Posts Tagged ‘economic’

Terry Pratchett’s Hydraulic Computer Wasn’t A Joke After All

November 30, 2014
In Terry Pratchett’s Discworld novel Making Money which is a satirical story of the creation of a fractional reserve banking system on the Discworld, the Wizards of the Unseen University* help to develop a water driven computer to model the economy of the city state of Ankh Morpork and predict future trends.

MONIAC – the water computer, now a museum piece (source)

 The computer is no more successful that the modern, digital supercomputers used by banks and governments but the book is very funny, it’s central character has the irresistible name of Moist Von Lipwig and while providing plenty of laughs it makes some very sound points about the flaws in the global financial system.

Now since reading the book I have thought the hydraulic computer was a creation of Terry Pratchett’s abundant imagination. I was wrong it seems, there was once, not all that long ago, a hydraulic financial modelling computer named MONIAC – Monetary National Income Analogue Computer. And it was no less successful (i.e. they’re all totally hopeless) at predicting economic trends than the supercomputers used by banks, government agencies and universities that failed to predict the 2008 financial crisis. I’ve linked an article from Zero Hedge below.

Water clocks are a kind of computer of course and have been around from pre Roman times. The earliest documented by contemporary witness accounts was the one in Alexandria, Egypt, in the reign of Nero (1st Cetury AD). There are several examples of medieval water clocks still telling the time in Germany, Netherlands, Belgium, Austria and The Czech Republic.

*you have to be sharp to pick up all Pratchett’s jokes, did you know for instance that Britain’s foremost scientific association, The Royal Society, was in former times nicknamed The Unseen College for the way it steered research.
from Zero Hedge

Presenting The 70 Year Old Hydraulic Computer Used By Central Planners To Visualize Economy

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America’s GDP Surges 4% in Quarter 2 – Jonathan Creek Shows How The Trick Is Done

July 30, 2014

Magic sleuth Jonathan CreekMagic sleuth Jonathan Creek exposes tricksters – economic sleuth Boggart Blog exposes statisticksters

This morning the US Bureau of Economic Analysis, an agency of the Commerce department revealed Q2 GDP statistics which blew made nonesense of estimates, showing year on year growth for the second quarter at 4.0%. This was explained as the result of a surge in Inventories and Fixed Investment, while exports added only 1.23% to the GDP number. The full breakdown by component is shown below.

The BEA noted, “The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The “second” estimate for the second quarter, based on more complete data, will be released on August 28, 2014.”

Hmmmm – several notes of caution there, and let’s not forget that the corresponding figure (the headline grabber) for the first quarter said GDP had grown by 1.6% for the quarter. This was later revised to -2.9% with the long cold winter (Warmageddonists please note) blamed for the contraction.

See a detailed breakdown of figures as the BEA web site.

What does this mean for the global economy? Nothing really, the economic recovery being puffed by Obama in the USA is as illusory as the one George Osborne is raving about in the UK. And don’t let any economically illiterate idiots tell you everything would be hunky dory if Labour were in power. Remember Osborne’s recovery illusion is employing the same trickery as the Brown Balls Boom of 2001 – 2007.

The real problem is that GDP, the statistic used by most governments as a measure of their economic success, is not a meaningful measure of economic performance. It only measures the amount of money churning through the economy. So ship in a million immigrants, give them £200 a week in benefits and you have grown the economy by £200million a week. Then if you fund that by raising £100million in taxes and borrowing £100million, you have ‘grown’ GPD by £400million a week.

Simples.

Do not trust a word government (of any political party) says. It is the responsibility of the electorate to hold the buggers to account.

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America’s Dumbest Move Yet: Hijacking A Foreign Bank

July 25, 2014

Has Quentin Tarentino been given a role in the US Government. Ten dark suited men strolled into the headquarters of FBME bank in Cyprus last Friday (18 July) afternoon and took it hostage. It must have looked like a scene from a Tarentino movie. And given the surrealism of how the east / west or to be precise USA / Russia conflict is escalating, maybe it was.

The Reservoir Dogs lookalikes were from the Central Bank of Cyprus (CBC). And they took control of FBME because an obscure agency within the US government recently issued a report accusing the bank of laundering money. On what grounds? You might well ask. It just so happens that FBME, and Cyprus in general, is where a lot of wealthy Russians hold their vast fortunes.

Bear in mind, there has been no proof that any crime was committed by FBME nor have reasonable grounds for suspicion been demonstrated. There was no court hearing. It wasn’t even the government of Cyprus who accused them of anything. No charges were read, no evidence produced ( although the men in suits might have said, “The American government says you’re guilty and we have to believe them because they’re not Russian,” as they did in connection with another of last week’s big news stories.

There was just a generic report penned by some bureaucrat 10,000 miles away.

Funny thing—when HSBC got caught red-handed laundering funds for a Mexican drug cartel last year, the US government gave them a slap on the wrist. HSBC got off with a fine.

Yet when the US government merely hints that FBME could be laundering money, the bank gets taken over at gunpoint.

Welcome to warfare in the 21st century. It’s not about battleships and ground troops anymore but bank accounts and bond yields.

How big an error is this compared with all Obama’s other recent fuckups such as Syria, Ukraine, Iraq, Afghanistan, Yemen and the rest. Massive. By terrorizing Russian interests, the Obama administration is begging the rest of the world to reconsider their misplaced trust in the United States.

All these foreign countries really have to do if they want to retaliate is start dumping their US Treasuries (which they are doing). Or simply stop letting the debt roll over when the notes mature. That will cause catastrophic consequences in the United States. Interest rates will soar, inflation will kick in, and the government will be even closer to default than it already is.

Inexplicably, Emperor Obama is practically begging the world to do this by reiterating his attitude filled pledge, “I was elected, I can do what I like.” It’s gobsmackingly arrogant. The US Republican’s response is tremendously stupid, they seem to think letting Obama screw up will make them popular. They will learn they world has not forgotten the Bush administration.

What Obama is doing is like the economic warfare equivalent of Napoleon and Hitler pompously throwing their already overstretched forces into a third front in Russia.

And neither Napoleon nor Obama gave the slightest consideration to the big picture consequences.

Here’s a funny thing about this story. My link to Yahoo News (above) is reliable enough but the original news report published in Cyprus News of Nicosia has been taken off line.

USA, Russia and Sanctions: The Real Situation

March 14, 2014

Yesterday someone commented on my post about the threat of the Ukrsine dispute turning into economic warfare, that the USA would be immune to economic fallout from any trade war because the world trades in US dollars. Now knowing what I do about the dross printed and broadcast by US mainstream media, I could not criticise anybody for clinging to this piece of propaganda, but in reality the situation has been changing for some years.

So when you read reports that Russia is ready to hit back with counter sanctions against the EU and US should they try to use economic measures to force the Kremlin’s hand on the Ukraine issue, be afraid. Since the start of the Iraq war, the economic landscape has changed enormously. The USA is no nearly as dominant as it was, due to the actions of the last two US administrations Uncle Sam has little goodwill to trade with. China has already recealed plans to replace the US$ with a new reserve currency and simlar plans have been discussed in G20 sessions because of fears about the systemic weakness of the US economy.

The President and Scooby Doo villain Secretary Of State Kerry are not in a strong enough position to indulge in sabre rattling.

“We hope that there will only be targeted political sanctions, and not a broad package affecting economic trade, “Our sanctions will be, of course, similar, ” Deputy Economic Development Minister Aleksey Likhachev the Russian Economic Ministry has said .

One way Russia will use to protects its economy from sanctions is by shifting settlements of bilateral trades to other currencies. China and Iran have already taken the lead in this, following a move by the late Saddam Hussein which I blogged on some years ago (How Saddam May Yet Win The War ) The old tyrant was merely giving the finger to bill Clinton’s White House but he established a precedent that others noted.

America’s vulnerability to attacks on the dollar is summed up in this comment made by Aleksey Ulyukaev, the Minister of Economic Development said in an interview with the Vesti 24 TV channel.

“We need to increase trade volume conducted in national currencies. Why, in relation to China, India, Turkey and other countries, should we be negotiating in dollars? Why should we do that? We should sign deals in national currencies- this applies to energy, oil, gas, and everything else,”

The Duma, Russia’s parliament, is drafting legislation to allow Moscow to freeze assets of Western companies and individuals in the event sanctions are imposed following the Crimea referendum vote on March 16.

#Such a law would give The Kremlin “opportunities to defend our sovereignty from threats,” according to its author, Andrey Klishas, as quoted by RIA Novosti on March 5.

With Russia and China already dumping dollar reserves and US Treasury bonds this could easily spell trouble if Obama and Kerry are not careful. The US Congress has already denounced Russia’s actions in Ukraine. Last Tuesday, congress approved a resolution that urges The White House to “to work with our European allies and other countries to impose visa, financial, trade and other sanctions on senior Russian Federation officials, majority state-owned banks and commercial organizations, and other state agencies, as appropriate.”

Earlier this week the European Union threatened to impose further sanctions on Russia starting on March 17, after the referendum in Crimea takes place on Sunday. Speaking to the German parliament, Chancellor Angela Merkel hinted sanctions would be needed if Russia “continues its efforts to annex crimea or bring down the EU supported rebel government of Ukraine. Merkel warned that if Russia does not back down the result would be to change the European Union’s relationship with its neighbour. She is right of course, Germant depends on Russian gas, if Putin turns off the tap it would quickly cripple the German economy.

The real clincher in determining how the Ukraine confrontation will play out is China. Seemingly far removed from this dispute, China would appear to have little to gain from involving itself in a dispute between the western powers and Russia. China’s ambassador to Germany Shi Mingde, has warned however of the global economic affect sanctions against Russia could hold. Mingde said the geo-political tiff between Russia and the West could “spiral” into chaos (by whih he probably means a shooting war or an economic crisis to make 2008 look like a short term cashflow problem).
President Putin and the Russian foreign ministry have both said sanctions against Russia could backfire, and spill over into the global economy and Moscow’s Foreign Minister Sergey Lavrov denounced any “hasty and ill-considered” sanctions as being likely to cause “mutual damage”.

Iran-style sanctions on Russian trade appear impossible because the EU would be much more exposed than the US and as Putin has warned, the American economy would be massively exposed should Russia decide to dump the dollar reserves it has built during years of exporting gas and oil.
The European Union nations import around a third of their gas and many other natural resources from Russia, and several nations are completely dependent on Russian gas. The US and Russia trade very little so it is difficult to see what harmful effect US sactions could have (but since when did Barack hussein Obama, the ego on legs, think through such foreign policy subtleties), but Russia is Europe’s biggest customer, and the $13 trillion EU economy would de devastated if trade with Russia was halted overnight.

So to summarise, collapse of the dollar, crippling of the EU economy and global financial chaos and the presentation to China of an enormous opportunity; does anyone still think the US has no need to fear the consequences of economic conflict with Russia? On the other hand, Russia is not truly a democracy, The Kremlin will simply tell citizens any hardships they face are due to the evil western nations and anyone who questios that had best get their affairs in order. Simples.

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What We Are Not Being Told About Ukraine

March 13, 2014

Another day passes and there is now hardly a word in mainstream media print and broadcast news about Ukraine. Has it all blown over you might well ask. Actually while a localised and limited shooting war would have been tragic for the people of Ukraine, Russia and some surrounding territories it would have afected people in the EU, Britain and the USA very little.

What’s happening now poses a far greater threat to our prosperity both in the short and long term and to the kind of future we can look forward to. Jere’s a summary of some stories that were not reported in western media.

Russia Threatens to Drop The Dollar and Crash The U.S. Economy if Sanctions Are Imposed – West Goes Ahead With Sanctions Anyway

On Tuesday Reuters reported that a Kremlin aid Sergei Glazyev had announced that if the U.S. were to impose sanctions on Russia Moscow may drop the dollar as a reserve currency and refuse to pay off any loans to U.S. banks saying that Moscow could recommend that all holders of U.S. treasuries sell them if Washington freezes the U.S. accounts of Russian businesses and individuals.

“We would find a way not just to reduce our dependency on the United States to zero but to emerge from those sanctions with great benefits for ourselves,” said Glazyev. “An attempt to announce sanctions would end in a crash for the financial system of the United States, which would cause the end of the domination of the United States in the global financial system”

That statement is startling by itself, but the true gravity of this situation is only evident when you consider it in context. China has taken Russia’s side in the Ukraine conflict (they are after all allies) and China holds the lion’s share of U.S. treasuries. If Russia puts out the call to drop the dollar China would have a choice: either hold on to those treasuries while the dollar slides (losing their shirt in the process) or join Russia and dump their holdings as well. It should be pretty obvious which way China would go.

As The Guardian reports however, that the USA has unilaterally decided to go ahead with sanctions against Russsia in retaliation for Putin’s refusal to back down and withdraw Russian troops from Crimea.

US imposes visa restrictions on Russian officials as Obama signs sanctions order
Employing his favourite tool for by passing the democratic process, On March 6 The Emperor Obama signed an executive order extending US sactions against Russia. (Read More on sanctions story at The Guardian)

Getting into an economic war with Russia would create a pile of problems for the Obama Administration, first it would drive a wedge between the USA and it’s EU allies most of which are heavily dependent on Russian gas for their domestic and industrial supplies. Secondly, failing to consider the consequences of Russia’s allies responding to such a move by applying sanctions of their own is, typically asinine. When Obama signed the sanctions order, authorizing economic action against the Russians he may have performed his usual arrested adolescent feat of convincing himself that we he speaks, nobody could possibly disagree with him.

Experience of dealing with other world leaders has taught him nothing in this respect. So was the massianic one hoping that on realising they had incurred his displeasure Russia would capitulate, beg for mercy and start dancing to Washington’s beat. It’s hard to imagine The White House corps of diplomats, advisors and political scientists could be so thick, but Obama has had five years to fill key roles with his personal rent boys appointees. Maybe they were just too busy planning the next frat party to think things through properly.

Either way, the outcome is the same. The U.S. government’s constant meddling in the domestic affairs of sovereign states has now embroiled it in a geopolitical game of chicken and if one side or the other does not blink soon there will be an almighty fracas.

Unfortunately though they initially picked a fight with the corrupt but democratically elected government of Ukraine in the hope of humiliating Russia by drawing its neighbour and close ally into the US / EU / NATO sphere of influence, by sponsoring regime change the USA has brought itself into conflict with the world’s 8th largest economy (by GDP), having already for a while been at loggerheads with China, the second largest economy and holder of huge amounts of US debt.

In the latest development India sided with Putin by announcing Russia’s interests in Crimea are legitimate (Times of India).

The question now is how will the rest of the world react. Iran’s position is a foregone conclusion and Saudi Arabia will demand a heavy price for its support, even from a traditional ally. With Japan, like the EU, hamstrung by economic difficulties and Australia and Canada likely to offer token support while Britain’s David Cameron’s hands will be tied by Parliament that in the wake of futile wars in Iraq and Afghanistan has become somewhat isolationist.

The lines of economic warfare have been drawn up, and as sides are being picked it looks as if the USA is backed by weaklings, wusses and economic basket cases. Get ready to kiss your savings goodbye. And find a good recipe for bone broth.

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Another Triumph For Western Diplomacy

November 24, 2013

In another epoch making triumph for diplomacy, western foreign ministers led by john (Lurch) Kerry and William (The Mekon) Hague forced the government of rogue state Iran to accept that sanctions against it would be lifted. In a tense meeting in Geneva Kerry and Hague imposed concession upon concession on the Islamic theorcracy while frustrating the Iranians eargernes to do a deal by demanding nothing of them.

In return for the easing of economic sanctions the Iranian govrnment has had to promise to carry on doing whatever the hell it likes. Russia Today reported:

“As part of the agreement, the international community has accepted Tehran’s right to a peaceful nuclear program. But after the deal was struck, participants in the Geneva talks put different interpretations on the issue of Iran’s right to enrich uranium.

Iran’s Deputy Foreign Minister Seyed Abbas Araghchi wrote on Twitter that the right to enrichment had been recognized in negotiations, and after the deal was clinched Russian Foreign Minister Sergey Lavrov said the deal accepted Tehran’s right to enrich uranium.

“This deal means that we agree with the need to recognize Iran’s right for peaceful nuclear energy, including the right for enrichment, with an understanding that those questions about the [Iranian nuclear program] that still remain, and the program itself, will be placed under the strictest IAEA control,” Lavrov told journalists.”

Israeli Prime Minister Benjamin Netanyahu condemned the agreement as a “historic mistake” and said the world had become a more dangerous place.

Business as usual then?

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