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, 31 March 2013

Greg Pytel: I told you so... with a mafia twist

It may be a bit self indulging to write all the time "I told you so. I told you so many years ago". But what's the choice? The continued economic downturn in the UK is not surprising at all. At present the economy is managed which ensures that dire straights will continue. So no one should be surprised: simply await more bad news to come. The politicians' rhetoric about growth, prosperity, etc. can only be met with an ironic smirk. It looks they treat people if they were silly and would not see the obvious. Some even mainstream pundits have been arguing (privately) whether it is correct to treat the politicians as either devious or stupid. Or maybe there is a third choice? Whatever the answer is it does not change the real situation.

Readers of "The largest heist in history" would remember that the financial mess which resulted from the collapse of a giant global pyramid scheme was engineered in order to funnel the money out the economies to private individuals. Governments bail outs, financial stimuli, generating massive public debt, quantitative easing, and so on - all in direct contravention with free market principles, common sense and indeed many existing laws (unlawful subsidies to the industry, anti-competitive behaviour, etc) - are reaching the end of their practical capacity. Every financial pyramid has its limit. Now, after investments, endowments, pensions have been plundered, the time came for private savings and deposits. What happened in Cyprus was not a mess or a misjudgement. Cyprus, being a small island, is a test case. Firstly it is a tiny economy so any unpredicted overreaction can be contained. Secondly it is an island so things cannot spread physically easily.

Telling people that they can lose their deposits, even possibly below guaranteed amount (100,000 euros), which later was retracted, had not been a mistake. Firstly people realised and got used to the idea that such thing was no longer unthinkable. Secondly, by hitting deposits above 100,000 euros with up to 40% (or even maybe up to 60%) tax, it was made clear that such hit can be very hard indeed. Not some 6.75% or 9.9% as originally mooted: so now it is matter for the 'financial markets' to extend their target, below 100,000 euros. It is indeed a very primitive piece of social engineering and coaching people for the forthcoming loss. It is preparing psychologically all countries in Europe for the next step of the largest heist in history: direct and hard targeting of people's deposits.

There is also a rather ironic twist in the events in Cyprus. It has been widely reported that many billions of euros held in banks in Cyprus came from all sorts of dodgy businesses (Russia?). There is even a whispering subliminal propaganda designed to make it easier to accept this new phase of the largest heist in history. The message is that there is nothing wrong in stealing money from the thieves. Technically what happened there was that the billions of euros in cash deposited in Cyprus was used to redeem for a lot of toxic waste of the financial institutions (it is called 'making investments' in a financial language, with depositors cash). So, as expected, those who had cash ended up with nothing and those who held (and are still generating) zillions of toxic waste, got another tranche of their heist. The largest heist in history continues.

If it is true, as it is widely rumoured, that many billions of euros of mafia money have been kept in Cyprus and now something like 40% or even 60% are going to be lost, one could wonder whether European politicians, central bankers, who drive this process, e.g. finance ministers, or some other decision makers, even lower down the chain, are going to sleep comfortably. Or are they going to think more about their own and their families safety? Is mafia going to accept such multibillion euros loss? Or would they plan to teach a lesson in order to get their money back, to get a compensation for the current 'inconvenience' and mess and to make sure such a thing is unthinkable in the future. Mafia starts wars when there is big money at stake. And in Cyprus some powerful groups lost billions of euros. Therefore we can also look forward to listen to some interesting news. Don't be surprised. Despite being a mere speculation. This is as predictable - and even possibly engineered on purpose - as the current financial mess.

Sunday, 10 March 2013

Greg Pytel: Juncker warns against the danger of war in Europe

For some years articles (and comments) on this blog warned that unless the current financial mess is solved (which was not that difficult) there was a real risk that the situation would develop into a war. For example in the article dated 23 December 2011, "Democracy on the ropes":

"The financial crisis that had started with the Wall Street collapse in 1929 ended up ten years later with the World War Two. It is impossible to tell whether history will repeat itself. But considering carefully the scale of the current financial crisis and the way it is managed by the world leaders, there is no particular reason to feel overly optimistic."

(This article was also published on OpenDemocracy blog: "Capitalism no longer exists: it's communism for the rich" on 5 December 2011.)

In today's Der Spieger Jean Claude Juncker, the Prime Minister of Luxemburg, who recently stepped down as the President of the Eurogroup after over 8 years, is quoted saying: "Anyone who believes that the question of war and peace is not an issue could seriously be mistaken" warning about the dangers of war in Europe.

The mainstream politicians are eventually catching up with glaringly obvious realities some 2 - 3 years too late.

The risk of war in Europe is quite real. And it will not just happen, As the economies were robbed and ruined - not just for now: for generations ahead - social unrests seem inevitable. They could be directed against those who caused the current economic mess. So why not direct them as a conflict between the nations, so people start killing each other under very noble slogans of patriotism and all that rather than those who stitched them up in this mess? This idea seems to be a no brainer. And like the current financial mess it will be quite easy to engineer. And it is also quite predictable.

In 1929 a Polish poet Julian Tuwim wrote a poem: "To the simple man". It is worth reading again.

PS. In fairness, in September 2011 British-born Polish Finance Minister Jacek Vincent Rostowski warned about the dangers of war in Europe in 10 years time. However his speech in the European Parliament in Strassburg did not get much traction.

Tuesday, 5 March 2013

Greg Pytel: Be careful what you wish for...

In today's Channel 4 News Mr Brooks Newmark MP discussed the EU proposal to cap the bankers bonuses to twice their salaries with a Swedish MEP Mr Olle Schmidt. Mr Schmidt argument for such a move was predominantly based on the public outrage about the bankers who engineered the current financial mess and are still handsomely rewarded for causing such disaster. Mr Newmark argued against limiting the bankers' bonuses as it would make the industry leave Europe (and the UK in particular). Instead he suggested that there should be an analysis of banks' balance sheets in the context of the credit risk.

Clearly, as Mr Schmidt admitted, his argument was political. Mr Newmark argument was professional, getting into the crux of the current financial situation. It appears that he was also right but most likely - as the context and the tone suggested - not in a way he actually intended.

If the analysis that Mr Newmark suggested had been done, it would have showed without any doubt whatsoever that the financial industry engineered and ran a giant global pyramid scheme that led to the systemic collapse in 2008. Basically the industry had been degenerated by those who had run it into a criminal enterprise operating according to exactly the same mechanisms as pyramid schemes in Albania in 1996 - 1997. In this case the bankers - most likely with very few exceptions and mainly on a junior level - should not only lose their jobs (hence any prospective salaries and bonuses), but also their liberties and any wealth (in order to compensate for the massive losses that they caused). If Mr Newmark's recommendation was followed scrupulously, the City would be turned into a giant prison (as this, quite likely, would have been cheaper than building new ones).

Mr Newmark, you may just have to be a little bit careful what you wish for.