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D-Day for economy

Nick Robinson | 17:43 UK time, Monday, 17 November 2008

The prime minister has just warned that Britain faces deflation next year.

Now a period of falling prices might sound rather attractive. Until you think about, that is.

A sustained period of falling prices leads people to postpone spending as they wait for prices to fall. Businesses that cannot sell their goods cut jobs. Prices are cut to stimulate sales. A deflationary spiral results and it's very hard to escape it.

In addition, deflation also increases the cost of debt. Think about it in terms of, say, a mortgage. Normally inflation means that the amount you pay back in a few years time is less in real purchasing terms than when you took your mortage out. Deflation reverses that.

Ask anyone who's Japanese and they'll tell you of the horrors of deflation in the 90s. Anyone old enough could tell you about the Great Depression of the 30s.

Gordon BrownThe political significance of the D word, of course, is that Gordon Brown can use the fear of it as another justification for trying to stimulate the economy via borrowing to cut taxes and spend.

The Tories' best argument is that interest rate cuts and the fall in the value of sterling do a lot more to kickstart the economy than a stimulus of a few billion here or there, particularly when that few billion has to be repaid.

Comments

Page 1 of 2

  • Comment number 1.

    The Government and Chancellor of the exchequer would do far better to encourage business - especially exporters to those countries that do have money.

    Borrowing money to splash out seems to me to be totally pointless and self-defeating. The way the balance of payments is at the moment most of the money would end up in China or India or even help the poor exporters in Japan, rather than helping british industry - and thereby the economy - which should be the aim.

    Once the money is spent then it has to be repaid - if the poor get the money then they can't repay it so taxes on the liberal left in this country would have to rise.

    I assume you are not stupid, Nick, so you must realise this and Labour political pressure is preventing you from pointing this out.

    Deflation may increase the cost of debt but for those who do have money in the bank then it enables them to buy goods much cheaper. Think of the savers for once, rather than the profligate. A deflationary period should also encourage people to pay back their mortgages and reduce debt quicker, which cannot be a bad thing.

  • Comment number 2.

    And amidst all this Jacqui Smith continues on her rampage to strip our liberties. Once this woman gets a bee in her bonnet

    http://news.bbc.co.uk/1/hi/england/7733751.stm

    Is she not avoiding the real current issues in her job description.

  • Comment number 3.

    Perhaps you should stop refering to "Borrowing" and more accurately refer to Defered Taxation.

    This should stop Brown's UNFUNDED (remember that word) spending spree on our, and at this rate our children's, future earnings.

  • Comment number 4.

    Brown is the Master of fear and bullying.

    He uses the "D" word only to get his way with no questions on Billions of give aways to his so called deserving poor

    What about Pensioners and Savers?

    Only those who are truly depedent on the State or Servanst of the State will receive largese from this cruel and unfair man, who has never been elected PM of our Country.

    He even despises any spirit or courage from the Scots and he was born here!! Brown is a classic example of a truly ruthless and ambitious man, looking to only his own way. His mistakes are forgotten and he NEVER learns from the past. We are all going to deeply regret this man;s Premier ship of the UK for a very long time to come

  • Comment number 5.

    Osborne makes an appropriate observation about the impact of Govt policies, historic and those being discussed, and is pilloried.

    Brown moves to using the D-word as a political justification for borrowing - possibly recklessly given that there has been no investigating how it will be paid back - and Nick Robinson says................, well, nothing really.

  • Comment number 6.

    It would appear that job losses and the pain will centre on the South East (non Labour areas), the economic boost will be in Labour areas.

  • Comment number 7.


    John Cridland, CBI Deputy Director-General was on television this morning revising the outlook for growth (given in September)from 0.3 to -1.7 for next year. A serious change in a short time.

    Is Gordon Brown playing catch-up?

  • Comment number 8.

    The political significance of the D word, of course, is that Gordon Brown can use the fear of it as another justification for trying to stimulate the economy via borrowing to cut taxes and spend.

    Yep. That'll be Gordon alright. Always looking for any excuse to spend money he doesn't have.

    He needs to have a good long chat with Alvin Hall about getting his finances in order. I'll pay.

  • Comment number 9.


    From the G20 Statement:
    "Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions."

    Anyone to blame Mr Brown? Finger seems to be pointing not only at America as you claim.

    "Use fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conducive to fiscal sustainability."

    Hardly an excuse for profligacy.

  • Comment number 10.

    Nick

    Why is your tone always pro Labour its now getting beyond a joke. Please please show some balance.

    I asked you on another thread if you look at the viewers reponses here and I await an aswer yes or no.

  • Comment number 11.

    Now Gordon, will that be global deflation or just UK deflation?

    I'm guessing it'll be global deflation. Probably caused by the Americans. Or the banks. Or Thatcher.

    We'll just have to wait and see who Gordon tells us to blame.

    Failure of Thatcherism anybody? Osborne 'talking down' the economy perhaps?


    Should be fun.

  • Comment number 12.

    God - it gets worse.

    If it isn't the "D" word, it's the "T" word. Gordon used that to try and get the "42 Days" through. That didn't work either.

    Call an Election!

  • Comment number 13.

    I remember being told stories by my mother (who was of an older generation) about the 1930's and they weren't pretty. Folks take a rise in the standard of living, healthcare, and welfare for granted today but at the time the post war settlement really meant something.

    I love Japan. Sure, Japan has its issues and was bankrupt after the war but their focus on industry and sacrifice, attention to quality and culture just blows me away. It's just a personal dream but economic and political unity between Britain and Japan could be very useful.

    In similar news, Asia Times comments that a much closer relationship between America and China could be very useful in stimulating growth and developing new markets. America needs to raise production and China needs to develop areas left behind by the economic revolution.

    This is just my view but, I believe, strong leadership by America and China as economic superpowers, and Britain and Japan as gateways to Europe and Asia, respectively, could be the cornerstones of a new world order that ushers in the global renaissance predicted by the UN.

    Buddhism suggests that procrastination isn't just a matter of being scared of the unknown, but fear of success. People can be so unused to seizing opportunity that they freeze, preferring to stick with the familiar. Perhaps, Gordon's gamble is the new sensible.

  • Comment number 14.

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

  • Comment number 15.

    I'm a superstitious person. Didn't use to be, but from the moment Brown stepped into Blair's shoes, things went from bad to worse. Frankly, I think somebody put the mockers on him, the reverse Midas syndrome. Any scheme this man instigates is bound to end in failure, so I will not endorse any of his new ideas. He has been mumbling on about the body organ scheme, whereby unless people actively opt out, they will become organ donors. Maybe Brown is looking for a new organ?

  • Comment number 16.

    "No more boom and bust"
    We have had the boom, here comes the bust

    "Education, Education, Education"
    I think he missed the words "I will destroy your" beforehand, look at the mess Labour have made of it, worthless degrees and thick kids. Forget the PC nonsense, that is what they are. Thick, uneducated fools. Media Studies? What a cop out, anyone can watch TV, where are the scientists? Where are the Biologists, Chemists and Doctors? Oh wait, they went abroad as they were being beaten in pay and conditions over there.

    I don't remember any "promises" for the police but they are driven by STATISTICS now instead of common sense; so many new laws yet not enough police to ENFORCE THEM. More CCTV was their answer, catch the criminals AFTER the crime. Great. I always thought that PREVENTION was better then the cure? More bobbies on the beat is the answer, the thug may think twice before pulling a blade or throwing something through a window.

    The NHS - gowd, what a state. Too many managers, all work outsourced to the cheapest bidder.

    I want to see a complete accounts sheet, I want to know EXACTLY where my tax money has gone as there is NOTHING to show for it.

    Scotland; they want to be independent, LET THEM! Stop spending MY TAX MONEY THERE!

    Political Correctness? Don't get me started on that.
    Or Health & Safety.

    It's a JOKE. Labour OUT NOW.
    As for will Mr Cameron be any better? I seriously doubt it. I want honesty and accountability from our next leader so come on Mr Brown, do us all a favour and leave now. In fact no, hand yourself in to the nearest police station. The charge? TREASON.

  • Comment number 17.

    I suspect the reality here is that Darkling has had his way and the fiscal stimulus ain't going to be quite as stimulating as GB would like it to be, for fear of the impact on the pound (now remind me, who said that?) and the consequent upward pressure on the BoE deposit rate.

    Hence the next wheeze will be reflation (printing money), blamed on the prospect of deflation, a consequence of, you guessed it, that pesky global recession. (See the Gavyn Davies article attached - if Gav says its okay, it must be.)

    http://www.guardian.co.uk/commentisfree/2008/nov/13/economy-inflation-deflation-bank-england

    Who said globalisation was bad?

  • Comment number 18.

    Of course GB wants to borrow the money. Why shouldn't he? After all he will no longer be in power when the pain of repaying it hits the people.

    Will they remember who caused this problem? I hope so (but doubt it)

  • Comment number 19.

    I think that whatever the government does there is risk involved.

    However; what the Tories are doing is actually helping to talk the economy down. They are just irresponsible, would you rather be in work and paying more tax, or on the dole ? Cameron and Osborne are just clueless opportunists.

  • Comment number 20.

    Whichever way you look at at it and whoever is in power we're now stuffed because of what has preceded this point. That is the constant in all of this!

  • Comment number 21.

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

  • Comment number 22.

    I have to say that the vast majority of posts in the political and business blogs are from Tory supporters. Or perhaps Labour haters. Maybe these are the dreaded vocal minority, but the amount of comments that blast the BBC's editors as being biased, or bowing under pressure from Labour, is astounding.

    So here's a view from the other side of the fence.

    Brown is right to spend through the downturn. Maybe we will have higher taxes at the end of it, but surely it's right to create jobs through capital spending and increase consumer spending through lower taxes while the economy is in trouble.

    After all, businesses will benefit from either approach. People will benefit from either approach.

    And when the time comes to repay it will be when the economy, and the public, can afford to.

    Stop bashing Brown. Don't support the ever-changing Osbourne who's policies are frankly a joke. And don't expect the Tories would be any better if they were in power. It's a cliche to refer back to the time when the Conservative Party stood for the rich vs the poor, but I can't see that they have changed much.

  • Comment number 23.

    Nick

    Falling prices a concern ? Hasn't Gordon just been pressuring all and sundry to cut prices for hard working British families ?

    Wasn't there talk 5 minutes ago about tax cuts being achieved by cutting VAT so as to reduce prices?

    Plan (a)
    What about a series of VAT increases to keep prices high ? And let's make the Bank of England inflation target a "not lower than" floor rather than a "not higher than" ceiling ?

    Plan (b)
    Send for the men in the white coats.

    Plan (d)
    Set up a review to find out what happened to Plan (c)

  • Comment number 24.

    re: 15, phoenix

    Probably! No wonder Sarah looks so miserable!

  • Comment number 25.

    #

    The PM's Brain is Missing?

    Where's Spitting Image when you need them?

  • Comment number 26.

    Gordon's Things to do list:

    1. Get a couple of hundred quid in the hands of those receiving tax-credits - before Christmas.

    2. Bully energy companies to reduce fuel costs as this saves paying an extra winter fuel payment to the poor and keeps petrol from going up.

    3. Don't bang on about Deflation or it will frighten the horses - just enough to spook the Tories though.

    4. Let the pound continue to fall, but not too fast - also see 2 above. Also foreigners may object as they will see it as a protectionist ploy!

    PS I am still concerned about the probity of ever lower interest rates - I am scared that the housing bubble will re-inflate. Still, no one can tell me why it (lower interest rates) will not.

  • Comment number 27.

    I think George Osborne is absolutely right to point out that tax cuts funded by borrowing are mad. Do you agree Nick, for example if you had a friend maxed out on half a dozen credit cards, you would hardly advise them to go and borrow some more would you? You might tell them to cut unesessary spending and increase income by taking another job. There's no other way in the real would unless you rob a bank or something!

  • Comment number 28.

    #22

    Stop bashing Brown.

    No.

    Don't support the ever-changing Osbourne who's policies are frankly a joke.

    Compared to the Gordon Brown one-trick-pony approach to economics they are a cool glass of water in a barren desert of ideology.

    And don't expect the Tories would be any better if they were in power.

    Funny. Can't remember the Tories presiding over the first run on a bank in over 100 years. I guess I'm just not old enough. Or the complete collapse of the major UK banks. Or the biggest house boom/bust in UK history.

    Now I agree that whoever has to pick up the pieces from here will have to make some hard choices. It's just that Gordon Brown ain't going to be making any hard choices is he? He's going to keep printing money and defer the hard choices until he either gets voted out of power or the only people who are getting paid are the military and police on every street corner to keep order. Although what he'll be paying them with I can't imagine. It'll have to be a hard currency - dollars or Swiss francs perhaps - otherwise there'll be a military coup.

    And even then he won't make the 'hard choices'.

  • Comment number 29.

    Thanks to Brown's profligacy and corruption our economy is toast.

    Ever heard 'Masters of War' by Bob Dylan? Check out the lyrics here.

    I'm afraid to bring children up in this country. Thanks Labour.

  • Comment number 30.

    Now who's talking the economy down?

    Brown's led the world with his bank re-capitalisation plan.

    Except it wasn't his plan.

    Brown led the world demanding 'international tax cuts'.

    In a 3,000 word G20, fiscal stimulus got 31 words. The words 'fiscal sustainability' were two of them.

    In a another statement, a veiled slap-down for Brown.

    Not even mentioned in the NY Times write-up.

    Now we get the 'D' word.

    On the BoE RPI measure, a measure that Brown ordered the BoE to jettison and target CPI.

    Incidentally an order that led to Mervyn King complaining he had no means now to measure house price inflation.

    And of course, all government pay rises are measured to CPI.

    So what is it Gordon, CPI or RPI?

    Brown is a busted flush, he's certainly got a nerve accusing the Tories of not having a clue.

    We've had the Keynesian splurge and got thoroughly routed

    We've had the Monetary medicine but the banks can't pass on the full cut (owing to Libor) the 12-month is still 4.5%.

    Now the tax cuts, unfunded, no doubt on seriously good terms to sell the debt. UK Government risk premium has doubled recently.

    And we will all have to pay the borrowing back with interest for years.

    STOP THIS MADNESS.

    CUT GOVERNMENT SPENDING AND CUT TAXES.

  • Comment number 31.

    #19

    However; what the Tories are doing is actually helping to talk the economy down.

    Pound up 3.5c on the dollar today after Osborne assured the market that he won't be printing his way to transient popularity.

    They are just irresponsible,

    You are having a laugh aren't you? And how would you characterise the government that doubled national debt and is running a massive structural deficit after 16 years of growth. The government whose woeful tri-partite system of 'regulation' enabled the banks to self-combust?

    would you rather be in work and paying more tax, or on the dole ?

    If things carry on as they are it will make more sense to be on the dole if anybody ever actually tries to raise enough taxes to pay back any of this borrowed money.

    Cameron and Osborne are just clueless opportunists.

    Freud would have something to say about that. But essentially you shouldn't just assume others have the same low moral values as Gordon Brown.

  • Comment number 32.

    #26

    Still, no one can tell me why it (lower interest rates) will not.

    I'll have a go.

    Sentiment.

    The whole bubbleicious bubble was driven up by the fear that if you didn't get on the 'property ladder' then somebody would pull it up behind them and you'd miss out on a lifetime of perpetual housing price increases, remortgaging opportunities for Audi TT's and exotic foreign holidays.

    Now the cat is out of the bag. House prices can go down. Indeed they're going down by an annualised 25% a year at the moment. It doesn't matter if interest rates are zero - you're still going to be better off kipping in your old room at your mum's and waiting a year before you buy. Maybe two years. What's the rush? They'll be cheaper next month.

    That's why.

  • Comment number 33.

    Deflation next year? Maybe, in official figures at least.

    But the way it's going, we will be heading for significant INflation very soon. All our imports (of which there are many) are getting vastly more expensive. And the government is borrowing loads of money it can't afford. Britain will soon be bankrput, we have personal debt which simply beggars belief.

    Why oh why do idiots keep voting Labour? I am genuinely baffled.

  • Comment number 34.

    14. power_2_the_ppl

    Tut! Tut!
    Not adhering to the party line?

  • Comment number 35.

    Here's one possible solution to the current crisis.

    Gordon Brown has spent the past decade or so borrowing, taxing, spending and wasting our money on a suicidal scale. He's shifted the main effort of the UK economy from productivity and wealth creation to a welfare-dependent, unproductive, client-state - the sole purpose of which is to keep the Labour Party in power. Now he's run out of cash, eye-catching initiatives and excuses for the mess he's created (hence blaming the Yanks for our woes).

    So, how about firing the near-one million people Brown has added to the public sector payroll and let them take their chances in the productive side of the economy; how about ceasing at least half of the state benefits pumped into the 6 million UK households claiming such benefits and let them have a crack at wealth creation; how about dissolving all of the pointless quangos Brown insists on funding to no discernible benefit to the UK taxpayer; and how about tasking the public sector with reducing its costs year-on-year by 5% whilst maintaining or improving service levels (just like the best and most profitable world-class manufacturing companies target for themselves)???

    I reckon we'd be fighting fit again within 5 years. As it is, Brown's brilliant plan to borrow more and spend more (you couldn't make it up) will screw this country into the deck and it will take us a generation to recover. The imminent end of cheap energy, meantime, will hammer the final nail in to the coffin of the UK economy.

    Meanwhile, the Tories continue to look on, dumbstruck and clueless. Aren't our politicians wonderful?

  • Comment number 36.

    stuartjreid wrote:
    "I have to say that the vast majority of posts in the political and business blogs are from Tory supporters. Or perhaps Labour haters. Maybe these are the dreaded vocal minority, but the amount of comments that blast the BBC's editors as being biased, or bowing under pressure from Labour, is astounding" .... Have you ever thought that these might represent tax payers who are fed up seeing their money wasted by the self-interested ruling classes? As tax payers we employ them to do a job. When it goes well they tell us how good they are, when it goes bad, as at present, they tell us its absolutely not their fault. The Tories can do us one huge favour - remove this hopeless bunch of incompetant spivs and no bodies from power.

  • Comment number 37.

    Who's up for a coup? (bloodless of course)

  • Comment number 38.

    You just cannot trust this man.

    How much of this so called stimulus borrowing will be needed to fund those projects already in trouble.

    PFI and public sector pensions for instance.

    Unfunded tax cuts already made.

    It will be interesting to see where this borrowing is coming from and how much of it will really be used to stimulate the economy.

    We will just have to read between the lines again.

    Things are never what they seem with Brown. He's been sussed out.

  • Comment number 39.

    In May 2008 the Fed sent out tax rebates of $68billion to eligible households in the US.

    This equated to $1200 per family, the equivalent of 600 pounds Stirling at that time.

    In September, the Treasury rebated tax to the sum of 60 pounds per person in the UK, a direct result of pressure put on the government over the removal of the 10% tax rate.

    The biggest benefactor of the package in the US was Walmart as people spent their rebates on petrol and food. In itself an indicator that their weekly budgets are being stretched and even blown.

    The stimulus had an initial bounce effect on economic data, but was far less than envisaged. It did nothing to get the economy moving again, it never could as a one off

    What on earth does the UK government think it will do with its own version of a stimulus package next week?

    It is now set in stone that any package to encourage people to spend a one off sum will only have a minor impact, if any impact at all.

    In order to grow the economy people need to spend, borrow and/or save. Without individual liquidity and disposable income there is nothing that can be done until disposable income is increased and available consistently week in week out.

    Peoples salaries either need to increase and/or everyday outgoings need to decline. Debt has to be repaid in order to kick start borrowing again, assuming the fraudulent pyramidal financial model is to be kept. Until this crucial element is tackled, the inability to repay personal debt will stop every attempt to kick start the economy it in its tracks.

    There is only one way that this can be achieved quickly, where the shear scale of disposable income that would be made available would allow the economy to prosper again. It is happening now, but needs to go much further. A house price crash.

    It will take many prisoners, but the reduction in the value of land in the UK to a point where the average wage can can afford a mortgage at 3/3.5 earnings with a suitable deposit to purchase an average house would cut hundreds of pounds off peoples mortgage and rental costs each month providing the disposable income needed to massage the economy.

    Tie this in with long term interest rates instead of the variable rate system the UK seems to love and you have the basis of stimulus package that may cost many who bought houses in the last 5 years, but will catapult us out of the other side of this cesspit.

    Will we be provided with stimulus providing thousands of cost effective homes to rent or buy, something that provides consistent stimulus on a monthly basis? No, because that would be thinking outside of the box.

    So next week we will be provided with one or three give-a-ways that will have a worse effect than the one the US tried in May.

    Why?

  • Comment number 40.

    6. skynine wrote:

    It would appear that job losses and the pain will centre on the South East (non Labour areas), the economic boost will be in Labour areas.

    ---

    That's an interesting way to look at it, and pretty stupid from Labour - everybody goes on about their reliance on Scotland, but were Labour to lose their seats in the south east, most of which are based on paper thin majorities, they would lose their rather slim majority - maybe they're after a hung parliament

  • Comment number 41.

    We have already seen a 25% drop in the value of the pound and a 33% drop in the value of the shares market .this to me is deflation....

    Gordon is hardly leading the world he is desperately running round the globe with a begging bowl hoping some countries will not stop buying our exports, if he was the financial expert he claims they would be coming here...

    We should see an immediate reversal of fortunes if the investors believe he is worth backing ...somehow i dont think its going to happen for a while..

  • Comment number 42.

    26 Jack

    The housing bubble probably will re-inflate, or rather it won't pop as suddenly as many expect/worry about - true it got out of hand based on dodgy credit and because people were short sighted and greedy, but there is still a lack of housing in this country, unlike in countries such as the US or spain ie. demand is higher than supply, at least in certain areas, which will prevent a massive collapse and will mean we probably see a pretty quick recovery on that front

  • Comment number 43.

    We will all in the end the question is how much and when

  • Comment number 44.

    "Maybe we will have higher taxes at the end of it, but surely it's right to create jobs through capital spending and increase consumer spending through lower taxes while the economy is in trouble"

    Maybe

    However the economy at the moment is geared to public spending money that they don't have. Once the money is spent then demand drops and we have a recession.

    Every quarter £20 billion pounds is leaving this country in 1997 the deficit for the whole year in goods was 'only' £12 billion.

    From 1997 to the end of 2007 the total deficit was £516 billion. That is money we no longer have in this country.

    We won't mention the destruction of manufacturing in this country now happening due to banks refusing to lend money - however how many of our businesses are based on leveraged borrowing. Virgin has a £4 billion debt for instance and could be bankrupted tomorrow if the loans were called in. How many businesses have refused to pay of debt - instead just 'servicing it' in the pious expectation that they always would be able to keep on paying the interest - For heavens sake they paid dividends, in my mind irresponsibly.

    Borrowing money to spend is, as mentioned above pointless in the long run - rather like giving a heroin addict another shot to keep the withdrawal symptoms away.

    Eventually we will have to go 'cold turkey'

    Spending one's way out of recession would only work if the country's Government had sufficient assets that they could afford to release them. IN our case we have to hope that other countries in better shape than ours release money and our poor exporters can get hold of some of it.

  • Comment number 45.

    Who's up for a coup? (bloodless of course)

    You're going to hang them. Right?

  • Comment number 46.

    11 U9etc

    Of course you're right U, when infact U know different;

    1 The World Wide Simultaneous Credit Crunch is in fact the fault of Gordon Brown's domestic economic policy.

    2 The simultaneous entry into recession of literally every developed country in the world is due to Gordon Brown's 11 years of growth, low interest rates and record levels of employment.

    3 The failure of a number of banks and financial institutions accross the world is down to Brown again because of the UK's regulatory framework.

    4 The current advice from the IMF encouraging fiscal stimulus to support monetary measures clearly demonstrates the pernicious influence of the Brown Spin machine.

    5 And Global deflation, should it occur, Yep, thats Brown for allowing interest rates accross the world to drop in response to this UK driven global recession.

    All together now, lets all bark at the moon.

  • Comment number 47.

    37 and 45.

    Go for it., I'm sure PTTP would be up for it too.

    The Blogging 3 as you'll be known, and they say there's no hero's nowadays.

  • Comment number 48.

    #32 U9461192 wrote:

    "Still, no one can tell me why it (lower interest rates) will not."

    I'll have a go.

    Sentiment.


    Ah, but if money is cheap will not it still be again possible to borrow absurd multiples as lenders will always be desperate for borrowers to keep them in the style, and with the bonuses, they have become accustomed to?

    I am not convinced that "sentiment" will keep the bubble from re inflating. I remain fearful that interest rates will remain too low for too long and the economy will again come to rely on equity release for growth, just like in the last decade. Indeed I think that this is itself the objective of policy. After all the borrowing for boosting current expenditure will be in the private sector and not on the governments books!

  • Comment number 49.

    #46.

    Now now. No need to be rude. As any fule kno my beef with Gordon Brown is the way he has left us uniquely exposed to the 'global' recession.

    For what it's worth I think our insane housing bubble would have led to a bust sooner or later anyway. Gordon Brown is just 'lucky' (if that's an appropriate word in the circumstances) that he has a convenient scapegoat on which to pin his fatally flawed mismanagement of the UK economy.

    The Americans. Them pesky Americans had a housing bubble and were lending too much money which could never be paid back and blah blah...

    For this to be a valid excuse you'd have to have house prices sensibly priced in the UK prior to the onset of the 'global recession' and our banks would not have been lending 125% to anybody who could fog a mirror. That was not the case. Our housing bubble was at least as insane as the Americans and our banks had been failed by lax regulation and then when they got into trouble, by Brown's dithering.

    The US had their housing bubble. It was big. It was bad and the selling on of debt and all the second, third and fourth order derivatives put the US into recession. And when the US sneezes then we catch a cold.

    Which would have been a perfectly reasonable excuse to blame the Americans. If only... If only we hadn't had an even bigger house price bubble, even bigger fiscal deficits and even more insane bank lending here in the UK. All presided over and lauded and all reflected glory gratefully received right up until financial ground zero by our own squanderer-in-chief, Gordon Brown.

  • Comment number 50.

    #37 tarquin wrote:

    Who's up for a coup? (bloodless of course)

    Obviously 'incitement to treason' is not against 'House Rules'. That is a bit odd? Unless of course you are an agent provocateur!

    Or perhaps you are talking of a small hen house or chicken coup, which for the sake of your continued freedom I hope you are.

  • Comment number 51.

    # 37 tarquin

    Who's up for a coup?

    Don't jest. There are some analyses out there right now that can foresee circumstances in which things could get seriously out of shape in the next, say, 5 - 10 years. Even Charles Moore in Saturday's Telegraph was moved to write, "There could be a complete collapse of the banking system, many millions unemployed, a return to barter, "self-sufficiency" (a Green word meaning poverty), extremist riots, looting".

    OK, Moore may have had his tongue tucked gently into his cheek, but the scale of the mess that Brown has created in the UK (er, sorry, that the Yanks have created in the UK ...) and the utter ineptitude of his solution (we borrowed our way into this mess and, dammit, we're going to borrow the hell out of it ...) does not put social unrest beyond the wit of man in the next few years.

    I have a bad feeling about where all this continues to head. The politicians are unable to control what's happening and a lot of what they're doing smacks of panic. Events are going to take on a life of their own in the coming 12 months and beyond.

    I'm not advocating a coup, but I am predicting some very angry citizens soon enough when the full impact of the Brown Terror filters into every nook and cranny of our society, as surely it will.

  • Comment number 52.

    45

    come now, we're more civilised than that

    ....stocks

  • Comment number 53.

    #48

    Ah, but if money is cheap will not it still be again possible to borrow absurd multiples as lenders will always be desperate for borrowers to keep them in the style, and with the bonuses, they have become accustomed to?

    A seductive argument and one I'm sure the government is relying on for the reasons you go on to elaborate on. But, as the Japanese demonstrate, twenty years into their housing bust even zero interest rates will not persuade people to take on massive debt once the 'magic' has gone.

    Now, we are culturally wired very differently to the Japanese but even then I point you to the housing bust of the late 1980's. A boom that never rose to the same insane valuations as the current one. A boom that thanks to the cleansing power of inflation only lasted about six year.

    This boom was much bigger. The bust will be much bigger and for all Nick Robinson's scare-mongering about deflation I believe Gordon Brown (and Ben Bernanke for that matter) will plump for just printing money and inflating away all this debt.

    It'll destroy the prudent, the savers, the pensioners etc but those who fuel the machine with their insatiable desire for debt and the false GDP figure this brings will be sacrificed on the alter of consumerism and Gordon Brown's megamaniacal lust for power.

  • Comment number 54.

    No more taxes now or ever!

    The Gov't should be reducing ITSELF and passing on the savings from it's over inflated overbearing presence in our nations life rather than borrowing without limit to fund them.

    Let's get interest rates down to zero first, then Gov't spending and if that doesn't do it then we'll all have to work harder and longer. Simple!

    We don't want more taxes in the future just because it's easy for Crash Gordon to get yet another expensive credit card. This guy is a borrowing junkie!!!!!!!!

  • Comment number 55.

    50

    I don't believe Gordon has yet passed the 'no cracking jokes on the internet, it's against the national interest' bill, though I do believe it's on the urgent 'to do' list

  • Comment number 56.

    49 U

    US sneezing and all that really demonstrates where the origin of the problem is.

    There's no denying our housing bubble but why the whole Euro zone, Japan and most if not all of the G20 having similar problems.

    Coincidence?

    Don't think so. The source of the current recession lies firmly in the US.

    Our housin price bubble would have deflated (sooner or later( rather than burst, the reason as someone earlier explained is simple supply and demand. We have under supply of houses.

    Apologies for the "rudeness" but be honest, your blogs invite it sometimes.

  • Comment number 57.

    re: 34, phoenix

    Lol nope. Nu-Labour's puppet broadcaster (the British Biased Corporation) tried to gag my other username, hence the slight change to p2tp. They fear my limericks.

    re: 47, Eatonpiffle

    I would like to cover Brown in breadcrumbs and throw him to some very hungry Canada geese.

  • Comment number 58.

    57#

    Whatever floats your boat.

  • Comment number 59.

    Sadly David Cameron is missing what is to me an obvious opportunity.

    Gordon Brown is playing the experience card based on no real experience of anything other than good economic times prior to 3 months ago, and even George Osborne's friends would admit he has been less than inspiring.

    The opportunity Cameron is missing is that within his party he has the ONLY politician who has actually successfully guided the country out of a recession, Ken Clarke the last Tory chancellor. Equally the problems then are associated with Norman Lamont, so Ken's track record is pretty positive.

    Cameron might have to agree to let Ken be Chancellor for the first couple of years of the next government, but he could easily move Osborne to the home office without too much loss of face, an awkward 2 weeks maybe at most.

    So, bring back Ken Clarke, and hole Brown fatally below the water line.

  • Comment number 60.

    Just seen Newsnight.

    Clearly BBC and therefore complete bias.

    But seriously, there seems to be a pretty strong consensus about the response to the recession, including the IMF suggesting a 2% of GDP stimulus.

    One Economist (Capital Economics I think) stating that it must be unfunded to give a net increase in the economy.

    I'm curious as to whether on a purely Party Politcal basis, are the many Tories on here happy with your Party's stance/response?

    Two schools of thought

    1 Osbourne/Cameron's Tories

    2 The rest of the World's economic Brain Power

  • Comment number 61.

    The NY Journal has a piece today - not fating Brown but comparing us to Iceland.

    Peter Riddell says the Tories were right about Sterling -and there is no convention.

    On that note read this article in the FT where it quotes Brown in opposition on sterling. This is the best bit:

    'The reason is that a weak currency arises from a weak economy which in turn is the result of a weak Government. A Government unwilling to introduce an industry strategy and unwilling to take the measures necessary to bring us out of recession will leave our economy, and our currency, weak.'

    Now it appears Reuters are reporting disagreement between the countries about what was agreed at the summit ; they say 'disappointing even for such low expectations' and that the leaders are not in agreement about who will do what.

    Strauss Karn says you should only do a fiscal package if you can afford it.

    How much of this has been on the BBC?

    Isn't it Brown who is talking down the economy to sell an election package despite the risks of bringing it down further.

  • Comment number 62.

    59#

    Don't be surprised if Ken was to break ranks.

    He must despair at Osbourne being Shadow Chancellor, he really must, but Cameron and Osbourne's careers are as tied as Brown and Blairs were. That could be an achilles heel to Cameron far sooner than it was to Blair

  • Comment number 63.

    #53 U9461192 wrote:

    "just printing money and inflating away all this debt. It'll destroy the prudent, the savers, the pensioners etc"

    And I might add the investors and the workers pension funds.

    Your 'inflation solution' to the slump is rather at odds with the prediction for 'deflation'.

    'Inflation solutions' to slumps need high inflation when the slump starts. Unfortunately for your 'inflation solution' we have entered the slump with low inflation. So we are left with protectionist currency devaluation as a mechanism, compounded by declaring that ever lower interest rates will be pursued as a policy.

    At some time interest rates will go up and then the housing slump will truly hit us once again. My guess is that this will be in the middle or third quarter of 2009. If rates do not go up we are, as I wrote several months ago, 'all Japanese now'.

  • Comment number 64.


    Deflation would be happening mostly in consumables, like Oil, Food, Clothing.

    Would we not use our cars because we might buy cheaper oil next month?

    Would we not eat, because food might be cheaper next month?

    Would we go stark naked because in 4 months time, cloths might be cheaper?

    People are buying less to save rather then spend, because of uncertainty regarding their jobs, no matter where they work. This is already happening all over the world especially in America.

    Some, who are suffering from amnesia are saying that interest rate cuts and the fall in the value of Sterling do a lot more to kick-start the economy.

    Ha ha, and that is exactly what’s been happening, but without stimulus we would have to suffer this GLOBAL recession and GLOBAL financial turmoil for much longer, as used to happen under the Tories.

    For the information of some gullible Tories who listen and believe what CamBorne try to imply, Italy has 108% in National Debt vis-à-vis it's GDP. Britain ranks 4th amongst the EU countries with the lowest % in National Debt.

    In previous recessions we had high interest rates and still, because our economy was very weak, Sterling lost it's value when compared with the Dollar. We were even forced out of the ERM because our economy was weak. In fact it was the contrary to what Lamont was suggesting. Now Sterling is low because interest rates are going down and possibly less then the Euro-Zone.

    Since when do we expect the Pound to keep it's value when the trend is reduction in Interest rates?

    The Dollar lost most of it's value when interest rates were going down fast in America, which pushed the cost of Oil sky high.

    Then again, the Tories are saying that reduction in N.I. for firms (for a limited time) would help unemployment.

    The questions which they have to answer are these. Who will be buying the extra production with full workforce when people are consuming less to save more? Where do we sell our goods?

    Cameron should go and say this to the likes of JCB, and they will surely have a very good advice for Cameron.

    Stick to modelling, and keep quiet!

  • Comment number 65.

    @22 - stuart

    "Brown is right to spend through the downturn. Maybe we will have higher taxes at the end of it, but surely it's right to create jobs through capital spending and increase consumer spending through lower taxes while the economy is in trouble"

    just one small problem with this sir, we have for sometime now had personal taxation at record levels.

    "maybe we will have higher taxes at the end of it" - we already have them now, i cannot support any spending of money without rigorous scrutiny, when it will be paid for by my family, in the future, with new record levels of taxation.

    gordon brown's words are not even the start of the scrutiny required.
    this present labour government have no mandate for these measures, nothing pledged before an election for the people to decide, the phrase "because its the right thing to do" (which is applied to all the government's plans) is not good enough.

  • Comment number 66.

    @62

    Eatonrifle's comments suggest to me that I am correct, Ken Clarke as shadow chancellor would be unwelcome within labour ranks.

    I don't think Cameron and Osborne ever sat down to make agreements in the way Blair and Brown did, Cameron was the outsider at the beginning of the leadership contest, with Davies the presumed victor.

    Eatonrifle is also correct that there is a danger of Ken Clarke breaking ranks, though I doubt he'd come out in full support of Brown. The test to Cameron's leadership is to grab him before he does, and allow him to gently move the Tories to a better economic strategy, which would remove the possibility of an April 2009 election.

  • Comment number 67.

    So, according to the BBC, Osborne was irresponsible for saying that unchecked levels of debt are a bad thing, but it's fine for Brown to say that we're heading for deflation?

    Deflation, 3 million unemployed by 2010 according to the cbi, private/company pensions now worthless thanks to Brown, everyone in the private sector paying for public workers' massive index-linked guaranteed pensions, massive additional public borrowing, and monumental tax rises when this pending borrowing con all comes home to roost.

    This country is finished beyond repair unless Brown/Labour get booted out in the next month. We have absolutely no hope with these idiots in charge.

  • Comment number 68.

    My advance apologies to Balhamu, Sagamix, CEH, Dhwilkinson and Grandantidote



    I will try and give some other warnings to you all......... but.....


    You are decent people, but I am afraid the time has come. Gordon really needs removal now.

    My advance warning is to say that as much as I like you lovelies.... Brown needs immediate political decapitation if we are to save the country much heartache, and I will find it nigh on impossible to continue to write in a semi-polite way concerning Brown's stewardship of the UK.

  • Comment number 69.

    I thought, perhaps wrongly, that G.Brown was no longer the Chancellor of the Exchequer and another guy called Darling took his place? Yet all the financial plans seem to be announced by the PM.

  • Comment number 70.

    My advance apologies to Balhamu, Sagamix, CEH, Dhwilkinson and Grandantidote



    I will try and give some other warnings to you all......... but.....


    You are decent people, but I am afraid the time has come. Gordon really needs removal now. Nothing else will do.

    My advance warning is to say that as much as I like you lovelies.... Brown needs immediate political decapitation if we are to save the country much heartache.

    Going forwards I will find it nigh on impossible to continue to write in a semi-polite way concerning Brown's stewardship of the UK.

    Gordon Brown today has taken to trying to scare the country with "deflation". Gordon has also tried to "spook" the country into supporting large-scale public spending programmes.

    Be under no illusion that the UK is the worst placed country to ride out the recession. Also make no mistake that Gordon's announcements are not designed to support the country, but are instead designed to pave the way for massive electoral bribes.


  • Comment number 71.

    Brown and Darling are not dealing with the problems, but burying their heads in the sand and going on a shopping spree. A sort of 'retail therapy' - which can only end in tears. Spend now, worry about it later (or in this case, they won't have to worry as they will no longer be in government). Scorched earth indeed!

    The Tories should be giving the government a good drubbing - but they now risk losing public support with their ill-considered social engineering proposals. IDS's plans to support pre-nuptial agreements and making it harder to get divorced smacks of the nanny state. Politicians can't mend society by forcing couples to stay together.

    One of the reasons Labour is so unpopular is because of its incessant meddling. We don't want to substitute a Labour nanny for a Tory one. They should remember, it's the economy, stupid.

  • Comment number 72.

    @ 70

    Well said , Electoral bride is his last chance for 4 more years, but he will have to call a snap election very soon after. If hes any chance of winning. if he leaves it till feb 2009 hes out for sure even though if he calls one tomorrow i still dont think he will get back in.

  • Comment number 73.

    I hate to be a killjoy but unless The Conservatives get their act together their slim poll lead will disappear in smoke. It's true to say that I loathe Gordon Brown with a passion and I believe he has put us in an extremely dangerous positionv vis a vis The Global crisis. The Opposition have allowed Gordon Brown and his Government to get away with murder and in doing so have lost the high ground. For me George Osborne is not the man to dismantle The P.M,s dangerous handling of the economy. The sight of Oliver Letwin sitting next to him during The New York Summit debate made me squirm. He is definitely not what we need. We need someone who can put The Government on the spot and and really ask incisive questions while at the same time presenting a coherent alternative policy or at least one which won't lead to punitive tax increases or accentuated problems in the future. The spectacle of so many failed ex leaders standing up to make weak contributions was frankly frustrating. All in all our performace throughout this whole crisis kicking off with yachtgate has been extremely disappointing. The Government needs to be challenged when it is wrong and it needs to be supported when it is perceived to be doing the right thing. The balance is wrong at the moment. I remain loyal to the cause but our challenge needs a good kick up the backside.

  • Comment number 74.

    # 73 sicilain29

    You are right that the Tories cannot take their advantage for granted.

    The danger to our economy needs to be spelled out. We cannot afford Gordon's bribes - spend now, worry about it later.

    I remember Maggie with her shopping basket. This was something people could understand and relate to. Most people realise that when short of money, you don't go on a spree to cheer yourself up! We should be urgently looking at cuts in wasteful government expenditure. Ditching ID cards would be a good start!

    The Tories are seriously in danger of losing the plot with their half-baked social engineering proposals. We don't need more of nanny! They should stick to the economy.

  • Comment number 75.

    How to scupper Brown before he gets his new (another) credit card? All you Forex guys have the ammunition... it'll hurt but we're up for it.

  • Comment number 76.

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

  • Comment number 77.

    27 Comments removed well done all in less than a week.

    I have sent in a formal complaint to the BBC


    Incidently i have also included the Halifax Plc file.

  • Comment number 78.

    Well done BBC Breakfast news........ great party political broadcast on behalf of the Labour party this morning!


    Ed Balls was interviewed about the Baby P scandal, then at the end the BBC dimbo asked for Ball's comments on the economy.

    Of course she let him get away without any challenge - he said something along the lines of "we were lucky in the UK because we have low debt" and then proceeded to trash the Conservatives.

    Not a single searching question - just a platform to continue the economic deception.

  • Comment number 79.

    Nick

    Osborne was pilloried for warning of a potential run on the pound.

    Yesterday, Brown used the 'deflation' word: equivalent to 'armageddon' in economics.

    Firstly, how likely is it that the UK will suffer deflation? I am only an amateur economist, but my thoughts as follows:

    - recent oil price declines will lead to reduced energy costs over the next quarter, lowering inflation from today's very high 5+% levels; but energy prices have now stabilised, so no deflationary threat here

    - sterling is down 25+% versus other currencies. Given we import most of what we sell in the shops, this would indicate INFLATIONARY risk, the opposite of deflation

    - given today's very high inflation, well above BoE's target, we have a hugely long way to go before we turn negative. Doesn't appear at all likely given current data

    - the UK has historically structurally been a relatively high inflation economy; this won't change

    - no major economist that I am aware of has said the UK faces a deflationary risk. Rather the opposite: the impact of the gov't spending splurge and lower BoE rates will be to increase liquidity in the economy. This is inflationary, not deflationary

    And yet: no one has challenged Brown on these pretty obvious grounds. Certainly not the BBC.

    My read is that our Prime Minister has simply used 'd' word to create an enhanced sense of crisis so that he can then justify his tax cuts/cons.

    In other words, our Prime Minister is deliberately seeking to increase people's worries and sense of crisis for his own political benefit: firstly to make himself look more important and powerful than he really is, secondly to justify his tax cuts and dismiss any arguments to the contrary without reason and logic, but relying on hyperbole and a sense of panic to frighten the public (and needless to say, BBC journalists!) into believing him.

    So I ask you, who is worse: Osborne or Brown?

    Two finalies:
    If there are any economists with a real view on the deflationary risk, pls comment as would be interested.

    Secondly, a major plea to the BBC: please, before you report this stuff, call some independent economists and see what they say so you can at least comment and report with a true sense of perspective, rather than simply trot out the Gov't 'narrative' the whole time as if it were Gospel truth. Did you even speak to the Tories for their views before posting this?

  • Comment number 80.

    Gordon has been working hard on his political survival.

    His long term plan seems to be to dodge technical recession, by swamping the country with borrowed money.

    In Brownomics, all he has to do is to "grow the economy" for one quarter with his cash splurge and it buys him another 6 months before he can be accused formally of leading us into technical recession.

    The recession is inevitable and Brown is only trying to dodge it so he can get elected.

    The mans ego knows no bounds. He clearly thinks he is worth a lot of tax payers money to save.

    With his plan in place, Brown has cynically spirited up the ghost of Keynes as an excuse for the cash splurge and called it "fiscal stimulus" (although more correctly it should be called an electoral bribe).

    Brown then shambles around the G20, telling us he is leading the world, but being ignored. He then secures 21 words in the G20 statement as an excuse for the cash splurge.

    Next step in the survival plan is to spread fear, uncertainty and doubt - "deflation". Yes - it is time to panic people into wanting his cash splurge.

    I suppose we must be near the final phase. He is now going to swamp "poor people with money to spend at Woolworths over Christmas".

    Given a lot of people will hold onto the cash handout - Brown is going to have to swamp us with a lot of cash if he is going to pull off his recession dodge.

    Meanwhile the countries debt spirals.....

    Policies remain designed for one mans survival and are not in the interest of the country.

  • Comment number 81.

    #63

    Your 'inflation solution' to the slump is rather at odds with the prediction for 'deflation'.

    The prediction for deflation is just bogus scare-mongering. That's not to say inflation will not go negative. It wouldn't surprise me a bit if it did - lower fuel prices would probably do that on their own. But it will be a temporary effect - just as interest rates were kept low even while inflation was up at 5%. Because that inflation was just a one-off step due to higher fuel prices.

    The threat of deflation with helpful 1930's style scenario from Robinson is to justify the massive borrowing and squandering we're going to be hearing about next week in the pre-budget report. I'm plumping for 1% of GDP or 15bn quid sent out in cheques to pay for a jolly good Christmas for everybody. This will, hopefully for Gordon, nix the second quarter of negative growth that would nail this recession on him and his incompetent government and also be fresh in the mind of the voters if he calls a spring election.

    I see some contributors are suggesting 2% of GDP may be an appropriate 'fiscal stimulus'. To go with the 3% of GDP of fiscal stimulus we've been getting for the last five years. I wouldn't rule out 2% or 30bn in pre-Christmas squandering to rig the GDP numbers and defer the onset of official recession. I think by now we all know that Gordon Brown is capable of any manipulation to cling to power.

    It might just work too. In the sense that it'll avoid the second quarter of negative growth and bribe the more hard-of-thinking in the electorate.

    Oooooh, I'm going to vote Labour - they sent me a 1,000 quid cheque.

    Will it revive the economy and stop the recession/unemployment etc in its tracks? Not a hope.

    We are all about to bribed with our own money. Well, more accurately, twenty people I've never met are going to be bribed with my own money.

  • Comment number 82.

    I read, with no surprise whatsoever, that the Iraq was was, in fact, illegal.
    Forget the economy! I want to see Tony Blair tried.

  • Comment number 83.

    The government and Gordon Brown have run as fast as they can away form this problem.

    But they cannot hide form the currency markets.

    Further increasing borrowing - if Gordon Brown really does believe defaltion is coming - is the height of irresponsibility as this debt will not deflate whereas our ability to repay it will go down.

    The government is about to be the owner of 60% of the RBS balance sheet - 2 trillion pounds of assets that are not worth anyhting like that amount.

    This is the best article so far about this:

    http://blogs.ft.com/maverecon/2008/11/could-the-uk-face-a-sterling-crisis-or-are-we-in-one-already/

    It's a scary thought but we may face a sovereign debt crisis on top of sterling weakness.

    The problem is that Gordon Brown has treated the economy the same way he has treated Metronet, the NHS, Railtrack...you name it the solution was to shower it with cash. This will be a disaster for the economy as a whole because of the contingent liabilities in the banking system the government now owns.

    Perhaps we can ask balhmu to ask his Nobel prize winner who believes the Brown plan is best to explain this one to us. And he can also explain why Barack Obama decided to duck a photo opportunity with Superhero Gordon Brown.

    Call an election.

  • Comment number 84.

    The horse has well and truly bolted on the fiscal stimulus plans. It is too late and they will not have the desired effect.

    Do the government really think that everyone will go out and spend their £1,000 just to help the economy out, when they know that a tax rise will be right around the corner?

    Whatever amount of money I receive, if indeed I do, is going straight in the bank so that I can afford to live when the tax rise comes. No doubt there are many, many others who will think the same.

  • Comment number 85.

    This recession hasn't even started yet (officially). Those who think that Labour have it in the bag, think again.

    3m unemployed by 2010 - Labour isn't working.

    All over again.

    Now, cast your minds forward a few months and into the public sector pay round...

    We'll probably have 2.5m unemployed by then.

    Ah yes, the unions... the organisations that are funding the Labour Party now the private donations have dried up.

    As hundreds of thousands of private sector jobs are being lost. Inflation has ravaged pay over the last year.

    The unions say their members need a pay increase due to 'falling real incomes'.

    What do you think Labour are going to do?

    Pay the unions what they ask for?

    Show some fiscal responsibility (I know laughable but I had to mention it) and say "Sorry, salary freeze this year."

    Yeah right.

    Do you think those private sector workers, the taxpayers and voters are going to be happy with that?

    In February, council tax bills are set, do you think the public would tolerate the government cutting LA funding this year?

    Meaning that LA's might have to go cap in hand to homeowners?

    Bearing in mind most councils are Tory ran now.

    Do you think LA workers and homeowners will be pleased?

    As welfare bills surge, tax revenues fall and government borrowing increases even higher. What do you think is going to happen? Government issues more gilts, index linking the debt to our children. Sterling sinking to the $ and Euro.

    There will be no stasis in the real world businesses will be going bust, private sector jobs being lost, houses being repossessed. Pensions being de-valued.

    Do you think those people will be happy at this outcome?

    Yet the public sector hasn't had one pound cut from its budgets, not a job lost due to the recession.

    It's still there, nannying and interfering where it shouldn't; getting in the way of wealth creation; a millstone round the neck of the country's entrepreneurs and business people.

    A tax code that's larger than India's and a law statue that the largest in our history.

    Even the teachers, nurses, doctors and policemen complain. We 'just' sent out soliders out to battle poor-equipped.

    What about that army of 750,000 form movers and target watchers. Or their £1tn final salary pension liability?

    Are they really adding value to UK plc?

    Hardly sharing the nation's pain is it?

    And Gordon grinning through it all like some psychotic madman?

    Do you really think the general public are really going to vote for all that?

    And that's just 2009... it'll be the same again in 2010. There is a nasty thing about recessions, having lived through a few.

    They are a day by day slow motion train crash, it will be bad news every day for 700 days. Powerless to stop it.

    And people are going to vote for more of the same for five more years?

    Labour get re-elected in 2009 or 2010?

    Dream on.

  • Comment number 86.

    How is Gordon Brown going to try to bury the following today?

    http://news.bbc.co.uk/1/hi/uk_politics/7734712.stm

    Or wil he just use it as a chance to kill off the Blairites?

  • Comment number 87.

    Re: 22. stuartjreid wrote:

    "I have to say that the vast majority of posts in the political and business blogs are from Tory supporters. Or perhaps Labour haters. Maybe these are the dreaded vocal minority, but the amount of comments that blast the BBC's editors as being biased, or bowing under pressure from Labour, is astounding."

    Have you ever thought that the reason there's so many comments about bias is because .. er... it might actually be true.

    Do you really think the BBC has been impartial over it's treatment of Osbourne or impartial in it's coverage of the US elections?

    What amuses me is while the comments regarding BBC bias usually contain facts to back up their case i.e post 78, those that criticise these posts can only muster a defence of; 'they must be all Tories.'

    This point may escape you, but I don't want it to be bias towards either Labour or the Tories, but show the SAME scrutiny of Lord Mandelson as it did with Osbourne, the SAME scrutiny of Obama as with McCain, the SAME scrutiny of Labour's economic failures as with the Tories etc. I want the BBC to uphold it's Royal Charter.

    I want this because I'm a License fee payer not because I'm a Tory (whom I never voted for in my life)

  • Comment number 88.

    #80

    Given a lot of people will hold onto the cash handout - Brown is going to have to swamp us with a lot of cash if he is going to pull off his recession dodge.

    Meanwhile the countries debt spirals.....

    Policies remain designed for one mans survival and are not in the interest of the country.


    Yep. And the telling thing is that we don't get any Labour apologists on here disagreeing with that scenario.

    None of the usual suspects giving it 'No, that would be cynical and irresponsible, Gordon Brown would never do that'.

    Which tells you that everybody, from whatever side of the political spectrum, knows that Gordon Brown is more than capable of a 'tough choice' like that. Which is a shocking state of affairs when you think about it.

    C'mon Labour apologists. Do you think Gordon Brown will be looking to get 15bn quid into people's hands in time for Christmas purely to defer the technical recession. Or not.

    I'm suggesting that tax cuts won't do the job. Too long term - won't defer the technical recession. I'm suggesting we will literally, like the yanks, be seeing cheques in the post before Christmas.

    There.

    Tell me I'm wrong.

    Stick your neck out too.

    I actually hope to be proved wrong because if I'm proven right then we will know for sure that we are witnessing a deliberate scorched earth policy from Labour. At the moment all the damage could still be put down to pure incompetence.

  • Comment number 89.

  • Comment number 90.

    It will be very interesting to hear what Cameron has to say at 10am - he has two major problems to deal with

    1) He cannot simply go on and on dismissing Brown and Darling - however right or wrong that may be - without offering some kind of vision about how he would handle the current crisis. The facts are that to date a few questionable and piecemeal proposals arounf Nat Ins breaks,Council Tax freezes etc have appeared what they are irrelevant,ill judged and taking a pea shooter to crack a tank!

    2) He has to very quickly shore up his core support,and I dont mean the electorate.Yesterdays debate highlighted the first tangible signs of widespread discontent amongst his back-benchers into the handling of the issue by the Tory Leadership so far - Osborne has so far borne the brunt of Tory angst,the longer Cameron dithers,the more his lack of policitcal judgement will become an issue.In such a crisis leadership,thinking,responsibility comes from the top - it strikes be internecine warfare could be about to break out on the Tory backbenches between to old fashioned Tory Country set who have never fully embraced Cameron but who were convinced enough by a tidal wave of good faith and booming poll support - and the younger Cameron Eton elite who worship at the feet of Messiah Dave - the last thing the Tories need at the moment is division,and if we are being purely impartial that last thing the Country needs is her majestys opposition tearing itself apart at a time when we need (a) some form of concencous and (b) a vibrant and vigorous but creative Opposition not only pointing out weakness in Government policy but providing radical alternative thought.

    Camerons problem is the Tories are being perceived as a one trick pony - anti Brown - no more no less and as a result any faith in them outside of their core support is slipping fast.

    The question therefore for Cameron in a few minutes will be - do you provide solutions and ideas or do you merely try to prop up your Shadow Chancellor and sooth your disaffected back benchers - in my opinion the former would be a master stroke - the latter would be political suicide - more of the same and Cameron and Osborne could be doomed!

  • Comment number 91.

    Well done BBC.

    Labours only defence is to trash the Conservatives each and every time a Labour stooge is interviewed on almost any subject.

    Are the BBC the New Labour Broadcasting Corporation.

    In the few weeks i have used this Blog service my faith in the BBC has been shattered.

    Incidently i have no political leanings other than i loath them all,the new political class are the worst YET.

  • Comment number 92.

    Re 88 - Brown in my opinion is trying to work a way out of a global mess the best way HE knows how - to spend - scored earth type bile does not help anyones argument.

    Of course no one can deny Brown is a consumate calculating and like most of the best of that type potentially devious politician - he, and indeed Tory Central Office,know the nightmare for Tory,dream for Labour political position....

    It is in my opinion...September/October 2009 - inflation and 0.5% - just out of deflation but not rising,interest rates around 20% and steady, a tax give-away of around £30bn announced December 2008 having given the average family around £800 p.a pro-rata extra in their pockets,petrol around 90p per litre , unemployment under 3 million,but crucially with the worst impact in the South/South East - a feeling in the heartlands of the Midlands and North West that although things have been bad,they could have been far worse - Gordon of course is still astride his white charger proclaiming victory of sorts-Cameron and the Tories seen and perceived as being merchants of doom and still talking about "pay-back day" the time when the give-away has to be handed back....

    Gordon claims the worst of the recession may be upon us but that getting out of it will take a further 12 months of hard labour with more difficult and dangerous decisions to be made - he is supported by his friends Obhama,Sarkosy,Merkel and Putin who proclaim his vision...

    Brown goes to the polls - seeking a mandate just over 6 months before he has to - he cant be accused of cutting and running - as would be the case in the spring - he has had 6 months as head of G20 to cement his position....

    Now - tell me that thats cenario does'nt scare the life out of anyone wanting to see an end to New Labour - if the Tory lead is now around 7-10 points what would it be in 12 months and in the heat of a 3 week election campaign??....my guess is a hung parliament with the Labout Party possibly with Lib Dem support and a voice for Cable-forming the next Government...

    So whilst Brown in my opinion is seeking an economic resolution,he is'nt kidding anyone when this is his dream political scenario...

    For he knows he would destroy the Conservative Party for at least another generation..

  • Comment number 93.

    Now that Lord Bingham has stated that the war in Iraq was illegal (why didn't he say this before he retired ? ...one asks) no doubt the governments taking part (USA & UK) will have to consider the financial consequences....ie Reparations to the Iraqis....loss of reconstruction and oil rights to the Russians and Chinese and a further devaluation of Sterling........something else EL GORDO will blame on the oppoosition parties ...especially if Alistair gets anywhere near the Sun And Mirror.

  • Comment number 94.

    Scorched earth is not even the start of it. Labour are going to be out for 2 generations at least, if not forever. If the electorate cannot see the futility of this then we are mugs.

    The tax cuts need to go to business. It is business that drives the economy and provides jobs - NOT POOR/LOW PAID/UNEMPLOYED PEOPLE!

    Please Nick - please for the love of this country, and your children (who will be lumbered with paying for Brown's idiocy), grow a pair and start asking some really tough questions. This madness has to stop.

  • Comment number 95.

    Nick,

    I am just so pleased that Gordon and his advisers read your Blog, I think you will find I was asking for the PM to and the Chancellor to tell us about the implications on the population of deflation.

    The trouble is we need to be told now about the implications for pension increases and social benefits. We need to be told for example that even if there is deflation then the state pension will increase by say £5 per week. I would state that an increase in state pensions would actually help to reflate the economy in a period of decreasing prices.

    What will happen to company pensions, what are the implications. Now that the first post-war baby boomers are coming to retirement the ticking demographic time bomb is just about to go off.

    Actually, if you strip out the increases in the prices in the former state owned monopolies you may find that deflation has been around for some time!

  • Comment number 96.

    Re Browns Economic management & exchange rates/inflation.

    Amongst other things like dealing with the insolvency problems facing some of our retail customers.My senior management team are giving consideration to relocating our business out of the UK.

    Looking forward we see Sterling crashing due to Browns policies we seek the tax burden exploding out of control.

    So we might aswell pack up and go ,relocate the distribution centre and sack 250 plus staff.

    True inflation next year can only go up look at the IMPORTS STUPID. . .

  • Comment number 97.

    @59

    I suggested bringing cuddly Ken back over a mmonth ago on a peston blog
    I agree with you Ken is the MAN

  • Comment number 98.

    re 93 - I think the billions already pumped in to Iraq in respect of "re-building" would constitute any form of reparation...
    The simple fact remains - if Blair and indded Bush had said "we are going in to Iraq to terminate Saddam" - something that Bush senior and Major should have done in 1991/92 but failed to do - and had then got out the troops and facilitated a UN Force - then the issue would have been expeditely and properly dealt with.

  • Comment number 99.

    #92 said:

    "It is in my opinion...September/October 2009 - inflation and 0.5% - just out of deflation but not rising,interest rates around 20% and steady, a tax give-away of around ?30bn announced December 2008 having given the average family around ?800 p.a pro-rata extra in their pockets,petrol around 90p per litre , unemployment under 3 million,but crucially with the worst impact in the South/South East - a feeling in the heartlands of the Midlands and North West that although things have been bad,they could have been far worse - Gordon of course is still astride his white charger proclaiming victory of sorts-Cameron and the Tories seen and perceived as being merchants of doom and still talking about "pay-back day" the time when the give-away has to be handed back...."

    1. Deflation has been modelled by the BoE on the RPI index in their October inflation report.

    Let me see, what is a key component of RPI?

    House Prices. They are falling - hence the deflation.

    There is no deflation modelled on the CPI index (which excludes house prices) - which is also the Government's official measure.

    So is Brown going to go back to RPI to justify his deflation claim and also his unfunded tax cuts?

    2. Interest rates at what? 20%?

    Are you mad? If the economy is deflating, YOU DO NOT INCREASE INTEREST RATES YOU CUT THEM!

    Your economic competence is in ruins - be quiet.

    As for the rest, that is the kind of Labour tribalism that has wrecked our society, destroyed our social mobility and got us in this mess.

    So you explicitly agree that as long as Labour throw their core vote a few tax cuts all will be well in this country?

    Sorry but you haven't got a clue about the economic pain being felt by everyone.

    I really hope you are connected with Labour Party because I want you to go out and canvas for votes on that. Please do it.

    I only hope you like doors being slammed in your face.

    Hard working families does extend to the middle classes as well. Labour have forgotten that; the middle classes but Labour in charge and they will remove them.

    Mark my words.

  • Comment number 100.

    Re Gordon Brown.

    It is clear he is out of his depth ,is deluded and self deceived.

    There will be no end to economic cycles regardless of his bizarre statement.

 

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