Tuesday, June 28, 2011

Biggest Strikes Since 1926 - Why?

The unions have got themselves a bit carried away in their rhetoric of late. Talking up strike action to rival the General Strike of 1926 only prompts people like me to look up how successful that particular campaign was.

What was it about?
Miners workers pay and conditions.

What was the problem?
They were going to get paid less and work more.

The mining industry in this country was dying on its arse. The easy rich seams were depleted long ago. Extracting the remaining sources was getting increasingly expensive and foreign supplies were becoming ever cheaper.

Why did the strike get so big?
Largely out of sympathy strikes. Subsequently made illegal.

What was the result?
Take a look at our thriving industry now. There's no escaping the inevitable.

And moving on to the present. Lets spot the similarities:

What is it about?
Pensions, mostly.

What is the problem?
Well, they are going to get paid less (by contributing more to their pensions and getting less back than they thought) and work more (extra years per lifetime rather than hours per day).

Well, the demographics of supporting large pensions are dying on their arse. The days were there were 9 workers to support each pensioner are long gone. We're now looking at closer 3.

Why is the strike getting so big?
As our Chancellor likes to point out we're all in it together. It's a mutual cause that chimes with almost every union.

What will the result be?
Take a look at the private sector. What's unsustainable will not be sustained. Kick and scream about it by all means, but it won't change. Not without a great shift in the demographic layout of the country.

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Greece - Will it Make it to the Long Grass?

The Eurozone leaders are becoming increasingly desperate to see Greece's problems dismissed to the long term. Voluntarily extending maturity on loans by 30 years can only be an option taken by someone facing obliteration if they do not.

The usual answer to being unable to pay debt is default. It's painful, it's ugly but it's necessary. Ever increasing debt gets to the point where you are paying nothing but interest on that debt and never repaying the capital. Greece isn't there yet but with it's bond yield in double digits and its economy in recession that is the trajectory.

Far better to accept the consequence now. Restructure the loans and reform the economy. Greece will learn to balance it's budget as it struggles to find foreign funding for years to come. Spurious lenders get their hands burnt and learn to invest more wisely in future. Something to be said for a balanced portfolio. But at least everyone will know where we stand.

The uncertainty is stopping us for moving on after the world financial crisis.

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