"Let it be one cheerful rational voice amidst the din of mourners and polemics." Ralph Waldo Emerson, 1840.
A Brit-in-Helsinki's blog about global politics, climbing, cycling, things that annoy me and other bits of life. But not necessarily in that order.
Friday, August 14, 2009
Dan Hannan - always backing a winner.
Americans should listen to Tory MEP Daniel Hannan because he clearly isn't a tit who has no idea of what he's talking about. Oh hang on...
I do not agree with Dan Hannan's views on Turkey, in fact I'm dead set against them. That however does not move me to label him "a tit who has no idea what he's talking about" as you have done Toby.
He has an excellent grasp of what a representative government means, which cannot be said of those who "love the EU as it is", so much so that they were willing to support its constitution even before the miniscule changes it made after the Irish voted it down.
I think that you're way off base with your dissing of Hannan.
The last lines of his Spectator article: "Icelanders believe that self-government is the natural condition for a sturdy, free-standing citizenry. They understand that there is a connection between living in an independent state and living independently from the state. They have no more desire to submit to international than to national regulation. That attitude has made them the happiest, freest and wealthiest people on earth. Long may they remain so."
Well, it lasted 4 years. Now they are unhappy, bankrupt and want to join the EU for the macro-economic stability it brought other small financially weak states, like Ireland, during the crisis.
Well of course it all depends how much of this is driven from the top on down, seeing that its ruling gov't is comprised of Social Democrats + Greens = absolute majority...I could see why the Icelanders, more than likely just the ruling elite, are now pulling for EU membership.
The financial circus they went through is the same as for everyone else - artificially low interest rates, massive loans given for dubious takeovers, and eventually their chickens coming home to roost. That's central banking regime.Government falters and then looks to even bigger government to prop it up.
Henry Hazlitt said in 1946 that: "The effect of keeping interest rates artificially low, in fact, is eventually the same as that of keeping any other price below the natural market. It increases demand and reduces supply. It increases the demand for capital and reduces the supply of real capital. It brings about a scarcity. It creates economic distortions. "
"It is true, no doubt, that an artificial reduction in the interest rate encourages increased borrowing. It tends, in fact, to encourage highly speculative ventures that cannot continue except under the artificial conditions that gave them birth. One the supply side, the artificial reduction of interest rates discourages normal thrift and saving. It brings about a comparative shortage of real capital."
Fiscal responsibility and smaller government ALWAYS trumps over-bloated command economies governed by collectivist /nationalizing minded governments, that believe "spend spend spend" is the magic bullet to cure any economic ailment.
Now, that said, shall I dip into the vast reservoir of EU lies and deceptions which passes for "business as usual in the European Union? Shall we take a closer look at the plethora of statements by the apparatchiks that comprise that behemoth of an institution in Brussels, who openly lie to the public, and feel no shame or guilt whatsoever when the they renege on what was promised? How about all that, and do you really care to crack open that golden vault of vile garbage?
So you'll have to excuse me Toby for forgiving this MEP for his misjudging the situation in Iceland, who are currently undergoing the same economic turmoil as in the US, but are even more worse off because their system of government has less checks and balances than in the US model.
His honesty is refreshing, even if it's at times his thinking is wrong, the same can NOT be said for many who work for, and applaud the Beast in Brussels.
Would you mean fiscal responsibility like the German reticence to ramp up public sector debt to spend out of the crisis? See Merkel versus Brown and Obama at the G20. The ECB is in effect the Bundesbank writ large, and hence Ireland which had as bad a bubble as Iceland staggers but does not fall. The joke late last year was "what's the difference between Iceland and Ireland? One letter and six months" but the Irish got the last laugh because of being in the Eurozone. So even if the "beast" lives in Brussels, it appears Beauty resides in Frankfurt.
Anyway that's all the by the by, Hannan has shown that he was wrong in understanding what the vast majority of the British electorate thinks about healthcare, which is why he got slapped by his own party, and he has shown that his economic analysis is just as wonky as well.
Yes Toby, Germany is the pillar of EU finance, but that does not exonerate it's fiscal irresponsibility in turning its back on sound economic practices that made it into the economic giant it is today (by EU standards that is).
The EU is corrupt, Germany is being corrupted by it, in throwing sound policy out the window, which only serves to undermine the worth of the EU...due to its corrupting capabilities.
If Iceland's socialists want to get bailed out, then the short sighted (socialist minded) EU is for them. If they want to however, maintain their sovereignty as a free and independent nation, and able to adjust their own currency rates according to their own economic predecament as well as having a vibrant free market, then no, the EU is not for them.
Pointing to the counter-productive policies of spending oneself out of debt or as they say ---Injections of currency--- does not help to prove your point. A point I might add, you were not totally crystal clear about, but I got the gist of it.
Look what economist Henry Hazlitt said (I say predicted very closely what's happening today):
http://jim.com/econ/chap24p3.html
"The effect of keeping interest rates artificially low, in fact, is eventually the same as that of keeping any other price below the natural market. It increases demand and reduces supply. It increases the demand for capital and reduces the supply of real capital. It creates economic distortions. It is true, no doubt, that an artificial reduction in the interest rate encourages increased borrowing. It tends, in fact, to encourage highly speculative ventures that cannot continue except under the artificial conditions that gave them birth. On the supply side, the artificial reduction of interest rates discourages normal thrift, saving, and investment. It reduces the accumulation of capital. It slows down that increase in productivity, that “economic growth,” that “progressives” profess to be so eager to promote. The money rate can, indeed, be kept artificially low only by continuous new injections of currency or bank credit in place of real savings. This can create the illusion of more capital just as the addition of water can create the illusion of more milk. But it is a policy of continuous inflation. It is obviously a process involving cumulative danger. The money rate will rise and a crisis will develop if the inflation is reversed, or merely brought to a halt, or even continued at a diminished rate.
It remains to be pointed out that while new injections of currency or bank credit can at first, and temporarily, bring about lower interest rates, persistence in this device must eventually raise interest rates. It does so because new injections of money tend to lower the purchasing power of money. Lenders then come to realize that the money they lend today will buy less a year from now, say, when they get it back. Therefore to the normal interest rate they add a premium to compensate them for this expected loss in their money s purchasing power. This premium can be high, depending on the extent of the expected inflation. Thus the annual interest rate on British treasury bills rose to 14 percent in 1976; Italian government bonds yielded 16 percent in ‘977; and the discount rate of the central bank of Chile soared to 75 percent in 1974. Cheap-money policies, in short, eventually bring about far more violent oscillations in business than those they are designed to remedy or prevent."
Shortsighted German politicians and economists today, (€ 480 billon bank 'rescue' package) are risking it all with their "stimulus packages", and future generations will be paying for it dearly. Hannan's observations four years ago shows just how quick politicians can turn and run with the flock like any other mindless goose, and Brussels is the place where they "gaggle".
Hanan's observation four years ago were completely wrong, and Iceland turned out to be in huge mess that Ireland has to some extent avoided because it adopted the Euro and the relatively conservative policies followed by the ECB. Being Irish isn't great currently, but it's better than being Icelandic. My original point was Americans might like to consider Hannan's track record when he tells them how to not reorganise their healthcare system.
The final paragraph from Hazlitt is basically a description of the German and ECB reticence over the UK and US bailout plans of last autumn so I'm confused as to what point you're making. In your desire to pronounce "the EU" evil, you seem to miss that the different bits that make up the EU can't agree on anything - be that member states, the Commission, the Council, the ECB, the EP - whatever. But that is all by the by: Dan Hannan was talking crap. Again.
Excuse me but: "The final paragraph from Hazlitt is basically a description of the German and ECB reticence"
The Germans and the ECB were not practing reticence as you say, perhaps not on the same level as the US, but nonetheless,...
Starting from when it was just being proposed by the Germans and others...
October 2008: € 500 billion bailout plan proposed: http://www.euronews.net/2008/10/14/merkel-defends-500-billion-bail-out/
100-billion-euro state rescue of the HRE bank (done in real life): http://www.earthtimes.org/articles/show/279634,german-opposition-wants-merkel-to-appear-at-hre-bail-out-inquiry.html
The €500 bailout plan again - still looking to see if it passed - it seems that the HRE rescue was part of that: http://www.dw-world.de/dw/article/0,,3711886,00.html
Well, a €32 billion plan was passed: http://www.france24.com/en/20081214-merkel-work-new-german-bailout-
Peanuts perhaps by O's standards but hardly practicing the reticence Hazlitt preaches. So I'm confused over your being confused. As for Hannan talking crap, I would assume you would be saying the same thing about US Founding Fathers rejection of big government and the need to every twenty years throw off one oppressors (read government).
If Germany is praticing reticence, it's not the same Hazlitt had in mind.
I do not agree with Dan Hannan's views on Turkey, in fact I'm dead set against them. That however does not move me to label him "a tit who has no idea what he's talking about" as you have done Toby.
ReplyDeleteHe has an excellent grasp of what a representative government means, which cannot be said of those who "love the EU as it is", so much so that they were willing to support its constitution even before the miniscule changes it made after the Irish voted it down.
I think that you're way off base with your dissing of Hannan.
The last lines of his Spectator article: "Icelanders believe that self-government is the natural condition for a sturdy, free-standing citizenry. They understand that there is a connection between living in an independent state and living independently from the state. They have no more desire to submit to international than to national regulation. That attitude has made them the happiest, freest and wealthiest people on earth. Long may they remain so."
ReplyDeleteWell, it lasted 4 years. Now they are unhappy, bankrupt and want to join the EU for the macro-economic stability it brought other small financially weak states, like Ireland, during the crisis.
Well of course it all depends how much of this is driven from the top on down, seeing that its ruling gov't is comprised of Social Democrats + Greens = absolute majority...I could see why the Icelanders, more than likely just the ruling elite, are now pulling for EU membership.
ReplyDeletehttp://eng.forsaetisraduneyti.is/news-and-articles/nr/3730
The financial circus they went through is the same as for everyone else - artificially low interest rates, massive loans given for dubious takeovers, and eventually their chickens coming home to roost. That's central banking regime.Government falters and then looks to even bigger government to prop it up.
Henry Hazlitt said in 1946 that: "The effect of keeping interest rates artificially low, in fact, is eventually the same as that of keeping any other price below the natural market. It increases demand and reduces supply. It increases the demand for capital and reduces the supply of real capital. It brings about a scarcity. It creates economic distortions. "
"It is true, no doubt, that an artificial reduction in the interest rate encourages increased borrowing. It tends, in fact, to encourage highly speculative ventures that cannot continue except under the artificial conditions that gave them birth. One the supply side, the artificial reduction of interest rates discourages normal thrift and saving. It brings about a comparative shortage of real capital."
Fiscal responsibility and smaller government ALWAYS trumps over-bloated command economies governed by collectivist /nationalizing minded governments, that believe "spend spend spend" is the magic bullet to cure any economic ailment.
Now, that said, shall I dip into the vast reservoir of EU lies and deceptions which passes for "business as usual in the European Union? Shall we take a closer look at the plethora of statements by the apparatchiks that comprise that behemoth of an institution in Brussels, who openly lie to the public, and feel no shame or guilt whatsoever when the they renege on what was promised? How about all that, and do you really care to crack open that golden vault of vile garbage?
So you'll have to excuse me Toby for forgiving this MEP for his misjudging the situation in Iceland, who are currently undergoing the same economic turmoil as in the US, but are even more worse off because their system of government has less checks and balances than in the US model.
His honesty is refreshing, even if it's at times his thinking is wrong, the same can NOT be said for many who work for, and applaud the Beast in Brussels.
Would you mean fiscal responsibility like the German reticence to ramp up public sector debt to spend out of the crisis? See Merkel versus Brown and Obama at the G20. The ECB is in effect the Bundesbank writ large, and hence Ireland which had as bad a bubble as Iceland staggers but does not fall. The joke late last year was "what's the difference between Iceland and Ireland? One letter and six months" but the Irish got the last laugh because of being in the Eurozone. So even if the "beast" lives in Brussels, it appears Beauty resides in Frankfurt.
ReplyDeleteAnyway that's all the by the by, Hannan has shown that he was wrong in understanding what the vast majority of the British electorate thinks about healthcare, which is why he got slapped by his own party, and he has shown that his economic analysis is just as wonky as well.
Yes Toby, Germany is the pillar of EU finance, but that does not exonerate it's fiscal irresponsibility in turning its back on sound economic practices that made it into the economic giant it is today (by EU standards that is).
ReplyDeleteThe EU is corrupt, Germany is being corrupted by it, in throwing sound policy out the window, which only serves to undermine the worth of the EU...due to its corrupting capabilities.
If Iceland's socialists want to get bailed out, then the short sighted (socialist minded) EU is for them. If they want to however, maintain their sovereignty as a free and independent nation, and able to adjust their own currency rates according to their own economic predecament as well as having a vibrant free market, then no, the EU is not for them.
Pointing to the counter-productive policies of spending oneself out of debt or as they say ---Injections of currency--- does not help to prove your point. A point I might add, you were not totally crystal clear about, but I got the gist of it.
Look what economist Henry Hazlitt said (I say predicted very closely what's happening today):
http://jim.com/econ/chap24p3.html
"The effect of keeping interest rates artificially low, in fact, is eventually the same as that of keeping any other price below the natural market. It increases demand and reduces supply. It increases the demand for capital and reduces the supply of real capital. It creates economic distortions. It is true, no doubt, that an artificial reduction in the interest rate encourages increased borrowing. It tends, in fact, to encourage highly speculative ventures that cannot continue except under the artificial conditions that gave them birth. On the supply side, the artificial reduction of interest rates discourages normal thrift, saving, and investment. It reduces the accumulation of capital. It slows down that increase in productivity, that “economic growth,” that “progressives” profess to be so eager to promote.
The money rate can, indeed, be kept artificially low only by continuous new injections of currency or bank credit in place of real savings. This can create the illusion of more capital just as the addition of water can create the illusion of more milk. But it is a policy of continuous inflation. It is obviously a process involving cumulative danger. The money rate will rise and a crisis will develop if the inflation is reversed, or merely brought to a halt, or even continued at a diminished rate.
It remains to be pointed out that while new injections of currency or bank credit can at first, and temporarily, bring about lower interest rates, persistence in this device must eventually raise interest rates. It does so because new injections of money tend to lower the purchasing power of money. Lenders then come to realize that the money they lend today will buy less a year from now, say, when they get it back. Therefore to the normal interest rate they add a premium to compensate them for this expected loss in their money s purchasing power. This premium can be high, depending on the extent of the expected inflation. Thus the annual interest rate on British treasury bills rose to 14 percent in 1976; Italian government bonds yielded 16 percent in ‘977; and the discount rate of the central bank of Chile soared to 75 percent in 1974. Cheap-money policies, in short, eventually bring about far more violent oscillations in business than those they are designed to remedy or prevent."
Shortsighted German politicians and economists today, (€ 480 billon bank 'rescue' package) are risking it all with their "stimulus packages", and future generations will be paying for it dearly. Hannan's observations four years ago shows just how quick politicians can turn and run with the flock like any other mindless goose, and Brussels is the place where they "gaggle".
Hanan's observation four years ago were completely wrong, and Iceland turned out to be in huge mess that Ireland has to some extent avoided because it adopted the Euro and the relatively conservative policies followed by the ECB. Being Irish isn't great currently, but it's better than being Icelandic. My original point was Americans might like to consider Hannan's track record when he tells them how to not reorganise their healthcare system.
ReplyDeleteThe final paragraph from Hazlitt is basically a description of the German and ECB reticence over the UK and US bailout plans of last autumn so I'm confused as to what point you're making. In your desire to pronounce "the EU" evil, you seem to miss that the different bits that make up the EU can't agree on anything - be that member states, the Commission, the Council, the ECB, the EP - whatever. But that is all by the by: Dan Hannan was talking crap. Again.
Excuse me but: "The final paragraph from Hazlitt is basically a description of the German and ECB reticence"
ReplyDeleteThe Germans and the ECB were not practing reticence as you say, perhaps not on the same level as the US, but nonetheless,...
Starting from when it was just being proposed by the Germans and others...
October 2008: € 500 billion bailout plan proposed:
http://www.euronews.net/2008/10/14/merkel-defends-500-billion-bail-out/
100-billion-euro state rescue of the HRE bank (done in real life):
http://www.earthtimes.org/articles/show/279634,german-opposition-wants-merkel-to-appear-at-hre-bail-out-inquiry.html
The €500 bailout plan again - still looking to see if it passed - it seems that the HRE rescue was part of that:
http://www.dw-world.de/dw/article/0,,3711886,00.html
Well, a €32 billion plan was passed:
http://www.france24.com/en/20081214-merkel-work-new-german-bailout-
http://www.france24.com/en/20081105-german-government-approves-50-billion-euro-stimulus-plan-germany-global-slowdown
Peanuts perhaps by O's standards but hardly practicing the reticence Hazlitt preaches. So I'm confused over your being confused. As for Hannan talking crap, I would assume you would be saying the same thing about US Founding Fathers rejection of big government and the need to every twenty years throw off one oppressors (read government).
If Germany is praticing reticence, it's not the same Hazlitt had in mind.