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Cassandretta

Listed below are comments made by Cassandretta between Wednesday, 11th June 2008 and Saturday, 27th September 2008.

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How will B&B be rescued? 12:51pm on 27 Sep 2008 Perhaps what is needed in the longer term is to rescind the limited liability laws, at any rate for companies worth more than (say) ten million pounds.
This would ensure that the directors of large financial institutions knew they were personally repsonsible if their bank failed, and this should induce them to take more care with it - and to ensure the employees who make the big bets have someting to lose as well.

Some have been saying that the LTD (PLC) state has distorted the market for years.

For years those of us who supported capitalism have been saying that it isn't a zero-sum game - that everybody wins in the long run. Perhaps we were wrong. Perhaps we need to make sure that banking is a zero-sum game, and that the banks losses are to be made up out of the assetts of their senior employees.
Stamp phobia 11:11am on 11 Aug 2008 If the Chancellor really wanted to boost the housing market he would end the 3% stamp duty on houses over 250,000, or raise it to a sensible level (500, 000?) or at least amend the tax so that it was payable only on the amount over 250,000 rather than the whole amount.

But I don't hold out much hope for any of these. On the subject of interest rates
the treasury and the MPC resemble nothing so much as rabbits trapped in the glare of oncoming headlights. Too frightened to jump to one side or the other, they still where they hare hoping against hope that this is the 'right' policy.

Prudent? Possibly.
Confidence-inspiring? hardly.
Correct? I wouldn't bet on it.
Pru and Invesco go nuclear 10:45am on 01 Aug 2008 I wonder why the government apparently believe they cannot build nuclear power stations themselves. Is this due to a sudden rush of modesty to the head? Have they suddenly discovered the limits to their own knowledge and power?
Or, being more cynical, have they simply decided that getting the French to build them means whatever goes wrong with them won't be their fault, and cleaning up the radioactive mess afterwards can be billed to them as well?
The latter sounds more likely but is still worrying, as in political terms it seems even less likely that the French government (or French private industry, for that matter) will worry as much about future polution in England than the current English Government does . . .
Who gets nuclear spoils? 3:35pm on 24 Jul 2008 The government has already sold off the family silver, and most of the gold, to pay for its disastrous public spending. I suppose it was inevitable they'd want to sell off the uranium too.
The pitiful thing is that they - and we - all know that in the end it will cost us more but it will go ahead for short-term reasons.
Isn't it time that we changed our ludicrously poor system of government and changed to something else?
Perhaps we could even try democracy?
Barclays and the FSA 10:32am on 26 Jun 2008 High Street banks like Barclays have for years been demanding that we prove we don't need money before they will agree to lend it to us.
How ironic if they are suddenly finding the same being said to them!
Debt and inflation 3:59pm on 19 Jun 2008 I'm very glad to see these points finally being put, whether or not people agree with them. We need some discussion and reassessment now.

But what I'm still trying to figure out is whether (or to what extent) Mervyn and Alexander appreciate or agree that:-

(A) Today's chosen weapon against inflation, interest rate, is powerless against external commodity price rises as we have seen and looks fairly ineffective against the consequences of these;

(B) The government's suggestions that we all repudiate wage rises and accept a significant fall in our living standards without complaint looks unlikely to win any popular acclaim;

(C) Any chance that this might have worked has surely been dashed to bits by the tanker driver's success in obtaining a 14% rise, which has surely set a new 'going rate'.

(D) That (given the above) the current economic control regime can no longer work effectively, and must be replaced (soon) by something else.

(E) That with different commodity and energy prices diverging rapidly, the effective inflation rate felt by individuals varies enormously with their circumstances, and that because those on low incomes and with low net disposable income feel the government neither understands nor appreciates their problems, this is a political issue as well as an economic one.
Letter to the governor 4:56pm on 17 Jun 2008 Twenty years ago we were all so worried about the evils of inflation we had seen that we had no though of its balancing benefits. Now we begin to see the problems that prolonged LOW inflation causes.

My parents did very well out of the high inflation era of the 1970s, which devalued their mortgage until they could pay it off out of petty cash. I am nowhere near as lucky and have a growing millstone around my neck.

Inflation is a tax on money. Those who have the most, pay the most. Those of us who are poor, who have mortgages and debts and struggle to make ends meet, pay the least - in fact we get money back by the reduction of our debts, and by the increase in wages we expect.

Frankly there are many of us who think that this kind of taxation is a great deal better and mroe equal than the VAT, stamp duty, fuel escalator and other taxes the government is wacking us with.

Inflation? Yes please. I'll vote for anyone who promises it.
Letter to the governor 4:34pm on 17 Jun 2008 Brilliant!
I couldn't agree more, and couldn't have put it better myself (though I would have phrased it much more strongly).

I hope the highly educated idiots who govern us are listening when we tell them that we are NOT going to put up with what they appear to be suggesting.
If they don;t change their minds and attitudes PDQ they will be out on their ears and the BOE heirarchy could well follow them in short order.

And I was amazed to read of the senior official congratulating himself on how well the interest-rate-driven control system has worked over the last decade and saying that we just need to stick with it. Does he not realise that the game is up? That in the era of stagflation we are entering the interest rate lever is not going to work?
Rate shock 4:13pm on 11 Jun 2008 We are in a period of transition and these are always painful. Feedback effects in the global economy always prevent long-term trends from having gradual effects, and tend to make the inevitable changes get underestimated at first, then over-estimated.
What are the changes?
In no particular order, they include:-
1. Fossil fuels. The annual supply of this is not fixed but the result of price-driven oil exploration. Higher prices mean more exploraiton and an increase in the medium-term supply.
2. Gas. The UK dash for gas was driven by short-term economic gains and is looking increasingly foolish on several fronts.
3.Alternative fuels. Many of these (including hydrogen and electric-based) have been waiting for the era of low-price petrol to end to make them econimically viable. Oil price rises are a requirement for change, not a disaster. Provided, that is, that political pressures to keep the prices low don't delay the necessary investment in alternatives until too late.
4. Housing supply/demand. In the Uk at least there is a chronic under-supply of desirable homes (and the land with planning permission for them) which is not going to go away. So long as planning laws are not relaxed suddenly this pressure will be maintained.
5. Property Prices The additional factor hs been the conclusoion by much of the UK population that after the fiascos in share prices (dotcom crash, unti trusts, etc etc) and pensions, the only realistric place to place investment money was housing. I still don't see an alternative to this. The major downside risk is a new government freeing up permissions so fast that house prices drop like a stone and make everybody feel poor again.
6. Debt financing. The long experiment by government central banks in devolving the creation of momeny (via debt) to commercial organisations has been not just an economic disaster but a social one too, as it has skewed the wealth back to the few and away from the many. The best solution to this particular problem is for governments to take it back in house. Yes, they will then print money to get themselves out of trouble, and yes this will raise inflation. But
double-digit inflation (which taxes wealth and refunds debt) is the best cure for the social ills too. The bankers won't like it, but this is hardly a surprise. We should be making them do our bidding not letting them tell us what to do.
7. World growth. This can and will continue for a long time, despite the pressure on natural resources. As always, it needs the price mechanism to drive efficient use of resources. And until some bright spark can come up with a satisfactory financial system that does not rely on continual growth, we will inevitably get more booms and busts.
8. The UK economy. This has been skewed for years by the pre-eminance of the City of London. The UK has a clear choice between investing in engineering (in its widest sense) and in money creation. If we continue to to do the latter we will be subject to more of these economic upheavals and risk losing the somewhat-illusory gains in wealth we have seen in the last decade. If we do the former, we stand a chance of remaining an economic force. personally I'd prefer to see the city of london under the Thames permanently and the banking disappear to the US. The we might get some interest and investment in industry. But I don't expect that to happen.
9. Agriculture. The low world cost of food has had several effects on the Uk and world economies and these will reverse as population growth and living standards improve in the 3rld world. Land recently taken out of food production will be reclaimed and UK farming will become profitable again. Rising prices are the necessary catalyst in this. But with rising food and energy prices in the UK this will casue massive deflation unless the exchange rate drops. WHich again means an end to the city-of-london-driven economic policies we suffer today.
Rate shock 4:13pm on 11 Jun 2008 We are in a period of transition and these are always painful. Feedback effects in the global economy always prevent long-term trends from having gradual effects, and tend to make the inevitable changes get underestimated at first, then over-estimated.
What are the changes?
In no particular order, they include:-
1. Fossil fuels. The annual supply of this is not fixed but the result of price-driven oil exploration. Higher prices mean more exploraiton and an increase in the medium-term supply.
2. Gas. The UK dash for gas was driven by short-term economic gains and is looking increasingly foolish on several fronts.
3.Alternative fuels. Many of these (including hydrogen and electric-based) have been waiting for the era of low-price petrol to end to make them econimically viable. Oil price rises are a requirement for change, not a disaster. Provided, that is, that political pressures to keep the prices low don't delay the necessary investment in alternatives until too late.
4. Housing supply/demand. In the Uk at least there is a chronic under-supply of desirable homes (and the land with planning permission for them) which is not going to go away. So long as planning laws are not relaxed suddenly this pressure will be maintained.
5. Property Prices The additional factor hs been the conclusoion by much of the UK population that after the fiascos in share prices (dotcom crash, unti trusts, etc etc) and pensions, the only realistric place to place investment money was housing. I still don't see an alternative to this. The major downside risk is a new government freeing up permissions so fast that house prices drop like a stone and make everybody feel poor again.
6. Debt financing. The long experiment by government central banks in devolving the creation of momeny (via debt) to commercial organisations has been not just an economic disaster but a social one too, as it has skewed the wealth back to the few and away from the many. The best solution to this particular problem is for governments to take it back in house. Yes, they will then print money to get themselves out of trouble, and yes this will raise inflation. But
double-digit inflation (which taxes wealth and refunds debt) is the best cure for the social ills too. The bankers won't like it, but this is hardly a surprise. We should be making them do our bidding not letting them tell us what to do.
7. World growth. This can and will continue for a long time, despite the pressure on natural resources. As always, it needs the price mechanism to drive efficient use of resources. And until some bright spark can come up with a satisfactory financial system that does not rely on continual growth, we will inevitably get more booms and busts.
8. The UK economy. This has been skewed for years by the pre-eminance of the City of London. The UK has a clear choice between investing in engineering (in its widest sense) and in money creation. If we continue to to do the latter we will be subject to more of these economic upheavals and risk losing the somewhat-illusory gains in wealth we have seen in the last decade. If we do the former, we stand a chance of remaining an economic force. personally I'd prefer to see the city of london under the Thames permanently and the banking disappear to the US. The we might get some interest and investment in industry. But I don't expect that to happen.
9. Agriculture. The low world cost of food has had several effects on the Uk and world economies and these will reverse as population growth and living standards improve in the 3rld world. Land recently taken out of food production will be reclaimed and UK farming will become profitable again. Rising prices are the necessary catalyst in this. But with rising food and energy prices in the UK this will casue massive deflation unless the exchange rate drops. WHich again means an end to the city-of-london-driven economic policies we suffer today.

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Cassandretta