Regular BLFP correspondent Adullamite sends this old picture of Drumchapel Post Office and enquires (I guess rather tongue-in-cheek) if it has changed much?
The main thrust of the comments on last week’s European summit by the great and the good have heaped disdain on David Cameron for exercising the UK’s veto in a symbolic gesture.
David Cameron bad, therefore the EU good!
David Cameron, right wing little Englander, EU centre left progressive Social Democrats.
Cameron acting selfishly against a heroic and fraternal attempt by the EU to solve the sovereign debt crisis.
Well this is what his website says about him:
Richard Murphy (53) is a chartered accountant and economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”.
Kevin Maguire, associate editor of the Daily Mirror has said:
We’ve got to take sides on tax. Rich individuals, corporations, well-funded special interest groups and much of Fleet Street is on one (the wrong) side and then there is Richard Murphy plus a few others, including yours truly. But it is Murphy who is the heroic figure. Tireless and forensic, driven by an admirable moral fervour, I take my hat off to a campaigner with Duracell batteries.
A few moments reading the remainder of his profile would convince the reader that he does not sound like a cheerleader for David Cameron, the City of London or any of the right wing
Tory MPs appeased by the UK’s stance on Europe.
However on his blog, in an article headed Merkel and Sarkozy want to turn out the left wing lights over Europe he points out some salient facts.
The Merkel and Sarkozy plan for Europe, agreed yesterday, will according to Reuters:
“Permit automatic sanctions against states that breach an existing deficit limit of no more than 3 percent of total economic output, unless a “supermajority” of states voted against the penalty.
That would reverse the current system where a majority of states must vote to launch a disciplinary procedure.
It would also enshrine a budget-balancing rule in national constitutions across the euro zone, although they gave no detail of the proposed wording.
You need know no more than that to realise just how dangerous this plan is.
But there is one piece of information you need to know about why this is happening. As the FT notes:
In an apparent concession, Ms Merkel agreed that private sector bondholders would not be asked to bear some of the losses in any future sovereign debt restructuring, as she had insisted this year in the case of Greece’s second bail-out.
So we know that this deal is for the benefit of banks and their owners.
What it in effect says is that Keynesian deficit financing is not allowed. And any government that does it will be automatically penalised. Let’s take the UK as an example of such spending. This data is from the March 2011 budget (I have not updated for the autumn statement yet, but that just slows the recovery):
First of all, Labour almost exactly met the EU requirement pre-crash. But, more importantly, when the crash came what this evidences, as I argued yesterday, is that governments have no control over their income. So this was what happened to UK current income and spending (i.e. spending not related to investment) (same data sources):
The data is right by the way: Labour ran a current surplus in 2006-08: the deficit was solely investment related in that period. But when the crash came it was income that collapsed.
Now what would happen under the Merkel/ Sarkozy plan? Simply that to meet the budget requirement that just as revenues crashed and people faced increased risk of unemployment the government would have to slash spending to balance the books. So there would have been no cuts of the sort we’re seeing now. There would be public services decimated.
Benefits would be slashed.
Class sizes would reach 45.
NHS services would be withdrawn from all but emergencies.
All investment would end.
Police and fire services may be part time.
Ambulances simply would not come.
That’s the scale of what would have been needed to balance our budget.
And of course hundreds of thousands or millions more would have been out of work and without benefit, which would have been slashed.
This is what Merkel and Srakozy would have demanded. And it would have been illegal for governments not to have made those cuts – to destroy the fabric of our society – all to save banking from loss.
This is what we face.
But it’s even worse than that. As I’ve also argued:
There are four engines for growth, and no more. They are:
1) Consumer spending, and that’s going down due to falling incomes, lack of confidence, rising unemployment and demands for more pension contributions from public sector workers, plus VAT rises.
2) Business investment, and that’s falling because consumers are spending less.
3) Exports, and the Eurozone is now killing those.
4) Government spending.
That’s it. That’s all you need to know about where growth can come from.
And the first three are all in decline, although business is increasingly profitable, perversely (and are lending their profits to government rather than investing it – that and quantitative easing are how the deficit are being paid for).
So, given these facts (for these are facts at present) then there’s only one way to go forward, and that is for the government to spend more. If it doesn’t then the cycle of decline continues. That is inevitable.
And as Keynes said, it spends for a reason: it spends to create jobs. That’s why the spending has to be on the Green New Deal (not the government’s watered down Green Deal) or infrastructure spending paid for by the government – because that’s far and away the cheapest way to fund it (and so getting pension funds to pay for infrastructure directly or subsidising banks to lend to small business makes no sense – the government has to act as organisers, funders, guarantors and so managers of such schemes since this way we get the benefit at lowest cost).
So what Merkel and Sarkozy are doing is banning deficit spending that is the only way to break recessionary cycles. They are actually going to make illegal the only hope we’ve got.
This is complete and utter madness.
There is no other description for it.
And yet people are told it is inevitable.
And it isn’t.
But the results will be catastrophic.
The complete article in its original context is here The sooner people wake up and realise that the main focus of last week’s events should be examining the proposal itself and not dismissing the opposition to it because the opposition happened to be for the wrong reasons, the better.
Surprisingly few people were asking “Will it work?”
It is interesting to note that quietly, Iceland has returned to growth a mere three years after its banking and sovereign debt crisis. An independent nation with its own currency, albeit with the assistance of the IMF, perhaps showing the model for recovery. Iceland’s partners in EFTA were not affected.
Greece’s next debt payment is due on December 17th.
Yes folks there have been some photos arriving at my desktop by readers of this blog.
I chose this particular one because it features a rear view of my emporium and I think I can see my vehicle parked there too.
Also my assistant at the said emporium,Joe has been out and about doing some of his wildlife photography. Here are two examples of his work.
And finally, Richard Hunt Smith who (graciously) contacted me over my publishing his Rest and be Thankful photo, can be found on blipfoto here and his image of Inveraray war memorial and Remembrance Day parade is a poignant one indeed: