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Goldman Sachs Guy: Mark Carney, Song and Dance


images (13)

Mark Carney has been the Governor of the Bank of Canada since 2007.  During his time as Governor, the main chartered banks were injected with “liquidity” totaling about $114 billion because of the financial crisis of 2008.  The Prime Minister denied that this injection was a “bailout.”  The Canadian banks also borrowed from the US Federal Reserve discount window–one bank alone borrowed $10 billion.

Canadian banks have gradually been deregulated and now are getting bigger than ever before.  They can sell insurance, make investments and take deposits where previously they had been just boring depository banks.  They are also getting bigger through acquisitions of other banking institutions.

Mark Carney gets credit for keeping Canadian banks from failing during the crisis but it was mostly luck (“horsehoes”) or previous regulation that actually kept the financial system stable.  Carney and Finance Minister Flaherty frequently warn Canadians to get out of debt even though savings earn very little interest with our low interest rate policy and wages are stagnant or decreasing while prices continue to increase.  Debt levels in Canada reflect the conditions of our economy.  At the same time, the government has decided to impose austerity on the population by reducing expenditures across the board by 10% including loss of government jobs.

Here’s a little song for Mark Carney as he leaves Canada to become Governor of the Bank of England:

When I was a Lad” (Carney Style)

By Polemic – Macro Man 

After prompting from a reader and getting bored of guessing Italian election outcomes, we have adapted Messrs Gilbert and Sullivan’s “When I was a Lad” from “HMS Pinafore“. Instead of the Queen’s Navy, we think the B.o.E is more topical. 

“When I was a Lad” (Carney Style)

When I was a lad I served a term

As a junior trader at the Goldman firm.

I cleaned the books and soon wasn’t poor,

As I traded debt and made the profits soar.

Chorus.

He traded debt and made the profits soar.

I traded debt so carefully

That now I am the Governor of the B.o.E

Chorus.

He traded debt so carefully

That now he is the Governor of the B.o.E

As trading boy I made such a fee

That they gave me a post in the ministry

As Canadian minister with no recourse

I introduced a tax on income trusts at source.

Chorus.

He introduced a tax on income trusts at  source

I introduced the tax when at the ministry

So now I am the Governor of the B.o.E 

Chorus.

He introduced the tax when at the ministry

So now he is the Governor of the B.o.E

In raising tax I made such a name

That a central bank governor I soon became

I saw a crash, chose policies to suit

To prevent Canada becoming destitute.

Chorus.

To prevent Canada becoming destitute.

I passed so well through the G.F.C

That now I am the Governor of the B.o.E

Chorus.

He passed so well through the G.F.C.

That now he is the Governor of the B.o.E

Of central bank skills I acquired such a grip

That they took me into the partnership.

Bernanke, Merve and then Draghi

All showed me the way to play the great Q.E.

Chorus.

All showed him the way to play the great Q.E.

Balance Sheet Constraint won’t apply to me

Now that I am the Governor of the B.o.E

Chorus.

Balance Sheet Constraint won’t apply to he

Now that he is the Governor of the B.o.E.

I grew so known that I was sent

By a select committee into Parliament.

I always voted for the strong growth call,

I never thought of thinking of inflation at all.

Chorus.

He never thought of thinking of inflation at all.

I thought so little, they rewarded me

By making me the Governor of the B.o.E

Chorus.

He thought so little, they rewarded he

By making him the Governor of the B.o.E

Now bankers all, (don’t look at me Moody)

If you want to rise to the top of the tree,

If your soul isn’t bothered by a ratings fall

Be careful to be guided by this golden rule.

Chorus.

Be careful to be guided by this golden rule.

Preach growth, restraint yet huge Q.E.

And you all may be Governors of the B.o.E

Chorus.

Preach growth, restraint yet huge Q.E.

And you all may be Governors of the B.o.E

http://www.goldmansachs666.com/2013/02/goldman-sachs-guy-mark-carney-song-and.html

Estimated Cost of Eurozone Break-up a Shocking $22.0 Trillion


eurozone

The financial crisis in the eurozone has continued for some time, and there is still no end in sight. What was once perhaps a nice theory on paper is currently crumpling under the strains of reality. It’s still a surprise to me that the founders of the eurozone did not realize the possibility of a financial crisis and the importance of having a fiscal union to go along with the monetary union. I’m sure every person knows that they shouldn’t cosign a loan with someone unless they can trust in that person’s ability to repay their debt. Instead, the eurozone has essentially given a blank check to the weaker nations, specifically the PIIGS—Portugal, Ireland, Italy, Greece, and Spain.

With this financial crisis unfolding, many are surprised that the eurozone is still holding together. So the question is: why would the wealthy northern part of the eurozone continue to support the poor and fiscally irresponsible countries during this financial crisis? Why not just break up the union? It appears that the costs associated with breaking up the eurozone might be far higher than most people realize. In fact, perhaps the eurozone members themselves know the true costs and are thus willing to throw in hundreds of billions of dollars to prevent the loss of trillions.

new study by research company Prognos has come out with an estimate; if Portugal, Greece, Italy, and Spain were to leave the eurozone, in terms of growth, it would cost approximately 17.2 trillion euros, or US$22.3 trillion, by 2020. (Source: “Euro Exit by Southern Nations Could Cost 17 Trillion Euros,” Spiegel Online October 17, 2012)

The research company looked beyond just the existing levels of debt that would be wiped out and considered the decline in economic activity in 42 economies around the world as well. While the company does state that an exit by Greece alone would have a minimal effect worldwide, it would have a serious effect on all markets, including America’s if the financial crisis were to spread to other nations within the eurozone.

The company estimates that if Spain were to leave the eurozone, it would cost America 1.2 trillion euros in lost gross domestic product (GDP) by 2020. The firm states that if Italy left, the cost of the eurozone financial crisis would be even more catastrophic for all nations around the world, including the U.S.

Obviously, these are just estimates and, considering the unprecedented nature of the financial crisis, a eurozone break-up would be extremely difficult to fully calculate. However, it is obvious that the costs of the financial crisis if the eurozone were to fold would be quite severe, including  the debt not repaid, the hit to the financial system, and the loss in economic activity and wealth within those eurozone nations that had left. Obviously, the currency of any nation that leaves the eurozone will sharply decline in value, which would mean a massive drop in imports and a historic loss in wealth. Hopefully, eurozone members are aware of the costs if the financial crisis should escalate, and are doing their best to not only plug the holes but to also make the necessary structural reforms to prevent a break-up from occurring. However, time is running out.

via Estimated Cost of Eurozone Break-up a Shocking $22.0 Trillion | NowPublic News Coverage.

via Estimated Cost of Eurozone Break-up a Shocking $22.0 Trillion | NowPublic News Coverage.

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