London Burning

It is very disheartening, disturbing and distressing to see many areas of London ablaze.  Rioting and looting has also been taking place in many areas of London, Birmingham, Bristol, Nottingham and Liverpool. The last time such disturbance took place was the early to mid 1980s.  Whether these activities are a result of the politics of the day, political grievance or not, it certainly isn't pleasant and it is not a way of protesting.  These are criminal activities in whatever way they are described.  Although, it is understandable that many sectors of the community feel disenchanted with the austerity measures, and job prospects being extremely poor, particularly for young people.  These activities cannot be condoned and it is highly unlikely that it has anything to do with the shooting of Mark Duggan by the police in London.

It is also distressing to see how inadequate the police and particularly the fire service is.  In Croydon, a very large fire was being tackled by three fire engines.  Under normal circumstances there would have been at least a dozen fire engines if not more.  Many areas report lack of police and fire services.  There has been cutbacks in these services because of the austerity measures.  One hopes that the thin spread of services is due to the number of incidents rather that a lack in service personnel.

The political leaders are all returning back cutting short their summer holidays and emergency meetings are taking place across relevant ministerial departments to assess the extent of the problem and how best to resolve it.  Whatever has triggered these uprisings is not as simple as it seems.  Underlying all the discontent and the despicable behaviour lies predictors and precipitants that are complex and highly likely to be fuelled by the general economic downturn that is affecting most of society.  There is also a gap developing between the rich and poor.  While most middle and low earners and the unemployed are being squeezed, there are some whose affluence is increasing beyond belief.  This is evidenced by the profits of some major companies but even more so by publication of the rich list in the national papers.  Prominent politicians may have also inflamed the situation by stating that multicultural society in Britain has failed.  However, these cannot be used to promote crime.

Whatever the predictors and precipitants, we all have a responsibility.  First and foremost we must utterly condemn these act of criminality.  All of us rich and poor, affected and disaffected should work to resolve the problem together.  Let us not posture and  threaten each other. Let us communicate our grievances in a lawful and responsible manner.  This applies to all of us including the rioters, the communities, the businesses and the politicians.  We are all in some way responsible and we must act in a responsible way.  It is bad enough for the global economy to  be spiralling into decline.  It does affect all of us not only the investors.  We are literally in it together and we all have to unite to get out this mess.  Divisions and subdivisions will only create acrimony, disrepair and despair.  If you wish to protest, remember Mahatma Gandhi, peaceful protest is much more powerful than violence.

Good Bye and Good Luck until the next time and may peace and serenity be with you.

Knight Owl

Double Dip Recession or Depression?

The global economy continues on a downhill trend despite two years of severe austerity measures, increased taxation and low interest rates.  European countries such as Italy, Greece and Spain are relying heavily on being bailed out or face bankruptcy.  In the UK, we blamed the snow last December and April's Royal wedding for our GDP nosedive, although the Royal wedding was meant to boost our economy.  The US indecisiveness last week in agreeing an economic policy and now the stock market turmoil. Added to that we have the US rating downgrade by Standard and Poor from AAA to AA+.  Economists are calling for more austerity measures and further reduction in government spendings.

Jeff Macke, citing Peter Schiff, writes  "The Depression [in the wake of the financial crisis] was temporarily interrupted by a bunch of stimulus which ultimately weakened the economy further,"  He further suggests that  the government's response of stimulating is, probably going to lead to "a complete economic collapse."  I would agree that this was a knee jerk reaction in the sense that while the governments were trying to stimulate the recovery they were also stifling and strangling it by severe cutbacks in the public sector and tax increases.


We blame the governments for interrupting the economic growth because they are borrowing more.  We make lame excuses that there are no jobs because there is no recovery.  The problem is that there is no recovery because there are excessive job losses both in the private sector and the public sector.  In the private sector because there is insufficient stimulus, lack of funds or lack of investments because the investors are being encouraged to invest in China (as per Todd Schoenberger) and India.  In the public sector the belief is to improve the economy, as per eminent economists, we have to reduce public spending.  In addition, we are paying higher taxes either directly or indirectly.


The pitfall is no jobs, no jobs and no jobs, therefore, no recovery, no recovery and no recovery.  And down in the dark hole of depression we disappear unless somebody is brave enough to take the bull by the horn and stop the rut.  Europe is in disarray; the European Union is not working as one. Each country forming the EU is trying to protect itself. Germany and Angela Merkel is strong but for how long? One person needs to stand out and let's hope it's OBAMA.  Go Obama go, let's see what you are made of?


Good Bye and Good Luck until the next time.

Double Dip Recession?

Global stock markets take a nosedive again and its reported to be the worst for over two years or since the banking crisis of October 2008. The blame is apportioned to the European debt crisis and the faltering US economy. May it also just be an economic reality of modern  stock market  manipulation?

Over recent weeks price of gold has surged, and many companies have announced massive profits.  Share prices have also been steadily going up and the markets have been bullish. There are rumours from the investment world that hedge funders have sold heavily to make a quick return on their recent investments.  No fear, therefore, that they will be buying cheap again soon with a view to the next recessive dip when they take their profits.

Whether it is the European debt crisis and the faltering US economy or the hedge funders, the global governments are following economic policies that are bound to inhibit economic growth. In a time of excessive economic growth and increased affluence among the lower and middle earners this type of policy may be appropriate to stop the economic bubble from bursting.  However, in a time of recession this type of policy is wholly inappropriate. It will not only retain the current recession but also promote further dips along the way. The few rich will get richer and the majority low and middle earners will become poorer.

The policy must change and governments must take control of the situation.  Quantitative easing in real terms needs to be applied and spending power for the majority must be facilitated to promote growth. State expenditure must grow instead of being retracted. The State should be investing more in public services and at this moment in time we need big States instead of big societies. The private sector must also be helped to invest more through government support. Mr Gordon Brown, former Prime Minister of the UK was nearer the mark than what is currently happening.

What is needed is spending power for the vast majority instead of the few. For every dollar spent by the few rich people, at least a, million is spent by the majority lower/middle income earners; but they have to have it to spend it.  They are the people who keep the wheels of industry turning by working in it and buying from it. The others just oil the wheels.

What needs to be done, therefore, are tax incentives for the lower and middle earners and a reduction in value added tax for everyone, rich an poor, to promote spending.  What is needed is not a reduction in spending but an increase.  This was evidenced by the last British Government's reduction in VAT to 15%; the economy was actually growing in Britain.  The current Government policy has actually reversed that trend and the next set of figures are likely to show a negative growth factor. Wages also need to be going up to promote spending and fall when the economy starts to boom.  These can be achieved by increased government borrowings during this period of recession.

The economic policy must be reversed.  In times of recession we need higher wages and lower taxes and in times of  economic boom we need lower wages and higher taxes, and not vice versa. By doing so we shall prevent this continuous boom and bust trend.

Good Bye and Good Luck until the next time.

Knight Owl

News International Saga

The News International saga and accusations of criminal activities continue to fill the British Media. Blame is being tossed like custard pies involving News International, the journalists involved and the Metropolitan Police Officers who helped to cover up the extent of the intrusions in the private lives of all the people concerned. It has also been the main topic in the political arena where past and present governments and ministers are being accused of inaction in the face of allegations and evidence that has been brought to their attention. Various actions are being proposed from wholesale police investigations to judicial and public inquiries. The Metropolitan Police Force are making inquiries to investigate, gather evidence and bring the culprit to bear the force of the judicial system. Unfortunately, although there is general agreement that abuse of power has taken place resulting in criminal activities and offences has likely been committed, there still does not seem to be an agreement on the necessary and appropriate action that needs to be taken. The approach continues to appear softly softly. Are we British soft on such issues compared to let's say the United States or Australia, for example?  Can we be accused of dragging our feet rather than taking decisive action?

News International certainly has been decisive in axing the newspaper involved, namely, the News of the World.  The paper will see it's last publication on Sunday, July the 10, 2011.  However, credit to News International, phoenix like rising from the ashes of the demise of the News Of The World, another British News International's newspapers, The Sun will now have a Sunday issue. Decisive action or what? The question remain, however, that was it the newspaper that was to blame for the scandals or was it the personnel involved in bringing the newspaper and its journalistic approach into disrepute? The latter being the case, should the personnel concerned not be axed or sacked as the case may be and not the newspaper?

Keep you ears to the ground and your eyes open, there may yet be more episodes to this saga.

Good Bye and Good Luck until the next time.

Knight Owl.

Telephone Hacking

The revelations concerning News International's involvement in telephone hacking continue to grow by the day.  Initially, it was revealed that famous people such as celebrities and prominent political figures had their telephones hacked and a legal battle ensued. It has now become evident that many common people had their phones hacked as well.  Among these people were victims of serious crimes, for example, the late Millie Dowler, and families and victims of the 7/7 bombing incidents among others.  Where does this stop or how widely has this perpetration spread?  How many other people in the United Kingdom had their phones hacked ? Is it endemic? Is it just a British problem or has it a wider international issue? Will the whole truth ever come out? It is also surprising that the British Police has been implicated to have participated in this practice by selling private telephone numbers to the hackers involved.

The matter is now in the hand of the police force who are investigating the seriousness of this "offensive" practice.  The outcome and consequences will follow.  Eminent legal professionals have suggested that serious criminal offences have been committed and criminal proceedings and appropriate actions should be taken. Offenders will be punished through imprisonment and fines.  Members of the police force involved will be sacked and face imprisonment if found guilty of misconduct.

How will this affect the standing of News International as a powerful media and broadcasting corporation, and the strong influence it has on the political parties in the UK and elsewhere? News International may even be subjected to a hefty fine that they can easily recoup by putting the price of their newspapers up by one pence a copy. Will this, however, have an effect on press freedom?  Will all this make a difference in the way the press and the media operate? If we look back to this infringement in ten years time, will the press and media, and News International in particular be a different and better behaved beast?

We shall just have to wait and see.

Good Bye and Good Luck until the next time.

Knight Owl.

Public Sector Pensions

Some public sectors workers in England have been protesting today because of changes to their pensions.  Despite increasing their pensions contributions by 3% and increasing their retirement age from 60 to 65 years, the UK government plans to reduce  their pensions when they retire. The government initially claimed that the current arrangement was not affordable.  However, when it was pointed out that affordability was not a problem, the government changed its tune and stated that they wanted to bring parity between public and private sector.

What does this really mean and what are the issues?

The private sector has been gradually eroding or eradicating pensions for workers in that sector and in cahoot with the government increasing retirement age.  (Senior managers and directors in the private sector, however, continue to enjoy lucrative subsidised pensions and retire early.) The government argue that because of pension changes in the private sector it has to change pensions in the public sector.  This only make sense in that the government can reduce  public expenditure, and in the private sector companies can increase their profits and in doing so give generous dividends to their shareholders. In doing so the rich gets richer even in this time of economic downturn and the less well off becomes poorer, the economic disparity widens.  The consequences of these profit orientated greedy approaches will surely have an effect on national economies in future as poverty expands in the rich and developed world. Sufferings in old age for many hard workers will increase.  Will it then be resolved through public expenditure and at a high cost?  Does it really make economic sense on the whole?

Instead of reducing workers pensions in both the private and public sectors and increasing poverty in old age, would it not make more sense for these governments in the rich and developed world to have a truly fair poverty eradicating pensions policy across the board that would apply equally to both the public and private sectors including senior managers and directors? These policies would need to be properly administered and regulated unlike the banks.  However, I believe that such a system would create a happier, more fulfilling, harder-working and stronger society and nation and would benefit globally. Let's work towards a happier and fairer world.

This is obviously one view.  I would very much welcome comments from readers to ensure a fair debate.

 Good Bye and Good Luck until the next time.

Knight Owl

"The Big Society?"

The UK government, particularly the Prime Minister is passionate about and determined to create "The Big Society" in the United Kingdom.  Among the many debates with regards to the subject, the first is the meaning of the term.  What does "big society" really means.  Nobody seems to be clear about it.  Everybody including the Prime Minister and his cabinet have got their personal reality and interpretation but are unable to clearly communicate it.  It appears though that "The Big Society" is about people volunteering to help others.

I would agree that over the years people have become selfish and society has as a whole become more disintegrated and self-centred.  This has worsened in the last twenty years or so where an emphasis has been on individual achievement whether as a person or an organisation.  This emphasis has been promoted by governments in most developed and developing countries.  Therefore, selfishness and greed has flourished, and society and individuals caring for each other has diminished.  Care or caring as such has become a commodity based on market economy.  If you are rich or can afford it, you can buy the care or caring you or your loved ones need.  If you can't afford it you may do the best you can and tough luck be your friend.

In the UK up to now, the state has some statutory responsibility for caring for people in need.  This has been available through national and/or local organisations.  These organisations have been funded and managed by the state.  The funding has come from tax revenue raised by the state.  For example, the National Health Service has been responsible for providing health care to those who needed it free at the point of delivery.  National Insurance provides towards unemployment benefits, sickness benefits and state pension. Revenue from taxation also help local authorities make social and welfare provisions at a local level.  Although these are state funded and managed services, in the last twenty years, the private and voluntary sectors have also benefited by being contracted to provide some of these services.

However, because of the fiscal deficit the state has accrued in the last few years and the government's haste in reducing this deficit, the government is drastically cutting back the funding that these state run services and organisations have had in the past.  This means that these services have to be trimmed accordingly.  At the same time, the government is also reforming some of the national institutions, the main one being the National Health Service.  Whatever happens, the needy will still be there.  It was initially envisaged that the private sector will be able to fill this gap.  However, as there is very little money and some services are not profitable for the private sector, it is highly likely that they will only take on the profitable services.  A big chunk of unprofitable services will be left unattended.

In my opinion, this is where the "Big Society" comes in.  The idea is that those people who have lost their jobs and those who haven't, volunteer to to fill the gap created by the state reforms and state withdrawal from public services as a result of the funding crisis.  The services that get rejected by the private sector and can't be run by the state sector because of lack of funding will hopefully be taken on by the voluntary sector.  In principle the idea is very good.  However, the process of getting it implemented is very poor because it is ill defined and generally lacking in coherence.  There is also a misguided expectation that it will be adopted willingly by the voluntary sector despite the fact that there are no funding or support identified for this  process.

Another problem is that it appears to be dividing society in two separate groups.  There is a rich well to do group who continues to enjoy their riches and lead a jolly carefree life.  Tax loopholes are created so they can get away with paying as little tax as possible.  Whilst they contribute little, they continue to benefit from universal goods and services.  The other poorer group in comparison is taxed to the hilt, their services curtailed and they are asked to form a "big society" and take care of themselves.  And while they do so the state distances itself from them whilst aligning with the rich.

The "Big Society" can work but only if we are all in together.  The poorer group doing the work whilst the richer group hand over some of their monies to fund the projects.

WHAT WE NEED IS SOME GOOD OLD FASHIONED PHILANTHROPY not just empty rhetorics!  

Good bye and good luck until the next time