Author: Douglas Knight

I disagree with the assumption that law is what holds our society together. In his work on the decline and corruption of a culture, C.E.M. Joad correctly notes that decadence is the identification of means with ends. Or as Mr. Wilson puts it ‘When our masters have destroyed the schools.’ When wealth becomes the end, for instance, there exists economic decadence. Or as Mr Wilson would have it, when ‘Our masters have seen to it that middle and working class families need two incomes to survive…’ When power becomes the end, you have political decadence; When pleasure becomes the end, you have moral decadence; and when emotions become the end, you have psychological decadence.
We must always remember that politics is more important than economics, that culture is more important than politics, and theology is more important than culture. In this way we can see that divorce was initiated when we lost the theology of marriage, it accelerated when sexual pleasure became the end of marriage (instead of the procreation and education of children) This assertion that we are a nation of laws and not of men is misleading. We have become a nation of lawless men (culturally), who elect people to lead us (politically) who believe ‘It’s the economy, stupid.’
If we passed a law tomorrow in America that prevented divorce before the yougest child born of the marriage was 18 years of age, the pleasure seeking people we have become, would prefer to ressurect the old whore house rather than the old homestead. The collapse is upon us, Humpty Dumty has fallen. The question is where and who will carry the elderly and household Gods out of the burning city. My thinking is it will be folks like burdened Aneas or men like St. Benedict living in the woods, where some old crow will bring them bread from time to time.
Robert Reavis

Many people are wondering how the current problems came about:

3. No-one, other than the British Government, believes that the rate of inflation has ever been less than 7% over the last decade and today it is clearly more than 15%.
7. The ‘growth’ in the profits of most western companies since 2000 are really due to understated inflation figures.
8. The governments of the Western Nations have depended upon their people borrowing more and more as their manufacturing capability has been lost.
10. Low interest rates that do not reflect the real level of inflation will always encourage people to borrow and spend but the consequence is that saving is pointless.
11. It does not benefit the pensions industry, the banks or the Government to admit that any young person that saves for their old age is wasting their time.
20. Although it has not been spelt out to them most young people know that they have no real future and that many of the opportunities that their parents had will be denied to them.

How it ends – Quotations

Profoundly unpalatable decisions are going to have to be taken for the sake of our survival and the possibility of future prosperity. It is not enough to say that confidence must return. Instead, great truths will have to be spoken: we are going to have to start being honest with each other about our predicament. Britain has spent and borrowed too much, saved too little and produces not enough of what the world wants. The banking crisis needs breaking down into two parts. First, there is what should be done immediately to end a cycle of despair. Second is what a future government should do to rebuild capitalism. The situation is that serious.
Iain Martin
Britain is not alone in its current distress, although the fall in sterling speaks for itself. The sovereign debt of Russia, Ukraine, Greece, Italy, Belgium, Austria, The Netherlands, Ireland, Australia, New Zealand and Korea is all being tested by the markets. The core of countries deemed safe is shrinking by the day to a half dozen. Sadly, Britain is no longer one of them.
Ambrose Evans-Pritchard

Dutch court has ordered prosecutors to put a right-wing politician on trial for making anti-Islamic statements. Freedom Party leader Geert Wilders made a controversial film last year equating Islam with violence and has likened the Koran to Adolf Hitler’s Mein Kampf. “In a democratic system, hate speech is considered so serious that it is in the general interest to… draw a clear line,” the court in Amsterdam said. Mr Wilders said the judgement was an “attack on the freedom of expression”. “Participation in the public debate has become a dangerous activity. If you give your opinion, you risk being prosecuted,” he said. Not only he, but all Dutch citizens opposed to the “Islamisation” of their country would be on trial, Mr Wilders warned.
“Who will stand up for our culture if I am silenced?” he added.
BBC
Cranmer responds

The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic. The political impact will be seismic; anger will rage. The haunted looks on the faces of those in supporting roles, such as the Chancellor, suggest they have worked out that a tragedy is unfolding here. Gordon Brown is engaged no longer in a standard battle for re-election; instead he is fighting to avoid going down in history disgraced completely….

Iain Martin Britain at edge of bankruptcy

We cannot recapitalize them through taxpayer donations, for through that path we only delay the inevitable. We do not have the ability to “manufacture” or “borrow” the three to five trillion dollars it would take to cover those losses – a full fifty percent increase in our federal debt, on which we would pay hundreds of billions of dollars a year – forever – being a permanent drag on GDP. Such a path will only lead to more insolvency as the crimp on GDP will inevitably lead to more job losses, more credit losses and more malaise, ultimately resulting in the very collapse that the proponents of this path claim to be trying to avoid. The math demands that we take bold action. We must force a cramdown of debt to equity, which will wipe out all of the existing shareholders, including those holding preferreds while converting the bondholders into new equity holders, pushing down the capital structure however far is necessary in order to return the firm to solvency.
Many people would argue this is “illegal.” It is not. These firms are already bankrupt if anyone bothers to perform a simple dispassionate balance sheet analysis. Their common and preferred stock is worthless. They continue to trade only on the premise that our government would come in and bail them out with an endless supply of taxpayer dollars, mortgaging our nation and its future in order to keep these bankers and their investors from suffering their just desserts as a consequence of their voluntary, irrational and patently unsound lending decisions. None of these investors put their money in with their eyes wide shut – or if they did, they knew better. Nobody was forced to buy a bank stock or bond. Everyone did so expecting a return, and all took a risk. That risk has now become realized – it has gone from hypothetical to actual. President Obama needs direct Treasury and The Fed to immediately go institution-by-institution, write down the assets to “death’s door” levels, determine how far down the capital structure needs to be crammed to restore that institution to a strong capital position with double the Tier Capital ratio required by law, and then forcibly reorganize the debt into equity.

Market Ticker There is only one solution to the banking crisis

and see Ambrose Evans-Pritchard