Economic growth: The IMF's take

"policy-driven, multi-speed recovery".

I presume what they mean is that the recovery is a fake one resulting only from the effects of printing money? In the UK our recovery fits that description quite well. It will take the best part of this decade for a real recover to be established when the stimuli (QE, the budget deficit) have been recouped and interest rates resume rational levels (5 o 6 percent).

Their outlook for the next few years show that we will in 2012 be able only to offer an austerity Olympics. I presume we may be back at the levels of 2007 sometime in the next twenty years (by 2029!) in constant prices as inflation is bound to kick in.

Debt Fuelled recovery is not really a recovery in my opinion, it's a balance sheet fudge of the kind Enron employed!

In fact its precisely what caused the likes of Lehmans to fail when taken down to its most basic design.

Growth by leveraged debt obligations. The only winners in the last 18 months have been the Banks, who are fast rebuilding their balance sheets and padding their bonuses at the taxpayers expense.

it also states that the low interest rates may be contributing to an asset bubble, bt meh this is the IMF real name New World Order Bank front , according to their report things can only get better unless it goes pop again

........multi-speed OK, slow and dead slow

The "return to growth" figure of 0.1% has been reported in every news bulletin by the BBC. I am a great fan of the BBC but even I am beginning to believe that I am detecting a hint of bias in their reporting. What have Mr Osborne or Mr Cameron said? Have their comments been reported? Let us hope for some better analysis on tomorrows Today programme.

There is now no hope for this apology for a Government - we need an election asap. There was a very good comment on the Nick Robinson blog - calling our Prime Minister "Incapability Brown" and I think Mr Cameron could use that. It would make a good sound bite.

Sorry but this is a load of balderdash!

What essentially the IMF are saying is that you can just about stanstill in the developed economies if you continue to manipulate the markets with high levels of stimulous. That makes as much sense (even in economic terms) as continuing to take pot-fulls of laxtive when the bowels are already empty. All of that stimulous is in effect more and more public debt!

Now the IMF are a part of the international financial system that has been proved to be riddled with systemic failure. They haven't made any major credible changes to their operations. Their economic analysis is based upon a comprison with and return to what existed prior to 2007. They are therefore a part of the problem rather than a bastion of calm leading us towards a brighter tomorrow. Their pronouncements should therefore be treated with little more than derision.

#5 I'd stick to van driver if i were you - whilst you still have one. If the Cameron crew win the election then even the slight prospects of recovery will be doused in a torrent of premature cuts.

You don't cure an alcoholic by giving him another bottle of whisky, and you don't help a bankrupt by giving him another loan. The problems have to be confronted.

The great difficulty is that the British economy is structurally dysfunctional and it is going to take some very deft footwork to get us out of this mess without either hurting people more or causing a further disaster.

I am tired of reiterating the prescription but it will take a very determined government to produce a worthwhile result. This is 1940 all over again, I'm afraid. No sign of the Old Man, though, or a substitute, worse luck!

2. Anand "Debt Fuelled recovery is not really a recovery in my opinion, it's a balance sheet fudge of the kind Enron employed!"

Exactly, and well put.

In a year the banks will be richer and the taxpayer poorer. There is no recovery, its just electioneering...

This comment was removed because the moderators found it broke the house rules. Explain.

The economy is steering between Scylla and Charybdis. But who is the heroic pilot?

Ho Do you think anyone actually read your copy and paste effort ?

You failed to mention the Chinese stimulus and how that has impacted their growth. There is also a rising concern about a housing bubble in China as property values in and around major cities are rapidly rising...not to mention residents lighting themselves on fire to protest the government taking their property and giving it to developers. Of course if China continues to ignore any labor laws or health laws and the true value of the currency they can sell goods very cheaply and the UK and US businesses that prefer the corruption of Chinese business to make a profit is also contributing to the issues of domestic growth. Of course, the banks which were bailed out by the taxpayer will want increased rates if the government trys to borrow back the money they have been given. When corruption of financial markets reach this level the predictions are always self-serving. The private sector has no national interest, except legislative and tax advantages that can be gained, and therefore cannot be looked at as participating in any recovery but will stand by in case there is some advantage to be gained or some other country or company enters "their" market. Things will get better but not for any of the reasons stated....the people are always ahead of the governments. Because the stimulus in the UK and US went to banks and levels of governments there was nothing remaining to create jobs. Everyone should always keep in mind that though it all the bankers are doing very well.....burned your house down to prevent the fire they started from burning down their house.

Earlier the report also says that "the fiscal stimulus planned for 2010 should be fully implemented". No 10 has that bit underlined in red.

Stephanie, we all know that it is responsible for governments to try and stimulate their economies during down turns. But what I hear reported by the media, including yourself, rarely seems to convey just how enormous the amounts are this time around, and how pathetic the returns are being felt.

We have had some dire recessions in the UK since the Second world war, yet our borrowing (budget deficit) only peaked at 7% of GDP in 1975 and then almost at 8% of GDP in 1993.

At the moment we are in the region of 12%-14%, with only scant plans by Labour and Conservatives to get this down to half this within 4 years.

What really rankles is when the government brag how their actions have reduced the levels of unemployment, etc etc, spinning how their actions are bearing fruit. And never in these speeches is there the slightest hint of the crushing impact on our futures by borrowing at these levels to obtain such modest impact on the economy.

When last week it was reported that Tax income for December was £30 billion, and borrowing was £15 billion, where were the media headlines that we are borrowing 50% of our income? Can you imagine anyone who each month borrowed 50% of what they earned? The impact on us as a nation is not that dissimilar to that for an individual.

Those who keep posting on these BBC blogs about the doomsters needing to lighten up really need to educate themselves. Many of us who post on this blog are naturally positive types who (like me) are self employed and are self motivated contributors to our society. But because we have to understand the basics of economics we know a financial mess when we see it.

11
Buridan's Ass!

12
“Facts do not cease to exist because they are ignored.”
Aldous Huxley

#2. Anand

"Debt Fuelled recovery is not really a recovery"

Spot on!

It's actually worse than that; it only serves to conceal and aggravate the underlying condition.

In fact we are worse off now than we were before the bailouts and QE.

The IMF are a really useful bunch are'nt they, keep the stimulus going but be sure to make cuts. As a business owner and a house owner I hate too face up too reality becuase basiclly its way too scary but I'm going too have to and soon, best case scenario years of weak growth and market speculation on who is the weakest wilderbeast in the pack , worst case...that just frightens the life out of me.

#10 Onward ho ho ho: "At least with boom and bust we go back to boom !"

Not any more. Don't you realise that Gordon Brown has ended boom and bust - now we are just left with the bust to end all busts.

#14

This

"When last week it was reported that Tax income for December was £30 billion, and borrowing was £15 billion, where were the media headlines that we are borrowing 50% of our income? Can you imagine anyone who each month borrowed 50% of what they earned? The impact on us as a nation is not that dissimilar to that for an individual."

Is great writing.

Simple data, simply put. Raw hard facts. In fact its 50% of our income every month. Derivative statistics are as dangerous as some other derivatives.

If we should be foolish enough to re-elect this government who want to implement a policy of maintaining fiscal stimulus for 2010, their proposed legally binding requirement to reduce the deficit by half in four years, surely becomes one to reduce by half in three years so the necessary substantial cuts they will have to make will be 33% greater than they would have been, if they started this year.
I hope the opposition takes note of this analysis!

Perhaps I'm being naive, but how come the government are attempting to produce a 'consumer' led way out of this recession by encouraging spending ?

I was under the belief that the problems were instigated by loose lending practices, yet at this point in time, nothing has been done to address how this will be dealt with in the future. Merely forwarding money to people to cash in their old cars, and giving money to banks to address balance sheets (who in the meantime allow themselves to make increased profit), does not seem to address any of the underlying problems.

'It started in America' suggested the nodding dogs, yet what have they done to ensure this will not happen again, other than blow a lot of future money on ill-thought out schemes ?

To return to my point, how can this recession be 'consumer' led ? I see nothing that has been done to actually encourage such behaviour on a micro-level.

The IMF do not have to pay the bill for their suggestions, the British tax payer though has to.

As John F Kennedy said ‘Why did I listen to the experts’.

Mr McCawber for Chancellor then we might just might stand a chance.

The economy is like a balloon with air being pumped in to keep it inflated and standing still despite QE, 0.5% interest rates and car scrappage schemes.

The truth is that the current Government has encouraged people to get into debt from the age of eighteen. It begins with your education at University and then progresses to houses and cars because after all - you’re worth it.

At the same time they forget to mention that through globalisation you must compete with countries who have no health care, no welfare benefits, do not finance impoverished states, do not fight wars and most importantly do not inflate their public sector economies through stealth taxation and then call it economic growth.

The worst is to come. Do not believe the experts or the snake oil salesmen. Think for yourselves.

So the recession is over.

For some there was never a recession. Recession for some may be over but for some it never was.

Our MPs got whatever they wished from the taxpayer, people on benefits were not effected, people working for organisations like BBC - recession, what recession? Indeed some in these groups benefitted from the depression.

Certainly the people who lost jobs were badly effected and for them there is no end of recession till they have found another job. People in lower income group continue to have hard time because prices of basic needs like milk and bread have almost doubled up.

In my opinion this euphoria of the end of recession is premature!!

statistics are every bit as useful as economist when it comes to prediction and knowing what is actually going on.Yes the south east has breify climbed out of the mire but the rest of the country patently has not.Goverment stimulus and the car industry and christmas shopping has breifly lifted us out of the doldrums.QE only serves to postpone the real effects of recession,you cant cure a debt timebomb by piling more debt onto an already ballooning deficit.At best you get runaway inflation and spiraling interest rates leading to an evitable depression ,but hey whats in a word.And dont look at manufacture to pull us out of this China`s got that market covered and besides we could never compete anyway with there labour cost,well only if we collectively give up the lifestyles which we all have become accustomed to.This side of regime change...

I note that the plethora of Whingers, Whiners and moaning Minnies (WWM's), that have blasted your other blog article have not posted on here today; in reaction to this IMF forecast.

They have complained bitterly elsewhere, ad nauseam, about BBC bias, being overly positive in favour of the government's counter recession policy and specifically, with the commentary on today's GDP figures of 0.1%.

Why have the WWM's completely passed this IMF forecast by? Could it be that the IMF has predicted UK economic growth of 1.3% for 2010 and 2.7% for 2011. This figure has been published and presumably arrived at completely independently of HM Treasury, the Bank of England, the Labour Party or the BBC; or anybody for that matter that could possibly be accused of bias towards the government.

Is this prediction too uncomfortable, or just too implausibly biased?

I think these IMF predictions deserve more debate and are possibly open to more independent critical scrutiny for their positive outlook.

The commentary from the BBC has been balanced and fair. Economic policy makers have a real dilemma, as you have rightly pointed out. The Conservatives have a conundrum about cutting spending and raising taxes too soon. The Labour Party have their own conundrum about not losing the confidence of the credit ratings agencies and currency markets by being seen too loose on public spending. What is Saint Vincent's challenge?

The constant calls for 'sensible' policies like a quick return to 6 percent interest rates are completely misguided. Not because they are 'wrong' per se but because they don't take into account the economic reality of life in this country for many people. If the bank base rate was at 6 percent, then mortgage interest payments would be close to ten percent,that would bankrupt many many households in the current climate. The majority of people who post here and on Peston's blog are ironically representative of a small minority of the general population, debt-free and able to take the moral high ground on what is 'right' for the country, without understanding that the massively overstretched finances of most people means a high percentage of money spent in the economy is borrowed, but that the economy is so dependent on consumer spending that interest rates will not move from where they are for the forseeable future.

Even with 'affordable' mortgages its still a black hole though, in Northumberland where my parents live the average cost of a home is eleven times the average earnings within the county, Northumberland is 'cheap' relative to many parts of the country so god knows what the ratio is elsewhere.

Onward Ho is a property developer so I'm sure he can enlighten us on this...

Fantastic coat on your piece from Canary Wharf on the 10 o'clock news Stephanie :-) Where did you get it!?

I'm quite intrigued, who the hell is lending us all this money, and why?

#27 mischievouscheesy101. You are probably correct that most people argue for policies that at worst will not harm them personally and at best will benefit them. But then when has it ever been different?

The raising of interest rates is a deliberate decision with the consequences that you identify. Therefore most likely rates will not be raised, as no one will want to be associated with the consequences.

Does this mean that everything will be OK, maybe a bit sluggish but otherwise most people just keep on keeping on? Does this mean that if interest rates are supressed you can carry on with ever rising asset prices and ever more debt?

Sadly not. Keeping interest rates low merely ensures a catastrophic collapse of the curreny and a situation where everyone gets economically wiped out. Who benefits from that? No-one with the single exception that no-one needs to accept responsibility for having taken action to "cause the crisis" and it csn all be blamed on unknown foreign international financiers.

This kind of trick has been tried many times and in many places down the years. The outcome is always the same, and it always will be the same.

#26 fleche_dor Do you actually read reports or do you just find that headlines satisfy your curiosity. IMF growth projections are conditional, amongst other things, of the implementation of planned or announced stimuli.

The economy is like a heroin addict - it is completely addicted to the drug of free money. Take it away and the economy dies.

Would it be so hard for you to improve your economic position if someone just gave you all the money you required to buy things. Do you know anyone who would be willing to underwrite your personal expenditure? If you did know some endlessly munificent person of this ilk do you think you would likely spend the money wisely?

There is a difference between reality and delusion, albeit delusion may superficially appear more comforting.

27

Yes that is a fair summary. Indebted and little disposable income. This is a debt dependent economy and with consumers scared shotless and under downward pressure on income and with little disposable income the outcome is obvious. The people with money to hand, and there are many of them still, are behaving the way they always have, and that is - they are careful - that is why they have some money. The spenders have been culled with debt or bad credit ratings. Every effort to keep interest rates low will be made and it has already been shown that there is not alarm if the pound drops.

26

I dont know if your comment is aimed my way but I can tell you that 0.1 percent growth is nothing to get excited about and it is meaningless - particularly in view of the money pumped into the economy and a still expanding public sector - to say the UK has this or that growth forecast from the IMF simply because other developed European economies started to come out of recovery in the Aril-June period 09. Britain has to play catch up and will still be behind whatever. Economic policy makers do not have a dilemma as the constraints on strategy are entirely obvious. The dilemma is political as somebody has to tell the voters to eat hard tack at some point and nobody wants to do it. As soon as reality bites are offerred around to be nibbled on by the voters then the ratings have or will drop for whoever makes them. Jobs still flow to low wage areas elsewhere relentlessly and will continue to do so in view of the minimum wage differential, which you can easily look up if motivated.

As far as the media being fair etc etc. I thought you need two quarters of growth to exit recession, just like you needed two quarters of contraction to enter it.

Here is a Pimco perspective of the UK

https://ftalphaville.ft.com/blog/2010/01/26/134711/an-eye-catching-quote/

Arma Times

I am getting v worried Megiddoman. We are uncomfortably close. I do not want to live in your village. I will resort to some sort of stimulus.

33 Thats quite entertaining, BTW nitro is fine as long as an unstable man is not carrying it. Will the Big Bang end with a big bang.

#34 riverside - We all live in the same village, albeit, for the time being, we can have different perceptions. Reality will ultimately punch through the delusions.

#32 riverside

The 2 quarters citeria is not a law. The wole idea of uing 2 quarters was developed by a student to help complete an assignment. It would appear reasonable when you 'need' 2 quarters of negative growth to define a recession that you should also need 2 quarters of positive growth to declare it over but when was reasonableness allowed to stand in the way of 'good news"!

0.1% is not a lot to get excieed about is it?

Anyway, the official statements are wrong - we are in a DEPRESSION and not a recession.

If the Cadbury shareholders agree to be taken over on Feb 2nd, will the £11.2bn company sold abroad be booked as an export ?

(I'm beginning to understand why an almost nationalised UK bank would fund such a deal at this time)

#33. armagediontimes wrote:

"Here is a Pimco perspective of the UK..."

As ever, quick to draw attention to a negative assessment but completely ignoring the upbeat one from the IMF.

It helps no-one to ignore the part of the picture that is inconvenient.

#39 rbs_temp. As ever quick to draw erroneous conclusions in pursuit of your devotion to the alter of intellectual nihilism.

I sought to cover the IMF report in an earlier post. You may not like the conclusions, but that is not the same as ignoring the issue.

#40. armagediontimes wrote:

"...not the same as ignoring the issue."

But haven't we all been in denial? Are we all still not in denial? Occasionally a few individuals point out the blindingly obvious ( see 'UK on a bed of nitroglycerine')

This country's financial position is in its worst state since records began (see 1694 when the Bank of England was created - paying 8 percent interest by the way!).

One of the most important indicators of the health of a financial, system is its ability to reward investors and savers at the same time as providing reasonable rates to lenders. I will point out, lest we have all forgotten, that interest rates are still effectively negative - the previous lowest was 2.5 percent during the thirties wasn't it?

AND EVEN NOW THE ECONOMY IS NOT REALLY GROWING!

The Bank of England's responsibility is to run monetary policy (along with the Treasury etc.). It is therefore not unreasonable to be very critical of the performance of the Bank - and indeed its continuing performance.

It is vital to future economic health that interest rates are put up and the real over-valuations of assets resulting from underpricing of money are removed from the economy as soon as possible. In fact I think it is reasonable to argue that this is the ONLY way to get the country back working again.

The consequence of readjusting this underpricing will be quite severe for those who have become indebted with underpriced money - but this is inevitable. We must take the hit both individually and as a Nation, for unless and until we do we will remain a basket case.

That latter figure is still below the chancellor's forecast, but it's interesting to note that the Fund is expecting the UK to grow faster than every other major advanced economy in 2011

Stephanie, you know that this has little relevance to the state of the public finances. For we already know that by then our borrowing will almost have reached £1 trillion, and be heading for £1.4 Trillion a couple of years later.

The increase in the interest payments alone will WIPE OUT any extra Tax revenue that a few percent of growth will have generated.

Over the last couple of years I have seen of few TV shows where a person with massive personal debt has a "debt doctor" help them face up to the reality that they simply do not earn enough to justify their level of spending. You sit watching with your jaw on the floor wondering how on earth someone can live in such denial. And I feel the same about our government.

It is quite simply impossible for our growth, even if "faster than any other" to restore the UK finances. Yet these predictions are presented as if "back to growth" equals "back to where we were".

Even with the Chancellor's optimistic growth expectations the treasury graphs do not show our debt back to 40% of GDP for a whole generation. (40% being the level Gordon quoted as prudent every year when Chancellor)

Even with massive growth the public sector will still need enormous cuts.

Is this reported by anyone on the BBC? That the MOST OPTIMISTIC outcome from this recession will have a massively reduced public sector with massive social implications?

I think growth has ceased to be the issue. The issue is do we want to end up like Iceland?

There is a need for the UK to get a grip on its affairs, not just to please to bond markets but because this is the only way anyone of us will be able to control our own lives. Hedonism must become so last year!

We need to focus on the deficit and seek to reduce both private and public debt. This will be uncomfortable and there will be more unemployment. The way to resolve the unemployment will be to make it a transitory condition between losing a value destroying government job and finding a value adding manufacturing job.

I saw a very positive article on the BBC News this morning about manufacturing in the UK taken from a shoe factory. Now living close to Northampton I thought a lot of the shoe making had gone east: apparently not. Good! This shows the supposed cost factor of manufacturing in the Far East may well be illusory once import duty, freight costs, inventory costs and finance costs are added into the pot. Also your supply chains are shorter and much cheaper to sustain. So why not give it a go? Are the banks up to that degree of investment or are there no bonusses for creating jobs in the UK?

I have been accused of being full of doom and gloom. Sure, I point out what is wrong, but I can also see the opportunities that exist in our current circumstances. We don't need all this government that New Labour has inflicted on us. Some of it has proved useful so we can keep that but dump the rest. Then refocus on what we can make that others want.

We can do it; only will we be allowed to do it? My earlier reference to 1940 is that with the same commitment that our parents' and grandparents' generation showed then, we can deal with this problem and eventually improve all our lives. It will require hard choices, hard times for many and for a while further economic decline, but with a sense of realism and a desire for practical change it can be done.

The alternative is too dreadful to spend time contemplating on it. However, the political class need to wake up or we will have to replace them as well.

If anyone saw the 'debate' between Ken Clarke and Mandelson last night on C4 news you will be fully aware of how bad this situation is.

When two heavyweights battle together about the most miniscule of detail like a pair of teenage girls arguing about who's the best pop band - you know we're in trouble.

One thing they both agreed is that 'cuts must come' - their debate is about when.
So I ask who is standing for parliment this year and saying 'No cuts, no way'? - because that's where my vote is going.

This is tyranny now, there are going to be dramatic in our lives over the next 10 years, it's not caused by the majority of us - and we have no choice about it.

I am so glad there is so much defence for what we call 'Democracy'.

I would point out Stephanie that yesterday I demonstrated that the IMF Economists were wholly inaccurate in their previous predictions - so why are you still commenting on what they say?

"True, the Fund's economists now think the advanced countries will grow a bit faster in 2010 than it thought - by 2.1% instead of the previous 1.3%."

This is not Journalism - it's merely parrot like imitation.

41. John_from_Hendon:

"One of the most important indicators of the health of a financial, system is its ability to reward investors and savers at the same time as providing reasonable rates to lenders. I will point out, lest we have all forgotten, that interest rates are still effectively negative - the previous lowest was 2.5 percent during the thirties wasn't it?"

Very true. This year, the government will need new borrowings (net of redemptions) of about £220bn. Assuming they don't print it again, who's going to lend them it - at low rates, and in a dodgy currency? Not Pimco, that's for sure...........

The US has a parallel problem, needing to raise $1,400bn to which foreigners are unlikely to contribute more than $400bn.

These are parallel problems, reflecting parallel errors. If you borrow the money domestically, you starve investment in productive capacity. If you print it, ultimately you drive up inflation and trash the currency. You can't pinch it all from wealth-creators because there aren't enough of them (and they'd leave anyway). So, survival depends on government living within its means.

I don't understand why the country just doesn't get its act together. The government should impose a one off tax that should charge people in relation to their earnings, eg if u earn upto £15.000 you pay £100, £15000 to £30000 you pay £150, £30000 to £50000 you pay £200 and so on with a top amount of £500 for those who earn over £100000. This money that would be raised would create a significant dent in the countrys debt without the need to slash public spending, cut jobs and generally send the country into one big foul mood

OK, genuine question here. There's something I don't understand and I'm hoping someone can explain it.

The BoE has pumped £200 bn of new money into the economy via QE. Where has it gone? If I understand correctly, this 0.1% growth represents about £350 million. What happened to the other £199.65 billion? Does that mean the economy would actually have shrunk dramatically without QE, or does the QE money not end up in the GDP statistics?

So, we have come out of recession exactly when the government predicted we would and the IMF have given our economic prospects a significantly positive slant yet your blog is still full of the Chicken Licken tendency rushing around crying that the sky is falling down. Do they want our country to go down the toilet just so they can say "I told you so!"?
The continual misrepresentation of the 10 years from 1997 to 2007, which were the most stable economically that this country has known since the days of Empire, the on-going misrepresentation of this current recession as a local event caused by local decisions is shameful.
In the last 20 years the economy of any one country has been subsumed beneath the great Gods of globalisation and free marketeerng: and there is not a major political party in this country that has tried to halt that flow - or that could have done so if they had wanted to.

#45. Friendlycard wrote:

"So, survival depends on government living within its means."

If only it were than easy, or cheap. Because we have, as a Nation, all lived beyond our means in the noughties AND HAVE NOT YET REALIZED THE LOSSES (important!) not only do we have to live within our means on a day to day basis (current basis) we have to pay back the money we borrowed in the past for past current expenditure. Not only are we up the creek - we sold the boat as well as the paddle.

Returning to capitals above. (..REALIZED THE LOSSES..) one of the good things about the 1930s crash (as against the 1870s) was that there was a rapid realization of losses - equities crashed - whereas we have a huge over pricing of real estate that will continue to crush us for decades (as it did in the 1870s) unless something is done about it and the quicker the better.

Not only are we still living beyond our means we will have to pay for a decade or more of doing so until we can recover and resume normal long term economic conditions.

Policy implications: - all horrible! But essentially there is no way out - either we do it ourselves or the market will force us to do it. For example: the price of houses must return to no more than 3.33 times of a single person's annual earnings (at a reasonable long term interest rate (8 percent?)) Only then normal economics can return (with genuine growth!)....

RE: 46. Greg1305

"The government should impose a one off tax that should charge people in relation to their earnings, eg if u earn upto £15.000 you pay £100, £15000 to £30000 you pay £150, £30000 to £50000 you pay £200 ..."

Interesting idea. Let's say the average charge per person is £300. There are around 60 million people in this country so let's also assume that all of them pay (an absurd exaggeration but bear with me). The yield from that is about £18 billion which is, as it happens, a bit less than the current average monthly borrowing.

"This money that would be raised would create a significant dent in the countrys debt "

It would in fact scarcely notice.

However, if you multiply your contribution numbers by 12, that would yield nearly enough to cover this year's borrowing requirement.

What do you suggest for next year?

46. At 11:17am on 27 Jan 2010, Greg1305 wrote:

Very sorry, Greg, but you need to work on your maths. If 30 million people paid an average £200 under your scheme (and the true figures would be much,much less), the take would be 6 billion. That is not going to go near making a significant dent in our public debt mountain.

#47. #DisgustedOfMitcham2 wrote:

"OK, genuine question here. There's something I don't understand and I'm hoping someone can explain it."

Try this one: the 200bn has vanished into a new housing bubble and the equities bubble.

That is we are still digging the hole!

Will it end up in GDP? House price inflation is not in GDP (I think).

Would GDP have shrunk further without it? Well possibly, not due to QE, but the associated zero interest rates. As many exporters, banks, and manufacturers are still in business that if they had had to pay the proper cost of finance would not be in business. Both they themselves and their employees who are still being paid, and thus both are buying stuff that is produced (some here) etc. But as many businesses are moaning about not being able to get the 'cheap money' my guess is that this is small beer.

The 200 bn was given to a few select banks. Banks have become more risk averse. Risk averse banks like to feel that loans are secured. In the past banks will preferentially lend on security - hence the banks will have loaned the money on property and that is why we have see 'a recovery' in house prices - which by the way is an extreme example of a bubble that must crash! (A bubble in the depths of a depression is multiply worse than a bubble in a period of growth.)

That is my two-pennyworth...

47. DisgustedOfMitcham2:

"OK, genuine question here. There's something I don't understand and I'm hoping someone can explain it.

The BoE has pumped £200 bn of new money into the economy via QE. Where has it gone? "

Well, government bought gilts with it, and the sellers then used almost all of the funds to buy newly issued gilts, because most of them had to (some funds are required to hold 'safe' investments, and gilts are still just about regarded as that). So QE funded the deficit.

In addition to QE, there's been the £12bn VAT cut plus the car scrappage scheme (I wish we had a government scrappage scheme). Take that lot out and underlying growth is negative.

And it's even worse than this, I think, because I don't have much faith either in the GDP number or the GDP deflator.

#46:

Nice idea, but sadly the numbers don't stack up. The UK national debt is about £15,000 per person. Not per taxpayer, per person. The figures you suggested above would do little more than scratch the surface of the national debt. If you multiplied all your figures by 100, then it would indeed pretty much solve the problem of the national debt. However, I doubt that your average sub-£15,000 earner would be too keen on the idea of stumping up £10,000 just like that.

#41 John_from_Hendon. At its core the situation is quite simple. Economic growth has ben predicated on ever higher levels of debt. This has led to a debt bubble and is completely unsustainable.

The only way out is for debtors to be wiped out. However there are a lot of debtors and wiping them out will have material adverse economic consequences. No-one is about to step up and take actions that will clearly crater the economy.

Therefore we will continue with fantasy "extend and pretend" economics. This policy will be pursued right up until there is a catastrophic collapse of the currency - at which point both debtors and savers (i.e. everyone) gets wiped out.

It has all been tried before at a variety of times and in a variety of locatations and always the ultimate outcome is the same. The only difference is that has never been tried on such a scale before. The only difference scale makes will be to magnify the scale of the ultimate catastrophe.

In part the inability to take extremely painful decisions is explicable by human naure. However this aspect of uman nature is reinforced by the deusional nature of the population. Delusional people do not tend to react well when their delusions are no longer capable of being maintained.

You can see the delusion everywhere you look. Thus you have people claiming that the IMF are providing positive news whilst Pimco are providing negative news. It is not hard to understand the fallacy of this argument.

The IMF are predicting growth provided the stimulus is maintained. You can only manintain stimulus provided you can debt finance. You can only debt finance provided there is international confidence in your currency. Therefore the two items of news are inextricably linked and they both point to one aggregate conclusion.

The thing to remember is that the "dominoes fall slowly" and they may fall even slower on this occasion due to the sheer number of large economies following the same bonkers policies. The US being the biggest example, closely followed by Japan and the inherent and unresolvable conflicts within the Euro zone. All this means is that the ultimate catastrophe will be all the greater - although it may take slightly longer to play through than those trained to expect instant results may expect.

The die it is cast, so to speak - and there is no way out and no way back. The only hope is that enough people can come to understand the magnitude of the events in motion and take actions to prepare themselves to survive in a radically altered landscape.

Here's an 'experts opinion'....

https://www.guardian.co.uk/business/2010/jan/27/sentance-no-double-dip-recession

....and that's why we are in soooooooooo much trouble....

But hey - who needs fundamentals when you have 'financial innovation'?

39. At 07:28am on 27 Jan 2010, rbs_temp wrote:

"As ever, quick to draw attention to a negative assessment but completely ignoring the upbeat one from the IMF."

Isn't that compliment reserved for me?

If you can find a Pimco prediction which is as inaccurate as this one from the IMF then I'll accept that as balanced. (i.i% growth in GDP in 2009??????)

https://www.stuff.co.nz/business/568887

However as it stands the IMF are surely as discredited as any other bunch of Economists. Who do you trust most? The Economists who make poor predictions without consequence, or the investors who bet their livelihoods on being right?

I'm sure you can find something positive in there somewhere....

41. At 09:39am on 27 Jan 2010, John_from_Hendon wrote:

"But haven't we all been in denial? Are we all still not in denial? "

Ah yes, but seeing as the solution for being in too much debt is to borrow more - then maybe the solution to denial is more denial.

I mean the plebians don't like their faux-reality smashed as it makes them have to face up to the consequences. However I can't see this fictional financial world lasting much longer - the investors have had enough, there is very little retail investment going on in the fund management world - it's just institutional money floating about - which is why volumes have been so low.

The man on the street has gone inside his house and locked the door.

#48 Tyto alba wrote.... The continual misrepresentation of the 10 years from 1997 to 2007, which were the most stable economically that this country has known since the days of Empire

You just don't get it do you? Don't you realise the massive personal and corporate debts that were being accumulated during that period? And from the government overspending, instead of making correct level of provision for the future? We were all benefiting from spending our futures during that decade.

I've often wondered how a nation like Germany, and Europe at the time, in the 1930s sleep walked into the rise of Fascism. I'm now understanding more how it happened. As we are undergoing the most monumental shift in our economy with massive ramifications for the rest of my working life (20 odd years). Yet so many people just simply cannot see or understand what is going on.

52. John_from_Hendon:

Right. QE money (plus low interest rates) have fuelled artificial recoveries in asset markets, in property (as you say) but also in equities and commodities.

So, having yet to pay for the last asset bubble-bust, we're already creating the next one. Clever stuff, eh?

To me, this all points to higher inflation in the future, and a sharp deterioration in the value of the currencies and bonds of the worst-affected countries (such as the US and the UK).

QE is a sticking-plaster, not a cure. Sticking-plasters are necessary sometimes, so I'm not criticising Mervyn for QE. But - as Mervyn himself keeps saying - we need a cure, not just first-aid.

54. DisgustedOfMitcham2:

"#46:

Nice idea, but sadly the numbers don't stack up."

Very true. The deficit - not the outstanding debt, just this year's addition to it - is about £180bn. That equates to just over £7000 for each of the 25.5 million households in the UK. Even the structural element is probably in the range £4000-£4500 per household. And that's just one year, remember. Spending cuts are therefore inevitable. No political party is admitting to the scale of the cuts that are needed. They'll tell you AFTER the election, of course.....

48. At 11:31am on 27 Jan 2010, Tyto alba wrote:

"So, we have come out of recession exactly when the government predicted we would and the IMF have given our economic prospects a significantly positive slant yet your blog is still full of the Chicken Licken tendency rushing around crying that the sky is falling down."

Well of course 'coming out of recession' it has nothing to do with their actions or the fact that they 'manage the numbers'. Don't get too excited at the 0.1% - as someone pointed out yesterday this is more of a 'rounding error' than a sign of growth.

"Do they want our country to go down the toilet just so they can say "I told you so!"?"

Not at all - this is a barmy misconception. However we do not close our eyes to make the monsters go away anymore - this hasn't worked since we were children. I want the Economy to recover as much as the next man, but simply lying about the situation is not going to make it better - in fact it will make it worse - just as the deception around NR caused a run on the bank - because a journalist broke it rather than the bank itself announcing it had problems.

"The continual misrepresentation of the 10 years from 1997 to 2007, which were the most stable economically that this country has known since the days of Empire, the on-going misrepresentation of this current recession as a local event caused by local decisions is shameful."

...but it was all fake - if you look at the FTSE as an example we have just gone backwards (economically) to about 1997 - so how you can claim stability over the last decade is silly - I mean don't you remember the dot com bubble bursting? I don't remember that being a 'stable period'.

"In the last 20 years the economy of any one country has been subsumed beneath the great Gods of globalisation and free marketeerng: and there is not a major political party in this country that has tried to halt that flow - or that could have done so if they had wanted to."

I do agree to a point - but lets face it, no Government has actively tried to prevent Globalisation with any actions - it's all pointless words.

Did you know that in the US all states except 2 are holding giant deficits and running at a loss - Calafornia is on the brink of bankruptcy.
One of those 2 states (I think it's North Dakota) has actually returned a budget surplus and has rising employment - why?
Well maybe it's because they did stand up to the banks and they have a state run banking system - which is performing admirably and supplying credit to the people of that state.

....now why didn't a single Government follow this type of action?

55. At 12:15pm on 27 Jan 2010, armagediontimes wrote:

"The die it is cast, so to speak - and there is no way out and no way back. The only hope is that enough people can come to understand the magnitude of the events in motion and take actions to prepare themselves to survive in a radically altered landscape. "

...and that folks - is the best advice you will see on this entire website today, this week and possibly forever - please take heed.

48 t alba

First time I have heard a bubble caled 'stable'. The problem remains the suction of jobs out of this country to low wage areas within and without the EU and the inflow of migrant workers by the million to this country because the minimum wage here is a multiple of other EU areas. This economic differential in favour of other countries results in a reduction in activity here and a consequential reduction in HMG revenues which in turn results in a the forthcoming reduction in the public sector. It is igenious to suggest that all mechanisms withing the EU are equal, they are not. Germany and France try to protect culture and commerce. Immigration was 1/3 to Germany of that which occurred to the UK from Poland, and the migrants have not returned to their homeland. BBC reports. That was because of steps taken by the German government. This country has the highest concentration of foreign ownership of our companies in the EU according to Lord Digby. His view is foreign owners look after their home base first, satellite business takes the hit. We have foreign corporates shutting down plants left right and centre, not because there is not demand for goods but becaue they want to manufacture somewhere cheaper such as Hungary or Poland etc etc. It is clear other countries which are not in the position we are have a different attitude at government level to jobs, business, culture. Those countries have difficulties but they came out of recession in the middle of last year. Thise coutries have continuing problems, this coutry will continue to have problems.

This UK 'coming out of recession' now, as forecast, is twaddle when 180 Billion has been run up as a deficit in the current year and public sector cuts have to come, and initiative after initative has been undertaken - 90,000 new jobs in the public sector in this period, car scrappages schemes, boiler scrappage schemes. Employment lags recessions by 3 years so unemployment will grow. The only mechanism to keep employment numbers up is those losing jobs taking part-time work or taking full time jobs with a drop in wage of 28 percent, as reported recently. BBC News article on this website.

The recession is global but the effect clearly appears to have been exacerbated locally so there is clearly local effect.

Until these effects stop driving decline then decline will continue. Decline clearly has not stopped as it is acknowledged that cuts have to be made. In what way is making cuts anything other than acknowledgement of decline. In what way is a 180 Billion current year deficit an acknowledgement of a failed economic strategey. It is a truely colossal figure. The last figure for the finacial cost of the Iraqistan war to date (mid 09) was 14 Billion. That war is supposed to be a big deal. It is exceeded in financial cost every month by this government.

#Greg 1305
You have way underestimated the problem. But you may well represent the view in the country. There are according to HMRC approximately 35 million taxpayers in the country. Though some of those pay virtually no tax. If each of them paid the maximum £500 that would raise £17.5 Billion. A decent sort of sum but less tham 10% of the £178 Billion the goverment expects to borrow this year alone.

#26 fleche_dor wrote

"Why have the WWM's completely passed this IMF forecast by? Could it be that the IMF has predicted UK economic growth of 1.3% for 2010 and 2.7% for 2011. This figure has been published and presumably arrived at completely independently of HM Treasury, the Bank of England, the Labour Party or the BBC; or anybody for that matter that could possibly be accused of bias towards the government."

What is also true is that this is "completely independent" of who wins the election and of the policies the winner implements. Amazing!

Here is something I have not seen discussed on the blog. Middle class WWMs have a secret weapon. Well, at least I do. It is called CHILDREN. They will emigrate.

Here is the consequence of targetting a Q4 growth in 2009 so you can claim salvation from Depression.

https://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article7004392.ece

There is a seemingly very important factor being
omitted from this discussion of the lacklustre
recent growth figures and that is the effect of
immigration.

Rewind to 2006-2007 and we see that a large
proportion of the then growth in the economy was
fuelled by (East European) immigrants taking
low paid work. More recently these migrants have
mostly gone home 'cos the low value of the pound
means they're no longer so rich when they go back
and change their money into zlotys.

This accounts for why unemployment has not risen
by the amount expected 'cos part of the dole queue
is also in Poland. The solution is clearly that
British employers will at last have to start hiring
British people for a change, and take the risks
associated with employees who know their rights
and expect to be paid.

#43 stanilic

Yes the remaining Northamptonshire shoe manufacturers are surviving by being niche. There are about 15 of them.

Most are high value. Take Church's for instance; at £300 for a pair it's hardly the stuff of the common man. Beautiful craftsmanship though. And a key sector exporter.

But craft industry can never be enough to sustain the economy and provide sufficient jobs, so we need to provide the financial conditions to encourage more internal mass manufacture. This does not seem to be part of the agenda, and its hard to see how we can move this way without fundamental reform of many of our beloved institutions.

ps - construction is still in the doldrums and not expected to recover job levels for 5 years (deficit = 250000 jobs). Technically still in recesssion then?

43. At 11:01am on 27 Jan 2010, stanilic wrote:

''I think growth has ceased to be the issue. The issue is do we want to
I saw a very positive article on the BBC News this morning about manufacturing in the UK taken from a shoe factory. Now living close to Northampton I thought a lot of the shoe making had gone east: apparently not. Good! This shows the supposed cost factor of manufacturing in the Far East may well be illusory once import duty, freight costs, inventory costs and finance costs are added into the pot. Also your supply chains are shorter and much cheaper to sustain. So why not give it a go? Are the banks up to that degree of investment or are there no bonusses for creating jobs in the UK?''

The introduction of a correctly structured green tax would put things in better perspective also particularly with respect to the polluting Far East. But I am afraid you are wasting your time. The majority are only interested in clinging to their right, as they see it, to have public services maintained come what may. And very few that post here are genuninely interested in the recovery of manufacturing, havent you noticed. The situation is that in a recession only a minority pay the full up cost and then arbitarily. Those that are not really affected are never that bothered. BTW Banks are only interested in feeding. You must have seen that. That is the one constant in life. Banks feed on the way up when the weather is sunny and trouser. They cash in at the drop of a hat if rain shows up. They then recover their mistakes by charging the remaining captives wherever possible. Invest, they are more likely to take your vest than invest. I try to keep them at distance. I would rather have syphillis than deal with a banker given the choice.

63.writingsonthewall:

"55. At 12:15pm on 27 Jan 2010, armagediontimes wrote:

"The die it is cast, so to speak - and there is no way out and no way back. The only hope is that enough people can come to understand the magnitude of the events in motion and take actions to prepare themselves to survive in a radically altered landscape. "

...and that folks - is the best advice you will see on this entire website today, this week and possibly forever - please take heed."

Might "emigrate" be equally good advice?

44 writingsonthewall:


''....agreed is that 'cuts must come' - their debate is about when.
So I ask who is standing for parliment this year and saying 'No cuts, no way'? - because that's where my vote is going.

This is tyranny now, there are going to be dramatic in our lives over the next 10 years, it's not caused by the majority of us - and we have no choice about it.

I am so glad there is so much defence for what we call 'Democracy'.....''

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

You believe manifestos then. You are likely to be paid with a reality cheque I am afraid. BTW look up the number of people who voted for NuLab as a percentage of the pop. Not what most people would imagine is a democracy. The occupancy of No 10 is determined one way or the other by a very relative few in a few key locations. Bit like a penalty shoot-out at the World Cup. Why bother with the game just proceed to the penalty box.

#51:

Thanks John, that makes a lot of sense. It did seem odd that house prices and the stock market were doing so well when common sense tells you that they shouldn't have done.

It's not going to end well, is it?

Two blogs on the same thing in two days Stephanie?
Things must be getting a little hot are they?

Can't really add to comments made especially from WOTW, Arma, riverside et al.

Can add a little on the taxpayer stuff however to understand the scale.

According to latest HMRC figures there are 29.3 million UK income taxpayers (subject forecast which may well be less in reality).

This generates £134 billion income tax and £98 billion NI. Of course this is before public sector cuts come in.

As comparison £64 billion is expected from VAT, £34 billion is corpration tax, fuel duty £27 billion and then a load of various taxes raises another £35 billion (note inheritance tax irrelevant).

What we are basically saying is that to maintain our current standard of 'investment' and just meet current borrowing need we basically need to find ANOTHER 28 MILLION income tax PAYERS with absolutely no other infrastructure/support costs....

THAT IS ABSOLUTELY BARKING MADNESS...

And a message to the likes of Fleche-dor, tyto alba and onward ho - please book yourselves in to see a therapist to treat your delusional state - its getting dangerous........ (perhaps you can all go together - with Stephanie?)

Regards

72 Friendlycard:

"emigrate"

Funnily enough if you look around internationally you find the countries, not just ex colonies BTW, that pass a rough and ready long term security assessment, eg density of population, infrastructure, natural resources, good argiculture base for food, upward mobility possible on the international scene etc etc have diferent policies than the UK and also genrally have very tough immmigration criteria, and strive to maintain a sense of identity. Rather different than here. Indigenous populations have sufferred there generally, perhaps it is progress and belated equality that the indigenous population may have problems here. There again it could be the British Empires last hurrah is to turn on its own citizens as the last deferred symptom of Empire implosion initiated 2 generations ago. The French view is Britain has lost its Empire and does not know what to do.

#72 Friendlycard. Sure from a personal perspective emigration is one way of going about things.

As emigration is suitable only for the more dynamic and adventerous it has net negative effects on society as a whole. Just one more thing that those that remain will need to adapt to.

It just gets tougher all the time.

67 trylypuzzled:

''Here is something I have not seen discussed on the blog. Middle class WWMs have a secret weapon. Well, at least I do. It is called CHILDREN. They will emigrate.''

One very highly qualified gone, and very welcomed at the other end. Better lifestyle advised. 2 more considering and in my opinion quite likely in time. They too are regarded as qualified key workers.

This relates to a long term problem. Youth unemployment growing and key worker migration.

49 John_from_Hendon

John you are so,so right. Why oh why do people just not get it.

Good to see we have a positive outlook from the IMF however the principle drivers of the economy are weak given the poor lending enviroment. Any recovery is going to be dependent on the financial services sector being given freedom to opporate as before and leaving us very venerable to future downturns.
The only way to produce a sustained recovery is to rebuild UK plc as a producer of goods as well as servises as this has the effect of damping down imports and increasing exports. However this is a long haul and not an easy quick fix which politicians would rush to embrace!

76. Riverside, 77 Armadegiontimes:

I met my financial advisor the other day to consider the value of my pension schemes and he remarked on quite how many of his clients have emigrated recently, or who plan to do so. It turns out that they've gone all over the place - to obvious places such as the US, Canada, Australia and NZ, but also to places as diverse as Thailand and China.

The image of emigrants is grannies going to Spain, but the figures don't bear that out. At least 300,000 leave every year, and the age demographic and destinations show that these are mostly young (or young-ish) working people, not retirees.

My own view is that emigration is attractive, and not just (or even mainly) on economic grounds, important though that is. A major consideration, for me, is that I increasingly find the UK depressing.

From an economic perspective, about a quarter of the working age population work for the state and another quarter are on benefits. This means that the remaining half - rather less than half, if you do the sums - are supporting everyone else.

Well, I didn't borrow excessively, and I didn't vote for Brown (mind you, no one got the chance to do so), so I don't feel responsible for this 'nitrogylcerine' economic risk - so should I stay here and pay for a mess that I didn't cause? I'm minded not to (and will look at this topic again come 6th May (or sooner, if rumours are to be believed).

The government wants to turn us into a heavily controlled, morally-lectured, high-tax-high-spend society. That's not for me, thanks.

72. At 1:47pm on 27 Jan 2010, Friendlycard wrote:

"Might "emigrate" be equally good advice?"

....unless you mean to China or the Moon, then no - emmigration is not good advice.
You take your chance in China with human rights etc.

The bottom line is there are no producers of note - except China - and there are no buyers period.

I saw the US 'consumer confidence' numbers cam out yesterday - they were about 50% - massively up on the dreadful 27% during the crisis. However the 'norm' is about 90% - which is a million miles away. As about 70% of GDP in the US in recent years has been from consumers - there is a lot to make up. It's worse than that because this is merely 'consumer confidence' and consumers can be as confident as they like, but without credit or savings they are merely passengers.

...my point being that the US was 'the customer' to China's factory - the relationship is now all but over and there is no country big enough to replace these two heavyweights.

That's why the bankers threat off jumping on the next plane is a joke - there is nowwhere to go!

46. At 11:17am on 27 Jan 2010, Greg1305

We all make mistakes....

However at least you can now see the sheer scale of the debt and why so many people are so concerned.

I am a bit concerned by your silence - I hope you haven't taken it too badly, swalling the red pill is always risky as it can explode your mind.

Don't worry Greg1305 - we're all in this one together...come back and we will show you what the media isn't....

All this discussion is based on the notion that GDP is a good indicator of economic well-being. It IS NOT. Many other commentators have highlighted the very severe limitations of this measure and how the obsession with GDP has become a sort of international fetish. If we want a true picture of the nation's economic health, which factors in our ability to thrive within environmental limits and levels of happiness, health etc. etc. we need a much more sophisticated basket of measures. OK, GDP can be one of these measures - but GDP alone is now simply misleading. Lets stop giving it so much attention.

49. At 11:47am on 27 Jan 2010, John_from_Hendon wrote:
'the price of houses must return to no more than 3.33 times of a single person's annual earnings'

I don't disagree with the sentiment or the idea here but suspect that there are additional factors driving house prices higher than the 'average' person can 'afford' other than just unsustainably cheap money.

Changes in housing demographics suggest that there will be a significant shortage of supply and that this situation is only likely to become worse during our painful and protracted financial hangover. Regrettably it seems likely that the current expectations of house ownership cannot be met.

Are house prices also not forced outside the scope of average income as a result of property inherited at death or through generous funding by better off parents?

Cheap money created the illusion of 'universal' house ownership but is this really now possible? House prices may (and should) fall) but it seems unlikely that they will fall to a level reachable by 'average' income and even at that level three fifths of the country's households would be excluded with the kind of interest rates suggested here (based on average as mean income of all households).

#81 Friendlycard

I believe a lot of people would agree with your comments. Your observation regarding those supporting is evidenced in the numbers above I presented in #75 above.

I think there's a fundamental problem facing the UK which is the split in national values (if you commonise them to a degree).

For those who may agree with your comments we seem to have an equal number who like to be guided, lectured, like spending but not taxed and have actually no care about government debt or the future as long is it stays the same for them (which of course it can't)..............

Given the state of the country and its finances, one would have thought that we would have angry mobs camped outside No 10 and that the current government would be thrown out with such gusto that most cabinet members would have to live in exile from now on.

The fact that we don't and that we're expecting a tight election is very revealing and that the BBC continues to present a fairly one-sided view in all of this is doesn't go unnoticed.......

Oh did I mention - I'm also considering relocation whatever happens....

84. At 3:32pm on 27 Jan 2010, Peter

We know - it's the media who keep on banging on about it.

They are confused between 'monetary wealth' and 'wealth' - they think GDP measures both, but it only measures monetary wealth.

I mean the simplest of calculations shows that we 'printed and added' 12% of our annual GDP to the 2009 GDP and the result was an outstanding......

......rise of 0.1%.

If the media continue to report in such a idiotic manner then I suggest we storm the BBC first....

10
12
Looks like poetry is banned from this blog......I had pasted in Darley's Phoenix poem ......ok it was a bit long and on re-reading it there are ? unintentionally risque bits (and how DO you do an acute accent?) .....I'm sure if Darley had a mobile.... e wdv txtd it2u qkr ... But actually, I was making the serious point that the British economy is rather like a phoenix rising from the ashes having just perished in the flames of recession.
I wonder if we are entering the PHOENIX PHASE OF THE ECONOMIC CYCLE.
And though Brown promised an end to boom and bust at least there is a boom after the bust.
It is a bit like the peace after the war, when lots of people aren't coming home and life is not the same again.But there is an end in sight although it will take a while to get going again.
But we are going to make it, we are the Come Back Kid of the G20.
And the IMF know that we are not as boring as the Eurozone and once we get back on our feet we will be racing.

ONWARD HO SAYS ............ UK = CBK!

86. Rugbyprof:

"Given the state of the country and its finances, one would have thought that we would have angry mobs camped outside No 10 and that the current government would be thrown out with such gusto that most cabinet members would have to live in exile from now on."

Yes, quite agree. One factor here is that, unlike say the French, Brits don't do angry demonstrations - yet, anyway. Another factor is that the system is increasingly repressive. For example, don't try standing in London and reading out a list of the UK's Iraq war dead - you'll be arrested as a terrorist. The same will happen if you dare to heckle a Labour minister, even if you're a harmless octogenarian lifetime party member. CCTV. Etc., etc..

You're absolutely right about a large number - the majority, maybe? - wanting things to carry on as they are, paid for by the rest; and equally right about this being impossible, but that doesn't mean they won't try that (and vote for it).

Another factor to consider is demographics. After WW2, there were 7 people of working age for each pensioner (and 'working age' doesn't mean 'working', of course). Now the ratio is 5:1. Before too long it could be 3:1. Long before that, the lotus eaters might find that the game's over, too much productive capacity has gone, and the ratios (private-to-public-sector, workers-to-non-workers) have become unsustainable, killing off their nirvana.

#87 WOW,

Totally correct. It has been the pursuit of monetry wealth that has led us to this dilema. In the UK we have been enslaved to monetry wealth. We have sold nearly everything we have and even the tattered remains have For Sale notices attached to them.

The problem for us is that the accumulation of real wealth and value is a long term project. However, we have evolved an 'immediate' society. We actually believe that life is faster than it was. We raise our children to expect that everything can be achieved with little or no effort, that they cannot fail and that every experience will have a 'wow factor' guarantee with it.

It's not just the BBC who have to change it's all of us.

#86 Rugbyprof & others,

Emigration has always appeared as an alternative. Perhaps it stems from our imperial history. However you also to have to look at the numbers of emigrants who ultimately return.

At the risk of bringing the tone down (and being accused of being a doomsdayer)

It's gone very quiet on the other side of the Government debt - it's investments (or should that be our investements)

RBS share price is following a classic path of decline.
Decline, decline, decline, slight bounce, profit taking, decline, decline, decline...

Lloyds is following an almost identical pattern - chart them against each other on Google and you'll see it.

Considering we're held the RBS stake for a year - and we're about half the value of the break even point - is there anyone here who will be brave enough to argue we will 'make a profit' before the end of the decade?
I did say this would happen when we took the stake - I mean it was obvious to the simplest of minds. There is no appetite for investing and certainly none for investment in finance for the foreseable future.

I wonder how those Lloyds shareholders feel now after having 'being cajoled' into taking on the rights issue at 38.4p when the share price currently stands at 51p.

The discount of the rights issue was 68% from it's 97p-ish price at the time.

Still, I suppose it's not exciting enough a story for the media parrots - I mean it's only a multi Billion pound loss to add to all the others...

Economic Growth : Onward-ho's take:

Euro vs. Pound 0.8674


Something big IS happening !


It is that we are being seen by others as beginning to emerge out of recession.

Anyone for 80p?

An economic stimulus is fine and sensible if you're in the middle of a cycle, AND you pay it back during the following boom. We started this with an annual deficit of £30 billion, and annual interest costs of £30 billion, ie we were only just paying the interest in the last year of a record boom. Darling has promised(!) to halve the deficit in 4 years, great or what, so we'll only be borrowing another £80 billion per year in 4 years time when we should be into our next boom cyvle. By that time our annual interest costs will probably be £100 billion per year.
That's why most external commentators think we're on a very slippery slope. Yes, maybe we need a stimulus, but we really can not afford it.
That's the consequence of Brownomics - spend spend spend....

Whoever complained about my post #91 will you please tell me what you found so offensive because I'm baffled as to what could have caused offense.

A post from me just now on the Nick R blog:

At 5:06pm on 27 Jan 2010, telecasterdave wrote:
Why on earth has my comment 51 been referred to the moderator. What on earth is happening.
------------------------------------
I have been following several BBC blogs today and all have more referrals than usual. Either there is a more hardline moderating policy today or we may have a malicious complainer causing trouble. Interesting to see if the comments end up permanently removed or not.

#31 armagediontimes - IMF growth projections are conditional, amongst other things, of the implementation of planned or announced stimuli.

1. What form of punctuation comes at the end of a sentence, which is a question?
2. All projections are conjecture, nothing more. It does not matter who produces them and how well qualified they are or are not. Depending upon the level of skill of the person or persons making the projection it may prove to be more or less accurate. From my previous readings I understand that recessions, or market shocks, failures or interruptions may cause the relationships between variables, which econometric models are created upon to break down. Economists usually use econometric models to make forecasts. Many forecasters expected and hoped that recession would end with the first release of GDP data last autumn, covering the summer period. They were wrong.

You may or may not choose to question the Chancellor of the Exchequer's skill in economic forecasting. He did correctly predict that the recession would end in the final quarter of last year; unless later revisions to the data change that. It is still possible for later revisions to the GDP data to show that we exited recession in the 3rd quarter last year and then dipped back into negative growth in the final quarter.

#32. -riverside. I did not get excited either about the failure to emerge last autumn or the technical exit from recession according to the data from yesterday, albeit only 0.1% growth. I did not hear any politicians, commentators or journalists doing so either.

Compared to the scale of negative GDP numbers that we saw during 2008 and 2009, the fact that the GDP data show that the economy has continued to move in a positive direction for three consecutive quarters, albeit from a very low base has to be very welcome. There are plenty of other data which show that the economy is improving, or if not at least standing still. Nobody says exiting this recession was going to be easy, painless or quick. Anybody that expected a return to any growth above 0.5% for the last quarter of 2009, based on the estimates for the previous quarter had to be totally deluded, considering the devastation caused by the crisis and recession, or depression as some people like to call it and specifically the UK's dependence on financial services for growth. The key to moving forward and preventing the economy retrenching or slumping back to depression is to stay positive, optimistic and crucially adopt the right policy moves.

Governments, businesses and individuals all borrow money. Banks have provided funds at a rate of interest for centuries to fund purchases, trade etc.

The reality is that the banks and other financial institutions have used the liquidity provided by the Bank of England's printing money or Quantitative Easing to provoke a mini rally in the stock market. It is now down to the banks, with their strengthened balance sheets and profits from this share dealing to ensure that the recovery takes root in the wider economy, by making sure that the profits from last year are made available to UK businesses and individuals to stimulate the wider or "real" economy. Who is putting any substantial pressure on banks; retail and wholesale and hedge funds, venture capital to put money into the businesses of the future, or has it just disappeared into the bonus pit, (oops Freudian slip, I meant bonus pot?

I have not heard any politicians from any of the main parties advocate the type of economic policy and strategy, that is likely to enable the UK to emerge fully from the current situation. The UK economy needs more than just public spending cuts and higher taxes to create the growth and employment needed.

If the people that Whinge, Whine and Moan on this site, spent half the time taking positive action to generate economic activity than they did blogging negatively here, then the UK economy would have exited recession more positively some time ago!

"It also says that countries facing growing sustainability concerns "should make progress in devising and communicating credible exit strategies".

In case you were wondering, Alistair Darling, that means you. "

Actually Steph, I think this refers to the U.S. Which now finds itself in the same position as the U.K. did in 1976. The U.S. now has to plan carefully just how it is going to service its international debt in future. It's reached the end of its borrowing ability and, on a global stage, now finds itself where the U.K. did after the Great War militarily and, WW2 economically.
Since their creation, both the World Bank and I.M.F. have been tools of successive U.S. regimes. Now the I.M.F obviously perceives its future to no longer be U.S. dominated. Several countries will now have to compete to influence the I.M.F. policies and agenda for the future.

0.1% ? Woo hoo!

https://www.artypolitics.com/2010/01/its-alive.html

97 fleche_dor

''If the people that Whinge, Whine and Moan on this site, spent half the time taking positive action to generate economic activity than they did blogging negatively here, then the UK economy would have exited recession more positively some time ago!''

I do not know if this is adressed at me since you just give sweeping asides. The fact I am economically active does not prohibit me having an opinion. It is people who never ask where they are going that do not know where they are going.