Request for comment: Collapse of the U. S. A.

[New Nexus]

Huguenot Wrote:

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> "When empires come to the end of their natural

> life ugly things happen."

>

> SDR is 40 years old. You can't use it as an

> illustration of the current challenges unless you

> were willing to claim the same in '69.

>

> As for 'opinion' - that's ridiculous. You claimed

> it was a reserve currency to supplant the dollar

> that Russia and China would refuse. That's like

> claiming the UK is a country between Australia and

> Fiji. It's incorrect on so many levels it can't be

> classed as a valid opinion.

Once again, I know your views regarding SDR, I also know the history of the SDR, thank you.

We will have to disagree.

[LadyDeliah]

I agree that it is a systemic problem, not just a few bad apples. I believe the whole system is rotton, but that is not exactly what Stiglitz said. He seems to have some faith in the system still, but thinks regulation will fix it.

As you know, I think we need wholesale revolution, but am happy with strict regulation for now!

Here is the link to his evidence from where I got the quote: http://www2.gsb.columbia.edu/faculty/jstiglitz/Crisis.cfm

Click on the first link. He does say there was deception.

[Huguenot]

You'll need to find the quote LD.

I can see how he says the systems were decpetive, I can't see where he says the people were deceptive.

That's different to the claims made on this thread where the words liar, cheat amd fraud were used to address individuals.

[Huguenot]

"Once again, I know your views regarding SDR, I also know the history of the SDR, thank you."

It's not a view, it's a fact. SDR is not a currency, and can never be a reserve currency.

[New Nexus]

To help people unfamiliar with SDR?s

What are SDRs?

SDRs were created in 1969 as an international monetary unit to support the Bretton Woods system of fixed-exchange rates. The value of the SDRs is set daily using a basket of four major currencies: the euro, Japanese yen, sterling, and US dollar. The SDRs are distributed between members in proportion to the subscription fees (or quotas) the country pays into the fund. "SDRs are counted as part of government reserves and may be used as collateral for borrowing, meaning that their creation in effect can mean increasing the global money supply," says Alan Beattie in the FT. Although they've been around for a while, SDRs have been largely dormant, used as little more than an accounting unit between governments and the IMF, says Beattie. That is, up until now.

What's changed?

"A single clause in Point 19 of the communiqu? issued by the G20 leaders amounts to revolution in the global financial order," says Ambrose Evans-Pritchard in The Daily Telegraph. In agreeing to support an SDR allocation that will inject $250bn into the world economy, "the G20 leaders have effectively activated the IMF's power to create money and begin global 'quantitative easing' [printing money], putting a de-facto world currency, outside the control of any sovereign body, into play".

[LadyDeliah]

I think there has been reference to the requests for criminal charges to be brought against various US bankers and/or regulators earlier, but Stiglitz is not a prosecutor, he is an economist and looked at the effects of actions on the economy.

He mentions deceptive practices that where widespread in the majority of the banks in the UK, but also mentions a minority who tried to do the right thing, so the inference there is that it was down to individual banks and bankers to look to their own consciences.

He also alludes to the US interference in overseas economies via the IMF and US Treasury to offset the US bad banking practices:

We should remember this is not the first time that our banks have been bailed out, saved from bearing the consequences of their bad lending. While this is only the second major bailout in twenty years in the US, past responses to financial crises abroad ? in Mexico, Brazil, Russia, Indonesia, Thailand, Argentina, and many others ? were really bailouts of American and European banks, at the expense of taxpayers in these countries, engineered through the bankers? allies at the IMF and the US Treasury. In each of these instances, the banks had made bad lending decisions, lending beyond the ability or willingness of borrowers to repay.

Here is another one:

loans made to uninformed individuals beyond their ability to pay, designed to generate bankers fees as they robbed the poor of the life savings, that began the unraveling of our financial system. Our bankers discovered that there was money at the bottom of the pyramid, and they did everything they could to make sure that it moved to the top.

Stiglitz doesn't call them liars or cheats, but what does engaging in deceptive practices, robbed of their savings or engineering bailouts of US banks by foreign tax payers, say to you? I agree that the system set up by the US and UK governments after lobbying by the banking bosses, encouraged deceptive practices, but that does not excuse the individual bankers who got caught up in the feeding frenzy.

I was just carrying out orders doesn't cut it.

They made millions from their deceptive practices and now the regular people are paying the price for their disgusting bonuses.

You would advocate that the people who took part in the riots should take personal responsibility for their actions during the riots that lasted for a few days.

I would suggest that the individual bankers who took part in the deceptive practices that have been bleeding the global economies dry for the past 30 years, should also take responsibility for their actions.

One of my favourite quotes from Stiglitz's article is this:

Underlying all of these failures is a simple point, which seems to have been forgotten: financial markets are a means to an end, not an end in themselves.

[Huguenot]

@NN.. And?

All of that says that the intergovernmental loan system has made more loans available. It doesn't make it a reserve currency.

If any of the transations were 'real' it would have to be converted in to a... currency.

It's the same as two people exhanging bills at the bar - "the last round cost me 13 quid, and this one only cost 10 quid - you owe me three, you can pay me any way you want or in kind, is that okay?"

Of course it's OK - The Russians and the Chinese don't suddenly launch their nukes.

[Huguenot]

@LD... So you've turneed away from tarring everyone with the same brush then?

Small mercys....

[LadyDeliah]

Huguenot Wrote:

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> @LD... So you've turneed away from tarring

> everyone with the same brush then?

>

> Small mercys....

When did I tar everyone with the same brush?

[Huguenot]

Let's now return to the original premise - that the world has a catastophe in the offing which is going to leave us all on our knees.

We've amended that to the fact that there is a banking community that needs reining in, increased regulation and a change of incentives?

[LadyDeliah]

And I don't see how examining the issues of the global economic crisis is tarring anyone with any brush.

[LadyDeliah]

That is your restrictive interpretation of the problem Hugo.

I have stated that I think the crises are many and interlinked.

[New Nexus]

Huguenot Wrote:

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> @NN.. And?

>

> All of that says that the intergovernmental loan

> system has made more loans available. It doesn't

> make it a reserve currency.

>

> If any of the transations were 'real' it would

> have to be converted in to a... currency.

>

> It's the same as two people exhanging bills at the

> bar - "the last round cost me 13 quid, and this

> one only cost 10 quid - you owe me three, you can

> pay me any way you want or in kind, is that

> okay?"

>

> Of course it's OK - The Russians and the Chinese

> don't suddenly launch their nukes.

Selective blindness hey.

?putting a de-facto world currency, outside the control of any sovereign body, into play".

Not a reserve unit yet.

A few more communiqu?s and abracadabra.

It was not a currency once upon a time.

[Huguenot]

Oh bollix NN, that's just one journalists's spin. No greater value than that.

It's not a currency now - it's a pledge to honour debt in any currency. It doesn't give a shit about anything else.

You were using it as justification for the collapse of the world economy, now you're clutching at straws.

@LD I was referring to any claim that you or others may have made that 'they're all liars and frauds', I'm sure you don't want me to trawl through your posts (it probably won't take long) to where I find sweeping comments about bankers or politicos?

[New Nexus]

The great Oz has spoken, no, no, don?t look at the man behind the curtain.

Sorry Oz all your knobs, buttons and levers are not working anymore.

Better known to us as governance, regulations and propriety.

[LadyDeliah]

I don't write that kind of sweeping statement usually, so I think you may have problems finding anything, but trawl away Hugo.

In anycase, here is Stiglitz saying that the system stinks:

http://video.cnbc.com/gallery/?video=1435168723

[New Nexus]

Huguenot Wrote:

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> Oh bollix NN, that's just one journalists's spin.

> No greater value than that.

>

> It's not a currency now - it's a pledge to honour

> debt in any currency. It doesn't give a shit about

> anything else.

>

>

Just like, ?I promise to pay the bearer on demand the sum ??

[Huguenot]

@LD

"The teenagers are not politically sophisticated, but they understand that the MPs had their hands in the till, the papers acted illegally and the bankers ripped everyone off."

That's pretty sweeping eh?

@NN

"Just like, ?I promise to pay the bearer on demand the sum ??"

So let me get this clear, you don't like fractional reserve banking?

[New Nexus]

Huguenot Wrote:

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> @LD

>

> "The teenagers are not politically sophisticated,

> but they understand that the MPs had their hands

> in the till, the papers acted illegally and the

> bankers ripped everyone off."

>

> That's pretty sweeping eh?

>

> @NN

>

> "Just like, ?I promise to pay the bearer on demand

> the sum ??"

>

> So let me get this clear, you don't like

> fractional reserve banking?

No I don?t like fraud and corruption, that passes itself off as banking.

[LadyDeliah]

Ok, that's quite sweeping, but the main point of that discussion was an opinion piece on the rioting and the bankers point was something mentioned in passing, so I apologise if in that instance I did not write a fully referenced piece about all incidental points mentioned.

[Huguenot]

Much love LD :)

[LadyDeliah]

Lol, well I hope you try some of my good friend Stiglitz's articles for your bedtime reading and expand your view of world economics dear.

Here is a nice, more up to date radio interview of his that you might enjoy: http://www.thetakeaway.org/2011/aug/23/nobel-laureate-joseph-stiglitz-americas-lost-decade/.

And just to prove I'm not a one trick pony, I'll be back with some other lovely economics from Derek Wall, another economist I quite like reading.

[Huguenot]

"So let me get this clear, you don't like fractional reserve banking?

"No I don?t like fraud and corruption, that passes itself off as banking."

Fractional reserve banking is not inherently corrupt or fraudulent. It's necessary to allow society to invest in activity now that will creat a future return. That's how you build a factory before it manufactures anything.

As a result it doesn't hold the reserves for the currency it transacts - it's simply owed that cash by other people. This is a casual assumption that we make about the banking environment, and enables, for example, small business loans.

It's possible to argue that there have been too many loans made recently that are unlikely to be repaid, but this is a subjective perspective. Any loan is a risk.

It doesn't make it corrupt or fraudulent by definition.

[Huguenot]

@LD I have been at pains to point out that the banking community needs some attention. My argument is unrelated. I'm simply pointing out that 'in need of attention' does not equal 'unmitigated collapse of life as we know it'.

[LadyDeliah]

No, I agree, but combined with impending economic and ecological collapse, I think it's all going tits up soon! I just hope it's not in the next 2 years because I have things I want to do!