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Saturday, 19 July 2014

Do share prices matter to you? Only if you want a States Pension.

You may not think that the price of shares matters to you, especially if you do not invest in the stock market, however this is not necessarily true.

Your government does invest in the stock market, if you have a pension then the money you pay in is likely invested at least in part in the stock market.

The £1.6 billion social security fund is entrusted to an investment manager and they decide which investments to make or not to make.

Share prices are doing pretty well at the moment, with anew highs almost daily, but all is not as rosy as it might be.

Stocks do go down as well as up, and what if they go down?

First, three weeks ago, it was the BIS. Then, last week, it was Janet Yellen, who during last week did what no Fed Chairman had done before: commented on stock prices, and what's worse she had her "irrational exuberance" moment when the Chairmanwoman of the Fed explicitly stated that biotech and social-network stocks are in a bubble.

That she finally admitted that the market is approaching its upper limit should have been enough to launch a major market correction. Instead the market barely budged and subsequently recovered virtually all its losses, even as the war in Ukraine and Gaza reached new highs, in the process confirming that other recurring Fed concern: that the market has hit record complacency.

It appears that the Fed has created a terrifying "central-planning" Frankenstein monster with its monetary policy, one which will keep going higher and higher until it crashes so epically, it will complete the finacial system wipe out that was started with the collapse of Lehman and merely delayed with the $4 trillion Fed balance sheet expansion. And the Fed is finally realizing just this, with a 5+ year delay.

Then, yesterday, it was none other that the IMF's Christine Lagarde, who joined the chorus of warnings that the market is overvalued and due for a correction. From Reuters and BBC:
"The head of the International Monetary Fund warned on Friday that financial markets were "perhaps too upbeat" because high unemployment and high debt in Europe could drag down investment and hurt future growth prospects... She also warned that continuing low inflation could undermine growth prospects in the region. 
"There is the danger of a vicious cycle: persistently high unemployment and high debt-to-GDP ratios jeopardize investment and lower future growth," Lagarde said on Friday, according to the prepared text of her speech
So to summarize: first the BIS, then the Fed and now the IMF are not only warning there is either a broad market bubble or a localized one.

And how do the High Frequency Trading algorythms (computer programs which respond to internet news stories to push the market up or down) react? They promptly ramp the S&P 500 to essentially its all time high. Why? Because at this point it is far too late for even the Fed to pretend it has any control over the "centrally-planned" market. Or rather, centrally-unplanned. And because it is now also too late for the Fed to even conduct a controlled crash.

When the epic crash that all international agencies are expecting comes, someone is going to have to take the loss. Some of that loss will be taken by your pension and by the Social Security Fund.

The Jersey Social Security Fund and Health Fund are already in financial difficulty, the States Pension fund is already short of the funds it requires to pay future pensions and those projections rely on certain levels of growth of around 8%.

So what happens if the 'epic crash' comes? Well everyone loses out. The rich may lose the same percentage of their wealth as you, but when you have £100 million you can lose £63 million and barely even notice, especially when those around you who have just £100 thousand lose £63 thousand. That £37 million suddenly buys a whole lot more than the £100 million would buy you before the crash when everyone had plenty of money to spare.

Thursday, 17 July 2014

Golden Jackass: Germany Pivoting East

It is finally happening in full view, in unmistakable manner, in a way that the awake, the aware, and the conscious can perceive in alarming stunning terms. 

The central force of Europe, the industrial juggernaut, the stable core, has begun to pivot East. The Germans have had enough, fed up with destructive US activities of all kinds. For the last few months, they have been laying out their indictment, their justification, their reasons to abandon the corrupt US-UK crowd. 

The bank wreckage, the market rigging, the endless wars, the sanctions which backfire, the sham monetary policy, the economic sabotage, the spying, the gold gimmicks, it has finally reached a critical level. Germany has begun to move East in full view. Only the deaf dumb and blind cannot notice, and they will probably never notice. They are fodder. The awaited signals seen by the Jackass have finally arrived. 

The grand stage leans East for the European players, with steps taken to the right, the weight having shifted, the messages suddenly more angry, more filled with disgust, more loaded with open confrontation. The commercial forces aligned with Russia are coming to the fore. The departure after a recent re-election by Chancellor Merkel should serve as the final slam of the hammer. She stood in the wrong camp, the banker and politician camp. They do not run Germany.

The marriage is over, the glow gone, the lawyers in the room, the bitterness in the open. Those exciting Saturday nights with the Germans and French enjoying a good ride with Mustang Sally are over. The once vivacious peppery exhilarating relationship with steamy back room sessions has turned ugly, old, nasty. She has lost her appeal, and worse, has turned vicious and destructive. 

Sally has stolen the jewelry, wrecked the credit lines, undermined the day job, and backstabbed the neighbors. As time passes, more joint accounts are seen as drained. Sally must go. The once thrilling tosses replete with the excitement of a bucking mare have turned into a kick to the head, a broken bed, as the acidic Buck has fallen from grace and burns holes everywhere. The lascivious flow has turned blood red, hardly a monthly matter. The only thing holding the relationship and tight liaison together is the heavy narcotics flow through NATO bases and major European banks. Regardless, Sally must go. 

Her devious devices, tools, ploys, nasty friends, and antics threaten to wreck the European industry supply lines and heated homes. The nation's accounts are depleted. Sally must go. Her ride is more like a kicking old hag with warts where a sexy smile once resided. Her trust is nowhere. She is wrecking the European house. Sally must go. When Germany turns away from Sally, and shows her the door, it will be clear in the global country club that Sally is gone. Then eastern winds will blow some fresh air on the putrid parlors.

BERLIN INDICTMENT CHARGES

Berlin is outraged by clear USGovt spying, and in process of conducting a Gold audit among their population. Germany is building motives to split from the Euro Monetary Union (common Euro currency) by forging stronger open ties with Russia & China. The justification is becoming plainly laid out, in four perceived indictment charges. The Jackass believes Germany will break from US/UK and its USDollar fiat currency regime over four primary thorny issues. 

The four are major indictments, all extremely serious, all indicative of a decayed system and morally bankrupt leadership. The charges are coming into view, highlighting fundamental commercial, philosophical, and ethical conflicts that distinguish the two nations (considering US/UK a single entity). The issues center on the following key differences:

1) Good relations with Russia and continued energy supply from Gazprom

2) Displeasure over planned Draghi Euro Central Bank bond monetization

3) Disgust over NSA espionage by USGovt, with benefit for US corporations

4) Damage to German population from gold price suppression.

The damage began with the refusal to repatriation German official gold by the New York Fed. The damage ends with the USGovt NSA espionage. Germany is very angry, sufficiently motivated to part ways with the US/Anglo camp. The plan to make distance from the British & Americans appears to be well along in execution. The critical stake in the ground was the prosecution, investigation, and forced actions during the Deutsche Bank actions. The trained eye and informed view notices the intense activity for the last two years, as closing all the back doors from the gold halls. Some major eruptions can no longer be brushed aside as simple anomalies. The boils, open sores, and deep rashes are visible everywhere. 

The London Fix is being abandoned, Deutsche Bank forfeiting its seat, regulatory bodies in the deeply corrupted London Centre concluding nothing askew and all is well. The LIBOR scandal has some German ignition points, with no prosecutions anywhere in sight. The FOREX and Gold derivatives are under intense scrutiny, again with a German hand to unwind the corrupted arenas, with massive naked short raids continuing in the last two weeks.

EXIT USDOLLAR, ENTER GOLD STANDARD

The plan seem obvious for Germany, to exit the USDollar, but first to embrace the Euro as a caretaker currency platform before the Eurasian Trade Zone comes together and offers a gold-backed continental currency with broad shoulders. All of Europe will rally around the Euro flagpole, hunker down during the other financial HAARP-like storm (bearing Weimar nameplate), and ride the storm until the Russian-Chinese hard asset currency arrives. 

The BRICS have invaded the mainstream Western stage and hold a banner for all to see. The stage has been altered, its weight shifted, leaning to the East. Tremendously important historical events are occurring. The King Dollar is wounded mortally, having fallen off the throne, looking weakened, haggard, and ashen. Sympathy for the US-UK corrupt violent vindictive crew has vanished. Next comes the assaults on the European Commission, that corrupt den.

The path to the Gold Trade Standard is becoming visible, the key break being the divorce between Germany and the US/UK fascists. It complements the divorce between the US and Saudis which has occurred since March. That break has been detailed in public Jackass essays. The German break is the new event, with current episodes absolutely mesmerizing for their importance and shock. Some US press sources are awakening. 

The United States Govt has treated France and Germany like adversaries, even enemy camps. The BNP Paribas case was atrocious for its devious ploys, giving old line Europeans a kick to the head. The US rats have infiltrated with organized networks of espionage agents. The press prefers to describe them as merely eavesdropping. In reality they are gathering information on Germany strategic planning, on Germany corporate contracts in development, and on German political functions. The consequence is a coordinated indictment taking shape which will result in the final steps coming to pass in the Global Paradigm Shift. 

The USDollar will be chucked into the dustbin of history, but first, it will be kicked to the used car scrap heap where it awaits finally processing. That processing consists of the conversion of USTreasury Bonds into Gold bullion on a massive scale at numerous offices. The BRICS Banks are ready to do business. They are two, the Development Bank and the Contingency Reserve Arrangement (CRA). In time the CRA will be known as the New IMF for its function, while the Development Bank will be known as the Central Bank housing gold.

ESPIONAGE AGAINST ALLY

The attention has gone from Sally to Ally, the relation turned quietly hostile. Not the queer conversion of GMAC into an empty bag lending institution, but rather the key Central European Ally in NATO. In the past Hat Trick Letter essays, items #1 and #2 have been addressed, focus having been on the deteriorated Ukraine situation and the antagonistic Bundesbank position. 

The US fictional output from destructive fracking and deceptive shale projects has been pledged to Europe, in a massive ruse that is vacant on its face. Huge 95% writedowns of shale oil reserves like by Monterey in California, combined with departures of fracking firms like Medallion in Western Pennsylvania, testify to the fact that the USGovt strategy is a ruse with empty tube. The German central bank has challenged the Draghi EuroCB not to embark on destructive unsterilized bond monetization. 

In the past, the EuroCB policy disagreements on phony bond patches and bond monetization have been the source of great conflict, even with German high court rulings against the EuroCB. The LTRO (Long Term Refinancing Operation) is but another device from the same Weimar laboratory, a mere banker con game with super seniority rights to favor the elite investors.

In extreme focus in the past month is item #3, the nefarious NSA espionage. Those who call it eavesdropping miss the point. It is not about catching juicy information on politician affairs. It is not to grab a lead on Merkel's next luncheon for tabloid display. It is to seize information on Russian and Chinese developments and plans, on the commercial front and financial sector respectively. 

It is to infiltrate the German computer systems and communication systems, probably to plant Trojan Horses for later leverage in blackmail at the state level. The Berlin officials are well aware. The entire NSA espionage chapter appears to be exploding on the scene. In fact, word has come that Russian Intelligence offices tipped off the Berlin officials about the USGovt NSA activity before arrests were made last week. The Snowden files are being used in important ways. The Central European source stated briefly, "The comical part in all this is that Russian intelligence FSB and GRU tipped the German authorities off by providing the leads." The Germans followed up quickly, so quickly that a divorce is the conclusion. 

In the meantime, the German-Russian cooperation with trust develops while the German-Anglo trust withers away. The break between the Germans and the Fascists from US-UK-EU may be closer than ever, as history is turned on its head since World War II. The entrenched Fascists on the global financial war front are the Americans and British accomplices, the big corrupt banks being the pillboxes. They will be abandoned, or toppled. At risk is the NATO Alliance. If and when Germany pivots fully eastward, the NATO membership will be rendered empty chair with a speaker phone attached.

GOLD ROOM CRIME

On item #4, a national audit seems underway inside Germany, as part of a criminal investigation. The purpose is not made clear, but the agenda seems obvious to the Jackass. The Federal Financial Supervisory Authority (BaFin) has asked German banks and investment intermediaries to formally hand over data about clients investment in precious metals until mid-July. All the depots will respond. The state wants to determine the extent of private sector German investment in Gold & Silver. The BaFin has requested copious information about client investments in precious metals from German banks and asset managers. But the requested information is only about derivatives.

A national audit seems the path, to determine damages to institutions and citizens alike. They seek certain precious metals or groups of precious metals as reference value, as well as shares in precious metals. They cite the Securities Trading Act and the Capital Investment Act, much like an attorney would before the court. Explicitly mentioned are Exchange Traded Funds, Exchange Traded Commodities & Certificates, which involve gold, silver, platinum, and palladium. BaFin has requested information from 2013, such as details on volumes and order size, in addition to methods recommended. The national audit is underway, even if not stated in public in clear terms. 

The entire gold issue began as a major sore spot when the New York Fed refused to repatriate 330 tons of gold from the German official account. Since that event, it has been like pulling a thread in a sweater.

The full purpose has not been revealed, but a multi-sector national audit for precious metals market losses due to corruption seems the ultimate motive. To be sure, BaFin has been making formal inquisitions on alleged gold price manipulation for more than a year now, especially at Deutsche Bank. The bank has many vice presidents actively squirming, as they reveal key data on London frauds, cutting immunity deals for themselves. Thus the London mid-level banker murders with ties to Germany. 

Many believe the investigation of German gold investments could possibly be related to extensions of the FOREX and Gold market investigation underway at D-Bank. The suspicion from the German front is to identify the extent of potential damage caused to investors by gold price manipulation.BaFin told Gold Reporter in a written statement that the inquiry was routine and that the probe does not relate to investigations on alleged gold price manipulation by Deutsche Bank. 

Conclude therefore that a bigger purpose is at work, to take account of national damages to German financial firms and German citizens. Furthermore, and not incidentally, many German citizens have large accounts in the major Swiss bullion banks, where corruption is rife, the secured gold illicitly sold. Ongoing class action lawsuits are in progress, kept well under wraps.

MISCELLANEOUS HINTS & WINDS

Many are the other scattered indications. They are growing fast like open windows, all facing the Easterly winds. The July Money War Report for the Hat Trick Letter offers details, but here are some in synopsis form to mull over. The mosaic is filling in, the collage telling the story. The Germans are going to give Russian partner a bear hug and the US bitch the cold shoulder. As a German official recently said, enough is enough.

The Germany Govt has instructed its companies to limit cooperation and procurement orders with the US corporations. New strict guidelines on security are to be enforced, as the fallout grows. They are installing No-Spy clauses in German contracts to guarantee that untrustworthy US firms do not relinquish confidential data. The effect will be felt by IBM, Cisco, and Microsoft. 

The effect has already seen an impact with a canceled Verizon account, where suspicion runs thick of planted blackmail Trojan horses and virus seeds. Severing ties with Russia, crushing relations with China, alienating France, and angering Germany has managed to sour relations with old friends to a point where one wonders just who is a remaining US ally in Europe these days. Germany will sever banking and business ties with the United States, as a matter of survival, all in time. NATO is a major clue.

Stephen Leeb has noticed Germany and China making a stronger alliance, along with Russia. While the USGovt spies on Germany (corporate trade secrets too), Berlin is turning Eastward. The Jackass has been adamant, how Germany is the linch pin in the Eurasian Trade Zone coming to form. India is important, but Germany is the game changer. 

Leeb notices how the Germany is being called strategic partners by Chinese leaders. He notes the growing relations with Russia. He concluded, "Perhaps the United States is spying on her [Merkel] because of her closeness to not only Russia, but also to China, and her distancing herself from the United States. It appears that the German-Russian-Chinese connection is getting stronger and stronger, and the [connection with the] US is becoming more distant. It feels like the world is changing in front of us. 

Do not be surprised to see Gold & Silver being the ultimate safe havens, but also Gold being sure to play a part in the new reserve currency in the East. This means the price of Gold will soar as that [scenario] begins to unfold. We are very close to that point of inflection, and every news story of any importance that I see proves that is the case." Leading analysts are noticing the German linch pin. Leeb detects a new Gold-backed currency launched from the East like a ballistic missile. It will contain Russian & Chinese markings, a BRICS guidance system, and elite private consultant designers. Sally must go, the Greenback to yield to the Redback.

Massive demonstrations in German cities have taken place, aimed to end the Federal Reserve. Consider Lars Maehrholz, main organizer of the massive Monday peace vigils in Berlin. The recurring vigils are part of an autonomous fully independent movement that gained massive popularity in the capital city. Like with the Occupy Wall Street movement, their advocates are under attack, in this case violent. 

Maehrholz is the object of severe criticism by the German mainstream media and political system. Worse, a car he was riding in was the object of a fire bomb incident by an anonymous perp. Lars had received online threats of exactly such actions. The coverup went into action quickly. The local police decided that the car caught on fire by itself, and are not investigating the case. Luckily neither the organizer Maehrholz nor his companion were in the car when it was set on fire. The common finger of suspicion points once more to Langley, where the professionals ply their trade. Memories of Operation Gladio remain fresh during three decades of sponsored Langley violence.

Germany has suspended shale-gas drilling for the next seven years during a political standoff with Russia, the nation's main gas supplier.Not only are shale projects a source of contamination, but they rub Russia the wrong way. They will be halted. Besides, they have deep concerns that exploration techniques could pollute groundwater, even sap electricity capacity. The dangerous fracking in Germany will stop for the foreseeable future, which wins praise from the environmental groups in the country. The Halliburton chemicals (monopoly in fracking business) are reputed to include toxic additives far beyond those necessary to release the natural gas, like heavy metals and even radioactive waste. Notice in Germany, how common sense prevails over corporate greed, corruption, and corrosive global agenda.

Germany and China are developing a special relationship, forging some new deals in the automobile and aviation sectors. The nations are embarking on deals to build helicopter and car plants. The deal precedes high level meeting between the German Chancellor and Chinese Premier. China is the magnet and Germany is being drawn into its vast sphere. Hundreds of German firms do active business in China, led by construction firms and equipment suppliers, as well as car makers and machine tool firms. The main contracts featured the purchase of helicopters from Germany, worth over $400 million. Germany's enthusiasm has come with gusto toward the construction of the Silk Road Economic Belt. It will serve all Europe. Over 3000 (three thousand) German companies do active business in Russia. Those who expect a German boycott of Russia as part of USGovt sanctions are true morons. The more pressure the US leaders apply, the more they will break apart the NATO Alliance with a crowbar.

Expect new block buster contracts with Volkswagen, Siemens, Airbus, Deutsche Bank, and Lufthansa, all very popular brands among the rising middle class in China. BMW sold half a million cars in China last year, which they would prefer not to cut off. Honoring lunatic US-led sanctions means hundreds of thousands of German job losses. As an added spice, an Eco-Park will be built in Qingdao which will showcase energy efficient buildings, using German engineering. The link is clear. Germany is going East for trade reinforced by secure energy, which is certain to cause a rift and split for US relations. The US cannot stop evolution, where the Western European nations forge stronger ties with Russia, which on the return lane provide reliable cheap energy supply. At risk is the entire system of NATO bases across Europe, which have been abused with narcotics distribution, and recently overrun by professional mercenaries. Neither narcotics trafficking nor accommodation of private mercenaries are not part of the original NATO Treaty.

COMING SOON THE BRICS CURRENCY

The climax event is the launch of the BRICS currency. Informed sources, whom the Jackass believes are directly involved in the planning, execution, and implementation, inform that the new currency will be gold-backed with further backbone in silver, crude oil, and in some manner natural gas. The Gazprom gas pipelines are far more important than the financial press mention. They are the skeleton and distribution system by which to capture Europe and to install the New Gold Trade Standard. The hints of its arrival are seen in the details for the BRICS Development Bank and the BRICS Emergency Fund. Without any hesitation in my mind, it is clear that these funds will serve as fronts for massive conversion of USTreasury Bonds into Gold bullion, which will reside in the BRICS Central Bank. The decision for location of the funds might be haggled in the open, but expect the central bank to be dispersed, using various key locations. The BRICS nations are all too familiar with US & Langley tactics, to destabilize, to raise internal dissension, to launch a war, and to steal the gold in banks amidst the chaos and confusion offered by the maze and din of war. The war in Ukraine, just like the war in Syria, and the attacks on Cyprus, all had Gazprom as common element.

The wars are to defend the USDollar, in the last stages of its reign of terror. The harder the US gangsters pull on the reins, the more they apply the fracture from the lever. However, Ukraine is the Waterloo. Yet comes the dreaded HOLOMODOR (famine) since no planting season took place in the fertile rich lands. Thus no growing season during the outbreak of war. Thus no harvest season. Starvation during a collapsed economy will surely turn the tide against the US-led Fascists in Kiev, all in time. Mass defection among their ranks has already begun, the fascist forces running low on supplies like ammunition, food, water, surrounded and until a hail of grenade fire at numerous locations. Thefts of their central bank gold and raiding official bank accounts by the US-led regime assured the outcome. Do not expect Germany to continue its reckless NATO support in this failed mercenary action. The ultimate victim of this desperate adventure will be the USDollar and NATO.

Sunday, 13 July 2014

Wallerstein on Libertarian Politics and Rand Paul

The general elections of most countries with parliamentary systems have largely functioned in the same way. They have had some regular alternation between two parties, one ostensibly left-of-center and one ostensibly right-of-center. In these systems, there has been little difference between the two main parties in terms of foreign policy and only a limited set of differences on internal politics, centering on issues of taxation and social welfare.

However, the actual mechanics of the elections in different countries vary but is has been virtually impossible for “third party” candidates to win elections or to be more than “spoilers.” 

Up to now, Libertarians have largely run as “third party” candidates. Libertarianism has never been, therefore, an important force in affecting policy choices or electoral preferences. The seriousness of the attempts by Sen. Rand Paul to obtain the Republican nomination has changed all that.

Libertarianism is most simply defined as a basic hostility to the government and its institutions. A full-fledged libertarian wants few (if any) state-owned enterprises, very little constraint on private enterprises by government regulations, low taxes, individual freedom in the social realm, primacy of privacy rights over governmental intrusion, and the reduction of armed forces and police to a minimum.

There have been movements promoting these ideas. The most famous one is that founded by Ayn Rand, a novelist and propagator of what she called “objectivism.” Her novels stressed the importance of individualism and the Enlightenment. She was critical of religion as a belief system rendered irrational by philosophy, which superseded it.

Politically there have been Libertarian candidates for president, notably former Congressman Ron Paul (father of Rand Paul). The votes Ron Paul received were always very marginal, both within the Republican Party’s primaries and in the general elections when he ran as an independent candidate.

So what is new? What is new is that Rand Paul won a seat in the U.S. Congress as a Republican senator from Kentucky in 2010. He won first the Republican primary and then the election largely as the result of fervent support from Tea Party Republicans who objected to his primary opponent as too “Establishment” and too “centrist” in his orientation.

As soon as he became a senator, Rand Paul began to play an important public role in asserting Libertarian values, and building an organizational base for his candidacy in 2016 (and thereafter). He has presented himself as less rigid in his interpretation of Libertarianism than his father, seeking thereby to create a more substantial voter base. Nonetheless, his candidacy is shaking up the way U.S. politics has been working.

There are three sets of issues on which Rand Paul does not conform to the traditional Republican-Democratic discourse: the economy, social questions, and foreign policy. On the economy, he has sought to go further in his anti-government position than the erstwhile mainstream Republicans. On taxes, on state expenditures, and on the so-called deficit, he stands out as a Tea Party hawk. This meets considerable opposition from big business supporters of the Republican Party who generally feel his policies will make things worse, not better, for their interests. Still, on economic issues, he comes closest to being a traditional Republican.

On social issues, however, he is drawing very different lines of cleavage. He is generally supportive of the argument that the state does not belong in the bedroom, and that the choices on how to govern one’s life should remain with the individual. In addition, and not least, he is fiercely opposed to the role of the National Security Agency and other state structures in violating the privacy of U.S. residents. Recently, he took these causes to a major locus of left sentiment, the student body at the University of California, Berkeley. There he made a speech along these lines that was wildly applauded. One of his Republican critics said of this speech that there was hardly a Republican sentiment in it.

And then there is foreign policy. He has expressed serious reservations about the belief that the United States has a role (even a political role, a fortiori a military role) in promoting “democracy” in other countries. He goes perhaps less far than his father who recently said the Russia’s annexation of Crimea was not something on which the United States should be having a position. Here too, the lines he draws politically are not conventional. His views bring together some far-right Republicans and the liberal wing of the Democratic Party.

Saturday, 12 July 2014

Is Germany going to leave the Euro, is the US headed for 3rd world status?

One outstanding prediction from the Golden Jackass is that Germany will be the nation to leave the Euro and will turn East, this prediction was made several months ago but we are finally beginning to see the signs.
Is the Treaty of Rome headed for failure?
The European Central Bank's interest rates are too low for Germany, Bundesbank chief Jens Weidmann said on Saturday, adding that ECB monetary policy should remain expansive for no longer than absolutely necessary. 
"It is clear that monetary policy, when seen from a German viewpoint, is too expansive for Germany, too loose," Weidmann told a crowd at the start of the open day. "If we pursued our own monetary policy, which we don't, it would look different." 
Bundesbank Vice President Claudia Buch said property prices were overvalued in some big city areas in Germany by up to 20-25 percent. (Reuters)
Germany a nation of prudence which has lived though a period of hyper inflation (just on the edge of living memory) is not one for spending more than it earns but financial difficulties are beginning to appear.
The proportion of German municipalities without a balanced budget rose to 34%. (deutsche-wirtschafts-nachrichten)
The US assault on its European "Allies" commenced with France turning its back on the US which only made the US start on Germany. The US is now isolated with only the UK (who have already begun courting Russian and China with a refusal to join in an assault on Syria) still an erstwhile ally. How strong a link a common(ish) language proves to be remains to be seen.

The Jackass' prediction of a 3rd World United States seems well on course

Wednesday, 2 July 2014

A Public Bailout

The Economics of House Building and the Plemont Decision
The cost of building a house if they are shipped in pre-constructed from Poland (and thus built to survive a Polish winter, a much higher spec than say Dandara properties) is in the region of £85,000 with probably £15,000 to lay the foundations and to connect all essential services. So we can assume since building firms choose not to use these properties that the cost of building in Jersey is less than £100,000 per 3/4 bedroom property.
Take note when you see new builds advertised for £650,000 just how much profit the developer is making per property!
Turning to Plemont. All the houses would have been built on what is currently green and the green area in the middle would have been laid over what is currently built on.
The cost of removing the asbestos is in the region of £1 million. The cost of levelling the existing buildings and digging out around £200,000
So the cost of destruction and construction assuming these were high quality dwellings would have been in the region of £4 million
Maintenance costs were cleverly to be passed onto the taxpayer as the 'public area' in the middle of the housing estate would have been maintained by the Parish of St Ouen. I am sure the residents would not have looked favourably upon strangers using "their green". Of course they would have paid rates to St Ouen so maybe it was going to be cost neutral to the Parish.
John Hemmings, owner of the Plemont Holiday Village, quite simply made a bad investment decision. He acquired the site as part of a package from Scottish & Newcastle breweries 15 years ago. The cost I cannot be sure of but appears to have been around £2 million.
Add onto that 15 years of failed planning applications with all the associated architect fees and planning taxes and associated costs. He also acquired all adjoining fields so there was no 'neighbour' to object to the plans. Let's assume this totalled £1.5 million
For a total cost of the development of £7.5 million
His plan was to sell the houses for £800,000 each (a little unrealistic but that is what he said) take off the Court taxes and agency fees and discounts and sweeteners and he would probably have received a total of around £17 million.
After tax he would have netted say £7.5 million.
As it stands he has accepted £7.3 million plus £50,000 for the option to purchase paid for by the National Trust.
The costs already borne amount to £3.5 million so he has come away with £3.8 million tax free as it is a capital gain and not subject to tax.
Since we can assume that this was a business decision and that this deal represented the most advantageous option that puts the developers realistic sale price of each house at £425,000
The States until recently were helping people to get mortgages of up to £410,000.
A number of estate agents have said that this was forcing people to drop the value of their houses to £410,000 to achieve a sale, this is absolute nonsense, a house is only worth what someone is willing to pay for it. SO in fact the States were artificially inflating the value of houses to £410,000 and estate agents were wildly overvaluing.
Assuming that the houses built would have sold at the aritifically high price supported by the States of Jersey then the sale has made the developer a profit of just £420,000 over what he could realistically have achieved by completing the development.
£4.20 each is I believe a small price to pay for the enjoyment in perpetuity of this headland. This headland is now in safe hands and no future bankrupt government will be selling it off cheap to fund civil service pension shortfalls which is what will happen with most public assets in the not too distant future without a change of government.
On balance I am content with this decision.The rate of return on this investment for Mr Hemmings is just 5% per annum, had he just bought gold and left it sitting there he could have achieved a return of 13.5% per year. Let no one get confused this was a REALLY poor investment decision. We have bailed him out.