Friday, February 19, 2010

A Few Snowflakes On The Curate's Hat

We're doomed : Jeremy Warner on our knacked economy and inflation. I myself am of the opinion that Brown's 'low inflation' economy was based on Chinese productivity keeping goods prices down and mass immigration keeping service wages (and prices) down - while inflation in housing roared ahead. What's this 'spare capacity' going to produce ?

Much of the present City debate around inflation therefore seems to me to be too simplistic and somewhat wide of the mark. The standard view, reflected by the Bank of England, is that once the present spike in inflation is over, abundant spare capacity in the economy will force prices back down again, allowing the persistence of very low interest rates into the indefinite future. This in turn will underpin house and other asset prices, including shares.

I'm not sure that either of these assumptions is correct. In the old days of largely closed domestic economies it might indeed have been true that a collapse in output would cause price and wage pressures to abate.

Unfortunately, the inflationary pressures of the future are quite unlikely to come from domestic demand. Instead, they will come from emerging markets, where fast growing consumption is already causing prices to rise sharply. After decades of exporting disinflation to the West, these markets could soon be exporting quite serious inflation.

The implications for monetary policy are alarming. During the Great Moderation, disinflationary pressures from China and Eastern Europe allowed UK interest rates to be lower than otherwise, which in turn helped cause upward pressure on asset prices and a bubble in credit.

There is now every chance of the reverse phenomenon occurring; interest rates might have to be higher than warranted by domestic demand to keep inflation at bay. That in turn will be bad news for growth, employment and asset prices – unless, of course, the Government wants to opt for a higher inflation target ...

I've been saying for a year or more that they won't be able to resist keeping the tap turned on and inflating their way out of one trouble and into a different sort. What would a Cameron/Osborne administration do ? Anyone know ? I can't make head nor tail of most of their pronouncements.

Two recent Alphaville posts raise the spectre of the press. I like this comment :

No, they'll say "the recovery is faltering and the economic situation worse than we thought, so more QE is required to safeguard recovery".

What they won't say is "we used QE to defer enormous amounts of economic pain and it also helpfully assisted the government in financing the deficit, but the trade-off is that all that deferred pain will descend like the wrath of god if we stop, because none of our structural problems, such as an unaffordable public sector and levels of household leverage, have been tackled, so we'll keep trying to defer the pain in the hope things get better on their own somehow. But they won't."
And this one :

'Just one more hit... I need it I just need it... I will quit tomorrow. I can quit. I will turn my life around...'

Oh Dear.

Can Pay, Won't Pay - Paul Kedrosky quoting an unnamed Greek banker on the debt crisis :

Once upon a time, Greece was a model small democracy. An extremely frugal government ran tight budgets and provided an extremely basic safety net, and truly threadbare services for a very low cost: Tax collected was minimal.

While tax rates may have been high, collection was virtually nil. A small oligarchy was the only source of capital and had the acumen, education and experience to deploy it as the country developed. Old families controlled the steel, cement, foodstuffs and construction companies that rebuilt Greece after the war. As recently as 1980, debt/GDP was at 30% and it would have been much lower were it not for the high costs of defense. When Greece joined the EU in 1980, all that changed. It was party time. Money that was sent to build the Greek infrastructure was funneled pretty much directly into the pockets of the oligarchy as well as the new Socialist oligarchy that emerged.

This was not chump change. It was 6% of GDP for 30 years. With the exception of farmers, who did extremely well off of the Common Agricultural Policy, the rest of the money went pretty much straight to Swiss bank accounts. As an example, Greece has paid 250% over list for F16's and Mirage fighters and has spent EUR 750 million for an airport that was built by the same company that originally bid EUR 220 million for the project. No prizes for guessing what happened there. Once the addiction to easy money set in, the government of Greece was transformed from a lean provider of defense, basic health, basic education, a basic road network and extremely basic pensions to an auctioneer of projects to the oligarchy.

The families who control business in Greece used a system of bribes the government was happy to accept and set up a newspaper each to deliver threats its members would rather not. Sticks and carrots, and lots of Euros. And once the system was established, there was no need to stick to the money that was coming from the EU. ERM entry cost our politicians the printing press, but thanks to low EUR rates, the government could now service previously unthinkable amounts of debt with impunity. A residual part of that money may have ended up in useful projects, but the bulk ended up in the pockets of the twenty families who run Greek business.

A big chunk of that money, in turn, has been invested by these families in bringing to Greece every foreign franchise from Starbucks and Pizza Hut to IKEA and Stanley Kaplan, driving existing companies out of business in the process. In summary, EU funds have done to Greece what oil did to Nigeria, while low EUR rates have allowed the government of Greece to be able to service a debt of 100% of GDP, most of which has gone straight to the pockets of the oligarchy. Man on the street, with the exception of the farmers, has not benefited one jot. This does not make all Greeks poor. Shipowners do very well, and a natural resource called the sun is very helpful to our 165,000 hoteliers. Man on the street never saw the benefit of the 250 billion the government has borrowed. Ergo, support for austerity now that the bill has come is zero. You won't see anybody accept an Irish solution in Greece.

The notion that Brussels will dictate to Greece terms on public sector wages and impose a May deadline are, frankly, comical.

21 comments:

Edwin Greenwood said...

"I myself am of the opinion that Brown's 'low inflation' economy was based on Chinese productivity keeping goods prices down and mass immigration keeping service wages (and prices) down - while inflation in housing roared ahead. What's this 'spare capacity' going to produce ?"

As the last steelworks closes and the last chocolate-bar production line is shipped to Eastern Europe, and a credit system based on lending each other money secured on imaginary valuations of unrealizable assets and on obfuscating the circularity of debt and risk drowns in its own self-delusion, those few of us lucky enough to secure jobs in Tesco and B&Q stare at the empty aisles and finally begin to wonder where the money is coming from to pay for all those Chinese knickknacks and Indian call centres and the remittances of our imported slave-labour classes.

And as the brighter elements of the developing world chase us up "the value chain", we finally realize that the indigenous talent that was going to support our new service- and design-based economy cannot be magicked out of nothing by the academic equivalent of quantitative easing.

The times are altogether far too interesting.

Sgt Troy said...

"I myself am of the opinion that Brown's 'low inflation' economy was based on Chinese productivity keeping goods prices down and mass immigration keeping service wages (and prices) down - while inflation in housing roared ahead. What's this 'spare capacity' going to produce ?

The "spare capacity" is just bullshit, like "re-balancing the economy" they come out with quite frequently - as if they can restore what they have stolen from us as easily as they can create one of their foul "financial instruments".

Inflation was allegedly low because of Chinese productivity aka slave labour , but also because of the regime's long-held preference for an overvalued pound. The manufacturing interest supplanted the agricultural(Corn Law Repeal of), and the last 3 decades have seen the Triumph of the financial interest over the manufacturing - shame they don't actually produce anything. The pound was driven up by speculative hot money flows, selling our assets for a mess of pottage, money-laundering and latterly through the oil currency war whose ostensible aim was to "liberate" Iraq.

Broon came up with a bit of a new one. He selected a twisted measuring stick to exclude most housing costs from the calculation of inflation(CPI) - thus he could boast of low inflation and a vibrant economy. This actually proves his complicity in asset bubble economics, as of course does his "tripartite" non-regulatory regulatory system. So we then had to listen to years of mentalist cant - "nae more boom and bust", and the most horrrid sychophancy

"Twice a year Gordon Brown fills his party's sails with pride. His tornado of facts and figures magics up images of untold national wealth and success. Sixty per cent more personal wealth! "

http://www.guardian.co.uk/commentisfree/2006/dec/08/comment.politics

And of course all the while we were being stealthily ruined in a Mega-Darien reprise

To the triple tree with the disgusting brute!!!!!

http://www.capitalpunishmentuk.org/tyburn2.jpg

Revolution Harry said...

There are plenty of dots to connect here. Do you still think this is all one big accident? Couldn't be helped. Sgt, Gordon Brown certainly is complicit.

Remember the agenda is World Government, World Currency, Army etc and that the EU is an important step along the way.

As you should be able to see Greece has been bankrupted intentionally and from that created 'problem' we'll see the PTB propose their 'solution'. This will inevitable involve closer political and economic union of some sort. Throw some serious disturbances in Greece, possibly spreading to other parts of Europe and you have the excuse for the police state to be expanded further.

As for us I would assume that the Greek crisis will be used as the reason for our economic collapse even though, as pointed out, it would have collapsed anyway. The scenario is 'just one more hit' until the optimum moment when the whole pack of cards is (intentionally) bought down. Presumably this will be used to scare the masses into joining the euro.

Welcome to the New World Order.

dearieme said...

"Man on the street never saw the benefit of ..": very possibly, but he's the ass who voted for it.

Epic Beard Man Fan said...

Rev Harry

I love a good conspiracy theory me.

I think one of the problems with all this NWO stuff is that the Chinese, Russians, and even the South Americans don't seem to be playing.

Wasn't it the Chinese that messed up all that Global Warming nonsense in Copenhagen recently?

I don't doubt that the Anglo-American elite exists, our glorious oligarchs, the likes of Soros etc, but I think they are probably deluding themselves.

Revolution Harry said...

Epic Beard Man, do you really think that all our manufacturing would have been shipped to China if they weren't on board? Russia's been in 'their' control since the Bolshevik revolution and China since the Opium Wars. Indeed China appears to be the 'Communitarian' (Third Way) model they're working towards.

"Whatever the price of the Chinese Revolution, it has obviously succeeded not only in producing more efficient and dedicated administration, but also in fostering high morale and community of purpose. The social experiment in China under Chairman Mao's leadership is one of the most important and successful in human history."

David Rockefeller

Any apparent 'differences' are all part of the (Hegelian) dialectic being played out.

Revolution Harry said...

“There is no proletarian, not even a Communist movement, that has not operated in the interests of money, and for the time being permitted by money - and that without the idealists among its leaders having the slightest suspicion of the fact.”

Oswald Spengler.

Sgt Troy said...

"Epic Beard Man, do you really think that all our manufacturing would have been shipped to China if they weren't on board?"

Anglo-American capitalism is very very short-termist though RH, that's one of the reasons it's such a disaster

Other people have their own agendas - China's is apparently to be a great power, and to redress the humiliating status it was reduced to for several centuries.

The Pakistani ISI took American money and said thanks very much.

Epic Beard Man Fan said...

Rev Harry

I was over my mothers house some time back and I came across an old school report of mine from when I was 11. My form teacher had written "Epic Beard Man Fan will always do OK as he reads anything and everything".

I am more familiar with much of this stuff than you might think. I have a copy of The Money Masters (and very good it is too) and the most expensive book I've ever bought is Tragedy and Hope - test me, I'll go get it and quote from any page.

Now, I know that certain NY bankers funded the Russian Revolution, just as I am aware Prescott Bush got into trouble under the trading with the enemy Act.

I am aware of a lot of stuff that gets dismissed as crazy conspiracy theory and I believe much of it to be absolutely true - but inconvenient as far as our masters are concerned, for plebs to know.

I am also aware of stuff, that for me, tends towards the interesting but probably unlikely, or at least, stuff that can never be proven so what's the point in arguing about it anyway.

There is as much practical point in discussing this stuff with you (or anyone) as there is in discussing verb conjugations in various dialects of Klingon.

Even if it were true, what are we supposed to do about it?

The sort of thing that comes to mind are things like the allegations of Benjamin Fulford.

FWIW, I don't believe that our elites control the world. They control Europe, North America, Japan, Australasia and South Korea. But they don't control Russia and China and their control over places such as Pakistan is under threat.

Why are American troops still parked in Japan, Korea and Germany?

The South Koreans could easily kick the North Koreans arses if it came to it. Germany and Japan completely defy explanation. Unless you consider these as occupied territories.

If our elites control the world, why do they need occupying armies in even the friendly bits?

I don't believe that our elites are even a unit, but rather a bunch of squabbling factions. Sometimes this squabbling can even manifest itself as terrorist incidents that gets blamed on convenient scape goats.

But anyway, there is as much point arguing about this as there is arguing about how many angels can dance on the end of a pin.

Interesting, but probably pointless.

Epic Beard Man Fan said...

I think on this topic, as on a few others, we are probably singing from the same song sheet Sgt Troy.

Revolution Harry said...

EBMF, you're quite correct, we could easily debate/discuss this subject all night. I think we both know that an agenda of sorts is being played out.

For myself I think that beyond the political/financial veil is an esoteric (for want of a better word) one. It's seems to me it's at the higher levels of the 'secret society' networks where the real control lies. These 'people' have no national loyalties. That's not how they think.

The criminal oligarchy that has controlled Britain, Europe and America are not stupid or shortsighted in my opinion. Far from it. The countries they control may be heading for disaster but it's a disaster they've planned for and will benefit from.

As to what to do, well the best we can do is to throw a few spokes in their wheels and hope for the best (divine intervention?). I'm involved with the British Constitution Group and there are others hoping to effect some change in the banking and finance system. I've always thought this was their weak spot but sadly their doesn't appear to be enough people who grasp the iniquity of the current system. Yet.

How about you? Any suggestions?

Sgt Troy said...

"The criminal oligarchy that has controlled Britain, Europe and America are not stupid or shortsighted in my opinion. Far from it. The countries they control may be heading for disaster but it's a disaster they've planned for and will benefit from."

I tend to think that they have deluded themselves. A tidal wave of money will buy you a lot of received opinion. But I do think that this worthless ideology they are into will be simply blasted away by the economic hurricane, that they themselves have unleashed. The question of whether or not they are stupid and short-sighted is of less importance than their delusional criminality.

I think that matters have gone too far for Parliamentary "democracy" so-called. What now is the nation? they have gone far to dissolve it. Are the Islamic colonists part of it?

The regime's forthcoming trick will be a National Government - but that will fail, by reason of deindustrialisation and "community cohesion", lack of. But a National Gov't, so-called will have the merit of exposing the one party nature of the beast

The only answer now is extra-Parliamentary. I would like to see a patriotic coalition coming together, differences put aside- BNP, some UKIP, some Tory, Frank Field, military elements - a coup premised on removing the Monarch's evil counsellors,. Very traditional grounds booting evil counsellors. Sure Ancien Regimes of the past summoned the Estates General in France and the "Short" and "Long Parliaments" in England which could have some claim to be representative bodies. But now Parliament is the problem - the Monarch's powers devolved on the PM, and the worthless lobby fodder rubbish in the Commons do nothing to protect the nation. I am afraid there will be a comprehensive collapse before we see any glimmers of light. The danger is though that we get a Right-wing Junto rather than a patriotic movement

Sgt Troy said...

RH - your linked site

"We must learn that politics is not about power. It is about our welfare, our liberty."

But politics is absolutely about power, otherwise you have no ability to deliver on anything.

English liberty was guaranteed by the fleet - and it didn't get much more powerful than a full broadside from a three decker

The nonsense talked here is always galling - "These days the Westphalian conception of the nation state is outdated and unfashionable."

England was a nation state long before 1648

Epic Beard Man Fan said...

Rev Harry

For myself I think that beyond the political/financial veil is an esoteric (for want of a better word) one. It's seems to me it's at the higher levels of the 'secret society' networks where the real control lies.

Possibly. A mate of mine is really into the illuminati explanation of everything. He talks a lot about the significance of a certain type of numerology. He said that when the Beslan terrorist massacre happened, he guessed correctly the exact number of deaths that would be reported. I've known this bloke for many years and used to work with him. I have no reason to doubt his sanity.

I think it interesting that Hitler sent Masons to concentration camps and banned/disbanded the Hanseatic League. I don't know what that was all about. But it does make me wonder.

I read a good book a few years ago called 'A Century of War: Anglo-American Oil Politics and The New World Order'. The author, William Engdahl had some interesting things to say about the P2 Masonic Lodge in Italy going back to the 19th Century. You may be familiar with Gladio, I seem to remember there was a connection with Gladio and the P2 lodge and also Berlusconi is also connected in some way.

These 'people' have no national loyalties. That's not how they think.

Haha. Yeah.

How about you? Any suggestions?

I'm afraid not. I'm mostly interested in how things work and why things are the way they are, together with trying to see beyond the obvious bullshit fed to us by the MSM.

I don't have any answers, but I'll take a look at your links.

I read these two articles this morning which seem to be relevant to our discussion here:

http://www.globalresearch.ca/index.php?context=va&aid=10651

http://www.henrymakow.com/the_secret_solution_to_greece.html

I read a lot of stuff, but I don't necessarily believe any of it.

I think this blokes blog is really worth a read though:

http://gregpytel.blogspot.com/

Sgt Troy said...

ps "Lawful Rebellion"

Good - like John Hampden and Ship Money, Sir John Eliot and forced loans

Anything which delegitimises the regime, any act of passive resistance is a plus

But of course in the end Hampden was forced to have recourse to arms

Revolution Harry said...

Sgt, with respect I think you may have misunderstood the gist of the BCG statement. Their aim is to return power back to the sovereign people rather than self serving politicians. If you'd rather that parliament and politicians have sovereignty, or power, you get exactly what we've had during the lifetime of this Labour government. A government that was made up of the true representatives of the sovereign people would never have been able to get away with half of what Labour have done, including mass immigration.

Their statement in regards to the 'outdated concept of the nation state' was meant with regret. The nation state is exactly what they are looking to preserve, starting with withdrawal from Europe. You should investigate the BCG a little further. I think you'll like what you see.

EFMB, as you can probably see I have similar interests to you. Perhaps what interests me most is how the subject of mass immigration, political correctness, multiculturism etc is seen through the prism of the New World Order agenda. For me looking at things from that perspective changes everything. For a start the whole left/liberal 'white man' bad 'ethnic minority' good gets blown out of the water. The white working classes of this country were (and to some degree still are) little more than slaves themselves during the period of the slave trade. We are both 'victims' and have the same enemy.

I did see the Henry Makow article on Greece. I like Henry a lot and he posts some good stuff though I disagree with him in regards to the Rothschilds being at the apex of the pyramid.

I'll have a look at the other link and the blog you suggested, thanks.

Sgt Troy said...

RH

"Their statement in regards to the 'outdated concept of the nation state' was meant with regret. "

Yes I appreciate that, what I wrote was phrased badly.
I like the idea of "Lawful Rebellion" - anything which de-legitimises the regime is excellent, I particularly like the traditional Constitutional thrust

But how do you go from this......

"Lawful Rebellion describes a movement, not an organisation. It is not a Political Party, nor is it aligned to any Political Party. Individuals and groups operate as a team where no one person or organisation is in control. We are simply people, groups and loose organisations gathering together in sufficient numbers so that our message(s) of concern and the truth about what is happening around us is heard and fully understood by the public at large."

.......to this??

"Their aim is to return power back to the sovereign people rather than self serving politicians."

Revolution Harry said...

It's the self serving politicians who are members of the traditional big parties (and some of the smaller ones) they take issue with. What they are saying is that the current political system is defunct. We need true representatives of the people not career politicians, loyal only to party and without any real experience of life out of the Westminster bubble.

Remember also that those involved with the BCG are aware of the 'conspiratorial' nature of things in this country so they have purposefully chosen to have lots of smaller individual units so as to reduce the effects of infiltration.

Weekend Yachtsman said...

"The notion that Brussels will dictate to Greece terms on public sector wages and impose a May deadline are [sic], frankly, comical."

Possibly.

So who does he think is going to impose those things? Or does he think Greece can continue indefinitely consuming far more than it produces?


btw Laban, this is surely the nearest thing to a serious tinfoil-hat comments thread that I have seen on your site for a while... quite amusing, if the subject matter were not so serious, and not one that may very well hit the UK next.

playboxdesign said...

btw Laban, this is surely the nearest thing to a serious tinfoil-hat comments thread that I have seen on your site for a while... quite amusing, if the subject matter were not so serious, and not one that may very well hit the UK next.

Have you done much research in this area WY? If you had you might find out that things are even more serious than you think. Not anywhere near 'amusing'.

Anonymous said...

So who does he think is going to impose those things? Or does he think Greece can continue indefinitely consuming far more than it produces?

Of course it cant, the wheels will come off one way or another. But the EUnuchs will do anything to keep the show on the road that little bit longer.

Our own British EUnuchs are fond of reminding us how tough life would be outside the EU, how its punitive measures could damage us for leaving or for threatening to leave.

Now thats comical!

There is no rule, no treaty, no ideal they wont compromise to keep the dream alive. We can see that starting to play out with Greece.