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“Due to the sudden rise in the share price of both Lloyds and RBS in the past 8 weeks, the UK taxpayer is now sitting on a £9.4bn paper profit on its investment.” [Raw data from uk.finance.yahoo.com]

But Brown the Clown says he must take still more tax from the economy in order to ‘safeguard the recovery’.

Meanwhile, he’s increased UK borrowings by over £23.5 billion in one month (March) as he tries to buy the election, equivalent to over £400 for every man. woman and child in the country.

The structural deficit in the UK is considerably worse than that of Greece.

And here we have the socialist government claimed tax figures since they moved in to destroy the economy, taken from a marxist source. The figures do not include the vast increase in PFIs, nor the huge borrowing figures - borrowings which will turn up as next year’s taxes.

Now, even by the government’s fraudulent figures, standards of living are falling in the UK for the first time since Noye was a boy.

“The second was from Andrew Lilico drawing our attention to the latest ONS stats on household incomes. It seems that households' real disposable incomes (ie real incomes after tax) are now falling - down nearly 1% in the most recent quarter.” [Quoted from burningourmoney.blogspot.com]

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the web address for this article is
https://www.abelard.org/news/economics012010.php#clowns_swindles_270410

there remains basic misunderstanding of banks in a fiat money system

In France, lawyers, called notaires, deal with many transactions, house sales among others. Notaire’s ‘fees’ can amount to more than 20% of the house price! But ... the notaire only receives maybe 1%, if lucky, on which he pays tax. The rest of the fees are also tax, which goes to various layers of government.

In the UK, people sell lottery tickets. Again, most of the money ends up in the hands of the government.

The banks in a fiat economy occupy similar positions. They manage the money system wholly owned by the government. The government make vast returns on their money printing machines through ‘inflation’, a dishonest form of tax. The banks are also used by the government to impose all manner of other controls and spying systems. Naturally, the bankers, a disguised form of the old time tax collectors, tend to skim off a percentage.

And if the banks get in a muddle, then - why - the government duns still more tax to bail-out/fund their tax collectors.

It is a fundamental error to mistake banks for ‘normal’ real businesses.

Washing machine manufacturers may make washing machines, but, despite the widespread confusions of the tin-foil hat brigade, banks do not produce money. Money production in a fiat economy is entirely a government process under full government control. However, a part of that process is licensed out to the tax collectors, just as a part of the process is licensed out to lottery sellers or notaires in France.

related material

• the mechanics of inflation: The great government swindle and how it works
• economics and money zone at www.abelard.org

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the web address for this article is
https://www.abelard.org/news/economics012010.php#banks_in_fiat_money_system_140310

on the ever increasing tensions caused by ever closer union and by the euro

“The introduction of the euro in 1999, it was claimed, would narrow the economic differences between the member countries of the monetary union. Unemployment rates would converge, as would other macroeconomic variables, such as unit labour costs, productivity, fiscal deficits and government debt. Ultimately, the differences in wealth, measured in terms of income per capita, would diminish as well.

“After the common currency’s first decade , however, increased divergence, rather than rapid convergence, has become the norm within the euro area, and tensions can be expected to increase further. The differences between member states were already large a decade ago. The euro became the common currency of very wealthy countries, such as Germany and the Netherlands , and much poorer countries, such as Greece and Portugal. It also became the currency of the Finns, runners-up in innovation and market flexibility, and of Italy, which lacked both, earning the apt moniker , ‘the sick man of Europe’ .”

More details at the link

From my document on EMU and the euro, written in early 1998. It was written in response to very widespread claims that Britain joining the EMU was ‘inevitable’ and could not be stopped.

“Alan Greenspan, one of the truly great masters of monetary consequences, has been reported by the Wall Street Journal as saying, “The Euro will come but it will not be sustainable”. He also recently expressed concerns over the EMU’s potential capacity to sow dissension between union member states, a central issue as far as I am concerned.

“Ted Truman, international chief of the Fed. (Federal Reserve - central bank of the USA), said that the Euro project could adversely affect the smooth functioning of the international monetary system.

“Volker, an ex-Fed. boss of great experience, said, “I’d rather start the intellectual process now than wait for the crisis and conflict that if not inevitable, are all too possible”.”

So far, much of the Greek debt appears to be held by Swiss and French banks. Further worries remain about national debt in Spain, Portugal and other European countries. Recalling the grave troubles of the international banking system, caused by toxic debt and fears to lending, met by vast money-printing and remaining uncertainties, it would be sensible to be concerned that any sovereign defaults could result in further panics and resorts to the printing press.

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the web address for this article is
https://www.abelard.org/news/economics012010.php#euro_tensions_140210

the problem with huge government debt

“In previous cycles, international banking crises have often led to a wave of sovereign defaults a few years later. The dynamic is hardly surprising, since public debt soars after a financial crisis, rising by an average of over 80 per cent within three years. Public debt burdens soar owing to bail-outs, fiscal stimulus and the collapse in tax revenues. Not every banking crisis ends in default, but whenever there is a huge international wave of crises as we have just seen, some governments choose this route.”
—
“While the exact mechanism is not certain, we presume that at some point, interest rate premia react to unchecked deficits, forcing governments to tighten fiscal policy. Higher taxes have an especially deleterious effect on growth. We suspect that growth also slows as governments turn to financial repression to place debts at sub-market interest rates. Fortunately, many emerging markets are in better fiscal shape than advanced countries, particularly with regard to external debt.”
—
“...Another big unknown is the future path of world real interest rates, which have been trending downwards for many years. The lower these rates are, the higher the debt levels countries can sustain without facing market discipline. One common mistake is for governments to "play the yield curve" - as debts soar, shifting to cheaper short-term debt to economise on interestcosts. Unfortunately, a government with massive short-term debts to roll over is ill-positioned to adjust if rates spike or market confidence fades.”

:precis

1. You can service larger debt as long as interest rates are low.
2. Eventually the market becomes fed up, the interest rates soar, and at that point you’re done for.
3. Therefore control your debt before that happens.

Someone should tell Brown the Clown.

[Lead from dvh]

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the web address for this article is
https://www.abelard.org/news/economics012010.php#economic_stimulus_020210

bernanke on the banking clag-up, special reference to housing bubble

“The right panel of the figure [above] shows the forecast behavior of house prices during the recent period, taking as given macroeconomic conditions and the actual path of the federal funds rate. As you can see, the rise in house prices falls well outside the predictions of the model [the prediction that there is a direct correlation between Federal Fund rates - interest rates - and house prices]. Thus, when historical relationships are taken into account, it is difficult to ascribe the house price bubble either to monetary policy or to the broader macroeconomic environment.”
—
“A possible objection to this conclusion is that, because of changes in methods of housing finance, the responsiveness of house prices to monetary policy may have been different in the past decade than it was in the 1980s and 1990s. For example, during 2003 and 2004, about one-third of mortgage applications were for adjustable-rate mortgage (ARM) products. Low policy rates feed through to monthly mortgage payments more directly when the mortgage interest rate is adjustable and tied to shortterm rates. This linkage could rationalize a stronger effect of monetary policy on house prices in the more recent period.”

Essentially, Bernanke is arguing in his speech that the main cause of the housing bubble in the USA was not primarily driven by any loose money policy of the Fed. as often alleged, but was much more driven by sub-prime mortgages forced on the banks by laws, driven by the ‘Democrat’ Party through Fannie Mae and Freddie Mac [see following linked pages].

related material
fanny mae and freddie mac - a history
fanny mae and freddie mac - the best politicians money can buy?
fanny mae and freddie mac - clearing up the mess
fannie mae / freddie mac - a summary

the web address for this article is
https://www.abelard.org/news/economics012010.php#bernanke_housing_bubble_130110

means by which socialist ‘new’ labour is robbing you via the banks

While they try to distract your attention by blaming the bankers and America, what is the UK socialist government really doing?

They are printing money, and giving it to the banks. The banks then charge you considerable interest. Then the government charges ‘special’ taxes on banks.

And that’s on top of the huge cut in monetary value to fund their ‘borrowings’ through the inflation tax.

Just to make sure, the government is blocking the banks from lending that money to business, let alone to private citizens. They’re doing this through Basel II and by taxing bank ‘profits’. (The effect of Basel II is that banks have to keep larger reserves

Naturally, their agents in the banks are looking for their cut!

But but but, it’s America’s fault, and because of those ‘greedy bankers’.

This is all nothing to do with Brown the Clown, of course.

“The world's biggest investment banks are expected to pay out more than $65bn (£40bn) in salaries and bonuses in the next two weeks, reinforcing the view that it is business as usual on Wall Street and in the City barely a year since the taxpayer bailout of the banking system.

“Despite efforts by Alistair Darling to deter banks from handing out multi-million pound bonuses through the introduction of a 50% windfall tax, City sources believe that the biggest employers will absorb the cost of the tax rather than cut the size of the bonus pools they amass throughout the year.

“This will mean that while proceeds from the tax could top £2bn – more than four times the £550m estimated by the chancellor in the pre-budget report – the government will have failed to alter the traditional bonus culture in the City.”

related material
the mechanics of inflation: The great government swindle and how it works

the web address for this article is
https://www.abelard.org/news/economics012010.php#uk_bank_problems_090110

brown the clown now trapped between his cowardice and dishonesties

The lowering of stamp duty and VAT ended yesterday, to be replaced by even more borrowing.

The tendency of these changes has been to bring forward purchases to the last quarter of 2009, in the hope that socialist New Labour may be able to claim a false positive in GDP numbers.

Those sales will, of course, be taken from the first quarter of 2010, and so will effect the GDP numbers reported in April.

Will the lying Clown dare to go for a late March election?

Everything in Brown the Clown’s cowardly character, and his desperate clinging to office, suggests he will have to be dragged out of no. 10 by the men in white coats.

Or will one of his incredibly talented cronies seek to oust him?

It’ll still be the very last minute.
“B*gg*r the country”, says Brown.

The problems in the US are vastly less than in the UK.

The prime problems in the USA [four pages] were, again, generated by left-wingers.

Brown the Clown removed bank supervision from the experts in the Bank of England and put his cronies in charge. This allowed unqualified people to head some British banks. Naturally, those spivs made grave errors like buying the trash paper emanating from Fannie and Freddie.

Meanwhile, the bankers run scared in bubble scenarios - when high profits go begging and competing banks are soaking up those profits. Any big bank knows full well the government will be forced to bail them out if they get into serious trouble, and the banks cannot afford to lose great batches of market share. Especially if they are to hope to compete in international markets.

“Too big to fail” is not some mistake in the markets. It is inherent in the dynamics of fiat currencies. There is no fix within the system, despite foolish claims or promises.

The instability in UK banking is almost entirely the fault of an irresponsible socialist administration and an incompetent innumerate chancellor, now PM.

Brown the Clown made a whole slew of other errors, which he is continuing to build and enlarge upon.

He is an innumerate and dull child abroad in a china shop.

the web address for this article is
https://www.abelard.org/news/economics012010.php#uk_brownonomocs_mess_020110

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