Blog 2023 Malcolm Blair-Robinson

This blog has many times stated that there is a limit to what populations will accept and Greece has now brought this prophesy to life. A referendum will be lost unless a significantly better deal is offered. Aside from tinkering, the paralysis in the structural dysfunction at the heart of euro governance will make this unlikely.

In the end the key issue is that many Western governments have borrowed beyond their capacity to repay and the eventual defaults will seriously damage those presently looking strong. For years there has been a false prosperity built on borrowed money, sovereign, corporate and personal, the cost of servicing and repaying which is now crippling economies and their constituent societies, to the point of near stagnation. The only hope offered by economists is to stimulate growth, but that is impossible without making the borrowing worse.

The Western economic model, especially the one favoured by the U.S. and the U.K. is medieval in its ability to suck resources from the less well off and give them all to the rich. An orgy of greed and selfishness has broken out wherein governments and other institutions, including the churches and in particular the Church of England, have lost their grip of values. This is fuelling a sense of outrage, especially among the young, which is beginning to manifest itself in protests, camps and sit ins in the relatively stable countries and violent strikes and demonstrations in those in greatest difficulty.

The game is now changing. Not only is the money running out, but so is the patience of the people. It is difficult to predict exactly what will happen, but it will be big and it will eventually need a universal default to put it right to create the conditions for a fresh start. When that happens it will be important to remember certain lessons. Together these will predicate that the most successful economic model is one in which the population feels secure and content, whilst at the same time inspired to strive for better. This requires low sovereign, corporate and personal borrowing in step with higher saving and much higher taxes funding top quality health care, education, infrastructure, utilities and social services. It is a model which incorporates the best of socialism with the best of free enterprise and could be called social capitalism.

As for the City of London and its offshoot Canary Wharf, a massive reconfiguration will be required. The day of universal banks, all of which are now technically bust if reality is faced, is over. Big Bang has lived up to the prediction in its name. The lesson learned, or if not it should be, is that far from being critical to the economy of the United Kingdom, we would actually be better off without it. Its continuing damage potential, the cost of its bail outs and the flawed economy it fuelled have all cost taxpayers far more than the revenue it earns. For this reason it is essential to impose discipline, logical mathematics, effective taxation and investment integrity upon the paper empire now smouldering. If some of them cry foul and up stumps and go, let them. We do not want them here. Let them go and wreck some other economy. Eventually they may wind up in China. There they may well be shot. This Blog will be hard pressed to shed a tear.

This entry was posted on Tuesday, November 1st, 2011 at 12:04 pm and is filed under Malcolm Blair Robinson. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.