Sterling shunned
I've been desperately scrambling around for something positive to say today - and the best I can come up with is that the remarkable fall we've seen in the value of sterling today (again) shouldn't make the Bank of England so anxious about importing inflation that it postpones the widely anticipated further cuts in interest rates.
The Scarborough Evening News is responsible for this insight (if such it proves to be), because it contains some striking remarks by the Deputy Governor of the Bank of England, Charlie Bean:
"This is a once-in-a-lifetime crisis and possibly the largest financial crisis of its kind in human history" said Bean. "In terms of the impact on the real economy we are still in early days."
Those do not seem to me to be the views of an economist whose main anxiety is the outlook for inflation. They're the words of a central banker worried about the possibility of a deep dark slump.
I
f the Bank of England doesn't cut a further ½% off the policy rate - either at its next meeting or in another round of global cuts in co-ordination with other central banks - I'll be somewhat surprised.
Also, some of sterling's weakness can be seen as the corollary of dollar strength, rather than a wholesale decision by international investors to shun sterling assets.
The dollar and the yen have both risen today as the last vestiges of the years of the carry trade - in which investors borrowed cheaply in yen and dollars to invest in emerging economies - is unwound.
Hedge funds and other institutional investors are liquidating any assets they perceive as even mildly risky, especially in eastern Europe, Russia and South America (see my note on this yesterday, "Now there are runs on countries").
And such liquidation inevitably leads to purchases of the US and Japanese currencies.
But just because part of sterling's weakness reflects a flight to the safety of the dollar and yen, there's no real comfort there for us.
Sterling today hit a record low against the euro and is at a 12-year low on a trade-weighted basis.
Why don't international investors love our currency any more?
You know where the smell is coming from:
1) our huge and tumbling housing and property markets;
2) a banking sector massively dependent on flighty wholesale funding from overseas;
3) a fast-growing budget deficit that has to be funded by massive sales of sterling government bonds, at a time when central banks, sovereign wealth funds and institutional investors are suffering a squeeze on cash available for such investment (Michael Saunders of Citigroup estimates that the Treasury will have to flog around £100bn net of gilts every year for the next three years - which, as a percentage of GDP, takes us back to the horrible deficit years of the early 1990s);
4) oh yes, and we appear to be in recession.
Now the capital flight out of the UK is mild compared with the currency crisis hitting Eastern Europe and Russia, which may well be translated into severe economic difficulties.
But all that means is that we shouldn't expect vast numbers of the recent émigrés from those countries to return home when the job market tightens here.
If Poles have a choice between being unemployed here or in their homeland, it's not obvious they'll all decide to repatriate.
But while we are on the subject of the vulnerability of Eastern European, Russian and South American economies, here's something positive to say about our banks: their loans to these regions are limited.
If there are big loans losses to be suffered by banks exposed to emerging economies, disproportionate pain will be suffered by continental banks.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~14~RS~)
Comments
Sign in or register to comment.
Why are you going on about the Poles going home Robert, we let Poland into the EEC, whether we like it or not they have a right to be here. It is not repatriation. Its a ridiculous comment.
Complain about this comment
We're dooooomed!
It's Friday evening, can't we relax until Monday at least?
Complain about this comment
Forget the positive, looks like you're scrambling around to say anything. It's funny isn't it, recently you've seemed to become mortal again. Where have all the scoops gone?
Complain about this comment
We should all now see the hollowness of Gordon Brown denying responsibility for this crisis on the grounds that it is a global issue. This may be the case but it also seems to be the case that we are perceived to be the worst of the rich countries as the plummeting value of sterling demonstrates. Oh and will the Government now recalculate the economic benefits of immigration when huge numbers of Eastern Europeans start claiming benefits?
Complain about this comment
The value of sterling is, for me, quite worrying as I really no longer understand why it has fallen so much. The downturn in the economy of the UK is mirrored by other countries worldwide. Therefore, why do we appear to be paying the price?
Over the last 2 years the US dollar has fallen in line with increasing oil prices and poor economic data. Both of those factors appear to still be in play - especially after OPEC's decision to cut production. Will we now see the dollar start to fall?
If our exports really do have the chance to increase then the fall may have some benefits. However, in a worldwide crisis I really don't see that happening.
Neither do I see any great benefit in slashing interest rates. I don't hear people complaining that the cost of finance is too high. The real problem is the risk and availability.
Complain about this comment
Who will buy UK Treasury debt? Given the level of borrowings and the effect of other financial instruments that have not yet worked themselves out of the system! How long before the credit rating of the UK is downgraded?
Complain about this comment
Hi Robert
Not sure of how to get hold of you so I think this is my best bet. I am a student in Oxford doing my masters in business. I am looking to do my dissertation on how blogs influence peoples perceptions of the markets. I would like to know if I could ask you some questions regarding the issue. If this is not the right channel, could some one please push me in the right direction.
Thanks so much for your time and looking forward to hearing from you.
Verge
Complain about this comment
Robert, aren't you missing another source of the 'smell', as you put it? Simply that there is an expectation that the BoE is going to gradually and continually cut interest rates over the few months encouraging institutional investors to pull out of sterling for those markets offering greater central bank interest rates?
It is not as glamorously depressing, I'm afraid, but may be the real source.
Complain about this comment
Time to sign up for the Euro - we cannot afford to delay any longer.
Complain about this comment
It is good to see that Mr Preston is trying to find something positive to say.
Sterling interest rates should be cut immediately over the weekend and it be a political decision that is fully justified. a half a point at least.
The reason sterling is so weak is more that it is sterling being hit not the dollar being bought - witness today's sterling dollar rate volitility and sterlings downward trend across currencies. The economy is in bad shape and the currency investors know the truth and are voting with their money
Robert has put his finger on some of the causes, but still does not seem able to admit that this government has spent excessively and placed the UK in a much weaker position than most western economies
Complain about this comment
We know where it will end. 0% interest rates. The Pound is a currency in dire straights. It has no value to give it strength, and value here means a solid maufacturing or exporting or growing economy to back it up.
Complain about this comment
Should i start buying US $????
any advice are welcome!
Complain about this comment
it'll be a hoot if another of those Bin Laden videos is broadcast tonight with the old boy wagging his finger at us..
GC
Complain about this comment
Hey Robert,
I want to buy a flat in NY, should i need to convert my pounds into american dollars or should i wait?
thanks in advanced for the time and help.
best
B
Complain about this comment
I thought the missive from Scarborough was a spoof as Mr Bean is a common bloggers nickname for Mr Brown. Still it is reassuring to know we have now got two Mr Beans on the Job with the able assistance of Lord Mandelson. I think its a dream team and feel wholly confident in them to turn things around. Their first month has only caused a 25% fall in the FTSE. I will leave my fate in their hands and that of my expert financial whizz at Friends Provident as I am sure he will not get caught holding any lemons will he? Well he's only cost me £35K so far this month and at that rate he won't have any beans left to count by Christmas ( Other than the two above!) So The Pound has now gone south as well as my Pension, my house price and my job what a horrible year 2008 is turning into. Perhaps I ought to apply for Mandy's Euro non job if its still free. The Value of Aluminium can go down as well as up!!
Complain about this comment
So we're almost bankrupt then Robert? Am I relieved we have good old Gordon at the helm.
Complain about this comment
There are other adverse factors which can be added to the list.
1 Lack of investment in technology, in part due to successive governments policies.
2 The desire to have foreign multinational manufacturing satelite plants in the UK as an easy solution. These are notorious as pack up and go activities if the tide turns, in fact some have already gone, with of course a great deal less government fanfare than when they came.
3 The obsession with the City as the answer to the economy. As de facto the City has to shrink, possibly quite a lot, there will be a hole left.
4 If you remove a technological edge and knowledge working you are left with a low cost labour market, and labour is always cheaper elsewhere.
5 The EEC grant aided industrial development in countries, eg car manufacturing in Spain. If you grant aid such a brand spanking new facility with a cheaper workforce than the UK, and there is surplus car making capacity elsewhere - such as the UK, then the UK capacity will reduce. It does not help that there were fundimental problems in the UK car manufacturing sector, but the new facilities elsewhere where effectively subsidised.
Perhaps it is time to ask Mr Bean just what he meant when he said the UK was well positioned to face a downturn.
Incidentally those who are so convinced that migrant workers will return home, as it were, should look at the situation in Hawaii. back before the 1900s the locals did not want the work on the largely American owned plantations, too badly paid, too difficult. Sensible. The solution was to ship largely Far East workers in from overseas, a lot from China. They would put up with abuse. At the end of the 5 year contract the new migrants then decided to not go back and refused to work on the plantations, so another shipload was brought in. This continued until the migrant workers outnumbered the locals. Today nearly 2 in 3 Hawaiians are not of local origin. Local origin Hawaiians, as I understand it, complain they have lost their culture, or at least their culture is threatened. This comment is not xenophobic. It is just historical fact. There should be no assumption of what somebodyelse will want to do when there is choice. It is their decision.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
What a mess,
when Robert starts a blog
(about our stack of cards economy starting to quiver), i will know it is time to head for the hills.
My Mom always said only pay for what you can afford,Gordon has encouraged debt for a decade the reckoning is coming
Complain about this comment
Buy gold!
We are going to have competitive devaluations as everyone scrabbles to devalue their currencies by cutting interest rates. This will fuel inflation but they won't care.
These governments can always print more money, but they can't print gold.
Its one of the few safe things left. If you leave your money in sterling the government is going to be effectively stealing some of it every year in the form of negative real interest rates after tax.
Buy gold folks!!!!
Complain about this comment
Robert
First time writing but I am one of the legion of daily readers etc
Have just read the full interview of Mr Bean on the web at Scarborough Evening News
http://www.scarborougheveningnews.co.uk/news/EXCLUSIVE-Bank-of-England-boss.4627518.jp
I Hope that Mr B enjoyed his libation before the interview (as that will be his excuse)
At one point he says
"This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history."
but manges, 2 breathes later to state
"hopefully we are on a path which is improving rather than deteriorating."
Help ma boab, Bob
Is this guy daft or whit?
Keep up the good etc........
Complain about this comment
You don't think inflation is going to happen? Think again - oil, gas, electricity all are dependent on the $/£ exchange rate. Raw materials and food too are predominantly imports so are going to get more expensive.
Never mind, our manufacturing industry exports will benefit from the exchange rates... but wait, what manufacturing industry?
Complain about this comment
If I hear Gordon Brown once again pontificating about his magnificent handling of the UK economy during his time in power, I'll be putting together my emigration papers and dropping him an email telling him to stuff it.
I just hope that history makes a point of defining the rank incompetence of the man, perhaps pointing out that his recklessness with British people's money has been unprecedented and near criminal in its magnitude and forthcoming implications.
The sooner Gordon Brown is consigned to the bottom of the dustbin of British political history, the better.
Complain about this comment
The sinking pound is negating to some extent the benefit of the price of oil dropping. That's serving as a double whammy to the Treasury coffers as well. I fht eprice of oil starts rising again, and I for one believe it will in the near future, petrol prices are going to up twice as quickly as they did before and perhaps hit higher peaks.
All this does not bode well for Britain's ability to climb out of the impending recession. The trouble is now that if interest rates fall and banks start responding to Government pressure and ease their lending restrictions, then we are in a situation where people will take a leaf out of the Government's book and resort to borrowing to get themselves by.
Then it won't be just imported inflation we need to be concerned with, but inflation in general. The lessons of the Seventies should not go unheeded.
Complain about this comment
This mess has shown that to allow politicians anywhere near the tiller invites accidents just as night will follow day.
The biggest nonsense here is that on eth way up the government was taking credit for growth even though it was solely based on borrowing.
Unfortunately there was no real growth it was all paper based. Had it been there we would have made provisions to weather a down turn What we have now is a pwoerless government blaming everyone else for their own economic mismanagement. How lonmg before they have to lay off the 600k of extra civil servants they took on.
The cupboard is totally bare and to listen to the Chancellor saying we all have to cut back is laughable.
We are in a mess and we need to point the finger to get things sorted. Why? because we can no longer allow those who had no foresight to realise nothing goes up in a straight line and blew our reserves to continue to manage the economy, That also cuts for the incompetance of the Financial regulators.
We have no choice but to get out the hatchet knives and give future generations a chance. it really is that simple and at the same time that awful.
There can be no more spin or dumb red herrings about meetings on boats the problem needs a toal reversal of approach to sort out as without doing so we truly will all be up the creak without a paddle and not becauze Labout taxed the paddle to the point where only the party heirachy could afford to buy one at John Lewis with taxpayers money as no one else can!!
Complain about this comment
RP - Who is this upstart Hugh Pym? He seems to have taken your 6pm news slot!
Complain about this comment
#1 Glanafon
I think it's a reasonable comment to make, many nationals of the new accession nations have come to the UK for the work, and don't necessarily have strong ties to the country. If the UK fares worse than other EU countries, you might expect the extended European labour market to work its magic and provide jobs elsewhere for those who can and will travel. I bet many Poles and others would love to go home if the prospects looked better there. Robert is merely pointing out that it doesn't at the moment.
Complain about this comment
mr peston,I have lost all respect for you,after your anti tory rant about mr osborne.what you did on the osborne matter was a disgrace,you should'nt have even got involved,but now now I know why,father a labour lord and you wrote gordon browns book and a good friend of his,me can not even read your blogs anymore ,you remind me of bbc bias.
Complain about this comment
Robert, will you be appearing on Newswatch this week? Raymond Snoddy indicated that you were due to be on last week and the previous week but no sign yet!
Complain about this comment
yet again more bad news aimes at lowering our self asteem and convincing us via the media that we need to drop sterling and join the euro, this seems to be government policy to drag us under european control without our say.
i can only wonder how much members of this government are being paid to knife there own country in the back, i know mandelson is not above doing underhanded things as we have seen before.
well if they get there way i feel they should be held as traitors to this country and publicly hanged.
its time the people of this country fought for there own rights even if it in opposition to what those fools in westminster wants.
Complain about this comment
Sabes10, I'm glad you can make light of what is looking more and more like the end of the world as we know it.
I wonder if you'll be so glib one year from now when sterling is worthless, energy companies are rationing supply to a few hours a day to maintain profits and and we're all living in cardboard boxes whilst the millions of government bank-owned homes seized in the forthcoming flurry of mass foreclosures and mortgage call-ins gently rot.
None of us have seen anything yet. Civil unrest and massive social breakdown of a society - which even before the depression was staring into the abyss - are pretty much inevitable. This is going to make the 1930s look like a weekend at Butlin's and when it's over, if it ever gets over, the world will be a very very different place.
Complain about this comment
If our financial crisis is as bad as during the Black Death, we should forever call it the Brown Death.
Complain about this comment
Sterling at record lowagainst the Euro??? I don't think so - unless the BBC web site has the numbers wrong....
Complain about this comment
'But all that means is that we shouldn't expect vast numbers of the recent émigrés from those countries to return home when the job market tightens here.'
That will be decided on how many are eligible for JSA and other benefits.
I'm sure the UK government will have some information on these various numbers to work out how many will have to leave if they aren't entitled to any help under the current system.
As for the economy the government needs to support small businesses and individuals and reduce any excess government spending to help the economy so consumers can pay off loans,credit cards and mortgages to a more sustainable level.
Rising unemployment in the UK when borrowing for mortgages,loans and credit cards is at its highest ever means the government needs to step in now and help the economy.
Complain about this comment
#14
You should have bought dollars when the were 50p each. Now they are 75p.
Complain about this comment
Interested by the comment about the UK joining the Euro. When he was Chancellor, Gordon Brown used to talk about the "convergance criteria" and the need for economies in the Eurozone to have broadly similar interest rates, inflation rates, National debt as part of GDP etc.
It seems to be that all of the European economies are now in the same "rickety" boat. Would this be a good time to think about joining the Euro and ditching one uncertainty, namely the volatile exchange rate?
Complain about this comment
The pound might be dropping at the moment because of fears that the BoE will be making further base rate cuts in the coming months, possibly to almost halve of the current rate before they feel the need to stop, and the markets are factoring that in.
One thing that is not being factored in, is that commodities, mainly precious metals are down at the moment as hedge funds and financial institutions try to liquidate assets in order to meet debt obligations which is artificially pumping their prices down and keeping the dollar up. At some point in the near future, I expect to see a reversal in the downward slide of gold as investors scrabble for a safe bet, and a precipitous fall of the dollar which is only going up at the moment by nature of its reserve currency status.
When China and the other eastern nations see that there is no option but to dump their dollar reserves, then it will go into freefall, and will most likely take the pound with it.
A safe currency in the future would seem to be the Euro, and in the longer term, the pound may well fight back if we have sensible financial direction from the Govt. and the BoE.
For now, I am buying a few thick duvets, stocking up on essentials and getting in a stock of paperbacks and candles to see me through the winter.
Complain about this comment
It is hard to see how the collapse of Sterling in the global marketplace can be anything but inflationary and indeed ‘depressionary’ for the UK. For example today, oil did drop again, together with almost every other commodity, but in terms of Sterling most of the commodity prices remained constant - some even rose in sterling terms as they are all priced in USD.
Normally a weak currency can aid in the export/import balance of payments, and the UK does import more than it exports even in terms or core goods, those costs will rise.
In the UK manufacturing sector imported raw material costs will most likely rise in terms of sterling, a sector who already sees demand from overseas drying up. With the depth of the impending recession for our trading partners it is hard to see a weak pound being a strong enough stimulant to encourage a dramatic rise in orders for UK goods despite a more beneficial sterling rate.
Perhaps the BBC should run the "The Good Life" series as self sufficiency may be more that a choice for a family - it may be a requirement for the country.
Complain about this comment
Like I said in the blog, a couple of weeks ago, people's savings in the banks are secure - it's just that the buying power of the money will fall. In other words, £50,000 will eventually be equivalent to about £35,000.
Complain about this comment
"I've been desperately scrambling around for something positive to say today..."
I didn't realise it was a requirement of the BBC's Charter that you only report good news.
You've certainly not been doing that so far as Banks are concerned. Still, their depressed share prices meant the taxpayer was railroaded (without any kind of democratic vote on the matter taking place in Parliament I might add) into supporting the bad banks at a knock down price.
Complain about this comment
Ah yes, gold. Have u seen the price recently, #20 DontCallMeDarling? (lol)
It's trending down, believe it or not, from a peak in February.
One would expect gold to be rising, safe haven as it is.
Some comment on this is here:
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=71248&sn=Detail
Complain about this comment
This drop in sterling was predicted last year. We have had a chronically weak dollar for the last 6 years, which led to an increase in sterling. We are now back to 2002 echange rates. Far too much currency speculation took place without sound reasons, some were even gambling on reaching $2.30, this clouds the value of Sterling as an economic indicator
Complain about this comment
"I've been desperately scrambling around for something positive to say today" - Robert Peston.
We pay you to report the news as it is. Not as you wish, or are told to report it.
Complain about this comment
The way the Gov't and Bank of England has failed to support our Banks...
Ie Nationalisation and forced marriages...
Has destroyed confidence in the UK
The Uk stockmarket is finished.
Complain about this comment
I moved to the US in 2003 and started a business. This year should have been good having got momentum. From March sales plummeted by 80% of projected and 70% of previous year. At the end of November I have a UK life policy maturing and I was expecting to get $30,000 once I moved it here - that will closer to $20k now.
Wonderful - banks have pulled all available credit from me so I cannot pay suppliers - do the banks want us all to fail?
Complain about this comment
Well here are a couple of other reasons Sterling is starting to collapse.
Note the graph post-Brown in 1997...
http://www.tutor2u.net/blog/index.php/economics/comments/the-uks-record-trade-deficit/
Also as for the "credit crunch":
http://www.fxstreet.com/fundamental/analysis-reports/economics-weekly/2008-10-01.html
oh and the government deficit we are running is a new record, not even in the same league as the 90s.
Complain about this comment
Buy Gold!!! The markets hit the bottom, get back in!!! Property is cheap, get a mort gage!!
Buy a bargain!! Hire a cleaner!! upgrade your car!! Have your nose and chin reduced in the lunch hour!! Order another starbucks!! book next years holiday!! Confirm next years private health insurance!! get ready for this years company Christmas party!!install sky hd!! Plasma tv please, 40 inch looks good!!
TO
Pawn your jewellery, bin your pension, lose your house, lay off your servants, use your bike, use the wifeys anti blemish cream, take a flask of coffee, mend the hole in the tent, cancel all unnecessary xtras, lose your job
Time to quote that rendition of Robert Shaw in Jaws
Farewell and adieu to you, Spanish Ladies,
Farewell and adieu to you, ladies of Spain;
For we?ve received orders for to sail for ole England,
But we hope in a short time to see you again.
Wakey, wakey everyone cos mr recession is here and devaluation is nothing but a signal that rates are going to lowered quickly - when one pound equals one euro, why have a referendum? hehehehehe
Complain about this comment
Tsk, that link is now dead. Try this one instead.
http://www.mineweb.com/mineweb/view/mineweb/en/page33
The gist was, large investors and central banks are dumping gold to free up cash, this is pushing the price down, the price will rise when they stop dumping.
Complain about this comment
Am i the only one who noticed that the poud recovered quite a lot at the end of the day. Or am I not allowed to be optimistic on this blog.
Complain about this comment
Interest rates need to be raised by 0.5 - 1%, not lowered. This will protect the currency, and help to bottom out asset (primarily house) prices, allowing stability to return.
Complain about this comment
I guess the folks so happy about the plight of the Banks won't be so happy now they cannot get a mortgage, or a loan, and soon will not be able to afford to go on holiday.
You will see much much higher prices in the Shops for imported goods, and a reduction in choice and in quality of those goods available.
And of course there will be yet more redundancies and business failures.
Oh and fewer Houses of any sort being built.
Makes you proud to be British.
Wasn't it in Mary Poppins that a Bank Partner says whilst the Banks of Britain stand tall so does the country ?
How prescient of them that the Banks failure signals Britains final breathes.
Complain about this comment
BoE should have cut interest rate agressively before as US did last year. There are clever people who sit there. They should anticipate and not only react to events. At this moment it is clear to everybody that interest rates must be cut very agressively and ASAP.
I was very surprised how people started to fear and panic after collapse of Lehman Brothers. I wonder if Lehnam Brothers had been saved would we have all this current, mostly irrational mess?
Complain about this comment
#28
I think the majority of people who have come to the UK from Eastern Europe will stay.
What has never been reported correctly in the UK is that our benefits, health and community system is very free and easy.
I used to work in Belguim for about 5 years. During this time I couldn't use any of the local facilities, could not claim any community benefits and healthcare is only available via insurance companies. To gain any kind of national and community benefits you had to signon at the local government centre on a regular basis with proof of employment contracts - if you didn't you had to leave, EU national or not.
It has been a well known fact that people from Asia and America take UK holidays just to take advantage of UK healthcare.
Why do you think everyone is coming to the UK from all over the world ? Our wonderful weather or the ease of taking the money from our pockets ?
Unfortunately I feel things have gone too far, in Europe we are the odd man out. We are taken advantage of and picked on - yet not even our own government will stand up for the UK.
Complain about this comment
There a distinct note of over-exuberance or over-exaggeration in Robert Peston's words about the gloom and disaster he is predicting.
Is he right?
Keynes warned about the contrary error of pessimism in times of recession.
Yesterday economic journalists were all predicting boom, boom, boom.
Now we have Peston!
Bring on Rory Bremner.
Complain about this comment
Is it wise to invest/buy in oil at the moment as it's relatively cheap? I don't know how one can do this, or where to put it all (perhaps a new shed may be in order). Ideas anyone?
Complain about this comment
"feel-bad factor" may be taking root in the UK and some experts have warned of the dangers of a self-fulfilling prophesy whereby, by making regular comparisons with the mid 1970s and early 1990s, the country talks its way into a recession. "
Well we have been saying this for months !
We Have been Talking ourselves in to Recession !
At least 50% of the problem, 'lack of confidence' has been caused by the media hype and scary graphics.
The MEDIA creates the panic.
And also Everytime when things seems to look improving, one idiot comes out with his Doom and Gloom and Recession reports then that is it !
knocking UK shares and weakening the pound.......
WE ALL NEED TO SHUT UP ! STOP TALKING-REPORTING ....
Complain about this comment
Robert one remarkable aspect of your reporting is that you continue to report on the financial mess on the daily yet don't ever draw the attention towards the question: what do we (the government, the bankers and the rest of us) have to change in future to be a normal economy, not one built on debt? You're resisting to acknowledge the obvious need for change, and so seem most other people here.
The impression is underpinned by the fact that you are a high-ranking officer in the army of rate-cut obsessed Britons. How can it be good to cut rates when the society is over-indebted?
Your motto seems to be: "Lets destroy the pound, lets destroy the savings. People who are prudent need to be punished, long live the bubble". But you're forgetting that for your beloved bubble to re-inflate you need a world willing to pump money into Britain and never ask it back. You don't expect that to happen, after all of this, do you? No lessons learned, no future!
Complain about this comment
I wonder if it's time to totally re-think the way our economy works and how it's true value is calculated.
I'm no economist, so these ideas will probably be shot out of the water. But. if we don't explore new ideas - no matter how radical they may appear, we will only perpetuate what has existed and repeat our former mistakes.
Firstly we should re-value our whole economy based upon it's true economic value and not just its financial value. let me explain. For too long, we have focused upon money rather than value. London centricism has been based upon the value of cash generated within the M25 being greater than that generated outside the M25. This concentration on money rather than true economic wealth had led to a lack of investment and hence the devaluation of our true economic assets. You may ask what is radical about this idea? It may be psychological but it will re-focus our views on true economic value and put money/finance back where it should truly be as the oil of the economy and not the centre!
Secondly, I think that the truly BAD news regarding the state of the US economy will not be made public until after the elections. If I am right, then I believe that the US will see a major retreat from globalisation and strident calls for isolationalism. We have to remember that the US will always look to secure its own well being no matter what the political rhetoric says. If that is so then the UK should take the lead in the EU by proposing a mirrord response that aids inter-EU trade e.g. tax relief and financing. After all, the expanded EU is nearly capable of feeding and clothing itself from within its members borders.
Despite enormous bail-outs worldwide, the bankers will still not trust each other and are seeking to recover profits from the very people who came to their rescue - us! Hedge Funds are waiting to feed on the bones of companies that are being squeezed by lack of capital. It's now time that we put these parasites back in their box. I'm not calling for some socialistic governance but in the short term we should demonstrate to these creatures that our national interests are far more important than their desire to profit from our misfortune. They must be made to help even if that help costs them in the short term.
Rant over, but I would appreciate your views.
Complain about this comment
Here are some positive thoughts:
1. The BoE will cut interest rate by 1% very soon with further cuts laters. UK Goverment will start spend money on public projects. All together it will stimulate economy and help people to pay their mortgages and loans;
2. Other Central Banks and Goverments are also stimulating their economies;
3. There is still a shortage of housing in the UK and population is growing;
4. In 1-2 years people will read good news in the newspapers and will forget this panicky time
5. It is now great time to buy shares. They are so cheap and will grow in value very significantly
Complain about this comment
The Henny-Penny moment (when the sky really does fall down) will be on November 4th, when Barack Obama, against all expectations, fails to win the Presidency.
This will represent the end of political hope, and Wall Street will fall off a cliff (to be followed soon after by riots in Los Angeles).
This will be the very moment to BUY.
Complain about this comment
Regarding the UK joining the Euro, surely the one 'bright spot' is that the UK government and the BoE have the ability to make decisions based on what is best for the UK. Over the last couple of years we have seen the ECB focusing on Inflation as Germany (in the main) had an inflation issue. Spain and the Irish Republic need interest rate reductions to stimulate growth. Those countries would almost vertainly be in a better position to face the global economic downturn if they had been free of the enforced monetary policy of a German/Franco Central bank.
The real unfortunate issue is that the freedom to control taxation, monetary policy etc. has been been abused over the course of the labour government, it was obvious the bubble would burst but little action was taken in advance to soften the blow. Add that to selling off gold reserves for a third of the present value and destroying of pensions even before the latest stockmarket crash and maybe we should just hand over the reigns to Europe. Could it really be any worse?
Maybe the tories should have a go first though...
Complain about this comment
@16
Well i am sure GB will be at the helm for sometime now . He must be shooting up in the poles. its seems labour can do wrong, Even the war people marched on the streets to say no. but at the last election they still got back in.but good old gord give you all that big fat bribe called money.
NOW LOOK WHERE WE ARE
Complain about this comment
Following on from what I posted earlier about confidence in the US being weakened, seems I was wrong about when it would start, seems I missed the boat, because close allies of Washington such as Taiwan are already dumping US assets!
http://online.barrons.com/article_email/SB122482470725666021-lMyQjAxMDI4MjI0NDgyMjQ0Wj.html
Complain about this comment
#49, the movement today has been around 10 cents in total, it dropped to below 1.52 in early trading, but was just under 1.60 recently.
Complain about this comment
#55 - Oil is going to keep going down if we have a global recession. Even a substantial output cut by the OPEC producers has not stemmed the falling price. Unless all the pundits are wrong and we somehow avoid a global downturn (not likely given all the results we have so far!), oil will keep dropping as demand tapers off, reaching a low in Feb or March as the winter demand for heating oil and Xmas travelling finishes.
Complain about this comment
Ah dear Robert, not had a good few days have you? Your socialism is showing old bean. I could have wished you a great career had you been impartial, now you've gone and spoilt it all by showing us that you are not a journalist, nor are you a money expert, you're just another NU LAB preacher.
And your faith is doomed, not today, not tomorrow, but doomed for sure.
Complain about this comment
what really frightens me is that the growth figure is for 3q08. i.e. the economy was already in freefall BEFORE the financial crisis went critical. the 4q08 number will be hair-raising..
Complain about this comment
True. Interest rates do need to be increased because the populous saving is only way economies and start again afresh.
Thrift is King. Kings have short thrift.
However, this is not the top agenda point and arms are thrown around to try and protect (them) and (their) systems of wealth.
We have had no say in any of the decisions taken over the last few months, yet those decisions will have a far more reaching effect than joining the Common Market or the Euro
Nor have we challenged those decisions collectively like those of America that scrutinised (their) plan in great detail before being hoodwinked and scared into submission.
A Prime Minister that did not and has not the backing or (vote )of the people has taken a unilateral decision to impoverish a nation instead of burn the cyst.
The trouble with us Brits is that we know it is wrong, we say it wrong but its not until its too late that we take to the streets.
We lost a civil war over our ineptitude.
Its time we seize control of our (peoples) representatives away from the current puppeteers.
Alas, the rich will maintain wealth, the deserving class will be left to pay and the poor will be supported by an amount of pennies above anarchy
Complain about this comment
There is a lot of doom and gloom here. Yes things are not going to be good but it will not be the end of the world.
The rich will get richer, they will buy the reposessed houses cheap and rent then back to people. As the next boom starts they will cash them in and it will start again. This is how the capitalist system works, those with capital gain, those with debts lose. Everyone gains for a stretch then it is taken away from the poor and we start again.
As opposed to the past in the modern era most people have not got into debt to feed themselves and their family but to buy depreciating assets, ie cars, tv's, new clothes etc.
People will have to get used to the fact that the 32inch LCD TV is the one they are going to have for the next few years, the 40" plasma tv will not be an option. There will be a lot of redundancies in the retail sector, look at the number of shopping centres there are.
As imports will be expensive and labour will become cheaper, people will start up small manufacturing companies supplying local markets and if they set good standards will be able to export them. Most German manufacturing exports come from small companies with less than 100 employees not the giants such as the car manufacturers, for each of them, there are thousands of small engineering companies .
Its a recession, people need to realise that shopping for "stuff" is not the be all and end all of existence.
I have spent the last 10 years with a modest mortgage (1.5 my UK average salary) and no other debts. I have achieved this by going without some things so I can afford others or saving money whilst I waited to buy it. I have never had a new car. I buy clothes when an item in my current collection starts to look shabby or break not because I want it.
So long as one of me or my partner keep our job we will get by without any problems.
I have very little sympathy with those who loaded their lifestyle onto their mortgage or who have big debts on their plastic, they have probably had more fun and gadgets and foreign hols over the last 10 years than me so I feel Ok with looking forward to a more comfortable few years than them.
Anyway, I am starting to lose track of my ramblings so that is probably a good point to stop.
Yours in comfortable solvency.
Yours
Complain about this comment
We all should look on the bright side.
We have just opened some of the best shopping centres in the world.
Complain about this comment
Well Robert,
If you're stuck for something to write about you could always do the country a favour and explain how we got here. After all, as an employee of our Public Service Broadcaster. The phrase Public Service means serving the public...the public...you remember.... the ones which pay the license fee and therefore your salary and your gold plated pension.
I noticed you produced a nice little video for the great unwashed entitled "Crunch guide
Robert Peston explains what caused the crisis "and predictably missed out the only bit that really mattered.
Yes, you've guessed it, Debt-based, fiat, Fractional Reserve Banking. You know the one? The system that requires an exponential expansion of debt in order to sustain itself. Don't you think that this may have had something to do with...er....our exponential expansion of credit over the last 10 years?
I tried to help you out before by posting a link to the instruction manual on how to run a Fractional Reserve Banking System published by none other than the Federal Reserve. And where did they learn their tricks from....you've guessed it...the good old Bank of England. In fact nearly every country in the world operates this deathly system on the BofE's model and we taught them how to do it...how ironic.
Unfortunately, your moderators see fit to delete my link no matter how I split it up or disguise it. They say that the link is "Unsuitable" or "Broken". Well its definitely not broken so I'm left with "unsuitable". Now why would a link to a pdf which explains the inner working of the Fractional Reserve Banking system published by the Federal Reserve be "unsuitable".
I'll try describing the link in the next immediate post and we'll see how the moderators handle it.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
I wonder if it will work......
Complain about this comment
Re post #50 (Ozymandias)
You, I and all the real free-marketeers know that we have to increase interest rates, but our blinkered politicians and mainstream economists are stuck in the 1930s thinking (wrongly) that low interest rates get the economy moving. Foolish little boys.
"Look upon these works ye mighty, and despair".
Complain about this comment
Robert, rather than searching for something good to say, why don't you try some objective journalism and highlight your chum Brown's hand in all these problems.
Or maybe it was all George Osborne's fault...
Complain about this comment
But while we are on the subject of the vulnerability of Eastern European, Russian and South American economies, here's something positive to say about our banks: their loans to these regions are limited.
If there are big loans losses to be suffered by banks exposed to emerging economies, disproportionate pain will be suffered by continental banks.
Oh Robert, what a silly observation, the banks, whether (continental) or (ours) have all been given explicit guarantees so there will be no pain for them, only for the tax payers
In the great crash, bankers lept from their windows having lost everything, in the the great smash and grab the bankers parachuted (bailed out) into the arms of their keepers puppets
You sow from what you have reaped
Complain about this comment
#56: "The MEDIA creates the panic."
Market data you can't see creates the panic. The man in the street is not moving billions of pounds around, so what he thinks does not affect the day-to-day much.
You can't talk your way into a recession either. If you talk the economy down during good times, you look silly and people ignore you. But these are not good times. The banks will not lend no matter how much you promise to think only positive thoughts. They will not lend because they have nothing more to lend against. Their capital has been levered up as far as it will go, and now they are borrowing their capital from you through the government.
Complain about this comment
27 crispblog
re Poles etc
Maybe. I agree almost certainly a remark made without ill intent by Robert if that is your point. Still dont agree the issue.
I don't see the migrant workers are the problem. All 500 million individuals resident in the in the EEC can legitmately come here if they want to. That is before countries outside the EEC who have workers here are taken into account. To start raising these sort of issues is unnecessary. Implicit in the statement is a question of whether these individuals really are wanted here, when it is totally inappropriate, it is their choice, they have entitlement. If they meet benefit criteria they are due it. If they want to stay it is up to them.
It is not clear where this recession is heading. Everybody hopes it is shallow and does not drag on. However if it does not all sorts of issues will be dragged to the front as scapegoats and diversions are sought by fringe elements. This is likely to be one of them. As soon as you have migration and national and ethnic identies you have tensions if the domestic situation is rough. It may be that more not less migration occurs within the EU due to economic problems and climate change. Once choice is made available it is up to the individual, well it is at the moment.
There is no reason why those British who have left the UK to live elswhere should not return in mass. Nobody would dream of raising that as an issue.
Complain about this comment
At the time of writing (9.30pm BST), the pound has recovered 4 cents on the Euro during the day. A dramatic recovery in intra-day terms. What's behind that? Anyway, some good news, however small, for sterling holders to end the week on.
Complain about this comment
Mr Moderator your time taken to get the thumbs up on these posts closes debate and just ends up with list of statements.
Hasten your approval and let us have the ability to debate in real time rather than miss comments because of lethargy
Complain about this comment
See - "Gordon Brown "The Rock", Rock Solid Guarantees ; and the Rock and Roll Generation" on my Hitch Hikers Guide to the Galaxy ( www.bbc.co.uk/dna/h2g2) site for a 21 page historical analysis of how we have got into this predicament.
It is a challenge and an opportunity. But whether or not we are up to either remains to be seen.
Casseroleon
Complain about this comment
'I've been desperately scrambling around for something positive to say today '
C'mon Robert - I've been reading your bloggs for a time that would seem like eons :)
Positive, peston?
Your having a girrafe mate!
Oh btw, we are knackered :) So I agree !
Complain about this comment
I am 'positively' sure that our central bankers are just like Alan Greenspan - haven't a clue what to do!
One little snippet of advice I would offer is that when things go pear shaped in economics it is often true that you should do the opposite of what you would have done in the past.
That is, in this case, when your historically validated action would have been 'lower interest rates' you should 'raise interest rates'.
Let see them mess it up again - just like they did in the 1930's!
Complain about this comment
69, good post, good morality
Sorted!
Complain about this comment
68 a most excellent post sir.
You know, these blogs have a vastly combined superior intellect that the mass culmination (if i can call it that) of the entire civil service / governemt and the rest of the paid useless buggers that have jobs in the public sector!!
Hey, think I'm wrong? wait until the battle between government and the remaining unions start, this is going to be serious!
Complain about this comment
#51
The problem here supercalmdown is that britain has been punching above its real weight for faaaar toooooo long.
we raped many countries for decades, its all spent and no one wants to be raped any more.
We are what we are, a little insignificant island in the world - get used to it!
Complain about this comment
One of the main cause f these problem is BOE it should have started to cut rates long time ago. In next months meeting it should cot rates by at least 1%.
Pound is not week against the dollar this was the rate few years back, pound was over valued in the last few years; fair value is around £1 = $1.5.
Complain about this comment
Re comment 77 by WerringtonSilent..agree absolutely with those comments, comments about Peston setting the agenda, making things worse and so on that started just around the Northern Rock crash are just ridiculous.
Returning to the main subject of the article above.... while commentators speculate on 50, 100 or 200 basis points and a further drop to 2.5 per cent ... they aren't "making the MPC do it" BUT they are showing that this is already expected... that's to say ..discounted.
If it's discounted in a blog..it was discounted days ago amongst the people who DO move billions around....
If it IS discounted already it means the positive effect can't be great... though the negative effect of it NOT being done , may well be.
Complain about this comment
Mr Peston, I am not sure if this is valid thinking, but maybe it should be factored into reasons why the dolla is gaining.... ponder please.
The USA instigated this crisis from sub.prime mortgages, why was this uptake so great? because in the USA people can legally walk away from a mortgage. Keys in the door of the lender and go.
Here and in Europe is a bubble of housing, economy etc etc.. blah we all know this.
In Asia,the savings of ordinary people are invested in western growth, housing development etc.. funded by extremely low ntrest rates in Asia.. 1% etc.. So for a chap in Hong Kong to borrow 10 grand to invest in the USA at 4% return....
The house of cards comes crashing down... push comes to shove.. Who is best able to recover fast from this problem (And here remember that the US gave 700bn to their banks and the UK 680bn, bit of a scale difference?)
The USA workforce is unburdened of debt.. they have and can still walk away from mortgages, whilst in the EU we cant, and the Asian saver has borrowed so is burdened...
Is this maybe another reason why money is flowing into what should be a very sick dolla?
The base of the US debt pyramid is actually the only one free of debt, and is free to move to new markets and generate wealth far far far (and i reiterate) far faster than any other country.
It will be a horrible time for all... but the one fastest to get up of the floor and not be counted out wins the trophy..
Valid comment or not Mr Peston?
And thanks for your engagement over the past weeks, it has been stimulating for me and I think many here.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
I would like to add to my comment 89, that for a long time I thought the USA law allowing 'walk aways' was favourable..
I never imagined how advantageous it could be for a country in such a global crisis situation.
The rest of the worlds workforce burdened by debt - and one countries workforce not..
wow.
Complain about this comment
I think you are not accurate. The pound has been lower against the Euro!
Complain about this comment
No 69
It is going to be you and (your) sort that suffer the most for it will be you that has to pay for the rich to maintain (their) wealth and pay for the poor to maintain ignorance.
And forgive me, but for every one of (your) sort that one or even both partners lose their jobs, then you become another human statistic that need to be supported to prevent anarchy.
The difference between this coming depression and the other is that it was the job of the (man) to support the family and even when all was lost the (family) stuck together to support the (men), grow food, make clothes. The church was used for communities to come together and support each over through the void. Now both partners need a job to keep afloat
However, if your partner lost their job and you maintained yours, the effect would be devastating for you all as your salary would probably not be enough to support your middle class (wealth).
Where would you turn? Would you grow vegetables? get out the wool? would your kids wear those jumpers, would you allow yourself to let them wear those jumpers - your kids would be bullied (wouldn't they?)
Could you get support from your (community). I think not, you might say a brief hello to your neighbour whilst washing your car (probably) and go to church at weddings
Having a job is all that is keeping you from the mire and mire is closer than you may think
Complain about this comment
@53
You may be the only person in the country who thinks there hasn't been enough reporting of the 'soft touch Britain' variety. I'd say there was far too much of it, when you consider that Poles and others have a legal right to be here, like we have a legal right to live on the Costa del Sol after we retire.
Complain about this comment
Time to take the big microphone away from Mr. Doomsday Peston - his 15 minutes of fame are long gone. Revelling in his own glory, he's now contributing more to the irrational fear, and less to the informed and rational discussion.
If everyone were to decide this crisis were over, it would be over. Buy stock at low prices, start purchasing again, take your car for a spin - suddenly people would be employed again.
Stop fear-mongering - if you have money to spare, then now is the time to start spending. If the markets are about to collapse, then it's better to spend your money and have something; and if everyone did it, there would be no collapse.
Half of this collapse is entirely artificial.
Complain about this comment
I can't believe no-one else has this username!
(I don't really (loverobertpeston) by the way)
Anyway, I am missing something?
This was a crisis caused by an excessive supply of cheap money!
What's the answer?
Even more cheap money!
Complain about this comment
thank you mr moderator, it must be quicker to allow posts that are obviously within the house rules straight away rather than hold up debate whilst moderating particular posts
Complain about this comment
I was checking the currencies out yesterday and commenting to my partner that the UKP is trading at or near 12 month lows against all currencies excluding two NZD and AUD.
What gives. New Zealand is in recession already, I can understand that, but Australia is not. I find it really strange, and perhaps indicative that problems are brewing in the Australian economy. I hope not.
Just as an indication, if dangerous house price to earnings ratios are having an affect on the downturn in the U.K and U.S, they are even more skewed here, ranging typically between 7 and 10 times earnings.
We have family planning to move out here in a year or so, which if the AUD to GBP improves any more will make it much easier for them to finance their move.
Complain about this comment
So Mr Peston, no more political dabbling this week ? Nothing on Mandelson to match the bile you put out on on Osborne ?
Complain about this comment
Take a look at the OECD figures for Purchasing Power Parity. Even with today's fall the Pound is still 6% overvalued against the Dollar, and just about competative against most European currencies.
This isn't (yet) a Sterling Crisis, just a long overdue correction.
Complain about this comment
From a perspective from Germany, I have a feeling of déja vu with memories of the meltdown in the UK in the 70`s which I experienced when I lived in the UK. At least then, the UK had some kind of productive industry. But as President Chirac once said, the UK is basically an "economy based on Estate Agents".
Think behind the words and you`ll discover the enormity of the problem - living on credit card debt (average consumer spending 9% higher than income), balance of payments, neglected infrastructure in the "good years", social meltdown.
In what way is the UK different from the USA? Sub-prime wherever you look
Complain about this comment
OK, I've posted the link to the Fed's instruction manual on how to operate a Fractional Reserve Banking System in about 6 different ways. I've spelled it, I've posted it as a link, with HTML without HTML, I've Tiny URL'd it and I've written it in long hand english.
The moderators really, really don't want a link to that document. What is their problem?
Now I know where that document is stored and what its called. So I've used all sorts of search criteria and Google will not pick it up.
Try here:
http://www.telegraph.co.uk/finance/comment/jeffrandall/3168301/Debris-from-the-City-and-Wall-Street-will-destroy-innocent-lives.html
Half way down the page.
Complain about this comment
No 93. Peters Kitchen
We all pay for the rich to maintain their wealth. Unless you are one of the rich you are stuck within the capitalist system.
I am a white collar administrative worker not a professional on a good salary, my salary is about the UK average my partners less.
I purchased a house when they were cheap and reduced my mortgage through overpayments. I chose a small mutual society to provide the mortgage as I believe in community and it is funded from other local savers. I paid slightly over the odds for the privilege of this compared to those who flit from one fixed rate deal to another.
The rich get richer more from others than me as I consume less than the average and have no other debts.
The rich get richer from the interest on their capital (generally produced from others debts)and their investments in industry and commerce.
I limit my involvement, I did however join my company share scheme two years ago with a small monthly payment which I have increased to the max in the early summer. I will be cashing these in in a few years when I next hear of the new economic paradigm of perpetaul growth or when all conversations seem to revolve around house prices. and no I dont care if we have reached the bottom of the market yet, I will have been buying through the bottom of the curve.
My financial advisor who I used to arrange my mortgage said to me "the only way to win in the housebuying stakes is to buy a house and to live in it." All profits from your house are not profits unless you can cash them in. A lot of other people will be enriching the moneyed classes by not thinking like that.
PS I am an athiest. As a swedish friend said to me "My god has a hammer yours was nailed to a cross" You do the maths
Complain about this comment
@ 95
DanielMilloy, i totally agree with you..
The crisis will end when the media stop the over-reporting, the speculation and the glorification of the crisis.
the media's reporting of this problem is highly counter-productive.
Complain about this comment
"I've been desperately scrambling around for something positive to say today"
Why? Trying to put a positive spin on the mess Liebour have got us into? How unlike the BBC...
Complain about this comment
'I've been desperately scrambling around for something positive to say...'
Proof if anymore were needed of Peston spinning for Brown and Labour. On the day when Brown's chickens came home to roost and this country is going down the pan, the voice of doom (Peston) tries to find something positive to say.
By the way Peston have you been gagged by the BBC after the shambles of your Osborne non story??? Not been on the airwaves today have you???
Complain about this comment
I do not think we can read anything into relative currency movements just now- we are in a world recession caused by a range of factors but where the correction must involve a recalibration of asset values throughout the world. We had a bigger asset bubble than most and we are still a major trading nation hence a slow down in trade has a relatively bigger effect on us.
I am worried about the language used by the media- everything is a 'freefall' or a 'collapse'. We need to get some perspective here. I think we have about 28 million people in work and it looks like unemployment will go up by some 1,500,000 that will still leave the vast majority in work. There will also be companies that do well. What we do know also is that it is likely to recover but I suspect unemployment will stick at higher levels for longer that politicians would like. What I find particularly interesting is that I think there is a sense of almost relief in many quarters because we all knew it was wrong but still pocketed the cash.
I said some time ago that we need to use this as a way of rethinking our values re the economy- we need to value making and doing things not dealing in bits of paper and we need business to look at all stakeholders not just shareholders. If I had a magic wand I would like to reconvert some of the insurance companies back to being mutuals- the concept of longevity and absence of greed in pay packages make them a much better structure for financial institutions than PLCs. Each week is a long time now but things are gradually getting sorted- the unwinding of hedge funds is the next shock to asset values and of course as LIBOR gets a bit more sensible, it will be interesting to see if the banks start doing business again. What I simply do not understand is what is going on in the derivitives market- as they unwind, the amounts are so huge- goodness knows what it will do to the so called markets.
My conclusion thus far is that there was so much distortion being introduced into markets that they lost all sense of being markets- they were just places where people bought and sold whatever came along even if it was 'nothing'. I am reminded of Steve Bells remarkable cartoons in the 80's where the big market was in 'turds'.
Complain about this comment
@1
Why Robert is going on about the polish is there as been some 1.3million come to live here in the last few years. even if half of these where to go back home it could have very bad effect on our ablity to rebuild our a economy. not only that the price of a house would drop even further taking even longer for them to drop and to recover. they would also leave our buy to let market in nearly as bad a state as our mortgage market.causing even more debt.Why would this be you might say. Well if all of a sudden you have some 150,000 hosues in buy to let market come available then cheaper rents, sounds good yes i know but the man who owns them needs the right amount of rent otherwise he cant pay the mortgages. by all means let people into the uk but once there here we cant let them back out.
Where is planning, oh my god no wonder the councils dont whether there coming or going. is there anyone out there with any brains please tell me there is. this just get even worse.
Complain about this comment
#102
I think you will find that all links that contain .PDF type files are nuked due to the need for a browser plug-in. Nothing to do with wanting to censor anything.
Complain about this comment
#104
More sand Sir?...
Complain about this comment
If I abhor Brown for one thing it was the abject stupidity of not joining the Euro when the UK would have been a leading light in the currency union. Blair wanted it and could have got it through the little Englanders but Brown wanted to be a big fish in a tiny pond and got his way. Under the tutelage of the ECB, UK banks would have been in a stricter regime and not got to where they have.
Now the Eurozone would probably not want us and could we afford it at 1.25.? Ok we export some products to the Eurozone, but we import so much in the way of foodstuffs and consumer goods that the balance would not be in our favour.
Why does the UK always miss the boat and then have to pay through the nose to be picked up later? Stupid arrogant politicians who think that they know better than everyone else in Europe!
Complain about this comment
marketdan # 10 observes:
"Robert has put his finger on some of the causes, but still does not seem able to admit that this government has spent excessively and placed the UK in a much weaker position than most western economies"
Yes, neither can Robert admit that the "horrible deficit years of the early 1990s" were insignificant compared with today's mess of unmeasurable debt.
The spin spoils the good bits.
Complain about this comment
You are such a fool Peston. How can you comment on economics when you understand nothing about the subject.The Pound fell because the UK is a major oil exporting country, and the price of oil has dropped dramatically. Nothing to do with the rubbish you are spouting.
Complain about this comment
I insist in my point of my previous comment. Despite this ugly moment in its economy, UK was, is, and will be the best economy in Europe, besides Sterling was, is, and will be the envy in whole Europe. ALL MY SUPPORT TO UK IN THIS MOMENT OF UPHEAVAL.
Complain about this comment
#53 You say:
"It has been a well known fact that people from Asia and America take UK holidays just to take advantage of UK healthcare."
Maybe, but it´s not a fact that I´m aware of. Perhaps you have some evidence, and maybe this evidence will also explain why only Americans and Asians take the particular holidays to which you refer.
Or maybe it´s just some cheap and peurile smear and innuendo.
Complain about this comment
#55 The long term average oil price (1876-2003) is about $17bbl (real). S
Complain about this comment
Get the interest rate cut[s] asap
Complain about this comment
foredeckdave (#58) is right about the economy.
Economics was always an easy university subject and economists never too great at figuring things out properly.
Economic growth has been measured in terms of the flow of money, regardless of the fact that the money is created from nothing and is flowing down the drains of waste and inefficiency and evaporating in non-productive holidays, entertainment, imports, financial gambling, unaffordable housing and make-work bureaucracy.
We have had a decade of unparalleled "growth " of this kind.
Worse than the ill-timed sale of gold reserves has been the squandering of our only significant natural assets, North Sea oil and gas, and the surrender of our skill-based engineering and scientific industries to overseas buyers in exchange for cheap imports stimulated by the bank-created credit illusion.
Those politicians and their economic advisers, who have enjoyed a decade of unparalleled hubris, could be better employed building nuclear power stations for the next ten years.
Complain about this comment
A flight to "quality" has money flowing into the US like it's going out of style. Even though the return on short term US treasuries is at nearly zero percent, the demand for them seems insatiable. This money will sit with complete safety (at least as much as their is in this world) waiting patiently for the US markets to bottom out and then the buying frenzy in US securities will begin. That could be a year or two or more from now, nobody knows. Meanwhile, other economies are suffering terribly, especially "emerging markets." The decoupling from the US was a myth. There is real danger of social upheaval, chaos, civil war, as a consequence in many places in the world.
Complain about this comment
these blogs were fun to read when they started, but they have degenerated into a few sensible comments and a lot of mudslinging.
Media commentators are using words like "panic" and "freefall" because markets are moving in a way that we haven't seen in decades and for a very good reason. All of the assumptions that worked for the last 25 years can now be ditched. You don't buy equities just because their price has fallen x percent. The markets are moving because the lend and spend era is over, not because Robert Peston is the new guru.
113 - leave him alone and check your own facts. The UK is no longer a net exporter of oil.
Complain about this comment
I have read all these comments on here and i am still struck by how many of these are such negative comments regarding others shortcomings.
Personally i have no interest at all in others actions . If they act stupidly I will take counter actions . I dont blame them for their stupidity, i just take advantage to better myself, because in the end we all need to take responsibility for ourselves.
It was easy to see that what was happening in 2005 was going to lead to massive problems. result: I sold up , quit the UK and started a business dealing with small companies in the UK from a paradise in the Far East. I sold my house and car and quit UK and worked and built a solid business. Now i have dozens of employees, I was earning over £1000 a day tax free back in June , which perversely has now risen 20% in pound terms due to the weakening pound. Thats inevitable now and will continue, so much so that I built up a massive , "for me " holding in Japanese yen earlier this year when it was running at around the 240 yen/£ and geared it up until it squeaked using everything I had as collateral and now now sit on paper profits worth over £3 million by selling the pound short.
Its going to take a some reversal in the pounds fortunes to wipe that out, and its easy to see the intervention of BoE in supporting the pound, I simply take some profits then gear it back up and start selling the pound short again.
I live in a beautiful condo 250 sq mts with swimming pool and all the luxuries, fly to places like Hong Kong or Singapore and Kuala Lumpur for weekend breaks as easily as going to Blackpool.
I bought a nice beach house this year for less than £30,000 cash and also now own land and other property and my 5000 sq ft of office in the downtown business district and even that is now rising in value in sterling terms as fast as the pound depreciates, which in my terms is a very sustainable bubble caused entirely by UK govt policy.
Who says its getting worse. Keep up the good work GB
If the stupidy of the UK electorate will keep Nu Labour in power then I will benefit every time
Stop complaining and work it out yourselves. Im certain almost all of you are far smarter than good ol GB and can look after yourselves just as easily as GB looks after himself.
Complain about this comment
I will just add in response to 121 that the markets are working just fine and dandy, its by following the herd and not spending enough time trying to understand them that people get it wrong and all the comments in the world from any commntator will not change for one second the way i do business and Im sure that applies to every other forward thinking individual like me who I know has made huge gains whilst this is going on around us.
He is so right is kiwisimmo in why the markets are moving the way they are,
Watch what the govt does, especially GB and go the other way .
Hes rarely right so you can be sure you would be rarely wrong.
Complain about this comment
The UK government have already nationalised banks ( i.e. interfere in the markets).
What happens when there is a further run on the GBP? As the pound slides further and outflows keep up, will the government introduce capital controls? Will it peg the GBP? Will it control 'hot' money?
Why the need to cut interest rates here? What is the effect of cutting rates here in th UK? How will lower rates help the UK? How will lower rates stimulate the economy here? Or is this 'herd mentality'?, i.e. let's cut rates as its's "seen" to promote growth?
Is the UK similar to countries like Malaysia, etc.? Where a weaker currency help exports? What does the UK export? Services? What "services"? Goods? Final/finished products or intermediary products? Raw items?
All I can say is... wait for after Christmas!!!
Complain about this comment
I said last August the big Merv, the head of the FSA and the chancellor should have walked over the NRK fiasco. It looks to me like the bold merv kept the rates too low for too long causing the upsurge in the housing bubble, similarly he has kept them too high for too long causing the recession.
The man is a clown of the highest order and for me deserves a public flogging for his utter incompetence!
Complain about this comment
Post 123,
What will high interest rates achieve?
Many Businesses WILL go to the wall, MANY homeowners WILL go bankrupt.
I can't get over some folk on here who think this tiny insignificant island in the world has some devine right to be a major economy.
WAKE UP, Nritain is in trouble because we are punching WELL above our weight, this is why the personal tax burdon is THE highest in the world (when talking ALL taxes direct and indirect into account).
The sooner our politicians learn to live within our means the better for all of us.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
#123 Malaysia's greatest and most invisible export is its competent brains !! It is the only country in South East Asia with a *shrinking* middle class !! The class of professionals and knowledge workers who have departed for pastures new !! Doctors, lawyers, engineers, accountants, teachers, nurses, IT techies !! All are departing as soon as they possibly can, if not sooner !!
Scratch the surface of the booming East Asian economies and you'll find Malaysians there without too much difficulty !! They might be difficult to spot on sight since they blend in chameleon-like with the local population , even to speaking the local lingo !!
Meanwhile, back at the ranch, the Malaysians left behind are getting poorer and poorer and standards are dropping like flies. Sounds familiar ??
Complain about this comment
# 121 damicol
Yes, I also think we need to consider the 21st Century as the forthcoming era of self-reliance and small community action (without a politician in sight).
The British political class have shown themselves to be a largely incompetent, self-serving elite - probably epitomised by the 'John Lewis List' - get voted in to the Club chaps and, whey hey, help yourself at muggin's (the taxpayer's) expense. The bankers are close behind, of course.
Like you perhaps, I simply no longer trust any politician, national or local of any political persuasion to put my best interests to the fore: far from it if you just look at the situation we're in today. Most people have still not grasped just how bad this is going to be in the coming years - forget talk of a one year recession - that's absolute nonsense.
The problem is that in the forthcoming decade we'll experience not only the after-shocks of the current global financial debacle, but also the end of the era of cheap energy. We're all distracted by the former right now, but the latter will make the financial crisis look like a cakewalk by comparison. Heard any politician with practical (repeat, practical) proposals to deal with the forthcoming global energy crisis (carpet-wind-farming won't work, believe me)? Of course not; they haven't a chuffing clue on that one either. The end of cheap energy is when self-reliance and small community action will become critical.
Meantime, back to my original point. Gordon Brown is without question the architect of the UK's current dire financial situation: mired in debt (you must include the off-balance sheet dross) and now with a gameplan that is "We're going to, er, borrow our way out of this one" Sub-text "... and hang on to all these lovely jobs for politicians, bureaucrats, quangocrats, eye-catching initiatives etc etc".
Finally, forget Dave and his Dizzy Crew. Let's remember that, until recently anyway, the Tories were positioning themselves as Like-Labour (some guff about the 'centre ground of politics' I think) and have since demonstrated themselves also to be utterly clueless on the matter of getting us out this mess. Bit difficult if your economic policy is predicated on the other lot's spending and tax plans.
Vince Cable for Queen anybody?
Complain about this comment
#53 "It has been a well known fact that people from Asia and America take UK holidays just to take advantage of UK healthcare."
Sounds to me like you've been listening too much to the broadcasts from the Ministry of Truth !! When even local residents complain bitterly about the standards of UK healthcare and take medical tourism abroad, what sane and financially comfortable person from Asia or America will want to spend a huge amount of money for a "holiday" in UK just to take advantage of the poor health service when they can get far better, first class, deals in Eastern Europe and South East Asia !! And the weather in South East Asia is far, far better too !!
Perhaps if you speak of Africans and Latin Americans, that *might* be true but even they, too, are going to Eastern Europe and South East Asia.
I know of many hospitals in Bangkok with English, French, German and Spanish speakers on their staff ready to welcome the honoured tourists and to help them avail themselves of the hospitals' World class service and equipment, for a reasonable fee, of course !!
Would these moneyed persons then want to queue for treatment in the UK 2 years after their first consultation ??
Complain about this comment
Brown has hoodwinked the British people about our invisible strength to weather this RECESSION. With the biggest deficit in history, how can this madman keep borrowing?
His relations with other European leaders is tenuous to say the least. The Belgian Chairman of the Euro-zone Committee stated, Brown had begged to be allowed to attend the recent mini summit in Paris. So don't expect any support for sterling from the dysfunctional EU.
Let the British people have the promised referendum. The sooner we curtail our membership, the sooner we will save our reserves. It is absolute madness to continue to pay £115 million pounds per week for membership. We urgently need a rebate, but Brown is such a weak PM, we have no chance.
Roll on a General Election.
Complain about this comment
# 121 damicol
Yes, I also think we need to consider the 21st Century as the forthcoming era of self-reliance and the ‘Transition Town’ model (http://tinyurl.com/3pg7z4). I had my last post on this subject ‘moderated’ – I think because I used the word ‘action’ (tut, tut).
The British political class have shown themselves to be a largely incompetent, self-serving elite - probably epitomised by the 'John Lewis List' - get voted in to the Club chaps and, whey hey, help yourself at muggin's (the taxpayer's) expense. The bankers are close behind, of course.
Like you perhaps, I simply no longer trust any politician, national or local of any political persuasion to put my best interests to the fore: far from it if you just look at the situation we're in today. Most people have still not grasped just how bad this is going to be in the coming years - forget talk of a one year recession - that's absolute nonsense.
The problem is that in the forthcoming decade we'll experience not only the after-shocks of the current global financial debacle, but also the end of the era of cheap energy. We're all distracted by the former right now, but the latter will make the financial crisis look like a cakewalk by comparison. Heard any politician with practical (repeat, practical) proposals to deal with the forthcoming global energy crisis (carpet-wind-farming won't work, believe me)? Of course not; they haven't a chuffing clue on that one either. The end of cheap energy is when self-reliance and the ‘Transition Town’ model will become critical.
Meantime, back to my original point. Gordon Brown is without question the architect of the UK's current dire financial situation: mired in debt (you must include the off-balance sheet dross) and now with a gameplan that is "We're going to, er, borrow our way out of this one" Sub-text "... and hang on to all these lovely jobs for politicians, bureaucrats, quangocrats, eye-catching initiatives etc etc".
Finally, forget Dave and his Dizzy Crew. Let's remember that, until recently anyway, the Tories were positioning themselves as Like-Labour (some guff about the 'centre ground of politics' I think) and have since demonstrated themselves also to be utterly clueless on the matter of getting us out this mess. Bit difficult if your economic policy is predicated on the other lot's spending and tax plans.
Vince Cable for Queen anybody?
Complain about this comment
# 121 damicol
Yes, I also think we need to consider the 21st Century as the forthcoming era of self-reliance and the ‘Transition Town’ model (http://tinyurl.com/3pg7z4 ).
The British political class have shown themselves to be a largely incompetent, self-serving elite - probably epitomised by the 'John Lewis List' - get voted in to the Club chaps and, whey hey, help yourself at muggin's (the taxpayer's) expense. The bankers are close behind, of course.
Like you perhaps, I simply no longer trust any politician, national or local of any political persuasion to put my best interests to the fore: far from it if you just look at the situation we're in today. Most people have still not grasped just how bad this is going to be in the coming years - forget talk of a one year recession - that's absolute nonsense.
The problem is that in the forthcoming decade we'll experience not only the after-shocks of the current global financial debacle, but also the end of the era of cheap energy. We're all distracted by the former right now, but the latter will make the financial crisis look like a cakewalk by comparison. Heard any politician with practical (repeat, practical) proposals to deal with the forthcoming global energy crisis (carpet-wind-farming won't work, believe me)? Of course not; they haven't a clue on that one either. The end of cheap energy is when self-reliance and the ‘Transition Town’ model will become critical.
Meantime, back to my original point. Gordon Brown is without question the architect of the UK's current dire financial situation: mired in debt (you must include the off-balance sheet dross) and now with a gameplan that is "We're going to, er, borrow our way out of this one" Sub-text "... and hang on to all these lovely jobs for politicians, bureaucrats, quangocrats, eye-catching initiatives etc etc".
Finally, forget Dave and his Dizzy Crew. Let's remember that, until recently anyway, the Tories were positioning themselves as Like-Labour (some guff about the 'centre ground of politics' I think) and have since demonstrated themselves also to be utterly clueless on the matter of getting us out this mess. Bit difficult if your economic policy is predicated on the other lot's spending and tax plans.
Vince Cable for King anybody?
Complain about this comment
Why is Sterling in the toilet?
Because the finance boys and girls have more eloquently passed judgement on Brown's stewardship of the economy than you have Robert.
It's in the toilet because we ran up a 3% deficit in a boom and projecting a 7% deficit in bust. They are completely unimpressed about the 'recovery plan'.
Also, Brown's manipulated national debt by removing Northern Rock from it so it's now ONLY 37% NOT 43%.
If you include all the other 'off-sheet' debts... the national debt is more like 90%+
The City is not fooled.
INTEREST RATES ARE NOT THE REASON.
The US base rate is 1% yet the dollar has gained a lot of strength lately.
Incidentally, to all the people thinking this is the moment of Euro capitulation.
It's not.
The main reason is we can't join because we don't conform to the economic criteria.
Too much debt.
Complain about this comment
Post 123,
What will high interest rates achieve?
Many Businesses WILL go to the wall, MANY homeowners WILL go bankrupt.
I can't get over some folk on here who think this tiny insignificant island in the world has some devine right to be a major economy.
WAKE UP, Nritain is in trouble because we are punching WELL above our weight, this is why the personal tax burdon is THE highest in the world (when talking ALL taxes direct and indirect into account).
The sooner our politicians learn to live within our means the better for all of us.
--------------------------------------------------------
Typical response (as that of many here) who have become overnight economics experts. Epitomises everything that is wrong with this country and its people.
Re-read post 123. Answer the questions put forth.
And as you put it, how will the further lowering of base rates help businesses? Given the circumstances of this crisis?
Complain about this comment
There's a great British natural resource that is so far totally unexploited.
It's all the hot air from bloggers.
We could power a fleet of transatlantic hot air balloons, replace countless wind farms and power a city the size of Birmingham.
Ranters-R-Us........
Complain about this comment
well to answer your question jetliner , its not hard to see how i did it . i sold up in UK and opened a business supplying the needs of UK based companies that found it was getting too expensive to source supplies, goods and services in the UK
I supply from a low wage based economy exactly what they need at far lower cost. My company is based in a tax haven so my income is tax free. i use ATM cards and have accounts open now in HK China Japan Philippines and Malaysia mostly with HSBC but also with local banks . I can easily draw equivalent of £1000 a day or more from these accounts and using online banking its just so easy.
even now the price of shipping and supplying these services is getting cheaper for me whilst the income from supplying is rising.
As far as shorting the pound I simply use online banking into a Japanese Yen account in Japan and short the pound using Yen. Its a one way bet.
The way I see it GB has handed me around £3 million of your money so far this year and as long as GB is handing out by intervening in the pound and giving it to banks Im going to do everything I can to get my piece of it, as i know dozens of people who are now expats are doing. Some run business like I do and some just invest in the downward spiral but from where we sit its all just manna from heaven
Complain about this comment
And here's my hot air, my contributions to philosophy:
No amount of Band-Aids will stop bubbles bursting.
We borrowed from the future. The future wants its prosperity back.
I have never seen Robert Peston smile.
Complain about this comment
Post 127,
Please re-read 123 again. Answer the questions posed.
Terribly out of topic, but indulging you, Malaysia is no different to the UK and many other countries then.
The standards here are so bad that the majority of the people here cannot differentiate between "you're" and "your", "there", "their" and "they're", etc.
You go to hospitals here to contract all sorts of diseases - instead of getting well.
There are a lot of immigrants in Malaysia - as is the case here in the UK.
There is also a marked brain drain here.
So yes, definitely sounds familiar!
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
Dear Moderator
Please email me an explanation for refusing to approve my last 3 posts. Thanks.
Complain about this comment
Yes Robert and you know where the smell is coming from too.....Downing Street, though won't openly admit it. We have borrowed so much our credit rating as a nation has plumetted. The drop in value of the £ is only reflecting that the rest of the world knows that also.
Complain about this comment
#17 glanafon
Perhaps it is time to ask Mr Bean just what he meant when he said the UK was well positioned to face a downturn.
Possibly he meant we're well positioned in that we're closest to the downturn and will be the first in and last out.
Complain about this comment
For Moraymint 140:
"Please email me an explanation for refusing to approve my last 3 posts. Thanks."
They're just thinking about them, Moraymint.
Your posts are too good to hurry.
Complain about this comment
Charlie Bean's comments cheered me up!
After 15+ months of Credit Crunch mutation, with banks not lending and effectively pushing the rest of the global economy off the cliff, it's refreshing to hear someone tell it like it IS.
I doubt if the hedge funds are finished deleveraging yet, but we can do without them. Every other financial entity seems set on a deleveraging flight to safety ($ Yen) at the moment and this looks to be feeding upon and re-enforcing the process.
That weaker nations run to the IMF for help is a further symptom of the malaise.
Yes, the borrowing projections for GB Ltd are huge, but they're likely wide of the mark as unemployment rockets and revenues shrink. Even if enough could be borrowed to prop the system up, it probably couldn't be repaid over an eco-cycle anyway.
Since ALL governments will be trying to borrow, that pushes int rates up and the economy down further.
Before we get there though, we probably can look forward to CDS joining the party and undermining the financial sector in the grandest manner. No chance of bailing that little boondoggle out with taxpayer dough - the sums are just too VAST.
Charlie Bean seems to be cognizant of this unfolding scenario as are many contributors here. The question then becomes:
"What are the best strategies for survival?"
Cash will be King for quite a while, which FORM of cash - Ah! that's the rub isn't it?
Currently Sterling is in the doghouse (the Euro is NOT doing as well as some writers think, either), yes, the Greenback (and Yen) are pushed by flight and deleveraged capital, but nothing is forever.
There are dark fundamentals ahead for the USA with that CDS overhang and as everyone now knows - bubbles burst.
Complain about this comment
#114
I wish the UK was a major oil exporting state! Perhaps your wish to 'bash Peston' clouded your mind for a moment...
Complain about this comment
when are you so called experts going to realise that lowering the interest rate wont work and is what got us into this situation in the first place. put up interest rates to 6% funds will flood into the banks, they start lending again and the economy is kick started. inflation is controlled and house prices will stabilise at the correct value.
Complain about this comment
109. At 11:56pm on 24 Oct 2008, Boilerplated wrote:
#102
I think you will find that all links that contain .PDF type files are nuked due to the need for a browser plug-in. Nothing to do with wanting to censor anything.
OK, Lets say that is the reason. I have read and re-read the house rules. I cannot find anything to suggest a pdf is not acceptable.
And why did they accept it here:
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/a_global_solution_needed.html#comment291
Complain about this comment
#121
"I sold up , quit the UK and started a business dealing with small companies in the UK from a paradise in the Far East."
I hope you have a business strategy for when these 'small companies in the UK' either stop sourcing their supplies from you as the UK goes into recession and companies either cut back of go bust.
Complain about this comment
i see today the lord mandelson has spoken and we the thick majority have to believe every word, cobblers to him and his phoney knighthood.
what has this person done that entitles him to a knighthood? has he preformed heroic deeds? has he saved lives? has he serviced the crown of england? what i bet he has done nothing but be tony blairs realy good buddy, the only servicing he has done is to his own pockets heroicly bulging them out with gains.
this government has cheapened the system for there own ends and in doing so has made it a laughing stock.
now his tissue of lies has been discovered he weaves a web of spin in the press to cover his exposed arse and still try to make the opposition look bad.
it shows how deeply corrupt the system has become and how blatently they can show it.
i am ashamed to have once thought this government may well do a good job.
the people should rise up and get rid of them before they ruin this country, or worse sell it out from under us.
Complain about this comment
#146
re putting interest rates up to 6%
Yes, house prices will be controlled, even inflation will be controlled, why - because every person and ever business will have gone bust!
People and business are awash with debt that they are having difficulty in furnishing now, if interest rates go up defaults will just increase.
Complain about this comment
The Bank of England, like the Government and the Board of Lloyds TSB, is populated by people with a singular lack of imagination.
The Bank meets once a month to discuss interest rates - no matter that the world is collapsing around them they will have their meeting and sit around like wise old owls. OK, they broke the mould (sic) this month when they were part of a concerted half point rate cut, but that was only because the Americans were driving the initiative. Most people who seem to know suggest that there should be a massive cut (some say 2%) but presumably consideration of that would have to wait until the monthly meeting. And then they wont have the bottle. Some say that if you cut our interest rates further then sterling will collapse. What did it do yesterday without the rate cut?
As for the Government, Mr Brown has long boasted about his skill with our economy. Now is the chance to show how it is done. Forget Darling, he is just a glove puppet. We need a stimulus package which does not include bailing out dead-duck banks like HBOS but putting those billions to work keeping what we have left of non financial businesses going during the slump.
As for Lloyds TSB - the shares of HBOS are trading at a 43% discount to the offer price, which itself has been lowered twice. Mr Daniels and his colleagues have a chance to redeem themselves by scrapping a bid that has never made sense - who wants to have 30% of a market in mortgages when there arent any? Or 30% of savings when nobody has saved since Mr Brown came to power.
For those who have never lived through a slump - I lived in Germany in the 70s when driving on a Sunday was banned. You could see families walking up the autobahn as part of their day out. Luckily, as a Senor Citizen I have one of Mr Brown's free bus passes, so I am not looking to walk up the M3 any day soon.
Complain about this comment
Hi Robert,
How embarrassing for you. Mandelson DID know Deipaska before he signed the aluminium tariff reductions. The Tories really did not get any money from Deripaska. Can I take it that you will now launch the same vituperation against Mandelson as you did against Osborne.
In case you are not quite with the story, look at the letter in the Times "clarifying" Mandy's contacts with Deripaska
Complain about this comment
#147
How predicatable was that?
I link to my own post which the moderators passed previously so they go back and delete it now.
How utterly pathetic.
Complain about this comment
# 143 noninflatable
Thanks!? I made one post which was rejected; modified it - rejected; modified it again - rejected again. I'm baffled. It's a polite and non-contentious post (no more so than some others here) with a link to the perfectly conventional 'Transition Town' movement: an organisation concerned with helping communities organise themselves (in conjunction with local government!) to prepare for the end of cheap energy (often referred to as just 'Peak Oil' for ease of reference).
I'm primarily irritated that I've had no feedback on the reasons for rejection, which I think the BBC is obliged to do under its own terms and conditions of blogging.
No, I'm neither a consipracy theorist nor a survivalist fruitcake, but I must say that Big Brother comes to mind. I thought I was a BBC shareholder?
Complain about this comment
The suggestion that we should adopt the Euro is understandable. The fact that we haven't is because the people who's greed and stupidity got us into this mess in the first place prefer to keep their speculative options open. It's a little too late to exercise that option now.
Another paddle lost in the creek.
Complain about this comment
#151
"For those who have never lived through a slump - I lived in Germany in the 70s when driving on a Sunday was banned. You could see families walking up the autobahn as part of their day out."
That wasn't cased by a economic slump, it was caused by the Mild East oil countries limiting the supply of oil (and thus causing the price to go from $3 to $11 a barrel) for political reasons to do with the US support of Israel. I will accept that it was a prime mover in the following recession as oil price stayed high from then on.
Complain about this comment
THE CURRENT FINANCIAL CRISIS
Here are my main points:
* 100% guarantees given by governments can be seen as an indicator of weakness because it is the people who support the government, not the other way around- though several generations have now been brought up with that idea.
* Security of property had been fundamental to the economic take-off that happened with industrialization in Britain. This was in contrast with the spoliation that was common elsewhere. Chartism was feared as leading to such spoliation in Britain, and the Second World War and the Attlee government saw such a “revolution”.
* The Nazi era saw the triumph of the idea of “big government” and the end of the Liberal Experiment- except in the USA, where wealth inequality and freedom of the individual remained important parts of the American Dream. This was connected with an economic dynamism that made the USA the great World import market for high cost high quality goods and services produced by, for example, well-paid British workers who could in effect subsidise Britain’s importing consumer society through their taxes and their own spending on housing and services. There is a global trickle down of economic activity and the possibility of US collapse raises the prospect of a collapse of the whole world economy.
* Those of us who grew up after 1945 remember an even more terrible “dark hour” during the Cuban Missile Crisis. It was a “Buddha moment” for there had been an attempt to bring us up in a happier world. Soon afterwards Beatlemania swept the world and the youth voice gathered momentum during the Sixties. For about five years there was a serious movement demanding change. But the 1973 Oil Crisis, and passing time, persuaded people to just get on with their lives the best way they could; meanwhile governments tried to be more representative of a greater breadth of public opinion.
* But this widening of government - “internalising the externality”- had an impact of the nature of government and politics. The newly integrated groups brought their own issues and agendas; that often assumed a disproportionate importance in political debate. Theirs were “new votes” not already tied to pre-existing political parties to be won. The result was a marginalisation of politics for “ordinary voters”, who increasingly came to believe that the State just took them for granted. In any case the belief in what “big government” could achieve had lost its common currency; but while we were stuck in the Cold War , we were stuck with it.
* The end of the Cold War created a situation that can be compared with the collapse of the Roman Empire, only in reverse. Just as the “carpet baggers” from the North flooded into the South after the American Civil War, or as British “nabobs” went into eighteenth century India, “Western” businesses and businessmen flooded into areas rich with potential and exploitation, where government supervision, systems of justice and ethical standards were very different. It was a new age of Goths and Vandals, a new struggle for the survival of the fittest. Interestingly it corresponded with a minority “Goth” culture among the youth of the affluent countries; and, as in earlier teenage periods, an “artistic” group was countered by an anarchistic and violent one- the
“urban guerrillas”. Both have helped to create feelings of insecurity, and resentment against the government.
But it is the “Vandals” who have done the damage.
* The Barbarians destroyed Rome not by looting it, but by trying to take it over and make it work for them. Perhaps the generation that had “seen through” the Cold War felt that it was time to hand over to youth. But, while globalisation “cashed in” on a claimed greater degree of “civilization” in the developed world, that was clearly not the case when children had grown up in a “need to know” culture. As J.K. Galbraith had written in 1987 people who went into business did not study Economics, but Business Studies; and this was typical of a situation in which promotion and responsibility came to well-trained technocrats who knew no more than how to operate- and improve or build on- the existing systems, often fooling themselves and others by a competence in IT. As the Finance Industry was their special field of operations it was natural that it was there that they did the most damage.
Casseroleon
Complain about this comment
"I sold up , quit the UK and started a business dealing with small companies in the UK from a paradise in the Far East."
well i did put up a post explaining how i did it and how relatively easy it is if you are prepared to move , but i guess the moderators dont like explaining how to make millions at the UK taxpayers expense because of stupid short sighted govt policy.
I guess in short the answer lies basically in understanding politics and motives .
Politicians only have interest in what they want , and when labour came to power GB and TB had a plan to get into power and stay there. but thier motive was the same as all politicians anywhere. POWER.
They needed a way to buy votes so they concocted the the situation to enable cheap easy credit and bought votes with this imaginary wealth. They didnt care of the consequwnses, only that got and retained power.
To judge the right time to move is to watch politicians, after the bickering of TB and GB over whos turn it is to have POWER, never mind what the country needed and i see TB sidling away from it all I knew it was time to go too.
TB was always smarter than GB so left him holding the baby.
Dont worry though about not having enough business, those companies still left operating in UK will inevitably have to buy more and more things from cheaper producing countries in the Far East beacuse othe businesses that did supply in UK either cant do it at the right price or they went to the wall.
Politicians on the other side of the world are faced with damaging effects on their ecomomies too and a lot of those are very good at hanging on to power and not always so democratically, but they are pragmatic.
They will still like to see money coming in too from overseas , G Brown notwithstading they facilitate the exports of cheaper goods, that some uk companies need to survive. Including all manner of fake and and reproduction goods , and if you have any doubts about a politicans willingness to bend rules if he keeps in power you are very naive indeed.
And dont ever underestimate the lengths people will go to survive, and get their latest designer goods or whatever they need fake or not.
How far do you think cjina will crack down on the factories producing fake goods, from jeans to pharmaceuticals in the face of a slowing economy and rising unemployment at home .
Especially now they have the upper hand
Opportunities are everywhere, you just need to know how to see them ..
Complain about this comment
#153
Rather proves my point, there has been no censorship of any discussion re FRB etc but linking to a PDF file gets nuked and all you did was flag the fish that got though the net.
Both the following house rules could apply to PDF files;
+Sites which initiate a download
+Sites requiring obscure software
+Sites which initiate a download
Complain about this comment
#154
But your comment have not bee rejected, just sent for moderation, they are probably checking the document you cite.
I had a comment sent for moderation a few days ago because it named a BBC reporter and a known fact about him, it was published unaltered about 36 hrs later - presumably after the mods had checked the facts were not contentious
Complain about this comment
Interest rates need to be higher to encourage saving, encourage investment of profits and curb house price inflation
They are 2% below what they should be at this moment regardless of what the BoE expect inflation to be next year.
Yes it will be hard for business that used debt to leverage growth. Yes mortgage holders would see their repayments double. Yes house prices would continue to fall.
However, unless we do this and let the indebted suffer their pain and/or default we will end up bankrupt as a country.
We should of done the same with the banks and let them survive naturally or bust.
As the currency sinks lower and lower inflation will increase because everything we import becomes more expensive.
We end up with 2% interest rates and 7% inflation. Then the government will have no choice. All you whining about putting rates up now will end up paying 3 times as much for your mortgage by next summer and a lot more will be homeless, unemployed and broke as a result.
6% rates now will protect many more all a lot better than short term 2% and then 8/9% next year which is where we are currently heading
Complain about this comment
Oil is paid for in dollars so our cost of oil has just increased by 25%, hasn't it ?
Complain about this comment
#150
you see that is where everyone is going wrong...the vast majority of people and companies are not awash with debt, they live their lives prudently and are now being punished for the excess of the few. In fact there are more savers than borrowers, who with increased income from savings will help the economy out of the recession.
Complain about this comment
#160 Bolierplated
OK; I'll see if I get the same treatment. Thanks.
Complain about this comment
It might have already been said but the US dollar has also strengthened against the Euro. Sterling dropped dramatically against the Euro in April this year but has been remarkably consistent against it since then.
All the pundits were saying the the US dollar would drop through the floor this year. They have been proved wrong as the Middle East and Asia are dollar areas and the last thing they want (particularly China) is a weak dollar.
My view is that sterling is seen in the same light as the Euro - not a place to stash your cash!
Complain about this comment
#163
So you are the only person who has it right, that the lenders (banks and mortgage companies etc.) don't know what they have lent!
Could the real reason you want an increase in interest rates be because you have investments that would benefit or (more cynically) you are hoping for a recession so that it gives you 'opportunities' in your speculation?...
Complain about this comment
Isn't the fact that the governemnt is going to have to sell a huge amount of bonds to fund the bailout and increase spending to boost the economy going to have a positive effect on sterling. Effectively all that money in the wholesale money markets not being used to buy up mortgage securities is going to be used to buy up these bonds which will in effect be used for mortgage securities anyway. At worst the net effect should be neutral for sterling but it should actually put upward pressure on sterling as the money supply is contracting and the bonds will place increased demand pressure on sterling.
I'm sure you have actually written about this in a previous blog. If this is the case then your reporting is becoming increasingly wreckless and biased towards the doom and gloom scenarios. I also recall reading, I think in your own blog, that you did not in fact own your own home, is this real hidden agenda here??
Complain about this comment
As various comments have been made in response to my comment about the Polish having the right to decide what they do, ie go or stay -
The minute the EEC was expanded to include countries like Poland 2 things were inevitable
1 People from those countries would have the right to come and work here, and some would.
2 The would be a flow of money both commerical and central european bank, ie public money, into those countries.
Personally I have never been terribly convinced about the expansion of the EEC. It mainly seemed to me to be driven by a not very clear security ambition of one sort or another and the ambition of the new entrants to join.
However the decision was made to expand. Those people then had the right to come here.
My main point is it is up to them whether they stay or go. Further that you should not assume outcomes when an individual has a choice.
History says that in fact migrants in fact do not always return.
It may well be that some with a tax status - where they have elected (as self employed workers) to pay their tax for a number of years back in Poland rather than here now find themselves without access to UK benefits and go back because they have no choice, (I am not interested in benefit law it is a specialist and horrendously complex area). It may be that some opt to go to other countries. Some, and it may be a lot, will chose to stay. It is up to them. If you dont like it your beef is with the politicans not the individual.
I note a comment somewhere that the UK is a soft touch. It looks to be the case on some counts, although others argue differently. That is a policy issue nothing to do with the individual. France has withdrawn, as I understand it, some access to healthcare for certain non economically active foreign residents for example. Some similar ideas have been aired here. It is most likely access for non UK nationals is steadily eroded here.
Migrants and cultural mixes can work very well but equally well the differences have proved a fruitful ground for troublemakers. Particularly in difficult times.
This, whatever anybody might want to say, is a relatively small island, and the straightforward fact is far more people have the right to come and stay than is comfortable. Migration is likely to be a sensative issue in the future, and not just here. Similar pressures are building up in parts of France about the influx of Brits. That is before the impact of climate change is considered which may make entire countries difficult to live in. It is because of the sensitivity of migration issues that it needs to be handled with a great deal of care, well that is my opinion. You can have yours.
As I also referred to Mr Bean and his comment that we where well positioned for the downturn. I should make clear I was referring to Vince Cables Mr Bean, ie Brown, not Charlie Bean. Personally I am concerned that the UK had slowing growth hidden under a growing bubble. Perhaps that was why the bubble was pumped. We now therefore appear to be at risk of having - slowing underlying growth, plus a bubble popped, plus entering (already in) a recession. On top of that it appears that there is so little room for policy manoeuvre that there is, however briefly, agreement between different political parties. I am not sure that I have ever heard of a cosmetics company downsizing before, but I am sure I will be corrected. There are a lot of mixed messages about, some, a small number, are doing well. I am not convinced the migrant worker is a problem, or should even be referred to as one, however obliquely. At best it is a very small issue.
Anyway I expect we will have some real trivia coming along soon, politicans playing trick or treat, its Halloween soon.
Complain about this comment
Before getting too hot under the collar about the pound, it is worth remembering that it started from an overly strong position. This time last year, we were somewhat amused that it had reached 2 USD amidst claims that the US was in trouble and Europe was entering a new golden age.
A sensible level is somewhere between 1.60 and 1.70 USD/GBP. The adjustment is not, in any case bi-polar. Other currencies are tracking the pound downwards including the Euro. I would tend to see this as a reasonable adjustment rather than a further symptom of catastrophe.
Cast your mind back to Black Wednesday and you will recall that, while there was an atmosphere of panic, things calmed down quite quickly when it reached a plausible level.
Complain about this comment
#167
re 'reckless' reporting
No doubt you also think the comments of the BoE deputy chairman is also reckless, could it be that Mr Peston's comments were made in the light of those (cited) comment?
Complain about this comment
Sorry #149, Mandy got a peerage not a knighthood. And don't think that's just a quibble.
Sir Peter Mandelson would have been bad enough but we could have shrugged it off and said that's what aging pop stars and the luckier soccer managers get. And a knighthood would still have meant that, to have him back in Government, El Gordo would have had to get him back into the Commons as an MP through a by-election, surely in these times a very risky business.
But a peerage does two things:
1. Mandy gets back into the Cabinet without having to go through all the boredom of getting the common people to elect him and, since he sits in the Lords, he is TOTALLY UNANSWERABLE TO MPs AND SO TO US, THE PUNTERS. Business in the Commons will be conducted on his behalf by some junior minister.
2. When this lot are given the push at the next General Election and many of the Cabinet lose their seats and find they have to work for a living again, Lord M will still be on a life-long gravy train. When he is in London he will just have to potter into the Lords and sign the attendance register to get his comfortable daily allowance and he will be free for the rest of his life to use the tax-payer-subsidised bars and facilities of what has been called the best gentlemen's club in the world. Assuming that the Good Lord grants him long life, for the next 30 years you will be able to walk past the Palace of Westminster and see Lord Mandy waving two fingers at you.
Complain about this comment
I thought making the bank responsible for interest rates was a good move.
Now the banks seem to be stuck in the grip of fear they are always behind the times.
The interest cut they did make looked like a set up with Brown to help him rather than a well thought out policy to stave of ression.
If they could get a grip and reduce interest rates BEFORE there is no business left to save, then, maybe, we could save jobs and struggle through this.
Complain about this comment
146
Yes you've got it right. This so-called crisis (not yet really) is the result of extreme over-borrowing. Debts are more than 600bn GBP above the level of total savings. It is not only counter-intuitive it is impossible that lowering interest rates can be the right move. It's nothing but a temporary pain relief for the voters. It does nothing to help this country to get back on its own two feet and will keep it in debt-addiction rehabilitation forever. A very miserable outlook! House prices will indeed stabilise, but very much below their current level.
Complain about this comment
must be some kind of parallel universe this blog..
.. because when you join it you enter a world untouched by reality where the pound is plumetting and the world financial systems are in chaos, folk in Pakistan are burning bills instead of paying them.
..meanwhile back in reality it's Govt business as normal, headlining the news with sideline issues that no-one's interested in, mendacious Mandy owning up again, Gifted Gordon smirking on the Glenrothes campaign trail, petrol at the pumps, cars roaring past my works, food in the supermarkets, clocks going back, Saturday sport on TV..
Or is it the other way round. I wish I could figure it out.
GC
Complain about this comment
#171
re Mandelson and his Peerage
You mean just like so many of the failed Tory MP's have got peerages...
Lets cut the cr*p on this issue, if Mandelson had been a Tory supporter, ex MP, or someone who had served in Thatchers (Kitchen) cabinet people like you would be full of praise for his ennoblement but because he is a Labour supporter... your protests and bile are just to fake to be taken seriously, even for many who are not natural 'Mandy' supporters.
Complain about this comment
I don't understand why the fall in sterling wouldn't cost import inflation. Surely it would cause the opposite?
I hope I'm not being silly for asking this.. but can someone please enlighten me?
Complain about this comment
I applaud the poster who said that the banks are no longer interested in return on capital, but return of capital.
Bailing them out means our building up their lost reserves and paying their inflated salaries and bonuses.
We have to print money to do that; no wonder sterling is going down the tubes with our gangster government in charge.
Complain about this comment
Can you comment, Robert, on how Islamic Banks are faring in the crisis?
So far all we've heard about is the effect on the Lombard system.
GC
Complain about this comment
glenafon
One interesting thing about migrant workers is that they account for another flow of money than the ones that you mention. A recent BBC Radio feature looked at the world of the money-transfer shops that are all over the place- especially wherever there is a large population with "roots" overseas. I was intrigued to find that the amounts of money thus going out of Britain to places that need financial support was greater than the official Government Foreign Aid. And to me this is good news.
It does mean that these populations are interested in getting more than a subsistence life on benefits in this country. Now some of them will no doubt be as good, or perhaps even better, at exploiting the system and our society than our own entirely home-grown criminal element. But criminals, like Jesus' poor, are always with you.
Most immigrants, however, hope to join the prudent and responsible majority that an earlier poster has referred to, and are busy trying to earn a living and support people both here and elsewhere. This is an incentive to be productive which is good for the UK economy; and moreover the money goes directly to people who will spend it for largely non-political purposes. Yes some will support Sikh separatism and other forces of violence and instability; but these sums are outweighed by the support given to ordinary people and , as two sets of government are cut out, probably reflect a much more effective way of helping the developing world than the "big government" or IMF solutions.
Of course such systems would be even better if people were educated to be able to look after themselves rather than be looked after by "the system", and if we could get back to the concept of the Brotherhood of Man. You may have noticed the rather cynical press reaction to the hope expressed by the Sicilian mayor yesterday that the winner of the Italian lottery might use the money in the light of the needs of his community. As if?
Casseroleon
Complain about this comment
People are over extended
Business is over extended
Banks are over extended
Banks have our cash
The government is over extended
Lowering interest rates is betting that the debt will be paid off instead of defaulted on
Lowering interest rates is betting that it will spur people to buy houses again
Lowering interest rates is betting that banks will begin to lend again
If the British Economy was Mr Smith, owing 30,000 on loans and a 150000 mortgage sitting at a debt advisor's desk stating that I am robbing Peter to pay Paul, but I might just go and buy that tv tomorrow because the interest rate is quite good - what advice would he get
Lowering interest rates works when there is liquidity in the system it will not pump liquidity unless someone is willing or able to borrow and someone is willing to lend
As both criteria are no-no's, then lowering rates is a no-no as well - or your going to get double digit rates in the summer!
Complain about this comment
So..
WE SHOULD BUY US$, Gold or Oil?
Weak pound help export?
What we going to export..Can we export politicians?
Yesterday 1 pound = us$ 1.54
Today 1 pound= us$ 1.96
Who is fault? G. Brown, Bank of England o the polish ; )
Are we recovering??
Thanks in advance for any useful tip!
Complain about this comment
sorry
today 1 pound = 1.59 us
Complain about this comment
I asked point #178
I must point out that I make no claim to be expert on this but if the leaders at the Beijing summit want to look for a new and fairer banking model they should be looking – in principle if nothing else - at the Islamic banking system. I stress right now that I have NO axe to grind and that I believe in tolerance and respect for all religions, but I have read enough to be very, very impressed.
Islamic Banking enshrines fundamental decency, ethical conduct, trust and respect in a way that is completely missing – we can now all see - from our Western World ie: Lombard and Fiat money systems.
Islamic banking conforms to strict ethical and religious law: Sharia, Islamic Law. Sharia is of course based first and foremost on the the teachings of the Prophet Muhammad with added consensus, reasoning,debate and precedent from qualified clerics. The fundamental principle of Islamic banking is the sharing of profit and loss and the prohibition of usury - and it emerged as a means of transacting commerce during the so called Golden Age of Islam from century AD 5th. Rightly named because the centuries that followed up until the Mongol invasions were a time of the most extraordinary developments in science, engineering, chemistry, agriculture. Guiding principles on financial transactions established in those very early times have stood the test of time because of strict religious supervision and observance.
Quoting from the Institute of Islamic Banking in London (whose website is well worth reading)
“The universal nature of these principles is immediately apparent even at a cursory glance of non-Muslim literature. Usury was prohibited in both the Old and New Testaments of the Bible, while Shakespeare and many other writers, particularly those writing in the 19th century, have attacked the barbarity of the practice. Much of the morality championed by Victorian writers such as Dickens - ranging from the equitable distribution of wealth through to man's fundamental right to work - is clearly present in modern Islamic society.
As I said, I should be interested in RP's observations on how the Islamic banks are doing at this time.
GC
Complain about this comment
183.
I agree. As someone who has taken a severe dislike to the current western banking model and the ruthless way that it is run, I too would like to see more coverage of alternate banking systems, to see if we could learn anything from them in the current crisis.
I suspect that we could learn a lot.
But as the current system only benefits the very few at the top, I suspect that this is a debate that the BBC will not engage in.
I hope I am wrong.
Complain about this comment
Mandelson a Labour supporter?
24/10/2008
Lord Mandelson today warned Labour's Left that there would be no return to the tumultuous days of 1983, insisting that the economic crisis did not mean a return to old policies of top-down state control.
In an interview with the Blairite Prospect magazine, the Business Secretary said it would be "absurd" to reject the entire market system because of "mistakes of regulation and personal behaviour" in the banking sector.
"There's a danger that some see the financial and banking crisis as an opportunity to resurrect the 1983 party manifesto. It's not going to happen. We've all moved on," declared one of the architects of New Labour.
Wait until he privatises the Post Office to bring some cash in.
Complain about this comment
#183. Well said.
This time we'll find out once and for all, won't we?
GC
Complain about this comment
I understand why lawyers are apparently preventing banks from apologising for their sins: short-sightedless, unawareness of what was happening, etc. But I also watch stories on UK and US television that show graphically the plight of many ex-householders rendered homeless through relatively little fault of their own; with doubtless many more to come.
I listen to people like Mr Richard Fuld totally unrepentant, and then I hear through The Guardian that US$ 70 billion is likely to be allocated in bonuses to people working in those financial institutions that are among most affected by/responsible for this crisis. As well as to promises to Lehmann ex-employees that they will still get their full bonuses at year-end even though Lehman has fallen.
I also read of the plan of the German Government to limit to 500,000 Euros the pay (including bonuses) of bankers that accept State aid. Maybe it won’t happen, nevertheless let’s take that as a base, and ask all the banking community in the UK and US who have more than an estimated 500 000 Euros net income for the tax year 2008 (2008/2009 for the UK) to give to a charity at least 10% of the excess over that amount. It could even be tax-deductible!
The aims of this charity would be fund the defaulting payments from home-owners for a period of up to ‘n’ monnths and prevent the repossession of their houses. The name of contributors would be published widely.
How much would that yield if say 30% of those affected paid? Could it be done? Obviously there are multiple questions but people capable of the sophistication necessary to devise the derivative schemes we have been talking about there should be competent. It would certainly help to dilute the perception most people I speak to have of greedy bankers remote from reality. And perhaps that is more important than some might realise or wish to consider.
Pie-in-the-sky?
Complain about this comment
185
Nationalisation of key industries (whoops) key utilities is a certainty in a world leveraged on the assets instead of cash.
A free market, like its banks need debt to prosper - and the IMF is going to be the lender of last resort
Complain about this comment
assets instead of debt (doh)
Complain about this comment
If you can't find anything positive to say then perhaps it might be best to say nothing.
I am getting heartily sick of this diet of unremitting gloom. Yes. I get the message things are going to be tough, but we are all just going to have to get on and make the best of things.
Bye-Bye Robert - I won't be reading your stuff again until things improve.
Complain about this comment
Pleas to the IMF won't stop this one, every Govt initiative in every country affected has failed to produce anything except more of a downward spiral. And after the IMF money is gone, what then? Just print more? Sure, adopt the Zimbabweean model?
The Pakistan model - burn your bills - don't pay them (because you can't) interests me. I won't take long for that to spread, and all the IMFs in the universe won't be able to fix it.
Beijing Summit?
What we're seeing there is a bunch of guys in suits talking to each other about Keynsian models et alia and kidding themselves that they have a shred of control over world economics anymore! What they should be doing is getting on the TV in their own countries and allying themselves into coalitions with other parties and dealing with the survival of their respective nation states and peoples in an upfront and practical way.
Of course some will resort to the old state control methods of martial law and police intervention, for as long as it can last. They're likely to get a sharp lesson in 'people power'over the next few days.
I say again, look what is happening in Pakistan.
GC
Complain about this comment
#185
Sure, only those who would join the SLP would think in terms of the Labour 1983 manifesto but does that mean elements of the 1945 - 2008 period of British political/economic history will not and can not be re-invented by learning from past mistakes.
Keynes and Socialism do not exclude either market forces or a capitalist element just as the free market doesn't have to exclude elements of the planed or 'social' economy - indeed some EU countries have been running such mixed economies for years.
Complain about this comment
#186
Did you mean #184 or were you just agreeing with yourself?! :-)
Complain about this comment
#190
"Bye-Bye Robert - I won't be reading your stuff again until things improve."
I think that is called cutting ones own nose off to spite a face...
Complain about this comment
sorry, yes #184!
GC
Complain about this comment
#180 Peterskitchen
I agree completely.
Tinkering with the interest rates, is just that tinkering. Real disposable income after taxes and basic cost of living are taken into account is very low. Unfortunately the effect on GBP sterling is nothing short of catastrophic - the increased spending that Mr Brown wishes to see is virtually all on imported goods and services.
The government needs to consider cutting taxes:
1. Bring back the 10% rate, and leaving the other two tiers at the same rates. Also be more generous with the threshold levels. This would affect every workers economic well being. But even this could be offset by inflation.
2. Consider some sort of either NI or income tax amnesty for a short period, on the strict understanding that the value is utilised as a one off payment on outstanding loans or mortgages. The banks by the same token would have to amend the terms of the loancontracts to allow this without penalties being applied. This would ease the total debt burden and improve the liquidity of the banks.
However, I suspect that these steps are the last thing that Mr Brown would consider and we are probably headed for stagflation (stagnant economic activity coupled with inflation).
As for people complaining about the press talking down the economy - don't be silly! If the economy was in great shape no amount of talking things down, would create a crisis situation. Unplanned and uncontrolled actions will cause intended consequences and also unintended consequences. The latter is what is happening now.
Mr Brown talks of beating the recession. This is nonsense, you survive a recession. I am also concerned that for the younger generation that only know of the good times, and could get themselves into severe financial bother by running up huge personal debt levels.
Whatever type of economy we have once we get through this crisis, a fairly clean and healthy credit history will be vital for personal prosperity. I cannot see loans being thrown around like confetti in the future.
Complain about this comment
Brown broadcast on this site: 'we're fighting this recession in every way we can..'
He don't know many ways do 'e?
Cutting this, cutting that, handing out a few bob to stop older folk from freezing this winter, and he's helping folk yuh know, who 'can't pay their mortgages...'
You must all stop complaining and smile more like Hazel Blears. Father Gordon's in charge and will save you all.
Please SNP, send the garrulous clown into orbit on 6th November.
GC
Complain about this comment
Fools and their money are soon parted.
With this in mind, I read the comments of many of your bloggers railing against foolish financiers and politicians in some bemusement. I'm afraid that they completely miss the point. The bonuses have been trousered, the mansions purchased, the gold plated pensions secured, the mistresses kept. The masters of the universe are not the fools, we are. We who are left with none of the above and will have to forgo medical care, pensions, road repairs, education etc. because all that future wealth was a mirage to lure us into letting them go their profligate way in the here and now and secure their own futures.
Consider how well off you are now and how well off they are now and how many of them are so upset that they are writing angry missives to RP's blog, then ask yourself who is a fool,
Yours Aye,
Graucho
Complain about this comment
#198, can't fault you in some respects. On the other hand if you're just a 'little person' and you want to improve your lot in life, you want to trust assurances from your own democratic Govt that there's nothing wrong in that. I think that breach of trust is far worse than trust accepted in good faith.
However for my part I think it is worth expressing views here nonetheless. You don't get much chance to speak out in 'Prison island'.
We may not be as 'clever' as those you speak of, but I do detect the beginnings of a modest groundswell of opinion among folk I speak to - against the way things were and the people who made it that way. The great and the good may be guffawing over their champagne now, I predict they won't be for long. Look what happened to the Weimar Republic.
GC
Complain about this comment
All the people who have been financially careful and lived frugally within their means throughout a lifetime are now going to lose out because of all the different and devious forms that credit takes and the way in which it has become normalised into every facit of our lives.
Common sense alone tells you that credit is not sustainable as an ever increasing burden. Blind mugs seem to have been sucked into a black pit. There are still no free meals to be had.
Complain about this comment
I suppose this is just sour grapes, but I am a little envious of Robert Peston. He gets to go on the tele and all he as to do is to waffle on about things he doesn't understand. Not that he is unusual, after all if anyone knew what was going on then we would not be in the state we're in.
Complain about this comment
No. 93 "Now both partners need a job to keep afloat."
Fiddlesticks. If neither partner has a job in your family, the government will pay sufficient for you, your partner and all of your children to live, and most of your council tax, AND pay all of, or something towards, your mortgage payment after 13 weeks. Local housing allowance isn't just for renters. It also covers mortgage payments while you are low income or out of work. For a family of four, those payments/rebates work out in total to around £380 a week, after tax. So before you all start panicking about losing your jobs, how about putting that energy into getting informed about what you will be entitled to if you lose your job and don't have much other savings or income to fall back on.
There is a caveat - you have to have less than £16K in cash to qualify for the handouts. Whoever has more than that and is out of work can, for sure, afford to support themselves.
No. 176, re your query as to why a falling pound would bring on inflation.
If the pound goes down, imports become more expensive, because these are usually priced in USD or Euros. So if before we needed £5 to buy USD $10 (at USD $2 = £1) worth of items from overseas, now importers will need nearly £7 (at USD$1.50 = £1) to buy the same basket of items.
However, in spite of that, I believe we will see falling, rather than rising, prices in the coming few years. Businesses will need to cut their considerable, and downright greedy, margins, just in order to stay afloat. And not before time.
It's not just the fact that Brits in recent years have consumed so much, but rather the sky high prices they have been prepared to pay, that have feathered the nests of business men and bankers alike. Credit cards at 19%, when the prices of good are already way over the odds, simply doesn't represent value for money.
Maybe now we Brits are waking up and realising that the bonuses paid to the elite few were funded by us, our idiotic consumption patterns and our willingness to work for pathetic wages.
Complain about this comment
It is ironic that many people will be losing their jobs because brown has stuffed up the economy, rather than any fault of their own; meanwhile a number of BBC employees are choosing to put their jobs on the line purely to broadcast thier own prejudices.
Complain about this comment
202
Please dont suggest that someone with a mortgage will be supported by benefits if they lose their jobs - the teenage grabberes would got a 125% loan from NR first before getting pregnant and keeping their houses!
You make it seem so easy
''Oh ive lost my job, oh well, I will twaddle down to the benefits office and claim my 389 pounds per week to keep me afloat until i can resume my estate agency''
Are you watching Monty Python?
And your second comment is as pythonese as the first
In a period of free markets where it is dog eat dog why would you not get the very cheapest prices on offer?
A falling pound and less competition means only one thing - higher prices and higher inflation
Now your going to tell me after i have cut your argument off that its only a flesh wound, arnt you? Monty?
Complain about this comment
"And he cried mightily with a strong voice, saying, Babylon the great is fallen, is fallen, and is become the habitation of devils, and the hold of every foul spirit, and a cage of every unclean and hateful bird. For all nations have drunk of the wine of the wrath of her fornication, and the kings of the earth have committed fornication with her, and the merchants of the earth are waxed rich through the abundance of her delicacies." Revelation 18:2, 3.
So just when people think God is a delusion ,the toothfairy egonomic system collapses
Unless of course you believe dawkin tonkeys hee haw
Complain about this comment
No. 204,
Regarding losing one's job and then claiming benefits - you clearly have not been down this track. I have, and it's a straight forward process. As it should be.
As to: "A falling pound and less competition means only one thing - higher prices and higher inflation".
Yes, provided all other things stay equal, in particular, demand for the products on offer, in spite of the higher prices. Demand has been falling for some time, and is probably not sustainable even at today's levels. Take housing. Raw material costs may well be going up, but I don't see the price of new-build houses going up. Do you? Far from it. Prices are tumbling like dominoes.
And before any of you start being sorry for the self employed business people who have been bleeding you dry these past few years, raking in the profits while people on wages rack up their credit cards to keep businesses and banks well in profit and able to live high on the hog, save it. If they have a family and their profits drop below £15K a year, they will be entitled to a top up via working tax credit, child tax credit and housing benefit, just like everyone else. It's called the minimum income guarantee. Otherwise known as privatising gains and socialising losses.
Complain about this comment
Re #202
Thanks for your kind explanation!
And yes, I do understand that point about imports being more expensive and exports being cheaper with the falling sterling.
Am I mis-understanding what Mr Peston wrote in his blog then?
He said that 'The remarkable fall we've seen in the value of sterling today (again) shouldn't make the Bank of England so anxious about importing inflation...'
I first thought it meant the Bank of England shouldn't be anxious because the FALL in the value of sterling would NOT import inflation. (which doesn't make sense to me because as you have said as well, the fall in the sterling value should lead to more expensive imports!)
That's why I got confused. Am I getting the wrong idea then? Or did Mr Peston mean what you had said, about the prices not going to rise anyway because of the current circumstances?
I hope I make sense... English is not my first language so I'm sorry if I sound contradictive or something.
Complain about this comment
Some interesting reading about how Corporate debt downgrading (recession) could create a similar problem to the mortgage market - immediate problem is write downs of bad debts/losses hence wiping out the banks capitlisation.
The CDO unwind waiting to happen.
http://ftalphaville.ft.com/blog/2008/10/23/17365/the-cdo-unwind-waiting-to-happen/
Are the days of CDO carnage behind us?
Apparently not. Bloomberg reported on Wednesday
Oct. 22 (Bloomberg) — Investors are taking losses of up to 90 percent in the $1.2 trillion market for collateralized debt obligations tied to corporate credit as the failures of Lehman Brothers Holdings Inc. and Icelandic banks send shockwaves through the global financial system.
... read article above.
Complain about this comment
Interesting article suggesting equity markets may drop by 30% based on P/E ratios for a deep recession in the USA. I also remember the IMF said there was 30% or so yet to fall.
Article is here:
http://www.rgemonitor.com/blog/roubini/254130/bloomberg_october_23_2008_roubini_says_panic_may_force_market_shutdown
Complain about this comment
its the cost of living in this country that is killing off our chances of surviving a major downturn.
in the mid 80's i worked on a garage forecourt an old fashoned one that was attended and petrol was in the £1.70's to £1.80's per gallon but during a small downturn it went to £2.00 a gallon and many customers stated that if it got too much higher they would stop driving.
well with the introduction of the litre the price per gallon is around the £5.00 mark people have been ripped off for so long that they have allowed it to become the norm.
house prices have rocketed why becouse of greed and society placing wealth above every thing else, its time to stop this cycle now during a downturn and bring the cost of living inline with reality.
Complain about this comment
It's all Starbucks' fault.
Complain about this comment
How are Gordon Browns friends? Any exclusives for us or will you wait to Monday?
Complain about this comment
Ah, now I see it, caffeine fuelled mania forced those salesmen out onto the street fast-talking their clients into buying property well outside their means....
Mr/Ms Damicol. I live in the Czech rep, here we are flooded with cheap eastern goods, unlike the west where a modicom of quality control exists - the product sold here is rubbish. Less than 1 year of life, even for 'brand' names. I can imagine your 'opportunities' unfortunately.
Ladies and Gentlemen, with the UK manufacturing base so reduced I can see we must return to what we do best and have forgotten..... The future is knitting, wickerwork and those nice boxes covered in seashells - No loans needed for those businesses hey?
I reiterate, UK businesses need support either through agencies or 2nd/3RD tier banking - the BIG banks, institutions et al should be left to the forces of Darwinism.
Trickle down is not working, the bottom levels of the pyramid need the assistance - not the top.
And, on a social note, here at age of four all child support is cut off. The parent, single or not must work. Its a fact of life and people dont go round weeping, stealing or overdosing on heroin. Here is self-reliance and self-respect.
I had always admired our welfare system. Much. Now I would only wish to see the health care model replicated worldwide, the rest of the support system is in this day and age, degrading and forms part of the bubble.
Complain about this comment
206. At 6:35pm on 25 Oct 2008, dktreesea wrote:
No. 204,
Regarding losing one's job and then claiming benefits - you clearly have not been down this track. I have, and it's a straight forward process. As it should be.
Monty, I have been down this route more times than I should and less times than I should want
In the recession of the early nineties when the Hooray Henries of the city were bathing in champagne(literally) I lost my job like lots of others (like lots will do now)
As for your further comment
You have mistaken assets (house prices) for carrots (help you see in the dark), provide food and dont come with a warning:
your investment in this carrot can go up as well as down
BTW same circumstances, I bought a house and double my money in 10 months, sold straight away and bought a house I would not have paid a fiver for in ordinary times for 3 times its value - interest rates went up to 15% - my family in the days of a single earner ( mums atayed at home in them days) had a choice to eat or lose their home - BUT in them days the government paid your mortgage for you so you had a chance to save yourself
Abse of the system stopped that so subsequently, you get know help at all, renters only, sorry
There is nothing straightforward to claiming benefits now im afraid , it just takes a few hours less than a days work and once you do it, if you rent your laughing, if you have ANY assets your crying.period
Complain about this comment
#203
I can remember the same thing happening under Thatcher, many people lost their jobs through no fault of their own because Thatcher decided that the UK didn't need to actually make anything anymore, and as for the media, a whole Television station was forced to closed due to them challenging Thatcher and her ministers prejudices.
Complain about this comment
No 207,
I think the full comment was:
"...the remarkable fall we've seen in the value of sterling today (again) shouldn't make the Bank of England so anxious about importing inflation that it postpones the widely anticipated further cuts in interest rates."
So, the theory goes, if the pound falls, causing imports not priced in pounds sterling to be more expensive, and therefore causing inflation, the Bank of England would usually increase interest rates. This would have the dual effect of attracting investment in the pound (raised demand ==> raised value compared to other currencies) and tightening/increasing the cost of credit so that the consumer would decrease demand. This would then counteract the upward pressure on prices due to the increase in the price of imports.
If the bank instead cuts rates, it is probably because it expects demand to be so low that any inflationary pressures due to the rising cost of imports will be more than offset by reduced demand. After all, one can hardly pass on a price rise to the consumer and hope to stay in business if no one wants the goods at the current price, let alone the new price.
Complain about this comment
#211
"It's all Starbucks fault"
Actually it's the Starbucks phenomenon that is to fault, why put the kettle on and make a cup of coffee when you can walk around the block and 'buy a Starbucks' on the plastic - in other words, it's consumerism, the must have-can't wait attitude that has caused this, heck some people (especially the under 30s) are going to have a very rude awakening if this is anything more than a very mild recession!
Complain about this comment
No. 214
From what I have seen and experienced of the benefit system in the past few years, it's a very fluid, forever changing, system.
At the moment, if you get income support, pension credit or the job seekers allowance (income based) you may be able to get help paying your mortgage interest. It's wrong to say no help is available at all if you are a home owner with a mortgage. Sure, the amount isn't paid through the housing benefit method, but nevertheless help is available. As I understand the current policy, that payment is restricted to the amount you would have been entitled to had you been renting instead of owning your home, is payable directly to the bank, and only covers the interest payment, NOT the capital component.
Also, though I believe politicians are looking to change this to bring it in line with the housing benefit (i.e. rent allowance is payable from the date of the successful claim), you may have to wait a few weeks before the DWP start paying the interest to the bank.
Typically, the capital component of any mortgage is miniscule and the interest portion huge. Sure, someone losing their job and unable to find other work straight away may suffer a loss of income, but not enough to get them thrown out of their house and behind on their mortgage interest, (under the current system) unless they own a half million pound mansion with a huge mortgage to boot.
And from experience, anyone needing this sort of help would do well to visit a citizens advice bureau before descending on the DWP, so that they know their entitlements. That goes a long way towards making benefit claims into a smooth process.
Complain about this comment
An interesting question in the Times to follow up on since Mr Brown is blaming everyone but taking no responsibility himself for encouraging debt.
"...why has the economy here fallen so much harder and faster than in America, which was where the trouble supposedly began?"
Complain about this comment
#218
"unless they own a half million pound mansion with a huge mortgage to boot."
The problem there is, in some parts of the country a family needing a four or five bedroom house will be getting very near the half million pound house (not mansion) and quite possibly a huge mortgage such has been the house inflation over the last few years - even modest terraced houses can be knocking 1/4 of a million around my parts of the country.
There is a real problem in that the benefit system (and dare I say the inheritance rules) have, for many reasons, just not kept up with soaring house price increases over the last few years.
Complain about this comment
One final, gigantic scare has still to come and provide the climactic laxative moment for investors.
What's it to be?
A major terrorist attack?
The collapse of Ford or General Motors?
McCain to win the Presidency against all the odds and kill political hope in America stone-dead?
It's coming...that thing that couldn't possibly happen and that nobody could predict.
Then, and only then, will it be right to venture back into the stock market.
Watch out for the Black Swan.....
Complain about this comment
Unfortunately, mr Peston, you are spot on with this article.
I suppose the best thing is to force the property market to crash and get the pain over and done with quickly.
You forgot to mention that the one share that outperformed the FTSE today was SOUPKITCHENS.com ... one of the few growth industries of the future.
Complain about this comment
Dont you just love him?
The PM having to go on the by election trail
if that was not enough
He has his hair quiffed up, really
It cant be mandys doing cos his hair holds up his top lip
OH, and then there is metal
Turs out mandy is nothinf other than a cartman
any old iron! any old irony? I mean any old aluminium? for me old pal olibach?
Lord he is Lording it over us - I hope I see the day when his downfall is so desperate it goes down in infamy either that or i will see him engaged in the7th way somewhere
OMG when the imbumbents go to their Lordy grass what takes their place?
Dave and the scrounger?
Please provide us with an alternative like the Queen
Freddy was great!
Complain about this comment
Robert,
What is Gordon Brown playing at?
He has a chancellor and a (newly appointed) business minister...
What are they being paid for if Brown is doing everything himself?
If they are otherwise engaged, maybe you would expand on what they are doing?
Complain about this comment
No. 220, I take your point, but presumably these people have some equity in their property as well?
An interest allowance up to the rate of Local Housing Allowance you would qualify for if you were renting can be quite substantial. Take somewhere like Enfield, in London. The housing allowance for a typical family with two children, boy and girl, one over 10, is £1,213 a month. Even at around a 6.75% mortgage interest rate, that works out just about enough to cover the interest on a mortgage of 180K.
The bottom line is these days, if you are out of work, it really doesn't matter whether you rent or own your own home. If the government is prepared to pay the interest on the loan, the bank is not going to be able to foreclose. The last thing the government would want is to have to house people forced out of their homes.
This isn't a prescription to save the previously well off, and now out of work, bankers. They should have been paid enough over the last few years to have been able to put ample aside for a rainy day. This is for people who have less than 16K in liquid assets, which is the vast majority of us. Some people who are now in their 40s may never see work again. How do I know this? Because that's what happened after the last big recession, in 1990 - 92. They need a place to live - it's good that policy has changed sufficiently on this count to enable people to be able to stay in their own home.
Complain about this comment
Being the new bbc guru and son of a NuLabor peer I have to ask why in the last one week at least you have not explained to the British public (your real boss) why your political boss Gordon's bank takeover is not reaching the public via the libor rate or any other action?
Surely nothing to do with the calls now being made on major investors a few of whom have gone awol, but the majority of which are made almost centless, if not senseless, in honoring their calls?
As quoted just days ago "government is an amateur profession and has no understanding of finance or banking, so does not know how to regulate it".
Your own efforts on this crisis reporting are laudable under UK tabloid conditions, but tainted by your ego and a sort of idiots guide to!
Complain about this comment
#199 GuyCroft used the critical word - trust. No economy can function without it and the unforgivable crime these financiers have committed is to destroy it. When it was reported that interbank lending had ceased because even the banks didn't trust each each other, the depth of this nadir became all too apparent. It is an oft repeated cliche that crime should not pay, but this one has repaid the perpetrators richly. Whether what was done was legal or not - well the lawyers will now get rich on that one - is beside the point. It is the damage that is going to ensue at a human level right around the globe that makes the actions of these people criminal.
Until the rules of company law are changed to make the boards of financial institutions personally liable when they mismanage other peoples money I see no disincentive for this situation to repeat itself in the future and no reason for trust to be restored,
Yours Aye,
Gaucho
P.S. In Act II as I recall the German financiers then bankrolled Adolph.
Complain about this comment
Now that the phantom "R" word is finally out in the open, the next economic-linguisitic debate of dubious worth will involve whether or not the "D" word follows, when, and to what severity. Meanwhile, such distractions get in the way of dealing with the real issues, including (1) how does the financial structure deal with the imminent bankruptcy of two emerging nations before calendar year end, and (2) how to afford the unaffordable-- bail outs for Main Street and High Street comparable to the largess doled out to the incompetent bankers?
Complain about this comment
To be honest, I thought the flight from Sterling was part of the plan. Devalue the pound until it achieves parity with the Euro and then join it.
After all the pound has been slipping since September 2007. Its just accelerated recently.
Complain about this comment
The political, economic and financial weaknesses of many Eastern European countries right now is too reminiscent of the 1030s for comfort.
Complain about this comment
There is a love that dare not speak its name which has been little discussed and much maligned throughout the duration of the current financial mayhem, and that is protectionism.
For twenty years or more governments and the public have been exhorting the advantages of globalisation – but what exactly are they? Manifested by the free cross border movement of capital labour, goods and services, globalisation, we are told, brings vague but unspecified benefits for us all.
Such as ?
Since the early 1980s there has been a systematic destruction of Britains’ ability to control the production of the goods and services consumed by its people.
- The city has been sold off to foreign investors
- Manufacturing has been left to wither on the vine.
- Despite being one of the worlds’ top twenty oil producers we have become utterly dependent on imported fuel
- Our pension savings have been exported to a wide variety of overseas destinations.
- Instead of being forced to confront imbalances in our labour market, we have imported cheap labour to fill a gap that could have been filled by long overdue welfare reforms.
- The ownership of huge numbers of solid UK business has passed into foreign hands.
But are we all really wealthier ? are we working less hours ? do we have a better education system ? do we have a fairer welfare system ? do we have control over UK fiscal policy? are the streets safer ? is our balance of payments better ? are we closer to energy self sufficiency? Could we feed ourselves in a crisis?
Many commentators talk about their being a need to discover a new capitalism – well how about some of the older style version?
It is possible for the UK to manufacture food, goods and services, sell them to its’ own population, furnish that population with well paid jobs and a rudimentary welfare safety net, develop an energy policy that can sustain this and do so without exporting the profit or importing the labour involved.
It is possible for this to be done without the need for Government consumption to account for 50% of the revenue that accrues.
How do we know it is possible – we used to run our economy that way for a great many generations.
It is possible that globalisation might actually carry huge risks and benefit a select few individuals and countries. It may even be the case that a large measure of protectionism is no bad thing?
Its’ just that nobody dare speak its name.
Complain about this comment
Yawn. No news = no need for blog.
Complain about this comment
#225 I applaud your reasoning and support the concept. However, in many parts of London, 180K cannot buy you anything, not even a studio flat/ bedsitter !!
For a man with the regulation 2.4 kids, the sum will have to be much higher.
#224 Gormless Gordon's Chancellor and business minister are there to look pretty !! He *HAS* to handle everything himself. Thus has it always been for all control freaks !!
#220 You are absolutely correct !! Just quickly looking into the estate agents' windows in my area tells me that there isn't a single 4 bedroom house for under 600,000 quid that isn't in a state of disrepair akin to collapse !!
I have serious reservations as to whether these properties are truly "worth" that much money !! A similar house cost a tenth of that when I bought my property in this area, albeit some 30 years ago !! Could people's earnings have gone up by 1,000% in those intervening years ?? The sins of the housing price inflation is now coming home to roost !!
Complain about this comment
#231
re protectionism
I think the reason many people don't speak it's name at the moment is because it's widely accepted that protectionism made the 1930s depression deeper and longer than it needed to be, also, as a consequence, it lead to some rather unpalatable political 'answers'. That is not to say that the worlds countries could not choose to retreat behind their boarders and trade controls when this all shakes out - it's a viable option but not one to be taken lightly, and the EU would have to become even more of a USofE than many would be comfortable with.
Complain about this comment
The drop in sterling demonstrates that the market has already factored in a substantial interest rate cut in the UK and to not to follow this would just add further complexity to an already immensely confused situation.
This is not the time for capricious behaviour: however appealing!
We have to recognise that we are in a very difficult situation and to navigate it successfully requires both thought and care.
We are by and large in a perfect economic storm and to try and second-guess events will just make matters worse. I am begining to fear that this is what the authorities are trying to do, prompted by foolish demands that they take control of events, and this in itself carries enormous risks.
There is a majestic beauty to the current circumstances. Nobody is in control. There is no government, no bank, no market and no divinity which is in control. This is true chaos and my delight is that it was caused by all the control freaks on earth who decided they had the economy sorted forever and that history had ended. Hubris indeed!
We have sown the wind and now we reap the whirlwind! This is where all attempts to control nature end: whether it be human nature or the Mother herself.
Complain about this comment
#231 Britain hasn't had a non-"globalised" economy for the last 200 years !! It started by exporting textiles and, dare I say it, "dissidents" to its colonies; first to the "New World" and then, when that ended in 1776, to Australia.
India, the jewel in the empire's crown soaked up masses of British manufacturing and Empire determined prices, to the detriment of all other manufacturing nations. Meanwhile, raw materials were imported from the colonies at advantageous prices !! America used to complain bitterly about British tariffs on their exports to the colonies !!
Well, the empire is no more and British manufacturing had priced itself out of the market because of its high labour costs and the fact that almost every raw material had to be imported at great costs !!
To sustain the high levels of government spending, the one asset Britain had, the North Sea oil, was squandered instead of being carefully nurtured for future generations !!
As for well paid jobs, Zimbabweans are current being "very well paid" !! They earn millions every day. Unfortunately, it cost millions to buy just a loaf of bread !! People cannot be "well paid" if there is no *real* money to pay them. The only way to get *real* money is to sell goods or services to other nations at a price they are willing to pay.
Protectionism in Britain's favour will only beget protectionism against Britain. And gunboat trade diplomacy went out when torpedoes were invented !! These days, they'll probably use third-hand Russian made RPGs !! Much cheaper !!
The one thing that Britain still excels in is its accumulated knowledge and the dissemination thereof. This is the one "industry" that will bring in lots of *real* money to Britain. And it is not helped by the government trying to dumb down university degrees !! Quantity does not equal quality !!
Complain about this comment
#232
..or need to read it!
Besides, considering that your comment is #232, with most of the previous comments discussing issues raised directly or indirectly from Mr Pestons blog entry means that you seem some what outnumbered in your opinion.
Complain about this comment
The foundations of globalisation and "free trade" as we know them were invented by Britain in the 19th century and solved the problems of periodic starvation and unrest to the detriment of the colonies.
You do not want protectionism without the colonies. Don't even go there. You do not know what you are asking for.
Complain about this comment
Boilerplated are you the real Mr Peston
Complain about this comment
China and the south-east asian economies already practise far greater 'protectionism' than is being discussed here. Protectionism is not a simple contrast between "closed borders" and "globalisation".
Complain about this comment
#239
" Boilerplated are you the real Mr Peston "
ROFLO! Not sure if to take that as a compliment or not...
More nutty fruit-cake sir?
Complain about this comment
171 "For the next 30 years you will be able to walk past the Palace of Westminster and see Lord Mandy waving two fingers at you".
I am glad Mandelson is back here where we (the Press on our behalf) can keep an eye on him. He was unelected in Europe, and had the opportunity to practice dark arts had he been so minded apparently with little scrutiny. I think he will be a disaster for Brown, and hand the election to Cameron, assuming the latter can decide what to do with Osborne, who looks like damaged goods.
Incidentally, I would be 101 when Lord Mandy's fingers had stopped waving at me -a promising scenario which I will diarise.
Complain about this comment
#242
You really don't understand the first thing about the EU and how it's run beyond what is printed in the Daily Maul (or UKIP press releases).
As for press reporting, there is nothing to stop the British press reporting what goes on within the corridors of power of the EU, the fact that they (in the main choose not to do so is because it's far more convenient for them not to, meaning they can spin their own opinions rather than reporting the facts.
Incidentally, don't be so certain that Mandelson will do for Labour and hand the election to Cameron, why do you think Osborne was (with Cameron's blessing) so keen to start sticking the knives in as soon as 'Mandy' returned, rather than waiting until (according to the Tory supporters claims) he pushes the self-destruct button one final time?...
Complain about this comment
Re 243
I would be pleased to be accused of not knowing the first thing about the EU as you have done. I am not very keen on it, not least because it seems to me to be both a gravy train and an excuse to misuse our money. Take the rebate. When Mrs Thatcher boasted about getting £2bn back nobody said anything about all the years we had overpaid by £2bn. Still, if you know so much about it good luck to you.
Also, I know nothing about the Daily Mail or UKIP as you mentioned and nor am I a supporter of any political party.. I do know when I see a negative blog which adds nothing to the debate.
Incidentally, my real objection to Mandelson stems from the first time he resigned. From my point of view I would rather not have people like that in Public life, and taking him back twice is rather like what Newcastle has done with Joey Barton.
Complain about this comment
The point about protectionism is simply this,
The whole idea of prioritising trade within ones borders at the expense has been largely discredited.
I do not for a moment beleive that any nation can live in 'splendid isolaton'.
What I do beleive is that re evaluating the whole idea of limited protectionism has to be carefully re exmained.
Frankly who cares if China or India refuses to export a vast array of cheap goods to the UK whilst continuing to effectively operate a protectionist trade policy. If we can make things ourselves and save on the fuel, carbon and time in getting them here, why not do so?
Complain about this comment
I see that Boilerplated commented in #175 on my #171. Perhaps BP (the nom de plume presumably refers to the coating of his brain) could get whoever reads these posts to him to do so again slowly after which he might get the gist of what I am saying. It is not that somebody else has been booted upstairs to the Lords. Of course the Tories and everybody else are guilty of this. The Lords have long been a congenial rest home for the politically dead. The point at issue is that Brown chooses not just to bring back into a senior Cabinet position a man whose dodgy dealings have twice recquired him to resign - even from the laissez faire environment of the Blair machine - and who as a result is a watchword for what many of us see as wrong with Nu Labuh. But El Gordo did not have the guts to have him elected as an MP so that he could answer for his department in the Commons. A nice by-election in Glenrothes coming up that would have tested Mandy's electoral appeal but, no, El Gordo catapaults him straight into the Upper House and out of reach of us, the plebs who pay for this and hope at least to be able to elect our representatives.
Complain about this comment
Robert - where were you when you should have been warning the world about the 'financial crisis'? You're full of advice and doom and gloom for the politicians, the professionals and the public now, but would it be fair to suggest to you that there's a bolted stable door here with your name on it and a missing horse?
David
PS - I think you should have been locked up after you 'leaked' the information you did about the government/banker meetings recently. So I guess I'm not a fan of yours!
Complain about this comment
#246
More nutty fruit-cake Sir or are you still counting how many bats you have in your bellfary?...
Complain about this comment
I note today that several well known Economists have staed the obvious to Chancellor Darling, that he cannot spend us out of this recession without major detrimental consequences.
What the Government will have to face, then debate and justify is:-
1) Tax Increases
2) Major cuts in the Public Servant numbers and Quangoes.
The gold plated pensions to over 500,000 people is quite unsustainable in such a recession and it is manisfestly unfair for those in the Private Sector to pay more to Public Sector Pension Provision, than to their own private pensions, which have been hit hard.
Pubic Servants of all colours and persuasions need a sence of realism now, they cannot blackmail the rest of us into paying over the odds for their old age and giving a guarrantee/no risk pension to them, whilst we suffer the vageries of the Global Markets
Complain about this comment
#247
Another highly intelligent 'one post wounder' - Not....
Complain about this comment
Sterling shunned? Who cares.
More importantly is Robert Peston's star waning?
Thanks to the BBC Robert has endeared himself to the nation and now he has the ultimate accolade of being mimicked by Rory Bremner.
First we wondered whether Robert was a safe pair of hands. Then we questioned if he was the harbinger of a socialist era of banking.
Scoop after scoop he terrified, enthralled but riveted us to our screens (BBC, of course).
Sadly, apart from that diversion to Corfu, there has been no white knuckle, TV viewing, sofa ride for weeks.
Robert, don't let Bremner steal your script.
Clearly the crisis has passed. We have now become more interested in the messenger than the message!
A rare accolade for a financial journalist.
Complain about this comment
Message 249
Here you hit a nail firmly on its head. It may well be the nail in the coffin of New Labour.
This recession, or should I say slump, is going to be too big to buy our way out from under. For a start who will have the funds to lend to us in the first place?
Sure, our track record shows we are a good risk but the funds to be borrowed are going to need to be large as will be the time required to pay off this mortgage. We have truly sold our children into slavery.
The public sector needs to become a whole lot more productive. Are there the managers to do it? In local government, certainly not. In national government, possibly. Yet, if you start laying off in the public sector you will aggravate both unemployment and levels of overall demand in the economy. The 10% cut in civil service wages and salaries imposed in the Thirties reduced economic demand when it was most needed. So we need to keep the public sector going but make it more efficient. Heady stuff! The public sector target culture and any bonus schemes can go first. We need competent, simple administration of public affairs not the insane policies of endless departmental reform.
Then there is the issue of tax. Taxes are too high and need to be reduced again to stimulate demand. This might be more important than any interest rate cut. But if you cut taxes will people necessarily spend the money? They might decide to save it. Again, during troubled times people tend to hoard cash and other bits and pieces which might prove useful or valuable later. So the cuts in taxes need to go deep.
On taxation I would slash taxes for the lower paid by raising the taxation thresholds for the lower paid by a vast amount. I would offset that by a major increase in taxes for those paid in excess of GBP 100K. These are the people who have let us all down and need to be forced to pay the full price. If they choose to go elsewhere as a consequence then we wave them goodbye and confiscate their passports as they leave. We don't want any deserters back here.
I would also abolish council tax and replace it with nothing.
I doubt if New Labour have the guts for either of these policies as they confront the attitudes, values and careers of two of their major support groups: public sector senior management and the rich.
No matter who you are we are all in the nasty stuff and so far we haven't touched bottom. We need to recognise we are all in this together: rank and privilege is irrelevant.
Complain about this comment
I'm willing to bet pestonthepillock (post 247) lost a hell of a lot of money with those scoops, hence the venomous post.
Complain about this comment
I see Brown is still on autopilot..
"Last recession saw interest rates at 18% [ for a few minutes ]" - of course this was the decisive action that lead to Brown inheriting the low-inflation, high-growth economy that he systematically screwed over the last 11 years.
Love the way that increased, massively inflationary spending is "bring spending forward".... Of course, cutting interest rates and going on a deficit fuelled spending binge is really going to help maintain Sterling's "strength" as per Darling's claim:
http://business.timesonline.co.uk/tol/business/economics/article5014549.ece
He must think we are all as thick as he is.
Complain about this comment
#253, unless you are not a uk taxpayer, you also lost lots of money on those "tips". Drop in the ocean of money p*ssed away in the last 7 years but still....
Complain about this comment
Note to boilerplated:
Ad hominem attacks (# 248 and #250) don't advance any blog.
Robert Peston provides enough of a target, surely?
Complain about this comment
#252, by definition the public sector is not productive. It simply can become last wasteful.
As for kissing goodbye to the people earning 100k or more, I would suggest you are going to need them in 10 years. Here is why:
20% of people will be over 65, 20% will be under 18. 10% will be unemployed and 10% work in the public sector and 10% will be carers at home. That leaves 30% of people earning the money to support the rest. You really want to reduce that number?
PS You give me back the tax i paid, net of all the "public services" I "used" and you can have my passport.
Complain about this comment
a apologise for 230
I was drinking my way out of a recession
I know what I meant but didnt mean to say it that way!
Anyway
When the 'Chief' of the economy led by the chief of the the only things he purports to know (there will be no return to boom and bust) PM are ridiculed by overs that also dont know what they are talking about, we have a problem
We cant borrow, we cant spend, its obviously the end to Great Britain and Hello suburb of Germany and France
History will show we were upturned by a Scotsman and his ilk - planned over 10 years and acted out like Punch and Judy with the crocodile winning
When Bush has gone, Americans still have that constitution, before Gordon tracks back to the Lowlands, we will have our constitution ( the european union one)
Complain about this comment
255
Am I a Brown fan : NO!
And yes I do realise the extend of the damage being done(that has been done), I will say this.
They WILL inflate the debt away, mark my words - Thats what they did the last time and all the signs are thats whats going to happen again.
I have a serious question for you,
do you prefer deflation to inflation (please provide a reason as to your preference)
Many Thanks
Complain about this comment
258,
He better not show his face up here, he's most certainly not wanted. I think you and many of your ilk need to drop the scotsman thing. You must remember that
a. Many Scotsmen don't like him either (as you will soon see from glenrothes by election) and
b. Many Scotsmen have English relatives (wives etc) so I think that most certainly needs to be dropped.
I am Scottish but I am also proud to be British!
Complain about this comment
At post 251 Chelyabinsk lamented Robert Peston's lack of scoops recently.
Well, blow me down!
At 12.30pm 26 Oct BBC Scotland reported the Prime Minister as saying,
"Banks want rescue merger".
Quote, (BBC Scotland)
"Merging Lloyds TSB and HBOS is the best option and still the only way forward, according to the prime minister".
This is a story right up Robert Peston's street.
Complain about this comment
It's all collapsing like a pack of cards.
Country by country now.
Everyone is waiting for someone else to do something.
Nobody is doing anything but waiting to see who's next.
No progress is going to be made until each country gets a grip and puts its own house in order. Whatever it takes.
How can anyone make a new world order out of such complicated chaos.
People need to be considered for without their support no government will be able to carry out the unpopular measures needed.
As no one government is now capable of sorting the country out there needs to be a coalition. Experts briefing the people and not politicians. Truth is paramount at a time like this and all parties have to act like one.
It really is beginning to feel like we're in some kind of economic war. Does this sound far fetched? No more so than the state everything else is in.
Everyone needs to come out of their state of shock.
The longer it goes unchecked the worse it will get.
Complain about this comment
Mr Peston
Glad to see you are concentrating again on the job what you are employed for ( and paid by all of us by ther way ). It pleases me, as well, to see that you have been able to resist the temptation to share your views on the matter of a lying or amnesiac minister . Perhaps the dodgy lord is one of your friends or he has got something on you too !!
By the way Sterling always goes up by the stairs and comes down by the lift shaft. nothing new there!!!
Complain about this comment
258 I apologise, but I have had a bad run of Scotsfolk in business.
Its a fact that more blue chip companies in history have gone bust with a scot at the helm than any other.
I think any culture that can wear skirts in public in their cold weather without tights has my vote
Complain about this comment
I have never been much of a political animal, nor an economics geru, but the past 11 years of this government to my way of thinking has been the worst example of lies, missmanagement, theft and downright contempt for the electorate of this country.
As a 56 year old who has previously been moderately successful financially, I am now seeing any reasonable hope of retirement disappear as my personal pension, along with everybody elses, goes down the pan.
Many of my friends who are also approaching retirement have had to swallow large lumps of pain during the last twelve months and will not get the chance to make up any shortfall in their retirement plans. They will not enjoy a standard of living that the previous generation of retirees have had.
We are now witnessing the worst case of theft imaginable from honest hardworking people in order to continue the funding of crooked banking and financial leetches that exist in this so called service oriented economy. This needs to be addressed now.
I have always thought that the people of Great Britain are generally laid back in attitude but when push comes to shove, history has shown that they are prepared to stand up for themselves. If these lies and theft continue then it will not only be the young people out on the streets demonstrating, but older people as well as we have all had enough of this dispicable government
Complain about this comment
How I sympathise with #265. If you wish to point the finger, well, as Poirot might say "Cherchez l'argent". The recent parade of a grotesque gallery of stinking rich rogue CEOs testifying to congress might be a good place to start. As for the governments, on both sides of the pond, and regulation, the whinge from the financial sector is that of a small boy crying out "It's all your fault, if you hadn't let me play football in the yard I wouldn't have broken the window".
In a sense the small boy was right, in spite of all his pleadings to be allowed free reign to play where he might, he was never to be trusted,
Yours Aye,
Graucho.
Complain about this comment
Robert,
You state "You know where the smell is coming from" and you give 4 reasons. But these 4 reasons apply 3 times over to the United States so why exactly is the pound devaluing against the dollar?
Complain about this comment
"191. At 2:51pm on 25 Oct 2008, guycroft wrote:
Pleas to the IMF won't stop this one, every Govt initiative in every country affected has failed to produce anything except more of a downward spiral."
Y'know. I think suspect will. Magically, the IMF will fix th problem, be seen as the white knight to the rescue, it will be cemented in place as lender of last resort to the whole world and boom, just like that, world domination; the bankers own everything, plus 5 percent.
Our politicians will cheer, and the people will sigh with relief that they can tithe their income to our global masters.
Complain about this comment
The pound falling because (your Reason 3) the government has a deficit.
Well, withdrawing from Iraq and Afghanistan would help that, of course.
But that is not what these speculators are interested in, is it, Robert?
They want to stop us providing ourselves with adequate schools, housing and hospitals - which only governments can do.
They work the usual self fulfilling trick:
'Oh, the govt. is spending too much. That is inflationary. Let's get out of this currency. '
At which, the pound falls, causing......inflation!!
QED
And the rhetoric they use (from your dad upwards or downwards)?
'Government spending 'crowds out' private sector investment'
Which is exactly the wrong way round.
The truth is that inequitable private excessive spending (on yachts and other luxuries) drives out equitable government spending on schools etc.....
...and it does it by arguing that government spending is a threat to the pound....
.....ie your Reason 3!!!!
Why didn't you or your dad tell us that, Robert?
Complain about this comment
257. laughingblacksheep
As someone who boasted on a previous blog that you were an ex banker who was able to retire in your mid thirties I suggest that you whinge a little less when people suggest that high earners should pay more tax or leave.
It's a fair argument that doesn't deserve to be shot down.
You're clearly a beneficiary of this current system. And I know it must have pained you at the time to pay all that tax, but you've done very well for yourself in the process. Most of us will have to work until we die.
I guess the talk of claiming back bankers' bonuses is making you sweat. I don't blame you. There are a lot of angry people out there.
Complain about this comment
I echo other posts - that the slide in sterling was because the markets were discounting substantial rate cuts because of the sharp economic decline. Thus when the cuts come, sterling need not slide further if the size of the cuts are what the market is now pricing in. Probably 0.5% in November and a further cut in December/ Jamuary
Complain about this comment
Robert as Business editor...
The chancellor has said that it was 'obvious' that we were heading for recession.
Could you find out when this became 'obvious' to him? and what he based this judgement on?
To everyone else in the country (if not the world) it has been obvious for some time -- for it to only recently become 'obvious' to the chancellor recently is a very serious concern...
Also I saw brown interviewed, and he said that he didn't want to invest in the banks, but it was all that he could do. A shame the interviewer didn't highlight that maybe it was all the brown could think of to do -- but that doesn't mean others didn't have other better options... That brown wants to evade responsibility by claiming that 'it was the only option' just reinforces the cowardice of the man, and is something that a decent reporter would challenge.
As long as the BBC continue with the pretence that the emperors does have a suit of fine clothes, the longer they are complicit in condeming this country to further hardship -- and hardship that will cost not only us, but our children and maybe their children too.
The empreror is clearly naked, we need his delusion to be ended.
Complain about this comment
It appears that Europe will be hit harder by the coming depression than America will be. Given the strong anti-American sentiments in Europe's populations during these last few years, there is a certain sense of rightness in this. It is also ironic that Europe is rooting for and will probably see the next American President who will likely pursue policies of protectionism and even isolationism. That will just add salt to the wound. Had anyone listened to what he said in Berlin last summer, they'd have heard him say that Europe had better be prepared to start making greater sacrifices in our mutual defense by among other things sending lots of troops ready,willing, able, and allowed to fight in Afghanistan. Personally I would not mind a pullout of the US from NATO and WTO.
Complain about this comment
If the chancellor is going to keep on spending after already bailing out the banks
and now pumping up the economy , it will make matters worse enhance debt which leads to lack of confidence and fall in Sterling which will be inflationary and we do
not have the manufacturing base to take advantage of the fall.
Complain about this comment
Robert,
I can't understand the negative run on the pound. You mention the UK deficit in your blog but why is the dollar so strong, and the USA deficit is now measured in trillions of dollars.
Complain about this comment
Read the Governor of the B Of E's speech, in particular the bottom of page 8. This country is on the edge of an economic cliff. The government wants to spend more, they clearly cannot get it from either taxation or from the savings of individuals as they too are in debt.
Why should other countries and sovereign wealth funds lend money to a country that has had a balance of payments deficit for years and a government that has failed to reduce government borrowing during the last 10 years.
This government will end its term in office by bringing in the IMF, like a previous Labour government has had to do.
Complain about this comment
Following is a paper I wrote in '02 around the time of the Asian Financial Crisis and circulated among academia; it seems even more relevant today in light of the meltdown, especially the idea of creating new capital (in terms of "Special Drawing Rights") to keep world trade from collapsing and to dilute the concentration of capital.
THE GLOBAL/DEBT CRISIS
(A Perspective from the Periphery)
Modern human civilization has been ordered by two predominant ideas:
1. The Christian-Judaic work/worth ethic underpinning societal well-being and providing the basis for the allocation of output—“by the sweat of your brow” you shall eat bread served all societies well up to the dawn of the modern technological era.
2. The “might is right” principle of the jungle now threatened by the ubiquity of weapons of mass destruction and the motivation to use them.
Both of these long established “principles” have fallen victim to technological advancement which has created the possibility of “plenty” as well as the poor man’s atomic bomb in the form of biological and chemical weapons of mass destruction.
Technological advancement has created the capability to produce more with less; less people, less hardware (raw materials) but more software, know-how and technology.
The net result has been a profound impact on the trade in primary products and employment. Raw material/commodity prices in constant dollars have declined steadily over the last 30 years and the possibility of future full employment in the traditional sense has been virtually eliminated. Governments, unions and societies at large will have to come to accept 3 and 4 day work weeks and other innovations in their formal economy to promote greatest levels of participation and inclusiveness as they mobilize production.
If you happen to have decent shelter, access to potable water, reasonable sanitation, three meals daily and are properly clothed you are in the privileged 2% of world population!. Yet, globally the technological capacity now exists to produce sufficient for every man, woman and child alive. What the global economy lacks is leadership with the volition to provide a basis for keeping production mobilized and a concomitant equitable allocation/distribution of output.
A case in point is the Pacific Rim experience. Even before the Asian crisis the products of Asian industry were highly competitive. There are huge quantities of cars, television sets, computer chips, shoes and textiles which in the current scheme of things cannot be absorbed by the Asian market and which are seeking an outlet. What worries the strategists of capital is not so much the stock exchange losses, or even the existence of “over-production” or the threat of recession. What worries them most is the threat of protectionism. This has already appeared in the form of competitive devaluations which for a productive economy is a means of exporting unemployment. This was one of the main methods of protectionism in the 1930’s that turned the slump of 1929-33 into a world depression which persisted right up to World War II.
In “Das Kapital”, Marx describes world trade as “the basis and vital element of capitalist production”. (Marx, Capital, vol. 3, p. 109.). One of the main motor-forces of the period on capitalist upswing of 1948-74 was the unprecedented growth of world trade. Up to the late 80’s trade has been the driver of the world economy. In the early 90’s the value of capital flows exceeded trade for the first time. It is capital flows that now drive the world economy and over 90% of capital flows are short term (read speculative), ready for flight the minute trend indicators show negative. Trade in the current scenario of globalization no longer has the same effect in promoting growth and productive investment as it did previously.
The fact is that the present global recession is a crisis brought about because it is capital rather than trade that is driving the world economy. This fact is manifested in “over-production” in the Pacific Rim countries and the domino devaluations recently witnessed as countries strive to maintain external markets. The problems that have emerged with capital in respect to both production and trade is largely due to its mobility and concentration.
The powerful G-7 countries are committed to the “orderly capital account liberalization”. This would enable banks, investors and others with large pools of money to move their capital between countries on demand, as a matter of right. Even though host countries might be seriously destabilized by the sudden flight, or sudden arrival for that matter, of billions of dollars of capital, they would have no right to impede capital movements either inwards or outwards.
The launch of the Euro (single currency) for the E.U. countries on January 1, 2002 may be considered a positive event to the extent that it may provide a needed countervailing force to the US dollar and the rabid profit driven US financial conglomerates and Trans National Corporations.
Argentina is known for being one of the IMF’s favorite pupils. Yet today, while 90% of the banks and 40% of industry are in the hands of international capital, the country has been in serious recession since July 1988; its external debt has increased to US133 billion; health and education are in tatters; and the average salary is worth half its 1974 value. The collapse is dramatic!. Ask a Mexican farmer, Indian civil servant, Filipino garment worker, Bolivian miner or South African student what structural adjustment is and chances are they would be able to explain IMF and World Bank mandated austerity measures because their lives have been affected by them.
Fiscal restraint is contrary to what most economists regard as helpful in a slump and even Stephen Hanke (dollarization guru) agrees that getting the Argentine economy moving again is the real answer to its debt problem. The challenge is how.
That the same people tended to admire Argentina and ENRON (both recently collapsed) is instructive because in their different ways both the country and the company tried to turn back the clock. Both ENRON and Argentina were experiments to test the libertarian (free trade) credo: that the great expansion in governments role between the two World wars was unwarranted. Both were supposed to demonstrate that government activism is unnecessary, and that radical laissez-faire works.
It is always better “economic ecology” and more sustainable to build consensus around naturally emerging trends and basic principles than to create artificial environments and transplant outdated ideas.
The ENRON experiment was, in essence about doing away with regulation—regulation of prices, regulation of financial trading. Most of these regulations had their origin in fear that consumers, workers and investors would be exploited by those who Theodore Roosevelt called “malefactors of great wealth”. ENRON used its political clout to create what one of its own executives called a “regulatory black hole” in which it could operate freely. What ENRON’s admirers believed was that experience would demonstrate fears about unregulated markets to be unjustified.
If ENRON was about doing away with regulatory activism, Argentina was an experiment in doing away with monetary activism. Argentina returned to colonial-era monetary system, a “Currency Board”, which took government out of the loop—no more disruptive interventions and lurching from crisis to crisis. Argentina would provide sound money and leave the rest up to the free market.
Though Argentina attracted the usual opportunists, I am pretty sure that both the creditors of its monetary system and many of its admirers sincerely believed that they were working in everyone’s interest. Alas, these particular good intentions paved the road to hell!.
In its latest report the United Nations Conference on Trade and Development (UNCTAD) backs the call of “Jubilee-2000” campaigns around the world, for an independent process for managing the debt crisis, by allowing countries to unilaterally declare standstills in debt payments and to establish an independent panel for sanctioning such decisions.
Based on the foregoing and out experience with globalization thus far, it should be clear that the development of the productive forces globally have outgrown the narrow limits of private capital and the nation state. The global challenge is therefore to create more / different types of capital. It may also be necessary to supplant or modify the role of capital especially with respect to trade; globalization has been relatively successful on the production side as distinct to the distribution of output. The changes ought to approached by piggy-backing on the emerging mega-trend towards a global “managed trade system”. Going back to basics – it is not money that really matters most, but the things that money can buy.
Complain about this comment
Hear is how you get confidence in the housing market , retintroduce MIRAS up to a level of £150k even £200k , make the lenders deduct it at source, it will cost the treasury very little as the tax credit can be offset against the loans and equity stakes we had to take in the banks to keep them afloat. Introduce CGT on all residential property with taper relief over 5-7 years . It would be popular, stabalise the market, help mr average and cost the goverment next to nothing.............. especially if interest rates keep falling.
Complain about this comment
#270, I left the UK last March. I don't own any Sterling, any property and have no debts. On a purely selfish personal level, the current crisis has zero impact on me. The chance that my bonuses will be "claimed back" is zero and given the current state of the banking market, it is a non-promise for the government to "force" banks to pay smaller bonuses.
My point is that no one was complaining when the debt-fuelled binge cause some fake prosperity in the UK. When Brown trashed the country's finances, I don't remember many people complaining and those who did - like all Cassandras in a bubble got ridiculed. Even now, we can see the BBC reporters fabricating history to offload the blame onto anyone except greedy consumers and an incompetent chancellor who is now PM( I say fabricating because there are plenty of explainations about the market works and one would expect a tax-funded institution to have people who understand it.... )
Complain about this comment
Trying to pin the blame for this mess on Brown is just plain wrong.
What was he supposed to do when the US was indulging in a 1% rates-fuelled credit binge? Hike taxes? Introduce credit controls? Imagine how the Tories etc would have squealed 'nanny state' and 'red tape'...
The lowest UK base rates got was 3.5%, at the time that seemed about right, and I don't recall even Vince Cable arguing for higher rates then. Nor do I recall anyone asking for higher taxes, to fix the roof while the sun was shining. Nor did anyone, not even the Tories, suggest lower public spending.
Complain about this comment
I love this... I mean if in the new era you're going to reconnect a bank with the people this is just the sort of chap you need to do it!
http://tinyurl.com/5c239u
Complain about this comment
Why on earth are we talking about the dangers of investing in Eastern Europe and Russia, when America has caused so many problems? The Polish aren’t taking anybody’s work place, they actually do jobs which not many people are willing to do. Many of them are working in the factories for the minimum wage and by being productive they are actually helping our economy. Many of them are renting and paying their rent on time, thereby helping their landlords to pay their buy to let mortgage.
A weak pound is not always a problem as it actually can help UK exports, but many will feel that purchasing power will diminish. Also those planning to retire abroad may find it difficult if the pound will remain weak.
Complain about this comment
View these comments in RSS