“Only Bono Can Save Us Now”
Sorry to weigh in with such a heavy ﬁrst article, but this is important, so tuck in and read on...
How Project Merlin should have gone down... In case you didn’t already know, the economy is fucked. Mainly due to greedy bankers and weak government. When the credit crunch hit a couple of years ago and banks were skint, the Labour government gave them a load of taxpayers’ money (£131bn according to the National Audit Ofﬁce) to keep them going. The idea was that the banks would lend the money to people and businesses and everything would start ticking over nicely. Except the banks didn’t lend out the money; they just sat on the cash. Or invested it to make money for themselves while the rest of us bumbled along or fell by the wayside (RIP Woolworths), so the economy never got moving again.
Obviously, what should have happened here is, instead of giving taxpayers’ money to the banks, the government should have given it directly back to us, the people, so we could have spent it and got the economy moving again ourselves. Governments don’t like giving money to the public though. But they sure like to take it from us. It often seems like they just see people as walking cash machines to fund their own activity (or pay their debts). Think about that. Ok, back to the current economy. After the failure of giving our money to the banks, the all new coalition government had a load of new money printed (they call it “quantative easing”) in order to ﬂood the streets with cash and get things moving again. But since the government doesn’t like to give cash to its electorate, they passed that responsiblity (ie. the money) to the banks again. And the banks didn’t lend that money out either.
‘Call me Dave’ Cameron keeps banging on about how “we’re all in this together”. Given that we’re experiencing massive cuts in public spending and services (£83bn worth - expect a decline in the quality or existence of jobs, healthcare, schooling, policing, transport networks, libraries, postal service, art galleries, libraries etc.) while the banks are sitting on taxpayers money, it doesn’t seem like we’re all in it together one bit. It seems like the public is paying for the incompetence and greed of the elite. Think about it. There have been riots all over Europe in the last few months; France, Spain, Greece, Iceland, Tunisia, Eygypt etc. British students also had a good old kick off a couple of months back; demonstrating and riot-lite-ing across the country. All inspired by governments scooping up public cash and using it to prop up their regimes.
“It is dangerous to be right in matters on which the established authorities are wrong.” - Voltaire When the spending cuts start taking effect, don’t be surprised if the newly mass unemployed start uprising too. I mean, what else are they gonna have to do if there’s no jobs to keep them busy? It’s almost inevitable. It’s not going to get all Tahrir Square though. Not yet. Just a lot of noise, a few broken windows, some bad policing and hysterical media headlines. That’s the English way and the government know it. They’ll just hunker down, tighten their resolve and carry on. Which kind of brings me to the intended point of this article as implied in the title. The latest government attempt to ﬂex some muscle on the banks was the hilariously title ‘Project Merlin’. Sounds like some military black-op. It’s a pretty appropriate title though - almost like an admission that the idea of taming the banks is as impossible as the magic of alchemy; bound to fail. And failed it has. They’ve got the banks to agree to lend out £11bn more than they did last year. sounds like a lot until you realise this; the banks are lending out £190bn this year instead of £179bn. Do those ﬁgures really seem so different? Not really - it’s a 6% rise, only slightly higher than inﬂation , so not much of an actual increase at all. And it’s not even a net target (ie. the banks must lend out £190bn more than the take in as payments), it’s a gross target (ie. they have to lend out £190bn but there’s nothing to stop them claiming
back the money through repayments on other accounts and sitting on that). So it’s pretty meaningless. They also increased a levy on the banks by £800 million; such a small amount it accounts for 1 week’s proﬁts from the main players. To cut a long story short, it’s a deal full of posturing with no real penalty to the banks and no real gains for anyone. You would think that a democratically elected government would have the authority to tell a private bank what the score is; banks don’t make laws, governments do. And that is true; so why doesn’t the government pull the heavy punches and rein in the banks’ excesses? Well, it seems the banks persuade them to go easy with pretty much one argument: Punish us too much and we’ll leave the country to set up abroad where we can earn what we want. That’s basically it, or certainly all the media seem to report as the bankers’ argument. Now, how likely is that to happen? How easy is it to just uproot a largescale ﬁnancial oragnisation and relocate it to a foreign shore? Not that easy, I’d say. How expensive would it be to do so? Fairly, I’d say. And how good are English people at adapting to a foreign environment? On the whole; not very, I’d say. Plenty of English people get culture shock hopping over the channel to France, let alone heading off to the faraway business lands of Hong Kong, Tokyo and the like.
Pessimist: “Things are so bad, they cannot possibly get worse…” Optimist: “Sure, they can!”
So, are those big earners really gonna give up their home comforts for foreign lands? Who knows, but I doubt many of them are actualy eager to. Sure, a few big-earners would follow the money but most emplyees would stay put. Think about it, even if a bank were to make moves to ship out east, the majority of staff wouldn’t follow; they have a families, a homelife, commitments and ties. So these same UK staff that are threatening to leave and take the banks proﬁts with them probably wouldn’t actually leave town and would be worse off if the bank did move abroad. So, if they followed through on their own argument, they would lose out. That makes me think this isn’t likely to happen. Another crack in the Merlin debate is the second line of government defence, which is that London is a super-important global ﬁnancial centre and thus the country can’t afford to let the banks leave. Sounds like it makes sense but it isn’t very ‘robust’, to use a term favoured by government. That argument can be turned on its head; if London is such an important ﬁnancial location (and it is - the world bullion markets are based there), why would a bank take the risk of removing it’s presence from it? Another competitor could step in and steal some market share. It would lose access to local networks and contacts, missing out on potnentially lucrative deals, particularly with the bullion trade.
For this to happen, all banks, competing against one another for market share, would have to agree to all move their operations simultaneously in order to pull this threat off. Are they likely to work in such a co-ordinated matter, or would it be a big game of poker with everyone saying they’re going to up sticks but are secretly planning to lay down a full house and sweep up once every other player has left town? What do you reckon? No, I think the banks are just calling the government’s bluff and would stay put. Another question I’ve never been given a good answer to is this; if the banks make massive losses and have to be bailed out, why are they so valuable to our economy anyway? If they’re making losses, they’re not paying taxes. That’s bad enough, so why give them tax payers’ money (£1 trillion in total) then just let them carry on as before, bar a few token gestures? It makes no sense. This government, particularly mainplayers Cameron and Osbourne, are a bunch of wet behind the ears idealists who don’t seem to get the reality of how things work. Even Bank of England Governor, Mervyn King, was caught calling them a pair of inexperienced rookies with no track record, ideas, plan or understanding (he later apologised to make future meetings less awkward for them all). So, here’s my slant on how Project Merlin should have gone down.
“I believe that banking institutions are more dangerous to our liberties than standing armies.” - Thomas Jefferson
The coalition should have used their elected authority to call the bankers’ bluff. Put pressure on them to sling their hook asap if they didn’t agree to terms that realistically reﬂect the situation and get them to hand some money back to the people. Bonuses should be performance related and proportional. No bailed out bank should be paying bonuses to its CEOs. Much tighter regulation should have been brought in (the banks still pretty much regulate themselves). Several people should probably be ﬁred. Tell the banks we want their loss-making, taxfund-sucking enterprises off our turf so we can use their buildings to house proﬁtable businesses which generate income for the national economy. If we could go back in time, the banks should have never been bailed out. Let the free market play out; the bad ones go under, the good ones stay aﬂoat. That would have woken the bankers up. People who’s money disappeared along with a bank would be able to recover up to £50k of their savings per institution they hold accounts with under the guarantee of the FSCS scheme. That would have been cheaper, fairer and more effective than full-on bailouts. The surplus of cash saved by not bailing out banks en masse could have been used to kick-start new manufacturing business with a view to exporting goods. This would help address the trade deﬁcit to some degree and provide the foundations for a sustainable economy.
And that’s it. Pretty simple, but if you understand the idea of a trade deﬁcit and what that means for an economy long term, ditto quantative easing and rising inﬂation and how they make your money worth less so things get more expensive over time, then you’ll get an idea of how this situation has been handled very badly by a goverment with only short-term ﬁxes (keeping everything seemingly ok on the surface) and no long term plan for how to get out of this mess. They have the business acumen of a particularly dim ﬂy who has ﬂown into a wineglass, gotten hideously drunk and been dead for a good half hour or so. And we’re the ones that have to drink the tainted medicine while the bankers crack open another bottle of champers. But we’re all in it together, remember. I hope that woke you up. For the record, the author has no preference for any political party; the branded deﬁnitions between them are hollow; they are all part of the same system with the same agenda; ie. protecting their power at everyone else’s cost. don’t fall for the false left-right argument; you don’t have to be a Socialist or a Liberal or a Conservative; it’s not black and white. Don’t be conned into following one camp or the other; work out who’s talking shit and who’s taking sense and draw your own conclusions. Peace out.
Narcotics Report Between 2002-2009, street purity of cocaine dropped from 64% to 22%. Import purity fell from 72% to 64% over the same period, except for a dip to 57% purity at the start of 2009. Basically, it went from being cut by about 10% to about 50% over a 3 year period and has stayed at that purity level ever since. Who knows what the other 78% is. People who sniff that shit might want to think about that.
Military Spending (2007) Country
Amazing to see that USA spends 10x anybody else and the big Eastern states spend less than us!
Why buying British stuff is a good idea UK Trade Deficit (ie. imports vs. exports)
Source: Ofﬁce for National Statistics UK Trade in Goods report Q3 2010
Difference: £25.8bn net imports
What does it mean to import more than we export? It means we buy more stuff from foreign countries than they buy from us. This means, overall, we give more money to foreign countries than they give to us. As you can see from the piechart, this difference in cash in and cash out (called the trade deficit) amounts to us being £25.8bn worse off for the final quarter of 2010. That’s a pretty typical figure, meaning our economy shrinks by about £100bn a year because we don’t have enough stuff to sell to other countries. What would be better for the country is to have a positive trade deficit - ie. sell more than we buy and bring more money into the economy. So, because we import a lot of stuff and don’t have enough stuff to export, we are in a continual process of losing money from the national economy - ie. the country is getting poorer. Notice how the piechart looks like pacman? That’s the trade deficit in action; our reliance on foreign goods is eating up the profits of our exports, plus another £100bn a year.
So, how do we go thing we can all companies; food, the money in the
about turning the tide? Well, the immediate do is buy things manufactured by British clothing, furniture, cars etc. This keeps economy and jobs in the country.
I don’t say this as some kind of nationalist or xenophobic sentiment; I’m down with all people, wherever they’re from. I say this purely as a matter of economical sense. Because what happens when an economy dives? The government has to borrow more money. And how does the government pay back its debts? Taxes. Taxes exist as a means for the government to guarantee it has the ready source of cash it needs to pay the interest on its debts. If an economy is tanking, it will be shedding jobs, so there will be less corporate tax for the government to reply on. This means tax rises focus on people (such as VAT and income tax increases) and things get more expensive for everybody. The other thing governments do to make up the shortfall is print more money. Sounds good, but doing this devalues the currency relative to the global economy (the more there is of something, the less it’s worth). As we import a lot of stuff, this solution also means things get more expensive for us. So buying British is a way to provide a more sustainable economy and cheaper cost of UK living in the long run. The other thing, which we can’t do but the government can, is to invest in new manufacturing industries so we can increase our exports. Lots of British brands are now owned by foreign corporations (Asda by Walmart and Cadburys by Kraft for example), so if you want to gen up on which brands you should buy to keep the country afloat, try these sites: www.buybritish.com www.choosebritish.co.uk
Interest-ing “If you owe the bank £100, it’s your problem. If you owe them £100 million, it’s the bank’s problem.” A. Wiseman When debt is created, new money is created. If you take out a ﬁve grand loan from the bank, they don’t reduce their reserves by the same amount, they add your ﬁve grand to their accounts as if it is new money. Made out of thin air, just like that, existing as nothing other than numbers on a computer screen. Now it gets interesting - if you were to take that loan out of your account all in one go and pay it into another account you may have with a different bank, that bank will register a 5k credit in its coffers. So, overall, you borrowing ﬁve grand from one bank has magically created double that in terms of new money in the banking system (£5k from the ﬁrst bank not reducing its reserves and £5k from the second bank increasing its holdings when you transferred the cash). This is what is known as ‘expansion of the money supply’. It’s a weird concept, but as long as everyone doesn’t want to withdraw all their savings as cash at the same time , it doesn’t make much difference. Thing is, there’s a twist; if money is created by issuing debt, then money and debt are essentially the same thing. But debt comes with interest; an extra debt attached to it. So, a question you might want to consider if you haven’t already is ‘where does the extra cash come from to pay for interest?’.
The answer is that it doesn’t exist. There isn’t enough money in the system to pay off interest on debts. This means that people defaulting on payments is built into the system. Another way of phrasing that is to say that poverty is deliberately designed into the system. Essentially, the banking operation is just a giant payramid scheme. Bad, right? So, what can you do? don’t live on credit. Live within your means and pay off debts as quickly as possible. Don’t just pay the minimum on credit cards; though it may dent your cashﬂow, pay them off sooner rather than later. That way, you’ll get out of debt quicker, pay less interest, and have your own money to spend rather than interest-laden money borrowed off your bank. I know it sounds boring, but loans and their associated interest are just ways of extorting more money from people and putting it in the hands of the already rich. They rely on people not really understanding how interest works, and it works by bleeding you dry; death by a thousand paper cuts. The slower you pay off debts, the more it costs you and the richer the banks become. Hopefully this has clued you up a little bit and you now know a bit more about how to stop your money ending up in the bankers pockets.
“Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves.” A. Wiseman
I’ve recently noticed that the once ignored and abundant discount section at my local supermarket is now the busiest area. Out of nowhere, people are jostling to get their hands on reduced meat for the freezer. I’ve been going there nearly ten years and have never seen anything like it. A sign that people are feeling the pinch due to rising inﬂation and the devaluing of our currency? And the cuts haven’t even really started taking effect yet. What next? I’m awaiting UK Food Crisis headlines in the Daily Mail.
The Sandwich Monologue
week 1 week 2 SAT
i want to eat some mescalin. it would go down nicely. it would be nice to be gripped hold of and taken away for maybe two days. let’s drink some whiskey. what are we going to do then?’’
there’s no way out, go make a sandwich. i wish i had some legal capacity to order you to make a sandwich.
Total no. of sandwiches: 19 Sandwich / non-sandwich days ratio: 11:3 (3.7:1) Highest daily intake: 3 (3 times) Average sandwiches per day: 1.36 Home-made / store-made ratio: 12:7 (1.7:1)
“I’ll kill you. Who wants a sandwich? I haven’t eaten anything and who wants some? i scream, i haven’t, it’s just a rumour. i’ll kill anyone who says ‘get your chops round that.’
One author tracks his sandwich consumption for 2 weeks.
Ba & con Eg g
ken Chic on ac & B
Number of different ﬁllings: 8 Most frequent ﬁlling: Beef (6 times) Most expensive: £2.99 (store bought Chicken & Bacon) Cheapest: 40p (homemade Hotdog) Total spend: £25.86 Average sandwich price: £1.36 Average spend per day: £1.84
es po l ic ne t
es bi m zo s ken s chic avian r e oth
& no be paltr yond onfear y ex e’s in p istence hysic al ae form th eis ts
ts is em tr ex n st hi stia sts dd chrri emi t ex
id ro te et as com /
choose your own
If you want to start standing up to the greedy buggers taking us for a ride, check out what UK Uncut are doing at - there’s loads of easy fun ways to make a stance with some likeminded decent people in your home town. They’ve already drawn attention to tax-dodgers like Vodafone (another bum deal that shows we’re not really all in this together) and now they’re aiming to drawn attention to the banks who are playing jolly with our money.
UK residents main fears of global destruction
re ve rs
Ok, that’s yr lot; a mini economics primer and some cartoons. We here at SmallModCons hope you enjoyed it.
glo war bal muslim min g extremists
Source: overheard Nelson’s column inches
Fight the system, not each other; united we win, divided we fall.
Not afﬁliated with UK Uncut Just down with the people.
Published on Feb 22, 2011