A Lesson From Politics on Business Communication

By:  Alan Walsh, Owner, Huntington Consultancy 

Among the complex factors determining the outcome of the last Presidential election was a significant difference in communication style, methodology, and delivery between the opposing camps. While The Republicans were communicating “lofty thoughts” and “civics lessons” that were issue-focused, the Democrats crafted a set of communications that were “short & sweet”, simple, jingle-istic whenever possible (developing a word or short phrase that would be instantly recognized as representing a more complex thought or concept), and focusing on core hot-ticket issues of voter self-gratification (as determined from polls, town hall meetings, and other sources).

As the success of their communications grew, the Democrats’ messages were presented with more & more of a lofty air, implying “We Get It..They Don’t” and instilling this belief in their adherents to psychological advantage. The Democrats made better use of the internet in getting their messages distributed; thus making better use of their campaign funds and drawing voters into a more personalized relationship. Often, adherents conveyed the message for the campaign.

In other words the Democrats made best use of, and appealed the most to, basic tenets of human nature; in the most effective way.

Before anyone gets their political “underwear in a knot”, let me comment that this is not a political manifesto for –or- against either party. The Reagan campaign in its time did much the same thing to their hapless Democrat opponents. Reagan was a master at reducing complex thoughts into simple, popular, easily-remembered phrases & jingles and planting them in peoples’ minds.

The Reagan campaign used this communication strategy effectively when the internet was still pretty much a “gleam in its daddy’s eye”. We all recognize now that the internet age has brought about a revolution in the style and delivery of communications; opening up whole new realms of possibility & challenge, and lending exponential power to the communication methods described above; if done properly. The Obama campaign made good use of this added dimension.

Businesses which want to survive and thrive would do well to absorb these lessons into the fabric of their communications.

 

  KEEP IT SIMPLE STUPID

The time-honored “KISS” principle serves well in guiding the crafting of effective business communications.

Simplify..   Shorten:

We’ve all watched company ads on TV that left us scratching our heads afterward about what they were trying to say – or sell. No offense BASF, but I remember an ad campaign of yours that left me saying – “Huh”? Lofty, multi-faceted communications just don’t work well; especially in this day & age. “Manifestos” are quickly ignored and forgotten.

Likewise we’ve all seen ads where they tried to get “cute” or “clever” with the result that the “trick” was a poor fit to the message, or the message just got “lost” in the nonsense. I can’t think of one off the top of my head, but there have been many.

Conversely, we’ve seen ads that communicated strong messages well with very few words or none at all. Budweiser and Coca Cola come to mind.

We live in a “bullet-point” world now. Complex messages tend to get lost in the background clutter, and people don’t have the time or patience for them. They especially don’t appreciate communications that are drawn-out, vague, or communicate above or below them.

Communicate in ways that fit in with the society’s contemporary language usage. People relate better to language that’s in common use.

“Jingle-ize” whenever possible. If you can establish a simple word or phrase to represent and replace a complex thought or concept in the customers’ minds, it makes communication simpler and you tend to gain “ownership” of that talking point; almost as if you copyrighted it. Whole business identities and brandings have been built around such “jingles”.

Know Thy Customers:

The key element in effective communication is understanding the “talking points” that resonate with your customers on a personal level. Society has taken on a much greater personal gratification / quality-of-life orientation than in past generations; which were burdened with global war, nuclear-age cold war and sacrifice for the greater good. A different societal mind-set existed then. Personal talking points that would have had little effect, or been looked on as being “self-centered” by past audiences, now resonate strongly with the new generation. It’s just a reflection of the times, but important to understand for business communications going forward. Even if you’re selling business-to-business, try to reach the key decision-makers on a personal level; and give them reasons to justify with their own people that they made the right decision buying from you.

Businesses are more & more recognizing this “personal” element. For instance, aerospace companies have been running ads that are crafted as “civic messages”, touting “defense and security”, to build public goodwill and cement themselves in the public’s minds as “key players”. Northrup Grumman comes to mind.

Do the research.

The internet’s a great place for any business, especially a small cash-strapped one, to see what works and what doesn’t. In fact, the internet is just as useful for research as for communication. Just go on Facebook or a similar site and see what’s attracting “Likes” and “Comments”. The values, interests, and personal desires of society are laid out for our edification on a daily basis; expressed in their own words. So are the communication efforts of competitors. Likewise, you can go to places like LinkedIn and see what other business people are saying & thinking. It’s all there to observe.

Get to the Point

Any ad man will tell you that certain styles sell. Without making a qualitative judgment, I’ll just note that “Sex” still works well if used properly (even though certain segments of society are increasingly finding it repugnant} –and- “Friendly.. Touchy.. Feely.. Warm.. Safe.. Secure” is taking on increased importance; amongst other styles.

Whatever “flavor” you want to give your communications, you’ll be wasting your breath if you don’t get to the point; quickly. You can have all the “sex symbols” or “friendly, warm, fuzzy style” you want, but if you’re not appealing to a real and direct want or need, and doing it with a quick, simple, memorable message, you’re wasting your time and the customers’.

Get Their Attention, and Give Them Something to Remember

Sometimes, it’s just not possible to get across everything you want to say with a simple message or “jingle”. In such cases, use the simple message or “jingle” to capture their attention and draw them into the more complex message. You’ve got to get their attention before you can tell your story. Plus, the simple message or “jingle” will be remembered way after the long message has faded; especially if you finish with it. Reagan did this well. He’d start off with jingle-istic phrases and work into more complex statements in his speeches; finishing off by reinforcing the jingles. Later, when the long speech was forgotten, people would be quoting the jingles.

Differentiate Yourself

A car is a car, but lots are sold for their “safety”, or “sexiness”, or other “fuzzy qualities”. Those “qualities” are often planted in customers’ minds with well-crafted messages and images. By associating your products or services with desirable or friendly “qualities” in customers’ minds, you will “own” those “qualities” and differentiate yourself; carving a unique niche.

Just as in politics, you’ll have competitors making their own offerings. Sometimes those offerings will be stronger than yours; sometimes they’ll be the same. Where you can, stress those offerings of yours that are unique and/or stronger than your competition’s. Otherwise, try to build an aura that disguises or downplays your weaknesses and gives you the edge on the common points. Politicians do this to each other all the time; usually through some “likeability” factor. If you’re personally attracted to the politician, you’re likely to overlook flaws and weak “fighting points”.

Use Visuals

“A Picture Says a Thousand Words”. A single image can convey a whole message. A set of images can attach “qualities” openly or subliminally while you’re stating your main message; or can be your main message. Images are “eye candy”, and are usually well-received. They fit in well with the concept of simple, rapid communication. They can “define” your brand. Use them to advantage. Just consider the image at the start of this article. It defines the topic instantly and attractively.

S&P on the Kill List: U.S. Government Seeking Vengeance for S&P Downgrade of U.S. Credit.

S&P On the Kill List By Douglas French Thanks to Douglas French and The Daily Reckoning

“Paybacks are a bitch,” as they say.What was Standard & Poor’s thinking back in August 2011, when the ratings agency took the Red, White, and Blue’s AAA rating away? A rating the most powerful government in the history of the world had held for 70 years. S&P downgraded long-term US debt to AA-plus. That score ranks lower than over a dozen governments, including Liechtenstein’s, and is level with Guernsey’s and France’s.McGraw-Hill Companies (S&P’s owner) may be a big corporation, but you don’t kick sand in Uncle Sam’s face like that and get away with it. Now the government, in the person of Attorney General Eric Holder, is kicking back. The US government is accusing the ratings agency of committing fraud by inflating the ratings of mortgage investments, which, of course, created the financial crisis.S&P, along with its competitors Fitch and Moody’s, famously rated the mortgage security goulash that Wall Street concocted AAA, thus allowing everyone everywhere to participate in America’s housing boom. And why not? According to computer models, housing prices never go down. Pension funds as far away as Reykjavik and Heerlan were gobbling up what Wall Street was serving because all three ratings agencies provided their stamp of approval. According to the government’s suit, S&P “knowingly and with the intent to defraud, devised, participated in, and executed a scheme to defraud investors.” Yep, in the minds of the government’s gumshoes, the clairvoyants at S&P knew these securities stunk to high heaven. They knew, or should have known, that the housing market was ready to crash any moment, but they were greedy capitalists who, while they were making a buck, created and carried out a diabolical plan to bring the financial world to its knees. Yeah sure, that’s what happened. S&P should be ashamed for maintaining that it ratings “were objective, independent, uninfluenced by any conflicts of interest,” the suit said. The suit centers around 40 collateralized debt obligations (CDOs) created from 2004-2007. The firm was paid $13 million for rating these securities. Giving these securities the highest rating must have been fraud, because everyone knew by that time that the market was toast. Right? After all, in 2004, the nation’s deposit insurer and bank regulator, the Federal Deposit Insurance Corporation (FDIC), published a paper on housing that concluded: “It is unlikely that home prices are poised to plunge nationwide, even when mortgage rates rise.” This is because “housing markets by nature are local, and significant price declines historically have been observed only in markets experiencing serious economic distress.” Plus, housing markets have “characteristics not inherent in other assets that temper speculative tendencies and generally mitigate against price collapse.” In conclusion, “it is highly unlikely that home prices would decline simultaneously and uniformly in different cities as a result of some shift, such as a rise in interest rates.” Whoops. Where’s the lawsuit against the FDIC?

Why the U.S. Government Hates -and Fears- Gold

By Alan Walsh

The U.S. Government hates Gold because it serves as a clear, unambiguous, and constant sign of their fiscal irresponsibility.

U.S. currency used to be issued by the U.S. Government, and was backed by Gold. You could literally trade-in your dollars for Gold. Then, the Federal Reserve system was created, the dollar was disconnected from Gold, and the U.S. government stopped issuing currency. To really “seal the deal”, the government even outlawed individual ownership of Gold for awhile and forced citizens to sell it to them at a fixed price they set; then they raised the “official” price of Gold, devaluing every dollar citizens held by about 40%.

The Federal Reserve (also referred to as the U.S. central banking system, or central bank) is not a government agency; it’s a private bank, owned by other big banks, and run by people from those banks. When the U.S. Government wants additional money to spend, it buys it at face value ($100 for a $100 bill, for instance) from the Federal Reserve; which creates the currency. That’s why your dollars say “Federal Reserve Note” on them. In order to buy the currency, the U.S. government goes into debt  via Treasury Notes & Bills, etc. The government then spends that money.

Why did the U.S. government do this? So politicians could avoid accountability, buy votes, get reelected, increase their power, and transfer the effect of their spending to the future. This is how the federal government got to be the monster it is today. Under the old system, the government could only spend as much as it held in gold-backed dollars. If they wanted to spend more, they had to tax citizens. Citizens don’t like higher taxes, and get upset. Politicians lose jobs. Government was held accountable. The new Federal Reserve system removes this nasty inconvenience by letting the politicians just go buy currency from the Federal Reserve, creating new debt in the process; and government debt is a claim on the productivity of the nation – therefore it is your debt. Government doesn’t produce; it only consumes – your wealth. The income tax was created at the same time as the Federal Reserve system to pay for this debt.

As government buys more dollars from the Federal Reserve (and creates more debt in the process), it increases the number of dollars in circulation; thus creating inflation – plus damaging boom & bust cycles in the economy – plus interest expense on the debt. This is where Gold becomes very annoying to them. Gold, like any other commodity, adjusts in price with inflation and glaringly points it out. As the number of dollars in circulation goes up, the price of Gold rises.  People see their purchasing power in dollars go down, so they trade them for Gold; which holds its purchasing power in times of inflation and serves as alternative money. Government doesn’t want you to notice their little shell game, and they don’t want you to stop using and holding their inflationary dollars, so they hate Gold.

Our government, and other governments who play the same shell game, try to control the price of Gold and hold it artificially down through surreptitious trading activity in league with major financial firms. They try to send you false signals about their inflationary borrow & spend activity by artificially holding the cost of Gold down. If the price of Gold is low, everything must be okay, right? Wrong! Very, very wrong!

We’ve now reached a point where government borrowing and spending is so extreme that they can’t artificially hold Gold down to the price level they would like anymore.  Thus, Gold is trading near $1,700.00 per ounce. Many experts argue that if the government wasn’t surreptitiously intervening in the market to hold the price of Gold down, it would be trading for $3,000 or more.  Regardless, the rise in the price of Gold is a clear and unambiguous signal that government spending is out of control. The effect of this is to undermine peoples’ faith in the dollar and our government.  That makes it hard for government to keep up their shell game. Their borrowing & spending has also created a debt that the income tax can’t begin to cover – plus those nasty and growing interest obligations.

Sober people have also questioned how much of the Gold the government holds it actually owns anymore. They suspect that the government’s secret Gold sales to flood the market and hold the market price of Gold down have been so extensive that very little of the Gold they hold is actually owned by them anymore. Large Gold sales usually don’t involve physical transfer. An electronic record is created to note the new ownership. Therefore the government may be sitting on a large cache of Gold that “we the people” don’t own anymore. Perhaps this is partly why the price of Gold has risen despite government’s best efforts to hold it down. Maybe they’ve run out of Gold to sell. We can’t know for sure, because the government hides this activity behind a thick wall of secrecy. But bits and pieces of info leak out now and then, and they paint a dismal picture. Investigators have even uncovered documents created by central bankers for central bankers on how to execute market intervention between each other to hold the Gold price down.

As the government shell game grows, people start paying attention, and realizing how they’re being hosed by the government’s inflationary, destructive borrow and spend policy. If more Americans understood how our monetary policy works, and what government’s doing to them, they’d be screaming. Government does everything it can to keep us in ignorance.

Faith in the U.S. Dollar has been so severely undermined that other nations, who are not so naive in these matters, are seriously talking about abandoning the dollar as the “world currency”, a beneficial status which the U.S. has enjoyed since the end of World War II. If that happens, investment coming into the U.S. will decline and government will find it increasingly difficult to sell or roll-over their debt; China being our largest current creditor. Then the U.S. will hit a “fiscal cliff” that makes the current one look like a ride in the park.

The U.S. national debt is now over $16 Trillion dollars; over $52,000 per person, and approx. 125% of gross domestic product (gross domestic product being our productivity as a nation – your productivity – the productivity our government taxes you on) – a new record by far. The current government’s policies alone added $8 Trillion to that debt in the last four years. Then there’s the interest on all that debt. Budget projections indicate that the national debt could hit $20 Trillion in the next couple years if we keep going the way we are. Other nations are starting to look at the U.S. like Greece; a bankrupt financial disaster. We’re mortgaging our nation to entities like China, who are not exactly our friends. The current administration’s indebted the nation to a greater extent than any other, but they’re not the only perpetrators. This has been going for decades since the new system was created. It’s not a Democrat or Republican problem – it’s a national tragedy.

Gold at $1,700 an ounce sends this signal clearly – which government fears and hates.

The government wants you to hold their inflationary dollars. The Federal Reserve does too; and bad-mouths Gold. The finance houses who surreptitiously work with the government to control the price of Gold tell you that Gold is an unproductive asset, and you should hold dollars instead; while they quietly buy it for their own accounts. They’re all propagandizing you to keep their shell game going. I remember one time a couple of years ago when one of the major financial houses (JP Morgan I believe) was publicly telling it’s clients to sell Gold, while privately buying it for their own account.

The national tragedy goes even deeper. The Federal Reserve holds secret meetings where it shares inside information with the finance houses who help it; information that they use to make millions and billions on the markets from you unknowing investors. If you think the equity & debt markets are free and open, think again. It’s all manipulated.

Let’s talk about one of the many ways in which your government shafts you with this shell game – Social Security. You are required to make tax payments into Social Security. These payments are made with post-income tax dollars (you’re first income-taxed on the income you pay the social security tax with). The government spends the social security revenues (money) and replaces them in the social security trust fund with government debt instruments; thus, the government spends your social security contributions as it sees fit, and replaces them with new government debt. Of course, government debt is a claim on the productivity of the country – your productivity – and therefore represents a new debt you as citizens take on. This is important to note, because government spends your social security contributions, and creates a new debt owed by you as a citizen (another tax) for payment of benefits to you. Then, when you receive your benefits, up to 85% of them are subject to income tax depending on your filing status and how much income from other sources you have coming in.

To recap, the government first taxes the income you pay social security taxes with (income tax), then taxes you for social security (social security tax), then spends the money and replaces it with new debt (a new claim on your productivity, or tax), and then taxes you on your benefits (income tax). That’s three taxes on the money you put into social security, plus the social security tax itself. Of course, the government must pay interest on the new debt they created (another claim on your productivity, or tax), so really you pay five taxes; and your contributions are spent now for anything the government wants. Most citizens think the government is taking their money and putting it into a social security trust fund (savings account) to pay your benefits. Nope! That money’s gone. They spent it and replaced it with debt – debt that you owe as citizens.

The government says that your benefits money is safe because it’s invested in instruments guaranteed by the U.S. government. What they really mean is that your benefit claims are backed by their ability to tax you; or create new debt that you owe as a citizen; and that’s the only way those benefits are going to be paid. They just keep spending the tax money as it comes in, and pass the buck for social security obligations to future generations. Neat trick huh?

Additionally, “people retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It’s a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press.”  The government absorbed all the money you put in, plus the employer contributions, and you won’t even get back what you alone put in; let alone all the interest you could have earned on that money over the years. This is what your government has done for you. Isn’t it great? What a deal!

Your wealth, purchasing power, and financial stability are being undermined every day by the government’s borrow & spend shell game, the underhanded dealings of the Federal Reserve and it’s finance house cronies, and very likely the sale of our nation’s Gold reserves (your Gold reserves) to manipulate the markets and fool you. Even your most basic “protections” are being undermined by government subterfuge. Gold serves as a clear warning, and an alternative.

That’s why the U.S. government hates -and fears- Gold.

Be informed.

Learn More About the U.S. Government Monetary Policy:

http://walshal.wordpress.com/2009/04/11/monetary-policy-a-primer/

Other Suggested Reading:

America Has Become a Pinata

http://walshal.wordpress.com/2012/12/28/america-has-become-a-pinata/

America Has Become a Pinata

“America’s national government has moved way beyond a political spoils system,” wrote Charles Goyette in his book The Dollar Meltdown. “A spoils system leaves the host alive so that a politician’s occasional ne’er-do-well brother-in-law can be put on the payroll.”

In contrast, Goyette suggested, “America has become a piñata: Everybody gets a crack at it. Presidents and other elected officials pass the big stick around as a reward to those who help keep them in charge of the piñata party.”

Goyette’s book came out in 2009. Since then, we have learned that the party is even more debauched, nay demented, than he ever imagined. And you, dear reader, were not invited…

Link to Full Article:

“America Has Become a Piñata…” http://dailyreckoning.com/america-has-become-a-pinata/#ixzz2GMmf3bfQ

Other Reading:

Monetary Policy – A Primer

http://walshal.wordpress.com/2009/04/11/monetary-policy-a-primer/

Why the U.S. Government Hates -and Fears- Gold

http://walshal.wordpress.com/2013/01/03/why-the-u-s-government-hates-gold/

Credit and Credibility: by Greg Canavan

Is it laughable, or lamentable? The market, that is. In the past few years, it has become a joke…a tool of manipulation, an unreliable source of information. Despite the outperformance of the US equity markets this year, ordinary investors (presumably people with savings they would like to invest in productive and attractive businesses) are not interested.

Reuters columnist Felix Salmon recently posted a few charts to highlight this trend. This one, originally appearing at ZeroHedge, shows the decline in trading volumes since the credit bubble bust in 2007/08.

Using the Monday after Thanksgiving as the comparison date (the first day of trade after the 2-day Thanksgiving holiday) trade volumes in 2012 are back to 1997 levels. So while you’re being told a recovery is underway, it’s clearly not a recovery in investor confidence or involvement in the stock market.

Read more: Credit and Credibility http://dailyreckoning.com/credit-and-credibility/#ixzz2DkEOKUxw

14 FACTS OBAMA DOESN’T WANT YOU TO KNOW

FOURTEEN  FACTS OBAMA DOESN’T WANT YOU TO KNOW:

1. Prosecution For Financial Fraud Hit A 20-Year Low During The Obama Administration (There were more prosecutions during every year of George W. Bush’s presidency than during every year of Obama’s).
2. Income Inequality Is Worse Under Obama Than Under Bush (The gap between the rich and the poor was more pronounced under Obama’s presidency than under George W. Bush’s).
3. Obama Wants To Lower The Corporate Tax Rate (Obama proposed a tax overhaul that would cut the corporate tax rate from 35 percent to 28 percent).
4. Obamacare Won’t Make Health Care Cheaper For Most Americans (After Massachusetts enacted a similar health care plan in 2006, premiums for an individual plan in the state rose 18 percent over three years).
5. Obama’s Housing Programs Have Largely Been A Failure (In 2009, Obama announced the Home Affordable Mortgage Program, promising to help 3 to 4 million borrowers, but as of January — more than three years into the program — HAMP had only reached 1 million borrowers).
6. Homeowners Haven’t Seen Much Out Of That Huge Mortgage Deal (As part of the settlement, banks said they would offer at least $10 billion in loan forgiveness to homeowners. But months after the deal was inked, banks have been slow to hand out the money).
7. Democrats Have Received Lots Of Campaign Cash From Bain Employees (Democratic candidates and committees had actually netted double the amount of campaign cash from Bain workers as of May than their Republican counterparts since 2008, according to the Boston Globe).
8. Goldman And Other Wall St. Firms Have Largely Escaped Punishment For Their Role In The Financial Crisis (The announcement last month that the Justice Department wouldn’t be prosecuting Goldman Sachs over allegations surrounding the financial crisis was a reminder for many that the Obama Administration has largely let banks off the hook for their role in the meltdown).
9. The Wall Street “Revolving Door” Is Alive And Well In Obama Administration (Many current and former members of the Obama Administration have ties to Wall Street. The list includes the president’s current and former chiefs of staff — Jacob Lew and Bill Daley, respectively — as well as his former budget director, Peter Orszag, and others).
10. “Too Big To Fail” Banks Have Grown Under Obama (At the end of 2011, five big banks, including Bank of America and JPMorgan Chase, held 56 percent of the U.S. economy, according to Bloomberg, compared to 43 percent five years earlier. That’s right, the too-big-to-fail banks have actually gotten bigger).
11. The U.S. Has Gained A Lot Of Low-Wage Jobs During The Recovery (Most of the jobs lost during the recession paid middle wages, while most of those gained during the recovery were low-wage jobs, according to a recent study from the National Employment Law Project).
12. Incomes Declined More During The Recovery Than The Recession (Median household income fell 6.7 percent between June 2009, when the recession technically ended, and June 2011, according to a Census Bureau study cited by The New York Times. That’s more than the 3.2 percent incomes fell during the recession, between 2007 and 2009).
13. Payroll Tax Cut May Expire On Obama’s Watch (The White House won’t be pushing for another payroll tax cut extension this year).
14. Many Top Obama Donors Are Employees Of Major Corporations (Of the top 10 companies with employees donating money to Obama’s campaign, three are big banks: JPMorgan Chase, Citigroup and Goldman Sachs, according to the Center for Responsive Politics. Some of Obama’s other major contributors include employees from big companies such as Microsoft and Google).

Source:    Huffington Post:

http://www.huffingtonpost.com/2012/11/15/fiscal-cliff-richard-trumka-unions_n_2134229.html?utm_hp_ref=politics#slide=more248394

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Germany Tip-Toes Toward a Euro Exit

Germany Tip-Toes Toward a Euro Exit

Dan Amoss The stock market will not remain in its current tranquil state. Investors will soon be roused from their blissful trance. This trance traces its origins back to the mass self-delusion that central banks can revitalize multi-trillion-dollar economies, simply by prodding investors into stocks and other “risk assets.” Investing is not that simple. The comparison between bond yields and stock yields — two completely different investments — has become absurd. Bonds are contracts involving a fixed stream of cash flows and a predetermined maturity date. Stocks are claims on highly uncertain streams of future free cash flows that often stretch out for decades. Many risks can enter the picture and alter the trajectory of free cash flow — and investors’ expectations of them. Risks tend to appear out of the blue and smack investors out of their blissful trance — a trance created by central banks that have shifted far too much attention on the returns of stocks versus bonds… Here is just one negative catalyst growing closer as the weeks and months pass: Germany could exit from the euro and return to the deutsche mark. While a German exit would offer long-awaited clarity about the future of Europe, it would also spark a mad scramble to adjust to a new reality. A German exit would trash the euro’s value against the currency that’s steadily becoming the reserve of choice: gold. Only weak economies with bankrupt governments would be left standing behind the euro. The European Central Bank (ECB) would be free to monetize as much Italian and Spanish debt as it wished (i.e., print euros to buy the government bonds of Italy and Spain). The economists calling for a weaker currency to restore prosperity to the PIIGS countries would get to see their prescription play out in a real-world laboratory. Results would show that currency debasement does not create stronger, more competitive economies. Countries left in the euro would see collapsing living standards: import prices would rise and capital investment would fall amid a chaotic currency regime. ECB president Mario Draghi famously deemed the euro “irreversible”; he would do whatever is necessary to preserve it. But what Draghi sees as necessary will eventually be seen as intolerable in creditor countries like Germany. Once Draghi starts monetizing Spanish debt, Germany and other wealthy countries will view the euro’s costs as greater than its benefits. The German central bank — the Bundesbank — still exists. The Bundesbank could convert its liabilities from euros to deutsche marks at a predetermined exchange rate and take a one-time write- down on assets related to claims on PIIGS central banks. It would certainly be costly, but the alternative is worse: perpetually financing eurozone states unwilling to restructure public benefit programs unaffordable for their economies. Having seen the example of Greece, the Spanish public suspects that austerity will only make things worse. Spain will come to believe that its salvation lies in the printing press — in the ability to inflate away its heavy debt burden. After promising markets that the ECB would buy Spanish debt, Mario Draghi now has no choice but to fire up the euro printing press. Most other debt holders will flee the chaos unfolding in Spain. They’ll refuse to hold Spanish bonds at yields too low to compensate for default risk. The ECB, once it establishes a fake, above-market price for Spanish bonds, will ultimately find itself the only holder of those bonds. This is what happens when central planners impose prices far from what private investors consider fair value (in this case, pushing Spanish debt yields to below 4%, versus a much higher market-based yield). Once the German taxpayers see that the ECB will become the majority holder of Spanish debt, they will insist that German politicians plan an exit from the euro.

A Dummy’s Guide to the 2007-2008 Financial Crisis

Helga is the proprietor of a bar.  She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar.

To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later.  Helga keeps track of the drinks consumed on a ledger; thereby granting her customers loans.

Word gets around about Helga’s “drink now, pay later” marketing strategy and as a result, increasing numbers of customers flood into Helga’s bar.  Soon she has the largest sales volume for any bar in town.

By providing her customers freedom from immediate payment demands, Helga gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer; the most consumed beverages.

Consequently, Helga’s gross sales volume increases massively.  A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Helga’s borrowing limit.

He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.  At the bank’s corporate headquarters, expert traders figure a way to make huge commissions; and transform these customer loans into DRINKBONDS.

These “securities” then are bundled and traded on international securities markets.

Naive investors don’t really understand that the securities being sold to them as “AA Secured Bonds” are really debts of unemployed alcoholics.  Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.

One day, even though the bond prices still are climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Helga’s bar.  He so informs Helga, who then demands payment from her alcoholic patrons.  But being unemployed alcoholics, they cannot pay back their drinking debts.

Since Helga cannot fulfill her loan obligations she is forced into bankruptcy.  The bar closes and Helga’s 11 employees lose their jobs.

Overnight, DRINKBOND prices drop by 90%.  The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.  The suppliers of Helga’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the BOND securities.  They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.

Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations.  Her beer supplier is taken over by a venture capital asset management firm; which immediately closes the local plant and lays off 150 workers.

Fortunately though – the bank, the brokerage houses, and their respective executives are saved and bailed out by a multi-billion dollar no-strings-attached cash infusion from the government.

The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who’ve never been in Helga’s bar.

Now do you understand?

Still Think Gold and Other Financial Markets Aren’t Manipulated? – Read Their Ad!

The Bank for International Settlements Bares It’s “Dirty Little Secret”.

Thanks to;

CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. -and- Researcher R.N.

The powers-that-be do their best to hide their manipulations of the financial markets, but every now and then the truth leaks out.

A researcher found a 24-page brochure prepared by the Bank for International Settlements to introduce itself to prospective members at a seminar at BIS headquarters in Basle, Switzerland, in June 2008.  The brochure includes an advertisement for the gold market-rigging services provided by the BIS to its 50 or so member central banks.  Page 17 of the brochure touts “Our Products,” including “Gold & Forex Services — Interventions.“

Can they make it any clearer?

Debt Derivatives and Gold will Explode Shortly

Courtesy of: CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.

Debt derivatives and gold will explode shortly, von Greyerz tells King World News

Fund manager Egon von Greyerz, interviewed by King World News today, expects debt derivatives to start exploding across Europe and the United States soon, and gold to end its consolidation phase and to start moving up again as soon as next week. An excerpt from the interview is posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/2/17_Greyerz_-_Gold_to_Begin_a_Major_Advance_Starting_Next_Week.html