UKBouldering.com
the shizzle => shootin' the shit => Topic started by: Johnny Brown on March 17, 2020, 12:35:27 pm
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*****Split from Coronavirus Covid-19 thread****
Indeed. It's a damn good job money isn't real.
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Indeed. It's a damn good job money isn't real.
I understand your point and for the wealthy it isnt, however i suspect its going to feel very very real to a lot of people in the next year if governments dont get this right. 140,000 job losses in Ireland in 48 hours.
You cant pay your rent/mortgage with idiology.
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You cant pay your rent/mortgage with idiology.
No, but you can stop paying...
I've mulled over a thought experiment before, and it's this:
What if we just write off personal mortgage debt, sign the deeds over to everyone who is currently resident in their house. Who loses out? Banks and the wealthy. My mum would lose out, her retirement is comfortable as she part owns a flat. So what? She'd still have her house mortgage free.
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Indeed. It's a damn good job money isn't real.
I understand your point and for the wealthy it isnt, however i suspect its going to feel very very real to a lot of people in the next year if governments dont get this right. 140,000 job losses in Ireland in 48 hours.
You cant pay your rent/mortgage with idiology.
JB has nailed the more existential question regarding the economy, and maybe one thing that might come out of this crisis is that the greater majority of the population will twig this and start discussing alternatives.
GME, your point about rent / mortgage is true, but only up to a point i.e. within the current system. Taking a step back to align more with JB's vantage point, there is an ideology where you don't have to pay your rent / mortgage.
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Indeed. It's a damn good job money isn't real.
Is this where we start burning money Adam? Is Bill Drummond really an economics genius....? If we all do it at the same time will it work?? It’s a nice idea and I get what your saying even though on this occasion I’m sober. As Gav says it’s not gonna pay anyone’s mortgages and even if this changes the world forever I’ll put everything I have on it not bringing capitalism down as our chosen system. Everyone’s money worries are about to get very real.
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Is this where we start burning money Adam? Is Bill Drummond really an economics genius....? If we all do it at the same time will it work?? It’s a nice idea and I get what your saying even though on this occasion I’m sober. As Gav says it’s not gonna pay anyone’s mortgages and even if this changes the world forever I’ll put everything I have on it not bringing capitalism down as our chosen system. Everyone’s money worries are about to get very real.
I don't expect it to bring down capitalism. I do expect an enormous fudge to take place in the world's accounts that will make the money tree used to bail the banks out look like a sapling. What's interesting is that this time it will have to directly benefit the common man.
Indeed. It's a damn good job money isn't real.
I understand your point and for the wealthy it isnt
Hmm, I'm not sure you do! My point is that it is only the wealthy for who money is most real. If you don't have any you can't be harmed by it becoming worthless. We are already feeding the poorest through foodbanks not the economy.
The question for governments is how they finance the poor without devaluing the rich - although the markets are doing a pretty good job of that already.
Be interesting to hear Andy P's thoughts on what we might learn from Weimar Germany, my initial thought is that such an experience may have been the bedrock for their more recent success.
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I don't expect it to bring down capitalism.
Having said that I do expect neoliberalism to get the most almighty kick up the arse (at last). Not hearing anyone suggest we can sit back and let the markets sort it all out are we?
For the person that says money isn’t real (I accept the theory) I would suggest that they are likely facing a different situation to us.
Likewise I'm running a small business (vocational training) that cannot be run without bringing people together, and therefore we will be closing for the foreseeable future. Mine and the businesses finances are healthy enough that we could absorb that for a month or maybe three but not much longer. However neither I nor the business have enough to mean that I can't contemplate them being erased. If our reserves are wiped out, whether by us being closed or some financial meltdown, they can't take away the knowledge or reputation we've accrued. The period following this crisis will see unprecedented growth.
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Human lives are real and cannot be valued in economic terms. Conversely the economy is entirely a product of our imaginations and has no unbreakable link to reality. It won't go away because modern society is dependent on trade. But the current position is no more concrete than a game of monopoly, there are just more players.
Imagine a venn diagram with three concentric circles like a target. At the centre is the economy, the middle ring society, the outer environment. The economy can only subsist as a subset of a functioning society, just as society can only exist within a functioning environment.
Yes I know, economists think they can put a dollar value on life, and the economy is quite capable of bestowing harm and benefit. But money is not a real thing, if you press reset tomorrow the only actual effect is rich people lose their wealth, which bestows no real harm only damage to self-image. If you don't agree, consider this - at least 12 trillion has already been lost from the US economy due to covid-19. Where has it gone? It only existed as a measure of people's aggregate confidence in the future. If they are deserving of it they will soon build it back up - the economy will come roaring back as soon as we let it. The problem of course is those in power are those with the capital. They won't press reset and the rich will try to push their losses onto others. But the longer this goes on the more radical the solution will need to be.
Human life and health is real and will be treated as such, as it has been since before money was conceived and will be after it has been forgotten.
Like GME I'm actually optimistic - as this becomes the only issue for huge sections of society I expect a vaccine will be developed and distributed in record time. The team that create it will be set for life with both status and wealth.
JB, funny I've always held roughly the same view of money and the economy as that you've described. I remember arguing for this when I was in my early twenties, and climate change was first becoming widely debated. My point then was something along the lines:
1. global warming is caused by humans and is 'real';
2. money is a human construction and is 'illusory';
3. arguments against taking drastic action on global warming are, broadly speaking, that it will be too expensive to make drastic changes;
4. therefore in my mind the way to fix climate change quickly is to temporarily dispense with the illusory construct of money and just build new tech and make whatever changes needed.
The problem with that theory is everyone has to agree, and it seems to takes an extremely 'real' threat of mass loss of life to realise what's real and what's illusion. As long as one group of humans have power derived from (illusory) wealth then there seems to be an insurmountable obstacle to doing away with the illusion.
Going to be *interesting* (understatement, obvs) to see if sufficient political will exists to press the 'reset button'.
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Is this where we start burning money Adam? Is Bill Drummond really an economics genius....? If we all do it at the same time will it work?? It’s a nice idea and I get what your saying even though on this occasion I’m sober. As Gav says it’s not gonna pay anyone’s mortgages and even if this changes the world forever I’ll put everything I have on it not bringing capitalism down as our chosen system. Everyone’s money worries are about to get very real.
I don't expect it to bring down capitalism. I do expect an enormous fudge to take place in the world's accounts that will make the money tree used to bail the banks out look like a sapling. What's interesting is that this time it will have to directly benefit the common man.
Indeed. It's a damn good job money isn't real.
I understand your point and for the wealthy it isnt
Hmm, I'm not sure you do! My point is that it is only the wealthy for who money is most real. If you don't have any you can't be harmed by it becoming worthless. We are already feeding the poorest through foodbanks not the economy.
The question for governments is how they finance the poor without devaluing the rich - although the markets are doing a pretty good job of that already.
Be interesting to hear Andy P's thoughts on what we might learn from Weimar Germany, my initial thought is that such an experience may have been the bedrock for their more recent success.
I have no idea what your on about then and totally disagree. Money is very real for those who dont have a lot of it. Only those who have none and thopse who have more than they need could say it isnt real.
Anyway far to deep for me, will leave that to the phlosophers among you all and concentrate on the practicalities.
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Perhaps we should have a thread split? Maybe resurrect the corpse-munching one?
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Conversely the economy is entirely a product of our imaginations and has no unbreakable link to reality.
Could you please explain what you mean by "the economy"?
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Could you please explain what you mean by "the economy"?
Good question. I suppose that's a bit of a sloppy use of the term. I mean the modern financial systems and all the things ascribed a monetary value that would disappear were we to revert to a barter system. For example the UK financial sector is currently ten times the size of our GDP, and the world's shadow banking system is bigger than the entire commercial banking sector and twice the GDP of Earth. I used to think of banking profits as the froth on top of the boiling pot economy. Only it seems there's now a lot more froth than water.
I am heartened today.
That's great news mate. :2thumbsup:
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Could you please explain what you mean by "the economy"?
Good question. I suppose that's a bit of a sloppy use of the term. I mean the modern financial systems and all the things ascribed a monetary value that would disappear were we to revert to a barter system.
So, a couple of things I don't get here. My time and yours are both ascribed a monetary value. Are you saying that should disappear, ie I should work for free?
And that use of the word "revert"... given that the very first writing we know about, back in 5000BC was writing down debts and repayments, in terms of money or at least "things owed", are you sure that much reverting would really occur? I have some eggs but want potatoes, you have some potatoes but want salsa classes... unless you're willing to go cheek to cheek and get trodden on, we're going to be needing some sort of money, no?
For example... the world's shadow banking system is bigger than the entire commercial banking sector and twice the GDP of Earth.
I'm not a finance guy so don't really understand this. If Earth's GDP is the sum of all goods and services on Earth, and the shadow banking system is lending capital produced on Earth, how come it's bigger? I did check, apparently world GDP is $80 trillion and the shadow banking system is worth $52 trillion, so it might not even be correct, but if it was, how does that work?
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So, a couple of things I don't get here. My time and yours are both ascribed a monetary value. Are you saying that should disappear, ie I should work for free?
No, as you say in your next line labour can be bartered and was certainly one of the first things to be traded.
And that use of the word "revert"... given that the very first writing we know about, back in 5000BC was writing down debts and repayments, in terms of money or at least "things owed", are you sure that much reverting would really occur? I have some eggs but want potatoes, you have some potatoes but want salsa classes... unless you're willing to go cheek to cheek and get trodden on, we're going to be needing some sort of money, no?
Agreed, I wasn't suggesting we didn't need money. My point is the economy has mutated and grown from money being used as a trade token and store of value.
For example... the world's shadow banking system is bigger than the entire commercial banking sector and twice the GDP of Earth.
I'm not a finance guy so don't really understand this. If Earth's GDP is the sum of all goods and services on Earth, and the shadow banking system is lending capital produced on Earth, how come it's bigger? I did check, apparently world GDP is $80 trillion and the shadow banking system is worth $52 trillion, so it might not even be correct, but if it was, how does that work?
No, you've got it, I'm afraid. That's my point. That 'real' economy you and I partake in is now just the underwriting capital for the banks' activities, which exceed the real economy by at least a factor of 10 in the UK. Source (https://www.lrb.co.uk/the-paper/v40/n13/john-lanchester/after-the-fall) When they fuck up - as in 2008 - the costs of the big casino 'froth' economy are borne by the real one. This froth economy has a big influence on politics and is what I'm suggesting needs resetting.
Plus, as Pete pointed out, current vested interests are preventing progress on climate change. The fact that we need an economy does not mean the current one is the only one or the desirable one.
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So, a couple of things I don't get here. My time and yours are both ascribed a monetary value. Are you saying that should disappear, ie I should work for free?
No, as you say in your next line labour can be bartered and was certainly one of the first things to be traded.
Erm, but wasn't I saying that labour couldn't be bartered? As far as I know, economic historians haven't actually found any evidence of societies with widespread barter... surely what happens when there is much, much less money floating around is that labour and goods become traded via an intricate and inflexible system of social relations underpined by violence. Break those relations, and you need much more money - as happened in Europe after the 14th century.
And that use of the word "revert"... given that the very first writing we know about, back in 5000BC was writing down debts and repayments, in terms of money or at least "things owed", are you sure that much reverting would really occur? I have some eggs but want potatoes, you have some potatoes but want salsa classes... unless you're willing to go cheek to cheek and get trodden on, we're going to be needing some sort of money, no?
Agreed, I wasn't suggesting we didn't need money. My point is the economy has mutated and grown from money being used as a trade token and store of value.
But what if I want to move my spending and consumption to a different point in time? Today the government urgently needs to do something (fight the French) and you have some money to lend them from your profits (say you've developed some new and slightly more efficient farming techniques), so the govt issues as bond and now we have created a financial instrument. And then we can buy and sell those bonds on the assumption that the government is always going to be around to pay it back. This has been going on since the 17th century if not before, so it's probably pretty useful, right?
For example... the world's shadow banking system is bigger than the entire commercial banking sector and twice the GDP of Earth.
I'm not a finance guy so don't really understand this. If Earth's GDP is the sum of all goods and services on Earth, and the shadow banking system is lending capital produced on Earth, how come it's bigger? I did check, apparently world GDP is $80 trillion and the shadow banking system is worth $52 trillion, so it might not even be correct, but if it was, how does that work?
No, you've got it, I'm afraid. That's my point. That 'real' economy you and I partake in is now just the underwriting capital for the banks' activities, which exceed the real economy by at least a factor of 10 in the UK. Source (https://www.lrb.co.uk/the-paper/v40/n13/john-lanchester/after-the-fall) When they fuck up - as in 2008 - the costs of the big casino 'froth' economy are borne by the real one. This froth economy has a big influence on politics and is what I'm suggesting needs resetting.
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So let me get this right. I'm participating in the real economy only when I get money from my labour and use it to buy an iPhone. But I'm paying for the phone on a contract, spread out over years. And the phone itself cost a billion dollars or so to develop, which was also spread out over years on the prospect of a flow of profits, so aren't I also participating in the financial markets?
Surely the picture on size of financial markets compared to GDP is complex? According to the World Bank:
"Private credit to GDP differs widely across countries, and it correlates strongly with income level. For example, private credit to GDP in high-income countries is 103 percent in high-income countries, more than 4 times the average ratio in low-income countries...
"Financial depth, approximated by private credit to GDP, has a strong statistical link to long-term economic growth; it is also closely linked to poverty reduction... Averaging over 1980–2010, private credit of financial institutions was less than 10 percent of GDP in Angola, Cambodia, and Yemen, while exceeding 85 percent of GDP in Austria, China, and the United Kingdom...
"A very high ratio of private sector credit to GDP is not necessarily a good thing. Indeed, all the 8 countries with the highest ratios of private sector credit to GDP as of 2010 (Cyprus, Ireland, Spain, Netherlands, Portugal, United Kingdom, Luxembourg, and Switzerland, going from the highest to the lowest) had a major crisis episode since 2008.."
https://www.worldbank.org/en/publication/gfdr/gfdr-2016/background/financial-depth
So when I read things like: "Imagine a venn diagram with three concentric circles like a target. At the centre is the economy, the middle ring society, the outer environment. The economy can only subsist as a subset of a functioning society", aside from knowing that you've read Kate Raworth, I'm not entirely convinced it makes sense. If by "the economy" you mean the financial sector, even Yemen has one and it is not a functioning society. In fact 17th/18th century Britain, a country with no sanitation system, rampant diseases, occasional famines, near constant wars with its neighbours, pervasive personal insecurity ("stand and deliver!"), widespread corruption, a tiny civil service, limited communications, a country so rickety it once lost half of its capital city in less than a week, still managed to have a fairly spunky financial system.
Feel free to move this to the financial crash thread if more appropriate!
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Feel free to move this to the financial crash thread if more appropriate!
I'm not a mod but probably sensible.
Erm, but wasn't I saying that labour couldn't be bartered? As far as I know, economic historians haven't actually found any evidence of societies with widespread barter... surely what happens when there is much, much less money floating around is that labour and goods become traded via an intricate and inflexible system of social relations underpined by violence.
Interesting. I'm not convinced - any sources you can recommend? As per your last post, book-keeping preceded writing so what evidence would there be? I'm thinking about pre-agrarian hunter-gatherer societies principally.
aside from knowing that you've read Kate Raworth,
No I've not. Is that the premise of doughnut economics?
I'm not entirely convinced it makes sense. If by "the economy" you mean the financial sector, even Yemen has one and it is not a functioning society. In fact 17th/18th century Britain...
Clearly we've got very different definitions of society. I don't see any financial sector in chimp society. I can't see any room for argument on this, if there are no humans the economy will go with them, that's all I'm saying.
And then we can buy and sell those bonds on the assumption that the government is always going to be around to pay it back. This has been going on since the 17th century if not before, so it's probably pretty useful, right?
Pre-17th century, as I understand it, money was kept in a fairly tight box as a token of trade and a store of value. Both governments and religions forbade usury - Islam and the Catholic church still do with varying effects - so making money from money required actual work rather than just lending for interest - which was considered immoral. And usury for most of history didn't mean excessive interest, it meant any interest.
Post 17th century money was allowed out of that box and in many societies it became easier to make money from money than from work. The jury on that is still out, perhaps it enabled the industrial revolution but clearly it is a powerful engine of inequality. I'm not well informed on it but I'm planning to read some Piketty over lockdown.
Surely the picture on size of financial markets compared to GDP is complex?
No doubt. I'm not a financial guy either, but my understanding it has grown rapidly since WW2 and particularly in the neo-liberal era of the last 40 years.
From wikipedia:
To give an idea of the size of the derivative market, The Economist has reported that as of June 2011, the over-the-counter (OTC) derivatives market amounted to approximately $700 trillion, and the size of the market traded on exchanges totaled an additional $83 trillion.[9] For the fourth quarter 2017 the European Securities Market Authority estimated the size of European derivatives market at a size of €660 trillion with 74 million outstanding contracts.[10]
However, these are "notional" values, and some economists say that these aggregated values greatly exaggerate the market value and the true credit risk faced by the parties involved. For example, in 2010, while the aggregate of OTC derivatives exceeded $600 trillion, the value of the market was estimated to be much lower, at $21 trillion. The credit-risk equivalent of the derivative contracts was estimated at $3.3 trillion.[11]
Still, even these scaled-down figures represent huge amounts of money. For perspective, the budget for total expenditure of the United States government during 2012 was $3.5 trillion,[12] and the total current value of the U.S. stock market is an estimated $23 trillion.[13] Meanwhile, the world annual Gross Domestic Product is about $65 trillion.[14]
At least for one type of derivative, Credit Default Swaps (CDS), for which the inherent risk is considered high, the higher, nominal value remains relevant. It was this type of derivative that investment magnate Warren Buffett referred to in his famous 2002 speech in which he warned against "financial weapons of mass destruction".[15] CDS notional value in early 2012 amounted to $25.5 trillion, down from $55 trillion in 2008
I'm far from convinced we need derivatives at all, but I'm all ears.
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Where the line between the second and third type should be drawn is open to debate but - as Sean says - is very complicated when you start looking closely at it.
Sure. What are the benefits to society of the more esoteric sectors like derivatives? Liquidity? Or is just profit for bankers?
any more than, say, the revenues of a small business should be close to the value of its assets.
I can see how that works for a business because revenues are derived from activities that may or may not require assets. But finance is broadly either charging interest or placing bets isn't it? Which requires some capital to provide underlying security? You can't play in a casino without some money.
As to the "correct" relationship between GDP and the scale of a country's financial system
Isn't that only due to globalization? What about the world economy as a whole? As I understand it a bank can lend up to, say, 7 or 8 times the amount of money it actually has. Which is fine as long as you are confident in the level of risk involved. But as the financial sector becomes more complex, more globalized, it's harder to understand when it has over-extended itself.
Which to get back to the original point of the thread - how are we going to get ordinary people through a slump of economic activity as unprecedented as this? It seems like the world economy isn't set up for such events. Is it because we underestimated the risk and over-extended the finances again? What will we do, borrow against the future or print money (if there's a difference in the long run).
And in the bigger picture of the climate crisis it seems the current financial system is likewise unable to meaningfully account for the actual capital of nature - a functioning environment - which underwrites society. Time we explored other options?
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We have one big positive with the CV19 recession/global impact.
It’s affecting people - and killing many (but not - so far - a cataclysmic number) but it’s not destroying infrastructure. This is quite different from a tsunami, a big earthquake (eg west coast US), or a world war... where you end up with a huge amount of physical damage.
So when this is over - there will have to be an economic rebuild (and hopefully restructuring) but no need to spend trillions replacing cities etc... this means in my limited interpretation that a rebound or bounce may well be quick.
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You mean “yet” TT.
Wait for the riots to start.
Then it’ll be the conquest of neighbouring nations in quest of their treasure (toilet rolls and tea bags), before nuclear weapons are deployed when we finally run out of non-dairy whitener (milk will begone long before this point),
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Dear Mr Sunak
No VAT payments
No NI
No income tax.
Would be a good start. Why should we pay you all of the above to then be given or loaned back to us possibly when it’s to late.
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Couldn’t agree more Gav.
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Seems to be the best way to play the system - that seems to be set up to burden small business with more debt.
Is there anything to stop me setting up a company - getting all the loans I can from the govt. ‘spaffing’ the lot up a wall and then going bust?
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Would show up in next years accounts if you didn’t feed it back to the staff. If you couldn’t prove it they could claim it back through increased corporation tax.
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Soz Gav my post didn’t work very well - I meant it provides some life support for business (I think) but ends up just saddling with more debt... etc...
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Dear Mr Sunak
No VAT payments
No NI
No income tax.
Because you don't pay income tax, NI or have spare cash to buy luxury goods which attract VAT when you aren't getting paid after you have been made redundant or your zero-hours contract has been cancelled.
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Agree completely Gav, I've got a huge VAT bill due in two weeks, almost submitted it last week, now trying to work out how much of it is due on courses that won't happen.
Seems to be the best way to play the system - that seems to be set up to burden small business with more debt.
Is there anything to stop me setting up a company - getting all the loans I can from the govt. ‘spaffing’ the lot up a wall and then going bust?
If you can rent a small property you could potentially get a grant of £10,000. No doubt there will be spivs doing both right now.
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The brutal decline in economic activities that epidemiologists say is required make crashing stock markets inevitable, given that central banks’ policy of excessively cheap money and pooled liabilities caused an unsustainable bubble. Because they used up their ammunition at inopportune moments, central banks bear responsibility for the bubble that has now burst.
What is really needed are fiscal measures to save companies and banks from bankruptcy, so that they can recover quickly once the pandemic is over. Policymakers should be considering various forms of tax relief and public guarantees to help firms borrow if necessary. But the most promising option is a short-time work allowance. This approach, which has been tried and tested in Germany, compensates for the underemployment of the workforce through the same channels that are already used for unemployment insurance. Better yet, it costs hardly anything, because it prevents the losses that would follow from increased real unemployment. All countries should be replicating this part of Germany’s policy to prevent job losses.
https://www.theguardian.com/business/2020/mar/17/how-best-to-fight-the-economic-impact-of-the-coronavirus-pandemic
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You can already defer your vat payment. We are doing so.
You need to ring HMRC but it’s about a two hour queue.
We have a very large one too in April.
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You can already defer your vat payment. We are doing so.
You need to ring HMRC but it’s about a two hour queue.
We have a very large one too in April.
Misreading that on purpose I wonder how well HMRC will fare over the next few weeks/months.
One of the things that really pissed me off during austerity was they heavily cut HMRC... the last thing they should have done when evasion and avoidance was so high and they needed more tax revenue. Economic dogma extended to the level of idiocy.
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I I suspected they have not gone anywhere near enough and there’s loads of vague ideas, understandably as they are doing stuff never done before.
VAT was deferred but ultimately needs paying so most companies will have to take on loans in 12 months to do so.
Interest free loans ditto. Need paying off and start accruing interest in 12 months.
Payment of 80% of salaries. Sounds like it’s only for staff not working, I guess designed for all the businesses they have just shut down. Does not account for the fact that most businesses are going to be performing badly due to the situation but still working. I need more detail on this before I can pass judgement.
I guess it gives me comfort that if we have a true lockdown and we can’t work they will pay a good chunk of our costs.
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Extraordinary measures though. It just shows how serious this all is and how long it’s likely to go on for.
I can’t imagine the mental backflips that Sunak, a lifelong free market neoliberal (ex-Goldman’s and hedge fund manager) has gone through in the last 72 hours. There’ll be more coming I’m sure.
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We've now closed for the foreseeable. First hospital to have arrivals exceed capacity in London yesterday. I think we're less than a week away from full lockdown now.
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Extraordinary measures though. It just shows how serious this all is and how long it’s likely to go on for.
I can’t imagine the mental backflips that Sunak, a lifelong free market neoliberal (ex-Goldman’s and hedge fund manager) has gone through in the last 72 hours. There’ll be more coming I’m sure.
His mind must be going through some serious pummelling, but at least its getting there. Interesting that due to events, we effectively did have ended up with a Jeremy Corbyn government...
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I still dont think we will go that far. Localised maybe.
I also have no idea what a lockdown is. Ireland is supposed to be in one according to the media but all construction sites open.
Our Spanish supplier of BMUs delivered to us successfully and is working in Spain.
If we can still work it does not concern me.
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In most places it means leaving the house for work (unless can work from home), food, pharmacy, hospital only. Exercise is a maybe depending on which country but driving to the crag would be out.
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We should know soon, within the next week or two at most, whether or not the European 'democratic' version of full lockdown is effective at reducing transmission of covid to the levels required to stop the increase in infections. I suspect the modellers already have a pretty good handle on what the answer's likely to be.
If it doesn't prove effective what do people think would be the next step?
Stop trying to fully lock down and instead move to the original 'mitigate' policy where vulnerable are locked down and the rest are encouraged to social distance - i.e. the current situation in the UK, or
Increase lock down to a Chinese level of enforcement.
Wondering how the wage underwriting is going to play out - there'll need to be an incentive to work, otherwise people can sit at home watching netflix on 80% pay while their colleague works full time for only 20% extra.
It would be a good opportunity for the gov to 'requisition' those without work, as a volunteer force for delivering food to vulnerable and other vital tasks. Kind of a national volunteer force paid by government. Bit like how the territorial army are still employed by employer but paid for by the government
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I think the free marketeers are horrified because now it’s not just socialism for the banks and stock markets, it’s socialism for everybody.
Although I’m sure the ‘trickle up’ will be truly gravity defying!
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I saw a video today of a Chinese Red Cross guy speaking to the Italians. He was very critical of their 'lax' lockdown. It's no secret what needs to be done. The financial hit can be short and sharp or you can try to delay and end up with a bigger one.
I daresay the columns of army trucks taking bodies away for burning will have focussed their minds. Will we need that too?
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It would be a good opportunity for the gov to 'requisition' those without work, as a volunteer force for delivering food to vulnerable and other vital tasks. Kind of a national volunteer force paid by government. Bit like how the territorial army are still employed by employer but paid for by the government
The jarring clash between the words "requisition" and "volunteer" notwithstanding, on the face of it a good idea. Why not do it in "peacetime" too?
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Ha, yeah I'm typing without too much thought for exact wording but yeah 'requisition' and 'volunteer' are at odds. Hopefully you get the picture of what might be possible given a government-funded workforce of millions organised into their company groups and set to work doing useful tasks.
Why not in 'peacetime'? Well I suppose we already do to some degree but on more a charitable footing than government-funded. I don't have an ideological view on it. Just pointing out that this moment is an obvious opportunity to do something pragmatic.
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We've now closed for the foreseeable. First hospital to have arrivals exceed capacity in London yesterday. I think we're less than a week away from full lockdown now.
Sorry you’ve had to close JB. We (like many others) have been deep into contingency planning all week. 100 employees. Working out plans and scenarios. It’s serious.
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Ha, yeah I'm typing without too much thought for exact wording but yeah 'requisition' and 'volunteer' are at odds. Hopefully you get the picture of what might be possible given a government-funded workforce of millions organised into their company groups and set to work doing useful tasks.
Why not in 'peacetime'? Well I suppose we already do to some degree but on more a charitable footing than government-funded. I don't have an ideological view on it. Just pointing out that this moment is an obvious opportunity to do something pragmatic.
Yes I got the picture! Forgot the winky thing :-)
I agree with the concept of your idea. I think the general point for discussion I wanted to make (which I kept in my head!) was; why is it we need such a huge crisis to raise ideas like this up the flagpole for consideration? For e.g. unemployment benefits are next to nothing. and those on them often scapegoated as scoungers. Why not have the government keep the current benefits for actual scroungers, but then on top also guarantee work to anyone who wants it at national living wage doing whatever needs doing? They could even allow people to leave with no notice if they had another job offer so that it "didn't interfere with the free market". It would increase productivity, give people a chance to work if they wish, and actually help them back into the private sector a lot more effectively than signing in once a week (evidence of work ethic, references etc.). It would also naturally enforce the national living wage nationwide without having to legislate for it via "market forces". I know you have no ideological position, but those in power do (I include the right wing press as a large part of this), hence why these pragmatic *at any time* ideas don't get an airing....
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I can’t imagine the mental backflips that Sunak, a lifelong free market neoliberal (ex-Goldman’s and hedge fund manager) has gone through in the last 72 hours. There’ll be more coming I’m sure.
Maybe...For those who are self-employed (I am) the only option as I see it is Universal Credit to a value equivalent to Statuatory Sick Pay = £94 / week (£407/month). Compare to employed people getting subbed up to £2500/month max? Also seems to be an issue of eligibility - UC not currently allowed for those with over £16K in savings (not me btw!). Seems to be a situation whereby your average self employed rope access tech whose fairly decent monthly wage is now replaced by £407/month max or £0 if they have put a good amount of money aside for whatever reason. Whereas if you're employed on £80K a year with a million in the bank you can get £2500/month. Does seem a strange situation? I can sort of half see some logic if I squint - the self employed are meant to be making a life choice to look after themselves so are left to the wolves. But on the other side everyone else now has less money to spend, social distancing makes some discretionary work impractical (plumber doing domestic bathrooms?), businesses postponing investment worrying about the future. Any thoughts? Not decided myself but then I do have some savings and no dependents. Suspect if I was looking after a young family I might feel differently...
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I guess the subbing of employees allows businesses to reduce their overheads to a point whereby the business is as dormant as it possibly can be, with the aim of hopefully avoiding the entire retail, leisure and hospitality sectors going to the wall within the next few months.
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@nigel lots of chat about this on the radio this morning. 5 million self employed affected. Suspect he’ll have to sort this out soon.
The easiest way would have been 2 weeks ago to say some sort of universal payment to everyone would happen. Instead we’ve had this tiered approach.
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@nigel lots of chat about this on the radio this morning. 5 million self employed affected. Suspect he’ll have to sort this out soon.
The easiest way would have been 2 weeks ago to say some sort of universal payment to everyone would happen. Instead we’ve had this tiered approach.
Haven't heard / read the news yet but its no surprise there's chat, its a lot of people affected. They do seem to be edging towards some sort of Universal Basic Income, hopefully we'll get there for everyone's sake. Like Falling Down said, its no surprise its taking a Tory government a bit of time to complete the necessary mental backflips. Even Trump is talking in these terms now though...
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Smart people who know things talking.
https://www.talkingpoliticspodcast.com/blog/2020/227-adam-tooze-on-the-crisis
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Habrich - Andy's wife is seriously ill in hospital. It might just be me being overly sensitive but every time he posts something remotely political or economically related you almost always respond with a pointed remark or dig. He just shared a podcast link that's all. I would have thought that we might try and be a bit more civil to one another during these times.
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Probably a bit basic for some of you but interesting in light of some this discussion:
Sunak, like chancellor Alistair Darling in 2008, keeps saying “the economy will bounce back” because it’s fundamentally sound. And that’s how most people think of the shocks we’ve experienced in our lifetime. To the ordinary person it appears as if there is a “real economy” of supermarkets, coffee bars, hospitals and universities – and above that a barely tangible financial economy dedicated to handling risks and generating large rewards for the rich, which occasionally goes wrong.
During the 2008 crisis it appeared as if this financial “roof” collapsed onto the building that was supporting it, but the building – though it suffered damage – remained stable and the roof was rebuilt. The problem is, by the same analogy, this time it’s not the roof collapsing, it’s the foundations.
Capitalism, like all previous economic systems, is built on people’s work. We are compelled to get out of bed, cram ourselves into public transport, obey the instructions of managers and the discipline of the clock. And when it’s over, even as we huddle together in the pub, or play five-a-side or go out to dinner, we’re still generating returns to capital invested by someone else.
And though the epidemic will be temporary, the resulting disruptions will not. Because the finance system is not actually a “roof”: it has, in the space of 40 years, become the supporting structure of capitalism itself.
Every aspect of human life, in a developed society like our, is “securitised”. That is: my gym membership fees, the takings at my local pub, the profits of Starbucks, the bus and tube fares I pay – all are wrapped up into financial instruments into which a complex network of banks, hedge funds, insurance firms and pension funds invest in order to generate profits.
If the gym membership is cancelled, if Starbucks makes a loss, if the pub closes and, above all, if the worker does not go to work, the entire financial system will come under strain – and in ways we cannot predict because more than half of it exists in the so-called “shadow banking system”, a barely regulated and opaque network that has amassed $52trn in assets since the 2008 crisis. These “assets” are in fact just the expected profits made by all the restaurant chains, insurance companies, airlines etc – which are about to go bust.
Paul Mason in The New Statesman.
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Well it would appear I timed the world's worst job change. Got offered a new (much better) job about 3 weeks ago, and finished up at my old place on 13th March (date of Boris' "we need to level with the public" speech).
I wasn't due to start new job till 6th April (their next available "bootcamp" for new starters). So, happy days I thought - a few weeks off, get stuff done on the house snagging list, climb myself back to fitness etc, generally de-stress.
How wrong I was. I managed all of a day of freedom, then my son had a slight (but over the limit) fever at nursery, triggering 14 days of self isolation for the whole family. Then, my new employer called to say that while they definitely still want me, given circumstances they can't commit to me starting until mid-July, and even that is a "wait and see".
Only positive is that with schools now closed, and a teacher as a partner I can at least be here to sort the kids without having to juggle working from home in a brand new job at same time.
Fortunately we have always been pretty prudent financially, so thankfully we have a decent contingency fund to draw off.
No idea what to do in meantime though. Just take the time, "enjoy" more time en famille, or maybe go help out at Tesco stacking shelves or on till. It won't pay big money but it'd keep us topped up.
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New site re the support offered to companies.
https://www.businesssupport.gov.uk/coronavirus-business-support/
Looks pretty straight forward at minute in relation to the job retention scheme that is most pertinent to me, and probably other employers too.
Thought it might have been a slow complex thing to sort as with most gov stuff but guess not b
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Well it would appear I timed the world's worst job change. Got offered a new (much better) job about 3 weeks ago, and finished up at my old place on 13th March (date of Boris' "we need to level with the public" speech).
I wasn't due to start new job till 6th April (their next available "bootcamp" for new starters). So, happy days I thought - a few weeks off, get stuff done on the house snagging list, climb myself back to fitness etc, generally de-stress.
How wrong I was. I managed all of a day of freedom, then my son had a slight (but over the limit) fever at nursery, triggering 14 days of self isolation for the whole family. Then, my new employer called to say that while they definitely still want me, given circumstances they can't commit to me starting until mid-July, and even that is a "wait and see".
Only positive is that with schools now closed, and a teacher as a partner I can at least be here to sort the kids without having to juggle working from home in a brand new job at same time.
Fortunately we have always been pretty prudent financially, so thankfully we have a decent contingency fund to draw off.
No idea what to do in meantime though. Just take the time, "enjoy" more time en famille, or maybe go help out at Tesco stacking shelves or on till. It won't pay big money but it'd keep us topped up.
That's shit timing. Maybe try to work at a local veg box supplier or something?
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New site re the support offered to companies.
https://www.businesssupport.gov.uk/coronavirus-business-support/
Looks pretty straight forward at minute in relation to the job retention scheme that is most pertinent to me, and probably other employers too.
Thought it might have been a slow complex thing to sort as with most gov stuff but guess not b
We already applied, this morning. Took about five minutes through the Torbay Council site.
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Good luck 3xT and all small business owners.
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New site re the support offered to companies.
https://www.businesssupport.gov.uk/coronavirus-business-support/
Looks pretty straight forward at minute in relation to the job retention scheme that is most pertinent to me, and probably other employers too.
Thought it might have been a slow complex thing to sort as with most gov stuff but guess not b
We already applied, this morning. Took about five minutes through the Torbay Council site.
Just need to actually be told to stop work rather than vague statements and we will be in it.
If not I am going to have to start payoffs which I really don’t want to do.
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Bad Luck TTT. One of my ex colleagues is in the same boat, except he hasn't got a "definitely still want me".
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New site re the support offered to companies.
https://www.businesssupport.gov.uk/coronavirus-business-support/
Looks pretty straight forward at minute in relation to the job retention scheme that is most pertinent to me, and probably other employers too.
Thought it might have been a slow complex thing to sort as with most gov stuff but guess not b
We already applied, this morning. Took about five minutes through the Torbay Council site.
Just need to actually be told to stop work rather than vague statements and we will be in it.
If not I am going to have to start payoffs which I really don’t want to do.
Aren't you the business owner? If so why do you need someone to tell you to stop?
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New site re the support offered to companies.
https://www.businesssupport.gov.uk/coronavirus-business-support/
Looks pretty straight forward at minute in relation to the job retention scheme that is most pertinent to me, and probably other employers too.
Thought it might have been a slow complex thing to sort as with most gov stuff but guess not b
We already applied, this morning. Took about five minutes through the Torbay Council site.
Just need to actually be told to stop work rather than vague statements and we will be in it.
If not I am going to have to start payoffs which I really don’t want to do.
Aren't you the business owner? If so why do you need someone to tell you to stop?
I understand your reluctance GME.
We went before we were pushed, but that’s because we were an obvious risk and the staff were on board and even grateful (one of our lads has a girlfriend with a serious autoimmune condition).
It was bloody hard and we lost a lot of sleep because of it. We actually, mainly, live on Polly’s part time salary (estate/lettings agent) and the rent from another house. I had already withdrawn from the business, intending to go back to the Royal Navy for a while.
My job start date is on hold, until further decisions are made, our tenant has chronic COPD and the agents shut down yesterday; so we very much dependent on the government making good on their promises.
So, yes, these are tough choices and not to be made under peer pressure alone. Follow the guidance, as best as you can interpret it and you are beyond blame.
If you have real, nagging, doubts about your choice, youmade the wrong choice. Change it.
That is all that can be expected, by anyone.
There will be vigilantes and hindsight “experts”.
They can go swivel.
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Oh yeah.
Screwfix and Toolstation are both shut down today, on line and physically.
Screwfix looks temporary, but the Toolstation wording looks more permanent.
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New site re the support offered to companies.
https://www.businesssupport.gov.uk/coronavirus-business-support/
Looks pretty straight forward at minute in relation to the job retention scheme that is most pertinent to me, and probably other employers too.
Thought it might have been a slow complex thing to sort as with most gov stuff but guess not b
We already applied, this morning. Took about five minutes through the Torbay Council site.
Just need to actually be told to stop work rather than vague statements and we will be in it.
If not I am going to have to start payoffs which I really don’t want to do.
Aren't you the business owner? If so why do you need someone to tell you to stop?
If i stop on my own accord but sites continue i am in breach of contract.
If i shut shop i will have to pay people off, site lads, unless i can take up the governments offer to pay 80% of there salaries but to do so i think we will have to show i had legit reason to get rid of them, if i can still work why do i need to pay them off.
Our legal advice is we need to work until we have been stopped.
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What I find baffling about the current scramble to come up with a coherent response to this pandemic is that none of it seems to have been gamed out in advance, and it's having to be made up as we go along with rushed legislation and numbers seemingly plucked out of thin air. Whether that's the overall measures to control the spread (e.g how to define essential work etc), the emergency legislation to provide extra powers (copy and paste rush job anyone?), mechanisms to avoid a complete economic meltdown (e.g. the job retention scheme), or avoiding people having to choose between health or poverty (the yet-to-be announced financial help for the self-employed).
I get that each pandemic will have slightly different characteristics, and the government of the time will react differently, but surely the general response would be very similar? And has no-one at the treasury or HMRC really ever been tasked with looking at what a system to cover self-employed workers under circumstances such as this would involve??
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Gme I'm not under any illusions there's an easy answer.
Situation at our place is I just got informed by the client that one of the two jobs we were supposed to be starting and for which I've been making arrangements for labour /equipment has been postponed. Because in the current climate it can't be justified as essential work. Quite right that it can't. I'm just hoping they decide the same about the other job supposed to be starting next week. Reading between the lines, there are plenty of people among our clients (and in my own group) who are trying to justify these projects continuing because it justifies their job.
In construction and industrial workplaces right now, from the point of view of what action is potentially most damaging to health it's blatantly ridiculous to justify anything but a skeleton maintenance activity of critical infrastructure as essential for the next couple of months at least. That leaves looking at it from the perspectives of economics or legal obligations. Totally understand things look different from those two perspectives. Economically, the government are hopefully about to close down that justification for people continuing work when they announce today or tomorrow the financial aid for self-employed. So that will be a big chunk of construction workers no-longer justifiable. We're already losing people in our group who are refusing to come in because the don't consider it safe to do so, I can't fault their reasoning. Legally.. cockroaches.
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Oh yeah.
Screwfix and Toolstation are both shut down today, on line and physically.
Screwfix looks temporary, but the Toolstation wording looks more permanent.
Screwfix are still doing click &collect and delivery.
But Toolstation is closed altogether.
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Bad Luck TTT. One of my ex colleagues is in the same boat, except he hasn't got a "definitely still want me".
Thanks - I really, really hope we can make it work. We should be able to sit this thing out, and then assuming the world us going back to normal-ish in summer pick my job up then.
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What I find baffling about the current scramble to come up with a coherent response to this pandemic is that none of it seems to have been gamed out in advance, and it's having to be made up as we go along with rushed legislation and numbers seemingly plucked out of thin air. Whether that's the overall measures to control the spread (e.g how to define essential work etc), the emergency legislation to provide extra powers (copy and paste rush job anyone?), mechanisms to avoid a complete economic meltdown (e.g. the job retention scheme), or avoiding people having to choose between health or poverty (the yet-to-be announced financial help for the self-employed).
I get that each pandemic will have slightly different characteristics, and the government of the time will react differently, but surely the general response would be very similar? And has no-one at the treasury or HMRC really ever been tasked with looking at what a system to cover self-employed workers under circumstances such as this would involve??
I think it was gamed and planned out, or at least “Pandemic” was. I think this one has wrong footed everyone.
“Stay in doors or you will die” would have been a relatively simple sell and straightforward response. Make your pandemic too specific, too selective, too broad a range of symptoms and this is what you get.
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All our site operations closed down as of today. Will need to go to a few to secure materials etc.
Crossrail shut, airports shut, HS2 shut. We risk assessed our works under the latest guidelines and reluctatly felt it was not possible to continue.
All the lads furloughed and all office staff working at home.
6-8 weeks minimum of zero income for the business when we normally invoice 750k a month. Going to be interesting.
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Do you know how you got your lads 'furloughed' status? I'm trying to push it along for some employees but the HMRC portal doesn't seem to be up and running yet?
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Do you know how you got your lads 'furloughed' status? I'm trying to push it along for some employees but the HMRC portal doesn't seem to be up and running yet?
It wasn’t this morning, I planned to try again tomorrow.
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It’s not up and running yet. We pay monthly in advance so they are paid until 31/3.
You need to put it in writing to them and then you pay them as normal but claim it back.
We have a bit of info that it will be as simple as that but I will believe it when I see it.
Will let you know if I find out more.
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Deloitte have a good Document relating to it but I only have it as a PDF and can’t link on here.
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Would be interested to read that, have pm'd you.
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Erm, but wasn't I saying that labour couldn't be bartered? As far as I know, economic historians haven't actually found any evidence of societies with widespread barter... surely what happens when there is much, much less money floating around is that labour and goods become traded via an intricate and inflexible system of social relations underpined by violence.
Interesting. I'm not convinced - any sources you can recommend? As per your last post, book-keeping preceded writing so what evidence would there be? I'm thinking about pre-agrarian hunter-gatherer societies principally.
Apologies for the late reply to your question, anyhow here is an article on the barter economy:
https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/
I had a quick look around and found a few papers that suggested barter was a thing in modern economies during periods of breakdown, particularly for Eastern Europe in the early 90s, ie they knew what a functioning financial system was, they needed it, but at that point they didn't have one. I don't find that particularly encouraging.
I'm not entirely convinced it makes sense. If by "the economy" you mean the financial sector, even Yemen has one and it is not a functioning society. In fact 17th/18th century Britain...
Clearly we've got very different definitions of society. I don't see any financial sector in chimp society. I can't see any room for argument on this, if there are no humans the economy will go with them, that's all I'm saying.
Chimps form groups for purposes of mating, hunting and rearing young but this isn't a society. To me, a society has two elements which animal groupings lack:
1) Fidelity to something non-physical, ie a set of beliefs or ideas. Religion, science, law, etc.
2) An apprecation that the society lasts longer than any one individual and will continue to exist after the individual's death. This is everything from heroism in battle to building the pyramids.
This isn't just amateur anthropology, but relates to my point: if you want to create stuff over long time periods, you need a way of moving consumption around in time. That's what financing does, at its most basic.
And then we can buy and sell those bonds on the assumption that the government is always going to be around to pay it back. This has been going on since the 17th century if not before, so it's probably pretty useful, right?
Pre-17th century, as I understand it, money was kept in a fairly tight box as a token of trade and a store of value. Both governments and religions forbade usury - Islam and the Catholic church still do with varying effects - so making money from money required actual work rather than just lending for interest - which was considered immoral. And usury for most of history didn't mean excessive interest, it meant any interest.
Post 17th century money was allowed out of that box and in many societies it became easier to make money from money than from work. The jury on that is still out, perhaps it enabled the industrial revolution but clearly it is a powerful engine of inequality. I'm not well informed on it but I'm planning to read some Piketty over lockdown.
Here's a working paper from the BoE which looks at long run interest rates, back as far as the 14th century:
https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2020/eight-centuries-of-global-real-interest-rates-r-g-and-the-suprasecular-decline-1311-2018.pdf?la=en&hash=5197703E8834998B56DD8121C0B64BFB09FF4881
It's really long, but interest was definitely a thing: "I observe that the trend in “Carolingian Europe” aligns well with the “safe asset” and global trend posited: the average annual real rate between 1428 and 1499 was 5.6%..."
Clealry lending went on - that's what Jews did, isn't it - but with ineffective taxation systems, poor rule of law and a very slow growing economy, it was just hard to move spending around in time.
I would also take issue with the phrase "making money from money". Investment is not that easy (buy to let landlords in the UK excepted). You need to pick things which are definitely going to make a profit, and even if you get that right, there's risk involved - your ship full of pepper might sink on its way back from India, or consumer taste might suddenly change, or there could be a drought, whatever. I'm sure Andy has a much better grasp of the risk to reward ratio of early modern investors, but it investing isn't just a black box of putting money in and money coming out (okay it kind of was for Jane Austen's characters but that society sat on the back of something). Someone somewhere has to make decisions about how those investements are deployed.
I wonder if part of the problems about the "do we need money" type of conversation is that people get hung up on money when what is equally or more important is prices. Changes in price - ideally the real price, not the nominal one - are what motivates us to change our behaviour and it is prices that act as really efficient aggregators of information.
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Apologies for the late reply to your question, anyhow here is an article on the barter economy:
https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/
Thanks for that reply and those links. A lot to digest there, and clearly I'm in good company vis poor assumptions on barter! But that piece does illustrate very nicely the point I was trying to make, which is not that the alternative to money is barter, it's that there are alternatives:
But even though money has been around for a long time, humans have been around for hundreds of thousands of years longer, and it may be a mistake to imagine that modern economics reflects some sort of primordial human nature.
“Economic theory has always got to be historically bounded,” Beggs says. “I think it’s a mistake to think you’ll find the workings of modern money by going back to the origins of money.”
Graeber asserts that the barter myth implies humans have always had a sort of quid pro quo, exchange-based mentality, since barter is just a less efficient version of money. But if you consider that other, completely different systems existed, then money starts to look like less of a natural outgrowth of human nature, and more of a choice.
Interesting also that she references 'trade' among indigenous australians - having done a bit of reading on them it has always struck me that not only did they not have money, they had no use for money. Each individual was allocated not only the skills to live (and typically live well) in the land, but also certain access rights to the land. As these rights were both strictly linear in nature and associated with totemic clans rather than tribes, they made boundaries as we understand them impossible. The only thing they 'traded' was knowledge, typically with a symbolic object being exchanged that conferred reciprocal rights. Violence was only resorted to when these inter-tribal promises were broken, whereas behaviour within the tribe would be encouraged via generally positive social pressure. So I'd take issue that non-monetary societies were 'inflexible and underpinned by violence' - it isn't supported by what I've read and could equally be said of modern economies. Once farming came along the only way they could be forced into work was either by taking their land rights away or by tricking them into debt.
1) Fidelity to something non-physical, ie a set of beliefs or ideas. Religion, science, law, etc.
2) An apprecation that the society lasts longer than any one individual and will continue to exist after the individual's death. This is everything from heroism in battle to building the pyramids.
This isn't just amateur anthropology, but relates to my point: if you want to create stuff over long time periods, you need a way of moving consumption around in time. That's what financing does, at its most basic.
Agree. But, as I hope your link and I've illustrated this doesn't inevitably lead to money. For me the culture created by aboriginal australians is one of the most impressive humans have created both in it's scope, success and longevity. But interesting you raise the pyramids - I guess the presumption would be a for such acts you'd require money. But (from a quick google) there is some evidence of a unit of account in ancient egypt but not currency - which 'symbolic and metaphysical reasons' prevented them from adopting.
How does this relate to the economy now? Well I'm not suggesting we could or should return to some pre-lapsarian state or even the land of little smallholders espoused by some on the green left. My beef is that (again, from your link):
For one thing, the barter myth “makes it possible to imagine a world that is nothing more than a series of cold-blooded calculations,” writes Graeber in Debt. This view is quite common now, even when behavioral economists have made a convincing case that humans are much more complicated—and less rational—than classical economic models would suggest.
My perception of our society is that with money we have made the mistake of confusing the map (the economy) with the territory (society). Every time we try to reduce value discussions down to money we ignore belittle other measures of worth and drivers of behaviour. Even economists agree that life is priceless (https://www.ft.com/content/e00120a2-74cd-11ea-ad98-044200cb277f), while of course attempting to price it. That end-of-life care may be subject to budgetary constraints doesn't make it a functioning market.
Changes in price - ideally the real price, not the nominal one - are what motivates us to change our behaviour and it is prices that act as really efficient aggregators of information.
It's clear to me that although we may treat money as a universal value system, it isn't. There are lots of real things it doesn't value and there seems to be no way the markets will prevent the economy from destroying the environment. So if it isn't a universal value system, what is it valuing? When we compare currencies, we can say their value is a reflection of the future of that economy. Within an currency, my belief is a monetary value expresses the potential to generate a return - in effect money values the potential to generate more money. Excel doesn't like circular references, and neither do I.
Here's a working paper from the BoE which looks at long run interest rates, back as far as the 14th century:
https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2020/eight-centuries-of-global-real-interest-rates-r-g-and-the-suprasecular-decline-1311-2018.pdf?la=en&hash=5197703E8834998B56DD8121C0B64BFB09FF4881
It's really long, but interest was definitely a thing: "I observe that the trend in “Carolingian Europe” aligns well with the “safe asset” and global trend posited: the average annual real rate between 1428 and 1499 was 5.6%..."
Wow, that's an interesting piece! Admittedly I didn't make it more than about 20 pages in and them skim-read - but for anyone following there's a very good interview with the author here https://www.mercatus.org/bridge/podcasts/02242020/paul-schmelzing-suprasecular-decline-global-real-interest-rates (https://www.mercatus.org/bridge/podcasts/02242020/paul-schmelzing-suprasecular-decline-global-real-interest-rates)
So the point I was trying to make was not exactly when interest began, but that for the majority of history it was considered immoral. There are snippets in here that allude to that:
but with very few exceptions, the embedded annual income streams are interest rate equivalents – hence repeated efforts by Church authorities to ban the practice
I'm interested as to why that was. It seems to apply across a broad range of religions and societies. Was it just a shallow prudism (cf sodomy) or were they aware of some deeper issue? Piketty's suggestion that it inevitably leads to inequality is challenged by this piece, but I suspect the debate will run.
I would also take issue with the phrase "making money from money". Investment is not that easy (buy to let landlords in the UK excepted).
Sure, I do have some personal experience here now I'm a moderately successful entrepreneur and that. But it remains that the easiest way to make a small fortune is to start with a large one. The only barrier to starting our company was the financial freedom to do so, and if you don't have sufficient spare capital you don't get a seat at the monopoly table (on the subject of which, I've always like the fact that Monopoly was originally 'intended as an educational tool to illustrate the negative aspects of concentrating land'). Having been 'lucky' enough to be educated at a top public school I remain confused as to why our careers advice didn't start by asking what we stood to inherit. Judging by my peers' progress it would have been very useful.
But what's really interesting to me from Schmelzing's BOE paper is that he can't really begin to answer why. Not only have we created this system that we have confused with both a universal value system, and much of the time society itself, but we've got surprisingly little idea of how it works, and even less control. I don't think it needs abandoning but I do think we need to look at our relationship with it. Right now, for once, we seem to be looking more at the territory than the map and that's surely a good start.
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Debt jubilee?
https://www.nakedcapitalism.com/2020/03/michael-hudson-a-debt-jubilee-is-the-only-way-to-avoid-a-depression.html (https://www.nakedcapitalism.com/2020/03/michael-hudson-a-debt-jubilee-is-the-only-way-to-avoid-a-depression.html)
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Not opposed in principle, but any idea how that would actually be usefully implemented? All I can imagine is its going to penalise anyone sensible/ careful while rewarding those who've been unwise or irresponsible. How would you pivot towards it without everyone rushing out with credit cards?
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I guess the only reward those wise enough not to have got into debt will get is not living in a dystopia.
Life’s not fair etc etc
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Good discussion JB (and Nigel, Sean).
Interesting to dig into the reasons behind why we attribute value and meaning to some things but not others. I think the point above - 'life's not fair' - is important to bear in mind at all stages!
You might come up with the most perfect system of organising a society of humans, without resorting to an illusory store of wealth/token of exchange. But the unfairness of life would probably find it out when exposed to enough alternative societies. Aldous Huxley's 'Island' basically - a perfect society organised along rational and fair framework, destroyed by chumps.
Aboriginals may have an amazing society but it was no match (not that they were trying to) for a bunch of capitalists who just took what they wanted.
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You don’t need chumps.
(They’re fucking irritating, mind you).
Natural disasters, random accidents and the odd Pandemic will do just as well.
Bring on the Robot Overlords.
Much better.
Discuss. 😱
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I’ll bite OMM.
I’m amazed some of the conspiracy theorists have not suggested this is actually a large scale software update in the matrix. That requires most of the world to be in their houses to successfully enable landscape 2.1.
😃
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I guess the only reward those wise enough not to have got into debt will get is not living in a dystopia.
Life’s not fair etc etc
Gave this some more thought on my daily trip to the park. I think you should to. Attractive as it may seem, it would help the wrong people and increase inequality. The very poorest have the least debt because they can't get credit. Those with the most debt are the most credit worthy, if we're sticking to individuals these would be the centrist dad demographic mortgaged up to the eyeballs with a big a house and a bunch of buy-to-lets.
For radical policies UBI (say 10k a year) would seem to be a far better way to level up from the bottom up without adding much for the better off.
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I was putting it up as a debating point, rather than advocating it completely.
However I do think the economy has been flooded with cheap credit to provide the means to spend as wages have been suppressed in real terms.
Rather than blaming poor people for getting into debt, it’s worth bearing in mind this behaviour is encouraged as consumerism is the neoliberal sweetener behind which the state is shrunk.
Servicing these debts is crippling a lot of middle-low income people. Surely the money would be better served in the real economy rather than disappearing as interest?
I mean it’s all hypothetical anyway as I’m sure we’ll just get another round of austerity.
Also agree UBI would be of great help.
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Debt is only meaningful net of income and wealth. Someone could have a 10th or 20th of the insignificant debt I hold and still be far more indebted than I am if they have zero meaningful income and wealth. The poor certainly do become indebted, in all kinds of ways. Nor should poverty and indebtedness be so easily ascribed to irresponsibility and a lack of wisdom.
In any case, I think a debt amnesty might be a momentary relief but it's no more than that.
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I mean it’s all hypothetical anyway as I’m sure we’ll just get another round of austerity.
Haven't been following the wider debate on here but I would think it'd be incredibly politically difficult for this Government to reinstate austerity, having previously very publicly brought it to an end before all this kicked off.
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Yes, but this has all kicked off. And now they’ve given god knows how much out in free money, which will ‘need paying for.’
Also the current government are the most demented collection of ideologues we’ve ever had in power.
Hopefully I’m wrong though!
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Also the current government are the most demented collection of ideologues we’ve ever had in power.
Boris a confirmed libertarian has ushered in state control and Rishi Sunak an ex-hedge fund manager has ushered the biggest state handout of all time.
Bearing in my mind your comments in the other thread would Corbyn and McDonnell have bent to reality in a National crisis where common sense would have required them to compromise ideology as quickly and decisively? (Answer is no BTW)
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Nor should poverty and indebtedness be so easily ascribed to irresponsibility and a lack of wisdom
That was not the point I was trying to make. For the record I don’t think that at all!
All I meant was that amongst my contemporaries some have chosen to be in more debt than others.
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Nor should poverty and indebtedness be so easily ascribed to irresponsibility and a lack of wisdom
That was not the point I was trying to make. For the record I don’t think that at all!
All I meant was that amongst my contemporaries some have chosen to be in more debt than others.
No, I believe you absolutely Adam. It was just really hard to let it pass, if only to clarify the point.
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McDonnell proposed a national investment bank with £500 billion behind it, so arguably there wouldn’t have to be an ideological shift in such circumstances, as the tools would already be in place to deal with it.
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Also the current government are the most demented collection of ideologues we’ve ever had in power.
Boris a confirmed libertarian has ushered in state control and Rishi Sunak an ex-hedge fund manager has ushered the biggest state handout of all time.
Bearing in my mind your comments in the other thread would Corbyn and McDonnell have bent to reality in a National crisis where common sense would have required them to compromise ideology as quickly and decisively? (Answer is no BTW)
You can’t be sure of that. That’s a guess.
I detest Corbyn and Bojo, but they might very well have done similar in the circumstances, since there seems little option.
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I guess what Shark was trying to say was that given some hypothetical disaster scenario where Labour were in power and were suddenly required to fuck over the poor and privatise the NHS while fellating the corporations, they might have found it harder to do so. But the Tories have always found it easier to compromise ideals for expediency.
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I guess what Shark was trying to say was that given some hypothetical disaster scenario where Labour were in power and were suddenly required to fuck over the poor and privatise the NHS while fellating the corporations, they might have found it harder to do so. But the Tories have always found it easier to compromise ideals for expediency.
I want video evidence of you saying that with a straight face.
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In what sense is Johnson a libertarian? It's an entirely impoverished term and yet he still doesn't deserve it.
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I want video evidence of you saying that with a straight face.
And let's not forget it's not that long ago that labour were in were during an unprecedented international crisis that required them to compromise their ideals. I thought they did ok*, and I'm fairly sure both the situation and the response would have been no better with the Tories in power.
* in Lanchester's words, what was done was both necessary and a disaster
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I want video evidence of you saying that with a straight face.
And let's not forget it's not that long ago that labour were in were during an unprecedented international crisis that required them to compromise their ideals. I thought they did ok*, and I'm fairly sure both the situation and the response would have been no better with the Tories in power.
* in Lanchester's words, what was done was both necessary and a disaster
I bet Bojo gets an easier ride than either Blair or Brown, though.
I can just imagine his crestfallen clown act, already.
Old ladies blathering on about how the “poor dear was overwhelmed and who wouldn’t be”.
Assuming there are any old ladies left.
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I guess what Shark was trying to say was that given some hypothetical disaster scenario where Labour were in power and were suddenly required to fuck over the poor and privatise the NHS while fellating the corporations, they might have found it harder to do so. But the Tories have always found it easier to compromise ideals for expediency.
Yes and colourfully put. And that’s why it is absurd to label them as ideologues (which is the description I was responding to) especially when the alternative we were asked to choose from were genuinely ‘demented ideologues’
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In what sense is Johnson a libertarian? It's an entirely impoverished term and yet he still doesn't deserve it.
Maybe I’m confusing it with libertine :lol:
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The what would Labour have done differently is quite interesting. And it’s all hypotheticals - but (and I’ll use a Cummings/Johnson favourite) they did it with a three stage plan. (Or 4 I’m not counting)
Don’t forget that over a period of a week to ten days. They first caved in on SSP. Then on business relief. Then small business relief. Then self employed people. And have still left all the zero hours people completely fucked -!and STILL have a 5 week wait for universal credit £££. They’ve done a lot - but do have most countries - as if they didn’t there would be total meltdown.
I would hypothesise that if Labour were in power the phasing would have been the other way around (a bit) starting with the people on benefits and zero hours and then working upwards.
Let’s not forget that whilst the chancellor has made big give away S - I’d argue he’s had no choice. Remember his budget speech - all that Stuff about statutory sick pay. That’s fecking chicken feed now in the big scheme of things.
Rail nationalisation? It’s basically prop up the companies or the trains stop running.
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I would hypothesise that if Labour were in power....
If we're hypothesizing about that, can I suggest that if Labour under Corbyn had introduced the (necessary) current social controls then the papers would largely be full of foghorn warnings about Gulags and Soviet-style control. So in some ways (and I can't believe I'm saying this!) we might be lucky to have the Tories in charge of this as they get a free pass on the "slippery slope to dictatorship" front from the media.
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TT,
Couple of things,
1. if Labour had phased support ‘from the bottom up (supporting zero hours employees before they supported businesses etc.) it would be little benefit if companies had fucked off all their employees because they weren’t seeing the support for their payroll come through sharpish. Supporting workers’ wages is no use if you’ve been laid off.
2. Not sure but fact check the 5 week UC. I thought the gov have agreed to fast-track an advance UC payment within the first week?
3. Also not sure but fact check the zero hours wage underwriting - from reading up on the scheme today I thought the job preservation scheme (I.e. the 80% wage underwriting) does cover zero hours employees?
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Hi Pete - the bigger point was that I think the emphasis of the bailout would have been different under a labour govt. but we’ll never know eh!
Tory or Labour got s would have both had the same economic tools/mechanisms to use - so there would be some similarity. But I’d bed the emphasis or what was implemented when to whom might have been different.
All moot now.
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This may have been posted before - but I thought this FT commentary summarised quite a lot of what has been discussed in this thread. And some other stuff.
https://www.ft.com/content/7eff769a-74dd-11ea-95fe-fcd274e920ca
Quite remarkable really that 5 years ago you’d have expected something like this being written in a socialist newsletter - not the FT. Incredible times.
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Link is for subscribers only
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I subscribed for a quid for one month and then cancelled.
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This may have been posted before - but I thought this FT commentary summarised quite a lot of what has been discussed in this thread. And some other stuff.
https://www.ft.com/content/7eff769a-74dd-11ea-95fe-fcd274e920ca
PSA:
Before posting paywalled links, please:
1) Copy the headline
2) Paste it in to Google news
3) Copy the Google news link in to your post.
It gets around the paywall, it saves everyone else from having to go through the same process and it saves people from discussing paywalls after every single article.
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Here's a musing..
Boris still hasn't recovered from covid19. The tories direction and purpose currently stems in large part from Johnson as front man and Cummings in the background.
My limited understanding of Covid19 is that there's a danger period going into the second week of illness, when you either recover or you risk going into the inflammation over-reaction, lung damage, rapid decline and ventilation, and 50/50 chance of not recovering. *I hope this doesn't happen (to anyone), below is just a musing of what could happen starting next week.
Jonhson's health starts declining next week and he doesn't recover.
Dominic Raab takes the reigns, but doesn't show strong leadership.
Tories flounder for the next month.
Starmer and other select Labour MPs invited to bolster government Covid effort. Proves successful.
Government of national unity formed, remains in place for next 12 months.
A tory government with the largest majority since 1987 never got to leave the starting blocks, stopped in their tracks by the death of its leader and the Covid pandemic.
Labour win next election.
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The thought occurred.
Think that’s the soft end of possible scenarios.
I think losing a head of state (HM not withstanding) would be catastrophic.
I wish the bugger had kept his hands in his pockets.
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Yes - looking at the numbers c.15-20% of those admitted to hospital don’t come out.
Much as I dislike him / I wouldn’t wish any harm to him and now is clearly not the time for anything bad to happen to him.
It does feel like the foot has come off the gas in the last week-ten days (testing, ventilators, Ppe). Dominic Raab eh. Trying to see an upside here...
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From what I can tell Lord Palmerston was the last UK Prime Minister to have died in office (1865), so the country would be in very unfamiliar waters. Much as I think he's a reckless and unreliable oaf, the last thing any country needs right now would be such an event.
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Candid nuts and bolts interview with the CEO of one of the UK’s largest car dealerships - how him and his team have reacted to events, where the business is now and what the outlook is.
Quite long and suspect probably not of sustained interest to most.
https://youtu.be/PIJ5Jk8JGC8
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I dont know, the system is pretty robust. Precisely because the PM doesn't (normally) have much power. If a Putin were to die though then there could be trouble.
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"PM can run country from hospital bed", says senior government minister. Not something I ever thought I'd read. During a huge national and international crisis like this I feel pretty uncomfortable thinking about decisions being made by anyone not working at full capacity. Which surely can't happen when you're so under the weather you end up in hospital!
Doesn't say much for his confidence in Raab if he feels better able to handle it while he's hooked up to a ventilator (yes, I know he probably isn't at that stage...yet)
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Another minister hits the finance headlines.
https://www.theguardian.com/business/2020/apr/05/rees-mogg-firm-accused-of-cashing-in-on-coronavirus-crisis
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Quality piece of journalism that. Thanks for posting.
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I'm surprised that anyone managed to get a news story out of "investors view large market movements as an opportunity to make money" :shrug:
(I also could tell if your post was sarcastic or not Tom? I'm assuming it was?)
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"PM can run country from hospital bed", says senior government minister. Not something I ever thought I'd read. During a huge national and international crisis like this I feel pretty uncomfortable thinking about decisions being made by anyone not working at full capacity. Which surely can't happen when you're so under the weather you end up in hospital!
Doesn't say much for his confidence in Raab if he feels better able to handle it while he's hooked up to a ventilator (yes, I know he probably isn't at that stage...yet)
There's not many harsher critics of Johnson than me.
But I think the country is safer with Johnson running things from his hospital bed right now than with greater roles being given to Raab or Gove.
I hope he makes a full and speedy recovery because I think more people will die if he doesn't.
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I'm surprised that anyone managed to get a news story out of "investors view large market movements as an opportunity to make money" :shrug:
(I also could tell if your post was sarcastic or not Tom? I'm assuming it was?)
Yeah, sarcastic. I’m not a fan of this type of yoghurt weaving lefty non story.
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Another minister hits the finance headlines.
https://www.theguardian.com/business/2020/apr/05/rees-mogg-firm-accused-of-cashing-in-on-coronavirus-crisis
Fuck me what an absolute load of nonsense, literally reporting "fund manager does job". The Guardian really does bark up the wrong tree sometimes.
And the quotes from Starmer and McDonnell are just as bad. They will both surely know that this is neither "taking advantage of this crisis" or "profit seeking from people's misery", but they've stuck their oars in because the soundbite is good and plays to the rich vs poor narrative they're so desperate to write; essentially they're contributing to fake news. Poor form in my opinion.
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Quality piece of journalism that. Thanks for posting.
:lol:
Investment company outed for buying low, with a plan to sell at a higher price in the future. Fuck off :o
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Another minister hits the finance headlines.
https://www.theguardian.com/business/2020/apr/05/rees-mogg-firm-accused-of-cashing-in-on-coronavirus-crisis
Fuck me what an absolute load of nonsense, literally reporting "fund manager does job". The Guardian really does bark up the wrong tree sometimes.
And the quotes from Starmer and McDonnell are just as bad. They will both surely know that this is neither "taking advantage of this crisis" or "profit seeking from people's misery", but they've stuck their oars in because the soundbite is good and plays to the rich vs poor narrative they're so desperate to write; essentially they're contributing to fake news. Poor form in my opinion.
This.
I invested a few grand last Thursday in two companies I've followed for years, as I felt there were bargain prices on offer in the current market fallout. Am I wrong to try to make my money work for me by doing that Offwidth?
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It may be a non-story and just stating what is essentially standard practice. But I can imagine it’s pretty disheartening for frontline nurses and carers to realise that while they’re working day in day out in an overstretched system barely able to cope, seeing some of their colleagues dying, and often not equipped with even the most basic PPE, at the same time some wealthy people with spare cash lying around are using it as an opportunity to make a bit more money. It may not be news, and it may not be wrong, but to me it still seems distasteful somehow.
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Isn't there a conflict of interest here though?
If someone who has so much early access to, or even agency over, the policies which will affect the markets is using that information to steal a march on other investors, then he's not just any 'investor.'
Or am I being naive?
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It may be a non-story and just stating what is essentially standard practice. But I can imagine it’s pretty disheartening for frontline nurses and carers to realise that while they’re working day in day out in an overstretched system barely able to cope,......
Sure. Then why publish it? And why post the link here?? If it's a non-story and disheartening (to some).
As for distasteful, I guess everybody is different. Distasteful to me would be celebrating about any opportunity this disaster creates. Seeing an opportunity and making use of it however, that's just rational (to me).
edit:Brutus Somebody's fool, that's a separate and valid point for market sensitive information. Knowing government policies in advance can give an advantage in markets, I don't know how Rees-Mogg's investing record aligns with potential conflicts.
But not for coronavirus. Nothing market sensitive in this event (ventilator companies, mask manufacturers, drug companies..?) - just a global pandemic that approached us in plain sight like a slowly-moving freight train approaching a stalled car.
edit edit: name!
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But they'll still be doling out massive contracts to specific suppliers in medical and pharmaceuticals etc in response to this. And it would help to know these sorts of things in advance, would it not?
Also, you've got the wrong Corbynite!
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It may be a non-story and just stating what is essentially standard practice. But I can imagine it’s pretty disheartening for frontline nurses and carers to realise that while they’re working day in day out in an overstretched system barely able to cope, seeing some of their colleagues dying, and often not equipped with even the most basic PPE, at the same time some wealthy people with spare cash lying around are using it as an opportunity to make a bit more money. It may not be news, and it may not be wrong, but to me it still seems distasteful somehow.
No I really don't think that's valid, as:
1. That's not what's happening; the story is inherently misleading as it implies people are exploiting the crisis when they're not, in fact pretty much all market participants will have lost a very considerable amount of money because of it (e.g. SCM's Global fund is down nearly 25% over the last month or so). The fund manager has a fiduciary duty to the shareholders/investors and if they weren't acting they'd be liable to them.
2. If those same NHS workers are participants in any sort of pension then it too will have lost a substantial amount of value, and the managers of the pension will now be doing exactly what SCM have said they're doing; looking for opportunities to make it back! This activity is in everyone's interests if they have used their money wisely and saved for the future. Should all those people just stop working (to the significant detriment of savers) just to show solidarity with the NHS?
3. Fund managers are typically remunerated based on the amount of assets they manage, so given the significant falls I mentioned earlier they will be being paid >20% less now than they were before (I know, heart bleeds, but actually margins in fund management have been under significant pressure for a while now and many firms were actually struggling before all this).
Don't get me wrong, there are innumerable issues with the financial services industry and the way it serves society and our economy, but "fund manager does job" is not one of them and this sort of story dog whistles to the politics of envy and simply distracts from real issues.
Isn't there a conflict of interest here though?
If someone who has so much early access to, or even agency over, the policies which will affect the markets is using that information to steal a march on other investors, then he's not just any 'investor.'
Or am I being naive?
Rees-Mogg is simply an investor in the company that runs the funds, he doesn't manage them or, as far as I know, have any involvement in their management. If he were using inside information to make investment decisions he'd be prosecuted under market rules, because that's illegal.
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Apols SF!
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It may be a non-story and just stating what is essentially standard practice. But I can imagine it’s pretty disheartening for frontline nurses and carers to realise that while they’re working day in day out in an overstretched system barely able to cope,......
Sure. Then why publish it? And why post the link here?? If it's a non-story and disheartening (to some).
Yeah agree with this. It's a story tailor made to incite the unjustifiable anger of those people. It's therefore the journalist and The Guardian who've behaved irresponsibly here.
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As for distasteful, I guess everybody is different. Seeing an opportunity and making use of it however, that's just rational (to me).
The point is that the people suffering most from
this crisis (poorly paid nurses, carers, over-occupied residences with no outside space and expected to stay inside 23hrs/day, people falling through the cracks of the government assistance) do not have the excess cash to exploit this opportunity.
The people who are giving up the most during this will come out of it worse off. The people giving up least have the opportunity to come out better off. That’s what’s distasteful to me.
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The people who are giving up the most during this will come out of it worse off. The people giving up least have the opportunity to come out better off. That’s what’s distasteful to me.
Yeah agree. And that's kind of my point, why publish this fake news when there are real and far more significant stories out there?!
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I can only guess the journo was sent to write a piece like this, but didn't know her arse from elbow. https://www.independent.co.uk/news/business/news/hedge-funds-short-selling-bank-of-england-andrew-bailey-financial-conduct-authority-a9440581.html
I don't see any real issue with going long at the mo, but short does seem to have some technical (feedback - hence BoE plea) and moral issues. Although I'd have thought it's a bit late?
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As for distasteful, I guess everybody is different. Seeing an opportunity and making use of it however, that's just rational (to me).
The point is that the people suffering most from
this crisis (poorly paid nurses, carers, over-occupied residences with no outside space and expected to stay inside 23hrs/day, people falling through the cracks of the government assistance) do not have the excess cash to exploit this opportunity.
The people who are giving up the most during this will come out of it worse off. The people giving up least have the opportunity to come out better off. That’s what’s distasteful to me.
Yes, See my previous point. Why publish this (non)story. Why link to this (non)story?? If not to incite bad feeling then what?
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Bradders and others have already made as good a point as needs to be made, but the article is wrong in a more fundamental way (as I see it, which might be wrong). The Guardian article implied that people were making money out of the crash caused by the pandemic. That's not strictly true though - they haven't made money out of the crash, they stand to make money during the recovery by being the ones to throw new money into the market when it is in the pit.
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Why publish this (non)story. Why link to this (non)story?? If not to incite bad feeling then what?
I didn’t.
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Yeah agree. And that's kind of my point, why publish this fake news when there are real and far more significant stories out there?!
I'm curious what people's definition of fake news is. In my opinion there's nothing fake about this. Is it newsworthy? Possibly not. Is it a chance to complain about the huge financial gulf between the Rees-Moggs, and 90% of the UK population? Probably. But most importantly, is it true? As long as the answer to that is yes, then it's not fake.
Or am I being too simple?
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Or am I being too simple?
No, I don't think so. The outrage may be a little over-leveraged, to coin a phrase, but the story is not untrue. It's not fake news. In fact, most things accused of being fake news (e.g. see Trump) are not in any sense fake. It's a phrase that is probably best avoided.
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Or am I being too simple?
No, I don't think so. The outrage may be a little over-leveraged, to coin a phrase, but the story is not untrue. It's not fake news. In fact, most things accused of being fake news (e.g. see Trump) are not in any sense fake. It's a phrase that is probably best avoided.
Sorry Andy I don't agree, two things:
1. The headline very clearly implies Rees-Mogg and the firm are "cashing in on coronavirus crisis". That is not true. See my previous post.
2. The article gives heavy weighting to quotes from Keir Starmer and John McDonnell, which again imply nefarious activity to "profit...from people's suffering" and taking "advantage of this crisis". Again, not true. See my earlier posts.
Taken together, I view the weight of the article as being towards the dissemination of information which is factually inaccurate. Ergo, it's fake information; a story conjured from thin air to play on people's sensitivities and sense of injustice, which is pretty much what all fake news does.
Of course, it's also cleverly disguised given it does contain other pieces of information which are factual.
In fact looking at it again I notice that the Guardian story is actually nothing more than a regurgitation of a story from The Mirror:
https://www.mirror.co.uk/news/politics/jacob-rees-moggs-investment-firm-21814351.amp?f=&__twitter_impression=true
Which arguably is worse.
I can only guess the journo was sent to write a piece like this, but didn't know her arse from elbow. https://www.independent.co.uk/news/business/news/hedge-funds-short-selling-bank-of-england-andrew-bailey-financial-conduct-authority-a9440581.html
I don't see any real issue with going long at the mo, but short does seem to have some technical (feedback - hence BoE plea) and moral issues. Although I'd have thought it's a bit late?
Agree, although I imagine it was more a case of the journalist seeing an easy opportunity for click-bait.
Bradders and others have already made as good a point as needs to be made, but the article is wrong in a more fundamental way (as I see it, which might be wrong). The Guardian article implied that people were making money out of the crash caused by the pandemic. That's not strictly true though - they haven't made money out of the crash, they stand to make money during the recovery by being the ones to throw new money into the market when it is in the pit.
Exactly right.
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I just think "fake news" is a dangerous term. It is irredeemably associated with Trump who uses to attack the free press as somehow an enemy of the people. Using it plays into that narrative and we should avoid using it. Call this article a poor, biased or even irresponsible piece of reporting, but don't call it fake news.
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The vast majority of investors including pension funds will be sitting on losses of 20-40% and a dramatic decline in dividend income. Some of those who use leverage will see those losses magnified or stopped out of positions. Some would like to ride things out but need to cash in a loss for liquidity purposes. Some with spare cash will have an opportunity to mitigate their losses by investing fresh capital but it’s still not risk free in an economic crisis of unknown length and depth. Some investments will multi-bag and others will be wiped out. Yes a lucky or clever few will make fortunes but most won’t.
No one should feel sorry for investors but stoking up hatred is crass. Rees Mogg is a hands off shareholder in a legitimate investment firm whose raisin d’etre is to encourage clients to invest in its products. Surely there are more better targets for the Guardian? They should be trying harder than taking such cheap shots. If that is all they can unearth we must be living in a just and fair country.
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I just think "fake news" is a dangerous term. It is irredeemably associated with Trump who uses to attack the free press as somehow an enemy of the people. Using it plays into that narrative and we should avoid using it. Call this article a poor, biased or even irresponsible piece of reporting, but don't call it fake news.
Fair enough, I get that it's a loaded term.
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On that Guardian link... it wasn't intended as a hand grenade... interesting that it went that way. I thought it illustrated the craziness of the times, (it is potentially a good, if way more risky than usual, opportunity to invest... but the subject might well be emotive for those with no money to invest or those more focussed on saving lives); secondly,, it usefully contrasted the old and new Labour leadership positions on such things and finally gave a reasonable balanced independent alternative view and a sensible response from the company. That this could escalate to accusations of fake news is weird. Even the headline is true and significant (McDonnell the departing shadow chancellor has accused the firm of that).
The reaction contrasts with earlier posts where some were implying unfair guilt by association for the majority of those running individual Ltd companies. In all such situations, although I happen to think our economy needs reform and certainly avoidance loop holes need closing, what is legal needs legal change and people are entitled to express their different opinions to help make that happen.
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Somebody else can pick apart the bullshit in that if they feel like it.
I just don’t believe you. I think you’re disingenuous at best or lying at worst. Yet more political point-scoring bullshit from you.
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Jeez Pete you come across as quite aggressive sometimes. It’s only a discussion forum.
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I don’t call people political point/scoring bullshitters on a regular basis but reserve it pretty much for one person.
Imagine it typed in a mood of eye-rolling calm amusement if you like.
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Somebody else can pick apart the bullshit in that if they feel like it.
I just don’t believe you. I think you’re disingenuous at best or lying at worst. Yet more political point-scoring bullshit from you.
Feel free Pete but it's rather sad. I think honesty is important and although like most I will sometimes tell white lies ( for the perceived benefit of others, especially kids), I'm not knowingly personally dishonest, even when it might benefit me at no risk, let alone in something like a public forum post (other than as a joke). I also try to admit when I'm wrong.
My life feels surreal at present so I may be a bit more reflective, emotive and occasionally more tetchy than usual (I'll happily apologise for the latter). I might not be communicating as well as I could and my eyesight is getting so bad I probably should be using glasses to avoid subsequent editing. My work (of 36 years) and I have just mutually agreed to part company yesterday and I was in limbo for a couple of months waiting for that. My wife is also dealing with a lot of tricky stuff. My main mental health safety valve for most of my adult life (climbing) is self embargoed, spending too much time on the climbing internet as a result. In the back of my mind during this pandemic is our 4 parents are all in the high risk group, as well as many close friends and other family, and friends are at risk in front line work.
I am a genuine social liberal. I believe in the importance of the state and the importance of individual liberty within that. As such I'm simply not anti-investment and have just risked investing more of my money in an ISA with legal tax benefits. I'm often sceptical of ideology, where huge groups of people are claimed as being bad, even if I dislike their position/politics. Where poeple do bad things, especially so those in power, I think it important to speak to that. In relation to that Guardian article it really seems much less bad than some there in terms of leftist political bias (which in itself is often exaggerated by opposite ideologies, as it's a centre left paper, not a socialist one) and my view in this specific case is not anti Rees Mogg, I have much better reasons to be concerned about him.
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On a lighter note...
This slightly worrying headline:
https://www.statnews.com/pharmalot/2020/04/05/gilead-covid19-coronavirus-remdesivir/?utm_content=124850630&utm_medium=social&utm_source=facebook&hss_channel=fbp-212009668822281 (https://www.statnews.com/pharmalot/2020/04/05/gilead-covid19-coronavirus-remdesivir/?utm_content=124850630&utm_medium=social&utm_source=facebook&hss_channel=fbp-212009668822281)
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4 days late?
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4 days late?
It’s a joke.
It was presented as such.
You, and Pete are getting a bit arsy.
You don’t look likely to call it quits or make a half arsed apology thing like Alex and I did.
Read the joke. Laugh, or don’t. Then change the subject.
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I think some of the replies on this thread typify the theme prevalent in Uk politics that anything to do with the left must be forensically held to account, while the right essentially get a free pass.
Is the greater social ill here that someone has written a tenuous article, or that the son of the guy who wrote the book on disaster capitalism stands to make a killing as hundreds of businesses try to find their feet again after CV?
And with regards ‘politics of envy’ and ‘inciting hatred’, let’s not forget the Labour Party is currently in serious trouble in leave voting constituencies. Unless papers like the Mirror can create a convincing counter-narrative to the one the right wing tabloids have created around these heroic brexiteers, by shining a light on their real motivations, it’s going to be very difficult for an arch-remainer to win them back.
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Just as an aside, the term ‘politics of envy’ really pisses me off. It seems to me to be just a lazy catch-all dismissal of any attempt at increased equality.
No one would have accused the suffragettes of playing the ‘politics of envy’. Well, no actually they probably did but history wouldn’t look too kindly on that stance now.
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I think some of the replies on this thread typify the theme prevalent in Uk politics that anything to do with the left must be forensically held to account, while the right essentially get a free pass.
I'm not sure what 'forensically held to account' means. All that's happening here is people picking up on the fact that an article is bullshit. BS is BS, whatever political rosette it wears.
Is the greater social ill here that someone has written a tenuous article, or that the son of the guy who wrote the book on disaster capitalism stands to make a killing as hundreds of businesses try to find their feet again after CV?
For 'disaster capitalism', see Ali K 'politics of envy / lazy catch-all / pisses me off'.
This is 'contrarian investing'. You'd have a stronger point about it being a 'social ill' if hedge-funds had created Coronavirus and unleashed it on the world in a plan to grow wealthy at the expense of everyone else.
As it is, everyone with money invested, either directly or indirectly (via a pension fund) - and that's most people - will have lost wealth due to the coronavirus outbreak. But everyone is also in a position to grow that wealth again as markets recover.
Anybody can invest and make (or lose!) money. All that stops most people is: a. it seems risky, b. lack of knowledge. Anyone here could spend time learning the dark arts of investing, researching companies, and then using their acquired knowledge to spot good entry points. You could even do this with borrowed money at cheap interest rates if you had that sort of appetite for risk.
(This bit isn't meant to gloat or show-off, I think it gives a good example) I've been a retail investor for about 20 years, but most active in the last 10. I've invested my own savings and, occasionally, taken out cheap loans to invest the cash. Overall I've done fairly well, some big losses but I've grown the value of my investments.
Last week, I invested £4k of my savings to buy shares in two companies which I'd followed for a few years and could see were probably undervalued after the market crash. As it stands today, I'm up over 20% on that investment.
Am I a disaster capitalist? I haven't screwed over anyone. I've done exactly the same as investment funds accused of it are doing. Or are you only a disaster capitalist once people are envious of the amount of wealth you've built? (I'm assuming nobody's envious of my 'wealth'!). I think I'm doing well for myself by using my own resourcefulness to make my money grow, using knowledge I've spent time learning and taking calculated risks.
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I agree that investing is fine. No problem with that.
I think this idea that the likes of Rees-Mogg are just normal investors is a bit of a reach.
Do you personally offshore everything you make to avoid paying tax, for that money never to be seen again?
Have you personally scammed a whole nation into leaving the EU so that you can continue doing the above?
My point was admittedly straying from the specifics of this article. But I do think that the soft left or centre left, whatever we’re calling Labour now, have to challenge the motives of these characters by building a convincing and consistent narrative.
The right wing press have managed to convince people by printing nothing but bullshit!
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I’m not sure how much I agree with this, but it’s food for thought...
https://johnhcochrane.blogspot.com/2020/04/whack-mole-long-run-virus.html
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I’m not sure how much I agree with this, but it’s food for thought...
https://johnhcochrane.blogspot.com/2020/04/whack-mole-long-run-virus.html
Jeez glad I didn’t need cheering up.
I don’t think the younger generation will settle for that level of bleakness.
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Pete, just one thing. In the same way as the £80k/yr guy on newsnight seemed to think he was somewhere close to the average salary your statement that ‘anybody can invest and make or lose money’ ‘even with borrowed money at cheap interest rates’ is just delusional.
Do you not understand that there are a huge number of people in the UK who don’t have the means to put ANY money aside at the end of the month, and the only access to finance they have is through pay day loan companies who lend at far from ‘cheap interest rates’? And if they do manage to scrape some savings together they might see putting that money towards a house deposit as more urgent than risking it by investing?
And also that a significant proportion of the above (nurses, carers, high-rise flat dwellers etc) are the ones who are doing all the hard lifting during the current pandemic?
I’m not sure you realise what a privileged position you’re in relative to average.
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Maybe we wouldn’t be having this conversation if the Guardian had published a useful article. Eg why furloughed workers might try and keep up their pension contributions despite the crash in the stock market and 20% loss of their income.
I think it’s a bit patronising to assume that key workers don’t have the ability to make investment decisions. I know plenty of key workers with different attitudes to risk who are very money savvy. They may not have a lot of spare cash but they certainly think about how to make best use of it.
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I’m not sure how much I agree with this, but it’s food for thought...
https://johnhcochrane.blogspot.com/2020/04/whack-mole-long-run-virus.html
Jeez glad I didn’t need cheering up.
I don’t think the younger generation will settle for that level of bleakness.
Agreed. I don't believe every climber in northern Europe will suddenly quit dreaming of Catalunya in February because of coronavirus. What might make a difference is being turned down for flying at the airport due to a failed temperature test or similar - would you take the risk of losing money given it's likely to be expensive to insure against? I suspect many of us would but travel with a family might suddenly become impossible.
It's just too early to tell tho.
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Pete, just one thing. In the same way as the £80k/yr guy on newsnight seemed to think he was somewhere close to the average salary your statement that ‘anybody can invest and make or lose money’ ‘even with borrowed money at cheap interest rates’ is just delusional.
Do you not understand that there are a huge number of people in the UK who don’t have the means to put ANY money aside at the end of the month, and the only access to finance they have is through pay day loan companies who lend at far from ‘cheap interest rates’? And if they do manage to scrape some savings together they might see putting that money towards a house deposit as more urgent than risking it by investing?
And also that a significant proportion of the above (nurses, carers, high-rise flat dwellers etc) are the ones who are doing all the hard lifting during the current pandemic?
I’m not sure you realise what a privileged position you’re in relative to average.
Just a quick reply as I'm between feeding prime fillet steak to the seagulls from my super-yacht moored off Llandudno.
Yes I realise. No it doesn't follow that investing, for those who are able or willing, is a social ill; or that timing your investments with respect to events so as to buy low and sell high is immoral.
And if they do manage to scrape some savings together they might see putting that money towards a house deposit as more urgent than risking it by investing?
I don't own a house. (But I could buy one for cash, from profits made investing). That should give you a clue to my priorities through my thirties and early forties - i.e. they weren't family life or owning my own house. In that regard I'm also different from the average.
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I’m not sure how much I agree with this, but it’s food for thought...
https://johnhcochrane.blogspot.com/2020/04/whack-mole-long-run-virus.html
I started writing an article a few years ago about the golden ages of climbing, and the last section said are we living in a golden age right now, where travel is cheap, easy and unrestricted, climbing gyms are widespread and of excellent quality. It concluded by saying i expect we will soon get transport levied heavily due to climate issues, but maybe CV-19 will herald the end of it instead. Depressing.
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Maybe we wouldn’t be having this conversation if the Guardian had published a useful article.
True. I suspect we’re having this conversation because it’s a bit of an outlier in terms of the Guardian’s output. To be honest I was surprised they ran with it. And it’s allowed you, Pete and Shark to rip it to pieces, probably rightly so.
But the Tory fan boy press is littered with this kind of stuff day in day out - sensationalism barely based in fact - and yet unfortunately it doesn’t suffer the same scrutiny (I don’t mean on ukb).
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Go back and read it again. What it actually says is simply not that bad and the views presented in it are pretty balanced. The people accusing the firm, as per the headline, were people like Mc Donnell and even as a liberal I think such views rarely get a fair exposure in the UK press (and in this rare case where he gets coverage it makes him look pretty silly). Hence, the anger here seems to me as odd as that from Mc Donnell in the article itself.
Maybe I'm missing something and someone can explain in detail what that is. Sure, the headline is probably a rhetorical hook: you see the 'Rees Mogg' and ' cashing in' bits and miss "accused"...... but which saintly UK editor avoids such tricks in the mainstream press.
https://www.theguardian.com/business/2020/apr/05/rees-mogg-firm-accused-of-cashing-in-on-coronavirus-crisis
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What exactly about the article made you to think it was worth highlighting here?
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What exactly about the article made you to think it was worth highlighting here?
I already said, I thought it illustrated how surreal things were getting and it's got clear political importance as possibly the last salvo of a departing shadow minister. I wouldn't put it past the Guardian editorial team to it being partly a set up to damage him, as there was no love lost there (nor in most of the Guardian readership). I should have explained things better with the link but life is difficult and I was leaving my job that day. I always saw UKB as humorously tolerant of such mistakes and of course expected people to take the piss.
So maybe you can now explain exactly what's so wrong with it, and why the response to my posting was so aggressive (standard-press-issue rhetorically misleading headline aside)..
I got to regularly read the Times and the Telegraph at my in-laws place over the decades and their decline in standards over the last few years is depressing. The rhetorical bile in the Telegraph over the end of last year was worthy of The Fail
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The biggest thing 'wrong' with that article was who posted it. Offwidth you may or may not realise that you come across - to me at least and rightly or wrongly - as someone utterly determined to make political points at the expense of the tories almost at every possible opportunity you get. You're the most political person I've ever interacted with online, and I don't mean 'political' in a good way. I mean it in a blinkered by the righteousness of your cause way.
I think most people familiar with your history of posting will have assumed you posted that article because it appeared to present something 'bad' about the government. That's what you do.
I think the reaction on here caught you out and now you're scrabbling around for a reasonable-sounding justification for posting what was basically a load of BS. Clear political importance?! Do us a favour!
I think it stretches credulity to believe you posted that clickbait with the intention of enlightening us all to how it made Kier Starmer and the shadow chancellor 'look silly' as you claim. But maybe I have you wrong.
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I think that article is nonsense and not worth posting. But whatever, meh, etc.
Far more noteworthy is the outpouring of bile from pete and will especially, who have been increasingly unreasonable toward anything offwidth posts, and jumped on this with obvious glee. You both come across more and more over the last few months as personally antagonistic to him and point scoring, and it's a poor look. Will in particular, I remember almost choking on my coffee when you had the astonishing lack of self awareness to accuse him of being sanctimonious! Ha!
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Views differ Pete. You are right that I do not like this government but some of their mistakes are pretty serious in my view, not least the state of brexit. I think our clown PM has had an amazingly easy ride in the UK press, has forced out most of the tory MPs I've been impressed with and selected the worst cabinet in my living memory (incredibly beating even Corbyn's shadow cabinets.....including heavily biased towards reactionaries, some grossly inexperinced, some incompetents and even some with criminal behavior). Why should I disguise my views on this, and my wish for political parties to try to better represent the breadth of their membership and voters, and my liberal sensitivities?
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You shouldn’t, and nobody had said you should. It’s tiresome, but that’s your choice.
But you’re being unrealistic (that’s being kind, some may say disingenuous) to act surprised when people don’t believe your claimed motives for posting crappy guardian clickbait.
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So, are you saying you’ve cancelled your Guardian subscription, then Pete?
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You shouldn’t, and nobody had said you should. It’s tiresome, but that’s your choice.
But you’re being unrealistic (that’s being kind, some may say disingenuous) to act surprised when people don’t believe your claimed motives for posting crappy guardian clickbait.
So what are offwidths real motives? I am fascinated and I am sure he is too, I mean if we know what is wrong with us we can self improve eh!!
Fuck me! Some people need to get out more! Oh...
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Emily Maitlis saying it how it is:
https://twitter.com/ed_son/status/1248021250267656192?s=20
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So what are offwidths real motives?
Well, he says so himself - the motive behind a vast majority of Offwidth's posts on ukb is: 'I want to express how very angry I am with this government'.
Against this backdrop of posting, it's reasonable to assume that this post by Offwidth - a link to a Guardian article with an anti-government slant - is simply another in the apparently endless canon of Offwidth's posts themed: 'I want to express how very angry I am with this government'.
Fair enough if that's your thing. I'm not the only one to find this style of posting tiresome - hint: we're all aware of the Guardian and are freely able to read it, and most of us do because it's free and because it's not the Mail or Sun.
But no. Wait! Apparently we've missed the nuance here:
Really, he was trying to enlighten everyone about the 'clear political importance' of this particular Guardian article, and to also make a point about how silly Labour's Starmer and McDonnell are made to look because they were talking bollocks about investment funds.
It all makes sense now.
Cough-bullshit-cough
It's not a big deal, but seeing as you asked and seeing as I've not much better to do.. :)
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Ok Pete I give up and admit I must be the Blofeld of social liberalism. I thought I was as a whim posting something that illustrated how weird life was during my weird current situation but clearly my manchurian side was in total control.
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I didn't even know you were from Manchester.
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Shit....it's all connected....the BMC fanboyness.....Lynn ... if only I had known.
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That Maitlis bit is great
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Emily Maitlis saying it how it is:
https://twitter.com/ed_son/status/1248021250267656192?s=20
Fantastic.
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Emily Maitlis saying it how it is:
https://twitter.com/ed_son/status/1248021250267656192?s=20
Good that it's been said, let's hope it doesn't stop at words though. It's a long way from it being said and people nodding along when they're shit scared of what's going to happen to people "in peacetime" recognising that something needs to be done and being willing to support it despite it not being in their own best interests financially. People can have selective/short memories following times of crisis.
I'd love to be proved wrong, but I don't think it's something that we will get from the current government.
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Ecuador.
Apparently, their official death toll is so low, because they gave up reporting or pretending to cope.
In French, sorry.
This is what it looks like when the system fails.
https://www.loopsider.com/fr/video/dans-cette-region-de-lequateur-des-cadavres-dans-les-rues (https://www.loopsider.com/fr/video/dans-cette-region-de-lequateur-des-cadavres-dans-les-rues)
So, things could be worse, here.
Glad to see Boris is out of ICU.
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So the Bank of England are now being tapped up by the government for direct money printing via the Ways and Means Facility...
https://www.theguardian.com/business/2020/apr/09/bank-of-england-to-finance-uk-government-covid-19-crisis-spending
https://www.theguardian.com/business/nils-pratley-on-finance/2020/apr/09/the-treasury-is-asking-for-a-big-overdraft-fine-as-long-as-its-short-term
Sorry for the links but if anyone is not interested (probably most people) then they are easier to ignore than an overlong post! If you are interested then this is different to QE, which takes a circuitous route through the gilts market to create extra money, which ends up with the "normal" banks. This Ways and Means stuff literally is magicked up straight into the government's account. A good yardstick of how serious this is getting economically as it is not often used - last time in anger was 2008.
And final link - the Guardian's editorial is worth reading as it aligns with what we have been discussing on this thread - i.e. money is always available to pay for anything if the currency issuer is sovereign, inflation could be an issue but now is not the time to worry about it. After the austerity years I never thought I'd see the day:
https://www.theguardian.com/commentisfree/2020/apr/09/the-guardian-view-on-the-covid-19-fight-it-can-be-paid-for#comments
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Ta, interesting. You get anywhere with that BoE report? I did post an interview with the author which is a bit more digestible.
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This is what it looks like when the system fails.
That's truly grim.
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This is what it looks like when the system fails.
That's truly grim.
Christ
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It may also be, at least in part, not true.
https://apple.news/A87dPH3pfQpGKIzMUgz9QcQ
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It may also be, at least in part, not true.
https://apple.news/A87dPH3pfQpGKIzMUgz9QcQ
I can’t open that link. (Edit. Got it to work).
But there’s more than one source popped up since a French friend shared the report I linked to:
https://www.independent.co.uk/news/world/americas/guayaquil-ecuador-coronavirus-death-toll-bodies-latin-america-a9456596.html?utm_medium=Social&utm_source=Facebook#Echobox=1586446178 (https://www.independent.co.uk/news/world/americas/guayaquil-ecuador-coronavirus-death-toll-bodies-latin-america-a9456596.html?utm_medium=Social&utm_source=Facebook#Echobox=1586446178)
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Ok.
Read the Apple news refutation.
But the Independent report cites various individuals, both local and representatives of local and foreign NGOs.
They even mentioned the tyre burning, in a rather different light.
One of the worst aspects of the “Fake news” phenomenon is how easy it is to spin both ways.
The inherent possibility of “Fake refutation” to reality, as easily created as the news.
Difficult.
I still lean toward the Independent reporting.
One factor to consider is that not all the dead are victims of C19, many will have died from “normal” things, but where the system is overloaded by the excess C19 deaths and associated precautions, plausibility (at least) exists.
Possibly the truth sits somewhere in the middle.
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Of course, you don’t need to look to the developing world to see signs of potential dystopia.
Coronavirus: New York using mass graves amid outbreak https://www.bbc.co.uk/news/world-us-canada-52241221 (http://Coronavirus: New York using mass graves amid outbreak https://www.bbc.co.uk/news/world-us-canada-52241221)
This is why I posted in this thread:
Can you imagine, this “thing” running rampant, without any mitigation efforts? Infecting and killing at it’s natural rate?
NY has had some pretty stringent measures in for some time and might just head off the worst possible scenario.
It looks (writer touches as much wood as can be found within reach of armchair, including his own head) as if that might be true here. The daily deaths being lower than feared now (yesterday’s figures included a good deal of catch up from the previous week) and probably just from the initial “social distancing” and not even yet from “lock down” measures.
I just cannot see the “cost” (human and financial) of letting it run it’s course, would be less than the cost of mitigation measures and I find it hard to imagine that that cost would not be much higher.
Granted, mitigation = prolongation not “cure”, even so, it must lead to a lower toll, just on the basis of being able to deliver medical care to those with a chance of survival (C19 and other conditions).
In other words, I can see why the Government abandoned it’s herd immunity course so readily and abruptly.
Oh, and:
(https://i.ibb.co/wCDWgYz/3567061-E-AEB8-46-D5-9-F66-B389825261-D5.png)
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Matt, that’s four long posts addressing about nine points that I didn’t make!
I don’t disagree with anything you’ve written, and my post was carefully worded since it looks like a shit show in Ecuador, but also that it’s hard to discern exactly how bad it is.
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Ah, see actually the first post was aimed at your point, the rest was general ruminating to the world, because I have too much time on my hands and I fell down the rabbit hole of link following...
Sorry I didn’t make that clear.
The digression into fake news seemed important in this climate though.
I was fishing for other opinions.
(Arguing with opposing views does not preclude learning from them, I always consider arguing “testing”, despite my apparent belligerence).
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Ah. I misread your posts then, sorry!
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Those interested in economic experts' views on the response to the coronavirus and its effects on the economy should check out this:
http://www.igmchicago.org/surveys/european-economic-policy-for-the-covid-19-crisis/
The format is a pane of economists looking at policy questions: "This panel explores the views of European economists on vital public policy issues. It does this by polling them on important policy questions, by including a way for them to explain their answers briefly if they wish, and by disseminating these responses directly to the public in a simple format."
Results are presented "as is" and also weighted by the individual's confidence in their answer.
Tl;dr - severe lockdowns probably worth it.
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A Guardian long read. It charts the financial impact and central bank responses and concludes the major western economy financial defensive measures just about worked so far, despite some terrible tensions and an unclear fuure. The final question is what happens now in the developing nations?
https://www.theguardian.com/business/2020/apr/14/how-coronavirus-almost-brought-down-the-global-financial-system
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Mark Carney; fairly brief but echoing some of the discussion here. Interesting to see him reference Taleb too.
This points to a final, deeper issue. As the philosopher Michael Sandel has argued, in recent decades, subtly but relentlessly, we have been moving from a market economy to a market society. Increasingly, to be valued, an asset or activity has to be in a market. For example, Amazon is one of the world’s most valuable companies, yet the Amazon region appears on no ledger until it is stripped of its foliage, and converted to farmland. The price of everything is becoming the value of everything.
https://www.economist.com/business/2020/04/16/by-invitation-mark-carney-on-how-the-economy-must-yield-to-human-values?cid1=cust/ednew/n/bl/n/2020/04/16n/owned/n/n/nwl/n/n/UK/452381/n
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Great article, cheers word. PS I'll try to re-listen to that podcast on interest rates soon and give an opinion...
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I'm not after an opinion but its very interesting. I think I could manage a pub-based yarn on some theories as to what's going on at some point...
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Pint in 2021 then.
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Wasn’t sure which one to put this in, but anyway.
Just been chatting to a neighbour about various things and the subject of furlough came up briefly. He’s a plasterer and was saying as he’s got more than 3 years of books he’ll be eligible for the 80% self-employed furlough scheme. But he’s also been working throughout the last six weeks - not full time but whenever he can get hold of plaster so around 3-4 days a week. By the sound of it this is cash in hand work (he didn’t outright say it but it wasn’t that hard to figure out). I wonder how many self-employed trades will be happily taking the furlough grant and carrying on working throughout...
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You’re allowed to keep working under the Self Employed Income Support Scheme somewhat bizarrely, so it doesn’t need to be cash in hand.
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Yeh I did have a quick look at the criteria and saw that was the case but assumed if the work being carried out was declared then that would be factored into the furlough grant (i.e. deducted)? So acting more like a top up to 80%. Which makes sense.
But cash in hand would obviously be tax free on top of any furlough payout!
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Smart people who know things talking.
I just listened to most of a podcast featuring Adam Tooze, the subject of Andy's original post, in conversation with economist Tyler Cohen. It's really wide-ranging and interesting, and the first part on the coronavirus crisis is quite economics heavy if that's your thing. Lots of cool stuff on Germany and the Weimar Republic, if you fancy a little light distraction from virus talk.
https://conversationswithtyler.com/episodes/adam-tooze/
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Seems very bizarre the self employed being allowed to claim the grant whilst still working. I know someone who works in construction, good money, weekends etc. And he’s probably getting £7500 off the government too and it’s legit. :shrug:
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Seems very bizarre the self employed being allowed to claim the grant whilst still working. I know someone who works in construction, good money, weekends etc. And he’s probably getting £7500 off the government too and it’s legit. :shrug:
Fast, cheap, good - pick two, also apparently applies to stimulus packages.
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https://conversationswithtyler.com/episodes/adam-tooze/
Enjoyed this whilst driving to the crag a couple of days ago. Conversations with Tyler is one of the best podcasts around even (or maybe especially?) if, like me, never studied economics.
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Currently reading through a blog called the The Money Enigma. Interesting to read his theories. Bit above my head! But would be interested in others' views of his theories on price determination, value of fiat money, and market valuation being a function of 2 sets of of supply/demand. His theory on fiat money's value: ''fiat money only has value (is an asset to its holder) because it is a liability of society. More specifically, fiat money is a long-duration, special-form equity instrument issued by society and represents a proportional claim on the future output of society.
http://www.themoneyenigma.com/
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Initial thoughts:
It's not very formal.
His attempts at rewriting basic micro theory to fit his macro theory are bollocks.
Isn't he basically just a monetarist?
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Well it is a blog, not a paper. I did find the grammatical error in the first sentence on the home page off-putting though!
Not particularity interested in which economic ideology he is or isn't (although from my limited understanding it looks like he thinks differently from Monetary theory on inflation, but being an econ punter I could well be wrong).
I'm more interested in his theory of the value of money, and fiat money. In the 'Theory of Money' section the author gives the clearest explanation I've read of how the value of paper money (or any money) is derived - well, up to halfway through his explanation of 'proportional claim of future output', then he lost me so I need to go back. It raises various questions in my mind, around time, growth, and future output. And understanding the value (or potential lack of value) of money has perhaps never been more important than currently, as JB alludes to.
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It is a blog and not a paper, but if you're going to proclaim you've come up with a new theory of macroeconomics I'd expect to see something that looks like macro theory! At least, say, some kind of graph showing how various variables interact under his theory, and then maybe the actual data showing that relationship to see if there's some kind of similarity. This is the kind of basic thing you see in an undergrad econ textbook... Does this theory make some predictions that we can test?
The "universal theory of price determination" is no such thing. It's just two supply and demand graphs drawn next to each other. He writes things like "There is almost universal agreement in economics that the price of a good is determined by supply and demand for that good." I mean, the guy has a degree in economics so why he is peddling you this rubbish when he knows perfectly well about monopolistic markets, informational asymmetry, etc, I don't know.
You may declare loftily that you are not interested in "economic ideology" but are getting excited about a "new" thing that seems to have some similarities with something that was invented some time ago... let me thrill you with news of a crag in Derbyshire that is FOUR MILES long! You must go sometime.
This whole business about money being "a proportional claim on the future output of society" strikes me as silly. If the government announced today it was banning five pound notes, then no one would be able to exchange their notes for anything, so you'd have no claim on any output. There was a mention (can't find the exact wording) of something that looked almost exactly like seignorage, ie using inflation as a tax to fund government expenditure, but this forms a very small part of developed economies' taxation (maybe a couple of percent, going by memory).
The whole point of money is that it denominates prices for labour, capital, consumption goods, etc, so we can easily work out how much of one thing we want to exchange for another. Macro monetary models should connect nominal changes, ie inflation, with those real quantities, to show how the decisions of economic agents facing those situations, with views about what is going to happen in the near future, feedback into the the wider economy. Those models produce equations which look nothing like his, in fact he says his just look like an asset-pricing model so I'm guessing he's levered something he knows about to do the work in an area he's much less solid on. This may strike you as unneccesarily technical, but if you're going to present a new version on an academic discipline maybe either use the usual tools or invent some new ones.
I'm sorry to piss on your bonfire, and of course your time is yours to waste as you see fit, but there's literally tons of great stuff out there that is way more worthwhile. Loads of good economists write blogs that are worth reading. I thought this was cool, six seminal econ papers:
https://www.economist.com/sites/default/files/econbriefs.pdf
Or how about Core Economics, which is basically an intro textbook that's really easy to read and has lots of real world applications:
https://www.core-econ.org/
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You may declare loftily..
No, I’m really not declaring anything loftily?
but you get excited about..
..err... no I’m really not!?
Tell you what, you could have said what you said without coming across as an obnoxious cunt.
I was interested in other’s opinions on something I make no claim to:
a) know very much about.
or
b) be making any claims or points about.
but your shitty tone makes me totally uninterested.
Edit: typos
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Me: This theory is quite like another theory...
You: Not particularity interested in which economic ideology he is or isn't
For someone who claims not to know anything, that’s quite a sweeping judgement. If you know your guy is a bit of a monetarist it gives you a handle on where he sits on issues, maybe where he differs, what’s new, etc. You’ve got a way of putting it in some kind of context.
Or maybe not.
What is tiresome is that there is, as I said, just tons of great stuff out there, for free, written by amazingly knowledgeable people. Even Wikipedia is actually pretty good. So why be attracted to the kooky blog? It’s just catnip to some guys, that “I’m gonna turn everything on it’s head, answer the questions the experts can’t,” that whole spiel. I’m afraid I find it on the same spectrum as anti-vaxxers, probably harmless but you never know, look at MMT. So that perhaps explains my tone.
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Funny this, I did think Sean your first response was a bit dismissive and was about to point how annoying it is when someone just says bullshit and that does seem to be a habit of yours tbf. But you'd already posted a very long and informative follow up post - duly wadded. But Pete seems to find offence in that anyway. Ah well, chill out people, pulling the c word is never going to advance a debate...
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Yes perhaps I was initially a bit dismissive so maybe should have waited.
I’ve been thinking about the strength of my reaction to this sort of thing. It’s 2020, millions of Americans and British people literally do not believe coronavirus exists. We have a crisis of knowledge and understanding that is going unchecked and is hollowing out our societies. If some blogger writes “I’ve got one over the experts” we simply do not have the luxury of indulging this nonsense. Spreading nonsense is just dangerous.
Clearly this is not an Andrew Wakefield situation, but you never know when crank ideas are going to catch on and what damage they could cause. And the environment of “here’s the real truth” is damaging.
I have some half formed idea that it comes from a lot of men’s (it’s quite a guy thing, I think, tho I’m sure there are plenty of anti-vaxxers on mumsnet) need for esoteric and privileged knowledge. They should be joining some mystery cult or other, or the
Freemasons, but instead they end up believing Bill Gates wants to put a chip in their head.
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Does this mean I can take my tinfoil hat off now then?
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Martin Lewis profile from the Guardian including his typical campaigning gusto to close the gaps in the C19 government financial support.
https://www.theguardian.com/money/2020/jun/22/martin-lewis-having-money-is-not-happiness-but-not-having-money-destroys-lives
https://www.moneysavingexpert.com/#coronavirus
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I have some half formed idea that it comes from a lot of men’s (it’s quite a guy thing, I think, tho I’m sure there are plenty of anti-vaxxers on mumsnet) need for esoteric and privileged knowledge.
Yeah, that's an interesting point. The number of flat-earthers I come across at work is amazing, seems particularly prevalent offshore. Which is the ironic, given the time they spend staring at the horizon.
Among 'older' (non-millenials) people, I think a big part of the problem is due to the transition from the curated, edited and accountable news feed of old compared to the free-for-all fire hose of modernity. A lot of folk seem to assume the new, like the old, can be taken at face value. There is a educational gulf to bridge there but it's also a battle against engagement, gumption and ultimately intelligence which is being exacerbated by increasing state-sponsored and social media-enabled disinformation.
But at a deeper level I wonder if it isn't being driven by the failure of the modern civilisation - and late capitalism in particular - to deliver us an attractive vision of the future. Instead we are faced with a global tragedy of the commons with those in charge seemingly unable to direct either the government, businesses or people in a more sustainable direction. And that has led a lot of people to genuinely have had enough of experts.
From my point of view - and the reason for this thread - I'm interested in what aspects of modernity are to blame for the economy's ongoing and seemingly unstoppable destruction of the environment and our future. Despite the aforementioned commons issue I'm not convinced basic human nature is to blame. I do have a strong hunch that the de-facto adoption of money as a universal value system, and the associated belief in markets, is at the heart of it.
We are all so invested in money's legitimacy that pointing out its illusory nature has become something of an revolutionary act. No surprise, then, that people are keen to theorise that it's value rests on more than imagination.
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I have some half formed idea that it comes from a lot of men’s (it’s quite a guy thing, I think, tho I’m sure there are plenty of anti-vaxxers on mumsnet) need for esoteric and privileged knowledge.
Yeah, that's an interesting point. The number of flat-earthers I come across at work is amazing, seems particularly prevalent offshore. Which is the ironic, given the time they spend staring at the horizon.
Among 'older' (non-millenials) people, I think a big part of the problem is due to the transition from the curated, edited and accountable news feed of old compared to the free-for-all fire hose of modernity. A lot of folk seem to assume the new, like the old, can be taken at face value. There is a educational gulf to bridge there but it's also a battle against engagement, gumption and ultimately intelligence which is being exacerbated by increasing state-sponsored and social media-enabled disinformation.
To this add:
- Alpha climber whose barking views (and attempts at creativity) are tolerated by his peers due to past ability to climb E8 / 9a / A5.
- Strong streak of the anti-establishment, as he's from the era when climbing was the sport of rebellious white men .
- Lives in relative physical isolation with a limited and uncritical social circle, compensates by spending an unhealthy amount of time in the wilder reaches of the internet.
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- Lives in relative physical isolation with a limited and uncritical social circle, compensates by spending an unhealthy amount of time in the wilder reaches of the internet.
Relative is a pivotal word here, but this is the general direction of society whether you are in your perma-culture smallholding in mid-Wales or a terrace in Meersbrook.
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I have some half formed idea that it comes from a lot of men’s (it’s quite a guy thing, I think, tho I’m sure there are plenty of anti-vaxxers on mumsnet) need for esoteric and privileged knowledge.
Yeah, that's an interesting point. The number of flat-earthers I come across at work is amazing, seems particularly prevalent offshore.
Do you mean that literally??
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Yes.
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To expand on that last one - there's a fairly well trodden path of conspiracies most of them follow. Once you've swallowed the story that 9.11 was an inside job, it's a short step to knowing the moon-landings were faked and thence the earth is flat. What is interesting is that it's often the more interesting, inquisitive guys rather than the mouth breathers. Their interest is piqued by the little discrepancies, but they fail to spot the giant non-sequiturs in the bigger picture. There is little point in debating with them as they are convinced you are the idiot happily chewing the blue pill while only they had the courage to swallow the red. (That stance is likewise my main beef with Andy K's output.)
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- Lives in relative physical isolation with a limited and uncritical social circle, compensates by spending an unhealthy amount of time in the wilder reaches of the internet.
Relative is a pivotal word here, but this is the general direction of society whether you are in your perma-culture smallholding in mid-Wales or a terrace in Meersbrook.
Good point. I don't know Sheffield well enough to know if there is a hint here but it reminds me of an encounter I had with a minor but persistent Peak activist, cruciverbalist, and Japanophile. He's also intelligent but with tunnel vision. In c.1980 he was selling off all his gear as he was 'giving up climbing'. I took advantage of this and collected my purchase from his flat which was painted entirely black for unspecified health benefits. He is now a strong proponent of the links between 5G and covid-19.
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:lol: No, no hint intended there it's just the new Nether Edge.
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Yes.
:o
it's a short step to knowing the moon-landings were faked and thence the earth is flat
A small step for a man maybe, but..
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Late Middle Aged delusions of grandeur maybe? A realisation that your life is not amounting to as much as you hoped, and you therefore start to look for a deeper meaning somehow, or start to think there is more to everything that there appears to be, and you are the only one (or one of the few) who knows the TRUTH.
You either start to blog about the deep value / meaning of a relatively trivial activity (often surfing, astronomy, photography, road biking or running) and mistake the minor endorphin hit for visions of enlightenment.
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Late Middle Aged delusions of grandeur maybe? A realisation that your life is not amounting to as much as you hoped, and you therefore start to look for a deeper meaning somehow, or start to think there is more to everything that there appears to be, and you are the only one (or one of the few) who knows the TRUTH.
You either start to blog about the deep value / meaning of a relatively trivial activity (often surfing, astronomy, photography, road biking or running) and mistake the minor endorphin hit for visions of enlightenment.
Hmmm...
Yeah, I can see that.
I’m going down that route, but I feel compelled to start a new religion, rather than a blog.
What do you reckon to the worship of Extra Mature Cheddar on toast? Slightly overdone?
I feel possessed by the holy spirit, just thinking about it.
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That's the other one. Faced with their own mortality they find / found a religion, or get all spiritual, go vegan or start doing yoga.
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thought this was cool, six seminal econ papers:
https://www.economist.com/sites/default/files/econbriefs.pdf
Thanks for the link. Just read those and they were all really interesting
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But at a deeper level I wonder if it isn't being driven by the failure of the modern civilisation - and late capitalism in particular - to deliver us an attractive vision of the future. Instead we are faced with a global tragedy of the commons with those in charge seemingly unable to direct either the government, businesses or people in a more sustainable direction. And that has led a lot of people to genuinely have had enough of experts.
This ^^
And I'm not Millennial! (not sure what I am, generation Y?) the offspring of the baby-boomer generation who have made the rules, played the rules and are still desperately trying the keep a grip of the rules. I can't help but feel that our generation understands the fuckups that have been set in the stone of modern society, but we're too ingrained in the system, and too powerless against the structures, hierarchies and inertia of the machine to do anything about it. Oh, and we have endless instabangs and youtubes to distract us whenever we start questioning things. And we're scattergunned by the million potential truths.
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I thought this was a fascinating lecture on the way demographics have created the current generational divide.
https://youtu.be/O9kYLPbOyQA
In the context of growing conspiracies and blaming the self-serving rich etc, it's useful to see the wide-ranging effects that can be created by a very simple input variable (a large cohort - the boomers) on a complex system. Willetts is a Tory life peer, but you wouldn't know it from his analysis or conclusions, and I daresay he would have no place in today's party. Also worth watching the q & a which largely consists of him effortlessly batting aside boomers' attempts to blame the young.
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In reply to Sean,
I’ve just come back to this thread, after being thoroughly pissed-off by what I perceived was the dismissive and condescending tone of Sean’s reply to what was a genuine question by me.
But reading your following reply about anti-vaxxers etc. (which I hadn’t seen) explains a bit more. I share your distaste of people ‘into bullshit’ so thanks for explaining.
In case there’s an assumption behind why I asked about that blog in particular - for e.g. me being one of those bro-science cat-nippers ‘excited by a new thing’ (as hinted).
I posted a request for opinions on that guy’s theories because there seem to be some relatively knowledge people on ukb who’s opinions I respect, or at least am always interested to hear. I was hoping Sean and maybe one or two others might reply.
It had nothing at all to do with any ‘fascination in alternative theories’, in case that’s how it looks.
The reason for asking about that blog was because the author, Gervaise Heddle, is the ceo of a company which I researched in the late summer of 2018, and then went ‘all in’ in autumn 2018. My investment now has the potential to be life-changing (and already is to some extent) by allowing me to retire at 45. Provided a few more events play out as research suggests they might (but might not). I don’t assume anything, I could be working until I’m 80 :)
So, when I found out last week that GH had written a personal blog in 2014 expressing some of his personal theories on economics I was naturally curious to read it - as an interesting, but very minor, side note to the 2 years of ongoing research I’ve already done in the company and its management team.
I was just curious about the coherence of some of the personal views, of someone who’ll play a central role in the outcome of what is a life-changing investment for me.
That is literally all. Nothing more than that. All I’m interested in is trying to understand more than I do.
The theories being above my head, I thought I’d ask the options of more informed people on here.
I was hoping for some factual rebuttals (or otherwise) of GH’s personal views, by people with more knowledge of economics than me. (What do I know - only looking at making a million through research, instinct and nerve ;))
I think you could have just as easily replied factually without the haughty tone, and without presuming I was someone with an unhealthy interest in alternative theories. But you gave a great answer so thanks.
I didn’t appreciate the comments that I’m ‘excited by a new thing’.
or being told ‘sorry to piss on your bonfire’, not that I’m ‘loftily proclaiming’.
I could have just explained in the first place why I was asking for opinions on THAT blog in particular. But I naively thought I shouldn’t need to explain.
edit: grammar
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A lot of nuance can be missed on the internet, something I've learnt the hard way, and this looks like a classic example. Hope the investment works out as you plan.
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I thought this was a fascinating lecture on the way demographics have created the current generational divide.
https://youtu.be/O9kYLPbOyQA
In the context of growing conspiracies and blaming the self-serving rich etc, it's useful to see the wide-ranging effects that can be created by a very simple input variable (a large cohort - the boomers) on a complex system. Willetts is a Tory life peer, but you wouldn't know it from his analysis or conclusions, and I daresay he would have no place in today's party. Also worth watching the q & a which largely consists of him effortlessly batting aside boomers' attempts to blame the young.
Cheers for linking that Adam, I watched both the lecture, and the Q&A linked. Nice to have some stats and a theory to take into arguments with "family friends".
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Cheers for linking that Adam, I watched both the lecture, and the Q&A linked. Nice to have some stats and a theory to take into arguments with "family friends".
Agreed, that was a really good summary, thanks Adam. I’ve been banging on about DB pensions from a public vs private sector angle for years, but I’d never considered the generational aspect of it before.
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So what is wrong with DB schemes? Do you think it's OK to change such schemes because others are worse? The cost of DB is largely manufactured by a faulty valuation system that just doesn't work in the unusual times we are living in.
https://www.professionalpensions.com/opinion/3033124/death-discount-rate-fundamental-flaws-accounting-approach-pension-scheme-valuation
The most embarrassing evidence of this is the Coal Miners' scheme. The Telegraph and anti DB campaigners complained that this would cost the taxpayers a fortune when the government took this on. This is the reality.. well over. £10 billion profit so far.
https://www.walesonline.co.uk/news/wales-news/miners-furious-uk-government-taken-14503996
I agree with Willets on housing but he was part of a government that removed a fairer rates system and gave away council housing to private ownership at ludicrous discounted levels that helped make that bubble. If people are earning vast sums from their home, just tax it.
I've said many times that I think we currently live in a kleptocracy. The super rich and globalised multinationals get away with murder and the average tax payer picks up the pieces. The ironic good side to this is Willets' cost estimates are overblown as people have stopped living longer and the estimates had lifespan growth built in. It's desperately unfair for the young but can be resolved by an improved tax system and blocking the theft.
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I'm guessing from that you didn't watch the video then Steve?
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Nothing wrong with DB pensions as such, but comparing public and private sector salary doesn’t recognise the value of the DB pension contribution by the employer/state. Take my salary, add on the employer contribution to DC pension and the value of other benefits and that gives a total reward package. Do the same for a public sector worker and that gives a fairer comparison than comparing salary. That has always been my issue with DB schemes. So do I think they should be changed because other schemes are worse? No, but members should recognise how much their benefits cost.
On your discount rates point, I largely disagree. Firstly, discount rates are only part of the problem. Saying that discount rates are manufacturing a high cost ignores the contribution of life expectancy and the differential between wage inflation and the return on appropriate investments. Secondly, that Professional Pensions article takes a really complicated issue and tries to simplify it with a few broad brush comments/conclusions and it isn’t that simple. For one, the discount rate changes the timing of the funding but not the actual amount of money paid out in pensions. A lower discount rate brings forward funding payments so provides greater security for member benefits if all other things remain equal (demographics, investment strategy/returns, etc.). In a world of volatility, I’d see that security as a positive.
On the Coal Miners scheme, that article doesn’t give me enough information to comment, but I doubt it’s as clear cut as is made out. All the comment is from one side so it’s not a balanced piece and therefore not the whole story
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The DB employer cost is right now significantly down to the specific financial requirements; they are probably double what they need to be with a still prudent but more sensible valuation method. In the past in 'good times' there were employer pension holidays as the methodology problems work in the other direction then. I know it's more complicated than the article illustrates (but the requirements are the main problem) as I've worked a little with actuaries on USS at national level.
All the identified problems add costs or reduce income below likely values. Overly prudent calculations mean more money is available than on current valuations so less employer and employee payments are required per year.
https://www.pensions-expert.com/Special-Features/Roundtables/Is-the-gilts-plus-model-broken?ct=true
http://www.actuarialpost.co.uk/article/half-of-schemes-feel-gilts-plus-valuation-method-unhelpful-11137.htm
https://www.actuaries.org.uk/news-and-insights/media-centre/media-releases-and-statements/longer-term-influences-driving-lower-life-expectancy-projections
https://moneyweek.com/484169/why-the-uks-company-pension-schemes-are-in-such-bad-shape
https://www.bankofengland.co.uk/working-paper/2018/growing-pension-deficits-and-the-expenditure-decisions-of-uk-companies
DC pensions make the investment companies much more money from fees per employee per year on the schemes than DB and push the market uncertainty onto the employee. For the same investment outcomes on average they would provide a lower pension at higher risk.
The closed Coal Miners' scheme really is that clear cut. The DB critics did say it would cost the tax payer a fortune and the government has pocketed over £10 billion from it so far and there are decades to run yet. That's real money not actuarial prediction.. it's clear evidence the arguments used by the likes of the Telegraph against public sector DB schemes are untrustworthy. I tried to find a link without spending much time .. they are available.
https://www.telegraph.co.uk/finance/comment/2794289/Taxpayers-may-have-to-dig-deep-for-miners-pensions.html
https://www.pensionsage.com/pa/Govt-defends-position-on-Mineworkers-Pension-Scheme-open-to-cross-party-talks.php
Finally the tax relief side of pensions is a mess and very much benefitting higher rate tax payers and increasing intergenerational issues.
https://www.theguardian.com/business/2019/oct/10/pensions-tax-relief-set-to-cost-government-almost-40bn
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My curiousity got the better of me but I keep only being able to see a paragraph at a time of that Telegraph article about the miners scheme before I'm invited to start a trial I don't want. Can you confirm whether my summary from that is right?
- the schemes were very aggressively invested for fairly mature schemes when compared against conventional wisdom
- that therefore allowed the scheme actuaries to justify quite a high rate of return, which justified bonuses
- equities did actually do well over that period, so surpluses and bonuses arose
- the other chap pointed out that if you use a lower discount rate (which is the same as saying your assets earn less and perform less well) then the scheme would in fact run a deficit.
If correct this all feels broadly like a statement of the obvious (insomuch as anything about DB pensions is obvious). The amount of assets you need depends on the returns they earn and if you assume more you need less and if you assume less you need more. It was inevitable that one of them was going to be right and the other wrong.
The only real question in my mind is whether the index linked gilt was a sensible rate to choose or not. Presumably it is the rate you would choose for a scheme that couldn't take any investment risk - you're buying risk free inflation linked cash flows and using those to provide inflation linked pensions. It's not obviously suited to a scheme heavily invested in equity, but I guess maybe the point he was trying to make was that the schemes *shouldn't* have been that heavily in equity. I don't know. Most sponsors probably wouldn't want the volatility. But then the government isn't most sponsors.
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The trick is to quickly snap, scroll, snap some screens with another device.
What you gathered is pretty much correct. The investigation was by John Ralfe, a self appointed pensions expert, who is a firm believer in the current valuation method and probably feeling pretty pissed off that the government were disproving his pet theories.
In DB the tail ended up wagging the dog. That some private companies ended up with Ralfe's so called near 100% bonds (nothing like true for all) was due to adding unneccesary caution upon caution, but even that helped kill the scheme as other overly pessimistic parts of the actuarial calculation got into trouble as QE hit guilt plus numbers. Back in the world of real money the Miners' scheme was worth £27 billion in actual assets when the government took it over and despite its continued liabilities being safely met, according to actuaries, just the surplus to date is already about half that and this includes the 2008 crash hit on equities.
At one point last decade in the scheme I was briefed on, USS, assets grew 16% in a year but despite no other significant changes the fund deficit, by the formal required calculation, grew by a similar order of percentage, as QE hit the measurement system. It was clear as day to me that something needed fixing somewhere. How can something who's real assets grow that much in a year be valued as a similar amount less
Back to Willets, DB pensions are actually being stolen from the young as an opportunity. They were never unaffordable but a mechanism made them look to be so (and incorrectly made them look over-funded in better times). Yes some of the false liabilities are currently being passed down to those employees outside the schemes as real remuneration losses. Yet the schemes will benefit the future young to an extent, as when the assets do turn out to have a massive surplus over liabilities (as it is very likely most will follow the path of the miners' scheme) that will add to organisational coffers that own the scheme. Coincidentally the biggest gains in the shift from DB are made by companies selling DC schemes with their higher company profit levels, and the rescue funds who buy company schemes, at a heavy discount, that look shit but are really gold. The bogus scheme deficits are also a handy political weapon for privatising the public sector and their pensions; those who believe in small government.
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Good to know I gathered the correct gist.
I don’t especially want to get involved in another debate around this, but the scheme actuaries would have been the ones supporting the current method, not Ralfe, because they have no choice but to be compliant with the rules. The article isn’t explicit on what they were doing since it only quotes his method in any detail, but my assumption is that it would have been “gilts plus something” (only based on the fact that that’s the common approach) just a larger “something” than you might get implicitly from the index linked gilt yield. Index linked gilt yields would be “gilts minus” in that terminology (but to use it correctly you would have to use different cash flows in the calculation, so the plus and minus are not immediately comparable).
I feel we’ve had the discussion about many of the other elements before so won’t repeat myself. The only thing that’s worth mentioning is that the primary advantage of being 100% bonds would have been that (assuming the right bonds to generate cash flows at the same time as the assumed outgoings) the surplus/deficit would have been largely immune to QE and other interest rate movements. That’s just the way the maths falls through.
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AJM - good summary.
I don’t especially want to get involved in another debate around this.
Me neither. This is getting dangerously close to work for me, so I’m going to stop. I’ve not said anything contentious so far, but clearing up some of the misunderstandings and misconceptions has the potential to get quite technical and I’d end up having to caveat all my comments appropriately. Suffice it to say that I think of the issue of DB affordability as far more complicated/nuanced than you’re making out, Offwidth.
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I don’t especially want to get involved in another debate around this.
Me neither. This is getting dangerously close to work for me, so I’m going to stop.
Starts to feel like a busman's holiday pretty quick :)
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Good to know I gathered the correct gist.
I don’t especially want to get involved in another debate around this, but the scheme actuaries would have been the ones supporting the current method, not Ralfe, because they have no choice but to be compliant with the rules. The article isn’t explicit on what they were doing since it only quotes his method in any detail, but my assumption is that it would have been “gilts plus something” (only based on the fact that that’s the common approach) just a larger “something” than you might get implicitly from the index linked gilt yield. Index linked gilt yields would be “gilts minus” in that terminology (but to use it correctly you would have to use different cash flows in the calculation, so the plus and minus are not immediately comparable).
I feel we’ve had the discussion about many of the other elements before so won’t repeat myself. The only thing that’s worth mentioning is that the primary advantage of being 100% bonds would have been that (assuming the right bonds to generate cash flows at the same time as the assumed outgoings) the surplus/deficit would have been largely immune to QE and other interest rate movements. That’s just the way the maths falls through.
The Miners' scheme actuaries were working for the government and Ralfe was accusing them of not using the standard valuation methodology. At the time Ralfe said the scheme was in deficit if they had used it, yet a surplus had been taken (implied mispractice). The surplus has continued to be taken for the years since then. The scheme also looks to be in surplus for years to come (note: I've not checked the impact of the covid crash) which is why ex miners are campaigning hard to get more of what was, after all, their money to help with work related industrial injuries (mainly lung problems).
I remember our previous discussions on USS where you pointed out how some gains are apparent because of other factors (which I've forgotten the detail but did accept to an extent, despite being counter intuitive) but not what was more than a 20% gap in one year between asset growth and scheme value in the stable period well post 2008 crash... this shows the valuation methodology is broken.
Yes bonds would have been safer in bad times but overall they grow much less fast over long time periods. A mix is best if you want to safely build assets.
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. Suffice it to say that I think of the issue of DB affordability as far more complicated/nuanced than you’re making out, Offwidth.
I though I was saying perfectly good schemes were being trashed by a combination of changes to make them look unaffordable and that it was complicated. The closed schemes will on average yield big surplus profits despite the dire current valuations. I gave the Miners' scheme as an example with Ralfe's dishonest portrayal of the risks that turned out to be BS, despite unexpectedly troubled times for scheme assets since then. Where am I making any error with this, and where was Ralfe right?
Not having these schemes is a big loss to future employees. That a perfectly good pension vehicle ended up this way is a scandal.
https://theconversation.com/britains-great-pension-robbery-why-the-defined-benefits-gold-standard-is-a-luxury-of-the-past-100844
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The Miners' scheme actuaries were working for the government and Ralfe was accusing them of not using the standard valuation methodology.
......
Yes bonds would have been safer in bad times but overall they grow much less fast over long time periods. A mix is best if you want to safely build assets.
I would be lying if I were to claim I know that much about whether the GAD has the ability to use very different valuation methods to those used in the private sector, but I would have guessed they probably dont. On the face of it, being able to use a significantly better assumed return than the index linked gilt yield doesn't sound especially controversial given what the article said about the asset mix. I didn't see anything in the article you linked that invalidates that, I don't think (an expected return on assets calculation yielding an expected return of higher than the linked gilt seems fairly plausible based on my understanding of how they might do it). But as I say I claim no great expertise on the fine detail of pensions regulation and how it might differ between GAD and the private sector.
My point wasn't that bonds are safer (generally you would assume that they are but it's not relevant to the point I was trying to make). The liability calculation behaves in effect like a large bond value calculation - you take a set of payments, you discount them at an interest rate, you get a liability value, in the same way that you would derive a bond market value. Mechanically therefore investing in bonds means your assets behave in the same way as the calculation of your liabilities with respect to interest rates and therefore you get dramatically reduced sensitivity of the surplus/deficit to interest rates. It's about the way the calculation works rather than about the assets themselves.
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From having had a slightly deeper look, the schemes seem to be set up as any other (aside from things like the profit share) in terms of having a trustee and a trustee company and whatnot, it's just that the actuaries are GAD rather than a consultancy firm. Technically they're probably working on behalf of the trustees in that case, but more importantly I failed to find anything to suggest they were doing anything under different rules than normal.
1. I'm obviously not claiming to have proved a negative, just noting that from a skim of a few relevant documents I couldn't see it.
2. This leads me to default back to my initial conclusion pretty much. I'm left with similar feelings to when I read an article on climbing in the mainstream press - there's some correct facts here and there but the whole thing just doesn't quite fit together into a coherent story, or the conclusions don't quite make sense. I'm sure you get the same when your area of expertise hits the press.
3. :offtopic:
4. :sorry:
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In reply to Sean,
I’ve just come back to this thread, after being thoroughly pissed-off by what I perceived was the dismissive and condescending tone of Sean’s reply to what was a genuine question by me.
But reading your following reply about anti-vaxxers etc. (which I hadn’t seen) explains a bit more. I share your distaste of people ‘into bullshit’ so thanks for explaining.
I clearly misread the intention behind your original post - my apologies. Good luck with the investment!
We are all so invested in money's legitimacy that pointing out its illusory nature has become something of an revolutionary act. No surprise, then, that people are keen to theorise that it's value rests on more than imagination.
As for the general interest in money (the stuff), perhaps it is a struggle to see something socially created as "real". For sure money exists, and it's value is as a result of us thinking it's real, rather than being linked to gold or silver. But so what? As an analogy, consider caste in South Asia. Caste is most defintely "made up" (if a long time ago, and by the interactions of lots of people including us), but that doesn't make it any less real: it's the foundation of marriages, political parties, affirmative action schemes, the geography of villages, towns and cities. My better half thinks caste is complete bollocks but you can be damn sure she knows what caste she is and which members of the family are of a different caste!
And whilst caste is an awful lot of habit, it is also about something real, namely the division of resources and power in society. Money may be imaginary, but how else are you going to exchange stuff including your time?
This is old but covers money a bit:
https://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2011/11/monetary-cranks-vs-jessie-j.html
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As for the general interest in money (the stuff), perhaps it is a struggle to see something socially created as "real". For sure money exists, and it's value is as a result of us thinking it's real, rather than being linked to gold or silver.
Sure. But to come at this from several angles:
Firstly, I don't think most people understand what a fiat currency is. Or fractional reserve banking. When these things are explained to them they are typically incredulous and then appalled. In most of the population there is a tacit but completely erroneous assumption that it must all rest on something a lot more concrete. Perhaps due to ignorance but surely also due to the fact that although fiat currencies have been flirted with for 900 years, they only really became dominant in 1971. This is a very new experiment, and one that makes many people instinctively uncomfortable.
Add to that the trend over the same period for the growing perception of money as a universal value system. We're now in a place where it seems impossible to express value in terms other than money. The worth of everything gets reduced to a cash value. That very narrow definition excludes but much of what makes actually makes life valuable. That we seem unable to question this as a society devalues these things further. Success today equals being rich. As I wrote a few pages back, what is it then that money is valuing? It's valuing the potential to make more money.
Money may be imaginary, but how else are you going to exchange stuff including your time?
To widen the context money is only real (as I mentioned a few pages ago) within the context of the economy. The economy is a subset of human society and human society is but a small subset of the biosphere - which is the real capital underlying all this. The economy is having a profound negative effect on the biosphere without any way to account for it. I'm sure some economists think it could given political will. I think this is profound hubris and only reflects a misunderstanding of the complexity of the natural world. This ability of money to move work and resources around in time can't just be viewed a bringing the benefits of modern life - the flipside is the destruction of the biosphere.
Thanks for the link - I was initially inclined to dismiss it but the comment thread is very interesting and touches on most of my beefs. Not many supportive comments are there! To attack the reality of modern money from a more economic perspective then, I guess this link from those comments is a much more expert critique than I can muster:
https://michael-hudson.com/2010/07/from-marx-to-goldman-sachs-the-fictions-of-fictitious-capital1/
Be interested in your thoughts.
TL:DR, you can go back to Marx who thought the value of money was derived from labour. Perhaps it was then, it isn't now. Such industrial capital did not dominate over finance as Marx expected, but the reverse happened, accelerating in the fiat currency era. Now money's value is based primarily on the ability to generate interest, rent or appreciation. It is self-referential, lacks solid foundation in physical reality, and being mostly wishful thinking given a number value is therefore highly prone to boom and bust. But it has such a grip on modern thought that we bailed the fuckers out.
"Marx characterized high finance as based on “fictitious” claims for payment in the first place because it consists not of the means of production, but of bonds, mortgages, bank loans and other claims on the means of production."
"Finance capital is fictitious in the second place because its demands for payment cannot be met as economy-wide savings and debts mount up exponentially. The “magic of compound interest” diverts income away from being spent on goods or services, capital equipment or taxes. “In all countries of capitalist production,” Marx wrote, the “accumulation of money-capital signifies to a large extent nothing else but an accumulation of such claims on production, an accumulation of the market-price, the illusory capital-value, of these claims.”
"Discussing the 1857 financial crisis, Marx showed how unthinkable anything like the 2008-09 Bush-Obama bailout of financial speculators appeared in his day. “The entire artificial system of forced expansion of the reproduction process cannot, of course, be remedied by having some bank, like the Bank of England, give to all the swindlers the deficient capital by means of its paper and having it buy up all the depreciated commodities at their old nominal values.” [15] Marx wrote this reductio ad absurdum not dreaming that it would come true in autumn 2008 as the U.S. Treasury paid off all of A.I.G.’s gambles and other counterparty “casino capitalist” losses at taxpayer expense, followed by the Federal Reserve buying junk mortgage packages at par."
I've not studied economics so this is probably 101 and taken as read. But it doesn't seem to be common knowledge.
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Without comment.
Because my irony circuit overloaded:
https://www.reuters.com/article/us-health-coronavirus-ppp-ayn-rand-idUSKBN248026 (https://www.reuters.com/article/us-health-coronavirus-ppp-ayn-rand-idUSKBN248026)
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Without comment.
Because my irony circuit overloaded:
https://www.reuters.com/article/us-health-coronavirus-ppp-ayn-rand-idUSKBN248026 (https://www.reuters.com/article/us-health-coronavirus-ppp-ayn-rand-idUSKBN248026)
Ayn Rand received at least $11,000 in social security during the last years of her life. She also received Medicare. But this was ok, apparently, because it was "restitution" of her stolen tax dollars, and not an entitlement.
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Without comment.
Because my irony circuit overloaded:
https://www.reuters.com/article/us-health-coronavirus-ppp-ayn-rand-idUSKBN248026 (https://www.reuters.com/article/us-health-coronavirus-ppp-ayn-rand-idUSKBN248026)
Ayn Rand received at least $11,000 in social security during the last years of her life. She also received Medicare. But this was ok, apparently, because it was "restitution" of her stolen tax dollars, and not an entitlement.
I am surprised not a jot.
She probably also drove/was driven on public highways, cared for in her dotage by nurses or carers educated in state schools and generally benefitted from a myriad of aspects of social democracy, that she would have called socialist; if her head hadn’t been rammed so far up her own arse.
I really should read Atlas Shrugged though. Do the great and elite, wash their own underwear in their retreat? Or do they take staff with them? If so, did they raise and educate those employees from birth? When they built their business empires, did they also build the roads, educate all their employees, provide all their medical and welfare needs etc etc etc, during that time of wealth generation?
I don’t know. I’ll have to read it...
But I’m not paying for it, so a rip off copy.
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I was going to put something in the YYFY thread, because we’ve been “silly” again here, in the name of having “adventure” and generally not doing what we would normally do.
You see, I would normally be quite careful with money. Had a bit of experience with “rainy days” and all that.
We’re not doing that.
We (Polly and I) have lost all our remaining grandparents over the last six months. Whilst it is possible that my Grandmother had Covid, at 93 and frail, it really could have been anything or, even, nothing. Both of Polly’s grandparents went to strokes and too early to be Covid related.
However, we both received small inheritances as a result.
We bought “kit” with it.
We bought a small RIB yesterday. Big enough for the six of us, small enough to break down and roll up into the van. Good for exploring the coast in fair weather and pootling around on the Dart or the Teign, towing the Kayaks or the SUP and finding little coves for a bbq etc. Coastal dive sites too.
Anyway, we wouldn’t have done this, if it wasn’t for Covid.
I’m sure we’re being way more “grab life by the balls” than we would normally be. Way more willing to spend than save.
Do you think this might be a common reaction?
Is anyone else feeling this way?
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That sounds amazing. Im sure it is a common reaction but i think economy suggests that saving is cureently the more common choice!
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I really should read Atlas Shrugged though. Do the great and elite, wash their own underwear in their retreat? Or do they take staff with them? If so, did they raise and educate those employees from birth? When they built their business empires, did they also build the roads, educate all their employees, provide all their medical and welfare needs etc etc etc, during that time of wealth generation?
I read The Fountainhead on El Cap, partly for the irony! Although I felt its main ideas were complete bollocks, being an overlong Mills and Boon for proto political philosophers of her ilk, it was not without interest and I like to know the enemy. As ever in such works, her villains are real villains (at least despite the pantomime vision of them) but the heros seem to me like monsters as well: as an example one of the two main protagonists rapes the other, but that's OK as theirs will be one of the great true loves. That anyone could see these things as the most inspirational works ever seems laughable until you look at the names who said it was, when it becomes dangerous. I'm sure I will read Atlas Shrugged one day as well.
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If rape isn't your thing in literature then don't go near Greek mythology! But Greek mythology could also be said to be some of the most inspirational works ever. Certainly more inspirational than Rand. Zeus seemingly raped his way through half his extended family, along with beastiality and torture.
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Neither the Scandinavians nor the Mediterraneans never asked of their gods that they would be good or virtuous. The gods where not to be liked but to be feared and mistrusted.
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The god of the Old Testament is not such a nice chap either, I believe.
As to Rand, I've long meant to read at least one of the novels, partly on a know thine enemy basis, and partly because I taught her work for several years. But I've never been able to summon up the resolve and fortitude.
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If rape isn't your thing in literature then don't go near Greek mythology! But Greek mythology could also be said to be some of the most inspirational works ever. Certainly more inspirational than Rand. Zeus seemingly raped his way through half his extended family, along with beastiality and torture.
A bit late for that advice as Greek myths were a staple of mine from 13. I took them as a useful parable of bad behaviour, like most religion. People with power will very often abuse that position and any claims of religious motives must be treated with great sceptisism. The total dysfunction of Rand's great love story, starting from rape and moving to a public play of hate but totally dedicated passion in private seems an alien example to sell her philosophy but that's maybe because the philosophy was always going to be alien to me, as sell it does, and more.
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The god of the Old Testament is not such a nice chap either, I believe.
Careful now, the Jewish god as vengeful and the Christian god as compassionate is an extraordinarily unsympathetic description of G-d in Judaism. About as popular as Roman law, if you like.
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A report of some economical analysis on the costs of prevention of future pandemics.
https://www.theguardian.com/world/2020/jul/23/preventing-next-pandemic-fraction-cost-covid-19-economic-fallout
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Thought it might be good to revitalise this thread based on some of the comments on the Local Lockdowns thread.
This adds a bit of weight to my point: https://www.taxresearch.org.uk/Blog/2020/03/19/the-government-can-create-all-the-money-we-need-an-explanation/
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Thought it might be good to revitalise this thread based on some of the comments on the Local Lockdowns thread.
This adds a bit of weight to my point: https://www.taxresearch.org.uk/Blog/2020/03/19/the-government-can-create-all-the-money-we-need-an-explanation/
Ahh, MMT.
Here's a critique of MMT, from the left, in fact from a think tank funded by individuals rather than corporations, so less ideologically suspect if that's your bag:
https://www.peoplespolicyproject.org/2019/02/24/whats-the-point-of-modern-monetary-theory/
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Thought it might be good to revitalise this thread based on some of the comments on the Local Lockdowns thread.
National debt is never repaid, and likely never will.
I know you've resurrected the finance thread so I'm replying to a post of yours on Lockdown thread here - just in case anyone doubts the statement above, below is a graph of UK national debt since 1692 (more or less the start of the BofE) up until just post 2007 financial crisis, which as we know caused such (unjustified) panic that austerity was the result. So for clarity, "current crisis" isn't covid, it was the last one, although the current situation is basically unchanged in debt / GDP terms:
(https://www.efpia.eu/media/24474/130904-1.jpg?width=500&height=209.26339285714286)
I think it speaks for itself - the line never drops below the x-axis i.e. we *never* pay back the debt. Obviously there is a lot of historical context to take into account, but ultimately here we still are having been debtors for 330 years. The question of where it becomes a problem is, let's be diplomatic, unsettled. The only other comment I'll make is that expensive national endeavours (or catastrophes if you prefer) are what obviously causes the debt ratio to rise. Don't forget that we are guaranteed (another) one of these very soon, and I don't mean Covid. I suspect Brexit is playing into government financial calculations RE Covid despite it (Brexit) having been largely ignored / forgotten about by the public / media.
It really is the time for UBI to be properly explored. If peoples basic needs were covered, then businesses could effectively lie dormant until demand picked up. (as long as rates, rents, and interest payment were all frozen).
It would be worth exploring, but I would say the likelihood of the current government doing it are very slim, to none.
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Ahh, MMT.
Here's a critique of MMT, from the left, in fact from a think tank funded by individuals rather than corporations, so less ideologically suspect if that's your bag:
https://www.peoplespolicyproject.org/2019/02/24/whats-the-point-of-modern-monetary-theory/
Thanks Sean. I wouldn't say I'm in the "Modern Monetary Theory" camp, so to speak. I'd actually observed what has happened with QE since 2008 and come to that conclusion. Interesting, I'd posted something similar back before I binned farcebook and got a response from a friend saying I should check out MMT.
The link you gave ties in quite well with my thinking. I'm not naïve enough to think you can "have your cake and eat it", but I do think that at times of historically low (and even negatoive borrowing rates, with minimal inflationary pressure, we should flips things on their head and just fund what needs funded (and for me, right now, that includes energy transition, education, health) if that leads to inflationary pressure, then we tax. #
MMT has been bad-mouthed due to people thinking it means we can spend without consequence (tax rises), which is clearly bunkum. Doesn't mean we can't advocate a different way of addressing a country's needs though.
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So for clarity, "current crisis" isn't covid, it was the last one, although the current situation is basically unchanged in debt / GDP terms:
(https://www.efpia.eu/media/24474/130904-1.jpg?width=500&height=209.26339285714286)
I think it speaks for itself - the line never drops below the x-axis i.e. we *never* pay back the debt. Obviously there is a lot of historical context to take into account.....
I'm totally on board with the idea of it being better to spend what needs to be spent, especially with rates this low, but I think the context of that graph is very relevant. As you say the level at which debt becomes a problem is ill defined but I'm not sure that it should (and I don't think you did, to be clear!) take from the graph that the answer is ill defined but >250%.
The growth of the industrial revolution, and probably the post war period too, is something I'm not sure I see us replicating these days. Also, historically there was a lot more pressure for institutions to hold gilts than there maybe is now, and for a decent chunk of that graphs time horizon sterling was the reserve currency that the dollar is today, which creates more demand and allows for larger debt issuance than might otherwise be the case.
Having said all that, we printed a lot of money to get through 2009-ish and we're printing a lot more now and the demons of inflation seem not to be rearing their heads. Between that and negative interest rates I'm not really sure how many of the usual rules make sense any more anyway! Uncharted Territory.....
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I think it speaks for itself - the line never drops below the x-axis i.e. we *never* pay back the debt. Obviously there is a lot of historical context to take into account.....
I'm totally on board with the idea of it being better to spend what needs to be spent, especially with rates this low, but I think the context of that graph is very relevant. As you say the level at which debt becomes a problem is ill defined but I'm not sure that it should (and I don't think you did, to be clear!) take from the graph that the answer is ill defined but >250%.
The growth of the industrial revolution, and probably the post war period too, is something I'm not sure I see us replicating these days. Also, historically there was a lot more pressure for institutions to hold gilts than there maybe is now, and for a decent chunk of that graphs time horizon sterling was the reserve currency that the dollar is today, which creates more demand and allows for larger debt issuance than might otherwise be the case.
Yes to be clear, I'm definitely not saying that we can merrily go to 250% ratio (thanks for recognising that!). As I say a sustainable level is an eternal debate. The only point behind posting the graph was simply to demonstrate clearly that the UK has always been in debt, as Fultonius said and which perhaps some people may not believe? I am aware that there is a school of thought that seems to hold that the government being in debt is somehow abnormal / undesirable, which is a point of view but they have the last 330 years to explain.
Everything you said about historical context I agree with.
Having said all that, we printed a lot of money to get through 2009-ish and we're printing a lot more now and the demons of inflation seem not to be rearing their heads. Between that and negative interest rates I'm not really sure how many of the usual rules make sense any more anyway! Uncharted Territory.....
It certainly is for us. Although Japan have been in similar territory for some years.
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Forgot to mention - the other main point I was trying to get at was that Covid is the not only thing in play with government finances. We still have Brexit definitely* happening on Jan 1st 2021, 10 weeks away. This may be being displaced by Covid in the media / public imagination, but I the same will not be the case in government. It is telling that the scientific advice RE circuit breaker has been released, but the economic assessment hasn't. It is perfectly possible it flags projections RE Brexit, not necessarily to UK advantage I suspect, that may bring it back into focus at a crucial** time in the negotiations. Today is BJ's so-called "deadline day" for no-deal.
*Nothing is definite these days!
**The real crucial time is once the result of the US election is known.
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It certainly is for us. Although Japan have been in similar territory for some years.
Very true.
I can't find out exactly how much the BofE currently holds but it's target is £645bn, or give or take 30% of the entire national debt. Now of course the Bank would say that "this is a temporary state of affairs and those will be sold back into the market at some point, it's definitely not as simple as saying a branch of government owns 30% of the government's debt which means it all cancels out"; I am more of a pessimist and expect some of that to still be there when I retire! Effectively we printed £645bn and there wasn't hyperinflation, the sky didn't fall in - hell, I'm not sure how many people actually understand that's what happened (my mother certainly didn't). Given that I'm starting to wonder whether the really meaningful "sustainable level" isn't necessarily how much debt you have but how much money you can print to buy it up with before it all goes pear shaped.....
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Ahh, MMT.
Here's a critique of MMT, from the left, in fact from a think tank funded by individuals rather than corporations, so less ideologically suspect if that's your bag:
https://www.peoplespolicyproject.org/2019/02/24/whats-the-point-of-modern-monetary-theory/
Thanks Sean. I wouldn't say I'm in the "Modern Monetary Theory" camp, so to speak. I'd actually observed what has happened with QE since 2008 and come to that conclusion. Interesting, I'd posted something similar back before I binned farcebook and got a response from a friend saying I should check out MMT.
The link you gave ties in quite well with my thinking. I'm not naïve enough to think you can "have your cake and eat it", but I do think that at times of historically low (and even negatoive borrowing rates, with minimal inflationary pressure, we should flips things on their head and just fund what needs funded (and for me, right now, that includes energy transition, education, health) if that leads to inflationary pressure, then we tax. #
MMT has been bad-mouthed due to people thinking it means we can spend without consequence (tax rises), which is clearly bunkum. Doesn't mean we can't advocate a different way of addressing a country's needs though.
I would say the argument "tax if we have inflation" is a definite MMT argument, and it ignores the fact that in the 1960s and 70s the UK had fairly high inflation (which barrelled around all over the place) alongside fairly high taxes. We know that monetary policy works to keep inflation in check, I'm not sure we should jettison that finding so easily.
As for the graph, what AJM said...! I am not convinced tho that a governent left-wing enough to satisfy Nige would appreciate that limits as to what we can borrow might exist, and that they would not take away from the graph the fairly obvious conclusion that the UK debt/GDP ratio did actually decline after the peaks, for whatever reason. They would probably, in my view, overestimate any government's ability to increase growth and assume that they could replicate post-1945 growth rates via their own policies. This may look like continuing to fight the last war, and maybe it is, but I prefer to think of it as paving the way for an effective social democratic government-in-waiting that the British people might actually vote for.
Having said that, Tory talk of immediate tax rises, and indeed the whole post 2010 austerity experiment, are to my mind fucking destructive bollocks.
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Ahh, MMT.
Here's a critique of MMT, from the left, in fact from a think tank funded by individuals rather than corporations, so less ideologically suspect if that's your bag:
https://www.peoplespolicyproject.org/2019/02/24/whats-the-point-of-modern-monetary-theory/
Thanks Sean. I wouldn't say I'm in the "Modern Monetary Theory" camp, so to speak. I'd actually observed what has happened with QE since 2008 and come to that conclusion. Interesting, I'd posted something similar back before I binned farcebook and got a response from a friend saying I should check out MMT.
The link you gave ties in quite well with my thinking. I'm not naïve enough to think you can "have your cake and eat it", but I do think that at times of historically low (and even negatoive borrowing rates, with minimal inflationary pressure, we should flips things on their head and just fund what needs funded (and for me, right now, that includes energy transition, education, health) if that leads to inflationary pressure, then we tax. #
MMT has been bad-mouthed due to people thinking it means we can spend without consequence (tax rises), which is clearly bunkum. Doesn't mean we can't advocate a different way of addressing a country's needs though.
I would say the argument "tax if we have inflation" is a definite MMT argument, and it ignores the fact that in the 1960s and 70s the UK had fairly high inflation (which barrelled around all over the place) alongside fairly high taxes. We know that monetary policy works to keep inflation in check, I'm not sure we should jettison that finding so easily.
As for the graph, what AJM said...! I am not convinced tho that a governent left-wing enough to satisfy Nige would appreciate that limits as to what we can borrow might exist, and that they would not take away from the graph the fairly obvious conclusion that the UK debt/GDP ratio did actually decline after the peaks, for whatever reason. They would probably, in my view, overestimate any government's ability to increase growth and assume that they could replicate post-1945 growth rates via their own policies. This may look like continuing to fight the last war, and maybe it is, but I prefer to think of it as paving the way for an effective social democratic government-in-waiting that the British people might actually vote for.
Having said that, Tory talk of immediate tax rises, and indeed the whole post 2010 austerity experiment, are to my mind fucking destructive bollocks.
Amen.
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As for the graph, what AJM said...! I am not convinced tho that a governent left-wing enough to satisfy Nige would appreciate that limits as to what we can borrow might exist....
I'll take that in the good humour with which I'm sure it was intended! :kiss2: Bit busy to respond fully but will hopefully get round to it.
In the meantime, relating to the general argument on government borrowing, Alaistair Darling (ex-chancellor) and Mervyn King (ex-governor of BofE) submit that it should currently be unconstrained to fund further furlough support: https://www.theguardian.com/business/2020/oct/19/mervyn-king-says-covid-furlough-scheme-may-be-needed-throughout-2021 (usual apologies for cliched Guardian link etc)
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Another £150 billion of QE announced. Now up to £450 billion in 2020 alone. Between 2009 and 2020 QE went from £0 to £445Bn following the financial crisis, so in the last 6 months alone we are now exceeding the entire amount of QE deployed in response to that.
Steve Baker MP said that £20 million spent on free school meals would sink the currency.
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Another £150 billion of QE announced. Now up to £450 billion in 2020 alone. Between 2009 and 2020 QE went from £0 to £445Bn following the financial crisis, so in the last 6 months alone we are now exceeding the entire amount of QE deployed in response to that.
Steve Baker MP said that £20 million spent on free school meals would sink the currency.
But, school meals for vulnerable kids, at Xmas, was so much too far...
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Another £150 billion of QE announced. Now up to £450 billion in 2020 alone. Between 2009 and 2020 QE went from £0 to £445Bn following the financial crisis, so in the last 6 months alone we are now exceeding the entire amount of QE deployed in response to that.
Steve Baker MP said that £20 million spent on free school meals would sink the currency.
But, school meals for vulnerable kids, at Xmas, was so much too far...
You know QE and state benefits aren't the same thing right?
Completely agree that free school meals should have been funded, and that excuse from Steve Baker is clearly nonsense, just think that's a strange comparison to make.
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Another £150 billion of QE announced. Now up to £450 billion in 2020 alone. Between 2009 and 2020 QE went from £0 to £445Bn following the financial crisis, so in the last 6 months alone we are now exceeding the entire amount of QE deployed in response to that.
Steve Baker MP said that £20 million spent on free school meals would sink the currency.
But, school meals for vulnerable kids, at Xmas, was so much too far...
You know QE and state benefits aren't the same thing right?
Completely agree that free school meals should have been funded, and that excuse from Steve Baker is clearly nonsense, just think that's a strange comparison to make.
Exactly.
It was, of course, just a flippant dig about the relative difficulty or ease with which the “ money” can be found, depending on who wants it...
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Ah okay, gotcha.
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Dark money and Farage links to the anti lockdown movement.
https://bylinetimes.com/2020/11/03/time-for-recovery-lockdown-nigel-farage-world-for-brexit/
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You know QE and state benefits aren't the same thing right?
Completely agree that free school meals should have been funded, and that excuse from Steve Baker is clearly nonsense, just think that's a strange comparison to make.
Yes I know that. And I accept my post was a non-sequitur! But ultimately the money the government is borrowing and spending at present is (largely) originating with the Bank of England's QE. So if the argument against £20million on school meals is that it will "debase the currency" then it is, as you say, nonsense - in the context of the £450,000 million that has been created for the government. Its 0.00004%. I
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Just listened to the most extraordinary interview I have ever heard on the BBC news channel with Jolyon Maugham from the Good Law Project, talking about poor governance in PPE contracts . Started at 10.30am and lasts for 10 minutes and builds to a proper crescendo. I'll try and link from BBC I player later.
It relates to this NAO report highly critical of government.
https://www.nao.org.uk/press-release/investigation-into-government-procurement-during-the-covid-19-pandemic/
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It seems that no-one in the media is brave enough to call “giving preferential contracts to friends of Tory MP’s” corruption.
Which is what it is - and why we normally have a tendering and procurement process.
Irrelevant now - but I suspect it breaches EU law....
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A few more links on the PPE scadal but the news clip is sadly still unavailable from I Player.
https://mobile.twitter.com/jolyonmaugham
https://bylinetimes.com/2020/11/11/prime-minister-boris-johnson-confronted-about-the-great-procurement-scandal/
https://bylinetimes.com/2020/11/18/procurement-uk-government-report-coronavirus-national-audit-office-ppe/
https://bylinetimes.com/2020/11/18/plymouth-exclusive-brethren-ppe-contracts-uk-government/
https://www.metro.news/millions-went-through-governments-pals-advisers-and-a-go-between/2225459/
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A useful link showing the idea that the oft touted UK tory cabinet line that there is a trade-off between covid response and protecting the economy is wrong.
https://ourworldindata.org/covid-health-economy
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Away from covid, a report on tax havens from the Tax Justice Network:
https://taxjustice.net/2020/11/20/427bn-lost-to-tax-havens-every-year-landmark-study-reveals-countries-losses-and-worst-offenders/
"The UK spider’s web is responsible for over a third of global tax losses. The jurisdiction that causes countries the most global tax losses is British Overseas Territory Cayman, which is responsible for other countries losing over $70 billion in tax every year. However, Cayman is just one jurisdiction that falls under UK’s network of Overseas Territories and Crown Dependencies, where the UK has full powers to impose or veto lawmaking and where power to appoint key government officials rests with the British Crown. Infamously referred to as the UK spider’s web13, extensive research has documented the ways in which this network of jurisdictions operates as a web of tax havens facilitating corporate and private tax abuse, at the centre of which sits the City of London.
The State of Tax Justice 2020 finds that the UK spider’s web is responsible for 37.4 per cent of all tax losses suffered by countries around the world, costing countries over $160 billion in lost tax every year."
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https://www.theguardian.com/business/2021/jan/09/dormant-asset-scheme-be-expanded-beyond-bank-accounts-reclaim-fund-covid-relief
A heads up for those who might have a small company pension or savings account out there that they haven't been in touch with for a long time.
Help on finding small old pensions:
https://www.gov.uk/find-pension-contact-details
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Amateur traders give a hedge fund a bloody nose and make the owners a fortune.
https://www.theguardian.com/commentisfree/2021/jan/28/anarchy-in-jokes-and-trolling-the-gamestop-fiasco-is-4chan-think-in-action
https://www.theguardian.com/business/2021/jan/28/gamestop-shares-robinhood-app-ban-blackberry-amc-nokia-reddit
https://www.theguardian.com/business/2021/jan/28/gamestop-how-reddits-amateurs-tripped-wall-streets-short-sellers
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See the investor's thread..
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Doh!...should have known it would be here somewhere. A potential stock bubble is worrying. My ISAs are up another 10% in 3 months (on average).. a bit too good to be true or that lucky.
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So is this the end?
https://www.theguardian.com/business/2021/jan/28/gamestop-shares-robinhood-app-ban-blackberry-amc-nokia-reddit
I still think this is beyond the subject of investments as the response indicates the big hedge fund players and wider market system don't like what happened and in that the reactions do look odd... free market hawks encouraging a sort of 'protectionism' within a potential 'regulatory gap' ?
Rewatching The Big Short recently I'm far from clear that enough has changed to stop big banks criminally rigging the system and getting off very light.
Incidentally, one of the 'players' in The Big Short is now shorting Barclays.
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https://www.economist.com/leaders/2021/05/08/the-digital-currencies-that-matter (https://www.economist.com/leaders/2021/05/08/the-digital-currencies-that-matter)
Governments and financial firms need to prepare for a long-term shift in how money works, as momentous as the leap to metallic coins or payment cards. That means beefing up privacy laws, reforming how central banks are run and preparing retail banks for a more peripheral role. State digital currencies are the next great experiment in finance, and they promise to be a lot more consequential than the humble atm
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There’s been lots of chatter over the last 12-18 months about the coming transition to state-controlled digital currencies. Many have concerns over infringements on individual freedom to make purchases of things states may not approve of, and privacy over individual purchases. A core concern being if a state - down to local council level - doesn’t like you for whatever reason then could they cut off your ability to use your own money, or prevent you purchasing what you want to with your own money. No doubt loads of conspiracy theory paranoid loons mixed into some genuine concerns, to make a fertile pot.
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Thought I’d kick over these ashes.
I’m currently sitting at home, twiddling my thumbs.
I am supposed to be sat in a classroom at Britannia Royal Naval College, learning all kinds of exciting things about, well, stuff.
However, two of my instructors tested positive and I’ve been sent home. I’m negative, double vaccinated and I hadn’t even met the affected instructors yet.
Is anyone else still experiencing similar disruptions?
I reserve opinion on how I feel about sitting at home…
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Thought I’d kick over these ashes.
I’m currently sitting at home, twiddling my thumbs.
I am supposed to be sat in a classroom at Britannia Royal Naval College, learning all kinds of exciting things about, well, stuff.
However, two of my instructors tested positive and I’ve been sent home. I’m negative, double vaccinated and I hadn’t even met the affected instructors yet.
Is anyone else still experiencing similar disruptions?
I reserve opinion on how I feel about sitting at home…
I sympathize with your frustration Matt, I don't think if it's due to similar disruption, but I've been applying for jobs now for nearly a year, although not during the last lockdowns last winter, without any success. Journalism, outdoor industry, catering industry, I'm beginning to wonder if I'm doing something really wrong, but I've had feedback from several people and noones said anything significantly critical, just that other people were better candidates.
The media guff about millions of jobs being advertised never seems to mention how many of them are kickstart schemes and thus only open to 16-23 year olds.
Hope your work gains some interest soon!
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Yes, it’s not the optimistic climate that the media portray.
I have had two false starts over the last 18 months. One of which I had a signed contract for, passed my start date (without getting instruction on where to attend on that date, even though I had been promised the same on on the Friday before my Monday start) only to be told on the Tuesday afternoon that it was all postponed. Start rearranged for September (last), only to be told the whole project was to be kicked in to a September spending review, mid June. Each delay, ultimately, down to Covid, as rates surged and Gov departments retreated to home working again or issues around “isolation prior to deployment” became too tricky for Civvie contractors.
It’s been far more stressful and financially difficult than that sounds, as I had to withdraw from my other income source, prior to the first start date and have basically been unemployed for 12 months.
Our business (the climbing gym) has been massively impacted by it all. Our biggest income stream had always been schools, youth groups, clubs and parties (not climbers, there aren’t enough of us. Those kids parties you hate so much, subsidise your training). That’s only now and slowly, beginning to recover and we’ve had to cover shortfalls from the little we’d put away for a rainy day (actually it’s quite damp, really. Bloke down the road is building a big boat in his garden. I think his name is Noah, or similar).
Almost all the Government “support” went to Landlord and Utility companies and, since neither of us had ever drawn a wage, we couldn’t furlough ourselves (actually, we never even took a dividend. Still the only money we take out is “loan repayment” on our original investment and we haven’t been able to do that since Feb ‘20).
Basically, life sucks in a great many ways and Covid can do one (with an exceptionally large, spiky, dildo, coated in chilli). My patience with anti-vax morons and idiots that cry over facemasks and social distancing, is at the point where I would like to see the same dildos deployed in those quarters, too.
Add to that the more “Brexity” shite and it’s even more grating. Under the circumstances, running our van (the only thing all six of us can travel in together) is all but impossible. Even a half hour trip up to the Moors, to climb or whatever, is a once a month luxury now (we can’t budget more than £25/30 a week for fuel. Last Friday, £25 bought me 16ltrs of fuel).
As for shopping for a family of six, where the “children” are now almost as big as I am, wear adult clothes and shoes and eat adult portions? Fuck my life!
To be clear, prior to the Pandemic, we were secure, not flush, but pretty comfortable. The business gave some extras, it wasn’t essential. We’ve gone from ok, to unable to cover basic needs, even though our income hasn’t significantly diminished.
Both of us have managed to secure new employment and we both started this month, so, in theory, next month should be better. That hasn’t been as easy as it sounds, of course and I can strongly sympathise with Toby. This isn’t a sellers market, regardless of the hype in the Press. We’re both lucky to have unique skill sets, that by chance, play well into the current state of the world (which seems pretty wild and not simply because of Pandemics and Brexit. They just seem to compounding negatives for the UK. We as a nation, have shit timing).
Ok. Bit of a rant. But I’ve been sitting on it without being able to vent for months (and it feels like the above mentioned dildo).
I am certain, that all around me, people are more bad tempered, less tolerant and generally unhappy. Everyone I speak to, is struggling financially. I know many people who have lost jobs, though most seem to have found alternatives, if “lower” than their expectations. Quite a few of my friends have taken contracts in the Middle East, this year, to get away from their woes here (all Engineers).
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Thanks Matt, I don't think I've pegged my expectations too high, applied for any number of cafe, kitchen porter, retail or waiting jobs along with other things. I've got 3 degrees, 2 of which are vocational, its getting pretty tedious.
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Thanks Matt, I don't think I've pegged my expectations too high, applied for any number of cafe, kitchen porter, retail or waiting jobs along with other things. I've got 3 degrees, 2 of which are vocational, its getting pretty tedious.
I know. I think about you often and wish I could help. (That sounded far soppier than intended, just add a bit of manliness there, somehow).
(Actually, I could cry about it, if only it was acceptable. I have in private. I don’t just mean my own shite, I mean all of it. I can’t explain how worried I am about my kid’s futures, for instance).
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I have proper sympathy to anyone looking for jobs, many companies treat job applicants with contempt, communicating only when it suits and providing feedback of zero value. Good luck to you both.
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...providing feedback of zero value...
I've been applying for a few Civil Service jobs and it seems they are required to give applicants feedback. One or two bits have been quite useful, but one was simply "17"! :furious:
Worth bearing in mind that the "jobs boom" is only in certain sectors, and that overall the UK economy is still smaller than when the virus hit, by about 5% if memory serves me rightly. Good luck to Matt, Toby and whoever else is looking for work.
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Thanks for the support everyone, it's reassuring in a way that others seem to have had similar experiences.
I'm not sure how much of the issue is covid and how much is Brexit, but it's easier for an organisation to blame the pandemic as it sounds less political.
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Keep going, hang in there.
Plenty happening up here, but I think not a lot of crossover for your area of expertise sadly.