After searching, I finally came across this from 21 October: "[…] the Corporation of London points out that the City in its broadest sense provided £66bn of tax revenues in 2009, employed a million people, and accounted for 10% of GDP." (http://www.guardian.co.uk/politics/2010/oct/21/spending-review-banking-city ).

Can you provide a link for the 90% figure you quoted, Andrew?

Thanks for the link. Wow! I don't know how many times I disagreed with Larry Elliott and others at the Guardian when they repeated 'it's a liquidity crisis' and I said no it's not and they either ignored me or said, you don't know what you're talking about.

The MASSIVE problem is that the SOLVENCY crisis WILL NOT BE SOLVED, CANNOT be solved by the idiot policies we have been and still are following. They were designed to deal with a liquidty problem which is why they failed and will continue to fail.

If King is now saying – finally – that it is a solvency crisis then WHAT THE HELL is he doing still following the broken and ruinous policies of bailing out the banks?!!!

Andrew I will respond you your very thoughtful posts. But I have only just got in from filmiing and am off again early in the morning. So I have no time to write. Hope you'll bear with me.

He says "In September 2007, everyone thought that the crisis was one of liquidity and as a result there was an expectation central banks could provide the solution. But it quickly became clear that it was in fact a crisis of solvency".

http://www.bankofengland.co.uk/publications/speeches/2010/speech455.pdf

Quite an interesting speech.

Strongly recommended !

frog2

Perhaps to advance the argument the terms need to be altered. I live in France, these discussions have spurred a new party to form : the Anti Capitalist party. They will be tilting
at windmills because the debt politic you desfribe is based precisely on lack of capital; if nations and banks had capital ( liquidity) the borrowing wouldn't happen. I don't think you can
call it capitalism anymore : you would have to call it something like " writing-capital-into-existence-out-of-thin-air"ism. The day when someone ( perhaps you ) decides what to call it
is the day when the answer we are both conjecturing will form itself in to an alternative which
experts and nations can put their fiscal wieght behind.

All this frantic dollar buying on behalf of China / UK ( you noted 74 billion last quarter) etc suggests a concerted try to shore up capitalism. But perhaps the capitalism and globalsim are in conflict with each other. Doesnt capitalism suggests a competetive world where seperate entities with a certain reserve of resources compete ? : this is not the same world where a phone call to a company in the UK goes to a call centre in New delhi, or our ecological trousers are shipped over from india at 1/10 of the cost to the customer of those made down the road.

Countries develop at different speeds, stock and shares rely on the same up and down being played out between companies and nations. Yet the global financial market works at a more or less constant speed, making its profit not for national economies but for multinational companies.

The so called credit crisis ………the liquidity / hosuing market crash is a symptom ……. but of what ?….

.Suggested by the above is that perhaps the cause of the debt spiral is a kind of contradcition in terms or " stress" or between the activities/ behaviour and goals of multinational companies and those nation states/national economies…..which nobody has thought to factior into their profit margins yet ?

well it doesnt convince me but it reads like it doesnt convince you either. I didn't really expect an "answer".

so here's some more questions:

Whilst agreeing in principle with your recommendations that bad banks should be shut down, I return to my question, who is going to shut them down, if the governments are the ones borrowing from them ? Answering a concrete question with an unrealiseable abstract only makes logical sense. This contradiction will be / is being played out in real time and will eventually resolve itself one way or another, perhaps something " drastic "' needs to happen to force someone's hand…. thats why smaller countries like ireland are interesting as a model. As you noted, the Irish gov't chose to back private wealth not the public interest …i.e. perpetuate the status quo / guarantee short term security.

Perhaps to advance this argument the terms need to be altered. I live in France, these discussions have spurred a new party to form : the Anti Capitalist party. They will be tilting
at windmills because the debt politic you desfribe is based precisely on lack of capital; if nations and banks had capital ( liquidity) the borrowing wouldn't happen. I don't think you can call it capitalism anymore : you would have to call it something like " writing-capital-into-existence-out-of-thin-air"ism. The day when someone ( perhaps you ) decides what to call it is the day when the answer we are both conjecturing will form itself in to an alternative which observers experts and perghaps even nations can put their weight behind. What would you call it ?

All this frantic dollar buying on behalf of China / UK ( you noted 74 billion last quarter in UK ) etc notes a last ditch return to capitalism. But perhaps the capitalism and globalsim are in conflict with each other, capitalism suggests a competetive world where seperate entities with a certain reserve of resources compete : this is not the same world where a phone call to a company in the UK or france or italy or brazil goes to the same call centre in New delhi, or where our ecological trousers are shipped over from india at 1/10 of the cost to the customer of those made down the road.

Countries develop at different speeds, stock and shares rely on the same up and down being played out between companies and nations. Yet the global fincancial market has no " eschange rate " it works at a constant speed, making its profit not for individual economies but for multinational companies. The money involved as you observe dwarfs national budgets.

90% of wealth generate in UK city related !! ( guardian)
no wonder they back the city before the UK !!!

The so called credit crisis ………the liquidity / hosuing market crash is a symptom ……. but of what ?….

.Suggested by the above is that perhaps the cause of the debt spiral is a kind of "contradcition in terms" or " stress" between the activities/ behaviour and goals of multinational companies and those nation states/national economies…..which nobody has thought to factior into their profit margins yet ?

Thank you for your kind comment. And thank you for the link. I am away for a couple of days and may not have time to post.

I have downloaded the pdf and will see if I can understand it.

Thanks again.

I don't think the mechanics of our monetary systems are arguable, so if the MMT folks' explanation is valid then a lot of people not only misunderstand the system, but are also implementing policy based on that misunderstanding, and to our detriment.

http://www.moslereconomics.com/wp-content/powerpoints/7DIF.pdf

So Golem, if you're not a member of the "MMT is bullshit" crowd, maybe someday you could talk a bit about its perspective on debt, taxes & austerity. Or not. Just a suggestion.

Regardless of your ideas about the MMT cult, I'm glad I found your blog, & I enjoy its thought-provoking nature.