Where does money come from?

How the money manipulators are ruining you

Part 1

Here’s a full length documentary by Paul Grignon explaining how it’s done. It’s 40+ minutes long, but if you’re pressed for time the first 10 minutes or so will be enough to get you hot under the collar. If you’re not into video, read my summary below.

Money As Debt:

this is a dummy line break
this is a dummy line break

Feel better now?

I didn’t think so,

Most people have trouble believing this stuff. Here’s a recent brief article in The Guardian lifting the corner to look at the sorry truth. Generally speaking, the news media don’t expose this outrage. Too many big players are reliant on the system to flourish and to maintain themselves in the ranks of the 1%.

The Guardian article refers to this document from the Bank of England which, surprisingly, confesses to the hidden-in-plain-sight dirty secret.

Here it is in a nutshell

Continue reading “Where does money come from?”

The Story of Stuff

Annie Leonard’s been wondering…

The video which resulted from Annie’s deliberations is a must see for everyone who thinks it’s a good idea to keep our planet viable. It’s a must-see even if you don’t give a stuff about the planet but you just need an excuse to get off the madcap consumer roller coaster.

How did big business create a system that puts consumer products on the shelf for a fraction of their actual cost? We’ve all wondered about it. Annie went to find out and it changed her life.

She tells you in an entertaining and disturbing way how this obscene system started, how it functions, and why—one way or another—it cannot last. She’ll tell you the real cost of our addiction to stuff and why your grandchildren will pay for it tomorrow just as the world’s poor are paying for it right now.

this is a dummy line break
this is a dummy line break

Please visit Annie and The Story of Stuff

Click right here to go to the Story of Stuff website where there’s a lot more stuff about our obsession with stuff. Annie has become  the Executive Director of Greenpeace USA recently, so has less hands-on role at the website.

How the 1% are cleaning out the rest of us: Part 2

Talk about hoisting yourself by your own petard!

Trickle down theory seems to have struck a roadblock
The graphs at the bottom of this post are from the New York Times. They’re self explanatory. What isn’t clear is how the movers and shakers of the world can be so bloody stupid. The figures are for the USA but it all applies here in New Zealand and throughout most of the world.

At the top of the graphic you can see that for the last 30 years wages have pretty much stayed the same relative to inflation for 82% of the workforce. The top 18% however, have creamed it. (The top 1% and even more avaricious 0.1% have really creamed it; we’ll get to them at another time.) As a result, in order to be able to buy all the flash cars, flat screen TVs, the ever more fancy houses, and the iPads  that media advertising bombards we peasants with, we’ve been borrowing up to our ears. Hence the current mess, and a situation where the people doing the lending are almost as deep in it as the borrowers.

Almost, but not quite. In some cases, not at all. (Continued below the graphic).

dummy line break

how the 1% are screwing the rest of us

Monumental stupidity from the top

What is mind-bogglingly and infuriatingly stupid about all this is that–as you can see from the second graph–it’s all happened before and it was perfectly clear that it was going to happen again. Not only that, it happened in the previous century (the 1800s) as well! More than once!

Sheesh.

Here’s how it works–or not

Continue reading “How the 1% are cleaning out the rest of us: Part 2”

How the 1% are cleaning out the rest of us: Part I

Occupy Wall Street posterThe Occupy Wall Street movement seems to be gaining momentum and there are people with a good track record of predictions—Dr Ravi Batra for instance—who believe that the time has come for such a movement to change the world. The non-productive money manipulators have broken the free market capitalist model and I’m hoping that pay-back time is nigh.

Where I part company with the Occupy Wall Street folk is that I don’t believe capitalism is the problem. Capitalism works well when adequately contained. It’s the failure of governments to regulate it that’s the problem.

Here is one of the ways the fat cats are creaming the system and destroying the world’s economy for the rest of us.

“Window Dressing”

The money managers borrow short term and use the loans to finance big risks without their shareholders’ knowledge. Then, prior to balance sheet publication, they sell the most toxic of those investments and pay back those borrowings. With luck, they make a killing on the dodgy assets without getting caught. The managers’ bonuses are earned on short-term gains, so their interests are not in line with the interests of their clients who want medium to long term gains on their investments.

The deceptive practice of some mutual funds, in which recently weak stocks are sold and recently strong stocks are bought just before the fund’s holdings are made public, in order to give the appearance that they’ve been holding good stocks all along.

The deceptive practice of using accounting tricks to make a company’s balance sheet and income statement appear better than they really are.
Investorwords.com

From The Wall Street JournalIt doesn’t always pay off as MF Global Holdings may discover very soon. The Wall Street Journal found such activity among “primary dealers,” major banks and securities firms that trade directly with the Federal Reserve are borrowing big during the financial quarter to invest in short-term high-risk investments to maximise their bonuses.When the end of the quarter looms they temporarily reduce borrowings by substantial amounts to hide their dodgy dealings.
Furthermore, the Journal reported in 2010: WSJ uncovered this dodgy practice at MF Global Holdings Ltd, who are filing for bankruptcy protection.

A Journal analysis of financial data from 18 large banks known as primary dealers showed that as a group, they have consistently lowered debt at the end of each of the past six quarters, reducing it on average by 42% from quarterly peaks.

Wall Street Journal 2011

Unfortunately the gambling hasn’t paid off this time:

From Reuters:

Call it the mother of all margin calls: Up to 50,000 former customers of bankrupt broker MF Global must find some $1 billion in additional collateral almost overnight, or be forced out of their trades.

Next: How the 1% are cleaning out the rest of us: Part 2