UK suffers worst double-dipstick chancellor in 50 years

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Britain’s chancellor George Osborne’s economic competence collapsed by 0.7% in the second quarter of 2012 as the country’s double-dipstick chancellor of the exchequer’s ineptitude extended into a third quarter.

A unique combination of across-the-board weakness in ability and proficiency coupled with a weakening of rational output right across Mr Osborne’s activities were responsible for the setback, according to data from the Office for National Statistics.

Analysts in the City had expected a 0.2% drop in gross economic negligence from the government in the three months to June but were stunned by the scale of the fall in ministerial competence. The decline followed the 0.3% fall in common sense in the first three months of 2012 and a 0.4% decline in savvy in the final quarter of 2011.

Constructive output in the all-important governmental sector dropped by 5.2% between the first and second quarters of 2012, with cabinet level quality falling by a massive 1.3% and ministerial output dropping by as much as 0.1%

This is the first double-dipstick chancellor the country has seen since the mid-1980s – when the UK was beset by high levels of arrogance under the chancellor Nigel Lawson.

Officials at the ONS said it was hard to assess the full impact of the chancellor’s fecklessness in the second quarter, but officials expect a bounce back in the third quarter, when the London Olympics should make people forget for a few weeks just how shoddy his handling of the economy is.

A spokesperson for the ONS explained:

The data indicates that the government’s proficiency is contracting at a quarterly rate of around 1%, suggesting that the Chancellor in particular will act as a major drag on economic growth in the second quarter.

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This article was originally posted on Pride’s Purge.

Simon says: QE is the biggest confidence trick of all time.

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Simon (Jenkins) says ‘QE is the biggest confidence trick of all time’:

‘It is a cheat, a scam, a fiddle, a bankers’ ramp, a revenge of big money against an ungrateful world. It is called quantitative easing, and nobody has a clue what it means. According to the Bank of England, the past four years have seen £325bn pumped into the British economy to kickstart growth, with another £50bn now on the way. This enormous sum does not exist and never has. It is not “printed” money or funny money. It is no money. The one silver bullet on which the coalition relies to pull Britain out of recession is a fiction.’ (1)

Has Simon got the wrong end of the stick?

Frankly, it depends … listening to politicians in the media, it is clear that (shamefully) most of them understand very little about economics.  They regular confuse government debt and the structural deficit. (2)  For the most part, they and our journalists are steeped in the strait-jacket of monetarism and the mythologies of neoclassical economics.  TINA still prevails in mainstream thinking….  But in 2008, there was a horrified realisation that the economy was not working as predicted and that the financial system was bringing about its own Armageddon. Since that point, the public have only been offered the impenetrability of economist-speak to explain QE, which may be spoken in good faith or to deliberately obfuscate the listener.

However, MMT-er Professor Bill Mitchell explains:

‘Does quantitative easing work? The mainstream belief is that quantitative easing will stimulate the economy sufficiently to put a brake on the downward spiral of lost production and the increasing unemployment.

It is based on the erroneous belief that the banks need reserves before they can lend and that quantitative easing provides those reserves. That is a major misrepresentation of the way the banking system actually operates. But the mainstream position asserts (wrongly) that banks only lend if they have prior reserves. The illusion is that a bank is an institution that accepts deposits to build up reserves and then on-lends them at a margin to make money. The conceptualisation suggests that if it doesn’t have adequate reserves then it cannot lend. So the presupposition is that by adding to bank reserves, quantitative easing will help lending.’ (3)

In other words, the mainstream assumption is that the bank is simply a ‘middle-man’ between those who put money in, and those who want to borrow… but that is neither what is happening, nor actually resembles the way in which banks work.


http://www.youtube.com/watch?v=l7L3ZtCSKKs&feature=related
New Economics Foundation – ‘Where does money come from?’

Simon (Jenkins) says:

‘Osborne and Cable still utter strangled cries for banks to do “more lending to small and medium-sized businesses”. They formulate endless schemes to “kickstart the economy”. They know that none of these works, but we still have such flops as Project Merlin, the regional growth fund and the business growth fund. The British economy is in a classic Keynesian liquidity trap. It is starved of demand, but nothing is done to boost it.’ (1)

Simon Jenkins is absolutely correct to identify the lack of demand… and that is why big business is not investing (4), and they are not going to start investing unless they see the return of demand.

‘… the weirdest assumption of all is that business will invest massively more? Why will they do that? Their customers – whether here, or the government, or abroad – are all going to be consuming less but it’s assumed business will invest substantially more. That is utterly implausible. They just aren’t that irrational. They want a return before they invest – and since this forecast clearly says none will be forthcoming then that isn’t going to happen.’ (5)

The Bears also agree with Simon (Jenkins) that Quantitative Easing does not do what the Federal Reserve and the Bank of England say it will do! …  But is it possible that there is another intention?  Could thecheat, scam, and fiddle’ be a completely different ‘cheat, scam, and fiddle’ from that identified by Simon Jenkins?

Could QE be removing government debt with just a magic click on the mouse? 

Payguy2 says:

‘… QE obviously isn’t working in the way it is intended.  The credits given to banks are not finding their way into the real economy.  QE is simply not stimulating growth in the money supply in the way it is intended to….. 

Is there a silver lining though? (6)

The Bank of England can obviously create money from thin air without creating a parallel debt anywhere else and this money could be used to clear Government debt. 


QE works thus – the Bank of England creates £75 billion electronically as it is a central bank and can credit its reserves with as much money as it likes. The Bank lends this £75 billion to a Special Purpose Vehicle – a wholly Government owned PLC called the Asset Purchase Facility.  The APF then buys £75 billion of outstanding Government gilts from banks, pension funds and other institutional investors. The banks all make huge profits from the sales and get cash credited on their central bank reserves. The APF takes on the government gilts. So far so good as no money created or destroyed.

What is intriguing is that this offers a chance to destroy government debt with no inflationary risk or build up of debts anywhere.

How? The AFP is sitting on £75 billion of government debt.  It is wholly owned by the government.  If it just retires the debts by communicating that they no longer exists. Job done. There is no further inflation or loss of investor confidence.

Already we have a situation where over a third of the outstanding National debt is sitting in the Government owned Bank and another section of the Government, the Debt Management Office – an arm of HMT – is paying interest to the Bank which is again just sitting there unused. It would be more honest to monetize this debt and just retire it.

It is very, very  likely that the debts will have to be monetised anyway.  With the Bank sitting on £325 billion (and some estimating this will rise to half government total debt or £500 billion) it just simply will not be possible to sell this at any time before the gilts mature and expire naturally. How on earth could the government fund its normal gilt issues when the Bank was dumping out £200 or potentially £500 billion worth of gilts from the APF.

This certainly won’t happen whilst the government still runs a deficit and needs to borrow and it certainly can’t happen when and if we have recovered. At this point, the banks will be creating enough lending to allow the money supply to widen at its normal rate. Dumping an additional £200 -500 billion of liquidity out on the market at this point will cause rampant inflation.

Until then we are left with a ridiculous situation where the Tories are moaning about huge and “unaffordable” government credit card bills. At the same time over a third of the debt they are moaning about is stuck in the government owned Bank of England with no hope of it ever being anything other than cancelled and retired.  (7)

Richard Murphy of Tax Research blog puts the case even more simply:

‘.. the Bank of England, which is owned by the government, has paid HM Treasury, which is part of the machinery of government, £325 billion to buy debt issued by the government …. as I have explained before, this means that in any proper accounting system that produced a single set of accounts for the government .. debt that was repurchased would have been considered to be cancelled. That’s because you can’t meaningfully owe yourself money, and yet that is precisely what is happening here. The Treasury owes the Bank of England money but as it, in effect, owns the Bank of England, it therefore owes itself the money and as such the debt has simply been cancelled….

I am saying that the arrangements used in QE hide this economic reality and that [when] all the mumbo jumbo is cleared away what is happening in QE is that money is being printed to clear the government’s deficit and that debt is not really being issued at all …

But that also means that … we haven’t got national debt of just over a trillion now, it’s just under £700 billion. Now that’s a lot, but it’s only 45% of GDP and that was so commonplace during, for example, the Thatcher years that no one noticed it. (8)

Jim Leavis argues much the same point and poses the following question in an article intended for Investment professionals:

‘If the government simply cancelled the £300 billion of QE gilts held by the Bank of England, who would be unhappy?

No default [would have] taken place (no CDS trigger, no D from the ratings agencies who are only interested in failure to pay private investors), the UK’s public finances become sustainable, the economy gets a boost from the knowledge that the QE cash injected will stay there for the foreseeable future, and a mechanism exists to remove cash from the economy should inflation return.’ (9)

So why would the government want to hide such positive news?  What would be the consequences of the Treasury and the Bank of England acknowledging that QE is a means to eliminate the huge hike in government debt which resulted from the socialization of banking losses? (10) 

Clearly, there would be political consequences:

‘…. If the population broadly understands that a sovereign government can never run out of money and can always make these electronic transactions then the questions they might ask their politicians will change and force the latter to be more accountable for their political choices….’  *UE is needed rather than QE  (11) 

… it means the whole debt paranoia is wrong. Debt is not rising at the level claimed by the government. Secondly, the focus can then move onto paying for services. That kicks in the tax gap debate. Third, it means Labour can honestly say it is not constrained by having to repay debt to future generations – because well over half of all debt issued since 2008 has already been repaid. (8)

 

In other words, this would be of enormous political significance, because such knowledge would undermine the ‘Austerity’ argument of George Osborne, the EU troika and the IMF .. and would demonstrate that the dismantling of the NHS, and public services, was an entirely ideological decision.. namely the ideology of the Washington Consensus. 

The misnamed ‘deficit-deniers’ would be thoroughly vindicated! 

Simon Jenkins was right to say QE isa cheat, a scam, a fiddle, a bankers’ ramp, a revenge of big money against an ungrateful world’….. but for the wrong reason.  The QE ‘confidence trick’ is that it hides the ‘inconvenient’ truth that sovereign governments can never run out of money.  The cuts are not, and were not, ever necessary.

Post-script:  In the light of the above, George Osborne’s speech is misleading to say the least.  

George Osborne: no U-turn on deficit reduction plan

Speaking at an investment conference in London, the chancellor admitted that the 0.7% plunge in growth in the three months to June was “disappointing” but insisted that the Treasury would stick to the course set two years ago.

“You will hear those arguing that we should abandon our plan and spend and borrow our way out of debt,” Osborne said in response to widespread calls for the coalition to do more to lift Britain out of double-dip recession.

“You hear that argument again today. These are the siren voices luring Britain onto the rock. We won’t go there.”

http://www.guardian.co.uk/business/2012/jul/26/george-osborne-no-u-turn-deficit-reduction?CMP=twt_gu

(1) http://www.guardian.co.uk/commentisfree/2012/jul/12/qe-bankers-swindle-liquidity-crisis?INTCMP=SRCH

(2) http://www.guardian.co.uk/politics/reality-check-with-polly-curtis/2012/may/09/nickclegg-davidcameron 

(3) http://bilbo.economicoutlook.net/blog/?p=661

(4) http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2012/03/capitalists-on-strike.html 

(5) http://www.taxresearch.org.uk/Blog/2012/03/21/the-key-economic-assumptions-osborne-is-making-are-wrong-which-means-he-cant-balance-his-books/

(6) Mervyn King has turned our leaders into zombie puppets 12 july 2012

(7) http://www.guardian.co.uk/business/2012/may/17/barack-obama-eu-growth-crisis

(8) http://www.taxresearch.org.uk/Blog/2012/07/13/the-untold-truth-about-quantitative-easing-is-it-simply-cancels-debt-and-that-means-national-debt-is-now-just-45-1-of-gdp/

(9) http://www.bondvigilantes.com/2012/04/11/if-the-government-simply-cancelled-the-300-bn-of-qe-gilts-held-by-the-boe-who-would-be-unhappy/

(10) https://think-left.org/2011/12/21/gordon-brown-did-not-spend-all-the-money-the-banks-did/

(11)  http://bilbo.economicoutlook.net/blog/?p=19828

*UE = Unemployment Easing

 

Plan B?

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Plan B,

By Sue Marsh, previously publish here

So  the Telegraph (of all papers) carries an article on IMF warnings to relax our austerity programme. They point out that:

  • “The IMF said that the British economy may not be able to cope with the scale of austerity planned for 2013-14.
  • “The IMF suggested there was little evidence to indicate fiscal easing would provoke a strong adverse reaction from markets”
  • They then went on to slash growth forecasts for the UK by a bigger margin than any other developed nation,  to just 0.2% having predicted 0.8% just three months ago. They have cut growth forecasts for next year from 2% to 1.4%

Now, if you’ve glazed over and all you can read is “Blah blah-blah blah-blah….” here are the important bits.

Firstly, the economy is in a much worse mess than we feared. Everyone expected growth to be returning by now, instead, we are mired in recession and that recession is much deeper and lasting longer than anyone thought even a few months ago. It is almost certainly at least partially, a direct result of austerity policies

Secondly, the Labour and Lib Dem plans for the economy pre-election were right and the Tories have got this spectacularly wrong. Most voters did not vote for an austerity manifesto and I don’t think it is any longer unreasonable to call a vote of no confidence in this government if they fail to relax their plans for the economy immediately. They have no mandate, no ideas and no ability. This is getting serious now. We risk losing a generation of young people to unemployment, a flatlining economy for a decade or more and grinding poverty for those casually crushed by the austerity steam roller.

Finally, the lack of global imagination to solve these credit problems decimating our futures is breathtaking. What do the IMF suggest?

Tax cuts. Yep, give carefully selected groups of society a bit more money back to spend in the economy.
Also, maybe build some stuff.

It seems to have escaped every lofty economic genius that taking with one hand (austerity) yet giving back with the other (tax-cuts) can only ever be a zero sum game. In primary school terms, 2-2 = 0 Add 2 back again and you still end up with 2

“Building some stuff” is much more promising. But we’re talking post war scales of stimulus to have a hope of recovery.

So George, I propose (as do many others) that you announce a National Restoration project. You will borrow lots of cash at historically low interest rates to build houses and bridges and restore national treasures.

You will introduce the biggest apprenticeship scheme in living memory and offer real paid work to those who are unemployed. They will build their own homes, learn a trade or skills along the way, then they can live in the home they worked on themselves at a favourable rent. This way, we can train an army of engineers, builders, electricians, plumbers and architects and give them a secure future. If Government cannot build and then rent affordable housing at a profit, they really might as well give up.

We must build and invent and innovate our way out of this mess with a sense of national spirit and solidarity. We can build opera houses or park pavilions; we can create treasures for the future or rescue those we already have. It doesn’t matter too much what we build, but it matters very much that we start to build something. And soon. The scheme can rehabilitate offenders, train those without skills, or simply give young people a job and some hope. What’s more, we’d be building more than just bricks and mortar. We’d be re-building communities.

A few houses won’t help, one or two high gloss national announcements won’t do the trick, things have gone too far. We need a vast national scheme backed with real commitment and passion.

The IMF warnings are stark and leave little room for doubt.

Now is a time for great women and men. For courage, inspiration and leadership. It is a time for pulling together, not falling apart, we must reach for the stars, not race to the bottom.

I’m not sure that there is anyone left here, or abroad, who believes George Osborne is that man of courage or that this Government can provide the inspiration we need.

Now is no time for British reservation or timidity. 

We need to act now. Or it it really will be too late. 

Cut out Cuts – Leave the Eton Mess Behind

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Jim Grundy

The 0.7% second-quarter fall in GDP in 2012 brings a calamitous verdict on George Osborne’s policy, with the UK economy now smaller than it was in 2010, and double-dip recession longer than in the 1970s.

The latest bad news on the economy will surprise no-one (I hope, other than your average BBC journalist). Isn’t it time that we adopt the line that all the talk of cutting spending to lower borrowing, to cut the deficit and lower the national debt was, and remains, a simple lie? Who in their right mind could fail to see that sucking billions out of the economy could have any other impact than shrinking the economy, lowering revenue from taxation and increasing costs through higher welfare payments (even if these are being cut)? And what do we see now – rising borrowing, a deficit that is not being cut and debt that is not being paid off!

In 1997 Labour inherited a national debt (as a % of GDP) lower than that seen in 2010, so the narrative that “all the money has gone” was always nonsense. It was and remains a simple pretext for the demolition of the public sector, the NHS, pensions, welfare programmes, anything and everything that has been gained through struggles going back generations. The Tories are our ‘Tea Party’ who are capable of delivering one thing and one thing only – blind ideological obedience to the interests of large corporations.

The “cutting too fast and too soon” line has won us no friends – quite the opposite, I would argue. It’s time we put the case for investment, for growing our economy, for delivering the new jobs, homes and for better public services so desperately needed now more than ever. To do anything else risks the unkindest cut of all – a reduction in voter turnout and growing voter antipathy to the whole process. And we all know whose interest that serves.

It’s time to change the record. Cuts are not the answer – well, they are but the question is not how we make sure we can live in a fair society, where people pay their way, get support when it’s needed and the interests of the many come way ahead of the private profits of a few. Time to leave the Eton mess behind. Time to give people hope that a real alternative exists.

Sue Davies adds:

We are fed a lot of nonsense about ‘there being no money left’.  This is a complete misunderstanding about the fundamentals of money and taxation. There is no limit to government spending other than in its capacity to cause inflation if the UK is operating on full throttle .. but at the moment, the real fear is of deflation, and there is plenty of spare capacity in the economy with the current high levels of unemployment.  This lack of inflationary effect is evidenced by the fact that £325 billion of QE has had little impact.

Labour should be aiming for full employment, not only by investing in a new green deal but also by lowering the pension age and shortening the working week.  A new green deal could be aimed at reducing energy demand and boosting renewable energy production. This would create new jobs, apprenticeships, new manufacturing, which in turn would cut the benefits bill, raise tax receipts, create demand and reduce the structural deficit. 

The UK desperately needs more social or council housing to be built, and this offers the perfect opportunity to provide sustainable homes, with heat/water conservation measures and the capacity for the microgeneration of renewable energy. Furthermore, a mass insulation programme of the existing housing stock would cut ordinary people’s heating bills and, with the declining cost of renewable energy, their electricity bills.  It would reduce cold-related illness/deaths, cut climate-changing gases and mitigate oil dependency.  On a political level, it would usefully break the power of the big six energy companies, who currently hold government to ransom over the development of renewable energy sources.

Steve Keen’s debt jubilee is an ingenious solution because it would both massively curtail the casino arm of the banks whilst also relieving the enormous debt problems of individuals/small businesses and creating demand in the economy.

Labour must abandon ‘too far and too fast’.  There is no rational argument for even a partial programme of austerity.  It doesn’t make any sense.

As Michael Meacher writes:

So why is this madness still continuing?   When the IMF, not normally a trendy lefty organisation, says the UK government must kickstart the economy with a boost to spending and increased investment in order to avoid a long depression and a “permanent loss of productive capacity”, even this bunch of far-right Tory ideologues should take notice and discover they have a reverse gear.  

 So why not?   Saving Osborne’s face?   Never under-estimate politicians’ vanity, but no Cabinet will hang on to a loser.   But caught between the markets still demanding death-defying cuts and the IMF now on the side of growth, Osborne can still Houdini-like find a way through.   With no increase in public borrowing, launch a big jobs and growth programme, funded by taxing the near-half trillion pounds amassed by the top 1% in the last 3 years.  

 http://www.michaelmeacher.info/weblog/2012/07/are-osborne-co.-insane-deluded-or-just-suicidal/

We need investment in a new green deal, in new housing, to create employment and to fully nationalise (at least) the bailed-out banks.

Think Left April 2012: Double Dip Recession: Don’t say you weren’t warned George

Think Left: How to End the Recession: A Modern Jubilee (CJ Stone)

Think Left: Gordon Brown did not spend all the money – the Banks did

Ed Balls Responds

Larry Elliot: Guardian: Osborne’s Blundering Incompetence made UK sicker

BBC: UK Recession Deepens after 0.7% Fall 

The Independent Shock as GDP shrinks by 0.7% 

Guardian in worst UK Recession for 50 years

 

A Modern Jubilee: How to End the Recession.

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A Modern Jubilee: How to End the Recession 

According to Economist Steve Keen

By CJ Stone, previously published on HubPages

As we all know, this was the year of the Queen’s Jubilee. How can anyone have failed to notice?

Have you ever wondered where the word comes from? Obviously it denotes a celebration, a time of jubilation. But the question is, what is it we are supposed to be celebrating exactly?

Originally the word represented the ancient practice of debt forgiveness (1). In the Bible this took place at the end of seven times seven years, that is in the fiftieth year, when all debt was cancelled, all slavery was ended, and all property returned to its original owners.

As it says in Leviticus 25:10 (2): “Consecrate the fiftieth year and proclaim liberty throughout the land to all its inhabitants. It shall be a jubilee for you; each one of you is to return to his family property and each to his own clan.”

The practice was also undertaken by Bronze Age kings (3) and the Roman State. Whenever the debt burden became too great, the kings would declare an end to debt, thus ensuring the loyalty of the people. The debt ledgers would be burned and a clean slate declared.

Often this was done on the King’s anniversary. This was something seriously worth celebrating. No wonder they called it a “jubilee”.

In case you haven’t figured it out yet, this is precisely our problem now. The world is so deeply in debt that it would take several lifetimes to pay it back. Meanwhile, the people we owe it to – the bankers – are so wealthy that it would take them several lifetimes to spend it.

The debt is greater now than at the onset of the Great Depression (4).

We have seen a massive redistribution of wealth, from the less well off to the wealthiest. The people who created the banking crisis have been rewarded, while the rest of us are suffering.

And, meanwhile, nothing is being added to the world’s wealth. Bankers are not engaged in manufacture, in innovation, or in research and development. Really they are little more than administrators who happen to have the keys to the safe.

They are administering our money, and then gambling with it for their own profit. Or as the title of a famous book by William K Black (5) has it: “The Best Way to Rob a Bank Is to Own One.”

There was a story (6) in the Daily Mail recently about self-employed auto-electrician Daniel Bond who converted a double-decker bus into a home.

This is not new, of course. It’s exactly what New Age travellers were doing over thirty years ago: turning buses, lorries, horse boxes, vans, trailers, army trucks and other vehicles into mobile homes. It was one of the reasons the travellers got so comprehensively trashed back then.

It’s exactly what gypsies and Irish travellers are still doing, only their preferred type of live-in vehicle is a highly polished trailer with glittering cut-glass windows and hundreds of knick-knacks all over the place.

Irish travellers and gypsies are also still being comprehensively trashed to this day (7).

Daniel Bond’s double-decker home cost £11,000 to convert and has all the mod-cons, including a fitted kitchen and a fully-functioning bathroom. He did it because of the ridiculous house prices, he said.

 

Everyone knows that house prices are grossly inflated. Between 1998 and 2007 house prices went up, on average, by 168%. Much of the reason for the current recession has to do with the banks’ aggressive lending over this period, driving up house prices to many times average earnings and fuelling a speculative bubble.

Meanwhile the banks continue to reap the benefit of their irresponsible lending in the form of interest on over-priced mortgages. A mortgage, which once took only one person’s income to service, now often takes two.

Our whole world is creaking under the weight of debt. As economist Michael Hudson (8) said: “Debts that can’t be paid, won’t be paid”. Expect to see more live-in vehicles on our roads as the recession begins to bite and people start to lose their jobs. Not all of the vehicles will be as nice as Daniel Bond’s home.

Famously, at a briefing by academics at the London School of Economics (9) on the credit crunch of 2008, the Queen asked: “Why did nobody notice it?”

Actually, some people did.

One of the most notable amongst them was Steve Keen (10), professor of economics at the University of Western Sydney (12). Professor Keen predicted the credit crunch as early as 2005 but was ignored. He was known as “the prophet of gloom” because of his consistent warnings that levels of debt were getting unsustainably high and that this would inevitably lead to depression.

“Depression” note, not “recession”. Professor Keen argues that we are in a depression now, which is as great, if not greater, than the Great Depression of the 1930s. He also says that if current policies continue it will take at least fifteen years for us to get out of it again.

The reason that conventional economists failed to predict the crisis was that their models of how the economy works are false.

Specifically they have ignored the role of the banks. According to these economists, banks merely transfer the savings of one part of the population, which then become the borrowings of another. Thus savings become debts and cancel each other out.

This is untrue. In fact the banks drive up debt, multiplying the amount they lend by many times the original savings. People borrow because rising asset prices make it seem that they cannot lose; but in fact prices are only rising because demand is rising, pumped up by borrowing.

This is what is known as a bubble, and bubbles always burst in the end. It was the end of the housing bubble in the United States which brought about the credit crunch.

Now, here is the strange thing: Steve Keen wasn’t listened to when he predicted the financial crisis, and he isn’t being listened to now. The very same people who failed to predict the crisis are the one’s prescribing the solution, in the form of austerity.

In fact austerity only serves the banks, as the economy shrinks and companies go out of business, allowing the banks to buy up their assets at rock-bottom prices. In case you haven’t noticed yet, the shift in wealth is all heading in the same direction. The rich are getting richer, while the rest of us are getting shafted.

Currently the government is propping up the banks by creating money out of thin air – “quantitative easing” (12) – and then handing it to the banks in the hope that they will lend it to us. In other words, the government wants us to take on even more debt.

Debt is the fuel that feeds the banking system. Recent revelations (13) have shown us just how corrupt and self-serving the banks are. We don’t want more debt, we want less. If the government can create money out of thin air to give to the banks, then it can create money to pay off people’s mortgages and to build affordable housing instead.

This is Steve Keen’s solution, what he calls a modern Jubilee.

He says that rather than government creating money and then giving it to the banks, it should be giving it directly to us, the people.

We would then pay down our debts, the banks would go out of business, and we could end the depression overnight.

We’ve tried conventional economics and they have failed us.

Isn’t it time we tried unconventional economics instead?

Videos:

 Steve Keen on Hardtalk

Steve Keen on Capital Account:

Links: 

Steve Keen’s Debtwatch

Analysis of the global debt bubble and the prospects for a Great Depression

William K. Black

Bill Black is an Associate Professor of Economics and Law at the University of Missouri – Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007.

Michael Hudson

Michael Hudson’s official website on finance, real estate and the powers of neoliberalism. A critical interpretation of global economic trends through the eyes of Classical Economy.

 Notes and links:

(1)  http://en.wikipedia.org/wiki/Jubilee_(biblical)

(2)  http://www.biblegateway.com/passage/?search=Leviticus+25%3A10&version=NIV

(3)  http://michael-hudson.com/wp-content/uploads/2010/03/HudsonLostTradition.pdf

(4)  http://www.rapidtrends.com/private-debt-is-much-higher-now-than-during-the-great-depression/

(5)  http://www.huffingtonpost.com/william-k-black/

(6)  http://www.dailymail.co.uk/news/article-2166028/Property-developer-spends-11-000-turning-double-decker-bus-new-home-priced-housing-market.html

(7)  http://www.guardian.co.uk/uk/dale-farm

(8)  http://en.wikipedia.org/wiki/Michael_Hudson_(economist)

(9)  http://www2.lse.ac.uk/home.aspx

(10) http://en.wikipedia.org/wiki/Steve_Keen

(11) http://en.wikipedia.org/wiki/University_of_Western_Sydney

(12) http://cjstone.hubpages.com/hub/Useless-Idiots

(13)  http://www.bbc.co.uk/news/business-18847180

The Fight for Remploy Factories

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by David Harney – Reblogged from http://defendequality.blogspot.co.uk/ 19.07.12

THE FIGHT FOR REMPLOY!

May 2010…Just how many of us I wonder, could contemplate what a Conservative led coalition government actually would mean for you & me?  Or for millions of others, who just happen to be young, old, have children, drive a car, pay the bills, rely on financial help, or just happen to be female?  How many could possibly have foreseen the gross disproportionate hardships imposed with such seemingly callus zelous, upon those in society, who need help & support the most?  The reason I pose these questions, are to help focus minds upon the latest government act of crualty to inflict one of society`s most vulnerable groups…. Disabled workers!
1946, & one of the most beneficial organisations to help disabled people was introduced…Remploy.  Since 1946, thousands upon thousands of disabled people have found dignity, self-respect, pride, & self-worth by the work opportunities it has helped provide.  Vital for any person, let alone a disabled person, I think you`ll agree.  Of far more benefit, even than the wages it has provided, for its workers & their families. 

Workers at a typical Remploy factory, skillfully manufacturing furniture…

Who, in May 2010, I wonder could have possibly dreamed that this new Tory, Lid-Dem coalition would or could, act with such speed & brutality in its crushing decision to close a minimum 36 of Remploy`s 45 factories?  Surely no British government could act this way?  There surely can be no way ANY respectable government could simply throw at least 1,500 disabled workers on the unemployment scrap heap, in the depth of the worst recession we have ever lived through?  This is pecisely what this Tory led coalition government intend to do! 

Yesterday, July 19th, saw those 1,500 Remploy workers picket their factories, in a defiant, unified, & dignified stand against what can only be described as this government`s savage attacks & utter disregard, on not just their livelihoods, but on their very lives.  These workers went on strike, not for higher pay, & not for better working conditions. They were not even on strike for better pensions, all of which are incredibly justified reasons to act.  The only reason these disabled workers took strike action was to fight for an opportunity & a right to work. For an opportunity to provide for themselves, & for their families.  For an opportunity, this government intends to remove as quickly as possible.

Last Stand? Disabled Workers at Remploy showing this government, their desperate desire to work!

What of me, I am not disabled, you may ask?  Why should I be concerned by closures that don`t affect me?  The point is, they DO affect us… they affect every single working person in the land!  If this Tory-led coalition can act this way against society`s vulnerable, they can act this way against everyone & anyone they choose, & at will.  The Tory track record of this brutality against our society is quite simply, recorded fact.  For those of us old enough, who can possibly forget Margaret Thatcher`s open sickening gloating, as miners, steel workers, factory workers, & public servants in their hundreds of thousands being thrown on the dole.  Even the kids had their school milk taken from their mouths, in what Thatcher called, `prudent policies`.  Who prospered?  Bankers, wealthy businessmen, the City`s high-flyers, corporate fat-cats, spivs & legal conmen.  It seems that, Thatcher may be gone, but little else changes with the Conservatives.  Remploy is testiment enough of that fact!

Our consciences should ALL be pricked. If they’re not, we have no right to complain, when this government sees fit to stab us in the back….& they WILL!
If we accept, the government`s assertions that `Remploy costs too much`, then why don`t they look at cutting some of the hundreds of able bodied managers, & bosses, who earn an average of £40 to £60k p/a?  Why make those who earn the least, pay the most.  Able bodied managers stand a far greater chance of finding alternative employment, than a disabled person, with a progressive illness, wouldn`t you say?  Quite simply, this government`s `reasons` for Remploy closures just do not stand up to logic.
Remploy workers have had incredible support from many honourable MP`s such as John Tricket, & Chesterfield`s Toby Perkins.   Help too, from Trade Unions, such as Unite, & my own GMB Union.  Help in their fight, by able mental & bodied people, who have taken the Remploy workers plight to their hearts.  In short, thousands of decent people support Remploy in it`s valiant fight against closure. All deserve a huge well done… & for many, the fight will go on!

Solidarity Thursday

There are major strike actions happening this Thursday across the country. GMB and Unite members in Remploy are taking strike action to defend their jobs and workplaces against Tory cuts.  If you can get to a picket line on Thursday morning, please do – and please sign the Save Remploy Factories Online Petition.

http://www.youtube.com/watch?v=5F2NhZIkHOk