Saturday, March 23, 2013

Christopher Monckton Knows Nothing About Economics Too

Christopher Monkcton has taken time out of his busy schedule of being completely wrong about climate change to be completely wrong about economics too, in the pages of the Obama-birther and general conspiracist World News Daily:

Exclusive: Lord Monckton has action plan to protect your wealth from Cypriots' fate
Action plan!  Ok, we'll get to that.  Why is Cyprus in trouble first:
And why did Cyprus go bust? I spent eight years there. The central bank was one of the most sensibly administered in Europe. The Cyprus Pound was one of the world’s strongest currencies. Thousands of international companies (including mine) were headquartered there. Tourism boomed.
Then the people of Cyprus made a colossal mistake. They voted to abandon the democracy they had had for less than half a century. They joined the dismal, failing European Union.
So Monckton had his business at one of Europe's most notorious havens for the wealthy to dodge taxes, the place now widely reported to be full of illicit Russian mafia money.  "Birds of a feather" comes to mind here.  Ok, let's skip to his thesis about the European Union:
Cyprus joined the EU. At once, nearly every offshore company – including mine – fled. The unelected EU bureaucrats marched in and began ordering Cyprus about. The euro collapsed as predicted. Cyprus – once one of the most secure and prosperous nations in the Middle East – went bankrupt.
Cyprus joined the EU in 2004.  Monckton makes it sound like this was all nearly instantaneous but in fact joining the EU was initially a boon and boom to Cyprus.  It is likely membership in the EU has contributed to its current problems but not why Monckton thinks, because a bunch of Eurocrats screwed up the tax haven party he was enjoying.

Oh and the Euro has not "collapsed" in any sense whatsoever.  It's still a currency, not one nation has left it, and its value against the US dollar is about the same as it was in 2004, and was worth more over most of the years between now and then.  Still, this comment about the Euro is as close as Monckton gets to why Cyprus is in trouble:  It doesn't control its own currency and thus has to beg other EU member states for bailout money to keep its ailing banks afloat.  The Cypriot government would not be in trouble except for its desire to not let the banks themselves go bankrupt.  If Cyprus had its own currency, it could bail out its banks without difficulty.  Monckton cannot mention any of this because it would completely spoil his attempt to equate Cyprus' troubles with some kind of looming US fiscal disaster.

Why does all this matter for America? Well, your nation, like mine and many others in the West, is as bankrupt as Cyprus. And your people, like the Cypriot people, actually voted for bankruptcy. The Cypriots voted for the EU. You voted for bankruptcy, too. You voted for Obama. Twice. 
Whom the gods would destroy they first make mad.

The US is not "bankrupt."  This is just flat nonsense.  Owing a lot of money does not make one bankrupt.  The US has been far deeper in debt in the past, particularly during and immediately after World War 2.  It was not "bankrupt" then.  Further, the US controls its own currency.  It literally cannot suffer a shortfall of cash with which to pay its debts, as those debts are denoted in US dollars and the US can produce as many dollars as it ever wanted to, if it found raising the money through taxation difficult (a problem Greece suffers).

The latter comment is some hilarious unintentional irony, except that the gods haven't evidently destroyed Monckton which sadly disproves the premise.

Why does Monckton think the US isn't suffering a similar crisis?
The sole reason why the United States is not in the same dire straits as Cyprus is that the markets cannot quite believe just how quickly what was once the world’s most prosperous nation has been brought down.
Note "sole reason."  Absolutely no evidence for this bold claim is supplied but it's laughably nonsensical.  Those wily, highly educated and hard nosed financiers and traders who comprise the bulk of what people mean when they say "the markets" have spent the last several years being stunned, so much so that not only do they not sell sell sell their US government treasuries, and say, buy gold, but instead they have such demand for US treasuries that they are actually paying the US government to hold their money when you account for inflation.

Now for the "horrendous advice" section of the article. First: Buy gold. Second: Buy Iraqi and Vietnamese currency.  The first one is bog-standard goldbugism.  Well, if you bought gold a year ago you lost money.  If you bought 6 months ago, you lost even more money. As gold is near multi-decade highs still, it's easy to imagine it is more likely to go down than up.  The second one is bizarre.  Basically Monckton's great advice just amounts to some highly speculative gambles on things that may or may not go up if other events happen.

There's a third piece of "advice" though:
Thirdly, get your congressman and your senators to write to the U.S. Treasury demanding to know on what conditions each tranche of U.S. sovereign debt to countries such as China has been borrowed. Your representatives will be astonished when they learn how much of the assets and undertaking of America has been given away by stealth.
How is this advice to protect your family's wealth from a Cyprus type collapse?  What does this even mean? What is supposedly going to astonish your representative?  What will they do?  Monckton never tells us.

This is the person climate deniers would rather trust than actual, qualified scientists who study climate change professionally and publish in peer-reviewed journals.  Well deniers, you'd better buy gold, dinars and dong.  You do trust Monckton right?

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