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The contrasting investment messages of UK and Germany

Robert Peston | 09:31 UK time, Friday, 28 January 2011

Davos: There is about $3 trillion of investment funds represented here in Davos by assorted heads of sovereign wealth funds, insurance companies, hedge funds and so on.

Shadows of participants of the World Economic Forum

Which is why the world leaders who throng this place become super-salesman for their countries.

So for example the President of the Bundesbank and member of the board of the European Central Bank, Axel Weber, looked those investors in the eye yesterday - in one of Davos's more interesting private meetings - and more-or-less dared them to short-sell the euro.

I am told by one of the investors that it was an impressive display of German confidence.

"He said that Germany had deployed the equivalent of its entire GDP on making a success of its national reunification" said the investor. "And he said we should assume Germany will do the same to save and strengthen the eurozone".

I am told that those who left the meeting were a bit less sure than they might have been that betting against the euro was a sure thing.

I should however point out that if those moneymen had - like me - spent a bit of time talking to individual finance ministers of EU nations and members if the European Commission, any belief they may have had that the eurozone's woes are behind it would have been shattered.

Because what emerged from my conversations was a profound unease with the way that Germany is bossing the process of deciding the size of the eurozone rescue fund and - more importantly - the conditions to be imposed on potential and actual beneficiaries of the rescue finance.

What's worse for investors, there still seems precious little recognition among Europe's political elite that the weakness of the eurozone's banks is arguably the more important cause of the eurozone's fragility than conventional government deficits.

On that analysis, Greece - whose crisis was a consequence of state profligacy and disastrously poor public accounting - would be the exception that proves the rule.

By contrast, Ireland and Spain were models of conventional fiscal rectitude in the boom years.

The point, as you know, is that Ireland went kaput because its government could not afford to recapitalise its bloated, lossmaking banks.

And Spain is viewed by investors as a possible accident waiting to happen because of its failure - in investors' view - to properly own up to how much capital needs to be injected into its savings banks.

As for Portugal, its difficulties are seen as a kind of "lite" hybrid of Greece and Spain - part intractable deficit, part banks that need capital.

But I digress from the simple uninteresting point that world leaders who come here tend to claim that their economies are doing brilliantly - or perhaps not as badly as some may have thought.

Those European finance ministers I've met may have incompatible prescriptions for bolstering the eurozone. They may be myopic about the weakness of the banks. But they refuse to countenance the notion - which is a commonplace among the bankers and investors - that the eurozone's woes may worsen.

As for the leaders of other nations, from Asia to South America, they're like market-stall traders offering bargain Rolexes: you would need locking up if you don't build your car plant or research centre on their soil, they say.

There is however one world leader whose message might be seen as refreshingly honest or chillingly frank. This is what David Cameron is saying here:

"Average government debt in the EU is almost 80% of GDP. Some countries are again borrowing five, six or seven per cent of GDP again this year. The figure for the UK is more than 10%. This is clearly unsustainable and action cannot be put off...
 
"Remember what we started with in the UK: an economy built on the worst deficit, the most leveraged banks, the most indebted households, the biggest housing boom and unsustainable levels of public spending and immigration. And now think of where we need to go: an economy based not on consumption and debt but on savings and investment; not on government spending but on entrepreneurial dynamism; not on one industry in one corner of the country but on all our businesses in all our regions, with a new emphasis on manufacturing, exports and trade."

As Mr Cameron says, correcting the structural flaws in the British economy won't be easy. And it's obvious why he is accentuating the negative: he needs to argue to a domestic audience that there's no alternative to public-sector austerity to remedy the deficit, and that the siren claims of the shadow chancellor, Ed Balls - that the cuts are excessive - are a straight route to the rocks of economic crisis.

But here's the thing. At a time when the UK economy has contracted again, the Davos money men (not my sexism, but the industry's) might not understand the politics of Mr Cameron's dour diagnosis of Britain's ills.

They might simply notice that the UK's structural weaknesses aren't trivial - and might feel there are less risky places in the world to deploy their funds. Some would see that as unfortunate, to put it mildly.

Update 10:22: This seemed to me to be the most arresting part of David Cameron's speech this morning at Davos:

"If you’re looking to set up a headquarters abroad, are you going to invest where your premises can be taken away from you? Where contracts are routinely dishonoured? Where there’s the threat of political upheaval?
 
"Or are you going to invest where there are property rights, the rule of law, democratic accountability?"

The British prime minister was making the case to global investors for placing their capital in Europe's liberal democracies - and he warned them against betting too much on what he called the "authoritarian capitalism" of China, Russia and other fast growing emerging economies.

Some will see this as a provocative statement at an event thronged with the so-called authoritarian capitalists.

But this was the prime minister doing what I said earlier all world leaders do here - which is try to flog their nations' or regions' comparative advantage to investors.

Comments

Page 1 of 3

  • Comment number 1.

    Cameron is embarrassingly naive to think that the economy will haul itself up by its own bootstraps when the government have gone further than any for years to deflate it through screwing the public sector. He seems to think the two sectors are not interdependent and that cutting public sector budgets is identical to cutting the deficit.

  • Comment number 2.

    You are right. Cameron spoke like a good UK salesman. He just forgot some of the more inconvenient thruths. If he speaks about high level of government debt, why does he not mention the £40-£70 billion lost each year to the UK treasury because of the massive tax avoidance and tax evasion of UK based companies and individuals. Davos, Switzerland would be a good place to start this conversation.
    Between US$ 10 to 15 Trillion are hidden away worldwide in tax havens.
    Does Cameron no mention this fact because too many of his friends, colleagues or relatives benefit richly from the financial services industry? All major UK banks have a strong offshore presence and profit from their facilitation of tax avoidance and tax evasion. Cayman Islands and Jersey are leading offshore centres/tax havens.
    Why this blindness of the Conservative party when it comes to tax avoidance/ tax evasion?
    Is it easier and less painful for the Conservatives to impose cuts on average employees in the UK then to rein in the big money men?
    Please find more detailed information on the murky and immoral business of tax havens and offshore centres here:
    https://globalinsights.wordpress.com/

  • Comment number 3.

    "Axel Weber, looked those investors in the eye yesterday - in one of Davos's more interesting private meetings - and more-or-less dared them to short-sell the euro."

    In what sense is short-selling the euro "investment"? It is speculation, financial terrorism, "attack gambling" whatever. My understanding is that investment ether creates something new, or takes a stake in something real. Short-selling is like a vulture harassing what it hopes is a wounded animal so that it falls off a cliff; the aim being then to feed off the carcass.

    I heard Mr Cameron promoting his faith-based model of the future British economy. I say 'faith based', as it is grounded neither in reputable theory nor successful historical precedent .

    "I think the British people will understand this" Mr C said, - but he clearly hasn't a clue - unless his real agenda is to protect his class by pushing Britain back to a form of feudalism.

  • Comment number 4.

    I'm broadly behind the Coalition policy, believing that the UK simply cannot afford a Public Sector as large as the one they were bequeathed. But I harbour a fear as follows. The Thatcher government had a simple, some might say simplistic, philosophy. "Create a fertile business climate, and the rest will follow". In other words, favorable tax regimes and employment legislation - but no active intervention. I think we must ask ourselves whether this relatively passive stance is enough, at a time when so many other economies, not least Germany, are actively subsidising manufacturing. Thus the Germans have a chain of Fraunhofer Institutes, doing heavyweight applied research, which can be plugged straight into production. This approach, I believe, is still anathema to many in Whitehall and Westminster. Does the Thatcher philosophy live on ? How and where to create real economic growth (not hairdressing and sandwich bars) is now the leading problem.

  • Comment number 5.

    The UK needs an overhaul of the political class, with people who are 'in touch' with the masses.

    I'm early 40's, mortgage free and have a comfortable job (at present at least) but i am sick to death of being fleeced so we can support the top 1% of our society.

    I'm no Union cheerleader however i shall be joining the NUS/TUC in March to voice my disapproval of this and the last neo-liberal Government, as there is no real alternative on offer at the ballot box.

    The Andrew Neil programme of a couple of nights ago summed up why there are so many things wrong with the UK for me perfectly, and i believe it shall only get worse unless the general public intervene and change the political/financial landscape for the good of the entire population of this country.

    I want my children to have an equal opportunity to do what ever they aspire to do, and for that reason alone i shall take to the streets in March.

  • Comment number 6.

    Cameron seems to be talking the talk but is he strong enough to follow through?

    I was taught never talk about the negatives just the positives, let others raise the negatives and you then reverse them into positives! Yes we all now what a mess we are in and where the responsibilities sit but it’s about time this was left behind with regards to blame, actions need to be taken and the future played up.

  • Comment number 7.

    Cameron said
    " ... And now think of where we need to go: an economy based not on consumption and debt but on savings and investment; ... "

    And where does he think the average UK citizen is going to be able to find money for savings in austerity Britain? It would need a dramatic redistribution of wealth from creditors to debtors, such as would have happened if the banks had been allowed to fail, to achieve this, or more slowly and stealthily, by conspiring with Mervyn King to have a long period of negative interest rates.

  • Comment number 8.

    #1 Watriler: Cameron & Co are not stupid as to think that the public and private sectors are not interdependent on each other. But in truth, there are two halves to the private sector. One half services the public sector. The other half is genuinely wealth-creating - producing and selling goods and services that earn (or save) the foreign currency that pays for bananas and BMWs. Right now, the UK has too few of the latter and the economic growth we so badly need must come from them, not from folk taking in each others washing.

  • Comment number 9.

    BBC Breaking News!!

    "UK: What is the likelihood of change?"

    Well, Egypt really. But only for the worse it seems.

    Let's change 'hope & glory' to 'land of wealth and privilege'

    GC

  • Comment number 10.

    This might not be what everyone wants to hear.

    By definition these "authoritarian capitalists" require a gulf of inequality to exist. If David Cameron is inviting them to Britain it implies he's happy for the gulf between rich and poor to get even worse.

    I thought we were supposed to be in this together now? What's the point if all that the vast majority will have to show for it in 10 years time is more inequality not less, more destitution, not less?!?!

  • Comment number 11.

    A nice quote from Paul Krugman: "Every year at this time the great and the good — and a lot of bankers, too — gather in Davos for the World Economic Forum." lol

    https://krugman.blogs.nytimes.com/2011/01/27/not-in-davos/

  • Comment number 12.

    Our public sector was fine before the last lot got into power and created around one million new public sector jobs. We managed perfectly well without them in 1997 and will do so again. Do we really need: Play strategy managers, Street football coordinators, Gypsy and traveller liaison officers, Diversity and inclusion managers, Mind and nutrition leaders.... I could go on. These are all non jobs created at great expense to us all. Getting rid of them would save a fortune.

  • Comment number 13.

    4 comments:

    1. Is it possible that the crisis in the euro will ultimately deliver a more integrated euro area based on German 'architecture'.

    2. Leaving to one side the cuts agenda does Cameron think there is any role for government in achieving 'entreprenaurial dynamism' in 'all of our regions'? If so what is that role?

    3. The anti authoritarian capitalism pitch is indeed pretty brave. But does it not also apply to the whole EU area, Switzerland, Canada, the US, even Australia and NZ.

    4. I agree with the poster above. I think it is about time the EU dealt with Switzerland and other tax havens managed by EU countries. If you want the benefits of property rights, rule of law and democratic accountability then it comes with a cost. So many of Britain's international companies want to take those benefits without paying the price (i.e. the tax).


  • Comment number 14.

    "UK Prime Minister David Cameron has vowed to "see through" his plan for deep spending cuts despite fears of their impact on economic growth."

    So not ideologically driven then....I mean drive through these changes and to hell with growth.

    Nice one Dave - you're doing your bit for the revolution!

  • Comment number 15.

    Oh, Cameroon's message is loud and clear...

    'BRITAIN FOR SALE!*'

    (*= and risk free!)

    We're not even waiting for the IMF to hold us over a barrel, the corporate raping of the UK state is taking place with Govt complicity.

    We're going to see mega privatisations (aka asset stripping) of the public sector (not just jobs, but assets like land, NHS/healthcare, state schooling, local councils) similar to that forced upon Ireland and Greece by the IMF, but on a scale that only Thatcher/Blair could have dreamed of.

    (as for the risk free environment, he'll just simply pull out the X-factor/Strictly viewing figures as evidence of the dumbed down/docile society that is the UK's pleb class)

    Cameroon: 'Come on lads, fill yer boots!'

  • Comment number 16.

    8. At 11:04am on 28th Jan 2011, Anselm wrote:

    "#1 Watriler: Cameron & Co are not stupid as to think that the public and private sectors are not interdependent on each other."

    Really? - are you sure about that? I mean the idea that the private sector will create the missing jobs from the public sector has a) never been proven and b) is not even possible to achieve in this country without a massive impact on service quality.
    The private sector isn't really 'creating wealth' - it's the labour applied to the raw materials - or the labour itself which produces wealth. The actions of trading is not wealth producing.

    ...anyway, about these cuts. If you look at the demise of the wrexham and shropshire railway you can see that as an 'unsubsidised' railway it could not compete in the current market.

    it was the 2nd best railway in the country - going from customer satisfaction - which is unsurprising as it was run by Deutsche bahn and uk ex-railway employees I believe - however the measure in capitalism isn't about 'service' it's about PROFIT - and that's why it had to close.

    This is a loud bell ringing for the problem with Capitalism - how can the second best railway in the nation not be 'good enough' to keep afloat?

    Capitalism will take us to a place where everything is cheap and disposable - and only efficient in monetary terms. This is not a progressive world I'm afraid, it's going backwards in many respects.

    ...W&S is a classic example of 'public spending' being hidden by the Government. I mean they want to cut programmes to schools and hospitals - well why not save money by not subsidising private companies to do run private profitable companies.

    Look at the service companies for ther Government, Serco, Group4 etc - without the 'public spending' that goes into it - they simply would not exist. However it seems the Government finds it acceptable to pay private - and non-accountable corporations to do the work rather than use their own accountable civil servants.

    This is fascism - make no mistake, it's here and it's real.

  • Comment number 17.

    12. At 11:17am on 28th Jan 2011, zorba wrote:

    "Our public sector was fine before the last lot got into power and created around one million new public sector jobs. We managed perfectly well without them in 1997 and will do so again. Do we really need: Play strategy managers, Street football coordinators, Gypsy and traveller liaison officers, Diversity and inclusion managers, Mind and nutrition leaders...."

    You think there are 1 million of them? - I would suggest you look into who is producing the 'news' you're reading which helpfully mis-informs you of the facts. Still, I suppose you're not celever enough to realise that 'Mind and nutrition leaders' actually tackle obesity and depression before they become a great expense for the NHS.
    I presume you think the world is made up of isolated individuals who's actions have no effect on others - would I be right?

    "I could go on. These are all non jobs created at great expense to us all. Getting rid of them would save a fortune."

    I think you'll find they will COST us a fortune in the long run......and besides, all you will achieve is an extra 1 million people on the dole because there is no proivate sector demand to mop them up....and people don't like to work for less than they can live on - which is what the private sector needs in order to return to profit.

    However I'm guessing you haven't thought that far ahead.....

  • Comment number 18.

    No. 8: Utter non-sense!

  • Comment number 19.

    5. At 10:54am on 28th Jan 2011, Bim Sherman wrote:

    "I'm no Union cheerleader however i shall be joining the NUS/TUC in March to voice my disapproval of this and the last neo-liberal Government, as there is no real alternative on offer at the ballot box. "

    Bim Sherman I applaud you - another citizen freed from the web of lies this (and previous) Governments have told.
    You're 100% correct, it doesn't matter who you vote for as they all have the same policies - just in different coloured manifesto's. This may be why more than 50% of the people don't even turn up for elections generally.

    ...they will find another way to express their democratic voice - just like the Egyptians, Tunisians and Yemenese are.

    If you can make it there's a protest in London tommorrow - if not I'll see you there in March!

  • Comment number 20.

    4. At 10:53am on 28th Jan 2011, Anselm

    Have you considered that the ever growing public sector may be due to the ever failing private sector?
    Generally the public sector steps in where there is market failure - where people are not provided with what they need because the private sector see's no profit.
    Free hospitals are an example, although there is a long term benefit, it's not a viable proposition for private healthcare to extract monetary profit from the good that comes from 'fixing people'.

    The ever increasing 'bad behaviour' of the private sector - and constant profit driving is creating a greater need for an even larger publis sector.

    Banks need regulators - and they need to be as established (and as big) as the banks themselves.
    As one ill-iformed poster mentioned before - "five a day" specialist posts have been created because companies like Macdonalds use advertising targeted at children (it's a clown for goodness sake!) and the cheapest meat to bring a monetary profit - but the cost is children are living off MacDonalds (and other fast food chains) and are not getting the nutrition they need.

    It would be lovely if we didn't need a public sector at all - but those who call for the dismantling of it simply don't understand how - or why it's all created in the first place!!

    It's like my wife buying new washing up gloves every month because I find it more efficient to wash up with all the items in the bowl (including knives which puncture the gloves)........and me complaining she spends too much on rubber gloves when I look at the bank account each month.

    I'm afraid those who call for the dismantling of the public sector are living in some self-isolated fantasy land where newtons laws don't apply (for every action, there is an equal and opposite reaction).

    It's barmy.

  • Comment number 21.

    As this piece here proves, economic forecasters are the Mystic Megs of finance and equally inaccurate.

    https://www.bbc.co.uk/news/business-12294332

    So if the 'experts' haven't a clue what will happen why do we still listen to them?

    Should we not just listen to good old fashioned common sense instead? Common sense like if you allow your finances to get out of control and your debts to pile up you are going to end up in big trouble? Just as Ireland and Greece are.

  • Comment number 22.

    "Gypsy and traveller liaison officers"

    Like a lot of Council sevices certain papers are constantly running down, such jobs are not needed. Until of course you get 30 caravans arriving to camp on your local park and a call to he police results in them responding with 'it's a civil matter'.

    I say congratulations to anyone who wants to be a Gypsy liaison officer - I doubt there are thousands wanting a job which must mean grief most of your working day.

  • Comment number 23.

    # 2. @ , invisiblehandadvisor wrote:
    "Why this blindness of the Conservative party when it comes to tax avoidance/ tax evasion?"

    Its hardly a party political thing, its a case of politicians (and officials) of all persuasions keeping their influential associates who can afford to lobby and make convenient donations happy.
    After all the loopholes and evasion / avoidance techniques haven't exactly been stamped out in the previous 13 years.

    Let's face it, countries like Lietchenstien have been doing very nicely from their fees for facilitating evasion for years; in many ways the governments of such countries are fully sypporting money laundering and some would say basing their economies on criminal enterprise.

    Its strange that we can send troops around the world to get rid of non-existent WMD, but can't send them to recover money stolen from the UK taxpayer.

  • Comment number 24.

    https://www.bbc.co.uk/news/business-12306336
    ===========================================================

    John Lewis sales down this year and the weather in the first week of last year was worse than this year. Next excuse from Mini Brain Osborne.

    Where are all these new Private Sector Jobs coming from? Nowhere. Does anybody want to bet that Q1, 2011 will not see a further reduction in GDP?

  • Comment number 25.

    @4 Anselm "I'm broadly behind the Coalition policy, believing that the UK simply cannot afford a Public Sector as large as the one they were bequeathed."

    You may or may not be right, but in that case why can Germany and Scandinavia support even greater public sectors than we have? The answer is probably quite complex, but here is a guess.

    1) Britain became complacent because it was first in so many things.* This means that other countries were able to learn from our mistakes as well as our successes.

    2) For about a century, money men have had more power than industrialists, and are now allied with the old aristocracy to protect and entrench their position. Investment in manufacturing and infrastructure has never been a priority for them.

    2a) The City of London. Generally successful for itself, but at the expense of distorting the British economy, inflating property in the South East and creating an economic climate damaging to real wealth creation.

    3) Ever since Thatcher, there has been an ideology that public is bad - unless the private sector can have a piece of it. Thus we have the PFI ripoffs - a huge drain on the public purse, and heavy public subsidies for privatised utilities like rail; or the right to fleece the public enjoyed by privatised water etc. Also, North Sea oil revenues, which could have been such a benefit, were not invested in our future, but instead squandered on imports and asset bubbles, thus causing real damage to the UK economy.

    4) Inequality and social immobiliy is greater in the UK than in almost any other industrialised country, though these days we tie with the US (there is a link to a pdf document in Krugman's article below). This means that much of the talent we need for our future remains undeveloped.

    https://krugman.blogs.nytimes.com/2011/01/10/economics-and-morality/

    To conclude, to support a civilised society, we need to make sure that we can produce a sufficient quantity of the necessities of life. That means manufacturing and agriculture. This has not been a priority in the UK, even for governments, since the 1970s. It must become so now. This is the "rebalancing of the economy" that we need.

    * After all, even before the Industrial Revolution, we cut off the head of our king 150 years before the French got around to it, and with much less of a reign of terror.

  • Comment number 26.

    17. At 11:45am on 28th Jan 2011, writingsonthewall wrote:

    "I could go on. These are all non jobs created at great expense to us all. Getting rid of them would save a fortune."

    I think you'll find they will COST us a fortune in the long run......and besides, all you will achieve is an extra 1 million people on the dole because there is no proivate sector demand to mop them up....and people don't like to work for less than they can live on - which is what the private sector needs in order to return to profit.

    However I'm guessing you haven't thought that far ahead.....

    =============================================================

    On form today my friend I see.

    A Capitalist Apologist for Economic Fascism of which he has no apparent awareness. Asking them to think is in itself is too much of demand, asking them to think ahead (as has been proven throughout the depression) is something far beyond their comprehension.

  • Comment number 27.

    "....the Davos money men (not my sexism, but the industry's) might not understand the politics of Mr Cameron's dour diagnosis of Britain's ills.

    They might simply notice that the UK's structural weaknesses aren't trivial - and might feel there are less risky places in the world to deploy their funds."

    And given their access to so much information they may see past all of the marketing hype and find someone being prepared to face up to the underlying issues quite refreshing and reassuring, but then maybe not, given that they profit most from the sort of unstable and unsustainable bubbles that got us into this mess. Revealing the emperors new clothes of the current economic system for what they are may indeed be seen as something of a threat.

  • Comment number 28.

    'At a time when the UK economy has contracted again, the Davos money men (not my sexism, but the industry's) might not understand the politics of Mr Cameron's dour diagnosis of Britain's ills'.

    Plenty of corporates have discovered it's far better to admit you have a problem than leave your finance providers to guess what it is and how big it is. At least they can take a judgement on whether you're capable of fixing it.

    A bit of 'chilling frankness' in respect of the Spanish banks would benefit everyone

  • Comment number 29.

    He who pays the piper calls the tune.

    Germany is the one doing the paying so they can determine how the Euro works out, size of rescue fund etc. If other Euro countries do not like it Germany does not have to pay as much and then what will the Euro do.

    I do remember in past blogs that much blame has been heaped on Germany because they do not have high levels of private consumption and for some reason this is wrong/unfair to other Euro countries. I have never understood this. Germany prefers to adopt a strategy based on prudent govt spending, it cannot make its citizens spend and the citizens have a culture of being against inflation - yet it is Germany's fault.

    Most of the Euro countries have got into trouble by their own actions. They dutifully blame the banks but they are wrong. The credit crunch did not cause the problems it merely determined when those problems would be seen in their true light. Greece had a shambolic public sector and dodgy accounting, Ireland went on an absurd property bubble, Spain similar to Ireland but with massive restrictions on youth employment to make it worse, Portugal a little bit of everything (actually do not think Portugal is that bad), UK had a property bubble, a govt spending bubble, a private sector debt bubble.

  • Comment number 30.

    7. At 10:56am on 28th Jan 2011, stanblogger wrote:
    Cameron said
    " ... And now think of where we need to go: an economy based not on consumption and debt but on savings and investment; ... "

    And where does he think the average UK citizen is going to be able to find money for savings in austerity Britain? It would need a dramatic redistribution of wealth from creditors to debtors, such as would have happened if the banks had been allowed to fail, to achieve this, or more slowly and stealthily, by conspiring with Mervyn King to have a long period of negative interest rates.
    ...............
    Given that our economic growth and indirectly our prosperity is based on consumption, I guess DC is saying that the future is one of economic contraction, poverty and inequality. That may prove to be a hard sell to the masses!

  • Comment number 31.

    5. At 10:54am on 28th Jan 2011, Bim Sherman wrote:

    I'm no Union cheerleader however i shall be joining the NUS/TUC in March to voice my disapproval of this and the last neo-liberal Government, as there is no real alternative on offer at the ballot box.

    ==============================================================
    I'll be there too!

    I have been saying for some time - if you left leanings then vote Green at least they are at the stage where they acknowledge the current economic model is unsustainable. Or spoil your ballot paper. If you are a right w(h)inger you have a great choice of 3 parties with indistinguishable leaderships and policies who cowtow to the economic fascists who have bankrupted the country. Or UKIP who, to be fair, do have some alternative policies.

  • Comment number 32.

    > Cameron: And now think of where we need to go: an economy based not
    > on consumption and debt but on savings ...

    Cameron is incapable of sustaining one coherent sentence between a capital letter and a stop.

    If he means what he says, why is he letting inflation eat our savings? Why is he letting King diminish our pension pots with quantitative easing and low lending rates?Why are Cameron's actions out of kilter with his words?

  • Comment number 33.

    I commented on this earlier this week - the Tories are banking on confidence being the key. Listen to my useless MP claiming that rest assured the lack of growth is not too concerning as "confidence is high"

    https://www.bbc.co.uk/news/uk-politics-12277536

    ....it seems even the wheels of this 'plan' have come off already!

    https://www.bbc.co.uk/news/business-12306336

    When you're policies are based in ideology and not fact or reason - it can never last for too long.

  • Comment number 34.

    https://www.bbc.co.uk/news/business-12306336
    I'm impressed; we now have "astonishing" to add to "shock" and "surprising". I suggest another; "un-b-leave-able". Coming to a BBC report soon.

  • Comment number 35.

    22. At 12:19pm on 28th Jan 2011, whirlygig wrote:

    > congratulations to anyone who wants to be a Gypsy liaison officer - I
    > doubt there are thousands wanting a job which must mean grief most
    > of your working day.

    And congratulations to anyone who wants to be a Gypsy. Withdraw co-operation from
    business and government and do your own thing.

    Good on them.

  • Comment number 36.

    # 12. @, zorba wrote:
    "Our public sector was fine before the last lot got into power and created around one million new public sector jobs. We managed perfectly well without them in 1997 and will do so again. Do we really need: Play strategy managers, Street football coordinators, Gypsy and traveller liaison officers, Diversity and inclusion managers, Mind and nutrition leaders.... I could go on. These are all non jobs created at great expense to us all. Getting rid of them would save a fortune."

    Its all about balance - looking at prioritising what we need against what we can afford.

    Of course manufacturing practically halving as a proportion of the economy in the same period vastly increased our exposure to fluctuations in financial services and left us at the mercy of those "dreadful" bankers people so love to loathe.

    Our cost of living is too high to allow mass employment manufacturing to be competitive in a global market (partially due to house price inflation driven by the "miraculous" bubble economics that were claimed to have "ended boom and bust").
    We've dumbed down our education system due to the "nobody fails" ethos, leaving us less likely to drive high tech innovation.

    Its a mess; and quite simply we as a nation need to be able to pay our way in the world, earning what we feel entitled to consume rather than relying on more and more debt (public, corporate and personal). [Just look a t how the current account deficit expanded between 1997 & 2007 - even with the growth of financial services].
    Continuing to sell our future for a few more years of the high life would be incredibly irresponsible and a betrayal of future generations.

    The amount of wealth held by UK institutions is one of our main assets, but its seems that they prefer to invest abroad (or just speculate on the next asset bubble) leaving us hoping to attract foreign investment (and the resultant outgoing profit streams).

    Its a dire situation, we feel entitled to a standard of living "because we're British" that we currently don't merit or earn with our productivity.

  • Comment number 37.

    The short sellers will short sell anything for any reason in much the same way as gamblers bet on rain drops dribbling down a window. It is not rational behaviour and is beyond reasoned argument. They have no right to endanger the livelihoods of honest folk.

    The best way to stop it is to close down the places where these gamblers assemble. Do they have casino licenses would be a good reason and place to start? If they object then deploy the riot police complete with rubber bullets, tear gas and water cannon as if they were ordinary folk who don't like prices going up. If they go on line and twitter at each other then close that down to disrupt their activity.

    What is sauce for the goose is sauce for the gander!

  • Comment number 38.

    # 21. sandy winder wrote:

    "Should we not just listen to good old fashioned common sense instead? Common sense like if you allow your finances to get out of control and your debts to pile up you are going to end up in big trouble?"

    It seems common sense is far from common these days.



    # 22. whirlygig wrote:

    "Like a lot of Council sevices certain papers are constantly running down, such jobs are not needed. Until of course you get 30 caravans arriving to camp on your local park and a call to he police results in them responding with 'it's a civil matter'."

    Until someone get's the application of the human rights act to be modified to a more reasonable basis and makes it a criminal matter and allows land owners to call in the bulldozers, maybe. However, the requirement is in many ways a by product of flaws elsewhere.
    Of course some would say that "liaison officers" often make the situation worse, workign as advocates for the travellers rather than helping to protect the rest of society from having their property and communities abused.

  • Comment number 39.

    12. At 11:17am on 28th Jan 2011, zorba wrote:
    “Do we really need: Play strategy managers, Street football coordinators, Gypsy and traveller liaison officers, Diversity and inclusion managers, Mind and nutrition leaders.... I could go on.”


    I eat my 5-a-day (in fact more) - thanks for bringing the need to my attention 5-a-day guys.

    I’ve quit smoking – thanks stop smoking nurse.

    I drink 2-3 litres of water a-day - thanks hydration people.

    I’m more mindful of other people – thanks ethnicity and diversity people.

    I have a healthy lifestyle – thanks for the heads-up Change 4 life.

    I look both ways before crossing the road – thanks Green-cross Code man.

    The fact is that these people educated me in what I need to be doing and will save you money in the long run. I’m not going to become obese. I’ve reduced my risk factors for the causes for heart dieses, cancer and type II diabetes.

    Have you? If you haven’t you are going to cost me a fortune.

    It seems to me these jobs are very much needed to educate the public. Problem is the public don’t want to hear it.

    Now get yourself out for a jog.

  • Comment number 40.

    Fromthe Beeb article about consumer confidence,

    "However, John Lewis said it was difficult to make comparisons with last year, as snowfall in January 2010 had created fluctuations in trade."

    Where was all this January snow then, it had all gone by the time I got back to work on the 4th. Lies, lies and damned lies.

  • Comment number 41.

    I totally agree with cameron (& every other politician, let it be said) that we need to rebalance our economy in the ways he set out at Davos. But I'm afraid I see no evidence he has the faintest idea HOW to do it (other than slash the public sector & hope that countries will invest in manufacturing in the UK) & the effect of his measures will be to depress demand for years, which will hardly make us an attractive proposition for investors. As the ex-head of the CBI noted, there is actually no convincing plan for growth. I just have a sneaking feeling that cameron believes that if you say something often enough people will believe you and it will magically happen in some way. Where's the beef?

  • Comment number 42.

    #31. At 12:38pm on 28th Jan 2011, M_T_Wallet wrote:
    5. At 10:54am on 28th Jan 2011, Bim Sherman wrote:

    I'm no Union cheerleader however i shall be joining the NUS/TUC in March to voice my disapproval of this and the last neo-liberal Government, as there is no real alternative on offer at the ballot box.

    ==============================================================
    I'll be there too!

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

    See you there guys.

  • Comment number 43.

    5. Bim Sherman wrote: -
    "I'm early 40's, mortgage free and have a comfortable job (at present at least) but i am sick to death of being fleeced so we can support the top 1% of our society."

    The problem is that the top 5% of earners in this country pay between 15% and 20% of the tax revenue, if that number rises above 20% they disappear and the revenue take shrinks. This is what happened in the 60s under the high taxing Wilson goverment. When the high earners do go away, there is nothing left but to increase the lower tax bands. This would happen what ever colour the party in power.

  • Comment number 44.

    #33. At 12:41pm on 28th Jan 2011, writingsonthewall wrote:

    "I commented on this earlier this week - the Tories are banking on confidence being the key."
    ---------------------------------------------------------------------------------

    If you base an entire policy around confidence and consumerism it's doomed to fail - after all confidence is a "trick" aligned to the money trick.

  • Comment number 45.

    While we are looking to Germany for solutions, let’s not forget its history in dealing with completely hopeless situations. We entered into a very valuable discourse when discussing Hitler’s solutions in dealing with the German economy, pre-WW2, on Steph Flanders blog. I fought Apartheid from the age of 12 and should therefore have a Hitler phobia. I therefore understand the sensitivities when discussing Hitler but as I said on Stephs blog, let’s not throw out the baby with the bathwater.

    Hitler’s solution of changing and reissuing currency as well as avoiding debt must surely be considered within a modern context. The days of printing cash are long gone. We can all live off 100% electronic transactions and in that respect , changing currency is as easy as issuing a new government smart card. No new notes need to be printed and purchases can be restricted to goods that benefit the economy.

    Now Hitler also provided us with options in dealing with profiteers who gained from the financial crisis and I was very clear on Stephs blog that control orders and concentration camps should not be considered for our arrogant bankers when we have the option of taxing them into oblivion.

    The Americans Tea Party movement regards taxation as equal to control orders and concentration camps. Let’s accept their point of view. 80p tax to income over £500k??

  • Comment number 46.

    #32. At 12:40pm on 28th Jan 2011, Jacques Cartier wrote:
    "> Cameron: And now think of where we need to go: an economy based not
    > on consumption and debt but on savings ...

    Cameron is incapable .........................................."

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

    You could have stopped there, no need to elaborate further.

  • Comment number 47.

    33. At 12:41pm on 28th Jan 2011, writingsonthewall wrote:
    I commented on this earlier this week - the Tories are banking on confidence being the key. Listen to my useless MP claiming that rest assured the lack of growth is not too concerning as "confidence is high"

    https://www.bbc.co.uk/news/uk-politics-12277536

    ....it seems even the wheels of this 'plan' have come off already!

    https://www.bbc.co.uk/news/business-12306336

    When you're policies are based in ideology and not fact or reason - it can never last for too long.

    ............
    They are nothing more than fish flapping on the beach in desparation looking for a solution after the tide went out, unaware a large Tsunami is on its way.

  • Comment number 48.

    David Cameron Said:

    "If you’re looking to set up a headquarters abroad, are you going to invest where your premises can be taken away from you? Where contracts are routinely dishonoured? Where there’s the threat of political upheaval?

    Or are you going to invest where there are property rights, the rule of law, democratic accountability?"

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

    So not the UK then!

  • Comment number 49.

    19. At 11:50am on 28th Jan 2011, writingsonthewall wrote:
    31. At 12:38pm on 28th Jan 2011, M_T_Wallet wrote:

    Well that is at least three of us then. I will have to do a 'Peston Blog' banner at ths rate!!

    WOTW it was you and Dempster that first got me questioning things, so thanks.

  • Comment number 50.

    37. At 12:49pm on 28th Jan 2011, stanilic wrote:
    The short sellers will short sell anything for any reason in much the same way as gamblers bet on rain drops dribbling down a window. It is not rational behaviour and is beyond reasoned argument. They have no right to endanger the livelihoods of honest folk.

    The best way to stop it is to close down the places where these gamblers assemble. Do they have casino licenses would be a good reason and place to start? If they object then deploy the riot police complete with rubber bullets, tear gas and water cannon as if they were ordinary folk who don't like prices going up. If they go on line and twitter at each other then close that down to disrupt their activity.

    What is sauce for the goose is sauce for the gander!

    .............
    Brilliant. Lets start with the square mile. Exceptions may be made for "toilet cleaners" and others that provide useful services.

  • Comment number 51.

    @33 WOTW "When you're policies are based in ideology and not fact or reason - it can never last for too long."

    Hmm - I think you're being over optimistic - most people refuse learn lessons until it's too late - here's a quote from George Orwell:

    "...we are all capable of believing things which we know to be untrue, and then, when we are finally proved wrong, impudently twisting the facts so as to show that we were right. Intellectually, it is possible to carry on this process for an indefinite time: the only check on it is that sooner or later a false belief bumps up against solid reality, usually on a battlefield."

    Here's another one from Krugman about the Republicans' fantasy economics:

    "I really do wonder how this country can remain governable, when one party insists on creating its own reality. Next thing you know they’re going to reject the theory of evolution. Oh, wait …"

  • Comment number 52.

    45. At 13:10pm on 28th Jan 2011, Supersage64 wrote:
    ............
    And a modern version can be found on the Positive Money web site. The Banking Commission have invited them to make a presentation on their proposals this spring. a small step forward

  • Comment number 53.


    Mr Peston, you wrote:

    Axel Weber, looked those investors in the eye yesterday - in one of Davos's more interesting private meetings - and more-or-less dared them to short-sell the euro.

    I am told by one of the investors that it was an impressive display of German confidence.

    "He said that Germany had deployed the equivalent of its entire GDP on making a success of its national reunification" said the investor. "And he said we should assume Germany will do the same to save and strengthen the eurozone".
    [End quote.]

    OK Mr P...an investor said so. Just ask the Germans themselves..not Mr Weber...not 'your investor'...if they are prepared to make such a sacrifice.

    The posturing and preening and strident deliveries of Monsieur Sackoffski, Herr Weber , your investor, and others are one thing. The attitude of the important 20 percent or so of German marginal voters quite another.

    Seven rounds of Regional Elections start on Feb 20th in Hamburg and only end in September . A slow trickle of electoral verdicts on the National Govt in Berlin. The
    FDP is still anti strengthening the contribution Germany makes to rescue policies.


    So time will tell if you have been listening to hot air, Sir. Time will tell.

  • Comment number 54.

    40. At 13:02pm on 28th Jan 2011, NorthSeaHalibut wrote:
    Fromthe Beeb article about consumer confidence,

    "However, John Lewis said it was difficult to make comparisons with last year, as snowfall in January 2010 had created fluctuations in trade."

    Where was all this January snow then, it had all gone by the time I got back to work on the 4th. Lies, lies and damned lies.

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

    Unless I miss my guess, we're in 2011 now? I for one well recall the snowfall of January 2010.

    It's in the pictures below, in case you're still thinking it's all lies:

    https://news.bbc.co.uk/local/coventry/hi/people_and_places/nature/newsid_8443000/8443418.stm

    That's not to say that the John Lewis figures are not down this year on last - just highlighting the fact that it really did snow last January.

  • Comment number 55.

    "Axel Weber, looked those investors in the eye yesterday - in one of Davos's more interesting private meetings - and more-or-less dared them to short-sell the euro."

    The vultures have picked the carcass of free market capitalism clean and are now turning on each other. The endgame is near.

  • Comment number 56.

    I was looking at the latest BIS stats.....does anyone know about the tables at the rear?

    It seems the UK is the world leader in most of these tables....both in assets and liabilities! So where are all the assets? Who do they belong to and are they likely to suddenly dissappear leading to a bit of an issue in terms of assets versus liabilities? Or is that figure so high simply because of our over inflated property values?

    Also, does anyone know where more detail to these figures lives? I wouldn't mind drilling down to see if I can answer some of the questions myself!

    https://www.bis.org/statistics/rppb1101.htm

  • Comment number 57.

    36. At 12:45pm on 28th Jan 2011, Reaper_of_Souls wrote:

    Too true. The age of austerity and falling living standards is ahead of us. Unfortunately, the avenue of moving up the value-add chain has been closed to us due to dumbing down of the education system over the last two decades and the fact that the most able and bright of graduates were employed mainly by the useless and unproductive banks. What we need to ensure, though, is that everybody shares in that pain - particularly the main culprits, the bankers.

  • Comment number 58.

    Mr Cameron stated: " And now think of where we need to go: an economy based not on consumption and debt but on savings and investment"

    So why would you save with interest at .5% and inflation at 3.8%?

    How can SMEs invest if the banks will not lend?

    Its all well & good Cameron or Brown before him grandstanding but average citizens did not create the financial mess the banks & service sector did and as mentioned on Question Time last night the political elite have still not changed a single banking regulation to stop the mess bourne out of greed happening again.

  • Comment number 59.

    That-Ian wrote. "dumbing down of education system over last two decades"
    I always find this an unqualified statement said by those ignorant of the true facts, I have two children that have gone through education during this period both of whom studied very hard like most of their class mates and most of which now have productive jobs across the spectrum. My son graduated last week all twenty two of his friends at Uni have a job all earning above £ 20K and only one is in banking.

  • Comment number 60.

    6. At 10:55am on 28th Jan 2011, common_man_123 wrote:
    I was taught never talk about the negatives just the positives, let others raise the negatives and you then reverse them into positives!

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


    I admire you for that. I really do wish I could do the same, however I am always being called a pessimist when I am just a realist.

    I take my time to gather all the evidence, then take a step back to see the bigger picture and gather more evidence, repeat as necessary and when finished I begin to connect the dots.

    Well I've been studying this crisis for two years and I've connected the dots. Regardless of all the nuances of the crisis the root cause is the debt that capitalism needs to sustain growth. The interest alone on the trillions of debt will cripple countries and nations within two years and the whole house of cards will collapse. No amount of discussion at Davos will avoid this mathematical certainty.

  • Comment number 61.

    Cameron appears to be laying it on the line in Davos.

    Fine.

    But his Chancellor had better get his finger out pdq and shred all those things which are stifling SME's or this country will double-dip down the plughole.

    As for Germany, Emperor of Europe once once.

    Deservedly so this time.

    The Germans have shown leadership and courage throughout this crisis and are proving the old adage, he who pays the piper calls the tune (they've obviously never forgotten Hamelin).

    Germany will bring much needed fiscal discipline to the PIIGS et al - who will just have to obey orders.

  • Comment number 62.

    39. At 12:56pm on 28th Jan 2011, Remantled wrote:

    I eat my 5-a-day (in fact more) - thanks for bringing the need to my attention 5-a-day guys.

    I’ve quit smoking – thanks stop smoking nurse.

    I drink 2-3 litres of water a-day - thanks hydration people.

    I’m more mindful of other people – thanks ethnicity and diversity people.

    I have a healthy lifestyle – thanks for the heads-up Change 4 life.

    I look both ways before crossing the road – thanks Green-cross Code man.

    The fact is that these people educated me in what I need to be doing and will save you money in the long run. I’m not going to become obese. I’ve reduced my risk factors for the causes for heart dieses, cancer and type II diabetes.

    Have you? If you haven’t you are going to cost me a fortune.

    It seems to me these jobs are very much needed to educate the public. Problem is the public don’t want to hear it.

    Now get yourself out for a jog.

    I’m sorry but you must be really boring. Get out and live more – a good steak and a bottle merlot followed by a double portion of cheese cake and follow that with a coffee (with cream) and a shot of what ever turns your fancy. Then off to bed feeling full, happy and contented. I love life can you sat the same?

  • Comment number 63.

    It is a fallacy that saving is good for the economy.

    https://en.wikipedia.org/wiki/Paradox_of_thrift

    Saving is only good for the economy if the resources not spent on consumption are spent on genuine investment which will bring future benefits; otherwise, in present circumstances, saving merely fuels recession.

    The idea that money in the bank should "earn" interest despite what a bank uses it for is an example of wishful thinking trumping economic reality.

  • Comment number 64.

    52. At 13:19pm on 28th Jan 2011, Averagejoe wrote:
    45. At 13:10pm on 28th Jan 2011, Supersage64 wrote:
    ............
    And a modern version can be found on the Positive Money web site. The Banking Commission have invited them to make a presentation on their proposals this spring. a small step forward

    =========================
    A movement in this direction could result in the collapse in the Gold price which will result in the fall in other commodity prices..... resulting in a panic sell off of commodity derivatives... resulting in another banking collapse.. but no problem because we now have solutions in the form of plastic with chip and pin :-)

  • Comment number 65.

    Germany bosses the Eurozone because it is the economic giant. It is the economic giant because its unions, government and company law protect its manufacturing industry.

    I'm an engineer and for years I've watched German companies buy British companies and take the skilled work back to Germany and export the non skilled work to low cost countries and then close the British company whist calling it inefficeint.

    The ridiculous thing is we then all buy German cars and think we're clever!!!!!

    Until we wise up Britain is going to carry on down the plughole.

  • Comment number 66.

    49. At 13:14pm on 28th Jan 2011, Bim Sherman wrote:
    19. At 11:50am on 28th Jan 2011, writingsonthewall wrote:
    31. At 12:38pm on 28th Jan 2011, M_T_Wallet wrote:

    Well that is at least three of us then. I will have to do a 'Peston Blog' banner at ths rate!!

    WOTW it was you and Dempster that first got me questioning things, so thanks.

    ........
    Another “intellectual” rescued from the clutches of “acquisitors” (as defined by Ravi Batra’s book the golden age).

  • Comment number 67.

    @59 jeffa4444: "That-Ian wrote. "dumbing down of education system over last two decades"
    I always find this an unqualified statement said by those ignorant of the true facts ...."

    As a retired maths teacher still involved with 'A' level coaching, I can assure you that education HAS been dumbed down, both in content and by grade inflation. The abolition of higher tier GCSE about 5 years ago has meant that the 'A' level syllabus has been degraded to match. In percentage terms, a garde 'A' was achieved by about 10% in the '80s; now it's nearer 50%. I am saddened by how not having a foreign language to GCSE is almost the norm these days, even for bright pupils.

    It's not the kids' fault, but they are being paid in debased currency!

  • Comment number 68.

    22. At 12:19pm on 28th Jan 2011, whirlygig

    An excellent point - of course because this only affects a minority of people the vast majority dismiss it as 'pointless' - egged on by a press core run by wealthy oligarths - who probably don't have much of an issue with Gypsies as their private estates are fenced off and they can afford private security.

    However for the rest of us - it's not such an easily avoided issue without help from the public sector.

  • Comment number 69.

    43. At 13:08pm on 28th Jan 2011, Iselworth wrote:

    You are speaking as if the top 5% deserve to be remunerated well enough to pay 15-20% of tax!? Even if what you saying is true (which i doubt), i say let them go if they want. I for one do not want to be held to ransom.

    Have you not considered that the 'revenue take' sinks if hundreds of thousands of ordinary people lose their jobs too?

  • Comment number 70.

    26. At 12:26pm on 28th Jan 2011, M_T_Wallet wrote:

    "On form today my friend I see."

    Friday is always my best day.

    "A Capitalist Apologist for Economic Fascism of which he has no apparent awareness. Asking them to think is in itself is too much of demand, asking them to think ahead (as has been proven throughout the depression) is something far beyond their comprehension."

    I know, when will capitalists understand that private sector profit = social cost.

    THE PRIVATE SECTOR CREATE THE NEED FOR THE PUBLIC SECTOR!

    I can only think that all capitalists live in bubbles, they don't know about the law of unintended consequences (choice bubble) they can't recognise an unsustainable debt system (debt bubble) and they don't realise the public sector exists solely because of the private sector (dribble bubble)

    ....basically they're all failed witches and wizards (hubble bubble toil and trouble)

  • Comment number 71.

    42. At 13:04pm on 28th Jan 2011, NorthSeaHalibut wrote:
    #31. At 12:38pm on 28th Jan 2011, M_T_Wallet wrote:
    5. At 10:54am on 28th Jan 2011, Bim Sherman wrote:

    I'm no Union cheerleader however i shall be joining the NUS/TUC in March to voice my disapproval of this and the last neo-liberal Government, as there is no real alternative on offer at the ballot box.

    ==============================================================
    I'll be there too!

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

    See you there guys.

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

    I am going with a bunch of friends so book in another 10.

    Those who want change come along and bring your friends. Peaceful direct action is the simplest way to effect change and bring justice. Look how quick conviction free politicians fold when the people crank up a bit of pressure.





  • Comment number 72.

    29. At 12:34pm on 28th Jan 2011, Justin150 wrote:

    "Most of the Euro countries have got into trouble by their own actions. They dutifully blame the banks but they are wrong. The credit crunch did not cause the problems it merely determined when those problems would be seen in their true light. "

    I can't even be bothered anymore...

  • Comment number 73.

    What the Hades is Tony Blair doing in Davos? I assume it's self promotion, as he has no worthwhile economic credentials.

    I forced myself to listen to his fatuous remarks on the Egyptian stuation: "what's important is that change is managed so that it's stable", or some such oxymoronic nonsense. The sooner that man has the political equivalent of a stake through the heart, the better!

  • Comment number 74.

    "But this was the prime minister doing what I said earlier all world leaders do here - which is try to flog their nations' or regions' comparative advantage to investors".

    If I ran a country and someone said about my place I might just throw a wobble. After all, in Mr Cameron's eyes I am unstable!!!
    Not good politics I would have thought.

  • Comment number 75.

    'wrtingsonthewall' you talk mince! The public sector is bloated and crowds out the private sector.

  • Comment number 76.

    #63 Sasha Clarkson
    "It is a fallacy that saving is good for the economy."

    Similarly it is pointless making electric cars if the total amount of energy used will be higher to perform the same task.

    Arguably it is good to destroy Nimrods since the job creation was what was really needed and that phase was over.

    Politicians are all now people. They will argue for the short term since that is what their voters want to hear. Reasoned people would not vote for them anyway.

  • Comment number 77.

    49. At 13:14pm on 28th Jan 2011, Bim Sherman wrote:

    19. At 11:50am on 28th Jan 2011, writingsonthewall wrote:
    31. At 12:38pm on 28th Jan 2011, M_T_Wallet wrote:

    "Well that is at least three of us then. I will have to do a 'Peston Blog' banner at ths rate!!"

    Now that would be funny to see on the evening news.....then they can blame Robert for the revolution as well as the banking crisis!

  • Comment number 78.

    37. At 12:49pm on 28th Jan 2011, stanilic wrote:
    "The short sellers will short sell anything for any reason in much the same way as gamblers bet on rain drops dribbling down a window."

    ...or the number of no balls in a cricket match perhaps?

  • Comment number 79.

    Mr Cameron I have a question for you - private sector debt (companies and citizens) in the UK is over 200% of GDP - how do you expect the private sector to drive the recovery as they are even more indebted than the government?

    So what are the private sector companies and consumers doing? - They are saving!!!! [in particular because you and George have scared us all so much about the state of the economy!]



    They are saving so much that the government can borrow at the lowest levels in history? at a level of almost 0% in real terms when considering inflation.

    Either the government can borrow and pay benefits to the unemployed or borrow and pay people to build something useful that will help long term growth in the country (eg. council housing or new wind farms/nuclear power stations)

    Why are they not using this opportunity to invest in the country!

    Crazy!!!!

    It seems cameron believes the nonsense about regulation stopping enterprise! Where is the proof of this?

    Cameron - wake up and look in the history books - you are repeating the mistakes of the 1930's all over again!!!

    PS Great piece from Martin Wolf in the FT today

    https://www.ft.com/cms/s/0/886ec5a8-2a52-11e0-b906-00144feab49a.html

    "The government has now been warned. The decision on the long-term level of spending relative to GDP is essentially a matter of political values. But how quickly to cut fiscal deficits is a different matter. If the government wants to stick to its plans for current spending, let it do so. But there is no reason not to complete valuable planned investments, as I have argued on previous occasions"

  • Comment number 80.

    43. At 13:08pm on 28th Jan 2011, Iselworth wrote:

    > The problem is that the top 5% of earners in this country pay between
    > 15% and 20% of the tax revenue, if that number rises above 20% they
    > disappear …

    … the bottom 95% would then pay 100% of the tax revenue, instead of 85% now. But 5% of people would have “disappeared”, according to you so 5% less tax is required. Furthermore, houses prices would be far more affordable with the top 5% somewhere else. That would easily plug the gap with more to spare. It would be a good thing to get rid of them.

    > This is what happened in the 60s under the high taxing Wilson goverment.

    You mean during the house buying boom in the 60s, when anyone could afford a decent place, on only one wage. Ask your Mum and Dad – we paid £1,500 for our house, with a 2% mortgage. Prices have gone through the roof since we started over-paying the toffs. Send them to Canada or somewhere cold.

    How come the past is so much superior to the present?

  • Comment number 81.

    72. At 14:21pm on 28th Jan 2011, writingsonthewall wrote:
    29. At 12:34pm on 28th Jan 2011, Justin150 wrote:

    "Most of the Euro countries have got into trouble by their own actions. They dutifully blame the banks but they are wrong. The credit crunch did not cause the problems it merely determined when those problems would be seen in their true light. "

    I can't even be bothered anymore...
    ==============================================================

    I reckon if he's read it he probably blames the children for running after the Pied Piper. It's the children's fault for liking the music and following the strange man!!

  • Comment number 82.

    38. At 12:52pm on 28th Jan 2011, Reaper_of_Souls wrote:

    "Until someone get's the application of the human rights act to be modified to a more reasonable basis"

    You mean so we can abuse our fellow man who we do not agree with the lifstyle of? - I can live with that but then will you be able to live with the consequences? (i.e. when someone decides your human rights are in the way of them)

    "and makes it a criminal matter and allows land owners to call in the bulldozers, maybe."

    That's soooooo lat century thinking...or current thinking in Israel. Buldozing people's homes - nice.

    "Of course some would say that "liaison officers" often make the situation worse, workign as advocates for the travellers rather than helping to protect the rest of society from having their property and communities abused."

    Their property? - it seems you have not thought this through to conclusion (or thought back to the origin)

    "The first man who, having fenced in a piece of land, said "This is mine," and found people naïve enough to believe him, that man was the true founder of civil society. From how many crimes, wars, and murders, from how many horrors and misfortunes might not any one have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows: Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody. ”

    — Jean-Jacques Rousseau, Discourse on Inequality, 1754

    Thanks to duvinrouge for that one...

  • Comment number 83.

    @39. Remantled.

    & personal responsibnility and thinking for ourselves?

    Maybe parents bringing up their children with some solid fundamentals.

    From your comment it seems we'd best get a few breathing motivation mangers at £50k p.a., just in case you forget how to breath without some official reminding you how to do it.
    Hopefully the recruitment process will be finished before you turn blue.

  • Comment number 84.

    54. At 13:27pm on 28th Jan 2011, north_view wrote:
    40. At 13:02pm on 28th Jan 2011, NorthSeaHalibut wrote:
    Fromthe Beeb article about consumer confidence,

    "However, John Lewis said it was difficult to make comparisons with last year, as snowfall in January 2010 had created fluctuations in trade."

    Where was all this January snow then, it had all gone by the time I got back to work on the 4th. Lies, lies and damned lies.

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

    Unless I miss my guess, we're in 2011 now? I for one well recall the snowfall of January 2010.

    It's in the pictures below, in case you're still thinking it's all lies:

    https://news.bbc.co.uk/local/coventry/hi/people_and_places/nature/newsid_8443000/8443418.stm

    That's not to say that the John Lewis figures are not down this year on last - just highlighting the fact that it really did snow last January
    ----------------------------------------------------------------------------------

    Yeah, but no, but yeah, but no, but yeah --- ah you got me. My brain didn't register what my eyeswere seeing.

    Still not buying the snow excuses, but there again no one is buying anything are they :-))

  • Comment number 85.

    40. At 13:02pm on 28th Jan 2011, NorthSeaHalibut

    ...and do you remember John Lewis being held up as a bright spot in the dour retail saled numbers?

    Do you think that was simply to produce some light on a dark day? - sounds like manipulation to me...

  • Comment number 86.

    73. At 14:26pm on 28th Jan 2011, Sasha Clarkson wrote:

    "What the Hades is Tony Blair doing in Davos?"

    What the Hades - great paraphrase, love it. :-)

    Yes, classical education - one of many great things lost to the new generations...

  • Comment number 87.

    "By contrast, Ireland and Spain were models of conventional fiscal rectitude in the boom years."

    No they were not!! They looked benignly on as their property sector suffered hyper-inflation. And now they are counting the cost.

  • Comment number 88.

    I find the economic illiteracy of this blog and the rather vile envy displayed by a great number of its participants to be unbelievable. You know who you are!

  • Comment number 89.

    51. At 13:19pm on 28th Jan 2011, Sasha Clarkson

    very true Sasha - this is why I keep having a go at ian for continually denying any possibility of a revolution - the longer you live in fantasy the harder it is when you're faced with unquestionable reality.

    The ONLY way to prevent a bloody revolution now is for the silent majority to get off their backsides and prove they are not to be pushed around - in a peaceful manner.

    Otherwise what will undoubtedly happen is those who feels strongest on both sides of the spectrum will tear each other to pieces and leave the 'middle roaders' massacred in their wake.

    Spread the word, the only way to save this country is for this country to save itself. The time for apathy is over.

  • Comment number 90.

    88. At 15:10pm on 28th Jan 2011, Sarah444 wrote:
    I find the economic illiteracy of this blog and the rather vile envy displayed by a great number of its participants to be unbelievable. You know who you are!
    -------------------------------------------------------

    And I find it vile that people can mistake a sense of fairness for envy.

  • Comment number 91.

    62. At 13:52pm on 28th Jan 2011, common_man_123 wrote:

    "I’m sorry but you must be really boring. Get out and live more – a good steak and a bottle merlot followed by a double portion of cheese cake and follow that with a coffee (with cream) and a shot of what ever turns your fancy. Then off to bed feeling full, happy and contented. I love life can you sat the same?"

    Unsustainable - your enjoyment comes at a price.

    Starving children in Africa maybe, but as long as you get your fill - yeah?

    The law of unintended consequences strikes at the heart of capitalism again - or did you think the starving people around the world was their fault - and unrelated to the rising obesity in the west?

    Bubbles, bubbles, bubbles...

  • Comment number 92.

    66. At 14:02pm on 28th Jan 2011, Averagejoe wrote:

    "Another “intellectual” rescued from the clutches of “acquisitors” (as defined by Ravi Batra’s book the golden age)."

    Do you know what's scary AverageJoe? - What did he predict about the revolution in the religious based autocracies (Egypt, Tunisia, yemen etc.) and the move into the age of acquisition (if I remember it correctly) - and what is hapening right now?

    If anyone wonders what on earth we're on about - it's the law of social cycle a brief description can be found here:

    https://en.wikipedia.org/wiki/Law_of_Social_Cycle

  • Comment number 93.

    88. At 15:10pm on 28th Jan 2011, Sarah444 wrote:
    I find the economic illiteracy of this blog and the rather vile envy displayed by a great number of its participants to be unbelievable. You know who you are!

    ==============================
    Convince us of your credentials then... I see you have a view on debt.
    Quick Question: Who do we owe all this money to and who is the biggest creditor to HM treasury

  • Comment number 94.

    73. At 14:26pm on 28th Jan 2011, Sasha Clarkson wrote:

    "What the Hades is Tony Blair doing in Davos? I assume it's self promotion, as he has no worthwhile economic credentials."

    He's defending one dictator staying in power (Mubarak) whilst simultaneously defending his decision to remove another (Saddam) in a theatre of such rank hypocriscy I think I've actually lost the will to live.......or does it merely strengthen my resolve?

  • Comment number 95.

    86. That Ian

    "Yes, classical education - one of many great things lost to the new generations..."

    Oh please.

    So tell me who are all the teachers and professerors of the classics teaching these days if it is not the "new generations"

    How many old timers out of 100 can talk about 'the classics' with any more confidence than the average hoodie. The use of the word Hades is hardly high brow but hey you have one at least fan.

    The classics are alive and well with our generation. They provide much of the evidence to support the anticapitalist view.

    So you embarressed yourself there sweet-heart.

  • Comment number 96.

    UK debt consists of "normal" cyclical borrowing plus "emergency" borrowing to stop the financial system collapsing - a unique, one-off event.

    Can we simply lump these together and talk as Cameron does about 10%+ borrowing as being "completely unsustainable"?

    We need to be more intelligent about the REAL level and nature of UK public debt - I think it is ludicrous to make no adjustment in our debt strategy about the VALUE of UK Financial Investments' holdings in the banks which must now be heading for £75 Bn. If you assume that unlike ordinary government debt, the money borrowed to make this investment in the banks could be paid off by selling the shareholding asset, then this changes our perception of UK borrowing last year of £163 Bn, 11.6% of GDP - take out the UKFI value and the figures become £ 88 Bn and about 5%.

    Failing to even mention the UKFI asset and pretending it's all unsustainable is like only looking at the liabilities side of a company's balance sheet and ignoring its assets completely.

    This is not "deficit denial" - it's the exact opposite of the coalition's position of "asset denial".

    When the UKFI holding is sold off the borrowing can be paid off and we will return to our "normal" level of cyclical surplus/borrowing. Cameron's policy of "credit crisis denial" is the bedrock that justifies the £110 Bn tax hike and spending reduction which he blames on the last government - but Brown didn't cause the credit crisis, the banks and speculators did that.

  • Comment number 97.

    Ooops!

    We were told that the collapse of growth in the last quarter of 2010 was due to the wrong kind of snow or something - nothing to do with the cuts, rising unemployment and the fear of unemployment destroying consumer confidence.

    It turns out consumer confidence has fallen by an 'astonishing amount' - down to minus 24. People are less confident than during the recession.

    Whilst british growth has stalled, US growth continues to rise, giving further evidence that the global recession is over.

    How long will it go on before someone starts to admit that tory cuts are wrecking the economy?

  • Comment number 98.


    80. At 14:48pm on 28th Jan 2011, Jacques Cartier wrote:
    Prices have gone through the roof since we started over-paying the toffs. Send them to Canada or somewhere cold.

    ============================================================

    Only problem with that idea is that A) Canada is actually a very nice place to live (i myself hope to emigrate in the next ten years) and B) there are some very warm parts of canada. i would put Siberia as a better alternative because not only is it barren, inhospitable,desolate, but they also speak russian which is a skill most investors (myself included) do not have

  • Comment number 99.

    13:55pm on 28th Jan 2011, Supersage64 wrote:
    52. At 13:19pm on 28th Jan 2011, Averagejoe wrote:
    45. At 13:10pm on 28th Jan 2011, Supersage64 wrote:
    ............
    And a modern version can be found on the Positive Money web site. The Banking Commission have invited them to make a presentation on their proposals this spring. a small step forward

    =========================
    A movement in this direction could result in the collapse in the Gold price which will result in the fall in other commodity prices..... resulting in a panic sell off of commodity derivatives... resulting in another banking collapse.. but no problem because we now have solutions in the form of plastic with chip and pin :-)

    Perhaps you’re are being sarcastic. Assuming you are not, I don’t see how this could happen, as for the most part the commodity prices are high because of the fact that they are priced in US dollars, which the Fed are printing at a huge rate deluting their value in the process and this money is being used for speculating forcing the price up. The opposite of what you infer would happen if the state print money. The proposals for monetary reform seem to me well thought out and comprehensive, and certainly way better that the present system, lets face it they couldn’t be any worse.

  • Comment number 100.

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

 

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