Preparedness for when

Frugalsod

silverwhistle wrote: »

So were mars bars; an economist's favourite measure until they started mucking about with the sizes. I've also used pints of beer as a relative measure in the past, but they've suffered much higher inflation.

It used to be 1.5 mars bars=1 pint in students union bar, 3.5 pints = 1 match day ticket at the local footie club. Now it's 6/1 and 10/1!:D

The Economist also promoted the Big Mac index to compare different currencies? They used it to see how over to undervalued each currency was. I stopped reading the Economist when its macro policy articles became junk.

Frugalsod

silverwhistle wrote: »

Thanks GQ for your post about foxes: there really are some stupid people around.

On a related note about tin-hatters and bank runs, I find it ironic that the very precautions people take and talk about in their own lives have an impact on the issue they are worried about and exacerbate them.

Yes but an avalanche is started by a single snow flake, so do you ban snow flakes to stop avalanches?

Any individual has to do what is best for themselves and their family. Also taking stupid risks like leaving too much money in an insolvent institution does not mean that they should do nothing. If you really want to stop such actions you need to make them unnecessary. Tough banking regulation in the years after Glass-Steagall meant few banks failed leaving depositors losing money. Even banks like BCCI were shut down before losses impacted protected depositors or the broader economy.

Now we have light touch regulation which basically means you have to act in your own self interest because the government certainly does not care about your money.

silverwhistle wrote: »

To take the Greek banks as an example: to be honest €60 a day should be enough for day to day living and 1800 a month was much more than I had to live on when I lived in the eurozone, and that was with paying rent. But most of the significant money had already left Greece. The lack of liquidity of Greek banks has a great deal to do with Greeks themselves: they neither trust the banks or the government or their own economy. Unfortunately nor do the governments (and people, in many cases) of other countries.

The problem is that the banks are already insolvent and so any money within them is at risk well below the deposit protection limit. Their mistakes have been to engage in excessive leverage because when things are going well it boosts profits and so share bonuses. Though when things turn down that also magnifies losses.

While €60 a day might be sufficient for day to day spending would you want to keep money in a bank that is about to go bust and you could lose all of it? Greek banks have nearly half of their loans as non performing so would need significant bail-ins from even modest savers to survive.

In addition the new bail in laws make bank runs essential to maintain what wealth you have in the banks. There has been a substantial silent bank run on Spanish and Italian banks for several years now with a lot of that money ending up in London property.

Most people do not have a lot to start with and losing what little you have because of bank incompetence when you were not speculating is pretty unfair.

Trust in governments also depends on governments providing services. The Scandinavian nations have higher taxes and higher services. I know people in Sweden who are among the highest earners there and while they paid a lot of taxes they did not resent it, because they knew that they got their monies worth. They had good free education for all their children and grandchildren even through university, even abroad. Their hospitals are excellent and they have very little corruption or crime because the wealth inequality is so low. This is one reason why our current government are trying to ruin public services so that they can justify privatising them and so increase downward pressure on taxes. If people do not feel that they get their money out of services they do not want to pay for them. Hence turkeys voting for Christmas.

silverwhistle wrote: »

I'm not sure what the solution is, and to everybody saying austerity isn't the answer I'm inclined to agree with, but they never come up with any reasonable solution. It was interesting to see Tsipras squirm when the leader of the liberal group in the EU parliament spoke: 13 new education commissioners appointed and 12 were affiliated to Syriza and the other's political ties weren't known: cronyism continues. The leaked list of Swiss bank accounts still hasn't been investigated. Tax collection is still poor and it's still the PAYE and pay cheque types who are the easy targets.

Wrong there have been plenty of suggestions as to what to do to actually improve the situation. The problem is that few listen. Varoufakis said that they needed a jobs program and in investment package and there is even one mentioned in the latest bailout but it will never get the funds needed because all the proceeds will be swallowed up by the recapitalisation of the Greek banks which have priority to the Eurogroup.

Secondly the EU forced cuts in the numbers of tax collectors because they were dogmatic about cuts. Even the previous Greek Samaras government had problems trying to get the EU to see sense on this. Secondly this bail out excluded tax increases on the rich or the business community so any the entire burden will fall on the poor again. The same applies to clamping down on tax evasion. Those on the Lagarde list have not been investigated in any EU country, and much of that money is in London yet our government will do nothing about tax evaders dumping money in our banks.

Cronyism is everywhere the only way to end it is to ban political parties, or have all appointments based on merit, but that does not suit politicians who what to get cronies to push through crazy policies that they have. It is also essential to pay off cronies when necessary with a nice cushy job. Just look at most western governments to see that is the case globally.

silverwhistle wrote: »

What happens if the debts are written off? Will behaviour change and what incentive will they have to do so? Who will lend to them in future? So many people saying the banks were irresponsible... OK then, they'll stop lending, which would be the sensible response.. What then?

The problems of debt write offs are really a problem for the creditor nations. Germany bailed out its banks so when Greece becomes a failed state they will have more than €150 billion to find. As the debts cripple more and more of the EU then those debts in Germany will become a bigger problem for the German tax payer. Also refusing to accept haircuts now only delays the inevitable, possibly only after the next election.

Well a nation without debt will be able to repay any sensible debt if offered a loan. A big part of the problem is that Greece has been undercut by its neighbours in terms of food production, as free trade has basically wiped out much domestic production. So it has had a huge trade deficit that it could not close because of the EU. The free flow of goods meant that Greek products could not compete with cheap food from Eastern Europe where wages were lower and land plentiful. Without some form of balancing mechanism the system was doomed to collapse at some point.

The problem is that banks business models are based on exponential lending. When that ends they are in trouble, because bank lending is basically a big Ponzi scheme. It might only be a decade before no one has any spare funds to borrow because everyone is so indebted. At that point the system fails and governments will try another sticking plaster for what will be a gaping wound.

silverwhistle wrote: »

Poor Greeks maybe, but Estonia, Latvia, Lithuania, Slovakia with their smaller GDPs are _really_ not happy with having to contribute to yet another bail out. Just like in gambling you don't chase your losses; you don't throw good money after bad. There have been huge amounts thrown at Greece, and for all the talk about the banks being the beneficiaries there's still a lot of money that has gone elsewhere. The very lack of transparency as to where it has all gone is part of the issue.

First of all the bail out of 2010 was the crucial mistake. So before Syriza took office or even existed. It would have meant the insolvency of Deutsche Bank as well as a few others in Germany. This would have triggered big losses on the credit default swaps mainly in the UK and USA so pressure was applied to avoid this. The US Treasury secretary was in Europe on a weekly basis to get this outcome. Even then in 2010 the total losses from a Greek default would have been €109 billion, more if you add in CDS losses. Now in a couple of years the sum will be €350 billion again excluding CDS losses. Also much of the money that you think has gone into Greece has really only been paid straight back out in interest payments. Very little has reached Greece or its population.

Secondly while €350 Billion has now been thrown at the Greek problem very little has reached Greece. It nearly all went to bail out German and French banks or interest payments.

In addition the bail outs of the Baltic states has left them very vulnerable. One nation Latvia had a collapse in GDP that was significant but the real impact was to cause the mass migration of a significant proportion of its working population elsewhere. Many of these will never return and in the process the demographics of the country are dire and it has aged significantly as a result of many of its youngsters leaving.



Greece has this in its future as well as many well educated Greeks have left the country possibly for good.

moneyistooshorttomention

jk0 wrote: »

Did anyone see this on PP?

http://phys.org/news/2015-07-robots-wise-men-puzzle-degree-self-awareness.html

Anyone enjoying 'Humans' on Channel 4? I find it fascinating. Trailer here: https://www.youtube.com/watch?v=HU4mwlTUXnc

Yep...I'm watching "Humans" - and finding some of those scenarios in there all too likely a prospect if we proceed with A.I.

If its good enough for a brainbox like Stephen Hawking to warn against the risks of this technology - then I'll take his word for it. But...yep....the obvious biggest risk I see is the one that the daughter of household could see - ie of them taking many more of our jobs from us. We've watched a lot of our most menial jobs vanish with the onset of technology - with no-one having answered the obvious question of "What jobs will then be available for those who are only capable of doing the most menial jobs?". I'm watching the steady decline of the "middling" jobs (ie the ones I did - ie office work) and no answer given as to what we are to do for jobs. Next up could well be the "professional" level jobs.

Actually...there would actually be advantages to having A.I. robot solicitors for instance:think: - ask the question you want to know the answer to and Robot Solicitor consults its extensive data memory and comes out with a totally clear/objective answer and is much better informed of the facts than some actual solicitors I have come across:cool:. Wonders if the programmers would insert a modification to allow for the "bluff and bluster" that some solicitors go in for to make out that they are right, when they aren't actually and have rather "kindergarten" level knowledge of their own job.

GreyQueen

I don't think that the rubble has stopped bouncing from 2007-2008 yet. When you're living it, the trend of history is harder to see than it will be when scholars and other interested parties will be able to look back on this era with the perspective of 30-50 years' in the future.

I think that the trouble is the basic idea that you can provide infinite growth on a finite planet, coupled with elites and a rentier class who want their money to make money, without having contributed anything to the production of goods and services.

A lot of what we think of as 'wealth' is smoke-and-mirrors anyway, which is why it can evaporate overnight. The people with money want to make more, and the vast amount of people have very little and can't contribute much toward the upkeep of an overcaste of parasites. So, you lend money to people who, because of circumstances and temperament, are unlikely to pay it back. You bundle sub-prime mortagages into investment vehicles like CDCs and trade those. But s**t-in-bundles is still s**t, isn't it?

The financial sector has become far too dominant in the world and the rest of the economy is being distorted to favour their interests above all others. There have been progressive moves to force Jo(e) Ordinary into their clutches, whether they will or not. You can barely survive in a modern society without a bank or building society account, and this makes everyone vulnerable to their shenanigans.

Never mind the Greeks failing to collect taxes, our own dear grubbyment is savagely-cutting into HMRC, making it more likely that fewer taxes will be collected in the future. The same government is slashing benefit fraud investigation, which will result in the failure to investigate and recover incorrectly-paid public funds. And cronyism allows corrupt practices on a nod-and-a-wink on the promise of a nice little overpaid part time job once having left public service. And we allow international companies to trade on our high streets whilst they claim they have to pay their taxes in other jurisdicitons, something facilitated by our so-called EU partner states, in many cases.:mad:

What can the sensible ordinary person do, surrounded by this mess? I make the best judgements I can, based on what I perceive as the risks and on what resources I have available. Most people, if not too distracted by fluff or too dim to notice, would do the same thing. Tens of millions of little decisions are what makes or breaks an economy.

Doveling

Everything changes and everything stays the same.

Heard this again recently, still worth a listen

https://www.youtube.com/watch?v=yLQgkF_FsO4

Does anyone else think that the new Liberal Democrat leader looks a bit like Harry Enfield's "Tim nice but dim" ?:rotfl:

http://www.theguardian.com/politics/2015/jul/16/tim-farron-profile-who-is-the-new-liberal-democrat-leader-

moneyistooshorttomention

Slight snag to that one Doveling - I clicked on the side thing and watched "what does it mean to be English?" and I just went off Billy Bragg after that.....:(. Peter Hitchens on the other hand:T

Doveling

Doesn't alter the words of the song

I don't like some of the noises Cameron is making -
"committed to working with the US to destroy the 'caliphate'"
what's that shorthand for.

moneyistooshorttomention

Well he aint much of a politician to call them by their self-designated name, ie "caliphate". That makes them sound like a legitimate country - and not the group of terrorists they actually are in fact. Never call anything a country unless it actually is imo.

I do think getting exact language used is important in many contexts.

Its a bit "obvious" to send in our armed forces under the guise of American armed forces - which is what seems to have been happening...

Though admits that I honestly don't have a clue what to do about that particular brand of terrorist - other than on a very personal level.....

I'm still struggling with just how bloodthirsty/nasty/discriminatory they are.

Frugalsod

GreyQueen wrote: »

What can the sensible ordinary person do, surrounded by this mess? I make the best judgements I can, based on what I perceive as the risks and on what resources I have available. Most people, if not too distracted by fluff or too dim to notice, would do the same thing. Tens of millions of little decisions are what makes or breaks an economy.

There are things that we can do. We can refuse to play the game.

You could buy your food as minimally processed as possible and make it yourself. You will also save money. That will deny money to the big food multinationals, who are almost certainly to be tax dodging. If you can grow your own food.

Buy local from small independents who are unlikely to be engaging in any tax dodging or offshoring of their profits and so reducing their taxes paid.

Live as green a lifestyle as possible so that means reduce consumption, reuse items if possible, recycle if possible. All these little things reduce funds to the big tax dodgers. Save money outside the banks, buy a safe if necessary.

Look at the past and see what you could do for yourself that does not involve a multinational. Make your own clothes, jams even furniture if you have the skills. Even use it as an opportunity to teach yourself so you not only use up spare time, so do not get bored but save money at the same time.

See who makes political donations and boycott them regardless of party as it perpetuates the system.

Butterfly_Brain

GreyQueen wrote: »

I don't think that the rubble has stopped bouncing from 2007-2008 yet. When you're living it, the trend of history is harder to see than it will be when scholars and other interested parties will be able to look back on this era with the perspective of 30-50 years' in the future.

I think that the trouble is the basic idea that you can provide infinite growth on a finite planet, coupled with elites and a rentier class who want their money to make money, without having contributed anything to the production of goods and services.

A lot of what we think of as 'wealth' is smoke-and-mirrors anyway, which is why it can evaporate overnight. The people with money want to make more, and the vast amount of people have very little and can't contribute much toward the upkeep of an overcaste of parasites. So, you lend money to people who, because of circumstances and temperament, are unlikely to pay it back. You bundle sub-prime mortagages into investment vehicles like CDCs and trade those. But s**t-in-bundles is still s**t, isn't it?

The financial sector has become far too dominant in the world and the rest of the economy is being distorted to favour their interests above all others. There have been progressive moves to force Jo(e) Ordinary into their clutches, whether they will or not. You can barely survive in a modern society without a bank or building society account, and this makes everyone vulnerable to their shenanigans.

Never mind the Greeks failing to collect taxes, our own dear grubbyment is savagely-cutting into HMRC, making it more likely that fewer taxes will be collected in the future. The same government is slashing benefit fraud investigation, which will result in the failure to investigate and recover incorrectly-paid public funds. And cronyism allows corrupt practices on a nod-and-a-wink on the promise of a nice little overpaid part time job once having left public service. And we allow international companies to trade on our high streets whilst they claim they have to pay their taxes in other jurisdicitons, something facilitated by our so-called EU partner states, in many cases.:mad:

What can the sensible ordinary person do, surrounded by this mess? I make the best judgements I can, based on what I perceive as the risks and on what resources I have available. Most people, if not too distracted by fluff or too dim to notice, would do the same thing. Tens of millions of little decisions are what makes or breaks an economy.

Totally agree.
This was posted on the Guardian today
There is an article in Zero Hedge, which mentioned an article by the Guardian about the Euro and the reason for its creation, which ties with this article really well (if one is prone to think critically and analytically).
http://www.zerohedge.com/news/2015-07-17/little-known-history-euro-crisis-was-baked-start
and the Guardian article:
http://www.theguardian.com/commentisfree/2012/jun/26/robert-mundell-evil-genius-euro
"But Mundell, a can-do Canadian-American, intended to do something about it: come up with a weapon that would blow away government rules and labor regulations. (He really hated the union plumbers who charged a bundle to move his throne.)
"It's very hard to fire workers in Europe," he complained. His answer: the euro.
The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.
"It puts monetary policy out of the reach of politicians," he said. "[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business."
He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace – or the plumbing.
As another Nobelist, Paul Krugman, notes, the creation of the eurozone violated the basic economic rule known as "optimum currency area". This was a rule devised by Bob Mundell.
That doesn't bother Mundell. For him, the euro wasn't about turning Europe into a powerful, unified economic unit. It was about Reagan and Thatcher.
"Ronald Reagan would not have been elected president without Mundell's influence," once wrote Jude Wanniski in the Wall Street Journal. The supply-side economics pioneered by Mundell became the theoretical template for Reaganomics – or as George Bush the Elder called it, "voodoo economics": the magical belief in free-market nostrums that also inspired the policies of Mrs Thatcher.
Mundell explained to me that, in fact, the euro is of a piece with Reaganomics:
"Monetary discipline forces fiscal discipline on the politicians as well."
And when crises arise, economically disarmed nations have little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the European welfare state down the drain.
Thus, we see that (unelected) Prime Minister Mario Monti is demanding labor law "reform" in Italy to make it easier for employers like Mundell to fire those Tuscan plumbers. Mario Draghi, the (unelected) head of the European Central Bank, is calling for "structural reforms" – a euphemism for worker-crushing schemes. They cite the nebulous theory that this "internal devaluation" of each nation will make them all more competitive.
Monti and Draghi cannot credibly explain how, if every country in the Continent cheapens its workforce, any can gain a competitive advantage.
But they don't have to explain their policies; they just have to let the markets go to work on each nation's bonds. Hence, currency union is class war by other means.
The crisis in Europe and the flames of Greece have produced the warming glow of what the supply-siders' philosopher-king Joseph Schumpeter called "creative destruction". Schumpeter acolyte and free-market apologist Thomas Friedman flew to Athens to visit the "impromptu shrine" of the burnt-out bank where three people died after it was fire-bombed by anarchist protesters, and used the occasion to deliver a homily on globalization and Greek "irresponsibility".
The flames, the mass unemployment, the fire-sale of national assets, would bring about what Friedman called a "regeneration" of Greece and, ultimately, the entire eurozone. So that Mundell and those others with villas can put their toilets wherever they damn well want to.
Far from failing, the euro, which was Mundell's baby, has succeeded probably beyond its progenitor's wildest dreams."


:mad::mad::mad::mad: