The Devonport Speculator’s Dummy’s Guide To Armageddon

Posted by on Nov 30, 2011 | 2 Comments

The Devonport Speculator is an avid reader and aficionado of the increasingly surreal nature of the debate around the brewing financial crisis and what various governments, economists, technocrats and politicians are trying to do about it.

Table_96 2011-11-30

In order to ensure its readers are up to speed with the important fundamentals of the imminent collapse, The Speculator has prepared a Dummy’s Guide to the crisis, which it will publish on an ongoing basis.

The illustration below provides some useful and easily understood background to the crisis. The hope is that this diagram can be easily reproduced to explain the cause of future events to one’s children, elderly parents, other survivors or NZ First voters.

Charlatans will try and baffle you with phrases like “the complexities of the global financial system are impossible to understand.” This is balderdash. The fundamental principles are very simple, and it is (somewhat unfortunately) among these foundations of the system that the trouble lies.

Some notable observations on the diagram;

– 1 trillion is a thousand billion. It is therefore a terrifyingly huge number, particularly when the number in front of the word “trillion” is anything other than “zero.”

– The black circle is a lot bigger than the blue circle. This is A Bad Thing. Why? Because the black circle is not real money, but money created as debt by the bankers. This means the bankers have promised to lend more money than actually exists in deposits. Normally this is OK, as long as people a) pay their debt back; b) people do not all want their deposits back at the same time c) the bankers are not overcome with greed.

In the current situation, an awful lot of people who borrowed an awful lot of money are not going to pay it back, because they have been a bit silly and bought things which have lost their value. They paid $100,000,000,000 for some shares that are now worth $0 let’s say.

Now here’s the really funny bit. Some of the really silly people bought DEBT!! That’s right, in total they purchased agreements between people with few real assets that were worth about $8,000,000,000,000,000 ($8 trillion) –  that lots of people with few real assets signed with lots of other people with few real assets. If only it had been a silly game! But no, it was a serious business that grown-ups in suits and flash offices did. And they kept doing it because every time they did it they were personally paid in lots of real money.

– Yes! The people who created the black hole have magically turned some of it into their own cash (via their salaries and bonuses) and are now impervious to the consequences of their actions. This is A Bit Unfair. It also doesn’t sound much like capitalism, where losers are supposed to go to the bottom of the pile, not sit on top of it, waving wads of other people’s money in their faces and braying “Get a job”.

– The people who have spent all the money in the black hole (other than the bankers) include goodies and baddies.  The goodies are people who borrowed the money and are able to pay it back under the terms of the agreement with which they borrowed it. They’re in the green circle. The baddies are people like Silvio Berlusconi, Sir Fred Goodwin and George Bush who spent all the money on silly things like football clubs, scantily clad young ladies, palaces and guns, then blamed someone else and expected those whose money they had lost (the bank depositors and taxpayers) to pay it back. These types of people are called socialists.

To lose a few trillion dollars really does suggest incompetence, insanity or dishonesty on an impressive scale by those managing the financial system. Anyone who then insists this minor oversight is the fault of “immigrants”, “dole bludgers”, “solo mums”, “commies” “London rioters”, or “a global conspiracy” is really not ready to have come down from the trees. Which is ironic, because it might be safer up there.

Exercise I: If you find yourself falling into this category, you have failed the first Dummy’s Guide test scoring an F, and will have to re-examine the illustration again. You may also want to consider a prehensile tail transplant.

If you find yourself preferring specific politicians or technocrats as scapegoats; for example “George Bush,” Ben Bernanke”, “Myron Scholes”, “Gordon Brown” “Bill Clinton” etc you are certainly identifying a small part of the cause, and you will therefore be awarded an unimpressive but promising C-.  This is unless you select someone who has had no influence on any events whatsoever like Bill English, in which case your score is a D.

Exercise II: Using your felt tip pen, on the diagram below circle the place you believe all the trouble started. Now circle the place where you believe the buck stops. Are they the same place? If not, award yourself a D. More homework for you. If they are in the same place, where are they? And if you drew the circles on your screen, go outside and climb into the rubbish bin.

Some questions for next time;

1: What kinds of pseudo-science were used to allow/justify this total systemic failure, and were the Flat Earth Society involved?

2: Where were the people who were supposed to prevent/regulate this kind of behaviour?

3: To whom was all this cash loaned?

4: Why does no one appear to be getting very cross about all of this?

5: Why is no one at least getting a bit of a telling off for seemingly destroying western capitalism as we know it?

6: Is the US Republican Party correct when it blames Alien Gods and Sonic The Hedgehog for the mess?

7: Is my instinctive and uncontrollable urge to blame someone lower on the food chain than me for the crisis a normal and healthy reaction?

These questions and more will be answered in the next installment of The Speculator’s exclusive Dummy’s Guide To Understanding Armageddon.

Because as The Speculator always says; “As you step over the abyss, it is critical to grasp the nature of gravity, as this will provide some useful insight into the impact at the bottom.”

Figure 1: Bugger

Figure 1: Bugger


  1. Sniff says:

    Being mathematically challenged, I was in a state of trepidation as I embarked upon reading this article. However, I soon realised that this situation has nothing whatsoever to do with maths – it is about stupidity. Thank you for the illumination – and the use of the word “balderdash”!

  2. FGC says:

    Brilliant. Thanks

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