One of the recurring unknowns among those bored by financial issues (I include myself in that group, by the way) is exactly where all the wonga is, who owns it, how they got it, and whether they have thus far contributed enough in terms of money and ideas to sorting it out. When you think that fully 77% of Americans either think the deficit is the debt or vice versa, you can understand why there is such confusion about the rest of the disaster.
Those heavily involved in fiscal and economic finance love it that way: for it ensures that – given enough patriotic political hypocrisy – most citizens in the West will sign up for anything, no matter how brass-necked and bare-faced it might be….as the Hank Paulson $750bn heist in 2008 proved. They do this because they don’t understand anything about it.
Another bemusing factor is the sheer size of the sums involved. We have become so used to the word “trillions” over the last five years, we tend to discuss billions these days as if they were minor matters….which – in relation to US National debt and EU waste – let’s face it they are. But even those latter money-pits don’t amount to much when it comes to the money available to deal with the problems. It’s just that (not altogether unexpectedly) those who own it all have no intention whatsoever of parting with it.
In fact, once you start to tumble the numbers, it becomes clear very rapidly that wiping out the current levels of US sovereign debt for example (without starting World War III with China in order to welch on it) is largely a problem of taking a few hundred folks to one side, and shaking them upside down until the money thus released is enough to deal with the past idiocies of the Pentagon, Wall Street, The City, Brussels and Washington. What they have about their person would be more than enough to do the job; believe me, they wouldn’t even notice it.
Bollocks? Read on and weep.
The US National Debt this morning stands at $17trillion. Literally thousands of Congressional man-hours have been expended arguing about the deficit ceiling, with Republicans making great play about how the entire problem is down to a level of spending in Washington and the State bureaucracies that is out of control.
Since the start of QE in 2009, Ben Bernanke the Federal Reserve Chairman has used nearly two trillions of taxpayers’ dollars to boost the economy, aka keep the banks afloat and the stock markets high.
Now think on this figure: the total amount of quoted capitalisation being traded on the New York stock exchange is an unbelievable $17,638 trillion: or roughly one-thousand times the size of the US National Debt.
So when a levy of just 0.001% on that total could wipe out the National Debt, is that too much for business to pay in return for getting the sort of governance that provides roads, schools, hospitals, and the greatest defence force the world has ever seen?
A similar levy with one less nought could wipe out the total banks’ exposure we all fear with equal ease. So why can’t those who deal in capital clear up the mess their banker friends created? Why should the mass taxpayer pick up the tab?
Here’s another stunner. The total amount of money invested in the top end of the US property market over the last two years has been in excess of of $2.7 trillion. This is mostly those who caused most of the trouble turning their cash into assets before fiat currencies (and some societies) finally fail. Why are none of them being asked to accept their financial responsibility for what’s happened?
Now I choose these examples not because I am a rabid egalitarian communist out to squeeze the boss-class dry: such a thing is virtually impossible anyway, because that class is literally swimming in money. I point these things out because levying in this manner would not have an adverse effect on the economy at anything like the order of magnitude we see as a result of the existing “solutions” being attempted.
In several Eurozone economies – as a result of making taxpayers render themselves destitute in order to pay off a credit bill run up by their politicians using taxpayers’ money as collateral in the first place – ClubMed is now in a dangerous slump….and no significant reduction in indebtedness has been achieved. Yet in many cases, this debt was eagerly sold to the sovereigns by investment bankers encouraged so to do by a central bank that had given those governments massive cheap loans already with taxpayers’ money.
There should be more punctuation in that paragraph, but it is impossible to use it and still express the profundity of unfairness this has involved to date.
Harking back to the titles of Parts 1 & 2 over the last few days here, all I am doing is pointing out the ethical responsibility that lies with The Munneee, and the economic consequences of asking the mass of average citizens to take the hit.
There is a simple vicious circle in play. The more money we take from the ‘squeezed middle’ already clobbered in the medium term past by the greedy agenda of neoliberalism, the less they will be equipped with the confidence and pdi to restart the real economy by consuming.
There is no escape from that blindingly obvious flaw in the model. And in making this point, it is impossible to simply say “So rich folks and Big Money, the next stage is down to you”. All that will do is allow the model to keep on functioning to pauperise the yeomanry. The conclusion any logical and objective commentator must reach is that we need a new model.
I suppose most of you knew from the very start of this magnum opus that we’d end up here. It is the solution, but it also points with clinical precision at the nature of the disease: the model owns the governments, and so the governments will never change the model. The sovereign governments are sick in the sense of being hopelessly addicted to the munneee supplied by the owners of the model.
Like all addicts everywhere, once hooked the user loses all sense of perspective: their real employers The People are ignored in favour of the all-pervasive pushers….without whose fix they couldn’t function.
But it also reiterates the two points I began making roughly three years ago:
- Take all monied lobbying out of politics and have the Parties paid for by the taxpayer. Trust me, this will cost far, far less than having addicts trying to steal your bank accounts on behalf of the pushers.
- Make life impossible for the pushers, not the addicts. The addicts are powerless muggers working for the pushers – they can be swept away at the ballot box once their Party organisations become insolvent. They are easily replaceable: the task is to ensure that the replacements are truly clean of drugs….and thus uninterested in what the pushers have to say.
It is primarily in these two areas that I want The Slog’s future focus to reside. And ironically, it was the disgraceful case of the Co-Op’s demise that helped finally push me into this niche. Here’s why.
Corrupt and foolhardy dealings with the Labour Party when in government are part of how Co-Op Group ‘milked’ the Cooperative Bank the better to sponsor Labour MPs and Ministers. By being too close to Government, the Co-op Bank then got into difficulties…and wound up being “rescued” by two hedge funds. Had such sponsorships been disallowed by law, the bank would still be with us and relatively sound.
A salutary tale, but with a sting in it: hedge fund owners are most unlikely to continue sponsoring the Labour Party, and the Cooperative retail movement just lost its historical cash-cow. This is undiluted good news for the more barmy spectrum of Tory Right thinking, and even better news for Tesco and Walmart.
On show here are all the dangers to pluralist democracy inherent in the lobbying/donation/sponsorship system currently employed at Westminster to keep the addicts in the chauffeur’s driving seat, and the pushers riding comfortably in the back of the Pimpmobile.
Ignore Westminster when it comes to the big Constitutional issues we must face: alcoholics don’t vote for prohibition. Apply the pressure where it matters: to the Munneee.