Why the Hadith Can’t Be Ignored

Dr. Bill Warner destroys the idea that Islam can be understood solely through the Koran:

Some of the “reformers” are claiming the Hadith and Sira can be ignored.  (This is in fact nothing new, there has been a movement called the Quranist movement for a long time).  They want to ignore them because the brutality is a lot more transparent and explicit, for example here is explicit justification for the killing of apostates in the Hadith:

Allah’s Apostle said, “The blood of a Muslim who confesses that none has the right to be worshipped but Allah and that I am His Apostle, cannot be shed except in three cases: In Qisas for murder, a married person who commits illegal sexual intercourse and the one who reverts from Islam (apostate) and leaves the Muslims.”

Dr Bill blows up this idea, that you can ignore the Hadith and the Sira, as follows – the Koran says Mohammed’s life is a beautiful pattern of conduct for Muslims to follow (Koran 33:21), but there is no way of really discovering Mohammed’s life unless you read the Hadith and the Sira. There is very little information about Mohammed’s life in the Koran, he is mentioned by name only 4 (or 5) times in the Koran.

https://en.wikipedia.org/wiki/List_of_people_mentioned_by_name_in_the_Quran

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Where Did All The (QE) Money Go?

[Second in a 2 part series about economics (the subject no-one knows much about) by a non-expert]

QUANTITATIVE EASING (ELECTRONIC MONEY PRINTING) – THE STORY SO FAR

The idea of quantitative easing (QE) supposedly arose because inflation was falling in the wake of the banking crisis and people at the top started worrying about a “deflationary spiral” (you know for example where the house prices start to go down to sensible levels instead of going up all the time). The idea of QE is SUPPOSED to be that you depress interest rates and this stimulates lending, which in turn stimulates the economy. A side effect (or is it the main effect) of QE is that it depresses the yield on bonds (relative to how much the bonds cost), and therefore makes it cheaper for govt.s to borrow more money (I think that’s how it works). With our governments struggling with a seemingly ever growing debt burden, you can see the attraction of THAT to the govt. QE is not supposed to be like printing extra banknotes (you know like they did in Weimar Germany), but I think it is like that, except that its not banknotes that get made up out of thin air, its 1s and 0s on a computer somewhere, and there are also different immediate effects, which I will try to identify presently.

In this article the BBC attempts to explain quantitative easing to dummies:

http://www.bbc.com/news/business-15198789

Quote:

Between 2008 and 2015, the US Federal Reserve in total bought bonds worth more than $3.7 trillion.

The UK created £375bn ($550bn) of new money in its QE programme between 2009 and 2012.

Hearing of all this extra money being printed at the time got me thinking, maybe I can get my hands on some of it! I therefore decided to ask for a raise. I went to see my boss at the office in which I worked and, a bit like Oliver Twist begging for his extra bowl of gruel, I meekly asked for a raise. “What, can’t you see I’ve got IMPORTANT THINGS TO DO RIGHT NOW TINKER!!!” shouted my boss and he thumped his fist on his desk, causing the steel balls of his desktop toy to crash into each other in a menacing manner. I imagined I could hear my colleagues sniggering in the office behind me as I retreated to his office door, stammering as I went “I’m sorry Mr. Shankly I did not realize you were so busy”. As I shuffled back to my desk I could see my colleagues smirking all around me and I thought to myself – I wish I was a banker, what am I doing here? It was true that that noble profession had taken a bit of a hit in the popularity stakes in recent years, following the recent banking crisis (like interest rates, popularity can go below zero). However it still seemed to be the only occupation where people still made anything like a decent income. It seemed pretty clear unfortunately that I was not going to see any of this money, after all. Anyway, enough about my own tragicomic existence.

At the end of the above BBC article there is a section titled:

Are there any losers from QE?

in which the BBC identifies who it thinks are the losers:

investors have to pay more to get the same income.

However I have this nagging feeling that these investors are not necessarily losers at all if they decide to sell their bonds back to the govt. (more on that in a moment). I have this nagging feeling that we, the little people, are the real losers, somehow. Remember that in matters of finance, there are always a lot of speculators swimming around with their dorsal fins sticking out of the water, waiting for an easy meal. I know that pensioners own bonds in their pension funds, so pensioners could be winners or losers in this I suspect, depending on who is managing their funds. There are a lot of younger people to think about however as well, who are struggling and striving away while the debt that will be their children’s legacy is growing.

SO, WHERE WAS/IS ALL THE MONEY GOING??

Now I began to start wondering what on earth was going on in the wake of all this “quantitative easing”. In the first place, I rather expected high inflation to result (that’s normally what happens when govt.s print loads of money). There was a bit of inflation going on in the supermarket, I seemed to notice, but not really a huge amount. There did seem to be a slight improvement in the economy, if the newspapers were anything to go by, but you can’t believe everything you read in the newspapers. My own economic circumstances did not seem to have improved at all, what with slight inflation and stagnant wages and house prices going up again.

Then they reduced and then stopped quantitative easing for a bit, and again, nothing much seemed to happen. Where was this deflationary spiral we had been warned about by the experts? Surely now that QE had slowed down, there would be deflation! What the heck was going on?? Some media “economics” pundits were actually suggesting that the problem was we weren’t doing ENOUGH “quantitative easing”! It was such a great idea that we needed to print MORE money. In this article there is a graph showing how QE was in fact reduced in the UK from 2011 to 2012:

http://www.economicsonline.co.uk/Global_economics/Quantitative_easing.html

An anonymous young man showed up at a talk by Lionel Shriver (I don’t know who she is either), and explained to Ms. Shriver why the huge quantitative easing had not caused high inflation:

Quote:

‘Only 8 per cent of QE has been re-lent into the productive economy’. The rest has gone to hedge funds and investment banks, which have stuck the dosh into ‘property and luxury assets of all kinds — which is why we see massive inflation in these particular asset classes, but not for the rest of us’.

http://www.spectator.co.uk/2016/06/lionel-shriver-the-trump-election-is-starting-to-feel-like-a-civil-war/

I have a funny feeling that young man was right. This seems an entirely plausible account to me. I had been scratching my head about this for some time, trying to figure out what the heck was going on. So, the owners of these particular asset classes had got very rich, THAT was what had happened, and that was more or less ALL that had happened (apart from very low interest rates for govt. debt). This seemed to me rather believable, and a bit sickening, to put it mildly. But, if you just sell something (in this case bonds) for the same price you bought it, then you are no richer. The question is, are the bonds bought back at the same price the bonds were originally sold for? I think probably not.

Now I am dimly aware of a thing called the bond market. If there is a market for bonds, then bond prices surely go up and down, because that’s what things normally do in financial markets. I don’t know if this is really how it works (so please jump in and comment below if you know better than me), but it seems to me if people hear the govt. is about to buy back a load of its own bonds, then the price is going to go UP beforehand, meaning that some people who own bonds are going to get rich out of quantitative easing, because they will be selling for more than the price they bought at. Apparently I’m not the first person to think of this, but its “apparently” more complicated according to an expert at investopedia (when is finance not):

http://www.investopedia.com/ask/answers/012815/how-does-quantitative-easing-us-affect-bond-market.asp

If anybody can read that and translate it into short plain English for me I will be grateful. So far, my suspicions remain. Why would people sell things at the same price they bought them at? Possibly they had decided the govt. was a dodgy institution and they just wanted to get rid of them? No, I don’t think things have got anywhere near that bad yet. Confidence in govt. lending may one day collapse, but we’re nowhere near that point yet, IMHO.

In a similar way (although in reverse), when Gordon Brown announced to the world that he was going to sell half of the UK’s gold reserves, the price of gold fell in anticipation, causing the UK to lose a lot of money in the sale:

https://en.wikipedia.org/wiki/Sale_of_UK_gold_reserves,_1999%E2%80%932002

Quote:

The advance notice of the substantial sales drove the price of gold down by 10% by the time of the first auction on 6 July 1999

No doubt, not only did the UK get poorer, but some speculators circling around saw their opportunity and made a killing. If we blindly trust our politicians to look after the nation’s finances, then well you see what I’m driving at, that’s not been going very well in the recent past.

IS IT NECESSARY FOR THE GOVT. TO PRINT HUGE AMOUNTS OF MONEY?

Here is the view from the Bank of England (beware, the BofE may be somewhat BIASED in this matter):

http://www.bankofengland.co.uk/monetarypolicy/Pages/qe/qe_faqs.aspx

If you follow a link to a pdf at the end of this, you see it says:

The Bank of England creates new money electronically to buy financial assets like government bonds. This cash injection lowers the cost of borrowing and boosts asset prices to support spending and get inflation back to target.

Right, see that? That seems to be an admission of the assumption I made at the beginning, that a motivation is to lower the cost of govt. borrowing, its not all just about controlling inflation/deflation. So, it IS like Weimar Germany money printing, its just that the IMMEDIATE effects are different. That worries me, because I wonder what the LONGER term effects will be like as well.

IS IT STILL GOING ON?

Yes it is in the UK (I’m not sure about the US). Now that the bandwagon is rolling, its difficult to get it to stop. QE seems to have spread like a virus, the Japanese, the EU. I thought the UK had stopped but it appears they started again in 2016:

QE or not QE The Bank of England’s new quantitative-easing programme is not a failure

Note this article seems to think QE is good but it also seems to confirm that telling people in advance you’re going to buy large quantities of something affects the price, although it does so in economist-speak:

Bank officials suspect that the holders of long-term bonds underestimated the price that would prevail at the auction on August 9th. As a result they held back from selling. Now, however, the expectation is that at the next auction of long-term gilts, expected to be on August 16th, the final price will be higher. Investors are unlikely to make the same mistake.

CORBYNOMICS VS TINKERNOMICS

What is Corbynomics exactly? When I first heard about Labour leader Jeremy Corbyn’s “QE for the people” idea, I had visions of red helicopters (emblazoned with the hammer and sickle), flying over council estates and dropping wads of cash on the delighted inhabitants. I posted my council housing application that same day, hoping to position myself directly under the helicopters’ flight path.

It seems I got it wrong though, that’s not quite what “QE for the people” is all about. The Daily Mail explains it in their financial section:

Quotes:

His biggest headline-grabber has been the suggestion of People’s QE to fund his infrastructure plans, which we explain below.
….
Meanwhile, Corbyn says he would end the public sector pay freeze, and he is a staunch opponent of welfare cuts. He argues that austerity is about political choices not economic necessities – and that there is money available.
….
new, large-scale housing, energy, transport and digital projects

Read more: http://www.thisismoney.co.uk/money/news/article-3211449/What-Corbynomics-Labour-frontrunner-s-economic-plan-explained.html#ixzz4VYcDTdVk
Follow us: @MailOnline on Twitter | DailyMail on Facebook

Well you know, there is always money available, over in socialism opposite-land. It seems Corbyn is actually planning to print money and use it to build council houses for one thing, and then rent them out (no doubt at low rents well below the rental market) to poor people, including to those who don’t work no doubt. Having now spent a considerable part of my adult life working and saving to buy a little house which forever grew in “value”, always staying tantalizingly just beyond reach, I have to tell you readers that I am not very happy about Corbyn’s plans, not very happy at all. Being a wage slave for a company is one thing, but being a wage slave for a company AND a loony lefty govt., well that’s too much. I quit.

Governments in the UK in the last century built a lot of council houses (and tower blocks), and many of them have since been demolished. A lot of the houses that were demolished to make way for the new council houses were perfectly useful houses, that were labelled as “slums” by the govt. often for really silly reasons such as the fact that they didn’t have bathrooms. A lot of the tower blocks that replaced these perfectly good houses have since become slums themselves, “sink estates” where drug taking and gang culture goes on. Quite a lot of these tower blocks have been blown up in controlled demolitions since. I don’t want to sound patronizing, I know this is very basic economics, but if you build some houses and then knock them down and then build some more and then knock them down and so on, this all costs money.

It seems a slum is more defined by the behaviour of its inhabitants than the buildings. Many of the tower blocks were truly hideous as well, and many of the little terrace houses that escaped demolition have since had bathrooms and fancy kitchens installed (not to mention damp proofing) and the areas have become gentrified and seen astronomical house price rises despite the modest investment in refurbishment. If you think drug taking and gang culture doesn’t go on in nicer low-rise estates as well btw, think again, it does. This is probably a subject for a separate discussion though, council housing is a big subject in its own right, and I do appreciate there were problems with overcrowding in those days.

Would Corbyn’s ‘QE for people’ float or sink Britain?

Quote:

For the avoidance of doubt, this is not same-old, same-old socialism; it is new, radical thinking.

It sounds very same-old, same-old to me. Is this the same-old, same-old BBC, grasping at a straw – leftyism may have failed in every “form” its taken, its just not been done the right way yet (bit like what many Muslims in the West say about Islam)? Robert Peston, the smug BBC (now ITV) economist superstar, does however conclude his article by expressing doubts about Corbynomics (I can never quite work out if Peston is a proper lefty or not, he seems to hedge his bets in both directions here):

Because there would be widespread concerns that the Bank of England would be indirectly financing white elephants via this investment bank – and would, as I mentioned earlier, be throwing good money after bad.

Ambrose Evans Pritchard (that well known member of the Communist party (that’s fake news by the way, he isnt really)) at the DT is egging Corbyn on:

Jeremy Corbyn’s QE for the people is exactly what the world may soon need

Quote:

Much of the money has leaked into asset booms, greatly enriching the “haves”, with a painfully slow trickle-down to the rest of society. A pervasive sense that the financial elites pulled a blinder – while austerity is for little people – explains in part why Mr Corbyn has suddenly stormed into the limelight, and why the US socialist Bernie Sanders has so upset the Democratic primaries.

AEP seems to confirm my above suspicions here about QE causing an asset boom at least. Note what he is saying here, note it well – Corbyn should not be underestimated. Note particularly that Corbyn is promising to crack down on tax avoidance and tax evasion, which will also be a vote winner, even though every party always says that. Then AEP made me wonder if he might be a member of the Communist party after all, when he says this:

[Milton] Friedman did not, of course, mean that banknotes should be dropped from the sky, though they could be in extremis, but rather that central banks have the means to create money to fund tax cuts, or to cover state spending, until the economy comes back to life.

See that “though they could be in extremis”, so AEP would actually support the fictional/joke helicopter drop that I described at the beginning of this section. Fortunately one of our correspondents was on hand to witness the first helicopter money drop:

PILOT: Welcome on board Mr Evans-Pritchard, did you bring those suitcases full of banknotes that we told you to bring, of your own money, that we’re going to throw out of the helicopter?

AEP: Yes, I brought them as requested, I think this scheme is an excellent investment opportunity! Power to the people!

AIR TRAFFIC CONTROL: Corbyn air traffic control here, you are clear for takeoff! Good luck with the money drop!

That’s fake news by the way, I just made that up.

AEP also says this:

Some invoke the spectre of Weimar, but Germany’s hyperinflation of 1923 followed the breakdown of the Wilhelmine state after the First World War. The German people saw it as their patriotic duty not to pay taxes that would be siphoned off for Versailles reparations.

Weimar tells us absolutely nothing about the merits or demerits of monetary financing in stable democratic societies with fully-functioning institutions that face a deflation crisis.

I would be interested to know what readers make of THAT.

Corbyn also wants to introduce a MAXIMUM wage, just by the by:

http://blogs.spectator.co.uk/2017/01/maximum-wage-corbyns-stupidest-idea-yet/

How would Tinkernomics work? Tinker is of the view that when governments meddle, they make a mess. Tinker favours a more hands off approach that involves governments not printing money, and not doing a lot of other things as well, such as knocking perfectly good houses down to make way for new houses that have to be knocked down after a few decades.

CONCLUSION

There is no easy way out of a big national debt (IMHO), except to reduce govt. spending or increase taxes, or to sell off assets. I suspect that some people are getting rich out of QE right now, not for doing anything useful. It may be that the national debt (that’s OUR debt) is not going up as rapidly as it might otherwise be if bond yields were higher, but we can’t keep doing this QE, we are living in la la land if we think so.

If the real aim of QE is to get the national debt down (or stop it getting any bigger) by printing money, and the fear about a deflationary spiral is unfounded (as it seems to be to me), then I think the consequence will be some type of inflation.  There will be inflation in SOMETHING corresponding to the amount of the QE, and growing wealth inequality if the QE mainly benefits people who are already rich.

If we keep doing the type of QE we have been doing then the wealth gap will grow so big that eventually Corbyn will be able to storm the capital with his comrades and the red flag will be flying over Buckingham Palace and the Houses of Parliament (not literally of course).

What do you think? Please add your comments below.

OTHER VIEWS ELSEWHERE ON THE WEB:

Jon Roland:

https://www.oxford-royale.co.uk/articles/japan-country-crisis-abenomics-start-rot-destroying-proud-successful-nation.html

The Guardian jumps on the Corbynomics bandwagon:
https://www.theguardian.com/business/economics-blog/2015/may/21/now-the-bank-of-england-needs-to-deliver-qe-for-the-people

https://en.wikipedia.org/wiki/Political_positions_of_Jeremy_Corbyn

http://www.telegraph.co.uk/finance/economics/11294510/Ambrose-Evans-Pritchard-Why-Paul-Krugman-is-wrong.html

Are Our Banks Still Too Big To Fail?

[Readers please note I will come back to the post-truth part 2 after this series, I got distracted onto the subject of the banking crisis and related stuff this week.]

[First in a 2 part series on a subject no-one knows much about – economics]

THE MIRACLE BEFORE THE STORM

There was a time when I kept my head down, shuffling along with the other commuters, then jammed in like a dead sardine on a tube train as I made my way to my 9-5 office job. I did sometimes wonder what went on inside those giant soulless steel and glass office blocks towering all around me, that seemed to grow ever taller. I did sometimes wonder why the UK seemed to be so obsessed with finance in London while the rest of the country dwindled. The former industrial powerhouse of the Midlands and North was now a depressed area where state welfare seemed to be the main source of a great many people’s incomes. Mrs. Thatcher seemed to have transformed the country for the better overall, there were no longer 3 day weeks, endless strikes and power cuts at least. Somehow however unless you were a banker, or a stockbroker, or a property magnate, or a lawyer perhaps, you had this painful feeling that you were being screwed. What did all these now-venerated occupations have in common? Well they were essentially non-productive in the sense that they did not produce anything useful or even tangible.

I had begun to notice that the more money I earned, that more of those extra earnings seemed to disappear in deductions that mysteriously occurred on my pay cheque. The little terraced house I thought I was going to be able to afford next year, when I got that pay increase I was promised for my hard work, had mysteriously acquired another £20,000 in “value” and was as far beyond my reach as ever. I was striving it seemed, to little avail. I began to take an interest in economics, hoping to solve this riddle of my futile existence. I read the newspaper columns and talked to my friends and colleagues. Some people were confident that there would soon be a house price crash. “House prices can’t just keep on rising forever” they said, “it doesn’t make sense!”. We (the little people) were all hoping for this – the thing that the “economists” were most afraid of, a house price crash – so that we could finally afford to buy a house.

Pundits in the media debated what was being called Gordon Brown’s “miracle economy”, and Prime Minister Tony Blair (of the Labour party) lauded his sidekick at no.11 “the best chancellor for 100 years.”:

http://news.bbc.co.uk/2/hi/programmes/panorama/4243108.stm

Quote:

Stephanie finds, as she travels the country, that it is spending and borrowing that has filled the gap – thanks to cheap money and cheap Asian imports.

How can you run an economy on “spending and borrowing” I wondered, is this really the best we’ve done for 100 years? Where on earth was all this “cheap money” coming from? Was this a miracle or a mirage? My experience of money was that it was very expensive, the concept of “cheap” money was quite alien to me.

That eminent banker Fred Goodwin, the CEO of the Royal Bank of Scotland, became Sir Fred Goodwin, his knighthood awarded for “services to banking”. Us mere mortals could only gaze up in awe at the towering giants of the banking world, who loomed above us like demi-gods, flying to and fro between the financial capitals of the world in their private jets, dealing in billions.

THE STORM – THE BANKING CRISIS OF 2008

Then came the banking crisis of 2008/9 and finally my nagging doubts about what was really going on, had turned to downright alarm. Was that basket that the UK had been putting all its eggs into, the financial sector, in fact just a giant house of cards that was about to tumble down? Fortunately Gordon Brown (of the Labour party), now the Prime Minister, was on hand to sort out the mess, he stepped up to the dispatch box in the House of Commons and casually revealed that he had saved the world. British politics had produced a real saviour to rival any of those fictitious Marvel comic-book super-heroes.

However before long my nagging doubts began to return. Had Gordon Brown really saved the world or merely “kicked the can down the road”? We were being told that the banks were too big to be allowed to fail, and so the PM had bailed the banks out, adding a large lump of extra debt to our national debt. The national debt had shot up from 35.5% of GDP in April 2008 to 65.5% of GDP by the time Labour were voted out in May 2010, and during the so-called “austerity” period that followed, where the Coalition and Conservatives were in power, the debt has continued to grow (it now stands at 83.9% (depending on who you ask)), although it is has stopped rising so quickly now (figures from the ONS):

https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/timeseries/hf6x

By the way the UK national debt total is now apparently:

£1,801,375,860,000

In case you got lost among all those digits – that’s quite a lot. To put it in context its very roughly £75,000 per taxpayer by my calculations. That’s what it was a couple of days ago anyway, according to:

http://www.nationaldebtclock.co.uk/

although the Daily Telegraph seems to think its a bit lower than that:

http://www.telegraph.co.uk/business/2016/02/19/how-large-is-the-uks-national-debt-and-why-does-it-matter/

At last house prices had indeed crashed somewhat but it wasn’t long before they started to rise again, albeit in a more shaky manner, as demonstrated by this graph:

http://www.economicshelp.org/blog/5709/housing/market/

Sir Fred (aka “Fred the Shred”), the man who more than anybody in the UK had come to be associated with the banking crisis, was reduced back to merely plain old Fred again, losing his knighthood in 2012. It seems he was also not a banker, if this is accurate:

https://www.theguardian.com/business/2011/mar/10/fred-goodwin-superinjunction-banking

The Labour front benches were in some confusion about how Fred had ever come to be knighted in the first place (it was something about charity was it Harriet, not “services to banking”?), to the amusement of the other parties:

WHAT CAUSED THE CRASH?

So, Fred the Shred was taken down a peg or two (maybe that wasn’t enough pegs), but what had caused the crash? As the 2008 crisis unfolded we had learned about all the hair-raising goings on that had led to the crisis, such as these convoluted things called “collateralized debt obligations” (CDOs) which we were told (if I remember right) were “parcels” containing lots of little bits of debt, including dodgy “sub-prime” mortgage debts.

http://www.investopedia.com/terms/c/cdo.asp

Other complicated sounding thingies like “credit default swaps” also were mentioned, you can find out what they are all about here (good luck with that):

http://www.investopedia.com/terms/c/creditdefaultswap.asp

We were told banks were lending to each other in a bizarre spider’s web of interconnections. Why?? Why were banks lending to each other? The point of banks is to lend to individual people and businesses, not to EACH OTHER, surely?? This system is also known as Fictional Reserve Banking – where banks lend to each other to somehow (I don’t know how) create the impression that they have reserves. I am of course making this all up, or am I? Judge for yourself:

https://en.wikipedia.org/wiki/Interbank_lending_market

Quote:

Low transaction volume in this market was a major contributing factor to the financial crisis of 2007.

Am I alone here or does this sound patently absurd? Low levels of inter-bank lending was a major cause of the financial crisis?

IS THIS STUFF STILL GOING ON?

Enough of reminiscing about all this, let us turn our minds to where we are at now, and where we are heading. What has changed at the banks exactly?  Perhaps some of the worst excesses have receded, but I wonder – is inter bank lending still going on, it appears that it is:

http://www.thisismoney.co.uk/money/markets/article-1645325/LIBOR-Latest-inter-bank-lending-rate-charts.html

Who on earth is lending to our government now that interest rates are set at the ridiculously low rate of 0.25% (I fear the answer is the banks)? Is lending to the government really a safe thing to do with your hard earned savings? Would you lend money to Gordon Brown for example, if he was just a person?

According to this article, some sub-prime lending is back (although at a high interest rate):

http://www.thisismoney.co.uk/money/mortgageshome/article-2385347/Magellan-offers-8-55-mortgage-loans-tainted-credit-records.html

In this article the BBC asks why anyone would lend money at a negative interest rate (negative interest rates are now a thing apparently). Generosity perhaps? Philanthropy? I don’t know, here is the BBC’s view:

http://www.bbc.com/news/business-32284393

I can’t help looking at all this stuff without thinking its just not possible for a real human being to know what’s going on in the financial sector any more. It wasn’t back in the run up to the financial crisis, and I really believe that it still isn’t. That worries me. To give us some idea of how complicated its got – apparently whizz kids in the financial “industry” have created mind-boggling computer programs that automatically make speculative transactions, this led to a new type of thingy called a “flash crash” in 2010:

http://news.sky.com/story/flash-crash-for-pound-to-118-is-surrounded-in-mystery-10608056

Wow, that’s flashy!! Did those whizz kids get their Ferraris repo’d I wonder?

ARE WE HEADING FOR ANOTHER CRISIS?

I don’t want to start a panic, a run on the banks, but I am continuing to wonder – are the banks still too big to fail? Has anything really changed in the banking sector? As I walk down the high street in my little town, I see the same big names that were there before – HSBC, Natwest, RBS etc., and the big building societies as well.

The government has guaranteed deposits of up to £75,000 but does this just make us lazy and not bother to look for alternatives to the high street banks, and not question THEIR credit worthiness? The very fact that big banks are “too big to fail” i.e. will be bailed out by the govt., surely makes us more inclined to bank with those very banks, giving them an unfair competitive advantage and making them lazy? This is always the problem with govt. interventions of course, the unintended consequences.

https://www.fscs.org.uk/what-we-cover/products/banks-building-societies/

If the banks are still “too big to fail”, and we have another crisis, what will happen? Will the govt. bail the banks out again and add even more to the national debt? Is a bailout actually a sort of reward for failure, where does all the bailout money actually go, is there any oversight? Of course the heads of the failed organizations are usually at least replaced, but many of the employees and the organization itself are often not, so the organization still survives – RBS is still with us for example.

The Guardian takes a look at Steve Eisman’s view on the likelihood of another crash (Steve Eisman got rich quick by predicting the last crisis and shorting stocks):

https://www.theguardian.com/money/2016/nov/19/big-short-financial-crash-steve-eisman-italy-banks-risk

Although he is focused on Italian banks in particular, I can’t help wondering if a crisis in the Eurozone could easily cause major problems for our financial sector, what with all this inter-bank lending going on, not to mention the basic economic impact such a crisis would have on the UK. Also, do our banks and pension funds own government bonds issued by other countries I wonder? Perhaps we should be reassured by Eisman’s view of our banks today:

I’m not really worried about England’s banks,” says Eisman. “They are in better shape than most in Europe.

This article talks knowingly about “stress tests” but I have to wonder if anyone just tried blowing really hard at the house of cards to see if it would fall down. After every crisis these people emerge who were unknown before the crisis, and shot to fame for predicting the crisis. I think we need to be careful not to assume they didn’t just get lucky. There still seem to be quite a few dubious things going on as far as I can see, from my limited knowledge.

COULD WE AVOID ANOTHER CRISIS?

The “Austrian” school think we should return to the gold standard, might not be a bad idea:

https://mises.org/about-mises/what-austrian-economics

A guy called George Selgin thinks that we could avoid future banking crises, he has published some of his ideas here:

https://www.alt-m.org/

New forms of currency have emerged – we have recently seen the emergence of Bitcoin and the Totnes pound:

https://en.wikipedia.org/wiki/Totnes_pound

I’m not sure if these will help the situation or not.

I wonder if the very phrase “too big to fail” is a misleading one. Could we make our big banks smaller without damaging their competitiveness in the global economy? Is the question the wrong one to be asking in any case, should we instead be asking if our govt. has grown too big to function sensibly? We have come to rely on our govt. to sort out any problems that come up, but does the govt. just make even bigger problems more likely in the longer run when it does “sort” our problems out in the present?

No-one wants to lose all their savings so its comforting to know the govt. has guaranteed our savings, but without such a guarantee we would be more cautious – we would spread the risk probably by splitting our savings across different banks for example. We might also be more likely to try other forms of investment to spread the risk still further. There are interesting new alternatives out there such as peer-to-peer lending sites for both personal loans and business loans now. We put all our money in the big banks but I have heard from businesses that these same banks are reluctant to lend (no doubt partly because the interest rates are so low). Is this state regulated and state supported (on a crutch) banking sector more of a hindrance to economic prosperity now? Is the relationship between governments and banks something like a marriage gone wrong where both partners are too afraid of what might happen if they split up? I am increasingly inclined to think so myself. The more I think about politics the more I think we need a smaller, less interventionist state. Maybe its not so much more regulation that we need, but rather a lot less regulation and interference.

WHAT DO YOU THINK?

I don’t know the answers to all these huge questions, but I have a nagging feeling that the questions probably need to be asked in order to forestall another worse crisis in the future. There is also the question of course – could we get our money back at some point for the last bailout or will our grandchildren still be paying for the mistakes of the bankers and politicians? What do you think about it all? Please add your by comments below (please try to make your explanations intelligible to the non-banker especially if you are an industry insider).

In the next episode I will take a highly in-expert look into the phenomenon of “Quantitative Easing”.

A Post-Truth Era? Part 1 – Trump and Brexit

The phrase “post-truth” seems to have rather entered the lexicon of news-speak lately.  Let’s have a look at what the usual suspects are saying about the “post-truth” “phenomenon”.

THE BBC

Late in 2016 I was listening to a BBC TV News (World Service) program where a presenter (Allan Little) was doing one of those end of year reflections on what is going on in the world.  He was bemoaning the victories of Brexit in the UK and Trump in the US, and trying to draw parallels between the two, and trying to figure out what on earth could have led to this twin disaster.  He didn’t call it a twin disaster of course in so many words but his doom-laden tone of voice spoke a thousand words.

The Year Everything Changed

The preamble to the program (aired Tue 27 Dec 2016):

This was the year of ‘post-truth’ politics, fake news and when some of the foundations of how global politics and trade are determined have been questioned. In many ways this has been a year when the silent majority has become vocal, and when old certainties have been questioned. This has also been a year when the internet has proved to be about something much more than about educating and connecting – and as a result has it made us not just less informed, but dangerously ill-informed and disconnected?

The internet is making us “dangerously ill-informed and disconnected” is it?  I was under the impression that the exact opposite was happening.  Is this a real concern or is the mainstream media (MSM) just worried that they are losing their grip over the distribution of “information”?  I will be coming back to this question in more detail in future posts, but in general I think the explosion of information sharing and debate on the internet is something to be welcomed very enthusiastically, even if quite a lot of misinformation is flying around.  There are also a lot of facts and great arguments flying around as well, and consequently lazy MSM journalism is being challenged as never before, and that can only be a good thing for the rest of us.

The program reflects on the fact that areas in the UK and the US are still struggling with the after effects of the closure of large scale industries in the “rust belt” in the US and in the north of the UK.  The conclusion here is that the rising economic tide has failed to “lift all boats”.  Its true, there are still areas plagued by high unemployment both in the UK and the US, and these areas do correspond pretty much with former industrial areas.  The sub-text to all this is that policy from the 1980s onward has failed these areas, and this has caused the people in these areas to vote for (what the BBC wants to portray as the twin disasters of) Brexit and Trump.  A lot of areas in the UK which have not benefited so much from a rising economic tide have also suffered from high levels of immigration, a point made by some of the UKIP supporters that Mr. Little interviews.

Mr. Little then interviews an American pro-Democrat writer called Naomi Wolf who apparently (according to Wikipedia) is a “third wave feminist” (whatever the heck that is).  She bemoans some of Obama’s policies, suggesting that Democrats have become complacent and turned a blind eye to things they shouldn’t have:

6:45    …if our democracy was still strong it wouldn’t matter that we have a crazy man in the White House ….
if you spend 12 years dismantling checks and balances enacting secret law suspending aspects of the constitution …
You’re left with rubble when the demagogue is elected ….

Mr. Little then turns his attention to the Brexit campaign, describing how:

9:30    Boris Johnson and Michael Gove toured the country in a bus emblazoned with the now notorious slogan “we send £350m a week to Brussels lets spend it on the NHS instead” …. Many said it was a sign that British politics had entered a new era, known as “post-truth“.

He then makes an astonishing claim, about this “notorious slogan”:

10:10    … it seems to have disappeared from the national debate about Brexit

Mr. Little is indulging in a little “post-truthiness” himself here, it has not “disappeared from the national debate” at all, in fact the MSM have been talking about this one gaffe by the Leave campaign almost non-stop ever since the referendum result was in.  They have been using this single point relentlessly to try to undermine the result, as will become clear as we examine articles from the other usual suspects.  Let’s pause a moment here and think carefully about this point, as we’re going to be hearing about it over and over again.

First of all, the £350m claim was refuted (in this article dated 27 May 2016):

The Institute for Fiscal Studies earlier this week labelled the £350m figure “clearly absurd” and said that an accurate figure of the net UK contribution taking into account the rebate and spending in Britain was £175m a week – half the Leave figure.

Further, the House of Commons Treasury Committee today branded the £350m claim “highly misleading” in a new report on the costs and benefits of the EU. Andrew Tyrie, the committee’s chair, said the Leave campaign’s battle bus should be “repainted” as soon as possible.

Granted, it was misleading, but how much significance did it really have in persuading people to vote for Brexit?  Very little I suspect, almost no effect at all probably.  I have yet to hear a single Leave voter say they have changed their mind about Brexit as a result of this slogan being refuted.

Everyone I know who voted Leave voted Leave for a whole mountain of other reasons including –

  • Open borders within the EU and the resulting mass immigration into the UK (probably the main reason).  Note that other countries haven’t been complaining so much about the open borders mainly no doubt because their countries have not been seeing such high levels of mass immigration.
  • The fact the EU leaders seem to have no interest in defending the EU’s external borders from illegal immigration (millions of young men have been swarming across the Med, mostly from Muslim majority countries)
  • The looming prospect of an EU army (quite what its for considering the previous point we don’t know – defence and security does not seem to figure very highly at all in the EU’s thinking)
  • EU red-tape hampering businesses (that’s a very big reason among small business owners especially)
  • The undemocratic nature of it (Juncker was not elected by the people for example)
  • The fact that some very bad people could not be deported from the UK because of their “right to a family life”
  • Attacks on the freedom of the press and freedom of speech
  • The situation in Ukraine
  • UK fishing rights

…and lots and lots and lots of other reasons.  I simply don’t believe that this claim about the exact amount the UK gives to the EU each week seriously came into it – and in any case £175m a week is still a lot of money.

The relentless repeating of this one criticism of the Leave campaign in the MSM is a good example of the technique of “saturation”.  The MSM know really that this slogan wasn’t that big a deal in the result, but by relentlessly reminding us of it they create doubt in the public’s minds and raise the hopes of those who still want to remain in the EU.  Just how big an impact it had is impossible to prove with absolute certainty, so it can’t be said that they are simply lying about it.  Of course the motive behind this particular use of saturation is to try to increase the chances of a second referendum being held that they hope would overturn the Brexit result.

Returning to the program now, Mr. Little seems to think that the US has really gone over the edge into the “post-truth” era, he thinks the UK is still just managing to keep a better perspective (no doubt thanks to the existence of the UK’s Ministry of Truth (aka the BBC)):

10:47    There is still a public square in British politics where you will meet views you do not like… its gone in America and it could go here too.  The dangers to democracy are obvious.

Blimey, the end is nigh then, you will see what I mean now about the doom-laden tone of this program.  The “public square” is gone from US politics is it?  I had to listen to this a second time to make sure he really said that.  I wonder if any readers from the US would like to express their opinion about that statement – add comments below this post?

Seemingly in an attempt to back this claim up with some hard evidence, Mr. Little then interviews an old school news editor who refers to a satirical “fake news” website that emerged during the Trump campaign.

13:29     “Pope Francis shocks world endorses Donald Trump releases statement” …. This was shared a million times on social media, the debunking of that was shared 30,000 times.

This old school guy is trying to imply that most people who saw the statement must have believed it because they didn’t look for a debunking of the statement!  LOOK, YOU DON’T NEED TO HAVE THAT STATEMENT DEBUNKED IT IS OBVIOUSLY A JOKE!!!!  I’m pretty sure (reasonably sure) that most people who saw this statement just thought hey that’s a funny bit of fake news (LOL) and soon forgot about it.  Anybody that did believe it is too dumb to vote sensibly anyway, and most of those people normally vote for the Democrats, as revealed by Mark Dice’s petition to gain approval for Karl Marx’s appointment as Hillary Clinton’s economic adviser.

At this point, only half way through this BBC program about the “post-truth” era we are supposed to be entering, I have had enough of hearing the BBC view, I’m done.  Let’s move on to the next of the usual suspects.

THE GUARDIAN

Here, the Guardian announce the fact that the Oxford dictionary has declared the phrase as the “word of the year” for 2016:
‘Post-truth’ named word of the year by Oxford Dictionaries

Quotes:

In the era of Donald Trump and Brexit, Oxford Dictionaries has declared “post-truth” to be its international word of the year.
….
The spike in usage, it said, is “in the context of the EU referendum in the United Kingdom and the presidential election in the United States”.

Why has there been a spike in usage??  BECAUSE THE MSM HAVE BEEN USING THE WORD A LOT!!!  The MSM have generated their own news here.  By not mentioning the fact that its the MSM who have pushed the phrase in the first place, they are subtly distancing themselves from the “news” that the Oxford dictionary found a spike in usage of the term during the campaigns of Brexit and Trump.  This helps to subliminally create an impression that this “post-truth” phenomenon is something that’s really happening in the real world.

Looking back to May 2016 however (when the spike began) we see this article in the Guardian:
Post-truth politicians such as Donald Trump and Boris Johnson are no joke

This article begins with a major attack on Donald Trump, for example:

To adapt Mary McCarthy’s critique of the novelist Lillian Hellman, every word Trump says is a lie, including “and” and “the”.

Well I somehow doubt if even most people who actually voted for Trump take every word he says at face value, but to suggest EVERYTHING Trump says is a lie, well that is itself a big lie, obviously.  They are joking, we know that, except they aren’t really, they mean it.

The writer then proceeds to attack Boris Johnson (BoJo).  First they point to the claim on the Leave campaign battle bus that the UK was sending £350m a week to the EU:

Emblazoned on the side was the slogan: “We send the EU £350 million a week.” Except it’s not true

It seems that almost every time the phrase “post-truth” appears in the UK media, there is a mention of this single error by the Leave campaign.

The writer then attacks BoJo’s mocking dig at what was called “project fear” by the Leave campaign:

…his critique of David Cameron’s speech on Monday, which had focused on the national security implications of a Brexit. Johnson hit back:

“I think all this talk of world war three and bubonic plague is demented, frankly.”

Now, its clear to anyone with a half a brain that BoJo is making a joke here to make a point, as BoJo often does.  He is not suggesting that Cameron ACTUALLY SAID that Brexit would lead to World War Three and bubonic plague.  But wait, did I say this is clear to anyone with half a brain?  To the Guardian writer it seems, its NOT clear:

Who but a cretin would suggest that the black death would be the result of a British break from the EU? And yet a scan of the text of Cameron’s speech yields no results for either “bubonic” or “world war three”.

The Guardian writer actually went back and checked Cameron’s speech to see if the words were there, I’m a bit speechless!  I can’t go any further with this article, time to move on to the next…

THE INDEPENDENT

In this article the Independent does at least recognize that lying in the world of politics is not exactly a new phenomenon:

We are not living in a ‘post-truth’ world, we are living the lies of others

That’s a good point, lets pause and remember just a tiny number of episodes from the days prior to this new “post-truth” era:

  • Richard Nixon – “I am not a crook,”
  • George W Bush –  “The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa.”
  • Tony Blair’s govt. – “Saddam Hussein could deploy weapons of mass destruction within 45 minutes of an order to use them.”
  • Tony Blair’s govt. – Did not disclose new Labour’s plan to “rub the right’s nose in diversity” by letting millions of people immigrate into the country.
  • David Cameron – promised that his govt. would reverse the trend begun by New Labour and reduce immigration to the 10s of 1000s – no ifs no buts he said.
  • Bill Clinton – “I did not have sexual relations with that woman [Monica Lewinsky]”.
  • The Clintons – All sorts of accusations and counter-accusations are swirling around the Clinton Foundation and have been doing so for some time.  Someone is not telling the truth.
  • Banking Crisis – One can only begin to imagine how many lies were told before and during the banking crisis of 2008.
  • Gordon Brown – I saved the world.

More predictably there is yet another reference in this Independent article to the £350m claim on the battle bus.

The article points to coverage of the war in Syria:

I suspect that “post-truth” has more to do with social media than mendacious elections. The use of social media in reporting the battle of eastern Aleppo has been extraordinary, weird, dangerous, even murderous, when not a single Western journalist could report the eastern Aleppo war at first hand. Much damage has been done to the very credibility of journalism – and to politicians…

This is another dig at social media of course from the MSM, but at least the Independent acknowledges that journalists and politicians haven’t exactly been covering themselves with glory in their coverage of this war.  I’ll come back to the subject of Syria in the next post.

THE ECONOMIST

The economist took a hilarious dig at Donald Trump’s claim that “Obama is the founder of ISIS and Hillary Clinton is the co-founder”:

The post-truth world – Yes, I’d lie to you

No says the economist, he wasn’t joking, he really meant that literally – Obama is the commander in chief of the Islamic State, apparently!  No doubt Obama personally ordered those be-headings (I jest here of course he didn’t).

Then, just as all the above articles did, the economist repeats the point about the EU £350m slogan, and sneers at the (actually worrying if you have a brain and know anything about Islam) prospect of Turkey joining the EU:

And he is not the only prominent practitioner of post-truth politics. Britons voted to leave the European Union in June on the basis of a campaign of blatant misinformation, including the “fact” that EU membership costs their country £350m ($470m) a week, which could be spent instead on the National Health Service, and that Turkey is likely to join the EU by 2020.

We don’t know if Turkey will join the EU by 2020 (or any time in the future), we don’t know at all.  The arguments against this happening were all based on the fact that the EU has requirements about new members joining that Turkey would supposedly not meet.  What we do know is that the EU is supposed to have rules, and when Greece joined the EURO, the rules were ignored.  So, people no longer TRUST the EU, and with good reason.  Its not perhaps so much a case of post-truth here, as post-trust.  What’s more, the EU has a very friendly attitude towards Islam in general, as revealed in a speech by Federica Mogherini , the “High Representative of the European Union for Foreign Affairs and Security Policy”, when she said that:

Islam belongs in Europe. It holds a place in Europe’s history, in our culture, in our food and – what matters most – in Europe’s present and future

That’s another reason for wanting to get out of the EU by the way, at least in my book.  I don’t want Islam in my culture or in my food thanks very much.

CONCLUSIONS

Of course we are not at all entering a “post-truth” era and the mainstream media know this well enough.  The media’s repetitive use of the phrase “post-truth” is a deliberate ploy to try to slander both Brexit and Trump’s election as being based PRIMARILY on misinformation.  This is another case of “saturation” – an idea being relentlessly repeated across the mainstream media.

What is happening is that people of the West are finally beginning to rise up against the elites who have (among other anti-democratic things) been rubbing the public’s nose in diversity by allowing and encouraging huge, unprecedented levels of mass immigration that have changed whole communities beyond recognition in a very short space of time.  The establishment viewpoint characterized by the phrase “political correctness” is being undermined very significantly as seen in the Brexit result and the election of Donald Trump.

We would rather elect a less “experienced” politician (experienced at politics that is) who we believe to have our best interests at heart (even if they say daft things from time to time) than a career politician who is well-practiced at the art of deceit and does not have the people’s best interests at heart.

ELSEWHERE ON THE WEB:

Bill Whittle talks about decline in areas of America such as Detroit

http://www.telegraph.co.uk/news/2016/06/24/nigel-farage-350-million-pledge-to-fund-the-nhs-was-a-mistake/

http://www.bbc.com/news/uk-politics-eu-referendum-36040060

https://en.oxforddictionaries.com/word-of-the-year/word-of-the-year-2016