Can banks plug the gap?

Stephanie wrote,

"the banks will "pay back the British people". That's up for debate" I don't think so.

Is it not a very serious allegation to suggest that what amounts to sovereign debt will not be repaid or that there will be a debt default by the UK? Where did you gain this intelligence from? Is the British Government preparing not to pay its debts? For that is what you are saying, as the major debtor banks are owned by the state and their debt must be as secure as any other sovereign debt, mustn't it?

Surely a more relevant question is: Will the debt repayments be worth anything after the (very) probable (possibly hyper) inflation?

By the way if you are right in what you say sterling may move quite rapidly south... anybody want 2 or 3 pounds to the Euro (whilst probably maintain current rates with the US Dollar and hopefully rather fewer Yuan to the pound).

All I can say is that these bankers you are talking to are spinning you a line!

Over the last 18 months the banks have done precisely NOTHING to help the economy, except perhaps highlight the impotence of the Government and the Bank of England.
They've been bailed out by the taxpayer AND are hoarding QE monies. Yet still they treat business and personal customers with arrogant contempt. Withdrawal of overdrafts with little or no notice - in the rare instances when credit is extended, criminally high levels of interest compared to base rate - profiteering, rip-off arrangement fees and supplementary charges - instructions to their surveyors to deliberately down-value property being offered as security. The behaviour of the greedy, bonus-obsessed banks is an ongoing disgrace and it would have been much better if they'd been nationalised. So we should expect ZERO favours from them. Caledonian Comment

Comment 2 : CaledonianComment

I really think you would be happier if you were to allow yourself to accept that banks and bankers had very little option but to behave in the way that they did. The government-sponsored line that if bankers had behaved like normal human beings we wouldn't have got into this mess is a total myth. Bankers did behave exactly how any study of human behaviour would have predicted they would. Exactly the same as a completely different group of people would have behaved had they been put into the same position.

What the interventionist left did was to change the means by which they achieved what they deemed to be social allocation of resources. Instead of offering State guarantees or subsidies to attract more investment than was commercially justifiable, they sought to change the ground rules upon which commercial decisions are taken. They did this by removing the risk of failure, by making it known that major aspects of the financial system are too big to fail. In doing so, they expected to take away the need for much of the industry's hard application of rational risk-evaluation, and to make investment in socially desirable projects less dependent upon being backed by State subsidies. They expected, through changing the rules of engagement, that the financial sector would discriminate less between investments on the basis of risk.

Well this the financiers did, of course, because they had no other option. With no-lose bets on the table, of course everyone's going to clamour after them, and anyone who doesn't is going very soon to find himself out of a job. Moreover, the business for whom he works is very soon going to become a takeover target if they don't follow the herd into the valley of plenty.

The whole idea back-fired on the interventionists because they failed to appreciate that moral hazard is the lynch-pin that holds together the system of competitive resource allocation. Without risk of failure the only criterion for investment is the gross rate of return, and allocation by gross rate of return can only be highly inefficient. There is, of course, a serious argument that commercially efficient resource allocation is not socially optimal, and that therefore it's socially justifiable to take steps to redirect some of the commercial investment through subsidy intervention. But this is a far cry from the destruction of the entire mechanism by which the commercial market makes its decisions, which is what Clinton, Blair and Brown have done over the last 15 years.

If I understand well, the banks are going to use the tax-payer money they have been given to buy government IOUs that will be repaid, ultimately, by tax-payer money? Which will no doubt strengthen them. I'm afraid I've missed the "wealth creation" step.

Well all the tax money that has been used to rescue the banks - in what ever form - needs to be returned to the public. This money needs to come from the still extremely puffed-up investment sectors of the banks.

SF "And when they decide to diversify, very slightly, into gilts - the Bank will have plenty ready to sell. " that is the Bank of England rather than the government? Sorry if I'm missing something.

So.

The banks overstretched and nearly collapsed.
The government spent public money on bailing them out.
The BoE buys gilts from everywhere to put new money into the system.
That new money immediately gets hoovered up by the great sucking noise of debt repayment into the banks.
The banks are now holding new BoE money and government debt.
The government introduces new laws that require the banks to hold more liquid assets.
The banks will have to buy more debt.

Hmm.

But with what money?

Sorry I mean government bonds when I say debt in case that's not clear

MONTY SLATER: A RETURN TO TRADITIONAL BANKING?

"But there will be a nice symmetry involved if a return to traditional banking ends up helping governments to service a mountain of public debt - which reckless banking did much to create."

When there was traditinal banking, those who didn't have the cognitive ability to manage their finances in the longer term were given weekly wages and rented where they lived. They didn't have delusion of grandeur, or even a cheque book, and they certainly didn't have credit cards!!

If there is to be a return to 'traditional banking' provision of credit cards to the likes of Monty Slater will have to be stopped, as it will to those with the cognitive ability of children. That will mean a dramatic end to much that many have become used to.

Do you fully appreciate the implications of that Stephanie et al.? I bet you don't....

Alistair Derling has been a proven Trotskyist, certainly up until his mid thirties (reference: The Private Eye).

BankSlickerminustheR (#10) Stalin and the Russian socialists-in-one-country (like Old Labour) knew the trouble the original anarchists would cause for a regulating, managing, welfare state where the means of production, exchange, communication etc were in public ownership rather than the people as private 'shareholders' (Thatcher's workers democracy with the aid of 'Sid'). That's why the original Bolsheviks were expelled from the party in the 1930s just as Militant was in the 80s here. The problem with entryism is that they are hard to identify (see SPIKED magazine today) hence the 'civil war' in the USSR in the 1930s and ultimately, Germany's effort to put a stop to it with the aid of Stalin (something we still haven't fully grasped, I suspect). People here won't see the connection between Thatcher/Joseph etc, Blair/Levy/Brown/Cohen and anarchism/Trotskyism/free market libertarianism. The makeover's been crafted via PR/Hollywood spin. They called their way 'The Third Way as a subterfuge.

In my view, the public has been coerced/blackmailed into serving as compulsory 'shareholders' in Financial Services' PFI projects and they don't see it any more than the Russian people saw through the same people's 'voucher scheme' in the 90s. n bankrupted Russia.

#s 9&11

Keep trying - one day you will finally understand th difference betwen Communism and Socialism . So now we know that Nazi Germany invaded the USSR to put a stop to a 'civil war' with conievance of Stalin! Your complete lack of understanding of both history and politics beggers belief!

However, as you are displaying the cognative ability of a child then please leave your credit card and chequebook at the door as you leave!

Hi Stephanie,

That's a really very interesting (and indeed contrary) view, so thank you for your analysis.

I'm a refugee from another part of the BBC economics blogosphere. If I might say so I think you've spotted this likely effect well before Pesto (but I know you're really very good friends.....).

I was indeed thinking that very very soon there will be a huge reverse in gilts based on "how is this QE business going to unwind", but maybe as you suggest the pressure from banks will smooth things out in a very big way.

Have you been able to estimate the scale of the requirement for gilts?

Clearly, as a good objective BBC correspondent, you cannot take a particular view but merely report the facts and the implications.

But for the rest of us who can take a view, I'd like to ask you the following:

- the banks must absolutely be regulated to increase their capital requirements (Basle 1/2/3 etc with its highly complicated formula of this level of capital for this and that level of capital for that is ridiculously opaque and obtuse... so, while it really should be dumped, it's the only basis on which we can compare) but what sort of money for the UK PLC do you think this represents?

- technical point, please explain the difference between simple reserves and gilts. Presumably reserves are with no fixed redemption, and gilts are a dated redemption? Is that it? So why would banks wish to hold more gilts than reserves? This implies you expect an environment where interest rates are declining and capital values increasing. But surely if you look at the next 5 years it's got to go the other way?! (because Base rate right now is 0.5%% etc.....)

- banking structure/regulation etc needs to be completely overhauled such that depositors have more power over how a bank operates and what banks do with (depositors) money (i.e. they should never be allowed to underprice the cost of money to such a ridiculous extent as in the last five years). The best way of this coming about may be via the resurgence of the mutual sector, where it's not shareholders who set lending and borrowing rates, but a simple contest between the lenders and the borrowers themselves (the BS Association has recently proposed just such a "mutual" exit for Northern Rock). If this is the case the govt has a political problem taking into account its ownership of RBS and Lloyds - vis the more sensible/draconian the capital requirements and constraints it implements (for the "peoples" long term benefit generally) the lower the value of the govts existing shareholding in those companies.

How will this work out?

It would be a very sorry outcome if the short term pressure to make a huge return on the governments capital injection into banks, as presently formulated (i.e. RBS and Lloyds/HBOS) was to prevent a sufficiently radical and necessary reorganisation of banking regulation in general!

Gordons right, the banks will pay back the British people,only not the ones on this little island in the sunk ,The graet Tony has been well payed back for services rendered to the bankers AAA,s holes ,where has he offshored himself to these days ,as for the banks wishing to hold onto quality assets it does beg the question as to what sort of quality assets can exist in a taxpayer backed ponzi scheme .

Who,s kidding whom

Where is the oversized rump of a banking system going to get its horn of plenty once the QE'rs withdraw never mind pay back the british people in diddle doe

The question, "what happens when the BoE stops pumping money into the system?" can only be answered if we know where the money is going. to what extent did the BoE buy:

a) Government bonds from the banks, thereby giving the banks a chunk of money and, at the same time, writing off the debt?

b) Toxic assets from the banks, thereby giving the banks a chunk of money and leaving the bad debts to be written off by the BoE at an appropriate time?

c) Other corporate bonds that ar still good debts?

We should also ask how much of the money given to the banks remains as reseves which can be spent; and how much of the current take up of Government bonds is from banks who are already using the QE money to strengthen their asset-base?

That would give us some idea whether the banks can take up the slack.

Someone must have these numbers and I would have thought that a few pertinent journalistic questions could elicit them.

foredecdave (#12) "now we know that Nazi Germany invaded the USSR to put a stop to a 'civil war' with conievance of Stalin!"

Thanks for your cntribution, but...not quite. The Soviet (National Socialist aka Socialism in One Country) sphere of influence expanded dramatically with the support of the UK and USA as a consequence of the fighting in the Pale of Settlement from June 1941 onwards (over 1 million Soviets were captured as POWs in German uniform by the allies incidentally). The Morgenthau Plan (joint effort of Jewish Morgenthau and Harry Dexter-White - see Bretton Woods etc) backfired on the Amercians forcing them into the Marshall Plan which laid the foundations for what we see today as the EU project.

For what socialism/communism is, I suggest you read Sidney and Beatrice Webb's book or have a look at the People's Republic of China today. It wouldn't hurt to look have a look at what 'paranoid' Angleton made of Golitsyn either given how the SCO opposes what the USA/Israel appear tio be up to over Iran etc.

Stephanie,
When I read your article my thought was that the banks will now play a waiting game.
Following the events of the Labour Party conference this week it has now become clear that the Labour Government is effectively dead. We know this. The banks know this. It is highly likely that the Tories will be the next U.K. government by the summer of 2010.
This could change everything for the banks and the financial institutions.
If I was the CEO of a major bank I would promise all I could, and then sit back and 'wait upon events'.

ON WESTERN NARCISSISM AND OTHER FOIBLES

Postscript (#16) Just to reinforce the point.

"Wearing a Mao suit, Hu stood in an open-top black Red Flag limousine to review the military formations, which assembled along Chang'an Avenue, part of which has been widened and reinforced for the weight of heavy military equipment to be displayed in the National Day parade.

"We must unswervingly follow the road of socialism with Chinese characteristics...and the reform and opening-up policy," Hu said in a speech atop the Tian'anmen Rostrum after reviewing the troops.

"The development and progress of New China over the past 60 years fully proved that only socialism can save China and only reform and opening up can ensure the development of China, socialism and Marxism," Hu said."

XINHUANET 1ST OCTOBER 2009

On the other hand, maybe I'm completely wrong as has been suggested. Maybe the above was a bad translation? Maybe he doesn't know that the USA neocons won the Cold War?

;-0

#16 Jaded

Now I know that you are infamous for getting your 'facts' right, but will you please explain to me just how "over 1 million Soviet were captured as POWs in German uniform by the allies in the Pale of Settlement in June 1941?

As for the merits, or otherwise, of the Morgentheau Plan, I fail to see what relevance it has to the decsion to invade the USSR? The plan was not even a 'twinkle' at that time and neither Stalin or Hitler would have been interrested in either of the proponents.

Which of the Webb's books would you like me to read their collaberative or independant books and pamphlets or their independant ones?. I have to inform you that the Webbs do not hold any proprietary rights over UK socialistic commentry and neither of their books Soviet Communism: A new civilization? (1935) and The Truth About Soviet Russia (1942) could be considered as objective.

Finally, as you appear to want to trade in disassociated 'facts'. How many soldiers of German, Russian and Jewish origin served in American uniforms? How many Norwegians, Dutch, French, Croats etc. were captured in German uniforms?

If the banks assets are tied up completely in gilts, then that is hardly a safe situation is it?

I mean, what if the world markets suddenly decide that the UK govt is not credit-worthy? As it currently stands the UK as a whole is insolvent because its liabilities exceed its assets.

So in one fell swoop we could have a complete collapse in sterling and our banking system.

It would be far safer if the banks would buy gilts issued by other states such as australia or Canada. Even better, let them buy gold.

I am amazed that anyone think's this money go-round called QE can do anything other than make things look normal until after the election.

Stephanie,

I find this a conundrum.

On the one hand inflation would be a great tool to reduce the financial burden of any foriegn loans this country has, as I assume the payments are in sterling the repayments would be reduced by said inflation - as would private debt and of course the whole cycle of banks trying to get everyone into as much debt as possible can continue,,,

But that doesn't help the near term problem of financing public debt - I'm not an economist/financial guru - but the problem is obvious that no foriegn investor would want to invest in a deflating currency.

#1 I've always seen inflation as one of the ways out of the UK's debt mess, not as though I like it 8(

Having had a day to think about it I can't help but think that QE will end when the UK government is happy UK PLC can comfortably pay back any outstanding foriegn debt hung over from the bank crisis.

ie QE has just been a way to bypass short term (a year or two) worries about sterling that would NOT have allow government finances to be forefilled. Gving time for the currency to deflate and allow business as usual (what ever that is).

Perhaps the new banking requirement your are talking about is just another measure to stabalise the gilt market before attempting to finance government spending via foriegn investment ?

I have seen the Financial Times quoting the "race to the bottom of the exchange markets",,, but politically this window has an end point. I for one am already very miffed.

I don't like where the money of QE has gone - to me it's a smoke and mirrors attempt to get more money into banks while funding government debt (stuff the people). But for the government it seems to have worked ?

Stephanie - if the regulators are really interested in sound banking then they need to separate out investment banking from "ordinary" banking and split up the big banks. All the talk of curbing banker bonuses is a smokescreen. If investment banking is separated out, I have no objection to bankers in that sector reciving quadrillion dollar bonuses. The bonuses are objectionable in the current circumstances because the taxpayer is effectively underwriting the risks of investment banking. If investment banking is separated out, then these banks can be left to fail. If the investment banking is separated out, would there really such a need to regulate bonuses in "ordinary" banking?

A lot of the liquidity sloshing around the banking system at the moment is being used by the banks to fund their investment banking functions - they are using it to speculate on the stock market. Why else has the Footsie risen by 50% since the spring? Taxpayer money is being used to create yet another bubble. The banks must engage in investment banking in order to generate profitability. The governmennt knows this but is so exposed to the banking system through the bail outs that it has little option but to accept this. It won't admit it but, in my view, it is one of the main reasons why there will be no proper reform and why the government persist with the banker bonus smokescreen.

PLUS CA CHANGE

foredeckdave (#20) "I fail to see what relevance it has to the decsion to invade the USSR?"

There is an awful lot which you fail to see. I suggest you reflect upon that at times. We all have to. It highlights our lack of omniscience.

The Soviets and Germans were allies ideologically in the 1930s and early 40s. They were both resiting Bolshevism as anarchism. That is what the purges in the 1930s in the USSR were all about. I have provided links such as this before to put you on the right trail.

It is very difficult (impossible) to read 'minds' as they don't exist. I suggest you don't bother trying. Just look at what actually happened geo-politically, not to what propaganda circulated by 'the allies' after the war said happened. The USSR won WWII. The USSR was National Socialist just as the PRC (and her allies) is today.

Sometimes strategists sacrifice assets for longer term gains. One has to ask, 'what did National Socialiam, properly understood as statism, actually lose in WWII?' It was a war against 'Jewish' Bolshevism/anarchism. The homeland of Jews in Europe was Poland and Western USSR, we know form the historical record that they were the ones who ran Bolshevist USSR and teh Comintern, but that was quite different in referent to the 'Russian' 'Old Labour' Soviet Union, as shown by the purges in the 1930s and policy in Spain in the 1930s. This should be born io mind when thinking about the Danzig problem in 1939 I suggest. The war between Britain/France and Germany in Europe was incited by vested interests. Whose? Britain lost its empire and was effectively bankrupted by it. The nation which economically benefited was anarchistic USA which was shortly in a Cold War with the statist USSR and shortly after, the PRC. Plus ca change.

TRADITIONAL BANKING II: ON THE CARDS STEPHANIE?

90% of the population has at least a current account. Question: Is 90% of the population numerate/bright enough to manage one?

Question: Given the available evidence (see #9, 2003 and err later), do the banks care?

A return to 'traditional banking' would surely mean a return to wage packets, cash-in-hand, and mass withdrawal of credit cards and credit......... Getting the picture everyone?

Does everyone see any of this on the cards? After all, anyone who suggests that ability is Normally Distributed is an evil, elitist, immoral, unethical etc etc 'nazi' are they not?........

Can banks plug the gap? I guess it largely depends on how many gaps there are to plug.

Lloyds and RBS have so far this year plugged a $4.4 billion gap in their operations in Eire. Or is it the case that British taxpayers have plugged a $4.4 billion gap in the operations of Lloyds and RBS in Eire? Who knows? and who knows if this gap may be larger than $4.4 billion?

Meanwhile another gap opens up in the Cayman Islands and this needs to be plugged by a GBP38 million loan ultimately guaranteed by British taxpayers. Had there been any Cayman Island taxpayers then they could have underwritten the loan - but hey why bother introducing taxes in the Caymans when there is already a fully functioning tax system in the UK?

Maybe there are just too many gaps to be plugged by anyone.

Stephanie

Its my opinion that its too easy to refer to 'the banks' as if some how they were all extacly the same and indeed had similar businesses and business models or indeed were all in trouble or are even now British owned businesses.

And surely your comments only apply if you consider that the problem children should be nursed back to the 'health' that they previously enjoyed. If you accept that revenue will not and cannot be generated in the same quantity from stamp duty on house sales what does it matter that the remnants of Northern Rock for example can't be revived.

The remnants of Northern Rock and Bradford and Bingley can only be managed over the long term. The mortgagees will pay the Government back or repossessions will happen and homes will be auctioned or packages of these mortgages will be sold to other providers perhaps. Maybe, at some point, the remnants could be floated off or sold but I can't see quite who would be interested in these regional remnants.

RBS is quite another matter and to be frank, I'd sell off Citizens Bank in the US acquired and amalgamated with substantial sums of money over a 15 year period and this would go some way to restoring the balance sheet. Alternatively, it could gradually flog of other bits of its empire. They sold off their stake in Chinese banks didn't they so why not this, even at firesale prices. Its what would have happened if they'd been allowed to fail - it would have been broken up and the bits sold off to the highest bidder. Over time, the corporate debt that swamps mortgages in value will reduce, I suspect and the requirement for the equivalent of wholesale money will diminish. To be frank, this is exactly what should happen because while the outside world think the UK government will pick up the cost of money to service these loans, its surely open season. In fact, the RBS web-site says 'we intend to reduce the number of compaines where we operate'. So not quite a basket case and I think it would not need support for all that long, given reasonable business decisions.

Lloyds, is the most difficult. No global reach, domestic, saddled with mortgages and loans to corporations. But hey, even this has bits to flog and mortgages that will get repaid.

I remain optimisitic and yes I do think the operational banks can plug the gap and they'll do that without posturing from our 'esteemed' leader. That is just populist rhetoric.

Perhaps you might ask the 'esteemed' leader quite how he sees all the other government debt being paid back.

Our banks are huge international concerns, there is no law to say that they need to hold UK gilts. The way the pound is getting hammered I suspect there is already a shift into investing in Euro banks.

If investors do buy our debt, the interest they will charge will be far higher than at present, there is now a real risk that the UK will default on its debt in the medium term, due the UK's complete inability to manage debt.

The countries situation is just like Rover, expending money is does not have ,keeping production high with no sales, borrowing money it can't pay back. The end result will be the same, bankruptcy and believe you me it will come out of no way.

The country needs to wake up and deal with the facts and the BBC needs to be more forward thinking in highlighting the dangers ahead, rather than looking backwards on events that have already happened...

I see that the BOE has issued its latest credit report

It looks to me that the amjority of the increase in corporate loans has been used to restructure balance sheets

As much as I like to see socialism/communism/Marxism discussed, in would be nice to know that those discussing it have actually read and understood Marx's major work, 'Capital' (or at the very least some introductory books that expalin the main concepts).

Then we could perhaps discuss how Marx saw capitalism and why it is prone to crisis.

Dear JJ

Having a bank account doesn't necessarily mean that you have a credit card or an overdraft does it?

Even if these facilities are available, not everyone uses them, do they?

Even if they do use them, some choose to pay of the balance at the end of the month like a charge card, don't they?

I don't have any idea how many of the 90% fall into these categories. Do you have any access to these facts and data?

Yrs

Mrs Bloggs

Well there you go the afternoon matinee has just been broadcast and it is yet another comedy served up by jadedjean!

One day you may just convince yourself that this antic nonesense is actually true.

mrsbloggs13c2 (#31) "Having a bank account doesn't necessarily mean that you have a credit card or an overdraft does it?"

No, and not having a bank account didn't stop banks from offering individuals like Monty Slater a credit card either, or many investment banks/brokers from offering NINJA sub-prime mortgages and other credit...

let's put this another way, if a low (verbal/spatial) IQ child said it couldn't see why it shouldn't have an airgun or have sex with a boyfriend, would you enter into a dialogue? There's the dilemma.

Does something magic happen at 18? Does age make one responsible all by itself. Are we all equal, educable?

Traditional (50s/60s/70s) bankers seeemd to know all about the nature of human diversity. Why did all that fuddy-duddy thinking go away in the late 70s early 80s along with IQ testing etc?.........??? How did we all become equals after hundreds of thousands of years of genetic evolution?

KS SATs are normally distributed you know. 16% of the European population has an IQ below 85. For some groups (e.g. Black Americans), the mean is 85, meaning that 50% of them have IQs under 85. Sub-Saharan Africa has a mean IQ of 70. Work out what proportion of their populations will have IQs under 85.

How do the (incresing number of) cognitively challenged cope with the internet and debit/credit card PIN numbers, fine print of Adjustable Rate Mortages etc?

Who might not want most people to think about these facts of life and peddle the idea that everyone is equal....and to say otherwise is 'racist'??

duvinrouge (#30) "As much as I like to see socialism/communism/Marxism discussed,"

I'm not here to 'discuss' those matters. I'm here to highlight what matters in terms of realpolitik. Those who want to use forums like this to chatter won't like what I am posting I'm sure. But they're mainly feminized, anarchistic males, who just like gossiping.

#34

Forgive me, but I do wonder if you understand Marx.

#25

What an odd little individual you are?

"A return to 'traditional banking' would surely mean a return to wage packets, cash-in-hand, and mass withdrawal of credit cards and credit...."

Why? and what evidence do you have for that?

Ah! didums den. Did somebody accurately call you a Nazi?

foredeckdave (#32) Your posts are abusive and irrational - see my response below to duvinrouge.

duvinrouge (#35) What you 'think' I 'understand' is moot, and given what I have said on this matter elsewhere, is irrelevant. Please look up 'intentional (or intensional, the former is a subset of the latter) idioms of propositional attitude' for further clarification. Much that's posted to these blogs is a waste of time and is a direct consequence of people having not grasped what this important logical/linguistic issue is about. Until you grasp this you will certainly not understand what I am posting. TRy not to behave like foredeckdave. He appears to habe major identity/self-esteem problems.

#25

DARLING CAME 4TH IN THE TROTSKYIST INTERNATIONALS

https://en.wikipedia.org/wiki/Alistair_Darling

'In an interview in The Guardian published 30 August 2008, Alistair Darling warned, "The economic times we are facing... are arguably the worst they've been in 60 years. And I think it's going to be more profound and long-lasting than people thought." His blunt warning led to confusion within the Labour Party. However, Darling insisted that it was his duty to be “straight” with people.'

'Darling was also Chancellor when the personal and confidential details of over 25 million British citizens went missing while being sent from his department to the National Audit Office. A former Scotland Yard detective stated that with the current rate of £2.50 per person's details this data could have been sold for £60 million. The then acting leader of the Liberal Democrats, Vince Cable, put the value at £1.5bn, or £60 per identity.'

Now, there must be Trotskyist plot in there somewhere. If we won't be willing debtors then 'they' will simply just take it out of our accounts anyway!...hold on a mo!...but the banksters are already doing that!

I especially liked the line 'Darling insisted that it was his duty to be “straight” with people.'

LEARNING DIFFICULTIES

foredeckdave (#36) "Why? and what evidence do you have for that?"

a) the 'credit crunch'.
b) dysgenesis/high immigration of the low skilled.

#32

You doth protest too much!...me thinks.

#35 duvinrouge

The answer is NO. The fascistic (nazi if you like or wish to differentiate German from Italian fascism) filter through which the whole world must be viewed would mean that no matter what Marx actually said JJ would have to identify it as the exct opposite.

Hence we have the proposterous calim above that Stalin and Hitler (Jo & Addy!) were really mates who helped each other out!!

foredeckdave (#41) Try to distinguish the message from the messenger.

"4) England:.... The REICH FOREIGN MINISTER stated in this connection that England had always been trying and was still trying to disrupt the development of good relations between Germany and the Soviet Union. England was weak and wanted to let others fight for its presumptuous claim to world domination.

HERR STALIN eagerly concurred and observed as follows: the British Army was weak; the British Navy no longer deserved its previous reputation.....
//
6) Anti-Comintern Pact:

The REICH FOREIGN MINISTER observed that the Anti-Comintern Pact was basically directed not against the Soviet Union but against the Western democracies. He knew, and was able to infer from the tone of the Russian press, that the Soviet Government fully recognized this fact.

HERR STALIN interposed that the Anti-Comintern Pact had in fact frightened principally the City of London and the small British merchants.

The REICH FOREIGN MINISTER concurred and remarked jokingly that Herr Stalin was surely less frightened by the Anti-Comintern Pact than the City of London and the small British merchants. What the German people thought of this matter is evident from a joke which had originated with the Berliners, well known for their wit and humor, and which had been going the rounds for several months, namely, "Stalin will yet join the Anti-Comintern Pact."

Memorandum (Aug 1939) of a Conversation Held on the Night of August 23d to 24th, Between the Reich Foreign Minister, on the One Hand, and Herr Stalin and the Chairman of the Council of People's Commissars Molotov, on the Other Hand

39

Now you really are showing by just how much you have lost touch with reality!!

Now let's be clear about what you have said:

people will have to "return to wage packets, cash-in-hand, and mass withdrawal of credit cards and credit"

because of:

a) the 'credit crunch'.
b) dysgenesis/high immigration of the low skilled.

Neither of the above statements corresponds with your first and are certainly not consequential:

The credit crunch was manufactured by the supposed brightest and best - certainly the best renumeratd!! Those who presently face the largest credit problems are more likely to be classic C1/11s.

As for the poor working class they tend to be able to compute very well thank you - ever been in a bookies or watched the scorer during a game of darts?

Take your prejudice elsewhere a shove it - preferably where the sun doesn't shine.

#40

After the rubbish you have just posted I don't care what you think. I do question your ability to think!

We sell bonds to ourselves and use the profit to cover the cost.... It's obviously stupid and comes under what one of our excellent bloggers called 'fictitious capital'. The problem is that it's one of those things that creeps up on you. Companies have incomplete work on their books. Accountancy practice forces them to give it a value: what value? If it's 90 % done, it is 90 % of the sale price or is it zero because it's unsaleable? The tax man might not like the latter, but the former is wishful thinking.

But you get used to the idea.

And then you see 'property developers' making money basically by buying and waiting for the property price to go more than inflation. Eventually, we are all converted to money rotation, 'bigger fool' theory, lemming behaviour and QE. No one notices until the bubble bursts.

What's worse is that the governments solution to bursting bubbles is to blow bigger ones.

#37

If you understood Marx perhaps you wouldn't make race such an issue.

The evidence is that it is the development of the means of production and the productive relations (class) that shapes the world.

#43

'Calm down dear, calm down!'

Now I wonder who said that?

CREDIT CRUNCH? WHAT CREDIT CRUNCH? PLUG THAT GAP!

foredeckdave (#43) You show a remarkably low level of abilitty when it comes to comprehending what's written or do you have a less than noble motive? You say you have a PhD...

Please re-read what I have written. Please learn how to read logical quantifiers in sentences. What was the referent (see quantifier)? Was there a time when some people did not have bank accounts, credit cards etc? Were those not the days of 'traditional banking? This was not all that long ago. What was it which determined who could have a bank account, credit card etc? What was it which determined who could have a mortgage, loan etc?

One can look to India and S. Africa for some indicative statistics. If one makes assumptions about populations, one can make a lot of money, just as predatory lenders did. This is what the liberal vs socialist confluct is abpout in the end, and why one has IQ diversity rubbished by liberals/predators.... :-(

CREDIT CRUNCH? WHAT CREDIT CRUNCH? PLUG THAT GAP!

foredeckdave (#43) You show a remarkably low level of ability when it comes to comprehending what's written or do you have a less than noble motive? You say you have a PhD...

Please re-read what I have written. Please learn how to read logical quantifiers in sentences. What was the referent (see quantifier)? Was there a time when some people did not have bank accounts, credit cards etc? Were those not the days of 'traditional banking? This was not all that long ago. What was it which determined who could have a bank account, credit card etc? What was it which determined who could have a mortgage, loan etc?

One can look to India and S. Africa for some indicative statistics. If one makes assumptions about populations, one can make a lot of money, just as predatory lenders did. This is what the liberal vs socialist conflict is about in the end, and why one has IQ diversity rubbished by liberals/predators.... :-(

duvinrouge (#46) "If you understood Marx perhaps you wouldn't make race such an issue."

Do you know what the full title of Darwin's famous book was? Do you know what Marx thougt of Darwin's work?

"The evidence is that it is the development of the means of production and the productive relations (class) that shapes the world."

Nothing to do with genes then? Class is a mathematical concept. It means group, or set. Can you tell the difference between different groups of dogs, plants, people? If not, what do we have the names for? Such grouping is essential to biology. Do you know why? People who can't tell the difference between classes are not very bright. This ability is very important. It's why discrimination between same and differnet is so fundamental to non-verbal IQ tests, which are very good predictors of educability. That's why they are used in schools.....

16 JJ

You advise us that Morgenthau was Jewish but you do not advise us of the religious affiliation of Harry Dexter-White? Why is this?

Is it that you recognise something so important about the one that you have to emphasise his religious affiliation but not that of the other?

Am I missing something here?

#50

So do you understand the critique of political economy?

Do you understand that it is the working class that is the 'gravedigger' of capitalism?

Do you understand how this concept of class is materialist?

If you understand all this how can you post comments that appear to support fascism?

The role of the fascists is to destroy the progressive elements in the working class.

Dear JJ

I really was aking if you have any access to data that indicates how say UK citizens use their access to credit.

One problem I personally have with grouping things is that it deals with the group and not the individual.

For example I know people who did very well at sitting tests and do jobs that require a great deal of training and expertise but are hopeless with their own money and debt

I know people who wouldn't or didn't pass the elevn plus but who manage successful businesses and employ many people

I know people who never passed an exam and probably couldn't have done given their behaviour at the time but who are excellent at managing their personal affairs

An I know some seriously bright able people who couldn't make a decision to spend money wisely that affected their collective long term security

I can't tell you much about their genes or their IQ but I know they don't neatly fit a classification - they sort of fit several - I think I too maybe like that.

I understand your concerns that not everything is as it seems. I suspect most of the posters here get your position that going back to basics is useful and that's the only way to dispense with a load of fluff.

Since most of us understand your position even if some don't agree with your analysis or conclusions, could we move on.

I would appreciate it because I have found that all the commentary here is interesting unless it is repetitive.

Yrs Mrs Bloggs

# 50 JJ

"Do you know what Marx thougt of Darwin's work?"

Why is it relevant what Marx "thought"? I was led to believe that you despised / dismissed as irrelevant the very concept of what people "think" (e.g. #37). I certainly think that I am confused.

Hope you haven't been leaving any petards lying around.

stanilic (#51) He was Jewish too Some tried to hide it. It isn't a religion, it's a way of life ;-)

Somehow, I don't think you're quite getting the bigger picture. People are the expression of their genetic heritage, not the 'church' they say go to. ;-)

duvinrouge (#52) "So do you understand the critique of political economy?"

I understand that you have been seduced by rhetroic at the expense of what happens. A capitalist is just someone who doesn't earn their living through their one labour. Working class includes doctors etc. The means of production include coal, steel etc i.e energy/raw materials for making things - all once nationalised along with communications etc by Old Labour many decades ago.

You appear to be either very young, or not very well educated. We are not the same. Don't make assumptions.

Hint. Learn when to listen.

mrsbloggs13c2 (#53) "I really was aking if you have any access to data that indicates how say UK citizens use their access to credit."

Which is, by definition, a statistical/actuarial request is it not? My posts assume that readers understand that what I write is actuarial - it is base don group properties. Anyone who tries to understand economics or policy has to think/write/talk this way.

"One problem I personally have with grouping things is that it deals with the group and not the individual."

Tnen you don't understand much if anything that I post, or much, if anything that anyone else who knows about these matters (or any science, or medicine etc) writes or says. That's a fact. You need to grasp this if you are going to converse rationally/intelligently with those who do, or they'll treat you like a child (usually very politely without telling you). When you see a doctor you are treated as a member of a class first.
Your body is assumed to work like others of your class (humans at the highest level, female next perhaps and so on).

"For example I know people who did very well at sitting tests and do jobs that require a great deal of training and expertise but are hopeless with their own money and debt"

I'm sur eyou do. But on average, those who have ability go on to do things which require the abilities which they have, in the past, demonstrated that they have competence in, or have shown to have skills which generalise. If later, they show that they do not have those abilities, they are either retrained or removed, subjected to competency procedures etc.

You have to understand that we talk and write in concepts or clases. Individuals are members of clssses. Intiutive judgments are not very reliable. Exceptions don't break rules. Professionals apply objective skills or rules that they have learned. If they do not do that, they behave unprofessionally.

Hawkeye_Pierce (#54) You are indeed confused. we use Natural Language idioms of propositional attitude in a modus vivendi, but we do not use such idioms in explanatory positions. There's an important point to grap here. Mentalistic terms (psychological verbs) resist existential quantifification (tat's teh logical quantifier) and subsitutivity of identicals salva veritate - the sine qua non for mechanical deductive inference. (the hallmark of extensinality and science). Most of modern 'economics' and politics is nonsense because it does not grasp this. It ignores human cogntive diversity.

The remark about Marx and Darwin was about what the book is about. It's about race! It's in the title. The demolition of race as a concept is anti-science. It is the work of anarchists. See the Jewish campaign via UNESCO in 1950 (and again in 1994 against The Bell Curve). My point has always been that this is 'libertarian' (anarchistic) predatory behaviour which has (successfully) made out to the naive that all groups are equal only so that financial predators can more easily prey upon the vulnerable.

All clear now?

Postscript (#58) The reason why what I've been posting here has caused a fuss with some is because it undermines the status quo. There are many others who have been saying what I have been saying, hence the links, but it is not sinking in. The reason it is not sinking in is because the status quo is very profitable! The reason it is not sinking in is because if it did many people would be out of very well paid jobs. The same goes with the point about the intensional idioms, it makes a lot of academia nonsense. Do not underestimate how radical this critique is

Watch the ETS video and read the above..........let it sink in.

#58

I have read all three volumes of Capital; to say it is about race is just crazy.

I think we have all given you and your racist views far too much attention.

#56 JJ

"A capitalist is just someone who doesn't earn their living through their one labour."

"The means of production include coal, steel etc i.e energy/raw materials for making things"

These are the two key concepts that modern economics ignores (exploits?):

https://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/07/i_could_operate_trains.html

In the 19th Century (and long before) it was the landed gentry who could let their land and the peasants work on it to subsidise their leisured class. In the first half of the 20th Century it was oil and good solid engineering / industrial know how that dragged most of the Western countries into this leisured class. In the 1970s this 'growth' ran out of steam. Since the 1980s and thanks in no small part to the hard efforts of the Chinese, the majority of the UK is now essentially a non-productive leisured class. Yes, most of us (Some, not all, but certainly the majority). That includes the following sectors: media, education, business services / consulting, marketing, retail, finance, computing, science, R&D and many many more besides. We are feeding off the surplus generated by the REAL productive engine of the global economy. Some of what we do is useful, but the vast majority is inefficient and wasteful.

P.S. Re #58. Wasn't Jeremy Bentham the arch Libertarian and key proponent of repealling usury restrictions? Does it not all trace back to him?

#61 Hawkeye_Pierce

Now you are someone that eventhough I know I will not agree will some of what you say, I know that through debating with you I will expand my knowledge.

I know I don't know it all (unlike some) and I know I need to put what I do know to test (unlike some).

#58

Hehe. The record has becometh stucketh:

"There's an important point to grap here. Mentalistic terms (psychological verbs) resist existential quantifification (tat's teh logical quantifier) and subsitutivity of identicals salva veritate - the sine qua non for mechanical deductive inference."

You see, this is where you are wrong. :-)

I have EXPLAINED this to you already, JJ, and you STILL don't get it.

Before we go any further, let me make it clear that I have TEN phds, and my IQ is immeasurably high. In terms of normal distributions, I am the dot on the right of the curve that is ten miles away from the edge of the page. When I speak to you, you quiver in awe at my utterly blinding intellect. Now, again to the explanation:

Your notion of extension is a set of things, each with its own term or label, exhibiting one or more properties called the intension. Unless some logic that applies to the elements of the set dictates otherwise, it must be presumed that the set is infinite. Infinite sets are computationally irrelevant, and when applied must be considered potentially infinite (ever increasing) as opposed to actual infinite. That is, the process creating the extension set must be forever ongoing assessing new input for inclusion, unless the intension and logic for inclusion declares otherwise.

The sentence "Lois likes Superman" is not the same as "Lois like Clarke Kent", but only if the set of extension of "Superman" does not include "Clarke Kent". The extension depends on the logic that permits things to be included in the set and the input criterion "Superman."

In short, there may be more than one extension for any given intension, and the extension depends on that doing the computation and the information available to it.

duvinrouge (#60) "I have read all three volumes of Capital; to say it is about race is just crazy."

Who said it was about race? If that's what you got out of reading my post, who knows what you got out of reading Marx. Go and look up the title of Darwin's 1st edition, then find out how and wy it is central to biological sciences. Then go and find out something about the genome.

#61 Hawkeye

Sometimes I wonder if the ecosystem isn't some vastly sophisticated supply chain left behind by a previous race of beings.

The fibers in grass, trees and plants that we carnivours can't digest, are made of something called cellulose. Cellulose is what they call a polysaccharide. That is, cellulose is just glucose molecules stuck together in a chain. As you know, glucose is very sweet. Shame we can't break that stuff down in our guts and have to eat herbivours.

Cows, sheep and all those herbivours live in a paradise where everything around them is a Willy Wonka style land of sweetness. When they look at a tree, they think "Hmmm. Polysaccharide glucose!" When they look at grass they think "Hmmm. More polysaccharides!" Everything is food just about.

Consequently they are all as thick as two short planks (which by the way would also be considered lovely bars of polysaccharide deliciousness, especially by termites)

Now here's the thing:

What if we, through pretty good technical innovation, come up with some nifty ways of supplying energy so cheaply that everyone could pretty much grow/make what they wanted. Need minerals? No problem, it's only 10Terawatts to bring it down from the moon. Need rare elements? No problem, it's only 50Petawatts to dredge the earth's magma.

I think then it wouldn't make any difference who was leisured. We just need cheap energy and production will become a hobby.

#60 duvinrouge. I don´t know why you get so upset with Jadedjean. The writing style is a bit brusque and arrogant, but other wisemore or less reflects the status quo.

If you don´t believe me do an internet search of Robert Mugabwe and Ben Bernanke - then compare and contrast the comments of the mainstream media toward these two individuals. Then try to identify and meaningful policy differences.

Dear JJ

You assume too much if you think that I do not understand what you write.

Measurement does not always provide the right answers. This assumes you are asking the right question, that your hypothesis is correct, correct? That is part of the scientific method, correct? Put up an idea, test it, assess the results, try again.

Measurement sometimes affects the outcome too, correct. Isn't that at the root of the Young's slits experiment. No test for where the photons go gives one result, check and you get another.

Thank you for your polite attention to my childish ramblings.

Yrs

Mrs Bloggs

I have a serious question that I need an answer to for this economics simulation stuff I am working on.

Well, a vague question that needs brainstorming a bit.:

Consider production of products as a graph.
- Products are used to produce other products.
- Which products are used to make which other products depends on techniques/processes/a skill
- The quantities of inputs and quantities of product and by-product depend on the process

I think the graph is directed, and weighted. It is not acyclic. On the contrary.


- What graph could be used to adequately describe the bulk of economic activity in the real world?
- What is the effect of entrepeneurship on this graph? In an agent based model of an economy, do changes in this graph structure adequately represent technical progress/regression?
- Does a list of processes need to be maintained separately or can they be incorporated explicitly into the graph somehow? If so, what is the best way?
- Does the real world graph include products that are not part of a cycle? In other words, are there products that are total system outputs, with no further participation in processes?


It would be an interesting graph.

Imagine the product "Mobile Telephone". It is used in the production of everything, at the moment.

Hawkeye_Pierce (#61) "P.S. Re #58. Wasn't Jeremy Bentham the arch Libertarian and key proponent of repealling usury restrictions? Does it not all trace back to him?"

Yes, but we've learned a few things about human behaviour since then, i.e that genes account for diversity - ergo, we have to treat people (most of us in fact) like children or invalids in some areas of our genetic expression. That is, we need to take care of each other!

I am beginning to think this is a blog for dunderheads ;-)

55 JJ

If he was Jewish too then why didn't you say so? Here I was thinking that with the names Dexter and White he was a post-Soviet Russian Trotskyite racist. There's not a lot of that about these days.

I am glad you raised the idea that it is genetics rather than their church which defines people. Where does culture stand in all this? How do you define the rise of Christianity in the late Roman Empire and in territories outside the Empire? Late Roman and Medieval heresies? The Reformation? How would you define the Enlightment? How do you define ideas? How do you define cultural change? Do our genes then keep changing? As humans are our bodies perpetually on the boil? Can this explain cancer, dementia and depression?

I am sorry but this is all just another version of predestination. Are you a Presbyterian by any chance? You are arguing that historical determinism is written into the human genome. Are you a Marxist by any chance or will just Hegel suffice?

How about a dissertation on post-Hegelian post-Calvinism?

Is the picture big enough now?

What this has to do with the banks trying to sell us back the debt they incurred and got us to buy off them in the first place is beyond me? Whilst I am happy to discuss the cultural implications of this from start to finish I am unable to see what genetics has got to do with it other than the fact that the human race is driven alternatively by greed and fear.

I would suggest some more reflection on the human condition would suit more than some rigid idea that looks like it pressages some new Dark Age made more sinister by perverted science. That last bit I pinched from my Dad's boss from between early 1940 and late 1944.

mrsbloggs13c2 (#67) "Thank you for your polite attention to my childish ramblings."

I evidently didn't make much of an impact on them though did it? Those childish ramblings are still pouring forth. ;-) Look, every time you go to a doctor or any other expert in anything, they know that they may get things wrong. It's just that they know more than the non experts OK? Like many posting here, I suggest you need to grow up a little and face reality. It isn't all just 'opinion' out there you know! ;-)

GIVING CREDIT WHERE IT'S 'DUE'

stanilic (#70) "Can this explain cancer, dementia and depression?"

Yes. Didn't you know?

"I am sorry but this is all just another version of predestination."

So? Get used to it. Read Beyond Freedom and Dignity (warning: it's very non Jewish ;-)

"What this has to do with the banks trying to sell us back the debt they incurred and got us to buy off them in the first place is beyond me?"

Oh dear. You wandered off what I said with all those silly questions! I said a return the traditional banking will mean an end to credit. I said lots of silly people should not get credit or credit cards etc. We are producing far more of them genetically, and when we are not doing that we are importing them!. I gave some limks to make it clear what I was talking about, and lots of you nitwits started talking/complaining about who knows what instead of addressing what I pointed out. Then you start complaining when I answer your daft questions ;-)

Maybe none of you should get any credit. You'll just spend the money on really daft things which make matters even worse! It's a supply and demand thibg ;-)

Culture? Have you seen/heard what passes for art/music these days? Give credit where its due.... ;-)

61 Hawkeye_Pierce

Benthem was what was called a utilitarian; a philosophy which had its origins in the late seventeenth century. It determined that satisfaction was the sole factor in human contentment and that moral purpose was defined by outcomes beneficial to humanity. It probably underpins the Whig interpretation of history and the concept of human progress. It is essentially a hedonistic belief. As such it has only a small parallel with libertarian ideas which tend to prefer a more puritan, simplistic approach.

Like all ideas utilitarianism developed its horrible aspect of which workhouses and the Great Hunger in Ireland are but two. Once you get contemplating human happiness one always gets into conflicts and questions of priority.

I am always amused at the idea of Jeremy Bentham, stuffed and mounted, sitting in his cupboard at University College, London. Is that the sum of human happiness? Possibly!

Philosphy is fun, but really the only thing that matters is what works.

Probably the production graph is a bipartite multigraph. Processes and products for vertex sets, with different edges for whether we are talking about mass of a product or kJ energy.

News out of the United States today is not good. The stimulus package, the cash for clunkers car programs have not worked well to stimulate the economy. The only thing Geitner could say the other day was that things were much worse when Obama took office, much worse a year ago when the crisis reached its peak. Maybe true but to suggest that the US economy is on the road to recovery is at the very least premature. It is likely things are similar elsewhere including the UK. Purchase of news cars is falling. Many of the purchases of cars were merely accelerated to take advantage of the offer, they would have been purchased in the near to mid term future anyway out of necessity. Capital investment is not returning, I can see that clearly in my industry. The problem is that money isn't flowing into the economy nearly fast enough. The tepid rate of money creation (based on what was destroyed) has hardly even begun to compensate for the losses that were suffered when the financial system collapsed. Until it reaches a comparable order of magnitude, there won't be any robust recovery. When it does happen, there will be massive inflation. Banks along with other creditors will pay the price for foolish lending in the past one way or another. That includes China. Continued recession/depression or inflation. Politically, the continued recession is unacceptable in the US because next year is a mid term election. The Democrats must show some kind of progress in fixing the economy or they will lose control over one or both Houses of Congress. The government has played every card in it's hand but one, the one it is most fearful of playing, the only trump card it has that will work. We need a massive infusion of new cash to write down all past debts. That it will deflate the value of the currency and bring massive inflation is the price that will have to be paid for the equally huge blunder over the past two decades. Inflation or depression, that's the alternatives facing the government. The choice is clear and the time to make it has run out.

72 JJ

So our bodies are perpetually on the boil: always changing, altering, amending themselves. How medieval! How is your bile today?

How is it then that my brother and my cousins get cancer and I don't? Work out that non-simplistic puzzle will you? I have and it has little to do with genetics. The answer is that unlike them I do not live a modern lifestyle.

Behaviour, behaviour, behaviour!

It took me twenty years to get rid of the old predestinarianism and now you want to dump another lot on me. Sorry dear, but this has a rather old fashioned aspect to it. Since I do not live a restless modern life I tend to be familiar with the old ideas and the psychological mindsets that they embody. This is where you and I will keep tripping over each other: I have met you before.

You will next be saying that criminality is inherited and determined by the shape of the head. Where have we heard all this before?

As I have said previously the expansion of further education has a lot to answer for: all those people with certificates who believe themselves to be superior to the rest and have a restless determination to prove it. There isn't enough space for all these self-assumed clever people. It will end in tears, I know it.

As for credit I don't use it. Credit is for you clever, restless people with your modern lifestyles. It became apparent to me some twenty-five years ago when I wanted to buy a car that the merchants were not selling cars but credit. This immediately creates a false value to the article the purchaser wants. It was then I knew everything would, as I have said already, end in tears before bedtime. My suggestion is that you all slow down and take a more measured pace to life. Cash is wonderful!

Sorry JJ, you think you are the solution but you are just another part of the problem. Now that was a good rework of an old hippie slogan, wasn't it?

JJ

You have alienated everyone and have failed to disseminate your message! (Which you know, I believe to be wrong and ill founded.) I cannot imagine that anyone, even you, could not understand this from the responses that you receive. I marvel at how polite people are towards you (particularly given how arrogant and rude you are towards everyone else) and I think that says a lot about human kindness - but you are trying everyone's patience (it appears from the forgoing 75 entries).

Please get back to economics rather than twisting everything to your own (misguided) agenda.

stanilic (#73) "Philosphy is fun, but really the only thing that matters is what works."

Agreed. So, read 'Beyond Freedom and Dignity', 'The Bell Curve' and Rachlin's book on self-control (he co-edited a collection of Herrnstein's papers on Matching too).

stanilic (#70) On the subject of Dexter-White, look up 'rats' and 'polecats' in the context of VENONA. ;-)

#75. MarcusAureliusII wrote:

Hi Barbarius,

So clunker cash does not stimulate the US economy! What would you like, a couple of thousand dollars for the poor to spend - given that you have to be relatively wealthy to pay the rest of the price of a new car - cash for clunkers is a middle class subsidy!

The same goes for our UK scrapage subsidy - a middle class subsidy too.

The only thing I can see it is favour is that it is not a direct subsidy to bankers.

There is a great fear of giving money to the people who actually need it on both sides of the Atlantic. I am not sure what we are all afraid of - perhaps that they would spend it! (Although the Australians did try giving everyone cash and I am not sure that worked either.)

The problem with all these schemes is that people's reaction is not to spend as they are frightened what may happen next - this is reflected in the increased savings ratio here (I don't know about the US - can you help with the information?)

It seems the World is anticipating(discounting) the huge jump in inflation that your government is scared of - and you are right about it being a 'solution' to historic debts - the problem is of course that (hyper)inflation is almost impossible to manage!

I fear that the choice that you present of "Inflation or depression" is wrong, and that we will get both. The huge destruction of capital that has occurred (and was 'manufactured' by) the banks must be paid for one way or another - and in the end every way hurts the people just about the same!

Dear JJ

When Master Bloggs ended up in hospital recently, the 'opinion' given by the 'expert' was totally wrong. This non expert used her brain and fortunately I did not have to face the already understood reality that life hangs by a thread.

My version of grown up involves making the best of today because we don't know what tomorrow will bring and by that I do not mean debauched revelry 24/7. It means learning from yesterday and planning for the forseeable future. It means assessing the potential implications of ones actions. It means working with ones neighbours to improve the comfort and security of their lives. It means being well mannered and caring and decent (however you define this).

It wouldn't include referring to 'virtual' strangers as nitwits and dunderheads.

Have a great evening ;-)

I'm off for a drink with friends.

Yr friendly neighbourhood simpleton

Mrs Bloggs

stanilic (#76) "How is it then that my brother and my cousins get cancer and I don't?"

a) maybe you had a different father (womnen lie) ;-)
b) your mother and father each passed on half their genes, hence sibling differ, it's simple.
c) genetics and probabilities goes hand in hand. See Fisher.

Your tone/impudence annoys me. I should be charging you a fee. Some here at a premium. I'm not arguing, just giving you a very basic education. There is a lot of material out there. It would take years to enlighten you. That's how long it take sto do degrees in genetics, even undergrad courses!

You are clueless. Really.

John_from_Hendon (#77) "You have alienated everyone and have failed to disseminate your message"

Only the very arrogant, clueless people like yourself. You assume too much from limited sampling. Brighter peole will be smiling at your naivety. Elsewhere thousands of people across the world are doing degrees in genetics etc, labs across the world are screening millions every day. You just don't know any of this. Yet you keep posting abusively. All you are doing as a consequence is making yourself look very silly.

stanilic (#76) "You will next be saying that criminality is inherited and determined by the shape of the head."

Yes, it runs in families so does mental illness. Didn't you know? It's not the shape of the head, but the structure/function of the brain. That's driven by genes. See the PPO project and Brown's recent proposals on heritability and how best to deal with it.

Too much credit is given to too many daft people...

John from Helldom, not only are you invariably wrong, this time you are even incoherent.

"#75. MarcusAureliusII wrote:"

Wrote what? I don't blame you for not reading your own postings. I find it a waste of time too. But since you choose to not only insult me but spread your evil lies and errors, I have no choice but to endure the pain of reading them so that I can correct you, if not to educate you than to save some poor misguided souls who might not be on to your nonsense and fall for some of it.

For a nation that is a large net importer, in times like these protectionism would be a boon...for itself. The US government has allowed American corporations to circumvent a century of legal progress by labor unions, consumers, environmental advocates by exporting jobs to places where they can abuse and exploit local people who don't have such protection. This has been rationalized under the lie that somehow protectionism created the great depression in the 1930s. The truth is that it had nothing to do with it. The depression of the 30s like today's depression was created by vast amounts of easy credit advanced to people to buy a class of assets (stocks in the 1920s, houses in the 1990s and early 2000s) where the assets themselves were the only collateral for the credit. When the inevitable bubble economy in these assets collapsed, the loans defaulted because the borrowers didn't have sufficient other assets to sell to pay back the loans and the creditors went bankrupt. The housing bubble wasn't created by the banks, they were merely the instrument of the government whose misguided Robin Hood mentality wanted everyone to own their own home even if they couldn't afford to. The recent collapse was compounded by the fact that the credit itself became the object of other speculative investment instruments which were heavily leveraged betting that the loans would be paid back. Protectionism in the US would force American companies to invest in American jobs or risk losing domestic markets to others who do. The tarriffs should be high enough so that imports are highly uncompetitive against domestic products. This of course would badly damage exporting nations like China but Americans shouldn't concern themselves with that. It would be China's problem.

There is much work that needs to be done in the US. For one thing its entire private and public physical infrastructure has been allowed to deteriorate badly. Major capital investment in all sectors needs to be done. Pump priming the economy in this way through direct investment in teh public sector and tax incentives in the private sector is the best way to put lots of money into circulation. For instance, about 70,000 bridges and overpasses need to be built. Most of the electric power grid needs upgrading or replacement. All 100+ nuclear power plants in America are approaching the end of their useful lives. Preference should be given to procurement of basic materials like steel up to the full capacity of the nation's remaining facilities from domestic sources and encouragement of building new ones here in America should be fostered by tax credits too. Also heavy taxes on imported automobiles, consumer electronics, clothing, and other once thriving American industries that have been exported should be imposed. It's time to bring America's capacity to generate wealth back to the United States and tell corporations that they must decide whether they want to be domestic or foreign companies. They've gotten away with murder for far too long. Would this bankrupt the rest of the world? Maybe.

JJ

You are obviously highly intelligent!

WWhat is your IQ and profession.

You must answer this...or you won't be taken seriously!

"People who think QE is part of a grand conspiracy to prop up the government will have to find place in their theories for the G20's reform of bank capital and liquidity standards as well."

Well funny you should say this,,, but after viewing the BBC program about the crisis, reading this article and writing a blog post I have a theory which might just be so far fetched to be true.

What if this crisis has been waited for, longed for, even engineered as much as possible to happen.

I was thinking while fishing today about the Conservatives failure to maintain the Pound at parity with the Euro many years ago,,, and it twigged.

What if when Labour came into power they realised the failure of governments had in some greater part been as a result of movements in teh markets against government policies - much as the conservatives had concluded about trade unions. The game of catchy monkey began,,,

When you consider that it was clear foriegn wholesale debt was being pumped into the housing market from Bank of England records - all parties did little to nothing about it. But they must have known and seen what was happening. Even if they themselves didn't spot it, gurus in the background must have. As must have senior civil servants. As must have the Bank of England - after all they USED to be monitoring this kind of thing and MUST have said something about it.

Think about it, even as the bubble stalled in 2005, more and more packages were introduced to keep the money flowing by banks. The banks couldn't help themselves only seeing the lure of money, organisers of their own doom. The government just let it happen, even 125% mortgages and sub prime.
From a political perspective it was ok because taxes just kept rolling in and the economy boomed - ensuring the government in power reflected in the glory of their presumed success.

Here there could be two lines of thought:
1) We don't care about it, make hay while the sun shines and clean up the mess when the good times end,,, as in all previous crashes.
2) We don't care about it, the hay is great but it's all going according to plan.

The plan being to gain political control of the banks.

No government could have afforded to buy the banks before the crisis, in fact if you think about Gordon Brown's dithering statements and the dithering in the house of representatives it was all a waiting game. Putting funds into the banks COULD have been done, buying toxic assets COULD have been done, but this wouldn't have allowed much of a stake in the banks as share prices were too high. Of course fixing the problem wasn't what was really needed, stopping the source of the problem WAS.

No action came until bank shares had collapsed - in fact Gordon Brown's plan could NOT have been implemented UNTIL bank shares HAD collapsed. I can't help but think of all the smiley faces as the European leaders lined up for a photo,,, well wouldn't you knowing that both a large unknown and periodic enemy/parasite has been well and firmly subdued ? Was Gordon's Plan in fact pre arranged sometime, potentially some years earlier ?

Think of the political power that comes with these international institutions. Trillions of pounds of debt spread across multi lateral borders, the political power of that money is immense.

Now consider the Lloyds/HBOS merger, isn't is far better the government controls a far larger sector of the banking industry by deliberatly welcoming the merger of Lloyds/HBOS - hence destroying Lloyds balance sheet and gaining control of that bank too.

Now consider Mr Blair aiming for European presidency, the complicit treatment by the French prime minister and the fact the money markets are in very bad shape to interrupt the pound joining the Euro. Ireland will have it's Lisbon treaty ratified before the Conservatives can gain power,,, will Labour have time to join the Euro ???

It goes even further than this, consider who can afford to invest in future technology. Banks and private individuals just don't have the capital, they can't even borrow it. All future investment has to have a large stake invested by government owned banks. If you consider the lack of investment in UK infrastructure over the years (transport/cars, roads, energy, telecoms) - all future profits will almost certainly have a large investment either made by government or government owned banks.

Even the banks which haven't been bought/controlled are now under implied control of government because public opinion will allow them to impose restrictions on operating practices that would previously been very disconcerting,,, allowing political manipulations to be relatively unhindered by markets if they so wish - or of course vice versa.


I have no idea if this is true, but if it was - what a gambit ! Shear genius if this was the plan all along - if not then very lucky.

Never-the-less, the position all governments are now in is unpresidented. Governments now have control over a large proportion of the financial markets and I don't think there is anything financial institutions can do about it.

It is a nice exposition of actual happening.
Only what I wonder, how long will it take to make
the transition? in other words to set down must debt?
I know the answer is not simple, but my guess is several years

Just my view

#85 MarcusAureliusII,

"Would this bankrupt the rest of the world? Maybe."

The true answer is probably not. A fully proectionist policy in the US would be matched by one adopted by an expanded EU and other trading blocks.

There would be a dramatic and necessary re-alinement of capital but complete collapse would not happen.

I have long agued that, contrary to political and economic folklore, protectionism is in fact the correct policy to employ in the face of a depression. However, as with QE, you have to know for how long and to what degree you are going to implement protectionism. You also have to be very aware that an unwanted (at least by the majority) consequence of protectionism is the development of a fertile ground for the rise of militaryism.

This comment was removed because the moderators found it broke the house rules. Explain.

#87 JackMaxDaniels

Go and grab a book called "The Dollar Crisis: Causes, Consequences and Cures" - by Richard Duncan .

What you describe has been forecast for a long time; it is not a plan so much as an awareness of an unstoppable juggernaut that has been in the making since Nixon ended Bretton Woods in 1971. It was then that the world switched to a pure credit money economy with floating exchange rates, and it was then that the giant trade imbalances between the US and Asia and the US and Middle East began. These trade imbalances shape the politcial/military situation today.

#83. JadedJean wrote: Rubbish and self destructive rubbish too...

Look JJ, if you claim to know everything then it is YOUR educational duty to put your ideas across in such a way as they are taken up - YOU have singularly failed to do so. This logically means that either YOU are incompetent at communication, OR that YOUR ideas are stupid, irrational and generally lack persuasiveness. In any case to blame and insult your readers is at best unwise and counterproductiove and at worst plain stupid, or of course you actually are the proverbial monkey reading Shakespeare. (That is that you are so incapable of understanding the material that you pretend to (mis) represent that your arguments are simply daft!)

MENDACITY OR IGNORANCE?

"The starting point, of our politics, is that all men and women are created equal"

David Miliband
Labour Party Conference
October 1st 2009

The starting point of New Labour's politics is empirically false. A lot of our recent socio-economic problems follow inevitably from this falsehood which is widely endorsed. Why is such a clear falsehood so widely held to be true?

Offended/alienated readers/posters here have to judge whether David Miliband and the rest of the government can truly believe this falsehood given the wealth of empirical evidence to the contrary. One trivial refutation is the government's own Special Educational Needs data, another is the Gaussian distribution of SATs at Key Stage 1, 2 3 and 4, another is marked differences in international PISA performance, yet another is the difference in male/female distribution of intelligence, especially in the tails.

These data and their denial have major implications for economics. They are neglected at all our peril. We have been led to ignore them for ignoble reasons.

It makes it much easier to make money at the expense of the vulnerable is one reason exposure of the facts of the matter is so unpalatable to some, another is that exposure of the truth is the death knell to David Miliband's anarchistic politics.

#85. MarcusAureliusII wrote:

See here Maximus Cretinous Americanus, I was responding to the detail of your posting and I actually quoted from it!

Your response to my points and indeed question about the state of the USA savings ration are still unanswered - why? In the UK it is rather counter logical to see the savings ratio increasing when the return on saving is really negative and we are being offered money at essentially zero interest rates if we choose to borrow.

You pose the choice of "inflation or depression" (as I quoted in my previous posting, but you did not read) but it is my belief that we will get both (because of the size of the destruction of capital and way the bank bailout are constructed). You seem to suggest that the 'Government' has a choice that it is able to 'exercise' - I do not share that belief in the power of Governments - for a person who refuses to take part in democracy I find your faith in Government at one touching and at the same time tragically misguided.

By the way do you also dispute that the beneficiaries of the cash-for-clunkers / car-scrapage schemes are those people who can afford to buy new cars - i.e. the middle class and upwards - thus excluding the poor from benefiting from the financial assistance? (That is wealth redistribution.)

#87. JackMaxDaniels wrote:

"The plan being to gain political control of the banks."

Unfortunately it has turned out that, as 'banks are too big to fail' the banks have control of the state!!! (Don't they?)

#91

Sounds like an interesting book.

The move away from gold as the monetary base to a fiat monetary regime is not the underlying cause of the economic crisis.

This was how the falling profit rate from real economic activity (i.e. profit from the circuit of productive capital) has been hidden and transformed into a financial crisis.
The root cause still lies in production and the need to devalue capital.

In just means that the resolution today will most likely come through inflation and possibly war.

BLING

BankSlickerminustheR (#86) "You must answer this...or you won't be taken seriously!"

Those who do not take what I have posted seriously are not very bright as the evidence is out there for anyone to look up if they are bright. Appeals to people's personal qualifications etc is an ad hominem (it has two sides). We've had enough of that destructive, narcissistic, celebritism. What is the case will not cease being so just because some silly, ignorant people don't believe it to be so, but their behaviour is useful heuristically to illustrate how the problem manifests....Don't be misled by the absence of the brighter people not commenting..

#65 Frank

"Sometimes I wonder if the ecosystem isn't some vastly sophisticated supply chain left behind by a previous race of beings."

Aha! What a wondefully eloquent way of explaining it! All of natures wonders are our fuel, especially the fossilised bodies of trillions of earlier lifeforms. Oil reserves are natures bounty from the evolutionary war to develop the eye. The goat is our way of surviving in environments with fibrous plants - see "The Last years of ancient sunlight" by Thomas Hartmann.

I'm with you up to the point where we extract things from the moon or the magna. All of these resources are stupendously energy intensive. At the moment there is no economically (Energy Return on Energy Invested) viable alternative for organic fuels. It was formed from billions of years of sunlight.

#68 Keep up the ABM work.

Here is an outline of a macro economic model that I put forward in early Aug:

https://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/08/qe_lives_on.html

The 2nd half of this post explains the main premise and the link has more detail.

Perhaps it is similar to what you are asking, but the emphasis that I place is (surprise, surprise) on the primacy of energy sources (food, wood, animals, coal, oil etc.) as the very fuel of ALL economic development.

Thought for the day:

https://en.wikipedia.org/wiki/Transactional_analysis

Has anyone come across this before?

John_from_Hendon (#92) "Look JJ, if you claim to know everything then it is YOUR educational duty to put your ideas across in such a way as they are taken up - YOU have singularly failed to do so. This logically means that either YOU are incompetent at communication, OR that YOUR ideas are stupid, irrational and generally lack persuasiveness."

Try to transpose that to a child in a classroom which is out of her/his depth. Some parents behave like you do. They blame the teacher for their child's inability to grasp what they are told in class. All that's happening here in this blog is that you can not, or will not, follow up the links which are provided whereby you too could learn what the truth of the matter is. You have a strong sense of entitlement. You appear to think that it is incumbent on me and others to serve everything up on a plate for you. That is illustrative of your narcissism, not my incompetence. In fact, I find your recalcitrant, incorrigible behaviour here very useful as it illustrates by example what we are all up against in these dire economic times.

I am being quite serious about this. I analyse behaviour. You should take that on board....