80,000 more reasons to do something about the economy

The big increase in the dole queues today should provide more evidence to all those who think our problem is inflation that our problem is now the downturn.

When are the authorities going to realise they need to do much more to limit the damage and to prepare for the eventual turnround?

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15 Comments

  1. Posted September 17, 2008 at 5:16 pm | Permalink

    John, Any thoughts on the implications of a proposed Lloyds TSB/HBOS merger?

    Reply: It should mean the worries abate about HBOS, which have gripped the markets in the last few days. It sounds as if it will have the Regulators and the government in favour, but it needs an agreed and announced deal, shareholder approval and Competition clearance. We can do without more rumours doing damage to a large mortgage bank.

  2. Posted September 17, 2008 at 5:56 pm | Permalink

    Regretably I can’t get my font size any bigger to shout I agree with you Mr Redwood.

    I’m watching BBC News here and they’ve just interviewed some high up finance guru who said we should return to a system of mutual trust and financial prudence with our banking as we had it before everyone started looking across the Atlantic for easy money.

    I also heard Clegg saying Labour are dead and finished but then I turned it off because I hate people stating the obvious and telling me what I know already unless they’re a Conservative ! lol

    Now then, when are you going to get rid of Labour and get cracking to get Britain back in shape and milify the populace with soem good old fashioned bad news followed by a silver lining please ?

    We need a good dose of CHANGE to UK PLC.

    Sorry about the double posting

  3. Posted September 17, 2008 at 6:30 pm | Permalink

    I'm led to believe (and perhaps I'm wrong on this) that the B of E have their hands tied by the remit imposed on them by the Government.

    Surely the buck here stops firmly with the Chancellor and the PM. In an emergency such as this shouldn't Gordon Brown be recalling Parliament or something?

    I'll hold my hand up and say that I was one of the people that worried too much about inflation, but then I don't pretend to have an in depth understanding of economics and finance and don't do a job that requires me to either.

    The silence from the Government is deafening. First we have Darling's curious Guardian article where he predicts an economic catastrophe to rival the 1930's. Next thing you know it looks like it's happening and all he can do is pander to small shareholders by means of a popularist pop at short-sellers.

    I've come to the conclusion that Brown, Darling and their wonks in the Treasury do not have a clue. Darlings admission that the first he heard of the ECB intervention was courtesy of the front page of the FT on holiday in the Med was frightening. It leads me to conclude that anyone simply bothering to read this blog was better informed that he was!

  4. Posted September 17, 2008 at 7:14 pm | Permalink

    Don't worry about 80,000 more unemployed John, that is only 0.3% of the working population. Spare a thought for all those poor Hedge Fund traders!

    There they were selling HBOS shares they did not own; hoping to buy them back for pennies and what happens. That bugger Peston at the BBC, says HBOS is in merger talks and will probably do a share swap at £3.

    It's a poor day when a Hedge Fund can't make a honest crust.

  5. Posted September 17, 2008 at 7:20 pm | Permalink

    You have repeatedly made clear that you do not consider inflation as either a threat or a problem. Unemployment is rising and is part of the price to be paid for bringing the economy back in control. By ignoring inflation, which is still increasing, you risk making the eventual unemployment figure even higher.

  6. Posted September 17, 2008 at 7:58 pm | Permalink

    The government should end stamp duty on shares and suspend it on property deals totally for at least three years . The stock market is weak and the housing market in the deep freezer ! I know that the PSBR is too high but long term cuts in QUANGO's and getting tough on those who do not want to work will in time deliver the savings required to slash the budget deficit .

    This is an emergency and as such the 100% end of stamp duty is needed to bolster two weak areas of the economy whose vitality is essential to get a recovery under way .

  7. Posted September 17, 2008 at 8:17 pm | Permalink

    John,
    Cameron and Osborne need reminding that a sharp move to the right would be almost universally welcomed after 11 years of the 'clunking fist' and the idiocy that went with it. They are altogether too liberal for my taste.

  8. Posted September 17, 2008 at 9:13 pm | Permalink

    JR: "It should mean the worries abate about HBOS, which have gripped the markets in the last few days."

    Other than the fact that even should the UK competition authority approve the merger, it is still subject to approval by the European Union.

    This illustrates why the EU is such a liability, we need a decision, even if the UK authorities provide one, it will be subject to being second guessed by the EU, the spectre at the feast.

  9. Posted September 17, 2008 at 10:55 pm | Permalink

    The problem is we do need to cut rates, however we can't cut rates because it will undermine confidence in Sterling and a weaker Pound will lead to further inflation because we are so dependent on imported food and fuel. If we were less dependent on imports this would not be a problem and we would be able to cut rates. This has to be understood, until we start to produce more of our own food and fuel we are hostage to the higher interest rates needed to support imports.

  10. Posted September 18, 2008 at 12:35 am | Permalink

    More communist propaganda from newsnight. We have already had a cosy studio discussion on Chinas "successful"one child policy, among others.

    Now Paxman is getting very exited about the end of capitalìm.

    Oh, they managed to get the markets wrong again tonight.
    I think the had the Dow Jones at 109000 ish.

    Its a joke of a show, its reason enough for the Beeb to be shut down. Why should people be forced to pay for this Guardianista (nonsense -ed).

  11. Posted September 18, 2008 at 2:04 am | Permalink

    The unemployment figures certainly do reinforce the need for a rates cut.

    In regards to the HBOS situation, I must say that it certainly came as a shock to me and would have been rather unthinkable even just a week ago.

    The bank may well have been more exposed to the current crisis in some regards, but did appear to be on fairly solid ground with a very healthy capital ratio. I would like to think that the influence of speculators and short-sellers is always minimal and does follow the real value of a company but it seems to have been damaging today.

    As a Scot, I'm particularly worried about the impact on the Scottish banking sector, especially if the Bank of Scotland ceases operating in it's relatively independent form.

  12. Posted September 18, 2008 at 11:56 am | Permalink

    JR: "80,000 more reasons to do something about the economy"

    One wonders if we really need quite so much migrant labour?

    Will the public finances be able to cope.

  13. Posted September 18, 2008 at 2:00 pm | Permalink

    Given the suspiciously gravity defying ONS retail sales figures just out. I get the distinct impression the government aren't as keen on a rate cut as you.

    I don't know in what parallel universe the government finds these retailers. Presumably the same one in which, for the purposes of CPI, it assumes everyone eats a diet of flatscreen TVs.

    Still think you underestimate the inflation threat. Time will tell who's right.

  14. Posted September 18, 2008 at 6:12 pm | Permalink

    I have been on the dole and, believe me, it is not funny. My heart goes out to all those poor people who have been made redundant. And a lot of them, of course, are the spear carriers, not Achilles and Hector.
    The government has, of course, been massaging the dole figures for ages.
    By keeping illiterate and unmotivated children at school and then in college, it massages the figures. The universities disguise the figures. The enormous number of people in non jobs like "Employment Supervisor" or "Council Control Executive" hide the figures. The vast number of walking wounded (greater than in 1916) on Supplementary Benefits vilify the figures.
    Now the numbers of dole people will probably top 2,000,000, in addition to the above.
    Meanwhile, immigrants fill the workplace…..

  15. Posted September 19, 2008 at 1:30 pm | Permalink

    The response to this situation is to decide that the best interests of each child from abroad must now trump our immigration policy – whatever that is supposed to be. As it is presumably in the best interests of each child from abroad to remain in a country where it and its family will get free housing, free healthcare, free education, free social care, free legal aid and advice, an unearned income to be going on with, etc. etc., where does that leave the best interests of our own children?

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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