The “cap” on bankers bonuses that the Tories have just removed had been set at double their annual salary. Yes, double their annual salary. So a banker on £320,000 a year could only get an annual bonus of £640,000. That has now been lifted so they will be able to get annual bonuses of millions again.
On each million of which they will also benefit from a new £55,000 tax cut.
The greatest irony of this is that the first multimillion pound bankers’ bonuses will be going this Christmas to bankers who shorted the pound before Kwasi Kwarteng’s “mini-budget”.
The cap on bankers’ bonuses was largely a sop to the public who had bailed out the bankers with public money borrowed – with trillions in interest – from the very bankers we were bailing out. In effect Gordon Brown created sterling and gave it free to the bankers who caused the collapse, so they could lend it to the public purse and we could pay it back over two decades of public austerity.
The idea of the cap on bankers’ bonuses was to remove the perverse incentive whereby a banker got a bonus of ten years salary by creating “assets” of bad loans, with no care whether those loans collapsed or not two years later, as he already had his ten years’ bonus. The Tories have just brought back that perverse incentive.
Krug all round in the City!! It’s a bonanza for lap dance club owners and cocaine dealers. It’s a disaster for us.
This perverse incentive will be needed to keep any money flowing into UK mortgages. With the Bank rate sure to exceed 5% in the next few months and inflation continuing, mortgage rates will be in double digits by this time next year, and we are only a couple of years away from mass default and repossession.
The wealthy will of course be able to use some of their tax cut money to take advantage of the stamp duty cut and snap up the repossessed properties as buy to let. That is what the Tories call growing the economy.
Over 50% of the money from the tax cuts will benefit the top 5% of earners. If wealth inequality were the primary driver of economic growth – and that is the basis of Kwarteng’s economic theory – then how do you explain that the UK already has the second highest wealth inequality in the G7, behind only the USA, yet the lowest economic growth? Wealth inequality has been increasing in the UK for decades. Kwarteng’s contention that excessive redistribution is the UK’s economic problem, is risible.
The Tories have declared class war by simply giving more money to rich people. This is based on two contentions:
1) Rich people will invest their money as capital in productive UK enterprises
2) Rich people will boost the economy by buying goods and services in the UK
The problem is, the days of the manufacturing entrepreneur in the UK are long gone. Rich people invest their money in the overheated housing market, or invest it overseas. Given Kwarteng’s borrowing spectacular is crashing the pound, the chances of any significant proportion of the money he has just given the wealthy being invested in UK assets is virtually nil.
The second proposition is manifestly untrue. Poor people have a far higher propensity to spend any extra money locally than rich people. They seldom have much choice. If you want to boost the UK economy, give money to the poor.
We should not forget that not only do we have this huge tax giveaway to the rich, we have the decision to tackle the energy crisis by yet more taxpayer borrowing, so the war profiteering of the energy companies will be paid for by ordinary people through yet more years of austerity and cuts to public services.
The notion of borrowing to boost public spending and demand during a recession is time-honoured. But borrowing to subsidise the super-profits of energy companies and to fund tax cuts for the rich is simply class warfare, an undisguised transfer of wealth from the poor to the rich. I have used the word “poor” throughout this article – as we become a helot society, that term encompasses much of the working population.
There will be a part two of this class warfare – the attack on workers’ rights, on the right to strike, on paid holiday, on maximum working hours, on the minimum wage, on sick pay and many more.
A couple of weeks ago I explained that I believed we were approaching a crisis of capitalism. I must confess it did not occur to me that it would be the Tories who start the class war.
I want to finish with one hopeful thought. The Tory media have of course been delighted with this extreme right wing agenda. The Daily Mail, as you might imagine, was crowing like crazy.
But there is a limit to how far you can fleece even Tory voters without their noticing. There was a fundamental adverse reaction from the Daily Mail’s online readers. These were the “best-rated” comments.
And these were the “worst-rated” comments
Even the Mail’s readers gave the worst rating by far to a comment that said “at last, a proper Tory government”, and uprated the negative comments by a ration of ten to one. The Tories have lost their own room. Once you are significantly too right wing for Mail readers, you are way out there. These comments also put the BBC’s carefully selected, Tory supporting “vox-pops” into stark contrast.
It is a great tragedy that just as the Tory party commits electoral suicide, the Labour Party reaches a climax of support for neo-liberalism and private sector, for profit provision of public services. There is simply no functioning democracy in the UK that offers voters any genuine choice of political direction. I remain convinced the only solution is to destroy the UK as a political unit.
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Craig said:
“A couple of weeks ago I explained that I believed we were approaching a crisis of capitalism. I must confess it did not occur to me that it would be the Tories who start the class war.”
The Tories have been permanently in a class war for all of my lifetime (68 years and counting) — the really bad news is that for the most part they are winning it. Any gains made by the working class, via the Labour Party are rapidly dismantled as soon as the Tories get in again. (The only exception to that has been the NHS — until now!)
On another note the second part of the Al Jazeera Labour Files has now been posted:
Part 1, “The Labour Files: The Purge”: https://www.youtube.com/watch?v=elp18OvnNV0
Part 2, “The Labour Files – The Crisis”: https://www.youtube.com/watch?v=5DTMF0MSXng
I hate to say it but the middle-classes took over the Labour Party and now it has lost all connection to the working class. It’s a nightmare!
The Tories have been permanently in a class war for all of my lifetime (68 years and counting)
Not true. Tory PMs like Harold Macmillan, Douglas-Home, and Ted Heath presided over government policies that were far to the Left of Blair or Brown. The NHS worked under Macmillan; there was no talk about privatising electricity generation, water supply, or the railways. Top tax rate on high incomes was over 90% with no serious discussion of reducing it.
The class war isn’t specific to the Tories; both Tories and Labour are parties for the rich. Keir Starmer would never propose anything as “socialist” as going back to the policies of Macmillan or Heath.
I’ll grant you that Liz Truss is probably worse that Keir Starmer, but it’s merely a difference of degree.
Exactly; Macmillan and co. would nowadays be expelled from the “Labour’ party as ultra-leftist ! In the sixties you never saw the poverty you see today, and I do not recall food banks where you are now asked not to contribute potatoes, as poor people cannot afford the fuel to cook them!
With respect, you fail to take into account the facts.
Firstly, the free NHS glasses, homes fit to live in, and all the other goodies Clement Attlee Nye Bevin etc, gave to the nations of this islands, after being forced to fight two brutal wars….. not for freedom, but establishment and bankers, just as is happening today.
The lack of education, the greed and selfishness and inhumanity to each other gives the nectar to give tories life, hence the class war. Who would have thought 68 years ago, laws could be passed to sell off the NHS to American financiers, or that the English government who made our forefathers fight Nazism, would be extorting money, starving and freezing the people in these nations to protect and finance the Ukrainian Nazi regime! Not only that, but starving people – just as the tories did in 1930s to the nations of these islands, which allowed them to create the hunger for war! Mass immigration, and emigration, poverty, no redress in law. Christ, read your history: the right to go to trial was suspended, at the start of WW2. It was supposed to be reinstated at the end of the war; do you actually realise why this was never allowed? The excesses of government could be tested at the lowest edge of society, and excesses curtailed.
“I hate to say it but the middle-classes took over the Labour Party and now it has lost all connection to the working class. It’s a nightmare!”
More like the security services took it over. The middle classes are thing of the past.
It seems to be a continuing policy of demoralisation without respite and with spite. There’s no policy just different forms of punishment.
Trickle down doesn’t work. When Reagan and Bush tried it the income of the lowest earners rose 6% but the top 5% saw their incomes rise 60% and the wealth of the upper 1% trebled. It seems we have a government ignorant of history.
Stolen off the internet – there is a good joke about Trickle Down.
I’d tell it but 99% of you won’t get it.
Ignorant of history? Trebling the income of the top 1% would be considered a fantastic result, and that’s exactly what they’d like to see!
G nl
It does work for the rich, smart, strong and powerful. Capitalism at it’s best ?
Now that is the fantasy. Rich = smart, strong, and powerful. Rich, in general, = privileged at birth with a wealthy leg up, bought into the best schools, anchored into the wealthy classes by connections, and hiding from any consequences to their dubious actions behind armies of high-priced lawyers. Not “smart, strong, and powerful.” Just heavily insulated.
Where did I use = ?
You missed my point but otherwise you are right.
Neither rich = smart nor smart = rich is necessarily true. Anyway, being born intelligent is just as much a matter of luck as being born rich.
Trickle down doesn’t work.
You don’t get it, Pears. It works perfectly – for them – the 0,1% and their friends. It’s not supposed to work for the rest of us.
> Trickle down doesn’t work. When Reagan and Bush tried it the income of the lowest earners rose 6%
In what sense is that “doesn’t work”?
I mean, I agree that trickle-down doesn’t work, of course; but if Reaganomics increased poor peoples’ incomes, that doesn’t seem to be an awful outcome. Unless the goal is to make rich people poorer.
> Trickle down doesn’t work. When Reagan and Bush tried it the income of the lowest earners rose 6%
In what sense is that “doesn’t work”?
In the sense that it is a very expensive way of achieving the object. If you burn dollar bills, you will become warmer, but dollar bills are not therefore a viable heating fuel.
That Red wall is looking very red again.
If I heard right Miss Trusst even talked about attracting more immigrants to stimulate growth.
Shockingly few observers understood that this was the reason why the Tories and media wanted to get rid off Bozo — effortlessly convincing liberals and centrists that he was “the worst PM ever”. It was only ever because they did not consider him rightwing enough economically.
It was instructive to see Mark Littlewood of the IEA celebrating this Britannia Unchained mini budget. At the last election his Lib Dems ran far to the right of Johnson’s Tories economically, promising a future of permanent austerity for the UK. Lest we forget, Britannia Unchained’s Liz Truss was herself a Lib Dem. I mention this in the context of your lament that “There is simply no functioning democracy in the UK that offers voters any genuine choice of political direction”. The fundamental nature of the Lib Dems has to be remembered whenever we hear centrists trying to kid us that the solution is a PR “progressive alliance” of LDs and neoliberal Mandelson Labour.
Classic “Deep State” strategy.
With Labour now firmly in the grip of the right wing establishment, Truss becomes the needed sacrificial goat.
Her over-the-top policies quickly cause a new election, and with Labour’s own failings suddenly becoming less odious by comparison, power is transferred to them until the Conservatives can choose a new leader with perhaps more palatable, but same old, right wing policies.
It’s business as usual.
Correct me if I’m wrong (I usually am!), but the only part of that (very plausible) sequence of events that seems to require any “deep state strategy” is the first, i.e., the neutering of the official opposition. The rest seems likely to have happened (or be about to happen) naturally, without anyone having to pull any strings.
Having a suitable alternate controllable party leader is of course critical. Sometime the new leader doesn’t play ball. (That interestingly was what happened when the US, acting as Russia’s deep state, chose Putin to replace Yeltsin).
Setting up a new leader to “lose” also gives a window for other generally unpopular things wanted by the deep state, or perhaps a special interest group, within the deep state, to be pushed through. I don’t know the details but I understand that Truss is currently enacting legislation favouring Israel, for example.
Quite soon this government will be gone, but many of their actions will live on, and when they come back into power the new leaders will be less likely to be blamed.
In addition to the sacrificial goat, other goats that the the establishment would rather get rid of will go too.
In some respects there is nothing wrong with much of this, it’s politics. However, when the opposition parties have been emasculated and distorted through underhand smear campaigns and other dishonest means, and there is a main stream media, and justice system totally controlled by the establishment, the country becomes locked into the worst of all situations such as we see now.
I know what you are saying about Putin as Yeltsin substitute but link would be ? nice.
Our family’s favourite comedian is Kevin Bridges and in this clip he jokes
about austerity and poor people spending and economy. It’s funny and yet true
https://www.youtube.com/watch?v=SrfjDfL0fxQ
On this argument I miss -N (Sorry)
This move is neither good Economics or politically smart.
Is it to enrich your mates donors and media( most of them will be affected).
What CM forgot is Kwasi … statement about part time jobbers working more
or lose benefits.
My favorite rhetorical question asked by ? “How can you morally or ethically justify Millions salary”? or as my favorite economist said: if the CEO died tomorrow, the company will not collapse!
Mary, Mary, quite contrary, how do your personal fortunes grow? Never mind, the Moscow gold standard will see you right, as will all the arms dealers.
Will Kwasi turn on Mary? We ought to watch this little duet, for she has form.
And people say Marxism is dead, when proponents of the class struggle are in power, just from the other side of the battle lines.
I don’t have a problem with uncapping bankers’ bonuses (as long as the bank paying them is not receiving bailout funds). After all, even at the lower 40% marginal tax rate, nearly half of that is going into government coffers and is coming from the private sector. The real issue is the refusal to tax energy company windfall profits and push the burden onto taxpayers and unborn generations. Prices have to be allowed to rise to let demand balance supply, but that doesn’t mean that pillars of the Establishment like BP should be allowed to engage in war profiteering.
War is part of the economy (market economy). “Prices have to be allowed to rise to let demand balance supply, but, bla bla”. There is a war and markets react and that is a beauty of wars and markets, like drought or flooding etc. The EU doesn’t want to import Russian gas, and supply is diminished and the price goes up, as you say, to balance the demand?.
Fazal
Too much demand and not enough supply caused by political decisions. Nothing to do with war, but with sanctions imposed by us.
I don’t have a problem with uncapping bankers’ bonuses
Well, you should have a problem.
If somebody works twice as hard as I do and is roughly 50% smarter, I see no problem with them getting 3 times as much salary as I do. Most people agree with that. And maybe somebody who does an unpleasant job, like cleaning the public toilets, deserves a premium even if they don’t work any harder and aren’t very bright.
But we’re talking about bankers getting 10 times or more, not 3 times, as much as a pretty good salary for a well-educated, hard-working person. There are people who worked twice as hard as I did, but nobody on earth worked 10 times as hard, there are only so many hours in a week and everybody needs to eat and sleep. Responsible retail banking is just accounting and the people who do it should be paid as accountants. Research has shown that most investment banking generates returns no better than index funds. That leaves trading, which requires ability but is very risky – banks should not be allowed to do it at all – it’s a bit like gambling, it can generate huge returns (->bonuses) but then huge losses resulting in a taxpayer-subsidised bailout.
I actually worked in banking for a while. I’ve met a lot of these people and they’re nothing special as far as ability goes. Some do work hard, but more like 10% to 20% harder, not twice as hard, as a typical middle manager.
The problems with excessive incomes are twofold: (1) they stoke inequality, already too high in the UK, and (2) they distort incentives, sucking people into parasitic jobs instead of useful jobs like medicine or engineering,
Fazal Majid
Capital doesn’t seek to control government in the interests of creating a free market, they do so to get markets rigged in their favour. Hence bailout. In a free market the banks would have gone bust.
You should have a concern about excessive bonuses because they encourage casino banking. The real problem of banking is that everyday banking should be separated from and perhaps treated as legal banking whereas the speculative banking reclassified as gambling.
The oil industry is up there with the pensions and timber-growing industries when it comes to very long product life-cycles. Sniffing out where there might be oil, drilling and not finding it, drilling again somewhere else, all takes time. Actual production of saleable commodity comes years later. A windfall tax during good (for oil companies) times is unfair unless we are also willing to bail them out during their long dry spells, which we are not.
To bring myself back on topic – I am sure that by now the bonus-capped bankers have arranged some other equally trough-ey changes to their reward system so I doubt they will be too bothered either way so long as they get that sweet sweet cash in their pockets.
I think the oil companies have sniffed out their next sources of supply…. And guess where they are.
Craig wrote:
– “The Tories have declared class war by simply giving more money to rich people” and “There is simply no functioning democracy in the UK that offers voters any genuine choice of political direction.”
In England, there is no choice left but civil resistance. Please join the broad coalition occupying Westminster for the whole of October, consisting of Corbyn’s Peace and Justice Project, Enough is Enough, Don’t Pay, the Quakers, Free Julian Assange, every environmental direct-action group you’ve ever heard of, and multiple trade unions. It’s the whole of October, so attend whenever and for as long as you can. See you there.
And if you can’t get to London, please support in your own locality; there are multiple campaigns preparing to do this, too.
No thanks.
Too busy seeking Scottish Independence.
In Scotland we have not voted a Conservative majority my whole lifetime.
And I am 66.
What you see in U.K. is England’s political disaster; it’s not Scottish, it’s not Welsh, it’s not Irish.
It’s English.
Read my comment again:
– “In England…”
I spent much of 2013 and 2014 in Scotland helping campaign for Scottish independence, which I still support. Any support you could reciprocate would be appreciated.
Do you really believe that an independent Scotland will be a beacon of socialism?
There you go; English problem, not Scottish problem, ya da ya da ya da!
It’s not nationalism that’s the problem though – seeing the problem in this light, is the problem. English working people have more in common with Scots working people than with the English and Scots ruling class that keeps them devoid of power, jobs and even hope. It’s about class. Forget this nationalism BS. Solidarity of working people of all nationalities is our way out of this shit. Forget Parliament, whether in Westminster or Edinburgh. Civil disobedience everywhere.
SA and Ingwe, down here near Westminster I would appreciate Terence Callachan’s support, but he has a point. The final two sentences of Craig’s post:
– “There is simply no functioning democracy in the UK that offers voters any genuine choice of political direction. I remain convinced the only solution is to destroy the UK as a political unit.”
I too remain convinced that Scottish independence would be greatly beneficial; for Scotland, obviously, but also for all parts of the current “UK”, and for the world as a whole. The UK government is particularly dysfunctional, corrupt and mendacious, a lynch-pin in most of what is wrong in the world. Its fragmentation would be a major step towards improvement for all.
We all have to do whatever might help, and Scotland is on the brink of breaking away, so Scottish independence is a major opportunity. World politics is transfixed in a dysfunctional state, so our task like trying to free a badly corroded bolt – apply freeing fluid, try twisting it left, wire brush it, more freeing fluid, twist at it back and forth, tap it from all directions, heat it, twist at it again, whatever you can think of until it starts to free up… There’s no one magic solution, just ingenuity, effort, and lots of perseverance.
> but also for all parts of the current “UK”, and for the world as a whole.
Sadly, I think you’re optimistic (I’m an English supporter of Scottish independence). If Scotland become independent but nothing else changes, then the UK rump will just become more right-wing and extreme. However if it was accompanied by regional governments in England, with real developed powers, possibly under a ranked preference PR system, we might get better government here.
Jimmeh, I think in England things would get worse before they got better.
It is not just in England that the only choice left is civil disobedience. Vision is parochially narrowed in times like these and the wider picture also tells a story we should factor in when assessing our choices locally – I would go so far as to say that civil disobedience is urgently needed while it is still possible! Everywhere. There are laws being introduced internationally to enshrine “state of emergency” powers beyond pandemic preparedness, and some now being set for debate openly state that human rights shall be abolished. This has gone beyond a fight for our democracies – it is a fight for survival. Consider this: to avoid such a dystopia we would willingly send ouir sons and daughters to war in the trenches, yet it is being created around us at home while we behave like slowly boiled frogs. This absolutely is NOT a matter of your cause OR my cause, of Scotland’s needs OR England’s needs, of the Trans Cause versus the Racial Equality Cause, or any other intersectional subdivision – these atomising priorities are very effectively neutering the support for what is at base the Human Cause. Rise up as Humans!
I’m sure I heard it on LBC radio news, or some guy commenting on a radio show that bankers gave themselves bonuses all the time, it’s just that they didn’t call them bankers bonuses, they used alternative descriptions to get round any legislation. As we were often told the banks are too big to fail.
The mini budget as you rightly say is a budget for the well off, and Chancellor Kwasi Kwarteng, has vowed to come down harder on those who are in receipt of Universal Credit, as someone said on the radio the other day after hearing about the mini budget, they said “Its Robin Hood in reverse” I have to agree with that.
https://www.moneysavingexpert.com/news/2022/09/chancellor-unveils-mini-budget-tax-cuts/
“The mini budget as you rightly say is a budget for the well off,”
No it is not. It’s a budget for the obscenely rich.
I know people who are “well off”, with annual incomes of £50,000 or so. This isn’t a budget for them. The big winners are the people with annual incomes of over £250,000 and “bonuses” bigger than most of us can imagine.
It’s not a budget for the 1%. It’s a budget for the 0.1%.
From what I have witnessed tonight the Labour Party, morphing into a version of UKIP, is effectively joining the Tories in its declaration of class war.
All that Starmer is crowing about is that he will revoke the abolition of the 45% tax threshold, a drop on the ocean, while ignoring everything else in case he frightens the donors and the bankers.
Has the feel of Truss fulfilling the promises she made to get the votes she needed to beat Sunak. Even promising extreme economics and being white didn’t get her the landslide she hoped for. I have mixed feelings about her leadership, Sunak would have (for a Tory) been much better. On the other hand Truss is appealing to only an extreme section of her own party and not to the votes that they had ‘lent’ to them. So she ‘should’ mean an end to Tory rule. Only Keir Starmer’s incompetence and insistence on having right wing policies could possibly prevent this..
Craig, Please don’t feel you have to comment on every major issue, and I think you are out of your comfort zone here. Far better (and maybe retain more subscribers) if you give some insider info on why the FO has fallen in love with the US neo-con scam that is Ukraine.
Peter Hitchens in The Mail on Sunday ( https://hitchensblog.mailonsunday.co.uk/ ) is excellent today, and he is an outsider. Craig, you could provide us with so much more insider’s insight.
Thank you for the link. We live in strange times when opinion columns in the Mail are more rational than government policy.
Here is the permanent link for the article that Conall Boyle refers to:
https://hitchensblog.mailonsunday.co.uk/2022/09/a-plea-for-civilised-debate-rather-than-mccarthyite-intolerance-on-the-ukraine-issue.html
The article asks:
– “What is Britain’s interest in Ukraine? Why are we shovelling weapons and equipment into that country, despite the fact that our national budget is stretched to bursting and our own armed forces have for many years been starved of money, men and kit? “
It is to weaken Russia, because the UK is supporting the US in attempting to control the world’s resources, especially hydrocarbons, especially liquid hydrocarbon fuel. This in turn is because governments do not wish to admit to their populations that our entire high energy, high consumption way of life has to change.
But this doesn’t merely delay the inevitable, it makes the eventual crash worse and worse the longer it goes on, while our way of life degrades the biosphere faster and faster.
Thanks for that link. Do you suppose there may be oil under parts of the Ukraine?
– “Do you suppose there may be oil under parts of the Ukraine?”
I think there may be a little offshore, but it’s a bit more complicated than that.
Jarek,
There is oil in Donbas; and there’s quite a lot of oil in Crimea.
Here’s a big picture explanation worth considering – it’s by Eamon McKinney at the Strategic Culture website. What he writes certainly fits what we’re seeing:
https://strategic-culture.org/news/2022/09/25/the-spoils-of-war/
If that disavowed Rand report summary and the recipient list also recently leaked turns out to be true then even the lumpen mass of propagandised mutes in Germany may finally ask the questions they have been too terrified to speak. I do wonder what will happen when a people who have been so suppressed for so long actually breaks the chains…
I’m getting “Firefox can’t establish a connection to the server at strategic-culture.org”. The problem appears to be in a Russian network:
clark@Old-HP:~$ ping strategic-culture.orgPING strategic-culture.org (192.145.97.84) 56(84) bytes of data.
From 40g-peer.highspeednetwork.ru (92.63.203.89) icmp_seq=3 Destination Host Unreachable
From 40g-peer.highspeednetwork.ru (92.63.203.89) icmp_seq=6 Destination Host Unreachable
From 40g-peer.highspeednetwork.ru (92.63.203.89) icmp_seq=9 Destination Host Unreachable
etc.
archive.org claims to have nothing from the site since 27 Feb 2021. I’ll check again later, but this is off-topic here so any further discussion should be posted as a new topic in the forums.
I thought the article was relevant to Craig’s post since it puts the UK position Craig writes about into a broader context.
I know some friends (all in Australia) can’t open Strategic Culture, don’t know why.
It’s probably blocked by your nameserver. If you can point your browser at a different nameserver, you will be able to get it. At least that worked for me.
Strategic-culture.org is working again, so I took a look around. I found some sensible articles, some misquotes and exaggerations, and a few articles that are very unpleasant indeed. I won’t be using the site.
Craig wrote a long piece on Ukraine just this weekend, still open for comments from what I can see. Unlike you he also cares about what is being done to people here and is unlikely to stop caring to please you.
“Hitchens an outsider”..LOL
“…mortgage rates will be in double digits by this time next year, and we are only a couple of years away from mass default and repossession.”
“You will own nothing and you will be happy.” The Great Reset, WEF, Build Back Better.
The first part is playing out nicely for them.
Interesting isn’t it? I do not think this is confirmation bias. Take care Robyn, by use of the WEF acronym you may trigger the “Conspiracy Nut” trolling crowd who will want you consigned to the assorted “nut job” bin. They do have their pet stock phrases and get paid for using them regularly.
They often seem to avoid censure for their typical ad hominem approach too, but that may actually be my confirmation bias in evidence. If I were an Integrity Initiative manager I would definitely have my senior trolls take out subscription accounts to ingratiate themselves in opinion setting spaces. They would pay-to-play more where the opinion of the day becomes more strategically important. This is also a weakness of the Patreon Model. Business as usual.
“The Great Reset” is a conspiracy promoted by the WEF as cover for Western WW3 preparations.
The Banker’s bonus issue is irrelevant. Much, much better for UK if large bonus paid in the UK and taxed at 40%, and also proceeds spent in the UK rather than paid in US, Timbuctoo or Paris.
I agree that they have gone mad though, cutting taxes , financed by debt in a period of high inflation and shortage of labour is completely crazy, pouring fuel on an already raging fire, and as Craig says it will force the pathetic Bank of England to pretend a bit harder that it is fighting inflation and may even lead to double digit interest rates.
We now have the exact opposite situation to the early 2000s when we had disinflation from the influx of less expensive labour, cheap Chinese goods, and cheap energy, we became richer while doing nothing. We now have to face the reality that we are getting poorer.
Stimulating a creaking economy will have little or no effect, when the consequences of these actions are higher interest rates and increased government debt.
The markets are working this out already and the pound is falling and implied future interest rates are rising.
If the government really wanted to make UK residents’ lives easier it might consider trying to re-establish peace in Europe! This could have an immediate disinflationary impact.
It would also be useful if so much offshoring is stopped and tax havens abolished. Instead we will soon have Caiman on Thames in the form of Freeports.
And yes bonuses do matter as they belong to casino banking not honest banking.
“I must confess it did not occur to me that it would be the Tories who start the class war.”
When have the rich not pursued class war? How else would they be rich? Its only called ‘class war’ when the poor decide to defend themselves.
“There is simply no functioning democracy in the UK that offers voters any genuine choice of political direction. I remain convinced the only solution is to destroy the UK as a political unit.”
The lack of functioning democracy may be by design and be a product of class war. It would make no difference to destroy the UK as a political unit if the successor units were along the lines of the Irish Republic.
In an article published over 30 years ago John Kenneth Galbraith likened the trickle down economics central to the ideology of Reagan and Thatcher to a policy of allowing horses to devour all the oats they like on the understanding that eventually some of the grain will pass through the horse undigested and then mice can feed upon it. Galbraith noted wryly that this policy is more popular with horses than with mice. Allegorically of course, the rich are the horses and the rest of us the mice. It is clear that from surpassing amounts of socio-economic data that this model favours only the rich and so for the Truss government to resurrect it now is something akin to the darkest arts of necromancy. One wonders if Liz and co are beholden not only to the doctrines of Friedman and Hayek – a la Reagan and Thatcher -; but the kind of claptrap peddled by Ayn Rand and her adherents. To return to Galbraith’s allegory, horses will gorge themselves to surfeit whilst we poor rodents get buried in shit.
Jonathan Pie (comedian)
Sums it up brilliantly
Liz Truss’s Statement of Intent – YouTube, 5m 9s
Looks like somebody has informed a few hedgefund managers of the impending budget plans the day before it was announced.
A lttle friendly insider trading information to Crazy Kwarteng’s friends (now best friends) resulted in massive shorting gambles on the pound.
Thing is, there are already rumours of having a no-confidence motion in Mary E. Truss, and if the pound drops below the value of the dollar, she is toast.
Shall we spend 300 million on a GE? or will we let her borrow over 300 billion and put us and our children in debt for the next 2 decades plus?
This energy ‘reversed truck system’ given people money to pay for energy, ONLY, will only help the privatised companies and banks.
Government bonds are tanking and interest rates have never risen faster.
A humungous stupidity, but I don’t think the middle classes realise yet that they cant run away from this incompetence.
I hear Clark’s call for concerted action, but why centralise in London, when it is much greener and less polluting to do it locally/regionally. Why would we want to work into the hands that leave us kettled? at the most convenient place for them?
Mary O’Leary actually.
«A lttle friendly insider trading information to Crazy Kwarteng’s friends (now best friends) resulted in massive shorting gambles on the pound.»
That’s the usual delusional notion that nobody could have seen the fall of the pound coming, when instead it was very obvious. Truss and Kwarteng, and the data, have been very, very clear.
People with the slightest understanding of politics have been dumping sterling as fast as they can to buy inflation-beating assets like property etc. for *weeks*. Every upper-middle class family with some awareness of market conditions has noticed that BTL contracts have a standard clause that says that rent increases every year by at least RPI+3%, and that indeed with RPI at 12% both property prices and rents have increased over the past year by 15%, and are now celebrating their huge booming property profits.
Nevermind, there are many local actions too. But hopefully, with so many groups involved, the London actions will be too big to be kettled.
Spot on dear Craig. I grew up in the 1940s and remember the start of the NHS. My father, a factory worker, bought a house on a mortgage, bought food and clothes, heat and light, and holidays (and Christmas presents) on his pay. In the 1950s I bought ex-government electronics to experiment with and had a happy time. It should have been no worse these 70 years later but it is. From Thatcher on the country has been wrecked by Tory governments. Best wishes for Scottish independence.
«From Thatcher on the country has been wrecked by Tory governments»
Compare with:
https://www.theguardian.com/society/2022/jun/29/how-right-to-buy-ruined-british-housing
«a 79-year-old retired carpenter in Cornwall, who bought his council house in Devon in the early 80s for £17,000. When it was valued at £80,000 in 1989, he sold up and used the equity to put towards a £135,000 fisherman’s cottage in St Mawes. Now it’s valued at £1.1m. “I was very grateful to Margaret Thatcher,” he said.»
For people like his the past 40 years have been years of a booming economy, with rapidly rising wealth and living standards, thanks to economic geniuses like Thatcher, Blair, Osborne. For that 20-40% of voters thatcherism has been very good; there are millions of voters who pack Waitrose and M&S shops mostly in the south-east, spending freely the trillions (literally trillions) redistributed to them from the lower classes via booming house prices and rents. 43% of voters, 14 million, are not all stooopids or brexit fanatics, they are indeed “very grateful”.
It’s a con, really. Yes the carpenter did well being able to buy his council house for less than it was worth, but that is really the only benefit he has received. He is now living in a smaller house. Ok, it’s worth more, but then so is his original council house and every other house in the locality. This situation is neatly summed up by the following apocryphal conversation between husband and wife:
“Honey, you know you always wanted to live in a million dollar house? Your dream has come true.”
“Great, when are we moving?”
“We’re not going anywhere, this beaten-up old shack has just been revalued at a million dollars.”
Money in the UK (and in all sovereign currency issuing governments) is created by computer key strokes in spread sheets at the Bank of England (i.e. the country’s central bank) and under government licence by commercial banks. The money supply is, at its most fundamental, a wholly controlled, underwritten and publicly owned endeavour in the UK. (The Eurozone is different because they share a central bank the ECB).
Taxes in the UK therefore simply drain the money supply, and adjust relative incomes, which is what the Truss tax cuts have done.
Tax is NOT government income and a currency issuing government is NOT a household. QE (Quantitative Easing) is loud evidence in plain sight that there are NO accounting identities limiting government spending to tax income. Only (deeply misguided) political and cultural conventions.
None of the UKs current crop of 650 MPs would get any votes at all from an electorate if it were properly informed and observant of these accounting facts and resultant behaviour of the UK money supply.
Indeed much of Craig Murray analysis above would not have been written if he was observant of these money supply accounting facts. For example mistaking government financing for the limits on household spending, Craig writes:
“… the public who had bailed out the bankers with public money borrowed – with trillions in interest – from the very bankers we were bailing out.”
Nope. The bail out money was created by the Bank of England, not “borrowed” as if it were the same as saving that you or I may be luck enough to hold at a bank, waiting to lent out.
Further, money in and of itself is routinely mistaken for what it can buy. For example, we could run out resources as the final limit on how many cakes we can bake, such as flour, ovens, sugar, electricity, kitchens, buildings, land, time, and staff. But we never run out of units such as kilograms to measure such resources, nor strictly secure government regulated spread sheet space to record the trillions of transactions of all those different types of quantities.
As such, public debt and the ‘we can’t afford it because there’s not enough money’ austerity mantra in and of itself does not exist: on the other side of the balance sheet public debt is simply recorded as private sector savings i.e. the money supply.
and as a matter of accounting fact, it does not “need” tax as “income” to spend. The Central Banks ability to credit private bank accounts – which it does all day long every day – is not constrained by tax collections. Even in special circumstances, for example:-
“DARLING LETTER TO BoE GOVERNOR MERVYN KING, JAN 29, 2009 “In my statement to Parliament on 19 January 2009, I announced that the Government had authorised the Bank of England to create a new fund, the Asset Purchase Facility.
“I am writing to set out the terms of the authorisation….”
https://uk.reuters.com/article/uk-britain-bank-letters-idUKTRE6132O720100204
https://www.reuters.com/article/uk-britain-bank-letters-idUKTRE6132O720100204
Central Banks (in the UK at least) is part of government – independence is an imaginary ruse at best.
https://www.taxresearch.org.uk/Blog/2021/03/02/the-national-debt-paranoia/
https://modernmoneybasics.com/facts/
http://bilbo.economicoutlook.net/blog/?p=41399
Were it that simple, Natasha, the bank bailout would not have increased the national debt. But it did increase the national debt, massively, hence the ensuing decade of austerity ostensibly aimed at reducing it. It was of course open to the government just to print money that did not have to be repaid, but that is not what they did. The net effect of what they did is they printed money, gave it to the financial institutions and then borrowed it back from them at interest.
You may be a MMT devotee, but do not confuse the banking bailout for an example of it in operation.
Gordon Brown’s bank bailout in the 2008 GFC was a prime example of fiscal flexibility – essentially creating over half a trillion pounds in digital currency to shore up the banks. It’s how the UK government operates its fiat currency reserves. Tax doesn’t pay for public services or government spending – it’s simply a mechanism for controlling inflationary pressure (as is the offshore tax systems, albeit a nefarious and unfair entity).
Natasha is quite correct in her observations. We are conditioned to believe that government finance is similar to household spending, but that is a complete fallacy. A sovereign nation could create any amount of money it wants, but the real challenge is how to spend it responsibly and productively for the good of its citizens. I’m not sure what you mean by a “MMT devotee” – it sounds rather patronising, but MMT simply observes and explains how governments’ financial systems work without all the propaganda and obfuscation.
The National Debt – just like the debt to third world countries could be negated instantly if there was a will to do so. It’s simply an accounting anomaly.
” It’s how the UK government operates its fiat currency reserves.”
Surely, under MMT, there is no such thing as “reserves”, any more than an ordinary citizen has “reserves” of IOUs.
Ok, let’s just create £70 million and give everyone a £million each. See how that works out.
“Ok, let’s just create £70 million and give everyone a £million each. See how that works out.”
So, seventy people become millionaires? The difficult part – aside from the arithmetic – is using the money you create wisely. Putting £1m into everyone’s bank account would be rather stupid – use it to create jobs and incentivise people, not to have everyone sitting at home with a pile of cash in the bank and nothing getting done or made. Money isn’t the problem. With a digital fiat currency, you can never run out of money – but you can absolutely run out of natural resources, of which people being the most important.
Oops I meant £70 trillion
Austerity is a political choice.
Just like funding Covid Track and Trace and PPE, just like funding Ukraine, and just like funding Bank bailouts. Political choices, not economically sound choices.
Inequality is also a political choice. While the Bank of England under Gordon Brown did QE to fill the holes that were riddled through the error filled high street banks and the losses that had gone to offshore accounts, the purpose of inequality means that this government creates debt by creating government bonds, which wealthy investors can buy as safe havens for their tax free savings. Their purchase of these bonds releases their money into the economy. And the economy is pledged to repurchase these bonds after a certain time from the same source as they were issued.
MMT
Today the government issues unlimited bonds
I’m not an expert, but I believe that MMT holds that the central bank can create money without incurring debt, but only up to a certain point.
Craig, MMT (Modern Money Theory) is not a choice, or a flavour of the month preference. One can no more, or less, be an “MMT devotee” as be a theory of gravity or theory of thermodynamics devotee.
Further, there is no literature that disputes the core MMT description of how modern money accounting bank operations work. Indeed even the central banks (BoE, Fed, etc…) research and bulletin publications all agree with it. MMT thus does not propose nor imply that “the bank bailout would not have increased the national debt”, it simply corrects the colloquial but incorrect assumptions on the accounting properties and implications of the “national debt”.
MMT (for the purposes of this discussion) simply points out that debt behaves in a uniquely differently way for the treasury than it does for all other sectors in the economy. This is the insight you appear to have overlooked. As such, the “national debt” doesn’t need “reducing” since it is only and simply an accounting identity: the debt sits on one side (of a digital spreadsheet held by a bank) with non-governmental sector savings and liquidity on the other side i.e. the money supply. Indeed no “national debt” equals no money supply. In contrast, non-government non-bank debt has to be paid back, but with no impacts on the money supply.
The courts and government enforce the consequences of these spreadsheet identities. In other words government can simply cancel any debt it owes, or is owed to it, by for example declaring a debt jubilee, invented 5,000 years ago in Babylon, which economic historian Prof Michael Hudson writes so well about.
https://michael-hudson.com/category/debt/
This is the power of owning the magic money tree – yes Theresa May, the Bank of England does exist – just as the Darling letter to the BoE ordering it create new money referenced above illustrates!
Further, your tax money and your tax bill are concurrently destroyed upon your payment of money to the tax collection functions inside sovereign currency issuing governments. This is as a matter of accounting fact, since there are no internal governmental / central bank accounting identities between tax inputs and spending. As such tax is an excellent tool for manipulating wealth inequalities by manipulating the money supply.
However, MMT also points out that since the real economy is limited by finite resources, any spreadsheet shenanigans by for example the likes of the Truss government, must also be similarly limited to reflect those real world realities, or else the economy will cease to function properly leading to collapse, which we are now witnessing globally as resources are rapidly depleting, with energy being the deal breaker for all other sectors bar none. More here:-
https://www.craigmurray.org.uk/forums/topic/the-decline-of-fossil-fuels-and-limits-of-renewable-energy/
The point of my comment above is to suggest that Truss’s tax fiddling entirely misses these realities. And that including MMT offers a more powerful rebuttal to such fiddling, than any analysis that omits the impacts of the double entry accounting reality that government debt does NOT behave the same as non-government debt.
Meanwhile, yes of course, everyone wants to argue about the policy outcomes following this bald MMT description!
The bankers’ bailout in 2009 only nominally increased the national debt, Boss, because the government owes all the QE ‘money’ to the Bank of England, i.e. itself – so this ‘debt’ can in theory just be cancelled out. Rather than approaching 100% of GDP, the UK’s real debt is only around 60% of it.
In effect, with QE the State is acting like a counterfeiter, and gets all the benefits of being able to ‘print’ money – except that the government generally spends it on worthy causes like schools ‘n hospitals etc. It only gave the banks and financial institutions QE money in exchange for government bonds (gilts) that they held.
In the UK, banks make most of their money from land for housing being artificially constrained via the planning laws, coupled with large increases in immigration over the past twenty years, so people have to take out a lot more debt to buy houses than they otherwise would, and thus pay a lot more interest on it.
“In the UK, banks make most of their money from land for housing being artificially constrained via the planning laws, ”
Can you cite me any evidence that the supply of building land affects its price to counter the fact that, whenever there has been a housebuilding boom in the UK and elsewhere, i.e supply has been increased rapidly, the price of houses, i.e land, has also increased rapidly, also the fact that Ireland, which does not have the same planning laws, has the same rises and falls in house prices as the UK?
Thanks for your reply, Bayard. From 1960-1980, on average, the UK economy was growing considerably faster than it was from 2000-2020, but the average ratio of house prices to incomes was far lower. A large part of this was due to the fact that far more houses were being built per year then than now. At that time, banks generally weren’t involved in mortgage lending.
The property boom in Ireland from the early 90’s to 2008 was largely a symptom of their ‘Celtic Tiger’ economy, with Irish people’s real incomes rising at unprecedented rates. The Irish stock market also boomed then collapsed. Obviously, with land freely available to build on, you would still get boom and bust – but what you wouldn’t get would be an anaemic economy with sky-high house prices like we have in the UK now.
“A large part of this was due to the fact that far more houses were being built per year then than now.”
No it wasn’t, it was due to the fact that interest rates were a lot higher, therefore the multiple of your income that the banks would lend you was a lot lower, therefore for a given income, you had less money to buy a house, therefore prices were lower. Also borrowing was far more difficult, you couldn’t count a second income if buying jointly for instance. The point that you are ignoring is that, as supply increased during the 1960s, prices increased also. The fact that things were different in the 2000s is irrelevant. Your theory dictates that prices must decrease as supply increases. This didn’t happen.
Thanks again for your reply, Bayard. I didn’t say that *all* of the low ratio between house prices to incomes in the 1960’s was due to greater housebuilding, just ‘a large part’. House prices are subject to supply & demand like most things. Imagine if, due to planning laws, there had been no housebuilding in the 60’s, but with rising incomes and immigration (which was largely outlawed at the end of the decade) there would have definitely been a huge demand for what housing was available, which would have bid up prices massively.
Even if the building societies were not prepared to lend more than three times single income, many people would have been prepared to save up deposits of 50%+, like my parents did when they were in their early thirties in the 1970’s – even though they both owned cars and had plenty of foreign holidays in their twenties, and neither had received any inheritances at that point. Eventually, for those people not prepared to save up, the building societies would have lobbied the government to change the rules to allow higher lending ratios, longer terms, etc. to the benefit of, if not shareholders, their (mostly senior) employees.
“House prices are subject to supply & demand like most things. “
No they are not. Land is not like “most things”. Land takes its value from its location. Each location is unique, therefore land is not interchangeable and interchangeability is key to things being subject to supply and demand.
“which would have bid up prices massively.”
No it wouldn’t. House, i.e. land, prices always rise to whatever people can afford to spend. Why would you sell your house for £x when there are several people prepared to pay more than that, regardless of the supply? No one is going to pay more than they can afford, whether the are no houses around or plenty.
Anyway, you still haven’t answered my question as to why, when supply was going up in the 1960s, prices were going up at the same time, if house prices are controlled by supply and demand.
Thanks again for your reply, Bayard. So I see that, as well as denying anthropogenic global warming, you’re now denying basic economic theory. In reality, the laws of supply & demand apply whether something is ‘interchangeable’ or not. No, house prices don’t always rise to whatever people can afford because, by cutting back on discretionary items, most people can always afford to pay more.
House prices increased in the 1960’s, along with people’s salaries, due to increased demand for housing. My point is that house price to median income ratios rose to nowhere near the levels we see now, thanks largely to a big increase in the supply of houses over the decade, with lesser contributions from building societies only being prepared/allowed to lend low multiples of incomes, immigration levels being lower than the present, and from domestic rates acting as a tax on house ownership – whereas Council Tax is also payable by tenants.
“So I see that, as well as denying anthropogenic global warming, you’re now denying basic economic theory.”
Whereas I see that, as well as with anthropogenic global warming, you’re quite happy to make the facts fit what you believe to be theory, rather than the other way around. You still haven’t explained why supply and prices of houses rose together in the 60s, you’d obviously much rather ignore those facts, just as you have ignored my explanations of why house price to income ratios were lower in the 60s and why land isn’t subject to supply and demand. My contention about what people are prepared to pay for accommodation is based on economic theory, namely Ricardo’s Law of Rents, so it’s you that are denying theory.
Thanks for your reply, Bayard. As I stated, house prices rose in the 1960’s because demand for houses was greater than supply, mainly due to rising incomes, even though supply was increasing substantially. This is no way conflicts with the law of supply & demand.
I haven’t completely ignored your explanations for it: as I mentioned, building society lending limits were a factor as they would have reduced demand to an extent by preventing some people who weren’t willing to save up a substantial deposit from buying, but they were by no means the only factor. The biggest factor in curtailing prices was increased supply, just as it is in the oil market, for example.
David Ricardo’s Law of Rent concerns farmland, and it was formulated at a time when there were no planning laws. The reason that houses in the UK are very expensive is not because their gardens are more suitable for growing crops than fields in the countryside – it’s because the supply of housing is restricted via the planning laws.
How are you getting on with proving that CO2 doesn’t cause AGW by the way? I’m sure Big Fossil would make it well worth your while if you can.
“As I stated, house prices rose in the 1960’s because demand for houses was greater than supply, mainly due to rising incomes, even though supply was increasing substantially.”
I see, so when supply increases, demand always increases faster, so prices goes up. Yeah right. What about when prices fall, like in 2008? Has demand fallen? If so why have people suddenly stopped wanting somewhere to live, all of a sudden? This is on a par with your argument that, in Ireland, house prices rose in the 90s because people had more money to spend, (which is the actual mechanism at play here) but in the 60s in the UK, when there were equally rising incomes, the price rise was due to planning restrictions. It reminds me of the opinion of the handwriting “expert” in the Dreyfus trial, that where the handwriting in the incriminating note matched Dreyfus’s, it showed he had written it, and where it didn’t it showed he was deliberately disguising his hand. Ireland and the UK have different planning regimes, but essentially the same housing market. That should tell you something if you weren’t trying to contort facts to fit your theories.
“The biggest factor in curtailing prices was increased supply, just as it is in the oil market, for example.”
Land is not oil. You can pick up oil from where there is a surplus and move it to where there is a shortage. You can’t do that with land. Extra houses being built in Birmingham can have no effect on house prices in Doncaster, because people who want to live in Doncaster don’t want to live in Birmingham and vice versa. Similarly an increase in the supply of Rolls-Royces has no effect on the price of Fords.
“David Ricardo’s Law of Rent concerns farmland,”
It does, but not exclusively: From Wikipedia:
“Being a political economist, Ricardo was not simply referring to land in terms of soil. He was primarily interested in the economic rent and locational value associated with private appropriation of any natural factor of production. The law of rent applies equally well to urban land and rural land, as it is a fundamental principle of economics.”
“The reason that houses in the UK are very expensive is not because their gardens are more suitable for growing crops than fields in the countryside – it’s because the supply of housing is restricted via the planning laws.”
So you keep saying, but that doesn’t make it true. How come houses aren’t vastly cheaper in Ireland, then? How come houses weren’t vastly cheaper, in terms of average incomes before the planning laws came in in the UK?
How come during the “Tiger Town” era in Ireland, where supply exceeded demand by many times so that new houses stood empty everywhere, did not house prices collapse until the banking collapse of 2008, when they also collapsed in the UK with its “restrictive” planning laws? How come there are empty houses at all? The law of supply and demand says that if there is an excess of supply over demand, i.e. there are units of production unsold, then prices fall until everything is sold. This we do not observe in the housing market.
“How are you getting on with proving that CO2 doesn’t cause AGW by the way?
CO2 may cause AGW, but since AGW is a totally theoretical concept, it is not something I would be bothering to prove one way or the other.
“I’m sure Big Fossil would make it well worth your while if you can.”
You really do think that the big energy companies are run by fools don’t you? They have long ago moved into “green” energy and are hoovering up the subsidies with the best of them. They know that, even if the AGW were true, it would be decades before the world can do without oil and that demand is no going to fall substantially any time soon. They are really not interested in trying to disabuse a bunch of green evangelicals of their misconceptions, they have better and more productive things to do, like going with the flow for as long as it lasts. One day someone will come up with a viable alternative to fossil fuels like synthetic hydrocarbons and they will be in there making them and selling them to us just like the hydrocarbons we get out of the ground. Anyway, this is very OT.
Thanks again for your reply, Bayard. Where did I say that demand for housing *always* exceeds supply? I was talking about a specific period in the UK – the 1960’s – when there was considerable productivity growth and no recessions. House prices fell in 2009 because a recession was getting under way due to the financial crisis and people were losing their jobs and couldn’t have got a mortgage even if they wanted one. Demand for housing fell as people moved back in with their parents and recent immigrants went back home. So for a brief period, housing supply exceeded demand, as some people were either forced to sell up or wanted to sell near the top of the market in the hope of buying back in later at lower prices, as some people did in the early 1990’s.
I never said house price increases in the 1960’s were due to planning restrictions. In theory, there were planning restrictions in the 60’s, due the Town & Country Planning 1947, but in practice they were employed much less than now due to there being far fewer NIMBYs and BANANAs* on council planning committees. There weren’t ‘equally rising incomes’ in Britain in the 1960’s and Ireland in the 1990’s: real Irish incomes in the ‘Celtic Tiger’ years rose far faster – and the Irish literally couldn’t build houses fast enough to satisfy demand, even though there were very few planning restrictions.
Irish incomes are now on average higher than in the UK, so their house price to income ratios are lower, even though Ireland has undergone far more immigration as a proportion of its indigenous population in recent decades, and its long-term growth prospects are probably higher. Before the financial crisis hit, Irish people were still buying houses, even if they couldn’t find tenants, because it was seen as a one-way bet. House prices didn’t completely collapse in the UK in 2009 – they fell by around 20%, much less than in Ireland. There are empty houses in the UK because the people that own them don’t want to let them out, for whatever reason – as is their right. Before the planning laws were established in the UK, real incomes were much lower than today, but the cost of a house was mostly construction costs, whereas today it’s mostly land.
Tens of thousands of houses being built in Birmingham would have some effect on house prices in Doncaster because some people would be prepared to move from Doncaster to a better house in Birmingham, commuting to Doncaster for work if necessary. Of course land is not oil – it’s much more widely available. The idea behind liberalising the planning laws is to make land outside Birmingham or Doncaster, or wherever people want to own their house without breaking the bank, freely available for building. I see you’ve moved from a position of AGW isn’t real, to one of: it may be real, but it’s just theoretical. I think that the transition to electric vehicles, largely powered by nuclear and renewables, as well as people largely choosing to travel by public transport, will happen faster than many people think, which won’t be great for Big Oil & Gas, which owns few renewable assets relative to its fossil ones. Anyway, I was thinking more of Big Coal – or rather Used-to-Be-Big Coal.
Speaking of off-topic, I wonder how the Russian ‘reservists’ will get on in Ukraine.
* Build Absolutely Nothing Anywhere Near Anyone
CM claims
“the bank bailout would not have increased the national debt. But it did increase the national debt, massively”
I can not find any reliable data that confirms that claim. If I look at year-on-year debt, it was steadily rising about 100 Billion a year. I can not see a jump of 200 or even less 800 billion. To me that proves that there is magic money tree. Corona QE is in the charts.
The whole system is very obscure and only lately things are slowly getting out. Is that on purpose or genuine ignorance or dogma (it works no need to change)??? In financial crises of 2008/9 everyone was bailing banks out, so to believe that that was borrowing means that someone was lending it (who, Martians).
There is debt, as we understand the term, and there is deficit versus surplus, which is often erroneously referred to as national debt. All money starts out as deficit. Money is supplied according to demand and supply of goods and trade balances. Political choices include funding national industry, development of national resources, infrastructure, and health, or corporate bailouts, low tax for high earners, bankers bonuses (which consist of whose money exactly?) and government bonds. Government spending is the business of government. Keeping the profits in house is socialism; giving the profits to shareholders is capitalism
The arithmetic doesn’t add up. UK debt grew from 500 billion before the 2008 crash to 1500 billion by 2016. (approx 1 trillion). The cost of the banking bail out to the taxpayer is estimated to be about 30 billion and even if you round that up to 100 billion for the sake of argument it is still less than 10% of the 1 trillion additional national debt incurred between 2008 and 2016. Also this huge debt cannot be explained by interest payments. The UK simply spends far more than it earns through taxation. As with most people who are going bankrupt we are in denial as a nation.
Even prior to 2008 the UK was spending more than it received in taxation. This was possible because GDP was growing, so the debt as a percentage of GDP was essentially flat. However, since 2008 GDP has stagnated – and there lies the problem. It is not realistic to assume that GDP will grow indefinitely since that implies we are getting wealthier and consuming more. Realistically,
I am not endorsing austerity – but dislike denial which is just blame shifting and unlikely to solve anything.
If only people understood how banking works they would understand that capitalism cannot exist concurrent with fractional reserve banking and fiat currency. To believe the current government is capitalist is laughable. Truss and Kwarteng are like so many others of mediocre talent constantly kicked upstairs for no apparent reason. Truss is a carefully groomed plant. All those fawning editorials about her ‘magnificent’ trade deals were in reality brokered by senior civil servants.
The system does indeed stink and is unjust but most have the wrong end of the stick. Governments do not run the world, certain banks do and this is easily explained: imagine how rich you would be if you could loan out at interest ten or twenty times the money you had and do this at compound interest for not just decades but over hundreds of years. Suppose 300 years ago you started with a £1,000 and lent out 10x that at 7% compounded for 300 years, you would now have £10 trillion or about 4x the total UK government debt. This money brings great power. Unimaginable power. More power than any Prime Minister or President.
The numbers are over simplified but not much. Sure there would be administrative expenses and other costs such as a few £million to Churchill and Blair plus the occasional regime change to fund. When Johnson joins the speaking circuit as Blair did at $100,000 or more a pop who will be paying? This tells you all you need to know.
Murray Rothbard was the best writer who made all this fraud easy to understand. I read these about 2002 and it completely changed my world view although it took me a long time to join other dots.
https://cdn.mises.org/Mystery%20of%20Banking_2.pdf
https://cdn.mises.org/What%20Has%20Government%20Done%20to%20Our%20Money_3.pdf
Your fractional theory of money creation is also wrong.
It is even worst in my opinion.
Really good article about 3 theories of money creation with experiment is
https://www.sciencedirect.com/science/article/pii/S1057521915001477#bb0070
(1) The currently prevalent financial intermediation theory of banking says that banks collect deposits and then lend these out, just like other non-bank financial intermediaries.
(2) The older fractional reserve theory of banking says that each individual bank is a financial intermediary without the power to create money, but the banking system collectively is able to create money through the process of ‘multiple deposit expansion’ (the ‘money multiplier’).
(3) The credit creation theory of banking,
“A couple of weeks ago I explained that I believed we were approaching a crisis of capitalism”
Further to my comment about banking consider whether this is capitalism.
War criminal Tony Blair’s son Euan is apparently now a billionaire from a company Multiverse Group Ltd that reported a loss of £10.9 million in the year to 31 March 2021, on revenues of £10.1 million from 5,000 customers. A company that issued a solvency statement in December 2021 enabling it to return surplus capital to shareholders, i.e. Euan Blair, to enable him to buy a £22 million mansion. Maybe, just maybe, the investors in his company are Blackrock, Vanguard and State Street or the likes of Google which are part owned by the former three. Euan Blair was recently awarded an MBE.
As the great George Carlin rightly observed, “It’s all one big club and you ain’t in it.” What he did not say was who runs the club.
Of course it won’t matter if the Tories lies and deceit has committed electoral suicide, after America destroyed both gas pipelines from Russia to Ukraine….. the destruction of European nations and American European allies,……commercial destruction is complete!
Europe 0 – America – infinity ……. poverty, insecurity hunger fear lawlessness dictatorship…HAS ATTAINED THE DESIRED PINNACLE TO SATISFY THE PLAN..
The same thing happened last century. EXACTLY the same playbook. Israel and America won that one too.
Highlander.
It looks like Poland could’ve damaged the three Russian pipelines in the Baltic Sea.
https://www.moonofalabama.org/2022/09/the-war-on-germany-just-entered-its-hot-phase.html#more
Whoever has damaged the pipeline is responsible for the consequences, politically and environmentally.
I do not like the generalising term ‘humans’ anymore. Like a spreading cancer we are eradicating thousands of species at every step we take, every move we make. We ecological fascists are out of control and unwilling to accept the truth that is smacking us in the face.
Our puppets in charge are acting like rabbits in the headlights and Mary T has not been seen for 4 days. Has she got covid or is she redecorating?
“Thank you, USA.”
https://twitter.com/sikorskiradek/status/1575045171376705537
twitted by Radek Sikorski, who describes himself as:
Chairman EU-USA delegation, VP EU-UK Friendship Group, Senior Fellow Harvard CES, Distinguished Statesman CSIS
Why is there even any doubt? The purpose of the tragedy in Ukraine is to obtain control of Russia’s gas and oil for US corporations. They did consider going after Iran’s first, as Biden’s first intentions indicated, but Putin has been the policeman of borders between Iran and Israel, hence Israel being cautious about declaring for Ukraine, so slowly weakening Russia serves 2 purposes in that department.
Not forgetting Victoria Nuland’s infamous “fuck Europe” remark
I am fairly certain I watched a news report about the gas pipe explosions on the BBC on which an ex military expert suggested that it was the Russians which blew up the pipeline, forcing me to check to see if I was dreaming. Why would they do that? It makes no sense. The only people with an undeniable motive to do that would be the good old USA, meddling in matters they should not.
It is less a class war than a war between competing autocracies, a game in which we are all poverty proles & powerless pawns. Sorry for the alliteration.
What else was he going to say? That the US did it? Mandy Rice-Davies springs to mind.
Whodunnit?
Pres. Biden: “If Russia invades, then there will be no longer a Nord Stream 2. We will bring an end to it.”
Reporter: “But how will you do that, exactly, since…the project is in Germany’s control?”
Biden: “I promise you, we will be able to do that.”
Pres. Biden: “If Russia invades…then there will be no longer a Nord Stream 2. We will bring an end to it.”
Reporter: “But how will you do that, exactly, since…the project is in Germany’s control?”
Biden: “I promise you, we will be able to do that.”
https://t.co/uruQ4F4zM9 pic.twitter.com/4ksDaaU0YC
—— ABC News (@ABC) February 7, 2022
Victoria Nuland:
“With regard to Nord Stream 2, we continue to have very strong and clear conversations with our German allies, and I want to be clear with you today. If Russia invades Ukraine, one way or another, Nord Stream 2 will not move forward.”
https://www.facebook.com/watch/?v=1089360115236518
—— US Department of State, January 27, 2022
If I were a policeman, these are the first two people that I would interrogate.
Good piece by Adam Tooze suggesting this is a deliberate Tory ruse to further dramatically shrink the state. “Cut taxes and, as revenue decreases, you create irresistible pressure for austerity”.
https://www.theguardian.com/commentisfree/2022/sep/27/kwasi-kwarteng-cut-taxes-austerity?CMP=share_btn_tw
«The idea of the cap on bankers’ bonuses was to remove the perverse incentive whereby a banker got a bonus of ten years salary creating “assets” of bad loans, with no care whether those loans collapsed or not two years later,»
IIRC bankers (etc.) who are “rainmakers” in that way are paid mostly offshore from a tax haven branch of a subsidiary of the bank to a tax haven nominee or corporate shell account for the banker, their official UK salaries and bonuses are just a small fraction of their actual commissions, declared just to throw a bone to HMRC. Same for many CEOs, small and big.
HMRC know this very well, and the security services know all the names and sums, but the government does not want to persecute those heroic “wealth creators”.
I would guess that the removal of the bonus cap is mostly symbolic, as was its creation.
https://www.zerohedge.com/markets/bank-england-capitulates-restarts-qe-due-significant-dysfunction-bond-market-material-risk
In a panicked move following an exponential increase in UK 30 Year gilt yields due to market reaction to Kwarteng’s fiscal action, the BofE has announced a purchase program of government bonds.
Here we go again with QE.
It is being put around that Truss and Kwarteng deliberately crashed Sterling in order to enrich their hedge fund friends. The true reason is much more sinister: they intend to collapse and destroy the NHS.
According to Charlie Bean of the OBR and Bank of England, one of the UK’s leading economists, if the government doesn’t reverse its fiscal plans it will have little option but to cut public spending so enormously it will result in the end of the NHS.
So why is His Majesty’s Loyal Opposition not sounding the alarm at conference, raising a hue and cry to try and save the country’s most cherished institution and reap huge electoral dividends? Probably because Sir Keir Starmer and his shadow health Secretary Wes Streeting are both bankrolled by John Armitage, a hedge fund billionaire with a significant interest in privatizing the NHS through the giant US corporation United Health. He also funds the Conservative Party.