Ed Milliband has recently warned that we're going to soon be living off raw potatoes and stale bread.
He attacked David Cameron over his decision to keep us out of any new European treaty. I won't quote him exactly but in summary; Britain will be isolated, the city will fall apart and before long you'll be queueing up in Soviet style mile long queues just to get some bread.
I exaggerate of course, but he genuinely does think the city (by which I mean the financial heart of London) will be worse off for being left out. This is rather strange considering the reason Cameron didn't go into the treaty was because the EU wanted the UK to be subject to the same new financial rules as everyone else in the EU... in other words, they wanted to control our financial industry. Doing this would mean there was no incentive to be in London, because it would be the same as anywhere in the EU. This would mean it would make most sense for a bank to move Germany (close to the European Central Bank where the power would be).
I apologise for this first part, how dreadfully dull I know. But now I'll move on the the crux of what I actually wanted to say. Isolation from the EU, how will we survive?
Well I would suggest that we'll survive in the same way someone does when a ship is sinking and they 'isolate' themselves by getting into a lifeboat.
The enormous disaster that is the mainship takes on water and the person in the life raft remains safe and dry, even if they are a bit rocked by the waves caused by the ship going down. This leaves the person in the life boat in a great position to get on another ship should one that is seaworthy turn up.
I'm hoping we're all getting the analogy.
You see, while free trade is excellent the political control of the EU is largely unnecessary and extremely expensive. Having public workers do any job is usually quite expensive (excluding Teachers, Nurses..) but having public workers do a job where no one in the building speaks the same language so everything has to be translated 20 times is the Mercedes A-Class of expensive, ie its not just expensive, its not that good either.
So what is to be done? Well what if we keep the free trade regulations and bin everything else? I mean EVERYTHING else. That particularly includes the Common Agricultural Policy... which for those of you who do not know, it where your money is taken off you and given to vineyard owners, so that they can tell you that Champagne is only called Champagne if it is from a specific region of France, otherwise it is 'sparkling white wine', very useful. In fact, it is worse than that, but I'm trying to give you a flavour.
So we're left with just the Common Market provisions, wouldn't that be nice? Is it even possible you ask? Well yes, we know this because Norway and Switzerland already have this arrangement. Both basically enjoy the free market but without having their countries run... well, from another country. And how does it affect their economy?
Well I'd like to finish with this. Below is the top five countries by GDP per captia. That is, how much money the country makes, divided by how many people in that country, it is an excellent way of working out how rich a country is proportionate to its size (population wise):
Luxembourg (tax haven, doesn't count)
Norway (in EFTA but not EU)
Qatar (not European)
Switzerland (in EFTA but not EU)
United Arab Emirates (not European)
So apart from a tax haven, the only countries in the top five that are European are outside of the EU but within the European Free Trade Area (ie they enjoy the Common Market, but don't have to waste their money on paying for bureaucrats to tell them what to call Champagne).
In fact, pretty much anyway of measuring the proportionate wealth in a country leaves the Swiss and the Nords way out in front of Germany, France, the UK etc. Which leaves us with the question, why aren't we joining them. And that is a question to which I just don't know the answer.
Showing posts with label European Union. Show all posts
Showing posts with label European Union. Show all posts
Monday, 12 December 2011
Sunday, 30 October 2011
Got you by the Bonds
When you have the money, you don't need guns to manipulate a country.
That was the claim I made in my last post. I wasn't going to go into detail because frankly these posts always seem to go on a lot longer than I anticipate. I guess argument just takes time.
However since China appears to be helping out the EU by giving us money, it actually seems like a prime opportunity to explain why having huge amounts of debt to another country is really concerning.
To begin I'm afraid we need a brief history lesson. The scene is post war Europe. The UK hasn't gone into the EU, because we didn't need to. Europe has huge debts to the US because after the war Europe had spent every penny it had trying to kill off Nazism. Britain and Germany had practically destroyed themselves in a fight for supremacy, while in the mean time, for most of the war, the US was happy to take over the trade the Britain was unable to serve because it was too busy trying to save Europe from the Nazis.
Not exactly America's proudest moment, but in fairness it was American citizens who didn't want to get involved in another costly war and no one knew about the holocaust until later.
Anyway, after the war the US bought huge sums of British bonds in order to give the UK the money to rebuild itself and get back on track. Largely it had.
So that is the scene. Now Egypt decides that it is going to take over the Aswan Dam, a French and British owned structure. The British and French unsurprisingly don't find this amusing. They launch a military invasion and sort the matter out within 5 minutes. Militarily Egypt was not a challenge for countries that knew how to fight.
So far, so straight forward, so where does the debt come in? Well at this point its 1956 the cold war between the Soviets and the US is going on... by cold of course we mean there was no war, there were just two countries (the USSR and the US) getting ready to beat each other into the stone age should war actually break out.
Egypt was doing a fine job of playing the two countries against each other. It went to the US for weapons, they said responsibly... fine but only if you're trained and supervised by US personel, the Egyptians didn't fancy that, so they went to the Soviets instead who said "sure, whatever you want, if you've got the money (or even if you don't) we've got the guns. Egypt also recognised China too a new communist state even though the US really didn't want this to happen, so all in all Egypt was doing a great job at playing the two off each other.
So you can imagine how wary the US was when two of its biggest allies went in and started kicking in Eygpt like an annoying little brat who isn't giving respect to the sixth formers.
The US feared that the USSR would come in to help Egypt and before you know it the cold war would turn very very hot. Bear in mind we are talking WWIII with nuclear weapons hot.
So the US told the UK and France to back off. Of course, Britain, like a good independent country would, told the Yanks to jog on and get on with their own business. Now if there was no debt, chances are, that is where the story would have ended. Possibly the US would have paid both the UK and France the cost of the Dam and quietly they would have left Eygpt with some excuse about respecting national autonomy or some other rubbish.
But the US didn't need to do that. It had bought all our bonds, remember? It just said to the UK, get out of Egypt or we'll sell all the bonds we own in the UK government. In doing so supply would have shot up, while demand stayed the same. The price of our bonds would have plummeted, the pound would have dropped like a stone and our economy would have collapsed. So perhaps unsurprisingly, we got out.
How embarassing. Annoying behaviour from the Yanks, but understandable when you consider what the cold war was about; essentially stopping the world from wiping itself out.
So that is the end of the history lesson. Well actually the true end of the story is that after this the UK joined the EU, obviously annoyed that there was the potential for foreign powers to interfere with its policies, it thought the best thing to do was to get into a bigger gang to look after its interests. Personally I don't see how taking orders from the EU is any better than taking orders from the US, in fact, I'm confident it is worse.
Back to China and today; I'm guessing you get my point. China is now buying bonds in the European Financial Stability Facility. Hmmm, do you see a pattern here?
Of course China has its own benefits from loaning Europe money. Europe is the country buying its products in the first place so if Europe goes down, so does their Export economy. Also as long as the amount of Debt owned by China remains low over all their influence will remain limited. But with the papers suggesting it could be as much as £62,000,000,000 that is a little concerning.
(see http://www.independent.co.uk/news/world/europe/china-holds-europe-to-ransom-over-16362bn-bailout-deal-2377396.html
http://news.xinhuanet.com/english2010/indepth/2011-10/30/c_131220069.htm)
Either way though it just seems to signal a worrying desperation to keep the EU afloat. Surely a lot of people are wondering why it is such a good idea to keep borrowing money, rather than letting those who are going to go under, go under.
Sure lots of countries would be bankrupt initially. Money would be lost and there would be problems. But then instead of borrowing to finance borrowing money could be spend investing. Lots of companies would become worthless and their assest can be bought by companies that are doing well and want to expand. Businesses that are efficient could borrow money and invest it, instead of governments borrowing money just to spend on interest payments. It would allow the system to re-settle itself with the companies that made mistakes dying off and those that didn't being in a better and stronger position than before... I'm willing to accept that I'm not certain about this, but I can't help but get the feeling all this borrowing is just postponing the inevitable.
Part of the problem is that we're too used to having what we want. We think that because we live in the West we're entitled to have the best of everything and the rest of the world is another matter.
In reality the West only ever had all it had because of a work ethic and a level of morality that meant you worked hard, didn't cheat and you weren't corrupt. Even now thankfully the level of corruption in the UK is way lower than in China. But I doubt that is going to stay the same. After all it is no surprise to me that the wealthiest areas of China are usually those that have the highest Christian populations, and a true Christian (I imagine a fake one is pretty rare in a country where it draws adverse attention from the authorities and can land you in jail) isn't likely to behave in a corrupt manner. This combined with the exploding Christian population in China at the moment means it is likely that corruption is going to decrease.
But while we're not too corrupt, areas of the West do not have the right work ethic. When the banks went under, people still refused to give up their bonuses. What sort of work ethic is that? You and your team fail so badly you send your country into crisis and you're still not willing to give up your bonus? What? If I was the government minister responsible I would have fired them on principle. I don't know where they think they are going to get new jobs when they have just made such a hash of their previous one.
Anyway, I digress, my concern is, with that sort of attitude in the West and the increasing efficiency of the East, that predicts storms coming our way, regardless of who has got us by the bonds.
The one thing that is likely however, the moment that problems do come, it may be that we start to sort ourselves out, moving away from materialism and more towards family and community... one can hope eh!
That was the claim I made in my last post. I wasn't going to go into detail because frankly these posts always seem to go on a lot longer than I anticipate. I guess argument just takes time.
However since China appears to be helping out the EU by giving us money, it actually seems like a prime opportunity to explain why having huge amounts of debt to another country is really concerning.
To begin I'm afraid we need a brief history lesson. The scene is post war Europe. The UK hasn't gone into the EU, because we didn't need to. Europe has huge debts to the US because after the war Europe had spent every penny it had trying to kill off Nazism. Britain and Germany had practically destroyed themselves in a fight for supremacy, while in the mean time, for most of the war, the US was happy to take over the trade the Britain was unable to serve because it was too busy trying to save Europe from the Nazis.
Not exactly America's proudest moment, but in fairness it was American citizens who didn't want to get involved in another costly war and no one knew about the holocaust until later.
Anyway, after the war the US bought huge sums of British bonds in order to give the UK the money to rebuild itself and get back on track. Largely it had.
So that is the scene. Now Egypt decides that it is going to take over the Aswan Dam, a French and British owned structure. The British and French unsurprisingly don't find this amusing. They launch a military invasion and sort the matter out within 5 minutes. Militarily Egypt was not a challenge for countries that knew how to fight.
So far, so straight forward, so where does the debt come in? Well at this point its 1956 the cold war between the Soviets and the US is going on... by cold of course we mean there was no war, there were just two countries (the USSR and the US) getting ready to beat each other into the stone age should war actually break out.
Egypt was doing a fine job of playing the two countries against each other. It went to the US for weapons, they said responsibly... fine but only if you're trained and supervised by US personel, the Egyptians didn't fancy that, so they went to the Soviets instead who said "sure, whatever you want, if you've got the money (or even if you don't) we've got the guns. Egypt also recognised China too a new communist state even though the US really didn't want this to happen, so all in all Egypt was doing a great job at playing the two off each other.
So you can imagine how wary the US was when two of its biggest allies went in and started kicking in Eygpt like an annoying little brat who isn't giving respect to the sixth formers.
The US feared that the USSR would come in to help Egypt and before you know it the cold war would turn very very hot. Bear in mind we are talking WWIII with nuclear weapons hot.
So the US told the UK and France to back off. Of course, Britain, like a good independent country would, told the Yanks to jog on and get on with their own business. Now if there was no debt, chances are, that is where the story would have ended. Possibly the US would have paid both the UK and France the cost of the Dam and quietly they would have left Eygpt with some excuse about respecting national autonomy or some other rubbish.
But the US didn't need to do that. It had bought all our bonds, remember? It just said to the UK, get out of Egypt or we'll sell all the bonds we own in the UK government. In doing so supply would have shot up, while demand stayed the same. The price of our bonds would have plummeted, the pound would have dropped like a stone and our economy would have collapsed. So perhaps unsurprisingly, we got out.
How embarassing. Annoying behaviour from the Yanks, but understandable when you consider what the cold war was about; essentially stopping the world from wiping itself out.
So that is the end of the history lesson. Well actually the true end of the story is that after this the UK joined the EU, obviously annoyed that there was the potential for foreign powers to interfere with its policies, it thought the best thing to do was to get into a bigger gang to look after its interests. Personally I don't see how taking orders from the EU is any better than taking orders from the US, in fact, I'm confident it is worse.
Back to China and today; I'm guessing you get my point. China is now buying bonds in the European Financial Stability Facility. Hmmm, do you see a pattern here?
Of course China has its own benefits from loaning Europe money. Europe is the country buying its products in the first place so if Europe goes down, so does their Export economy. Also as long as the amount of Debt owned by China remains low over all their influence will remain limited. But with the papers suggesting it could be as much as £62,000,000,000 that is a little concerning.
(see http://www.independent.co.uk/news/world/europe/china-holds-europe-to-ransom-over-16362bn-bailout-deal-2377396.html
http://news.xinhuanet.com/english2010/indepth/2011-10/30/c_131220069.htm)
Either way though it just seems to signal a worrying desperation to keep the EU afloat. Surely a lot of people are wondering why it is such a good idea to keep borrowing money, rather than letting those who are going to go under, go under.
Sure lots of countries would be bankrupt initially. Money would be lost and there would be problems. But then instead of borrowing to finance borrowing money could be spend investing. Lots of companies would become worthless and their assest can be bought by companies that are doing well and want to expand. Businesses that are efficient could borrow money and invest it, instead of governments borrowing money just to spend on interest payments. It would allow the system to re-settle itself with the companies that made mistakes dying off and those that didn't being in a better and stronger position than before... I'm willing to accept that I'm not certain about this, but I can't help but get the feeling all this borrowing is just postponing the inevitable.
Part of the problem is that we're too used to having what we want. We think that because we live in the West we're entitled to have the best of everything and the rest of the world is another matter.
In reality the West only ever had all it had because of a work ethic and a level of morality that meant you worked hard, didn't cheat and you weren't corrupt. Even now thankfully the level of corruption in the UK is way lower than in China. But I doubt that is going to stay the same. After all it is no surprise to me that the wealthiest areas of China are usually those that have the highest Christian populations, and a true Christian (I imagine a fake one is pretty rare in a country where it draws adverse attention from the authorities and can land you in jail) isn't likely to behave in a corrupt manner. This combined with the exploding Christian population in China at the moment means it is likely that corruption is going to decrease.
But while we're not too corrupt, areas of the West do not have the right work ethic. When the banks went under, people still refused to give up their bonuses. What sort of work ethic is that? You and your team fail so badly you send your country into crisis and you're still not willing to give up your bonus? What? If I was the government minister responsible I would have fired them on principle. I don't know where they think they are going to get new jobs when they have just made such a hash of their previous one.
Anyway, I digress, my concern is, with that sort of attitude in the West and the increasing efficiency of the East, that predicts storms coming our way, regardless of who has got us by the bonds.
The one thing that is likely however, the moment that problems do come, it may be that we start to sort ourselves out, moving away from materialism and more towards family and community... one can hope eh!
Wednesday, 26 October 2011
The EU vote raises the same question that is never explicitly asked.
Why do Labour and the Lib Dems never vote against Europe?
This was largely the question posed to me by a friend when the discussion of exiting Europe came up. I have to be honest, I had to think. If the population of the UK wants to get out of Europe, which it does (why else would a government be so scared to hold a referendum?) surely it would be easy money for Labour or the Lib Dems to cash in on this by saying they would exist Europe.
Well, the reason begins with this; no one believes in independence anymore. Confused? Let me lay it out. Power is dictated by money, whoever has the most money, has the most influence and has the spare cash to spend on financing a nice shiney military. But even without guns money gives control (more on this a little later). To get money you need a good economy.
The US has a good economy, for example, because it has low tax, highly skilled workers and a huge home market. If you don't know what I mean by a home market take this example.
Your name is Bob, you like in the US, you make a product which brushes your teeth for you. You can now sell that to the whole US population of 300 million people at $5. You make $1.5 Bn.
Your name is Francois, you like in France, you make the same product. You can now sell it to the whole of France's 65 million people for $5 which makes you only $325million.
If you want to sell else where you need translation, you need to address the change in cultures their toothpaste tubes don't fit etc etc. This all causes expense and profit margins go down.
In short, if you live in a big country or area with the same rules and regulations and culture, you make more money.
This is why the US is so rich. Everyone speaks the same language, drive on the same size roads, has similar values and so on.
Great. Lesson one, done.
Lesson two I'm going to abridge to stop this getting too big. The more money a country has the more you can get other countries to do what you want. If they don't do as you ask, sell all your investments in their country and their economy goes down the pan, people lose jobs, the leader gets kicked out, and you start the process again.
So with this in mind the leaders of the UK know that if we go it alone, we're going to get screwed with by countries like the US. So we need to get along side someone equally as big. The two obvious options at the moment is the EU and the US. Frankly I'd rather get on side with Australian, New Zealand and Canada, but whatever.
This is where the explanation comes in for Labour's and the Lib Dem's behaviour. Everyone in Parliament knows we need to choose between the EU and US... how do they decide?
Ideology.
The United States is a free market, free speech, small government, morally Christian kinda place.
Europe/the EU is 'generally' is a protectionist, socialist, big government, morally secular kinda place.
Labour is protectionist, socialist, pro-big government and morally secular
Lib Dems are big government, morally secular
The Tories are for free speech, small government, free market, and half of them are morally Christian.
Get it?
Basically this is lifes play ground and we're having to choose who our friends are. Each party is trying to pick the ones that are most like them. This is just an epic sized question of "do you hang around with the junkies, the nerds, the jocks or the Crispys?"
You're not going to spend your life on your own, so it is time to choose some friends. But be careful who you choose, "Do not be deceived: “Evil company corrupts good habits.” or another proverb "The righteous should choose his friends carefully, For the way of the wicked leads them astray."
Now I'm not saying Europeans are evil or good or vis-a-versa. But you will become more like your friends, whomever they may be. Whether they are good or not.
So the next time you heard about a EU treaty and who has voted on it and how. Don't look at the small picture, whether the treaty has merit or not. Look at the bigger picture of the aims of the two parties, because I'm willing to bet that there is one group of people who will vote for it no matter what it says and others who will vote against, almost everytime.
That's because the question is not about that individual treaty really, rather it is about the country you want to live in in 30 years: a socialist leaning, protectionist, big government secular one, or a free market, small government (slightly more) Christian one.
That is the question for the EU vote, and that will ALWAYS be the question for each EU vote.
This was largely the question posed to me by a friend when the discussion of exiting Europe came up. I have to be honest, I had to think. If the population of the UK wants to get out of Europe, which it does (why else would a government be so scared to hold a referendum?) surely it would be easy money for Labour or the Lib Dems to cash in on this by saying they would exist Europe.
Well, the reason begins with this; no one believes in independence anymore. Confused? Let me lay it out. Power is dictated by money, whoever has the most money, has the most influence and has the spare cash to spend on financing a nice shiney military. But even without guns money gives control (more on this a little later). To get money you need a good economy.
The US has a good economy, for example, because it has low tax, highly skilled workers and a huge home market. If you don't know what I mean by a home market take this example.
Your name is Bob, you like in the US, you make a product which brushes your teeth for you. You can now sell that to the whole US population of 300 million people at $5. You make $1.5 Bn.
Your name is Francois, you like in France, you make the same product. You can now sell it to the whole of France's 65 million people for $5 which makes you only $325million.
If you want to sell else where you need translation, you need to address the change in cultures their toothpaste tubes don't fit etc etc. This all causes expense and profit margins go down.
In short, if you live in a big country or area with the same rules and regulations and culture, you make more money.
This is why the US is so rich. Everyone speaks the same language, drive on the same size roads, has similar values and so on.
Great. Lesson one, done.
Lesson two I'm going to abridge to stop this getting too big. The more money a country has the more you can get other countries to do what you want. If they don't do as you ask, sell all your investments in their country and their economy goes down the pan, people lose jobs, the leader gets kicked out, and you start the process again.
So with this in mind the leaders of the UK know that if we go it alone, we're going to get screwed with by countries like the US. So we need to get along side someone equally as big. The two obvious options at the moment is the EU and the US. Frankly I'd rather get on side with Australian, New Zealand and Canada, but whatever.
This is where the explanation comes in for Labour's and the Lib Dem's behaviour. Everyone in Parliament knows we need to choose between the EU and US... how do they decide?
Ideology.
The United States is a free market, free speech, small government, morally Christian kinda place.
Europe/the EU is 'generally' is a protectionist, socialist, big government, morally secular kinda place.
Labour is protectionist, socialist, pro-big government and morally secular
Lib Dems are big government, morally secular
The Tories are for free speech, small government, free market, and half of them are morally Christian.
Get it?
Basically this is lifes play ground and we're having to choose who our friends are. Each party is trying to pick the ones that are most like them. This is just an epic sized question of "do you hang around with the junkies, the nerds, the jocks or the Crispys?"
You're not going to spend your life on your own, so it is time to choose some friends. But be careful who you choose, "Do not be deceived: “Evil company corrupts good habits.” or another proverb "The righteous should choose his friends carefully, For the way of the wicked leads them astray."
Now I'm not saying Europeans are evil or good or vis-a-versa. But you will become more like your friends, whomever they may be. Whether they are good or not.
So the next time you heard about a EU treaty and who has voted on it and how. Don't look at the small picture, whether the treaty has merit or not. Look at the bigger picture of the aims of the two parties, because I'm willing to bet that there is one group of people who will vote for it no matter what it says and others who will vote against, almost everytime.
That's because the question is not about that individual treaty really, rather it is about the country you want to live in in 30 years: a socialist leaning, protectionist, big government secular one, or a free market, small government (slightly more) Christian one.
That is the question for the EU vote, and that will ALWAYS be the question for each EU vote.
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