This morning’s key headlines from GenerationalDynamics.com
- Syria ‘peace talks’ end in recriminations and accusations
- Eurozone continues spiral into deflation, with 12% unemployment
- Three bankers commit suicide in one week
Syria ‘peace talks’ end in recriminations and accusations
The so-called “Geneva II” Syria peace conference in the Swiss town ofMontreux ended Friday with no agreement on peace, no agreement onhumanitarian aid, and no commitment to another meeting. According toUN envoy Lakhdar Brahimi, who was the conference leader:
Progress is very slow indeed, but the sides haveengaged in an acceptable manner. This is a modest beginning onwhich we can build.
The gaps between the sides remain wide; there is no use pretendingotherwise. Nevertheless, during our discussions, I observed alittle bit of common ground – perhaps more than the two sidesrealize or recognize.
Things have gone so far down that they are not going to get out ofthe ditch overnight.
The Friends of Syria, a Western alliance that backs al-Assad’s foes,said, “The regime is responsible for the lack of real progress in thefirst round of negotiations. It must not further obstruct substantialnegotiations, and it must engage constructively in the second round ofnegotiations.” The U.S. State Department said that the Syriangovernment “continues to play games.”
Syria’s deputy prime minister, Walid al-Moallem, gave two reasons forthe failure of the conference:
[One reason was] the non-seriousness and non-ripenessof the other side and its threat of blowing up the meetings manytimes and stubbornness on one issue as if we come here for onehour to hand them over everything and return and this indicatesthe illusions they live. [sic]
The second reason was the US flagrant interference in the talksand the tense atmosphere through which the US wanted to coverGeneva meeting by its actual appearance and its flagrantintervention in the meeting affairs were also reasons that madethe talks don’t lead to tangible outcomes. [sic]
Brahimi says that a new meeting is scheduled to begin on February10, but the Syrian delegation denies that it’s agreed to attend.
Eurozone continues spiral into deflation, with 12% unemployment
As we wrote several weeks ago, the eurozone inflation rate has been fallingsteadily for over a year, raising very real concerns that the eurozoneis headed into deflation. The statistics for January are out, and theeurozone CPI was just 0.7%, substantially lower than the 0.9%predicted by expert economists. This raises more alarm bells overdeflation, which is often the precursor to a major economicdepression. As long-time readers know, Generational Dynamics predictsthat we’re headed for a deflationary spiral and a major globaleconomic crisis, the worst of which is far from over. CNBC
Three bankers commit suicide in one week
It’s hard to know what to make of this, but three bankershave committed suicide in the last week:
- Gabriel Magee, 39-year old VP of JP Morgan’s technology department, jumped to his death from the roof of the bank’s European headquarters in London.
- William Broeksmit, a 58-year old former senior executive at Deutsche Bank AG, was found dead in his home, also in London, after an apparent suicide.
- Mike Dueker, the 50-year old chief economist at Russell Investments in Washington state, jumped over a fence and fell down a 50-foot embankment in an apparent suicide.
It’s well known that suicides occur most often around the Christmasholiday season, so it’s possible that the timing of these threesuicides was coincidental. However, it’s also true that a number ofbankers and investors jumped to their deaths during the GreatDepression, usually from hotel rooms, and that the overall suiciderate today has surged even higher than during the Great Depression(usually because of unemployment). A financial crisis sends manypeople to financial ruin, but more than that, a financial crisisexposes a lot of crime, particularly embezzlement.
John Kenneth Galbraith described what happened during the GreatDepression in his 1954 book, The Great Crash – 1929, asfollows:
In many ways the effect of the crash on embezzlementwas more significant than on suicide. To the economistembezzlement is the most interesting of crimes. Alone among thevarious forms of larceny it has a time parameter. Weeks, months,or years may elapse between the commission of the crime and itsdiscovery. (This is a period, incidentally, when the embezzler hashis gain and the man who has been embezzled, oddly enough, feelsno loss. There is a net increase in psychic wealth.) At any giventime there exists an inventory of undiscovered embezzlement in -or more precisely not in – the country’s businesses andbanks. This inventory – it should perhaps be called the bezzle -amounts at any moment to many millions of dollars. It also variesin size with the business cycle. In good times people arerelaxed, trusting, and money is plentiful. But even though moneyis plentiful, there are always many people who need more. Underthese circumstances the rate of embezzlement grows, the rate ofdiscovery falls off, and the bezzle increases rapidly. Indepression all is reversed. Money is watched with a narrow,suspicious eye. The man who handles it is assumed to be dishonestuntil he proves himself otherwise. Audits are penetrating andmeticulous. Commercial morality is enormously improved. Thebezzle shrinks.
The stock market boom and the ensuing crash caused a traumaticexaggeration of these normal relationships. To the normal needsfor money, for home, family and dissipation, was added during theboom the new and overwhelming requirement for funds to play themarket or to meet margin calls. Money was exceptionallyplentiful. People were also exceptionally trusting. A bankpresident who was himself trusting Kreuger, Hopson, and Insull wasobviously unlikely to suspect his lifelong friend the cashier. Inthe late twenties the bezzle grew apace.
Just as the boom accelerated the rate of growth, so the crashenormously advanced the rate of discovery. Within a few days,something close to universal trust turned into something akin touniversal suspicion. Audits were ordered. Strained orpreoccupied behavior was noticed. Most important, the collapsein stock values made irredeemable the position of the employee whohad embezzled to play the market. He now confessed.
After the first week or so of the crash, reports of defaultingemployees were a daily occurrence. They were far more commonthan the suicides. On some days comparatively brief accountsoccupied a column or more in the Times. The amounts werelarge and small, and they were reported from far and wide.
Each week during the autumn more such unfortunates were reveledin their misery. Most of them were small men who had taken aflier in the market and then become more deeply involved. Laterthey had more impressive companions. It was the crash, and thesubsequent ruthless contraction of values which, in the end,exposed the speculation by Kreuger, Hopson, and Insull with themoney of other people. Should the American economy ever achievepermanent full employment and prosperity, firms should look wellto their auditors. One of the uses of depression is the exposureof what auditors fail to find. Bagehot once observed: “Every greatcrisis reveals the excessive speculations of many houses which noone before suspected.” [pp. 132-35]
We have to remember that today there’s a tremendous undercurrent ofwhat we might call “unreported crime” going on. Thousands of bankerspurposely created and sold trillions of dollars in fraudulentsynthetic securities backed by faulty subprime mortgages, and not asingle person has gone to jail for these crimes. We’ll have to wait andsee what’s going on. Bloomberg and Business Insider and Global Research (May 2013)