Public deficits are rich’s surpluses

Reducing government deficits is one of the most prominent themes of public debate.

But a related basic fact hardly ever gets mentioned: all deficits are counterbalanced by surpluses, and the sums on both sides are equal.

A deficit occurs when your revenues are less than your outlays in a given period.

Because your outlays are necessarily someone else’s revenues, and your revenues someone else’s outlays, your deficit implies that the rest of the world economy has a net surplus vis-à-vis you exactly equal to your deficit.

If you are the Greek or British government, or any government, the rest of the world economy includes all other economic actors in your country and all economic actors abroad.

For sake of clarity, non government economic actors can be clustered into households and companies.

A public deficit in, say Britain, implies a net combined surplus for households and companies in Britain plus all foreign households, companies and governments dealing with Britain.

In the present climate, a majority of households have serious difficulties covering their expenses. Likewise, many small and medium size businesses are far from enjoying big surpluses.

So where are we to find the surpluses counterbalancing the huge public deficits?

Simply put, they are with winners in the global economic game: multinational companies, their top managers, investors, bankers, accountants, lawyers, and the host of individuals and entities of various kinds gravitating around them.

But what about emerging countries? Aren’t they benefiting from deficits of developed economies?

Yes, in the sense that their exporting companies are enjoying surpluses, and so are their owners, senior managers, and officials having some control over them.

At the end of the day, wherever you look, a very small group of people in the global economy take the lion’s share of surpluses counterbalancing public deficits.

Can this continue for much longer?

To find the answer, let’s bring debts and financial assets in the picture.

If you have a deficit, there are only two things you can do: use some of your savings, or incur debt.

If you have a surplus, there is only one thing you can do: pile up savings.

Savings can be either in financial assets, such as cash, bonds, shares, hedge funds …, or in real assets, such as land, houses, jewellery, gold, wine….

Financial assets are the flip side of the coin of debts and liabilities: they are claims on economic actors who have borrowed (or issued shares).

These days, holders of financial assets face a problem: governments have such high levels of deficits and debts (from past deficits) that they will find it increasingly difficult to honour their obligations.

Which means that sooner rather than later, substantial financial assets will disappear in smoke.

Ah but, say economists, governments will be able to meet their obligations if only the economy grows, allowing government revenues (mainly taxes) to increase, and if government expenditures are squeezed.

We hear this sort of stuff almost daily.

About Greece, Portugal, Spain, Italy, Britain, the US,…and a host of other countries.

The key question is always left unanswered: where will the extra demand for goods and services necessary for growth in the world economy come from?

Governments, whether national, regional, or local, have to reduce their demand.

The vast majority of households can hardly spend more given the squeeze on their incomes and job prospects. As for companies, they are busy minimizing expenses and investments to maintain profits and cash flows.

So where to turn for extra demand in the economy? We are left with the ultimate winners: the rich.

But will the rich, who have enjoyed surpluses and accumulated savings in the past, spend more in the future?

They see that reductions of government deficits will entail smaller surpluses for their businesses, and they see increasing threats to the value of their accumulated savings.

In short, it looks like the end of the road for the present economic set-up.

Frantic growth in the last decades was fuelled by cheap debt as central banks pumped easy money in the system.

But the debt mountain is now so high that confidence in the system is evaporating.

Without confidence, no growth is possible. Without growth the debt mountain cannot be repaid.

Substantial default is thus inevitable; it has already started with Greek bonds. Enormous turbulences will ensue.

This, broadly speaking, is where the world stands in purely financial terms.

As you can appreciate, it is not so difficult to grasp, once you see through the shower of jargon confetti blown in our faces by the system’s experts.

It’s good to be clear once and for all about the global financial story.

We can then put it in a corner and concentrate on the essential: the amazing vibrational and spiritual changes taking place on the planet.

Fear not, enjoy harmony in its delicate manifestations.

Love,

Leo

Copyright © Leo Foresta 2012

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Globalisation is reverse socialism

There is a lot of whinging about the excesses of capitalism these days.

Understandably so.

As a good example here is an interesting post from Zero Hedge relayed with comments on Mike Norman’s blog:

http://mikenormaneconomics.blogspot.com/2012/02/zh-should-you-be-subsidizing-executive.html

Extract:

“What we won’t hear about is Corporations, like Caterpillar, taking money from workers and taxpayers, to enrich Corporate profits, and Corporate executives.  

We won’t hear about a CEO who got his pay quadrupled, and in turn cut his workers salary by 50%.

Most of all we won’t hear about the soft landing in living standards for 80% of Americans”.

All fine, but at the end of the day, the problem is much deeper than capitalism and its injustices.

The real issue is materialism, i.e. the mechanistic world view and its consequences on individual and collective attitudes and behaviour.

Fear not, enjoy some rest.

Love,

Leo

Copyright © Leo Foresta 2012

Medical technology is great for GDP

Contact lenses, hip replacement, pace makers, open heart surgery, IVF… are all marvels of modern technology.

We can’t help but admire the technical prouesses that they imply.

But couldn’t their aims be reached by other means, possibly more natural, less painful, with fewer or no side effects, and cheaper?

Take contact lenses for example.

They may seem a great help for short sighted people. They do enable to see with more accuracy, but at the cost of a significant intrusion: the eye surface is definitely not meant to be covered by a layer of glass or plastic.

And lenses do not restore natural vision.

According to conventional ophthalmologists, restoring natural vision is impossible. Once you are short sighted, there is nothing else to do than wearing glasses or contact lenses, or having the shape of your eye corrected by surgery.

But what exactly is short sightedness? And why does one become short sighted in the first place?

The eye is a globe whose movements are commanded by very powerful muscles.

These, like other muscles in the body, are subject to abnormal tensions when the mind experiences certain emotions.

When particular states of mind persist, eye muscles become permanently tense, causing the eye shape to be altered, with the optical consequence of short or long sightedness, and/or astigmatism.

Clear characteristics in the psychological profiles of short sighted and long sighted people are well documented.

For instance, underlying fear and anxiety are always strongly present in the minds of short sighted individuals.

One doesn’t usually become short sighted before a certain age, say eight or nine, the time for basic fear and anxiety to get in and take root.

What it is not generally known is that some people, through fundamental changes in their outlook on life, manage to improve their vision significantly, sometimes back to sharp accuracy.

This always involves deep relaxation and reaching some state of “let go” of fear.

Conventional ophthalmologists are usually not interested in the deep seated psychological problems of their patients.

They haven’t been trained to deal with them. Their extended knowledge concerns the physiology of the eye, and all the possible forms of eye diseases.

Their focus is on the eye, not the person.

In contrast, when you follow the path of improving your vision naturally, you concentrate on your mind, and even on your soul.

You learn to relax, to meditate, to accept life with more confidence, to experience what happens as fascinating events in the bigger picture of universal consciousness.

When you were a child, fear and other emotions settled in you and caused different things in your body, including tensions in eye muscles, resulting in the symptom of short sightedness.

Once you realise that connections between soul, mind and body are the key to all, you regain your freedom.

Nothing is irreversible. Life is movement, flow and changes. If parts of your body are malfunctioning, there is always a subtle reason.

Always very deep in your fundamental outlook on existence: fear, ego, distrust, impatience, rejection, bitterness, …

These induce subtle messages in the energy/consciousness fields of all your cells, with myriads of physical consequences, invisible and undetectable until they consolidate into manifest symptoms.

In the particular case of short sightedness, changing one’s mental dynamics towards trust, acceptance, patience, etc., has two kinds of effects.

It induces improvements of visual accuracy, often first only during occasional brief spells of a few seconds or minutes: “flashes of clear vision”,  indescribable bliss to whoever has been short sighted for many years.

It also brings a much enhanced comfort of vision: pleasurable sensations in the eye and around, fewer headaches and facial pains. The energy starts flowing again in your eyes. And your thinking becomes clearer, less rigid, less anxious.

You may still need your glasses for driving and other activities requiring accuracy, but most of the time you can live happily without them, enjoying long hours without the tension always present with lenses on.

As for contact lenses, only use them very exceptionally, when you need lenses and absolutely do not whish to wear glasses.

Once you start wearing glasses and contact lenses for much reduced periods of time, you obviously need to buy fewer of them.

Which is great for you, but not so good for business, and not so good for GDP.

Here we are: the money motive, omnipresent in every aspect of life, is especially strong in things medical.

It is interesting to note that Essilor, the number one multinational in contact lenses and glasses, was one of the few companies whose share price improved significantly in 2011 while most of the market booked a strong decline.

It is also interesting to notice that kids tend to wear glasses at a much younger age than was the case a few decades ago.

Could it be that feelings of fear, lack of trust, …etc develop earlier in today’s society which is distinctly child unfriendly.

But for ophthalmologists it seems so much easier not to ask too many questions or to dig too deep. Just prescribe the specs.

Anyway, there are so many trendy coloured frames nowadays that good mothers almost find it a pleasure to buy them for the little darling.

Which is jolly good for business, share price and GDP. Why is it that we see young kids with fun glasses in adverts, films,…etc.

Everything is connected. Nothing happens without a reason.

It is pretty obvious that we could develop a similar line of argument for many other medical conditions and brilliant technologies that are supposed to deal with them.

We focused here on short sightedness because it is often (wrongly) not considered so serious and therefore would not raise the same controversies as more life threatening diseases.

But the gist of the matter is this: there are two approaches to health, which are directly related to two opposing views of the universe.

One is mechanistic, materialist and great for big business, and the other is holistic, subtle, and great for free souls.

Finally, note that medical expenses represent now more than 10% of GDP in several developed economies, fast approaching 20% in the US.

Given the state of public finances, it is glaringly obvious that the system will increasingly focus on a very restricted fraction of population: the rich (generally oldish), and on a few mass public actions particularly remunerative for big business, like vaccination campaigns.

Fear not, be free and keep well.

Love,

Leo

Copyright © Leo Foresta 2012

The poor, the near poor and you

Editorial of The New York Times on the eve of Thanksgiving 2011

http://www.nytimes.com/2011/11/24/opinion/the-poor-the-near-poor-and-you.html?_r=1&hp

The article speaks for itself.

Fear not, keep warm.

Love,

Leo

The mirage of growth is fading away

Politicians and experts all over the world have shared a major obsession for decades: economic growth. Their tune today is that public finances cannot be restored without renewed growth.

However, growth – as they mean it – is a now thing of the past. And this will have major practical implications for all of us.

Economic growth was made possible by a combination of four factors:

–  abundant cheap energy from coal, oil, and gas

–  rapid creation of debt based money

–  demographic expansion in developed countries

–  disregard of natural ecosystems and traditional societies.

But tipping points are now being reached in each one of these four areas.

Coal, oil and gas account for over 80% of energy sources; without them supplied in large quantities and cheaply, industrial civilisation as we know it cannot be sustained.

But increasing their production is becoming very difficult. For oil a production plateau has already been reached and levels can only be maintained with contributions from “non conventional” sources, such as “tar sands”, at great financial cost and with considerable ecological damages.

There is no way fossils fuels can be substantially replaced by renewable sources, such as wind or solar. And this is particularly true for oil, from which are derived fuels for cars, trucks, planes and ships, as well as feedstock for the chemical industry.

The cost of energy will therefore continue to rise substantially, which is soon going to be a decisive obstacle to economic growth.

Over the last three decades, commercial banks have created massive quantities of money through loans, with encouragements from the central banks. A mountain of money and debt has grown faster than the level of physical economic activity, with the result that confidence in the whole system is now in question.

Public authorities with large debts are forced to reduce their expenses and increase their (tax) revenues; but this, by itself, makes growth almost impossible to achieve.

Developed countries have had rapidly rising populations since the end of World War II. But their indigenous populations are now aging and no longer growing.

Many children nowadays are born in poor non indigenous families which can only afford low levels of consumption, which is another impediment to growth.

Finally, and most importantly, the technologies, processes, logistics that are stimulated by the abundant use of fossil fuels have very intrusive impacts on all aspects of nature: destruction of local ecosystems, air pollution, soil poisoning by chemicals, water contamination, greenhouse gases emissions, etc. etc.

The derailment of nature on a global scale is beginning to seriously show its effects in terms of damage to human health and to property.

As these various factors are deeply interacting with ever greater vigour, the conditions for growth as we have known it could only be a temporary state of affairs.

This temporary state, an illusion, a mirage, is now coming to an end.

We are all going to have to adapt, pretty soon, to a post growth age.

Most people fear this to a such degree that they get stuck in denial, whereas a minority (think they) welcome the transformation, without necessarily having thought through its full implications.

These implications we shall explore in future posts.

In the meantime, fear not, keep warm and take care.

Love,

Leo

Out of your comfort zone

The financial crisis looks ever more like systemic unravelling. In its fall, finance is going to pull down the whole economy. The latter is unsound and unsustainable anyway, so you might say its collapse is overdue and to be welcomed.

True, but, the crash will be a time of tough transition. For middle class folks in developed countries, it is going to be a mighty big shock, an encounter with shades of discomfort that they hadn’t previously envisaged.

On the other hand, it is not the end of the world, and the whole business is only a minor blip in the universe.

No consolation for you?

Think deeper.

Are you a poor transient material creature on its own, chained to this little planet and to this small window of time? Or are you a wave of infinite and eternal universal consciousness?

If it is the former, you are truly up a creek. If it is the latter, you don’t have to worry and can concentrate on behaving meaningfully through this micro crisis.

Yes, I know, it does take a wee bit of getting used to that sort of thinking.

But consult with your intuition. Don’t you feel deep down that you are a wave of eternal infinite universal consciousness, and that the goings on around you are just the décor of an avatar that you are going through as part of your spiritual expansion.

It is entirely your choice now: trust in benevolent expansion of universal consciousness, or shrinking in the prison of your mind trapped in the materialist illusion.

Your inner peace or intense anguish will be the consequence of your choice, whatever seems to happen around you.

Fear not, feed you cat, and take care.

Leo

A few lines by George Orwell

From the last chapter of Animal Farm:

“Somehow it seemed as though the farm had grown richer without making the animals themselves any richer – except, of  course, for the pigs and the dogs.

(….)

There was, as Squealer was never tired of  explaining, endless work in the supervision and organization of the farm. Much  of this work was of a kind that the other animals were too ignorant to understand.

(….)

But still, neither pigs nor dogs produced  any food by their own labour; and there were many of them, and their appetites  were always good.”

Animal Farm was published in 1945.

In the next post, I shall be back in the present.

Fear not, keep warm and cosy.

Leo

Don’t be intimidated by economics

The economy has invaded almost every aspect of life. Yet the discipline that is supposed to explain its functioning is of little value; worse, it has become an intellectual fraud.

Shortly after the fall of Lehman Brothers in 2008, the Queen of England, on a visit to the London School of Economics, wondered publicly how it was possible that nobody had seen the crisis coming. Economists and financial experts looked silly indeed.

Have they improved since?

Not at all. Faced with fresh developments of the crisis, their basic (and incredibly simplistic) story is unchanged: the world economy needs growth, ever more growth.

But what does that mean, and what are the implications?

Growth means that the production of all goods and services offered by industry, commerce and public administrations keeps increasing every quarter, every year.

Note first that economists are not in the least concerned by what is produced:cars, houses, healthy food, junk food, drugs, armaments, religious books, porn videos, etc.

They just compute the market value of whatever is produced, total it all up, and if the total for country X is more than it was a year before (after allowing for inflation) by, say, 2%, then growth for that country is 2%, which is deemed not too good, not like the “performance” of China and India, which managed over 10% in the last years.

Note also that the alleged reasons why growth is a good thing according to mainstream economics are: (a) it creates more things for people, which supposedly makes their lives better, and (b) it creates more jobs.

But what is the evidence?

Starting with (b): job creation, the evidence is that an ever larger share of production, in each sector, is controlled by a small group of multinational companies constantly restructuring their activities (and by ricochet those of their subcontractors, suppliers and distributors) to employ less and less people, at ever lower costs.

The sole objective of these multinationals is to increase their profits; they are not in business to create jobs; it fact most of their management time is spent squeezing jobs (and making presentations to the financial markets).

In consequence, growth can never compensate the constant pressure on jobs that management and economists nicely call “productivity”.

What about (a): more things to make life better? Considering the evolution of society over the last few decades, this is laughable.

The basic “material” needs that must be met for comfortable surviving are well known: food, clothing, housing, perhaps remedies; the rest are additional luxuries.

For millennia, food was collected, grown, hunted or fished locally, and consumed within the community or extended family. And the same was true for materials used to make clothes, build houses, keep warm, concoct remedies, etc. Informal economic activities were conducted in the
context of local ecosystems in which humans, animals, forestry, land, rivers, all lived in some kind of balance.

With the rising dominance of Western civilisation, perennial bonds with the land, and nature in general, were gradually loosened.

Today, you have kids in America, Europe, and elsewhere, who have never seen a potato, a chicken, or a goat. They love chips, but they don’t know that they are made with potatoes, and they they can show you chicken nuggets, but they have no idea what they are made of, let alone how they are prepared.

To meet their basic needs, most people in “advanced societies” are entirely dependent, no longer on their local community, but on a global set-up of sourcing, production, logistics and mass distribution. That huge, anonymous system is managed by people whose (practically only) motive is to make profits.

No attention (other than hypocritical lip service) is paid to the large destruction of ecosystems resulting from industrialisation, resources exploitation, mass tourism, etc.

Nor is there time or compassion for the tens of billions of animals (cows, pigs, chickens, rabbits, salmons, and others) who spend lives of intense suffering in the abominable conditions created by the food industry.

Nor is there real awareness of the poisoning and death of land subjected to intensive agriculture (with its millions of tonnes of pesticides and fertilisers, and now its GM seeds). Intensive agriculture employs very few people; the populations that use to live off the land from traditional agriculture have been forced to migrate to urban areas where conditions are very precarious for most.

The top 1% richest people on earth, together with the 5 % below them, “benefit” directly or indirectly from around 70% of all goods and services produced in the world.

But even they, who regard themselves as “privileged”, are largely cut off from nature, and their well being is being rapidly eroded by unhealthy food, commercially driven technical medicine, pollution of air, water, toxicity of components and additives in cosmetics, food, household
products, electromagnetic effects of telecommunication antennae, etc. etc.

The illusion of the consumerist industrial society is torn away before our very eyes. And the dogmatic religion of growth is being exposed.

But the dominant “elites” (the top 1% of the privileged 1%) look intent on holding on to their position, come what may.

To that effect they will resist radical changes, and they will use propaganda and disinformation (vaccination, GM crops are all for the good), censure (do you still hear much about Fukushima?), outright violence (against protesters or marginal groups) to keep their control over society and the economic system.

Isn’t all this crystal clear? The question then is: what can we do?

Remedies are in the spiritual sphere, not in some kind of “fighting” the system in the ordinary sense.

The modern economy, which is a complete dead end for mankind and the planet, is the result of a collective mental trap. A mental trap in which everyone is made to believe things that are 180 degrees from spirituality.

The actions we now need to take must be geared towards helping as many people as possible to free themselves from that mental trap. And the starting point is to free oneself first.

Enough for today. Nice sharing with you.

Fear not, and take care,

Leo

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