From the Summit of the Moral High Ground

Amongst the world's recent economic news there has been much strangeness; the decision of China and Japan to trade directly with each other instead of in US dollars is just the latest tolling of the bell which is trumpeting the end of the US economy. Just waiting on the Saudis to add the final nail to the coffin. The warning signs are becoming clearer with JP Morgan holding a 'derivative position' which has already caused losses of $3 billion and with $140 billion of outstanding lawsuits in progress against it, the $120 billion capitalisation of the world's largest bank is looking like it is going to be worth nothing. The SEC (the US regulator) has decided that Lehman Brothers moving $50 billion of liabilities off its balance sheet every time they were required to file accounts was not fraudulent and that no one will be prosecuted for basically outright cheating. The regulator takes it orders from the president who takes his funding from the banks... and the el...

Jersey is heavily exposed to the bond market according to Senator Ozouf, the paltry 9.17% return on Jersey's fund of funds, which would have been 30%+ had the fund simply bought gold instead, is riding the largest bubble in history — government bonds or sovereign debt. Capital is seeking security in bonds But bonds are not particularly secure One nation after another crashes Jersey's reserves are in that market Jersey has about £1.3 billion which would meet government expenditure for about two years, but this includes the Social Security and employee pension funds. Imagine this scenario: A major government has been forever borrowing from Peter to pay Paul, never lifting a finger to cut its deficits. Suddenly, global investors pull the plug. They dump the government's bonds like a hot potato. They drive bond prices into the gutter and make it impossible for the government to borrow another cent without paying sky-high, budget-busting inte...

Historical Archive This article is preserved as part of the historical record of this blog. It was originally written by Dr Willie (The Golden Jackass) and is republished here with permission as part of an ongoing effort to preserve historical economic commentary that has since become unavailable. The content has not been substantively altered, although the HTML, accessibility and formatting have been updated to meet modern web standards. Readers interested in Dr Willie's more recent writings can visit www.golden-jackass.com . How can a Greek DEFAULT be a success? Right now, we're seeing much the same global reaction we saw after many of the EU's previous 13 crisis summits: officials are congratulating themselves for doing next to nothing. The media is proclaiming the meetings "successful." So are all stock markets and currencies except for the dollar. So where's the beef behind Europe's latest news? THERE IS NONE! Over the next f...