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A multi-track global economy

Stephanie Flanders | 17:30 UK time, Friday, 11 March 2011

We always talk about the economy in black and white - it's boom, or bust, or if we're really unlucky, a double dip.

But what if the future is simply grey? That's the question I was discussing with guests on the Bottom Line this week. I was interested to know whether a long period of slow growth might be more challenging, for some businesses, than a short, sharp shock.

The point was brought home to me lately when we interviewed an insolvency expert for the television bulletins. He reminded me of an astonishing fact - that the corporate insolvency rate in the UK is currently at a 30-year low. But, he said, the first couple of years of an economic recovery are often the worst for business failures, especially if growth is slow to pick up. The longer companies are forced to operate well below their usual capacity, the greater the chance they will eventually go bust - even after making it through the toughest recession in more than 20 years.

I've banged on about this before - it all goes back to the so-called "endogeneity" of our supply, and the worry that slow growth will become a self-fulfilling prophesy by destroying capacity and skills.

It all made me interested to hear what my studio guests would say about living with a slow growth. They were Rupert Soames, chief executive of mobile energy group, Aggreko; Neal Gandhi, chief executive of international business services company Quickstart Global and David Haines, chief executive of German bathroom fittings company Grohe.

Surprise surprise, they could barely comprehend the concept of a slow growth economy - all of their businesses are doing so well. (When's the last time you heard an interview with a chief executive talking about how bad his company was doing?!) But there was a good reason why they might all be thriving. None of them depended on the UK market for their growth.

Grohe has been doing well, even in the slow UK market, but where the bathroom business has taken off is, you guessed it, in the Bric countries. As so often in these conversations, all roads inevitably lead to China.

We also spoke about why the German economy is doing so well - and whether royals should get mixed up with promoting Britain's business interests. You might be surprised to hear that Prince Andrew got a big thumbs up from the guests. When the palace was looking for endorsements last week, it should have phoned them.

But most interesting, to me, was a theme that I have come across a lot in the last few weeks - the notion that the digital economy, combined with a more integrated global economy, has smashed all previous ideas about what a "global" firm looks like.

As Rupert Soames commented, in the old days they said you had to reach a certain critical size before you could even think about exporting, or opening offices abroad. Now you see tiny niche players, with customers from around the world. The fact that Germany's SMEs have always worked this way is, famously, a big part of the country's economic success.

Neal Gandhi's business helps UK companies set up outposts abroad, providing them with office space and staff in places such as India and China, so they don't have to cope with the time and expense of doing it themselves.

He's been working with an online gift recommendation service based in southern England. Just a few weeks after the business got started, a well-known TV personality in Argentina happened to stumble upon their service, and tweeted about it. Suddenly, Argentina was by far their biggest market. That's not something you can plan for. But, happily for them, Argentina grew by 7% last year.

Comments

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  • Comment number 1.

    "an astonishing fact - that the corporate insolvency rate in the UK is currently at a 30-year low"

    ... and thereby we have the results of the economic policy of the economists (regardless of the politicians) who manage the Bank of England.

    but at last, the debate has begun between slow growth (an over-damped economic system) and dynamic pruning-and-growth (a less-damped economic system).

    Given that we do not want simple economic recovery, but want complex economic reincarnation, the importance of stimulating the activity of individuals and small enterprises should be taking precedence over the protection of medium to large to global corporations. No?

  • Comment number 2.

    Most of my comments probably seem quite downbeat, but I actually believe that many inet based businesses will continue to do exceptionally well. Along with many IT and Tech services and manufacturers. In fact, I'm outrageously optimistic about continued growth in Asia and Mid East.

  • Comment number 3.

    "and the worry that slow growth will become a self-fulfilling prophesy by destroying capacity and skills." The impressive growth in manufacturing exports recently may be false dawn because over the years there has been that diminution of capacity and skills. I am confident that in the midst of rising unemployment the manufacturing sector will be complaining soon about skills shortage and an inability to fund investment in physical capacity and technology. It will be no surprise as all governments since 1979 have preferred to 'stroke' the City in the conduct of economic policy. This one will not break the mould.

  • Comment number 4.

    I fail to understand how or why 'growth' should be relevant at all. Does anyone else feel the same way?

  • Comment number 5.

    It really does seem that it is only the big coporations, judging by recent published financial results, that have come through the recession OK. Perhaps this is reflected in the statistic, released in the last few weeks I believe, that 70% of UK business does not export. SME's are just not taking advantage of globalisation.

    So we know that GDP shrank 0.6% in the last quarter, which apparently is a shock. But is it not more of a shock that it "only" shrank by 0.6% given that most of our economic growth is concentrated with just a handful of FTSE100 firms! (All out eggs in one basket??)

    I see trouble ahead.

    If the UK is forced through a slow and painful recovery, we risk losing these large coporations and their foreign investment in the UK as they seek to consolidate their business in other, better, markets abroad.

    The UK desperately needs (no joke) a massive shock, and a redistributuon of wealth (think housing). There will be many losers, but removing the burden of debt is the only way to reduce the cost of living and, by the same stroke, the cost-base of the British worker. That would make us much more competitve relative to other global markets.

    I see a lot of whinging amongst the UK public about the drop in living standards, but little do they know that this is actually what is required if we are to secure our long term future and prosperity.

  • Comment number 6.

    It is all about debt and the price of money!
    ===========================================

    Quite apart from GDP as much of a measure of economic activity in any real sense. (I am referring to the inability to distinguish spending from savings or borrowings and for investment or consumption - without which no sane system of economic accounting can exist!)

    My whole view of where we are and what we can expect is clouded by an analysis of debt and its role in the crisis and previous crises and the role of money as the intermediator of everything.

    Indisputably the crisis was caused by building up an economy based on the exponential expansion of debt, built on ever shakier foundations. When this has happened in the past the bubble needs to be deflated before economic conditions can return to normal (non-depression conditions). In short no deflation of debt equates to no end to the depression.

    Further the role of money is vial in economics and all financial relationships. Some people have seen fit to criticise my analysis that places money as central to economics. I would just add that the present price of money to the financial sector (i.e. big banks) is negative and there is no historical precedent that indicated anything apart from collapse from such a situation. Indeed the rates are now one fifth of the previous lowest rate in the Bank of England's 362 year history. I have further searched the literature to try to find out if interest rates had eve been lower in recorded time (back to time immemorial - the conquest) and I can find no reference to such a low value being put on money in the developed World.

    The Bank of England and the Treasury are therefore pursuing an entirely unsupportable policy. There is no supporting evidence of theoretical basis which could possible see what they are doing as anything by destructive and a prelude to a deep and long lasting depression lasting fro two or three decades. In short we are following exactly the same economic path as the Japanese and we can see that this has led them to a prolonged depression.

    What is puzzling is that the 200 economists at the Bank or England who must, one presumes, one has the right to presume, have analysed the situation have not produce any evidence that what they are doing and pursuing as policy has any chance of having a good outcome. They are completely silent. They have not refuted either of the ideas nor the historical precedents (The Long Depression of the 1870s or Japan recently ). I must therefore conclude that debt must be deflated before we can recover.

    Deflation debt should be an aim of policy as that is the engine of regeneration of economic activity. The question is of how fast should it be done? Do it slowly and the depression will continue sapping the lifeblood from the country and driving enterprise into its shell - but that is the present choice! In the end it is about the price of money. One has to ask the obvious question: why should anyone want to make money when what is made is so worthless? And there is the terrible Catch-22 trap that Mervyn King cannot face. Unless and until it is worth making money because money itself pays a sensible long term rate of interest then why bother? Only when the twin targets of debt deflation and sensible interest rates are resumed can we get out of the depressionary trap. Of course event - such as a general strike including the police would catalyse the situation, but I fervently hope that the historical precedent of the previous police strike is avoided as I wonder if we have enough soldiers to fire on the police.

    One footnote: All business that relies on investment returns are in a terrible situation that is pensions and insurance both of which will of necessity have to increase changes and reduce returns as a fair percentage of their business is financed by investments which are tied to interest rates.

    In short The Bank of England rate decision is the primary cause of the collapse, both in creating the bubble and since the crash. I believe they know this but haven't the gumption to fix the problem - so a long depression beckons.

  • Comment number 7.

    Dear Ms Flanders,

    Could you sketch the shock scenario?

    I'd guess Higher interest rates => clearing out marginal companies, reducing property prices, deflation. Resulting in lower costs for surviving companies + deflation (negatively sloping demand curve increases quantity demanded, people do not just sit and wait) => increased demand and growth (and then learning economies + reskilling and rebalancing).

    But I would prefer your expert description.

  • Comment number 8.

    It's all immaterial, we're bouncing along the plateau of peak oil, it's way past too late.

  • Comment number 9.

    As the owner of one of the aforementioned global SME's can I just say: well, duh.

    The domestic economy will not be fixed until house and land prices are corrected and a short sharp shock is infinitely preferable to the 10 years of 5% inflation and 1% IR the BoE currently has planned for us. Particularly as it's never been successfully carried out before and the more time goes by the more things beyond our control in the global economy are likely to go wrong ($200 oil anyone?).

  • Comment number 10.

    6. At 7:38pm on 11 Mar 2011, John_from_Hendon wrote:

    “It is all about debt and the price of money!”

    I’m not an economist (still learning) but your argument seems entirely logical to me.

    Asset deflation (housing in particular in the UK) is the frightener here as far as the BOE is concerned as it has a very negative hit on banks balance sheets, especially as some banks have almost stopped writing of debt in this area and are frightened to invest further into it (I wonder why).

    There must be a return on “money” -3.5% to -4.5% (inflation adjusted) when bubbles are still left in the economy seems to me to be standing on the edge of a cliff, hoping the wind does not change anytime soon.

    Interest rates should be in the region 5 to 6 percent I submit… yes I can understand all the arguments against this but these only delay the inevitable which when the event driven model the BOE are using catches up with reality it will all be “out of control”.

  • Comment number 11.

    I was interested to know whether a long period of slow growth might be more challenging, for some businesses....have you tried the question how about a long period of slow decline, because outside of financials thats what we've got...I believe its called the "new normal"

  • Comment number 12.

    Evening stephanie,
    If you take the time to look at pre-tax profits announced by the overwhelming majority of UK companies which reported last year, you will see that they are all doing very well with profits up significantly. The problem is that those profits are not being re-invested in the companies to expand and employ more labour.
    That is the problem that we must collectively solve. If not, then the monies generated will not be paid out as dividends but will be used for M&A activity which (as we know) results in more job losses.

    With reference to #8 NorthSeaHalibut, we are still a long way away from peak oil which was predicted in 1970's!
    Perversely, we will reach peak-oil if the world economy recovers and capitalism is restored growing at 3% per year (which, by definition, it has to do).
    It was stated that 25% of the daily oil supply is used by 4% of the worlds population (USA) and that China with all of its supposed growth only requires less than half of what USA uses per day for all of their population.
    The solution seems to be obvious but I don't expect to see it in my lifetime.

    Meanwhile back at the UK recovery, we still have another 3 years to "mark-time" before the banks can move forward again and dazzle us with their financial innovation!

  • Comment number 13.

    re #10
    Big question is whether to get there slow and gentle, watching what else is going on and being prepared to adjust if necessary (my view) or jump in one or two goes (J_f_H) and hang the consequences - more or less. {Please excuse me, John, if I haven't quite got that right and post a correction as req'd.}

  • Comment number 14.

    Dear JfH, I cant decide if you are an old testament soothsayer shaking a crooked stick at the gods of Threadneedle Street or a 21st century oracle who has a potent vision. I need more evidence. Living in Hendon suggests the former role. I recommend a small phorical change in moving to Hedon (near Hull) to create more opportunity for puns.

    Raising bank rate to 5%, fast track, may produce a tad more social problems than most governments and mortgaged house 'owners' will have a taste for.

  • Comment number 15.

    6. At 7:38pm on 11 Mar 2011, John_from_Hendon wrote:

    In short The Bank of England rate decision is the primary cause of the collapse, both in creating the bubble and since the crash. I believe they know this but haven't the gumption to fix the problem - so a long depression beckons.
    -----------------------------------------------------------------------
    A good post at #6, John, but it could be argued it was the wrong inflation parameters given to the BoE/MPC from the outset. Post crash, the strong argument from some of the MPC for reducing rates to near zero(Prof. David Blanchflower leading the charge, if I recall correctly) was the threat of deflation.

    I think we may have seen that one off.

  • Comment number 16.

    What concerns me is this preoccupation with growth; growth in what?

    Money circulation
    Efficiency
    Production
    Customer base

    We are stuck with ‘money in circulation’ as a measure of growth and that is relevant only to the banks. I cannot argue against an Interest rise but I can justify keeping it as it is for the time being!

    It is time to think outside of our current thinking – yes john the house prices need to come down but this is not as others think detrimental just a rebalancing after our love affair with money and greed. It as been said that if a company does not make above 21% profit then they are making a loss – what a load of co**lers! A rethink of what denotes growth is needed. If a company increases efficiency, production and it’s customer base then as long as it as made some profits up and above it’s commitments then it as growth, but my guess is some will disagree.

  • Comment number 17.

    Evening Stephanie,

    This may surprise you but as owner od a YK SME i hope that the future is grey. If fact would go as far as to say Love it. Give me grey above boom or bust any day of the week.

    Why? Simples. We have more chance of surviving and growing on grey. Now ask the same question to the CEO's of the big companies. Most of the big businesses rely on growth to survive and my guess is that if the future is grey we will hear profit warnings left right and centre and banks CEO's of banks being fired.

    The first banking crisis was due to sub prime mortages. The second will be loans taken out on overvalued companies that under perform. Should anyone have any doubts take a look to see what has happened to Blockbuster in America over the last 18 months or Yell.com and ask yourselves two simple questions 1. How the hell are they ever going to repay that amount of debt and 2. How many more companies are in the same position. Answeres 1. Never and 2. Many.

    Go on Stephanie, go and ask CEO's some embarrassing questions and see what you come up with. Try especially hard with those CEO's of Private Equity Companies that bought companies to sell on at a profit but now find themselves left holding the baby.

  • Comment number 18.

    Dawn upon this if you dare, do you want a fully integrated cashless society or would you rather walk around with you head up in the clouds?

    Big society and big bucks can only mean one thing, 'Spin the Bottle' and it's your turn to chicken out or play on!

  • Comment number 19.

    It is something that even small children of average intelligence can understand. If you live without doing anything useful for 15 years of your life and borrow the necessary money, then you can expect to suffer for the next 15 years, barely having to eat whilst you work hard to pay for your lavish lifestyle before. Well now of course you have two options. You can think and realise what you have done, pay for your faults and become a better person. Or you can continue to seek to betray and leave it to your children to pay the bill when you are gone. Do I have to tell you what I think is the right way?

  • Comment number 20.

    12 spendidhasbrowns

    3 years? Very optimistic IMO. I suggest 2016/2017 which is well past the next GE. Hey you could be right, who knows.

  • Comment number 21.

    Nick @ 9

    Too late.

    The governments had the opportunity to avert the crisis by bailing out the common man. This would have reduced private debt levels, which is what you are really talking about. In conjunction with re-introduction of regulated lending, this could have been do-able.

    Instead, they bailed out the banks.

    They've lost our trust, tried to perpetuate the status quo, obeyed their masters and screwed the likes of you. To hell with them.

  • Comment number 22.

    What government all I have had for the past decade is a DEC VAX legacy system that failed to run when prompted. "Press the Space Bar"

  • Comment number 23.

    "Nick Clegg has said he wanted to "wring the necks" of bankers who threw Britain's economy into turmoil and forced the coalition to bring in austerity measures." PA

    Now, if anyone on this blog had suggested that it was right and proper to 'wring the necks' of bankers the moderators might not have permitted our post to stand - so why did Nick Clegg apparently use such incendiary language tonight in Sheffield?

    Might I offer a suggestion: he is stuck in the 'group think' that blames anyone except government. It is still apparently unbearable for politicians to admit that the regulators and their treasury created the conditions, permitted and encouraged the banks to do what they did. Indeed for over a decade it was the accepted wisdom that ever exponentially expanding personal debt was really good for the country. Yet this insanity is STILL government policy for students, if not home owners. Nick Clegg's incendiary remarks - amounting to the issuing a fatwa against all bankers shows how far the political class has yet to understand and to move before we can have a hope of recovery.

    Sorry Nick, you are a nice chap but economics is not your thing - please learn to question the script given to you by the cabinet office - whose boss caused or stood by in HM Treasury when the rot started!

  • Comment number 24.

    @4 Oblivion asks "I fail to understand how or why 'growth' should be relevant at all. Does anyone else feel the same way?"

    The simple answer is that if we didn't have growth, most of us would still be pre-industrial revolution peasant farmers, with 1/3 of our kids dying in childhood and hardy anyone living past 50.

    However the more subtle way of looking at it is that whilst we are now wealthy enough in both absolute and relative terms for 'growth' to be less essential we, at all costs, need to avoid the opposite. The biggest possible disaster that could afflict any country is a full blow depression with attendant deflation.

    Our economy is a fragile thing based on confidence which we need to maintain at all costs. Without growth, maintaining that confidence whilst not impossible would get harder and harder with time.

  • Comment number 25.

    The economy is in the grey or black area, slow growth or double dip. The cuts the coalition government are making can't be sustained, it will eventually cause the small firms to go bust & take us back into recession. Surely the dangers of crowding out is not more important then risking growth. Having said that upcoming months will be a test for UK small businesses... got to feel sorry for them.

  • Comment number 26.

    "As Rupert Soames commented, in the old days they said you had to reach a certain critical size before you could even think about exporting, or opening offices abroad. Now you see tiny niche players, with customers from around the world. The fact that Germany's SMEs have always worked this way is, famously, a big part of the country's economic success."

    This statement just typifies how stupid most CEOs actually are! SME's engaging in exporting has always been an integral part of UK business life. How the hell did he think that the UK service the largest empire that the world has ever seen? It's not a question of us learning from German SMEs, they learnt from us.

    On the wider point of a grey economy. Let's not be so PC about our terminology. Prolonged stagnant or low growth is in fact a DEPRESSION and that is what we are in. Now I believe that we are still in the shock phase of that depression - things are going to get a lot worse before they settle to prolonged years of stagnation. Yet even in those future grey years there will be sectors and regions that buck the general trend - you only have to drive down Western Avenue in London and see the preserved 1930's facades to be reminded of that.

  • Comment number 27.

    #23 John_from_Hendon,

    John,

    Methinks you are trying a little too hard here. The bankers, and in particular the investment bankers, do need their necks wringing. Without their conievance and short term profiterring this mess would not have been so debilitating. After all, if they had not made debt so readilly available and apparently cheap we would not be in this position.

    Having sad that, then the policticians (as guardians of the national interest) and we (the people) also have to share in the responsibility.

  • Comment number 28.

    1. At 5:51pm on 11 Mar 2011, verano wrote:

    "an astonishing fact - that the corporate insolvency rate in the UK is currently at a 30-year low"

    ... and thereby we have the results of the economic policy of the economists (regardless of the politicians) who manage the Bank of England.

    but at last, the debate has begun between slow growth (an over-damped economic system) and dynamic pruning-and-growth (a less-damped economic system).

    Given that we do not want simple economic recovery, but want complex economic reincarnation, the importance of stimulating the activity of individuals and small enterprises should be taking precedence over the protection of medium to large to global corporations. No?

    ..............
    Lies, dam lies and statistics!

    Over what period are the insolvencies being measured?

    May be the insolvencies are low is because what companies were insolvent have alreday gone bust and companies that are left are bumping along with zero growth and inactive e.g. unbale to hire or invest etc.

    Eventually, the bedrock of dormant companies will be under threat as identified by Ms Flanders ... in what is, overall (there are always exceptions) ,a corrosive stagnating domestic British business environment.

    More lies from the gold plated inflation proofed pension estblishment!

  • Comment number 29.

    I've banged on about this before - it all goes back to the so-called "endogeneity" of our supply, and the worry that slow growth will become a self-fulfilling prophesy by destroying capacity and skills.

    ............

    Exactly, that is why the budget must deliver:

    Impact
    Momentum
    Multipliers

    ... and test alternative revenue streams such as e.g. the price elasticity and demand on e.g. foreign luxury and other damaging imports ... under the conditions of Trade Tax Harmonisation (TTH).

    Biggest impact would be to reduce VAT as gives a compounded effect by putting £15 billion in our pockets AND reducing inflation in the short term which is worth an additional equivalent amount to the UK economy without actually spending anything.

    Combined with THT to replace overall VAT revenue reduction; this can easily deliver a £50 billion push to the UK economy where it is needed most ... in improving/optimising the output of the UK's critical sustainable activities and as not by e.g. pushing QE money at the banks for them to invest it overseas so as to merely enhance their investment bonus pots ... and this modest redistribution can alter behaviour, create margins, business opportunities, lower operating costs ... etc ... this would be a stimulation to the economy from mere redistribution of revenue.

    Currently, all of the politicians talk of growth, from all political parties,(apart from the Green Party - although some of their policies are quite mad) ... is piddling and will do nothing ... and will lead to years and years of slow or zero or no 'growth'.

    The underlying problem with 'endogeneity' is with our piddling 'do nothing' politicians and self serving establishment.

  • Comment number 30.

    #12 splendidhashbrowns

    Peak oil isn't determined ny output capacity.

    #29 nautonier

    I like, good angle.

  • Comment number 31.

    #14. watriler wrote:

    "Dear JfH ..."

    On Hendon: there are two, one a suburb of London and one a suburb of Sunderland!

  • Comment number 32.

    #27. foredeckdave wrote:

    "After all, if they(bankers) had not made debt so readily available and apparently cheap we would not be in this position."

    But Dave... the cheapness or 'price' of debt is set by the Bank of England!!! (Price is also the only control for debt volume.) The Bank and its Governor and his 200 economists must therefore take the lions share of the blame for the 2007/8 crisis and the ongoing one today - they got it wrong, they get it wrong and the continue to get it wrong!

  • Comment number 33.

    #29. nautonier wrote:

    "The underlying problem with 'endogeneity' is with our piddling 'do nothing' politicians and self serving establishment."

    This weeks example: a subsidy for alternative renewable fuel use in heating - sounds good.... but who has the big boilers and space for large straw bale / wood burning stoves and fuel storage and people to stoke their boilers ... why it is the landed gentry - the moat owning classes! Tories serving themselves!

  • Comment number 34.

    the oil price has fallen on the world markets.....that means petrol will come down!!! yeah right.... I know what iam going to do come april..jack my job in and sponge off the system like the rest of them, this two halfpenny government wont get 1 jot of my hard work thank you very much.

  • Comment number 35.

    Ex engineer

    Is it that simple? Is technological progress continues at a pace that allows all manufacturing to be automated, and if that progress includes improved methods of energy extraction, then the price of goods and assets both continue to decline.

    Technology is notably deflationary. We bought DVD players for hundreds knowing that they would be half price a couple of years later. Farmers buy technology that makes their produce more abundant. Isn't this what we want?

    Growth, while technology and population remain constant, represents and increasing amount of money in circulation with no change in quality of life, if I understand the term correctly.

    CDs, DVDs, VHS etc., these were all huge industries, but now we can download it all for little more than the cost of the broadband subscription . Practically free. What great progress! We should collectively pat ourselves on the backs! But that is not the way "growth" operates is it? Growth does not want this kind of progress. And it certainly does not want a shift away from oil.


  • Comment number 36.

    @26. At 02:53am on 12 Mar 2011, foredeckdave wrote:

    "typifies how stupid most CEOs actually are! ...."

    -------------------------------------------------------------------------

    Perhaps the point being made was in the phrase "in the old days they said you had to" ... I believe this was the old ACADEMIC model. Companies first competed nationally, then exported and then moved to becoming multinational. There is now another model (academic and real) in which companies (the micro-multinationals) are multinational essentially from day one. I'd guess that might be the point, that one's vision can be immediately lifted to the world - still what policies, support, training one puts in place for this I have no idea.

  • Comment number 37.

    everyone on this site is so pessimistic, predicting doomsday scenario's!! its prob more likely it will be a tough few years then economy will be back to normal

  • Comment number 38.

    Paul Krugman blog, November 1, 2010, 'Macroeconomics Is Hard':

    "I’m getting some fairly hysterical reactions to today’s column, many of them along the lines of “You’re an idiot — I know what it’s like out there in the real world of business” etc..
    The thing is, no amount of experience meeting a payroll helps you understand issues that are critically affected by the way things add up at a macro level. Businesses are open systems; the world economy is a closed system, with feedback effects that are crucial but play no role in ordinary business experience. In particular, an individual businessman, no matter how brilliant, never has to worry about the fact that total income equals total spending, so that if some people spend less, either someone else must spend more, or aggregate income must fall. This is why we have a field called macroeconomics. Unfortunately, the hard-won insights of macroeconomics are being rejected right now in favor of visceral feelings. And we’ll all pay the price."

  • Comment number 39.

    Here's a mad idea - give back all Euro currency members - their own currency.

    The European Union was originally designed to unite Europe via trade to create unity to avoid another war in Europe.

    However, an anonymous committee decided to go further. Let's be like the United States of America and have one currency - moreover - let's impose the Euro as entry to the United States of Europe.

    Sadly, the Euro has failed, simply because Europe is not remotely similar to the United States of America.

    Thus far, the Euro is failing all EU Members? Sovereignty of a nation isn't just about politics - but what ordinary people and their sovereign currency economy relies upon?

    You can take the currency from a nation - but you can't take a nation out of it's currency?

  • Comment number 40.

    We certainly should worry about the UK economy moving into an era of slow or even negative growth.

    The economic system is a complex non linear system and exhibits the typical properties of such systems, one of which is that it has several relatively stable quasi-equilibrium states, and there can be rapid transitions between them, or catastrophes, in response to relatively small forces, which require much larger forces to reverse.

    Feedback, or endogenic parameters in economist speak, are usually responsible these transitions, and is the reason why wise governments have employed devices, such as generous unemployment benefits, since world war 2, to make sure that the feedback is negative not positive.

    The present UK government think they know better and are busy winding up these devices. This policy could well be disastrous.

  • Comment number 41.

    33. At 09:39am on 12 Mar 2011, John_from_Hendon wrote:

    #29. nautonier wrote:

    "The underlying problem with 'endogeneity' is with our piddling 'do nothing' politicians and self serving establishment."

    This weeks example: a subsidy for alternative renewable fuel use in heating - sounds good.... but who has the big boilers and space for large straw bale / wood burning stoves and fuel storage and people to stoke their boilers ... why it is the landed gentry - the moat owning classes! Tories serving themselves!

    ...............
    John
    The establishment has changed ... some of those with green wellies and shotguns hanging off their forearms are now leading the field in terms of implementing green issues.

    The establishment includes non doms, tories, liberals and champagne socialists and even despots with plenty of money meddlling with British business.

    Identifying the UK establishment is not straightforward as some of our estblishment have never even set foot outside of London as now controlling something in the UK from overseas. There is no accurate definition of establishment ... but it undoubtedly does exist ... but it has changed considerably ... as now top heavy with bankers and those in finance rather than our historic landed gentry as your post seems to suggest?

    I went out to a meeting with an engineer last week and the guy cancelled and said that he had taken a job with a bank on about 4 times his previous salary ... I wonder if this is reducing the number of engineers that Britain has available in engineering?

  • Comment number 42.

    37. At 10:59am on 12 Mar 2011, Tavster wrote:

    everyone on this site is so pessimistic, predicting doomsday scenario's!! its prob more likely it will be a tough few years then economy will be back to normal

    ..........

    Interesting comment as is typical of many made in 2008/2009/2010 - have a look around and see what is happening - those who have posted similar to yourself generally seem to have have the least ... well nowt to say about anything ... I like genuine optimism ... but not false optimism.

  • Comment number 43.

    #36 Mike3,

    The reason that I labled most CEOs stupid and Rupert Soames in particular is that blinkered understanding prejudices their decision making.

    If you look at our trading history then you find companies such as The East India Company, The East Africa Company and The Hudson Bay Trading Company being set up without first involving themselves in domestic trade. This is not just an academic rant (though any International Marketing text will prove my point) it is a matter of fact.

    More importantly, it is this very type of mis-thinking that led us into the Dot Com Bubble on the basis that "things are different now".

  • Comment number 44.

    21. At 10:23pm on 11 Mar 2011, Oblivion wrote:
    “Nick @ 9

    Too late.

    The governments had the opportunity to avert the crisis by bailing out the common man. This would have reduced private debt levels, which is what you are really talking about. In conjunction with re-introduction of regulated lending, this could have been do-able.

    Instead, they bailed out the banks.”


    You are right. In 2003/2004 when I looked forward, after realising that the, then, current course was unsustainable, I thought the only way out of this mess was for the government of a capitalist society was to bail their citizens. Pay off their debts and everyone is back up to zero. They are no longer paying off their debts all the money they earn they can then spend on goods and services to keep the economy going. The money they earn wouldn’t be spent paying off their debt to the banks. But instead they chose to bail out the banks directly thus highlighting that the society in which we live is not capitalist; survival of the fittest.

    The banks would have been re-capitalised, the indebted would have had their debts paid off and have money to spend. The savers would have been marginalised (tax payers money bailing out the imprudent!) but their savings would still be gathering 5/6% interest. Possibly the best solution. I’m open to debate…

    Unfortunately what I didn’t realise is that we live in a fascist society (the merging together of government and business). Because of the way we in the west are governed; by lobbyist and the rich the money was given to the banks. Now with nowhere to invest the free money, i.e. to make a return, the banks are ploughing said money into commodity futures and we are now reaping the whirlwind.

    Now we are witnessing the results of a global capitalist society; the thirst for profit. Where will this all end? In my opinion, which nobody asked for…

    This is not going to end well!

    I have just re-read what I have typed and I seem to use the word ‘now’ frequently. There is reason for that - this is happening NOW people.

    Stop sleepwalking…

  • Comment number 45.

    Look I may be stupid or something but why does the Economy need perpetual growth?
    Would that not mean that we need to consume more? using more scarce resources? needing more consumers who then concume ever more resources and on and on ad infinitum.

    Surely perpetual growth is not possible?

    Would it not actually be better for the country to sustain zero growth? And in the case of resources a negative growth. (I do know enough that all money is debt and that if all debts were paid there would be no money) but really just who gains from perpetual and un sustainable growth..

    Could it be the top 1% wealthiest people in the world? (speak softly now) those very people who espouse the Disabled the Sick and the poor must all do their part whilst the rich collect the winnings?

    Is it possible that the ordinary human is being swindled on a mindboggling scale?

    You know I think we are and lots of others are comming to the same conclusion..

  • Comment number 46.

    238. At 11:47am on 12 Mar 2011, ntp3 wrote:

    Paul Krugman blog, November 1, 2010, 'Macroeconomics Is Hard':"

    --------------------------------------------------------------------------

    (With the usual caveat that I know nothing) the macro by Steve Keen seems better reasoned than PK's.

  • Comment number 47.

    @43. At 1:50pm on 12 Mar 2011, foredeckdave wrote:

    "#36 Mike3,

    The reason that I labled most CEOs stupid and Rupert Soames in particular is that blinkered understanding prejudices their decision making.

    If you look at our trading history then you find companies such as The East India Company, The East Africa Company and The Hudson Bay Trading Company being set up without first involving themselves in domestic trade. This is not just an academic rant (though any International Marketing text will prove my point) it is a matter of fact.

    More importantly, it is this very type of mis-thinking that led us into the Dot Com Bubble on the basis that "things are different now". "

    ------------------------------------------------------------------------

    I don't think anyone can deny trade has shaped the world (-now I have typed that somebody will). Also I agree with you that the history of both business and management is informative (though double entry book keeping, joint stock companies and reducing cost of capital may not be gripping to many, they certailnly have a long history). But reading SF on Soames, does not read to me as a statement that everything is different, only that some things are different. Yes some things are the same, poor businesses failed after the dot com bubble and poor microMNEs will fail, but some things are actually different.

    CEOs can be blamed for thinking things won't change, just as much as thinking things will change. [And yes, for not thinking at all]

  • Comment number 48.

    45. At 1:53pm on 12 Mar 2011, deadpansean wrote:
    "Look I may be stupid or something but why does the Economy need perpetual growth?
    Would that not mean that we need to consume more? using more scarce resources? needing more consumers who then concume ever more resources and on and on ad infinitum......

    -------------------------------------
    I have wondered the same for a long time.

    May be someone else has different views, if so I'd be delighted to see your thoughts. The conclusion I have come to about the reason is that every country's economy is totally based on debt. All the money (95+%), comes from debt. Our current 'prosperity' is a result of many consumers being in debt. In the long run, it must fail. We cannot keep rolling over debt unless there is growth.

    The only other alternative with the current system is to have inflation, so that the debt is inflated away to a small percentage of everyone's income. No-one likes this idea. It brings echos of the Weimar Republic etc and Printing money.

    The reason is that as individuals we all like to see an improvement in our standard of living and an increasing income. Perhaps we are all just a little bit greedy. Politicians who do not deliver this are soon voted out and a different lot are tried.

    Is there a solution? I believe there is, we need debt free money. There used to be a video on Youtube - the Secret of Oz' that explained. You might also follow up on the ideas of Modern Monetary Theory. At least we would then have a good starting point and the rest then imho becomes political about how much we should consume. It won't then be driven by the need to satisfy the finance industry.

  • Comment number 49.

    I am pleased you feel that you have the time to promote your other programmes on the BBC Stephanie. However if this blog is as it says it is.
    "This is my blog for discussion of the UK economy, how it how it relates to the rest of the world, and how it affects us all."
    Perhaps you might mention.
    1. How consistently high producer price figures are becoming an ever bigger problem for the UK economy as we had new figures for them. You so rarely mention inflation since you last told us there wasn't any signs of it in October of last year.
    2. News from the Euro zone
    3. Economic news from China.

  • Comment number 50.

    Hi Stephanie
    What UK Plc needs is an 'economic earthquake' short sharp shock. I've recently experienced the Christchurch NZ earthquake and the response of everyone in NZ to this dreadful catastrophe. Amazingly, during the response, many good, selfless acts of caring occurred, many acts of bravery and many acts of true leadership. People pulled together, the mayor of Christchurch deserves a medal for his upbeat leadership/communication skills and in the end that city will flourish again.
    On returning to UK I see ineffectual government, lack of inspiration and leadership, a nation which seems have little pride and so much talk-talk rather than action.

  • Comment number 51.

    A column in two parts, so two comments in one:

    1) One thing about low growth is that it makes organic growth easier for companies. One might therefore conclude that more companies will grow without needing to either dilute their equity or buy expensive credit in order to avoid losing market share. Given the ills that are being laid at the door of the price of commercial loans in the modern world, this might be one aspect of the Good Old Days that could be welcome.

    2) In the early 1990's I ran a global software business from my dining room (and ate in the living room....). I've devoted some (idle) thought to globalisation. In the 17th century the Ruckers family lived and worked in Flanders, yet their harpsichords were so good they were carted all over Europe. Globalisation is all about quality and communications. The Ruckers had quality but no communications. The first dot-com bubble had communications but no quality. The dot-com survivors had both.

  • Comment number 52.

    33. At 09:39am on 12 Mar 2011, John_from_Hendon wrote:
    This weeks example: a subsidy for alternative renewable fuel use in heating - sounds good.... but who has the big boilers and space for large straw bale / wood burning stoves and fuel storage and people to stoke their boilers ... why it is the landed gentry - the moat owning classes! Tories serving themselves!
    ==============================
    Just two facts:
    a) this scheme has rolled over from the previous government;
    b) anyone can benefit from the solar heat panels part of the scheme as long as their roof faces southish.

    I agree that the scheme is a waste of money (as are the Feed in Tariffs for solar electricity) and and believe that they should have been first in line for the cuts.

  • Comment number 53.

    #52. AnotherEngineer wrote:

    "Just two facts:
    a) this scheme has rolled over from the previous government;"

    This 'fact' again demonstrates how we have two Tory parties and no real choice in our democracy. The Labour party made a positive virtue that they were to carry on with Tory polices in 1997 - the latest Tory government did not need to bother to make a similar assertion because there was no change of policies from the previous Labour Government as they were just following Tory policies as they had stated!!!!

  • Comment number 54.

    18. At 9:53pm on 11 Mar 2011, Sean_Tunctan wrote:
    "...Dawn upon this if you dare, do you want a fully integrated cashless society or would you rather walk around with you head up in the clouds?..."

    +++++++++++++++++++++++++++++++++++++++++++

    That's the choice, is it?





  • Comment number 55.

    #10 >>Asset deflation (housing in particular in the UK) is the frightener here as far as the BOE is concerned as it has a very negative hit on banks balance sheets, especially as some banks have almost stopped writing of debt in this area and are frightened to invest further into it (I wonder why).

    Why are people still concerned about the effect of falling house-prices on the banks' balance sheets ?? If the banks themselves have not factored that into their own business plans, then they deserve a hit in their balanc sheets. To keep the status quo indefinitely is an illicit-chemical fuelled dream !! It's time and well overdue time to face the reality that some of our banks have gambled heavily with other people's money and have lost. To keep propping them up with more other people's (taxpayers') money is to put the entire national economy in jeopady !!

    The government should sell off those banks to the highest bidder, for pennies in a pound if need be, and use the money recovered to pay down the national debt. This should make the debt more manageable and mitigate against some of the cuts on essential services.

  • Comment number 56.

    Not grey, not even double dip, but breakdown.

    Try this for an understanding of breakdown theory:

    http://critiqueofcrisistheory.wordpress.com/historical-materialism-and-the-inevitable-end-of-capitalism/

  • Comment number 57.

    I would argue that a business built on servicing the UK market will have immense difficulty adapting to export markets.

    Export sales and the organisation to support them is wholly different from selling to the domestic market. More opportunism can be applied in servicing the home market whilst export markets require more deliberation and cultivation. But then once the organisation has learned exporting all can fall into place. Learning to deal with overseas markets can be as long, as difficult and as complex as you want to make it. Approach it with an open mind.

    I will never forget a few years ago when the unfortunate child at the time responsible for our piffling level of export sales popped his head round my office door to tell me that a competitor in Germany had gone bust so there was an opportunity for sales so what should he do?

    I replied `Haben sie Deutsche gelernt?' meaning can you speak German. He replied that he couldn't so I suggested he saved his time and did something more constructive like selling ice to eskimoes.

    I would qualify that this argument would not apply to a business set up from word go to export.

  • Comment number 58.

    I don't think low growth is necessarily the problem, I think any growth will be very difficult for the forseeable future. I confess I am very much taken by the argument that we have been in a phoney depression these last three years but the real one may just be round the corner.

    Perhaps this is just the reflections of a professional dismal jimmy who always has his glass half empty, but a sequence of events over the last few days has given me cause to feel that way. I have even seen an episode of Minder which inevitably included the spiv Arthur Dailey whose existence I had long forgotten.

    Apart from food and fuel everything else in the shops is discounted, often discounted by large amounts. Whilst this is a measure of how much gross margin the retailers have been able to build into their business during the boom it is also a measure of the stress they are feeling at the till.

    This is not to say that the entire economy will go into reverse but we are in for some major and fundamental adjustments. We have been living in a boom with very generous levels of spending from government and significant borrowing from the population at large. We have been allowing Arthur Dailey with his bit of this and a bit of that to run our economy for the last thirty years. We have come to believe that what he called business is actually business. So we have allowed our country to be run by petty crooks of one type or another. All that has to come to an end first, before we can even begin to recover.

    As Warren Buffet is prone to say that when the tide goes out you will find those who have been swimming naked. The economic tide is receeding so we can expect some unpleasant sights. For the time being we must all batten down the hatches to survive.

    The focus of public policy should not be about keeping the bubble pumped up but more about ensuring that we have a trained and capable work force in place so that we can profit from the eventual upturn with value added products. We have to get the country back into a culture of working for a living, not poncing off each other.

    I recall David Steel in the early Eighties remarking that an economy in which we are all estate agents and insurance salesmen selling to each other is unsustainable. We can now see the truth in that so we must move on and move on quickly.

  • Comment number 59.

    58 stanilic

    There is always room to turn a bob or two. You are a dismal jimmy me ol' whatnot. Always opportunity. Trade on the way up and on the way down. Plenty of money about - at the moment just it doesnt want to shout. Ear to the ground, ear to the ground.

  • Comment number 60.

    #58 stanilic,

    I agree that we have been in a 'phoney' depression. How, and where the critical event that turns this depression 'hot' (please forgive the mixed metaphore) is purely for the soothsayers - but it is far more likely than not.

    If we look at the kind of responses to that have been enacted both here, the EU and the US then for all of the money thrown at the problem we have not managed to stabilise the situation. It is interesting that we knew that Eastern Europe was economically fagile before 2008 and yet we hear precious little about how they are managing to hold on - yet the implications for the French and German banks could well be critical. We quickly created the PIGS and yet we have no real analysis of their present positions and prospects. We have seen signals from China that inflation is becoming a problem - how much bigger will that become if the West significantly reduces its demand? Then we have the on-going debate about the US economy and the responses that they have made. Somewhere in this morass could well the the trigger for the deep depression.

    As far as the UK is concerned our focus in the short term will probably be upon the cuts and the social response to them throughout 2011/12 - that would be typical of us.

  • Comment number 61.

    #58. stanilic

    Earlier I was described as an Old Testament Prophet (#14 above), but I do wonder if we risk being are seen - and dismissed - too easily as Dismal Jimmies (see C. Dickens, I think). I think it is important to stress how to go forward and that once we, as a society, admit the errors of the past then the way will be clear to go forward and move back to a functioning economy.

    I is all very well to write about the noughties and what is wrong but it is also necessary to show what the economic world will be like after we have grasped the nettle (deflated the overpriced assets and re-established a sensible price for money).

    We should stress that once again small businesses and small retail businesses will repopulate our nearly abandoned high streets and pubs and tea shops will reopen.

    We should also extol the virtues of reducing commuting and working locally, near where we live, in affordable homes, as being beneficial to our way of life and health.

    We should not permit the falsehoods of the last twenty years to drown out the rationalism and essential truth of the new paradigm of economics, which it the way forward. The old order will say that we are doing OK now and support this with fiddled figures and an entirely destructive money price. However, history does tell us that these old dinosaurs of the financial community will fight a terribly destructive rearguard action in a vain attempt to preserve their hegemony over us all, much like in Libya today where the banks and their chief apologist, the Bank of England, are taking the roll of Colonel Gaddafi.

    As to the main (as I see it issues) of debt and money the difference between the reformers and the old order is that the reformers see it as best and least destructive to return to rationality rapidly whereas the old order either never see that it is possible or that it should only be done slowly. Here the way froward to the liken the old order to economic gangrene. To save the limb the surgery needs to quickly as delay risks the whole body. Politics is sclerotic at best - none of the participants are willing to address the issue of the direction and management of regulation that is central to reform (OK, Nick Clegg had a go at the banks in such robust terms that if he had used them on this blog he would have risked the ire of the moderators, but that was only to deflect attention from the politicians and the regulators.)

    In short - of course the bubble has to deflate!

  • Comment number 62.

    59 Arthur Daley

    Ah bless! How nice to meet you.

    With all due respect you are part of my past which I am trying very hard to run away from. My maternal grandfather was much of that sort and the Winchester Club looks like it was based on his club in Fulham of all places! Prior to the '73 recession there was a bit of me too in there: the lad of the streets! All of the old boy's mates were a bunch of total dead-beats. I could tolerate that as they were a generation with little education, few opportunities and no money. There is no excuse for that today, or is there? Looking at the last series of The Apprentice I am probably wrong in that estimation.

  • Comment number 63.

    60 foredeckdave

    There is a strong parallel between the economy and those heroic engineers in Japan who are endeavouring to cool down a runaway nuclear reactor or two. I wish those guys and possibly gals all the luck they deserve.

    Sadly our economy does not have courageous and honourable engineers working for the common benefit, rather a bunch of cowards who have already run to high ground with as much of their portable property as possible. It will be left to the likes of thee and me to sort this shambles out. What is more we will only know that it is sorted once we are knocked out of the way by the ambitious opportunists who will want to claim the credit for the hard graft.

    To continue the Japanese association they have lost a decade because nobody wanted to tackle the real problem of indebtedness. I agree with John from Hendon that the closest parallel to our current condition is the 1870s. It is a good comparison but we must not forget that then the UK was the top-dog and could afford to mark time. We don't have that luxury any more.

    Whether we like it or not we have to go through a period of restructuring to cleanse the debt from the system. In my view this should be done as a deliberate policy so that the damage is minimised. If we don't then the damage will be more random and thus more destructive. The place to start is with the banking system where much of the trouble lies.

    My fear is that neither the institutions nor the public will have the stomache for the adjustments necessary so that in the end the destruction of what remains of value in our economy will be total. Even then I would still say optimistically that a `Stunde Zero' would force the essential reforms. The question is how bad do we want it to be in the interim?

  • Comment number 64.

    62 stanilic

    When the number 3 economy in the world is in the state it is in things are not too bad here. Suns out and stuff is growing.

    Education is part of the problem. Education means people go to uni and do not come back reducing the local populations capability.

    Must go and check my motor. Parked in near a bloke on a soapbox and somebody might pelt the preacher man. Same lecture all time from that one. Round here our sages know there onions. And when a chicken comes home to roost it gets roasted.


  • Comment number 65.

    64 Arthur

    Good luck with the motor but check the fuel gauge. Lots of dodgy geezers about with cans these days. Also don't eat all the chickens.

    I am going out to put my onion seed in the ground once the weather dries out. So things will be growing hereabouts. The rhubarb survived the winter thankfully.

  • Comment number 66.

    A multi-track global economy?
    Fascinating stuff ... but it would be nice to discuss/focus on Britain instead of rubbing our noses in it over and over again?
    We know that global spivs and money-makers do well ... But, do we need telling this over and over again?
    What interests me about the three business men mentioned above ... Is why they do not even TRY and do more in the UK?

  • Comment number 67.

    61 John

    I wholly agree with your sentiments.

    No ruling class ever gave up its privileges without a fight. I think they want one but for the wrong reasons so they will get one anyway.

    However, it won't be achieved by the organ playing of the professional Left and the political establishment who are both as much part of the problem as those silly bankers and dim regulators. Yet the economic and political equation will inevitably tip towards fundamental reform.

    The argument at the moment is more about how much damage and how long will it take before we get that necessary reform. Strangely, there are those in the City who are not hostile to reform. So it has to be just a matter of how long will it take.

  • Comment number 68.

    Oblivion wrote: "I fail to understand how or why 'growth' should be relevant at all. Does anyone else feel the same way?"

    Firstly, the population keeps growing and then most people want to improve their standard of living. A long period of slow growth sounds like the best possible outcome in terms of social stability. Some companies will be more profitable and a few will lose out.

  • Comment number 69.

    The current BOE measures are supporting good businesses as well as bad ones. Business really needs a bit of a kick to sort the good ones from the bad.

  • Comment number 70.

    Spendid Hash Browns you are incorrect about the prediction date of peak oil saying it was back in the 1970's. The prediction of peak oil for the USA was in 1970 and it was bang on correct. The output of oil from the US (then the world largest oil producer) was 1970 predicted by Marlon King Hubbert. Hubbert went on to predict in the early 70's that peak oil would be around 2000 for the whole planet. He was wrong by a decade because OPEC engineered a reduced demand ramp up by limiting supplies as the developed world became reliant upon OPEC to supply their demand growth. So the issues created by peak oil is now.

    There is no oil supply capacity in the world now to meet any kind of economic growth and hence economic growth for developed economies overall is impossible as energy is the enabler of economic growth. What will happen is for a while relatively poor countries such as China and India, and exporters of niche technology and wealth trappings required by these countries (Germany) will have growth at the expense of over-priced and over-endebted economies such as the UK. In effect they will take a larger share of a flat and soon to be reducing finite resource.

    However, after another five years or so their growth too will slow to nothing as they can no longer be supplied with the basic raw materials they need and inflation in the price of basic raw materials chokes off their domestic and foreign markets.

    Many on this site keep pushing the old economics argument about substitutes popping up to replace oil as it rises in price. However, when you examine the substitutes argument they all fall short in meeting GDP growth due to cost and lack of the utility that oil has (flexibility). I agree with Oblivion earlier that it is not all about growth.

    What we should be concerned about is changing our economic model back to a more basic one of sustainability and jobs, food, shelter and security for all in society. The amount of work that is required to engineer our transformation away from the financially dominated unsustainable economy we have now is huge and will require a lot of work from and for all members of society. However, we have to be realistic in our earnings potential within this economy and our so called standard of living as it relates to the endless purchase of tat, foreign travel etc.

  • Comment number 71.

    Sleepydormouse you are so right about us being too greedy and the need for government controlled money supply. Hopefully the populus in general will wake up to this realisation and change will happen without too much human suffering. However, I fear this may not be the case as the people who grow wealthy from the current ponzi economic structure have much power and are unlikely to see the inevitable unsustainability of their position and way of making a living. The result of this inaction and inertia will be as Stephanie summises a prolonged slow recession and lenghty period of inflation eroding everybody but the few's living standards and keeping increasing numbers unemployed and under-employed. A lamentable waste of human potential.

  • Comment number 72.

    Well, guys and gals, all our wittering on is about to be tested when the Tokyo and Peking Stock Exchanges open in a couple of hours. Unless the Japanese Government takes a brave and (slightly) unusual decision to suspend trading for a day or two and China decides to follow suit.

    Seat belts buckled?

  • Comment number 73.

    'None of them depended on the UK market for their growth.'

    ...............

    The economic performance of the UK is now paralysed (in overall terms) with all kinds of high debt levels liabilities and in the top 3 for the highest personal and other tax rates in the world, with a huge proportion of those of working age inactive ... is over-populated, under-educated, has massive welfare and other public liabilities, is near total dependent on oil, gas and other imports ... as all carried by the tax burden, mainly of its private sector.

    The debts, liabilities and very high operating costs, employment law cost issues, taxes have stalled the UK economy ... and the UK 'banks'(?) (because many are not 'banks' at all but ... 'SOFOMTS') prefer to invest overseas and ignore the UK as much as possible. Hence we get a lecture from global spivs; bragging about how much growth they are achieving by avoiding Britain.

    The question is how to unravel all of this ... an deliver impact, momentum and multipliers to redistribute and rebalance in the UK without making things worse!

    Is not just about problems ... we need to identify the right solutions and apply these quickly ... getting the most out of the least, leverage, multipliers ... the clever stuff that our govt/establishment and civil service ... and media and much of the foreign controlled UK business community will not even countenance.

    Going forward, the UK is now dangerously split economically between the 'haves' and the 'have nots', unless more is taken off the 'haves' and some better redistribution/rebalancing occurs ... the question is, *realistically* ... how best this should/can be done.

    Apart from that we're doing fine and I've just seen a barn owl - 'fantastic'.

  • Comment number 74.

    73 nautonier

    Can't ease off on the tax burden - which would boost activity - without reducing provision demanded by influential voters in a hung political system with all parties huddling in the middle of the road.

    The debt can only be paid off with time

  • Comment number 75.

    74. At 9:06pm on 13 Mar 2011, Arthur Daley wrote:

    73 nautonier

    Can't ease off on the tax burden - which would boost activity - without reducing provision demanded by influential voters in a hung political system with all parties huddling in the middle of the road.

    The debt can only be paid off with time

    ..................

    I've never said ease off on the tax burden ... what I've said/am saying is ... raise extra taxes with trade tax harmonisation (import tariffs on selected damaging imports) and at the same time lower VAT to put more money in the pockets of those who pay VAT ... mainly the have nots as a % of their incomes (probably not a good idea to reduce VAT on cigarettes and alchohol)...this in itself will deliver a strong impetus generally where it is needed most AND will reduce inflation at the same time; which is also worth tens of billions of redistrubitive money supply in the UK economy.

    Import tariffs also create margins for British business as some foreign imports become more expensive.

    There is little else can be done or extra money that can be found as an alternative ... with UK finances under massive stress?

    Done properly this can deliver £50-£75 billion pa money supply effect stimulus to the UK economy ... starting THIS YEAR ... and avoid excessive interest rate rises in the control of inflation.

    This is getting the most out of the least amount of input and disruption to the UK economy and will target many import spivs as paying the tariffs

    Impact
    Momentum
    Multipliers ... other than money

    Do you get it? This would cut VAT but is still 'revenue neutral' ... also reducing inflation is the SAME AS A TAX CUT in terms of real net disposable incomes.

  • Comment number 76.

    #74. Arthur Daley wrote:

    "The debt can only be paid off with time"

    My analysis is that the debt cannot be paid off quickly enough to avoid a thirty year depression and as this is unacceptable, in consequence, it is necessary that the debts are liquidated/deflated more rapidly if we are to avoid the worst of a depression.

    If fact I believe that the idea that the debts can be paid off is a terrible economic trap which in fact only benefits the bankers and not the country. My analysis also leads me to the conclusion that paying the debts off slowly is not even in fact the best option for bankers.

    (I'll describe the logic of this if anyone is interested, but broadly it is to do with the lost opportunity of a growing economy to the bankers as against preserving their shrinking balance sheets. Hint: examine a time series of their potential cash flows over the next thirty years under the two sets of assumptions and I think you will see what I mean.)

  • Comment number 77.

    76. At 10:24pm on 13 Mar 2011, John_from_Hendon wrote:

    #74. Arthur Daley wrote:

    "The debt can only be paid off with time"

    My analysis is that the debt cannot be paid off quickly enough to avoid a thirty year depression and as this is unacceptable, in consequence, it is necessary that the debts are liquidated/deflated more rapidly if we are to avoid the worst of a depression.

    ....................

    John

    Yes ... I think that is scenario is realistic/ possible with piddling 'do nothing' govts.

    Unless the UK govt radically re-organises the UK economy and consumer behaviour and attitudes and we have policies such as e.g. rationing on some imports ... the 'grey growth' scenario as drawn out over many, many years or decades ... I don't know how many years ... is already upon us ... apart from the global bragging spivs ... the rest of us ... the largest part of the population, are going to have to claw our way out of this situation as to be also paid for by our children and grandchildren.

    However, under current market conditions, UK inflation would have to be sky high for 20 years to even reduce the current UK debt by half. So inflating our way out of debt is also a non-starter and inflation will crash our economy just the same if not managed properly. Trying to inflate our way out of the debt would crash our economy within a couple of years ... I hope that is not the underlying policy of the BOE ... the same one that you are openly critical of?

  • Comment number 78.

    re #75
    Nautonier,
    Let's get a liitle bit sub-micro on tax trade tarrifs. What would you hit with a high tax?

  • Comment number 79.

    Daniel von Asmuth @68

    At the risk of sounding pedantic, logically your statement equates growth with standard of living.

    If I understand the term growth correctly, this is not the case. If for example 50% of a society's GDP was down to entertainment media, then making media digitally available at low cost for all on the internet would represent a negative growth.

    It is basically the old observation that a money economy relies on scarcity and also seeks to perpetuate it (artifical scarcity), and the forces that benefit from the regulation of money do so at the expense of technical progress that raises the standard of living.

  • Comment number 80.

    There is a bigger issue that has yet to hit our economy and that is going to throw the proverbial spanner in the works. That is the unsustainable debt of a number of the Euro-zone countries. The so called PIIGS have "Not gone away" and in fact things are getting worse. We just have to look at Greece and Ireland to see this and what is worrying is that they are still in denial about how bad things are.Greece still believes that they will be offered an unconditional bail out. In other words a hand out or a gift or a grant or a ........ The same applies for Ireland who are looking for a major reduction in interest rates at the same time "burning" the very investors they are looking to for help. And while this is going on we still have the rest of the PIIGS teetering on the edge being stopped from falling by the soundings off of the ECB. Unfortunately these are starting to sound less and less convincing. So much so the German Chancellor is starting to change her rhetoric for she knows that what they have been doing so far is not popular with her own people. She has suffered under the hands of the electorate in the resent past and questions would be asked if her party don't change this tide.

    Now this is where the spanner comes, the cost of financing government debt is going to rise in the Euro-zone due to these concerns and that is likely going to flow to the rest of the EU members as we will be judged guilty by association. It will also have a direct impact and the economies of the EU countries and will slow any recovery down to a trickle at best. Bumping along the bottom would be about right if we had reached the bottom. There is a way to go yet.....

  • Comment number 81.

    Sorry I wanted to add that what we see within the EU over the last weeks and months is just indecision and inaction. Yes they do a lot of talking but don't do anything. They are just not stepping up to the mound. They want to be a big player but do not want to make any difficult decisions and more importantly do not want to make any commitments that they may well have to stand by.

    The same goes for the ECB who do not stand firm and are seen as a push over. That is why the ECB is the preferred route rather than the IMF who do stick to the job in hand and actually look for improvements rather than just talk about them....

    Just look back over our recent history and you will see a total lack of action by the EU. But they have talked a lot about all them all and talked and talked and talked and talked........

  • Comment number 82.

    32. At 09:35am on 12 Mar 2011, John_from_Hendon wrote:

    the cheapness or 'price' of debt is set by the Bank of England!!! (Price is also the only control for debt volume.)
    ~~~~~~~~~~~~~~~
    Pardon me for butting in, but isn't the "debt overhang" almost entirely due to creative accounting , and short-term profit-seeking on the part of the moneylenders?

    As I have come to understand the "financial crisis" by reading people's comments here, a couple of bits of regulatory stupidity account for most of it.

    1. Major mortgage lenders were permitted/encouraged to go from loan-to-asset ratios of 10:1 to 40 or 50:1.
    2. Loan valuations were out there in fantasy land, and were counted as capital
    3. "Originate-and-hold" risk models were relaxed in favour of "originate and distribute"

    And so...on the strength of all those "AAA" debt futures (valued as assets), an insane amount of money was created by the moneylenders. Not just "asset backed" (real money), or even "debt-backed" (imaginary money) but totally la-la-land money which played a high-speed game of musical chairs until one day in 2008, the music stopped.

    I don't see how the "price of money" at the lender of last resort could have affected that.

    If the BoE raised the base rate tomorrow to 5%, wage claims would kick in on a multiplier. Mushroom thinks that this is one reason why we have low base rates. To keep index-linked wage claims from looking reasonable.

    Having spent the savings, the future earnings and the interest on the future earnings, the only way to recapitalise the moneylenders is to put real (asset-backed) money or imaginary money (serviceable debt) back into the system without taking as much out. Hence Basel3 etc.

    Self-regulation failed. BoE independence was part of that horrible mess, wasn't it?

  • Comment number 83.

    76 JFH

    Bankruptcy to liquidate debt or the repayment of debt are just devices to eliminate debt. The problem remains the scale of the debt. The idea you can initiate large scale bankruptcy programmes and this will be beneficial are doubtful.

    When a manufacturing facility of any sort is shut down it is seldom replaced and the infrastructure behind it disappears. A similar thing happens at a domestic level. That is the problem of long term unemployment. That is the problem of taking houses off people.

    In developed countries the level of taxation required to provide the level of services demanded by the broad electorate damps the economy. So relatively higher activity can be expected in countries - elsewhere - which do not have this dampening. This is happening. It is not unexpected.

    The maturing of resident industries without easily exploitable new opportunities via technology leads to stagnation influences.

    Rampant consumption of energy has to fail. A society based on unsustainable consumption has to in turn become unsustainable.

    Many will fight to maintain the status quo but is will make no difference.

    I expect 20 to 30 years of problems until the advantages of the East decline due to internal problems, a 50 year cycle part in process. In the meantime flexibility is required by individuals as western trade moves steadily to non physical output. Government has little room to manoeuvre, it is trapped by tax demand for service provision and the expectations of the electorate and debt.

    The financial sector remains the most important sector in the economy and quite frankly it is irrelevant what bonuses are paid out. The UK financial sector, despite being overblown was in principle undermined by crazy behaviour in the US.

    There is no law that demands people engage in unaffordable debt which is the root of the current problem. Increased individual debt servicing simple removes money from activity. This is a consumer problem so the consumer has to pay.

    The UK lost its Empire and won WWII at near bankruptcy and has yet to find an effective new role. Until it does then the problems will continue, for some at least. A Marie Celeste only needs a skeleton crew.

  • Comment number 84.

    103. At 6:36pm on 11 Mar 2011, Up2snuff wrote:

    re #91
    Well, there's a thing!
    ~~~~~~~~~
    Have to be more careful out there tomorrow?

  • Comment number 85.

    #82. stillpuzzled wrote:

    "#32. John_from_Hendon wrote:

    the cheapness or 'price' of debt is set by the Bank of England!!! (Price is also the only control for debt volume.)
    ~~~~~~~~~~~~~~~
    Pardon me for butting in, but isn't the "debt overhang" almost entirely due to creative accounting
    "

    No... If the BoE had put interest rates up to 5% (or indeed more) the banks and lenders would certainly have reacted by putting up their lending rates so the worst absurdities of the mortgage lending would have been priced out of the market and in consequence the asset bubble would have no occurred.

    It is I think silly to think that the lenders would not have been forced to put up rates if the BoE had put up rates - because as government debt would have gone up to match base rate then the lenders would have seen a rapid withdrawal of retail finance - and they still do, and did, have a degree of dependence on retail finance. So they would have experienced higher borrowing rates - further this would have also put down the price at which they could have secularised their existing loans also putting up its price. So in short the Bank of England's stupidity was critical and crucial in the creation and maintenance of the credit bubble which is destroying the Nation and will go on destroying the Nation for decades to come.

  • Comment number 86.

    81 Chris

    You assume action has effect. You assume management of the situation can occur. Why is this. Just curious. The more disparate the interests are and the larger the number of parties that have to agree the less likely an effective agreement and implementation of action will be. When impacts are common and shared then things are easier, this is the blitz mentality, which is showing up in Japan following the quake. There is no such bond in Europe.

    82 still p'd

    Markets are drive by confidence not facts. Sometimes a low confidence and resultant low expectation can be useful in the price outcome : )

    You will have to excuse me I have to go and fill my car with fuel at the local voluntary tax donation centre known as a petrol station.


  • Comment number 87.

    #83. Arthur Daley wrote:

    "I expect 20 to 30 years of problems"

    Arthur, but isn't it better to try to avoid this? By avoid I mean that we should strive to get rid of the cause of our problem, which has nothing to do with the rise of the East. And which will not be cured by the relative decline of the East.

    We have to fix our problem. Our problem is the unsupportable private debt mountain. I do not share you view that it is impossible to fix. Nor do I share your view that bankruptcy is bad. A good business makes money. A bad business looses money. Good businesses have money to invest from their own resources. Bad businesses have to borrow and borrow again to stay in business. Maintaining a zero money price only helps bad businesses (and absurdly over-borrowed mortgagees). Furthermore these bad businesses price out good businesses so damaging the country. In the household sector over-borrowed mortgagees keep house prices far too high and prevent the sensible rational mortgagees from living near where they work thus compounding the congestion problems which we cannot solve.

    In short we need to engineer as rapid as possible re basing of asset prices (get house prices down!) and get the economy to rid itself of bad businesses so that the good can thrive.

    Aside: my great grandfather's house is currently up for sale at £600,000. It is a modest 3 bed country village property with one reception, kitchen and a single bathroom downstairs, mains water and electricity only, which would be ideal for a farmworker and his/her family. Its economic price should be less than £90,000 (given the level of farm worker's pay) This well illustrates how far house prices need to fall for the economy to be rational once again - that is by some 85%!!!!! What do you want to do wait till farmworkers pay rises to £300,000 a year! By not wanting to do anything that is exactly what you are arguing!

  • Comment number 88.

    #86 Arthur Daley - enjoy filling your car while you still can. Peak oil is upon us.

  • Comment number 89.

    86. At 10:15am on 14 Mar 2011, Arthur Daley wrote:

    Does everything have an equal and or opposite reaction, the EU's mentality is that if you do nothing, then you do nothing wrong. This is more commonly known as the ostrich syndrome. Stick your head in the sand for long enough and the problem will have gone away or will have been dealt with by someone else. However after raising their head above the parapet they can't now just bury it's head once again as this will if it has not already done so, loose them all their credibility. The problem is that it is now their problem and it will not just go away and no one else will solve it for them. So it is just festering and the wound is getting worse and will either mean the death of the patient or at the very least an amputation. The patient is gravely sick and needs attention urgently just waiting and hopping will do nothing other than exasperate the situation.

  • Comment number 90.

    This thread, so far, has cheered me up a little in that we are all focusing upon solutions to differeing aspects of the same problem. We may disagree on how to achieve our objectives but we are not slagging each other off or depricating ideas - that has to be positive!

    May I thank nautonier for his useful thoughts on protectionist policies. This has been a policy that I have favoured since I started posting in 2007/8. Now I know that many of you believe that such a policy would only engender a trade war and protect poor companies thereby hindering development and I have to say that to some degree you may be right. However, when we strip out the falsehoods associated with free-market globalisation such a prospect dimiminshes when compared with the long term strategic damage to the UK economy that has already been done.

    There is nothing intrinsically Chinese, Indian or Brazillian in their export growth. The technologies that they employ are not domestically generated. It is only the labour cost that gives them a competitive advantage - along with both overt and covert barriers to entry. It is possible for the vast majority of the products that they produce to be made here. Hence nautoniers proposals make sense for the long term wellbeing of the UK economy.

    I would add some provisios. All tariff revenues to be dedicated to the development of new technologies. Any firm that recieves assistance to implement an agreed training programme for their employees. I would also like to see the creation of joint-venture (state/private) enterprise companies to drive forward this technological drive.

    If our economy is about anything then it should be about the long term wellbeing of all of the citizens. To my mind that means providing the opportunity for as many as possible of the people to have access to productive wealth generating employment.

  • Comment number 91.

    re #84
    Too right!
    Hopefully, you were able to read between the lines and realise what I was suggesting as an interesting example of government and greed.
    If not, let me know.
    Any thoughts?

  • Comment number 92.

    78. At 11:11pm on 13 Mar 2011, Up2snuff wrote:

    re #75
    Nautonier,
    Let's get a liitle bit sub-micro on tax trade tarrifs. What would you hit with a high tax?

    ..............

    Hi Snuffy
    I've explained much of this in previous posts ... 'high taxes' needs some relativity ... 1-2% trade tariff might be high enough in some instances ... but if, say, the UK does not produce any large luxury gas guzzling 4 x4 vehicles ... then any higher tax on their sale/import would be beneficial to HM Treasury /general tax payer and e.g. a special higher rate of VAT could apply there and operate as an import tax.

    There is a lot of cross-over between the effects of VAT and TTH /import and export tariffs ... but successive UK govts have not got to grips with this ... and prefer to take easy money at e.g. our PAYE and at the petrol pumps, council tax instead.

    The problem is not so called protectionism (as is a phrase used by the establishment to frighten the 'rabble') ... it is lazy incompetent govt parasiting on our pay packets etc as we are easy targets.

    Also, if say there is spare capacity on steel production in say NE of Britain ... then an import tax of x % on non EU manufacured steel could be beneficial.

    There are some itesm like e.g. light bulbs which Britain now import by the millions even billions from place like China ... a tariff here could be beneficial if Britian can produce its own light bulbs (most Chinese lightbulbs contain mercury which is actually poisonous - and perhaps Britain might one day be able to make a light bulb in the UK that someone might ctaully want to buy and be able to use?).

    There are thousands and thousands of items and opportunities to be looked at so that the UK is well and truly 'harmonious'.

    The amount of tax can be whatever is suitable to make the policy sensible, non-discriminatory, harmonising, non agressive, effective, structural and progressive for the re-building of British industry.

    Obviously, this is a complex area and needs a lot of work but it can be started on a smaller scale hitting the main import issue targets and gradually be refined as Britian currently collects about £2-3 Billion a year in import taxes when it is paying probably hundred billion £'s a year excess on subsidised products, exports tariffs, goods resold and targeted at Britain at higher prices etc.

    The extra revenue from TTH and careful import tariffing is there to be collected by the UK Chancellor and we need this extra revenue now!

  • Comment number 93.

    90. At 12:22pm on 14 Mar 2011, foredeckdave wrote:

    This thread, so far, has cheered me up a little in that we are all focusing upon solutions to differeing aspects of the same problem. We may disagree on how to achieve our objectives but we are not slagging each other off or depricating ideas - that has to be positive!

    May I thank nautonier for his useful thoughts on protectionist policies.

    .............

    Hi FDD - Thanks mate!

    Remember - It's 'TTH' (Trade Tax Harmonisation) and not 'protectionism' ... as the latter is used by the establishment to 'frighten the peasants' ... as otherwise our bunch of Chamberlains would have to stop raiding our pay packets and pockets and have to work a bit harder getting in govt revenue

  • Comment number 94.

    85. At 10:04am on 14 Mar 2011, John_from_Hendon wrote:

    #82. stillpuzzled wrote:

    Pardon me for butting in, but isn't the "debt overhang" almost entirely due to creative accounting
    "
    ~~~~~~~~~~~~
    No... If the BoE had put interest rates up to 5% (or indeed more) the banks and lenders would certainly have reacted by putting up their lending rates so the worst absurdities of the mortgage lending would have been priced out of the market and in consequence the asset bubble would have no occurred.
    ###########
    Just checked online, and found the BoE base rate was over 4.5% for at least 5 years before 2008, and at its lowest it only got down to 3.75 in 2003.

    It was in fact 5.25% at the beginning of 2008.

    Hope that helps.

  • Comment number 95.

    re #92
    It is important to think about the effects of taxes. [Something the Tories may not have done in the past. ;-)]

    4x4's are a relatively small segment of UK car sales. Some are bought by the taxpayer or public subscription. Increasing the cost of those by 1-2% will not go far to financing a year on year 25% reduction in the current VAT rate AND will add to Council Tax where the 4x4s are used by Police and Fire services.

    Remember the hoo-hah over shoes from China about three to four years ago and before that over underwear? That had to be dealt with in Strasbourg over some months. Can you really expect the Germans to agree a levy on BMW, Mercedes and Porsche/VW 4x4s?

    We do have some other existing trade tariffs and restrictions: some are quite strange. Video cameras are subjected to import limitations and a tariff that have now been effectively circumvented by small recorders such as 'phones, pocket DV devices and DSLRs with a video capability good enough for feature films. The video camera is now quietly dying as a consequence.

  • Comment number 96.

    re #92
    Am with you on increasing UK manufacturing. But the trend over 40 years is to raise the cost of labour in the UK and make home industry uncompetitive. Funny, not a lot of people know this: FD and the FDE have played a part in that but VAT has not.

    The US, I believe, use trade tariffs and taxes to protect their steel industry. I wonder how much revenue is produced? I guess again the Germans and some other European countries would not like us to restrict their steel in favour of ours.

  • Comment number 97.

    #96 Up2snuff,

    Snuffy,

    The US tarrifs on steel still haven't stopped the decimation of their domestic industry. Why do you think the NE seabord is known as the Rust Bucket States?

    Perhaps the Germans and the French should also examen their restrictions on the provision of services (not just financial) to their public sectors?

  • Comment number 98.

    95. At 1:48pm on 14 Mar 2011, Up2snuff wrote:

    re #92
    It is important to think about the effects of taxes. [Something the Tories may not have done in the past. ;-)]

    4x4's are a relatively small segment of UK car sales.

    ..............

    That's right ... but there are thousands and thousands of products and items to be reviewed ... and some have had an inappropriately high or low tariff on them for many many years ... this is sheer incompetence and neglect by UK govt and Customs and Excise ... as now under-staffed

  • Comment number 99.

    96. At 2:10pm on 14 Mar 2011, Up2snuff wrote:

    re #92
    Am with you on increasing UK manufacturing. But the trend over 40 years is to raise the cost of labour in the UK and make home industry uncompetitive. Funny, not a lot of people know this: FD and the FDE have played a part in that but VAT has not.

    The US, I believe, use trade tariffs and taxes to protect their steel industry. I wonder how much revenue is produced? I guess again the Germans and some other European countries would not like us to restrict their steel in favour of ours.

    .........

    Yes! Good point ... but many things coming into Britain by the cargo ship load would not affect our UK cost base if properly tariffed ... and many things which we import at inflated prices ... we could make ourselves ... if the subsidised or export tariff inflated product was made more expensive as giving a better margin to British manufacturing with the glimpse of margins on products for sale in the domestic GB economy ... e.g. millions and billions of mercury poisonous imported inferior quality light bulbs

    We need to develop our own economic 'Tai Chi' ... and put a bit of 'yang' in our 'ying' (something like that)!

    TTH is not intended to give perfect price matching or price advantage over imports... it is meant to give British people jobs in Britain that do not exist at the moment ... this may create some supply anomolies with some products ... but there are no risk free options available to the UK with our stagnating 'grey' economy ... and arguably doing next to nothing carries the highest possible economic risk of all ... to the bulk of the British population.

  • Comment number 100.

    91. At 12:26pm on 14 Mar 2011, Up2snuff wrote:

    re #84
    Too right!
    Hopefully, you were able to read between the lines and realise what I was suggesting as an interesting example of government and greed.
    If not, let me know.
    Any thoughts?
    ~~~~~~~~~~~~
    Licence to steal? Or MP's expenses? Sorry, you've lost me on the details. Never mind.

    On the matter of the trend over 40 years is to raise the cost of labour in the UK and make home industry uncompetitive. Funny, not a lot of people know this: FD and the FDE have played a part in that but VAT has not.

    Its true...if I have to pay more for fuel, I require a bigger salary. If it costs more to shift the product, I have to charge higher prices. So customers have to have higher wages to be able to afford the product.

    i.e. Industry loses at both ends (costs AND prices) and you can add VAT on top of any tax rise. FD and FDE sucks. Used to be a principle of appeal in tax law about "double taxation". Wonder what happened to that?
    ~~~~~~~~~~~~~~
    But mushroom still thinks the biggest cost to any company is the wage bill, which is currently at least 30% higher than it needs to be because of PAYE and NI. (And another 20% higher than it needs to be because of employment law and HSE regulations.)

    And also thinks that the discrepancy between what companies can offset against profit for tax, and what employees can, sticks in the craw of every working joe in the UK.

    If the LibDems did what they promised pre-election and raised the personal allowance to the same as the minimum wage, low-earning people would have more to spend and it wouldn't cost their employers a bean. It would also shift the balance of profitability from "low employee-count" businesses like web-selling of financial products to higher employee-count businesses like growing, making and mending. (i.e. wealth generators.)

    It also would be seen as an attempt to address the "we're all in this together" issue. If the moneylenders can cream off the top, why shouldn't the little people get some of the surplus in their take-home pay?

    Anyway, the next blog is about Japan, and I won't be commenting in that one.

    Be careful etc.

 

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