Do we need a Plan B for the economy?


            Yesterday’s papers were alight with jeremiah comments saying the economic strategy could not work and we need a Plan B. The headlines and quotes often said the Chancellor needed to slow the pace of the spending cuts, yet the truth kept popping out of the analysis. Both the Observer and Guardian allowed statements that so far public spending has risen and has contributed positively to the GPD outcome over the last year. They both acknowledged that the government is trying to cut the  rate of increase in the debt, not seeking to cut the debt itself. Both saw that if the government  continued to borrow too much markets could lose confidence and interest rates could be forced up damagingly.

The problem comes from the reluctance of economists to say what the figures say – so far the squeeze has been  on the private sector, not the public. So far the biggest cause of the squeeze has been rising inflation thanks to the weak pound engineered by the Bank’s strategy,followed by tax rises on income and spending. Probably the single most important cause of slow growth is the weakness of the banks, or the insistence of the regulators that the banks put increasing cash and capital above financing the recovery.

All last week I wrote about how Plan A could be made to work. It will need more changes to get the private sector led recovery the strategy requires for success. The economists who criticise the lack of a Plan B need to understand Plan A. In a way it is their own plan. It rests on tax revenue increases, not on spending cuts, to deliver most of the reductions in the deficit. The last  budget saw a substantial increase in borrowing and a relaxation of the targets for deficit reduction from the first Coalition budget, less than a year into the strategy. Why don’t the economists welcome that flexibility, and why isn’t their recommendation which the Chancellor adopted in March   working as they say it should? Don’t they bother to read the Red Book which sets out very clearly extra spending and extra borrowing?

Whilst they are pondering that question, they might also like to answer this one. Why are the largest deficit countries like Greece, Ireland, Portugal and now the UK growing more slowly if at all than the lower deficit countries like Germany and China? Doesn’t international evidence show that fiscal stimuli can backfire if they are linked to over tough regulation of banks, broken banks, or to rising rates owing to a lack of confidence in the fiscal strategy?


  1. lifelogic
    June 6, 2011

    “The insistence of the regulators that the banks put increasing cash and capital above financing the recovery.” This is indeed the single main cause of the lack of private sector growth.

    I was initially delighted to see reports that 50 economists have written to complain about poor growth and the absurd Cameron’s economic policy. I naturally assumed that they are calling for lower taxes, a much smaller state, fewer and better regulations, some sensible banking and an end to the mad over priced green energy policies and EU central control.

    But when I read it actually call for a crackdown on tax evasion, a targeted industrial policy – including investment in green technologies – and higher taxes on the rich to create jobs and growth, saying, “these are the foundations of a real alternative”.

    Are they perhaps Oxford/LSE “economists” and believers in the new lefty/green religion or real ones with just some temporary brain storm? I wonder by what mechanism they imagine their solutions might possibly work. Perhaps their thought processes have not yet got that far. I assume they are the equivalent of scientists who who do not believe in evolution or scientists who believe the 100/200 year global warming computer projections as a religion.

    1. lifelogic
      June 6, 2011

      An interview with a state sector union official on radio 4 this morning. The state sector are threatening mass strike action as they have not had a pay increase for (a claimed) two years. The BBC reporter might reasonably have been expected to point out, in response, the 43% pay differential with the private sector and ask for his thoughts on that. Surprise, surprise not a word.

      Might this perhaps be because the BBC pay to private sector differential is probably even higher still?

      1. lifelogic
        June 6, 2011

        And this despite the fact that due to the type of work many would work at the BBC for next to nothing.

    2. Caterpillar
      June 6, 2011

      I don’t think the Profs wrote “higher taxes on the rich” I think they actually said “by raising taxes on those best able to pay”.

      I for one would be happy if the Profs want to voluntarily contribute more. Perhaps they are actually suggesting that Public Sector workers, say above national median, should pay more tax.

      1. Kenneth
        June 6, 2011

        I think these ‘economists’, the bulk of whose salaries are no doubt coming from the taxpayer, are marked men (and women).

        By putting their head above the parapet we can instantly see the case for a major saving in the education budget.

    3. REPay
      June 6, 2011

      I think this letter may have fallen through a tear in the time-space contiuum from the early 1980’s…I seem to recall it was wrong then.

  2. norman
    June 6, 2011

    I feel you’re being unfair to the ecomonists. The Chancellor isn’t quite following their plan to the letter. Yes, he is increasing public spending, yes he is increasing the debt, but the part he is missing out is further ‘fiscal stimulus’ (sic) by means of the printing presses.

    The US, normally an economic powerhouse, has gone down this route and growth and jobs forecasts have been continually downgraded.

    Although I do believe the super rich (who I’ve nothing against but let’s be clear about who this policy is helping) are doing quite well out of it.

  3. Ralph Musgrave
    June 6, 2011

    Why the assumption that the deficit needs to be reduced? As Abba Lerner (a contemporary of Keynes’s) pointed out, the deficit / surplus should be whatever is needed to maximise employment within inflationary constraints. If that happens to be a whapping great deficit, so what? If it happens to be whapping great surplus, so what?

    And if all and sundry are worried about the fact that deficits lead to an expanding national debt, no problem. As Keynes, Milton Friedman and several other leading economists pointed out, a deficit can perfectly well accumulate as additional monetary base instead of additional debt.

    Reply: But the UK deficit has imposed inflationary threats owing to money printing and a weak pound. In Greece, Ireland and Portugal it has forced up interest rates to crippling levels.

    1. lifelogic
      June 6, 2011

      To the reply indeed it has imposed the treat of higher rates. Borrowing for sensible infrastructure, to get banks lending to business or for other investments may be sensible sometimes but borrowing to give it away to the EU or the PIGS or waste it on pointless government officials or other making a nuisance of themselves to the wealth creators, or pointless green Bling really is folly.

    2. Stuart Fairney
      June 6, 2011

      Aahhhh… So that explains Spanish unemployment, the Spaniards just haven’t borrowed enough! The Greek politicians have been positively miserly with their borrowings, how their unemployed must call for the state to take on mopre debt, that’s the answer ~ dig you way out of a hole.

      1. Bob
        June 6, 2011

        “We contend that for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
        Winston Churchill

        seen on the comments today at from “AC1”.

        1. lifelogic
          June 6, 2011

          Not quite a true analogy as in that case you just stand still.

          Perhaps better a man standing in a bucket resting on quick sand who then tries to pull himself up with the bucket handle.

          All the while the recipients of the tax helpfully use some of the funds to bash him, repeatedly, on the head with a spade.

          1. Mike Stallard
            June 6, 2011

            Oekonomia is, of course just the Greek word for housekeeping.
            If you are in debt, then you have several choices.
            One is to borrow money and invest it in a factory or something that brings in money. If you just borrow money and spend it on things that do not bring in money, you are an idiot.
            One is to cut back hard on expenses until your meagre income brings you up to scratch.
            Another is to issue IOUs down the pub and wait as one by one the creditors cease to speak to you.
            Put like that, doesn’t it all make sense?

    3. Ralph Musgrave
      June 6, 2011

      I am very sceptical of the view that it is excess money or excess demand that has bumped up inflation, and so is the Bank of England. That is, I agree with the Bank that recent price rises are due to temporary factors (e.g. raised world commodity prices). Inflation is a continuous rise in prices, not a temporary rise.

      Also, even had it been excess money printing that has caused the recent price surge, that is compatible with my initial point above. This was that a deficit can perfectly well be funded by “new” or “printed” money. Clearly if that goes too far, inflation ensues. But if any other stimulatory policy goes too far, the same inflationary consequences ensue. E.g. if interest rates are kept too low for too long, inflation is likely. But that does not prove that interest rate adjustments are a poor tool for regulating economies.

      Re PIG countries, they don’t issue their own currency, so they can’t print money. Their problems are very different to the UK’s, but I better not go into that: I don’t suppose John Redwood wants a 1,000 word article!

      Reply: Our inflation is n ot temporary – I don’t think prices will come back down again. Its rate may fall next year, as the Bank forecasts.
      The main cause of our inflaiton was the fall in the pound which amplified commodity price rises. Commodity prices also rose for Japan, Germany etc but they do not have anything like our inflation rate.

      1. Stuart Fairney
        June 6, 2011

        Rising prices are a consequence of inflation, they are not inflation itself.

  4. Alison Granger
    June 6, 2011

    The reason that the largest deficit countries are growing slowest is obvious. It is not the failure to manage stimulus or their plan to slow down their runaway spending. It is the size of their public sector that is crowding out lending to private business and sucking up vast amounts of taxpayers cash for completely unproductive uses. We pay tax, then tax on tax and then tax on that. Every penny of that tax is cycled through grossly inefficient government departments than returned to us in the form of very inefficient “services”, all of which would be massively better run and cheaper if supplied by private firms.
    Here in the UK as the other deficit countries there is an assumption that government should supply hundreds of services, regulations and generally interfere in every aspect of our lives when in reality we’d all be richer, more free and happier if it did and said as little as possible.

    1. lifelogic
      June 6, 2011

      Spot on though very little is ever actually given back as anything very useful. Most is buying votes, pointless officials or just propaganda.

    2. Mike Stallard
      June 6, 2011

      But what about all the millions of people who would be unemployed? Where can someone who is virtually illiterate, who is often absent (sorry, “on leave”) and who is used to delay, playing it safe and not taking risks, be any use in a society that depends on private initiatives?
      You are spelling out political suicide. And that, for any politician, is not an option.

      1. Bickers
        June 6, 2011

        But the alternative is national decline and Third World status. Government is useless at generating real wealth, brilliant at wasting wealth creation.

        This country’s future lies outside the EUSSR (but in it as a trading partner) and with a radically re-structured education sector (just look where the UK is in the International leagues – frightening)

    3. Bickers
      June 6, 2011

      Well said. We need the Governments take of GDP to be no more than 35%, if that. And we need to get out of the EUSSR asap.

  5. Peter van Leeuwen
    June 6, 2011

    It wouldn’t need a lot of government money to set up export stimulation programs for SME’s. There must be ways to exploit the competitive rate of the pound and SMEs should be assisted, even when banks become shy in lending to SMEs.

    1. Robert K
      June 6, 2011

      If SMEs have something worth exporting it is up to them to export it. The state should not excise tax revenues from one part of the economy and reallocate it to nifty ideas such as export stimulation programmes. Just cut the tax cost of setting up such an initiative and let the private sector get on with it.

  6. Javelin
    June 6, 2011

    Good points, but I never believed Plan A. As I’ve posted here since before the emergency budget the cuts will be cunningly resisted by the civil service and growth will be 0.5% this year and growing at 0.5% a year. I think both my predictions have been spot on. Given growth is half what is expected then the UK must learn to live within it’s means. This luxurous, gold plated, give-a-way civil service need to wake up to the position of the UK within the world economy.

    Oh and just to add to the good news, a friend looks after CDSs at a global investment bank and is preparing to default on their Greek sovereign debts – and claim the money off the other banks. He follows my logic that why should he keep paying cash every 3 months to a Euro bank insuring Greek bonds BECAUSE he now has a huge counterparty risk against the bank – forget the risk of Greece defaulting – it’s the risk of the bank defaulting that scares them – and that is not being addressed by Mr Trichet. Banks who are not exposed to Euro sovereign debt will want a default and when you look at the composition of the European Swaps Dealer Association banks it’s the buyers of the greek CDS (ie Uk and US banks) and not the sellers (ie the insurers) who make the vote.

    1. Javelin
      June 6, 2011

      Just had lunch with more bankers/senior administrator/IT managers and the round table agreement was for CDSs –

      Why should we not demand a default?

      The whole point of CDSs is a hedge against risk. So when the Greek Government can’t pay its way then the buyers of CDSs should have the right to exhange the cashflows they are paying for the CDS for the cash value of the underlying obligation.

      It appears to me the senior EU bankers have got very confused – on one hand they like the claim CDS instruments should be there to hedge against risk and should not be used for shorting (or making money) but THEN they go on to try to create a soft restructuring that treat them exactly like a cashflow product – and not an insurance product. If they really want CDSs to be an insurance product they need to understand that buyers will demand a credit event because the underlying risk has defaulted.

      Note : CDS products are insuring an underlying security (e.g. Bond) and are paid for based on an Index – like a “3 month LIBOR”.

      Either way I can see the lawyers getting heavily into this one. The spirit of the CDS market is insurance not cashflow. I repeat buyers of CDSs have bought them to mitigate risk – and will want their cash payout – and want to stop paying cashflows every 3 months.

      Again this is not just about Greek debt this is about counterparty risk – why keep paying cashflow to a bank when that bank might not be there 30 days later when the bank has to pay for the credit event.

      1. StevenL
        June 6, 2011

        I’m confused, are you saying the people who wrote the CDS contracts can’t afford to cough up if the credit event occurs?

        Down here on Planet Earth, this might be construed by some people as fraudulent. You know, fiddling your balance sheet and convincing people to advance you money on the basis of such trickery. What was the intention of the people that did this? To pocket the money and spend it on high living?

        Yep, sounds like fraud to me.

  7. alan jutson
    June 6, 2011

    Just a simple comment.

    Who exactly are these 50 economists/academics ?

    Are they tried, trusted and successful working businessmen who have made a fortune, or are they theorists who teach and study, but have never put their head above the parapet and had to earn a living in the commercial real world.

    The growing problem we have in this Country is so called academic experts and advisors rising to positions of influence, way beyond their capabilities and experience.

    The other problem we have, is that many MP’s on all sides, do not recognise these people for what they are.

    Pleased about one thing, at least we are now starting to get to the truth of the matter, we are only slowing down the rate of growth of our debt (spending is still rising) and that 80% of it is being paid out of increased taxation.

    Perhaps when the government admit that their policy also includes allowing/encouraging an elemet of inflation to help reduce the numbers in the short term, we may have an element of truth of the real position being taken.

    Looks like our children, grandchildren and perhaps even great grandchildren will be paying for our past and present financial sins if they stay in the UK.

    1. lifelogic
      June 6, 2011

      Indeed there is a “big tax ever bigger state sector” cabal composed largely of economists, academics, students, the unemployed and the young (all indoctrinated at school with the lefty agenda and syllabus), most charities, the BBC, state sector workers, the EU and also alas most MPs and politicians.

      All joining together to live off the labours of the rest of us.

      1. lifelogic
        June 6, 2011

        Also, of course, the little read newspapers that these economists often tend to write to (largely supported by state sector job and other state sector adverts and similar funding).

  8. Caterpillar
    June 6, 2011

    “the biggest cause of the squeeze has been rising inflation thanks to the weak pound engineered by the Bank’s strategy”

    So how do hoi polloi change the actions of an unelected group?

    “It rests on tax revenue increases, not on spending cuts, to deliver most of the reductions in the deficit.”

    So how do hoi polloi change the actions of an elected group?

  9. oldtimer
    June 6, 2011

    The Plan B advocated by the economists is not what the UK needs. What the UK needs is a Plan C comprising, inter alia, (1) a rejection of the Carbon Plan and its associated feed in tariffs and subsidies to uneconomic means of trying, and failing, to produce usable energy via wind farms and solar panels, (2) cuts in avoidable government spending, notably the increases in the aid budget and (3) cuts in taxation that demonstrably do not work, notably the removal of the 50% tax rate on incomes, the extra tax imposed on UK energy production to name but two. These are all changes that should have been made in the budget earlier this year.

    1. lifelogic
      June 6, 2011

      Absolutely the 50 economists are trying to pull Osborn’s boat ever more off course to the left. But he is already stranded on the mud flats at the left bank of the river.

  10. A.Sedgwick
    June 6, 2011

    Let’s cut out some big ticket expenditure e.g. overseas aid, Afghanistan, EU contributions and reduce business taxes then we might see some growth to match China and Germany.

  11. Edward.
    June 6, 2011

    Plan B, who made this up [?] and it incredibly includes, a move to ever greater advocacy of: ‘green technology’?

    Bejeppers, Joseph and Mary too.

    There wouldn’t be a ‘green technology industry’ were it not for vast taxpayer subsidies and loading the market – CO2 emissions pricing lunacy.

    These ‘left leaning’ economists [more borrowing] are precisely the reason we are so deeply in the proverbial, Brown listened to their siren calls and now, we are on the rocks.
    Simply treading water, we will soon have to fork out £60 billion just to maintain the present state of affairs – £60 billion – that’s dead money!

    Small government, indeed no government and low taxes are the only way out of this financial and fiscal disaster but not even Dave gets that.

    Oh yes and finally [the last nail?] last year, we had an extra 586, 000 ‘mouths to feed’ [economic migrants] too, Dave’s immigration policy is working just dandy.

    If you can, it’s time to leave, Britain is no longer open for business – worse, Britain doesn’t look or feel like Britain anymore – we are a nation lost, merely, a maritime province of the EU.

  12. Mike Stallard
    June 6, 2011

    How about this one: If you are spending lots and lots of your income on repaying debts, then, surely, you are poorer than if you weren’t? Heaven knows how much of our income is being wasted on debt repayment and indeed deficit repayment.
    Meanwhile lots of money is being syphoned off into projects which do not help the national recovery. For instance, here in Wisbech, Cambs, a huge school is being constructed for £25,000,000 and then there are the new Council Offices…….
    On top of that there is an army of bureaucrats bossily intefering and then not taking responsibility when it all goes pear shaped. (“I don’t do blame”.) Our law court and now our fire station are “at risk”. Nevertheless two “Officers” are busying themselves in yet another Art Outreach at March. I wonder what their salaries come to?

    PS As a civilized being, I am afraid that I shall have to arraign you on a charge of Toryism. You have spelled the name of the Sacred Text wrongly. It ought, as someone in you position ought to know very well by now, to be spelled like this:

  13. Mike Stallard
    June 6, 2011

    PPS There are tons of acronyms in the comments above which make them pretty impossible to understand. I was particularly interested in Javelin’s comment, but, frankly I do not know what CDS are. I though they had gone out with iTunes……
    It is only good manners when you use an acronym to spell it out the first time you use it.
    I wonder if the Moderator (pbuh) could please put this right.

    1. sm
      June 6, 2011

      Credit Default Swaps- A contract to insure against a capital default for a premium.

      What is the point in paying the premium for insurance on your house if your house has burnt down already and you consider a contract is only as good as the other party-or guarantor?

      Recommended Blog: Golem x1v blog which to me explains some of the mess we are in and some of the jargon in context.You get the gist pretty quickly.

  14. Michael Read
    June 6, 2011

    Nick Robinson called it right on Today this morning.

    To admit of a Plan B, destroys the credibility of Plan A.

    Of course, there is a Plan B … and probably C though to Z.

  15. Winston Smith
    June 6, 2011

    Can someone find out the annual cost to the taxpayer of these 50 academics, including pensions, clerical support and all benefits? If more spending is the best they can come up with, then they are surely an example of State waste. We could spend the £10m/yr (my estimate) on education and training for the long-term unemployed.

  16. Bernard Otway
    June 6, 2011

    Many commenters above have said all of what I have said in posts to Conservative Home in the last two days,including Alan Jutson’s one about pushing the burden as far down as our
    Great Grandchildren,with the caveat “If they stay in the UK’,I have said that my heartfelt advice to anyone under 45 particularly those with children is to Emmigrate to the antipodes,
    many I talk to are going to do just that.My point is WHY have conservative home NOT allowed my comments are they considered seditious.In my opinion if things get worse watch government of whatever hue return to foreign exchange controls last seen under liebour in the 1970’s,thus denying these emmigrants their own capital except at great cost.

  17. Bernard Otway
    June 6, 2011

    I agree with Javelin above,all his comments on the economic points are spot on,particularly the one about CDS’s and counterparty risk.I say expel Greece as it is communist and let it collapse the capitalists will then rise in that country and FORCE the issue.

  18. BobE
    June 6, 2011

    Germany and China are not involved in overseas adventures. They try to make the things people want to buy. Germany tries to sell top class engineering and China does mass production. As far as I can see the UK does insurance and not much else. Why can the elite expect any growth, hasn’t every thing been sold anyway? Remind me did Gordon actually sell Dover in the end?

  19. Gary
    June 6, 2011

    The markets will have the final verdict on the unworkable plans A and B. Plan A is doomed because the banks are insolvent and growth will not reach 2.5% required just to avoid the debt trap. Plan B won’t work because print and spend is what got us to this crises in the first place.

    I suggest Plan C. Mark all the debt to market, write off the insolvent, shrink the govt to Hong Kong proportions, get an honest money system, and re-start from there. Alas, there are too many trough feeders, career politicians and people on the make, so plan C is also doomed.

  20. javelin
    June 6, 2011

    Could the European Central Bank go bankrupt ?

    Just thought I’d ask the question.

    Reply: Unlikely. It can seek more capital from member states, and it can print its own euros.

  21. Suze Doughty
    June 6, 2011

    Fiscal stimulus was tried and could now be said to have failed in the USA after the Great Depression, but the country was a better place for all those new roads. Europe is old enough to have roads already.

  22. Neil Craig
    June 6, 2011

    John I don’t think you need to argue that lower spending means better growth. The facts are so unambigously clear on this that nobody capable of looking at facts can deny it. Granteed there are a lot of people not capable but arguing it in any playing field short of a formal debate where it would be undeniable who loses (which is why the BBC and others won’t allow it) is merely giving them credibility.

    I think the arguments that regulation and expensive electricity have yet to be fully debated and entirely won but we are well on the way.

    The next step has to be not debating the principle but saying exactly what policies would do this. The most inspiring remark of recent politics was Sarah Palin’s during that election “Starting in January, in a McCain-Palin administration, we’re going to lay more pipelines and build more nuclear plants”. I have never seen even a horrified eco-fascist trying to deny that had it been done America would be long out of recession now. I don’t think anybody, however horrified at the idea, could seriously deny that had we not had decades of eco-fascism and government parasitism here too we would not have a recession.

  23. Peter
    June 6, 2011

    For sure we need an alternative policy. Pensioners like me are paying the price under the coalition just as we did under ghastly, venal and lying New Labour. My lifetime retirement savings are now inflation eroding by several thousand a year. This on top of the Equitable debacle and all the other obvious but un-addressed scams by the financial services sector. And in spite of this continual and serial failure, still the same FSA guys are at the helm of “self” regulation. And the same Bank of England crew are in situ – the latter paying no heed to their statutory duty to control inflation. Sorry John, this conservative minded voter won’t vote at all next time. You’re all duds. Even you yourself are pretty naive in your columns about the wonderfulness of financial services. Don’t tell me – I worked in it for half a lifetime. How do Germany and France largely manage better without it?

    1. alan jutson
      June 6, 2011


      Agreed that inflation is like yet another tax on savings.

      Agreed that the FSA should be no longer, they have failed too many times.

      Agreed that many Financial service providers look after themselves first, and your savings last.

      For the last few decades those who have borrowed way beyond their means seemed to have done best, as a last resort they can then go Bankrupt and escape the havoc they have caused everyone else. The last government even made that (going bankrupt) easier and less painful than years before.

      The lesson from the last few decades seems to have been, do as little as possible, borrow as much as you can, for as long as you can, live for today, forget about tomorrow, if it all goes tits up, then go bankrupt, and if you have enough kids the State will provide.

      We hear all about “doing the right thing”, but in truth if you do, where does it get you, unless of course you have made a bucket load of money, and not many do that legally.

    2. Caterpillar
      June 6, 2011

      It is not only pensioners that are paying the price for the unelected MPC being allowed to ignore its mandate. All savers who ‘have done the right thing’ are being directly punished, and indirectly the attraction to housing rather than productive investments is being continued. So the MPC seems too neither follow the inflation target nor the Gov’t’s rebalancing agenda. That an unelected group of people would even consider doing this, let alone be permitted to is unbelievable – common decency is not so common anymore.

      The second hit is for those who had planned to leave the UK, helping the Coalition’s net migration numbers, if this had been based on ‘sensible’ saving then the BoE’s rates have just thrown a third of these people’s lives away. It is truly shocking.

      And as you indicate, the aggregate effect of this behaviour is to further reduce trust in Government – whoever you vote for the Government always gets in. It is a remarkable situation that policy does not seem seem wholly aligned to the supposed rebalancing, nor – well ethical.

      In my positive moments I take heart from the fact that, though perhaps historically average or less, at least I can reason several steps, a little more than many MPs and media commentators. In my negative moments I am saddened at the opportunity of civilization that is thrown away by triviality, short termism and the quick buck (that doesn’t price risk). I’ll try to maintain a stiff upper lip until I retire, and hope that the prices of real books with real content will still be affordable.

    3. electro-kevin
      June 7, 2011

      Spend your savings on something tangible which is likely to appreciate. Or blow them on having a good time. If you become dependant they’ll only be taken off you to subsidise others anyway.

  24. Gary
    June 6, 2011

    CDS were never meant to be insurance that was callable from issuer. They were meant to be insurance on otherwise non-sellable junk that miraculously obtained a AAA rating after the CDS voodoo was applied. As long as new suckers could be duped or bribed (see pension funds etc)into buying the junk, and as long as the govt stood ready to apply moral hazard and sacrifice the tax payer , there was zero incentive for the game to stop.

  25. Kenneth
    June 6, 2011

    It seems to me that the BBC is at the forefront of pushing the ‘Plan B’ brand.

    This is the organisation that successfully brought to market such brands as ‘poll tax’, ‘sleaze’, ‘modernisation’, ‘international law’ and ‘eu citizen’

    No doubt over the next few weeks we will hear a lot more from the BBC ‘Plan B’ campaign.

  26. Anoneumouse
    June 6, 2011

    We already have a plan ‘B’ , call a general election

  27. BobE
    June 6, 2011

    If I assume that the leadership is fully aware of the folly of its own plan, then there must be some other reason to continue to follow it even whilst knowing that it will fail.
    Is that reason the total capitulation of the UK into Europe? Followed by nice jobs for those that led us this way.
    (I know fully realise that Cameron is just a PR man with no ideas of his own. What a wasted opportunity.)

  28. Bernard Otway
    June 7, 2011

    Disaster,disaster ,disaster,nothing else to say,I am glad to be 66 I won’t be around in 20 years time due to my health ,and I laugh to think of the FOOLS left behind.The book of Revelations
    is correct.

  29. Rodney Dawkins
    June 7, 2011

    Meanwhile the ‘economically inactive’ number in the millions, and the cost of a train ticket to attend a job interview in London from deprived areas is well over £100. So they drive, cost after paying Wall st. Vampire squids? marginally less. Economic dysfunction needs to be sorted as part of plan A. Deficit reduction will highlight each ridiculous edifice left by the previous shower of non-governmental crooks.

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