The speed of unravelling

Italy has a new prime minister, former EU commissioner and ex manager at Goldman Sachs. His government is entirely composed of non elected “experts”.

Greece’s new prime minister is a former head of his country’s central bank.

He was in that post when Greek authorities produced false public accounts, blurred by the use of financial derivatives arranged (i.e. sold at great profit) by … Goldman Sachs.

The European Central Bank’s new chief is a former manager at Goldman Sachs.

The US government includes several ex managers at Goldman Sachs and the same is true of the Federal Reserve.

While Italy’s public debt is € 1,900 billion, the US federal public debt has just hit $15,000 billion (almost 100% of GDP). It was “only” 10,000 billion in September 2008; thus, an increase of five trillions in three years.

Will the “experts” be able to save their financial system?

Not a chance. But they will try, and they are going to be ruthless (and undemocratic) in the process.

The only question is the speed and details of the unravelling.

There could be a sudden event triggering runs on banks and economic free fall, or a more gradual shrinking, which has effectively already started with the 50% moratorium on Greek debt agreed recently.

For lucid observers of the global crisis, none of this comes as a big surprise.

Their priority now is to refine reflexions on how to adapt to increasing turbulences, emphasising simplicity and reduced dependence on big systems (see first post on that subject of 14 November).

Fear not, be resilient, keep smiling.

Love,

Leo

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