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Monday 17 May 2010 | Ambrose Evans-Pritchard feed
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Comments 72 | Comment on this article
Mr Trichet was ash-white at the Brussels summit a week ago. He distributed charts of credit stress to every eurozone leader. By the time he had finished his hair-raising discourse, everybody round the table finally understood what they faced.
“The markets had ceased to function,” he told Der Spiegel. “There is still a risk of contagion. It can happen extremely fast, sometimes within hours.”
Related Articles Trichet calls for more control in eurozone Trichet is bounced into defence of the euro Leading bankers converge on Wyoming to assess recovery signs European Central Bank falls into line and embraces quantitative easing Eurozone interest rates at record low ECB faces mutiny from national bank governors as recession deepensThe spreads on Greek, Iberian, and Irish bonds have, of course, dropped since the ECB stepped in with direct purchases. But the euro rally fizzled fast, to be followed by a fresh plunge to a 18-month low of $1.24 against the dollar. European bank stocks have buckled again. Spain’s IBEX index fell 6.6pc in capitulation fever on Friday.
Geneva professor Charles Wyplosz said EU leaders made the error of overselling up their “shock and awe” package before establishing any political mechanism to mobilise such sums. “The fund is an empty shell,” he wrote at Vox EU. “Worse still, crucial principles have been sacrificed for the sake of unconvincing announcements.”
Brussels was unwise to talk of smashing the “wolf pack” speculators and defeat the “worldwide organised attack” on the eurozone. As Napoleon said, if you set out to take Vienna, take Vienna. Besides, the language of the EU priesthood – ex-ECB board member Tomasso Padoa-Schioppa talks of the advancing battalions of the “anti-euro army” – frightens Chinese and Mid-East investors needed to soak up EU debt. These metaphors are a mental flight from the issue at hand, which is that vast imbalances – masked by EMU, indeed made possible only by EMU – have been decorked by the Greek crisis and now pose a danger to the entire world.
One can only guess what Mr Trichet meant when he said we are living through “the most difficult situation since the Second World War, and perhaps the First”. Is this worse than Credit Anstalt in the summer of 1931, the event that brought down central Europe’s banking system and tipped Europe into depression?
Or was Mr Trichet alluding to something else after witnessing the Brussels
By Ambrose Evans-Pritchard Published: 5:37PM BST 16 May 2010
Comments 72 | Comment on this article
Mr Trichet was ash-white at the Brussels summit a week ago. He distributed charts of credit stress to every eurozone leader. By the time he had finished his hair-raising discourse, everybody round the table finally understood what they faced.
“The markets had ceased to function,” he told Der Spiegel. “There is still a risk of contagion. It can happen extremely fast, sometimes within hours.”
The spreads on Greek, Iberian, and Irish bonds have, of course, dropped since the ECB stepped in with direct purchases. But the euro rally fizzled fast, to be followed by a fresh plunge to a 18-month low of $1.24 against the dollar. European bank stocks have buckled again. Spain’s IBEX index fell 6.6pc in capitulation fever on Friday.
Geneva professor Charles Wyplosz said EU leaders made the error of overselling up their “shock and awe” package before establishing any political mechanism to mobilise such sums. “The fund is an empty shell,” he wrote at Vox EU. “Worse still, crucial principles have been sacrificed for the sake of unconvincing announcements.”
Brussels was unwise to talk of smashing the “wolf pack” speculators and defeat the “worldwide organised attack” on the eurozone. As Napoleon said, if you set out to take Vienna, take Vienna. Besides, the language of the EU priesthood – ex-ECB board member Tomasso Padoa-Schioppa talks of the advancing battalions of the “anti-euro army” – frightens Chinese and Mid-East investors needed to soak up EU debt. These metaphors are a mental flight from the issue at hand, which is that vast imbalances – masked by EMU, indeed made possible only by EMU – have been decorked by the Greek crisis and now pose a danger to the entire world.
One can only guess what Mr Trichet meant when he said we are living through “the most difficult situation since the Second World War, and perhaps the First”. Is this worse than Credit Anstalt in the summer of 1931, the event that brought down central Europe’s banking system and tipped Europe into depression?
Or was Mr Trichet alluding to something else after witnessing the Brussels tantrum by President Nicolas Sarkozy? According to El Pais, Mr Sarkozy threatened to pull France out of the euro and break the Franco-German axis at the heart of the EU project unless Germany capitulated. To utter such threats is to bring them about. You cannot treat Germany in that fashion.
Chancellor Angela Merkel has put the best face on a deal that has so damaged her leadership. “If the euro fails, then Europe fails and the idea of European unity fails,” she said. Too late, I think. The German nation is moving on. I was struck by a piece in the Frankfurter Allgemeine proposing a new “hard currency” made up of Germany, Austria, Benelux, Finland, the Czech Republic, and Poland, but without France. The piece entitled The Alternative says deflation policies may push Greece to the brink of “civil war” and concludes that Europe would better off if it abandoned the attempt to hold together two incompatible halves. “It can be done,” the piece says.
What makes this crisis so dangerous is not just that Europe’s banks are still reeling, with wafer-thin capital ratios. The new twist is that markets are no longer sure whether sovereign states are strong enough to shoulder rescue costs. The IMF warned in last week’s Fiscal Monitor that the tail risk of a “widespread loss of confidence in fiscal solvency” could no longer be ignored. By 2015 public debt will be 250pc in Japan, 125pc in Italy, 110pc in the US, 95pc in France, and 91pc in the UK.
There is a way out of this crisis, but it is not the policy of wage deflation imposed on Ireland, Greece, Portugal, and Spain, with Italy now also mulling an austerity package. This can only lead to a debt-deflation spiral. The IMF admits that Greece’s public debt will rise to 150pc of GDP even after its squeeze, and that Spain’s budget deficit will still be 7.7pc of GDP in 2015.
The only viable policies – short of breaking up EMU or imposing capital controls – is to offset fiscal cuts with monetary stimulus for as long it takes. Will it happen, given the conflicting ideologies of Germany and Club Med? Probably not. The ECB denies that it is engaged in Fed-style quantitative easing, vowing to sterilise its bond purchases “euro for euro”. If they mean it, they must doom southern Europe to depression. No democracy will immolate itself on the altar of monetary union for long.
Comments: 70
I don't know why Chelyabinsk refuses to use his real name. He'll get no more derision posting as Trichet than using his nom de plume. Re PeterB @ May 17, 2010 at 09:25 AM. Peter it has obviously escaped your attention that the world has a huge number of countries, most with economies smaller than that of the UK, that do not belong to the UK or any other bureaucratic bloc and nonetheless manage to trade with others and keep their economies operating. Why you imagine people in EU countries will not want to buy from and sell to the UK if it is not part of the EU, while they do this with every other country is a puzzle. You're not another nom de plume of Chelyabinsk/Trichet are you?
Merkel-sadly iron lady no more(she turned !)by the raging of another would be Bonaparte.Sympathy with the Germans but hold on!-isn't a big slab of this rescue package mainly to prevent collapse of the German & French banks?
“The only viable policies – is to offset fiscal cuts with monetary stimulus for as long it takes.” Ambrose, are you absolutely sure about that, won't that mean a huge expansion of the money supply leading to hyperinflation? Take a look across the pond with their $Trillions of stimulus, hyperinflation is already baked into the cake.
".... Sarkozy threatened to pull out the euro..." Pure bluff by puffed-up Sarko! Highly subsidised French farmers would bring their country to a standstill and total chaos if they ever thought that CAP payments from Germany and the UK would not materialise! I cannot believe that Angela Merkel fell for that one. Angela needs to work quickly on Plan B with Gemany walking out of the euro to form a new hard currency/export orientated DM zone with the Benelux plus Austria and a few others. Entry by invitation only! Europe definitely needs a hard currency core to off-set the profligate disorganised Club-Med and inflation prone de-industrialised UK with its ridiculous overwhelming reliance on the City. In fact Germany is the only significant western nation that is capable of giving the East Asian industrial giants any real competition. The UK gave up on industry years ago under Maggie Thatcher. Gordon Brown continued the theme by failing to keep open one of Englands last big steel mills at Redcar. Of course as was to be expected Gordon Brown acted very quickly to bail out the collapsed Edinburgh banking sector (with billions of English money).
@Humungous 8.04am 17 May It looks like Humungeous is suggesting a "War of Northern Aggression" to resolve outstanding contradictions" in the EU. In other words Germany should invade Greece, and probably Spain and Portugal too! Listen Humungous, Germans regularly invade these countries in the war of the beach towels. And no-one gets more annoyed with this Teutonic invasion than the Brits. @JezB 8.43am 17 May Buy Euros, sell dollars? It depends what your time scale is Jezza. Whilst the Euro is becoming the most competitively priced global currency, thanks to market traders, the prospects for the dollar are that it is going to go into free fall in 2011.
there is only one way out from this situation: germany leaves the Euro. it's the only country which can renominate the debts from euro to its own courrency without been called a default. after that, each country will decide what to do, if to stay in the EU, or to go back to it's own currency, or to joyn a monetary union with Germany.
"Nouriel Roubini's greatest worry, in his own words, is the USA not the EU. Is anyone therefore suggesting the end of the dollar zone?" No, they're not, for a variety of good reasons. The dollar zone has existed for 200 years, through war and peace, produced monumental economic growth and is united by one political system. The same, to a lesser extent, applies to the UK. The fundamental problem the euro has is that the political and popular will to sustain it will not be as great as a national currency.
Chelyabinsk "The Euro will then be set to eclipse the dollar as the global currency of choice, which in turn will force Britain to belatedly join the Euro" It is internal factors and not external factors that will force Britain into the euro. Now that public spending is to be slashed and financial services put under pressure, how will Britain continue to feed its population of 60 million? (We are not Switzerland or Norway). Only by putting more emphasis on making things and selling them abroad. But Britain is too small to generate the necessary economies of scale that the planning, development and production of world-beating export products will need. It is clear that Britain needs a vastly greater home market to generate those economies of scale. The EU single market cannot provide such a home market because all trade with it is distorted by currency transaction costs and fluctuation losses, fattening the wallets of the bankers and currency traders but impoverishing manufacturers and preventing investment (and jobs). The only way that British business can generate the necessary economies to give the country a secure future is to join the seamless home market of the eurozone. As public money dries up and as financial services leave the City, there will be nothing left to take their place unless British business is released from the shackles of sterling and allowed to operate on equal terms in vast home market of over 400 million consumers. It is only by tapping the formidable economies of scale offered by the eurozone that British enterprise and ingenuity can be transformed into producing world-beating export products. Unless we do that, what do we live on?
Not many media outlets are reporting the largest civil lawsuit against the SEC. It’s the largest fraud case in world history. Between June of 2004 and October of 2005, over 2 trillion dollars worth of fake (naked short) CMKM Diamonds Inc. shares were sold to the public. The company’s shareholders are now suing the S.E.C Commissioners for 3.87 trillion dollars. http://www.youtube.com/watch?v=pN8xp66k-is
Well, despite a negative Dow on Friday and negative Asian markets this morning the DAX and European markets turning green, it seems. The markets seem to like the prospect of QE in Euroland. What is good for the goose is good for the gander and the currency with the least QE is still the strongest currency. In the not too distant future it may be the European Key Indexes showing the way to the Asian and American markets. Stands to reason that the biggest economic area, the EU, should be top dog. Will gold go to 1500$/oz before long and perhaps even 2000$/oz before the end of this year? With the help of the $, the £ and the € all turning Mickey Mouse? You bet.
Gordo would suit it out.
@ Chelyabinsk - can I take it then, that you are buying Euros and selling dollars? Good luck with that.
the Fed gave trillions to the banks, heavelly indebitating itself, so did the Bank of England; so the proplem is the eurozone¡ Erase Wall Street and the City, and things will get better
Its not weird if you're looking for something harder than a Chamber of Commerce like simplification. Innovation goes so far unless your talking revolutionary jumps.Look at funding for biotech in California the last few years.Venture capital has gotten very picky where it goes. The dollar prices oil,military ops and Chinese labor.Beijing has no choice but to continue engagement.The paper chase grows.This is why the dollar is still standing.Surely not fundamentals of the domestic economy.
"While China invests in infrastructure that will be a component of its economy for fifty years" You may be interested in this link, Jon: http://factsanddetails.com/china.php?itemid=326&catid=12 This gives you the flavour of it: "Corruption, poor planing and shoddy construction have plagued infrastructure projects. Former Chinese Prime Minister Zhu Rongji referred to the problem as "bean curd projects." With the vast infusion of government money and waves of a national infrastructure building, the problem has gotten much worse. Collapsing bridges, roads, dikes, buildings and dams are a serious problem in China. Dikes are filled with mud instead of concrete. Half finished skyscrapers lean dangerously to one side. Buildings lack proper foundations. Bridges are constructed with flawed designs. An estimated 33,000 dams and dikes need to be reinforced. Between 1949 and 1999. 3,200 dams failed In Chongqing alone 1,600 people have died as a result of shoddy construction. Forty people died after falling 460 feet when the steel-and-concrete Rainbow Bridge over the Qijang River near Chongqing collapsed. An investigation uncovered faulty welding, $12,000 in bribes given to officials to overlook problems and allow project to exceed its budget. Some of the siphoned-off money was used to build a karaoke parlor with scantily clad girls. Less than a week later, another bridge collapsed in Fujian Province, killing seven people In both cases government officials were arrested on charges of corruption and using shoddy materials."
-> alec on May 16, 2010 at 10:11 PM ///…while South will try to procure its commodities from Caspian region and Africa./// In the latter case it might turn out to be very, very tough going. From news reports it's quite clear that China has been sewing up natural resources for the last decade, signing agreements hand over fist with various countries in Africa.
The "split" is indeed between the predominantly Protestant North/East and the predominately Catholic South/West. The new North would be clearly much much closer to an optimal economic area, as indeed would the South. After it happens the UK should join the North/East IMHO. They are "our kind of people" I think. Before and while it happens we should stand well back.....and not scrap Trident!! Nothing seems to have ever changed in Europe it seems to me other than the consumables. True, unchanged, natures are being revealed as Merkel is discovering as Sarko/France effortlessly flips from blowing in Germany's ear to shouting in its face. Time for a slap peut etre? North/East - South/West split, just a matter of time. Look at the people, their cultures and how they think. They split along these lines do they not? How to profit (speculate, LOL) from that then? I think the UK's eports are mainly to the North and East are they not? Maybe we are "well placed" after all??
To G. Chelyabinsk: Your knowledge of America is deeply flawed. Dollar Zone? No. A functioning quasi-unitary state. We had our “EU” phase followed shortly thereafter by an Athenian Tyrant and a “War of Northern Aggression” to resolved outstanding contradictions – contradiction less fundamental than those which haunt the EU at the moment. As of today, it appears that the EU will be mercifully(?) spared the benefits of a Lincoln.
"The markets have ceased to function" I love it, straight from the horses mouth. Oh yes the function of the markets is to lend money to those that need it. They need it because they don't have any, how can they pay the bills if there is no more credit? They have debt to maintain. Oh but Europe is about to discover they have no rights only privileges that must be paid for by the sweat of our brows. Yes Mr AEP without more creation of money the end will be sooner. Why hold falling currencies though? If we have systemic failure what will become the means of exchange? If we have enough "stimulus" by how far do currencies fall, parity will the Rupee? Either way the markets will make their choice so far precious metals are pretty high on the list of options. More QE will cause a flight of capitol, the next trance of QE might need to be accompanied by exchange controls at some point.
"ArabianMoney.net says this is great for gold and silver." People should never forget the absolute power governments have over us. The market for gold can be destroyed with an ink squiggle, as FDR demonstrated in 1933 with his executive order.
In your final paragraph you say "short of breaking up EMU". The only way the Euro can survive long term is for those Nations wishing to be part of that currency bloc to surrender their economic sovereignty to a centralised European "treasury" with full budget powers of tax and spend. The Euro is a political fudge that has only survived due to the perceived never ending growth pattern between '97 and '07. This was illusory anyway as it was built on unsustainable levels of debt. Time to be honest with the peoples of Europe.
"The ongoing crisis was caused by EMU". If this were true then by the same logic in the US the "ongoing crisis was caused by the Fed", and Britain's " ongoing crisis was caused by the Bank of England". Were in not for the more dire debt problems of the "Anglosaxon" economies this constant Euro knocking would have some credence. No one is suggesting that the Dollar or Sterling are about to fall apart. Nouriel Roubini's greatest worry is the dollar as he says in DER SPIEGEL (post 7.55pm 16 May). To put things into proper perspective, Anti-euro remarks are flying about because tomorrow the EU will pass measures to limit the hedge funds (or wolf pack as AEP calls them), who have been engaged in economic warfare with the Eurozone, 80% of which are based in London. ____________________________ "No democracy will immolate itself on the altar of monetary union for long". The US immolated itself in a dollar monetary union in the Great Depression. Nouriel Roubini does not suggest that any of the bankrupt states of the dollar zone like the ones he identifies, California, Arizona, New York and Florida will cause the dollarzone to fail. Fiscal union in the Eurozone will put the Euro on par with the dollar. The Euro will then be set to eclipse the dollar as the global currency of choice, which in turn will force Britain to belatedly join the Euro.
Ambrose Evans-Pritchard's Monday pieces are the best cold-water splash in the face anyone could hope for. They don't make for comfortable reading, but the truth - undisguised by the flannel and spin of third-rate politicians - is sometimes very harsh. We have been falling off a vast cliff since the demise of Lehman Brothers and are nowhere near the ground yet. What can any of us do? Commonsense things. Economise. Pay off debt. Take on no major new financial commitments. Do not be tempted by the stock market or by property. Do not tie up your money. Keep it liquid and close to you. Hunker down. Remember always that it is burrowing rodents who survive Ice Ages.
"“If the euro fails, then Europe fails and the idea of European unity fails,” she said." There is absolutely nothing wrong with the far simpler notion of Europe as a free trading area. It would be no tragedy for the Eurozone to collapse entirely. The idea of "European unity" is one foisted on an unwilling people of Europe by unelected Eurocrats with an agenda. One of the greatest services the much-despised and reviled Gordon Brown performed for the people of Britain was resolutely to keep us out of the Eurozone.
To Mr. Lincoln: Regarding Norway not being included in German “Northern Tier” thinking – Norwegian memories of 1940-45 combined with little desire to give up less than century old sovereignty? To Alec: Regarding the “Northern Tier” looking to Russia for raw materials and markets – bingo! However wither the “Southern Tier” in such a scenario? I would argue given that Serbia, Bulgaria, Greece, and – oddly enough – Turkey will go with Russia in the end the idea that Spain, Portugal, and Italy can look to the Caspian/Caucuses is a non-starter. Berlin-Volgograd-Teheran RR anyone? Continental geopolitics as usual – Germany and Russia defining spheres of influence only this time around without Hapsburg or Ottoman complications. Not good times to be Latin or Ukrainian or Polish…
Well said 'andrew' the markets are indeed functioning perfectly. The so-called 'wolf-pack' are nothing of the sort. The market is simply a system of correcting mechanisms that PUNISH political mistakes and fiscal recklessness AS THEY SHOULD because no-one else will. Note the Euro down to 1.22 this (Monday) morning. Bye bye Euro - you won't be missed.
Yes the unravelling could be mighty fast from here - aka Dow Jones -1,000 points 10 days ago. Nouriel Roubini is pitching in with some interesting comments. ArabianMoney.net says this is great for gold and silver, but heaven help other asset classes.
Is this the beginning of the end or the end of the beginning? If one is to believe the early markets in Asia, it is the former. What has happened? Godfather Zeus lost it in front of all the gods running around the Olymp waving his spear in order to wake the sleeping virgin within her wall of fire .... ehm, sorry, wrong mythology .... whilst Hera, goddess of the white elbow, looks on unmoved with big, round blue eyes. Hera is adamant that this time she will not let him get away with the rape of Europa. Suddenly he stops in his tracks, thinkers pose with cheek in hand and then this wonderful Louis de Funès smile lights up Olymp. The gods stirr in expectation. Cronus, father of Hera, across the water must help to bring his daughther to reason. Soon the Ipod of Hera sounds the ride of the Valkyries. Hera listens intently, stands to attention, klicks her heels. “Yes, father”. Meantime, the Euros have pulled the Greek horse within their city, breaking up a large part of the wall in the process. At midnight the Hedge fund mercenaries who only fight for money climb out, sword at the ready to kill the innocent, who have saved for generations and accumulated a treasure. Suddenly torches flare up all around, a firewall of torches held by 750 billion Euro fire fighters. Europa is saved. The Greeks defeated. Notwithstanding the legend, this time the Euros listened to Cassandra AEP and put up a massive firewall to defend their savings. The Hedge funds are put to the knife. Back to the present: If Sarko really lost it in front of the assembled Grandees of Europe and treated a lady in such impolite manner, which I doubt, because a Frenchmen with class would never behave in such manner, then he would have shot himself in the foot. Did he really do his Lous de Funès bits including biting into the carpet .... ehm, sorry, wrong leader .... only to see that the lady is not for turning? All Angela had to do is to say “Fine, go ahead” or “OK, you pull out of the Euro and of CAP? Did I hear you correctly?”. Sarko is not stupid. He also is not Louis de Funès, although he does come near. He is playing to the gallery and the most popular way to get a standing ovation today from the French, the Germans and the rest is to point to The City and Canary Wharf and to declare “Voila, le mal vien de là. Ils ont brulé Jean d’Arc, maintenant ils brulent l’Euro”
"The dollar exists still because of oil and the Chinese necesity to play ball with it." That's a weird claim. The Dollar exists because the US economy exists. The US is still where the vast majority of industrial and scientific innovation takes place, even if a lot of manufacturing happens elsewhere, and that's what give the Dollar its value. Another thing that is going to give value to the Dollar is the highly negative experience that companies and countries are now going through if they diversified out of the Dollar and into the Euro. Since December, they have lost one sixth of all the cash they put into the Euro. That sort of thing leaves a very bad taste in the mouth - doubly so if you were in the habit of boasting about how clever you were to buy Euros. A falling Euro may be good news for Euro-area exporters, but it's not so good news for investors in Euro-area debt.
"But if US/UK/Euro bonds need to be avoided then where do bond investors go?" I'm sure that pleasant President Chavez will be delighted to take your money.
Its not going to get any prettier from here! The Euro, is like a good ole' Sunday roast! Fork it, its done!
Good stuff from AEP, but it is beginning to seem to me that the Euro is a problem within a bigger problem. A pillar collapsing in a building that is itself collapsing. The whole developed World has been borrowing, but what's worse is that it has been borrowing to make lower and lower quality uses of the money it took in. While China invests in infrastructure that will be a component of its economy for fifty years, Greece was borrowing to pay thirteenth and fourteenth month salaries to civil servants, and other developed countries are much the same, with differences of detail. You can see the same story with industry. A Dollar borrowed by US industry produces a much smaller increase in GDP than it used to do, so private debt levels have been rising fast. The problem is that as China extends its manufacturing higher and higher up the value tree - China used to make underpants, now it makes small passenger jets - the West, because of its wage structure, becomes non-competitive in more areas of manufacturing, but it has not yet made the transition to high-tech and design based economies that it needs to make. What's worse is that because of the West's credit-worthiness, it has been able to hide this from itself by taking on more debt. Had we not borrowed so much, more of the West's industry would have already been destroyed and replaced by high-tech. Using high debt, the West has been making the "Stalingrad" error of refusing to make a strategic retreat while it still could. I think the EU's current problems are a symptom of this - there is always a weakest borrower - but if the EU persists in trying to remain in industries where it lost its competitive advantage long ago, that would be the best possible argument for the UK to go its own way. Maggie made the strategic decision to allow non-competitive UK industries die and be replaced, and Cameron is going to have to do the same. Achieving that in Europe, with its strong unions and mercantilist traditions, is going to produce ugly situations we are best to stay out of.
With a debt based currency, enormous amounts of money have been borrowed into circulation in order to speculate on rising asset prices, which fuels ever more speculation and speculative borrowing. So speculators drive up prices with low interest debt, then when the debt bubble starts to crash, the government is expected to buy this bad debt to give the speculators more money and finally, when there is nothing left to speculate on and the money becomes inflationary, the government is expected to borrow it back and pay these people interest for the privilege! Am I missing something? This isn't so much criminal, as it is completely stupid. Can't we just put these people in Vegas and give them some plastic chips to play with? Three hundred years ago debt based currency was a smart idea, since there was little economic data to determine how much money was necessary and debt grows at roughly the same rate as productivity, but this archaic formula has played itself out and now the question is how to formulate a viable production based currency system, since money is drawing rights on productivity and having a bunch of criminals rent seeking off everyone else doesn't improve productivity.
With a debt based currency, enormous amounts of money have been borrowed into circulation in order to speculate on rising asset prices, which fuels ever more speculation and speculative borrowing. So speculators drive up prices with low interest debt, then when the debt bubble starts to crash, the government is expected to buy this bad debt to give the speculators more money and finally, when there is nothing left to speculate on and the money becomes inflationary, the government is expected to borrow it back and pay these people interest for the privilege! Am I missing something? This isn't so much criminal, as it is completely stupid. Can't we just put these people in Vegas and give them some plastic chips to play with? Three hundred years ago debt based currency was a smart idea, since there was little economic data to determine how much money was necessary and debt grows at roughly the same rate as productivity, but this archaic formula has played itself out and now the question is how to formulate a viable production based currency system, since money is drawing rights on productivity and having a bunch of criminals rent seeking off everyone else doesn't improve productivity.
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