January 4, 2012

Marie Antoinette's notion wasn't all that half-baked

Posted in Irish Independent · 91 comments ·
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Happy New Year and I sincerely hope it is a good one — for all of us. Around this time it is customary for economists to write about what the new year might hold, as if a collective new year’s resolution can have an impact on the economic or business cycle. The economy doesn’t work like that.

The annual forecast should always be taken with a salt cellar because why should we think that the Roman calendar has anything to do with the economic cycle? The economic calendar and the annual calendar are two totally different things.

In fact, there are two distinct times: there is calendar time and there is economic time. They are not the same. The economic time, better known as the economic cycle, can take years (as we know here too well), while the official annual year takes a measurable and pre-ordained 12 calendar months. Consider this recession and the ludicrousness of linking economic time to calendar time. The recession started when people didn’t expect it and it has lasted longer than most people feared. It was not dictated or influenced by, in any way, the calendar as we know it.

As a result, why should we think that because the 31st of December leads to the 1st of January, this transition from one 24-hour period to another has any impact on the economic cycle? Sure, companies make decisions that are based on a calendar year, but the economy only responds slowly and it has never, ever, been the case that a 12-month period has ever accurately captured the ebb and flow of any economy. In economic time, no one fires a gun at midnight on New Year’s Eve.

This is why annual budgets and targets are so risky for governments because they are trying to relate one thing, the economic cycle, to another thing — the Roman calendar.

Therefore, at this time of the year the only thing the economist can do is try to alert the reader to one or two big trends which are already in the ether and might affect the way the economic experience impacts on different people.

Using the word ‘experience’ when discussing the economy in a downturn might raise a few eyebrows but curb your indignation for a second. By experience, I mean the way the ‘economy’ affects people individually. There is no unique economy, nor is there a unique economic experience that we all share. The way the economy plays out and how it affects you is based on thousands of variables, which no one can pre-programme.

This brings me to one of the huge or mega-trends which will affect us all this year. This mega-trend is that things are getting more expensive for poor people, while things are getting cheaper for richer people. Or, more accurately, the things that poor people spend relatively more of their income on are getting expensive, while things that rich people spend relatively more of their income on are getting cheaper. There is deflation for the rich and inflation for the poor and this is an extremely worrying development.

The reason for this is that the world is split in two. There is deflation and recession in the rich world, but there is still a boom going on in the emerging nations, like India, Brazil and, of course, China. Clearly the emerging markets are now suffering the fallout from what is happening in the US, Europe and Japan, but when you have huge demand coming from countries where there previously was very little, the global price of certain items goes up.

The main items affected by the extraordinary surge in emerging markets are food and energy. One thing we do know is that the first thing to change when people get rich is their diet. In emerging markets the demand for meat and milk has gone through the roof, driving up global food prices in certain areas. These are staples for people in this part of the world. So poorer people in Ireland have seen food prices rise because of the demand from the Chinese middle classes for our diet.

One other major impact of surging demand and production in the emerging markets has been the rise in fuel prices. This obviously has had a greater impact on poorer people because poorer people spend more of their smaller incomes on fuel.

This mega-trend will continue even if there is a setback in growth in China (as I expect) because these long-range changes take time to manifest themselves and take years to fully be appreciated.

In contrast, think about very rich people in Ireland who are already wealthy and have preserved this wealth in the downturn. For them the deflation, in very expensive houses for example, is an opportunity. It means that they can buy these assets right now, if they want to, for a song.

They can also buy all sorts of upmarket, leisure gadgets much more cheaply relative to what they were years ago because Chinese competition is keeping the price of these things low and pushing them lower.

So the ‘leisured’ class — the already wealthy — are seeing a fall in the price of goods which they spend relatively a lot of their cash on, while the poor are seeing a rise in the price of the goods that they spend relatively more on.

And this price divergence is being driven by precisely the same dynamo: the two separate global economies.

If this price divergence happens and goes unchecked, things can get very volatile very quickly. For example, we know that higher food prices were one of the catalysts for the Arab Spring, which is reaching a horrible denouement in Syria.

But if you really want an example of how diverging prices for the rich and poor can affect history, spare a thought for Marie Antoinette. When she allegedly declared that the peasants should ‘eat cake’, she was only offering an observation on deflation for the rich and inflation for the poor. Towards the end of the monarchy, Paris as a great cosmopolitan city became a centre for all sorts of fancy bakeries servicing the very rich.

As a result of this intense competition, the prices of fancy cakes were falling in Paris, despite the fact that the price of bread for the poor was rising. This was because the upmarket bakeries were eating into their margins to remain competitive and to increase their market share amongst the very rich.

So it is entirely plausible that poor old Marie Antoinette was only relaying her own experience — not so much with absolute wealth but with relative price movements.

As mega-trends go, this divergence between deflation for the rich and inflation for the poor is extremely dangerous. After all, we all know what happened to Marie Antoinette.

Happy New Year.


  1. Time Machines and Words

    Economics – cycles
    Science – oscilations
    Law – Michaelmas
    Fiscal – Tax Year
    Astrology – Orbits
    Mathematics – patterns
    Church/
    Religion etc – calendar

    and more

    Depending on the context man has made words to express their relevant experience top describe a journey from A to B . All of them can be connected if one has the patience to find out how.

    What David is pointing to is a Black Hole on the horizon and at that point everything is swallowed up.

  2. tommyj

    I don’t mean to mess with your analogy, but Marie Antoinette was not referring to `cake’ as in Birthday Cake or pastries. The term `cake’ refers to the crap that was `caked’ on to the inside walls of a baker’s oven. Not much of a dessert.

    • stuff01456

      Nothing wrong with David’s reference:

      1) this was never actually said by Marie Antoinette, or at least there is no evidence of it – its a vague reference from Rousseau which was retrospectively attributed to Marie Antoinette
      2) it was brioche (not cake) and the point of the reference from Rousseau was that the rich were so out of touch with what poverty even was they either
      a) they that in a famine cake could simply be substituted for broiche (which was more expensive containing eggs and milk whereas a peasant break contained only flour, water etc)
      b) didn’t care about the fact that they couldn’t afford bread and the comment was therefore sarcastic etc

      Truth is nobody knows exactly what it meant but this is the way it is interpreted in France.

      • stuff01456

        sorry – typos
        “… so out of touch with what poverty even was, that they either
        a) thought that in a famine cake could simpl …”

  3. Full Moon

    Orbital News

    Jan 9th is full moon and the 7th day before the full moon was the day of the recent wind storms .

    Drive slowley .Go Slow.

  4. zohan

    Time to rebel. lets bring in our 5 point plan.

    1 Stop spending on everything from lotto ,cars ,clothes,non essential repairs,houses,meals out, indeed anything that the government gets tax from.
    2 Do not holiday in Ireland,
    3 Save as much as possible but not in an Irish institution
    4 Bring a lunch
    5 Travel up north for cheaper food in bulk.
    Do this for three months and force the government to balance its books and scrap that stupid Croke park agreement and silly quangos,and if they dont act continue for 3 more months.Otherwise we carry on with our heads up our asses and nothing will change.

  5. Adam Byrne

    subscribe.

  6. Paris75013

    I’ve just subscribed!

  7. Malcolm McClure

    David says:”things are getting more expensive for poor people, while things are getting cheaper for richer people. Or, more accurately, the things that poor people spend relatively more of their income on are getting expensive, while things that rich people spend relatively more of their income on are getting cheaper. There is deflation for the rich and inflation for the poor and this is an extremely worrying development.”

    This debate about the morality of capitalism was raised in the context of the tent people at St Paul’s on Newsnight tonight. The Canon (who was replaced because he supported people’s right to protest) spoke passionately and eloquently on the subject.
    It is clearly an issue that will shape politics everywhere in the coming year.

  8. Colin

    David,

    I hope you haven’t bought into this ‘Arab Spring’ nonsense. It is nothing of the sort. First of all, that Tunisian set himself on fire because it was a PoliceWOMAN who told him to clear off as he did not have a permit to sell any goods where he was located. He found it hard to take that a woman could be so authoritative, and hence ended his life.

    If you call more burkas worn, more church burnings, more anti-Israeli sabre rattling ‘Spring-like’, then God help us for the ‘Arab Summer’.

    • Juanjo R

      I wonder has Muammar Kadafi bought into it?

      …mmmm….

      …and those youngs fellows in Tahir Square in Egypt – what do they think of it all?

      • Colin

        You’ll find Gaddafi was set upon and butchered to death by thugs claiming to have peace, justice and liberty for all Libyans at the heart of their mission.

        Those young fellows in Tahir Square think this is a great opportunity for the Muslim Brotherhood to seize power in Egypt.

        Any other queries Juanjo R? I’ll gladly answer them.

        • Juanjo R

          Gaddafi the angel was butchered by thugs…indeed…

          If your answers are ones that sanctify a tyrant I don’t really care to hear them.

          And you can see into the minds of the fellows in Tahir square into their life history and their motivations all from your PC in the middle of nowhere?

          I don’t wish to query you…you obviously know it all.

          • Colin

            Putting words in my mouth won’t wash with me. SPlease show me where I said Gaddafi was an Angel.

            Here some background reading for you Juanjo R, as you seem unwilling or unable to look for the truth on this matter.

            “Egypt’s al-Nour Salafists say no to Coptic president,” by Manar Ammar for Bikya Masr, January 3:

            CAIRO: Egypt’s al-Nour ultra-conservative political party announced that a Coptic Christian cannot become president of Egypt and that Egyptian society “will not accept a Christian president.”
            “The puritan party’s spokesman wrote a statement published on the party’s website aiming to clear the controversy after Egypt’s al-Akhbar state-run newspaper published an interview with spokesman Mohamed Nour on December 31 in which he said that “the Egyptian society is not fit to accept a Coptic president.”

            “Egypt’s Islamists could soon challenge generals,” by Leila Fadel in the Washington Post, January 4:
            CAIRO – The dominant showing by the Muslim Brotherhood’s Freedom and Justice Party in Egypt’s first post-revolution elections puts the country on a collision course, analysts say, with emboldened Islamists and the entrenched military set to vie for power.
            The Brotherhood, which was the leading opposition force under now-deposed leader Hosni Mubarak, has emerged as the country’s most viable political power.”
            “They have made it clear that they want Sharia and abrogation of the treaty with Israel. They’re “relatively moderate.”

            Now Juanjo R, go do a little bit of research for yourself before you have a go at me.

          • Colin

            And finally…..

            “The Islamist Winter: New Report Suggests Extremist Views Winning in Libya,” by Catherine Herridge for Fox News, January 4

            The Arab Spring may quickly become an Islamist Winter in Libya, reads a new report circulated among federal law enforcement and written for policymakers on Capitol Hill.
            An advance copy of the report entitled “A View to Extremist Currents In Libya” and obtained by Fox News, states that extremist views are gaining ground in the north African country and suggests a key figure emerging in Libya formerly tied to al Qaeda has not changed his stripes.
            “Despite early indications that the Libyan revolution might be a largely secular undertaking … the very extremist currents that shaped the philosophies of Libya Salafists and jihadis like (Abd al-Hakim) Belhadj appear to be coalescing to define the future of Libya,” wrote Michael S. Smith II, a principal and counterterrorism adviser for Kronos LLC, the strategic advisory firm that prepared the report.
            The Obama administration’s National Director of Intelligence also thought the Muslim Brotherhood was “largely secular.”

            Belhadj is considered one of the most powerful militia commanders in Libya as head of the Tripoli Military Council. As Fox News reported earlier this year, Belhadj is reported to be a former emir of an al Qaeda affiliate known as the Libyan Islamic Fighting Group or LIFG. Founded in 1995 to set up an Islamic state or emirate inside Libya, it waged jihad against the regime of former Libyan leader Muammar Qadhafi.
            On Nov. 3, 2007, senior al Qaeda leaders announced that LIFG had officially joined Usama bin Laden’s network, according to the State Department which designated LIFG as a terrorist organization.
            Belhadj, who joined the group at its inception, had fought against the Soviets in Afghanistan in the late 1980s. He was arrested in Malaysia in February 2004, reportedly interrogated by the CIA, before he was sent home to Libya. He was released from prison in 2009 as part of a rehabilitation program.
            In its report, Smith writes that a 400-page document authored by members of the LIFG in 2009 and widely depicted as a repudiation of al Qaeda and Islamic terrorism in general was largely misinterpreted by both media and policymakers in the West, and that helped foster support for the revolution in 2011.
            “The resultant misapprehensions bolstered by insufficient analysis of the LIFG’s ‘revisions’ have likely influenced decisions made in Washington and Brussels since February 17, 2011,” reads the report.
            This summer, State Department spokeswoman Victoria Nuland was asked by Fox News about Belhadj, his connections to LIFG and whether he had a place within the Libyan transitional government.
            “They’re going to have to make their own decisions as all of these countries who have been in transition recently have had to make — whether past action, past affiliation meets the smell test within the principles that they’ve laid out,” Nuland replied.
            Smith emphasized that traditionally Libyan operatives have been central to the al Qaeda mission.
            “Libyans have been featured prominently in the history of core al Qaeda. Libyan LIFG member Abu Yahya al-Libi is regarded as core al Qaeda’s top Sharia official and many analysts anticipated he would be appointed bin Laden’s successor. His brother is Abd al-Wahad al-Qayid, a founding member of the LIFG who was one of the six LIFG leaders who authored the group’s corrective studies while imprisoned in Libya.”
            The Kronos report says that “Libya is of such strategic interest” to al Qaeda that for years it was its own entity separate from its north Africa affiliate — al Qaeda in the Islamic Maghreb.
            Libya was considered important to al Qaeda because of its geographic proximity to Egypt and its perceived ability to “affect the jihadist political situation in Egypt.”….

          • Juanjo R

            I honestly don´t care!

          • Colin

            If only you had told me you didn’t care at the start of this thread then I wouldn’t have wasted my time posting those posts. In future, if you wish to reply directly to something I said, could I ask you to state at the outset whether or not you really care about what you are typing, because then I can make a judgement about whether I should bother replying to your comment or not.

          • Juanjo R

            “If your answers are ones that sanctify a tyrant I don’t really care to hear them.”

            “And you can see into the minds of the fellows in Tahir square into their life history and their motivations all from your PC in the middle of nowhere?”

            Your starting position is untenable in the argument. Therefore I’m not interested.

            I have read enough on it already.

  9. Elpenor Dignam

    So do we expect a revolution David? Seems to me that during the boom time the rich were also doing alright and the less wealthy were still being shafted – now they’re just being shafted even more. Perhaps this has nothing to do with economic cycles at all and everything to do with consumer capitalism being one big scam perpetrated by the rich on ordinary people. In my opinion trickle-down economics can never work, for the very simple reason the rich like to hang on to their their money – if they weren’t greedy they wouldn’t be rich – isn’t that what your hero Milton Friedman used to say?

  10. redriversix

    Good morning all

    I am calling for A Financial strike for Families and business in difficulty.

    The Government has imposed austerity on the people,I say the people should now impose austerity on the Government and their Bank Bosses.

    Do a budget
    Pay your self first
    Prioritize family and essentials
    Slash all Bank/state debt repayments by at least 80%
    use the savings,if any to protect your family
    Do not pay any household charge or any other “tax” you deem you cannot afford.

    If its Austerity they promote,I suggest we should take their “advice” and give THEM austerity.

    Contact me anytime for any help or assistance redriversix8@gmail.com

    Financial strike now

    Best
    RR6

  11. Peoples Park

    Today a new cafe has opened inside the peoples park in Limerick and the aroma is inviting to tempt. Maybe I might meet Marie Antoinette .I hope the price of fancy cakes are falling today and that there will not be any competition to find a word in her ear some time soon .

    • Colin

      I wonder what Frank McCourt would make of it all John. He used to lick the Limerick Leader wrappings of discarded Fish and Chips sold from Naughton’s to survive on.

      If people are willing to pay over €3 for any class of a coffee, then we still have many people who are insulated from austerity.

      • Juanjo R

        obviously you have never had a fabulous gourmet coffee down at the 3rd floor cafe ( abbey street opposite arnotts exit in Dublin )! well worth the 3 euro-ish!

        • Colin

          Hands up, yeah, you got me, no, I’ve never been to ‘a fabulous gourmet coffee down at the 3rd floor cafe ( abbey street opposite arnotts exit in Dublin)’. You’ll have to forgive me if I admit I’ve no intention travelleing that far to see for myself if it’s worth it or not.

          We all don’t live in Dublin or hold Dublincentric opinions by the way.

          • Juanjo R

            Whats with the aggression?

            Sense of humour Colin – there maybe are circumstances where food or wine or something truly fine which cost more to bring to that place ) is prepared with artistry and is worth paying a little more for…

            This is my decision to make – which is part of living in a free country…

          • Juanjo R

            and oh i live in Brazil.

      • tony_murphy

        I noticed in a recent post Colin, that you may have marxist believes. this post is what i would expect from a socialist/communist/marxist. I don’t know if you are, and I don’t care to honest if you are.

        I hope you value freedom, liberty, the right to own private property etc

        If you want Maxism/Socialism/Communism, well, might I point you in the direction of China/Russia/North Korea and the same applies to those who think the EU is a good idea.

        • Colin

          Which posts have you been reading Tony, because for someone to accuse me of being a Marxist is laughable. I’ve been accused of being a tea-party supporter, a neo-con, a Christian fundamentalist, a right wing nut, a fascist, but this charge of being a Marxist…well…. it has come out of nowhere.

          I did post to Adam Byrne here, following his visit to Highgate Cemetery (I live nearby it but that shouldn’t make me a Marxist) that next time he’s over we could meet up in a local pub and discuss Marx and McWilliams. Now, there is a clear difference between discussing and supporting. For what it’s worth, in my opinion, Marx did have good intentions as a philosopher, but his ideas been seized upon by thugs and dictators and this has caused huge suffering and anguish in this world. But I don’t hold Marx accountable for this. I do hold Stalin, Pol Pot, Kim Yong Il, Ho Chi Minh, Mao Che Zhung and the rest of them accountable.

          So, in summary, I’m a capitalist, a McWilliamite and a free marketeer. I’m not a socialist, nor a communist nor a marxist. I hope this clears up any misunderstanding.

          p.s. I’ve no intention of travelling to Cuba, North Korea or anywhere like that. If they read my posts here, they wouldn’t let me in anyway.

  12. coldblow

    Here’s a couple more predictions for 2012.

    1. BBC’s (and Newsnight’s) Paul Mason in the Observer

    http://www.guardian.co.uk/theobserver/2012/jan/01/paul-mason-newsnight-china-novel-interview

    “I think we might look back on 2011 and 2012 as the years everything changed. And what has happened in 2011 is the nice bit. In 2012, we are going to get economic double dip. That’s the minimum. Combined with all the harsh realities of revolution, at the centre of which is who gets what.”

    2. Kunstler

    http://kunstler.com/blog/2012/01/2012-forecast-bang-and-whimper.html

    “[in Europe]Everybody will get poorer simultaneously – and if not, there will not just be regime change but civil war and revolution.”

    And talking of Marie Antoinette (who I suspect has been harshly judged by history) here’s a bit from his 26 Dec article:

    “I’m afraid events are a little too far gone now. There was some hope that Mr Obama would restore the rule of law, but he has gone even farther in the opposite direction by disabling even the lever of truth – and in so genial a style that nobody noticed that, either. That ‘thinking democratic slice’ of the public I averred to must have mortgaged their souls the past three years just to keep on keeping on. Hence, when the truly rooked wake from their zombie sleepwalk, there will be hell to pay for sure. Sometimes an intellectual ‘governor’ on events no longer even avails, as was the case in the French Revolution. When the lawyers, political theorists and philosophers got into the act, the blood really flowed.

    “Will that happen here, in the months and years ahead? I do think so. We’ve grown ourselves a toxic aristocracy of privilege and mega-wealth as cheeky (or worse) than the fops and strumpets of Versailles.”

    • coldblow

      Oops, I think that should have read ‘thinking demographic slice’. Let’s face it only a small proportion of people know what’s going on, even though the rest are starting to get the general drift by now. I saw (involuntarily) quite a lot of RTE telly over the holiday and I was trying to find a form of words to summarize what they are at. They see the population as one, well, retarded mass and have tailored their product so as to ingratiate themselves with this target audience, its tastes and prejudices. This won’t reach the thinking demographic slice who are surely occupying themselves more productively, perhaps making their own arrangements. This is broadcasting for the doomed. For the moment it feels like being locked into a secure home for patients suffering from either attention deficit disorder or dementia (no offence meant). A kind of Craggy Island where everything, and everyone, is beyond comprehension, or redemption.

      • Colin

        Coldblow,

        I briefly tuned into RTE Radio 1. I could not believe my ears. RTE presenters were congratulating themselves on how great and important they are, because they believe the Irish people still prefer to get their news from them and not some foreign provider or native competitor. I think Bryan Dobson was promoting this piece, along with who else but Tubbs. I couldn’t believe my ears.
        But then again, maybe he’s right. Look at the Private Health Insurance market. VHI had a monopoly, competitor arrive, offering cheaper and better coverage, and yet VHI retained 80% of its customers. Just goes to show old habits die hard with a large section of Irish society, and this extends to believing RTE News above all others too it seems.

        • Deco

          Well, yes the VHI do retain a share of their market.

          But the other two competitors have been tainted by associations with Anglo Irish Bank – so I suppose you can’t blame people for not switching to damaged brands.

          • Colin

            I disagree with you here Deco. Bupa arrived here first, don’t think they were tainted at all. People could have switched to Bupa and saved money and received better care for their subscription. They chose in their droves not to. Maybe a bit of ‘green jersey’ economics and post-colonial syndrome at play here. Then the Third force arrived, Vivas, again untainted by any AnIB association. Again people stuck with VHI.

        • coldblow

          I was wondering what people like yourself returning for Christmas made of it. I spent the hols with my parents and they had it turned up LOUD as they are both a bit deaf.

          I had actually written an extended rant but decided that it was OTT and saved it to my computer instead. (Something I quite often do I have to admit.) One of the points related to listening to Philip Boucher-Hayes discussing the US Rep candidates on Drivetime on Radio 1 a couple of days ago. The clear implication was that here were dingbats in thrall to dark forces of religious superstition. Maybe so (or not). But it seemed to escape his mind that Ireland is hardly in a position to laugh or point the finger at anyone.

          The RTE News is plodding, repetitious and tortuous and tells you very little of substance.

          In other countries they know how to get through a series of minor stories in snappy reports that follow on from each other. The only ‘snappy’ item I ever encountered on the 6-1 was that apology to the priest in Galway.

          • Colin

            Yes, and has anyone asked PBH why he can’t call himself Philip Hayes? Oh, I suppose it gives me gravitas – I can hear him say.
            PBHayes, Pres MDHiggins, MGQuinn, CJHaughey, I see a pattern here, take on a middle Initial or a double barrelled Surname and the Irish herd will start thinking its the Irish RM they’re in, not the ROI.

            I too remember RTE/Irish Times Lefty liberals hoping and even ‘praying’-hard to believe but not impossible, that the Vatican would elect a touchy-feely-liberal-lefty Pope to succeed JPII. The look of disappointment on their faces when God’s Rottweiler was eleceted Pope, well, it was a picture!

      • Elpenor Dignam

        What Walter Lippmann refereed to as “the bewildered herd”, the herd who needed to be tamed by the specialist class for fear they might stampede – the media’s role – pacify and stupefy us with news stories of dogs being rescued from frozen ponds in America.

      • Juanjo R

        “They see the population as one, well, retarded mass and have tailored their product so as to ingratiate themselves with this target audience, its tastes and prejudices.”

        Well put!

        • coldblow

          Thanks, but looking at that again the only word that approaches what I was trying to say is ‘ingratiate’, like Rick in the Young Ones. They are playing up (as in talking down) to this stagey idea of a thick but loveable, ‘colourful’ tribe, like something out of Roddy Doyle. Those Brennan’s Bread ads do something similar.

          The other side of RTE is the moralizing, puritanical one. Could you ever imagine any of their current affairs people laughing in the face of an ‘expert’, as Paxman does all the time on the BBC, and telling him he’s talking rubbish?

          Returning to the Young Ones analogy, Rick (RTE) will do whatever the other two, who call the shots, tell him, even if that means contradicting what he’s just said. He then goes and takes it out on Neil. Wonder who Neil stands for?

          By the way Newsnight did an interesting leading story on Brazil last night.

  13. Philip

    When someone like Paul Mason says he would not have the same opportunity today as he did decades ago, that is a damning indictment. It is a damning indictment of the so called growth of the 90s and 00s.

    Here’s a question for David and all in this blog. Do you think your kids will have as good prospects as you have had. I believe we work harder nowadays simply to stand still.

    The other comment by Mason from a Greek who met him on the streets of Athens – I paraphrase: If Greece goes, the rest goes. I think this is 100% accurate. All it is saying is that our so called civilisation is but a veneer.

    We may yet consdier ourselves to be very fortunate we are living on an Island with a lot of wind and water. 2012 may force us to think radically when we finally realise there is no help out there. We may be entering emergency mode – and frankly, I cannot see how it’ll be avoided.

  14. Juanjo R

    David,

    This article is one of four in a row, for me, that have been really great in terms of content and direct objective – please keep it up.

    However I realise that to keep it short you need to generalise and this last article I think suffers a lbit from that. I agree with your general thrust about widening gaps. Taxation policy if it was progressive could help address that. FG have other ideas.

    I think as a general observation, too, in particular you are underestimating the role that soya production ( for ethanol ) and commodities speculation in world markets is playing in distorting world food prices leading to rioting, etc.

    Speaking from my own point of view of living in one the BRICs mentoned above I’d like to say first that all the BRICs are very different in terms of political systems, internal make-up, recent lets say 30 year history, energy resources and what not else. It is difficult I think to make a simple but completely true statement which applies equally to all of them.

    From what I see where I live here in Brazil nethier energy and food are problems. I’m actually going to some personal research to verify whats going on…I’m curious to find out more. The biggest worry here seems to be that the country isn’t going to be ready for the Copo do Mundo and the Olympics afterwards. Those two and Neymars hair-do.

  15. Deco

    There are complex money flows in action.

    The prices of essentials are going up. Because there is more competition for them from consumers in the newly advancing countries. The actions of certain central banks in reflating the banking system, and this capital then going to investment hotspots in Asia, results in an eventual increase in pricing there which affects the world price.

    The prices of assets, is going down, mainly as a result of there being less capital available on loan for purposes of speculation. But this is what we should expect at the end of a crack-up boom, after it unravels.

    The problem, is that some people in this country comprehend this. But officialdom is in denial of it.

    At the root of the problem, is a central banking policy that favours those who speculate, and which conversely costs those who do the actual work.

    And once it has started, it is something that becomes incapable of fixing, until a massive depression is created – where those who work are penniless. The years 1996 – 2007 were a repeat of 1922 – 1929. And we will see a long depressed period in consequence.

  16. Deco

    While bondholders get bailed out, and rich owners of banks and trusts get to appoint their corporals to run countries as “technocrats”, life for the ordinary people everywhere continues to be cornered in.

    There is a clip in the following website, which shows us how people in California, who decide to give themselves an indepdendent lifestyle, out of touch with modern consumerism, are becomming the target of officialdom.

    Interestingly enough, these people seem to get the type of visit that befits some sort of national security threat or terrorists. Even though, they are pensioners.

    http://theautomaticearth.blogspot.com/2012/01/january-3-2012-storm-surge-of.html

    What about the Common Law for the Common people ????

    A technocrat class of legal eagles, placed legistlators and stooge officials seems to be overwhelming it in a myriad of moves that all amount to a subvention of people’s liberties and freedoms.

    Common people everywhere have a lot in common. Let us stick together, and dismantle the system which is driven to implement misery on the people.

  17. Deco

    The greatest lie of all is that this is a Greek problem, or an Irish problem.

    And we and the greeks are being forced to pay our taxes, to bail out the rich, to maintain this pretence.

    The whole European banking systme is over-stretched by the interest rate policy that the ECB ran between 1998 (as pre Eurozone launch EMU), and today. Interest rates were too low and that resulted in excessive stimulation for the Eurozone.

    The whole system is in trouble. The problem is not the Greeks sitting in the sunshine, or our media whipping a real estate euphoria. The problem is the ineptitude prevailing in the EU, and the ECB. A generation of spoofers are in charge. And they all trust one another’s nonsense. Dissent is not welcomed.

    Folks prepare accordingly. The UK will not escape the mess. Norway might. Switzerland might.

    And the idea that Merkel is protecting the Euro from inflation, is nonsense.

    • Deco

      Brian Hayes positioning himself as an economics expert.

      This is more absurd than Lenny reading Greenspan’s book, and thinking that he understood economics. Of course the difference was that Lenihan was a more intelligent man, and Hayes is probably more confused than it all than Lenihan.

      The case is building for people who are trained economists to be running economics ministries in the government.

      The answer is quite simple really.

      Stick him in an interview room with Constantin Gurdgiev for 30 minutes, and let Constantin give him a solid lesson in economics.

      • Dorothy Jones

        Deco, just read your post now. I had hoped that some people would see that point at the last election. Instead DSE gave us Lucinda Creighton and the ‘man with the tan’ instead of Paul Sommerville. LC is not the woman for her job. I’ve seen her ‘live’ as a keynote speaker on occasion. For someone who is a trained barrister….

        • Deco

          DSE was saturated by FG/LP. People got canvassed multiple times. Ruairi Quinn was on Pravda several mornings. I got a massive sense that the wagons were circling to keep Paul Sommerville out of the media.

          Sommerville Abu !! Shane Ross Abu !! Donnelly Abu !!

      • Colin

        Has Peter Matthews died? I haven’t seen his name mentioned anywhere lately. Does he hibernate?

      • redriversix

        you should see the email I sent that………….TD

        best

        RR6

        Please support my call for a Financial strike see Facebook/financial strike now

        Lets impose austerity on this Government and their Bank Bosses and put people first,They CAN reduce /slash their debt without permission from a bunch of failed schoolteachers……redriversix8@gmail.com

  18. Deco

    Well this is good.

    Here we have Brian Hayes, TD, and Junior Minister for Finance. He brought that absurd statement “we have reached the bottom of the bottom, ot the housing market” (dated April 2011). All these bottoms, and the arse has still not fallen out of the market.

    And he seems to know more than either David McWilliams or Bruce Arnold.

    http://www.independent.ie/opinion/analysis/leaving-the-euro-would-be-carcrash-economics-2981435.html

    This is the real Brian Hayes. Making statements that were not based on fact. Complete spoofer.

    http://www.youtube.com/watch?v=UyKzzpW5O7s

    • Dorothy Jones

      Good link:):)

    • tony_murphy

      Little Big Mouth Hayes is the most annoying person on the whole island or Ireland – with the exception of maybe Peter Sutherland imo.

      If anyone wanted a reason to get big government out of our lives and faces, he would come close to the top of the list. Followed closely by Lucinda Creighton.

      As for his rant about the Euro, it’s only paper. Debts that can’t be paid, won’t be paid. Tell the creditors to take a long run off a short pier. Debts not incurred by the ordinary citizens of Ireland or any other country for that matter should not be paid by the ordinary citizens.

      Have competition with the euro and let the people decide what money they want to use.

      David suggested an debt audit some months ago, regarding what debt is owned to who and who is responsible for it. Mr Hayes would be better employed talking and doing something about that.

      90% of the reasons people pay tax, is to keep the likes of him in a cushy lifestyle, where he can exercise his need to control people, the rest is to pay interest to globalist banksters, so they can keep us busy enslaved instead of figuring out what they are upto

  19. Realist

    Happy New Year David,

    You said: “So the ‘leisured’ class – the already wealthy – are seeing a fall in the price of goods which they spend relatively a lot of their cash on, while the poor are seeing a rise in the price of the goods that they spend relatively more on.
    And this price divergence is being driven by precisely the same dynamo: the two separate global economies.”

    I just cannot grasp your points here clearly.
    Both poor and wealthy need to eat and both poor and wealthy are buying gadgets.
    The pricing is mainly driven globally by demand and supply, if we for a second ignore governments influences through taxations and tarrifs (that I can talk forevet about :).
    Are you saying that the posh things wealthy are buying, e.g. expensive cars, hotels and holidays are dropping in price ?
    Are these products made by “poor” working in factories employed by money from wealthy ?

    Anyway, my point is that I cannot see anything wrong with pricing forming due to the supply and demand for whatever product.
    We cannot stop China consuming meat more, is not it.
    We are all benefiting of cheaper gadgets that came due to increased labour productivity.
    Both poor and wealthy benefits from it, I cannot see the distinction really.
    The problem is that poorer people have less disposable income but that is due to the reasons you never wanted to express in your articles fully.

    “If this price divergence happens and goes unchecked, things can get very volatile very quickly. For example, we know that higher food prices were one of the catalysts for the Arab Spring, which is reaching a horrible denouement in Syria.”
    So, how you check it ?
    What do you do with it ?
    Government intervention to lower the price of bread and put more taxes on luxury ?
    Like Danish government that put taxes on sugar and fat ?

    This should not be the fight of poor against wealthy or wise versa, it should be the fight of both poor and wealthy against the corruption wealthy and privileges given to them.
    This fight needs to start with removing inefficiencies from our lives, starting with banking fraudsters sponsored by governments through fractional reserve banking.
    Do we want more money printed in trillions ?
    Does this cause prices to rise for poor and wealthy too ?
    It should also be against public policing of every little aspects of our life while constraining our liberties.
    We should spend all money we earn and not waste it on so many wasters through the taxes.

  20. Lord Jimbo

    Ballyhea makes the international news.

    The Irish village that said ‘no’ to austerity (the Guardian)
    http://www.guardian.co.uk/world/2012/jan/05/irish-village-ballyhea?commentpage=last#end-of-comments

    • Lord Jimbo

      As for Marie and the rest, one need only see Versailles to see how out of touch the Royal court was when it came to the suffering French public. Victor Hugo captures it well in ‘Les Miserables’ while Émile Zola did a nice job OF depicting the lot of working people in ‘Germinal’.

      One person who did learn from the slaughter of the Swiss guard and capture of the Royals was Napoleon, some years later facing a similar situation he ordered his canon to open fire on a Parisian mob, thus helping to save the provisional government, this saw him promoted and the rest is history.

      • coldblow

        I (like Michael Hudson) tend to look at it more through the prism of Balzac, ie backwards. Eugene Grandet’s miserly father found himself, through luck and cunning, owning a large amount of land by the time it had all sorted itself out. See also my quote from Kunstler above (I like his turn of phrase). Wasn’t Germinal set later on where the enemy had become the industrial bourgeoisie?

        It gives me an idea though. What are the odds you’ll ever hear these words from an Irish politician? It is a far, far better thing that I do, than I have ever done…!

        • Lord Jimbo

          Yes, one power elite simply replaced the other but same consequences for the working poor.

          • Deco

            It happens because “change” is usually brought about by a cadre of opportunists, who see a weakening of current authority, as an opportunity for them to install themselves in power.

            There is only one ideology in such a scenario – opportunism. Bonaparte was a classic example.

  21. Dorothy Jones

    ‘Afternoon David
    I see the most recent pol to you have you in their crosshairs is Brian Hayes [today's Indo].
    Brian Hayes?!!!!! I can’t seem to remember any decent commentary from him since he was elected. No pearls of wisdom there. Maybe I missed something.

  22. CAMA

    I believe if the proposed Citizens Asset Management Agency were formed it should apply for a banking licence and lend monies at cost from ECB plus a handling charge . This would be a Super Credit Union on par with the enemy of the State namely the Banks.

    That would rule out any proposed non payment of mortgages as the new lender would be a community service.

    Any ideas?

    • redriversix

      I think that’s a brilliant idea,John

      But maybe setting it up like that would be above my pay grade

      Getting some good feed back on the Financial strike.small steps , but positive.

      Do a budget
      slash your Bank and state debts
      Put you and your family first
      Support C.A.M.A

      Financial strike now……..because things are moving very fast this year and not in a good way.

      You do need permission from the state to take care of you and your family

      Best
      RR6
      redriversix8@gmail.com

    • Deco

      If there was a new bank in the morning, it would attract deposits out of the existing banks – including the so-called “pillar banks”.

      It would have a better rating than them to start with. It would not be loaded up with all the dodgy loans. It would not be forced by Basel II to buy dodgy government bonds from it’s political masters – in a dog following his tale financial maneovre.

      It would not need to borrow from the ECB – because it would be a better risk in the minds of the citizens than the existing banks. And the new staff could not be more inept than the clowns running the existing banks.

      In all likelihood, the government and the ECB would not want it to happen, because it would make their advocacy of protection of existing banks, look ludicrous – because there would be no need for them – they would not be of “systemic importance”.

      It is a great idea – it would make the whole policy framework look like a joke.

      Which probably explains why it is not occurring…..

  23. SLICKMICK

    http://www.youtube.com David’s Late Late Show appearance in 1999.

    • coldblow

      I mentioned a few months ago an interesting Horizon (BBC science series) about psychopaths. It turned out that the US scientist who has made big breakthroughs in recent years in the field is himself one, ie it is a genetic condition and he has the traits, but due to his good upbringing he has never turned to crime. He admitted himself that if he had to go to his mother’s funeral and there was a party on at the same time he’d have no bad feelings about choosing the party. Apparently it prevents you from empathizing with others. The prog mentioned that psychopaths are very significantly over-represented among corporate classes.

      I also mentioned before the psychologist Oliver James who (The F*** You Up) has referred to the very significant over-representation among the political classes of people with severe behavioural disorders.

      So there is a bit of a pattern all right.

  24. nh1999

    Interesting article in UK Sunday Times today. Propsing that people on welfare benefits have to provide community service after a certain period of time. Why would this not work in Ireland? It incentivises people who are abusing the system to seek work, it motivates people and perhaps adds to a skill set for others, and with the cutbacks in govt spending perhaps some of the unemployed could start making a contribution to the state with skills they had from previous employment.

    • SLICKMICK

      30,000 people are already doing community employment, they have a lower chance of getting a job afterwarrs than peole who are unemployed ! if work is to be done, pay the going rate for the job.10k a yr is no use for people with bills to pay.

  25. Deco

    Well this is an interesting proposal.

    http://www.telegraph.co.uk/news/politics/david-cameron/9000601/David-Cameron-give-shareholders-vote-to-rein-in-executive-pay.html

    The boys having a round of golf in Straffan, must be aghast at the thought.

    Should we start a campaign to have such a law introduced here, just to undermine the cliques : ))))

    • Adam Byrne

      Taking this article at face value then, it would appear that Cameron is one of the ‘good guys’?

      • Adam Byrne

        In other words, if all politicians are in the pockets of the bankers, then how can Cameron even propose this, never mind implement it?

        It is just a charade, while he continues to patronize the bankers behind closed doors?

        • Deco

          You could be right.

          I mean can you imagine the banks allowing somebody that they cannot trust getting into a high position like that ?

          It would never happen. The political options list is sufficiently pruned by media organizations looking for advertising revenue. It simply is not permissable.

          Anyway, I hope he pushes ahead with it.

          So as to undermine the K-Club Klan in Straffan who have the system here loaded with their clique, and who have IBEC to “represent” their interests.

          I almost used the verb “lobby” there. But under the social partnership model of running a country, it is not even necessary anymore.

      • Colin

        Cameron has kept a 50% tax rate on incomes over £100k, so he’s a good guy in my book. Lenny and Cowen had the chance to do this on overpaid judges, medical consultants, semi state fat cats, ESB Middle managers and NAMA accounts managers, but said it wasn’t best international practice, so it wasn’t imposed.

  26. Dorothy Jones

    Interesting headline in Handesblatt [German 'Commerce Paper'] today Sun 120108.

    ‘If one wishes to buy a house or an apartment; one shouldn’t wait too long. Finance for construction is still cheap at the momentAnd the price of property can rise further….. ‘
    [Wer ein Haus oder eine Wohnung kaufen möchte, sollte nicht mehr lange warten. Noch ist Baugeld billig. Und die Preise für Immobilien dürften weiter steigen...]

    Recognise a pattern?

    Caveat Emptor to those wishing to purchase German property in the current market. It may have been good value in recent years but:
    - prices have risen sharply e.g. in Berlin.
    - legislation protects tenancy rights
    - Generally: rent may only increase in tandem with a change of tenancy

    Much talk of property in the popular media.

    Patterns…same stuff, different year[s]

  27. Dorothy Jones

    Lisbeth Salander

    She might carry out the appropriate actions needed.

  28. Irish Young PENSIONERS earn the Highest

    Former PM Brian Cown who receives a very high pension will be 52 on tuesday.

    And we all thought French Railway Strikers were greedey !

  29. redriversix

    Cameron offers billions to ECB to assist Europe.

    This mornings F.T

    Financial strike now.

    C.A.M.A

    RR6

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