Any benefit from a sterling depreciation must be countered with the reality that there may not be purchasers at all for physical goods because finance is not available. This can be graphically illustrated by the collapse in the the Baltic Dry Index and a look at the ports of Asia where vessels are idled.

Similar stories are being told in the US congressional and senate committee hearings particularly in regard to the plight of US automakers. When asked whether they felt they had benefit from the bailout of several financial institutions – they all replied no – none at all. Surely someone needs to ask why the banks are not extending lending and credit facilities to finance trade flows firstly and secondly consumer credit (though in this case one could clearly understand why). My point is where is all this going? Unfortunately, credit is the life-blood of the global economy and unless it is extended nothing will happen. What is the role of government, if any, in encouraging this – and what measures have, if any, been discussed as an alternative. Or are we already prisoners on death row?

Reply: You are right to b e worried. This is why the authorities are trying so many different ways to get credit flowing again, but have taken decisions like the UK one to up regulatory capital and the US to allow Lehmans to go under which have made that much more difficult

1. Why haven’t the Conservatives been far more critical of the government non-job ‘industry’? We don’t recall Gordon Brown ever being directly confronted on this particular subject in the House or by the media.

2. Is it possible to quantify:
(a) the cost of the additional jobs artificially created given the guaranteed pension rights in addition to often-high salaries?
(b) the advertising/recruitment costs?

3. Do you agree that recruitment should be halted NOW and staff whittled down by natural attrition and redeployment rather than via a costly redundancy bloodbath?

4. Given that the governor of the BoE recently stated that RPI inflation will inevitably fall following the MPC’s slashing of interest rates, why didn’t they do this earlier to meet their remit on the inflation rate? The question of that remit seems very confused as 2 years ago they were trying to deflate the rise in house prices. Was that their responsibility as housing costs don’t appear in at least one of the sets of inflation figures?

We ask here as your grasp of these issues far outstrips those of anyone from whom we have yet to hear in government! Thank you.

Reply: I estimate the extra 250,000 civil servants taken on by this government are more than required to run a sensible government. The excess should be reduced by natural wastage over a period of years. I do advocate a recuritment freeze troughpout the public sector save for front line jobs like teachers, nurses etc.
The MPC was looking in the rear view mirror, as I warned constantly earlier this year when ti was obvious to anyone folllowing it that prices were going to tumble later.