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Stanley
Local Historian & Old Fart
36804 Posts
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 Posted -
28/04/2011
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07:37
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Political comment is a high risk activity on the site these days so I thought I'd try again to give those who are interested in politics a safe haven!
Stanley Challenger Graham
Barlick View
stanley at barnoldswick.freeserve.co.uk
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Tardis
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Posted - 17/10/2011 : 10:34
The bigger debate today seems to revolve around Energy Policy.
Chris Huhne made no mention today of the enviroment taxes imposed on energy firms which obviously feed through to the consumer, nor the fact that the shale gas discoveries might actually prolong the UK obsession with carbon fuels.
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Stanley
Local Historian & Old Fart
36804 Posts
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Posted - 18/10/2011 : 05:38
Has Rebecca Burns-Callander been reading my posts? See this LINK for the Item Club report on UK growth prospects. Her last line advises the lads to put their tin hats on.
One of the nice things about the shed is that the activities are quiet enough to be able to listen to R4 and there was a man on yesterday saying some quite sensible things about the present difficulties. He was addressing the question why the general public is in the dark about what is happening. I liked him because he reinforces my own misgivings. Where is the £2Trillion we threw at the banks in 2008? Where is the money coming from that the EU is proposing to throw at the immediate crisis of the Greek Debt? If the 'cure' for the problem is to eliminate or reduce debt, how can it be sensible to pay for this by creating even more debt?
This pops up in the Ernst and Young report which points to the present government borrowing being at the highest level ever. In other words, we are borrowing to support a programme to cut debt levels. Something is definitely wrong here and we don't seem to have any policies to address the problem. As Ernst and Young point out, the QE isn't going to do anything about growth, the money will end up in bank vaults doing nothing useful and all they can come up with is that the BofE should halve the interest rate to .25%. In other words, we have no economic tools left in the box. Meanwhile, the growth forecasts decline month on month and the one thing that everyone seems to be agreed on is that added value from growth is the only way out of the maze. This is the common global problem.
I don't know about you but my problem is that when I try to be even-handed and take into account all the various factors and points of view I get bogged down. My tiny brain can't handle the calculations. So, being a simple-minded bloke I go back to basics. Cut through the knot.
It seems to me that our policy-makers are in the same condition as the masses of ordinary workers over the ages. They find themselves in a system which possesses ample resources but they have no control over them and are starving to death with no prospect of any relief. Instead of addressing the basic systemic problem they are forced by circumstance to scratch round for ways of alleviating the immediate problems, in the peasant's case by finding food to keep going, in the policy-makers' case to find enough money to finance their policies. In both cases it may be that the problem is the system and the way out is a form of revolt.
I'm not suggesting simple revolution, I'm suggesting that our Western economic model is deeply flawed and has only kept going this long by constant economic growth by exploitation of resources and deep inequalities in the distribution of wealth. We can see this on a global scale, look at the poverty and starvation all over the world and compare this with the hotspots of capitalism.
So, have I got a conclusion? We've tried everything else, why not think the unthinkable. Why not start from the point that we are obviously wrong, ditch the capitalist market led mode and start again with a more equitable distribution of real value? Of course this is impossible, the leap of logic is too great, it would lead to chaos. Unfortunately this leads me to my real-world prediction. I think that this is what is going to happen but not in any managed logical way. The economic problems we are looking at are insoluble in the sort term and can only lead to uncontrollable chaos if we don't change our approach. So, if a bank or a country is going to fail, let it happen and deal with that small outbreak of chaos. Instead of cutting the easy expenditures like public services, cut everything, start in government by declaring an emergency and cancelling all contracts with any person or body except those actually adding value. Cut the casino banks adrift immediately and force the core banks to concentrate on their job, financing the real life of the country. Make up your own list.
Each of these actions will cause chaos in a certain sector and this will have to be managed. My point is that it is better to create and manage small slices of chaos rather than sit back and wait for the big one. If that happens it will be uncontrollable and whilst what will emerge will be a new order, we will not have any assurance that it will be better than the old. So I suppose what I am advocating as a solution is controlled chaos rather than Armageddon. Mind you, I might be completely off my trolley!
Stanley Challenger Graham
Barlick View
stanley at barnoldswick.freeserve.co.uk |
Stanley
Local Historian & Old Fart
36804 Posts
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Posted - 19/10/2011 : 06:37
Lord Woolfson has been reading me as well, See this LINK. He's offering a £250,000 prize for the best strategy for an orderly melting down of the Euro. In effect, managing the chaos which could ensue which was my point yesterday. Perhaps he's off his trolley as well?
Not going to bore you with what you already know. Only bright spot for us pensioners is that this month's inflation figure is the one used for setting pension levels next April, forecast is that basic pension will rise to £107 per week.
GOD's report shows the extent of Fox's contempt for the ministerial code and party discipline. Question is, how was he allowed to get away with it?
See this LINK for the latest idea how to get more bedrooms into the housing market. Government has rejected the idea but it's an indication of the way some people are thinking.
Stanley Challenger Graham
Barlick View
stanley at barnoldswick.freeserve.co.uk |
Stanley
Local Historian & Old Fart
36804 Posts
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Posted - 19/10/2011 : 08:27
An interesting point cropped up in a discussion this morning. Remember when, at the height of the housing boom, some buyers used the cunning wheeze of taking out mortgages with French banks in Euros because there were advantages in the arrangement? What consequences could lie in wait for them as the EU banks become increasingly suspect?
Stanley Challenger Graham
Barlick View
stanley at barnoldswick.freeserve.co.uk |
Tardis
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Posted - 19/10/2011 : 10:28
Interesting point about the Dr Fox report:
The civil service were aware of the meetings, and thus there were really no security implications and it also reveals that the MoD chief had been "warning" Dr Fox, but had not progressed those thoughts beyond his own department.
Certainly sounds like there was a major fall out at the MoD and Dr Fox didn't cover his back enough.
Meanwhile, the chief Civil servant is presumably still in their job and not yet being asked to answer the questions that made Dr Fox say no to civil service involvement. Questions remain.
On top of which we have all the heat from Labour when the current policy was written by Tom Watson (MP), and dizzy Clegg isn't due to review this policy with new legislation until next year as it is already in the timetable as he prioritised the Election referendum.
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Tardis
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Posted - 19/10/2011 : 10:38
The facts that stand out from the inflation figures was the increase in fuel...9%, but no one has yet spelt out the impact of the taxes added.
The greater worry is that the Stock market is currently sitting at a level it was at 13 years ago. Put simplistically that would mean that the city views the last 13 years of "growth" have gone.
Amazes me too that some think tank is still banging on about the 3rd Way policy of forcing older people to sell their "large" homes and downsize to help others in the housing market. Totally overlooking the fact that it was the 3rd Way policy of unrestrained housing price inflation that got the UK banking system into this mess in the first place.
The housing market is currently not moving because lenders will no longer lend to the same extent, but if the banks don't keep some of the market moving it will leave an awful lot of folk with mortgages beyond the actual value and possibly a rash of keys handed back. Not to mention the buy-to-let market. The houses that do sell, are going for about 30% below asking level, yet there is no market readjustment.
Why has the "we saved the world" policy locked in this inability to move and allow the correction necessary to jumpstart the economy?
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Tardis
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Posted - 19/10/2011 : 10:56
I also think that you misrepresent somewhat the government policy Stanley.
It is currently to pay down the deficit (the gap between tax receipts and government spending), none of this activity is to pay down debt.
If it were to also pay down debt the consequences would be much worse.
The scenario over the country is similar to a train on a new rail line being the economy, during the years of "abolishing boom and bust" the government locked in spending for the future by implenting programmes that it knew it could not afford at the time although it massaged taxation rates to try to get more revenue to offset these future costs.
Even at the time the government's own figures showed that they were borrowing to fund these programmes, and this ignored all those off book costs like the PFI's and new schools.
As I mentioned above a key plank of this 3rd way was house price inflation, and when this went all wrong several banks had liquidity issues, which forced bad debt problems.
All this stalling in the economy now means that tax revenue is far below that necessary to pay for many of these programme costs that were introduced and locked in.
So in many ways the country no longer has the capacity to fund the new rails and stations at the rates it was before, and the train must be slowed down to accomodate the new programme to ensure it does not become derailed, and all the passengers on the train will have to pay higher ticket prices to help bridge the gap introduced by these elevated costs.
Maybe once the economy is rebalanced there will be opportunities again, but history should teach us not to repeat the lessons from history.
The question that should be asked is which programmes people want to keep, because then the others could be dispensed with, saving some money and enabling the balance (and recovery) to happen at a much faster rate.
An example: Blackburn hospital was built under PFI, all very laudable, but now Burnley general is under threat because the costs of Blackburn are locked in and Burnley is not. The service is diminshing, but the cost is not.
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handlamp
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Posted - 19/10/2011 : 15:24
quote:
Not going to bore you with what you already know. Only bright spot for us pensioners is that this month's inflation figure is the one used for setting pension levels next April, forecast is that basic pension will rise to £107 per week.
I wouldn't bank on it, Stanley, Mr. Cameron, and his merry men are already scratching around for some excuse to go back on that arrangement asthey did with changing the increase figure from RPI to CPI
Ted |
Stanley
Local Historian & Old Fart
36804 Posts
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Posted - 20/10/2011 : 05:03
"I also think that you misrepresent somewhat the government policy Stanley." Really?
Ted, funniliy enough that thought did occur to me. There were some comments yesterday about it being unfair that pensioners were being protected from inflation. What they forget is that when we were paying large amounts of tax out of low wages when things really were bad we were made a promise. That the State would look after us in old age if we kept our noses to the grindstone. There was no way we could have paid for private pensions, indeed, as far as the ordinary people were concerned they didn't exist.
Greece slides towards inevitable default and the EU banks and others exposed to Greek debt lobby for subsidy. Billions of phantom Euros will be thrown at the problem in addition to the money already spent. I don't hear anybody admitting that it will happen and talking about how best to manage the problem. Spain comes under increasing pressure. Domino effect springs to mind. What a mess!
Funny thing is that no real value or resource has been vapourised. It is all still there. The root of the problem is political, overspending by governments and they are still doing it. Bit like curing bleeding by blood-letting. So they blame the people who were ripped off. How's that for an appreciation of the government policy?
I shall keep on saying it, we need radical policies to renege on contracts that are bleeding us dry and cut government internal spending to the bone. Advisors, lobbyists and consultants are leeching us dry. Look at IT contracts for just one example of incompetence and had management. Add PFI. MOD debt. Make your own list. In the end the public service cuts will cost money not save it in terms of problems down the line. There are no such penalties with internal cuts but then that begs the question what the politicians are actually doing.
One good thing about the Fox affair is that the Civil Service may regain some of the control over ministers that they have lost over the last twenty years.
Stanley Challenger Graham
Barlick View
stanley at barnoldswick.freeserve.co.uk |
Bruff
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Posted - 20/10/2011 : 09:52
I think we need to caution against any idea that structural deficits are uniquely associated with the last administration and that prior to 1997 such deficits didn't exist. I'm struggling to think of a year when we had a 'balanced' budget, but no doubt there are one or two. It's certainly the case that the last administration ramped up spending on investment in services and infrastructure beyond a level tax receipts would support - a political decision as it seems the majority of the electorate welcomed this investment but recoiled from any notion they might have to pay a little more for it (and this ramping up largely occured in the last New Labour term). It was fully supported at the time by the then opposition, who promised to match these spending plans. And they would presumably not themselves have increased taxes to pay for it (having promised to 'share the proceeds of growth') and would no doubt have carried on with the PFI which after all, was introduced by them when in Government (again, PFI should not be thought of as uniquely associated with the last administration, though they did take it up with a gusto which some of us at least thought rather ill-advised). It would be interesting to muse on what many previous administrations did with the money they borrowed to make up the gap.
Superficially, I don't disagree with the notion that people should be asked which services they would like to keep and those which they would be happy to see go. Though I wager that many responses would be something like 'keep those I feel I personally benefit from, and remove those I feel I don't'. Which is not how the current social contract works, but then nothing is ever cast in stone. I'd quite welcome a societal debate on this, but given the binary choices many would arguably make it would have to be done with care and not a little caution. I don't think at present we're mature enough for it and I don't mean that perjoritively.
Richard Broughton
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Tardis
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Posted - 20/10/2011 : 11:45
I agree, the discussion about what people "want" and what people "want to pay" are possibly at opposite ends of the spectrum.
Unfortunately someone will have to make the hard choices for the former if the latter is not complied with.
Deficits are nothing new, and maybe if the financial miracle had continued the deficit would not be quite so high or even non-existant.
That said, if the treasury were to follow strictly Keynesian theory then the ramping up of the spending would only have occured if there was actually revenue there to support it, simply because of all the resources invested that might be "wasted" by cancellations of projects with all the fallout on those involved.
and yes Stanley really, unless you were missing an emoticon
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Stanley
Local Historian & Old Fart
36804 Posts
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Posted - 21/10/2011 : 05:33
Richard, you are quite right of course about the genesis of the over-optimistic spending and the fact that after 1997 the Tories supported it. At the time, in the light of the economic advice they were getting it was a logical policy. However, as Nigel Lawson said, regulation always lags behind the Lords of the Universe, they can afford to pay for better brains and nobody picked up what was happening, the fact that Phantom Money was being created. This was a consequence of the moves towards deregulation that started in the 1960s, a re-run of the 1920s syndrome which the bankers and regulators seem to have forgotten. The 'Financial Miracle' was a mirage massaged by those who were doing well out of it and the politicians and regulators ignored what warnings they got. These are the same people who are 'advising' us now. I'm convinced that they are no more reliable now then they were then. That is why I suspect the direction we are heading in at the moment. Time will tell whether I am on the right track.
Stanley Challenger Graham
Barlick View
stanley at barnoldswick.freeserve.co.uk |
Stanley
Local Historian & Old Fart
36804 Posts
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Posted - 22/10/2011 : 06:09
Confirmation this morning that the Coalition is in deep trouble. Cameron makes the big mistake of allowing Parliament to get diverted into referanda on EU membership but even more serious, news this morning that the WI have gone public about the downgrading of wamen in politics and the media. Be afraid, be very afraid! Remember Blair and the WI?
Stanley Challenger Graham
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stanley at barnoldswick.freeserve.co.uk |
Stanley
Local Historian & Old Fart
36804 Posts
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Posted - 23/10/2011 : 05:11
Ossie makes optimistic noises about the EU and Greece. I think he's whistling in the wind. The root of what happens to the EU and the Euro, which is what Greece is all about, lies with the markets who have been waiting for a solution. What interests me is whether the factor that is holding them back is the possibility that failure to deal with Greece and the collapse of the Euro Project might trigger consequences for the global economy which they can't predict. As Roosevelt said, "What we have to fear is fear itself". Some things never change. It is fear which is driving this process on both sides.
My prediction is that Greece will fail and after that who knows.... We live in interesting times.
Stanley Challenger Graham
Barlick View
stanley at barnoldswick.freeserve.co.uk |
Another
Traycle Mine Overseer
6250 Posts
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Posted - 23/10/2011 : 07:49
Time for a global war?
China moves to secure the Greek economy then starts making overtures to Italy and Spain.
USA cuts itself adrift pulls out of Nato and Seato.
India starts to panic about China's intentions in south east Asia and starts making threatening noises.
Pakistan siezes the chance to have a go at India and invades.
China mobilises in Tibet and threatens India not to invade Pakistan then its goodbye world.
Anyone care to bet against something like this happening? Nolic
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