Monday, January 19, 2009

It's The Economy

Things are moving with remarkable speed. By next week Barclays and HSBC may be in the Government's bail-out tent, while Lloyds TSB, which was meant to be coming to the rescue of HBOS, may be more than 50% state-owned. Given that most of the banks would be bust without taxpayer guarantees I don't know why they don't just wind them up in a controlled manner, transferring assets and liabilities to the state, before beginning the process of building a case against their boards, freezing their assets and attempting to claw back their bonuses, property and pension funds - on the basis of the effectively fraudulent accounts, based on flawed asset evaluations, which have showed such huge profits over the last ten years. What would happen to a small or medium sized quoted business which inflated its assets in the accounts year on year, distributing huge dividends and bonuses until the day the assets turned out to be not quite as valuable as the liabilities ? At a minimum, HMRC would be all over their books, if not the Fraud Squad. In the States they'd do time - why not here ?

They might claim they truly believed the valuations - in which case sectioning under the Mental Health Act might be more appropriate. Their delusions have turned out profitable for them and dangerous for us.

Laban's not generally a believer in the state doing what can be done by private enterprise. But the banks are in a unique position - licensed to create money - and have been found grieviously wanting.

Only a few months back any Tory spending proposal would be greeted by Labour with cries of 'where's the money coming from', with dire prognostications of closed hospital wards and classrooms. Now Gordy's spending money he hasn't got like the proverbial drunken sailor, and the tab marked 'taxpayer' behind the bar gets longer and longer.

When the Tories stopped believing in God and Labour stopped believing in the British working class, they soon found other things to believe in. The Gods of the Market Place satisfied the spiritual needs of many Tories, while Labour returned to the Old Religion of the Pelagian Heresy - that man is essentially good and perfectible - but with a twist that Marx would have noted with a sardonic smile - perfectible only with enough teachers, social workers, Housing Officers, Funding Stream Co-ordinators, outreach workers and other Labour-activist beneficiaries of the Caring State.

Old Labour scorned the Gods of the Market, but New Labour realised that the taxes (and the party donations) would have to come from somewhere, so were quite happy to let the Market Place rip while taxing it to feed their core constituency clients - said social workers, Housing Officers etc. Indeed, for the architects of New Lab, it was but a short step from being intensely relaxed about others getting rich to being intensely interested in getting rich themselves. In this context I would recommend a read of lefty Yank Greg Palast's expose of Mandy's mate Derek Draper. It certainly dispels any illusions about the People's Flag.

Draper should have been pleased with his success. But his mood was philosophical.

“I don’t want to be a consultant,” he said. “I just want to stuff my bank account at £250 an hour.”

Blair and Gordy took the whole thing a little too far, though. Convinced that with enough social workers and Sure Start schemes, crime would fall, they didn't bother to build any prisons - and now the ones they have are full. Convinced that 'something would turn up' - like wind power - and afeared of the Guardian, they closed all the nuclear power stations and didn't commission any new ones. Now they've had to sell our energy future to the French, and the lights will soon be going out as the old stations shut faster than new ones can be built. The story of Anglesey Aluminium is a disgrace.

Above all, they spent and taxed in the boom years as though they would never end. What are they going to do now that they have ? The kitty's empty.

IMHO there's only one option open to them. They'll keep spending and start printing. Consider their position. With unemployment projected to rise to three million, they'll be worried about keeping order among the youth of our rainbow nation. No way can they let up on the outreach workers, but who will pay for them ?

The oldies will - especially those who were employed by the private sector. They don't fight. They probably voted Tory anyway. Many of their company pensions have been destroyed, but there are still a fair few impacting the bottom line with their future pension liabilities. Just print money, let inflation rip, and zap ! those future pension liabilities are halved in real terms.

That solves the problem of paying the outreach workers, it ensures more donations and directorships from grateful capitalists - and it also makes a lot of pensioners, with their pensions eroded by inflation, once again dependent on the State. It's a win for everyone - except the pensioners, but who cares about them ? They don't riot !


Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

I'll second the above post.

But what is to be done?

Anonymous said...

Superb LT.

The Link to Greg Palast's article about New Labour sums it up; they, and the rest of our political class, are basically criminals.

The predictions about unemployment today are utterly chilling. The Ernst & Young Item Club are saying it will pass 3.25 million by the end of 2010 and hit 3.4 million in 2011.

If that prediction plays out we are going to have major civil unrest in this country.

Anonymous said...

I’ll go along with that. Over the last decade or two we have been royally shafted. Our country has been changed beyond recognition and is now just about bankrupt. We have precious little manufacturing industry left and the much vaunted financial services sector is in a nosedive. Sixty years ago we were a world power and now look at us. We can’t build a first rate fighter on our own…the US can, France can, Sweden can, Japan can, China, India, Iran, Taiwan...the list goes on. We’ve neglected our power generation industry and now we need to close old power plants with nothing there to replace them…we can’t even build our own now so we’re getting the French to do it!

We have foreign criminals rioting in our streets and the police running for fear of “offending” someone!!!! This is barely even reported in the media.

Large areas of our cities are third world ghettos where the indigenous population fear to tread.

We need a strong and decisive leadership and I fear that is beyond the capacity of the three main parties and that the UK will endure a period of civil strife not seen since the last Jacobite rebellion in 1745-6.

Anonymous said...

That piece was possibly your best post, if anything it makes me realise that my childhood under Thatcher was a golden age. We'll never again be blessed with such strong, uncompromising political stewardship which placed the needs of the country before self-aggrandizement. This country has gone from a confident nation state into hundreds of poly-monocultural, mutually hostile tribes.

Despite her righteous zeal for privatization she would have never allowed our public utilities to be hawked to the French and Germans. It is rather alarming that we do not control the key cogs of national infrastructure, our fate is in the hands of others. The former trotskyists have triumphed in a sense, the Russians are our overlords on account of their reserves of natural gas. Also, the multiculturalists can crow at how Britannia is dependent on those vast lakes of oil controlled by non-Western cultures in the Middle East and South America. We, alas, do not have any bargaining chips.

Anonymous said...

"This country has gone from a confident nation state into hundreds of poly-monocultural, mutually hostile tribes."

Just re-read that - apologies for the appalling syntax!

Anonymous said...

Thatcher is one of the architects of this mess.
She believed that you could run an economy purely with the financial sector.
Thatcher hated industry and thought the City was the answer to everything.

Blair and Brown were seduced by the City as easy money.

Now we have an economy based on house prices and credit, utterly stupid.

Anonymous said...

Excellent post.
'Convinced that with enough social workers and Sure Start schemes, crime would fall, they didn't bother to build any prisons - and now the ones they have are full'. Not only that, they let Long Kesh (an ideal holding centre for foreign criminals if ever there was one, and a facility paid for by mainland tax payers) fall out of their grasp and into the hands of the semi moribund NI assembly. Tho only future they (or at least the greener elements)can think of for this bounty is to turn it into some spastic 'memorial to the troubles'.Remember that the next time you read of an early released crim raping or murdering someone.

'With unemployment projected to rise to three million, they'll be worried about keeping order among the youth of our rainbow nation'- spot on. Note that diversity head honcho Trevor Philips now wants to kiss & make up with the police- 'sorry guys, we overplayed things on the 'institutional discrimination' front'. He's probably been looking into the same crystal ball as you, doesn't like what he sees- and is backpedalling like mad to save face.

Anonymous said...


Do you have a post or series of posts describing how you went from youthful lefty to your somewhat more conservative self now?

(Great post, BTW.)

Anonymous said...

I don't think Thatcher was the cause of the problem.
Remember she came into power after a similar government to Gorden Browns, the country was bankrupt, the context is everything, she couldn't have afforded to keep paying the massive industrial subsidies even if she wanted to.

Same will happen at the next change of government, they will be forced to massively cut costs, and a future generation will probably blame them for it, influenced by the leftist media trying to divert the blame.

Great post tho Laban.

I don't understand this bailout mentality..
If you have 2 people wanting to buy a property.
1 seller.
1 banker.
Without the banker, both buyers can only afford to pay 75k, but after talking to the bank who offers to loan them 90k and 100k respectively.
Now the price of the property has been bid up to 175k. The winners being the seller and the banker. The buyers were effectively competing to see who could withstand being in the most debt..

So this idea of cheap credit and lending lending lending that economists keep talking about is not actually advantaging buyers at all, as the bidders are all getting access to similar amounts of credit, effectively bankers and the government on behalf of people who hold assets are trying to trick people into paying too much for property.

Anonymous said...

3 years from now LT will have cause to link back to this post. Things will be no better, just the unbelievable feeling that they are actually getting worse. There will be no revolution. Damage done.

Anonymous said...

Halved in real terms?

We should be so lucky.

Back before the great Heath/Wilson inflation, my father - who's now in his eighties - worked for quite a few years in a pretty good management position at a household-name British manufacturing company.

His pension from those years of work now pays his weekly paper bill - and he only takes one or two papers each day, nothing at all at the weekend.

Oh no, they won't get half of what they've worked and saved for, nothing like it at all.

NuLab are bastards, every last one of them. Hanging's too good.

Laban said...

Anon 1.10 - thank you for the kind words, but please do not compare our leaders to the female genital organs.

a) this is a family blog - or tries to be

b) it's an insult to the said organs

Anonymous said...

OK, I'm sorry LT, I don't normally sink to the gutter!

Despicable gits, we should hang the ringleaders.

That was the gist of the deleted 1:10 AM post.

Anonymous said...

"The buyers were effectively competing to see who could withstand being in the most debt.."

Spot-on. This happens because the super-rich people that are really running the country want to prevent the bulk of the population from getting their hands on the land. That is why they also endeavour to create credit bubbles and recessions because those that were getting somewhere towards owning their own land lose their jobs and the land passes back to the super-rich again. That is how they have kept their hands on the land since the Norman conquest and the bulk of the people have stayed poor.

Remember that Labour have never really done anything to take the land away from the rich but they sure as hell have made sure that ordinary working people have the least chance of retaining any land. They are on the side of the super-rich, bought and paid for.

Anonymous said...

erm well anon 3:24
I dont really see how the government can take land from 'super-rich' and give it to the people, especially when we have such high levels of immigration? who would the government give the land? I can see the affirmative action land grabs now..

I don't think its true that the superrich have a lock on land in this country anyway, you only need to pick up any farming magazine and there is lots of land for sale and its relatively inexpensive compared to house prices.

I think talking about land is sometimes a distraction, someone who owns a 20 million pound estate in Hertfordshire might have the appearance of great wealth but isn't in the same league as a London banker. Even though the banker may well not own as many acres and whos wealth is often not as outwardly visible.

Anonymous said...

anon 5:29

Google "Land Value Tax"

You don't need to take the land, you just need to tax it.

Shifts the burden of taxation to the land owning super rich.

Look up Fred Harrison, you can find him on youtube as the undercover economist.

Anonymous said...

"you only need to pick up any farming magazine and there is lots of land for sale and its relatively inexpensive compared to house prices."

The problem is that if you buy that inexpensive land and build a house on it, the government will send men with guns around to drag you off to jail and then destroy your house; another wonderful 'progressive' Labour innovation from the 1940s, if I remember correctly.

Labour are despicable scum who've been working to destroy Britain for at least sixty years; now it would appear they've just about achieved their goal.

Anonymous said...

Why if someone owns £10 million worth of land should he be taxed more than someone who owns £10 million in other types of assets?
Why is their this land fixation?

An asset tax seems like a good idea sometimes, but the problem is who desides on the 'value' of the assets, as we saw with house prices they doubled in value within 7-8 years but then the bubble pop'd and they will return to similar levels they started at.
Who desides the 'real' value?

Anonymous said...

The real value is what its worth then. Seems straightforward enough.

Landowners beyond a certain value should pay tax on land. The state guarantees property rights after all and if you hold land thats the clearest benefit you get from the state.

Imagine your house & garden, its not impossible to imagine you and your family successfully defending that from squatters, rapacious builders etc

If you are Lord Borsetshire and youve got 10,000 acres how do you defend that? There could be incursions all the time, sure you can hire a private army but thats expensive. As it stands now the state protects your property but you get that protection from taxes you pay on economic activity, not on the land itself.

Try looking up 'rentier class'.

Anonymous said...

"The real value is what its worth then."
Erm well ok, how do you deside what its 'worth'?

9 years ago a friend bought a house for £50k, during the boom other propeties very similar reached £160k, but now we realise £160k was not the true value and it was just a massive bubble that has since pop'd and its currently 'worth' 100k and dropping..

I agree, people should have to pay for their property rights.
But I don't understand why you think it should specifically apply to land?
What if someone owns a £30 million yacht, is the government not helping them to secure that?

Anonymous said...

When your friend bought the house for £50k, the market valued it at...£50k, it was worth £50k.

Later it was worth £160k, then £100k. So it had three different values at three different times. There never was a 'true' value other than those figures.

I'm not saying not to tax other forms of wealth. I just feel it would be better to tax that rather than economic activity.

Anonymous said...

no no no. The house was not 'worth' £160k, equivalent houses on the market were bid up to that price by people promising to pay money they couldn't really afford.
We knew it was overvalued and that there would be a correction it was just a matter of time.
If the government had valued it at £160k for tax purposes it would have be ridiculous.

Anonymous said...

How then would you value the house?

"Sorry Mr Taxman, I know houses like mine are selling for £160k, but mine is really only worth £99k (or whatever)."

Anonymous said...

If property taxes were done like that, it would be a powerful disincentive to bid the price up would it not?

Or would it?