Tuesday, June 28, 2011


Today is a special day. The Greek government is deciding on whether to accept the austerity conditions demanded by the ECB (European Central Bank) and IMF for receiving the next slice of the bailout credit. I am fortunate to be in Greece and see and "feel" the situation in person. General strikes have been called for yesterday and today. In one city and one town I have seen permanent tent cities in public squares to protest. These tent cities are similar to the ones found in Madrid and Barcelona, Spain. There, in Spanish, the protesters are called "Los Indignados", the indignants, the angry ones. These groups across various European countries have united under the motto "Direct Democracy Now" or "Real Democracy Now". The site of the Greek branch of this European wide movement is www.real-democracy.gr/en.

Graffiti is on the walls in many places and flyers posted on many shop windows. They are expressing the feelings of the average people of the street. Where I have been the general strike was a partial one. I had no problem with the public transport and many shops, if not most, were open. One store used the term "Crisis Prices" instead of "Sales" to attract customers. A Greek friend commented that his salary was lowered 20% and that the politicians are discussing to lower it by 20% for a second time. Gas prices have gone from €0.80 to €1.75, i.e. they have more than doubled in a single year. To be truthful I have to say that I was nervous about the decision of the Greek government. I favored a rejection of the credit conditions, but that in turn could be the trigger to a domino effect across nations and economies.

A Greek friend expressed his view as follows. He sees this as a giant battle between banks and governments. Not only on a Greek scale, but on a global scale. In my mind a picture emerged like a Greek tragedy with elements from the Greek mythology; in my head a picture of two snakes formed, one representing a few elite world bankers, the other snake representing the world's governments. He continued to explain that he sees it as a fight between financial power and the political system. Furthermore he sees it as a sort of pilot project. If the banks win over democracy then they will take the Greek case study and rubber stamp it on other nations worldwide. He sees it as a reference case that will be repeated and replicated in the near future in other countries.

At the end of the day the Greek government accepted the bailout conditions and in my friend's view the political system gave in to the financial powers. My friend was disappointed with the decision. The political system and the Greek people are no more than slaves to the banking system. With the acceptance of the credit slice the problem is not averted, and certainly not solved. Everybody knows that it is just delayed by exactly 3 months until September when the next credit payment is due. So, the whole Greek tragedy will repeat itself shortly. Each time it will be worse. The only question I have is: How often will it repeat itself?

Wednesday, June 22, 2011

Artificial Photo Synthesis

MIT professor Daniel G. Nocera has researched artificial photo synthesis and already 2 years ago presented his approach as a highly distributed and highly personalized solution to the world's energy problem. In short, he wants to replace power stations of all kinds with small inexpensive photo synthesis solutions installed in your home. Here are his talks given 2 years ago: Dan Nocera: Personalized Energy (22min) and Personalized Energy for 1 (x 6 Billion): A Solution to the Global Energy Challenge (78min). The idea itself is not new, already in 1912 (no type here) -- 100 years ago -- it was suggested as a solution to our energy needs.

I am not expert enough to qualify his research, but his speech and vision are impressive. It promises democratic and clean energy, auto-sufficiency, individual independence, risk avoidance, pollution avoidance and sustainability. With such promises it is certainly worth investment, but it frightens the establishment as it would be the end of the day of utility companies and remove our energy dependency.

D. Nocera now works with the Indian Tata conglomerate to bring the research into the commercial market. There is hope after all.

Tuesday, June 21, 2011

Gold Purchases

Who is buying gold? The latest data of state gold purchases and sales have been published by the World Gold Council. This data shows the following countries as leading gold purchasers over the last 10 years:

  • China: some 550 tonnes
  • Russia: some 420 tonnes
  • India: some 200 tonnes
  • Mexico: some 100 tonnes

It is interesting to see that there is no European country, not a single one, that has purchased any significant (5 tonnes or more) amount of gold at any point in time. The US hasn't bought any gold either. India and Mexico have been single one-time purchases. China and Russia are continuously buying mid-sized amounts year by year. Europe as a whole has sold around 3,000 tonnes of gold over the last decade.

Saudi Arabia is listed with a one-time 180 tonnes entry, but as far as I can tell this is not a real purchase but a paper adjustment.

It is a telling sign that the US and EU are not purchasing any gold with respect to any future currency decisions the politicians/banks of these countries will make.

Monday, June 20, 2011

Bitcoin Hacked

Amazing. The dollar is crashing. The Euro is crashing. And now also the Bitcoin is crashing. But the crashes are for different reasons, and the causes the resulted in the Bitcoin crash are easier to fix. Read this article on the events of this month in Bitcoins entitled "Inside the Mega-Hack of Bitcoin: The Inside Story".

What we learn from these events are:
  • Bitcoin like any other currency is affected by human emotions and speculations. It goes up and down. Its value rises or drops on rumors, politic events and so forth. To this degree the currency does not reflect value but perceptions. Nothing new about this but the drastic rise in value over the last weeks and the following drop has demonstrated it.
  • Bitcoin as a currency is still very young and not yet mature. The key issue currently is that some 90% of all exchange operations are traded on a single exchange. The currency is distributed by design, but currently its exchange is nearly centralized through this near-monopoly of the exchange named Mt. Gox. More companies must come forward and build exchanges so we have a more decentralized and less monopolized exchange infrastructure. This heavily used exchange Mt. Gox was compromised and user login, password and wallet data stolen, misused and later published openly. This is equivalent to a master heist in which a major bank is hacked, online bank account data such as account numbers, user names, and passwords stolen to be used later to login and transfer money. Clearly the exchange Mt. Gox is to blame. They had a poor security set-up.

Let's give it some more time to mature.

Thursday, June 9, 2011

Beyond Greece

The New York Times as well as the National Herald posted an article entitled "It's Not About Greece Anymore". The content of this article is not surprising and nothing new. The article identifies the fears of the European politicians to let Greece go into bankruptcy as it might cause a bank run in similarly positioned countries like Spain, Portugal, etc. In short, afraid of a melt-down of the European currency or the European Union (several nations have threatened to revert back to their own independent currencies) EU politicians are willing to do about anything to rescue Greece. As always politicians are trying to save their own hide more than anything else and any solution for Greece is only a temporary one.

The article goes on with the authors' suggestion that the Euro must be devalued drastically and then a dramatic political change must take place in order to survive.

What is surprising is the frankness of the article and that it was published in the NYT and National Herald. The writing is not just on the wall. It is in plain view, published by major mainstream newspapers.

Both US and Europe have overspent, gone into massive debts, and despite the crisis since 2008 nobody wants to face the music. We don't want to see and we pretend not to see the root causes and all we do is apply patchwork fixes here and there, billion dollar band aids that will fall off anytime we shake ourselves. What we need is radio and chemotherapy to get rid of the cancer of our times: the bankers and the politicians they have bought.

Friday, June 3, 2011

The End of Money

Franz Hoermann is a professor at the university of economics in Vienna, Austria. Recently he published a book entitled "Das Ende des Geldes". The book is in German and so is most of the available information about Hoermann. There is a good summary TV interview (16 min) he gave after the documentary presentation of "Zeitgeist - Moving Forward".

The title of his book is frequently translated as "The End of Money" or "The Death of Money". He presents some off-the-beaten path ideas of how to eliminate money and suggests a substitute solution that is more just and socially fair. His replacement for money is a new innovative social accounting system based on "units" rewarded for actions valued by society. Each individual receives a base "income" to which he adds more income received for the productive actions he performs. The received units are stored on a credit card like card and can be spent in any store, gifted, traded, etc.

Here is an English translation of an interview given to the Austrian newspaper Der Standard. This article covers several items mentioned in the TV interview. He briefly comments on his view of an unconditional basic income for everyone. Growth and full employment pressures are removed in his proposed system. People have more spare time and more freedom to decide on what they want to work on. This part is similar to concepts presented in the Zeitgeist documentary series.

The Thdrussell blog offers this article which talks about Hoermann's view of money and the currently used double entry accounting system. This article does not go into the suggested money replacement.

On the KeimForm blog is an article with 3 critical comments on the TV interview given after the Zeitgeist presentation.

Here is a 19-page paper of his entitled "Premises and Promises" in which he outlines how he wants to convert today's zero-sum economic "game" into a more cooperative system where everybody can win.

The Guardian points out that -- according to Hoermann -- money is rewarded with money. We don't reward accomplishment in our system, we reward property. The economists Gunnar Heinsohn and Otto Steiger proved that modern money – worldwide – is not backed by value. Rather, whenever money is created an equal debt is created with it. The systemic problem arises out of the fact that the debt is loaned at interest. The money for this interest is not created. The money for the interest doesn't exist at all. Hoermann's suggested solution eliminates interest completely and creates a solution that rewards actions rather than possessions (as is the case in today's monetary system).

There are several good ideas in his work. The unjust money creation process has been outlined many times before (e.g. The Money Masters). Money as debt and the impossibility to repay the interest is a well understood theme (e.g. Money as Debt). Money should not be rewarded with money. The rat race is equally absurd. We cannot and we should not achieve full employment. We do not need full employment in today's world. As a joke I saw a graffiti that says "We do not lack money, we just have too many thieves". It is so true, we have enough resources, we just spend them unwisely. The thieves are the bankers and politicians. Given our resources we could all live well without putting in so many hours of inefficient and unproductive work. A basic income as suggested brings many advantages, more so than disadvantages. It removes pressures, crime, oppression, not to mention stress and illnesses. No, his plan is not perfect. No system seems to be ever perfect. But we can cherry-pick. There certainly seems to be less evil and risk in his approach than in today's twisted money game controlled by a few bankers.