Monday, September 17, 2007

Spamming banks

One sometimes wonders what fucking planet David Cameron is living on, because it sure doesn't seem to be this one. Spam has written a bizarre article in The Telegraph in which he contradicts himself a number of times.
And I believe that we need now to learn a fundamental, long-term lesson: an economy built on debt puts economic stability at risk.

For fuck's sake, credit is what allows our econony to grow, as Timmy points out.
But before everyone says, gosh, how wise he is, think about what an economy that wasn't built on debt would be like. No mortgages: so very few indeed would own their housing. No trade credit, so companies would have to pay cash for everything. No money markets, so no movement of savings to those who would use them. No interest, therefore, on such savings. A little bit of economic instability seems pretty cheap for all those things, doesn't it?

Spam also muses about who should be lent to.
We have called for greater transparency, and for lenders to be allowed to talk to each other about a borrowers' credit history.

Has he never heard of Credit Rating Agencies which do, effectively, just that?* Yes, he has, because he acknowledges their existance earlier in the article.
The rating agencies play a key role in assessing risk - yet there are pressing questions rightly being asked about their objectivity.

One might ask when, precisely, Cameron has ever tried to borrow any fucking money—it's really pretty difficult. After the last few years, I cannot borrow fuck all. On fact, I would love to know who is doing all of this borrowing: as someone whose maximum credit card borrowing limit was £300—even when I was in full-time work—I do wonder where, precisely, people get all this credit from.

And then Cameron justs leaves this fucking planet and goes off into la-la land.
As I said last week, the same spirit of innovation that makes the City of London a global financial centre can create the type of problems we are witnessing now. That doesn't mean we should fight shy of innovation: but as the Financial Services Authority recognises, innovative markets need innovative regulators.

What the living fuck is this about? Since when has any government agency ever been innovative? Or flexible? Some might claim that the FSA is already a toothless dinosaur as it is constantly outclassed by more flexible businesses. And is Cameron suggesting that the state get into more regulation?

He's an idiot. The state always stifles innovation; in many cases we accept a certain amount of regulation in order to keep some stability but we have to recognise that stability is achieved precisely by making it harder to innovate, i.e. take risks.

The thing is, where he attacks the Labour Party—and the fucking cunt Gobblin' King—Cameron is largely correct, but then he undermines his own points.
Over the past decade, the level of personal debt has trebled, to £1.3 trillion. We owe more than our entire national income. So now when interest rates go up, the impact on homeowners escalates. Mortgage payments are at their highest for 15 years. Add in Gordon Brown's stealth tax rises, and real take-home pay for the average family is falling. No wonder insolvencies have quadrupled in the past 10 years, and are now at record levels. Someone goes bust in the UK every seven minutes.

Yes, that is all very well, Dave, but what are you going to do about it? Are you going to cut taxes? No, you aren't; you have said that you are not going to cut taxes and that you are going to stick to NuLabour's spending plans so, whilst you might whinge about Brown's debt levels, you are not actually going to do anything about it, are you? So why don't you shut the fuck up?
There are no quick fixes to these problems.

Well, quite. Although cutting fucking taxes might be a good start. After all, if you really want to "share the proceeds of growth", then might I suggest that you actually stimulate growth by cutting taxes?
Lower business taxes are good for growth. That's the message of this new paper (pdf) from Patrick Minford and colleagues.

Using data from 76 countries between 1970 and 2000, they estimate that a 10 percentage point cut in tax rates would raise GDP growth by 0.2 percentage points a year.

And the think is, Dave, that I know you are paranoid about people thinking that you will cut services but, as the recent Taxpayer's Alliance Survey showed, people don't think that you politico fucks are spending that money in a worthwhile manner anyway. They are ready for the low tax argument.

So how about you stop spouting this contradictory crap and start looking at decent policies using decent economists, rather than half-arsed fuckwit failures like Gummer and Goldsmith? Or kill yourself. I'm not fussed.

* UPDATE: as a commenter so politely points out, Spam is talking about two different types of rating agency. One type rates banks, etc. and the other rates grunts such as you and I. Might I venture to point out that maybe, just maybe, Spam might have made that a little clearer in the article?

It also doesn't alter the fact that the grunt credit rating agencies already talk to each other and the banks: otherwise, what would be the point of them?


Guthrum said...

He is just a member of the 'political class' he is paid to talk, it really does not matter what he says as long as he makes some facile noises on the issue of the day. No ideology,no position, no idea

AD627 said...

When Cameron mentions "rating agencies", he is referring to the agencies such as S&P, Moody's and Fitch - the agencies that rate sovereign, municipal and corporate debt, as well as the more complicated amalgams such as CDOs. He is not referring to the likes of Experian, which rate individuals like you and me.

Your criticism would be rather more credible if you showed an understanding of the basic facts.

And criticising those who believe that recent economic growth has been built on unsustainable debt levels on the grounds that an economy without ANY debt would be sclerotic is pretty schoolboy stuff. Clearly, debt is a vital component of a modern economy, but it is equally clear that excess debt leads to unsustainable booms and the accompanying busts.

Mark Wadsworth said...

cutting fucking taxes might be a good start

1. Cutting government waste
2. Cutting taxes on turnover, employment, profits and income.
3. Introducing an annual tax on land values to prevent speculative bubbles, because asset price bubbles are the flip side of credit bubbles. If people want to speculate on shares and stuff with borrowed money, good luck to them. Affordable housing is too important, and don't forget that 12 years ago housing was pretty fucking affordable by anybody's definition.

That's that fixed.

Roger Thornhill said...

DK, if you were a certain kind of person I am sure you would get all manner of credit cards and loans.

Northern Rock was castigated by some IFA/IVA parasite on R5 the other day for being too harsh on borrowers including the amoeba's client who ran up £100,000 on cards. Northern Rock wanted its money back, not to go for IVA which I suspect the parasite would get a nice little slice.

Northern Rock seems sensible. I wonder if the shares are worth a punt...

Devil's Kitchen said...

Yes, I thought that they may be worth a punt. However, talking to my broker last night, he seemed to feel that they may be something of a risk.

He has a couple of other suggestions.


Anonymous said...

I think he just doesnt think the electorate is ready for whats really needed yet. Im fairly sure that Cameron's true views are more sensible. He's just trying to be too clever, trying to triangulate and beat Labour at their own game. Whats really needed is someone with balls and will to give the electorate what they (dont yet fully realise they) want.

John Miller said...

I'm sorry I can't put together a coherent post. I am speechless. Why just banks? Why not every business? Where is their logical argument? The Government has intervened to save a company owned by shareholders. Why is Northern Rock special? Why would they not save my local little plumbing company owned by the plumber and his wife? You may say the answer is obvious, but is it? What logical definition do you put in place to distinguish them between them? The only answer that springs to my mind is that it is politically expedient. So now the Government can save any company it chooses. This means we now have a communist state, as some companies will be state subsidised. Why doesn't anyone see the consequenses of this Governments actions anymore? Why are we all so blind?

Oh yeah? So what has happened for the last ten years, exactly?

Over at the ASI, they are posting some of the winning entries of the Young Writers on Liberty. One does not want to put such keen minds off,...