Cartoon Time.

Carney warns about popular disillusion with capitalism

From the BBC

5th December 2016

The Bank of England Governor Mark Carney has warned that people will turn their backs on free and open markets unless something is done to help those left behind by the financial crisis. In a speech, he said: "Globalisation is associated with low wages, insecure employment, stateless corporations and striking inequalities." In many advanced economies there are "staggering wealth inequalities," he added.

Mr Carney was speaking in Liverpool. He told his audience that politicians and central bankers must act to ensure people do not lose faith in the current system. "Turning our backs on open markets would be a tragedy, but it is a possibility," he said. "It can only be averted by confronting the underlying reasons for this risk upfront."

Mr Carney, giving the Roscoe Lecture at Liverpool John Moores University, spoke of the need for wealth distribution and putting individuals back in control. He cited Prime Minister Theresa May's criticism of "stateless corporations" who paid little tax and had little responsibility to local communities. The governor said: "Redistribution and fairness also mean turning back the tide of stateless corporations. As the prime minister recently stressed, companies must be rooted and pay tax somewhere. Businesses operating across borders have responsibilities," he added. Since that vote, the governor has had to defend himself against criticism that he had made explicitly pro-Remain comments, and also against suggestions that the prime minister had been unhappy with the Bank's monetary policy because savers had lost out.

However, although Mr Carney acknowledged in his speech that there were losers from the policy of low interest rates, he said: "The thrifty saver and the rich asset holder are often one and the same. Just 2% of households have deposit holdings in excess of £5,000, [they have] few other financial assets, and don't own a home. So the vast majority of savers who might have lost some interest income from lower policy rates have stood to gain from increases in asset prices, particularly the recovery in house prices," he added. The challenges to greater prosperity, he said, were far wider.

Mr Carney listed three priorities:

  "Economists must clearly acknowledge the challenges we face, including the realities of uneven gains from trade and technology"

  "We must grow our economy by rebalancing the mix of monetary policy, fiscal policy and structural reforms"

  "We need to move towards more inclusive growth where everyone has a stake in globalisation."

Last week, the bank's chief economist, Andy Haldane, struck a similar note when he warned about Britain's widening inequality gap. He was concerned not just with the gap between rich and poor, but also geographically - between north and south, east and west. Mr Haldane said in a speech: "I think [the issue of regional inequality] is right up there as among the most important issues that we face today as a country. What's more, the variations are among the widest in Europe."

[It comes to something when even the Head of The Bank of England feels the need to issue this kind of warning. Well, at least the PTB (Powers That Be) can’t say that they didn’t see it coming when it (hopefully) blows up in their faces. You can’t expect to cynically exploit the majority of the population and get away with it forever. At some point it reaches a crisis and then things get very interesting indeed!]

Just Finished Reading: Destroyermen – Rising Tides by Taylor Anderson (FP: 2011)

There is, it would seem, not peace for the wicked – or at least not for the crew of USS Walker trapped in a strange world where humans failed to evolve. After helping to defeat the ravenous Grik horde the next stage of the weird version of WW2 needs to be planned and assets put in place. New ships need to be built, new technologies, unfamiliar to the Lemurians or their new erstwhile allies from the New British Empire, such as radio developed and a million other things need to be fixed, taught or found. Speaking of discoveries, the floating of the half submerged submarine goes on apace under the angry watch of a nearby volcano and a beached cargo ship carrying a precious cargo of boxed fighter planes has to be cleared of its new inhabitants before it can be refloated. Meanwhile Walker herself is in hot pursuit of Company ships holding several of his crew hostage, including the captain’s head nurse and love of his life. As they approach waters patrolled by the Empire’s warships tensions rise – they need allies not enemies and the British have something the American’s are very short of: women. But deep in the heart of the Empire is a snake and that snake has the backing of another human power yet to be encountered by the US crew – the Dominion, a corrupted version of Catholicism and South American blood worship. Just how complicated can things get on this strange world whose horizons are expanding with every mile they sail. What strange creatures and strange cultures are just around the next hill and how many will want the American’s dead if only to take their guns.

This is the 5th book in the Destroyermen series and I must admit that I have enjoyed every one. The author has given himself enough room and enough scope to create an entire world to play in (and one that is just chock full of possibilities only so far hinted at). After 5 books we’re still in the Pacific. We have some idea of what’s happening in Asia and India – Grik central – and now we have hints of what’s going on in South America – Dominion territory – but no clue as to what is to be found in the Northern hemisphere. Then there’s the possibility of rifts with other Earth’s and not just our own. That could pretty much find anything that the author can imagine. But he’s not one to pluck things out of a multi-dimensional hat just to get his characters out of a bind. They have real (and potentially tedious) logistic problems which plague them on a daily basis. These are not overcome in a day and we ‘see’ great efforts (generally in the background) to resolve them. The author knows what he needs to do to move the story along but knows that he can take his time to build character, build a believable world and populate it with reasonable internally motivated characters. It is, to be honest, fascinating to watch unfold before your eyes. Just one thing: in line with prevailing trends the author is not afraid putting his main characters in peril and is not averse to actually killing off major characters when the plot demands it. No one is safe and the heroes don’t always win and don’t always survive encounters with the enemy (or random bug bites!) so it’s best not to get too attached to your favourite characters. I’m not sure if I have book 6 in my stack but if not I’ll be buying it soon. After that there’s still another 6 books to come so far! Maybe we’re going to see much more of the world the Destroyermen now call home! I do hope so.

Cartoon Time.

When the chickens come home to roast (yes, I did mean that)……… 

Brexit: Italian PM Matteo Renzi warns UK over EU rights.

It will be "impossible" for Brexit talks to result in a deal that gives Britons more rights than others outside the EU, Italy's PM has told the BBC. Matteo Renzi warned that leaving the EU would be a "very difficult process" - but the problems could be solved only after the UK began the exit procedure. He said the Brexit vote had been "a bad decision" but had to be respected. Meanwhile a German business leader said a so-called "hard" Brexit, rather than a "fudge", was the only option. Following the UK's vote to leave the EU in June's referendum, attention has focused on the government's likely demands in Brexit negotiations. Mr Renzi said he had been shocked and saddened by the referendum result, but repeated Mrs May's vow that "Brexit is Brexit", saying democracy had to be respected. Asked about whether there could be "flexibility" over EU rules on freedom of movement and access to the single-market, he said "I think this is a very interesting debate, because this debate will be a debate about the concept of rules in the EU." But he said that debate could only begin once the UK had triggered article 50 - the official procedure for it to start leaving the EU - and he warned: "It will be impossible to give to British people more rights than other people outside the EU."

UK spending grew strongly post-Brexit vote, ONS data shows.

The UK services sector grew 0.4% in July, much more strongly than expected in the wake of June's vote to leave the European Union. It shows consumers carried on spending as normal after June's Brexit vote. Other figures from the Office for National Statistics (ONS) show economic growth accelerated faster than thought in the run-up to the referendum. Gross Domestic Product (GDP) grew by 0.7% in the three months to the end of June, up from the 0.6% first estimated. The second-quarter figures were well up from the 0.4% growth of the previous quarter. ONS statistician Darren Morgan said: "Together this fresh data tends to support the view that there has been no sign of an immediate shock to the economy, although the full picture will continue to emerge." The figures will help the Bank of England assess policy when it next meets in November. It has already cut interest rates since the UK voted to leave the EU and has hinted there could be another one if needed.

Tory ex-ministers push for speedy Brexit.

Britain could quit the EU well within the two-year time limit laid down by Article 50 of the Lisbon Treaty, Tory ex-ministers have told Theresa May. They also called for a work permit and cap system to control the number of EU migrants coming to the UK. Led by Leave campaigner John Redwood, the "Brexit Blueprint" urges a "take it or leave it" attitude to EU trade. Mrs May, who is due to tackle Brexit at the Tory conference on Sunday, says the right deal may not be the quickest one. She has already stated that Article 50, the formal mechanism for Britain leaving the EU, will not be triggered this year - but faces calls to clarify the government's demands. The so-called Blueprint was compiled at a private conference in Oxford's All Souls College earlier this month. It was convened by former Cabinet minister Mr Redwood with other contributions from former Iain Duncan Smith, Owen Paterson, Peter Lilley and Sir William Cash. Mr Redwood told the meeting there was no reason why negotiations over the terms of British withdrawal from the EU should take anything like the two-year maximum laid down by Article 50. "It is in both sides' interest to reach an earlier agreement to reduce business uncertainty," he said. "If there is a breakdown or no likelihood of agreement, then the UK should withdraw and after the two-year period the UK will be formally out. Trade will revert to World Trade Organization rules."

Nissan boss warns on UK investment.

The boss of Nissan has warned that Brexit uncertainty and possible tariffs could damage investment in the UK's biggest car factory. Chief executive Carlos Ghosn said the firm would need "compensation" for tax barriers that might result from Britain leaving the European Union. Nissan's plant in Sunderland produces about a third of the UK's car output. The comments come amid warnings from the UK car industry about the risk of EU tariffs from Brexit. "If I need to make an investment in the next few months and I can't wait until the end of Brexit, then I have to make a deal with the UK government," Mr Ghosn, who also runs France's Renault, said at the Paris Motor Show. "You can have commitments of compensation in case you have something negative," he said. Nissan is due to decide early next year on where to build its next Qashqai sport utility vehicle. The plant at Sunderland is Nissan's biggest factory in Europe, employs 6,700 people and has the capacity to produce around 500,000 cars per year. "We would like to stay. We're happy, we have a good plant, which is productive but we cannot stay if the conditions do not justify that we stay," he added. Mr Ghosn told the BBC that the Sunderland plant would "lose competitiveness" if Brexit meant the UK had to pay 10% tariffs to import into the EU.

Brexit: May to introduce EU repeal bill in Queen's Speech.

Theresa May has said she is to introduce a "Great Repeal Bill" in the next Queen's Speech that will overturn the act that took the UK into the EU. It will remove the European Communities Act 1972 from the statute book and end the supremacy in Britain of EU law. The government will also enshrine all existing EU law into British law and anything deemed unnecessary will be abolished later. Her pledge comes as the Conservatives gather for their annual conference. The repeal of the 1972 Act will not take effect until the UK leaves the EU under the process for quitting the bloc known as Article 50. Mrs May has previously said she will not start the formal process of leaving the EU until next year. In an interview with the Sunday Times, the prime minister said the repeal bill would mark "the first stage in the UK becoming a sovereign and independent country once again. It will return power and authority to the elected institutions of our country," she said. "It means that the authority of EU law in Britain will end."

All details above from BBC News website.

[It’s interesting to see, with the Supreme Court appeal starting today, that passions have hardly cooled since the Referendum vote back in June. Yet again the crazy Right-Wing press is calling the case an affront to democracy knowing full well that not only is the case an *example* of democracy in action but the point it turns on is the essence of a democratic state – where the power lies, with the Government of the day or with Parliament itself. It is not and has never been about over riding the decision (stupid as I feel it to be) made back in June to leave the EU. It’s about using the proper procedure as laid down in our constitutional law and applying the rules not just when it’s convenient to those in power who want to rush everything through before people have an opportunity to scrutinise things properly. You do have to wonder what the Government is afraid of considering that most MP’s have publically said that they not oppose the enacting of Article 50. Hopefully we’ll be allowed to find out.]

Cartoon Time.

BoE's Andrew Haldane warns of regional growth inequality.

From The BBC

2nd December 2016

Regional inequality in the UK is becoming more pronounced, Bank of England chief economist Andrew Haldane has warned. London and the South East are the only places in the UK where income per head is back above pre-financial crisis levels, he said. Net wealth has also fallen in places such as the North East of England. But without action by the Bank, the regions could have faced economic contraction, he added. "The UK, I think, is towards the bottom of the league table within Europe in terms of its degree of difference across regions," Mr Haldane told the BBC economics editor Kamal Ahmed.

He said that wage differences between regions of the UK could differ by as much as 50% and that the productivity gap between regions could be as much as 60%. Mr Haldane also said there had not been much evidence of those gaps shrinking over the past few years. "If anything these gaps, which are of long standing have nudged a little wider over the course of the UK's recovery," he said.

There was no single reason why there were such big and persistent differences between regions, he said. But he thinks differing levels of skills and research and development could be partly to blame. "Very much more of the research and development occurs, as you might expect, in those high productivity, high income regions of the country," he added. Mr Haldane said regional inequality was among the most important issues facing the UK. Reducing the gap could open up considerable opportunities, he said. For example, he said that if the productivity levels of all companies could be brought up to the levels of those in the most productive parts of the UK it would boost productivity "by fully 20%".

"It would take the UK right up there to rival the Germanies of this world when it came to efficiency and performance," he added. "That in turn I think would lift wages, it would lift incomes and would lead to a bigger pie as well as more equally redistributed one." However, the Bank of England lacks the tools to tackle the problem, according to Mr Haldane. "The tools we have at our disposal are, truth be told... few in number and rather blunt in impact. They tend to work by lifting all boats across the whole of the UK," he said.

[Oh, what a surprise! London and the South East are growing at the expense of the rest of the country and especially the North. Really? I mean, Really? I doubt if anyone living north of the infamous Watford Gap will be in anyway shocked by that particular economic gem. London has ALWAYS been in a parasitic relationship with the North of England. The (yet again) proposed high-speed rail link to Manchester and Leeds will accelerate that pull and drain more and more of what little wealth is generated in the North and deposit it in the already bloated coffers of Southern businesses. I think we are long overdue for another northern rising!]