ECB Plans For Grexit – Its SHTF Time

greek debt toonpool.com cartoons

When the European Central Bank “leaks” that it is preparing to ride out a Grexit, take it seriously, because it is time to start thinking about what happens on “the day after.” First thing that will happen of course is Spain, Italy, Portugal and Cyprus will announce they want out too.

And because Boggart Blog readers are not by and large bond market players, to satisfy curiosity about what will happen to European bonds in finance markets (and thus to your pensions), the ECB has suggested any money invested in such vehicles will take a 95% loss.

While the ECB is making it very clear what happens to markets in the case of a “Graccident”, it has yet to provide an explanation how it will resolve the billions of Greek debt on its own balance sheet, which are about to be “marked-to-default”…

Here’s what one German pundit thinks (by Tim Bartz, Translated from Manager Magazin by fatsally)

The European Central Bank (ECB) is preparing for a possible Greek exit from the euro zone. In internal model calculations, the central bank has already calculated the consequences of different scenarios on the prices of Greek government bonds.

Fernando González Miranda, head of risk analysis at the ECB, assumed for his calculations three different developments of the Greek crisis. These variants have also been presented to our colleagues from the Bundesbank few days ago.

Under the most likely method, the value of Greek government debt – currently around € 320 billion – in the event of a sudden, “accident-like” Farewell to the Greeks from the Euro-zone (“Graccident”) shrink to around 5 percent of the principal amount.

If however, the Greek Government were to complete the withdrawal on the basis of ordered negotiations (“Grexit”), the ECB expects a residual value of government bonds by nearly 14 percent. And should it even create the country to negotiate a recent haircut, without having to give up the single currency, the government securities could keep at least a quarter of its original value.

As central bankers feared, the risk is high that the Greek government members “lose track and suddenly find themselves unable to settle their bills.” In such a case, the rating agencies Greece would classify as necessarily insolvent, with the result that the central bank should have stopped emergency loans.

But what of Greece? How would that country fare outside the EU. The received wisdom is that they could simply print New Drachma and inflate away their debt. Tyler Durden at Zero Hedge thinks things might not be so simple for them.

Unless there is another way out …

While Greek treasury officials are digging around in the sofa cushions to try and scrape up €2 billion by Friday (20 March) in order to pay interest due to the IMF, the ECB, and Goldman Sachs, and with celebrity Finance Minister Yanis Varoufakis doing his absolute best to sink the entire ship with a series of epic PR faux ups, where can Athens turn when Berlin and Brussels finally pull the plug on further bail outs to suport the continuation of gross incompetence in the Aegean. Reuters carried this story today:

Greek Prime Minister Alexis Tsipras will visit Moscow on April 8 after being invited to talks by Russian President Vladimir Putin, a Greek government official said on Tuesday.

Greece’s government has previously said Putin had invited Tsipras to visit Moscow on May 9 and it was not immediately clear if that trip had been changed. It would be Tsipras’s first official visit to Moscow since being elected in January.

So one again the Geopolitical chess player outmanoeuvres the bluffing poker players of Washington and Brussels. As Syriza faces the unenviable proposition of either completely giving up on its campaign promises or plunging the Greek economy and banking system into a drachma death spiral, it appears as though Athens is playing the one card it has left, which is threatening to effectively surrender itself to the Kremlin.

As Reuters notes, this wouldn’t be the first time Greece has inadvertently created speculation around the possibility that Moscow could end up being the new best friend of Europe and marginalising the USA.

Well as someone on television said, “When you play the Game Of Thrones, you win or you die.” Its a pity Obama and his friends only watch reruns of The Fresh Prince Of Bel Air.

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Greece draws up drachma plans, prepares to miss IMF payment
Greece is preparing plans to nationalise the country’s banking system and introduce a parallel coupon currency so that citizens can carry on their day to day activities in the event of the Eurozone taking steps to defuse the simmering debt crisis. Sources in the governing Syriza party said the government may be forced to take the unprecedented and high risk step of missing a payment to the International Monetary Fund (IMF) as early as next week.

Has German Finance Minister Goven The OK For A Greex EU Exit Referendum?
Comments by German Finance Chief Wolfgang Schaeuble seemed to indicate that the EU’s paymaster is ready to let Greek PM Tsipras put continuing Euro single currency membership for Greece to a popular vote. Any such move could affect negotiations with creditors by allowing Syriza to claim it hasn’t betrayed its support base, but a vote also risks plunging the country into turmoil should the gambit backfire

Everything You Need To Know About The Greek Crisis.

Those people who think I have suddenly become a right wing extremist because I have been supporting UKIP’s anti – EU, anti – Global Government stance and their resistance to the political mainstreams war on European cultures by be surprised to know that I was hoping for the Greek General Election to deliver a convincing victory for ‘extreme’ according to the Euronazis in Brussels and their friends in mainstream media) left-wing party Syriza.

The point is Syriza, while not actually anti – EU (and their are few anywhere who are totally against the European nations sticking together to form a powerful trading bloc against global hegemony by the USA, or the rapidly emerging counter USA bloc led by Russia, China and Iran. What Syriza are against is not simply Brussels imposed austerity as you will read and hear, but the surrender of the elected Greek Parliament’s sovereign powers to unelected EU bureaucrats.

But what gave impetus to the rise of Syriza from a fringe Marxist group to a party of government. And what pressures led them to form a coalition with a right wing party rather than any of the pro – Brussels groups of the soft left?

Anybody who does the Greek debt arithmetic (and it sometimes seems that nobody in Brussels, Berlin or the British media actually does – or can,) knows that Greece cannot repay its external debts, now around 170% of GDP, without a level of pain that is simply beyond the tolerance of democratic societies’. Furthermore, because of rules imposed by Brussels on members of the Euro single currency system in relation to welfare, immigration and financial policy, even with interest rates at or close to zero per cent, Greece could not repay existing debt as fast as it needs to borrow new money to stay afloat.

So the voters in Greece have elected to end their humiliation by the ‘Troika’ (EU/IMF/Capitalist Bankers) punitive austerity programme, by voting for a party that promises to unilaterally write off a large part of the debt.

It is widely believed (thanks to misinformation from Brussels and misreporting in mainstream media) that Greece’s bailout by the Troika, to the tune of 226 billion euros, was mainly aimed at keeping the bankrupt Greek state afloat, maintaining its basic operations and paying the salaries of its overpaid, skiving public workers.

WRONG!

The bulk of the bailout money actually went to the country’s banks and foreign creditors, mostly French and German banks. In other words, more than 80 per cent of the bailout funds were used to indemnify, either directly or indirectly, the financial sector (both Greek and foreign) against losses incurred due to their irresponsible lending to bad risk clients. Neither the Greek state nor it’s people saw any tangible benefit.

What happened in Greece is also what was done in South America Eastern Europe. Disaster capitalism. Setting in train a deliberate policy aimed at bringing entire countries to their knees by first encouraging debt by making cheap money available, then imposing predatory conditions, and then using the ensuing chaos and smouldering ruins to take full control over their political, economic and social systems.

The oligarchs supported by the bureaucrats of the Troika were not expecting the likes of left-wing Syriza Party, libertarian UKIP, or right wing groups like France’s FN or the Sweden Democrats to offer voters a way to defy the globalist oligarchical power grab. It will be interesting to see what attempts the EU will make to overturn this vote or what punitive measures will by inflicted upon Greece as a Nazi / Soviet style warning that the new mood of defiance should not spread to Rome, Paris, Madrid, Lisbon and others.

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Europe sacrifices the future for Globalist ideology

Economist, Nobel Prize Winner, Has Irony By Pass

With the left wing screechers still having their volume dial turned up to eleven over George Osborne’s statement that we will need five more years austerity to get the economy sorted we need some respite. In fact after five years of ‘austerity’ the debt has grown, earnings are down, real unemployment (i.e. including those jobless the government statisticians don’t count) is about the same, the poverty gap is wider and we are still fucked so no respite in sight from the brain dead zombies who insist that to get the country on the right track we need five million unskilled, uneducated, undomesticated immigrants from third world terrorist hot spots.

Is should be no surprise that the world’s leading brain dead idiot economist Paul Krugman has had an irony by pass. You thow up your hands in surprise but what other explanation could there be for Krugman’s recommending governments to follow the advice he was giving throughout the 1009s until the dotcom bubble burst and from 2001 to 2008 when the sub prime bubble burst.

Yes without the slightest hint that he is aware of the irony Krugman is suggesting that to get out of the shite we must follow the economic policies he developed that got us into the shite.

from Alternet.com

The problem with ideologues is that they do not learn from their mistakes, not even after they repeat them and things go wrong again. Paul Krugman returns to one of his favorite subjects in his Friday column: the mismanagement of Greece’s fiscal crisis, which erupted five years ago and has ongoing terrible side effects that are damaging the whole world. “But I’m not talking about the side effects you may have in mind — spillovers from Greece’s Great Depression-level slump, or financial contagion to other debtors,” Krugman writes. “No, the truly disastrous effect of the Greek crisis was the way it distorted economic policy, as supposedly serious people around the world rushed to learn the wrong lessons.”

Greece is again in crisis and Krugman is wondering if (hoping that )the world will learn the right lesson this time.

The first time, the conversation became all about cutting government spending and obsessing over deficits. That this worsened unemployment and blocked any chance for growth was simply denied by fiscal austerity hucksters like British prime minister David Cameron and U.S. budget hawk Paul Ryan. We’re all going to be Greece, they hysterically warned. Minus the sunshine. Krugman:

In reality, Britain and the United States, which borrow in their own currencies, were and are nothing like Greece. If you thought otherwise in 2010, by now year after year of incredibly low interest rates and low inflation should have convinced you. And the experience of Greece and other European countries that were forced into harsh austerity measures should also have convinced you that slashing spending in a depressed economy is a really bad idea if you can avoid it. This is true even in the supposed success stories — Ireland, for example, is finally growing again, but it still has almost 11 percent unemployment, and twice that rate among young people

Read more at Alternet

But does the academic scab louse not understand it was lack of financial discipline and unrestrained borrowing that got Greece, Portugal, Spain, Italy, Ireland, Cyprus and other debtor nations into trouble in the first place. Al little austerity when Krugman was screaming “Borrow, borrow, borrow, the good times will never end,” and they might not be in such trouble now.

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When The BIS Is Worried At The State Of Financial Markets We’re In Deep Shit

Contributed by Phil T. Looker

Few outside the financial community will have heard of the bank Of International Settlements perhaps, it is the organisation in which governments and international banking organisations settle their obligations to each other. as such, the BIS is a major player in fixing rates, making sure markets are rigged and generally managing the financial jiggery pokery involved in making sure the status quo is preserved.

So when the BIS, the exclusive club of bankers and billionaires that fixes the markets starts to worry about the markets being broken you know we are in big trouble.

This article fom Zero Hedge explains just how big and how far in we are:

An Avalanche Of Upshitcreekness

argentina default

We are kind to our readers here at Boggart Blog, we give you lots of new and very amusing words like upshitcreekness to play with when you are trying to describe the state of the world. Upshitcreekness describes no only how far up shit creek we really are, the depth of the shit beneath our canoe, the conspicuous lack of a paddle and the stinkyness of our surroundings.

The reason we invented upshitcreekness today is to adequately describe the situation in high finance following the debt default by Argentina and the collapse of Portugal’s Banco Espirito Santo this week. “But do those affect us, Ian?” You might well ask.

Not directly or immediately, but they demonstrate that in spite of all the blether from mainstream media, the debt crisis and the fragility of banks’ balance sheets has not gone away. There is no recovery.

“But haven’t Whitehall and Washington been pumping out data that shows a strong economic recovery is underway, everybody now has fourteen jobs, wages are rising and prices are falling and everything is hunky dory because that nice Mr. Rothschild lent us the money to sort it all out.

Well the numbers that they crank out to make everybody feel good are almost as phony as the numbers that the Argentine government has been cranking out for the past few years. Cristina Fernández the government finance chief says well, we only have 10% inflation. But everybody knows that a broad snapshot shows for necessary purchases it’s 30 to 40%. And here they say we have 2% inflation. I would say that based on a household budget (which excludes luxury goods that are being heavily discounted because nobody is buying) inflation is realistically in the 8-10% range here, and in the USA it’s going much higher because the US$ has been dropped by many trading and oil producing nations as the currency of bilateral trade. This has been going on for a while but contracts are made eighteen months to two years in advance so the effect does not kick in at once.

If we observe the actual economy rather than the fiat money and quantitative easing economy it has been obvious for a while that the upshitcreekness was being masked by printing money and statistical prestadigitation.

The growth is all a fantasy. It’s all a result of the assumption that there is no inflation, when there really is because what we have is inflation masquerading as economic growth. But the bottom line is the economy is really contracting, although jobless figures are massaged by simply not counting the long term unemployed and counting those in part time jobs as having a whole job and not a fraction of a job, the labour force is actually shrinking. GDP may be growing but that’s only because the government keeps printing money and handing it out in benefits, there is actually less economic activity. That’s why we’re using less energy, that’s why the people’s standard of living is going down, and real incomes are falling and job opportunities are disappearing. It’s because we’re in a recession, a depression even, and no one wants to admit it.

And as in 1939 the leading economic powers see war as a way out, which is why the USA and its allies are madly angling for war in Ukraine.

And if there’s a war we’re fucked, I’m fucked, you’re fucked, we’re all fucking fucked. That’s what is meant by Upshitcreekness.

Well that’s the external threats dealt with, noe we need to deal with the enemy within (the EU)

If The Government Does Not Keep Junkhead Junckers Hands Off The City, we can say gooodbye to nationhood.

Yes, thanks to economic mismanagement by Conservative and Labour governments since the 1960s we are far too dependent on our financial services business. And the money hungry bureaucrats of the EU have coveted the revenue that brings in for many years.

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The Biggest Secret About banking has Just hit Mainstream Media

debt burdenThe Debt burden – source financial helper

Mostly in my guise as Little Nicky Machiavelli, I’ve pointed out for years that banks create money out of thin air. With many economics pundits predicting another, bigger than 2008, financial crash as ustable currency floods the world it has now finally struck mainstream media that our money is worthless, the only thing underpinning it is debt, your debt, your neighbours debt, Old Uncle tom Cobbleigh’s debt, George Osborne’s debt my … oops; I have no debts, repugnantly sensible person that I am, I saw it coming. The outcome is inevitable when loans come first … and then deposits FOLLOW.

In fact the money you borrow is bundled with the debts of others and used as collateral by your bank to secure loans from investment banks which will be used to make further loans to punters like you. If you think this sonds a lot like creating money from air, it is exactly that. The global economy is a giant Ponzi scheme, thanks to ‘liberal’ and ‘socialist’ (for both read corporatist) politicians and fuckwit economists with the intelligence of turnips perverting Keynesian economics to justify the infinite public spending oligarchic collectivism requires.

This is the most important secret about modern banking because it demolishes one of the biggest myths preventing a true economic recovery, challenges one of the main pork barrel profit centers for big banks. If finance ministers heed to common sense brigade and ignore the siren song of academics, running a national economy is just like managing a household budget but with much bigger sums involved and thus much bigger economic catastrophes as the consequence of continually spending more that your income opens up incredible opportunities for a prosperous economy.

This undeniable truth which stands conventional wisdom on its head has now gone mainstream, with not just bloggers like myself, financial market pundits like Tyler Durden of Zero Hedge and the Financial Times’ Martin Wolf – one of the world’s most influential mainstream financial writers – says that, since banks create money out of thin air, they should be stripped of this power, and limited to normal depository functions.

In other words they should not be able to lend money that is not underwritten by deposits or substantial assets, a bundle of debts is not a substantial asset, it is an effing debt, money owed which carries a risk that it will not be repaid. For example, The Deutschebank’s $75 trillion holdings of debt derivatives is worth absolutely eff all until people repay their debts. Simples. Or maybe not if you consider it amounts to 20 times Germany’s GDP.

Wolf indicates the centrality and importance of the issue with his subtitle: The giant hole at the heart of our market economies needs to be plugged.

Read more at Washinton’s Blog

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The Beautiful Scam Behind the Stock Market Chaos

stockmarketcrash
Picture Source: philip9876.com

The Dow Has Already Fallen More Than 1000 Points From The Peak Of The Market
The Financial Markets are a beautiful scam. Take a look at what has happened in the past few days in the context of market activity over the past year and then I’ll tell you how the scam works.

“On Monday of this week the Dow Jones Industrial Index was down 326 points. This followed sharp falls towards the end of last week. Overall, the Dow dropped more than 1000 points from the peak of the market (16,588.25) back in late December.”

The Economic Collapse blog said this:

“This is the first time that we have seen the Dow drop below its 200-day moving average in more than a year, and there are many that believe that this is just the beginning of a major stock market decline. Meanwhile, things are even worse in other parts of the world. For example, the Nikkei is now down about 1700 points from its 2013 high. This is causing havoc all over Asia, and the sharp movement that we have been seeing in the USD/JPY is creating a tremendous amount of anxiety among Forex traders. For those that are not interested in the technical details, what all of this means is that global financial markets are starting to become extremely unstable.

Unfortunately, there does not appear to be much hope on the horizon for investors. In fact, troubling news just continues to pour in from all over the planet. Just consider the following…

Read all …

Now unfortunately to some people the word market has become a sacred cow in the way that words like gay, lesbian, black, equality and disadvantaged have to others. The fact is financial markets have little to do with free markets. The financial markets are and always have been the most tightly controlled and heavily manipulated area of international commerce.

Since the 2008 crash the global economy has stagnated, even China’s economic miracle is stalling. As John Steinbeck told us, “The monster has to grow or it will die, and if the monster is to grow it must be fed.” The question is how do we feed a growing monster when the food supply is static. And the answer unfortunately is that the monster must be allowed to steal our share of the food supply.

After recovering gradually from the 2008 crash, stocks finally returned to pre crash levels sometime last year (or maybe late in 2012, I don’t keep statistics. At that point the monster was close to starvation. And so the store of food in the larder had to be made to look greater than it was.

How is that done? Traders working for the big banks start to force up prices by holding stocks and only releasing a trickle to be traded. The media play their part by hyping positive economic news and creating the impression that economies are growing strongly. Prices start to go up and everybody wants a piece of the action. Fund managers pile in although they understand how the game is played, so your savings and pension funds are invested and eventually individual small investors are sucked up in the tsunami of false confidence.

Then comes the point where the big investors have taken as much as they want out of savings and pensions. Sell, sell, sell, the cry runs round the market and the pre planned panic takes hold. Fund managers are first to offload stocks and get into cash or bonds, small investors cannot react as quickly and are hit hardest. The market goes through what is euphemistically known as a ‘correction’ and when it bottoms out the big investors quietly start to buy up stocks again, ready for the next bubble.

If you are not one of the people being hit there is a certain poetic beauty to it really.

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Economic War? CNN reports China dumps US Bonds

My eyes pricked up when I saw this story on the usually reliable Zero Hedge website:

It’s one thing for the Comedy News Network formerly known as CNN to announce the opposite verdict on Obamacare as breaking news or that the TV studio formerly known as the NYSE is under 3 feet of water (based on what it saw on Twitter). It’s something else entirely for it to report that China has declared semi-hot war on the US (unless of course CNN is merely reporting tomorrow’s news today).

Read full story at Zero Hedge

Now to be fair CNN claim this was the result of their site being hacked. (I love the Zero Hedge alternative to their long form name, Comedy News Network. CNN -founded by Bilderberger Ted Turner – gave up news reporting in favour of being a propaganda sheet years ago.) But if it is true and the CNN online news site can be hacked so easily by people spreading fear and panic, their IT department is crap and I will accept a fee of ONE MILLION DOLLARS for telling them how to fix their process.

Even if the CNN story was a hack there are bizarre things going in in the very stinky world of high finance. Take this BBC News story from this morning.

HSBC imposes restrictions on large cash withdrawals
quote
Some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it, the BBC has learnt.

Listeners have told Radio 4’s Money Box they were stopped from withdrawing amounts ranging from £5,000 to £10,000.

HSBC admitted it has not informed customers of the change in policy, which was implemented in November.

The bank says it has now changed its guidance to staff.
New rules

Stephen Cotton went to his local HSBC branch this month to withdraw £7,000 from his instant access savings account to pay back a loan from his mother.

A year before, he had withdrawn a larger sum in cash from HSBC without a problem.

But this time it was different, as he told Money Box: “When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved.”

end quote
Read all, BBC News

Clearly the bank is out of order, if someone wants cash out of an instant access account it is eff all to do with the bank what it is wanted for.

I used to bank with HSBC and know what a bunch of incompetent tossers they are. The only two things this organisation is good at are stealing customers’ money and covering their own arses so when anything goes wrong they can shift blame to the customer.

I left because of their internet banking system’s habit of shutting me out of my account by changing my date of birth. Several times I had it reset to the date shown on my birth certificate. I would then successfully log in once or twice and then be shut out and told I had entered the wrong date of birth.

It proved impossible to get through to a human being on the 50p a minute help line to complain so I decided HSBC are thieving scum. Most banks are the same unfortunately. I have an uneasy feeling they are softening us up for the day when China calls in the west’s debts and the New World Order confiscate all our funds to pay them. Trust nobody.

The Death By Debt Of Western Civilization

debt burden
Picture: The Debt Burden. Source: financialhelper.co.uk

For every £1 which the Labour government added to the British economy between 2001 and 2009, they added £5.40 in debt (source below). That statistic puts into perspective the news that unemployment is down, inflation is on target and growth is up. This does not really mean the economy is staging a Lazarus style comeback. It is bad news really because the wrong message will be inferred, as Cameron’s showboating in Parliament and Gideon’ Osborne’s jumping on the conference table in Davos and yelling, “We’re the Bits, we’re well hard and we’ll take you all on,” have demonstrated.

Among the youngish men who have never had a proper job in the real world but think a PhD in Philosophy, Politics and Economics and a few years experience as a political researcher makes them an expert in everything Nick Clegg is furthest off the mark in thinking that the signs point to closer links with Europe and eventual entry into the Single Currency system. He wants more public spending and will we all stop accusing pervy Lib Dem politicians with perviness please. Boris Johnson has argued in the past that we should “dump the rhetoric of austerity today,” while rousing choruses of “Happy Days Are Here Again” have been heard around Conservative headquarters. At a time when the economic situation demands a serious attempt is made to explain why austerity is necessary and a more vigorous implementation is vital, the Prime Minister and Chancellor want us to buy bigger houses, the Deputy Prime Minister wants to spend more and the Mayor of London wants us to close our eyes and ears and pretend we’re in a safe place.

If the latest statistics tell us anything at all, it is that despite that the official huffing and puffing about recovery, Britain’s economy has run aground on the shoals of stagnation (don’t we British love a nautical metaphor). There many be more jobs, but we must remember that many of them are part-jobs, only offering twenty or thirty hours work per week. This is evidenced by the lower productivity and no real growth in the economy.

Let’s be honest for a while, pumping the equivalent of five per cent of GDP into the economy by printing money (aka Quantitative Easing) while only managing to show two per cent growth is a recipe for financial catastrophe. And with official inflation still running ahead of GDP growth (and real inflation even higher) in real terms the economy is still shrinking. If people earn roughly the same as they did seven years ago, before the credit crunch, and the real cost of living has risen in the region of four to five per cent each year, the difference in lifestyle will be enormous.

While interest base rates (the rate government lends to banks) remain near zero while the banks charge much higher interest rates for lending the money straight back to government at over three per cent (yes, that’s how Quantitative Easing works when governments have a structural deficit), costs will continue to rise and wages will not . Currencies will continue to go down like the proverbial Lead Zeppelin against commodities and energy costs will go on rising. We truly do live in Interesting Times, and they will not be ending soon.

The question of when Britain will return to real growth as opposed to growth through manipulated statistics (there’s an election just over a year away remember) is difficult, but from every side of the argument there is one common but completely wrong headed assumption, that if we follow the right policies now then we will be back up and running at 3pc annual growth in three or four years.

The fault lies with neither Labour, Conservative nor even Coalition government. The rot set in decades ago, when Margaret Thatcher’s government (and Ronald Reagan’s administration in the USA) started to base their economic policies on the Kumbayaism of academics rather than the sound advice of people who ran businesses. Back then the panacea that did not work was controlling the money supply. Yes, it would be lovely if we had free trade and everybody could sell their goods on equal terms in a free market, without let or hinderance. Such utopianism is fine on paper, where the economics of academia start and end. but exporting jobs to India and China in the sure and certain knowledge of those nations buying services from our countries that they could provide more cheaply and just as efficiently “in house” and buying into our values and tradition of fair play was just delusional.

So we are stuck, economies go west as jobs disappear over the eastern horizon while national, business and personal wealth disappears down the drain. One of the big problems those visionary economists were too myopic to see even though it was staring them in the face is that if you create a huge pool of Labor by exporting jobs, it places an enormous financial burden on the state as welfare and social security bills rocket. This forces up taxes and eventually, as higher taxes cause more unemployment it leads to more borrowing in the bond markets to fund the deficit. Every bond sold increases the amount of interest the government must pay which again forces up taxes. It is a series of concentric vicious circles.

And example of the sheer idiocy of academic economists like Paul Krugman (Krugmanomics) is their belief that increasing benefits (funding the extra spending through borrowing of course) contributes to GDP growth. They are too naive, too ignorant of real life, to understand that GDP is only a measure of churn in the economy. An increase in GDP does not indicate greater productivity.

Until low income earners have the tax burden lifted, which would mean getting the deficit (NOT the National Debt, that’s a different problem) to near zero, consumption spending will be low and living standards will decline. The Conservatives seem to understand this but do not have a clue how to achieve it, while Labour are still advocating their own version of Krugmanomics, created by finance spokesman Ed Balls, which future historians may come to call Bollocksonomics. Bollocksonomics involves expanding the public sector vastly by creating non – jobs in town halls and government departments. A non – job is a position which caries a salary without any job description, functions or tasks having been defined. For examples non – jobs follow this link.

Such drastic deficit reduction also cannot happen without people accepting that others can afford to give them less through the state. That won’t happen at all, one only need witness the wailing and gnashing of teeth from the hand wringers and bleeding hearts of the Labour voting, middle class left at any mention of benefit cuts to understand why.

The political will, and more importantly the reforming zeal needed to take on the smug, affluent wailers just isn’t there. Another fly in the ointment is the grip on the public sector of the Unite Union, an anti British organisation that will do absolutely anything to prevent necessary reforms to the financially crippling benefit system.

Soon none of this will matter. The compound effect of the rapidly increasing debt burden we are under will be such that the deficit will need to rise again to sustain it. Add to that the financial disaster that will ensue should Labour return to power in 2015 as well they might, and open up the borders to uncontrolled immigration (as they certainly will) while giving those unskilled immigrants generous benefits and free health care, and the debt burden will reduce us to a Greek style basket case economy by the end of their first term.

Further Reading: Perfect Storm by Dr. Tim Morgan, Tullett Prebon

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Shock Labour Defector – To The Tories?

After asking a few days ago, in the wake of criticisms from John Major, David Blunkett and Jack Straw of the parties whose governments they served in, we asked who would be the next political elder to defect to UKIP.

The defection, when it came, was a shock. Ken Livingstone turned against Labour and the loonytoons economics advocated by shadow chancellor Mr. Bollocks and embraced Thatcherite monetaraism.

from The Daily Telegraph:
Ken Livingstone, the former Mayor of London, has accused the Labour party of “cowardice” for building up billions in debts rather than taking difficult decisions on tax cuts and spending.

In a speech to a campaigning group on Saturday Mr Livingstone accused Gordon Brown of borrowing too much in the boom years.

Mr Livingstone said: “Gordon Brown was borrowing £20 billion a year at the height of the boom in the first decade of this century in order to avoid having to increase taxes, because he wanted to increase public spending.”

The former Mayor described the racking up of debts as “an act of cowardice” on the part of the Labour party.

Mr Livingstone appealed to Ed Miliband, the Labour leader, not to borrow more. Referring to Mr Miliband and Ed Balls, the Shadow chancellor’s, plans for the economy, he said: “I don’t believe that borrowing is your way to the future.”

As Livingstone is going against Labour’s traditional policy of saddling future generations with unserviceable levels of debt inh order to buy working class votes by handing out cash benefits, we must assume Red Ken’s political career is over.

On the other hand it might just be that he’s the same old hypocrite he always was and will embrace anything he thinks might help him cling to a sliver of power a little longer. I mean, he’s already endorsed Sharia Law and you can’t get any more conservative than that