Yesterday in the very short Budget debate we were finally allowed, there were signs of a sensible agreement across the House. Labour, Conservative and Liberal Democrat MPs united to tell the government it is more important to sort out the banks than to borrow more to reflate.
Today in the Telegraph I have set out how the government should re-open the banking support package, to cut the risks to the taxpayer and to help it work better. I have also pointed out that the government and the regulators are forcing the banks to be ultra cautious with their new regulatory requirements, at the same time as lecturing them on the need to be less cautious and to lend more at a time when too many people will find it difficult to pay the interest and pay back the capital.
I am still livid that there was “no time” for me to make these comments in the Commons, owing to the government’s stubborn refusal to allow us to debate the Budget for long enough yesterday. It certainly shows that this Budget, which Labour claim is the answer, is not something they are proud of or wish to defend. Labour speakers yesterday found it difficult to warm to the VAT cut, and turned for comfort instead to bashing the “rich”, people on more than £19,000 a year who will have to pay more tax on Labour plans for 2010 and beyond. So Parliament gets another holiday!
November 27, 2008
The VAT rate cut is worse than useless. It is stupid. It is stupid because it is both counter productive and a waste of taxpayers money. With personal debts so high, the net savings ratio about zero and tax increases on the way it is not going to provide a stimulus. Instead people I know are cutting back their spending for the stormy times ahead.
Is it not time to call the spade a spade?
It is also time to counter the "Do nothing" Big Lie constantly propagated by Brown and co in the approved Goebbels way.
Finally, on the subject of "fairness" and the 45% tax rate, what is fair about my pension fund being raided, year in year out, to support unfunded, index linked public sector pensions paid for out of taxation? And that is without considering the enormous hit taken by the fund because of the stock market crash.
There needs to be much more bite in the Conservative attack and more prominence for the actions it proposes.
November 27, 2008
Nulabor evades full and open parliamentary debate, preferring to 'duck, dive, spin and lie' …….
Brown made time to involve himself in a minor issue between the BBC and two of it's presenters and present it to the house. Since when has a lewd comment been more important than 'parliamentary business' ??
November 27, 2008
I have not had time to follow this issue in detail, but I have some (possibly naive) questions:
* Are the proposed measures, some of which are to be implimented PDQ not to be the subject of a Finance Act?
* If not, are they legal?
* Does the House of Lords have any jurisdiction on these matters?
* I know that the Parliament Acts removed Budgets from Lords' votes, but if the Government's plans are of dubious legality (under the Bill of Rights), then do the Lords have any sanction?
The government's actions, which will have deep long term consequences, seem high handed and undemocratic. Do we know who (apart from Treasury groupthinkers) they consulted?
Reply: We have asked for a vote on the VAT Order, and are awaiting a timetable for it. They will win it, however, as there are few signs of Labour rebels
November 27, 2008
Mr Osborne and Mr Hammond did well from your front bench in the PBR debate. Nice touch quoting the sovereign credit default swaps prices; I like to think we may have made a contribution to that via this site.
I can imagine today, all those journalists trying to find out what a Credit Default Swap is; having struggled to understand LIBOR, let alone a LIBOR spread margin.
I think Darling Bud knows he has made a mistake. I wonder how many Treasury wonks leave the office at night and go and get pissed, out of the sheer desperation of working for Gordo % Co.
Politicians’ interfering in financial markets always causes major discontinuities in those markets. Politicians never understand that these markets are profit oriented; their actions are always in that direction. If interest rates are low, they will seek new ways – new products – to increase profits. Left unconstrained, they continue until a “selection event” occurs and resets them to some previous point in their evolution.
Exactly the same process occurs in nature. Species mutate and evolve in numerous forms until a selection event occurs and chooses those that will survive and evolve further until the next selection event. Nature has already decided that 99.9% of all the species that have ever existed on this planet shall be extinct. Unfortunately, the final selection event has yet to occur for ZaNuLabour.
If you are going to interfere in those markets, for political or socio-economic reasons, it is best that you use the mechanisms that those markets have already built to do the job. Wherever an uncovered risk occurs, markets always invent a product to cover it. Markets then signal with a price the level of that risk up to a point where everybody decides the cards they are holding are too weak to sustain a further bid for the pot.
That is where in particular the UK is this morning. We don’t need so much a lender of last resort but a credit INSURER of last resort. I see from the FT, that the French are proposing the Caisse Centrale de Réassurance today, to do exactly this job.
Additionally, markets always discount for known future events today. The price of thirty year bonds will change to reflect the known events all the way to redemption. Even though it knows that next year, the scene will be different.
This is where governments have to signal with rules and regulations that a selection event that may be acceptable to markets – a few million unemployed because a bank went bust – will not be acceptable to governments; and should there be a risk of it occurring, the government will do X; Y and Z and it will cost you a lot Mr. Banker and your shareholders.
http://www.ft.com/cms/s/0/ba64eaa2-bb31-11dd-bc6c…
November 27, 2008
I watched part of the debate, chamber wasn't exactly brimming with MPs was it.
Perhaps a motion of no confidence would have had the place full.
So, how many hours of Commons debating about this country's economic crisis, the worst for decades, has now accumulated?
A handfull?
November 27, 2008
John – Are you reading this?
Has anyone noticed that the Chancellor in his speechon Monday and the Treasury in hte official documents have stated a very incorrect figure for GDP projected growth for 2008?
He stated 0.75% as the latest projection. He stated that a contraction was assumed in the current quarter 4 (clearly).
But the first 3 quarters have been +0.3%, nil and -0.5% respectively – so the projection of +0.75% for the whole year is clearly wrong.
Assuming this is an accidental mis-statment it shows a lack of care when delivering a key statistic. But even if accidental it still mis-led the listener and the reader.
If the Trueasury have actually based any calculation son the figure then it's catastrophic.
I think they meant to say -0.75% rather than +0.75% but no commentator, amalyst or newspaper has picked this up. Everyone has just repeated the error.
I have called Conservative central office to alert them and also the BBC. Do take this up!
November 27, 2008
I am afraid that he is so used to spinning the figures – CPI, Census, national debt – that one more little "mistake" goes unnoticed. Lord Eatenough (I think that was his name) was on the radio saying that we had to borrow "a hundred trillion pounds". Well, anyone can make a slip of the tongue, can't they. He then went on to talk about "trillions" instead of the billions which he obviously meant to say. Was there any correction? No. I wonder, myself, how accurate the GDP figures are anyway. All through this crisis, the figures have been widely disputed.
November 27, 2008
You are right to be livid. Unfortunately your power as an MP has now passed to unelected, unrepresentative, and unaccountable broadcasters. The Queen no doubt feels much the same, or should.
What we need now is a new Reform Act to reflect these changes. Broadcasters if they are to wield this power on our behalf should be elected at refular intervals.
In the meantime I am worried about the whole governing class, broadcasters and civil servants included, being index-linked. What is to stop them either printing money or allowing others to do so, to pay off the debt? We could ultimately face a fate similar to Germany's in 1922-3, or Zimbabwe's now.
November 27, 2008
I am beginning to be really scared. The way the government is constantly savaging the banks and blaming them for everything that goes wrong : your own party also seems to have forgotten how badly the regulators let down the country, as well as the borrowers and even the bankers, who like all humans tend to get carried away in times of euphoria – what else are regulators for if they fail to regulate obvious excesses??
We should remember (how propoganda can encourage hatred of groups-ed): surely this is what the government are trying to do with the bankers – pick on a disliked group, turn the dislike to hate and then blame them for everything. The hatred really is being whipped up on every possible occasion (even more than the silly 'do nothing' jibe!) and I fear for the consequences when the downturn becomes really bad. The regulators, and hence the current government, should bear the brunt of any judgement, then the bankers and then, indeed, even we, the reckless borrowers, bear some guilt.
November 27, 2008
Reckless borrowing is one thing as far as responsibility is concerned; believing Brown's pronouncements of economic growth and stability is quite another matter. Borrowing on this understanding is called 'being conned' !!! Discovering that the 'conman' has landed your family in four generational levels of debt shows contempt at the level never before witnessed in the history of British politics.
Had Brown applied his self serving policies in free market private sector, many believe he would have been imprisoned for fraud and embezzlement – having caused four generational debt to shareholders. I can think of two employees imprisoned for causing considerably less loss to banking establishments.
Brown displays increasing symptoms of megalomania – detached from all reality and responsibility.
November 27, 2008
John,
Can I ask a really stupid question?
Where has all the 'money' that was in the banking system a year ago gone? My bank manager couldn't tell me!!!
November 27, 2008
Andy, it depends what you mean by "money". If you mean the folding stuff in your pocket that is still out there, about £44 billion of it. A lot of it has found its way back to the BoE on deposit and technically not in "circulation". The rest of it is in the form of bits of paper, basically IOUs that promise to pay you a bit of interest for holding that bit of paper for a while. You are allowed to use that bit of paper as "collateral" and use it as "near enough cash". Should you wish to convert your IOU into nice crispy folding in the wallet stuff; that's when the BoE fires up the printing press.
If you want to pay someone with a cheque say; you have to have cash in the bank to cover it; the BoE doesn't.
Money is created when someone takes out a loan at their bank. Money is debt; debt is money. When you pay back the loan the money disappears into thin air. It also does that if you go broke and don't pay back the loan and your bank ends up being worth a bit less than it was or in some cases worth bugger all.
November 27, 2008
Banks lent 'credit' against money (collateral) they didn't have.
This occurred as a direct result of labour's abolition of financial regulation in 1997. Economists forewarned …..
November 27, 2008
Yesterday's debate was very disappointing. It was too short but given the paucity of serious contributions from the Labour benches perhaps it was as well it lasted only three hours. The lack of intellect on the Labour benches is a disgrace in a modern democracy and it is hard to see how anyone in private enterprise would ever employ most of them. They should be the ones to suffer from the recession rather than sitting on their excessive and completely undeserved salaries, expenses and gold plated pensions.
November 27, 2008
Mr Redwood, like everyone else I am following events with increasing alarm. With the state of the country's finances, how bad will it have to be before a state of emergency is declared? I was impressed by George Osborne's performance and disgusted by Gordon Brown laughing while we are in serious trouble. Like many people, I feel he is a little mentally unbalanced. God help us.
November 27, 2008
I am so pleased to be able to glean a little commonsense from this site. The three things which I treasure most are:
1. The remark, made yesterday, that this crisis looks so much like the terrorist crisis when the government pinched a lot of our English rights from us and then used them in the most unjust ways. Now it is using the banking crisis to nationalise the banks by whipping up hatred against them.
2. The way that the threat of complete melt down has never receded. It is rarely mentioned elsewhere. But if the pound disintegrates, how do we buy food, oil, gas, electricity, clothes or personal safety?
3. A really clear dissection of why the banks are no longer doing their job of supporting business and mortgages.
November 27, 2008
I'm beginning to have a certain sneaking sympathy for the banks.Why should they lend cheap credit into a falling property market via old-fashioned mad mortgages? They had their fingers well and truly burnt with the last housing bubble,seeing their investments go down the Swanee in the bust. I will not flaunt my Socialist credentials on this occasion as it seems to me a time when private institutions like banks should resist the threats by the government to inflate another housing bubble.Mind you if the Gov were to announce a land value tax when the property market bottoms out to stop land values ( the inflationary element of house prices) going up again,banks might very well feel emboldened to re-enter a less dangerous form of mortgage lending.Bankers for Henry George!
November 27, 2008
Jon,
You quote the government's stubborn refusal to allow time to debate the budget.
I was under the impression that it was Gorbals Mick who imposed a three hour time limit.
Are you saying that Gorbals Mick is a tool of the government? Surely not!
Reply: It is not fair to blame the Speaker on this occasion. He granted a special debate which we sought against the wishes of the government. Under the rules of the House he could only grant 3 hours. We appealed to the government to allow more, but they made it clear they would use their majority to prevent fuurther debate.
November 27, 2008
I have lived through the last three recessions of the 70s, 80s and 90s and for the first time I really am scared. This government terrifies me in too many ways to go through. I really thought, at the time, Tony Blair was a breath of fresh air but that didn't last long but you couldn't help quite liking him in spite of his many faults. Brown frightens me and I am inclined to agree he is unstable, no decent person would put party before country in the present circumstances, especially given his large contribution to the mess. I am retired, on a reasonable pension and I am one of the relatively lucky ones, but I am beginning to wonder if even that is safe! given it is not a government pension. I certainly won't be spending more, in fact I am frightened to spend on anything big in case the shop goes out of business. Just yesterday I heard of yet another friend in his late 50s being made redundant from a good IT position, what chance will he have of a comparable job now? and there must be many more in the same position with still young children and a mortgage. In just 11 years Labour have managed, as usual, to ruin this country in so many ways. They always did economically of course but never before have had so long a period to complete the wreckage. Tony Blair was the smiling face that fooled so many and to be fair I do think his intentions were good and he would have been a far better PM if he had sacked Brown, my loathing of that man is so great I cannot bear to watch or listen to him and I simply don't understand how anyone, apart from his vastly increased client state could even consider voting for him. Any government would be better than this lot regardless of Party and it will be a very long, hard road before we get the chance to get rid of him.
November 28, 2008
I am deeply concerned not just about the state of the economy and Browns irresponsibility but the behaviour of this Govt. They have provided little time for the debate despite them claiming Brown is leading the world and its a great plan! Now on top of the ever increasing spin we have the situation over the arrest of Damian Green. I'm not going to comment in detail on this latter episode until we know more but nevertheless there is enough to concern us already about the conduct of this govt.