Banks, like any other business, try to attract the best talent available by offering the best conditions, usually the higher pay and bonus. By limiting the bonus they can pay to their employees, the Government limits the talent they can attract and makes it difficult for the banks to repay government money.
Bonuses is a flammable subject and the Government is trying to get some votes out of it but the politics of envy are hard to manage: you cannot generate just the "right" level of anger before everything gets out of control. And anger spreads quickly.
Banks should be able to pay whatever bonuses they want. The problem is that they should have never been bail-out in the first place. Socialising the loses and privatising the profits generates envy, and envy takes us one step closer to socialism. Norther Rock and RBS should have never been rescued by the taxpayers. The consequences of that are only now starting to appear.
Sunday, 14 February 2010
Sunday, 7 February 2010
Fly you fools !
Most Europeans governments denied the 2007 economic crash hoping that consumers would keep spending and thus averting most of the disaster. In the meantime, businessmen close to the governments and highly-paid bureaucrats were cashing their shares and running like a Balrog was chasing them. Treating citizens like idiots is a characteristic of deficient democracies.
Britain seems to be in a "back to normal" mood, now that the economy grew 0.1% last quarter. It took the largest economic stimuli in history, including the printing of £200 billion pounds, a near 30% devaluation of the Pound and a budget deficit close to 12% to grow 0.1%. Now, the media and the Labour government try to make us believe that the depression is over. They hope that Britons will carry on buying things they do not need with money they do not have.
Listening to what the government and the media say is close to economic suicide. House prices, no matter what you read on the tabloids, will not grow 10% this year. There is a £170 billion hole in the public finances and guess who is going to cover it. Investors tread UK debt as toilet paper.
The 2007 crash was only the beginning. The bureaucrats know it, the lobbyist know it, the government knows it. And, despite what they might thing, we know it.
We are not as stupid as they think.
Britain seems to be in a "back to normal" mood, now that the economy grew 0.1% last quarter. It took the largest economic stimuli in history, including the printing of £200 billion pounds, a near 30% devaluation of the Pound and a budget deficit close to 12% to grow 0.1%. Now, the media and the Labour government try to make us believe that the depression is over. They hope that Britons will carry on buying things they do not need with money they do not have.
Listening to what the government and the media say is close to economic suicide. House prices, no matter what you read on the tabloids, will not grow 10% this year. There is a £170 billion hole in the public finances and guess who is going to cover it. Investors tread UK debt as toilet paper.
The 2007 crash was only the beginning. The bureaucrats know it, the lobbyist know it, the government knows it. And, despite what they might thing, we know it.
We are not as stupid as they think.
Sunday, 31 January 2010
Follow the Byzantines
The Eastern (Byzantine) Roman Empire's economy was based on agriculture but it offered two peculiarities: it had a very strict Gold Standard and the successive Emperors respected free trade. The "solidus" was the medieval Dollar for nearly six hundred years and helped to turn Byzantium into the most advanced, prosperous and wealthy state on Earth with a capital city ten times larger than any other European metropolis.
Debasing the currency is the oldest trick in the book. The Romans did it in the 3rd century to pay for their civil wars. Even the Byzantines did it in early 11th century (yes, more civil wars), marking the beginning of the end of their glory. We all know what happened to Germany after the monetary chaos of the 1920s. As Ron Paul put it in his book "End the Fed", no great civilization has ever survive after abandoning the gold standard. I guess the sorry current state of the West is just another sad example.
Debasing the currency is the oldest trick in the book. The Romans did it in the 3rd century to pay for their civil wars. Even the Byzantines did it in early 11th century (yes, more civil wars), marking the beginning of the end of their glory. We all know what happened to Germany after the monetary chaos of the 1920s. As Ron Paul put it in his book "End the Fed", no great civilization has ever survive after abandoning the gold standard. I guess the sorry current state of the West is just another sad example.
Sunday, 24 January 2010
One for the Euro
This might sound politically incorrect, but I do not think the Euro is such a bad thing. Granted, had the UK joined it in 2001, our housing/financial bubble would have been even worse (interest rates in Euroland were lower), but now we would have no other choice but to do what Ireland is doing. Instead of printing money and inflate our way out of the crisis through inflation, we would need to live within our means and cut expenses.
The European Central Bank has no such wide powers as the Bank of England to create money out of thin air. It can provide "liquidity schemes" and devalue the Euro of course, but with so many countries nobody agrees on anything so the currency is left largely untouched.
Besides, the Euro is based on a German-Standard, by which a country's risk of default is measured against Germany's. It isn't a Gold Standard, but it is something. No wonder Russia has 50% of its foreign reserves in Euro, a currency that did not exist just a few years ago, and barely nothing in centuries-old Sterling.
As long as the EU do not rescue Greece and its members are forced to maintain some level of fiscal discipline, Euroland countries will avoid the currency crisis we suffer here every 15 years or so.
The European Central Bank has no such wide powers as the Bank of England to create money out of thin air. It can provide "liquidity schemes" and devalue the Euro of course, but with so many countries nobody agrees on anything so the currency is left largely untouched.
Besides, the Euro is based on a German-Standard, by which a country's risk of default is measured against Germany's. It isn't a Gold Standard, but it is something. No wonder Russia has 50% of its foreign reserves in Euro, a currency that did not exist just a few years ago, and barely nothing in centuries-old Sterling.
As long as the EU do not rescue Greece and its members are forced to maintain some level of fiscal discipline, Euroland countries will avoid the currency crisis we suffer here every 15 years or so.
Wednesday, 20 January 2010
First Authoritarian Outing Of Tory Party Policy
A Prisoners Earnings to Be Taxed
and the money used to fund Rape Crisis Centres
Fabian social control using the Tax system, how novel !
Strengthening Police stop and Search powers, and 'grounding' orders
The Police will love that, and abuse it the same way they did the Terrorism Act
Anybody caught carrying a knife should expect to go to jail
That's me buggered then, I had better start practicing gnawing through stuff as an alternative to carrying a tool to do the job.
Allow Police to use surveillance powers in routine cases without need for authorisation
The Stasi Charter, the DDR did this they bugged and followed people and completedly missed the 1989 revolution. Do CCHQ not watch films like the 'Lives of Others' or read books like '1989, The Berlin Wall, My Part In Its Downfall' by Peter Millar.
The Police will love this
Replace Police Authorities with Elected Police Commissioners.
No No No, Elected Chief Constables. In Swindon when the Authority said they were going to rip out speed cameras, the Chief Constable just said he was not accepting that, and would put more mobile units on the street. The Chief Constable should set out his Policing Priorities in his manifesto, not drafted by the likes of Jack Straw.
VOTE TORY, VOTE FOR AN AUTHORITARIAN POLICE STATE
This crap comes out the same day the Met was chastised for allowing a taxi Driver sexually assault forty women, because they basically could not give a toss.
Sunday, 17 January 2010
Let's print some quids
I was first told about the Gold Standard in school, when I was around 8 years old. The teacher told us that, before the Spanish Civil War, we could take our "pesetas" notes to the Central Bank and they would give us a bit of gold (I never put that to the test, though). Now, the teacher said, the value of money was based on the amount of it, and the amount of it depends on the Central Bank. The system, the teacher said, was now based on "trust".
The "trust" he referred to was the hope that the Central Bank and the Government will not mess everything up (I am way too old to believe in "independent" Central Banks). The Bank could print money to pay for Government debts, because the debts were fixed ("hey, you owe me a trillion pounds") but the value of money was not ("yeah, I'll print them out for you!").
It is the equivalent to pay for a £500 new TV by getting cash from a cash machine with your Visa Electron (you've got to have the money in you account), or use your Visa Credit Card instead (you create money out of nothing although you'll have to pay it back in the future).
Credit Cards create an illusion of wealth because one can afford a lot of things "now" and pay "later". The same happens with the Government. The Government can get a lot of things now (hospitals, benefits, wars) and pay later. Or, better still, don't pay at all and simply print the money, which causes its value and the value of the debts to fall. One cannot print gold or create it out of nothing, that's why Governments don't like it. Paper money isn't good for the lender but quite nice for whoever owes the money.
The guy who invented the fiat currency, or paper money, system was quite clever. And he definitely owed money to someone.
The "trust" he referred to was the hope that the Central Bank and the Government will not mess everything up (I am way too old to believe in "independent" Central Banks). The Bank could print money to pay for Government debts, because the debts were fixed ("hey, you owe me a trillion pounds") but the value of money was not ("yeah, I'll print them out for you!").
It is the equivalent to pay for a £500 new TV by getting cash from a cash machine with your Visa Electron (you've got to have the money in you account), or use your Visa Credit Card instead (you create money out of nothing although you'll have to pay it back in the future).
Credit Cards create an illusion of wealth because one can afford a lot of things "now" and pay "later". The same happens with the Government. The Government can get a lot of things now (hospitals, benefits, wars) and pay later. Or, better still, don't pay at all and simply print the money, which causes its value and the value of the debts to fall. One cannot print gold or create it out of nothing, that's why Governments don't like it. Paper money isn't good for the lender but quite nice for whoever owes the money.
The guy who invented the fiat currency, or paper money, system was quite clever. And he definitely owed money to someone.
Sunday, 10 January 2010
How "fair" is that?
"Fairness" is one those words that sound really good and mean very little. "Fair Trade" is assumed to be good, thus progressives buy "Fair Trade Coffee" thinking that they are saving the world. That is only wishful thinking.
"Fairness" cannot be measured. Is £0.50 extra on the price of the coffee "fair" enough? or £0.63? paying an extra premium to selected farmers in poor countries only damage their competitive edge against other farmers which will eventually bankrupt them: free money does little to incentive better production.
It is equally absurd to try to "help" poor farmers whilst the EU's Common Agricultural Policy (CAP) uses nearly 50% of the EU budget in trying to keep poor countries' agriculture out of European supermarkets by protecting rich French farmers. Should the CAP be lifted, poor farmers in Africa would be able to sell their products in the EU and earn an honest living.
"Fair trade" is like "global warming" and "organic food": just nice words to make some wishful thinkers in the West feel better about themselves and add some meaning to their lives (saving the African farmers or, think big, the Planet). It is also a very damaging to Third World economies.
"Fairness" cannot be measured. Is £0.50 extra on the price of the coffee "fair" enough? or £0.63? paying an extra premium to selected farmers in poor countries only damage their competitive edge against other farmers which will eventually bankrupt them: free money does little to incentive better production.
It is equally absurd to try to "help" poor farmers whilst the EU's Common Agricultural Policy (CAP) uses nearly 50% of the EU budget in trying to keep poor countries' agriculture out of European supermarkets by protecting rich French farmers. Should the CAP be lifted, poor farmers in Africa would be able to sell their products in the EU and earn an honest living.
"Fair trade" is like "global warming" and "organic food": just nice words to make some wishful thinkers in the West feel better about themselves and add some meaning to their lives (saving the African farmers or, think big, the Planet). It is also a very damaging to Third World economies.
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