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?".

Sunday, 5 June 2011

Greece: there is a method in this madness


Every person with rudimentary understanding of finance knows that preventing Greece from defaulting on their debt by giving it yet more loans (at very high interest rate, by the way) only delays the default and makes it bigger. Everyone knows it is a sheer madness: it is like borrowing even more money on one credit card to pay off the debt on another. A classic financial fools' trap. So why the governments agree to it if it is so idiotic. Well, there is a method in this madness. If Greece defaulted now this would have affected to a great degree private banks. By lending Greece even more money, this time by the countries, Greece is getting into even more difficult financial situation, but it is shifting the debt from private banks onto taxpayers. So when inevitable happens and Greece will eventually go bust it will be mainly taxpayers that will end up with unpaid debt rather than private banks.

This is so trivial: people in power are not that stupid. So why do they do it? Why are taxpayers in business of saving private business such as banks? (Incidentally it is against the EU rules about state subsidies.) The largest heist in history continues and indeed the financial industry loan shark strategy against the taxpayers is meticulously implemented (with the help of the politicians).
Posted by Greg Pytel at 13:08
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13 comments:

  1. RedTez5 June 2011 at 15:02

    So good to see you are still there enlightening us less informed in financial matters. The above revelation has helped me to understand the current situation so simply. However...

    I see with great awe that as you said way back when - the British government are seriously attempting to inflate our way out of the financial crisis whilst blaming the previous government for the 'pain' we are all feeling. What i wanted to ask you though was - what effect on the collapsing pyramid and the dreaded black hole in the finacial system will it have had. I remember you saying it would only grow the pyramid greater and enlargen the eventual black hole we will be left with. Is that still your opinion?? Are this government even stupider (and eviler with its relentless cuts on the poorman's life sustaining systems) than the last, is there any chance eventually, when it reaches such a dire state, we could throw the towell in and watch it all sink from a distance and good riddance - or will this go on injuring every nation, every people, every environment forever??

    As always - BEST REGARDS ALL

    ReplyDelete
  2. Greg Pytel5 June 2011 at 15:45

    Hi RedTez

    I simply do not know. I am describing mechanism (which may help to make predictions) but I do not know the future. My instinct tells me that the current situation is financially unsustainable and soon will become socially unsustainable. So one can predict quite dramatic if not tragic end.

    Remember the crisis that was sparked off by the financial collapse of October 1929 really ended 10 years later with World War 2. If the history is something to go by the future does not look pretty.

    Best wishes

    Greg

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  3. ayupmeduck5 June 2011 at 20:37

    This comment has been removed by the author.

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  4. ayupmeduck5 June 2011 at 20:45

    "This is so trivial: people in power are not that stupid. So why do they do it?"

    They do it because they can. More than that, the banks can sit on their takings and watch the public squabble amongst themselves, trading insults about which countries taxpayers are the biggest bunch of idle lay-about scroungers. It's quite neat, in an evil way.

    ReplyDelete
  5. reginald6 June 2011 at 09:42

    Yay Greg's Back !!!!

    It is fantastic to see you back online and sharing your views on these matters.

    I wanted to ask you if DSK was still in charge would Greece be getting this loan?

    Cheers

    Reg.

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  6. Greg Pytel6 June 2011 at 09:53

    Hi Reg

    Thanks for a kind word:-) As to DSK I have no clue. I heard some theories that he is a victim of elaborate provocation because he could have stopped this heist. But this is just a speculation (of little credibility to me).In real life it is not conspiracy theories that matter but actual conspiratorial practices.

    Best

    Greg

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  7. reginald6 June 2011 at 10:07

    Hi Greg.

    It is the practice that matters however insane it is.

    However insane it is, what is becoming more apparent to me is that people have less power than ever to effect any sort of change to improve their lot.

    Reg.

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  8. Bob H7 June 2011 at 09:13

    Greg, I agree that the method of mitigation here is flawed, but I think you are missing the point. Greece, as a nation and a people, has yet to actually accept responsibility for their situation. They have been living beyond their means for over a decade on borrowed money, over 50% of the work force is employed in public services and they 'produce' virtually nothing other than relatively limited margin holidays.

    As much as any debt consultant would suggest to a debtor to come to new terms with their creditors they would also try to ensure the lifestyle of the debtor was consummate to the repayments.

    Greece must first rationalise its public sector and the people must accept their culpability before they can move forward with refinancing.

    I find myself occasionally blogging about Greece now for personal reasons: http://www.orbit.me.uk/Blogs/Wandering-round-in-fields-of-idiots/greece-and-public-spending.html

    ReplyDelete
  9. Greg Pytel19 June 2011 at 08:32

    Hi Bob

    I think you are missing the point. The banks allowed countries such as Greece or Britain to ran a huge structural deficits (by lending them money). At the same time the bankers were stealing money using a pyramid scheme. Once this pyramid started collapsing (in 2007 - 2008) countries had to put even more money to prevent a complete meltdown.

    So in reality a problem of countries', like Greece, deficits (which is a big problem) is tiny comparing to the structural theft organised by the bankers that made the banking system illiquid. Yet it is a very convenient smokescreen: rather than blaming a real criminals (bankers who are pyramid purveyors) the attention is shifted onto societies that want to live better and governments that were spending money irresponsibly (which has been a fact).

    Governments borrowing suited the bankers (and they condone it up to 2008). There were three reasons:

    1. Bankers were getting bonuses on the back of the huge transactions of countries getting into debt.

    2. It was a good cover up of the pyramid scheme (i.e. criminal activities).

    3. Once the pyramid started collapsing the bankers were not urging the government to stop public spending but in fact forced the government to spend taxpayers money on rescuing banks from collapse.

    4. Now governments structural deficit is a good cover up for the financial industry crimes.

    To summarise: the financial industry does not mind spending taxpayers money on subsidising them (e.g. by rescuing Greece). The truth of a matter is that banks want to get more money from governments and to help this they want government to free up taxpayers money by cutting public spending.

    Best

    Greg

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  10. Greg Pytel19 June 2011 at 08:42

    Hi Bob

    BTW, I am not sure whether you realise that governments are typically advised on the "wisdom" of borrowing by... the bankers. I have not heard many of them shouting too loudly when governments (including Greece) were borrowing as if the was no tomorrow. Instead they were also peddling nonsense about "the new economy".

    So it is a bit to late for the bankers to criticise governments for too big debt (huge part of it was generated by the bankers anyway, thanks to rescuing the banks). Right or wrong, bankers have no credibility with the public and as professionals.

    Best wishes

    Greg

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  11. schweik19 June 2011 at 09:58

    Hi Greg

    DSK was, in my opinion, manoeuvered out of the way in order that the IMF could bully the ECB into shoving these unwanted loans through but like you say, it really doesn't matter in the scheme of things. What is important is the effect of the actions taken....

    I am predicting that the social pressure on the Greeks will cause a default very soon. I am obviously not alone in this but what I am wondering is if this, and an eventual rout of the EURO is what the Americans and the IMF desire? That way the Dollar will strengthen again as the world's reserve currency. This is what happens in a crisis after all: the dollar goes up. What do you think?

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  12. Greg Pytel19 June 2011 at 10:30

    Hi Schweik

    I am not a fortune teller but looking back at history and trying to check up the risk of events I would consider seriously:

    1. By this Christmas I think "colonels" will be in power in Greece. (It is not a coincidence that the defence minister switched to the finance portfolio in the Greek government.)

    2. In a few years time (maybe sooner), the world will experience a significant historic event. The financial crisis that started with the market crash in October 1929 really ended with the World War 2. There is a significant risk of an event of a similar proportion in 5 - 7 years window.

    3. The dollar is a funny one (as the world reserves are hooked on dollars. Have a look at "The US' way out?"

    http://gregpytel.blogspot.com/2009/04/us-way-out.html

    and have a look again at point 2 above. I think we are getting there.

    Best

    Greg

    ReplyDelete
  13. 1704193720 June 2011 at 07:03

    I have wondered whether intense pressure from the US government lies behind the EU/ECB/IMF determination not to let Greece default at any price ; risking the collapse of the Euro .

    ReplyDelete

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