Khan Academy is a not-for-profit educational system with the goal of changing education for the better by providing a free world-class education for anyone anywhere. Everybody can go there to learn something at their own pace. I fell back on 'Khan' to explain something that is going to be of utmost interest the next coming weeks: the huge survival problems of banks and with them entangled governments. The banking system is in complete disarray. It's falling apart in a sort of 'lingering death', it appears so far. Countries, like Argentina, Greece and Brazil, are at the brink of financial ruin, whereas the Euro zone is arriving at a point for which the leading British economist Bernard Connolly had warned almost 18 years ago. In 1996 he already got severe personal trouble for blowing his whistle in public when "the European elite" tried to silence him for his well-founded critique on plans about (undemocratically) establishing a centralized European "super-state" with "one-currency-fits-all" money, the €uro. His critique was correct to the fullest as we now, in 2013, know and would have to admit, which still isn't happening by political bigotry and wishful thinking of this 'elite'. Economies go down the drain, civil unrest may follow soon. Alea iacta est! Time ran out to safely pass the Rubicon.
But how to explain to you what the very basics are of this 'state/central bank guaranteed banking' without using complex mathematics? However to understand the "global banking crisis" as an out-of-control fractional banking system, you'll need to have some insight in those basics. Kahn Academy appeared to have a series of short videos to explain this in the simplest words! So, if you want to understand what might, no, by consequence of political and financial 'adventures' inevitably will occur the next few weeks and months, it truly is a good idea to take a very close look at these 3 fundamental, short films. It's your time well-spent indeed! Yes, you wise guys: it is about the Western fractional banking-gambling system and not about (assumed) 'full-reserve' Islamic banking... If in great hurry, see film 3 to assess the current crisis.
Only for your information if you still don't understand... The EU spans 1/3 of the world. That's no match for the USA of course, though that country does all it can to play the biggest imperialist. Therefor it is useful to view this film and get convinced of the organizational competence, good taste and efficiency of the EU... (were I kidding?)
The Euro-zone is hanging on a threat..., or is it: a thread? It's no longer about some wavering and incompetent governments ripping off their people with "austerity measures", but also the rising sentiment among common people that politicians and banksters are "one and the same", trying to save a bankrupt banking system managed by a "money mafia". Bankster who can't offer clear answers to their doings. They want to break away from it. The Catalans, the Venetians, the Greek, the Irish, and others, to restore their individual wealth and prosperity with their own hands. Break with an "elite" stemming from a non-elected officialdom and from (ancient) corrupt oligarchies. Europe is in a free fall and under stress of breaking apart into historic segments as if it were the 12th century! Little time left for leaders to eliminate the power of banksters, cancel artificial 'mega'-debts, hand out (cash) money to their people to (re)start consumption and show leadership, instead of offering lip services to bankrupt banks. Getting consumption going means re-starting employment and 'growth'. More austerity could mean the disintegration of countries in Europe as we know them. There is little time left to make a choice...
These images keep me wondering... To my opinion either everybody in Spain for the time of 365 days firmly joins and backs minister-president Mariano Rajoy and his governing team to have them complete the overhaul of the Spanish State institutions and banks, modernizing Spain. Or alternatively join Greece and create a huge politico-economic mess with loss of much precious time to bring the house in order once and for all. That is at stake. The sooner the groundwork is laid, corruption and over-spending dealt with, lean institutions established that work far less bureaucratic and more efficient, the labor-market cleaned from archaic obstacles, the better for a modern and growing Spain. You can only achieve that step by step. Tax hikes (in vain, for recession is already taking place), cutting pensions and minimum subsidies for the poor to buy at least food and pay the rent, is the worst way I can imagine to get things growing! That causes the sort of incidents you can see on the movie. However, excessive force is trivial when protesters trespass boundaries that were clearly defined near the Congress building in Madrid. What had to be a peaceful, playful event then partly turns into a riot. These are painful times (to learn) for Spain...
"Morten Messerschmidt, Danish MEP and member of the Freedom and Democracy group in the European Parliament, believes Greeks should exit the Eurozone to save themselves." That writes RT News to their report about the Eurozone. Moody's Rating Agency now threatens to downgrade the whole of the EU when no proper political action is taken to stop the Euro-crisis. Thursday, Sept. 6, may become the crucial date when the European Central Bank (ECB) intends to expose its plans to buy bonds from debt-ridden countries in the zone. If these plans are -again- vague, exchanges will surely react to that news. On Wednesday, Sept. 12, the German High Court at Karlsruhe will determine if the European Stability Mechanism that could be used by the ECB to assist countries in need, is unconstitutional. It's hard to believe it will arrive to that conclusion, but if this court should it would cause a "bloodbath" on the money markets.
In the meantime I see dire signals in Spain, where 'austerity' appears to be translated by local councils and governments into excessively raising their levies and taxes! How long this will be accepted by the population is the burning question. Many foreigners close up their Spanish houses and go home, not willing or able to pay the formidable rise in the cost of living the last several weeks due to a new, much higher value added tax, excessively rising prices at supermarkets, costs of petrol and diminishing services. My observations and bills show a rise of about 25%. Spain is on the Greek path to 'hell' for sure, if this can't be reversed. This only to save Spanish banks from going bust...?
Developments in Euro-land are so volatile, so many contradictory words are spread by media, so much political galimatias is told, that I really had a hard time to keep up with it and gauge the real situation and its risks. It's not so much that uncertainty exists about the European economies or their usage of the €uro, but WHY this particular crisis persists! After reading Max Weber on "The Protestant Ethic and the Spirit of Capitalism" I thought to have found an important clou. He argues that Calvinism introduced the concept of salvation by "a chance of profit" for those God had choosen to His will, and wasn't longer in the Catholic realm of believing the sacraments, assent to doctrines or doing good deeds to negotiate salvation.
When we carefully look to the difficulties the Eurozone has with its economies, we do see the clear dichotomy(pdf) between orthodox plus mainly catholic, southern countries and the reformed ones, like Germany. Beyond all political abracadabra isn't there a religious component at work? Is Germany as a Protestant stronghold trying to impose its traditional convictions and its associated economics on countries that have a distinctly different attitude towards the value of labor and its resulting materialism? How then could you ever align those countries into one single economic space with some degree of unity? What however when one or more of the southern countries would leave the Calvinist dominated Eurozone? Apart from the religious component Capital Economics manager Roger Bootle provides some answers in his paper: "Leaving the Euro - practical guide"(pdf). A recent interview of Roger Bootle with RT explains more about what could ultimately be a blessing in disguise...
Link: http://youtu.be/s2eZzyit3mgFinally an analysis that pays attention to the patchwork of old-fashioned nation-states that Europe is. The Euro-Crisis regarding spending and overspending a single currency is deepening and widening still. Leaders and politicians appear not to have learned from the Great Depression 1929, repeating nearly the same errors and continuing the path to a "Germanification" of the euro-zone by austerity. The "bail-out" of Spain, using a still non-existent European Stability Mechanism, where Spain and Italy (also in crisis) are a.o. with Germany the largest contributors of money for the ESM (!), remind me of the irrationality of political decisions. It appears now that the Spanish Prime Minister, Mariano Rajoy, is trying to float by pulling his own suspenders... From the European Central Bank, manipulated by Germany and France (also in crisis), no uplifting initiative. We are for a 5th year spiraling downward into an evermore dangerous deflation. Who said: l'histoire se répète? Yes, it does - in Europe these days.