The final cost of recession

Labour continue to spend
But for us this could be the end,
They borrow and borrow
(No thought for tomorrow)
How low can Labour descend?

Who gives a stuff about the economy......what's Gordy gonna do about Brand and Ross???

What a truly amazing man

1997 brief spell at the treasury, Secretary of State for Social Security, has handled the Education portfolio, Transport, Scottish office and Dept for Trade and Industry, Energy etc.

Now he's lecturing life time economists on the state of the economy

Thank goodness we have superb and talented individuals like this running our country.

I feel secure.

Borrow in order not to cut public spending? A cautious OK to that. Where public projects are concerned it could plausibly even be finessed into 'investment'. But is such a position not undermined by the freezing of council tax at a cost to public spending? Is that vote-catching manoeuvre any longer sustainable?

With regards to your final point, I'm not sure why this would be an interesting political consequence.

That seems to be made on the very simplisitic view that Tory policy is All Tax Cuts Are Good when manifestly David Cameron has been saying since elected that he only favours tax cuts that can be afforded.

With regards to Alistair Darling and Gordon Brown's position it will be interesting to hear what elements of the vastly increased borrowing represents new enterprises to boost growth (their words) and what simply reflects the fact that their existing spending plans have gone kapput.

The economy has been growing since the Conservatives managed us out of the last recession. Labour paid off some of our net debt. It then reverted to type and set out on a massive borrowing-fuelled spending spree that saw our debt accelerate to over £630bn. It has gone even further now.

The IMF warned it was unsustainable. Labour ignored them. Personal and public sector debt soared. Labour used the excuse that borrowing is lower as a percentage of GDP, but does not count the PFI debt. The net amount owed is far greater than ever before and more than it should ever have been.

The borrowing and debt has increased while the economy was growing - so why is it only now that Alistair Darling talks about reducing borrowing when the economy starts to grow again? It was not done before so why should we believe they will rein in spending in future?

If GB and AD want to peddle something to the electorate, why not quote Keynes and then tell us we've all misinterpreted it. You couldn't make it up!

That was a good topic, Nick. I enjoyed reading it. I'm quite excited by the idea that the Prime Minister has become a little more confident and Alistair Darling has a nuanced approach to policy. Another thing that leaps out is how ministers are being asked to rise to the challenge and show what they're made of.

One thing that's struck me is how some people have taken a clichéd and reactive approach to developing an economic plan. Now, the usual lists of spending plans and revenue are being discussed, but I'm more interested in how the government will tweak people's attitudes as, I think, this is a key determiner of success.

I note that some people in the brewing industry are looking at investing in more innovation, and Ford is doing everything it can to retain staff even if that means a little belt tightening. This sort of stuff doesn't cost much money or level mountains but by taking a better focus now people can be in a stronger position and gain more in the long-term.

Gordon Brown was generally responsible even if he did use some smoke and mirrors to ride the economic wave. The upcoming budget looks like it may be pulling a similar magic trick. If Labour pull it off, and I hope they do, could this be the beginning of putting a stake through the heart of Britain's broken economic fundamentals?

The scope for new technologies and developing new markets is considerable. So much so that a UN commissioned report concluded that we were on the brink of a global economic renaissance. Now, we could confuse things or talk ourselves into a deeper recession like the Tories, or ride through this and properly embrace this potential.

Wow. *squeal* I'm sooo excited.

There is a myth that classic Keynesianism (of the General Theory vintage) is fine for periods of classic depression - with falling real prices and stagnant or falling money wages - but no good in periods of actual or latent price inflation. It was the great lie of monetarism that this was not only true by experience, but bound to be true.

Keynes knrew this was claptrap. In 'How to Pay for the War' he outlined exactly how an anti-recession strategy could work in a period of potential inflation.

Keynesianism, of course, is supposed to be a busted flush because 'we are all Thatcherites now'. Well, no we are not. Those for whom Keynesian or neo-Keynesian ideas still have real meaning know that what JMK was on about was not some desperate scheme for creating employment in the face of depression, but a systematic approach to macroeconomic policy management that....well, went a bit further than announcing the odd tweak of interest rates, which has just about been all that there is of macroeconomic policy management for the past decade.

If anything is a busted flush it is the notion - beloved of Conservatives like Mr Cameron - that all is for the best and that 'markets will eventually equilibrate'. We have seen time and time again since the 1970s the sight British governments doing nothing for fear of inflation, upsetting the City or depressing the value of the pound.

Well now, all bets are off. We want a lower pound, we will have falling inflation and the City is....well, the trigger for our current malaise and, besides, the government now seems to own a considerable slice of it.

JMK, your hour is now.

"The chancellor's been spending rather a lot of time recently studying the views of the great
economist"

So, after spending 11 years in charge of the money and destroying the economy, he's finally decided it's a good idea to actually learn some economic theories.

I think he's a bit too late, and it kind of proves the point that I always make that he never understood anything about economics.

Yes, more media reports of how bad it's going to get ('there will be more insolvencies and more repossessions') and no-one acting to stop this arcane nonsense.

Why 'bankrupt' people who have done everything possible to service their financial obligations and simply cannot through no fault of their own.? Or repossess their house?

As the downward spiral in the banking system gathers pace no-one is giving this their attention although David Cameron alluded to it recently.

It is grossly unfair to throw the burden of responsibility for failure on the individual who took out perfectly reasonable financial liabilities based on assurances of stable economics from Government.

The converse is that if everyone took out liabilities based on that the economic system was bound to fail - no-one would ever borrow! And generally people borrow because they don't have enough savings to cover the intended costs. This doesn't mean they are irresponsible - which is how the law makes them look. It's not about the 'undeserving' or 'deserving poor'. It's about being decent and reasonable FAIR.

Britain's insolvency laws belong in the Dark Ages. If something isn't changed quickly the courts are soon going to be on overtime and there will be a legal and social trainwreck for decades to come.

Your urgent attention to this important social issue please!

Sign my No10 Petition.

https://petitions.number10.gov.uk/Harsh-treatment

If you are not worried do it (with social conscience) for others who are not as fortunate as you. it is only live to 9th Dec after which it will either have done its job or it won't matter.

Why do I write this here?

Because I watched the ghastly panoply of State measures rolled out against so many in the 90s recession while the Govt stood by and did - NOTHING. At least with the internet now one can speak out to a degree. I have to say I am again shocked at how silent OUR Parliament is on this absolutely fundamental social-economic issue. The repossession/foreclosure juggernaut coming your way frankly, flies in the face of everything that Article 17 of the UN Universal Declaration of Human Rights stands for that states that a person should not be 'arbitrarily deprived of his home'.

Thank you for reading this.

Guy Croft

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"So what would a bold Brown do?"

Answers:

1) Enable his Chancellor to get on with the job.

(Problem: Brown installed a puppet, but the puppet doesn't always like having his strings pulled....)

2) Say "Sorry - I cocked up. I'm going to resign"

(problem: sadly, some dreams are truly beyond our reach).

What will Brown do?

Answer: Say "I'm bold! (hey, I even 'wrote' a book about courage)" and continue to delude himself and try to do likewise to the nation.

The most dangerous situation for the World to move into is competitive interest rate cuts.

The USA is about to cut theirs so we will cut ours - there lies doom and a Japanese style perpetual recession. Unless the bad loans are let deteriorate properly they will be a gigantic drag on the economy.

Home borrowers (I will not say home owners) must either pay a reasonable rate of interest on their loans, or default, and be reprocessed and the homes sold for what they are properly valued.

Ultra low interest rates will deepen and prolong the slump. Over the very short term perhaps 3 months, they may be necessary, but it must be made clear that borrowers should reckon on at least 7 percent mortgage rates in the long term. If the borrowers cannot afford this then they must be allowed to default.

Without the very necessary correction in property prices in the UK the economy will not recover. Lowering interest rates is the path to doom.

Lower interest rates and all those dependent on savings income to fund their expenditure will hold back - already equity release has ceased to be an economic driver so the net effect will be to multiply and deepen the depression.

Money needs to have a reasonable value and cost. This must be the medium term aim of policy and all other matters flow from this, such as income multiple maximums of 3 to 3.5 times to house prices.

If we do not have affordable homes we will destroy the structure of society (such that it is.) Regulation and tax policy must be used to ensure that this happens, before the next election, Mr Darling!

A speech to stop the horse once it has already bolted would be a more apt description. The unprudent language used for this spending policy has been so ridiculous. The pound is in freefall and the old adage 'loose words costs lives' is never more appropriate.

Bit more balanced today though Nick - 7/10!

If ever there was a case of failure packaged as strategy - then this is it.

The line "Responsible fiscal framework" ties into the accusations of Brown presiding over an "age of irresponsibility" doesn't it?


Brown's economic reputation is dust.

Nick when you say:

"The lesson that Gordon Brown's learnt from the past few weeks is to be bold and to make policy announcements big."

I am unconvinced.

I think he has decided to keep making announcements and make sure that people don't start asking how we got here. It could have been worse with the Tories but thats not the point. You can't fix a problem if you don't know what the problem was. It needs a full blooded public inquiry.

It is frightening that we have "whoops economic apocalypse!" and then there is a shrug of the shoulders and people move on.

I can't see any reason why we won't be vulnerable to this type of event in the long term.

Gordon is just "brassing it out".

It seems that according to the Keynsian view, the solution to the recession is a spot of 'retail therapy' - spend, spend, spend, Buy Now, Pay Later.

The problem is, the country was already in debt before this latest crisis.

The Government's answer is to take out a few new credit cards, and switch the outstanding balance for a few months at 0%, then worry about it later.

Brown knows it wont be his problem, because by the time the final demands land on the doormat, he won't be in Number 10 any more.

The very least he could now would be to try to cut back on waste. Scrapping the expensive ID card scheme would be a good start.

Aboloshing HIPs would also help free up the property market, thereby helping hard-working people who find themselves in the negative equity trap through no fault of their own.

re 10: I forgot, Brown is no longer officially the chancellor (although in reality he is), but the same basic logic applies regardless; whether it's darling or brown, having at least one of them studying economics would be a step in the right direction seeing as neither of them understand economics at all at the moment.

Brown does, however, know history (although he doesn't learn from it), and can quote irrelevant historical facts and figures very well. The problem is that he never studied economics and his analysis skills are non-existent and he never listens to anyone who isn't 100% in favour of his own ideology. I have no idea why/how the labour party left such an arrogant idiot in charge of the money for so long; they've got a lot to answer for.

Keynes did say ' I change my mind when the facts change - what do you do sir? ' So has Darling changed his mind because the facts have changed? Don't think so because we have had increasing borrowing requirements over the last few years in a boom time (don't care what Brown says , we've had a boom the last few years..) which is completely contradictory to Keynes basic premise of boosting spending in an economic downturn but not in boom times. We are now maintaining spending at a time when tax revenues are declining sharply from a recession and borrowing to avoid having to raise taxes to resolve our debt issue. Brown has presided over this situation, either at No.11 or No.10 and I for one will not forget that when it comes to the next General Election.

At the end of the good years we should have had a budget surplus to allow us to maintain spending and potentially lower taxes to help cushion a recession. What Brown has done is to mis-manage the economy so that we may be able to do neither and just have to ride it out. Personally I think history will judge him a truely appalling Chancellor who squandered his inheritance

To get the full benefit of government funded economic pump-priming the economy has to be on the floor. The economy has not yet hit the floor, so any direct action of that nature at this time would be wasted.

However, a substantial tax cut for the lower paid is well overdue and will certainly be appreciated by all.

Going forward, taxation should be directed at economic outcomes so that taxpayers get to see the unequivocal benefits of government spending of their hard-earned.

Taxation must no longer be used to feed the bloated state machine that New Labour has deliberately created to please its own client groups.

So Keynsian economics properly applied will have a direct benefit to the community at large.

However if this label is used to just place a face on more of the same that got us where we are then we can forget it and need to begin to plan for our own revolution.

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I'm sure the fiscal rules aren't really dead, are they? As I understand it, the fiscal rules can be written thus:

"We will always make sure that economic cycles, investment, current spending, and what actually appears on the balance sheet are defined in such a way that it appears that borrowing will only be used for investment over the course of an economic cycle".

Surely that's still true, isn't it?

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it realy doesnt matter who is incharge this is a global problem and thus it can only be sorted globaly.
what i find scary is this idea of borrowing to offset the downturn, doesnt all borrowing imply payback with interest thus the taxpayer has to keep paying off government loans that may not even help.
these loans could break this country and the only way to survive will be to be fully part of european structure, what this government has already been paid to do by there european masters.
all we the public can do is kiss our assetts goodbye.

The problem with Brown is that he continues to make policies for his short-term self-interest rather than the countries interests. That's why government borrowing is out of control...or "a little too high" as Labour's mate Robert Preston put it.

Biased Biased Corporation.

The idea that the government can spend now and pay it all back later is wishful thinking at best.

They were already being warned about their failure to balance the country's balance sheet for years and years. Labour are simply too addicted to tax, borrow and spend.

Ken Clarke, who Gordon has much to thank for inheriting a strong economy, was already writing about this 3 years ago:

https://www.guardian.co.uk/politics/2005/apr/25/election2005.economy

As Ken says; "It remains an iron law of politics that the job of Conservative governments is to clear up the mess left by Labour governments."

Maybe Brown should get in the queue at the IMF now before it gets any bigger. Darling seems to have caught the Brown ( I'm an economic genius ) disease. When did being a lawyer, who practised for a very short time suddenly become the criteria for having enough knowledge of economics to regulate the world's finances ? Was it perhaps that, like his mentor, he, being a " son of the manse " was provided with this amazing knowledge by god himself? It's just a pity god didn't do it sooner before the holy duo destroyed the the country's economy . Somewhere in the bible they wrap themselves in is the parable about the "talents " of silver and how they should be invested, maybe god forgot to tell them about that bit before they squandered the country's resources. Still ; if Brown's performance at PMQs is anything to go by, we must all join them in praying that "The Lord will provide ".

Darling said: "the government's fiscal policy must adapt to the current exceptional economic circumstances"

But the whole point of the fiscal rules would be that as a government you'd save during a boom so that you can then spend when there's a recession. That was the whole point of the rules.

The fiscal rules were a good idea, it's just that labour never followed the logic behind it; if labour had properly followed their own fiscal rules and not hidden things with false accounting and if they'd kept spending to the level that they were supposed to, then we wouldn't need to borrow at all right now, and we'd be out of the recession in a couple of months.

It was the fact that they never kept to their own rules that we're now forced to break those rules in order to stave off total economic collapse.

re: 18, Distant Traveller

The very least he could now would be to try to cut back on waste. Scrapping the expensive ID card scheme would be a good start.

Well said. The sooner we get rid of this ridiculous, human-rights infringing cash-vampire the better. And I'm talking about the ID cards scheme as well.

#17, right on.

I don't know how old you are, but what is coming is beyond frightening. I don't care any for those who say 'oh, doom and gloom' because nothing ever touches them, what I care about are the folk whose lives are going to be comprehensively savaged by this economic onslaught. I know exactly what's coming.


The consequences of Brown's 'shrug of the shoulders' as you so aptly put it and that of all his ministers, all his MPS and all those of all the other parties and the whole Govt executive machine too right down to the magistrates and circuit judges, sheriffs and bailiffs et alia are going to be the instruments of the greatest social upheaval in the UK since the Inclosure Acts.

The judiciary will cope perfectly well with the new workload, indeed it will create jobs in the public sector. They will be as icily efficient and adaptable as the German legal system under Roland Freisler.

If I cannot stop them, at least I can say I tried this time.

GC

One of the most worrying aspects of this is that the plan is only now being written.

Grown has recently taken to denying that he ever said he had ended 'boom and bust'.

However, if he did expect a bust at some point, then why was there no contingency plan in place already?

Not only is the emperor naked, but he wants to have his cake and eat it...

Nick, at some point you must realise that anyone who continues to pretend to beleive that the emporer still has clothes now looks as stupid as he does.

From this week's Private Eye:

Anagram of Peter Mandelson: Mean old serpent.

and I might add that after having been in place for many weeks my petition for rewrite of the insolvency laws has so far attracted a massive 22 signatures.

Just next to "Ban all pellet guns in the UK" with 23

whereas the breathtaking

" instruct water companies to return to charging churches as charities rather than as business premises" has attracted nearly 37,000, no doubt signed by all the faithful who think the recession is 'doom and gloom'.

I wish I could get an introduction to someone as public spirited and newsworthy as Joanna Lumley.

GC

guy @ 11

I have to say I am again shocked at how silent OUR Parliament is on this absolutely fundamental social-economic issue

We're all sorry that your business has gone bust.

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#23 DisgustedofMitcham

I'm sure the fiscal rules aren't really dead, are they? As I understand it, the fiscal rules can be written thus:

"We will always make sure that economic cycles, investment, current spending, and what actually appears on the balance sheet are defined in such a way that it appears that borrowing will only be used for investment over the course of an economic cycle".


Very Good. I'm sure that Mr Brown's Fiscal Rules' amount to nothing more than a draft Code of Practice.

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jcook @ 22

Whether this saturation coverage will attract any viewers remains to be seen

The US election you mean? I'll be watching every second of it ... it's like Olympics and World Cup, you only get to see about seven of them in your post childhood but pre senility lifetime.

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Borrow?
How much and for how long?
Who from?
With every other country borrowing billions at a time to keep them solvernt how long before the money runs out and we can't borrow any more.
Already the IMF are seeking extra funds from China and Saudia Arabia.
These countries will have their own problems to sort out so are unlikely to provide enough funds to continue to prop up everyone else.
This is a temporary measure for a long term problem
Unless the problems are tackled now at source country by country we will all find ourselves bankrupt.
That prospect is so horrific it is unthinkable.
Welcome to the third world.

23. DisgustedOfMitcham2

Of courses its true. thats why HMG reclassified road maintenance costs as investment in new roads and why the interest payments for the network rail loans were investments in new railways.

No funny accounting here.

Yep, it's the same for me as the government I guess? I'm in a bit of a financial mess as a result of the global over-leveraging problem. So, I think I'll go get me some more leverage - borrow, say, £50,000 - and get down to spending my way out my personal financial crisis. God knows how I'll ever pay it back, but then again I assume the Chancellor's probably thinking much the same thing.

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More nu-labour spin from the BBC. The public pays hard-earned cash for this, they deserve balanced reporting and analysis. The BBC has no right to pursue its left-wing agenda when it is funded as it is currently.

#25 delmister

You say "this is a global problem and thus it can only be sorted globally".

I think this is largely correct, but what we do nationally is also very important at this time.

Think of it this way. If you take out a mortgage to buy a new house, you will need to consider how much you can afford in terms of monthly repayments. It might be very tempting to take out an even bigger loan and also pay for new carpets, curtains, fridge-freezer, plasma TV and maybe even a new car. You are either extending the loan period, or facing higher monthly repayments. You need to take very great care not to be tempted to over-extend yourself.

When money is tight, as it is now, it makes sense to keep a very tight reign on spending - not to keep borrowing for unnecessary luxuries.

Rather than spend a week on the speech and then lecture us on the state of the economy, I would rather he sat at his desk and worked hard to stop the likes of:

20bn on an IT system for the NHS that has had questionable trials, and lacks the support of NHS staff,
2bn lost in tax credit fraud or errors.
2.3bn refurbishing civilian offices of MOD
1.7bn spent settling Metronet’s debts following the failed privatisation of London Underground
300m to Transport for London to cover its cost in taking on Metronet’s contracts.

300m lost on two cancelled IT projects at the Department of Work and Pensions In 5 years the DWP managed to spend £2.14bn on IT projects, both ongoing and cancelled, with over £500m going to consultants alone.

A further £486m has been wasted on the computer project for the Child Support Agency and £140m on a system designed to streamline payments which was shelved because it never worked.

Or perhaps £77m on an IT system meant to clear the backlog of immigration casework which was shelved because it missed deadlines.

Maybe he should consider the waste in respect of a system that was being introduced to manage the applications of adults applying for independent learning grants which was scrapped after millions was lost in fraudulent applications; the cost of this was another £97m of taxpayer’s money.

MOD: After failing to include a clause ensuring that Chinooks purchased from the USA would meet UK airworthy standards MOD has spent more than £300m, now forecast to be £500m to upgrade them. Though ordered in 1995, the upgrade on these 8 Chinooks has still not been completed. Likely waste is in the region of £500m plus the cost of the Chinooks.

The MOD also scrapped a computer inventory scheme before it was introduced at a cost of £118m and a further £77m on a radar system for the Harrier before it was decided to withdraw it from service.

Or perhaps the Nimrod AEW aircraft that was supposed to replace the RAF Shackletons. Despite the fact that a well proven replacement, The Boeing E3 was available, the Government MOD decided it was better to spend £1.5billion on a radar system that didn’t work. Having wasted this £1.5bn, they went on to spend another £750 million buying the 7 aircraft that the RAF had wanted to begin with!

The MOD also wrote off 118m on a failed inventory IT project (DSMS). In fact, the MOD may end up writing of over 3bn for a programme to upgrade RAF Nimrods, a plane that is built on the 1950’s

Or the Pathway project, which promised to introduce a benefits payment card in 2000 and was scrapped after four years of expensive development was scrapped at a cost of 1bn

400m was spent on a project aimed at ‘cost control’ for the 2012 Olympics. Value Eh?

In respect of Information Technology projects, this government is forecasted to spend another £14bn of taxpayer’s money this year, this is roughly equivalent to a reduction in personal taxation of 7p in the pound.

Now this government wants to spend another £5bn on a computer system to manage a new ID card system.


Remember all this when hes lecturing us on the state of the economy and fiscal responsibility.

Here is something that the Government could try ... being honest.

That would be very helpful indeed and a wonderful morale booster.

For example, they could start being honest about Income Tax and National Insurance 'contributions'.

We, the people, know that they are really the same thing, so why not merge them into one tax - that would be an honest thing to do.

A much simplified 'flat rate' tax system would also be a more honest arrangement, in that its transparency would appeal to the peoples sense of fairness.

As they/we now 'own' bank(s), they could also be honest about repossessing homes.

This repossession is very bad business and there are a number of ways in which this could be avoided - so let us see a bit of honesty from HMG here.

The unemployed would be in a more honest relationship with the Government if they actually earnt the money that was paid over to them - so let us see some effort in this area.

If Government concentrated in offering genuine value per tax-payer pound for the services it provides then that would be an honest thing to do, and would be seen as such by the people.

Sadly, I think we will find that such honesty is in very short supply within HMG or for that matter, the Opposition.

I think Keynes understood this completely and would have sighed deeply at these politicians and their feeble attempts to rearrange deck-chairs when radical, honest reform is desparately needed.

You would have thought a Labour Government heading for probable electoral defeat would think well, we've nothing to lose so we might as well go for it.

Come on Brown, Campbell, Mandelson and 'moneybags' Blair - reprise New Labour and let us see if we get anything sensible this time around.

When keynes wrote the General Theory of economics government spending as a proprtion of national income was dramatically lower.

For a start off there was no NHS with a 97 billion pre annum budget.

There were no city academies and a comprehensive system.

The state did not employ 50 per cent of the labour force.

There were no diversity officers and the police force was dramatically smaller.

State spending was way below where it is now so the startig point was different.

Comparing the current situation to that of the 1930s is akin to saying we are going to pour in some bubble bath; then the taps had not even been turned on.

Anything the government does now is irrelevant to overall GDP....pushing on a string.

The government are a bunch of amateurs who have no idea what path to take so they take the path of least resistance; spend more money. Our money.

There should be wholesale tax cuts and incentives to save more money (tax credits)

Call an election.

Prime Minister's questions went as expected, he never answered one question.
They will have to rename it Prime Minister has no answers.
Mandelson must have went to the same school, that teaches how to refuse to answer questions with a smirk.
Is the giggling and chuckling part of the deal when sitting in Parliment? I wonder at them having such a good time while dishing out waffle.
Neither use nor ornament.
Darling will put on a brave face when he tells us how we are going to pay for the gross mismanagement that has been Labours policy.
I'm sure we will not be joining them in the laughter.
Boom, Bust, Debt.

What has happened at the BBC? No moderators on this blog for almost 2 hours, or has the Wossy and Wussy saga got everyone in a bit of a tizz?

For all the budding economists out there.

Have a look at the article and chart in the link below (click on the chart to expand it).

https://www.nakedcapitalism.com/2008/07/has-deleveraging-even-begun-not-for.html

It specifically relates to the US economy but ours is a mirror image of theirs.

It won't matter what policies they decide on in Westminster village. We're gonna get hit and we're gonna get hit hard.

As guycroft posted earlier, they should be concentrating on policies that will prevent business defaults and home repossessions (through no fault of their own). They should be doing everything to keep families in their own homes.

Its our Yoomun rights....innit?

Shock horror the Tory Blog Mafia are not complaining. Please can we get back to examining Cameron and Osborne you Soooooooooo biased against Labour....

Excuse the sarcasm but we only get to blog on topic if it's broadly critical of Government.

GB's fiscal rules are clearly dead. The question is were they wrong altogether or right for 10 years but need replacing now.

The government should be getting hammered but the Tories have been incapacitated by the Osborne row and seem intent on playing only to the Westminster crowd.

Policy, Policy, Policy. Show us there is an alternative, make it bold and tell it calmly. Fulfil the promise to remove punch and judy the subject is too important.

A few pence of relief to tiny businesses will not help. Massive incentives to SME's will. For example add a 5% tax on all payments to companies employing less than 1000 that are delayed by more than 60 days. Big companies frequently rape smaller ones through late payments particularly in hard times. Try to use the current laws to charge interest and they threaten to take their business elsewhere. Make companies declare late payments then smaller profitable business won't go under for want cash flow. Pass the money directly to the smaller business up to the level of their bank charges. Sounds harsh but it's the smaller businesses that cannot get lines of credit easily at the moment. SME's are the backbone of our economy, protect them. Many who run them could be better off by pulling the plug. Support them and they support UK PLC.

Propose compulsory purchase of repossessions at a rate that is punitive if a lender pulls the plug too early. Use the home for social housing renting to the dispossessed owner if appropriate and allowing a buy back (or part buy back) at a later point. Banks would be forced to accept a huge loss or help the country by trying to help those they probably should not have lent to originally.


Twopolicies in 5 minutes, yes we would need to borrow to fund one of them but they would help stimulate the economy and offer people a bit of hope.

gordon @ 29

if they'd kept spending to the level that they were supposed to, then we wouldn't need to borrow at all right now, and we'd be out of the recession in a couple of months.

I think you're underestimating (by miles) the magnitude of the economic downturn that we are entering. There are quite a few chickens coming home to roost, all at the same time, and only one of those (probably the least significant) is the level of UK government debt.

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In these difficult economic times, it is completely and utterly sickening to witness these Labour and Tory politicians slugging it out as per usual.

What does it take to make these politicians understand that that we can no longer afford the luxury of adversarial politics.

Unless these two so-called mainstream parties get their act together PDQ and start genuinely co-operating for the benefit of the country, then they will fully deserve to be put up against the proverbial wall.

Down here on the 'Banksy' level, it is not impossible to imagine that the wall would be necessarily 'proverbial' either.

That is a very prophetic article!

Unfortunately - I don't share Ken Clarke's faith:

"I have great faith in people's ability to see through hype."



When he has been caught out - Brown evades, blusters and misleads. We've seen it on 'Gold', we've see in on 'Boom and Bust' - we see the same every week at Prime Ministers Questions.

The media could and should pillory Brown for this - but they leave him alone and prefer to investigate stories with gossip and intrigue, rather than major political substance.

Until the media take their gloves off and tackle Brown - I do not have faith that 'people will see through the hype'

These blogs often have post(s) which points out ad nauseam '{the boy called out} the emperor has no clothes'.

People think that that is profound.

But there is another point in that fable ... the procession carried on .

Excellent point made by Cameron at PMQ's

In 1997 - Brown told us all that the lesson he learnt from the last downturn is that you cannot spend your way out of a recession.

How things have changed, could this U Turn be anything to do with a complete lack of forward planning during the good times?

Having just read George Osborne's latest comments, I wonder if the Tories are hell bent on talking down the economy with the sole intention of discrediting the government, regardless of the damage they might do to the country in the process. One minute they are drawing our attention to the drop in the footsie, and blaming it on the government; when it starts to climb again, they search around for another stick to beat Gordon Brown with. Since when has borrowing to bring forward pre-planned work on Crossrail, hospitals, schools, affordable housing and the 2012 Olympics been 'splurging on white elephant public works'. His comments merely show his contempt for those less fortunate than himself. You can take the boy out of the Bullingdon Club but you can't take the Bullingdon Club out of the boy. Pump priming was ever the way to kick-start a failing economy. Why doesn't he just go back into the cupboard where he's been hiding for the last 3 weeks. He really doesn't have anything to say that's of any relevance.

Charles_E_Hardwidge wrote:

//
Gordon Brown was generally responsible even if he did use some smoke and mirrors to ride the economic wave. The upcoming budget looks like it may be pulling a similar magic trick. If Labour pull it off, and I hope they do, could this be the beginning of putting a stake through the heart of Britain's broken economic fundamentals?
//

You WHAT? Why not google

IMF WARNS UK
(no quotes)

and see what comes up

You will find that Brown was warned more than once about the following

1. Public debt
2. Private debt
3. The bubble of the housing boom
4. UK SUB-PRIME MORTGAGES (my caps,
as this confirms Brown is lying when he
says are troubles are down to the USA)

So what Brown was warned about, has happened. And you say he was "generally responsible"? No - he is almost single-handedly responsible for the mess we are in.

There's none so blind as them who don't want to see, eh, Charles?

29 Oct 2008, the-real-truth wrote:

//
Grown has recently taken to denying that he ever said he had ended 'boom and bust'.
//

Grown!?

No, he claims he had put an end to "TORY boom and bust".

No comment. Oh, just one. The man is insane of he thinks that fools anyone. Tory boom and bust, FFS?

Couldn't we simply put Jonathan Ross's salary into the economy to buiild a few schools and hospitals. Both problems solved!

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

Well its 5:20 now, and I get back from work in 6 hours, so hopefully this will be up by then!

Woohoo, I think Charles finally gets it! He has now accepted that we are in a recession, and not only that, he also says

"Gordon Brown was generally responsible even if he did use some smoke and mirrors to ride the economic wave. The upcoming budget looks like it may be pulling a similar magic trick"

Welcome to the real world Charles. Now do some more digging and you'll discover the actual extent of those "smoke and mirrors". Take a deep breath before you do though, because it's scary stuff.

#33 pttp

Gideon Osborne = Oi! No snob greed!

It's the borrowing stupid! You cannot spend more than you earn. Is that such a difficult concept for Gordy and Darling to understand? The fact is that the piggy bank has been emptied by Nu Liebour. The Third Way project has been shown up for what any right thinking person has known for years. It's all smoke and mirrors. The government could save billions without touching spending simply by eliminating the appalling waste of our money on failed capital projects. All we ever hear Gordy talking about "is more money into the NHS, more money into education...drone, drone ,drone.." Any fool can spend someone elses money, the trouble is that they spend much of it badly. Waste and Nu Liebour are perfect bedfellows. The Big Clunking Fist? More like The Big Girls Blouse!

Brown hasn't balanced a budget since 2001.

He probably won't balance another one until 2011 - oh, he won't be in power then.

Brown's decade of debt beckons.

in reply to 46
i understand that what is done localy will help the global problem as it will take all the locals to fix the global. titer ye not at my thinking its hard to convey correctly sometimes as i am no politition with a spin doctor to hype it up.
so what i try to explain is regardles what this country does in the overall scheem of things we are but a part player that has no power due infact to the governments poor handling of the ecconomy and there blatent dack door attempts to drag us into europe and thus no longer able to affect anything.
the british leader that led us into the common market was well paid for his effort and members of this government i fear are being well paid to put us further in to europes debt.
westminster is slowly becoming just a mouthpiece for eu bureaucrats .
the current leadership are traitors and as such should be treated as.
this neu labour group has spat on the ideals of the labour party, ripped off ideas from wherever they can, lead this country into its darkest hour since the second world war and they think they can do what they like and get away with it, well come the reconing they will pay as all traitors should public hanging.

Ref my post at 22.

Somebody doesn't like me pointing out that the BBC is biased in favour of Obama and Labour and biased against the Conservatives and McCain.

Now I support the Conservatives and Obama - so the bias is obvious to me.

As much as I dislike McCain - I wish the BBC would treat him equally to Obama. I just don't feel like I'm getting the full impartial picture on the US election.

I also pointed out a story in this weeks Private Eye covering BBC pro Obama bias - it seems as if the BBC are getting themselves ready to party on the same scale as 1997.


Now if my post at 22 is removed - that is going to be interesting - because I even made sure it was on topic by welcoming Nick returing to more meaningful topics such as this "The final cost of Recession".



As for Nick's current blog - I don't detect bias and am glad he is back on the straight and narrow again - for completeness I defo think that Gordon is a man with an overdraft and not a plan.

So Brown is going to cut taxes and increase spending when revenue is falling - by increasing borrowing even more, I guess.

This shows that he either:

a) does not care about the fiscal implications about this provided he has a better shot at winning the next election; or

b) already knows he will lose but wants to limit the Tory majority so he can try to stay as Labour leader.

Why would we want such an irresponsible man as our PM? "Iron Chancellor"? More like "Flip-flopping sponge"!

I almost threw up watching Brown on PMQs today. His lying, like his spending, is out of control. Greed and power have gone to his head, and all he cares about is getting Labour re-elected--- two fingers to everyone else.

Well guess what--- it ain't gonna happen.

hmm look at all these warnings over the years about the precarious state of the country's finances. Yet still Gordon continues to believe his own spin, even as the roof collapses in on him!

https://www.independent.co.uk/news/business/news/imf-warns-over-uk-property-crash-415925.html

https://www.thisismoney.co.uk/news/article.html?in_article_id=419293&in_page_id=2

https://findarticles.com/p/articles/mi_hb5553/is_200409/ai_n22240955

https://www.independent.co.uk/news/business/analysis-and-features/brown-steels-himself-for-fresh-clash-with-imf-over-outlook-for-uk-economy-507725.html

59. laugh_on

In 1997 - Brown told us all that the lesson he learnt from the last downturn is that you cannot spend your way out of a recession.

How things have changed, could this U Turn be anything to do with a complete lack of forward planning during the good times?

THE GENTLEMAN IS NOT FOR TURNING!

Go on Gordan!
Labour smacks out the Tory bench.
Besides as if the GLOBAL recession could have been stopped!

Im sure Brown is confident enough to sort out any economic kinks.

machine @ 50

Is the giggling and chuckling part of the deal when sitting in Parliment? I wonder at them having such a good time while dishing out waffle.

Poor show isn't it?

So why all the opposition to moving more power to Europe?

Gordon Brown seems not to care
About this wretched, sordid affair,
His shameful excess
Has left us a mess,
If only he'd go, like Blair!

Brown's regime will be history soon
So we ought to be over the moon,
But when Nu-Labour lose
He might end up drinking booze
Like that ginger-haired Lib Dem buffoon.

16 Cook

"Brown's economic reputation is dust"

Well if you say so it must be true.

This recession/depression/downturn call it what you want can and will be managed.

In fact no matter who is in power after the next election, it will still be finite.

Despite the determination of many politicians to milk it for all its worth, unlike the 1930's when countries acted more in isolation, the global problems will take on a more global solution.

The Brown Banking Plan (like it or loath it) has undoubtedly put in the first building block, that is to stabilise the banks.

The LIBOR rate has fallen for 14 consecutive days.

The oil and food spikes driven inflation is now receeding, there will be interest cuts here and probably in most countries to put money back into national/global economy.

Modest increases in public spending, funded by borrowing (all parties accept the necessity for this, I think that includes the Tories today perhaps not tomorrow) will also contribute to the recovery.

The shares of temporarily nationalised banks will rise overtime and can be sold at a profit.

I suspect even Cameron and Osbourne understand this but political gain comes first.

constable @ 48

Here is something that the Government could try ... being honest.

Strangely enough, I think that might pay electoral dividends too. You know how it's only very naive people who make a point of trusting nobody? - well, kind of like that if you see what I mean.

Gordon Brown's busy today
With his plan to lead us astray,
And make us believe
He has tricks up his sleeve
And that everything will be OK.

But of course the truth is far worse
'Cause Labour will never put us first,
Their only concern
Is how much they earn...
Having Nu-Lab in charge is a curse.

52 Bankslicker -R

I am afraid that the two things you can be pretty certain of are -

1 Very little will be done to stop the repo of houses.

2 Very little will be done to stop the foreclosure of small businesses.

Both are based on individuals and they are not organised as a group, therefore do not have much political clout.

Inevitably most people in a recession may suffer a bit but they do not pay the highest price. That is paid by a small number, usually arbitarily. The majority will not be interested unless they are afraid they are next. This was only too evident in the early 90s. The tale is as old as Jason and the Argonauts.

In both cases - housing repo and small business failure - some minor posturing by the government will be made in order to say they have taken action. There is no great intent. They so far have asked the banks to 'repackage' where possible. Minor stuff. And they have asked the courts to check a repackaging option has occurred. both are deliberately arms length strategies so that the government can say it is up to somebody else, not us.

I know somebody who has worked with young offenders and the way a minor financial wrongdoing is treated is remarkable in comparison to offences like rape, drink driving etc. Anything financial is hammered however small. The potential fine for having no road tax is higher than some rapists recieve as a penalty.

Unfortunately the government is only interested in the majority, and only interested in the short term, and only interested in the public sector.

The government also knows that many in trouble will not last for long and the issue will 'disappear' within a fairly short time, politically at least. They have already done the figures. They did the same in the early 90's.

Anybody who thinks that this recession will only hit the feckless, and not hit hardworking, ethical, above average people is seriously misguided. Much ado is made about the need for clever people inthe private sector but in the UK we have one of the most adverse environments anybody could develop, long term, let alone short term, it weakens the country.

79 Eaton Rifle


I said his reputation is dust'.... that doesn't imply his reputation over the last 14 days or so. I'm talking 11 years or more.


Brown's one big promise "No more boom and bust"


We have a bust. It is both a global as well as a local problem.


Brown was economically stupid to say that he had ended 'busts'. He can't admit that we now have a bust. He can't admit that some of his actions have contributed to the bust.

Hence....... I'm afraid - that 'Browns Economic reputation is dust".

If he fessed up I would respect him more. That he seems only able to claim credit and shrug off the negative makes my skin crawl. I'd rather have an open and honest leader.


"All men make mistakes, but only wise men learn from their mistakes."

Winston Churchill


Brown is a second or third rate leader if he can't admit to admit to failures. He does not command respect.

shellingout @64

Answer: The one that was popular with the Appalachian mountain men, of course.

#70 jonathan_cook

At the time of writing, your post #20 has the message "This comment has been referred to the moderators" - so we'll see if it comes back!

Let's hope the moderators do their job properly and uphold the BBC's own rules and reinstate it. Messages are only supposed to be removed if they break the House Rules, which yours did not. According to the rules, Messages will not be removed for any other reason.

I think we should be told who keeps referring the messages. Abusing the complaints system is itself a breach of the rules. Action will be taken against anyone abusing the complaints system or technical infrastructure.

Why do the moderators not take action against whoever it is who keeps referring messages for no good reason?

Neither Jonathan Ross nor that dirty Brand character are funny or talented. A true case of the Emperor's New Clothes. For a long time I've wondered how they have achieved fame and riches. I think I finally know - they are of the same ilk as Mandy. Need I say more?

Just think that Brown got it spectacularly wrong over the 10p tax band.

From a political, social and economic perspective.

Politically - it seemed ludicrous for a Labour Chancellor to introduce a bit of a bail out for the most needy, then pull the rug away.

Socially - because folk with less income find it harder to accept the vast gap between themselves and the stupid idiots who created a financial nightmare.

Economically - because people on smaller incomes spend more of the income they have, because they simply have to. So taking away their ability to spend simply limits the flow into companies offering "core living" products.

With all that massive intellectual talent available via the Treasury (plus advisors), why couldn't they have simply introduced an "IF" clause in the tax regime?

In other words, if total income is less than GBP N,000 then apply the 10p break.

That would have excluded people who had big (or at least significantly bigger) incomes. So limiting the "generous" allowance to those who really needed it.

And, so far, there is no real solution to the problem.

The GBP2.7BIL Brown and Darling conjured up is only committed to cover this year's impact.

Where's the moral compass in that?

In the land of the blighted.....the one eyed monster is king[Canute]!

re: 86, phoenix

They achieved 'fame' because the BBC, in a desperate attempt to appear up-to-date and trendy and make it seem as if the licence-fee was worthwhile, confused 'edginess' with unpleasantness. It seems that only now are they realising their mistake. Those two loathsome and talentless bullies ought to be removed from the airwaves for good.

Nick,

You must to be slipping!.....most people are interested in Robert Peston's blog at the moment. Politics seems a bit dull in these financially interesting days. Have you got any juicy Mandy stories for us? [please, please!]

I see there's a new BBC programme on the horizon....it's to be called...

EMIGRATE
EMIGRATE
EMIGRATE

The poor people in the private sector cannot afford to fund the final salary pension schemes of those in the public sector.......so the only option open to them is to leave!

89 Power-to-the-ppl


First time I have found myself disagreeing with you............. oh well...... had to happen one day.

I think Brand and Ross are both talented and I like them.

OK - so the current thing is pretty bad....... but on the whole I like both.

I think the whole situation is a mountain out of a molehill.

The BBC were stupid to broadcast it. I agree with that.


Not sure I'm with Mindphoenix - Bland and Ross compared to Mandelson?? No way. Mandelson is a separate an unique form of vileness.

#85
My message!

Typo - I meant jonathan_cook's message at #22 (not #20). Sorry for my mistake.

It's still not back...

If it didn't break any House Rules, why has it been removed?

Is any action going to be taken against whoever referred it, for abusing the complaints system?

Darling is the worst Chancellor since Lawton!

Economic policy should never be left in the hands of politicans. It's like employing a tank commander as your gardner.

It all depends on what Alastair Darling spends our money.

Spend it on paying manual labourers to make roads as our civil service did during the potato famine in Ireland (1845-1848) then the money goes directly to the destitute.

Spend it on capital projects then the money like-as-not will go to large overseas multinationals and the UK will see little of it.

PS An odd thing: the Year of Revolutions occurred all across Europe in 1848 (see above)! 23 years after the defeat of Napoleon by Wellington and Blücher at Waterloo and still 23 years before the creation of Germany at the end of the Franco German war of 1870-1871. A truly significant year! Let the numerologists play with that!

PPS nobody remembers the war of 1812!

#90 Bank

Damn right! We shouldn't give these free-loading civil servants a pension. Or even a job. Get rid of the lot of them I say.

re: 91, jonathan_cook

I was never a fan of them, I have to admit! Phoenix Nights and The League of Gentlemen is much more my sort of thing. Too bad the dreadful Little Britain became popular by shamelessly ripping off TLOG...

Don't watch TV at all any more, watch/read the news on the net... TV really has gone downhill, it's all lowest-common-denominator tripe because the BBC can't stop making cheap crappy 'celebrity' singalong programmes. People like Brand and Ross suck up the licence fee and prevent real programmes being made, but I doubt you'd agree with that!

Nick Just the same old boring rheteric from the Tories everybody is wrong except them.

Post after post on every blog full of the Tory experts and of course the clowns it doesn't matter a damn to them really, their like Cameron and George say anything at all as long as they think theve scored a few points doesn't matter what harm they do to the country.
I thought Gordon Brown made Cameron look like a novice once again at PMQs not one sensible question he has seven and yet not one of substance he's a waste of time, I can think of several tories that would make a better fist of it than Cameron, but thats OK lets leave him were he is , some of the older Tories must cringe when either Dave or George get to their feet.

sagamix @ 80

When I read your post about honesty and trust, an old Russian phrase popped into my head :-

"doveryai, no proveryai" (trust but verify)

Which sums up my attitude to Government, I will {initially at least} trust but always try to verify.

It is not as straightforward as doing what you say you are going to do because politicians are masters of saying one thing but doing another.

We, the people, usually have to form a view via the sometimes distorted prism of the media.

Does it really matter?

I think it does because people hate the feeling of being cheated in any way, and if the source of the dishonesty is perceived to be the Government, then that is a bitter pill to swallow.

PS. Anyway, in the long run, as Keynes famously said ... we all move on.

83#Johnathon Cook

I'm guessing you're a Tory. Perhaps you could sy if you are or not.

You say you would appreciate an "honest open leader"

Now Cameron. Have you not noticed the flip flopping from less regulation to more regulation?

The current increased borrowing need to no increase in borrowing?

The no intervention on market/banking to intervention is needed?

A straight question. Is Cameron the "open honest leader" that you would support?

Nick,

Don't want to cramp your style or anything like that...

But if the BBC have 'skills exchange' sessions, you might want to look up "Richard Galpin".

Dunno about the guy generally, but his interview with mandleson was pretty good.

He asked reasonable questions, and when mandleson wriggled and writhed like a vampire exposed to the light, Richard politely pointed out that the question had not been answered, and repeated it.

Not difficult, but something that you may need to brush up on?