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Stanley
Local Historian & Old Fart
36804 Posts
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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 - 10/10/2011 : 14:57
Mr Darling flagged up "the worst" recession just before the "forces of hell" were unleashed against him.
It should also be noted that the first round of QE was supposed to buy gilts and corporate debt in a roughly 90:10 split, and those were the instructions given. It turns out that The BoE governor bought only £1.9 billion of corporate debt and the rest was put into gilts.
This procedure, because of Osbourne's policy too, has ensured that prices of gilts remain high, and thus interest payable low. Meanwhile there is no actually liquidity flowing through into the wider market place.
The financial system seized in 2008, and even now the ripples passing through are showing what has gone on during the last 10 years as all those banks pour over their held "assets" and "liabilities" and review them. Now that institutions do not trust each other there are fewer lines of credit, and this is incredibly difficult for any bank to operate a full system of fractional banking because they don't know if anyone is going to provide them with the credit once the current batch needs to be repaid, or at what rates of interest.
One of the problems in all this system is mortgages, where the bank lends on a 25+ year scale, but borrows on cycling 3 monthly contracts from the money markets. Imagine a swimming pool with a leak where the replenishment tap has been turned off, and slowly the funds are draining away. Once the money comes repayable the bank can hardly tip the mortgagee out of their house just to repay a liability.
Money is currently washing around in commodities, which is inflationary
Many changes are likely to occur, and as Mr Darling said, it could take upwards of 10 years just to get back what was lost. That bit of the economy has gone. When those statements were made the Euro Zone Crisis was not even on the agenda. Once Greece goes bust all that "lost" money has to paid by someone (companies, banks, etc) and this will reduce even further the liquidity available for the wider economy.
In other news, I see that the majority of the hedge funds are now moving to Geneva. Apparently it takes about four weeks. That is a great loss of income to the Treasury and the burden for all that spending that has been fixed (PFI's etc) is likely to fall on the wider tax payer.
What I don't see is any alternative to what is currently proposed, because I have no desire to see the UK become a substate of Germany or ruled from China because of some ruinous conditions applied just to get a bail out to avoid bankruptcy which would force the UK out of the money markets for at least a generation.
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belle
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Posted - 10/10/2011 : 19:28
Tardis: " Many changes are likely to occur, and as Mr Darling said, it could take upwards of 10 years just to get back what was lost." I think you are an optomist if you think we are going to get back what was lost! I am not an expert in politics as you seem to be, just someone with the ability to think for myself, which I have discovered is a rare commodity..you are right about the possible outcomes of the proposed decisions...no one seems to have voiced the idea that if you are in millions of pounds of debt.. and nice Mr Germany bails you out..he kind of owns you after that...surely they aren't naive enough to think it's being done out of the goodness of their hearts!
Life is what you make it |
Stanley
Local Historian & Old Fart
36804 Posts
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Posted - 11/10/2011 : 05:55
Belle I think you are right. there is not going to be any return to 'normal'. A few years ago I sensed something was happening and wrote an article about the tectonic plates of governance shifting, systems were beginning to crumble and I wondered what the results of any change would be. The problem is that as I see it, the politicians and masters of the financial universe dragged themselves back towards 'normality' and basically carried on as before. We saw no alteration in politics even after the expenses scandal and the public verdict of a hung Parliament. The financial world arranged the biggest loan ever and are carrying on as before. Neither of them has realised that something fundamental has happened, we reached a tipping point, the plates shifted and the world of 'normality' is crumbling around them. This is the reality and the alarums and excursions in the global economy are a symptom, not the disease. There is exactly as much money, value and resource in the world as there was before 2008 but it is out of control and not being used rationally.
There are clues. The root of the UK, European and US problems is the inability of political systems to act decisively and address the problems of imbalance and massive debt. Indeed, they made it worse by locking up the life blood of the Captalist System by putting it in the vaults of the banks which caused the problem in the first place. This Black Hole of governance has destroyed confidence and trust in the markets and capital holders, they look for safe havens for their wealth. On the most basic level investing in gold and shoving it under the bed sterilises the value and it can't roam free and finance work which is the real root of wealth, adding value. As Newton Pickles said twenty years ago "There aren't enough people making things". He was no economist but he hit the nail squarely on the head.
So I think you're right Belle. Something has changed and like you I can't see where we are going. All that is certain is that the days of milk and honey are gone and we may be entering a far harder and more agressive era. Sorry Kids, I can't see a light at the end of the tunnel. Always bear in mind unexpected events. They will not improve things and are inevitable.
Dr Fox. He wants us to believe that his 'chum' who gets £10,000 a month from an equity fund looking for investment opportunities for acting as a fixer who can arrange access to the MOD and arms dealers and buyers has not made any money out of his eighteen trips abroad with the man in charge of the MOD. He must think we are all stupid! Add to this the complication I mentioned yesterday, there are similarities between Fox and his mate and Cameron/Coulson. No positive vetting and both getting an income from dodgy sources, Coulson was being paid by Newscorp of course while he was in Downing Street. Funny how this was cut off when he left and he is now suing his former masters. This similarity will have been noted in Downing Street and will demand some fancy footwork. There is also the added complication that Fox is that rare bird, a working class ultra right wing Tory. Thin on the ground in the higher echelons of the party. It's a mess and it's not surprising that Cameron has left all his options open and remained at arm's lenth from the investigation.
Stanley Challenger Graham
Barlick View
stanley at barnoldswick.freeserve.co.uk |
Stanley
Local Historian & Old Fart
36804 Posts
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Posted - 12/10/2011 : 05:46
The report on incomes and poverty from the institute for Fiscal Studies isuued yesterday make dire reading (see this LINK). It reinforces those (including me) who see a severe cut back in living standards over perhaps as much as the next ten years. Personally, my opinion is that the effects will be felt for much longer than that. I watched David Willetts on the TV news last night and was struck by the fact that he tried to put a brave face on the situation by citing various government initiatives, none of which offer any real answer to the root problem of low income families. Future benefit revision like the income credit, even if they were adequate, are not the answer. The root cause is the inequality of the way the cuts are hitting the bottom 85% of the population. The old problem of distribution of wealth. Incidentally Willetts denied that this gap was widening but offered no evidence to support this contention. I see no signs of it.
The further we get into the woods the harder it is to see the trees and I heard an informant from Seattle on World Service this morning who said "It wasn't the workers who broke the economy". Dead right and he put it in a nutshell. We would do well to remember this as our incomes continue to shrink and any opposition to the CoDem Coalition should be hammering away at this single fact. The next general election could well be decided on who the public thought had the strongest policy on reform of our financial institutions. I think it was Harriet Harman I heard yesterday advocating a blanket abject apology from the Labour Party for the mistakes made by the last government in not tackling this while in power. This would clear the books and give a real chance of some proper opposition instead of the muted criticism we are hearing at the moment.
What could be done in the present economic climate? The Fox Affair lifts a corner of the lid and exposes the murky world of arms dealing and procurement. Private Eye regularly exposes linkages inside government with industry and the financial sector who bankroll politics and use the leverage to insert 'advisers and consultants' who are in effect spearheading the biggest lobbying operations we have ever seen. These are disguised as 'partnerships' and reinforced by favourable contracts which push expenditure down the line. Added together these account for vast expenditures far greater than the £18billion estimated cuts in the benefit system when they all work through. 'Getting people back to work' has a hollow ring when week on week jobs vanish and many of those that remain do not pay a living wage.
Yes, there is a serious economic problem. Yes it was exacerbated by Labour in power who completely missed the fact that the 'New Economy' was an illusion. But also yes that all governments since the 1960s have allowed the slide down the slope of de-regulation which allowed the Lords of the Financial Universe to take maximum advantage of the opportunities. Are their children in danger of poverty? As in all depressions and recessions the burden falls on the most disadvantaged in society and the potential human cost, not only in terms of direct poverty but stunted life chances should be the driver for decisive actions to revise our system of governance. Cameron once said that Britain is Broken. I don't agree with this but at the moment can see no signs of any meaningful government action to stop it happening. They call it Statesmanship. We need it now.
Stanley Challenger Graham
Barlick View
stanley at barnoldswick.freeserve.co.uk |
Tardis
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Posted - 12/10/2011 : 10:32
Belle, optomist that the country will gain back the growth that we lost (looks like it was about 7%), no. The financial sector that it was based upon, and all those figures for spending that Mr Brown quoted were mystical.
Optomist that the growth can come from elsewhere, yes. It is, however, going to take some time. The average start up company that goes beyond "family" takes about 3-5 years to begin paying taxes that benefit the economy. For every 2 successful companies that make it that far there will be about 8 that don't. Once you start doing the maths you start to realise the timescales involved.
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belle
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Posted - 12/10/2011 : 10:46
Tardis, I find myself always struggling to know how to answer you..you always speak with such authority I am assuming that you are either in banking or a politician...if that's the case perhaps "bantering" with the likes of me is a bit beheath you. I shan't be doing the maths thats for sure..not everyone approaches life the same way, if you are familiar with any Myers Briggs research you will know that some people are more intuitive and feeling, guess I am one of those, it has stood me in good stead all my life so it's unlikely that I will change now.. all I can say is my gut feeling doesn't include a scenario where we continue on looking very much like we did before.
Life is what you make it |
Tardis
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Posted - 12/10/2011 : 10:52
You are right about the need to make things again Stanley, but I wonder if the country is actually willing to make the necessary changes to make it happen.
You fail to add in your notes that much of our "government" spending is actually fixed, and not very flexible. the deficit was there before the crash, and the current unemployment is massaging it slightly.
You can't spend money that you don't have, and if the country pursues policies which chases away those people who would actually contribute the most to the system then everything is due for renewal. The burden will fall on those who have nothing to offer, because those that do will leave to seek other opportunites as seen in Ireland.
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belle
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Posted - 12/10/2011 : 10:59
I am assuming you are a politician then as they often ignore peoples questions. 
Life is what you make it |
Tardis
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Posted - 12/10/2011 : 11:07
Belle, a debate necessarily contains many features and contributors.
Without the different points of view you may end up with a diatribe of singular thinking that can lead down blind alleys and sometimes prejudice.
I do not consider "bantering" with you beneath me. You are a human being with equally relevant opinions that form part of the debate. You may not come to the same conclusions but it is important to investigate all that is available to bring about a thorough investigation of the issue.
I have worked in the city, but not as a banker. The FT is still the best UK newspaper in my opinion, but no-one beats the Sun for sports coverage.
I tend to find that a person of a certain political persuasion will necessarily talk up that piece of an issue which supports their view whilst ignoring other equally relevant facts because they are "complications" to the view.
Politicians work for the electorate, not the other way around.
A balanced view enables an informed opinion, rather than one that someone else wants you to have.
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thomo
Barlick Born Old Salt
2021 Posts
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Posted - 12/10/2011 : 12:14
I am in total agreement about the need to make things, and I have spent the greater part of my life doing just that. I have had the advantage of having served my time to two skilled trades, one could be called a service trade, the other was definitely manufacturing, all in the private sector. Both had a great deal of job satisfaction and both were "hands on". One was improving peoples environment, the other was making parts for all manner of things from sewing machines, through tractors, helicopters and jet engines, finally producing a complete item from scratch in the form of boats for the inland waterways. Frequently I would get my hands and other bits dirty, something that appears to have become totally abhorrent to many today. I have often made the point that not everyone can sit behind a desk, and for this I have more than once been labeled as a thick Northerner, At one time apprenticeships were highly sought in the face of fierce competition, now it appears that if all else fails, try that. The idea of everthing being made abroad because it is cheaper does not take into account that if the country involved decides to take us to the proverbial cleaners, we will be well and truly stuffed.
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belle
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Posted - 12/10/2011 : 12:20
I don't have any political persuasion, though i think people sometimes jump to conclusions that I have, like you I believe hearing both sides or all three (4,5,6,7,8,9)sides, is the only way to make informed opinions. I do feel that once you are at a certain age you have settled into an opinion and it is hard then to see another point of view, or it may just be that you have alreadsy considered it and dismissed it. Because I am of no fixed political view I don't alwaya argue politics in a way that those who have nailed there colours to the mast do. I see flaws in all parties and none reflect more than a small percent of my views so why vote?
Life is what you make it |
Bruff
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Posted - 12/10/2011 : 14:09
Not enough rugby coverage in The Sun for me (and anyway, living on Merseyside now I'd get gobbed on if I bought it). We're an FT/Sunday Times household (the wife), and The Guardian/Observer (me). Plus the Craven Herald and Pioneer (Online).
A 'balanced view' does bring its own problems. The BBC for example. Folk on the 'right' might argue the BBC is a bunch of pinko types when they see 'their' views being subject to questioning. Folk on the 'left' might argue the BBC is a bunch of establishment lackies when they see 'their' views being subject to questioning. These concerns are though a back-handed complement for the BBC as it shows they're doing things right. But it's a drag for them, I'm sure. And sometimes impartiality goes too far. Climate change reporting on the BBC for example. They always adopt a questioning line here but frankly for consistency, given the consensus amongst serious scientists, they should have a member of the Flat Earth Society on when they report on the SpaceStation etc.
I of course am perfectly balanced having a chip on both shoulders........
Richard Broughton
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thomo
Barlick Born Old Salt
2021 Posts
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Posted - 12/10/2011 : 14:15
Why vote Belle? because as a citizen of this country you have the right to, and to do so in the manner that you feel is appropriate regardless of outside influence, or that's how it should be, but like many things it is open to misuse. Many are still told how to vote and will do so whatever their own personal views are, and of course, you have the right to decline to vote, but by voting, you are helping to ensure that the system is kept as fair as is possible.
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Tardis
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Posted - 12/10/2011 : 14:18
Belle, if you do not believe in the political situation then with holding your vote in the current system means that you are condoning it, as non-votes are not counted in any other way.
Plus, if you don't vote, then effectively you are giving up the right to actually comment in many people's thoughts because they do not have to consider your opinion.
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Tardis
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Posted - 12/10/2011 : 14:23
Rugby is covered in some depth by the FT, and the cricket. The Sun covers much more main stream unless there is a cross over. Always the first, and usually the best. The spat on merseyside is another matter, we lived in Sheffield when Hillsborough happened.
I don't think I'd even waste money on the Guardian if I needed paper to help light a fire.
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