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
- Net
public debt for 1997 totalled £348 billion,
equivalent to £495
billion in 2010 values.
2010 net public debt was £759 billion.
the web address for this article is
https://www.abelard.org/news/economics122011.php#economy_destroyed_210112
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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.
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
- 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 |
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University of California
Press, 2010, pbk
ISBN-10: 0520266560
ISBN-13: 978-0520266568
$13.37
[amazon.com] {advert}
£14.20
[amazon.co.uk] {advert}
Kindle edition: 648 kB
ASIN: B003VIWK4C
$17.13
[amazon.com] {advert}
£12.78
[amazon.co.uk] {advert}
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the web address for this article is
https://www.abelard.org/news/economics122011.php#ecb_prints_money_211211
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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]
“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.
the web address for this article is
https://www.abelard.org/news/economics122011.php#hsbc_mis_sold_051211
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