John Rubino's Contributions

For the past few months depositors have been emptying their Greek and Spanish bank accounts and moving the funds to safer places like Germany and Switzerland. This is not surprising. What is surprising is that anyone still has accounts in Greek and Spanish banks.

If central bankers weren’t the main architects of the coming depression, it might be tempting to pity them. The world is falling apart and everyone expects them to save the day with lower rates and/or exotic new stimulus programs. But at the same time everyone assumes this debt monetization will destabilize the financial system, bringing about the end of the world as we know it.

We have indeed become more polarized, but viewing this as something that just came out of the blue or as a plot by one side or the other misses the point, which is that the more debt a country takes on, the harder and thus less politically marketable the fixes become.

Today’s world can be summarized in two sentences: Unless continuously fed with new credit, the global financial system will implode. And when confronted with this possibility, governments will always respond with new credit.

The in-laws own a gas station in Miami that they’ve wanted to sell for years. But they dithered when the market was hot and ended up being stuck with it when interest evaporated in 2009. Lately, though, the phone has begun to ring again.

One of the problems with the debate over the “national debt” is that there’s no generally agreed upon definition of that term. Is it what the federal government owes, or what it owes foreigners, or what the whole country, private and public sector together, owes? Does it include off-balance-sheet items and contingent liabilities?

For years now, US government bonds have looked like terrible investments, what with those trillion-dollar deficits and multiple wars and all. But Treasuries just kept rising, earning their owners nice returns and making their critics seem like financial illiterates who didn’t know a AAAA credit when they saw one.

It looks like Greece will get its debt restructuring, which presumably delays its collapse by a few months. So now the spotlight shifts to the other functionally bankrupt eurozone countries which have no choice but to demand the same deal.

Nicole Foss, who under the pen name Stoneleigh co-edits the Automatic Earth website, just did a long-form interview with an Italian magazine where she lays out her peak energy, societal collapse thesis in the coherent, accessible way that fans of her writing have come to expect. I'll break down an interesting point she made in this editorial.

As the Greek default (and it is a default no matter what they end up calling it) is finalized this week, the consensus seems to be that failure to reach a deal would cause a global financial apocalypse.

Europe’s parade of surreal financial news just keeps coming. This week, investors are paying Germany to take their money by accepting negative interest rates on new government debt.

The thing to understand about inflation is that if one major country does it, all the others have to do it too. A single country can benefit by making its currency less valuable, because a falling exchange rate gives its exporters a pricing edge in global markets.

The Europe that its elites envision looks like soft version of the US — but with a balanced budget amendment. You don’t have to be a conspiracy theorist to believe that the creators of the Euro-zone wanted just such a union but knew they’d need an existential crisis to make it palatable. Whether by design or chance, they now have their crisis.

It begins with part or all of the global economy appearing to implode under its five-decade accumulation of debt. The public sector/central bank nexus responds with a liquidity injection, leading the markets to rally explosively and the pundits to declare the problem fixed.

The Eurozone’s descent into chaos is starting to get repetitive — though with each iteration the numbers do get scarier. Back in 2010, for instance, the crisis was already almost a year old and Spain looked like the most likely post-Greece domino.

This week all eyes are on Greece and Italy, which is reasonable since they’re likely to be pretty entertaining. But as incredible as it sounds, PIIGS country sovereign debt might not be the biggest banking-system threat on the immediate horizon. It turns out that the largest European banks have held onto — and apparently ...

As Europe grinds out yet another doomed banking system rescue plan, it might be helpful to examine the underlying assumption, which is that we need these big banks.

Standard & Poor’s downgrade of the U.S. confused the markets but not the pundits. From far-left to far-right, everyone with a stake in the existing order is shocked that a lowly rating agency would critique the emperor’s wardrobe.

The above is mostly speculation, of course, but it does seem reasonable that among the things we’ll be offered at Tuesday’s Fed meeting will be a promise of low interest rates pretty much forever, increased buying of long-term bonds to lower interest rates even further, and a statement of willingness to flood the banks with cash again if the bonus pool shrinks, er, if the economy keeps slowing.

As pretty much everyone knew they would, Congress and the president have stitched together a sad little "deficit reduction" plan that allows them to keep borrowing through the next election. But the details are less important than the timing, which coincides with what might be the start of a double dip recession.