"When a central bank thinks its house is on fire, it too will rush to save the thing valued most. In the [US], the central bank has rushed to save the bonuses and dividends of its Wall Street clientele by hiding away the bad assets that can no longer be foisted on gullible investors. ... I am disgusted by the central banks preserving the privileges of the financial elite in preference to the jobs, incomes and businesses powering the real economy. ... I consider the workers and businesses in the real economy as meriting greater protection that the financial elite. It is not merely that I think the financial elite little better than criminals for their irresponsible excess of recent years, but I fear long term harm and political instability will come from neglecting the needs of the real economy. ... If the democratically elected governments--through their appointed executives and central bankers--are free over an extended timespan to ignore the interests of the people, then how is a Western democracy superior to a Chinese bureaucracy? From looking at the policies and practices of the past year, the merits of Western democracy are not immediately apparent in ensuring that policy responses are aligned with the interests of the people. Even over the past decade, it is not clear that the policies of the democratic Western governments have aimed to strengthen and broaden the economy to benefit of the electorate rather than a narrow, self-serving elite", my emphasis, London Banker (LB), 28 November 2008, link: http://londonbanker.blogspot.com/2008/11/what-we-value-is-what-we-save-in-crisis.html.
Yes LB. As I wrote on 26 October 2008, there is a whiff of cordite in the air. Let the peckinsniffs of the Economist laugh, I see "political instability" may come out of the current bailouts. If the US gets the price inflation I expect, we should look to Germany, 1922-23 for a glimpse of our future. Not an attractive view. LB's comments are what I have become accustomed to from Mencius Moldbug at Unqualified Reservations or Jesse at Jesse's Cafe Americain.
6 comments:
Cenbanks sing the "stability" song but the truth is more along this line...
"the central bank has rushed to save the bonuses and dividends of its Wall Street clientele by hiding away the bad assets that can no longer be foisted on gullible investors"...
IA... I had to look up term that you tossed at the Economist crowd...
I found a slightly different spelling but a tremendous definition >> "pecksniff"
"pretentious, unforgiving architect of double standards. [Br. Lit.: Martin Chuzzlewit]"
That is quite a rapier in the heart of those esteemed ones... :)
Anonymous:
I checked dictionary.com and it does not have my spelling. That said, that's the word I wanted and Dickens is the source.
IA
The preservation of the elite has always been a hallmark of hyperinflation. The elite wish to keep buying expensive foreign luxuries, but the industrial and export economy has collapsed underneath them.
The elite engineer preservation of the value of the currency, in spite of huge trade deficits through central bank asset distribution (period from 1960s, silver then gold repudiation, to now). When that ultimately fails when the asset cupboard is bare, the hyperinflation starts up.
Of course by that time, the elites have managed to stow their assets on foreign shores, as they wave good-bye to their strife torn homeland.
There is no rescue. No amount of government "leaf raking" programs is going to save this catastrophe. We are headed to a crummy imitation of Cuba. It is a good thing everyone now likes 50s cars. The US and Cuba can exchange know-how and parts.
IA... I was always a terrible speller and only care about definations... and I think Peck***whatever is perfect...
And Printfaster... Cuba? That is a long fall down... hopefully not so far...
Anonymous:
I was never a good speller either. I don't know that we will become another Cuba, but think things will deteriorate in the US for the forseeable future.
IA
Of course I am engaging in hyperbole, asserting some sort of parallel to Cuba.
Still, I am having a hard time coming up with anything else that makes any sense in the long run, given the trends in politics. I still don't see anything in the character of the American public that would point away from a Cuban solution. The current crisis in Iceland, points to an Iceland that might look more Cuban than European. I do not find the US embargo as the cause of Cuba's descent into 1950, but rather the autarky, and lack of desire to generate trade.
The US will have to find a means to generate true wealth, rather than find government solutions. Even China at this stage seems more mature politically and economically than US citizens.
In the end, the US has a number of end stage targets to choose from, Cuba, and China being but two. Others are Japan, Taiwan, France, Germany and Russia, none of which I find likely.
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