If you are new to this blog, you are invited to read first “The Largest Heist in History” which was accepted as evidence and published by the British Parliament, House of Commons, Treasury Committee.

"It is typically characterised by strong, compelling, logic. I loosely use the term 'pyramid selling' to describe the activities of the City but you explain in crystal clear terms why this is so." commented Dr Vincent Cable MP to the author.

This blog demonstrates that:

- the financial system was turned into a pyramid scheme in a technical, legal sense (not just proverbial);

- the current crisis was easily predictable (without any benefit of hindsight) by any competent financier, i.e. with rudimentary knowledge of mathematics, hence avoidable.

It is up to readers to draw their own conclusions. Whether this crisis is a result of a conspiracy to defraud taxpayers, or a massive negligence, or it is just a misfortune, or maybe a Swedish count, Axel Oxenstierna, was right when he said to his son in the 17th century: "Do you not know, my son, with how little wisdom the world is governed?".

Monday, 13 April 2009

Gillian Tett in the FT

On 2 April 2009, in the FT Ms Gillian Tett has eventually started asking a question, implying that the answer was not known: “how big the toxic rot really is, let alone when it might end”? A bit late my dear. I asked this question back in October last year giving an estimated answer $1 - 2 quadrillion (qn) dollars at the time. By now it is likely to be of the order of $5 - 6 qn. It is quite depressing that it takes an FT's journalist over 6 months to ask the most fundamental and trivial of questions (an estimated size of a loss). In any financial trouble, any competent financial adviser asks the question: “what is the loss”. Ms Tett also appears to be still some way from understanding that a global pyramid scheme is the crux of the current mess.

Here are further clues what I expect to read in the FT (and other high profile press) in some weeks or rather months to come. The size of globally committed stimulus package is $2 trillion dollars i.e. 1/572 of the outstanding notional value of derivatives (as estimated in December 2007 by BIS in Basel), which is $1.144 qn. And this is about 23 times the world’s GDP. This is an optimistic look at the figures.

It begs a question why papers like the FT or The Economist do not even consider such basics.

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