German bank:- This is the end game

[Mega]

http://ftalphaville.ft.com/blog/2011...says-deutsche/

..........unless you suckers would like to give us ALL your MONEY!
Mike

[sunskyfan]

Re: German bank:- This is the end game

Let's see. What is the algorithm here? Pass social liabilities from corporations to the government. Constrain the ability to tax to pay for such things so force the government to borrow and pay interest to those corporations until government can't address liabilities. Governments negotiate with corporations as corporations cherry pick any assets held by governments. Governments are rendered to police forces and militaries with no assets and subject to enough debt to do what the corporations tell them. What is next? GM attacks Toyota? Exxon/Mobile attacks GM? BP attacks Exxon/Mobile? Goldman Sacs attacks Lybia?

[dcarrigg]

Re: German bank:- This is the end game

Let's see. What is the algorithm here? Pass social liabilities from corporations to the government. Constrain the ability to tax to pay for such things so force the government to borrow and pay interest to those corporations until government can't address liabilities. Governments negotiate with corporations as corporations cherry pick any assets held by governments. Governments are rendered to police forces and militaries with no assets and subject to enough debt to do what the corporations tell them. What is next? GM attacks Toyota? Exxon/Mobile attacks GM? BP attacks Exxon/Mobile? Goldman Sacs attacks Lybia?

Hmmm...

"I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents."

[Starving Steve]

Re: German bank:- This is the end game

As the central banks buy-back their bonds or buy the IOUs of the deadbeats, the central banks expand the money supply. This is like throwing gasoline onto the inflation fire.

In order to put-out the inflation fire, the central banks have to hike interest rates, and that would create a panic in the bond markets with a spill-over into the stock markets first and the real estate markets soon after.... That then would collapse the entire world economy.

I couldn't have drempt-up a more disastrous (yet possible) end-game scenario. No wonder why gold is now sniffing around the bottom side of $1600.

And if the central banks don't buy the bonds and mortgages and expand the M1 money supply, then everything collapses into bankruptcy even faster. Even if the central banks replace old bonds with new bonds, deadbeat or zombie mortgages with new central bank guaranteed-paper etc, then the confidence of the public is eroded even further. The con game continues on for another round or two, like a gambler doubling his bet with each loss in a gambling game...... The deadbeats would party on, and why not? But the end-game would be an even larger sovereign default than now.

The central banks could play the extend-and-pretend game with 99-year zero-interest rate bonds. The Bank of Japan did exactly that in the 1980s.... The deadbeats would love that. Imagine the fun they could have with 99-year mortgages that cost zero (or next to zero) to finance! The Bank of Japan failed to soft-land its real estate bubble with 99-year mortgages in the 1980s, and the same failure would happen in the rest of the world if the central banks go the extend-and-pretend route.