Old Etonians

My dudgeon for Elites is far from restricted to Old Etonians.  I'm an equal opportunity dudgeonite. I surmise that the recent reappearance within UK politics of, free-market extolling, public school boys has more to do with the rest of the the Elites adopting an extremely low and chagrined profile due to the disastrous outcome of their prolonged ascendancy - and thereby avoid accepting the blame. Given the political variegations of the assorted national polities, now financially bereft and increasingly austere, during the time our present problems were being built - Republicans in the USA, Fine Fail in Ireland, Labour in the UK - it'd be unfair to apportion blame, within the whole mess, to a particular political party. A time when all politics were in substance economics.

But let’s not wallow in Political and Economic Theory, Dogma or Mantra and take a look at reality. Assorted Finance Ministers, Secretaries of Treasury and Chancellors of Exchequer were not so much guilty of wilfully ignoring the Economic entrails, as read by Chicago School economists, but believing in them. That an infallible vein for laying-off risk and accumulating profit had been mined by the brilliance of the same folk that brought us Game Theory, infinite extra universes and a couple of dozen additional dimensions. Not surprisingly these "Mathturbations" led to the same belief as a soldier going into combat “It’ll be some other guy”. As a result cosmic quantities of leveraged debt were created based on financial instruments so exotic that not even those people that created them understood their ramifications. We call these people bankers.

Now, the argument goes, if the “invisible hand”, of Adam Smith fame, is perfectly manicured then regulation isn’t required. Chief manicurist Milton Friedman told us this. Unfortunately, and obviously, he didn’t have a plan if the hand were to display only one erect finger. The finger now brandished at the tax-payer. From the tax-payer’s point of view maybe it is time for them to make use of a good crisis themselves and default, instead of paying- off light years worth of somebody else’s debt. Either that or continue to fire 18,000 pound a year public sector apparatchiks - about 1,000 of whom equal one banker's bonus. Permitting the market to regulate itself while inflicting austerity on everything else has resulted in Retail sales in the UK plunging 3.5 percent in March, the sharpest monthly downturn in Britain in 15 years. The Centre for Economic and Business Research, an independent research group, forecasts that real household income will fall by 2 percent this year. That would make Britain’s income squeeze the worst over two consecutive years since the 1930s. The bank's incomes meanwhile..... 

Since the day the US invaded a sovereign country to protect a corrupt fruit company we've been fed the fiction that democracy is the bride of capitalism. The Chileans, Argentineans and Brazilians might have a different view. A view that will likely be reflected in the result of the next UK General Election. While the great unwashed are reeling from the impact of exaggerated financial ruin they are distracted from challenging present policies tailored to advance the very system that ruined them. To effect these policies it is mandatory to defile the efficacy of all state owned or run enterprises, services, facilities and extol the benefits of corporatist free-market competition in their future provision. Which is why the unwashed are paying more for their electricity, water, transport and soon healthcare, education and the requisite increase in the cost of imposing law and order while implementing "liberalisation".

My advice would be to have Meteorologists and Cosmologists do all future economic planning and forecasting, they use the same mathematical models, and appear to be randomly more accurate at predictions than Economists. The Economists, meanwhile, can look around manifold universes and dimensions for the missing 75% of the Universe's matter - they also might find where all the money went.

Sadly, thanks to Globalisation, one cannot escape the vagaries of our present economic malaise by transferring continents. Especially while a diarrhea of money squirts into a failed global banking toilet. While I have absolutely no philosophical objection to capitalism I do have many concerning it's present practitioners.

At our time in life having invested decades of increasing deductions and payments towards the provision of a comfortable and cared-for retirement it appears that we now won't get it. I'm more than just a little irked by this. What I won't now stand for is for some politico-economic fundamentalist (public school or otherwise) to give what remains of it to a corporation that'll turn my contributions into their profit. The fallacy that Baby-boomers (11 years from 1946 to 1957) will bankrupt the system is used as an economic shibboleth to reduce entitlement. Even if we all live 10 more years than predicted the populations will dramatically decrease below threat levels before financial oblivion results. I was talking to a Tax theorist the other day who explained that the main problem is the asymmetric tax-burden between personal and corporate tax levels. The main burden for the provision of entitlements falling upon the personal rather than the corporate purse. While the average corporate tax is falling towards 20% the personal remains around twice that. A further reduction in corporate taxation, as not surprisingly is recommended by the corporatists themselves, would only exacerbate this imbalance.

The trickle down is going up.

Middle East

Brian,

The illusion was that the regional political structure was fundamentally stable in the first place. Had it been there would be no need for repressive regimes. When we talk of stable what we mean is one that suits us. Our fantasy team of terrorists will expand exponentially as we see the results of this "democracy' and we manoeuvre to reverse it. Even as I write, I surmise that, our highly trained teams of think-tank strategists, spooks and assorted uniforms (given their inability to predict any of this they are actually just ill-informed pragmatists) are discussing the requisite actions, military coups and suitable despots that'll be required to protect and preserve our strategic and economic interests. We're probably going to hear a lot about Sovereignty while the Saudis, Emiratis and Kuwaitis kick the shit out of their democrats and lock them up. What we do if the Saudis open fire on their population or roll tanks down the causeway into Bahrain will be interesting - probably nothing. The theoretical threat from Iran will no doubt reach screaming pitch.

It is always important not to believe anything that comes out of these events - babies ripped from incubators or bombing your own civilians. From what I can extrapolate the Kaddafi regime has so far bombed their own military stores to prevent them falling into the other side's hands - understandable, the odd collateral civilian death not withstanding. What we're seeing is tribal warfare. Fortunately for us and unfortunately for Kaddafi his tribal bit doesn't have the oil. Which is why we appear to be a bit schizo about the goings on there - the outcome in his bit doesn't matter. The Brits et al will all be heading to Bengasi. BP is particularly vulnerable to the outcome in Libya - especially since the Russians changed the rules and messed up their return on investment there. And we're expected to believe that the Blair government rapprochement with Kaddafi wasn't a cynical oil driven deal. Can anyone explain to me how Blair is now supposed to bring peace to the middle-east?

While we thought bailing out the banks would solve the global problems and return us to the status quo - boy were we wrong. We're now broke, ineffectual and confused and everyone else is unhappy and on the streets - which is possibly where we should be too.

Best,

Egypt

Brian,

This is yet another example of blowback from 65 years of the wrong, primarily US, foreign policy (abetted by the former colonial powers) - support for (and installation of) totalitarian rulers in the post-colonial world that can be bought off to stay on our side of the cold war and protect our economic interests. As part of this policy any form of Nationalism was conflated with Communism as an excuse to suppress any form of democracy that might lead to the "wrong" folk getting elected and doing harm to our economic and strategic interests. When the wrong guys did get into power we orchestrated or perpetrated their removal. This is a self-defeating mechanism as after enough political repression the only ones left standing are the extremists - all other forms of more democratic opposition are driven out of the country. As a result of continuing this policy, after Communism went away, any sign of Nationalism from the remaining "opposition" became rapidly branded as "terrorism". So it behoves the supporters of this policy to find exaggerated threats from militant Islam under every bed. The new McCarthyism.

This is nothing new - Churchill was saying the same things a long time ago for more or less the same reasons that the Crusaders said them even longer ago - as shown below

 "How dreadful are the curses which Mohammedanism lays on its votaries! Besides the fanatical frenzy, which is as dangerous in a man as hydrophobia in a dog, there is this fearful fatalistic apathy. The effects are apparent in many countries, improvident habits, slovenly systems of agriculture, sluggish methods of commerce, and insecurity of property exist wherever the followers of the Prophet rule or live.
 
A degraded sensualism deprives this life of its grace and refinement, the next of its dignity and sanctity. The fact that in Mohammedan law every woman must belong to some man as his absolute property, either as a child, a wife, or a concubine, must delay the final extinction of slavery until the faith of Islam has ceased to be a great power among men.
 
Individual Muslims may show splendid qualities, but the influence of the religion paralyses the social development of those who follow it.
 
No stronger retrograde force exists in the world. Far from being moribund, Mohammedanism is a militant and proselytizing faith. It has already spread throughout Central Africa, raising fearless warriors at every step; and were it not that Christianity is sheltered in the strong arms of science, the science against which it had vainly struggled, the civilization of modern Europe might fall, as fell the civilization of ancient Rome."
 
Sir Winston Churchill; (Source: The River War, first edition, Vol. II, pages 248-50 London) 
 
In the case of Egypt - after the failed (stifled by the USA for its own strategic benefit) attempt to re-occupy it militarily by the Brits and French when an ultra-Nationalist Nasser nationalised the Suez Canal - it headed into the arms of the USSR - and not because it wanted to become Communist. Everything from that point on has been to ensure that no leader with unfavourable to the West leanings held power. Threats to that power were repressed violently by one hand while the other hand accepted enormous payments that enriched the military, commercial and political elites. This encouraged them to toe the line with our foreign policy objectives - peace with Israel being just one of them. The West saw this as a benign regime. In reality Egyptians lived in a dictatorial Police State - albeit a handy one where we could send terrorist suspects to be tortured. Repression was justified by the threat of militant Islam in the form of the Muslim Brotherhood - however small that threat, in reality, might be. What the population wanted was neither here nor there - until we announced that our Foreign Policy was to export Democracy to those that didn't yet have it - we justified our invasions of Iraq and Afghanistan as bringing democracy to them. Unfortunately Democracy elected Hamas in Gaza. You reap what you sow. The vast majority of Egyptians spend their time thinking about survival not politics - they are too poor - Religion is the politics of survival. As yet Egyptian politics is the realm of a few million (at most) of the upper and middle (educated) classes - the elites and those that want to be elites - so the first move will be dominated by secular thought and economic self-interest. The religiously represented poor will garner a minority of the vote. We will do everything we can to ensure that the outcome suits us and when, eventually, the poor democratically elect too many religiously inclined representatives we'll attempt to orchestrate an acceptable take-over of power from them - and if that fails we'll consider invading the Suez Canal Zone - ably assisted by the Israelis. Although the Canal is not as important as it is made out in the general fear mongering of the moment - it was closed for years while the Israelis occupied the Sinai and nobody came to ruin - we invented super-tankers. Nobody asked the Israelis to withdraw to reduce the price of oil raised by the Arabs in response to the occupation of Arab land. Today the real unknown is how many Middle-East, North African countries may go for a popularly demanded regime change all at once. We might be able to have some influence in a few but not all at the same time - as I've said before Globalisation contains the seeds of its own demise. There is the possibility that a wrong move by us will encourage a widespread and unstoppable independent nationalistic response in the face of overt or covert outside interference. Sticking US forces into the oil states could well backfire. A sort of "we saved the village by destroying it" moment.

So don't speak too soon about what the Egyptians as a whole will eventually do under Democracy - when you're fed-up being poor and you're only refuge is Religion and you are the majority in a democracy there are only two ways it can go - Theocracy or Socialism - both heavily flavoured with Nationalism and Nationalisation. How long it takes for this to come about is the period that permits real reform to modify the popular intent. The post-revolutionary Iranian Govt. had secular elements for about the first 3 years. The West's policy towards Iran did away with that.

We're not howling about Democracy in the major oil exporting countries - heaven forbid that real Democracy there elects those that would nationalise their oil companies. What we would like is for the rulers there to set up a few Democratic looking institutions and adjust their attitude to women. (I could go into my glib theory here about feminism being the root cause of Al Qaeda - but I won't). They'll probably do a bit of tinkering with Democracy under our direction. Meanwhile we'll supply them with enough arms to get some of the money back. The threat from Iran will be used widely here. Unfortunately we don't have enough military force to invade everywhere at once so we'll need to keep a few repressive regimes in power - fuck democracy when oil is at stake! Outside of the oil exporters the other Arab countries don't have any over-riding strategic importance - although the military-industrial complex and some export businesses might argue otherwise.

Which brings me to the question of who actually sets the West's foreign policy? Since the end of WW2 the US policy (recently embraced by others) has been militaristic and is now even more so since the check of the USSR vanished. After the World Trade centre fell down the world's biggest office building remains the Pentagon. Where commanders sit and approve drone launched attacks on wedding parties. The money spewed out by the Pentagon has militarised American society. By Eisenhower's time the Pentagon's national influence extended to things economic, political, martial, academic, scientific, technological and cultural - hence his military-industrial complex warning. It continues to this day but should be extended to include the military/security, industrial, academic and political complex. Illustrated by the unquestioning increase in defence spending as the US wallows in debt. A reliance on the long term efficacy of the Neocon strategy relies on this continued haemorrhaging of money into the military's coffers - but it only works if there is a military solution. There might be a touch too much "democracy" around for that.

Best,

Derivatives

Brian,

Develop your thesis as much as you like but you're regurgitating the fiscal chimera that got us here in the first place. Leverage that results in inflated value creates real debt fictionally secured on phantom assets . Unfortunately this particular free-market mechanism flourishes because the more inflated the value the better the return. Nothing to do with real world risks or expectations but a simple bet on a profitable outcome - using somebody else's money.

It is as if I borrowed a tenner from you to place a bet at even and agreed to pay you a pound back every month for a year - I win my bet, pocket the money and borrow another tenner on the same terms from you and now from all your mates as well while placing bets at even (lowish risk) all over the place - still pocketing the money from my winnings. Because I'm making money and the odds are low risk you all join in and there is so much money on the even bets that the odds shorten. To keep my returns up I now make riskier and larger bets - to reduce my exposure I lay-off some of my bet back to you, agreeing to share my winnings. We continue to make riskier bets and lay-off more of them - in fact we package our bets into financial betting instruments - these take on a life of their own and are are bought and sold before the bet even takes place. We wanted a high return on our money but Sillybank just wants 1 to 5 as it has billions to invest - so it can pay us more than the bet cost us and still get its desired return. This makes sense to us so we forget about what we are betting on and just create financial betting instruments and do very nicely thank you. Because the bets are riskier and the returns not so good one day we can't sell our betting instrument - so we buy it back at the inflated price we wanted just to keep the market up. We also decide, as cover, to bet that, as we can't sell this one, the other bets will lose. So now we're betting against ourselves. We convince you to buy a bet against your bet on the basis that you can't then lose. We package the bets against the bets into yet another financial betting instrument and then slice and dice them into bets and bet/bets and sell those too - the logic is so smart that we even buy them ourselves even though we don't know who made the original bet. So does every other punter. So now we've taken your original tenner and leveraged it into unknown territory - all on borrowed money. Until there are so many bets and counter bets that the value in the original bet bears no relation to the present price. Then one day you ask for your tenner back because you've bet all your liquid money.  I don't have any cash as I spent it all - so I try to sell - nobody wants to buy - I try to borrow the money - nobody will lend it to me - I cry to the government for a loan - they give me enough money - I give you your tenner back - we all pretend it didn't happen. So how much is a market now costing the world's taxpayers trillions to support really worth? Your answer seems to be "who cares" so long as nobody asks. Otherwise known as "Confidence in the Market".

There are no banks that got it broadly right but some that got it less broadly wrong. They'd be toast if their counter-parties hadn't been bailed out. This isn't about defaults by customers its about defaults by banks. Its a cluster-fuck.

A bankrupt country is one that can't afford to employ, educate or sustain its citizens.  Can't afford to invest in infrastructure or support its services and industry.

Let's look at a recent example in the US where the self-regulating (more like self-deluding), free-market economic model rules the day. BMW are going to open a plant there with auto-workers queuing up to take jobs at $15 an hour while in Germany the same auto-workers are paid $30 an hour - never mind comparable health care or vacation time - the present German economy works while the present US economy doesn't. So which model would you choose? Given your present stance it would appear to be the US model. Back in 1816 Thomas Jefferson remarked that "I hope we shall . . . crush in its birth the aristocracy of moneyed corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country." To that add the Banks. He seems to have hoped in vain.

Some how or other you seem to regard the Mediterranean countries as more "corrupt" - than what? Leave Greece out of the picture - too easy. Italy functions despite the government - always has. Spain's banks aren't in as much trouble as the UK's and Portugal's economy is too small to really matter - unless you're a Port drinker. Bit hard to maintain a National high ground while submerged in debt - remember we globalised the system - they did it to become like us - and now they're in deep shit.

Either you accept that Germany will be the economic power house of Europe or take a hike. If you apply the same economic rules to National finance as you do to corporate finance - the guy with the money sets the rules.  Get off the corporation tax hobby horse - governments need revenue - especially if you want them to pay off bank debt. You're not going to convince many governments (other than possibly one in the USA) to reduce taxation in the foreseeable future. I suspect that Dublin will increase its corporation tax sooner or later under the next government - when it can blame the last one for it. Ireland did everything it was told and more to become the lauded Celtic Tiger - the canon of free-market economic growth - and look where it got it. A nation in an aspic of debt.

So while y'all sit besuited around the lunch table spouting big thoughts, over your Windsor soup, about the economy it might help to bear in mind that, based upon the prevailing model's principles, there isn't one - only the shadow. And for fuck-sake don't listen to bankers or economists. There is worse to come.

Best,

Bankers

Brian,

I told you not to listen to Bankers!! The debt was created by Bankers, both Commercial and Central. Repayment of debt created by cheap money can only be repaid by cheap money - any increase in the cost of money will only encourage default. The need to loan more money to countries faced with increased cost of money results in the debt is increased not reduced.  Any increase in interest rates will then only reward the Banks short-term and punish everyone else for the banks mistakes. So far all the Banks have learned is that if they get it terribly wrong the public purse will bail them out. Those Banks bailed out by public money are now to be sold - toxic loan free - at discount prices to outside investors - in some other country.

You appear to be stuck in the economic groove that punishing the populace to improve the market for business is preferable to solving the actual long-term problem.  More or less every country in the world borrowed more money than it was prepared to lend itself as part of spreading the risk - good old business school thinking - so now instead of one country sinking under its own debt it is in danger of taking everyone else down with it. Derivatives were the major - unregulated - way of exporting non-government debt - manifoldly larger than the combined government debt of the world - a large part of that was created bailing out the Banks. Derivatives are fundamentally Commodities based on the value of the underlying product - housing, debt, etc - nobody envisaged their future value imploding and if it did the risk could be theoretically swapped or insured out of existence. What a load of bollocks! When the music stops someone is holding the parcel and the music has most certainly stopped only to find everyone is holding a parcel - and they are all too afraid to tell anyone what is in it (a humongous economic turd) - so they look to government and the tax payer to give them enough money so they don't have to tell them how big the turd is. Unfortunately there actually isn't enough money around to make it go away. And this is the system you want to perpetuate? What benefit accrues from your cheaper loans if the country you sell to is bankrupt? Not so much Quantum Mechanics as a simple chemistry experiment that fails to react. While the uncertainty principle won't allow measuremant of where it is and how fast it is going at the same time - we know both of those things about the economy - very rapidly down the tube.

While the old rules laid down by the IMF and World Bank still dominate economic thinking - squeeze the cash out of the population (except the rich) and ownership of the assets out of the country - we are on a global hiding to nothing. Germany's industrial strength is based on the new EU members in the East surviving on money that Germany is lending to them. Similar to the US - China revolving debt. The UK manufacturing sector is double fuck-all compared to even 30 years ago. As to it being buoyant - ask the unemployed. If capitalism can't get its mind around the fact that the present iteration has failed it'll only get worse. Blind self-interest and the adherence to economic shibboleths won't create a market for a bar of soap if the consumer is too impoverished to spend. 

As to the issue of the Euro - it is the existence of the Euro itself. Britain, Australia and Canada can do what they like with their currencies, interest rates, assorted monetary policies and economies in general as they are tied to no external mandatory measure - not so within the Euro group. Domestic economic sleight of hand such as the Barnett formula faces insurmountable obstacles if introduced between contrasting nation states.  The good old days of Empire and the ability to impose and maintain the CFA and Sterling are long gone. The short-lived US fiscal hegemony over the world has resulted in their artificially cheap money driving both itself and its fellow liberal capitalist democracies into penury. All on the advice of free-market economists and Central Bankers that think like you.  Germany, if it is smart, will take a dive back into the Deutch Mark and drag along the other better run EU and non-EU european countries (which excludes the UK) into a new fiscal union and let the rest wallow in a Euro supported by France.

Bear in mind that financial regulation was introduced after a depression and removed before this one. Squeeze the electorate hard enough and they'll change the system once the present guys they deem responsible for the pain get thrown out. The free-market song sounds out-of-tune. Next time you have lunch with a banker ask him what the size of his bank's total exposure to all forms of Derivatives is and don't accept his estimate of exposure only to possibly toxic ones - they are all toxic given there is no market for them.

No Flies

Brian,

Way back when I told you that no matter how bad you think the economy is it is actually worse. At the time of the original financial collapse nobody knew where, or how much, the money was or who owed what to whom. As these hundreds of trillions worth of financial instruments work their way to maturity over the upcoming months and years the losses will have to be taken - that's what we're seeing. The bailouts enabled these instruments to be carried on the banks' books at close to face value in the hope of a swift economic recovery - faint hope. If any government insisted on banks 'fessing up to their losses like the Irish Govt is doing they'd all be in the same situation - skint - including your bank. The next Irish Famine will be a financial one. This is why the early enthusiasm for restructuring the financial system went nowhere - the realisation that by seriously taking the rotten one apart we'd all be ruined instantaneously. Recent events in Japan have sucked billions in liquidity out of the markets, a similar event in, say, California would put an end to them permanently. The term "confidence in the market" is not bandied about without reason as without it the trick wouldn't work.

Again, I've told you not to listen to politicians - you can never be too cynical. Hordes of Libyans heading toward Afghanistan? They've got no real idea who is, or how many are, fighting in Afghanistan as their only, somewhat insecure, area of control extends but a few yards outside Kabul - and that is so corrupt that any information coming out of it is suspect. Funny that we haven't heard about this until now - when it might support our position in selecting a regime change in Libya. That is not to say we'd do the same in Saudi Arabia even though they're largely paying for the Taleban. In all likelihood we're talking a few dozen, at most, maybe less, Libyans in Afghanistan from a population of six and a half million. About the same proportion as the IRA was in Libya or Lebanon. As there are no flights in or out of Benghazi or anywhere else in Libya how they are able to trail these guys at the present time would be a good question to ask.

The borders of Afghanistan weren't drawn by the Afghans themselves but by those trying to get away from them. I was unable to convince my employer at the time that the Soviet Union's invasion was the action of the good guys. Had we accepted that then the oil pipelines from the former Soviet "Stans" to the coast would already be in place and working nicely - rather than the impossibility they now are despite our best attempts to secure a path for them.

The no-fly zone and attacks on Kaddafi's troops are more about protecting oil installations from damage than assisting democracy. Democracy in this case being the ascendancy of one tribe over another one. One doesn't want a firefight in the middle of an oil terminal. If you're wondering where our special forces are .... so far the oil fields themselves appear to be untouched.  This military action has led to the inevitable requirement that Kaddafi now goes lest he punish the oil companies from participating countries by nationalising them in revenge - and also that what replaces him doesn't do the same thing. Remember that even at the height of Kaddafi's lunacy these oils companies were operating in Libya so they're none too concerned as to the legitimacy of the next government - so long as they're allowed to continue doing business as usual. Even a brief glance at the list of potential candidates from the former regime hoping to replace Kaddafi would exclude the possibility of democracy prevailing - especially if we can enlist the war on terror.  

An open letter to the Irish

Ah well now,

Youghal better move somewhere else - invade Poland

Der's fur an a haff millien of yez at de last count and dis week yer 7 billion Euros short - eye tink dat works out ata bout 150 million fur each one of yuh - an dats only in de first tree munths. Eye tink yud better be looking for some of dat Mexican drug muney. What you need is a branch of the Wachovia Bank.

Ever consider how the feck y'all got into this situation. The litany of services you've already paid taxes for that the great unwashed are no longer getting - healthcare, pensions, education and the additional costs for water, electricity, transport that at one time you used to own.  Never mind not having a job. Meanwhile assorted elites are making out, literally, like bandits - Wachovia Bank admitted to laundering close to 400 billion in Mexican drug money. Who foisted this fiction upon yourselves?

As an Irish rural property owner myself I'm less than impressed by headlines such as "Irish property going for a song". Which feckin song? I hope not one by them U2 tossers - none of whom appear to pay any taxes at all. Any chance of my moving to my piece of Connemara bog is obliterated by the prospect of the immediate personal inheritance of 150 million of current account debt - lessened, upon my arrival, by one four and a half millionth. Statistically ever fecker that you let emigrate just increases how much money those left behind owe - but who to?. It would appear to be them Germans mostly - so before the Germans follow their usual practice in times of economic hardship and invade Poland I'd rev up the Irish Army and beat them to it. There'd be enough Poles in Dublin to provide interpretation services - if you hurry.

Alternatively the Irish Army could be rented out to the rebels in Libya - they certainly look to need the help. Who'd pay might be a problem although BP would seem likely to want to chip in.

Speaking of black holes I gather that Youghal is rapidly becoming one among many to be found around the sainted isle due to Cosmic quantities of debt. My suggestion is that Ireland's debt be henceforth measured in Light Years rather than Euros - that way it is a much smaller, more manageable number. Advice on how to do this can be gotten from Argentina.

On another matter, I'd be campaigning to rearrange the acronym PIGS alluding to the state of certain national economies - Portugal, Ireland, Greece and Spain - to something less derogatory - such as GIPS or SPIG. This is the least one could do to fractionally relieve the embarrassment of having totally screwed up the lives of four and a half million people who had their heads up their arses simultaneously.

UK Economy

Brian,

It isn't looking good in the UK with 0.1% growth in the last six months and ONS figures registering a drop in manufacturing. In a familiar attempt to use an exaggerated crisis to introduce normally unpalatable policies (usually resembling unbridled capitalism) the Coalition has overstepped the mark and created a giant, possibly terminal, crisis for itself. It's policies have engendered outrage from places it might have expected to find conceptual support. With one foot now on the free-market brakes and the other in reverse - a posture not usually displayed on the playing fields of Eton - can we expect a sufficient wobble that'll have them off their policy bikes soon?. It has been said of Castilians that if you meet them on the stairs you can't tell if they are going up them or down them - the same could be said of the Conservative/Libdem coalition. Having reduced RAF capabilities they then ask them to bomb Libya. Who are these guys? 

It is fairly simple really - in order for manufacturing to grow more people have to buy more stuff. If your politically driven economic policies prevent this you're fundamentally stuffed - at least when following the present economic mantra. Do you really want your healthcare or education provided (or your wars fought) by a private corporation? Do you want profit or you yourself to determine what you're going to learn? Do you want your national census performed by part of the US military/industrial complex? Would you want News International to dominate the information supply to the nation. When taken to it's logical conclusion capitalism resembles communism in that all production is dominated by a few entities. For those looking for freedom and equality the market offer is choice and opportunity - provided you can afford either of them.


Best,

Portugal - more

Brian,

There are probably innumerable reasons for Portugal's present condition - and competitiveness isn't one of them unless you mean removing any chance of competition to the wealthy EU countries from Portugal. One cause may be the same as Greece's need to borrow vast quantities of money - off the balance sheet - in order to meet the required entry level debt band. Another is the cost to the national purse of the rapid market changes required before and after it joined. This would include the price paid for services subject to European regulation such as health, education, welfare - add to that the cost of all those now unemployed as a result of an "efficient" free-market. Exacerbated by the loss of government revenue from privatisation or internationalisation of ownership. Don't forget we brought them in so we could raid them. Rapid reform is the cause of this predicament and provides no solution. So parroting the usual World Bank, IMF, WTO, Washington Consensus mantra won't make it go away - ask 24 million Indonesian unemployed. But the main reason is simply that Portugal borrowed much more money than it's own paltry banks could lend it and ended up owing a large part of it to other countries' banks (and the banks that insured them - and ditto, ad nauseam) that now need it back but at an increased interest rate - rather than write it off - which in my view is exactly what Portugal, Ireland and Greece should do. It is the fallacy of self-regulating markets in a globalised world at play. If I were Spain I'd announce default before speculators killed my bonds, took all my wealth, and go for a Siesta. Better to suffer austerity for your own benefit than for that of some multinational bank. We'd go back to being a bunch of nation states and the only real losers would be those in the globalised banking industry. And of course the governments foolish enough to have bailed them out.

The panicked chatter now is for a solely Northern European Union as a result - excluding PIGS and Italy. A two tier union at best. I think we're seeing the end of the Globalisation era. And a very short one at that. Since the fall of the Soviet Union we have seen raw capitalism more or less destroy itself through the actions of it's strongest adherents. Crisis economics begetting yet worse crisis economics - all based on greed. Signs of this are to be seen in the Arab world - forced by repression to accept the austere economic dictates of globalisation they have rebelled. These are not the fanatics but the dispossessed looking for their fair share of the action - and why not. What we think is the natural order of things may not last forever. We've had a go at perpetuating it through exaggerated economic crises - which worked up to the 1999 WTO in Seattle. Then by armed force justified by equally exaggerated threats - hasn't worked in Afghanistan or Iraq unless hatred and corruption are the hallmarks were looking for. And now we've run out of excuses. Especially as we ourselves are falling victim to our own policies and practices.

Anyway, we haven't quite reached that point just yet. Ask yourself who benefits from an increase in the ECB interest rate given the economic suffering of numerous EU countries. In my view it is clear - why tip billions into these countries and not come out owning a large part of them - or at least the future profitable bits. So what we're seeing is a stab at the usual economic blackmail. Give us what we want or we won't give you any money. Although if enough countries threaten to default that may cause a rethink. My favourite mind experiment of the moment is that China decides to stop buying US debt and refinances the PIGS.

There is a difference between freedom and choice that defines our future. Freedom allows us to come to our own conclusions and make our own decisions - choice permits us to pick from someone else's. I prefer the former. Equality is universal, opportunity is selective. That's a tough one given our intrinsic selfishness but at the end of the day there is no existential justification for the extent of the inequality surrounding us - no matter which economic system we embrace.

Best,

Portugal

So now we can add Portugal to the ever-growing list of submerged economies. Is that the sound of cracked Castanet's I hear? Ola financial ruin Espana. When Spain goes - duck - in fact hide.

For the Portuguese govt. to have squandered 80 billion on its citizenry they'd have to have pointlessly tossed about a million at each one of them - seems unlikely. So again we're looking at the cost of retching money into a bankrupt banking system at the taxpaying public's expense and depravation. Unfortunately there is not enough money in the wide, wide world to do that for everyone - the banks have already sucked most of it up. Like continually putting ever more fuel into an engine with a cracked block - still won't go.

We're now at the point of asking the financially blind to lead the economically headless. The final result may be a pair of empty smoking shoes formerly the property of Milton Friedman. For those still mired in the illusion of the Washington Consensus on economic brilliance - fuck you very much.

On just how cabalistic the system has become the NZ government yesterday acted like a private bank and loaned money to a private company - a commercial TV and Radio company facing financial oblivion due to falling ad revenues and lacking sufficient security to get a real commercial loan - and did so, it would appear, after heavy lobbying by the politically well-connected owners and against the advice of it's own Treasury dept.! I'd like a Neocon explanation to that one. Adam Smith is spinning in his grave and so is Milton - and so they should be. Oh, and on the same day they also underwrote NZ's second largest insurance company. I think I hear Castanets clicking here.

You can continue talking to your politicians, bankers and economists but in reality they're as much, if not more, in the dark as anyone else - this is horrendous territory which they just can't admit having led us into. Bunch of tossers.

I'd be grateful to know as to how you'd resolve this - monetary easing? - austerity? - default? - running around in circles waving your arms in the air? - or simply sticking your head up your arse and hoping it'll all get better courtesy of, now reduced to one extended finger, the invisible hand. Unfortunately the invisible hand may be too busy tossing-off your politicians, bankers and economists.

Best,