There’s a hole in my bucket

hole in bucket.jpg

You can’t blame the Conservative Government for the weather. But you can blame the Labour Government for the banking crisis of 2008. David Cameron made merry with the note left by Liam Byrne, chief secretary to the Treasury under Gordon Brown, to his successor ‘I’m afraid there is no money’ [left]. A throwaway line, much like Cameron talking about ‘all that green crap’. Because there is always money. How a government spends the money it has and the money it borrows determines what type of government it is. The Conservative Party takes money from poor people and gives it to rich people is a simple formula that holds true.

The simplest way the government does this is by printing money which they then buy back in the form of bonds. Arbitrage is a process by which a trader uses the price difference between the banks buy money at and the price they sell it at to make a guaranteed profit. Thank you Bank of England. Banks then increase the liquidity of the nation by loaning this money to an indebted nation, while wages have stagnated at or below 2008 levels, borrowing has increased to fill the gap. Productivity between 2008 and 2014 is almost zero.

The barometer of how well a nation is doing can be counted in terms of GDP, how much a nations’ goods and services increase. In a good year we experience less than 1% growth but beggars can’t be choosers.

Only they can if they call for increasing levels of self-regulation are met. Royal Bank of Scotland, for example, rescued with £45 billion of public money. Increasing arbitrage between buyer and seller by Libor fixing, selling dodgy debt wrapped up in mortgages, fixing the price of gold. But, of course data shows we’re back to the bonus culture. Average of quarter of a million pound bonuses paid to 900 lucky bankers in the US last year. They’re worth it. Arbitrage gaming a refund on the tax you’ve paid on losses, or bonuses for bosses you’ve made. Arbitrage moving global profits made in one country to another no-tax or low-tax country such as Ireland or the Seychelles. Alistair Darling as Chancellor of the Exchequer set out a deficit reduction plan. Later he followed the path of most high ranking politicians and joined the board of Deutsche Bank.  Imagine Sean Connery fighting against Al Capone and suddenly swapping sides and joining his bootlegging gang.  Only poor people pay tax.

Weather is a matter of liquidity. But climate change is not a matter of days or weeks, but longer term. That’s the Third Word War. And we’ve already lost. The cost is going to be tens, perhaps hundreds of millions of refugees on the move, famine and wars. Our economy is premised on a discredited notion of liquidity, but monetarism can’t fix the hole in our bucket. When the levee broke, as it did in New Orleans in 2006, what seemed dumb, directly spending public money on infrastructure was flipped. Not directly spending public money, because fiscal spending was a bad thing, was the stupidest thing since Reaganomics as clean-up costs soared. Public spending on infrastructure. That’s the cruellest joke. There’s a hole in my bucket and the water’s rising.

 

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