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Wednesday, February 2, 2011

A Sobering Reminder

K. McCaffrey -- Last week, Britain's chief central banker, Mervyn King, painted a grim picture of the years to come in the UK.

- “In 2011, real wages are likely to be no higher than they were in 2005… One has to go back to the 1920s to find a time when real wages fell over a period of six years.”

- “The Bank of England cannot prevent the squeeze on real take-home pay that so many families are now beginning to realise is the legacy of the banking crisis and the need to rebalance our economy.”

- “The squeeze on living standards is the inevitable price to pay for the financial crisis and subsequent rebalancing of the world and UK economies.”

- Furthermore, inflation may rise “to somewhere between four per cent and five per cent over the next few months.”

- “The idea that the MPC could have preserved living standards, by preventing the rise in inflation without also pushing down earnings growth further, is wishful thinking.”

- “[U]npleasant though it is, the Monetary Policy Committee neither can, nor should try to, prevent the squeeze in living standards, half of which is coming in the form of higher prices and half in earnings rising at a rate lower than normal.”

- “I sympathise completely with savers and those who behaved prudently now find themselves among the biggest losers from this crisis.”

I give King a bit of credit, at least he's acknowledging the trouble reckless behavior has brought with it instead of glossing over and promoting more irresponsibility.

Yet I wonder what the world is going to look like as my generation will be one of the first to possibly live shorter, less prosperous lives than our predecessors. The question isn't purely economic either, how will we adapt socially?


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  1. The solution is simple, though the euros refuse to see it. This is not a 'Banking Crisis'. If it is, this is merely a symptom of their larger problem. This is a 'Socialism Crisis'. This is the result of a deficit of economic freedoms.

  2. It doesn't have to work out that way. We are heading into a rough period that will be very trying no matter what we do. But the key is for us to first start making better personal decisions. If we don't resist the siren's call to kick our problems down the road one more time, we may very well have nothing to look forward to as we bust.

    The course we are on, one-world-without-borders corporate/statist egalitarianism, will leave us with nothing to look forward to because we are abandoning being Americans "for the good of the world". What bunk!

    If we work our way through a period of austerity while rediscovering the American traits of living within our means, hard work and innovation, there will be much better days ahead. If we follow the siren's call of globalism, we are doomed. We are running out of time but it isn't hopeless.

    The US Constitution is not obsolete. Let's use it. But let's grow up and stop looking for handouts.

  3. And our president looks up to them and wants to be just like them.

  4. 1. Yet I wonder what the world is going to look like as my generation will be one of the first to possibly live shorter, less prosperous lives than our predecessors.

    Your generation in the West, maybe. I doubt that holds for Asia.

    2. It's true that college-age Americans have been dealt a worse hand than they should have been, but they are not blameless. They went for Obama hook, line and sinker. They are not exactly lining up to enroll in the science & technology curricula from which future prosperity will be constructed.

    3. Kathleen, my impression is that you plan a career in politics and I wish you well with that. But never forget that government can prevent prosperity but cannot create it. It can only create conditions in which private actors feel encouraged to try to create prosperity. Trying to enforce prosperity is a great way for a government to preclude it; a government that takes too much credit for prosperity is taking a big step toward trying to enforce it.

  5. '“The squeeze on living standards is the inevitable price to pay for the financial crisis and subsequent rebalancing of the world and UK economies.”'

    1- Living standards in all Western (Latin) nations are gluttonously high and have been for the over six decades of my career. They remain gluttonous, i.e., omni-destructive. The classical term of art for this is concupiscence.

    2- "Financial crisis" my foot! The oligarchs of academe, finance, government, think tanks and some businesses and industries manipulate the gluttony of citizens to rob them. Now who's to blame for that? What crisis?

    3- "Rebalancing of economies" is oligarch code for channelizing, globe-wide, individual and group activity in order to set up for looting all sources of wealth not previously expropriated, and indefinitely into the future.

    And I second the caution on thinking government service is a way to do good. We don't need do-gooders. Do-gooders are socialists, collectivists, they believe that as individuals they fall short of wisdom and power but in committees, particularly government committees with their glorious perks (looted from taxpayers), they partake of the excellences of Almighty God. Alright, hyperbole, but it dramatizes the point.

    We need people who don't lie, cheat or steal or tolerate those who do. It is nearly impossible to work in government, academe or ecclesia without doing all three. Better Sherwood Forest than Nottingham Castle.

    The humanist ideal of improving human nature through education and directing human activity through benevolent government -- i.e., socialism -- is the enemy. Well, its bearers are, because education and government are as tainted with ego and as prone therefore to negative results as any activity is. Humanism ignores delusion and its remediations. It is the root of socialism. It has been in this country since Quakers and Unitarians.