Thursday 11 June 2009

Latvian do-or-die night is tonight it would seem

I have to point out that much is made in the linked article about Latvia having no choice but to raise their top tax rate to 40%. The alert readers among you will quickly realise that we in the UK have had a 40% top rate of tax for some time, and in fact have recently faced up to this being increased to 50%. Right off the bat this tells you a lot about our own state of affairs, if you ask me.

You might also agree with me it is instructive that again much is made in the article about having to find $1bn of cuts or find themselves unable to receive loans from the IMF/EU (AKA "loan sharks"). I mean really, $1bn? That's chicken feed as far as, for example the UK, is concerned. The Bank of England would print that up without even bothering to meet and discuss it. I know, I know -- the UK economy is much larger than Latvia's, and that is most certainly true. A couple of years ago $1b was a lot of money here too, but these days? Naaah, that really is nothing to our elite now, they routinely announce they're printing up and spending more than that averaged across every day of the year right now. However, in my opinion, the UK economy isn't such an order of magnitude bigger that we can consider $1b to be nothing and just print it up any time we like, while it is a big big deal if they want to do the same in Latvia.

The point I am trying to get you to think about is not Latvia needing to find $1b down the back of their sofa and how that is a big big deal, which clearly it is, but rather why is nobody talking about how we don't have it buried under our sofa cushions either, and yet we are spending money like water? Like it is gushing over Niagara Falls and we can just scoop it up in massive buckets, indefinitely, as it flows past us. We are printing up 100's of billions of dollars worth of pounds this year, expressly just for the purpose of buying the UK Treasury's debts because nobody else will buy them all. That is exactly what Zimbabwe did that caused their recent problems, and so many other examples through history. How come the world is not chattering and worrying about the UK being a big fat domino waiting to fall and take down the world economic system with it? (Hint: outside of the UK, they are.)

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