Article 50

HolbornFox

Capitalism is named as the scurge of the economy in a book i have just read... Written in 1901.

Papa

While I would also be keen to point out that the City and Wall Street sunk the financial system, it should also be noted that the crisis eurozone nations were deprived of the time-tested method of dealing with financial crisis by the disaster that has been the euro. Unable to devalue - and not allowed to default - they have had their hands forced, suffering a combination of austerity and low growth - and also been unable to kick start their economies back into action, as they previously would have done, with lower exchange rates bringing down the cost of their exports etc. The debt-sozzled governments of Europe fed by some northern European nations lending them lots of money at very low rates and selling them lots of stuff to buy with it caused a substantial amount of the eurozone problems. In the absence of the prudent parts of Europe being willing to simply hand over the money needed to the spendy bits, the eurozone was always doomed to fail. I don't doubt that the City and Wall Street accelerated that, but the eurozone was sunk by its own madness. The eurozone was always a bad idea. It was never going to work, I remember studying the reasons why in A Level economics. I also think that while debt and credit makes the world go round, you can have far too much of a good thing. Capitalism itself isn't at fault. It's the debt-soaked modern-day twisted version that we have that caused all this mess.

krappyrubsnif

*Tips hat to @Papa L*

Mimsy

The City and Wall Street BOUGHT every politician left right and center since the 1990s, when that great liberal doyen Bill Clinton and his wife (who wrote the legislation) sold the country off lock stock and barrel through the repeal of Glass Steagal. The politicians and the government workers were completely and totally complicit in this, and yet know one ever calls them out for the ridiculous gravy train that government including local government ride. @ Arkady ... "The EU proceeded on the assumption that a fiscal union would inevitably follow the currency union in due course. " that is the cart before the horse... they jammed the currency through... and said, 'don't worry, we'll do the debt union later...' and never "got around to it"... like they did;t know at the time, a currency IS a note of debt. Bloody Keystone cops. Every person in love with Brussels here should wake up and see not only how they mismanaged everything, but also how they cannot be reformed... they are rolling with their plan until the ship sinks and takes everyone with it. They refuse to admit error, and refuse to take responsibility for their wholesale mismanagement... and then they blame the UK and Switzerland for not giving them total control. ...they are a joke. and their twin sister, the IMF, is too.

Mimsy

@PapaL ... well said. We are so soaked in debt we will never get out. debt in 2018-19 is now forecast to be around 89.7 per cent ... I would remind those who have not read Reinhart and Rogoff, that when you hit 90%, not a single nation has ever survived without total default. (p.s. - it means you are NOT getting the pension government said you would... and taxes will rise to 90% to pay off the government employees who retire at 55-60 *update - we are presently at 90.6%.

Mimsy

@krappyrubsnif ... "The basic, fundamental, core, upstream problem is that for the past 40 years most of the world has been run by capitalism. And capitalism is broken." when 33% of income is taxed... and the VAT is leveled at 27% AFTER that tax... you are really looking at 55%+ ... and then licenses, fines et al are taxed at the point of the consumer... No one can seriously entertain the idea that MORE tax is the answer. The unfortunate truth is that 1) government has plundered the economy and produces damn near nothing and has spent 7 generations of money in 2... and 2) the 'collectivist' version of the economy was tried in the UK in the 1970s, and led to disaster... and 3) if you want MORE government revenue... you lower taxes, and you'll get it. (statistically provable). If the last 40 years was capitalism, I just can't wait to see the socialism everybody keeps saying is going to change everything for the better.

Arkady

@Mimsy Genuine question: do you agree that growing inequality and declining meritocracy are a problem, and what would your solution be if not taxes on wealth or income?

Mimsy

@Arkady wrong. .... those previous spikes represented wartime, when the country was highly agrarian, and also fairly homogenous socially. Not so now. try http://www.tradingeconomics.com/united-kingdom/government-debt-to-gdp http://www.tradingeconomics.com/united-kingdom/government-debt-to-gdp since 1980 its a bloody moonshot.

Arkady

Isn't that just the last ten years, rather than the last 300 years as I linked to?

Mimsy

@Arkady the problem is not that taxes on the uber wealthy would;t be bad... but historically that's not what happens... its only what's promised. Soon the 'wealthy" starts to be anyone with £100k in the bank and an annual salary of £40k+. The declining meritocracy you mention is exactly the point. Government work has little merit. It is the unproductive part of the economy. Take a look at the Japanese - ravaged by war, no natural resources, little arable land, and they become the 2nd biggest global economy in 30 post war years. How? Productivity. They bloody well work for it. Me personally, I kick myself for not going into government. You don't have to do a thing, you can call in sick for weeks, and its illegal to fire you unless you hit something like 12 weeks a year absence, and then you coast through the rest of life on a taxpayer funded check that a communist party apparatchik could barely dream of. Who pays for that?... the average Jo. What we need is to lower rates on small businesses = who do the big hiring in the economy. But the Council will never let that happen... That's why in London every other store is a bloody charity shop... for charities which have volunteers and HQ has a nice comfy payroll. Its stupid. Rates for businesses should be halved... for starters... government pensions CAPPED. THAT will address more inequality than any set of taxes.

Arkady

The high peaks do, but not the averages per decade. And the high debt:GDP periods are often very high growth periods, as Keynes pointed out. The 'moonshot' you point to isn't a general post 1980 trend either, but a result of the 2008 crash as the graph clearly shows. Not sure why homogeneity is relevant.

Mimsy

Homogenous nations (like the Japanese) tend to be more productive because everyone is pulling in the same direction... that not advocacy (because I know I'll be called a racist now) - that's just social science. Its not just the 2008 crash (what crash??... the stock market went down...that stock market is a pimple on the ass of an elephant compared to the debt markets...i.e. bond markets) The reason the chart is spiking is because it has started to hit the exponential inflection point where debt become insolvent... ergo, the stock market recovers (as it has) but the debt keeps right on growing... as the aging population becomes more and more unproductive... and more and more 'demanding ' on the economy... health care/pensions etc.

Mimsy

But the anti- Trump protesters are all for peace and love... yeah? (p.s. - with all this anti-Trump protesting, and the reasons, allegedly for it, do you not think there should be millions outside the Saudi Embassy... whose ass the UK government kisses night and day.?)

Arkady

But as both of our graphs show, the debt:GDP ration was stable or declining until the crash, and has often been much higher in the past without any sort of existential crisis of the type you suggest. I'd be interested to see the homogeneity evidence. There are countries that are less homogeneous than us (US, Germany) that have higher productivity, so I wonder whether it's actually a casual factor. I don't dismiss it though, I can believe that conformity makes people more boorishly workaholic.

HolbornFox

I dealt with this waste of oxygen recently, previously championed by the brainwashing corporation. This is just a tiny snippet of what is so wrong and where all the money goes. Legal aid has been slaughtered for the people who need it but this guy can claim and claim to take PST soldiers to court on baseless accusations. If this was a tradesman and the UK was an old lady he would get 5 years. http://www.telegraph.co.uk/news/2016/12/08/iraq-human-rights-lawyer-phil-shiner-faces-struck-admittingrecklessness/ - Made me laugh that the legal services industry will lose 30% of trade?! The lawyers will be straight in the trough for Brexit legislation, good old Cherie might even open up a new chambers in the specialism like she did before when Anthony put the Human Rights legislation though.

Mimsy

@ Arkady... got find the other one - my bad.. still, the bottom of the trend is 1990 http://www.primeeconomics.org/articles/1757

Arkady

I've only given it a cursory reading, but doesn't that article support my argument, or at least not contradict it? I can't see how it supports yours.

Arkady

"The truth is that there is no level of debt which is in particular more risky or leads of itself to worse results. It is always a matter of context, and of getting the right mix of policies. But the (probably wrong) "findings" on public debt of Reinhart and Rogoff have been used as cover for contractionary policies of austerity which have ruined the lives of millions. For this they bear a heavy burden of responsibility."

HolbornFox

The futures market is crazy as well, mind blowing when you think about it. I love this analogy: http://randyaimone.com/marys-bar-excellent-analogy-2008-financial-collapse/

Mimsy

@Arkady.... I actually don't think this talk of "getting the right policy mix" means a lot. The real reason for the problems of 'austerity', for me are simple... the state said we will cover everybody in old age... and in health care... and induction and in olds other things... so what did everyone do? They stopped saving... and stopped looking after their family (elderly) as a result. Now the whole thing is blowing up. Creating dependence on the state is one of the best ways to control people... then the state mismanages itself and people are screwed. So while everyone can complain about 'austerity'... the real point is "you did't actually believe the government would do what it said it would? did you?" ...re" the chart... I may be a little US centric in my thinking... try this http://www.tradingeconomics.com/united-states/government-debt-to-gdp ... the UK, and its empire tend to skew the data in 1820 and again when on a war footing, but 1992 is still the low of 25 years trend. The end of WWII, of course, skews it... so maybe, "peace time" ratio is more of what I mean. Moreover, with expanding age demographics... the unfunded liabilities will explode... and the UK consumer has got to be about the worst, in terms of debt as a % of net disposable income. When the property market moves down... that will explode... and in terms of purchasing power, it already has... some 30% vs the USDollar. Unfunded liabilities are going to explode in the UK (and the west)...

Mimsy

@HolbornFox ... I agree... once again, lawyers are not part of productivity in the economy. The constant litigation is a drain... and have you ever wondered why it is lawyers who make up most of the people in government? They are the parasites par excellence.

grenners

English law is actually quite productive as we have a very trusted judiciary. So therefore all sorts of contracts are written in English law and referred to English courts. It's not a bad industry and makes us one of the safest places to do business the world.

I'm not a lawyer by the way.

Mimsy

parts of the law are... but a lot of the corporate litigation is fluff... english law is weak on contract (compared to French) and promotes endless litigation. Human rights litigation is mostly fluff. Anyone want to guess what Gina Miller just racked up the taxpayer for?

HolbornFox

It is a safe bet if you are a russian oligarch and can afford the high court fees, funny how randomly selected Judges seem to get similar cases and council every time though.

Mimsy

@HolbornFox ...touche...

maclondon

This lesson in doomsday economic theory is all well and good (serious reform is needed and all sides are at fault) but blaming the politicians is lazy thinking - the problem is that politicians have been responding to the 'have your cake and eat it' approach to policy - don't take my benefits away and keep headline taxes down. Yes the rich have benefitted most but until THE PEOPLE start to look at themselves and admit that voting for choices have to be made the better. Until then, Trump feeds the hatred flame and Theresa the Appeaser keeps us entertained - it's like a Roman leader re-opening the Gladitorial games to distract us from the real problems.

Ali

So who owns this debt? Is bit our selves through the Bank of England and pension funds?

miss annie

Absolutely right about business rates. London shops will see their rates go up by anything from 150 - 400%. Many business will close, when you are a small business or a large company where margins are small, the rate rise plus annual rent increase will finish you off completely. Goodbye to the last few independent shops in London. Jeanette Winterson is closing her lovely shop in Spitalfields because of the rate rise.

Sutent

@missannie. Is that the oranges author? I didn't know she had a shop. What does she sell?

Mimsy

@maclondon ...and I thought politicians were supposed to show leadership. Politicians NEVER say, you had better learn to look after yourselves. Because, guess what? Then you would't need them anymore. The dependency is inbred by the politicians to keep them relevant. Nonetheless you are correct... when people say I'll give you endless free stuff, everyone says, "I'll vote for you!" The public is infantilized. The politicians dangle their goodies before the public like rare steak in front of a dog... and the public goes crazy. The public should be more responsible... but the politicians are pure evil... because they know exactly what they are doing...and they also know that eventual insolvency is on the way... hopefully just not yet. Fundamental axiom of politicians: " I win, you win, and the person who gets screwed hasn't been born yet." (now, if you can create a generation of near childless people, you never have to answer to the masses, because no one has the next gen. to care about what shape they leave the world in.... its just about me me me me ... which is really the mantra of the past 40 years.) ...except now, it looks like s/he has. Quantitative Easing means the debt is owed to ourselves... this is the end of the era of Central Banking... they are all insolvent.