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It’s even worse than the Thirties
Fiscal Deficit
Two years down the track, where do things stand?
Lots of pain is being experienced, without much gain. Inflation – largely a consequence of a 25 per cent fall in sterling’s exchange rate in the global financial crisis – has soared. [Read more...]
The Printing of Money
Central banks are now flooding the world with electronic money that provides a basis for explosive inflation in the future. Why is it unrealistic to expect that a growing number of investors will take the view that some of their wealth is safer in assets whose value cannot be consistently degraded by official policies, because their quantity cannot be expanded without limit by irresponsible governments? [Read more...]
Texas Takes the Lead in Promoting Prosperity
Texas Prosperity
The state of Texas is planning to introduce a UK-style “loser pays” rule that will require plaintiffs to pay the legal costs of those they target where they lose their cases. This will discourage lawsuits for damages which blight the US legal system (a restraint strongly opposed by the vested interests of the powerful trial lawyers’ lobby, a major source of donations to Democrat politicians).
Americans now spend more on tort litigation than they do on new cars.
Over the past decade Texas has become easily the most successful state in job creation. One reason is the restrictions it has placed on litigation.
Since it overhauled medical malpractice laws, ending the practice of venue shopping for friendly judges and putting a $250,000 cap on non-economic
damages such as pain and suffering, Texas has become a Mecca for medical specialists, who elsewhere face high premiums for insurance against malpractice suits.
Since 2003 the number of doctors applying for permission to practise in the state has increased four times faster than the population.
This is an interesting example of how legal and regulatory reform has be a major stimulus to economic growth.
CopyRight – OnTarget January 2011 by Martin Spring
The Phoney War
Currently investment markets are experiencing a “phoney war,” the words used to describe the quiescent period in 1940 before the Germans came smashing into France to destroy one of Europe’s greatest armies in a matter of days.
The stockmarket that most people still believe leads the world, Wall Street, continues in its strong uptrend, seemingly signalling coming greater strength in the US economy. But historical evidence is that such signals often prove to be false. [Read more...]
The Fat Cat Bonus
Although there have been some populist backlash – the emergence of the Tea Party movement in the US, the electoral advance of the Far Right in Sweden – it’s surprising how generally apathetic voters have been towards the bias in policies in response to the bursting of the credit bubble. The score so far has been Fat Cats 10, Employees and Small Businesses nil. [Read more...]
Some strengths to cope with adversity
Cope with Adversity
continued from previous article > The truth about cutting out waste
My next point is important, although rarely voiced…
It suits commentators, politicians and speculators to scare the wits out of people with apocalyptic visions of what will happen if their particular views aren’t acted on. I am convinced that although Britain’s fundamental problem of public-sector profligacy is serious, the immediate risks of a fiscal crisis are greatly exaggerated.
The strengths of Britain’s position are ignored by scaremongers. For example, its foreign trade deficit is low – the IMF forecasts it for this year at only 1.7 per cent of national output, compared to 8.9 per cent for Greece. Unlike the US, the UK does not need a massive continuing inflow of foreign capital to pay for excessive imports. And its national debt, although soaring, is doing so from a relatively low level. [Read more...]
Public-sector workers
The truth about cutting out waste
continued from previous article > Painful End to Britain Spending Spree
Britain faces the prospect of cuts in the pay of public-sector workers (as already imposed in several European countries), in subsidies to relatively-poor regions such as Scotland, Wales and Northern Ireland, in construction of public buildings such as schools, in tax credits and child benefits and highway maintenance. [Read more...]
Global Crisis
continued from > Still too dependent on exports and investment
How ironic that the near-death experience of the world economy in 2008 originated in the US, the country that promoted aggressively the merits of private enterprise, free trade and using market forces to discipline behaviour, yet has now responded with the opposite policies of huge public subsidies, regulation and near-total state provision of mortgage finance!
While America looks increasingly like socialist, sclerotic Europe, China becomes more like the US in its 19th century capitalist heyday. It is, Bolton says, “the investment opportunity of the next decade.” [Read more...]
Austerity
The Risks to Growth from Policies of Austerity
As this is now “a risky and dangerous time for the world economy,” the deep cuts in public spending the British government intends to implement next year will leave the UK “badly exposed to the new economic storm that is coming,” says Ed Balls, who for many years was a key policymaker as a close ally of former finance minister Gordon Brown.
A “perfect storm” is one where “continued deleveraging by banks and the private sector meets premature fiscal retrenchment from governments and a drastic tightening of consumer spending, as tax rises, benefit cuts and rising unemployment hit home.”
Balls says cutting public spending and raising value added tax in these circumstances is “economically foolish.” A lesson of history is that one should be wary of anyone who tells you that there is no alternative to a policy, or that something must be done because the markets demand it. [Read more...]
The past 60 years have been great for Germany.
Rebuilding a powerful modern economy at the heart of Europe. Establishing an empire of 500 million people based on willing consensus among its territories. Leaving to France predominance in the policymaking of the empire, thus converting a traditional enemy into a close ally. [Read more...]
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