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Guest Post: Daniel Hannan MEP on When Nothing is Something
You may remember Daniel Hannan for his rather direct and brazenly eloquent critique of Gordon "The Devalued Prime Minister of a Devalued Government" Brown last spring. If not, it is quite easy to get acquainted with Mr. Hannan's singular voice via his veracity-charged YouTube channel. (We are particularly fond of the instant classics, Richard II on the EU constitution, The Brussels Racket, and The Germans Have Caught On). I have personally been a Hannan-fan for quite some time so it should surprise no one to learn that I was thrilled when he accepted my invitation to write for Zero Hedge. As a result, Zero Hedge is pleased to present our readers with the first of what we hope are many Hannan pieces at Zero Hedge. Welcome, indeed, Mr. Hannan!
Is there anything - anything at all - that might convince world leaders that they shouldn't respond to the credit crunch by spending more? It may seem common sense that you can't borrow your way out of debt: we all apply that principle to our household budgets. But, since the financial crisis began, states increased their spending despite the plain evidence that stimulus packages have done nothing to ward off the recession.
On most measures, it hasn't worked: the downturn has happened anyway, but we are now drifting into it with an additional debt burden. The trouble is that, politically, stimulus packages take on their own momentum. Leaders cannot go back to their voters and sheepishly admit that the money has been wasted. They have to pretend that they are almost there, that another billion dollars will do the trick. And so, like rogue traders, they end up doubling and doubling in an attempt to move the market.
What's the alternative to spending more? How about this: not spending more. The phrase "doing nothing is not an option" is one of the most pernicious in the political lexicon, and is almost never true. By way of illustration, ponder the way in which New Zealand dealt with an earlier banking crisis two decades ago.
New Zealand was the first major country to withdraw all subsidies from its agricultural sector - a reform that was hugely controversial at the time, but that almost no one now wants to reverse. When the grants were terminated, land values fell, and many Kiwi farmers found themselves in negative equity. The bankers approached the government to demand a bail-out. The government declined to involve itself. The bankers tried again, insisting that, if the state didn't step in, there would be a financial collapse. Ministers politely told them that this was their problem.
Result? The bankers realised that it was their problem. Well aware that the last thing they needed was a series of repossessions and auctions, they allowed farmers to reschedule their mortgage payments. The crisis was averted and, sooner than expected, land prices recovered. It's what economists call "spontaneous order".
The point is that, had the government given in to pressure, it would almost certainly have triggered the collapse that it hoped to avert.
Sadly, it's a brave politician who argues, in a crisis, against state activity. The natural advantage will always lie with the Something Must Be Done crowd. But there are few crises so severe that they cannot be exacerbated by government intervention. I leave you with the words of that most conservative of Conservatives, the third Marquess of Salisbury, spoken about the Bulgarian Crisis of the 1880s, but capable of much wider application: "If anything happens, it will be for the worse, and it is therefore in our interest that as little should happen as possible."
-- Daniel Hannan's daily blog is hosted by the London Daily Telegraph: http://www.hannan.co.uk
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Thanks Marla!
And WELCOME Daniel....hope to see more of your contributions here.
Daniel Hannan = my hero. It is because of people like Daniel, Marla and Tyler that I have not completely lost faith in humanity. I am relieved there are still a few rational people in this world. Daniel, I hope this is not the only post we see from you on Zero Hedge.
Concur. My hero too - please write more.
I wish America had more politicians like Mr. Hannan, but hopefully he will be the future prime minister of the UK. His speaking common sense to the blatant stupidy of government intervention is much neede and welcome. Please keep contributing, you're common sense is very welcome here.
His videos are fantastic. But the problems are moot. Fractional reserve banking is a scam. How can economic activity bring about such debts? Simply by multiplying fantasy onto reality. I hope he can help the EU put and end to the scam and revert to no debt non usery banking.
Nothing is going to slow the interventionist approach in the US. The fed will continue POMO until March. Zero interest rates are with us for at least six months. Congress will pass an expanded ($15,000) home buyer credit. More clunker deals are coming. The printing press will be extended to the BK states in 2010. The Feds are still making 96.5% LTV loans at silly mortgage rates.
The only thing that will stop this is the market. At what point will it say, "Enough is enough. We will not buy more US paper"? Based on a 3.3% 10 year we are far from that.
This will end with a run on the dollar. When that happens the doors will get closed on the US. That is when the great sucking noise will truly be heard.
In the meantime Daniel, welcome to ZH.
We still have massive state and local government implosions poised to tip over. Police cars are getting repossessed, budget holes are starting to gape again, infrastructure is crumbling, and all the while tax revenues are dropping. These stimulus and recovery act projects do not generate much in tax revenues for these starved states. Is the fed going to start buying Muni Bonds?
They can keep dispensing sugar shots to the economy, but I fail to see how or where we keep from drifting deeper into oblivion, and as Daniel stated we go there under the crushing weight of more debt and ultimately higher taxes which will extinguish any recovery faster than higher interest rates.
I am taxed to f-----n death here in NY state and they are raising fees and taxes in tsunami fashion and not cutting spending when they have every reason and excuse in the world to do so.
The goddamned HIGHEST TAXED states are the most bankrupt if anyone cares to notice.
California's problems will re-appear and several other states including NY will have giant red sink holes on the balance sheets by the end of 2009.
The ONLY way out of this death spiral is a giant butcher knife and a huge gut bucket approach to government spending and taxation.
We are still being crushed under the weight of dead carcasses like the Tennessee Valley Authority which gets bigger and more bloated yearly because of the budget model that they follow whereby they only get funded if they can show they spent all the money they got prior year. There are hundreds of these behemoths out there. NY State has dozens of "Authorities" which extract taxes and fees out of businesses and citizens above and beyond what the state collects.
Nobody gets it. It drives me crazy. We are being smothered!
That is why things like this happen here.
http://www.buffalonews.com/cityregion/story/672153.html
http://www.timesunion.com/AspStories/story.asp?storyID=801528&category=REGION
Imagine paying $165,000 a year in property taxes on a 2800 square foot house.
Good points....you have my blood boiling about how much I hate NE. Yes, I've met a few nice people here, but the people are generally stupid, yet they think they are the be all to end all. I'll save my rant for another place here at ZH, but these people have a great influence over the rest of the country through their media and political culture. The people in the rest of the country would do themselves a lot of good by seceding from anything connected to DC and points north of there - ASAP!!!
NJ for example sends $1.65 to the Fed for every $1 that comes back. South Carolina? About $0.60. Please secede asap.
I told you they were stupid...lol
One man's tax break is another man's tax increase. Can't feel the love for your bloke. Frigging Billionaire is complaining about taxes? I pay a tenth of that now and I don't have 800 feet of lake frontage and I'm no billionaire, millionaire, thousandaire. Nore do I profit from a tax supported business like he does. You need someone more Mother Teresa like to fight your battle.
Bruce, as much as I think you're absolutely right, the US government will not stop intervening, especially not now, it hurts me to read it.
The only way out is for everything to be set to zero and making it illegal for the GS's of this world to keep coming up with more and more exotic instruments. By all means have a stock exchange which deals in shares and nothing else. Ban all derivatives and all the spin off from these derivatives
Hannan; one of the few Anglo-Saxon politicians ( or otherwise ) i can stand; and not just stand; but support his ideas; good job old chap; hope we see more of you in the upcoming months, years ....
Let me add my welcome and congratulations on a wonderful maiden effort.
i wish there were more politicians like him...
And, thanks for the insight about the tough and rightful decisions made by NZ. Unfortunately, we will implode before the blind masses in the US see any light, drunk with greed and the opiates of government handouts.
That's it... I'm moving to New Zealand.
Watch the profanity...we are now in the presence of Daniel Hannan! Nevermind, this whole financial/political/economic/fraud-filled mess is a profanity.
Thanks for this!
I'm reminded of a story told to me by a friend about a business. For multiple reasons, the business was going badly and the friend, a senior employee, said to the owner: "This is a pile of shit", to which the owner replied "Yes, but it's MY pile of shit."
Politicians are unable to do nothing, even when nothing is the right thing to do. To do nothing would be to admit that they cannot manage the economy, tantamount to admitting that they and their central banks are frauds. This is of course true, but the admission itself is impossible. It is much more likely for me to have tea with my nearest doppleganger from a parallel universe. Another reason is that politicians are put where they are by wealthy interests who are totally invested in the status quo, and their job, more than anything else, is to maintain the status quo.
These are among the reasons why I am so (nearly) certain that this crisis will culminate in a currency crash, and why I am so fond of saying that "government can be counted on to act stupidly." They are also among the reasons why I am so committed to eliminating the central bank and minimizing government.
Welcome Daniel. Have shown your original lambasting of Brown to many friends and colleagues. The only thing that will stop the Keynesian insanity is if the Federal Reserve is shut down. Its all about the Fed. Also, as someone noted above, the world may eventually balk at buying US promissary notes unless they are paid a handsome interest to compensate for an ugly balance sheet and grim future prospects.
A warm welcome indeed to a voice and style that is not heard often enough to be fully appreciated here in the US. One more fine day has arrived. With wit & candor perhaps the tide of ever increased diffusion of responsibility and accountability may well be subsiding.
All The Best
Daniel Hannan for President.
So Daniel, er Mr. Hannan, what do you make of Blair as President of the EU? LOL, it would be hilarious if it wasn't true. I feel like I am living in the twilight zone where down is up, black is white, stupidity is smart, the incompetent are promoted, failures are rewarded.
This guy also had another message for the U.S. on a television interview I watched...He said basically, "If you can choose one single thing from our system in the U.K. to use as a learning experience it would be NOT to go down the road of letting government intervene in health care!" He was passionate and emphatic about keeping health and government miles from each other.
welcome mr. hannan.
Great insight... the best summary I have read of what should have happened when this crisis began and why... looking forward to reading more from you.
Bravo Mr. Hannan.
Please continue to courageously speak out as there are all too few voices of reason & sanity out there in the wilderness.
We need more politicians who can detail financial issues with such poetry.
Well done, Mr. Hannan. Good piece.
ZH keeps on kicking a$$ and taking anons. Great stuff.
"MARK IT ZERO,DUDE"
As of 10:34am I have got to yell: "YOU´VE GOTTA LOVE AN EFFICIENT STOCK MARKET!!!"
"Result? The bankers realised that it was their problem." Ring the bell, we have a winner!
Welcome, Mr. Hannan.
Adding dan Hannan to Zero Hedge is another reason I am impressed with this site. Thanks for the good work, ZH!
Refreshing article... especially after reading this morning about Krugman and Reich pushing for a second stimulus.
It's really disturbing to see economists clamoring for spending more money, while ignoring the fact that the system is broken (e.g., wrong leadership, too much consumption).
Why not fix the system first? It would cost no money.
Hannans one of the few conservatives left in the tories.god bless him and dougie carswell.most of the rest of the parliamentary tory party are the main reason I don't vote tory any more.
sadly as with anyone saying anything sensible a position of power will only come when the rest of the idiots have completely fucked it up and fucked off with their bullet proof pension to retire to Tuscany/take up bullet proof EU sinecure
Daniel, people with honesty, integrity and the ability to question the corrupt status quo are not long for this world.
Welcome to the tiny atoll of transparency and dissent surrounded by the tempestuous sea of lies and deceit.
Cheers,
Pigpen
Welcome, Mr Hannan!
While yours is an unusual perspective from one in government, it is the more valuable for that.
Sadly, many of your colleagues will observe serial liars and interventionist like Mr Blair "fail upwards" and choose to emulate his excesses rather than your restraint.
hannan, wonderful to see you here! welcome to la resistance!
Welcome to ZH Mr. Hannan. One of the few decent, honest politicians out there.
Your comments remind me of the classic line spoken by the Civil Service mandarin, Sir Humphrey Appleby, in the old BBC comedy 'Yes Prime Minister'.
'Something must be done, Prime Minster. This is something. Therefore we must do it!'
Fantastic.
Welcome.
When this thing unravels, I imagine you and Dr. Paul will be members of an exquisitely small group of politicians that will be allowed to survive when the goblin horde comes looking for those they hold responsible.
But still, keep that pike in the thatch sharp, and stay safe.
The world will need you.
The pieces are in motion.
While you were dragging to your sacrificial altars the men of justice, of independence, of reason, of wealth, of self-esteem -- I beat you to it, I reached them first. I told them the nature of the game you were playing and the nature of that moral code of yours, which they had been too innocently generous to grasp. I showed them the way to live by another morality-mine. It is mine that they chose to follow.
All the men who have vanished, the men you hated, yet dreaded to lose, it is I who have taken them away from you. Do not attempt to find us. We do not choose to be found. Do not cry that it is our duty to serve you. We do not recognize such duty. Do not cry that you need us. We do not consider need a claim. Do not cry that you own us. You don't. Do not beg us to return. We are on strike, we, the men of the mind.
We are on strike against self-immolation. We are on strike against the creed of unearned rewards and unrewarded duties. We are on strike against the dogma that the pursuit of one's happiness is evil. We are on strike against the doctrine that life is guilt.
There is a difference between our strike and all those you've practiced for centuries: our strike consists, not of making demands, but of granting them. We are evil, according to your morality. We have chosen not to harm you any longer. We are useless, according to your economics. We have chosen not to exploit you any longer. We are dangerous and to be shackled, according to your politics. We have chosen not to endanger you, nor to wear the shackles any longer. We are only an illusion, according to your philosophy. We have chosen not to blind you any longer and have left you free to face reality -- the reality you wanted, the world as you see it now, a world without mind.
--John Galt, Atlas Shrugged 1957
Only one solution remains...
"While you were dragging to your sacrificial altars the men of justice, of independence, of reason, of wealth, of self-esteem -- I beat you to it, I reached them first. I told them the nature of the game you were playing and the nature of that moral code of yours, which they had been too innocently generous to grasp. I showed them the way to live by another morality-mine. It is mine that they chose to follow.
All the men who have vanished, the men you hated, yet dreaded to lose, it is I who have taken them away from you. Do not attempt to find us. We do not choose to be found. Do not cry that it is our duty to serve you. We do not recognize such duty. Do not cry that you need us. We do not consider need a claim. Do not cry that you own us. You don't. Do not beg us to return. We are on strike, we, the men of the mind.
We are on strike against self-immolation. We are on strike against the creed of unearned rewards and unrewarded duties. We are on strike against the dogma that the pursuit of one's happiness is evil. We are on strike against the doctrine that life is guilt.
There is a difference between our strike and all those you've practiced for centuries: our strike consists, not of making demands, but of granting them. We are evil, according to your morality. We have chosen not to harm you any longer. We are useless, according to your economics. We have chosen not to exploit you any longer. We are dangerous and to be shackled, according to your politics. We have chosen not to endanger you, nor to wear the shackles any longer. We are only an illusion, according to your philosophy. We have chosen not to blind you any longer and have left you free to face reality -- the reality you wanted, the world as you see it now, a world without mind." -- John Galt, Atlas Shrugged 1957
Good post.
Brilliant and concise insight.
Welcome to ZH sir.... and thank you Marla.
As an American I have not read too much Daniel Hannan. However, the stuff I have read is quite visionary. I would say he is one of the most revolutionary small-government thinkers on the planet! Great score for Zero Hedge.
Yes, welcome.
One nit to pick--one can borrow one's way out of debt if the borrowing is refinancing at a lower rate of interest. Used judiciously the state's lower costs for finance can actually help in certain situations.
Just not this situation, and not these bureaucrats.
Rhetoric yes, but substance too please. :^)
--Your Friendly Neighborhood Hive Mind Node
Great post! It's all right there in the Tao Te Ching...-
Frankly, if it were not against the law for an individual to print money, I would be doing it right this second.
Behavior is governed by incentives for the 'normal' person.
The governments print money because it's not illegal for them to do so, it's the easiest way out, and they don't have to seek the approval of anyone to do it.
Without removing that 'solution' from their bag of tricks,
expect the words of Mr. Hannan to be ignored.
They will keep doing these things for as long as they can. Who wouldn't borrow 43 Billion dollars for two years at 1% interest? Our central bank is dangling this money in front of Obama's face so of course he'll snatch it and make some venture investments with it. Whether doing this is ok or not is debatable, to a certain point, even considering the big deficits and the logic of approaching debt with greater savings and not more debt...But then we see that those venture investments turn out to be purchasing stakes in bankrupt companies... It is as if the government doesnt realize that backing insolvent comapnies is not the best way to get a good return. In the end it turns out to be only a huge waste of credibility.
The current finanical crisis is not contained in one sector of economy, as was the removal of the NZ Ag subsidies. It was a purposeful devaluation of land prices, which were based on a false farm economy, supported by taxpayer money.
The NZ government did not sit back and do nothing; they took the action to remove the subsidies knowing their actions would cause the devaluation of land prices.
I can’t follow what action or non-action you are praising or protesting. Was the NZ government good because they decided to destroy a bloated Ag sector or were they good because they would not go back on their legislative decision not to help the banks and farmers in the first place?
Please don’t manufacture stories like this, it very George Will like.
PS. NZ is a mini Iceland; got caught up in the Yen carry trade, not a good example of financial admoration.
From the movie 'Chinatown'
Evelyn Mulwray: What were you doing there?
Jake Gittes: Working for the District Attorney.
Evelyn Mulwray: Doing what?
Jake Gittes: As little as possible.
Evelyn Mulwray: The District Attorney gives his men advice like that?
Jake Gittes: They do in Chinatown.
I just talked with a friend of mine who's from New Zealand. He said that it was politically easy to stick the banks with the problem, because most of the banks were Australian! I guess there's no love lost between N.Z. and Australia!
Do nothing and see what happens.
This is a great principle and one of the true crown jewels of management but no one will ever admit it because it makes them look bad. Let's face it, from a PR point of view it's all downside. If things go well you can't take any credit and if they go bad you're the goat. The crowd of opportunists who call themselves managers today would never take a bet like that because risk aside, it offers no benefit to them personally even though it may have the greatest benefit for their organization (or society) if the bet pays off.
Anyone who can take a position like this has got my ear. When the smoke clears people will always have good and bad opinions about your decisions, it's the results that matter. It was never a credit crisis or this-or-that economic crisis. It always comes down to a personal integrity crisis.
The first thing to do when you find you've dug yourself into a hole too deep to climb out of, is stop digging.
However, Uncle Sam says, "Are you kidding me? What am I supposed to do? Just stand here and do nothing? I've got to dig faster."
You just need to understand that our leaders don't care about the common people, they just care about themselves and those who give them the status of positions where they have the appearance of power. Those truly in power, controlling these mindless puppets, are simply using them to rob the rest of us of as much as they possibly can for as long as they can. That is why they borrow all the more, in the midst of a debt crisis, and give it to the politically well connected. Because they know that their time is short and they want to get as much for themselves as they can before the rest of us start refusing to give any more. Personally, I think it is time to begin seriously considering the advise of the fictional character John Galt in Ayn Rand's novel "Atlas Shrugged" and just go on strike.
As a "kiwi" who lived through the reforms of the 1980's kiwi farmers are now the most cost efficient farmers in the world.
I laugh at Europe and US farmers that can only survive on subsidies from their governments.
You just need to understand that our leaders don't care about the common people, they just care about themselves and those who give them the status of positions where they have the appearance of power. Those truly in power, controlling these mindless puppets, are simply using them to rob the rest of us of as much as they possibly can for as long as they can. That is why they borrow all the more, in the midst of a debt crisis, and give it to the politically well connected. Because their puppetmasters know that their time is short and they want to get as much for themselves as they can before the rest of us start refusing to give any more. Personally, I think it is time to begin seriously considering the advise of the fictional character John Galt in Ayn Rand's novel Atlas Shrugged and just go on strike.
Death to the middle classass!!! ha ha ha In all seriousness it is sad that our middle class, the strength of the nation, the strength of all truly great nations is being eradicated.
Death to the middle classass!!! ha ha ha In all seriousness it is sad that our middle class, the strength of the nation, the strength of all truly great nations is being eradicated.
One alternative not mentioned is to print some more money.
Too true, you cant borrow your way out of the debt mountain.
But if you have a deflationary collapse, as you well might, then that debt cannot be repaid either, as the total amount of money falls every time debts are not repaid, making it more difficult to pay the remaining debt, which causes more debt, etc, until you are left with only a fraction of the initial money supply.
Take away 90% of an economy's money, with contracts valued at nominal currency, and the economy siezes up completely.
The solution, print money, and pump it in to the economy to stop such a collapse from happening. Keep and eye on inflation and interest rates of course, and the result will not prove price inflationary.
I fear that if we were to follow Mr Hannan's advice and go for the deflationary collapse, we will all be eating grass.
Why are we all tap dancing around the real problem?
Without private banking control of national money supplies, all at the cost of interest to the banksters, none of this would be happening! Instead of nations creating money directly to service their economies without creating debt, we have banksters charging us interest for the privilege, ceded to them by stupid or corrupt governments. This gives the banksters power over government, and everything else, in an unsustainable spiral of increasing debt.
The solution is simple. Governments must take back all powers to create money in any form from the private bankster parasites and repudiate all government debt to them because they created the money for that debt out of thin air in the first place. This can be done legally, as the sale of government bonds to the banksters were illegal, under contract law, because no consideration (money) was exchanged. The banksters created the money for government bonds out of thin air!
Interest on loans from properly national banks would go back to the government, replacing taxes, instead of being siphoned off to private banksters who use it to control government, media, and every security and commodity market, including national foreign currencies. This is how the banksters have raped the 3rd world of their resources, and now they are raping us!
Read "Web of Debt" by Ellen H. Brown for the details.
We can return to the incredible prosperity of early American commonwealths, but only if we, once again, cut the parasites off. We have the choice of doing this before chaos ensues. We may never recover from the chaos inevitably to come if we decide to do nothing.
Why are we all tap dancing around the real problem?
Without private banking control of national money supplies, all at the cost of interest to the banksters, none of this would be happening! Instead of nations creating money directly to service their economies without creating debt, we have banksters charging us interest for the privilege, ceded to them by stupid or corrupt governments. This gives the banksters power over government, and everything else, in an unsustainable spiral of increasing debt.
The solution is simple. Governments must take back all powers to create money in any form from the private bankster parasites and repudiate all government debt to them because they created the money for that debt out of thin air in the first place. This can be done legally, as the sale of government bonds to the banksters were illegal, under contract law, because no consideration (money) was exchanged. The banksters created the money for government bonds out of thin air!
Interest on loans from properly national banks would go back to the government, replacing taxes, instead of being siphoned off to private banksters who use it to control government, media, and every security and commodity market, including national foreign currencies. This is how the banksters have raped the 3rd world of their resources, and now they are raping us!
Read "Web of Debt" by Ellen H. Brown for the details.
We can return to the incredible prosperity of early American commonwealths, but only if we, once again, cut the parasites off. We have the choice of doing this before chaos ensues. We may never recover from the chaos inevitably to come if we decide to do nothing.
Daniel Hannan, thanks for your succinct and potent statements of truth and faith in what was once called Good Sense or Common Sense. Your words are re_assuring and point toward the fact that we need to set our sights on the bigger goal of jailing these plundering criminals of corrupt DC and New York and other insider big city machine politicians, after they've returned all of their stolen money back to we The People.
WOW! Thank you Zero Hedge and Danniel Hannan.. cannot wait to read your work Mr. Hannan!
Zero Hedge.
The absolute best and only getting better!