The cost of bringing banks home
Mervyn Davies is almost the only banker to emerge from the mayhem of the past few years with his reputation enhanced.
He revived Standard Chartered as chief executive and latterly as chairman. And this British-based international bank has avoided the horrendous mistakes of its bigger, prouder peers, such as Royal Bank of Scotland and HBOS.
So some will say that Gordon Brown is fortunate to have recruited the lively Welshman as trade minister, in succession to the sometimes controversial Digby Jones.
However Davies's appointment only reinforces the paradox that a prime minister who claims to be a great democrat is relying to an extent unprecedented since perhaps the 19th Century on unelected ministers in the Upper House to fix his biggest problems.
Unlike Digby Jones, Davies will join the Labour Party.
And he'll endeavour to avoid the inevitable sniping about financial conflicts of interests by putting all his assets into a blind trust. He won't be taking a salary.
So what's in it for Davies?
Well the day job is trying to promote trade and inward investment - which he sees as proper public service.
Given his expertise, he'll also have a useful sideline in the war against the credit crunch, the contraction of lending, as yet more imaginative uses of taxpayers' money are found to reverse the crippling contraction of credit available to households and businesses.
In that context, probably the most significant feature of today's announcement that something over £11bn of our money is being pledged as loan guarantees and investments in small companies is that ministers believe it'll generate some £10bn of additional lending to small and medium size businesses (that is lending on top of the £21.3bn being guaranteed).
They're stipulating that banks can only take our financial help if they pledge to use the resources that are then released to provide new loans to companies with a turnover of less than £500m.
Which is useful.
But, of course, ministers can have no control over whether banks simultaneously cut their lending to households, or big businesses.
And £10bn is - in any case - small beer in the context of the vast quantities of credit that have been removed from the economy as a whole by the collapse of a range of financial institutions and the scaling down of lending here by a raft of overseas banks.
Banks all over the world are repatriating the focus of their operations. They are concentrating their resources on their domestic markets, because of the intense political and popular pressure they face to support their home economies.
What we're seeing is reversal of the financial globalisation that was such a feature of the past 20 plus years.
In that context, there was inevitability about this morning's announcement that semi-nationalised, cash-strapped Royal Bank of Scotland has flogged its 4.26% stake in Bank of China for £1.6bn net.
It's a case of needs must - although it's a resonant manifestation of the utter collapse of Royal Bank's ambitions to rule the world (in a banking sense).
But don't assume that the widespread return by banks to national banking is all for the good.
The internationalisation of banking, the growth of cross-border flows of capital, generated huge incremental increases in the wealth of most of the world.
A long halt to the process of distributing capital to any place on the planet where its most needed and could be most productively used would impoverish rich countries and - perhaps more importantly - poor countries.
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Quite tired of seeing unelected ministers brought in via peerage to do the job that the elected Labour MP's don't seem fit to do!
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As I said already. A new sociopolitical shift is underway.
Yet more tax money being wasted. How are we to repay all this money with tax from an economy which is in free fall and future tax revenues of any kind are doubtful.
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Hurrah, the cash strapped Royal Bank of Scotland has raised £1.6bn by selling shares in Bank of China.
Any idea what they paid for them in the first place?
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It would be good to see a piece of real questions put to the politicians in real power.
Sky did this with AD on Monday night and most interesting it was.
Search for 'Randal grills the Chancellor'.
Sadly the BroonBC prevent urls being cut and pasted. I did try, honest guv!
Robert come on ask these questions.
Instead of these stupid appointments and daily umpteen announcements lets get real accountability. Fat chance of course but.....
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We all know that people who seek elected to office are in politics because they are unsuited for real jobs and just want to be on the telly. So, unelected ministers brought in via peerage to do the jobs of the elected, seems to me to be a jolly good idea. At least we know that they can actually do the job.
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Ahhhh. Political reward for the real architect of the bank bail-out.
Too bad that while he was making sure Standard Chartered didn't copy the mistakes of RBS and HBoS he didn't mention to the Maximum Leader or the FSA or the BoE or the electorate direct that he (Brown) was doing the same think to the entire UK economy.
And there really was no need to join the Labour Party. Unless it's a PR stunt as part of the ongoing misinformation blitz to claim that the banking crisis was 'solved' by Labour.
In any case, in return for his ermine I'm sure our noble Lord can be relied on to support the printing of hundreds of billions of pounds on the q.t.
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Another carrot from the spin machine and while i do think it makes sense to have someone onboard who has an idea of what's going on, the problem that also has to be overcome is Gordon Brown.
Taxpayers have lost confidence in a man who claimed to be the Iron Chancellor, would not gamble with our futures who would ensure we could go through rough patches due to his prudence.
As all the dirty laundry comes out by the day, it's evident that the man and his party have squandered the UK coffers on countless ill planned and ill afforded projects, they have burdoned us with an EU Constitution which we were promised a referendum on, they have destroyed a generations retirement and now with all the extra borrowing they are even saddling our Children with a lifetime of tax debt.
For me, I will not be going back to a normal spending pattern until after the next general election as I simply do not trust the Labour government or Gordon Brown, a man that has ruined any chance I have of a decent retirement for 40 years hard work while he and his cronies walk off into the sunset with their cushy pensions.
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I found the thought about a reversal of the 'globalisation' trend an interesting one. As well as being true of banks I am sure that it will be true of other companies whose overseas ventures are often capital-intensive to set up, with uncertain returns. Equally, it is likely I guess that individuals will travel less (particularly US citizens) and with so much financial trouble at home that our media will focus on domestic news to a greater extent. Perhaps all of these effects will cause us to be more inward looking.
'Globalisation' has had somewhat of a bad press I believe, leading many people to feel that they are flotsam (or even worse jetsam) on the international tides of commerce and politics. Whilst there is undoubtably some truth in this, I have long felt that the net effect is good and that increasing interconnectedness means we take more interest in the rest of the world and perhaps come to understand other people better. I hope that this is not in danger.
If you have any crazy ideas to make sure that people continue to look outwards you can comment on http://thedailycrazy.wordpress.com - it is just a blog...
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Robert
Your last paragraph is the most interesting.
Removing 'invested' money from poor countries need make no difference - it is put there to make a profit not as a gift - if the original investors do not want that profit, then the (potential) profit is there for whoever wants to take it (even the locals).
Even with the removal of investment, they still have their resources and they still have their labour - they just need to continue to use them.
Money just represents 'owed labour' - it doesn't create anything, add anything or mean anything in itself.
Give a man a fish and you feed him for a day
Teach a man to fish and you feed him for life
Buy his fishing rights from him and all bets are off...
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So here we have it, another appointment which indicates he has to promote from outside to get talent of any kind into his cabinet.
Is he going to be yet another headless chicken in the road outside No10?
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How are 'small and medium sized businesses' defined?
Are these the same as an SME (small or medium sized enterprise - less than 250 employees) ?
Or, as I suspect, it is whitehall fudge and actually means 'quite large businesses'.
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Borrowing NOW needs to be linked to the amount of TAX paid!
Only this will see sustainable growth with the government getting revenue to help in downturns. In the long term.
Flexible unlike the current interest rate Sledgehammer!
IE an individual or company paid 50k in tax and so a bank can lend say 250k total.
Etc etc etc
If we had this in the past then regardless of the global economy we in the UK would be in a strong financial position.
AND so would the government!
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The problem Davies will encounter is one of credibility. I mean how could you have any confidence in someone that conciously joins the Labour Party.
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Off the subject a tad, and I may be accused of harping on about the same issue again, but there are only 2 more days left to join the petition asking for Gordon Brown's resignation due to his miss-handling of the economy.
Only 945 people have signed it up to now. It is not enough.
You still have chance to join in by looking at the number10.gov website and trawling through to find the petition originated by Alex Wallace that expires on 15th Jan.
Alternatively, you will find the direct link by looking at post 198 on RP's blogg - Our Banks 'have to lend more'
Get signing, - now !!!!!
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This helping business nonsense IS a JOKE!
By the time the business goes to the Obudsman hell he’s bangrupt!
All this fluffing around the real problems!
Typical of an out of touch government.
They we out of touch in 2007
They are still out of touch.
The basic requirments and fixes are so beyond their understanding it is a discrace!
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So as businesses have been scared out of trading with each other, in case invoices aren't paid promptly or customers have been scared off spending to buy things, how on earth does the Government expect local trade, let alone global trade to resume?
Who is going to make the first move to say out loud, "its okay to buy, sell and trade"?
The Banks, the government or the media?
Trade will only return when business has confidence, not banks.
Who has killed business confidence? Media? Banking? Government?
The media can really help to repair things with responsible reporting.
Stop navel gazing and report good things. With over 6 billion people on the planet someone must be buying and selling something somewhere.
We all ate yesterday didn't we?
It must have come from somewhere and invoved a chain of business suppliers?
Trade does go on and yes, if the banks had any courage, they'd see they could stimulate the markets by helping their customers to continue to trade, thereby earning themselves more fees in the long run.
Have journalists got it totally correct, are the banks really to blame?
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The Master Plan the save the global banking industry was nothing more than an attempt to spike the guns of the High Street majors by saddling them with onerously high capital ratio requirements forcing them to take Government funds and thereby stopping them from paying a dividend. As we have now seen with HSBC you should be careful what you wish or indeed what you foist on others. It is just a matter of time before some bright spark will run his slide rule over SC and come up with some absurdly large sum of money needed from shareholders to bolster the CR . Is it coincidence that the saviours of UK banking are also big supporters of Basel II? Sure the banks have not covered themselves in glory but they haven't exactly been helped by some blinkered ill conceived and poltically inspired accounting nonsense. Scrap Basel II and lending will resume
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'So what's in it for Davies?'
He will be well placed when the banks are fully nationalised.
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Browns BELIEF IN DEMOCRACY???
ELECTION NOW THEN!!!
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What we are seeing is a revrsal of globalisation. Yes Robert the good lord built the 5 contients of the world for a reason. And gordys global world is Dying fast. time for protectionism.
@5
But we dont elect them to do this job.
There should be an election now. I for one dont think we should be throwing money around willy ,nilly like this. i think it will make things worse in the long.
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"It's a case of needs must - although it's a resonant manifestation of the utter collapse of Royal Bank's ambitions to rule the world (in a banking sense)".
Well if that means pocketing an eight hundred million dollar profit then good on them , they'll have HMG paid back in 2 years at this rate.
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As usual very little detail about this guarantee stuff. I guess the dysfunctional loons that run the country now have spent most of their time working on the soundbites etc.
Are all loans covered?
Is it only loans for working capital? And what is the precise definition of this as it will mean different things in different sectors?
Are existing loans covered or is it only loans made from a certain date?
Does it cover only loans to a particular value?
What is this fee? Is the fee a flat sum or a percentage value of the loan?
If the borrower defaults and the guarantee is called in, can the bank's expect immediate reimbursement?
Who will administer this? Another quango to set up? If we are talking Whitehall, it will take months just to figure out the tea and biscuits budget.
What happens when the guarantee limit is about to be breached? I guess banks will become extra cautious again.
Oh, and has the original Autumn 2008 bail out money ACTUALLY been paid out to LTSBHBOS and RBS yet?
Why wasn't Davies parachuted into doing something useful like beong made Governor of the B of E? Perhaps Threadneedle Street should be renamed as Sesame Street!
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#4 - organum - Good video - My respect for AD has gone up after this interview. Not for being chancellor, but for his ability to dodge questions, remain calm and appear superior to the interviewer. Even at his peak, teflon could not have done better.
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"Well the day job is trying to promote trade and inward investment - which he sees as proper public service..."
He won't succeed. Basics: The UK trade gap is widening fast and will continue to do so. This means an ever heavier burden on internal money. That's a very finite bucket and the more the Govt spends or pledges from it the faster it will empty.
The redlight will come on within two months, and it will be the public sector that switches it on. There will be crisis meetings. At that time Plodder Brown will have to admit openly that the 'game is up'. The coalition that follows will fight to stop the the slide to Dickensian poverty but will, by that time, be almost irreversible.
This is coming, no amount of tinkering and gestures from Brown's Govt. can stop it now.
GC
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10. At 09:17am on 14 Jan 2009, StrongholdBarricades wrote:
So here we have it, another appointment which indicates he has to promote from outside to get talent of any kind into his cabinet.
A very valid and good point, with all due respect, what are cabinet ministers doing in their jobs if Brown is having to recruit outside the party.
This highlights the inability of highly paid Labour MP's to do their jobs so what are they doing?
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It really worries me the way the government seem to be focusing on saving businesses.
My theory is that in the long run, a recession in which many businesses fail is a thoroughly good thing for the economy. It's good old Darwinian natural selection at work: the badly run businesses will go out of business, but the good businesses will survive. Sure, people will lose jobs in the short term, but the remaining good businesses will be able to expand to fill the gaps in the market and some brand new good businesses will emerge, and people will get their jobs back, and probably happier jobs than they had before.
Just to give a little example of a company that deserves to be out of business: my central heating boiler, which is only a year old, has broken down and needs a new heat exchanger. The British Gas engineer who looked at it told me that my particular boiler is notoriously unreliable and the heat exchangers fail all the time. And guess who installed it? That's right, British Gas. And I have a maintenance contract, so they have to pay the considerable expense of fixing it. Now tell me, if they know this boiler is so unreliable, why did they recommend it in the first place, especially when they also know that they'll have to pay to fix it? Absolutely staggering incompetence.
So, I say please don't give a penny of help to businesses. If you want to help businesses, abolish some of the ludicrous red tape we have and maybe cut corporation tax, but please don't give money to businesses who can't make money all by themselves. Let the bad companies fail, and we'll all be better off in the long run.
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"The-Real-Truth" wrote that removing invested money made no difference to the poorest of countries. I disagree. Yes they have resources and labour but often investment is needed to unlock this. To amend his/her adage of choice:
Give a man a fish and you feed him for a day
Teach a man to fish and you feed him for life
Lend him enough to buy a fishing rod and suddenly the teaching can be used...
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You forget to add that the downside of all these wonderful cross border cash flows and investment deals also allowed the US (and to a lesser extent UK and Spanish) banking problems to spread through the whole world economy, turning what should have been a nasty US and UK recession into a global collapse. Alot of the money transferred in this way was not true wealth creation but transfer of illusory funds based upon a foundation of unsustainable house prices and unpayable mortgages.
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Sadly Mr Davies probably won't make a jot of difference.
What will is possibly this. Has Lord Mandelson possibly made a mistake in his recent announcement?
Guaranteed business loans via the Banks may genuinely help many small businesses, but NO business will survive, guaranteed loan or not, if they have NO CUSTOMERS.
The government has bailed the Banks, Building Societies, some business sectors, but what about the CONSUMERS that drive the real economy? Not Joe Bloggs either.
Where are the real consumers? Where are the B2B trades?
How is Lord Mandelson going to stimulate trade between business and countries?
What incentive can possibly be brought to bear on international trade?
None, unless international traders, banks, investment houses want to trade.
They won't because they are too scared, especially when their respective Governments or regulators are breathing down their necks as well.
Mr Davies I'm sure will be happy his own private investments are secure and will grow in his trust over time.
I'm sure many of us would like to take a year's sabbatical and dabble in the Cabinet Office instead of having to hold down something called real work!
Why not withdraw Gordon Brown and Alistair Darlings salaries and put them on dole money. Trying to make ends meet would surely focus their supposedly talented minds and skills quite quickly!
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#26 "badly run businesses will go out of business, but the good businesses will survive"
That is such a simplistic generalisation, it's insulting. I'm in business. If you weren't so widely published here I'd ignore it.
Try applying it to a 'good' business like say, JCB. From this site: 'The company said its total business was down 75% on the same period last year'.
Fact: collapse the economic infrastructure and no business can survive. This is where we are.
GC
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Robert,
Anychance of an interview with someone from the treasury that will answer questions
Then you can task him about detail and costs etc
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#26 -DisgustedOfMitcham2 - Hmmmm. Now about the gov lending to biz. It goes like this. Take JCB which makes or made construction machines. No construction equals no demand equals no jobs equals biz lost equals skills lost. However, when construction picks up it will need machines but as UK is out of the JCB biz so we will need to go abroad for them which equals lower GDP which equals people saying why did the gov not lend JCB the money to get over the rough times. QED.
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Building a Rocket Ship does not always mean you will reach mars. If you make any errors calculating the correct flight path by even a few degrees you end up missing your target by a zillion miles.
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The day Gordon Brown becomes a democrat pigs will fly over Whitehall.
That aside, there is a muddle at the heart of his policy responses that confuses the picture.
We have borrowed too much, but he wants us to keep borrowing more.
House prices were unsustainable, but he wants to prop them up with more credit.
The banks put too much faith in unreliable credit markets, but he now discourages the savings that are a stable source of funding.
He wants the banks to have stronger capital and carry enormous liquid reserves, but also expects them to carry on lending as before...
A 'bad bank' would have been a fairly straightforward way of putting many of the mistakes of the past on one side, and would allow the banks to go forward with a responsible, but sympathetic, lending to their more viable customers.
Hey ho - Gordon knows best ....
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I'd be grateful if the right wing loonies on this blog would keep to the point and stop calling for the government to resign, have an election now etc every single day. It becoming v boring, it convinces nobody (which is why less than 1,000 people out of 60,000,000 sign useless petitions calling for Brown to go) and just takes up space for no good reason. Perhaps they could just have their own blog to vent their spleen and repeat the same points again and again.
There are some interesting points about globalisation - The UK has been one of the main players and advocates of globalisation and a retrenchment into 'little Englander' mentality especially if this means an increase in protectionism would be a disaster for the Country which is one the the major trading countries of the world.
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#5 peterbaldwin
If elected officials aren't competent to do the job, then what makes them competent to appoint the right people to do the job for them?
The fact he has decided to actually join the labour party puts his judgement seriously in question.
And if the man is doing it unsalaried but 'for love' then what accountability does he have? You have no sanction against him - you can't even cut his 'bonus' etc...
Watch out for any seniour labourites buying houses they shouldn't be able to afford...
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We did a reckon up on TAX REVENUE
For 2009/2010/2011
LOOKS LIKE A 20% to 25% year on
year???
THE BIG BUST THEN THE IMF.
THERES NO PAYBACK VEHICLE............
FOR ALL THIS GOVT BORROW
BORROW.
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#30
Could not agree more.
You always get people like 26 who are clueless.
He can't even buy a boiler without getting it wrong, did he not wonder why it was the cheapest in the shop?
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25. At 09:39am on 14 Jan 2009, UK-SILENT-MAJORITY wrote:
" ... with all due respect, what are cabinet ministers doing in their jobs if Brown is having to recruit outside the party.
This highlights the inability of highly paid Labour MP's to do their jobs so what are they doing?"
Ultimately the electorate were seduced in to electing the MPs - the majority of MPs from all parties could not not hold down a real job. A very well paid meal ticket while you are a MP and for 5 years after !!
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I have no doubt whatsoever that Mr.Davies is a highly competent technocrat that knows the financial industry very well indeed.
Unfortunately it was letting technocrats have the run of the place that caused our economic difficutlies in the first place.
The argument that our country is in deep trouble which is getting worse by the day and so we need our best brains on the case is valid.
However, it is also becoming more apparent by the day that the government has additional agendas to resolving the economic crisis. These other agendas are undermining their ability to properly address the issue of the collapsing economy.
Consequently what support there is in the country for the government is diminishing rapidly. It is losing legitimacy and no amount technocrats are going to solve anything.
We need a new consensus which means either a general election or the resignation of this government and its substitution by a coalition government. There are good arguments for a coalition and good arguments for an election.
Either way we cannot continue the way we are any longer. Time for change!
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Guycroft
Youve hit it on the HEAD.
Problem is that manufacturing is NOW
SO WEAK that they dont stand a
chance.
It would be more or less impossible to
set up my manufacturing business in
the UK as there is a ZERO SKILL
BASE.
JUST AS A STARTER WE RECKON THE
YEARLY LOSS TO THE UK BY MY
OPERATION ALONE IS CIRCA
100,000,000 Sterling per annum.
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To me it would be a vast improvement if positions such as trade minister even chancellor etc, were filled by people with proven track records to understand and address the issues of commerce and the economy rather than elected mps whoes skills and ambition is to play politics. Of course ultimate leadership would need to be elected but if positions were ever non political biased it may help in consitancy of policy rather than positioning to win an immenent election.
In terms of protectionism the idea that the uk is its own soverign state died a long time ago. The possibly long term and deep recession in the uk was brought about by world wide institutions. the best solution is for a true world wide coordinated effort to trade and invest.
it is also morally wrong to forget the uk is miles away from the hardship of much of the developing world
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#4
http://news.sky.com/skynews/Home/Business/Sky-News-Presenter-Jeff-Randall-Grills-Chancellor-Alistair-Darling-At-Number-11-Downing-Street/Article/200901215202005?f=rss
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31. At 09:52am on 14 Jan 2009, StrongholdBarricades wrote:
Robert,
Anychance of an interview with someone from the treasury that will answer questions
31, Why are you asking such valid silly questions?
No one is accountable in this governemt and no one is wrong.
You are part of the electorate and have no right to ask awkward questions even if the government is in the process of bankrupting the country.
Remember this is the Labour Machine in office, the one that announced a "new beginning" on the morning after the 1997 election.
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To defend GB, I think the use of industry experts in government has a lot of merit.
I've always wondered why professional politicians believe they are qualified to run a country with little relevant experience and a degree in law.
However, I do wish GB would look outside the financial industry for talent. As talented as I am sure Mr. Davies is, surely he is going to take a financial industry bias.
We’ve witnessed the effect of successive governments being focused on the growth of the financial industry for the last 20+ years. What we need is a similar focus on industry and product development. Who knows, with a proper strategy we could finally have a really strong balanced economy.
Wouldn’t it be nice, if when asked, to be able to immediately list 10 global world-class British non-financial companies (e.g. Microsoft, Nokia, Siemens, etc)? Personally, I struggle after naming Rolls Royce and Vodafone.
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RBS spent fortunes last year sponsoring Williams F1 to flaunt their global credentials.
It will be interesting to see if their logo appears this year, using taxpayers money!
As to Mr Davies, surely we need industry people, not bankers to sort out this mess?
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Davies has a good record because under his stewardship Standard Chartered retrenched back to old lines of business and avoided the problems that the more 'Exciting ' banks became involved in.
Can he make a difference? At least he does know the business.
Democratic is hardly a word I would use to describe G Brown and the current Labour party. The individual has lost more rights and had more laws pushed through parliment to curtail our personal freedom over the past 11yrs. No. Democratic is not a word that springs to mind when you utter G Browns name. He will continue to appoint those he wants and push it through in whatever way he can. We no longer live in a democracy.
I am not sure I like the line that he, Davies, can help 'as more imaginaive uses of tax payers money are found to reverse the crippling contraction of credit........' Isent that how we got into this mess? Being imaginative and creative, lacking in substance. I could go on but it gets boring.
Labour have never and never will accept any responsibility for any part of the recession we are now in, so how can they get us through it? Lessons are being learned, they continualy say, actually no. they are not. The first part of learning is to look at your part in a situation and moving from there.
I dispair at the legacy of debt we leave our grandchildren thanks to G Brown. He is a meddler and this mess is in a large part his and Labours. IT is not all the fault of the Americans, WE HAVE NOTING IN THE KITTY BECAUSE HE SPENT IT. For years he told us how wonderful he was and that he was responsible for how well it was all going. But now the clouds are here he not only has no brolly, but he is not responsible! Lesson one, try some humility.
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re 3
http://www.guardian.co.uk/business/2005/aug/18/china.internationalnews
good starting point
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If the banks won't lend why do we bail them out ?
Let the banks and their 'assets' fail.
We made the mess, we need to take the poison to save the future.
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Interesting quote from the FT on the German stimulus package:
"Germany will change its constitution to ban excessive public borrowing and impose strict new rules to ensure the extra debt created by its latest fiscal stimulus package is paid off as soon as possible, Angela Merkel said yesterday.
Underlining Berlin's concern about the erosion of fiscal discipline in Europe, the chancellor said she was determined to balance public sector budgets in the medium term. "We will have to borrow more," she said. "But we must also be credible vis-à-vis future generations when we say we intend to repay this debt.""
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What has a banker ever built?
(apart from mountains of debt that is).
ANSWERS on a post card to:
Mr Gordon Brown
10 Downing Street
London
SW1A 2AA
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Sadly this government has still not learnt the realities of life. Ten years ago when buying life insurance one of the standard questions on the proposal was "have you had a test for HIV?". To answer yes normally meant instant declineature. The same is true of Government bailouts ~ as soon as you ask for government aid your business becomes instantly toxic and hence the governments impotence when it comes to sorting out the mess...
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Off topic slightly but does make you wonder why Merkel et al seemed so against Browns stimulus...
Jan 13: Germany's second stimulus package amounts to €50 bn (about 2% of GDP) and follows the first package announced in 2008. Measures include: Investment measures (about €8 bn); income tax cuts (about €18 bn); incentives to buy energy efficient cars; lower health insurance contribution; increase support for families with children
The second bailout package would include a €100bn “Germany fund” that would issue credit guarantees to help cash-starved businesses raise debt as necessary because the government does not want healthy companies to fail for lack of credit. However: how to decide which companies are worthy of credit and which should disappear?
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I know this is slightly off topic, and I have asked this before, but it seems critical - is the government really going to be able to borrow a net GBP 118bn (maybe a lot more) this year, with the currency and the trade balance disintegrating, and with interest rates that a far lower than are on offer from other countries?
Is anyone really going to lend this bunch that kind of money?
If yes, from where can these huge funds be borrowed? And what are the implications for gilts and for market interest rates?
If no, what happens next? IMF, anyone?
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I would agree with #40 stanilic #42 kudospeter and many others on here this morning in saying that whilst Mr Davies may be a talented financial whiz, all these appointments are the result of off-the-record discussions between the people who got the world economy into this mess
Can the same people get us out of it? I have my doubts for several reasons: they are old dogs who are unlikely to learn new tricks and are clearly prone to suffering group-think. These people will put at least half their efforts into trying to rewrite recent financial history to make themselves look good.
We desperately need some new people and ideas from outside the club!
So advice to HMG has to be 'when in a hole stop digging!'
If they are determined to continue deepening the huge hole they have got us all into, then the least they could do is answer #32 peterbaldwin's request and help JCB by buying a load of their diggers.
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Good points #9, #30, #40, #41.
Agreed "regime change" is well overdue but ask yourselves this question.
Who or what parties/countries have an interest in weakening the UK's ability to survive independently?
Is this then the real core of the problem?
National and/or international players do not want the UK to exist independently, of say Europe, any longer?
As you imply, with the skills base appallingly low, manufacturing has been reduced to the point of possible extinction in some sectors, especially in global trade terms.
The future looks bleak though, even with "regime change".
So who will benefit when UK PLC ends up as a (financially crippled) 'service sector' holiday park?
Perhaps the retired classes, politicians and the environmentalists?
Everyone else will be in sweat shops/call centres/retail distribution to pay taxes.
Lord Stern quoted the crippling cost to the 'global economy' of doing nothing to avoid Climate Change.
Little did he realise then just how much greater economic damage we managed in the UK, all by ourselves!
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41
AC...
YOUR COUNTRY NEEDS YOU!
Put your money where your mouth is by helping your country and not running it down all the time.
Zero skillbase....train 'em!
LESS POO-POO
MORE DO-DO!
LESS TAKE,
MORE GIVE!
Stop moaning, start helping!
WHAT ARE YOU GONNA DO WITH ALL THAT CASH?
What is it for?
What is your life all about?
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If this is the best Brown can do 16 months after Northern Wreck and 18 months after it all kicked off in earnest, it is feeble in the extreme. Reactive, panic-stricken, and so so late.
How long before we follow Ireland into sovereign downgrade territory ?
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Spot on #32
Credit insurance is the real business killer. Any large business will insure it's debt and if it cannot do so, it wll die alongside it's customers.
JCB is a good example, although the economy is shrinking, it would not normally expect to lose 75% of it's business in such a short period of time. This is where the government needs to use it's financial toolkit, not on a VAT rate cut.
Although as usual short on details and six month too late, this is the sort of action that ensures a softer landing for UK business and allows them to manage themselves through this economic mess.
All political parties lack business nous, so I welcome the appointment of Mervyn Davies. As for the criticism of unelected people being welcomed into government, do me a favour! If you gave the public a choice, 99% wouldn't know any of our talented business people because they haven't appeared on X-Factor or Big Brother!
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#46
You've just brought up one of the many reasons I detest RBS.
As someone who has put his own hard earned cash into sponsoring his son's racing mainly in Scotland and perhaps no more than 20 miles from RBS's Edinburgh HQ, it infuriates the heck out of me that RBS has steadfastly refused to provide even a small chunk of sponsorship for Scottish racing.
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Frienlycard post 54
TOTAL COLLAPSE ENTER: I M F
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Banks all over europe are reporting big losses for Q4 of 2008. citi bank is going to take an hammering tomorrow on the stock market, a masive down sizeing of the biggest banks in the world is starting to happen. And more importantly some of these banks have not had a bail yet.
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Hopefully Mr Davies will be able to acquiaint Brown and Co. about the brutal truth of the private banking and finance sector and save them from their worship of all things private.
Government focus is on supply side but where is the demand B2B and C2B to resuscitate SME's
It wont be coming from the 7000 local government workers made redundant by the public sector or the thousands shaken out by the banking sector.
Changing paymasters from the local council to the DWP is the economics of the Marquis de Sade
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#14 Thanks! Just signed it.
Re the skills base it's instructive to look at what's happened to "A" level maths. About three years ago they abolished the higher tier of GCSE to make the A,A* grades more "accessible". Result, it's worth no more than a grade 1 CSE used to be. They introduced a "further maths" GCSE which is about the same standard as the "O" level I took in 1971.
Now, at "A" level, you need to do 6 units. It used to be 3 pure maths and three applied. Now, because so much of the old GCSE has been abolished they need to do 4 pure units at "A" level. and only two applied. These are usually 1 very simple statistics unit and one very simple mechanics unit. 15 years ago, most would do some applied maths to a reasonably high level. Now they do almost nothing worth doing and science education is suffering too. This has a knock-on effect on science/engineering at university. This "accessibility" fetish is damaging future generations of British technical skills. I am all for accessability - but by helping and encouraging more young people to raise their game, not by dumbing down and giving them an A* for it. This too is debased currency.
Sorry for the long post.
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44. At 10:10am on 14 Jan 2009, UK-SILENT-MAJORITY
You can always hope for some balance in reporting
Without the detail how on earth will we recognise it as the lifeboat it purports to be.
No point in being able to see the rescue party if you can't reach it and their rules of engagement mean they can't approach you.
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No.54
As I've mentioned before, the British government won't be able to borrow all the money it needs for its spending plans. The USA will have first call on investors' cash, as US Treasuries are still seen as a "safe" haven in times of trouble.
Having said that, even the USA won't be able to borrow as much as it wants, as there simply aren't enough cash rich investors in the world.
Hence all that talk about "quantitative easing" - which just amounts to printing money.
No.53
A German colleague tells me the Bundesbank has lost control of the German economy twice in the past. Hence, the Bundesbank is ultra cautious and does not like large amounts of debt within the economy.
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#4 organum
Did the link you use contain an ampersand (&). The BBC blog has issues with them in hyperlinks.
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We've had a largely similar scheme whereby the government guarantee loans to business for years, in the form of the SFLGS, which the banks have been notoriously reticent to lend under.
What's the difference here, other than the guaranteed %age being different?
I will guarantee that they will still be reticent to lend.
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If you think my last post is important, I urge you to sign the number 10 e-petition on science exam standards, sponsored by the Royal Society of Chemistry.
It can be found HERE
Without protecting and promoting science education, we really will decline into the third world. A banana republic without the bananas!
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This appointment tells us one thing and one thing only.
The Labour Government dont have the skills themselves to get us out of the crisis they have a large part in creating.
This leaves us with one conclusion.
The queen should disolve parliament and force a general election then each party can put up candidates in their safer seats who are capable of resolving the problems.
We the people can make our clear choice between Borrow more pay debt or bankruptcy later, or tighten belts and save now and possibly have money to spend to grow at the end of the crisis.
I know what my choice is. I started the belt tightening process 18 months ago, to the point now where my fammily has more disposable income than at any point in the last 20 years.
That said we're not spending a penny of it just in case Labour stay in power, we'll need the money to pay for thier borrowing of future taxes.
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@59 Geoff
"This is where the government needs to use it's financial toolkit,"
They dont have one. Gordon spent the money that could have been used.
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onward ho post 57
I ve done manufacturing in the UK
It became a one man crusade low
quality low output despite all the
training. TOTAL RESENTMENT by the
majority of the workforce so out
went 1150 or so jobs which left
256 who wanted to WORK.
Regretfully we no longer manufacture
here except samples. . .
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we've moaned about Labour being clueless about the economy and that, as a party, they're doing a great job at convincing us they have absolutely no idea about running business.
Appointing this gentleman seems to me to be either a huge public relations move or an attempt to get real sense linked to the government.
If his track record is as good as Robert says, I'm surprised he wasn't asked to apply for Head of Financial Stability!
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Well maybe this guy can do some good. I'm not a fan of this 'bring em in from the outside' culture, but if he's proved that he has avoided the mistakes of others in his position then he must have his head screwed on straight. Whether this'll eliminate the 'climate of fear' out there is another thing altogether. With regard to this loan guarantee stuff, well, who knows how the dominant banks'll handle this. I suspect where they're required they'll do as they're urged, but it'll have an impact in other loan areas. The point is they don't want to lend too much and that's not going away even with all this government intervention.
What is interesting about all of this is the realisation that those in charge of our economy are as blind to the consequences of their actions as the rest of us. Perhaps we'll never again be fooled into thinking that economics is anything like a 'science' or that the crude use of parametric statistics within these financial models somehow allow us to manage better the 'information' out there in the 'market'. These models seem to have made the financial sector 'lazy' they have allowed banks etc. to make vast transactions based on crude assumptions. When you consider the sheer complexity of market information out there is any wonder these 'assumptions' driving these models of the 'market' have proved inadequate? Hopefully the 'quants have had their day.
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The truth about how and who amongst the bankers and city financiers caused the debacle that we are in is yet to be told. However, business also has to take some of the responsibility. The accountants were complicit in racking up the levels of debt that are now crippling business. They really did live up to their reputation of knowing the cost of everything and the value of nothing.
Their combined mismanagement forced the spread of globalisation, egged-on by politicians. They pressured well managed companies th change their strategies. What happened to Weinstock's empire after the forced opening of the 'war chest'. The City hated the idea that Pilkington dedicated a percentage of their turnover to R&D. How many firms were forced to pay increasing dividends when internally they were crying out for investment.
I have noted a small but growing number of posters postulating that this slump has been manufactured by a small group of macro-global enterprises. To my mind this is nonsense. The whole thing is far too messy for that and will last for far too long
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"war against the credit crunch"??
I just hope this new war will be somewhat more succesful than the last big "war" we are all involved in: the "war against terror":
- after proclaimed victory, the war has continued for another 7 years...
- in order to fight this war, major players simply "overlook" civil rights (eg Guantanamo)
- this war has led us to comply with an unprecedented amount of surveillance and intrusion into privacy
- torture is a favourite means for conducting this war
- I don't even want to start thinking about the costs of this war
- the umbrella of this war has legitimised any number of other, non- or marginally related involvements and policies...
- As the actual enemy is difficult to pinpoint, everyone who remotely resembles a possible enemy is under suspicion
Etc. ... Please, not another euphemistic "war"!
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Post 34 . I couldn't agree more with your comments. I think the phrase is "if you are in a hole stop digging".
Post 46 an interesting point re RBS and Williams Formula 1. I object to my money subsidising Newcastle United via the Northern Wreck shirt sponsorship.
I imagine that for both there may be a long term deal in place that prevents RBS & NR suddenly pulling the plug. RBS are still shown on the Williams F1 website so I imagine it will be continuing.
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@53 Cool
"Off topic slightly but does make you wonder why Merkel et al seemed so against Browns stimulus..."
Its because they along with the rest of the G20 said you should only attempt this IF YOU CAN AFFORD IT, and we cant.
You'll also note instead of a pathetic badly thought out VAT drop with added rises later, they have planned cuts in income tax putting money in peoples pockets some of which will get spent. Also their credit guarantee scheme is 5 times the size of ours.
They have achieved this because they were more prudent during the boom and they have thought about what they are going to do and introduced it all together instead of the drip drip of poorly thought out solutions that we have had.
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Robert,
Whilst I can see how the banks in which the Government have an equity stake can be pushed towards extending their credit lines as the Government wish, why should those who stayed free such as Barclays. In fact, Barclays dont want to be directed toward expansion of UK lending, rather use their discretion toward emerging markets.
Given that the small print of the announcement today makes clear that the Government will charge an unspecified premium to the Banks for the Working Capital Scheme guarantee with pricing to reflect risk and a mandatory condition that they expand new credit from their freed up capital ( presumably only to UK business?)how will we know what real difference this will make until these details are tabled and the Banks do their numbers. Also, this might be termed a State Aid to the Banks and target businesses and blocked by the EU which the headlines have missed - what's the chance of this?
Peter Mandelson appears to hope and rely on the fact that the Banks will expand credit because they will profit from the prospective new lending. Is this more hope than expectation in this severe recession?
Some more important questions :-
1. What are "ordinary-risk businesses" that shall qualify for the Working Capital Scheme?
2. What criteria are to be used by the Banks in chosing target companies for their WCS portfolios?
3. Which companies get the new loans freed up by the WCS guarantee?
4. What are "smaller credit-worthy" companies which can get the Enterprise Finance Guarantee and who decides which of these might otherwise fail without EFG support? Who decides which of these benefit from EFG and on what terms can they convert overdrafts to EFG loans as well to create fresh unused overdraft facilities?
5. Which companies can attract Government/Bank equity finance under the Capital for Enterpise Fund? What's in it for the Banks?
6. Will foreign companies benefit?
7. Will overgeared private equity companies of the like your book describe benefit by the taxpayer lifeboat?
Let's have the facts, please....this is taxpayers' money on the line.
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#10 StrongholdBarricades
"So here we have it, another appointment which indicates he has to promote from outside to get talent of any kind into his cabinet."
Perhaps he had to do it.
There is no training to be an MP nor any kind of qualification required.
They could have dyslexia, discalculia or both. I do not wish to be cruel but they can also be blind.
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Politicians have the habit of introducing spin and PR at times to cover up some really atrocious news. Did you notice, did you see the really bad trade figures or were all our eyes on what the government would do. UK's goods trade gap with the rest of the world reached record levels in November. Sterling drops 30 percent and instead of export picking up it drops 6 percent while we pretty much kept importing stuff with imports only down 2 percent. This is an imbalance that cannot be maintained and the only solution would appear to be further significant falls in sterling until the balance between imports and exports starts to match. 10 pounds per loaf of bread coming to a store near you. Fortunately shipping costs suggest imports will have fallen rapidly since November.
So lets actually look at what Robert has chosen to talk about or perhaps has been deliberately played to talk about. Namely the shrinkage of financial globalisation and how some foreign players have withdrawn from UK markets while UK banks withdraw from Asian and Chinese markets. An Analysts report out today I think from Morgan Stanley suggests HSBC will need some 30 billion of extra capital. This being mainly due to severe losses that they seem likely to chalk up in the US and Asian markets. Losses on UK lending don’t even get a mention namely because the pale into insignificance when compared to US problems. This suggests to me that to compete with US banks our UK banks had to ignore their risk models. Robert is right that a long halt to the process of distributing capital will severely damage some weakers economies, hence the threatened ratings downgrades on Ireland, Spain, Italy, Greece and Portugal. Emerging market countries seem likely to suffer the most while those that instigated the mess will tend to escape.
The government plan makes reasonable sense in terms of size and who it is targeted at although I would have preferred an element of price capping (to stop extreme pricing) for loans and insurance to have been included as well, its just I feel cross at the deliberate manipulations of electorate sentiment by politicians. Just like big business the government seem determined to make things opaque and to nanny everyone into a conforming view. More choice please and less reporting influenced by government actions please.
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"the growth of cross-border flows of capital, generated huge incremental increases in the wealth of most of the world." - Hmm...
We should think of wealth not just as bits of paper (money) but as real goods and services produced, and perhaps even more importantly as the investment in infrastructure, education etc in each country to allow goods and services to be created in the future.
Certainly there has been investment in some of the poorer countries like China/India (though those countries have made a lot of the longer term invesrments themselves). Meanwhile investment in richer countries like the UK has fallen and perfectly good factories get closed down. Is this an efficient long term use of resources? - I'm not convinced.
Most importantly, the globalised financial system has proved to be inherently unstable. It has allowed trade imbalances to build up to a far greater extent than was healthy. It has led to a situation where individual countries have no real control over their own economies. And in the end it is a house of cards - remove one card and the whole lot falls down (banking fails everywhere, demand falls everywhere, etc, etc)
I'm not sure that globalisation has led to huge improvements in living standards for most people. It has certainly led to greatly increased disparities between rich and poor in each country though.
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"Lord Stern quoted the crippling cost to the 'global economy' of doing nothing to avoid Climate Change.
Little did he realise then just how much greater economic damage we managed in the UK, all by ourselves!"
And we have barely begun to add on the cost burden of trying to stop 4 billion years of the climate doing what it has always done.
'Stop Climate Change' has got to be the single most stupid political statement of all time.
They may as well say stop earth rotating.
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I am still mystified as to how the Govt. can use Taxpayers money to 'fund' Failing companies, when there is still no prospect of recovery in the Economy for the forseeable future.
Surely guarantees of this nature can only be promised when a recovery begins - because it is only then that we will see which companies are 'fundamentally sound' as their productivity increases.
Providing guaranteed loans to ailing companies now is lunacy - remember we are at the beginning of a recession unlike any other before it, and no economist or politician can predict when and how the economy will recover. So how long will the loans last? What happens when there is no recovery, do we continue guaranteeing further loans to prop up non performing enterprises?
The truth is in this Country, and I think the populus are beginning to accept it but the leaders have yet to, is that we all have to downsize and reduce our expectations. This applies to everything - Our Government, our Business', our salaries and probably our standard of living. My business will probably still be here when recovery comes, but it will be smaller.
We will survive because we have not over-borrowed or taken vast personal sums out of the company to finance Range Rovers or any other self indulgences. We have also invested in our Staff and facilities. I hope those competitors of ours who have acted irresponsibly are not provided with too much assistance, because if this is the case then we will be the fools for running a 'tight ship' for the last 15 years.
The private sector, as we know it, could be about to change because the rules of competition appear to be being re-written, in the favour of the non-prudent.
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Mervyn Davies is another of the ones the rules do not apply to.
His move from CEO to Chairman of SCB was in direct contravention of good corporate governance as recommended by Higgs.
He'll fit in well with Mandleson, another one the rules do not apply to.
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If he can help sort this out - great
I still feel deeply uncomfortable that he will become a peer and is completely unelected - but if it works - again - great
But the real point of this article is at the end - there is absolutely no doubt that for all its excesses the global financial system and trade has generated prosperity and wealth outside the financial sectors because of its global reach.
If as a result of this fincial crisis banks all retreat into national instritutions then we'll all be the poorer for it
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56 sanity4all:
"Agreed "regime change" is well overdue but ask yourselves this question.
Who or what parties/countries have an interest in weakening the UK's ability to survive independently?"
It is so true that we need "regime change" of some sort, but I do not really think that we can look elsewhere for the cause of our problems.
Successive UK governments have thought short-term - "max out our oil and gas reserves in the shortest possible time, borrow wherever we can, save nothing. pursue our domestic PC agendas, build up bureaucracy, discourage manufacturing, increase financial services, sell gold, sell Westinghouse, privatise everything".... it has all been so narrow-minded, self-serving and short-term.
Even now, the solution to a borrowing-induced crisis is presented as more borrowing!
I am totally fed up with hearing Gordon and crew blaming world events - how many times can that man get the word "global" into any answer on our crumbling economy? - and disowning any culpability.
We may not manufacture much in the UK these days, but we are pretty good at creating economic crises.
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24,
Thanks for cheering me up :-0
On the bright side, we should see an end to half ton man / mum / son programmes. Obesity will almost certainly disappear to be replaced by an epidemic of national anorexia. Also property snake programmes will become the norm, showing individuals how to make a fire basket capable of providing enough heat and hot water to keep your tent warm at night.
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ah,
'The Banker as God in Modern Society', now that would have been a prescient work...
GC
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If this guy is one of the few 'credible'bankers left we be delighted that he is prepared to offer some help.
Meanwhile, in the light of the gargantuan hole we are in why does GB not call on our only credible politician;
VINCE CABLE ?
If this were a war, we would immediately set up a coalition government using the best across the board.
Forget party politics, Bring in the brains and worry about the personalities later.
An economic disaster team should be set up without delay.
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"The internationalisation of banking, the growth of cross-border flows of capital, generated huge incremental increases in the wealth of most of the world."
Maybe it wasn’t as wealthy as it appeared Rob!
Making ridiculous amounts of borrowed money available so we can outbid each other and give the appearance that asset values are growing is not REAL growth!!!
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I've never heard of Mervyn Davies did he ever play any rugby?
[I make big money i drive big cars everybody know me,i make big money i drive big cars everybody know me,i make big money i drive big cars everybody know me, cause ima superstar]
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For anyone who saw Mandy on "BBC Breakfast" this morning, what does, "additionalise" mean?
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Any chance that some of your post might end with the good and start with the bad Mr. Peston?
The same routine of lifting us up with the good then bring us back down with a bump is getting tiresome!
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msg 34 molieres
Thanks for saying this for me.
Those of us who have stuck through the many and varied explanations surrounding the big CC are left with the illogical logic that we caused it in the frist place therefore we must refurbish the banks who will have nothing more to do with us and the only way to cure the problem is for us to spend, spend, spend or, better still, get back unto debt as quickly as possible only don't look to the banks for any help.
I think that's what I mean.
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The Scottish philosopher Adam Smith described a nation’s economy as the product of innumerable self-interested decisions to trade which, as though guided by an invisible hand, proved overall beneficial. Last year’s banking crisis caused debtors to realise that they could not continue to shop as though in possession of (as the Rt. Revd. Peter Selby put it) a ‘credit card with no limit to their credit and no date by which repayment will have to be made’. Wisely, Britons have self-interestedly decided to pay-off their debts. Thus, business people and politicians must recognise a paradigm change in the nation’s psyche: confidence to repay (sometime) has ebbed away. The issue is not availability of credit but confidence. Meantime, there's no point making things for which there is no demand. Stock unsold only ties up capital.
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As usual, no comment from me of any real signifcance. Just sentences... sometimes without verbs...and with poor grammar.
My USP is my stupidity. My 2nd USP (!) is my pedantry.
A BEAUTIFULLY WRITTEN blog today Sir : flowing words used with almost poetic economy.
Just one, miserable, tiny comment to make on your use of English punctuation.
LAST paragraph about capital flowing 'where ITS needed'...tush and tut. What were you sub-editors doing ? Or are you your own sub-editor ?
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72 AC
Well at least you tried.
But what happened to the good ones, were they not salvageable?
Maybe the British negativity on this website ,mostly anti-Labour , is reflected by the negativity in the workplace, mostly anti-Capital, and in the boardroom , often anti-worker.
And yet, on a one-to-one basis most Brits are fine and reasonable.
It is the collective psyche....I have lived and worked overseas too and find that people let you get on and do things more, they are less class-bound, less xenophobic , more likely to stand-up and start again.They are less role-restricted, less up themselves .
There must be something that can be done to cheer UK up and get it back on its feet....I think Labour are really trying ,but they are up against massive resentment and it is difficult to appear as a new approach. But I simply do not trust the Tories as they polarised Britain more than anyone.
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Post 64 - Sashaclarkson
Thanks for signing and joining in, however, Alexander Curzon has stated on another blogg that we all need to sign in order to be noticed. He is right, and we will all need to continue some sort of effort to remove this government.
For the rest of you, see post 14.
JOIN IN - NOW !!!!!!!
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#58 and #81
> How long before we follow Ireland into sovereign downgrade territory ?
Erm, Ireland's sovereign debt has not been downgraded.
Here's a basic lesson on the Irish economy for the 2 of you.
Ireland's 2 biggest export earning industries are Software and Pharmaceuticals. Unlike the UK's Financial Service industry which has been decimated by the recent downturn both Software and Pharm are relatively unscathed.
People still need their viagra as much as their software services.
Indeed my own software company has just been taken over by MasterCard for over 100 million USD.
Which was nice for us option holders.
I know several software companies here that are still hiring. And guess what - you still can't get good developers.
Of course there was an unsustainable building industry boom.
So what ?
Government is going to slash public services and numerous builders (many foreign nationals who will return home) are on the dole.
But guess what - eventually Ireland will have a sustainable building industry.
Apart from those in the building industry, the only tangible effects for many people here has been a reduction in house prices and in mortgage repayments.
This so-called downturn is a god send for the real economy.
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Easy solution to all
Give the money to the people of the country and tell them to either save in bank or spend and get economy going- pay some of their mortgage- or cay payments etc
the to us and we shall spend and start all
Tony
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This comment was removed because the moderators found it broke the House Rules.
98. onward-ho:
Very good points, and this reminded me of something that I have noticed in the US - a big contrast with the UK.
Here, we look to governments (of whichever party) to solve our problems.
In the US, they do not tend to think this way. Most Americans, even died-in-the-wool Reps or Dems, regard politicians collectively, and government, with contempt.
They do not look to government to solve their problems. They get on and sort things for themselves. Although this is necessarily a bit of a generalisation, Americans tend to have a mindset that is far more self-reliant, and less dependent on government solutions.
As UK public opinions of politicians plumb new depths, some more American-style self-reliance might be a positive result of this crisis. But the scary, structural problems here include powerful interest groups, which rather undermines my optimism on this point.
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Lets fact facts folk,
Our ‘banking’ industry has been revealed as the biggest ponzi sham of ALL time, we have been caught telling porkies and now we have nothing to trade with to get us out a hole.
How is the current conservative ‘New Labour’ Government going to perform THE biggest U TURN of all time and admit to folk that they will need to nationalise vast swathes of what’s left of UK Industry?
Answer, they can’t and won’t, make way for the most left winged conservative party in history ;-)
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Dear Robert it is time you and the rest of the media started to really stick the knife in to Brown and his vile administration. I am a wealthy banking expatriate working at a bank which has not had to beg capital from the taxpayer. Last year would have been a good year taking business from competitors who should have been made insolvent last year. I would like you and other UK taxpayers to know that many of the UK banks notably RBS are still paying huge packages to expats in the region. Here in Japan several live in apartments costing over GBP 15,000 per month with a huge amount of fringe benefits and enjoy a lifestyle of expensive restaurants, Porsches and Ferraris. Since the government retains ownership stakes in these businesses perhaps you should ask Gordon some more searching questions about the way these businesses are restructuring? Especially in light of your recent blog which criticizes the lack of lending back at home.
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74 doctor gloom
"Perhaps we'll never again be fooled into thinking that economics is anything like a 'science' or that the crude use of parametric statistics within these financial models somehow allow us to manage better the 'information' out there in the 'market'."
I agree with you completely. Economics is faux scientific, positivist in its philosphical meaning. The use you mention highlights the difference between information and knowledge, we have way too much of the former and hardly any of the latter.
It is the End of Positivism maybe, but certainly not the End of History.
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Also man group plc the worlds biggest publicly traded hedge fun manger, reported a 21% fall from 67.6 billion to 53. 3 billion in Q3 of 2008 ,and the industry is estimating to have seen an out flow of some 160 billion to 200 billion in Q4.
Anyone know how that works. looks like they have alot more going out than what they have.
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Money to JCB - presumably this would class as a sound/viable business just 'temporarily' affected by global downturn?
But with so much second hand machinery on the market and coming on to the market how long would it need propping up for before the good times return??
If downturn lasts 5 years then government can't fund all these losses - companies need to get leaner to be competitive - this is not just labour savings but being hard on costs right across the business - otherwise effectively the government would be funding employee wages at full cost rather than unemployment benefits.
Of course lowering any cost in a business is an income of somebody else which means less spending, less income for other businesses less taxes for the government and so it goes on - mmm tricky......, anyone know a good Welsh banker who has 'emerged from the mayhem of the last few years with his reputation enhanced'?
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77 & 46
Wouldn't have anything to do with Labours links with Bernie Ecclestone would it?
Surely not.
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83 purpleDogzzz
Climate Change trolls will only get scraps to feed on in this blog, I would try a more "on-topic" one if you're really hungry........
once you've extracted your head from the rotating earth, that is.
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Perhaps we can all save our breath if we remember that Robt Peston may be lots of good things, but his main role at the moment is as a loudspeaker for Gordon Brown and Peter Mandelson. If you want to know what is really going on, and where we might be heading, probably best to read the foreign news sites for the time being ...
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#106 ThorntonHeathen:
"74 doctor gloom
"Perhaps we'll never again be fooled into thinking that economics is anything like a 'science' "
Should we also think that way about Accountancy?
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So RBS has sold stake in Bank of China. Precisely why has it not been told to divest itself of assets like this BEFORE getting bailed out by the taxpayer?
Investments like the above ought to be scrutinised at all banks who have borrowed from the taxpayer and they should be sold forthwith and the taxpayer refunded!
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So the BBC tells you that there is a reversal of the globalisation trend, but doesn´t bother telling you what that means for people not obsessed with banks and money.
For example the UK is almost certain to run out of electricity generating capacity. It has no domestic generators of any size and has no domestic production of generating technology and insufficient domestic fuel.
Maybe like poster # 26 you just want to protect strong businesses - you need to make sure that they are businesses can operate without the need for electricity.
Even switched on guys like Alexander Curzon may find the forthcoming lack of electricity to be problematic.
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#93 robin.venables:
"For anyone who saw Mandy on "BBC Breakfast" this morning, what does, "additionalise" mean?"
I did give an opinion but my post was moderate perhaps only pro-tem.
I forgot we should not criticise M.
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Davies is Welsh, mae'n siarad gumraig (I think the aspiration's right, out of practice these days, mae flin 'da fi). That means he's unlikely to support the Conservatives, both out of tradition and conviction, the Cons having just suggested disenfranchising the Welsh even further. What's in it for him's a Lordship, as that's the price of buying-in expertise in Chinese industry. At least now we know what the Final Solution is, Wun Hung Lo UK.
#26
If only BG were reduced to the scale of a small enterprise, many productive hours would be saved by their customers. Unfortunately, they're not, so taking the utter incompetence of these former monopolies as par for the course is a gross insult to most of industry.
#98
Industry got wiped out by the growth-constraint capping inflation - the only companies which could grow were those which were already established enough to grab the 2% for themselves. At least me old mucker Nick Campling's still going to stay in business producing capos for folksingers and prototyping hard engineering solutions for the restart.
As far as cheering things up is concerned, it's premature. Not only do the British take a morbid joy in pulling together in the hard times, you've-never-had-it-so-bad when-I-were-a-lad-even-the-hard-times-were-soft (well, that's the likely scenario now), but also because it's too late for this policy to affect the Wall headed towards us of dominoing businesses taking each other out one after the other up and down the vertical supply chain.
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#64 I couldn´t agree more. in another life I used to hire analyst type people - most of whom were maths or engineering graduates, mainly in their mid 20´s looking for their second job.
Over time these people tended to become increasingly qualified and yet increasingly clueless. There were a few exceptions but in the end the bulk of the people we hired had been educated somewhere other than the UK.
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At 11:55am on 14 Jan 2009, Japanjunkster #105 wrote about High Life Style amongst RBS expats out east.
Have just read this entry...is this all true ? RBS tell US..you seemingly conniving swindlers...IS THIS ALL TRUE ?
Have just read 'Cityboy: Beer and Loathing in the Square Mile ' by Geraint Anderson. As if his revelations were not bad enough, we now hear hear from an apparently informed blogger about RBS.
The slow, smouldering revulsion that I was feeling towards the City is about to flare up into unmitigated disgust.
TELL US...you so- and- so's at RBS is this TRUE?
TELL US...TELL US... TELL US !
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#1
What an odd comment.
People don't get elected to Parliament because they're competent to run the country - they get elected because they've got good hair.
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#100 ProfJamesMoriarty
Interesting. But somewhat of a blinkered view of the Irish economy. It matters not a jot the position of software or pharmaceuticals are in the pecking order. What does matter is that the export levels of other sectors has almost collapsed!
Neither of the sectors that you mention have a need to be based in Ireland. Therefore their long term security to the country is not assured.
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Friday February 13 1931: America's crisis
The crash was as a result of banks over-lending, market gambles and growth fuelled by unchecked consumption.
Between 1929 and 1933 around 40% of America's banks failed and CREDIT DRIED UP.
The gap between rich and poor became a chasm, slashing the spending power of the masses and spurring what became known as the Great Depression.
Oh we have a Friday the 13th February in 2009. Lets hope history is not repeating itself.
I'm sure the well educated powers that be would have been aware of this previous financial disaster.
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I have a feeling this recession will go on until everyone is bored of reading item like this and realise life is not that bad. We can all feed and cloth ourselves and our families.
OK we may not have the brand new beamer we thought we needed but hey I have two beautiful healthy kids and a lovely wife.
A bit strapped for cash we went to the kids fun day at the museum last weekend, all free, kids loved it and I learnt a few new things. Best day out for a long time. Perhaps a little less cash will focus minds on what really matters.
By the way, did you know Wogan has christened you Robert Pestilence, which you must admit is funny even when Wogan says it.
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I very much agree with Nataku regarding bringing more un-elected persons in to do what some of the incompetent misister should be capable of doing.....but are not...
It gives me some bad taste in my mouth regarding the personnal links with these un-elected people, either that of the possible future intentions, its all open to question.
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Post 100.
Perhaps you can take on the 1,900 people in Limerick let go by Dell as it moves production to Poland.
Dell are generally ahead of the game in the IT industry.
Ireland was cheap 20 and 10 years ago for both IT and Pharma but now that the Irish GDP per head has caught up the UK you will face the same problems of jobs migrating to cheaper parts of the EU as we have had over the last decade or so.
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taking things in another direction for a while.
This global slump has been led by a failure in the global financial systems. We need to change these systems before we can even begin to dig ourselves out of the wreckage. yet even today, there are thousands of brokers and traders (stock, commodities, currency, etc.) who are playing with the realities of life yet not adding one iota of real value to our economies or life.
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Post 100 made me laugh LOUDLY
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Will the new unemployed get any tax breaks for 2008
(i.e 5th April 2008 to 4th April 2009)
or forward into infinity?
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Since when has the Peter Ridsdale / Leeds United financial management strategy become valid financial policy for an entire nation?
This short-termism concerns me. We know that the next 12-18-24 (or more) months are going to be tough so why not concentrate on putting things in place to smooth the path out of the mess then to promote more sustainable, real growth? Concentrate on bringing forward the real recovery rather than wasting the necessary future financial resources temporarily delaying the pain.
The country needs to create wealth and retain it, it doesn't need money indiscriminately thrown at it, particularly when much of it will leek out of the economy in the form of profits to foreign shareholders, imports and interest payments on spiralling public debt. The Government, even with its love of statistics, couldn't tell us what return or value that we will be getting for our money.
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Overheard in the Office of the Great Pretender:
Brown: come up with another scheme that makes us look good and costs nothing
Mandelson: Too easy! Loan guarantee scheme!
Brown: But that will cost the earth
Mandelson: No. Bank lending would be targeted at innovative, viable and growing companies that are finding it difficult to access working capital
Brown: Ah - innovative viable and growing! All three! Brilliant. So no-one will qualify and the money will just sit in the bank?
Mandelson: Absolutely. Every penny.
Brown: You DO make me look good! Start working on tomorrow's package of measures.
GC
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#35 I'm no right winger but why should I subsidies ALL those left wingers that though they could follow GB's example of speeding more money than what was being earned. I only spent what I earned and any assests that I might have are going to be rapidly devalued via printing money to paper over the cracks, maybe I should statrt my own press ?? I would end up in jail for that , so why does not GB and his communist Cohorts
Also they have made some disasterous industrial policy mistakes. One of them being IR35 and the other being in the Defense/avionices area where there have been some really stupendous mistakes along the Line of TSR2 re Harrier and the JSF etc History does repeat itself
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#30:
Yes, you're right, it is a simplistic generalisation. I'm sure there are some fundamentally sound businesses who have a genuine need to borrow money, particularly if they are doing something particularly capital intensive.
However, my point is that borrowing money has become far too deeply ingrained a part of running a business, and I really don't think that's healthy. Businesses are supposed to generate money, and if they put a little aside for when cash is tight rather than paying every last penny in dividends and bonuses, then they wouldn't have to borrow anything like as much. If they can't plan for the bad times, why should I bail them out?
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76, the enemy you refer to is YOU!
The individual or man in the street to stop an uprising!
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I feel it is a great plan but the goverment has acted slightly to late with this. And the proposed buget is some what of a drop in such a occean.
And after this plan we will each be in a debt of around 17 thousand pounds. Slightly ironinc solving debt with more debt, not that it got us into this mess in the first place eh?
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100 prof moriarty
Thank you for a comment that all is not lost and that removing some of the thespians from the workplace can actually help. The idea that the world needs these nonentities is misplaced. The only tragedy is they will pull down others down with the suction of their evacuated accounts.
83 purpledogz
the slump will probably help the climate change issue short term with reduced activity reducing emissions, industrial and domestic, no impact on politicans emissions. The save the world message is wrong anyway it should be save the world for man. The world will just mosey along in a different state if man eliminates himself.
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#113 bliarwatchproject
RBS could not sell earlier as it had a lock in clause when it bought the stake. The clause has just expired.
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Robert,
On an anside but a good example of Gordans maths, can you look into geting the goverment to justify that the "Tipical Famaly" has £5 a week more to spend due to the reduction of VAT.
This has been sited my several ministers today and my GB in PMQ.
Doing the maths to have £5 extra you need to spend just under £231 on vated items or just over £1000 a month.
Council tax, mortages, food, alcohol, ciggies fuel, water, insurance bus and train tickets were not effected (or had duty put up to counter the reduction).
A tipical household has around £2000 a month take home pay so the Gordan is telling us that they are spending HALF their income on VAT'ed luxaries!
Something does not add up!
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Thorntonheathen 106 and Toldyouitwould 112
Yeah I agree. There's certainly a massive misunderstanding about what we can adequately 'quantify' in our models and our spreadsheets. When it comes to the riddle that is modern accountancy 'methods', well, God knows how we've all been duped here. Enron and all those other dodgy companies certainly knew a thing or two about the use of creative accountancy.
A I see it, much of this current mess is largely down to the political use of 'data' to manage economic 'expectations'. It's also linked to the current 'cult of the model' that pervades much quantitative 'research'. If we think, or believe, that the 'market', what ever that is (the hidden hand etc.) is as much about using 'information' (the 'knowledge economy' and all the rest of that tired old sociopolitical jargon) as it is the act of buying and selling goods and services, then those who seem to have the power, or the mystique, associated with managing this mass of information will have influence. It's almost a form of alchemy: turning crude assumptions into useful 'financial products' etc.
Numbers in spreadsheets and assumptions in models are often little more than simplistic estimations of the nature of certain sorts of 'social relationships' and 'psychological drives'. These 'techniques' for doing things with 'data', like magic, allow us to eliminate the 'confusion of life and thought'. It seems to make our interactions and motivations somehow calculable and 'knowable'. It allows us and our economy to be 'managed'. Well, given the current mess, that's what some people thought.
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I find the remark that globalisation spread wealth to most of the world questionable.
As we are fast finding out it wasn't real wealth at all it was all sheer fantasy.
This is why the global economy is shrinking so fast as trying to find out where the real money is becomes an increasingly impossible task.
All we're really hearing are politicians with no idea what to do next just bluffing their way through from one day to the next.
They talk percentages but have no real numbers on which to base them.
We hear percentage unemployment from the thirties but the population was only approx two thirds the size it is today.
Everyone knows this is a period like no other so trying to resurrect ideas from the past are useless in fact they are likely to do far more harm than good.
Where are the radical thinkers or were they confined to the dustbins as no longer relevant in the age of easy money and the prosperity which is now ebbing away like a tsunami.
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Merkel's plan for the German bailout is to
a) pay back the publicly funded extra debt asap
b) ban excessive public borrowing
c) make it illegal for any German government to raise the state's public deficit above 0.5 per cent of GDP "in normal economic times".
d) set up a "redemption fund" with binding rules that commit the government to repay the cost of the stimulus package by a set time.
----
Whereas Brown just jumps from latest idea to latest idea - no overall plan, no overall strategy other than trashing the pound and introducing inflation.
A world of a difference between German and Uk recovery policy.
FT story here
http://www.ft.com/cms/s/0/74d04d20-e1dc-11dd-afa0-0000779fd2ac.html?nclick_check=1
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I freely admit I am not a banker or anything vaguely rhyming with that occupation, but this Tory £50 billion, or even the government £20 billion is a lot of money. the UK population is around 60 million, take away all under 16 year olds & you are left with approximately 50 million. Do you see where we are going here? If every adult was given 1 billion, or 100 million pounds, would that solve this economic crisis? Some would save it back in the banks, which would give them something to count. Some would spend it on houses, cars, goods etc. which would keep the factories and shops going. Are there any experts that can tell me, apart from the problem of trusting the plebs with so much wealth, why this wouldn't work?
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131
You have an odd view of what small businesses are, and the difficulties they face.
The vast majority of small businesses are run by their owners and do not pay out every last penny in dividends and bonuses.
Further, the the difficulties in borrowing of money also extends to trade finance. So even those in a position of having a healthy order book are currently crippled.
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124 ian
Fair enough comment, I dont think the transiton is done yet, I dont see what is to stop it for a long time. However consumers do not have to buy imports do they - but they happily ditch home produced stuff if it suits them. I never understood why these new EU entrants were invited in it, was always going to end like this. They were pestering to be let in, why?. There is now a constant flow of EU money going into the infrastructue there apart from anything else. Let alone the trade opportunity. To return to the residual economy, there is still some, and the main news is focused on losses at present. The media is enjoying the horror stories. I remember the local news in the early 90s in England, good news under 200 jobs being created in a warehouse for something like frozen food distribution, big show from the local MP. Minimum wage jobs. Just down the road a greater number of job losses, all highly paid, no publicity, no reporting. Sometimes the news is throttled or oriented one way or the other. I suggest some of these businesses shedding are in trouble, some are opportunistic in downsizing when criticism or protests from staff will be ignored. Some businesses are probably misrepresenting the cause of their problems. Does anybody really think a lack of credit is the problem for JCB, yet that is their claim. The construction industry is in trouble that is JCBs problem.
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#129 - funny - but too close to the truth to laugh at too much!
#130 - IR35 for anyone who doesn't know taxed consultants as if they were employees after they had set up a limited company to reduce their tax bills. When the govt talk about all these tax avoidance schemes this was one and they shut the loophole meaning they had to pay tax like everyone else. IR 35 Survivor doesn't like paying proper amounts of tax like the rest of us. The only way I can possibly side with him is that loopholes still exist for the superrich which they exploit and these should be closed too - its not right that only the people who can't afford to avoid paying tax have to pay it - we ALL should.
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#7
Very aptly put!
Labour have destroyed the UK economy and are desperately trying to lay all the blame at door of the US/World.
They have been profligate with tax payers money, feathering the pension nests of millions of public sector employees (who are now on better pay terms than their oppo's in the private sector), have job protection and in many cases are doing unproductive work, many times stifling the wealth creating part of the economy with red tape.
At some point the public sector has to cut back massively and the gold plated pension scheme brought into line with the private sector
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Robert, You have hit the nail on the head in my opinion with your last few paras. The problem we face as a species is all "wealth" can be traced back to a plundering of the earths natural resources. So with wealth comes responsibility. The best we can do is try to make limited resources last a bit longer for succeeding generations of homo sapiens. Call me a troll if you like but that won't change the facts. As James lovelock said in "The revenge of Gaia" 2006 "There is no such thing as sustainable development .... what we need is a managed retreat" Lets keep it real folks. The global downturn (including UK) is a good thing and I believe most serious thinkers now realise that, it must be managed however, to protect the most vulnerable.
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Gordon still trumpets his £5 per week VAT gift to the 'average' family and Nick - you, your colleagues, and the Opposition parties let him get away with it!
So the average 'hard working' family spends £10,000 a year on vatable items? This after spending say 5,000 a year on food and other essential zero rate goods, plus say 10,000 a year on Mortgate/rent, credit card interest, sewage charges, newspapers, magazines, books etc. This is c. 25,000 a year before fuel for the car, car repayments, saving for the holiday (at 0%) etc. Lets call it 30,000 a year after income tax.
Give or take childrens allowance (there will be no other benefits at this level) this average family is earning c. 37,000 to 40,000 a year gross.
The issue is simple - policy on the basis of average income always penalises the worst off in our society, which with OAP's, unemployed, and people on the minimum wage is several million!
Yet another policy badly thought through and worse, Gordon is following his tactic of never admitting to be wrong about anything, so bad decisions are never revoked!
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i don't understand why the Royal Bank needed to sell its stake in the bank of China. It has already raised £32 billion in the form of rights issues this year (£12 billion from its own shareholders and £20 billion from the government)! A totally enormous sum of money...
Surely however big the Royal Banks losses may turn out to be, they cannot be that big?
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#120
>Neither of the sectors that you mention have a need to be based in Ireland. Therefore their long term security to the country is not assured.
How many countries in Europe are English speaking and in the eurozone ?
I can only think of one off hand.
People don't seem to understand the importance of FDI in Ireland.
The 4 factors (including the above 2) that have attracted sofware and Pharm are lower corporate taxes and a high percentage of 3rd level grads in the 2 areas in question.
#124
That is exactly the type of grunt work Ireland does not need and the government has said so !
Ireland cannot compete with low cost economies and doesn't want to anyway.
The workers in Poland are averaging 3 euro an hour for heaven's sake.
The whole IDA policy is based on skilled jobs not assembly type jobs.
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#131 - Sure - I read you all the way on that.
I've seen 3 recessions now, albeit that I was in the Army during the 80s one and watched my late Father's architectural business crumbling from some way off, but the most striking thing about this recession is the marked difference in the overall effect on companies.
Last time round, 90s, the big firms were all smirking and saying 'it won't touch us', the small firms got hit hard first and longest, this time it's - as far as I can tell - the biggest that are crumbling.
Mind you, in the 90s I think on the whole more firms were cash-rich and really could ride it out. Some bigger firms got a LOT more help from lenders than others. Not this time. And it's more than just that - this time size per-se is no protection - some of the big players have remarkably exposed balanced cashflow regimes.
The thing about business growth -if that is what you seek - is that you always want to invest in more people, stock, equipment and if you were doing that last year you probably look back and wish you'd hung onto the money or not taken that loan. If that hasn't worked out, that's real bad news but completely forgiveable. As for the type you refer to in your last para. who run up vast bank debt as well, I have no sympathy with them at all.
For myself - if I borrow for my firm - I have to put up a pretty robust case and my demands are matched against firm work-in-progress, past record and any outstanding creditors, quite sensibly, by my bank's commercial manager. It's by no means a 'given'. The managers I've had over the last 7 years have been pretty down-to-earth, straightforward and yes, good to me if you want to know. And there's nothing wrong with that. It both limits the risk and makes money on both sides.
But I look at things like Waterford Crystal/Wedgewood and wonder who the heck allowed the balance sheet to get so imbalanced. Banks who pour money time-after-time into firms and permit huge liabilities to build up - to bank and creditor - I just don't understand how that could be allowed to happen. Very poor judgement on both sides really.
All in all I think it's going to pay off to be a pretty small firm handling relatively modest amounts of money in this one.
GC
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As Robert Peston articles go this isn't too bad but unfortunately my opinion of him has now too far gone... It seems to me that he actually enjoys the recession - perhaps because he was unknown prior to it and as soon as the good times return he'll be a nobody again...
A valuable lesson has been learnt today though... if you have a dinner party and don't want your guests to top themselves then don't invite Peston.
If on the other hand the economic gloom holds no light at the end of the tunnel for you then my advice is to stick a bit of Coldplay on your stereo (anything from the first album) and check out a bit of the Peston archive. That ought to be enough to tip you over the edge. Personally, I will avoid reading/watching/listening to anything that this man has to say in future as frankly it's ruining my week... Instead I'm going to get 'Trading Places' on DVD, a 4 pack of lager and enjoy some classic Ackroyd, Murphy, Lee-Curtis action... check out the Paul Gleeson cameo too... It's recession proof fun guaranteed!
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@136 wombat and countless others
In reference to GB's asertion that the VAT cut means 5gbp extra in our pocket per week
"Something does not add up!"
Well what a shocker. our self proclaimed mathematical genius ex-chancellor can't do sums.
Judging by how far his economics have got us in the do-do that has been apparent for some time now
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Dear Moderator - are you allowed to post on this blog? If so I would be interested to know why sometimes the moderating seems to stop for long periods of time - toilet breaks?, eating breaks, a particularly dodgy post that needs a lot of 'moderating' etc - is there just one of you or a busy little group of moderators (collective noun suggestion anybody?)?
Its just that sometimes you make a post to respond to someone elses and when it gets moderated about 45mins later its all a bit stale.
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54. (and others).
Gilt issues. There may not be as much trouble getting these away as you might think. There is c.£4 trillion in UK pension funds and household deposits. Given the way interest rates have gone there ought to be plenty of capacity there, before considering what appetite these might be from overseas investors. (Who might also see a currency arbitrage - plenty think the dollar and Euro are overvalued). If I can only get 1 or 2% on a bank deposit - secured by the UK government - why wouldn't I consider 4 or 5% on a gilt if I was prepared to hold it a while?
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#138, where is all the real money?
From what I can glean, it's in accounts in Monaco, Lichtenstein, Andorra, Cayman, Switzerland. Vast fortunes of the stuff. And the real money went out of UK in the 90s recession AND NEVER CAME BACK. Labour inherited a country with an empty balance sheet thanks to the Major government. I'm not sure they ever grasped that.
GC
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It may not be an easy day at work today, for your extra efforts seem to go unnoticed. You don't expect to get undeserved recognition, but it bothers you when others who have done less than you are in the spotlight. Instead of being acknowledged for your commitment, someone may go out of the way to criticize your contribution. Don't waste energy defending yourself now for it will only make things worse. Just continue along your same path and you'll be on top of the situation by next week.
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should have said Tax CREDITS
# IR35_SURVIVOR - blame the tories or the HMRC Contractors who snitched
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The response of the FTSE to today's news seems interesting: Government launches a new initiative to encourage lending and bank shares take a dive! Could it be the fear of full-scale nationalisation? Perhaps it would be better to have a big economic bust up (banks failing because of hyperinflated loans for property; lots of repossessions), after which confidence and a normal market will return.
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@140 berg
Do your sums if you gave everyone in the country just 1 million that would cost 60 trillion or 60 million million
give them 100k thats still 6 trillion
10k = 600 Billion
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#141:
You may think my view of small businesses is odd, but it's based on having run one for the last 10 years.
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Who is going to buy anything except essentials when one doesn't know if one is going to have a job and what the future outlook is?
Who is going to give credit?
Who can get credit?
Who wants credit?
It is stale mate and things can only get worse.
Everyone seems to think by the end of 2009, the economy will suddenly pick up. Why should it?
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The move has merits. Give adequate power and sufficient resources to those who are competent, dedicated and, above all, has only our interests in their hearts and mind.
They must be able and willing to ignore the interests of lobbists, associates, political parties and people from the same culture, racial, religious and business backgrounds.
Favouitism is the sinister and covert dark reverse side of the coin of corruption, fraud and swindle.
Come to think about it, why do we have so many MPs playing politics, schemeing, toeing the party line, talking, spinning, networking for personal self-interests and perhaps arranging something cushy and lucrative later on? We only need those with a cabinet level responsibilities. Saves £hundreds of millions and environmentally friendly too.
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#149 GC - It sounds like I live in a similar world to you and your description of your meetings and dealings with your bank manager mirror my experiences.
The only point I would query is that a lot of small businesses rely on some big businesses buying off them to survive. If big businesses are hit then small ones will be hit too sooner or later.
And of course even if your small business only deals with other small businesses then some of those will be affected by the trade they are not getting from large businesses so you will be affected then.
There's no escape - if it's hurting the big boys its hurting us all!
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145. At 1:54pm on 14 Jan 2009, cynicaljock wrote:
The global downturn (including UK) is a good thing and I believe most serious thinkers now realise that, it must be managed however, to protect the most vulnerable.
You make a valid and far from cycnical point. I continue to find it scary that Lovelock has been very prescient about this, far more so than most other commentators.
So yes, though the glass is half empty and shrinking still, maybe we all really dont need to drink quite so much anyway.
Except beer, of course :-)
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#117 - to what extent was your company to blame there for the failure of UK graduates to shape up?
My exp of 'graduates' (ie: straight out of university) is that they're all over-weaning, overpaid, silly, arrogant, commercially clueless and completely bereft of practical exp. They need the very firmest leadership and direction which only the direct and daily intervention of a very direct and hard-hitting Principal Engineer (or similar) with an open remit can provide. How many firms employ people of that calibre? Not many..
Did they get it from you - or did you just expect them to perform 'out of the box'. They don't, see. It's the university culture that messes them up. I'm dead against foreign graduates (esp China) coming into British industry, our intellectual prowess (such as is left) is one of the few realisable assets this shrinking nation has.
GC
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'The internationalisation of banking, the growth of cross-border flows of capital, generated huge incremental increases in the ' of most of the world.'
Well, no actually: What it really did was create huge increases of wealth for the 'Gnomes of London and Wall Street'(and the Madoffs of this world) and otherwise generated huge incalculable risk for the rest of the world.
I think, from the tone of the responses over these months, that Mr. Peston would perceive that most of us are weary of having our lives upended by the greed and stupidity of distant people in distant places engaging in reckless behaviour.
At least when my bank creates a mess, I can (and do) call up and give them hell. They pay attention, because I make them money, and can go down the street with my business.
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Yes, the next step after the withdrawal of banks from overseas investment and their retreat to the home islands, is a full scale nationalization.
The timing of this will be the point at which realization dawns that credit availability will not recover, and will in fact decline further. The political imperative will then dictate the effective confiscation of liquidity in order to prevent total collapse and the calling-in of the IMF.
Banks shares are falling in anticipation. Deposits in banks will probably be frozen and customers not allowed to withdraw certain types of funds. This will be sudden, presented as a fait-accompli to prevent a run on said banks.
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To GuyCroft and Grimupnorth
First of all, let me mmake it clear that I think we need far more entrepreneurs like yourselves and far less employment in banking/property/public sector, etc.
But I'm with DisgustedofMitcham2 on this... I see a million + homes on sale, empty office towers and a looming catastrophe in retail shops and warehosues as we stop our unsustainable shopping binge... how then can JCB justify a bailout?...we have borrowed and spent not just tomorrow's money but 2 generations' worth during this bubble... if it takes 20 years fr the uk as a society to AFFORD all the space built, then should JCB be on life support for that long? We don't need an endless line of construction machinery parked on disused runways any more than thousands of Jags and LRs....
The marke is working just fine rationing our credit... the government's fiddling CANNOT fundamentally be a good idea because the government cannot assess credit risk at all...worse thanour esteemed bankers
You describe a loss of 75% of its sales as an aberration, but it is the last several years that have been the aberration...considering the tax, pension, healthcare and mortgage/debt liabilities we have a populace have built up, we cannot now afford whatever construction was in the pipeline and this will remain so for years if not decades
This is just one analysis / example but I find it difficult to believe that the effective nationalising of credit is in any way the solution to businesses' problems, big or small...
The banks are de-leveraging at an astonishing pace....when they have done so and when asset values find a floor, people will start hiring/spending/lending again....no point tinkering with this necessary and painful correction
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148.
I wouldn't dream of throwing stones at the Irish from our particularly large glass house, but aren't the numbers of pharmaceuticals and software graduates simply an effect of the favourable tax regime that attracted these companies there in the first place? I accept that it is good to have strong software and pharmaceuticals industries, but they don't pay much tax to the Irish government and are likely to go elsewhere if they did.
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145/163
You are exactly right. At some point within the next six months, the ones at the helm of the Good Ship UK will finally realise that no matter how much money they throw about they cannot do anything to boost an economy devoid of confidence and therefore demand.
Demand will return but only when the necessary contraction is complete.
The Govt. should be saving its resources (if it actually has any left) to fulfill its primary purpose, which is to look after its people, because no one can deny there are going to be a lot of needy and vulnerable people very soon. The welfare state is likely to be the only growth industry for the next few years.
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Well, now we've seen the details, we can see it's not worth the paper spent on the spin. There's the princely sum of 25 million not dependant on some form of banking underwriting, and we know exactly how much of that there's been the last few months.
Even if I'm wrong, the best hopes of it coming on line is March, but given the ability of HMG to cause delays, the question now is, which year. It then has to work its way into place, which may be six months to a year after that. Anyone still playing by then will be grateful for the boost out of the pit, and it light be in time to do something for the elections, but there's a while to survive in the mean time.
As far as globalisation is concerned, the imminent departure of GWB to pastures new is obviously being discounted as a collapse of the WTO hegemony, thence a return to 1990 or thereabouts. That might actually be good news for the third world, who have not actually seen much of the crumbs from the American table. As we now rank in their number, perhaps it could also help our own balance of trade...
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#167 - I agree with you - see my post #108 so not sure what has given you the impression that I don't - that doesn't mean that it isn't giving my company some problems - even if you have cash saved it doesn't last long if there is no income coming in! Fortunately we're not quite in that position but I would say that UK is a dead market, Europe sleeping, USA dead and only ME and South East Asia keeping us going.
With oil prices the way they are I'm not sure what the prognosis is for ME in medium term either so like most people we have a lot of concerns but I do know that I would start shipping people before I started borrowing to pay their wages simply because we do not know how long this is going to last and it could be an adjustment to a permanently lower level of trading as many posters have commented.
As I respect and value all 50 employees and their families this is not a throw away comment but a harsh reality of the choices we face.
1) More/same work - we're all oaky.
2) Less work - borrow?? (not for me)
3) Less work - reduce costs
4) Less work - don't reduce costs and go out of business and we all lose our jobs.
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#148
>"Neither of the sectors that you mention have a need to be based in Ireland. Therefore their long term security to the country is not assured.
How many countries in Europe are English speaking and in the eurozone ?
I can only think of one off hand."
People don't seem to understand the importance of FDI in Ireland.
The 4 factors (including the above 2) that have attracted sofware and Pharm are lower corporate taxes and a high percentage of 3rd level grads in the 2 areas in question.
Software is a global business. Irelands advantage is merely short term. Look at the growth in this sector in the asian markets. They are producing well educated garaduates and technicians at a significantly lower cost than you can manage in Ireland. BTW they can also speak English!
Finally, show me a major pharmaceutical company that has moved from it's historic home to Ireland.
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# 90 i agree with you 100%
" An economic disaster team should be set up without delay" And include Vince Cable.
They have to get ahead of the financial dry rot to stop it, not simply react day by day to its effects.
Otherwise at the current rate of recent growth... The Bristol Channel will run out of space to accommodated any more empty container ships lying at anchor.
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#72 alexandercurzon
#102 onward-ho
I don't think it is a problem with Labour or the Tories. Even Labour has not been able to resurrect UK manufacturing. I think it is a manangement problem. If poor quality is being produced by the whole force, it must be a training problem. If poor quality is being produced by the odd worker, he must surely wan't help in regaining some esteem from his fellow workers by finding out how to improve his reject rate.
Something goes wrong in the vision-mission-recruitment-motivation-training-achievement-results cycle. AC had it solved by a showdown of sorts. That solved it, but it was UK's loss.
Human nature and crowd mentality is very fickle. People will rally around informal leaders. It seems you have to build in feedback loops and correcting mechanisms to keep your employees on board all the time.
Unfortunately, as organisations grow, things start to become perceived as a struggle between "them" and "us".
Maybe there is an employee group size beyond which individuals start to see themselves as just a number within the organisation.
Perhaps within smaller task-oriented groups a greater sense of belonging and identification with the organisation's goals can be achieved?
There are many manufacturing companies still operating successfully here in the UK. Are we losing the management skills that these possess? What are these skills?
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# 140 Bergspyder
I think you got an error in your decimal points and I'm not sure if you are serious....
But if you hang about a few years you might be carrying around a one million pound note!
Then you'll know what it's like....
As for the rest - I now here there might be pressure on banks to lend more in the mortgage market...... great my additional tax money going into a scheme to make sure houses cost more - so we can borrow more against them and imagine we are wealthier than we are!!!!!!!!
Genius!!!!!
Can I order a never ending bottle of beer please......
.... hang on I'm thirsty, make that 2!
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"140. At 1:47pm on 14 Jan 2009, Bergspyder wrote:
If every adult was given 1 billion, or 100 million pounds, would that solve this economic crisis? Some would save it back in the banks, which would give them something to count. Some would spend it on houses, cars, goods etc. which would keep the factories and shops going. Are there any experts that can tell me, apart from the problem of trusting the plebs with so much wealth, why this wouldn't work?"
If everyone had a million pounds, how much would 1 pound be worth?
How about a billion pounds each?
How about a trillion pounds each?
How about if everyone was given a gazillion pounds each, surely that would solve our problems.
Everyone would be wealthy then.
How much do you think a loaf of bread would cost if everyone had a trillion pounds? Money is not wealth.
If you want to start thinking about the nature of money, to understand what it really is and why we have the current problems, try these links:
http://css1971.wikispaces.com/Economy.money
also
http://www.mises.org/money.asp
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#168
The favourable tax regime is definitely a part of it, but only a part.
If you take for example Pharm, in order to sell in to the US one must get FDA approval. One part of this requires every single process to be Validated. In order to work in Validation there is a legal requirement to have a Science or Engineering degree.
You are correct regarding the low corporate tax returns however the skilled jobs themselves are a significant income tax earner.
#172
Manufacturing jobs are short term - its a race to the bottom.
Regarding Dell for example there were 4000 jobs - the Irish govt was happy to let the 1900 manufacturing jobs go - as long as the R&D ones were retained.
How long before Poland loses out to the likes of Romania etc
In software there is of course competition, particularly with the likes of India.
I dont begrudge them the Cobol legacy grunt stuff, but I would be concerned if they were competing for anything involving original thought.
Regarding Pharm see my point above.
I'm not sure what you mean about moving from a historic home to Ireland.
These are multinationals.
The stats speak for themselves:
http://www.idaireland.com/home/index.aspx?id=64
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174
Spot on!
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I want my share of bailout money transferred to me personally. I disagree with whatever this government doing with my tax money. I am sure there are lots of people who want the same.
Then I will decide in which bank to keep the money or spend it on my business, morgage repayment or buy the things I need. The boost of economy will occur naturally. The people who always waste money will waste their portion, the people who generate the money will generate more.
Is there anyone out there willing to take the lead and organise it properly?
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157,
‘After which a normal market will return’
I don’t think that will be the case, after tens of thousands lose their homes and they realise that they effectively worked for the last decade for zip. I think you will find it very hard to ‘sell’ a house of any description, renting on the other hand will become the norm. This is why they must sort the house prices out, if they don’t – The banks, the government, and each and every one of us is snookered!
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This 'Resign' petition...
I really would sign it, but there's no way I'm giving them my address.
That is all.
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Re 163: ThorntonHeathen: Thanks for the support. However try red wine, its better for your heart and waistline. Ha Ha.
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#169 - I think you are entirely wrong!
"You are exactly right. At some point within the next six months, the ones at the helm of the Good Ship UK will finally realise that no matter how much money they throw about they cannot do anything to boost an economy devoid of confidence and therefore demand. Demand will return but only when the necessary contraction is complete.
The Govt. should be saving its resources (if it actually has any left) to fulfill its primary purpose, which is to look after its people, because no one can deny there are going to be a lot of needy and vulnerable people very soon. The welfare state is likely to be the only growth industry for the next few years."
Whatever Government we have as the year develops (and I've already said in an earlier post that I believe Brown will be out and a coalition fromed by end Feb) it MUST make a fundamental decision:
1. Reconstitute the country as a trading entity to restore the trade deficit and bring non-internal money into the country. Fast. This will require the most sophisticated measures and is well beyond most contemporary politicians I know of to mastermind.
or
2. Take us all back to a kind of subsistence Victorian Farm economy with enforced equality for all. Great for environment but frankly, compared with what we're used to, the Stone Age really. No worse than how many, many people live in the 3rd World, that said.
There IS no in between. Although we are in a state of leaderless flux right now with no-one having the faintest idea what's going on.
If the country develops into an even bigger welfare state economy the 1st result will be an increase in crime (because of envy, jealousy, desparation) the like of which hasn't been seen since the Middle Ages, with the well-off and comfortably retired living in terror behind locked doors guarded by Rottweilers. And meanwhile, as the internal money supply dries up the services will rapidly degenerate into chaos themselves.
I'm British. I'm for option 1. I believe you have to stand up and fight for things. Why should a bunch of economic appeasers in Westminster be allowed to get away with running this country into the Stone Age? You really believe they are doing everything they can? It just shows how little they know about what 'everything' is, ie: no grasp of what is really possible, none at all. I wonder if, behind the suave arrogance and jargon they're actually a bit 'dense'. They could certainly do with a bit of 'no limits; Airborne philosophy those guys. And you don't need Mensa IQ to be a paratrooper. They need what might be laughingly called a bit more iron in the glove.
So could you, #169, along with everyone else who thinks that way.
GC
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152
A corral of moderators
As in OK corral
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Speaking of Schadenfreude, a real ride -Wheeeee!
;-)
ed
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A lot of people say we should be exporting our expertise blah blah - I say this unenthusiastically but this is what my company does!
The problem is that the expertise is getting older because the manufacturers aren't there to support the expertise.
We do train our own expertise but if that moves on and you try and recruit the skills basis is in shorter and shorter supply and is getting closer and closer to retirement age.
At the same time please remember that Chinese etc are not really any less clever than us - they import our skills but they don't want to do that forever - they watch and learn and ask questions and obtain information and slowly they are able to do things themselves - then they set up companies to sell to the world what we have sold to them.
Do not believe that in the new world order we have anything better than anyone else - we probs have for the next ten years but its dwindling - fast!!
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GrimupNorth
Apologies, re-read your post 108 re JCB
I think drastic pay-cuts keeping more ppl in work for longer are fairer than letting 20 of 50 employees go...have just experienced drastic pay cuts myself, and I am grateful to be getting on..... zero income is a frightening prospect
On a more general note, the UK should not despair.... i grew up ni a rabidly corrupt 3rd world country, and believe me, it is impossible to value what appear to be achievements like clean air and clean drinking water on tap
What we should however acknowledge is that we are a lot poorer than we thought we were, and or entire way of thinkng and our educational system should gear up to focus on sectors that can make us sustainably wealthy again, i.e. renewable energy, etc. and forget our obsession with construction, proeprty peddling, banking, retail and government.
I see a lot of complients for Vince Cable, and he is by far the most decent of the lot, but he is also agreeing with almost every step taken by Flash.
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Has Standered Chartered shares dropped 11% today because there was a rumour that their name had been mentioned on one of Rob Peston's blogs?? ;-)>
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"The banks will have to pay a premium to BERR for these guarantees, and pricing will be agreed when a portfolio of loans is submitted. The more risk involved in the portfolio, the higher the fee.....
....This premium will almost certainly then be passed on to the company borrowing the money"
Geddit? 'The more risk in the portfolio, passed on to the company blah blah..'
Haha. Plus ca change.
GC
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Why does everyone assume that we will be able to call in the IMF?
With the entire western world in trouble where is the IMF going to get the cash? It used to come from the US but they have their own problems these days.
What can UK industry do successfully these days?
1. Can't compete where low cost labour is required because people will not work for internationally competitive wages and govt impose too many overheads.
2. Can't compete where large capital investment is required becauseUK banks/govt are not interested in funding expensive facilities (e.g. semiconductor or LCD screen fab).
3. Can't compete where low cost energy is required because green lobby want high cost energy to reduce CO2
4. Increasingly, can't compete where skilled engineering labour is required because UK students can see that banking/medicine/law/civil service are better paid than science and engineering.
Concluding that we can't compete at anything and we should just keep borrowing money from other countries to keep the false economy going is no longer an option. If we actually want to pay back debt to other countries then we need to make a profit not a loss on our international trade.
Like it or not we have no choice but to get competitive and that means reassigning capital into industry and cutting industry's costs. Devaluing the pound was a good starting point but its not enough.
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Flash Gordon?
Flush Gordon more like, judging by what he's done to the country.
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#162:
Up to a point, but it's not necessarily true that small businesses are hurt if big businesses fail.
If the big businesses are your customers, then you are indeed in trouble.
But if the big businesses are your competitors, then that's a great opportunity.
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'Since when has the Peter Ridsdale / Leeds United financial management strategy become valid financial policy for an entire nation?'
Spot on-that is THE paradigm.
I still think Gov. backed loans are a fraudster's charter. No one has yet disabused me of that belief in any blog I have read. The last thing we need is more irresponsible lending, but this will encourage that to happen for sure.
It's a real pity Mrs Thatcher is unwell. At least she had some experience of this particularly arrogant folly.
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#177 ProfJamesMoriaty
"In software there is of course competition, particularly with the likes of India.
I dont begrudge them the Cobol legacy grunt stuff, but I would be concerned if they were competing for anything involving original thought.
Regarding Pharm see my point above.
I'm not sure what you mean about moving from a historic home to Ireland.
These are multinationals.
The stats speak for themselves:"
Well now there's a classic attitude problem! The same was said about engineering and manufacturing in Japan. I feel sure that their ability for 'original' thought will jump up and slap you in the face in a very short time.
Pharmaceutical production is no different to any other and will follow the cost trail. As for the FDA that is a total red-herring. Pharmaceuticals are generally batch production which is overseen by pharmacists.
Sorry mate but you are in exactly the same slump situation as the rest of Europe. However, you do have a serious 'real' inflation problem and are tied into a monetary system that will continue to exacerbate it.
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#164:
I agree with you 100% on that one. As far as I can tell, one thing that's badly wrong with the British economy is that very few companies are willing to employ fresh graduates as they are not prepared to put the effort in to train them (and yes, it is a lot of effort).
Personally, I think that's short sighted, both from the point of view of the individual companies who are missing out on inexperienced but nonetheless talented workers, and more importantly for the whole economy, which suffers from a shortage of properly trained workers. I frequently employ people with very little experience, and it may take a few months before I'm getting the best out of them, but it's well worth it in the long run.
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185. At 4:24pm on 14 Jan 2009, Ed Iglehart wrote:
Speaking of Schadenfreude, a real ride -Wheeeee!
+
SELL! LEGGIT! TOP YOURSELF! GET DRUNK! GET DIVORCED! It's probably the best thing that ever happened to you, I still feel the chains around my feet but I am free
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re 188
Thanks for ending my day with a chuckle!
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Without ensuring, through legislation, that mortgages are on low enough income multiples to make them a sure thing, the international flows of credit lack underpinning. This government has to bite the bullet and accept that house prices are going to lose 40-50% from august 07 highs. Yes it's electoral suicide, but it's the right thing to do for our economy and the world's.
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#69 SashaClarkson
A very important point. I totally agree with the RSC that the products of the UK education system are emerging with minimal analytical ability or critical faculties (let alone the skills to write an unambiguous report!).
Graduate recruitment is painful and embarrassing. There are some gems, but you have to look hard!
Unfortunately the rot set in a long time ago - so many of the key decision makers in business also lack these key skills!
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Robert, just listened to you talking to Huw Edwards on the 5 0'Clock News about Baroness Vadera's silly comments and you sounded like an apologist for her?
Since when have the licence fee payers paid BBC journalists to stand up and defend Government Ministers when they have said the most arrogant and stupid things about the economy on a day when thousands of people have lost their jobs?
Green shoots my Aunt Fanny! The economy is in meltdown and is getting worse by the hour!
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SO WHY ARE THE BBC...........
TRYING INSITE RACIAL HATERD,? WHY ARE THE BBC TRYING TO PUT RACE AGAINIST RACE . BECAUSE THERE LOSING POWER. BUT SO ARE THE CONS. A NEW DAYS DAWNS.
Robert preston sir you are a good man,
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Much has been said that manufacturing is the answer to our woes. It is not - suppose we were manufacturing, who in the current global recession would be buying? Manufacturing countries like China/ Germany are sufferring just as we are.
What needs to happen is our beloved government needs to keep their powder dry and PICK UP THE PIECES not try and avoid the inevitable asset price correction.
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Given that the profits are no longer there in the financial markets, just how is UK plc going to make a living?
It was Thatcher who started the systematic destruction of our manufacturing industry but Blair and Brown have followed her lead with enthusiasm.
So, what are we going to live on? Hourly performances of the Trooping of the Colour for US citizens who are afraid to leave their own state, let alone cross the Atlantic?
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Alternatively face a real run on US and UK bonds and a government default.
Labour need to get with it. They lost the next election a long time ago. They ahven't the honour to resign after the mess they created. Now do what will work instead of the current ideological claptrap and political posturing. 12 billion on 2.5% off VAT. It's just an unbelievable waste. Stop it now.
Davies is a good choice. But any team is only as good as the leader. And ours isn't up to it.
Never forget, 10 years of house prices rising at 15-25%pa while wages rose at 2-4% pa. Thats a governement whose policy was to price 100,000s of young working people out of buying to create a feel good factor amongst their target voters. Not just incompetent, but cruel.
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sizzler994 you are right the housing market has to be left to find its bottom. this could be in excess of 50%. the system we have known is finished i am hoping i can avoid bankruptcy but it is certainly going to be a challenge and i have no intention of taking on any more debt no matter how low the interest rate.
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Minister: " Green Shoots "
Hmmm.
What colour is Gangrene?
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We had a fantastic IT industry from the mid 1990s onwards till about 2001. Our IT workers were in demand the World over, many of them pulling in 6 figure salaries and actually generating real income for UK plc by bringing in Dollars, Euros and other hard currencies.
Alas, the green eye of Brown looked down upon these entrepeneurs and he decided to penalise them heavily with a new tax targeting them specifically - IR35 - which effectively destroyed the IT sector overnight driving many highly skilled people out of the industry or out of the UK altogether.
To this day there are many in the IT industry who are convinced that Brown got his laptop fixed by an IT worker who let slip that he was earning more money than Brown and that just rankled him until he sought revenge.
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#207 - re IR35 - only if being taxed the same way as all other employees in this country is a bad idea - see my post #143.
IR35 only targetted one man limited companies set up with the sole purpose of minimising tax - otherwise they would have been trading as non incorporated businesses and paying more tax - they were happy to pay their accountants £1500/year to pay the government £10k less tax (guesstimate).
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#202 dknotty
Of course there is also our own UK market, but I agree this would suffer in the present downturn too. However, we would have helped with the Balance of Payments/Trade deficit problem.
I agree the correction of asset prices to their long-term trend levels is necessary/inevitable. The Govt is trying to soften the blow. Whether the Govt (us) or the financiers/banks will make losses as a result of this support is unclear.
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When this lady talks about green shoots could it be she is really seeing all that printed money liberally spread throughout the system.
Saving the day and making everthing in the garden look luverly.
Lots of money to borrow and lots of money to spend.
A proper utopia.
Until ???????
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#204 sizzler944
Reverse the vat reduction.
There is a petition on the no 10 petitions website. Search for
restoreVATrate
to get to the page.
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# 207
Point well made - IR35 was one of his many failings / stealth machinations and we are now reaping the results. If he was so envious of individuals making more money than him, perhaps he should have looked more closely at what was going on in the City at around the same time!!
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Explorer 63 post 174
Re JOBS??
In my organisation weve managed to get to well over 5500 in three overseas countries with NO problems whatsoever.
My experience in the UK has always been disappointing ive employed people
from the age of 23/24.
Despite my rants on here i am a long term strategist not a ranter.I ve always
been a fair and generous employer
paid over the going rate made training
available,employed all races and people
with criminal records people with literacy
& numeracy difficulties. I ve always
gone the extra mile to make life better.
Obviously to make money.
BUT MAKING MONEY IN THE UK??
THATS THE BIG BIG PROBLEM!!
SO MANY PEOPLE ARE HAPPY TO SEE
FAILURE.
THIS PROBLEM (ATTITUDE) IS UNIQUE
TO THE UK.
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206) Toldyouitwould
Minister: " Green Shoots "
Hmmm.
What colour is Gangrene? labour red with a hint of G brown.
Almost as bad as the uk is the best placed to deal with the downturn which is clearly not the case.
or recovery by mid 2009.
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Shriti the shreik comments on Green Shoots.
Government reaction?
Bad sound bite, unspin, unspin, unspin.
Their concerns are underlined yet again, image not substance.
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# 210 virtualsilverlady:
"When this lady talks about green shoots could it be she is really seeing all that printed money liberally spread throughout the system."
+
These would be greenbacks?
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Re: 190 Tom_Edinburgh
'Can't compete where low cost energy is required because green lobby want high cost energy to reduce CO2'
That is a breathtaking simplification of the energy crisis facing this country. Actually a very short-sighted and cynical woman decided that there would be no cheap energy in this country by closing down the pits.
That particular episode is history now, so there's no point in flogging a dead horse, however..
Once upon a time Scotland had dirt cheap (almost free if you believe the stories) electricity generated through hydro-electric stations on many Lochs. My father was a lorry driver in the fifties and sixties and often passed the pumping stations on his travels. In about 1969 these hydro -electric stations started to dissappear until by the mid seventies there were none left. My Father asked the locals what had happened and was told that the miners union had put pressure on the govt to close the hydro electric stations down because they would then be replaced by coal fed generators, thus ensuring the long term viability of the pits...
Leaving aside the veracity of that explanation, why is it that an island surrounded by water and full of lakes and reservoirs cannot generate a useful amount of energy via hydro-electric power? Most if not all of Norway's electricity is generated in this way for example. anything that reduces our dependency on oil and gas must surely be a good thing or am I missing something blindingly obvious.
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FTSE closed down 5%, Banking shares hit hard today, Not many signs of green shoots, i think the frost caught them!!!
Go Gordy before you completely Ruin the World.
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It is said that we the tax payers have bailed out the banks. Will we ever see a return for all this money, I doubt it. We are told there is not enough to pay decent pensions and yet we've come up with billions to save the banks. what have they done with it all?. To put money back into the economy I feel it would have been better to refund low income earners with a sizeable tax refund to help them pay of debt and spend anythig left, thus putting money into the economy.
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Robert, can we just calm down here a bit? Everything in your reporting - on this and everything else connected with this recession - suggests a unique crisis beyond our experience, wit and wisdom to address.
In fact 'the repatriation of lending' as you call it is a return to a more sane, less risky, financial environment of the kind that will allow the price of borrowing to find its equilibrium level more effectively. It is a rational response, and we should work with the grain of it.
Please, please try to report what is happening, and don't invent dramas where they don't exist. Having lived through the restructuring of economies in far, far worse shape than this (remember the seemingly limitless inflation and unemployment in Ukraine in the early 1990s, for example?), I am sure the dynamics of the system will work - the path of policy is to ease them, not wave a magic wand to make everything right again.
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Look guys -
A little while ago Numpty Bank went to Numptyville and said to Mr Numpty here you go - have some money.
Mr Numpty goes around throwing the money around as though it is confetti - seen it. Barking mad.
One simply must have a 20 or 30k 4x4 flashwagon to drive around the 'hood etc, just like telly. You have to eat funny shaped bread, a loaf is not good enough. In fact you must have at least 20 or so funny shaped breads to pick from. Breads from all over the world. Cost more because they are special, more sprinkly stuff on top. Can't drink coffee anymore like for centuries before, must have marshmallows and special cream and dust and sprinkles on top. No wonder Mr Numpty is overweight. Another growth industry. Give me strength.
Mr Numpty now has the 20 or 30k 4x4. But also unbelieveably now has another cheaper, old vehicle that he runs alongside the flashwagon because Mr Numpty cannot justify the fuel for the flash wagon, and cannot justify selling the flashwagon and take the hit which is what the books say he should do. But Mr Numptys not about to do that when the flashwagon was bought with equity withdrawal still with 20+ years to repay. And this stunningly depreciating 'asset' is all Mr Numpty has to show. Drives the cheap vehicle in the week and the other one occassionaly. Same with a whole load of other stuff.
Meanwhile Numpty Industries and Numpty Retail were aglow with money, raking it in. Numpty business CEO says jolly good, pull out the cash in the business must buy more shares in Numpty Co, and a boat. Oh dear credit gone sorry Mr Numpty. Mr Numpty and his tribe broke, bit like before. Oh dear oh dear. The whole lot is falling like a pack of cards.
The wheels have come off Mr Numptys flashwagon and Numpty Industries and Numpty Retail have no money, are what used to be called a shell or holding company. Lean on supplier chain and disembowel them. No problem with blood as long as it is not Numpty blood.
I mean is this really any surprise. How on earth can you backtrack decades of stealth asset and capital filtching which came to a head of froth in the last 5 years or so.
El Gordo and Comical Ali - We must put support in place but have no risk to taxpayers money. Repackage something already in place and pretend it is new. The whole thing is a publicity stunt. Lend money to banks at 12 percent that will solve it, they will lend it at 3 or 4 percent I'm sure, its their fault if they dont. You couldnt make it up. I must be living on Planet Wackybaccy. Make sure that funds are available to those who dont want them. Less use than an empty box.
The politicans all have the same policies because they are driven by the same criteria. Add very little to the pot and repackage, in a way that does as little as possible, ie take no risk. But shout all the time you are doing something. Lots of hologram economic plans needed - no problem we have buildings full of people working flat out on that.
Anything associated with Numpty is blown, gone. Take the virtual Numpty Froth Economy away and the UK was in decline, almost certainly. What were you ever expecting. Let this lot fall down and get on with the real thing. Mr and Mrs Old School still have money but are not going to rush to buy any big ticket items from a falling Numpty Retail and Numpty Industries. They want to be sure they are going to get something for the money not a row with an administrator, not their style.
So they walk on by. Buy later when things calm down. Buy the odd treat for themselves, postpone anything big.
So you have a double hit. No more Mr Numpty and friends and at present Mr and Mrs Old School are quieter, not everywhere - but in Numptyville they are.
Meanwhile Mr Numpty, Numpty Industries and Numpty Retail are running around and saying its not my fault. Make it as it was. Prop it up, pump up the volume. Send a few more workers off, all very Roman, decimation. Still the Numpties all wanted to be Roman.
The problem is they are damaging others providing a genuine service or products - often old school types themselves but not always - in this process, because the Numpties dont care how much damage they do, they never did. The sooner they are gone the better.
It is a waste of time trying to rationalise anything to do with Mr Numpty. If you are then you are assuming they are rational and that the survival instinct kicks in. It doesnt, not from what I have seen. they think if they wait long enough or bodge something here or bully something there it will come thru. Oh that sounds like the dynamic duo in charge. Could they be Numptys. Hmm. I see some Business Minister, who appears to specialises in Investment Bonds is commenting there is growth. Bonds have gone up. Are they NeuNumpty Bonds I wonder. There is stuff that is okay but I dont measure success in bond movements.
And before you ask, no at present we here appear to be unaffected by the madness. But we never dealt with the Numpty lot. Good news, but I do not take any pleasure in troubles elsewhere.
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Listening to the interview and knowing about the Norman Lamont green shoots comments this was clearly media entrapment.
This is why we never get anything but spin from all public figures whether politicians, sportsmen whatever.
If the media were not after their stories and sackings then we probably could have an open honest debate about whats going on.
Note this DOES NOT mean that I think RP or the media is responsible for the recession - just all the spin that goes on.
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Sometimes the things and people you work the hardest to protect in your life will end up the things/ones that completely destroy you. funny that .
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SO WHY AM i so tranish?
Maybe because i cared to much, i know im just a down to earth man, but i have traveled the country. and met many people. I have work for jenny pitman the trainer in lambourn, and sir Andrew lord webber on the north hamphires downs. Also ALan pardew ex manger of west ham and chralton fc. Who started at reading fc came upto me oneday and said could i give a team talk. it was a team talk of a lifetime, they went from 16th to 1st in just 7 games, seven straight wins that was without letting in a goal.In the team talk was john salacko, and tony rougier, to very good players, I shared a house with a man from kenya for nearly three years and yet today im still called a racist. why because i support the BNP
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COR
Da daa daaa da dad da da
News alert now this is serious news
TV journalist trips up inexperienced minister.
She says she sees the green shoots ah NO oo ooooooo
I cannot believe the pathetic nature of schoolboy journalism, which seems to pervade the BBC.
PATHETIC
MIND YOU
She’s got a load more publicity that she otherwise would have.
I also don’t see all this lack of lending that is constantly reported here on the BBC ever 10 seconds of the day!
There IS money being lent just as Baroness Vadera said!
The Economy is not DEAD well not yet.
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224 lionsomebody
Now your talkin. I thought Jenny was brill. Now that is a work ethic with any in that field. No wonder you feel disorientated.
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Glanafon 100%
Excellent post.
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@217
A new hydro scheme opened last month with the
Glendoe Hydro
there is another hydro scheme just up the road from it as well
I drive past many hydro schemes up here, there are plenty, they are building large pylons getting ready to ship the stuff down south, of course we dont want massive pylons , but its too dear to put below ground where there is no wind :)
I'm not sure where you got your info from there are plenty of hydro schemes in the highlands, there are trials of tidal energy generation happening now in the Pentland Firth.
There are oodles of wind generators up here too, they use to make them near Campbeltown, before the foreign company making them decided to take their manufacturing back home.
We are energy rich up here but like the oil we will be raped of it to take down south, and be patted on the head and told there there you part of the union, here is your pocket money for the year
dont complain too much because we will spin that the Barnett formula means they get more money than everyone else but we will say that we are keeping you , and the bigger boys down south will say oooh those sweaty jocks we are keeping them and look they get free parking in hospitals, they get free school meals, and for god sake dont let them read the Mccrone report
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my money is still on Iran, what's barrack saying ;)
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I was just WONDERING AS ONE DOES
IF I JOINED THE LABOUR PARTY IF
GORDY WOULD GIVE ME THE
TWENTY MILLION IVE LOST AS A
RESULT OF HIS ECONOMIC POLICIES.
WHAT PRICE VOTES GORDY??????
IS IT HONOURS IN REVERSE??
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I am sick to death of reading and hearing what a waste of money the reduction in VAT is,what utter nonsense.
If that is the case why not raise it to 25% or even 30% I can remember the outrage when VAT was raised from 8% to 12% Any reduction in tax is to be welcomed in times of recession.
The present Tory leadership have shown themselves to be complete economic illiterates.
It is amazing that even the BBC now seem to follow this ridiculous assumption that tax cuts and interest rate cuts are counter productive in a recession.
As for government borrowing when the private sector is either unable to borrow or unwilling to borrow then the potential for government borrowing is almost unlimited the overall borrowing in the country is very likely to be less due to the drastic reduction in private sector borrowing.
There is a widespread misconception that banks are borrowing money from the government at 12% and then being forced to lend this same money at a much lower figure say 3%
The money at 12% was to re capitalise the banks this capital can then be used to maintain the banks capital reserves,due to fractional reserve banking the bank can then in fact lend for every £1111.12 raised in this way up £100,000 thereby only increasing the % rate on the whole by a tiny fraction.
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Going back to Mervyn Davies.
Call me an old cynic, but I suspect SCB will have wanted to play but were not large enough to join in with the big boys.
Luck, nothing more, nothing less.
He arrived at a bank that was acting like a headless chicken and gave it a head. Watched carefully, did not do much. Right decision but almost certainly good fortune not good management.
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213 AC
It seems to be something to do with too many passengers, too much dislocation from recognisable work being the source of income. If the government applaudes financial manipulation and working the contract to its small print limits as a means of short changing, even if by just sitting by and watching it happen, it destroys motivation. If house values are manipulated to provide easy pickings why work. If you are in a position where you work but cannot share in the wealth generated why work. Funny I cant remember the characteristics you are describing in UK factories in the 70s and 80s. People worked overtime, sometimes routinely, so they worked. No it is all tied to housing money being easy money. Benefits have actually reduced over the years according to the stats so its not about benefits. There are sterotypical unemployed, but most are not like that. Government expenditure seems to be part of the mix, there seems to be a rather strange belief that somewhere there is a professional to sort any problem, no personal responsibility required. That is particularly evident in the health field. The continual disappearance of jobs overseas and the subsequent import of very cheap goods giving an artifical sense of wealth also seems to be a problem. That is not a personal criticism by the way, but even the minimum wage has allowed the purchase of considerable imported goods which perviously would have been out of reach for some.
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YAWN MORE CRASSITUDE FROM
GORDY JUST TO PUSH THE WHOLE
LOT OFF THE PRECIPICE.....
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#213 alexandercurzon
I sympathise with your case.
We're a 1st world country (pro tem!) and maybe workers at the lesser/skills/technology levels don't really value their jobs or themselves that much. The images of others enjoying the "good life" in ads and programmes on TV and other media make the differences in their own lives all too clear to them. Earnings levels at or just below median levels are not really good enough. They want it all now but realise that they are not up to the high life except by "astonishing good luck" or some scheme or other. So we have a certain morose attitude.
In days gone by, these workers were upwardly mobile and only had to apply themselves to progress amongst their peers. Our workforce in general has reached a ceiling that they are unhappy with. Good work now no longer gets rewarded by a visibly enhanced status in society? Is this what has happened to us?
On the other hand, when you look at a developing country, the workers there are only too happy to be offered plenty of medium level skilled work and find the remuneration lifts them rapidly out of povery. They are a very happy bunch! It is much easier to manage a business with these people.
What this is all saying is that somehow we need to develop skills with products in higher technologies that we can export, and skills in higher technologies that we can offer here. Really, our workforce needs to be trained in a mix of skills that will rebalance our trade deficit and balance of payments deficit. These need to be in categories that contribute a higher value added per employee.
This will permit higher earnings per employee.
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... problems posting...
data at root level invalid again....
testing, testing
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Part 1
Coom.t revolution, if we are looking to the future can we start to devolve power and decision-making please.
Thatcher started it and Blair went gung-ho. Centralising power in Westminster & the City of London has helped to bug*er this country. It created a whole generation of poncy prima-donnas who flock about in herds making the same stupid decisions in unison.
continues
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continues 3 ...
Gordo is the problem, because he is an uninspired centraliser of power and a one-man wrecking ball -doubly so because Mandy can maybe make him look like a statesman....
But the City of London is as big a problem, because they are all going to continue to play copy-cat with the latest new-fangled dumb financial instrument. Why shouldn?t they, who?s gonna stop them? Break em up into safe little pieces please, and soon.
(You would then hopefully make it easier to pick up the guilty for some court action during the re-shuffles.)
Apologies, takes so long to reach posting you can't tell what works and when html error has been rectified.
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Bloggers!
We are looking at this at 20:47.
I know things are bad/terrible/catastophic but we ought to get a life. I know I am on here with you too.
It is addictive. There will be a medical term shortly, Blogeritis possibly and therefore Chronic, Hypo, Hyper and possibly Terminal Blogging.
At least we can say in our defence we are not watching Monarch of the Glen again.
There have been some incredible eyeopening expanations on here. I do not agree with everyone but it is good to hear the other side.
I interpret the situation from the posts I have read as: We have not gone over the waterfall yet but we can hear the thunder of it.
I do not want to go in the barrel again.
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Re Mervyn Davies
Sorry to post something on the actual subject ( I am one of the worst offenders of off subject submissions I might add)
I dont mind that the government brings on board experienced people with real experience in the real world to assist with the mess they have created.
I dont understand why they have to be made a member of the house of lords to do it however.
There should be a law passed banning career politicians from running the country.
Only people who have proven themselves in the real world in some way and are above the age of 40 should be considered as eligible for running the country.
That way we would get a bunch of grounded, pragmatic yet inovative people running the country (visualise that for a moment...nice isnt it!) instead of this bunch of career rhetoriticians.
No doubt there would be some EU legislation banning the above idea as being against the under 40s and vocal underachievers human rights.
So what say I, this is not a test, this is running the country for real...
Jericoa
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#192 "if the big businesses are your competitors"
Off-topic, but I just remembered being told about a one-man-and-a-dog paintmaking operation.
The new secretary needed to write to ICI and couldnt find the correspondence. The boss had filed it under 'Competitors'!
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#217 - Not quite right I´m afraid. Scottish and Southern (formerly NOSHEB and SHE) own and operate about 1.4GW of hydro generating capacity. Some of this dates back to the 1930´s.
This is the vast bulk of UK run of the river hydro capacity although there are a few other bits and pieces mainly in Cumbria.
There is a 2GW pumped storage facility in Dinorwig - never get built today, too expensive, but that´s progress for you.
No hydro generation has ever been closed down due to pressure from the miners or anyone else. (Although some tiny proposed schemes have been turned down on the basis that it interferes with a rich mans enjoyment of his river bank). It´s all too small to matter in the big scheme of things.
Norway has a lot of hydro because it has a lot of water and a lot of mountains. The UK has a lot of water but lacks mountains and this limits the potential for hydro - probably to more or less what is currently is.
The UK will experience material power shortages by around 2017 - and there is now very little chance that that can be avoided.
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FO RP, RIP.......
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#228 - Yeah right. Maybe it escaped your attention that Scottish Hydro Electric bought Southern Electric (which is down south) renamed themselves Scottish and Southern and exported shed loads of money from Maidenhead to Perth.
Not many southerners (say zero for the sake of accuracy) benefit from the pitifully small amount of hydro that exists in your part of the world.
As for wind - no-one would touch it if it weren´t for the subsidies. There is a disproprtionately large amount of wind in Scotland - now I wonder where the subsidy emanates from?
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The "financial globalisation" that you talk about basically consists of the Chinese financing US government borrowing by buying US government bonds. Thus of course artificially holding up the US dollar and causing Chinese goods to be artificially cheap in the shops. The trade deficit and the government deficit go hand in hand.
And in the UK, Brown has been doing the same for years.
This whole crisis has basically been caused by massive tidal waves of government borrowing in the UK and in the US. And Brown's solution is to guarantee loans to the private sector. Better solution: change government policy and CHANGE THE GOVERNMENT!!!
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Is it time to say goodbye to the high street banks, have they passed their sell by date.
Are the banks in their present form a relics of a now redundant and bygone age?
Can their place be taken by other more appropriate domestic institutions and companies?
Such as credit unions, mutual societies and co-operatives – and even high street stores like Tescos, Marks & Sparks, Sainsbury and ASDA etc.
Back to plain vanilla.
Do we need a fire wall between the domestic banking sector and the international banking sector with closely controlled and monitored crossing points.
This may be the only way to prevent the banks in their international role from continuing to milk taxpayer, customers and their shareholders.
International finance with still be important, but the effect on national economies by the international arms of these banks will be limited.
It time to remember high gain can lead to high pain – avarice is never good for a stable economic system.
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Re 'Green Shoots' comment.
This remark shows shows the contempt the Labour government has for the UK population. It says a lot that the minister is a former investment banker!
What is the multi-million pound credit deal that gave the minister this false laid hope anyway. The credit markets are dead and will probably never recover.
As Billy Bragg said in the mid 80's 'our politicians have become careerists'.
The political system needs the same overhaul that is rapidly speeding its way to the financial system.
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Peston - are you watching Evan Davis on BBC2? Aren't you a bit embarrassed that with all your celebrity doom-mongering you've not come close to explaining the reality of the financial situation as succinctly as Davis?
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242 armagediontimes
There have I understand been repeated investigations into the use of existing water reservoirs for hydro, but historically the figures have not worked. The balance point may have changed. I did hear that at least one study into the Severn Barrage expressed concern about the silting problem causing major operational problems. As usual there are many obvious solutions which are less easy to implement than identify. The prospect of new major hydro plants would be fought tooth and nail in many locations. There is a latent local objection to any development which is put in place to benefit those many miles away and which causes the destruction of a locality. Additional as some windfarm proposers are finding there is just not the infrastructure to enable access to many remote locations. It is not just a problem of doing something , it is getting there to do it. As France has come to the conclusion, No Oil, No Gas, No choice and gone to Nuclear it is likely we progressively follow. I cannot understand why steps are not taken to implement energy saving technology, much more is available than used, all it needs is mandate, not marketplace motivation. The problem has to be squeezed from both ends. Energy has to be expensive in the future. Windfarms are considerably less cost effective than gas etc which is why they have to be subsidised. The cheapest options have already been put in place and are in decline. The whole mentality of relentless exploitation of resource is due to flounder. Good thing too.
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"The money at 12% was to re capitalise the banks this capital can then be used to maintain the banks capital reserves,due to fractional reserve banking the bank can then in fact lend for every ?1111.12 raised in this way up ?100,000 thereby only increasing the % rate on the whole by a tiny fraction."
Right - and now suppose that 20% of your loans go bad . . . sub prime mortgages, businesses folding, that sort of thing (CDOs. CDS of course transferred these losses from the banks who originally incurred these losses elsewhere - who knows? who's telling?)
You had £1111.12 from the Government - you loaned £100,000 and you suddenly lose £20,000. Doesn't that make you sort of £18888.88 in debt?
It is the leverage in banking that was the source of their great profits - it is also the source of their great demise.
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230 ac
What about the sum in excess of that which accrued your way due to an overvalued GBP. Doesnt that balance this out somewhat. Euro 1.6 at one point last summer I believe, USD 2.0. Didnt that help your cause?
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Dear Robert,
What worries me is the size of this thing. If it gets any larger, the mess it leaves behind will surely be unthinkable.
Then again they do say some things are too big to fail. Let's hope that applies in this case.
All the best to you and the Team,
Michael.
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#213 and #233. I am British, but have only ever spent 5 years of my life working for a British company - dispiriting and depressing I only stayed because I had small children and didn´t fancy moving.
It seemed to me that the management were actively seeking failure with only slightly less vigor than they were seeking to avoid being held responsible for failure.
Despite being a company with a legally mandated monopoly for a product used by all they did fail. No small achievement, but hey we all make mistakes, let´s move on. I note that in large part the management of this enterprise have moved on; onto various gravy trains associated with NHS Health Trusts.
I guess it cuts both ways.
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Yes Amused to Death totally true...fringe benefits are massive....I am so surprised the British media have not delved further into the extent of overseas banking ops that our crippled banks are still running. It doesn't stop with the Brit banks but also also Euro banks like UBS (EUR 49Bn from Swiss govt), Citigroup ($89Bn to date), Morgan Stanley, Goldman Sachs to boot.
Although some costcutting has been brought to bear (Citi has been most aggressive) most are alive and kicking and happily paying out large expat packages.
Children are educated at company expense at around GBP 14,000 per child per yr at international schools, free business flights (GBP 5,000 return to UK) back home for you and your entire family, not to mention the bonuses where many can deploy tax avoidance schemes ( I myself do not ).
I realise I am in a lucky situation but would happily have died on my sword if the company had become distressed. I realise I am talking from a point of self interest in that my rivals demise would mean a better business for myself, but our company has been very prudent throughout the cycle and did not expand aggressively into credit derivs and mortgage backed securities. This should be our moment of crowning glory here but instead we find out competition happily in place and still earning much larger packages than we ourselves do. This is the Central Bankers moral hazard argument writ large.
As I said before UK taxpayers should know where there money is going. I am sure if they did there would be outrage across the country as innocent hardworking people not only get their jobs and investments plundered but also their taxes.
I'd also like to add here that the media should be roasting Brown and Labour at this point. I can't believe his renaissance as the lame reporting applauds him for his bailout scheme - this was almost directly copied from Japan's model 5 years ago and is not in any way original - except to doughnuts in the British financial media who have lived in their own bubble for 20 years.
The people of Britain deserve better. For the second time in 30 years Labour has bankrupted the country. More importantly than this point is the fact that IF the origins for the crisis are not correctly identified - and the government's part in all this is deflected solely onto the banks - then this crisis will be repeated all over again. Make no mistake, regardless of loose money in the US, Brown's government should have reigned in consumer credit (and mortgages) from 2003 onwards. Instead the rich got richer and the poor got poorer - how does that tango with the Labour ethos?
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#249 The Severn Barrage is tidal which is technically (although maybe not practically) different from Hydro.
This kind of thing is very expensive, may not work properly and may cause environmental harm.
Tidal power is still largely untested - maybe something for the future. Probably more sensible to spend money finding out than to spend money subsidising your "Numpty" family!!
The UK has substantially no capacity for meaningful hydro - it´s just a function of physical geography.
Nuclear is a lot more expensive than banks!! No-one can admit that and so there is a problem. As you say energy needs to become more expensive, but people will resist. How do you tell people that Nuclear is cheap but that energy prices need to rise?
Wind is purposeless. The only people that disagree are those that pocket the subsidies, and those that want to assuage their environmental consciences by chanting the mantra "wind"
No-one is interested in energy conservation. Business models only work with demand growth. NGC Transco is "vital" to the economy - do you really think anyone is going to be interested in proposals that undermine their business model?
Maybe the whole mentality of relentless exploitation will founder - but it´s a global issue and I´ve been to places where they have air conditioning units in the street.
There are things the UK could do - you could maybe connect to Norway and Iceland - but this is expensive, and you can´t lie about the costs as easily as you can with nuclear. You would probably have to spend money in Iceland developing geothermal - but as you are aware we would prefer to confiscate Icelandic assets under anti terror legislation - much more sexy. You can also develop micro CHP (efficiency over 90%), but this is conducive to the development of local democracy and is bad for NGC Transo - so that´s a non starter.
Waste to energy works, but it´s expensive and subject to vociferous planning objections, and probably bad for the development of the local rubbish bin inspectorate.
The Government is interested in "big business" and "strategic announcement" so they might say things but they won´t do anything.
You will get your wish with regard to energy saving in 6 or 7 years time. You will know when the time has arrived because you will go to switch on your lights but nothing will happen, you won´t even get to see all of the stuff in your freezer that is defrosting.
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This is a business economics stream. The Army has a motto widely adopted in industry, Prior Planning and Proper Preparation Prevent Pi$$ Poor Performance. In other words, unlike Cruella de Chancellor, we're trying to look down the track a ways and find a set of points which will save us from the pileup with the oncoming train.
Suggestions like "Nationalise the banks" are reactive - it'll take three or four months to achieve, time which we don't have now, that's why I stopped suggesting it a couple of months ago when that set of points flashed past in a haze of hail-fellow-well-met from the bankers, offered a second set of bail-out cash which they promptly used to pay off their debts, doubtless including a few which were unaccountably discovered at the last moment in Zurich, instead of bailing out industry as it was supposed to be used for. As a result, instead of 700 billion, our future will depend on the thin green line of 20 billion. Great.
Might I therefore propose that reactive comments be moderated out, however shocked we may be at HMG's latest attempt at a "with one bound, he remained lashed to the barrel"? We need lateral thinking now, or the serious discovery of a process to control either warm superconductivity or nuclear fusion.
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Re 183 GC: Your views are too extreme in my opinion. No one is suggesting going back to the stone age. Having said that I worked in Nepal for a year back in the early 80's and found the Nepalese very happy people living off the land in a sustainable way. They lacked medical support and modern technology and life expectancy was low, but are they happier now? I regret what I may have misguidedly contributed to their culture at that time. I would go for your option 2 with all the advantages of modern science, medicine and electronical technology thrown in. Maybe I am naive. Maybe I am a romantic. My ancestors lived off the land as did all our ancestors (I am talking 1000's of years here) Its in our genes. There can be no greater satisfaction in my opinion than being self sufficient; emotionally, physically and spiritually. Happiness is finding more than you expect from living. The meaning of life is avoiding dying, and as a species avoiding extinction - its as simple as that.
I know where I want to go - do you?
Kikidread: what are you on?
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This comment was removed because the moderators found it broke the House Rules.
Reviewing my 256:
The though Zurich might be playing a hidden hand comes from the frontline composition of the Business team: Mandy, Vadhera (ex-UBS) and now Merv Davies (Standard Chartered).
That being said, we now have a fine bunch of soccer fans on the loose. Perhaps that will be the salvation of us, at least AC (Fulham), Mandy (Hartlepool) and Merv (Spurs) have some common away grounds...
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This recession was not caused,by one person,its world wide,support for the prime minister would be better,as this fine man is trying his best,in the limelight of the world press,and critics from every other party, who made a mess of things, when they were in power. He needs the support of ordinary people,the very people he is trying to protect and help. YES US, mr&mrs joe blogg, the people of this great and beautiful nation, We need to rally round as one,behind the prime minister,this will give more clout,to help get GB back on the road to recovery.Please GB and the prime minister needs less snipping, but tons of vocal support
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I think one problem that will have to be addressed this year by the new US administration and ours is the severe undervaluation of the Chinese Yuan. When you consider that China has 4% of the worlds GDP yet uses between 50-60% of the worlds annual consumption of Aluminum, Coal, Concrete and Steel, just for example, it is blindingly obvious that something is seriously skewed.
The pegging of the Yuan to the Dollar is a necessity borne out of the Asian currency crisis of 1997. Yet this pegging mechanism has allowed China to become a dominant supplier of 1st world goods at 3rd world prices. This has in turn wrecked the so called 1st world's production capacity resulting in unmatched trade deficits. We're told that China has 100's of millions of poor peasants so the currency must be kept low to facilitate their transition. The problem as I see it is that China has used a Stalinist approach in that prosperity can only be achieved by an ever upward spiral of production; of course this has been the most perfect marriage of conveniance for some western business.
The Science and technology of the USA and UK was brought to fruition in its manufacturing bases and it brought with it the most dramatic changes in standards of living ever seen. Is it right that this should have all been lost for the profit of big business?
But think of the inflation of all those cheap imported goods we need to get our economy going again!
So what do WE do to fix it... carry on and do nothing!!
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I cannot believe that a daily announcement of new iniatives is going to stabalise or should i say kick start the economy.
If anything it shows panic by the goverment, randomly clutching at straws and showing no trust and belief in their own polices.
I understand that changes need to be made, however, at present it is not instilling any confidence in us the general public when the goverment is seen to be panicking.
The mess is a global one, however, the UK's is our own, organically produced by stripping us of all our assets, overspending and having little regulation within the financial services industry.
Not all countries are in the same situation as they have taken a more prudent approach ie Australia.
Lastly, where the underlying issue has been that everyone has borrowed too much, with no ability too pay back - it seems unbelievalbe that is what is being encouraged, and is why it is not working.
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Robert,"The internationalisation of banking, the growth of cross-border flows of capital, generated huge incremental increases in the wealth of most of the world."
" .... You are confusing the appearance of ponzi money[unrecoverable debt] with wealth.
What is Great Gordon up to ,that is the question now that he has returned from lilliput [no strings attatched]?after 12 years egognomic cyclotherrappy at taxipayerrs expence.He has surrounded himself with the three musqueteers ,wisemen in their own ayes with gold frankinsense and merr Alaaastair Maaandy and Evaaans,an Englishman a welshman and a Scotsman[AND THE START OF A JOKE]bypassing the commons things can only get better ,index linked mob and ready to bluff their way out of complicity in the great gravy train robbery STILL UNDERWAY by putting up the front of being an Oleg arky that can save ponzi beached on Bright Tone Rock
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The economy is going to be in freefall for the whole of 2009 if we like it or not. To date we have been concerned with our own particular economic downturn. We hear that this is a global recession but we hear very little about the situation in other countries and therefore cannot judge if we are being truly hit harder than others. Also we cannot judge if the governments initiatives are better or worse than in any other country. We truly need more comparative information.
Whilst we will continue to shed jobs by the bucketload, I believe that the next major 'shock' will come about March when the US finally realises that it no longer has the industrial or financial clout that it needs to sustain itself and goes into freefall - massive job losses and a freefall in the dollar (Bernanke's 'easing' will only exacerbate matters). China and the Arab states will then call in their loans and all hell will truly break out.
We can't stop any of this. however, as some posters have pointed out we do have a very small window in which make some major strategic decisions as to how best to protect our people and sustain some form of economic base that will be viable when the upturn finally arrives.
If the US does fail then one of the obsticles to our survival - our global indebtedness - becomes less of a problem. We can then adopt a can't pay: won't pay approach.
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RBS BORROWED money on its own account to buy stakes in Bank of China and what is now Citizens Financial Group in the USA and ABN AMBRO.
It now has to retrench because it can't finance these boorowings. How will HMG retrench when it finally comes to the conclusion that it too has borrowed too much? What will it have to sell?
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A different view of the world.....
Local John Lewis so busy we gave up the quest for a boring ordinary purchase
Local london plumber as busy as ever - people choosing to replace boilers and bathrooms rather than move
Window replacement company signing many orders
Local london carpet supplier saying no problem, busy
Local posh london furniture shop saying busy as ever, world wide trade
Philly based blind supplier, extremely busy
Philly based contractor, busy as ever
Philly restaurants busy
Christmas shows sold out
Selfridges with best results ever
Philly based kitchen supplier, busy as ever
With the exception of JLP these are smallish businesses. They all have stayed close to their customers. They all provide good service. They get it right, first time. They are responsive. They haven't borrowed ludicrous sums of money. They aren't listed on stock exchanges
I have family and friends on two sides of the Atlantic. Those with mortgages have seen their costs fall. Those with jobs, still have jobs, those with pensions, still have pensions
So there seem to be two worlds. Those whose lives just carry on and those who didn't say 'what if' and these can be individuals, corporations and governments
Perhaps they didn't understand variable rate mortgages (many americans don't). Perhaps they didn't understand that notional value can go down as well as up. Perhaps they didn't understand that eventually debt has to be repaid. Perhaps they didn't understand that revenue can't be guaranteed or that consumer preferences change. Perhaps they didn't get that the world isn't completely flat. Perhaps they couldn't work out the implications of policy changes.
Perhaps they didn't understand that over time multiple throws of a fair coin just equal out.
Its utter nonsense for those that didn't bet.
It seems to me that in the future, there will be more people that question more, that don't just believe the spin, that ask how can they offer these rates of return, that rely on their own judgement not that of advisors or agencies.
I really hope this is the case. What appears to be cynicism in these blogs perhaps are the real green shoots.
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What if we just let those bad banks to burst, safe our tax payers valuable credit, which is a scarce resource nowaday, to those on the main street, doing honest business responsibly, who need these credit desperately.
Maybe a new institution be set up, to provide these credit to the main street directly which is more effective than to put money into the blackholes of the fast shrinking big banks.
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A while ago I had responsibility for a large sum of other peoples money which was earmarked to make substantial costly improvements to a huge residential building.
I and my colleagues had a fiduciary responsibility for this money. Some of our stakeholders thought we should 'invest' the money to help pay for our project.
We could not do this. What would we have done if our bets had been the wrong ones.
Despite the allure of bigger earnings, we played safe. We still got more in interest than we budgeted for and we were able to pay for our contractual obligations.
Had we done otherwise and failed, we could have been sued and its unlikely our insurers would have bailed us out.
In essence we planned properly and did not have piss poor performance. Its real prudence. Have real cash, keep it safe, spend it wisely on things that matter.
As a consequence, our homes increased in value between 2006 and 2007 and a quick analysis of 2007 to 2008 indicates that we have bucked the market again. This is across all properties. Gains in like for like properties are substantial.
This means that the expenditure or investment made in homes has compensated for reductions in the many investment vehicles denuded to fund the renovations and we are saving huge sums of money on energy bills too.
Bringing the contents of banks to home!
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Oh and by the way, Heathrow was heaving with people on tuesday morning and the plane I caught was as full as it would ever be on a tuesday in early January - almost every seat taken
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'The City Uncovered'
A good programme Evan.
Well done.
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#269 Probably because the overall number of flights have been reduced!!
You view of teh world is a warped one. I give you that. In fact you are a part of the problem. Its called denial....
Stocks plummeted worldwide yesterday almost 5% on the FTSE 100.
4.97% to be exact in case someone accuses me of being negative. Not that I give a ...
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Re: Equitable Life
It's known as the horns of a dilemma: either accept the sloth of the enquiry caused HMG to miss the opportunity to call time on the Regulatory misdemeanours which caused this mess (and accept the compensation claims resulting) or have the conclusions and basic probity of government cast into doubt.
Could this be the end of GB?
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glanafon 251
Debt write off.
The 20 million sterling was lost to UK
retailers last year its not a major
problem except the VAT people are
trying to avoid refunding the paid
VAT.
Re exchange rates i abandoned the UK
banking system last year in as much
as i could,so ive picked up on the
falling pound,as we trade in Dollars and
Euro etc.
The big drive this year is to establish
our retail presence in the UK and to
drive forward retail partnerships
elsewhere.
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explorer63
Re manufacturing.
If we were producing clothing in the UK
in 2009,i would be paying including
Xmas & summer bonus profit share etc
circa 18K for a 40 hour week with 20
days holiday plus bank holidays etc.
Compared to all the low skilled retail
jobs with antisocial hours. . .
A slight difference from the recently
exposed sweatshop in Manchester . .
Oh and i forget free canteen and
medical care,free training and an annual
allowance of 500 for night school
courses.
BUT THE UK DOESNT WANT THESE
JOBS?????????????????????????????
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#272 Quite right it will be interesting how that unravels. Notice the way BBC have put it up as a main story, so I will bet that it will be positive news for those who lost out. Expect a beaming portrait of Bruin to glorify the shabloids
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#274
AC. Im sure many would at the moment, myself included.
You and I were both educated in the same R.B. going by a previous claim of yours. Do you still have a wing of your business there?
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Robert comments:
"A long halt to the process of distributing capital to any place on the planet where its most needed and could be most productively used would impoverish rich countries and - perhaps more importantly - poor countries. "
But actually what has been happening is that poor people in China have been lending rich people in the UK and US money to buy unproductive assets (houses). Money has not been going where it is most needed its been going where it would bring our bankers the largest end of year bonuses. They did not care whether the actual business made any sense at all or whether it would bring down their own companies and large sections of the economy.
261 is right - the elephant behind the credit crunch is China's policies for bringing 1Bn people out of poverty and the west's flawed reaction to them. Bringing 100M's of people out of poverty is a great thing and long term will have huge benefits but China is just too large for it to keep growing this fast.
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peaceandunity 276
Youve lost me on R.B.
I had the misfortune of Colwyn Bay
in North Wales. .
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#278
Could be mistaken, but i'm sure you mentioned Kingston at some point in the past. Perhaps you just have an outlet or factory there.
Not so unfortunate. One of the most beautiful roads in GB takes you up there...
I have a bad feeling about today with the massive drop on shares yesterday and the Beeb publishing 2001 news regarding Equitable, thats supposed to turn good. Maybe we are not too far from the US gov calling protocol on the FED.
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@255
I know of many wind powered sites that do very well without any subsidy, there are numerous sites in the werstern isles. Tidal power is viable I know a small engineering firm that are making units now for placement round the orkney isles and they work.
the population in the Scotland means the power produced in the Highlands makes it an exporter of power.
any subsidies im aware of were from Europe
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Ah, one of the family (Maldwyn) was a Colwyn Bay JP. If only we'd known ;[
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Get wise. I'm not condoning people to stop working, but people in employment need to make practical plans for the future and stop worrying about losing their job and building up stress. People out of work have to live and must get over their problems, worry and stress to function again.
Disambiguation
List of famous misquotations, "Money is the root of all evil" is misattributed to Jesus Christ (actually stated as "the love of money" by Paul the Apostle in his letter to Timothy: 1 Timothy 6:10)
Pandora's box, a mythological object said to contain man's evils
Radix malorum est cupiditas, Latin for "Greed is the root of all evil"
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#280 - To be blunt, you are wrong. All wind generation in the UK is subsidised with direct subsidy coming from the Climate Change Levy.
In addition there is a further hidden subsidy. Wind generation is a function of wind i.e. it only works when there is wind. This means that in order to maintain supply in non windy times you cannot close down conventional thermal plant, although the load factor of the thermal plant will decline because its output is displaced by wind when there is wind. This serves to increase the fixed and operational costs of the thermal plant that is required as a back up to wind.
Wave power works and it is obviously more reliable than wind, although at the moment it also requires subsidies - probably more direct subsidies than wind, but much less in terms of indirect subsidies.
The direct subsidy level has been set to optimise wind - which is useless. It´s all political.
If you´ve got billions to spend then maybe wave power would be more sensible than propping up a load of failed banks.
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On a lighter note, I see that Jonathan Ross will be presenting the Baftas this year. I'm speachless.
I wonder if he will be presenting an award to Flash Gordon, and for what ?
Any suggestions ??
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#257 - Fundamentally I don't mind where we go so long as it is planned for the nation as a whole and we all go forward together in the same direction as a nation and the plan ensures survival of the things we/ our children and the planet need for the very long future.
What I really object to is having no national strategy as a country/people and no leadership worth the name for nation as a whole. And I'm not talking about 'leadership of the Labour Party' or 'leading the Government' because we all know - after decades of right-left politics that the govt in power speaks only for its supporters.
Furthermore, in common with many I speak to each day on the subject I do not see why, having worked hard all my adult life and having achieved the dizzy status of being able to feed my family (3), heat my house, live in a crime-free and quiet neighbourhood, fill up the car with petrol and glean modest satisfaction from running my own firm - why I should willingly have to see it all poured down the plughole because the Government can't run the country in a logical, sane and professional way. I don't ask for much, just tell us, Govenment, where the heck we are all going. I don't want my life - and the lives of others who feel the way I do to be plunged into chaos.
I don't want to spend the remaining years of my life losing what little I have managed to gain in the ruthless world of modern Britain, looking up at people living in clover and knowing I can never have the things they do - like financial security, dinner out, holidays or savings or luxuries etc etc. If some equality comes from this - which there is not at present - just several sides all scrabbling for the best they can get - or take - then frankly - I will do whatever the Government says is in the best interests of the country.
When Brown appears on television and tells us his 'vision' and how it is going to affect every one of us and what our part in is and how we are going to live and survive I'll listen. Until then it's a complete mess, a muddle, a trainwreck and I continue to press my 'extreme' views as widely as I can to jolt him-anyone into action.
GC
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#285 guycroft
I fully understand the sentiments in your post and agree with you. The only addition that I would make is that the window available for us to develop a plan is very very small and if we don't get on with it as a matter of urgency we will never manage to achieve it. Then God help us all!
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peaceandunity
R.B. yes i ve got it
No weybridge
But Kingston post code. ..
Offices nearby
Warehouses in North West.
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282 Pandora's box
When all the evils flew out she looked into the box and saw Hope.
Whether Bob or no I don't know
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# 286 foredeckdave - thanks. Window,yes.
That window doesn't exist in the contemporary political order. Only a coalition Government with cross-party support can save us now.
The greatest failing by far by this Micawberish Government was to have no contingency plan in place for the absolute worst case (collapse of all the systems) and to try to contain the situation, always hoping for the best, without ever saying 'what if'..
This Govt has an abysmal track record on planning. They love to meet and they love to talk, but they never get anything useful done. Even flooding catches them half-asleep with no contigency plan in place.
Take, if you will, their own website: 'UK Resilience'. It has not been updated since bird flu alerts last June.
"The Government's aim is to reduce the risk from emergencies so that people can go about their business freely and with confidence. This website exists to provide a resource for civil protection practitioners, supporting the work which goes on across the United Kingdom to improve emergency preparedness"
With confidence. Haha. It's not just civil emergencies as outlined that can destroy business confidence but where is the contingency plan for that? Dreamed up over a coffee each morning by Mandelson?
GC
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Interesting parallel.
Labour arrived with the song "THINGS WILL ONLY GET BETTER". It has taken them over 10 years to find out NO THEY WON'T.
Obama has arrived with the slogan YES WE CAN. It will take him less than 10weeks to find NO YOU CAN'T.
Hey that's progress - I think
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Re Mandy - when people talk about him being a brilliant politician (which members of his party and supporters frequently do) what it would be good they meant is
Someone who can cut through the irrelevant, find the nub of the problem and formulate plans to deal with them and communicate them effectively to both those who need to take action and the general public who need to understand what is being doen and its impact on the problems they face.
Sadly what we actually seem to have is
Someone who can cut through the irrelevant, find the nub of the problem as perceived by the masses and formulate plans to communicate to the masses in a way that they will think something effective is being done about the problem without any actual action needing to be taken at all but that will protect his party and their leaders until it is obvious that things have got much worse.
The difference to the media and the general public is small in the short term; in the medium and long term it is catastrophic.
Also I have worried about all the money that the government has been throwing at this problem as have many other posters, having just read what I've written above I begin to wonder.........has any money been spent at all or is this just my perception.......
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Guycroft 289
You are correct there is NO FORWARD
Plan beyond the next press statement,
they have no idea what they are doing.
EXCEPT OF COURSE BENEFITTING
THEMSELVES AND BANKING PAY
CHEQUES.
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Some of these problems are so big that I'm struggling to get my head round them.
Final salary pension fund deficits now stand at £195 billion - I'm pretty certain that's a lot!
Does this include all the public sector pensions or not?
I think these deficits need to be paid off in ten/twenty years so there needs to be a plan in place for these companies to fund either £10 bilion or £20billion a year - that's still a lot I think? Particularly with most of these companies struggling in a global decession (sic).
Now where I get a little confused is if there is hyperinflation so all the final salaries of the people in these schemes start going up by a lot does the share market keep pace with hyperinflation??
Or does it not matter because £125 billion will become £125 trillion zillion but a loaf of bread will cost £1 billion so it doesn't matter?
Think I'm going home to dig up my back garden and turn it into a vegetable patch and plant a few apple trees.
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#265 Us. Straight down the river.
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This comment was removed because the moderators found it broke the House Rules.
242,
Scotland has a lack of mountains? Britain may well have but up here there are mountains every where (1 in front of my house) with dam's all over the place.
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# 266 268 269 mrsbloggs
Well done for avoiding the downturn and resisting any temptations to borrow too much or gamble with other people's money;
You are clearly one of the successful, well-educated, self-motivated doers, which helps. They are lots of us around and not everyone is going to do badly (or well) in any economic situation. Some of your descriptions sound a bit hard to believe .... I mean I've been to Philadelphia and recall that at least half of it has more in common with the Gaza strip than Harrod's; but heh, it's good to think positively and you are undoubtedly correct in saying that too many people on here are gloomsters
A lot of Peston's blog followers, though mostly old white guys, have a similar outlook on life as a lot of 14 year-old Goths; they presumably dress all in black and inhabit black-painted bedrooms with the curtains pulled tight shut all day! some are dyed-in-the-wool supporters of UKIP etc but many others are just
ADDICTED TO BAD NEWS
The British have a general tendency towards going nuclear on the negative stuff, and it's not a good idea to always go for the worst-case scenario, any more than to don the rose-tinteds
I'm sceptical of talk about self-fulfilling prophecies or this silly talk about Peston actually causing some of the problems through his reportage, though I do wish that Peston simply did a better job as a journalist; personally I think Evan Davies is much better and more balanced, as are most of the quality paper economic journalists here in the UK and in papers like the NY Times and Toronto Globe and Mail
British gloom and doom has a lot of causes and an army of sociologists has already raked over them, but the inequality in schools, the class system, the honours system, the crap weather, and our terrible politicians and party system all contribute. Hence the ridiculous over-reaction to Lady Verdant's mention of green-shoots. Truly pathetic and juvenile all round.
Spring will come no matter how tight you draw those curtains boys!
PS to Mrs Bloggs: amongst all your good works, it's particularly nice to see that you are supporting blind suppliers too
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#285 Guy.
You are correct. Although I do not agree with everything you post on here, particularly regarding the future importance of manufacturing and exports to our recovery - due to our geographical position and massive global competition (I am one of those who believe we can survive on a largely service based economy, if managed correctly) I am sure the answer lies somewhere inbetween, but that is a debate for another day.
I do however feel soliodarity with you in the fact we, as owners of SME's are expected to lead our companies and workforces through these troubled times - making vital decisions that may either ruin us, or help us to survive and prosper, yet we see absolutley no decisive action from the Govt.(or opposition) It is as though they are all overcome with fear. But now is not the time for fear, we need bravado. I wouldnt mind if someone stood up and said we were heading back to a feudal society, at least it would give us something to work towards or against. Lets be honest, things down here in the real economy are getting worse by the week.
The time has come for someone to stand up and start telling it how it is and what they are going to do about it. Even if it upsets some people we need some radical thought. The current Govt. are simply trying to preserve a system that we have all watched capitulate over the last 6 months. Someone needs to decide what is going to replace it.
We need to start Rebuilding the New Britain, and fast.
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Sounds like Digby Jones didn't leave the Civil Service on very good terms
So is he calling the efforts of government frustrating British businesses?
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yup all.
If only Cable and Cameron could sit down, set aside their differences for the sake of the country, get their best brains on all of this.
GC
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HMG has a very big opportunity to make a tidy profit from all these doom and gloom.
Banks make bumper profits from savings and loans, but are too frightened to do so at present.
Whilst not a big advocate of socialism, a giant fully National Savings and Loans bank is the IDEAL solution to 1. getting the UK economy moving again via credit injections to business and 2. rebuilding HM Treasury's terrible balance sheet.
There is a real opportunity to finally get Taxpayers a return for once.
Why should banks be the sole benefactos of our Monetary system and credit based economy?
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#213
You are right - no one values failure/ mediocracy like the British do. Brits have the most negative psyche of any nation and this needs to change, and fast!
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RBS must be either desperate or stupid if they are selling shares that they know are going to rocket as soon as it is confirmed that the UK has started printing money.
Is this the first sign that the Banks are in trouble again, you know the media will not fore warn you this time around untill it has happened.
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Does anybody know if the Prime Minister has given an unequivocal pledge not to change the inflation target for the Bank of England? Has anybody asked him? I think the government is planning to print their way out of this crisis, and in so doing effectively steal from those who have saved and been prudent.
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are we now a country where the bad news is good ?
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#297 somali_pirate_SP500
yes we Brits do have an ability to look at the dark side. perhaps there are 2 major reasons for that:
1 We have a long history of economic decline and inflationary bubbles to draw upon. Therefore we have a good understanding of their consequences.
2 Until it is almost too late to make preparations and our backs are to the wall we resist the calls to unite and fight back. However, when we do fight we do so with belligerence i.e. loose all the battles - win all the wars.
However, it is the US that really worries me. Up to now they have been able to sustain themselves by being too big to fail. However, now they can be seen to be an even bigger basket case financially than we are. The psychological damage to their national psyche will last a lot longer than this slump. I still believe that they will return to 1930s type isolationism.
Where all this will leave the rest of us i don't know. But, I do know that the rest of the world has to start to develop a new way of fiancing and doing business.
BTW, I am certainly NOT a 14 year old Goth!
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I'm a bit late on this one but agree with #9 comments re your last para - that poor countries could be impoverished due to lack of finance.
Radio 4's piece yesterday morning highlighted the amount of private capital steaming into Africa to take account of cheap entry prices for land etc.
As Nicola Horlick also stated on Radio 4 (you know who she is - the one who invested loads in Bernie Madoff) she sees agricultural land investment in Peru as a good buy in the current market.
We can all therefore rest easy for the developing world. Alright, no cynical sarcasm - the developing world will not be able to develop if Wall St/City of London buy the land/"fishing rights".
I agree with many earlier comments - a new system for the common good required and not personal greed.
C'mon there are more of us than there are of them!
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#285 Guy, #298 Costaquenta: good on you!
Now we are starting to get at the heart of where the real debate and action needs to be. Hope you read RP's piece on "The New Capitalism". It's no use trying to prop up the failed "experiment" in a debt-driven economy, backed by a "money mirage". The new economics needs to be underpinned by stable assets, a new way of valuing long terms projects such as investments in failing and sustainable infrastructure, and services that are currently supported parasitically - e.g. many health and long-term care issues, and a system of creating sustainable finance that enables these projects to go ahead and be completed. Sounds too much like Keynes?
People and business leaders really need to kick-start this debate somewhere... probably not on a BBC Blog.
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GC Yes I agree with a lot of what you are saying. I believe the politicians are between a rock and a hard place ie the economy and the environment. Not easy to balance the two. Witness the fudge solution today on Heathrow's third runway. Trying to please everyone at the same time is impossible. 40% even is probably too optimistic. What would ease this dilema ? I would turn back to Lovelock for guidance. WWF/FOE etc have found that there are not enough resources on this planet to support 6.5 billion of us living as we currently do, so he suggested aim for 0.5 to 1 billion. We need a debate on some fundamental human rights issues first however. 1. Do we as humans have the right to bring new life into the world under any circumstances? 2. What rights does a yet to be conceived embryo have to a safe and secure life? These cultural issues must be addressed in my opinion given the current circumstances. The Chinese seem to have had that debate already, or certainly the leadership has. Lovelock then went on to say land in UK could be divided as one third unmanaged and natural, one third intensive agriculture, and one third cities and industry. Nuclear fission would provide energy until fusion can be made to work. I also agree its time for a coalition government to bring the best brains and knowledge together to address the issues. That doesn't solve the global scale of the problem however so the UN or IPCC need to be put in charge to bang heads together. Those are my thoughts.
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#296 - You should get out more - for the most part they are not mountains they are big hills.
The few (small) mountains and the big hills support about 1.4GW of hydro and they won´t support much more.
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Those who think we are being too gloomy - does that mean you can see the green shoots of recovery?????????????
Our company had another potential order for £300k put on hold this morning - that's a total of about £1.5million now 'on hold' since start of December.
When they tell us they are on hold they say things like we're putting the work back 6 months. I, correctly I think, am translating that as this work will not happen unless the economic conditions in the world improve.
This equates to about 7.5% of turnover for us. Not catastrophic but scary, particularly as we're at the start and not the end of the process.
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#305 A long time ago the UK government abandoned full employment policies - but neglected to tell the general population.
To mask this fraud they began reclassifying unemployed people as long term disabled, and also effectively abandoned educating the people likely to move from school straight to a lifetime of "disability". To mask this policy shift they fiddled the education figures.
They gave these newly disabled enough money to buy beer, drugs, burgers, and DVD´s. Big drug consumers needed to supplement their state income by crime. But to mask this they fiddled the crime figures.
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Baroness 'green shoots' Vadera simply made the mistake of sitting next to Peter 'Paraquat' Mandleson.
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Actually pretty sick of seeing the "elected ministers" not doing there job full stop.
The goverment think throwing money at everything will work, but i doubt it will this tiem, i think they will need to let it go and then see when it comes back.
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# 307 foredeckdave Yes I think I would agree with that analysis of the British psyche
Also agree that the situation in the US looks very bad (except for mrsbloggs part of Philly, that is). They are generally a lot more positive than us, but currently seem to be only holding it together at all in the hope that the incoming Obama administration can do some loaves and fishes-type miracles pretty quickly. It's going to be hard for him and there is still a lot of opposition and pork-barrel politics to overcome in the Senate. And the amount of corruption combined with greed that has gone on amongst the 'elite' over there dwarfs the worst that the City of London can muster. Plus just plain stupidity, like allowing the bailed-out giant American banks to still pay dividends, using taxpayers money!
Glad to hear that you are not a 14-yr old Goth BTW; neither am I
doubt if # 305 alexander curzon is either, though do wonder what kind of check-out he was at where everyone was wearing nightwear. Supermarket? airport? hotel?
I thought Manchester was still the capital of the SHELLSUIT
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#291
There's a minor but important difference in the concept in the public service, whereby funds are committed without necessarily being spent outright immediately. For those of you in the private sector, think of it as a form of budgetary management, whereby the budget is whittled away bit by bit in the direction of the normal supplier order flow.
The problem is, that if something's committed to an insurance system, it's quite possible it'll never come up. however, the nature of insurance is such that the Corporation of Lloyds takes a number of years (it used to be five, but I haven't looked recently) to close its accounts, and government financial systems tend not to be set up to carry inchoate amounts forwards over such periods.
Any looseness of thinking (such as bedevils these announcements) tends to result in the same funds being committed in different directions simultaneously, causing chaos when both have to be drawn down, as they then end up nicking funds from somewhere else yet to cover the shortfall, and when that one comes up short, there's hell to pay - this is one of the top ten problems in the European Commission, in practice.
The corollary is cashflow: the public financing may actually be quite healthy underneath, but in potentially a terrible state if everything went belly-up simultaneously.
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#310 - I was worrying about our falling order book - now you tell me that 5.5billion of us need exterminated!!!!!!!
Perhaps some sort of Weakest Link format would work best?
One minute I'm trying to avoid redundancies the next we're all facing mass execution.
If mass execution is just round the corner then redundancy might be a good option - I've got about £30k of savings so I could probalby survive long enough and see a bit of the world too - any idea when the cull will start?
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#293
Public pensions are not included, as it's funded notionally partially from the pension deductions made by the employed, but in practice from the Common Fund which these recoveries are paid into.
In other words, like any business, there's not necessarily a clear line from input to output, and it can contribute to printing money if the budget is not balanced or its outcome is diverged from. Even so, this is to some extent a self-correcting mechanism as fiscal recovery is replaced by inflationary or deflationary vectors in the overall economy.
That being said, I've just spent the morning preparing figures for the OECD in this respect, so it's not entirely ignored.
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Yet again, whilst Workers salaries rises are held below the cost of living rises, the Consumer based UK economy will continue on a downward path.
Just about every business, from Builders to Supermarkets, will be affected.
And the unfortunate business model of borrowing money to return 'excess capital' to Shareholders has left nearly every business vulnerable to the rise in credit costs and fall in Sales.
This pincer was the real downfall of Woolies, and will be the downfall of many more businesses before the year is out.
Consumers need to have spare cash to spend without there is no market for consumer goods. QED.
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#309, 310, thanks
Interesting about the way forward, as I said I have no strong views as to what that is so long as we're in it together not condemned to penury/slavery.
But, really, this global collapse, well, it is both a warning and a chance to change. Oddly enough I had very black premonitions all last year that dark days were coming although I never expected it for one minute to be a global economic collapse. Well, not that odd since I'm a spiritualist. Maybe the reason that I did not expect it is actually that the economics - are just the end of the beginning not the beginning of the end - of something darker still coming later if we don't heed the warnings, and yes I'm still getting those premonitions. And before you write me off as a nut, I have a race engine firm - you have to be pretty 'down to earth' to be successful in that..
GC
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#290 foredeckdave:
"Labour arrived with the song "THINGS WILL ONLY GET BETTER". It has taken them over 10 years to find out NO THEY WON'T."
+
"Things will only get better" once we have hit the bottom of the Abyss.
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Armergediontimes?
5,800,000 on out of work benefits
7,000,000 by the end of 2009
8,000,000 by the end of 2010
1,200,000 on early state pension
ie under retirement AGE NOW.
Circa 450/500,000 18/25 year olds
off the system.
Circa 340 school leaver per annum
with less than 5 gcse's.
THE UK IS THE LA LA LAND OF EUROPE
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post 323
School leavers should be CIRCA 340K
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"The New Capitalism"
Will it have any CDS CDO SIV or derivatives?
I know derivatives are important now but we did not always have them or the other b*m paper, did we?
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Somali pirate
The queue was at Netto a cheap super
market.
I asked the Polish cashier she said it
was NORMAL in perfect ENGLISH!!!
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Robert,
"The internationalisation of banking, the growth of cross-border flows of capital, generated huge incremental increases in the wealth of most of the world"
1. you left off " 's bankers. "!
2. You have no solid evidence for this unfounded assertion, particularly with reference to cross-border capital flows.
Rather it is these cross-border capital flows that have to a large extent caused our present troubles with liquidity. Now that they have stopped there is a huge unfunded capital requirement that our national banks simply cannot supply. Thus cross-border capital flows, are the cause of the problem!
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rahere - thanks - sounds like you've got access to the figures that count - how bad's it looking?
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#310 cynicaljock
I agree with what you are saying and well put, I have posted on similar lines also but I think you are getting into the mechanics of it there.
These are however massive issues, only pushed through in China by virtue of an authoritarian and secular society who both saw the danger / unsustainable aspect and were prepared to 'crack heads' to make it happen to stop overpopulation wrecking civilisation in China.
Is that really what we want globally?
I have thought about this a lot and it is extremely hard to come up with a solution that does not involve some very nasty reprocussions. Much of the world is in the 21st century technology wise thanks to language convergence (english) and the internet but in the 13th century culturally, an incredibly dangerous scenario on a basic level.
UN
' excuse me if you carry on like this you will have far too many people for your resources and there will be a lot of suffering and fighting for those resources amongst yourselves and your neighbours.''
Response
'God tells us as written down in the scriptures over 2,000 years ago (or which ever variation it may be) not to use birth control and have large families'
UN
'Ah thats all right then carry on, we can not challenge your culture'
Note the population control response to the UN above could equally apply to a large section of the USA as anywhere else, so where does that leave us exactly as a planet?
either
a) We all go back to our borders and come out fighting at some point when we cant sustain ourselves within our borders and look outside them. Except this time a lot of nations will have a lot of advanced weaponry.
b) DO SOMETHING.
b Sounds good dont you think Barrack Obama?
Jericoa.
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Lets play (bloggers) word association.
I'll go first...
+
REDUNDANCY
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Sorry for OT but the 'Obama Beast':
"One of the specifications is that we don't talk about the specifications," he said.
Did he just talk about the specifications?
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IR35 was specifically target at "working class" hard working individual's as they were seen as easy targets. In 1999 Morgan stanley had 751 directors and voted out £4 billion in dividends thus avoiding over £1 billion in taxes. alledegly 70,000 contractors were avoiding £325 million. what theysort to do was make us permenant employees for tax perposes where we paid both the personal NI and company , not the company we were contracteredto, but having NONE of the benifits nor being able to sing on when out of work either. So this was not about tax aviodance it was dressed up as such , BUT the important thing was they wold no go after the CITY millionaire to get a fairer share of TAX. Because they did not want the CITY to turn on them. which leads us to the current sitution where the have turned a blind eye to the happenings becasue they were contributing large TAX revenue to GB PLC and in that you will see why we have to where we are. it was the politics on not unspetting the CITY but trappling over hard working individuals but dressed up as tax avoidance to please the backbench MP's . it actually targetted many labour supporting people (not any longer though) and let the BIG cats of free.
The as long as the CITY was handing over larger ££££'s they they were not interested in how they got the ££££££ , as long as the CITY supoort the New labour message they left them along and when after the small fry in a range of the politices of envy.
thats why we have blind eye chancellotr Gorden Brown,
It just shows you what a great economy lady T build that it took over 10 years for GB to run it into a brick wall
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Digby Jones described the civil service as "honest, stuffed full of decent people who work hard".
But he added: "Frankly the job could be done with half as many, it could be more productive, more efficient, it could deliver a lot more value for money for the taxpayer. "
Its a pity he is leaving government with an attitude like this he should be promoted.
According to the Telegraph Ireland is planning to cut state spending by 8% of GDP!
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#297
The problem with your comparison is that you haven't done the homework I set you a couple of days back. Your thesis falls when a Director of the establishment you use as your baseline publishes the views he has published here.
Confidence will come when we have found our footing again, but that's a while away yet. The current has swept us off our feet, and we hear Niagara ahead, but there may yet be hope of regaining land, if it were not for certain Ministers pulling us hard into the middle of the stream because it's prettier there and the view as we go sailing out over the edge will be unbelievable - to those watching from the shore.
In the mean time, those who keep saying, reach for the bottom, need first to find out where it is. Try the following calculation on housing: a semi-detached three bedroom house costs around 40000 materials plus 15000 labour to build in Birmingham. Add a maximum 20% profit once-off and the sellers' fees and you get a house valuation of around 70000. Once houses meeting that rough description have reached that kind of level, you know most of the air's gone out of the fluff. There remains the question of the losers who bought at 250000. Sorry, folks, I've seen my property go from 160000 to 850000 and will probably see it come back to 160000 again: it's just a house I need to live in, and such questions are only of interest to my heirs, who will be much more grateful being spared the cashflow hit of the inheritance tax when I die. I bought at the price based on the above calculation and although I could see seven hundred thousand sail down the swanee by selling out at the top and getting back in the bottom, that's not my kind of game, it was funny money at 850000 and will be good value at 200000.
Similarly in share valuations: a dividend ROI of 5.5% (ie target inflation 2% plus GNP growth of 2.5% plus base-rate tax) on should indicate the rough region for the stock market to live at.
Let's have a few more bubble valuations: sportsmen for starters. When a soccer star earns in a day what a skilled craftsman earns in a year, there's something wrong.
The average Joe is either jealous or resents such profligacy, and it must stop, at 50000 a year, there's some hope.
Follow up with Modern Art. The scrap price for metal is so much, allow a similar margin to my housing logic and you find they should be giving it away. In fact, HMG could very well do so, it's housing so much of the junk: the current European Bulgarian fiasco is the direct fruit of a project I was engaged in many years ago when HMG loaned us god knows how much artwork to save a couple of thousand on the budget to decorate the place. The other governments thought it a great idea and then the Commission started copying us. Now, however, they seem to be paying some conman when they could have had it for nothing. Suckers.
Any other bubbles to be pricked around here? Oh yes, Rossy. An obvious case of it not being what you know, nor even of who you know, but of what you know about who you know. And the rest of his ilk. Footballer precedent applies.
And last but far from least, bankers, lawyers and speculators. What more can I say?
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Given enough time a monkey can be taught to play Chopin. So it's perfectly conceivabe that given time, a former architect of the banking systems demise can turn the whole thing around. Now where did I put the bananas
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#310 cynicaljock
#318 GRIMUPNORTH77
"- now you tell me that 5.5billion of us need exterminating!!!!!!!"
That will not happen unless the Ebola Virus gets out. Do you think bin Laden is working on that?
There can be no more growth.
Birth control, mass sterilisation and an end to single parent allowances come to mind.
No growth (contracion even) will require FRB to be scrapped and some other basics.
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Ask the OECD in about three months time, my bit's minuscule.
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I wasn't trying to say that everything in the garden is rosy.
Clearly it isn't.
BUT it is also clear to me that there seem to be two worlds
What I do know is individuals change their own behaviour if put under pressure. If gas reaches $4 a US gallon, fewer people take their cars out so often or they shop locally instead of far afield. If utility bills become too high they turn the thermostat down or buy insulating tape or CFL light bulbs or turn the lights off. If food bills increase there's the potato effect - no more flash imports from overseas, potatoes instead, if prices are slashed they will buy now rather than later, if their mortgage costs go down they might spend the money or pay off debt.
These are output behaviours but they are determined by inputs and for many, if not most people the inputs haven't changed much at all.
And yes I am in favour of non-discriminatory purchasing....
And yes parts of Philly could still be substantially 'gentrified' but the city is much improved over the last 10 years. I recommend a visit.
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At the risk of sounding like a party pooper, I'd like to return to the original topic for a moment.
I have mixed feelings about the idea of allowing non-elected folk like Mervyn Davies to play important roles within the government.
In this specific case, I think it's probably a good thing. I know very little about Davies, but if the general vibes I'm picking up from what I've read about him are true, namely that he actually knows quite a lot about economics and banking, then it will be a good thing if he's part of the government. Let's face it, the rest of them know b***** all about what they're doing and could use a bit of professional help.
On the other hand, the general principle worries me considerably. Isn't the idea behind a democracy that our rulers are democractically accountable? Populating the government with unelected cronies of the PM has the potential to be very unhealthy indeed, although I don't believe it is in this specific instance.
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# 312 and 318 grimupnorth
yes a fall in orders of 7.5% is a worry; the entire economy (UK, US, euro etc) seems to be shrinking at a 6% annual rate, which is unprecedented, at least since the 30s
I know lots of people who run or work for small businesses and they are all seeing sharp falls in work, some by bigger %s; the general trends are being felt far and wide, including on people who have put some distance between themselves and the mainstream rat-race economy. My consultancy doesn't have much work on the books beyond May this year and I'm a bit concerned that things will go very quiet; I can go into semi-hibernation for a while or do a little woodland management over the summer, which would no doubt be good for my soul, but everyone needs to have some prospects
mass extermination Lovelock-style is something that he reckoned the planet will just do to us at some stage, as I recall; perhaps we deserve it, though I'd like to see the planet set some priorities and start by cutting off the oxygen to the bankers first, so that we can at least get some enjoyment from our own demise as heads of the animal kingdom
hard to resist taking a pop at our awful politicians for their general poor-running of the country, I must say; two more stunning examples today (1) news that the big aluminium smelter in Anglesey may have to close later this year because the govt forgot to make any arrangements to replace the electricity generated by the nearby nuclear power station, which is scheduled to close next year (2) approval of 3rd runway - really an entirely new airport - at Heathrow on the basis that it's essential to the economy (eh?) and won't threaten pollution target undertakings; aside from being the craziest claim since Big Tobacco said that smoking wasn't bad for us, it is nothing but a capitulation to the Airheads; if they could only try to think ahead to what the UK will need 20 yrs from now (which is about as soon as it could be built), they would see that a bigger airport in W London is not it; see Simon Jenkins' excellent piece in yesterday's Guardian
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323 alexandercurzon
You left out those with means who are looking for work but do not register with the system due to the prescriptive measure. Quite a number I think. Squeezed ou tof the system to cut declared numbers.
By the way thank you for answering about the 20 missing big ones.
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#3 eddixon
On the 18th August 2005 RBS bought their bit of the Bank of China for £1.7 billion. This figure is taken from their own press annoucement.
So they have made a loss, again, not a good investment !
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#329 Jericoa
I hope you are right and Obama does make the right decisions, because it looks like the whole world is waiting for him to come along and kick-start everything.
My only fear is that things won't go so well for him. My experience of the insulated masses in the US is that they will look to protect themselves and if Obama panders to them, I can see a growth in US protectionism. If other countries follow this, then there will be a return to some kind of economic cold war.
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# 330
Word Association
Urrrrgh JOB CENTRE
(Sorry I've got to log off)
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# 284 Re Jonny Ross + BAFTAS
Award for Flash Gordon
Well it has to be
"SAVIOUR of THE UNIVERSE aaaahhhhaaa"
Doesn' it ??????
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This comment was removed because the moderators found it broke the House Rules.
#310, #318
Yes, it's interesting when scenarios such as Bladerunner and Soylent Green start looking like potential solutions!
Of course, we could be witnessing a situation where the unintended consequences of globalisation is that it drives towards a kind of forced equality by redistributing and dividing assets.
I like the thinking on unintended and unforeseen economic consequences in "The Undercover Economist" (Tim Harford). We need to extend that thinking dramatically.
#325 - look at the unintended consequences of those CDOs, etc, etc !!!!
Almost no-one that matters thinks beyond the 5 year political horizon.
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A philosopher once said
that "life is a bowl of cherries"
AHH, I'll ask for more
Yo Milk, what kind of pie do you like?
I don't like those that's old and stale
With burnt up crust and fruit that's pale
Giz starts bugging
What more can I say?
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re previous:
I should have said "thinks and then acts".
Too much talk, thought - not enough considered action
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333 tom_edinburgh:
- Digby Jones described the civil service as "honest, stuffed full of decent people who work hard".
But he added: "Frankly the job could be done with half as many.." ---
+
Surely both statements cannot be true.
Either they are only working half as hard as they could or the half as many will have to work twice as much?
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@ Rahere post 334
makes a lot of sense to me
At the comment of unelected people being brought in
The government we have is not elected by the majority, what was the turn out at the last election?
good programme by Evans last night, just goes to prove that the fat piggies screwed it all up again,
no matter how much they made the country in those short years , we will be paying for it for the next 30 years.
And for future governments not to poo poo the early naysayers who as early as 2000 pointed out the problems, but as with all whistle blowers are ridiculed and sidelined.
There has to be accountabilty, I see Milliband now saying War on Terror was a mistake, Gordon , Tony et al should be run over the coals and where neccessary prosecuted
All these schemes should be banned now, all future schemes would need approval first , but not before a 6 month public enquiry and a vote, to prevent this happening again, because left unchecked it will.
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re post from gonzomuppet in which is stated only few people had signed up against Gordon Browns handling of the economy and he should resign perhaps the simple real reason is that most people are realists and disagree and believe that a good job has been done
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Too much negative thinking here. Yes the banks (and particularly the rating agencies) did get it all wrong and now worldwide we are all going to have to tighten our belts.
However, that argument about the cost of building a house versus its market value is absurd. It is the scarcity of land that keeps prices high and in this country an absurd desire to own one's house at any cost. If that is true, and very few houses are selling at all at the moment, then the inevitable rise in prices will occur again. It is only held back by the unavailability of funds.
When I bought my first house - as a bachelor - I saved hard for 10 years to get the deposit. Only then did I buy a flat. The emphasis should be on saving first. Tough - but if you want something badly enough in life you have to make choices and sacrifices. Perhaps no expensive holiday for a few years, not so much eating out (ever heard of the dinner party - great in the 60's and 70's and an enormous saving on costs as well as being great fun), less DVDs, less CDs, most economical car etc. Everyone has heard it all before but continues to complain.
The banks are working hard to restore their assets( loans plus reserves) and building up their liabilities (deposits) but until the PANIC dies down it is not going to improve much.
The TV stations and newspapers pour out a stream of crisis headlines " Sales down 3%" So what. That is nothing. Even today the BBC flooded their morning programme with news of poor sales and results and only at the end mentioned a couple of companies who are doing very well thank you.
Take a deep breath, adopt a positive attitude and don't let the media get you down. Good news is no news so why not dump you newspapers for a few weeks (there's another saving) and don't watch the news programmes more than once a day.
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344. At 1:40pm on 15 Jan 2009, goforit99
Word Association
"Urrrrgh JOB CENTRE"
+
Sorry thats 2 or 3 words
You're OUT
...next
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guycroft
Nothing wrong with intuition
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#332 Mr Survivor - firstly two wrongs do not make a right. If people in the City got away with not paying the correct amount of tax then that would be wrong too - I doubt that the directors of banks got all their bonuses in dividends as I doubt their shareholding would be significant enough for the bonuses to work out correctly but it would not surprise me if some other tax avoidance scam was used to avoid them paying proper amounts of tax - they should have paid tax the same as the rest of us (they maybe did) in my opinion and so to that extent I agree with you.
But your claims about IR35 are still misrepresenting the reality and I know this because pre IR35 introduction, to my embarrassment now, I was working in an accountancy practice helping people like you set up limited companies to massively reduce their tax bills - we charged about £1500 a year in fees for doing accounts etc, the poor working class peson like you saved about £7 - £15k in overall tax depending on whether they were earning £50k consultancy or £150k.
When IR35 came in the majority of these single employee companies could have simply returned to unincorporated status like many other traders and paid tax like the rest of us but no - they set up 'umbrella' company scams to give the appearance of being a company with many shareholders and continued paying dividends based on ridiculous share structures and divi waivers etc.
Please lets hear no more of how IR35 has ruined this country, there would have been no need for it if these single person companies had not been set up - if you feel we are all paying too much tax then that is a different matter and I would be interested in your point of view
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#334 rahere
yes I can't argue too much with what you say; certainly like your extended Niagara falls/barrel metaphor
funnily enough, a lot of people who have gone over Niagara falls, some intentionally and some by accident, survived to tell the tale
others walked above the falls on tight-ropes; apparently it was all the rage in the 1880s
crowds gathered to watch the daring stunts; some prayed they would get to the other side or be picked up at the bottom intact, while others secretly wanted to see them plunge to their death
all very similar to feelings towards Gordon etc today I suppose, but the difference is that we are all in the same metaphoric barrel going over the falls with him!
# 388 mrsbloggs
was it W C Fields who made all those Philadephia jokes? and his tombstone epitaph read 'I would rather be living in Philadelphia.' or something like that; perhaps I should visit again but not at this time of year as it's probably about -20 !
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I am sure at least some of you will agree that, with at least 30 hours since the last Peston blog, confidence will have begun to return to the global financial system.
We can be sure that the crash/recession etc is thus over and the green shoots will thrive on his benign neglect!
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#260 bless you lionshattie
Ask your mummy to help you next time you want to use the computer...
There are 2 other things you need to know
1. Santa isn't real - sorry
2. Gordon Brown is telling all the little children it's a Global thing. You see that way he doesn't point the finger at any of his world leader mates.... and they do the same...... you see they all need re-electing before this thing finishes.
You'll have also noticed that despite this going on for over a year there is no one to blame yet....... now that's because if you start naming names sometimes emails or reports surface that embarrass you.......
But Gordon won't shirk responsibility, when times were good he was standing at the front of the queue for praise...... so I'm sure if he is partly to blame he'll be putting his hands up soon
He’ll also be able to add to his CV – Chancellor through the ‘longest period of sustained economic growth’ (as he has said with repetitive monotony) AND PM through the most severe recession in modern history..... what a guy!!!!
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330 kikidread
Lets play (bloggers) word association.
++
BANKRUPT
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#311, #296 et al.
the main point about hydro electricity is that it has a second use acting as a massive battery.
You pump the water up the hill when the power station has over-generated during the peak hours on the grid, and recover it for free later.
More hydro capacity in lots of areas in Scotland, we have an ongoing study for small-scale deployment in western highlands.
Nuclear, shame on everyone that has been suckered by Teflon Tone's 2006/7 pronouncements that nuclear now good, bless him.
Unfortunately the nuclear waste and de-commissioning problems did not go away.
4 legs good, 2 legs bad..... three bags full Tony.
Nuclear is an entirely selfish, desperate reaction to non-planning future energy requirements dating since 1997. Leave it to your offspring to clean up.......
Regards,
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Don't knock Philly, my uncles ashes are scattered in Fairmont Park.
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GRIMUPNORTH77
you have no idea the extra risks taken on my people who operatre as a ltd company. They have expenses that normal employees do not incur, they have less secure work, less favourable contractual terms and no holiday entitlement etc.
IR45 was designed to basically stamp out all contractors that prefer the flexibility and risk of working through their own business as oposed to being a permie. if IR35 was blanket across the self employed/freelance world, there would be ZERO incentive to freelance.
Someone on a 40K permanent salary pays less tax and NI combined incidently than an equivalent freelancer ourtide IR35 on 65000 (after expenses) which is a reasonable comparison.
So your tax evasion argument doesn't really hold up.
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mrsbloggs13c2.... and the point is what?
We are talking 6% reduction not 60%
You need to be writing to the 1,000,000 who will have lost their jobs by this time next year and tell them how busy your plane was...... and how busy the posh london furniture shop was....
Presumably most companies you deal with and bump into give you access to a full P & L report...... or don't you think most people will say everything is fine even if it isn't..
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re 350 and Digby Jones.
I bet about 50% of you lot are civil servants, and as for GrimUpNorth - get some work done!
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# 260 lionshattie
"..... Please GB and the prime minister needs less snipping."
+
GB is the prime minister and it is his dad who neede the snipping.
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Re subsidies for wind generation esp in Scotland.
Would anyone care to remind everyone what the disparity is in £s between the exhorbitant National Grid transmission costs charged to generators in Scotland and the subsidy given to English generators for transmission.
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Very interesting interview with Sir John Varley of Barclays by John Snow on Channel 4 last night.
The first and probably most straight talking CE to admit that Quantitive Easing {printing money) will have to take place over a short period but must be controlled to take account of inflation.
Of course it will for who can afford to lend this country the money it must have to keep going.
Problem is when Gordon gets his hands on the printing presses he will not know when to stop.
This is when it becomes dangerous for us all.
Peter Mandalson's reply was they had no plans to do this at the moment
I think he meant at that particular moment literally.
Wonder what's happening today behind the front of Heathrow and Equitable Life. Both timed to cover other bad news no doubt.
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#363 - I run a limited co and employ 50 people &, believe me, right now I am all too aware of the risks. See my post #312.
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#342 Goforit99
That's rather what I thought would be the answer but didn't know the numbers myself.
So they bought it in 2005 and sold it last week and booked a loss of millions!
Nice work.
Wonder how much fees was generated off this?
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350 Toldyouitwould
Both statements from Digby Jones can be held to be true. His words about civil servants chime with me.
I have spent a fair amount of time working along side civil servants, many of whom are well educated, literate, numerate and hard working. The lack of productivity can easily be prescribed by the system in which they are expected to work.
At each turn they are confronted with the problem of the "the system is too big to change" - just work within it. Swimming against the tide in such a behemoth would lead to further inefficiencies and frustration on their behalf.
Effort expended and results obtained cannot always be correlated, as much as that is how we would like things to be.
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this monetary contraction needs bold investmetn quicklyand i fear that this is too little .
We need 'shock and awe 'concerted across the globe and we have got dribs and drabs and mutterings from a priminister who needs to stop mumbeling.
bring on Obama and lets have Bodecea on a charriot.
they used to say 'its the economy stupid but now 'its confidence stupid'
goldilocks had some favourable charactersitics with low inflation guarenteed form chinese labour etc..
these advantages are still there but at the momeent we cannot see them.
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# 362 I'm not knocking Philly, just kidding mrsbloggs; I see the Eagles beat the Giants in the NFL playoffs
#361 hydroelectric is great (where it doesn't involve the World Bank funding the destruction of river valleys in LDCs) but I fear that Scotland is just not big enough to generate a significant amount, though it is lovely and does have mountains
Niagara Falls, on the other hand, is already an excellent source of hydroelectric whilst also serving as a launching point for politicians in barrels
James Lovelock in his follow-up book, The revene of Gaia (2006) has come out very strongly in favour of nuclear; I found this hard to accept at first and still do, but having read what he says I grudgingly see his point; his theories are worth reading, no matter what one's viewpoint:
http://en.wikipedia.org/wiki/Gaia_hypothesis
I just wish the UK govt had an energy policy; ANY energy policy! they appear to be accidental conservationists as they've completely neglected to make any decisions about building new generation nuclear, or building storage capacity for gas, or doing carbon-capture coal; but they are also neglecting to really push for power from the sun (both solar and wind) or even to try to get all our draughty old houses properly insulated (which would create jobs, save a huge amount of energy, and make a lot of new generating power of any sort unnecessary!); and even stranger, they seem to think that a new generation of aircraft won't need engines, thereby meeting our climate change targets despite doubling the size of Heathrow.
What I can't understand is why airplanes without engines would need such a long runway; perhaps a top-secret glider policy is being developed. I can't wait!
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Oh, and as for Mr P's assertion that Standard Chartered are a British Based bank, ask them how much business they do in Britain and how much in the Far East.
That's how British they are...
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re. equitable life:
Yvette Cooper says that (even though regulators & government admit they were incompetent) any compensation to policyholders etc. would have to be calculated with one eye on the sad state of the public purse.
I presume that when I submit my tax return in end Jan, I can cite that excuse for not paying all tax due................
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Lovelocks population control requirement may yet come about!
We have practiced going to war in Iraq and Afghanistan. So we are now ready to take on a really big war.
think about it. We can stimulate the whole economy if we put it on a war footing.
Some madman may just try it!!!!!
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350 toldyouitwould
the statements are true. Half of them are doing jobs which aren't necessary
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Unemployment? Depends upon what you measure, for instance... (apologies for US figures, but...the bottom line (and trend) are of interest. Meanwhile....
;-)
ed
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This comment was removed because the moderators found it broke the House Rules.
Guycroft
esp' #285
Haven't you realised yet that the plan is taking place before your eye's and it's all going spot on.
YOUR GETTING FRUSTRATED AT THEIR POLICIES AS THEY DO NOT MAKE SENSE IF ONE WANTED TO GET THINGS 'RIGHT'.
They are not incompetent CONTARY.
The objective is TOTAL CONTROL OF ALL ASSETTS including a one world currency controlled via bio metric ID and RFID chips. TOTAL GLOBAL CONTROL AND ABSOLUTE ENSLAVEMENT OF THEMASS'. Look at the policies and politics through this objective only then will it make sense.
its called the NEW WORLD ORDER - it aint a secret anymore, do your research.
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forgot to say there are many at the BBC whom benifit from personal contracts at the detriiment of the taxpayers.
They only have one employer too BBC
Is Mr Peston a permine or contractor
and aviod large wads of tax, as he is on far far more than me.
Can Mr Peston asnwer please
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This is probably the wrong place to post this BUT:
I am normally on the side of any little person ( oh no I'm becoming PC!) fighting government or big institutions but this Equitable Life thing really narks me!!
Nobody forced these people to Invest with Equitable Life. They did so because they responded to an offer that was significantly more advantageous to them than those offered by other providers. They took the risk and now expect us to pick up the tab.
Oh I forgot, we live in the nanny state were we are not responsible for anything - now even greed!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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"The cost of bringing banks home"
The Finger in the Air estimate =
The middle finger (F.O. type quote)
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re equitable life
Likely to be professionals and conservative voters give em nowt
Northern wreck, labour heartland, bail em out.
Only the hardest hit? how do they tell?
Set up an enquiry, if they are that hard hit they'll be dead from worry before we give em owt. Good strategy that.
Crooks and shysters? comparing them with Nulab gives crooks and shysters a bad name.
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# 378 ed iglehart
a lovely bunch of stats and stock market charts; there sure are a lot of stock markets out there, which perhaps has been part of the problem.......
the term discouraged worker is a good one (for those who have been out of work for several months and have given up actively looking for a job?) but we might need to
REDEFINE IT FOR UK USE
that could cause economists to come up with a figure close to 100%, based on a straw poll of Peston's bloggers
more seriously though, I do worry a bit how our modern societies/economies here in UK/euroland and US/Canada are going to cope with a severe and long downturn; in the 1930s the majority of the population still had some connections to the land or lived in rural areas and villages; plus more people had some basic survival skills in terms of knowing how to grow stuff and fix things........ my grandparents had a little farm in Ontario and did ok in the 30s though bought and sold very little; can't see much of that going on in the 2010s though I suppose that necessity is the mother of invention
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Is Robert away today searching for green shoots?
Or maybe taking some time out.
I hear parties on yachts are very good, you can meet some interesting people. Whilst he's there he could ask some questions too
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I was watching old footage of working men shuffling in well ordered queues during the last depression.
I cannot imagine modern workers anywhere accepting the situation as did our forebears.
If it does get that bad expect civil breakdown.
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380. At 4:20pm on 15 Jan 2009, sabotageANDsteal wrote:
Guycroft
"its called the NEW WORLD ORDER - it aint a secret anymore, do your research."
+
Sounds like the OLD WORLD ORDER
and they are still as incompetent and corrupt as ever
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#383 kikidread:
"The Finger in the Air estimate =
The middle finger (F.O. type quote)"
+
And I thought it meant 'You are Number One!'
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Tonight, we are being told all about the new runway at Heathrow...All the discussion takes the "need" for travel and transport at the present (or growing) levels as unquestionable. Can we not recognise that spending such a large portion of our time budget on just scurrying around is silly?
And In the future, historians (if there are any) will refer to this as the Age of ScurryingScurry on!
ed
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#385 somali_pirate_SP500
We'll just have to stop agreeing like this!!
When the average household in the UK uses its cooker for less than 2 hours per week it must indicate that there not just a lack of will to actually cook things but probably a lack of cooking skills!
My grandparents lived in a terraced house in Liverpool. they somehow managed to keep a goose in the backyard. You wouldn't be allowed to do that now.
On a serious note, the social implications for our inner-cities are very serious indeed. I see a fertile ground for the rise of the far right!
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StanChart always been a bit of a joke compared to the big boys, like HSBC; lots of expat allowances for their global execs, and a pittance for the footsoldiers - the local hires in the LDCs they operate in, often 'foreign' to the country itself. Thus in the Gulf it's known as 'the Indian Bank' because it hires so many non-resident and cheap Indian workers rather than real locals. It's based in Singapore not London, it's irrelevant in capital markets, real estate financing, corporate lending (except in obscure local currencies).. but it does a great Letter of Credit, Red-Clause L/C, Transferable L/C, Stand-by L/C, Documentary Collection, Bid Bond, Performance Bond, Retention Bond, Aval, Confirmation, Bill Discount, L/C Reimbursement, Pre-Shipment Financing.. in fact all those forms of international trade finance that are dying a death in favour of Open Account; maybe they'll come back into fashion. The StanChart business is so totally irrelevant to the UK trade picture it's a joke: isn't it 80% with the EU/EEA? And not UK merchant shipping steaming round the headland to be unloaded by sweating stevedores in Valparaiso or Kelantan, and then bunkering at Bandar Seri Bagawan or Rios de Gallegos, before putting in at Fortalez or Mombasa. Mervyn has emerged with credit because StanChart are a total sidelines player.. but he's also a NuLab hack like the new Chair of RBS: anyone with connections to the Sainsbury family has athe subtitle 'NuLab hack and acceptable face of capitalism'.
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#328
Please ask the Moderators to release my reply. When extensive calculations indicating a ball-park reply to that rather galring hole break the House rules on an Economic blog, one tends to despair.
The potted answer is if you go digging in [Unsuitable/Broken URL removed by Moderator] and http://www.statistics.gov.uk/pensiontrends/ you'll discover the UK State Pension spend is around 70bn a year. The risk is on the funding side, but basically 25m households paying 8% on average income of 35k roughly fund it. However, if the 1929 scenario hits, that 25m becomes 15m and you get a hole of 28bn, to which you add maybe another 100bn unemployment benefits for 10m unemployed taking in 5k basic plus other benefits and training of about the same.
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# 384
I wouldn't think the shareholders in Northern Rock would agree with you that they've been bailed out - account holders maybe but all bank depositors are now protected.
Please find another forum for your repetetive right-wing (and now anti-Northern) prejudice.
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#380 sabotageANDsteal
Do your own research and tell me who 'they' are exactly because I've asked around repeatedly in every discrete low and high circle I know which is more than most and no-one has mentioned that.
As for New World Order Hitler tried that and look what happened to him. Satan could do it, there are plenty who don't understand the power of evil, but no, I don't think anyone else, Satan's day may yet come I figure. If you don't believe in him - well, he's got to you already.
GC
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#390 Ed Iglehart
Sorry mate we decamnped to our cities over 200 years ago!
When we all loose our jobs we'll have plenty of time on our hands.
Surely the argument now should be how to use transport more efficiently and effectiveness. I somehow doubt that you are going to force the majority of people back onto buses loaded with the grocery shopping.
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re edit post 356
#356, you have completly missed the political point that I was making.
1) A City based institution do not need 700+ directors (most compaines have the order of 25 or so) they do that for tax aviodance purposes, which is what the Nulab wanted to target before the 97 election as they sow this as unfair and avioding tax and NI
The multiply that my the number of that type of buisness and you will see that the tax aviodance bill is hugh. In 97 is was reported to be £4 billion or more ) I would not be able to be a director of comany XXX but in the CITY its standard practice, These were directors with share to aviod the tax and NI.
2) So not to upset the city , ie upset city equal lost elections TB+GB+co did everything to keep them on side including turning a blind eye to "funny" practices.
But they had to keep the back benches happy to close the tax loopholes, as long as it looked like that was what they were doing it looked good, the back benches ask no more questions. As they thought that they were targeting the CITY. Most had not got clue number one whom was actually being targetted.
3) many contractors that I new were wroking class made good via education and it was them that got shafted. how ironic is that.
4) This was the mind set that was underpinning their "economic policy" (;-))
I pay a fiar tax but I'm not allowed to claim any sort of benifit at all. whereas the CITY are getting millions in tax free bonuses via shares and directorships. £1 million would do me I'm not greedy.
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This government set the tone by proving they couldn't even run a funfair back in 2000. They squandered millions of pounds of taxpayers money on a white elephant. It took 02 to prove what could be done at the Millennium Dome.
I'm afraid the following 9 years have fared no better.
They have now squandered billions.
All the while we have had to listen to Brown bleat on about how brilliant he is, yet on any major issues (Iraq war, Guantanamo, Palastine etc) he prefers to keep shtum.
He is a one dimensional PM, who can focus only on the economy, and badly on that too...
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373 pirate
You are looking at decades of stripping cash and assest out of UK. Thatcher onwards. Government and corporate. Lack of investment, take the easy road. Shuffle paper to make money. Remove working capital replace with credit.
As it is easier to destroy than build it leaves a problem, plus you never get back to the same positon because others dont sit still. You are looking at the destruction of entire skill bases and knowhow. It is always easier to import knowhow than grow it again. eg EDF Nuke plants.
Unemployment normally lags the onset of a downturn, employment pick up normally lags economic pick up by 3 years or so.
So far employment has dropped sharply, I have not looked up the figures but this looks a worse than any usual downturn. Sharper due to banking stutter. And promotion of fear - politicans posturing and media, old school customers hibernating with cash.
The effect will be to move huge numbers into unemployment with skills that are not judged necessary on an upturn.
Management used to have a pyramid structure, it will now be more like a cherry on the top of a pancake. Few well paid, rest kept low. The fact you are skilled or qualifed does not stop you being low paid.
Lifestyles usually relate to income and financial indebtedness usually relates to income. Readjustment is going to be traumatic for some.
There will be a form of set-aside-man but they will not be honest enough to say that is the mechanism and accept the situation.
There will therefore develop a subclass which may have some turnover but is forever kept as cheaply as possible on the side being coached and cheaply short term trained, for jobs that do not exist. Side effect keeps the wages low, makes the economy 'efficient'. Must not let wander about, black market problem. Becomes a sort of probation.
Non compliance, no money or reduced money.
There will be an expansion of small self employed activities set up simply to gain access to elementary - in - work - but - poor tax credits. Sort of a business but not viable on its own. Could develop viability but unlikely stats v poor, objective is not business it is access to tax credits, wrong objective, miss target.
There will be a continuation and probably the expansion of one off grant subsidies for businesses not viable but of 'social need', all sorts of oddball stuff. Local business goes under. Co-operatives then formed with a small core of staff and a load of volunteers. Causes problem for real businesses nearby. Or set up PC activitiy relating to favoured issue such as climate change, much the same.
It is inevitable that the public sector shrinks. To maintain standards means testing and conditional access will become common. Fat man slim before you get access, you have to get thru that narrow doorway.
Alongside that - Browns Model Reccessionary Army of unemployed will be formed into low grade task workforce to undertake duties no longer paid for by the reduced Public Sector. It will start small and just inch along and grow. Placements on work experience, working whilst waiting to work, expansion of voluntary organisations to manage the supply of unpaid workers.
The majority stay in jobs but get relatively poorer. Pressure on disposable income. Still buy cheap imports just less of them, some other specialist stuff, and buy local services and supplies for other stuff that cannot be imported.
All of this is in in place, or likely projections, or being talked about as policy. Nothing new or radical. Not all big indicators just small developments with possible routes forward.
So the post industrial society, after the Brown Period, or whatever you want to call it.
A mix of set aside man and conscript workers. Pre industrial style co-ops and small business activites, lots of one man bands many subsidised. A new Middle Ages. Alongside - Large businesses usually in large buildings exploiting - high tech as suits, the supply chain and workers, and their customers - do the clerical work for us so we can cut staff. Some limited hi tech businesses. Reduced public sector with more restitricted access. Still some well paid jobs scattered about. A lot of lower paid jobs, more short contracts etc. Essentially a lot of polarisation.
Obviously an economy but it depends if you are favoured by it. Downward pressures on prices but still a very financially inefficent supply chain. High Street to remain in trouble due to high council and other overheads. Online to grow, whatever the doubters say. One shop on High Street equals one shop with limited customer population. One digital shop equals global outlet to anybody online. Digital shop cheaper.
I see the projection for many more degree skilled workers made by HMG for 2020. Doesnt mean they are well paid though. That is supply and demand, are the skill right. No need to have so many unskilled - well maybe, but what do you do with them as a society, all there is is Browns Model Recessionary Army.
A lot of dehumanising processes and treatments, prescriptive and computer driven. A cultural divergence between corporate and small businesses. A cultural shift and new social groupings and outlooks. Personal wealth depends on whether you can supply something valued, not where you are located in the economy. But is obviously ultimately less limited in a large business, but mobility within that framework likely to be significantly more limited.
Those earning will put money into housing again, just inevitable. Funding more limited than before. Access denied to more people than before. The market sets its own boundaries.
Historically pirates whether on the high seas or in a city tend to have a short life unless they are doing something that helps somebody in authority. Everything is relative. So retire at the right time.
Could be wrong of course. If so file in the digital waste paper bin. Up to you.
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re edit post 379
#356, you have completly missed the political point that I was making.
1) A City based institution do not need 700+ directors (most compaines have the order of 25 or so) they do that for tax aviodance purposes, which is what the Nulab wanted to target before the 97 election as they sow this as unfair and avioding tax and NI
The multiply that my the number of that type of buisness and you will see that the tax aviodance bill is hugh. In 97 is was reported to be £4 billion or more ) I would not be able to be a director of comany XXX but in the CITY its standard practice, These were directors with share to aviod the tax and NI.
2) So not to upset the city , ie upset city equal lost elections TB+GB+co did everything to keep them on side including turning a blind eye to "funny" practices.
But they had to keep the back benches happy to close the tax loopholes, as long as it looked like that was what they were doing it looked good, the back benches ask no more questions. As they thought that they were targeting the CITY. Most had not got clue number one whom was actually being targetted.
3) many contractors that I new were wroking class made good via education and it was them that got shafted. how ironic is that.
4) This was the mind set that was underpinning their "economic policy" (;-))
I pay a fiar tax but I'm not allowed to claim any sort of benifit at all. whereas the CITY are getting millions in tax free bonuses via shares and directorships. £1 million would do me I'm not greedy.
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390. Ed Iglehart
Ed, I'm not sure this blog is ready for Ivan Illich. He has plenty to say about Economics but he never did produce his magnum opus about Needs, did he? Great thinker though, a real Libertarian (unlike fascist fake Ayn Rand who has been "pushed" on here).
394 stevenpal