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uk: how to destroy an economy

  • A huge increase in PFIs [private finance initiative].
  • Vast tax increases.
  • A steady reduction of the tax base as an extra million ‘workers’ were transferred onto the public purse.
  • I further estimate that the real value of the pound was halved during the socialist administration. (But this gets complicated.)

That is, a lower tax base and ever higher outgoings.

By increasing the taxes, the profits were reduced, thus making productive companies ever less viable.

As companies become less profitable, their ability to employ reduces and the whole economy spirals downwards.

Decreased viability was offset to a degree by ever increasing borrowings, not just by government but also by companies and individuals.

Now comes the hangover, the inevitable cost of socialism. Don’t forget, Brown the Clown was also printing money at a huge rate and, of course, selling off gold reserves.

The end result is that the standard of living will drop at least 10%, instead of increasing as it did previously under the Conservatives.

end note

  1. Net public debt for 1997 totalled £348 billion, equivalent to £495 billion in 2010 values.
    2010 net public debt was £759 billion.

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https://www.abelard.org/news/economics122011.php#economy_destroyed_210112

see the end of the euro

Death of the euro. Image: telegraph.co.uk

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the web address for this article is
https://www.abelard.org/news/economics122011.php#euros_end_020112

ecb goes deep into quantitative easing (inflating the money supply)

So at last the ECB is doing the right thing - half a trillion of money printing.

“The ECB said it allotted the three-year loans—the longest maturity ever offered by the central bank—to 523 banks. The amount allotted was the most ever for a longer-term refinancing operation, exceeding the previous record of €442 billion set at the June 2009 one-year auction.” [Quoted from wsj.com]

That is, buying distressed debt at par.

Of course, this allows a carry trade, selling poorly performing (interest carrying) instruments and using the money to buy better performing instruments.

With this change of action,. the euro can now ‘survive’, if you call it survival.

It will mean the continuation of huge wealth transfers from the richer northern countries to the southern poorer countries. Why wouldn’t the southern countries welcome this and reaffirm their love of the euro?

However, the northern countries may increasingly dislike this, especially in times of stress.

Marker at abelard.org

On a related matter:

“Requiring the American people to actually pay for all of the government they receive is, as Niskanen and others have convincingly argued, the most effective way to limit its growth.” [Quoted from breakthroughjournal.org]

That is, not borrowing to pay for today’s government, thus passing the debt onto the next lot.

California crackup, by J. Matthews and M. Paul, describes the problem of electorates voting in people who will provide more services, while voting out those who attempt to increase the taxes to pay for those services.

This leads to pols competitively lying and promising things for which they’re not prepared to vote the taxes that pay for them.

The main policy the Right want to stop this mess is a ‘balanced budget’ law; but, of course, the Left fight this down the line.

related material
The mechanics of inflation: the great government swindle and how it works
EMU (European Monetary Union) and inflation – a civil liberty issue

end note

  1. It is important to understand that, apart from the open transfers of wealth through various subsidies, and regional transfers, large transfers of wealth occur through inflation. For example, if France borrows 100 billion euro and Greece borrows 200 billion euro, assuming a realistic assessment of inflation at 5%, then the Greek government will gain 10 billion euro each and every year, while the France government will only gain 5 billion euro. (To understand this further, see the mechanics of inflation).

    The population of France is approximately 65 million, whereas the population of Greece is about 11 million. Of course, inflation in the Euro zone falls upon every citizen in the Euro zone. Thus it costs the French population about six times as much as the Greek population. Meanwhile, the Greek government gains six times the profit from the inflation per capita.

    This puts a heavy incentive on countries in the Euro zone to borrow as much as they possibly can. It is a major pressure driving the Euro zone towards bankruptcy. Of course, as they go nearly to bankruptcy, it gradually dawns on the markets that some of these growing debts are ever less likely to be settled. Hence the steadily increasing interest demanded by those holding euro bonds.

California crackup: how reform broke the Golden State and how we can fix it
by Joe Mathews and Mark Paul

California crackup by Matthews and Paul

 

 

University of California Press, 2010, pbk
ISBN-10: 0520266560
ISBN-13: 978-0520266568

$13.37 [amazon.com]
14.20 [amazon.co.uk]

Kindle edition: 648 kB
ASIN: B003VIWK4C

$17.13 [amazon.com]
12.78 [amazon.co.uk]

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the web address for this article is
https://www.abelard.org/news/economics122011.php#ecb_prints_money_211211

euro still shipping water

“French lenders lost €100bn (£86bn) in short-term deposits in September alone, mostly due to precautionary moves by US money market funds and Asian investors afraid of France's exposure to Italy. "There were huge net capital outflows," said Eric Dor from the IESEG School of Management in Lille.

“The effects of this capital flight are surfacing on the Bank of France's books under the European Central Bank's so-called "Target2" scheme, an ECB payment network that lets funds move automatically where needed.

“Liabilities jumped suddenly in late July, rising from €10bn to €98bn by September. Ireland's central bank owes €118bn, Spain's €108bn and Italy's €89bn.”

related material
EMU (European Monetary Union) and inflation – a civil liberty issue

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the web address for this article is
https://www.abelard.org/news/economics122011.php#floundering_euro_071211

another piddling fine for bank fraud

1/Aug/2011
“The announcement came as the bank reported pre-tax profits for the first six months of the year of $11.5bn (£7bn), up 3% on the $11.1bn the bank made a year earlier.” [Quoted from www.bbc.co.uk]

Marker at abelard.org

“HSBC fined £10.5m over mis-selling

“Banking giant HSBC was landed with a record City fine today after a mis-selling scandal involving nearly 3,000 vulnerable elderly customers living in care.” [Quoted from independent.co.uk]

£11.5 billion? £10.5 million?
That is, less than 1/1000th of the six month profits.

And then there’s the fossil media.

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https://www.abelard.org/news/economics122011.php#hsbc_mis_sold_051211


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