OT. Interesting link about the future.

[harryagain]

So what does the panel think about this one? Can't fault the logic personally. And more important, what to do about it?

[harryagain]

And BTW is the counter-argument.

[Geo]

Dunno about the logic - they keep repeating how good they are - like a snake oil merchant.

But they tell you at the end (if you can wade through all the blurb) - buy their magazine...

[Geo]

"All in all the MoneyWeek article was stuffed full of misleading statistics, blatant revisionism, deliberate omissions, blatant fearmongering, adverts for their own magazine and services and outright lies all built on a foundation of exactly the kind of hard-right ideologically driven neoliberal pseudo-economic gibberish that actually caused the neoliberal economic crisis that they spend the whole article lying and fearmongering about."

They said it better than I did.

[Huge]

Thanks for posting that - I wasn't going to bother reading the article until I saw this lefty nonsense.

[Huge]

I only got 4 lines in before I reached the first logical fallacy.

[Tim Lamb]

I struggled through it. Skipping the lefty bits, the above seems about right:-)

The rebuttal also took some concentration and, apart from the graph corrections, seemed almost as far off in the other direction! He did say a couple of things which struck a chord...

Only borrow to invest if the payback is guaranteed and national strategies need to span more than one government.

I'll vote for a benign dictatorship:-)

One day someone (TNP?) is going to explain to me how you can continue to profit from speculation without ultimately expanding the world economy.

[Artic]

Owned by Bill Bonner ...

Bonner argues in his latest book that mob and mass delusions are part of the human condition.

Nuff said

[js.b1]

The MoneyWeek article is irritating. It extracts a part of a large argument circulating the USA for 12-18 months .

The problem: Housing/Debt/Stock bubbles of 1980 1990 2000.

- Each higher than the last, each not allowed to correct re Bank Of Last Re sort. Each accelerating GDP export, reducing domestic GDP to meet local soc ial costs. Each creating a bigger future bubble, future vacuum, next admini stration problem.

The cause:

- Bank deregulation, gov't using bank policy & taxation to fund social poli cy, Greenspan bail outs. Failure to increase mortgage rates & limit multipl es - seen as social fund not economic risk. Belief in big gov't, Cambridge Magdalene & Princeton 1960s failures finally got the helm with every failed soci-econ policy.

The reality:

- 1995 Greenspan saw a flat economy so hit the gas - and fell asleep at the wheel. 2008 was stupendously predictable & avoidable. 2008 proper correcti on could not be afforded - just like 1987 1998 2000 re bank & gov't failure .

Today:

- We get a shallow hole, flat recovery, banks zombie, UK burns generations to protect banks, Japan-II. Public sector cost is outrageous - even EC says UK could save 137B/yr, politically unacceptable. NHS will burn elderly - t heir lives or their jobs, so guess which is going to win.

The REAL risks:

- #1 - Political short-termism restarts housing bubble - hard as banks satu rated.

- #2 - Someone does not take an ax to public sector cost - market forces ra tes up.

- #3 - Systemic shock -> reaction -> repeat of bubble 1980 90 2000 -> South Sea Bubble II -> pre 1660.

Most likely "managed stability" becomes "managed decline" - exactly what th e political class want. That leaves us with demographic factors - USA has t he lower age benefit, USA wins.

So 2008 should have been left to continue, public sector pay/pensions -35%, banks collapsed, housing corrected, business miss-allocation corrected, hu ge dip and pretty much a good recovery. We did a JPM style bailout too soon AND we have a bunch of champagne socialists doing what champagne socialist s do - hide the cost, live the life, steal from everyone.

It is that "shock" that is the risk; and I think that may come from China n ot EU as a mature teenager has to give up its crack & fake business/bank/de bt habits.

[michael adams]

What it doesn't say is who the UK owes all this money to, and what they can do if we don't pay it back.

It's the old story.

If you owe your bank a thousand pounds and you can't pay it back, then you're the one who's in trouble.

If you owe your bank a thousand million pounds and you can't pay it back, then its your bank who's the one in trouble.

Same as the US which is even more indebted.

The reason the Arabs and latterly the Chinese lend the UK and US all this money, is because there's nothing else they can do with it, other than stuff in under the mattress. As rightly or wrongly the UK and the US are seen as the most stable countries in which to buy long term government bonds. Which is what this debt largely consists of.

michael adams

...

[John Williamson]

This does:-

An interactive graphic, showing the biggest international debt players in the Eurozone.

For instance, we owe the USA ?576.8 billion, while the USA owes us ?834.5 billion, so the USA as a whole don't care if we don't pay what we owe them, they could, potentially, just knock it off what they owe us. Of course, a lot of the ?576.8 billion is owed by companies and people in the UK to people and businesses in the USA, but the net result is that the USA owes us money overall.

[Grimly Curmudgeon]

It's the economics of the Kindergarten.

[Roger Chapman]

It is not even that. It is fallacious nonsense from beginning to end and anyone who thinks there is any merit in it is in serious need of a shrink. The Angry Voice refutation is a much saner piece of work.

Why anyone should believe anything from an idiot who is so confident that Ted Heath was PM when the top tax band was raised from 75% to 83% that he didn't bother to check his facts is beyond me.

[harryagain]

Actually true. He cut taxes first but was forced to put them up again.

Bit here about taxation history in the UK

Over 99% at one period. Incredible.

[news]

It won't stay benign

AJH

[Roger Chapman]

I may have been a bit harsh in labelling it fallacious nonsense from end to and. Like any con it needs a few pieces of sense to hang its preposterous conclusions on.

Ted Heath may have presided over rising tax rates during the course of his time as PM but he lost the general election in the spring of 1974 and was replaced by Harold Wilson (he of the 'pound in your pocket saga').

In 1973/74 the basic rate of tax was 30% and the highest tax band 75%. For 1974/75 under the Labour Government 3% was added to each tax band including the basic rate and two new bands introduced - 38% and 83%. The squeeze tightened even further the following year with another 2% added to every tax band other than the 83% band which generously remained where it was so that the very rich would see a maximum tax rate of 98% with the addition of the investment income surcharge rather than a straight 100%. Either way tantamount to theft even if inflation had been zero rather than out of control at over 20%.

Well it was wartime and the country was fighting for its very existence but there could be some doubt as the Revenue don't admit to it -

However the differences could be down to translating ye old system of shillings and pence in the pound into percentages and with the waters further muddied with a fraction for earned income relief rather than the later investment income surcharge to confuse the unwary at moneyweek who thought that income tax rates in the 1960s at 90% were higher than those in 1974 when they peaked at 98%.