Monday 27 July 2009


Apologies (even though I know you are glad of the reprieve :-) ) for the haitus in my missives recently. Been a bit hosed.

However, Liam Halligan at the Telegraph can still be relied upon to tell it like it really is.

Why is it that the Telegraph is the only mainstream media outlet, that I've come across so far, which doesn't hide the real stories from you, behind the bread and circuses like sports stories, celebrity gossip, political BS events like Norwich North, etc etc etc? These are nothing, these are future (very) Trivial Pursuits questions. Why are they put front and centre all the time? To keep you from thinking about the things that really matter, that's why. You can't handle the truth.

Personally, if I were to subscribe to buy any daily paper (but really, why would I?), it would have to be the Telegraph (or the FT). All the others are just choc-full-o-distractions to keep you off the scent of what is really happening of importance around you.

Tuesday 14 July 2009

"Winter" is coming

Anyone who has put up with my commentary for any length of time will know that I feel "autumn" has started to turn to "winter".

I am far from alone, and here is someone else who articulates it a whole lot better than me.

Not an article for those of a weak disposition, but I figure it is always better to have a sense of what may happen so that you can at least attempt to prepare yourself, even if only mentally, in advance. Call me old fashioned.

Monday 13 July 2009

This is the reality of raising taxes

On first inspection is seems reasonable to raise taxes on corporations, because Robin Hood will be robbing the rich to redistribute to the poor.

However, as one of Guido Fawkes' blog posts today shows, the rich simply up sticks and leave for other more tax-friendly shores, stiffing the working poor who can't relocate for the (bigger) tax bill.

With feeling: there is no Robin Hood, Tooth Fairy, Easter Bunny, Santa Claus, or a political party that really does have the interests of the poor working man at heart. You cannot have something without paying for it. There is no such thing as a benevolent all-knowing government who can actually steer the economy without crashing into the rocks. Marx was a fraud and everyone who follows his teachings is too.

There. To all the progressive social democrats out there, choking on their nice glass of wine and reaching for the security of their Guardian instead of this fascist's drivel -- how do you like those apples? But really, when you've recovered a bit, just have a think about it. A proper one, not that one you usually have where you merely confirm to yourself that everything you have been told by others is true.

Friday 10 July 2009

China and the Bank of England

I have what I consider to be two related posts for you today, both from The Telegraph's economics section.

The first story gives the somewhat surprising news that the Bank of England ("BoE") Monetary Policy Committe ("MPC") yesterday elected NOT to use the option of further expanding its money-printing operations right now. Everyone but everyone, with any kind of interest in the subject, had presumed that they would just keep printing and printing and printing money ("Quantative Easing") for some time to come. Most likely in ever-increasing quantities. (See Zimbabwe, Weimar Germany, Brazil, Argentina, etc etc etc for historical precedents and an educated guess on what the results will be like.) So its really something of a surprise to read this announcement from them.

The second story for you is news that China have stood up once again in front of a roomful of world leaders at the "G8 (plus 5)" meeting in Italy, and told everyone that they are deeply, deeply concerned about the dubious fiat currencies and fiscal policies of certain countries in the Western world. They did not specifically mention names, but you should know that top of the list is the US dollar given the sheer volume of dollars the Chinese hold in their reserves and the lax restraint on the number of new dollars being issued, and second on the list is the UK given the massive volume of money printing at the BoE lately.

At first blush, I submit that very few people would ever consider these two items appearing on the same day to be a coincidence; they just seem so discrete from each other. But I am putting together a couple of dots here, joining them also up to a G8 meeting, and thinking the UK has been warned by the Chinese to stop debasing the pound so badly -- that is the reason for the surprise announcement from the BoE. The threat from the Chinese will be that otherwise they'll seriously consider moving from collecting ever more of our government Gilts in their reserves, to actually disgorging themselves of them and forcing down the market value due to the sheer volume of supply made available (thereby increasing interest rates, which move inversely to the value of the bond). Who in their right mind will hold on to, let alone continue to accumulate, an asset that they know is being deliberately depreciated in value by over-issuance? I mean, the Chinese are smart people and they play a longer game than our short-term vote-grabbing politicians in the Western democracies. They will only put up with being taken for a ride for so long, before they start to formulate their exit strategies and then implement them. My feeling is that we're on borrowed time, the exit strategy has been formulated and its just a matter of time before implementation gets under steam.

May you live in interesting times, as they say.

Statistical evidence that Socialism doesn't work?

Well well, who would have thought that Labour's brand of socialism doesn't work?

Readers in the States can substitute Democrats, Germans can use Social Democrats, etc etc -- they're all singing from the same crackpot theory Robin Hood song sheet, where the strapline is "we'll rob the rich to give to you the voting poor majority" but the footnotes say in very small writing on the back page, long after you will have got bored and stopped reading, "not really, we are the rich and do you really think when you add all this up we will have given you diddly-squat? Suckers."

Thursday 9 July 2009

Looking for a job? Which sectors should you consider?

The Telegraph has an article listing what experts consider to be the top 10 sectors to get a job in currently.

TBH I'm not so sure IT should be on this list right now, but hey maybe... gotta be higher than bricklayer for the foreseeable future anyway.

Tuesday 7 July 2009

Who says "deflation" is the disaster?

The media and politicians would have you believe that "deflation" (by which they mean the price of things, not the amount of money and credit in the economy per the Austrian economics definition) is a complete disaster.

But I ask you, when was the last time you thought "Hmmm, I kinda like it but I just wish I could pay 2% more, maybe I'll wait and buy it next year for that 2% higher price"? I'm guessing never.

No, in truth you are thinking "Neat! I can buy this stuff with 30% off the price I remember last year, now THAT is a bargain!" Right? You can now almost afford a house you actually want (but wait, because you know it will get cheaper still).

So for you, as a consumer of Stuff, "deflation" (price deflation) is a good thing. You can buy more with the money you earn as a wage slave.

Of course, you might lose your job though, if fewer people are out at the shops buying the products and services that you lovingly create for them. Ah. Now, there's the disaster then. If you lose your job, you won't vote for Gordon and his "free lunches" any more. (It was people like Gordon and their "free lunches" that brought on the circumstances in the first place, if you want to stop and join up some dots here.) Bummer.

So, a little bit of inflation is a good thing, and that is why the elite are always hell bent on bringing that about if at all possible. If they can just keep it under control, you can guard yourself against the pernicious theft of your purchasing power through monetary inflation, by just borrowing more and more money and buying more and more tangible goods, ideally ones that will bear an income too, as a store of value that will keep pace with monetary inflation.

"The Rich" never have a lot of money, but they do have a lot of tangibles that produce income, often appreciating in nominal value to keep pace with inflation too, and very often you will find on inspection that they carry a lot of debt in order to purchase and maintain those tangibles. The simple explanation for this strange-seeming setup, is they know that politicians will steal their wealth by inflating the money supply, because politicians will do anything to buy a vote. Certainly including debasing the currency. So the educated rich simply step in front of that process and put the circumstances to their own advantage. (If only I was from an educated rich background, things might be so different! But alas I went to a State Comprehensive, an awful one at that, on a council estate in the back of nowhere. Consequently, I was deliberately not taught about anything relating to money, not even budgetting skills, and have spent most of my life like most people, ignorant and taken advantage of. Just as it should be. I have come to be interested in and study economics purely by fortunate accident, and life has slowly improved ever since!)

My concern is that in the panic to avoid a deflationary spiral into Depression, the people turning the money taps on full-bore will overdo it and will not be able to turn them off in time to keep the cat in the bag. I think inflation will get out of hand pretty quickly, when it does inevitably show up. If that proves to be the case, we will all be wailing and gnashing our teeth, calling for a return of price deflation again, because we can no longer afford to buy enough food, let alone any luxury items that keep each other in paying jobs. We might keep jobs, but the wages we will earn will be significantly outpaced by the rising cost of living. Look to Zimbabwe, where people were in jobs and paid a fixed salary, but in the course of the day they were working prices of the goods they needed to buy at the end of the day to survive had doubled. If they can find them in a shop at all -- smart shopkeepers will hoard goods in inflationary periods, as they will sell for more tomorrow than today, and the money they would have received in return is worth less tomorrow than today.

To put all this another, more succinct way: Price deflation is not great for the economy as a whole. Raging inflation will be far worse.

Aiming to return to moderate inflation is akin to attempting to balance a bale of straw on a donkey's back as you make the trip to market to sell it, in a tornado -- at first it is blowing all over the place and its pretty hard to get enough weight down on the thing to hold it in place securely, then there will be a brief period of calm as the eye of the storm moves into position and you will mistake this for "back to normal" (aka "green shoots"?) so you'll take off all the weights and shackles to let the donkey walk lighter again since you're a regular good guy that's nice to animals and stuff like that, and then finally the back side of the twister will hit with full force and out of nowhere -- the straw will be gone with the wind before you know it, probably the donkey disappears too, and you will never get to market. You will be left with nothing. Bit of a bitch, huh?

Monday 6 July 2009

OMG! A post NOT about either politics OR economics! :-O

I read a suggestion from a smart man today, which goes something like the below. Logic suggests to me that it would very likely be pretty effective, so perhaps I will make the effort to try it myself from tonight. Here it comes then...

Last thing at night, just as you fall off to sleep, try to think of one good thing that happened today, and one thing that brought you closer somehow to meeting the goals you have set yourself in life (even if its just to think that you haven't set any yet, but that you're going to!).

When you first wake up in the morning, think of one thing that you will do today that you will enjoy, and one thing that is going to bring you closer to your goals (even if it is that you will today start to make a list of goals that you're going to aim for in order to make your life better. Or perhaps your life is already perfect and you don't need to, but you would probably be the first person in all of recorded history...)

Get into a habit of doing this, which will take some effort initially, but like all habits you'll slip easily into it before long, and you'll do it effortlessly, as a matter of routine.

Friday 3 July 2009

Desperate measures and dire outcomes

In Sweden the savings deposit rate is now -0.25% (yes, that is a negative figure, you were not mistaken).

OK, now to my mind this is utter, utter insanity. The goal is of course to discourage anyone to save money, and get them out to the shops spending it to stimulate the dire economic situation. People are afraid to buy things because they anticipate lower prices in future, so they save the money instead. The obvious answer is to get people to burn through their money, right?

Yeah, TOO obvious.

All that will happen, if any of the retail banks follow this lead by the Riksbank, is that they will very likely suffer a run. People will draw out their deposits, since they would much rather put it under the mattress than pay a bank money to keep it "safe" for them, no? Would you put money in your bank, if they were going to take a bit from the pot every month, rather than put more into it? No, you wouldn't.

I am not happy with the idea of having money in a bank at all right now, but there is no way on god's earth I'll let any bank hold a significant amount of my money if they are not going to pay me for the privilege of letting them use it.

Even better, the panic and rush to try to be one of the fortunate ones who get access to their cash, will most likely result in people hoarding that cash, rather than spend it into the economy, anyway. So I would humbly suggest that it won't even have the result they hope to achieve, to kick-start the economy. It will have the opposite effect and exacerbate the original problem.

Given that Swedish banks are no different to any other banks in the world, inasmuchas they employ Fractional Reserve Banking and they deal with other banks internationally as a matter of course, this will be a rolling disaster -- none of the banks have anywhere near enough cash on hand to cover the eventuality that most of their depositors and/or counterparties ask for their money back. Exactly what happened to Northern Rock and the Icelandic banks, in other words. This is the case in all countries today, every country's banks use FRB and all the banking systems or all countries are closely interwoven with each other. If just one bank succumbs to a run and does actually go under, it will have a contagion effect across the globe. Britain could afford at the time to borrow money to support Northern Rock and stop it becoming Ground Zero of global financial meltdown, but now I'm afraid the national creditcard is rapidly approaching maxed-out; it could not be done now.

This is probably the most idiotic idea any central banker ever came up with (and they have some stunningly stupid ideas under their belts). Bernanke at the US Fed has come up with it in the course of his academic career studying deflation and Depression, and how he thinks in his academic Utopian world he can avoid it. The nice people at the Riksbank in Sweden are taking the idea for a spin to see how it really works out. Anticipate trouble. If your bank switches to offering you a negative interest rate, or indeed even if they no longer will pay you a positive interest rate, buy a biscuit tin to keep your money in instead.

Better still, buy some gold or silver and keep it somewhere safe and under your own control. The only honest and reliable forms of money ever invented. Nobody can print up a few more Trillion ounces of gold/silver on a whim, and nobody can shut their doors and deny you access to what is rightfully yours if you don't let them have it in the first place.

Thursday 2 July 2009

Mirror, mirror, on the wall. Who is the most in debt of them all?

Mirror: Why you are, o beautiful Witch of the West, Miss US of A. With your ugly step sister, Miss UK, a very close second.

The Baron interjects: factor that the US has about six times as many people living in it, to share the debt load... and suddenly Miss UK looks even uglier. Right readers?

The Baron feels he must also add: Factor as well that the US can just print up today's global reserve currency, the almighty dollar, and repay all of those debts tomorrow, if it felt like it. Of course it would very much cease to be tomorrow's global reserve currency, which would come with a significant amount of hardship, but that's a whole other story...

Gordon Brown rejoins: We are the nation best placed to recover quickly.

Yeah, of course Gordon. Muppet. :-\

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