[AgentR11]

the thing to do is to get out with some cash if you can soon.

But looky looky, right at what you wrote... bolded. What is cash? Its the ultimate expression of that ponzi scheme. Infinitely printable, completely worthless if the ponzi scheme crashes. That's how deep this little game goes; even those seeing it for the scam it is, still instinctively place value on those pretty slips of paper. Which is why I do not believe it will crash. At *worse* our little digital blips of money will go from being called "dollars" to "kdollars" or "mdols" maybe, ie, you'll be earning your 10 mdols an hour; just a transition in terms, made trivial by a digital world. You wake up one morning, and the treasury guy says, "the number's we're using are stupid, behold the mdol, all your balances have been converted overnight, at the rate of 1 mdol = 1,000,000 USD. All bonds issued in US dollars to this point shall be redeemable upon maturity using this same conversion factor.

Tada.

This scam can go on for freakin ever, as long as the bits move on copper and glass.

[Loki]

You wake up one morning, and the treasury guy says, "the number's we're using are stupid, behold the mdol, all your balances have been converted overnight, at the rate of 1 mdol = 1,000,000 USD.

Sounds like a good reason to go max out the credit cards and buy bullets and band aids, though I suppose they'd move the decimal point on CCs, too. I wonder how debtors made out in Argentina, Zimbabwe, and Weimar Germany?

I don't think the hyperinflation scheme can last indefinitely. Historically most hyperinflation situations only lasted a few years at most. A decade or two of decimal adjustments would lead to a barter-based society.

[AgentR11]

I wasn't suggesting one day you would be making 10 Dolllars / hr and then the next 10 mdol; more like a steady increase over time, if it became necessary; and then when the numbers get stupid after a while, you just bump the decimal and give it a name.

Right now though, the bankers seem to be winning the war on non-food/fuel inflation, and keeping wages static for the working class; eventually something will give, but I think there's a lot more give that the working class can fork over, than the working class currently thinks they can fork over.

Crank that thumbscrew babes!

[americandream]

The ECB lending directly to Greece/Italy can immediately be renamed into the Soviet European Union Ministry of Finance. And the situation will be similar to the late Soviet Union - bankrupt southern rim and the donor northern core, unwilling to go on financing the south.

Not really. The USSR was socialised wealth bankrupted by private wealth. The current crisis is private wealth stealing from socialised wealth (again). Can you see the difference?

It is no wonder that the West still fears the Russians. The ex-Soviets know only too well what is afoot. And they also realise that bumblekins such as yourself will have to suffer the real depridations of capitalism's eventual collapse for you to understand the real difference between pure socialised value (that which is always held in common, which is all the planet) and the bogus socialisation of capitalism's adventurisms (fleeting title). I really can't express these terms any simpler as they capture in essence the difference between high civilisation and barbarism.

[radon]

Not really. The USSR was socialised wealth bankrupted by private wealth. The current crisis is private wealth stealing from socialised wealth (again). Can you see the difference?

It is no wonder that the West still fears the Russians. The ex-Soviets know only too well what is afoot. And they also realise that bumblekins such as yourself...

I am an ex-Soviet myself, not sure about bumblekins whoever they are. I appreciate that Quinny's main question was almost rhetorical. What I meant was that ECB lending directly to sovereigns would literally, technically operate as a Soviet financial ministry. After decades of IMF-sponsored ordeal aimed exactly at destroying this arrangement, reintroducing it in the EU is a no go. This is a side issue, but in practical terms, it is an important one, along with other some other side issues that I tried to pick up. As to the main issue - many posters including yourself commented on it quite extensively above.

However, there are a number of side technical issues that make ECB operate in the way it does. If ECB finances the countries directly, try answer the following questions:

What if a sovereign defaults?
What if the sovereign continues to expand its budget deficit?
What if it is practical to stop financing one country while continue financing another? (watch nationalist backlash)

and so on.

With regard to the interest rate differential between the ECB lending rate and sovereign bonds yields - see the posts above + the formal risk argument. Technically, under the current arrangement it is the banks that assume the risk of default by sovereigns, rather than the ECB. It is one thing to let a bank to go under (with all the usual "too big to fail" caveats), and another - to let a sovereign to go under. The ECB would probably prefer to avoid being enmeshed in inter-sovereign politics to the extent possible and keep its options open. If the ECB opens the flood gate of direct finance it is not clear how this could then be stopped.

[Quinny]

I understand the transfer of risk, and as Pops article says much of the money is not directly invested back (what it's 'used' for is another question).

As well as propping up the banks, the other crazy thing is that commissions are usually paid on value of bond transaction not on 'profitability' so brokers involved are pocketing massive bonuses for basically re-cycling public money.

The points re sovereign default vs control are valid whether or not intermediaries are involved. With banker appointed puppet leaders which nation can truly be described as sovereign nowadays?

[americandream]

I understand the transfer of risk, and as Pops article says much of the money is not directly invested back (what it's 'used' for is another question).

As well as propping up the banks, the other crazy thing is that commissions are usually paid on value of bond transaction not on 'profitability' so brokers involved are pocketing massive bonuses for basically re-cycling public money.

The points re sovereign default vs control are valid whether or not intermediaries are involved. With banker appointed puppet leaders which nation can truly be described as sovereign nowadays?

Bearing in mind that the housing derivatives have to be reported on the banks annual balance sheets, losses being incurred notwithstanding, what do you think that they are doing for the banks end of year capitalised value? Had they not had this surplus easing to bolster up that value, there would be a mass liquidation across the financial network. The effect on the trust of liquidity flowing through these banks would be terminal, sending the markets into a tailspin along with the whole asset base of advanced capitalist countries, China would heamorrhage in the process, closing that portal of value as well and the links of co-dependence that give global capitalism its depth would be ruptured in a way that would take us back to crude regionalism and a long and slow climb back to globalism (globalism is an essential step to mankind's next development phase (there's always the risk we might poison ourselves in the process but that is an inevitable consequence of being an evolving species.)

[rangerone314]

I don't think that globalism is an essential step for mankind anymore than I think we need the inevitable trillionaires that would eventually result.

Of course with varying government predictions for sometime between 2015 and 2017, for oil production to nosedive, may be a moot question. Globalization will go back to merely being international trade via wooden ships in the 22nd century. Of course global warming will seriously f**c up existing ports, but I guess they'll have to find new ones.

[americandream]

I don't think that globalism is an essential step for mankind anymore than I think we need the inevitable trillionaires that would eventually result.

Of course with varying government predictions for sometime between 2015 and 2017, for oil production to nosedive, may be a moot question. Globalization will go back to merely being international trade via wooden ships in the 22nd century. Of course global warming will seriously f**c up existing ports, but I guess they'll have to find new ones.

It is irrelevant what you or I want. It is an immutable law of capitalism that growth follows acquisition and that the said quest for growth chases all availabe surplus, from the heights of the most remote mountains, to the depths of the most forbidding oceans, from the jealously nationalistic neighbourhood of a parochial American car plant to the far reaches of a recently industrialised rise paddy in faraway China. That my friend is what constitues globalism and there is nothing you can do about it unless you organise in the only thing you have as a non-capitalised worker, numbers. And that aint gunna happen until workers worldwide have been trampled into the dirt, one and all.