tag:blogger.com,1999:blog-7820485130017459619.post6419464118604002870..comments2023-10-24T01:46:47.151-07:00Comments on CynicusEconomicus: UK Bankrupt? Does the market now realise?Unknownnoreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7820485130017459619.post-62589965094490757492008-09-12T08:41:00.000-07:002008-09-12T08:41:00.000-07:00Arlo,If the 18C aristocrat had a load of shares he...Arlo,<BR/><BR/>If the 18C aristocrat had a load of shares he could cash in, why would he borrow money at interest? Wouldn't he use up his cash first?<BR/><BR/>With regards to the UK, what happens if the people 'we' have been lending money to cannot repay the loans? Presumably we are still liable for the 12 trillion dollars in debts?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-10231889081741525702008-09-10T09:31:00.000-07:002008-09-10T09:31:00.000-07:00This raises the philosophical question of whether ...This raises the philosophical question of whether you can "realise" something that isn't true.<BR/><BR/>UK has a big external debt but is also a big external lender. Whether we're bankrupt or not depends on the net position. UK external assets are about 95% of UK external debt, so the problem is about 5% the size you claim.<BR/><BR/>Your 18C aristocrat has a portfolio of shares almost as large as his debt, so his net annual payments to creditors is a tiny fraction of his income from non-financial activities (GDP). That's why they keep lending to him.<BR/><BR/>Sorry it's not as exciting as a financial apocalypse, and it doesn't really add much to big-picture arguments about a postindustrial economy or whatnot. But that's accounting for you.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-11458804229826695082008-09-06T22:54:00.000-07:002008-09-06T22:54:00.000-07:00Good comments Lemming! Thanks for the link to the ...Good comments Lemming! Thanks for the link to the archdruid report. Lots of interesting material there.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-39377004786905365242008-09-05T05:50:00.000-07:002008-09-05T05:50:00.000-07:00I have just read the latest installment of the 'Ar...I have just read the latest installment of the 'Archdruid Report' http://thearchdruidreport.blogspot.com/<BR/>and a section of it is not too far off the random meanderings I posted in a comment yesterday. However, he particularly emphasises the role of cheap energy in allowing the West to indulge in economically non-productive activities for decades. <BR/><BR/>Here's the section I particularly noticed:<BR/><BR/>"The flood of cheap abundant energy that surged through the industrial world during the twentieth century reshaped every dimension of the economy in its image, and nearly all the things we have grown up considering normal and natural are artifacts of that highly abnormal and unnatural state of affairs. Very few people in the industrial world today spend their workdays producing goods or providing necessary services; instead, pushing paper has become the standard employment, and preparation for a paper-pushing career the standard form of education. The once-mighty archipelago of trade schools that undergirded the rise of America as an industrial power sank with barely a trace in the second half of the twentieth century. I once lived three blocks away from the shell of one such school; it had been engulfed by a community college, and classrooms that once hummed with the busy noises of machine-shop equipment and the hiss of hot solder were being used to train a new generation of receptionists, brokers, and medical billing clerks<BR/><BR/>The postindustrial economy proclaimed by Daniel Bell many years ago, and accepted as an accurate description of economic reality since then, was never much more than a shell game. The societies of the industrial world were every bit as dependent on industry as they had ever been; they simply exported the industries to Third World countries where labor was cheap and environmental regulation nonexistent, and continued to reap the benefits back home. Those arrangements only worked, however, because cheap abundant energy made transport costs negligible, and systematic distortions in patterns of exchange pumped wealth from the Third World to a handful of industrial nations, providing the latter with the wherewithal to pay a very large fraction of their populations to do jobs that don’t actually need to be done. As energy becomes scarce and expensive again, and the imperial systems that concentrated the world’s wealth in a minority of nations are shredded by the rise of new centers of power, those arrangements will break down. As that happens, a great many goods and necessary services now done offshore will need to be done at home once again, and a great many professions that produce no goods and provide no necessary services will likely drop off the economic map."Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-952220196988697472008-09-04T03:14:00.000-07:002008-09-04T03:14:00.000-07:00The idea that although we have been bankrupt for a...The idea that although we have been bankrupt for a long time, foreigners have been prepared to lend money and 'invest' in the UK makes absolutely perfect sense to me. In fact, it explains the nagging doubt that I've always had at the back of my mind, wondering just how our lifestyles were sustained. <BR/><BR/>I don't think many people understand, however. To them, the fact that they have always been working, saving, paying the rent and taxes means that, by definition, they have 'paid their way'. It would be difficult to persuade them that their whole working lives could have been spent on economic 'froth', made possible by a mass delusion. <BR/><BR/>People only think in terms of ordinary human timescales, so that in their minds ten years is more than enough time for a complete 'flushing out' of the economy. They cannot conceive that a delusion could have perpetuated for decades, or even entire lifetimes.Anonymousnoreply@blogger.com