SmallModCons“Only Bono Can Save Us Now”
Q1, 2011.
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How Project Merlin should have gone down...
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.
Sorry to weigh in with such a heavy first article, but this is important, so tuck in and read on...
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.
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.
“It is dangerous to be right in matters on which the established authorities are wrong.” - Voltaire
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.
Pessimist: “Things are so bad, they cannot possibly get worse…”Optimist: “Sure, they can!”
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.
“I believe that banking institutions are more dangerous to our liberties than standing armies.” - Thomas Jefferson
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% pu-rity 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.
US UK China Russia
Military Spending (2007)
Country Spend World Share Per Capita World Ranking
USA $546bn 45% $1.8k 1st
UK $60bn 5% $1k 2nd
China $58bn 5% $50 3rd
Russia $35bn 3% $250 7th
Amazing to see that USA spends 10x anybody else and the big Eastern states spend less than us!
US UK China Russia
UK Trade Deficit (ie. imports vs. exports)
Imports: £92bn Exports: £66.2bn
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 defi-cit) 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 coun-try 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.
Source: Office for National
Statistics UK Trade in Goods report Q3 2010
Why buying British stuff is a good idea
So, how do we go about turning the tide? Well, the immediate thing we can all do is buy things manufactured by British companies; food, clothing, furniture, cars etc. This keeps the money in the 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 govern-ment 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 in-crease 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.comwww.choosebritish.co.uk
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 cre-ated 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 ‘expan-sion 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 at-tached 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.
“If you owe the bank £100, it’s your problem. If you owe them £100 million, it’s the bank’s problem.”A. Wiseman
“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.”
Interest-ing
A. Wiseman
The Sandwich Monologue
“I’ll kill you.Who wants a sandwich?I haven’t eaten anythingand who wants some?i scream, i haven’t,it’s just a rumour.i’ll kill anyone who says‘get your chops round that.’
there’s no way out,go make a sandwich.i wish i had somelegal capacityto orderyoutomake a sandwich.
i want to eat some mescalin.it would go down nicely.it would be niceto be gripped hold ofand taken awayfor maybe two days.let’s drink some whiskey.what are we going to do then?’’
SAT SUN MON TUE WED THUR FRI
3
2
1
0
Ham
Hotdog
Beef
FishFinger
Bacon
BLT
Bacon & Egg
Chicken
& Bacon
One author tracks his sandwich consumption for 2 weeks.
week 1
week 2
Total no. of sandwiches: 19Sandwich / non-sandwich days ratio: 11:3 (3.7:1)Highest daily intake: 3 (3 times)Average sandwiches per day: 1.36Home-made / store-made ratio: 12:7 (1.7:1)
Fillings:
Number of different fillings: 8Most frequent filling: Beef (6 times)Most expensive: £2.99 (store bought Chicken & Bacon)Cheapest: 40p (homemade Hotdog)Total spend: £25.86Average sandwich price: £1.36Average spend per day: £1.84
Sandwich Analysis
Poetry Corner:
An Observation: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.
UK residents main fears of global destruction
Fight the system, not each other;united we win, divided we fall.
Ok, that’s yr lot; a mini economics
primer and some cartoons. We here at
SmallModCons hope you enjoyed it.
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 Voda-
fone (another bum deal that shows
we’re not really all in this together)
and now they’re aiming to drawn at-
tention to the banks who are playing
jolly with our money.
www.ukuncut.org.uk
the mayans
bankers
thechinese
asteroid
/comet
globalwarmingmuslim
extremists
christian
extrem
ists
buddhist extremists
aetheists
chooseyourown re
versal of magnetic poles
CERN
zombies
chicken
s
& other
avians
no fear beyond one’s
own paltry existence in physical form
Source:overheard Nelson’s column inches
Not affiliated with UK UncutJust down with the people.