Yesterday was another very bad day in stock markets. It was the day when investors and investment managers let out a great cry for help. It was the day they decided the west’s political leaders had no answers.
The immediate cause was the results of the two day Fed meeting to consider the crisis and what to do next. The Fed decided to do very little. It announced no new great money printing scheme. There are to be no fistfuls of extra dollars to push up asset values.
They did say they would sell some short term bonds, and buy some longer bonds. They did say they would use the proceeds from repayments of mortgages they own to buy some more mortgages. They also said the economic outlook was poor.
Clearly it was not enough for the optimists still left in the market. They had been hoping that the Fed would have a new magic bullet. They hoped the Fed would have a way of puffing up the economy again.
Markets had come to realise the US President cannot deliver his package to boost the economy by spending more, taxing more and borrowing more. Nor do they think such a package would work anyway. They also know the Republican package of spending less and taxing less is stillborn. The balance of the US constitution has delivered a log jam at the top, when people want decisive leadership.
The biggest falls took place in Euroland. There no-one speaks convincingly for the Central Bank. The Bank often has to pursue its policies by stealth, for fear of upsetting the prudent ones led by Germany. The leading politicians of Euroland are in disagreement with one another. They cannot decide whether to print more or borrow more to tackle the heavy debt problems of Greece and Portugal, Italy and Spain. They say they do wish to keep all the problem countries in the zone, but do not communicate a vision on how that is possible.
The Euro remains an orphan currency. It is in search of political parents to love it and take care of it. It needs a sovereign to tell it what to do. It needs a grown up Central Bank that has clear views on how much to print and how much support to offer the commercial banking system.
At the heart of the crisis unfolding is too much debt.In the first phase of the crisis in 2007-8 the problem was too much private sector debt. Banks had borrowed too much. Banks had lent too much, especially against property in the US, UK, Ireland, and Spain. Governments eventually got over the worst of this by taking many of the debts of the banks onto their own balance sheets one way or another. They also decided on a reckless expansion of their own borrowing, to stave off the full adjustment.
Now, the second phase of the crisis is on us. In this phase weakened banks lend money to heavily over borrowed governments, and spendthrift governments lend or spend money on propping up the weakened banks. We have often talked here of the dangers of this arrangement. The Regulators have made the banks lend more to governments, claiming this is risk free. The governments have often propped up the banks, without demanding action to sort them out.
So what should be done? The governments and banks both have to get their houses into order. For the governments, that does mean spending less . You cannot get out of a debt crisis by borrowing more. For the banks, that should mean quicker action to sell assets, write off liabilities, break up weak conglomerates, raise new capital until each main bank is trusted by the market.
None of this is easy. The sooner the adjustments are made, the sooner we can resume decent growth. There is no safe way left to kick the can down the road. Print more cash and you will get more inflation. Borrow more, and you will undermine markets further. Pretend and extend more credit, and you continue the gnawing erosion of confidence.
Yesterday the World Bank, the IMF and some of the leaders of the west made statements telling us things are bad, but saying that someone else needed to take action. The US Treasury Secretary has urged Euroland to sort itself out, but has to admit the US can’t settle on a single policy either. Euroland keeps delaying decisions, as individual countries make heavy weather of even implementing what the zone agreed last July. There is a lot riding on the G20. In the end it will come down to individual countries sorting out their own budgets and tackling the problems of their own distressed banks. Those who do so convincingly will get a better ride from the markets than those who hope the problem will go away if they ignore or simply hire more spin doctors.
September 23, 2011
Very good summary of the position.
They need to make real cuts in state spending and use any money available (also change the banking regulations) to enable the banks to lend to sound businesses for sound investments rather than the quack government “investments” such as the Olympics, HS2, Green nonsense and all the rest beloved of “caring” Cameron, Cable, Huhne, Osbourne, and Clegg.
Make people pay to see the doctor, increase class sizes, cut state sector pay and pensions. Start with the over generous MPs scheme to show a lead. Lower taxes on jobs and do not pay health people to do nothing for year after year.
September 23, 2011
If the government could show they are at least just a little bit serious about tackling the huge waste and overspend/over regulation in the state sector perhaps by sacking Huhne and Cable.
If people had the idea Cameron & Clegg were at least swimming slowly the right way and that they might even win the next election it would help confidence a lot.
September 23, 2011
The today program this morning (just before 9.00) was discussing the new Peter Obourne pamphlet “Guilty Men”. The presenter astonishingly claimed that the BBC is not a “monolithic” institution. Perhaps he does not listen to it very much or perhaps it just concords with his views and he does not notice. On the EU, the green religion, the equality religions, and pushing for ever more regulation and an ever bigger socialist state it is actually monolithic to quite an amazing degree.
Also they claimed there were euro-sceptic employees at the BBC – well perhaps but only somewhere behind the cameras, in engineering services or similar never interviewing or commenting on any news or political programs or on any current affairs “comedy” programs.
Even now when almost everyone is the country is euro-sceptic they are invisible.
September 23, 2011
Monolithic and completely wrong on these issues too.
September 23, 2011
we need to make it worthwhile for the low paid to work,with tax cuts,and a lowering of what can be “earned” by sitting on ones but
September 24, 2011
Real Tory stuff. Would state sector pay be cut for the many of them that are already on low pay. What about cutting your pay in the form of a tax increase? Are you in favour of that? What will happen in the real world to the ones who cannot or will not pay for the doctor as an example of your cost cutting which will also include rent and benefits. What will happen to these people when they do not have enough money fro rent and food. Will they just magically disappear or just be happy that the government is doing something and this will lead to a job that will pay for everything?
September 23, 2011
It looks, once again, like our host is able to say ‘I told you so’. What a pity, again, that it wasn’t government policy to front load the spending cuts and defer the tax increases but instead to do things in the opposite manner.
Or plan to do them in the exact order as we’re not going to see meaningful spending cuts (election, weak economy) nor higher tax revenues (anaemic growth caused by crippling tax rates).
Until the cuts are enforced but it would have been far better to be proactive. Like almost everything this government has done though they will be left fire fighting and reacting to events rather than shaping them.
September 23, 2011
As you say “What a pity, again, that it wasn’t government policy to front load the spending cuts and defer the tax increases but instead to do things in the opposite manner.” indeed.
A pity also that Cameron did not put a proper small government, cheaper less green energy and Eurosceptic agenda to the country – then he would have clearly won and had more elbow room.
September 23, 2011
I don’t think John Redwood or any other eu-sceptic needs to be shy about saying “I told you so”. They should be saying so loud and clear as Peter Obourne did today.
Opposition to our membership of the Euro is not some quaint subject from history. The disaster that came about in the Eurozone is a lesson learnt the hard way.
Now it is becoming obvious by the day that those who wanted lower public spending are also being proved right. These tend to be the same people that were warning against the Euro over a decade ago.
So, while the Plan B brigade are looking increasingly out of touch with reality the time has already come when we should be saying “I told you so” again.
We should be getting our public spending down NOW while this can still be achieved in an orderly way rather than wait until we are forced into rushed and panicked austerity.
September 23, 2011
We all know the right thing to do is slash taxes, deregulate, slash the public sector by privatization and stop doing for citizens what they should be doing for themselves and ditch green policies. Of course the voters and vested interest would be appalled and there would be chaos, strikes and rioting. Governments are between a rock and a hard place but they have to bite the bullet and get on with it. If they do not then it will all happen anyway when the money runs out as it will. Politicians of course are adept at not taking the blame and using scapegoats to cover up their ineptitude so will carry on as they are until the problem is global or terminal so that they can say ‘it was not us gov it was forced upon us by those nasty people at the IMF ‘ or the bankers again or the Chinese take your pick. In the UK Labour of course who got us into this mess in the first place will blame the coalition for cutting to deep too quickly when in fact they are not cutting deeply or quickly enough.
September 23, 2011
A bit of a “shock and awe” for them would be no bad thing. Perhaps start by putting a special tax on state sector wages and pensions or perhaps make them all pay the true cost of their state sector pensions themselves and not paying sick pay rather than making, the much poorer, private sector tax payers pay for all this.
September 23, 2011
State sector to pay the true cost of their state sector pensions themselves – (this would however leave MP’s with virtually no salary (as their pensions are so valuable worth about the same as the salary).
September 23, 2011
That pretty much sums it up.
The reason govts are helpless, and whatever they try makes it worse, is because there is nothing they can do, except get out of the way.
Von Mises has again been proved right. There is no way of stopping a credit collapse, except make it worse.
September 23, 2011
‘Print more cash and you will get more inflation.’
Surely, the extent of any money printing should be set to partially offset the severity of the debt contraction allowed. Any credit destruction (write-offs) will similarly deflate the money supply. Normalize interest rates. The state could then purchase distressed private housing for rent or build new ones.
As you said restructure banks so they can be let go and or cold rebooted-via forced recapitalization or bondholder bail-ins. Seek new bank entrants, someone referenced Bank of North Dakota. Where are the new entrants?
Pity we cant have a net 239k banks entering the country each year to ensure the economy has the skills it requires.
September 23, 2011
We could swap all the debt for cash. Then we will be in Weimar or Zimbabwe territory. We would be bankrupt amid a pile of £1000000000 notes.
We could try and bail the banks until we plug their balance sheet. That could consume all the capital of the entire country and then some. We would be bankrupt and working in chinese sweatshops based here.
We could let the insolvent businesses fail, write off bad debts, stop printing money, slash taxes, slash govt, get a sound money system. We would be in a world of pain, but in 2 -3 years we would have a solid, sound base to grow off and attract capital and investment.
Pick one.
September 24, 2011
I certainly would not support private debt or swap cash for bad-debts as you say.
If you print and spend cash into an economy you build a bridge or power station or increase personal allowances. I would move to a situation where only government created money.
Some banks may be worth saving- minus the bad debts. That bad debt write off will contract the money supply(credit) and asset prices will fall sharply.Economic contraction due to lack of cash credit creation will ensue. Some cash will be needed to facilitate economic activity as insolvent fractional reserve banks will be unable by themselves in such a downturn.
Buying ‘distressed assets’ at market value to house people is sensible.
No doubt a correction is coming, government is there to protect the little guy, starting from the bottom.
The automatic stabilisers would force the spending or in worst case scenario rationing?
The debts will be paid for its just who?
September 23, 2011
The problem with government spending is that politicians have made so many unsupportable promises to so many people in efforts to buy votes that they are simply incapable of cutting spending. They are not going to cut spending or promises until a collapse actually happens and it won’t be pleasant. The markets are finally waking up to the reality that our leaders are just not up to the task and their only policy is to delay the inevitable for a bit longer.
A real recipe for growth and jobs would be a flat rate tax of 20% of income with no other taxes at all. No bank bailouts, no government bailouts, no illegal wars, no crushing regulatory burden.
It won’t happen because no politician would have the stomach or votes to do it so welcome to the collapse era.
September 23, 2011
I sadly believe this to be true. This is the crisis in the polticial paradigm of the late 20th Century that will lead to better Government in the long run. It is sad that, except for a few exceptions (i.e. John), the Parliamentary Pygmies were not willing or able to stand up and recognise the huge errors they were making.
September 23, 2011
A very good summary of the predicament in the West, including the UK.
I think it can be characterised as an unresolved battle between sound money and unsound money, the instincts and policies of the Bundesbank vs those of the Eurocrats. I think that this battle applies as much to the UK as it does to Euroland and the USA. Until an obvious winner emerges I think we shall continue to have nervous markets.
The worrying prospect for the UK is that policy appears to be tilted towards unsound money, with all that that implies and you have described. It is not enough merely to blame the rest of the world, as Mr Cameron did yesterday in his letter and speeches in North America. It seemed to me that many of his criticisms of others could be applied equally forcefully to his own administration. We must not overlook the uncomfortable substance of the UK`s own predicament lurking beneath the spin and criticism of other countries and trade blocs.
September 23, 2011
“The US President cannot deliver his package to boost the economy by spending more, taxing more and borrowing more.”
You really need to read up on American politics in something besides the Republican propaganda outlets.
The recent Obama proposal includes tax cuts for ordinary Americans (e.g. the payroll tax cut). The tax increases are for people earning more than 200k (or 250k for families) via the expiry of the Bush tax cuts (one of the most damaging of the Bush era policies) and especially an increase in taxes for those superrich people who pay a lower tax rate than ordinary Americans (yes, there are quite a few superrich people who pay less than 25% tax). He also proposed ending some of the ridiculous tax subsidies for oil companies.
Obama also proposed some entitlement cuts, and in fact is proposing less spending, not more. In fact he particularly wants to spend less on the military, which funnily enough is one area that the Republicans want to spend ever more money on.
Overall his proposal would allegedly reduce the deficit by 3 trillion over 10 years. Well, that number is of course open to interpretation, but calling this “borrowing more” as if he is just throwing money willy nilly at the problem, is blatant intellectual dishonesty.
Of course “the US president cannot deliver his package” because the Republican Party is run by people whose main goal in life, besides giving ever more tax cuts to millionaires, is to make sure that Obama does not get a second term. They actively want the economy to be bad (c.f. their recent letter to the Federal Reserve) so are not going to do anything constructive.
Reply: I think you will find that if you look at the package impact in the first two years my statement is correct. Later years are meaningless, as things will change.
September 25, 2011
Obama is washed up – he is desperately trying Gordon Brown’s failed method to stay in government for one more term – relieve current pain by printing money and to hell with the future, someone else will sort it out.
Fortunately, the USA is still a democracy (unlike the UK) so the representatives of the people are doing the will of the citizens (unlike the UK) preventing this wanton, reckless action (unlike in the UK).
I hope (like the UK) that his desperate actions will see him rewarded in the only proper way – permanent holidays and playing golf, and no more destruction of the US economy.
September 23, 2011
What makes JR think we need to reduce our national debt? The interest we pay, adjusted for inflation, is now negative! We’re ripping our creditors off something rotten. If you are ripping someone off, why stop?
Reply I am not saying we should reduce our national debt, merely saying we need to stop it going up so quickly.
September 23, 2011
Those being ripped off are called savers. They are a group of people who live within their means and can be found all over the country. They don’t have portfolios of buy to let houses, or cars on balloon finance they will never own. They don’t put a cruise on the mortgage.
Inflation at officially several times the interest rates paid ( and taxed! ) is stealing the savings of those who were prudent in the past. The lesson is clear. Saving is a mugs game.
September 23, 2011
davidb
Agreed.
Its theft really, and deliberate at that.
September 23, 2011
Tell me about it – the interest return on my wife’s and my modest, safe investments in the year April 2010 to April 2011 have slumped and reduced our income by £4,200 – a loss of £80 per week.
Should have spent it all when we had the chance and be damned to the numpties that think that they are clever enough run the UK economy…..
September 23, 2011
And this is what confuses me.
Our creditors must be well aware that they’re being ripped off.
This gas discovery in the North West by Cuadrilla. Could it be a game changer for us ?
Reply: It looks very handy, assuming we are allowed to exploit it.
September 23, 2011
On no the BBC, the Carbon poison/ AGW people, the libdems and the rest are sure to find a very good environmental reason why we must not do any such thing in Lancashire. Pointless windmills and PV roofs only they will say – in words of one syllable probably.
September 23, 2011
I agree, John.
‘Allowed’.
Just who are these people ?
September 23, 2011
The greenies are already out in force trying to stop it based on spurious evidence. They use the film Gasland as the basis for this but as has been reported recently serious allegations have been made about the authenticity of some of the statements and scences in this film and the director of said film (thats me being polite by the way).
September 23, 2011
Reports have stated there is more like that under East Anglia. The UK has the opportunity to develop its own shale gas reserves with the several benefits that offers, notably a big step towards energy self sufficiency and less dependence on vulnerable foreign sources, significant balance of payments benefits, and probably significantly lower costs. Furthermore British companies like BG group already know how to do it and are doing it elsewhere.
Will the Coalition grasp this obvious opportunity? On present form they will look this gift horse in the face and reject it. If so it will sum up everything that is wrong about this Coalition.
September 23, 2011
200 Tcf at 60 p/therm (current UK wholesale gas price) is worth £1,200bn – enough to pay off the gilts in issue with change to spare. Even at a US style 40 cents/therm it would make a big dent – and make us industrially competitive.
For Greenies: isn’t it better to burn UK gas than let the Chinese burn more coal to produce the same things?
September 23, 2011
2p per KWHour for gas – convert this to electricity so about 4p per KWHour of electricity and 2p of waste heat. What does Huhne pay with his “green” feed in tarifs 41p per KWHour inflation linked I think and this is not even generated as and when needed.
Pure insanity and he must know it.
September 23, 2011
Kevin
Exploiting this Gas would be done by fracking. In America this has proved to be a very controversal method because of the dangers involved to the environment.
As you know, I am not a green nut but I think we should all draw the line at possible earthquakes, harm to water supplies etc. no matter how desperate we are. Besides I thought any ideas of this being explored had been put on hold for these very reasons and the amount of gas to be found had been exaggerated.
September 23, 2011
If you investigate this in detail, I think you will find it is the risks that have been exaggerated (like the original CAGW scare) and UK reserves underestimated. There are huge shale gas fields elsewhere around the world; Poland is very well endowed. In the USA their own production of shale gas has meant the their LNG port facilities (for imprts) are now standing idle. This is bad news for Russia and Gazprom, one of the companies questioning shale gas.
September 23, 2011
Inform yourself, rather than absorbing tabloid/green propaganda:
http://www.geolsoc.org.uk/gsl/geoscientist/features/page9767.html
September 24, 2011
Mark,
Actually Mark on the the subject of fracking, I did do quite a lot of investigating. I would not just use one source and would particularly ignore any Green propaganda as you put it. I think you will find many in the industry themselves are very cautious about fracking as not enough is known.
However, in this instance I would agree with the Government, if they are holding back, not enough is know about the subject to go ahead at this time. They cannot take that kind of risk, in truth, we would not expect them to.
Not everyone who has an opinion on this subject is run by the green agenda, I certainly am not, being almost a total unbeliever it is rather a matter of common sense.
September 23, 2011
I know you’re not a ‘green nut’, Susan.
However, for those that are I say we give them exactly what they want:
An Island of their own in a cool climate with bog all on it and small enough so that they can walk around it in a day without having to own a car.
September 23, 2011
Yes, the debtors are ripping off the savers and the pensions. If you think that is OK, then we really are lost. Never mind that it is immoral, it is unsustainable. As we now see.
The reason that we got into this mess is because we severed the link between consumption and savings/investment. Savings are the seedcorn that allows for productive investment and sustainable growth. It is only when interest rates are attractive enough that some people will defer consumption, and that allows others to use those savings to make capital investment. The interest rate is then a regulator or throttle that maintains the balance between consumption and investment/savings. The interest rate is then very close to the real growth of the economy and sends out more accurate signals to save or consume in turn. Under this system the interest rate has been distorted. Until we restore the market and let the rate regain its true value, we cannot move forward. That means that many unsound investments will have to be liquidated. Everything the govt and central bank does is preventing this. And they wonder why we are worse off than when this crisis began ?
September 23, 2011
What happens if / when interest rates regress to the mean?
Also, only ~25% of our debt is owned by foreign interests the rest is owned by the great unwashed here in Blighty, in one form or another. It may be great sport in your mind for the government to gorge itself on debt and ‘rip-off’ ordinary punters here in the UK but not in mine.
September 23, 2011
The interest we pay may(will) not stay at the current level, the risk is that it will rise significantly. So no we do need to cut the deficit and also start to reduceour national debt.
September 23, 2011
Agreed. We are in a false and temporary position.
September 23, 2011
Our creditors on gilts are ourselves in the main (~70%). Foreigners were net sellers of gilts in Q1 2011. In short, government is ripping off its citizens – or at least one group of them in favour of another.
September 23, 2011
The markets NEVER scream for help. Markets and help is a contradiction in terms. Politicians and Keynesian economists are the ones doing the screaming.
September 23, 2011
Completely agree – the cause of the crisis is political. The economic crisis is a symptom.
Politicans have borrowed too much, dreamed too much and promised too much. The crisis is because they have let weak nations into the Euro but not convinced European voters that a Federal European Union is worth having. If fiscal union were worth having then we would all be rushing ahead to join. But were not.
The TRUTH is that the EU Leaders have schemed and manipulated the electorate they have had recounts until the electorate have said yes and have become sick of them. Nobody in Europe wants the European leaders to be there, but they all want Europe. Now is their day of reckoning.
The TRUTH is the electorate know the Eurozone will collapse – and they are just sitting there and not doing anything about it because they don’t want fiscal integration and they are happy to let the EU collapse.
September 23, 2011
Not much has changed in that regard.
“The UN must take military action where states attack their own people.”
That sounds highly expensive to me.
September 23, 2011
Cameron on steroids – always looking for somewhere to interfere next whilst studiously ignoring his role of trying to lead our country out of the economic doldrums…heir to Blair.
Zorro
September 23, 2011
he problem was too much private sector debt. Banks had borrowed too much. Banks had lent too much, especially against property in the US, UK, Ireland, and Spain
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Still can’t blame the borrowers eh? 🙂
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In this phase weakened banks lend money to heavily over borrowed governments, and spendthrift governments lend or spend money on propping up the weakened banks.
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Politicians forced them. What do you expect?
Look at the scale of the crisis. 70 bn bank bail out. UK government debts, 7,000 bn
The banking crisis just exposed the government messes.
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For the governments, that does mean spending less .
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30% less.
Even that leaves the government with its debts. Spending less doesn’t change existing debts.
So you are going to default. In most cases partially.
Now, that 30% less just gets you to break even. You’re still taxing as though you are delivering all those ‘services’. You won’t allow people to opt out and provide them themselves cheaply, because then your financial mismanagement is exposed, as is the cost. After all you need the cash to pay off the debts (or keep them still)
So with no tax cuts for capital spending that generates profits, (ie. Not HS2), we’re in a for a long disaster thanks to the political parties.
Meanwhile Vince Cable is crowing about regulations on Belgium chocolates.
September 23, 2011
Not on Topic, but connected.
It is reported in todays press that some of the travellers on the Dale Farm site have been getting housing benefit and Council tax refunds for years !
The alleged excuse given, even though they are reported as renting properties which are illegal, and have no planning permission, which the Council are trying to remove after 10 years, at now great cost, is, that they are entitled to it !
This just about sums up the total and utter chaotic thinking and actions of politicians and local authorities who have interfered with our lives, and introduced so many benefits, with so many loopholes, for so many people, that it defies logic and any sort of commercial/financial commonsense.
No wonder Governments and local Councils are found not fit for purpose on so many occassions. No wonder we find ourselves in the present chaos.
The solution is so simple, they simply have to SPEND LESS, TAKE LESS, and get out of many aspects of our lives.
Yes in a dream world it would be nice to have all sorts of safety nets/benefits for everyone, but that is a dream world, it is fantasy, the socialist experiment of the last 50 years and mantra of cradle to grave, work or not, has now proven to have failed, it has run out of other peoples money.
The sooner politicians learn that you cannot forever put off tough decisions, the sooner we stand a chance of getting out of this mess.
The sooner the media tell their readers, listeners and viewers the truth about our situation, the sooner the population will realise that tough choices have to be made.
I am fed up suggesting a huge digital display screen to be put up over the entrance of The Palace of Westminster which would show all, politicians most importantly, (as it may just concentrate their minds when going in and out)) the constant updating of our national debt second by second.
Perhaps it is time we should pay politicians a large element of their earnings on a payments by reward basis. Simply based on debt reduction, and the running of a balanced (in financial terms) economy ?.
I am a very frustrated citizen today John.
September 23, 2011
Given that it is party Conference season.
Perhaps it should be manditory for the debt digital diplay screen to be the backdrop of all party political conferences.
Perhaps it should be maditory for every political idea to be financially costed and shown next to the debt display to show the effect on any promises made.
All figures to be independently costed of course, to try and avoid the Brown type presentation, fudge and fiasco of PFI off balance sheet debt/repayments which was never truely exposed at the time.
September 23, 2011
Perhaps BBC tv should be forced to constantly display a DOG (digitally-originated graphic) of the national debt.
September 23, 2011
The markets no longer trust the EU and US leaders. The EU leaders have shown themselves to be economically destructive in pursuit of their ideology. The US leaders are going against the grain of a nation that does not traditionally pay high tax.
Its another bloody day on the markets with the FTSE down by 4 %. This is the SECOND phase of the recession that has been held up by 3 years to give the world economies a breather.
As I’ve said before we will also hit a THIRD phase, once the debts start to be paid back and Government spending is withdrawn on a massive scale. The the tax-and-spend luvvies will be out in force arguing to borrow and borrow again and spend it on luxurious Government projects that have brought the world economy to its knees.
September 23, 2011
I am amazed the UK is still getting away with it. We still have the highest government budget deficit in the G20. We have the highest household debt burden. Very low household saving. A permanently negative national current account. A currency that has weakened, in the last five years, by a greater amount than any other major currency; with no resulting export boom.
We have a non-financial corporate sector that is holding onto its cash. Does not want to risk hiring people because of the latest flood of employment law. Does not want to invest because they can’t see any customers coming over the horizon. And; does not want to risk breaking one of the 47,957 rules and regulations our politicians have signed up for.
September 23, 2011
We are “getting away with it” because the government is saying all the right things. But as Mr Redwood constantly points out – they are not in fact doing what they say they are doing. Sooner or later the “markets” will call their bluff.
September 23, 2011
Employment law in the UK is far less onerous than the employment law in the rest of Western Europe. In France and Germany it’s almost impossible to fire people.
September 24, 2011
Could you come up with some specific reasons why employment laws as they stand are stopping employers taking on more people? If you cannot you should stop trying to lower the working conditions of many millions of people. The minimum wage stops them being taken on for less than £5.93 this is true, but the business is not viable if this is the case.
September 23, 2011
There is a weird contradiction going on in the “markets” at present.
Folk want “decisive” action from politicians whose hands are well tied behind their backs. To put up VAT 1% on a pair of socks takes how many months?
We have to choose between some sort of war situation (banks ordered by politicians to do something today) or wait for due legal process (banks told they might have to do something eventually).
September 23, 2011
Nobody will do anything because I don’t think that there is one leader in the world who is prepared to make the necessary decisions. All will talk, all will try to blame someone else for the mess, but nothing real will happen.
If we are at war, as the LibDems claim, where is the wartime leader like Churchill who is capable of both leading and inspiring us to fight for better things?
September 23, 2011
Dear Mr Redwood,
As a constituent may I suggest that you spend less time blogging and self promotion and perhaps dedicate your time more productively to working on behalf of the people you were elected to serve, namely the good people of Wokingham !
Thankyou,
A Constituent.
Reply: I note you do not give us your name or address. If there is an issue you would like me to take up , then send me details of it and I will do so. Blogging is part of doing my job, seeking to influence opinion and to learn of the views of others.
September 23, 2011
If I get a chance I will move back into Johns constiuency I would rather have him as my MP than anyone else in parliament
September 23, 2011
I agree and it is very a nice area too – just spoiled by 52% taxes and over regulation everywhere.
September 23, 2011
I am a fellow constituent of JR.
I have had cause to write to JR on two occassionsm, on a personal basis since he has been my MP. (I have lived in Wokingham for 30 years), on both occassions I received a response, and meaningful reply in under 24 hours, this I may add, was before I started blogging and making comments on this site.
I also happen to give a substantial amount of my time to a voluntary charitable organisation.(Lions Club as it happens)
When we have directed some people who have had unresolved problems with the local Authority with which we could not help (housing and other problems) to contact JR as a last resort, they have been surprised with an almost immediate response, and help in getting their problem to be resolved.
Far from self promotion, which I agree may well be the case with some MPs, I have found JR to be an excellent constituentcy MP, who cares about the community and local businesses in the area (he can often be seen shopping in the Town), and I look forward to his daily postings, which usually contains an insight into the workings of Government business, and finance in general, which you simply do not get from any other media.
No I am not a member of the conservative party, although I do vote for JR in general elections, simply because Ithink he is the best persn for the job.
I would happily trade a bit less work from him in the community, if he was in a real position of power and influence in the government, goodness knows we need it.
Keep up the good work John, you will never please all of the people.
Reply: Thanks for the support. I think constituency work is important, and usually better not displayed in the media, as it often deals with sensitive matters in people’s lives and businesses. I note the complainant did not give an address or name, so there is no proof he or she is a constituent.
September 23, 2011
Hear hear, blogging can be very constructive in influencing opinion as a powerful new media. JR has shown himself to be both a competent and effective constituency MP over the years.
Zorro
September 23, 2011
I suspect that “A Constituent” is in fact not one of JR’s constituents at all. More likely a troll of the opposite political persuasion with nothing worthwhile to say.
September 24, 2011
Probably a member of his own party, I suspect.
It wouldn’t surprise me.
September 23, 2011
Personally, I wish more MPs had blogs, and more to the point read the comments. If they did, they might then be less out of touch with what people are thinking in the country. Unfortunately, my own MP doesn’t have a blog, perhaps because he holds a sensitive post in government and it would probably attract too many people expressing their views as to what they think about justice in this country!
September 23, 2011
The blogging is very important indeed particularly as so few in the Tory party and the BBC seem to have sensible policies at the moment any movement towards the JR direction that is achieved, even by a small amount, will more than justify the blogging time.
September 23, 2011
The politicos, the banks, including Central banks plot to increase the complexity of the web of debt within which the Western world is ensnared whilst scratching their heads as to why their megalomaniacal inanities and profusive vapourings do not cause ordinary businesses, that make the money the former spend, to expand and make profits and pay more taxes.
In the UK, lending to SMEs has shrunk and those that have capital garner it for fear of the power that the uniquely powerful and uniquely irresponsible banks have for wrecking businesses by arbitrarly calling in loans.
At what point do we realise that combining the socially useful activity
of providing banking services for ordinary companies and ordinary people with the purpose of supporting a healthy and stable economy with the socially useless activity of allowing morons to gamble away $2.3 billion on a financial product the world could well manage without like all those others which have been designed to create risk free profits and have had precisely the opposite effects, is a very bad idea since its sole purpose in any case is to provide gamblers access to other peoples’ money and to lose it and then ask their governments’ taxpayers to bail them out.
September 27, 2011
The blog has taken the place of the public meeting which was very much an MP’s duty. It was there he gave an account of himself and his party if in government, and explained what they were trying to achieve. It was also where he challenged government policy if he were in oppostion. It educated his constituents and at the same enabled them to keep him informed. Public meetings were valuable and I miss them, but blogs reach more people and can’t be misrepresented by the media. Imagine if Enoch had had a blog. Our history mght have been so different. As it was, he was misrepresented to the public as a dangerous madman for opposing, among other things, the printing of money, our entry into the EU, and mass immigration. Though the public supported him, the BBC saw to it that he was sacked, because they controlled which words reached the public out of context.
September 28, 2011
Sorry, Forthurst, this was meant to be in reply to A Constituent, above.
September 23, 2011
There is absolutely nothing inherently wrong with the markets. Free marketism is alive and well and living in most of the world where there are growth rates of up to 14.4 annually.
Technology which is the ultimate driver of growth, is progressing faster than at any time in history. Moore’s law is increasing – computer capacity doubling time is down to 1 year.
We could be in the 50th year of consecutive growth with market downturns being when growth falls to 5%.
It is solely, completely and totally the fault of government parasitism, taking our money, running up debts in our name and banning new technologies. Any politician who says otherwise is wholly & thus dishonest and unfit for public office.
September 23, 2011
“It is solely, completely and totally the fault of government parasitism” – indeed and Green Ludites in government too.
And this at a time of huge improvements in technology, genetics, IT, electronics, bridges, materials, aircraft, engine efficiency, mining and oil and gas explorations, manufacturing technology systems, insulation systems, medicine, ……………………….
September 23, 2011
Absolutely….huge technological advances should be bringing great efficiencies in industry and driving innovation and growth. This state of affairs is a fine testimony to the poor leadership qualities within our politicians.
Zorro
September 23, 2011
I think you need also consider the deliberate dumbing down of education in this country and its change of function from academic instruction to mind control. I cannot imagine that in SE Asia the emphasis of education is on the need to prevent intelligent children getting a more academic education than those that can’t behave and were born with a low inductive capacity and on putting three year olds on lists of ‘racists’ and feeding them propaganda about race religion and sex as a substitute for the three Rs. On the contrary, I suspect in SE Asia the emphasis is identifying and nurturing those with aptitudes for maths science and Engineering who will be the wealth creators of tomorrow.
It’s time for people to wake up to the fact that it’s not political incompetance but deliberate sabotage by an alien malignancy that has infested Western civilisation; the same process is taking place in the USA under exactly the same auspices: Frankfurt School.
September 23, 2011
The problem is that EU governments refuse to discuss the one idea that will work, that the five PIIGS leave the Euro and some mechanism is found for a partial default. This might take the form of converting Euro and Dollar debts to the new national currencies and giving them leeway to inflate at 5% per annum. Can anyone with financial experience suggest a better way?
The Managing Director of the IMF isn’t helping, is she, with her Euro fanaticism still firmly in place.
September 23, 2011
Really and I mean really CUT the cost of the state,and do it IMMEDIATELY,tell the employees WHY,tell them that A JOB is better than NO JOB later down the line.I drive only when I have to I only spend at the most £20 a week on petrol,WHY ? petrol is now 30p more per litre than 15 months ago,IF and when things get better and the £ improves in value and greedy politicians don’t look at the better oil price like a Mosquito looks at a THROBBING VEIN,I will drive more,THOUSANDS of us are HAVING to do this.WHY not Govt employees
BITE the bullet you politicians [You are excluded John as you already have],watching Sky news DC tells Canadian mp’s we are LOOKING DOWN THE BARREL OF A GUN,maybe ?? he has woken up [I won’t HOLD MY BREATH]. There is only one way,and as for that little pipsqueak Millibore on Sky I won’t tell you what I would do with him if he was my offspring,same with Mrs Lagarde she is directly CONTRADICTING as IMF head what she said as French finance minister,AAAAARRRRRGHHHH !!!!!!.
September 23, 2011
Thank you for sharing your insights with your constituents and beyond. My MP is also a regular reader. By blogging you are doing your duty of holding governments to account through analysis which informs the electorate who ultimately hold them to account.
September 23, 2011
The question shouldn’t be ‘Why isn’t in his constituency?’
We should be asking why JR isn’t on the front bench in a supposedly Conservative party and at this time of dire need.
September 23, 2011
I wish he was but I suspect that they are scared of threats to the gravy chain that they hope to join in three years time.
The next election is a certain win for labour and the death of the LibDems. After that we will become a region of Europe.
September 24, 2011
Bob – “After that we will become a region of Europe.”
And that thought might render us all in-Continent one day.
September 23, 2011
About ten years ago we had Hague saying “Only two weeks left to Save the Pound”, and now we have Osborne saying “Only six weeks left to Save the Euro” …
To be clear about this:
1. There is no legal basis in the EU treaties for the eurozone states to set up the European Financial Stability Facility, EFSF.
2. Moreover the EFSF has been structured in a way which means that is positively and brazenly illegal under the EU treaties.
3. It will still be illegal under the EU treaties even if all the eurozone parliaments approve the amendments agreed on July 21st.
Is it proper, or even lawful, for a UK minister to urge the eurozone governments on to further breaches of the EU treaties?
September 23, 2011
All of this happening in the USA, Europe, China and the UK, and in the end, nobody will be answerable for the mess you politicians have left the taxpayers in.
YOU made the laws, YOU ruled the banks. This demolition job is YOUR fault.
Will Brown be answerable? Not on your nellie. The venerable Bliar, not likely. The world poser Cameron? I don’t think so. Osborne? Gimme a break!
Will the Conservatives be answerable to the electorate for not giving them the referendum IT IS THEIR RIGHT TO HAVE?
Nope, nein, nada, non.
Do any of you know what you are doing?
You should have said NO instead of dragging us into this insane ILLEGAL bailout scam to save the banks, it was not our problem! Your duty was to us, not to the EU!
In some ways, you are worse than NuLabour was. Cameron deceived, lied and mislead his way into power. Cameron, the socialist in Tory clothes!
Whatever happened to the “whipped” Tory Europlastics?
Gone, in a puff of smoke. You really are all the same!
Reply: I opposed the bail outs and refused to vote for them.
September 25, 2011
I am aware that you did Mr Redwood. I know who the culprits are who have betrayed the taxpayers of the UK.
Most of us ex-Conservatives feel like we’re banging our heads against a wall now. You must get rid of Cameron. He is NOT a Conservative and get rid of the Lib Dims too, they have lost all support anyhow.
Vote someone in who IS a proper Conservative, somebody who will not just promise but somebody who will deliver. Somebody whose first move will be to give us a referendum and stick with the final outcome. Somebody who will establish laws to protect the people and not the criminals. Someone who will sort out immigration and benefit entitlements.
You will have us all behind the party again. UKIP will die a death and the Conservative Party membership will be revived… and so will the country.
September 23, 2011
This is what constitutes respect for the law within the EU….things can only get more authoritarian….’Tomorrow belongs to me’ as the song goes….
Zorro
September 24, 2011
My own feeling is that this impending crisis cannot and will not be solved, by the so called “Developed Democracies” The idea of democracy, as we Voters thought years ago, was that Honourable men and women would enter say, the Houses of Commons and represent us, at least to some extent.
However, as Honour, Trust and Integrity went down the plughole decades ago, in the USA and the West in general, our political systems are completely unsuited and not able to deal with such a huge crisis as that we are moving quickly into. The People, who are the Taxpayers who are funding this “Fiasco” do NOT trust Politicians. The Politicians meanwhile, are very frightened to lose ther good jobs, lifestyles and gold plated pensions, so they will play the BLAME GAME it was not me, I am not the one to blame etc etc..
Thus, the major US, UK and EU Politicians all know full well what should be done, but the structures and institutions cannot cope with such huge decisions, we need Military Dictatorships to sort such issues out, not wet, blown out, unworkable democracies. In other words, I now believe this crisis is no longer about debt or macro economics, it is about Political Order, Social Fabrics and the very future of our Cultures and ways of life.
I have lived abroad for many years, and witnessed two Revolutions and a Coup. (I have taken out speculation about a coup in the UK to take over from democracy as I do not support or wish to give credence to those who favour non democratic solutions-ed)
We could witness a Sea Change in UK Politics over the next 12 months and JR is in a very, very good position. “Peston” with all his BBC backing, Blog etc gets some 150 to 200 visitor comments daily on his blog. John, on his own, not even in Government is now achieving 70 plus comments to each Blog Day. A LOT of people are watching Jon Redwood and reading his Blog with both admiration and respect. This man could possibly have a majority of tax payers, possibly voters, on his side, when the S…. really hits the fan. ie When Greece defaults.
It would be no surprise to me to see JR as Chancellor in a New Coalition Emergency Government within the next two to three years. Way to go!!!! It is like watching a 100MPH car crash but in very slow motion. We watch and listen to all these Ministers, BBC Pundits etc but know in our guts, this is all bad, very, very bad..