It is Obvious

Chris Rick has got altogether too much to say

Archive for July, 2015

Blinker, Blindfold and Ear-plug sale today

Posted by chrisrick13 on July 13, 2015

It is obvious: it can’t happen to me

I’ve not been round for money in a while.  Get your cheque books out.  I’ll explain later.

On Sunday I saw the SNP deputy leader, Ian Hosie, being interviewed.  He was asked about the budget.  The budget plans for a £40bn surplus by the end of the parliament.  This means that the saving on spending, the more efficient tax gathering, the more onerous taxes and growth in the economy will enable us to begin to pay off our debts.  Carrying on like that will only take 20 years and we will have a debt that means we don’t have to pay twice for our NHS and if interest rates go up not only will the country not go bankrupt but we won’t have to pay 7 times for our NHS.  (I am trying to write fantasy novels but I cannot think up such extreme flights of fancy for my books.)

Mr Hosie has a very different view:  £40bn of savings is £40bn too much – money we could have spent.  The problem is that someone as dangerous and stupid as this is believed by a lot of people.

I find it amazing with the Greek economic problems being played out on the media that so few people can see that this is where the UK is heading at a high speed.  I could say ‘velocity’ which implies direction but we have no direction in our economic activities.

The Greeks have borrowed and spent.  They want to keep borrowing and spending and are puzzled that nobody will lend them money without some credible plan to pay it back.  It matters little that for any plan to work, Greece has to be gifted £360bn to pay those debts.  Imagine the UK asking for £1trn.

The UK is not that bothered by Greek problems.  Little trade and the chance of cheaper holidays.  Not many debts owed to UK banks.  There is a problem though.  The IMF is owed money by the Greeks and will be lending more if there is not a default on Greek debt.  The UK has money in the IMF.  Greece does owe us money so we only need to chip in about £600 each to let the Greeks continue to live in the way that they have become accustomed to.  Start saving though because I’ll be round for another cheque in a year or so.  I think I would rather spend the £600 on my holiday.

It is obvious: it can’t happen to me – today

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What’s a Greek Urn – a lot less than it is paid.

Posted by chrisrick13 on July 4, 2015

It is obvious: a nation decides

I cannot resist adding to the ‘noise’ on Greece.

We are at the prostitute’s question  The analysis is simple.  To quote the country dweller: What’s the best way to London?  Don’t start from here.

There is nothing that can be done to return Greece’s economy to stability.  The economy has been cruelly beaten.  There will be no rise in GDP where the extra tax revenue can be used to repay debts.  Increasing taxes will shrink the economy and give less revenue (Laffer)…not that the Greeks pay taxes.  Now they are running a cash economy I would imagine tax revenue must be close to zero.  Austerity will shrink the economy but remember that the Greeks voted in a party that promised no more austerity.

Japan has debts at over 200% GDP.  It is the only country that can sustain that level of debt as the Japanese save huge amounts of their income.  More than about 85% debt and a country will never pay off that debt – look at the UK.  The IMF raised that ratio to 120% so that Greek would be ‘safe’ at 115% but it has now move on to 200%.

Nothing can be done to move to an orderly repayment of debt.

What can be done?  They are on one of those chaos curves with a fold in it when one step along the x-axis creates a huge drop in the y -axis.  Greece has to ‘crash’ to use that word in a fuzzy fashion.  The experience of all crashed economies in the past has been one of a short amount of extreme pain and then rapid recovery.

The IMF and ECB are undertaking a process of a long period of extreme pain followed by a crash and a short period of extreme pain.  I know which I would prefer.

At some point Greece will default.  Every single euro lent to Greece will be lost.  Gone.  Not done too well.  (To quote South Park).

Meanwhile we wait for a referendum vote.  Have you seen the question.  It runs to the best part of a page.  I cannot understand it.  It refers to two 30-page documents that I in common with most people in Greece have not read.  So the people of Greece are voting on a question that they do not understand and which can be interpreted in many ways depending on the result of the vote.

It is obvious: a nation decides – oh no it doesn’t

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