tag:blogger.com,1999:blog-1141932539860553199.post3612473108370003328..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: Debt before Dividends?Mark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger42125tag:blogger.com,1999:blog-1141932539860553199.post-49742854879376556502016-08-08T09:59:06.991+01:002016-08-08T09:59:06.991+01:00@Mike W
Sorry to hear that you were led to read Ge...@Mike W<br />Sorry to hear that you were led to read Gesell after a discussion involving me and Lola. Cant imagine what impression you got of this key figure with L going on ,as usual, about "sound money" and minimal government and me going deranged in response, though we always manage to stay polite.<br />There are plenty of scholars who accuse Keynes of plagiarising Gesell.<br />My feeling is that he didn't plagiarise him enough: Keynes in the General Theory says that the ideas Gesell derived from Henry George were not very important when, in fact, the Georgist component could have saved the entire "Keynesian" project by taxing or nationalising land to restrain inflation of the money supply.(Somewhere Gesell said that a severe bout of LVT would so knock the stuffing out of land speculators that they would queue up for the compensated land nationalisation Gesell envisaged: would rush to unload their land.)<br />Most likely, faced with the technological redundancy of having so many robot factories, the chateau generals will have to turn to Gesell and Douglasite national dividend income for all because they will have run out of arguments, as you have said.(My argument with MW is that he would raise the Dividend from Land tax returns when it is simpler for the State to take over the money supply from the banks and issue the dosh straight out with LVT as an anti inflationary back-up.But there is a superstitious belief that banks borrow the dosh off their savers to lend on which is a bit pathological.)DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-62154683323265744672016-08-06T14:41:50.654+01:002016-08-06T14:41:50.654+01:00DBC Reed above,
I did not know Haig was a member ...DBC Reed above,<br /><br />I did not know Haig was a member of the Bullshit Club at Oxford. Did you know that the most vicious battle the British fought in 1914-15 was the battle Haig engaged in to remove ('degum' as it was called)General Sir John French from command of the BEF. Haig won because he had in Court, a Lady in Waiting, whispering on his side. Not much changes in a hundred years, what, what. <br /><br />I now own a copy of, 'The Natural Economic Order' by Gessel. Some time ago you and Lola, et al, discussed the matter and I got round to the book ( a swinging 1960s type cover from an Indian printer was my only option). It has no index!<br /><br />So...<br />I have had a real job finding secondary sources to read at the same time. But a first scan of the book shows me why Keynes did not discuss Henry George when he approached the topic of Fisher and Gessel in the GT. George is embbeded in Gessel too. Quite satisfactory. <br /><br />In my hunt around for a good discussion of why Kenyes thought the future belonged to Fisher and Gessel (and George) I came across this Neo Lib economist, who does not seem to be the run of the mill moron. He might amuse you as he seems to me to use the word 'liberal' in the sense of J S Mills, Utilitarianism. Anyway if you dig around he has some interesting stuff about breaking the zero bound.<br /><br />http://blog.supplysideliberal.com/post/23959666073/what-is-a-supply-side-liberal<br /><br />Glad to hear your opinion.MikeWhttps://www.blogger.com/profile/15455583313857077618noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-25649782187852165552016-08-05T15:13:58.336+01:002016-08-05T15:13:58.336+01:00@Mike W
Very odd: my print copy of the Guardian do...@Mike W<br />Very odd: my print copy of the Guardian does not contain Simon Jenkins' article which, in the online version, is clearly dated for today.<br />I would say that Jenkins' views here are identical with my own and contain all the references to the Government dishing out money to punters that incur the righteous indignation of the Chateau generals on here.( Good you e-mailed: I was about to write to the Guardian comparing current economists to the self-same Haig and Rawlinson who heroically massacred their own men at the Somme.Did you know that Haig was a member of the Bullingdon Club? Class will out.)<br /> I suppose Jenkins feels that infrastructure spending will not give the immediate boost to popular demand that his other measures like dishing out bank cards worth £1,000 to all and sundry will engender.<br />Something in that. On the other hand, Silvio Gessell's idea of time limiting the bank credit on a use-it-or-lose-it basis would make sure all the dosh got into the system straight away.DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-90837604055436968882016-08-05T12:07:47.120+01:002016-08-05T12:07:47.120+01:00DBC Reed above,
There are not many 'progressi...DBC Reed above,<br /><br />There are not many 'progressive' left wingers left at The Guardian. Indeed, it comes to something that Jenkins is to the left of most of the useless wankers there and at the BBC and the PLP. He does discuss the hetrodox economists you link to above. He calls the BOE, WW1, 'Chateau Generals'. They have no idea what the front line looks like. Very Good.<br /><br />He adds:<br />It is irresponsible to await the chancellor’s autumn statement and a political fiddle with tax rates. The engine of the economy must crash into forward gear. Money must be got into bank accounts, cash cards, shops tills and revenues. The plea from 35 economists published in the Guardian this week for “unconventional measures” made only one mistake. It suggested more spending on state infrastructure, which is just spending delayed. <br /><br />Not sure about that bit. Does he think Infrasruture spending would not spread down quickly enough?MikeWhttps://www.blogger.com/profile/15455583313857077618noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-36776811860359450632016-08-04T22:57:03.979+01:002016-08-04T22:57:03.979+01:00DBC Reed above, 'deniers and Tina's will s...DBC Reed above, 'deniers and Tina's will surely deny they ever said anything of the sort!<br /><br />I notice the media make sure that fiscal policy (which will have to come in the end) is known by Freedman's simplification, 'helicopter money'. But Keynes deeper understanding of the failure of a pure monetry approach that we have been following is not. 'Pushing on a string' surely captures why the BOE has nothing left and had nothing much to start with. Buinessmen here would tell Carney, to another interest rate reduction, some cheap bank loans, but no return on capital investment in the future; to Feck right off! Mr Shiny, Mr Lola, Mr W et al, will all just keep on piling up the Guv bonds thank you very much. <br />One for the kids, to paraphrase, that nice Mr Churchill, The British government always does the right thing: Once it has exhausted all the other possibilities.Not long now.MikeWhttps://www.blogger.com/profile/15455583313857077618noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-57466998171087161402016-08-04T19:48:02.641+01:002016-08-04T19:48:02.641+01:00@Mike W
To complicate matters Skidelsky , Victoria...@Mike W<br />To complicate matters Skidelsky , Victoria Chick, Steve Keen and 30 others have published a letter in the Guardian (4.viii.16,) which Larry Elliott correctly describes (p2) as an argument for "helicopter money". Would be interesting to see how the bank money creation deniers explain away "Helicopter money." Not to worry a few more years of near zero interest rates and quantitative easing putting up asset prices and they'll get round to something tremendously unconvincing.DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-43531009020935859752016-08-04T13:22:52.434+01:002016-08-04T13:22:52.434+01:00Mombers
Again, accountants lawyers etc will play ...Mombers<br /><br />Again, accountants lawyers etc will play games.<br /><br />What is investment? Marketing spending? Is that investment in a new asset or 'consumption'.<br /><br />What about if I create a Newco, borrow the money and buy a machine. Is that OK? But what if I go and buy a brand from another company? Is that an asset? Or I buy the shares of another company with a load of machines/patents/R&D/stuff I want that they are not using and that I can put to better use?<br /><br />What about borrowing for working capital?<br /><br />And what is an accounting profit? Which is what a dividend is paid 'from'. Even though you need the cash to pay. <br /><br />See... its a bit more complicated out here in the real world.Shineyhttps://www.blogger.com/profile/13281261419328886986noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-5015290713847843722016-08-04T12:52:16.390+01:002016-08-04T12:52:16.390+01:00DBC Reed above,
That's right banks do not ...DBC Reed above,<br /><br />That's right banks do not 'borrow' from customers. They are not 'loanable funds' institutions. The funny thing is, this is what Positive Money (100% reserve) wants: to make banks, be, as it were, what folks think they are ie, LFI! At best,at very best, you might say banks actually 'lend' (they have it) £1 in every £250 that goes onto their balance sheets as an asset and a liabily. <br />But, but, but, DBC Reed, once invented, created, monitised, the debt is real: the state will come after whoever owes the banks this 'madeup' amount!!! <br /><br />So, more like 'Original Sin' than anything postmodern MikeWhttps://www.blogger.com/profile/15455583313857077618noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-42133258594158182462016-08-04T10:06:47.562+01:002016-08-04T10:06:47.562+01:00@L As "debt to finance consumption "come...@L As "debt to finance consumption "comes from government borrowing from banks and as banks don't borrow off their customers , there is no debt as such.Perhaps the problem is linguistic.DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-73242782545014407022016-08-03T16:37:43.782+01:002016-08-03T16:37:43.782+01:00M. And debt to finance consumption = V bad, as th...M. And debt to finance consumption = V bad, as that is 'capital consumption'.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-30134701039879663142016-08-03T13:18:55.640+01:002016-08-03T13:18:55.640+01:00I propose a general principle: debt to create new ...I propose a general principle: debt to create new assets = good, debt to buy existing ones is bad. Lots of grey areas between the two of course! Private equity is particularly dodgy I think - without the massively favourable tax treatment it wouldn't make sense. Mergers using debt are also bonkers - simply offer the target shareholders payment in shares.mombershttps://www.blogger.com/profile/09650866436764567516noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-70994907612945300252016-08-03T12:20:46.144+01:002016-08-03T12:20:46.144+01:00S. No-one is per se criticising debt (least of al...S. No-one is per se criticising debt (least of all me - similar story in rescuing my Dad's business after he died). What we are saying is that there is a possible skew away from equity risk capital and debt caused by various government interventions and biases. Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-7172197048055937842016-08-02T21:44:01.308+01:002016-08-02T21:44:01.308+01:00Look you lot....debt has its place. I know. Been t...Look you lot....debt has its place. I know. Been there, done it, got the scars and the T-shirt. Me and my business partner saved a business from the death, and 49 jobs in the process, by using it to the max and putting our arses on the line. So no f***ing lectures.<br /><br />You don't run a manufacturing business in c21st without some form of debt facility somewhere. End of. And to have some idiot who has NEVER run anything, not even a whelk stall, saying you can't get a return on the effort in a tax efficient way (i.e. dividend) until its all paid off is, frankly, bollocks of the highest order and would kill most SMEs stone dead.Shineyhttps://www.blogger.com/profile/13281261419328886986noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-35883459209599750622016-08-02T20:11:19.844+01:002016-08-02T20:11:19.844+01:00DBCR it was largely the flawed 'economics'...DBCR it was largely the flawed 'economics' of Blair brown balls that drove the explosion in the use of debt.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-50301911885438836502016-08-02T20:11:13.200+01:002016-08-02T20:11:13.200+01:00DBCR it was largely the flawed 'economics'...DBCR it was largely the flawed 'economics' of Blair brown balls that drove the explosion in the use of debt.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-60488528247975291382016-08-02T18:48:07.256+01:002016-08-02T18:48:07.256+01:00Not sure what all the fuss is about. Fans of Briti...Not sure what all the fuss is about. Fans of British capitalism will be more righteously indignant about the latest assault on all that's holy by the stinker Corbyn who is somehow allowed to publish in a national paper: "Labour would reform the takeover code to ensure any corporate buyer has the means to acquire a company without saddling it with debt" Observer 31.vii.16.The Labour Party is suggesting that you have to have the money to take over somebody else's company!Obviously he is not aware that the long Conservative progress to deindustrialisation has been based ,not on old-fashioned company growth (that's what the Germans do for Gods sake) but taking them over for next to nothing and doing a bit of fucking about.Look at all the honours Man U has won since the Glazers gave the club this treatment.And all the fan loyalty! Some people!!DBC Reedhttps://www.blogger.com/profile/17891849727783879145noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-12422763617476544982016-08-02T18:20:48.537+01:002016-08-02T18:20:48.537+01:00@ SK, good one, whatever rules B or anybody else c...@ SK, good one, whatever rules B or anybody else could think up would be easily circumvented by stinkers like thee and me.Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-23160290647515945832016-08-02T18:12:54.524+01:002016-08-02T18:12:54.524+01:00Mombers. All true.Mombers. All true.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-7649094376362552132016-08-02T18:05:05.394+01:002016-08-02T18:05:05.394+01:00@Lola, the government hasn't helped what with ...@Lola, the government hasn't helped what with ZIRP but my point is that companies in trouble generally look like more like gigantic underfunded pensions with a manufacturing department / retail operation on the side. Even without ZIRP, rising life expectancy would have scuppered their promises. It's not really the business of anyone except insurance companies to take on the risk of increasing longevity and a real shame to see good businesses bankrupted or crippled because of carelessly written blank chequesmombershttps://www.blogger.com/profile/09650866436764567516noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-6709147614291871242016-08-02T17:40:14.220+01:002016-08-02T17:40:14.220+01:00Bayard - Yes I assumed that you were looking at it...Bayard - Yes I assumed that you were looking at it too simplistically and my suspicions were confirmed by your reply ;-D<br /><br />Wide ranging laws designed to cure a narrow and specific problem are rarely effective - as SumoKing points out it just allows lawyers/accountants to play even more tricks. And they tend to have unintended consequences/side effects as Sobers points out.Shineyhttps://www.blogger.com/profile/13281261419328886986noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-48259419486911462762016-08-02T17:37:52.561+01:002016-08-02T17:37:52.561+01:00Mombers. I forgot ZIRP and financial repression. ...Mombers. I forgot ZIRP and financial repression. They have doubled the cost of Pensions.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-91704939368657566582016-08-02T17:14:36.539+01:002016-08-02T17:14:36.539+01:00Mombers. Well, it's a combination of factors,...Mombers. Well, it's a combination of factors, with the gummint playing a large part. Yes, employers were ambitious, or rather their actuaries didn't get on top of increasing life expectancy and changes in fund returns post 1991 - the general fall in bond yields. And that meant that fund values were over-estimated as to solvency and employers could take contribution holidays. that was compounded by G Howe having a go a 'fund surpluses' and threatening to tax schemes. Plus all the regulatory crap after maxwell etc. etc.<br /><br />But most of it is government failure.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-52474808256411294272016-08-02T16:29:56.149+01:002016-08-02T16:29:56.149+01:00There would be no effect.
What you would have is...There would be no effect. <br /><br />What you would have is (as usual) a largely empty top holding company/listed top holding with a treasury centre company directly below which would lend to all your operating group cos below. <br /><br />They would then pay everything they could back to treasury centre via debt repayments drawing down loan money for operating expenses during the year and subject to thin cap rules never become profitable. <br /><br />Treasury centre would probably have a big loan from top co, loaned down when it was incorporated with share premium or it would be in profit and divi up as much cash as possible to then be shared out to shareholders, who if listed are probably holding less than 10% equity directly but slightly more than 25% when you dig down into nominees and investment companies.SumoKinghttps://www.blogger.com/profile/02018901303892114091noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-71296583242305782792016-08-02T15:19:05.139+01:002016-08-02T15:19:05.139+01:00I'm not convinced that the problems with final...I'm not convinced that the problems with final salary pension liabilities are so much the government's fault. Companies made ridiculous open ended promises to their employees, they should have realised a lot earlier and closed the schemes down and replaced with (employer) risk free defined contribution ones instead. We now have the vicious circle of companies put in trouble by their pension liabilities, weighing down their share prices, which then weigh down other companies' pension assets, etc.mombershttps://www.blogger.com/profile/09650866436764567516noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-35320709622513231642016-08-02T12:25:03.932+01:002016-08-02T12:25:03.932+01:00MikeW. Ho Ho.MikeW. Ho Ho.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.com