Archive for the ‘Economy’ Category

What way now for the euro and Europe?

An awful lot of people are now taking it for granted that Greece will be parting ways with the euro later this year. The only question now seems to be whether it’ll be an orderly exit or a total fiasco. Either way, it seems sure to be something of a roller coaster ride for everyone.

But, whether or not Greece exits the euro, there remains the question as to what to do in the rest of Europe. There are just too many major economies in trouble and needing to grow their economies at the same time as cutting their deficits. One country trying to do one of those choices is difficult but several countries trying to do both simultaneously seems an incredibly unlikely prospect. The result seems likely to be a little of one, a little of the other and overall nothing much happening that’s in any way positive.

In the midst of this the European central bank president sees the future as him taking over the position of the central banker for all the Eurozone countries. That would have been the sensible way to go 10 years back when the euro began. Now it brings forth the vision of Bankia writ very, very large: not the merger of seven lame-duck regional banks this time to create one bigger failing bank but rather the merger of a number of lame-duck central banks to create one bigger failing central bank. Even if he had the time and there were the political inclination to do it, it seems just a means of postponing the inevitable break-up of the Eurozone and, just as the collapse of Bankia will be more painful than the collapse of the individual banks that created it would have been, the collapse of the super central bank would be much, much more painful than the collapse of one or two smaller ones would (will?) be.

Painful as it may well be, it would seem that the best way forward would be to recreate the drachma, lire, peseta and perhaps the punt.

 

 

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

To strike or not to strike for public service pensions

Pension payments for all but the lowest paid in the public sector are going up (mostly doubling) and they’re going to have to work longer before they are entitled to the maximum pension. Surely it must only be right that the well paid public servants in secure jobs pay more for their gold plated pensions? Why should the rest of us pay for their pensions anyway?

The snag with public sector pensions is that the employer is the government so therefore, yes, the rest of us do have to pay for their pensions. Unless you’d rather that they get no pensions at all (in which case, I hope you don’t mind doing without schools, hospitals, etc.) then the government (ie taxpayers) must act as responsible employers and pay for those pensions. The other snag is that, unlike private sector pensions, the public sectors operate on a pay as you go system which means that the current workers pay for the pensions of the current pensioners or rather taxes do (that’s how the normal retirement pension operates too).

OK, so we should pay them a pension, but surely we shouldn’t be paying the well-paid public servants gold plated pensions? Actually, well-paid public servants are very much in the minority with a considerable number getting close to the minimum wage. Courtesy of a number of changes in recent years, that “gold-plating” is looking distinctly tarnished with three separate schemes being introduced over the last 10 years, the prior schemes being closed to new members and each new scheme being markedly poorer than the one before. The latest offering is a lurch towards an average salary rather than the current final salary scheme which will be a major, major drop in the pensions that people will be eligible for though, as usual with pensions, a magnitude of a drop that most people wouldn’t realise until it was far too late.

In some ways it could be a good thing. The net effect, for public servants who realise it, is that their lifetime earnings is being cut quite dramatically so it might encourage more to leave for the private sector. The only snag with that is that we need those public services that the people most likely to leave provide. On the whole, those most likely to leave would be the higher earners. Do you really want to have an exodus of teachers, nurses, etc.? What about the well-paid Whitehall people perhaps? Surely they can be done without? Certainly, if you’re happy to have poor advice given to the government on all kinds of matters, you could do without them.

Should you strike? Despite being what I’d say was one of the most right wing union representatives ever, I think, yes, this is a time to show that you support your union negotiators.

Should you support the strike as a taxpayer? I think yes too as it’s really going to impact on the quality of public servants and hence public services that you get over the years to come.

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

Quite a full Easter

With starting the new job the week before Easter, this is my first week of work holidays in over eight years!

As we normally do, it was off to Portrush on Easter Monday. Usually, there’s a mass of traffic along the way, a traffic jam a mile or two long going into the town, pretty much nowhere to park, wall to wall crowds everywhere regardless of the weather and no money in the cash machines. This year the traffic seemed a bit light on the way up, there was no traffic jam at all, loads of parking spots even quite close into the town, hardly any crowds and money in the cash machines even in the late afternoon as we were leaving. We didn’t even have to queue in the café and there was next to no queuing in Barry’s either. Methinks that Portrush is going to have a tough time financially if they can’t fill up even on Easter Monday.

Ongoing throughout the holiday has been the assignment for SD329 a biology cum psychology course that runs through to October. Although it was very much a last minute thing, it was a much easier assignment than the chemistry one which I’ve been ruminating over for weeks. I wasn’t too keen on the breakdown of every section of every question into a specific word count but it did prompt me to write a little more on some questions than I otherwise would have done which, hopefully, will improve the marks. Anyway, it’s off so it’s just the final chemistry question to complete tomorrow.

I came across a neat site which converts any website into an Android application so I’ve put on four trial ones. They look fine on the ASUS tablet but I’ll need to rejig the style sheet a bit to tidy up their appearance on Android phones. I may need to get myself an Android phone to really try them out too. No downloads as yet but then they’ve only been on a couple of days.

The materials for the Infectious Disease course arrived yesterday. No big surprises there as I picked up a copy of the pre-course briefing last year. I’ll have to get going on reading it properly soon as I want to get that well underway before I need to start the chemistry revision and indeed the pre-course work for the chemistry summer school for that matter. Oh, and the two assignments that’ll fall due in the midst of that revision time too. It’s going to be a hectic time for me in May and June.

 

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

Recession or depression?

Nobody is openly calling it a depression but then it’s a difficult call to say whether you’re in a depression or not when you’re actually in the midst of one.

Aside from the obvious financial difficulties that a growing list of countries are finding themselves in, signs this time around are seemingly all around on the smaller scale too. The list of bankrupts seems to be growing although that’s not really a terribly reliable sign in these days of financial engineering.

What’s perhaps more obvious is the number of small shops gradually disappearing. The smaller shops are more dependent on the local economy than the large chain stores and they tend not to have a large financial cushion to help them ride through the bad times either. Indicative of this too is the rise in the number of charity shops which can operate through financial difficulties as they don’t pay their staff nor do they pay for their stock. Thus in difficult times, charity shops tend to replace small shops.

Slightly strangely in some ways is that the chip shops and home bakeries are closing up. Two different reasons are working here with the chip shops suffering as they’re popular as cheap food outlets and thus have a fall-off in trade when those at the bottom end of the income levels have to make cuts. To some extent that affects the home bakeries too but there’s also the element of their products being a bit of a treat and that “treat money” is in shorter supply these days.

Will we all look back on this period ten or fifteen years from now and call it a depression? Somehow I suspect that the answer to that will be yes and that there are even more difficult times lying ahead.

 

 

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

So what will happen with Greece in the end?

The basic problem that Greece seems to have is that it has never really properly adjusted from the days when it could devalue the Dracma every couple of years.

In such an environment, you don’t really need to worry too much about creating a real economy as you can always pull in more tourists by reducing the value of your currency every now and again. Since that hasn’t been an option for ten years, what they did instead was to borrow more and more money to balance the books until they reached the point when they could borrow no more.

The problem now is that they have no economy to generate the money required to repay all those loans and neither can they devalue to reduce the value of the loans. Instead, what’s going to happen is that they will have to have those loans renegotiated to reduce their value directly. Snag is that this just pushes the refinancing out to the organisations which provided the loans who in turn need to be refinanced. The bigger problem is the sheer scale of the loans which, built up over ten years, amount to a significant proportion of Germany’s GDP. Proposals to privatise the debt just relocate the problem.

The current refinancing is essentially just lending more money to allow them to make the debt repayments without fully recognising that the capital needs to be repaid too. That’s, naturally, where the problems are going to mount up.

And, of course, that’s just Greece with Spain, Italy, Portugal and Ireland not too far behind them.

 

Copyright © 2004-2014 by Foreign Perspectives. All rights reserved.

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