Welcome to the billy blog Saturday quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following six questions. Your results are only known to you and no records are retained.
What I learned studying history at university about Charlemagne I have mostly forgotten other than the broad brush of his historical presence. I know where he is buried because his Frankish home base was Aachen on the extreme west of Germany bordering with the Netherlands. I have spent a lot of time in that area (given my association with the University of Maastricht) and have visited the cathedral that houses his grave. What I can recall is that he was a Christian imperialist who forcibly imposed “Germanic” rule on most of what is now Western Europe. But while he largely restored the old “Holy Roman empire”, this “unity” did not last long after his rule ended. That is, he dramatically failed to embed a lasting unity. I think it is appropriate then that yesterday, the President of the ECB, Jean-Claude Trichet, was awarded the famous The Karlspreis which is in honour of Charlemagne. The Germans think it is about unity or at least that is what they claim it is about. The other analogy with Charlemagne is that just as he sought to impose his religious views on the “heathens”, Trichet is also seeking to impose another religion on the people of Europe – neo-liberalism. It is a religion that has failed to provide succour to those who have had to endure it. It works well for the “priests” as all religion seem to. But it is imposing harshness and calamity on the rest. Anyway, in Aachen yesterday, it was another one of those days when the elites wine and dine well together and hand out prizes to each other.
Some years ago – I did not have sexual relations with that woman – were the famous words that seemed to redefine everything we had come to think of sexual relations between two consenting partners. Suddenly we could have sexual relations without having them. The same person has come up with a new conclusion – the US never ran “permanent structural deficits of any size before 1981”. Hmm, you mean that for 84 per cent of those years from 1930 when the US federal government ran deficits they were just cyclical events indicating deteriorating economic conditions? Maybe the former president might say a structural deficit equivalent to 3 per cent of GDP was not of “any size”. My conclusion is different – that this statement like the previous one was another case of a former US president making things up.
Today, the Australian winter officially begins yet where I am the sun is shining. Not so for the Australian economy though. The Australian Bureau of Statistics released the National Accounts data for the March 2011 quarter which shows that in the first three months of this year the Australian economy contracted by a staggering 1.2 per cent. The result has been dismissed by the Government and many of the commentators as a “one-off” result driven by the extraordinary weather events (floods and cyclones) earlier in 2011. There is some truth in that statement. But overall once we net out the likely effects of the natural disasters the data suggests that the Australian economy is growing modestly – but not strong enough to eat into the pool of idle labour. We have to appreciate that this is a rear-view mirror of what the economy was doing 3 months ago. The contemporary data (flat credit demand, construction, retail sales, employment growth) tells us that the current performance of the Australian economy is very weak. With the contribution from government now negative and the household sector saving ratio rising sharply we are increasingly dependent on the external sector for on-going growth. The fact is that with China introducing contractionary policies there is still some uncertainty ahead on that front notwithstanding the evidence today (terms of trade) that demand for our exports remains strong.
The US press was awash with claims over the weekend that the US was “living beyond” its “means” and that “will not be viable for a whole lot longer”. One senior US central banker claimed that the way to resolve the sluggish growth was to increase interest rates to ensure people would save. Funny, the same person also wants fiscal policy to contract. Another fiscal contraction expansion zealot. Pity it only kills growth. Another commentator – chose, lazily – to be the mouthpiece for the conservative lobby and wrote a book review that focused on the scary and exploding public debt levels. Apparently, this public debt tells us that the US is living beyond its means. Well, when I look at the data I see around 16 per cent of available labour idle in the US and capacity utilisation rates that are still very low. That tells me that there is a lot of “means” available to be called into production to generate incomes and prosperity. A national government doesn’t really have any “means”. It needs to spend to get hold off the means (production resources). Given the idle labour and low capacity utilisation rates the government in the US is clearly not spending enough. The US is currently living well below its means. But the US government can always buy any “means” that are available for sale in US dollars and if there is insufficient demand for these resources emanating from the non-government sector then the US government can bring those idle “means” into productive use any time it chooses.
billy blog Saturday quiz. The quiz tests whether you have been paying attention over the last seven days. See how you go with the following six questions. Your results are only known to you and no records are retained.
The Great Hunger Lottery report shows how such speculation on food has impacted on the poor around the world. Hunger and starvation escalated between 2007 and 2008 with over 1 billion people considered chronically malnourished at the time they prepared the Report. The major players in creating this havoc are Goldman Sachs, Bank of America, Citibank, Deutsche Bank, HSBC, Morgan Stanley and JP Morgan. In my view, this speculation creates no widespread good and should be declared illegal. We should ban financial speculation on food prices.