Papering over the cracks

The most defining thing about the economic crisis is the lack of leadership. As you would expect leaders of different nations are pushing policies that they perceive will benefit their nations. They are trying to paper over the cracks and the paper is being torn as the cracks widen. No one is taking an approach which seeks to fix the structure which will enable the cracks to properly mended and prevent their reoccurrence.

Greece and Italy have appointed as leader “technocrats” who are expert in papering over the cracks, rather than engineers who will examine the structure carefully. The failure of Greece and itlay, the lack of success of the United States and the rest of the European Union is a systemic failure. Newer economies like China and India are not structurally more effective, but structurally less complicated and it is always easier to prosper while your competitors are failing.

It seems that all the politicians are frightened to speak out as to the reasons for structural failure; the truth is that the economies that have been built are too complex and too geared towards inventing money by devices rather than by work and effort in making things or doing things.

When Greece joined the Euro it had to prove it met the criteria for doing so. It “proved” that it had met the criteria by hiring one of the large investment banks, who with arguments and complexity proved what was un-provable and the technocrats believed the proof. I cannot now recall the firm they hired; that firm has quietly pulled up the drawbridge on its activities and does not publicise its work now.

I think that the way to get economies prospering again must involve a return to fundamental principles of banking.  We need to prevent banks “investing” in financial products that cannot be understood – no, we need to go further than that; they should not invest in financial products that cannot be explained in a few hundred words write large on a single sheet of paper. After all, the banks are not investing their own capital, but the savings of all of us.

What worries me the most about the financial crisis is that no leader seems to be seeking for a sustainable solution. Perhaps the sustainable solution is too unattractive for the people that lead us and the people of wealth and power. It involves less growth, but sustainable growth; it involves a reconnection with reality ,and perhaps most of all it involves depriving many bankers and hedge funds of their rather ill gotten gains.

2 Responses

  1. I intend to investigate an assumption that major German and British investment banks and financiers who are the main creditors and lenders for many European countries in the last twenty years deliberately created the current European sovereign debt disasters to gain control over certain countries.

    The reason behind this accusation is very logical and clear. To protect investors, normal creditors in any situation shall definitely refrain from lending to any already heavily indebted entity or state.
    The questions posed here to readers are:

    1- Do you have any idea why these investment banks and financiers provided bad debts?

    2- Do you know the names and ownerships of the major investors and creditors to each European country in crisis?

    3- Why the EU institutions did not warn and intervene before approving the loans to heavily indebted countries?

    4- Why the EU is suddenly very vigorous in dealing with debt default and bankruptcy while they were watching the clear problems in the making?

    5- What made elected governments exceed any reasonable debt ceiling and overspend beyond their capacity?

    6- Why the essential financial and economic prerequisites of the EU were relaxed and allowed heavily indebted countries to gain membership?

    7- How far the EU and the financial markets are legally allowed to topple democratically elected governments and appoint unelected rulers?

    8- What are the invisible relationships between the EU institutions and those investment banks and financiers?

    9- Why the credit rating system was not applied to states that exceeded reasonable Debt/GDP ratio?

    10- Why very rich countries like the USA, Germany, Luxembourg, Belgium, Switzerland, Austria, Sweden, Denmark, Finland, Norway, France, and the UK are the top indebted countries without interference?

    I appreciate any information and comments on these questions to let everybody know the truth behind the unholy alliance between bankers; bureaucrats; and senior officials in any country.


    Banking was conceved in iniquity and was born in sin, The bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again.

    Writen by

    Sir Josiah Stamp: (1880-1941) President of the Bank of England in the 1920’s, the second richest man in Britain at the time.

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