Before we
say goodbye to 2011, let us pause to remember itÂ…briefly. We
spent 365 days with it – 365 days in a row. We can’t just
move on to 2012 without at least a backward glance. What kind of
a year was it? In what direction did it take the world, dear reader?
Should we cheer that it is goneÂ…or merely dry our eyes and
hope for the best in 2013?

We are writing
this little retrospective from memory. WeÂ’re not going to consult
the news reportsÂ…or the magazine recollections. Instead, we
base this only on what we recall, not on the basis of what actually
happenedÂ…

Why? This way
is more accurate.

Not that we
remember things more accurately, but that what we remember is more
important. History is always bunkum. Facts are remembered imperfectly,
to suit a narrative, not to give us a full picture of what went
on. ThatÂ’s why contemporary or recent history is so contentious.
Different people remember it differently. Each one recalls some
facts and forgets others, depending on the angle from which he saw
the eventsÂ…and what story he is trying to tell about them.
Then, over time, these thousands or even millions of different honest
and fairly accurate historical experiences are fermented into one
rich brewÂ…a fiction that is accepted as history, often with
little connection to what actually went down.

So, we will
tell our version of 2011 events. From memory. Besides, weÂ’re
too worn out from the holidays to do any real research.

So, what do
we remember? HmmmÂ…

Ben BernankeÂ’s
plan to goose up spending by printing extra money began in January.
That was a big deal. QEII it was called. It was expected to lower
bond yields and get the economy going by putting more money in more
pocketsÂ…

Wrong on all
counts. Bond yields rose. No new jobs were created. The economy
didnÂ’t expand. And the money stayed in the pockets of the bankers.

But the new
cash – or the thought of it – was enough to drive up the
price of oil and food. This didnÂ’t do much for AmericaÂ’s
middle class consumers. Their cost of living rose while their incomes
and net worth fell. Houses kept going down, month after month, quarter
after quarter.

Gold soaredÂ…from
somewhere in the $1,400 rangeÂ…to over $1,900, before falling
back into the $1,500 range by year end. Another solid year for our
friend, gold, in other words. Up about 10%. Who can complain about
that?

Meanwhile,
the price of oil surprised us. It was as if it didnÂ’t know
there was a Great Correction going on. The price was pushed up by
the fedsÂ’ money printingÂ…and something else. Speculators
were afraid that freedom and democracy might catch on in the Mideast.
The US government supported practically all the old “strong
men” of the region. It slipped them a twenty from time to time…along
with a few US surplus handguns and torture equipment. Then, when
the winds of “Arab Spring” shifted direction, the feds
went over to the other side. Mubarak and Gaddafi were out of luck.

The old tyrants
disappeared. Nobody cared. And oil stayed around $100.

QEII expired
in June. Then, a different crisis took over the headlines. Despite
all their rescue efforts, EuropeÂ’s little boats kept sinking.
First the Irish went down. Then, the Greeks began to go under. France
and Germany, on EuropeÂ’s only dry ground, kept throwing them
lifelines. But just as soon as they had one little boat in tow,
another one started to ship water.

The Greeks
groused because they wanted more money. And the Germans fussed because
they didnÂ’t want to give them any more. Investors thought that
was all there was to it. But then the SpaniardsÂ…and the Italians
began to sink too. And then speculators began to wonder about the
French. If you studied the numbers, you saw that there wasnÂ’t
that much difference between the Spaniards, the Italians and the
French. All the Latins were deep in debt. And none seemed to have
a serious plan for getting out of it.

It was one
thing to toss a line to the GreeksÂ…but who had enough money
for the Italians? They were the third largest debtor in the world.
And the French? Forget it.

Silvio Berlusconi
was a special case. The Italian president didnÂ’t seem to want
to play along; he just wanted to play around. The banks wanted him
to put on a good showÂ…to pretend to cut spendingÂ…to pretend
to implement a serious austerity program. Berlusconi wouldnÂ’t
do it. Italian bond yields continued to rise. Whether it was speculatorsÂ…or
the Euro insiders themselvesÂ…we donÂ’t know. But someone
wanted ItalyÂ’s elected chief out of the way. Berlusconi stepped
aside when Italian bond yields approached 7%, making room for a
guy named Monti.

The papers
reported that the ‘technocrats’ were taking over. Monti
used to work for the Boston Fed, if we recall correctly. And then
there was Mr. Draghi over at the European Central Bank, who used
to work at Goldman Sachs. Not only that, he was head of the Bank
of Italy at the very time Italy was getting itself in financial
trouble. The top job in Greece turned over too. Papandreou stepped
aside to make room for Papademos. Something like that. Papademos
was a banker too.

All of which
recalled for us the famous remark of Mayer Amschel Rothschild, “Give
me control of a nation’s money; I care not who makes its laws.”

Now, the bankers
were in charge. They made the lawsÂ…and its money too. The term
“technocrat” was completely misleading. “Technocrats”
makes it sound like they had some useful technical training that
they could use in the service of othersÂ… Not at all. They were
in it for themselves, desperately and recklessly trying to hold
the system together – so lenders (banks) got their money.

There was a
little mystery in the summer when the President of the United States
sent a hit squad to carry out the premeditated murder of Osama bin
Laden. If the US ever wanted anyone for questioning, youÂ’d
think Osama bin Laden was that man. But instead of capturing him
and torturing him, to see what they could get out of him, the feds
said they killed him and dumped his body in the Indian Ocean. It
was as if they really didnÂ’t want to hear what he had to say.
There were many different tellings of the tale. The official version
was completely unbelievable. But so were all the others. Some thought
the man killed was not Osama bin Laden. Others believed it was bin
Laden, but that he was still alive. Still others claimed the whole
thing was stagedÂ…phony from the beginning to the end.

Another mystery
appeared when Occupy Wall Street became a nationwide sensation.
Who were these people? What did they want? Even they didnÂ’t
seem to know.

Otherwise,
the European crisis dominated the financial news for the rest of
the year. Finally, in November, the merde was approached the fan.
Vague promises werenÂ’t enough to hold it off. The bond market
was in sell mode. Italy was less than 100 basis points from bankruptcy.
France was beginning to wobble too. And Germany had no intention
of saving them all. Besides, it didnÂ’t have that much money.

This time the
technocrats came to the rescue. The European Central Bank gave the
banks more than $600 billion. The bankers happily took the money.
Stocks soared. Nobody seemed to know or care where the ECB got its
money.

In the last
quarter of the year, the publicÂ’s interest shifted from finance
to politics. Not that voters were suddenly attracted to the issues.
But the candidates themselves drew a crowd. People listened carefully;
they were sure they would say or do something delightfully stupid.
One would forget that North America was a continent. Another would
be unable to remember his position on abortion. And a third would
be caught in flagrante delicto with a household pet.

Only one candidate
had a coherent program and consistent views. Alone in the field,
he had a plan for avoiding national bankruptcy. He also seemed to
be a decent, sensible man. For these reasons, he was judged unelectable.

January
4,
2012

Bill
Bonner is the author, with Addison Wiggin, of Financial
Reckoning Day: Surviving the Soft Depression of The 21^st
Century and
The New Empire of Debt: The Rise Of An Epic Financial Crisis
and the co-author with Lila Rajiva of Mobs,
Messiahs and Markets (Wiley, 2007). His
latest book is Dice
Have No Memory.
Since 1999, Bill has been a daily contributor and the driving force
behind The Daily Reckoning.

Copyright
© 2012 Daily Reckoning

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