. Fiat money would still be allowed to exist, but it would be forbidden by Jewish law to affect the status of gold as a commodity or silver as money.

If people chose to use fiat government money, they could. But if they didn’t want to, they wouldn’t have to. A Jewish economic regime would have competing moneys, and the money with the most value would be the one that was most used. If the government decided to print more bills, they could, but the citizens would be able to resist the theft lawfully.

This is how a Jewish state can and should function. This is how it will eventually function. And the world will follow our lead and free humanity from government fiat money Keynesian tyranny. After all, the power to print money is no power at all when the citizens are not under any compulsion to actually use it.

Competing currencies was first proposed by Hayek, one of the fathers of the Austrian School of Economics.

How the Federal Reserve will lose control of inflation

Over at Economicpolicyjournal, Robert Wenzel is reporting that the Fed is seriously considering another round of quantitative  easing (QE). The reason they’re considering it is that their gauge of inflation, a formula which changes on a whim depending on whether they like the result of their calculations or not, is still low, so there is room to print more money without affecting prices too much.

The reason inflation is low is that in times of economic slowdown, debt becomes liquidated. Debt that once represented dollars becomes nothing. So let’s say Jay owes Mike $10,000 that Mike lent to Jay to start a business in a time of economic boom, say in 2007. Jay got his business off the ground just before the 2008 crash. Mike owns $10,000 worth of Jay’s debt, and as long as the economy is going, that debt is still worth $10,000 because the debt will be paid back. So that $10,000 still exists in the economy in the form of Jay’s debt.

Now the crash happens. Jay’s business fails. He can’t pay back the $10,000. So the value of his debt goes to zero. $10,000 is erased from the economy. The amount of money in the economy goes down, the value of the dollar goes up. Prices go down, so printing money will keep the prices stable.

Problem is, when there is less money in the economy because the Jays in the world can’t pay their debts, the Mikes of the world have less money, so keeping prices stable while people lose money is equivalent to raising prices while people have the same amount of money. Either way they can’t afford to buy as much with the money they have.

The economy naturally wants to deflate now because people cannot pay their debts. And the Fed keeps pulling it the other way and trying to inflate it. What you have here is a massive tug of war, and someone is going to win. That someone is the Fed, because as much as debt can be liquidated and money erased from the economy, the Fed can always, always just print more.

What will happen? After some round of QE or another, probably after the Euro collapses, gold and silver will suddenly become the only preserver of value that exists anymore. Dollars will be erased from the economy, which should push the value of the dollar up, but the Fed will have printed so many of them that it can no longer increase in value. With no Euro, everyone will pour into gold and silver simultaneously.

That’s when those who own gold and silver will escape with their wealth, and those holding paper will be in serious, serious trouble.

Greece’s Syriza leftists promise money that doesn’t exist

According to CNN, the new Greek Syriza party is promising rainbows and sunshine if elected.

Syriza promised to raise the minimum wage, freeze wage and pension cuts, reduce taxes on food and increase unemployment benefits, the reports said.

Sounds great! But how the hell are you going to do that! Easy. Print the money. Like all statist parties, Syriza believes that money is a function of government decree instead of the hard work of an individual. Since the State is all powerful, they have the right and responsibility to take care of the people.

This is quite consistent with the rest of Syriza’s platform, which states that it is the State’s responsibility to plan the economy, to eliminate competition, and to organize society. You can read about Syriza’s platform on Greekdefaultwatch.com. The post is in Greek, but run it through Google translate and you’ll get a pretty good, if disjointed translation.

The allure of having this kind of ideology is that if you actually believe in it, you feel pretty powerful when you are part of the government that is supposed to save everything. If you believe that the government is supposed to plan everything and make sure all the people are alright and have money, then you pretty much feel like a god when you are part of the government. This is the real allure of Statism. It allows man to be god when man governs.

It is this ideology that got Greece into so much debt in the first place. The government believed they were responsible for running the country instead of protecting the freedom of Greeks. Running a country is too much for any government to do, and it costs way too much. That’s why Greece is now bankrupt.

I’ve said many times on this blog that the beginning of the end of Western Civilization will begin in Greece. Greece is the seat of the West, the seat of Democracy, and it will be the first to fall. Democracy and atheism are a toxic mix. It makes governments believe they are God.

The only democracy that is moral is a democracy that believes that ultimately, God is in charge. When you have that humility, you understand that your basic job as government should be simply to protect the rights that God gave humans. That is, the right to life and freedom.

If you believe all people were created in the image of God, then you will humbly back off when asked to run the country. Instead, you will let the people run it.

If you’re a Statist, you will resort to robbery and theft until the people have nothing left. Greece is at this point now. If Syriza is elected, they will try to steal more money from the people in order to run the country. Problem is, there’s nothing left to steal. The saddest thing is, even if they aren’t elected, the other parties will steal just the same.