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Another Week Older and Deeper in Debt May 16, 2010

Posted by markswill in Media, Politics, Schmolitics.
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To Batley this week where I am ‘project managing’ the spiffing up of my bro-in-law’s late father’s house (keep up at the back) so’s it can be let. This involves ferrying stuff down to their Brixton mansion that he and my sister are emotionally attached to, clearing out the rest, re-decorating and carpeting, and blitzing the garden. Can’t say the prospect of this filled me with joy but after my third visit I can report that the locals are friendly, the fish’n’chips – my primary diet up there – are excellent and cheap and last week I narrowly missed seeing Billy Ocean at Batley Variety Club which, trivia geeks, was the venue for Frank Sinatra’s last ever European gig. Instead and much against my indie cinema-mogul sister’s advice, I went to the massive Showcase multi-plex just up the road. This is the largest fleapit I’ve ever been to with 24 – count ‘em – 24 screens but not one of which was showing anything I yearned to see. Awash with rom-coms, CGI-driven wham-bams and child-friendly furry animal fare, the best I could find being Iron Man 2 which, as the original wasn’t bad, I hoped would be at least tolerable. It wasn’t. And the digital projection was fuzzy, the auditorium chilly and on a wet wednesday night, there were only five of us watching it. So much for the joyous shared cinema experience.

I mention this only as some kind of bland hors d’ouevre  for what follows which must of course be the results of the election which my last few digital scrawls have been fixated with, not least because all the Batley-induced driving I’ve done in recent weeks has meant locking into R4’s obsessive coverage of said shenanigans (the cassette player’s broken). But I may be partially responsible for the outcome since along with 209 other wise souls here in Brecon & Radnorshire, I voted for a Monster Raving Loony government, and that is what we’ve now got.

The endless proclamations from slippery Dave and the boy Clegg about “strong and stable government” don’t however wash with yrs. trly. As I gather half the Liberal shadow cabinet – if one can dignify it thus – had to be dragged kicking and squealing into a coalition and only after they realised that if they didn’t go for it they’d be screwed come the next election which, had they sided with No Labour, would’ve been sooner rather than later. And had they sided with neither, they’d be screwed too. Screwed whichever way they looked at it.

And so I fear are we.  Reading in the current issue of Prospect on how Britain has changed under No Labour, I learnt that whilst our GDP has increased from £995bn in 1997 to £1,264bn last year, public spending as a percentage of GDP has also more than doubled from £332bn to £671bn, with the consequence that public debt (as a percentage of GDP) is now 62% as opposed to 42.5% in 1997. Our balance of trade payments, roughly equal in 1997 soared to a £39bn deficit last year, £16bn of which readers of my last blog won’t be surprised to learn is with China. Meanwhile at £42bn, the UK’s military spending is the third highest in the world (and second only to Israel’s as a %-age of GDP!), last year our national health service cost us £110.5bn, i.e. almost three times what it did in 1997/8 due in some degree to a 1095% rise in obesity related illnesses which in turn may just be related to Tesco now controlling 31% of the retail food market – up from 15% twelve years ago.

I’m spewing out these figures because they are the telling subtext to the massive budget deficit that we as taxpayers and, yes, voters, are going to have to pay off over the course of the next government and beyond. I gather that this means roughly £6,000 per household which as a single, largely unwaged person living on my own makes me disproportionately accountable. And angry. I didn’t cause this bloody financial debacle, but I am somehow obliged to sort it out. As indeed are most of you – though hopefully in bigger households (with nice Smallbone kitchens and mirrored bedroom ceilings).

So what are you going to do about it? Harangue your local MP when the local primary school, post office, sports centre, library and GP surgery are closed down? Write a strong letter to the Guardian condemning their “Brilliant new gardening columnist” (why are they always “brilliant” and “new”, i.e. code for young and photo- if not telegenic?) for exhorting you to don your by now shagged-out Cathertine Kidston wellies and start planting the turnips that will become our staple diet by 2013 because the Cam-Clegg alliance has imposed 25% VAT on food? Or will you, like me, divest yourself of fripperies like your once beloved Yamaha trailbike and classic moneypit, sorry, classic Lancia and use the money to spend on crack cocaine, 2-litre bottles of Tesco’s vodka and endless afternoons at multiplex sheds watching vacuous 3-D Hollywood opiates? In the words of that other slippery political brinkman, Harold Wilson, you know it makes sense. Or as much sense as putting our trust in the sort of men – and they are all men –who got us into this mess in the first place.

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Comments»

1. Colin H - May 17, 2010

Hard to argue with any of that. So hard that I’m off to look at French estate agents on Wednesday.

2. Tony Sleep - May 17, 2010

They won’t be getting £6k from me, that’s for sure (estimates vary – I’ve seen £19k cited, but I don’t have that either).

As an erstwhile economic migrant to UK I’ve been forcibly repatriated to whence I came, Frestonia (a state of mind and pocket, not geography – see http://tonysleep.co.uk/frestonia ). I suspect very many of us are headed for the same destination.

It seems there’s going to be lots of defaulting. Defaulting is going to be the new black. Listening to a R4 programme last week on the subject of sovereign debt, an economics prof. was of the opinion that Greece will inevitably default. Probably followed by Spain, Portugal and a few other countries around the world including, quite likely, the UK.

Howzat? Well, he said, the Same Old Shit has resumed, we are still firmly enmired. Only worse.

He pointed out that, having been bailed, the banks are still not lending, they are choking UK PLC to death. They consider the risks of lending too great.

So what’s happened to all that liquidity that HMG has so kindly provided? According to the prof, a great deal of it has been invested in nice, secure Government bonds.

So what has happened is this
1. Banks have no money c/o CDI/subprime Hall of Mirrors implosion
2. HMG lends them money it doesn’t have, by printing cash (“Quantitative easing[TM]”) & issuing bonds
3. Banks use the money to buy the bonds HMG issued to raise money to lend to the banks (genius!)
4. Banks now earning interest on the bonds, and of course trading them speculatively. The money to pay interest and redeem the bonds will have to come from the taxpayer for whom there isn’t going to be an economic recovery because the banks won’t lend.

You don’t have to be a chancellor to see the recursive deficiencies in this wheeze. No wonder Gordon Brown looked relieved as he left no.10.

Con-Dem nation is now pinning its hopes on growth that seems unlikely to happen without capital or customers. Not making or growing anything except financial services, I think that’s us fucked. There are only two other ways out if growth isn’t possible. inflation (which was Labour’s strategy), or default.

Oh, and there is also the festering global gold bubble. 90% of gold being traded globally doesn’t actually exist, it seems it’s just paper (despite banks charging bullion warehousing costs for this non-existent metal). Which all sounds like pure internet paranoia until you follow the links to US Commodities Futures Trading Commission inquiries. http://tinyurl.com/ydno5gt etc.

markswill - May 17, 2010

I think you’re even angrier than I am this week Tony, which is saying something! However as your brotherly harbinger of doom, I do wonder exactly what the consequences of default would be? Hasn’t yet happened to an advanced western nation that I’m aware of, but it could be, ah, interesting. Time to brush up on our Molotov Cocktail-making skills and get ready for the Man when he comes down the street in his armoured car after we’ve starting looting Tescos…?

And if you haven’t already, read Terry K’s Comment including the bit about Gordo which, coming from a Yank, is telling.

3. WTK - May 17, 2010

Good research and good facts, Mark. Welcome to the New America. Mr. Teleprompter Empty Suit has effectively quadrupled our national debt in 1 year. Followed by a wandering “no solutions” policy, if you can call it a policy. But, hey, take it from the Wall Street pigs and the middle class. Brilliant solution. As Thatcher said, “the problem with socialism is that you run out of other people’s money”. Well, we’re the “other people” now. Stop whining and belly up to the bar and pay. Through the nose. You didn’t want to buy anything, anyway, right?

Now, studies have shown the $1 spent via the govvernment has a 13% efficiency while $1 spent by for-profit companies has an 81% efficiency. So, let’s use the least efficient method of growing the economy—duh?

Now, the New Team comes into town, says Whoa! there is a deficit highter than the sky and we better do something about it, so up goes taxes and fees. Growth is crippled. Who do you blame? The ‘men’ trying to reduce the deficit, or the idiots that incurred the deficit?

I met Gordon Brown and he was disarmingly dolt-ish and out of touch. No clue about the New Team. They could hardly be worse.

Regulating markets is like squeezing a water balloon—it just engorges someplace else. And, as in the US, the banks are cautious, buying comercial paper, and taking no consumer risk, so the Stimulus Package doesn’t work. And can’t work. And nobody has any loot to buy goods. Since we are both in a consumer-driven economy, we get negative growth. Wonderful!

The only saving grace for the US is that Mr. Empty Suit has driven policy by multitudes of Presidential orders which can be punctured by the court system and/or wiped clean by a New Team. And, most of the outrageious debt is only on paper as government efficiency has managed to squander only 11% of the earmarked funds. Lastly, no Democrat in primary elections or general elections has won in the last year, so Mr. Teleprompter is taking the whole Democratic Machine down with his plummetting approval ratings.

And while you may believe I am a raging Republican I have always voted for the best person in every election. Unfortunately, there doesn’t appear to be a ‘best’ person any longer. I guess I will go back to writing-in Angela Davis as a candidate…

markswill - May 17, 2010

Always sobering to read about what’s happening on the flipside of our so-called ‘special relationship’, Terry. You might be interested in Tony S’s claims about commodities, too, but otherwise I think we’re ALL agreed that expecting growth from consumer spending in the current climate is like waiting for the return of steam railroads. Trust you read my last blog about China’s imminent world domination, and I just heard a radio programme about that country’s efforts of turn Bangladesh into the new Shanghai. Be afraid, be very afraid.

4. Ian Powis - May 17, 2010

Aw Mark, I’m disappointed that you didn’t go skipping down the road at the prospect of the Con-Lib coalition. Some good names been bandied about for it hasn’t there? I especially like Con-Dems. Suspicious amount of talk about raising taxes so far and not much about cost savings so far. From what I’ve seen of the Labour folks they seem positively delighted to be out of it for a bit. Our local authority a few years back, in a bid to justify their council tax increase, put out a tick sheet of local services asking which should be cut if the increase wasn’t approved, presumably in the misguided impression that everyone would say of course we need all that stuff. Well we don’t and they didn’t repeat the exercise so presumably they didn’t get the response they had hoped for. Of course this is all fine in the abstract but not so easy to support when it’s friends of yours that are being affected by job cuts, which have been underway for several months in our area. But perhaps it’s too easy to be cynical and maybe we should give the new lot a chance. Growth has to be the answer but the long term problem has to be the deficit and the general balance of payment and the decline of manufacturing. We want more and more stuff as individuals and we’re not making it, but how you turn this around is the big question, and we’ve been saying this since the 60’s so what chance this latest government? It’s a shame about the Gamma Mark, but the head has to rule at some point and you certainly gave it a good go. Tightening of belts and battening down of hatches is probably going to be in fashion over the next couple of years.

5. markswill - May 17, 2010

Well your point about growth is certainly well taken and as Terry K. points out in his comment, state-funded growth is never going to work with such a huge deficit to deal with, so maybe we’re all ConDems now? (Wish I’d thought of that tag myself). Or in his case, Republicans (by any other name). And I remember him when he was a wild, hippie biker… but then weren’t we both? (Sigh).

And yes, needs must means the Gamma has got to go, but the way things are it mightn’t even fetch half of what I paid for it. (Sigh, again).

6. Dr Dick - May 18, 2010

If the UK is going to default – as in war bonds payable at zero interest in 50 years time – it will have to run a budget surplus as noone will lend it money but getting there will probably mean it will not have to default after all. I think it is the USA that is going to disintegrate more than anywhere else. Freedom is your own house sans mortgage and some kinda motorcycle than runs on animal waste… sure you are there already Mark so stop worrying and smile… and Cameron seems like a nice chap, recognizably British.

markswill - May 19, 2010

Not the Richard Williams I used to scribble for when he (you?) was (were) major domo on Malady Marker, surely? Anyway, you may be right about the Yanks, but I pay rent and the only motorcycle I have is a 125cc scooter that runs on high grade ethanol with a monster turbocharger. Mighty. Fallen. Oh etc., etc.

7. Dr Dick - May 19, 2010

Mark, nope – there are probably a lot of rw’s around. I am rather shocked to hear you are riding a scooter, these days. WTF? You will have to cajole Uncle Frank into giving you a Tiger Cub or something or even a Honda C50

8. Angela Pitts - May 20, 2010

Those figures make for very depressing reading, as does the phony, fatuous coalition. I’d go for the cocaine/vodka/multiplex option but only the booze is available down my way. Probably a saving grace!


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