Posted by: aboutalbion | March 25, 2015

Two voices spoil the Chancellor’s party

The UK Chancellor’s optimistic mood in his annual Budget statement last week has been qualified by two influential voices.

In his Guardian column last week, George Monbiot drew attention to a book entitled “How Corrupt is Britain?” by David Whyte.  The argument in the book seems to be that Britain’s place as one of the least corrupt countries in the world is based on an unusually narrow definition of corruption.

George Monbiot put it like this.  “Common practices in the rich nations that could reasonably be labelled corrupt are excluded [from Transparency International’s corruption index]; common practices in the poor nations are emphasised.”  He continued with a list of the commercial banking system scandals of the past generation that had not been associated with any successful prosecutions.  He went on to suggest that the City of London, with its elaborate secrecy regime and with the assistance of British Overseas Territories and Crown dependencies, is the world’s tax haven of choice (with 24% of all offshore financial services) for global capital (which just happens to include tax evaders, smugglers, sanctions-busters and money-launderers).  He concluded that the “power of global finance and the immense wealth of the global elite are founded on corruption, and the beneficiaries have an interest in framing the [definition of corruption] to excuse themselves”.

A few days later, my weekend newspaper drew attention to an organisation that I didn’t know existed.  This organisation is the Bank for International Settlements [BIS], ‘the central bank of central banks’.  And its Chief Economist has very recently warned that the seemingly unending offer of very cheap credit would test “economic, legal and political boundaries” to the limit if its availability continued much longer.

What the Chief Economist of BIS seems to me to be saying is that the present trading conditions in world markets are unsustainable.  What the UK Chancellor seems to me to be saying is that the present trading conditions in world markets are giving him the confidence to predict (what he sees as) welcome UK economic growth into the foreseeable future.

Therefore, it seems to me that it is reasonable to conclude that the UK economy will be adversely affected when the next “correction” in world markets occurs.  My weekend newspaper put it like this: “Markets are priced for Armageddon, yet most economic forecasts point to robust growth.  It’s a fundamental contradiction …”

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