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Tag Archives: Bankruptcy

Tragi-Comic Greece Illuminates “Austerity”


Tragi-Comic Masks--a Greek Invention [courtesy Google Images]

Tragi-Comic Masks–a Greek Invention
[courtesy Google Images]

Reuters wrote in May (“Euro zone: more time needed for Greek reforms”):

Euro zone finance ministers will not meet on Thursday and need more time to discuss Greek reforms that would unlock new loans, signaling significant differences remain between Athens and its lenders on bailout targets.”

Signaling”?!

Signaling significant differences?!“

Bunk.

What they’re signaling in this “never-ending story” is that Greece will never be both willing and able to repay its existing national debts—and neither side wants to admit that truth.

What they’re “signaling” is that the EU creditors refuse to face reality: Greece is bankrupt. Therefore, Greece should be allowed to file for bankruptcy because it can’t possibly repay its existing debt. Greece should be allowed to rebuild its economy without repaying existing EU debt obligations—and also without going deeper into debt.

What they’re “signaling” is the creditors’ refusal to admit that “what can’t be paid, won’t be paid”.

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How Governments React to Bankruptcy


[courtesy Google Images]

[courtesy Google Images]

Michael Snyder (TheEconomicCollapseBlog.com) wrote:

 

“The crisis in Puerto Rico continues to spiral out of control.”

 

Maybe so, but I don’t regard Puerto Rico’s plight as big news. I don’t see Puerto Rico as being the domino that starts the chain reaction that eventually, topples the U.S. economy.

Even so, Puerto Rico’s reaction to its default is interesting as an indicator of what may happen to the US when the U.S. government also inevitably defaults on its debts.

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Posted by on February 23, 2016 in Bankruptcy, Debt, What Can't be Paid

 

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Confidence in Debt Repayment


And Also Self-Deceiving [courtesy Google Images]

But Also Self-Deceiving
[courtesy Google Images]

According to Michael Snyder (TheEconomicCollapseBlog.com), “The [debt] crisis in Puerto Rico continues to spiral out of control.”

Michael might be right, but I don’t regard Puerto Rico’s plight as big news.

According to Wikipedia, Puerto Rico is over $70 billion in debt.  $70 billion’s not chicken feed.  But, on the other hand, under Quantitative Easing 3 (QE3), the Federal Reserve was handing out $80 billion per month to stimulate the U.S. economy.  Surely, the Fed could cough up enough to solve P.R.s debt problem—right?

I doubt that Puerto Rico’s $70 billion debt is a domino that’s big enough to start a chain reaction that will, eventually, topple the US economy.  If I’m wrong, why doesn’t the Fed simply lend Puerto Rico, say, $40 billion, to placate some of its creditors and at least kick the can down the road for another year or two?  We could call it “QE4”—a one lump loan of $40 billion to save Puerto Rico.

However, even if Puerto Rico’s debt problem is more noise than news, Puerto Rico’s tactics for dealing with that problem might be illuminating.

Why?  Because there are only so many moves on the board.  I.e., there are only a limited number of tactics that any insolvent government can use to deal with its excess debt.

By understanding Puerto Rico’s tactics for dealing with its unpayable debts, we can gain a pretty good idea of the tactics available to any other overly-indebted nation (including the U.S.) when it’s finally forced to default.

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Does Debt-based Currency Necessitate Open Immigration?


[courtesy Google Images]

[courtesy Google Images]

Someone writing under the pseudonym “dog-move” posted the following comment on my blog (adask.wordpress.com):

 

“Richard Kelly Hoskins stated in his book War Cycles Peace Cycles that open immigration has always been a practical economic necessity in a debt-based usury system.  That the immigrant became more valuable than the indigenous population of a nation because the immigrant was better able to borrow needed money/debt into existence.  I have not heard anything on this particular reason in any current report of the escalation of mass immigration happening now, worldwide.”

 

I am also previously unfamiliar with Mr. Hoskins’ hypothesis.  Nevertheless, his argument sounds fascinating.

“Dog-move’s” brief description implies that once a nation embraces a debt-based monetary system, that nation will be mathematically compelled to bring in more immigrants to support the debt-based monetary system. Left unchecked, that influx of immigrants may destroy the nation.  Apparently, the people in power think that national destruction is a small price to pay–or may even be a desirable outcome.

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Logical Consequences


Pick Your Premises; Pick Your Destiny [courtesy Google Images]

Pick Your Premises;
Pick Your Destiny
[courtesy Google Images]

Beliefs matter.  Profoundly.

Whenever you embrace a particular belief, it becomes a premise in your life.  Based on that premise, your logic will compel you to act in one way or another.

For example, depending on whether you believe in God or believe there is no god, your conduct in life will be profoundly different. Based on the fundamental premise of belief, an atheist has a completely different set of logical goals, values, inhibitions and even compulsions as compared to a Christian.  Actions which atheists find logically compelling can be anathema for Christians.

As another example, consider negative interest rates.  That concept seems absurd to most, but to those who understand and embrace the premise of debt-based monetary system, negative interest rates are a reasonable, rational and even necessary concept.  The logic of the first premise (debt-based money) compels the consequence of negative interest rates.

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IMF Colonized Korea, Part I


South Korean Flag [courtesy Google Images]

South Korean Flag
[courtesy Google Images]

I first wrote and published most the following article in A.D. 1998.  It’s too long to be presented as a single article in this forum, so I’ve divided it up into “Part I—Description” and “Part II—Evidence”.  This week, the Description; next week, the Evidence.

I’ve also edited the original article, added some comments, made a couple of corrections and changed some verb tenses to make the text more readable and “current”.  Nevertheless, despite these changes, 80% of this article was written 17 years ago.

Why should anyone want to read an article written 17 years ago?

First, because the article explains how overly-indebted South Korea “voluntarily” accepted colonization by the International Monetary Fund (IMF) rather than risk declaring a national bankruptcy.  The process is almost exquisitely wicked.

Second, this article should help people to better understand what’s recently happened to Greece.  In order to avoid declaring bankruptcy, the overly-indebted Greece agreed to a bailout deal with the European Union (EU) and the European Central Bank (ECB) that essentially reduced Greece from the status of a sovereign nation that joined the EU voluntarily, to the status of a colony that’s been conquered and is now owned and operated by the EU and ECB.

The most recent Greek bailout deal is so extreme, it’s been described by some as less than an “agreement” than an unconditional surrender—the capitulation of an overly-indebted nation who feared the pain of bankruptcy more than the bondage of debt.  (That’s exactly what also happened to South Korea in A.D. 1997.)

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Those who live by Fractional Reserve Banking . . . .


Sovereign Debt Crisis [courtesy Google Images]

Sovereign Debt Crisis
[courtesy Google Images]

This article is conjectural.  The conjecture flows from the idea that a monetary system that’s based on debt (mere promises to repay) rather than on assets (actual payments denominated in physical gold or silver) and leads us to some very strange economic implications.

For example, in a debt-based monetary system:

1) Debt is our measure of wealth. I.e., the more debt you have, the wealthier you become (or at least, appear).  Could you enjoy the apparent “wealth” of living in a $250,000 home, if you hadn’t first been able to go into debt for a mortgage?  Could you enjoy the apparent “wealth” of driving a new car, if you couldn’t first go into debt for an auto loan at the bank?  Our apparent wealth is a function of each debtor’s capacity to make promises rather than engage in productive work.  As an extreme example, think “liar’s loans” (people who couldn’t possibly repay their loans were still entitled to move into expensive homes based on mere “promises” to repay).

2) If debt is wealth, then destroying debt (through bankruptcy) destroys wealth and, more, destroys whatever fiat currency that’s based on that debt.

3) The governments and creditors of the world should have a vested interest in restricting debtors’ access to bankruptcy laws.  If debtors can’t file for bankruptcy, they can’t destroy the debt and debt-instruments that support the debt-based monetary system.

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