Finding a way out of the economic crisis

Now come on Nick, if I didn't know any better I'd say you were trying to draw attention away from the new shocking evidence regarding the government's accountability in the Baby P affair? Don't you have anything to say about that?

If Gordon Brown were to want a fiscal stimulus that would mean spending an unthinkably large £60bn - or the entire budget for state pensions.

But his planned budget deficit this year (from 2007 budget speech) was already 2.9% of GDP - or somewhere around 43bn quid. And that was assuming the laughably implausible GDP 'growth' of ~2%.

Which, incidently feeds back to what I've been saying here and elsewhere for a long time. We've been in recession for years. If you borrow 3% of GDP and end up with 'growth' of 2% then absent your 3% 'fiscal stimulus' you're already in recession.

The difference now is that Nick is probably talking of an additional 60bn of fiscal stimulus.

As I've said on other threads this government is very soon going to run out of 'bad' statistics from 25 years ago. It's currently setting whole new levels of 'bad' in the here and now.

Nick

You need to make this point more often -- every time someone talks about 'lessons learnt' from other recessions and the great depression - noone should be left in any dobut that there is no unanimity about why they end.

We don't know why great depression ended - nor whether the active measures put in place help or hindered the recovery.

Don't let people get away with citing the past as absolute evidence - everyone chooses what narrative to believe.

p.s. Anything happening on mandleson? have you had a chance to ask him about his tariff discussions with oleg? - or has your time together been spent discussing other things?

there he goes wasting taxpayers money staying at exclusive hotels, going to expensive places to have a chat about the ecconomy.
taking the mickey i think is the term.

we have a government without a clue and the majority that elected them are to blame.

if this country is to pull out of this major downturn we are going to need more than fancy spin and empty promisses, we need action.

its time that people with resposability and power took hold of the situation and start to fight back or be willing to accept they are of no use and be replaced by those willing to create change.

its blatent negligence and those responsable should be held accountable.

soon this country will be in such crisis it may never recover and be stuck on life support for years.

well i can only hope every one is happy and ready for the longest winter of discontent since the 70's.

Why is it that no journalist is prepared to analyse why Krugman praised Brown?

When Krugman published his Gordon Does Good entry in his NY Times blog on 12 October, he would likely have preferred to have written it as Sarko Does Good. To have done so in a political climate where praising Sarko is only a small step down from praising Castro, Kim Jong-il or Ahmadinejad, would have rendered his advice unusable to any serious politician in Washington DC. It was therefore politically safer to laud Brown.

But there is no question that the core ideas were promulgated by Sarko in a speech reported in the same NY Times' Sarkozy Stresses Global Financial Overhaul on 26 September. While "Duff" Gordon was still dithering, it begins by reporting: "While the global financial crisis will have serious consequences for the French economy, he said, bank deposits will be guaranteed and individual taxes will not be raised. Mr. Sarkozy promised that the government would move ahead with its reforms, especially in shrinking the bloated state sector, and he called for an overhaul of the world?s financial system, arguing that an era of unregulated markets was over."

That may have sparked Ireland to jump the gun, as reported in the Irish Indy's Government guarantees deposits for two years of 30 September.

It was certainly discussed and developed for the whole EU with Barroso no later than 1 October in preparation for the Eurozone summit to which Brown was invited. This is confirmed by BusinessWeek's 'Super Sarko' vs. 'Flash Gordon' of 21 October.

Brown, of course, pre-empted the full announcement by promulgating his own version just before the summit, sparking a brief press war where the pro-Sarko francophone press praised Sarko while the antis praised Brown.

I do not say that Brown's plan is wrong, but it certainly was not all his own work. Like tax credits, it was also unnecessarily complex due to Brown's stubbornness over full guarantees.

I'd be interested In Krugman's views on Gordon Brown's impact on causing the economic crash given this recent comment in the Financial Times:


"Given Gordon Brown’s ruinous fiscal and financial stability legacy, Paul Krugman’s question in his October 12 New York Times column, “Has Gordon Brown, the British prime minister, saved the world financial system?”, can only be answered one way: no he has not.

He has left a ruinous legacy of financial instability and lack of fiscal restraint at home. He has been one of the principal cheerleaders for the competitive international deregulation of international financial markets and of border-crossing financial institutions.

He is one of the fathers of the crisis. I am pleased he did not stand in the way of Chancellor Darling’s partial remedy for the worst of the local manifestation of the banking crisis in the UK."


Gordon Brown's ruinous contribution

If fiscal stimulus is the answer why wait another 10 days? Dithering or what?

Oh Nick!

Diverting away from the Baby P case. Sham on you.

Well no one can accuse you of avoiding talking about the economy can they.

Mr Brown as the saviour of the global economy…… bbbrrrurrrrrrrr



All hail the android emperor.

#2.

That should have been referring to the 2008 budget A document a mere six or eight months old. Not the 2007 budget.

The British economy will this year grow from between 1.75% and 2.25%, down from 3% last year.

• "There will be no return to the inflation rates of the early 1990s," Mr Darling said.

• To provide certainty, the chancellor said he is writing to the governor of the Bank of England to keep a 2% target on inflation.

• Borrowing next year will rise to £43bn, some 2.9% of national income. It will fall to 1.3% by 2012/13.

And this even after they'd taken over Northern Rock, and the other banks were in weekly crisis meetings begging the Treasury and BoE for help. Still they came out with this moonshine.

Comedy gold now of course.

Not a clue this government. Not a clue.

Quoting Nick...
"Now, none of these countries have Britain's problem - a massive budget deficit. No matter, he says, we can and should borrow"

Am I the only one who feels mildly sick at the sight of Gordon Brown "grandstanding" on the world stage having made such a mess in his own country?

Whether "fiscal stimulus" or "budget deficit" works, we, the Taxpayers of the UK, will be paying for this for years.

I suppose the one "silver lining" is that now the Labour Party are unlikely to dump him ahead of an election, so I can at least look forward to the prospect of voting him out of office.

Gordon won't only be looking for political cover this weekend.

Gordon will also be looking to strut like a peacock - the spinners will be busy - and anyone that makes the slightest platitude towards Gordon will find their comments seized on and exploited by the spin machine.



Any platitudes will be used to fuel the false narrative "Gordon saves the world - and is the leader of the planet"


So this isn't just about getting political cover. This is also about saving Gordon's job, by trying to avoid anyone mention of Brown's obvious culpability towards causing the crash in the first place.

This weekend is therefore also all about helping Brown cling to power in the UK.

Dear Nick
There is now absolutely NO differnce today, than there was on the same day in 1945.
Massive unemployment, no houses, four million troops demobed, (now immigrants), and a Bankrupt country reliant on the Marshall Plan for recovery and a country in Hock to the USA, for its very survival, along with Europe.
So tell me, "Why is it then the same ruling classes were Never EXPOSED TO BEING BANKRUPT, but the men and women who fought the war to keep them safe were treated like second rate citizens------Nothing changes,
Except now Barclays are going cap in hand to the Middle East for Funding instead of America, Bin Laden Terroritory.??

GB (the Texan one) was wrong about a few things last night, but I do agree we are heading for "Global meltdown" and I do agree "We don't need more Government, we need smarter government"...

GB (the Scottish one), I think has probably got the right sort of ideas for changing the international financial system, but he's completley wrong about what we need to do in the GB (Britain) to come out of the recession. We need to stimulate manufacturing and innovation...

I hope the bankruption of economists will get the details right, re: the new improved International Financial system...

It'll be an interesting weekend on the news channels...

djlazarus wrote:

Now come on Nick, if I didn't know any better I'd say you were trying to draw attention away from the new shocking evidence regarding the government's accountability in the Baby P affair? Don't you have anything to say about that?

###############

No, they are not accountable. They got a letter from a solicitor a year and a half ago which they properly forwarded on to the right people.

The press are leaping up and down shouting "someone's head should role"

Has anyone asked how many children are SAVED by social services? How difficult a job it is to do, whatever the rules and training?

No, course not - Politicians believe that they only sound good if they shout for resignations. They dont care whether it is the right thing to do or not.

Listen to the transcript on the BBC website, followed by Evan Davis' questioning of Willem Buiter.

https://news.bbc.co.uk/today/hi/today/newsid_7728000/7728875.stm

I hope that writers on this blog listen to what he says. Hardly the ringing endorsement of Krugman.

Nick, You really are in danger of damaging your reputation as a journalist by not drawing attention to the very thoughtful interview by Evan.

Thank you for interviewing Paul Krugman. I read his blog regularly now to know what tomorrow's news will be.

#1 djlazarus

no, I think this is a pretty valid topic for a new blog, particularly as the old one covering baby P is still going on (however an update on that blog would help!).

After all, this is all the major leaders getting together to try and agree a way forward.

Some things to watch for.

First, GB will stop (temporarly) talking about it being a problem created in America.

Second he has already started and will continue telling other leaders they should be following his ideas of tax cuts and more spending. On this point the fact that he has as yet announced nothing concrete and China Germany and Japan are already doing it won't stop him claiming it as his idea.

Third he will continue trying to claim credit for everyone recapitalising banks - especially in the light of the Krugman quote - even though several other places had done it before he did.

Fourth he will ignore any question on boom and bust, too light regulation, failure of tripartite system etc. And woe betide anyone who dares mention the IMF suggesting we (Britain) would have among the worst if not THE worst recession in the world. We will be told that the IMF are wrong, despite them having been proved right several times over the last few years.

So, all in all, an ideal time to put some searching questions to GB and see what he comes up with. Only problem is, the journalists won't and neither will he.

If this isn't Labour spin, I am DonaldDuck. Where, oh where, is the impartial reporting? It is just one article after another finding things nice to say about Labour or nasty about the Tories.
I will vote for any party willing to stop the licence fee.

More on Krugman and Brown - also from the FT article I posted at 6


"The capital injection into the UK banks announced by the British authorities on October 8, 2008 - which was the subject of Krugman’s October 12 column - is indeed an essential component of a sensible recovery plan for the UK banking sector.

It was late and is still too little, but it was better than what had been achieved till then in many countries - certainly better than what was on offer in the US through TARP as then construed.


But far from being the decisive leader of the West in recapitalisation matters, the UK too was playing catch-up. On September 29, the Belgian, Dutch and Luxembourg governments each took 49% equity stakes in the banking operations of Fortis (a large banking and insurance consortium) in each of these three countries. This was all the more remarkable, because it involved cross-border co-operation.

The deal was modified within a week, with the Dutch state taking 100% of the Dutch operations of Fortis and the Dutch rump of ABN-Amro, which was owned by the Fortis Group.


If the Benelux are considered too small fry to be interesting (even though their banks certainly are big enough to be interesting), then the 3-country co-ordinated capital injections into Dexia on September 30, which involved the French, Belgian and Luxembourgese authorities, also pre-dated the British bank rescue plan.


The UK plan was put together by Alistair Darling, the current Chancellor of the Exchequer, and his officials in the Treasury, with a little help from the Bank of England, the FSA and some private sector consultants. Gordon Brown took no role in its genesis.

A generous-minded (or naive) observer would credit Gordon Brown with recognising a good thing when he sees it and throwing the political weight of his prime ministerial position behind it.

A cynic might argue that Brown recognised the merits of the plan and decided to steal the Chancellor's thunder by claiming the Darling plan as his own.

There are, of course, times when the global and national interest coincide with the personal interests of a Prime Minister fighting for his political life. This may have been one of these times."

How Ironic!

The Government are heralding the statement made by this nobel prize winner,

and yet

The Government ignored another Nobel Peace Prize winner in 2003, when he stated a War in Iraq would be illegal.

There's cake and eating it for you.

Nick Robinson- you are a disgrace.

Shame on you

No one has died because of this recession. However an innocent baby has been slaughtered to death and we find out today that the government knew about baby P and did nothing about it

https://news.bbc.co.uk/1/hi/england/london/7728630.stm

When will you stop being Gordon (who was never elected by the people) Browns PR

I thought that was Alistair Campbell's job

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

'I was no more perceptive than anyone else; during the bull market years [of the late 1990s] some people did send me letters claiming that major corporations were cooking their books, but - to my great regret - I ignored them. '
Paul Krugman, The Great Unraveling: Losing Our Way in the New Century, Sept. 2003.
Fill yer boots, Paul!

Some believe that Gordon Brown's motive this weekend is not just to plot our economic recovery but to get political cover for the fact that his government has let borrowing get out of control.

More of that from the BBC please. Of course it's too late to go back in time and have news of this candour released on the same day the government was forced to nationalise the banks.

Drive home to the electorate who was to blame. Rather than the newsreel footage we got from the 1980's that dismissed the whole thing as 'The end of Thatcherism'.

One way to get the economy moving would be to establish banks that poor people can use without being loan sharked. If people weren't paying such ridiculously high loan rates they'd still be in their own homes and able to afford their new cars and the economy would be humming along. How come no one ever talks about this simple fact? Too sensible, I guess. Not enough obscene profit to be made.

As you said, History matters here.

What Brown, Obama, and other world leaders are fighting against is a 30 history where the modern interpretation of a market economy took the lead over all other ideas.

I heard Vince Cable (I think) crack the joke about pigeons leaving deposits on Ferraris the other day. The last time I heard that joke was the late 1980s.

The reason that is relevant is because the same underlying theme ran then as runs now - governments really have little or no control over this system at all. And nor can they and still be a democracy. The controls being proposed by governments and oppositions alike are mere pipe dreams, and they know it.

The other misunderstanding is about the various economies around the world. Globalisation has gone a lot further than people realise and the idea that each country has its own economy is but a thin glaze on top of reality.

The problem is that there is now only one economy, the global one, and it is in trouble. Different countries will weather this differently depending on where they are with their spending plans. It is churlish to compare one country against an other and say "they were better prepared"

No they weren't, they just happened to be in the UP part of their cycle when it hit. It is more luck than judgement.

Ken Clerk used to love to boast that Brown was so successful because he just followed Clerks policies.

I notice he started dropping that mantra a while ago when it became clear that the path Clerk started us down was getting us into trouble. I lost respect for him at that point.

The truth is that a governments real role is trying to balance the local fiscal situation against what ever the real economy is doing - because over that they have NO control or influence at all.

Markets, by definition, are run by cowards. Always have been, always will be. The true economy is completely based on the fall out from their self serving actions.

Quick divert attention...

Nothing to see here move along....

moving along... back to Brown's comfort zone let's big up Brown's economic handling.

Shame on you Nick, shame on the BBC and shame on Gordon Brown and his shabby, out-of-their-depth ministers.

As you point out it's another 10 days before the pre-Budget report.

The terrible Baby P farrago is in every major newspaper and media outlet now.

Compare and contrast...

Osborne's activities on a yacht are No.3 & 4 news item on other news media.

It's No.1 on the BBC for days...

The Baby P fiasco is No.1 on every news media today and it makes for a very bad news day for the government.

Worse than Yacht-gate for certain.

And your blog...

Banging on about an economist's backing for the Standard Chartered plan and praising Brown some weeks ago.....

How utterly transparent.

#11 quertywalrus

Am I the only one who feels mildly sick at the sight of Gordon Brown "grandstanding" on the world stage having made such a mess in his own country?

No - I watched the TV in astonishment this morning as Gordon proudly portrayed himself as a world leader. Seems Gordon is still revelling in his new "I saved the world" status, quoffing drinks and eating canapes at the Waldorf (at taxpayer's expense), conveniently forgetting about the fact that thousands are losing their jobs back in the UK. Nice one.

Here is an alternative take on Gordon's objectives this weekend:

Gordon's agenda

I'm sick and tired of Mr Robinson letting Brown off the hook. You are in considerable positions of power; you have the ability to shape opinion and make the news. Yet you simply regurgitate the spin the government places on everything. Where's the journalistic impartiality, investigation or just basic rigour?

Stop fawning over the man who has presided over our economy for the last eleven years. Stop getting wrapped up in the unbelievable spinning games where terrible economic indicators turn into problems for the opposition and not the government.

We need Brown held to account. If you can't do it, step aside and let someone else have a go before you sully the name of the BBC further.

As for Krugman, esteemed academic though he maybe, he admitted in your interview this morning that he had no advice for the government because he knew little of the background in the UK. Sounds like he has just bought into the spin then doesn't it?

I am always amazed how economists are constantly inventing and reinventing the story of the world economic structure.

There is already plenty of historical evidence, let alone the current economic calamity, which demonstrates clearly how spurious and untenable their previous capitalist or recent neoliberalist arguments are.

Numbers, statistics and structures are not as 'scientific' as they seem to be, consider the 'great' architects behind them.

#4

"we have a government without a clue and the majority that elected them are to blame"

I agree that they haven't a clue. But this is not the fault of the majority, who didn't elect them.

Labour received 35.3% of the popular vote, equating to approximately 22% of the electorate on a 61.3% turnout.

It is our stupid electoral system, not the people, who gave them a majority of 66 seats.

That is why I have consistently argued that we need a hung Parliament at the next election as the only scenario through which we might get electoral reform and something approaching democracy (as opposed to elective autocracy) in the UK.

Arguments in favour of retaining "first past the post" as connecting MPs with the constituents etc. all fail at the first hurdle as they mean government without a true manate from the people.

And hands up everyone who who thinks that their MPs first loyalty is to them rather than the political party which selected them? No-one? No, I though not.

Coalition government has its faults but could not possibly be worse than what we have now. And it's certainly worth a try after what we've had in the last 30 years.

As a secondary effect it might also lead to Scottish independence, if that is what the Scots truly want, or to the Scots making a positive decision to remain in the UK and then getting on with it.

Joan Olivares

I agree - there is a huge loan shark problem at the moment. People are getting further into debt using loan sharks, to pay off previous loan shark debts.

I'm not sure how best to handle it - but the government should try something.


The government had been planning on taking money from dormant savings accounts and giving it to charity - why not make this money available for 0% loans to the least well off. (Yes - this scheme will need some sort of means test!)

Look, as I understand in for the last decade or so 'equity release' boosted the Nation's consumption to a small but noticeable extent. No equity release = slump.

So the fraudulent economists want another housing bubble to get the 'equity release' economic pump going again. This is of course a rubbish idea as it will just further inflate the housing bubble.

That the economists want this bubble is beyond dispute as they have taken the one massive action that will, without countering measures, guarantee such a bubble - they have drastically lowered interest rates - the engine of the previous bubble.

# 20 jonathan_cook
"The UK plan was put together by Alistair Darling, the current Chancellor of the Exchequer, and his officials in the Treasury, with a little help from the Bank of England, the FSA and some private sector consultants. Gordon Brown took no role in its genesis."

I think the plan was a "private enterprise" plan put together by senior execs in Standard Chartered Bank, Peter Sands and Richard Meddings and taken to the Treasury as a suggestion.
Come to think of it I have never seen Mr Brown thanking them, possibly he has them highlighted for the New Years Honours List (I think not).

Funny how Gordon Brown is happy to accept praise but simply ignores any criticism.

In April 2002, the IMF said "..a policy tightening may have to be considered soon - especially given the imbalances in the economy, notably the high levels of household and corporate debt" and it warned that interest rates may have to rise to counter consumer spending.

Well, 6 years of low interest rates down the line and the economy has gone bust. The debt bubble has burst. And we cannot say we were not warned. In his efforts to prove the IMF wrong, he proved them right.

Read Jeff Randall's article in the Telegraph today to see how much of a mess he's made.

Everyone calm down. It's not even 5.30am in the US and Nick will be getting his beauty sleep before he spends the day with a gaggle (not sure if that is right) of lame duck leaders.
We need real courage in all of this. These leaders need to come out and say to the world we can only do so much, we cannot destroy our world for several generations.

I believe the only way for things to carry on is if we get a stability and confidence back to the markets. Bold leadership is key but not writing massive cheques. Companies should be allowed to make redundancies, and/or go bust/be taken over. It is a rude fact of a global market. Trying to encourage more of the same is frankly dangerous and ridiculous.

Nick will be commenting on Baby P later I'm sure. Party politics was never an issue but it is certainly looking more the case now

My son is 34 and earns around £20k per annum as a store manager. This week he looked at a flat to buy; the flat was priced at £125k and he was hoping to buy it on a shared owner hip basis. The scheme was aimed at key workers and first time buyers on incomes between £20k and £60k pa.

He had a meeting last night with the mortgage adviser attached to the scheme. First, the Government funding for the shared ownership scheme has run out for this year and new funding will not be available until next spring. To buy it outright he would only be able to raise a mortgage of £98k and would need a deposit of £30k!

Who, as a first time buyer on a lowish income, is going to have £30k as a deposit? I think that the developer is going to have to rent these flats, as I cannot see many, if any, being sold.

I thought the idea was to kick start the housing market to aid the economy. Not in my town, it seems.

You don't have to be a Nobel Prize winning economist to know what to do.

There are several kinds of fiscal stimulus.

1. Use your current account surplus built up over several years of sensible economic management to cut taxes in the medium term.

2. Cut government spending on non-essentials (like quangos, big IT projects) and pass on the savings as tax-cuts.

3. Borrow more money on the open market, use the money for tax cuts knowing that taxes (and possibly interest rates) will have to rise in the medium term to pay the interest on the borrowed money.

He can't do 1, he blew all our cash and more.

He's mortally allergic to 2, despite the fact it represent the least amount of pain to taxpayers.

So it's 3. The riskiest, causes the most long-term damage to the economy and saddles the taxpayer with even more debt.

And Krugman is really going to back that for the UK?

Wow, they give out Nobel prizes cheap these days..

Nick

Now how about giving some space to one or more of the many economists who disagree strongly with this approach, and fear it will make things much worse by accelerating the collapse of the pound - now below $1.50 and possibly to fall much further, helping exports but re-igniting inflation. Petrol prices are going to go up, not down, if this continues, as oil is priced in dollars, unless the oil price falls faster.

Ask 10 ecomomists for a view and you'll get at least 11 replies. Chosing the one who supports what you've already decided to to and then trotting him or her out as the world's greatest expert is just political spin.

Regrettably, Governments of all persuasions want evidence and advice which supports their policies, not to take advice then formulate policies based on evidence, and this is no exception.

By the way, Krugman got the Nobel Prize for Economics not for an analysis of the global banking system or predicting it's faliur, but for work over many years on free trade theory and the impact of economies of scale in international trade, especially reconciling the wish of consumers for choice in the goods they purchase and the manfacturers' desire for economies of scale.

Relevant but hardly the key to the current crisis.

As political (very) editor Nick Robinson can, I think, pretty much choose what he wants to cover, and never mind the real news.

If he wants to keep telling us that Gordon Brown is wonderful and David cameron is a waste of space he is in a position to do so.

So I can't help thinking that the only way for those of us who feel that Mr Robinson is somewhat biased towards Labour in his blog is to email complaints to the relevant department, or alternatively write to the Director General.

However, I do not hold out any hope of a change. I have never, ever hear anyone from the BBC admit to being wrong about anything without huge pressure, ie. Brand and Ross.

Like others, I am in favour of of reducing the licence fee to the BBC. Perhaps a public campaign to ressign the licence fee, or do away with it altogether would concentrate the minds of those at the top.

I'm sorry but who gives a stuff about this? Leave it to Peston.

Today you could actually look deeper into this Haringey/Patricia Hewitt debacle and *be* a journalist but you completely side step it.

Does your bias know no bounds?

Nick,

what exactly are you doing in America. What is the point of you being there when the summit is about economics and the problem to global meltdown, surely this is one for Peston, or you both attending eating canapes, I mean you do love to wind us up don't you.

Exactly where are you staying, hope you get in some christmas shopping, hope you declare any items over a certain value to the Customs. Is the wonderful Sarah in attendance or is she at home looking after the children. It was so good that there is somebody looking after Gordon's children because he is so lucky to have them. I mean he is even putting the economy and solving the problems of the world above his own family, he really does care for us doesn't he. Such sacrifice, wonderful man. Course talking about his family is beneath contempt bringing politics into it, shameful, no it was Brown that did that by his shameful performance at PMQs.

I made the point yesterday #295 what exactly is the purpose of this jamboree, the President elect will meet nobody, yet we know who can turn the global economy around, Bangladesh it is their fault, they can solve it, or maybe it could be little Leichtenstein because that's a good tax haven.

No Nick can we be told the point!

Should there not be an injunction taken out preventing any reporting of the great time that the leaders of the free world are having, I mean national security, human rights, or child confidentiality. Canapes and wine, you couldn't make it up.

I shudder to think what sort of things New Labour will come up with to stimulate the economy. They're already talking about ID cards as a 'boost' to the economy. It's a worthless modern-day Versailles that will gobble up all the UK's computer talent.

What has become increasingly clear is that we are heading for a lost decade like Japan in the nineties.

Not allowing banks to fail and using those banks as macro economic tools to prop up a failing system is exactly the mistake Japan made which caused a decade long recession.

The system must be allowed to clear in order for it to reallocate capital to where it si needed. Propping up dead duck companies just causes oversupply and deflation.

Anyone prepared to argue that this is the right thing to do better be sure thet don't have a mortgage on their house becasue they are in for serious debt deflation and negative equity.

I'm sure Gordon Brown is enjoying his moment in the sun but it won't last as the recession bites. The action the governemnt has taken wil not only make this worse but they will prolong the agony and delay the recovery.

People will be screaming for him to go by 2010.


Caall an election.

I remember thinking Gordon Brown was far too prudent in his early budgets after Labour won the 1997 election. But I did see my modest income go a little further than it had in previous years.

I think there are three important points which will affect the UK's economy in this current world economic slow down.

1. We allowed our production and manufacturing industries to decline in the 1980s and 1990s. Where outdated industries may have needed to close, they should have been replaced. In the event a lot of expertise and opportunities have been lost in the UK and will take years to rebuild.

2. We have, after more than 60 years discharged our debts to America. This probably makes a small difference to the US, but should it make a considerable difference for the UK's budget.

3. We would be in a better position if we were aligned to the European currency. If we had the Euro, In my opinion, it would be easier to advance our trade with the rest of the world.

#39

Excuse me but what would be wrong with you mortgaging your own home, if you have one. Don't you want to help your son out, why should the taxpayer help your son get a home, it is this sort of attitude that destoys our society. If you can't afford it, tough.

However, there is another problem. Let us say that your son does buy the flat, and the developer can't sell the others. The other flats are rented out, let us say for social housing. Now then your son will live in a block of flats, which he is paying for, and hoping it doesn't fall in value, in the meantime the other occupants in the block are social housing. Now, who would want to buy a flat in a block with the other occupants being socially housed?

I think that your son has had a narrow escape, who on earth would buy a new flat or house where the value will decline as the new homes around become nothing other than council houses.

Perhaps we should start our own blog within this blog.

Since Baby P, and possibly the Manchester killing of two young children,is top news at present, would someone like to write a piece in the style of Nick Robinson on the political fallout resulting from this tragedy and we can discuss it.

There's creative for you!!!!

My son is 34 and earns around ?20k per annum as a store manager. This week he looked at a flat to buy; the flat was priced at ?125k and he was hoping to buy it on a shared owner hip basis. The scheme was aimed at key workers and first time buyers on incomes between ?20k and ?60k pa.

This just highlights the insanity. Your son shouldn't even be entertaining going out and borrowing 125K if he's only earning 20K. The fact is that on any sensible measure houses are still, even after a 15% price cut, insanely over-priced.

But fear not. The word is out now. Everybody realises they've been caught up in an irrational, unsustainable boom in house prices and they're on their way back down to sensible prices as I write. Why anybody would buy now unless they're getting 30 -35% off the 'peak' price is beyond me.

The only way house prices will go up over the next two years is if the government prints absolutely astronomical amounts of money. Hundreds of billions and then uses this devalued paper to award massive payrises to the public service. Ie encourage massive inflation.

Otherwise there is not a cat's chance in hell of house prices going up. We've been through this before. In the early 1990's. House prices get out of control, we chase them up for a few years then suddenly we collectively sober up and simply stop playing that silly game.

High house prices are not a good thing. The only people who benefit are the baby-boomers who can sell their ludicrously over-priced terrace in Fulham that they bought 40 years ago on one salary and tie two childless earners into trying to pay off a ludicrous mortgage. They, meanwhile, downsize to the coast and spend the remaining cash on cruises and safaris.

Stuff that. We are at a turning point in UK demographics. All the baby-boomers are rushing for the door trying to lock-in those 2007 prices but nobody can borrow enough money any more. And, at the bottom end, the banks have realised that housing is going down in price so they want the retail punter to put up a 15 - 20% cushion of their own money to encourage them to sit tight even if it falls by 30%.

Surely the only sensible thing to do is continue to rent and wait for those house prices to come back to meet you. I'm predicting 40 -50% off 'peak' house prices. That's assuming mild levels of inflation ie around 5%. Obviously if printing cash gets back up to previous Labour levels and we get inflation of 20% then that house price deflation will become less visible but house prices will certainly come down to a much more sensible ratio of average wages.

They peaked at 6 times average wage. They're currently at five times average wage. The long term average is four or 3.5 times average wage. Expect house prices to 'bottom' at 2.5 to 3 times average wage. A 50% reduction.

There is no rush from me to buy a house. I'm renting and at the moment every month for the past two or three months I've 'saved' 2% on the price of a similar house to the one I sold. That's an annualised 24% a year.

Why would anybody buy a house today? They're getting cheaper by the minute. Unless you strike an absolute bargain factoring in the next two years price declines it makes no sense at all.

According to Cassius, Gordon might do well to remember what happened to those who took the advice of the last high-profile Nobel Economics prize winner:-

https://cassiuswrites.blogspot.com/2008/11/beware-nobel-prize-winners-bearing.html

The fiscal stimulus is a big talking point but merely a facilitator. The real turnaround is in building new industry and new relations. The scope for innovation and markets is huge on a global scale, but that process begins at home and, more importantly, on a personal level. Business and communities have to take ownership of the project.

In the wake of the Baby P affair, Simon Jenkins writes a good piece on the human factor. Martin Kettle writes about the nasty and untrustworthy tabloid media that's skewing perspective. Julia Finch reports on how the NFU is taking on the big supermarkets. Taken together, all three are a good comment on Britain's broken fundamentals.

The "Brown Doctrine" of innovation, teamwork, and the long-view is exactly what entrepreneurs, employees, managers, community workers, leaders, and regular folks can use to get through this to the other side. With government, the international community, and people on the ground focused on a common and moral purpose, success is achievable.

Well, c'mon. What's stopping YOU succeed?

Nick
Me at #16
Nick, You really are in danger of damaging your reputation as a journalist by not drawing attention to the very thoughtful interview by Evan.


Nice to see that you do read this blog and add links when they are drawn to your attention. How about timing your NB's and add credit where it is due!!

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

48 and 50

The point is, that he wasn't looking to borrow £125k but only arouond £52k if the shared ownership funding had still been in place. The mortgage broker just looked at what it would take for him to buy the flat outright, which he had no intention of doing. Or could even contemplate, as the figures show.

I would help him out if I could; I was willing to give him up to £10k for a deposit but cannot stretch to £30k. We do not own our house and are saving for retirement in 2010.

I think you are right and that he probably had a lucky escape. However, it was interesting and somewhat depressing to see what obstacles a potential buyer of a fairly low priced property is up against at the moment.

52 CEH

Sounds like a planned economy, 5 year tractor plans, etc.

With Commissar Brown at the helm I expect, telling us all what to do and not to do, on pain of being ostracised.

Japan had the best idea. Its government looked at which industries Japan could become world leaders in and supported them. This in turn led to huge numbers of jobs.

With labour government in charge I imagine we could become number one in local government. After all the majority of the jobs created by labour are in the public sector and low paid jobs done by economic migrants. No real productive jobs for the native British.

The "Brown Doctrine" of innovation, teamwork, and the long-view

Bwahahahahaha.

Innovation?

Bwahahahahaha.

Teamwork?

You've done it again. My eyes are watering. You made coffee and biscuits come out of my nose.

'the long-view'.

Harararararar. Arf.

Re Charles @52

I'll tell you what's stopping me succeed

Overregulation for small businesses
IR35 ( Me being taxed by Gordon as a a full time employee yet not getting any benefits from the company )
Higher level of corporation tax that I pay compared to other European countries

so much for Gordon's support of the 'knowledge economy'

I think you are right and that he probably had a lucky escape. However, it was interesting and somewhat depressing to see what obstacles a potential buyer of a fairly low priced property is up against at the moment.

Yet again you demonstrate the dislocation in what constitutes a 'fairly low-priced property'.

125K is a whole heap of money. It represents about 10K of materials - wood, cement, brieze blocks, bricks wire, plastic pipes etc. Another 10 or 15K in labour. A ridiculous premium for the building plot (probably 30 or 40K) and a massive profit for the builder.

Stuff that. They're 50% over-priced. Have nothing to do with them. Let house price deflation work its magic. The materials and labour costs won't come down by much but the cost of a plot and the builders premium are going to be slashed.

Good. They're ridiculously over-priced as it is. The only thing that drove them up to those levels were insane expectations of perpetually rising house prices and endless property porn on TV. Total dolts buying a house at auction, wandering around with a can of paint, some new carpets and way-hey, 50K 'profit'. Ooooooh, I'll have some of that.

Our entire 'economic miracle' has been built on the hundreds of billions borrowed by individuals and government as it chased up house prices, convinced we were all brilliantly clever because our house 'went up' and encouraged us to just spend that money. Who cares if you have no savings at the end of the year? Your house 'went up' by 20K. It's like you'd earned 20K tax-free.

Mauritius or the Seychelles this Christmas?

It was this mentality at every level (government, bank, individual) that got us into this disastrous hole.

We're only now starting to come to terms with it and house prices, barring massive printing of cash, have a looooong way to fall.

I feel for anybody who gets sucked in to buying one in the next two years unless it is very heavily discounted. 35% off peak would be fair today. It'll fall further but you'd have to pay rent anyway so overall you'd be no worse off come the 'bottom'.

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

The full blog by Willem Buiter is on the Financial Times website

https://blogs.ft.com/maverecon/2008/11/how-likely-is-a-sterling-crisis-or-is-london-really-reykjavik-on-thames/

Apologists for Gordon Brown (you know who you are) should read it in full. A sobering blog about the Government foul-ups otherwise know as "no more return to boom and bust".

Charles,

"Brown doctrine"...teamwork?

Now that is funny.

#52

I don't normally comment on CEH's musings but

"The "Brown Doctrine" of innovation, teamwork, and the long-view"

is the best laugh I've had this week.

Oh, and the Matt cartoon in todays Torygraph. He's wasted on them.

Culpability Brown is to blame - how is it that the UK ended up with a structural Budget deficit after 16 years of continuous growth? This is nothing short of a scandal. The problem is that Brown abandoned Prudence in 2002 and the Government has been living beyond its means ever since. If this country had been running a fiscal surplus in recent years, we would be much better placed to deal more effectively with this bust.

Crash Gordon is guilty as charged!

61 Skynine

Thanks for posting that. Well worth a read.

I might even be pursuaded that we should join the Euro.......... blimey.........

So apparently the 30's depression was solved by WW2. You have to congratulate NuLabour on this - they saw the need for this early and got involved in two pointless wars in the middle east!

I just visited the Doctor today for something minor and came out with the possibility I might have a terminal illness. I'm not making anything up, trying to get attention, or squeeze sympathy, there. Just a fact.

Both Gordon Brown and Steve Jobs have had their brush with death. Both have survived and prospered. Some of that is down to the situation and support, but a lot of that is down to the will to succeed.

Just as some folks are getting the jitters over a recession, smaller and more personal issues are no different. The world can be hard and people aren't always helpful but I've found Zen Buddhism helps.

Calm. Life, death. Outcomes. This is Zen.

LOL!, #52, LOL!

Choked on my cup of tea.

Brown doctrine indeed.

In other words, if the world economy was saved by WWII, then it was saved by Grandfather Bush's injection of Harriman funds into Krupp on the one hand, and the same group promoting the American War Machine on the other. Any odds on who invested in Iraq's nuclear research?

I just visited the Doctor today for something minor and came out with the possibility I might have a terminal illness.

That's a stroke of bad luck. Hope it all works out for you.

Laughter is a great tonic - keep posting the funny stuff.

Nick, you have lost all credibility as an impartial political commentator. Your defence of Gordon Brown after PMQ's on Wednesday's Daily Politics show would have made the Labour spin machine proud.
You have been found out and should resign.

Don't worry Charles, as a Buddhist you could always come back as Gordon Brown.

I don't discuss my medical history on this blog.

The intellectual property rights for the bank bail out reside in Sweden and date from the mid-Nineties. The Treasury cribbed the idea last month to save the bacon of The City.

Any claim by Brown that this is his invention is quite unacceptable and so I suggest, if he wants to be taken seriously, he becomes a bit more modest in his arrogance.

What we are now seeing is the growing realisation that despite saving the banks the real economy is going south fast with little to sustain it.

My view would be to hold off with any stimuli until we can see the nature of the beast with which we are dealing. In the current climate any business that is exposed or vulnerable will disappear. This will happen regardless as to fiscal stimuli. Many others less exposed or more cannily managed will survive for one reason or another.

The haste of this government to put fiscal stimuli in place makes me suspect that this is more about covering backs and burying the past than it is about eventual economic recovery.

I must confess to be one of those who is saying let's wait awhile, see what actually happens over the next three months, wait for the Obama administration to get into office and by then we will know what needs to be done.

To jump the gun will probably mean that even more time, money and lives will be wasted in the end.

67 C_E_H

Best wishes with the illness - I hope it isn't terminal.

At least we have our politicians to cheer us up.

That's a stroke of bad luck. Hope it all works out for you.

Laughter is a great tonic - keep posting the funny stuff.

I've been planning on doing something else. Nearly stopped posting last Friday. There's just too much dreg and attitude online.

On the other hand, there is some legitimacy in saying I exist to serve Dear Leader until my last dying breath.

Ask that one at PMQ's, Bullingdon boy. Jeez, this is so funny. I don't know who's more stuffed. Me, or Cameron. LOL.

(Damn, I nearly choked on my cup of tea.)

Given all the flak Nick has been taking recently - I thought I'd do a bit of digging.

These two quotes from his Wikipedia entry were interesting:


"Robinson caused a major stir early in the 2005 election campaign at the unveiling of a Labour Party poster. The poster claimed the Conservative Party would initiate cuts of GBP £35 billion if elected; journalists, led by Robinson, attacked Prime Minister Tony Blair.

Blair was forced to admit the £35 billion figure was a reduction in future spending rather than cuts of existing services. This confrontation was all the more notable for the wide grin which appeared on the face of Chancellor Gordon Brown as the questions to Blair became more and more hostile."





And also this:



"Media monitoring group Media Lens used part of an article written by Nick Robinson, on the subject of the invasion of Iraq, to illustrate their view that mainstream journalism has become largely associated with promoting the interests of those who hold power:

"In the run-up to the conflict, I and many of my colleagues, were bombarded with complaints that we were acting as mouthpieces for Mr Blair. Why, the complainants demanded to know, did we report without question his warning that Saddam was a threat? Hadn't we read what Scott Ritter had said or Hans Blix? I always replied in the same way. It was my job to report what those in power were doing or thinking... That is all someone in my sort of job can do."



....so now why know why Nick doesn't question Gordon's economic lies too heavily.

On the other hand, there is some legitimacy in saying I exist to serve Dear Leader until my last dying breath.

That's the most depressing thing I've read all day.

C'mon. Levity. Laughter. We know you've got it in you.

Ask that one at PMQ's, Bullingdon boy. Jeez, this is so funny. I don't know who's more stuffed. Me, or Cameron. LOL.

Nope. Not quite sure what you're getting at there. Bit more context perhaps? Or a bit less?

Nick

"Finding a way out of the economic crisis"

There is no 'cheat' or 'get out of jail free card' - even to ask the question suggests that the questioner does not live in the real World!

We have had a bubble it has burst - it will take years to grow our way out of it.

Economists are like snake oil salesmen, they will sell any gullible fool anything they want to hear just to get a few bucks.

The graph of a recovery from the Bank of England is fantasy. The chance of the economy turning so rapidly in Q3 2009 is minimal - a slow recovery may appear as quiet often statistics are produced year on year, but for rate the turnaround speculated by the Bank is not very rational in the real World. To achieve such a rapid turnaround the rate of economic growth will need to be inconceivably large in Q3 2009. To publish such a projection (and without error bounds) is tantamount to deliberately lying to us.

Also note my concerns in #35 above.

G20 - Guido lays the boot into both Brown and the Conservatives

No.76 Wasn't Nick at the time employed by ITN??

It was my job to report what those in power were doing or thinking... That is all someone in my sort of job can do.

Hmmmm. Fair enough. He reports what he's told. By Brown. By Campbell. By Mandelson.

I guess it's up to the Tories to tell him something different. Unless Brown just pulls rank and wipes any thought-crime from the record.

I suppose that explains the 'Failure of Thatcherism' news narrative on the day that, after a decade of Labour government, the banks failed and we were exposed as uniquely unfit to enter recession.

That isn't a grin of self-congratulation on Brown's face. That's a grin of 'I can't believe we pulled that one off - what suckers - did they really fall for that??? Maaaan, they are even more stupid than I thought.''

Hell, I've I'd managed to rewrite history in real-time like that I'd be wandering around with a 'I can't believe the dumb saps fell for that' look as well. The down-side with that of course is that it will simply spur him on to even more outrageous liberties with the truth. Before long we'll be hearing how not only is he not responsible for the entire past decade of insane borrowing but he's actually the chap to 'fix' the entire financial system.

Oooh.

Alright. He'll be claiming that not losing a rock-solid safe seat in a by-election is 'proof' that the UK population recognise his leadership at this time of crisis.

Oooooh.

Okay, he'll be trying to get every other countries to commit to massive amounts of 'fiscal stimulus' so that he too can then justify the largest UK deficits in history and the concomitant trashing of sterling.

Ooooooooooh.

Okay. He'll suspend elections.

Just watch him.

The haste of this government to put fiscal stimuli in place makes me suspect that this is more about covering backs and burying the past than it is about eventual economic recovery.

I must confess to be one of those who is saying let's wait awhile, see what actually happens over the next three months, wait for the Obama administration to get into office and by then we will know what needs to be done.

Obama doesn't, actually, have an economic plan to deal with this issue. He commented that he hadn't thought about it during the campaign. But, he's made supportive noises and Downing Street have their powder dry for when further discussion take place.

Life and death (just in case you missed it) is about change. We move from the past and into the future through the now. It's the now that matters because that is where all things spring from. If that involves letting go of failed ideas and mistakes, so be it.

However bad an economic situation may be, it can always be worse. It usually is for someone, somewhere. If that someone is you, well, when you're on the bottom the only way is up. The content mind is more open and welcoming to this moment.

skynine @ 61

The Buiter article is excellent but busy working bloggers don't have time to plough thru it all.

So I have taken the liberty of cutting the most crucial parts {with a concluding comment} :

"By bailing out the banks, and other bits of the financial system, the authorities reduce bank default risk but by increasin sovereign default risk.

the UK, with gross foreign assets and liabilities of well over 400 percent of annual GDP does look like a highly leveraged entity - like an investment bank or a hedge fund.

By contrast, gross external assets and liabilities of the US straddle 100 percent of annual GDP.

Assume for the sake of argument that the UK’s banks are sound.

Most of them obviously are not, which
is why so many of them have had capital injected into them by the government, and why all of them benefit from explicit government guarantees on new bank debt issuance and implicit government guarantees that the government will come to their assistance should they be at risk of insolvency.

The government argues that its net debt position is strong, with a net debt to annual GDP ratio still just below forty percent.

That statistic is a prime example of lies, damned lies and government statistics.

It is not at all far-fetched to hold the view that the British government has effectively guaranteed the balance sheets of the entire UK banking sector.

All may still end up well (cyclically adjusted well, that is).

But the piling of fiscal commitment on fiscal commitment by the government is not a risk-free option."

So, as I read it, the prudent will ensure that their savings are deposited in a financial institution that runs a Full Reserve Banking system.

Which counts out most of the UK's banks.

#52, Charles_E_Hardwidge,

What's stopping people succeed, the answers obvious, a Socialist government that considers anybody showing entrepreneurial spirit to be a tax evader who deserves to be used as a cash cow to fund spurious Nu-Labour hobby horses and IR35 is a good example of that.

BTW just to make you guys even more depressed the milking of Independents is well practised over here in Europe as there are loads of crazy punitive taxes that hit any enterprise. Social contributions are high for very little return, and you have few social benefits. To put it another way the various governments love people to be independent as they can devolve themselves of all responsibility for that person on the basis that they were highly paid and should have saved, as if!

Quite frankly Charles, anyone becoming Independent these days is being foolhardy, you risk all and are treated as if you were a thief or cozener.

The graph of a recovery from the Bank of England is fantasy. The chance of the economy turning so rapidly in Q3 2009 is minimal

Maybe they're trying to saddle the Cameron government with such ludicrous expectations.

Lose an election early/mid 2009 - point to the fantasy graph and say 'that's what we were going to do' and then shout rudely from the opposition benches for another five years. ANd make no mistake, if Brown goes now then Labour will only be out for five years. Because there is no way this is going to look good in five years time either.

The only way GDP will be increasing in Q3 2009 is if the government borrows in excess of 10% of GDP and hands it all out as wages to public sector employees thus igniting inflation. GDP will go up, debts will be wiped out but savers, pensioners, anybody who has been prudent during the decade of irresponsibility, will be wiped out.

I personally think that is what will happen. Gordon Brown is just going to deliberately stoke inflation to make the GDP numbers look good and hide the collapse in house prices by printing his way through them.

If one believed that it was a mistake to give all that 'bailout' money to the banks instead of spending it directly on the public spending needs that Brown is borrowing to maintain, much support for that view could be gained from the NYT article. The financial institutions are now ready to sit tight for as long as it takes, while unemployment hits, and taxes and interest rates look set to bounce around in a game of political squash. Echoes of 79 are slightly louder now. Scenario: a Tory administration takes over in disatrously hard times and proceeds to rub the noses of the vulnerable in the mess. Except that there is no industrial or utilities family silver (attrib. Macmillan to Thatcher) to sell off. Thanks goodness the silly party have little electoral credibility, thanks to Osborne's antics and complacency at the top, but Brown's trials are not over, and the story could well unfold in this way.

CEH

Looks like you and Britain are in the same boat. Lets pray that both you and Britain aren't terminal.

Gordon Brown seems to have the answer to all ills - lets hope he has the answers here.

FDR positioned himself as a dictator. Mercifully a benign one but the Supreme Court still brought it to an end. Price fixing. Wage fixing. Protectionist trade. Millions out of work. Millions starving. Food being destroyed to try and raise farm prices.

And Brown and Krugman think FDR didn't do enough?

He did too much. World War II revived the US economy far more than FDR ever could have. This isn't a new supposition either. Everyone with half a brain can realise Western Europe's industries were being flattened by Germany, and US manufacturing readily took up the slack.

What's stopping people succeed, the answers obvious, a Socialist government that considers anybody showing entrepreneurial spirit to be a tax evader who deserves to be used as a cash cow to fund spurious Nu-Labour hobby horses and IR35 is a good example of that.

The tax burden isn't historically high, and IR35 and other dodges are just excuses for people to cheat the system. Plus, the hobby horses you mention are things like bringing the infrastructure back up to scratch and providing glue that keeps civilisation ticking along. Both are solved issue, so why people keep banging on about it is a mystery.

I see growth! I see markets!

*waves hand*

I see... opportunity.

Bleh. We're all D-E-A-D, anyway. Before now, you didn't exist. After now, you won't exist. All the ideas and experiences you had or ever will have are merely a burp of the universe. This burp farts at that burp, and our huddle of burps are farting at the big scary burp, until that burp turns into a nice burp. Then all the little burps will start farting again, and so it goes on.

Hey, this economics thing is fun.

I stopped listening to Nobel prizewinners views on practical application of economic policy around the time that LTCM (Scholes and Merton) blew up in '98.

89. At 1:16pm on 14 Nov 2008, Charles_E_Hardwidge wrote:

"IR35 and other dodges are just excuses for people to cheat the system"

What on earth do you know about IR35 - it was in fact an illogical response to a problem in the tax system. The problem in the tax system is that unearned income (e.g. dividends) is taxed at a lower level than earned income (wages). The Government's response to that was to legislate that small ltd companies run by freelancers would not be allowed to make a profit - all income (bar 5%) is treated and taxed as salary. That is wrong and absurd, for the rules mean you cannot make a profit if you work for yourself, but any plutocrat can make a profit out of your work because employing consultancies are not affected by IR35!!!!

It was another anti-enterprise Brown tax con!!!

I see growth! I see markets!

*waves hand*

I see... opportunity.

Ahhhh. The ying to the yang of Nelson putting the telescope to his blind eye and declaring 'I see no ships!'

#89 CEH

For once I agree with CEH:

"The tax burden isn't historically high, and IR35 and other dodges are just excuses for people to cheat the system"

- although "cheat is perhaps a little unfair.

People have very short memories: for most of Thatcher's years as PM the top rate of tax was 50%, only being reduced to 40% in the budget of 1988.

We are NOT over-taxed historically or compared to EU comparators (although trend is currently unfavourable). US citizens pay significantly less tax but get no NHS etc.

https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP

Although what will happen in the future to pay for the current shambles Brown has presided over, GOK.

IR35 is just another stealth tax - it was only done for the money.

It virtually destroyed the market for freelance IT consultants. So depriving many business of flexible expert assistance in an area vital for business efficiency and development.

How do you build a company if all of its income is taxed and NI'd...

The removal of ACT was another nail in the coffin.

Brown - the mighty destroyer of british innovation.

Nick,

I know your admiration about Krugman and you would die to link him with our economic genius 'Boom and Bust' Brown. Are you sure Krugman is neutral. Take a look at the following:
==========================
New Wealth for Old Nations:
Scotland's Economic Prospects
Edited by Diane Coyle, Wendy Alexander, & Brian Ashcroft


In Chapter 2, Paul Krugman sets out the analytical framework with a discussion in the light of recent theories on growth and economic geography of the challenge of raising the trend growth rate in a regional economy such as Scotland. He examines the distinctive characteristics of regional growth. Unlike growth in a large economy such as the US, the EU or large nations--where, of necessity, the primary market is domestic and growth is driven by productivity gains--regional growth is more export-dependent. Hence, a region's overall openness to international markets matters.
============================

When there was a debate about whether Krugman deserved the Nobel Prize, it was not coicident that he praised Brown linked to Wendy and back to Kruman.

The world is a small place Nick. I suggest you do some homework. Krugman is not soley sought after by Obama. Talk to a few more Nobel winners there in economics.
I know you are dying to link Krugman to our great leader. That is your mission. But look around.

To be honest this just is not funny any more this strutting egotist (Brown) is starting to scare me. Hes systematically destroying this country and prancing round the world to cover that up. Its not just financially, he has produced in this country an underclass on benefits that needs to be addressed so that incidences like baby P. do not happen again. He is no saviour of anything and the world must be laughing its socks off at him.

People who knew him in Scotland when he lived here say he was not a very pleasant person, very quick to loose his tember when someone did not agree with him and very quick to take revenge when crossed, and having a large ego even then.

You should be reporting on the developing story on baby P. as the dreadful Balls and Brown try to cover their mistakes.

Furthermore on This Week last night A. Neil said that he did think D. Cameron was genuinely angry on PMQs making a bit of a nonsense of your assertion that he agreed with you on this subject.

IR35 is just another stealth tax - it was only done for the money.

It virtually destroyed the market for freelance IT consultants. So depriving many business of flexible expert assistance in an area vital for business efficiency and development.

How do you build a company if all of its income is taxed and NI'd...

The removal of ACT was another nail in the coffin.

Brown - the mighty destroyer of british innovation.

I've worked on the inside of an agency and outside as a consultant. IR35 just wiped out subsidised lifestyles that a few were benefiting from. Boo-hoo.

A tax subsidy for what innovation? What business building? Naff all that I can see. It was a wheeze that everyone knew about. It's just that it got too much attention when the wannabes joined the queue.

Funding and building a business is another issue, and if someone can't do that with what they've got they probably don't want to or aren't up to it. On balance, the government was right to call that bluff.

IR 35 was brought in to stop people who, to all intents and purposes, were employees from setting themselves up as limited companies and hence paying less tax than people who technically were employees.

It doesn't catch real businesses - e.g. those with more then one customer at the same time

Closing a loophole, effectively.

Message 82 Hardwidge

Obama may not have had a plan during the campaign but I expect he and his team will have a plan for when they arrive in office.

Why waste time and energy dealing with a dying administration unless you want to try and take it prisoner before it starts?

On the subject of life and death, the only change is to die. So spares us the cliches, please.

No doubt you will also be singing the hymn of this administration `Things can only get better'.

it is so funny to see you folks arguing amonfst yourselves as to how bat the system.

The system that was put in place for the people.

The only good aspect is that you know that when you die you take nothing with you.

Have you guys ever considered the missery that you create today and leave behind after?

Certainly. listening to the current committees you do not.


It is a sad day when in the 21st Centuary your people are called to account in America.