Tag Archives: Spain

Cyprus – The Waterloo of Eurocratic management or the ultimate catalyst for Euro zone growth?

3/18/2013 Portland, Oregon – Pop in your mints…

While the management of the ongoing banking crises on this side of the Atlantic has been dishonest, the management on the other side of the pond, or in today’s case, sea, has been an unmitigated disaster.  Or so it would seem.

We are talking about Cyprus.  For those who have yet to hear about Cyprus, it is an island nation located in the far eastern Mediterranean Sea, just below Turkey.  It is currently inhabited by a fiery mix of Greeks and Turks, who have lived in an uneasy peace with each other for some 40 years after the events that took place during the summer of 1974.

Like many island nations, Cyprus has been able to find common ground with those who have been unable to find common ground on the mainland.  It has found that it can leverage its sovereignty and willingness to bend the rules to offer banking services without the nagging regulations which increasingly plague banks and their clients in the Western nations on the mainland.

Now that the government of Cyprus is bankrupt and in need of a bailout, showing that even a tax and banking paradise can be poisoned by a bad currency, they have gone hat in hand to Belgium, a strange country in the north with absolutely nothing in common with Cyprus, save the currency in question.

The Eurocratic apparatus in Belgium, either on its own or at the behest of the global banking giants in Cyprus, has decided that the terms of the bailout, or “bail in”, which is the Euro friendly way to say “Corralito,” {Editor’s Note:  Corralito is the Argentinean term for when the Government decides to unilaterally make use of the funds in its country’s banks to fund the government because there is literally no one willing to lend them currency on any terms}, would be the direct confiscation of funds from depositors bank accounts in the form of a tax, in this case between 3 and 9.9% (because 10% just looks bad in print) to ultimately pay back the countries who have been generous enough to provide the funds, which, despite the technicalities involved, for most Europeans means Germany.

Predictably, the people of Cyprus, who caught wind of the confirmation of the rumors on Friday and awoke Monday to find that their government had declared what is, at this writing, an indefinite banking holiday (meaning banks and ATMs are closed) to prevent anyone who did not want to participate in the bail in from withdrawing their funds from the country’s banks, are channeling their anger at the German Embassy, quite naturally:

Henry Blodget has written a decent analysis on the details of the Cyprus bail in over at the Daily Ticker.  Blodget does a good job of analyzing the events up until the point where He presumes:

“…the moment depositors think that there is risk to their savings, they rush to banks to yank their money out.

That’s called a run on the bank.

And since no bank anywhere has enough cash on hand to pay off all its depositors at once, runs on the bank cause banks to go bust.

That’s what happened to hundreds of banks in the Great Depression.

And it’s what happened to Bear Stearns, Lehman Brothers, and other huge banks during the financial crisis (though, with Bear and Lehman, the folks who yanked their money out weren’t mom and pop depositors but other big financial institutions). It’s what threatened to bring the entire U.S. financial system to its knees. And it’s why the U.S. and European governments have been frantically bailing out banks ever since.

But now, thanks to the eurozone’s bizarre decision in Cyprus, the illusion that depositors don’t need to yank their money out of threatened banks because they’ll be protected has been shattered.”

What Blodget presumes is that a bank run is bad for the bank.  Here at The Mint, we postulate that this tax on depositors is taken precisely for the benefit of the Cypriot banks.  Further, it has been taken not only for the benefit of the banks in Cypriot, but to serve as the catalyst for the Euro zone to return to growth, or the activities which pass as economic growth circa 2013.

How can this be?  To understand this will take a basic understanding of the banking revenue model.

Ever since 2008, the Federal Reserve and the ECB have been underwriting the banking sector by providing cheap cash to banks and, indirectly, the governments and people’s of their respective countries.  This is where Blodget’s parallel of today’s bank runs and those that occurred during the Great Depression falls apart.  For all of the mistakes that Ben Bernanke has made, the unconditional guarantee of liquidity in the banking system is the one that he will never relinquish, despite appeals to reason, for he mysteriously sees it as his life’s calling.

However, in an effort to stem the fall in asset prices, which is largely a product of the insane “jack the rate 25 basis points every month or so” policy that the Greenspan and Bernanke Fed followed from June 2004 until June 2006, the policy that caused markets to seize up like a car engine losing oil as they accelerated to record speeds, the Feds and the ECB have largely ignited an increase not in economic growth, but in bank deposits.

Bank deposits, far from being a boon to the receiving bank, are a huge problem when market conditions force them to reinvest (read lend out) those funds for rates that are unconscionably low (3.75% to consumers for 30 years, in a fiat currency system, are you out of your mind?).  Making matters worse, the consumers have been slow to take the bait, resulting in a big time squeeze on the traditional banking revenue model.

Enter Cyprus, an island that holds a disproportionate amount of bank deposits.  As a thinking Eurocrat, of which we suspect there are few, save Nile Farage, who is hunting for a way to both ensure that the banking revenue model continues to function, the government of Cyprus retains legitimacy, and that economic activity in the Euro zone will increase, the pile of Euros in Cypriot banks looks like a great target not to loot, as most analysis of the situation will paint this move as, but to force billions of Euros out of the digital vaults of the banking system to wash from the shores of Cyprus outwards into the other Euro zone countries in search of real goods, not simply another cash warehouse.

One sees the Eurocratic genius in the move at the moment one (again, that is you and I, fellow taxpayer) understands that the mere threat of a unilateral tax on deposits as a condition for a Euro zone bailout is causing lines to form at ATMs from Andalu to Cataluña, across the border into Torino and down to the lonely parts of Sicily.

Cyprus Flag
Will the Cyprus Misadventure by the catalyst for elusive economic growth in the Euro zone?

Within a matter of days, billions of Euros which were locked up in the accounts of villainous savers and otherwise useless to the European economy will be running around the Spanish and Italian streets in a desperate attempt to purchase anything real in which to hold said savings.

With what appears to have been a typically boneheaded Eurocratic move, the Eurocrats may have managed to do what Ben Bernanke and all of the helicopters in the world could not have done to the club Med economies:  Shower them with foolishly spent cash while at the same time bailing out both the banks and the governments as a grotesque side effect.

To be sure, it is a short term fix and will leave the Euro zone further down the scorched earth economy path in a matter of years.  Even so, you have to give the Eurocrats some credit for pulling out all the stops, even if they did stumble upon their ultimate stimulus, which relies upon their own stupidity to function, completely by accident.

Meanwhile in Cyprus, the latest is that the government wants to “think over” the terms of the bailout.  The formal vote has been postponed until Friday, and we presume that the banking holiday will remain in effect until after the vote is taken and any taxes are skimmed.

It is a hard assignment, and we do not envy them nor blame them for thinking it over.  The decision before Cyprus’ government officials is simple.  Should they accept the bailout, they face being blamed by their countrymen for sacrificing their parched island on the Eurocratic altar as well as spending the rest of their lives dodging the hit men of any oligarch’s who did not have sufficient forewarning of the move.

Should they reject the bailout, their government may even find a few contributions from said oligarchs to keep operating, and the only cost will be a few less German tourists on their shores, which, given the alternative, seems a small price to pay.

In the end, if our hunch is correct, the mere threat of corallito should be enough to stimulate the Euro zone.

Were we in their shoes, and we are glad we are not, we would reject the bailout.  Either way, it is a strong argument for exiting the formal banking system or becoming a large net creditor.  It is much easier for “crats” of any stripe to confiscate assets with a few keystrokes than for them to lift a finger to grab something in the real world.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for March 18, 2013 (PM)

Copper Price per Lb: $3.43
Oil Price per Barrel:  $93.79
Corn Price per Bushel:  $7.20
10 Yr US Treasury Bond:  1.96%
FED Target Rate:  0.15%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,606 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.7%
Dow Jones Industrial Average:  14,452
M1 Monetary Base:  $2,466,100,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,499,300,000,000

Adios Pesetas: A look back at adoption of the Euro in Spain

3/18/2013 Portland, Oregon – Pop in your mints…

The following is an essay written by a dear friend of ours, Tom Baker, in February of 2002.  Tom and his wife have lived in the region of Catalunya for a number of years.  His observations regarding the currency transition which was about to take place in Spain from pesetas to the full adoption of the Euro may prove timely if and when a similar event takes place in your locale.  Enjoy!

Adios pesetas

A major milestone has come to Europe with the introduction of the common currency known as euros.  Actually the Economic Union of 12 countries (Trivia question–can you name the 12 countries? answer below) has been on the euro standard for the last 2 years, with exchange rates fixed permanently between the currencies of the member countries.  Everyone was really using euros, but they just looked different in each country.

Now in the last month, the last major hurdle has been addressed with the withdrawal of all local currencies from circulation, and their replacement with euro coins and bills.  Think of the problems involved in changing the currency of 12 countries (approximately the size of the US) with 12 different monetary systems simultaneously.

Prices for goods have been posted in both pesetas and euros in the larger stores for the last year to accustom people to thinking in euros.  It isn’t easy-we have gotten used to valuing items in pesetas, and even though the euro is close to a dollar in value, that hasn’t helped much.  So it must be worse for those that have lived with pesetas all their lives.

Spanish FlagThe schedule is for 2 months of dual circulation, with only euros after that.  Now for some details of the tactics used.  Most cash registers are electronic and have been reprogrammed to handle both currencies.  Banks had kits of euro coins available in December for their customers so people could start getting used to the feel and appearance, but they could not be used until Jan 1.

The big change-over day (Jan 1) was of course very quiet, the major change being that most cash machines only dispensed euro bills.  Then the tactic to force the change-over was that customers could pay in either currency, but always received their change in euros.  So all the stores were sucking pesetas out of circulation.

It was a bit chaotic in the first week, with small merchants having to do the conversions on calculators.  Lots of mistakes were made, lots of people were confused, but the pesetas were disappearing briskly.  A few operations had problems with machines that accept coins, especially the toll roads.  So they decided to shut down the automatic coin machines until the conversion period is over, giving them time to convert them to euros.  If you want to pay cash, you have to give it to a human operator, otherwise use a credit card for automatic payment.EU-flag

The use of credit cards in general was encouraged to reduce the demand for change initially.  There were some shortages of coins, especially when the big traditional sales kicked in on Jan 8.  Now after a month of usage, the euros are seeming more natural and the prices are starting to make sense.  Pesetas have disappeared-all transactions are in euros now.

[A cartoon that I saw showed a bank robber at the counter, and the cashier asked if the transaction would be in pesetas or euros].

In our house, and I’m sure in most others, there was a sweep to collect all the pesetas and get them spent.  Then you find another coat pocket with a handful of coins, plus an envelope with French francs, another with Italian lira, etc.  There are cans with slots in all the banks for those last few stray pesetas to help children around the world.  We’re going to haul our francs to France for one last meal there before the pumpkin-hour.  The lira we sent with friends that are visiting Italy.

If you are holding on to European currency, send it to me immediately :-).  No, just kidding, but you do need to change it.  Bills you should be able to change at major banks until March 1 when all local currencies will disappear; after that you will have to change the money at the state bank in the country of the currency.  They predict that at least a third of the currencies will never be turned in.  That is pure gravy for the governments.

A side effect of the change-over is its effect on black money.  Spain and other areas of Europe have a sizeable underground economy, with all transactions in cash, not reported to the government for tax purposes.  Now some people are stuck with bundles of currency that will soon be unusable.  So the sales of luxury items skyrocketed in December, especially expensive cars.

Also there seemed to be a lot of money being poured into new construction, and housing prices have risen dramatically in the last year.  We will see if they subside in the coming year.  The government has promised to look into suspicious purchases of luxury items.  There were reports of Germans hauling carloads of marks into Switzerland.

On your next trip to Europe, you will find things much easier, with only one currency to carry unless you visit England, Switzerland, Denmark, Sweden, or Norway.  I wonder how much this will affect tourism into these countries?

The last thought is the number of colloquial sayings that will disappear from the language.  “No vale ni un peseta” = “It’s not worth even a peseta”.  The common words used for money were duros (5 pesetas, or like a nickel), and pelas (1 peseta).  These will disappear.

Euro coins:

1, 2, 5 Cents, Centims, Centimos-Copper colored
10, 20, 50  Cents-Gold colored
1, 2 Euros-Gold outer band, silver inner section

The “front” side of each coin is unique to each country, while the “back” side is common to all.

Euro Bills: 5, 10, 20, 50, 100, 200, 500

Euro countries:  Spain, Portugal, Ireland, France, Germany, Austria, Italy, Greece, Holland, Luxemburg, Belgium, Finland

We wish to thank Tom for allowing us to share his essay with you, our fellow taxpayers.  It is both an interesting, first hand look at a significant event in the history of world currencies as well as an instructive guide as to how one may prepare and what to expect should the monetary authorities in your locale choose to swap their existing national currencies for some flavor of supranational currency, such as the Euro.

At the time the Euro was adopted, it appeared to have a number of benefits for the adherents despite the minor inconveniences and sometimes painful price adjustments (we are told that the typical café, which before the Euro went for 100 pelas (see above) was immediately repriced up to a round 1 Euro (roughly 162 pesetas), an instant 62% increase) that were experienced in its adoption.

Now, some eleven years later, five of the countries on the above list have experienced significant economic distress, while others teeter on the fine line between growth and solvency.

It is important to note, however, that the countries that are now in distress experienced substantial economic booms related to the Euro adoption.  Their governments were allowed to borrow at rates which were aided by the strength of their European neighbor’s finances and, as Tom pointed out, the Central Banks made a windfall profit on the quasi confiscation of nearly 1/3 of the currency in circulation.

Was it worth it?  In terms of currency history, 11 years is a bit too soon to make a call, but either way, we have a feeling that a similar sort of currency “consolidation” awaits many in the not too distant future.  It will not be some sort of conspiracy, as many believe, but simply an attempt by the desperate governments of the world to shore up their ailing finances.

It will ultimately fail, but that time may be farther off than it seems.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for March 18, 2013

Copper Price per Lb: $3.51
Oil Price per Barrel:  $93.21
Corn Price per Bushel:  $7.16
10 Yr US Treasury Bond:  2.01%
FED Target Rate:  0.14%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,596 THE GOLD RUSH IS STILL ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.7%
Inflation Rate (CPI):  0.7%
Dow Jones Industrial Average:  14,496
M1 Monetary Base:  $2,466,100,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,499,300,000,000

A Happy Ending to the Euro 2012 and the Futility of European Elections

For the few who missed it, Spain handily defeated Italy yesterday, proving Moody’s wrong once again and making us 1-0 on Euro cup calls here at The Mint.  The Spanish national team, which has won each Euro and World Cup since 2008, will now go down as one of the greatest national teams of all time.

Spain downs Italy as The Mint goes 1-0 on its Euro 2012 prediction

The continent will now turn its weary eyes to the Olympic games, while those who can afford it prepare for their constitutionally guaranteed summer vacation (no kidding, the EU high court has held it as such).

Unfortunately for footballers and vacationers alike, Europe is operating in a perpetual crisis mode, and it is possible that vacationers will return to a Europe that is quite different than the one they left just 30 days before.  One in which their options are limited and their ATM card doesn’t work.

Yes, what started as a minor Hellenic financial problem has predictibly mushroomed into a political crisis at the highest level of the EU.  Voters, fed up with the bailout/austerity approach to banker welfare, increasingly exercise what is left of their sovereign right to vote out relative conservatives and/or moderates and vote in technocrats and/or populists as their fearless leaders.

Here is another prediction, for what its worth, the populists take Germany in the fall of 2013, Europe’s version of Mega Maid will have turned all the way from suck to blow.   The path of austerity that they are currently on will be but a faint memory as the ECB and policy makers move from bailing out the bankers to bailing out any and every political ally.

{Editor’s note:  A populist, for our purposes, is a socialist who no longer masquerades as a conservative or moderate, they are out of the closet, as it were.}

Yet for all the drama and human suffering that is unfolding, we can’t help but think that this is all simply a high priced publicity stunt to get the doomed Euro currency some air time.

For many of the European peoples, the Euro currency has served as nothing more than an unwanted crash course in math and an agent of larceny on the grandest of scales.  The average Jacque, Giorgos, Jorge, or Giovanni would have been better off in the long run had the Euro never been dreamed up.

Rising Populism in Europe to test the ECB’s commitment to elasticity

However, the continued use of the Euro is an extremely high priority to for a select few with addreses on Wall Street, in The City, and anywhere in Germany.  As such, the current tack for the doomed Euroship is for it to be spoken of in the same context as climate change or terrorism, which invariably involves an increasingly illogical and alarmist rhetoric.

The question of whether or not something should be done is glossed over in favor of handing supreme power to a body who demands that something be done.  The only rhetoric that is allowed beyond fear mongering is a discussion of what the supreme power should do.

And so it is with the Euro.

There will be a number of elections over the coming months in the Eurozone, and not one of them will matter.  The tone in Europe is turning decidedly populist, as George Friedman eloquently describes in his recent Geopolitcal Weekly report via Stratfor:

The Futility of European Elections

The only question that remains is whether or not the ECB will accomodate the populist agenda with an accomodative monetary policy.

Our guess is that they will, for populism has never been bound by fiscal restraint.

 

The Mint’s Euro 2012 prediction – Germany loses on all fronts

6/25/2012 Portland, Oregon – Pop in your mints…

After defeating Greece in the quarterfinals, Germany will now face Italy in the Euro semifinals and, if they are victorious in there, either Spain or Portugal in the finals.  If the 2012 Euro plays out according to the most recent soveriegn credit ratings, according to Moody’s, we should expect the following outcomes from the aforementioned teams:

Germany (Aaa) defeats Greece (Ca), which already occurred on Friday.  Spain (A3) would defeat Portugal (Ba3) on Wednesday, and Germany (Aaa) would come out a hair ahead of Italy (A3).

The Germany would then come out victorious after handling Spain on July 1.

However, as Italy showed England yesterday, poor credit ratings can be overcome on the pitch.  Therefore, we are speculating that Spain will defy Moody’s and take the cup.

Spain to defy Moody’s on the pitch

Ironically, a similar scenario is set to play out at the latest emergency EU summit (we have lost track but believe that there have been at least 14 prior to this one) where the Germans are set to capitulate on not only austerity measures but also restraint on monetary policy.

As unemployment in Europe’s club med regions rises, Germans and Europe in general will be keen to avoid a repeat of the rise of the Third Reich in their neighbors to the south.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for June 25, 2012

Copper Price per Lb: $3.36
Oil Price per Barrel:  $79.31

Corn Price per Bushel:  $6.31
10 Yr US Treasury Bond:  1.61%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,585 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  8.2%
Inflation Rate (CPI):  -0.3%
Dow Jones Industrial Average:  12,503

M1 Monetary Base:  $2,192,300,000,000
M2 Monetary Base:  $9,933,900,000,000

Spain, Debt and Sovereignty via Stratfor

The EU’s direct Spanish bank bailout, while ostensibly averting the latest in a string of events which threaten to blow the Euro to smithereens, has now raised the question of moral hazard for German politicians.

The path forward, as we have discussed in this space before, leads to the elimination of national sovereignty for the countries unfortunate enough to have adopted the Euro.

George Friedman discusses the scenarios which may unfold as the Eurozone inches closer to implementing their ultimate solution to the continent’s debt crisis: The Eurobond

Read the full essay here:

Spain, Debt and Sovereignty

Spain, Inc., the latest proof of Anarchy in action, an Impromptu Manifesto

6/11/2012 Portland, Oregon – Pop in your mints…

When we attended graduate school in Spain, we were the first North American student in our course.  It was late 2003 and the Eurozone was full of optimism.  This optimism lead some of the professors to use a portion of their class time taunt the US model as failed and the European model as the obvious way forward.

As proof of European supremacy, our Finance professor often made a point of mentioning to us that the yields on the Spanish 10yr bond were almost the equivalent to the yields on the US 10yr bond.

What a difference nine years and 500 basis points make.

Circa 2012, Spain dominates the financial headlines as the latest casualty of the European debt crisis.  Apparently Spain now is in need of a bailout.  The bailout strategy which will be employed by Spain, Inc. is a hybrid of the prior bailouts accepted by their counterparts, Greece, Inc. and Ireland, Inc.

Greece, Inc. required a bailout because its government was broke.  Ireland, Inc. was slightly more ingenious in that it made a good faith effort to backstop its banks, only to find that it was now the entity which required a backstop.  Spain, Inc, theoretically learning from both experiences, forced its banks to accept the backstop directly so that the Spanish government could save face and be spared the humiliation of the Irish scenario.

Unfortunately, the markets have seen through the charade and are now putting pressure on all bonds, bank or sovereign, which hail from the Iberian Peninsula.

What a difference nine years and 500 basis points make!

Spain’s strategy has failed before it was even implemented for lack of collateral and credibility, both of which are in desperately short supply amongst the EU leadership.

How did once proud Europe end up in this situation?  They decided to force a debt based currency integration by integrating only the currency part of the equation and leaving the debt and fiscal matters to chance.

As if choosing to use a debt based currency weren’t bad enough, choosing only to implement the currency is like handing the nations foolish enough to engage in such a gamble the revolver in a game of Russian roulette where the revolver is fully loaded.

Now, the revolver is being passed and it is Spain’s turn.  Once Spain slumps to the floor, it is Italy’s turn, the Belgium, France, etc. until the European Currency Union, doomed from its outset, breathes its last.

At some point in the process, possibly as Spain pulls the trigger, USA, Inc. will be forced to step in with the “ultimate” backstop, the final hope of the failed, insane “debt is money” currency regime.  As the US throws its sovereign credit rating in front of the runaway freight train of Europe’s soveriegns, it will quickly find itself in the very situation that it is trying to save the European Sovereigns from.

For in this debt crisis, the unwritten rule of quality holds.  When one adds wine to sewage, one gets sewage.  When one adds sewage to wine, one gets sewage.  The sovereign vats have long since been polluted.  It might make sense to check one’s portfolio and remove as much sewage as possible.

Beyond that, we will present two unsolicited yet practical bits of advice.  First, US Bonds will ultimately slide as USA, Inc. wades across the pond to aid Europe.  The Euro currency will rally as the run on European banks by the citizens and the wholesale dumping of any bond denominated in the currency begins.  Quite simply, demand for the Euro will exceed supply in the short term.

Plan accordingly.

We submit to you that the Spain, Inc. debacle is further evidence of one of The Mint’s central themes, that Anarchy is man’s reality, it is an ultimate given, it simply is, and all understanding of the current political and social structures is greatly facilitated by one’s acceptance of this fact.

In fact, one’s ability to act and react to the unfolding changes in the current political and social structures depends upon accepting and embracing Anarchy as the basis for reality and learning to operate in the Truly Capitalistic system which organically emerges as men learn anew that mutual trust and cooperation are in their rightly understood self interests, and that he who is to lead must truly become the servant of all.

To truly embrace this fact, we must understand the nature of mankind.  Man, left to his own devices, is completely devoid of the ability to do the right thing.  He doesn’t have it in him.  He is lazy, self-serving, and completely evil.  He needs God and his fellow man to be able to do anything productive, altruistic, or what may be considered remotely good.  A full defense of this statement is a subject for another day (although the evidence is all around us), we mention it here only to underscore the necessity of a framework which presupposes this fact within which mankind can use this weakness to avoid both self and mutual destruction.

The only reliable framework which has emerged out of natural Anarchy which not only addresses the problem of human nature, but also turn man’s weaknesses into strengths is what we call True Capitalism.  Ironically, by allowing market forces to work with as little hindrance as possible, mankind can insulate itself from descending into chaos and catastrophe.

In fact, to fight the workings of True Capitalism is, by default, to submit oneself to chaos and misery.  Yet every nation on the planet is devoted to some degree in the fight against True capitalism.  Why?  Because the nation state sells itself as the most perfect expression of man’s good intentions, which we presuppose do not exist.  In other words, the dream of the nation state is built on a false pretense that is usually attributed to socialism: That man is inherently good and wants to do good to others.

Given their presuppositions, is it clear that the nation state and a truly capitalistic society are, in fact, the antithesis of one another.  Where a nation state regulates by edict,  truly capitalistic society regulates by example.  Where a nation state is rigid, where  truly capitalistic society is pliable.  Hence, where  truly capitalistic society will bend but not break, the nation state is repeatedly smashed to pieces when faced with change.

For the more a nation state tries to force men to do good, the more mankind’s character flaws will overtake these good intentions until the nation state becomes an expression of mankind’s evil nature.

The truly capitalistic society allows each mans evil nature to be corrected by allowing him to experience the consequences of his inherently poor behavior, paradoxically and naturally improving the behavior and norms of all.

Moving to a less philosophical level, how can we be sure that Anarchy is the basis of man’s current existence?  The evidence can be found in that the institutions which supposedly offer the best option to Anarchy, the nation states if the world, are beginning to succumb to the punishments they have built up in their losing fight against natural law.

Greece, Ireland, Portugal, Italy, and now Spain, Inc. are now succumbing to the inevitable.  The member of club med which turns from the failure of the Euro currency to go it alone and embrace the much feared “Anarchy,” as it were, paradoxically stands to be richly rewarded by the flocks of tourists who can suddenly afford a European vacation without the Euro.

We conclude with a brief manifesto for your perusal and enjoyment.  What does the future hold?

Out of Anarchy, a Truly Capitalistic System will ORGANICALLY emerge, and with it a new dawn for humanity, built on mutual interest and almost endless capital formation which will engender a spontaneous and dynamic social order, a society without borders that would enjoy freedom and prosperity that we cannot even imagine under current conditions.

Believe.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for June 11, 2012

Copper Price per Lb: $3.35
Oil Price per Barrel:  $81.49

Corn Price per Bushel:  $5.92
10 Yr US Treasury Bond:  1.60%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,596 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  8.2%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  12,411

M1 Monetary Base:  $2,306,000,000,000
M2 Monetary Base:  $9,790,100,000,000

They told me a year had passed

We invite you to enjoy a bit of poetry about our time in Barcelona and Spain this Friday afternoon.  Have a great weekend and stay fresh!

They told me a year had passed

By David Mint

 

I sat on the terrace in Les Planes,

Staring blankly at the wooded hills

Beyond the train station

Pondering all that had occurred

 

I’d arrived in the dead of winter,

Without expectations,

Without plans,

completely unprepared

 

I’d resisted the change,

Defiant,

Trapped in my ways,

Until the day that I was broken

 

At the point of death,

I sat waiting at Sant Pau,

And soiled myself,

Shortly after I’d been called

L'hospital de Sant Pau

As I lay in the dungeon,

Of the modernist gem,

Life dripped back into my veins,

Yet only to a point

 

I arose,

A changed man,

A blank page,

Humbled

 

I was free to travel,

Learn,

Serve,

And to love

 

Free to explore,

 Llançà, Huesca

Contra Corriente, El Lokal, L’Estudi,

Les Heures, Ligonde

 

Yet it is the people,

The love,

The Spirit which we share,

That remains

 

I met my true love,

Now this dream will never end,

We march forward and do not look back

Two becoming one,

 

I sat on the terrace in Les Planes,

Staring blankly at the wooded hills

They told me a year had passed,

And I did not believe them