The System, Part 2: There really is a class war, and the Right knows it

Yesterday, I attempted a jokey and simplified graphic to illustrate the result of "free trade" - the initial response from James Higham has been very sniffy, something to do with hats I gather (though he seems to have no similar objection to barrels or Chinese junks). Apparently it shows I'm a Leftist, even though I've never voted for Labour - or anything further left, before you ask. Or perhaps he's merely provoking me to greater effort, despite the sense that so many bloggers are getting now, of how they are wasting their time when they could instead "sport with Amaryllis in the shade ." Nevertheless...

The "System" graphic (see sidebar) is, of course, much too simple - where is the Federal Reserve, where are the bankers (NOT the banks) who make (extract*) money at every turn, including and especially when they receive government bailouts and organise the purchase of government securities?

But a striking aspect of this cartoon update of what is, in effect, a class war is that the conflict was identified and described in class terms by speakers for what one might loosely call the Right, 18 years ago. They anticipated our present economic crisis and the resulting social instability and they did not at all welcome the prospect, as I shall show. I'm not generally fond of embedding long videos, because I like to skim and scan for essential points, but I'd like to share a couple here and having watched them in full myself I recommend them to you. Neither of the speakers makes reference to the other, but in relation to GATT and untrammelled free trade generally they are saying the same prophetic things.

The first is a talk by Dr John Coleman (whose website is here); the occasion is not explicit but from the content and tenor of his remarks I think he is addressing a broadly Republican-supporting audience in New Mexico in 1994, at the time of the GATT talks. Think of this 100 minutes as an investment, saving you the trouble and expense of reading his several books, as much of his material appears to be summarised in this tour through Conspiracy Central: Guelphs, the Black Nobility of Venice, the coming New World Order etc. In the final 5 minutes, he predicts that the US economic system will collapse and destroy the American middle class, and the varied and extensive banking system will concentrate into five majors. I'm reluctant to accept the alleged motives of the alleged secret players, and think that short-sighted greed and venality are more plausible drivers of the process, but the end result is the same, with or without the comic-book villains.



Next is an interview (also in 1994) with billionaire Sir James Goldsmith, where he correctly sees that GATT will (as he says) tip the balance between labour and capital sharply in favour of the latter, and that it will cause social disruption in Western societies.



Goldsmith, like Dr Coleman, was emphatically anti-Communist and spent his cancer-riddled last energies campaigning for a referendum on the UK's membership of the EU; he describes himself in this interview as pro-free trade; but he is very clear on the destructive effects of putting our workforce in direct competition with foreign workers whose labour is dramatically cheaper in currency-adjusted terms. (Since then, we have seen the Chinese manipulate their currency so that this price advantage is maintained, whereas according to the idealised system described by classical economists the renminbi would rise against the dollar, certain US exports would be encouraged, certain Chinese exports discouraged and there would eventually be a new equilibrium).

The canal analogy I used in my graphic has two functions: first, it suggests that the removal of all barriers to international trade triggers financial flows and economic developments at a rate that neither side can properly cope with. Second, it illustrates a system that is indeed intended to foster trade, but with a series of control points (lock gates) that manage the rate of change.

Time is the key. Given more time to adjust, capital and labour in the West would be reallocated to relatively more competitive enterprises; education and training could mutate to support the required new skill sets. But certain individuals saw an opportunity to make massive personal fortunes by helping to dislocate the society that nurtured them, with the result that the West is experiencing growing disparities of income and wealth, as well as national accounts that can't achieve a balance, and the development of a kleptocratic and tyrannical overclass in government.

Well, it it so now, despite the best efforts of the Jeremiahs and Cassandras. Perfectly ordinary, stable, hard-working people that I meet as a financial adviser are saying, unprompted, that their government doesn't care for them, even that we are headed for a revolution. Some of it is jokey (a taxi driver I know wants to start a new political party called Dilligif, after the Oz saying "Do I look like I give a f***", to show we care as little for them as they do for us); some, less so.

And it wasn't just the Left then, or now, that was saying it.

* Jesse's discussion of Acemoglu and Robinson's "Why Nations Fail" is enlightening, with its polarised pair of terms "extractive" and "inclusive". 

How the System works...

Time must have a stop: was there actually NO "Big Bang"?

"A fool may ask a question which forty wise men cannot answer."

I have a question about the supposed origin of the universe, and perhaps you may be the forty-first wise man (or woman):

Time slows down in the neighbourhood of massive objects. There is no object more massive than the entire Universe, when (some 14 billion years ago) it is supposed to have been compressed into a space smaller than the nail on my little finger. In that case, seen from our present frame of reference, was time then effectively at a stop? In which case, is the Big Bang effectively separated from us by an infinite duration, and therefore did not happen?

Another correspondent tells me, "Good question. Before Planck time, there isn't even matter, and energy doesn't experience time."

Punt that pint! The beer vending machine you HAVE to assault

hat-tip: Dick Puddlecote

London Metals Exchange: another one bites the dust

Founded in 1877 but with 16th century roots in Gresham's original Royal Exchange, the London Metals Exchange has just been sold to the Chinese.

Ironically, the LME is the last "open outcry" market in Europe. Apart from a few brave individuals like Brian Haw (whom Parliament, to its everlasting disgrace, attempted to outlaw), and the Occupy London protestors against which the City, major newspapers and that refuge of the poor and oppressed the Church orchestrated a campaign of condemnation and legal action, we hear very little open outcry against our negligent, incompetent, venal, corrupt, secretive, dictatorial and treacherous overclass. A class that has sold its soul to the money men, who have sold the freehold and seed corn of our economy in the name of "free trade" that is progressively costing our freedom and is only beneficial to the trader. It does not take a conspiracy theorist to see a pattern in the invitees to Bilderberg 2012.

The complacency of the traders and their agents in politics is astounding. Martin Hutchinson was warning of the future decline of the City back in 2007, and around the same time a smirking financier at an Oxford college reunion was assuring us that we'd be cheating foreigners for a long time to come.

How many bricks can you take out of the bottom course of your house before the structure caves in? We don't have leaders; we have Destructors.

Controversy continues over Chinese foreign farm purchases

Further to my recent post on this subject, here's a WSJ article about resistance from New Zealand farmers to the purchase of 16 farms there.

According to Wiki, Crafar Farms was NZ's largest family-owned dairy concern until a crash in milk prices forced it into receivership. The receivers had two goes at getting official clearance to sell to Chinese businesses and got the okay in April this year.

Other farmers are worrying that it's the thin end of the wedge and cash-rich foreign buyers may now start to flood in, snapping up land at prices the locals can't match and ultimately turning Kiwis into tenant farmers. Australians share their concerns - though at least one business commentator there is blowing the free trade trumpet and warning of international tension if it's unheeded.

It's an issue here, too: last month saw a £50m deal between the UK and China, to sell pork products, which is OK in itself, but indicative of the potentially vast demand from the Chinese, so our food may not stay cheap for much longer.

The Daily Telegraph, reporting on this year's Hay Festival, included an interview (see 18:00) with Conor Woodman, author of Unfair Trade - How Big Business Exploits the World’s Poor and Why It Doesn’t Have To.  The title is self-explanatory, and the issue is becoming live for us here; as Woodman says, "What concerns me more than monopolies is Chinese investments in parts of the developing world where they are buying up land, fishing, mineral and mining rights. The Chinese have been going round buying up the world and we ought to be concerned by that."

On the one hand, there's land-grabbing going on inside China, where speculators are illegally seizing and converting precious agricultural land to building projects; and on the other, Chinese business is purchasing blocks of food-producing land around the world, including the South-East of England.

Don't expect our negligent, venal and treacherous ruling class to do much about it. Daily Mail business expert Alex Brummer's new book, "Britain for Sale: British Companies in Foreign Hands - The Hidden Threat to Our Economy" shows how, unlike our foreign counterparts, the UK has long been happy to sell off key British enterprises; flogging the very ground we stand on is only an extension of that process.

Savers between a rock and a hard place

The stock market is thoroughly corrupt;  physical assets, especially those purchased with the assistance of debt, are overpriced; and the bond market looks like a mantrap.  Yet even now there are economic commentators who are not in favour of protecting cash against inflation.

If sound money is not to be, then it seems to me that unless one is part of the elite battening on the financial system, sucking out wealth faster than it is diminished by inflation, impoverishment is certain.