How? When? Why? How much?Whom?
Created | Updated May 10, 2013
The Euro crisis has stopped becoming merely a Greek tradegy and is threatening to become a meltdown. This has occured because of globalisation. Free Trade was first proposed by the Englishman David Ricardo over two hundred years ago. Globalisation has been around (in the UK) since 1910. By 1910, goods could be ordered from anywhere in the world, then delivered to a London address. It may have been by low technology back then, mail order really, but it happened.
One hundred years later, the same can be done by using internet shopping. This means that industries are interdependent on a global scale. Many businesses, in the UK, have to have a constant exposure to exchange rate risk, just to do business. Other businesses now spend a major part of their time and energy providing international services, via the imternet. All this ties the future of a business in, say, London to one that may be located in many other European cities. Interdependence may not be the fault of the internet, but is made more immediate by the world wide web. So, as the Greek economy goes into meltdown, the Euro crisis contaminates the UK economy. Today people in the UK are being adversely affected by the Euro crisis.It does not even matter that they may never use the Euro currency on a day by day basis. People in the UK should care about the Greek economy, because the Euro dollars that are flowing into Greece, are being channelled back into the UK Real Estate market. Asset inflation is the last thing the UK economy needs right now, but it is happening. It is true that the UK economy benefits from events like the Golden Jubilee and the Olympics. And these events will mitigate some of the economic contagion, that is coming from the Greek meltdown. But not all of it. Already the London Stock Exchange is sufferung from an investors crisis of confidence. Some UK computer companies are downsizing. And the export earnings of some UK firms are falling. A double dip recession is a tricky thing to manage. Goods deflation can survive alongside asset inflation. This makes monetary policy useless.
A revolution in economic management is needed. The UK economy needs another Karl Marx or John Maynard Keynes. Let us hope that someone like that is out there already. The UK economy cannot wait much longer for an economic saviour. Europe needs such a saviour sooner than that; and the Irish economy will not recover without the intervention odf some economic genius As Spain begins its journey down the path much travelled already by Greece, Iceland, Ireland, Portugal and Italy, the Uk economy catches a bad dose of economic contagion. The bad news is that all cannot be reversed under the Capitalist system. The price mechanism will only help those with money and those with an opportunity to earn an income.. Rich people will get richer! Those who already have one job will be able to find another second job. But the poor will get poorer. And those without ba job will stay unemployed for longer.
Solutions will involve some method of ending all the hoarding going on by savers and businesses. A "use it or lose it:" tax incentive may work. All those with large reserves of cash can be given a taxd free month when they get gods VAT free. Businesses with large cash reserves can be disqualified from government programmes. Employment is going to be the most intractable of all economic problems. Long term unemployed people will need assistance acquiring new job skills. Then they will need to be given a chance. Perhaps a payroll tax exemption for six months may be the "carrot" offered.
Whatever is done must be done quickly and with as little red tape as possible. Governments should use charities to find jobs for the unemployed. Co-operatives can be given VAT exemptions that apply only to their members. And businesses can be rewarded for reducing reserves by offering infrastructure bonds. As John Maynard Keynes said in 1936, there can be no excuse for government inaction. Decisive action is mandatory!
One hundred years later, the same can be done by using internet shopping. This means that industries are interdependent on a global scale. Many businesses, in the UK, have to have a constant exposure to exchange rate risk, just to do business. Other businesses now spend a major part of their time and energy providing international services, via the imternet. All this ties the future of a business in, say, London to one that may be located in many other European cities. Interdependence may not be the fault of the internet, but is made more immediate by the world wide web. So, as the Greek economy goes into meltdown, the Euro crisis contaminates the UK economy. Today people in the UK are being adversely affected by the Euro crisis.It does not even matter that they may never use the Euro currency on a day by day basis. People in the UK should care about the Greek economy, because the Euro dollars that are flowing into Greece, are being channelled back into the UK Real Estate market. Asset inflation is the last thing the UK economy needs right now, but it is happening. It is true that the UK economy benefits from events like the Golden Jubilee and the Olympics. And these events will mitigate some of the economic contagion, that is coming from the Greek meltdown. But not all of it. Already the London Stock Exchange is sufferung from an investors crisis of confidence. Some UK computer companies are downsizing. And the export earnings of some UK firms are falling. A double dip recession is a tricky thing to manage. Goods deflation can survive alongside asset inflation. This makes monetary policy useless.
A revolution in economic management is needed. The UK economy needs another Karl Marx or John Maynard Keynes. Let us hope that someone like that is out there already. The UK economy cannot wait much longer for an economic saviour. Europe needs such a saviour sooner than that; and the Irish economy will not recover without the intervention odf some economic genius As Spain begins its journey down the path much travelled already by Greece, Iceland, Ireland, Portugal and Italy, the Uk economy catches a bad dose of economic contagion. The bad news is that all cannot be reversed under the Capitalist system. The price mechanism will only help those with money and those with an opportunity to earn an income.. Rich people will get richer! Those who already have one job will be able to find another second job. But the poor will get poorer. And those without ba job will stay unemployed for longer.
Solutions will involve some method of ending all the hoarding going on by savers and businesses. A "use it or lose it:" tax incentive may work. All those with large reserves of cash can be given a taxd free month when they get gods VAT free. Businesses with large cash reserves can be disqualified from government programmes. Employment is going to be the most intractable of all economic problems. Long term unemployed people will need assistance acquiring new job skills. Then they will need to be given a chance. Perhaps a payroll tax exemption for six months may be the "carrot" offered.
Whatever is done must be done quickly and with as little red tape as possible. Governments should use charities to find jobs for the unemployed. Co-operatives can be given VAT exemptions that apply only to their members. And businesses can be rewarded for reducing reserves by offering infrastructure bonds. As John Maynard Keynes said in 1936, there can be no excuse for government inaction. Decisive action is mandatory!
