"The opposite of a sovereign debt crisis"

Being paid to look after money isn't what governments ought to be doing.

Business Insider's Joe Weisenthal has written a blogpost which is doing the rounds at the moment, in which he argues that the world is experiencing the opposite of a sovereign debt crisis:

The problems of Spain, Italy, and Greece are often pointed to as being somehow bleeding-edge, canaries in the coalmine that serve as warnings to other governments of what might happen if they don't get their acts together.

But the real story today is just the opposite. The world is experiencing whatever the reverse of a sovereign debt crisis is, as borrowing costs for government are plummeting EVERYWHERE. . .

What this essentially means is that there's a lot of money out there that sees no productive investments in the real world, and thus people are willing to stick it with entities that promise them a very meager return.

The whole piece is great, with compelling charts and stats, and is definitely worth a read.

As government yields hit zero or lower, conventional economic realities fall apart. Jonathan Portes has written about the possibility of financing a £30bn infrastructure program using just the income brought in by the now-defunct pasty tax, while Matt Yglesias has arguedfrequently –  that when real interest rates are negative, it simply makes no sense to collect taxes.

It isn't just governments facing unusual situations in a world of free money. Google's chariman Eric Schmidt was faced with the reality of his company's situation in a debate with tech investor Peter Thiel:

ADAM LASHINSKY (Moderator): You have $50 billion at Google, why don't you spend it on doing more in tech, or are you out of ideas? And I think Google does more than most companies. You're trying to do things with self-driving cars and supposedly with asteroid mining, although maybe that's just part of the propaganda ministry. And you're doing more than Microsoft, or Apple, or a lot of these other companies. Amazon is the only one, in my mind, of the big tech companies that's actually reinvesting all its money, that has enough of a vision of the future that they're actually able to reinvest all their profits.

ERIC SCHMIDT: They make less profit than Google does.

PETER THIEL: But, if we're living in an accelerating technological world, and you have zero percent interest rates in the background, you should be able to invest all of your money in things that will return it many times over, and the fact that you're out of ideas, maybe it's a political problem, the government has outlawed things. But, it still is a problem. . .

ERIC SCHMIDT: What you discover in running these companies is that there are limits that are not cash. There are limits of recruiting, limits of real estate, regulatory limits as Peter points out. There are many, many such limits. And anything that we can do to reduce those limits is a good idea.

PETER THIEL: But, then the intellectually honest thing to do would be to say that Google is no longer a technology company, that it's basically – it's a search engine. The search technology was developed a decade ago. It's a bet that there will be no one else who will come up with a better search technology. So, you invest in Google, because you're betting against technological innovation in search. And it's like a bank that generates enormous cash flows every year, but you can't issue a dividend, because the day you take that $30 billion and send it back to people you're admitting that you're no longer a technology company. That's why Microsoft can't return its money. That's why all these companies are building up hordes of cash, because they don't know what to do with it, but they don't want to admit they're no longer tech companies.

What we are seeing is two sides of the same coin. When companies like Google – which, as Lashinsky says, is one of the biggest fans of blue-sky innovation in Silicon Valley – can't find anything to spend their war chests on, then they have to keep them somewhere. Banks are, for the first time in a generation, perceived as risky, so they turn to sovereigns, thus driving yields even lower.

The problem is, since these companies are looking for safety rather than income, yields have a lot further to fall. How much will Google pay for a safe place to keep its money? We don't know. But it's likely to be a lot more than a measly 0.3 per cent.

Google CEO Eric Schmidt, who has the unfortunate problem of Too Much Money. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Brexit would jeopardise the rights of working women

Europe isn’t perfect, but without it millions of women and millions of trade unionists would be at risk of Tory deregulation. 

One of the most important arguments in favour of staying in the EU is the protections that membership affords working people.

Whether it’s equal rights for part-time workers, the agency workers directive or limits on the length of the working week, we all owe the European Union and its Social Charter – campaigned for by a generation of trade unionists from across the continent – a great deal.

Outside of Europe British workers would find themselves worse off both in terms of their pay packets and the rights that they rely on. Add to that the reality that outside the EU risks being a place with lower public spending thanks to a troubled economy and rising privatisation of our public services, you can understand why the vast majority of British trade unions are recommending that their members vote to remain.

And for working women, the choice is starker still, because women have that much more to lose when rights and protections are stripped from the workplace.

Just think what EU law guarantees for all working people through the social charter, and how losing these rights (and putting the Brexit bunch in charge) would impact on things we’ve all come to rely on like maternity pay and guaranteed holiday pay.

Think about how much harder the struggle for equal pay will be if it’s not underpinned by EU law.

Think about how a Boris Johnson led Tory government – outside of Europe, on the fringes of global influence and under increasing pressure from UKIP to withdraw even further from the modern world – would attack your working conditions.

The Tory right – fresh from dragging our country out of Europe and away from regulations that help keep us safe at work aren’t going to stop there. Their next port of call will be other sources of what they deem “red tape” – like equal rights legislation that helps ensure women have all the same opportunities afforded to their male colleagues.

That’s something that matters to me as a trade unionist and as a woman.

It’s something that matters to me as Assistant General Secretary of a union with more than a million female members – UNISON, the biggest membership organisation for women in the country.

It matters to me as President of the TUC – when most trade unionists are women and when we have the first female TUC General Secretary in Frances O’Grady.

But most of all it matters to me because of the stories of all of the women I’ve met and am proud to represent who benefit every single day from Europe-wide protection of their rights.

What we face is the risk of losing those rights to a cynical and desperate campaign based around false promises and rhetoric from the Brexiteers. What we need in this campaign is some straightforward honesty. So here’s my position in a single sentence: Europe isn’t perfect, but without it millions of women and millions of trade unionists would be at risk.

I won’t stand for that. Neither should you. And neither should they either.

Liz Snape is Assistant General Secretary of UNISON and President of the TUC