Tuesday, May 22, 2012
IMF tells UK to consider quantitative easing (QE) and several other measures including interest rate cut to boost growth, it won’t work!
You couldn’t fail to notice that the Euro crisis is heading towards financial Armageddon.
We are looking at Greece, as the spotlight focuses there, but the ‘virus’ in the Eurozone has already run through the entire system.
Spain is looking decidedly shaky, France has problems, Germany is in political flux, and Italy is also in trouble.
I will be blunt, the IMF has suggested more quantitative easing (QE)for the UK, this is bullshit.
Have a read of what QE is, short version, it is a scam to dilute currency value.
The continual dilution of the currency makes FIAT currency worthless, it may be seen as a short term fix, but like heroin continual use will kill you.
In Greece, I saw a report on SKY News that old aged pensioners were foraging for food in bins.
We can grow our way out of debt by taking on more debt, by ‘printing’ new electronically created money which makes the value of the currency worse, everyone has noticed the buying of Gold and Silver on commodities markets.
There is an argument for a return to the Gold Standard to be made.
The International Monetary Fund (IMF) wants the UK to consider more quantitative easing (QE) such an idea should be resisted.
If anything we should be going in the other direction.
One thing they did highlight of value was to say that if growth failed to pick up, the government would have to consider delaying cuts.
Across Europe we need a Marshall plan; the Marshall plan was the work of Secretary of State George Marshall which saw the rebuilding of Europe after WW2.
From that wiki article:
“By the end of World War II much of Europe was devastated. Sustained aerial bombardment had badly damaged most major cities, and industrial facilities were especially hard-hit. The region's trade flows had been thoroughly disrupted; millions were in refugee camps living on aid from United Nations Relief and Rehabilitation Administration and other agencies. Food shortages were severe, especially in the harsh winter of 1946–1947”.
Who doesn’t think minus the war aspect, the above situation doesn’t apply today in Europe?
We need a reindustrialisation of Europe, Germany is a good model to look at but we need that scaled up in the 27 countries of the EU.
Greece should default totally; there is no question in my mind that is what the Greeks need to do, but that action will ripple across Europe causing problems for others.
At this point people may say to me, you said the solution to a problem isn’t the creation of another problem.
27 nation default!
Everyone must default at the same time in the Eurozone, however is unlikely that the UK would agree; London is a major financial centre, is also the centre of the fraudulent derivatives trade and place where US Banks move debt offshore from their balance sheets when the US regulators come round.
As well as the Eurozone default, we need a new banking system established, State Banks, broken down to City Banks to act as buffers in local areas.
New rules regarding leveraging of debt and higher liquidity set aside in banking operations.
You could continue writing other measures needed all day, the problem is complex and deep rooted.
The cure in the short term is also painful, the virus is in deep in the Eurozone, but eventually if not treated as a whole, EU countries will be forced to break away from the Euro.
Quite simply, the people will grasp that their political leaders in place now will have to go, Greece is a good example, the attempts to form a government are difficult.
As an aside, the return of far right or far left parties will grow.
IMF managing director Christine Lagarde said:
"Unfortunately the economic recovery in the UK has not yet taken hold and uncertainties abound."
Britain relies too heavily on the financial market trade in London which is dysfunctional, that causes uncertainties.
Too many bubbles have been created by the financial markets, liquidity is available to business as others would hope for and the entire system is rotten.
Again, we need a new State Banking system.
We also need failing banks to go to the wall, no one is too big to fail we just need to ensure that savers have their money protected by guarantee.
To return to the IMF, their technical expert on the UK economy, Ajai Chopra said:
"I think the sort of measures we have in mind are, one could consider cutting the Value Added Tax. One could consider the payroll contributions because these can be credibly temporary. The emphasis here is on temporary and those are the sorts of measures we have in mind."
Window dressing, something that treats symptoms not the disease!
In its official statement on the UK economy, the IMF mission states:
"Fiscal easing measures...should focus on temporary tax cuts and greater infrastructure spending, as these may be more credibly temporary than increases in current spending."
Short term spending, yes we need to spend on infrastructure but that infrastructure shouldn’t just be built for the sake of it.
The Statement added:
"The stresses in the euro area affect the UK through many channels. Growth is too slow and unemployment - including youth unemployment - is too high. Policies to bolster demand before low growth becomes entrenched are needed."
That returns me to another theme I have blogged on the internal immigration policy within Europe, such an idea is needed.
Just as EU students need the right qualifications to get into higher education in the UK, certain qualifications should also be in place to work to in the EU.
In a nutshell Support Packages!
In the EU there is free movement of Labour, but that creates a problem, the EU needs to radically reform. I cannot believe for a second that in the original European dream we would have a situation where people would be eating out of bins, soup kitchens and living in substandard conditions or even sleeping rough.
That isn’t the dream as envisaged.
Austerity isn’t helping, QE will not help in the long run and the solutions are complex and deep rooted, we need a new European dream.
And that will be a painful birth.
The Campaign for Human Rights at Glasgow University