Monday, 18 May 2015
To Whom Do We Owe This Money, Exactly?
Independent candidate has ‘political dynamite’ manifesto
Another independent candidate has thrown his hat into the ring to become the next MP for Wokingham.
The Chinese authorities have, for some time now, been talking about the desirability of moving their economy from being overly reliant on exports to one which has a significant domestic component of goods produced in China for consumption in China. The central authorities have wished rather publicly that more investment and bank lending was going in to domestic production and consumption and less into property speculation. But wishing, however fervently, has had little effect.
So news of what, if we dare trust Chinese government’s figures, would appear to be very large wage rises, seems to me to be very significant. As the Wall Street Journal reports today,
Wages in China continued to climb at a double-digit pace last year despite slower economic growth.
In an economy which is still quite heavily, centrally – if not planned and controlled, then certainly centrally meddled with – then such large and across the board wage rises would suggest a deliberate policy. I do not see these wage rises as the central authorities as losing control of wages but quite the opposite. I suggest that allowing wage rises is part of a policy of creating a consumer demand to be satisfied by domestic production.
So while Bloomberg recenlty ran the headline,
China Surging Wages Threaten Economy’s Competitiveness
I disagree. Bloomberg’s article goes on to report that,
China’s surging wages and other costs are showing signs of undermining the competitiveness of the nation’s economy, threatening its growth potential, the Asian Development Bank said.
ETFs a warning.
Some time ago (May 2012) I wrote two articles about ETFs suggesting they were The Next Accident Waiting to Happen. In that first part I described how they work and who owns and runs them. My argument was that,
I think the signs are already there to suggest ETFs are where the instability and risk is accumulating. If I am in any way correct then ETFs will be to the next stage in our on-going state of siege-mentality crisis what CDOs were to the last.
In part two I looked at exactly how,
…the clever boys and girls of finance have found ‘innovative’ ways of pumping those ETFs up a bit, just like they did to Securities.
I detailed the alarming number of different ways ETFs and their market are being mutated into a monster of instability just as securities, CDOs and the like, were before them. I wondered about how many ETFs would be stuffed with high-risk sovereign bonds but held with a risk weighting of zero? I ended by suggesting that the claims being made for ETFs, of access to high returns via a product that massages away the risks, were as false now as they were when the same was said of mortgage backed securities in 2007.
I ended by saying,
ETFs have in their DNA everything it takes to become monstrously dangerous. They are wide open to all the fraud and shitty behaviour the banks seem not to be able to stop themselves from bathing in. They are awash in leverage and riding on a tide of derivatives which hide so much concentration of counterparty risk that it makes a mockery of ‘risk management’.
I haven’t written much about ETFs since, except for one brief update on bank etfs.
There have been three important men in my life. The dreams of all of them have been betrayed.
My grandfather was and in many ways still is everything I admire. He began working down the pit when he was 14 years old. He retired at 65 and a few fleeting years later was dead of cancer. But in his life he fought for the dignity of the ordinary working man and woman. He believed that if we wished for a better world, a world where ordinary people had a chance in life, a chance to earn a living wage, to educate themselves and see their children educated, then we all had an obligation to fight for that dream. And he did. When WWII began he was too old to be called and as a miner was exempt, but volunteered and at Dunkirk saved the life of a young man who became his life-long friend – my godfather. After the war it was his generation, his vote, his willingly paid taxes, which made sure his children would have what he had not, a National Health Service and a chance to go to university. These were his dreams and he fought for them every day when he went to work.
“How great a man is he that he would lay down his country for his life?”
PROLOGUE: this is what the Financial Times reported on June 15th 2017: