Leading to oblivion?
Posted by: erquicia on: December 10, 2008
On Saturday, I joined several thousand people on the climate change march from outside the US embassy to parliament square.
It was a good humoured affair in spite of the seriousness of the issue, timed to coincide with re talks in Potsdam.
The media found other things to focus on that day – football, Greek riots and Xmas shopping statistics.
What they missed was a curious political phenomenon.
Two leaders were present at re rally. One came across well, projecting her voice.
She was on familiar territory – this was after all a core party issue. Caroline Lucas, the green party’s recently elected leader, had relaunched the party with the Green New Deal. This mini manifesto was a populist document, more palatable to the media, is still the best roadmap out there – though it is not clear how it sits with the real party manifesto.
Easy to understand, it is meant to allow GP activists to engage with re public on serous issues.
and show the Party has a plan for jobs and the wider economy.
It can be criticized for trying to save existing capitalism and its backdrop of Roosevelt and Churchill quotes from an imperial era. Pre-Lehman Brothers it seemed very radical early September. Now as even Cameron acknowledges, the world has changed.
Whatever its merits, the eager beavers expecting a media blitz with a New Green party will be chastened by the damp squib of a campaign since September.
It seems the media feel the environment can be discarded as we worry about the Great Recession 1.
The Greens face an uphill task to be heard in 2009. No change there, then.
The real story on Saturday was about the other leader.
Nick Clegg had sent out a clarion call to LIb Dem activists to turn out in large numbers
After a week of build up in the Independent, this was to be his bid for leadership of the green movement – at least the so-called Middle England voters. In a way, one could say he was suggesting there was no need to vote Green, when the Lib-Dems (a more ‘serious’ party!) was available. Reminiscent of the Ken vs anonymous Green Party mayoral candidate charade earlier this year.
What a fiasco for Clegg.
In a sea of green, there was hardly a yellow banner or badge to be seen.
The Lib Dems snubbed Clegg and the grassroots probably now realize they have elected the wrong leader. He has moved the party to the right in one of the worst political blunders this decade. His timing was atrocious.
In reality, the cult of the leader might have been appropriate for the anodyne politics in the era of the credit boom. Politics was bunched up in the Right, though we called it the centre-ground. The only differentiation was presentation and ‘personality’.
The electorate is now polarizing – to Left and Right. Times are tough.
The last thing they want is another Blairite chief executive, focusing on marginal seats and searching for the holy grail of the Centre.
The world has indeed changed.
Will the courtiers to all leaders understand that fact quickly enough?
Panic at the Bank of England
Posted by: erquicia on: November 6, 2008
We said yesterday that if the Bank of England cut by 1% then it would mean a savage recession, worse since WW2.
Well, they went one better and cut by 1.5%. So it now stands at 3%, down from 4.5%.
What’s our reaction?
This is panic.
It means interest rates are going to fall to 2% (OR LESS) sometime in 2009.
With house prices in freefall (already down 15% this year, with two more months to go) and Capital Economics forecasting another 20% drop next year……. roughly 40% off peak prices…….. and the banking sector in full retreat,……………… the Bank of England is saying we are close to an economic depression.
Of course it is not saying that in words (and maintaining a stiff upper lip that they are really in control… sure!) but their actions indicate that they are throwing everything bar the kitchen sink at the problem.
Now for the bad news….
a) expect the lenders to act like oil companies when prices of their crude go down… they take their time passing on the costs…… in this case, banks will invoke small print in tracker mortgages and refuse to go below 3% and / or they will up their fees and need for deposits or use the Loan to Value ratios …. and other tricks to ensure they don’t lend sub prime and squeeze what used to be prime… Of course prime is rapidly devalueing.
b) this is a solvency problem for a lot of big companies, beyond banks… Cutting interest rates implies that this is a problem of liquidity…. Wrong. The credit crunch will continue, after a few days of false euphoria. The big Private Sector is on strike (in terms of refusing to lend) while the Government is cheapening money and offering hundreds of billions to stave off depression.
Who will win?
My guess is that because we have a craven set of politicians, there is little political pressure that can be put on out of control Wall Street and the City of London.
The latter two (as long as they survive, unlike Lehmans) can make a lot of money out of all this. Imagine buying assets at rock bottom prices?
The Bank of England interest cut is about 12 months too late, in the context of mainstream economics.
Why oh why does not Mervyn King resign?
Some traditional values of falling on one’s sword has seemed to disappeared from parts of the venerable British establishment……
South America in the cross-hairs?
Posted by: erquicia on: November 5, 2008
- In: asia | Bolivia | geopolitics | Latin America | US foreign policy | Wall Street
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Will Latin America bear the brunt of US ire?
After a few months of phoney war and sweet words, will Bolivia come under renewed attack to prose away Santa cruz and it’s rich gas reserves ?
Will Chavez have to face another coup ?
Will columbia be pumped up to rattle Ecuador and the other neighbours?
Will Wall Street use the IMF to rip apart the economies once again in central America?
Will Mexico get an even worse deal through NAFTA and the new protectionism for the North but not for those south of the rio grande?
Latin America knows that the giant is suffering from cuts to its economic body and wounds from two costly wars.
However, a wounded giant would prefer to strike while it’s still standing.
The Monroe doctrine is of almost divine significance to Washingon.
Asian powers (including Russia as part f the Shanghai cooperation organiaation) is not welcome.
1997 and 2008
Posted by: erquicia on: November 4, 2008
- In: geopolitics | politics | U.K. | US foreign policy
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U.K. 1997
U.S.A 2008
Lots of bumph about ‘things will get better’ and ‘an ethical foreign policy ‘ then.
That led to wars in the Balkans and West Asia and a credit binge emriching a few and trapping the majority into debt.
Now we hear about change and hope. So that’s what a billion dollars of advertising buys – rhetoric !
For the cheerleaders staying up late tonight, I have two questions:
A) if you were given a pen and paper, could you write down Obama ‘s policies?
B) do you know how it turned up after another hopeful came to power after eight years of Nixon and Ford?
Blair, Obama , Climton – these are snake oil salesmen. They are leaders for the corporate world – with not a shred of left wing thinking important their bodies.
Cheerleaders for unfettered globalisation they belong to yesterday.
Expect lots of empathy and sharing of pain but focus on the people with real power who know their man is there to prevent real change.
And to maintain the status quo of a cruel imperial power that thinks nothing of destroying the lives of billions of people and even the planet.
The honeymoon will be short . Yes we will get propaganda about ending wars and beimg tough witj wall street.
Just who gave he bulk of the campaign comtributions?
The first black president will turn out to be the most hated in recent memory as America sinks into a depression.
If you derided Pravda, why believe Fox news, CNN or the new york times?
As another black politico once said :
In America there are two parties – Republican and republican lite.
Enjoy the coronation. Marvel at the spectacle. Do not be fooled.
Highway to Hell
Posted by: erquicia on: November 3, 2008
It’s now November and we can no longer say ‘last month’ saw the crash of Lehman brothers and the slow crash of the stock markets
Does it not seem an age ago? It was only six weeks ago that one infamous US investment bank bit the dust.
We have almost become immune to bad news. Unless a bank collapses we think it’s an OK week.
Well, another bank had just collapsed in America – the seventeenth this year and I don’t even know its name.
I cannot name the other sixteen beyond Bear Sterns, lehman, wachovia perhaps and merrill lynch.
This crash is proceeding so slowly we can almost get on with our normal lives.
What does normal mean when the engine that takes us on the road to extreme globalisation break down?
Well, the mechanics from the AA (add your favourite rescue service here ) have patched it up, jump started it and sent you up the highway before the next breakdown (bank collapse, currency sell off, forced merger)
As ACDC would say: we are on the highway to hell.
Even then we were not warned about the dangers on our way to nirvana via unfettered capitalism.
Truth be told many of us didn’t protest as we bathed in the luxury of ever rising house prices and learnt the science of home equity release.
Most of us still don’t get it.
This is the worst crisis of capitalism since 1930
If that is so, it does not mean a short slowdown or that we are near the bottom of the Market.
Have we not heard the great and the not so good say this is a once in a lifetime event?
A bit like world war two!
The twin engines of the financial and property sectors are seriously damaged. They can limp along to the next garage but you can forget about cruising up that highway
We are going to have to get off and catch the bus (better still , a train) in a different direction.
This new political debate has not started.
The longer we leave it, the greater the chances that the extreme right will fill that gap.
Who says we don’t make the same mistakes over and over ?
We know what Europe did in the thirties. The right wing must be salivating at the prospect.
The signs are ominous.
Lehman’s collapse was deliberate
Posted by: erquicia on: October 17, 2008
- In: asia | economics | Financial crisis & economic depression | Money | Wall Street | war
- 1 Comment
Lehman Brothers was allowed to fail. The ultimate fall guy. Without its demise, ex-goldman Sachs Hank Paulson and his cronies could not engineer the largest transfer in wealth to a bloated financial sector.
He and his sidekicks had to scare the US political class that the Western financial system was on the verge of collapse. Well, the trick worked but only too well. The system is indeed in serious trouble and this is historic in many ways.
In 1907, there was a similar crash.
By 1914, the world was at war.
The media caused the house price crash
Posted by: erquicia on: October 17, 2008
- In: Money | U.K.
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Or so goes the argument by many a bewildered person claiming that the incessant headlines from the tabloids and the TV channels is scaring people. In other words, it is becoming self fulfilling.
In that case, would someone dig up the headlines from 2003 to 2005 and agree therefore that the media talked up the house price bubble?
You cannot have it both ways.
In reality, the bubble was caused by a deliberate policy by the banking sector, aided and abetted by all governments, to offer cheap credit. Interest rates of 1 to 2% in the US and Euroland!
Moreover, the banks sold off the mortgages, many knowing that they were full of NINJAs (no income, no job or assets) so passing on the risk to Asian governments.
Cheap credit more or less led to a property boom.
Little or no credit leads to a property bust.
We can blame the media for a lot of things but the house price crash isn’t one of them
A shock is coming to homeowners in UK
Posted by: erquicia on: October 17, 2008
Homeowners in the UK are in denial.
According to a survey by zoopla.co.uk more than a third believe their prices are worth more than the market is telling them. The majority are not buying into the argument that house prices are 13% down nationally compared to a year ago.
They will go into shock next summer as they finally realise that a house price crash is happening all around them.
Cut military spending & kickstart a green economy
Posted by: erquicia on: October 16, 2008
The UK military budget is 32 billion pound sterlng every year. Compare that to Europe’s spending of 120 billion. If the island nation had a sensible policy, it would reduce its budget by 15 billion.
In the teeth of a depression, a political movement has to crystallise around this:
- no more upgrades to nuclear weapon systems
- no more white elephant aircraft carriers
- no more wars 5,000 miles away
In a positive vein, it should use this war dividend to save jobs and at the same time move the economy towards lower carbon emissions.
One way of achieving twin objectives would be to use the money saved from fighting energy wars (Afghanistan & Iraq) and use it to develop a renewable energy sector, based on wind, tidal power and solar.
Add a comprehensive home insulation programme which provides jobs to hundreds of thousands laid off the construction sector and also reduced fuel poverty, and of course reducing carbon emissions – housing accounts for 25% of our carbon emissions.
The anti war movement has been adopting a moral stand. Now it can add an economic angle, along with a green perspective.
An island thousands of miles away from any military threat should be spending less per head than Italy, Germany or Spain.
The days of military follies and adventures must come to an end.
Banks need to remain nationalised
Posted by: erquicia on: October 15, 2008
So just how many trillions have been transferred from Western people to a bloated financial sector? €2 trillion or €2,000,000,000,000 in Europe alone. That excludes the UK.
The story being bandied around is that this ‘is a good deal for the taxpayer’ because the government will sell off the banks a few years down the line and might make a profit. Ballyhoo!
They point to the Scandinavian experience of the early 90s. This is unhelpful because they were entering a period of boom in the equity and property markets. We are sailing in the opposite direction and could be in for several years of a deep and savage recession – the worst in 40 years according to some economists.
Share prices, beyond a dead cat bounce, will lie in the doldrums for years, perhaps a decade (ask the Japanese)
moreover, the banks will soon be asking for yet more money.
The short term solution is to nationalise the banks completely, with a cast iron guarantee that they will not be sold off to big business.
If they do not like it, let them operate as businesses – as they have been insisting for decades. They cannot and therefore should have failed. In fact, they did fail.
When any customer of those banks falls behind their mortgages or loans, the banks were quick to repossess, without mercy.
Small businesses do not get the grace of government money and a promise of a sale five years later. They are brutally allowed to go bust.
The banks must remain in government hands, with more moral levels of payment and bonuses for the top officials.
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