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A STEP IN THE RIGHT DIRECTION

By David Vance On March 28th, 2012 at 8:58 am

Another excellent article on the vital issue of re-balancing the Northern Ireland economy from my friend Robin Greer;

“It is unclear whether regional pay rates would apply to all public sector employees, or just to those in departments that still report directly to Westminster, but it has been confirmed that any money saved will be retained within the Northern Ireland budget, to be spent or squandered as the Assembly sees fit.

The public sector spin is to focus on the plight of nurses and teachers and to compare them with bonus happy bankers. The excesses of the financial fraternity do invite contempt, but a more useful comparison would be between the senior and middle managers in government and in business.

In the NI Health Service there are 10 chief executives taking home over £100,000, and several near or over the Prime Minister’s £142,000 salary, plus many other managers on or near six-figure salaries. The same pattern is repeated in every branch of government and in the local councils across the province.

Some of these people are very able, but how many local businesses would currently be able to compete with the public sector for their services?

If we had a healthy business sector then market forces and regional pay rates would ensure that both private and public pay packets would grow. That is what rebalancing the economy is really about.”

GLOBALISATION HAS TAKEN US BY SURPRISE!

By David Vance On March 21st, 2012 at 9:52 am

This is a guest post by Elena Marciano.  Elena is a friend of Rob Greer, sometimes of this parish and Biased BBC, and she has written this most thoughtful consideration of the current global economic system.  I trust you will give it a read.

“Some economists want to examine the existing financial and economic system and correct it, but we really need to understand that the reality has changed; the system has become globalised and integrated and that it is no longer possible to continue living under the current economic and social structures.

We are entering a completely new paradigm, politically, economically, socially and in technology. This was first recognised over one hundred years ago when the first signs of the new phenomenon of global interconnection were identified.

The Russia scientist Vladimir Vernadsky called it “noosphere.”, a new sphere of human thought. It is the natural evolution of global society towards greater integration and unification, albeit an evolution that has been brought about by disruptive events such as wars, the emergence of the internet and mass travel.

The current financial crisis is another crucial point in our evolution that we have to get past. Globalisation has taken humanity by surprise. It is a system that has written its own rules, and although we did not choose them, we are not able to ignore them. The economic laws of the free market have become interlinked with the whole of our economy and society.

It is now becoming apparent that the old connections, social and economic, are no longer sufficient for managing our lives and for living in peace and comfort. This applies both to governments trying to manage economies and to ordinary people trying to live in the modern world. The consequences are seen in the escalating conflicts and unemployment.

Due to the importance of money in our lives, the economic crisis is receiving the most attention. It has exposed our dependence on international financial markets to an extent to which most people had not previously realised. Much that has been built in the existing system stemmed from selfish and egoistic instincts, as writ large in the global banking industry.

The new reality necessitates that we reciprocate rather than exploit. The interconnection between us is much tighter than ever before and it compels us to upgrade our connections to manage a more connected world and a mutual guarantee of each other’s wellbeing.

All of a sudden the social and economic systems we have built to match our needs and the nature of our relationships seems insufficient for managing our lives and for living in peace and comfort.

Rather than concentrating on repairing the existing model, the challenge now is to prepare for the transition into a new social and economic system that recognises and seeks to bring balance into the increasingly complex nature of global interconnection.

Such a balance, bringing with it global wellbeing, is the natural and inevitable outcome of social and economic evolution. We can work to prepare for a smooth transition or face the bumpy path of ever more crisis.

The easiest and advantageous path will require widespread education and information, creating an environment that nurtures the values of mutual benefit. Only an evolutionary process of that type will guarantee a stable and efficient economy that provides harmonious, balanced, and sustainable living for all.

Change is inevitable; it cannot be stopped, the more we resist, the more we will experience the change as a crisis.”

UK, US TO RELEASE EMERGENCY OIL STOCKS

By Pete Moore On March 15th, 2012 at 5:30 pm

Why is the UK (apparently) going along with the White House in order to influence a presidential election?

(Reuters) – Britain has decided to cooperate with the United States in a bilateral agreement to release strategic oil stocks, two British sources said, in an effort to prevent high fuel prices derailing economic growth in a U.S. election year […]

“The Obama administration can only take so much political pain from rising gasoline prices, which pose a serious threat to the economy and the president’s re-election,” said Bob McNally, a former White House energy adviser and head of U.S. energy consultancy Rapidan.

Obama is no friend of the United Kingdom, though a Left Wing operator like Cameron would undoubtedly prefer to work with him than one of the Republican socialists. I think there’s more to it it than this, however. Read the rest of this entry »

NOMURA ANALYST: “MONETARY ANARCHY”

By Pete Moore On February 29th, 2012 at 6:15 pm

Not to be outdone by Bernanke’s Mad Money Machine, the European central Bank has magicked up 530 billion euros on the cheap for European banks to gorge on. The mainstream is finally seeing what’s going on. Bob Janjuah, head of tactical asset allocation at Nomura, correctly states:

“We have Monetary Anarchy running riot, where the elastic band between the real economy and the current liquidity-fuelled markets is stretched further and further beyond credulity.”

He adds:

“Bubbles are visible in all asset classes because central bank balance sheets are at the core. If/when the current cycle implodes, central banks which have seen explosive balance sheet growth will add to the problems, rather than being able to act as credible lenders of last resort.”

The phoney, manipulated recovery will implode, but not yet. First will come severe price inflation, the first waves of which are lapping at our feet, followed by central banks turning off the liquidity tap much too late. That’s when another great bust will happen and experts will again claim that “the free market has failed”.

BUG OUT BAGS AT THE READY

By Pete Moore On February 26th, 2012 at 9:22 pm

There seem to be a few ex-boy scouts among Wyoming legislators. They’re pushing through a Bill “to launch a study into what Wyoming should do in the event of a complete economic or political collapse in the United States.”

Not a bad idea, gentleman.

The Bill would investigate potential catastrophes, including disruption to food and energy supplies, an alternative currency and the possible meltdown of the federal government. In the event of the latter I’d suggest party hats and booze. Strangely, state Rep. Kermit Brown’s amendment was approved which includes investigating the conditions under which Wyoming would acquire an aircraft carrier.

The alternative currency idea is settled by 5000 years of civilisation. Real money is precious metals, fiat paper is an alternative and a failing one to boot. I wouldn’t die in a ditch to say that Cheyenne shouldn’t spend a few bucks to prepare for what might/will happen. Goodness knows gummint wastes vast amounts of cash on things detrimental to taxpayers. Just avoid the management speak and reject anything which recommends more fees for consultants. More important is that individuals don’t take anything for granted and that they have their own contingencies.

(h/t drudge)

OIL AND FOOD PRICES ARE GOING UP – FURTHER

By Pete Moore On February 20th, 2012 at 8:29 pm

Saudi Arabia, the world’s largest oil producer, reduced production and exports of crude oil in December. Combined with the Obama administration’s attempts to shut down the Iranian oil industry and Ben Bernanke’s ongoing money printing, oil prices are going one way only.

Land prices are not just rising across the American cornbelt, they’re rising faster than at any time in the last 35 years, spurred by higher prices for grain. Bankers throughout the five-state region in the Chicago Federal Reserve District report a 22% increase in the value of good farmland over the course of 2011.  In the seven-state Kansas City Fed District, the value of farmland rose 25% in the past year.

Price inflation is coming, but you only need to be aware if your lifestyle depends on oil and food.

SIR MERVYN KING MUST BE SACKED

By Pete Moore On February 15th, 2012 at 8:26 pm

Oh Lordy, we’re in big trouble.

Sir Mervyn King, Economic Commissar of the Bank of England, has been justifying his war against savers. Reports the Telegraph, King claims that “moves to reward their prudence would tip the economy back into recession”. He’s arguing that the State Central Monetary Committee knows the optimum interest rate for money in our economy, and that interest rate is ‘rock bottom’. Yes, if interest rates rose we would go back into recession, but the economy is still desperately trying to re-arrange itself. We ought to welcome a recession as the cure for what is still a horribly inflated economy.

Worse than this, however, is the astonishing claim which comes next: “Sir Meryvn King also suggested that growing household savings rates are one reason for Britain’s recent poor economic performance.”

What? The man doesn’t understand page 1, chapter 1 of Econ 101. Savings are the very basis of economic growth. An excess of debt combined with a chronic lack of savings is the underlying context of the economy. Savings are the very foundation of economic growth. They arise when we choose to under-consume today so that we can consume more tomorrow. When we consume everything we produce today and more, we have no savings to provide the capital for the production from which we want to benefit tomorrow.

If King doesn’t understand this the British economy will never recover.

“BANK OF ENGLAND INJECTS £50BN INTO ECONOMY”

By Pete Moore On February 9th, 2012 at 4:29 pm

Thus runs the obsequious headline in The Telegraph.

Yes, Central People’s Monetary Committee of Bank of England counterfeits our money yet again, steals yet more of it, chooses to inflate away yet more of its value and stick it yet again to people on private pensions and fixed incomes.

Central People’s Monetary Committee of Bank of England said without more stimulus, “inflation was more likely to fall below the 2pc target in the medium-term”.

Yes, because falling prices, meaning that we become more wealthy, is somehow a bad thing. It remains that state monetary policy is to steal half the value of your money every 35 years.

US CONSUMERS TAKING ON MORE DEBT

By Pete Moore On February 8th, 2012 at 8:10 pm

This is ominous.

According to the WSJ: “the Federal Reserve said Americans ramped up their borrowing at the end of 2011.” Household borrowing rose at a seasonally adjusted 9.3% annual rate in December, following a 9.9% rise in November.  According to the WSJ, that’s the biggest two-month surge since late 2001, when auto makers rolled out zero-percent financing after the Sept. 11 terrorist attacks.

This is the tsunami of Bernanke printed notes now working its way into the consumer sector, having already manipulated the growing boom in the capital goods sector. Motivated by zero interest rates, borrowers are suckered into taking on more and more debt, but with consumers grabbing those notes too prices can only go one way. Soon it will be a very bad idea to be in debt.

US EMPLOYMENT SOARING

By Pete Moore On February 3rd, 2012 at 6:47 pm

Job numbers increased by 243,000 in January according to the US Bureau of Labor Statistics. Cue much scratching of expert economic heads whose Keynesian models are yet again obliterated. Like the economist I just heard on BBC Radio 5 Live, who was laughably wrong on why jobs are being created, they’ll spend the rest of the year wondering what happened to the double-dip recession which they all predicted, with absolute certainty, for the second half of 2o11. That’s people like Ezra Klein in the WSJ, who is clearly stumped:

The strangest thing about January’s jobs report is that it’s pretty much all good. The headline numbers are great, of course: payrolls are up by 243,000 jobs. Unemployment is down to 8.3 percent. But the inside numbers are good, too.

You see? The “strange” thing is the good news. It’s strange to them because, essentially, Keynesians have no idea how an economy works and therefore do not understand the effects of Bernanke’s incredible money printing. Because they don’t understand how manipulated and inflated the economy is, they also won’t predict the price inflation which is right around the corner.