Category: Capitalism

Or a song or three?

A few days ago I published an article that had first appeared on the CASSE Blog site entitled Top Ten Songs for a Steady State.  A long-term contributor to this Blog, Per Kurowski, then added a comment to that post that I thought deserved being made into a separate item on Learning from Dogs.  Here it is.

This is also a contender:

Where Do the Children Play?
Cat Stevens, Tea for the Tillerman (1970)

Well I think it’s fine, building jumbo planes.
Or taking a ride on a cosmic train.
Switch on summer from a slot machine.
Yes, get what you want to if you want, ’cause you can get anything.

Chorus: I know we’ve come a long way,
We’re changing day to day,
But tell me, where do the children play?

Well you roll on roads over fresh green grass.
For your lorry loads pumping petrol gas.
And you make them long, and you make them tough.
But they just go on and on, and it seems that you can’t get off.

Well you’ve cracked the sky, scrapers fill the air.
But will you keep on building higher
’til there’s no more room up there?
Will you make us laugh, will you make us cry?
Will you tell us when to live, will you tell us when to die?

By the way the following song should also classify as a contender… though excuse me if when I also use music to keep sane… I might drive others insane

http://ayearofsongs.blogspot.com/2010/06/color-of-wind.html

Thanks Per!

Essence Of The Civilizational Crisis.

A guest Post from Patrice Ayme.

(Well I say ‘guest’ in the sense that Patrice has very kindly allowed me to publish a post he recently published on his own Blog. It’s very much appreciated. I should add that the minor changes that I have made, in my editorial role, are gently to improve the clarity of this fine piece of work, not in any way to amend meaning. Ed.)

THE PRIVATIZATION OF MONEY CREATION IS THE ENGINE OF PLUTOCRACY.

To understand the present financial and economic crisis, we need the clarity of deep philosophy.

The situation is actually simple, in its grossest outline. To create public money, the money everybody uses (be it cash, electronic transfers, swaps, whatever) we use a private system, with proprietary money creating devices inside (say subprime, or derivatives). Civilization has never worked this way before, as the state previously was careful to stay the one and only money creator.

Now society, worldwide, uses a privately-managed public-money ‘system’ creating what is known as a fractional reserve system. [Wikipedia explanation of fractional reserve system, Ed]

That puts huge power in the hands of underground private individuals we don’t even know the names of. Those cloaked powers in turn corrupt the visible political socio-economy, from below. The whole metastasis is not even described, because intellectuals would have to do so, but most are paid by institutions subservient to the present global corruption.

We saw a similar situation in the Roman empire, when the intellectual class was at its richest, but its critical ability had been corrupted.

The modern banking system is a Faustian bargain (as in a deal with the Devil) with the bankers; in exchange for the immense powers the private bankers were given with money creation, they were supposed to loan it back to society for its development.

This worked reasonably well in the Nineteenth Century. But in the Twentieth Century, bankers observed they could support fascism regimes, and get away with it (only Dr. Schacht, one of the “Lords of Finance”, sat in Nuremberg tribunal, and he was exonerated). Now bankers think they can engineer a depression, and get even richer from it: just keep the profits, and make taxpayers pay for the losses.

By Patrice Ayme

Note 1: Paul Krugman observes, with many others, that the crisis of the West needs “intellectual clarity” to be resolved, and, meanwhile we are “overmatched“. I made preceding comment in answer to Krugman’s cogent remarks. (The New York Times had the kindness to publish what I wrote within two minutes! )

Note 2: HOW THE FINANCIAL CRISIS IS TURNING CIVILIZATIONAL:

China just established another train speed record for “unmodified’ train sets (481 km/h). OK, some will claim China stole a lot of Japanese and European technology. And some French engineers have sneered that the very high speed system in China is not as high performing as it looks (France has much higher average speeds, the highest in the world). However, this is not the point. The point is that China is trying very hard to progress and improve. Meanwhile some of the colossal technological edge of the West is eroding away quickly. The result will be world war, or global plutocratic peace (as plutocracy furthers its deal with China).

How does China improve so much and so fast? Because Chinese banks, the largest in the world, operate according to the fiduciary duty, the Faustian bargain, that the fractional reserve system ought to impose, and used to impose in the West.

Top Chinese bankers know all too well that if they cheated, they may end up with a bullet in their skull. China is led by scientists and engineers who turned to politics, but know that they cannot make mistakes in their calculations. Mao made many mistakes, and dozens of millions died.

The history of China, in the 26 centuries before that, was spoiled by a well meaning, but meek philosophy, which left too small a place to deliver progress of the material, and intellectual kinds.

Civilization is not about “leaving it at that”, the way Confucius mostly had it. Civilization is also about the dream, and implementing it. Indeed, civilization cannot stand still, anymore than a biker can stand still, because resources run out always (as Rome and the Mayas found out). Thus moving on is the price of sustainability. Progress is the price of sustainability.

Note 3: It may seem a curious thing that Karl Marx did not make a strident version of the preceding critique (instead he modestly accused tangentially bankers of “monopoly” powers).

But this Marxist discretion proves the point I alluded to above, namely that bankers were better behaved in the 19C. So Marx talked about other things.

Ironically, early American presidents had perfectly well seen the danger bankers posed, and worried more about them than Marx himself! And let no one call Andrew Jackson a communist: that would be serious mistake…

In the 21st Century, by capturing the states (USA, EU), and various institutions above them (IMF, World Bank, BIS), the bankers have established a monopoly of power early American presidents rightly feared (and Jackson, wounded at 13 by an English sword, later a proud carrier of several bullets, and a general in the field, feared very little). The wise know what to fear. The mentally simple just smile, thinking only about themselves, as they can’t think much further than that.

*********************************

From the Ed.

Dear Readers, I really hope that you read Patrice’s post in full and in a quiet place where you could reflect on the meaning and underlying implications of what Patrice is saying.  Those in the UK may have been able to watch a typically fabulous BBC Television series, Ancient Worlds.  It’s still available on BBC iPlayer.

What comes out from the message of mankind over the centuries is that wonderful French expression plus ça change, plus c’est la même chose – the more that changes, the more it stays the same thing.  But where we are as we approach the New Year of 2011 A.D. is possibly at a cross-roads – and I intend to write a little more on this idea over the coming days.

The Madoff Link?

Anyone see any connection?

From the UK Newspaper The Independent:

Bernie Madoff was able to con thousands of extra investors by using a British bank which “looked the other way” and ignored repeated warnings that he was engaged in a sophisticated fraud, according to the man charged with recovering their losses.

HSBC and its staff were accused of receiving “kickbacks for looking the otherway while legitimising BLMIS (Bernard L Madoff Investment Securities) through their name and brand, making it attractive to investors”.

SNIP

“Had HSBC and the defendants reacted appropriately to such warnings and other obvious badges of fraud … the Madoff Ponzi scheme would have collapsed years, billions of dollars, and countless victims sooner,” said Mr Picard. “The defendants were wilfully and deliberately blind to the fraud, even after learning about numerous red flags surrounding Madoff.”

Mr Picard wants to recover the $9bn from HSBC and a network of international funds that acted as “feeders”, enticing investors to place money with Madoff’s investment company. It makes the bank the biggest defendant so far, eclipsing lawsuits already filed against the Swiss bank UBS and America’s JP Morgan. Other defendants named in the HSBC suit include the Italian bank UniCredit and Austria’s Bank Medici.

The accusations levelled against HSBC will come as a huge embarrassment to a company which has become increasingly controversial, having threatened to quit London for Hong Kong should the Government seek to impose too heavy a levy against banks or attempt to break it up after the Independent Commission on Banking, set up by the Chancellor, reports next year.

However, suits against more European banks are likely to follow. The lawsuit, filed in the US Federal Bankruptcy Court in Manhattan, is the latest move by Mr Picard who has filed more than 100 lawsuits over the last few days in a bid to recover funds from those institutions which he claims enabled the fraud or those who received “false profits” by getting their money out of the scheme before it collapsed. Mr Picard faces a deadline of Friday – the two-year anniversary of Madoff’s arrest – to file everything.

and from the BBC News:

Questions have been raised about police handling of tuition fee protests after a car carrying the Prince of Wales and the Duchess of Cornwall was attacked.

A window was smashed and paint thrown at the vehicle as the royal couple made their way to a central London theatre.

Violent demonstrations spread after MPs voted to increase university tuition fees in England.

SNIP

The National Union of Students (NUS), meanwhile, said the violence had overshadowed the story it wanted to see in the newspapers.

Shane Chowen, vice-president of further education, said: “Not the headlines I wanted. I wanted to see the fact that the coalition government have just trebled tuition fees, sentencing a generation of students to record student debt.”

A more peaceful version from March 2010

By Paul Handover

Fairness in society

Very difficult times ahead but a fairer social order could be one outcome.

As is so often the case, a number of different lines of thought come together once again to highlight the pressures on society and my belief that we are in the ‘zone of change’ between the last 40 or 50 years and what is ahead for western societies.  There is no question that these are very difficult times as, I presume, all phases of change have been over many centuries.

On the 28th October there was a Post on Learning from Dogs about the recent book from Will Hutton, Them and Us.  That book masterfully articulates the core issues in British society arising out of some fundamental economic policy errors and the very difficult times that are being experienced right now.

The British are a lost tribe – disoriented, brooding and suspicious. They have lived through the biggest bank bail-out in history and the deepest recession since the 1930s, and they are now being warned that they face a decade of unparalleled public and private austerity.

As if to underline the fact that the economic situation is far from recovery, despite what is being promoted, here’s a recent article from Washington’s Blog. Almost impossible to take an extract that conveys the essence of this powerful (and scary) article – so just go here and read it.  Or if you haven’t the time here’s a taste:

SATURDAY, NOVEMBER 27, 2010

It’s Not Just the “Peripheral” European Countries … Financial Contagion Could Spread to “Core” Eurozone Countries and the U.S.

CNN notes:

Americans will not be spared if there’s a recession in Europe, even if U.S. bank exposure to European government debt is relatively limited.

SNIP

The European Union is the second largest market for U.S. exports, behind only Canada. The EU bought about $175 billion in U.S. goods in the first three quarters of this year. That’s up about 8% from a year ago.

So worsening problems in Europe will clearly be a drag on the U.S. as well.
Niall Ferguson, Marc Faber, and SocGen’s Edwards and Grice predicted 9 months ago that the European debt crisis would eventually spread to America.

But the question of what country the “contagion” might spread to next is really the wrong question altogether.

The real question is whether the wealth of the people around the world will continue to be shoveled into the bottomless pit of debts held by the big banks, or whether the people will prevail and the giant banks and bondholders will be forced to take a haircut. See this, this and this.

So back to the issue of fairness.  There is no escaping the consequences, still playing out, of the ‘spend now, pay tomorrow’ culture of the last 30 or 40 years so then the main issue is how do we mitigate the consequences for those who are most exposed to some of less prettier aspects of modern life.  Ponder on that question while you read this recent piece from Open Democracy.

Fairness and the cost of life for the poor in Britain

Brian Landers, 26 November 2010

Most Britons had “never had it so good” despite the “so-called recession” declared Lord Young of Graffham.  His words were immediately disowned by David Cameron, who fired him. But in reality Young was only articulating what he and his circle are experiencing and privately believe.

For example, on the BBC’s Sunday morning Broadcasting House on 21 November, Lord Charles Powell who was Margaret Thatcher’s advisor, complained, “unfortunately he said the wrong thing. In terms of fact what he said was probably right, with interests rates low people are not particularly badly off at the moment. But some people are very badly off and it is insensitive, I suppose, to suggest that everyone is not doing too badly at this time. It does show that you can’t speak the truth in politics anymore you have to defer to what is politically correct”.

Well, there is another truth: that for thousands of pensioners and not just “some” of them, negative real interest rates on their savings are becoming a disaster. Even though for the heavily mortgaged wealthy, low interest rates do indeed make them much better off.

What Young’s comments illustrate, therefore, is that when we consider equality and inequality we need to look at expenditure patterns, which can be just as important as differences in income.

Historically debates on social equality focus overwhelmingly and inevitably on inequalities of income. We read, for example, that according to a study by Incomes Data Services chief executives of the UK’s 100 largest companies are now paid on average 88 times the pay of typical full-time workers and that this ratio is getting worse. Last year the multiple was 81 times and ten years ago top bosses took home 47 times the average wage.

But in addition to their income being a lot lower the poor also suffer more because life costs them more. There are two issues, one obvious, one less so.

The primary issue is one of fairness. Three for the price of two supermarket offers are great value only for those who can afford to buy two; those who can only afford one end up paying 50% more per unit. Is that fair?

Another supermarket example which received widespread but soon-forgotten newspaper coverage earlier this year is more subtle. Tesco owns three convenience store brands in this country: Tesco Express, Tesco Metro and One Stop. An enquiry in 2006 found that the corporation was charging more than 20% more for the same products in its One Stop stores than in its Tesco branded stores. Tesco responded that it was bringing prices down in One Stop but in 2010 further research showed that One Stop prices were still 14% higher than prices for the same product in the rest of Tesco. One Stop typically operated in less attractive (that is poorer) areas where there was no competition from other mega-corporations and where therefore significantly higher prices could be charged. Again that raises issues of fairness.

If such unfairness is somehow familiar there is a further layer that goes beyond fairness: we live in a society where in many tiny ways the poor actually subsidise the better off through the way patterns of expenditure are organised by the market place, (i.e., not just by providing cheap labour).

Consider for example the cost of owning a car.  Bernard Jullien of the University of Bordeaux analysed published data on household expenditure and trade data from car distributors (See Competition and Change 6, 2002). He showed that richer consumers were being cross-subsidised by poorer consumers. Distributors in France (and almost certainly elsewhere) were following a conscious policy of keeping new car prices lower to increase their market share. Then then marked up the prices of spare parts and maintenance to maintain their overall profit levels. Jullien found that the unintended consequence was that well off customers, who were more likely to buy new cars, ended up being subsidised by less well off customers who typically bought second hand cars that needed more frequent repair.

There are more examples if the term “well off” is extended to include corporations. The cost of producing and distributing the electricity needed to power a light bulb is the same whether the bulb is in a private house or in the office of a mega-corporation – and yet the corporation will undoubtedly pay far less. Quantity discounts typically reflect the purchasing power of the buyer rather than any scale economies for the seller.

What are apparently rational pricing strategies have the unintended consequence of ensuring that poor people pay more than the well off in ensuring the overall profits corporations need.

Then there is time. Time budget surveys have shown, for example, that the poor take much longer per mile to get to work than the rich because the forms of transport they use are typically much slower. Similarly the poor have to devote more time to food shopping and a host of other activities.

There is nothing conspiratorial about the way that the poor fare worse than the rich. Often it is just the accidental by-product of perfectly sensible business decisions. Indeed in some cases there may even be wider social benefits. Improved stock control with Just-In-Time inventory techniques and Call-Off procurement contracts has ensured that waste in many industries has been sharply reduced; it is unfortunate that in food retailing one consequence is that end-of-day price reductions on perishable products are now less common, again hurting the poor more than the rich.

What can be done to mitigate these expenditure inequalities? First, they deserve to be highlighted, if only because, like so much else, they are beyond the experience of the multimillionaires in and around the cabinet. Second, and especially if we are going to talk about Big Society and us being ‘all in it together’, we need to think about economic models that build into their measures of success their consequences for all of us.

[Published with the permission of Brian Landers and openDemocracy.net under a Creative Commons licence.]

By Paul Handover

Whoops, just on the phone!

The unacceptable side of mobile (cell) phones.

Recently, I saw something come in to my in-box that just held my attention for sufficiently long to get me to move from scan reading to actually thinking about what I was reading and how it made me feel.

The US government may require cars to include scrambling tech that would disable mobile-phone use by drivers, and perhaps passengers.

“I think it will be done,” US Secretary of Transportation Ray LaHood said on Wednesday morning, according to The Daily Caller. “I think the technology is there and I think you’re going to see the technology become adaptable in automobiles to disable these cell phones.

No, this is not some other form of Government interference in areas of our lives that are irrelevant to the real world.  This is serious stuff:

Believe it or not, I wasn’t always so outspoken about the dangers of distracted driving. Like a lot of folks, I just didn’t give a lot of thought to it.

But that all changed as I met people from coast to coast who told me about the loved ones they lost in senseless crashes caused by texting and cell phone use behind the wheel. And it was their stories–of dreams shattered and lives cut short–that turned the fight to end distracted driving into my personal crusade.

These people have had a profound effect on me. And I think their stories will have a profound effect on you.

SNIP

Just last year, nearly 5,500 people were killed and 500,000 more were injured in distracted driving-related crashes.  But, these aren’t statistics. They’re children and parents, neighbors and friends.

So this really does deserve thinking about.  As The Register article puts it:

The problem is that the average driver doesn’t think that he or she is an average driver: nearly two-thirds of drivers think of themselves as safer and more skillful than a driver of median safety or skills — a statistical impossibility, of course.

When faced with the prospect of automotive mobile phones being disabled, we’d be willing to bet that most drivers, suffused with confidence in their own skills, will think in terms of personal inconvenience and a restriction on personal freedom.

Perhaps it might be better to think of the guy texting in the lane to your left, or the gal yelling at her ex on her iPhone in the lane to your right, and think not of your own inconvenience, but of some distracted dolt killing you.

Remember one unassailable statistic, as explained by the late, great George Carlin: “Just think of how stupid the average person is, and then realize half of them are even stupider!”

LaHood may be right. Disabling mobile phones in cars should not be looked at as a way of protecting you from yourself, but instead as a way of protecting you from the stupid.

Quite so!

By Paul Handover

Future for Societies

The glass is filled half-way.  Is it half-full or half-empty?

This is a rhetorical question, of course.  It is what comes to mind as I write this simply because of a small half-full/half-empty experience in the last 10 minutes.  Let me explain.

I had started watching a video on TED.com.  This one was entitled Jared Diamond on why societies collapse.  Within a few minutes I started drifting to the comments, and read:

Jared Diamond talks of how societies choose (unwittingly) to collapse. William McDonough with his Cradle to Cradle concept also talks about choices and provides ‘Love of all children of all species for all time’ as a positive conscious choice.

With goals or missions in place (for example profit for businesses) humans have achieved amazing things.

So what would happen if all groups, families and individuals followed a mission of ‘Love of all children of all species for all time’?

I rather liked that.  We always have choices. A positive conscious choice is always better.

So I stopped the Jared Diamond lecture and found the William McDonough one, also on TED.com, and conveniently shared on YouTube.  It’s just 20 minutes long, so settle down somewhere, perhaps with a glass filled half-way with something!

By Paul Handover

More on Them and Us

Will Hutton’s book continues to impress me; greatly.

On 28tTh October, I wrote an article about Will Hutton‘s impressive book, Them and Us.  I had got to page 120 or thereabouts and could resist no longer the urge of reading the book to the end before commenting on Learning from Dogs.

Now I am reading through page 260 and, again, find myself incapable of waiting until the book is completed before offering further thoughts!

Despite being very optimistic about the long-term future, I sense that the period that we have been in since 2008 may turn out to be one of the darkest in recent history – I touched on this aspect in a recent post called Faith in a (new) future.

One of the things that strikes me is the complete lack of openness from the British Government about the likely growth scenarios over the next decade.  Here was how the latest ‘growth’ figures were presented a couple of weeks ago, “The economy grew by 0.8% in the three months to September – double the rate that had been predicted by analysts.”

UK output increases by 0.8 per cent 4Q 2010

But here’s Will Hutton,

Britain is going to be much poorer than it anticipated just a few years ago.

and a couple of sentences later talking about economists Carmen Reinhart and Ken Rogoff,

They paint a sober picture of prolonged loss of output, high unemployment and depressed asset prices, and warn that there is no precedent for what happens after the kind of global crisis through which we have just lived. (My italics)

Hutton says that growth would need to accelerate to 3.25 per cent in order for output to reach its predicted level if the recession had not taken place.

He then says that a more plausible scenario if growth remains at 2.75 per cent (average level in recent years leading up to the credit crunch) “then it might never recover sufficiently to converge with the old trajectory.”

Hutton continues,

However, even that may be optimistic.  The reality is that between the economic growth troughs of 1991 and 2009, growth in Britain actually averaged just over 2 per cent.

That would lead to a cumulative loss of output of more than £5 trillion!

It could be even worse.  The economics team at Barclays believe that is it perfectly plausible for growth to average just 1.75 per cent for the first half of the current decade.

And all of this before the huge budget cuts announced by the UK Coalition Government start to bite!

So the reality is that we are a long way away from any form of real recovery, despite what the politicians are saying!

What is so impressive about the book is that Will Hutton is meticulous in his research (there are 23 pages of referenced notes at the end of the book) and from Chapter 9 starts setting out how Britain “has the opportunity to put things right fast.”  So this is a book from a well-respected author that sets out carefully and logically the cause of the recession and then presents some powerful options for change.

The bottom line is that Britain has to be a much more fairer society. Not just Britain.  Here’s an extract from a recent posting on Tom Engelhardt’s Blog. Tom is the author of the book, The American Way of War.

I’m no expert on elections, but sometimes all you need is a little common sense.  So let’s start with a simple principle: what goes up must come down.

For at least 30 years now, what’s gone up is income disparity in this country.  Paul Krugman called this period “the Great Divergence.” After all, between 1980 and 2005, “more than 80% of total increase in Americans’ income went to the top 1%” of Americans in terms of wealth, and today that 1% controls 24% of the nation’s income.  Or put another way, after three decades of ”trickle-down” economics, what’s gone up are the bank accounts of the rich.

In 2009, for instance, as Americans generally scrambled and suffered, lost jobs, watched pensions, IRAs, or savings shrink and houses go into foreclosure, millionaires actually increased.  According to the latest figures, the combined wealth of the 400 richest Americans (all billionaires) has risen by 8% this year, even as, in the second quarter of 2010, the net worth of American households plunged 2.8%

Change is definitely overdue.

By Paul Handover

And a reply to Patrice Ayme

This is a guest post from an old regular (as in frequency, not age!) contributor to Learning from Dogs, Chris Snuggs.  He has written in response to the guest post from Patrice himself that was published on the 31st October.

Patrice AYME – WOW!

First, an amazing post – lots to talk about. Secondly, (get the bad news out of the way first) the fact that you warmed to Brown when he became Prime Minister worries me, principally because the man was at best totally incompetent and at worst a moron, having totally messed up almost every aspect of British life one can think of but in particular the economy. It is only the fact that we started out from a better position that prevented (or prevents) us from “doing a Greece”. The waste and delusions were humungous; the basic management skills non-existent. I note that Mr Brown is going to make a speech in the House of Commons soon; I wonder if he is going to apologize for the appalling shambles he left behind or whether he is going to accuse the new government of not spending enough. His finest hour came when “saving the world” by encouraging governments everywhere to borrow vast amounts of money to save money. Had the overall consequences of his previous policies not been so disastrous this could almost have been funny. Well, it was funny for the banks, who of course were laughing all the way not only to the bank but at it.

CHINA: I’ve been to China – (wonderful people) the problem (if there is one) is not their economy per se but the fact that it is a dictatorship. There have been and indeed are worse dictatorships, but it is one nonetheless. As their economic power increases so does their sabre-rattling. Have there ever been any cases where mighty economic power has not been followed by territorial expansion? Patrice will know this; his overview of history in these matters is extraordinary. N° 1 Satan the USA may be, but without their umbrella free, democratic Taiwan would most likely already have been invaded by mainland China.

The YANKS? Humans are – in my humble opinion – often extremely conservative. Americans have been used for decades if not centuries to believing that their country is “the greatest in the world”. (they are not the only guilty ones, the French and Chinese run them close). It is going to take them some time to realize the junk value of that particular belief. While they are slowly internalising it we should be patient, remembering that they did save us from Hitler and/or Stalin. No doubt of course for their own selfish reasons, they did the same in Kosovo, too, (the Europeans – except those anti-European, Anglo-Saxon Brits of course – having done SFA) though I’m still trying to work out why – perhaps EXXON had geological surveys indicating vast oilfields around Pristina?

To save the US it will take someone with a lot more steel than Obama; that is the problem, and WHERE is this person coming from?

FRANCE: If there is any country mired in self-delusion apart from the USA it seems to me to be France ….. I am NOT anti-French – far from it. I lived and worked there for ten years ….. however, Patrice’s observation that most French people understand the need for change but most also support the strikes is revealing. This is the crux – they cannot make up their minds what they want – for too many in positions of power the status quo is too good – a bit like in the USA with the plutocrats. Thus they stagger about getting into a worse and worse situation, much like Britain did under Gordon Brownosaurus.  The STATE in France is TOO BIG and SELF-IMPORTANT. Sarko realizes this, but his attempts to rein it in (forced by budget constraints) have been feeble and in any case the inertial resistance is stupendous. The phrase “reality-check” comes to mind.

THE EU: As for “STATE TOO BIG”, the EU is overreaching itself, having just committed to spending over €5 BILLION on a fatuous new diplomatic service run by a nonentity earning TWICE as much as the British and French leaders and which will give the EU FORTY-SIX “diplomats” on the island of Barbados. Nothing against the Barbadians – jolly good chaps and chapesses – but are they REALLY that important to the EU taxpayer? We’ll also have over 50 in that economic colossus of the universe, Madagascar. Meanwhile in Brussels, a new building is to be leased at a cost of a piffling £10,000,000 a year. It is said by the great and good in Brussels that this new diplomatic service is needed to “compete with the Chinese and Indians”.  Absolute rubbish of course. The idea that a black-African country will trade with the EU and not the Chinese just because we have fifty odd “diplomats” in a spanking new building downtown is ludicrous. What the Africans want is good value (i.e. cheap) and reliability. Europe is getting past the stage of being able to offer much of those, bogged down as it is by 100,000 pages of European Law and mindless regulations designed à la française to improve the lot of “workers” but which in fact gradually destroy all their jobs.

I personally think the EU is doomed; destroyed by greed, arrogance and self-delusion. The British are already very anti-EU, NOT because we are anti-European; we are just anti venality, greed and overweeing self-delusion. However, in true EU spirit, we are denied the referendum we were promised on the Lisbon Treaty. Anyway, in the EU if you vote “No” in a referendum you just keep getting referenda over and over again until you say “Yes”, so what is the point?

EU TREATIES? A tremendous FARCE of course. Did you know that it is ILLEGAL for members states to bail each other out? But what happened with Greece? And now they have a NEW cunning plot to bail out the next failing economies: Spain, Italy, Portugal and Ireland must already be licking their lips at the thought of getting free German money. So, bailouts are ILLEGAL, but not apparently if we actually want to do it. So they are only illegal in THEORY then? So it seems. Now Frau Merkel and the usual stitch-up-the-rest suspects (France) have worked out their plan there remains the niggling little detail about it being ILLEGAL. So what is the solution? The humungously-overpaid and fatuous EU President (has he got his presidential jet yet?) has been asked to look at the problem and “see if he can find a way to bail the countries out legally.”

Of course, despite spending thousands of man-hours on the problem he won’t find a way that will stand up in court so the increasingly-fragile and erratic Frau Merkel is talking about “amendments to the Lisbon Treaty”. More hilarity – this took ten years to thrash out, agree and pass and yet she wants to muck about with it already. I find all this both hilarious and criminally venal, treating the European taxpayer with contempt. How do they get away with it? VOTER INERTIA – the same problem as in the USA, where they have a POOR choice of parties and lurch from one dinosaur to the other without ever seeming to explore alternatives. EUROPE? Do YOU know who your MEP is? Does he or she LISTEN to what you say? With Europe in the midst of the biggest financial crisis since WWII when EVERYONE in the real world (not Wayne Rooney of course) is cutting back, jobs are going, projects abandoned the MEPs voted for a 6% INCREASE in their budget. One wonders who their PR people are, but in truth they don’t have to bother much about PR since their accountability is about zero.

The EU initiatives are INSANE – power-mad. It is so transparent as to be laughable. As the British learned from “Yes Minister”, the bigger your budget the more important you must be and therefore the more you must pay yourself. This is the rational for EU top-brass being paid double what NATIONAL LEADERS get.  (Oh, and for the “inconvenience” of living abroad of course, even though they get a whole raft of vast expenses including free schooling for their kids). Cameron knows it, but the Brits are so used to being slagged off by the Continent (especially statist France, which is always very glad to get its bills paid by someone else  – will the Germans bail out France when their economy collapses?) that Cameron has to tread a tricky line. At heart, the Brits are FREE MARKETERS and NOT willing to be an outpost of The United States of Europe, which is of course what they want over the Channel. France wants that because it believes it can control it;, they could be deluding themselves – monsters one creates often become uncontrollable. And the Germans of course are kept on a leash because France still plays on German guilt for WWII, but is that ploy now looking a bit sick? It certainly can’t last for ever so milk it while you can, eh?

THE EURO: The recent EU jolly came up with a plan to “save the euro”; they were all happy as sandboys about this, but do they REALLY believe that Greece can EVER repay its debt without MORE vast donations from Germany? Do they think Germany will continue to bail out the feckless Mediterranean countries (plus Ireland …)? Some of these countries shouldn’t BE in the euro, unless of course the EU can control their economies. AHA, THERE WE HAVE IT! That is the agenda of course … more central control = more power and in particular more “harmonisation” of taxation. Don’t you just love that word; it sounds so PC. ‘harmony’ = balance, peace, contentment ….. all the right marketing vibes … but what it means of course is “harmonisation” UPWARDS to match the preposterous tax levels in Germany and France. The Germans are so efficient that they seem to get by with such high taxes, but they are crippling France. Despite their fatuous 35 hour week  – introduced to create more employment (why didn’t they make it 10 hours per week – surely that would have created even MORE employment?) – their unemployment rate is still way above the average, and this for DECADES.

Well Patrice, I agree with much of your analysis of the USA, but I suspect Yanks will be up in arms. (the “greatest country in the world” syndrome). I am reminded of the importance of education; is it SO difficult to learn from the past? Apparently so – humans are so deep-rooted in the immediate present and so few take a long-term view, especially in our “democratic” systems of government where Obama has only been going for two years yet is effectively starting the next election campaign. And as we know, British politicians will do and say anything to gain power and having done so very often ignore much of what they promised. I myself do not remember the British Labour Party promising to ruin the country in 1997, yet that is what they have done in many areas.

Where I disagree is with the impression I have from your post that Europe is doing much better than the USA. I don’t think we are. I think we are in a tremendous mess and have NOT yet understood what faces us – see strikes in France for a start. One bright light? the economic performance of Germany, the only “serious country in Europe – apart from those magnificent Scandinavians of course. Another bright light? The performance so far of the British Coalition, at least having the courage not to take the easy but long-term catastrophic path of “Spend, spend, spend” so honed and perfected by the previous bunch of charlatans.

By Chris Snuggs

A reflection from Patrice Ayme

Intelligence at the core of humanism – Patrice Ayme

This is a full copy of a recent post from Patrice Ayme published on Learning from Dogs with Patrice’s written permission.

I am bound to say that many of the arguments set forth in much of Patrice’s writings stretch my brain cells but that is not the point.  The point is that all right-minded (not in a political sense, you will grant me!) citizens of the free world need the expressions of thoughtful people in order to make the best decisions they can; for themselves, their families and the wider community.  For me that is why Patrice should be read.

Here is the article from Patrice Ayme published on his Blog on the 22nd October. (It’s long – but it’s a Sunday so think of it as your Sunday newspaper, settle down in an easy chair and get stuck in!)

Krugman, or Crudeman?

By Patrice Ayme

HIGH DEBT = HIGH PLUTOCRACY.

Abstract: President Obama has been getting atrocious economic and financial advice, all across the spectrum, from Summers to Krugman.

This abominable advice reinforced the plutocracy, with tax cuts, and a giant spigot of money creation directed at giant banks and their demons. While the banks are getting nearly all the money, the rest of the economy has been weltering. The government is obsessed with throwing money at bank holding companies to save its friends, while accusing everybody else.

The main architect of this quiet coup, Summers, and his demoncrats and democrats, is supposedly on his way out (see Note1). That may be just a ruse to escape the sword of justice and positive change.

Another Reagan adviser posing as a democrat, and a progressive, Paul Krugman, has been more in evidence recently, as some of his advice has obviously gained traction.

Krugman’s advice: accusing China, with GUSTO (while sparing the American plutocracy of much blame), and augmenting government spending, BLINDLY. It does not matter if said spending is on foolish things: just spend. Keynes, the Jesus Christ of Krugman’s religion, said so, so it ought to be right. A detail: said augmented spending goes through… the friendly giant banks. Friendly to them oligarchs (see Rahm Emanuel’s 17 millions from one bank).

After accusing China, whatever China does, Krugman has also targeted European austerity programs, from Ireland to Lithuania, blaming them for the difficulties of the USA.

Krugman’s latest attacks are against the British government austerity program (some of which was started by Labor before the election in Spring, so there is real tripartisan support for it).

China and Europe are trying hard, in many ways, to change their economies and societies for the best, though, whilst the USA is just forking more money to its greedy plutocrats, calling thatdismal masquerade “recovery and reinvestment“ (a lot of these huge transfers of money go through hermetic notions such as “Quantitative Easing”, or buying toxic garbage from the banks, as if it were worth anything: it’s done through the banks… the private banks).

Let me repeat slowly. The advice of Krugman is dressed in leftist garb, but it is nothing of the sort. It’s like getting currency advice from Soros: dangerous at any speed.

The policies Krugman promotes, such as Quantitative Easing 2 (flushing the biggest banks with money), and xenophobia, are deeply pro-plutocratic (unsurprisingly Soros advises QE2 too).

This essay will rectify some of Krugman’s massive disinformation. Whether he is fully conscious of it, or not, is irrelevant: Krugman gives bad advice to the government of the USA. The USA needs to engage in Colbertism, as Europe and China are doing, and the defense department of the USA does.

Sending more money on the ravenous world manipulating financiers, as Krugman suggests to do even more of, in practice, amounts to feeding more poison to the victim, throwing more gasoline on the fire, breeding more black mambas inside the house, while screaming that more insanity will bring strength. And lying about other countries, from China to Great Britain, does not help. It’s internationalism at its worst.

***

***

DEBASING CHINA:

According to Krugman, China is bad, Europe is bad, whilst the hard working USA is good, as it tries single handedly to pull the entire world economy out of the slump it itself created. But the USA’s goodness is not quite enough to master the foreign devils. So sad. This is apparently Krugman’s latest New Trade Theory: USA sinks, because big bad aliens did it.

Nothing to do with reaganomics, Obama’s admiration for Reagan, Clinton’s dismal selling of democracy and the future to plutocracy, and Krugman’s work for Reagan, hand in hand with Summers. This is all the past, we don’t need to ruminate it. Krugman would rather talk about…1937. (Not to tell us about American plutocracy supporting Hitler, while undermining democracy, as what was going on then, but to talk about FDR overenthusiastic support of… interest rates!)

One has to know that Krugman is viewed as one of the authors of“New Trade Theory”, NTT, a sophistry which basically boiled down to claiming that trade is good, no matter what. NTT did not work for the common folk, thus apparently Paul Krugman is now down to trading insults with reality, in the apparent hope that this will distract enough simple common folks. Thus New Trade Theory has revealed its true nature: adding insult to injury.

New Trade Theory faltered by ignoring the enormous leverage American plutocracy would get by going global, while no legal strings were attached, and conspiring with local dictators (the later a good source of Bill Clinton’s prodigious income). Plutocracy could drive at any speed, carry whatever cargo it wanted, including the most precious good: people’s employment.

The result is the unfolding economic and social disaster in the USA (and a lot of the world). Krugman may be trying to change his spots to cleanse his soul. And Krugman liberally attacks all foreigners, all over, most of the time, thus diverting attention to the root cause of the problem, already clear with his old boss, Reagan.

Last week Krugman was furious because China had lifted its short term interest rates up to 2.5%. That should lift the Chinese currency, which is one of the obsession of Krugman. So Krugman gets what he wanted, but that makes him even angrier (because, as expected, it changes nothing).

Meanwhile the dollar of the USA is returning a colossal .18% on short term maturities (Fed Funds rate). Yes that is about zero percent. Yes, that is about 13 times LESS than the return on the Chinese currency! In other words the USA is trying to lower the dollar as much as possible (Obama said he wanted to double USA exports in the next five years. But he forgot the slight detail that the USA is becoming a banana republic. I cannot believe he will find so many bananas to sell, even if they come super cheap, not everybody wants to splurge and become obese on American bananas).

So Krugman accuses China to debase its currency, but the USA is debasing the US dollar thirteen times more (this, what I just uttered, is a parody of what plutocratic economists call a model, full of sophisticated mathematics, the sort of things Krugman claims he does. but it’s little more than smoke and mirrors, and silly graphs which mean nothing, except that plutocracy is hiding behind them).

In truth China has something like four giant infrastructure projects running concurrently, in education, trains, biology, clean energy, etc. China builds universities, and China builds Airbuses (yes, from the company headquartered in Toulouse). Just the Chinese High Speed Rail infrastructure project amounts to 500 billion dollars or so (it uses basic European HSR technology).

China has even offered to finance and build the High Speed Rail in California. That is because all the American money goes to American plutocrats, and none is left for mundane activities. As Stiglitz pointed out a few days ago:

“The US Federal Reserve may make funds available to banks at close to zero interest rates, but if the banks make those funds available to small and medium-sized enterprises at all, it is at a much higher rate.”

The banks keep the money, making risk free profits, feeding their bonuses, and their power.

And don’t worry: Silicon Valley plutocrats use private planes, and do not want to see 250 mph trains in their backyards, for many reasons, so it will not happen, for a long time (except if American sheep wake up and turn into combative Europeans, which is unlikely, because they have been brainwashed into believe that it is cool to be as cool and politically minded as barnacles).

***

WRONG IS WRONG:

Krugman, Stiglitz, and also myself, would be viewed, by many as critics from the left. As the last British election unfolded, I was more in support of Mr. Brown, who had long aggravated me, but changed his spots, once he became Prime Minister. However, I hold that the truth is the truth. It is not because one overall disapproves of the general drift of the new PM, Cameron, that one should then support invented data inimical to Cameron. But that is what Krugman has been doing.

When the sheep invents data to support its cause, it invites the wolf to do the same, and the wolf will do it better, with more drastic consequences for the sheep.

In a remarkably misleading editorial, Krugman says the following (see full quotes in the notes):

1) “Fiscal austerity is the fad of 2010. That fad is fading, but the damage is done.” (False: successful Europeans nations, such as Sweden and Germany, have been at austerity for arguably 20 years. Let alone France in the 1930s…)

2) Krugman asserts that austerity does not rest on careful analysis(False: not only it rests on careful analysis, all the way from the High Middle Ages, but austerity rests on careful experience: Europe is made of more than 30 nations, and some went austere, and came out ahead, while the profligate ones are down in the dumps.)

3) Krugman claims that austerity has been justified by the hope of gaining confidence. (False: Europeans and Chinese don’t give primacy to market and business confidence, due to the fact that there, in China and Europe, the state rules, rather than the plutocracy. In the EU around half of the economy is state.)

4) Krugman claims that “The sensible thing, then, is to devise a plan for putting the nation’s fiscal house in order, while waiting until a solid economic recovery is under way before wielding the ax. But trendy fashion, almost by definition, isn’t sensible — and the British government seems determined to ignore the lessons of history.“

(False: the sensible thing to do is to do what has worked several times in Europe, let alone China: re-establish fiscal, economic and social order, FIRST. Don’t wait for plutocracy to toll for thee. There is no evidence that the other way around ever worked.)

-So what history is Krugman alluding to? Just the relevant, but specious case of the 1937 USA, when FDR squeezed “liquidity” (that is, money creation by private banks, in financial jargon) too early, reverting a nascent recovery of the PRIVATE economy.- This a special case, irrelevant to the present Europe and China. And, of course, irrelevant to the present USA where short term interest rates have long been put at zero by the government (and other rates have been made very low, by same government, to HUGE opportunity cost for the rest of society)-

5) Krugman compare incomparables by claiming that “Both the new British budget announced on Wednesday and the rhetoric that accompanied the announcement might have come straight from the desk of Andrew Mellon, the Treasury secretary who told President Herbert Hoover to fight the Depression by liquidating the farmers, liquidating the workers, and driving down wages.”Krugman confuses here the private sector in the USA in 1931, with the public sector in Great Britain in 2011. So many words, so many ideas, so many concepts, so many years! It can all go zoom zoom in one’s head!

6) Krugman then observes that Great Britain’s debt is below “historical average”. He disingenuously forgets to say that historically average debt, contracted in World War One was what the boom of the 1920s was engineered to fix (causing Great depression II). And that historically average debt, furthered by World War Two, and the USA financially perfidious behavior, ruined Great Britain durably thereafter. As a good American patriot, Krugman wants Great Britain to be historically indebted, so it can keep on being the USA’s poodle. Fortunately the present British government has no docile canine temperament, and has figured out American perfidy.

7) Sanctimoniously, Krugman gives the usual preaching about learning from history. But the preceding shows that as he threatens Great Britain with Japan’s fate, he forgets that Japan has a total state debt above 200% of GDP, nearly double that of Greece (itself much larger than Britain’s). Among dozens of other important facts he conveniently forgets to mention as true.

Paul Krugman forgets to say that, overall, the British government spending will keep on augmenting. UK government spending is planned to be UP by 6% in nominal terms by 2014. (Down 3% in real terms with inflation taken into account.) So much for the gloom and doom. Oh, wait…

Why so many spectacular cuts while spending increases? Because the payment of the interest on the British government debt is exploding, and the government has to budget it. It is pretty telling that Krugman does not mention the rotting elephant in the bathroom: what a jolly sight, what a happy surprise!

The problem of exploding interest is not exclusive to Great Britain. In France the entire national income tax is used to pay for the interest on the national debt. French national debt is still augmenting as more debt is piled up to pay for retirees, some retiring at 54 (as in the railways, as if we were still in the age of steam and coal). 10% of the French retirement is paid through more national debt.

***

KRUGMAN IS RIGHT (OF THE PLUTOCRATS), EXCEPT FOR ALL THE FACTS:

I reacted to Krugman’s “British Fashion Victims” with the following reply that the honorable Krugman and his New York Times had the kindness to publish:

In truth, Europe knows what it is doing, and Krugman, with all due respect, does not know enough about what he is talking about, to be cogent, as we will presently demonstrate by deconstructing most of his remarkably erroneous essay.

An example: Prime Minister Cameron program will reduce government employees by 490,000 (much of them through attrition, as employees retire with their expensive pensions). Krugman says that’s terrible, and it will depress the British economy.

However, Great Britain has six million civil servants in 2010. Proportionally to the population, it is as if the USA had 30 millioncivil servants (the UK has a bit more than 60.5 million citizens, the USA a bit more than 310 millions).

But how many civil servants do the USA have? Krugman forgot to point that number out. The USA has 18 millions employed in government, three times as much as in Great Britain. Three times as much, for five times as big a population. Thus, to have the same relative number of civil servants as the USA, PM Cameron would need to fire more than two million British civil servants.

Thus the situation is much different from what Krugman depicts it to be. Different times, different countries, different situations.

Krugman compares Prime Minister Cameron in 2011 to Hoover in 1931. In truth, by letting banks close, Hoover was destroying the private economy. Cameron and his government are cutting what they view as government fat. Education and defense are basically untouched. Nationalized health care is left completely untouched (as promised in the campaign).

Cameron’s and Clegg’s idea is to increase high technology plus innovation. Tories and Liberals are singing the praises of Airbus (a major employer in the UK, as it builds there Airbus’ wings). This is very far from what the Americans expected, as it behooves them that Britain would be anti-European, that is, against itself. The British government wants to make economies by sharing aircraft carriers with France. What is there not to like in this no non sense approach to the real European economy?

Indeed, the analysis in Britain is that the UK has fallen behind France and Germany in high technology industry (after centuries of leading, or being equal), and that this is the root of Great Britain’s doom, should it be not fixed immediately. The aim is to do whatever it takes to catch up in industrial high technology. This is a major insight of Tories and Liberals. It is of course a major rapprochement with the main line of France, first, and Germany, second.

This line of progress was the line of the Franks: instead of enslaving men, let technology do the work… And let’s keep the government small. After five hard centuries of using that method to pull out of the Dark Ages imposed by the Christian obscurantism and fascist theocracy, by the year 1000 CE, the Franks (basically the present Eurozone) had achieved the world’s highest GDP per head.

So it is not surprising that Europe is going back to the tried and true. All of Europe is reigning in state spending. Even Norway (which is more than twice richer, per head, than the USA). Even Sweden, the temple of social democracy, richer per capita than France, or Germany.

Even in Germany, the world number one exporter (even beating sneaky China, most of the time).

In France, more than 10% of the present retirement spending is paid by further borrowing by the state. This is unsustainable, thus unacceptable. Most of the French population (more than 60%) believe that it is unacceptable (while, paradoxically a majority supports the strikers according to the sacred French principle that loud protests are the only religion worth having… as long as it does not interfere with the All Saints vacation).

And the stingy Europeans are right. Those who have borrowed money are owned by those who lent it to them. The last time there was really major borrowing in Europe, it came to be called serfdom. This is indeed what happened in the High Middle Ages.

The debt had to be piled up, then, because the Imperium Francorum was invaded from all directions. First Charles Martel nationalized the church, to pay for the army. But that was not enough.

The terrible Muslim invasions were very expensive to fight as the attacking fascists had harnessed the resources of more than half, and the richest half, of the Roman empire to feed and equip their jihadist armies.

Thus, although the Franks had outlawed slavery, overspending, caused in great part by the necessity of rising the greatest armies since the heydays of imperial Rome, and the cost of reconstruction once the ravaging Muslim armies had been pushed out, brought them right back down into a system where the average person was indebted… And being indebted means being indebted to the rich.

The first European Prime Minister who came to understand that government spending had to be cut down was the Swedish PM, and he was a Social-Democrat. Social democrats had put in place the all controlling Swedish nanny state. That Swedish PM, as progressive a liberal as they come, embarked on a savage austerity program who made him very hated.

At the time, the Swedish economy was collapsing, so there was no choice. The PM started very crafty changes, replacing a lot of costly central state functions by cheaper local citizen initiatives, for example in health care ( midwives and other non MD medical personnel were allowed to make a lot of medical procedures, and lots of health care is conducted on the phone, making Sweden the best health care system, even ahead of the 2% of GDP costlier French health care, which is more gold plated).

Now, but for oil rich Norway, Sweden is doing better economically and socially than all other European countries. And Sweden is in the EU, and it has no oil. The Swedes are proselytizing, and the rest of the 26 EU countries are inspired by it.

In general, Scandinavia has long cracked down on the imperial state. Scandinavian politicians pay for all their private expenses, and do not fly business on flights less than 3.5 hours. One is far from the Imperial Roman state based in Washington, with a First Man (“Princeps”) and a “First Lady” who make Nero and Caligula look like misers, relatively speaking.

***

IMPERIAL USA, DOWN THE PLUTOCRATIC ROAD: I SELL, THEREFORE I RULE:

Why does this all mean? Trying to boost the economy through throwing money at the people was done during the worst centuries of Rome. It led to success only in the sense that the fascist imperial degeneracy kept on going.

Of course, some will say that those days are back. Imperial Rome was at its most grotesque when the Praetorian Guard put the imperial throne for auction. Yesterday, Barack Obama came to the San Francisco Bay Area. Plutocrats paid $30,400 per person to come to events where the president was acting up. Two months old plutocratic babies paid their $30,400. Then, to have your photograph taken with the president, it would cost you another $6,500.

Yes, $30,400 is more than half the average family income in the USA. And yes, Barack Obama visited several plutocratic homes. Meanwhile the Praetorian Guard is building bases as if it were going to stay a century in Afghanistan. Never mind what Obama says, he will do as the plutocrats say. As long as they pay. A Silicon Valley plutocrat spent more than 100 million dollars of her money to be elected governor.

***

LEVERAGING STATE SPENDING FOR THE TECHNOLOGICAL ADVANCEMENT OF THE ECONOMY:

I am as progressive as they come. I am for central state spending in health, education, etc. I believe in Colbertism, the invention, earlier, by King Henri IV, of the high technology, legislated advancing economy to provide every family with a hen in the pot, at least once a week, as he put it.

However, this government investing in a valuable future works better when the spending is similar to what is done with money creation through private banks (the fractional reserve money creation system). The state brings in 10%, of the money, the privates do the rest. So the privates leverage on public money. For example in Europe, 250 mph, High Speed Rail is financed and built by private companies, leveraging governmental input. The USA used to do this, for example when railroads were built in the USA in the 19C. But for that government has to have available money to spend. This is highly relevant: 1.2 million construction workers are idle, and they could be put to work on conventional railroads, making them faster, safer, more efficient. But of course that cannot happen as long as the money goes to the corruptocrats and other plutocrats.

To borrow for current spending is unacceptable, in a family, but even more in a country: a family can die, and escape debt that way, but not a country…without great mayhem. Actually this is exactly how debt leads to war.

Cautious spending, investment spending, is the way to go. Unfortunately, Obama’s spending, deluded by Reagan advisers, and their plutocratic masters, has been neither. What British PM Cameron is doing is risky, but it may well work. What has been done under Obama, so far, cannot work.

***

Patrice Ayme

***

Note 1: STIMULATING PLUTOCRACY, NOT JOBS: First there was Larry Summers, who used to be a Reagan economic adviser, at the inception of the plan to put the plutocracy in power much more than it already was (“trickle-down economics”). Summers advised to write as many big checks to the banks as needed, to save their owners and managers.

TARP was put in evidence, but was only a small part of the (on-going) support to the giant banks and their giant owners. A grandly called “stimulus” was also put in evidence. But it was nothing of the sort. More than half of it was made of tax cuts (yes, a la Reagan!), and most of the rest compensated for the states’ financial collapse. A tiny proportion went to creating jobs (mostly of the menial, non multiplying type, such as improving trails in the middle of national lands).

This meant that money creation was mostly directed at Wall Street. Money was created, to serve Wall Street, not industry. In 2 years Obama stimulated jobs for 50 billion dollars (the trails above, and a few potholes), while Wall Street, in bonuses alone, distributed to itself 300 billion dollars. The source of the money is the same: taxpayers. To create these 300 billion dollars of bonuses, about four trillion dollars were spent.

How? Through Quantitative Easing. Basically the government lent short at zero interest to the giant banks, which were then allowed to reinvest with the government on so called longer maturities, at much higher interest. Many other tricks were used, such as having nationalized companies (FHA, Fannie Mae, Freddie Mac) buy at outrageous prices worthless mish mash of over-valued mortgages. said nationalized companies are broke.

The other of ex-twenty something Reagan adviser, Summers’ alter ego, at least in the Reagan White House, was Paul Krugman. He seems to be listened to recently (considering the USA’s aggressive dollar devaluation, and all azimuths attacks against other countries).

***

Note 2: HOW THE QUR’AN CREATED MIDDLE AGE SERFDOM: One way the Franks beat the Muslim armies, aside from sheer intelligence, was with very heavy cavalry, and its giant armored horses. The cost was tremendous, but a cavalry charge by European knights would go through Muslim horse like a hot knife into butter. More generally a highly specialized military aristocracy, training itself from early childhood was created (under Charles Martel). But it put all of Western Europe in debt. On the positive side, the savages from the north (Vikings), from the east (various types of Huns), and the south (Muslims), were thereafter domesticated, once their armies had been defeated and chased out (which took more than 12 centuries in the case of Europe itself, and various Muslim theocracies).

Note 3: American ignorance is an astounding marvel: The other day, Fox News’ Neal Cavuto, one of Fox’s stars, who thinks he is a business genius, was interviewing a BRITISH European Member of Parliament in Strasbourg, France (the Euro parliament sits in Strasbourg, part time).

As he interviewed the British European MP, Cavuto idiotically insisted, again and again, that “Great Britain had to be happy not being part of that club“. Meaning that Great Britain had to be happy not being in the European UNION. First, the EU is not a club, but an Union.

Secondly Cavuto was interviewing a British Euro MP, knowing very well that the gentleman was British, and a Euro MP, but apparently, Cavuto was congenitally incapable of drawing the conclusion that this meant that Great Britain was part of the European Union.

This is the degree of ignorance of Americans about Europe, in full evidence. And it’s not just Fox’s Cavuto: Krugman and Stiglitz, and smart, for American economists, are both deeply ignorant of European politics, history and economics, to the point that the advice they give about Europe reminds of the advice of Huns about Ukraine.

(Stiglitz, as Krugman has long been anti-European; in the last few days, Stiglitz wrote an essay in the Financial Times along the lines I have long held, of doing what one could call an investment stimulus… by opposition to a current account debt pile up, advocated before. So some are learning… Hopefully such knowledge can reach Obama…)

***

Will Hutton, Them and Us

Changing Britain – Why We Need A Fair Society

 

Will Hutton

 

I have been reading Will Hutton‘s latest book for the last couple of weeks and am now through the first 5 chapters, at the time of writing this Post!  To my mind, it’s a very powerful and extremely well-argued summary of the sickness that has engulfed Britain, and by implication, other countries who have had similar experiences over the last 20 years.

There was a long extract published by the Guardian on the 26th September 2010 which gives one a good feel for the book.  Here’s how that extract starts:

The British are a lost tribe – disoriented, brooding and suspicious. They have lived through the biggest bank bail-out in history and the deepest recession since the 1930s, and they are now being warned that they face a decade of unparalleled public and private austerity. Yet only a few years earlier their political and business leaders were congratulating themselves on creating a new economic alchemy of unbroken growth based on financial services, open markets and a seemingly unending credit and property boom. As we know now, that was a false prospectus. All that had been created was a bubble economy and society. Yet while the country is now exhorted to tighten its belt and pay off its debts, those who created the crisis — the country’s CEOs and bankers, still living on Planet Extravagance, not to mention mainstream politicians — all want to get back to “business as usual”: the world of 1997 to 2007.

There are many, many sentences in the book that have one gasping for breath.  One of them that particular struck me was one on Page 13, see below for the sentence in italics.  But let me include sufficient text to put the sentence into context:

Today, philanthropy or living according to a particular moral code does not confer status.  Only money is able to do that.  People start to question whether vocational career choices – in farming, teaching, medicine or science – make any sense when society rewards them so lowly while rewarding finance so high.  Material values start to crowd out altruism, philanthropy and restraint.

Then comes this staggering reflection:

Two incidents in September 2007 highlighted the new values.  Lance Bombardier Ben Parkinson, who lost both legs after a landmine exploded in Afghanistan, was offered £152,000 compensation by the Ministry of Defence.  The very same week, Eric Nicoli left his job as CEO of EMI – having failed to turn around the company – with a pay-off of £3 million. [My italics]

Earlier, on page 6, Hutton writes of Richard Lambert, head of the Confederation of British Industry, the CBI as having said in March 2010, “for the first time in history officers of a company can become seriously rich without risking any of their own money.”   Here’s another piece from that extract published in the Guardian:

We need a shared understanding of what constitutes fairness in order to restore our society. At present, there is none. The rich argue that it is fair for them to be so wealthy, in much the same way as Athenian noblemen believed that their riches were signifiers of their worth. They believe they owe little or nothing to society, government or public institutions. They accept no limit or proportionality to their wealth, benchmarking themselves only against their fellow rich. Philanthropic giving is declining; tax avoidance is rising; and executive pay is rising exponentially. All three are justified by the doctrine that the rich simply deserve to be rich. Meanwhile, the poor, in their view – and that of a virulent right-wing media – largely deserve their plight because they could have chosen otherwise. The mockery of chavs is premised on the assumption that they could be different if they wanted to be. The poor could work, save and show some initiative. So why should we indulge them by giving them state handouts?

This lies behind the arrogance with which bankers still defend their bonuses, in spite of everything that has happened over the past few years.

OK, you get my drift! I could go on and on but, hopefully, my point is made.  This book by Hutton is going to be another of his classics and may well be seen as the ‘tipping point’ when society looks back in a decade’s time with that wonderful 20:20 hindsight!

Finally, are there other conclusions to be made of Hutton’s approach?  Yes, of course.  Reading the comments posted on the Guardian web page will show you many.

By Paul Handover