In perfect harmony

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The UK election.
S&M
THE “FULLY COSTED” FALLACY

What’s irritating about this is that rests upon an elementary fallacy – that governments must act like prudent housekeepers, accounting for every penny.

~~~

I’m sure that the ECB think they are actually `doing something`.

Clearly nowhere-near `full employment`

~~~

~~~

Strange divergence here … the Chinese think there is something wrong with the Chinese

~~~

Peter Levine
when social advantage persists for millennia

Equality and prosperity look relatively promising, by comparison. Christopher Winship argues that “the best way to approach serving the interests of the least well off [may be] to avoid policies that decisively pit the interests of the less advantaged families against those of the more advantaged families.” He cites evidence that Scandinavian countries have achieved the highest levels of shared prosperity and economic equality in the world today not by directly pursuing equality of opportunity (which would mean lowering the odds that the children of the rich will be rich) but by negotiating policies that are attractive to business as well as labor. These compromises have created durable and accountable states that have been able to deliver high-quality services for all. Such states also provide conditions for somewhat more inter-generational mobility than we see in the USA, just because the bottom of the income distribution faces less profound obstacles.

~~~

Bloomberg
More Robots, Fewer Jobs

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~~~

  • amoeba

    The fallacy

    There are considerable problems that would arise if the government ever admitted to not being constrained by a budget.

    One question will be based on, “why can’t you pay me 50% more if there is no budget constraint”.

    And another, “Why is my budget being cut? Just give me another 150%, I need it”

    The peeps have not even been “push” informed about the banks creating money from nowhere. But they could possibly get their heads around it after being told that the debts have to be paid off.

    The “no limit spend” is something they would have way more difficulty understanding. Maybe better to leave Pandora alone.

    • There is that, yes … but, there is also the other-end of the fact – that being, that they could well contract the economy with their housewifery.

      It may be fun for us to watch … but the next recession is going to be a touch-and-go affair … dancing on the high-wire with only a string-vest strung up down below.

      People are stupid. When on a run … they tend to keep going, come-what-May.

  • amoeba

    Japan powering.

    “Japan 2016 current account surplus hits pre-Lehman levels
    Country logs third-largest figure ever of 20.2 trillion yen”

    http://asia.nikkei.com/Politics-Economy/Economy/Japan-2016-current-account-surplus-hits-pre-Lehman-levels

  • amoeba

    Well fuck me, I have finally had an answer from the BoE to my email from two months ago.

    “In the example you provide, the bank is financing the purchase of an asset in a similar way to any non-bank entity. When a commercial bank purchases a physical asset such as a building, it would be balanced with either a reduction in other assets (for example, if it draws down on its cash balances held in reserves), or by a corresponding increase in liabilities (for example, this could be a deposit liability to the seller of the asset – but there are several other possibilities). If the latter, this would in effect be the bank ‘creating money’, as referred to in the Bank of England’s Quarterly Bulletin Article: Money creation in the modern economy (2014).

    In the second scenario, if the seller of the asset draws down on its deposit balances, the bank would need to have sufficient liquid assets it could monetise to meet the outflow, in addition to continuing adequately to cover all its pre-existing liquidity risk. Commercial banks in the UK are subject to Liquidity Coverage Requirements (LCR), which specify a minimum amount of liquid assets banks must maintain, linked to its outflows. On the asset side, all UK deposit-takers are subject to a capital requirement adjusted for the risk of the assets that they hold (including, in this example, for their physical assets such as buildings). In addition, the largest of the UK deposit-takers are also subject to a leverage ratio requirement, which specifies a minimum amount of Tier 1 capital banks must hold, irrespective of how risky their assets are.”

    So there you have it.

    The definitive answer.

    Yes, the fucking banks can indeed simply buy stuff and create a deposit to pay for it.

    Is the public ready to be told this?

    • amoeba

      I am utterly flabbered by this.

      I did not want to believe it. It has sort of rearranged my perspective on bankers. But also has clarified my concepts of how banks really work.

      Stand by for the next crisis,

      “oh, we have to bail out blah blah bank with a cuppla hundred Billions”,

      is not going to be easy to sell to the peeps if the peeps had an inkling………

      • Arrr but thems banks be essential for the smooth running of theconomy innit.

        It is … officially … funny-money … all the way down.

        • amoeba

          It is not so friggin funny when I am paying for the bankers’ exuberance.

          • Well yes, there is that … but damn-it-all-man … it is fabulously funny~!

            • amoeba

              I suppose in a way it is all utterly fucking ludicrous. I am still trying to comprehend what is going on here.

              -The government can simply create enough money to fix all sorts of problems.

              – And the bankers could do exactly the same.

              “Need a new old people’s home?”

              Yessir, here’s the cash to build it.

              “Need to give the pensioners an extra cuppa tea a week?”

              Yessir, here’s the cash to do it.

              What actually happens?

              – government says no cash available unless we tax it out of the economy

              – bankers say no cash available unless you pay interest and we are prepared to let you have it

              I feel like one layer of the onion has been peeled away, but how many are left?

              Indeed, I am beginning to wonder if there really is something behind the idea that bankers rule the world and everybody else depends on their largess.

              • Where has China got all its `build-out` money from~?

                • amoeba

                  The usual place, expanding balance sheets internally.

                  The external development such as the OBOR thrust is financed by the AIIB, that bank the Yankees did not want to have on the planet, and loans from China itself.

                  China lends the cash but as part of the deal Chinese companies are heavily involved in the implementation. This is similar to what the USA did in lending countries USD’s to buy whizz-bangs, provided the whizz-bangs are made in the USA.

                  At least China is constructing stuff that is productive, not stuff that destroys itself and whatever else is in the neighbourhood.

                  • Exactly … I brought up the example (China) … as an example of – Where do you think they get the money from~?

                    As in – `These new Chinese cities were built on the savings of the peasant rice-farmers … I don’t think so. `

                    • amoeba

                      Aye, but the poor sods might end up paying anyway.

    • Lummy~!!?

      They could either … kinda pay-for-it, or … get it for free.

      Lummy~!!

    • Axionication 3

      Nice one (10/10 for your tenacity. 10/10 for banks doing open sighted hiding).

      Would you know how much of these selfie assets sit on their balance sheets? Surely it must somehow be shown in their assets, liabilities and possibly even in their equity? It will have no where else to sit.

      • amoeba

        It will not be done as a simple balance sheet entry. There is all the off balance sheet trickery foolery and the labyrinth of subsiduaries which hide this stuff. There is doubtless a lot of tax avoidance in there too.

        They can afford the very best of creative accountants.

        • Axionication 3

          Something must be stopping the banks from going full retard? (Surely?)
          —–
          The mountains of cash that the likes of Apple/facebook/Google sit on could be used to turn them into banks of the traditional ‘deposit creates loans’ understanding. It seems to me all but academic whether they got a Harry Potter ‘banking licence’ (however the fuck this power is bestowed) or not.
          Surely a matter of time before ‘facebook’ bank.

          • amoeba

            It works the other way, banks must reckon we’re all full retards for allowing them to do this and reducing their regulation.

            I believe, but am not 100% sure, that the friedly societies, mutual savings banks and building societies are/were essentially lending out deposits. But a lot of them were merged, or turned into full banks in the interests of capital gains.