What will make the difference?

Nick,

Another day, another idea stolen from the "Do nothing Tories".

Unlike yesterday, will the BBC TV News be giving the Conservatives credit for intially calling for a national loan guarantee scheme. Or will Gordon, once more get all the credit..?

Why cannot HMG accept that there is no short term simple solution? People have borrowed too much, the whole country has borrowed too much and now we have to pay it back. This mania about getting people spending is totally misplaced, all it does is make the problem worse as then at the end of the day people will have to pay even more back.

What will make a difference is actions to help people pay off debt and making savings attractive so that people can buy things from their savings. Then and only then will there be a sustainable recovery but unfortunately we are years away from that point.

So, no inane, wasteful, doomed-to-fail, across the board VAT cut for Germany.

Lucky them!

Part one idea stolen from the tories and was shouted down by the government 4 months ago as no good.

Part two stolen from the Swedes and Brown talked the USA out of doing this 6 months ago and saved the world by advocating doing it his way

Part three idea last attempted by a Labour government which resulted in hyperinflation and a trip to the IMF

Part four Another fiscal stimulus because the first was ill advised and didnt work and is only recommended by the G20 IF YOU CAN AFFOR IT, and we cant afford it.

OK clearly this government are out of ideas can they now please call an election and get out of governance.

So if the government are going to borrow Tory ideas does that mean they are going to just "do nothing"? As after all that is the accusation they have been throwing at the Conservatives!

This does seem to be the second Tory idea they have borrowed in as many days?

The government seems to attack Tory and Lib Dem ideas (and in the Tories case accuse them of doing nothing!) and then when there own ideas fail they borrow the ideas of the other parties to implement as well!

It is better to do nothing then do something stupid - sadly we have a PM that doesn't seem to understand that!

Why is it that the Government are only now considering measures that the Tories announced 2 months ago?

And Nick, shouldn't you be asking the Chancellor, that's Alistair Darling by the way, not Gordon Brown, what the real borrowing requirement is now likely to be as his PBR forecast that we would see growth in 5 months time (and counting) was either hopelessly optimistic or plainly fraudulent?

//what will make a difference?//


a new government, i reckon.

Another "jam tomorrow" type approach then?

Are we to understand that the Treasury actually knows what is going on?

Will we have a U-turn on previous policies?

Where is the detail?

Who will it actually help?

Come on, you do it to the Tories...why not the government

Is the news of tomorrow embargoed?

Did you meet the insider on the Thames?

The only thing that will make a difference to me, is having some disposable income.

As soon as I get some disposable income, I promise to dispose of it in the shops...

But I will not be borrowing any money to finance my spending. If I haven't got it, I won't be spending it...

The politicians have therefore got to get me back into work.

Which means dragging me out of the trap of having no contact with the DWP because I can't claim benefits and am living off capital...

I think there's at least a million people who are out of work and not claiming benefits at the moment, completely lost to the the processes that help people get back into work...

This is an interesting and crucial point ... what will make a difference.

Almost certainly, there is no magic bullet.

In my opinion, Governments, especially Governments operating from a position of fiscal weakness, have very limited options.

All they can do is try to block any systemic collapse, as indeed the UK Government has just about managed to do (so far).

I think that the economic outlook will continue to deteriorate in the short term, that is the next year or so, and then will begin to recover in the UK.

This is a storm of sorts and ordinary folk, which is my only concern, are advised to hunker down, in all its forms, until people feel it has passed.

Then, confidence returns.

There is one thing that will get the economy moving and that is credit.
Anyone listening to the boss of JCB on the Today programme will understand that industry needs credit to function, without that we will end up on job seekers allowance and the economy will grind to a halt

Forget all the silly schemes that are being drawn up, just adopt Conservative ideas and get moving.

It is clear that whatever Risk Management reporting has taken place by the financial institutions and passed to the B of E, FSA and the Treasury has been inadequate. From an IT perspective it is a doddle to create a simple table detailing the loan book against various measures such as credit worthiness, industry type etc.

There were a whole stack of write downs made last year and the year before that. For RBS its subsidiary had made a USD 3.5 bn loan to an Amercan chemical firm that has gone bust. It looks like the whole loan will be written off. In the FTSE index leading financials are being hammered again.

Until we are able to identify debt categorised by its toxicity, the markets are liable to have little confidence in the financials. Perhaps we should suspend trading in these companies until that confidence returns and the toxic stuff ringfenced.

Otherwise the authorities will always be on the back foot, even if the authorities were actually competent. Sadly this is not the case. the actions taken so far are more notable for the soundbites rather than the substance and technical detail.

I strongly suspect that the German stimulus package will be a quite boring read with little panache. But it will be packed with detail. Oh, and it will probably have a better chance of succeeding than anything that the chumps in Downing Street could ever come up with.

If the truth be known, there's nothing that's going to work - we just have to take the medicine. We all went to an orgy and now we've all got syphilis.
Gordon the Golem wants to throw good money we don't have after bad money we didn't have. Where will it all end?

Does anyone else get the impression that all these "great minds" haven't really got a clue what to do?

Economists (of the academic sort) fall back on a rigid adherence to a narrow interpretation of Keynes. If/when that doesn't work, where will they turn? There's nothing else in the "manual".

(Meanwhile the non-academic economists are either living off the proceeds of the good times, or considering ways to profit from these times).

The Bank of England Monetary Policy Committee have as much as admitted that they never saw the bus coming.

Hubris prevents from politicians admitting to their "mistakes", which usually leads to a compounding of those mistakes.

Several years ago I said (not here) that George Bush would probably be remembered as the worst president the USA ever had, for the effect his policies would have on the US economy.

To avoid a similar label, perhaps Gordon Brown might like to consider an early exit from Parliament so that he can "spin" a more favourable account of his time in office, before history judges him on his performance and vanity.

In the meantime, perhaps we need a real Mr Micawber to explain the link between income and happiness...

Hi Nick,

I do not think we can put too much faith in what Ben Bernanke has to say. In unprecedented times, the best he can do - definitively - is guess.

And let's not forget that Hank Paulson not long ago admitted to Congress that he was wrong in how he thought banking systems should operate.

See you in the pub.

Another balanced blog from the BBC
Happy Days.

Someone on yesterdays blog said that the Gov changed the law on publishing the amount of money they're Quantative Easing / printing into the economy. A law that dates back to Robert Peel. This can only because they want to cover up their printing.

Helicopter Ben will be here to tell us to print and borrow. But he is in no situation to tell anyone. The average family of four in America is associated with $732,000 of debt and that is before the TARP and Stimulus packages.

The PBR figures are looking more and more stupid.
Spending is set to rise greatly even on PBR figures we would have 1 Trillion pounds of debt.
And we can say that in reality it will grow far more than the 1 Tril pounds figures, as the recession will run far longer than July this year.
Also our GDP will fall off a cliff over the next 2 years.
Greatly reduced income from the financial industry.
The building and associated industries are on their knees.
Service industries are being battered.
What will the % of Debt to GDP turn out to be?
It will look terrible to our foreign investors.

Nick, has HMG given all the promised capital funding to the banks yet? How much capital will it need to give to a bad bank?

The people need cheering up, then theyll spend more.

They need an election.

What will make a difference?
A different government!

Watch a few episodes of Foyles War. Great leveller for thinkers!


Seriously, I can't help but think, nay I am CONVINCED this whole economic crisis was conived and is a huge dangerous feat of engineering by Brown, Bush with the old American pm's shouting "go on" from the wings.

That said, there IS a problem which I was horrified to observe over the last eleven or so years where people's behaviour, spending, greed was spiralling out of control. That was compounded by the banks allowing but BUT surely this government has socialogists or whatever and could have monitored the trends and slowed it down BEFORE we got to this frightening, insecure problem across - ostensibly - the world?

I am no economist, I have no solution.

The human spirit (like the human body) is almost far stronger and far more able to withstand the trauma and terrors thrown at it than one can imagine.

Maybe if we can get Brown out now it will resolve. He does seem to be the perpetrator in most people's books. If he prints money and if he wholly nationalises banks and the world follows well, then, the banks will be in charge of the world and that is all part of his desire. Headstrong is not the word for it.

Do we just hold onto the sides, scream and hope the roller coaster eventually docks successfully without casualties? People are falling over the side already....!!!

Je ne sais pas. I really don't.

What can make a difference? A return to a cost-plus market, releasing the air from the bubble. The entire system's been based on an exponential percentage-plus system, so like Alice in Wonderland, businesses have been forced to run faster and faster just to stay in the same place.
That means true competition enforced by proper regulation by industry outsiders.

4 Pot kettle

Bang on.... I'd go further though............



Labour would help us all (even themselves) if they gave up their ambition to govern the country.

They have ruined the nations finances (again) and have demonstrated that they have no idea how to escape the economic mess (again).


With respect policy areas (outside finance and the economy), they have some nice ideas, but completely fail to understand how to deliver, or create services which represent value for money.


Labour should re-invent itself as a 'pressure group' or 'think tank'. They have shown that they can't govern or manage anything (other than an election winning and PR machine).


Labour would do us all a favour if they restricted themselves to inspiring policy ideas and avoided management altogether.


We need an election to ensure labour's removal ASAP.

Yes I do, well I think I do. What if the other countries dissent to Brown's Master Plan? Germany is throwing a wobbly.

Its time for governments to face facts:

There is nothing they can do to reverse this, the inflationary debt bubble is too huge, it cannot be sustained and we will suffer a massive global revaluation before things get better.
You can see its too big for governments to handle: its like watching rabbits caught in truck headlights as they fruitlessley hop from policy to policy until the juggernaught hits them.

The ONLY policies that governments should be adopting is ones that cut expenditure and then divert all funds they have to supporting those citizens worst affected by the crisis and to open up avenues for wealth creation.

I've used the word depression before and people need to see it as that big a problem now and not wait for official figures to declare it before deciding what to do.

We need to be investing in cheap accomodation (if necessary converting empty factories into housing), we need to stop importing energy and start putting money into cheap local energy (a quick fix would be to start using coal again) even if it is dirty energy (we can't afford the luxury of Kyoto) or investing in projects like tidal barrages. If neccessary cutting out the middle man and employing workers directly, rather than through profit-taking (usually foreign-owned) corporations.

Then we need to decide on what exactly this country is going to do to create wealth. What can we make and sell that the world wants? We need to get back to the basics: we need to make and export goods, certainly not trying to make money from moving other people's money around.

Hey guys - I think I know where Derek Barking is today! He is speaking right now on LBC to James O'Brien. He is, could he be, no, yes I THINK HE IS DEREK HATTON!



www.lbc.co.uk


click on Listen Live

Why is it necessary to have to back up small business lending? I thought we owned some of these banks now, shouldn't we be pushing them about a bit?

Another policy stolen from the tories, is anyone keeping a count? I see that the tory lead in the polls has increased as well. At last it seems the great mass of the proles are finally waking up to the fact that their ten year boom was all done on the national credit card, and that far from investing in infrastructure (power stations, prisons, etc) the labour government has frittered all the money away for little benefit; on social engineering projects and suffocating bureaucracy.

Gordon continues to fiddle the figures as UK PLC burns around him.

Not more than a week ago, the Labour minister was on Newsnight saying this would not work!

It should work, and the cost needs to be passed on to the banks, not the consumer. The cost of underwriting this should be minimal, as it is the risk of default and the banks should be lending to quite strict criteria. It should not be indefinite, but it should be for a bit more than £20 billion to make a difference. The scramble to get this will be ridiculous. It will cost about 5% max to underwrite, and should be paid for by a premium from the interest rate charged. With interest rates so low that should not make a huge difference to business.

So well done Labour for coming up with something that was already suggesting but making a bodge job of it!

Back in the mid-Seventies when the situation in Northern Ireland was well out of control I was introduced by a UDA supporter to an interesting verb, namely. `to throstle'. The context was that the British government could not find any solution so the ministers moved about trying to create an impression of focus and energy.

This is a fair description as to where we are now on the economy. The government feels it has to do something, hasn't a clue what to do but thinks it needs to create an image of focus and action. Hence the false accusation that the Tories are a `do-nothing' party.

This government has completely lost it. For me the VAT reduction was the last straw that exposed them as people with absolutely no idea as to the nature of the problem, what caused it and the options available to miitigate the worst affects.

It is now self-evident that we need a new government. Only a Hamas government could be worse than this one.

WILL IT MAKE A DIFFERENCE??

GORDY OUT WILL!!!!

At some point, people have to start spending if there is to be any recovery. Only then will firms be able to ramp up production and employment. It HAS to start with Joe Public, so why is so much effort presently directed into frightening JP into NOT spending, but hanging on to cash?
Whatever one thinks of GB, at least he's trying to DO something, even if its in part to save his skin!
Why do so many stand outside the tent P***ing in, as Pres Lyndon Johson would have it, instead of mucking in and trying to help? When you're in the merde, it's no use arguing about how you got there, but how best to get out!

Make money valuable again - that is the only way to make a difference.

At present money is worthless in the very real sense that having it provides no income and borrowing it is essentially free.

What greater 'moral hazard' can there be?

Along wit the raising of VAT at the end of the year the BOE should announce that interest rates will return to 5 to 7 percent.

This pre-announcement will let savers plan to continue spending and prevent borrowers over-borrowing as well as providing much needed liquidity to the whole economy.

Helicopter Ben, eh?

Instead of dropping money, why don't they drop gift vouchers?

If the problem is getting people to spend, why don't they get something that you can't squirrel away and earn interest on?

Put an expiry date on them and that should be fine.

You can save money too by using voucher codes or cashback websites. That'd save the Government 5% or so. Maybe Argos would do a bit of a deal on a bulk-buy, you never know...

I like the idea of having a "bad bank" too. Could we get Clint Eastwood or Harvey Keitel to run it?

"Bad" banks.

So how long before "Septic Bank" becomes interchangeable with "Septic Tank" in Cockney rhyming slang?

After all, it was the "septics" wot done it.

Come on Nick. There's next to nothing the crazies in New Labour can do. What's even more worrying is knowing that there is next to nothing that they won't do to stop their slide into political oblivion. In other words they'll keep on squandering public money to try to save their political necks. Good old Gordon and his merry band of woodentops'll throw us all on the scrap-heap just to save their skins. They've destroyed our pensions, destroyed our NHS, destroyed our policing, destroyed our manufacturing base, destroyed our transport infrastructure etc. etc., and now they're looking to finish the job: they're destroying our economy.

Whilst it probably wouldn't 'fix' it, a change in Goverment would be a first very useful 'step in the right direction'.

Question For Nick: Did you see Jeff Randall yesterday?

Portcullisgate

I have asked if anyone has seen the projected government figures for public sector pensions. These seem to have disappeared off the face of the earth. If the figures have to be disguised, then we can only assume that the amount of spending is far, far worse than the government are letting on.


Extremely worrying.

Rare words of wisdom from the Golem: "A downturn is no time to slow down investment".
No, Golem, the time to slow down government investment, is during an upturn. That's how Keynes works - in the good times the government saves, in bad times it spends. The problem is, of course, that the Golem had "eliminated boom and bust" so there'd never be bad times again, thus there was no need for the government to ever stop spending.
Now, we're all paying the price for the Golem's hubris. Nemesis is at the gates.

If something is in short supply then the price should rise. Thus demand for credit should cause interest rates to raise and thus a price is established where the interest is worth the additional risk of a time like now. However the BoE has distorted the behaviour of the market with its 1.5% interest.

The problem is that existing loans that have to be renegotiated because most lending deals these days are short term. Also politically it is unacceptable to increase voters Mortgage payment.

Thus the medicine which could be applied by a government with 5 years to go will never be applied by one with a year and a half left on the clock.

The eventual solution of the market is to allow asset prices to fall to the point where assets will effectively guarantee loans and justify the low rates.

No matter how you play it there will always be a payback but it is the duration and who gets hit which is the nature of the game Brown is playing.

Quantative easing means the Government spends without it appearing on a balance sheet. There will be 2 areas to which this is address.

1. Removal of toxic debt from the banks - effectively a huge subsidy for the banking industry

2. Massive public spend.

The outcome of this will be highly unpredictable but again Brown will gamble because he is only interested in power not the good of the nation but then again show me a politican who isnt.

#18 Carrots

You said, the people need cheering up, then theyll spend more. They need an election.

Quite right. I think the election of a Conservative Government (if necessary supported by the LibDems) would improve the confidence and morale of the country, and we would all feel more confident to both spend more and take longer-term investment decisions. At the moment most of us are worried what half-baked neo-socialist scam Gordon is going to serve up next, and know we need to lock up our wallets in readiness to pay for it. And as we all know, Gordon's priority is keeping the Tories out, not saving the economy.

I'm sure academic economists have studied the link between political trust and economic confidence. Confidence and trust is at rock-bottom, and even the remaining Labour supporters are running scared.

The Results of Quantative Easing might be a period of calm and stability during which Brown can hold his election.

What can be guaranteed is that we will have 70s style rampant inflation back again and wages and saving not keeping pace with inflation will pay the debt back.

There is the possibility of a real run on the pound and financial meltdown could result but to Brown that's an Acceptable result.

The Gangsta's motto applies to him.

"Get rich quick or die tryin' "

#24 Delphius

I just posted this one on the blog from yesterday...

A cut in spending would appear to be on the cards....

...............................................................
#369

Strange you mention that (yeah I know I was supposed to take a day off - but I knew Nick was going to blog again...something is in the air)..

Anyway - I was going to post this yesterday...this may answer some of your questions:

https://www.theregister.co.uk/2009/01/12/it_contract_review/

El reg are usually spot on with analysis - I sincerely hope this happens...

Upon reflection, there is something that would make a huge difference in the long run ... a return to honesty.

Honesty in Government ... for example, merging Income Tax and NI into a single tax would be an act of honesty about that particular taxation policy.

Honesty in Business ... for example, Nicks heading to this piece gives a clue '... may lay hidden in their balance sheets ...' obviously nothing should be 'hidden' in balance sheets.

Nevertheless, I sadly do not see 'honesty' making a comeback anytime soon in either Government or Business circles.

Nick, a word , we STILL call "quantitative easing" the printing of money even if you dont.

@10 JohnConstable

Nice to read someone speaking sense.

Also nice because it was free of mud slinging, party bias and name calling.

Forgive me, but isn't managing the country's economy what we pay these people vastly inflated salaries for?

Gordon was Chancellor of the Exchequer for 10 years. A self-professed world statesman at the very tip of the pile in Britain's financial world. It was his job to know exactly what the money was doing around the world at any given time.

America started to feel the pinch as far back as 2005. Gordon made no provisions and did nothing. Things got worse in 2006. Gordon still did nothing.

Gordon did absolutely nothing. Zip. Zilch. He left it until it was too late. It IS his fault. It was his job to manage the country's accounts and he didn't. Whatever makes him think he can get us out of this? He should be sacked - today!

Labour - the DID nothing party.

#27

You have a valid point that no-one seems to have picked up on...

Energy - it has been well reported that we will be facing a energy crisis soon...

Just what have the Govt done over the past 11 years to invest in that - during the supposed boom years - with record tax takes..

Where has all the money gone? On stupid and idiotic pet social engineering schemes...you think we are up the swanney now...!!

Nick,

your comments on this would be appreciated.

as the banks are doing nothing, can the BOE not stand up to the plate and take some radical action
1. Take over all Mortgages in the UK and offer every mortgage holder a tracker of 2%
2. Can the Bank of England not offer all Savers with over £5000 a minimum of 4% return and stop all the money going abroad buying different currency

I appreciate the cost of this will be a lot, but so will the cost of unemployment and repossessions, I can only see the way out of it is to put money back in people pockets and get them spending, as the consequences of people not spending is disaster

thanks

zak4444

Hi Nick...Considering Germany's fiscal stimulus announcement..are you going to start a blog on that subject?

Please note that the key points seem to be ..

No VAT reduction.

A 100M Euro business loan guarantee.

Reduction in health care contributions.

Does this seem to be a slap in the face for our own Governments World saving efforts?

18. At 12:31pm on 13 Jan 2009, CarrotsneedaQUANGO2 wrote:

The people need cheering up, then they'll spend more.

They need an election.
= = = = = = = = = = =

Quite correct 'Carrots', and the USA have just had one!

They'll start to cheer up in a few months, maybe.

Gordy will hope to hang in there until that effect ripples around the world.

Then he'll confirm his role as global saviour, and we'll get an election when he thinks it safe to put his head on the ballot box.

To amend Nick's phrase from yesterday:
"Not the economy! It's politics, STUPID!"

I think the first steps to recovery should be Gordo standing up in the House and admitting

"MY NAME IS GORDON BROWN AND I AM A SPENDAHOLIC "

Come on now Gordo find the courage within you and repeat after me " Lord grant me the serenity ....."

Of course I meant 100Billion Euro business loan guarantee scheme..sorry.

2. At 11:44am on 13 Jan 2009, agc3167 wrote:
Why cannot HMG accept that there is no short term simple solution?

It's simple, because they allowed it to happen under there noses and they also knew the personal debt was mounting.

The government has become a rogue trader throwing good money after bad.

There is no short term solution to this and the consequences of this ridiculous level of borrowing will burden our kids with a lifetime of tax debt.
People out there who believed Brown was careful with our coffers (prudent) have been lied to all along.

It's only when you open the bag that you realise Gordon hasn't brought anything to the party. Just two empty bottles and a couple of bricks.

Nick,

What will make a difference? May I suggest to start by picking one's advisers carefully.

Imagine a group of people who haven't mastered their subject. Now imagine these same people being awarded great riches, honours and prizes. Even Nobel Prizes! Imagine even that although they are reliably and consistently wrong they are eagerly pursued for their council. Hard to believe eh? The English language has already coined a name for this group. They are called Economists.

'What will make a difference' will be newlabour, and more particularly Gordon Brown, admitting that they got us into this mess.

If you decide to ignore all the signs that the economy is overheating from excessive bank leverage to historic multiples of house prices to earnings you will pay the price. It is senseless to protest that these factors emerged and made us better palced to wahter the downturn; with PFI added into govenrment debt (as most of it should be) we were uniquely badly placed to weather the storm.

There are signs that the BBC steam roller tactic about supporting government policy until proved otherwise is running low on gas. This is art the revelation that the real figures (and not the ones newlabour choose to present) are truly, adysmally bad.

There is noly so long one can go on defending a governemnt that has made so many blatant strategic and financial errors. Eventually - as an be seen on these posts - the general public screams back with approbation, that you are willfully misrepresenting the facts.

This is where we have arrived. The BBC has worked out it is backing the losing ticket at the next election and nees to start giving the whole view; that's not a pretty picture.

Newlabours record of consistently ignoring all the warning signs will keep them out of office for two decades.

So, call an election; let's get this thing over with.

26#

Indeed we should Chris, as we own part of them.

Only problem is....


we're picking up the share options no one else wants to buy to save these chumps from collapse.... what we are not doing at the moment is putting people onto the boards of these banks, so they are just carrying on in their own sweet way with no penalty, no-one watching over their shoulder, no reason to change strategy.

And, the new Quango that is meant to be running the publics interests in these banks... isnt ready yet. No rulebook, no Terms Of Reference, no nothing. Probably recruiting from the same Civil Service redeployment pool that gave us the FSA. When they do finally recruit them, the usual civil service mentality of "dont do or say anything that will make you stand out or attract attention" will pervade and nothing will get done, decisions will get fudged and we'll be no further forward but will have had our collective pockets picked for billions.


As I've said before, its not so much the idea sometimes, its the half ar$ed implementation of an idea that is the killer.

Sounds more like we don't know what to do and we don't want to make things worse by doing the wrong thing.

That doesn't instill confidence in anyone.

It's a fast downward slope and no one will really know what's happened until it finally reaches the bottom.
That still seems a long way off.

The sooner it does the better so all these manouvres to prolong the agony should be
knocked on the head.

Good entrepreneurs can always start up new businesses when the time is right.

The world economy will go on shrinking but how much no one knows.
All this country can do is tighten its belt and wait to see where it will end up.

At last someone has woken up to the fact that the Tories do have some good ideas.

How long it will take this government to implement them or whether they've left it too late only time will tell.

What will work? Good question.

I know what won't work - Continuing with the policies that got us into these dire straits in the first place, like living off borrowed money as a state and as individuals. I mean, who in their right mind would think that the way to get out of a recession caused by borrowing too much, is to borrow even more. Ridiculous! Could never happen here! Don't know why I mentioned it....

Nick,

At 11:43 I posted the following question: "Will the BBC TV News be giving the Conservatives credit for intially calling for a national loan guarantee scheme? Or will Gordon, once more get all the credit..?"

I've just watched the 1 O'Clock and surprise, surprise, Gordon got all the credit. No mention of the Tories calling for a national loan guarantee scheme since November. Indeed, not only were opposition spokesman not asked to comment on the GVN's plans, the opposition parties were not even mentioned. Instead, Robert Preston was invited on to praise Mr. Brown's economic genius for coming up with such a great plan... Balance (I think not!)

By comparison, ITV news invited both George Osborne and Vince Cable to comment on the GVN's plans. Just why are the editorial standards at the BBC falling so low?

So Gordon Brown is meeting "Helicopter Ben", a man who once advocated dropping money on the electorate (to the strains of "Ride of the Valkyries", naturally).

Didn't a certain son of the Austrian, Herr Schicklgruber* once have a similar idea - except that he saw that as a means to destabilise the wartime UK economy?

(*I'm sure he would also have appreciated the Wagnerian connection.)

Strange bedfellows indeed.

40. johnharris66

Just to expand on that in one particular direction.

If we get Brown for another term we know we will get higher taxation and further increases in public spending, and almost certainly a period of VAT at 20 percent.

So am I running to the high street to buy discounted white goods and clothes I dont need or am I saving for that rainy day.

Oh what to do!

Cameron on the other hand would at least slow the process.

And heres another very good reason why we need to end cheap credit

https://business.timesonline.co.uk/tol/business/economics/article5508201.ece

#49 dontneedthegrief

So they've copied Gordon then. No, don't try to think. The means of implication is irrelevant.

Just remember Gordon Brown invented the concept of fiscal stimuli and unless I'm very much mistaken, this is one of them.

Basically, everyone is copying Gordon Brown's response to the first global crisis of the global age that started in America.

Why? Because it is the right thing to do.

That's all you need to know, now move on.

I'm with the majority - a general election will make a difference.

Gordon doesn't know what to do -- that is why he keeps making anouncements on the hoof (pretending they were planned) and then there have to be quick panicked meetings to actually work out what the announcement actually means all with out any consideration of due diligence.

Mandleson can apparantly pluck vast amounts of money out of thin air - https://www.thisislondon.co.uk/standard/article-23618111-details/So+how+did+Mandy+buy+his+%C2%A32.5+million+Regency+villa/article.do maybe he should be asked how he does it...


ps. Any update on mandleson/oleg ?? I am starting to wonder if you are ever going to get around to it...

#43 John Constable

Spot on.

The root of our problems is not economic, it's moral.

I think 'Stoop Down Gordon' could learn something from 'Helicopter Ben'.... instead bowing to the CBI and adopting ridiculously wasteful, ineffective policies like cutting VAT why not just give us the cash to spend?

As for the taxpayer stepping-in for the banks that we've just showered with money, I think that's absurd. THE BANKS MUST BE FORCED TO LEND.

Gordon et al must stop cowering before the rich and powerful - I know they're looking for jobs al a Tony after politics but surely they've given enough of our money.

20 flamepatricia

"I am no economist, I have no solution."

Sadly, neither do the economists.

What would make a difference is an instant stop to all of Gordon’s gimmick, headline grabbing, policy announcements that have not been thought through and cost us all money.

It is now clear to all that he could only manage the economy (in the loosest possible terms) in the good times and never had the ability to run the country at any time.

Labour are now devoid of ideas and running the country into the ground. Let us have an election; it seems the campaigns have already started anyway!

Uh oh looks like NuLab need to get themselves a new mantra to 'Do Nothing Tories' if they're gonna steal their ideas every 5 minutes.
Or at least it would be nice if that silly hysterical person Yvette Cooper stops with the 'economical madness' tosh.

What will make a difference? How about a party that doesn't spray cash at the bloated unproductive public sector. Great Britain needs it's confidence back and that requires a clean slate. It requires Labour to relinquish power *now*.

#47, yes indeed, what about the forthcoming energy crisis?

Strangely, 'Stoop Down Gord' is silent about that - perhaps he's pondering a suitable world-saving measure. I guess watch this space (Nick Robinson will surely be onto it).

A general election and a change of government is the only thing that will restore confidence. Brown and Darling have proved over the last few months that they are totally bereft of ideas , totally lacking in integrity and more interested in hanging on to power than in overcoming the country's problems; problems in the main caused by the excessive spending and lack of fiscal control of this incompetent government. A Tory election win would produce an immediate rise in confidence in the stock market and in the financial sector.

Germany's recession will most likely damage living standards less than than the UK's because Germany has a skills base that helps its competitiveness and german households were not spending all their disposable income.

The latter point is also crucial to understand that bank lending, although necessary but perhaps not as locked up as the government makes it out to be, will not help prevent the UK's drop in GDP. The situation in 2006, beginning of 2007 in the UK did not represent an equilibrium. UK households spent more than they got with their pay cheque after tax, while companies were gearing up and the government ran a budget deficit.

2 interesting weblinks that make you wonder whether it is worth the risk to let the debt explode:

Bernanke in his helicopter speech said that monetary easing might not work when balance sheets are impaired (as they are in the UK) as he looked at Japan's experience

https://www.federalreserve.gov/boardDocs/speeches/2002/20021121/default.htm

Krugman said that fiscal stimulus only works under some assumptions "that are at the very least rather speculative."

https://web.mit.edu/krugman/www/trioshrt.html

Nick,
the easiest way to get spending going is for the Government to make short term loans available at reasonable rates through one of their numerous "white elephants" (i.e. regional agencies,) providing that money was spent entirely and quickly for useful purposes.
Banks are simply not making loans available EVEN to perfectly sound business (with a long track record) like mine.
We wanted to make some alterations and improvements to our business and we thought it may be a good idea to apply for a loan rather than using our savings. Our bank asks for 10% interest (plus absurd setting up charges) exactly as we paid 10 years ago. Other banks we consulted advised us to stay with our bank as they couldn't match its conditions!
Needless to say that in this uncertain economic climate we will not spend a few thousands Pounds of our savings for the time being.
Another area the Government hasn't considered is the business rates which is now clearly another political fund. They collect thousands of Pounds in the better off areas to redistribute them in the areas with the greatest number of Labour electors. I am still hopeful that they will eventually see the obvious because according to what Robert Peston said on the news the Government now has only two more ideas to try and if they don't work they will be doomed! Unless of course the Conservatives and Vince Cable come to his rescue :-) I think we all know by now why the Government and their loudspeakers like Derek & friends on this blog keep on asking the opposition parties to make their policies known :-)

shellingout
37
Portcullisgate

I have asked if anyone has seen the projected government figures for public sector pensions. These seem to have disappeared off the face of the earth. If the figures have to be disguised, then we can only assume that the amount of spending is far, far worse than the government are letting on.


Extremely worrying.

XXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shellingout

This is the single most important question.

What are projections for Government Debt & LIABILITES (including pensions). And can we sell and service that amount of debt.

These idiots 3 months ago said we will have growth starting in July in six months time!!!!!!!.

The % gap between Debt and GDP which is falling off a cliff will be enormous

If they are continuing their spending based on such stupidity how can we trust them to do the right thing from now on.

Every forecast I've ever heard in their budgets have been wrong.

They cant even see 3 months ahead clearly.

God help us one and all

I would also add we cannot guide any meassures properly until we know where it is needed.

We have no idea what the figures are for expendable income across the salary bands.

There is no use trying to get people to spend if they have no expendable income.

Please, for the love of God, make it no longer being 'all things on the table', but decisive action to get credit moving again. This has been going on for almost 12 months and finally there is a stolen conservative policy to guarantee borrowings. The cost of this should wash its own face by the consumer. It should not cost 10%, and the cost should be met by the bank/consumer. It is a blank cheque to nothing, just assurance that bad debt will be covered, however all normal collateral requirements will be in place so there should be a buffer for any lender/the coverage. It is a simple accounting practice to cover the debt, but there should be no money transfer until someone defaults. Simple! Please can we have someone intelligent rather than Mandy thinking this through.

Sgt Digby @64...

"The means of implication is irrelevant.

Just remember Gordon Brown invented the concept of fiscal stimuli and unless I'm very much mistaken, this is one of them.

Basically, everyone is copying Gordon Brown's response to the first global crisis of the global age that started in America."

If the means is irrevelant,please tell me ,Sir,why ours hasn't worked?

..and if you really believe that Brown invented the concept of fiscal stimuli,could you explain why Keynes,and others, were promoting the idea before Gordy was born?

Somewhat blinkered methinks.

Anybody else noted the subtle spin in the headline to this article on the B BC website?

https://news.bbc.co.uk/1/hi/business/7826552.stm

In the article Ben Bernanke is quoted as saying that the stimulus 'could' help the economy - importantly different to the headline.

#64 Sargeant Digby

So they've copied Gordon then. No, don't try to think. The means of implication is irrelevant.

Just remember Gordon Brown invented the concept of fiscal stimuli and unless I'm very much mistaken, this is one of them.

Basically, everyone is copying Gordon Brown's response to the first global crisis of the global age that started in America.

------------------------------------------------------

You've completely missed the point here - Germany have deliberately limited their 'fiscal stimuli' to areas that they can afford (following their previous years of financial prudence - remember that phrase?) and are considered more likely to work.

They haven't followed Gordon's approach of half baked measures.

And as for Gordon inventing the concept of fiscal stimulus, I thought he had been incorrecctly claiming he was following Keynesian economics for the past 3 months - conveniently ignoring the part about building up reserves in the good times in order to be able to stimulate the economy in this way.

I was speaking to some Americans today about how they see things,and it was interesting to note that even though they were not Obama supporters they feel that a regime change will have the confidence boost needed to get America moving no matter what his policies are.

But of course in this country we would call him inexperienced !!!

I am one who agrees with my American friends and only regime change will bring about a new confidence,i don't particularly care who.....we just need shot of the old.

#77 dontneedthegrief

Apologies, I should have littered some of these ;-) badboys throughout my previous post.

Don't know exactly what they mean, but if they indicate a bit of tongue-in-cheekedness, then that's what I was aiming for.

I thought the blaming America bit was more-or-less the same thing. No worries.

75 PortcullisGate

"There is no use trying to get people to spend if they have no expendable income."

Very true and I'd like to throw into the discussion something I heard on Radio 4, I think, last week. Unfortunately, was only half listening to programme so can't give any more context, but it got me thinking. The speaker said that the reason borrowing exploded in (I think) the US was because middle income earners didn't have sufficient increases in earnings, so they had to borrow.

Thinking about the situation here, it was pretty similar: income increases were low because of low inflation, but the cost of essentials like heating, travel to work, food increased by more than inflation and HMG compounded the problem via stealth taxes. A colleague said, some years ago, that a bit of inflation, say 5% is necessary to keep things going. What do others think?

78 CockedDice

I'm surprised they didn't go with the trick of adding a question mark. E.g.

"Obama Plan Would Lift Economy?"

Or, taken a bit further:

"Gordon Brown's economic recovery plan proves successful?"

You're allowed to write any old toss, as long as you put a question mark after it?

#64 SergeantDigby.

You wrote that Gordon Brown invented the concept of fiscal stimuli and the world is following him.

A fiscal stimulus dates back to Keynes; but on the more substantial point you will find this analysis by the Managing Director of the IMF on its website:

Some countries have already introduced temporary decreases in VAT… The degree of pass through is uncertain AND ITS UNWINDING MAY CONTRIBUTE TO A FURTHER DOWNTURN (my capitals). It is also questionable whether decreases in the VAT of a few percentage points are salient enough to lead consumers to shift the timing of their purchases.

The IMF goes on to praise the approach of other European countries. This is about as cricitical of the UK as it is possible for an international organisation to be of one of its own members.

So please can we have no more lectures on how the world is following Gordon Brown. If the IMF is not recommending his example I don't think anyone else will.

I contend that Gordon Brown acted early for political reasons. He wanted to be seen as saviour of the world and didn't mind what he did as long as he did something.

Sgt Digby...

OK ;-)

Not much point going up to drop money on the electorate when you haven't saved enough to fuel the helicopter.

Or is this a first glimpse of Gordon's policy in electoral marginals?

75 Portcullisgate

Government pension liabilities must run into billions and billions of pounds.

If you take into account the number of civil servants, teachers, doctors, etc., etc., etc., - and that's not counting our MP's (whose pensions are cast-iron, jewel-encrusted and water-tight) this is phenominal amount of money to have to find on top of everything else. The number of people actually claiming public sector pensions must run into hundreds of thousands. Even if you just take into account the people who are going to retire next year it will place an awful financial burden onto the state - never mind those who have already retired and are collecting their pensions.

I understand that there is no 'saved amount' for pensions already being paid out, and pensions are currently paid out from taxes raised every month. The fact that the figures are not easily available is nothing short of scandalous.

I pray that a hungry journalist will pick up on this. I'm 99% sure Government are hiding the figures because they would lose the next election for sure if the public knew exactly how much money was involved.

dontneedthegrief and cockeddice

Does this mean that there are people on here who genuinely say stuff like that?

Poor idiots.

Anyway, sorry for riling you unnecessarily.

#81 Sgt Digby

Apologies for not getting the irony in your posts either - maybe I'm missing it in Nick's blog reports as well!

johnharris66

I apologise to you also. Sarcasm does not transcend the internet indeed.

Lowest form of wit and all that.

I agree with the common sentiment that a new government will help boost confidence - it will in the USA where Obama is a popular choice, this will feed through to the markets and consumer confidence in time

The problem we have is that no political party stands head and shoulders above the rest. Labour has to go, whilst they can't be held entirely responsible for the global problems they are entirely to blame for not preventing the damage here in the UK, regulations were in place to do this but they were ignored by the FSA etc

We still need house prices to drop by another 20/30% I reckon; this will certainly get the housing market moving again. Mortgages are available in plentiful supply - but on responsible levels now (3.5x salary) and a reasonable deposit is required - just like it always used to be when banks were sensible in their lending. House builders will start up again and money will start moving around the markets again

We need to let this thing bottom out and not try to prop up the bubble any longer. There are people out there with lots of cash but they are not confident the market has hit bottom yet (i'm not talking about financial markets here) Traditionaly property has been a safe market with good returns over time - but it hasn't dropped enough yet.

When the price of a house comes down to 3.4 or 4 times your salary things will improve; construction is always the first to the wall and the first on its feet again

We need a fresh look from a different perspective and only a change of government can do that now - regrdless of who gets in (it doesn't make any difference anyway)

I've got a feeling that Wednesday's announcement will be like all of Gordon Brown's Budgets, a good initial reception then read from the back to see the small print.
It would however be an excellent time to update the country and the world on the latest forecast for the government deficit. Will it be into the 100bn yet, I suspect so after all the squandering of the last couple of months.

25% or 27% of council tax was used for local authority pension schemes already a few years ago.

Guess where that % will go now that house prices have fallen and council tax revenues will be lower.

Now that we're all a happy family again..Sgt Digby/CockedDice/JohnHarris... ;-p

Can we have that blog on the German response,please Nick?

Too be quiet honest we just have to bide our time.

One of the guests on today`s Daily Politics Show explained in quite simple terms that the economic cycle is rather like a clock and what this Govt is trying to do is to move the hands forward. Instead of being at 3 o`clock they are trying to move the hands forwards to nine o`clock - which is an impossible task. The economic cycle like time will move forward at is own pace.

This country has been allowed to over indulge in borrowing, to which Gordon Brown turned a blind eye as things were going so well for him. People had never had it so good and as long as they were happy he felt loved.

Unfortunately all good things come to an end and now it`s pay back time.

Personally I think enough of our future wealth has been spent propping up the economy and it should now be left to sort itself out.

Yes there will be great pain. Already there have been many more job losses than the Govt has admitted to. Many were part timers who, because of the hours they worked, won`t show up on the unemployment register as they will be unable to claim the dole. Many more are foreign workers who have gone home.

Politicians have never been successful at running businesses. You only have to look at the waste there is the public sector and the massive overspends on govt projects - many of which are binned as they don`t work. Ministers would not survive for one minute in the real world.

My penneth for what`s it worth is that enough has already been spent in propping the banks up - now is the time to take a step back and let it sort itself out.

At the end of the day the country will be all the better for it. All this will serve as a salutary lesson, and not before time, for our financial institutions, borrowers and businesses.

It was only a matter of time for many businesses before they went belly up as they were badly run and to blame everything on the recession is plainly wrong.

Like everything with our 24/7 media everything is gloom and doom; because every story is disected in minute detail and rerun throughout the day at 15 minute intervals. Perhaps if we switched the tv off and took a more postive out look on life then we might get out of this mess sooner rather than later.

The Govt would also do well to shut up. Gordon Brown clearly does not know what to do next and is flondering about looking for the next headline. His policies were the main cause of the problem in the UK and now HE is the problem. He is not in control of the ship and the best thing he could do for the country is to fall on his sword and leave. That Nick is the way out of the recession. Get rid of the Govt. Have a clean start with a team who are not tainted by this unwholly mess and let, "nature," take its course.

@94

House price changes dont change relative council tax band levels the council tax revenues will not be falling even on recently sold properties.

You can dispute your band due to the purchase price but you will be banded with similar properties that have already had their relative banding set.

Once a band E always a band E unless you live in wales where all properties went up a band or two unfairly.

Changing the government is not the answer, however attractive it might sound. We have a political system which relies heavily on ' the passing of the buck' which will result in the blame being put on the Tories if they should make it to office after the next election. Throwing borrowed money which has to paid back onto already borrowed money which has to be paid back is simply extending the problem, and it seems to be the strategy of this government. So whatever we do, the next party in office will be perceived as the bad guys, unless GB wins it( which I pray is not the case). The damage is done, there is more pain to come, and he must be aware of the pathetic excuse for a PBR which serves no-one. A change of government may be welcome, but in this climate, I fear we will just blame whoever takes over. Nothing new there then!!

97 potkettle

I successfully got my council tax banding reduced. It wasn't easy and was time-consuming, but I just took their leaflet and picked it apart.

It can be done.

#75 portcullis

The answer to your questions is obvious...

Haven't you noticed the change in the line of attack of the tories since the begining of the year?

Siance last week the tories have had access to the treasury's real numbers ahead of a potential general election.

The tories now know how truly desperate the state of the economy is but are bound by electoral practice not to use the information with caution.

What they know, however, is that come an election for real they can reveal the true degree of mismangement once and for all, including the grossly inflated pubic sector pension deficit.

So, for the time being, they go on the attack with all this spending has to stop because come a general election they can explain in detail just what a mess these goons have left us in.

Why do you think there has recently been an airing of Lowd Howe's remarks upon becoming chancellor in 1979? 'It was not a question of whether we should borrow more money, it was a question of if we would be able to'...

This remark and its resufacing tells all...the national accounts are in a truly disasterous state and Gordon Brown has nothing better to do than run around the country launching smoke screen intitaitives and hold time and moeny wasting summits.

Call an election