Keynesian Political Economy Is Theft – Monty Pelerin's World : Monty Pelerin's World
Keynesian Political Economy Is Theft – Monty Pelerin’s World : Monty Pelerin’s World.
The plague of our time is Keynesian economics. It has destroyed the economics profession and enabled the political class to obtain powers never intended.
Keynesian economics provided the intellectual cover for the criminal class we politely call “government” to plunder its citizenry. In the beginning, clear-thinking, independent economists (not dependent on government largess) expressed objections to this “new economics.” There was little new in Keynes’ work and many errors that had been debunked decades before Keynes was even born. Bastiat’s parable of the “broken window” in 1850 is probably the best-known refutation, although similar arguments preceded Bastiat by a century or more.
In the 1930s leaders were desperate and willing to try anything. Keynes General Theory was published in 1936, during the middle of the greatest depression the world had ever experienced. Politicians, more so than economists, welcomed his ideas as a new approach.
The Austrian economists represented by Mises and Hayek saw the fallacies in this new approach immediately. Some of the Chicago School (Knight, Simons, Viner) did also. Ludwig von Mises, never one to mince words, described Keynesian economics in the following manner:
What he really did was to write an apology for the prevailing policies of governments.
Mises likely was one of the few who saw the full ramifications of what Keynesian economics would provide for government. Most early criticisms were in terms of the economic unsoundness of the theory.
To contrast the blatant differences between proper economics and Keynesian prescriptions, the following two prescriptions were offered early in this century:
It was proper that one of these men should have won the Nobel Prize in economics. It just happened to be the wrong one.
JAMES BUCHANAN, NOBEL LAUREATE
In 1977 James M. Buchanan and Richard E. Wagner wrote “Democracy In Deficit — The Political Legacy of Lord Keynes” (available online). It was the first comprehensive attempt to apply public-choice theory to macroeconomic theory and policy. According to Robert D. Tollison:
The central purpose of the book was to examine the simple precepts of Keynesian economics through the lens of public-choice theory. The basic discovery was that Keynesian economics had a bias toward deficits in terms of political self-interest.
From Buchanan and Wagner came this judgment regarding Keynesian economics:
The message of Keynesianism might be summarized as: What is folly in the conduct of a private family may be prudence in the conduct of the affairs of a great nation. (p. 3)
This fundamental confusion was responsible for the political acceptance of Keynesian economics. Politicians saw the potential for themselves in this new doctrine which advocated central control of the economy and fiscal irresponsibility as a necessary and patriotic thing. Giving them this gift was like providing matches and gasoline to an arsonist. (“I don’t want to spend money, but I have to otherwise the economy will tank.”)
Once government took control of the economy, they needed economists to provide the analysis and justifications for their new policies. Many in the economics profession were procured in similar fashion used with prostitutes. Money and power were heady incentives for a profession that had rightly been consigned to a section in their own ivory tower.
Justifying what government wanted to do and was doing was the only requisite. But, in order to qualify, it became necessary to convert to Keynesianism. Other branches of economics condemned government policies, at least on economic grounds.
Economists more than most understand incentives. When the payoffs increase, some men in any profession find it easy to modify ethics and integrity.
Buchanan and Wagner knew the damage that Keynesian economics had already inflicted and knew its potential was much greater. Thirty-seven years ago they commented:
What happened? Why does Camelot lay in ruin? Viet Nam and Watergate cannot explain everything forever. Intellectual error of monumental proportion has been made, and not exclusively by the ordinary politicians. Error also lies squarely with the economists. (p. 4)
They answered their own question:
The academic scribbler of the past who must bear substantial responsibility is Lord Keynes himself, whose ideas were uncritically accepted by American establishment economists. The mounting historical evidence of the effects of these ideas cannot continue to be ignored. Keynesian economics has turned the politicians loose, it has destroyed the effective constraint on politicians’ ordinary appetites. Armed with the Keynesian message, politicians can spend and spend without the apparent necessity to tax. “Democracy in deficit” is descriptive, both of our economic plight and of the subject matter for this book. (p.4)
Now, thirty-five plus years later, one may judge the merit in this book. Prescience, while not limited to them alone, was amazing.
One must also marvel at the continuation and acceleration of the ruinous policies. Whether Buchanan and Wagner imagined things could go on for so long and to such an extent is not known. However, to appreciate these changes, this graph from Zerohedge shows the effects of Keynesianism and what it has done to governments around the world:
The deterioration in fiscal discipline was astounding and in line what they predicted.
As this false economic theology known as Keynesianism runs its course, the following conclusions are probable:
- Regardless of whether this generation escapes or not, we have impoverished our children and grandchildren.
- Politicians now control most of the economy, including what passes for acceptable economics.
- No honest economist can work for government; nor would one want to.
- The tipping point for reversing this condition has long past.
- Politicians have no incentive to stop the process underway.
- Markets (and perhaps societies and governments) will eventually collapse, ending this terrible period of economic madness.
When this flawed paradigm is finally exhausted, the world may enter a better place in terms of economics and limited government. Without this shift, poverty and misery will grow along with wars used as political diversions.
One can only hope that the world avoids an Economic Dark Age when the collapse occurs.
Share this:
Keynesian Political Economy Is Theft – Monty Pelerin’s World : Monty Pelerin’s World
Keynesian Political Economy Is Theft – Monty Pelerin’s World : Monty Pelerin’s World.
The plague of our time is Keynesian economics. It has destroyed the economics profession and enabled the political class to obtain powers never intended.
Keynesian economics provided the intellectual cover for the criminal class we politely call “government” to plunder its citizenry. In the beginning, clear-thinking, independent economists (not dependent on government largess) expressed objections to this “new economics.” There was little new in Keynes’ work and many errors that had been debunked decades before Keynes was even born. Bastiat’s parable of the “broken window” in 1850 is probably the best-known refutation, although similar arguments preceded Bastiat by a century or more.
In the 1930s leaders were desperate and willing to try anything. Keynes General Theory was published in 1936, during the middle of the greatest depression the world had ever experienced. Politicians, more so than economists, welcomed his ideas as a new approach.
The Austrian economists represented by Mises and Hayek saw the fallacies in this new approach immediately. Some of the Chicago School (Knight, Simons, Viner) did also. Ludwig von Mises, never one to mince words, described Keynesian economics in the following manner:
What he really did was to write an apology for the prevailing policies of governments.
Mises likely was one of the few who saw the full ramifications of what Keynesian economics would provide for government. Most early criticisms were in terms of the economic unsoundness of the theory.
To contrast the blatant differences between proper economics and Keynesian prescriptions, the following two prescriptions were offered early in this century:
It was proper that one of these men should have won the Nobel Prize in economics. It just happened to be the wrong one.
JAMES BUCHANAN, NOBEL LAUREATE
In 1977 James M. Buchanan and Richard E. Wagner wrote “Democracy In Deficit — The Political Legacy of Lord Keynes” (available online). It was the first comprehensive attempt to apply public-choice theory to macroeconomic theory and policy. According to Robert D. Tollison:
The central purpose of the book was to examine the simple precepts of Keynesian economics through the lens of public-choice theory. The basic discovery was that Keynesian economics had a bias toward deficits in terms of political self-interest.
From Buchanan and Wagner came this judgment regarding Keynesian economics:
The message of Keynesianism might be summarized as: What is folly in the conduct of a private family may be prudence in the conduct of the affairs of a great nation. (p. 3)
This fundamental confusion was responsible for the political acceptance of Keynesian economics. Politicians saw the potential for themselves in this new doctrine which advocated central control of the economy and fiscal irresponsibility as a necessary and patriotic thing. Giving them this gift was like providing matches and gasoline to an arsonist. (“I don’t want to spend money, but I have to otherwise the economy will tank.”)
Once government took control of the economy, they needed economists to provide the analysis and justifications for their new policies. Many in the economics profession were procured in similar fashion used with prostitutes. Money and power were heady incentives for a profession that had rightly been consigned to a section in their own ivory tower.
Justifying what government wanted to do and was doing was the only requisite. But, in order to qualify, it became necessary to convert to Keynesianism. Other branches of economics condemned government policies, at least on economic grounds.
Economists more than most understand incentives. When the payoffs increase, some men in any profession find it easy to modify ethics and integrity.
Buchanan and Wagner knew the damage that Keynesian economics had already inflicted and knew its potential was much greater. Thirty-seven years ago they commented:
What happened? Why does Camelot lay in ruin? Viet Nam and Watergate cannot explain everything forever. Intellectual error of monumental proportion has been made, and not exclusively by the ordinary politicians. Error also lies squarely with the economists. (p. 4)
They answered their own question:
The academic scribbler of the past who must bear substantial responsibility is Lord Keynes himself, whose ideas were uncritically accepted by American establishment economists. The mounting historical evidence of the effects of these ideas cannot continue to be ignored. Keynesian economics has turned the politicians loose, it has destroyed the effective constraint on politicians’ ordinary appetites. Armed with the Keynesian message, politicians can spend and spend without the apparent necessity to tax. “Democracy in deficit” is descriptive, both of our economic plight and of the subject matter for this book. (p.4)
Now, thirty-five plus years later, one may judge the merit in this book. Prescience, while not limited to them alone, was amazing.
One must also marvel at the continuation and acceleration of the ruinous policies. Whether Buchanan and Wagner imagined things could go on for so long and to such an extent is not known. However, to appreciate these changes, this graph from Zerohedge shows the effects of Keynesianism and what it has done to governments around the world:
The deterioration in fiscal discipline was astounding and in line what they predicted.
As this false economic theology known as Keynesianism runs its course, the following conclusions are probable:
- Regardless of whether this generation escapes or not, we have impoverished our children and grandchildren.
- Politicians now control most of the economy, including what passes for acceptable economics.
- No honest economist can work for government; nor would one want to.
- The tipping point for reversing this condition has long past.
- Politicians have no incentive to stop the process underway.
- Markets (and perhaps societies and governments) will eventually collapse, ending this terrible period of economic madness.
When this flawed paradigm is finally exhausted, the world may enter a better place in terms of economics and limited government. Without this shift, poverty and misery will grow along with wars used as political diversions.
One can only hope that the world avoids an Economic Dark Age when the collapse occurs.
Share this:
The Answer is 42 | Two Ice Floes
The Answer is 42 | Two Ice Floes.
One would think that the answer is entirely dependent upon the question, and normally I would agree with that logical deduction. But when pondering sticky questions, particularly those that involve Cognitive Dissonance, the Hitchhiker’s Guide to the Galaxy’s famous “Ultimate Question of Life, the Universe, and Everything” answer (“The answer is 42”) seems just as apropos as anything you or I could, and regularly do, pull out of our bums.
For example, why is there near universal agreement that politicians, (governmental) institutions and other ‘author-ity’ figures (those who author their own justification or rationalization to receive/take our power) lie, cheat and steal, with special emphasis on lie, yet we eviscerate them when they actually tell the truth? Worse, when they actually admit to lying (supposedly to keep the peace) why do we derisively condemn them every which way to Sunday?
I suspect people tend to panic when confronted with the truth because we’ve been so conditioned to accept their lies that when told the truth (which incidentally we intuitively know is the truth without seeking an external authority for confirmation) we panic, logically thinking that it must really be bad if they are being ‘honest’, or as close to honest as they can get without becoming tongue tied. I now understand that the answer to my question is (obviously) 42.
Case in point, a while back Jean-Claude Juncker, former Luxembourg Prime Minister and Head Euro-Zone Finance Minister, was quoted as saying “When it becomes serious, you have to lie.” For this little moment of clarity and truth he was unmercilessly pilloried in the mainstream press, blogs, opinion pieces and various international pancake houses for speaking the truth about lying when the shit hits the fan.
If his lips are moving…….
Of course the bastard lies, and often for the very same reasons our children lie to us and why we lie to our friends, children, bosses, spouses, strangers and ultimately ourselves. To save our asses from immediate consequences, if only for a short period of time
Bottom line the perceived benefits of (self) deception are often considered to be much greater than the perceived consequences of being caught, regardless of whether the perceived benefits are in fact ‘real’ or just imagined. For example, think about the benefits of having your bias confirmed as an ‘imagined’ benefit that supports further self deception. I’m getting that tingling feeling between my toes just thinking about it.
We all conduct a quick mental check before deciding to lie or not, a sort of Ben Franklin Close (aka The Balance Sheet Close) where we list the so-called benefits on one side of a sheet of paper and the costs on the other, though it is often done in real time with lots of presupposed assumptions (beliefs and ideologies) and outcomes plugged into the variables.
Often when the ‘believed’ consequences of lying are small (or the social acceptance of our little ‘white lie’ is high) the cognitive path to (self) deception is not only cleared, but there’s a tail wind blowing our lie in for a safe three point landing.
Other than becoming the laughing stock of the world for a day or so, exactly what consequences did Juncker suffer? Was his pay reduced or his bonus pulled after he admitted that he lies? Did he lose his position of power and influence? Was he sent to the nearest corner for some down time to reflect upon his transgression?
None-of-the above is the proper response here because Juncker suffered no lasting consequences and, dare I say it, might even have received some (extra) consolatory loving from Mrs. Juncker (but most likely his Mistress because he is European banker after all) for being so brave.
Before the Ponzi and its supporting control system became so blatantly obvious (to us we tell ourselves, everyone else still being too stupid to see the blatantly obvious) one needed to look and listen closely for the flaws in the control system. Nowadays the insanity is on display for all to see 24/7/365 and the proof is the endless material for WilliamBanzai7 to hit out of the ballpark at least twice a day here on ZeroHedge.
The G8 Liars Club
Let’s take a look at another example. Why is it that we can clearly see when foreign politicians are pandering to their ‘electorate’ (or indentured economic slaves as the case may be) for local consumption, yet we fail to recognize the exact same behavior when we are pandered to by ‘our’ own politicians? The answer (naturally) is 42. It never ceases to amaze me how brilliant we are when recognizing other people’s stupidity and how utterly stupid we are when failing to recognize our own idiocy.
How often have we read about this or that foreign diplomat or politician delivering a troubling speech berating those evil Americans/French/English/Germans (insert your own nationality here)?
Now…..if it was ‘our’ enemy doing the berating the politician/writer/news anchor would assume the proper righteously indignant tone of voice and declare the bastard our national enemy number one…..who was (of course) lying through his teeth to his own people about ‘us’.
By the way, since when did I personally piss off Kim Jong-un or Hugo Chavez (may his lying ass rest in peace) enough that they became ‘my’ own personal enemy? I have a hard enough time dealing with that prissy checkout girl at the local Wawa without worrying about some lying fool half way around the world whom I never met.
Bad boy, bad boy, what ya gonna do?
However if the foreign leader insulting ‘us’ is our ‘friend’ (I certainly don’t remember ‘friending’ the bastard, but what the hell) the politician/writer/news anchor assumes a consolatory tone of voice and soothingly assures us that the poor foreign leader, our bosom buddy and lifelong pal, was simply delivering a speech ‘for domestic consumption’ and really didn’t mean it. In other words, s/he was lying through his/her teeth to the local population in order to pander to the idiots, so ignore what s/he’s saying.
Ultimately we should be asking ourselves why we tolerate lies from complete strangers who just happen to be ‘our’ leaders. Or why we tell ourselves we don’t believe a lying word out of their mouths, then jump all over them for telling the truth about the fact that they lie to us. To be perfectly honest (pun most definitely intended) the reason we tolerate lies from others is because we want them to tolerate our lies. What goes around (hopefully) comes around, at least when it comes to lying.
Most dysfunctional relationships, and there is no doubt that the relationship we have with ‘our’ leaders is the epitome of dysfunctional, requires and encourages mutual lying in order not to be held accountable to each other while presenting the facade that we are. And make no mistake about it, accountability works both ways, not just from the top of leadership down to ‘us’ peons.
Who reading this right now is actually willing to run this country, let alone try to ‘fix’ it, considering the present state of psychosis nearly everyone, not just ‘our’ leaders, are suffering from? Only a madman, a sociopath or someone suffering from NPD (narcissistic personality disorder in case you’re wondering) would beg to be put into the type of position where not only must they go along to get along, but they need to enable the other madmen and sociopaths or they might just find themselves taking a long walk off a short pier.
I’m not quite sure what is more outrageous, the fact that politicians lie to ‘us’, the fact that they actually desire the type of position that requires them to speak anything but the truth to the public or the fact that we tolerate, and at times enable, all of the above.
In fact I wonder why I’m outraged at all considering I’m just as insane as the rest of ‘us’ inmates in The Insane Asylum. The answer (naturally) is 42.
The Insane Asylum
“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”
-The Rothschild brothers of London writing to associates in New York, 1863.
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The Answer is 42 | Two Ice Floes
The Answer is 42 | Two Ice Floes.
One would think that the answer is entirely dependent upon the question, and normally I would agree with that logical deduction. But when pondering sticky questions, particularly those that involve Cognitive Dissonance, the Hitchhiker’s Guide to the Galaxy’s famous “Ultimate Question of Life, the Universe, and Everything” answer (“The answer is 42”) seems just as apropos as anything you or I could, and regularly do, pull out of our bums.
For example, why is there near universal agreement that politicians, (governmental) institutions and other ‘author-ity’ figures (those who author their own justification or rationalization to receive/take our power) lie, cheat and steal, with special emphasis on lie, yet we eviscerate them when they actually tell the truth? Worse, when they actually admit to lying (supposedly to keep the peace) why do we derisively condemn them every which way to Sunday?
I suspect people tend to panic when confronted with the truth because we’ve been so conditioned to accept their lies that when told the truth (which incidentally we intuitively know is the truth without seeking an external authority for confirmation) we panic, logically thinking that it must really be bad if they are being ‘honest’, or as close to honest as they can get without becoming tongue tied. I now understand that the answer to my question is (obviously) 42.
Case in point, a while back Jean-Claude Juncker, former Luxembourg Prime Minister and Head Euro-Zone Finance Minister, was quoted as saying “When it becomes serious, you have to lie.” For this little moment of clarity and truth he was unmercilessly pilloried in the mainstream press, blogs, opinion pieces and various international pancake houses for speaking the truth about lying when the shit hits the fan.
If his lips are moving…….
Of course the bastard lies, and often for the very same reasons our children lie to us and why we lie to our friends, children, bosses, spouses, strangers and ultimately ourselves. To save our asses from immediate consequences, if only for a short period of time
Bottom line the perceived benefits of (self) deception are often considered to be much greater than the perceived consequences of being caught, regardless of whether the perceived benefits are in fact ‘real’ or just imagined. For example, think about the benefits of having your bias confirmed as an ‘imagined’ benefit that supports further self deception. I’m getting that tingling feeling between my toes just thinking about it.
We all conduct a quick mental check before deciding to lie or not, a sort of Ben Franklin Close (aka The Balance Sheet Close) where we list the so-called benefits on one side of a sheet of paper and the costs on the other, though it is often done in real time with lots of presupposed assumptions (beliefs and ideologies) and outcomes plugged into the variables.
Often when the ‘believed’ consequences of lying are small (or the social acceptance of our little ‘white lie’ is high) the cognitive path to (self) deception is not only cleared, but there’s a tail wind blowing our lie in for a safe three point landing.
Other than becoming the laughing stock of the world for a day or so, exactly what consequences did Juncker suffer? Was his pay reduced or his bonus pulled after he admitted that he lies? Did he lose his position of power and influence? Was he sent to the nearest corner for some down time to reflect upon his transgression?
None-of-the above is the proper response here because Juncker suffered no lasting consequences and, dare I say it, might even have received some (extra) consolatory loving from Mrs. Juncker (but most likely his Mistress because he is European banker after all) for being so brave.
Before the Ponzi and its supporting control system became so blatantly obvious (to us we tell ourselves, everyone else still being too stupid to see the blatantly obvious) one needed to look and listen closely for the flaws in the control system. Nowadays the insanity is on display for all to see 24/7/365 and the proof is the endless material for WilliamBanzai7 to hit out of the ballpark at least twice a day here on ZeroHedge.
The G8 Liars Club
Let’s take a look at another example. Why is it that we can clearly see when foreign politicians are pandering to their ‘electorate’ (or indentured economic slaves as the case may be) for local consumption, yet we fail to recognize the exact same behavior when we are pandered to by ‘our’ own politicians? The answer (naturally) is 42. It never ceases to amaze me how brilliant we are when recognizing other people’s stupidity and how utterly stupid we are when failing to recognize our own idiocy.
How often have we read about this or that foreign diplomat or politician delivering a troubling speech berating those evil Americans/French/English/Germans (insert your own nationality here)?
Now…..if it was ‘our’ enemy doing the berating the politician/writer/news anchor would assume the proper righteously indignant tone of voice and declare the bastard our national enemy number one…..who was (of course) lying through his teeth to his own people about ‘us’.
By the way, since when did I personally piss off Kim Jong-un or Hugo Chavez (may his lying ass rest in peace) enough that they became ‘my’ own personal enemy? I have a hard enough time dealing with that prissy checkout girl at the local Wawa without worrying about some lying fool half way around the world whom I never met.
Bad boy, bad boy, what ya gonna do?
However if the foreign leader insulting ‘us’ is our ‘friend’ (I certainly don’t remember ‘friending’ the bastard, but what the hell) the politician/writer/news anchor assumes a consolatory tone of voice and soothingly assures us that the poor foreign leader, our bosom buddy and lifelong pal, was simply delivering a speech ‘for domestic consumption’ and really didn’t mean it. In other words, s/he was lying through his/her teeth to the local population in order to pander to the idiots, so ignore what s/he’s saying.
Ultimately we should be asking ourselves why we tolerate lies from complete strangers who just happen to be ‘our’ leaders. Or why we tell ourselves we don’t believe a lying word out of their mouths, then jump all over them for telling the truth about the fact that they lie to us. To be perfectly honest (pun most definitely intended) the reason we tolerate lies from others is because we want them to tolerate our lies. What goes around (hopefully) comes around, at least when it comes to lying.
Most dysfunctional relationships, and there is no doubt that the relationship we have with ‘our’ leaders is the epitome of dysfunctional, requires and encourages mutual lying in order not to be held accountable to each other while presenting the facade that we are. And make no mistake about it, accountability works both ways, not just from the top of leadership down to ‘us’ peons.
Who reading this right now is actually willing to run this country, let alone try to ‘fix’ it, considering the present state of psychosis nearly everyone, not just ‘our’ leaders, are suffering from? Only a madman, a sociopath or someone suffering from NPD (narcissistic personality disorder in case you’re wondering) would beg to be put into the type of position where not only must they go along to get along, but they need to enable the other madmen and sociopaths or they might just find themselves taking a long walk off a short pier.
I’m not quite sure what is more outrageous, the fact that politicians lie to ‘us’, the fact that they actually desire the type of position that requires them to speak anything but the truth to the public or the fact that we tolerate, and at times enable, all of the above.
In fact I wonder why I’m outraged at all considering I’m just as insane as the rest of ‘us’ inmates in The Insane Asylum. The answer (naturally) is 42.
The Insane Asylum
“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”
-The Rothschild brothers of London writing to associates in New York, 1863.
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US Official Claims 6,000 Russian Troops In Complete Control Of Crimea – Crisis Map Update | Zero Hedge
While the images and local news have been suggesting that Russia is in control on the Crimean peninsula, US officials (according to Bloomberg) have confirmed this:
- *RUSSIAN FORCES IN COMPLETE CONTROL OF CRIMEA: U.S. OFFICIAL
- *RUSSIA HAS 6,000 TROOPS IN CRIMEA, U.S. OFFICIAL SAYS
- *KERRY TO REAFFIRM SUPPORT FOR UKRANIAN SOVEREIGNITY, PSAKI SAYS
Obama, Merkel, and Cameron are now on a conference call to discuss this “fact” and officials have just reported that US Secretary of State John Kerry will visit Kiev tomorrow (though we suspect not Sevastopol).
Via AFP
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US Official Claims 6,000 Russian Troops In Complete Control Of Crimea – Crisis Map Update | Zero Hedge
While the images and local news have been suggesting that Russia is in control on the Crimean peninsula, US officials (according to Bloomberg) have confirmed this:
- *RUSSIAN FORCES IN COMPLETE CONTROL OF CRIMEA: U.S. OFFICIAL
- *RUSSIA HAS 6,000 TROOPS IN CRIMEA, U.S. OFFICIAL SAYS
- *KERRY TO REAFFIRM SUPPORT FOR UKRANIAN SOVEREIGNITY, PSAKI SAYS
Obama, Merkel, and Cameron are now on a conference call to discuss this “fact” and officials have just reported that US Secretary of State John Kerry will visit Kiev tomorrow (though we suspect not Sevastopol).
Via AFP
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Ukraine Capital Control Crunch: Largest Bank Limits Cash Withdrawals To $100 Daily | Zero Hedge
Ukraine Capital Control Crunch: Largest Bank Limits Cash Withdrawals To $100 Daily | Zero Hedge
As we warned on Friday, the military escalation in Ukraine has had dire consequences for the financial state of the country, its banks, and ultimately its people. The central bank promised to rescue domestic banks so long as they agreed to its complete control and it appears the first consequences of that “we are here to help you” promise is coming true:
- UKRAINE’S PRIVATBANK LIMITS ATM WITHDRAWALS TO UAH1,000/DAY ($103/day)
Privatbank is Ukraine’s largest bank and while claiming this move is temporary (just like Cyprus’ capital controls), the bank has also ceased new loans amid what it calls “geopolitical instability”. In summary, you can’t have your money back! Expect long angry lines at Ukrainian banks on Monday morning (and at the pace of collapse in the Hyrvnia, hyperinflation next).
Ukraine’s largest commercial bank, Privatbank, announced temporary limits on cash withdrawals for its account holders and suspended writing new loans, saying in a statement the measures were intended to stop those undermining the political situation in the country. “A temporary limit on withdrawals is needed to stop the forces that are working to destabilize the situation [and] are using the cash for [their] sabotage,” the bank said in a statement. The bank didn’t clarify which political forces it was referring to.
The bank first announced withdrawal limits of 1,000 hryvnia ($103) a day at both automated teller machines and in over-the-counter transactions.
…
Privatbank’s announcement was the first case in which a major Ukrainian bank has limited customers’ immediate access to cash in the local currency since the military tensions erupted. Privatbank is the largest retail bank by number of clients in Ukraine, a country of approximately 45 million people.
Last week, the National Bank of Ukraine introduced a $1,500 daily limit on foreign-currency withdrawal.
But perhaps the most notable, somewhat hidden, comment from the bank was this:
Privatbank said it was suspending all its credit lines issued to both private and corporate customers, including credit cards. It said it would no longer accept debit cards from other banks in the Crimea.
In other words, we won’t allow the people of Crimea (the region now in play with the Russians) to ‘run’ on our bank…
Privatbank said its measures were a “rational” response to the current situation and they were designed to help the bank serve its customers and protect the national currency.
We wonder what ‘loophole’ the uber-wealthy will find (as in Cyprus deposit shifts to the UK) to extract their deposits before the real capital controls collapse the currency.
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Ukraine Capital Control Crunch: Largest Bank Limits Cash Withdrawals To $100 Daily | Zero Hedge
Ukraine Capital Control Crunch: Largest Bank Limits Cash Withdrawals To $100 Daily | Zero Hedge
As we warned on Friday, the military escalation in Ukraine has had dire consequences for the financial state of the country, its banks, and ultimately its people. The central bank promised to rescue domestic banks so long as they agreed to its complete control and it appears the first consequences of that “we are here to help you” promise is coming true:
- UKRAINE’S PRIVATBANK LIMITS ATM WITHDRAWALS TO UAH1,000/DAY ($103/day)
Privatbank is Ukraine’s largest bank and while claiming this move is temporary (just like Cyprus’ capital controls), the bank has also ceased new loans amid what it calls “geopolitical instability”. In summary, you can’t have your money back! Expect long angry lines at Ukrainian banks on Monday morning (and at the pace of collapse in the Hyrvnia, hyperinflation next).
Ukraine’s largest commercial bank, Privatbank, announced temporary limits on cash withdrawals for its account holders and suspended writing new loans, saying in a statement the measures were intended to stop those undermining the political situation in the country. “A temporary limit on withdrawals is needed to stop the forces that are working to destabilize the situation [and] are using the cash for [their] sabotage,” the bank said in a statement. The bank didn’t clarify which political forces it was referring to.
The bank first announced withdrawal limits of 1,000 hryvnia ($103) a day at both automated teller machines and in over-the-counter transactions.
…
Privatbank’s announcement was the first case in which a major Ukrainian bank has limited customers’ immediate access to cash in the local currency since the military tensions erupted. Privatbank is the largest retail bank by number of clients in Ukraine, a country of approximately 45 million people.
Last week, the National Bank of Ukraine introduced a $1,500 daily limit on foreign-currency withdrawal.
But perhaps the most notable, somewhat hidden, comment from the bank was this:
Privatbank said it was suspending all its credit lines issued to both private and corporate customers, including credit cards. It said it would no longer accept debit cards from other banks in the Crimea.
In other words, we won’t allow the people of Crimea (the region now in play with the Russians) to ‘run’ on our bank…
Privatbank said its measures were a “rational” response to the current situation and they were designed to help the bank serve its customers and protect the national currency.
We wonder what ‘loophole’ the uber-wealthy will find (as in Cyprus deposit shifts to the UK) to extract their deposits before the real capital controls collapse the currency.
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Ukraine's New Navy Head Denis Berezovsky Defects After Just One Day On The Post | Zero Hedge
Ukraine’s New Navy Head Denis Berezovsky Defects After Just One Day On The Post | Zero Hedge.
Overnight, there had been numerous rumors that the newly appointed chief of the Ukraine navy, who was just made head of the navy on Saturday, had defected to the Crimean people explicitly, and to pro-Russian forced in the region implicitly. The sourcing of most were various Russian outlets so we discounted these until we got confirmation from a “western” source. The BBC did just that moments ago.
New head of Ukraine’s navy ‘defects’ in Crimea
The newly appointed head of Ukraine’s navy has sworn allegiance to the Crimea region, in the presence of its unrecognised pro-Russian leader.
Rear Admiral Denis Berezovsky was only made head of the navy on Saturday, as the government in Kiev reacted to the threat of Russian invasion.
Russia’s troops have been consolidating their hold on Crimea, which is home to its Black Sea Fleet.
The moment of defection allegedly caught on digital media:
????????? pic.twitter.com/h7tsOzgHmG
— Kashin?Kashin?Kashin (@KSHN) March 2, 2014
The move is not entirely unexpected: while the US may not have many issues with facing the Russian navy head on as it did last summer in the Mediterranean over Syria, others are not quite as excited with being on the receiving end of the Russian military juggernaut.
So if this has been confirmed, the rest of the news reported earlier by RIA is also true. To wit:
Ukraine’s autonomous region of Crimea confirmed Sunday that the majority of Ukrainian military units stationed on the Crimean peninsula have expressed their support of legitimately elected Pro-Russian authorities.
Earlier reports by Russian media about peaceful takeover of the military units by forces loyal to the Crimean government were denied by the Ukrainian defense ministry.
However, Crimean authorities said that most of the Ukrainian units sided on Sunday with pro-Russian forces “without a single shot fired,” and warned the commanders of a few units that remain loyal to Kiev that they would face criminal action if refused to surrender.
“I would like to warn commanders who force their subordinates to commit illegal actions that they will be punished according to existing laws,” Crimea’s Prime Minister Sergei Aksenov said in a statement.
The Crimean government said earlier that some 10 warships from the Ukrainian navy left their naval base in Sevastopol apparently on orders from Kiev.
Crimea is now at the center of the ongoing crisis in the country as pro-Russia groups move to distance themselves from a reformed national parliament that ousted President Viktor Yanukovych a week ago.
The map below is said to summarize all the Ukraine cities where the Russian flag has already been hoisted.
If anything, these bloodless victories will only embolden Russia to press on: hardly the resolution the west would like. Perhaps that explains why early unofficial quotes of the Russian Ruble see the currency dropping as much as 10%.
Share this:
Ukraine’s New Navy Head Denis Berezovsky Defects After Just One Day On The Post | Zero Hedge
Ukraine’s New Navy Head Denis Berezovsky Defects After Just One Day On The Post | Zero Hedge.
Overnight, there had been numerous rumors that the newly appointed chief of the Ukraine navy, who was just made head of the navy on Saturday, had defected to the Crimean people explicitly, and to pro-Russian forced in the region implicitly. The sourcing of most were various Russian outlets so we discounted these until we got confirmation from a “western” source. The BBC did just that moments ago.
New head of Ukraine’s navy ‘defects’ in Crimea
The newly appointed head of Ukraine’s navy has sworn allegiance to the Crimea region, in the presence of its unrecognised pro-Russian leader.
Rear Admiral Denis Berezovsky was only made head of the navy on Saturday, as the government in Kiev reacted to the threat of Russian invasion.
Russia’s troops have been consolidating their hold on Crimea, which is home to its Black Sea Fleet.
The moment of defection allegedly caught on digital media:
????????? pic.twitter.com/h7tsOzgHmG
— Kashin?Kashin?Kashin (@KSHN) March 2, 2014
The move is not entirely unexpected: while the US may not have many issues with facing the Russian navy head on as it did last summer in the Mediterranean over Syria, others are not quite as excited with being on the receiving end of the Russian military juggernaut.
So if this has been confirmed, the rest of the news reported earlier by RIA is also true. To wit:
Ukraine’s autonomous region of Crimea confirmed Sunday that the majority of Ukrainian military units stationed on the Crimean peninsula have expressed their support of legitimately elected Pro-Russian authorities.
Earlier reports by Russian media about peaceful takeover of the military units by forces loyal to the Crimean government were denied by the Ukrainian defense ministry.
However, Crimean authorities said that most of the Ukrainian units sided on Sunday with pro-Russian forces “without a single shot fired,” and warned the commanders of a few units that remain loyal to Kiev that they would face criminal action if refused to surrender.
“I would like to warn commanders who force their subordinates to commit illegal actions that they will be punished according to existing laws,” Crimea’s Prime Minister Sergei Aksenov said in a statement.
The Crimean government said earlier that some 10 warships from the Ukrainian navy left their naval base in Sevastopol apparently on orders from Kiev.
Crimea is now at the center of the ongoing crisis in the country as pro-Russia groups move to distance themselves from a reformed national parliament that ousted President Viktor Yanukovych a week ago.
The map below is said to summarize all the Ukraine cities where the Russian flag has already been hoisted.
If anything, these bloodless victories will only embolden Russia to press on: hardly the resolution the west would like. Perhaps that explains why early unofficial quotes of the Russian Ruble see the currency dropping as much as 10%.
Olduvaiblog: Musings on the coming collapse 