Cameron predicts new economic crisis

by Michael Smith (Veshengro)

In mid-autumn 2014 the British Prime Minister David Cameron stated that the Euro zone is teetering on brink of new third recession and he may, in fact, not be far off this. The fact is that, despite what they are telling us, the economy is not doing very well at all and also not in Britain.

It is being suggested to us day in day out that the economy is on the up – in Britain at least – and that we have lower rate of unemployment for decades. That may look fine on paper but the reality, alas, is somewhat different. Many of those that have “found” jobs and are off the unemployment register are in part-time or very low-paid employment only and thus have very little purchasing power.

The only way, and they are hard at work on that one, to grow the economy, is to have another lovely big war or why does anyone think has NATO started a new cold war against Russia?

The austerity drive to “reduce” public spending definitely is not helping the economy to grow one bit. In fact it is having the exact opposite effect especially as so many public sector employes have faced job losses and those that retained their jobs pay freezes, which actually amount to loss in income due to other costs rising, and now, after a year or two having been given a miserly one percent increase in their wages the talk is of yet more cuts and more pay freezes.

At the same time they, and not just Britain, waste Billions on armaments and new aircraft carriers (that will not have any aircraft for them as the one that is supposed to fly from the, the new US-made F-35 has still got problems even getting off the ground properly, literally), a Trident replacement and also a ring-fenced foreign aid budget of Billions upon Billions. All of this could get the economy at home working nicely. Then again the perpetual growth economy is (1) not sustainable and thus (2) has to be abandoned. On the other hand such monies would do nicely for the health service and social housing.

What, as it would appear if we look at it without blinkers on, we are really heading for is not just a little third recession, and not just the Euro zone but all of us, but a full-blown Depression more likely greater than that so-called Great Depression of the 1920's/1930's but the powers-that-be do not dare to even suggest such a thing openly, not even by way of a warning.

Why not?, you may ask, but the answer to this is very simple. It would put the proverbial feline amongst the columbidae and cause panic because, unlike in the 1920s when the Great Depression struck, and even though it was bad for people, they knew, in general, how to make do and how to make and do things for themselves. Not so people in today's entitlement culture who believe that government – or someone – has to do this or that for them and that the government – or someone else – is responsible if they have problems.

Our parents, grandparents and their parents were much more capable of handling many of such things and problems as they did not have the entitlement mentality that the powers-that-be have brainwashed the population with. They knew how to look after themselves, their families and also others in the community and in turn everyone looked after one another. Today most people do not even know their neighbors and often do not want to get to know their neighbors either. Sharing and helping each other, thus, is no longer being done, in most cases, and community does not exist in all but name.

The next Great Depression is coming and it, more like than not, will be worse than the one in the 1930s and it is time – high time, in fact – that we all got back to some sense in our lives and got to know one another and learned to help where help is needed once again without expecting a reward in return.

© 2014

Gold and Silver in an Economic Downturn

by Michael Smith (Veshengro)

Those that make a nice living from selling bullion coins try to convince everyone that gold and silver coins (and bullion) is the best way to protect against problems in an economic downturn and when things finally collapse, as they may some day.

Those advocated of gold and silver who have a huge vested interest in other people believing their message as to this always cite the fact that in the recession and depression after WWI – worldwide – and then after WWII in Europe gold and silver, and here especially coins, were used as a means of economic exchange, instead of useless paper money and general currency.

That, however, was then and this is now. In those days in the past gold and silver coins were still or had been not so long ago in official use and circulation and people could relate to the value of those coins and in many places gold and silver was more accepted, anyway, than the paper money of the realm. People could put a value to gold and silver coins of various countries. But, as said, that was then an d this is now, and today things are rather different.

It must also not be forgotten, though, that cigarettes, for instance, had much greater barter value than anything else in Germany, for instance and that this was something the GI made great use of.

Despite what the advocates of gold and silver for use in a meltdown suggest and they do after all have a vested interest anyway gold and silver, even .999 pure coins marked as such, are of no real use to you at all.

Whatever those coin merchants or those preachers of doom and gloom – even though they may be right with the doom and gloom bit – on websites and in books try telling you gold and silver, whether as coins or bullion bars or jewelry, has (virtually) no use in any economic, financial crisis or similar.

So, do not waste you money on it. Gold and silver, and that applies for coins, most of which are no longer legal tender proper, bullion and jewelry, equally, will not save you and yours in a downturn. Proper preparedness and skills, on the other hand will.

Learn the right skills and learn what to store and where and how, including stuff that you can use for barter in the bad times. You do not need to include gold in silver in such preparations. Anyone who tells you different, I am afraid, has no idea of what he is talking about and has a vested interest somewhere as to selling gold and silver (and even platinum).

© 2009
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Economic crisis may be worse than Depression

by Michael Smith

The global economy may be deteriorating even faster than it did during the Great Depression, Paul Volcker, a top adviser to President Barack Obama, said recently.

Mr. Volcker noted that industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker told a luncheon of economists and investors at Columbia University.

But still the likes of the head of the Federal Reserve is trying to con people into believing that the turnround will be with us before the turn of the year. Those with a proper link to reality are all aware that we are in a Depression and that it is NOT going to be over in a few months. We have seen nothing yet.

Given the extent of the damage, financial regulations must be improved and enhanced to prevent future debacles, although policy-makers must be cautious not disrupt things further while the turmoil is ongoing.

Had the old rules of banking been followed, that is to say that a bank would not; nay could not, was not allowed to, lend more that 80% of its deposit base. But what did they do? Yes, the exact opposite and anyone who has ever seen what happens in a financial trading room with dollars being sent to there spot overnight on 10% interest the night or pounds to some other places at 7% interest for the night will understand how quickly things could go wrong. The money that is transferred is only done so virtually and often it does not physically exist with the bank that is sending it either.

Volcker, a former chairman of the Federal Reserve famed for breaking the back of inflation in the early 1980s, mocked the argument that "financial innovation," a code word for risky securities, brought any great benefits to society. For most people, he said, the advent of the ATM machine was more crucial than any asset-backed bond.

"There is little correlation between sophistication of a banking system and productivity growth," he said.

He stressed the importance of preventing financial institutions large enough to pose a threat to the entire system from engaging in risky behavior such as running hedge funds or trading for its own accounts.

I would like to interject here that, maybe, we should curb the activities of such banks by cutting them down to size and making them, once again, more or less local banks, dealing with more or less local activities. Time for a change in economics and time for a new way which is not new at all.

The current crisis had its beginning in global imbalances like a lack of savings in the United States, but policy-makers around the world were too reticent to take action until it was too late, Volcker said.

And despite the fact that there was a lack of savings in the USA, and Britain, I would hasten to add, the banks still dealt as if they had all the world having savings in their institutions.

Now that the crisis had erupted, it was important to take decisive actions, including a more effective regulatory structure and some movement toward uniform accounting systems, Volcker said.

He said all financial institutions that are deemed too large to fail should be subject to increased scrutiny, echoing the findings of the Group of 30, a panel of policy-makers and influential economists, which he leads.

One could use a slogan from a movie that was “Houston, we have a problem” for we indeed have a problem. While Houston will not be able to change anything there the fact is that we have a problem and this problem is not simply going to go away.

As I have indicated in a previous article, I believe that it is time that we looked at a new way of doing things; a way that is not that new at all. One of those is the economy itself, then the way we, the people, do things and then also the governments also.

© M Smith (Veshengro), 2009
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