An economists view...
Lifted from the IEA Blog
Showing posts with label The Economy. Show all posts
Showing posts with label The Economy. Show all posts
Tuesday, May 04, 2010
Wednesday, April 21, 2010
St Vince, Brillo & Flanders On Economics
For anyone who wants to know a little bit more about Liberal Democrat Economics and on Vince Cable's public record prior to the election.
Tuesday, April 13, 2010
The State Of Our Union
As I suspected I arrived at work today and there is quite a bit of talk going on regarding the election campaign. What does not seem to have penetrated the hard skin of those who only "do" politics when an election looms is the scale of the crisis in the economy, and that is probably fair enough because I don’t think the campaign has really directly addressed these problems or highlighted exactly how severe things are.
So, here is my attempt to set it out in layman’s terms, both why the main parties are being shall we say economical with the truth and to set out where things are, or at least and more accurately how I think things are. My humble aim is to reach beyond my normal readers and offer something that can help people understand some of what is being talked about. I am not generally comfortable on the economics when it comes to the nitty gritty, so I will reference back where I am able, but feel free to put me right in the comments if I have drifted astray.
I believe it was in the 2009 Budget that Labour set out their spending plans for the 2010/11 year and this was not amended in the recent 2010 budget. In it, Labour has basically said that they will spend around about £706bn in this financial year (2010/11). Now, this covers everything from doctors and nurses, through to teachers, maintaining the roads, buying paperclips, servicing our debts and of course, funding MP's expenses.
That number again is:
£ 706,000,000,000
Now, the Conservatives did say quite some time back in 2007 that they will match Labour overall spending totals were they to win the election. This was emulating Labours 1997 pledge to mirror the Tory economic plans, which won favour with the voters and reduced uncertainty in the minds of the voters about changing the regime. The plan in 2007 was to try and take away any accusations from Labour that the Conservatives would “cut services”. The debate at that time was that Spending was equal to Service, thus a cut in spending would result in a proportional cut in service; this is an argument I would reject, (but you may not.)
That was pretty much how things stood until recently.
However, the Labour government recently announced that they have identified £11bn of annual spending which they could classify, today, as “waste” and they declared that they intend to cut this waste from their 2012-13 spending plans onwards. In return, the Conservatives amended their 2007 pledge stating that they had in fact identified £12bn in “waste” and that if elected they would cut that “12bn waste starting right away; using £6bn of it to tinker with the National Insurance Bands (the “Tax on Jobs”) and cut spending annual spending by £6bn with the rest.
That's:
£ 12,000,000,000 in annual wasteful spending the conservatives will begin to halt in the over the 2010/11 year if elected in a few weeks.
£ 11,000,000,000 that Labour say they know is being wasted or inefficiently used that they want to keep spending until the 2012/13 year, (though we should keep in mind that by 2012 whoever wins the election will have to have at least one spending review before this date so all numbers at that point are likely to change.)
£ 6,000,000,000 that the Conservatives will spend less per year than the Labour Government. (A less than 1% reduction.)
So to repeat, the £6bn currently in discussion in the media and on the TV and what will be mentioned in the leader’s debates is £6bn of money already being spent which has been identified as wasteful with a further £6bn being used to not make employing people into work more expensive.
So, based on the above, the Conservatives are effectively now saying that for 2010/11 their spending projection is the Labour pledge of £706bn, less the £6bn just mentioned, or:
£700,000,000,000
Now, if you like me get a bit bamboozled over these numbers you are not alone and it is because the numbers are truly huge.
To pay for Public Sector Spending as set out by each party a Government can basically do two things, it can collects tax and it can borrow money. Borrowed money needs to be repaid at some point along with interest along the way and is obviously a more costly way of keeping the Government running.
There is no way I, you or Alistair Darling can be certain of the amount of tax that will be collected in the 2010/11 period, but what we can look at is how much was collected last year and see how much tax is coming in versus how much is needed to go out. Looking at the HMRC numbers for total tax collected in the past year and in recent years there is a very large gap between what can be afforded via tax revenues and via what either a Labour or a Conservative Government is committed to spend. By the chart linked, the Government has collected £397bn in taxation to go towards the amount needed.
Let’s keep our numbers simple hope that the tax rises coming will not stifle tax revenue collection and assume that if collection remained flat the money coming in will be:
£ 397,000,000,000
So in our exercise, with a fair assumption on tax income for this year there is a shortfall or to use the Economic term a Budget Deficit in the Labour plan between the amount of money needed to keep the government going and the amount of money coming in via tax of:
£ 309,000,000,000
And it is fair to say that there is a deficit in tax revenues to the Conservative plan of:
£ 303,000,000,000
And that crucially for this next year alone!
This deficit however is not the same as debt.
So when The Chancellor and George Osborne talk about tackling national debt and tackling the deficit these are not the same thing. Sometimes watching debates on TV about the state of the economy I have heard questions asked about our debt and the answer has come about cutting our deficit – this is usually a rouse to lead away from the truth that by all projections our national debt is soaring and will continue to soar no matter who wins the election because the best the parties are offereing is to halve the deficit.
The national debt can be defined quite simply as what the UK owes, and every penny of it needs to be repaid, usually with interest. The current national debt for the UK is about £849bn and as (I hope) you can see from what I have written above, this is rising all the time as the deficit between the money coming into Government and the money going out are vastly different and the deficit needs to be plugged with new loans.
That number again that every taxpayer in this country is now indebted to is:
£ 849,000,000,000
Now, unfortunately this is the "official" number. However, the official number because it is defined by the Government does not take everthing into account that you and me might include in a more traditional definition. So, to illustrate this more clearly I need to go back just a few months. At the end of 2009 the National Debt number stood at £829.7bn. At that point I wrote about how that £829.7 does not even include Private Finance Initiatives and Pension Obligations that the Government is obliged to pay and at that point a more truer interpretation might put the true debt at £1.35 Trillion, or:
£ 1,350,000,000,000
But, this £1.3 Trillion also does/did not include the potential and worst case outlay based on pledges to buy back mortgage securities. When those are factored in the number rises again to £2 trillion.
Yep, that’s:
£2,000,000,000,000
As the debt goes up in terms of what we can afford to pay so too will the interest rate in which we can borrow future debt, as it becomes more and more risky to lend to us the more we already owe. This is not just true of the UK, but also true of all countries, all households and all businesses. As our deficits continue our total debt rises.
If the deficit is the difference between income and outgoing, and debt is the total that we owe; it is therefore the case that the deficit can be cut, whilst debt continues to rise.
So, you can see that by focusing the debate on the £6bn issue of whether to cut wasteful spending now or later is kind of a false issue which serves to distract from the fact that to actually implement either plan would require loans that are just not realistic in the medium or long term. To meet spending plans as presently set would require loans that would cripple us. If the deficit is growing by about £12bn every month, perhaps £6bn annual reversal is not enough of a plan for now(?)
When the Chancellor and George Osborne talk about halving the deficit in the next Parliament we should remain aware that they are not talking about cutting the debt that is being accrued for which we must continue to pay interest on, the gap will remain and the amount we owe and the amounts we pay each year in interest are set to go up and up and up and up and up and up.
You can look back across recent years and see, there is no way tax revenue would ever cover the levels needed. Simply raising tax rates will not guarantee that more money will come in at the end of the day.
So, in my humble view the current economic debate is something of a sham, because none of the parties are facing up to the real tough questions that should be posed this side of an election. They all know that there is absolutely no way we can afford to take on and service that level of debt. The extent, size, reach and cost of the State has been inflated to a dangerous size, one in which the people of the UK could never have afforded to support over a great period of time. This has been done by our present Labour Government and it is being propped up already by high amounts of borrowing. We will spend more this year on debt repayments than we will for the entire Armed Forces on the United Kingdom and the figure is creeping up.
Labour has had 13 years to re-build the country in the Social Democratic or Socialist model it so desired, but they built their house on foundations of sand and there is a storm approaching. It will need to be rebuilt all over again.
The State framework that Labour built is going to crumble in the next year or so no matter who wins this election. There is going to have to be massive, massive cuts to get by. But let’s be clear, the size and cost of this predicament has been caused by, set up by, with sole responsibility belonging to, this Labour government.
Please frame this in the context of your home or in terms of circumstances that are close to you in terms of what we must do. If your household income fell, you would not increase your level of spending you would cut it to match your income. There may be loans, credit cards and even a mortgage to factor in, but you would manage these based on your ability to make repayments. We probably all know someone who over borrowed or maxed out their credit cards a few years back who is struggling today. It is not really so dissimilar, we all know that in the end to balance ANY budget spending and outgoings need to be balanced against ability to pay, furthermore we all know that by delaying this ends up being more costly in the long run.
By keeping the argument about the circumstances, and merits of the Conservative application of a potential £6bn distracts from the very real arguments that are not being aired, and that people will be afraid to air. The cost, and thus the size of Government needs to be cut by my guess at least by a third and maybe more.
The Institute for Economic Affairs is more optimistic than me, and they think that without any new tax rises that Labour’s spending plans need to be scaled back by at least £167bn annually.
Sorry, but to continue the theme that’s a cut of:
£ 167,000,000,000
Taking £167bn or two times the NHS budget out of the public sector will lead to unrest, it will lead to strikes. Tragic though the consequences are for the people losing those jobs are, the truth is many of them should not have been hired in the first place, their fate is a result of Government mismanagement of our economy.
So when the layoffs do happen and the strikes and civil unrest does come, be it under Labour, the Conservatives or under a Coalition partnership we should be talking today about what lies in store in the road ahead; because ultimately every single person in our land is going to feel the effect of this, every single one of us. And that is what the leaders in this election campaign should be addressing, and as a result that is the debate that we should be having in our schools, workplaces and pubs. By not discussing the size and extent of the inevitable cuts, I believe will fuel even more unrest and protest, because yet again decisions will be made in Whitehall and by the time the election is over and the cuts are being made, the dialogue will be about the tough decisions that need to be made.
After this election the only thing we will be talking about is cuts, cuts and more cuts. That is why we should all be talking about it this side of the election if we want an input on how those cuts may land.
So, here is my attempt to set it out in layman’s terms, both why the main parties are being shall we say economical with the truth and to set out where things are, or at least and more accurately how I think things are. My humble aim is to reach beyond my normal readers and offer something that can help people understand some of what is being talked about. I am not generally comfortable on the economics when it comes to the nitty gritty, so I will reference back where I am able, but feel free to put me right in the comments if I have drifted astray.
I believe it was in the 2009 Budget that Labour set out their spending plans for the 2010/11 year and this was not amended in the recent 2010 budget. In it, Labour has basically said that they will spend around about £706bn in this financial year (2010/11). Now, this covers everything from doctors and nurses, through to teachers, maintaining the roads, buying paperclips, servicing our debts and of course, funding MP's expenses.
That number again is:
£ 706,000,000,000
Now, the Conservatives did say quite some time back in 2007 that they will match Labour overall spending totals were they to win the election. This was emulating Labours 1997 pledge to mirror the Tory economic plans, which won favour with the voters and reduced uncertainty in the minds of the voters about changing the regime. The plan in 2007 was to try and take away any accusations from Labour that the Conservatives would “cut services”. The debate at that time was that Spending was equal to Service, thus a cut in spending would result in a proportional cut in service; this is an argument I would reject, (but you may not.)
That was pretty much how things stood until recently.
However, the Labour government recently announced that they have identified £11bn of annual spending which they could classify, today, as “waste” and they declared that they intend to cut this waste from their 2012-13 spending plans onwards. In return, the Conservatives amended their 2007 pledge stating that they had in fact identified £12bn in “waste” and that if elected they would cut that “12bn waste starting right away; using £6bn of it to tinker with the National Insurance Bands (the “Tax on Jobs”) and cut spending annual spending by £6bn with the rest.
That's:
£ 12,000,000,000 in annual wasteful spending the conservatives will begin to halt in the over the 2010/11 year if elected in a few weeks.
£ 11,000,000,000 that Labour say they know is being wasted or inefficiently used that they want to keep spending until the 2012/13 year, (though we should keep in mind that by 2012 whoever wins the election will have to have at least one spending review before this date so all numbers at that point are likely to change.)
£ 6,000,000,000 that the Conservatives will spend less per year than the Labour Government. (A less than 1% reduction.)
So to repeat, the £6bn currently in discussion in the media and on the TV and what will be mentioned in the leader’s debates is £6bn of money already being spent which has been identified as wasteful with a further £6bn being used to not make employing people into work more expensive.
So, based on the above, the Conservatives are effectively now saying that for 2010/11 their spending projection is the Labour pledge of £706bn, less the £6bn just mentioned, or:
£700,000,000,000
Now, if you like me get a bit bamboozled over these numbers you are not alone and it is because the numbers are truly huge.
To pay for Public Sector Spending as set out by each party a Government can basically do two things, it can collects tax and it can borrow money. Borrowed money needs to be repaid at some point along with interest along the way and is obviously a more costly way of keeping the Government running.
There is no way I, you or Alistair Darling can be certain of the amount of tax that will be collected in the 2010/11 period, but what we can look at is how much was collected last year and see how much tax is coming in versus how much is needed to go out. Looking at the HMRC numbers for total tax collected in the past year and in recent years there is a very large gap between what can be afforded via tax revenues and via what either a Labour or a Conservative Government is committed to spend. By the chart linked, the Government has collected £397bn in taxation to go towards the amount needed.
Let’s keep our numbers simple hope that the tax rises coming will not stifle tax revenue collection and assume that if collection remained flat the money coming in will be:
£ 397,000,000,000
So in our exercise, with a fair assumption on tax income for this year there is a shortfall or to use the Economic term a Budget Deficit in the Labour plan between the amount of money needed to keep the government going and the amount of money coming in via tax of:
£ 309,000,000,000
And it is fair to say that there is a deficit in tax revenues to the Conservative plan of:
£ 303,000,000,000
And that crucially for this next year alone!
This deficit however is not the same as debt.
So when The Chancellor and George Osborne talk about tackling national debt and tackling the deficit these are not the same thing. Sometimes watching debates on TV about the state of the economy I have heard questions asked about our debt and the answer has come about cutting our deficit – this is usually a rouse to lead away from the truth that by all projections our national debt is soaring and will continue to soar no matter who wins the election because the best the parties are offereing is to halve the deficit.
The national debt can be defined quite simply as what the UK owes, and every penny of it needs to be repaid, usually with interest. The current national debt for the UK is about £849bn and as (I hope) you can see from what I have written above, this is rising all the time as the deficit between the money coming into Government and the money going out are vastly different and the deficit needs to be plugged with new loans.
That number again that every taxpayer in this country is now indebted to is:
£ 849,000,000,000
Now, unfortunately this is the "official" number. However, the official number because it is defined by the Government does not take everthing into account that you and me might include in a more traditional definition. So, to illustrate this more clearly I need to go back just a few months. At the end of 2009 the National Debt number stood at £829.7bn. At that point I wrote about how that £829.7 does not even include Private Finance Initiatives and Pension Obligations that the Government is obliged to pay and at that point a more truer interpretation might put the true debt at £1.35 Trillion, or:
£ 1,350,000,000,000
But, this £1.3 Trillion also does/did not include the potential and worst case outlay based on pledges to buy back mortgage securities. When those are factored in the number rises again to £2 trillion.
Yep, that’s:
£2,000,000,000,000
As the debt goes up in terms of what we can afford to pay so too will the interest rate in which we can borrow future debt, as it becomes more and more risky to lend to us the more we already owe. This is not just true of the UK, but also true of all countries, all households and all businesses. As our deficits continue our total debt rises.
If the deficit is the difference between income and outgoing, and debt is the total that we owe; it is therefore the case that the deficit can be cut, whilst debt continues to rise.
So, you can see that by focusing the debate on the £6bn issue of whether to cut wasteful spending now or later is kind of a false issue which serves to distract from the fact that to actually implement either plan would require loans that are just not realistic in the medium or long term. To meet spending plans as presently set would require loans that would cripple us. If the deficit is growing by about £12bn every month, perhaps £6bn annual reversal is not enough of a plan for now(?)
When the Chancellor and George Osborne talk about halving the deficit in the next Parliament we should remain aware that they are not talking about cutting the debt that is being accrued for which we must continue to pay interest on, the gap will remain and the amount we owe and the amounts we pay each year in interest are set to go up and up and up and up and up and up.
You can look back across recent years and see, there is no way tax revenue would ever cover the levels needed. Simply raising tax rates will not guarantee that more money will come in at the end of the day.
So, in my humble view the current economic debate is something of a sham, because none of the parties are facing up to the real tough questions that should be posed this side of an election. They all know that there is absolutely no way we can afford to take on and service that level of debt. The extent, size, reach and cost of the State has been inflated to a dangerous size, one in which the people of the UK could never have afforded to support over a great period of time. This has been done by our present Labour Government and it is being propped up already by high amounts of borrowing. We will spend more this year on debt repayments than we will for the entire Armed Forces on the United Kingdom and the figure is creeping up.
Labour has had 13 years to re-build the country in the Social Democratic or Socialist model it so desired, but they built their house on foundations of sand and there is a storm approaching. It will need to be rebuilt all over again.
The State framework that Labour built is going to crumble in the next year or so no matter who wins this election. There is going to have to be massive, massive cuts to get by. But let’s be clear, the size and cost of this predicament has been caused by, set up by, with sole responsibility belonging to, this Labour government.
Please frame this in the context of your home or in terms of circumstances that are close to you in terms of what we must do. If your household income fell, you would not increase your level of spending you would cut it to match your income. There may be loans, credit cards and even a mortgage to factor in, but you would manage these based on your ability to make repayments. We probably all know someone who over borrowed or maxed out their credit cards a few years back who is struggling today. It is not really so dissimilar, we all know that in the end to balance ANY budget spending and outgoings need to be balanced against ability to pay, furthermore we all know that by delaying this ends up being more costly in the long run.
By keeping the argument about the circumstances, and merits of the Conservative application of a potential £6bn distracts from the very real arguments that are not being aired, and that people will be afraid to air. The cost, and thus the size of Government needs to be cut by my guess at least by a third and maybe more.
The Institute for Economic Affairs is more optimistic than me, and they think that without any new tax rises that Labour’s spending plans need to be scaled back by at least £167bn annually.
Sorry, but to continue the theme that’s a cut of:
£ 167,000,000,000
Taking £167bn or two times the NHS budget out of the public sector will lead to unrest, it will lead to strikes. Tragic though the consequences are for the people losing those jobs are, the truth is many of them should not have been hired in the first place, their fate is a result of Government mismanagement of our economy.
So when the layoffs do happen and the strikes and civil unrest does come, be it under Labour, the Conservatives or under a Coalition partnership we should be talking today about what lies in store in the road ahead; because ultimately every single person in our land is going to feel the effect of this, every single one of us. And that is what the leaders in this election campaign should be addressing, and as a result that is the debate that we should be having in our schools, workplaces and pubs. By not discussing the size and extent of the inevitable cuts, I believe will fuel even more unrest and protest, because yet again decisions will be made in Whitehall and by the time the election is over and the cuts are being made, the dialogue will be about the tough decisions that need to be made.
After this election the only thing we will be talking about is cuts, cuts and more cuts. That is why we should all be talking about it this side of the election if we want an input on how those cuts may land.
Sunday, April 11, 2010
Bravo
There is a reason why I am a part-time bedroom blogger, and that is that on my best day I could not come close to writing as good as many others, and especially Christopher Bookers latest.
If you have not read it yet, go now.
If you have not read it yet, go now.
Wednesday, March 24, 2010
Budget Reactions
Thanks to everyone who joined in today's Live Blogging session which was simultaneously carried by 10 blogs across the Blogosphere. My reactions whilst listening live was much the same as those also taking part.
What did people think of today's budget?
What did the Tax Payers Alliance think to Darling's last Budget Speech? Chief Executive Matthew Elliot is quoted on their web page as saying:
BTW the TPA has released their manifesto ahead of the General Election which is riddled with common sense ideas which no doubt millions of people would vote for - expect the political parties to brand it as "popularist" as they do with most ideas which people might actually like.
What did Fraser Nelson think?
What did the BBC's Douglas Fraser think?
What did Sky New's Jon Craig think?
What did the Adam Smith Institute think? Dr Eamonn Butler replies:
What did The Fink, think?
What did Michael White of the Guardian Think?
What did Gentle Ben think?
What did I think now I have had some time to mull things over?
In some regards this was a "pointless budget" but in having said that, the fact that our finances are in grave turmoil and the Chancellor had nothing to offer the people who work in this country but dry humour about tax arrangements with Belize highlights exactly how vacuous the people who make up our cabinet are.
We are screwed. Royally screwed. What do Labour propose to do? Tax us more and borrow more. Great, thanks, because that has been working really well for the last decade or so hasn't it!
Take the pulse of the people you meet tomorrow and ask them about the budget. When they have finished bumbling along and regurgitating TV news sound-bites ask them how they will personally benefit? Cue vacant stares.
This is a budget that does not benefit individuals, and it does not benefit society, nor set a course to correct the ugly vandalism that has defaced our Exchequer. It is a Budget by the Labour Party, of the Labour Party and for the Labour Party. Alistair Darling could not offer anybody any reason to vote Labour even with the control that the Chancellor has; he has crystallised how impotent the Government has become. The sooner the election is called, the better.
Finally, what did Paul Waugh think? He wants to know how you can deliver a budget with a straight face when it has so many holes in it!
What did people think of today's budget?
What did the Tax Payers Alliance think to Darling's last Budget Speech? Chief Executive Matthew Elliot is quoted on their web page as saying:
"The Chancellor has utterly failed to face up to the horrific scale of Government borrowing and debt. There was a handful of tax holidays and spending cuts, but nothing to deal with the debt addiction which threatens to make Britain the next Greece. The public are crying out for serious and sizeable spending cuts to rebalance the books, but the Government is living in La-La Land. Large spending cuts are essential for taxpayers and for the health of the economy but Gordon Brown only knows how to spend more, not less. We need a real Budget after the election that faces up to the serious realities of our situation."
BTW the TPA has released their manifesto ahead of the General Election which is riddled with common sense ideas which no doubt millions of people would vote for - expect the political parties to brand it as "popularist" as they do with most ideas which people might actually like.
What did Fraser Nelson think?
Personally, I forgive Darling all the partisan stuff in his speech - this is a pre-election Budget after all. There is no act of wanton vandalism, like the 50p tax. Stamp duty on properties over 1m is rising from 4 percent to 5 percent, but does anyone seriously think this would not have happened under the Tories? And there was quite a bit of sense. Entrepreneurs’ tax relief for capital gains tax was doubled to £2 million. There was no extra splurge. All told, Darling did what he could to salvage his own reputation before he passes into history as the Chancellor who picked up the most poisoned of all chalices from his predecessor.
What did the BBC's Douglas Fraser think?
It's a bad day for scrumpy, cider and the Wurzels, and a good day for kids who make their living making and playing computer games.
Duty on cider is soaring by 10%, on top of an alcohol tax accelerator.
The cynic might look at a map of the cider-producing counties of England, and find few marginal constituencies in which Labour is a contender at the general election.
What did Sky New's Jon Craig think?
After the Budget, I asked the Treasury pointyheads who always give a thoroughly baffling briefing to economically illiterate political correspondents just how many people would be affected by the Belize crackdown.
"Errrr," came the reply. Embarrassed shuffling of feet and staring at their shiny shoes.
"How much will this raise for the Treasury?" someone else asked. No answer to that, either.
Never mind, a shameless piece of tribal, class war, stuff-the-Tories politics had cheered up Labour MPs as they prepare to go back to their constituencies and defend their seats in the weeks ahead.
What did the Adam Smith Institute think? Dr Eamonn Butler replies:
the Chancellor did not mention that the trade deficit had risen by £7bn or that business investment has fallen 5%. Nor that a government which was borrowing £6bn a year when it came in is now borrowing 27 times that, at £167bn in 2009/10 and another £163bn forecast for next year.
What did The Fink, think?
Basically nothing happened in this Budget because he had already announced policy earlier.
The entire Budget was anchoring.
What did Michael White of the Guardian Think?
Alistair Darling struck a tone of high-minded responsibility but I was not convinced by the way he magicked away those mountainous deficit and national debt figures
What did Gentle Ben think?
This was his Budget, we are told by the Treasury, meaning that while Mr Brown may have been allowed to have his say (do you think he ever stops to say to his Chancellor ‘thanks for not treating me the way I treated Mr Tony’? no), Mr Darling was in charge. And while he has emerged with credit as one of the few straight-talkers in the gang who kept a cool head while others flapped, he is also a Labour politician who has an election to fight. So in addition to the narrative about tough choices (that Tories would not have made), there were specific digs: the rejection of a unilateral bank tax, the offsetting of a stamp duty cut for first time buyers with an increase for those buying million-pound properties, the boast that most additional tax was coming from the top 5pc of earners, the decision to pay for long term care by freezing IHT allowances, the extension of the ‘temporary’ rise in winter fuel payments for a year inviting a campaign question to the Tories – ‘will you extend it?’ and particularly the partisan attack on Lord Ashcroft via a convenient tax information exchange deal with Belize. It was a pointless Budget without a spending review, but it was above all an election Budget from a Labour politician.
What did I think now I have had some time to mull things over?
In some regards this was a "pointless budget" but in having said that, the fact that our finances are in grave turmoil and the Chancellor had nothing to offer the people who work in this country but dry humour about tax arrangements with Belize highlights exactly how vacuous the people who make up our cabinet are.
We are screwed. Royally screwed. What do Labour propose to do? Tax us more and borrow more. Great, thanks, because that has been working really well for the last decade or so hasn't it!
Take the pulse of the people you meet tomorrow and ask them about the budget. When they have finished bumbling along and regurgitating TV news sound-bites ask them how they will personally benefit? Cue vacant stares.
This is a budget that does not benefit individuals, and it does not benefit society, nor set a course to correct the ugly vandalism that has defaced our Exchequer. It is a Budget by the Labour Party, of the Labour Party and for the Labour Party. Alistair Darling could not offer anybody any reason to vote Labour even with the control that the Chancellor has; he has crystallised how impotent the Government has become. The sooner the election is called, the better.
Finally, what did Paul Waugh think? He wants to know how you can deliver a budget with a straight face when it has so many holes in it!
Tuesday, March 23, 2010
Feeling The Pain
It has not been much fun working where I do in the last few years. During the Summer of 2008 there had been a number of redundancies that had been horrible to be around, but nobody expected what was to follow in October 2008. Of the staff in my office, about 25 of them (approx 30% of everyone) were called by name one by one over the tannoy to attend reception and one by one they were escorted off to a meeting room and informed that they had been identified as candidates for redundancy, they were to go upstairs to collect their personal belongings, turn in their laptops and phones and exit the building and they would be contacted within a few days regarding the details of the mandatory group consultation which would soon begin.
By 4pm that day the office was completely empty as we toddled off to the pub to join our fallen comrades. I lost 4 colleagues and my manager from a team of 8 to redundancy in an afternoon. (One colleague was lucky enough to be retained after a month of consultation, but alas was latterly let go in a later round of redundancies; just one month before his wife gave birth to their first baby.)
In February 2009 we were informed that there would be a temporary, but mandatory 10% pay reduction extending a six week period but applied to all employees worldwide. The reasoning being that the company was forecasting that it would miss it primary targets, and though that meant it would remain profitable, it also meant that the banks that own my company through various credit agreements would exercise penalty clauses which would in turn mean there was no way we would hit the Q2 number, which would have lead to another fine which in turn meant we would never hit the Q3 number... you get the picture. The board foresaw that if we missed the Q1 2009 number we might have a terrible year and they were clear that the company my not recover, or may have to drastically downsize further. We took our medicine, and it was a bitter pill to swallow. In the UK because we are salaried and receive a monthly payment it actually meant the whole reduction was applied to one months payment, so was 15% lighter than the one before and there were no promises it would be the last. Being a newly wed of a one income house, it was not easy to endure.
Between April and August further redundancies were made but at a slower rate.
As a result of the staff sacrifice and downsizing we made that Q1 number and every subsequent target in 2009 and finished the year in profit. Despite a drastic reduction in staff worldwide with no reduction in customer requirements nor overall workload we managed to find new ways to pick up the excess work and new ways of working. Many of us spent much of last year arriving early and leaving late to do what we could to help. One of my 4 colleagues that lost their job in October 2008 only managed their first day of work in a new job three weeks ago in March 2010, having not even managing to find temp work in the meantime. This is not just my story, it is a shared experience of my friends and colleagues, and former colleagues. It is an experience that will not sound too unfamiliar with millions like me who are or were in the private sector in the past two years. It has been horrible to endure, but despite the brutality we are in no doubt that if the company I work for had not of restructured it would not be in business today and instead of a third of us being out of work, all of us would have been. We would not be taking on new heads today and looking at introducing new technologies and exploring new markets.
That is an unfortunate reality, and the private sector has felt the pain and companies that were not in a healthy position had to shape up or shut down. We would all take back a Woolworth's or a Thresher's having watched them disappear, but we would have bemoaned the kinds of redundancies my company went through if they had of been announced in an effort to save those brands.
I understand the pain of redundancy, and the fear that I may soon face it - a fear that is still with me. But, as a tax payer, I really cannot endorse the Government's inaction in not shrinking the size of the state, in fact I am angry that in the meantime, whilst the productive sector of this country, the bit that creates wealth and jobs and pays a hefty chunk of tax to the Exchequer the size and burden has increased to satisfy the political fetishes of Gordon Brown and Peter Mandelson. The whole time the state is growing unsustainable, not only is the tax burden rising today to meet the wages and expenses of these workers, but also is the debt that must be repaid on the extra borrowing that is being extended. Late in 2009 it looked like we would be spending more in debt payment in 2010 than we would be spending for all Armed Forces expenditure. If we do not reverse this, now; I wouldn't mind betting that we will spend as much on debt as we will on the NHS which in a single year will far exceed £70bn.
Public Sector workers losing their jobs is inevitable, let us not stall and increase the overall cost at the expense of the economic recovery. Where as my former colleagues could look to between 2 and 4 weeks salary to cushion the blow of losing their jobs, some junior and middle public sector roles are cushioned by 2 or 3 YEARS of redundancy payment. My guess is that many of them are hoping for the call to come through. It is a time-bomb waiting to explode, the people on these contracts cannot be supported on borrowed money forever, but we pay extra for not cutting now.
If there are two things I have gathered from my recent conversations with people from all ages and varied occupational backgrounds is that people want a BIG cut in the size of the state. Secondly, people are angry at Gordon Brown and Labour for setting this whole situation up whereby we face the choice of a decade of heavy debt payments versus two decades of heavy debt repayments all mortgaged for no tangible benefits to the vast majority of people who live here, work here and pay tax here. In more candid conversations the notion has been expressed to me more than once that we should affix to Gordon Brown a charge of criminality for his execution of the public purse. A very popular notion that never fails to spontaneously invite participants to speculate upon suitable punishments for his crimes upon us.
Now imagine this is the lead story tomorrow morning:
By 4pm that day the office was completely empty as we toddled off to the pub to join our fallen comrades. I lost 4 colleagues and my manager from a team of 8 to redundancy in an afternoon. (One colleague was lucky enough to be retained after a month of consultation, but alas was latterly let go in a later round of redundancies; just one month before his wife gave birth to their first baby.)
In February 2009 we were informed that there would be a temporary, but mandatory 10% pay reduction extending a six week period but applied to all employees worldwide. The reasoning being that the company was forecasting that it would miss it primary targets, and though that meant it would remain profitable, it also meant that the banks that own my company through various credit agreements would exercise penalty clauses which would in turn mean there was no way we would hit the Q2 number, which would have lead to another fine which in turn meant we would never hit the Q3 number... you get the picture. The board foresaw that if we missed the Q1 2009 number we might have a terrible year and they were clear that the company my not recover, or may have to drastically downsize further. We took our medicine, and it was a bitter pill to swallow. In the UK because we are salaried and receive a monthly payment it actually meant the whole reduction was applied to one months payment, so was 15% lighter than the one before and there were no promises it would be the last. Being a newly wed of a one income house, it was not easy to endure.
Between April and August further redundancies were made but at a slower rate.
As a result of the staff sacrifice and downsizing we made that Q1 number and every subsequent target in 2009 and finished the year in profit. Despite a drastic reduction in staff worldwide with no reduction in customer requirements nor overall workload we managed to find new ways to pick up the excess work and new ways of working. Many of us spent much of last year arriving early and leaving late to do what we could to help. One of my 4 colleagues that lost their job in October 2008 only managed their first day of work in a new job three weeks ago in March 2010, having not even managing to find temp work in the meantime. This is not just my story, it is a shared experience of my friends and colleagues, and former colleagues. It is an experience that will not sound too unfamiliar with millions like me who are or were in the private sector in the past two years. It has been horrible to endure, but despite the brutality we are in no doubt that if the company I work for had not of restructured it would not be in business today and instead of a third of us being out of work, all of us would have been. We would not be taking on new heads today and looking at introducing new technologies and exploring new markets.
That is an unfortunate reality, and the private sector has felt the pain and companies that were not in a healthy position had to shape up or shut down. We would all take back a Woolworth's or a Thresher's having watched them disappear, but we would have bemoaned the kinds of redundancies my company went through if they had of been announced in an effort to save those brands.
I understand the pain of redundancy, and the fear that I may soon face it - a fear that is still with me. But, as a tax payer, I really cannot endorse the Government's inaction in not shrinking the size of the state, in fact I am angry that in the meantime, whilst the productive sector of this country, the bit that creates wealth and jobs and pays a hefty chunk of tax to the Exchequer the size and burden has increased to satisfy the political fetishes of Gordon Brown and Peter Mandelson. The whole time the state is growing unsustainable, not only is the tax burden rising today to meet the wages and expenses of these workers, but also is the debt that must be repaid on the extra borrowing that is being extended. Late in 2009 it looked like we would be spending more in debt payment in 2010 than we would be spending for all Armed Forces expenditure. If we do not reverse this, now; I wouldn't mind betting that we will spend as much on debt as we will on the NHS which in a single year will far exceed £70bn.
Public Sector workers losing their jobs is inevitable, let us not stall and increase the overall cost at the expense of the economic recovery. Where as my former colleagues could look to between 2 and 4 weeks salary to cushion the blow of losing their jobs, some junior and middle public sector roles are cushioned by 2 or 3 YEARS of redundancy payment. My guess is that many of them are hoping for the call to come through. It is a time-bomb waiting to explode, the people on these contracts cannot be supported on borrowed money forever, but we pay extra for not cutting now.
If there are two things I have gathered from my recent conversations with people from all ages and varied occupational backgrounds is that people want a BIG cut in the size of the state. Secondly, people are angry at Gordon Brown and Labour for setting this whole situation up whereby we face the choice of a decade of heavy debt payments versus two decades of heavy debt repayments all mortgaged for no tangible benefits to the vast majority of people who live here, work here and pay tax here. In more candid conversations the notion has been expressed to me more than once that we should affix to Gordon Brown a charge of criminality for his execution of the public purse. A very popular notion that never fails to spontaneously invite participants to speculate upon suitable punishments for his crimes upon us.
Now imagine this is the lead story tomorrow morning:
Good morning. Here is the news. Because of the budget deficit, shrinking economy and untenable level of national debt, all public service salaries will be cut by an average of 13.5 per cent, with immediate effect. The charges will appear on your payslip as “government levy”, and will apply to frontline public workers in health, education, transport and local services and also to MPs, Ministers of State and the Attorney-General.
Judges will be, for the moment, exempt, but a mechanism is in place for voluntary payment of this levy. So far 72 judges have paid up. No undertaking can be given about when, or if, take-home pay will return to former levels. The severity of this measure reflects the good levels of public pay, security and pension rights compared with the private sector. Government regrets the pain this will cause, but regards it as essential. Thank you.
You don't have to imagine if you are from Ireland as this is what happened some months ago, as Libby Purves has set out tonight. It is the remarkable but largely unreported story from across the way. The Irish are showing us Brits the way forward. Could you imagine if Gordon Brown sent around a communication announcing that everybody suckling from the public bosom must endure a 13.5% cut in pay - it seems pretty unimaginable, but the money has just about run out and it will not be long before the public sector stop getting paid on pay day. Despite Ireland making the cuts, the hospitals and schools are still open, society did not collapse the sky did not fall.
It is exactly what we need here in the UK, and by not taking the lead on the matter Labour will not only leave office with the public finances in a state, they will have left the Unions well funded, highly connected and in prime position to disrupt any Conservative Government attempts to do what is needed. Labour's first 8 years in power were funded because of the excellent state of the economy inherited from the Conservatives, but they not only drained the coffers, they drained the pension pot and indebted us for a generation. This is their way of thanking you for electing them, and they would argue that it is what you wanted them to do. The conservatives will be a spent force before the economy has recovered - this is not how things are supposed to be in a "free society" and it is not the background setting to a truly fair society.
Labour, somehow, some way, must be made to pay a price for their criminal economic mismanagement.
Wednesday, March 17, 2010
As Good As Certain...
Making bold predictions can be a very unrewarding game, especially if you are a journalist. Us bloggers can get away with it a little more, but we are still wary. Anatole just can't resist it, he seems to make one every week; or at least he used to many years back when I read the Times. I came to realise very quickly that whatever Anatole would predict not only would not happen, but, very often the exact opposite would happen... I was not a Times reader for very long, they were way off the mark with too much and gave New Labour too much unwarranted credit. It was like being led up the garden path.
Anyway, it's not too often I am over on their site but I was tonight and Anatole has predicted that Labour are going to "do a 1992" and win the General Election, because the Tories have to measure the budget response right, and he feels they will not do this. He even says:
This could be the best news yet for David Cameron and George Osborne, they may not realise it but it really is. Maybe in the last few years Anatole has turned it around and got a few right, and if that is the case it is I who will indeed be left with egg on my face.
His theory that the Conservatives must make more of the Budget than Labour is simply not true. Alistair Darling is about to stand up and say how he wants to buy Labour some extra votes on money borrowed off of the future toils of the tax payer. He wants to nudge the Conservatives into immediately replying with specifics about what they would cut after a General Election, and quite frankly even Cameron is not stupid enough to do that. Nobody believes what labour has to say on the economy the trust is gone. Nobody argues with crazy people in the street, they accept they are crazy and walk on... They certainly don't shout crazy back.
The Conservatives do need to shape up their policy announcements, but that does not mean they have to make specific pledges on cuts, the best weapon the Conservatives have between here and May 7th is that nobody believes Labour when they talk economics, nobody believes the numbers. Like the mob, they would appear to have two sets of books running, one for the public when they need election promises, and the other that tracks the real cost of their profligate failures. Talk cuts by all means, say that they will be robust and deep - people will appreciate that and take it as honest; but specific cut pledges in a budget week is not a good idea.
When Alistair Darling stands up and says he is going to add £5 to the winter fuel allowance David Cameron should throw Ed Millibands Energy Taxes back in his face, when Darling says he is raising the State Pension by £4 Cameron should remind everyone who raided the public pension purse. When Darling remarks about borrowing to spend on investment Cameron should repeat that we are spending more on debt repayment to banks than we do on our under equipped and under supported Armed Forces. And so on, ad nauseum.
What Cameron should not do is get dragged into a fight about numbers and projections that are probably not even true. Labour will be setting traps. He should insist that if the PM can't even tell if he has spend more money year on year on defence and if Liam Byrne is confused as to whether there will or will not be any new taxes there is clearly some work to be done to straighten out the books and only when after a Conservative Government has audited the books, and the bank statement, will they truly have an idea what measures are needed. It is Labour that has created this uncertainty but that the Conservatives are ready to roll up their sleeves and give people a straight picture.
Anatole tries for an observation:
No not quite. The real problem is that the Conservatives, especially early in this Parliament began to believe the propaganda that was coming out of 11 Downing Street about such things as "ending boom and bust" and having developed some grand new economic platform that virtually did away with inflation. The removal of powers from the BoE and the setting up of the FSA allowed for the debt bubble to grow unfettered and was a big part of why there was a massive recession. It was all lies, they should have rejected the premise of Gordon Browns claims. Their language at the time regarding economics was to the line of "sharing the proceeds of growth" - they wrongly accepted the premise that there was unlimited growth to be had. It wasn't that they built it at the wrong time, it was that it was built on a foundation of sand. When the credit cards were being cut up and we hit our limits, the Tories were just as lost as Labour. When it went wrong, Brown claimed that "nobody saw it coming." With a little more Tory caution, Browns best defence line would never have been accepted.
Buying into Labours falsehoods will prove to be the Tories biggest problem. I have been saying for some time that the Conservatives need to disassociate from Labour. By accepting Labours lies and building their policies on those same falsehoods they not only validate the Labour Line, they set themselves up for their own failures and u-turns. The NHS, The EU, Public Schools, Devolution and Green Taxes are all areas where the Conservatives will have to unpick their position and set a new direction after the election, and all because they have built their policies, well defined or not on the New labour reality rather than the real world reality.
So how do I know the Conservatives will win and Anatole is wrong?
All David Cameron has to do now is, not do what Anatole suggests and the election is his.
Anyway, it's not too often I am over on their site but I was tonight and Anatole has predicted that Labour are going to "do a 1992" and win the General Election, because the Tories have to measure the budget response right, and he feels they will not do this. He even says:
But next week’s Budget will be a pivotal political event, not because of anything Alistair Darling may or may not say, but because of the response he will elicit from the Tory frontbench.
This could be the best news yet for David Cameron and George Osborne, they may not realise it but it really is. Maybe in the last few years Anatole has turned it around and got a few right, and if that is the case it is I who will indeed be left with egg on my face.
His theory that the Conservatives must make more of the Budget than Labour is simply not true. Alistair Darling is about to stand up and say how he wants to buy Labour some extra votes on money borrowed off of the future toils of the tax payer. He wants to nudge the Conservatives into immediately replying with specifics about what they would cut after a General Election, and quite frankly even Cameron is not stupid enough to do that. Nobody believes what labour has to say on the economy the trust is gone. Nobody argues with crazy people in the street, they accept they are crazy and walk on... They certainly don't shout crazy back.
The Conservatives do need to shape up their policy announcements, but that does not mean they have to make specific pledges on cuts, the best weapon the Conservatives have between here and May 7th is that nobody believes Labour when they talk economics, nobody believes the numbers. Like the mob, they would appear to have two sets of books running, one for the public when they need election promises, and the other that tracks the real cost of their profligate failures. Talk cuts by all means, say that they will be robust and deep - people will appreciate that and take it as honest; but specific cut pledges in a budget week is not a good idea.
When Alistair Darling stands up and says he is going to add £5 to the winter fuel allowance David Cameron should throw Ed Millibands Energy Taxes back in his face, when Darling says he is raising the State Pension by £4 Cameron should remind everyone who raided the public pension purse. When Darling remarks about borrowing to spend on investment Cameron should repeat that we are spending more on debt repayment to banks than we do on our under equipped and under supported Armed Forces. And so on, ad nauseum.
What Cameron should not do is get dragged into a fight about numbers and projections that are probably not even true. Labour will be setting traps. He should insist that if the PM can't even tell if he has spend more money year on year on defence and if Liam Byrne is confused as to whether there will or will not be any new taxes there is clearly some work to be done to straighten out the books and only when after a Conservative Government has audited the books, and the bank statement, will they truly have an idea what measures are needed. It is Labour that has created this uncertainty but that the Conservatives are ready to roll up their sleeves and give people a straight picture.
Anatole tries for an observation:
The Tories made three closely related mistakes in devising their economic and electoral strategy at the nadir of the financial crisis in the winter of 2008-09
No not quite. The real problem is that the Conservatives, especially early in this Parliament began to believe the propaganda that was coming out of 11 Downing Street about such things as "ending boom and bust" and having developed some grand new economic platform that virtually did away with inflation. The removal of powers from the BoE and the setting up of the FSA allowed for the debt bubble to grow unfettered and was a big part of why there was a massive recession. It was all lies, they should have rejected the premise of Gordon Browns claims. Their language at the time regarding economics was to the line of "sharing the proceeds of growth" - they wrongly accepted the premise that there was unlimited growth to be had. It wasn't that they built it at the wrong time, it was that it was built on a foundation of sand. When the credit cards were being cut up and we hit our limits, the Tories were just as lost as Labour. When it went wrong, Brown claimed that "nobody saw it coming." With a little more Tory caution, Browns best defence line would never have been accepted.
Buying into Labours falsehoods will prove to be the Tories biggest problem. I have been saying for some time that the Conservatives need to disassociate from Labour. By accepting Labours lies and building their policies on those same falsehoods they not only validate the Labour Line, they set themselves up for their own failures and u-turns. The NHS, The EU, Public Schools, Devolution and Green Taxes are all areas where the Conservatives will have to unpick their position and set a new direction after the election, and all because they have built their policies, well defined or not on the New labour reality rather than the real world reality.
So how do I know the Conservatives will win and Anatole is wrong?
Assuming that the new Budget confirms these Labour plans for long-term fiscal consolidation, how should the Tories react? The answer is simple. Instead of quibbling about Alistair Darling’s figures and forecasts, the Tories should endorse his budgetary numbers and promise to carry out essentially the same macroeconomic programme.
All David Cameron has to do now is, not do what Anatole suggests and the election is his.
Wednesday, March 10, 2010
None Of The Above Please
So we are to have a budget in two weeks time, or at least we are to have Alistair Darling on TV in two weeks time telling us how he is going to spent yet more borrowed cash on swing voters in order to buy Labour another election.
Here is some of what Gordon Brown said today:
He then (with a straight face) declared that he had the “character” to lead Britain to economic recovery and attacked the Tories for planning to cut spending and bring us back into recession.
I am glad Gordon Brown mentioned his character because it comes up time and time again and two things are immediately and resoundingly evident to everybody not wearing a red rosette (and too many that do).
1. Gordon Brown is an indecisive bottler, incapable of making tough decisions. In fact, I would suspect that he has problems taking the not so grand decisions also. So he has surrounded himself with bullies and blowhards who by being vocal and aggressive to others have fooled the dim-witted PM into believing that they are decision makers who can compensate for and disguise his own failings.
2. Gordon Brown is prepared to put The Labour Party, The EU and himself before the general welfare of the UK. He is a selfish man in the midst of constructing what he likes to call a new system of world governance and never once have people been consulted. History will not view Gordon Brown kindly, nor should it.
Clearly his attribution asymmetry is way-off if the bullying allegations are to be believed, which I think the overwhelming majority of people do. In success, people will naturally attribute success to their own abilities and talents, but in failure we look to attribute this to external factors and bad luck. Other peoples fortune is down to their good luck and others failure are down to their mistakes. So when the debt bubble that Gordon Brown helped to create came crashing down it was all the fault of the American Sub-prime market. When the expenses scandal broke it was the fault of the Conservatives 1983 legislation and a retired pensioner. When he inherited a golden economy borne out of the backbreaking labour of the Conservatives self employment revolution he stood at the dispatch box and proclaimed to have ended “boom and bust”.
If the election is decided on Gordon Browns Character there will be a funeral for the Labour Party on 7th May.
It is telling that despite everybody in the country being very aware of Gordon Brown and Labours failures that the Conservatives are not 30 points clear and that we are not talking about the Liberal Democrats assuming the mantle as the new second party of the UK. I have written before of my dislike and distrust for the Conservatives new direction.
Janet Daley has been having one of those tediously boring back and forth’s with Danny Finkelstein that generally is not interesting to anybody but those involved, however this one may have (finally) reached an interesting conclusion vis-à-vis the modern Conservative Party. The Tory modernisers it would seem have been hired from the New Labour School of misdirection. They seized upon some polling which suggested that Conservative Policy on Immigration during the 2005 election was deemed popular or welcomed in the polls, but only when those being questioned did not know that it was a conservative policy. When the Conservative brand or Tory name used, people disassociated with it. This was of course to do with the BBC witch (or Warlock?) hunt on Michael Howard and the BBCs rather successful attempts to show all Conservatives as bigots.
When telepromterless Cameron landed in CCHQ sans tie and pin-stripped suit the “modernisers” took the Immigration Polling and used it as the basis for the need to “detoxify” the brand. Thus ensued photo shoots with Huskies, policy meetings with Bob Geldof, and explains why Cameron was in East Africa whilst his Witney Constituency was under water. The Party was hijacked by the policy wonks on the basis of a poll that showed that if the BBC’s editorial policy is biased and vindictive enough the Toris wil flinch; clearly the BBC has too much control over the TV News arena in the UK. So instead of picking a fight with their mates at the BBC Cameron the new team were given their own dodgy dossier of research (also done by the BBC) that showed that people don’t know or care about things like “back benchers” they don’t even know what terms like that would mean. They care about gay weddings and Eastenders and thus the Conservatives need to modernise and use pollsters and rock stars in their policy formulation, and stop relying on voters and party members to tell them what they want. Janet edges us to the conclusion that therefore as a result we now have a Conservative Party fit for the post democratic era. Not as she says because the whole conservative brand was tarnished, but simply because of the public view on Immegration after the BBC assault.
The problems of course begin with and end with So What? This would have been useful information two years ago or even a year ago, but with Cameron tight lipped on policy back then there would have been hardly any concern from the grass-roots. It is the emergence of Team Dave’s direction and the recent u-turns and revisions that have planted the red-toryistic concerns in voters’ minds. So it doesn’t really matter so much now how the Conservative Party got where it is today there is an election in six weeks. The decision needs to be whether to vote for it or not. The perplexing question is having taken the Conservative Party away from conservative voters, will a Tory Win be used as confirmation of the new Tory Brand and strategy thus abandoning Conservative voters for at least a generation or would a defeat or hung parliament force the party to where the Conservative Grass-roots are?
There are some in the Conservative Party that are just now realising why Tony Blair won in 1997 and are determined to use their new found knowledge in an election in 2010. It is only because there is an empty suit in 10 Downing Street that they are not being spanked completely in the polls. Tony Blair would have turned the polls already – he would have done it a year ago and we would be into a fourth Labour term.
In the absence any Conservatism from the Conservative Party and in despair at Labour the voters are seemingly looking for a do over. We are not getting the options we want or need so we are engineering a hung Parliament as a vote of no confidence in both Labour and the Conservatives and we are hoping one or both will come out the other side and start listening to what people are asking for. We need and want a severe reduction in the size of the state and of our overall tax burden, we want our finance put in order, we want a tax break to make the cost of living in this poorly governed country easier, we want fuel bills to go down not up, we want to smoke in the pub and we want government to concentrate on governing, rather than what I put in my wheelie bin.
For the benefit of David Cameron’s aides I have translated this message into some graphs that may be confused with polling data and therefore can be slipped into the radar as a hint to the current Tory Leadership about where their current problems lie.
Here is some of what Gordon Brown said today:
"We are weathering the storm; now is no time to turn back.
"We will hold to our course. And we will complete this mission. We have got through this storm together but there are still substantial risks ahead.
"There will be bumps in the road. And I believe the only way to overcome them is by displaying the same strength and resolve as we did during the crisis."
He then (with a straight face) declared that he had the “character” to lead Britain to economic recovery and attacked the Tories for planning to cut spending and bring us back into recession.
I am glad Gordon Brown mentioned his character because it comes up time and time again and two things are immediately and resoundingly evident to everybody not wearing a red rosette (and too many that do).
1. Gordon Brown is an indecisive bottler, incapable of making tough decisions. In fact, I would suspect that he has problems taking the not so grand decisions also. So he has surrounded himself with bullies and blowhards who by being vocal and aggressive to others have fooled the dim-witted PM into believing that they are decision makers who can compensate for and disguise his own failings.
2. Gordon Brown is prepared to put The Labour Party, The EU and himself before the general welfare of the UK. He is a selfish man in the midst of constructing what he likes to call a new system of world governance and never once have people been consulted. History will not view Gordon Brown kindly, nor should it.
Clearly his attribution asymmetry is way-off if the bullying allegations are to be believed, which I think the overwhelming majority of people do. In success, people will naturally attribute success to their own abilities and talents, but in failure we look to attribute this to external factors and bad luck. Other peoples fortune is down to their good luck and others failure are down to their mistakes. So when the debt bubble that Gordon Brown helped to create came crashing down it was all the fault of the American Sub-prime market. When the expenses scandal broke it was the fault of the Conservatives 1983 legislation and a retired pensioner. When he inherited a golden economy borne out of the backbreaking labour of the Conservatives self employment revolution he stood at the dispatch box and proclaimed to have ended “boom and bust”.
If the election is decided on Gordon Browns Character there will be a funeral for the Labour Party on 7th May.
It is telling that despite everybody in the country being very aware of Gordon Brown and Labours failures that the Conservatives are not 30 points clear and that we are not talking about the Liberal Democrats assuming the mantle as the new second party of the UK. I have written before of my dislike and distrust for the Conservatives new direction.
Janet Daley has been having one of those tediously boring back and forth’s with Danny Finkelstein that generally is not interesting to anybody but those involved, however this one may have (finally) reached an interesting conclusion vis-à-vis the modern Conservative Party. The Tory modernisers it would seem have been hired from the New Labour School of misdirection. They seized upon some polling which suggested that Conservative Policy on Immigration during the 2005 election was deemed popular or welcomed in the polls, but only when those being questioned did not know that it was a conservative policy. When the Conservative brand or Tory name used, people disassociated with it. This was of course to do with the BBC witch (or Warlock?) hunt on Michael Howard and the BBCs rather successful attempts to show all Conservatives as bigots.
When telepromterless Cameron landed in CCHQ sans tie and pin-stripped suit the “modernisers” took the Immigration Polling and used it as the basis for the need to “detoxify” the brand. Thus ensued photo shoots with Huskies, policy meetings with Bob Geldof, and explains why Cameron was in East Africa whilst his Witney Constituency was under water. The Party was hijacked by the policy wonks on the basis of a poll that showed that if the BBC’s editorial policy is biased and vindictive enough the Toris wil flinch; clearly the BBC has too much control over the TV News arena in the UK. So instead of picking a fight with their mates at the BBC Cameron the new team were given their own dodgy dossier of research (also done by the BBC) that showed that people don’t know or care about things like “back benchers” they don’t even know what terms like that would mean. They care about gay weddings and Eastenders and thus the Conservatives need to modernise and use pollsters and rock stars in their policy formulation, and stop relying on voters and party members to tell them what they want. Janet edges us to the conclusion that therefore as a result we now have a Conservative Party fit for the post democratic era. Not as she says because the whole conservative brand was tarnished, but simply because of the public view on Immegration after the BBC assault.
The problems of course begin with and end with So What? This would have been useful information two years ago or even a year ago, but with Cameron tight lipped on policy back then there would have been hardly any concern from the grass-roots. It is the emergence of Team Dave’s direction and the recent u-turns and revisions that have planted the red-toryistic concerns in voters’ minds. So it doesn’t really matter so much now how the Conservative Party got where it is today there is an election in six weeks. The decision needs to be whether to vote for it or not. The perplexing question is having taken the Conservative Party away from conservative voters, will a Tory Win be used as confirmation of the new Tory Brand and strategy thus abandoning Conservative voters for at least a generation or would a defeat or hung parliament force the party to where the Conservative Grass-roots are?
There are some in the Conservative Party that are just now realising why Tony Blair won in 1997 and are determined to use their new found knowledge in an election in 2010. It is only because there is an empty suit in 10 Downing Street that they are not being spanked completely in the polls. Tony Blair would have turned the polls already – he would have done it a year ago and we would be into a fourth Labour term.
In the absence any Conservatism from the Conservative Party and in despair at Labour the voters are seemingly looking for a do over. We are not getting the options we want or need so we are engineering a hung Parliament as a vote of no confidence in both Labour and the Conservatives and we are hoping one or both will come out the other side and start listening to what people are asking for. We need and want a severe reduction in the size of the state and of our overall tax burden, we want our finance put in order, we want a tax break to make the cost of living in this poorly governed country easier, we want fuel bills to go down not up, we want to smoke in the pub and we want government to concentrate on governing, rather than what I put in my wheelie bin.
For the benefit of David Cameron’s aides I have translated this message into some graphs that may be confused with polling data and therefore can be slipped into the radar as a hint to the current Tory Leadership about where their current problems lie.
Wednesday, February 17, 2010
Inflation Numbers
This week the Governor of the Bank of England had to write to the Chancellor as Inflation surpassed the 2.0% target. The actual Inflation number given was 3.5% however this is the CPI (Consumer Price Index) number, which is the index that does not take into account the cost of housing. The CPI number thus does not take into account what most of us would consider our most important and usually highest outgoing each month. The CPI measurement is the measure set by Gordon Brown when he became Chancellor for use when setting monetary policy.
The RPI (Retail Price Index) number does take into account housing, and is still used for the setting of benefits levels, public sector pay and index-linked government debt. This number was actually 3.7% and so is higher than the CPI number and is generally more reliable for us non-economists in measuring inflation against our changes in cost of living.
The banks however are a little more sophisticated and use their own measure or RPI which excludes interest charges (RPIX). RPI alone can distort because it reflects swings in mortgage rates, and at the moment rates are being kept low by the Bank of England. The RPIX number currently stands at 4.6%, and you won't need a calculator to see that is a full 1.1% above the official CPI number.
Inflation going up was the expected side effect of the recent Quantitative Easing programme, the fear was always that Inflation may reach a level that becomes difficult to control. I speak to the effect to us people on the street as we will feel this in increased prices in the shops and in our bills. The problem is that Labour and quite likely the Conservatives are making noises about a 20% VAT rate after the General Election. This of course relates to you and me as an additional rise of the price in the shops.
To me, I think the way forward is to help people hold on to more of their hard earned money, typically this will be used to either pay down personal debt or passed on in the form of spending. Both of these actions are good, personal debt is worryingly high and consumer spending is very low and this is fuelling this slowdown. With Interest Rates low, there may not be the inclination to put the money in the bank which at this time would not really help too much. However, the danger I see is if inflation takes hold, the Bank of England may see the need to start raising interest rates, which will in turn raise the cost of variable mortgages and make borrowing tougher which in turn will leave many people with less money and in turn stifle consumer spending which is already in the doldrums.
The Governments car scrappage scheme seems to not be a greatly inspired economic scheme. Yes, there were some tax payments, but there was also a large subsidy. However, the bulk of the cash spent on the cars then made it's way off shore back to the car producing nations that have exported to us. No wonder France and Germany came out of recession months before we did. What we also need, as I repeat over and over again is to export as much as possible to places like China where they are sitting on Billions of Dollars. Bring cash into the country, and let it circulate a bit to stimulate spending. When people are spending shops and domestic manufacturers start hiring.
With my usual caution about the lack of my economic credentials I submit this as my working theory as to why we should cut taxes now to reap as much of a benefit from the QE programme as possible.
The RPI (Retail Price Index) number does take into account housing, and is still used for the setting of benefits levels, public sector pay and index-linked government debt. This number was actually 3.7% and so is higher than the CPI number and is generally more reliable for us non-economists in measuring inflation against our changes in cost of living.
The banks however are a little more sophisticated and use their own measure or RPI which excludes interest charges (RPIX). RPI alone can distort because it reflects swings in mortgage rates, and at the moment rates are being kept low by the Bank of England. The RPIX number currently stands at 4.6%, and you won't need a calculator to see that is a full 1.1% above the official CPI number.
Inflation going up was the expected side effect of the recent Quantitative Easing programme, the fear was always that Inflation may reach a level that becomes difficult to control. I speak to the effect to us people on the street as we will feel this in increased prices in the shops and in our bills. The problem is that Labour and quite likely the Conservatives are making noises about a 20% VAT rate after the General Election. This of course relates to you and me as an additional rise of the price in the shops.
To me, I think the way forward is to help people hold on to more of their hard earned money, typically this will be used to either pay down personal debt or passed on in the form of spending. Both of these actions are good, personal debt is worryingly high and consumer spending is very low and this is fuelling this slowdown. With Interest Rates low, there may not be the inclination to put the money in the bank which at this time would not really help too much. However, the danger I see is if inflation takes hold, the Bank of England may see the need to start raising interest rates, which will in turn raise the cost of variable mortgages and make borrowing tougher which in turn will leave many people with less money and in turn stifle consumer spending which is already in the doldrums.
The Governments car scrappage scheme seems to not be a greatly inspired economic scheme. Yes, there were some tax payments, but there was also a large subsidy. However, the bulk of the cash spent on the cars then made it's way off shore back to the car producing nations that have exported to us. No wonder France and Germany came out of recession months before we did. What we also need, as I repeat over and over again is to export as much as possible to places like China where they are sitting on Billions of Dollars. Bring cash into the country, and let it circulate a bit to stimulate spending. When people are spending shops and domestic manufacturers start hiring.
With my usual caution about the lack of my economic credentials I submit this as my working theory as to why we should cut taxes now to reap as much of a benefit from the QE programme as possible.
Economic Inactivity
From the Telegraph:
All of this basically means that at present one in five people of working age are not in are not employed, and quite a few that are working are working part-time because there are not enough full-time positions. I am not sure how they qualified the "do not want a job" position, but I am still staggered at that number. I learned this week that a former colleague who was laid off in October 2008 is still unemployed despite actively seeking work.
To me these numbers paint a grim picture of where we are as a country both economically and socially. The shrinking private sector is being increasingly expected to support massive unemployment and public sector costs. I maintain my belief that we need to shrink the Public Sector and stimulate the markets, ideally by increasing the money supply to stimulate the paying down of debt and an increase in consumer spending through my old and long forgotten friend, the tax cut.
As for the "economically inactive number" I applaud those who are included in that number who are studying so as to pursue a more enjoyable or more profitable career path and I also salute those who are so desperate for work they are working part-time to keep things going. I think it fair that people with genuine disabilities should be supported if they are unable to work. At some point someone is going to have to address that high "do not want a job" number, because we need some radical proposals that will get people out to work. Welfare should never pay more than work and those that seek a life on the scrounge from the taxpayer should be identified and have their entitlements stopped. These numbers are unacceptable high, I hope voters who agree will let the political parties know that is how we feel.
Managing a drastic rolling back of the State whilst trying to grow the economy will be rough but the consequences of inaction promise to be worse.
The number of people who are neither in work nor seeking employment reached 8.08 million in the last three months of last year, the highest on record.The talking points are:
In all, 21.3 per cent of working-age adults are now "economically inactive", a category that includes students, the long-term sick, unpaid carers and those who retire early.
- 5.75 million people are inactive and do not want a job, a rise of 57.9% from 2008.
- 1.64 million are claiming some form of employment-related benefits, the highest since 1997
- Full employment is at 21.22 million, down 37,000. Part-timers are up 25,000 and now number 7.67 million.
- The ONS says there are 1.04 million employees and self-employed people working part-time because they could not find a full-time job.
- The over 65 age group has seen an increase in employment up 5.1% over the last year. In contrast the number of people aged 18-24 working fell 5.2%.
- Public sector jobs rose over the last year by 5% to 6.09million...
- During the same period the Private Sector lost 735,000 positions down to 22.82 million.
All of this basically means that at present one in five people of working age are not in are not employed, and quite a few that are working are working part-time because there are not enough full-time positions. I am not sure how they qualified the "do not want a job" position, but I am still staggered at that number. I learned this week that a former colleague who was laid off in October 2008 is still unemployed despite actively seeking work.
To me these numbers paint a grim picture of where we are as a country both economically and socially. The shrinking private sector is being increasingly expected to support massive unemployment and public sector costs. I maintain my belief that we need to shrink the Public Sector and stimulate the markets, ideally by increasing the money supply to stimulate the paying down of debt and an increase in consumer spending through my old and long forgotten friend, the tax cut.
As for the "economically inactive number" I applaud those who are included in that number who are studying so as to pursue a more enjoyable or more profitable career path and I also salute those who are so desperate for work they are working part-time to keep things going. I think it fair that people with genuine disabilities should be supported if they are unable to work. At some point someone is going to have to address that high "do not want a job" number, because we need some radical proposals that will get people out to work. Welfare should never pay more than work and those that seek a life on the scrounge from the taxpayer should be identified and have their entitlements stopped. These numbers are unacceptable high, I hope voters who agree will let the political parties know that is how we feel.
Managing a drastic rolling back of the State whilst trying to grow the economy will be rough but the consequences of inaction promise to be worse.
Monday, February 15, 2010
Old Mother Hubbard
If I were to owe you £100,000 you may on the surface simply be inclined to say it is my responsibility to repay as per our agreement. If however I was to owe you £100,000 and you knew that the extent of my assets could no longer stretch any further than £20,000 then you were not be proven a bit foolish for having lent that money to me, but you would have a very good reason to take an active interest in my finances, and maybe even want a say over them.
Greece is in big trouble, but so too are nations like the UK, France & Germany which have purchased bonds to help prop up the profligate Greeks. A recent €20bn issue needed a record high interest rate to attract interest, and it is now thought that another €20bn is needed to prevent a default in April/May with a total €53bn requirement this year for the Greeks to just to stand still.
Greece's GDP is 75% reliant on services, and with less than 4% is dedicated to growing and less than 21% to producing and selling exports, the Greeks are not exactly bursting with goods to sell abroad which will bring in cash. With the European financial services sector in meltdown, and the people of Europe groaning under their own public sector tax burdens, it is looking very unlikely that Greece will be able to shoulder their debt burden past 2010.
Now, I need to re-iterate as I do whenever I wander into the economic territories that I am no economist, but once again I am wondering into this arena and doing so a little bemused. We have a situation, much like with the banks whereby the debt is exceeding the potential assets available (for recovery), and instead of insisting on corective behaviour, we are again sitting still and waiting for a collapse, at which point we will all be dragged around the table and told that we have to prop things up until profitability returns, and that we will be servicing our own debt, and increasing our own liability in the meantime. It is a recipe for disaster.
In the last two decades, the worlds economics has in my humble opinion completely taken leave of its senses. Is this planet really so chocked full of idiots that they think we can run the world economy, both public and private sectors completely in defecit? Greece is in trouble because it traded it's sovereignty for the EURO, and now it cannot take the devaluing measure needed to ease it's burdens. I am sure that when the EURO was adopted they felt that there was no way the Germans and the French would let their economy flounder, I think this assumption has just been tested and the results are not encouraging.
When EU leaders met last week, like with Old Mother Hubbard they declared the cupboard to be bare. The big economies of Europe have inflated their public sectors and grown an unproductive intra-national nightmare in the EU and they have done it by borrowing and by taxing the productivity out of the markets. Take a moments pause and you can hear the pips, squeaking. Two to Three years ago the warning signs were there, and these governments could have made cuts to help reduce these deficits, but they failed to do so. Instead, we have taken up the last of pour lines of credit, and are at breaking point. We owe more than we can pay... so does everyone else.... and the debt bubble is about to burst.
EU Leaders can't help Greece, because we are all in the same boat, we have debts coming out of our ears. Greece is just a little more exposed and thus ahead of the curve. The QE Programme has kept us afloat but we will feel the sore pinch of that in the next decade. Britain was able to exercise this option because it is not in the EURO, but it is not an exercise that can be repeated. There is only one thing left to do, and it is what should have been done two years ago... The borrowing has got to stop, and the cuts need to begin. We in the UK will pay more on debt interest this year than we will on our armed forces and about half of what we spend on the NHS. It has got to stop.
Old Mother Hubbard
Went to the cupboard
To get her poor doggie a bone,
When she got there
The cupboard was bare
So the poor little doggie had none.
Greece is in big trouble, but so too are nations like the UK, France & Germany which have purchased bonds to help prop up the profligate Greeks. A recent €20bn issue needed a record high interest rate to attract interest, and it is now thought that another €20bn is needed to prevent a default in April/May with a total €53bn requirement this year for the Greeks to just to stand still.
Greece's GDP is 75% reliant on services, and with less than 4% is dedicated to growing and less than 21% to producing and selling exports, the Greeks are not exactly bursting with goods to sell abroad which will bring in cash. With the European financial services sector in meltdown, and the people of Europe groaning under their own public sector tax burdens, it is looking very unlikely that Greece will be able to shoulder their debt burden past 2010.
Now, I need to re-iterate as I do whenever I wander into the economic territories that I am no economist, but once again I am wondering into this arena and doing so a little bemused. We have a situation, much like with the banks whereby the debt is exceeding the potential assets available (for recovery), and instead of insisting on corective behaviour, we are again sitting still and waiting for a collapse, at which point we will all be dragged around the table and told that we have to prop things up until profitability returns, and that we will be servicing our own debt, and increasing our own liability in the meantime. It is a recipe for disaster.
In the last two decades, the worlds economics has in my humble opinion completely taken leave of its senses. Is this planet really so chocked full of idiots that they think we can run the world economy, both public and private sectors completely in defecit? Greece is in trouble because it traded it's sovereignty for the EURO, and now it cannot take the devaluing measure needed to ease it's burdens. I am sure that when the EURO was adopted they felt that there was no way the Germans and the French would let their economy flounder, I think this assumption has just been tested and the results are not encouraging.
When EU leaders met last week, like with Old Mother Hubbard they declared the cupboard to be bare. The big economies of Europe have inflated their public sectors and grown an unproductive intra-national nightmare in the EU and they have done it by borrowing and by taxing the productivity out of the markets. Take a moments pause and you can hear the pips, squeaking. Two to Three years ago the warning signs were there, and these governments could have made cuts to help reduce these deficits, but they failed to do so. Instead, we have taken up the last of pour lines of credit, and are at breaking point. We owe more than we can pay... so does everyone else.... and the debt bubble is about to burst.
EU Leaders can't help Greece, because we are all in the same boat, we have debts coming out of our ears. Greece is just a little more exposed and thus ahead of the curve. The QE Programme has kept us afloat but we will feel the sore pinch of that in the next decade. Britain was able to exercise this option because it is not in the EURO, but it is not an exercise that can be repeated. There is only one thing left to do, and it is what should have been done two years ago... The borrowing has got to stop, and the cuts need to begin. We in the UK will pay more on debt interest this year than we will on our armed forces and about half of what we spend on the NHS. It has got to stop.
Old Mother Hubbard
Went to the cupboard
To get her poor doggie a bone,
When she got there
The cupboard was bare
So the poor little doggie had none.
Thursday, February 04, 2010
Debt Mountain Ain't A Ride At Euro Disney
Here are the current personal debt stats for the UK.
Source.
- Total personal debts stand at £1.46trillion. This includes Mortgages, Credit Cards and Personal Loans.
- The number of people seeking help from Debt agencies has risen 30% in the past year.
- According to the National Audit Office some [at least two] debt advice agencies are turning people away as their waiting lists are too long to be able to assist.
- The £1.46trillion is equal to £56,000 per household. This is 60% above the average pre-tax income.
- "Debt Experts" say that there will be 150,000 new bankruptcies this year, up 15% on last year.
- The Consumer Credit Counselling Service said its typical client has £24,300 of debt across 11 different creditors, painting a grim reality of modern life.
- The Government has committed to spend £142million in providing debt management services, mainly this is for free face to face counselling.
Source.
Wednesday, January 06, 2010
Government Indebtedness
In 2009 the national debt rose to £829.7 Billion this is all money that must be serviced by the tax payer. This figure does not include Private Finance Initiatives and Pension Contributions which the Government is obliged to pay meaning the true debt figure today is likely to be in excess of £1,350 billion which is way above what could be expected to be collected in a single year in tax. The level of debt is rising, and could sky rocket again based on pledges to buy back Mortgage securities. Potentially, in a very bad case, the UK Public Sector debt could be in debt to the tune of the £2,000 Billion bracket in 2010.
To service the interest on our debts, like all borrowers the Government must pay interest. In 2009 the Government paid over £31 billion in debt interest, this is very close to the number (£32bn) the UK pays on the entire defence budget annually. Nearly everybody outside the Labour Party in the UK agrees that this Government has made some serious mistakes with the economy, but I don't personally think it is enough to lay the blame at the feet of the current Government and simply repay the national debt down to a level that is more comfortably managed… We should force a change of the rules so that no party can ever make its people so indebted ever again. Governments of the three parties that have held government in the last 150 years have all had at some point high levels of public debt, and often that debt rose with little consent from Tax Payers.
As an electorate, and as a country, we should demand from our political parties not only a commitment to cap national debt today until a General Election has taken place, but we should also demand that national debt is paid down to a level of 0% of GDP over a period over the next 5 Parliaments.
Yes, Governments have been borrowing for centuries, and yes, in the good times economically debt can be borrowed and serviced somewhat cheaply. However, the rules governing Government borrowing and spending are not so dissimilar to the rules you and I face in managing our household budgets. If you borrow, you must pay interest on that. I think it is easy to make a case that the need to raise in excess of £31billion in taxes simply to pay interest is immoral. We all know the folly of those who have put too much on their credit cards, and who attempt to live on credit... they pay through the nose.
In my opinion with Tax Levels so high, Governments should seek to have no debt, and to work with a budget in credit. If the budget was in credit, the Prime Minister and Chancellor would need to set out the public finances in a different way, in a bad year they would have to balance to no worse than £0. Taxes should be sought to pay for the next year’s spending and to keep a sensible reserve. It would be illegal to manifestly propose legislation that cannot be met through current taxation, and thus all government expenditure would need to be set in terms of how much each of us would pay in tax over the following year or years. No Government could employ a scorched earth policy of engaging in unfunded spending in the run up to an election. In an emergency the Chancellor or PM could address Parliament - our representatives - and ask permission for to take out a short-term loan on our behalf and set out the implications and costs of such a loan and more importantly explain why they were unable to foresee this need in advance. If Parliament refuses, the PM and Chancellor will have to find the money from existing finances. The reserve would be there for spikes in spending, but our money would be invested and earning money and interest and all spending from the reserve would have to be explained annually at Budget time.
In the event of war, well, this idea would not work... however, debt would be accumulated from £0 or surplus, rather than beginning to rack up more debt on top of a position such as the £1,340 Billion already in place today.
Working in surplus would give the nation a sense of pride that the public finances are in order and provide a greater degree of control over Government, as Government can stop listening to the people they owe money to and listen to what people want their money spent on.
Another crazy idea on this blog perhaps, but makes perfect sense to me. The way to achieve this is to petition the current parties until they relent and accept the responsibility of managing public finances in our interests, not theirs. There is no partisan reason for the continuation of government indebtedness for the rest of time; all that is needed is the realisation that this would be an idea widely accepted by the public... Then for us to use our voices to call for some lines to be drawn and some belts to be tightened.
To service the interest on our debts, like all borrowers the Government must pay interest. In 2009 the Government paid over £31 billion in debt interest, this is very close to the number (£32bn) the UK pays on the entire defence budget annually. Nearly everybody outside the Labour Party in the UK agrees that this Government has made some serious mistakes with the economy, but I don't personally think it is enough to lay the blame at the feet of the current Government and simply repay the national debt down to a level that is more comfortably managed… We should force a change of the rules so that no party can ever make its people so indebted ever again. Governments of the three parties that have held government in the last 150 years have all had at some point high levels of public debt, and often that debt rose with little consent from Tax Payers.
As an electorate, and as a country, we should demand from our political parties not only a commitment to cap national debt today until a General Election has taken place, but we should also demand that national debt is paid down to a level of 0% of GDP over a period over the next 5 Parliaments.
Yes, Governments have been borrowing for centuries, and yes, in the good times economically debt can be borrowed and serviced somewhat cheaply. However, the rules governing Government borrowing and spending are not so dissimilar to the rules you and I face in managing our household budgets. If you borrow, you must pay interest on that. I think it is easy to make a case that the need to raise in excess of £31billion in taxes simply to pay interest is immoral. We all know the folly of those who have put too much on their credit cards, and who attempt to live on credit... they pay through the nose.
In my opinion with Tax Levels so high, Governments should seek to have no debt, and to work with a budget in credit. If the budget was in credit, the Prime Minister and Chancellor would need to set out the public finances in a different way, in a bad year they would have to balance to no worse than £0. Taxes should be sought to pay for the next year’s spending and to keep a sensible reserve. It would be illegal to manifestly propose legislation that cannot be met through current taxation, and thus all government expenditure would need to be set in terms of how much each of us would pay in tax over the following year or years. No Government could employ a scorched earth policy of engaging in unfunded spending in the run up to an election. In an emergency the Chancellor or PM could address Parliament - our representatives - and ask permission for to take out a short-term loan on our behalf and set out the implications and costs of such a loan and more importantly explain why they were unable to foresee this need in advance. If Parliament refuses, the PM and Chancellor will have to find the money from existing finances. The reserve would be there for spikes in spending, but our money would be invested and earning money and interest and all spending from the reserve would have to be explained annually at Budget time.
In the event of war, well, this idea would not work... however, debt would be accumulated from £0 or surplus, rather than beginning to rack up more debt on top of a position such as the £1,340 Billion already in place today.
Working in surplus would give the nation a sense of pride that the public finances are in order and provide a greater degree of control over Government, as Government can stop listening to the people they owe money to and listen to what people want their money spent on.
Another crazy idea on this blog perhaps, but makes perfect sense to me. The way to achieve this is to petition the current parties until they relent and accept the responsibility of managing public finances in our interests, not theirs. There is no partisan reason for the continuation of government indebtedness for the rest of time; all that is needed is the realisation that this would be an idea widely accepted by the public... Then for us to use our voices to call for some lines to be drawn and some belts to be tightened.
Monday, January 04, 2010
My 2010 Predictions
1. David Cameron will be the UK’s next Prime Minister
2. The UK General Election will be on Thursday 6th May 2010
3. Economic recovery in not be achieved in Q1 2010
4. Guantánamo Bay will not be closed in 2010, though it will continue to gradually reduce it’s inmate population
5. The key political and economic concern in Q3 and Q4 2010 will be Inflation… “Hyper Inflation” will be the prophesised buzz words of concern in the media and blogosphere
6. At least two Labour MP’s will be exposed in the tabloids as having affairs in the lead up to the General Election
7. David Miliband will secure the backing of Peter Mandelson and become the next leader of the Labour Party
8. Vince Cable will become Liberal Democrat leader in 2010 with the backing of Charles Kennedy and Ming Campbell.
9. Nigel Farage will unseat John Bercow
10. Here is my very early attempt at some serious Nostradamus forecasting as I predict the GE result in terms of Parliamentary seats.
Conservative Party / UUP – 349 Seats
Labour Party – 212 Seats
Liberal Democrats – 49 Seats
SNP – 12 Seats
DUP – 8 Seats
Sinn Fein – 6 Seats
Independent – 5 Seats
Plaid Cymru – 3 Seats
Social Democratic and Labour Party – 3 Seats
UKIP – 2 Seats
Respect – 1 Seat
2. The UK General Election will be on Thursday 6th May 2010
3. Economic recovery in not be achieved in Q1 2010
4. Guantánamo Bay will not be closed in 2010, though it will continue to gradually reduce it’s inmate population
5. The key political and economic concern in Q3 and Q4 2010 will be Inflation… “Hyper Inflation” will be the prophesised buzz words of concern in the media and blogosphere
6. At least two Labour MP’s will be exposed in the tabloids as having affairs in the lead up to the General Election
7. David Miliband will secure the backing of Peter Mandelson and become the next leader of the Labour Party
8. Vince Cable will become Liberal Democrat leader in 2010 with the backing of Charles Kennedy and Ming Campbell.
9. Nigel Farage will unseat John Bercow
10. Here is my very early attempt at some serious Nostradamus forecasting as I predict the GE result in terms of Parliamentary seats.
Conservative Party / UUP – 349 Seats
Labour Party – 212 Seats
Liberal Democrats – 49 Seats
SNP – 12 Seats
DUP – 8 Seats
Sinn Fein – 6 Seats
Independent – 5 Seats
Plaid Cymru – 3 Seats
Social Democratic and Labour Party – 3 Seats
UKIP – 2 Seats
Respect – 1 Seat
Wednesday, December 16, 2009
Part Of The Reason Why I am So Broke...
I have just stolen this graph from Mark Bathgate from Coffee House, and added the two points of reference.
Fig. 1 - Approx date my wife and I decided that we would get married in a very beautiful spot in Ireland.
Fig 2 - Actual date of wedding and of when most of the payments in Euro's was made.
The devaluation of Sterling hit us hard and very sharply as the favourable x-rate was slashed.
This is not the full story of why I am broke, to disclose it would result in a prompt ending of said marriage, and I am actually rather in love still; so I won't risk it. (Plus rising cost of living and taxation along with pay reductions have not helped at all.) The moral of the post, like the disclaimers say, rates may go up as well as down - it is a risk.
Fig 2 - Actual date of wedding and of when most of the payments in Euro's was made.
The devaluation of Sterling hit us hard and very sharply as the favourable x-rate was slashed.
This is not the full story of why I am broke, to disclose it would result in a prompt ending of said marriage, and I am actually rather in love still; so I won't risk it. (Plus rising cost of living and taxation along with pay reductions have not helped at all.) The moral of the post, like the disclaimers say, rates may go up as well as down - it is a risk.
Wednesday, December 09, 2009
I Probably Missed Nothing... Right?
I have pretty much missed all of the PBR reporting today because of work (however, I am more grateful to still be in work that to have had the time to have caught it though!) I did catch a brief summary earlier online at the end of lunch so I kind of have a feel for what I will be heading home to on the news tonight. In my mind, it is not too important to know the in's and out's this minute, as what tends to happen with the Budget and the PBR is that it takes a few days for the analysts to sift through and find the real details rather than the fluff announced at the dispatch box. I also want to add that it's a good thing as well that the Treasury left the VAT announcement until 9th December, nothing like giving the nation a whole 10 full working days, (plus the Christmas period) to implement an entirely new Tax rate on top of the tax accounting rules due to come into force on 1st January 2010... Very considerate and visionary of the man charged with setting the course for economic recovery.
With the announcements and what it will likely mean, I already feel from behind my veil of ignorance that I will probably be stuck to my previously stated mindset; that the UK will again not be out of recession after Q4, and my guess is that it will be Q2 2010 at least before a return to growth. Though, given how long it we have been in recession and potential impact of the PBR I guess Q1 2010 could be realistic, but I still harbour doubts so will not change my outlook; well, not yet anyway. I am also guessing that in a few days time, when the likes of John Redwood and Fraser Nelson have dug through the details, whatever the top line cut figures are on my TV tonight will actually be revealed to be lower, and/or the proposed tax hikes actually deeper into our pockets... Like I say, I will wait for a few of the better economic journalists and organisations to have a good pick through, as they tend to do a pretty good job these days interpreting these budget announcements back into English.
Another thought occurs; weren’t the online MSM sites promising a big expenses scandal today? Has this been slipped out the back door under the cover of the PBR...? I will have to see about getting online later and having a search for the news (gossip).
With the announcements and what it will likely mean, I already feel from behind my veil of ignorance that I will probably be stuck to my previously stated mindset; that the UK will again not be out of recession after Q4, and my guess is that it will be Q2 2010 at least before a return to growth. Though, given how long it we have been in recession and potential impact of the PBR I guess Q1 2010 could be realistic, but I still harbour doubts so will not change my outlook; well, not yet anyway. I am also guessing that in a few days time, when the likes of John Redwood and Fraser Nelson have dug through the details, whatever the top line cut figures are on my TV tonight will actually be revealed to be lower, and/or the proposed tax hikes actually deeper into our pockets... Like I say, I will wait for a few of the better economic journalists and organisations to have a good pick through, as they tend to do a pretty good job these days interpreting these budget announcements back into English.
Another thought occurs; weren’t the online MSM sites promising a big expenses scandal today? Has this been slipped out the back door under the cover of the PBR...? I will have to see about getting online later and having a search for the news (gossip).
Wednesday, November 25, 2009
Best Placed Economy In The G7...
...Best placed of those needing an IMF bailout loan help that is.
So, was he lying? Was he so incompetent not to know? or, is he simply deluded?
A good summary, plus more blogable graphs from Mark Bathgate over on Coffee House, who is filling in now Fraser has moved up to the Ivory Tower.
200 years ago, Gordon Brown would have been dragged from Parliament and shot for gross incompetence and betrayal of the nation.
100 years ago, Gordon Brown would have been unceremoniously relieved from his position and lampooned forever as the profligate buffoon he really is.
Today, he is able to command a state funded broadcaster to dictate the mantra that he has saved the world, whilst selling out the poorest to a legacy of state dependency and crippling taxation; meanwhile, yet again, continental Europe, with Browns complicity has its sights on destroying the free enterprise initiative of the City of London, the very heartbeat and soul of our strength and identity as a world trading nation.
And yet, somehow, in a way that future historians will understand less than us, he somehow still gets double figures in opinion polls.
So, was he lying? Was he so incompetent not to know? or, is he simply deluded?
A good summary, plus more blogable graphs from Mark Bathgate over on Coffee House, who is filling in now Fraser has moved up to the Ivory Tower.
200 years ago, Gordon Brown would have been dragged from Parliament and shot for gross incompetence and betrayal of the nation.
100 years ago, Gordon Brown would have been unceremoniously relieved from his position and lampooned forever as the profligate buffoon he really is.
Today, he is able to command a state funded broadcaster to dictate the mantra that he has saved the world, whilst selling out the poorest to a legacy of state dependency and crippling taxation; meanwhile, yet again, continental Europe, with Browns complicity has its sights on destroying the free enterprise initiative of the City of London, the very heartbeat and soul of our strength and identity as a world trading nation.
And yet, somehow, in a way that future historians will understand less than us, he somehow still gets double figures in opinion polls.
Monday, October 26, 2009
Turkey Shortage?
I intimated in a post yesterday that my guess was that retailers will be looking to keep stock low this year, so as to avoid burning off too much excess festive stock in sales, and this morning I have seen an article that seems to back my point about retailers expecting a quieter Christmas.
It would appear that Supermarkets have ordered much fewer Turkeys during this summer in their preparedness for Christmas; in doing so 30% fewer premium Turkeys were hatched this summer in preparation for this Christmas.
The article states that there are now concerns that there may be a shortage, and that some people will need to switch to an alternate meat for their Christmas dinner.
It will not just have been Turkeys that the big retailers will have slashed orders for; it will be across the whole retail sector. Turkeys are a good indicator because they are so synonymous with Christmas and because they need time to be hatched and grown, demonstrating retailer confidence for sales ahead of Christmas. And the absence of surplus stocks will mean a reduced need for Pre-Christmas sales, and the absence of sales is not good for the economic forecasting of Mr Brown.
For the record, the Christmas accord of 2005 still stands which guaranteed that my wife and I would alternate Christmases between each of our parents houses also meaning that we shall be at my parents this year, and thus meaning Capon is the bird that will have already been pre-ordered.
It would appear that Supermarkets have ordered much fewer Turkeys during this summer in their preparedness for Christmas; in doing so 30% fewer premium Turkeys were hatched this summer in preparation for this Christmas.
The article states that there are now concerns that there may be a shortage, and that some people will need to switch to an alternate meat for their Christmas dinner.
It will not just have been Turkeys that the big retailers will have slashed orders for; it will be across the whole retail sector. Turkeys are a good indicator because they are so synonymous with Christmas and because they need time to be hatched and grown, demonstrating retailer confidence for sales ahead of Christmas. And the absence of surplus stocks will mean a reduced need for Pre-Christmas sales, and the absence of sales is not good for the economic forecasting of Mr Brown.
For the record, the Christmas accord of 2005 still stands which guaranteed that my wife and I would alternate Christmases between each of our parents houses also meaning that we shall be at my parents this year, and thus meaning Capon is the bird that will have already been pre-ordered.
Sunday, October 25, 2009
Browns Economic Statement
I just have read in the Sunday Times that Gordon Brown has said that the recession will be over by the end of the year. This despite the articles admission that economists in Downing Street were “staggered” by Fridays figures showing that the country is still in the grip of recession.
The article also adds:
On the high street retailers will be hopeful for a good Christmas, but I have my doubts that they will be overly stocked after a tough year, so the prospect of attractive cut price sales before the end of the year are not as likely to materialise this year to entice people into the shops. Last year, many retaillers felt the need to cut early, lessons will have been learned. Furthermore, there is no appetite for taking on additional credit to fund an extravagant Christmas, so sales will largely be funded by disposable income. Many people, including myself have faced a reduction in income in the last 18 months and have faced increases in cost of living thanks to the crunch, leaving less disposable income available. I don’t think I am alone when I say there will be a strict budget applied this Christmas in our house.
I am not sure that we will see too much end of year budget burning from the private sector businesses either, as finance directors will be looking to go into 2010 with as much cash in hand as possible so as to be as well positioned as possible after what has generally been a bad year all round. Public Sector budgets tend to run to end of Q1 so unless ordered to spend, I would not be confident that there will be additional expenditure there either.
All round, the outlook for people and business is that they face even more price rises in 2010, which is easy to point to with the VAT rate scheduled to rise on 1st Jan. I think that in Gordon Browns position he should have aired on the side of caution.
If Browns statement is shown to be wrong, Brown will be punished at the polls if he tries to use his economic record for electoral gain, because it just isn’t as great as he thinks it is. The opposition parties will be able to deride him, even more so than they potentially already can. Even if I am wrong, and there is signs of growth by January that does not mean the voters will give Brown the credit he will feel he deserves. Given that, either I have a very different assessment of where the country is to 10 Downing Street and this is very likely to prove to be ammunition for Cameron & Co or Gordon Brown knows something we don’t.
My verdict. I think this is an act that shows there is some desperation in Downing Street and that it will come back to haunt him.
The article also adds:
Mr Brown was clearly counting on nothing happening in the next three months that will suddenly put the recovery off the rails, but it was unusual for the usually cautious Prime Minister to be so definitive.I think it is a bold move to make such an assurance, especially considering it seems to be an unprompted remark. It strikes me that this is a big gamble and Brown is pinning perhaps all of his electoral hopes on Christmas spending bringing the UK economy back to growth. Problem is, there is a good chance this might not happen. Yes, confidence is needed but the political outlook for Gordon Brown in 2010 was already looking dire, this could be the final nail for him and the Labour Party.
On the high street retailers will be hopeful for a good Christmas, but I have my doubts that they will be overly stocked after a tough year, so the prospect of attractive cut price sales before the end of the year are not as likely to materialise this year to entice people into the shops. Last year, many retaillers felt the need to cut early, lessons will have been learned. Furthermore, there is no appetite for taking on additional credit to fund an extravagant Christmas, so sales will largely be funded by disposable income. Many people, including myself have faced a reduction in income in the last 18 months and have faced increases in cost of living thanks to the crunch, leaving less disposable income available. I don’t think I am alone when I say there will be a strict budget applied this Christmas in our house.
I am not sure that we will see too much end of year budget burning from the private sector businesses either, as finance directors will be looking to go into 2010 with as much cash in hand as possible so as to be as well positioned as possible after what has generally been a bad year all round. Public Sector budgets tend to run to end of Q1 so unless ordered to spend, I would not be confident that there will be additional expenditure there either.
All round, the outlook for people and business is that they face even more price rises in 2010, which is easy to point to with the VAT rate scheduled to rise on 1st Jan. I think that in Gordon Browns position he should have aired on the side of caution.
If Browns statement is shown to be wrong, Brown will be punished at the polls if he tries to use his economic record for electoral gain, because it just isn’t as great as he thinks it is. The opposition parties will be able to deride him, even more so than they potentially already can. Even if I am wrong, and there is signs of growth by January that does not mean the voters will give Brown the credit he will feel he deserves. Given that, either I have a very different assessment of where the country is to 10 Downing Street and this is very likely to prove to be ammunition for Cameron & Co or Gordon Brown knows something we don’t.
My verdict. I think this is an act that shows there is some desperation in Downing Street and that it will come back to haunt him.
Friday, October 23, 2009
The Recession Is Not Over, And I Don't Think It Will Be For Some Time Yet
I see in the news the announcement that the recession is not over. The surprise for me is that there is surprise at this particular announcement.
I am no economist, and every post when I talk anything approaching economics I still feel the need to warn of this, but my analysis and predictions have so far been pretty accurate. My thinking going back to early Q2 that we would not emerge until at least early 2010, and possibly not until Q3 2010. If 6 quarters is the worst recession for 54 years, I do wonder where 9 or 10 qtrs will sit?
Why do I think this? Because the Government and the Bank of England have taken measures to ensure that economic corrections are kept to a minimum.
Now I can understand the politics of this, and they two-fold.
Firstly, it is one of the biggest dividing lines in the minds of Conservative and Labour voters over aged 30. During the 80’s and the 90’s when the UK went into recession the Conservatives allowed the market to contract before recovery with little or no intervention. This allowed for a quicker recovery (in theory) but meant the economy dipped faster and deeper causing many people to lose houses, their livelihoods, their businesses. The Conservative argument would be that the UK economy leading into the 80’s was in need of modernisation and was still built very much in the image of post-war Britain and overly reliant on dying industries. The crashes took a lot of older businesses out, but in the booms allowed for the creation of future industries which we rely upon today. It is an argument that will never probably be settled in broad public opinion. Labour stuck very much then to the politics they have followed during this recession; that Government(s) should intervene to prevent the recession getting too deep at any one point. The argument again would be that (in theory) this will draw out the recession for longer and also that the necessary “corrections” which our future economy may benefit have not had a chance to come into place. Now, I say this not to advocate either position, but, the current path undertaken was one that was known and one of general intervention rather than of allowing market forces to work unfettered.
The second point is as political as it is economic. It was and is a very big gamble. To my mind the Quantitative Easing programme has been a stealth effort in devaluing sterling, which has had some results, not necessarily completely positive, but not disastrous (yet). Of the big economies only Japan and the EURO zone have not followed with similar measures and China’s decision to fix against the Dollar is looking to have been very profitable. The EURO zone may still need to devalue, as it is hard to see it continuing for long at $1.50 to €1.00. The EU including the UK needs grow its Exports, and with the EURO so strong that is not looking likely. The danger of QE is hyperinflation, and clearly the extra money is not being leant as it was supposed to have been, but the UK seems to have been able to leverage its independence from the EURO to keep Sterling attractive and as exports may not have suffered as much as they could have, and we have an advantage, for now, on the EURO zone countries.
On point two however, I think we have our economic independence to thank, as we have been able to make decisions independent of the EU. It could however very quickly turn to be a disadvantage and I would like to see an end to QE and an immediate cut in Government borrowing. As long as we have QE we risk adding hyperinflation to an increasing unserviceable debt mountain. That would be like the perfect storm of recessions.
I really do not see any long standing positivity until Government and personal debt is slashed. I think individuals have responded and in 2009 are directing income into repaying debt rather than spending. This trend will continue. The Government needs to do the same. Though it will probably not do so and it will fall to an incoming Conservative Government to undo the damage. The sooner it is reigned in the less the UK will need to repay, and the quicker we can head to recovery. Individuals need to start spending, but day to day spending needs to not be linked to personal debt such as credit cards. As the nation’s credit rating improves, sensible borrowing for houses and big items like cars will aid recovery further.
Anyway, that’s my take, and that is what I am basing my personal economic decisions on. Recessions are ugly, and unfortunately I think until we can point to “corrections” all we have is the same struggling economy, the pain will have to be felt a lot more harshly somewhere – and I am not sure where; my guess a year ago was on homeowners, but this looks slightly less likely to be the case now. I am sure there are those of you who will disagree and that’s fine, but if you are rebutting in the comments, please keep it in layman’s terms as much as possible as like I said, I am not an economist. [So, don’t bet your house on my economic predictions!]
No surprises from me that we are still in recession. I still think there is one thing that Gordon Brown can do to bring about confidence in the markets and in the public and that would be to call a General Election.
My very final thought is again political. John Major complained of bringing about a “voteless recovery” and reports from Gordon’s bunker were in the same vein. I wonder what will be his cry if there is no recovery to link his lack of votes to?
I am no economist, and every post when I talk anything approaching economics I still feel the need to warn of this, but my analysis and predictions have so far been pretty accurate. My thinking going back to early Q2 that we would not emerge until at least early 2010, and possibly not until Q3 2010. If 6 quarters is the worst recession for 54 years, I do wonder where 9 or 10 qtrs will sit?
Why do I think this? Because the Government and the Bank of England have taken measures to ensure that economic corrections are kept to a minimum.
Now I can understand the politics of this, and they two-fold.
Firstly, it is one of the biggest dividing lines in the minds of Conservative and Labour voters over aged 30. During the 80’s and the 90’s when the UK went into recession the Conservatives allowed the market to contract before recovery with little or no intervention. This allowed for a quicker recovery (in theory) but meant the economy dipped faster and deeper causing many people to lose houses, their livelihoods, their businesses. The Conservative argument would be that the UK economy leading into the 80’s was in need of modernisation and was still built very much in the image of post-war Britain and overly reliant on dying industries. The crashes took a lot of older businesses out, but in the booms allowed for the creation of future industries which we rely upon today. It is an argument that will never probably be settled in broad public opinion. Labour stuck very much then to the politics they have followed during this recession; that Government(s) should intervene to prevent the recession getting too deep at any one point. The argument again would be that (in theory) this will draw out the recession for longer and also that the necessary “corrections” which our future economy may benefit have not had a chance to come into place. Now, I say this not to advocate either position, but, the current path undertaken was one that was known and one of general intervention rather than of allowing market forces to work unfettered.
The second point is as political as it is economic. It was and is a very big gamble. To my mind the Quantitative Easing programme has been a stealth effort in devaluing sterling, which has had some results, not necessarily completely positive, but not disastrous (yet). Of the big economies only Japan and the EURO zone have not followed with similar measures and China’s decision to fix against the Dollar is looking to have been very profitable. The EURO zone may still need to devalue, as it is hard to see it continuing for long at $1.50 to €1.00. The EU including the UK needs grow its Exports, and with the EURO so strong that is not looking likely. The danger of QE is hyperinflation, and clearly the extra money is not being leant as it was supposed to have been, but the UK seems to have been able to leverage its independence from the EURO to keep Sterling attractive and as exports may not have suffered as much as they could have, and we have an advantage, for now, on the EURO zone countries.
On point two however, I think we have our economic independence to thank, as we have been able to make decisions independent of the EU. It could however very quickly turn to be a disadvantage and I would like to see an end to QE and an immediate cut in Government borrowing. As long as we have QE we risk adding hyperinflation to an increasing unserviceable debt mountain. That would be like the perfect storm of recessions.
I really do not see any long standing positivity until Government and personal debt is slashed. I think individuals have responded and in 2009 are directing income into repaying debt rather than spending. This trend will continue. The Government needs to do the same. Though it will probably not do so and it will fall to an incoming Conservative Government to undo the damage. The sooner it is reigned in the less the UK will need to repay, and the quicker we can head to recovery. Individuals need to start spending, but day to day spending needs to not be linked to personal debt such as credit cards. As the nation’s credit rating improves, sensible borrowing for houses and big items like cars will aid recovery further.
Anyway, that’s my take, and that is what I am basing my personal economic decisions on. Recessions are ugly, and unfortunately I think until we can point to “corrections” all we have is the same struggling economy, the pain will have to be felt a lot more harshly somewhere – and I am not sure where; my guess a year ago was on homeowners, but this looks slightly less likely to be the case now. I am sure there are those of you who will disagree and that’s fine, but if you are rebutting in the comments, please keep it in layman’s terms as much as possible as like I said, I am not an economist. [So, don’t bet your house on my economic predictions!]
No surprises from me that we are still in recession. I still think there is one thing that Gordon Brown can do to bring about confidence in the markets and in the public and that would be to call a General Election.
My very final thought is again political. John Major complained of bringing about a “voteless recovery” and reports from Gordon’s bunker were in the same vein. I wonder what will be his cry if there is no recovery to link his lack of votes to?
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