I am queuing in the cavernous aisle of Right Priced, a wholesaler in George Town, the capital of the Cayman Islands. Around me, poor black Caymanians are stocking up too, served by Filipino immigrants. These are not the people you see in the glittering strip of bars and hotels that service the massive ex-pat population here. These people are different. They are close to the bottom of a society, which has become extremely wealthy over the years by being a tax shelter for rich people’s money.
Why am I in a wholesaler – a sort of Musgraves in the sun?
I am buying soap, deodorant and toothpaste for Cuban friends ahead of my flight to Havana. If anything underscores the difference in outcomes between the two systems in these neighbouring Caribbean islands, it is this.
One is the home to the most freewheeling, tax avoiding, beggar-my-neighbour capitalism on earth. It has opened its doors to foreign capital and has created a society that plays host to thousands of professional expat service workers. They grease the wheels of this offshore banking and tourist haven. The locals don’t appear to mix too much with the ex-pats, but the co-existence is made all the more tolerable by the soothing balm of other people’s money.
In contrast, Cuba has done the very opposite, creating a socialist paradise in the sun where the health and education system may be the envy of many first world countries but where the cracks in the edifice are evident everywhere. Yes, things are changing, and there is little doubt that the people in the other Caribbean islands – dependent, as they are, on tourism – are very worried about the opening up of Cuba.
Cuba is a giant in the region. It is hard to overstate just how much bigger and culturally richer Cuba is than many of the other Caribbean islands. Yet still today, Cuba remains a place where friends have to ask other friends to bring over soap. Even the most committed idealist has to question this state of affairs so many years after the revolution.
The outcomes of both economic models – one beggar-my neighbour capitalism, the other beggar-myself socialism – is so stark that it could be a made-up textbook economic experiment carried out here in the Caribbean, if it didn’t happen to be true.
Interestingly, reading some of the commentary on Greece in the past few days, you could be forgiven for thinking that the choice Greece faces is between a Cuban or a Caymanian future. The hyperbole with which the legitimate democratic mandate of the Greek people has been received in Europe is quite shocking. Syriza and their (elected) leaders are being portrayed as wannabe Fidel Castros about to push Greece headlong into the abyss of collectivism.
In order to save the euro and the rights of creditor banks, the EU top brass are in danger of destroying the EU, because the EU is based on solidarity, for all. It is an extraordinary sight that the ECB will try to cut off liquidity to the banking system of a member country and in so doing, precipitate a bank run. What does that say about European solidarity?
Yes the Greeks have made mistakes and yes the country is corrupt, but everyone knew this and still lent to them. The onus when lending is on the lender, not the borrower, to suss out whether the borrower is delinquent or not. If you were going to lend to someone wouldn’t you want to do at least a credit check? And if the person had debts greater than their income and no real way of paying the cash back, other than borrowing more from someone else to pay you, wouldn’t you think twice? Surely the chance of bankruptcy might have struck you as possible?
After all capitalism without bankruptcy is like Catholicism without hell. You need the deterrent to make the whole thing work. So when Greece says, we don’t have any money – which is true – who is to blame? And does prompting a bank run make it more or less likely that the Greeks will pay?
Debts that can’t be paid won’t be paid. A broken balance sheet is made better by less debt, not more. The way you get to less debt is by doing deals, so that the country can pay and grow at the same time. If you turn the country into a debt-servicing agency for foreign creditors, what hope does it have of being a stable society?
Threatening the Greeks now just proves in whose interests Europe is run. It is not a democracy but a bankocracy – still run for the interest of creditors. This can’t last. Greece is no angel in this drama, but neither is it exclusively culpable.
The story of debtors and creditors is as old as the hills. It is biblical and it is about financial morality.
Here in the Caribbean, the bible is everywhere. There are churches of all sorts here and religion is extremely strong, particularly evangelical faiths.
Today would have been the 70th birthday of the Caribbean’s most famous son, Bob Marley. And although a committed Rasta, Marley wrote lyrics infused with the verses of the scriptures with talk of redemption and exodus. These were the words, language and symbols of his Christian youth in Jamaica and his knowledge of the Old Testament – a book the Orthodox Greeks subscribe too as well.
In both Leviticus and Deuteronomy, extensive reference is given to the concept of the debt jubilee, which is a period of time after which excessive debts of a neighbour should be forgiven. The reasoning is that if a neighbour is crushed with the burden of excessive debt payment, he is unlikely to remain a peaceful, well-behaved neighbour indefinitely.
As I head to Cuba – a country whose isolation has been lifted due to the intervention of the Pope, on the birthday of Bob Marley – I wonder what morality lessons inform our friends in Berlin.
Germany, the serial defaulter of the 20th century, is now enforcing impossible conditions on Greece and dressing it up as left versus right or efficiency versus sloth or North versus South.
It is none of these. It is about too much money lent and borrowed. It is about morality and ultimately, it is about the future of Europe.
As I listen to the Bob Marley celebration on the radio here, I wonder how will this all end: with redemption or exodus
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FART I believe that Greece will ‘fart’ from the Euro as the Germans have decided will happen . There will be no exit …just …’a fart ‘ . This will be instant as we all know by the meaning of that word and sometimes it happens when we least expect it even if it is embarrassing .No matter how many anoraks the Greek Prime Minister borrows to meet with his counterparts in Europe nothing will slow down the sudden explosion that will follow . The resultant residue will tamper the remaining edifice and following a new health certificate from the… Read more »
If ‘redemtion’ means extending Greek debt repayments out to 2115, then this is the way it’ll go.
De Velera
The father of Eamonn De Velera was Cuban and while you are there search up his long lost family and invite them to the 1916 commemoration.Maybe FF might have better health policies to learn from this reunion .
This article pretty much sums up the whole sorry debacle.
http://davidstockmanscontracorner.com/history-in-the-balance-why-greece-must-repudiate-its-banker-bailout-debts-and-exit-the-euro/
Bob was a genius and is rightfully worshipped in the Caribbean.
Hi David, “The story of debtors and creditors is as old as the hills. It is biblical and it is about financial morality.” Once again more advent garde commentary. The only mainstream economist introducing moral concepts into the dialogue. I wonder do the MBA students study the theory of moral sentiments? I suggest that capitalism (which hasn’t existed for a long time now) can only exist in the context of a full understanding and adherence to moral principles. Contrast that idea with atheist totalitarian madness or banking psychopathic madness and you’ll catch my drift. “I wonder how will this all… Read more »
A lot of right wing sentiment is going to be shocked altogether if Greece manages to shake off the Euro, default ( as countless countries have done before), devalue it’s currency and start on the path to massive recovery.
The “cracks in the edifice” so “evident everywhere” in Cuba are not the result of of an apparent decision to “create a socialist paradise in the sun”, David. I’d love to know where you got that phrase from. Have you ever heard a Cuban use it? What they will probably tell you is that those cracks that do appear, are the result of a criminal and illegal international trade embargo that the country has had imposed upon it since 1961. Yet, despite those obstacles, they appear to have build (and again, I am using your words, David) “a health and… Read more »
I would like to notify museum curators of the near-future that back in 2000 I placed the Punt-Euro Converter Calculator that was issued to every Irish household in a drawer for sake keeping knowing one day a museum may like to purchase it as part of their “History: The Failed Euro” installation.
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The speed of Ireland’s Rejection of a debt conference would lead an outsider to believe We Live In a Democracy.? We belong to the most undemocratic Society In the modern world and Its beginning to show, IRISH people didn’t want house tax water tax but it was rammed down our throats by a Govt that has Little or No regard for democracy,
This is just a side show of the global economy so i agree with grexit. Why aren’t we as one. One Europe. Haven’t I as much in common with Merkie as I have with Roy Keane. As much in common with a corkonian as a parisian. We are all one. All the same. Why the barriers. Wasn’t this what europe was supposed to be about. Solidarity with each other. Some chance. It seems to be more to do with profits. When the Germans are making the profit they will not share. Maybe all others should stop buying German products until… Read more »
Jungle Demands The Irish Government has now appointed a British SC to act for the State to defend the EU decisions re Apple in Ireland . Based on the language of Thames Valley I do not have any optimism that this defense will succeed. As I have protested before the Irish Finance Acts have two words for Taxation namely Taxation and Cain . Unknown to the Government my findings show that these two words ……do not mean the same thing and should be investigated . Using the original logic of the intended meanings of each word of original man when… Read more »
David, Quote: Germany, the serial defaulter of the 20th century, is now enforcing impossible conditions on Greece… I am afraid you cast the wrong light onto a problem that is bigger than what this statement would suggest. Remember the Lisbon referendum version 2.0? Before this referendum the Eurogroup had no legal basis. After the Irish were told, thanks for your vote, but you ticked the wrong box, let’s do that again, and the treaty was then voted in favour, Protocol 14 was what this Irish vote enabled as well, which is now the lgeal basis for the Eurogroup. When Eurogroup’s… Read more »
Hi David, Biflation going on so listen here; http://moneyweek.com/pippa-malmgren-an-inflation-shock-is-coming/ It’s not just the yorkie’s it’s the Creme eggs are getting smaller. Tony Brogan every sovereign wealth fund is buying land from 7:00. Beef prices in US all time highs. Biflation in a nutshell David. Prices on mandatory items are RISING. Prices on discretionary items are FALLING. According to the video a major contributory factor to the Arab spring was a rise in the price of BREAD. Tony Brogan you are like an oracle. As for bail in it has arrived. With interest rates going negative you get LESS money back… Read more »
To all of you here who wish for an end to the Euro, beware of what you wish for, especially those who support a strong EU but not a common currency. The EU itself will fail without a common currency because it will fail to unleash its economic energies as the U.S. would have done without a common currency. Europe is now in the middle of a Hamilton/Madison ideological battle similar to what the fledgling U.S. had to fight in the 1790s. This may even be an existential battle similar to the American Civil War of the 1860s (hopefully to… Read more »
An interesting article David but how can you expect morality from bankers? Please note that this is also the same Germany that would have remained a bombsite without the Marshall plan (as much of East Germany did). The same Germany that decided on re-unification with East Germany and the expansion of the EU and all that this entailed without too much consultation with other Member States. They can be quite selective where memory is concerned with other aspects of their past when it suits. As you stated the deal is simple, conduct due diligence before lending against an asset and… Read more »
In the final stages of a long-running investigation into corruption in the world’s largest financial market, federal prosecutors have recently informed Barclays, JPMorgan Chase, the Royal Bank of Scotland and Citigroup that they must enter guilty pleas to settle the cases, according to lawyers briefed on the matter. The pleas would be likely to carry a symbolic stigma, if limited actual fallout, in handing felony convictions to some of the world’s biggest banks.
Posted at the lemetropolecafe.com
A new episode unveiled on Tuesday is one of the most vivid examples yet of this mentality. Over the last year, federal investigators found that one of the world’s largest banks, HSBC, spent years committing serious crimes, involving money laundering for terrorists; “facilitat[ing] money laundering by Mexican drug cartels”; and “mov[ing] tainted money for Saudi banks tied to terrorist groups”.
http://www.theguardian.com/commentisfree/2012/dec/12/hsbc-prosecution-fine-money-laundering
Get the money system out of the hands of these thieves and crooks. Get it out of the hands of the politicians. Put it, like the internet, in the hands of of the people of the earth.
The EU is not the Euro !
and nobody’s right,if everybody’s wrong
Tony: you say: “This requires a national currency and not someone else such as the EURO”. I am beginning to think that maybe the great strength of the Euro is that it is NOT a national currency, that the best type of currency IS a shared currency. Maybe through the Euro the world is stumbling towards something other than a bank debt based system of money or single nation controlled currencies, as the best way “to have a mutual currency in which trade settlement is made but without it being held and owned by a single authority”, as you also… Read more »
The major problem with the Euro Pat is twofold. It is run and controlled by the central bankers, ECB, who call the shots. They run the politicians and receive direction from the IMF, and BIS which is also a creature of the central bankers. One currency is not suitable for all. There must be local currencies for local people. In the US or Canada there could easily be state or provincial currencies for local people. That then leaves us with the problem of valuing each against the other. That is a market place function as already takes place. However for… Read more »
Good Pat.
This is what Kilkenomics should be about. There should be a series of forums addressing this problem. Can you imagine 50 classes with audience participation and the standup comics as moderators.
Put it to the people and the solutions will arrive.
We would need a week to educate the moderators to the issues so the debate is properly lead.
Whatever format it takes it would need a conversion on the way to Kilkenny by David to have any chance of such a conversation taking place.
Actually the headline here should be
Europe is a Bankrupt Now.
There is not a state that is solvent. Certainly the EU collectively is bankrupt.
It is the same for the world economy in total.Madness.All based on A Ponzi debt based currency.
Debt jubilees do not cut it. We need a new system.
A simple calculation that ridicules the charging of interest within an economy never mind that all the money created by the Ponzi central bankers charges interest.
https://islandstrust.wordpress.com/2014/12/27/a-penny-for-your-thoughts/
Don’t know where David comes up with “Socialist Paradise”. What I saw was child prostitution in Havana, non existent child labour laws, they were working in the fields and grifting in the streets, and outright scammers con artists and thieves whenever you walked from one venue to the next. It was shocking. Hope he comes back with his wallet.
https://www.youtube.com/watch?v=qEuYKEbMVvQ
Hi David,
Professor Black’s first opening statement rejected;
http://www.independent.ie/business/irish/banking-inquiry/banking-inquiry-outspoken-us-banker-bill-black-addressing-hearing-first-opening-statement-rejected-30966059.html
Michael.
http://sprottglobal.com/thoughts/articles/eric-sprott-expect-physical-gold-backing-of-currencies-within-next-decade/
Conclusion:
Is it possible that defending central banking isn’t practical because the process itself is ultimately indefensible?
– See more at: http://www.thedailybell.com/news-analysis/36074/Bashing-Central-Banks–Does-Rand-Paul-Know-What-Hes-Talking-About/?uuid=6F800609-5056-9627-3C5071902B060BF2#sthash.gjQStaTu.dpuf
Being charged for having money in a savings or chequing account is turning investors to gold as it is cheaper to hold than a deposit of cash.
Gold is the strongest currency in the world this year following last year when it was the 2nd strongest just 1% behind the US Dollar. 86% of the worlds people made money (or saved the losses in the native currencies) in 2014 by owning gold, and a little better by owning silver!!
http://www.bloomberg.com/news/articles/2015-02-11/swiss-bank-says-investors-favor-gold-amid-charges-on-cash
Do not confuse a central bank with a public bank.
http://www.alternet.org/economy/why-public-banks-outperform-private-banks-unfair-competition-or-better-mousetrap
It is happening in Canada. The people are slowly arousing themselves to claim back the governing process from the bankers
http://www.gata.org/node/15086
This is where Kilkenomics can involve the people in direct debate, and move into the forefront of molding political change. The change must come from the people. Education is the key.
Central banking is the problem to be rid of. Sovereignty is given away with the banking privileges. A national bank issuing its own currency from Treasury is the start of the reclamation process.
Posted on http://www.lemetropolecafe.com Comment on central banks Hello Bill: A comment about the Swiss Peg provided the incentive for a comment about the viability of central banks. Why are central banks allowed to exist? Clearly they are undemocratic, and therefore alien to Western Civilization. They may operate outside governments, as some are actually private corporations, yet they wield immense influence over the everyday lives of the citizens that live within the borders of western nations. They are un-elected, but impose policy on citizens who never have the opportunity to unseat them. They are autocratic over both national governments and the… Read more »
Let us have the money problem and the central banks criminal monopoly as the topic for 2015 Kilkenomics. Call in Chris Powell,GATA. Bill Murphy, Lemetropolecafe. Max Kaiser, Bill Black, Eric Sprott, Andrew Maquire, etc etc.
Lets get it on. Let’s get a change in thought process. Bring it on at Kilkenomics.
Maybe just Maybe we will get to call a spade a spade at the 2015 Kilkenomics.
http://blog.milesfranklin.com/a-spade-can-never-be-called-a-spade
After thought.
Bill Holter would be a good addition at Kilkenny
The PTB can not handle the truth. Rather they handle it all too well, never letting it see the light of day!!
http://www.zerohedge.com/news/2015-02-10/man-will-never-be-invited-back-cnbc
Two more names for kilkenomics Greg Hunter and Peter Schiff http://usawatchdog.com/ On gold, Schiff says, “Gold has not fallen, not nearly as much as the gold bears have expected. In fact, in 2014, gold was only marginally lower by 1% or 2% lower in dollars, but in most other currencies it did very well. It was up 5%, 10%, 20% or more. You pick a currency, and gold did very well. In fact, gold outperformed most all the stock markets in the world in 2014. Thus far in 2015, it is beating most all the stock markets, and it is… Read more »
How do these people use a currency only to be found online and who have a history of not trusting paper money or the banks that use it.
Gold is a common gift at weddings and festivals, and rural Indians who account for almost 60 percent of demand use it as a means of savings because most don’t have bank accounts…
http://www.bloomberg.com/news/articles/2015-02-11/india-smugglers-and-their-bodies-take-a-break-from-gold
Mike: what Stockman left out of his unduly focused rant on Germany was the part played by his friends at Goldman Sachs. The real question facing Germany and the rest of the world is how to get out of the grasp of the moneylenders. Goldman Sachs and its echelon of parasitical bond holder clients are the real terrorists. Everybody is terrified of them. Hopefully the Greeks will highlight the fact that it was Goldman Sachs who almost singlehandedly shepherded Greece into the Eurozone so that it could lend to the Greek Government and send the bill to the German people.… Read more »
“His bottom line would appear to be that the game is up for the Euro and possibly the EU as the Greeks won’t give in and the Germans won’t give ground.” It is not what I took out of the essay. Stockman basically says no matter what happens the economy is toast because of Loose monetary policy of the ECB. This lowered the bond rates, creating huge maladjustment of investment and borrowing. The result is exponential growth of debt across all nations including Germany. There is no future in the EU or Euro unless an autocratic, totalitarian state is accepted… Read more »
How about the game being up for Wall Street moneylenders? My only criticism of Germany is that it let itself become the debt collector for Wall Street. Shame. David Stockman is guy with a checkered history both in and out of government. He has a blind eye when it comes to Goldman Sachs et al. He never even mentioned the bondholders. I believe Yanis understands the real problem and will show the world that that this crisis is not a Greek crisis, it is a Wall Street overreaching crisis. Wall Street and their offices around the world is where the… Read more »
[…] because he’s a great story teller and his post of a couple of days ago is one of his best. Germans, Greeks, Bob Marley, Leviticus, Deuteronomy, Jubilee, Capitalism, […]