Posts Tagged ‘incompetence’

The present world economic and political order – A madhouse where the Arsonists are Running the Fire Brigade‏

2 december, 2013

I have written a lot about the present economic and political disorder (including foreign policy), where the common people are the ones paying the price for the gigantic folly by the political class, old media, central and investment banks, hedge funds etc.; who are pushing risk, leverage and debt to ridiculous and dangerous extremes.

This absurd Alice in Wonderland economic and political farce has been going on now for some time. And the Rabbit Hole is getting deeper and deeper because of the actions, and inactions, of the people mentioned above.

When you start analyzing these figures you get utterly horrified of the totals of the open derivatives positions in the US and European markets.

Just as an example: the four big investment banks in USA (Goldman Sachs, JP Morgan Chase, Citibank and Bank Of America) ONLY “covers” 2,27 % of the Total Exposure with ALL their Assets!

To sum up – TOTAL EXPOSURE TO DERIVATES for ONLY these four banks:

207, 375, 086, 000, 000 TRILLION DOLLARS!!!!!!!!!!!

TOTAL ASSETS for these four banks:  4,720,464,000,000 TRILLION DOLLARS

And remember: these figures are now over one year old. Today’s figures are worse.

If you do the math for example for Goldman Sachs, it has a total exposure to derivatives contracts that is more than 364 times greater than their total assets!

To put these GIGANTIC sums into perspective let’s compare with the GDP from USA and all of EU from 2011.

There a lot of different way to calculate GDP and the figures for each year. Add to that exchange fluctuations, conversion rates etc. So the figures below come from the same source (IMF) to make the comparison easier.  And it is their conversion.

GDP USA 2011 – 15,094,025 billion US dollars

GDP EU 2011 –  17,610,826 billion US dollars

Total GDP for EU and USA 2011: 32,704,851 billion US dollars.

Let’s compare these 32,704,851 billion US dollars with TOTAL EXPOSURE TO DERIVATES for  these four above mentioned banks:

207, 375, 086, 000, 000 TRILLION DOLLARS!!!!!!!!!!!

                                        VS

32,704,851 billion US dollars in COMBINED GDP of EU and USA

Anyone see any problem???”

See among others my posts:

After Cyprus there can be NO Trust Anymore

The economic mess and structural problems in EU and US – Part 1

The economic mess and structural problems in EU and USA – Part 2

Why the Euro is doomed – the German households net wealth in not EVEN HALF of that compared to Italians

Citizens! Forgive us for not arresting those truly responsible for this crisis: bankers and politicians

This is why the Euro is doomed

EU a stupid empire on purpose

EU – an unaccountable mess created by an undemocratic treaty – Now also a crony Bankocracy

The scam that is called EU and the Euro is behind the present crisis

Below are some observations from people with very long experience in the investment and economical field. So rather than me writing again I give you these people’s views.

First from John Mauldin in his newsletter from November 30th (you have to be a subscriber). John Mauldin is a renowned long time financial expert who has written extensively and in depth about the world markets and economic situation. He has his own investment companies; he is an advisor to hedge funds, he an author of several books etc.

(Note: Most of the bold are mine and all underlining is mine. And the charts are mine)

Arsonists Running the Fire Brigade

”I led off by forming an analogy to my Thanksgiving Day experience:

I rather think the stock market is acting like we did at dinner. When the alarms go off, we note that we have heard them several times over the past few months, and there has never been a real fire. Sure, we had a credit crisis in August, but the Fed came to the rescue. Yes, the subprime market is nonexistent. And the housing market is in free-fall. But the economy is weathering the various crises quite well. Wasn’t GDP at an almost inexplicably high 4.9% last quarter, when we were in the middle of the credit crisis? And Abu Dhabi injects $7.5 billion in capital into Citigroup, setting the market’s mind at ease. All is well. So party on like it’s 1999.

However, I think when we look out the window from the lofty market heights, we see a few fire trucks starting to gather, and those sirens are telling us that more are on the way. There is smoke coming from the building. Attention must be paid.

I was wrong when I took the (decidedly contrarian) position that we were in for a mild recession. It turned out to be much worse than even I thought it would be, though I had the direction right. Sadly, it usually turns out that I have been overly optimistic.

This year we again brought my now-96-year-old mother to my new, not-quite-finished high-rise apartment to share Thanksgiving with 60 people; only this time we had to contract with a private ambulance, as she is, sadly, bedridden, although mentally still with us. And I couldn’t help pondering, do we now have an economy and a market that must be totally taken care of by an ever-watchful central bank, which can no longer move on its own?

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I am becoming increasingly exercised that the new direction of the US Federal Reserve, which is shaping up as ”extended forward rate guidance” of a zero-interest-rate policy (ZIRP) through 2017, is going to have significant unintended consequences. My London partner, Niels Jensen, reminded me in his November client letter that,

In his masterpiece The General Theory of Employment, Interest and Money, John Maynard Keynes referred to what he called the ”euthanasia of the rentier”. Keynes argued that interest rates should be lowered to the point where it secures full employment (through an increase in investments). At the same time he recognized that such a policy would probably destroy the livelihoods of those who lived off of their investment income, hence the expression. Published in 1936, little did he know that his book referred to the implications of a policy which, three quarters of a century later, would be on everybody’s lips. Welcome to QE.

It is this neo-Keynesian fetish that low interest rates can somehow spur consumer spending and increase employment and should thus be promoted even at the expense of savers and retirees that is at the heart of today’s central banking policies. The counterproductive fact that savers and retirees have less to spend and therefore less propensity to consume seems to be lost in the equation. It is financial repression of the most serious variety, done in the name of the greater good; and it is hurting those who played by the rules, working and saving all their lives, only to see the goal posts moved as the game nears its end.

Central banks around the world have engineered multiple bubbles over the last few decades, only to protest innocence and ask for further regulatory authority and more freedom to perform untested operations on our economic body without benefit of anesthesia. Their justifications are theoretical in nature, derived from limited-variable models that are supposed to somehow predict the behavior of a massively variable economy. The fact that their models have been stunningly wrong for decades seems to not diminish the vigor with which central bankers attempt to micromanage the economy.

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The destruction of future returns of pension funds is evident and will require massive restructuring by both beneficiaries and taxpayers. People who have made retirement plans based on past return assumptions will not be happy. Does anyone truly understand the implications of making the world’s reserve currency a carry-trade currency for an extended period of time? I can see how this is good for bankers and the financial industry, and any intelligent investor will try to take advantage of it; but dear gods, the distortions in the economic landscape are mind-boggling. We can only hope there will be a net benefit, but we have no true way of knowing, and the track records of those in the driver’s seats are decidedly discouraging.”

”but now let’s jump into Code Red. In this section, we deal with the topic of central banking and its failures and ponder the implications of continuing to give the same people ever more authority and responsibility. This is from Chapter 5, called:

Arsonists Running the Fire Brigade

In the old days, central banks raised or lowered interest rates if they wanted to tighten or loosen monetary policy. In a Code Red world everything is more difficult. Policies like ZIRP, QE, LSAPs, and currency wars are immensely more complicated. Knowing how much money to print and when to undo Code Red policies will require wisdom and foresight. Putting such policies into practice is easy, almost like squeezing toothpaste. But unwinding them will be like putting the toothpaste back in the tube.

20131122_buck

Promoting Failure

We’ll admit that we’re having too much fun criticizing central bankers, the Colonel Jessups of the Code Red world. But please don’t just take our word for it when we tell you that they’re clueless. Let’s look at what others have written.

In 2009 Congress created the Financial Crisis Inquiry Commission to uncover the causes and consequences of the financial catastrophe that almost brought down the world financial system. They roundly condemned the Federal Reserve:

We conclude this crisis was avoidable. The crisis was the result of human action and inaction…. The prime example is the Federal Reserve’s pivotal failure to stem the flow of toxic mortgages, which it could have done by setting prudent mortgage lending standards. The Federal Reserve was the one entity empowered to do so and it did not…. We conclude widespread failures in financial regulation and supervision proved devastating to the stability of the nation’s financial markets.

Not surprisingly, public confidence in the Fed has plummeted.

Italian Ind production

The Federal Reserve performed disastrously before the Great Financial Crisis, but almost all central banks were asleep at the wheel. The record of central banks around the world leading up to the Great Financial Crisis was an unmitigated disaster. All countries that had housing bubbles and large bank failures failed to spot them beforehand. In the case of England, where almost all major banks went bust (some rather spectacularly!) and required either nationalization or fire sales to foreign banks, the Bank of England never saw the crisis coming. Let’s look at what The Economist has to say about central bank failures:

In 1996 the Bank of England pioneered financial-stability reports (FSRs); over the next decade around 50 central banks and the IMF followed suit. But according to research cited by Howard Davies and David Green in ”Banking on the Future: The Fall and Rise of Central Banking,” published last year, in 2006 virtually all the reports, including Britain’s, assessed financial systems as healthy. In the basic function of identifying emerging threats, ”many central banks have been performing poorly,” they wrote.

According to published reports, the Bank of England only learned about the bankruptcy of one huge bank after another a few days before the actual public announcement. So much for staying on top of the situation. The regulators were captured by the very institutions they were supposed to regulate, with neither the banks of the regulators understanding the serious nature of the problems they were creating with their actions.

20131119_thisismadness

Housing bubbles swelled and burst everywhere: Spain, Ireland, Latvia, Cyprus, and the United Kingdom. Countries that had to recapitalize or nationalize their banks were broadsided by a disaster they did not anticipate, prepare for, or take action to prevent. In the case of Spain, even after the crisis unfolded, the Bank of Spain acted like a pimp for its own banks. It insisted nothing was wrong and proceeded to help its banks sell loads of crap to unsuspecting Spaniards in order to recapitalize the banks. (We apologize for our language, but there is no other word besides crap that properly characterizes selling worthless securities to poor pensioners – well, there are, but they are even less suitable for public consumption).

In fairness, central bankers did save the world after the Lehman Brothers bankruptcy. The money printing that the Federal Reserve oversaw after the failure of Lehman Brothers was entirely appropriate to avoid another Great Depression. But giving them credit for that is like praising an arsonist for putting out the fire he started.

The failure of central banks makes it all the more remarkable that they were given even more responsibility in the wake of crisis. Since 2007 central banks have expanded their remits, either at their own initiative or at governments’ behest. They have exceeded the limits of conventional monetary policy by buying massive amounts of long-dated government bonds, mortgage-backed securities, and other assets. They have also taken on more responsibility for the supervision of banks and the stability of financial systems.

Japan%20Charts%20Abenomics

The Banking Act of 1933, more popularly known as the Glass-Steagall Act, forced a separation of commercial and investment banks by preventing commercial banks from underwriting securities. Investment banks were prohibited from taking deposits. Until it was repealed in 1999, the Glass-Steagall Act worked brilliantly, helping to prevent a major financial crisis. It was replaced by the Graham-Leach-Bliley Act, which ended regulations that prevented the merger of banks, stock brokerage companies, and insurance companies. The American public’s interests were thrown to the wolves of Wall Street, and the Fed and the Clinton administration gave the middle finger to financial stability.

After the Great Financial Crisis, Congress could have simply reinstated Glass-Steagall. The act was only 37 pages long, but it had worked incredibly well. Instead, after an orgy of bank lobbying and Congressional kowtowing to the bankers who had brought the world to the brink of a global depression, Congress passed the Dodd-Frank Act. It is over 2,300 pages long; no one is sure what is in it or what it means; and it has added a dizzyingly complex tangle of regulations and bureaucracy to what should have been a simple, straightforward reform of the financial sector. (The act is so long and complicated that it was nicknamed the ”Lawyers’ and Consultants’ Full Employment Act of 2010.”) You will hardly be reassured to learn that the Federal Reserve’s powers were expanded through Dodd-Frank.

Please note that it was the same banks and investment firms that lobbied to repeal Glass-Steagall in 1999 that so aggressively and successfully lobbied for the Dodd-Frank Act. While there are some features contained in the plan that are good, the basic problems still remain. Industry insiders were able to assure that business as usual could continue. And to judge from their profits, it has done so remarkably well.

Figure 5.4 Major financial legislation: number of pages

Financial legislation

The Fed didn’t need more powers. In the years leading up to the Great Financial Crisis, the Fed already had almost all the tools it needed to prevent the subprime debacle. It simply failed to use them. You could call that lapse nonfeasance, dereliction of duty, going AWOL, or anything other than doing their duty. If you don’t believe you are capable of recognizing a bubble in advance, then all the additional regulations in the world won’t make any difference in preventing a bubble. Dodd-Frank merely gave them more regulations not to enforce. It is the mindset that needs changing, not simply the regulations.

According to the Financial Crisis Inquiry Commission, the Federal Reserve failed to use the tools at its disposal to regulate mortgages or bank holding companies or to prevent the abusive lending practices that contributed to the crisis. The central bank didn’t ”recognize the cataclysmic danger posed by the housing bubble to the financial system and refused to take timely action to constrain its growth,” the report said. It also ”failed to meet its statutory obligation to establish and maintain prudent mortgage lending standards and to protect against predatory lending.”

The most sordid part of the Great Financial Crisis was not the extreme failure by central banks to regulate. The most egregious violation of the public interest came in the form of the massive subsidies and aid the central banks gave to the banking system when the crisis was underway. The great journalist and essayist Walter Bagehot argued in the mid-19th century that during a financial crisis central banks should lend freely but at interest rates high enough to deter borrowers not genuinely in need, and only against good collateral. During the crisis, the Fed and other central banks lent trillions of dollars at zero cost against the shoddiest of collateral. And the Fed went out of its way to provide gifts to Wall Street banks via the back door. For example, when AIG went bust, Timothy Geithner decided that the US taxpayer should pay out credit default swaps to AIG’s counterparties at full price. Goldman Sachs was given a parting gift to $10 billion. Geithner did not even negotiate a haircut. The money went to dozens of banks, many which were not even American. It is no wonder Geithner became well-known as ”Wall Street’s lapdog.”

20131115_SpainGDP

Our good friend Dylan Grice wrote a fascinating piece on what happens when you have too many rules and too little common sense. In a Dutch town called Drachten, local government decided to take out all traffic lights and signs. They hoped people would pay more attention to the road rather than fixate on rules and regulations. They were right. In Drachten there used to be a road death every three years, but there have been none since traffic light removal started in 1999. There have been a few small collisions, but these are almost to be encouraged. A traffic planner explained, ”We want small accidents in order to prevent serious ones in which people get hurt.” Let’s see what Dylan has to say about the lessons for capital markets:

You might be thinking that traffic lights don’t have anything to do with the markets we all work in. But I think they do. Instead of traffic lights and road signs think rating agencies; think Basel risk weights for Core 1 and Core 2 bank capital; think Solvency 2; or think of the ultimate market regulators of our currencies – the central banks – and the Greenspan/Bernanke ”put” which was once imagined to exist. Haven’t these regulators provided the same illusion of safety to financial market participants as traffic safety tools do for drivers? And hasn’t this illusion of safety been even more lethal?

Wouldn’t it be nice if central bankers thought more like Drachten town planners? But central bankers and parliaments prefer extensive rules to a common-sense approach.

Central Banks and GDP growth

Unlike the planners of Drachten, the Federal Reserve and central banks around the world issue extensive sets of regulation, fail to enforce them, encourage everyone to speed, and then when crashes happen they protect as many banks as possible from the consequences of their own actions.

The Federal Reserve is in desperate need of reform. This doesn’t mean that politicians should be deciding interest rates or that banking supervision should be taken away from central banks. But central bankers should be answerable to the public for how they do their jobs. Accountability has been completely missing throughout the entire crisis. Almost all central banks failed to do even the basics of their job. The regulations they created, especially in Europe, made it possible for banks to take massive risk and make huge profits that ultimately had to be bailed out by taxpayers.

They believe the banks and other institutions they were regulating when they showed the models which they created which demonstrated conclusively there was no risk. Everyone, bankers and regulators, believed we were in a new era, for the old rules of common sense didn’t apply. Central bankers didn’t need more rules or regulations. They failed miserably at even carrying out the simple job they had. The regulatory functions of central banks should be treated like those of any other regulatory agency. It is critical that we hold central bankers accountable for their management of the banking system.

Participation%20Rate_0

No Apologies, Only Promotions

One of the most disastrous battles of World War I was the British Gallipoli campaign in Turkey in 1915. It was utterly devastating, leaving more than 50,000 British wounded and almost 100,000 dead. Winston Churchill, first lord of the Admiralty, was one of the architects of the campaign. In the wake of the outcome, he resigned his post to become a soldier in the war. Churchill was a humble man who felt he was at fault. He was honorable. But if Churchill had been a central banker, he would never have had to accept responsibility or resign. He would have kept his job and been given even more far-reaching powers and a big pay raise to boot.

For the past few years, central bankers have been living large. The same people who brought us the Great Financial Crisis are now bringing us a world of Code Red policies and financial repression. The arsonists are running the fire brigade.

Where is the central banker who has apologized for contributing to the crisis or for being asleep at the wheel? Given how disastrous their performance has been, it is extraordinary that the same cast of characters is still running the show. Central bankers are lucky that they still have jobs. As far as we are aware, no central banker was fired for incompetence or mismanagement. Many have retired and are now enjoying generous pensions and highly paid consulting careers advising investment funds as to what their former colleagues might do next.

Labor%20Force

Central bankers have had plenty of time to discuss the financial crisis since 2008, but they have provided only scholarly disquisitions as to what went wrong in the banking crisis, without accepting any responsibility at all. At no time have any central bankers admitted that they might have ignored the warning signs of excessive debt, kept interest rates too low for too long, ignored bubbles in housing markets, failed to regulate banks correctly, or proved themselves even mildly incompetent.

Not only were central bankers not fired, many were promoted instead and given pay raises. Timothy Geithner, who headed the Federal Reserve Bank of New York, not only failed to regulate a host of banks that needed massive government bailouts but was an active apologist for Wall Street banks. For his efforts he was promoted to Secretary of the Treasury under President Obama. In Europe, Spanish central bankers stand out as perhaps the most incompetent ever, having overseen dozens of banks that created the biggest housing bubble in European history and having failed to recognize problems not only before but after they happened. Bankers like Jose Viñals, Jose Caruana, and others were given plum jobs at the IMF and the ECB after being asleep at the wheel in Spain.

Japan debt

Granting extra powers to central banks without a change in the philosophy behind their management is like encouraging an irresponsible teenager. Imagine your teenage son borrowed the family car and crashed it, and instead of punishing him you bought him a new Ferrari to test drive. Conventional monetary policies are like a sturdy old family station wagon, but Code Red policies are like a modified Ferrari 288 GTO capable of hitting 275 miles per hour. Given how spectacularly central banks failed during the Great Financial Crisis, it blows the mind that they’ve been handed the keys to a faster set of wheels.

One last thought. You might get from reading this that we are against rules and regulations. Far from it. We just like very simple, workable rules. Reinstate Glass-Steagall. Limit the ability of banks to create leverage, and require even more capital as they get larger. Banks that are systemically too big to fail are too big, period. Take away the incentive to grow beyond what is prudent for the deposit insurance scheme of a nation to maintain. Allowing bankers to take the profits and then hand taxpayers the losses in a crisis is not good policy, even if it is bolstered by 1,000 pages of regulations written by lawyers and bank lobbyists who then proceed to ”massage” them in order to do what they want to anyway.

But, alas, such hopes may remain dreams deferred until there is yet another crisis and taxpayers are asked to absorb even greater losses (but we can always hope!). So, in the meantime, as prudent investors and managers, we must be aware of the realities we face. The saying in Africa is that it is not the lion you can see that is the danger, instead it is the one hidden in the grass that leaps out at you as you try to escape the one you see. Later we will talk about a few strategies that can help you handle the risks that crouch hidden in the grass.”

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Second this presentation from Grant Williams, investment and financial expert from Singapore, with 28 years of experience of world markets, to get another angle of the same problem. He is now a portfolio and strategy advisor for a hedge fund in Singapore.

“Grant Williams ”pulls no punches” in this all-encompassing presentation as the ”Things That Make You Go Hmmm” author reflects on what is behind us and looks ahead at the ugly reality that we will face when ”the impurities of QE are finally flushed from the system.” Central bankers of today have ”changed everything” he chides, ”in ways that will ultimately end in disaster.” Following extraordinarily easy monetary policies across all of the world’s central banks, Williams explains why ”we are now near the popping point of the 3rd major bubble of the last 15 years,” each bigger than the last. The only way Janet Yellen avoids being at the helm when this ship goes down is to blow an even bigger bubble than Bernanke’s government bond experiment, ”which is highly unlikely.” From how QE works, why many don’t ”feel” wealthy anymore, to the fact that ”the geniuses that gave this thing life, don’t have the guts to kill it,” Williams warns, ominously, ”the bills have come due on the blissful latest 30 years.”

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Returning to a world with which we are familiar is going to require either some real magic on the parts of Draghi, Kuroda, Carney, and soon to be Yellen; or some kind of tornado that sweeps away everything in its path and allows the world to build again from more solid foundations.

20131130_TTMYGH5

Wizened In Oz: ASFA 2013 Presentation. Perth, November 2013

Third, just to remind us that it is the normal, hardworking people that are following the rules that are getting screwed, just take a look at this graph from USA below:

This is why all these welfare systems are going to crash taking the societies with them.

And ALL these SYSTEMS were put in place by politicians KNOWING FULL WELL WHAT THEY VERE DOING and THAT THESE SYSTEM COULDN’T LAST IN THE LONG RUN.

US welfare cliff

http://www.zerohedge.com/news/2013-11-30/other-america-taxpayers-are-fools-working-stupid

“While what little remains of America’s middle class is happy and eager to put in its 9-to-5 each-and-every day, an increasing number of Americans – those record 91.5 million who are no longer part of the labor force – are perfectly happy to benefit from the ever more generous hand outs of the welfare state. Prepare yourself before listening to this… calling on her self-admitted Obamaphone, Texas welfare recipient Lucy, 32, explains why ”taxpayers are the fools”…

”…To all you workers out there preaching morality about those of us who live on welfare… can you really blame us? I get to sit around all day, visit my friends, smoke weed.. and we are still gonna get paid, on time every month…”

She intends to stay on welfare her entire life, if possible, just like her parents (and expects her kids to do the same). As we vociferously concluded previously, the tragedy of America’s welfare state is that work is punished.”

As quantitied, and explained by Alexander, ”the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045.

“We realize that this is a painful topic in a country in which the issue of welfare benefits, and cutting (or not) the spending side of the fiscal cliff, have become the two most sensitive social topics. Alas, none of that changes the matrix of incentives for most Americans who find themselves in a comparable situation: either being on the left side of minimum US wage, and relying on benefits, or move to the right side at far greater personal investment of work, and energy, and… have the same disposable income at the end of the day.”

WELFARE ABUSE: 32 years old Austin, TX welfare recipient says (October 30)

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The example set by the political class/elite and the riots in Britain

11 augusti, 2011

There is much to be said about the riots in Britain. And as usual most of it is not said in the mainstream media. So I thought I give you three pieces that are to the point and that give you some perspective of the latest riots. The focus is on the example and behaviour set by the political class/elites. And why we should not be surprised that “things” like these happen.

And I finish with medias role in this.

                                The Bullingdon Club

“Things got out of hand & we’d had a few drinks. We smashed the place up and Boris set fire to the toilets.”

David Cameron (Prime Minister and leader of the conservative party) recalls his time at Oxford  speaking in 1986. And the Boris Johnson he is talking about is the present Mayor of London.

Nice gang wouldn’t you say?

(My bold and underline)

An Open Letter to David Cameron’s Parents

http://nathanieltapley.com/2011/08/10/an-open-letter-to-david-camerons-parents/

“An Open Letter to David Cameron’s Parents

August 10, 2011

Dear Mr & Mrs Cameron,

Why did you never take the time to teach your child basic morality?

As a young man, he was in a gang that regularly smashed up private property. We know that you were absent parents who left your child to be brought up by a school rather than taking responsibility for his behaviour yourselves. The fact that he became a delinquent with no sense of respect for the property of others can only reflect that fact that you are terrible, lazy human beings who failed even in teaching your children the difference between right and wrong. I can only assume that his contempt for the small business owners of Oxford is indicative of his wider values.

Even worse, your neglect led him to fall in with a bad crowd.

There’s Michael Gove, whose wet-lipped rage was palpable on Newsnight last night. This is the Michael Gove who confused one of his houses with another of his houses in order to avail himself of £7,000 of the taxpayers’ money to which he was not entitled (or £13,000, depending on which house you think was which).

Or Hazel Blears, who was interviewed in full bristling peahen mode for almost all of last night. She once forgot which house she lived in, and benefited to the tune of £18,000. At the time she said it would take her reputation years to recover. Unfortunately not.

But, of course, this is different. This is just understandable confusion over the rules of how many houses you are meant to have as an MP. This doesn’t show the naked greed of people stealing plasma tellies.

Unless you’re Gerald Kaufman, who broke parliamentary rules to get £8,000 worth of 40-inch, flat screen, Bang and Olufsen TV out of the taxpayer.

Or Ed Vaizey, who got £2,000 in antique furniture ‘delivered to the wrong address’. Which is fortunate, because had that been the address they were intended for, that would have been fraud.

Or Jeremy Hunt, who broke the rules to the tune of almost £20,000 on one property and £2,000 on another. But it’s all right, because he agreed to pay half of the money back. Not the full amount, it would be absurd to expect him to pay back the entire sum that he took and to which he was not entitled. No, we’ll settle for half. And, as in any other field, what might have been considered embezzlement of £22,000 is overlooked. We know, after all, that David Cameron likes to give people second chances.

Fortunately, we have the Met Police to look after us. We’ll ignore the fact that two of its senior officers have had to resign in the last six weeks amid suspicions of widespread corruption within the force.

We’ll ignore Andy Hayman, who went for champagne dinners with those he was meant to be investigating, and then joined the company on leaving the Met.

Of course, Mr and Mrs Cameron, your son is right. There are parts of society that are not just broken, they are sick. Riddled with disease from top to bottom.

Just let me be clear about this (It’s a good phrase, Mr and Mrs Cameron, and one I looted from every sentence your son utters, just as he looted it from Tony Blair), I am not justifying or minimising in any way what has been done by the looters over the last few nights. What I am doing, however, is expressing shock and dismay that your son and his friends feel themselves in any way to be guardians of morality in this country.

Can they really, as 650 people who have shown themselves to be venal pygmies, moral dwarves at every opportunity over the last 20 years, bleat at others about ‘criminality’. Those who decided that when they broke the rules (the rules they themselves set) they, on the whole wouldn’t face the consequences of their actions?

Are they really surprised that this country’s culture is swamped in greed, in the acquisition of material things, in a lust for consumer goods of the most base kind? Really?

Let’s have a think back: cash-for-questions; Bernie Ecclestone; cash-for-access; Mandelson’s mortgage; the Hinduja passports; Blunkett’s alleged insider trading (and, by the way, when someone has had to resign in disgrace twice can we stop having them on television as a commentator, please?); the meetings on the yachts of oligarchs; the drafting of the Digital Economy Act with Lucian Grange; Byers’, Hewitt’s & Hoon’s desperation to prostitute themselves and their positions; the fact that Andrew Lansley (in charge of NHS reforms) has a wife who gives lobbying advice to the very companies hoping to benefit from the NHS reforms. And that list didn’t even take me very long to think of.

Our politicians are for sale and they do not care who knows it.

Oh yes, and then there’s the expenses thing. Widescale abuse of the very systems they designed, almost all of them grasping what they could while they remained MPs, to build their nest egg for the future at the public’s expense. They even now whine on Twitter about having their expenses claims for getting back to Parliament while much of the country is on fire subject to any examination. True public servants.

The last few days have revealed some truths, and some heartening truths. The fact that the #riotcleanup crews had organised themselves before David Cameron even made time for a public statement is heartening. The fact that local communities came together to keep their neighbourhoods safe when the police failed is heartening. The fact that there were peace vigils being organised (even as the police tried to dissuade people) is heartening.

There is hope for this country. But we must stop looking upwards for it. The politicians are the ones leading the charge into the gutter.

David Cameron was entirely right when he said: “It is a complete lack of responsibility in parts of our society, people allowed to think that the world owes them something, that their rights outweigh their responsibilities, and that their actions do not have consequences.”

He was more right than he knew.

And I blame the parents.”

Cartoon by Peter Nicholson Source: The Australian

British rioters the spawn of a bankrupt ruling elite

http://www.theaustralian.com.au/news/opinion/british-rioters-the-spawn-of-a-bankrupt-ruling-elite/story-e6frg6zo-1226112640970

 “British rioters the spawn of a bankrupt ruling elite

Theodore Dalrymple,August 11, 201112:00AM

THE riots in London and elsewhere in Britain are a backhanded tribute to the long-term intellectual torpor, moral cowardice, incompetence and careerist opportunism of the British political and intellectual class.

They have somehow managed not to notice what has long been apparent to anyone who has taken a short walk with his eyes open down any frequentedBritish street: that a considerable proportion of the country’s young population (a proportion that is declining) is ugly, aggressive, vicious, badly educated, uncouth and criminally inclined.

Unfortunately, while it is totally lacking in self-respect, it is full of self-esteem: that is to say, it believes itself entitled to a high standard of living, and other things, without any effort on its own part.

Consider for a moment the following: although youth unemployment in Britainis very high, that is to say about 20 per cent of those aged under 25, the country has had to import young foreign labour for a long time, even for unskilled work in the service sector.

The reasons for this seeming paradox are obvious to anyone who knows young Britons as I do.

No sensible employer in a service industry would choose a young Briton if he could have a young Pole; the young Pole is not only likely to have a good work ethic and refined manners, he is likely to be able to add up and — most humiliating of all — to speak better English than the Briton, at least if by that we mean the standard variety of the language. He may not be more fluent but his English will be more correct and his accent easier to understand.

This is not an exaggeration. After compulsory education (or perhaps I should say intermittent attendance at school) up to the age of 16 costing $80,000 a head, about one-quarter of British children cannot read with facility or do simple arithmetic. It makes you proud to be a British taxpayer.

I think I can say with a fair degree of certainty, from my experience as a doctor in one of the areas in which a police station has just been burned down, that half of those rioting would reply to the question, ”Can you do arithmetic?” by answering, ”What is arithmetic?”

British youth leads the Western world in almost all aspects of social pathology, from teenage pregnancy to drug taking, from drunkenness to violent criminality. There is no form of bad behaviour that our version of the welfare state has not sought out and subsidised.

British children are much likelier to have a television in their bedroom than a father living at home. One-third of them never eat a meal at a table with another member of their household — family is not the word for the social arrangements of the people in the areas from which the rioters mainly come. They are therefore radically unsocialised and deeply egotistical, viewing relations with other human beings in the same way as Lenin: Who whom, who does what to whom. By the time they grow up, they are destined not only for unemployment but unemployability.

For young women in much ofBritain, dependence does not mean dependence on the government: that, for them, is independence. Dependence means any kind of reliance on the men who have impregnated them who, of course, regard their own subventions from the state as pocket money, to be supplemented by a little light trafficking. (According to his brother, Mark Duggan, the man whose death at the hands of the probably incompetent police allegedly sparked the riots, ”was involved in things”, which things being delicately left to the imagination of his interlocutor.)

Relatively poor as the rioting sector of society is, it nevertheless possesses all the electronic equipment necessary for the prosecution of the main business of life; that is to say, entertainment by popular culture. And what a culture British popular culture is!

Perhaps Amy Winehouse was its finest flower and its truest representative in her militant and ideological vulgarity, her stupid taste, her vile personal conduct and preposterous self-pity.

Her sordid life was a long bath in vomitus, literal and metaphorical, for which the exercise of her very minor talent was no excuse or explanation. Yet not a peep of dissent from our intelllectual class was heard after her near canonisation after her death, that class having long had the backbone of a mollusc.

Criminality is scarcely repressed any more in Britain. The last lord chief justice but two thought that burglary was a minor offence, not worthy of imprisonment, and the next chief justice agreed with him.

By the age of 12, an ordinary slum-dweller has learned he has nothing to fear from the law and the only people to fear are those who are stronger or more ruthless than he.

Punishments are derisory; the police are simultaneously bullying but ineffectual and incompetent, increasingly dressed in paraphernalia that makes them look more like the occupiers of Afghanistan than the force imagined by Robert Peel. The people who most fear our police are the innocent.

Of course, none of this reduces the personal responsibility of the rioters. But the riots are a manifestation of a society in full decomposition, of a people with neither leaders nor followers but composed only of egotists.”

Corrupt and decaying from top to bottom

http://eureferendum.blogspot.com/2011/08/corrupt-and-decaying-from-top-to-bottom.html

August 10, 2011

“Well, I think we can finally say that social welfarism has utterly failed as a project. The case made to me was that welfare, if nothing else, stopped the great unwashed rioting and looting on the streets. This week demonstrates fairly well that it doesn’t even do that.

We have a state school system producing kids who couldn’t and won’t get a job and a wider population who thinks the Easter Bunny will pay for their retirement, housing and day to day needs. Meanwhile, thanks to the cultural gas chambers we laughingly call schools, British business would rather not employ Brits if there is an alternative.

We have a justice system that serves only itself and its welfare clients, while occasionally slapping down the odd tax payer to ensure their obedience to the state. It is a system that works for the perpetrator, not the victim.

And who are these kids tearing down our cities? It is said they are the disenfranchised who have no stake in ”our society”. Kids who feel there is no reason to comply with the basic rules of civil society because it does not pay dividends. Their obedience is required, but for what?

There’s a kid I know who has not had a proper job in over ten year years. I say kid because, for all that he is a grown man, he has remained kid by way of remaining a client of the state. Cosseted with a head full of silly notions about where money comes from, and all that he is ”entitled” to. The reason I continue to help him is because he has not yet given up. He still wants a job and has not resorted to criminality.

He is one of the rare ones who, every week, goes walking round the industrial estates asking for work, applying for anything he can find. But he has no skills. He has nothing to offer them. He has no work experience of value, no qualifications of value and very little natural ability.

What makes him different from the rest of his generation is his willingness to find work. I think most by now would have quit looking and found a way onto the incapacity benefit system. And after ten years of ceaseless heartbreak, I wouldn’t blame him, and I would actually support such a move.

The continual humiliation of going round and round inside the welfare system, a mere statistic in a creaking bureaucracy, fighting for a pittance that makes the difference between starving or not, erodes the soul. To be routinely told you have nothing of value to offer, even if that’s true, cannot be good.

And what has government done in this regard. They have fed him on false hopes. He has been round the system, on this or that training course and placement scheme. His list of ”qualifications” is now longer than some graduates I know. But these ”qualifications” are a contrivance of government, neither useful to, nor demanded by business.

The kid has what is known as a European ”Computer Driving Licence” without possessing any marketable computer skills. The course is useless, the material is easy and all that is served by it is a fat cheque from the government to the public and private bodies who award such junk.

This all at a time when public spending was at an all time high. We have to face the simple fact that it doesn’t work. Throwing money at the problem simply perpetuates it.

Abandoned by his parents and abandoned by the school system to become just another human life on the scrapheap before it has even begun. I have done what I can to help with remedial education but you can’t deprogramme all that sense of entitlement. That lesson has to be taught first hand. But it will probably never happen for him.

You could certainly say he has no stake in society. He is certainly ”disenfranchised”. Thanks to the mechanisms of the state and his background (generational welfare), his fate was sealed early on. He has every right to be angry and frustrated, which indeed he is, but he is not out looting this week.

He has always, with the intervention of friends and distant family, known the difference between right and wrong. He has been known to shoplift the odd tin of beans on the odd occasion when a giro has not gone as far as feeding him. Anyone who has been on the dole long enough, with no family to speak of, would probably confess to likewise. Who of us would not?

What keeps him from rioting is the hope that eventually something will come up, that he will get a break in life. He is perhaps more optimistic than I would be. All evidence suggest that he will not. Especially not now we’re looking down the barrel of a global market meltdown.

But for every one of him who does know the difference between right and wrong, there is evidently a legion that does not. Or maybe does, but does not care. Obedience will bring them nothing but a miserable, unhealthy, unproductive life. One could even say my young friend is dumb, expecting that he will get somewhere pegging his hopes on the system he finds himself in.

We have just enjoyed ten years of unprecedented wealth and opportunity, but for most of these kids, those opportunities weren’t available to them, not speaking Polish being one of the many reasons. All we have done by maintaining a welfare underclass is subsidise a pressure cooker that is now blowing its top. Much like the banking crisis, we have thrown money at a problem to delay the inevitable, only to feel the consequences much harder later on.

After decades learning bit by bit that petty crime is tolerated and they can get away with it, that underclass is now probing the system to see what else they can get away with. The answer is: a lot. This is simply all our chickens coming home to roost. Welfarism, a useless police force, a court system whose moral compass is spinning round faster than ride at Alton Towers, and state school system which at its very best is unfit for purpose.

While that is obvious to most, the statists are fighting for their agenda. They cannot allow the liberation of the poor. The poor are their livelihoods, their clients, their power base. And so the Left must present it in terms of social division. There are vested interests who, once again are trying to make this about race.

We must not allow them to succeed. These are black and white and Asian kids. They are all victims of the state welfare system. If we allow this to become a race debate as we have the last few times, we will simply get more of the same: more red tape for the police, more equality surveys, more outreach workers and more ghettoisation.

The race riots of decades past are no different to these riots in some senses. They are also the result of state mechanisms not only allowing, but facilitating ghettoisation of society, if not by race and faith, then by class. I have always said that if you subsidise poverty, you will always have poverty. We need to stop it. Welfare at best needs to be a temporary lifeline, not a lifetime habit.

But in amongst the disorder, we also see mass larceny by people with full time jobs. Opportunistic theft by supposedly respectable people. Are we a society in moral decline? Were we ever of high moral fibre? We like to think we are more civilised than other countries because of the values we teach. But we’re not. Order is kept because most people live under the illusion that they will be caught if they do bad things. Now they’ve worked out they won’t be. This theft is brazen and is done with impunity.

We know from experience the police will not investigate, let alone catch thieves on a day to day basis. There is no reason to think this will be any different when the lid has blown off the pressure cooker. There was a time when the police would come to a crime scene and take fingerprints (this was my earliest memory of a police encounter), this in the days before super computers.

Now, for all the police resources they will simply turn up, give you a crime number and refer you to your insurance company. Consequently insurance premiums drive up costs for everyone.

The police have largely abdicated from routine police work. They have virtually given up on enforcing narcotics laws. Whatever your views on drugs, the law is the law. But now we have police making their own minds up about which laws to enforce. The law is so out of step with the people, and so unpopular, that if the police want to maintain a level of order, they have to decide which laws to uphold and which to ignore.

The law has made a mockery of itself. We have a law engine spewing out law after contradictory law. Not knowing which way to turn, enforcement becomes neglected in populist areas and so a quota or a crackdown to suit the political zeitgeist is launched resulting in knee-jerk unpopular policing. That is how we arrive here.

So again we draw the same conclusion: this is a crisis of politics. An establishment that does not know what it is for. But that is hardly surprising when that same establishment has abdicated government to other powers. The rot starts at the top. Our government is dysfunctional, without direction, without ambition, without guiding principles and is mired in the institutional larceny of the parasite class.

The immigration system is creaking, the roads are broken, our armed forces in complete disarray, the DVLA has lost the plot, Social Services are bandits, the welfare system is swamped and our energy grid is rapidly running toward rolling blackouts while parasitic corporates asset strip the country for everything it’s worth. And what do we see in government? Children with their infantile preoccupations following one media bandwagon to the next, fire-hosing more borrowed money at problems they created.

Now the streets are littered with broken glass, and the burnt out husks of buildings still smoulder, we again ask what can government do? The answer is nothing. It has demonstrated beyond any doubt that it is incapable of taking grown-up, difficult decisions. Again, that is reflected in the wider population.

We are flat broke and yet we march to stop cuts. We praise the bravery of the police when they stand idly by while the criminals wreck our cities. We are a nation of infants under the illusion that only government can, or should, come to our aid.

Until we reject this notion, put government back in its place and ask the question of what government is actually for, we will be back here again and again. Government is not a creator of jobs or wealth. And nor should it be. In recent years it has been the biggest obstacle to jobs and wealth.

The only way the bulk of our youth can have a stake in society is if we create opportunities for them. We will not give them opportunities by confiscating wealth and redirecting it to the many foreign corporates who build government-mandated projects. Wealth must be left in the hands of those who earn it, to spend as they see fit and to care for those they find deserving.

But while our masters get fat off the proceeds of big government, it is not in their interests to introduce any meaningful reform. They need to subsidize the poor to secure their power base. If we want significant change we must throw the scraps from their table back at them, boycott government involvement in our lives and starve the beast. We must rid ourselves of them and start doing things for ourselves.

They do this to us because we let them.

And this piece which in all its glaring clarity shows the absurdity of the mainstream media and their total PC view of the world. That is that certain facts, figures, etc. should never, ever be allowed to be mentioned or published, regardless of the circumstances.

And this has nothing to do if it’s black, white, yellow, pink, green or whatever “color”, race or sex, etc. it is. It is about the utter betrayal by journalists and the mainstream old media of their journalistic role, and of all that good and independent journalism was supposed to be.

Instead, the journalist and the media are pushing their political and social agenda.

We have seen this so many times, again and again. On this blog, I have written extensively about press and mass media and their role in this the greatest scientific and political scandal of modern times – the Global Warming Hysteria. And their willing participation in driving and promoting this hysteria.

AT THE SAME TIME, AS THESE MEDIA HAVE TAKEN AN ACTIVE PART in SUPPRESSING FACTS and IS CENSORING AND INTIMIDATING EVERYONE WHO HAS OPPOSED THIS HYSTERIA.

A truly “worthy” goal for the organizations and companies whose goal was supposed to protect and enhance freedom of speech and freedom of expression.

http://blogs.telegraph.co.uk/news/jamesdelingpole/100100339/what-will-happen-to-the-convicted-rioters/

“Funniest interview ever on Sky. Female Sky reporter interviewing a white guy who has had his shops burned. He said to her , the arsonists/looters were all black. She said to him , you can’t say that , there must have been white guys there as well. He thought about and then said , ok they were not all black , i was the only white guy there. Is that ok to say ?

This guy states this with a totally dead pan face without a hint of the pc faux pas.

She again corrects him and states nervously you just cant say they were all black , he responds , but they were i was there.

Unbelievable. The interview describes the state of our society in a nut shell.”

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