Perspectives on the global economic meltdown- (Nov 28 2010)

VikramS · Post by **VikramS** » 13 Nov 2011 15:03

Neshant:

Why do you feel that the stock market has to be positively correlated with lower unemployment and higher paying jobs? In fact in a country where labor costs are the biggest input costs, these two factors will help increase in profits.

Your reasoning would be valid in a closed environment where higher unemployment and absence of higher wage jobs would indicate economic stagnation. However in the world we live in the available markets for both labor and consumption are global.

So even if the US economy stagnates, the large corporations can continue to grow their revenue thanks to overseas markets, and their earnings even faster thanks to lower wages.

Welcome to the era of the multinationals. While for a long time, they were viewed as preying on the less developed world, they are now an equal opportunity predator, serving the interests of their shareholders who primarily come from the upper wealth segment.

That being said, this is a market to trade and not buy and hold. We are one step away from a major liquidity crisis which can trigger another bout of de-leveraging to mirror 2008-2009. That being said, I would not be surprised that we get a V shaped bounce like we got in 2009 after a major sell-off. The markets tend to move in 3-4 year cycles, and we are likely going to approach the date of a multi-year low in the next 6-18 months.

Chinmayanand · Post by **Chinmayanand** » 13 Nov 2011 17:58

Gloom Boom & Doom November issue, it's worth a read.

abhischekcc · Post by **abhischekcc** » 13 Nov 2011 23:58

sumishi, WW2 would not have taken place if Hitler had attacked USSR. UK and US would have backed him to the hilt if he had done so.

shaardula · Post by **shaardula** » 14 Nov 2011 09:09

a fairly good complement to nassem taleb's works.
Quant: The Alchemists of Wall Street.
http://www.youtube.com/watch?v=ed2FWNWwE3I

kmkraoind · Post by **kmkraoind** » 14 Nov 2011 12:18

Obama to China: behave like 'grown up' economy - Reuters

Using some of his toughest language yet against China, Obama -- a day after face-to-face talks with President Hu Jintao -- demanded that China stop "gaming" the international economic system and create a level playing field for U.S. and other foreign businesses.

"We're going to continue to be firm that China operate by the same rules as everyone else," Obama said. "We don't want them taking advantage of the United States."

.....

Obama insisted that China must let its currency rise faster in value, saying it was being kept artificially low and was thus hurting American companies and jobs. He said China, which often presents itself as a developing country, is now "grown up" and should act that way in global economic affairs.

shyam · Post by **shyam** » 14 Nov 2011 14:16

Remember what that trader mentioned in BBC interview?

Goldman Sachs International Advisor Mario Monti Is Italy's New Prime Minister

shyam · Post by **shyam** » 15 Nov 2011 11:17

Papademos is new Greek PM, vows to stick with euro

Papademos, who is not a member of any party, has been operating lately as an adviser to the prime minister.

He taught at Columbia University from 1975 to 1984 and worked at the Federal Reserve Bank of Boston before returning to Greece to become chief economist at the Bank of Greece from 1985-1993.

kmkraoind · Post by **kmkraoind** » 15 Nov 2011 23:42

IMF Sees ‘Buildup’ of China Bank Risk Needing More Oversight
................

European Stocks Drop as Monti Struggles to Win Backing in Italy

Finmeccanica SpA sank 20 percent, saying it will sell 1 billion euros ($1.4 billion) in assets after predicting a loss for this year. UniCredit SpA slid 4.5 percent as banks posted one of the worst performances of the 19 industry groups in the Stoxx Europe 600 Index. Cable & Wireless Worldwide Plc plunged 26 percent as the company suspended future dividend payments and named a new chief executive officer.

Wondering what might be the defense manufacturing assets for sale. Time for Tata, L&T and/or Pipavav to look into these.

Hari Seldon · Post by **Hari Seldon** » 16 Nov 2011 04:29

ss_roy garu, where art thou?

I recall the man predicting the fire-sale of assets including prime tech & defence ones in the TFTA emerged world in one of the very first-first posts back when this dhaga was separately created by Ramana garu in Sept'08....

How true-true only...

paramu · Post by **paramu** » 16 Nov 2011 05:17

He has been banned for advocating violence in some other thread.

shaardula · Post by **shaardula** » 16 Nov 2011 06:50

Inflation in US from 1666 to 2004 (Wiki)
http://upload.wikimedia.org/wikipedia/c ... ncient.svg
some chi-by-eye: you can see that upto late 1700s positive and negative spikes were equal in magnitude and duration. short rapid fluctuations. net ~ zero.
then during civil war(1860s) sharp short +ve inflation. then followed by prolonged small -ves.
war years net positive.
post war, managed economics, net positive.

dow jones from 1890s to late 2000s.
http://upload.wikimedia.org/wikipedia/c ... log%29.svg
y-axis is log. are these type of steps organic?

abhishek_sharma · Post by **abhishek_sharma** » 16 Nov 2011 08:35

Krugman vs Summers: The debate

ramana · Post by **ramana** » 16 Nov 2011 20:51

One of the best moves the Germany did was to spend the ~$120B on East German integration in the 1990s. They are reaping the benefits now of being the most advanced indutrial country in Europe. Sort of capping their 100 years of rise since unification of Germany by Bismarck in 1870s. in contrast Great Britian became UKistan trying to curb the rise of Germany!
Such is the force of history of awakened people.

No wonder the game in India is put the people to sleep.

abhishek_sharma · Post by **abhishek_sharma** » 17 Nov 2011 04:47

Obama’s Flunking Economy: The Real Cause

shaardula · Post by **shaardula** » 17 Nov 2011 18:40

robert reich
http://www.marketplace.org/topics/econo ... -be-better

But over the last three decades, the opposite has happened. The economy has doubled in size but the pay of most workers has barely risen, adjusted for inflation. Almost all the gains have gone to the very top. America's middle class maintained its purchasing power for a time because wives and mothers enter the paid work force, and then, during the housing boom, it could borrow trillions against their homes.

But those coping mechanisms are now exhausted. Which means most Americans no longer have the purchasing power to keep the economy going. That's why we're in the mess we're in. So to get the economy moving again we have to restore broad-based prosperity -- not just for the top 1 percent and not just for the bottom 99 percent, but for everyone.

The top 1 percent should be eager to do this. As we learned in the three decades after World War II, the rich do far better with a smaller share of a rapidly-growing economy than they do with a big share of one that's barely growing at all.

shyam · Post by **shyam** » 18 Nov 2011 11:21

I think the MF Global scam, and theft of client money, is going to create much bigger problem down the line than that is felt now. Some time back a UK trader said that he is going to close his entire US operation because he can not trust the US financial market. Another small investment manager has advised all his clients to take back their money. He says that he can not guarantee his clients that their money is safe. Another person says that he can not do his financial business now because his money is now stuck as the fund he invested-in had in turn invested in MFG. Trends Research Institute founder, Gerard Celente, said that he lost the 6 digit money he invested in gold futures with some investment firm who in turn used MFG.

One thing people realize is that MFG is not the only one who use clients' money for company bets. Absolutely no criminal action against MFG management also shows that US is not serious about fixing the problem. This erodes the confidence people have in the US financial markets. It will take sometime to fully unravel, and GOTUS/SEC/FED must take some serious steps if it wants to prevent this.

shyam · Post by **shyam** » 18 Nov 2011 11:29

People believe that US corporations are now sitting on a lot of cash. There is another truth to this, they are sitting on a lot of debt.

Why that corporate cash pile isn't so impressive

But this sunny picture for the largest companies is marred by debt, too. Since the start of the recession, S&P 500 companies have borrowed an additional 44 cents for every additional dollar they've hoarded in cash. For many companies, debt has risen more than cash.

Drugmaker Pfizer added $3.5 billion to cash from the start of the recession. But it added $28 billion of debt, according to FactSet. PepsiCo added $22 billion more debt than cash. Hewlett-Packard added $16 billion more, Wal-Mart $13 billion.
....
....
The expectation was that this "wall of debt" would cause some companies to fail. Others would struggle but ultimately pay their lenders. Either way, borrowing would ultimately fall.

But that didn't happen. Instead, the Federal Reserve slashed benchmark interest rates to near zero, lowering yields for conservative investments like money market funds and pushing frustrated investors into riskier corporate bonds offering higher returns. As demand for those bonds rose, businesses were able to issue more of them than ever, and use the proceeds to pay off old ones coming due soon.

"The Fed encouraged debt refinancing, but we need debt extinguishment," says Boockvar. "It's bought time, but it doesn't deal with the fundamental problem."

...
...
The problem with debt is you don't need an actual recession to cause trouble for companies, just the fear of one. Spooked lenders can hike rates on new loans needed to pay off old ones, or cut companies off completely.

shyam · Post by **shyam** » 18 Nov 2011 11:33

People always say that China has $3T of reserve to do anything they want. The fact is that big chunk of that money is already invested in other assets. The liquidity available to them is far far low at $100B.

Sorry Europe: China's Pockets Are...Empty

As every central banker, politician (except Chuck Schumer), and bank CEO looks towards Chinese central planners as their apparent bottomless pit of dumb money, it seems that perhaps the cupboards are bare. Reuters, via The China Post, highlights in a recent article that while there are indeed reserves, they are gainfully employed and the unwinding of those positions (in size enough to matter) to provide the cash that is so desperately needed to keep the ponzi going, will itself cause a vicious circle of negative sentiment. In fact, analysts reckon China's armory has only about US$100 billion to spare.

shyam · Post by **shyam** » 18 Nov 2011 12:57

The Interests Of Global Elites Are Diverging

RamaY · Post by **RamaY** » 18 Nov 2011 19:33

shyam wrote: Sorry Europe: China's Pockets Are...Empty

From this...

Meanwhile, China's trade surplus, essentially the money it has to invest overseas, is shrinking as Beijing does what critics in the developed world have been urging for years and rebalances its economy away from exports.

Imports surged 28.7 percent year on year in October and the surplus of US$17 billion was well short of the US$24.9 billion forecast by economists.

Beijing holds an estimated one-quarter of its reserves in euro-denominated assets, so keeping that steady implies a US$117.5 billion increase this year if the country's foreign exchange reserves grow by the US$470 billion estimated in 2011.

That's roughly the amount economists expect China to invest in Europe in 2012.

“Assuming the FX reserve accumulation does not slow significantly, I think China will put at least US$80-100 billion in euro assets per year in the next two years,” said Wei Yao, China economist at Societe Generale in Hong Kong.

RamaY · Post by **RamaY** » 18 Nov 2011 19:36

China Trade Surplus May Be Wiped Out Within Two Years, PBOC Adviser Says

China’s trade surplus may disappear within two years as domestic demand rises, making the yuan rate less of an issue, an adviser to the nation’s central bank said.

“In one to two years, our trade surplus will be zero,” the adviser, Li Daokui, said in an interview in Beijing today. “It’s possible for the renminbi to face depreciation pressure. If that time comes, let the market decide its fluctuation,” he said, referring to the Chinese currency.

...
Yuan Rate
The yuan fell 0.16 percent to 6.3528 per dollar today. China’s currency has appreciated 2.3 percent against the dollar in the past six months, according to Bloomberg Data.

China’s inflation rate has dropped from a three-year high of 6.5 percent in July to 5.5 percent last month, government data show. The economy expanded 9.1 percent in the third quarter, the least since 2009, amid the government’s campaign to cool consumer and property prices.

“Inflation will likely ease to 2.8 percent next year,” Li said. Inflation will be 50% down in a year? How do they do it???? That may help deposit rates rise above the inflation rate, in line with the central bank’s goal, he said.

...
Economic Growth
China will probably invest in public works projects if there’s a risk of the nation’s growth falling below 6 percent , Li said. China’s economy will grow 9 percent next year, according to an International Monetary Fund projection in September.

svinayak · Post by **svinayak** » 19 Nov 2011 02:55

shyam wrote:The Interests Of Global Elites Are Diverging

This is a good thing and India has to exploit the global situation.

Asit P · Post by **Asit P** » 19 Nov 2011 03:49

Coming to Grips with Japan's Government Debt

According to Ministry of Finance statistics, in the current 2011 fiscal year accumulated central and local government debt has already reached 229.1 percent of Japanese GDP on a gross basis, and 127.8 percent on a net basis. By comparison, the numbers for the U.S. are 99.5 percent (gross) and 72.4 percent (net); for Italy 120.5 percent (gross) and 100.6 percent (net); for the UK 83 percent (gross) and 75.1 percent (net); for France 87.6 percent (gross) and 77.9 percent (net); and for Germany 80.1 percent (gross) and 54.7 percent (net).

RamaY · Post by **RamaY** » 19 Nov 2011 05:35

http://www.leap2020.eu/GEAB-N-59-is-ava ... a8148.html

As we come to the end of the second half of 2011, it is evident that 15,000 billion in ghost assets have gone up in smoke since last July, just as was anticipated by LEAP/E2020 (GEAB N°56 ). And, according to our team, this process figures to continue at the same rate throughout the year to come. Indeed we estimate that, with the introduction of a 50% discount on Greek government debt, the global systemic crisis has entered a new phase: that of the generalized discount on Western public debt and its corollary, the fragmentation of the global financial markets. Our team believes that 2012 will bring an average discount of 30% of total Western public debt (1), plus an equivalent amount in loss of assets from the balance sheets of worldwide financial institutions. Specifically, LEAP/E2020 anticipates the loss of 30,000 billion ghost assets by early 2013 (2), with an acceleration in 2012 of the partitioning process of the global financial market (3) into three increasingly disconnected currency areas: Dollar, Euro, and Yuan. These two phenomena feed into each other. They will also be the cause of a sharp decline of 30% on the part of US currency in 2012 (4), as we announced last April (GEAB N°54 ), which will occur amidst a sharp reduction in demand for the US dollar and the worsening of the US governmental debt crisis. The end of 2011 will therefore see, as anticipated, the trigger of the European debt crisis detonating a US bomb.

RamaY · Post by **RamaY** » 19 Nov 2011 05:42

Acharya wrote:
shyam wrote:The Interests Of Global Elites Are Diverging
This is a good thing and India has to exploit the global situation.

Acharya garu did you watch the interview posted at the end?

Muppalla · Post by **Muppalla** » 19 Nov 2011 09:16

ramana wrote:One of the best moves the Germany did was to spend the ~$120B on East German integration in the 1990s. They are reaping the benefits now of being the most advanced indutrial country in Europe. Sort of capping their 100 years of rise since unification of Germany by Bismarck in 1870s. in contrast Great Britian became UKistan trying to curb the rise of Germany!
Such is the force of history of awakened people.

No wonder the game in India is put the people to sleep.

Though there is a lot of support for French fighers, I think its going to be Eurocopter for India. Who knows how a combo of fake aryans and real aryans would be.

shyam · Post by **shyam** » 19 Nov 2011 10:33

Money has been privatised by stealth

hariks · Post by **hariks** » 20 Nov 2011 00:39

Speech by economist Larry Lang on china
http://www.theepochtimes.com/n2/china-n ... 41214.html

Neshant · Post by **Neshant** » 20 Nov 2011 02:26

Kyle Bass interview

shyam · Post by **shyam** » 20 Nov 2011 04:48

hariks wrote:Speech by economist Larry Lang on china
http://www.theepochtimes.com/n2/china-n ... 41214.html

The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China’s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not post his speech online, or “everyone will look bad,” in the audio that is now on Youtube.

In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.
.....
.....
Lang’s assessment that the regime is bankrupt was based on five conjectures.

Firstly, that the regime’s debt sits at about 36 trillion yuan (US$5.68 trillion). This calculation is arrived at by adding up Chinese local government debt (between 16 trillion and 19.5 trillion yuan, or US$2.5 trillion and US$3 trillion), and the debt owed by state-owned enterprises (another 16 trillion, he said). But with interest of two trillion per year, he thinks things will unravel quickly.

Secondly, that the regime’s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang.

Thirdly, that there is serious excess capacity in the economy, and that private consumption is only 30 percent of economic activity. Lang said that beginning this July, the Purchasing Managers Index, a measure of the manufacturing industry, plunged to a new low of 50.7. This is an indication, in his view, that China’s economy is in recession.

Fourthly, that the regime’s officially published GDP of 9 percent is also fabricated. According to Lang’s data, China’s GDP has decreased 10 percent. He said that the bloated figures come from the dramatic increase in infrastructure construction, including real estate development, railways, and highways each year (accounting for up to 70 percent of GDP in 2010).

Fifthly, that taxes are too high. Last year, the taxes on Chinese businesses (including direct and indirect taxes) were at 70 percent of earnings. The individual tax rate sits at 81.6 percent, Lang said.

Once the “economic tsunami” starts, the regime will lose credibility and China will become the poorest country in the world, Lang said.

shyam · Post by **shyam** » 20 Nov 2011 05:13

There's No Getting Around It, Germany Is Taking Over Europe

shyam · Post by **shyam** » 20 Nov 2011 05:16

Police pepper spraying and arresting students at UC Davis

A viral video. 80K+ views in one day.

Pepper spraying happens in the bginning of the video. The students finally made the police retreat by shouting "shame on you".

shaardula · Post by **shaardula** » 20 Nov 2011 07:25

folks,
i'm trying to understand what they call the 'market' is and had a couple of questions.
the understand business, and invest in it types are the real market.
others dont care a damn about the business and are just riding the waves. whether, it is going up or down, as long as there is volatility, there is a differential and hence a potential for profiting.

my question is, are the number of long term investors more than these wham-bam-thanku mam type of operators? if not isn't the 'market', its 'value' all vapour-ware?

now these days there is algorithmic trading. which brings in efficiency to wave riding. the question is where is the differentiation, if everybody is using the same equations? is it in picking the contrasting trades? or is it in the duration? if you are using the same algos - what is the hitting ratio? how do you guarantee, that demand does not exceed supply at a given instant?

shaardula · Post by **shaardula** » 20 Nov 2011 07:32

this occupy concept is the same as dharna in India. India we have lathi charge. Here they have lathi charge and pepper spray. Police at UC Berkeley hit women in their guts with batons. some 80+ year old woman was pepper sprayed in WA.

shaardula · Post by **shaardula** » 20 Nov 2011 07:50

same dynamics of dharnas everywhere. listen to the slogans. same every where. even the intonations are the same. who's university, our university.

atleast at the various UCs the kids are alive and have a pulse. in my town the kids are still on facebook checking status, fashion blogs, and having weekend parties. well, rich kids with trust funds who pay 40K/semester are who most them are. what else do you expect? grads, who do most of the real reputation building work are all foreigners. elite school and all with great rankings. what education is it if your kids have no idealism?

svinayak · Post by **svinayak** » 20 Nov 2011 10:25

Looks like the answer to the financial collapse is to create a bigger pie so that they are still relavent

america is under the control of a domestic and international banking cartel that is ready to install the north american union which will combine mexico and canada and america under a structure similar to the EU, the same ones who created the EU are the ones who have the north american union ready to be put in place once the whole financial house of cards collapses here in the u.s, they even have the new currency ready to replace the dollar, it is called the AMERO,

Read more: http://www.globalpost.com/dispatch/news ... z1eDb89Npr

Christopher Sidor · Post by **Christopher Sidor** » 20 Nov 2011 11:21

The World in a "Balance Sheet Recession" ---- CSIS Dated 14-Nov-2011.

A different take on what happened in Japans lost decade of 1990s. The audio recording of the Presentation has to be viewed in conjunction with the PDF of the presentation. Some of the points that came out of presentation are given below

1) In japan, post the bubble burst of 1990, majority of corporate sector started to pay down debt, without any credit uptake from the consumers. This left only the government as the consumer of the credit. That is why government spending continued to outpace its revenue/tax collection. This is a fundamental economic principle, if there is a saver (creditor) saving say 10 yens/dollar/euro/rupee then there has to be a person (debtor) on the other hand willing to use the 10 yens/dollar/euro/rupee. Otherwise the money gets stuck in the system and we cannot progress. What Richard said was that this is happening in US too, i.e. all the major corporations/Banks/etc are paying down debt. This does not pass scrutiny. Banks are trying to repair their damaged balance sheets. But not the big US big Companies.
US big companies are not awash in debt and they are not paying down Debt. Rather they have cash surpluses. They are retaining this cash surpluses for one reason, they are not getting funding from US banks. US Banks are getting cash from Fed Reserve at next to zero and Fed Reserve has driven the cost of long term funds very low. But still the US banks are not lending to corporate at similar rates. While Big US companies are able to whether this due to cash flow and inbuilt cash reserves, small and medium US companies are the most badly hit. And these US small and medium companies are the biggest generator of employment. Till money supply to them eases, US employment generation will not pick up in any meaningful way.

2) In UK post the Lehman disaster, the money supply by Bank of England increased by over 150%, but lending by banks to the companies actually declined by 17%. In US the money supply increased by over 200%, but lending by banks to companies actually declined by 25%. In EU the money supply was increased post lehman disaster, then it was contracted then again was expanded, in a see-saw manner. But even in time periods of money supply increase, It does seem that Banks are not lending to companies. They have come up with many excuses, like there is no demand for credit. In certain cases they have even admitted to carrying out "tightening of lending standards".

3) In Euro there is a single currency. What this implies is that any of the investor/Bank/pension fund/Financial institution PIIGS is free to pick up any bond from any issuer, either sovereign or non-sovereign, in the entire Euro-Zone. So looking at the current economic scenario, what does a PIIGS investor do? The investor goes and invests in German/Netherlands/France Government Bonds or Corporate Debt. What does the PIIGS investor not do? He or she does not invest in PIIGS themselves. This leads to a depressing of price of German/Netherlands/French sovereign bonds. It also has an very bad effect on the economy of PIIGS themselves, as PIIGS companies cannot access low-interest loans.
Please note that I have kept Iceland out of the PIIGS acronomy as it has its own currency, Krona and is not part of Euro-zone.

shyam · Post by **shyam** » 20 Nov 2011 12:00

What price the new democracy? Goldman Sachs conquers Europe

Christopher Sidor · Post by **Christopher Sidor** » 20 Nov 2011 13:24

^^^^
Observe the map given above. See the relative size of Germany and France. Yet still Germany is a bigger economic power as compared to France. The current rump of Germany is due to the eastward expansion of Poland's border and the loss of East-Prussia to then Soviet Union after 1945. And why did Poland expand eastward? Because the Soviets, post 1945, took the eastern territory of Poland and in compensation provided it with German territory.

Singha · Post by **Singha** » 20 Nov 2011 18:11

^^
a useful comment:
Well said and well written. In reply to your earlier post, have you
read Nicholas Shaxson's "Treasure Islands: tax havens and the men who
stole the world"? The chapter on the anachronistic City of London - a
"state within a state" which is exempted from many UK laws and where the
number of votes of the companies (accorded in proportion to the number of their employees - who do not have to be consulted over how their votes are used) is about 3 times that of the 9000 or so residents
- is a real eye-opener. The City (Corporation) is the power house and
everyone else, HMG included, is terrified of upsetting it. Amongst other things, this is why a much-needed tax on financial transactions/speculation which might help to curb the excesses will never see the light of day
---
http://www.guardian.co.uk/commentisfree ... of-century

I used to think of such processes as regulatory capture: government agencies being taken over by the companies they were supposed to restrain. But I've just read Nicholas Shaxson's Treasure Islands – perhaps the most important book published in the UK so far this year – and now I'm not so sure. Shaxson shows how the world's tax havens have not, as the OECD claims, been eliminated, but legitimised; how the City of London is itself a giant tax haven, which passes much of its business through its subsidiary havens in British dependencies, overseas territories and former colonies; how its operations mesh with and are often indistinguishable from the laundering of the proceeds of crime; and how the Corporation of the City of London in effect dictates to the government, while remaining exempt from democratic control. If Hosni Mubarak has passed his alleged $70bn through British banks, the Egyptians won't see a piastre of it.

Reading Treasure Islands, I have realised that injustice of the kind described in this column is no perversion of the system; it is the system. Tony Blair came to power after assuring the City of his benign intentions. He then deregulated it and cut its taxes. Cameron didn't have to assure it of anything: his party exists to turn its demands into public policy. Our ministers are not public servants. They work for the people who fund their parties, run the banks and own the newspapers, shielding them from their obligations to society, insulating them from democratic challenge.
......
Our political system protects and enriches a fantastically wealthy elite, much of whose money is, as a result of their interesting tax and transfer arrangements, in effect stolen from poorer countries, and poorer citizens of their own countries. Ours is a semi-criminal money-laundering economy, legitimised by the pomp of the lord mayor's show and multiple layers of defence in government. Politically irrelevant, economically invisible, the rest of us inhabit the margins of the system. Governments ensure that we are thrown enough scraps to keep us quiet, while the ultra-rich get on with the serious business of looting the global economy and crushing attempts to hold them to account.

And this government? It has learned the lesson that Thatcher never grasped. If you want to turn this country into another Mexico, where the ruling elite wallows in unimaginable, state-facilitated wealth while the rest can go to hell, you don't declare war on society, you don't lambast single mothers or refuse to apologise for Bloody Sunday. You assuage, reassure, conciliate, emote. Then you shaft us.