Wednesday 13 April 2011
Open letter to Lorenzo Bini
20:05 | 
Posted by
Vicente
Dear "Mr." Lorenzo Bini Smaghi,
After reading your opinion on irish tax payers (http://www.irishtimes.com/newspaper/breaking/2011/0413/breaking15.html) I was faced with the incredible difficult dilemma of describing my opinion of you and your reasonings so I set myself on a quest to find the proper words for your incredibly sharp and bright comments: after examining the meaning of pedantic, barmpot, barmy, berk, blighter, fascist, bugger, stupid, idiotic, bubonic, lamer, asshole, divvy, dozy, eejit, gormless, grotty, manky, muppet, flat brained, arsehole, brainless, de-evolved, tyke, retorted, twisted fucked brain damaged, scoundrel, bully, bastard, nazi, retrograde, retarded, trash, garbage, wazzack, looser, trashy pervert, prat, poxy, shitfaced, soulless, bubblehead, crackhead, dick sucker, crackpot, ass eater,shit glutton, pee sack, pikey, mind raper and given the fact that I did not want to associate you to any other individual or group for fear attacking their respectability like mobster, thief, dictator, robber, financial prostitue, illiterated, cynic, demagogue, sofist, etc I'm afraid I have run out of words to appropiately describe your comments and the mind behind them.
In the mean time be assured that If I ever have the dishonor of meeting you, I will try to condense these words in a single and principled punch in your face, which will be a real honor to perform.
Attently,
An Irish taxpayer
After reading your opinion on irish tax payers (http://www.irishtimes.com/newspaper/breaking/2011/0413/breaking15.html) I was faced with the incredible difficult dilemma of describing my opinion of you and your reasonings so I set myself on a quest to find the proper words for your incredibly sharp and bright comments: after examining the meaning of pedantic, barmpot, barmy, berk, blighter, fascist, bugger, stupid, idiotic, bubonic, lamer, asshole, divvy, dozy, eejit, gormless, grotty, manky, muppet, flat brained, arsehole, brainless, de-evolved, tyke, retorted, twisted fucked brain damaged, scoundrel, bully, bastard, nazi, retrograde, retarded, trash, garbage, wazzack, looser, trashy pervert, prat, poxy, shitfaced, soulless, bubblehead, crackhead, dick sucker, crackpot, ass eater,shit glutton, pee sack, pikey, mind raper and given the fact that I did not want to associate you to any other individual or group for fear attacking their respectability like mobster, thief, dictator, robber, financial prostitue, illiterated, cynic, demagogue, sofist, etc I'm afraid I have run out of words to appropiately describe your comments and the mind behind them.
In the mean time be assured that If I ever have the dishonor of meeting you, I will try to condense these words in a single and principled punch in your face, which will be a real honor to perform.
Attently,
An Irish taxpayer
Tuesday 4 January 2011
Bail out you, bail out me,
Two years ago I relocated to Ireland sadly seeing my home country sink itself in corruption, lies, deception, cheap populism and unemployment in the hopes of seeking a better future for myself and my family...
And I was wrong, as even though I have improved, I see how in Ireland something similar happens, a repetition of an action most governments have taken in order to safeguard the sacrum-sanctum financial market and forgetting that markets are a tool to society, not the other way around.
Where do we start? By the hypocrisy of saying they believe in "free market" and then running to subsidize -effectively indebting all the country inhabitants with debts for years without consultation nor benefit- failing business -banks in this case-? Or when they sponsor and become accomplices of white glove stealing, when they devote the money needed to run the country and provide their inhabitants with services to support a runaway set of corrupt, incapable and unprofessional elements of society which have taken the "more is better" -I would say with Freudian issues to deal with- as life motto, instead of "maximize what you can do" and thus ditching resources into a sink hole.
Lets be clear: when an average house costs 240000 euros in a country where over 40% of the population earns less than 1000/month or when the average house costs over 400000 and the salaries are in the 2000/month range, something is very wrong: a healthy and efficient economy is not the one in which big numbers reign, but one in which small numbers and percentages let society and citizens do great things. It's easy to fall in the charm of the big numbers though, after all 1000000 looks much nicer than 100000 or 10000 but it does not make it better.
A consequence of this Freudian love for big numbers is what has happened to most western economies, with a focus on Iceland, Ireland, Spain, Greece (Portugal is a partly bystander taking heat for Spanish generated debts) but also including EEUU, UK, etc... When bigger numbers are better, you've to increase prices, reduce salaries -in relative terms- to cost of life, etc... so at the end your country has a bigger GIP but... Is that all that matters? No, when your GIP is big but your costs are big too, your micro economy becomes fragile, and at the end, your macro economy too, influenced by the increased risk of financial operations at the micro economical level that banks and financial operators are going to assume in order to catch the bigger share of the "bigger is better" philosophy:after all, banks can't default right?
If the love for big numbers dominates the economy, you end in a delicate situation: overinflated prices, "optimized" salaries -enough to make marginable feasible high risk financial operations- and a growing "financial" sector that dedicates itself to the task of taking its share of the overinflated cake at any cost, as they're driven by the responsibility against their shareholders without a solid social contract that ties them to provide services to the society they drawn from. This situation generates a complex set of relationships: in order to keep on "growing" prices have to keep increasing, salaries have to increase -not as much as benefits have to be always optimum- and the risk of the operations increases as the increase of prices is higher than the increase of salaries and the underlying economy. A crash is not just foreseable, but an unavoidable consequence of this situation, and when it happens, the whole system falls, leaving a huge empty void in our economies.
The origin of the void is mainly due to a loophole in our economic and financial system, this is called "fractional reserve system" and the while well intended -its pourpose is to allow financial institutions to operate for a value larger than their reserves in order to maximize their revenue- it has been abused both by the depair of the regulators and by the greed of the operators. The regulators acted by in despairs by maximizing the ammount they allowed operators to use (2% of the operating value was to be kept in reserves as a result of a risk curve designed to keep their liability at that 2%), letting them operate for roughly 50 times their reserves, which obviously the banks, in the greed of geting increased benefits and cash inflow, used to the very max. A sidelooked effect is that generalized use of the fractional reserve system ammounts to letting banks invent money under their own conditions, instead of under government control, with the sole supervision of often underfunded and undermanned financial regulator with a limited, national scope of action. Such is a recipe for disaster.
When you have the previous ingredients in place, and there's a slight issue at the economic level, you've a snowball effect across the economic actors, entangled in a feedack loop that generates a ramping crisis that quickly propagates across all sectors like the one that has happened. In those situations national governments are faces with a difficult situation: let the banks fail or steal money from their citizens to inject it into a failing system (honestly, they could look at a third option in order to create a better economic system, but they're politics and such a bold and intelligent move would be too much to ask from them). Obviously, they will lean towards the second, as is easier to help their friends than to help their citizens (which will involve the first and third options). Stealing is often named as "bail out", "rescue plan", or other nice and politically correct names: but the truth is that it is stealing (taking other's money and/or property without consent).
Is curious though to see how the economy has fared for those countries that have stolen money and the one that has avoided so: Greece and Ireland are in deep trouble still -and is gonna get worse- while Iceland is growing at 1.2% (faster than most european economies at this point) so, where's the point of the bail outs? I have been stolen through additional taxes and scrapped services while I'm not going to get additional services from my bank, I would not get better rates for my money, nor easier credit, it will simply contribute to the bank still being alive... as the bailouts don't enforce banks to act on their side.
At this point I wonder how no more people are seriously considering the legality of the bailouts, or the need of referendums for them to be enacted:after all, they're using our money with no hope of being returned ever.
And I was wrong, as even though I have improved, I see how in Ireland something similar happens, a repetition of an action most governments have taken in order to safeguard the sacrum-sanctum financial market and forgetting that markets are a tool to society, not the other way around.
Where do we start? By the hypocrisy of saying they believe in "free market" and then running to subsidize -effectively indebting all the country inhabitants with debts for years without consultation nor benefit- failing business -banks in this case-? Or when they sponsor and become accomplices of white glove stealing, when they devote the money needed to run the country and provide their inhabitants with services to support a runaway set of corrupt, incapable and unprofessional elements of society which have taken the "more is better" -I would say with Freudian issues to deal with- as life motto, instead of "maximize what you can do" and thus ditching resources into a sink hole.
Lets be clear: when an average house costs 240000 euros in a country where over 40% of the population earns less than 1000/month or when the average house costs over 400000 and the salaries are in the 2000/month range, something is very wrong: a healthy and efficient economy is not the one in which big numbers reign, but one in which small numbers and percentages let society and citizens do great things. It's easy to fall in the charm of the big numbers though, after all 1000000 looks much nicer than 100000 or 10000 but it does not make it better.
A consequence of this Freudian love for big numbers is what has happened to most western economies, with a focus on Iceland, Ireland, Spain, Greece (Portugal is a partly bystander taking heat for Spanish generated debts) but also including EEUU, UK, etc... When bigger numbers are better, you've to increase prices, reduce salaries -in relative terms- to cost of life, etc... so at the end your country has a bigger GIP but... Is that all that matters? No, when your GIP is big but your costs are big too, your micro economy becomes fragile, and at the end, your macro economy too, influenced by the increased risk of financial operations at the micro economical level that banks and financial operators are going to assume in order to catch the bigger share of the "bigger is better" philosophy:after all, banks can't default right?
If the love for big numbers dominates the economy, you end in a delicate situation: overinflated prices, "optimized" salaries -enough to make marginable feasible high risk financial operations- and a growing "financial" sector that dedicates itself to the task of taking its share of the overinflated cake at any cost, as they're driven by the responsibility against their shareholders without a solid social contract that ties them to provide services to the society they drawn from. This situation generates a complex set of relationships: in order to keep on "growing" prices have to keep increasing, salaries have to increase -not as much as benefits have to be always optimum- and the risk of the operations increases as the increase of prices is higher than the increase of salaries and the underlying economy. A crash is not just foreseable, but an unavoidable consequence of this situation, and when it happens, the whole system falls, leaving a huge empty void in our economies.
The origin of the void is mainly due to a loophole in our economic and financial system, this is called "fractional reserve system" and the while well intended -its pourpose is to allow financial institutions to operate for a value larger than their reserves in order to maximize their revenue- it has been abused both by the depair of the regulators and by the greed of the operators. The regulators acted by in despairs by maximizing the ammount they allowed operators to use (2% of the operating value was to be kept in reserves as a result of a risk curve designed to keep their liability at that 2%), letting them operate for roughly 50 times their reserves, which obviously the banks, in the greed of geting increased benefits and cash inflow, used to the very max. A sidelooked effect is that generalized use of the fractional reserve system ammounts to letting banks invent money under their own conditions, instead of under government control, with the sole supervision of often underfunded and undermanned financial regulator with a limited, national scope of action. Such is a recipe for disaster.
When you have the previous ingredients in place, and there's a slight issue at the economic level, you've a snowball effect across the economic actors, entangled in a feedack loop that generates a ramping crisis that quickly propagates across all sectors like the one that has happened. In those situations national governments are faces with a difficult situation: let the banks fail or steal money from their citizens to inject it into a failing system (honestly, they could look at a third option in order to create a better economic system, but they're politics and such a bold and intelligent move would be too much to ask from them). Obviously, they will lean towards the second, as is easier to help their friends than to help their citizens (which will involve the first and third options). Stealing is often named as "bail out", "rescue plan", or other nice and politically correct names: but the truth is that it is stealing (taking other's money and/or property without consent).
Is curious though to see how the economy has fared for those countries that have stolen money and the one that has avoided so: Greece and Ireland are in deep trouble still -and is gonna get worse- while Iceland is growing at 1.2% (faster than most european economies at this point) so, where's the point of the bail outs? I have been stolen through additional taxes and scrapped services while I'm not going to get additional services from my bank, I would not get better rates for my money, nor easier credit, it will simply contribute to the bank still being alive... as the bailouts don't enforce banks to act on their side.
At this point I wonder how no more people are seriously considering the legality of the bailouts, or the need of referendums for them to be enacted:after all, they're using our money with no hope of being returned ever.
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