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The pressure for protectionism

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Stephanie Flanders | 14:41 UK time, Friday, 30 January 2009

"History is not destiny", Gordon Brown said in Davos this morning. His aides tell me he was referring to the need for governments to stop talking about the global crisis and start acting.

But this is a day when striking refinery workers have thrown his talk of "British jobs for British workers" back in his face.

He might just as well have been talking about the history of the 1930s - when countries turned to protectionism and the global capital market fell apart. The growing feeling in Davos is that it is history we may be about to repeat.

Gordon Brown in DavosI talked earlier this week about the rise of financial protectionism. Gordon Brown called it "financial mercantilism" in today's press conference and he stood against it.

He said that the banks' return to their home markets was already hitting capital flows to the developing world, and could lead to full-blown protectionism down the road.

He also grimly reminded his audience that "protectionism protects no-one and least of all the poor". And yet, his government's own approach to Britain's banks shows how hard it can be to resist.

We have a huge stake in keeping the global capital market going - global capital is something we need quite a lot of. But British banks have themselves been under pressure to focus scarce lending on borrowers here at home.

The pressure is not always explicit, but it's there - and as much in the City as on Wall Street.

At least one central banker I spoke to here in Davos politely suggested the prime minister might want to get his own mercantilist house in order before lecturing everyone else.

Comments

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  • Comment number 1.

    So what is the better option, or is the answer different whether you consider short term or long term?

    We're being forced to increase lending in the UK, to the detriment of bank margins and de-leveraging but to the benefit of the UK, but we should also bear in mind the overall benefits of overseas lending to boost demand for exports.

    Which should we focus on?!

  • Comment number 2.

    If "protectionism protects no-one" Gordon Brown today in Davos, then why is the UK pursuing a policy of devaluing sterling?

    They would have of-course argue that they were not it was just the market, but the dramatic decline in sterling is being praised as a help to our exporters - if that is not protectionism what is?

    Interest rates need to be increased to lessen the devaluation of sterling otherwise we are being hypocrites!

    "...the prime minister might want to get his own mercantilist house in order before lecturing everyone else" I agree wholeheartedly, based on the evidence.

  • Comment number 3.

    Why anyone ever listens to a word this joker utters is utterly beyond me? Do as I say, not as I do seems to be his byword. His sheer hypocrisy is fast becoming legend. When he dares to suggest that global confidence is required I am amazed at his total lack of understanding. Who on earth can have confidence while clowns like him and his darling Alistair are at the helm? I suggest that he and darling Alistair should consider a gap year for at least 12 months leaving strict instructions to the other cabinet bufoons to do nothing (except plot perhaps) until their return, thereby restoring confidence in the British economy at minimal cost to the tax payer.

  • Comment number 4.

    It is certainly right that one of the great lessons of the 1930s is the risk of economic crisis leading to protectionism, with all sorts of costs and risks from that - including contributing to the downward spiral to war. So we must be on the guard against protectionism all the time. I was interested to see in Markwell's book about Keynes that Keynes, having been a free trader (who believed that free trade encouraged peace) and then briefly a protectionist of sorts, came to favour free trade again. He thought that, combined with sensible economic policies, it helped to lay a solid foundation for peace.

  • Comment number 5.

    he needs to get all his house in order before lecturing anyone else.



    In fact, most of Gordon's soundbites seem to be coming back to bite him now...

    British jobs for British people?
    Abolished boom and bust?
    Britain best placed to survive global recession?
    Inflation under 2% with house prices going up 15%?
    Saddam Hussein with WMD's?
    Things can only get better?


    I can't believe he is being allowed to represent our country. I never voted for him to do so and neither did anyone else.

  • Comment number 6.

    And no doubt the Europeans will want to point out that competitive devaluations were a part of the 30s too. This man has no shame. How can he think he has anything useful to contribute? He has failed in his duty: to protect the people of the United Kingdom to the best of the State's ability. He has impoverished us all, even those not born yet.

  • Comment number 7.

    Great Gordon said "protectionism protects no one least of all the poor"

    By "poor "was he refering to Britain and its stagnant financial casino ?

  • Comment number 8.

    What is the point in asking for comments on a blog and then not moderating them for an hour? I won't waste my time again.

  • Comment number 9.

    Wow, finally a reasonably balanced blog on the BBC site. We all missed it but he, these are the times that Gordon is saving the world and as with any religion, airing a dissenting view shall not be tolerated.

    And another time it's a lady daring Campbell and Mandy, following Ms Hargreaves's column in The Guardian alst week.

    Walk on, walk on through the rain (with the "rain" being fewer invites to labour drinks parties; not a big price to pay when you enlight the world).

  • Comment number 10.

    In times of economic hardship, how do you protect against protectionism?

    "Charity begins at home" is a natural reaction.

  • Comment number 11.

    You talk pretty loosely (doesn't every media commentator - and many posters..) about protectionism.

    What EXACTLY do you mean by protectionism? Frankly the whole idea is surrounded in myth and legend.

    Come clean please.

    GC

  • Comment number 12.

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  • Comment number 13.

    How to make an impact.

    In a week when the IMF has declared the UK the worst-placed major economy of this present crisis, one of its chief architects gets up to deliver a lecture to the rest of the world.

    Brown's speech will be remembered for the credibility gap you highlight, the use of words he doesn't understand and for a (priceless) Dom Joly moment: HELLO! NO, I'M IN DAVOS, SAVING THE WORLD!

    If we weren't an international laughing stock before, we certainly are now.

    And what's wrong with protectionism? The USA has been indulging in it for years under the banner of "free trade".

  • Comment number 14.

    How does Gordon Browns' professed & much trumpeted support for 'the knowledge economy' square with the inability to get jobs in Britain filled by qualified British workers, when importing workers from Italy suits the French owned company?
    Economics is not a dry subject: it is the cause of grief, as well as projecting or tracking profit.
    With GB spouting away at Davos, whilst the engines of economic growth are dismantled or sourced by imported labour, we are steaming towards the Iceberg eventual meltdown.
    It is not protectionism to expect that locally sourced labour should have a chance of employment in straitened times.

  • Comment number 15.

    "History is not destiny"

    How true, how true. You know, maths isn't transcendental idealism either. And latin isn't actually your nemesis.

  • Comment number 16.

    Brown's "policy" of saying something, saying anything rather than do nothing is only worthwhile if he has anything relevant to say. In any large business a senior executive will make a significant contribution when declaring the annual results, setting out the corporate vision or if a major calamity strikes.

    As a rule they do not do day to day communiques. If this is necessary then this will be delegated to an underling; senior managers are more concerned with how daily production fits into the overall strategy. I found Putin's comments interesting as they were more strategic in nature, no doubt in part drawn from his training in the KGB. Is it a coincidence that so many former KGB agents are not just oligarchs but very successful ones but also displaying great acumen?

    At the heart of the UK's problems is a lack of strategy and planning in detail for the future. There is a woolly ambition to have greener power generation, greener transport etc. Blair to his credit did at one point have a vision of public sector investment to nurture an industry, which would subsequently be privatised. This would then become a cyclical generation project.

    Examples:

    North Sea gas and oil will run out in 30 years or so. When new houses are built should they use gas central heating? On the infrastructure side should we build new gas and oil terminals to import gas and oil from elsewhere rather than rely totally on Russia?

    Surface drainage from excessive rain, has not been addressed. Thousands of families in Yorkshire are still living in caravans, 2 years after the massive floods. clearly the bore of thepipes are too narrow to cope with the volumes. Old cities do not flood - the Romans built drains near to rivers that measure 6ft height by 4ft width. Newer cities unfortunately have to cope with 20th century vision..

    Why is solar power given such a bad press? I worked in the south of Brazil (border with Uruguay) 25 years ago and the 4 start hotel I stayed had 15 floors and the solar panels powered lifts, air conditioning kitchens etc. I can only see great opportunities in this area - we have seen in new technology that as sales increase the supply side find greater cost efficiencies and the price drops.

    This is a very frustrating country to live in.

  • Comment number 17.

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  • Comment number 18.

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  • Comment number 19.

    The most important advantage the US has at present is that they are rid of the architect of their troubles, Bush. That give the new broom the chance to act without having to defend previous policies. Meanwhile here in the UK we still need a new broom and there is no acknowledgment that the domestic policies that got us here were flawed. A GE is badly needed.

    This is not the same as any post WW2 recession and there is no sensible forecast of when an upswing will occur, particularly for some big businesses. The current mentality remains one of jumping the gap, of trying indirectly or directly to prop up businesses that floated on the bubble and saw oversupply, and in fact drove overconsumption along at every oportunity. Quite why these agent provocateurs should be assisted deserves questioning.

    The policy conflict at present is between the inherently optomistic, who include HMG, and who claim rebound is shortly due - and the more realistic who are saying rebound will occur when it occurs. Every week the drop in activity exceeds forecasts which are contantly revised. Every week the recovery date is put back. Where is the surprise in this. The bubble has popped and only another bubble will provide rapid return to previous levels.

    Establishment recession projections are not up to the job. They feed through into strategy which then is accidental. Endlessly pushing money into supporting big businesses can only damage the residual economy. It is inevitable that these businesses have to downsize. Why is that not accepted.

    It is fine to jump a gap providing you clearly understand the size of the gap. Otherwise it is a blind man driving off a cliff.

    It is obvious that the need is to allow the housing market to stablise at a new level and to have secure mortgage funding available for first time buyers. This problem started with the housing market and recovery has to start there also. If people are not buying houses, please tell me why you think they will buy other big ticket items. One follows the other, not the reverse.

  • Comment number 20.

    "consider a gap year for at least 12 months "

    Jokes about the competence of GB aside, how long should a gap year really be?

  • Comment number 21.

    On GB again:

    "I can't believe he is being allowed to represent our country. I never voted for him to do so and neither did anyone else."

    Actually, the voters of Kirkcaldy and Cowdenbeath have voted for him.

    There was one post-war prime minister for whom no-one voted (except a smoky room of political bigwigs): Lord Douglas-Home.

  • Comment number 22.

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  • Comment number 23.

    Before the PM's speach this morning at Davos, on BBC News24, you down graded the importance and PM's motive of the MP for making this speach before you had even heard what he was about to say. - I regard your "I know better than you" attitude as typical of the young "pen pusher journalist" that are now at the BBC.

  • Comment number 24.

    We often laugh when we read the ridiculous story lines of sundry 'soap' characters but the various things that Gordon Brown and other politicians have said (and worse, done) down the years are often completely contradictory and seem pretty asinine when replayed.

    Which shows that politicians say one thing to one audience and then, sometimes on the very same day, take up some opposite position for a different audience.

    So, for example, Brown has said 'British jobs for British workers' when he was trying to downplay his Scottishness.

    And recently, Brown has stated that protectionism is very bad for the world economy.

    Obama played up 'American jobs for American workers' when on the campaign trail but privately his aides told Canadian politicians that it was just for domestic consumption.

    Nobody knows how this will pan out but serious policy errors now would just prolong the pain.

    Gordon Brown must be very careful or he will be history quite soon.

  • Comment number 25.

    I have been toying with the words `History is not destiny' and I am afraid I cannot make any sense of them.

    It would seem that Gordon Brown is keen to follow in the footsteps of that great orator John Prescott in talking rubbish. At least with Prescott you knew he didn't mean it so you could have a good chuckle at an otherwise charming man struggling with his tongue.

    I regret that I have grown tired of Mr. Brown. He is an academic who is too obsessed with his own genius to notice what it happening all around him.

    People speak of hubris; I see something else, something far more destructive, I think it is called betrayal.

    The betrayal of the Labour movement that once was a great dream of the British people. The dream has now become a nightmare. Enough!

    Time for the men in grey suits to lead Mr. Brown to the back benches and commence negotiations with the other main parties for a coalition government. There is work to do and we cannot leave it any longer.

  • Comment number 26.

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  • Comment number 27.

    The problem that has been created is that the great global "free" market has effects that are not always benign. The free market solution is to let businesses go bust, unemployment to rise around the world by millions, or by hundreds of millions, for governments to try to balance their books by matching their spending with their declining taxation incomes, etc, etc. Eventually living standards fall to a point where private investment sees opportunities for profit in cheap labour and capital.

    A proper Keynesian solution is for government (in general) to borrow for the increasing pool of savings and spend to prime growth, this kick-starting private investment at a lower level of unemployment than would otherwise be the case.

    But in order for this to happen governments must co-operate, not compete to strengthen their own position against other countries. Some chance I fear!

  • Comment number 28.

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  • Comment number 29.

    What a waste of breath from Gordon Brown. Protectionism is already here. As others have said, when you pressure the banks to lend domestically then you are already walking on a protectionist path.

    Governments around the World will follow the path. The major driver will change from the politicians, bankers and economists to the streets. If the democratic governments of the world loose the streets then they know that they will loose power.

    look at the present strikes in the UK. The workers are fighting a losing battle - legally anyway. They have no real problem with the Italian workers but they are frightened and annoyed - understandably. For years British workers have seen their jobs disappear in the name of globalisation. Now the so called economic benefits of globalisation are disappearing in front of their eyes leaving them mired in debt and with the weakest employment legislation in Europe! Friends and family are unemployed and the forecasts are for many many more to follow. How are they to survive with their mortgages and loans, massively hiked energy bills and food prices starting to rise again?

    The unions have already taken to the streets in France. It is likely that other EU countries will also see similar protests.

    Given all this our leaders are seen as being weak ( passing blame from one to another) and clueless as to what to do practically. Saving banks for greedy bankers means nothing to the man in the street. Saving "the world" whilst jobs disappear in Britain just appears stupid.

    As the situation worsens, governments who do not protect industries and therefore jobs and give clear national direction are creating an ideal environment for the far right or left.

    The situation with the Italian workers may be the first signal of a very testing time for the EU itself and hence the Euro.

  • Comment number 30.

    re: 20 "Jokes about the competence of GB aside, how long should a gap year really be?"

    Well, mine was nearly 18 months, when you include both summers...

    So yes, i had gap year-and-a-half, technically :)

  • Comment number 31.

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  • Comment number 32.

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  • Comment number 33.

    Surely, if as Brown say, the problems with the UK economy are due to overseas factors then we need Protectionism to protect us from these!?

    Personally, I think some Protectionism is a good thing because it means looking after your own country, which is after all the job the Government was elected to do.

    Protectionism does not mean an end to international trade, it just means doing trade on terms that are mutually beneficial and in our national interest. This government, however, does not want to do anything in the national interest. Blair and Brown would rather gallivant around the globe playing world leaders than do anything for their own country. They launch wars for the US; give away our rebate to the EU, and give foreign aid to countries like India that can afford nuclear weapons and a space program! What have they actually done for this country?

    Brown's version of Globalisation just means taxing the British to pay for their bloated government sector, while allowing business owners to shift jobs overseas.

  • Comment number 34.

    The only protectionism which started this mess was banks protecting themselves from each other because of the huge invisible risks they had been swapping and creating amongst themselves.

    It was not protectionism that caused short term foreign lenders to withdraw their loans from our banks, it was risk of insolvency of the borrowers. Because stupid bank business models matched long term illiquid assets against short term money market borrowing on engorged balance sheets, when the red flag went up governments had no choice for the sake of their reputations and depositors to step in

    Was this protectionist - I say not.

    Having found themselves in the bankers' shoes, politicians now cry " dont beggar thy neighbour" in the next nightmare phase of national fiscal stimulus and bank- loss haemorraging . Now this is where it counts. Even though for public home consumption they announce " lending agreements" to enforce support for their own economies to avoid the riots, they play the protectionist card on the international stage.

    Now Governments need to protect themselves from each other. Full circle, really.

  • Comment number 35.

    The key issue is this - free trade may be a good thing, but only if that trade is balanced.

    The root of most of our current problems is two decades of imbalanced trade, getting rapidly worse over the past five or six years.

    If we want to avoid protectionism, then we must make trade in goods and service balance for each country. Then everyone will be confident that for each job lost through imports another will be gained through exports.

    In theory, if the market were allowed to work, net exporters would see their currencies rise until they became uncompetative, net importers would see their currencies fall until they became competative. Things should sort themselves out.

    Why hasn't this happened? Simply because the globalised financial system has got in the way. Flows of "money" around the world have dwarfed the flows of goods and services and the necessary feedback loops have been broken. Exchange rates (when not rigged by the likes of China) are set based on relative interest rates not on balances of trade.

    I just can't help thinking that it is impossible to have a successful system of internationalised trade unless the globalised financial system is brought to an end.

  • Comment number 36.

    I wonder if the global economic system doesn't become fundamentally unstable in a down term from the viewpoint of free trade.

    Since cheating is so attractive for each govt don't we have a large scale tragedy of the commons ?

    If this is the case then Brown is standing like King Canute forbidding the tide to come in.

  • Comment number 37.

    "History is not destiny"

    He who does not learn from history is doomed to repeat its mistakes and failures for ever !!

    If nothing else, his statements have created the greatest effect on Britain's credibility gap and contribute massively to a devalued Sterling !!

    Having just returned from France with a (large ?) fistful of Euros, the devalued Sterling certainly didn't hurt me but, in the interest of the general public, this man should go !!

    The way he bumbles along creating one disaster after another makes a bull in a china shop look like an angel dancing on the head of a pin !!

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  • Comment number 39.

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  • Comment number 40.

    #35 random thought

    You get down to it and it is all so simple isnt it.

    It has been the elephant in the room for years, perfectly obscured by our own refusal to see the obvious through the filter of our 'greed glasses'.

    ENOURMOUS trade Imbalance.

    Giddy Asset price rises 10% plus year on year.

    120% mortgages

    Huge growth in 'non' jobs

    Individuals being paid annual bonuses on top of salary of 10's of millions for creating and selling on debt in various forms!!!

    What on earth were we thinking!!!

    It is absolutely essential that international trade continues as few nations are self sufficient in basic needs for their modern populations anymore, failure is not an option.

    The financial system must become the servant of the real system, not the other way around.

    Bankers should never be allowed to drip honey in the ears of politicians again. This time it will have to become part of the constitution.

    The regulatory system after the 1930's was pretty good, it has been allowed to be slowly eroded as the memory faded and the opportunity to get something for nothing was allowed to be tempting again.

    Jericoa


  • Comment number 41.

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  • Comment number 42.

    a)
    "protectionism protects no-one and least of all the poor".

    There is no need for the second part of the Brown quote as the ''no-one'' signifies the exclusion of everyone.
    (including the exclusion of the poor in case the Brown script writer missed it)

    b)
    "History is not destiny"

    One must assume therefore, that the Davros audience didn't know how to reference a dictionary until Brown came along to educate them in the mysterious and archaic system of assigning different meaning to different words.

    How the audience of World Leaders must enjoy the patronising lectures by Brown. Now they know how the rest of us feel.

    However as a point for discussion which may be a tad easier than attempting to rationlise 'Quantitative Easing',

    .... if a time traveller journies back in time, then does history not equate with destiny, or even follow destiny ?
    (history is where you have been and destiny is where you are going)

    Answers on a postcard please, to the
    No 10 Think Tank,
    c/o Ministry for Wacky Speeches.

    Recommendation - More science education funding and/or philosophy education funding is obviously needed .
    And a different script writer might help.

  • Comment number 43.

    Another great day for Gordon and his gang of buffoons,as we lurch from one disaster to another he continues to spout nothing but hot air. Great on talking, definitely absent on the action stakes. When will he and the rest of the prats currently sitting in Parliament realise that the blame game they practice is getting nobody anywhere. Surely its time to knock some heads together,take the best ideas from all sides of the house to get things moving rather than playing at Party Politics and point scoring. Also stop asking the banks to act but demand and ensure that they release the funds that we the public (against our will) have been forced to present them with in order to kick the economy into life. Finally when job opportunities present themselves make sure that British Workers are first to be given the chance to fill them.

  • Comment number 44.

    Point 1) History is not destiny but if you don't know where you came from, you probably don't have a clue where you're going to.

    Point 2) Brown needs to stop 'acting' and start 'doing'.

    Point 3) When Brown said that 'the banks' return to their home markets was already hitting capital flows to the developing world' he was no doubt referring to where the UK will be after his disastrous mismanagement of our economy since he took charge of the Treasury and the Regulator in 1997.

    Point 4) When Brown said "protectionism protects no-one and least of all the poor", he was talking about the future citizens of the UK.

    How this man, our unelected leader, has the gall to speak on behalf of this once fine country is an affront to democracy. Like Mugabe, he must go immediately.

  • Comment number 45.

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  • Comment number 46.

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  • Comment number 47.

    In an article with The Daily Telegraph, Brown is calling upon the 'spirit' of the British people to see the nation through this crisis. So there you go folks you heared it from the Leader it's every man for themselves.

  • Comment number 48.

    Firstly, may I say it's great to see you back Stephanie. It's nice to see someone who doesn't resort to doomsaying in order to fill a 4 minute slot.

    Secondly, for the people saying 'I didn't vote Brown', what's your point? You know as well as anyone who has even a vague idea of parliamentary democracy that we don't vote for a Prime Minister. The PM isn't our head of state and there's no written constitution to suggest we HAVE to vote a leader.

    This crisis clearly started in America, and the knock-on effect on Europe is a result of global capitalism, thus blaming Gordon Brown for all your financial woes is patently illogical and proves the culture of personal irresponsibility that led us to this situation in the first.

  • Comment number 49.

    Gordon Brown increasingly desperate attempts to serve two very different masters; the financial service industry - here we see 'Flash' Gordon, self-proclaimed saviour of the world, ethical capitalist - on the other hand there is General Gordon, the bully boy, calculating, mercenary leader of New Labour, obsessed with power and his own self-aggrandisement, like a cross between Richard Nixon, Captain Ahab and Glen Bulb (Mark Gatiss's character in the comedy 'Nighty Night'), has he perhaps some strange political 'bipolar disorder'?

    Someone PLEASE stop Gordon Brown from getting in front of a TV camera, speaking at news conferences, and/or announcing any more govt. initiatives, since hardly a day passes without "Deputy Dog's" pointless, disingenuous 'statements' and boring self-promotion.

    “I will not allow house prices to get out of control and put at risk the sustainability of the future; the UK should not return to the instability, speculation and negative equity of the 1980s and 1990s”
    Gordon Brown, Chancellor of the Exchequer, November 1997. Eleven years is far too long going over lessons Gordon tells us HE has learned.

    Although ordinary people couldn't see the economic crisis coming, Gordon Brown should have known from his classic latin lessons, 'In regione caecorum rex est luscus' Desiderius Erasmus, Adagia (III, IV, 96) (1466 - 1536) 'In the land of the blind, the one-eyed man is king'.

  • Comment number 50.

    I just heard that anti-dumping legislation means that duty on imports of steel products from China increases by about 87% on Monday. Is that not a form of protectionism?

    Why does GB say that his government believes in globalisation without protectionism when they are increasing import duties by such a huge percentage?

    Why has this 87% increase in duty not been reported in the financial press?

    Is 87% enough to stop the dumping?

    When steel prices went up in 2006 and 2007 it was apparently because of the enormous demand from China's booming economy. It seems ironic that we should now have to protect against cheap imports from China!

  • Comment number 51.

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  • Comment number 52.

    Point of Order if I may Madame Stephanie

    Is it not a matter of etiquette for Editors to provide a modicum of feedback to the many excellent points raised on the individual Editor blogs ?

    A sort of Hansard weekly summary in less than 250 words of interesting points raised perhaps?

    We know that Pesto and Nicko don't do it for the valid reason that the good points in their blogs get swallowed up by the multiple rants.
    The good points tend to be consumed in the Shadow of the Valley of Rantage.

    But there appears to be no valid reason for your goodself to follow such a path of avoidance.

    Any views ?
    I look forward to your considered reply

    regards

  • Comment number 53.

    Skilled immigrants can make a very positive contribution to our economy.

    Skilled migrant workers who do not commit to the outrageous expense of settling here usually send or take as much money home to spend in their own country as they can.

    That's a distinction Gordon Brown seems determined not to notice. He speaks of the latter as if they were the former.

  • Comment number 54.

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  • Comment number 56.

    When will the adage "when in a hole stop digging" come into play?

    The whole World seems to have undertaken to dig faster when everyone acknowledges that the aim is to be out of the hole.

    At sometime the digging has to stop.

    (for those of you not following my point digging equates to transferring the assets of the prudent to the profligate [and downright fraudulent?] or from savers to 'banks'.)

    The nirvana that is aimed at is increased savings ratios in a balanced economy, but the incentive to save is being crushed faster and more furiously now than it has ever been in history(? - possible exaggeration.)

    Answers on one side of A4 - if you can get it right you will make oodles of dosh!

  • Comment number 57.

    I didn't vote for Gordon Brown either. I voted knowing that my vote wouldn't make a whit of difference in this constituency which has been represented by a Conservative for as long as I've lived here. Nevertheless I voted and hoped for an overall Labour victory. I also had the expectation that Gordon would subsequently become PM.
    I remember what it was like with a Conservative govt. All the sleeze, mortgages going through the roof, street riots, poll tax, the miners' strike and police taunting miners with wads of notes, loadsamoney- boy-bankers, the first Gulf War.
    That was the point at which my husband started up a small business. I thought he was crazy but he now employs 12 and, oddly enough, it is surviving this. In the last two months exports have doubled. The order book is looking good and there was a sharp up-turn the moment VAT decreased to 15%. Turnover for the last 6 months is the best ever.
    I don't mean to sound insensitive about other people who are obviously suffering in this down-turn but the fact is that, in my view, government measures are working. The VAT decrease did make a difference, being able to negotiate a delay in paying the last quarter's VAT bill helped enormously with cash-flow over the Christmas period. Our personal out-goings have decreased since mortgage payments have gone down so much and the cost of heating oil has fallen dramatically. Houses are selling around here and the prices don't seem to have fallen hugely.
    The banking sector has been at fault - and still is holding things up - but it is not all doom and gloom, especially now Bush has gone.
    I would love to see less carping and negativity on these blogs which seem to me to have been hijacked by professional political workers dedicated to criticising Gordon's every move and I also feel that these demonstrations spreading around the country against foreign workers will be traced back to a similar source to that which master-minded the fuel protests. Incidentally, the fuel protests very nearly sent my husband's business to the wall. The effect was far, far worse than anything we are experiencing now.

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  • Comment number 60.

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  • Comment number 61.

    #57

    Some businesses will thrive in the current conditions, but most of them will not.

    I think you have to accept that a lot of the criticism of Gordon Brown is reasonable.

    The banking crisis is largely due to a lack of regulation. Gordon Brown introduced the regulation in this country.

    You can say that it started in the US. But for the same flaws that we have cultured over here, and it has affected our financial system a lot worse than in other countries, though not all. My point here is that it was possible to protect more against the effect from America. We could have done more to prevent this.

    One thing I wonder about is the choice to make the Bank of England responsible for controlling inflation but getting them to concentrate on CPI rather than RPI. I was going to have a look into this out of interest, but haven't had the chance yet.

    I think that because CPI doesn't include the effect house prices, it means that there has been effectively nobody overseeing inflation in the housing market except for the government.

    As we see repossessions rise and negative equity affect millions of homeowners, ask yourself how this arose.

    Remember that it was sub-prime debt that crystallised this situation - mortgages backed by potentially over-valued assets.

    That was prevalent in this country. That's why Northern Rock was hit so hard.

    With regards to the VAT position, I'm sorry but I don't believe that your husbands business, has benefitted overall.

    You say that he was more affected by the fuel protests and he exports which makes me think that your husband relies heavily on transportation. The increase in fuel duty has effectively raised the cost of fuel for business.

    In addition, the exports wouldn't be affected by VAT so the increase in sales would be due to the weakness of the pound.

    As we import more than we export in this country, I think you'll find that overall this is a bad situation and you will begin to see this as new stock comes into the country.

    Bit rambling this, but I thought it was worth questioning some of your points. I thought it was an interesting post.

    Oh, you mentioned the first gulf war as a bad thing and it made me also wonder about your opinion of the second.

  • Comment number 62.

    Are these Italian workers brought over to work in the Total refinery classified as Non domiciled in the UK?

    If so, they will not pay UK tax nor make NI contributions. But if they are also out of Italy for a number of months they may not liable to pay Italian income tax either (do not know italian laws). If that was the case then I can well understand the cheaper cost angle.

    Oh, and if they get sick who pays? The UK taxpayer of course. Pull out of the EU and call an election.

  • Comment number 63.

    Stephanie:

    Brown has only himself to blame. It's been a constant theme in New Labour land to make abstract general statements in speeches that are designed to supply easy sound-bites to the media. Brown claims himself to be a 'doer' rather than a 'talker', but unfortunately old habits die hard with him and his party. All they ever do is talk talk talk, endless yak yak yak without substance. They don't know how to 'do'. Their party has been formed in the image of some 'ten steps to better management' type book. All they know to do is talk. They just don't get it. They've adopted some of the worst habits of many of those they've used to provide them with their new language of change (the management 'gurus' and 'establishment sociologists' [you know who you are]). All this has done is make us all weary of listening to them. we're tired and insulted by sound-bite speeches and we're fed-up with a party that has separated itself from the everyday concerns of ordinary people. They have peddled this utilitarianist trickle-down theory of prosperity for far too long, and have undermined any chance they might have once had of changing UK plc for the better.

  • Comment number 64.

    I guess several tens of thousands of Brits working in Europe have their heads down at the moment while 600 Italians await their fate with Total.

    Its good to see the oil and gas workers are doing their traditional best to aid in Britain's economic recovery by striking! Perhaps they should try working harder instead.

  • Comment number 65.

    Stephanie

    I am very concerned about all of the media reporting from Davos. It appears to me that the bankster political fat cat elite are steering the agenda into preservation of the status quo in terms of that awful 'G' word -'globalisation'.

    I say that 'Globalisation' is one of the worst misnomas afflicting our world and has, overall, led to both huge world populaton growth and poverty in some countries - ask any charity doing overseas work. G Brown says he supports efforts against world poverty but we do not seem to have heard any Charitable in depth coverage on this issue . This is important in terms of poverty/ population growth - it (should) concern us all directly.

    Regarding G Brown's ridiculous and insulting speech - let's hope our UK ''destiny is for him to very soon be 'history'.

    The main problem is that the Davos bankster/fat cat rhetoric is intended to promulgate the 'fear of protectionism' - this also seems to be accepted by some at the BBC as well.

    There is not a shred of evidence that so called 'protectionism' would be damaging or more damaging than what we have now - which is the laxy, sleazy global way of carrying out, regulating and ordering trade without national safeguards doing things rather than action in growing a resource backed currency, strong UK industry, R & D, renewable energy to make ourselves a net exporter of real goods.

    G Brown, the banksters, vultures, financial parasites, bung seekers, free loading internationalists, fat cats are spreading this anti-protectionist rhetoric simply to protect themselves - G Brown has sold Britain down the river - The Yangsee Kiang - the yellow river.

    Some of these globalists are saying on the BBC that the current economic problems are cyclical not structural - These views are going completely unchallenged and this is not balanced or impartial media reporting by the BBC and other media, in my view.

    Are we getting value for money out of our BBC licence fees at this critical time while the banksters grease palms and spread their 'anti protectionist' agenda which leaves them as the beneficiaries of billions of pounds of tax payers money with large amounts of this money now overseas in stead of having been invested in our British industry for Britain as a future net exporter.

    There does not appear to be anyone challenging this dangerous rhetoric - except perhaps David Cameron may be leaving the door open with his carefully guided statements.

    Let's be clear about the terminology - anti globalism is my view, in simple terms, means being anti to what is largely unregulated international trade, banking ( massive cash movements leaving UK exposed), immigration, as coupled with a legal and regulatory framework actually supporting and exacerbating the effects lack of regulation/laws in some areas that seriously disadvantage the majority of the people in a single nation - that's what the Davos back slapping rhetorists need to address.

    We need to talk about EWT - 'ethical world trade' and not globalisation. There is not a single champion of EWT at the conference from what I can hear.

    I'd like to hear someone at Davos say 'British jobs and industry for Britain' - 'this is what Britian and its political economy is going to do going forward in relation to world trade - Catch us (the UK) if you can'. This is not protectionism - this is international competition - surely what is NOW needed in the UK. Ethical world trade and not globalisation would put up solar panels and irrigation into the Sahara desert and allow the countries there to compete on a more level playing field.

    G Brown and his government do not understand resource backed currency and industrial competition - in order to have compete we (all countries) need to have industry and resources that under-pin our/their currency - Brown has now largely missed this opportunity by pouring Billions of pounds into banks in a panic stricken tax/borrow orgy and seemingly has got little in return to build and organise at street level in the UK.

    I say the political fat cats favour keeping and seeing the return of a bloated financial sector because its easier for them to get a bung from a bankster than it is to get one out of a factory boss.

    We need to separate the City of London from Parliament/House of Lords and make these buildings historic buildings open to the public - as sleaze museums - because that is what they are now.

    We need a fresh political economy - separating the political establishment from the city of London - We need a new parliament and a subserviant institution to deal with legislation. We need change to achieve a new worldwide political economy - we need EWT and not the 'G -word'.

    Why is B. Obama - not there in Davos - his vision for a new America will not be built around anything said at Davos - he's already started building the new America from within as a resource backed competition machine. Bloated, lazy, sleaze ridden, fat cat, backward looking globalisation is not within his agenda. His/The American way is that he will speak to his entrepreneurs and industrialists and the banks will serve their needs. Subservience by the banks will also be achieved in the USA by improved regulation.

    What's the matter with your colleagues at the BBC and other media services - Are they still petrified in fear of Alastair Campbell?

  • Comment number 66.

    Sergeant Digby.
    Your post is one of the more intelligent ones I have read on these blogs so I will answer in detail.
    I agree that the crisis is largely due to lack of regulation though I had thought that began before 1997 hence my recall of the Loadsamoney mentality during the Thatcher/Major years.
    I cannot defend the sub-prime debacle (but how can Gordon be blamed for that?) or the buy-to-let mortgages. Yet today's post has just arrived and with it an offer to borrow £12000! Ludicrous.

    The VAT decrease genuinely has made a difference. I can't explain why but I am telling the absolute truth when I say that our phones hardly rang at all in the last week of November and went crazy from Dec 1st onwards. There is only one conclusion to draw. On a personal level, we put off buying some stuff in November and bought it in December instead. One saves a bob or two when one can.
    The reason why we nearly went down during the fuel protest was that our staff couldn't obtain enough fuel to get to work. They have fairly unique skills, we are in a rural area and not all live locally (public transport wasn't an option because of Dr Beeching) so orders weren't being completed and paid for but overheads had to be paid. It caused a cash-flow crisis which would have been final if it had gone on any longer.
    VAT is chargeable on goods sold within the EC. In the last two months we have made sizeable sales to Germany, Slovenia, Ireland and The Netherlands. The customers have made savings on the VAT and are happy to do so. Perhaps they would have been happy to pay the extra 2.5%. I don't know what their reasoning is but I suspect it is a combination of the exchange rate and the VAT change which has caused them to make the purchases now. They're paying in sterling and our suppliers are in the UK. It currently represents 60% of our turnover - 30% up on last year. If the relative weakness of the pound against the Euro is a bad thing then why is a French Minister objecting to what she sees as an unfair advantage?
    I'm not saying nobody is hurting. Clearly it is disastrous for many but I'm trying to redress the balance a bit and speaking personally. All the business people we deal with are saying the same as us however and, believe me, it is a major topic of conversation. I only directly know two people who have actually lost jobs. One is a solicitor (!), the other taught in a private school. On the other hand, local farmers are doing well and the tourist industry round here is set for a boom.

    I defend neither Gulf War.

    I will vote Labour in future: always have, always will. My memories of the Thatcher/Major years are bitter. But a party that promised to restore student grants might tempt me......

  • Comment number 67.

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  • Comment number 68.

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  • Comment number 70.

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  • Comment number 71.

    Brown can lecture people as much as he wants; he won't ever be able to get out of this mess while he's in charge because firstly he's too stupid to do what's needed (reduce debt), and secondly nobody has any confidence in the government/him.

    When your business collapses due to massive financial mismanagement and stupidity by the directors, do you allow the directors to hang on to their jobs and try and fix the problem? No, you fire the directors and get in someone else who actually understands business.

    Likewise with governments; when the government is responsible for creating 100% of the problem (no regulation, no understanding of how the financial system works, running up insane levels of public/private debt), then you need to fire the government and elect a new one who'll take a grip on the situation and fix things properly.

    There is absolutely no way to correct this problem from the uk perspective without a change to the uk government.

    The collapse of the pound proves this very point. We're not just losing against the dollar, we're losing against every currency (apart from that of zimbabwe, but we're getting close to mimicking what they're going through economically). This isn't just the speculators trying to make money, this is every other country in the world dropping the pound like a stone because they know we're finished with our current government in charge.

    Election, and a new government; that's the only way out. Fiscal/monetary policies are irrelevant in the uk until that happens.

  • Comment number 72.

    Regarding the vat changes mentioned in various posts above; something to consider is that the pound started collapsing immediately before the vat change was announced, and then continued collapsing afterwards.

    Speaking from my own business' point of view (essentially being a services exporter), it's the collapse of the pound that's helped our order-books, not the vat reduction.

    The vat reduction's made no difference to us at all; the collapse of uk orders on our books prove that; uk orders have all but dried up because the uk is dead in the water (apart from other exporters that is), but our foreign orders have increased dramatically since the pound started its steep collapse.

    There's no such thing as a domestic uk market at the moment in our business; it simply doesn't exist anymore; the uk has no more money; virtually all our business is now exporting to countries which still have some confidence left in them (usa, canada, australia mostly) - the uk is finished; only exporters will be likely to survive if this goes on for more than another couple of months.

  • Comment number 73.

    Re: #3.

    Excellent posting, I especially agree with the bit about Labour and Darling and Brown doing nothing for a while... they do NOT instill the much needed confidence.

    Only a new government can do that, as we all instinctively know.

  • Comment number 74.

    Let's just hope that at some stage in the coming months we dont end up as we did in the 30's.This is the 21st Century and we are governed by politicians who cannot instill confidence, or inspire any great belief.
    What was it " Things can only get better!!"
    Yeh RIGHT!!!

  • Comment number 75.

    #66 with regards to the VAT on foreign customers, I had assumed they were VAT registered retailers based outside the UK. That'd be a zero-rated supply of goods and therefore not affected.

    I disagree with your opinion that Gordon Brown cannot be blamed for the sub-prime debacle. Not because he caused the US sub-prime issue, but because he has been irresponsible in creating the same issue over here.

    Note the repeated use of the phrase "it started in America". This is correct. But our economy wouldn't be as damaged if we hadn't been doing exactly the same thing. It started in America and continued over here because we were vulnerable for exactly the same reasons.

    Anyway, thanks for the reply. Pleased to hear you didn't support the second gulf war. Gotta go now. Cheers

  • Comment number 76.

    getridofgordonnow - the nom de plume indicates that you have a fixed mind-set but your comments baffle me. Why are you moaning if your exports have increased dramatically? Surely that is a good thing. Ours have too, but we're still getting 40% of our business from the domestic market.
    The pound has been far too high against the dollar for a long time. That was great if you were making a trip to the States but our business hasn't made a sale to the US for about 3 years until recently.
    The pound hasn't collapsed. It is adjusting to something like where it should be against the dollar and is beginning to creep back to something more like normality against the Euro.
    If you export services outside the EC you will not have benefitted from the reduced rate but you have brought money into the country and done our economy some good. We are exporting manufactured goods mainly to private individuals within the EC who are charged UK VAT so our experience in the last two months has been positive regarding the VAT change.
    What your business and ours has brought into the UK economy is terrific and we'll eventually dig our way out of the hole.
    Thank your lucky stars that we have a government that is taking steps to ease matters, take advantage of what is on offer and give it all a chance to work.
    The last thing we need at the moment is an election.

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  • Comment number 79.

    #48 Ginger_Warrior

    You obviously missed the point about elected PM so let's pass over that subject.

    But what I really get fed up about is 'it all started in America' mantra that Gordon and the Brown Noses trot out all the time.

    It is such a puerile statement.

    It is rather like saying 'The First World War started with the assasination of Arch Duke Ferdinand in Sarajevo and therefore that that conflict was the fault of the people of Bosnia and Hersegovina; the Germans were blameless'.

    The bursting of the sub-prime market bubble triggered the event that led us to where we are now. If it hadn't happened in America first, it would only have somewhere else; either way it was something that was inevitable.

    It was always going to happen in America or the UK or Iceland and some other countries whose availability of easy credit was out of control.

    Having said that, the bursting of the sub prime bubble wasn't going to happen in China, it wasn't going to happen in Thailand although let it not be forgotten that every country has been dragged into the downturn.

    Banco Satander has fared better than other banks because of tighter Spanish regulatory controls; if the US and the UK had had the same regulatory controls in place our banks would be in a better shape too.

    There are some governments who can put hand on heart and say it was nothing to do with me. Obama is untainted and is in the clear.

    However Bush, Blair and Brown are not.

    Bush, Blair and Brown are like small children who have been left in a room on their own with a plate of chocolate cake in front of them and told not to eat it.

    On returning to the room you notice the cake is gone and you ask them if they have eaten it.

    Each of them looks you in the eye and says with absolute sincerity that they have not touched it and blame the other, not realising that all the while you can see large smears of chocolate around all their mouths!

    Of these three stooges two have left the stage. Only one to go and it won't be before long.

    And another thing, the next time Brown calls Clarke the 'Shadow Shadow Chancellor' he should be reminded that he is worthy of the same sobriquet because it is a job he has occupied most of the time since assuming Blair's mantle but only when it suits him.

  • Comment number 80.

    Interesting piece in the Telegraph today about EU workers moving to other nations in the EU:

    "One reason why so many EU workers are in Britainis that the UK Government decided not to use transtional powers to restrict access to the labour market to the new east European countries that joined in 2004. Other major economies, notably Germany kept restrictions in place. As a result most Poles and other east Europeans came to this country."

    An estimated 0.5 million Poles have decided to stay in the UK despite the recession. Any population estimates in this country, whether they be the total, EU migrant workers etc are not much more than guesses. To be honest you might as well ask the chimpanzees in London Zoo, as the Government has failed in its duty of counting the numbers of people who enter and leave the country.

    Like it or not the Italian workers are here legally. My reservation is this: is it a level playing field in the rest of the EU? At specialist levels in the jobs market UK workers can and do work in the EU, but if your vocation was a builder, can you really see every member of the EU being as welcome as that old TV show "Auf Wiedersen Pet"?

    More prosaically we need to encourage international trade, as we cannot ignore the plight of the Third World. Trade is the only way for them to better themselves. Handouts from the Dept International Aid and development, are constantly being sent to Africa etc. to no discernible benefit. The EU has a big responsibility in this as CAP prevents food imports and the talk of carbon footprints is disingenuous. Its like saying that the transport of aid is OK, but if the same transport is engaged in trade it is bad as it has a carbon footprint?

    Another thing that needs to be addressed in times when credit is difficult to come by are the standard sales terms on an invoice. It is usually 30 days payment grace from the invoice date. International Trade terms are sometimes longer depending on the journey time. It is crucial that these terms are met and in full.

    Unfortunately some companies in the UK (and some are very successful) have turned this into an art form. It should be illegal to do so, penalties could start as fines and culminate in jail time for the Chief Executives. Apply name and shame tactics: if they are members of CBI or IOD expel them etc. In this respect the whole business community is in this together.

  • Comment number 81.

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  • Comment number 82.

    Those criticising Brown miss the point somewhat.We get the politicians we deserve,Our greed,shallow obsession with material goods and willingness to believe more and more of us could get richer forever has been corrected for now.No doubt it will again when we forget this recession,or maybe we will learn. Brown has to talk up the economy,any politician would but at least we are free to criticise,unlike the people of the advancing giant-China. I can't take the Tories seriously when they batter a fellow freemarket fundamentalist.Does anyone believe they would have reined in the banks? I remember before the '97 Election messrs Fortune and Bird conducting a spoof interview in which the Labour politician was asked why his party had adopted Conservative policies," how else to you expect to get Tories to vote for us" was the reply. Many a true word...

  • Comment number 83.

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  • Comment number 84.

    80. At 5:40pm on 31 Jan 2009, excellentcatblogger wrote:

    Like it or not the Italian workers are here legally. My reservation is this: is it a level playing field in the rest of the EU? At specialist levels in the jobs market UK workers can and do work in the EU, but if your vocation was a builder, can you really see every member of the EU being as welcome as that old TV show "Auf Wiedersen Pet"?

    Hi excellentcatblogger!

    I remember being on a german building site in the time of the early days of that TV programme and a lot has been made in news recently about this nostalgic piece of TV history - as if this should make us happy with the flood gates now being opened to foreign workers.

    The British were there ('welcomed there' is an 'over-statement') because Germany had acute skill shortages at the time, major on-site health and safety issues with german workers taking beer breaks - Yes the german construction workers took beer to work in their flasks on most days. The work was largely very isolated and often with dangerous conditions for British workers. The position was that Germany accepted that the British workers were needed - and the need factor was very high.

    These overseas British workers were accepted only because of these chronic skill shortages and at the time British tradesmen were amongst the best and better than most in Europe. The British workers were only their in relatively small numbers - no more than a thousand or so in total. Germany wasn't invaded by millions of foreign workers as in the UK - the germans would not have stood for that then and I don't think they will stand for it now.

    None of these conditions now apply to foreign construction workers in Britain and there are plenty of British unemployed who would retrain/relocate and do the work if they had to/ were given the opportunity and training.

    We should remember this when the mercantilists of spin and rubbish try and use this powerful but misplaced media imagery in their rhetoric.

    Whoever thought of using this imagery at Davos hasn't got a clue what they are talking about - this is nasty, nasty spin - No wonder the UK is now in such a mess.

  • Comment number 85.

    82 stevejohnson72

    I think the tories would have kept a closer eye on the banks. When they were in power they did for the uk insurance industry what labour should have been doing for the banks.

    Back in the 90's the tories saw things like the reinsurance loops and other damaging things in the market, and they forced people like Lloyds of London to put their house in order before things got out of hand, and so things were fixed with hardly any pain at all; nobody really noticed but it was fixed. The reason nobody noticed was that the tories fixed it before it became a major problem.

    If you wonder why the insurance market in the uk is relatively unscathed/safe and yet the banks' sheets went mad, it's because the tories corrected the insurance market when they were in power.

    It was only when labour got into power that the regulation went out the window. The tories saw it all and fixed it before it was a problem, then labour got in, ignored every warning, and broke it.

    I know who I'd rather have in charge of overseeing the financial institutions, and it's not the man who thinks that doubling the tax rate for the lowest paid wouldn't adversely effect people on low pay.


    re: 76 doctordisraeli
    The benefit of making money through increased exports due to a low exchange rate is only temporary, because hyperinflation will soon outweigh that benefit when things truly reach a head and the policies get more desperate. So, yes, I'm personally getting more business at the moment because I export, but at the same time I can see the public finances go deeper into the toilet with no hope in sight, so I'm ok for now, but as a country we can't survive like this for much longer. Labour still won't even admit that the root cause of this was too much public/private debt and lack of regulation; that lack of admission means they can't/won't ever fix those root causes.

    Saying that I shouldn't be moaning as I'm doing ok is like telling someone standing on a train-track to stay there because there's no train within 10 feet so he's fine.

  • Comment number 86.

    So now Gordon says he doesn't know if his spend, spend, spend approach will work, while he sits there with his financial future safe behind his MP's pension....

  • Comment number 87.

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  • Comment number 88.

    Protectionism of industry is very important if we are to rebuild, re-tool, and retrain to produce goods that the global market wants and needs (see Japan).
    Protectionism for banks is not good because most of our capital was inflow to this country-hence the drying up of commercial loans. I think that is what Gordon Brown should have said.
    As for un-elected leaders, what about Peter Mandelson, he still thinks he is a Commissar, now there's an unelected leader (for life)!
    I have found a good solution to Gordon Browns pronouncements, I just hit the mute-button every time he appears on the box- it works for me.

  • Comment number 89.

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  • Comment number 90.

    He is just looking to blame, someone, anyone other than take his share of the responsibility for this economic problem - namely very light regulation
    I think that its a bit rich him lecturing people on what do do when as soon as the IMF points out the anomolies in what he says he just rejects them out of hand.
    I'm afraid that I'm not listening to him anymore , he may be saying some good stuff but he is discredited in my opinion (what what thats worth..)
    The sad thing is that his hubris will affect this country for the next 20 years and the taxpayer will have to pay for his failings as Chancellor and PM - still I don't expect him to survive t he next election so that is something

  • Comment number 91.

    Suggestion to help with the recession:

    Background:

    House prices seem to be the root cause of the recession.

    Banks and others were lending to customers of poor credit quality, assuming the value of the collateral (houses) would cover them from default. As house prices declined, the banks lost billions. Banks need a level of money to repay deposits, and following the losses, the banks had to get government money to help maintain this level as well as reign in their loans.

    As banks reigned in their loans, people and businesses had less money available to spend and invest, so many businesses have cut back on their activities or closed and laid people off.

    Current problem:

    House prices are still at unsustainably high levels, but no-one know how low they will fall (or when). The banks therefore don't know how much more they will lose, and are reluctant to lend until they have certainty over the losses.

    Businesses and people are therefore also uncertain and are restricting activities until they are certain over availability of bank loans, certain over their jobs and income, and certain that if they buy items, the items won't decline significantly in value.

    Suggestion:

    I think the solution is to leave house prices to market forces, and let them fall to a sensible multiple of income. True, the banks will incur losses, but at least these will be known and governments can help provide money to cover these.

    The benefits will be that certainty will return, banks will start lending again, businesses will be able to make decisions and invest, and people will have the confidence to buy the houses and cars and items the businesses are producing once again.

    Paul S.

  • Comment number 92.

    Are we now not suffering from historical decisions? The crash of 1929 was a major contributing factor to World War 2. Post War the European leaders were anxious that such events should not occur again, especially with the growing menace of Russia. The formulation of The Common Market may have looked good at the time. The problem is that more poorer countries have now joined. If you allow Rochdale to join the Premier League, it is only human nature that their players would prefer to play at Old Trafford. If East European workers can come here and earn three times what they could earn at home and take advantage of our benefits system they are going to.
    Millions of decent British people suffer death, deprivation in two wars and now their descendants are being thrown on the scrap heap by an influx of foreign workers

  • Comment number 93.

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  • Comment number 94.

    91. At 12:46pm on 01 Feb 2009, Paulsuggestion wrote:
    Suggestion to help with the recession:

    Background:

    House prices seem to be the root cause of the recession.


    Someoone who speaks the same language as me.

    House prices have to be bought back in line with income in order for banks to start borrowing at sensible levels with minimal risk.

    If Bliar & Brown had kept their promise from 97, house prices would not have outstripped income levels.

    This however means massive numbers of negative equity mortgages if house prices do srop to the correct levels.

    However, estate agents, banks and building societies should bare the brunt of the blame for this because of over pricing houses.



  • Comment number 95.

    We as tax payers need to question these banks. The money is not filter to the taxpayer, the banking system is design to take not give for (ex: you can pay a $40,000 car off in 6years something that depreciate in valve; where you buy a house for the same $40,000 and it take 15 or 30yrs. to pay off yes interest rate is the big key, look whose determining this; the banks!!!!!!!!! Anyway way you look at it ; it's legalized loan sharks. The old saying the rich get richer and everyone else gets poorer. Their is no more middle class all of us are the same struggling while corporate America continue to buy unconscious.

  • Comment number 96.

    62. At 11:36am on 31 Jan 2009, excellentcatblogger wrote:

    'Are these Italian workers brought over to work in the Total refinery classified as Non domiciled in the UK?'

    I'm no tax expert - but there does appear to be scope for some avoidance /evasion here on income tax, business rates, council and other taxes. Another question - are their lodgings taxable as a benefit in kind? Has any UK agency vetted each invidual's suitability to be in the UK?

    I'd be interested to get the details on that floating cell block they're all hiding in - I'm told that it is difficult to charge business rates on it if it has a single assessment as a hostel or similar and virtually impossible to assess for Council tax purposes - I very much doubt if any of these non doms? are contributing anything to the UK at all - as presumably their salaries are paid overseas which may be one reason why their employer appears to prefer foreign workers as enabling a lower wage rate to be paid as under-cutting local workers.

    I have to mention my view is speculative but I would have thought that the Inland Revenue and all relevant authorities should pay them a visit and check them over also make sure they're not polluting the water.

    This may be giving these 'workers' a sizeable financial advantage in lodgings, accommodation, low rentals and which would not be a level playing field for local workers who have to pay council taxes etc on jobseekers allowance or get evicted or their house re-possessed. This shoots a hole through New Labours' open border/EEC lies spin and nonsense and shows the kind of business and their ethics New Labour are encouraging - may actually be allowing the Italian and US sub-contract employers to break UK laws in the process - by a complex series of tax and possibly other evasions /breaches.

    The whole thing stinks in my view! Needs a full forensic enquiry. I'd send in Customs & Excise and the fraud office police as well as ACAS.

    If Peter Mandelson/ Alan Johnson/ Gordon Brown can get me or some of the 'local protest workers' a job in Italy - I'll go and I'm sure many others would go and give it a try - otherwise they might do better to refrain from speaking (individually and collectively) like the proverbial fool and Senior Professors of Spin. I'd say to the three of them - put the jobs for UK workers where your big mouths are!

  • Comment number 97.

    96. nautonier

    I'm not going to go throughe very point you raised, but would just toss out a few general thoughts on this.

    Using non-residents to undertake work is usually a high cost option, actually for reasons you kind of allude to. If you ship people in for a short term contract, typically you have to pay their accomodation and other living expenses, whereas if you hire locally you expect everyone to pay their own rent/mortgage etc. Now a floating barge might not be luxurious, but it isn't free. If the Italian company came in as the lowest bidder, it suggests to me they were willing to accept a lower margin on the work.

    As for the tax etc, I have no idea how Total and their contractors have structured things. The general tax rule is that as an individual you are non-resident if you spend under 183 days in a year in the UK, and less than 365 days over a four year period (ie 90 days-ish a year). I think the Total job will be under 183 days, so they'll be non-resident. They are definitely non-domiciled. These are not guys looking to live out their days in the UK. Conversely, for instance, I remain UK-domiciled, but non-UK resident.

    Non-domiciled and non-resident persons, generally, do not pay tax in the UK. As for whether their employer will pay tax (Corporation Tax), I suspect they will, otherwise everyone would just set up non-UK companies, do all the work in the UK, but invoice (and book all profits) offshore. The fact this doesn't happen, suggests there is no tax benefit. Contrary to what some on here may think, the Revenue isn't staffed entirely by idiots. Such positions are reserved for their political masters.

    Given that this whole thing seems to be covered by EU rules on tendering, I'd be surprised if there aren't also standard rules to cover taxation. Otherwise everyone could undermine the cross-border competiton rules by using their domestic tax regime to make using foreign firms unattractive. So I suspect the tax authorities are rather less bothered about this than anyone else.

  • Comment number 98.

    Please tell me that I have been misreading the posts that suggest that this crisis is due to house prices.

    House prices are just a minor reflection of a major malfunction (you may like to call it fraud) in the global financial system. We are now finding that it is not just a question of quarenteening the 'toxic' debts. The real question now is do we have enough 'good' money to actually cover all of the debts worldwide. In other words by how much has the world overstretched the amount of wealth that is supposed to underpin it.

    This is the true reason why companies big and small around the world are going to crash as the second tsunami wave hits us.

  • Comment number 99.

    I am surprised at how negatively Brown is portrayed in the comments. Unlike any other politician he has correctly diagnosed the financial situation and acted quickly to impose solutions. Given that the crisis is very complicated and new problems surfacing daily, it is not surprising that Brown will suggest contradictory/inconsistent actions over time. This should be viewed as a strength, a sign of a pragmatic politician not ruled by rigid ideology. He has understood better than a raft of Nobel prizing winning economists the true depth of the financial crisis and he does not lack the courage to impose radical solutions. This indeed is his finest hour, who would have thought it a year ago for such an uncharismatic figure, but like Churchill in 1945 I doubt he will reap electoral reward.

  • Comment number 100.

    It defies belief that anybody would try to decipher what Brown 'mean's when he decries 'financial mercantalism'. Whatever that might be.

    This is a man who denies ever having said 'boom and bust'. He meant 'Tory boom and bust'. And when he said 'British jobs for British workers' he didn't mean 'British jobs for British workers' in the sense that yo might think. Ie that he wanted British jobs for British workers.

    So given that he will bare-faced deny even the simplest of utterances that have passed his vacuous mouth I think we can safely say that when Brown says he deplores 'financial mercantilsm' he is just blowing air and wasting everybody in Davros' time. And ours too.

    How much longer must we labour under this reign of lunacy?

 

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