Princes of the Yen

In this outstanding documentary, loosely based on Professor Richard Werner‘s book with the same title, we can not only better understand the post WWII japanese economic history, but also comprehend how “independent” central banks were introduced in Asia, first in Japan with the legal modifications induced by the 1989-1990 japanese stock market crash and, later, with the 1997 Asian Crisis, also in the “tiger” economies of South East Asia.

The documentary convincingly argues and documents, that modern central banking serves purposes and objectives that often have very little to do with the welfare of their own nations and a lot to do with projects of economic and social engineering and financial colonization by western financial institutions, most of them based in America. The often perverse role played by the International Monetary Fund (IMF) is compellingly explained.

One of the strengths of the documentary is to explain with precision how the transformation of the social and economic structures of whole countries, and of successful ones by the way, are planned years, in the case of Japan, decades, in advance, how are economic crisis artificially created and how, when crisis finally break out, “independent central banking” and fire sale of domestic assets to foreign investors are systematically imposed on nations that lose their economic independence…forever.

The documentary ends with a warning to Europeans about the true nature of Europe’s own “independent” central bank: the European Central Bank (ECB).

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0,1% > 90%

The increase in inequality in the western world is a theme that is increasingly discussed. Occasionally you come into a statistic that in a very simple way explains the degree of inequality that has been “achieved”. The Economist publishes this chart where it is easily visible that the top 0.1% of the USA population in terms of wealth owns as many assets as the bottom 90%. As the chart ends in in 2013, you can safely assume that the situation is now worse (or “better”)?

“The authors examine the share of total wealth held by the bottom 90% of families relative to those at the very top. In the late 1920s the bottom 90% held just 16% of America’s wealth—considerably less than that held by the top 0.1%, which controlled a quarter of total wealth just before the crash of 1929. From the beginning of the Depression until well after the end of the second world war, the middle class’s share of total wealth rose steadily, thanks to collapsing wealth among richer households, broader equity ownership, middle-class income growth and rising rates of home-ownership. From the early 1980s, however, these trends have reversed. The top 0.1% (consisting of 160,000 families worth $73m on average) hold 22% of America’s wealth, just shy of the 1929 peak—and almost the same share as the bottom 90% of the population.

Reverse Robin Hood explained

In this article published by Zerohedge we can find a cogent explanation of the present process of wealth redistribution from poor to rich, a phenomenon felt everywhere. Whether this process is an intended one, a sort of conspiracy, or just “collateral damage” of unsound monetary and economic policies, is for the reader to decide. This is, in words of Stanley Druckenmiller, one of the most successful hedge fund managers, “the biggest redistribution of wealth from the middle class and poor to the rich ever”. Don’t miss the charts, they are self explanatory. As a summary, the aim of achieving this wealth redistribution is achieved thru several mechanisms:

A – “the rich hold assets, the poor have debt”

B – QE has resulted in a loss of purchasing power for the US dollar. Faced with this problem, consumers in the middle class are taking on more non-housing debt in order to maintain the same standard of living. In addition, the US government – which continues to run a deficit year after year – continues to accumulate debt. Due to these facts, total debt outstanding – aka credit market instruments for all sectors – is at all time highs. More debt means more interest payments and lower savings rates. These trends do not bode well for the middle class consumer.

C – On the other hand, QE has been great for the rich. QE has inflated the prices of assets such as property, bonds, stocks, and non-home real estate.

D – Taxes as a percentage of real disposable income have more than doubled since 1980. This trend has not been kind to the bottom 90%.

E – Median household income has been in a downtrend since the late 90s.

F – The entitlement problem is only going to get worse as more baby boomers leave the work force. Future generations will have to pay for the debt that the old and rich continue to take on.

In conclusion, QE, taxes, income disparity, and entitlements are contributing to “the biggest redistribution of wealth from the middle class and the poor to the rich ever” If things continue the way they are going, then millennials and future generations will pay the price:

Germany says “Ja” to Bitcoin

Despite strong opposition by the american government, Bitcoin appears to be winning some important battles. You can read more about the virtual currency in Bitcoin a virtual currency that defies the NWO.

Bitcoin recognized by Germany as legal tender @ >CNBC.com Some excerpts:

“Virtual currency bitcoin has been recognized by the German Finance Ministry as a “unit of account”, meaning it is now legal tender and can be used for tax and trading purposes in the country.”

“Bitcoins is not classified as e-money or a foreign currency, the Finance Ministry said in a statement, but is rather a financial instrument under German banking rules. It is more akin to “private money” that can be used in “multilateral clearing circles”, the Ministry said.”

” “We should have competition in the production of money. I have long been a proponent of Friedrich August von Hayek scheme to denationalize money. Bitcoins are a first step in this direction,”said Frank Schaeffler, a member of the German parliament’s Finance Committee, who has pushed for legal classification of bitcoins.”

Bitcoin: the Berlin streets where you can shop with virtual money @ The Guardian Some excerpts:

“Florentina Martens has had the same experience since opening her Parisian-style cafe Floor’s two months ago just a couple of streets away. “There is not a prototype Bitcoin payer,” she said. “It’s random people. Not only nerds, let me put it that way.” ”

” “It’s an easier way of digital payment than credit cards, which cost me a lot of money as a business and to which I’m forced to sign up for years,” she says.”

”  “The truth is, I really want to believe in it. And I like the fact that Bitcoin scares people in suits, because if this thing were to really take off, it would bankrupt a lot of bankers.” ”

“Crypto-currency experts meeting Patzer at a recent Bitcoin soiree in the back of Floor’s cafe prefer to talk of the recent dip as a correction rather than a crash, which has brought Bitcoin back to a realistic price while it has retained its underlying value.” ”

” “I would look at these spikes and corrections as the birth pangs of an entirely new system,” said Mike Gogulski, a Bitcoin developer. “It represents an opportunity to transform the way we deal with the flows of wealth and human energy.” “

TYR reads “Survivorship Bias”

Survivorship Bias @ You Are Not So Smart in this delicious short essay David MacRaney, author of “Your Are Not So Smart”, explores survivorship bias, specially harmful when trying to “learn lessons” in order to improve our chances of success. A short biographical sketch of a forgotten genius, Abraham Wald, is a not minor plus of reading this article. As David MacRaney says:

The Misconception: You should study the successful if you wish to become successful.

The Truth: When failure becomes invisible, the difference between failure and success may also become invisible.

Some excerpts:

“Colleges and conferences prefer speakers who shine as examples of making it through adversity, of struggling against the odds and winning. The problem here is that you rarely take away from these inspirational figures advice on what not to do, on what you should avoid, and that’s because they don’t know. Information like that is lost along with the people who don’t make it out of bad situations or who don’t make it on the cover of business magazines – people who don’t get invited to speak at graduations and commencements and inaugurations. The actors who traveled from Louisiana to Los Angeles only to return to Louisiana after a few years don’t get to sit next to James Lipton and watch clips of their Oscar-winning performances as students eagerly gobble up their crumbs of wisdom. In short, the advice business is a monopoly run by survivors.”

“It might seem disheartening, the fact that successful people probably owe more to luck than anything else, but only if you see luck as some sort of magic. Take off those superstitious goggles for a moment, and consider this: the latest psychological research indicates that luck is a long mislabeled phenomenon. It isn’t a force, or grace from the gods, or an enchantment from fairy folk, but the measurable output of a group of predictable behaviors. Randomness, chance, and the noisy chaos of reality may be mostly impossible to predict or tame, but luck is something else. According to psychologist Richard Wiseman, luck – bad or good – is just what you call the results of a human beings consciously interacting with chance, and some people are better at interacting with chance than others.

“Wiseman speculated that what we call luck is actually a pattern of behaviors that coincide with a style of understanding and interacting with the events and people you encounter throughout life. Unlucky people are narrowly focused, he observed. They crave security and tend to be more anxious, and instead of wading into the sea of random chance open to what may come, they remain fixated on controlling the situation, on seeking a specific goal. As a result, they miss out on the thousands of opportunities that may float by. Lucky people tend to constantly change routines and seek out new experiences. Wiseman saw that the people who considered themselves lucky, and who then did actually demonstrate luck was on their side over the course of a decade, tended to place themselves into situations where anything could happen more often and thus exposed themselves to more random chance than did unlucky people. The lucky try more things, and fail more often, but when they fail they shrug it off and try something else. Occasionally, things work out.

““The harder they looked, the less they saw. And so it is with luck – unlucky people miss chance opportunities because they are too focused on looking for something else. They go to parties intent on finding their perfect partner and so miss opportunities to make good friends. They look through newspapers determined to find certain type of job advertisements and as a result miss other types of jobs. Lucky people are more relaxed and open, and therefore see what is there rather than just what they are looking for.” – Richard Wiseman in an article written for Skeptical Inquirer”

Survivorship bias also flash-freezes your brain into a state of ignorance from which you believe success is more common than it truly is and therefore you leap to the conclusion that it also must be easier to obtain. You develop a completely inaccurate assessment of reality thanks to a prejudice that grants the tiny number of survivors the privilege of representing the much larger group to which they originally belonged.”

“If you spend your life only learning from survivors, buying books about successful people and poring over the history of companies that shook the planet, your knowledge of the world will be strongly biased and enormously incomplete. As best I can tell, here is the trick: When looking for advice, you should look for what not to do, for what is missing as Phil Plait suggested, but don’t expect to find it among the quotes and biographical records of people whose signals rose above the noise. They may have no idea how or if they lucked up. What you can’t see, and what they can’t see, is that the successful tend to make it more probable that unlikely events will happen to them while trying to steer themselves into the positive side of randomness. They stick with it, remaining open to better opportunities that may require abandoning their current paths, and that’s something you can start doing right now without reading a single self-help proverb, maxim, or aphorism. Also, keep in mind that those who fail rarely get paid for advice on how not to fail, which is too bad because despite how it may seem, success boils down to serially avoiding catastrophic failure while routinely absorbing manageable damage.”

TYR February 13 2013 reads: Greece imploding

While financial markets continue their upward march, sustained and pushed by unprecedented money creation by most of the western world’s central banks, under the surface, Greece’s economy continues in free fall.

Professionals increasingly failing to pay their tax dues @ Ekathimerini “More and more professionals are withholding value-added tax from the authorities in a bid to maintain cash flows.”…”Financial Crimes Squad (SDOE) inspections last months led to fines imposed for the nonpayment of VAT and the tax on salaried service growing by 51 percent within a period of just one year: In January 2013 the fines amounted to 35.3 million euros, compared to 23.3 million in January 2012.”…”The question now is how these fines will be collected, as experience to date shows that despite the imposition of fines, debtors often fail to turn up to settle their accounts, at the expense of public coffers.”

Construction activity is crumbling @ Ekathimerini “Construction activity in Greece is in free fall, according to data released yon Tuesday by the Hellenic Statistical Authority (ELSTAT). In November 2012, total activity dropped 66.6 percent year-on-year in terms of building permits, 63.3 percent in terms of surface area and 65.4 percent in terms of volume.”

PPC losing millions due to power theft @ Ekathimerini “The phenomenon of electricity theft has grown out of control due to the economic crisis and the inability of many to pay their bills.”…”power theft… has now spread across the country and into expensive areas too, including the northern suburbs of Athens.”
Greece and the troika, dancing in the dark @ Ekathimerini In this article, Nick Malkoutzis argues for a relaxation of the targets imposed by the “troika” on the greek government. He bases his case on an IMF paper concluding that the effects of spending cuts on GDP have been deeper (a higher multiplier) than previously forecast. After two bailouts, it is difficult to assume there will be enough goodwill, or money, left in Germany, the country that in the end is paying most of the bills, for a third one. Some excerpts:
 

“As wages shrink and jobs disappear, nobody is looking forward to the prospect of paying more into public coffers.”

“…the IMF assumed the fiscal multiplier of spending cuts and tax hikes was around 0.5 percent of gross domestic product – in other words, austerity measures equivalent to 1 percent of GDP would produce a 0.5 percent decline in economic activity. The two economists, however, discovered that the real fiscal multiplier was between 0.9 and 1.7 percent of GDP.”

“In Greece’s case, if the accuracy of forecasts is in doubt, surely so must the attainability of targets. Given that this year’s fiscal targets were agreed before the full extent of Blanchard’s research was known, isn’t there a case for revising the goals? In the wake of the admission over the fiscal multiplier, what is the troika’s reasoning behind still favoring a “strong and hard” approach that will see Greece implement some 9 billion euros’ worth of measures (approximately 5 percent of GDP) this year?”

“…The property tax that Stournaras defended this week seeks to raise 3.2 billion euros, six times what Greeks paid in 2009. Greece’s property market is in a state of gradual collapse, construction is on its last legs and consumption is plummeting. Under normal conditions, Stournaras would have rejected out of hand the idea of imposing this level of taxation. But Greece does not find itself in normal circumstances. The tax is not being imposed as part of a recovery plan, it is designed as a tool to help Greece meet the targets agreed with the troika.”

“Speaking in Washington last month, Blanchard outlined that one way of providing relief for countries under a fiscal adjustment program could be to focus on cyclically adjusted data, which factors in the impact of recessions, rather than the nominal fiscal statistics. “We have recommended that countries shift from nominal targets to structural targets,” he said. “Or another way of saying we have suggested that the countries allow automatic stabilizers to work, accepting the fact that fiscal outcome will not be quite what was hoped for.””

“However, as Blanchard acknowledged, it all comes back to the issue of how generous or patient lenders are prepared to be. “The slower you go, the more financing is needed, and there’s not infinite financing,” he said.”

“As Greece attempts to get the program and its economy back on track this year, the warning signs are there that things could go disastrously wrong if all sides persist with the formula that’s been in place since 2010. It was reported this week that state revenues for January were 7 percent below the target and 16 percent lower than last year, as consumption continued to plummet.”