It’s Time to come Clean about our National Debt

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Courtesy of Liam Halligan @ The Telegraph:

Most pundits assume the general election will be fought against a strong economic backdrop. The Conservatives certainly hope that buoyant consumer sentiment, including continued rock-bottom interest rates and stable financial markets, will help them secure victory, and even an overall majority, in May 2015.
After David Cameron’s conference speech in Birmingham earlier this month, complete with a promised £7bn income tax cut, some 39pc of voters said it was the Tories “they most trust to manage the economy”, compared with just 19pc backing Labour.

It was in the afterglow of that speech that the Tories chalked up an overall poll lead for the first time in more than two years. A strong economy, then, will clearly be front-and-centre in any successful Conservative general election campaign.

It’s politically significant, then, that public sector borrowing figures released on Tuesday were truly shocking – so bad, that further pre-election promises of tax cuts are now much less likely. Such promises, as we just saw, are vital when it comes to keeping the Government’s electoral opponents at bay. If such terrible figures continue into the coming months, the Tories could even lose their reputation for superior economic management.

The economy is growing at 0.7pc per quarter, we learnt on Friday, far faster than last year. Yet public sector net borrowing over the first half of 2014-15 was 10pc higher than the same period in 2013-14. Borrowing in September alone was £12bn, a staggering 15pc up on the same month the year before. While tax receipts were up 3.1pc, revenue growth was outstripped by even higher spending. For all the talk of “austerity”, central government expenditure in September was 5.4pc above that during the same month a year ago, as welfare payments spiralled.

The Government, having already borrowed £58bn between April and September, is almost certain to miss its £96bn annual target by a mile. It’s now all but certain the UK will post a sixth successive year of triple-digit, billion-pound deficits, five of them under the Tories. Osborne has borrowed more in his half-decade as Chancellor than his predecessor Gordon Brown did during a decade at the Treasury. The Conservatives’ 2010 “emergency Budget” said the books would be balanced by next year. Official projections now suggest that won’t happen until 2018-19.

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BONDS MAY BE DEFYING DIRE FORECASTS (Part 2)

BUT THEY ARE NOT DEFYING LOGIC
(Part Two)
Antal E Fekete
New Austrian School of Economics

Courtesy of Professor Fekete.com:

In Part One of this two-part series I have argued that Keynes inadvertently ignored the rule asserting that the rate of interest and the price of bonds vary inversely and, as a consequence, his conclusions concerning employment, interest and money are irreparably faulty.

In this second part I shall argue that the policy of open market operations of the Fed causes deflation rather than inflation as intended. The authors of the policy have inadvertently ignored its effect on bond speculation. This was true in the 20th century; it is true in the 21st century as well. The Fed’s monetary policy is counter- productive. It is trying to foster inflation through its bond purchases, but what it in fact does is fostering deflation through capital destruction. It is responsible for the coming depression, just as bond purchases of central banks were responsible for the Great Depression of the 1930’s.

The fact is that the policy of open market purchases makes bond speculation risk-free. Speculators forestall the central bank and front-run its bond-buying program. Gradually the central bank is losing control. Bond speculators are now in charge. The central bank is trying to call off the bond-buying campaign, in vain. Like the Sorcerer’s Apprentice, it is desperately trying to find an ‘exit strategy’ only to realize, too late, that it hasn’t got the magic word.

The interest-rate structure goes into a free-fall, causing prices to fall, too. One can see that at the heart of the problem is the fact that the central bank (deliberately or inadvertently) ignored the rule that the rate of interest and the bond price vary inversely. Continue reading

Hitler’s Economics & Why You Should Know A Thing Or Two About Them

Courtesy of Chris Rossini, The Mises Economic blog:

Hjalmar Schacht was Hitler’s economic guy. According to Wikipedia, Schacht: ”became a supporter of Adolf Hitler and the Nazi Party, and served in Hitler’s government as President of the Reichsbank and Minister of Economics. As such, Schacht played a key role in implementing the policies attributed to Hitler.”

Now, we all know what happened to Hitler. But what about Schacht?

On June 9, 1947 Henry Hazlitt would write in Newsweek:

Nazism was defeated in war. Hjalmar Schacht, the Nazi economic wizard, is in jail.

So Hitler was dead, and his economic guy went to jail

But what about the economic ideas that the two would implement together? What happened to them?

Hazlitt continues:

But when Schacht and his surviving comrades survey the world today, they must feel consoled. Intellectually Schachtism has conquered Europe. The system of price control, wage control, profit control, interest control, exchange control, foreign-trade control, bilateral treaties, rations, priorities, allocations, quotas, with a special license required for almost every more, and with a mounting currency inflation hidden and repressed by these devices – this is Schachtism. And this is the system which nearly every country in Europe has now embraced. Continue reading

Britain Needs a New Model for Energy

Courtesy of The Morning Star Online:

There was understandable fury around Britain on Saturday morning at the continuing problems in restoring power to more than 1,000 homes — and the offer from UK Power Networks to up compensation from £27 to £75 has understandably provoked further ire.

For those forced to live on takeaways or eat out, to move across the country to stay with relatives who do have power or otherwise fork out cash to deal with their situation, that’s hardly going to recompense them fairly.

And they were asking, rightly, why it is taking so long.

First, we have to offer them our sympathy and best wishes and hope that the further forecast rough weather isn’t going to cause them and others further hardship.

And we need to recognise that many workers, for the companies and the emergency services, also had their Christmas plans interrupted and have been working hard to repair the damage.

But Britons simply don’t trust our privatised energy companies any more, and with good reason.

They know that they are profit-making companies which operate with the aim of maximising shareholder return, not ensuring a secure, affordable energy supply for the public. Continue reading

Fukushima Beta-Radiation Levels Soar To New Record In Aftermath Of Typhoon Wipha

As the true extent of the Fukushima meltdown, after 2&a half years of spewing radiation into the Pacific Ocean, is slowly being realised on the world stage, is enough being done? I very much doubt it as they have no idea where 3 of the cores are. This is a massive issue for the planet but why is so little being done? My opinion, if the Japanese were truthful their stock markets would crash, along with their economy. The motivation is ‘money’ and preserving the status quo, an idiotic and reckless policy that will result in millions of deaths but as long as the stock market is going, all is well. Courtesy of The Hedge:

It is only fitting that on the day the Stalingrad & Poorski 500 rises to a new record high, that that other centrally-planned catastrophe, the exploded Fukushima nuclear power plant, in the aftermath of Japan’s Radioactivetyphoonado reports a completely different record: namely the level of beta radiation levels at Fukushima. Bloomberg notes that the nationalized utility Tepco, which has taken denial to a different superstring dimension altogether, has detected beta radiation levels of 400,000 becquerels per liter in a water sample taken yesterday from a monitoring well near storage tank area H4 at Fukushima Dai-Ichi nuclear plant. This was the highest reading on record. This number compares to Beta radiation levels of 61 Bq/L in the sample taken Oct. 16 and 90 Bq/L in the Oct. 15 sample.

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