I came across this new journal on basic income and thought it would be worth passing. there are many good and thought provoking articles available. What I have found interesting is this political slant given to some of them. Quite frankly who cares?

It actually falls neatly into and out of most of the political spectrum. Where it diverges is on the issue of control. Politics is all about who is in control whether Blue, Red, Yellow or Green or any shade in between. Basic income is about giving everyone access to the financial commons and allowing them the just get on with it. It isn’t a social policy its an expression of freedom and a right.

It will be interesting to see how this debate develops but I’m glad to see it taking on a more formal conversation.

Than you to Owen McCaffrey for this new political party for NZ focused on money and land reform. Recently born, it focuses on bringing in a land tax and money reform, issues that have been discussed widely on this blog.

Added to that is a citizens income, disestablishment of welfare, better infrastructure and importantly a compulsory health insurance.

It will be interesting to discuss these issues further. I may invite Owen to expand on them here. The name is a bit of a mouthful but that can be worked on.

It’s a very good start though.

Here we go again. Another “rogue trader” strikes at the heart of the capitalist empire this time racking up a fairly impressive $7bln odd loss. No that is completely out of this world. In fact it’s almost unbelievable…..he must have had some serious positions which only the 3 blind mice wouldn’t have noticed. Being French just adds to the frisson given they are supposed to be conservative players (which is not true at all) and gives the Septics something to stick to the Euro mob.
Naturellement the SocGen management disclaim any knowledge of this fraud. What do they think they get paid for? Certainly not for making money because they don’t. Their job is to manage traders and make sure risk limits are being enforced. I know this well since I was a trader who frequently ran up and bust risk limits and without fail would receive a phone call from somebody asking, politely, about the humongous $/Y position I has acquired. Positions always show up somewhere especially big ones. This one was a monster.
Bottom line: this stuff shouldn’t happen without someone knowing about it. Expect the usual cover up.

Two interesting piece of news on the geopolitical spectrum caught me eye this week: Firstly Gordon Brown and his secret talks with other world “leaders” to establish a “new world order”. This will have the conspiracy theorists running amok with versions of the Trilateral Commission and Bilderberg Group stories. Suffice to say that the “New World Order” project has been going quietly in the background for over 30 years.

Alongside this is a new manifesto from top Pentagon, Nato and EU players, past and present. The premise is that a first up nuclear strike is a legitimate and warranted policy option. Their reasoning is that it will be impossible to control the proliferation of nuclear weaponry and that the best approach is to simply nuke those nations who might be a bit aggro with the odd nuclear warhead.

So that probably takes the Middle East, North Korea and other such spots off the tourist map for a while. Unfortunately this sounds like one of those crazy ideas that gets the green light. Time to re-watch “V for Vendetta” and “Children of Men”.

Brave New World and all that.

I guess the upside is that NZ property prices will hold up for some time.

I like this piece from Naked Capitalism.com. It talks about the issue of moral hazard and the interventionist policies of all the so called “capitalist” supporters like Reagan. History shows us that far from allowing markets to be free successive governments and central bank authorities have constantly intervened to keep the ship afloat, quite often to feather the nests of others.

As Jamesy commented in the previous post, the LTCM collapse was a good example. The rescue of LTCM was a huge earner to the banks that participated over the carcass and being there at the time I can confirm the glee that surrounded this bail out.

Free markets might actually be good if they were free, just like free trade and anything else with free attached to it. Control is everywhere and freedom is a myth. Just ask people servicing mortgages, caught in the grip of death.

Well the 20% drop I predicted in December has happened pretty quickly but that’s coming off a big high. We’ve had liquidity injections, stimulus packages and now an emergency rate cut of 75bps.

So far so good but what happens next?  Well if this was a standard asset bubble/recession I would imagine a lowering of rates globally, a bond market rally, a rise in unemployment and so on. But this is different because its really a money crisis.

I say money instead of credit because to all extents and purposes money is credit. But whereas money is secured on confidence, credit is secured on assets. Those assets are now worth a lot less than previously imagined (another word for risk analysis!).

We’ve seen some major US banks bailed out, a major UK lender go bust and be bailed out and a complete collapse of the US sub-prime market. The stock market reaction is simply an inevitable response. But don’t let that distract us from the real crisis which is global financial insolvency.

So the next issue will be a major US (or other) financial institution going to the wall. I mean a big player simply collapsing. To prevent this the Fed and other central banks will have to underwrite the whole system of interbank credit. A major collapse simply cannot be allowed to happen.

We may not even hear much about it but right now credit lines are frozen solid and at some point that pressure will cause an explosion somewhere.

So I wouldn’t be getting too excited about cheap assets just yet