Pyramid Comment

This journal takes an alternative view on current affairs and other subjects. The approach is likely to be contentious and is arguably speculative. The content of any article is also a reminder of the status of those affairs at that date. All comments have been disabled. Any and all unsolicited or unauthorised links are absolutely disavowed.

Saturday, January 29, 2011

Mechanism For A Crisis

The financial 'crisis' is not difficult to understand when the focus is directed towards the obvious. Misdirection is essential to make the illusion work. The main thrust was initially to convince everyone that a problem is the reality. The solution quickly follows constantly reminding of growth which is symbiotic with debt, but that is rarely, if ever, mentioned. Without the debt then growth cannot happen. It relies on Winners And Losers. It's always about loans, interest, borrowing, inflation, debt, recession, decline. And...


aka growth

The definition of this 'growth' depends on viewpoint. The government objective is to 'reduce the deficit inherited from the last government' (alleged deficit - DA) and this is managed by making the people pay. Brutal, but simple. This does not require actually attacking the problem (but this is the solution to the 'created' problem so leave it alone as it's working so well - DA). Any child of school age would appreciate that raising taxes (and VAT) and minimising outgoings would raise the finance coming in to the Treasury by forcing the people to 'donate' a greater part of their already taxed income.

Disposable Income

Government 'governance' is patronisingly cynical in the extreme. Exploiting the 'making life easier' for some, the minority with true wealth (gold-based), at the expense of everybody else (majority). The Virtual Money 'possessors'. That's what they do. Create wealth for the select few. In the interests of ALL citizens? Absolutely NOT.

Not creative and definitely not pro-active in dealing with the problem, though in a grotesquely nauseating paradox...

there never was a 'problem' to deal with, but the

contrived and unnecessary

'solution' is working very, very well - DA
    Winners And Losers. Redistribution. This sustains the problem and continues to raise the rate of inflation substantially and it's self-sustaining. Cyclical. Interest on savings is depressed and that encourages the 'spend it now' philosophy. It's all depressing evidence that this is a government that has absolutely no ideas except to control and behave as a true parasite. It is also supportive evidence of there being no intention of attempting to reduce inflation, taxes etc. In fact, the reverse is clear. Inflation on the increase and debt encouraged is the in the mindset only of the total incompetent. And, of course, the human parasite feeding off humans. All that really grows is...
    r a g e

    Planet Earth only has a fixed amount of water and of that only very little fresh drinkable water (about 3%). This may seem a lot in the grand scheme of things, but a growing population that has the most essential need in water with NOTHING AS IMPORTANT.

    Without water there is no life

    This critical resource is scavenged and effectively destroyed by locking up in cement and concrete to build more houses for more people and in the process 'creating' illusory wealth. Concrete soaks up water and over time gets harder. Although 'dry' concrete still contains all the water used to make it, none of this water is available to sustain life. It is chemically bonded and forever totally irrecoverable. Building upwards conserves land, though for the price of one site many apartments can be constructed and sold.

    The cost per m2 (footprint ground area) makes it absolute sense to build upwards (maximise profit). The same site-footprint exists, but each apartment is priced according to where the building is located. It's a simple multiple. As an example, 20 apartments would come from 5 floors with 4 flats on each. Obviously, construction itself becomes more difficult the higher the building goes and this would have a major cost impact. The trade-off is cost of the building site against the increased construction cost. A taller building would need a larger footprint for stability, but the growth rate upwards is greater than outwards.

    If x = horizontal and y = vertical, the relative ground area is (x x x) and the structure volume is (x x x x y). The value of x will increase at a lower rate to that of y so if x grows in the sequence

    1.00 -> 1.25 -> 1.5 -> 1.75 -> 2.00

    The ground area will increase:

    1.00 -> 1.56 -> 2.25 -> 3.06 -> 4.00

    The structure volume will increase:

    1.00 -> 3.12 -> 6.75 -> 12.24 -> 20.00

    • 1.00 x 1 = 1.00
    • 1.56 x 2 = 3.12
    • 2.25 x 3 = 6.75
    • 3.06 x 4 = 12.24
    • 4.00 x 5 = 20.00
    The increase of ground area is much smaller relative to structure volume. Volume represents the number of apartments (1 floor = 4, 2 floors = 8, 3 floors = 12, 4 floors = 16, 5 floors = 20) and the consequence is that profit:

    increases rapidly

    This has to be a major reason for wanting to construct the tallest building. It's 'sold' to the people as a 'competition' to be the tallest. This means, of course, the most profitable. Dubai is one of the most expensive place to live on Earth. A good reason to build the tallest and most lucrative real estate. The more narrow the building (smaller footprint) for its increasing height, the profit will increase more than for a larger footprint. The equation marries the greatest height with structure volume for the smallest footprint (ground area). The maximum number of apartments.

    Minimal ground area

    Maximal structure volume

    Greatest profit

    Imagine, a tall block of flats in a rural setting: rare if ever. But in London, New York, Dubai... The financial benefit from a rural tower block doesn't exist. Large numbers of people living within a small area require supply of essentials. A high population density defines a commercial setting. People are necessary to populate such areas to ensure a viable marketplace. Oddly, tall buildings and structures are rare in Paris (France). This city has an extensive underground metro system that enables construction in the suburbs (les banlieues). France has a large land area for the population size. London has a very much larger population density for a smaller overall land area. Dubai is surrounded by desert so building upwards makes more sense than outwards. The landed gentry create an effective desert around the urban areas. Such land ownership stifles outward growth and forces it upwards. The wealth is potentially located with the landed gentry so perpetuating the cynical nature of growth.

    Growth can only happen with the decline of something else and that is very difficult to qualify. It is not likely to be a single factor. The web that is weaved can be likened to a tree growing upwards. It becomes more complex (in 3-dimensions) as it grows. The apparent 'rise' in standards can only be based on the debt.

    • It really is that simple

    All the experimental and therefore untested solutions only make matters worse, but Keynesian Monetary Theory is still

    It's feeding a terminally dying (or dead! - DA) body while it declines. The classic scenario of an old car constantly requiring repair illustrates the end game. The cost outlay to keep the car working ultimately exceeds the cost of starting with a new car. Or at the least a younger one that is in better condition. Otherwise the money is sucked in to attempt propping up the now definitely dead car.

    It's the same with finance, except the belief is that the device (debt) can be saved. But this is, perhaps, being too generous.

    The future for the planet looks really
    healthy while that for the human
    race is increasingly bleak