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Everything posted by huw

  1. Real wealth comes from land and labour, which can't be packed up and moved. Consider the experience of an aristocratic Russian émigré in London, after his home country had stopped playing by the previous rules.
  2. A lot of us want the globalisation behemoth to be stopped. That's part of the process of changing the status of the "witch-hunt" groups mentioned in the OP. Trying to keep everyone in the style to which they've [we've] been accustomed while our wealth-creating ability is washed away by the Mercantilist/Globalist tide, is simply not going to work. The "gotcha" is that the globalist tide has temporarily floated our boats higher. The withdrawal of those temporary resources inevitably looks like a witch-hunt.
  3. He/she was asking about credit creation though. .
  4. Yep. What I'm really arguing for is a change of lending culture to emphasise investment over speculation/consumption, which needs a change of banking culture and a whole lot of other changes too. Maybe those changes won't happen this side of a proper depression/collapse.
  5. Or in a casino economy such as ours, the individual may be in NE or otherwise bankrupt. With loans made for productive investment, at least the plant will still be there*; in the case of a bubble asset like a BTL it will also still be there, but will require mark-to-fantasy valuation to keep the lender in a pretence of solvency. Makes no sense to me, or for the UK, or for the banks' shareholders, in the long term. Short term and as long as costs/risks could be externalised, it was GREAT. It's a wider problem of course, lots of things are wrong with the UK economy and result in low investment; they all need to be sorted out. Banking is just one of them. * I suspect that a German bank would be more likely to have people able to assess/understand the real value of the plant; another shortcoming of UK finance?
  6. Can you explain why lending to Acme-Corp-employee Joe Bloggs for speculation or consumption is a good risk, while lending to Acme Corp for investment is a bad risk? If Acme failes, Joe's loan will most likely go bad. And Acme's prospects are diminished if it cannot access the finance it needs. The banking sector's preference for lending lending to Joe instead of Acme is a classic, British example of short-sightedness. I think that's how more visionary countries have built more balanced economies than the UK. German bank support for their "Mittelstand" has been legendary; during Japan's rise, one of MITI's roles was to secure financing of industrial investment. While in the UK we had a "white heat of technology" speech and not much more, as far as I can see. It's all very well to cry that banks are private businesses and should be allowed to get on with it according to their own private interests -- but they're not. Setting aside any bailout/insurer-of-last-resort function that the state provides, banking itself is a state-granted monopoly; the state is entitled to ask, in return, that banks begin to act more in the national interest. There'd be no compulsion to comply with such a request, or even to abide by new bonus rules. Banks are free to hand their banking licenses back and compete within the real economy they've helped create, just like any other company.
  7. They're still lending, you can still get mortgages, loans and credit cards. By and large, lending to an individual = betting on the business that employs him; is there really a different level of risk in lending to the business instead -- particularly when you consider that the individual usually borrows to speculate or consume (largely imports), while the business borrows to invest?
  8. Anyone know if this extra income is at least taxable?
  9. Looking at this issue from a slightly different angle, and accepting pragmatically that cuts must be made... What has to be decided is, who is going to bear the pain of unkeepable promises being broken? There's a chain of obligation that runs something like: indebted worker -> bank -> depositor or bondholder ISTM that people are much more likely to consent to their contracted benefits being reduced, if the pain is equitably spread along the chain. Unfortunately, we made the decision to shield bank creditors from ANY of the pain, at the time we bailed out NR, RBS and so on. This means that all the pain is now being concentrated on the left-hand side of the chain. A possibly interesting aside: following recent events, the state owns/guarantees links along the entire chain. They might be defaulting on their contract with a worker, while insisting he keeps up his contract with their bank...
  10. I agree that they're immoral, but this immorality (and much else) WAS authorised, by politicians who'd won enough votes to have the constitional power to do so. The implications of just cancelling that would be profound, as I tried to indicate above. Do you want the state to be subject to the rule of law, or not? It would be an odd sort of bankruptcy where only one class of creditors (NHS workers, in this discussion) suffer default. Fully-sovereign states can't really go bankrupt in any case; firstly they have printing presses; secondly they have territorial control meaning that bankruptcy proceedings can't be imposed on them. However, states CAN collapse (=losing the ability to control its territory, when it comes down to it) and in the event of collapse I agree that all contracts are null and void because the contracting party doesn't exist any more. But the UK state has manifestly not collapsed yet. It is still controlling its territory and paying its obligations, as far as I can see. Again a contra-indication for bankruptcy: you're proposing preferential treatment of certain creditors. Bear in mind that my preferred "devaluationary" approach gives those who've been free-riding real-terms cuts in any case. Real wealth-creators would be okay, because they have something of value to trade. Savers would suffer, but many savers have been free-riding on the boom in any case. E.g. if you STR'd to a liar-loan-borrower, where did the STR pot really come from? Nowhere, of course, and that's where it needs to return.
  11. Now you're just being silly Do you really want the state to go even further in the New Labour direction of doing whatever it pleases/is expedient, without regard to [domestic/international] law? 'cos I don't.
  12. You need to think the debt-deflationary aspects of this through.
  13. Agreed, we just need to choose whether to do it by devaluation/inflation or default/deflation. We seem to be in different camps on this. With retrospective legislation to enable us to set contracts and redundancy agreements aside, and either defiance or outright withdrawal from the EU, I presume?
  14. Your evidence for this, please? Consider the debts they've almost certainly taken on, on the basis of the salaries. Also, the legally-binding contracts we've signed with them.
  15. Perhaps not, but under this proposal they could easily end up with one, even if they've been prudent so far. That's why I mentioned moral hazard -- changing the rules on someone half-way through the deal. That's also why we have contract and employment law, to stop that kind of thing from happening. Inflationary erosion will also force people to re-cut their cloth, but in a way they can manage on their own terms rather than the bank's. If we're going the full-on salary-cutting, loan-defaulting deflationary route, we might as well have joined the eurozone.
  16. I'm not arguing for leaving things as they are; I think we need to devalue sterling (cut all current wages in real terms) and get rid of unneeded public sector roles -- which are probably not GPs, who were being lined up for a 50% pay cut in the post I was replying to: Making the workforce bankrupt and homeless, while expecting no impact on service? I don't think so.
  17. Great one-line summary of the underlying problem and how to tackle it.
  18. Apart from moral-hazard and contractual issues, you'll be turning honest borrowers (if there are any in this country!) into involuntary liar-loaners: borrowed on the basis of 120k; actual income 50k. How long before the banking system goes pop again, if you do that to enough people? The other approach is inflationary erosion, which is going to take some time.
  19. High prices good, low prices bad; high prices good, low prices bad...
  20. I wonder if they're doing a joined-up cost-benefit analysis; it's all very well saving the cost of a hip or cataract op, but there are also costs involved in a person being blind or suffering reduced mobility (and maybe more likely to fall or whatever). Oh well maybe it will draw attention from the HB reforms
  21. Only to the extent that their income goes on fully-VAT-rated goods, rather than on food or domestic fuel. If the so-called poor are really spending the bulk of their income on full VAT-rate goods, then there are questions to be asked about why is so much redistribution necessary in the first place? Perhaps it shouldn't be necessary to claw it back at all. [edit: it is in this area, IMO, that we find real dishonesty, but of the vote-buying rather than the intellectual kind]. Having said that, there's certainly a debate to be had about whether the current ratings are fair, and whether the system could be more flexible. I'd support making the first X units p.a. of electricity or gas zero-rated, for example. But to say that the system as a whole is fundamentally, intellectually dishonest? I don't buy it -- and neither do I buy many full-VAT-rate items
  22. They had to borrow the money in turn, i.e. find the money either from a private lender, or from a central bank if desperate; we've seen what happens to banks like NR that couldn't fund (incl. rolling over) their lending. Who could possibly have had enough credit to lend our banks the vast sums involved? The countries and companies holding several decades' worth of credit notes that we've been using to finance our lifestyles, I'd have thought.
  23. Because if (when) we repudiate our debts to them, they won't lend us any more money, and we don't earn enough to pay for what we consume. Example: I would guess that oil-state SWFs number among our creditors, and that they've been supplying us with oil and taking our credit notes in return, which was bound to end in tears sooner or later. The point is that if we default (or allow our banks to default because too many of their customers default), it will end in tears SOONER -- the very next day, in all probability, which I would guess is deemed unacceptable by most people including our leaders. And that also embodies an explanation for many coming job losses; e.g. if you work in retail selling Chinese imports, and the imports can no longer be afforded (never could be, in fact) what's supposed to happen?
  24. It's possible that a robust and liquid bitcoin-currency exchange would make bitcoins more acceptable to people supplying real goods, but those people still have to deal with the physical world of warehousing, delivery, invoices etc. -- the physical world in which centralisation and force are at their most potent. That's why I say it's the acid test: there's a step-change when you go from a transaction where both payment and goods are "invisible" to the authorities, to a transaction where one or both of them exist in the physical world and/or on a centrally-controlled system.
  25. Achieving that is one thing for virtual goods, another for physical ones. The acid test for such a system becoming general "money" will be along the lines of, can you buy a barrel of oil or a bushel of wheat with it?
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