tag:blogger.com,1999:blog-6263577133333272085.post6751830703550114170..comments2024-03-28T11:04:16.315+00:00Comments on Boffy's Blog: The Fantasy Politics of The Tories and SNPBoffyhttp://www.blogger.com/profile/08157650969929097569noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6263577133333272085.post-43766383834358651752015-05-05T16:06:46.173+01:002015-05-05T16:06:46.173+01:00David,
The interesting thing is not just the numb...David,<br /><br />The interesting thing is not just the number of money capitalists recognising that - Marx was right, of course, that objective laws ultimately will have their way - but that for similar reasons states will also have to be investing money. The state of infrastructure in the Us is well known - I saw something the other day about the amount of investment in track etc that is being undertaken by Buffett in his railway investments - but in Germany, their Internet infrastructure is crap, but also I've seen reports that their highways need loads of investment for repairs etc. too. <br /><br />I'm not sure whether oil has bottommed, from the reports I've seen output continues to expand. There was an interesting presentation yesterday by David Einhorn about the frackers showing that many are producing at a loss when all costs are taken into consideration, but as I pointed out a while ago, that involves taking into consideration sunk capital investment costs. If you only take current production costs, I'm not sure that is the case, in which case it comes down to whether the firm has borrowed via the junk bond market to finance that original investment, and still needs to cover its repayments from revenues.<br /><br />There has been a rise in oil demand - in fact there has been a rise in many commodities suggesting the global economy may be stronger than is suggested and gearing up for another surge. There could still be a very short term spike down in the oil price to clear out excess supply, but I expect prices to begin to move back to around $70-80 by next year, and stabilise around that level.<br /><br />That means along with the other factors I've described before - rising costs and and currency in China - that there will be pressure on consumer prices. If the interest rate cycle has bottomed, and these other factors lead towards sharply rising costs, along with increased productive investment, there could be a whip-saw with a massive financial crash, and a sharp rise in inflation, causing a need for an even sharper money contraction to bring it under control.<br /><br />I think the deflation argument I made is valid, but I don't think deflation is actually a long term phenomenon.Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-52785546391306433572015-05-05T12:57:13.819+01:002015-05-05T12:57:13.819+01:00The boss of Aberdeen Asset Management was saying s...The boss of Aberdeen Asset Management was saying something along the lines of "even money capitalists are getting the message" on the radio this morning.<br /><br />Also, that point about the link between QE and consumer deflation was one of those moments when I went, how can I not have seen this before?! Not sure whether to thank you for that or not.davidjchttps://www.blogger.com/profile/18432693921346520951noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-75803803060633919772015-05-05T07:34:46.433+01:002015-05-05T07:34:46.433+01:00David,
They'd have to vote for a Tory Queen&#...David,<br /><br />They'd have to vote for a Tory Queen's Speech for that to be effective. I doubt that would happen as a "rebellion". It appears the new intake might be to the Left of the old PLP, and to sabotage the potential for defeating the Tories and getting a Labour government, would make life very uncomfortable for them with the CLP's etc.<br /><br />If A Tory QS falls and Labour gets its QS through, the Blairites will be hamstrung. Personally, looking at the economic stats, including what the IFS says, (Paul Mason has also pointed this out) provided there is only a reasonable level of growth, there is no need for Labour to actual pursue any further cuts, and the deficit would disappear by the end of the Parliament.<br /><br />I expect growth to pick up in the second half of 2015, as part of the 3 year cycle, and with the damaging effects of austerity removed - I also expect austerity will get removed in the EU too, alongside ECB QE - then growth will pick up.<br /><br />I also expect, as I've written previously that the interest rate cycle has turned up. The new Bond King also believes as I've argued previously that the global long run interest rate cycle bottomed in 2012.<br /><br />Look at the German Bund Yields over the last week, which have risen 6 fold, despite QE. For the reasons I set out a few weeks ago, I think QE may have been causing consumer price deflation as the flip side of asset price hyper inflation.<br /><br />If interest rates have turned, then asset prices will crash - because bubbles never deflate slowly. In that case, potential money-capital will begin to get diverted from speculation to productive investment - there have been quite few voices saying that's necessary in the last few weeks from Larry Fink to Warren Buffett. Even money-capitalists get the message eventually that their interest payments and capital gains are not sustainable without actual profits, and profits are not possible without productive investment.<br /><br />In that case, as I set out in my book, I see a huge financial crash, but with a powerful global economic boom arising out of its ashes. The test for Miliband and other social democrats will be the extent to which they allow the banks to fail before taking over the remnants - I'd prefer their workers to take them over - rather than stepping in to save them.<br /><br />Under the conditions of the next financial crash, they may have no possibility to save the banks, as they will have their work cut out just protecting the deposits of small savers!Boffyhttps://www.blogger.com/profile/08157650969929097569noreply@blogger.comtag:blogger.com,1999:blog-6263577133333272085.post-59834199942932814622015-05-04T19:28:30.802+01:002015-05-04T19:28:30.802+01:00Totally agree. One glitch might be the Blairites, ...Totally agree. One glitch might be the Blairites, who've already piped up to side with minority Tories. Even a small group of them could hold a loaded gun to Ed's head - we'll vote with Tories for the good old national interest if you don't speed up deficit reduction etc.davidjchttps://www.blogger.com/profile/18432693921346520951noreply@blogger.com