Mantis Claw
11-20-2002, 03:04 PM
Between the Devil and Deep Blue Sea
Adam Porter, November 18, 2002
London may not be burning, yet, but our man in Shepards Bush Adam Porter argues there's a reckoning a'coming, and the blame lands squarely on the Square Mile and its counterpart across the pond:
Letter from London, Nov. 17, 02:
It really is the economy stupid.
Let us be sure about this. The global economy is at its most vulnerable right now. The most vulnerable it has ever been. Yes, ever. Not that you would hear about it from Lou Dobbs, Tom Clancy or the BBCs Evan Davies.
Davies, a chirpy chap, like so many of the BBC`s economics unit, was interviewed yesterday (15/11/02 BBC Radio Four) about an impending price collapse of the U.K.’s out-of-control housing market. He, like so many fund managers, hedged.
He was certain that there would be no more 25% a year price increases, but he was less sure about the whole place tanking. That’s because he doesn’t have a clue. What he certainly will not say is anything that might cause the markets to flutter. He, like Dobbs, Clancy and all the other economist-lites you see on TV have to maintain their rigour. That rigour is, make it up and pretend you understand what is happening.
After all did you hear any of these people predict an impending market collapse in 2000 or 2001? Not at all. Did you hear any of them say that massive fraud was going on at the heart of the U.S. economy? No, because these people are no more than other corporate `journalists` (actually they are presenters but…), frightened careerists more centred on their own popularity and job prospects than on questioning market power.
All the major economies of the world, the U.S., the Brits, the Eurozone, the Japs are caught between some terrifying devils and deep blue seas.
Now, I am going to shortcut here for speed. `Wealth creation` and general `market economics` are no more than a con. They, as people like YearZero.Org and GNN.tv have been saying for years, are a method by which the elite can loot economies. Take Argentina as a good example. Previously the financial centre, the middle class, service based economic powerhouse of the south. Now rooted in despair via a series of looting runs from the international rich and their institutions.
There really is such a thing as `race-to-the-bottom` economics. It is practiced in many areas but it stems from the U.S./U.K. model. As the BBC World Service noted (12/11//02) Wal Mart has upped turnover this year. Good for Wal-Mart. But its profits are down. They may have to `reposition` themselves away from super cheap wares (for the poor) in order to increase profits. They have slashed and slashed margins until there is nothing left to slash. They have attacked other retailers, forcing them out of business, “in order to maintain `market share`”. The social cost to the U.S. of lower farmers margins, out of work competitors staff and so on are discounted. Who cares for Joe Schmo USA now? No one. But then did they ever? Lou Dobbs ain`t gonna be telling you that’s for sure.
In Europe a low cost airline called RyanAir is destroying its competitors like Go, Swiss Air, Sabena and Air Lib (the latter still with us just). This November it gave away all its flights. Never mind about profit, smash the competition. These are the days when it is all there to be fought for, so one may as well smash away.
So, we see race-to-the-bottom margins. We see nation states and their elites who are not only ignoring this calamity but still encouraging it. After all it is they who profit the most. Reg G is the new corporate regulation brought in the U.S. after the utter farce of Reg-FD. Reg FD was said to encourage openness in corporate accounts, instead, as many feel it was intended to do, it encouraged silence. (see our previous piece on good ol` FD).
Reg G will be as about as successful. Harvey Pitt may have resigned but that is only because he was caught out, he like the rest of us, is expendable. But the `rights` of the rich and elites still prosper. The rights to dictate economics as they see them. The right to hold guns to the heads of the world’s civilian population via their market monopolies. This has not changed.
Race to the bottom economics are the reason no one can turn a decent profit. But they are still racing harder than ever. But now that the giant con trick of the 1990s has also come apart, suddenly desperation is setting in.
Alan Greenspan has cut interest rates to almost nothing in order to spur borrowing and re-inflate the economy of the U.S. But the aggressive 0.5% cut this week merely scared the volatile markets. What does he know? That we’re really tanking that hard? That is the devil. Deflation. Its deep blue sea is personal debt. If the U.S. economy continues to turn down, as in the long term surely it must (unless the previously mentioned fundamentals are reversed or another giant con is discovered) then what happens if deflation occurs?
Well, Japan is already there. Germany, (the world’s third biggest economy) will join it soon. Indeed, the whole Eurozone is facing a nasty economic downturn. The European Central Bank refused to cut rates. Why? No one really knows. The Bank Of England cannot cut rates any more because the U.K.’s housing market is now the most valuable on the planet. The poor have been cleansed from London, (some call it Manhattenisation) to make way for the righteous few. The Brit-elite, American, Arab and European property speculators, and of course those who work at the top of the Square Mile. To cut rates any more (thereby decreasing mortgage borrowing rates) will mean no one who earns less than $175,000 a year will be able to buy anything within miles of London. And I’m not joking. To born and bred Londoners (like yours truly) the only way you can `extract` the increased `value` of your poxy apartment is to move out. To fuck off. Who cares for Joe Bloggs U.K. now? No one. And here they never did.
But let us be clear. The rich and their allies in political and corporate circles (often the same people) have fuelled the crisis, looted the crisis and are now going to exit the crisis. In doing so an economic balance had to be maintained so that the gigantic inflationary push created by the top 1% did not harm their profits. If inflation had occurred then the rich would have made so much less you see. So the rest of us, the vast majority, have been deflated. Our wages are down in real terms, our working hours longer, we do more than one job. But then you know that right? It’s your life right? In return we have been asked to extend and extend and extend ourselves. Personal debt (the deep blue sea remember) is at a global high. So is small business debt. There are mountains of it. People who have been able to have taken out extra debt against the rising price of their house or assets. Or even the falling price. Take my good mate Joey B. He owed a few people money, nothing dodgy just a love of stupidly fast cars. Plus the desire to emulate those speculators and the Square Mile dudes we see around us everyday in London. They have closed our pubs and turned them into shallow eating holes at $50 a head, but then none of the pub goers can afford to live there any more so who cares. If they can afford it they are confined to crack estates (projects) or too broke to go out. But Joey B ended up about £27,000 off. About what…$40,000ish. So he pays off his debts by getting the money up from his mortgage. He owns a small flat in west London that has gone up 300% in the last decade. So why not?
Well, if the U.S. economy deflates, as race to the bottom must determine, then U.S. imports will rise in price. If U.S. imports rise in price then U.S. inflation will rise (many economists are now encouraging this to avoid possible massive- as opposed to normal - deflation). If U.S. inflation rises then you can bet your bottom that inflation will rise in the U.K. If inflation rises in the U.K. then mortgage rates will rise (you Yanks will already be in the mire by this stage but it’ll be pretty simultaneous). But with rates so low many people, those deflated people, will find their mortgages doubling if rates go from 1.5% to 3%. Doubled mortgages coupled with deflated incomes means disaster. Big disaster. Evan put it like this. Mortgages are “at about 500-550%, they should be at about 300-350%.” In other words, little people are going to get fucked.
There are a few ways out. Well, kind of. Wars have sometimes bumped up cashflow (from the taxpayer – us lot - to industry). But they sometimes do the opposite, especially if they don’t take a few weeks and the opposition aren’t a load of guys in pick-up trucks with sandals on. Nevertheless a brutal, high cost and quick victory in Iraq II that doesn’t spill over to Saudi or Pakistan may well hold things for a while, manage the decline as it were. Isreal, Palestine and Sharon's 200 illegal nuclear weapons…well, that won’t help, put it like that. Neither will full access to the weapons inspectors. Keep an eye on that one.
The other is the personal way out, as they say `cash is cash`. If you sell up and keep the cash you may well be rewarded. If inflation bumps back in from (I know its odd) the deflation happening in the major economies then those with cash in the bank will be laughing (hmm…and those smart rich dudes again). I would if I were you, because, with a few exceptional areas, prices everywhere in everything are topping very heavily, especially in property. So you ain`t going to lose out, even if Greenspan produces an economic rabbit from his top hat. On the other hand if prices tank and interest rates rise then you and the other wise people can move back in, buy up a few streets and have a house like the Beatles had in Hard Days Night, like, really big with massive furry rugs and gold stuff.
If you haven’t got anything to sell, well, sell it anyway.
Now, if you don’t believe subversive elephants like me then try a few right wing economists who are saying all this quietly to each other. So as not to scare the shit out of ordinary Schmos, Bloggses, Le Schmoes, Van Der Schmoes and so on. Check this (real audio) interview on Bloomberg, for example. Or this or this or this or this.
And if you have any hills near you, then you may like to look for the quickest running route to them. But hey, who am I to go against our glorious economic pundits? Because I ain`t Lou Dobbs, that’s for sure.
Adam Porter edits Yearzero.org, and knows way too much about English football.
Adam Porter, November 18, 2002
London may not be burning, yet, but our man in Shepards Bush Adam Porter argues there's a reckoning a'coming, and the blame lands squarely on the Square Mile and its counterpart across the pond:
Letter from London, Nov. 17, 02:
It really is the economy stupid.
Let us be sure about this. The global economy is at its most vulnerable right now. The most vulnerable it has ever been. Yes, ever. Not that you would hear about it from Lou Dobbs, Tom Clancy or the BBCs Evan Davies.
Davies, a chirpy chap, like so many of the BBC`s economics unit, was interviewed yesterday (15/11/02 BBC Radio Four) about an impending price collapse of the U.K.’s out-of-control housing market. He, like so many fund managers, hedged.
He was certain that there would be no more 25% a year price increases, but he was less sure about the whole place tanking. That’s because he doesn’t have a clue. What he certainly will not say is anything that might cause the markets to flutter. He, like Dobbs, Clancy and all the other economist-lites you see on TV have to maintain their rigour. That rigour is, make it up and pretend you understand what is happening.
After all did you hear any of these people predict an impending market collapse in 2000 or 2001? Not at all. Did you hear any of them say that massive fraud was going on at the heart of the U.S. economy? No, because these people are no more than other corporate `journalists` (actually they are presenters but…), frightened careerists more centred on their own popularity and job prospects than on questioning market power.
All the major economies of the world, the U.S., the Brits, the Eurozone, the Japs are caught between some terrifying devils and deep blue seas.
Now, I am going to shortcut here for speed. `Wealth creation` and general `market economics` are no more than a con. They, as people like YearZero.Org and GNN.tv have been saying for years, are a method by which the elite can loot economies. Take Argentina as a good example. Previously the financial centre, the middle class, service based economic powerhouse of the south. Now rooted in despair via a series of looting runs from the international rich and their institutions.
There really is such a thing as `race-to-the-bottom` economics. It is practiced in many areas but it stems from the U.S./U.K. model. As the BBC World Service noted (12/11//02) Wal Mart has upped turnover this year. Good for Wal-Mart. But its profits are down. They may have to `reposition` themselves away from super cheap wares (for the poor) in order to increase profits. They have slashed and slashed margins until there is nothing left to slash. They have attacked other retailers, forcing them out of business, “in order to maintain `market share`”. The social cost to the U.S. of lower farmers margins, out of work competitors staff and so on are discounted. Who cares for Joe Schmo USA now? No one. But then did they ever? Lou Dobbs ain`t gonna be telling you that’s for sure.
In Europe a low cost airline called RyanAir is destroying its competitors like Go, Swiss Air, Sabena and Air Lib (the latter still with us just). This November it gave away all its flights. Never mind about profit, smash the competition. These are the days when it is all there to be fought for, so one may as well smash away.
So, we see race-to-the-bottom margins. We see nation states and their elites who are not only ignoring this calamity but still encouraging it. After all it is they who profit the most. Reg G is the new corporate regulation brought in the U.S. after the utter farce of Reg-FD. Reg FD was said to encourage openness in corporate accounts, instead, as many feel it was intended to do, it encouraged silence. (see our previous piece on good ol` FD).
Reg G will be as about as successful. Harvey Pitt may have resigned but that is only because he was caught out, he like the rest of us, is expendable. But the `rights` of the rich and elites still prosper. The rights to dictate economics as they see them. The right to hold guns to the heads of the world’s civilian population via their market monopolies. This has not changed.
Race to the bottom economics are the reason no one can turn a decent profit. But they are still racing harder than ever. But now that the giant con trick of the 1990s has also come apart, suddenly desperation is setting in.
Alan Greenspan has cut interest rates to almost nothing in order to spur borrowing and re-inflate the economy of the U.S. But the aggressive 0.5% cut this week merely scared the volatile markets. What does he know? That we’re really tanking that hard? That is the devil. Deflation. Its deep blue sea is personal debt. If the U.S. economy continues to turn down, as in the long term surely it must (unless the previously mentioned fundamentals are reversed or another giant con is discovered) then what happens if deflation occurs?
Well, Japan is already there. Germany, (the world’s third biggest economy) will join it soon. Indeed, the whole Eurozone is facing a nasty economic downturn. The European Central Bank refused to cut rates. Why? No one really knows. The Bank Of England cannot cut rates any more because the U.K.’s housing market is now the most valuable on the planet. The poor have been cleansed from London, (some call it Manhattenisation) to make way for the righteous few. The Brit-elite, American, Arab and European property speculators, and of course those who work at the top of the Square Mile. To cut rates any more (thereby decreasing mortgage borrowing rates) will mean no one who earns less than $175,000 a year will be able to buy anything within miles of London. And I’m not joking. To born and bred Londoners (like yours truly) the only way you can `extract` the increased `value` of your poxy apartment is to move out. To fuck off. Who cares for Joe Bloggs U.K. now? No one. And here they never did.
But let us be clear. The rich and their allies in political and corporate circles (often the same people) have fuelled the crisis, looted the crisis and are now going to exit the crisis. In doing so an economic balance had to be maintained so that the gigantic inflationary push created by the top 1% did not harm their profits. If inflation had occurred then the rich would have made so much less you see. So the rest of us, the vast majority, have been deflated. Our wages are down in real terms, our working hours longer, we do more than one job. But then you know that right? It’s your life right? In return we have been asked to extend and extend and extend ourselves. Personal debt (the deep blue sea remember) is at a global high. So is small business debt. There are mountains of it. People who have been able to have taken out extra debt against the rising price of their house or assets. Or even the falling price. Take my good mate Joey B. He owed a few people money, nothing dodgy just a love of stupidly fast cars. Plus the desire to emulate those speculators and the Square Mile dudes we see around us everyday in London. They have closed our pubs and turned them into shallow eating holes at $50 a head, but then none of the pub goers can afford to live there any more so who cares. If they can afford it they are confined to crack estates (projects) or too broke to go out. But Joey B ended up about £27,000 off. About what…$40,000ish. So he pays off his debts by getting the money up from his mortgage. He owns a small flat in west London that has gone up 300% in the last decade. So why not?
Well, if the U.S. economy deflates, as race to the bottom must determine, then U.S. imports will rise in price. If U.S. imports rise in price then U.S. inflation will rise (many economists are now encouraging this to avoid possible massive- as opposed to normal - deflation). If U.S. inflation rises then you can bet your bottom that inflation will rise in the U.K. If inflation rises in the U.K. then mortgage rates will rise (you Yanks will already be in the mire by this stage but it’ll be pretty simultaneous). But with rates so low many people, those deflated people, will find their mortgages doubling if rates go from 1.5% to 3%. Doubled mortgages coupled with deflated incomes means disaster. Big disaster. Evan put it like this. Mortgages are “at about 500-550%, they should be at about 300-350%.” In other words, little people are going to get fucked.
There are a few ways out. Well, kind of. Wars have sometimes bumped up cashflow (from the taxpayer – us lot - to industry). But they sometimes do the opposite, especially if they don’t take a few weeks and the opposition aren’t a load of guys in pick-up trucks with sandals on. Nevertheless a brutal, high cost and quick victory in Iraq II that doesn’t spill over to Saudi or Pakistan may well hold things for a while, manage the decline as it were. Isreal, Palestine and Sharon's 200 illegal nuclear weapons…well, that won’t help, put it like that. Neither will full access to the weapons inspectors. Keep an eye on that one.
The other is the personal way out, as they say `cash is cash`. If you sell up and keep the cash you may well be rewarded. If inflation bumps back in from (I know its odd) the deflation happening in the major economies then those with cash in the bank will be laughing (hmm…and those smart rich dudes again). I would if I were you, because, with a few exceptional areas, prices everywhere in everything are topping very heavily, especially in property. So you ain`t going to lose out, even if Greenspan produces an economic rabbit from his top hat. On the other hand if prices tank and interest rates rise then you and the other wise people can move back in, buy up a few streets and have a house like the Beatles had in Hard Days Night, like, really big with massive furry rugs and gold stuff.
If you haven’t got anything to sell, well, sell it anyway.
Now, if you don’t believe subversive elephants like me then try a few right wing economists who are saying all this quietly to each other. So as not to scare the shit out of ordinary Schmos, Bloggses, Le Schmoes, Van Der Schmoes and so on. Check this (real audio) interview on Bloomberg, for example. Or this or this or this or this.
And if you have any hills near you, then you may like to look for the quickest running route to them. But hey, who am I to go against our glorious economic pundits? Because I ain`t Lou Dobbs, that’s for sure.
Adam Porter edits Yearzero.org, and knows way too much about English football.