The Plan

[scepticus]

So, what have our beloved global leaders got up their sleeves for us all over the next couple of years?

Today we hear about new curbs and circuit breakers for the US equity markets, and we hear about EU clampdowns on hedge funds and short sellers. No doubt a pipeline of these new stability initiatives awaits behind the scenes. We also have a proposal to create the worlds largest SPV for iffy european government debt.

Cue lots of squeeling from self annointed self important market ramping types on cruddy little blogs masquerading as beacons of freedom in much the same vein as no doubt the Persons of Quality of the Ancien Regime would have decried the vulgar indigation of the paris hoi polloi just before the latter cut the former's bewigged heads clean orf. Then it was the political elite that fell, will it be the same this time? If the political elite had blogs, what message would they be broadcasting?

There are always three aspects to a civilisation besides the sheeple: the political, economic and military elites, over-seeing their corresponding sub systems, all of which exist within and are justified/legitimised by the values of the people. In times of plenty and stability, the elites co-exist quite happily extracting yield from the sheeple. In times of crisis one of the three gets set against the other two. Today, we have the political elite versus the economic elite, with the military on the sidelines.

Its my belief that the international political elite have a rough plan of action, and here I include, quite explicitly, the central bank technocrats as part of the political side, which has been the case since at least the final ditching of the gold standard and possibly a lot earlier, since the point in time that central banks were fully or mostly nationalised.

Does the economic elite have a plan? I'm not sure about that. For starters, who really are they?

[REP013]

Cue lots of squeeling from self annointed self important market ramping types on cruddy little blogs masquerading as beacons of freedom in much the same vein as no doubt the Persons of Quality of the Ancien Regime would have decried the vulgar indigation of the paris hoi polloi just before the latter cut the former's bewigged heads clean orf. Then it was the political elite that fell, will it be the same this time? If the political elite had blogs, what message would they be broadcasting?

WTF? English, or a facsimile please?

[Georgia O'Keeffe]

So, what have our beloved global leaders got up their sleeves for us all over the next couple of years?

Today we hear about new curbs and circuit breakers for the US equity markets, and we hear about EU clampdowns on hedge funds and short sellers. No doubt a pipeline of these new stability initiatives awaits behind the scenes. We also have a proposal to create the worlds largest SPV for iffy european government debt.

Cue lots of squeeling from self annointed self important market ramping types on cruddy little blogs masquerading as beacons of freedom in much the same vein as no doubt the Persons of Quality of the Ancien Regime would have decried the vulgar indigation of the paris hoi polloi just before the latter cut the former's bewigged heads clean orf. Then it was the political elite that fell, will it be the same this time? If the political elite had blogs, what message would they be broadcasting?

There are always three aspects to a civilisation besides the sheeple: the political, economic and military elites, over-seeing their corresponding sub systems, all of which exist within and are justified/legitimised by the values of the people. In times of plenty and stability, the elites co-exist quite happily extracting yield from the sheeple. In times of crisis one of the three gets set against the other two. Today, we have the political elite versus the economic elite, with the military on the sidelines.

Its my belief that the international political elite have a rough plan of action, and here I include, quite explicitly, the central bank technocrats as part of the political side, which has been the case since at least the final ditching of the gold standard and possibly a lot earlier, since the point in time that central banks were fully or mostly nationalised.

Does the economic elite have a plan? I'm not sure about that. For starters, who really are they?

im 100% sure the international political elite have a plan and im even more sure these best laid plans of mice and men will turn to sh!t when market events overtake them unexpectedly

[scepticus]

im 100% sure the international political elite have a plan

so what is it then? care to hazard?

unexpectedly

events dear boy.

events, are also opportunities.

[wonderpup]

What strikes me is how deeply personal this has all become- especially in Europe- the Eurocrats are not at all happy that the money men have pissed all over their pet project- and for all the sabre rattling from the neocons, and dark mutterings about what the 'markets' will do in revenge, the reality is that the political class have a power the financial one does not- the power to alter the rules of the game itself.

The idea that globalised markets had somehow slipped the bonds of state control was always an illusion.

[Game_Over]

You've got to have a dream

Cos if you don't have a dream

How you gonna have a dream come true?

[Game_Over]

What strikes me is how deeply personal this has all become- especially in Europe- the Eurocrats are not at all happy that the money men have pissed all over their pet project- and for all the sabre rattling from the neocons, and dark mutterings about what the 'markets' will do in revenge, the reality is that the political class have a power the financial one does not- the power to alter the rules of the game itself.

The idea that globalised markets had somehow slipped the bonds of state control was always an illusion.

The political elite may think they can change the rules of the game

But when the game is economic reality then the financial elite will always win

Because the financial elite deal in economic reality wheras the political elite deal in economic fantasy

IMHO

[scepticus]

You've got to have a dream

Cos if you don't have a dream

How you gonna have a dream come true?

lol, that pretty much sums it up lots of dreams and hopes all round.

[Game_Over]

lol, that pretty much sums it up lots of dreams and hopes all round.

At last, someone with a sense of humour

It's been a long wait......

[erranta]

The political elite may think they can change the rules of the game

But when the game is economic reality then the financial elite will always win

Because the financial elite deal in economic reality wheras the political elite deal in economic fantasy

IMHO

But the politicos employ them as quango/economic "advisers" in the background!

"Dream - Much study has failed to prove that O.E. dream "noisy merriment" is the root of the modern word for "sleeping vision," despite being identical in spelling.

Either the meaning of the word changed dramatically or "vision" was an unrecorded secondary Old ENGLISH meaning of dream, or there are two separate words here."

Edited May 18, 2010 by erranta

[scepticus]

Because the financial elite deal in economic reality

yes but who are these purveyors of economic reality? Goldman? Soros? dave from TNT capital management? Liam Hallighan? Hugh hendry? Buffet?

these people can't even agree with one another, and most of them seem somewhat deluded.

[Toilet-Currency]

Dunno. The political elite couldn't run with the previous plan and I doubt Matrix 2.0 will be much better. But do you think it's really about plans or control?

PS Scepticus, may I compliment you on the new avatar. A great improvement on the previous one (the self-portrait)

[_w_]

Because the financial elite deal in economic reality wheras the political elite deal in economic fantasy

Economic reality?

Does the crash of 2:45pm strike you as being economic reality?

[scepticus]

Dunno. The political elite couldn't run with the previous plan and I doubt Matrix 2.0 will be much better. But do you think it's really about plans or control?

the reality is there is no group with a master plan. its all event, events. my take is that the various political power centres have individual plans which are close enough they shall find benefit in co-operating, for some period of time.

I really don't believe as some others do, that there is a shadowy yet united group of zombie banker illuminati who plan world domination. All I see is lots of shrilling by various market ponzi merchants who as soon as it suite them will hop right into bed with whatever scheme the BIS cooks up.

PS Scepticus, may I compliment you on the new avatar. A great improvement on the previous one (the self-portrait)

no, the new avatar is the self portrait.

[Game_Over]

the reality is there is no group with a master plan. its all event, events. my take is that the various political power centres have individual plans which are close enough they shall find benefit in co-operating, for some period of time.

I really don't believe as some others do, that there is a shadowy yet united group of zombie banker illuminati who plan world domination. All I see is lots of shrilling by various market ponzi merchants who as soon as it suite them will hop right into bed with whatever scheme the BIS cooks up.

no, the new avatar is the self portrait.

I agree there is no plan

But there is such a thing as economic reality.

For instance, in the long run, no individual or state can 'spend' more than it can 'earn' - this is the one that always dooms Labour governments to failure.

Or if the state takes all the surplus an individual produces they will only produce the minimum to survive - this is the one that always dooms socialism to failure.

[scepticus]

For instance, in the long run, no individual or state can 'spend' more than it can 'earn' - this is the one that always dooms Labour governments to failure.

Or if the state takes all the surplus an individual produces they will only produce the minimum to survive - this is the one that always dooms socialism to failure.

agree with all that, but I'll add that capitalist growth eventually always leads to depresion inducing wealth mismatches, unless it is let off the hook by population growth or the ability to transfer the burden of yield to external economies.

also, no democracy will tolerate austerity for any period of time except in the case where there is minimial wealth inequality.

so, given all that, where does that leave us?

[Toilet-Currency]

My 2p's worth:

1) Expect the next G7 or G20 summit to mark a fake watershed (a bit like early 2009 when they announced massive global stimulus package, which marked a market bottom)

2) If the US, EU, Japan have a common plan which is dramatically different to the current system, they need to collapse the current system before the reboot. That means continuing to do bizarre, ludicrous things in order to be seen to be resisting the collapse. Next up, IMO, will be a global exchange rate system, with $, €, DM, Y, £ trading in tight bands, backed by the threat of massive CB intervention. Of course, this won't solve the problems of over-indebtedness, ponzi pension schemes, demographics, fossil fuel dependency etc etc

3) If there is a common, cunning plan, I don't think it will be popular in China.

Just teasing about the self portrait.

Edited May 18, 2010 by Toilet-Currency

[scepticus]

My 2p's worth:

1) Expect the next G7 or G20 summit to mark a fake watershed (a bit like early 2009 when they announced massive global stimulus package, which marked a market bottom)

2) If the US, EU, Japan have a common plan which is dramatically different to the current system, they need to collapse the current system before the reboot. That means doing bizarre, ludicrous things in order to be seen to be resisting the collapse. Next up, IMO, will be a global exchange rate system, with $, €, DM, Y, £ trading in tight bands, backed by the threat of massive CB intervention. Of course, this won't solve the problems of over-indebtedness, ponzi pension schemes, demographics, fossil fuel dependency etc etc

3) If there is a common, cunning plan, I don't think it will be popular in China.

Just teasing about the self portrait.

good input. I don't actually believe the OECD nations have a common plan as such. What I think is that a comon plan will emerge out of the step by step initiatives they take.

we have built up a huge imbalance of collective vs private capital flows since WWII which IMO are going to be reversed over the comnig decades bit by bit.

in fact prior financial crises for the last three centuries have followed a similar pattern, resulting in oscillating public and private debt levels, and oscillating international capital mobility.

[scepticus]

More Merkel-ing (emphasis mine):

She was speaking after Germany unilaterally banned naked short selling of eurozone government bonds, in a move intended to be a clear political signal, according to German government officials.

The chancellor said the G20 group of the world’s largest economies had promised to introduce more comprehensive measures for financial regulation after the market crash of 2008, but little progress had been made.

“We have produced wonderful technical papers,” she said. “But there comes a moment where we need to provide the evidence: ‘Yes, we did it.’ This is what we still owe to our citizens.”

She promised to campaign for a global tax on financial transactions at the G20 summit in June, and called on her fellow leaders to agree on a banking levy, backed in principle by Germany and France, as well as the UK and the US.

She also gave her support to a plan to establish an independent European rating agency, to compete with the US rating agencies.

“We all agree that intelligent control of systemic risks is what we need,” she said. “How can we ensure that banks and financial institutions do not become so big that they blackmail the state? How can I ask for a capital requirement to ensure they can take care of themselves?”

She said that governments, including her own, were making drastic savings to cope with the consequences of the financial crisis. “Another question is whether we need to involve participants in the financial markets in our efforts to reduce our deficits. It raises the issue of fairness.

“We will campaign for a tax on financial transactions,” she added. “It is clear that this is something that will not be agreed at our first dinner [at the G20 summit]. But I don’t think it would ruin the financial markets if we found agreement on a global tax.”

She said that there was conflicting advice on the need to regulate hedge funds. The directive agreed by European Union finance ministers this week was “a step forward”, but it would be good to have comparable legislation at G20 level.

Earlier, Wolfgang Schäuble, the German finance minister, said financial industry lobbyists were starting to question the need for financial reforms, but “we have to maintain the momentum”. He said the top priority for European governments was to restore confidence in the stability of the euro, and they were committed to drastic spending cuts to reduce their deficits.

They were not seeking to “stigmatise speculators as scapegoats”, he said, “but we have seen the markets no longer perform the welfare function assigned to them”. Instead, the use of “innovative financial products with enormous financial influence” failed to promote stability, but rather reinforced market trends, and were characterised by “strong herd behaviour”.

“Market participants do not benefit from calm markets,” he said. “They profit from instability. If we want to draw lessons from the financial crisis, it is clear that we need a regulatory framework that contributes to more responsible behaviour.”

Strong stuff from merkel, and not before time. It is hard to argue with straight face with any of the points she makes, and this sort of talk is going to go down extremely well with both traditional conservatives and the centre-left.

Also interesting that she suggests that markets will be called upon to do their bit to help deal with (read: suck up) some of the private losses which were socialised.

And various bits about reducing capital mobility.

Go merkel.

[Bloo Loo]

yes but who are these purveyors of economic reality? Goldman? Soros? dave from TNT capital management? Liam Hallighan? Hugh hendry? Buffet?

these people can't even agree with one another, and most of them seem somewhat deluded.

yeah,,,one world government, one world currency.

its a laugh, but you gotta see a conspiracy theorist could beleive its all a plan.

I see a loophole that some bright spark has found and the rest pile into it. All for personal reward, not for some altruistic World Order.

Like the computer screen can look like a virtual world, its all in the mind.

[scepticus]

http://www.ft.com/cms/s/0/4526d52c-6506-11df-b648-00144feab49a.html

"At the very least, the survival of a crisis demands ensuring that the fiscal pain is equitably distributed. In the France of 1789, the erstwhile nobility became regular citizens, ended their exemption from the land tax, made a show of abolishing their own privileges, turned in jewellery for the public treasury; while the clergy’s immense estates were auctioned for La Nation. It is too much to expect a bonfire of the bling but in 2010 a pragmatic steward of the nation’s economy needs to beware relying unduly on regressive indirect taxes, especially if levied to impress a bond market with which regular folk feel little connection. At the very least, any emergency budget needs to take stock of this raw sense of popular victimisation and deliver a convincing story about the sharing of burdens [scepticus: that means bond investors must share the austerity which means very low or negative real rates] . To do otherwise is to guarantee that a bad situation gets very ugly, very fast.....

....Against this tide, facts are feeble. When Senate Republicans succeed in briefly blocking financial regulation by representing it as an infringement on liberty rather than as a measure minimally needed for the security of the commonwealth, you know the truth needs help from the Presidential Communicator-in-Chief. He is back on the stump, but as with the case for healthcare reform, his efforts are belated and cramped by misplaced obligations of civility. But if his government is to survive the November elections with a shred of authority, it will need Barack Obama to be more than a head tutor. It will need him to be a warrior of the word every bit as combative as the army of the righteous that believes it has the constitution on its side, and in its inchoate thrashings can yet bring down the governance of the American Republic."

this is the order of battle.

the question is, who commands the heights and retains formation and who has their best cavalry mired in the swampy low ground beset by skirmishers and lack of order? There are re-inforcements on the way, as yet undeclared for either side.

How terribly exciting. March to the sound of the guns, and all that.