Zombification of the U.K. Revisited

    • I think the current economic malaise is that of spirit, attitude and culture: in short what used to be termed ethics, in better days. Data and results follow from it.

      None of the subcultures and races that inhabit the Avalon Isles these days has the right mix to be a success in the global market: not the white supremacist in the UKIP, not the Islamic fundamentalists, not the hedonistic lower and middle-classes, the city boys and the old dying Anglo-American system of the elite also comes up empty: they get their money but not the real power that they want.

      I think the only example, though not perfect. of someone from our society showing signs of true progress where the oft' loathed Eastern European builders, nannies and cleaners. Now, these people were no saints, and there is a criminal element within them but I saw also that they had the right mixture of grit, desire, humility and intelligence.

      The Eastern Europeans were all hard-workers who added much to the British economy. And I have made much use of them in my own business. After the crisis, many have returned to their native countries without much further ado and keep struggling like mighty titans cast in secondary roles to better their lives, even if they gnash their teeth. They have something of the Teutonic spirit within them, even though they are mostly Slavonic on the outside.

      Therefore, I can not for the life of me understand why, even after the summer riots, people from Eastern Europe get the heavy and sharp end of the stick in the British Isles. It is a joke, but true nonetheless that many of the Polish builders are intellectually, morally and culturally superior to our professors and Ph.D.s, not to speak of the middle and lower classes the white and dark trash of Great-Britain who want their iPads and consumption driven lifestyles.

      If you only respect the heaviness of the wallet and glossy political correctness — whether fascist or ultra-liberal you are doomed, I figure the Brits will be in for a nasty surprise.

      The Golden Rule of Business is that real entrepreneurship and values wear out the teeth, eyes and the whole body of the doer, most of the times you will be half-dead by the time when the much dreamed of and desired success beckons, There is that, or you choose the path of the blue or white collar teeth — who gets the things the easy way. There are sociopaths who will choose the second option but most people will choose neither and just wait for things to work themselves out.

      The media has fooled us by portraying millionaires and billionaires as perpetual sunshine-boys. I reckon some of them might be, but all the covers of the magazines produces illusions that success is easy for the individual and for the state. It is not.

      You only get ahead in life honestly if you struggle mightily like the laughed at Eastern European. Brits have forgotten that.

    • Thanks, Allen, for taking the time to respond in such detail. It is hard to compose into this tiny box, but I'll try:

      My disagreement is that you seem to find the Bank guilty of theft when they should be accused of murder. They murdered the UK economy in 2008 by being too timid; 5y inflation expectations (via the breakeven rates) fell from 3% in September to -1% in December. The response to the Lehman failure was to cut Bank Rate in October to... 4.5%. The UK was in recession for two quarters by this point on the latest figures. Why is that not a shocking policy failure, ex post?

      Scott Sumner's argument on the subsequent causation seems compelling: the devastating fall in nominal spending during this period decimated incomes, the fiscal position, employment, and the asset base of the banking sector. That last in turn caused a massive redistribution of resources away from UK taxpayers, present and future. Tim Congdon takes a similar line.

      I would never try to deny there was a UK credit bubble which inflated house prices. I think evidence of excess supply is thin though. If you find excess supply in Leeds and tight supply in the M4 corridor, that does not shout "bubble" to me. You will always find those kinds of regional variations. When you drive into Milton Keynes and find a ghost town, print that headline!

      But the crimes of bad mortgage regulation and a credit bubble were not the Bank's mandate either. Macro stability was, and they failed on that metric.

    • One remark to add is that UK has total debt of 5 x GDP which is the developed world highest on par with Japan. Thus, there was/is potential for Apocalypse on much greater scale then the Greek one. Taking this into account BoE has done wonders, proof is in the AAA credit rating for borrower loaded with debt of five times yearly income and priniting money to survive is still save heaven!

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