This is just a disaster — and more prolonged than the depression of the 1930s:
And even more of a disaster when we consider the impact this has had on youth unemployment, which has climbed far above the EU and OECD averages (although nothing like as badly as Spain or Portugal):
This is not just a failure of government austerity, although that in itself has totally failed to ignite any kind of growth or recovery. The fiscal trajectory is important (not least for business expectations) — and trying to cut public spending and raise taxes during a severe depression in private activity has been shown repeatedly to just exacerbate the private slump — but it’s just one aspect of a greater problem — the failure to create a favourable business environment that can attract capital and growth to the UK.
Lending to UK business remains severely depressed:
Given that the British government owns the bailed-out commercial banks, it’s a shock that they haven’t leveraged this power to reignite lending to business, and particularly to business startups. So long as businesses are allowed to either succeed or fail on their own merits, it would not be a malinvestment of time, energy or capital to use publicly-owned bailed-out banks to break through the lending freeze.
It is something of a chicken-or-egg problem to say exactly how much of the problem is austerity, and how much of it is a weak business environment. But either way, we are on the wrong track. Business confidence levels are still deeply depressed — lower than they were when Cameron and Osborne came to power:
We’re now half of the way to a Japanese-style lost decade. If we carry on on the same track, we may end up with exactly that.
If British businesses don’t have confidence in Cameron and Osborne’s policies, if their policies don’t lower unemployment, don’t create growth, don’t boost imports and exports, don’t result in recovery, and don’t even result in less borrowing (their stated aim), why do they continue to pursue them?
Aziz, what should be done best?
I have written similar article on British economy with some additional graphs – oil import/export balance is here: http://www.theoildrum.com/files/UK_oil_importexport_balance.png
my whole article in Slovak here: http://ac.blog.sme.sk/c/319711/Britska-ekonomika-je-katastrofa-A-vraj-nikto-si-nie-je-isty-preco.html
So I also see a peak oil compontent here,
The top thing I advocate is using the bailed-out banks to break the lending freeze and provide unemployed people with low-interest loans to start new businesses.I also advocate deregulating small business, especially housebuilding.
Coalition has talked about BOTH of these things to some degree, yet they have not done anywhere near enough.
“low-interest loans to start new businesses” – isn’t it said that low interest rates contributed to the (subprime) mortgage crisis? Or is there difference in what you propose?
Even if you stimulate businesses and reduce unemployment, you will need to have a demand for that products, but now we, globally, are in OVERcapacity and OVERdebt, or not?
In terms of demand, the more people who have jobs, the better, but that’s really a side-issue, and ultimately won’t solve anything because it doesn’t address any of the real issues, so Krugman, etc, are wrong.
The issue is actually creative destruction. Right now we have lots of zombie industries — finance, transportation, energy, etc — many of which are supported by bailouts, state subsidies. With a loan freeze, there are very few new competitors. What breaking the loan freeze will do is create new dynamism and competition, by creating new businesses — some of which will succeed, some of which will fail. The uncompetitive industries will either have to become more competitive, or face being driven out of business by new competition.
In terms of debt if debt and debt service costs continues to be a problem debt can be directly addressed with some kind of debt jubilee as envisaged by Steve Keen. Yes, this is basically just printing money, but the difference is that instead of just handing it to the big banks a la QE, which of course enriches the top 1%, you distribute the money uniformly through debt extinguishment, which lowers the debt total, giving consumers and businesses more breathing room. Ideally, I hope it doesn’t come to this, I hope that we start growing again so the debt-to-GDP ratio starts falling.
What are they going to produce with these loans. An iPhone app?, Financial innovation? Pork Pies?
In the 20’s the rich eccentrics built cars, raced them against the Continentals and built the brands, Bentley, Jaguar etc. That was innovation which assisted the war effort too (Rolls Royce engine in Spitfires).
I think the cost of WW2, and the decline of the empire with the independence movement, saw less demand for British goods. For example Australia buys cars from Asia and the USA now. British brands are very limited.
Easy credit for small business? Are you nuts? The real wage has been flat since at least 1964. (Actually since 1940, by my model) Keynesian stimulus is 180 degrees wrong. What is needed is a 10% tax hike to retire some of the national debt. Of course, good luck with trying to sell that to the worker, telling him his real wage will go up as a result of taxation, even though it is true.
Savings and investment would rally as well and the interest rate would get up to over 6% for a change.
If you think I am advocating Keynesian stimulus, you don’t understand what I am advocating.
Please explain how a tax HIKE would increase real wages, and how higher interest rates would not follow DEflation (increasing real wages), but INflation, reducing real wages.
Wouldn’t savings and investment rally from lower debt only if that is achieved primarily by cutting government deficits through lower outlays? How would it help to further impoverish business and workers with higher taxes?
@Aziz – Unless you are advocating an issuance of negative interest currency, then I don’t understand how providing liquidity to start ups will be of any benefit. You can’t repay too much debt with even more debt. More debt will just worsen the real wage for the workers and savers.
@Don Guier Yes a tax hike is the only means of repaying the debt and reducing the price level, unless you have a better idea.
I doubt whether inability to get loans is a major constraint. First, employers on both sides of the Atlantic are sitting on record piles of cash. Second, there are three surveys done of employers in the US which indicate that shortage of finance is very minor problem for employers. Of course the US is not the same as the UK, but the surveys are indicative. See:
http://www.pwc.com/us/en/industrial-manufacturing/barometer-manufacturing (Page 26)
http://blumshapiro.com/media/uploads/files/BlumShapiro%20CBIA%20Survey.pdf (Page 4).
http://www.nfib.com/Portals/0/PDF/sbet/sbet201009.pdf (Page 18).
You will probably think this is crazy…but peak oil is a false premise created by the ruling elites. It was Rockfeller of Standard Oil who coined the phrase “fossil fuels”, and it was chosen to create a false sense of scarcity of oil.
From the point of view of these elites….they would not want the price of oil to drop through over supply and they would not want the people to have access to ‘free’ renewable sources of energy for their needs…because this would mean we are independent of them.
“Peak oil” IS false, but CHEAP oil has long-since peaked. Oil is progressively more expensive to find and produce. Except for the temporary, N. America-only glut, natural gas supply/demand/price will follow oil, except that gas is more expensive to transfer overseas.
Some wisdom right there, Don.
Agreed. With further research I have discovered that Natural Gas requires advanced storage to contain the higher pressures to turn liquid. It is not like Propane gas.
Cheap energy is a thing of the past. The sugar high is over. Now for austerity and a simpler life. The planet has a chance to renew I guess.
Both these sources indicate there is plenty of oil….just not being extracted, to limit supply, extraction technology is being deliberately withheld. Alaska has huge untapped oil reserves. Peak oil and the whole energy crisis /scarcity meme is an elite based social theme. This includes man made global warming and carbon tax….all created by the ruling elites for their own control agenda. rich powerful people with means lie and makeup things…they are not altruists or libertarians (some of them may adopt these positions to de-legitimize them but that is another story).
The ME oil supplies give excuses to the ruling elites to limit supplies and to have their wars all designed to gain greater control over people.
“Cheap energy is a thing of the past.”
Matter is energy. Energy is ubiquitous. We use free energy all day, every day, in every way.
It is only freeing oneself from “their” energy that causes difficulties, but these are temporary inconveniences as technology will continue to discover cheaper and more efficient ways to access/use energy.
Reply to the FOLLOWING comments by Buddy Rojek, robc and impermanence:
Buddy: CNG (compressed natural gas) requires compression plus high pressure transportation and storage at terminals, dispensing stations and vehicles. LNG (liquified NG) for shipping requires a “train” of compression stages at the loading port, high pressure/cooled storage aboard ship, and degasification facilities at the receiving port.
robc: Alaskan and other federal lands are “deliberately withheld” from oil & gas exploration by government (politics). Production of “shale oil”, which requires enhanced fracking, from private and state land in one or two states, and apparently in all of France, is effectively prohibited by politics. As you note, fraudulent man-caused global warming/carbon tax initiatives are public politics and private greed. Shale oil (kerogen) is uneconomic. Production from (Canadian) oil sands is now economic, although pipelining to refineries and seaports (all in the US) has been blocked by the US federal government, as has rapid expansion of production from the federally controlled Gulf of Mexico. Nowhere is private competitive enterprise “deliberately withholding” energy technology or production.
Switching from fact to opinion, why does the Obama administration deliberately frustrate progress toward energy independence? One can conjecture among several possible reasons: environmental politics, anti-private enterprise (especially the oil industry) ideology, bolstering income to Muslim states, Russia and Venezuela, cronyism with solar, wind and biomass capitalists.
impermanence: Mass to energy occurs only at the nuclear level (e=mc[squared]). Fear- mongering and politics hold back nuclear electricity generation. Economically competitive energy is NOT ubiquitous.
CORRECTION to my Feb 09 @ 06:09 comments: those comments apply to BR’s, robc’s and impermanence’s posts ABOVE not FOLLOWING.
Big oil lobbys the government to limit oil supplies through regulations and barriers to entry.
Big oil likes the status quo.
REPLY to robc of Feb 11 @ 11:07:34: You accuse “big oil” of lobby government to LIMIT oil supplies to maintain the status quo. Let’s look at some background facts, and see what we know and don’t know.
“Big oil” usually refers to very large international “majors” with both upstream (exploration and production) and downstream (refining, marketing, chemicals) operations. Their mouthpiece is the API (American Petroleum Institute). I can’t recall any public API or company appeals to reduce domestic crude production, can you? I have no inside industry or government information sources, do you? But “big oil’s” (1) downstream revenues exceed those from upstream, suggesting that cheaper crude (more supply) is to their advantage; (2) non-US operations exceed domestic; suggesting that cheaper Brent and other foreign crudes would help their bottom lines. Of course, their income from production would benefit benefit from pricier crude, but I think that withholding production would bring net loss of revenue.
“Independents”, lacking downstream operations, want higher prices; but exploration and production is very capital intensive, motivating full output at whatever prevailing prices. They form the IPAA (Independent Petroleum Association of America), whose lobbying is for reduced restrictions and more government acreage for drilling.
Seeing as we are following the same policy trajectory as Japan why are you so surprised at the same outcome trajectory? Government “austerity” has been laughable in so far as they are spending more money each year. The alternative, Keynesian spending, simply configures the economy even more to state depency as business sprouts to service government spending. In line with Japan policy trajectory we will given up on any pretence of “austerity” in a few years and spend our way to govt debts of a multiple higher for no realised benefit.
Bank lending to business is weak because of weak demand for loans from business. Poor business opportunities to make money. Asset prices are artificially high due to a mixture of QE and low interest rates. Every entrepreneur is standing back thinking asset prices aren’t really justifiable, let me wait (or maybe buy a house in London as the ‘modern’ gold bar). Japan shows that the plan to inflate debts away doesn’t work unless local salaries track the inflation – and in the global world, they don’t. Best thing govt could do is jack rates up to 10%+ and have a blood bath, asset prices through the floor, businesses fail in their 1000s. Schumpeter’s “creative destructive” capitalism. From the ashes great opportunities and new wealth would emerge but that’s hardly supportive of today’s wealthy so the youth who would be the ultimate beneficiaries can “get stuffed”. Take your opiate of unemployment/sick benefit and go watch telly…
Not actually correct, there have been real spending cuts — http://www.bbc.co.uk/news/uk-politics-11579979
This is a data repository of where and how cuts are occurring — http://www.guardian.co.uk/society/public-sector-cuts+news/datablog
I’m not sure we should actively force this on society in quite the way you advocate. Chances are you would take down a lot of good healthy companies by doing that. If it happens naturally, like in 2008, I think the best thing to do is to let the liquidationary effects occur, but provide a safety net during its occurrence so that those who did not create the mess do not get hurt by it, and so everyone and not just the elite has an opportunity to benefit from it. Creative destruction without such extreme destruction — let the zombie companies and systems fail, but less chaotically (because with a mass liquidation, if things get out of hand it is possible to end up with food shortages, riots, etc).
Now that we have failed to go through with the liquidation, I think the best thing to do is to try and use what we have to support new productive growth. We need to restore proper market function, opportunity for all, and let businesses succeed and fail on their own merits — no central planning, no picking winners, just using government as a framework to support market society as Adam Smith advocated. So we do not have to go through 20+ years of stimulus/austerity cycling. But it is looking more likely that we will (the best hope for not doing so seems to be technological shocks like solar power becoming cheaper than fossil fuels)…
Your linkage to BBC article is only planned cuts not actual ones! All politicos know that after announcing news hardly anyone goes back to check it happened! 2009-£629bn, 2010-£670,2011-£689,2012-£695. Of course this years budget, 2013, is a projected cut – aren’t they always! You can argue that of course spending has gone up to support those out of work but “deep” austerity? Come on! Anyway, the last thing Conservatives want to do is cut hard and give Labour an opportunity to spend more without raising taxes. Did that in 1997. So the plan is obviously not to cut but re-balance. Take handout money from “scroungers” and give it to productive as tax breaks.The £10K tax free allowance is all about that. Make work pay (or try to).
More generally, the policy response of high interest rates to the 1990 recession was far more effective. You talk about 10% rate as being wrong(?) to be forced on people – but today’s rate is not the market rate – the market wouldn’t choose it. ZIRP will simply condemn us to the Japan outcome as it allows failing businesses and people with too much debt to scrape by. They won’t fold on their own; it might sound heartless but in a world without debtor prisons and consumer friendly bankruptcy laws it is better – soldier on with a millstone of debt for 30 years or be freed and start again? If we had market rates and they went back to 5%, (and didn’t we all think that low at the time!) what would happen? A load of promises-to-pay would become worthless. Who do you want to protect – the wealthy bondholder or the want-to-be worker of tomorrow?
This is the definitive chart in the “is Cameron practicing austerity or not?” argument:
Per capita (£2005):
What do you really mean by the market rate? It’s a term I’ve heard Ron Paul use, but I don’t really find it very meaningful. Do you mean the rate we would have if we abolished fractional banking and went back to the gold standard? That would be such a complex thing to do, it is impossible to say exactly how interest rates would respond. My guess is that they’d be much higher, but why should we base this fiat system on what might theoretically happen in a gold-backed system? Do you mean the rate we’d have if central banks stopped buying treasury securities? Well, again, I’d guess that that rate might be higher, but I don’t know. Basically, given that interest rates have been zero for a long time, and given that inflation is still pretty subdued my guess is that the natural rate of interest given the system that we currently have is actually negative. This is quite logical, too. Our money is just paper printed off by fiat, and nowadays in very large amounts. Why should that yield a positive interest rate? Maybe a positive gold-denominated interest rate (which of course we actually have) but that is a different thing entirely.
I completely agree with this, but raising rates to 10% would probably take down a load of solid, sustainable businesses, too. Basically, I think we need a different route out given that we failed to liquidate in 2008. I recommend liberalising the regulatory burden in as many areas possible, using bailed-out-banks to lend to unemployed people to start new businesses, spending more on useful infrastructure people need (e.g. more roads, gigabit fiber broadband, housebuilding), etc. If these measures fail we should try some kind of debt jubilee.
BUT have not any apparent “spending cuts” been off set by the taking on of more debt and the false rate those debts are set at ?….by false I mean; lets wait and see what they are going to be in 6 months and then see how much the UK government is in effect paying on their overdraft,then factor that into, so called “reduced spending” . Perhaps that way we will have a better picture of what we are actually in at the moment.
With satellite TV, the “standard” of living has increased exponentially
“Take your opiate of unemployment/sick benefit and go watch telly…”
My question is, if business “expectations” are so low, are there really that many business that even want to borrow money? I own a business here in the US, and I have zero desire to take on debt for any projects at this time. I am in a defensive position, ready to weather another few years of stagnation. I see taking on leverage in order to expand at this point in time, like trying to catch a falling knife.
One specific problem is that there are a lot of unemployed people who want to start businesses who have no access to credit. This is mainly what I think unfreezing the loan market would be useful for. This would create competition for many of our zombie industries, and competition leads to innovation, expansions, and hopefully economic growth.
The only problem I see with that theory, is that there is plenty of data out there to demonstrate that the vast majority of new businesses fail. If banks start throwing money down a rathole of business failures, how does that ultimately help anyone?
If every new business eventually failed within 5 years (which presumably they wouldn’t — in the real world, maybe 80% would fail, 18% would moderately succeed, and 2% would dramatically succeed), we’d still have the advantages of creating competition (which creates innovation and economic growth), the older businesses should emerge stronger from having competition, because they will have to innovate/improve efficiency to make the competition fail.
Interest rates have been falling in the US since 1981, more or less steadily. The problem a business investor faces in a falling interest rate regime is that 3 – 5 years down the road he will face a competitor who will build a bigger and nicer store at a lower finance cost. This is the cause of WALMART-ization and dooms small business.
Either allow interest rates to rise by eliminating the inflation which is caused by public spending, or burn everything down and start over – debt default, new government, no central bank.
Don’t imagine that you will save small business and the middle class with low interest loans.
Falling interest is killing them.
That is what Venture Capitalists are for. Not banks. Banks do not have the talent to do this. It would be an utter waste of time. Have you not watched the program “Dragon’s Den”? The failure rate is shocking.
This entrepreneur could give Cameron some advice http://en.wikipedia.org/wiki/Peter_Jones_(entrepreneur)
The best solution is to tax the 1% via Capital or Property taxes, redistribute, then lower taxes on income for new business. This will reinvigorate growth via investment and renewed demand. Who know we may get a new gadget or service from the exercise.
Pingback: Britain’s Greatest Depression | My Blog
The policies are designed to destroy the remnants of the social contact, the economy is simply collateral damage. You can’t fine tune a class war. Another factor to consider is that banks make a lot out money our of increased volatility – they can earn as much through shorting stock and gambling with credit default swaps as they can by taking a long position. If the economy collapses they can still do very well and enjoy record bonuses. The banks, and not industrial capital, now own the political system.
Yes, in the end they’ll suffer, but the corporate time frame doesn’t extend past the next quarters returns.
You bailed out the Bank, not the People
Get ready for Bondpocalypse
And the currency wars explode into Currencypocalypse
‘Given that the British government owns the bailed-out commercial banks, it’s a shock that they haven’t leveraged this power to reignite lending to business, and particularly to business startups. So long as businesses are allowed to either succeed or fail on their own merits, it would not be a malinvestment of time, energy or capital to use publicly-owned bailed-out banks to break through the lending freeze.’
Banks will lend where it is justified by the criteria in front of them on a case-by-case basis.
It’s what they do.
The fact is, it is not that easy to start a viable business in the current climate, so banks are not lending.
Address the climate – specifically the red tape – rather than try to force more lending without changing things.
That’s just throwing good money after bad.
I agree about red tape. That’s definitely something I support, and definitely part of my solution. I don’t agree banks are rational, though, or that their lending decisions are justified. Their lending decisions weren’t justified before the crisis, either. Truth is in the era of supermarket banking, they’ve lost their edge at finding return on lending. They spent way more resources employing engineers and mathematicians to create algorithmic trading software to skim of arbitrage, rather than analysts who are skilled at making loans to good entrepreneurs.
Int and Az: May I once again try to play the interpreter/peacemaker — “Banks will lend where it is justified by the criteria IN FRONT OF THEM” (i.e., here and now); “I don’t agree banks are rational” (i.e.,will work out over time).
I must disagree, as I have been involved in talks with banks to fund business investment, and they were very rational, and did not give money away. The biggest problem is outsourced consumer loans and credit cards, but the interest rate reflects this.
Business is just too uncertain about the future to invest, and banks just do not see viable models. The taxes on income earned from business must be reduced, and capital spending must be fully tax deductible in the first year. Business will then invest, and banks will be comfortable with the after tax cashflow to service.
The gap won’t be filled by tax cuts. The problems a simple one – the demand fueled by a multi trillion dollar housing bubble has collapsed. The private sector will not make up the difference. Supply side solutions are discredited. The only rational answer is to close the gap between productivity and wages, and stop kicking more wealth up to the 1%.
The economy works if you are, # 1, in finance, or #2, a corporation. The small business model works poorly for the vast majority, especially if you must compete on any level with bigger businesses. They have rigged the game to their advantage [the purpose of the political system].
The real money is being made thought the financialisation process, not through actually making of commodities. This is where much of the capital is being wasted. If you can make more money off of debt-slavery, fees, tolls, levies, taxes, fraud, theft, and the like, this is where the capital will flow.
Because of the resulting weakened real economy, and poor future prospects, demand for commodities and capital is weak. As noted in an above post, nobody in a small business wants more debt.
The cost of doing business in countries such as Great Britain has become uncompetitive due to enormous government growth and asset bubbles that have raised the cost of living to the point where wages can not be competitive with other markets.
This entire century of inflation and debt-money has led to a destruction of the business model for all but large corporations. Add in the welfare state developed to satiate the disenfranchised [as this process proceeded], and you end up with the majority unable to do business [or able to earn a living wage] and unable to support the welfare state.
This system is failing, as do they all. Exactly what the end game is, is what makes life worth living! I am putting my money on the U.S. to come out of this in good shape, having transferred most of the mess elsewhere. It’s what empires do.
The U.S. is full of egomaniacs in all areas [especially in academia] who are very much invested in the notion that the U.S. is somehow God’s chosen country. When people feel this way, they have a tendency to do some pretty radical things [like financial weapons of mass destruction or drones or [fill in the blank].
Agreed. Provided the USA can utilise this Nat Gas boom in a low cost way, it will be the future driver of growth. African food development and minerals supply will subsidise US consumers and the USA will export its way out.
Population levels will decline as many people are delaying the choice or ability to have children. With the decline in population, Per capita GDP will skyrocket. A glorious future for the unborn indeed.
Pingback: Guest Post: Britain’s Greatest Depression | Financial Fall
I read Adam Smiths “Wealth of Nations” and I have a British made Villiers Rotary Hoe garden machine from the 60’s. The Tyres were made in England too,and ironically branded “India” where they are now made. British Manufacturing is finished.
The UK of yesteryear is gone. There is no going back. The Welfare State supporting its empire has come home to roost.
Britain is 25 years ahead of the USA. I see this as the USA’s future too.
Population and Manufacturing is going to be centred on the Asian region. The peripheral nations are merely a resources and agriculture backwater. Unless immigration is allowed in Asia, I see no chance to compete. Especially with declining energy resources which will make it uneconomic to transport. I see it in Australia. If you are not in the big city, you have very limited economic opportunities.
“Britain is 25 years ahead of the USA. I see this as the USA’s future too.”
BR, how do you figure? GB was a classic colonial power in that had virtually no native resources. It’s empire collapsed when its colonial interests freed themselves from the crown.
The U.S. is a whole different story. The U.S. has incredible natural resources. Natural wealth is THE name of the game. Not only that, but who is going to challenge the U.S. over the next several decades in terms of stealing from the rest of the world?
The U.S. has it hands in every damn thing at the moment, controls global finance, global culture, global communications, global everything. The financial crisis is not going to destroy the U.S. This is a ridiculous position to take. This is why.
Because of the above mentioned controls, when this system does finally play itself out, who is going to be in the best position to maintain control? Look at how the financial interests have off-loaded risk so far!
With a history of freedom that the U.S. has, does anybody really believe that this country is going to turn in a Nazi Germany? This is absurd, despite the bizarre things going on.
Once whatever happens, happens, the time will come to clean up the mess and move on. Again, who will probably be in the best position to do this? Seems to me that the country with the greatest tradition of freedom, with the highest degree of technological innovation, with the most arable land, so on and so forth.
Remember, there are still a great number of seriously freedom-minded people in this country, and people still come here from other countries to this end. Although this might be the beginning of our second civil war, the forces of freedom will win out because when critical mass is reached, and people finally realize what is at stake, the shit will hit the fan.
People need to be able to look beyond this present era and see that although the financial system has severely hampered all institutions, this will not last forever. We will move beyond this era and a new day will come [inspirational music begins], people will fall in love, have families, picnic in the park, eat ice cream cones, so on and so forth [transparent flag starts waving in relief].
Although this is damn ugly, it is NOT the end of the world. It’s another example of human beings doing stupid-shit things in their never ending lusting after the Holy Grail [something for nothing]. [music fades, sun sets on the pacific, curtain drops :].
Imp, old friend, I am overjoyed at your optimism and fervently hope you are correct. However, your “drama” suggests another one: what if the founding fathers decided that the continent’s natural resources and the settlers’ spirit would assure eventual liberty and independence, so that revolution was not necessary?
I am sorry, DG, but I am not understanding your question. Please re-state. Thanks.
I should have written “What if the founding fathers HAD decided ..”. I meant to invite speculation on an answer to the question: how would this continent be governed IF the founders has chosen to wait rather than fight? I believe we need a second American revolution against tyranny (this time, from within –domestic, not foreign) while it can still be non-violent. Note the popular slogan “Take Back Our Country!”
I do not believe we can know much of anything, as even the simplest of events is presaged by an infinite number of events leading-up.
And, to tell you the truth, DG, I am not so sure that it’s very important how it happens. I do believe that most Americans I speak with about such matters [and its probably been in the thousands over the last 25 years or so], most people have a gut feeling that this will end well, but not without a great deal of pain.
Since this transition has been on-going since the 70’s, when the manufacturing base headed to the third world and industrial workers began receiving their pink slips, metastasizing to the managerial class in the 80’s, and finally to the professional class in the 90’s, there has already been a generation of severe dis-location and disruption.
In what form the second American revolution will take is difficult to speculate on as the events which will cause this have not yet occurred. I believe that if the Soviet Union could begin to address their issues within that monstrosity of their failed state, then there must be hope for this country, with all it has going for it.
True power in the United States lies in the Constitution and those who fought to make it work for the past two centuries. The evil bankers and other elite who have corrupted this country, turning a manufacturing giant into their personal wealth producing scam, will not outlast 300M people, who at some point, will remember why their forefathers risked everything to give their descendents the opportunity to enjoy a better life.
Soon, real leadership will put down their toys and pick up the tools to start doing the work that will begin to turn the tide. It is simply a matter of sacrifice and coming to the realization that standing up for something you truly believe in is what makes life worth living.
[A reply to impermanence of Feb 09 @ 6:13]: More applause, old friend, for beautifully phrased summa bona and confidence in Americans!
But it is quite important HOW SOON we start “doing the work that will begin to turn the tide”! We don’t want our children and their children and their children’s children to suffer seven decades of slavery and misery like the USSR’s — which is the obvious (though disguised) goal of Obama’s* government. For nearly a century we have been strolling away from Jeffersonian Democracy (a Constitutional Republic) toward Marxist tyranny (Communism or its cousin, fascism); the stroll became a jog, and now it is a sprint to the finish line!
Machiavelli’s (1469-1527) eye-opening, though cynical, assessment of humanity: “The people resemble a wild beast, which, naturally fierce and accustomed to live in the woods, has been brought up, as it were, in prison and in servitude, and having, by accident got its liberty, not being accustomed to search for its food and not knowing where to conceal itself, easily becomes the prey of the first who seeks to incarcerate it again”. Have “the people” permanently changed in the Renaissance and Enlightenment and since, or not? My own observations counsel that it is some of both; that the only reliable determinant of individuals is parenting, and of societies is leadership.
* Secure and complacent Americans find it hard to accept shocking evidence that an elected president is not just “liberal” (a democratic socialist), but an ambitious wannabe dictator. This generation of foreigners — except those in Russia, Venezuela, Muslim states, and African dictatorships — are not (yet) confronted by ideological despots like Machiavelli’s prince, Lenin, Hitler or Obama, and hence may be even more susceptible to becoming “easily … the prey”.
DG, many people believe me to be [fill in the blank] because I seem reluctant to deal with the everyday practicalities of change/revolution, etc. Prognostication is very tricky business for many, many reasons, but none more important than the fact that most of what determines the outcome of anything happens shortly before the event itself, so even if one could understand what is going on, most of the information is available.
So, speculation is not so important to me. Most seem consumed with what is going to happen instead of what is going on right now. THIS is what’s most important to me. Living in the future is not so fulfilling [about the same as living in the past].
As I have said many times, I believe the future of America is VERY bright. Why wouldn’t it be? One of the interesting things about people is that they project their own experience into the Universal. So, if we are having a bad time of it now, then this is how the rest of time is going to play out. This is utter non-sense.
The United States has a great deal of good going for it; good people, good land, and a good history. I believe that going forward that the forces of evil will lose out to the forces of good. In this era of the rapid dissemination of information, how long would it take for people in this country to mobilize themselves if the authorities push too far?
What’s going to be interesting is to see exactly what the breaking point of the American people will be. There are literally tens of millions of people like ourselves who would be willing to do what it takes by listening to the counsel of the founding fathers and take the government back from those who are “misinterpreting” the constitution.
One thing that ALL Americans feel is their absolute birthright is freedom of speech, the one thing that the elite can never tamper with, and paradoxically, it is this that will cause their termination. The downfall of their tenure will be broadcast on the six o’clock news, just like everything else.
So, have a beer and relax. 🙂 Help out when and where you can, see things are they are, and things will work themselves out.
I agree the USA is a beacon to freedom loving people, but the USA is not the free market peddlers and food stallers from the third world can make a living in, like they used to.
It is too regulated. It has become Europe. Africa is the new frontier, if they can solve their violence and corruption issues.
I was a believer in Nat Gas as a new energy boost to the USA’s productivity and GDP per Capita, but now I am not so sure. It is an expensive energy intensive process, with numerous environmental hurdles to overcome.
Great Britain has to be a mercantilist nation again (A Singapore of Western Europe), attracting the best brains to innovate and develop the products of tomorrow. It is a fun place if you are young. They have to draw on their education system, and Commonwealth network to attract the best and brightest. English is a world language so it is the comparative advantage in education services that they should focus on, then build high tech manufacturing, and high end fashion and beauty products.
I kind of think that GB is done for a while. Without the advantages of size and natural resources, being a mature society with archaic institutions, seems like a complete re-invent is necessary.
With GB’s gloried history/entrenched interests, this seems like a long-term project. Look at Italy, still trying to figure out what to do since the fall of Rome.
To Buddy Rojek,CPA @ Feb 09 06:37 and impermanence @Feb 10 02:33:
Buddy: (1) The freedom that early 20th century US immigrants sought and found was primarily opportunity to “make a living” — food, clothing & shelter. The current motivation is the same, but legality and order (quotas, locations, requirements, e.g. language) have been abandoned by Democratic politicians (beginning, I think, with Hillary) seeking
and finding votes. (2) USA’s newly discovered natural gas AND oil ARE competitive, and are creating lower prices, more jobs and tax revenues, and much-reduced foreign exchange deficits. Especially as “shale” oil&gas deposits are found in additional countries (UK?, Australia? Eurasia [Poland already, but sans socialist-environmentalist France]), dependence on Muslim, Russian and Venezuelan oil will continue to decline. (3) UK as Western Singapore/Japan/Hong Kong (and like England in its Empire centuries?), seems a fascinating possibility to this non-economist.
Imp: (1) I shall follow Doctor’s orders, but will Doctor confirm that red wine is even better than beer? (2) Afterthought supporting YOUR faith in Americans: the Bolshevik capture of the Russian revolution (and the Putin oligopoly), the Cuban Castro Communist revolution, and the Maoist conquest of China, all re-imposed totalitarianism on peoples who, unlike Americans, had NEVER KNOWN freedom. (3) Afterthoughts supporting MY concerns: (a) Wiemar Germans DEMOCRATICALLY installed the Nazis and a Fuhrer; it seems little comfort that they did so because of terrible inflation, because Obama is arranging that. (b) Obama was elected and reelected only because of bloc voting* by increasing populations of African-Americans and Mexican-Americans; these economic underclasses, deliberately held back (apartheid) for votes and to suffer the most in politically-caused default/bankruptcy/hyperinflation, will be the first to follow a charismatic con-man.
* The bifurcation of voters has become so pronounced that Romney would have won if only male votes were counted, and by even more if only SINGLE women’s votes were excluded.
Billionaire entreprenure-political hack Bloomberg nailed it when announcing support for Obama because of his “position on abortion and same-sex marriage”.
“If British businesses don’t have confidence in Cameron and Osborne’s policies, if their policies don’t lower unemployment, don’t create growth, don’t boost imports and exports, don’t result in recovery, and don’t even result in less borrowing (their stated aim), why do they continue to pursue them?”
If the stated goal of a program isn’t met but the program continues, then you can be sure that the unstated goal IS being met.
Now you just need to find the unstated goal… shouldn’t be too difficult to figure out.
Exactly!! Things happen 99.9% of the time because that EXACTLY how they were designed to work.
hawks5999 and impermanence – “If the stated goal of a program isn’t met but the program continues, then you can be sure that the unstated goal IS being met.” AND: “Exactly!! Things happen 99.9% of the time because that’s EXACTLY how they were designed to work.”
Thank you! Too many people assume that these guys don’t know what they’re doing or that they just make “mistakes”. WAKE UP, people. This is all by design.
Reality is such a bitch!
Reblogged this on reality paradigm.
Pingback: Britain’s Greatest Depression
Between me and my husband we’ve owned more MP3 players over the years than I can count, including Sansas, iRivers, iPods (classic & touch), the Ibiza Rhapsody, etc. But, the last few years I’ve settled down to one line of players. Why? Because I was happy to discover how well-designed and fun to use the underappreciated (and widely mocked) Zunes are
You know, I was just talking to a friend of mine the other day about how under-appreciated the role of mp3 players are in relationship the global financial/economic/political crises.
It seems like a spam comment has gotten through.
I will leave it, because it’s funny.
Britain should make the Zunes
Pingback: The success (or lack thereof) of Cameron’s policies (graphic) « Hanuman Capital
Aziz, thank you for this very interesting post:
“If every new business eventually failed within 5 years (which presumably they wouldn’t — in the real world, maybe 80% would fail, 18% would moderately succeed, and 2% would dramatically succeed), we’d still have the advantages of creating competition (which creates innovation and economic growth), the older businesses should emerge stronger from having competition, because they will have to innovate/improve efficiency to make the competition fail.”
Don’t you think we became too obsessed with money, per se, and have forgotten that the real reason for the free market is to satisfy the needs of the average Joe, not to stuff the pockets of some already rich individuals?
Very much agree.
I also agree with that sentiment. However, the idea that it makes sense to essentially “set fire” to the capital resources used to establish the 80% that fail, just so we can keep the game of musical chairs going a little longer, seems nonsensical to me. That is how politicians think, not people that believe in a true free market economy.
Pingback: Großbritanniens Große Depression
BF, Az & DM: (1) In practice “the REAL reason” is an “OUGHT”, not an “IS”. Politicians are not the only predators who get away with exploitation and corruption of free markets, unless we define “politicians” very broadly, both government and private.
Several posts above I quoted a half-millennium-old Machiavellian explanation of why people are easy prey. As the natural scientists say, if there is anything edible, there will be something to eat it.
Viva panem et circenses
alternative lyrics best sung to Coldplay – Viva La Vida
by “poor by standard” (firstname.lastname@example.org) CC-BY license
[Jan – Sept 2012, v1.11]
We used to rule the world
call an empire our own
now in the morning markets open
[to] trade the future until it’s broken
We used to be the guide
industrial revolution full of pride
finance now is all we have
making us the 51st state of the US
One minute we raise a loan
next stop debt trap danger zone
and we discovered that we all depend
upon leverage of oil and leverage of gold
Bank of England’s just printing money
soon it’s gonna get really funny
no proper industry to defend us
just high finance here to suspend us
For some reasons we can’t explain
lobbyism’s our sovereign reign
credit with unbacked quid
it is funny it used to work
Repoed portfolios and derivatives
are banksters’ top initiatives
fiat is not but a failed car brand
it’s quite the beginning of the end
for Exter pyramid’s increasing weight
cartel banksters not shy to rig
precious metals on any uptick
Paper paradigm is collapsing
sheeple savers in for a waxing
compound interest to suck us dry
welfare and peace to say goodbye
For some reasons we can’t explain
lobbyism’s our sovereign reign
credit with unbacked quid
it is funny it used to work
When is Britnery Spears, Rhiannon and Nicky Minaj going to do a trio cover of this?
That will get the Teenagers thinking.
Pingback: The Unending British Deleveraging Cycle « azizonomics
Pingback: Does Shelf Stacking Beat Geology? « azizonomics
Pingback: George Osborne Still Doesn’t Get It | azizonomics
Pingback: Save Our Bonuses! | azizonomics
Pingback: Sparkassen — A De Facto Glass-Steagall? | azizonomics
パーソナライズされた環境にやさしい子供用キャリー バッグについて考えることがあります。環境に優しい妻に完璧なだけでなく、ガール フレンド、この理想的なトートバッグを与える緑エレガントな最良の選択肢と彼女を導きます。この環境に優しいトートバッグは、しばしば彼女の生態学的な側面を示していますが、スタイリッシュな財布です ！このパーソナライズされたキャリー バッグ ヒップ、素朴な装飾の使用木材の繊維と一緒に持続可能な草によって細工された、ブライドメイド、最高の仲間とリストにすべてのあなたの惑星と流行に敏感な女性に係る新しい驚異的な贈り物になります。この複雑な地球に優しい、パーソナライズされたキャリー バッグ寛大惑星に精通したファッションと彼女の日常的な要件を保持します。