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News
that that a swarm of termites deep inside the British banking system have
been fiddling the interbank interest rates (LIBOR) for years in order to
systematically vacuum a few billion pence off the exchange floors for
themselves is the latest blow to the credibility of the global money system -
and probably a fine overture to a looming climactic implosion of the
gigantic, creaking, smoldering, reeking, duck-taped
edifice of broken promises, booby-trapped hedge obligations, counterparty
follies, central bank euchres, sovereign flim-flams,
and countless chicanes too various, dark, and deep to smoke out. Next, we'll
probably hear that Lloyd Blankfein over at Goldman
Sachs has been tinkering with the rotation of the earth in order to gain a
few micro-milliseconds of advantage in his firm's high frequency trading
rackets. After all, back in 2008 Lloyd himself
claimed to be "doing God's work."
In
short, world banking is now hopelessly pranged, and I am not at all sure the
project of civilization (modern edition) can continue by other means. The
impairments of capital formation are now so profound that no one and nothing
can be trusted. Not only are all bets off, but nobody will want to make any
new bets - and by that I mean venture to invest accumulated wealth (capital)
in some useful project designed to sustain human well-being. What remains is
just the desperate hoarding of whatever remains in assets uncontaminated by
the pledges of others to pony up.
All
this points to a dangerous new period of political history, a deadly
Hobbesian scramble to evade the falling timber in a
burning house as the rudiments of a worldwide social contract go up in
flames. Such is the importance of legitimacy: the basic condition for
governance, especially among supposedly free people. You can meddle in a lot
of distributory issues - who gets what - but when
you mess with the most basic operations of money to the extent that no one is
sure what it's really worth, or what it represents, then you are deeply
undermining society. This is now the condition that is set to blow up
republics.
Reality
dislikes fraud and accounting tricks. Reality is serious about settling
scores. Reality eventually intervenes and puts an end to monkey business. What will it be
this time?
Europe
and America have been buying a month here, a month there (of a fragile,
continuing status quo) on the installment plan. That's what QE, TARPs, LTRO,
EFSF, Operation Twist, et cetera, are all about. Think of them as
multi-billion dollar (euro) fire extinguishers bought on credit cards. Europe
is now completely out of credit to buy more fire fighting
equipment. For months now it has been down to whether Germany intends to keep
supporting Spain, Italy, Greece, Portugal, Ireland, the French banks (and a
few stray forgotten places between the backwaters of the Danube and the Gulf
of Finland) without any say in how they manage their allowance. Much as
Germany enjoyed the Ponzi heyday of the Euro zone, a big "tilt"
sign now flashes ominously over the continent, signaling game over. All fall
down. Everybody gets real poor real fast. M. Hollandaise over in Paris has
already sealed his fate with his stupid plan to return to "go" on
the Ponzi game-board. Merkel's tattered scarecrow of a coalition will blow
away in the next national election. The Club Med countries will soon boil up
in street-fighting, Holland and Finland will drink themselves
to death, and across the channel outsider Britain will fizzle away to a burnt
bowl of mulligatawny. That's what the end of the summer looks like to me.
Over
here, in this sorry-ass edition of America, the election will look more and
more like a World Wrestling Federation staged dumb-show between two catamite
hostages of a foul corporate oligarchy. Imagine that horse's ass Mitt Romney
spending the next four months denouncing Obama-care, modeled on his own
health care reform in Massachusetts, while Obama pretends he has a grip on an
economy where the rule of law is absent due to Obama's own omissions and
negligence.
And
if you can't stand that spectacle, just look around at America itself: a
wasteland of futile motoring and discount shopping populated by depressed,
overfed clowns bedizened with sinister tattoos, pretending to be Star
Warriors. No nation ever seen in human history ever laid such a disappointing
egg. Only to have it fry
on the sidewalk.
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