Taxpayers' short-term loans to business

And how is all this being monitored and reported to us? Or is this something else that we (as the investors) will never actually see quantified?

Is this something that operates through the Bank of England?

It is essential that the Bank of England keeps reporting its weekly balance sheet so that we know how much is being spent on these schemes and, when the time comes, how much money is being printed.

It is scandalous that the requirement to publish this information is being removed by the government this week.

More useless and inaccessible packages of measures/pledges/promises from this inept Government. I've just been on Labourlist.org and seen dugouts like Mandelson crowing about how they believe/care/understand.

My takings (eg) are down very significantly since 3rd qtr last year, everyone I speak to is worried sick (and that is an understatement). Every day brings another liquidation, news is so bad I hardly read it now because it makesmy hands shake. The LAST thing on earth I or anyone else in business that I know needs is a loan - from anyone! Unless it's zero interest unsecured and not repayable for 100 years.

You CAN'T borrow your way out of debt, can someone tell these idiots please, it's well-known business sense and you can't survive in business by borrowing to cover 'downturns'.

All this hard on the heels of EU money for business, other govt money for business blah blah.

These guys will say/pledge/promise ANYTHING to grab the headlines and make themselves look good for a few more days, till the next big idea comes along, all cobblers, the whole lot of it.

GC

Are all these new measures permanent, or "just" whilst we dig ourselves out of this mess (however long that may be)?
Who gets to decide who qualifies, and what exactly are the criteria for deciding?

We're still heading down the tube Robert. If we're having to do the job of the banks etc. it just shows how useless they've become for the economy at large.

Dear Robert,

This is solely my opinion, but it seems to me that you can only be being so soft on these Labour Government's radical nationalisation and Quango programme proposals mentioned in your post that you must be affected by your family Labour connections (your father was a Labour Peer).

In this post, you fail to expose and clarify what the government is really going to do, giving a very confusing picture that the average man can in no way understand.

And yet, you must know what it really is !!! And it appears to me (in my opinion only) that you are trying to help the Government slip it through.

Lord help us all.

All this is just papering over the cracks in the wall. The subsidence of the collapse of the Western financial system is not going to go away with some government borrowing acting as security for short term loans. And anyway, when will any of these "instruments" ever see the light of day? We are still waiting for the nationalised Northern Rock to start acting like it is implementing government policy, so why should we believe that the government will make good on all its promises for assistance?

What we are seeing is the end of the Western economic dominance. It was inevitable once the West became cash poor and saddled with collosal debt it can't pay off without reflation. The cash rich states of the Far East and Middle East now call the shots. It can only be from these sources that the governments of the West are now borrowing.

That's why interest rates are so low. The governments know that the situation for the West is much much worse than anyone has dared hinted at yet. And as I foresaw, we are now seeing evidence that this depression will make the 80s recession look like a minor downturn. We are now seeing the great unwinding of global imbalances, and the big losers are going to be the indebted Western countries. Our way of life will never be the same again.

Does this mean the end of Tax and Spend , after all we, the taxpayer, will be paying for the credit crunch for years to come. If so, what are they going to replace it with?

This is all tinkering with micro-economics of the worse type. No one is addressing a major problem and that is we simply do not manufacture anything so almost all our economy has the flimsy foundation of being service based. Supporting existing business is wrong. What we need to do is start manufacturing in this country, divest ourselves of the unsustainable growth model as well as the PLC and private limited company, pay our workers (redistribution of welath) more and stop chasing poverty around the globe so we can have cheap DVD players and £3 t-shirts. And stop buying "stuff". Credit has been supporting our puffed up lifestyle and subsidising private companies appalingly low workers salaries. The model's broken, so build a new one.

another startlingly pro labour press release pesto, whatever happened to impartiality ?

Why are ‘OUR’ banks reluctant to lend, after we told them to?


Since I OWN them, I’m calling RBS today and I’m going to order them to lend me 10 million (@0%)!

Sound fair? Does to me, sod it let’s make it 20 million (just in case inflation sets in :-) )

An interesting thread re. small businesses and unfamiliar brands that I've been discussing anecdotally with colleagues is the impact of business failures on consumer trust. I.e. people are becoming reluctant to make a purchase because they don't know whether a company will be in existence after the order has been made. If you can't walk away with the goods then there is now an inherent risk in losing your money (or at least a load of hassle in getting it back). This is epecially the case for less familiar on-line brand names without a high street presence, and big ticket items that have an extended delivery time such as a sofa or a kitchen. A viscous spiral ensues....

Basically its just one big overdraft facility.

IT'S TAKEN THEM OVER 6 MONTHS TO COME UP WITH THIS!

Well it's about 6 months too late for the former employees of Woolworths, JCB, Findus, Zavvi, Adams, Land of Leather, Nissan etc. etc.

Call a General Election NOW!

Captain Gordy??

Your rudder has fallen OFF!!


Perhaps you would like to refund the

20,000,000 ive lost in the last 10

months as a result of your inept

handling of the ECONOMY??

As a small business owner, I strongly object to these plans.

I manage my cashflow carefully, and I'm not greedy in the amount of the company's money I take out as remuneration. My business has therefore never had to borrow from the banks.

If I've understood this plan correctly, I shall have to subsidise, through my taxes, those of my competitors who have not run their businesses in a financially prudent manner.

Call me old fashioned or mean spirited if you like, but I don't like subsidising my competitors.

Can we mix and match ideas and solutions instead of pigeon-holing them Liberal- Labour - Tory (maybe file away as good - bad - unsure)

Umm, this is stil Labour copying a Tory idea. A good one at that, only without as much confidence.

As such that pretty well sums up the state of the political parties at the moment.

The Government is still not very joined up though is it? it has announced this, hence barclay's and other bansk decimation today - but still wants to stand behind them.

Which is it?

I predict Peston's blog tomorrow will be about Britain joining the Euro!

"The government will tomorrow announce three kinds of financial support for small and medium-sized businesses..........

And in the coming few days, there will be an announcement that the government will co-insure trade credit "

It seems to my clearly untrained eyes that Robert himself has just announced these items of news. Is he stealing the Government's thunder to their chagrin or is he (to their glee) actually being allowed to spill certain beans so as to test public opinion and that of the banking and business sectors?

It seems to me that the banks want it both ways - and so does the government
Government tells the banks to re-captililise whilst at the same time wanting them to maintain existing lending (which is sort of what got us into this mess? but I digress ).
Banks take the government money (well most of them do..) and then won't lend in order to protect their capital ratios ..
So if it lending that is the real issue what is stopping the banks running on a reduced capital ratio in the interim? The potential for bad debts on their previous lending I think .. and why should the tax payers rescue them from the consequences of original errors by buying the debt off them ? I think thats where the political consequences will come home to roost because there is no magic bullet for this problem - at least some section of society will pay for this. The governments calculation I think is that if we all do (as taxpayers) then the pain will be spread equally. I think this is a big mistake because the electorate did not forget Black Wednesday at election time and I know that come the next election the question I will want to be sure on is not spending (because in fact then is just a couple of percentage points in it..) but the economic management that got us here - step forward GB and take a bow ..

It might be useful to substitute "our supposely elected servants" for government.

In 2008, financial institutions have borrowed and taken deposits at interest rates of 6%+ and some at near double-digit interest rate and high costs (eg. Barclay's Middle-Eastern loan). How are they going to cover their costs, and to make some profits, if they do not lend ?

I suspect there are people sitting on £$ millions/billions who are happy, or maybe even scheming to deepen the global recession, so they can buy up UK/global assets and businesses very cheaply.

The problem with financial industry or political advisors or legal or specialists or public service experts only blogging or having a say about relevant topics or participating in meaningful working party groups is that they are purely interested in promoting their own financial interest industries or livelihood rather than implementing fair play.

More people need to challenge to improve all the systems as the squeaky wheel gets the oil.

Again, another proposterous measure.

We've now bailed out the banks to the tune of hundreds of billions and yet we, as the taxpayer, are having to do their job.

Out of interest, how long are the banks going to sit on their hands and make money whilst the taxpayer fulfils the their tricky roles?

'Stoop down' Gordon needs to stand up to the banks once and for all. He could try doing the same with his big-business buddies and can this ridiculously wasteful VAT cut.

Looks like more jobs for Quango's and non elected hangers on.
They will gobble up more than half of any amount they have been "Alloted" in meetings and expenses and if they EVER hand out a loan it will only be to obscure non businesses that cannot obtain loans because thier ideas are crackpot anyway.

This Government are spreading money about like water and it isnt going to do one ounce of good and when its gone as they say ! ITS GONE

If they are allowed to carry on we will never recover from Browns failed Government EVER

I have just watched you on the 1 O’clock news.
You pedalled your Government spin/leak and at no time did you make people aware that this is a policy that the Conservatives have put forward for the last 2 months.
As always with you output we cannot take it on face value and have to look for the spin.
I believe that you are not as balanced in your output as you should be for a BBC editor and have therefore made a complaint to Newswatch about the piece on the 1 O'clock news today.
Please can we have more balance in future? If you are being fed information please get the opposition parties opinions and include them for balance.
I should not have to tell you how to do your job you should not be in it if you don’t understand how to produce balanced output.

Unless I've missed something, the banks aren't forced to use this system for all commercial loans. And not all banks have to be involved.

Since there's a cost involved, the banks will surely cherry-pick and cover the safe money themselves, leaving the taxpayer guaranteeing the bad debt. Or the commercial banks will only cover the safe stuff leaving the nationalised banks to pick up the dross.

As I said yesterday, Labour's policies here have some original and good ideas. Unfortunately the good ideas are not original, the original ideas are not good.

What a mess! This sounds like a sticky web of bureaucracy and government meddling that should keep the capital markets ensnared for years.

12,

Its not even that!


This is how they are going to pump prime the economy with new notes!!! As many have said (Guy Croft), you can’t borrow yourself out of debt!

#5 -- Have to agree. This post from Robert and the previous one on small business finance are so disjointed and confusing that most readers won't understand what he is attempting to explain or discuss.

The biggest issue the UK population have is that for the past few years Brown has managed to slip through some pretty draconian laws gnerally hidden in the fine print and not debated in the House of Commons. Now we have it that the Bank of England won't need to present its weekly Balance Sheet but instead monthly. As we all know a week is a long time in politics let alone a month. Next we have Harriet Harman planning to push "social engineering" into the public domain.

What next do these control freaks have planned ?

Any ideas Robert -- you and Nick seem to be pretty close to the chaps in Downing !Street ??

It seems NuLabour has entered the

FANTASY ACCOUNTING LAND OF BOB

MAXWELL, wasnt he a Labour MP once?


CAPTAIN GORDY??

YOU CANT SPEND MONEY TWICE

YOU SEEM TO BE SPENDING IT

THRICE?

13,

Fell Off ??? Did he ever have a rudder ???

At least he's been prudent, or so I heard :-0

You're very loose with your definitions of what are small, medium and large companies Robert.

My concern is that (from your article) it appears that little or nothing is being done for the thousands of SMEs - companies with under 250 employees.

Loan guaranteess directly from the government will be extremely complex and will not get the money flowing effectively or quickly enough because they will be bureaucratic and delayed by bank's procedures.

If the major issue is cash flow and bank capitalisation then delay VAT payments for businesses for six months followed by repayment at 25% per quarter for the next year. Money goes directly to firms and is used for normal business requirements, demands on the banks will be significantly reduced for the period while they recapitalise and get lending criteria sorted out, the delayed payments can be qualified if required (No redundancies for the period perhaps). The treasury demonstrates that it is not a permanent addition to National debt and the whole procedure could be implemented extremely quickly which is what is required. The main risk is the number of defaults on the future payments but that will be no greater than the risk from loan guarantees

"BankSlickerminustheR wrote:
I predict Peston's blog tomorrow will be about Britain joining the Euro!"

Why would Labour announce that - this week they will be mostly borrowing from the Tory party!

We have to wait until a week when they are borrowing ideas from the Lib Dems for them to announce joining the Euro :)

Why does this ridiculous excuse for a Govt. continue to belive that the answer to everything is to provide more and more credit.

Why should Companies borrow more money to survive. The whole point of borrowing capital is to invest in order to increase productivity, it should not be seen as a way of sustaining an ailing, loss making enterprise. I understand that business' require overdrafts/loans to help them through short term cash flow difficulties, but this should only be done when there is a probability that there is potential for the business to recover. The main problem we face now is that there is no evidence to suggest that there will be any recovery in the economy in the forseeable future. We could well be in for 18 months+ of contraction, and Darlings prediction og growth later this year is pathetic.

The issue that is affecting everyone in Business (in every Industry) is a sudden dramatic fall in demand, and many of us have geared up our enterprises to meet a level of sales (pres 2008) that is simply not going to return. We have to accept this. The only way to survive now is to 'cut your cloth' to suit the new marketplace. If this means job cuts or downsizing then so be it, but further borrowing to sustain, or attempt to sustain, unrealistic levels of productivity is wrong.

The Govt. should be trying to find ways of stimulating demand in the economy i.e. tax cuts or major construction projects. Instead all they seem to want to do is resurrect the cult of lend and spend.
Of course they do practically own the Banks now, so I suppose it will benefit them to get a large amount of Business loans on their mortgage book, as it will allow them even more control over us all.

It's a hoot the way folk incl Govt talk about SMEs - round here (Lincoln) a firm 30 people is a fairly big company...!!

It's the turnover and balance sheet that counts and esp the profit-turnover ratio, not the number of people. It's clear the firms being hardest hit first (unlike the 90s recession) are the ones with the big (and varied) debt liabilities.


GC

All these initiatives! Sounds like the Sergeant Jones " don't panic, don't panic" syndrome. For a scheme to be so convoluted it has to be a Gordon Brown fudge. Calm reflection, leadership and a clear vision is what is wanted and not just blind action.

Robert,
To quote you "and it's all quite technical,involving financial engineering that some may see as too complicated".

Remind me again what 'we' did to actually get it this position in the first place. Was it "all quite technical etc etc". LOL

You know even the dumbest beasts in the animal kingdom know when to stop doing the same thing and expect a different outcome. So much for us being the top of the food chain.

When it is all 'cheap' enough there will be money and there will be buyers/investors and there will be good sustainable businesses. Interfering in this process to the extent that we are trying to does not change the outcome per se,it just means it will be longer before we get there and it will probably have cost more en route shackling the fortunes of the good to the bad.

It's just a shame we seem to have no political mechanism that can quickly isolate and put into limbo a current goverment that places it's survival above that of the people that elect it.

It is not "complicated" and it is not "beyond" the common man; the government is printing money in order to loan out to companies who will then charge the taxpayer for the privelege in paying it back; the impact is that we are stung on 2 levels.

We shouldn't be printing money, and if we are the bank of England SHOULD BE NATIONALISED - if we are to be in hoc to anyone it should be people we at least have a modicum of control over, not a faceless elite who keep us in bonded slavery

You can always trust the labour party to make everything more complicated that it need be.

Complicated means it will take much longer to get the money to where it's needed.

We are talking about business customers of the banks who need existing facities to be renewed in the main.

The banks already know these customers and their businesses and are extremely unlikely to practise bad lending if only 50% of the facility is guaranteed by the taxpayer.

This as I understand it was the Tory thinking.

As far as the labour plan is concerned it sounds far too complicated for banks or businesses and by the time they get round to understanding it never mind implementing it it will be far too late for many.

Typical! Make an announcement but throw a spanner in the works at the same time.

So the taxpayer will have to bale out inefficient businesses that are hovering on the brink of insolvency; will this solve anything,? I suspect it will merely prolong the agony by enabling them to stay in business for a few more weeks. If they cannot sell product now, will they be any better placed to sell product in 6 weeks time, I doubt it. So the taxpayer will pick up another bill for something that delivers nothing. Brown, Darling and their " advisers " are totally bereft of effective solutions to any of the present problems. They must reduce the size of government by an enormous amount over the next year and make a like reduction in the welfare bill or the country will indeed be facing banktrupcy.

Can the Government please just stop!

Stop raising taxes. Stop borrowing. Stop increasing spending. Stop passing new laws.

Go away, have a holiday. make it a long one!

Leave us alone and we will sort it out for ourselves. Yes, some companies will go bust, some loans will not get paid, some people will lose their jobs. Bit the more you meddle, the worse you make it.

This smells of the government's 'picking winners' philosophy.

(I remind those who do not remember that this was not a particularly successful activity!)

I repeat my mantra - "money must be made valuable again"

see

https://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/01/vulnerable_small_firms.html

Re joining the Euro, is this realistic?

Spain’s serious slump and Germany’s isolation on monetary policy could give rise to an end to the Euro could it not?

There will be many people who will consider this proposal and ask themselves:-

Will a firewall be put in place that will ensure that the deserving, "fundamentally sound", businesses are not subject also to the requirement that they are substantial employers in marginal seats that the Labour Party needs to win at the next General Election?

These people will then look at the probity exhibited by the present Government, and conclude that there's less chance of this happening than there is of Hell freezing over.

Maybe Mr Peston, with his contacts at the highest level, may be able to convince us that our conclusion is wrong.

@25 EXACTLY! it is only going to work if the banks play ball. Which they will only do if they can see a significant profit.

Also by providing ONLY working capital they are neglecting any manufacturing investment. In effect they are paying for even more bankers, consultants and accountants - just what we need!

Douglas Adams we need that first space ship NOW.

Just one or two comments:

1) Yes Tesco do squeeze suppliers but they gave me a choice of TWO USB WIFI sticks on Saturday when my nearest big name electrical stockist (which sells lots of computers) didn't sell any. They also make things as CONVENIENT as possible for the consumer (phone top ups and lottery tickets from every checkout) AND long shopping hours AND all under one roof AND free parking... Say what you like, when it comes to convenience why should I be at the shopkeeper's behest and convenience rather than him making things easier for me? If one wants money, one has to work for it. Tesco are constantly working to improve service convenience and meet social trends. When they try to influence trends, THEN I might have doubts.

2) That being said I am not here to totally laud Tesco. What the HECK is their latest ad about ? lots of blue and green shopping baskets with spurious stats that even the lightest of maths lightweights must see as questionable. As echoed previously, methinks Tesco are losing out on the price front.

3) Ref. UK economy, is there an elephant in the room or is it just wishful thinking? When (not if) will house prices FINALLY succumb to reality and the law of gravity? Prices are still WAY over-valued and with unemployment, credit shortage and lack of confidence in houses as cash cows any more, the market must be due for a collapse?

4) As for all those political answers to the huge economic problems that face us all...Sorry but why should our tax money go to prop up thousands of businesses? Markets SHOULD mean businesses come and go. Business should survive on price and quality of goods/services. When these things don't matter is the time businesses don't bother about their customers (the total opposite of Tesco!)

PS Pls read or Google

PPS Bank shares are dropping as I write, looks like things are starting all over again...

Just one or two comments:

1) Yes Tesco do squeeze suppliers but they gave me a choice of TWO USB WIFI sticks on Saturday when my nearest big name electrical stockist (which sells lots of computers) didn't sell any. They also make things as CONVENIENT as possible for the consumer (phone top ups and lottery tickets from every checkout) AND long shopping hours AND all under one roof AND free parking... Say what you like, when it comes to convenience why should I be at the shopkeeper's behest and convenience rather than him making things easier for me? If one wants money, one has to work for it. Tesco are constantly working to improve service convenience and meet social trends. When they try to influence trends, THEN I might have doubts.

2) That being said I am not here to totally laud Tesco. What the HECK is their latest ad about ? lots of blue and green shopping baskets with spurious stats that even the lightest of maths lightweights must see as questionable. As echoed previously, methinks Tesco are losing out on the price front.

3) Ref. UK economy, is there an elephant in the room or is it just wishful thinking? When (not if) will house prices FINALLY succumb to reality and the law of gravity? Prices are still WAY over-valued and with unemployment, credit shortage and lack of confidence in houses as cash cows any more, the market must be due for a collapse?

4) As for all those political answers to the huge economic problems that face us all...Sorry but why should our tax money go to prop up thousands of businesses? Markets SHOULD mean businesses come and go. Business should survive on price and quality of goods/services. When these things don't matter is the time businesses don't bother about their customers (the total opposite of Tesco!)

PS Pls read or Google “Atlas Shrugged” soon to be an Angelina Jolie movie. A view of our futures?

PPS Bank shares are dropping as I write, looks like things are starting all over again...

IT seems that the banks are being encouraged to go back to lending and that the guarantees are another way of sweetening the process for them.
What worries me is that they have already shown themselves to be utterly selfish in saving themselves at the cost of mortgage and business customers.

the cost of bailing them out has already run in to tens of billlions, but in December they managed to lend a mere 27million to homebuyers.The loans to business were even less.

If the Government had spent the 60billion on lending DIRECTLY to the public would we really be in this economic mess.

The profit model for the banks was foolish in the extreme. Yet only a few commentators picked this up. What if they are just shoring up their profits whilst expecting further public help if it all goes wrong.

The banks have acted like a bunch of school bullies and now our headmaster is to offer them another incentive to change their ways.

Claire2009 - oddly - or maybe not so - the legal requirement for the BoE to publish their balance sheets has very recently - and very quietly (what have they got to hide?) been removed. Most reckon the printing presses have been whirling for some time.

https://www.order-order.com/2009/01/growing-unease-about-old-ladys-secrecy.html

3rd world status beckons, as we follow in Mugabe's footsteps.

The report just been shown on BBC 24 about ben bernanke was good not so much what Bernanke said but the interview with the other man afterwards said. Is words where. We are looking at a deep recession or depression. That all depends on which side the atlantic your on. as he is from the usa they are looking at a deep recession at 20% unemployed , yet here in the uk it should be classed as a depression as unemployment will be nearer 50%

This is yet another politically motivated scheme.

The final nail in the coffin of this Labour Govt. will be mass unemployment. Mass Unemployment brings hardship, hardship brings unrest and unrest brings change. This cycle has already begun.

Every announcement we are hearing from the Govt. is an attempt to stave off mass unemployment long enough to attempt to win an election. Yesterday they were giving away £2500 to take on the long term unemployed, today it is loans to SME's.

We need an election now so whoever the ruling party is can start actually doing something positive, instead of watching an unpopular leadership attempt to save its own skin at any cost.

So its the cherry picked MEDIUM businesses that will be offered assistance.

Doesnt the one man band shop on the high st count any more.

You know, the one that will go out of their way to get you, the customer, what you want at the same price as Tescos, the one that gives you that "personal" touch, the one who will listen to an OAP telling you their life story, the one thats always open, no matter what the weather, never takes a day off let alone a holiday, always pays their taxes.

Well, Mr Gordon bloody Brown, we might need help soon. We dont want multi million pound loans. What we want is a level playing field .
Lets start by abolishing Business Rates as it is and introduce a profit tax, at say, 10%.
No concessions, no wiggling out of it. A straight 10%. At least then if you have a bad year, you are not taxed for having a bad year as you are now.

Business Rates account for anything between 12 - 20% of my profit, yet Tescos, say, accounts for as little as 3%.

FAIR??

I think not

Robert,

There are a few worrying areas in your report which I dare say are all too present it the Government's strategy…


"And it's all quite technical, involving financial engineering that some may see as too complicated."

That's it then, the Government couldn't see that runaway house prices were a problem, so what chance have these measures got?


"Probably the most eye-catching of the measures will be the provision of perhaps £10bn of taxpayer guarantees for short-term corporate loans provided by banks. These loans would cover medium-size companies' working capital requirements, or their day-to-day financing needs."

So the banks that we have bailed out aren't good for the money, I'm glad our money was put to such good use.


"Or, to put it another way: ministers hope that by reducing the requirement of banks to finance companies' working capital, the banks will be prepared to take a few more risks in financing companies' investment and longer-term needs."

There used to be two hopes in this world Bob Hope and no hope. Bob Hope is now dead, so I guess that leaves us with no hope! Words like hope shouldn't be used to describe such measures.


"Finally, the Business Department is making available a few tens of millions of pounds of equity capital to help the survival of strategically important small businesses that foolishly borrowed too much during the years of the debt bubble."

Sorry but 'once a fool always a fool', why save business that can't plan for a rainy day? Mind you the same could be said for people that take on excessive mortgages. How will these individuals learn if we don't let them hurt themselves?


I know I sound very righteous, but the people that will pay for all of this will be the people that least deserve to do so.

The banks have already received billions from the government.
The guarantee scheme is another sweetener for them to start lending. But so far it seems all they have done is to lock out the businesses and mortgage customers whilst shoring up their own war-chest.

After receiving over 60 billion in November they managed to lend just 27 million to mortgage in December and even less to businesses.

Like the emperors clothes the credit crunch has shown their business model to be foolish at best.

Would it no have been better for the treasury to have lent out the billions of pounds directly for business and mortgages.

I know we have our doubts about their levels of inefficiency but could they really do a worse job than a bunch of bankers who thought that a pyramid scheme was a sound
idea for profit

#34

"I understand that business' require overdrafts/loans to help them through short term cash flow difficulties, but this should only be done when there is a probability that there is potential for the business to recover"

Yup, that was the old way, sure.

In new Unpredictable World anyone who wanted to predict potential to recover would need a pretty reliable crystal ball, because cashflow forecasts in this environment based on reliable selling to whoever, well, dream about the accuracy of your figures for even the long term. Except maybe unless you are a weapons manufacturers supplying forces in Iraq etc.

Then when it's crunch time again wait for the right-royal shafting and blame/finger pointing (irresponsible borrowing blah blah) as they foreclose on you.

Sound familiar? Oh, that's right where we are now isn't it?

Nope this one's a whole new ball game being played out under rules that suddenly became obsolete 3 months ago. Bit like the 1st World War when the French cavalry (hey ho) suddenly discovered the Germans had machine guns and lances weren't actually much use against them..


Repossessions up 12% and nobody came.
GC

Stop, Stop, Stop guys

You're getting mixed up, it's all a game... no one has the slightest interest in sorting this out properly

... Gordo & Cameroon are fighting for the PM's job next time round... MP's are fighting for their jobs... journo's are wanting headlines........ us ordinary people think recession - they all think opportunity for promotion!!!

Never think anyone with a career that has a rank structure and pay scales has in his list of objectives someone else’s wellbeing....

No one with the opportunity to sort this mess out will do so if it is in anyway unpopular, we live in a land of opinion polls and focus groups now – everything is road tested against voters first.... irrespective as to whether it makes sense .....

If Cameroon wants in then, take a leaf out of Thatch’s book... tell it how it is and do what has to be done so we don’t pass this on from generation to generation........... if the medicine is bad trust the country to understand.......... (obviously trendy wealthy celebrities excluded)

On the other hand, maybe the Conservatives don’t want to win...... leave GB in situ and the likelihood is you’ll be in for 20 years next time round.....

Call me sceptical, but has any government actually spent their way out of a recession before on their own terms?

I know there are those who claim that the massive government expenditure of the 1940s was the factor that actually turned the corner after the 1930s, but strip away the effects of the war and is the case conclusive? Has anyone actually done it in the way the Brown thinks he can - from a comparable position?

I can't help but think spending more and more and creating money out of nothing is what got us into this position in the first place - and doing the same on a much bigger scale could make things worse.

After all, if you were a doctor treating a compulsive over-eater, who had serious health problems and was massively over-weight, would you:

a) address the weight problems first, creating a diet that satisfied the craving for eating and restored some semblance of health.

b) recommend extensive phsychiatric counselling to get to the root of the compulsion.

c) Give him the keys to a chocolate cake factory and tell him to get stuck in.

Bon appetit, Gordon...

Re joining the Euro..

purpleDogzzz wrote yesterday...

'The elite families that still run the global central banks and highest level policy think-tanks have a goal of a single global government. They want a single global currency and have been creating "shocks" in the system (problem) that create a public backlash (reaction) that ratchet up in pitch until these elites can impose their policies that tip-toe us, step-by tiny step, to their solution. The EU is a stepping stone towards this, as is the North American Union, the Asian union and African Union.'

'Many more people are calling for a global solution to the global crisis. Well to my way of thinking. If globalisation is the reason why this crisis spread globally so fast, then more globalisation is not the answer.'


We know Mandy has already started to test the waters on this one!

This isn't rocket science.

* The government has lent the banks money at upto 12%.

* The Basel II rules correctly require the banks to increase capital during down times to cover bad loans (the alternative is for banks to again risk failure when business go under or house prices fall further)

* The housing market is a burst bubble with prices falling because people (correctly) can no longer get and in fact no longer want 7xsalary loans for 100%+ of the value of properties.

* Business are struggling because people can no longer spend the money they didn't really have in the first place.

=> Therefore, the bank correctly don't want to lend at low interest rates to individuals or many business.

Whatever people think, you can't borrow your way out of a debt fueled recession. Ultimately you have to tighten your belt and payback what's owed, along with improved productivity by working harder for less.

afternoon all; 2 blogs in a day Robert but can you keep up to the HMG's accelerating rate of announcements of important initiatives, which is already up to at least 3 a day?

'the road to hell is paved with good intentions' is an excellent multi-purpose proverb, but in the case of GB and the current govt perhaps we should rephrase it as THE ROAD TO HELL IS PAVED WITH ANNOUNCEMENTS OF INITIATIVES

Some of these proposed initiatives might be worthwhile but at this point nearly everyone will give up trying to keep track of them. Which is presumably the intention.

A bit like the FOG OF WAR that the Israeli spokespeople use as an excuse for the unfortunate killing of 100s of Palestinian kids, GB is creating a FOG OF ANNOUNCEMENTS to throw us all off the track.

It is interesting to look at a list of previous government announcements on an issue - take your pick: environment, health, education, knife crime ......... and see how many have achieved anything or even been implemented; you'll find that most haven't; they are mostly hot-air

You might have seen that a new study claims to correlate the success of stockmarket traders in the 'good times' with the length of their index fingers (not another part of their anatomy that you might have expected they would be measuring)

It seems that our politicians, especially GB, measure their success by how many *%$£ announcements they can make per day.

Abetted by the media who want to measure their column inches of course.

A smaller number of actual policies that were clearly explained and seen through to delivery would be nice.

These proposals are not developmental in any way.

Short term loans are exactly that - short term. By the time that such schemes become effective it will be too late to save firms that are already over-burdened with debt.

As many contributors have already said you cannot borrow your way out of debt. All this will do is give failing firms another bucket with which to bail out the boat without addressing the real problem - fixing the leak!

There's far too many "OMG, LOL, Gordy Broon is soooo useless" comments here by half. Can we keep to the subject?

The billions handed to the banks was, if I'm correct, not designed as an impetus to get them lending, but to stop them crashing, in a flaming wreck, to the ground. The government might tut and moan that the wheels weren't oiled for loans to business, but they knew the real use for the money.

Lots is being said about the governement supporting loans, or "it's lending so much that got us into this mess". It seems pretty clear to me that none of the main parties is advocating a return to the levels of borrowing previously seen, but all recognise that cold turkey would kill many of the patients; and with the death of the company, a loss of skills, materials, value and quality of life.

The question is one of balance, surely? Balancing a reduction in the reliance on credit, whilst not taking out otherwise healthy industry. And a question of not making these tools unworkably complicated, whilst not handing out cash to companies that simply could not work in a future with reduced credit. These two balancing acts are where the parties differ - you pays yer money.

18. At 1:32pm on 13 Jan 2009, ThorntonHeathen wrote:

Peston's been the government's mouthpiece for a while now. Given that the BBC is the propaganda arm of New Labour, I guess that is not too surprising.

And that is why ... as the Prime Mentalist likes to preface his daily annoucements ... we no longer pay our license fee.

Come and get us!

I've read down the comments on this one and I can't see "Joetheplumber"......

Looking forward to Flash saving the Universe (and Britain) at the 25th attempt tomorrow morning.

Also looking forward to receiving my personal invitation from Flash thro the post tomorrow to be a civil servant along with 99.999 deserving others.......

Perhaps I can announce some BIG projects for him like the resurfacing of Downing Street, a G10 summit in London with all the trimmings and the queen doing lunch at the palace...........Did some mention help for small and medium sized businesses??? Perhaps we could just cut Corporation tax and save on my new civil service job??? It would be really easy and might even attract back some of those companies who have been going to Eire and other places. Which would Flash more income in general etc etc

Flash Ahaaaaaa!!!!!!!!

Another stunt by Labour that will make no difference. They see big numbers equalling problem solved.

They know nothing as we always suspected!!

If the taxpayer is taking so much risk why do we have banks. I would like to cherry pick who I deal with and find my company protected if the payee pushes off leaving me in a mess.

The State under Messrs Brown, Darling and Mandleson just don't seem to understanmd the State can't buck natural economics.

Why should my hard working employees in my small company battle on whilst contemporary companies who never invested in their staff and had dire management get support?

A strong economy requires business to be ultimately self sufficient, this proposal will extend the Social Services nanny state to business and decimate what is little is left of what we call an economy.

The weak must go to the wall so the strong can survive otherwise we get a scenario where teh good can't improve because they are up against inept contemporaries who survive through bloodsucking the taxpayer.

This is not Social Economics but the economics of the Lunatic Asylum and inmates appear to be running the show!!

I saw this suuposed quote from Cicero in 55 BC. I hope that it is genuine, though I'm sure someone will tell me if it is not.

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt.

People must again learn to work, instead of living on public assistance."

# 14 & 28 Couldn't agree more.

"Finally, the Business Department is making available a few tens of millions of pounds of equity capital to help the survival of strategically important small businesses that foolishly borrowed too much during the years of the debt bubble."

I run a small business, have cash in the bank and always have had. No not prudent, just sensible. What is the rationale for bailing out those who "foolishly" borrowed. Be interested to see how competent UK govt is at spotting those worth saving. Presumably those "politically" worth saving.

A further point, "strategically important" implies that there is some sort of strategy at work here. To suggest that is the case is laughable.

Finally, how ironic that 12 months ago the govt saw fit to increase taxes for small companies, whilst cutting it for large corporates. It's not going to be the large global businesses that generate a recovery in the UK, it will be small businesses and start ups. How about some joined up, medium term (never mind long term) strategic thinking for once from the govt - how about introducing in the next budget measures to encourage entrepreneurial spirit. Or perhaps that simply doesn't fit in with Gordon Clown's personal agenda over the next 12 months.

I expect more tinkering, and more stubborn lecturing to come from the govt.

Bert

think you should have pointed out to a few weirdos on here that this was actually an original idea of the tories

#66 Verlugio.

I wish I had said that.

Robert

Please check the actual bank lending figures published by the Bank of England.

The latest published figures showed lending to non financial businesses still growing at a double digit percentage

Also I suspect that businesses complaining about bank interest margin increases are those whose margin is set relative to Bank Rate rather than LIBOR.

Banks can not borrow at anywhere near Bank Rate and so companies can expect their margin to be increased. Companies whose rate is set relative to LIBOR may find interest rates not falling as fast as Bank Rate but that is not the banks' fault.

I don't understand why the financial institutions are starved of funds. There are many thousands of investors eager to give them their money. I'm one.
We recently applied for a Cheshire Building Society bond, with £20,000 at our disposal.
A week after the closing date we still don't know if the Cheshire have judged us to be suitable investors as their 'phone lines are jammed with others trying to find out if they've been accepted and the deadline for informing the lucky ones has, we learn today, been extended by a further week.
This sits oddly with the perception that the financial sector is scratching about for money and needs the Government to help bail it out. It also suggests that the prudent who have saved for a rainy day may find it hard to get wet...

As a small business owner and taxpayer, I strongly object to these plans.

We are one of the few manufacturers left in the UK and we have always worked hard and never had a business loan.

But over the years we have seen millions of pounds of taxpayers money wasted through and by government agencies on launching poor businesses which compete with us, deplete our profits and then disappear after a year or less when their initial funding runs out.

Under these plans we as Taxpayers and Businesses are now being asked to subsidise more silly companies which have loaded themselves up with debt, mostly deliberately. I do not agree with this at all.

@62
"There's far too many "OMG, LOL, Gordy Broon is soooo useless" comments here by half. Can we keep to the subject?"

That is the subject!

No 44 sppot on

NuLab aree busy now priming all the areas where they can get votes. They have created a big state employment system.
They are spraying money at the marginals by way of "saving them at all costs" from the do nothing conservatives!
Now they will be "saving" your firm with a loan to keep your jobs.

Paying for all this does not come into the equation.

October election on the way.

More Taxpayers money which will never be seen again..bye bye

RE 56: thinkb4

Spot on.

They are all self-serving myopic opportunists looking to make enough out of the situation such that they'll be alright when we've all gone to hell in a handcart.

62,

Not if I heard Comical Ali and El Gordo correct ;-) They said at the outset the bailout was to get the lending going again, later on they changed their story to ‘we had to bail the banks out, as collapse was imminent’.

A Labour lie often not debated by the press!!!

Too little too late perhaps.

The major housebuilders alone have working capital (most of which is their landbanks) of in excess of £5 billion. They have difficulty refinancing and consequently have made 100000s out of work, including at subcontractors and suppliers, with little housebuilding happening, and it's not even clear they would qualify for such guarantees.

It does sound complicated and what is the incentive for the banks to take it up, in these days of higher capital ratios and accelerating recession?

The Government needs to start buying up asset backed securities from the banks at reasonable prices to get them lending.

At this rate the combined incompetence of the government, BoE and FSA will totally ruin this country. I can see why the wealthy are hoarding gold.

I am not a small businessman but a pensioner.Throughout this whole debacle my greatest concern is 'where and how does the writer seem to have this information always prior to to the official announcement' Are we all just mugs?

This latest 'DO ANYTHING' Gov't announcement just goes to show how out of depth they really are.

At this rate all we're going to end up with is a bunch of well capitalised banks.....all at the expense of real businesses.....which are going bust fast!

....oh, apart from Tesco's of course.

WHO ARE THE BANKS GOING TO BE BANKERS TO? (themselves???)

I would like to propose a small experiment:

I would like everyone to ignore the TV and newspapers for 3 days (not too long I don't think!) and then assess how much the credit crunch is affecting you. My guess is that the majority of people will say 'not really'

I am working abroad at the moment as don't watch the local news or read the local papers, I rarely watch the BBC news as it's too depressing! It's amazing how well ignoring the bad news works. Just take s step back and say to yourself 'what has changed in my life? What is actualy different today than last year?'

As most people have commented sentiment is all about confidence and 'feeling' nd absorbing all the bad new 24/7 does not help this

The only news I get/read is on the web and reading blogs like this - i'm glad i'm not in the UK right now if this is the sentiment of everyone, the crunch has hit here as well but it's not reported and rammed down your throat all day long and to be honest most people here are just carrying on as normal

I know that people are affected with job losses etc and i'm sorry for them, but the fact is that the vast majority of people will are only affected because they feel they will be (or should be), but in reality nothing will change for them. A lot of this really is down to your outlook on life

Apologies to anyone who has been directly affected; ie made redundant as a result - my comments are meant to make people assess their situation and look at it from a different perspective; then maybe things won't look so bad

PS regular readers - don't panic, i'm not going to start banging on about Zen!!

Yesterday I protested about the ill-defined use of the adjective viable to describe firms in need of government assistance. Well today Robert has managed to avoid the V word, so, am I pleased? Actually no, I am worried. The V word has been replaced by phrases such as businesses that are fundamentally sound, or sound, relevant, needy businesses and, scarily, firms regarded as vital to the long-term needs of the economy.

Sound is the new V word and still as meaningless when referring to businesses in need of taxpayers benevolence. Just who is defining relevant and vital? And as for needy, aren’t we all? Those contributors who have been warning of creeping communism look increasingly accurate if we are to be treated to Brown & co’s assessment of which business are to be saved. Yet, the BBC, Robert in particular and British journalism in general appear to be avoiding questioning who is to make these decisions and on what criteria. Maybe he is eyeing a job as pig iron production monitor for Potemkin nr. Pontefract.

74 I agree
The election should be in the spring though.
If the majority of people in this country believe that Gordon Brown and his NuLabour merry men are up to looking after the interests of the UK and gain the country's support then they will win and have five more years to work on all the issues of Government.
If the majority of people want a change because they dont like the NuLabour direction and vote for an alternative Government then so be it.

Sometimes you have to count to ten to be able to post without swearing!

I have said for a long time that I would vote for the party who would introduce and change no legislation for a full year - this way everyone would know what they are dealing with.

Now we are getting a massive policy announcement once a week (at least) and with RP knowing the day before it feels like double this amount.

There has not been time yet for any of the measures to flow through into the economy and now we have another one - the government are trying to deal with bad news by having a weekly policy announcement to deal with the situation. The Opposition and media are demanding this and the governemnt just keep on obliging.

For goodness sake - does anyone feel like they are in an episode of Dads Army.

Don't panic, don't paniiiiiiiiiiiiiiiic!!!!!

Robert, when will Gordon and his cohorts admit that between his lot and the major banks, they have ruined GB Ltd. and yet they are all still in their jobs.
This mess must be allowed to sort itself out. No amount of "government" (taxpayers) money thrown at so many daft schemes will cure the problem. Gordy and the banks encouraged everyone to borrow and spend more than they could afford. I have run a small family owned property investment company for 40 years. We have never borrowed from banks despite them pestering us to and I strongly object to bailing out all the idiots that have.

Why is it that all these 'announcements' get so much media coverage? We never read anything about the implementation or success of anything that was in one of these 'announcements'.

They should be legally obliged to make an announcement regarding the progress of these 'announcements' 6 months after they where first announced. (apologies for the excessive use of the word announcement) Then we could see some results, either positive or negative.

I for one am sick of hearing about x million for this and x billion for that, just to grab a cheap headline, and try to negate the news on job losses.

No more announcements please.

However you dress it up, it is just unacceptable to prop up a business with public funds. There is no way you can then call it a private business. This government is sailing merrily towards grave disaster. A complete mess. No amount of funds will save a failing or borderline business.

This is all well and good, but I'm growing increasingly frustrated at the lack of detailed commentary on important issues outside of the UK. The BBC does report reasonably well on the US economy but there is a painful lack of detail and analysis on:

Europe. It just isn't there! Couldn't the BBC syndicate something from elsewhere if they don't have the infrastructure in place. The Eurozon is our biggest trading partner - yet all we get is the odd statistic about (lack of) growth in Spain and how difficult it is for German exporters.

China. I'm fed up beating this particular drum. How about some full analysis and reporting on what has been going on (and continues) in China. I'm referring to their manipulation of the exchange rate, export subsidies, control of energy prices etc.


This is a global crisis and everything we see happening in the UK must be viewed within the context of what is happening elsewhere.

What is the UK governments response to the unfair trading practices in China?

Grrr.

14 Disgusted of Mitcham

Like everything else in this now wretched country, the successful are to be brought to their knees. Everything you will have worked for will be micturated against a party wall, the labour party.

Why is the government not hunting and then prosecuting the people who feed Peston his announcements?

The government leak a pre _____ (fill in the blank of your choice )report, then they report it.

Then a few weeks/months down the line they leak it again and still later report it.

Four headlines that they are doing something.

There is of course one HUGE problem.

Virtually nothing actually happens apart from taxes going up.

Ah, micturated doesn't mean what I thought it did.

Good pithy post.

Are the last 3 paragraphs not political bias? Labour plan good, Tory plan bad.

As for the proposal, well bailing the banks out of their responsibilities didn't get them lending the first time so i don't see how doing it again it will now.

So not really targetted at small businesses, so a bit like the Chancellor saying that the treasury would ensure that HM Revenue would afford small businesses flexibility in terms of settlement of tax. JUST not true. I spoke to my tax office and I can assure you they are as inflexible as ever and apparantly unaware of what the Chancellor has said in the Commons -NO change there then! God protect us from politicians and the likes of Mandelson

Another thing.. please please call an election. Its just too much to watch an unwanted, unpopular, crappy, inept government playing wild cards left, right and centre.

ROBERT........


SHORT SELLERS ARE BETTING ON THE BIGGEST COMPANIES IN THE WORLD.

Genral ELetrics , Pfizer, wells fargo , halliburton , IBM, AT&T, CSCO, INTC, I, XOM.


Whats more amazing is they control the world as in media and energy and security. in other words in complete control.

i have heard the word common purpose many times but god they been working hard on bringing the worlds Economy down.

i would certainly tell everyone never to believe a word you here anywhere more so in the news and media.

they crashed the finacial market of the world
in order to take power.

here are the links for people to see

i could not post the links check them out

Robert, I know that being a good little journo means that you have to out 'scoop' anyone else, but for morality's sake, shouldn't you be telling your mole in Labour's back office that the government should be explaining their pathetic policies to the masses personally and not doing it through you?

I'm sick of hearing about what the government is announcing and not hearing about what IS actually happening which I suspect is very little. Has any promised bail out money actually reached the banks yet? Use your talents to tell us that!

So mosts posts are saying you can't keep expanding credit when that is exactly what got us here in the first place.
Yes lets keep throwing money at the problem Gordon that'll do it.
They have no idea and, as a previous post, said it's all spin. I run my own business and am setting up two new ones, different times, different markets.
Labour policy seems to reflect whatever the screechings of the Daily Mail leader comment are that week. Come on Preston lets have a bit more in depth analysis. The BBC seem to be a mouthpiece for Labour Party press releases not the investigative, challenging beast it used to be. Challenge the status quo eh, but then we'd never get into the Ivy - public school broadcasting, public school government, upper class twit economics. I'm off to walk the dog, in fact he'd make a better PM.

Ah! of Course. Off Balance sheet Nationalisation-just what we need.

Read this everyone please and look up who they are.


https://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=T

This is just the latest attempt by Crash to try to keep enough plates spinning until the next election. It is like papering over the cracks of a badly subsiding house and hoping that no one notices.

We come back to a few very simple facts that caused this problem in the first place and required yet another attempt at a rescue of the UK economy.

1) The longest boom in history that Crash took all the credit for along with his promise of abolishing boom and bust was paid for by easy credit available to businesses, individuals and the UK government. This pushed growth and borrowing way beyond what makes economic sense.

2) All three of the above (individuals, businesses and government) lived on in the panancea that the good times would continue for ever and we would never see a recession again. Borrowings were never intended to be repaid merely rolled over.

3) Rather than put money aside for a rainy day many people, businesses and the UK government kept borrowing and spending.

Now the wheels have fallen off the economy and the banks, government, many businesses and individuals find that there is no longer virtually free credit and the supply of loan finance has dropped back considerably to what is probably a more sensible level.

Unfortunately for all those that have borrowed and spent like there is no tomorrow the day of reckoning has now come.

Whatever analogy people want to use be it a drug user having cold turkey or an alcoholic having the dt's we need a correction. The only problem is that the bubble was allowed to get way too inflated in the first place and now the crash is that much more severe and sudden.

There will be lots of innocent victims in this fallout . I just hope that they realise where the blame should lie i.e. 10 Downing Street.

For those that brorowed recklessly and businesses that borrowed sillily on the never never well I am afraid you only have yourselves to blame.

For those innocents caught up in the collateral damage my sympathy.