Ed,
As, of course, Bernanke himself has confirmed! If
ever there was a case of financial chutzpah, the
idea of a government trying to hold an economy
steady by means of announcing unchanged interest
rates for the next two years just about beats
anything that's ever been said by any economist.
It had the immediate effect of rallying the stock
market yesterday, which had threatened to
collapse, but once the implications of this sink
in (a likely QE3 to come) then there can be
little hope for the dollar. Its demise as the
world reserve currency is as inevitable as the British pound was in the 1930s.
Keith
At 14:26 09/08/2011, you wrote:
Oh no no no, Keith, all that we are downwardly
spiralling into is a double-dip recession...!
----- Original Message -----
From: <mailto:[email protected]>Keith Hudson
To:
<mailto:[email protected]>RE-DESIGNING
WORK, INCOME DISTRIBUTION, , EDUCATION ; <mailto:[email protected]>Ed Weick
Sent: Tuesday, August 09, 2011 1:16 AM
Subject: Re: [Futurework] Capitalism in crisis:
80 years ago, a banking collapse devastated
Europe, triggering war | Mail Online
Ed,
At 22:59 08/08/2011, you wrote:
Keith, sorry I didn't get back to you
sooner. I've spent the day leaping from one
thing to another, much like the global
economy. On reading your message about the
only thing I have to say is that we are in
agreement -- not complete, but pretty close.
And I am sure that both of us would agree that
the collapsing stock market in Asia, America and
Europe is an indication that the investment
banks and lack of adequate governmental
supervision have now taken us very close to an
economic condition that, if anything, could tip
into something far worse than that of the 1930s.
Keith
Regards,
Ed
----- Original Message -----
From: <mailto:[email protected]>Keith Hudson
To:
<mailto:[email protected]>RE-DESIGNING
WORK, INCOME DISTRIBUTION, , EDUCATION ; <mailto:[email protected]>Ed Weick
Sent: Monday, August 08, 2011 10:08 AM
Subject: Re: [Futurework] Capitalism in crisis:
80 years ago, a banking collapse devastated
Europe, triggering war | Mail Online
Ed,
Well, I'm glad you agree with me that it's not
capitalism itself that's in crisis. It's those
who have effective (almost monopolistic) charge
of it at the present time which are in crisis.
Yes, you're right about all the other factors.
And you're quite right about the fact that much
of it takes place out of sight. Derivatives are
a wonderful example of this. Even now, scarcely
anybody outside teams of traders and their
maths helpers in the investment banks
understand what they are, even though, at rock
bottom, they are insurance policies no
different in essence from what many farmers do
in order to establish prices for their future
crops or what we do when we insure our homes
against fire. But with modern derivatives (all
brand new since about the mid-1990s when they
were initially invented by JPMorganChase) most
of them have become policies based on other
policies -- derivatives of derivatives --
instead of being based directly on the goods
themselves. Whereas before the mid-1990s the
total amount of derivatives was about the same
as world GDP, by 2008 they had become ten times
the value of world GDP. All derivatives can be
valued so they all acted like money. So we had
this great mass of pseudo money being juggled
in the air between the investment banks and
then finally landing as debt in the punters'
laps -- the punters being governments, the
ordinary commercial banks and, in turn, us.
But there are two more important factors which
I think should be added to the list. One is the
steady encroachment of automation. This is
already having huge effects in the bifurcation
of jobs skills. The other is that in the
advanced countries we are all becoming locked
into a particular way of life in which there is
scarcely any opportunity for new iconic
consumer goods and services. We had many of
these all the way through the past 300 years.
Keith
At 14:12 08/08/2011, you wrote:
Keith, I don't think you give enough credit
where credit is due. Several things in
combination are causing today's
crisis. Globalization, technology and the
movement of jobs to the "developing world" is
one such thing. The increasing economic
dominance of the FIRE sector(finance,
insurance and real estate) in advanced states,
plus the fact that much of what it does takes
place out of sight, is another. The growing
gap between rich and poor and the increasing
saleability of politicians is yet
another. And most recently, the trumping of
democracy by ideology (the Tea Party, for
example) appears to have become a very important factor.
Poor old hunters/gatherers have nothing to do
with it. What I found in my work with people
who still hunt and gather in northern Canada
is that they are highly cooperative. If one
person invented a better method of hunting or
gathering, everyone shared in it.
And it may not be capitalism that's in crisis,
but governments and nation states certainly are.
Ed
----- Original Message -----
From: <mailto:[email protected]>Keith Hudson
To:
<mailto:[email protected]>RE-DESIGNING
WORK, INCOME DISTRIBUTION,EDUCATION ;
<mailto:[email protected]>Robert Stennett
Sent: Monday, August 08, 2011 2:49 AM
Subject: Re: [Futurework] Capitalism in
crisis: 80 years ago, a banking collapse
devastated Europe, triggering war | Mail Online
Barry,
Capitalism is not in crisis. So long as man
retains his curiosity streak and wants to make
and do new things then, to bring them off, he
has to devote time, effort and (these days)
money beforehand. The first hunter-gatherer
who investigated his hunting weapon -- a crude
piece of stone -- and discovered that, with
skill, it could be fractured into sharp edges
and points was the first capitalist. The time
and effort spent was the first investment --
the first capital -- before money was invented.
What's in crisis today is governmental and
banker-led capitalism. In previous times there
has been military-dominated capitalism, as
also religiously-led as also
industrialism-led. Each has the effect at
their zenith of exploiting the masses. But
then they inevitably go too far and lose their
'mandate from heaven' as the Chinese put it.
Today's crisis has been caused by (a)
governmental printing of money way beyond
normal productivity; (b) banks' inventions of
all sorts of credit schemes which have vastly
enhanced the existing money supply. In fact,
governments and banks in the advanced
countries are synergistic. It's revolving
doors for the chief players. Senior
politicians hardly fail to become rich when
retired; senior bankers hardly fail in being able to influence legislation.
If it's of any consolation there are clear
signs that both banks and governments have
bitten off far more than they can chew. Having
grown from something like 5% of GDP to
something like 15% in the last 100 years,
banks are now contracting, both in personnel
and schemes. Having grown from something like
10% of GDP to something approaching 50% (in
some of the most advanced countries) in the
last 100 years, governments are already
contracting, both in personnel and scope. This
hasn't reached America yet but it will do.
In this increasingly specialist world new
power groups will arise in due course as the
whole pack of cards is reshuffled. Don't ask
me what the next specific power centre(s) will
be. For example, it could be education or
medicine (and perhaps one particular
specialization within this such as
neuroscience for happiness purposes or
genetics for breeding purposes). Both
education and medicine already have the
appearance of being much larger economic
growth sectors in the coming years. Both of
them have the potential of gaining power over
the personal lives of politicians, bankers and
their children. Or it could be something quite
unexpected which might carry great economic,
and thus political, power with it, such as
quantum computing or particle physics perhaps.
Unless you happen to think that mankind is
about to fall into chaos or oblivion or both,
then capitalism will survive. The real point is -- in whose hands?
Keith
At 23:56 07/08/2011, you wrote:
<http://www.dailymail.co.uk/news/article-2022993/Capitalism-crisis-80-years-ago-banking-collapse-devastated-Europe-triggering-war.html>http://www.dailymail.co.uk/news/article-2022993/Capitalism-crisis-80-years-ago-banking-collapse-devastated-Europe-triggering-war.html
I think the following quote summarizes much
of my current thinking about economics.
Barry
"At bottom, capitalism is as much a moral
enterprise as it is an economic one. If those
lucky enough to become successful ignore the
virtues of thrift, self-discipline and
sobriety, as well as the moral imperative to
look after the weak, then capitalism
degenerates into cronyism and self-interest."
Article to follow....
Capitalism in crisis, a warning from history:
Eighty years ago, a banking collapse
devastated Europe, triggering war. Today,
faith in the free markets is faltering again
Last updated at 6:03 PM on 6th August 2011
Exactly 80 years ago, international
capitalism stood on the verge of meltdown.
The collapse of the banking system in the
summer of 1931 sent shockwaves through
Europe, bringing governments to their knees
and thousands out onto the streets.
In the United States, an increasingly
careworn president and his congressional
critics fought a bitter battle over government spending and tax rises.
The collapse of the banking system in the summer of 1931 brough
The collapse of the banking system in the
summer of 1931 brought governments to their
knees and thousands out onto the streets (Pictured: the Jarrow March)
And in Britain, with the Labour government
broken by the economic crisis, a
Conservative-dominated coalition imposed the
deepest spending cuts in a generation,
slashing benefits in an attempt to restore
confidence in the nationâs finances.
With the banks refusing to lend, and millions
of people thrown out of work, capitalism itself seemed utterly discredited.
In other countries, many turned to the far
Right, swelling the ranks of the Nazis and their allies.
In Britain, a generation of intellectuals
turned their backs on capitalism, placing
their faith in the utopian idealism of Soviet
Communism and closing their eyes to the horrors of Stalinâs barbaric regime.
For decades afterwards this extraordinary
historical moment when capitalism itself
appeared to have failed was forgotten, and
looked like the stuff of ancient history.
But in the summer of 2011, with the
eurozone in chaos, the British economy
stagnant and the U.S. crippled by debt, with
social mobility at a standstill and millions
of ordinary families squeezed until they can
barely breathe, it feels disturbingly familiar.
In the past two days alone, stock markets
have been in free-fall across the capitalist
world. With investors manifestly losing
confidence in Spain and Italy, two of
Europeâs biggest economies, a second
devastating world recession cannot be ruled out.
Although the share-price plunge does not yet
come close to the infamous Wall Street Crash
of 1929, this weekâs market mayhem is a
chilling reminder of the sheer fragility of the capitalist system.
If the worst happens, if Spain and Italy go
down and the euro crumbles, then the world economy really will be in trouble.
Only 20 years ago, the capitalist West was
congratulating itself on victory in the Cold
War. The Berlin Wall had come down, the
Soviet Empire had broken up, and American
intellectuals were even proclaiming the âend of historyâ.
Marxism was dead and capitalism triumphant,
or so we were told. Having lifted millions in
the West out of poverty, having showered them
with goods and opportunities, the free-market system could do no wrong.
Today, the picture is very different. For
although the Left has never recovered from
the fall of the Soviet Union, capitalism has
rarely seemed in a more desperate condition.
Last year Barclays boss Bob Diamond pocketed an incredible £6.
Last year Barclays boss Bob Diamond pocketed
an incredible £6.5 million - and that's on
top of his £8 million-plus annual pay package
And with bankers still pocketing gigantic
bonuses and Europe swept by a wave of
austerity, even the Right are beginning to
wonder whether the system is intolerably
loaded in favour of rich metropolitan elites.
Only last week, for example, the Tory MP
Douglas Carswell suggested that âthe free
market all too often turns out not to be a
free market at all, but a corporatist racket for the fewâ.
Modern Conservatives, he said, should be
âas suspicious of Big Business and
Corporatism as we have been of Big Governmentâ.
On the surface, this may sound shocking. Yet
when you dig a little deeper, it is not hard
to see why so many people have lost faith in the free market.
The entire premise of the capitalist system,
after all, is that in a free market, hard
work will produce its own reward. For
capitalists, the important thing is equality
of opportunity. If you put in the effort,
then you can be whatever you want to be, regardless of your background.
So when Margaret Thatcher, one of
capitalismâs most passionate champions, ran
for the Tory leadership in 1975, she defined
her values as âthe encouragement of variety
and individual choice, the provision of fair
incentives and rewards for skill and hard
work, and a belief in the wide distribution of individual private propertyâ.
And when she walked into Downing Street four
years later, she promised to ensure that âhard work paysâ.
But you do not have to be a card-carrying
Left-winger to see why millions of people
not just in Britain but across the world feel completely cheated.
When most of us contemplate the results of
the bankersâ greed, for example, talk of
âfair incentives and rewardsâ seems a sick joke.
In every corner of Europe, ordinary families,
through absolutely no fault of their own, are
paying an intolerable price for the outrageous avarice of the financial elite.
Recent figures show that City bonuses came to
a staggering £14âbillion last year, with
one executive, Barclays boss Bob Diamond,
pocketing an incredible £6.5âmillion â
and thatâs on top of his £8âmillion-plus annual pay package.
When she walked into Downing Street, Margaret Thatcher promised
When she walked into Downing Street, Margaret
Thatcher promised to ensure that 'hard work pays'
Yet at the same time, banks are refusing to
lend to ordinary families and small businesses.
Indeed, last month the banks actually took in
as deposits £3âbillion more than they
lent, which goes a long way to explaining why
growth is virtually non-existent.
âNo wonder economic growth is barely
visible to the naked eye,â remarked the
Coalitionâs former Treasury spokesman, Lord
Oakeshott, âwhen the banks keep sucking billions out of the economy.â
These are, incidentally, the same banks, such
as RBS and HBOS, that British taxpayers had
to save from the consequences of their own reckless gluttony.
Three years ago, the Government spent
£500âbillion to bail out the collapsing
banking system. And now, while the bankers
toast themselves with vintage champagne, the
rest of us are picking up the bills.
But the bankersâ greed is only one symptom
of a wider malaise. The stark truth is that
millions of ordinary families feel the system gives them no chance of success.
The facts are simply unanswerable. A child
born in 1971 has less chance of moving up the
social ladder than one born in 1951.
On top of that, the gap between rich and poor
has grown steadily since the 1970s, with some
of the biggest increases coming during the 13-year New Labour regime.
Half a century ago, during the Fifties and
Sixties, grammar schools, job opportunities
in manufacturing and the death of deference
meant that working-class children felt they had a decent chance of getting on.
And in their different ways, state-school
educated prime ministers such as Harold
Wilson, Ted Heath, Jim Callaghan, Margaret
Thatcher and John Major gave the impression
that anybody could make it, regardless of their background.
Even in 1931, during the last great crisis of
capitalism, Britain was run by a prime
minister, Ramsay MacDonald, who was the
illegitimate son of a Scottish labourer and a
poor housemaid. At a time when it would have
been easy to imagine that power belonged
exclusively to the rich, MacDonald was a shining example of social mobility.
Nobody could possibly look at our leaders and
draw the same conclusion today.
From Cameron, Clegg and Osborne
respectively the son of a millionaire
stockbroker, a banker and the heir to a
baronetcy to Ed Miliband and Ed Balls, one
the son of a North London intellectual, the
other the privately educated son of a
professor, British politics has become the
plaything of a tiny self-regarding elite,
totally out of touch with ordinary families.
Looking at our political class, you begin to
suspect that modern capitalism is loaded in
favour of those who already enjoy wealth and
power. It has become a closed system,
impossible to penetrate unless you are incredibly lucky.
Other facts tell a similar story.
As the Tory minister David Willetts showed in
a provocative book last year, Britainâs
youngsters are being cut adrift. Thanks
partly to ferocious competition from Eastern
European immigrants, workers in their 20s
today earn far less than their parents did at the same age.
And with house prices having soared and banks
refusing to lend, they find it impossible to get onto the property ladder.
As a result, the old Conservative dream of a
âproperty-owning democracyâ is
increasingly reserved for the silver-haired.
Most experts recognise that home-ownership is
one of the keys to a stable, prosperous,
hard-working society yet since 1997, home
ownership among people in their 20s has steadily fallen.
Of course there was a time when education
offered a leg-up: but those days are becoming
a fading memory. Thanks to the unforgivable
abolition of the grammar schools, the gap
between private and state education has become a chasm.
In a country that claims to value
competition, it is nothing less than a
disgrace that just four expensive private
schools Eton, Westminster, St Paulâs, St
Paulâs Girls send as many students to
Oxford and Cambridge as 2,000 state schools put together.
Meanwhile, the Governmentâs education
reforms mean that working-class children face
the prospect of paying back £9,000 a year in
tuition fees if they choose to go to university.
And this, of course, comes at a time when
fat-cat vice chancellors, already rewarded
with grace-and-favour residences and
boundless expense accounts, are being paid an
average of more than £220,000 each.
On holiday in Tuscany something well beyond
most British families perhaps David Cameron
should spend an afternoon with his great
predecessor Benjamin Disraeliâs book, Sybil.
In this work, first published in 1845, the
greatest Tory statesman of the Victorian era
warned that Britain had become âtwo nations
¦ who are as ignorant of each otherâs
habits, thoughts, and feelings as if they
were dwellers in different zones, or
inhabitants of different planets; who are
formed by a different breeding, are fed by a
different food, are ordered by different
manners, and are not governed by the same laws: the rich and the poorâ.
Disraeli was no socialist. But as an outsider
himself, born into a Jewish family, he
recognised that capitalism could only take
root in ordinary peopleâs hearts and minds
if it gave them a stake of their own.
At bottom, capitalism is as much a moral
enterprise as it is an economic one. If those
lucky enough to become successful ignore the
virtues of thrift, self-discipline and
sobriety, as well as the moral imperative to
look after the weak, then capitalism
degenerates into cronyism and self-interest.
At its best, the free market is a tremendous
liberating force. During the Fifties and
Sixties, it gave millions of people
opportunities their parents could barely have
imagined: happy childhoods, good schools,
well-paid jobs and contented retirements.
On holiday in Tuscany - something well beyond most British fami
On holiday in Tuscany - something well beyond
most British families - perhaps David Cameron
should spend an afternoon with his great
predecessor Benjamin Disraeli's book, Sybil
But when capitalism fails, as in the 1930s,
then it allows extremism to thrive.
During that unhappy decade, some were
bewitched by the false promise of Stalinist
Russia; others flocked to the blood-drenched banners of the Far Right.
Eighty years on, capitalism has once again
lost its way. With millions betrayed by their
under-performing schools, locked out of the
job market, forgotten by the banks and
abandoned by their politicians, Britain is in
danger of becoming two nations again.
Modern capitalism is not beyond redemption.
But it badly needs to rediscover its moral
dimension, lost amid the scramble to protect
the privileges of a narrow metropolitan elite.
It is time that our politicians cracked down
on non-domiciled billionaires, and time they
made sure the rich elite paid their fair share of our national tax bill.
And if David Cameron really wants to rekindle
the British peopleâs faith in the
capitalist system, then he should go further.
He should force the banks to lend more money
to individuals and small businesses, getting our economy moving again.
He should restore a culture of competition
and excellence to our state schools, giving
working-class children a genuine sense that
they can climb the ladder. And he should make
it a priority to encourage real jobs in real
businesses, reinvigorating a manufacturing
sector that has been abandoned for far too long.
The stakes could not be higher. Unless
capitalism opens its arms to the common man,
then an entire generation will conclude that
it is no more than a fig leaf for the super-rich.
That would be a tragedy. For despite all
capitalismâs weakness despite the flaws,
inequalities and hypocrisies that are an
inevitable part of any human endeavour it
remains the only way to promote real and lasting opportunity.
Other systems have been tried, and they have
collapsed in bloodstained ruins. Only
capitalism the free exchange of goods,
skills, services and ideas has proved
itself true to the instincts of human nature.
Today, we can only hope that capitalismâs
champions learn the lessons of history.
For if they fail, then the results could be too dreadful to contemplate.
Read more:
<http://www.dailymail.co.uk/news/article-2022993/Capitalism-crisis-80-years-ago-banking-collapse-devastated-Europe-triggering-war.html#ixzz1UO1xowqN>http://www.dailymail.co.uk/news/article-2022993/Capitalism-crisis-80-years-ago-banking-collapse-devastated-Europe-triggering-war.html#ixzz1UO1xowqN
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/08/
----------
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/08/
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/08/
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/08/
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