I’m afraid there is STILL no money!
Category Archives: Economic Crisis
Event Horizon- In general relativity, an event horizon is a boundary in spacetime beyond which events cannot affect an outside observer. In layman’s terms, it is defined as “the point of no return” i.e. the point at which the gravitational pull becomes so great as to make escape impossible.- Wikipedia
The USS Government a Constitution class starship is drifting aimlessly toward a giant black hole. There is nothing wrong with the warp engines, it is drifting because of an argument between the Captain, Kirk, and a small group of red shirted security men over who should take the helm. The argument began after Kirk decided to change the regimen of the Chief Medical officer Dr McCoy.
The Chief of Engineering, Scottie has warned Kirk that it will take 24 hours to warm the warp engines up before they can pull away “Aye, we cannae start her cold captain, she’ll never take it.” Kirk coolly looks out of the main viewing screen where the abyss looms ever larger.
One of the security guards, Smith, steps forward, “We demand that McCoy return to his original working regime. Otherwise we won’t allow Scottie to turn the engines on.”
First officer Spock addresses Smith, ” We are fast approaching the event horizon, beyond which there is no escape. If that happens we will continue to be sucked into the black hole regardless of what action we take. The ship will then enter the black hole and be crushed by the immense pressure into a tiny point the size of an atom.”
“Will there be Obamacare in the black hole ?” Smith angrily asks.
“No, Mr Smith because we will all be dead.” Spock explains patiently.
“Hah Hah! So, there won’t be Obamacare in the black hole.” Smith gleefully replies, “At last a real choice for the crew !”
This conversation continues in different ludicrous variations.
The decision of Republicans to insist that they would only vote to fund the US federal government in return for a one year postponement to ‘Obamacare’, key parts of which go into force today, will now see the US government effectively shut down. As a consequence 700,000 non essential government workers will be temporarily laid off without pay.
Although this shut down will cost the US economy $8 billion a week, markets around the world have so far not reacted too adversely.
That said is is important to note that if this is not resolved within 3 weeks, and money is not made available to fund government debt and the unthinkable happens and the USA defaults, then this would lead to a global economic meltdown.
It is irresponsible and a betrayal by any politician from any country to put party politics above their own country’s economy, and by extension, above their country’s security.
Although no one believes the Republicans would force the USA to default on it’s debt, the longer this goes on the more nervous the financial markets will get and there is always the danger other unforeseen situations (black swans) compounded with the current nervousness might precipitate a crisis.
I expect the Republicans to back down and nothing will happen but I’m also aware that this unnecessary argument might have unforeseen consequences.
Interestingly, it is thought that the concept of paying interest derived originally from the expected natural increase in a herd of livestock, a simple compensation for what the lender might have expected to accrue if he had not lent out his property. Somehow, as money has evolved into an increasingly abstract concept there has developed a disconnect between any natural basis for rates of interest and what often is charged.
The divisive effects of unchecked interest charging has been known since money itself first started to circulate and many ancient and diverse cultures have sought to legislate against it. From ancient Greece to ancient China, many countries have outlawed loans with any interest. Usury was at times denounced by a number of religious leaders and philosophers in the ancient world, including Moses, Plato, Aristotle, Cato, Cicero, Seneca, Aquinas, Muhammad, Jesus, and Gautama Buddha.
“And what do you think of usury?” — “What do you think of murder?” – Cato
“If thou lend money to any of My people, even to the poor with thee, thou shalt not be to him as a creditor; neither shall ye lay upon him interest.” – Exodus 22:24
“Thou shalt not lend upon interest to thy brother: interest of money, interest of victuals, interest of any thing that is lent upon interest.” – Deuteronomy 23:20
“…Out of thine own mouth will I judge thee, thou wicked servant. Thou knewest that I was an austere man, taking up that I laid not down, and reaping that I did not sow. Wherefore then gavest not thou my money into the bank, that at my coming I might have required mine own with usury?” – Luke 19:22-23
“Those who charge usury are in the same position as those controlled by the devil’s influence. This is because they claim that usury is the same as commerce. However, God permits commerce, and prohibits usury. Thus, whoever heeds this commandment from his Lord, and refrains from usury, he may keep his past earnings, and his judgment rests with God. As for those who persist in usury, they incur Hell, wherein they abide forever” – Koran, Al-Baqarah 2:275
The First Council of Nicaea (325) forbade clergy from engaging in usury. The Third Council of the Lateran (1179) decreed that persons who accepted interest on loans could receive neither the sacraments nor Christian burial. Pope Clement V made the belief in the right to usury a heresy in 1311, and abolished all secular legislation which allowed it. Pope Sixtus V (1585 – 1590) condemned the practice of charging interest as “detestable to God and man, damned by the sacred canons and contrary to Christian charity.”
But slowly, over time the moral imperative has been supplanted by the profit motive.
Today we discover the Church of England’s £5.5bn investment portfolio included a stake in Accel Partners, a US venture capitalist that co-funded the launch of Wonga, a company that charges up to 5,500% APR.
Perhaps more importantly we should ask ourselves how it is possible that ‘Loan Sharking’ in the UK has become legal ?
Could it be because that Adrian Beecroft, who owns Wonga, has dontated more than £500,000 to the Conservative Party since 2006 ?
Could these generous donations to the Conservative Party also explain why Adrian Beecroft was commissioned to report on employment law soon after the Conservative led coalition came into power ? Know the man by his report, released on Monday 21 May 2012, the “Beecroft Report” recommended that the government should cut red tape in order to make the hiring and firing of employees easier. This apparently, was one of the least offensive suggestions that made it past the spin doctors and was actually published.
‘Donations’ to political parties are tax deductible. So if you want an example of ‘having your cake and eating it’ then look no further than donations like this. These ‘donations’ have effectively cost Adrian Beecroft nothing. In fact, it could be argued that these ‘donations’ were made at the expense of the general public.
But of course, Adrian Beecroft got nothing from this ‘philanthropy’, did he ?
So what next ? Arise Sir Adrian ? Lord Beecroft of Wonga ?
The Office for Budget Responsibility appears to be recommending that the UK increase immigration to promote growth. Why ?
Well, it boils down to a very simple argument, it goes like this; The only sector in the UK that is growing is the service sector. The service sector needs people to ‘service’. If the number of people increase then the service sector continues to grow. Increased population should also see a stimulus for the construction industry. The primary sector, which involves the extraction of resources directly from the Earth, this includes farming, mining and logging, and the secondary sector, which involves the processing products from primary industries (production) are in terminal decline and even the service sector itself is under pressure from online efficiency.
By continually increasing the population of the country it is possible to create the illusion of economic growth but this con trick can not go on forever. Perpetual growth within a finite structure is as impossible as perpetual motion.
The lower birth rate counteracting increased longevity should be seen as a sign that our society is self-righting and naturally compensating for medical developments. It should be welcomed as a possible new stage in human social development and our leaders should attempt to adapt to this new paradigm.
In fact if other places in the world had reached a similar stage then the issues associated with essential finite resources like water which arise from a massively overpopulated world, currently 7 billion, would be largely assuaged and the planet would be a more peaceful place.
But all of this does not sit comfortably with capitalism which demands perpetual economic growth to sustain itself.
And if that weren’t bad enough only the wealthiest 5% of the UK population benefit from from the so called economic growth derived from immigration while the other 95% of the population bear the costs which sees their own living standards fall in real terms.
I guess the question that every person currently living in this country, regardless of whether they were born here or not, need to ask themselves is just how many people do you want to share this country with ? According to the 2011 census the current UK population is 63,182,000. How big has the poplulation got to get before our leaders recognise the folly of immigation fueled economic growth ? 80 million ? 100 million ? 200 million ?
What kind of country do you want to live in ?
The Office for Budget Responsibility said that spending on the state pension, social care and healthcare will rise from 14 per cent of Britain’s GDP to almost a fifth.
The report found that allowing more than 140,000 immigrants into Britain a year, equivalent to 6million people, would help increase the overall number of people who are in work and improve public finances.
Its analysis suggests that Britain’s borrowing as a propotion of GDP would rise to 99 per cent if there is a steady flow of immigrants. If there was a complete ban on immigrants, borrowing would rise to 174 per cent of GDP.
………….Or What Happens When There Is Not Enough Bread To Pay For The Circus.
Once upon a time there was a central banker who had thought up a new scheme which would ensure that everyone would get filthy rich. He took his idea to the Emperor who was greatly impressed. “What do you need from me to make this work ?” asked the Emperor.
“It’s very simple.” replied the banker. “Place £1 on the first square of my exchequer board in the first quarter, the following quarter place £2 on the next square, the third quarter double the sum once more and place £4, and keep on doubling the amount each quarter ad infinitum.”
“And this will ensure everyone gets filthy rich ?”
“Absolutely” replied the banker, “It will ensure perpetual growth, we’ll all get stinking rich.”
“Excellent ! here is your first pound from my very own pocket.” the Emperor declared.
After ten years the Emperor called the central banker back to his palace. “I know we’re all getting stinking rich, just as you said we would but this next quarter we’ve got to place over £1 Trillion on your exchequer board and in just another two years we’ll have to place over £140 Trillion.”
“Errrrm” pondered the banker “We could always print more pounds, I suppose………………………………”
OK, a frivolous illustration but my point is that the money has run out, or to be more accurate the economic system is unsustainable and only has the illusion of stability by the use of complex accounting tricks, more akin to alchemy than mathematics. The modern day philosopher’s stone doesn’t turn lead into gold but gold into paper or tungsten. The spot price of gold has been contaminated but that is the subject of an altogether different topic…
This article is about what happens to our society when the money runs out. Has anyone else noticed that since the beginning of the financial crisis the UK has been dogged by a number of seemingly unrelated crises ?
You see, before the ponzi scheme became apparent there was just so much money sloshing around that nobody delved too deep into corrupt and deviant practices. Even those on state benefits had Sky satellite dishes crucified to their council house walls, we could all afford to eat Tuscan sun-dried tomatoes marinated in a pesto infused vinaigrette with our Scottish kiln smoked salmon, the nameless elves from China shipped container loads of the latest must have branded trainers, clothes, and electrical goods, all at very affordable prices.
But then………..Double, double toil and trouble; Fire burn, and credit bubble.
You see, you don’t understand just how many people were being paid off with all that money and as long as enough trickled down to you, you never thought about asking.
The police are a very good example. Ever since Margaret Thatcher realised in the early 1980s that as long as you could keep the police onside you could just about screw over any other group of people in the UK, the police have had extremely generous working practices and financial arrangements. Most police officers probably wouldn’t agree but that says more about the amnesic affect of thirty years of preferential treatment, which now appears to them to be a right. There was a time before that when policemen, firemen, and medical staff all recognised each others social contribution as being similar but to pay for the police arrangements the firemen and the nurses had to make sacrifices.
Some might suggest that it is extremely brave of this government to try and ensure that the ‘we’re all in it together’ mantra applies to the police also. I would suggest that they are only doing it because they literally have no alternative. It’s not brave to do what has been forced on you, regardless of how brave a face they put upon it. I only mention the police example because the ‘Plebgate’ incident indicates clearly what happens when you don’t pay them off.
But by far the worst leeches were the bankers, businessmen, crooked politicos, civil servant mandarins, defence contractors, media moguls, and basically everyone who went to the right school, or belonged to the right family, who felt they had a god given right to be kept in the circumstances that their parents had become accustomed to. A bonfire of the quangos is a bonfire of patronage. They all had to be paid off in some way before you got your share.
Their payment ensured their complicity and silence.
And like the decadent Romans before them, not satisfied with all that money could buy, they thought they could take what they had no right to take.
There is a difference between Law and Justice. When the law applies equally to all it can often be just but justice is not law, justice stands above the law and can stand outside of it.
So, what happens when there is not enough bread to pay for the circus ?
The people cease to be distracted.
The Prime Minister, David Cameron, has told the CBI today that the UK is facing the ‘economic equivalent of war’, or as the Telegraph has it today-
The Prime Minister will put reforms of the planning system at the heart of a drive to place the public sector on a “war footing”.
The pursuit of economic growth will now come before all other concerns, just as defeating Hitler’s Germany supplanted all other considerations during the Second World War, Mr Cameron will say.
The Prime Minister will tell business leaders that to ensure Britain keeps its place in the top tier of world economies, he is willing to put previous concerns aside and “throw everything we’ve got at winning in this global race”
However, as those of us with memories slightly longer than a goldfish will recall, the phrase was first coined by Vince Cable at his parties conference in 2011.
Business Secretary Vince Cable has told the Liberal Democrat conference that the economic challenges facing the UK are the “equivalent of war”.
In a bleak assessment of the future, he said the era of ever-rising living standards had ended and people were just worrying about “how to survive”.
Needless to say, that when Vince Cable originally said this he was accused of scaremongering by Conservatives on the right of the party but that is just a side issue, hypocrisy by politicians just isn’t news anymore. What is of interest is the context and consequences of these statements because what Vince Cable and David Cameron are talking about are two subtly different things dressed up in the same clothes.
If it is war then who is the UK at war with ? This is an obvious question that might occur to you. It could be argued that the UK is in an economic war with everybody else but as any solution must come through cooperation, the idea that the UK is at war doesn’t really hold up. Certainly, the UK is in competition but that is the nature of capitalism and it has always been the case.
Actually both Vince Cable and David Cameron are both trying to convey the idea that the UK public will have to make sacrifices.
Vince Cable was looking at the UK and European economic fundamentals and he could see that the status quo was not sustainable. Default by Greece, whether it is called default or not, is inevitable and this will likely be the start of a slow motion domino default scenario. Under these circumstances the UK would have to become more self sufficient and even consider policies such as rationing. To understand why this might be necessary you need to try and imagine a world where fiat money is no longer worth the paper it’s printed on and that trade between sovereign states no longer takes the form of credit but must be faciliated by exchanging goods or commodities such as gold. This may only be the case for a relatively short period before a broad trade arrangement can be put in place but under those circumstance the UK would have to dig deep.
Cameron, on the other hand, is talking about a different kind of sacrifice, and not so universal. He is talking about sacrificing the checks and balances on government (bypassing the civil service) and sacrificing regulation (cutting red tape). These sacrifices are made by you and are to the benefit of the businessmen he was speaking to and who financially support his political party.
Both Mr Cable and Mr Cameron are drawing on our innate patriotism but I would suggest that Mr Cable was just giving us fair warning, whereas Mr Cameron is seeking to exploit the situation for his own political agenda.
“He who joyfully marches to music rank and file has already earned my contempt. He has been given a large brain by mistake, since for him the spinal cord would surely suffice.” – Albert Einstein
“Patriotism is supporting your country all the time and your government when it deserves it.” – Mark Twain
“The duty of a patriot is to protect his country from its government.” – Thomas Paine