At 15:17 02/07/2011, Ed wrote:
(Keith):
And over and above all that, the major problem has yet to be solved.
How can Western governments -- with few exceptions -- possibly pay
off their growing government debts from taxation? They'll only be
able to do so by means of substantial assets sales. And these, in
order to fully realize their value can only be spaced out over a
period of many years. And these sales can only begin to start when
there's a non-inflationary world reserve currency available to them
and which satisfies both the advanced and the emerging countries.
The IMF and our most recent institution, the G20, show few signs of
achieving this so far even though they're aware of the problem. As
is always the case in the affairs of man, it will take a catastrophe
to fully concentrate our minds. Credit-crunch II still awaits.
(Ed):
I don't think a "non-inflationary world reserve currency" is ever
going to happen, Keith, and certainly not in our lifetime.
Agreed -- not in my lifetime or yours! But hopefully in our
children's lifetime (even if only for the sake of our grandchildren!).
(Ed) The Euro functions as such a currency for the countries of the EU,
But surely not. The Euro is as much subject to money-printing as is
the dollar and all the others. Although it's illegal (according to
its constitution) the European Central Bank has already issued
something like 600 billion extra Euros by one dodge or other (that is
proceeding via these ad hoc institutions they've been so
imaginatively devising recently!). The Euro slithers about vis-a-vis
the dollar and other currencies for no other reason than the
judgements of bond speculators, when it really ought to be adjusting
pretty precisely as a matter of trade balances as they pile up or
diminish in respective central banks.
(Ed) . . . and we can see the very difficult problems that Greece
and the other PIGS are encountering. Despite the resolve of its
governement, I see Greece abandoning the Euro and moving back to a
currency that is under its control, the drachma. You can see other
EU countries doing the same thing.
Inevitable in the case of Greece, and highly likely in a few others
also (Portugal, etc). There's a good item on Der Spiegel's website
showing that even Germany -- the strongest economy in Europe -- would
find it impossible to carry out an austerity programme that's
equivalent (proportionate to GDP) to that which the IMF and the ECB
are now imposing on Greece. This past week's bail-out has only been
kicking the can down the road. The same crsis will occur again . . .
and again . . . until there is a major reconstruction of the Eurozone
or its demise.
Keith
----- Original Message -----
From: <mailto:[email protected]>Keith Hudson
To: <mailto:[email protected]>RE-DESIGNING WORK, INCOME
DISTRIBUTION, ,EDUCATION
Sent: Saturday, July 02, 2011 4:07 AM
Subject: [Futurework] Credit-crunch II still awaits
I see from this morning's papers that Goldman Sachs is forecasting
that consumer confidence will bounce back and all will be at its
Panglossian best from now onwards. As well it might. After all, even
Goldman Sachs is now making some of its staff redundant and badly
needs a livelier stock market so that it and its fellow investment
banks, such as JPMorgan, can recommence fleecing ordinary investors
such as pension funds with their high-frequency, algorithm-driven
methods as they were doing last summer. The dawdling stock market
this year, not knowing what to do, must be quite frustrating for them.
Yes, GDP will continue to grow at a low level (in the UK and Europe
as well as the US), sustained by the continuing immigration of poor
people who are busily taking up the low-paid jobs that still exist
and stocking up with the standard range of consumer products. But
what about the indigenous population? Consumer confidence is still
in shock, retailers are failing in most major cities, house prices
(except those in the highest range in choice locations) are still
static, if not declining, as are real, rather than nominal, wages
for the mass of the population due to inflation.
Goldman Sachs and its ilk have had a field day in the last 30 years
as they accelerated the availability of credit far beyond anything
that has occurred before in the whole history of the Industrial
Revolution. The 2008/9 credit crunch was only a partial therapy.
Realms of second and third degree derivatives have yet to be
neutralized, and mountains of property debt, private and commercial,
have yet to be either suffered or worked off in the balance sheets
of the retail banks -- whatever they, or their friends in governments may say.
And over and above all that, the major problem has yet to be solved.
How can Western governments -- with few exceptions -- possibly pay
off their growing government debts from taxation? They'll only be
able to do so by means of substantial assets sales. And these, in
order to fully realize their value can only be spaced out over a
period of many years. And these sales can only begin to start when
there's a non-inflationary world reserve currency available to them
and which satisfies both the advanced and the emerging countries.
The IMF and our most recent institution, the G20, show few signs of
achieving this so far even though they're aware of the problem. As
is always the case in the affairs of man, it will take a catastrophe
to fully concentrate our minds. Credit-crunch II still awaits.
Keith
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/07/
----------
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/07/
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
