Snow is romantic - and capitalism works for everybody

It snowed several times last week.
The romantics were full of it. Hey, we'll have a white christmas etc. etc. etc. YAWN!!!!
Look out there today. No new snow for days. A mixture of grey-brown relics of snow and black ice and filthy brown slush. And large pools of ice-filled, dirty water.
Romantic? Spare me! And someone, please save me from idiotic romantic notions and put us back in the real world.
It reminds me of the people who tell us that capitalism works for everybody. It is the one solution that ensures that there is no poverty, no unemployment, no debt .....etc. etc. etc. YAWN!!!
Look at the world we have now. More people in terms of sheer numbers living in poverty than ever before (and the number of people living in poverty is many multiples of those living in wealth), unemployment (except in capitalist economy dictatorships like China) at disgustingly high levels. And debt still near all-time record levels with little likelihood of any reduction in the foreseeable future.
Of course the alternatives do not work either? Probably not, but this version of capitalism is a grotesquely over-romanticised philosophy, and is the road to ruin for a large number of people on this planet. That is facing the facts as they are, not indulging in silly daydreaming.

Debt

All over the Web at the moment - people complaining about government debt.
Fine - why no complaints about business debt?
Why no complaining about personal debts?
The government should not be running up debt as it affects future generations.
Doesn't the same apply to business and personal debt?
Especially when much of that debt is required merely to gamble on "values" in the hope that somehow it will turn out to be profitable. And if it does turn out to be profitable how much of the debt will be paid off?
Or will it sit around on the "wait until I am ready" principle?
The point is - it is debt culture that is the problem. The people who vote in governments are probably playing this silly game with debt themselves (this is particularly applicable to those who believe in Friedmanism, which is a philosophy that cannot eliminate debt from its thinking - it is fundamental as to how it works). The government debt is merely a reflection of the not so frugal habits of the voters. If private individuals cannot restrain their spending, and live within their means, why should anyone expect their governments to think or act differently? The government eventually is the body representing the people, and that includes everything that that involves - including its psychology.
My own take? We need an end to debt culture in all areas - it only leads to poverty and instability.

Government propaganda and facts - German style

Yesterday there was an announcement that Germany has now 1 million skilled jobs that it cannot fill.
It would be interesting to know where (certainly not in IT! - I will tell you that from experience!).
t-online.de asked its readers to relate their experiences and held a poll asking people to vote on this.
81% of people indicated that the job market was as near to impossible as it gets and there were still no jobs out there. Dozens of people wrote in saying exactly the same.
Perhaps we need to know what these 1 million skilled jobs are, where they are and how people should apply for them. Merkel should get her ministers to publish a list!
My suspicion is that the definition of "skilled" these days means "flipping burgers" at McDonalds or Burger King!

Political Terminology Explained

For those confused by different political terms, an allegorical explanation:

Capitalism – owning the casino guaranteeing that you are the only winner, but even you can lose if you get too greedy or drink away the proceeds.

Fascism – working with the casino owner to take over any competition by forceful means, eradicating all the people whom you think (on a totally arbitrary basis) should not be in the casino or anywhere else for that matter, and giving dirty jobs to a large number of the remainder.

Conservatism – playing the casino all the time expecting to win, borrowing large sums so you can do so, laughing at all the losers, but crying like a baby (and always blaming someone else) when you lose yourself.

Socialism – still playing the casino, thinking somehow you can get everyone to win when reality constantly proves that it is not possible, and making sure the winners don’t get to enjoy their winnings by taking their winnings away and trying to distribute these by way of freebies (drinks, food, tee-shirts) to everyone there.

Communism – taking over the casino and closing down all the games played inside it, wondering where all the money has gone, and then forcing all the people still inside to stay even if they do not want to, and tying up in chains, or shooting, the people who argue.

Environmentalism – playing the casino and trying to replace the chips with flowers.

Anarchy – blowing up the casino.

NOTE ALSO

Libertarianism – see Conservatism (these were previously different. There was something else called Conservatism, where people simply kept their winnings and left the casino, or only came back with the money that they had won, not with borrowed money. This is now though a defunct theory and has merged with Libertarianism, apart from the fact that former Libertarians smoke reefers, while traditional Conservatives do not).

Another job rejection

Today after two months waiting for a reply, I got another job rejection from a company that will remain nameless.
This job suited my talents to as close to 100% as any can. I sent a very detailed explanation on a point by point basis to them as to why I was suitable for the position. I gave them very clearly in all the questions that they asked to answer (in a spreadsheet) clear and precise responses.
There is no reason except ageism why they should not at least have interviewed me.
This morning after TWO FRIGGING MONTHS, they sent a rejection. Explanations? NONE!!!!
Just the usual trash answer reading along the lines of wishing you luck with further applications etc. BULL****! If they are not interested in taking on someone that talented, why should anyone else be?
Of course the frigging conservatives out there who created this global economic crisis think that it is really easy finding a job.
I would gladly wish LONG-TERM unemployment upon every frigging conservative on this planet - they might learn something! Maybe they would be happy to become slave labour at McDonalds!
I will happily commit suicide before anyone tries to impose that solution upon me though. I am a brain worker, I am very good at my job when allowed to be and nobody is going to reduce me to menial slavery! I would rather die first!

Obama, sounding like Schröder, proving the Republicans right!

In India this weekend, Obama remarked that the Indians were not stealing jobs from the West, rather that they were creating them.
This is a bit like Gerhard Schröder's famous need to import 20,000 Indian IT technicians to Germany as the "skills did not exist and we need them to get economy moving".
You want to know how many IT specialists there are unemployed in Germany at the moment, and remember one of Merkel's cohorts commenting the other week that Germany doesn't need any more immigrants to do IT work ....
So if the Indians have not stolen my job and created jobs instead, what I am doing unemployed? Where is my job? What am I supposed to be doing? Why do I keep sending out applications by the dozen and getting no reply?
Of course there is the US Republican Party answer to this (in line with "the poor have created their own poverty" and their denial that the financial crash ever happened in 2008) - namely that the unemployed are lazy and don't want to work.
The jobs don't exist therefore I don't want to work. The problem is that this weekend even Obama  subscribed to that.
If he were right about the jobs being created incidentally, then please let me know where! Something in line with my qualifications, experience, intelligence, and something that will at least keep the wolf from the door!
I will happily do German to English or French to English translation work as an alternative incidentally.
I would like to see Obama proved right for once (can any sensible person on this planet want to see the Republicans back in power in the US with the same bankrupt ideas and their need to start unnecessary wars?), but he increasingly comes across as being brilliant at rhetoric and that is it.

Tea Party Logic

Quoted from Cynthia Tucker's latest column (without permission - I hope she won't mind, this deserves more publicity) on the US Tea Party.
The underlining and use of blocks is mine though:

They are mostly ultraconservative Republicans. They may be frustrated with the mainstream GOP, but they've aimed more of their fire at Democrats than Republicans. In Georgia, for example, it's no surprise that Julianne Thompson, state coordinator for the Atlanta-based Tea Party Patriots, is a longtime activist in Republican politics
But for all the supposed tea party anger about government spending, most of its supporters tend to favor entitlement programs such as Social Security and Medicare, according to The New York Times. And they don't seem aggravated by the Pentagon's budget, either.
Why would they be? According to the Times, 57 percent of them hold a favorable opinion of George W. Bush, whose tax cuts, two unfunded wars and massive increase in entitlement spending -- the Medicare prescription drug plan -- wrecked the federal budget. Meanwhile, however, more than half the tea partiers told the Times that Obama's policies -- which they consider "socialist" -- favor the poor.
This really isn't a new blend of tea, after all. It's the same brew of ultraconservative ideology that's been served on the right for decades.

And my own comment on this, I expect that most of them will be happy to see an invasion of Iran under President Palin in 2013, no matter how much it costs!

Spare me the polemics

One thing of which I have become aware over the years.
The more polemical your argument (fascist, conservative, socialist, communist), the less likely it is to work in practice.
What do I believe in?
Pragmatism.
Whatever works, and not just for me, but for the good of everyone.
When we have eradicated unemployment, underemployment, poverty, debt, war, nationalism etc, we will have succeeded.
As not a single one of any of the polemical beliefs as listed above will get us there, I will regard them ALL as failures.
Pragmatically they do not deliver the goods.

Another Day, Another Idiot

I went on Helium.com this morning to check out the front page.
Occasionally they have some interesting stuff (once in a while some of mine), sometimes some really rivetting stuff.
Today? Headline item, some guy going on about Obama being a Socialist.
Again?
Does he know what he is talking about? No. Absolutely not, but then I have more or less given up on common-sense or intelligence from such individuals.
Is Obama a Socialist? OK - define "Socialist".
In my university days (when dinosaurs roamed the earth), I used to pal around with "Socialists" - all 57 varieties of them.
In the 2002 French elections there were three Trotskyist candidates, two Communist candidates, one mainstream PS (Social Democrat) candidate and one independent Social Democrat candidate. All of them "Socialists". Really - six out of seven would not have agreed with what the other "Socialists" thought, they were not real "Socialists".
And I frankly doubt that Obama would have been on the same page with any of all seven of them.
I have stayed out of the American Health Care debate (not my business), but as a neutral observer, I would remark that the only way that it could have contained traditional Social Democrat elements would have been if it had included a "public option", which was dropped from the bill early in the game. A public option like they have in that country full of dangerous Marxists called .... "Canada"! Stephen Harper, Alberta's answer to Karl Marx? I saw a seditious poll incidentally indicating that some 13% of Americans disapproved of the Health Care bill as it did not include a "public option". Not my issue, I digress.
Anyway I read the Bio of this guy on Helium's front page this morning. He is a conservative blogger.
A conservative? A George W Bush (run up 7 trillion dollars worth of public debt and let's invade yet another country without being asked) conservative? A Margaret Thatcher (close down the textile mills, close down the steel works, close down the mines, close down half of the ports, now where did all these idle feckless unemployed come from? Never mind, borrow, speculate, borrow some more, speculate some more, borrow even more, speculate even more, and, while we are at it, let's bomb Libya) conservative? A Carly Fiorina (25% decline in the HP share value and thousands of jobs exported to China and India while she was CEO) conservative? A Sharron Angle (let's get rid of Social Security and make the elderly who need it live in tents) conservative? A Sarah Palin (I couldn't even finish my term as Governor of Alaska without quitting, but now I want to run the country for 8 years, and while we are it let's increase military spending, even if we cannot afford it, and invade Iran) conservative?
Nearly as wide a variety of them as there are "Socialists"!
And about as much sense from all of them .....

Personal Responsibility

Personal Responsibility?

I agree completely, utterly and without reservation that we should be responsible for our own actions.

Where I do not agree is the way that this is used as a political slogan. That we should not depend upon others for providing for us is a great idea. The problem is that economically we are! Even if you run a shop, your own business, you are dependant upon customers buying your services or products, and at a price where you make a profit. If not, then you are dependant upon banks to keep you in business.

Quick reminder at this point – banks are not charitable organisations either! Banks are also there to make a profit, often at your expense!

If your business loses money, the bank will not keep you alive for long. Bad debt it does not need, it hurts their profits (or it spoils their ability to have fun speculating with the money that you have invested with them – they have no problem losing your money for you, that goes with the territory!).

And if you are the quiet, shy type of individual (like myself) for whom selling is a chore (to say the least), then how do you manage to practise this concept of personal responsibility? Finding someone who believes in your ability sufficiently to employ you and pay you enough money to meet all your requirements.

Just how easy that is can be summed up by the increasing tendency of businesses to close down their operations where they pay decent but not amazing salaries to talented, industrious, hardworking, very competent individuals (like myself) in the developed world, and move them to less developed parts of the world, where they can pay the proverbial peanuts.

Easy? NOT AT ALL!

And what happens to the concept of “personal responsibility” then? No point running to a bank, they are not there for that purpose. In fact banks (the most fundamental basis of any capitalist society NB) are the last people who will be there when you need help – unless you want someone to help you with some speculative venture from which they can gain themselves!

Rather you end up, reluctantly, despite yourself, asking a government agency for help. Frankly it stinks! But where are the alternatives?

Polemical answers I do not need. Just a job (or a regular, and not particularly excessive source of income), and adequate money to keep me afloat so that I can take care of my personal needs. I do not need lessons in personal responsibility, particularly from people who supported the individuals who speculated us into the current crisis, and are prepared to vote to put the maniacs back in charge of the asylum!

Democratic dictatorship

                You turn up to vote in an election. You vote. The other party wins, gets elected, carries out a series of policies that result in you being thrown on the dung heap of the unemployed, which forces you further and further into poverty.

                They then start spinning stories about the unemployed being lazy and idle, and the poor being responsible for their own poverty, despite all your futile attempts to escape this mess that you did not choose to create for yourself.

                This is democracy, or simply some crude form of dictatorship?

Or when you don't know how to fix your economy

Blame the foreigners / immigrants whatever, which is where we have been for the last few weeks in Germany. For the record the number of Muslims among the immigrant community (how you count that is controversial enough) is approximately 25% - which means that 75% of immigrants here are not Muslims! Some of us like myself are EU citizens (and as in my case committed atheists). My wife is a practising Buddhist, and works here for a living working long hours for not so substantial a reward (and she has a university degree to her name NB). Anyway as the German government's popularity rating falls by the day and they show little sign of knowing how to get everyone back to work earning decent money, we turn to the old distraction tactic of "don't blame us, it's someone else's fault".
Of all the countries in the world, this is the last place I would have expected it. In the UK and the US, it is always someone else's fault when things go wrong, Germans normally know how to own up.
There is a world economic crisis, there is a massive shortage of good jobs, thousands of talented people are expected to scrape by on next to nothing until things get better (the US congressional elections voting in a large number of Republicans will only make things worse - we need more controls, not less). Meanwhile Merkel, Seedorfer & Co raise this old "canard".
The following is an item that I wrote of MyLot.com. Not sure what the copyright situation is, but anyway, as I wrote it once, I should have some right to it.

0230 - have nightmare that last weekend Angela Merkel was telling German young conservatives that all foreigners who cannot speak German need to get out of the country 😡 (for this example, Britons and Americans are not for some reason "foreigners"!😕).

0300 - wake up and realise that it was not a nightmare and she did do that.

0302 - realise that my wife still has not mastered German to the extent required, and while she is working and they love the job she is doing and they have just extended her work contract, the police may be round shortly to put her on the next plane to Bangkok (at our expense).

0305 - ignore warning voice in my head that this was the usual typical "Turk-bashing" (or Muslim-bashing) by German conservatives, as ever, and that all other foreigners are excluded from this thinking. Bar all the doors and windows, tear the doorbell out so I cannot hear it ring.

0310 - switch on PC. Take 25 minutes for the anti-virus program to decide to switch on. Turn off warning messages that I have no anti-virus screen in place about 14 times. Go make coffee.

0335 - finally get on Internet. Check email. Throw out 34 more job rejections. Throw out 72 notifications from MyLot from American conservatives indicating that the unemployed are all lazy and of course they could get a job if they wanted.

0340 - read through today's 207 emails about what jobs are available, wonder why I bother, but note all the ones that are worth applying for for later in the day when it is a sensible time to send them off (like 0545).

0345 - read German news. Pick up items like discussions on immigration. Read items like the one thing they don't need here is IT specialists  (really, you could have fooled me - look at my email queue, all the offers ....). Wonder why Gerhard Schröder a few years ago imported 20,000 IT specialists from India as there weren't enough IT specialists here, couldn't be 'cos they were cheap????

0350 - try to think of other ways of making a living - translation work (tried it, getting nowhere), writing (very slow progress - maybe in 15 years I might make a living from it), robbing banks (no gun), building my own nuke (no, that is last week's joke).

0400 - make more coffee, wonder how I am gonna be awake at 0740 to go and get the bus so I can be on my JOOMLA / XHTML / CSS course at 0800 and stay awake until 1300.

0415 - plan what item(s) I will be writing on Helium.com today.

0430 - replan my CV/resume/cover letters so that it sounds less brilliant and spectacular and successful and motivated. Let's face it the other approach isn't working. It makes me sound like I can do a good job.

0445 - finish planning, go off and play stupid contract bridge game or minesweeper on the new laptop (which we cannot connect to the internet yet - plan what time I need to talk to Deutsche Telekom about this) ....

All times CET

An atheist's near death experience and his reaction

Daniel Dennett's comments following his heart attack and his full recovery. This is very amusing, and as I share his views on religion, I understand exactly what he was saying.

In an essay posted on the Edge website, Dennett gives his firsthand account of his health problems, his consequent feelings of gratitude towards the scientists and doctors whose hard work made his recovery possible, and his complete lack of a "deathbed conversion". By his account, upon having been told by friends and relatives that they had prayed for him, he resisted the urge to ask them, "Did you also sacrifice a goat?".

Christmas Story - A Conservative Christmas Carol

Christmas is not that far away

As you know - you get Dickens's "A Christmas Carol" pushed down your throat in some form or another every Christmas.

What gets me about this story is that it is obviously a load of Liberal (in American terminology, “liberal” means something completely different in Europe – for my European readers use the words “extreme left-wing”) hogwash where a good employer called Scrooge gets taken to the literary cleaners while his employee, Cratchit, for some reason gets all the plaudits. This Dickens was obviously some sort of Communist lackey.

It is time that the true story was presented from an infallible Conservative perspective. Consequently, please find below the abbreviated version told the way the story should be.

NB – anyone wishing to complain about copyright, use of the original names etc, I am perfectly prepared to modify the text to take that into account.

           

It is some time in the mid 19th Century in England.

Eberneezer Scrooge, a hardworking small businessman, is desperately working hard to keep his business afloat.

One of his employees is a certain Bob Cratchit. This guy is obviously a dangerous Communist. He does not take his responsibilities seriously. He is always goofing on his job, showing more interest in what is happening at home, pretending his son is sick, and certainly not concentrating upon his job to the detriment of his employer's business.

Despite the obvious difficulties that his employer is undergoing, he is pushing for extra paid holidays (he wants Christmas Day off for starters!), full health insurance for his family (no, he is not prepared to take full responsibilities for his son's alleged medical needs himself), and, though it is not directly stated anywhere, a massive wage increase, which could well bankrupt his employer. And this despite no promised increase in productivity.

His son, Tim (nicknamed "Tiny" as he has not reached full growth for his age - maybe because his father is probably whittling away his income on booze rather than providing his family with food), is malingering at home.

He should, like any normal kids of his age at that time, be doing the usual sixteen-hour shift at the local factory. He would not be earning much, but it would be in his interests (according to the infallible logic of the never mistaken theory of trickle down economics) long-term, it would teach him the work ethic necessary to make him a valued member of society, and the occasional necessary beating with a rod would teach him proper respect for authority.

The story takes a weird turn when something happens to Scrooge. It is not abundantly clear exactly what, but it would be fair to surmise that Cratchit, being the deviant Communist that he is, slips some sort of opiate into his boss's tea (in the 20th Century this could have been done with LSD, but at the time of the book, this obviously was not available).

When he gets home, Scrooge, already exhausted from his strenuous efforts to keep his company afloat and keep his idle workers from slacking, falls asleep and, obviously impacted by the opiate, starts to hallucinate about ghosts and how wicked he has been, and what a foul future he faces if he does not change.

Wonderful things these opiates! The voices in these hallucinations start telling him to be generous to the Cratchits. Consequently upon awakening, he gets loads of presents for "Tiny" Tim, and goes round to the Cratchits' house and, abominably, gives in to every one of Cratchit's demands! Extra holidays, better wages - he even agrees to cover all of "Tiny" Tim's medical bills himself. He is last seen wandering round the city uttering some fool phrase like "A Merry Christmas to You All".

Not mentioned in the book (Communist revisionism as ever), Scrooge is forced into bankruptcy, and eventually into poverty. Cratchit gets a job as a Trade Union organiser earning five times as much as Scrooge ever paid him, but the Union can strong-arm employers into paying, threatening them with what happened to Scrooge. Meanwhile "Tiny" Tim is now out on the street begging. There is nothing more touching to passers-by than a crippled child begging (even a child, as here, pretending to be crippled), and Cratchit finds the extra income useful for buying the copious amount of beer that he consumes. 

Left and Right and other nonsense terms

Accepting the phrases “right" and “left" as anything meaningful for the moment (I don’t think that the linear model works frankly, so it is a bit pointless), let us state the problem clearly:

The “left” (moderate “left” anyway) has a lot of ideas that I can live with and support. The problem is that it hardly ever succeeds in meeting its objectives, and fails to deliver the goods for its support base. This is usually, sadly, the story wherever you live in the world

The “right” on the other hand has very few ideas that I would support (maybe some of its law and order platform – I see little value in having large numbers of violent criminals walking the streets), and while it often is successful in delivering the goods to satisfy its base – though it notably hasn’t been lately, see 2008 – that is of no practical use to me.

In other words do you choose what you want but cannot get, or what you never would want in the proverbial month of Sundays? 

Eradicating Poverty

I will only be convinced by this world when we have an answer to poverty. When we can eradicate poverty for the planet, then we will finally have succeeded. That requires work opportunities (and not just selling things!) paying at least a basic living wage for everyone, affordable accommodation, an affordable food supply etc. For this also we need to get out of thinking in terms of charitable handouts, and start offering positive work alternatives – for people with brains as well as brawn. And we need for once and for all to eliminate the concept of living off debt!

Capitalism cannot provide this. Communism cannot provide this. Organised religion cannot provide this. Governments cannot provide this. Anarchy cannot provide this. So how do we come up with a solution?

Or maybe I just need to be cynical and write this world off completely. At the moment all we have are problems, there are precious few solutions in sight! The situation is just getting worse, not better.

Chips

Frankfurt, Germany, 5/10/10
(Originally issued on 14/6/10 - updated)

I remember telling Andy (a close friend of mine) back in the mid-90s that I wanted a permanent (meaning permanent, not temporary on a lousy salary) job. If you have the sense of security, you are more likely to turn up concentrated, and keen to do well.

If on the other hand, you have the sense that you can do your job as well as anyone, but the things that affect company policy are out of your hands, and they will fire you no matter how well you do your job, then what incentive do you have?

Unfortunately that is increasingly the world we have. The few people who have the chips can decide everything, the rest of us are like those chips – there to be gambled with. When they lose we get thrown away. There is no say, no grounds for complaint, nothing.

It has become so much about these few people gambling. They invent numerous concepts, numerous excuses.

“You need to be self-employed” they tell you, when they know large numbers of people hate selling, the fundamental basis of self-employment, and also when they know that 60% of new businesses eventually fail – either exactly because they are run by people who hate selling, or because they get squashed by the big guys.

“You should work longer hours” – as if working 16 to 18 hours a day will improve the quality of the work that you produce.

“You need to retrain on more modern technology”. Do that at your own expense some time (I will tell you that I have – from experience), check out how many employers are interested. Few to none – they want “work experience”.

“You should be prepared to move”. I have changed addresses 31 times, lived in six countries, worked in a seventh, I have done this as much as anyone. It does not improve your life (!), and anyway you cannot build the basis of a successful existence if you cannot eventually put your roots down somewhere. And the major proponents of this “mobile workforce” theory are usually university economists (invariably of the unreal conservative strain) who probably have not moved themselves in decades!

The usual conservative nonsense about scroungers

Frankfurt, Germany, 5/10/10
(originally issued 14/6/10 - updated)
A response to some nonsense issued by some typical conservative idiot who remarked recently that unemployment benefits encourage unemployment:

The first thing that you do is ensure that there are suitable job opportunities for all the people who want to work (and I am not talking about McDonalds-type garbage jobs for people with science degrees for example).

You also ensure that these jobs provide a living wage, avoiding in the process the road to debt and poverty, which are, in my opinion, interrelated.

Then you make sure that the economic fortunes of the population at large are not risked by emphasising speculation and other related forms of gambling, and rather put the emphasis upon intelligence, hard work and product quality. You also end the export of jobs to other parts of the world, purely because the goods can be produced more cheaply (if not as well) there – instead accepting that quality produced locally is more important for the local economy than reliance upon cheap imports.

Then, and only then, do you start pursuing individuals who are exploiting the system by trying to get away with government handouts for doing nothing.  And not the other way round!

Not our business?

Frankfurt 5/10/10

                 Our economy was doing quite well. Not amazingly, things were not swinging along with the degree of certainty that everyone would working inside six months, and that unemployment would not exist inside a year, and that we could all hope to be earning decent money and be able to have something to save for the future (well sadly they have McDonalds here too, and since when were their employees able to live off their earnings?).

                But things were in fairly good shape and improving.

                Then came July 2008. After months of rumour, the American financial system started to hit the wall. July 2008, I repeat, surname of the American President at the time, for those who have conveniently forgotten, was “Bush”. Within weeks financial companies all over the globe were running away with their faces covered. And they ought to have been ashamed.

                The massive gambling (no other word to describe it, my friends) on the American property market had finally produced a whole series of losers.

                If someone in the UK goes to a betting-shop, puts the value of all he owns on a horse, and the horse loses, he suffers, his family suffers, but nobody else suffers.

                If banks (over whom we have next to no influence – let that never be forgotten, we are not talking democracy here!), on the other hand, do pretty much the same thing, it is not just the banks that suffer – we all go down with them!

And while we are here, let us remember that banks only survive in the first place because they get money from their investors. So, in other words, the investors’ money was being gambled away by the banks. Whether you like it or not, these are facts.

The extent of the gambling across the world can be seen by the extent of how many banks internationally would have crashed had various governments not intervened. Perhaps the most ridiculous situation of the lot arose in Iceland where all three of the country’s banks ran into impossible difficulties. A few idiots in the investment department of some banks take some extremely stupid decisions, a whole country is supposed to disappear into a hole in the Atlantic Ocean?

Yes, well ….

Let us repeat – this was not a crash in the value of property worldwide, this was a crash in property values in the United States. It was events in the United States that were affecting the rest of the globe. Their economy headed downwards sharply, ours, amidst all the others, was carried down with them.

European governments mainly stepped in to prop up their banks - mainly to protect investors from losing their money. It may not fit the monetarist playbook, but if thousands of small investors had lost their savings, then the governments involved would have had other concerns (check out events on the streets of Athens after the Greek financial crisis if you want an idea). More significantly they also took action to prevent the banks based in their countries from gambling the same way in the future. This was very much a case of locking the stable door after the horse had bolted, but anyway.

The point here though is this. Many Americans (particularly conservative Americans) will start telling us that their political system is their business (though when there is a war they need to fight somewhere, suddenly that is our business as well, for some obscure reason!). Fine! I will happily leave it like that – provided that failures in THEIR economy do NOT impact US! And for that matter I will remain indifferent to them having successes in their own economy while they are there. Everything starts to go well for them? Fine – good luck, get on with it! Jealousy and envy have never been part of my make-up.

They can do what they like with their health provision – not our problem! They end social security and suddenly they find large numbers of old people living out on the street in tents? Not our problem!

They can, as far as I am concerned, remain totally independent while we resolve, or fail to resolve, our own problems (and without help (?) from American credit agencies deciding what is the state of our economies – see Portugal recently!). Until that happens though I reserve the right to comment on their political system and the obvious failings like the ones that caused the 2008 crash.  Sadly it is our business, whether we (or they) like it or not.

Economic Realities and Political Chicanery in the USA and Germany

 Frankfurt 23/9/10

            It may be that when waking up at 5 o’clock in the morning that my mind is free from all the nonsense that has been thrown at it the previous day.

                Anyway after reading a few things this week on Yahoo News and seeing some very silly bits of information in the German tabloid “Bild” earlier this week, I had the sense that all the nonsense in the world was never going away, and clarity was needed.

                Clarity came to me at 0500 today.

                I read on Yahoo News this week that, according to a recent survey, only 11% of American voters think that the Democrats can fix the US economy (that includes their own supporters). Great news for the GOP? Not exactly, apparently only 21% of American voters think that the Republicans can fix it (which is virtually their support base and nobody else).

                Mid-term elections coming up, kick all the bums out, put some new bums in their place? Vote for your local Tea Party candidate, scrap social security, wonder why in a year’s time your grandmother’s living out on the street wondering why she has nowhere else to go? Two years ago she could not pay for all her medicine, now she cannot even pay the rent!

                My impression is that while the Democrats understand the problem, they do not have a clue how to fix it and are floundering round looking for solutions. Larry Summers, a former Harvard Economics professor, is leaving his position as White House advisor on economics, and going back to Harvard, after a hardly stellar performance over the past two years. Now if a university professor on economics cannot fix the problem, it says to me two things:

1. It doesn’t speak volumes for the quality of teaching in the most significant educational institutions in the USA.
2. If he doesn’t know the answer, who does?

Meanwhile the Republicans seem to be stuck in a mode of thinking that the 2008 financial crash never occurred, and are permanently in denial over it. As far as I can see, they do not have a single new idea from those that they were advocating before. Tax-cuts for the wealthy will resolve everything, the more tax cuts, the more investment there will be, the more new jobs etc.

The more tax cuts, the more investment there will be, the more new jobs? Yes – in China!

It is worth repeating over and over again – the 2008 crash was not a mere glitch on the computer. It was the most significant event in the world economically since the Wall Street Crash in 1929. Choose your analogy – an economic earthquake, tsunami, landslide (relevant in the sense that it was caused by deforestation that should not have taken place). Maybe all of those at once. The impact of the complete crash of Lehman Brothers and Merrill Lynch, and the near collapse of the main financial insurer, AIG, cannot be simply written off as unfortunate events, which can be resolved virtually overnight. The impact will be deep and lasting.

It was also a water-mark in a way of thinking, an economic philosophy that had hit the proverbial wall.

Since 1980, the US economy had been based upon Friedmanism (essentially putting into practice the thinking of the American economist Milton Friedman). It is a philosophy based upon values rather than income, and places a heavy emphasis upon debt. Property (and we should include in that generalised word stock ownership) has value, debt is taken from banks against the value of that property, the cash in that debt circulates and the economy grows. Consequently the more property is worth, the more the economy grows. Of course there is the downside to that in that the more debt is in circulation.

While the values are realistic, and the debt is sustainable, there are no problems. Once the values reach a point that they cannot be maintained, because the debt structure underpinning them has become unsound, the whole system is endangered.

And when the debt structure became unsustainable (actually towards the end of 2007), the whole system threatened to collapse like a ton of bricks. Income from other sources might slow the decline (including the dubious practice of sustaining debt through the input of other debt), but as income had become understated and values greatly overstated, collapse was inevitable.

When a value driven system suffers this sort of collapse, a large amount of cash simply disappears from the system. Replacing the cash is not an option, it simply does not exist any more. The debts that sustained the values though continue to exist. This leaves a massive hole which needs to be filled. Filling this hole takes time, a long time. The temptation (pretty much what the Democrats are trying to do) is try to rebuild the values by borrowing against future growth. The risks in doing so are obvious, and when it does not work, or does not appear to be working, then the question-marks - as to whether the right policy is being pursued - will remain.

An alternative is simply to leave the hole unfilled (essentially the Republican solution). There are winners and losers in this system, let the losers lose, concentrate on building space for the winners. Everything will eventually come right. Believe it, it will happen! Which, in my view, means accepting even higher unemployment, and no long-term resolution of the debt issues involved, meaning that in a few years time another economic tsunami could well strike – for which, again, no-one will be prepared.

This is not incidentally traditional conservatism. Traditional conservatism is essentially invest what you can afford, water the plants that you have planted, watch the plant grow, reap some of the profits, re-invest the rest and watch it grow further. Slow but steady growth, sensibly defined within the parameters of what you can afford. It eliminates speculation, it reduces debt to being a tool that is merely a short-term expediency which covers an immediate shortfall. You do not, though, spend what you have not got unless it is absolutely necessary. You do not get rich overnight, but over a period of time everything in the garden looks good. There are more plants, everything is well-watered and looks healthy.

And in case you think that the US is the only placed where silly thinking and false rumours abound, in “Bild” this week they were calling the German economic performance “the new economic miracle”. Unemployment (surprise, surprise) has fallen below 3,000,000 – lower than it was before the crisis struck. All well and good. The German government is doing its damnedest to shovel the unemployed away on work-training courses and experience to get them off the dole – so what is the real figure rather than the artificially created number that this is? And if you are one of the 3,000,000 (which IMHO is still 3,000,000 too many – hardly anything to be proud about), it is no matter about which you can be too cheerful. During the real “economic miracle” of Adenauer and Erhard, that figure was nearer to 300,000, a tenth of the current figure.

Final comment. Max Otte is a German economics professor (University of Worms, I think). The US is not unknown to him as he has done research at Princeton and was Assistant Professor of Economics at Boston University between 1998 and 2000. In 2006 he wrote a book called “Der Crash kommt” (“The Crash is coming” - English). Nothing much was heard of it for a couple of years, just another book on economics stuck away on the shelf which will keep the specialists interested, and would gain little interest elsewhere. Then the crash came, suddenly a book on economics (a dry subject even for Germans) is on the best-seller list, and the author is a celebrity. He was in Frankfurt last week – pity I forgot, I meant to go and hear him.

Anyway his book has taken off internationally. It has been translated into twelve languages, including Mandarin Chinese. Interestingly though, not English – obviously people in the US and the UK are uncomfortable with the thought of this book appearing in their own language! One wonders why, though, Rupert Murdoch for instance did not line up the English language translation. Or more likely he tried to block it!