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Gilts: The fine line between hope and despair

Robert Peston | 10:39 UK time, Friday, 11 December 2009

There's an unmistakeable smell of the 1970s about finance, politics and economics: the City recovering from a banking crisis; a super-tax on wealthy bankers; fears that international investors will stop lending to the British government; excitable chatter about the likelihood of a hung parliament.

All we need now is a power cut and I would swear I had been transported back to my teens (if only).

Alistair DarlingAgainst that slightly discombobulating backdrop, what has been bugging me ever since Alistair Darling announced his one-off tax on banks paying big bonuses is whether there would be any impact on the government's ability to sell £225bn of gilts to investors this year (and a similar amount next year).

Or to put it another way, would the Treasury pay for its raid on bankers pay by being forced to pay more when borrowing in the form of sales of government bonds?

It would certainly be wrong to attribute yesterday's fall in the price of gilts to bankers' retribution.

That was caused by bond investors' disappointment that the chancellor in his pre-Budget report did nothing to accelerate a reduction in the UK's record peacetime public-sector deficit.

This is how Michael Saunders, an economist at Citigroup, put it:

"The PBR offers little or no coherent plan to get the UK back to a sustainable fiscal stance over the next few years...There are still no plans for public spending after 2010/11, merely forecasts. This is not just a linguistic difference: it signals that the government has not yet decided on its public spending intentions for those years. This implies that the UK also has no plans to get back to fiscal sustainability."

Saunders adds: "The UK's fiscal route will, if followed, probably also lead to the UK losing its top-notch [credit-rating] status, for the first time ever."

It's only a view, and there are others who argue that the UK's AAA credit rating - which allows the government to borrow at very low interest rates - is safe, at least for the time being. Moody's, for example, said overnight that the outlook for the AAA ratings of the UK and the US was "stable", even though earlier this week the ratings agency said that both countries may "test the AAA boundaries".

That said, the clever old Debt Management Office - which organises the sale of gilts for the Treasury - will not be properly testing investors' appetite to lend to HMG till 6 January.

Treasury building

Which is when the next sale of conventional gilts takes place (there will be a small sale of index-linked stock next week, but that probably won't give much of a guide to how the market feels about the UK's credit-worthiness).

The point is that governments typically have an uneasy relationship with big financial institutions: there is a relationship of patron to client, in that governments provide lots of valuable business to banks and have ultimate responsibility for how they are regulated; but governments which borrow are not all-powerful, in that they require the goodwill of banks and investors to borrow what they need.

If bankers are grumbling about having their bonuses slashed by Mr Darling, are they really going to be enthusiastic salesmen for the bonds he wants to sell?

Finance isn't just about numbers and rates of return; it's also about emotion. And if the City were to be alienated from the incumbent government, that would not be healthy for either side.

That said, there is a semi-rational connection between the bonus super-tax and downgrades of the UK's fiscal prospects, which is that if genuine wealth-creating firms and individuals were to move abroad, that would lead to a shrunken tax base in the UK.

However the notion that the bonus tax would have a material impact on the British economy would of course be absurd.

But what also strikes me is how delicately balanced the UK is between vicious cycle of decline and virtuous circle of recovery.

For those who want cheering up, take a look at an analysis in this month's Financial World magazine by the noted monetary economist and former member of the Monetary Policy Committee, Charles Goodhart.

He believes the time has come for the Bank of England to cease helping the government to borrow, to stop buying gilts, to end the quantitative easing programme of converting government debt into money - for fear that to extend the QE programme beyond the first quarter of 2010 would pump up asset prices to dangerous levels (and see my note A bubble or 'stubble' or our own design).

As he implies, all else being equal, an abrupt halt to the Bank of England's acquisition of gilts could spark something of a crisis for the Treasury, because the Bank's purchases have almost exactly matched the volume of gilts being sold by the Treasury (though to be clear, the Bank buys in the market, not directly from the government).

Will conventional bond investors take up the slack after the Bank of England withdraws from the market? What will happen to the price of gilts and the interest rate paid by the Treasury in those circumstances?

It's an alarming prospect.

Except that all else isn't equal. Goodhart points out (as too has Stephanie Flanders in her blog) that - as luck would have it - big banks are about to be forced by the Financial Services Authority to make substantial purchases of gilts, to rebuild their liquid resources and make them less vulnerable to the kind of cash crises they suffered last autumn.

He says:

"Commercial banks have built up huge unused reserves at the Bank of England. It hardly takes a genius to recognise that three requirements can be simultaneously realised:

1) fund the public-sector deficit in 2010-11;
2) return the Bank of England's swollen balance sheet to normality;
3) rebuild the liquid assets ratio of UK banks."

Or to put it another way, commercial banks - the likes of Royal Bank of Scotland and Barclays - will be the big buyers of gilts after the Bank of England becomes a net seller.

Or will they?

I am not so sure. Because the Financial Services Authority has told me that - although it is obliging banks to increase their holdings of top quality government bonds as a bulwark against unexpected swings in funding needs - it recognises the dangers in forcing banks to buy vast numbers of gilts too quickly.

Here's the thing: by all historical standards, the price of gilts remains very high; so it would be madness to force British banks to buy tens of billions of pounds of UK government debt at the top of the market, because that would make the banks vulnerable to capital-eroding losses as and when the price of gilts returns to more normal levels.

In other words, the supposed happy coincidence between the government's funding needs and prudential regulation of commercial banks is not quite what it seems. If the Financial Services Authority had its way, it might actually be deterring banks from buying gilts at the moment of the Treasury's greatest need, because this would be when gilts were most over-priced.

That said, even if the banks were to devour gilts to the tune of tens of billions of pounds, that would not restore the health of the public finances, as Goodhart concedes.

He says: "immediately after the general election, whoever wins must execute a credible plan to restore the UK's fiscal position to a sustainable level".

Which is becoming a boringly familiar refrain.

Comments

Page 1 of 3

  • Comment number 1.

    And still Brown keeps on spending money we haven't got....

    https://news.bbc.co.uk/1/hi/world/europe/8407112.stm

    This is even worse because £1.5bn is considerably more than Brown spends in the UK on energy R&D.

  • Comment number 2.

    Until the banks increase their lending to the historic levels of say 5-10 years ago, that is before the surge that preceded the credit crunch, the Bank of England must continue to compensate by buying government bonds. It will only be necessary to increase interest rates in order to sell bonds into the private sector, if and when there is pressure on sterling.

    If there is evidence that the new money is causing asset inflation it means that it is going into the hands of savers instead of those who would spend it and help lift the UK out of recession. Special taxes should be used to discourage money going into traditional asset inflation areas such as housing and equities.

    Many economists, politicians and business leaders seem to be stuck in the time warp of the 70's, and continue to utter the nostrums of that time. Regulating the economy is a balancing act and at different times corrections need to be applied in entirely opposite directions.

  • Comment number 3.

    Oh dear, back to internal infighting and the Balls-Brown axis.

    You've just got to say in this sort of situation, when Brown denies something....... it's just got to be true.

  • Comment number 4.

    #1 Didn't he say that RICH nations should pay their fair share to help third world economies with climate change?

    ... so after NuLabs brilliant financial stewardship, when does UK get some money then?

  • Comment number 5.

    Brilliant piece Robert but I'm afraid you've frightened 'em all of with this one!

    A number of things are heappening here - as you point out. I would add emphasis to :

    - The expectation of a change of government?

    - The expectation that QE money is about to run out?

    - A labour government distancing itself from the city in order to try and disentangle Gordon Brown from past mistakes?

    - A change in the preferential terms and conditions being offered on the government, bonds, gilts and securities by the BoE to preferred, select buyers?

    - Brown and Darling have had most of what they need from the banks in order to contest the next general election. Brown's time horizon is only until next June and he now may think that HM Treasury/BoE has done just enough to get the UK through to next june in terms of UK money supply.

    Soemthing has changed behind the scenes for sure but I think that the EU is becoming more involved behind the scenes and Gordon Brown is trying to save his power base and his reputation in order to contest the next election and the banks and is putting a Euro focus on this behind the scenes.

    If the markets get to think that the Euro currency is on the cards for the UK if the catastrophic event of a continued labour government staying on after the general election, they they will of course hold off and see what happens to the GB £ currency pricing before jumping in and buying sovereign bonds and gilts in substantial quantities.

    This again is Brown and Darling's fault for creating uncertainty and operating without reasonable transparency on government finance.

    I think we need to know what Brown thinks of the UK joining the Euro currency and reasons for joining/not joining, in order to eliminate the currency dilemna and facilitate commercial bond and other contract currency price planning on behalf of those able and willing to buy UK government debt.

    A clear statement now by Brown/Darling on Britain's membership of the Euro would be extremely beneficial. If pseudo dictator Brown's successor decides for the UK to join the euro then his ability to borrow even more will be severeley limited by the EU central bank and if the markets are uneasy and uncertain about Britain joining the euro after the general election, then buyers of soverein UK debt will be likely to hold off.

    This is not a politicallly inspired attack on Brown by a 'red tory' as there is a genuine problem there for Britain over debt/currency/euro and Brown/darling is making it worse by dithering.

    A clear statement on this is needed for planning the rebuilding of UK plc
    and a YES/NO intention for the Euro is a massive issue for the UK and for the markets - even though it looks like only 'little me' is authorised to write about it - the BBC also seemed to be scared of discussing it - Peter Mandelson said just a few months ago that Britain will obviously join the Euro.

    If a possible next prime Minister of the UK is saying that the UK joining the Euro currency is inevitable after the general election/ Brown's removal - isn't it time that Brown removed the uncertainty and damage that his retiscence and silence is causing to the markets?

  • Comment number 6.

    A written constitution should take away the ability for any government to borrow. We would struggle to fight senseless wars.

  • Comment number 7.

    I think your piece today is irresponsible and treacherous.
    The country is absolutely dependent on cheap borrowed cash....any snivelling or undermining which puts up the cost of this borrowing translates into a closed hospital here, a rejected new chemotherapy drug there,a closed school here and a faulty helicopter there.
    If press carping and confidence bashing by a government-funded media oraganisation's Economics team puts up the cost of borrowing £800bln by even 0.1% it will cost the country nearly a billion pounds.....think very carefully about what you say and who is reading it ,Robert, you already helped cause a crash.

  • Comment number 8.

    I agree ,climate change spending is the first thing that should be cut as it is a non-priority event,indeed it is a load of codswallop...... you don't check carbon dixide levels when your house is on fire.

  • Comment number 9.

    1+8
    I was agre with comment 1

  • Comment number 10.

    onward-ho, so we are all supposed to keep quiet about how badly Gordon is handling this? I'd have thought a healthy debate would hearten bond buyers more than a terrified silence.

  • Comment number 11.

    Banks hold capital reserves in safe liquid assets, such as government bonds.

    However, you can't force British banks to choose gilts over German bunds or US Treasuries. If gilts lose their AAA status, our banks would have to move away from gilts and diversify into safer reserves.

  • Comment number 12.

    Onward-ho

    I am sure that the investment community can work out the consequences of this governmens't actions as well as Robert Peston.

    Had the chancellor taken more appropriate action (e.g. to pay down debt) in the PBR, rather than producing a budget which goes as far as it can to appease the voters, the markest would not be taking fright.

    I was around in the 70s and yes it does feel somewhat like that period

  • Comment number 13.

    Can someone put me straight on this ?
    I though BOE was buying gilts from commercial banks as part of QE
    Now commercial banks will be buying gilts from BOE to fund government.
    Is QE actually happening or not ?

  • Comment number 14.

    what happened to the 'winter of discontent the right wing media was predicting?

  • Comment number 15.

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

  • Comment number 16.

    # nautonier. No-one is coming to rescue you, least of Euroland. Take a look at what is going on in Greece.

    Pretty soon Germany will need to decide whether to rescue Greece or whether to cut it loose. A bit of a Hobsons Choice that - Cut away from the Greeks and the market will assume that remaining PIGS will also exit the Euro in due and panicked course. Step up to the plate with the Greeks and the next up to the begging doing their Oliver Twist impression will be Spain.

    All this at a time when Mrs. Merkel has just discovered a further Euro 80 billion hole in the German banking system, and to the East of Germany is a whole range of economic basket cases in various stages of collapse.

    Meanwhile contraction continues in the "great" Anglo Saxon economies which should do nothing at all for German exports.

    Germany cannot possibly rescue everyone. The only unknown is whether Germany may be persuaded to destroy itself in a futile atempt to achieve the impossible.

    Not all problems have solutions.

  • Comment number 17.

    Feels like the seventies does it.

    When the deficit corrections really start to be addressed, it will feel more like the thirties.

  • Comment number 18.

    Goondog Trillionaire has spooked the markets for sure!

  • Comment number 19.

    #7 Onward-ho. Presumably you agree with the traditional definition of treachary. In which case this cannot be treacherous

    https://www.zerohedge.com/article/citi-blasts-moodys-optimism-says-uk-aaa-rating-doomed

  • Comment number 20.

    16. At 12:40pm on 11 Dec 2009, armagediontimes wrote:

    # nautonier. No-one is coming to rescue you, least of Euroland. Take a look at what is going on in Greece.

    >>>>>>>>>>>>>>>>>>>>

    The EU has no choice but to rescue Greece as lender of last resort, otherwise, the Euro currency will come under pressure as Greece's debts permeate around the world in a further contagion of toxic debt. A central bank has responsibility for its currency.

    This is becoming a big test for the EU.

    This is why it is imperative that Gordon Brown makes a clear and transparent statement on Britain's possible membership of the Euro, to steady the markets and allow adequate currency planning for those wishing to purchase UK sovereign debt.

    Brown has spooked the markets and he is still spooking the markets and this needs to stop.

    Brown's becoming a 'Spookdog trillionaire!

    Brown has a responsibility to create stability and give businesses a view going forward and in a global market, as Brown keep's preaching, knowing which currency the UK is likely to have in 1 year, 3 year, 5 years, 10 years, 15 and 20 years matters a lot when government debt is concerned.

    Believe it or not, it also matters a lot to the little people in the street, like 'me'.

    If things continue as they are we'll be going begging to the EU for rescue - then the EU might respond.

  • Comment number 21.

    The UK will soon be following the Ukraine and the rest of the basket-cases to the IMF. Broondog trillionaire and his crew of politically corrected incompetants have well and truly truly stiffed the economy. Batten-down the hatches everyone, the real storm will soon be upon us,

  • Comment number 22.

    First the general population borrowed and consumed irresponsibly to sutain the economy.

    Then the government took over to keep things going.

    Obviously I am just a simple person incapable of understanding economic complexities but....

    Who the **** is going to take over from the government when the markets force them to stop borrowing beyond their means to keep us all in HD flat screen TVs...and gas.....and electricity.....and food?

    Manufacturing perhaps (china may have something to say about that)?....finacial services( ha ha ha ha)?..... Oil and gas(not much left)

    Agriculture?...nope we import 30% of our food requirements.

    Our hopes appear to be pinned on hightech industry and services!!! How many people does the often lauded company who came up with the 'Grand Theft Auto' game employ I wonder..1/2 a million perhaps or about 50? besides a million graduates ayear from china and india may have something to say about our 'high tech high value services'.

    Answers on a postcard to George Osbourne please.

    If you cant come up with anything emigrate before 2011/2012.


  • Comment number 23.

    10
    THERE IS A NEED FOR DEBATE, BUT WE DO NOT WANT A RUN ON THE POUND LIKE THE ONE WE ALL KNOW GEORGE OSBOURNE HELPED TO CAUSE LAST YEAR, NOR DO WE WANT TO DAMAGE CONFIDENCE IN THE SYSTEM AT SUCH A DIFFICULT TIME.
    KEEPING SCHTUM UNTIL THE BOOM,GIVES US ROOM AND WILL ALLOW US TO VROOM VROOM VROOM OUT OF THIS MESS.
    Britain really does need cheap cash.If there is a widespread perception that we are up a gumtree then we are up a gumtree.....but do not say it too loudly as it can only cause harm....with media freedom comes responsibility.
    The act of observing and commenting is not a non-impactive matter.
    ALSO WHEN ECONOMICS EDITORS SAY EXACTLY THE SAME THING AS THE TORIES, WHO NEED TO RAMP UP THE PERCEPTION OF DISASTER IN ORDER TO GET INTO POWER,IT IS NOT RIGHT....I KNOW THAT ROBERT IS ACTUALLY NOT POLITICALLY BIASED AND I KNOW A BLOG DOES NOTHING, BUT THIS IS A VIRAL AGE WHERE NEWS AND SENTIMENTS HAVE HUGE EFFECT......THE GOVERNMENT HAD TO BUY RBS BECAUSE OF HUGE SUDDEN WITHDRAWALS WHICH HAD TO BE GUARANTEED, RATHER THAN BECAUSE OF HUGE LOSSES.THOSE HUGE SUDDEN WITHDRAWALS WERE IN NO SMALL MEASURE DUE TO PERCEPTION AND AS THEY SAY, PERCEPTION IS REALITY.
    And talking about the 70s is divisive.
    There is a common perception that the Callaghan government were disastrous when in actual fact they turned the economy round in the late 1970s after the mistakes of the Heath and Wilson days......ask William Keegan who was there.
    History has been rewritten recently where it is blandly assumed that Thatcher sorted out UK, whereas everybody knows who was there at the time and saw the riots and deindustrialisation in the early eighties ,it was Britain's worst hour and she caused it....There were worker disputes with the Labour Government at that time but these were having a minimal impact on the economy and the anti-Union tide was already turning......like a Fascist leader Thatcher capitalised on Middle England's mob sentiments...BUT SHE JUST ABOUT KILLED OFF THE ECONOMY.
    It wasn't strong medicine, it was poison.

    Whereas thecounter inflationary measures, the turning around and control of public spending , and the handling of the financial crisis by Healey were absolutely first class.
    There is a tendency to generalise about the seventies and come out with bland soundbites about what really happened.....it was all so much more complex and interesting than the young of today realise...
    I am indeed getting old.
    So it is very,very important to realise that we are not going back into the 1970s, and that the people of England (who else in the UK would do such a thing?) MUST NOT VOTE FOR DISASTER.....
    THEY MUST NOT VOTE TORY.

    If Cameron is Thatcher with sideburns we are in for disaster.
    If Cameron is not Thatcher he is Heath,and God help us from that.

  • Comment number 24.

    Personally I crossed the thin line between hope and despair back in 1973 when it was obvious to the dimmest light-bulb that government existed only in this country to tax and waste.

    What is wrong with this country is that there is a perception that government is some objective paternalistic entity concerned only with the well-being of the private citizen. This is tosh!

    The reality is that government in Britain, and there is little party difference, behaves like the great unwashed on a Friday night booze-up: anything goes and stick it on the credit card. When times are good it is champers and cocktails, when times are bad it is white cider and meths. The formula never changes as it is the taxpayer who gets the hangover.

    What is need now is a political leader who tells the truth (Laughter). Seriously, this is what is needed. It is not just that the party is over and the house needs to be cleaned up, but the brokers men are at the end of the drive looking to repossess. It does not get much more serious than that!

    The current government is lead by a Prime Minister who is in total denial over the situation his incompetence has placed the country. Between him and his predecessor we have had the choice of a moral bankrupt and a real bankrupt. So much for New Labour: morally and intellectually corrupt, unable even to run their own bath!

    We have now reached the apogee of stupidity. The government is bust, the banks are bust and the taxpayer is now expected to bail the lot out. There is active talk being spread around that speaks of economic recovery but then why are interest rates still locked at 0.5%. There is no recovery: there is only taxes and the greedy lining their pockets.

    It does not remind me of the Seventies. Then, although you could disagree with someone, you could still respect them as an individual. Not so, now. Not so now and that is the toughest part of the entire tragedy.

    No, this reminds me of the period after the Napoleonic war: the time of the Bloody Code, the time of the tax-eaters, the time when the demand for political reform was stifled, the time of inherent political corruption, the time when working people were reduced to penury and starvation, the time of King Lud and Captain Swing, the suppression at Peterloo, a time of great unrest. This time though: unlike then the country has no money at all.

    I just hope we don't go back to 1642: perhaps we can jump around a bit and go for 1648 and get some levelling, digging and ranting done to scare the pants off the great and the good.

    Certainly a new beginning has to be in prospect because we have to have reached the end of what has been going on since 1997. I do so hope so!

  • Comment number 25.

    22. At 1:12pm on 11 Dec 2009, Jericoa wrote
    'Who is going to take over from the government when the markets force them to stop borrowing beyond their means'

    Answer: no one, the government's promise to pay, is our promise to pay, and I don't think we're good for it.

    As regards the UK’s AAA rating:

    The first is A is given because you pay back the capital.
    The second A is given because you honour the interest payments
    The third A is given because you don’t water down the value of the gilt by printing more money.

    The third ‘A’ is likely long gone but not admitted to.

  • Comment number 26.

    "There's an unmistakeable smell of the 1970s about finance, politics and economics: the City recovering from a banking crisis; a super-tax on wealthy bankers; fears that international investors will stop lending to the British government; excitable chatter about the likelihood of a hung parliament."

    You forgot two other similarities:

    1. The Country is being run by a Labour govt that has allowed spending to get out of control (even before the crisis); and

    2. (most importantly) the Chancellor of the Exchequer is a man with ridiculous eyebrows

  • Comment number 27.

    Its ironic that the banks and credit rating agencies that have been saved by governments are now turning against them.

    Why has borrowing risen so much? There are two main reasons

    1. The bank bailout

    2. The massive reduction in the unsustainable tax revenues from the city which we were led to believe were due to 'innovation' and 'talent' but were infact were built on sand.

    The gov and regulators looked the other way.

    Its unjust that the richest people are using this crisis as a vehicle for pushing forward their agenda for slashing the public sector for their own gain. We don't spend more on health and education than the rest of Europe however we do pay less tax.

    Why don't we pay more tax?

    Do we want the country to be like Sweden or the US where people who cannot afford health care are allowed to die?

    Sadly it looks like the discredited 'free-market' US style is winning out - the richest sadly have more power through the media/contacts/lobbyists etc than the system of democracy should allow.

  • Comment number 28.

    Sorry hadn't spellchecked it.
    12
    The markets want the Tories...DO THEY NOT?
    So if the chancellor does something that will get him more votes do they take fright.....you bet they do.
    19
    Anything Citi announce is usually because they have shorted UK bonds and hope to make a killing.
    UK is in victim mode right now.....how many gloomy galloots can you get into a BBC blog......have you not had your Weetabix today?
    22
    Subo!......she will earn more for Britain than Grand Theft Auto this year!

  • Comment number 29.

    Maybe if the government paid credit rating agencies to rate their bonds their chance of a AAA rating would be higher?

    The credit rating agencies should not even be in existence at the moment their judgement has been shown to be so flawed in the past years

    See extract and link to article below...

    "To promote competition, in the 1970s ratings agencies were allowed to switch from having investors pay for ratings to having the issuers of debt pay for them. That led the ratings agencies to compete for business by currying favor with investment banks that would pay handsomely for the ratings they wanted.

    Wall Street paid as much as $1 million for some ratings, and ratings agency profits soared. This new revenue stream swamped earnings from ordinary ratings.

    "In 2001, Moody's had revenues of $800.7 million; in 2005, they were up to $1.73 billion; and in 2006, $2.037 billion. The exploding profits were fees from packaging . . . and for granting the top-class AAA ratings, which were supposed to mean they were as safe as U.S. government securities," said Lawrence McDonald in his recent book, "A Colossal Failure of Common Sense."

    https://www.mcclatchydc.com/227/story/77244.html

  • Comment number 30.

    #14
    "what happened to the 'winter of discontent the right wing media was predicting?"

    You're right, it hasn't happened! This is because Broon and comical ali have maxed out on the UK's credit card and more, something that even the most stupid on the left can't have failed to notice - he's trying to poke his dirty little fingers into the dyke until April and then all hell will let lose.

    What Nulab has done is set the UK up for a "DECADE OF DISCONTENT"
    (can I have copyright on this phrase please?)

  • Comment number 31.

    I am a self employed working Joe, husband and father of three, and here is a memory from a few months ago.

    A local lad, now an old man, who started a manufacturing business many years ago, sought to expand it and took a lease of an industrial premises. He paid his rent and in addition paid to the landlord an extra sum to cover the insurance of the premises.

    The building was broken into several times, his landlord failed to insure and make good the damage, so he undertook the basic repairs needed himself to keep the business going. Finally he gave up, yielded up the building upon expiry of the lease and shut down the business, which put many out of work.

    The landlord then demanded around £50,000 in the form of a dilapidations claim. The claim on careful examination was found to be false, in that it claimed for damage to the premises that should have been repaired by the landlord’s insurance, and for alterations undertaken by the landlord’s previous tenants.

    The old boy (now retired) refuted the claim, and rightly so. But then end product is a business closed down, people out of work, some of whom are likely to have families, and may well lose their homes.

    Now here’s the interesting part of the story. The Landlord was the Local Authority.

    The greed of government and banks is extracting a very high price from individuals, families and not least those in business.

    It is the social cost which I feel most aggrieved about, namely destitute families and those young people and children who should be setting in life on a level playing field, but instead have a mountain of debt to climb.

  • Comment number 32.

    Funny isn't it that most people have virtually zero active interest in UK history until the time arrives to try and score political points.

    1970's 1980'2 1990's are largely irrelevent as Labour have been in power for the last 12 years after inheriting a well managed and improved economy. Our Labour government is fully responsible for everything that has happened in recent years and is happening or not happening now in the UK economy and UK Parliament's.

    What is important, is what is happening now and 'Spookdog Brown' is continuing to unsettle the markets while the last part of his 'celtic, equalizing, vengeful England wrecking conspiracy' plays out.

  • Comment number 33.

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

  • Comment number 34.

    "Do we want the country to be like Sweden or the US where people who cannot afford health care are allowed to die?"

    The world is over-populated and that is a serious problem and will only get worse. To spend zillions keeping the brain-dead, the bed-ridden and those who don't know which day it is (ok, sorry Gordoom, comical Ali, left-wingers) et al alive or not is a no-brainer.

    PEOPLE DO DIE AND SHOULD BE LEFT ALONE TO DO SO IF THEY SO WISH. It shouldn't be about saving EVERY baby etc, thats emotional not logical, if it were my baby ... sure I'd try everything to get it saved, but it is simply nonsense from a NHS and affordable economic perspective.

  • Comment number 35.

    8. At 12:03pm on 11 Dec 2009, onward-ho wrote:
    I agree ,climate change spending is the first thing that should be cut as it is a non-priority event,indeed it is a load of codswallop...... you don't check carbon dixide levels when your house is on fire.


    No you don't count carbon dioxide when your house is on fire. You phone the fire brigade because you recognise you have a problem that needs to be dealt with.

    Better to deal with the problem than let the whole street go up in flames. Or will it be a non-event for the Tuvalu population (12 500) arrive on your doorstep looking for a bed for the night?

    Watch these and learn
    https://www.bbc.co.uk/programmes/p004hsk7
    https://www.bbc.co.uk/iplayer/episode/b00pdjmk/Horizon_20092010_How_Many_People_Can_Live_on_Planet_Earth/

  • Comment number 36.

    Robert and above,
    You get close to the real issue. Sovereign governments are now captured by the global banking institutions behind which they stand as guarantors. State laws cannot reverse the power-play. Only international sovereignty can now get close to altering the balance of power and the G20 is not yet up to the job - its paralysed by self-interest of its members. The people serve the markets ( and not the other way around).

    Whilst the Thatcherites saw militant trade unionism as the threat of a generation, I see this as ours. The globalised nature of financial power lessens the state's influence.

    Each state must look at itself and analyse its relative vulnerability. This is where the UK needs to take a good look at itself. Of its gross domestic demand, 64% is private consumption and 22% is government consumption delegating fixed capital investment to a a mere 14%. Our imports drown out our exports. The government feeds itself with £500 billions of taxes per annum from an ageing population and an overdraft of £705 billions. Its debt servicing costs per annum could fund entire large departmental spending.We are sleep-walking into the future with a political consensus that public debt is a permanent fixture and, when added to by the year, will either be devalued by inflation, serviced by home consumption or paid for by our grandchildren.

    Private home consumption is fuelled by private debt of an unacceptable level. The providers of debt for the majority are banks, not capital markets. The intermediation of capital is monopolised.

    We are a nation of retailers, consumers, middle-men and bureaucrats.

    Where is the leadership? ( end of rant)

  • Comment number 37.

    Global cooling has already started,the figures were doctored, UK is bloomin' freezin',we pay far too much petrol and road tax and gas already, and like 99% of the population I am bored with the carbonocracy and their intolerance of Western standards of living.
    Send your carbon tax demand to the sun ( the real sun, not the newspaper) and see how much attention it pays when it flares and cools as it pleases.
    A recent article attributed the rise in temperature to asphalt carparks in the meteorological stations!
    Thank goodness climate change is now going off the radar as a dead duck.

  • Comment number 38.

    Can't say I feel the need for panic...right now/yet. The fear factor is definately on the increase.

    The scale of the task is significant, and i agree (implied but not said RP) that double-dip is on the way next year.

    Gilts is definately the watch-word for January...

  • Comment number 39.

    #31 - Dempster I agree.

    The human and social cost of this is massive - but as long as GDP was going up it was all OK. We need a different measure of what success means for a country - as the 'boom' of previous years didn't improve the vast majority of peoples lives in the country.

    Money and markets don't serve us - we've become slaves to them.

    The city wants volatility (which helps them increase profits) so thats what they get - whereas stability is what most people want.

    If the gov had thought about people they would have started to worry a lot earlier that it was getting impossible for normal working people to get their foot on the housing ladder and would have maybe done something to stop it getting out of control.

    The action of the Local Authority doesn't surprise me - totally short sighted! its the same when to cut costs gov lays off low paid workers - what happens? they are unemployed & recieve benefits instead - there are also health and social costs and so the net effect is a cost not a saving!

  • Comment number 40.

    Another excellent picture in today's Blog, of the Chancellor (again) sporting a fancy blue tie round his neck at appx cost of £850bn . Another impressive Name Plate...alas not of Claridge's ....but a bleak 'HM Treasury' in black and white.

    Surely, Robertino, given the Festive Season and the real postion of the UKs finances this should be changed to red and white ?

  • Comment number 41.

    34 Is Clive the new Tory spokesperson on Health?

  • Comment number 42.

    #20 nautonier It is not the way you think it is. The US Fed and the BoE have long since abandoned any responsibility for the curency. All responsibiltiies have been prostituted to the ongoing bailouts of the systemically insolvent.

    The only way the ECB can bail anyone out is with German agreement and German money. If they bail Greece then they will need to bail Italy, Spain and Portugal and probably Ireland. That is a big ask. It could be done if the German banking system had not been suckered by the Anglo American snake oil derivatives salesmen - but it has. The Germans also have to contend with collapsing exports and a full scale collapse in the East. The last thing the Germans want is a systemically bankrupt and systemically lieing UK lining up for German money.

    It is not going to happen - as I said no-one is coming to save you.

  • Comment number 43.

    As a non-economist I find it difficult to understand why the UK was allowed to get into this financial state. If I can't afford things I don't buy them. I budget my expenses to be less than my income. There appears to be no Agency or Government department with any authority to regulate borrowing or the excesses of lending/debt incurred by the banks. After all it's not complicated, not rocket science, just plain old common sense. Ah ... I see ... we are talking here of MPs, senior civil servants, bankers and of course journalists. Deary me, I should have known better!

  • Comment number 44.

    36"Private home consumption is fuelled by private debt of an unacceptable level"

    ACTUALLY IT IS NOT ANY MORE,PRIVATE DEBT HAS BEEN FALLING ALL YEAR.

  • Comment number 45.

    Although I accept entirely that the UK economy is up to its neck in troubled water, I find the involvement of the rating agencies problematic.

    These are the guys who made sub-prime shine like gold in the eyes of gullible bankers.

  • Comment number 46.

    I know, how about a super-tax on all those who voted NuLabour. If it's good enough for bankers......

  • Comment number 47.

    33. At 1:49pm on 11 Dec 2009, onward-ho wrote:

    32 is racist.

    >>>>>>>>>>>>>>>>>>

    This is what Goondog Trillionaire and his english hating racist supporters and their negative political agenda have done to the British nation. They've tried to reduce any member of the normally silent majority into a position where if they speak out an tell the truth they are branded with the foulest, discriminatory language that they can find in order to try and intimidate poeple into accepting the england wrecking conspiracy that Brown/Blair and their supporters have unleashed, on the English nation, particularly.

    Goondog Trillionaire is an English hating, sell out racist and so are many of his supporters and advisors. The biggest losers are the English elderly, unemployed, and students and the British working class although Brown's contagion is spreading ever upwards through the economic incomes brackets.

    I'm responding to Spookdog Trillionaire - he has wreaked havoc in England while subsidising the rest of the UK, after 12 years of wreckage I'm going to have my say.

    You never hear Brown mention England at all - to go through 12 years of Brown's speeches you would think that England does not exist at all - that tells you something about Brown who is interested in anything overseas but not with England - the mass of evidence against Brown's negative agenda is over-whelming when it is England that continually takes the brunt of Brown's copius and very damaging mistakes and deliberate but behind the scenes wrecking policies. Look who the losers are and see where most of are from - whether its soldiers in Afghanistan or babies getting murdered or old people dying of poverty and cold.

    I don't know who you are but I respect your right to free speech and you should respect mine as well - that is an English principle, in case you don't know.



  • Comment number 48.

    42. At 2:17pm on 11 Dec 2009, armagediontimes wrote:

    #20 nautonier It is not the way you think it is. The US Fed and the BoE have long since abandoned any responsibility for the curency. All responsibiltiies have been prostituted to the ongoing bailouts of the systemically insolvent.

    The only way the ECB can bail anyone out is with German agreement and German money.

    >>>>>>>>>>>>>>>>>

    You may well be right, we'll have to wait and see - much depends on where the debt is and which other countries/banks are affected. The IMF may not have enough to spread around and so the EU may have to step in as the debt is large enough to affect EU money supply. Don't tell me its RBS!

    If the BoE had been still responsible for the UK GBP currency, arguably the debt mountain would not have been allowed to accumulate?

  • Comment number 49.

    Onward-Ho. I too was around in those halcyon days of Heath,Wilson et al.

    I do not remeber the Labour utopia of which you speak!

    The UK was spoken of as the sick man of Europe because of the power of the Unions and the havoc some were wreaking! The UK's powerbase of manufacturing was in serious decline because of this.

    MT broke that power and introduced the Market Economy as a long term antidote - good in some ways, bad in others. Kinnock rid the Labour party of Militant Tendancy which set the Party on the road to Government, which is where we are today - in deep purple again.

    I do agree that a Heath clone as next Prime Minister would be an absolute disaster!

  • Comment number 50.

  • Comment number 51.

    42. At 2:17pm on 11 Dec 2009, armagediontimes wrote:
    'The only way the ECB can bail anyone out is with German agreement and German money. If they bail Greece then they will need to bail Italy, Spain and Portugal and probably Ireland'

    I think I'm with you on this one AT. Unless the ECB prints money, but that would still penalise the less feckless in the Euro.

    If Greece defaults however, there is a danger of others following suit, .... not least the UK. Then how many more financial institutions would fail.

    The funny thing is, if sovereign nations default, it could be the average Joe that may have the last laugh.

  • Comment number 52.

    #34

    I'm interested to know if you think that 100% (or more?) of the nations income should be spent on health? Perhaps you think it should ... but remember that people WILL STILL DIE. Perhaps you think we should then simply borrow more truckloads of cash to keep even more people alive?

  • Comment number 53.

    #49
    Think Mandelson and Heath of the same tendency rather than present Tory leadership.

  • Comment number 54.


    47 This sentiment nealry broke up the UK.
    WHAT HAS SAVED THE UK UNION IS THE CREDIT CRUNCH AS IT PUT PAID TO THE CELTIC TIGER MYTH AND EMASCULATED THE SCOTTISH BANKING SYSTEM.
    IN SCOTLAND THERE ARE THOSE WHO SAY GB/AD ENGINEERED THE BANKS' TAKEOVERS TO SAVE THE UNION.
    UNTIL EARLY THIS YEAR INDEPENDENCE LOOKED A DEAD CERT.
    If Brown is anti-English I do not understand it.
    He wanted a UK team even if it meant jeopardising the home countries' position.
    IT IS ALL VERY SILLY THIS SCOTTISH V ENGLISH NONSENSE.

  • Comment number 55.

    To the Chancellor of the Exchequer,

    Dear Sir,

    I have a cunning plan:
    This is what I’d do to solve the UK debt problem.
    I’d make it known that the UK was going to default on its debt.

    The value of all those gilts would drop through floor, then I’d get the BOE to print some more money and buy ‘em all back when the hit around 1/10th face value.

    It is possible that some of those trading and holding the debt would complain a little.

    But still it would all be in a good cause.

    Love John

  • Comment number 56.

    In the '70s Robert might well have been in his teens but we also had shipbuilding, coal mines, steel works, manufacturing, nationalised power companies - I could go on. It wasn't good but it was survivable. We had loads of pubs as well. Not very many supermarkets.
    Then we had the property owning democracy as espoused by saint Margaret which is still keeping tulips in flower all these years later. The City really loved the big bang too. Really took off.
    We will need something a bit better than the big bang to survive now.
    Perhaps a man with a big white beard will come down the chimney and sweep all the bankers away.

  • Comment number 57.

    42. At 2:17pm on 11 Dec 2009, armagediontimes wrote:
    'The only way the ECB can bail anyone out is with German agreement and German money. If they bail Greece then they will need to bail Italy, Spain and Portugal and probably Ireland'

    >>>>>>>>>>>>>>>>>

    Here we go ... Stephanie Flanders - 8th December

    'Greek debt is forecast to rise to more than 130% of GDP by 2011, almost double the level forecast for the UK. And the IMF forecasts a Greek current account deficit this year of 11% of GDP.

    There are not supposed to be any bail-outs for Eurozone economies who can't pay their bills - or no formal ones, anyway. The treaty establishing the single currency expressly forbids them. But for the past two years, Greece and other hard-pressed economies on the Eurozone's periphery have been getting the next best thing to a bail-out, courtesy of the ECB.

    Here's how it works: indebted government sells lots of bonds to domestic banks; banks then use bonds as collateral to get shedloads of (nearly) free money from the ECB.

    As well as achieving the avowed end of increasing liquidity in the European banking system, the policy had the unstated, but equally welcome (to many European officials) effect of propping up the demand for the indebted country's debt.

    It's not a formal bailout. But it certainly helped.'

    >>>>>>>>>>>>>>>>

    The ECB has already moved on this - spotting the danger as Greek debt is the worst in the EU and a risk to the EU/ECB - the debts of the other EU countries are not so much of a risk, from the ECB's viewpoint?

    Sounds like EU 'QE' to me? The global money market is also saturated with central bank/sovereign debts - if we look beyond the UK - this is the problem of the UK trying to sell more government debt - everyone is doing this and international money can take its pick!

  • Comment number 58.

    OUR HEALTH SPENDING AS A PROPORTION OF GDP IN UK IS ABOUT 50% OF USA'S.

  • Comment number 59.

    Just been reading the WWF Clean Economy report which is all about
    building strong clean energy technology industries.

    Thought you should all know that the UK is in the top five countries!!!!


    Sadly though thats for sales of insulation only!!!!!

    Add in everything else and we're 20th which is near the bottom of the list.

  • Comment number 60.

    #55

    And how would you suggest pursuading investors to buy gilts again after that little ploy?

    Old saying .... once bitten, twice shy ..... still it is banking fraternity!

  • Comment number 61.

    Why isn't the BBC reporting the bonds crisis in Greece?

    Worried you'll be forced to cover a similar crisis closer to home next week?

    Seriously fellers - your status as a serious news organisation is in tatters; first ignoring climategate for a fortnight, now ignoring this. What gives?

  • Comment number 62.

    https://www.guardian.co.uk/politics/2009/jan/30/british-jobs-british-workers

    Guardian newspaper story - now get this... Labour MP's think that Gordon Brown is a racist!

    BBC can you please run an opinion survey to find out what percentage of English people think that Gordon Brown is a racist - Can we try and settle this one with some opinion poll/survey information?

    You know who - Do you get it?

  • Comment number 63.

    "Will conventional bond investors take up the slack after the Bank of England withdraws from the market? What will happen to the price of gilts and the interest rate paid by the Treasury in those circumstances?

    It's an alarming prospect."

    Why would "conventional bond investors" suddenly want to take up the slack at all, if they have not been in the market for gilts so far? This Government won't go to the IMF, not this close to the end of its term. Instead it will have to order MORE QE in the first quarter? Some Gilts will be bought for regulatory reasons. But I suppose THE question is could "conventional gilt investors" fund the Gilt sales, even if they wanted to?

    The Government has GOT to get the Gilts sales right. It knows it and the UK bank's know it. They may be falling out of love, because they are between a rock and a hard place?

    But if the thought of £225bn is just too horrifying, and if Government can't function financially, (and can't therefore pay its workers etc...) that might well seem to be one nightmare scenario too many?

    Then What?










  • Comment number 64.

    I made reference to this story yesterday - the Governments plan is all going to start unravelling as soon as QE stops.

    When the Govt stops buying then the banks are supposed to take over as gilts are in the list as acceptable for 'Cash capital' - however I simply cannot see that happening. The yield on 10yr Gilts rose by about 3.5% yesterday - the markets are finally catching on to the disaster that awaits and by the time QE stops there will be more sellers of Gilts than buyers.

    I am also curious as to how the Government (anyone, I don't mind which) is going to fund a new and improved FSA from the moths coming out of the public purse. There clearly need to be cuts made and some areas have been ringfenced - so where is the investment required for better regulation?

    mmmmmmm - me thinks the Government says one thing but then does another.

    What is funny (ironically) is that the electorate have been presented with a very dim picture of the future - and this is an over-optimistic painting by Rembrandt Brown!

    As Alistair my Darling said on radio 4 yesterday "I simply don't buy this 10 years of austerity people are talking about"

    ...no Alistair, you have been buying your own Gilts, you probably haven't had time to buy anything else. However there will be 10 years of Austerity and WritingsontheWall will remind you of that in 9 years time - just as he reminds us all of Baroness Vadera's green shoots every so often.

    Don't forget AD predicted a return to growth in his last budget by now - I said it was rubbish at the time - he said the UK would suffer a 3.5% decline in GDP this year

    https://news.bbc.co.uk/1/hi/business/8002618.stm

    ....and now he's revised it to be a 4.75% decline.

    https://news.yahoo.com/s/ap/20091209/ap_on_bi_ge/eu_britain_budget_2

    ...which I still don't see any basis for, but then what do I know - I'm just a pessimist and not a skillful politican or Government Economist or financial whizzkid from the big city.

    If only the wider public knew what a fraud it all is - I'm sure they would be much more angry than they are at the moment.

  • Comment number 65.

    54. At 2:49pm on 11 Dec 2009, onward-ho wrote:

    "IT IS ALL VERY SILLY THIS SCOTTISH V ENGLISH NONSENSE."

    I don't normaly get involved in the devolution argument, mainly because I am English born with Scottish grandparents.

    However it is very silly arguing about England V Scotland - the lines of battle are not drawn by land mass or national border.

    The line is between those who have just been screwed and those that did the screwing.
    On the screwing side you have the banks, the Government and multi-national corporations and oligarths etc.
    ....on the other is all the rest of us.

  • Comment number 66.

    58. At 3:10pm on 11 Dec 2009, onward-ho wrote:

    "OUR HEALTH SPENDING AS A PROPORTION OF GDP IN UK IS ABOUT 50% OF USA'S."

    This is very true and I understand we pay less per capita for the administration of that health service compared to the privatised schemes in the US.

    One in the eye for the 'public sector wastes everything' argument.

  • Comment number 67.

    65. At 3:25pm on 11 Dec 2009, writingsonthewall

    So does that make me a screwee.

    So I being the screwee take issue with you the screwor over the severe screwing I have just had.

  • Comment number 68.

    #58

    "OUR HEALTH SPENDING AS A PROPORTION OF GDP IN UK IS ABOUT 50% OF USA'S"

    That is possibly the case, but its NOT the question I asked. Let me repeat, what percentage of our UK income (100% in your view perhaps?) should we spend on health. People will still die HOWEVER MUCH you spend on health. What is needed is a realistic assessment of what is needed at a macro level and what the country is trying to achieve. Do we really want to have 100,000's of bed-ridden, unhappy pensioners who WANT TO DIE to salve our conscieneces of th ebleeding hearts that "we did all we could?". There is a cost to all public service (and a benefit) trouble is when it all gets out of hand and is unaffordable regardless of how it happened, the country goes broke [and it has already]. Gormless offering more money to the third world such as India that can afford aircaft carriers but can't see it's grossly over-populated and has millons of children in poverty but does nothing about them is the supreme stupidity. Bob Geldof 'saved' those kids in Somalia, great ... they've grown up now, procreated and the population is much higher and they in famine agiain and that country is even more over-populated nice one Bob!

  • Comment number 69.

    47The reason he does not talk about England is that he is not the Prime Minister of England, he is thePM of the United Kingdom,as our current monarch who should really be QE1 of GB will confirm.

  • Comment number 70.

    36. At 2:05pm on 11 Dec 2009, shireblogger wrote:
    Whilst the Thatcherites saw militant trade unionism as the threat of a generation, I see this as ours. The globalised nature of financial power lessens the state's influence.


    Exactly.

  • Comment number 71.

    Robert

    As business editor, could you turn your efforts to Kraft's proposed takeover of Cadbury in part using money that will be borrowed from RBS.

    How come RBS can find cash in the attic for this?

    What are the potential long-term costs to UK Treasury since right now Cadbury is based here but Kraft isn't?

    Its a business story, I know, but it has a banking/borrowing angle.

    Mrs Bloggs

  • Comment number 72.


    64. At 3:21pm on 11 Dec 2009, writingsonthewall wrote:

    I made reference to this story yesterday - the Governments plan is all going to start unravelling as soon as QE stops.

    >>>>>>>>>>>>>>>>>>>>>>

    It's even worse than that Im afraid...

    See my post at 57. and quote:

    'There are not supposed to be any bail-outs for Eurozone economies who can't pay their bills - or no formal ones, anyway. The treaty establishing the single currency expressly forbids them. But for the past two years, Greece and other hard-pressed economies on the Eurozone's periphery have been getting the next best thing to a bail-out, courtesy of the ECB.

    Here's how it works: indebted government sells lots of bonds to domestic banks; banks then use bonds as collateral to get shedloads of (nearly) free money from the ECB.'

    >>>>>>>>>>>>>>>>>>>>

    Am I right in thinking that the current UK government QE programme is a policy borrowed from near bankrupt Greece?

    'There are not supposed to be any bail-outs for Eurozone economies who can't pay their bills - or no formal ones, anyway. The treaty establishing the single currency expressly forbids them. But for the past two years, Greece and other hard-pressed economies on the Eurozone's periphery have been getting the next best thing to a bail-out, courtesy of the ECB.

    Here's how it works: indebted government sells lots of bonds to domestic banks; banks then use bonds as collateral to get shedloads of (nearly) free money from the ECB.'

    Is the current QE programme borrowed from the ECB/Greece nearly two years ago and did the UK government discuss this with the ECB as a way of avoiding sanction under the Maastrict Treaty?

    Looks like the UK government sought permission from the ECB in carrying out the current UK QE programme as being as bad if not worse in debt than Greece?

  • Comment number 73.

    #66 writingsonthewall. I don´t know what wall you are writing on, but the NHS is in significant part used to funnel vast amounts of money into global drug companies.

    What do you think the deal was with swine flu? Who made money out of that? yet still less deaths than from road accidents which largely remain unreported.

    Where did swine flu come from? Why not take a look at how some people treat their pigs

    https://www.rollingstone.com/politics/story/12840743/porks_dirty_secret_the_nations_top_hog_producer_is_also_one_of_americas_worst_polluters

    Don´t get too sentimental about health services - they are in large part used to cover the crimes of the oligarchs, but funded out of public money and defended by socialists. You couldn´t make it up.

  • Comment number 74.

    70. At 3:34pm on 11 Dec 2009, copperDolomite wrote:
    36. At 2:05pm on 11 Dec 2009, shireblogger wrote:
    Whilst the Thatcherites saw militant trade unionism as the threat of a generation, I see this as ours. The globalised nature of financial power lessens the state's influence.
    Exactly.

    But only as long as you don't default on your debt. Globalised nature of financial power only exists as long as we the average Joe & Josephine make good the Government's promises to pay.

    If we don't the Globalised nature of financial power, may well evaporate.



  • Comment number 75.

    The heart of the matter is the banks and financial services. It was their scheme and their greed that created the problems. As these banks are now able to pay bonuses so some portion of the public assumed debt should be returned to the banks. This reduces the deficit side of the public books. In fact, a plan should be developed that provides for the banks to pay annual portions of this debt as it actually belongs to them. A payment plan for the banks like an individual would have on a mortgage. The government can "secure" the debt, like a co-signer, and have the banks make annual payments until it is paid off.

  • Comment number 76.

    #71
    Perhaps they are selling their art collection? Its about time, the country has bailed out this mob big time and they haven't got rid of their art portfolio. I wonder when the last time receivers were in at a bankrupt compnay and said 'nice art collection, creditors need their money .... but you can keep it.

    Well done RBS board again! (oh and before you leave, can you sell your investment banking arm to the highest bidder ... after all its a great profit earner so will attract a fabulous price won't it??

  • Comment number 77.

    69. At 3:32pm on 11 Dec 2009, onward-ho wrote:

    47The reason he does not talk about England is that he is not the Prime Minister of England, he is thePM of the United Kingdom,as our current monarch who should really be QE1 of GB will confirm.

    >>>>>>>>>>>>>>>>>>>>>>

    Blair/Brown grew the problem by a botched devolution programme - Spookdog Brown talks about everywhere but England - I wonder why? I want a referendum on England's independence!

  • Comment number 78.

    Re: copperdolomite and shireblogger

    You know what always surprised me about the destruction of the mining industry, was why do it?

    I mean we actually got something from the miners……coal, someone took it to a power station burnt it and made electricity.

    I could never quite figure out the reasoning behind shutting down a whole industry like that.

  • Comment number 79.

    #71

    Cadbury's - "British jobs for Foreign workers?"

    Good british company, profitable makes pretty good chocolate. Takeover target of US Kraft "dairy milk slices?" or US Herscheys "chocolate even sewage works can't treat?"... takes bitter and awful ... that's NOT chocolate as we brits know it.

    Makes a pile for RBS as investment banker / provider of capital. Factories closed, jobs lost, says Cadbury's poland on the wrapper, tastes awful. Well done RBS!!

    As chocolate is about all we can afford these days how about making Cadbury's one of our 'essential industries' we wont allow to be taken over?

  • Comment number 80.

    68 "Do we really want to have 100,000's of bed-ridden, unhappy pensioners who WANT TO DIE?"

    No we should give them proper social care like the Scots do, funded by an abandonment of anything that costs a penny related to carbon or climate change policy.
    "Bob Geldof 'saved' those kids in Somalia, great "
    YES IT WAS...... PERIOD.
    WHAT WOULD YOU HAVE DONE?

  • Comment number 81.

    Governments defaulting on sovereign debt. You know the more I think about it, the more you can see why it is feared by all those who control the financial strings.

    If we the average Joe & Jane say no, awfully sorry, we’re not paying, we’ll open our own bank, we’ll call it the NBS (National Banking Service). After all we have an NHS, why not an NBS.

  • Comment number 82.

    BLATANT COMMERCIAL ADVERTISNG, is there no editorial in the BBC now! Plus when you click to the supposed article link in the blog posting it doesn't exist.
    You are no less a mercenary than the rest of them.

  • Comment number 83.

    80. At 3:55pm on 11 Dec 2009, onward-ho wrote:

    68 "Do we really want to have 100,000's of bed-ridden, unhappy pensioners who WANT TO DIE?"

    >>>>>>>>>>>>>>>>>>>>>>>>>>>

    The basic Scottish subsidy is £26 billion per annum paid for mainly by the merry olde englishe taxpayer - thanks a bunch Gordon Brown

  • Comment number 84.

    67. At 3:27pm on 11 Dec 2009, Dempster wrote:

    "65. At 3:25pm on 11 Dec 2009, writingsonthewall

    So does that make me a screwee.

    So I being the screwee take issue with you the screwor over the severe screwing I have just had."

    Sorry - I am a screwee too (my post was badly worded) and I will suffer the same screw-overing through extra NI contributions as you will. If I do see a screwor I will point them out to you and we can combine to provide the 'reverse screwdriver' on their screw-tum.

  • Comment number 85.

    #78
    Think destruction of mining industry complex reasoning.

    1. Maggie thought miners were bolshy .. and they were I guess ... she needed to get rid of them to get other TU's to be reasonable
    2. Govt thought there was lots of cheap oil and when that ran out nuclear (costs of decommisioning not thought out) and multiple fuel choice meant no energy dependency.
    3. Coal distribution costs from dozens of little deep mines expensive
    4. New technology meant much coal could be more economically and safely obtained by drift mining
    5. Most UK deep mines didn't have seems suitable for new technology as they didn't have either the requisite depth or seems wandered up and down rather than being horizontal.
    6. Foreign coal was virtually being given away at the time.
    7. Even then, sweden and Norway giving pain on acid rain impact on their forests.

    Interestingly Nulabour did NOTHING to reverse OR EVEN STOP this trend - I wonder if our left-wing colleagues can help us as to why?



  • Comment number 86.

    #57 nautonier. I would not necessarily rely on the BBC for news about Greece. Take a look at this:

    https://ftalphaville.ft.com/blog/2009/12/08/87711/how-do-you-say-vicious-circle-in-greek/

    The ECB is only supposed to accept bonds rated A- or better. However they have already waived this requirement under emergency collateral rules so as to allow them to accept BBB.

    Sure looks like a formal bailout to me

    What happens when the "emergency" is over?

  • Comment number 87.

    73. At 3:42pm on 11 Dec 2009, armagediontimes

    I don't disagree with what you say - it's true.

    However the difference is between these two ideals:

    1) A National Health Service which provides care for those who are unable to pay for health care due to the un-resolved inequality of wealth and any bad luck that may befall them. It provides a basic level of care for all citizens of the nation so we can truly say we 'take care of all out people' no matter what their circumstances.

    2) A convenient conduit for Government to pump money into the private sector through private contractors, nursing agencies, drug and equipment requirements, construction companies (when building hospitals) and of course consultancies on a variety of subjects.

    One of the above we want - but don't get, the other we get but don't want.

    However, even though we have the system which is abused at every opportunity - it still proves itself to be cheaper to administer per capita than the private providers in the US, thereby bringing into question the age old mantra that 'private sector is more efficient' - which is so often relied upon when attacking the public sector.

  • Comment number 88.

    The trouble is as the guy from the heart of the failed banking system says , alot of these so called forecasts rely on stability,and with the incumbent Government short of ideas,we are rudderless until June, when i am absolutely certain that labour will be thrashed out of sight.

    Confidence will not return to the " system " until the election is done and dusted.

    Even up here in Labour safe seat country, our MP's have suddenly woken from their 5 year slumber and running around like headless chickens to get noticed,they are obviously not as confident that their gravy train is going to continue, and they might have to reign in their property portfolio's.

  • Comment number 89.

    #80
    My mother-in-law wanted to die 10 years ago and is still waiting interminably. She had wanted to die after her husband died and got progressively worse until she was bed-ridden. She lives at home cared for by my sister-in-law (who is a saint on this, but even she gets fed up at times)and carers. She does not want to go into a home.

    She is sound of mind however, her life revolves around

    a)sleeping most of the time
    b)being fed by someone
    c)having her nappy changed
    d)getting urinary infections which mean she doesn't know where she is and hallucinating
    e)drinking a babies cup of tea (on her own, but she is often unable to hold onto it)
    f)watching television although with no interest
    g)she cannot move her legs or even turn over in bed
    h)not getting any visitors apart from a few relatives as all her friends died years ago

    I genuinely feel sorry for this woman, she is very nice and friendly, but she would PREFER TO DIE and yet our nanny state won't let her and condemns her to this pitiful existence. I myself would rather die than be in that situation. You can spend as much as you like on social acre, but Jim sure won't fix it for her.

    As for Somalia, I would have provided some assistance, but only on condition that a rigorous program of birth control was enforced (as per China) until Somalia's population matched its ability to look after them. No further assistance until that pledge was met.

  • Comment number 90.

    78. At 3:49pm on 11 Dec 2009, Dempster wrote:

    "You know what always surprised me about the destruction of the mining industry, was why do it? "

    Who needs coal and natural resources when you can buy anything you want with monopoly paper money!!

    I mean that's what Dubai is based on and they are the success story of the Arab states......whoops!

  • Comment number 91.

    74. At 3:42pm on 11 Dec 2009, Dempster wrote:

    But only as long as you don't default on your debt. Globalised nature of financial power only exists as long as we the average Joe & Josephine make good the Government's promises to pay.


    I've no idea about that - way beyond anything I have any competence in. What would happen if we just refused to pay?
    And what would happen if we let the finance industry fall over?
    We are told this would be chaos. Lots of things can be described as chaos, but it really doesn't mean anything specific does it? I'm left to imagine that we could invent a new currency, perhaps vitamin tablet currency.
    One of my big concerns, and has been for a few years is the loss of democracy (if we ever had it). No company or organisation can vote, yet the politicians court the companies no end and the lobbyists court the politicians.
    The Glasgow East By-election had a turn-out of about 33%.
    Just what would happen, seriously, if at a general election, not one voter in any part of the UK cast a vote? A kind of voter strike, where the electorate refuse to go along with the warped game. Many of the electorate seem to be on strike as it is.

    This might be a variant of your thoughts on refusing to pay the debt, refusing to play the game.

  • Comment number 92.

    79. At 3:52pm on 11 Dec 2009, Clive of India wrote:

    "As chocolate is about all we can afford these days how about making Cadbury's one of our 'essential industries' we wont allow to be taken over?"

    Unfortunately first the Cadbury's workers need to convince the Government that 'nobody can make chocolate except us because it is such a difficult and complicated process'. Then they threaten to leave the country for better paid chocolate jobs in Switzerland claiming that they will leave behind a 'chocolate wilderness' and take all the cocoa and sugar with them.

    That's how you get the Government to bail you out, it's got nothing to do with being an essential industry but more to do with the Government being afraid of what it clearly doesn't understand.

    The world of chocolate making is clearly to opaque.

  • Comment number 93.

    83 Nautonier

    Er, no it's not. You are using the figures that don't include all of Scotland's tax revenues, and allocate some English spending to Scotland. In fact, in two of the last three years Scotland recorded a fiscal surplus, and last year a deficit of around 2.5% of GDP, which is rather better than the UK figures. (Sssh, don't mention the oil!)

    As for those who suggest the fact that Brown never mentions England means that he is 'pro-Scottish', you need to appreciate the position Labour holds in Scottish politics, which is 100% red-white-and-blue British Unionist. Labour's rhetoric is all Dad's Army bulldog Britishness up in Scotland, which appeals to their core vote of working class OAPs. They recently objected to a saltire appearing on the Scottish First Minister's Christmas card, saying it was partisan. Yes, they really are that daft.


  • Comment number 94.

    85. At 4:07pm on 11 Dec 2009, Clive of India wrote:

    "Interestingly Nulabour did NOTHING to reverse OR EVEN STOP this trend - I wonder if our left-wing colleagues can help us as to why?"

    ....because NuLabour are about as Left wing as Mussolini.

    They are the betrayers of the working class, everything they have done has been a continuation of senseless Thatcherite policies under a red flag.

    There is no left or right anymore, there is Government and there are subjects. Governments continue to pass more and more to the private sector thereby further increasing the debt owed by it's citizens to the small number of uber-rich.

    Once they pass a law which allows 'inherited debt' then their plan will be complete. We will have reverted to the Feudal system of 'lords and serfs'

  • Comment number 95.

    #92 writingsonthewall

    What is the difference between Cadbury's and Corus/British Steel?

    About 4 years.

  • Comment number 96.

    Ref 77 - me too!

    Ref 78 et al - because imported coal was cheaper and 'Union' free, although some mines stayed open for a few years. Nowadays, we are not allowed to burn it else the 'Greenies' will climb onto your chimney and shout denier slogans at you!

  • Comment number 97.

    Bottom line, it is all about the election.
    Not really any thing else.. We look forward to the spring

  • Comment number 98.

    89. At 4:21pm on 11 Dec 2009, Clive of India wrote:

    "As for Somalia, I would have provided some assistance, but only on condition that a rigorous program of birth control was enforced (as per China) until Somalia's population matched its ability to look after them. No further assistance until that pledge was met."

    Did you not see the Horizon programme this week about population? If we all lived on the same % of GDP as the Indians (which they manage to do) then we could support a population of about 16 Billion - about 3 times the current size.

    It's the inequality that causes over-population and stress on resources. Is it fair to expect a Somalian to only have 2 children considering the chances of 1 child surviving is about 5 to 1 (hence the reason for larger families).

    ....or did you think they just like breeding a lot???

  • Comment number 99.

    "58. At 3:10pm on 11 Dec 2009, onward-ho wrote:
    OUR HEALTH SPENDING AS A PROPORTION OF GDP IN UK IS ABOUT 50% OF USA'S."

    yes, healthcare is bankrupting America also.

    "79. At 3:52pm on 11 Dec 2009, Clive of India wrote:

    As chocolate is about all we can afford these days how about making Cadbury's one of our 'essential industries' we wont allow to be taken over?"

    Cadbury is a publically listed company. It is owned by its shareholders, it is not for you or anyone other than them to "allow" the takeover, anyone could buy it, you could gather together like minded individuals to buy it, just don't ask the government to step in. Setting a precedent like that unleashes all kinds of unintended consequences. If you don't like the product don't buy it.


  • Comment number 100.

    91. At 4:31pm on 11 Dec 2009, copperDolomite

    Some good questions raised.

    To be honest the people that fear the most from the collapse of the financial system are those who benefit most from it (unsurprisingly).

    The rest of us would have to barter our posessions and labour in order to survive, but oddly the further down the current pay scale you go the easier this would be.

    Overnight the highly paid bankers would be worthless (because they have little or no use anymore) and the farmers, labourers, builders and practically skilled would become extremely valuable.

    I have wondered if the turnout next year is so low that someone can legally challenge the mandate to govern - but this is all nicely covered by the laws which protect the political classes from the rest of us.

    However, sometimes it matters not what the rules are - but whether they are followed.

    I believe there is a law on not using your phone whilst driving - but the people have spoken on that one (rightly or wrongly) and are obstinately ignoring it in favour of their own judgement.

 

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