European Debt: The Big Picture

By Simon Johnson

For everyone struggling to get their arms around the debt crisis in Europe, Bill Marsh in today’s New York Times offers literally a compelling picture, with graphic illustration for the key issues.

The picture is big, 18×21 inches. Either you need a very large computer screen or a hard copy of the paper (pp. 6-7 in the SundayReview section, “It’s All Connected: A Spectator’s Guide to the Euro Crisis).

The main debt linkages across borders for which we have data are all here – and the graphic pulls your eye appropriately to the centrality of Italy in whatever happens next.  (On why eurozone policy towards Italy now matters so much – and what are the options – see my recent paper with Peter Boone, “Europe on the Brink”.)

But you might think also about what is not in the NYT graphic because we lack reliable information.  For example, what is the exposure of US financial institutions to European debt, directly or indirectly, through derivatives transactions of any kind?

The opaqueness of derivative markets means that most investors can only guess at what could happen.  Most of the relevant regulators and supervisors with whom I have talked seem also to be largely in the dark – remember the experience of AIG in 2008.

Cross-border bank exposures through loans and other holdings are publicly disclosed – data from the Bank for International Settlements are represented by the arrows in the NYT graphic.  These data are surely not perfect, but they do convey the main points and they tell you where to focus attention.

Why do we not require publication of similar data, preferably by financial institution, for all derivative transactions – including both gross and supposedly net exposures across borders?

119 responses to “European Debt: The Big Picture

  1. Absolutely outstanding post, and I really love the Bill Marsh link. Terrific.

    Even though this Euro talk seems to come up every weekend and a person finds themselves growing numb to it over time, there is something, I can’t put my finger on it, since about Thursday it just feels different somehow. It’s mainly a subjective feeling I have had since Thurs, I can’t put my finger on it, but it’s this subjective like feeling.

    And here is the thing, more factual based, that really gets me. It was in Friday’s FTAlphaville blog, but I didn’t actually read it until very late Saturday. Check out this link and the wording at the beginning:
    http://ftalphaville.ft.com/blog/2011/10/21/709076/greece/

    Here are the parts (really only related to one thing) from the John McDermott story that strike me. Some parts of McDermott’s post are from an EC report. (it should be noted PSI stands for “Private Sector Involvement”:

    “The headline: it suggests private bondholders will be pushed to take 50 or 60 per cent haircuts.”

    “It assess how far 50 and 60 per cent haircuts on PSI would take you (our emphasis):”

    “Deeper PSI, which is now being contemplated, also has a vital role in establishing the sustainability of Greece’s debt1. To assess the potential magnitude of improvements in the debt trajectory, and potential implications for official financing, illustrative scenarios can be considered using discount bonds with an assumed yield of 6 percent and no collateral. The results show that debt can be brought to just above120 percent of GDP by end-2020 if 50 percent discounts are applied. Given still-delayed market access, large scale additional official financing requirements would remain, estimated at some €114 billion (under the market access assumptions used). To get the debt down further would require a larger private sector contribution (for instance, to reduce debt below 110 percent of GDP by 2020 would require a face value reduction of at least 60 percent and/or more concessional official sector financing terms).”

    “The report suggests that even with a 50 per cent haircut by private bondholders, Greece will require further and sustained support by public international lenders.”

    “As UBS economists noted earlier this week, even 50 or 60 per cent haircuts won’t be enough. A 110-120 per cent debt to GDP by 2020 (as suggested in the scenario) remains highly dangerous.”

    Let me tell those of you BaselineScenario readers who might not be able to decipher it: A HUGE part of the Eurozone foot-dragging from beginning up to now, has been European government officials making the American and European taxpayers pay for defaults, while protecting private European bondholders (i.e. rich government cronies).

    Rich European bondholders= PSI= corrupt banks

    Between Germany and France, France is the obvious weak link, and it looks like France will very soon lose its AAA credit rating with many corrupt and weak French banks that don’t want to open their accounting books. So, after showing the above I ask another question: Isn’t it interesting how Christine Lagarde, good friend of the French banks, has suddenly become, as Elmer Fudd would say “vewy vewy quiet”?????

  2. Short translation of my comment above:

    When you read in a reliable media source that the private bondholders are FINALLY being asked to feel some pain, you know the SH*T has really hit the fan and is getting on the wall and everyone’s clothes.

  3. Moderately unrelated link:

    Densely-linked cluster of 147 companies control 40% of world’s total wealth

    http://boingboing.net/2011/10/22/densely-linked-cluster-of-147-companies-control-40-of-worlds-total-wealth.html

  4. Am I an idiot, or does this chart say that Spain has lent UK 24% of its GDP? OK, I’m probably an idiot regardless, but is this possible?

  5. Here, for what it’s worth, is what the big U.S. banks disclosed as their exposure to what I like to call PIG-Sity (Portugal, Ireland, Greece, Spain, Italy). Note–only one bank went to the trouble to explicitly disclose sovereign as well as non-sovereign exposure to these countries: http://bit.ly/q6lzEx

  6. Every Icelandic Viking citizen :-) owes 20 million – if you believe derivatives. I’m helping by buying their 8.8 pH water – it was on sale yesterday for 60 cents less than usual.

    You guys do the math – oh wait, that’s not the strong point of *policy* makers….

    Sigh.

    Let’s get some Italian shoes here in NJ – we love your shoes and we’re SO OVER the crap we’ve been getting from noodle heads who have done some very strange things to their feet over the centuries….

    Even if they take a 60% cut – they still have enough money to buy all the water bottles from Iceland…

    As for USA politics, hands down the Rethugs have won the competition for how bad they can hurt the *Middle Class* through *banking* – a decade of building up a private mercenary army was SAVAGERY on our financial lives.

  7. jhm, you are not an idiot. It’s a very good question actually.

    When I first looked at the NYT graph I thought you were nuts. But actually if you look at it, it is saying that Spain is a creditor to Britain. It’s 325.8 billion that Britain owes Spain. So if you take that 325.8 billion and divide it by Britain’s 2.3 trillion you would get the % of Britain’s GDP they owe to Spain. So, what I do is I just move the decimal in the numerator to switch to terms of trillions.

    You get then, .3258 divide by 2.3 and you get 0.14165

    That equates to 14% of Britain’s GDP they owe to Spain. I guess you were off one decimal??

    Which is why this graph Professor Johnson is sharing is actually pretty awesome, because it could make you realize things you didn’t before in a easy to comprehend form. Assuming it’s accurate (and I think it is) it’s really an awesome teaching tool.

    It’s important to remember, just as Professor Johnson is saying, this doesn’t include “shadow banking” or some “off—balance sheet activities”. That’s part of the point Professor Johnson is making, is we need to know how much of those derivatives activities are out there, and there needs to be a way to account for that.

  8. While I certainly agree that transparency is warranted, can’t we just protect depositors and let the derivatives fall as they may? Why are they different than bets in Las Vegas? If they have become intergrated into products sold to unsuspecting investors, can’t we those investors sue the h*ll out of the bankster boys? And can’t we “stop the looting, and start prosecuting”? Better yet, in lieu of judicial action, let’s just put the banksters and their political accomplices in a room with hurt investors and others hurt by these “phantom money” (PhM) shinanigans– for 1 hour, with full immunity.

  9. He forgott Belgium in that chart, the country without a government since 18 months and that most likely will be split in half.

  10. “Why do we not require publication of similar data, preferably by financial institution, for all derivative transactions – including both gross and supposedly net exposures across borders?”

    As to why there’s no reporting requirements on derivatives, just ask Brooksley Born. She was Chair of the Commodity Futures Trading Commission (CFTC) and wanted to regulate derivatives, esp. CDSs, back in 1998. She saw the danger of leveraging and insuring debt without adequate capital reserves 10 years before Lehman collapsed, but she butted heads with Treasury Sec. Robert Rubin (remember him?), Alan Greenspan, Oracle of the Greenspan Put (ditto), Larry Summers and others. Born was branded “difficult” but persevered while the “Boys” worked on Congress behind her back. Coup d’etat. Not only did they take away her authority to regulate derivatives, Congress passed the Commodity Futures Modernization Act (2000), putting the deregulation of derivatives into federal law. She resigned shortly thereafter.

  11. Annie wrote: “we’re SO OVER the crap we’ve been getting from noodle heads who have done some very strange things to their feet over the centuries….”

    Scru u Annie, you racist pig!

  12. It all ends with the ECB, period. Germany can’t backstop it all. Nominal growth in Greece is negative – and debt is 130% GDP with 10%+ deficits (even after austerity). Austerity in the absence of debt adjustment or expansionary monetary policy is nearly impossible at those debt loads, even in the presence of export led growth. And export led growth only works when devaluing the currency (and, either through devaluation or renegotiation, dropping debt load).

    The Fed is ready to open swap lines to the ECB, but can’t directly absorb the loss due to politics – and doing so would only devalue the dollar and actually hurt ECB competitiveness anyway. IMF doesn’t have the firepower, and it would basically be the US anyway. Besides, current international policy toward Greece is essentially IMF standard operating procedure already, and has failed catastrophically.

    Draghi comes end of this month, Trichet is out (hallelujah) – there is hope. Maybe, if someone can bring Germany to reality, the ECB can agree to absorb part of the Euro fund backstop, and or directly recapitalize European banks. My guess is not until Germany is directly threatened.

    Besides, from Germany’s perspective, all of this helps exports. If Germany went back to the DM, it would suddenly find itself in the Swiss situation – capital would flee to the Mark, appreciating it so much that the Bundesbank would need to peg it lower (like the Swiss did to their Franc).

    Of course, if Germany left the Euro, all debts would be repaid in (now much less valued) Euros, and the Germans would effectively absorb a massive haircut anyway on all bonds owed by Euro member states to germans and german banks… And if Germany chose to peg to the Euro (like China to the dollar), it would end up building a huge supply of Euro paper (an effective subsidy anyway).

    The rope Germany is pulling on is the same one wrapped around its own neck.

  13. SCRU U ANNIE!!!!

  14. Calm down, noodle head.

  15. SCRU U PAUL AND ANNIE — WITH A JACK HAMMER.

  16. This comment directed @ Statsguy

    Two things: 1) Do you think Germany throwing money at corrupt European bankers is going to help Greece?? I got a better idea. Statsguy, yeah you Statsguy—give “Snooki” of Jersey Shore your credit card, tell her she has carte blanche buy some clothes for Goodwill and let me know when she comes back with your receipts, ok??? Because according to you that’s the only way to live in “reality”.

    2) Let me tell you something else Statsguy, on the slight chance you haven’t been paying attention lately. The odds on Germany “pegging to the Euro” in the future (I can’t even hardly type it without pausing to questioning the general intelligence of humanity) is about the same odds as you seeing a skinhead on CNN tomorrow using the Israeli flag as a head bandana.

  17. Well, not NotAnnie, let’s not be too hard on paul and Annie. After all, they’re just debtors and we’re the creditors.

    It’ll be a pleasure to repossess them.

  18. Guess that you, Annie and paul think that James Kwak is a noodle head and that his relatives must have bound feet.

    Real nice; are you sure you aren’t Fox News fans?

  19. [Chinese TV drama on a screen monitor, we see on the monitor a middle-aged man with peach fuzz mustache sitting on park bench in major Eastern city]

    Zhao Benshan: [Zhao looks under park bench seeing perfectly shaped unbroken egg, directly under his rump.] “Oh my Heavens, great fertility god in the sky finally gave me a baby!!!”

    China masses watching TV monitor laugh emptily with no sincere feeling, on cue, in rhythm: “Heh!! heh!! heh!!, heh!! heh!! heh!!”

    Hu Jintao: [leaning to the side of his chair, hand cupped firmly to his mouth so as to hide from lip-readers, whispering sternly to Secretary of Humor Bureau] : “They are not laughing heartily enough, more knee slaps or I’m sending out the tanks to squash some students”

    Secretary of Humor Bureau: “That’s a big 10-4 on the squash Chief.”

  20. [US TV drama on a screen monitor, we see on the monitor a middle-aged man with peach fuzz mustache sitting on park bench in major east coast city]

    Jim Bennett: [Jim looks under park bench seeing perfectly shaped unsigned credit card, directly under his rump.] “Oh my Heavens, great credit god in the sky finally gave me a platinum card!!!”

    US masses watching TV monitor laugh emptily with no sincere feeling, on cue, in rhythm: “Heh!! heh!! heh!!, heh!! heh!! heh!! to the laugh track.

    Jamie Dimon, CEO, JPMorgan: [leaning to the side of his chair, hand cupped firmly to his mouth so as to hide from lip-readers, whispering sternly to Secretary of Treasury] : “They are not laughing heartily enough, more knee slaps or I’m sending out the police to squash some OWS protestors”

    Secretary of Treasury: “That’s a big 10-4 on the squash Chief.”

  21. Thank you so so much Prof. Johnson for this post.
    Was there any economist in 1999 who warned that single currency for varied nations is a really bad idea?

  22. We Americans are acting like the character, Geraldine, in Flip Wilson’s classic comedy skit: “The Devil Made Me Buy This Dress” The character attempts to put the blame for her free spending habits on the Devil when in fact she herself made the choice to spend.

    Sounds like many Americans who are saying, “The Chinese Made Me Buy This Dress.”

    Wonder if that line works with a collection agency?

  23. Bill Marsh incorrectly presented the BIS statistics. It is totally WRONG to show or interpret that Spain lent 23% of its GDP to UK. If he used BIS Table 9D or 9E, you should ignore this Article (fully WRONG). If he used data from Table 9B, then one can say “local debt plus cross-border debt” of a country to worldwide offices of national banks of another country but 100% incorrect to show in and out arrows between countries e.g. between Spain and the UK. Because Spanish bank lent to UK from Spain, UK, US, DE, FR, MX, etc and not from Spain alone. So what does the arrow between Spain and UK means????? What is the concept of debt between a country and another?

  24. taner.berksoy

    aa

  25. There’s actually a more manageable version of the same graphic
    with “interactive” selected features at

    http://www.nytimes.com/interactive/2011/10/23/sunday-review/an-overview-of-the-euro-crisis.html

  26. And of course, if we taxed financial transactions-including derivatives– at the 1% now being suggested we would know more about them.

  27. The ECB recapitalizing European banks at reduced valuations while imposing haircuts on bondholders is not rewarding bankers – they are currently fighting to avoid recapitalization (or nationalization) by having the EFSF backstop bad sovereign debt.

    Greece should leave the Euro and devalue its currency/nominal debt load, and re-balance its exports – which is going to involve cutting pension programs. Maybe it will, maybe not. If Germany wants a firewall that has a chance of working (to save other periphery members, at least some of whom – like Spain – really deserve to be saved), its going to need the ECB to get involved. Otherwise, we’ll be back here in another 12-18 months as austerity kills the continent without helping the export balance.

    If France and Germany had booted Greece 14 months ago and modified the ECB charter to allow QE to support other periphery nations, they could have avoided all of the periphery absorbing another 10% addition to their Debt/GDP ratios, causing the periphery to expand further into the core. A firewall might not even be possibly anymore.

    Swiss pegging to the Euro was also unthinkable. Until it happened.

  28. I am sorry to say again that Bill Marsh incorrectly presented the BIS statistics. It is totally WRONG to show or interpret that Spain lent 23% of its GDP to UK. The arrows between countries are misleading …and such article creates more harm to strugling countries(GR, IT, etc) than doing anything good. NY Times should immediately drop this article that used data from BIS Table 9D on ultimate risk basis(see reasons below).

    Example 1. Santander Madrid lents to NY branch of HSBC. Table 9D shows it as claims of Spanish banks on UK (HSBC’s parent country) but it is in fact debt of US to Spanish banks.

    Example 2: Santandar NY lents to NY branch(or any US branch) of HSBC against UK govt securities as collateral from HSBC. In Table 9D, it is part of Spanish banks’ claims on UK. But in fact, it is local debt of US to Spanish bank.

    Is Bill Marsh giving new theory on debt? This is misleading article!!!

  29. ah ha!!!

  30. “1. It starts with the Euro… This union allowed poorer countries like Portugal, Italy, Ireland, Spain and Greece to borrow money at the same low interest rates as rich and financially prudent Germany even though their inflation rates were higher, that gave them a strong incentive to borrow.”

    That is absolutely not true… that has very little to do with the Euro and much to do with the Basel Committee on Banking Supervision.

    What gave the banks the incentives to lend to all these countries at extraordinarily low rates was that they were all authorized by the Basel regulations to do so against a minimum minimorum capital requirement of 1.6 percent, signifying being allowed to leverage their equity a mind-boggling 62.5 times to 1… signifying that if a bank made a one percent spread on Greece it would be earning 62.5% on equity… meaning of course monstrously huge bonuses.

    In the US, what would happen if banks could lend to political messy Illinois, or poor Kentucky, against only 1.6 percent in capital?

  31. @JetLi “Well, not NotAnnie, let’s not be too hard on paul and Annie. After all, they’re just debtors and we’re the creditors.

    It’ll be a pleasure to repossess them.”

    Dream on. Like it’s not tense between China and Japan.

    FIAT $$$, JetLi. It’s all made up crap that you bought into believing you are the *creditor*…

    100 of us, 1000 buffalo. Not someone else’s problem you did not get basic math of living.

  32. How much is the US Fed and Treasury behind this?
    Why are banks involved with derivative transactions?

  33. one more question…..how does more borrowing more money solve a debt crisis?

  34. Bill Marsh’s graph looks like something from a Dilbert comic stirp. lmao, if weren’t so serious.

  35. “….oh what a tangled web we weave when we first practice to deceive….”

    Mummy, “How much is the US Fed and Treasury behind this?
    Why are banks involved with derivative transactions?”

    Haven’t read The Patriot Act, have you? Power was transferred to the Secretary of the Treasury and there are NO JUDICIAL LIMITS to how many different ways the newly minted *money god* can invade your finances and life – BILLIONS invested in spying on YOU – BILLIONS….

    Totally stalinesque – the combo of FIAT money (made-up crap) and made up reasons to focus HATE beams on anyone they want – at will – to repo *fruits of honest labor* – it’s identity theft by CRIMINALS from the halls of an EMPTY justice institution…

  36. “A good recent example of how swiftly sovereign fortunes can change: One day, everything was fine in Greece, which enjoyed paying interest rates on its national debt that were a few skinny basis points (hundredths of a percent) above Germany’s. A few short months later, Greece was paying over 150% interest on its one-year paper.”

    “What I am asking is this: What happens when the same sweep of recognition visits the US Treasury markets?”

    “My belief is that someday, perhaps within a matter of months but more likely in a year or two, the US Treasury market will fall apart as certainly and as magnificently as did Greece’s. Here’s how that might happen: ….”

    http://www.zerohedge.com/news/guest-post-real-contagion-risk#comment-1804410

  37. @AkulJay: This review article (http://ec.europa.eu/economy_finance/publications/publication16347_en.pdf) covers 170 opinions that the EMU would have problems. Many indicated that the problems would include exactly the ones they are experiencing now.

    General note on Bill Marsh’s chart, particularly step 4: Has anyone thought about what a massive capital inflow would do to Germany? (Marsh says it could take just a few hours.) Would German banks just explode?

  38. @ Annie,

    Sounds like your missing a few of your meds. Most likely Abilify — which your fiat money will help you buy.

  39. The scenarios in Europe seem so horrendous we wish we all were just having a nightmare.

    What if we could wake up and find a Euro II, with all European governments, Germany included, having given their creditors exactly the same haircut, for instance 40 percent, and used the excessive hair-cut in some countries, to compensate for the insufficient haircut in others.

    Why not? The bank regulations that allowed European banks to lend to Greece against only 1.6 percent capital, and which of course helped to create Greece’s excessive debts, were not just a Greek idea but a shared European one.

    And if thereafter Europe helps to avoid a repeat… like for instance requiring bankers to put up exactly the same capital when lending to a European sovereign as it has to put up when lending to a European small business or entrepreneur… could we all not wake up, hurting a lot, but at least looking forward to a better future?

  40. I spent about 5 useful hours recently reading Michael Lewis’s book Boomerang. Wow, want to get a feel for what wrong with the Eurozone? Just read. It confirms for me what I have always felt, even long before our current problems: that the countries comprising the Eurozone are culturally incompatible. They just don’t relate, AT ALL!!! This is a marriage made in hell. We have some fairly amazing differences between the populations of our states in the US, but those differences are primarily superficial. The fact that the Eurozone isn’t working (admit it, finally!!) is, I hate to say it, bred in the DNA. And, yes, there are some of the cultures which relate better than others, but at the greatest differential (represented by Greece and Germany), there is no chance of reconciliation. It can’t happen. Ever. My belief is that this disparity in world views is at the core of the problem, and will prevent an adequate resolution. Let’s face it, an economic union without political union is simply not possible on this planet. Can you imagine the US, Canada and Mexico being combined in such a union? Some have. Not this writer. And Europe is a far greater stretch.

  41. @JetLi – I want to know what YOU are taking – must be really good stuff because it’s hard to figure out how a NORMAL mind could be so DELUSIONAL about their own situation for so long!

    Hate beaming back at you – it bounced off the shield I made :-) Duck!

    The shield is even strong enough to contain the *current* of 75 trillion in *derivatives* stuffed in a box…but I can’t find any *inwestors* interested in supporting the maintenance of the *REALITY* shield, so it’s gonna blow up everything….

    Meanwhile – let’s get back to Western Civilization. If nothing else, there is an experientially-earned stability to what we consider our highest cultural achievements. No matter what, we have a tendency to hang on to, and pass down, to future generations what was created when our citizens pursued collective common sense and used practical applications of math and science to make life LESS MISERABLE for ourselves. We make very good use of our times of peace and are exceptionally adroit at re-creating prosperity. There is much that needs no apology to anyone. Why would there be surprise that the best in us is pushing back against the revenge/hate filled madness known as *theoretical global economics*?

    And we make better shoes because we SEE that the human foot is a feat of engineering :-) We have lots of mechanical labor saving devices inspired by the architecture and function of the foot – hence, better shoes….podiatrists must be raking it in from all the breaks and sprains caused by this year’s fashion statement – scheesh – *extreme* platform shoes – idiotic – you want to float around everyone else on the street, use roller skates….ooops, JetLi just tripped and fell walking on 6 inchers and reading this at the same time…

  42. I dunno, Annie, you sure sound unstable and batty. Suggest that people around you keep you away from sharp objects and things that go bang bang.

    Maybe Topamax would be better for you :).

  43. Professor Johnson,

    Great graphic and congrats on getting it in the NY Times. I am glad to see that topic of my last paper re-afffirmed by your graphic.

  44. @JetLi – woof woof – Ah, you are a lap doggy for Drug Lord – he teach you how to google list of depression meds and play doctor – typical GenX….

    limited English must be preventing you from showing your genius acumen for predatory theft via gizmo software…”me own USA”…now me in jail I *inwested* in in USA…

  45. @ Annie, LOL! As a native speaker, your English and reading comprehension skills sure suck.

    Perhaps we’ll see you someday on the street, disheveled, smelly, muttering to yourself, “Filthy fiat money! Filthy fiat money!” Then you’ll stop to clean yourself of this filthy lucre by spitting into your own palms and applying them to your hair. Rinse and then repeat.

    Darling, you’re headed for the psych ward. :)

  46. @Annie

    Wow you are incredibly prejudice and dare I say downright racist! I mean, you aren’t even subtle about your prejudiece/racism – it is clearly overt. You should be ashamed of yourself.

  47. @ Annie,

    As a long reader of this excellent blog, I’m astonished at your racism. Perhaps you want to try calling Kwak and his family “noodle heads” while feigning a Hollywood Chinese accent.

    That should make you really proud of yourself.

  48. @Miss Dudu: OT but very funny ROTFLMAO…

  49. Per wrote earlier: “In the US, what would happen if banks could lend to political messy Illinois, or poor Kentucky, against only 1.6 percent in capital?”

    Well, probably NOT a lot of good coming out of that scenario, either. : )

    But here is what I wanted to say: did the BASEL regulators KNOW beforehand what they were doing was totally crazy? Or, did the KNOW it was CRAZY, and they did it anyway, because of pressure from bank executives on the hunt for mega bonus checks in their pay envelopes (computer account).

  50. http://photoblog.msnbc.msn.com/_news/2011/10/24/8401161-what-do-7-billion-people-look-like

    the original *racists* were who, Cohen?

    http://mynameisjoecortina.wordpress.com/2010/06/06/open-letter-to-all-men-of-good-will-of-all-nations-of-the-world/

    And like the Chinese did not call us the *white devil* for millenia :-) we just LAUGHED at it – “….sticks and stones can break my bones but words will never hurt me…”

    PC crap doesn’t work anymore – especially when you look at the attached pictures – what are THEY thinking around the planet? We get it that you globalists without loyalty to any culture other than your own secret delusional CULT are left with only the TRULY ignorant on the planet believing in your *credit* issuing powers – but you still will have to answer to USA people why the only WAR booty you got after 10 years of using a mercenary army in the Middle East was the destruction of the infrastructure of the middle class – the single family home. Seriously, bring ON the holier than thou CRAP – I freely admit to being a *racist*. I know who in my own *race* is full of crap and ALWAYS has been full of crap…your babushka busybody days are OVER….and we know what’s next and it will be ugly as both sides are equally armed…rethugs fewer in total numbers, though…

    If we don’t throw the *cabal* who lied, killer and stole their way to power into jail, the USA will never have credibility as a SANE country. That’s the fire in the belly of the 99% – we want everyone to know YOU are not US.

    Big picture politics in the big league – we need a global Nuremberg-like trial for the *financial* shenanigan crimes against humanity, plain and simple. Playing in the big leagues via computer algorithms – LOL – not gonna happen

    engaging the trolls is fun :-))

  51. @Woop “did the BASEL regulators KNOW?”

    Not long ago I would have said “Absolutely not!” Now seeing Basel’s continued silence on so many issues raised and their stubbornness in following basically the same faulty script with Basel III, I am not longer so sure.

    Current bank regulations cause criminal harm to the economies. Should these be denounced at the ICJ in Hague? http://bit.ly/t7tGip

  52. @woop – then KNEW what they were doing – seize the documentation…

  53. So, who’s been twisting banker arms all along to hold this crappy sovereign debt? They could’ve sold at any second in the last two years.

  54. @ Poor Little Orphan Annie,

    You know I’ve been wondering about the festering sore of anger that resides at your (rotten) core. It is because you’re a few woodies short of insanity? Is it really because of the banksters or filthy fiat money? Is that you don’t like yourself very much? Most likely.

    But maybe the real reason is much more charitable: You can’t afford Italian shoes anymore! As you look at your credit card statements and try to avoid the collection agencies, you realize you’ve spent more on shoes than Imelda Marcos! And dammit! Those Jimmy Choos would be *so-so-so-so* nice — except you can’t afford them anymore. Actually you probably never could afford them, but the credit made you think you could.

  55. Anonymous “So, who’s been twisting banker arms all along to hold this crappy sovereign debt?”

    I guess the hope for a European TARP, QEs or TWIST that could gently take that debt of their books.

  56. I have a working theory, that above a certain level, Annie….there are no coincidences and even fewer accidents.

    So, If I had to guess, it would be……of course they knew, how could they not know? : )

  57. @ Per, that ex-ante risk *perception* you write about and how this contributed to the debt bomb plaguing Greece and other sovereigns, seems to me to be one of “intelligent design”…hehe…what a phrase, there!

    Here’s the scoop: 1. loan vast amounts to a country relying heavily on tourism and olive oil exporting to the tune of “ludicrous speed”…..such vast tranches of fiat money…..that can not possibly in any realistic sense of collectibility ever be repaid;
    2. when news of this predicament is about to hit the fan, send over some sharpies from WALL STREET to CONCEAL the mess from interested third parties, as reported here:

    http://www.nytimes.com/2010/02/14/business/global/14debt.html?pagewanted=all

    (Now, as an aside, COVER UPS always involve prior knowledge of the CRIME…so, yes, the Hague is a marvelous, if perhaps, an unrealistic suggestion.)

    3. send in the IMF bankers to unravel social safety nets, ruin pensions, increase unemployment, impose overall murderous austerity on an entire country;

    4. impoverish the country to the level of the politicians are agreeing to sell off national treasures, etc. at fire-sale pricing.

    It seems to be, yes?

    So, this has all been totally deliberate, with malice, and mind-boggling determination.

    Per, thanks, pal. :)

    This is definitely not good.

  58. Woop “So, this has all been totally deliberate, with malice, and mind-boggling determination.”

    No! There are many other human frailties that could have been present in causing this true disaster and so it is going to take much much more to convince me of the “deliberate malice”

  59. Ah Choo? What kind of shoe is that?! One that if you wear it you’ll catch a cold? I guess you don’t have an open enough mind to appreciated a different race’s view on what a good shoe is….suffice it to say that the Italian version of the 6 inch wedge’d heel architectural shoe to keep a woman in her place would be a shoe with built in *stabilizers* for the height :-)

    Everyone has something unique to offer to the mundane necessities of life….especially a culture with a belief in 100 of us, 1000 buffalo – shoes are no big deal…especially when being NORMAL about the purpose – to protect the feat…rest is art in the eyes of the beholder stuff…

    So, Woop and Per, I am all for the *stupid* defense as the OFFICIAL mea culpa provided they agree to public humiliation (did you go to “fastfreddy101″‘s website? Exhibit A for idiot), and provided that they don’t expect to get paid for designing it, and provided that they don’t expect to be allowed to continue to work in banking(!),

    and also provided we put back the BIG wall between investment banking and commercial banking AFTER they put all the commercial currency they stole back in the accounts of We The People.

    As for HOW the last provision can be done, well, easy. It’s that piece of civilization we keep going back to as our FOUNDATION as free men and women:

    http://www.archives.gov/education/lessons/homestead-act/

  60. from your link, Woop – “What’s more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world’s large blue chip and manufacturing firms – the “real” economy – representing a further 60 per cent of global revenues.”

    This is so wrong – who is SMART enough to pull all the correct levers – decide what to manufacture (Borg’s?) – for 60% of global revenues? No one!

    A civilization, traditionally, is regionally sustainable at a certain man to land ratio. Interactions among civilizations are with trade (commercial banking), not manufacturing (investment banking).

  61. I’m old enough to remember the Earth Shoe, and the Root Shoe, as well as Edwin Case shoe, for the *terminally* flat-footed six year old boy, traipsing with his mother to Children’s Hospital, where despite my objections, well-intentioned orthopedic doctors there would custom-make orthotics for my anatomical deficiency.

  62. @ Little Racist Annie,

    My poor dear, obviously you do shop low rent. You’re probably one of those people who when going to Bergdorf Goodman gets snubbed or followed as a shoplifter.

    But worry not, my dear; feast your eyes: http://www.bergdorfgoodman.com/store/catalog/templates/silo.jhtml?itemId=cat200648&parentId=cat000000&siloId=cat200648&navid=topNavShoeSalon

    Perhaps something nice to wear to your next OWS event — although my guess is you’ll need weight stabilizers for these heels. :)

  63. There has been some debate on Presidential Candidate Rick Perry’s state (where he happens to be Governor) of Texas about the DMV allowing specialized plates with the Dixie flag emblazoned on the license plates. From an LATimes report made from the city of Houston by journalist Molly Hennessy-Fisk:

    “Jackson Lee, Ellis and other lawmakers have called on Perry to speak out against the license plate proposal, but the governor — who faced widespread scrutiny this month after he acknowledged his father leased West Texas hunting grounds that were once known by the name “N*ggerhead” — has demurred.

    ‘The governor believes this is a decision for the board,’ spokeswoman Lucy Nashed said Monday.

    But some proponents of the license plates think they have Perry’s support.

    Eleven years ago, when the NAACP pushed to remove the Confederate battle flag from government buildings across the South, Perry wrote a letter of support as lieutenant governor to the Sons of Confederate Veterans. Davis kept the letter on his kitchen counter.

    ‘I want you to know that I oppose efforts to remove Confederate monuments, plaques and memorials from public property,’ said the letter, later obtained by the Associated Press. ‘I also believe that communities should decide whether statues or other memorials are appropriate for their community. I believe that Texans should remember the past and learn from it.’ “

    Going by Gov. Rick Perry’s form of logic, it would be a good idea for many Texas children to go to school with a large Swastika on the front of their t-shirt so they can “remember the past and learn from it”.

  64. One question I would have the gall and unmitigated nerve to ask any J.e.w.s. who read this site is, where is the anger/uproar/voices and J.e.w.ish defamation league when issues like the Dixie flag come up in public discussions repeatedly??? Or is it only “never again” when it affects your ethnicity???

  65. @ Woop,

    Given your age, you still have a full life ahead of you, overflowing with yet unfulfilled promises unleashed by latent talents.

    (W)oops! Too late for that.

  66. “One point that senior administration people made to me recently is that the Eurozone doesn’t just have fiscal/monetary problems, it has bank regulation problems. The idea of a single currency is that a Euro in Finland is the same thing as a Euro in Slovakia. But if Finnish and Slovak banks are regulated in different ways by different entities with different fiscal capacities, then a Euro in a Finnish bank and a Euro in a Slovak bank are not in fact the same. Hence this quiet bank run: …”

    http://thinkprogress.org/yglesias/2011/10/13/343047/the-quiet-bank-run/

  67. Random Commet on NYT – “Banks Flooded WIth Cash”

    “It just demonstrates the perversity of our money system. Most of the country is desperate for money and the banks won’t lend at reasonable rates.

    ALL OUR MONEY IS DEBT – DEBT OWED TO BANKERS.

    How much more evidence do we need for monetary reform? The government should be creating our money, not banks, and spending it into circulation debt-free. Most people instinctively think that that is the way money should be but it is not.

    Currently we are slaves to bankers who constantly round up their debt notes (Federal Reserve Notes) with armored cars only to LOAN them out to the next victims. Since money needed to pay interest on these loans is never created, there is always a money shortage and some loans HAVE to be foreclosed upon.

    It is truly an evil system.”

    And it is also *fiat* – all made up crap….

  68. @ Annie,

    Keep on ranting because that’s the only thing you’re good at.

    Just a little thought experiment for someone so thoughtless: If you, Annie, buy a U.S. savings bond, does the bank own that debt or do you? When you buy that bond, have you in fact helped create fiat money?

    When you deposit money in a bank, are you participating in the fractional reserve banking system?

    Hope your mattress where you keep your money is flame-proof.

    You are a singular, blabbering idiot.

  69. real life situation – lending is noting other than a revenge exercise – hate-driven:

    Captain-Bruce | Oct 25, 2011 06:29 AM ET
    Awash in Cash ???

    Went the other day to Wells Fargo. Applied for 30 grand 120 month home equity loan. Credit score 815 home paid for zero debt. Was told rate was between 2.9 and 4.9 depending on credit rating, no fees no closing. Underwriters called the next day said 11.9%. LOL Have since come back by mail at 6% variable. Still no interest in their loan here.

    Boy they have balls only paying me .01% on the hundred grand I have in Ira. No wonder this country is floundering along. Still getting mass amounts of paper work from bank regarding appraisal fees, closing cost etc etc.. Last time I did such a loan was 6 years ago with Wachovia for 60 grand 120 month paid in full early. Took 20 minutes no appraisal no closing cost.

    Wells Fargo your doing a great job ! Thanks but no thanks.

  70. @moneypenny – keep calling real-life, real time *data*

    “ranting”

    that makes you look really really smart

  71. “Sovereign nations and individual citizens are over-indebted—to the point where they cannot pay back what they owe. We all know that this overindebtedness at the sovereign and individual level is going to end, and end badly: Worse than 2008.”

    http://www.zerohedge.com/news/guest-post-waiting-lehman

  72. @Annie,

    Let’s get this straight: You have $ 100k in the bank @ at a mythical “.01%” interest and yet you’re trying to borrow $ 30K, which at a minimum, they’ll charge you 4% and more likely 6%.

    Even given your credit score of a mythical “815″

    Yeah, Annie, keep on congratulating yourself on how smart you are.

  73. @moneypenny – you have a reading comprehension problem – that was from a person called “Captain Bruce” and the reason I re-posted it was because of the false advertising that Wells Fargo is doing – they are not making loans to anyone at the advertised rate.

    The accusation that *lending* is hate-driven and motivated by revenge stands. There is no proof to the contrary.

  74. @ Racist Annie,

    Looks like what you define as “hate driven” lending is when you get rejected. Knew you were low rent.

    PS, looks like you’re getting reamed a lot lately.

  75. “The Euro-zone continues to teeter over the edge of the financial abyss as bankrupting countries that cannot print Euro’s threaten the collapse of its banking system that would would soon collapse the whole global banking system in a matter of hours as electronic bank runs sweep across the worlds financial system resulting in trillions of dollars worth of deposits being withdrawn in a matter of hours and thereby collapsing first the Euro-zone and then within 24 hours the UK, USA and Asia along with it. My recent article (Euro-Zone Prepares to Print Trillions in Advance of Greece Debt Default) covered the potential consequences for the world in the event of financial armageddon, this article continues on from the last article that covered the inflationary depression consequences of money printing that the likes of Britain and the United States are engaged in and that the Euro-zone WILL eventually replicate (Bank of England’s Quantitative Inflation Bankster’s Paradise Inflationary Depression Economy ). The focus of this article will be on concrete steps that depositors need to take now to reduce the real risk of the actual loss of their funds on deposits at bankrupting banks before they should go on to protect against the ongoing real terms loss of value in the face of the perpetual money printing Quantitative Inflation Mega-trend.”

    http://www.marketoracle.co.uk/Article31124.html

  76. Annie makes me miss Bond Girl, like, soo much.

  77. Title 25, you’ve proven, again, you are witless, artless, fatuous, and a troll.

    No wonder you can’t find a girl. : )

  78. @ Moneypenny, Annie is correct about the debt-based fiat facsimile money thing, an evil system that has been in existence for a VERY VERY long time. A lot of people, particularly Muslims, eschew usury, and this
    undoubtedly worries the private banking cartels a good deal. They have maintained power via the printing press, and as someone from the Sopranos may have stated, “it’s a good earner.”

    Anyhow:

    Joseph P. Farrell recently published a book that I started today, called THE GRID OF THE GODS, and ascribes the debt-money system to those belonging on the *dark* side….others may want to hear this author on YOU TUBE: he has written a number of books on related topics, also.

    His doctorate from Oxford is in *patristics*, which was new to me. This is a theology offshoot dealing with the founders of the Christian church.

    He’ll hold your interest, as he relates physics, banking, long-ago cosmic wars, to secret ENERGY technology.

  79. OWS for dummies:

  80. “Rich Dad advisor Mike Maloney explains how currency is created, “fractional reserve banking,” and why our banking system is a pyramid scam of epic proportions.”

    http://www.zerohedge.com/news/michael-maloney-we-pay-tax-privilege-have-currency

  81. @woop

    You are reading about ‘physics, banking, long-ago cosmic wars and secret ENERGY technology’ from a guy who has an education in none of them? Really? Seriously?

    From wikipedia:
    Education – A student of Timothy Ware, Farrell became a professor of Patristics at Saint Tikhon’s Orthodox Theological Seminary.[citation needed] He also holds an M.A. from Oral Roberts University, a B.A. from John Brown University and is a doctoral graduate (D.Phil.) of Pembroke College, Oxford University with specialty in Patristics awarded in 1987.

    Btw, the school he teaches at is interesting also.

    From wikipedia:
    The California Graduate School of Theology is an unaccredited American institution of higher learning in La Habra, California. It was founded in 1968 as an interdenominational graduate school and has been attended by over 5,000 students. The institution notes that it has been without federal accreditation since its inception.

    Unaccredited. Nice!

    Finally, you do realize that this school has some famous alumni such as Terry Jones. Yes, that Terry Jones. The one whose World Quran-burning controversy arose in July 2010, when Terry Jones, the pastor of the Christian Dove World Outreach Center in Gainesville, Florida, U.S., declared he would burn 200 Qurans on the 2010 anniversary of the September 11 attacks (again from wikipedia).

    If you want something “real and substantive” to read, I will be more than happy to provide a list of quality reading materials.

  82. @woop – okay, I’m going by the earth shoe carbon dating clue :-) to reach back to a Saturday Night Live skit from the 1970s – that skit where the VP of a mega-corp has his whole day lined up with half-hour appointments with people who want to pitch their INVENTIONS to him. The inventions were all about using less gasoline for running automobiles because it was soon after the big spike in gas prices. As soon as the VP lies about being *sold* on the invention and gets his hands on the blueprints and the archetype, he reaches under the lip of his desk and pushes a button that opens up the floor under the inventor – and another one bites the dust…

    There is no *secret* energy technology from aliens. There is, however, a very concentrated and focused information war against the same liberating energy discovery being re-discovered and brought to market by so many different inventors from across the globe!

    Here’s the energy technology I’m talking about :-) *god’s work* is hard to keep as a secret – evidence even got down to Kentucky – they must have thought it was their day of reckoning – LOL.

    http://spaceweather.com/

  83. cmk, I would suggest actually reading his books before dismissing him as a quack. It’s a counter-intuitive approach, to cast judgment without knowing anything except a blurb recitation.

    Where were you educated?

  84. There may be no secret energy technology from aliens, or cousins of homo sapiens, but there is secret energy technology, I am reasonably certain of this. HAARP is but a single example; there are others, seemingly “leaked” to the public, etc.

    IMO, HAARP was used to generate the quake that ruined Japan, so these technologies are there to keep entire nations in line with the program. Ditto TURKEY this past week.

    The Manhattan project never ceased, the National Labs went full speed forward, discovering much more than their experiments had yielded with “Mike” and other the “fission-fusion-fission” devices, that obliterated all yield computations.

    And this: I saw a large *spaceship* this past summer, driving back home from visiting with my mom…it was there in one instant, and gone from its’ position as I tried to re-aquire the view. But I saw it, no question.

    I am happy to see you are able to carbon-date such glorious events as happy feet, chess in Cambridge, and hoops and rolling rocks….all simpler and in some ways, better times than today. And we’d be remiss in not mentioning John Belusi, Dan Akroyd, Gildna Radner, and the others…..they helped with the buzz.

  85. Excuse me, there used to be a blog at this URL about economics but it seems to have been replaced by something else concerned with space aliens and secret energy sources suppressed by the Illuminati. Does anyone know where that blog went?

  86. @oregano – try to keep up :-) What the 1318 want to *manufacture*, they do – for about 3 decades it’s been lies, war, and poverty…

    This is what I am referring to: “from your link, Woop – “What’s more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world’s large blue chip and manufacturing firms – the “real” economy – representing a further 60 per cent of global revenues.”

    @woop – okay, I get what you are referring to as *secret* – it’s just where some of the inventors were imprisoned and forced to do *god’s work* after they dropped through the floor in the VPs office in the 1970s :-)

    I’ve been sky watching my whole life – Dad turned me on to it at Age 4 – and I have never seen a UFO. I’ve always been able to correctly identify what kind of craft it was – from my own Mother Ship (wink wink) on down to a weather balloon. Most interesting sighting was the Stealth coming in for a night landing at the airport 20 miles from where I was – the *marine layer* folded around it and made it visible for a brief sighting – very cool optics.

    And now we should all go back to the pics – “what 7 billion people look like” – I had to put aside an uneaten bowl of cheerios because my mind overlaid the photo of the Chinese in their round floats giggling together in the pool…

    Crimes against humanity were committed on a massive scale – LAW is a moral contract in the final analysis.

    Every human being has the right to make their lives less miserable through honest work.

    We need an Energy Policy in USA…and

    BURN THE PATRIOT ACT.

    Thank you and goodnight.

  87. Well, well, look what Kwak hath wrought with partisan rantings: Nut cases like Annie and Woop galore! This is almost as good as earle of Florida.

    Hahahaahaahaa!!!

  88. Excellent post, Simon. The derivatives may yet turn out to be the biggest disaster of this whole mess. You are right to question why they are not regulated or reported in any way.

  89. Title 25, if you were 1/10 the man of Earle of Florida, or myself, or of Annie here, you wouldn’t be writing such awful and hateful and jealousy-tinged comments about people who are your superiors, in every single aspect of humanity, decency, and compassion towards others.

  90. Annie, we are on the right side of history, so being honest is having the desired effect….an awakening of consciousness all over the world, that perhaps will bring about a change from this seemingly irreversible path of destruction…..evil in the end will be defeated by good, don’t ever forget this.

    George Lucas had it all……down.

  91. @woop,

    Let’s get to my places of education second. First, I am most interested in hearing more about these comments you made.

    “There may be no secret energy technology from aliens, or cousins of homo sapiens, but there is secret energy technology, I am reasonably certain of this. HAARP is but a single example; there are others, seemingly “leaked” to the public, etc. IMO, HAARP was used to generate the quake that ruined Japan, so these technologies are there to keep entire nations in line with the program. Ditto TURKEY this past week.”

    Comrade, you should know better than to inform the uneducated and non-believers of the super duper secret work of the almighty HAARP. I must inform the super-secret galactic commission of your infraction. I am sure the Romulans and Klingons will be pissed that you broke the intergalactic treaty. I may even have to call out the “Men in Black” to clean up this mess. And you can only imagine the hand wringing this will cause at Star Fleet command. You are on your own from this point on – the agency can longer protect you – may the force be with you!

    LOL!!! I can’t keep a straight face and I am only typing this! Are you serious? I mean did you actually consciously type that you believe HAARP was responsible for Japan and Turkey? If so, please do yourself a favor and call 911 cause you are a danger to yourself and your community. I mean, you must really be “off your meds”. Hell, maybe you and @Annie are both “off your meds” and this is the start of your joint concerted effort to rule the world. Hee, hee.

    As for my schooling. While I do not pretend to be very intelligent, I have had the luxury of studying at institutions such as MIT (had Simon Johnson as professor), London Business School, and others.

    And as for “dismissing him as a quack…without knowing anything except a blurb recitation.” Guilty as charged. There are lots of great works out there, I will NOT waste my time reading something from someone as unqualified as Joseph P. Farrell.

  92. Woop the Loop

    With a mind full of goop

    He stoops to poop

    With Annie as a group

    All over this blog

    For the pair

    Make a laughable troupe!

  93. Why do we not require publication of similar data, preferably by financial institution, for all derivative transactions – including both gross and supposedly net exposures across borders?

    -Because that would be telling.

  94. cmk, your snobbery is still less-than-impressive, trust me.

  95. @ Title 25, you sound brain-damaged, demented, or senile, or some combination….give it up….you’ll always be a clown. : )

  96. @ Woop the Loop,

    No doubt you were abducted and raised by aliens from faraway planets, many, many decades ago. This was intended for the cross human/alien breeding program. Unfortunately, after testing and discovering certain defects such as your double digit IQ and club foot, they decided to put you in the catch and release program. Ever since then, we’ve been graced with your presence here on mother earth.

  97. http://www.msnbc.msn.com/id/3036697/#45023311

    I guess it’s all about deciding what is fiction, even if it is int he realm of the “who knows, could be?”

    Is anyone arguing for *derivatives* being some cosmic truth or made up alien crap?

  98. Imagine the horror writ large if Annie, Woop, Herzog and earle of Florida show up on Halloween at your doorstep, crying out “Trick or Treat!”

    Marlon Brando in “Apocalypse Now,” saying, “The horror, the horror…”

  99. Annie, I go with the latter! : )

  100. Professor Johnson should investigate who launched *derivatives* – it might very well be *bad aliens* :-)

    And just because they are *aliens* doesn’t mean that they are SMART aliens! We’re merciful. We will let them use the *Duh Konstandt* defense.

  101. Hopefully everyone has vented and we can get back to civility.

  102. not a chance.

  103. this place is tame compared to zerohedge……

  104. @ annoyed

    This from zerohedge this evening:

    “Our conclusion: Buy gold. Buy guns. Buy ammo. Be prepared. It’s coming.”

  105. @Anonymous, “It’s coming.”

    What *it*? The aliens in high heeled shoes with stabilizers to take back their stupid *derivatives* and blast off the planet because we’re too crazy now from trying to count up a quadrillion-th fraction of a gold nugget?

    The 0.000000000000000-th time someone sold it to someone else who didn’t know what it was, either?

    It was the aliens, and I’m sticking with that story. Dumb aliens, too, something we forget to consider – aliens could be dumber than humans :-))

    Was anyone even trying to provide a real explanation the past 3 years for the situation? Nope, huh? Is that *bad intent* or stupidity?

    And round it goes….*IT* – so yeah, *IT* is coming

  106. It would be useful if some first rate economist made the case for several years of very high inflation in Europe as a solution to the excess debt. Inflation is probably the easiest and best solution to excess debt and I suspect ultimately Europe will have to go that route, over Germany’s dead body.

  107. Brenda Vinall-Mogel

    To Chris:

    While inflation if a person owns a house and receives pay wages to keep up with inflation will make a home payment less in terms of percent of wage payment, governments and their social programs increase their social payments based on inflation. If inflation goes up too fast for compensation to stay equal more people will need social programs and those on social programs like public pensons will usually get cost of living increases. Who then is to pay for these increases. I would add that since it seems the only part of Econ Class many people in business paid any attention to was supply and demand if these countries have high unemplyment, then there is no need to increase wages — using their logic. Exterior factors could and are causing inflation through food, but I believe we will find there is going to be a max price to sell food until all substatutions become equal in price and then we will be in a real mess., My worry here is that government programs will then further increase food inflation to a point that if it is not watched, it will cause more housing issues as the working middle class will not qualify for food assistance and wages will not increase in effect making a house that was a say 30% of income actually more like 35-40% as discretionary spending moves into money thought of as fixed costs. Meaning a person who is currently looking at buying a house would with all loans now have to look at dropping to a formula of 20% of income for fixed costs like loans and 80% for everything else. If you need real numbers for this I can provide them tomorrow — I am typing without my glasses and my eyes starting to get really blurry. As for the spelling, grammar, and annoyance police, please remember we are visitors to Simon and James’ site Can we please leave the muddy boots outside.

    There are solutions to work through this. One way is very conservative the other very liberal. But if people want my solutions then they are going to have to hire me for pay. I no longer give free advice that is then claimed by others or it is written by me in a few paragraphs to give people the general idea, but then I am not asked to give the little details and expand the ideas into workable solutions. I can be reached through LinkedIn.

  108. Brenda Vinall-Mogel

    To Chris: (dropped my reading glasses and then rolled my chair over them. I finally went to get another pair and found a few errors. This copy would be better to read. Apologies.)

    With inflation if a person owns a house and receives pay/wages to keep up with inflation it will make a home payment less in terms of percent of wage payment. Governments and their social programs increase their social payments based on inflation. If inflation goes up too fast for compensation to stay equal then more people will need social programs and those on social programs like public pensions will usually get cost of living increases. Who then is to pay for these increases? I would add that since it seems the only part of Econ Class many people in business paid any attention to was supply and demand, if these countries have high unemployment, then there is no need to increase wages — using their logic.

    Exterior factors could and are causing inflation through food even though it is not a recognized inflation trigger, but I believe we will find there is going to be a max price to sell food until all substitutions become more equal in price and then we will be in a real mess. My worry here is that government programs will then further increase food inflation to a point that if it is not watched, it will cause more housing issues as the working middle class will not qualify for food assistance and wages will not increase in effect making a house that was a say 30% of income actually more like 35-40% as discretionary spending moves into money thought of as fixed costs. For a future person who may look at buying a house, food inflation would with all loans have to look at dropping to a formula of 20% of income for fixed costs like loans and 80% for everything else. If you need real numbers for this I can provide them tomorrow — I am typing without my glasses and my eyes starting to get really blurry. As for the spelling, grammar, and annoyance police, please remember we are visitors to Simon and James’ site. Can we please leave the muddy boots outside.

    There are solutions to work through this. One way is very conservative the other very liberal. But if people want my solutions then they are going to have to hire me for pay. I no longer give free advice that is then claimed by others or it is written by me in a few paragraphs to give people the general idea, but then I am not asked to give the little details and expand the ideas into workable solutions. I can be reached through LinkedIn.

  109. Wonderful post! So thoughful and insightful. Thouroughly enjoyed reading it!! I believe the next-gen European cooperation is the only way this crisis can be resolved. Satifying both your country people and the interest of the union is a touch job for the policy makers.

  110. @Brenda – wow, aren’t you something – building a square and calling it a re-invented wheel!

    Mission accomplished, no?

    The War Booty, after 10 years and TRILLIONS spent, turned out to be the housing stock of USA *middle class* and the vacation resort of Greece (and not oil) for the mercenary army and the death corps like Halliburton.

    Seriously, Brenda, stop pawing through your neighbors financial records to figure out how much MORE damage you can do to them.

  111. Everyone knows that the plan the European leaders have recently agreed on is not a solution at all. It will only postpone the current disastrous situation in Greece. But the question remains what will happen if one of the bigger countries like Italy or Portugal defaults? The economic situation in those countries is not positive at all and the possible default would surely destroy all hopes placed in the EFSF and other rescue packages recently approved by the EU. This only shows that the countries which were in favor of looking for other solutions and refused to make their contributions were right. Now it’s too late and there clearly are no more good options that would put a halt to this crisis.

  112. Yes it is much too late to avoid a crisis, in fact many years too late, but what can still be decided though is whether the crisis is going to be a long and painful sickness or a fast amputation which, the-morning-after, allows everyone to breed fresh air and start anew… of course with new bank regulations that do not discriminate odiously based on ex-ante-perceived risks.

  113. Bruce E. Woych

    Just released:
    http://www.imf.org/external/pubs/ft/survey/so/2011/surveyartf.htm

    * IMF Survey: Iceland’s Recovery: Can the Lessons Be Applied Elsewhere? As the first country to experience the full force of the global economic crisis, Iceland is now being held up as an example by some of how to overcome deep economic dislocation without undoing the social fabric.

    http://www.imf.org/external/pubs/ft/survey/so/2011/surveyartf.htm

  114. “We have to wait and hope for tragedy. What the media vassals to our political lords call a catastrophe, will in fact spell freedom for Europe’s 500 million fake-debt serfs. It will be a glorious lifting of tyranny, well fitting a Medieval morality play and pageant. The threat is well known to our ruling class kleptocrats.”

    http://www.marketoracle.co.uk/Article29483.html

  115. Hi!
    like you post: to my @rznfpeiu twitter

  116. Bruce E. Woych

    http://www.truth-out.org/occupy-colleges-now-students-new-public-intellectuals/1321891418
    Published on Truthout (http://www.truth-out.org)

    Occupy Colleges Now: Students as the New Public Intellectuals
    Monday 21 November 2011
    by: Henry A. Giroux, Truthout | News Analysis
    (excerpt)
    “The police violence that has taken place at the University of California campuses at Berkeley and Davis does more than border on pure thuggery; it also reveals a display of force that is as unnecessary as it is brutal, and it is impossible to justify. These young people are being beaten on their campuses for simply displaying the courage to protest a system that has robbed them of both a quality education and a viable future.

    Finding our way to a more humane future demands a new politics, a new set of values, and a renewed sense of the fragile nature of democracy. In part, this means educating a new generation of intellectuals who not only defend higher education as a democratic public sphere, but also frame their own agency as intellectuals willing to connect their research, teaching, knowledge, and service with broader democratic concerns over equality, justice, and an alternative vision of what the university might be and what society could become.”
    (Read it ALL)
    http://www.truth-out.org/occupy-colleges-now-students-new-public-intellectuals/1321891418
    Published on Truthout (http://www.truth-out.org)