MR. MARKET

by: MisS VictoriA DaviD

The 'market' (bond, commodity, stock, FX, etc.) in general, is like a supernatural entity and it can bring down the Governments. For example, the USSR (Union of Soviet Socialist Republics) came crashing down and adapted capitalism from the ruins of the old system. Recently, the Argentine middle classes lost there 'shirt' as the value of the peso crashed, due to Government debt.

At the moment, why there is a Greece crisis it is because they cannot afford to pay the interest of the bond debts. The money every three months become due. The recent turmoil has been caused because successive Governments had borrowed too much and can't afford the interest on the loans. These loans are called bond that are traded in the market. As Greece didn't have the money to pay the interest on their bonds they had to ask the EEC (European Economic Community) and the IMF (International Monetary Fund) to rescue them. That is the historic debts!

Any new borrowing by Greece is now price at 15% per annum. This is much more than the country earns, so, there is no way to pay without going bankrupt. This is the cost of the crisis that the market will bring to the door of any 'Govt.' or 'person' who ignores it.

Don't be surprised if the Euro or Sterling drops in value because Greece problems are endemic in many European countries.

WHERE ALL IN IT TOGETHER (EXCEPT THE RICH)

by: MisS VictoriA DaviD

We constantly hear the debate between those who see the need for austerity (generally on the right) and those who advocate growth (usually on the left notable the Labour party). Yet this debate is a diversion for the simple reason that we are going to get austerity whatever people want. There is no money from the bond markets as they have had enough of government debt. The fact is, you can't borrow your way out of a debt crisis! 

So far, the UK has borrowed £500bn to spend on growth policies. These Keynesian policies designed to get the economy moving have failed (so far) and will continue to do so. If the government is going to spend so much, it must direct money towards industries and technologies that the rest of the world will need. However, the the most effective way to get growth going is to cut public expenditure enough to allow tax cuts, there by giving resources to individuals and companies as they are much more efficient and creative at spending than governments.

Western governments and the big banks are in a crisis and cannot find easy answers to our current economic problems. At least ones that will get them re-elected! Witness Greece? It would be better if politicians (like Ed Balls) would tell how it is and stop peddling dangerous untruths to a gullible and frightened electorate.