American economic strengths we could copy

 

 Yesterday I argued that the US was not growing faster than the UK because it was enjoying a larger fiscal stimulus. Most of you agreed, but some were extremely sceptical of the quality and sustainability of US growth. Today I wish to look at the factors that are assisting the US growth rate. I understand that there is still too much unemployment in the USA, and that some people’s living standards have been badly squeezed. However, the official figures drawn up under  international public sector accounting conventions do show faster growth in the USA last year and this, than in troubled Europe.

Some have rightly observed that the USA now has very cheap energy in the form of low priced gas, thanks to its enthusiastic embrace of shale gas. Mr Obama was dismissive of Sarah Palin’s “Drill baby, drill” remark when asked about energy policy, yet his administration seems to be adopting it as a practical means of cutting energy bills and providing a big stimulus to industry. The Uk needs to pursue cheaper energy policies, as I have often argued here.

The USA is riding the digital revolution well. The US still has that energy and dtermination which produces huge corporations from new technology and new market opportunities. The USA has moved on from the Microsoft generation to the Facebook and Google generations. Large US corporates lead the field. There is in the USA a zest for enterprise and success which is often lacking in Europe.

Government helps reinforce this with lower income and capital gains tax rates than in much of the EU. The top rate of income tax is 35%. The top 1% in the USA pay an even bigger proportion of total income tax  than in the UK.  The US has a no nonsense regime over out of work benefits and availability to work, which makes the US labour market more dynamic and successful.

The USA fixed their banks more quickly than the Europeans after the Credit Crunch. Businesses and consumers can now get access to credit more readily than in Europe. They allowed house prices to fall further and faster,and wrote off the losses more rapidly.

 

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145 Comments

  1. Mike Stallard
    Posted April 28, 2012 at 6:33 am | Permalink

    Keep it simple:
    If you reward people who build the economy and who work hard and who raise a family successfully, then – surprise – you get more of them.
    If you reward people who are bludgers and whiners and who have no intention of doing any work at all or of raising a family, then – surprise – you get more of them.
    That’s the first point.
    Second.
    If you pay people to stop other people building the economy – by banning Free Schools in my own case or in the case of fracking in the case of northern England then – surprise – you get no economy.
    Simples. (As I believe you say in London.)

    • alan jutson
      Posted April 28, 2012 at 10:50 am | Permalink

      Mike

      Not wishing to put words in your mouth, but you seem to be saying:

      Encourage all those people who are attempting to do “the right thing” by working, saving, and who try and support themselves and their families.

      And

      Discourage all those who just want to take more and more from the state and who give absolutely nothing in return.

      This used to be a Conservative policy of many years past, but afraid no longer as their actions to date have shown.

      • Nick
        Posted April 28, 2012 at 1:51 pm | Permalink

        There is a simpler explanation.

        They are up to their necks in hidden debt. So they need people to pay lots of taxes and get nothing in return.

        • lifelogic
          Posted April 28, 2012 at 2:53 pm | Permalink

          That is certainly it. But why do they give all the money away to the IMF and the PIGIS or waste it everywhere too?

        • Bazman
          Posted April 28, 2012 at 3:18 pm | Permalink

          Interesting to know how much debt many of the people who contribute to this site are up for and what it is for. None of it will be because of their actions that’s for sure.

          • alan jutson
            Posted April 29, 2012 at 12:03 am | Permalink

            Bazman

            Simple answer with regard to finance.

            I do not owe a penny to anyone.

            My company was also completely debt free for the 30 years I was in business. During that time I was offered many loans by Banks, they were all turned down.

            Reason:
            I was bought up never to buy anything I could not afford.
            Thus I owe my Parents a debt of gratitude.

          • APL
            Posted April 29, 2012 at 9:08 am | Permalink

            Bazman: “Interesting to know how much debt many of the people who contribute to this site are up for and what it is for.”

            Small amount on my mortgage. No HP no Loans, no payday loans – I am earning just above the minimum wage after a spell of unemployment.

            I was stung twice by debt, the first time I ever took out a credit card as a teenager, ‘your flexible friend’ was extremely accommodating when I was spending, but no so, when I had to pay it all back.

            The second time in the Major credit bust, where ditto the building society put up my interest rate to a penal level.

            Bazman: “None of it will be because of their actions that’s for sure.”

            Wrong again!

          • lifelogic
            Posted May 1, 2012 at 5:52 am | Permalink

            About £10M at the moment personal and my companies mainly spent building up businesses and on property.

        • drayner
          Posted April 28, 2012 at 6:05 pm | Permalink

          I’m still not really sure why my children and my grandchildren should be forced to pay for debt racked up by banks and governments when it had absolutely nothing to do with them. If the state really wants people to feel there is a mutually beneficial arrangement then they better get their house in order or the only growth area in the economy will be the black market.

          My fathers generation had it very nice indeed really. The baby boomers rigged the system in their favour and have left subsequent generations to clean up their midden.

          • Bazman
            Posted April 29, 2012 at 9:37 am | Permalink

            I find it hard to believe my fathers generation had it more easy than todays.

        • Bob
          Posted April 28, 2012 at 6:57 pm | Permalink

          @Nick

          “…they need people to pay lots of taxes and get nothing in return…”

          They could cut back on handouts to the indolent too, but they’re afraid of the resulting onslaught from the BBC.

          • APL
            Posted April 29, 2012 at 9:15 am | Permalink

            Bob: “the resulting onslaught from the BBC.”

            The BBC are the indolent. Have you seen the absolute ‘tat’ they turn out these days? Children’ s programming is a disaster!

            Secondly, don’t for a second think Cameron and the BBC are on different sides of the political spectrum. Cameron, Osbourne, Clarke, et al, all probably think of themselves as what used to be called ‘ One nation Tories’, which is to say the Tory wing of the Labour party, AKA Blue Labour.

            Two years and no action on the BBC, says all you need to know about the absolute disaster that has turned out to be the Cameron administration.

            Entirely predictable.

          • Bob
            Posted April 29, 2012 at 11:05 am | Permalink

            Re BBC output, agreed – that’s why I don’t pay the TV licence fee any more. Very unfair on ITV et al to lose viewers because they refuse to subsidise the BBC.

            Also agree with you about Cameron’s Blue Labour Tories, but the point I was trying to make is that the BBC attack anything that they see as conservative (emphasis on small “c”) such as welfare reform; not to mention anything they see as competition to their media dominance such as the Murdochs.

          • APL
            Posted April 30, 2012 at 7:59 am | Permalink

            Bob: “the point I was trying to make is that the BBC attack anything that they see as conservative (emphasis on small “c”) such as welfare reform;”

            Yes they do, and they do it for a reason. The BBC is the principle player in the Marxist ‘continual revolution’, that has been ongoing in the UK for the last thirty or so years.

            Everything that underpinned the established way of doing things is to be criticised and ridiculed.

            The BBC is the single most powerful and thus most poisonous weapon in the arsenal of the cultural Marxists that infest the Guardian, the political consensus itself and much of the Tory party.

    • uanime5
      Posted April 28, 2012 at 4:10 pm | Permalink

      Free schools are little more than failed private schools bailed out with taxpayers money. This money could be better spend improving existing schools.

      • drayner
        Posted April 29, 2012 at 7:31 am | Permalink

        They are improving them. By taking them out of local authority control. Removing schooling from the hands of politicians is a fantastic thing and will benefit the pupils immensely.

        • uanime5
          Posted April 29, 2012 at 4:59 pm | Permalink

          Personally I’d rather have the state ensuring that the schools was providing a decent education than no one one checking.

        • lifelogic
          Posted May 1, 2012 at 5:55 am | Permalink

          “Removing schooling from the hands of politicians is a fantastic thing” Indeed this applies to most things – but they will still exercise control from a distance with regulations and the “education” agenda alas.

      • alan jutson
        Posted April 29, 2012 at 8:47 am | Permalink

        uanime5

        I thought free schools were a new start up idea.

        • Bob
          Posted April 29, 2012 at 11:20 am | Permalink

          @uanime5

          The problem with state schools in that they are run by the state. Try comparing the cars made by British Leyland to the cars made by BMW, Mercedes, VW, Audi, Volvo, Honda, etc. etc.

          The only innovation BL managed was the square steering wheel in the Allegro, which says it all.

          Compare the telephone system we had with the GPO to what we now have. Do you think mobile phones would have happened if left to a state run telecoms provider?

          Any state run enterprise very quickly becomes a black hole for public money.

          • uanime5
            Posted April 29, 2012 at 4:58 pm | Permalink

            Schools are not a business therefore your comparison is invalid. If schools were run like a business they’d fire all the pupils who didn’t get high enough marks to ensure their league tables remained high.

          • Bob
            Posted April 29, 2012 at 7:00 pm | Permalink

            @uanime5

            Of course the comment is valid, it’s about efficiency! (or in the case of state run endeavours, lack of efficiency).

          • Bazman
            Posted May 2, 2012 at 5:57 am | Permalink

            This is just a complete crock of simplistic free market fantasy.

  2. lifelogic
    Posted April 28, 2012 at 6:43 am | Permalink

    Indeed easy hire and fire, cheap energy, top tax rates at or below the 35%, a no nonsense regime over out of work benefits and availability to work, banks that are actually in the lending business, a smaller state sector (to inconvenience the productive rather less) and an uplifting vision.

    Alas we have had the opposite from Cameron and Mr Morally Repugnant with predictable effects. Tax, borrow, waste and inconvenience is rather unlikely to work. Also of course the US has better economies of scale and, like most countries that are doing well, it is well out of the EU.

    I see the Tories (and of course Liberals, Labour and anyone on the BBC) are now constantly referring to “unscrupulous landlords” they seem to mean ones who charge the market rents and whose costs have been hugely pushed up by increased counter productive regulation, expensive property and high bank margins and fees.

    What is needed is more houses/flats and landlords not fewer. Calling them unscrupulous seem rather stupid. If they want to call anyone “unscrupulous” they should look at tenants who disappear owing rent and leaving a tip or squatters who usually do the same, MPs who pedal the politics of envy, over regulation and fiddle their expense accounts or directors who destroy companies while taking all the loot in remuneration.

    In fact anyone carelessly using the phrase “unscrupulous landlords” using the “politics of envy” for political advantage, calling aggressive tax avoidance “morally repugnant”, pushing green energy or anyone following the policies or “tax borrow waste and inconvenience” is unscrupulous in my book. So most of the Tory party and nearly all the Libdems, Labour and the BBC are.

    • JimF
      Posted April 28, 2012 at 8:39 am | Permalink

      Yes indeed these weasel words are in danger of heralding in a new regime where anybody owning and renting out property is an unscrupulous landlord, so we need rent controls. Anyone earning too much money needs to hand most of it over in tax or they are morally repugnant. Anyone saving money is holding back the ecomomic recovery, so we need to pay zero interest.
      It’s extremely worrying that these noises are coming from Liberals, Conservatives and Labour which is why there are people out here wanting an alternative party in the ascendant, before worse hits them in the face.

      • rose
        Posted April 28, 2012 at 8:53 pm | Permalink

        We are now a short step away from using phrases like “enemy of the people” or “revisionist swine”. “Capitalist roader” even.

      • lifelogic
        Posted April 29, 2012 at 5:33 am | Permalink

        You say “Anyone saving money is holding back the economic recovery” – except that they usually save it in a bank (or investments) who then lend it to someone else to invest so there is not much difference in practice. If they save it under the bed than it is just, in effect, an inflation loss or gift to the state – a back door tax.

    • Bazman
      Posted April 28, 2012 at 9:38 am | Permalink

      Still not come up with an answer to why we do not have easy hire and fire rules here have you?Agencies short term contracts and so on. How do you propose to make the benefits system less nonsensical is another question you will have no answer for too I suspect. Unscrupulous landlords are like scrupulous employers in the same way. They do not exist? Laughable. Scum landlords and scum tenants. The politics of envy is often practised by the very wealthy thinking they are hard done by.

      • lifelogic
        Posted April 28, 2012 at 3:00 pm | Permalink

        The reason we do not have easy hire and fire rules is because there are more employees than employers and so politicians think they can win cheap votes by legally “protecting” them and playing the politics of envy.

        Actually it makes things worse for all in practice.

        A similar argument applies to landlords and tenants.

        • rose
          Posted April 28, 2012 at 9:00 pm | Permalink

          An analogy may be made with the movement of capital. When it was controlled in the seventies, people didn’t just not move it out, they didn’t move it in. Control isn’t always beneficial in its results.
          I remember when rents were controlled in the seventies and it was very difficult to find a rented flat at all, let alone a nice one. No-one wanted to let because the rents were controlled and the tenants couldn’t be got rid of. So who suffered the most? The would-be tenants of course. The decent landlords and landladies just went into something else, like selling outright. But the hard men stayed in the trade and gave it a bad name – one of them even gave their very name to the phenomenon.

        • Bazman
          Posted April 28, 2012 at 9:48 pm | Permalink

          There is actually more cleaning jobs than cleaners? You have your head on upside down. Beyond laughable. Insane.

    • stred
      Posted April 28, 2012 at 11:55 am | Permalink

      One of the reasons for the shortage of affordable rental housing in London is the unwillingness of landlords to rent to anyone depending on housing benefit or rented through the council housing department. One experience is enough. Labour decided that paying HB directly to landlords was an affront to tenants, so now it is common to find that the benefit is pocketed and often the rent is unpaid too. Then after the minimum 6 months to obtain possession the tenant will clear off and mug someone else.

      I have currently experienced tenants removing insulation and making an extra room in the loft, subletting to extra persons, leaving traps and windows open so the gas bill doubled and the boiler fan broke twice, then clearing off to do the same elsewhere with a fraction of rent paid. My new continental tenants handed over their share of the rent to a British sharer and he has taken their money for 3 months paid no rent and is now leaving, only promising to return the money after I said I would go to the police and this was theft. Of course, if he had just not paid the landlord instead of taking other tenant’s money the police would not be interested. Guarantees and references are useless as it is always necessary to go through lawyers and court.

      • lifelogic
        Posted April 28, 2012 at 3:02 pm | Permalink

        Indeed not helped by the useless and slow county court system which means they are well gone before anything can be done.

    • Electro-Kevin
      Posted April 28, 2012 at 12:08 pm | Permalink

      “…referring to “unscrupulous landlords” they seem to mean ones who charge the market rents …”

      A market which is being distorted by housing benefit (taxation) and low interest rates, Lifelogic.

      • stred
        Posted April 28, 2012 at 1:59 pm | Permalink

        My few properties, bought as a’pension’ return about 4-5% in a good year based on rent to current value, and this is based on doing all my own building work. If it were not for the real rate of CG tax, which is about 60% in my case, I would sell tommorow and do without the hassle.

        • lifelogic
          Posted April 28, 2012 at 3:10 pm | Permalink

          You can sell and roll over the CGT into some other qualifying investments like the EIS if you can find an honest one. Or you can go abroad and sell but not return for 5 years I understand. The second sounds like a good option to me somewhere warm, (given that global warming was clearly a huge exaggeration). Perhaps paying less tax on your pensions and heating bills too and with better food and cheaper wine.

          • lifelogic
            Posted April 28, 2012 at 3:19 pm | Permalink

            You can go back for up to 90 days PA – if you do miss anything but I doubt if you will.

          • stred
            Posted April 30, 2012 at 10:07 am | Permalink

            Thanks. My one remaining older family member has done this and disappeared somewhere hot. I have yet to make contact during occasional visits to the UK. Personally, I can’t leave because of family commitments.

            I have a suspicion that the Treasury have lost any previous moral obligation to avoid retrospective taxation, and they will be after any taxes they had allowed to pass. Keep your finger crossed and the cash out of the UK.

            As regards rolling over, we were advised by accountants that this was possible on an investment a few years ago and also by a helpful youg man for HMRC, then later stuffed for £22k by a very unbending lady inspector from another office.

          • stred
            Posted April 30, 2012 at 10:09 am | Permalink

            Reply was to lifelogic.

      • lifelogic
        Posted April 28, 2012 at 3:16 pm | Permalink

        You say “A market which is being distorted by housing benefit (taxation) and low interest rates” yes clearly these affect the market but if you had something to rent would you rent it for half price? If so how would you choose which of the 500 potentials tenants to rent it too? Landlord did not put the daft system in place politicians did.

        Interest rates are not really low unless you have an old deal in place. Bank margins/fees are now very high indeed and rates are very likely to rise in the medium term. If you want more houses to rent someone has to build them and someone has to pay for it all. The landlords will not do so if they can make no return.

      • davidb
        Posted April 28, 2012 at 11:02 pm | Permalink

        I pondered that today when AQ’s on R4 were talking about it. If we had no rent support at all would the market responses not be to see a reduction in rents, a reduction in people who could afford to live in London, and either higher wages for Londoners or a movement of business out of London to other places where a pool of labour existed which didn’t need landlord subsidies?

        The taxpayer subsidies distort the market. I seem to recall one argument for a minimum wage being that unscrupulous business owners were subsidised by taxpayers as the wages of the poor were topped up in welfare.

        Perhaps the answer to all these problems is the abbrupt withdrawal of the state from just about everything, the establishment of a free market economy, and the removal of all those taxes we resent. We could perhaps engage Chinese or Russian experts to advise on how to do this.

        • Bazman
          Posted April 29, 2012 at 12:20 pm | Permalink

          Chinese or Russian experts to advise on how to do this?They are known as the Mafia in this country. Another fool who thinks Russia and China are advanced countries. Thanks for the input Dave no doubt we will not hear any more of your entertaining ideas.

    • uanime5
      Posted April 28, 2012 at 4:14 pm | Permalink

      We don’t need more landlord, we need more council houses and flats.

      • lifelogic
        Posted April 29, 2012 at 5:39 am | Permalink

        Council houses and flats have a landlord – just an inefficient and hugely subsidised one. Why should some get tax free subsided housing and others not? Why should one landlord be able under cut another hugely due to unfair subsidy from tax payers? What about fair competition rules?

        • uanime5
          Posted April 29, 2012 at 4:52 pm | Permalink

          No idea why you’re complaining about this. Council housing and flats are better than renting because they’re cheaper for councils as they cut out the middle man (the landlord). I thought you be happy that the state was being more efficient.

          • stred
            Posted April 30, 2012 at 10:49 am | Permalink

            Euan. Mrs T decided to stop subsidising council housing because the property was of high value but often let on a permanent basis to families who had become well paid and no longer needed the subsidy. Some had incomes way over average. The system of Housing Benefit was set up so that the tenants who needed subsidy got it and not the others.

            She reduced the number of council houses by a high tenant purchase subsidy and relied on the private sector to take up the difference. Not many investors were around in the early days, and following the economic crash engineered by J. Major prices of property stayed flat for years. It was not until Blair/Brown started a new bubble that investments became attractive. This boom continued for 10 years when many thought that there should have been a correction. I personally think that to sell the remaining council house at a fraction of their value now is another of Cameron’s mistakes. Just charge economic rents to people who can pay. Let’s say nothing of the huge subletting fraud.

            The reason rents are high now is that many new landlords have turned to property because of the theft of their pensions by churning and historical returns through a price bubble caused by Labour. But currently, real returns after inflation are negative and high rents have to be charged in order to pay higher than normal bank interest and charges. For example a house in SE England might have cost £300k to buy plus £25k torepair , furnish and let. The rent after depreciation, repairs, charges and fees etc would be around 311k giving a return of 3.4%. About the same as an ISA but with tax payable and risk. Also any increase in value will be capital gains taxed even if it only keeps up with general inflation. An investor must expect to pay 28% on the current purchase value as it should double every 12 years at average rates. Any attempt by Mr Moral to hit the “unscupulous” private rental sector could result in bankrupcies and loss of this form of pension for many investors as well as a housing slump and shortage of private rental housing.

    • Trevor Butler
      Posted April 28, 2012 at 6:02 pm | Permalink

      Would rents going up, on average, by 40% in the last 3 years in the area in which I live (Wokingham) not qualify me to use terms like “unscrupulous landlords”?

      • lifelogic
        Posted April 29, 2012 at 5:41 am | Permalink

        No what is unscrupulous about charging the market rate? It also bring more supply into the market as is clearly needed.

        You would just give it away at half price I assume?

        • Trevor Butler
          Posted April 29, 2012 at 12:57 pm | Permalink

          One has a right to feel slightly aggrieved when one’s housing rental costs now compromise 65% of one’s take home salary and then the council holds one to ransom for another 9% of said take home salary – 74% of my take home just to put a roof over my families head in an unexceptional 3 bed semi miles from anywhere.
          There is market rate and there is ripping people off and I think landlords are now crossing the line between the two.

          • alan jutson
            Posted April 30, 2012 at 6:05 am | Permalink

            Trevor

            Rents should reflect market value, which to a degree reflects on the cost of property.

            The problem is that with so many rents being subsidised by housing benefit, we have a false market value for renters, which has kept rent at an artificial high.

            Like all things which are subsidised, those who try to provide for themselves are screwed, those that do not seem to be helped.
            Thus the true market value is higher than it would be, should that subsidy not be in place.

            In decades past we used to have what was called a fair rent scheme, problem was, this was set too low to keep houses in a decent state of repair.

            What would be your ideal solution to the problem ?

  3. Antisthenes
    Posted April 28, 2012 at 6:50 am | Permalink

    The US is better placed than Europe because it has not gone so far down the social democratic path. However the US is making efforts to do so especially with Obama in charge and him in office another 4 years will no doubt see an acceleration in that direction. Europe is now beyond recovery until such time as free market capitalism and libertarianism is more an influence than socialism is on it’s economic, social and political models.

    • Timaction
      Posted April 28, 2012 at 7:33 am | Permalink

      The main difference is USA =Hard work and enterprise with conservative ideas and a value system that offers a handup. UK/EU = socialism and a handout with I have rights with no responsibilities culture.

      • Antisthenes
        Posted April 28, 2012 at 9:09 am | Permalink

        Very true. However the West became victims of it’s own success and wanted to maintain that success not by natural adjustment but by manipulation. Capitalism offers natural adjustment by cooling when economies become overheated and less competitive but at times it can be painful for the ordinary people and it’s flaw is that the able feel less pain than the less able. Manipulation through socialism is seen as the panacea for dealing with this problem but is proving that the this way of dealing with the problem causes more problems than it ever solves. Obama (WORDS LEFT OUT-ED) is tainted with a feeling of victim hood and sees social democratic policies and practices as the answer. The European current experience should be a lesson not only to Obama but to all peoples of the West that socialism is not the solution and in the end only makes thing much worse and that capitalism with all it’s flaws is the only way so far devised that can maintain a decent level of prosperity.

    • uanime5
      Posted April 28, 2012 at 4:16 pm | Permalink

      If Europe is beyond recovery then why is the German economy doing so well?

      • Antisthenes
        Posted April 29, 2012 at 5:18 am | Permalink

        There are always exceptions to every rule and Germany is one of them. The answer to your question is on the back of internal devaluation and as far as Germany is concerned a weak currency that has helped bolster exports. The Euro was a gift for Germany but has now turned into double edged sword as the benefits of their success are not going to go to the Germans but to prop up the rest of the euro-zone if the euro is to be saved.

      • fox in sox
        Posted April 29, 2012 at 7:16 am | Permalink

        In large part because of sound fiscal policy, with little budget deficit.

  4. Gerard Fox
    Posted April 28, 2012 at 7:02 am | Permalink

    The potential for shale gas & other domestic developments in energy to transform America’s current account long term is only just beginning to dawn on people. Ultimately, very bullish for the USD. & potentially will assist them, if they get their act together soon, in rectifying their fiscal imbalamces. The US banking system’s balance sheet is a much more manageable multiple of GDP than the UK’s. They were more able to act fast, force capital on the banks & enforce a more rapid clean up of balance sheets. I think your analysis is spot on.

  5. Steve Cox
    Posted April 28, 2012 at 7:42 am | Permalink

    You miss one of the great strengths of the American economy that lends itself to a healthy and prosperous society – namely the limited social security safety net that exists for most people. This is one reason why US public spending is less than it is in the UK and Europe, and you have already detailed the benefits of small government. Under the US social security system people have a much bigger incentive to find work – any work, anywhere – than they do in the EU with its excessively generous benefits systems. It may sound harsh, but as long as we mollycoddle the workshy, and continue to dish out truckloads of cash to them, they will not bother even looking for work, never mind relocating to a distant part of the country to do a low wage job. IDS’s reforms go nothing like far enough or fast enough to make a useful difference during this Parliament, which may be Cameron’s first and last time in Downing Street to judge by the way things are going. Why not look at the best parts of the American system and adapt them to Britain? We don’t necessarily need to be quite as harsh as the US, but when people wring their hands in dismay at the prospect of benefits being limited to the average UK wage, or housing benefit being capped at some astronomical figure that no normal person, even in work, could possibly afford to pay, it’s little wonder that our economy has all the vigour of a slug on a salt flat, or that the government is still busily bankrupting the country.

    • Bazman
      Posted April 28, 2012 at 3:08 pm | Permalink

      Many people in the USA live in third world poverty in shanty towns. You seriously think we should tolerate this in the UK. The population would never tolerate this. You seem to be under the impression that everyone on benefits is a work shy scrounger who live on benefits as it is better than working. Now common sense tell us that for a small minority this may be the case. A lifestyle choice, but how much choice they have is questionable. This is a very convenient truth for you a fantasy of your own making that they are all driving expensive cars and living in expensive houses laughing at you working. The reality is that life for most is very harsh. They are not starving and have roof over their heads true, but this is an entitlement in modern Britain whether you like it or not. The USA has almost insane gun laws too, with some spectacular mass shootings going on every week. Every week! Do you propose to free us of our gun laws as guns do not kill people do. etc.

      • APL
        Posted April 29, 2012 at 9:18 am | Permalink

        Bazman: “Many people in the USA live in third world poverty in shanty towns. ”

        That’s Hope and Change for you!

        I wonder, the woman who famously said on O’s reelection, ‘Obama’s gonna pay my mortgage’, how did that work out for her?

        PS, Bush was just as bad, this crisis has been brewing for at least three decades.

    • uanime5
      Posted April 28, 2012 at 4:24 pm | Permalink

      Given that those who can’t find work in the USA end up homeless or turn to crime I wouldn’t describe their system as a success or recommend it here.

      EU benefits seem generous because their based on a person’s previous salary, unlike the UK where you get a maximum of £71.00 per week job seekers allowance.

      Given the cost of relocating is it any surprise that people won’t relocate for a low paying job.

      Finally many people who are working get benefits because they’re in a low paying job, so cutting their benefits won’t encourage them to work.

      • Bazman
        Posted April 28, 2012 at 10:12 pm | Permalink

        A company complains in the Daily express that they canot find van drivers for £7.25 an hour and blames the benefit system for this. Is the benifit system supposed to subsidise your business? £7.25 is not bad for driving a van, but you need to pay the market rate where you are. You are being told to ram it and do not understand..

        • APL
          Posted April 29, 2012 at 1:11 pm | Permalink

          Bazman: “Is the benifit system supposed to subsidise your business?”

          No. But neither should it act as a disincentive for people out of work.

          Bazman: “You are being told to ram it and do not understand..”

          Then probably not the right type of person for the job of a van driver.

          • Bazman
            Posted April 29, 2012 at 6:15 pm | Permalink

            I did not get the van drivers job because of this attitude. This is true. The job was rammed.

  6. Martin
    Posted April 28, 2012 at 7:42 am | Permalink

    We have now extra long airport queues for passport checks. Were I a foreign business man visiting the UK to place a large order for British goods I would turn around and not come back. Simples!

    I saw a programme on Channel 5 last night about Tunnelling machines. These were made in Germany. You might also want to note the article in todays Independent http://blogs.independent.co.uk/2012/04/27/can-the-uks-ailing-economy-learn-from-germany/

    • Caterpillar
      Posted April 28, 2012 at 9:11 am | Permalink

      Martin,

      I agree with the point on airport queues, though I’d usually use this as a chance to plug Birmingham International + HS2, I’ll instead make a defence and a general query.

      The defence: I suspect like many others I have been in similar queues when entering the US (just search JFK immigration queues) – the US economy is not destroyed by queues at JFK.

      General query: Are the queues in anyway modelled / optimised at UK airports? I ask because the problems look (on the face of it) to originate in the variation of interarrival rate and ofprocessing time. On the first I wonder whether the full airspace at Heathrow causes more batching in landing and thus large (coeffcient of) variation in interarrival rate. The second is harder to cope with, because it is hard to pre-guess problems. But I am surprised that there isn’t a group size sort or a confidence in forms filled sort (or a proxy of frequent visitor), I suspent any attempt at pooling arrivals with similar process times will help. [Queues for security clearance for departures are even more bizarre, but occur. If passengers were given a preset time to arrive at security clearance then the interarrival rate could be low variation and queue lengths kept down.]

    • lifelogic
      Posted April 28, 2012 at 11:22 am | Permalink

      Re. Airport queues – It seems rather strange that the government wants to waste £32.7bn on HS2 to save ten minutes on a train journey for people going (almost but not quite) to Birmingham. Yet people have to wait 3+ hours at Heathrow just for the sake of a few pounds spent on an efficient immigration system.

      Will the ten minutes they save on HS2 be more than offset by hours wasted on HS2 security checks and ticket queues it seems quite likely.

      • zorro
        Posted April 28, 2012 at 2:32 pm | Permalink

        Indeed, it is ridiculous to spend this amount on HS2 when Heathrow/Gatwick could be modernised and a sensible immigration management system could be put in place that actually works. These passport queues will not go away, and it can only get worse…..there will be dedicated Olympic lanes for officials and athletes but normal travellers will suffer as they will have less facilities to rely on to process them through the border. But it will also carry on after the Olympics. What other country would be prepared to man its border with recently retired staff or people with minimal training and no previous experience. It’s not surprising that the Home Affairs Select Committee is asking questions about this matter.

        zorro

        zorro

    • Barry
      Posted April 28, 2012 at 12:52 pm | Permalink

      Martin

      Extra long queues are not unique to this county including (and in especially) the States. As a foreign business man visiting such places, long queues are irritant but at least I am arriving at a place that prevents the entry of those that might do harm.

      As an engineer, I lived in Germany for a while was highly regarded, given all the latest technology and well paid. The Germans want engineers to make things they can sell. Not so in the UK. We want anything BUT engineers and if we do have them they’ll go into non engineering jobs (e.g. banking) for employment security and better pay.

      Whilst in Germany I met a number of British engineers who had been made redundant in the UK. “Best thing that happened” because they moved to Germany where life as an engineer is much better than the UK.

      • Martin
        Posted April 28, 2012 at 5:46 pm | Permalink

        I’m sorry but Britain has hundreds of small ports, quays etc that any bad person / small army could walk ashore at. Add to that miles of unsupervised beaches etc. So I feel the entire UKBA thing is just security theatre.

        I totally agree with your comments about Science/Engineering/Technology jobs in the UK.

    • Nick
      Posted April 28, 2012 at 1:53 pm | Permalink

      The original tube tunnel was cut by hand at the rate of 20 meters a day.

      Why do you need a big machine? Dig some sharfts, and start digging in both directions using 19th century techiniques (search for the Great Shield if you want to research).

      Nope, its the big machine, and the big cost. We’ve been conned.

      • lifelogic
        Posted April 28, 2012 at 3:22 pm | Permalink

        You do need a lot of cheap and expendable people with your method though!

        • Bazman
          Posted April 29, 2012 at 12:24 pm | Permalink

          If the benefit system was stopped then thats what you would have. Or maybe employ workers from the Third world and put them in camps without any state care policed by their own army. Am I onto something here?

  7. merlin
    Posted April 28, 2012 at 7:57 am | Permalink

    Although the USA still has a mountain of debt which will get worse over the next five years I’m a strong believer in the resilience of the american people which is an intangible quality that cannot be defined by statistics. I also believe that the american economy will still outperform China in the future. I have recently read that the key moment for the american economy will be in June when the supreme court decides yes or no on Obamacare. Another interesting fact is that since Obama has been in power american GDP has only risen 2% which is one of the worst performances by an american president in the whole of their history. Obama is a left wing president and is trying to introduce left wing ideology into american politics whether he will be able to continue to do this will depend on the next election. The UK compared to the USA is an overgoverned, overtaxed and overregulated country and as a result will never be as economically successful as the states and we have a relatively new layer of overregultion in the EUSSR. The shale gas debacle in Blackpool is an example of where this country is failing, a technology which has been hugely successful in the USA for many years. I’m afraid I can only see more of the same in the UK in the future unless we can elect a truly Conservative government.

    • wab
      Posted April 28, 2012 at 9:00 am | Permalink

      “Since Obama has been in power american GDP has only risen 2%”.

      Do you mean real GDP or nominal GDP or trade-weighted GDP or per capita GDP or what? If you want to throw around numbers then please try and pretend to be precise.

      Also, you might have noticed that the real hit came in his first year in office, in 2009, and guess what, that was because of the massive recession left to him by, you guessed it, the previous Republican administration, who also managed to turn a dwindling debt figure into a massive spiralling debt problem courtesy of ridiculous fiscal policies (e.g. tax breaks for millionaires) and the crazy war in Iraq. Obama was left to clean up the mess, just like Cameron was left to clean up the mess in the UK. Obama has been hampered by the Republican lunatics in Congress, Cameron has been hampered by, well Cameron.

      “Obama is a left wing president.”

      ObamaCare, his “signature” policy achievement so far, was standard Republican orthodox policy until Obama adapted it, when the Republicans turned around 180 degrees and decided they needed to oppose it, partly for party political reasons and partly because the Republican party has completely gone over the cliff the last four years.

      “I have recently read that the key moment for the american economy will be in June when the supreme court decides yes or no on Obamacare.”

      This will not be a “key moment” for the American economy. The main impact will be political, at least if it is overturned. (And yes, activist right-wing Supreme Court judges might well overturn a century of law and convention and rule key parts of ObamaCare to be illegal.)

      • Posted April 28, 2012 at 3:29 pm | Permalink

        Wrong on most counts! Americans quite clearly do not want to end their quality health care by leveling. The untouchable NHS is, as Thatcher rightly said, an albatross around England’s neck. Yet the mindless continue to whistle in the dark. God Dave the USA from the vile NHS! 275 million people enjoy the best cancer treatment in the world; leveling to destroy inovation is for Euro-socialist fruitcakes. As for the Tea Party: that moronic attitude is exactly why you pay more than 80% tax on a liter of petrol. Well done!!! Keep whinnying & pay on. The Americans would, justly, riot if their politicians imposed such a confiscatory tax. Thank God for the separation of powers: the Supreme Court will strike down the “individual mandate” as it violates three centuries of law. Nobama will be thrown out in several monthes & if not the Senate & House will block every move he makes. This disgraceful regime is a blot on the history of the USA. Perhaps Kim Philby above has another agenda?

    • Electro-Kevin
      Posted April 28, 2012 at 12:14 pm | Permalink

      It’s not an intangible quality. It’s overt patriotism combined successfully with a Christian ethic.

  8. Brian Tomkinson
    Posted April 28, 2012 at 8:08 am | Permalink

    JR: “They allowed house prices to fall further and faster,and wrote off the losses more rapidly.”
    Not sure what you mean by the first part of this. Who in the USA “allowed” the house prices to fall further and faster?
    On ‘Newsnight’ last night you left me with the impression that you consider the most important thing was to get the banks lending again. I have heard politicians say this repeatedly for the last few years. At the same time we read that, presumably, the large businesses are sitting on cash of around £750 billion – why do they need to borrow money? As they clearly are not short of their own resources then the reason for the lack of private investment is lack of confidence and/or opportunities. What is the actual real effect on small businesses of the lack of lending about which you complain? We can all imagine a possible effect but what is the real evidence? Having increased taxation and allowed uncontrolled inflation it is no surprise to me that there is no growth. You have taken out domestic demand and there is bound to be a time lag before this can be compensated for, if it ever will. The government is simply spending (wasting) too much – you know it and I was disappointed that last night you ducked that issue. Hearing you in agreement with that dreadful Lord Oakshott was not comfortable viewing.

    Reply: Many people and companies that are solvent and have good projects or purchases they wish to make cannot do so for lack of funds. I have several current cases of companies needing long term mortgage finance for their property, and unable to get sensible banking offers for it.
    The US monetary and banking authorities encouraged rapid adjustment through sale and write down in the US residential market. The UK sought to hold up values by their monetary policy and by bank nationalisation.

    • Brian Tomkinson
      Posted April 28, 2012 at 9:13 am | Permalink

      Thanks for your reply. Can you quantify what you think the difference to our economy would be if there were funds readily available for all these frustrated businesses? Without some resultant objective this kind of argument is just a debating point to me.
      Isn’t there also a contradiction in wanting banks to lend more and presumably increase their risks and expecting them to get their balance sheets into better shape and nor reliant on the taxpayer to resue them?

      Reply: Not necessarily. I think banks have gone from being too lightly regulated so they took too much risk, to be being too tightly regulated so they don’t take enough risk. There could well be say £30 billion of good projects/mortgage opportunities out there, adding 2% to output.

      • lifelogic
        Posted April 28, 2012 at 3:35 pm | Permalink

        I do not even think it is “risk” they simply do not want to lend. They have x to lend and have demand for 10x due to the new capital rules. There are many very low risk loans being turned down all the time for no good reason other than this. Indeed even good loans being called back by government owned banks.

        I think each £100,000 not lend is probably about 1 job lost directly and then a multiplying factor for the extra demand they would have created. So the £10Bn soft loan “given” to the IMF is pehaps 100,000 X 2 perhaps jobs gone. Then there are all the other loans to the PIGIS & endless waste or daft green and train schemes to consider too.

        The banks also have daft capital requirement rules, for the type of security taken, which are arbitrary and irrational on a sensible risk assessment basis.

        • lifelogic
          Posted April 28, 2012 at 3:42 pm | Permalink

          Even where it is a risk issue the risk could be reduced substantially by a smaller state sector, simpler taxes, easy hire and fire and fewer daft regulations everywhere.

          • Bazman
            Posted April 29, 2012 at 12:25 pm | Permalink

            Another wish list with no basis.

    • lifelogic
      Posted April 28, 2012 at 12:08 pm | Permalink

      JR as you say “Many people and companies that are solvent and have good projects or purchases they wish to make cannot do so for lack of funds.” You are quite right the banks are just looking for reasons not to lend, take for ever to make any decision (so the deal in no more) and want an arm and a leg if they actually do lend.

      Just imagine what the £10Bn they pointlessly gave as soft loans to the IMF could have done in a new lending bank in the UK for UK businesses. They could have made a good profit on it, created perhaps 200,000 real (not fake green) jobs and got more tax revenue in and paid far out less in benefits to too.

      The banking rules are far too tight for current conditions.

  9. JimF
    Posted April 28, 2012 at 8:29 am | Permalink

    You say all this yet the Government which was elected with votes for you amongst others says things which are completely different.

    Things said here which would never be said in mainstream America:
    “Those with the broadest shoulders should carry most of the burden” (because they already do)
    “It’s like social cleansing to move people 120 miles” (because people actually want to work and be successful in the US, they move to do so, and folk actually understand the word market)
    “Keeping house prices high is important to the economy” because the reverse is true
    “As a government we’ll pay people not to work but stitch students up with enormous loans and debts” (because that is crass stupidity)

    • uanime5
      Posted April 28, 2012 at 4:35 pm | Permalink

      1) No they don’t. The Tycoon Tax was proposed in the UK because certain Republican candidates were avoiding so much tax.

      2) Except they weren’t being moved to get a job, they were being moved because the Council didn’t want to have to pay to house them. Also some of these people had jobs and would lose them if they were moved 120 miles away.

      3) No it isn’t. Keeping house prices affordable is important.

      4) Well these students are most likely to become the people who won’t work. Also the student debts are much higher in the USA and aren’t written off after 30 years.

  10. James Reade
    Posted April 28, 2012 at 8:38 am | Permalink

    What about their rate of corporation tax John?

    What about the fact figures yesterday showed their rate of growth much lower than expected, suggesting that growth is tailing off?

    Reply Their rate of growth is still higher than the UK or the EU rate. Why do you always have to ignore the figures in order to be perverse?

    • James Reade
      Posted April 28, 2012 at 9:14 am | Permalink

      On a more considered note, the important point you address here John is that get-up-and-go attitude that leads to Americans being inventive, innovative and setting up companies.

      My response though is I really don’t think that the top rate of tax is really what’s inhibiting Brits from doing the same. I don’t doubt red tape gets in the way, but I seriously doubt someone stops setting up a company because the top rate of tax is at 50%.

      Then on banks; you say the Americans “fixed” theirs. What did they do? Bail outs instead of nationalisation I guess? Why would one work and not the other? Both have very adverse impacts on incentives. I personally think they should all have been allowed to fail, allowing better banks to take their place.

      Reply: The US let Lehmans fail as an example, and lent money to others which they have now repaid. That was better than pumping in taxpayer equity so the bankers could go on paying themselves large salaries at taxpayers expense.

  11. TomTom
    Posted April 28, 2012 at 8:52 am | Permalink

    The Pentagon subsidises Universities and Technical Research in the USA. Have any of you ever been through the Pentagon Procurement database ? Have you seen how big a Defence Contractor, Harvard, MIT, CalTech are ? Do you know how much subsidy Silicon Valley receives ? Then contrast with Government funded R&D in Britain and contrast Britain with Germany. Do you know the US Government spends a higher proportion of GDP on Taxpayer Funded Healthcare than the UK ?

    The US Government invests in Technical Progress. The US Government created the Internet, GPS, Human Genome Project, through direct funding….the British Government created LCD displays through funding an MoD Project in the 1940s.

    Then there are People. Try an Estate Agent. In the US they will have facts at their fingertips – price per square foot by district, value of kitchen, pool, bathroom, marketability, they will be sellers able to negotiate, to understand how to induce a hesitant purchaser to make an offer……in the Uk it is little girls who sit and wait and passively offer for sale hoping enough price reductions will make a bargain too obvious to miss. They know little, do little, but seek to make the customer work for them.

    That is the British Way – make the Customer work for YOU…do little charge much, make the customer fill out forms, chase progress, correct errors but provide a hefty but non-specific bill for immediate payment plus 20% for HMRC.

    It is a peasant society where every poorly-trained idiot thinks he has a right to fleece the customer. Britain is a nation where most people are poorly trained, badly educated, incompetent and terrified lest their incompetence be discovered so they prevent any competent people from entering the business only to drive the competent and industrious to be expatriates.

    I was once asked by an American why those of us he met in the US were so impressive and those he encountered when working in The Square Mile were such dross and puffed up incompetents……I told him The Best Leave

  12. TomTom
    Posted April 28, 2012 at 9:05 am | Permalink

    “we’ll pay people not to work but stitch students up with enormous loans and debts” ”

    The Federal Reserve Bank of New York estimates 37 million Americans have student loan debt, totaling $870 billion

    $270 Billion In Student Loans Are At Least 30 Days Delinquent

    Credit Card Debt $794 billion; Auto Loan Debt $734 billion Student Loan Debt $867 billion

    A couple of new laws in 2008 and 2010 has made the U.S. government the sole supplier of Federal student loans, rather than just the ultimate guarantor. That means student loan is now part of the gross U.S. national debt.

    America’s Student Loan To Reach $1.4 Trillion by 2020

    • Nick
      Posted April 28, 2012 at 1:54 pm | Permalink

      That’s peanuts compared to the government debt in the UK.

      Your share, 225,000 pounds.

      How are you going to pay off that mess?

      • lifelogic
        Posted April 28, 2012 at 3:38 pm | Permalink

        I am not I have gone.

      • Denis Cooper
        Posted April 28, 2012 at 4:33 pm | Permalink

        I think my share of the public debt is more like £80,000, which I propose to pay in instalments over the next 40 years as the liabilities fall due.

        I don’t propose to pay anything for other people’s private debts.

      • TomTom
        Posted April 28, 2012 at 6:09 pm | Permalink

        Sorry, are we speaking of GOVERNMENT Debt ? well the US Government Debt is now

        Debt Clock

        US Debt = $15,658,412,534,199

        US GDP = $14,590,000,000,000

        So US Debt > GDP

        Global GDP = $70 Trillion and US Debt = $15.7 Trillion

    • JimF
      Posted April 28, 2012 at 3:39 pm | Permalink

      Too true but I was raising the anomaly of PAYING people not to work but LOANING them to study. Why can’t out-of-work welfare also be a repayable loan?

  13. DiscoveredJoys
    Posted April 28, 2012 at 9:10 am | Permalink

    The American attitude – take the hit, move on – is a very powerful system. The downside is that people suffer reverses, particularly the poorest.

    The European system – skirt around the worst, stagnate – is nowhere near as effective. On the positive side few people experience significant suffering.

    I find the American system too brutal, but even some movement towards that system would require wholesale restructuring of our society. I don’t think there is sufficient political will to make those changes.

  14. StrongholdBarricades
    Posted April 28, 2012 at 9:26 am | Permalink

    The US has also managed to encourage those businesses that offshored to China and the Sub Continent to re-establish prescences in the US.

    In the UK, the Business Secretary’s mantra is offshore for the cheap labour costs

    Why? When we are just importing Chinese inflation?

  15. Leslie Singleton
    Posted April 28, 2012 at 9:31 am | Permalink

    There aren’t many certainties but one is that you are right in spades about cheaper energy. Shale has halved American energy prices yet all Cameron wants to do is prattle on about, not to mention subsidise, self-evidently useless wind turbines. Turbines are gr8 but only under water in estuaries. Back to shale, I understand that the risk from earthquakes (small in any event) is only of same order as that applying to coal mining. If that is wrong then maybe some original thinking is needed and I offer the idea of a free and automatic Government insurance programme that pays out in cases of earthquakes near shale drilling, indeed if it is decided there is a significant risk it might be worth paying people simply to continue living in risk areas.

    • A Different Simon
      Posted April 28, 2012 at 4:07 pm | Permalink

      Leslie ,

      Cuadrilla ended up pressure-lubricating a pre-existing fault which caused slippage to occur which relieved stress . That is why the siesmicity was stronger than expected .

      Shale is brittle and snaps quickly which is why fracturing itself does not build up sufficient energy to cause problems .

      Lloyd’s of London syndicates provide coverage to shale operators in the US . The London Insurance Market can provide it to UK operators too .

      What we need that we don’t have , and of course this doesn’t just apply to shale , is strong leadership .

  16. Atlas
    Posted April 28, 2012 at 9:33 am | Permalink

    Quote: “The top rate of income tax is 35%”

    Is this just the Federal component of an individual’s tax bill? If so, then what is likely combined tax bill please?

    • uanime5
      Posted April 28, 2012 at 4:40 pm | Permalink

      It’s about 47.62% in New York including federal, state, and city income tax. More if you include sales tax.

  17. Paul Rivers
    Posted April 28, 2012 at 10:01 am | Permalink

    An important point is US companies better access to credit. This reflects the much larger non bank financial institution sector ( providing asset based lending) and the much more highly developed junk bond market and retail investment in the loan market, allowing banks to originate and distribute loans. I think the government is well aware of this issue but there is little they can easily do, although the recent innovation around reduced lending costs to SME’s may help. Poor access to credit is part of the reason for reduced corporate productivity.

  18. oldtimer
    Posted April 28, 2012 at 10:08 am | Permalink

    Re energy costs I read that the government has stated its intention to price carbon unilaterraly at c$12, whereas the EU market price is around $1 to $2 ton (I believe these are the correct measures and orders of difference). This is madness. It is a sure way to drive industry out of the UK, like the recent case of the Alcan smelter.

    It is relevant, in this context, to view this talk by Prof Salby, an atmospheric physicist, on his analysis of the available satellite reading. He demonstrates that the observed and measured changes in CO2 in the atmosphere are actually caused by nature not by man. His talk, given last year, may be viewed via this link:
    http://www.youtube.com/watch?v=YrI03ts–9I&feature=player_embedded

  19. merlin
    Posted April 28, 2012 at 10:46 am | Permalink

    I’ve just read an e-book summary of George Trefgarne’s Metroboom which is well worth reading regarding how to get out of a financial crisis i.e the 1930’s, not disimilar to today. Essentially the coalition or national government cut taxes and government spending in a much more draconian fashion than today and it worked. This government should do the same now and stop focusing on absurd plans like reform of the house of lords which will precisely nothing.

    • Electro-Kevin
      Posted April 28, 2012 at 1:54 pm | Permalink

      Merlin – They also reduced interest to around 2% from 6%. However, personal debt was socially unacceptable in the 1930s – personal debt didn’t feature much in that economic crisis.

      It was the recovery from that era (low interest) which heralded the boom in home ownership – before then most people rented. Our crisis was caused largely by people spending borrowed money (low interest) based on notional valuations of their houses and the expectation that those valuations would continue to rise.

      I’m not sure that the two eras are similar at all.

  20. alan jutson
    Posted April 28, 2012 at 10:57 am | Permalink

    John

    The US seem to have been more honest with their Citizens, and have taken action which should help encourage more self help.

    We had a group of US citizens here in Wokingham last week for a family wedding.

    They seem much more upbeat about their Country’s future fortunes than we do. Maybe their trust is over enthusiastic and misplaced, but at least they see an acknowledgement of the problem by some members of their government, and some action taken to deal with it.

    In contrast the UK is still in spin mode.

  21. Posted April 28, 2012 at 11:00 am | Permalink

    I wouldn’t choose the USA as the ideal to aim at. Though their economy is actually growing, unlike the EU ones, it is far below the world average.

    Lets aim at the targets of some of those who are actually above average. China, India at 10%. Singapore at 14%, even Canada.

    What do they have in common – economic freedom and cheap energy unrestricted by the Luddite energy policies so rigorously enforced here and across the EU.

    None of this is complicated or factually disputable. We are in recession purely and simply because of our political class. We could be out of it in days if they wanted it.

    http://a-place-to-stand.blogspot.co.uk/2011/11/we-could-get-out-of-recession-in-days.html for a detailed programme which no politician, pundit or journalist disputes would get us into world leading growth quickly. Also which no politician, pundit or journalist is willing to support.

    • Nick
      Posted April 28, 2012 at 1:55 pm | Permalink

      Becareful of some of the numbers. Think how much debt has been created in China to fund their boom.

    • Martyn
      Posted April 28, 2012 at 3:49 pm | Permalink

      I read the blog. Two things hit me – the surprising references to building up Ascension Island as a UK space facility and building artificial off-shore islands there, and nuclear energy.

      I have worked on Ascension on and off over the years so know it well. The airfield (Wideawake) is American built and owned, though the UK does of course have, in effect unlimited access (e.g. Falklands war), but every volcano top, many flattened to increase surface area, is already dominated by USA assets – radar etc – which leaves little or no room for additional UK assets.

      As to artificial islands, the depth of the south atlantic ocean off Ascension is effectively bottomless, therefore the islands would have to be floating. Ascension Island has no port or berthing facilities – ocean-going vessals anchor offshore and tourists or visitos have to land in small vessels at the Georgetown pierhead and then only in calm weather. So offshore islands would have to be largely self-supporting and probably need an airstrip from which to ferry goods to/from Ascension.

      Nuclear. I have long wondered why cities or large towns could not have their own small nuclear plants based on the designs of HM Submarines ? Nuclear subs have been operated for decades and, so far as our Navy is concerned, with a very good safety record so why cannot that technology be installed on land? Nonetheless, the blog has merit, thanks for the guide to it.

      • Posted April 30, 2012 at 6:09 pm | Permalink

        Thanks for the sensible reply Martyn, I bow to your experience of the island not having been there and only seen pictures. However the island is sovereign British territory & if we stand by our rights the Americans will have to give.

        Its area is 34 square miles which makes it about 1/8th of Singapore. Not large but not unfeasibly cramped. I do accept our government would have to invest some money in port facilities. also water and electricity and some roads if we want to make it attractive – the other thing making it attractive being low tax/regulation. Even there I suspect they could easily cover that cost, if desired, with a bond issue since a mini-Singapore would be a remarkably good investment.

        The floating islands bit is taken from http://en.wikipedia.org/wiki/The_Millennial_Project:_Colonizing_the_Galaxy_in_Eight_Easy_Steps a book you will cetainly appreciate if you like my blog. The technology discussed optimises the islands anchored in about 3000 ft of water because they are powered by a generator using the heat differential between surface equatorial water and deep water. There are some undersea mountains north of Ascension which do rise to that depth.

        I agree with you about small reactors. Indeed here is stuff about Westinghouse (who used to be a British owned company till Labour bankrupted the industry by regulatory fiat) who are planning just that. By mass producing them it is clear Westinghouse expect to be able to produce them at about £200 million for a 250 GW station. I also suspect that, because they can be moved and need only local investment they may be much less susceptible to political pressure (in the same way that government planning committees have less chance to interfere with car ovnership than a house extension). I think if our government were to express real enthusiasm about building a factory mass producing these it would be the equivalent to our economy as Boeing is to California’s. I do not expect our government to manage such, or any, enthusiasm for that, though they would if it was for windmills.

    • uanime5
      Posted April 28, 2012 at 4:56 pm | Permalink

      Ignored isn’t the same as not disputed. I suspect no one had the time to point out the flawed maths and incorrect assumptions. Here are just a few problem:

      1) The free market won’t build any nuclear power plants without subsidies.

      2) There’s no point training more plumbers, electricians, etc unless there’s a demand for them.

      3) Building an island and using it as a base for space exploration is just silly.

      4) Anything with a £255 billion liability is too risky.

      5) As it takes 7 months to get to Mars from Earth the launch will have to be in 2014 to ensure a ship gets their by 2015. As it takes 4-6 years to get to Saturn this rocket will have to leave before the Mars one to get to Saturn by 2020.

      • Bazman
        Posted April 29, 2012 at 12:33 pm | Permalink

        Remove health and safety and let private industry build nuclear power stations? What an absolute crock.

      • Posted April 29, 2012 at 3:08 pm | Permalink

        1 – Yes it will. That is why there is a worldwide nuclear industry. What they require in Britain is theat the government not use regulatory powers, once the reactors have been built, to dorce them to sell the power at silly prices. Since this is precisely what labour did it is not an unreasonable condition and one which nobody could honestly call “subsidy”.

        2 You ever tried getting a plumber?

        3 So that is what you call factual dispute is it? Actually it is perfectly sensible to place a space launching site on on the rquatoe for reasons you would understand if you had knowledge to match your opinions.

        4 So Britain shouldn’t have a road system.; or sewerage system; or water, or invest £200 billion in windmills (in which you are right but not for that reason); or have airlines and airports; or telecommunictions, including the net?: All od these have invested costs close to or above that.

        5 ) If you actually check it out you will find that the propulsion system involved works far faster than that. It is possible that you know more about the physics of this than Freeman Dyson who was also on my blog agreeing it would work, but somehow I doubt it ;-)

        So, as normal, wrong on all points Uni, but don’t let that stop you. I look forward to your next attempt.

        My programme is either so obviously wrong that it is not worth bothering to criticise or so obviously right that no credible criticism is possible, no middle ground. I wouldn’t quite say you have proven it the latter because I’m not sure you can manage credible criticism of anything.

        Nick – China’s main debt problem is that the US has borrowed vast amounts from them and cannot pay it back. Of course if the US had a similar growth rate paying it would be easy.

    • Lindsay McDougall
      Posted April 28, 2012 at 7:15 pm | Permalink

      We should take a slightly more jaundiced view of high growth rates in countries with low average incomes. Country A (rich) has an average income per capita of £30,000 per annum, which grows 1% in real terms in one year, rising to £30,300. Country B (poor) has an average income per capita of £3,000 per annum, which grows 8% in real terms in the same year, rising to £3,240. In absolute terms, the average income gap has widened.

  22. Iain Gill
    Posted April 28, 2012 at 11:57 am | Permalink

    The US has large numbers of main stream politicians prepared to speak out very much against their equivalent of ICT visas, and the US is putting great pressure on the Indian outsourcers to change their ways

  23. lola
    Posted April 28, 2012 at 12:16 pm | Permalink

    From yeaterdays piece:- “All agree that the state should borrow to offset a fall in demand in a recession. All agree that there needs to be controls over money and credit creation with a monopoly money system organised by the state. The Central Bank has to decide on overall levels of money and credit. ” Has it ever occured to any of you that such a consensus my just be the problem? Certainly Keynes was a bright bloke, but a lot of his stuff is open to serious challenge. Plus Keynsianism has an inherent attraction for politicians as it legitimises tax ‘n spend.

    Reply: Yes of course, it could be flawed. I was describing the consensus, not endorsing it.

    • Nick
      Posted April 28, 2012 at 1:57 pm | Permalink

      Yep its flawed. Bernanke and King both engineered too much free credit, leading to boom and bust. Egged on by Brown and Blair.

      That is the disaster of the monopoly.

      Look now at what they are doing. Deliberately causing inflation, and screwing savers with their policy of inflation.

    • Leslie Singleton
      Posted April 28, 2012 at 2:08 pm | Permalink

      Actually you said “All” (twice) not “consensus”, which is a very different thing.

    • zorro
      Posted April 28, 2012 at 2:55 pm | Permalink

      The system which Keynes outlined and endorsed can work reasonably well as long as it is followed in full. Unfortunately, politicians only endorse the tax/spend bit and forget to save money in the years of plenty….There are of course other views/slants from Hayek, Friedman, Austrian school economists.

      zorro

  24. Posted April 28, 2012 at 12:37 pm | Permalink

    Hello John – I’ve just posted a question on Richard Willis’ blog and thought it apt to ask the same of yourself – please could you tell me what a pint of milk costs?

    Reply: I have just paid 52p for a pint of semi skimmed in my local Co-op. I know the main prices I pay for food because I do my own shopping. If a politician does not know the price of a pint of milk he or she might still have a good understanding of inflation, prices generally, real incomes, and the budget strains of his or her constituents. Some politicians rely on their wives or husbands to buy the food.

    • Posted April 28, 2012 at 1:58 pm | Permalink

      Respect is due sir.

    • rose
      Posted April 28, 2012 at 8:26 pm | Permalink

      I have been a housewife for 40 years and I don’t know the price of a pint of milk. I get it in the Farmers’ Market, along with butter, cheese, cream, yogurt, and sometimes ice cream for a treat. I trust the dairyman and don’t query each item.

      I wish the PM wouldn’t pander to these absurd trends in political gossip. How low is it going to go? It isn’t his job to know the price of a pint of milk. It is his job to know the price of allowing the media to get the upper hand, and of allowing inflation back.

      That smirking lawyer in the Leveson enquiry is having “such fun!” – which just about says it all where modern lawyers and journalists are concerned. Let the government rise above this decadent metropolitan frivolity: they still have serious work to do.

      • rose
        Posted April 28, 2012 at 8:39 pm | Permalink

        I remember when Mrs T worked out that £50,000,000 worth of ice cold third pints of milk being mostly poured down the sink after break-time could buy an awful lot of nursery school places. That is the sort of calculation I want our politicians to be capable of making and acting upon.

        Naturally she was traduced over that, as she was over most of what she did and said, but she never lost a general election.

        • Denis Cooper
          Posted April 29, 2012 at 9:29 am | Permalink

          Was it being mostly poured down the sink?

          I don’t know; it certainly wasn’t being poured down the sink at my primary school twenty-odd years earlier; the small part that was left over, typically altogether making up a part or full crate out of the many delivered, was put where we could drink it before we went home, and we did; but times change, and maybe when she stopped it children were no longer interested in drinking it.

          • rose
            Posted April 29, 2012 at 1:58 pm | Permalink

            I don’t know about the forties when it was universally introduced, and much of the fifties. I would guess it was probably mostly drunk. In the sixties it was sometimes made into hot cocoa by imaginative enterprising schools like mine, in an attempt to get the children to drink it while outside in the cold. A lot of them still wouldn’t have it, and the socialists abolished it for secondary schools in 1968 . I don’t think this is much remarked on.

            By then rickets had disappeared. (I know they are back now that children’s legs are covered up.) Until then everyone under the age of 18 had had a third of a pint of milk bought for them every school day by the tax payer. This must have been an astonishing burden when it was first brought in in 1945, when the country was bombed out and on its knees, and in debt as bad as now.

            By the seventies a lot was still being poured down the sink straight from the bottles in council primary schools. To a Minister of Education who had been through the war in her formative years, that was going to be an obvious challenge when she wanted to improve nursery education and was being pressed by the Treasury to reduce expenditure, not just on milk, but on meals and books as well. She reluctantly compromised with the Treasury, and it was abolished for children over 7.

    • Bazman
      Posted April 29, 2012 at 12:37 pm | Permalink

      Why would any bloke know what a pint of milk cost without finding out? A pint of beer? A litre of fuel? Yes. A pint of Milk? I would probably have to phone my mother..

      reply: Some of us know because we have to buy a pint for our tea.

    • APL
      Posted April 29, 2012 at 1:18 pm | Permalink

      JR: “I have just paid 52p for a pint of semi skimmed in my local Co-op. ”

      How do you feel about paying more than 10 shillings for a pint of milk?

      Reply: I am pleased to know the farmer is making a living and I hope the cow is happy too! It some of the charges government imposes which I find less justifiable. After all a second class stamp tomorrow becomes 10 shillings in old money.

      • APL
        Posted April 30, 2012 at 1:34 pm | Permalink

        JR: “I am pleased to know the farmer is making a living and I hope the cow is happy too! ”

        Of course when a pint of milk cost 1/2 penny, the farmer made a living too and the cow that produced the milk ate grass in the same field.

        JR: “It some of the charges government imposes which I find less justifiable. ”

        Inflation, a policy of every government since the end of the last war, is a charge on everyone in the UK. Do you think inflating the money supply to the extent that an item that used to cost 1/2 a penny and now costs 10 shillings could be described as an economic success?

  25. Phil Richmond
    Posted April 28, 2012 at 1:35 pm | Permalink

    1) Leave EU
    2) Very simple flat tax system. 20%@10K – 35% 100K. No tax exemptions of any kind.
    3) Hiring freeze in Public sector. Start slashing waste.
    4) Capital gains tax – 20%
    5) Bonfire to EU regulations. It should be so simple to start a company.
    6) Bonfire to work directives & Harpersons equality legislation
    7) The goverment/councils and all Public sector employees just leave us alone!!!!
    8) Close the BBC.

    Sorry I was dreaming there – will never happen in Camerons multi-cultural EUSSR hell-hole!

    • Bob
      Posted April 30, 2012 at 8:21 am | Permalink

      And scrap Gordon Brown’s ridiculous “cliff edge” stamp duty rates on property transactions.

  26. Richard1
    Posted April 28, 2012 at 1:39 pm | Permalink

    It would be interesting to hear your views, if you have time, on the Royal Society’s highly tendentious new report urging egalitarianism both nationally and globally as a solution to the supposed ills of population growth. One of the impediments to growth-oriented policies, especially in the UK & EU is, increasingly, a drum-beat for neo-marxist energy and economic policies masquarading as ‘science’. The chairman of this report was on the radio today saying (paraphrasing) if we don’t adopt global socialism, raising taxes and limiting growth and consumption ‘the planet will burn’. It is terrible the way this distinguished and historic (and publicly funded) institution has been suborned by left wing activists.

    reply: I hardly thought it worth commenting on. Scientists should stick to the evidence and test out their theories, not indulge in crude polemic. The scientific method rests on constant challenge to existing theory, to see if it can be improved and to ensure its predictive power works. Clearly we need more of such challenge and more work on predictive mdoels in the global warming department.

  27. Denis Cooper
    Posted April 28, 2012 at 1:48 pm | Permalink

    Over the years I’ve grown increasingly wary of any argument couched in the form:

    “In country A they do X and the outcome is Y”

    whether Y is a seen as a desirable or an undesirable outcome.

    Nations have their own histories, their own cultures, their own structures, and what seems to work or not work in another country may have the same effect here.

  28. AJAX
    Posted April 28, 2012 at 2:09 pm | Permalink

    If everything is as this post says, why is the Fed terrified to raise interest rates above 0%, why is it $ printing on a huge scale to shore up Wall Street in an on-going emergency programme of 4 years + & counting, & why is the US Treasury being endlessly wrecked with multiple trillions of mounting debt in the process?

    Facebook, Google, Wall Street? I can list in return British Petroleum, Tesco & the Square Mile as examples of English zest for enterprise, but this is micro-economics & whilst I’m sure it excites the short term share portfolio team management opportunities for the clients of (active share managers? ed – names the wrong house for this kind of investment), it’s perhaps less indicative of theglobal macro-economic picture, which is profoundly troubling, & which will in due course start affecting the micro-economic landscape again as the aegis put up be Bernanke starts to crumble in the face of debt

    The US banks have not written off debt, it’s still on their books being currently disguised by the funny money they are being supplied with from Bernanke’s printing presses

    ‘US government figures are recognized by international authorities & reliable therefore’.

    How many of these internationally recognized & respected authorities warned of Crash 2008?

    For the reliability of the US BLS’s figures, check out the cutting edge work of Charles Biderman to see the antiquated way they’re calculated.

    The US has faster growth than Europe?

    True, but check the US Federal Treasry’s expansion & on-going escalation of debt which is the driver. The Germans are attempting to balance Europe’s books (in what I suspect is a forlorn endeavour given what they’re surrounded by now) whilst Bernanke’s going for broke (literally) with a Keynesian experiment on a colossal scale, hence the difference for now.

    Lower taxes = micro-economics again, Germany has higher taxes, it doesn’t appear to affect them adversely (altho personally I believe in less taxation philosophically, but that’s off topic).

    US labor market is more flexible than elsewhere = well, tell that to the proportion of it that’s listed under U6 & the masses reliant Federal Government food relief programmes.
    Cutting red tape in the US is as much a cry heard in the USA as it is in England, the grass isn’t greener across the Atlantic in this regard, & again, this isn’t a macro-economic factor.

    As for the amazing last para:

    The US banks have not been repaired they have just been shallow flooded with devalued $’s printed & fire-hosed out by Bernanke & he can’t stop or normalize interest rate conditions because he knows what their real state is behind the vault doors with the debt they have on their books ticking like a bomb; creating new credit access (i.e. debt) – new debt is not the answer to a crisis of macro debt saturation; allowed real estate values to fall – lol, this 1 will be news to the Bernank, he’s been fighting this factor every inch of the way to stop what fall there has been which has occurred despite his efforts, & there’s far more to come as the debt deleverages around the globe. As for the US having written off losses more swiftly. News to me, Bernanke’s flooding of the banks with freshly printed funny money has the express purpose of stopping this happening, & in that he’s succeeded …. at least for the time being

    Reply: Real estate prices in the US for both residential and commercial property fell further and faster than in Europe.

  29. bobthefishontour
    Posted April 28, 2012 at 2:21 pm | Permalink

    Some observations on the differences (note – these are just my observations after 10yrs living in the US after leaving the UK aged 30 with wife + small child):

    Right to work states – easy to hire and fire. Little downside in ‘taking a chance’ on an incremental employee. Willingness to move around the continent to find work, and a general expectation that you will do so. I think this can be summed up as ‘proper labor flexibility’

    Cheaper petrol/transportation costs ($4.19/short US gallon, 65p/litre approx).

    Energy costs – not as cheap as made out. Consumer electricity rates here (southern CA) start at $0.15/kWh and very quickly rise to $0.31/kWh.

    Federal support (direct/indirect) for housing by backstopping mortgage markets. 30yr fixed mortgage rates for 4% ish. No redemption penalties.

    No incentive at all not to have a job. Any job. Benefits are meagre and time limited. Lose your job and don’t get another soon it is a short distance to the abyss.

    No child benefit. At all. None. Maternity leave – 6 weeks. More than that, you are expected to take out of your annual vacation allowance. Dads get nothing. You have 9 months to schedule your vacation time. Expectation is to look after yourselves.

    Taxation – in general, once federal, state and local taxes, plus whatever ‘healthcare’ insurance/copayments are taken into account, I think it is about a wash compared to the UK. Maybe slightly less taxed in the US. But the headline comparison of federal rates compared to UK rates is false. (CA tax rate is 8.75% for example)

    Taxation of the family as a unit. Different filing options married jointly, married singly, head of household, single, enables families to look after each other. Stay at home moms are not penalized (within limits) under the tax code. Working moms have deductible (within limits) child care.

    The US is also a huge place. Huge. Real estate and land is plentiful and (relatively) cheap. People have no problem at all in commuting 40-50 miles each way to work. I present no opinion if that is a good thing or not, but it does mean more flexibility in the labor market and any jobseeker has more potential opportunities within ‘travel range’.

    US has its faults. So does the UK. They are just different.

  30. Vanessa
    Posted April 28, 2012 at 4:02 pm | Permalink

    If we we weren’t shackled to the EU we would be growing too. This recession is the LOOOOONNNNNNGESTTT in history. I wonder why? Thank you EU with your dissregard for national governments we are paying your vast empire trillions of pounds in wasted membership and taxes – how on earth can any of the 27 countries climb out of the hole you have so cleverly dug for us. When will a government find the guts to say we are leaving and THEN WE WILL FLLLYYYYY.

  31. uanime5
    Posted April 28, 2012 at 4:08 pm | Permalink

    “The top rate of income tax is 35%.”

    No it isn’t John, 35% is the federal income tax. There’s also state income tax and the city income tax, which amount to about 12.62 per cent in New York. So in some parts of the USA the total income tax isn’t so different from the income tax in the UK.

    “The top 1% in the USA pay an even bigger proportion of total income tax than in the UK.”

    That’s because they have a larger percentage of the total wealth. Is it really a surprise in a country where the richest 1% are paid $350,000 or more per year that they make up the largest percentage of tax revenue.

    “The US has a no nonsense regime over out of work benefits and availability to work, which makes the US labour market more dynamic and successful.”

    No it doesn’t, it just results in more people living in poverty or being homeless. People can’t work if there aren’t enough jobs available and removing their benefits won’t change this.

    Also here’s an article about why Germany is recovering faster than the UK. It credits German success to a more effective tax system, increasing exports, encouraging medium-sized firms, better education, low income disparity, and ensuring the people retain their purchasing power.

    http://blogs.independent.co.uk/2012/04/27/can-the-uks-ailing-economy-learn-from-germany/

  32. Posted April 28, 2012 at 4:57 pm | Permalink

    I’d be interested to read your thoughts on:-

    “The US has a no nonsense regime over out of work benefits and availability to work, which makes the US labour market more dynamic and successful”.

    This is the key to our future I feel.

    P.S. Are you going to Silverstone this year?

    Reply: No, I am not going.

  33. Bazman
    Posted April 28, 2012 at 5:49 pm | Permalink

    As Under Secretary of Commerce for International Trade, David Rothkopf oversaw the International Trade Administration under Clinton.
    David Rothkopf on Wealth Distribution. Take a look fantasists. (etc)

  34. Barbara Stevens
    Posted April 28, 2012 at 6:20 pm | Permalink

    I’m getting the impression we keep hearing about the USA as though it’s becoming the utopia of free trade, and the way they can hire and fire at will without redress for the employee. In Europe we have overcome this employment free for all, with some decent laws to protect workers, who are human after all with families. Yes, there are some laws that are silly and we can do without, but the freedom to hire and fire is an excuse for bad employers. I don’t agree with that at all. Laws would not have been imposed in the first place if employers had been fair.
    As for ‘fracking’, well I suppose it’s OK if you don’t have to live by it, get the cheap fuel, but who will pay the ultimate price, and someone always does. I can well understand people being against it and feared of the results. The USA is not what most think, they have underlying problems just as Europe has, its just that they are tackling them differently. As for some saying we should adopt the no out of work benefits like they have over there, I say no we shouldn’t. I’m ashamed to see our own people having to use food banks for free food, we are not a poor nation at all. If we can give to foreign aid on the scale this government is doing then we can feed our own, or allow enough benefits for them to feed themselves. Many mention Christian values, well I think allowing enough benefits for people to live in a reasonable way and feed themselves is a Christian attitude. Yes, work they should do and look for, but if jobs are not there what else can they do? What some should stop and think about is who will be next, with the begging bowl, it could be yourselves. Such arrorgant talk is showing we have become a nation that is not only selfish, but very self centred, and ‘I’m alright Jack.’
    Its a pity those who propose such things don’t try it out for themselves first, their attitude may be very different then. No I’m not unemployed, I pay tax, have worked all my life but now retired and still pay tax, quite a bit in fact. But I believe in looking after our own before foreigners, it’s a pity some MPs don’t feel the same.

  35. Lindsay McDougall
    Posted April 28, 2012 at 7:03 pm | Permalink

    I grant you all of these American virtues but it doesn’t alter two facts (1) USA accumulated federal debt is 95% of GDP and is expected to peak at 110% (2) Reducing the annual fiscal deficit to 5.5% of GDP is going to depend on either the Democrats getting their way on tax increases or the Republicans getting their way on spending cuts. Concensus is not guaranteed. Their best hope is that the administration finishes two wars and doesn’t start any others.

  36. David Langley
    Posted April 28, 2012 at 9:46 pm | Permalink

    Late post sorry,

    Whatever happened to the Collateralised Debt Obligations ( CDO’s) that our bankers bought in the billions from American Sub Prime mortgages that were worth very little. I thought that we went bust because of the mess we got into then. I also thought it was the big mortgage providers in the states that bore the Main brunt over there. The US Treasury printed loads of dough but punished Lehman Bros as an example.
    Blair and Brown said it was a world recession that was causing the big problem for us. Since then I reckon that with the casino banking, the mortgage shambles the massive credit card uncollectable debts beyond repair hidden on the ledgers. The bankers threw everything overboard and went cap in hand to our Labour politicians for payback. We Billy public have been shafted right royally. I think we will never know the full extent of the mess, I do know that credit risk was bought paid for and never used by some major banks because the Directors were not risk averse and would not blow the whistle on their watch. Not until they had retired with the golden parachute as well. Simples!!!

  37. Bernard Juby
    Posted April 29, 2012 at 9:57 am | Permalink

    Shale gas may be cheap but how do you stop it from polluting the water table and the atmosphere and thus endangering life, including us?
    It comes to something when you can actually light your water taps – which is happening in the USA!

    • Bazman
      Posted April 29, 2012 at 12:38 pm | Permalink

      Cheap it ain’t.

  38. Conrad Jones (Cheam)
    Posted April 29, 2012 at 6:10 pm | Permalink

    “The USA fixed their banks more quickly than the Europeans after the Credit Crunch. Businesses and consumers can now get access to credit more readily than in Europe. They allowed house prices to fall further and faster,and wrote off the losses more rapidly.” – no they haven’t. Many Mortgages are greater than the colaterol thats backing them up but the Banks keep them on their books and list them at full face value before selling them on to the secondary market.

    “The USA fixed their banks” ? You mean they stole tax payers money in greater quantities and gave that to the Banks more quickly. Mr Redwood, do you honestly think the USA has “fixed their Banks” ?

    ‘How to Fix the Housing Crisis | Douglas E. French’ MISES Institute
    Banks do not operate as a FreeMarket, they operate as a Cartel with Government subsidies. Banks are insolvent – even after the USA has allegedly “fixed” them.

    “Large US corporates lead the field. There is in the USA a zest for enterprise and success which is often lacking in Europe.” – despite many manufacturing Jobs either being shifted to the Far East or large Car Manufacturuers requiring Government Loans (more debt).

    “The UK needs to pursue cheaper energy policies, as I have often argued here.”
    (disagrees with western military action in Middle East-ed) The situation in Iraq is getting worse and they still have inferior Public Services (Water, Electricity, Health Care) than before the War.
    BP has a 37.5% share in the Iraqi Oil Field Rumaila. The Iraqi State only has a 25% share in Oil Fields in it’s own Country. The US has interests in two new service contracts in “West Qurna 1″ and “Zubair”.

    There are clever ideas out there for more fuel efficient vehicles – such as Kinetic energy recovery systems in motor vehicles, which would reduce the need for fossil fuels.
    http://en.wikipedia.org/wiki/Kinetic_energy_recovery_system

  39. REPay
    Posted April 30, 2012 at 2:44 am | Permalink

    Even left wing people in the USA admire enterprise. I understand that a generation of British youngsters are put off business by the BBC program The Apprentice…they think success is about being ruthless and a bully…and they learn that education and speaking well is for loosers and wimps. Is this a public sector recruiting ploy?

  40. peter
    Posted April 30, 2012 at 9:56 am | Permalink

    The last 2 paragraphs sums it up well – the banking sector was fixed quicker due to the US move on approach in contrast to the European ‘borrow and debt’ and their tax rates are competitive.

    I still get the feeling though that the US like the UK is borrowing far too much sovereign money and worry where it is all going to end.

    Contrast us to China etc who are building up huge reserves whilst we borrow money to ‘lend’ to the IMF (I mean Euro) which has had nothing meaningful done to sort it out.

    We really need to stop these leaks and remove any barriers to progress by the EU ASAP – I’m sure if Cameron showed some grit he would very quickly become more popular again.

  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
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