The derivative collapse caused severe economic recession as it vaporised wealth but still, savers need banks to return the backbone of prudence and stability and provide for inflation proofing of prosperity. Banks that invest in bonuses that represent winners who also require losers in the markets they work in. Losers do not receive negative bonuses, so their accounting funds that could have supported local economic growth. Huge bank bonuses appears to be an international economic phenomena, with each market competing with others for the bankers with the most clout. If a generation of bankers agreed to invest their winnings in local growth businesses it could change the world.
Twenty five percent of the vote in Italy went to a party that want an exit from the EU and a return of the Lira. The Monetary Madness continues apace. When a country could inflate away its debts and then revalue again after it had cleared its path back to being an attractive place to spread into some of ones’ investment risks. As part of a common currency they can not con each other in this way – they have to borrow to cover the shortfalls that stem from corruption in the political class. Italy has rejected austerity but the 25% is not a protest vote. It is a game changer. It is a kick in the face of the EU. It may be fatal.
However, if the PIGS were to leave the EU, they could form their own trading bloc – one hopes they call it SPIG rather than PIGS or GIPS or the less pronounceable IGPS – they would then be able to inflate their way out of their primary problem, together. And then they could then rejoin the EU as a block and create economic treaty zones, consider an example set of economic zones:
- Central EU (Germany, France, Belgium, Luxembourg),
- South EU (SPIG),
- Eastern EU (on or adjoining the Eastern border),
- Northern EU (Scandinavia, Denmark, Holland, UK)
Each part of the EU has an exchange rate balancer, so if they want to devalue, they can by negotiating revaluation elsewhere. The four zones have floating exchange rate mechanisms with each other relative to capital value. So any shift of liquidity between the zones has its economic effect.
Monetary conditions are created by a mechanism like the trading of bonds (not cash) between the Super Governments – here are a group of talented long range analysts can set the degree of valuation (this model may in effect be five currencies), the democratically preferred flavour of financial control and regulation levels that at least disallow fantastic risks with people’s pensions that maybe once paid off but now wear away at value. Perhaps Super Governments have no other function.
Each bloc contributes to a common currency pool and sells bonds to it to maintain an economic state of relativity. However something like that may or may not work it should be understood that the awareness of very different political system is required.
Europe without a central federal body probably leads to too many demands for regulation being imposed in the wrong markets as well as the more significant, in body count at least, the absence of regulations that would have prevented disasters evaporating vast tracts of wealth in an instant. Such an ephemeral quality wealth can turn out to be. Protecting it irrationally may backfire.
The central purpose is to introduce long range capital increases where they are needed. The absence of any Government led stimulus or infrastructure corrections that long range planning needs to consider in its calculation of growth. You can squeeze an orange once, but a healthy tree means more future oranges and you better have the infrastructure to squeeze them.
“a far less great Britain struggling with a mere percentage of its economy left yet more people to employ and an inability of the state to collect fair taxes”
The apparent Tory creed of demanding tax fairness, while protecting the tax avoiders who support them, will seem shallow as the record shows a far less great Britain struggling with a mere percentage of its economy left yet more people to employ and an inability of the state to collect fair taxes means it stubbornly refuses to finance progress. Italy may serve to push the EU into progress and reform the lumbering beast.
The economies of the West have all run into trouble due to the derivatives scam and resultant financial meltdown causing massive capital flows out of national economies. Tax avoidance and corporate logic has led to offshore tax havens becoming significant on the radar of the US and UK governments. Austerity has lain the problem upon the society rather than the entities that caused it, and has prevented growth being a solution to endlessly rising government deficits and ultimately inflation.
The UK and USA could learn a lot from a more progressive and successful Western economy – that of Norway. True, they have oil reserves, not as large as the USA reserves – but they charge a 50% corporation tax levy on oil drilling. And so they should. Oil companies invest in exploration and drilling, yes it is expensive. But once they tap into the Earth’s resources they are effectively using something that belongs to the people and the future.
Western Governments are stuck in a thread of believing that any tax rise is regressive when ultimately what they are achieving with short-termism is to evaporate wealth from their own coffers. The 1% benefit because they avoid tax and yet enjoy the benefits of health and protection (both police and armed forces), education and pensions provided by the Government.
New progressive thinking is required and Norway is a good place to examine for a balanced model.
Understanding the economic crisis is not that easy. How can bankers pay themselves millions in bonuses. How can we pay Mark Zukerberg 16 billion for his website creation, Facebook? We did. That is why he got double just a few weeks ago what is now worth 8 billion dollars – so where did all that cash go? It went into his pocket.
It went to pay the people who’s stock went up, that is the beauty of a market – it revolves money around in transactions – it is the ammunition of the economy that is fired actively in an economy that functions. When bits of it start to fall off, especially the productive bits that enable the lives of millions of workers up and down the country we have unemployment and pointlessness instead of enterprise and pupose.
Why involve the lumbering unresponsive state with responsibility if the private sector has so spectacularly failed with it, why does the state believe it can do better, you hear the beautiful quitters – the image queens who tread on the political nerve of being liked while talking the talk.
Now why is that such a bad thing? One hears the question.
Why is it a good thing. To be controlled by a peacock. Would a stern eagle or a severe buzzard not product better results?
Capitalism is not about theft. It is about the flow of money towards enterprise and the growth of that which helps a large number of lives. Enriching individuals as Facebook launch obviously has, is really not the intention of capitalism.
This modern drain on the finances have to go somewhere, and reflect the devaluation of the British economy that the Conservatives and Lib Dems have dictated without a public mandate. And their enforced austerity is a given insofar as their idea of how to make things improve seems to be fixed, uncompromising even in the face of a triple dip recession.
See also: The Guardian
Over 300 flood defence schemes were subject to budget cuts and not proceded with, and hundreds of millions of pounds in insurance claims and the cost of the suffering and interruptions in people’s lives that could have been avoided by not abandoning the relatively trivial cost in net human experience quality of life vs how much exactly in tax savings? What if it happens, again, next year?
The role of Government is to apply wisdom to prevent disasters rather than throw the cards into the air hoping to catch a few as they tumble down. The abandonment of not just progress, but the safety of residents – we tax payers invested in some planning for there to be 300 flood defence schemes, so lets go ahead and make the necessary investment. It is hardly a luxury but the ruthless abandonment of Governmental responsibility for our investment in the work of civil servants which would have to be redone at another date if we are not to relocate families from 300 or more locations affected by the failure to actually employ valid work. It is more than supplying a demand, it is an act of massive criminal cruelty to the lives of many, many people.
Austerity is a tightening of the belt of economic safety and keeping the lid on things that actually have an impact on the economy. What the Osborne regime is doing however increasingly appears to be a failure in the strategic intelligence department. The investment in flood barriers was not as great as the cost of the damage. Far less than the bank bailouts. Far less than Trident. We waste 83 billion on a system while isolating Iran for trying to emulate it.
A failure to apprehend that climate change meant strategy change is only now becoming relevant to Government now that 98% of the scientific community are indicating that the extreme weather we are having may well be a bit of a sign of things to come. The others deny this and that is their right. But Government should not be banking on the unconventional view here. If we are going to build houses on flood prone ground, then we had better build protection. As this had already been researched, and understood, abandoning necessary planning is worse than criminal negligence on a scale. It is politically motivated cruelty. Protecting the bankers while stomping on the need to look after each other.
A generation or two of high unemployment and low wages is considered a price worth paying to bring down the deficit. This makes little sense economically (no jobs means less tax revenue, hence Osborne’s frantic borrowing)
If the Government believes that it is good to take from the majority because they a) either live in low circumstances and thus electorates that will never vote Tory anyway, or, b) they are young and are not enfranchised into the democratic system as they have no independence of mind or body. The “Baby Boomer” generation is defined by indulgence and when this is given to children in the fashion of top education good nutrition and a sense of moral value well and good, but a vast number of children these days get past the age of 25 due to zero economic options.
It is a cynical and unlawful party that recommends scrap heaping a section of its population that may never be able to vote against them. A bullying tactic or just a natural consequence of being a Tory toff who had his bread buttered for him from the start and now can not conceptualise that the economy is like a living animal, when you run it too hungry it gets tired quickly. The methods of the “financial stimulus” that the Brown government did was to buy into RBOS and NatWest – now the most badly managed banks because they outsourced too much responsibility to one failed cog that cost them a week of downtime and millions of customer headaches. And now Barclays has been fleecing interest. After the PPI scandal you would think that the banks would be a little more careful when it came to customer base fairness. A run on a bank is always down to perception. Dishonest bankers must be rooted out and sacked or confidence in the financial system suffers manifold.
This lenience on the wealthy and brutal treatment of the vulnerable while pricing education so that students are forever in debt is a master stroke of enslavement and duress upon an undeserving generation.
The Lib Dem balls up on Proportional Representation was a tragic day for those young disenfranchised voters. All voices should be heard equally or your democracy is unavailable.
Austerity is failing our children as it makes it impossible for them to assert their independence, so they do not define themselves in terms of their roots being well placed. They start life late, feckless and unremarkable. Our instincts shelter our young so they can lord it over their own isolated game console addiction the default pacifier of the teenager. Better than having them run wild in the streets.
Today’s government is a little like a medical team locking themselves in the cafeteria in case they catch something. The evolution of progress is forming an ugly mess of a future. That is what is wrong with this austerity. It is the isolation of social spending as a target for funding wealthy arrogance.
Lift them up for godsakes.
So, the government bails out a bank that sailed too close to the wind with their wild investment arms flailing about enthusiastically until it all went wrong. And Stephen Hester goes in to save the day and even though the bank continues to make losses there is “progress”. Huge bonuses attract much media attention.
Are cost cutting and mismanagement behind their IT systems failure? It is easy to blame it on cheaper outsourced employees.
It is a illustrative example of how wrong footed and illogical austerity is as a solution to the economic problems caused by the banks deregulated enthusiasm for gambling assets. Deconstruct society by making education out of reach and watch the corrosion at the margins eat away at your assumed wealth.
Top Tory donor George Robinson was a director of Rushmore, a (failed) tax avoidance scheme that Jimmy Carr was also a listed “Director” of – alongside 500 other disappointed capitalists.
Does this mean that the Tory Party is partly funded by income made via tax avoidance. Does this not mean that the Tory party is funded by people willing to steal from the people? Our Government is dishonest if they do not immediately act to close tax sheltering by the very very rich and if they are to remain honourable they should investigate their donors and if they are making donations of tax avoided monies, then the Conservative party effectively owes tax – and must immediately pay the correct amount of it to HMRC.
Additionally, the Government cost reduction strategy has reduced the HMRC staffing levels to the point where billions of pounds in tax avoidance are unable to be investigated.
Guardian article on Tory donor tax avoidance.
Obama is talking up the European economy saying that growth is required to conquer recession rather than austerity. And David Cameron comes out in favour of this – growth is needed in Europe and yet his policies of austerity in the UK contradict this support and makes one wonder if his office have a rating system and agreeing with Obama trumps most other issues, including the main economic plank of his frat pal chancellor.
What is growth? It is an improvement in terms of real wages vs inflation which in the UK has been on the decline for rather a while. Austerity in the face of recession is a knives edge course of shaving bits of the economy off until its a lean machine like some kind of down sized corporation. But the lives abandoned by the governmental machine are humans not dollars. They do in fact matter. Bleeding your population to support the mistakes of the banking industry and their magic numbers is simply belief in a myth. Mathematics be damned!
How the head of JP Morgan got bit by the derivatives market and what this says about financial regulation when it comes to taking risks with our pension funds.