Fortsätt till huvudinnehåll

Finance Meltdown and the Crash of 2026

The row over what to do about Northern Rock rumbles on. It will be surprising if there are not other banks in a similar situation. If there are, can the government guarantee their depositors' savings too?

The other issue is this. Huge amounts of money have gone abroad to pay for consumer spending, with the result that previously British-owned assets have fallen into foreign hands.

READ ABOUT £65 BILLION BRITISH DEBT

And what has funded this consumer spending? Borrowing on the security of land values which have themselves been stoked up by injudicious lending.

This is in principle no different from what happened in the great crash of 1929. My own suspicion is that not only are we are moving towards the worst economic crisis since the end of World War 2, but that the problems that we are seeing at the moment are just the start. Things will get a lot worse over the next couple of years.

I have no confidence even in the security of such seemingly solid pension schemes such as those provided by local authorities and other public sector bodies.

None of this need have happened. Booms and slumps running on an 18 year cycle were a persistent feature of the nineteenth century. As long ago as 1880 it was demonstrated that they were a consequence of the interaction of the land market with the banking system. A solution was proposed, which nobody has ever convincingly refuted. Unfortunately and unforgivably, politicians and the professional economists who advise them have consistently ignored and even dismissed this analysis. Unless the proposals put forward in 1880 are implemented within the next five years, it would be a good idea to pencil in the next crash for around 2026.

Kommentarer

Populära inlägg i den här bloggen

The dreadfulness of British governance

I wrote to my MP on two entirely separate issues recently. The first was to do with the replacement for the Inter City 125 train, which at £2.6 million per vehicle, is twice as expensive as it ought to be. The second concerned the benefits of a switch from business rate and Council Tax to a tax based on site values. In both cases, the replies were full of spurious, unsubstantiated assertions and completely flawed arguments. This is typical. You will not get an iota of sense from the government on any area of public policy at all - finance, economics, trade and employment, agriculture, housing, health, transport, energy. All junk. If you write to your MP you will invariably receive answers that are an insult to your intelligence, no matter what subject you are writing about. Of course they cannot understand statistics. They are innumerate. Whitehall is staffed with idiots with a high IQ. Look at their IT projects. And mind your purse, they will have that too.

How much more will the British tolerate?

The British are phlegmatic, tolerant and slow to rouse. Thus there was no great reaction after the terrorist attack in July 2005. The murder of Lee Rigby created a sense of outrage, but nothing more, since it appeared to be an isolated incident. Two serious incidents within a fortnight are another matter. Since the first major terrorist incident in 2001, authority has tried to persuade the public that Islam is a religion of peace, that these were isolated events, or the actions of deranged "lone wolves", having nothing to do with Islam, or to reassure that the chances of being killed in a terrorist attack were infinitesimally small. These assurances are are beginning to wear thin. They no longer convince. If government does not act effectively, people will take the law into their own hands. What, however, would effective action look like? What sort of effective action would not amount to rough justice for a lot of innocent people? Given the difficulties of keeping large n...

Importing people to sustain demand

I got involved in a discussion with a Youtuber called “Philosophy all along”. This was in connection with criticism of Trump’s policy of deporting illegal migrants, which he argued would be bad for the economy as it would reduce demand. This implies that there is a need to import people to sustain demand. There is no obvious reason why a population should not be able to consume everything that the same population produces. If it can not, then something else is going on. It is a basic principle that wages are the least that workers will accept to do a job. Wages are a share of the value added by workers through their wages. The remainder is distributed as economic rent, after government has taken its cut in taxes. Monopoly profit is a temporary surplus that after a delay gets absorbed into economic rent. Land values in Silicon Valley are an example of this; it's like a gold rush. The miners get little out of it. Rent and tax syphon purchasing power away from those who produce the g...