Vorsprung durch scrappage
The car industry is delighted that Lord Mandelson has expanded the government's car scrappage scheme. But I'm tempted to say they lobbied the wrong government. Getting Germany to extend its much more generous scheme - which expired at the start of this month - might have done the average British car worker more good.
Consider the arithmetic. The UK now plans to spend another £100m on its scrappage scheme, bringing the grand total to £400m. That sounds exciting until you hear that Germany's scheme cost 5bn euros (£4.6bn). In other words, more than ten times as much. Under the German scheme, the government provided a rebate of 2,500 euros to everyone exchanging an old car for a new one. Two million Germans have bought cars under the scheme - compared to 227,000 so far in the UK scheme.
Why does this matter - other than confirming that German governments are a lot more into cars? It matters because some of those new cars being bought in Germany were made in the UK.
Though Germany is a world-beating car exporter, Germany is also Europe's biggest car importer. About 40% of sales last year were imports. But importers have benefitted even more than you might expect from the German car scrappage scheme, because people trading in their clunkers tended to buy smaller, compact cars, which are more often made abroad. In the first few months of the scheme, nearly two-thirds of the cars bought under the German scheme were made overseas.
It hasn't exactly caused a surge in demand for British cars. But according to the HMRC's trade figures, our car imports from Germany in the first seven months of the year were 34% down on the same period of 2008, whereas car exports to Germany "only" fell by 19%.
It's true that we still bought a lot more of their cars than they bought of ours - £3.6bn worth versus £515m. But every little helps. Our car "deficit" with Germany has shrunk by nearly £2bn - from £4.9bn in the first seven months of 2008 to £3.1bn now.
Put it another way: we import around 80% of the cars sold in the UK. So, by a very rough approximation, you could expect that around £45m of the £227m spent on the car scrappage scheme went toward buying a British-made car. (I know that the scheme's supporters point out that some of those cars have UK-made parts, but this calculation is tricky enough already.) By the same logic, the German government appears to have spent about £2.8bn on helping Germans buy foreign cars.
Now the vast majority of those imports weren't British. But if a mere 1.7% of that money was spent on a car made in Britain, the German scheme has made a greater direct contribution to the sale of cars made in the UK than our own government's scheme.
First, it's a reminder that the Germans have done a lot more to boost their economy than their rhetoric would suggest, whereas the British have done a lot less. To hear the Chancellor speaking today, you would think that the government planned an enormous boost to the economy next year - which the Conservatives would callously take away. But the IMF estimates that discretionary programs (that is, special policies to combat the recession) will not support the economy at all next year. By contrast, Germany is planning to spend another 2% of national income on boosting growth.
The Germans have a reason for being low-key about their stimulus packages - they think it makes them work better. On their theory, people (German people anyway) will spend more of a given cash windfall if they're not worried about the tax rises to come.
It seems to work for them - the rise in car sales was almost single-handedly responsible for the very modest growth in GDP which Germany achieved in the second quarter of this year. According to Capital Economics, German consumer spending grew by an annual rate of 1.2% in the three months to the end of June, at a time when spending in the UK was falling at an annual rate of 3.4%. Without car sales, spending would have fallen in Germany as well.
Possibly, the average Brit is less likely to lie awake at night worrying about the public finances than his German counterpart. Maybe we get a warm glow from the idea that our government is valiantly running up debt on the economy's behalf. Either way, our government has taken the opposite approach to the Germans. Ministers have endlessly talked up the stimulus, even though by US or even German standards, it was pretty small. We'll never know whether it would have been more effective to play the stimulus down.
Second, it shows us once again, why sometimes it's better to be a spender than a maker.
Almost by definition, countries with big trade deficits will be less affected by a global downturn than countries with big surpluses. Why? Imagine Country X has a 10% of GDP current account deficit - meaning that it only makes 90% of what it consumes. Whereas its neighbour, Country Y, has a 10% of GDP surplus.
Then imagine global demand falls 5% across the board. Other things equal, the country that contributes 110% of its GDP to global supply will be worse hit than the country that only produces 90%. On this example, X faces a hit of 4.5% of GDP versus 5.5% of GDP for country Y. And so exports of Country Y fall more than imports, whereas the opposite will be true for Country X. The numbers are smaller, but this the essence of what has happened in Britain and Germany.
And that's if other things are equal. Country X benefits even more when Y decides to spend £4.6bn boosting domestic demand for imported cars, while its exporters are being hammered by falling foreign demand. Thanks to cash-for-clunkers, German car sales in the year to August are up 27%. By contrast, car exports are 29% down on last year. Though something tells me they'll be back.
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A question:
By the way who gets the 2000 GBP? - How much to the manufacture, the importer and the garage that sells the car? The buyer sees £2000 off the price paid, but who gets the cash? OK this will vary by car brand (I suspect), but who actually benefits from the subsidy? Anyone know?
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British cars? What British cars?
There is no major British car manufacturer. They are German, Japanese, Indian, French or Chinese.
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Remember GDP doesn't distinguish between productive capital and fictitious capital.
New cars are productive capital (and very damaging to the environment).
Moving symbols about that are legal entitlements to future (unrealised) surplus value (e.g. buying and selling shares, or goverment debt) is fictitious capital.
The latter hides the fact that the 'real' profit rate is falling (due to capital accumulation).
But when it dawns that the future 'profits' (surplus value) will not be realised (as in a Ponzi scheme), all capital is devalued.
The only option the state has is to devalue the monetary base, i.e. inflation.
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I think the only point of relevance is the very last line of your post "Though something tells me they'll be back."
The post prior to this is something you might see in a secondary maths class and has about as much relevance.
The thing I have never understood about the UK is that we are quite literally at war and always have been. Yes, it's an economic war - survival of the fittest and the most wise.
The key strategy in times of an economic down turn is (from a governments point of view) is to ensure survival of key money making industries that will earn money when the economy turns.
So if you look at the German car industry the government has bent over backwards to ensure both credit and demand are boosted while ensuring production capacity is at the very least guarded and protected.
Let us swing the attention span onto the UK. Any so called "failing" industry is left to it's own devices, left to fail and is either sold off to a foriegn competitor or the bones picked over by the banks. Even if a foriegn competitor buys the industry in most cases it's not long before it's shut down.
At long last I noticed a glimmer of what has happened to this country actually made a way into Mandelson's thought processes - wonders never cease ! In bad economic times the UK has ALWAYS failed it's industry while being very happy to take taxes in the good times. This strategy is doing nothing but loose the war !
What happens in some purile mathmatical calculation bears no relationship to the real world.
The real world is one where the UK cannot get credit, business cannot fund cash flow/orders from credit, businesses fail, assets are sold and are bought by foriegn industries - because our currency is weak our own industry cannot afford to buy even if they could get the credit. "Metal movers" are doing a roaring trade at the moment. Of course the net result is that an asset stripped country will be less well placed when the economy recovers.
I wonder if the German economy can get credit or even needs credit if it has a trade surplus ?
While I am sure you are correct in stating that the average british car worker might benefit from some measure of job security from a boost in a German scrappage scheme - but as the UK doesn't own any of it's car manufacturing most of the profits will go to the foriegn owners as cars are made under license. I would guess that the end result is barely treading water in economic terms while further boosting foreigners who will only invest the money in their own development making our own situation worse.
The war unfortunately was lost many, many years ago in the hands of trade unions and poor governance.
It never makes sense to be a spender than a maker not just from a economic point of view but from a social one too.
While I am sure there are some who are quite happy to go into the financial services many crave engineering, agricultural and manufacturing careers.
I for one would hate working in the financial services - I would rather not work than work in the financial services, I have always wanted to make, research and produce.
Governance fails to account for the variety in the "human condition" - is it any wonder society fails on so many levels in this country when no value is placed on some peoples lives ? A happy society is one where everyone feels valued and needed - a happy society is most likely a productive one. Calculations are not people, they are just numbers on a screen or on a piece of paper.
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At 09:39am on 29 Sep 2009, Wee-Scamp wrote:
British cars? What British cars?
It may surprise you to know that we make more cars in the UK than we have ever done. Virtually none of them are British managed or owned. A true testament to the short termism and failure of British Management (and government).
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Firstly, the UK scrappage scheme announcement yesterday was a political rather than an economic statement. In terms of real stimulous it is rather paltry. The mjor UK effect will be in the maintenance of jobs.
We are not privy to the corporate finance decisions of motor manufacturers but it is transparent that they are not UK firms. Any profits will ultimately be transfered elsewhere.
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If the roles of Germany and the UK were reversed and we were subsidising the car industry via the scrappage scheme 10 times more than the Germans, what's the betting some EU Commissioner would cry "foul" and accuse us of breaking EU rules ? Caledonian Comment
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Interesting take on the scrappage scheme - does it conform to the law of unintended consequences. For example scrapping a perfectly serviceable small car for a larger less economical car. There appears no test of sustainability in the scheme considering the energy needed to manufacture a new car and to 'reprocess' and old one? It is also a story (aided by the above comments) about the decline of manufacturing in UK. For decades the finance sector has beaten up on the useful things industry and even a Labour Government has been holding their coats and looking on. The news that some firms in the city are folding up their tents and going is good. Labour has failed to have a meaningful industrial policy throughout its period of government and a £100M on a scrappage scheme is no substitute.
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The problem with the UK economy is that we consume a lot and make a little. This means we borrow more and if we reduce borowing, which we must, we consume less, but the ratio of imbalance remains similar. The scrappage scheme benefits the dealers more than manufacturing. As part of the restructuring of the UK economy over the medium term we have to restore home manufacturing of consumables as a much larger percentage of what we buy. We should have learned two things out of this mess, if nothing else. The first is there is no such thing as a service economy and the second is that the current use of the word credit actually means debt.
We have to transfer up to a million workers from the public sector, where they are a drain on the economy and paid out of taxes, to the manufacturing sector where they will contribute to both wealth creation, growth and taxation. This will require near war time commitment and ingenuity, but no other sort of recovery can be sustained.
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[Unsuitable/Broken URL removed by Moderator]
An all too realistic depiction of Liberal-Democracy and its market-forces in their full glory?
How is Mr Darling going to regulate anything when deregulation is the essence of Liberal-Democracy and is being promoted not just by the Lisbon Treaty, but G8 and its explanation?
Cars: - name me a major British car manufacturer rather than a car made in Britain where the company is Japanese, Indian, US or that of some other country. Why do cars only fit for scrappage have to be taxed, insured, MOT'd and road-worthy? Is it because all the parts on a road worthy car eligible for a 2K rebate can be sold for about 2K?
The 'British' public are now just cash cows. Public Services and schemes have just become a vehicle to make money out of people.
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The mathematical example above is based on a very restricted set of parameters that bear *NO* relation to the real world !! It is rather akin to proving that Achilles cannot catch the tortoise !!
The facts are that German cars are for customers all over the world whereas, British cars barely sell outside of Europe !! This would demolish that presumption that the stimuli are restricted to European economy alone. The Germans know that by keeping their car industries going, they can export, not just to UK, but to their biggest car market - China !! German cars out-sell British cars by at least 1000 to 1 in China !! This means that German car workers are kept at their jobs in preparation for the worldwide economic pick-up, when they can push more heavily into China than the Brits can ever dream of !!
Meanwhile British cars have been so over-produced during to good times in order to chase some feel-good factor about the statistics, that Britain simply does not have the slack in inventory to mitigate the current production. Just look at the square miles of disused airfields covered in brand new, unsold cars here !!
The only way that Britain can get out of this manufacturing trap is *NOT* to throw good money after bad. The British/British-owned car industry is on its knees. Let it die and use that "stimulus" for other industries !! There are zillions of small to medium sized companies out there that have thriving markets but cannot expand into them simply for a lack of funds. Ah, but it's too much like hard work to go after all these little people. Let's just throw more money at the big boys and let them squander it !!
To sum up, the Germans *TARGETED* their stimulus to where it would do most good for their economy. The Brits just threw money at whoever could lobby them best, be they unions, big businesses or cronies !! And all this is quite aside from the relative size of their stimuli. Perhaps Mrs. Thatcher Mark 2 aka Frau Nein has the right idea !! We shall see !!
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No 9 "The first is there is no such thing as a service economy ..."
Oh but there is !! All you need is a lot of slaves !! :-)
"We have to transfer up to a million workers from the public sector, where they are a drain on the economy and paid out of taxes, to the manufacturing sector where they will contribute to both wealth creation, growth and taxation."
God forbid !! Why, they bring with them public sector working habits into an already ailing manufacturing sector and destroy it entirely !! :-)
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It's pretty obvious what sort of car You drive, Stephanie.
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REAL WORLD VS SELF-BELIEF & RHETORIC
Postscript (#10): 'Graphic Designer vs client' youtube. Tell me it isn't so. This is people's choice, 'workers democracy' at work. Today, at the Labour Party conference, Johnson was warning against the Tories doing effectively what New Labour was celbrating just a couple of years ago. He looked very pleased with himself at the end. According to the BBC, 2/3 of the hall was empty....
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Some suggest that British cars don't sell outside the UK and Europe. In fact, Jaguar Land Rover (Indian owned, but still British designed and built in spite the best efforts of Lord M. and our respected government) are increasingly dependent on exports.
As for the argument about spenders and makers, I'm Stephanie wrote it as provocation. May be the manufacturing nations like Germany have lost a bigger per centage to the crisis. But, they have lost a percentage of something. We, who don't manufacture, have lost a slightly smaller fraction of almost nothing.
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I would be very grateful if duvinrouge contributed again, to develop his point by defining his terms. Many thanks, you have aroused my interest.
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#11 ishkandar,
A little disingenuous. You are well aware that the marketing decisions for UK produced volume car manufacturers are not made in the UK. Therefore, to make comparisons with their German counterparts is not realistic.
As for a Mrs Thatcher Mk2 -GOD HELP US if that was ever to come about!
#5 adilbert
Having spent many years training managers in the UK I can assure you that the failure of the British economy is not down to the failure of British managers - at the operational level at least.
Whilst working at ENSAE, it was gratifying to see just how valued British managers were by foreign organisations. Whilst their Asian counterparts tended to want to 'kick problems upstairs' for direction, the Brits showed ingenuity and flexibility when dealing with problems in a volatile environment.
#9 sonbinor 39
Not much point in transfering a million people from the public sector to a manufacturing sector that is still contracting. Until we develop a real strategy for our manufacturing future then we have little chance of emerging this depresion with any more than a shell of the little that we have left of British manufacturing.
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Given the government's professed 'green' stance on ecology, scrappage is a nonsense. In a car's lifespan the most damage caused to the environment is during its manufacture. Far better to promote maintenance and repair of existing vehicles. Less pollution, fewer raw materials, more local employment. It must be better for the home economy.
So are hybrid/electric cars a nonsense. Just consider the scale of ecological damage caused by the mining of all the extra heavy metals needed to manufacture all the new batteries that will go into these vehicles.
So whose tune are the government dancing to?
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As I can say from experience, old cars which have been around for 10 years or so are quite expensive to keep on the road. Each MOT test and annual service brings a whole bunch of things that need fixing and replacing. And this provides a lot of work, often for local, independant garages up and down the country, as well as for manufacturers of replacement parts. The scrappage sceheme will presumably lead to a significant fall in demand for these businesses.
Has anyone bothered to work out the overall benefits of these schemes. Is it possible that more service and repair jobs will be lost that manufacturing jobs are gained - especially in the UK where so many new cars are imported?
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Wasn't the aim of the scheme to reduce carbon emissions? Yet 80% of the emissions in a car's lifetime come from its manufacture. Junk an old one before the end of its life and force the world to undergo all the pollution of making a new one - great idea!
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The demographics don't match up. 10 year old cars are currently worth under £1,000. New ones are around £12-20k on average. So people, in a period when credit is hard to obtain, are suddenly stumping up £10k or more on the change.
This isn't a real and sustainable programme. People using it are merely trying to find another place for their savings, away from under 1% savings accounts. Or motor dealers have seen a loophole to get money from the government.
Of course extending it until after the election was never in doubt.
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#16
Sorry if my posts are not clear enough.
Productive capital - a capitalist buying variable capital (e.g. energy to run the machines involved in car manufacture, new machine parts for those that have worn out) and constant capital (i.e. labour power), which then produce a commodity that is sold, so that the capitalist ends up (hopefully, from his perspective) with more money (capital) than he started off with.
Fictitious capital - claims on future profits produce by the productive capital through the purchase of some legal entitlement.
So, for example, the ownership of a stock entitles the owner to a share of the productive capital's future profits (in capitalism profits are actually distributed as interest and rental payments as well as pure profit). But these entitlements can be traded and passed on at ever higher prices. An asset bubble, if you like.
This is how stockmarket and housing bubbles hide the 'real' rate of profit and end up producing financial crises.
I'll come back to surplus value another time.
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Peter Mandelson and the Government have made a lot about the "green" value of this scheme. In fact it is a very expensive way to reduce greenhouse gases, as this analysis (from Slate Magazine) shows: http://www.slate.com/id/2224306/
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First of all we must say thank you to the Germans: a little courtesy goes a long way.
The interesting point in Stephanie's blog is that the German car scrappage scheme appears to be the active factor that lifted Germany out of recession. Clearly this needs some more work but the suggestion is that all that is lifting the economy at the moment is government spending in one way or another.
This is the point at which Stephanie's argument that the makers would suffer more in this downturn than the spenders begins to fall apart. Sure, to begin with the makers experience a shortfall in demand leading immediately to lay-offs and closures. Yet in the medium term it is the spenders who suffer as they then have to repay their debts from diminished liquidity.
Although we are now just over a year into the bust this still has a long time to run. The idea that we need to shift a million workers from the public sector to the private sector is a valid point but this immediately begs the questions as to how, with what, from which and into where? Some concept of a product would also be nice.
The time is rapidly approaching when in this country at least we are going to have to get a grip on government spending. In my view there are stealth cuts going on as suddenly public bodies run out of money. Either there is a budgetary management problem or the funds have dried up. I think government has become so complex and overblown it hasn't got a clue as to how to run itself let alone anything else.
My suggestion is that as a country we need to direct such resources as we have into value-added activity which includes manufacturing. I am by instinct a metal basher and would love to make things again rather than being a middle-man: probably a bit late in my case now but one can dream.
My suggestion is that a portion of the spending cuts to come are directed back into manufacturing in some way. I am sure that this is what Mandy has in mind.
It will be interesting to see what the Tories have to say about this next week.
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NewFazer (#18) Good point and question, but don't expect too much sense here. Most verbally prance for attention like so many of our politicians and media folk. They have no sense of perspective or truth. It's all about making it easier for 'business' to milk more money from consumers these days. Anything else is 'evil incarnate'.
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#22 DuvinRouge
Here are 3 clear objections to modern finance that I list below, which seem similar to the concept of fictitious capital:
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/09/can_governments_squeeze_banker.html#P85438040
These are the "socially useless" functions that I believe Adair Turner was alluding to in early September, but it seems have been stifled from mass media coverage and even debate among inquiring minds :-(
Maybe those in Gvt and the City do realise that they are dabbling all the while with fictitious capital. But as long as it provides us with a fictitious sense of wealth, importance and power, who would be brave enough to pull the rug from under our feet?
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#25
Interesting. If, as you claim there is no sense here then why do you continually propogandise?
But then DSM IV-TR does apply in your case - sadly. In there lies the answer.
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No 17 FDD - "As for a Mrs Thatcher Mk2 -GOD HELP US if that was ever to come about!"
That's what she was alleged to have wanted to be !! :-)
"Whilst working at ENSAE, it was gratifying to see just how valued British managers were by foreign organisations. Whilst their Asian counterparts tended to want to 'kick problems upstairs' for direction, the Brits showed ingenuity and flexibility when dealing with problems in a volatile environment."
Whilst it is true that some British middle management are highly valued abroad for their ability to, generally, "think outside the box" and try to solve problems instead of passing on the responsibility, there are those who do not. However, the problem usually lie with the British upper management who are either to "Americanised" or are too stick-in-the-mud to progress beyond "what's good enough for great granddaddy is good enough for me" !!
Unfortunately most of the good middle management have been lured abroad by a combination of better pay, working conditions, lower taxes and/or a better life-style !!
"Until we develop a real strategy for our manufacturing future then we have little chance of emerging this depresion with any more than a shell of the little that we have left of British manufacturing."
Unfortunately, it's this "shell" that will drag us down !! What we are new areas of manufacturing that is not mired in the early 20th century thinking. The British car industry is no more and throwing money will not resurrect that corpse. However, there are plenty of small to medium sized businesses around that, given a helping hand by the government, will prosper and grow to take us out of this recession far better that going head-on with the Germans or the Japanese in car manufacturing. They have an acknowledged technology, marketing and manufacturing lead on Britain and to challenge them is just jingoistic arrogance. Better to save our resources and start afresh where the playing field is more level !! And as Franksz would say, "Technology, technology and more technology !!"
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18 NewFazer
You ask "So whose tune are the government dancing to?"
The same tune as always, the one that the Oil companies and SMMT have been playing to them for the last century or so.
Looking rather further into the future than the next election, I see advanced technology (post peak oil) only ever helping the ultra rich to stay mobile and out of reach of the mass of the poor i.e. the rest of us, our mobility having been sacrificed for the greater good of the few.
My advice is to take control of your destiny - walk, cycle, catch a train, ride a horse, but don't rely on having a car.
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No 18 "Just consider the scale of ecological damage caused by the mining of all the extra heavy metals needed to manufacture all the new batteries that will go into these vehicles."
Hello ?? Modern high capacity batteries use Lithium as their base and, in case you have forgotten your GCSE Chemistry, Lithium is atomic no. 3, the lightest metal on Earth !! Wherefore, the "extra heavy metals" ??
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#24 stanilic,
If you look more closely at the published data on the German economy, I think that you will find that the german recovery was more technical than actual.
During the report period German imports dropped significantly which appeared to show an upturn. You also have to look at the reporting schedules to see that many guestimates were made simply because the required data was either not availale or was on a different reporting cycle.
I do agre with you that a 'rush to manufacturing' would not prove beneficial. We really do need a clear strategy as to what industries to invest in and appropriate means for funding them.
I don't accept that this government has ben any more inept in their management of the economy than any other party would have been in the same circumstances. They have however created a mega beaurocracy that has taken on a life of its own. Hence costs have increased whilst the benefits/savings have not materialised. At lest to this extent the public sector needs to be pruned. However, it is more likely that the lower echalons of the public sector will pay the price!
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No 19 "Has anyone bothered to work out the overall benefits of these schemes."
At a guess, it's an attempt to preserve jobs in NuLabour constituencies at the expense of many more jobs elsewhere !!
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No 22 "So, for example, the ownership of a stock entitles the owner to a share of the productive capital's future profits (in capitalism profits are actually distributed as interest and rental payments as well as pure profit)."
Have you factored in the fact that the money from the shares sold are used to buy the plant and machinery and the working capital to pay for, not just wages, but other costs, like rents, rates, electricity, transportation, repairs, administration, etc. ?? In effect, the company is "borrowing" money from the shareholders in order to produce goods for sale and, hopefully, profit from it.
Besides, pension funds are usually some of the biggest shareholders and they need the dividends to pay for future pensions. Digging a hole in the garden and putting money in it will not provide much of a pension for later, especially, after 40 years or so, the money will have devalued so significantly that what is there is practically worthless !!
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The car scrappage scheme is clearly a sign of desperation to try to prop up what is in effect market failure and the misallocation of capital.
I recall from reading Arian Nevin's National Economy recently, a number of similar examples that occurred during the Great Depression. Thousands of barrels of port thrown into the sea, crops burnt / destroyed. Nevin cites an elusive book by Jeffrey Marks: Modern Idolatry written in the mid 1930s. It states that the Gvt paid for the destruction of this stock, in order to protect companies from failing and to preserve employment for the masses. But where did this money come from? Higher Gvt debt which ultimately has to come from future tax returns.
So under the guise of protecting the jobs and prosperity of the people, it is instead a means of protecting investors interests at the expense of the community (i.e. debt slavery).
A most pernicious strategy indeed.
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Lost in translation ??
http://news.bbc.co.uk/1/hi/uk_politics/8279701.stm
"He (Gordon Brown) said voters at the election, due to be held by next June, would have the "biggest choice for a generation".
Translated - NuLabour is in such deep doo-doo that the voters now have to choose between the Tories or the Lib-Dem !!
So all those "no more boom or bust", "too-big-to-fail", "green shoots of recovery" and "I have saved the world" have come to naught !! All that money thrown at the car industry didn't seemed to have made any difference except for the few who took advantage of it !!
Now that the Labour grandees are putting in the boot, he's "seen the light" !! Would that he "saw the light" some 12 years ago !!
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foredeckdave (#27) Because there are likley to be some readers who do not post the self-centred nonsense which people such as yourself are renowned for. You serve as an excellent illustration of so much that's wrong with our system today. You can't help it I'm sure.
You appear to be unable to provide anything other than testament to your propensity to distort/misunderstand. Still, as there are plenty of role models for you out there, nobody should be at all surprised, given that this is an economics blog. This is an accurate description of your behaviour over many months.
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30. ishkandar wrote:
"in case you have forgotten your GCSE Chemistry, Lithium is atomic no. 3, the lightest metal on Earth"
The only exam I recall ever failing is my O Level Chemistry. Ever since then I've known my limits and stayed within them!
However, on a more serious note, how is the lithium extracted/transported/processed without using other, maybe heavier metals and nastier chemicals?
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36 Jaded jean
"the self-centred nonsense which people such as yourself are renowned for"
should read
"the self-centred nonsense which people such as YOU are renowned for"
Didn't they teach grammar where you come from or are some people just genetically unable to learn it?
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I just replaced both our cars and what I heard from manufacturers was that there was no crisis, business had never been better.
I had a car that would have qualified under scrappage but I traded it in for less in the end against a 2nd hand model since the only decent deals on scrappage are on small cars not well suited to the long distances I drive.
And some are a con - the Kia that's supposedly £5,700 off. well they don't mention that that incluides teh so-called discount of £5,000 that every customer gets for walking in the door. Which means that the scrappage allowance is £700. Is that even legal?
And since the worthwhile cars often lose so much money early in their life it made more sense to buy 2nd hand. E.g. a Mitsubishi Outlander Diamond is £29k new, a one year old one is about £20k, so why do I want £2k off a new one? Makes more sense to buy the one year old version.
A BMW 535d is £50k new with the "standard" extras and about £23-27k for a 3 year old one. I got one that was 3 years old with 15,900 miles on the clock for 27k. And I got a good deal on the SLK I traded in (the scrappageable Passat went against the Outlander for £700 although I could have got £850 from BMW - darn).
Both from a main dealer so possibly cheaper if you buy elsewhere.
Also many manufacturers discounts are higher than scrappage. So... it's a bad deal for everyone but the dealers. And you have to have an MOT on the car at the time you collect the new one... waste of money.
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ThorntonHeathen (#37) "The only exam I recall ever failing is my O Level Chemistry. Ever since then I've known my limits and stayed within them!"
You are incorrect. This incorrectness is very common, alas.
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#36
"You appear to be unable to provide anything other than testament to your propensity to distort/misunderstand."
I bow at the feet of the great distorter!
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The cash incentives to buy new cars trading old ones in will not increase car sales, it will merely accelerate them. They would have been bought within a year or two or three anyway if times were good. The government cash incentive is in effect a tax revenue reduction which will come back in the form of a deficit, inflation, more QE. The effectiveness of the effort to prime the pump now to get the economy restarted will not be known until the pump runs dry. That's when we'll know if without the stimulus the economic engine sputters out or continues to run on its own steam.
A 400 million pound (600 million dollar) stimulus for a two trillion dollar a year economy doesn't seem like much. It's .03%. Germany's is 0.3% Is this a measure of how serious the problem is? Is this all it will take to fix it? Or is this spitting in the ocean?
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foredeckdave (#41) "I bow at the feet of the great distorter!"
I have summarised what research (well replicated internationally) shows. This is indeed contrary to what popular opinion has been led to believe for many years. I have always referenced the sources so that others can look this up for themselves. Others will know that to be true.
If you are going to accuse me of distortion I request that you provide the empirical evidence to substantiate your assrtions. Otherwise, I request that you shut up.
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No 37 "However, on a more serious note, how is the lithium extracted/transported/processed without using other, maybe heavier metals and nastier chemicals?"
Lithium salts are extracted from the water of mineral springs, brine pools and brine deposits.
The metal is produced electrolytically from a mixture of fused lithium and potassium chloride. In 1998 it was about US$ 43 per pound ($95 per kg).
Not very different from producing sodium or potassium by electrolysis. I doubt there's much "nastier chemicals" than hydrochloric acid (a product of the electrolysis of salt) and "heavy metals" involved unless they employ Heavy Metal fans !! BTW, your tummy also produces hydrochloric acid, so it can't be that nasty, can it ??
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The consequences of the scheme:
The only important consequences to most governments of any of their schemes, this car scrapping one included, are (1) that it looks good to an impressionable public and (2) that any bad consequences do not show up until after the next election.
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ThorntonHeathen (#38) "Didn't they teach grammar where you come from or are some people just genetically unable to learn it?"
If I did have a genetic impairment, or if I'd suffered brain damage in the past, surely all you'd have to decide is whether this impaired your understanding of what I've written? Otherwise your remark would just be an ad hominem, and logically invalid.
You, foredeckdave, John_from_Hendon etc all need to take these points on board, as I don't think any of you sufficiently discriminate at present.
My points are far more substantive than you appreciate.
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ishkandar (#44) Please stop posting silly remarks. Lithium, even Lithium proscribed medically, is toxic. Even 5g can be fatal. Many people take these drugs still, making out that they are not dangerous if handled irresponsibly is thoughtless. Some people take the drug for mood disorders.
That we have HCL in our stomachs does not mean that HCL is not highly dangerous/corrosive. It depends on the molarity.
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Looks like Iran won't be messed around with anymore...
Iran tests longest range missiles
http://news.bbc.co.uk/1/hi/world/middle_east/8278026.stm
D'you know...it's funny how a pariah nation can suddenly become a respected trading partner....only after they attain 'the bomb'...oh!, and the means to deliver it.
There might just be US troop withdrawal after all...sooner rather than later.
Israel is on it's own now!
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No 42 "A 400 million pound (600 million dollar) stimulus for a two trillion dollar a year economy doesn't seem like much. It's .03%. Germany's is 0.3% Is this a measure of how serious the problem is? Is this all it will take to fix it? Or is this spitting in the ocean?"
£400 million stimulus may not do much if it's thrown about indiscriminately but it may do some good if it is properly targetted !! Forget the dead ducks of the car industry This is especially true in America with GM and Chrysler in deep trouble and Ford not doing that well either. Put that money into more high tech industries and maybe more good will come of it !!
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Germany and France will now have to start 'stepping up to the plate' with regard to paying for the defence of the increasing European Union and the 'Eastern' Liberal Democracies. The Lisbon Treaty 'Yes' vote will help allow the German Volk to swallow this new responsibility by spreading the cost of the pain throughout the EU.
...and now that the UK has been exposed as the sick pauper of the world (economy), our 'defence' budget has now been exposed as totally unsustainable in the medium to long term.
Maybe things won't be quite so bad afterall, now that the weight of the 'free world's' defence will be removed from our shoulders.
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No 47 "ishkandar (#44) Please stop posting silly remarks. Lithium, even Lithium proscribed medically, is toxic. Even 5g can be fatal. Many people take these drugs still, making out that they are not dangerous if handled irresponsibly is thoughtless. Some people take the drug for mood disorders."
Anyone who knowingly ingest Lithium in any form deserves all they get !! This is especially true of people who knowingly try to sqallow their mobile phone battery !!
Anyone who prescribes toxic doses of lithium will be struck off the GMC and, very probably, be prosecuted in a criminal court. Anyone who ignores the prescribed dosage and overdoses is responsible for their own action, not the doctor who prescribed.
None of the above have anything remotely to do with "heavy metals" or "nastier chemicals" !!
"That we have HCL in our stomachs does not mean that HCL is not highly dangerous/corrosive."
You can also overdose on salt if you are stupid enough to ingest too much of it !! In any case, the acidity needed for electrolysis is too low to be dangerous. It is created from the ions from seperation by the electrical charge(s).
So, wherefore are the "silly remarks" ??
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#46 Jadedjean - Perhaps the problem lies with a surfeit of discrimination on your part.
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No 48 "D'you know...it's funny how a pariah nation can suddenly become a respected trading partner....only after they attain 'the bomb'...oh!, and the means to deliver it."
Ooi, you, you weedy twerp.....oh, ah, SIR, would you mind pointing that AK47 elsewhere, SIR ?? Please, SIR ?? Please ?? :-)
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#43
Well let's look at some of your statements:
You claimed that Isreal had eugenic legislation regarding the marriage of Isreali citizens. The Isreali Diplomatic Service confirmed that no such legislation exists. Your statement is a LIE.
You claimed that China has eugenic legislation on its statutes book. This has been checked with the Chinese Embassy in London and they have confirmed that they have no eugenic legislation on their statute books. This claim is also a LIE.
You have claimed that Behavioural Analysis provides a functional control mechanism. This claim is, at best, a major distortion.
You claim that the official record of both Nazi Germany and the USSR is wrong.
You claim that the work of both Skinner and Hernstien is FACT when it is not.
The above is merely an example of your lies and distortions. I could go on but it would not be to the benefit of the vast majority of the readers of this blog.
Therefore I will not be alone in the confrontation of your lies and distortions. In FACT it would be far better if YOU shut up
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Lots of words about nothing. And the conclusion: It's all fine. Let's continue to be unproductive and rob the world by creating finance and housing bubbles. It is great to be uncompetitive and live of other people's work. Hopeless!
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#48 BankSlickerminustheR,
You rally do not understand international politics at all!
Rather than leaving "Isreal on its own" it is more likely to solidify Saudi Arabia and the Emmirate States with the US sphere of influence, continue the Iraqi dependance upon the US, promote stronger ties between Turkey and Syria with the US. It may aslo foter closer relations between the US and Russia in relation to Iran.
If the Ireali's decide to 'take-out' the Iranian facilities just watch the surrounding states take an Arsene Wenger stance.
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ishkandar (#51) Your whole post above was silly. Lithium is prescribed for mood disorders and the therapeutic dose is close to toxic. People easily do silly things. Your remarks were ignorant and socially irresponsible.
armagediontimes (#52) "Perhaps the problem lies with a surfeit of discrimination on your part."
No, you really don't discriminate carefully enough. Here's an aid. See today's Labour Party speech for some context if my posts to this blog on this matter don't suffice.
foredeckdave (#54) This is just another instance of narcissistic rage on your part plus more falsehoods from you as anyone can check via the web. I won't suggest you seek help, as I know that will be a waste of both your, and other people's time. You should listen more and try to learn.
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#54. foredeckdave wrote:
I concur.
I suspect that JJ actually believes what he/she writes, and is not as sophisticated as to be able to knowingly argue an obvious erroneous argument with such consistent and devious determination. This personal tragedy for JJ and waste of a life is quite sad. All we can fervently hope is that dealing with JJ and his/her kind requires a less violent solution that that required to deal with Dr. Joseph Goebbels. (lots of degrees - but fundamentally bonkers!)
In short, as you write, we must oppose, and it is our duty, and the duty of all rational people, to oppose, such perversions of logic, science and understanding. But not get too worked up about it as this provides the oxygen of publicity to the nonsense! The more JJ writes the more rabid and the sillier JJ becomes. JJ is really fast becoming a joke.
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#55. markus_uk wrote:
"It's all fine. Let's continue to be unproductive and rob the world by creating finance and housing bubbles"
I fear you will be proved right. The 'rob the world' bit though is dependent on the world not taxing these unnatural exuberances to distribute the profits more widely. I guess as the Banks have subverted the state you are right there too. Indeed the only evidence that the banks have not subverted the state will be to see effective regulation and this I doubt too.
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#54 foredeckdave and #58 John_from_Hendon So the thoughts of Jadedjean leave much to be desired. But are these ramblings really so different from some real world examples?
Perhaps you remember Gordon Brown welcoming the King of Saudi Arabia to London. If I recall correctly he spoke of the many shared values and interests of the two cultures.
Do you agree with him? If so is this one of the values or interests that you share?
http://news.bbc.co.uk/2/hi/middle_east/7098480.stm
How many people have been killed in Iraq and Afghanistan as a consequence of British policy and actions? Is it not possible that the fact that no-one can agree on an exact number somewhat more obscene than some rantings of a likely eccentric?
Do you know that the British government acted to prop up the Khmer Rouge? - a regime that exterminated approximately 30% of its population. Any thoughts on the obscenity of that action?
If you are in way any exposed to US culture how about the fact that the Pentagon developed a computer program that "demonstrated" that the life of 1 US Marine was equivalent to the lives of 80,000 Rwandans and hence the computer said no in terms of seeking to act to stop the Rwandan genocide.
There are plenty of cause that may actually benefit from some genuine outrage - no need to expend all your fire on one insignificant target.
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#58 John_from_Hendon
Thank you.
What really angers me is the time and space that is wasted here having to expose these lies and distortions. The whole world is facing the most serious economic episode since the 1930s. We have the opportunity here to share ideas and debate them as to how to resolve or survive the problems yet we are constantly divereted by the facile selfish actions of one individual.
As you said the other day "hey-ho"!
Next year, this country faces a criticl decision as to how our future will be shaped. Before I cast my vote, I want to explore a range of options (some/many I may disagree with) so that whichever party I vote for I do so cogniscent of the strength and weaknesses of their proposals. As you know, I am at heart a socialist. That does not mean that my vote is committed to Labour or that it is not avaialable to either the Conservatives or Liberals. If we are diverted by nonesense from these discussions then we are doing ouselves and the country a dis-service
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John_from_Hendon (#58) Hmmmmmmm....
I do have a major problem in that I'm a real sucker for empirical evidence and am rather prone to spot people who are out of touch with reality.
It's one of those training things I suspect.
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Perhaps the scrappage scheme could be extended to other disfunctional pollooting old wrecks like parliament and the money can be put towards buying the latest Japanease inflatables that commit hurry curry at the least whiff of scandal.
In fact the scrappage scheme should not encourage the exchange of old polluting bangers for new destined to be old poluting bangers ,but should encourage the move away from automobile production altogether, by offering the old and infirm a straight forward exchange for the latest japanese robotic dolls for their aged poluters with subsidies given to the british car industry to retool and make these dolls localy in the old car factories, ready for the huge export potential to china where there a looming woman shortage.
In fact if british robotic doll production got together with honda we would not need roads anymore with the resultant sinurgy trained to leap over tall buildings .
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AXIS II CLUSTER B E.G. APD/NPD - IS IT ALL IN THE GENES?
foredeckdave (#61) "What really angers me is the time and space that is wasted here having to expose these lies and distortions. The whole world is facing the most serious economic episode since the 1930s. We have the opportunity here to share ideas and debate them as to how to resolve or survive the problems yet we are constantly divereted by the facile selfish actions of one individual."
I suggest you all stop posting then.
Instead, spend some of your time reading and digesting this from ETS, first released in February 2007. Obama's definitely been made aware of it and yet, sadly, people like yourself and John_from_Hendon remain clueless. As a consequence, you really have nothing to contribute.
Here's something else that Brown tacitly referred to today (look back for the PPO project). It's most probably all genetic, hence we have to reduce the birth-rate in this group (and closely supervise their progeny when that's impossible). Sadly, some of these types seem to do remarkably well in Financial and Business Services, the Entertainment industry etc :-(.
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JadedJean
Please note VERY CAREFULLY that, in the first 2 points of my post #54, I am identifying the person using the pseudonym of JadedJean as knowingly and willfully lying.
Your reponse in #57 demonstrates that you lack both the moral fortitude and evidence to refute the charge.
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#18
in this week's Newsweek there is an article that states that China currently produces 95% of the world's supply of so-called rare earth metals used in vehicles such as the Prius and in other 'green' technologies.
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Labour's extension of this stupid scrappage scheme is simply to buy the votes of the unions during their conference; it's the ultimate in short term planning, and does nothing to strategically rebalance the economy towards high tech. manufacturing and renewable energy. Instead once again the government is playing King Cunute trying to stop legacy car manufacturers from restructuring and pouring valueable resources down the drain, just like the "loan" to Rover before the last election. This government has no vision, no strategy and no ability to execute what needs to be done for the UK
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#33
I agree that the initial issue of shares is borrowing money from shareholders.
But remember the trading of second-hand shares doesn't actually transfer the prices paid for the shares to the company, even if accounting techniques allow the company to incorporate this into its balance sheet.
The general point I'm trying to make is the distinction between capital used to purchase means of production and labour power and so commodities to be sold (the process by which surplus value is acquired, i.e. the amount paid in wages and means of production is less than the amount realised at point of sale), and fictitious capital, which is basically an increase in asset prices through speculation and involves no actual surplus value being realised.
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No 66 "in this week's Newsweek there is an article that states that China currently produces 95% of the world's supply of so-called rare earth metals used in vehicles such as the Prius and in other 'green' technologies."
Can you post a link to this article ?? I read Newsweek online at www.newsweek.com. I would be very interested in this article. Thanks, in advance.
I do know that China is currently the largest producer of Lithium in the world. I don't remember the exact percentages. However, Lithium is the lightest metal on Earth. It is also a very common metal.
It is possible that minute traces of rare earth elements are used in alloys but they cannot possibly be used in large quantities since, as their name implies, they are very rare and, therefore, very expensive !!
Perhaps the Chinese have found some deposits that make mining and/or refining them commercially viable. I know that China's Non-ferrous Metal company have been hunting all over the place for new deposits of commercially usable non-ferrous metals. However, much of their efforts have been focused on copper and such.
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No 68 "But remember the trading of second-hand shares doesn't actually transfer the prices paid for the shares to the company, even if accounting techniques allow the company to incorporate this into its balance sheet."
I do not understand this unless you are talking about mark-to-market valuation. However, there are other forms of capitalisation; loan capital and capitalisation of profits, for instance.
Trading in capital need not be speculation since there will be times when one party wishes to be rid of its holdings for one reason or another and a second party is quite willing to purchase that holding for an agreed-upon sum. By extension, this leads to the stock markets acting as a pricing mechanism and the brokers act on behalf of parties that do not spend every minute of every day studying the shares of different companies available for sale.
Going further, futures and options and their respective markets are needed to smooth out the supply of resources to companies otherwise they may increase or (more rarely) decrease their prices according to the availability of the basic resource needs. For example, would you like to see your gas price fluctuate at least 8 times a year ?? Would you like to see the price of chocolate double because the price of cocoa just shot through the roof ??
Sugar prices climbed like a rocket recently and the Indians are hurting badly because the price rise coincided with several of their festivals. Those who *need* sugar as a raw material and have bought sugar futures months ago would have ensured a rather smoother pricing of their primary resource. Airlines that have not hedged their future fuel needs have been badly hurt or went bust during the last oil price spike !!
However, for every winner in these transactions there is a loser. Win-win transactions are very, very rare !! What went wrong is the belief that there will be perpetual win-win transactions and that the good times will never end. It is this that fueled the last bubble !! Notice I used "belief" instead of "fact" !! Believing in false prophets is what had led to this pass and pushing for more powers for these false prophets will not solve this situation.
Come back, Mr. Ponzi !! These guys have done far better than you could have dreamt of !!
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#70
Capitalism does indeed benefit from the financial transactions that reduce risk as well as introducing the dangers of speculation/asset bubbles (fictitious capital).
These risk reductions in themselves are not productive capital because they do not produce any surplus value.
They merely transfer surplus value from productive capital to financial capital.
Surplus value takes the form of profits and interest (and rent for that matter).
Wiki has a good article on surplus value.
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foredecdave (#65) "Your reponse in #57 demonstrates that you lack both the moral fortitude and evidence to refute the charge."
No, what that post, and others demonstrates is that you do not understand my posts but that the moderators do (or the posts that are not censored would have been pulled as in breach of House Rules). There is noting untrue or offensive in my posts or the links. There is nothing racist, sexist or abusive. I am indeed hightly critical of your behaviour, that of John_from_Hendon and several others, because it is wrong. At times, those posts may be referred to the moderators and even removed by moderators, but I suspect the latter is only done to calm matters down. What you all need to grasp is that you are factually, i.e. empirically wrong.
The problem is that none of you seem to have any grasp of statistics, actuarial language or science. None of you appear to undrstand how groups differ and what the implications of that is. That is not racism, any more than criticism of Israel is 'anti-semitism' or to say that the frequency of some characterists amongst Jews is such and such (some of which are admirable). Nor is taking steps to get better control of offenders and teenage mothers and their fecundity.
That none of you understand how those who advise on economic and social policy talk, is somewhat worrying given that you all think that you have something of value to contribute here on the 'economic crisis'. As a corrective, once again, I suggest you read this link and follow up its links very diligently. It is far more important than what you are currently posting, and you might learn something about economics which all too few economists currently factor into their thinking, and you should be able to see from your own, wayward, behaviour, why that is, and what the consequences are.
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The reason the Germans have supported their manufacturing industry (whichever country its factories are located in) is that it directly supports jobs and removes environmentally damaging vehicles from the roads. In Great Britain the financial support has been poured down the throats of the ultra greedy grossly irresponsibly careless City bankers who are responsible for the crisis in the first place. No wonder there is little left for the real economy!But then in Britain the government is completely beholden to the financial "industry", unlike in Germany.
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63. SpartacusmartyrAAAs
At last, a sensible practical suggestion, almost a win-win I reckon. Less cars, more robots, reducing unemployment and lessening the balance of payments deficit, while making lonely men everywhere happy. Phillippe Starck would be most impressed.
A beneficial use for those empty automobile factories too, which is far preferable to turning them into (for example) temporary holding camps for economic migrants.
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ON HYPOCRISY, MENDACITY, DECEIT, SPIN AND SELF-DECEPTION
Postscript (#72) Readers should at least glance through this and look up the marriage laws for Jews in Israel as covered by Israeli newspapers. I have commented before on the UNESCO and other efforts to vilify the PRINCE's 'family planning' laws of 1995. As to other issues, even just a brief look into the Bush administration preoccupation with the Neocons and theconsequences of their 'interventionist' agenda should open just a few purblind eyes.
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72 jj
You lump into one basket all those who would beg to differ from you in their approach to the issues discussed on here. You are "critical of (our) behaviour..... because it is wrong". What is right and wrong depends on the assumptions underlying your chosen approach to life, the universe and everything.
Many of your critics are scientifically literate. I happen to be a critic of a mechanistic approach to life and I cling to a sense of wonder at the myriad complexity and beauty of existence. Along with that comes certain assumptions and value judgements which I don't expect everyone else to share. Your reductionist, behaviourist perspective is grounded in a belief that ALL is material, everything can be reduced to and explained by data. You don't appear to realise that this too is a belief. Well, I can see that it is and that really is all there is to say.
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No71 "These risk reductions in themselves are not productive capital because they do not produce any surplus value."
Surely that depends on your definition of "produce any surplus value" !! I would take the fact that a reduction of risk of *losses* as the equivalent of "producing any surplus value" !! For surely, any loss is a *reduction* in surplus value !! Sometimes "not to lose" is a gain in itself !!
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No 74 "A beneficial use for those empty automobile factories too, which is far preferable to turning them into (for example) temporary holding camps for economic migrants."
Why bother ?? Send the illegal immigrants back to Sangette !! :-)
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ThorntonHeathen (#76) "You lump into one basket all those who would beg to differ from you in their approach to the issues discussed on here."
I classify and analyse behaviour. Your verbal behaviour here is arrogant, ill-informed and lacking in insight. You don't beg anything other than the important questions. Others posting silly remarks here are definitely no more scientifically literate than you are. You need to face facts, some of which are your self-evident areas of incompetence. This is a healthy thing to do which you currently do too little of. The worst offender by far is foredeckdave whose response to accurate feedback is narcissistic rage, as it is in the case of John_from)_Hendon.
"What is right and wrong depends on the assumptions underlying your chosen approach to life, the universe and everything.
Anarchistic nonsense! You have been badly taught. Go and learn some science and logic by following my the links. Begin with the ETS video. Then find out about the NAEP in the USA and our SATs (as proxy IQ tests) over here. You may learn something useful about economics and the control of behaviour in the process.
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erratum (#75) Spelling checker/user substitution error: substitute PRC for PRINCE'S
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72 jj
Your link doesn't work.
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31 foredeckdave
I take the point as to the prevailing economic recoveries being more technical than anything else. I think Stephanie has implied that within her blog.
This then begs the question as to when or even if a self-sustaining recovery is possible and when. I fear I am becoming increasingly dystopian in my expectations.
The reality that government has turned itself into a bloated bureaucracy does at least create an opportunity for some economic realignment. Yet such a realignment needs to be carefully constructed and yet not become in time a self-serving bureaucracy all of its own.
To start with I think we need to stop seeing ourselves as a developed economy. Quality training in industrial skills from the bottom up is a good place to start. In my experience skilled technicians given the proper support are sufficiently motivated in their own right to initiate the industrial revolution we require.
Having seen how Taiwan and Hong Kong function through a multiplicity of small workshops supplying the larger factories suggests a possible route. I can recall forty years ago a London which had a similar network of small workshops all doing their own thing: I know that because my Dad had one. The business property boom of the Seventies killed them off. Says it all really.....
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Scrappage - 100m is nothing, not worth covering except to show this.
How much is the Lottery giving to renovate an old hut in Turing's (gay pride?) honour?
SF, I've given you some free advice as to what's worth covering in the aftermath of this mess, how about doing so? ;-)
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#69
Dear Mr Kandar
As requested
http://www.newsweek.com/id/215544
Its not quite the same as the article in the printed version
Yrs Mrs Bloggs
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RSVP? Absolutely no idea what that means! And talk about cars and their scrappage I am all for it - and could we extend it to certain presenters of TV shows ABOUT cars? No offence Jeremy and person supposedly pushing supermart trolleys up mountains to get to the meat of the issue. Other Supermarts are available.
Top Gear - the TV show - is a guilty pleasure. And vorsprung durch? Hello! lol
OK, Ms Flanders. I lie awake worrying about other stuff -
not the public finances of either country - though I suppose I should. So irresponsible. My stimulus package is not low key - lol - I do not think. It is sort of haiku. But that is another story.
And I mostly walk. This just caught my eye - not haiku at all.
Quote:So many gods, so many creeds, So many paths that wind and wind, While just the art of being kind is all the sad world needs. -Ella Wheeler Wilcox, poet (1850-1919): Unquote
Subject: Vorsprung durch scrappage (a freehand lets spin)
Anagram: Paul RSVP - cad peer runs - confide gangster rap - shh
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hodgeey (#81) "Your link doesn't work.
OK, try this. One of the authors of this work is the father of Finland's PM.
It should be read in conjunction with Herrnstein and Murry's earlier work, and that of Cattell in earlier times (1930s Britain). A look at Michael Young would help too. It's a pity New Labour never did.
Consider modrn british adversarial politics as a storn in a teacup, they oppose each other in the dip in the middle of an M, misleading the electorate as to what the far right and far left is. The real 'far right' is economic libertarianism (as Brown remarked at the conference yesterday), without pointing out that it is the inevitable, entropic, result of inaction, i.e inertia, of pseudo-adversial liberal-democractic politics we have endured for decades. See the shift in The Sun under Murdoch's Neocon influence.
Meanwhile Harman says the Conservatives know nothing about equality...but neither does she if she's taken at her word, as she appears to have no grasp at all of the Gaussian distribution, how genes drive populations, and thus, politics and economics.
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I have an idea that would help UK small businesses, UK employment and the UK balance of payments and it would be very good for the environment.
Britain is a world leader in vintage and classic car restoration activity. Let's build on it. The government should offer £2,000 towards the restoration or improvement of any car over 20 years old and £4,000 towards restoration of a car over 40 years old.
Better for us and better for the world than subsidising a foreign import that, in spite of all the publicity, produces far more environmental damage just in its manufacture.
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#77 Iskandar
To hedge or not to hedge, that is the question.
By your own admission in post #70 hedging is rarely a win/win situation. Having read Das' Traders Guns & Money it is quite clear that hedging (and many other derivatives based "high finance" activities) are not wealth creating, but wealth transferring: two parties take opposing positions on future price movements, ultimately only one of them will be right (and so one of them wrong), and the house takes its cut.
In your example of the airline who hedges oil futures and the price goes up then sure he is better off. But if oil prices drop substantially, then the winner will be that airline which DIDN'T hedge. Swings and roundabouts.
Hedging has been sold on the promise of reducing exposure to price instability. It is the confusion between risk & uncertainty. High finance claims to be able to price (and therefore assess) uncertainty - to put a known value onto the unknown.
But I'm with Taleb, Tavakoli, Warren Buffet et al on this. Hedging has probably amplified instability not reduced it. I fail to see how it can actually help tackle the underlying cause of volatility. If anything it reduces (removes) the need of a company to understand, think & act on what could cause instabilities. If you have hedged the sale price of your wheat crop, it won't make the weather better!
Hedge funds feed off instability. They are not doing the world a socially useful task in mitigating against it. In fact quite the opposite; it is the fuel of their engine of growth, and so they need to constantly stoke the fear of volatility!
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I guess 100 million for the UK is just window dressing, it's not going to turn the economy around. I'm just grateful it isn't bigger. Every old car scrapped was worth something. No doubt some were pretty reliable with a good few years still in them. Scrapping those cars is DESTROYING REAL WEALTH and to replace them with someting that takes new resources to make is the economics of the madhouse - otherwise known as conventional economics! Also (as others have said) a car purchase brought forward by this scheme is not going to happen next year, so it is putting of the inevitable slump at the cost of extra borrowing now. So next year we get the slump AND the interest payment.
Incidentally to Ishkender and Thornton Heathen, the environmental problems caused by Lithium extraction may be relatively minor. However, the whole modern electronics set up relies on minor elements available only as byproducts of the usual polluting heavy metals industries. You can't have one without the other. Rare earth elements are a little bit different in that they tend to occur in unusual deposits which are not distributed evenly around the world. However, most of them are not actually very rare although I believe China has a virtual monopoly on supply of the heavier rare earths.
Rare earths are used in phosphors (light emitting compounds). Electronics also relies on gallium, arsenic, indium, tellurium etc. All byproducts of metal smelting.
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#82 stanilic
I support your despair - nowhere do I see small businesses springing up in England - the more visible evidence of high street occupancy is now (still) banks, estate agents charity shops and expensive coffee shops.
On another strand, in this weeks Economist Page 30 "Where the money goes" shows in a nice bar chart govt spending by function, 2009-10 forecast.
Anyone fancy pinning the tail on the donkey?
Welfare benefits c.£190bn
Health c.£120bn
Education c.£90bn
Defence c.£40bn
Public Order c.£35bn
Social Services c.£30bn
Housing and environment c.£25bn
Debt Interest c.25bn
Transport c.£20bn
Business and employment c.£15bn
Other c.£70bn
Source: HM Treasury
So the amount spent on business and employment including presumably scrappage is dwarfed by Welfare benefits
Begs the question - has someone somewhere accepted that a significant majority of the population of our once proud nation no further economic function? All our handwringing angst on this blog about green + technology investment, creating a new economic direction for the UK is well meaning but ultimately futile if the current and future governments accept this.
I'm not anti-EU per se, but it seems to me the rules stopping state support for growing strategic future industry are bonkers in the current situation. It will be difficult enough to switch benefit recipients into new productive, sustainable jobs without government intervention.
Oh and Dave, Charities and the voluntary sector just aren't up to remodelling the UK economy.
I for one can't accept this waste of human life, spirit etc. and make a loud call again for limits to be placed on welfare, access to consumer credit, daytime TV so we again become a nation of doers rather than consumers and benefit recipients.
Even if it means spending a bit more on Public Order.
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No 84 Thank you for the link. I had a quick look but I've not read it in detail. She-who-must-be-obeyed has summoned me to be the pack mule for her shopping trip !!
I will read it later and come back to you with any comments I might have.
BTW, my username is Ishkandar although the BBC website, in its infinite wisdom, insist that I must be known as "you" despite my consistently logging in as "Ishkandar" !! C'est la vie, as the English say !! :-)
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No 88 "In your example of the airline who hedges oil futures and the price goes up then sure he is better off. But if oil prices drop substantially, then the winner will be that airline which DIDN'T hedge. Swings and roundabouts."
Firstly, the airlines do not hedge against each other but airlines hedging against oil traders, etc. !! Secondly, if the price goes down, the airline can walk away from the future or option and forfeit the amount paid for that derivative. Since that amount is a tiny fraction of the real price, that amount is considered to be an insurance premium, a cost of doing business. If the airline is *NOT* hedges, then the price rise may be substantial and will cause much loss to its profitability.
"If you have hedged the sale price of your wheat crop, it won't make the weather better!"
True but you will not lose out if the bottom falls out of the wheat market !! Besides, it is quite common for farmers to sell their crops ahead of time (futures) in order to get the money to keep the farm going. Without that money, the farm may fail and contribute to the certainty (not the risk) of instability !!
"Hedge funds feed off instability. They are not doing the world a socially useful task in mitigating against it. In fact quite the opposite; it is the fuel of their engine of growth, and so they need to constantly stoke the fear of volatility!"
Here, you are confusing two totally separate things/objects - hedges and hedge funds !! Hedge funds often have little or nothing to do with hedging !! What they do is gamble on the areas that they think produce the highest possible returns for a given amount of capital. In a sense, they overlap with venture capitalist.
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No 89 "Every old car scrapped was worth something. No doubt some were pretty reliable with a good few years still in them. Scrapping those cars is DESTROYING REAL WEALTH and to replace them with someting that takes new resources to make is the economics of the madhouse - otherwise known as conventional economics!"
Keynesian economics !! Who cares if the real wealth or the environment is destroyed so long as *some* workers are employed.
"However, the whole modern electronics set up relies on minor elements available only as byproducts of the usual polluting heavy metals industries."
Not being an electronics engineer or scientist, I have no idea what the exact composition of various electronic components are made of. But as I understand it, heavy metal industries are based around commonly used metals like lead, silver, gold, etc. None of these industries have any bearing on the production of Lithium !!
"Rare earths are used in phosphors (light emitting compounds). Electronics also relies on gallium, arsenic, indium, tellurium etc. All byproducts of metal smelting."
Very probably true and that is very probably why the Japanese have spend billions successfully developing the new OLED (Organic Light Emitting Diode) technology !! Now the world and his brother will charge in clamouring to produce oleds !! Better mousetrap and all that !!
Britain has/had(??) a good research base. What is lacking is the *business will* to turn their products into industries. Most of the time it's more "business won't" than "business will" !! :-)
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tonyparksrun (#90) "
Welfare benefits c.£190bn
Health c.£120bn
Education c.£90bn"
This is why the demographics/TFRs/IQ point is so critical.
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CRASS STUPIDITY
Postscript (#94) Such talk offends the lofty 'sensibilities' of some. That's what the psychopthic predators have counted on, of course.
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http://news.bbc.co.uk/1/hi/sci/tech/8283909.stm
"A study from the Stockholm Environment Institute estimated when embedded emissions are taken into account, the average UK resident pollutes 15 tonnes a year - almost five times more than the average Chinese person at 3.1 tonnes a year."
Worse and worse !! As had been predicted, if Britain insist on restricting imports from the East, then it will get hit by the pollution restrictions that will apply in the near future.
So all those who have been foolishly screaming about applying tariffs on East Asian made goods for climate change reasons had better think again - *very seriously* !! Britain is in no position to point fingers !!
Billions have been poured into saving Scottish banks and bare scraps and bones are thrown at developing new technology for renewable energy generators !! Perhaps a good start to government cuts and efficiency savings is to fire Ed Milliband, since he's not terribly efficient !!
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Vorsprung durch scrappage
http://news.bbc.co.uk/1/hi/technology/8282839.stm
"But only nine countries, including Korea, Japan, Sweden, Latvia were ready for future demands, such as watching high definition video."
Amongst them are the 4 most advanced tech-savvy countries in Asia - Japan, South Korea, Hong Kong and Singapore.
So, scrap the making of cars and start making internet products !! The 100s of millions of quids will start up a lot of smaller tech companies and create a lot more sustainable jobs than simply keeping Honest Joe's Used Car Lots in business !!
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#96 ishkandar,
Surely then Britain has a moral responsibility to repatriate all that production from Asian countries to save all those people from increasing their carbon footprint!
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No 98 "Surely then Britain has a moral responsibility to repatriate all that production from Asian countries to save all those people from increasing their carbon footprint!"
So true but, unfortunately, if only....
If a guy can start a company with SG$5,000 (£2,000), borrowed from his father, and build it up to challenge Apple in the MP3 arena, surely all those government "scrappage" millions can do more !! For more information, look up Creative Technology, whose Zen range is giving the IPods a good run for their money !!
http://www.creative.com/corporate/about/
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He should be fined £2,00000,0000000bn!
PC's were nice quiet mchines before thart ruddy Sondblaster Pro thingy was developed!!! - burrrrrrrrrrrrrrrrrr :-)
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No 100 FDD - Then again, 100m kiddies might dispute your statement !! What will movies and games on a PC be like without Soundblaster and its ilk ?? :-)
On a more serious note, they moved out of that market when the likes of Nvidia and Gforce moved in and concentrated on the MP3 and MP4 markets !! To date, they are the only ones to give Apple a good fight !!
That said, Creative and its boss had two major advantages !!
(1) They had a government that is serious about and supportive of SMEs. The amount of paperwork and business regulations they have to comply with are truly minimal and the civil service is highly efficient !! This is a major killer for SMEs who need to concentrate on business instead of filling in millions of forms in triplicate !!
(2) The taxes are very low to start with and start-up companies are given full or partial tax holidays for 5 (I think) years !!
Here, Teflon Mandy blathers on about helping small businesses and doing nothing concrete while his colleagues generate gazillions of regulations and then tax you to death !!
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http://news.bbc.co.uk/1/hi/business/8284217.stm
"The global recovery is being led by Asia, where economies have "withstood the financial turmoil much better than expected," the IMF says."
Well, after the Asian Currency Crisis of 1997 and the heavy-handed IMF support efforts there, most Asian countries are highly allergic to more IMF support !! In fact, they had spent the last decade or so stockpiling as much reserves as they possibly can and heavily regulated their banks. Hence, their economies "withstood the financial turmoil much better than expected" !!
The Germans have the reserves !! What's the betting that Frau Nein will take the Germans down the "regulated banks" route soon ??
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#92 "Here, you are confusing two totally separate things/objects - hedges and hedge funds !!"
Touche! But I guess my beef is with the concept of hedging. Do you agree or disagree with the premise (by Taleb, Tavakoli, Buffet etc.) that hedging doesn't remove / protect underlying volatity, but actually exacerbates it?
This is connected with the fact that since the early 20th Century economists seem to have forgotten the distinction between wealth as making things vs wealth as making money. I set out my stall on this topic below:
http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/08/qe_more_to_do.html#P84968196
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No 103 "Do you agree or disagree with the premise (by Taleb, Tavakoli, Buffet etc.) that hedging doesn't remove / protect underlying volatity, but actually exacerbates it?"
Actually it neither removes nor exacerbates volatility. It simply transfers the risks from one party to another. In a fashion, it is insurance against risks.
However, speculation is another kettle of fish altogether !! *THIS* exacerbates volatility since this is usually done with little or no underlyings !! Speculations are simply gambling on the direction of volatility movements. There have been some spectacular consequences if the "guesses" go right or wrong. Usually, it's the ones that go wrong that are reported with such glee by the media.
A recent example is that Chinese trader/manager for the oil hedges in Singapore. He went so spectacularly wrong that he nearly dragged the Chinese airline into oblivion. He was recalled to China "to help with inquiries" and had not been heard of since !!
Another, also in Singapore, is the Nick Leeson/Baring Securities case. In this case, Nick Leeson took a venerable bank with him to oblivion !!
Therefore, there had to be (1) a separating of consideration between "insurance" and "gambling", and (2) it is damn near impossible to prove (and therefore, legislate against) "gambling", and (3) unless some government is willing to cover such risks are the insurer of last resort, no one else will be willing to take up such risks without the corresponding rewards.
It is always easier to criticize an system than to solve it's problems. Cornucopia exist only in Greek mythology and the Elysium in Roman mythology. Us poor mortals have to take things as they come and deal with them as best we can.
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Addendum to No 104 - There is nothing wrong with "wealth as in making money" since "money" is yet another product/commodity and, therefore, can be "made" !! It is *gambling* for it that I'm against !! It is just as wrong to bet sheep as it is to bet money !!
And betting on a lying politician being honest is a "sucker bet", as many ancients have comment on that !!
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http://news.bbc.co.uk/1/hi/business/8284941.stm
If they can "value" CDOs and CDSs as AAA+, then it is possible to "value" a £100 stone as £11 million treasure !! Same difference !!
Please come back, Mr. Ponzi !! You weren't that bad after all !!
Meanwhile, we keep on being "best placed to come out of the recession" without ever coming out of it !!
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http://news.bbc.co.uk/1/hi/world/americas/8280441.stm
5 years ago, when Fidel Castro was reported to be very ill and Raul was seen to take on more and more of the running of Cuba, there was much speculation that Cuba will go the "China route" !!
This looks like the first step along that route taken by China in the early 80s - the freeing of small farmers !! The next step will be cottage industries and small scale enterprises. Perhaps their "private farmers markets" are part of this next step.
When low-cost light industries start popping up, we'll know they are well along that route !! The world's economies are definitely changing and the old concepts and dogmas are getting increasingly irrelevant !! At least the Europeans have embassies and representatives in Cuba now and, therefore, in on the ground floor, so to speak !!
"Watch this space", as our American cousins will say !!
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HMG kidology, they do not provide money. A car sold has tax which would in most cases exceed HMG concession of £1k reduction in price by tax but still net them a tax gain, therfore they provide no money but gain from a car sold in net reduced tax recieved. Effectively there is no money provided and a gain in tax recieved by HMG for cars otherwise not sold.
Similarly £1k off from a car dealer is the norm when no trade in which is effectively what a 10 year old car is
The short term feel good factor is it keeps people employed but in the long term steals demand from the future reducing demand for second hand/new cars.
This is not unlike HMG short term governance strategy of the past 10 years with their excessive and current ongoing borrowings and stealth taxing.
Its sad when the reduction of a tax on an item generates business and in a way indicates the that the law of diminishing returns are an outcome of excerssive tax and ultimately the reason for our current plight.
HMG will do anything to turn a buck in the economy, unfortunately this generally increases the lack of productivity in the sytsem and ultimately has led to now over half the spend in the country being that of Brown the clown and a collusion of his incompetent cohorts BoE, FSA and burgoining legions of advisers.
Its worth note on todays topical theme they all have pretty secure pensions for being so incompetent, perhaps if they did not they might have performned better.
The goverments historical strategy of getting money to turnover more and more in unproductive schemes gaining ever incresing tax reciepts has been a model of collusion with the banks with ultimately the artificially generated wealth collapsing with bankruptcy.
Who pays the ferryman? we do its going to be dire
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What are the implications for the car scrappage-scheme now that the Conservatives are in power? I notice that at one point the article mentions that "To hear the Chancellor speaking today, you would think that the government planned an enormous boost to the economy next year - which the Conservatives would callously take away." Does this mean that the Conservatives have other plans for the scrappage-scheme, or was this just general politicking from Mr. Darling? It would also be interesting to know what the effect has been on the sale of used cars in the country, an industry that I thought would be booming due to the recession. Obviously the scheme encourages the purchasing of new vehicles, and going by the statistics in various articles, it appears to be working!
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