Posts Tagged ‘casino’

Whither The Battered Economy

November 17, 2008

Because I have some financial and business background in my early life I have been increasingly astonished, not to say angered, by all the devices that are being uncovered in what has been a casino [still is, I fear]called the financial sector.

The various government supports in response to that industry’s yells of ‘Feed Me!’ have shown the truth of the old saying ‘Owe a million and get an honour, owe a thousand and get put in prison.’ Except these days no respectable honoree owes less than a billion!

You know the film, don’t you? ‘Feed Me!’ gets fed by all those who owe it nothing, and it gradually takes over and destroys everything. This seems a good analogy for the financial sector – certainly since the early 1980s.

Now it seems, through government action, we, our children, our granchildren and on are going to be paying off the gambling debts. Indeed that sector appears fully in the tradition of the rake who, on inheriting the family fortune proceeds to gamble it away, as well as the lands, the building and possibly his own grandmother.

I am not encouraged either by the G20 meeting or its statement. In brief it seemed to say ‘our answer is more of the same even though we know it isn’t working… …And we are putting off the hard decisions until another generation of politicians comes along’.

And no, I do not think President-Elect Barak Obama is that new generation in this sense. If you look at his advisors who have been drawing up his plans you will see how heavily finance and business oriented they are.

By ‘new generation’ I think I mean of economic thinkers. My personal view is very revolutionary – and for someone who tends to be small ‘c’ conservative that is saying something!

I believe the fault lies with the structure of the company. It lies far outside democratic process, yet it is so easy for the larger ones and the corporations to affect our lives in the most personal ways. Our jobs, our communities, our very environment and our world. Oh yes, and our finances.

Plan as we might, understand the dangers to the future of mankind as much as we will, all protest is frustrated by the big business power to buy influence and to drown out protest. It is not the format of George Orwell’s 1984 but it is most certainly his concept of Big Brother!

Can you go anywhere without being on CCTV? As things are shaping even your iris will be on a database – ready to be accidentally ‘lost’ and for sale. Or even accessible to so many that it can be easily hacked.

The foundation of the company lies 400 years ago, with the first Queen Elizabeth. Four worlds ago and for a completely different purpose.

Do we, this time, just want to patch things up again for a third Depression in 80 years time?

Joseph Harris

Debt Control Man

Can Debt Really be a Way of Life?

November 13, 2008
Life has a habit of knocking us off our perches, does it not?
Anyway I’m back with the blog and thought a quick review of the national and international scene might be worth the time.

I can actually remember when most people would at least be aware of the saying ‘neither a lender nor a borrower be’. And then, right at the beginning of the ’60s, came to our shores the first hire purchase company [Union Discount if I have the name right – started by the man who later created the Bank of Wales].

Hire purchase (h.p.) was quickly dubbed ‘the never-never’. I am still not sure if this meant you never finished paying, or if it meant that you never fully paid.

The first implied that the company had you in its grasp, the second that one paid in such small amounts over such a long time that you never really paid its value. When inflation was serious (remember it has reached 15 per cent a year within the past 40 years) of course the value of the cash used to pay was indeed well below the worth at the time the contract was signed.

It may have been at first that the loan was secured against the item, but later the loan became separate. In a way credit cards work on a similar basis except that the loan is never tied to any goods specifically.

Over the years the idea of credit grew and caught on. After all kings had always borrowed money – to fight wars if nothing else – and the Government of England had found itself with a debt in the seventeenth century.

That debt led to the creation of the Bank of England – a private joint stock company, empowered by parliament to handle the national debt!

The entrepreneur who had seen the opportunity later went on to bankrupt Scotland and force the union of the two countries. But that, as you can imagine, is a quite different story!

By about twenty years ago the idea of credit, that old frowned on idea of ‘buying on tick’, was accepted. Governments had early learnt how easy it was to run deficits on the nations’ dealings internationally – the balance of payments – and on the annual budget.

And we did not resist the idea of having more goods than we had earnt!

And companies, who always had been dealing with uncertainty, found debt a very good way of dealing with the lags between orders and delivery and distribution and sale. And then came the more relaxed control of the financial sector.

And the development of ‘derivatives’, and sub-prime mortgages. I don’t have to tell you much about those now, as they have been well discussed in the press, on radio and on television.

And in blogs…

I have seen all that well described as MLMs and Ponzi schemes, and the whole sector as a casino. And when those bastions of sobriety, the banks, joined in I am afraid there was nowhere else to go but down.

‘Down the rabbit hole,’ as Lewis Carroll put it so well, and in to Wonderland. Well a land in which the great and the good certainly seem to have well-developed senses of self-delusion.

And you spotted how our very own Gordon has taken centre stage, as though born to acting.

But then aren’t all politicians? [Paulson on his knees to Pelosi – I ask you!]

Meanwhile the massive $707bn that Paulson and Bernanke twisted arms to get the US Congress to approve to buy ‘toxic’ [don’t you love that term? It means poisonous!] debts from the banks is now not going to be for that.

Whatever; its purpose appears to be to pay the gambling debts of those big businesses, rather than to spur the US economy, which has a really big hangover from the ‘credit economy’.

Not incidentally that the $707bn tag is even very relevant to the new debt we are all going to have to pay off some time – through taxes – which as already reached about $2trn [that’s $2,000,000,000,000]. Maybe it needs some more noughts. It is big for sure.

It is about $300,000 for every man, woman and child on the planet – assuming a population around 6.7bn. In English say £200,000. But the possible real amount of toxic debt – silly me, I mean derivatives including sub-primes that have gone sour [not all have] – is about five times that.

So you owe a million; so do I. that puts our personal problems in perspective, huh?

Joseph Harris

Debt Control Man