I wish George Osborne believed in Britain. Not just in a fly-pass enjoying, tub-thumping sort of way. But in its capacity to deliver. And I am not sure he does.
I know he has to improve the UK's balance of trade and net overseas foreign direct investment if he is to clear the deficit but does he have to do that by quiet so blatantly begging China to invest here?
And does he have to do it by so obviously making the UK a tax haven to achieve that goal, because what else explains the 18% corporate tax rate?
And does he really have to hand over control of key UK assets, and so in the long-run policy as well, to achieve that goal?
Aren't all these just the actions of what I once called cowardly politicians who when they see a problem run away from it in the hope that others can fix it for them, rather than thinking they have something to offer themselves?
Because let's be honest, do we really want to be another satellite state of China? Especially given the way ot is headed economically? I'm really not sure that is good policy.
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He doesn’t seem interested in anything other than getting into number ten. He must be one of the most cynical and callous of politicians in recent times. With Osborne it’s not so much lack of courage, but lack of principles. Corbyn has the principles, let’s hope he (and the rest of the parliamentary Labour party) have the courage too.
On the subject of defecits, which seem reasonable for a layman to view as debt or a form of debt, there is an article posted on Counterpunch today about another of China’s debtor’s by a chap named William Edstrom (Waiting for Collapse: USA Debt Bombs bursting).
This lists the current debt levels of a range of US Cities, Counties, States, Municipalities, hospitals, colleges, banks, corporations etc. and seems to suggest that when the current asset bubble bursts there will be a systematic collapse of those public and private entities under the current burden of debt to the extent that the US itself as it is currently constituted will also go under. Unfortunately, despite the avalanche of specific data on individual entity/organisation debt levels and current employees, there are no reference sources cited to substantiate the articles published figures.
Consequently there is no way a laymen can adequately evaluate the liklihood of such events or the articles claimed outcomes (Federal Government unable to cope; States seceeding; mass unemployment; unravelling of health and education provision; internal collapse etc.). On the public/Government side of the equation it seems reasonable to observe that the US twin deficit is sustained by the dollars world reserve currency status rendering any such outcomes unlikely; whilst on the private sector side the US bankruptcy laws ensure that such debts are written off and companies can start again. It would certainly be useful, however, to have these two seemingly reasonable observations tested and pulled apart by someone with more specific expertise in this field.
Because with the UK being very close to the US across a range of cultural, political, economic and military spheres it also seems reasonable to surmise that any kind of debt crisis and collapse as laid out by Edstrom for the US could well unravel in similar ways within the UK. In which case China might well be back for a lot more than a £2 billion guaranteed sweetener from whoever is Chancellor to deliver on this deal.
The debt data is publicly available for government in the USA and for publicly traded corporations. At yahoo finance, for example, you can enter the stock symbols for the corporations cited and then click on key statistics and profile to get basic info on number of employees, debt and so forth. From there, you want to verify with the SEC and with the corporation websites as well. For municipalities and states, their books are supposed to be open books by law, google and you shall find. You can also check out credit ratings, like Moody’s, S & P, Fitch, etc. to get a short answer basic overview to the finances of cities, counties and government authorities mentioned. It would take hundreds of hours to ‘find the debt’ and to verify debts, but it is possible for anyone willing to invest the time to find the debts of different municipalities, states, government authorities, corporations and for the US Federal government. An earlier article in counterpunch, “Wall street and the military are draining Americans high and dry” for example details government debts in greater detail. Just click on the $46 trillion figure at the top of the ‘Debt Bombs Bursting USA’ article in counterpunch to access that article or copy and paste this link into a web browser: http://www.counterpunch.org/2015/09/02/wall-street-and-the-military-are-draining-americans-high-and-dry/
Thank you for reading my article and for citing it here. Will Edstrom
Thank you
Looking at the earlier post there are parts which I could have chosen a better form of words. For example the part about references.
What particularly interests me about this Counterpunch piece is the suggested or implied outcomes of the debt levels of these public and private organisations and entities.
On the public/Government side I am trying to test the efficacy of my current understanding that no matter how big or bad the overall debt, and it’s sub parts at City/County/State levels, the dollars status as world reserve currency will prevent any systemic collapse at any level as the debt is simply recycled to the rest of the world as it seems to have been since the dollar achieved that status?
Ditto for the private sector. In terms of the companies and corporations involved how would the US bankruptcy laws, which I understand (accurately or otherwise) write off or write down liabilities/debt to allow restarts, affect the liklihood of the suggestion in the article of, say, a collapse in private health provision or the sudden non availability of vital drugs?
What is nagging me is that arising from the 2007/2008 financial collapse Banks seem to have been classed as a special case on a too big to fail basis. Is the US in the same category? Or is my understanding flawed and/or incomplete?
This is all about Hinkley Point C, the new nuclear power station, which costs £25bn to build. Rather than the government building it, it will guarantee to buy nuclear electricity for the next 35 years from the contractors (French nuclear power industry/Chinese subcontractors) at TWICE the market price (which will go up with inflation). Decommissioning costs are not included, the state will have to pay for those.
If you think that is not absolutely bonkers, just imagine you had to enter into a contract to pay from 2023 £2.20 per litre of petrol, to be increased with inflation, for the next 35 years.
It probably is the most expensive PFI contract in history, which the Chancellor is going to settle us with next month, when the Chinese president comes on a state visit to the UK. The cost is £2.2 billion (+inflation) per year over 35 years, when the cost of other alternative renewable fuels are falling.
That cost is £110 for EVERY household per year for the next 35 years, which will be reflected in their electricity bills.
Ultimately, even though a large proportion of the investment cost will come in as capital investment, and therefore help the UK’s balance of payment deficit, the money will flow largely abroad again. After 2023 £2.2 annual payments will be made to foreign companies, once the power station will start to produce electricity.
As 3 times more money needs to be paid back, than has been invested, the contract will over the 35 years deteriorate the balance of payment position of the UK. But Osborne by then will probably be an old man.
Now, the nuclear power plant could be “free” if we had PQE and a National Investment Bank to finance it, maybe Corbyn should remind Osborne of this.
Nice example – if Labour doesn’t start belting him repeatedly over this then they will not doing their job as an opposition.
On the available evidence so far the majority of the PLP are seriously confused on the subject of opposition. Their definition and practice in this area is so at odds with reality that they, along with ex members of their ilk, are reduced to dismissing dangerously large sections of the population as living in a ‘post truth’ mindset in rags like the New Statesman.
Too many of them seem to have conveniently forgotten that the Labour Party is a sub organisation of the Labour Movement – for those of this persuasion it is the other way around – and that opposition means opposition to the status quo rather than seeking to be part of it. If the majority of the current PLP had been around in the 19th century they would have had no problem in accepting the notion that it was not possible for employers to cut the working day from 12 hours to 11 hours because all the profit was made in the last hour.
Waiting for effective opposition from the majority of the present incumbents will be like waiting for Godot.
Dave Hansell; that’s because they’re Tories.
In some regards it’s wrong to consider Osborne as having any nationality at all other than by geographic chance. He’s from the country of the rich, his is the roving state of the wealthy. He owes allegiance to none save that, and it’s foolish to expect him to. It’s a lot more foolish to put him in charge of anything, therefore, but, you know, voters…
I’m quite a fan of more free trade of goods and services with Chinese people. Who could forget the smuggling story from a few years ago where a shipment of garlic ( approx 9% tariff into the EU as it can be grown here ) was disguised as a shipment of ginger ( 0% tariff as it needs really hot soils that even Greece doesn’t have ). Genuinely unsubsidised free trade puts a stop to such shenanigans, then we can spend more of our resources doing the fun types of shenanigans.
Encouraging, foreign investment is a really stupid way of reducing your current account deficit, which is one reason that leaders often prefer to focus on increasing exports or reducing imports instead.
With Foreign Direct Investment,the one-off benefit (inflow) will eventually be outweighed by a continuous outflow of repatriated profits.
Foreign loans may or may not be a different matter. If the loan is funding a productive, domestically-owned investment with an output that easily outweighs the interest on the loan (net outflow) then, well & good. If it is being used to do nothing more than bid-up the price of existing assets in some stupid bubble market then there isn’t much to be said for it.
Either way, there is and never has been any reason to assume that all foreign investment is good and productive. That little faith-based, neo-liberal nostrum is something that always needs to be firmly put in its place.
9
You’re talking about a government which will give £2 billion in financing and decades of income guarantees to a Chinese government project for no identifiable return. Yet that same government berates UK citizens for too much government dependency, for laziness and for low morals, insisting they need to conduct their lives in self-reliance. Socialism for the big and powerful and rugged individualism for everyone else. The unlimited incoherence of neoliberal thought is as offensive as its outcomes.