Idiot American Congressman

[bridge too far]

The article I quoted above, by Ann Pettifor for the Guardian, posits that central banks should CUT interest rates and governments should stoke up inflation temporarily by creating jobs and increasing wages.

 

These inflationary measures will result in higher spending and a growing economy. This will put profit back into business and revenue back into government coffers.

 

It is a Keynsian theory apparently. It sounds good but there has to be a downside to the theory. Can anyone explain it to me (in very simple terms )

[Crouchie's Lawyer]

The article I quoted above, by Ann Pettifor for the Guardian, posits that central banks should CUT interest rates and governments should stoke up inflation temporarily by creating jobs and increasing wages.

 

These inflationary measures will result in higher spending and a growing economy. This will put profit back into business and revenue back into government coffers.

 

It is a Keynsian theory apparently. It sounds good but there has to be a downside to the theory. Can anyone explain it to me (in very simple terms )

 

The downside is inflation itself. I did Economics at A level so its going back a few years but if im right, if inflation goes up, it means the cost of our good increase, thus meaning our products are less desirable overseas due to the price so our oversea trading decreases. I could be wrong though?

[No 2 to Maybush]

Definite Deja-vu, Saint in Exile.

 

There is a Republican nominee in the US, Ron Paul, who put himself forward for the Presidential election, but got frozen out by the MSM (main stream media), who just didn't report his campaign. He predicted this situation 2 years ago, and yesterday tabled a Bill in Congress for the abolition of the Federal Reserve Bank.

 

In his view, the only way out is to drop Fractional Reserve Banking and go back to a system similar to the Gold Standard. I would recommend you google him or look him up on Youtube. He talks a lot of sense, but is a voice in the wilderness of American politics.

 

What is encouraging though, is that there was a groundswell rebellion against the Paulson proposal in the US, orchestrated on the internet, where ordinary citizens bombarded their representatives to reject the Bill, and it worked! Shame we don't have quite the same level of democracy over here.

 

And if anybody thinks the Paulson plan was the way to go, I would suggest they review the Bill, which stated that Paulson would have had COMPLETE CONTROL with NO OVERSIGHT and NO RECOURSE IN A COURT OF LAW to his actions. The Bill also stated that he could draw $700 billion AT ANY ONE TIME to aid the recovery, ie a blank cheque. The exposure in the US runs to Trillions of dollars. Given that China has stopped lending to the US, where is the money coming from except from the Federal Reserve running the printing machines on overtime?

 

I expect to see a lot of football clubs going under in the next year, especially those with a lot of debt, and I don't just mean Saints. There are a number of Premier clubs that are seriously overleveraged who will find it hard to make it to the end of the season IMHO.

 

Still, you've got to smile, hey? The sky hasn't fallen (yet) :-)

[bridge too far]

No.2 - I thought one of the reasons that the US banks got jittery about the Paulson proposals was because the £700 billion was going to be released in tranches?

 

I don't see any reason why citizens in the UK couldn't organise, mobilise and bombard our MPs if we didn't like forthcoming legislation? Mind you, it only works if there's an election coming up, doesn't it

[bridge too far]

The downside is inflation itself. I did Economics at A level so its going back a few years but if im right, if inflation goes up, it means the cost of our good increase, thus meaning our products are less desirable overseas due to the price so our oversea trading decreases. I could be wrong though?

 

Yes, I understand that bit I_N_S but deflation is as damaging isn't it? Whereas with (controlled) inflation, some demand will rematerialise, keeping businesses afloat and people in jobs.

 

I guess the middle ground is the wise option, eh?

[Weston Saint]

May be the Nay's were right. The DJ has opened up 200 points.

[toofarnorth]

Definite Deja-vu, Saint in Exile.

 

There is a Republican nominee in the US, Ron Paul, who put himself forward for the Presidential election, but got frozen out by the MSM (main stream media), who just didn't report his campaign. He predicted this situation 2 years ago, and yesterday tabled a Bill in Congress for the abolition of the Federal Reserve Bank.

 

In his view, the only way out is to drop Fractional Reserve Banking and go back to a system similar to the Gold Standard. I would recommend you google him or look him up on Youtube. He talks a lot of sense, but is a voice in the wilderness of American politics.

 

What is encouraging though, is that there was a groundswell rebellion against the Paulson proposal in the US, orchestrated on the internet, where ordinary citizens bombarded their representatives to reject the Bill, and it worked! Shame we don't have quite the same level of democracy over here.

 

And if anybody thinks the Paulson plan was the way to go, I would suggest they review the Bill, which stated that Paulson would have had COMPLETE CONTROL with NO OVERSIGHT and NO RECOURSE IN A COURT OF LAW to his actions. The Bill also stated that he could draw $700 billion AT ANY ONE TIME to aid the recovery, ie a blank cheque. The exposure in the US runs to Trillions of dollars. Given that China has stopped lending to the US, where is the money coming from except from the Federal Reserve running the printing machines on overtime?

 

I expect to see a lot of football clubs going under in the next year, especially those with a lot of debt, and I don't just mean Saints. There are a number of Premier clubs that are seriously overleveraged who will find it hard to make it to the end of the season IMHO.

 

Still, you've got to smile, hey? The sky hasn't fallen (yet) :-)

 

I thought one of the concessions made to try and get the bill through was that it would only be drawn in installments and would give the US stock in any companies it "bailed out". Thinks there were a few other concessions as well but obviously they didn't go far enough for some peoples liking obviously as it din't work.

[TopGun]

The article I quoted above, by Ann Pettifor for the Guardian, posits that central banks should CUT interest rates and governments should stoke up inflation temporarily by creating jobs and increasing wages.

 

These inflationary measures will result in higher spending and a growing economy. This will put profit back into business and revenue back into government coffers.

 

It is a Keynsian theory apparently. It sounds good but there has to be a downside to the theory. Can anyone explain it to me (in very simple terms )

 

It just keeps the wheels spinning which is better than nothing happening. Keynesian theory is of course mocked by free marketeers who know better... oops!

[View From The Top]

I'm sorry, but I just don't see how anyone could believe that "The Plan" was a good idea.

[OldNick]

The article I quoted above, by Ann Pettifor for the Guardian, posits that central banks should CUT interest rates and governments should stoke up inflation temporarily by creating jobs and increasing wages.

 

These inflationary measures will result in higher spending and a growing economy. This will put profit back into business and revenue back into government coffers.

 

It is a Keynsian theory apparently. It sounds good but there has to be a downside to the theory. Can anyone explain it to me (in very simple terms )

If the whole problem of banks afraid to loan to each other then adding inflation will not help the man in the street in fact it would draw them closer to losing their homes.

So that will result in the unions demanding pay rises to keep up with inflation.

The majority of the nation is helpless and have to watch and wait, the authorities should be getting the banks to tighten the credit card lending as the people are just extending the nations debts.the toxic costs of these debts will come home to roost as well as a lot of the people with these debts will sadly lose their jobs in the fall out from the current problems and so wont be able to pay back these incredibly expensive debts.What asset will the bank be able to take back from them, a second hand Ipod or tv a few pairs of trainers?

It will hurt the economy to do so but sooner or later someone has to grasp the nettle.

I beleive there will be a run on the pound and that will mean high inflation and that will bring the pain of the early 70's of the days of Harold Wilson funnily enough another Labour PM who thought he knew all the answers but couldnt see the signs of over spending and putting the nation in terrible debt.

[Saint In Exile]

In his view, the only way out is to drop Fractional Reserve Banking and go back to a system similar to the Gold Standard.

 

It's hard to argue against this although in the aftermath of WWI Great Britian was struggling to return to the gold standard at a parity with the pre-war period... This then led to monetry inflation in the US as the British economy faced deflationary pressures, inflexibility in prices causing large rises in unemployment and the British government then asked the US to help out with its net inflow of gold reserves. This monetry inflation in the US led to a credit-boom which was unsustainale and caused the debt situation that led to the depression.

 

I don't believe that dropping Fractional Reserve Banking on our own can possibly work it would need the buy-in of all the major worldwide economies and I just can't see that happening....

[Wade Garrett]

If the whole problem of banks afraid to loan to each other then adding inflation will not help the man in the street in fact it would draw them closer to losing their homes.

So that will result in the unions demanding pay rises to keep up with inflation.

The majority of the nation is helpless and have to watch and wait, the authorities should be getting the banks to tighten the credit card lending as the people are just extending the nations debts.the toxic costs of these debts will come home to roost as well as a lot of the people with these debts will sadly lose their jobs in the fall out from the current problems and so wont be able to pay back these incredibly expensive debts.What asset will the bank be able to take back from them, a second hand Ipod or tv a few pairs of trainers?

It will hurt the economy to do so but sooner or later someone has to grasp the nettle.

I beleive there will be a run on the pound and that will mean high inflation and that will bring the pain of the early 70's of the days of Harold Wilson funnily enough another Labour PM who thought he knew all the answers but couldnt see the signs of over spending and putting the nation in terrible debt.

 

 

The way you twist your arguments to suit your politics is pathetic. The Tories have presided over just as many economic crisis. Remember Ted Heath's 3 day week, remember Norman Lamont's Black Monday, remember Thatcher freeing the market of regulations that would have prevented what we are going through now.

 

Selective memory to try and suit your politics. You need to be a little bit more objective.

[anothersaintinsouthsea]

The way you twist your arguments to suit your politics is pathetic. The Tories have presided over just as many economic crisis. Remember Ted Heath's 3 day week, remember Norman Lamont's Black Monday, remember Thatcher freeing the market of regulations that would have prevented what we are going through now.

 

Selective memory to try and suit your politics. You need to be a little bit more objective.

 

Indeed e.g. under Thatcher public sector borrowing increased despite increasing oil revenues and wholesale privatisation.

[Crouchie's Lawyer]

Heard this am that the only reason the £700b bill was rejected is because the yanks didnt think they would get anything out of it!

 

Makes me laugh. They mess up, a problem arises and when they are faced with the problem spiraling out of control they ask what benefit it is to them to sort it out!

 

THE BENEFIT IS THAT THE WORLDS ECONOMY WONT BE AS F*CKED IF YOU SORT OUT THE MESS YOU PREDOMENATLY CREATED!

[bridge too far]

Indeed e.g. under Thatcher public sector borrowing increased despite increasing oil revenues and wholesale privatisation.

 

 

Quite right and in fact the ratio of public borrowing has fallen from something like 46% in 1997 to 37% now.

 

So we're less indebted now than we were under Major.

 

Oh, and remind me, who was Norman Lamont's advisor?

[OldNick]

The way you twist your arguments to suit your politics is pathetic. The Tories have presided over just as many economic crisis. Remember Ted Heath's 3 day week, remember Norman Lamont's Black Monday, remember Thatcher freeing the market of regulations that would have prevented what we are going through now.

 

Selective memory to try and suit your politics. You need to be a little bit more objective.

Ted Heath along with Wilson were 2 of the biggest disasters as Prime Ministers in recent history until you come to the current lot. Thatcher was the reason we had the good times and so I dont agree there.

Lamonts Black Monday was an embarrassment and terrible misjudgement and the City again were ready to make a fortune as well as people overseas.A lot of that was being tied to the Mark. Our European allies were supposed to support us but they melted away.In a funny way it did help kick start the economy again as we had a devaluation and so we started to export again, but I agree it was a mistake of bad proportions.

I notice figures about our borrowing, my understanding is that there is much that is not shown as the PFI etc does not get put under those figures.

[South City Si]

TBF as long as we sustain a system that purely exists to grab for money then you will always get this eventually.

Banks, hedge funds, stoke brockers, stock markets, etc exist purley to get as much money as possible. They are not being 'selfish' or 'greedy' they are just doing what they designed to do.

If you rely on this system then you can't expect these people to be altruistic and deny themselves profit for 'the good of the economy' or the nation, etc.

[bridge too far]

Nick - the PFI question is a difficult one. I've worked on two major hospital PFI schemes so know a tad about it, although I'm no accountant.

 

The first thing to remember is that PFI was brought in by the Major government. I know this because we were about to sign on Financial Close on the first scheme when the election was called in 97. There has to be a moratorium on all government deals when an election is called and we had to wait until the new (Labour) government was installed before we could finally close the deal.

 

The advice from Treasury is this. As the buildings (i.e. assetts) belong to the private sector developer, they cannot be shown on a public sector balance sheet. The public sector merely 'rents' the buildings (and pays for services such as hard and soft FM). The public sector rents many buildings and other assetts (e.g. MRI scanners); you wouldn't expect to see them on the books either.

[No 2 to Maybush]

Quite right and in fact the ratio of public borrowing has fallen from something like 46% in 1997 to 37% now.

 

So we're less indebted now than we were under Major.

 

Oh, and remind me, who was Norman Lamont's advisor?

 

I think you'll find that old monobrow is pushing north of 40% on the public borrowing at the moment BTF, with the MSM (main stream media) prepping the peeps to expect borrowing to be 90 -100 billion quid this year.

 

As to your comment about renting buildings and MRI scanners, can't you see how wrong that is, in terms of setting up the infrastructure of the country? How long do these rental agreements run for? I've read 40 years, and the assets are still not ours at the end of that time. So what happens to all our new hospitals then (except they won't be new)? We will have to renegotiate rents on these assets. Meanwhile the Private firms will have recouped their outlay many, many times over. Sounds like a complete waste of money to me - it's like taking out an interest-only mortgage.

 

With regards Saints in Exile comment: I don't believe that dropping Fractional Reserve Banking on our own can possibly work it would need the buy-in of all the major worldwide economies and I just can't see that happening....

 

There are already talking heads putting forth the proposal of a World Bank as a "fix" to the current problems, and an end to paper money. One bank, electronic credits against you , accessed via retina scan or fingerprint.... the potential for abuse of such a system is enormous. Freedom would be out the door as you would be forever dependent upon the benign munificence of the bank to keep you in the matrix.

 

I read yesterday that someone staying at a Premier Inn tried to pay their bill in cash and was told it would only be accepted if they could provide proof of identity, ie Passport or driving licence. Go figure!

[bridge too far]

No 2 - I'm no advocate of PFI, especially after having worked on such schemes. I'm certainly no apologist for PFI either - it goes against my socialist principles FFS

 

But you talk about renting MRIs. They're leased, of course, and within that lease comes consumables, maintenance and repair, staff training and, usually, state of the art upgrades. Business Cases usually demonstrate that this is a cheaper option long-term than forking out capital now.

 

With regard to PFI buildings - this is how it works. The private developer rents the building back to the NHS / Education, whatever, usually for 30 years. At the end of that 30 year period, the NHS / blah blah can just walk away. There are also break clauses built in, after usually 15 years when again the NHS /... can walk (although for a consideration, I imagine).

 

The pro PFI lot will say that most of the risk is transferring to the private sector because, in 30 years time, they'll be left with a lot of redundant buildings. And that's not as daft as it sounds actually. Think of the developments in health that there've been in the past 30 years. We actually need fewer big hospitals NOW (let alone in 30 years time) because a large percentage of procedures are done using day surgery - no need for lengthy in-patient stays. And community hospitals are being developed (using NHS money or via LIFT - Local Infrastructure Finance Trust but won't bore you with what that's about right now) to provide 'step-down' care where, again, people can be cared for in local low-tech hospitals.

 

Where PFI has been particularly evil is in the way the private sector has refinanced the loans they needed to develop PFI. In simple terms, they negotiated loans based on 'plans' and risk was factored into to the cost of these loans. Once the hospitals were up and running, the private sector renegotiated the loans at more favourable rates because the risk was less, given that a tangible assett had been constructed. This was how PFI was first structured before 1997. After that, with the realisation that the private sector was making sh*tloads out of the public sector, the new deals were structured so that any 'gain' by the private sector from renegotiating the finance would be shared with the public sector.