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?".

Thursday 13 January 2011

"Financial markets" loan-shark mechanism at works


On 11 January 2011, The Financial Times published the following graphic:


The graph of 10-year government bond yields show that they grew considerably, manyfold, in the last 12 months. Yet nothing has happened in the last 12 months that was not predicted 12 months (or even longer) ago. For at least last 18 months the world financial situation (e.g. economic growth, banks liquidity, sovereign debt, etc) is going very well according to predictions. (It is a matter of judgement but one might say that things are going worse according to "plan".) Therefore 10-years government bond yields should be the same (or within a very narrow margin) now as they were a year ago. But they are not. In a nutshell the system works as follows:

1. In the past year governments were pressurised to cut public spending. Making such cuts creates a financial room for governments to spend more money on servicing the debt (i.e. pay more taxpayers money to the banks).

2. Then the so-called "financial markets" increase bond yields, which results in paying more taxpayers money to the banks. This was facilitated by public spending cuts.

3. Hence, in practice, what governments saved by making these cuts, is transferred to the banks by increased bond yields mechanism. In fact it is more: as the FT graph shows the government debt keeps growing which creates yet more pressure for further public spending cuts. Littles doubt, once they are made the bond yield will be increased further. And the process will be repeated.

It is not a sophisticated financial mechanism. It is not innovative at all. It does not require a "successful" (as the British Prime Minister Cameron called it) financial industry. No need of well qualified bankers to implement it. It is the most classic loan sharks' strategy: primitive no-brainer.

Incidentally it was predicted in "The largest heist in history", an article written over two years ago, that this was the direction the financial industry would go unless governments took a decisive action.

131 comments:

  1. What a load of tosh. If governments increased public spending and increased the number of bonds issued to fund it then bond yields would rise even faster. Lower government spend should slow down the increase in bond yields over time.

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  2. Hi Mark

    Thanks for your comment. Please do not imply things that I have never written (or implied). It is a rather primitive discussion tactics to write or imply a nonsense ("tosh"), attribute it to someone else (in this case me) and then dish out a wide-sweeping criticism ("what a load of tosh"). You basically criticised yourself of ill-thought argument that you attributed to me.

    Therefore I suggest you read my post carefully (and I trust you are capable of understanding it as there is nothing complicated there). For clarity:

    1. I do not suggest that governments should borrow more. In fact I believe that that governments should borrow much less and run very conservative, balanced budgets.

    2. What I described in my post was how the banking industry pressures governments to make cuts and then forces (through bond market mechanism) to pass the benefit of these cuts to the banks. And there are more mechanism like this. It does not imply that making cuts is bad or borrowing is good, but simply shows the way the financial industry found a way to put their hands into taxpayers pockets. It is a loan shark way.

    Best

    Greg

    ReplyDelete
  3. Hi Mark

    If you read (with understanding) my 2 years old article, "The largest heist in history", you would have realised that the main reason for the banks to implement a primitive loan shark strategy is that the banking system lacks liquidity. I.e. the money multiplier is incredibly high (the lowest estimate I found was 150, but it may well be 1500 and growing). This is basically the scale of the financial pyramid that the bankers engineered. Therefore government cuts (which are good in principle) in theory in a normally functioning markets (i.e. with money multiplier below 8 - 10) would eventually decrease bond yields. However the huge magnitude of the money multiplier makes the situation intractable: whatever the governments cut the banks will come back for it (as they need it to reduce the money multiplier, in other words stabilise the financial pyramid).

    Hence in a normal markets public spending cuts result in reduction of bond yields. In the current markets, which is basically illiquid pyramid scheme, public spending cuts create a situation that banks may demand more for the debt (and get it). As you should see the market is completely dysfunctional and even really good moves in principle do not result - as they should - in good effects.

    Best

    Greg

    ReplyDelete
  4. Dear Greg

    I dispute

    "2. Then the so-called "financial markets" increase bond yields, which results in paying more taxpayers money to the banks. This was facilitated by public spending cuts."

    Rising bond yields only affects the cost to govt of NEW bond issues. The spending cuts could result in a balanced budget which means no new bond issues and zero dipping by 'financial markets' into taxpayers pockets.

    The rise in yields is part justified insurance against haircuts plus some herd panic by investors. I think we all agree the best response to get the 'bankstas' off our back is to reduce the deficit to zero ASAP.

    ReplyDelete
  5. Hi Paul and Rina

    I hope you realise that you dispute the fact (which I referred to in point 2). So I have no comment to make.

    Furthermore governments roll over a lot of debt so a lot of NEW debt is in fact old debt which was rolled over.

    I agree that with "zero deficit" approach to public spending. But the current financial crisis requires a more complex solution. I presented it in an article: "Prime Minister, sort out this mess, please".

    Best

    Greg

    ReplyDelete
  6. Is the date of the graph wrong? Shouldn't it read 11 January 2011? Or am I missing something?

    ReplyDelete
  7. Hi Stuart

    You are right. Correction made. Many thanks.

    Best

    Greg

    ReplyDelete
  8. Hi Greg

    I've been reading your blog and other financial websites for quite a while now. As you will be aware, there are all manner of theories about what has happened, how it happened and what will happen next. It seems nobody is complete agreement about anything and I guess it depends where each individual is coming from, their particular interests etc, is a large determining factor behind the conclusions they reach.

    I've read through your blogs and have found them interesting and informative, and they have certainly got me thinking. I'm not a financial expert, I just have an enquiring mind.

    At the end of this missive, you say "Incidentally it was predicted in 'The largest heist in history', an article written over two years ago, that this was the direction the financial industry would go unless governments took a decisive action."

    It's the "unless governments took a decisive action" that puzzles me.

    Do you mean "a decisive action" or would that have been better worded "decisive actions".

    Do you believe there was/is a single action governments could have taken or would it have required several or a series?

    If so, what action(s) would you recommend - briefly, if possible - that could solve the problem(s)?

    I suspect you may have answered these questions before, so a link will suffice if you have.

    Many thanks

    Stuart

    ReplyDelete
  9. Stuart wrote (as was sent to me via e-mail):

    Hi Greg

    I've been reading your blog and other financial websites for quite a while now. As you will be aware, there are all manner of theories about what has happened, how it happened and what will happen next. It seems nobody is complete agreement about anything and I guess it depends where each individual is coming from, their particular interests etc, is a large determining factor behind the conclusions they reach.

    I've read through your blogs and have found them interesting and informative, and they have certainly got me thinking. I'm not a financial expert, I just have an enquiring mind.

    At the end of this missive, you say "Incidentally it was predicted in 'The largest heist in history', an article written over two years ago, that this was the direction the financial industry would go unless governments took a decisive action."

    It's the "unless governments took a decisive action" that puzzles me.

    Do you mean "a decisive action" or would that have been better worded "decisive actions".

    Do you believe there was/is a single action governments could have taken or would it have required several or a series?

    If so, what action(s) would you recommend - briefly, if possible - that could solve the problem(s)?

    I suspect you may have answered these questions before, so a link will suffice if you have.

    Many thanks

    Stuart

    ReplyDelete
  10. Hi Stuart

    This is what I mean by a "decisive action" as I recommended over two years ago, citing from "The largest heist in history":

    "Unless and until the governments identify, isolate and write off toxic instruments held by financial institutions every pound put into “rescue” is very likely to end up being good money thrown after bad. (The governments, as ultimate customers of the global pyramid scheme, are supplying the pyramid purveyors and beneficiaries with tax payers’ cash and the largest heist in history continues.) Alongside the liquidation process, but after the toxic waste has been isolated and fenced off in failed financial institutions, governments must launch a fiscal stimulus package and go after the pyramid purveyors and beneficiaries to recover any cash and assets from them and bring them to justice. As the financial pyramid scheme is global, any action — including the recovery cash and assets — must be global, too."

    In the current context I listed what-to-do action point in "Prime Minister, sort out this mess, please".

    Best

    Greg

    ReplyDelete
  11. Mark:- it is so obvious you are arguing with the mathematical and physical facts - which i doubt he has even read - because you have got it 'absolutely' and 'without any doubt' worked out that all this financial mess was caused by the lazy unemployed and scroungers alongside the wasteful incompetant labour party which spent its way into all of this financial crisis - it suits the right wing agenda to perversely uphold such a disgraceful and dangerously incorrect view.

    The financial crisis firstly was/is global (i dont think gordon or the labour party ruled the world). The financial world already was a pyramid for the rich for a long time, limited it seems, only by the limited sums of available money investors had to invest (gamble)in it - only the masses didn't realise it and those who did could do nothing to change it. As more people - particularly foriegn, or overseas - gained wealth and looked to invest it - it has openly exposed the system for what it was - a cash cow for the rich at the expense of the majority of everyone else. As more and more money went into the system - it looked for more and more to be pumped out as returns. The 300% loan to deposit ratios and above, are just the grotesque levels of vulgarity the bank operated pyramid scheme developed into. Add to it the humongous trade defecits and the inevitable illegal activities that exists wherever there is money flowing and we get pretty much to where we are today.

    If you want to blame gordon for anything - blame him for nievity bordering on incompetance with him completely failing to understand how vicious the greedy men of the world really are - something cameron and clegg are doing just the same - no, i predict even worse - they trully think the zero borrowing model is achievable and desirable when truth be known it is more than likely neither - and whilst they inflict that straight jacket on the population the unscruperlous vultures will be stealing all of the extra saved cash they put into the majic unprotected deposit box (an illegal pyramid) whilst the original perpertrators try to work out how to take the still profitable top of the pyramid to one side and start it off again - leaving the rest of the enormous pyramid to collapse on the tax payer and blame it all on the unemployed. You well fell for that crap - hope i can help others to see the reality in a hope we can do what needs to be done:-

    http://gregpytel.blogspot.com/2010/06/prime-minister-sort-out-this-mess.html

    We are all in this together - but i dont see any sign of YOU..??

    Best Regards ALL

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  51. WELCOME TO ABIGAIL MILLS abigailmills.loans227@gmail.com our aims is to provide Excellent Professional Service.

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  52. My name is Mrs Abigail Mills we are a new legit loan lenders of 2018 and we like to help any body that need financial help we offer as from $500,000.00 and $5,000,000.00 and we also give out loans in euro above that so if you need help kindly send us an email on:abigailmills.loans227@gmail.com so that your loan transaction can take place now you will be with your loan in the next 8 hours it is a fast transfer and is safe without any delay. So Email:abigailmills.loans227@gmail.com if interested

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  53. Hello everyone my name is katheryn Liz Rhea am from San Francisco USA. I just received my loan now from Mrs Abigail Mills loan company they are new legit loan company of 2018 and it has not been long i received my loan from them i got my loan from them today and now as am posting this message i am very happy this company is real great so anyone that need a loan contact this company they are real great their mail is abigailmills.loans227@gmail.com

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  54. This comment has been removed by the author.

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  55. Hello Everyone

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    ReplyDelete
  56. My name is Vonda Dionne i am from Los Angeles i just got my loan from a new legit loan company of 2018 and the name of the company that helped me with my loan today is Abigail Mills loan company they are the most lovely loan company i have ever came across with i applied for a loan from them yesterday and the only thing i did was pay the transfer fee which they said i should pay and immediately i make the payment in the next 12 hours time i was with my loan sorry i can not say how much they helped me with but it is a large amount of money so everyone if you need a real loan this is the right loan company to contact their mail address is abigailmills.loans227@gmail.com

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  57. Good day everyone my name is Donna Susan Patricia and i am from Houston, USA i want to use this chance i have now to write this message to the internet if anyone of you is looking for a loan real this is the right company to contact i am a business woman and i applied for a loan in a 2017 legit company and the name of the company is Abigail Mills loan company they have been helping people since 2016 and we are in 2018 now and i just received my loan from them so if anyone of you need a loan go and apply from them because they are real i just pray you people that need help with a loan don't get scammed that is why i am using this chance to write this message on the internet if you need a loan legit loan apply from this company so that you wont get scammed when you apply from the wrong company. their E-mail address is abigailmills.loans227@gmail.com.

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  58. My name is Kimberly Lori Cheryl and i am from US, San Jose i want to use this time to tell everyone on the internet on how i received my loan after been scammed 3 times i applied for a loan from Abigail Mills loan company yesterday i saw people testify about her good works and on how she helped people so i decided to apply and she told me what i needed to do i was scared but i did it this morning now i just received an alert from my bank there there money in my account and i checked the amount and it was my loan i am so happy. So i want to use this time and say to everyone on the internet that this company is real if you need a loan this company is the right company to apply from do not get scammed like me because there are scammers out there apply from this company and you will be happy. their mail address is abigailmills.loans227@gmail.com

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  59. My name is Freida Erna Madeleine i am from Chicago USA i want to use this time to write to the internet that i just received my loan funds of 5 million dollars from this company called Abigail Mills loan company at first i did not believe what people were saying on the internet but i decided to try and i applied for the loan 2 days ago and i just received a call from my bank that there is the sum of 5 million dollars in my account and immediately i received an alert from my bank Abigail Mills loan company called me and asked me if i have received my loan and i told them yes so they said i should bring more people to there company if anyone do need a loan so if you really do need a loan this is the company to apply from they are really great and i believe now that there is a real loan company that gives loans and that company is Abigail Mills loan company so if anyone of you need an urgent loan and it is important this is the right company to apply from. Their mail address is abigailmills.loans227@gmail.com.

    finally i am really happy and can start my own business now. Thank you once again Abigail you are great and God bless you and your company.

    ReplyDelete
  60. My name is Gwendolyn Tammie Shari. I am a single mother and i am from Canada and i live in the city of Montreal. I want to use this time to tell everyone on the internet that there is only one company that offers real loan and that company is Abigail Mills. I was looking for a loan online for the past 3 weeks now and all i have got is lenders scamming me of my money that i had God knows i was so poor and i wanted to kill my self but there i saw so many people testify about this company that they give out loans at first i did not believe cause i saw other testimonies of other lender and they all turned to be scams. I said let me apply from this company and see if it is true and immediately i applied they told me everything i needed to do and i agreed and they assured me that in 8 hours time i was going to be with my loan cause they said they are using fast transfer service. At first i did not believe but i waited for my loan before 8 hours time i received an alert from my bank and be hold it was my loan i was very shocked when i saw it and i prayed to God for directing me to the right company who helped me today as i am writing this on the internet now i just received my loan from this company and i am using this time to testify to other people if you need a loan a loan don't be fooled this is the right company to apply from. Their Email address is abigailmills.loans227@gmail.com

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  61. Good day My name is Ebba Agnes Lilly i am from New York City this company Abigail Mills people are talking about is real i never wanted a loan but i just said i should try this company and see if what people are saying is true and i applied for a loan from them yesterday and i just received my loan today from Abigail Mills loan company anyone if you read this message and you need a loan apply from this company cause they are going to help you this company is the only company that offers real loan online. The loan i applied from them was $75,000.00 dollars and in 8 hours time i received my loan so my friends don't be scammed if you need a real loan this is the right company to apply from. If you are interested of there loans their mail address is abigailmills.loans227@gmail.com.

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  62. Good day everyone

    My name is Vanessa Jodi i am from Los Angeles USA. I want to use this time to write to the internet that anyone if you need a true loan Abigail Mills is the right company to apply from few days i was in need of money and i looked for a loan online i saw a company and i applied that company cheated me 2 times of my money i was so sad cause i needed money so i decided to look for another company and i applied from another company that same company also told me to deposit money and i did and never got my loan i was like what is happening to me cause i needed money urgent to buy a house cause if i do not get a house soon my landlord will drive i and my family away from his house so i needed to get my own house. When i was searching again i saw this company Abigail Mills i saw a lot of people testified about this company that the company is truly great so at first i was afraid to apply cause i was cheated 2 times so i said to my self let me try and see if this company was real so i applied. When i applied they told me all i was needed to do i was still afraid but i trusted them and they assured me that in 8 hours time i was going to be with my loan i wanted for my loan and on my eyes i received an alert from my bank that there were a sum of $200,000.00 into my bank account and i was very happy in a while ago the company called me and asked if i have received my loan and i told them yes and i thank them and as i am writing this message on the internet now this company have also helped my 2 brothers so anyone if you need a true loan Abigail Mills is the right company to apply from. In case you are in need of money you can only contact them via mail and their E-mail address is abigailmills.loans227@gmail.com. I thank everyone who read my message and be safe and apply from this company because you will be happy with them.

    ReplyDelete
  63. My name is Robert Christopher. I am from USA New York City. I want to write to the internet that if you need a real loan Abigail Mills is the real loan company that gives loan i applied for a loan from this company last week Friday and i just received my loan from them today so everyone if you need a real loan without been scammed this is the right company to apply from thus company is truly great and they are real so many people that have been scammed if you need a loan without being scammed this is the real company that gives loans i applied for a loan from this company Abigail Mills and i received my loan today so anyone around the world if you need a true loan locate this company and be rest assured that this company is going to put a smile to your face. the company can be contacted via mail their mail address is abigailmills.loans227@gmail.com Thanks to anyone that will read this message this company does not know am doing this i am only doing this for people in need of a real loan to be safe.

    ReplyDelete
  64. I am Brayden Wyatt Bryce by name i am a police officer and i live in New York city in USA. Few days ago i was searching for a loan online and i only found people scamming me of my money. I really need this loan for a project in Colombia and i have been cheated severally one day when i was off duty i decided to look again this time for a true company that give loans i found this company named Abigail Mills loan company and a lot of people have testify about this company at first i did not believe but i decided to apply the loan i was looking for was the sum of $7,000,000.00 i applied from this company and they told me all that needs to be done i trusted them and i did what they told me to do and they assured me that in 8 hours time i was going to be with my loan safely i never believed them but i waited for my loan in exactly 8 hours time i got a call from the company that if i have received my loan yet and i said No. They told me to go to my bank and check my account that my bank might not send me an alert i obeyed and i went to my bank and check my account on my eyes i saw my loan of $7,000,000.00 in my account the money i was having on my account before was $1,000,000.00 and i now found $8,000,000.00 pulse my money and my loan was $8,000,000.00 i am so happy and i thank this company for they are great. I want to use my little time to write to people in United States that if you need a real loan Abigail Mills is the right company to apply from this company does not know am doing this so anyone if you need a loan you can only contact this company via mail or whatsapp but i do not use whatsapp so their mail address is abigailmills.loans227@gmail.com

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  65. Abigail God will bless you and your company

    My name is Veronica Rose Holly. I am from Chicago USA. I have nothing much to say anyone that need a true loan without you being cheated should apply from Abigail Mills cause i applied for a loan from this company today after i read so many good and wonderful comments about this company. I applied for a loan to pay my debts and all i needed was $50,000.00 because i will also use part of that money to pay my children school fees. As i am writing this on the internet now i just received my loan from this company today and i am so happy i never believed i would ever be happy again cause i have passed through a lot and i thank God for Abigail Mills God will bless her and his company for putting a smile to my face. So anyone around the world from Chicago and other countries that need a loan your helper is here and the company is Abigail Mills anyone that applied from Abigail Mills loan company will have no problem cause you will receive your loan exactly the time she tells you. their company Email address is abigailmills.loans227@gmail.com

    Once again God bless you Abigail Mills and may you live long to continue helping people.

    ReplyDelete
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