Be Excellent To Each Other

It is still better off than Ireland. Its debt is cheaper, the unemployment rate is less and they have less debt. Simply because they told most of the people that they owed money to to piss off.

This is the same solution that Ireland, Greece et al need. And it is what will happen. However, what is happening now is that the private sector, banks, investment funds, bond holders are ensuring they get paid back first. Once they are satisfied and the only creditors are the taxpayers, then you will see all the defaults.

And now that bloody pinko leftwing rag The Telegraph is at it too.

Erm, hang on..... http://www.telegraph.co.uk/news/politic ... right.html

I didn't realise things in Iceland were so bad they'd turned to space currency.

Mm, there's no reason that banks aren't taking full advantage of this to screw everyone over yet again, even if it is the less damaging course of action for europe as a whole.

But then, that's what they do.

This "debt ceiling" thing in the US looks like it make get interesting, although I'm sure it's all just brinkmanship and they'll come to an agreement in time. I mean, there's no way Congress will vote to kick out one of the pillars supporting the entire world economic system, right?

No, but considering the Republican Party is now, officially, batshit insane, you never know.

Its weird seeing an entire political party, and a lot of its supporters, actually refusing to acknowledge their opponents right to even exist.

Frightening, isn't it? As awful as the effective two-party system is in this country, it's terrifying to realise that a lot of Republicans actually seem to want there to be a one-party system in the US.

Mmm, not sure. A lot of Republicans only seem to define themselves as the opposite of whatever the Democrats said last; with no opposition I'm not sure they'd even exist!

Personally, I think Obama should start making public statements like "oxygen is good" or "I like pie" to watch Glen Beck contort himself into opposition.

They would. They just think todays America is exactly as it was in the 1950s.

Related: The Chart That Should Accompany All Discussions of the Debt Ceiling.

I was really hoping for a map of the Carribean, with a big 'X' and the writing 'here be treasure'.

More like a map of the Middle East, and it says "oil" instead of "treasure".

I'm a romantic at heart, cruelly pummeled by left jab of reality, and the right hook of macro economics.

Wait, what?

That you can't climb out of the top of a lift if it gets stuck, the hatch will only open from the outside, as it is for fireman to rescue people with, not to aid Bruce Willis.

Budget Hero, for nerds who fancy it.

Does it come with a plastic briefcase?

I think Gordon Brown was testing a prototype when he was Chancellor.

Did he get any cheevos?

Greek debt "restructuring" is losing RBS 50% (£840m) of its investment. That's quite some "contract variance", Kissy

But now Greece has cut a deal, we're all ok, right? I mean there's no way a larger, richer neighbour of theirs, with a GDP and total debt 5 times the size, might default soon? Right?

Yeah I know, Daily Mail, but they do have the odd decent columnist. This guy makes the wider point (which I've been getting at myself) that capitalism itself appears to be fundamentally broken at the moment and badly needs to get back on track, or it'll take democracy with it.

http://www.dailymail.co.uk/news/article ... again.html

It's not that good an article though. In parts the writer seems to be vaguely arguing for some weak social democracy (government intervention to save capitalism from itself, equality of opportunity) without actually stating it, then wonders off into typical Daily Mail territory blaming the social situation on this mysterious "metropolitan elite" (usually the Mail's term for a few upper-middle class people with centre-left views), New Labour, the lack of Grammar schools, migrants from Eastern Europe, etc. So it's a confused mess, part a critique of neoliberalism, part fundamentalism ("the system isn't capitalist enough!"), part scapegoating of social democrats for not being social democrats. Basically.

I do agree with your own general point, however.

According to S&P, our diddy little Isle of Man is now more creditworthy than the USA.

I'm not sure if this is a good or a bad thing really, considering our total population is less than 100,000. Is the USA really that fucked?

#gid=3">https://spreadsheets.google.com/ccc?key ... l=en#gid=3

I think it's more of a case of S&P throwing their weight around, frankly - "You screw about with risking defaults again, and here's an example of what we can do". I don't think Fitch or Moodys will follow suit.

It's borderline irrelevant taken on its own, except as a political talking point. Planet Money covered the reasons why recently.

I imagine China, Oil-rich Middle Eastern sheikdoms and those huge institutional bond dealing firms are now going to sell all their US Treasury debt and reinvest it into the Isle of Man, Denmark and Switzerland.

Yes it is, but I'm still correct. It's not a default. It's much like with software supply agreements - we inevitably end up entering into contract variations to take into account delay in the project by the supplier, otherwise the supplier has a hissy and threatens to stop working. They may have screwed up, and they'd be totally in breach of the agreement if they downed tools, but we vary the contract in order to keep things moving and to get the software, meaning they're not in breach of the contract as the goalposts of the contract have moved.

Lulz.

http://www.aoltv.com/2011/08/09/jon-ste ... ing-video/

Woohoo, currently every household in the UK is £1500 down on this excellent deal.

http://www.dailymail.co.uk/news/article ... hares.html

So, the £65 billion is currently worth £26 billion.

Completely different story that was being put around when the bail out happened, that we had "given away" £65 billion, which simply wasn't true. Which was the point I was making

Fast cars and loose fiscal morals: there are more Porsches in Greece than taxpayers declaring 50,000 euro incomes.

How dare the ordinary people evade taxes! That is the job of the rich!

/punches butler

Right, so – people who know about banking and money and that - this article is nonsense on stilts, right? This is not remotely how banking works, is it?

This is the bit that annoyed me:



This is arrant bullshit, isn't it? The only people who can create money out of thin air are the central banks, who then use that to buy government bonds off the banks (or something) which then puts that money into circulation (or more liekly sits on the banks' balance sheet)

Isn't this a case of people confusing credit and money?

Mr Kissyfur puts £10 in HSBC. HSBC now owes Mr Kissyfur £10 - Mr Kissyfur does not have the £10, he is merely owed it by HSBC. HSBC then lends that £10 it got from Mr Kissyfur to MaliA, who then buys a Girls Aloud CD from Nirjehenge’s car boot sale. Nirjehenge then deposits that £10 in Lloyds, so Lloyds has £10 and Nirjehenge is owed £10 by Lloyds.

So what you have here are two deposits of £10, which are just debts of £10 (one from HSBC to Mr Kissyfur, one from Lloyds to Nirjehenge), one person who owes £10 to HSBC (MaliA), one person who has something worth £10 (MaliA) and a bank with a tenner (Lloyds). So there are two bank deposits of £10, which are both just debts, one person who owes £10 to the bank, and one person with something worth £10. This looks like two people have £10 each and one person has a physical asset of £10, but really the only person with a tangible thing here is MaliA, but even that's balanced out by him owing the bank a tenner. The only party which actually has £10 here is Lloyds. I can see how this looks like creating money, but it isn't, is it? Unless both Nirjehenge and Mr Kissyfur withdraw their money at the same time, but in that case HSBC and Lloyds have given them £10 that each of Grim… and Craster deposited, and so on. This only looks like creating money because not all depositors ask for their money back at the same time – the only time a bank says “sorry you can’t have that £10” is when you haven’t got £10 in your account. The bank never says “eeeeh, we’re a bit hard up at the moment, soz”, unless the bank’s run by Jimmy Stewart.

I’ve got this right, haven’t I?

Where's Craster when you need him etc etc.

Even worse are the full reserve banking weirdoes, who think banks should only be able to lend if they can back that loan up 100% with assets

Yes.

The central bank sells the bond to the normal banks.

And not understanding fractional reserve banking, I think.

Glad I'm correct. The author has been fairly vehement in his opinions in the comments - although he keeps referring only to a text book he once read.



How does that result in the QE getting into the system then? I thought the magic made up money was introduced into the system by the BoE buying government bonds off the banks?


Well, quite. The author of the article seems to think that if you have a reserve requirement of 10% and get £100 of money, that means you can lend out £1000, which is bobbins.

All that said, how come there's more money now than 100 years ago?

It trickles down.

Oh, yeah, that's how quantitative easing works, but that's distinct from the business-as-usual process of buying and selling government bonds.

Wikipedia has an article about this, of course.

There's a really good This American Life podcast about it, too. Fascinating stuff.

Yeah, indeed - I was just talking about "creating money out of thin air" - BoE is the only way that happens.

"Comment Is Free" - massively-less-well-informed than Beex since 2008.

Indeed -- http://www.thisamericanlife.org/radio-a ... l-of-money

The only thing that surprises me about that Guardian article is that Monbiot didn't write the deliberately misleading sack of bullshit.

Monbiot's usually not far off being right on most things, to be fair. This guy's a fecking tool though.

I'm not trying to start an argument, but what are people's general beef with Monbiot? I know he pissed a lot of anti-nuclear folk off recently, but other than that? Has he been proven to be talking shit and I've missed it?

He wrote a tax article a year or so ago (maybe earlier) which claimed that the tories had introduced legislation to encourage people to use tax havens. Not only was the concept so utterly, utterly flawed it was ridiculous, he also missed the point that it was labour who introduced the legislation - deliberately so, as anyone who had spent 30 seconds reading the history of the legislation and consultation would have seen it was first proposed in the 2008 (I think, could even have been earlier) budget.