.. Nixon: "I am not a crook!" ...
.. but Oh, yes he was ...
.. as are all his successors
"Earlier stock markets across Europe had all closed more than 3 per cent down as economists warned of the chance of a fresh global financial crisis sparked by the fear of European debt contagion spreading to Italy and a lack of confidence in the US economy."
Comment 1: Why are economists warning? No-one in this 'business' does anything without a plan, so why talk it down? Against all rules.
Comment 2: Please explain "European debt contagion spreading," i.e. exactly how/why what happens in one country (Greece, say) may affect another (here, Italy)? All these countries (PIIGS + B, UK, more?) are being *pushed* into crisis.
"Even so-called defensive stocks such as Telstra and Woolworths were down 2.4 and 2.7 per cent respectively, as investors fled shares for cash."
Comment 3: For every seller there's (still?) a buyer.
Comment 4: How does anyone know what drives the herd? Except to say that fear-mongering works.
What we know:
1. Since the US 'went broke' = off gold on August 15, 1971, effectively all currencies have been 'fiat;' money being created by the stroke of a pen, or these days on a computer keyboard (= 'printing').
2. The $US became the world's reserve currency, effectively backed not by gold but oil. Almost all oil is denominated in $US, notable exceptions being (temporarily) Iraq, say, and see what happened to them.
3. It is a 'normal' function of central banks to determine the quantity of money on the 'Goldilocks' principle, i.e. neither too few nor too many, but 'just right;' determined as a function of inflation. The RBA sets a 'headline' target of 2-3% - but why not zero?
4. The inflation figures are fiddled; substituting lower-cost items for increasers, like chicken instead of beef (end result for pensioners = tinned cat-food, anecdotally.) They also omit rents, as if sleeping under a bridge was an 'acceptable substitution.'
5. Asset inflation cannot be 'quarantined,' however much they might try; $s are fungible and any/all inflation means too many *printed* $s.
6. After inflating madly, Aus house-prices seem to have hit a 'natural' = affordability limit. (Inflating mostly thanks, but "No, thanks!" to Howard/Costello's ½CGT; Aus house-prices went through the roof, as are *privatised* electricity costs, etc..)
7. All bubbles eventually collapse, this having been known at least since 1929. Perhaps this stock-market 'correction' is a true collapse, but again, why are most/all commenters talking a crash *up*?
1. 'Real' $s: There are none. Under 'fractional reserve banking,' the trading banks have 'real money' reserve-accounts (originally share capital, say) in the 'national reserve bank,' and are allowed to create some multiple of 'credit money' which they then loan out to customers, typically businesses (or home buyers.) All money loaned attracts some % = interest. Since $s are 'fungible,' no distinction can now be made between 'real money' and 'credit money;' all $s in circulation attract interest - even when deposited as a credit, any interest paid by banks is (on average) less than that charged on loans. Apart from minimal and reducing bank-overheads (function/jobs off-shoring, down-sizing, going ever-more lean&mean), loan-interest is a stealth tax, passed on to us, we the people, disguised as a 'cost of business.' Nevertheless, stealth or not, a tax is a tax, and fiat-$s cost *nothing* to print.
2. Speaking of taxes, ever since TINA-Thatcher and voodoo-Reagan, politicians have been cutting taxes, mostly off the rich, and at the same time cutting public services and privatising public enterprises, most despicably needed utilities like water, sewage & electricity = neoliberalising. The absolute worst is pushing privatised medicine; do anything 'for profit' and you will get profit before performance. All knowingly, cynically done; and when the doing gets tough, hand the job to the so-called 'progressives,' since they purport to be the people's friends; when progressives neoliberalise, the stunned people are more likely to 'accept' it. Note that bipartisan = un- & anti-democratic.
As a truly disgusting example, see the latest 'stunt' by Obama; cutting deeply into welfare whilst hardly touching the military, let alone requiring the filthy rich to shoulder even part of their responsibility-share.
3. Whatever; any idiot can cut taxes (see Abbott), but cutting services = neoliberalising takes longer so there's a lag; voila: Debt crises -> wicked austerity. All done on purpose.
Intermezzo: Anticipating Perkins below, the US plus hangers-on are increasingly attacking innocents, mostly Arab/Muslims in the middle-East, not by happenstance where lots of oil is, plus an illegitimate rogue state living on stolen land. These aggressive invaders, short-handed as the US-M/I/C/4-plex, their accessory-thugs NATO and the I/J/Z-plex are now killing with impunity to steal resources = oil, land & water.
The 4 stands for 4th estate, aka the corrupt & venal MSM. Even publicly financed broadcasters are 'in it' = relaying and *actively assisting* the propaganda, 'perfectly' typified by reporting on the vicious, illegal NATO bombing of Libyan TV; the newsreaders saying (my paraphrase; transcripts *not* available): "NATO had to destroy Libyan TV to protect civilians." Risible = criminal, the bombing and the reporting both.
Apropos the AusBC, it/they have drastically reduced the opportunity for feedback/comment; as one example of many, the unleashed-forum commenting time now cut to minimal tending to useless, favouring the quick-draw pro-war, pro-Z & pro-crime propagandist-trolls.
But what is the end-game? People going broke everywhere, following deliberately caused unemployment; the wages/salaries portion dropping like stones, govt-service reductions, costs soaring, always fewer $s for the people, going on ever increasingly expensive items.
Perkins' "Economic Hit Man" explains the process (IMF SAPs; forced onto 3rd world, same process being done *voluntarily* by so-called democracy-leaders); then when all else fails, send in the military - Afghanistan, Iraq, Libya, etc.; when Merkel dragged the IMF into the EU-crisis, I knew she was being bad, and nothing good would result. See 'as are all his successors.'
Most people's money has now long been committed; forced savings being their only possible savings, and most of the forced savings landing in the stock-exchange (or investment-housing for the better-off savers.) If stock- and house-prices now crash, affected savings will be wiped out - the people will have less for the future, as well as being on the limit now. Who's winning? Not us, we the people. Yet the financial system is presumably working 'as designed,' by the 'geniuses' in parliaments, Wall St & (corrupt!) universities. It must be so, since they *made* it so.
And the banks, with their fat-cat shareholders, are already obscenely rich - on printed = intrinsically worthless fiat-$s. Yet they still want more, and will probably get it - shortly after this current little 'shake-down' subsides.
the economy is basically sound!
rule: never talk it down
but not this time
.. Nixon: "I am not a crook!" ...