Oppose the bank bailout!

[kyser_soze]

Most of the policy wonks I've met are smart cookies; even someone like that mad-bitch from hell Shreety 'Green Shoot's Vadera has a brain on her (if not necessarily always connected to mouth). The only problem is that what a CS policy wonk thinks is either a. relevant or b. something that's sellable to the public is very different from the wider world!

The core problem is that the CS is often too honest for it's own good. Some of the Foresight stuff, for example, was considered incendinary, and as such was quietly released because inevitably the press wouldn't have actually reported on the full contents of the documents, only the headline grabbing stuff.

 

[elbows]

Personally I can't see who would benefit from a buy-up of the banks by the UK taxpayer, in that I have no particular faith in the governments ability to manage the banks out of the crisis that they have had a hand in creating, and since the current level of collusion between government and the banks is quite bad enough without giving politicians an even larger stake in them.

What would you do then?

Given that the horse has already bolted, its a hard one to answer. There are lots of things that could have been done in the past to prevent the crisis happening, but now that its here, what do we do?

Personally I did not think we could just let the banks collapse overnight, as that would mean instant misery for almost everyone. I suppose I would have favoured full nationalisation. The government may manage it badly, but at least they are supposed to be accountable to us, and if they had full control of the banks then things would be slightly more transparent. ie they would not be able to blame banks for not acting how they wanted them to, when we dont really know if thats how government really expected or wanted banks to act.

I suspect they know how bad the crisis is, and are simply trying to manage the pace of the descent, and avoid total collapse.

The biggest threat right now does not seem to be that banks are wasting taxpayers money, but that the crisis in confidence could spread from the banks to the government & country as a whole, leading to the nation going bust and having to go cap in hand to IMF etc. Ultimately if things continued to slide, the global institutions could then get into trouble, if nobody is left to bail anybody else out then I guess we really have witnessed the death of capitalism as we know it.

I dont know how we salvage the current system whilst causing as little pain as possible. I suspect that peak resources & climate change mean that our expectations for the future were mad, that the debt against our future is therefore totally out of proportion to what wealth we can create in future. So we need a financial system that matches our poor future, ie a much much smaller one. Maybe we can slowly pay off the bad debt by massively increasing the cost of fossil fuels, which will also help reflect their true cost. Bring all the externals home to roost.

Reality cheque bounced. Expectation realignment commenced, long way to fall yet though.

 

[Fruitloop]

I reckon the bubble analogy is very appropriate in this case, as a bubble is maintained by specific and temporary conditions, and once this situation comes to an end there's nothing anybody can do to prolong it. The current initiatives will do something (although apparently not much) to slow the pace of the descent, but I think that this will only be achieved at the cost of a deeper fall in the long run. In terms of causing the least pain, I guess the question is ‘the least pain to who?’. The government is currently spending hand over fist the money that might be needed later on in benefits etc for individual workers affected by unemployment etc, benefits it will most likely wriggle out of at some later date on the grounds of insufficient funds (which may well be entirely true at that point). The only people who I think government assistance could perhaps be justified is individual savers, who are the people who have acted with financial prudence so far, and who are engaging in the activity that will be necessary if the UK is to emerge out of the other side of the depression rather than simply hoping and pretending that it can be avoided altogether, or mitigated to a significant extent. The current policy of low interest rates and the significant inflation that is just over the horizon are likely to disincentivise savings though, exactly the opposite of what should be happening.

From a global perspective, I don’t think it’s quite correct to see this as bad news for everybody; what we’re seeing is a rebalancing of the global economy away from the old-developed world and what we should probably be thinking of as the new-developed – India, China, etc. Where it goes in the longer term is hard to say, as the newly-developed economies are no more insulated from the externalities you mention than Western ones are, perhaps less so given their extraction and manufacturing base compared to the bloated, doomed Western service economies. Assuming the global capitalist system continues in much the same way as it has been though, I think that the short- to medium-term prospects for the UK economy are fairly bleak, and the only way forward is to bite the bullet sooner rather than later. In the long term it’s hard to say, but I imagine that reprieve will only come by actually making things that people want to buy, by increasing the country’s self-reliance wherever possible, and by rearranging the relationship between business and workers so that more is made of the UK’s permanent residents - hopefully such that they produce and are paid a reasonable amount for things of enough actual value to offset the value of what they consume, rather than relying on imported capital to support a debts'n'service-based economy staffed by imported workers on low wages, while a large section of the country's native workers languish in underemployment or on the dole.

 

[elbows]

Interesting stuff. I agree with much of what you've been saying in this thread.

But I still dont understand what real choice the government had regarding bailing out the banks - I mean they could choose the detail of how to bail them out, which is important, but did they really have the choice not to save them?

Because if I think about the banks collapsing, I think of the government not lasting a week, because everything would stall overnight.

Now we also have bailouts for companies of all sizes, either via the banks or directly for very large companies as announced today. Most of this is as a result of bank & market failures, and is about trying to enable companies to renew their debt, of which massive amounts becomes due to rollover this year. Over time I think companies will have to come to terms with having less easy credit available, but would it be fair to let them collapse right now because the wind changed direction without many years of notice?

Dont get me wrong, I think we need radical change, but whilst it is tempting to wish the current crap collapses quickly so we get to build something new, thats likely to be an ugly process to say the least. So I cant really blame people for trying to manage the transition. To avoid this sort of mess we really needed to go off in a different direction at the end of the 70's, but we went the wrong way. Can I have the last 30 years back please?

 

[TomPaine]

I have to say over here in the US things are feeling pretty fucked. I heard yesterday that the unemployment rate is hovering around 7%, if they where to include the number of part time workers who would like to work fulltime but can't, the figure is about 13% out of full time work.
Whilst the comments about the diversfied economy over here are somewhat correct, a lot of the US manufacturing base has vanished, and the fighting that is breaking out between the Unions and the management is starting to look like Britain in the late 70s/early 80s.
Watched a pretty shocking documentary on Wal-mart the other night as well and their poor treatment of staff globally. With jobs vanishing, places like Wal-mart are going to have the unemployed desperate for work by the balls.

 

[Sunray]

........The government is currently spending hand over fist the money that might be needed later on in benefits etc for individual workers affected by unemployment etc, benefits it will most likely wriggle out of at some later date on the grounds of insufficient funds (which may well be entirely true at that point). The only people who I think government assistance could perhaps be justified is individual savers, who are the people who have acted with financial prudence so far, and who are engaging in the activity that will be necessary if the UK is to emerge out of the other side of the depression rather than simply hoping and pretending that it can be avoided altogether, or mitigated to a significant extent.......

The government has no choice.

It bailed out the RBS because if it didn't by the Sunday, on the Monday the RBS and the Natwest which it owns, wouldn't have opened for business. They were that fucked, they didn't have any money left.

If there was such thing as a stake to the heart of the UK economy, one of the high street banks not opening for business and being declared insolvent would probably be it. Can you imagine the Natwest not opening for business? The government know that cannot happen and in that sort of crisis, money suddenly becomes no object because the alternative is the partial breakdown of society.

Today isn't a bailout of the banks, today is a bail out of the entire economy so banks don't do what they did to the women in this article

http://news.bbc.co.uk/1/hi/wales/7795449.stm

84k overdraft but still profitable and probably employing some people to boot.

I really can't see that the Government have many options left.

 

[Spymaster]

Willies.

 

[treelover]

Shouldn't this be moved to P/P?

 

[Spymaster]

.

 

[frogwoman]

spymaster?

 

[SpookyFrank]

With that in mind, it would be tempting for me to see the horror legislation as part of a plan to put systems in place that would enable our institutions to survive a dramatic downturn in quality of life for the masses, and the associated unrest.

With jobs vanishing, places like Wal-mart are going to have the unemployed desperate for work by the balls.

I think it's fairly obvious that the snowballing welfare reforms (read backdoor abolition) have been designed with a recession in mind. Presumably the logic is that companies will be better able to weather the coming storm if there is a constant supply of desperate unemployed people who will be given the choice of either working for anyone who will give them work or losing all their benefits and being left to starve (or starve more quickly than one normally does on JSA). With a minimum income for the unemployed no longer guaranteed, those in work will accept any sort of crappy treatment their employers see fit to hand out because they will be rightly terrified of losing their job. Long term contracts will become a thing of the past as employers find it increasingly easier to retain a worker not quite long enough to worry about giving them sick pay, pension plans or any of that nonsense and then cut them loose and have them immediately replaced. IIRC the mooted legislation requiring equal treatment of both temporary and permanent employees never quite made it past the rhetoric stage. It doesn't seem overly paranoid of me to suspect that the government has been hatching these plans specifically to improve private sector profit margins by removing incentives to treat workers fairly and opening the door for wide-ranging wage cuts. Some might say that the government is just desperately trying to cut welfare spending, but they still find shedloads of money to hand out to new deal training contractors etc. so that one doesn't hold much water IMO.

As for social unrest, I've often wondered why the state has gone such great lengths in recent years to legislate, harass and bully protest movements to the brink of extinction. The activist scene as it has existed lately is relatively small and, for the most part, fairly toothless. Nothing like the kind of threat that the disproportionate responses from the state would seem to suggest. Now it is becoming clearer what all this is about; soon isolated, single issue protests will most likely be replaced by major strikes, riots and various other manifestations of despair and blind rage. What we've seen from the police, home office etc. may well have been a mere flex of the muscles from a state that is genuinely terrified of the corner it has painted itself into and may well have to fight its way out of in the near future. Function creep can apply to both anti-terrorism laws and anti-terrorist sub machine guns after all.

If this is all paranoia then there's no real harm done, perhaps I'll just feel really foolish in a few years' time. If, however, our masters really are that bit more crafty than they seem, well then I'll be glad I stopped trusting them many years ago and maybe saved myself a lot of trouble in the process.

 

[A Dashing Blade]

I think it's fairly obvious that the snowballing welfare reforms (read backdoor abolition) have been designed with a recession in mind . . .

Er . . . .yeah . . . .

 

[goebfwai]

On top of reducing the length and severity of the economic downturn, isn't the exchequer and the nation getting something else of considerable value back for all these bail outs? It now owns one bank outright as well as a substantial proportions of others. Isn't the plan to start selling off these shares once they are in profit again and the share price recovers? In a number of years from now, that's got to be worth something, and a considerable something at that...

I don't buy the arguments that full scale nationalisation is on the cards. The only bank that has happened with is Northern Rock. Besides other reasons, I think it suits the government to keep a sizable proportion of the bailed out banks quoted on the stock market as it enables a fluctuating independent, market determined valuation to be placed on the share the government owns.

They will always be able to point to the share price and say look our share is worth x amount. Plus there is the dividend income. Another reason in my opinion that full nationalisation is unlikely is the fact that if it is fully owned, and the time comes to sell, a public flotation would be needed, which is administratively (in terms of advertising, accountancy and auditors fees etc) very expensive. There would also be the risk of egg on the face (remember the B.P. flotation?) if it is undersubcribed. Part ownership would surely mean that the governments shares can be drip fed back onto the market or sold back to the banks as the share price rises.

They have been very consistent in maintaining the part-ownership would only be temporary.

Monbiot highlights some interesting ideas here as a compliment to meeting the challenges ahead.

http://www.guardian.co.uk/commentisfree/2009/jan/20/george-monbiot-recession-currencies

It's not mentioned, but with money scarce and lending and credit at a standstill (and when it gets going again it wont be what it was) I think people need to recognise the value of barter, the DIRECT trade of goods and services. A lot of businesses are already doing this. Private individuals do so through local employment trading schemes. What would help, and is a good idea to progress for people out there, is setting up a national website to promote and help facilitate a national swap-shop (remember that Noel Edmonds show from the 70's, where it was done through television!?)

 

[Fruitloop]

Well, the government could have guaranteed loans for individual savers, and offered itself as a lender of last resort for small and medium-sized businesses that are essentially viable but undergoing a crisis of liquidity. My main problem with their current actions is that they are predicated on the belief that there is no fundamental problem with the way the UK economy is constituted, and that if the government can just get the banks to turn the credit taps back on then everything will be okay – that’s why we’re seeing so many examples in the media of people who have been affected by the withdrawal of credit from basically sound businesses. Whilst there obviously are people who are in this situation, you have to ask, if they are representative of the general picture then why are the banks so spooked? My argument would be that they are not representative of the underlying problem, which is that the economy has been sustained to a large extent by individual borrowing that was backed by imported credit, and that against a background of job insecurity and property deflation exporting credit to the UK no longer seems like a good bet for overseas capital, and that this particular situation is not going to go away even in the medium- to long-term. So the banks are faced with a very large amount of so-called ‘toxic’ debt and paper, and at the moment they can’t even draw a line under their losses because the prices are still in free-fall.

What we have lost track of in the last twenty-odd years of right-wing economics is the concept of what is and isn’t a social good. Fundamentally I think that whilst under capitalism saving is a social good, and small-to-medium enterprises are a social good, banks in themselves are not. Credit is a more complicated issue in that it is only a social good when it is lent against goods and enterprises that either have real value or are capable of producing it, not when it is used to maintain the price of things that are over-priced relative to their value anyway. A modern economy that is built on sound principles should be able to deal with bankruptcy even in the banking sector – in fact I would say that in an environment where the financial services are deregulated to such an extent that the banks can undertake risk to the degree that they quite clearly have, it must be possible for them to fail.

I don’t buy the idea that this bailout is in any way a good investment for the tax payer. Firstly because sound investment involves selecting the investment that is most likely to offer the best return on the money invested, not the ones that are least likely to, and secondly because I don’t believe the government will hold onto their stake in the bank long enough to see a decent return even if the banks it has bought into don’t turn into a bottomless money-pit, or the government's own financial credibility doesn't collapse in the meantime (a very real danger IMO) – in fact they have basically already reassured the business community that they will sell out at the earliest opportunity.

Ultimately I reckon that because the underlying problems haven’t been addressed, what this amounts to is a sticking-plaster over a bullet-wound – the problem might be hidden for a while longer, but underneath the economy is still haemorrhaging. In the meantime the government is spending vast amounts of yours and my money propping up the price of over-valued property amongst key swing voters, and protecting the investments of their wealthy associates. In that light, I think it’s a shame this has ended up in P&P, because everybody in the country should be up in arms about it.

 

[Fruitloop]

Hmm, yep, as I suspected it's a graveyard.

 

[perplexis]

What can we do?
Whom can we contact?
How can we make a difference?
This issue isn't in the hands of the people, it's in the hands of the elite, we could try rising up and murdering the politicians, but it wouldn't get us far.
We can pontificate endlessly, and we probably should, but talk won't get anything done.
We can challenge the ideas behind the moves, but you can't change the minds of the people who are so deeply invested in their own economic constructs.

We can get angry. But then we'll just get ulcers.

 

[Wolveryeti]

I don’t buy the idea that this bailout is in any way a good investment for the tax payer.

I agree. If RBS was to be a going concern in 5-10 years, it would be reflected in its share price. Banks' major capital are their people and their relationships. RBS has lost both, and I doubt being under government control is going to improve the situation.

 

[Fruitloop]

@perplexis:

Well personally I think that it should be made clear to the politicians that anyone who uses public funds to bail out private industry will be kicked hard at the ballot-box. The most important first step is probably to get rid of the idea that the government has no other options - like I said in the last post if the banks are going to gamble then the economy must be able to survive them gambling and losing; if on the other hand they are going to be propped up by the tax-payer then they shouldn't be allowed to undertake the amount of risks that they have done. The government are largely unaccountable but not completely so, so we need to use the leverage that still exists.

My worry is that whilst ordinary people will suffer (perhaps a great deal) from this so-called crisis, the rich will get off lightly, so I think there is something to be said for everybody protecting themselves in the way that the wealthy do; be aware of the realities of the financial situation not the media spin, get out of debt as much as possible and don't take on any more at the moment, live within your means, save money wherever possible and make sure that it's in things that will hold their value (the wealthy are buying gold, apparently), if you have a mortgage then it's worth carefully considering fixing it while interest rates are low, etc etc. A foreign-currency bank account is probably a good idea if you have savings of any substance as well.

 

[perplexis]

@perplexis:

Well personally I think that it should be made clear to the politicians that anyone who uses public funds to bail out private industry will be kicked hard at the ballot-box. The most important first step is probably to get rid of the idea that the government has no other options - like I said in the last post if the banks are going to gamble then the economy must be able to survive them gambling and losing; if on the other hand they are going to be propped up by the tax-payer then they shouldn't be allowed to undertake the amount of risks that they have done. The government are largely unaccountable but not completely so, so we need to use the leverage that still exists.

My worry is that whilst ordinary people will suffer (perhaps a great deal) from this so-called crisis, the rich will get off lightly, so I think there is something to be said for everybody protecting themselves in the way that the wealthy do; be aware of the realities of the financial situation not the media spin, get out of debt as much as possible and don't take on any more at the moment, live within your means, save money wherever possible and make sure that it's in things that will hold their value (the wealthy are buying gold, apparently), if you have a mortgage then it's worth carefully considering fixing it while interest rates are low, etc etc. A foreign-currency bank account is probably a good idea if you have savings of any substance as well.

Sadly though, kicking the government in the ballot box means the tories win next time.
The electorate tends to vote for bigger parties, and for the time-being it looks like Cameron and his team's slimy policyless contrariness has the ear of the majority.
You're absolutely correct that the proposed measures serve to protect the wealthy more than the poor, but it's very hard to imagine that a government that doesn't have to call a general election for another 15 months or so is overly-concerned about public opinion in the immediate. They seem to be hoping that by the time there's any kind of election people will either be so mired in crisis that they can't imagine doing anything but voting for the status quo (see abusive relationships) or that everything will magically have become alright and everyone will love them and vote for them.

Something tells me that there is some serious adherence to doctrine going on, people making these moves aren't doing so for the people but through some misguided high-minded assumption that they know best and dissenting voices are just wrong. Of course, there's a hint of conspiraloonery in this view, but it's not unlikely that their actions are motivated by self-interest and the interests of their circle of acquiantances, cronies, corporate overlords etc.

I don't believe that there are no other options, nor do you, and nor do many many people. All this gives us is some ability to determine for ourselves that the government is bullshitting us or is misguided or whatever- we have our views and believe ourselves to be sufficiently well informed to make judgments about what might be a better course of action.
Of course pouring money into the banks is a bad idea- it's irresponsible in so many ways, quite aside from the fact that insuring bad debt won't turn out to have been a great investment, it also reduces the all-important "confidence" in the industry, which devalues the stock in which the government is blithely investing, thereby rendering it an even worse investment. Score.
Even if we agree on this, there's some way to go before getting Alistair Darling to agree.
I'm just being very depressed about the whole thing. Taking to the streets doesn't seem worthwhile, and I don't have the ear of any politicos or even journalists.

 

[Fruitloop]

Yeah well I share your pessimism to a large extent to be honest.

There’s definitely an interesting issue that you raise around the adherence to doctrine in that until the ‘credit crunch’ the government has been able to manage the economy in pretty strict accordance with the principles of laissez-faire capitalism, and even now it is sanctioning state interference whilst doing all it can to reassure business that this is a minor interruption and normal services will be restored shortly. Quite soon though they may have to choose between adherence to dogma and doing what their big-business backers want, and it will be pretty interesting (probably in a depressing way) to see which way they jump.

 

[goebfwai]

Did some digging for this old article from the Daily Mail. The really interesting part I have reproduced below. Could a new barter economy running alongside the old one (currently on life-support in intensive care) help? I really think it could. There are a number of LETS schemes up and down the country and the Freecycle group, a lot of direct re-use household goods recycling groups. Folk may have seen LETS was heavily promoted recently on a peak-hour ITV show. Could they be included/advertised under the one umbrella on a new, heavily publicised website? If it can help Russia and the systems that Monbiot described helped last time around, it can help people here too in the here and now:

"[Ex Russian oligarch turned peasant Sterligov] has got together with some former business colleagues to pursue an idea that he claims can save Russia's foundering financial system. The scheme is a money-free commodities exchange based on bartering. His exchange is operating from a Moscow skyscraper and attracting some attention, and Sterligov is in negotiations to set up a London branch. He calls it 'an anti-crisis commodity transactions centre' through which cash-strapped companies can barter goods instead of paying for them in the traditional way. 'It is an electronic substitute for money, not linked with the dollar, euro or rouble,' he explains. By using computers and the hated internet, Sterligov hopes that this can be done on a vast scale, creating chains of commodity deals that might get the economy moving again."

http://www.mailonsunday.co.uk/news/...appier-peasant-says-man-challenged-Putin.html

 

[g force]

I agree. If RBS was to be a going concern in 5-10 years, it would be reflected in its share price. Banks' major capital are their people and their relationships. RBS has lost both, and I doubt being under government control is going to improve the situation.

Investors are dumping RBS shares because it's now 70% Gov't owned...why would anyone want to own shares in it? Bugger all chance of a traditional 'return'.

RBS biggest problem was its own losses could have been manageable but in a fit of idiocy it bought up parts of ABN Amro...the parts that it turns out had the biggest exposure to the toxic debts. Oh and the fact it paid £20bn for that business which way over the odds even in the good times.

 

[secretsquirrel]

Hmm, yep, as I suspected it's a graveyard.

Hey, I made a special journey over from General to follow this thread! (Although, fuck me, it's depressing )

Did some digging for this old article from the Daily Mail. The really interesting part I have reproduced below. Could a new barter economy running alongside the old one (currently on life-support in intensive care) help? I really think it could. There are a number of LETS schemes up and down the country and the Freecycle group, a lot of direct re-use household goods recycling groups. Folk may have seen LETS was heavily promoted recently on a peak-hour ITV show. Could they be included/advertised under the one umbrella on a new, heavily publicised website? If it can help Russia and the systems that Monbiot described helped last time around, it can help people here too in the here and now:

"[Ex Russian oligarch turned peasant Sterligov] has got together with some former business colleagues to pursue an idea that he claims can save Russia's foundering financial system. The scheme is a money-free commodities exchange based on bartering. His exchange is operating from a Moscow skyscraper and attracting some attention, and Sterligov is in negotiations to set up a London branch. He calls it 'an anti-crisis commodity transactions centre' through which cash-strapped companies can barter goods instead of paying for them in the traditional way. 'It is an electronic substitute for money, not linked with the dollar, euro or rouble,' he explains. By using computers and the hated internet, Sterligov hopes that this can be done on a vast scale, creating chains of commodity deals that might get the economy moving again."

http://www.mailonsunday.co.uk/news/...appier-peasant-says-man-challenged-Putin.html

Like this perhaps? http://uk.bartercard.com/

Used to work for a firm who used it - and it does have many flaws - especially when you're working in a business where you're charging your time rather than exchanging/purchasing goods - but maybe this is the ideal time for them to really push their business?!?

 

[Fruitloop]

Thanks for stepping into the badlands of the politics forum!

In this thread I’ve been deliberately avoiding the subject of social change and trying to make an argument from a predominantly capitalist economic point of view, but that’s not to say that something of that nature wouldn’t be the preferable solution. I guess at one end of the spectrum you have barter type schemes that could be adapted to allow some sort of simple credit facility for people who have a proposal for something that would generate real-world value but who need resources to get started, and at the other you have full-on participatory economics like in Bernie Gunther’s Eco-anarchist Utopia thread, or various kinds of grassroots anarchist solutions to fulfilling people’s immediate needs in a localist fashion. First though I think it’s necessary to realise the extent of the problem and garner enough support for measures that would genuinely address it.

The major problem with this is that the government is committed both to capitalist ideology and to its backers in big business, which is why it will be interesting (as I said in my reply to perplexis) to see what happens when these two come into direct conflict. My worry is that the government will pursue the maintenance of capitalist business as usual in the UK regardless of the cost to the vast majority of people, and that they have granted coercive powers to all sorts of corporate and state bodies from bailiffs to local councils, through all kinds of petty officialdom like the TV licensing people and the DVLA, and many of these may have to be resisted in some way if anyone is going to try to live in some kind of alternative manner without being harassed at every turn by a legion of ‘jack-in-the-office’s.

 

[Fruitloop]

What happens next?

I reckon that over the next few months we will see a crisis start to develop in other kinds of borrowing, most noticeably credit-cards as they are the lender of last resort for people who are already in a shaky financial position. Credit card companies are almost without exception complete and utter bastards when it comes to getting their money back from defaulting debtors, so the issue of bailiffs and their newly-granted powers to effectively burgle people in order to recover debts will loom large. Mortgage defaults will also go up, but are more likely to get some form of government assistance because of the greater vote-winning importance of the home-owning demographic.

The other big bang is likely to be the buy-to-let market. Buy-to-letters have for quite a while now been servicing debts well above the potential earning capacity of their buy-to-let investment, because the market price at resale still justified the expenditure. Rents have been going sky-high in areas where buy-to-let is popular, as owners try to balance outgoings with the rents that they can earn. However I think that there is only so much of this that the rental market can bear, and once the differential becomes unmanageable (which could happen very suddenly if the oversupply of sterling becomes more of a problem than the deflation if general house-prices, and the BOE repeatedly puts up interest rates in a short space of time in an effort to put the brakes on the devaluation of the currency and the inflation of imported commodities), then at first a few, and then more and more buy-to-letters dump their properties on the market as they end up with an investment that is neither earning money in the short term or appreciating in the foreseeable future. Given that buy-to-let makes up about 10% of the housing market as a whole, this is going to have a marked effect on house-prices as a whole, particularly at the bottom end.

 

[kyser_soze]

regardless of the cost to the vast majority of people

What about the cost to a sizeable minority, but never an actual majority of people? One of the reasons for capitalism's longevity is it's ability to please most of the people most of the time. If things get so bad that a 'vast majority' (which for me means anything over 70%) are genuinely suffering then things will change; however, even during the 1930s it never got that bad - so even if there's a repeat of the Great Depression, you're still looking at having a majority of people who are in not-great straits, but not the kind of levels of immiseration that a big political upheaval would require, especially if those that are having a hard time start to get by adequately with alternative approaches that work well locally and keep them housed, fed and warm.

 

[secretsquirrel]

@ fruitloop: I can follow what everyone is saying here but my contributory powers are minimal cos you all understand it a lot better than I. However, it is all v.educational!

I find the whole thing both fascinating and horrifying and am frequently reminded of the Chinese curse 'may you live in interesting times'.

Me? Well, I live in the West Country and may well go and buy myself a tepee and find a self supporting off grid hippy colony. Lord knows there’s enough of ‘em round here…

 

[Fruitloop]

@ kyser:

It's a good point, for sure.

Personally I'm no believer in leftist immiseration, in that I don't think that increasing levels of poverty, unemployment or a general worsening of living conditions necessarily results in any kind of social change, let alone the kind of positive social change I'd like to see. So I don't feel compelled to believe the corollary, that the absence of social upheaval necessarily implies that people are in a good situation, or that they are particularly contented with it. To stray briefly into the murky waters of Marxist terminology, radical social change requires a revolutionary subject, i.e. a group of people who are conscious of themselves as a class and are sufficiently empowered to take whatever action is necessary to secure their class interests. I don’t think there has been any trace of a revolutionary subject in this country for quite some time, although things are different elsewhere and could potentially change very rapidly here.

 

[taffboy gwyrdd]

kyser does have some points but does it amount to the fact that as long as we dont starve we wont kick off?

That way we can either be doleys reliant on the state or workers that pay off the debt to capitalism for many generations.

It's a fucking mess, no suprise when you look at the fact that Mandellson is command of scores of billions going to his fraudster banking buddies.

 

[Fruitloop]

@ fruitloop: I can follow what everyone is saying here but my contributory powers are minimal cos you all understand it a lot better than I. However, it is all v.educational!

I find the whole thing both fascinating and horrifying and am frequently reminded of the Chinese curse 'may you live in interesting times'.

Me? Well, I live in the West Country and may well go and buy myself a tepee and find a self supporting off grid hippy colony. Lord knows there’s enough of ‘em round here…

Glad you find it interesting

Of course I could be completely wrong. I sincerely hope so, but in all honesty don't think so. That we live in interesting times is rapidly becoming pretty self-evident I think.

Hopefully having an idea of what is actually going on, rather than the 'half a picture' that you get through mainstream media channels will help people to prepare for what might happen (whilst taking into account that it might not) and so improve their situation if what I'm worried about does become a reality. The next couple of months will be key - if things develop the way I think they will then it's a pretty strong indicator that what is happening does resemble what I (and other people) reckon is going on.

ETA: Is there space in that teepee?