"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of the voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." - Ludwig von Mises
On Monday the Chinese Yuan started trading against the Russian Ruble on the inter bank market. This is the latest in a series of moves which will promote the Chinese currency's use in global trade and finance.
With the US flooding world markets with dollars its reserve status is coming under increasing threat. As the dollar is the currency of international trade it means that most countries in the world need to have reserves of dollars to buy goods such as oil. This creates demand for dollars and holds the price up whilst at same time the Federal Reserve is devaluing it by printing trillions more (quantative easing).
Inundating the world with dollars creates volatility in exchange rates and destabilises international trade. It also means that US companies can go on a spending spree with dollars whose value is being held up by other economies. This causes inflation in the target economies. The US is also a huge debtor nation and its creditors see the value of their dollar holdings diminished by devaluation.
As US deficits (including off balance sheet) are now spiralling out of control America's creditors such as China realise they are not going to be paid back. As a consequence they want rid of their dollars and are making deals in all asset categories round the world. They could simply sell their dollars but if they put them on the market all at once the dollar would collapse and their reserves will become valueless.
Dollar depreciation has sparked a currency war which is effectively a race to the bottom. Most major currencies are being devalued and this is indicated by the rise in price of precious metals. Gold and silver are seen as safe-havens at a time of currency volatility. In the last few months silver has risen in price from €14 to €20.46 (50% rise) at the time of writing. This partly reflects a previous rally in the Euro which had been thought of as an alternative reserve whilst confidence in the dollar plunged. However recent sovereign debt panics in the Euro-zone have seen confidence in the Euro plummet.
In pounds, silver has risen 65 per cent since January. This shows the pound is nose-diving as British governments and the Bank of England continue their policy of quantative easing (money printing). The most recent figure for quantative easing in the UK was £200 billion and government borrowing for the month of August was an unprecedented £15.3 billion. With deficits expected to escalate and with Britain's financial sector still in crisis, the UK would be in the same postion as Ireland were it not for the fact that Britain can print more money. Ireland does not have that luxury - unless it leaves the Euro.
With currencies being debased at such a pace countries such as China, Brazil and Russia are pushing for a new global reserve currency. The Chinese seem intent on providing that platform:
"The pace of internationalizing the yuan is accelerating," said Zhao Qingming, a senior analyst in Beijing at China Construction Bank Corp, the country's second-largest lender.
"The direct trading between the yuan and the rouble will help expand trade settlements in the two currencies."
The message in these developments for Scotland and the SNP government is that should Scotland have to escape the pound in a hurry the Euro may well not be a wise alternative. An independent Scotland may instead be advised to choose an oil-backed currency such as Norway's Krone (NOK) - one of the most stable currencies in the world.
As the UK enters a period of traumatic sovereign debt, currency and financial crises, Scotland may be wise to float its own currency and so provide a stable platform for foreign trade whilst protecting the wealth of its citizens.
Isn't it great that banks got in trouble and passed that trouble on to us? Private debt was turned into public debt. Some well-indended activists do not support stopping bailouts and they now have to explain why! The bailouts have led to soveriegn debt and currency crises. People's wealth is being diluted including pensions and the banks are still bust.
As we are starting to realise Lloyds and RBS have huge exposure to the Irish banks. Bailing them out is printing money, giving it to the Irish who then give it back to the British banks. This makes sure the debts are hung around the Irish necks when what should happen is the Irish banks are allowed to go bankrupt and let the British banks fight over the scraps.
So much for Brits bailing out Ireland as the BBC would like to have us believe. Where is the intrepid journalism?
And while we're at it. In Scotland the people are now under blanket propaganda by the unionist mainstream media. Scots are being bombarded and being lied to systemically about the SNP government. It is full-throttle Orwell!
I'm sorry if some journalists get caught in the cross-fire but the journalists are supposed to be there for the people not the other way round. Getting the truth to a besieged population is far more important than the bruised ego of the odd journalist who should know what it means to get into that profession, in Scotland, before doing so.
As we know the City of London is extractive not productive. Nothing comes from there, everything is sucked into there including student grants, pensions, savings, public sector, family wealth etc etc.
If Ireland declares bankruptcy as world-renowned investor Jim Rogers advises what would be the hit on British banks?
Lloyds: £21.7 billion in loans, £11.7 billion in impaired loans.
RBS: "Significant" exposure, according to Morgan Stanley, including £51.9 billion in loans.
Austerity is kicking off. Here is what the students think:
The legendary international investment guru Jim Rogers, who formerly co-owned the Quantum Fund with George Soros has shown up the bailouts for what they are - economic illiteracy and fraud.
There is absolutely no need for the public to assume the debts of big financial institutions and it will only make things worse anyway.
The Euro would be stronger if Ireland was allowed to go into administration. The logoc behind the bailouts is all about banks manipulating the political agenda. The bailouts will kill the Euro and Europe and severely indebt ordinary people who did nothing wrong except be taxpayers.
The debts which will be hung around the Irish people's necks enslaving them for a generation at least and spark another population exodus. This will leave a smaller working population to pay for public services and guarantee pensions for those retiring.
When will people say we've had enough of this daylight robbery? Stop your politicians trying to engraciate themselves with the bankster class and demand that government takes care of the people before the banksters.
Sinn Fein is right. This is economic treason. Our politicians must know that they will be held responsible. It is time for politicians to decide if they are on the side of the people or on the side of the banks.
As reported in www.thejournal.ie around a hundred Sinn Fein activists breached the gates of the Irish parliament today:
Sinn Féin activists breach gates of Government Buildings
Here is BBC footage of the demonstration. There are accusation of police kicking protestors who are calling for the immediate resignation of the Taoiseach Brian Cowan who has given interviews recently where he has shown signs of fatigue and in one interview was clearly drunk.
How long before Scotland draws appropriate conclusions about the UK's financial sector, bailouts and auterity?
If you were in any doubt about the anger erupting across Ireland then the Sinn Fein demonstration today will set you straight.
People feel betrayed. Folks, this is a flavour of what's around the corner here. Austerity is going to cause civil unrest. The political system is captured by a financial oligarchy and taxpayers are the victim. Normal political channels are not going to help and so the grassroots will have to remind the political class who's boss!
Ireland is in the middle of a global political game. The bailouts, as they are eslewhere, are all about banks in other countries making sure they get paid back for loans that they lend fraudulantly and/or recklessly. The Irish are taking the political flack for Germany and the ECB generally.
The 'bailout' of Ireland is supposed to stop a 'contagion' inside the Eurozone. It hasn't worked. According to Zerohedge the bailout has failed and markets are moving on to gut Portugal.
How long can the Euro survive? As Britain is also bankrupt the question is also, how long can the pound survive as it prints more money to QUIETLY bail out Britain's insolvent financial sector.
With currencies being devalued to keep the banks on life-support sovereign debt crises and money printing are seeing the value of assets, savings and investments collapse. Pensions are taking a pounding and will likely be of little value when people retire.
We must stop throwing public money at private debts. Let them fail. A new system can be created, the bailouts repudiated and the money set aside for a new pension fund.
People are worried. In Ireland there are increasing flashpoints where demonstrators are being arrested. Here is another example of tensions rising to the surface in the Irish parliament -
Gerald Celente is the world's most respected trends' forecaster. His company - the Trends Research Institute - has been, over the years, commissioned by governments, multinationals and others to give an insight into their futures.
Gerald is absolutely furious about what is going on between governments and international bankers. He is absolutely adamant that bailouts are morally and economically reprehensible and predicts that no good will come of them. You can get a wealth of information by subscribing to his Trends Journal.
Below is an interview he gave to an Irish radio programme two weeks ago. It turns out that his message of not bailing out private debts with public money and the folly of austerity was prescient in Ireland. The Irish presenter was already getting at the whole idea of debt repudiation and that's before the latest crisis.
Here's my forecast:
There will be a groundswell of debt revolt in Ireland which will spread to the UK as austerity moves closer. Trust in the political class will diminish quickly. Banks who indulge in repossessions will have their services boycotted. People will withdraw their money from big banks and deposit it in local independent banks or credit unions or they will buy precious metals to protect themselves from quantative easing which is jargon for defrauding the population.
The sooner these options are explored in Scotland the better. Over to Gerald -
Without the powers of economic independence which the SNP government would dearly love to have, Scotland has no choice but to send the surplus in its national accounts to London and after that endure a £1.3 billion cut in its grant from Westminster to pay for Britain’s escalating budget deficits.
The Scottish government’s budget was always going to be a delicate balancing act. As a minority government the SNP Finance Minister John Swinney had to negotiate with his cabinet colleagues, deliver on his party’s election pledges, achieve a majority vote in Parliament for his budget and keep local government on board with the party’s policy of a Scotland-wide freeze in the council tax.
Set against a backdrop of severe cuts to the Scottish block grant from Westminster, getting a successful budget passed through the Scottish parliament in the final year of the first ever SNP government’s term in office will be a real test of John Swinney’s mettle. It seems that Scotland’s Finance Minister has, against considerable odds, delivered with authority for both his party and the nation.
Throughout the SNP government’s tenure the Labour Party’s strategy has been to portray the SNP government as a failure. To this end the Labour Party have often appeared as an irresponsible opposition by putting their partisan party interests above the interests of the nation. Last week was a case in point when Labour voted down world-class legislation which was minimum pricing of alcohol.
Undermining the SNP’s manifesto pledges has been Labour’s strategy in presenting their adversary’s term in office as one of failure and so attacking the SNP’s policy of freezing the unpopular council tax has become a fixation for the party.
Local Government One of John Swinney’s first successes as Finance Minister was his concordat with Scotland’s local government councils. In return for agreeing a council tax freeze local councils gained in terms of central government finance and having more freedom over their spending powers. Much of this was achieved with the agreement of the President of COSLA, Labour’s Pat Watters.
This entente cordiale has recently come under threat because of cuts to the Scottish block grant, much of which would have to be passed on to local government. The leader of Labour’s Holyrood group Iain Gray, sensing the demise of an SNP manifesto pledge, came out against continuing the council tax freeze arguing that a rise in the tax take would help offset the cuts.
Labour’s local government leaders led the charge, insisting that they would resist a freeze, and were backed by Labour’s trade-union partners. This opposition suffered a blow however when an opinion poll showed that the council tax freeze was a very popular policy with the Scottish electorate. Iain Gray wobbled, leaving Pat Watters’ negotiating position with Swinney weakened.
Watters indicated that a freeze would be achievable if certain concessions were made by Swinney. First of all Watters forwarded the case that £70 million of extra cash from the government was insufficient - Labour councils are free to raise their council tax but they’d lose that government money if they did. The choice now is to take the Westminster cut of 6.4 per cent and raise council tax to pay for services or keep the freeze and accept a 2.4 per cent cut. Watters turned up to Swinney’s party.
Another condition of accepting the freeze was that the SNP government set a three year budget, however Swinney has remained firm on this by setting a traditional one year budget, which has been accepted.
Some small concessions were made by Swinney in terms of the flexibility councils have with spending and £70 million was allocated within Nicola Sturgeon’s health budget to a “Change Fund”. This fund is accessible by local authorities to redesign services thus, easing the pressure on acute hospital provision.
Ultimately, Swinney had the stronger hand. Watters’ negotiating position wasn’t helped by Iain Gray’s volte face and the SNP will get to keep their manifesto pledge of a council tax freeze going into the Holyrood elections on May 7 next year.
Public Sector Reform A critical aspect of the budget is the establishment of the Commission on the Future Delivery of Public Services, chaired by Campbell Christie which will be a comprehensive review of Scotland’s entire public sector. After generations of Labour control over a public sector created by successive UK Governments on the basis of models developed for England, many will see a process of renaissance as long overdue.
As John Swinney pointed out to Andy Kerr, allocating detailed future budgets to sectors, which might undergo radical change, simply puts obstacles in the way of public sector reform. Naturally, parties who would prefer to see the status quo or yet more ad hoc adjustments would much prefer that these obstacles remain in place.
This is a bold call by the SNP. A balanced budget for 2011-12, together with a drive to restructure Scotland’s public sector to create a modern, efficient Scotland. Regardless of the election results in May, there would be a Spending Review next Autumn for the longer term. The choice would be between an SNP led Government planning for a long term future, or a Labour led Government planning to regain their control over the institutions of the country.
It would indeed be a question of “party over nation”.
Draft Budget 2011-12 Westminster’s cuts are savage. On top of the 3% “efficiency savings” that Westminster has assumed in allocating budgets, there is the continuing reduction in the Barnett formula – in every financial review, even less of Scotland’s money comes back to us.
The SNP propose protecting the NHS Budget, but that has consequences elsewhere. After taking the Westminster “hit” of 3% efficiency savings, other budgets have further reductions –
Local Government : -2.6%
Crown Office : -5.5%
FE& HE : -5.6%
First Minister : -5.8%
Environment & Rural Affairs : -6.3%
Administration : -6.9%
Finance : -7.3%
Justice : -8.7%
Opposition parties can force some changes as to which departments gain a little, and which others consequently lose more. They can force Scotland to continue with a public sector structure designed for England. They can force Scotland’s economy to comply with the needs of the UK rather than ours.
Optimism about the UK economy is overwhelmingly negative according to a new survey for the news agency Reuters. (1)
The telephone survey conducted by Ipsos-Mori shows that 79 per cent of Britons believe the economy will stay the same or get worse over the next 12 months. Only 28 per cent of respondents believe that there will be an improvement in the economic climate but almost half of the total, 48 per cent, take a very negative view believing that Britain’s crisis will deepen.
This dire lack of public confidence in Britain’s economy is set against the backdrop of calls by economists, such as Andrew Hughes Hallet, and others for full economic powers to be repatriated to Scotland. With the coalition government in London’s strategy of using cuts to deal with unprecedented public sector spending deficits, many in Scotland will feel that there is no need to take the pain of austerity.
As Scotland’s accounts (GERS) show a healthy surplus, economic independence would offer Scottish businesses and institutions stability and growth instead of the volatility and uncertainty that Westminster’s austerity programme threatens.
Public sector workers are the most worried by the parlous state of Britain’s finances. (2) 61 per cent are either fairly or very concerned about the threat of redundancy compared to 41 per cent of their private sector counterparts.
As the Holyrood elections draw closer the issues of jobs and the economy will naturally begin to dominate the campaign. With many polls showing that a clear majority of the electorate blame the last Labour government for Britain’s solvency problems, Iain Gray will try to have the campaign focus shifted onto Tory cuts. The SNP will seek to keep the pressure on Labour by having them defend their economic record and prove why Scots should trust them to turn around a crisis that the electorate believes Labour themselves caused.
As Britain heads into simultaneous sovereign debt, financial and currency crises the issue of economic independence in Scotland will climb up the political agenda. Scots will have to decide if they want to take the prescribed medicine for an illness they don’t have or take control of the economic levers that are currently reserved to Westminster and decline the offer.
A controversial Labour Party plan to pay for a year’s free newspaper subscription for every 18 year old raises very serious concerns over Scottish democracy.
Sales of Scottish newspapers have plummeted in the last year by almost 100,000 readers. The hardest hit newspaper is Scotland on Sunday whose circulation now stands at 50,897 compared to 56,308 last year – a fall of 5,411 or 9.6 per cent.
This drop in circulation across all newspapers means a fall in advertising revenues and so even more staff will likely be lost across all titles. In 2008, the Scottish Daily Mirror reduced its staff to ONE, for example.
Scotland’s newspapers tend to support Labour, with an occassional nod to Tory and LibDem parties and are almost universally anti-SNP. The news of a decline in readership across the board, in a political sense, then is good for the SNP and bad for its arch-rival Labour.
An indication of how some newspapers may benefit from a Labour victory was apparent in 2006, when the then Labour-led Scottish Government decided to spend £900,000 utilising the Daily Record’s services in communicating ministerial messages on health, anti-racism, and bullying. The next-highest sum given was £40,000 to the Scottish Sun, which had a similar national daily circulation but not quite the same political leanings.
One year later the Scottish press suffered a blow when the SNP government came to power and ordered all public sector jobs advertising to be done online. The resultant budget savings are estimated to run to £2.5 million per year. The drop in circulation combined with a loss of income from public bodies have hit the sector hard.
Critics have levelled criticism at the media in Scotland accusing it of showing bias in favour of unionist parties, of being London-centric and anti-SNP. There is of course no problem with newspapers having their own perspective but allegations of collusion and suppression of information between parties and editors abound. The public sector broadcaster BBC Scotland has been especially singled out for criticism.
Recently, campaigners pointed to the recent BBC Question Time programme where David Dimbleby refused to let the SNP’s Nicola Sturgeon speak about specifically Scottish matters, pointing out that the TV audience was a “UK audience” despite the programme being filmed in Glasgow in front of a Scottish audience. Dimbleby went on to invite the other panelists to criticise the SNP government’s decision to free the convicted Lockerbie bomber Abdelbaset Ali Mohmed Al Megrahi whilst refusing Sturgeon the right to defend the Scottish government’s position. After that the programme went on to discuss issues which were only relevant to London.
Last month BBC Scotland commissioned a survey (1) which asked Scots what their preferred option was to deal with cuts to the Scottish budget. The options were spending cuts or tax rises but no option on economic independence. As Scotland’s accounts show a surplus there is no need to do either should Scotland take back control over its economic powers – a point which is crucial given the proximity of the Scottish elections.
Campaigners argue that this national media bias is the underlying cause for the decline in circulation across the print sector. The argument is that as newspapers increasingly contort their political reports, to bolster the Labour Party and undermine the SNP, the electorate increasingly feel deceived and so look to alternative media sources, particularly online.
Given that Labour has such an advantage in terms of its media coverage in Scotland it would undoubtedly be an unwelcome development for Labour to see these newspapers lose income. This would be especially so if the owners of these newspapers identified support for Labour’s political narrative as the primary cause for that decline. In this context Iain Gray’s Holyrood manifesto pledge to have the taxpayer foot the bill, estimated at £15 million, to pay for free newspaper subscriptions for all 18 year olds in Scotland will be rightfully viewed by many with deep suspicion.
The ramifications of this policy are obvious and dangerous. Such a formal relationship between the state and newspapers will alert civil rights activists evoking images of state-controlled outlets like Pravda for example and will do Scotland's international reputation no good at all.
The second French Revolution is due on the 7th of December!
In France there is a campaign whereby people are going to take their money out of their big banks and let them crash.
Things have gone too far! The banks lost money gambling and are bankrupting the rest of us by demanding compensation for their private losses. Who says we need to bail them out? Only the people who are controlled by the banks i.e. our entire political class.
Say NO to austerity cuts. Take action against the banksters by withdrawing your money. How does it work?
When you deposit one pound the banks use that pound to lend out somewhere in the region of fifty. So your power is multiplied by fifty. That means a relatively small amount of people can bring bail outs and austerity to an end! The Move Your Money campaign in the US is having great success.
The date? 7th December
Action: Let's join in solidarity with the French! Pass the word..
Put my money where? Independent banks or co-ops. The Airdrie Savings Bank is strongly recommended. Better still, take the money and buy silver coins or bullion!
Here is a video by Eric Cantona explaining the process (English subtitles)
If you have been following my blog and the stories of the suppression of the price of precious metals by colluding banks and governments then you should follow the current campaign to crash JP Morgan's share prices by buying silver bullion or coins.
The problem is that the prices of gold and silver are being suppressed in order to hold up the price of currencies. If people don't like their currency being devalued as it is by quantative easing then investors will sell their currency and move into the safe havens of gold and silver. To prevent this from happening the price of the metals has been held down.
In March this year a silver trader broke cover and provided evidence to the CFTC (commodities futures trading commission) proving that the the price of silver was being manipulated by JP Morgan which is a huge player in the market. That trader - Andrew Maguire was almost killed in a hit-and-run incident in London the day after he blew the whistle. The police caught the driver after helicopters and cars trapped him but no arrests were made and the identity of the driver has not been disclosed to the public.
Paper contracts on silver have been sold and it is believed that for every ounce of silver that they have, they have sold one hundred in paper contracts.
The idea behind the campaign is that people buy so much silver (it is a physically small market) that a panic will ensure and investors will demand the silver behind the contracts. This will show a massive hole in JP Morgan's accounts and cause a run on its share price.
It is a co-ordinated campaign based on using google search words "Crash JP Morgan Buy Silver" and when you click you find articles explaining the details of the campaign.
The silver market is small and so easy to manipulate. If people sell cash by buying silver the price of silver will rocket. Silver contracts are worth trillions which is more than the foreign debt owned by China..
Suffice to say then that this is a monumental issue and impacts upon national security. If the campaign works the pound and the dollar could be crashed with weeks.
Just how important is silver to the money markets?
The idea that JFK was assassinated shortly after he brought in the silver-backed dollar is fast gaining traction as the best motive behind the decision to kill him.
So, go buy some silver for JFK..
Here is a video explaining the issue.
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Update. Crash JP Morgan Buy Silver campaign taking off! Watch for further updates..
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Update: Visit http://www.crashmorganbuysilver.com/ for more details.
Britain is a "shameless" place where one-third of people talk casually about their debt without embarrassment according to a new survey.
The survey called ‘Shameless Britain’ was compiled by the financial comparison website uSwitch.com (1) also contains an alarming finding that 18 per cent of respondents find no shame at all in bankruptcy. With official figures due out regarding insolvencies the survey is another worrying indicator of the direction in which Britain is going.
There are question marks over many economic indicators such as GDP which is skewed by quantative easing (money printing) by the Bank of England and money borrowing by the government. The extra money finds its way into the system and then seems like GDP but is in actual fact debt. Figures such as rates of insolvency then help to give a clearer picture of Britain’s true economic condition.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "Some may see it as a sign of shamelessness, but for many Brits it's a case of desperate times calling for desperate measures."
In the last quarter to June this year there were 35,000 insolvencies in the UK. The coalition government’s austerity strategy is bound to increase these numbers dramatically as they cut just under 500,000 public sector workers, £7 billion in benefits and one-fifth from all government departments. The impact of austerity will cause an increase in unemployment claims as public jobs go and employment in the private sector as well owing to the consequent drop in high street spending.
In Scotland, where there the national accounts show a surplus, there are growing calls for economic independence to shelter the Scottish economy from volatility and uncertainty caused by an austerity programme aimed at fixing a problem it doesn’t have.
With the Holyrood elections looming the Labour Party in Scotland will be aiming to deflect attention away from the causes of Britain’s economic crisis. Polls show most people blame their last government for the parlous state of Britain’s finances. With the economic problems deepening, the SNP will ask the Scottish electorate not to trust Labour to solve a crisis that Labour themselves caused.
Another ‘Shameless Britain’ figure which will cause alarm is that a full 38 per cent of Britons say that there is no shame using a pawn brokers. Unless policy makers start to come up with real solutions to the crisis they may be living on borrowed time.
In short the argument is that governments and banks have been colluding to hold up currency value by suppressing the price of PMs (precious metals) (which function like currency in times of paper money volatility). They have done this by selling paper silver contracts but without having the undelying asset to back up the contract. It is believed that for ounce that they have in their warehouse they have sold one hundred.
As governments and banks are now diluting the money supply they are affraid that investors will want to get out of cash and into the money safe-havens of gold and silver. In recent months silver has rocketed in price showing that more and more investors are worried about currency collapse in the big Western currencies $ € £ and moving quickly into PMs. In order to stop this run on fiat currency governments and banks have colluded to hold down the value of PMs by selling more than they have.
The weakness in the system is that if enough people ask for delivery of the PM and it is obvious that the PM isn't in the warehouse there will be a scramble to buy real physical PMs and the price will go exponential along with a currency collapse.
This week has seen the launch of campaign to bring down the banks involved by everyone buying a one ounce silver coin. Spot price silver currently trades at about €20 or £17 per ounce and you can buy coins from various vendors including ebay - see here.
The idea is to show the global merchant banks, like JP Morgan who our politicains fall over themselves to compensate their gambling debts with taxpayers' money, exactly who's boss!
This buy a silver bullet campaign will work if enough people participate so get out there and buy some silver!
As models, the SNP’s ‘Arc of Prosperity’ involved three countries each of which varied in terms of their comparability. Unionist politicians had the right to try and pick apart any aspects of these models which did not resonate and they did.
That done, it made no sense to then point to their perceived ‘failures’, when their respective economies suffered badly because of the global financial crisis, as counter-evidence against Scottish independence. This inconsistency was ignored by Scotland’s mainstream media.
Murphy’s Law contains another false assumption upon which the case for the status quo hangs. If Scotland should look to the ‘Arc of Insolvency’ and conclude that political independence is undesirable what happens then when those models fare better, in independent assessments, than the UK state? By unionism’s own economic criteria the union, is by extension, redundant.
The tiny nation of Iceland has a population of 318, 000 people which is much smaller than Scotland’s capital city at just under half a million, and miniscule compared to the UK’s population of 62 million.
Examination
To justify his assault against this member of the United Nations Jim Murphy said: “Iceland as a country is on the verge of bankruptcy.”
Iceland’s bankers and government were incompetent and easily influenced. Global merchant banks undertook a sting operation. The banks were privatised, investment flooded into the country mostly from Wall Street and the City of London, the government and the nation felt invincible and was talked into undertaking a hugely expensive national dam project.
The dam project cost billions more than was originally estimated and there was no need for the dam with a generating capacity of 4, 400 GW per year in such a small nation. The reason they were undertaking the project was to provide electricity to a new aluminium smelter plant that would cost another €1 billion to construct and which would be constructed by Alcoa – a US company whose former CEO was George Bush’s treasury secretary. Aluminium would be used to make airplanes and such like products. Could Iceland not manage economic diversification in a more economically sustainable way? The country was taken out.
When reality started to dawn that the nations’ finances were a mess, investment pulled out leaving Iceland with a mountain of debt and little means to repay it. During all the speculation Iceland’s banks gambled on derivatives whose assets were not worth their stated value. Most of these products would have been sold by City of London traders who were not properly regulated thanks to PM Gordon Brown’s policy of ‘light touch’ regulation.
Iceland’s banks seemed to have lots of assets on their books. They offered high interest rates (15%) and so under rules of ‘fiduciary responsibility’ Brown’s government directed local councils to put their savings where interest was highest i.e. said Icelandic banks. This encouraged the speculation that the big global banks were after and Gordon Brown was in the thick of it with the financial oligarchs. The assets on the banks’ books imploded along with the global financial sector.
Then came the thorny issue of getting the money back. When Lehman Brothers went bust and Europe lost money the latter didn’t press the issue. Iceland though was small and could be bullied. To recoup losses Gordon Brown and Alastair Darling branded Icelanders ‘terrorists’; another diplomatic outrage by Labour politicians with a subtext. They used anti-terror laws to freeze accounts in Icelandic bank branches in the UK. The banks could not remit the money back to Iceland and so the banks were insolvent.
Then Britain, the Netherlands, ECB and others demanded that the Icelandic banks’ private debts be transferred to Iceland’s taxpayers. There is an attitude that high interest was not compensation for private risk by investors. On top of that the British Labour government showed incompetence by not taking any responsibility for regulation or oversight for these transactions. Now, foreign countries were demanding that private debts become public debts. It was either that or track down the fraudsters, who were bankers colluding with governments, so that wasn’t the kind of precedent that Gordon Brown wanted to set.
Icelanders held a referendum and refused to assume the debts. Now their former PM Geir Haarde is standing trial on charges of ‘economic negligence’ – a crime which carries a maximum sentence of two years imprisonment. I’m not sure what the right honourable Jim Murphy MP will make of his ‘Arc of Insolvency’ model in light of this development, but I would hazard a guess that this is where he would draw the line when comparing Iceland to Scotland.
Murphy’s contempt over the Iceland financial model was part of a strategy to demonstrate that the UK umbrella could shelter Scotland from the worst of a global recession. By pointing to their ‘near bankruptcy’ status the message was that Scotland would have faced a similar fate without the cushion of the leviathan UK economy sheltering her.
However last November Labour’s John McFall MP, then chairman of the powerful Treasury Select Committee, let slip on the BBC that the entire banking sector of Britain was bankrupt:
”Every bank in the United Kingdom has the taxpayer standing behind them.
“Let’s not be kidding ourselves, there’s no bank at the moment in a sense standing on its own two feet because there’s so much government money going around with quantative easing, with the printing of money, that they are getting the benefit of this cheap taxpayers money.”
Labour was well aware of the problems the banks were having and allowed them to continue trading. They did this by allowing the banks to transfer their debts to the public through bail-outs and money printing.
The huge debts that the UK banks, government and population now have combined mean that credit has frozen. Money continues to be printed and given to the banks who simply buy from and sell products to other banks using taxpayers money and draw down giant bonuses but the economy is broken. You can borrow money to pay deficits and that money will go towards consumption and make the economic statistics like the GDP look a little less bad but what happens when the government can’t borrow to plug the hole in the public finances anymore?
In August Britain borrowed over £15 Billion in a single month to balance its budget. Soon austerity will cost Britain almost 500, 000 public sector jobs which can’t be absorbed by the private sector as they are struggling with declining sales and being credit starved. This cull of public services will be a real shock to people’s way of life and on top of that, more unemployed will mean less consumption and place a higher social security burden on a reduced workforce.
These problems with deficits and austerity undermine unionism’s implied assertion that Scotland is sheltered by the scale of the UK and its global roll as a key financial player. With the Legatum Institute’s findings that public confidence in Britain’s financial sector stands at 101st in the world, ranking among third-world nations, it transpires that the economic icon of the mighty British wealth generating City of London was actually a parasite flush with ponzi finance and dependent on state subsidies to survive.
Money printing is technically defaulting on debt. With a printing press a nation can avoid running out of money but when a government and its central bank resort to printing to pay debts and balance budgets, that’s bankruptcy. The new government’s deep austerity cuts are merely a symptom of that.
Labour’s economic negligence perhaps can’t be better expressed than it was by the outgoing Labour Chief Secretary to the Treasury, Liam Byrne, when he left a note on his desk for his Liberal Democrat successor which said: “Dear Chief Secretary, I’m afraid to tell you there’s no money left. Kind regards – and good luck, Liam.”
Summary
Iceland has less unemployment than Britain and her per capita GDP is five places higher in the Prosperity Index. Perhaps Iceland wasn’t the best example for Salmond to point to. It is not Iceland’s exposure to global economic volatility that rattled them but manipulation, fraud and bullying, much of which emanated from London. However the lowest ranking nation on the Legatum Index out of the ‘Arc of Insolvency’ still scores higher than the UK. If Iceland is an example for Scotland not to follow then according to Jim Murphy neither is the UK.
Ireland’s population is around 4.6 million people. Although it was described as the Celtic Tiger, Ireland had a much smaller financial sector than Scotland. Her economy is modern and diversified. Historically, ties between Ireland and Scotland are very strong and so culturally both nations are in some ways very similar.
Examination
Scottish Labour leaders like Murphy and Iain Gray have pointed to Ireland as a model for Scotland not to follow.
The ‘Arc of Insolvency’ and other derogatory claims about the Irish economy have prompted harsh words from Ireland and one Irish economist, Marc Coleman, in particular felt it necessary to defend his country (and Scotland) in relation to the Scottish constitutional debate in the Scotsman newspaper:
“Ireland's GDP per capita is 30% above the European Union average, while Scotland's, sadly, is well below it. Labour has ruled Scotland for 13 years, and it's been a very unlucky 13 indeed with Scotland's population and relative living standards falling far behind…
"And, according to forecasts of the International Monetary Fund, the Organisation for Economic Co-operation and Development and the European Commission, once the correction of the last two years is past, the Irish economy will resume its record of growing faster than both Britain and the euro zone...
“The nation that invented the phone, television, penicillin, the Enlightenment, modern economics (I could go on), is just as capable as Ireland, if not more so, of rapid growth. But not if its politicians love their Westminster careers more than their country. And not if a one-size-fits-all economic policy – ideal for the south-east of England but devastating for Scotland – draws economic activity and talent away from the north and towards an already over-congested south-east."
The tenet of Murphy’s Law which seeks to undermine Scottish self-confidence was exposed as intellectually redundant in this blistering riposte. Yet, that stands for nothing. The other tenet of Murphy’s Law ensures the first survives unaffected. For Scotland’s compliant mainstream media it was business as usual when Labour MP Ann McKechin, referring indirectly to Scottish independence – and in spite of Marc Coleman’s protestations - again felt it incumbent upon herself to run down the Irish economy on a BBC Radio Scotland programme.
Ireland has a higher GDP per capita seven places above the UK and its economic outlook is far better according to the Prosperity Index. Again, given that Ireland has no large oil revenue, it is perhaps not the best example of what an independent Scotland would be like. According to the Legatum survey Ireland ranks two places higher than the UK in terms of prosperity. This begs the question that if Ireland is a model of failure according to Jim Murphy, Iain Gray and other unionists, then why should Scotland thole a Britain which is comparatively worse?
Norway’s population is just under 4.9 million people. It is, like Scotland, a serious oil producer. Scotland has some key advantages that Norway does not have such as a large financial centre and whisky exports. Norway has been more cautious with the exploitation of their oil fields and now produces more than the UK. However, recent large discoveries in the UK sector and as yet untapped deposits West of Shetland and indeed West of Scotland where the sea is less deep may, in the medium term, mean that situation is reversed.
Examination
This member of Jim Murphy’s ‘Arc of Insolvency’ is the second richest country in the world in terms of wealth per adult. According to Credit Suisse the average wealth per adult is $326, 530 which is almost $100, 000 more than the UK and represents a 195% increase since the year 2000.
Labour politicians in Scotland argued that Norway was struggling due to the crisis. In the last year Norway’s oil fund, which is now valued at £315 billion and amounts to £67, 000 per person, grew by 26% - an amount which is more than double Scotland’s grant from Westminster.
This oil fund called ‘Statens pensjonsfond utland’ or ‘Pension Fund Global’ is a pension fund which is set aside for future generations to enjoy. It is the second-largest sovereign pension fund in the world and the most respected according to the prestigious Peterson Institute in Washington DC. Around 60% of the fund is invested in overseas shares in companies quoted on different stock-exchanges worldwide. It is thought to own around 1% of the world’s wealth. Only 4% of Norway’s oil revenues go into public spending.
The former World Bank chief economist and key economic advisor to President Clinton, Joseph Stiglitz, pointed out to Gordon Brewer of Newsnight Scotland recently that Britain had ‘squandered’ its oil wealth whereas it should have invested it.
This supported Alex Salmond’s call for oil taxation to be devolved so that an oil fund for Scotland could be established. Professor Stiglitz is now an advisor to Scotland’s First Minister.
In Scotland’s mainstream media, the sensational story of Joe Stiglitz joining the Scottish Government’s Council of Economic Advisors invoked Murphy’s Law – it is undeniably good news for the SNP and so a media blackout is enforced.
With the UK’s tax-base plummeting, North Sea oil will soon contribute 20% of all of the UK’s corporation tax. This doesn’t take into account tax levied at the pump. It is clear that if those revenues were attributed to a Scottish treasury that Scotland would move in the direction of Norway’s economic success and away from Britain’s public sector debt, financial and currency crises.
Invoking Murphy’s Law, BBC Scotland invited the Professor of Economics of Strathclyde University to discuss why the benefits Norway accumulated from oil would not be so beneficial to the UK with a population of 62 million. No mention was made about how those benefits would go to an independent Scotland. There were some comments about how North Sea oil is a mixed blessing for Norway’s economy. One wonders how the second-richest people on earth would respond to that observation.
Final Hearing
The SNP’s enthusiasm saw them point to example nations such as Iceland and Ireland. These were poor examples and unionism had good cause to point that out. However, unionism about turned after the financial crisis when these nations developed financial problems. Suddenly they were good examples of what Scotland would be like. Despite the media ignoring this opportunistic and logically absurd volte face these models still nevertheless favour Scottish independence by dint of the fact that the UK is outmatched by all three nations.
The three best models for the SNP to point to in arguing for the cause of independence are 1) Norway, 2) Norway and 3) Norway.
Murphy’s Law extends beyond the ‘Arc of Insolvency’ and in fact permeates every aspect of the economic debate. Another example is Scotland’s financial sector. The unionist case, carried uncritically in the mainstream media, is that an independent Scotland would not be able to afford to bail out the affected Scottish banks.
No serious probing analysis of this assertion has been forthcoming from Scotland’s mainstream economic commentators. The fact that the bailout money mostly went to bondholders and shareholders in London is not considered to be a salient fact undermining the key premise of unionism’s thrust. The argument is a little complex and so for unionism the corrosive charge of unaffordability finds headlines easy to come by.
Another unionist narrative which is implicitly and explicitly promoted in the mainstream Scottish media is that Scotland is subsidised by London. Last week the world renowned economist Andrew Hughes Hallet told BBC Radio Scotland that an independent Scotland would not in fact have had to pay for the entire bail-out of Scottish banks as they had significant operations in England.
Hallett also exploded the unionist myth that Scotland is subsidised by England in the same programme when he argued that for a number of years, at least, Scotland has subsidised the UK.
Indeed, GERS (Government Expenditure and Revenues Scotland) demonstrates a surplus going from Scotland to London.
None of this world-class or official analysis matters when you have a captured mainstream media. The narrative doesn’t change, despite the evidence.
This reality well explains the abundance of pro-independence blogs and websites on the internet. Unionism has identified this phenomenon and has sought to undermine its effects by categorising ‘cyber-nats’ as a peculiar SNP problem. All these outlets are attempts at by-passing the captured mainstream media where nationalism cannot expect a fair hearing. The problem for nationalism is that these are disparate and so, without some kind of aggregation, lack any serious counter-balancing effect on the mainstream media.
That is the void into which Newsnet Scotland has stepped. Its mission must be to rewrite the Scottish debate in such a way as to force unionism into an evidence-based defence of Scotland remaining within the union. Not to directly benefit the SNP, but to benefit Scots who switch off because the debate is not fair, free and honest. Murphy’s Law must be challenged - an audience frightened out of its wits, confused and misinformed will incline towards disengagement with the political process or arrive at non evidence-based political conclusions and that only suits the status quo position. This is a systemic problem and is an unacceptable affront to democracy.
For Scots to make informed decisions about their future, only an honest and intelligent debate will engage them. Unionism must supplant Murphy’s Law with a cogent defence of the union.
For the sake of Scottish democracy, it is imperative that Newsnet Scotland succeeds in its mission to become mainstream. Unionism must be forced out into the open to argue its case intelligently. Newsnet Scotland is small and run by volunteers yet, despite a crowded media market, more that 20,000 people are already reading it. That is testimony, not only to the passion and determination of those who established Newsnet Scotland, but to the reality that hundreds of thousands of Scots feel betrayed by their media and have no refuge from deception and fear-mongering.
This unserved market is rich pickings for Newsnet Scotland – it is not loyal to mainstream newspapers which continue to shed readers by the thousand. The fact that the SNP won the Holyrood elections in 2007, in spite of an almost uniformly hostile unionist press tells a story of that enormous constituency’s resilience and scepticism.
To force unionism out into the open, nationalism must beat it at its own game. The stranglehold unionism has over Scotland’s media is an insult to our nation.
Britain is heading into a very deep and protracted economic depression. It is not the consequence of business cycles and there is no recovery or recession despite what the economic propagandists tell us. The British government and the Bank of England are involved in money printing which is creating volatility and uncertainty for business and Scottish institutions.
Nationalism must seize this opportunity to turn the tables. Scots can not afford to go down the road of austerity and do not have to. Scotland is in surplus and consequently, with the economic powers only independence can grant, Scottish businesses and institutions will be able to plan ahead with confidence and create jobs and prosperity in so doing. Our North Sea oil wealth would pay for the debts Scotland would have to carry over from bankrupt Britain and would stabilise our higher education sector. That done the rest of that wealth would be invested in future generations. Those generations face either austerity and a legacy of debt under the UK or economic freedom and prosperity in an independent Scotland. This is a strong self-confident message which must be heard.
It is my belief and prediction that Newsnet Scotland, born to democratise Scotland’s media, is here for the long-haul and will ensure that that side of the story has the right to be heard. I look forward to its swift growth and success.
In closing, I plead to my fellow Scots to see through those who conspire to blind you. You are the highest authority in Scotland. In the forthcoming Scottish elections, I urge you to grant Scotland a final divorce in the case of Scotland V. Britain.
Published with special thanks to Kevin McCourt and Stephanie Gough.
Read more of Alex Porter's Essays written for Newsnet Scotland:
She worked as a manager in the Singer sewing machine factory in Clydebank. During her lunch hour she went round 'the girls' and got them to sign up to the first women's union in the factory - an employer which was a collosus in Clydebank. While collecting the signatures male trade-unionists like Gavin Laird and others belittled her endeavours, until that is, she signed up a majority. Oh yes, then they stepped in to take it off her hands and march to the management's office. She later had to leave her job because the company demanded that when they laid off workers they should be 'singe parents' and she refused!
She shared a platform with the late Jimmy Reid. She was also an SNP election agent back in the days when the SNP were working with small fractions of the vote and literally signed up thousands of members - a more than useful election agent she motivated her teams and kept them disciplined so as not to give the cause a bad name.
When independence comes it will be because of the efforts of Scotland's women as much as its men. Of that there can be no doubt.
With that in mind, I recommend the following piece. It is an excerpt can be read in full at Bella Caledonia.
By Lena the Hyena
My initial response to reading Caitlin O’Hara’s piece,Independent Women, was where is the breakdown of figures showing women’s support for independence? What exactly are we talking about? What influences women in casting their votes? Do rural women vote differently from urban women? How widespread in Scotland is this tendency for women to vote for parties other than nationalists? What is the breakdown between the male and female vote in constituencies where SNP MSPs and MPs are returned?
By Alex Porter and Dave Taylor
POLITICS...
