From today’s Lib Dem News

By Howard of Lib Dem News

* Mary Reid is a contributing editor on Lib Dem Voice. She was a councillor in Kingston upon Thames where she is still very active with the local party.

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This entry was posted in Humour.


  • Benjamin: [like]

    Or Greece with his feet up whilst Merkel is hard at work in the factory.

  • Well done Howard; good to see a cartoonist here!

    Reminds me a bit of Spitting Image Maggie having dinner with her Cabinet; ‘What about the vegetables, madam?’ asked the waiter. ‘Oh, they’ll have the same’ she replies.

  • @Benjamin @Tabman – To suggest that all Greek people deserve their current misfortune (or indeed, that all Germans deserve their current status) is crass in the extreme , not to mention illiberal.

  • Keith Browning 8th Jun '12 - 2:26pm

    No-one can blame the people of Greece – they have been carrying on the same way for millennia.

    Their ruling classes arranged for someone to offer them ‘free’ money. The people said thank you very much and now the ‘giver’ wants his money back – shouting – ‘I didn’t mean it I was only joking’. The only people to blame are those with a pay grade of ‘banker’, ‘government minister’ and above.

  • Keith Browning 8th Jun '12 - 2:59pm

    This cartoon could easily apply in every country in the world – and ours is no different – replace Merkle with an Oxfordshire toff and Greece with Sunderland or Sheerness. That is the analogy we should be using.

  • Keith Browning – or replace the Oxfordshire Toff with the Glasgow Aparatchik

  • Benjamin – hear hear

  • Tax evaision in Greece is about 7 times worse than it is in the UK. It’s not just the equivalent of Oxfordshire toffs who aren’t paying taxes. It happens at all levels of society. I have sympathy with the situation the Greeks find themselves in now, but for years people at all levels of society thought they could get something for nothing.

  • “We all had a jolly good time – Greeks more so, but Brits as well – getting all the extra spending on public services we wanted and keeping unemployment low by creating all those public-sector jobs, without ever asking the (in hindsight) obvious question of where the money was coming from if not from higher taxes (which we refused to pay.)”

    Not all, Benjamin or even most. The bulk of the productivity gains of the decades prior to the financial crash, have been largely captured by the wealthiest in society. They have not been manifested in corresponding increases in real wages but in increases in personal debt for the great majority.

    We have lived through a period where the manufactured goods we buy have been produced by millions of Chinese at lower relative costs than ever before; and much of the hard labour services we rely on undertaken by immigrants on minimum wage. Yet we see standards of living falling.

    Countries like the UK, Spain and Ireland were brought down not by excessive public deficits but by out of control property lending. This cheap money was and would have been available to any growing developed economy, whether in the Euro or not. Despite these countries sharing the attributes of highly educated workforces, attracting substantial inward investment and benefiting from open access to European markets – the reckless activities of an unregulated financial sector overwhelmed the productive capacity of the economy.

    The financial crash in the UK was not precipitated by unsustainable losses on consumer debt in the UK, but by massive write-downs on speculative lending in commercial property investments, financial derivatives such as US collateralised debt obligations and loans to foreign banks and overseas property investors.

    If we are not to repeat the same mistakes, we need to relearn the principles established by Adam Smith – that the Wealth of Nations lies not in rent-seeking mercantilism and its stock of gold and silver bullion, but in the productive capacity and consumption of its people.

    In the modern age, it is not the accumulation of financial assets by the few or the monetary illusion of housing wealth that builds the wealth and well-being of a nation, but the extent to which its population is both engaged in productive employment and can enjoy the fruits of its own labour, without the burden of excessive debt service over the course of a working life.

    Free trade, division of labour and comparative advantage remain as important as ever. The challenge for us now is to chart a course that maintains full employment and financial stability in an ever more competitive and globalised world. . We cannot do that without ensuring that our progress is not derailed every ten years or so by a financial services sector that remains inherently unstable or by a housing market bubble that destroys relative competetiveness.

  • Richard Dean 8th Jun '12 - 4:53pm

    When a borrower defaults, part of the fault can be the lender’s.

    It seems that Greek politicians lied and lied and lied, but also the lenders do not seem t have done much in the way of due diligence checks. The better organized nations needed markets for their excess consumption, and these were created by banks lending money to Greece and others. And much of these transactons probably went through Satan’s Workshop (the City of London).

    So it us who is partly to blame, Germany and France and the UK too and others.

  • Richard Dean 8th Jun '12 - 5:02pm

    I strongly disagree with the idea of following Adam Smith. The world is different today. Workers have much more power. Many people own homes and have some say in the use of the means of production. The financial services sector is here to stay. As is the web, inernet banking. Everyone can buy and sell shares.

    Our problem is that we are in the process of learning how to manage a credit-based capitalism. We’re making mistakes as we go, which is natural. What we need is new ideas about how to structure and control this new behaviour.

  • “So long as all the increased wealth which modern progress brings goes but to build up great fortunes, to increase luxury and make sharper the contrast between the House of Have and the House of Want, progress is not real and cannot be permanent.

    ~Henry George, Progress and Poverty, 1879”

  • Richard Dean 8th Jun '12 - 5:17pm

    @Joe. What happens now, as you well know, is that “fortunes” are never left to stagnate. They are invested in something, ultimately in government or in firms. And government or firms attempt to use that money in supportive or productive ways. Even when money is put in the bank, that money gets invested by the bank, for otherwise they would be unable to pay interest on accounts.

    There is certainly a problem of the distribution of wealth – there always has been and always will be. I suppose this equates to an unequal distribution of decision-making power. Perhaps this later distribution may be one of the keys to the new ideas we need to seek.

  • Simon Bamonte 8th Jun '12 - 5:22pm

    The situation in Greece is dire, with tens of thousands going hungry, medical treatments for the most ill being completely dropped and people abandoning their babies. To see Lib Dems saying, basically, that the Greek people somehow “deserve” to suffer for the mistakes and failings of the political and banking classes, without a hint of compassion, is insensitive and, frankly, rather disgusting.

    But, then again, the same thing (on a lesser scale) is happening here. Ordinary people being made to pay for the mistakes of the elite with their lives and jobs while the rich continue to have the ability to move their money about, engage in fiddling their taxes (which the recent budget changes won’t do much to fix) and using all kinds of tricks to keep their often ill-gotten gains.

    Compassion doesn’t seem to be high on our party’s agenda these days. There’s little actual discussion and analysis of the effects of coalition policy on actual people here. It all seems like a theoretical discussion to most. People would rather discuss Lords Reform or boundary changes or other Westminster-bubble wonk. Sure, Lord’s Reform is important, but not when you’re struggling to find work and feed your family. And I’m almost getting the feeling many Lib Dems feel more comfortable with those who are ok, rather than those who are truly struggling. How many of you are wondering, or have ever wondered, where your next meal is coming from?

  • Richard Dean 8th Jun '12 - 5:31pm

    There is certainly a problem of unequal distribution of wealth in Greece. The rich would certainly be able to resolve the problems of the poor if they decided to do so. The government needs to get tough on tax evasion, and needs to be supported by the EU in this. The money lent to Greece went somewhere, and someone needs to be in jail.

  • Simon Bamonte 8th Jun '12 - 5:42pm

    @Richard Dean:

    Indeed. I think there’s a whole host of corrupt and greedy “financial executives” around the globe, who have a big hand in this crisis and have not suffered at all, who should be in jail. Like in the UK, in Greece it is mainly those who are already well-off who have been able to avoid paying taxes.

    Not to mention the part Goldman Sachs played in cooking the books and happily lending even more money to Greece when it knew the truth of the situation there.

  • Larry Elliott and Dan Atkinson put forward some common-sense principles in their 2008 book [i]The Gods That Failed: How Blind Faith in Markets Has Cost Us Our Future[/i]

    “First and foremost among its principles is the subordination of finance. Before the current madness, from Washington in the 1930s to London in the 1940s to Paris and Bonn in the 1950s and 1960s, financial-sector activities were kept on a tight rein, their destructive potential fully realised and their proper, auxilary role in relation to the real economy kept firmly in focus. It is time to remember that banks and other large corporations are creatures of law, and it is the public’s right and duty to supervise them. Furthermore, they, the financial New Olympians, have had their chance. The result of letting them off the leash has been a disaster.

    Next comes personal and social security, the principle that society should insure its members against misfortune, protect their savings and make proper provision for their old age. This is what we tried to do in the past, and, in Britain, are trying again to do, with very mixed results, using a range of entitlements of frequently baffling complexity. The loss of a person’s job ought to be a problem, not a cosmic disaster. Savings in approved schemes ought to be guaranteed. Why are the sort of high-quality pensions on offer in the postwar period now “unaffordable”? It would rightly be thought extraordinary were policymakers to agonise today over the difficulties of ensuring the average family could buy an Austin Cambridge car and a black-and-white television – our society is greatly wealthier than it was 40 years ago, and very much improved cars and consumer goods are relatively much less expensive. Why retirement schemes should be any different is not clear.

    A third principle is accountability, or “democracy”, to put it slightly differently. The leaching away of powers from national parliaments to the New Olympians’ mandarin allies in bodies such as the IMF, the World Trade Organisation, independent central banks and the European Commission would be obnoxious even without the economic and financial turmoil that it has created. So great is the democratic deficit that people increasingly either do not bother to vote or vote for non-mainstream parties. The answer from left-of-centre parties, terrified of crossing the Olympian orthodoxy, has been more of the same. Thus the UK’s Labour party is losing votes to the British National Party and the Irish Labour party is losing votes to Sinn Fein. The response of both parties has been to cede more powers to Brussels and to insist on the need for another world trade agreement that will transfer more authority to the WTO. There have been suggestions that Gordon Brown is planning a bill reasserting the primacy of British law over EU law. That would be a most welcome blow against the Olympian system, but we fear it is unlikely to be proposed by Brown, a fundamentally conformist person with an apparent yearning for respectability.

    A fourth principle is the undesirability of a semi-detached super-rich class. Not only does such a class pull money values completely out of shape – in the housing market, for example – but it tends to be the fons et origo of the horrendous errors from which the world economy is now reeling. It was super-rich investment bankers and derivatives traders who dreamed up the collateralised debt obligations and exotic derivative products that have caused such chaos in the past year or so. It was the super-rich who have demanded cheap money for most of the past decade and cheered on the inflating of the credit bubble.

    This leads to our fifth principle, the protection and strengthening of an independent middle class. As we described yesterday, the super-rich and their political allies are destroying the middle class. Lawyers and doctors are to be faced with a stark choice between corporate employment and unemployment, while de-skilling and outsourcing are eating into occupations such as accountancy and journalism. Much of this is attributed to “market forces”, when in fact it stems from legislative changes designed to tear down time-honoured protection for professionals. But even were the market driving all these changes, we believe the value of a professional middle class, independent of both the state and of corporate power, greatly outweighs any efficiency losses, and that the market ought to be curbed.

    Which leads neatly to our sixth principle: social stability and tranquillity are more important than market efficiency or shareholder value. In other words, to the specific protections from the market for the professions ought to be added a general protection for everybody. If market forces dictate the concreting over of the south of England, or the obliteration of British manufacturing, or the closure of the rural post office network, then they should be resisted. This is, of course, an impeccably conservative as well as a centre-left position. This is TE Utley, writing in the Daily Telegraph in 1977: “I simply do not believe that if society decides that some evil produced by the spontaneous forces of competition (ie, mass unemployment in an area like Ulster, afflicted by civil disturbance, or the destruction of the farming industry) calls stridently for governmental action to temper it, that action is bound to prove disastrous, however prudently and deliberately it is conceived and carried out.”

    Our seventh and final principle may surprise some readers: liberty of the person. Hang on, you may say. You propose all sorts of controls on financial and business activity. It is a bit late in the day for you to start banging on about individual freedom. Not at all. The New Olympians have been keen to assert that their right to move colossal sums around the world, to speculate and to generate credit, is indivisible from the right of humbler folk to live their lives as they choose, but we argue otherwise. The Olympians are in receipt of huge legal and other support from the state; ordinary people, including the self-employed and those running small businesses, are not. And yet, as financial interests have been progressively freed over recent decades, the liberty of the person has been increasingly restricted. Spot-tested at work for drugs, monitored by closed-circuit television, subject to rules prohibiting “inappropriate” language, soon perhaps to be burdened with a national identity card, the individual is having a thin time of it. It is time to restore privacy and autonomy to the private citizen.

    Much is made of the need to make trade-offs between liberty and security in the age of terrorism. We are told that we must face restrictions on our liberty to prevent terrorist attacks, and few object to sensible restrictions in this respect. But the New Olympians must concede the same point. They have been merrily transporting the financial equivalent of fissile material around the world for several years now, and the result is widespread contamination of the financial system. “

  • Richard Dean 8th Jun '12 - 6:06pm

    “The financial crash in the UK was … precipitated by … massive write-downs on speculative lending in commercial property investments, financial derivatives such as US collateralised debt obligations and loans to foreign banks and overseas property investors.”

    Larry Elliott and Dan Atkinson’s principles seem interestng but not sufficient in themselves. Like some puddings. Thinking aloud, outside Adam Smith’s and others’ boxes …

    All transactions in the financial services sector seem to exchanges involving present money and future money flows. If I pay cash for a share, I am exchanging my present money (cash) for the promise of future income (future money flows) from dividends and final resale value. If the future income collapses, my losses are .limited to that income, and I can still find work to live. But if I borrow to buy shares, I am betting that the future income (inflows) from the shares will be enough to repay the future debt servicing amounts (outflows). If the future income fails, my problem is much worse – because I still have the outflows to pay. If I can’t pay these, I default and transfer the problem to the entity I borrowed from. That entity then faces the same issues, and may pass on the problem to another entity, …. Ad infinitum. Hence contagion.

    This thinking suggests that contagion is the results of chains of lender/borrower arrangements in which each lender is borrowing in order to be able to lend. Perhaps this thought can be a starting point for some new ideas about how to control financial services? It is probably ok to let individual lenders collapse (insurance just adds a link to a chain), but not to allow long chains to collapse.

  • Richard Dean 8th Jun '12 - 6:11pm

    So my conclusion would be to develop procedures and regulations that looked at exposure and risk in terms of cahins rather than in terms of individual transactions, and limited the existence of long chains. Chains need to be short, and somewhere along a chain, there needs to be some instutution that can handle a default without passing the problem on. Of course it’s complex because any given bank/institution will be part of many chains,

  • Richard Dean 8th Jun '12 - 6:23pm

    Some kind of global financial services regulator? Paid for by a financial transactions tax? With every financial transaction having to be authorized by the regulator before being allowd to be completed? The regulator would be required to model all large future money flows in real time , assess riskc posed by chains and networks of flows, and only authorize transactions that did not pose major risk of contagion. Feasible wiuth today’s supercomputers, if the academics can develop an effective risk assessment model. But then, who would regulate the regulator?

  • Simon Bamonte 8th Jun '12 - 6:32pm

    Here’s a brilliant article on how Goldman Sachs royally screwed over the Greek people:

  • “Brits as well – getting all the extra spending on public services we wanted and keeping unemployment low by creating all those public-sector jobs, without ever asking the (in hindsight) obvious question of where the money was coming from if not from higher taxes (which we refused to pay.)”

    Perhaps, just as important, is to ask Where did all the money go?

    According to Eliot and Atkinson in 2008:

    “By no stretch of the imagination could the public sector be considered to be starved of cash. In the eight years between 1999-2000 and 2007-2008, public spending in Britain rose by 29% when adjusted for inflation.

    Even so, the local police station that was once open 24 hours a day, seven days a week, is now open only between 8am and 4pm and closed all day Monday. The local sub-post office is closing for good, the library is short of books, and the weekly refuse collection is fortnightly.

    Voters supported the increase in spending: they had been unhappy at the shabby state of the public realm in 1997 and wanted to see extra investment. They now want to know what has happened to all the money.

    The government’s answer is twofold. First, it says the money has led to an improvement in services, which is true but only up to a point. Given the colossal increase in spending – particularly on health and education – it would have been miraculous had there been no benefits; the question is whether the improvement matched the scale of the investment. Sad to say, it does not. In the NHS, for example, productivity has been falling; in education, there is no evidence that extra money has meant higher achievement. The government argues that, after the hard rations of the 18 years of Conservative rule, it will take time for the extra money to show up in higher productivity.

    While stretching the boundaries of plausibility, this explanation is a lot more convincing than the second reason for the economies made by ministers, namely that they have a duty to make sure that precious resources are spent as efficiently as possible. If that means temporary opening hours at police stations that might have only two callers a day, or the closure of “uneconomic” post offices, then so be it.

    This is undermined by the glaring examples of New Labour’s non-efficiency once big corporate and financial interests become involved. These include the £2bn bail-out for the failed Underground maintenance contractor Metronet; the doubling of the cost of the new IT system for the NHS from £6bn to £12bn; and the systematic closure of hospital beds to pay the fees on Private Finance Initiative contracts.

    Clearly, there have been beneficiaries of the surge in public spending over the past eight years. It is, however, not immediately apparent that the real gainers have been either the public or those at the sharp end – the nurses, the refuse collectors, the librarians, or the police.

    Labour used to be accused of allowing producer interests to “capture” the public sector. It is still open to that charge. But now the producer interests in question have bigger salaries, drive more expensive cars, and appear to have been singularly unsuccessful in delivering for the public.

  • Paul Walter Paul Walter 8th Jun '12 - 7:18pm

    “Like” (the cartoon, that is)

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