Keynes turning in his grave

Is any wonder that we are in such a financial pickle. 

Relative to 1960s, domestic debt in 1970s rose by 238%. In the 1980s relevant to the 1970s debt rose 318%. In the 1990s 180% and in the eight years up to the global crash in 2008 163%. That's 'household debt' in a period when household earnings had plateaued and begun to decline. The offer of "debt inducement" was predicated on the need to feed the consumerism which was the linch pin to so called economic growth.

The rise of Walmart, a model whereby the goods were discounted in accordance with the reduced circumstances of whole neighbourhoods was in part dependent on low wages and long hours which further drove down the earnings in the neighbourhood since Walmart had became the major employer within the neighbourhood. 

The package of low priced goods, falling wages and ever attractive debt offers are the Capitalistic landscape we have become used to. There is no resilience in this economic scenario and in my opinion we are headed for another crash which this time will be much more difficult to counteract because of the negligible interest rates (a major tool used to stimulate an economy) we have had for a decade.

This didn't come by accident but like the Generals in the two World Wars, there is a disconnect between the leadership and the ordinary human being.

Money is the great differentiation. But even money is suspect. They have devaluated all the major currencies with unimaginable amounts of  'Quantitative Easing' (printing money in the old language) and we are awash with uncertainty. 

The glitter of short term returns has meant the banks never really ceased their sometimes near criminal manipulation of money and given the wholesale largesse from the taxpayer to rebalance their balance sheets, (not in the form of a loan but as a gift from us), they continue to weave a sense of false security. Like the child with its hand in the cookie jar they are are unable to go back to the basics of proper banking. 

Barclays, after the debacle of Bob Diamond and his laissez-faire minimal regulation approach they brought in Anthony Jenkins a local man who's first task was to free the bank from its reliance on the casino of arm of the bank, 'investment banking' and re-establish the wholesale bank with its priority on lending. Jenkins was the good guy, home grown he promised to rebalance the balance sheet and rid the bank of bad practice which was exemplified by the complicit nature of Diamond, an American banker, with the Libor scandal on his watch.

After only 2 years, Jenkins has been sacked. The pressure for the good old days of rapid unsubstantiated growth from the banks 'Hedge Fund' shareholders was too great and another American, Jes Staley from JPMorgan, one of the banks involved in the crash of 2008 were he was, you've guessed it their Investment Bank boss, has been brought in with the blessing of the Banks Chairman John McFarlane who has promised to take a back seat and give full reign to the incoming guy. One wonders, was he doing that when Diamond was in charge ?

And so the wheel turns full circle and Keynes must be turning in his grave !!