From the Summit of the Moral High Ground

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 reflects the author's views at the time of publication. The content has not been substantively altered, although the HTML, accessibility and formatting have been updated to meet modern web standards. Italy's sovereign debt crisis. Flicking through the media coverage of the Italian financial crisis, the first thing I notice is the biased reporting of the facts. These nations have been overspending for years and building up huge debts. The overspending is caused by politicians keen to win votes with government services and benefit payments. Yet the language used by the media places the blame squarely on the "markets", the ultimate denial of culpability because the markets are made up of countless entities, largely the major financial institutions. "The European Central Bank, the only effective bulwark against market attacks, intervened to buy Italian bon...

Historical Archive This article is preserved as part of the historical record of this blog. It reflects the author's views at the time of publication. The content has not been substantively altered, although the HTML, accessibility and formatting have been updated to meet modern web standards. In the second follow-up to my article on Spartan constitutions, I want to look at what lessons can be learnt from modern Greece. From a free-market perspective, I argued that no bank should have been bailed out during the 2008 financial crisis. Businesses take risks, and bankruptcy is one possible consequence of poor decisions. People would undoubtedly have suffered immediate losses, but those losses would have been recognised and the recovery process begun. Instead, three years later, many people had still lost savings, pensions had declined, homes had been repossessed, and the same banks remained at risk of failure while threatening entire nations. Bankruptcy is part of th...

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...