Economy is worse under us, says Cable
 

Vince Cable has admitted the 'brutal reality' that Britain's economy is in a worse state than it was when Labour was in power










http://www.dailymail.co.uk/news/arti...recession.html

Re: Economy is worse under us, says Cable:
 

I think that's obvious, just think how bad it would be if Labour was still in power.

Re: Economy is worse under us, says Cable:
 

l think the fact remains whether it was the Labour government or the Coalition they are not doing a very good job with our economy and perhaps a new economic strategy needs to be thought out because the current stategy is quite clearly not working.

Re: Economy is worse under us, says Cable:
 

I still think that to much blame is put on labour.

OK yes they did do some silly things but a lot was also down to the world wide recession and for that they cannot be blamed it would have happened whoever was in power.

Re: Economy is worse under us, says Cable:
 

But they can be blamed for putting the country into so much debt that when the recession hit, we were so badly affected.

"End to boom and bust" was the phrase used, I believe.....

Re: Economy is worse under us, says Cable:
 

l am afraid the phrase "boom and bust" applies to both parties as if you look back at the economic cycles of the last 40 years as we seem to make the same mistakes economically time after time.

Re: Economy is worse under us, says Cable:
 

I love Vince. Truly the very definition of a loose cannon. :D

He's right, things are in a parlours state. The pertinent questions, however, are:

1. Would things be any better under Labour's plan?
- hard to say, seeing as nobody, least of all Labour, seems to know what that plan is.
2. Would things be any better had Labour not spent the good times urinating tax revenues up the wall instead of shoring up the national finances and ensuring we were prepared for a rainy day?
- almost certainly, though as Gordo seems to have really believed he had personally put an end to the economic cycle, it's not very surprising that he didn't.

Re: Economy is worse under us, says Cable:
 

Who could possibly have known that if you adopt the completely wrong policies at totally the wrong time in global financial history that you make matters worse.

It was obvious in the pre-election discussions that if they adopted the Canadian austerity model (1993 to 1999) in a global downturn rather than the global boom that Canada were fortunate enough to pick, that we were in for serious problems.

The writing has been on the wall for the Western economies to which we export since 2007 and commodity prices have been in an up trend for years.

Against such a back drop it was lunacy to expect growth in the private sector to mitigate contraction in the public sector.

Soon we will see the worst of both world's with ongoing contraction in global marketplaces which will place downward pressure on growth, costs will continue to rise and the public sector job losses will compound the government expenses going out (benefit payments) with a simultaneous reduction in tax take.

Doing the simplistic right thing at the wrong time can as is being proven and will haunt us horribly make a bad situation much worse. Thatcher was accused of using "handbag economics" but this government set on a path akin to paying down a credit card so as to avoid interest charges against a back drop of reducing income with which to pay back. A reasonable idea to begin with but becomes problems on steroids without growth.

The measure of the robustness of a financial model is the ability to withstand shocks. We have been put in a position whereby we could not be much weaker and there is potential for plenty of shocks to come our way from Europe. Greece is the current wild card which unlikely to have have positive long term outcome. Sarkosy and Merkel are having almost weekly summits to plan the planning of the plan and as their agenda appears more political than financial I can see the money men calling time on the talking shop.

Having experienced the 70's and 80's I had hoped never to see the like again but I strongly suspect that this lot will be substantially worse. We the boomers had three parts of nothing through the 60's and were used to fairly low expectations which in part allowed for a great deal of tolerance to the decade+ long financial problems of the 70's.

The cohort that are our children have known no such difficulties but I suspect they will endure a period of difficulty which will be difficult if not nigh on impossible to bear. Collectively they are are a generation of "I want it all and now". How they will respond to going backwards at the speed of light doesn't bear thinking about but I think in time it could become ugly, Greek style.

In another thread the intergenerational group think that older people should be encouraged to sell large house to release stock. My wife and I retain ours as a bolt hole of last resort for our children and grandchildren. Three generations under one roof doesn't work but if things get bad enough and needs must we can protect our own which is satisfying for us and an insurance policy for them.

The phrases "too far, too fast" and absence of "plan B" are indicative of the young guns in a hurry and as supremely ironic as it may be , the only party that showed credibility at the last election was Labour albeit they would have needed a new leader and not the one they currently have.

Re: Economy is worse under us, says Cable:
 

I would question your definition of credibility given that they didn't have a new leader prior to the election and it has since transpired that the new leader the party favoured turned out not to be the one you think they should have had. With their leadership prospects so royally screwed, from whence comes the credibility of which you speak?

As for the rest of it, I think we are still a long, long way from Greek-style protests on our streets. Greece barely has the money to pay anyone's wages, leading to a round of belt tightening the likes of which we've never seen, nor are ever likely to. It's not surprising they're all out on the streets. Here in the uk were just going to have to get used to the idea that was taken for granted in your generation: credt is for massive purchases you can't reasonably afford at the time, like a car or a house, not things you can't be bothered to wait for, like a TV or handset upgrade.

Re: Economy is worse under us, says Cable:
 

Once again, "point", "have", "missed", "the", "you" - please rearrange the words....

Only one party's Chancellor claimed to have ended the cycle.

Re: Economy is worse under us, says Cable:
 

I don't think anyone really has a concrete plan to turn the Economy around. It's not something governments have total control over, they can only aim to help change it's direction with policy.

That said critics of Labour, including this government, were demanding swift action of when Labour in power so they are open to the same criticism themselves. It's still too early to judge the current government by the state of the economy but their economic policies have been in force for a while and before long people will be expecting signs of them working.

Re: Economy is worse under us, says Cable:
 

And as Mr Cable says it ain't working as it currently stands so maybe they need to think about a change in policy sooner rather then later or many people fear that this economic crisis could go on for a generation before we see improvement.

Re: Economy is worse under us, says Cable:
 

Good, well written post.


Personally, I can't see how things can get any better sometime soon

Re: Economy is worse under us, says Cable:
 

But a change in policy could lead to the UK's credit rating being downgraded, which would mean the interest rates on all the money we, as a country are still borrowing to pay for current spending plans, would rise, leading to higher debts and probably more cutbacks.

We can't carry on, as a country, spending money we don't have.

Re: Economy is worse under us, says Cable:
 

My credibility remark is\was relative to the totally wrong headed approach by both the Conservatives and Libdems. The Canadian plan was\is a recipe for disaster and they both wanted to pursue that policy whether literally or in principle.

I did not want to vote at all which would have been a first in my adult life and the reason was that none of the parties had a clue on what to do but the pay down your debts which found resonance with the electorate. Labour portrayed a slow as she goes approach to austerity which if managed well could have been a dynamic approach as opposed to a dictatorial mandate devoid of flexibility.

As for leaders there are none in any party in whom I see the hopes of leadership. We will have to hope that as time progresses and things get worse, somebody will emerge.

The nature of the events currently swirling around the world is that nothing much happens for months or years and then the dominoes fall as crisis builds on crisis. Situations change fast when they truly start to go wrong and something which was unthinkable just weeks earlier can become reality very quickly. If you had lived through the 70's you would know how fast things get worse.

Re: Economy is worse under us, says Cable:
 

I did ... Most of them, anyway. And I have enduring memories of scheduled power cuts and my dad buying a petrol generator. I may not have a first-hand adult understanding of how bad things can be, but I have lingering impressions and they're not nice.

Re: Economy is worse under us, says Cable:
 

I did live through the 70's, and also remember why what happened, happened.

Re: Economy is worse under us, says Cable:
 

And picketing firemen.

And picketing teachers.

And picketing cleaners.

And picketing council officers.

:erm:

Re: Economy is worse under us, says Cable:
 

You can't compare what is happening now to the 70's, or indeed 80's & 90's.

We're in the longest, deepest recession in living memory - so we keep being told.

Yet interest rates are the lowest in living memory and will be well into next year and possibly beyond.

Growth is just managing to stay above zero.

The high street recorded sales up last month.

Nearly every house hold has two cars, 3 tvs, sky or cable, broadband and several smart phones

Everybody is talking about cuts, but none of the cuts have actually been implemented yet - so any redundancies in the public sector are being implemeted in anticipation of the cuts.

I am not an economist and have no idea what the best course of action is, but then again I don't think that most so called "economists" do either.

I believe that if something makes sense then it's right.

If you owe billions, borrowing billions more wont help you - unless you are borrowing to invest in infrastructure, manufacturing etc

If you are borrowing to supply services and pay wages - forget it.

Borrow to invest is the road to success, borrow to spend is the road to the end.

When you're in a hole, stop digging - Nick Leeson.

The governments plan, may not be perfect for everyone, but it is a plan. The world markets like it - I don't see what Plan B there could be.

Re: Economy is worse under us, says Cable:
 

I feel sure you do but I feel it would be wrong to focus on who did what and why because that would start endless discussions on who went on strike and why.

The area I tend to focus on is the fact that secular recessions are usually back to back recessions in which the second is opposite to and made worse by the mistakes made in the first.

The early 70's were deflationary as spending power was lost in higher costs to the oil price hike. Businesses closed, unemployment soared and spending power was reduced dramatically. The deflationary period damaged the supply side of the economy very badly with boarded up shops and businesses which left no supply side when workers forced through higher wages. As demand rose with no supply, inflation rocketed until equilibrium returned.

This time around and as usual the opposite occurs. We have inflation in a situation which is more true of stagflation. When part 1 is over and all the mistakes (100's of billions down the drain) come into play. In part 2 we get the opposite of 1 and deflation kicks in. Following the rule of alternation we get what was prevalent during the secular recession before the last which was 1930's.

I think this government has made very bad choices because even discounting global factors, recessions are as much about consumer mass psychology as other factors. Austerity forces savings both via government measures but more importantly destroys public confidence. The less people spend or have to spend the greater the snowball effect as fear breeds fear and the money in circulation goes down. The less money in circulation the more people lose businesses and jobs and if it goes on long enough the effects are exponential.

Deflation can become a depression and if this country sees one I for one will know for sure that it was this government who on the back of the previous government's mistakes made an even bigger one by removing liquidity from the economy.

Re: Economy is worse under us, says Cable:
 

Agreed think ALL PARTIES should get together thrash out policies which will help the country not personal gratifacation/gains/budies.

If they work together then we might just turn things raise funds from which will make inroads bring in policies which will truly make difference. Chase those who defaulting on there tax. Stop the green taxes relieve burdens hit hard and fast at utilities giving ofgem some real power.

Lets start making difference instead retoric party trashing/bashing the helpless needy. Lets get MONEY circulating put it where it would be spent in people pockets. By hurting unemployed/disabled/elderly/low paid/public sector/freezing wages they stalling killing the country. Its governments fault this country now service industry heavy so they only way is to now make money move. The way to do it is ORDINARY PEOPLE to spend buying products. We aint got enough manufacturing to kickstart the uk heart.

Re: Economy is worse under us, says Cable:
 

If they work together than who is there is oppose bad policy?

Re: Economy is worse under us, says Cable:
 

Hey Pierre, the cuts started at the start of this financial year, and have been deepened by inflation as the budgets were given in nominal terms.

Your second paragraph is spot on. They stubbornly refuse to invest in anything beyond trying to get the banks to feed us all more of the poison that caused the trouble to being with - debt.

Re: Economy is worse under us, says Cable:
 

qft

Re: Economy is worse under us, says Cable:
 

This national debt stuff is getting really, really boring. Every so often yadda yadda record levels of debt.

Osborne is missing his deficit reduction targets due to the tax take being down, and I should mention that a large proportion of the national debt can be removed overnight.

The Bank of England owns £186bn of gilts purchased in QE 1, they'll probably own ~£70bn more after QE 2. This is debt purchased with invented money. They tear those gilts up, there's £250bn wiped off the national debt overnight.

They are full of it, I agree with the need to reduce the size of the state for sure, what I am disgusted by is the indifference to inflation. This is a stealth tax for those with savings and those who work, it is genuinely affecting our living standards but they still allow it in order to keep asset bubbles inflated and insolvent banks operating.

I hate this coalition's economic policies. They are reducing my income through tax rises and withdrawal of family allowance, they are reducing the value of what I do get by ignoring inflation, they are harming my attempts to save for a deposit for a home through low interest rates and they are harming my attempts to buy that home by propping up house prices with low interest rates.

If they had an ounce of conscience in their banker-whore bodies they'd tear the gilts up, capitalise RBS if need be and force it to deliver credit responsibly - we own 83% of it for heaven's sake - and get some investment rolling in infrastructure delivering jobs and housing, two things which are massive drags on the economy.

Huge amounts of capital are sitting in housing doing nothing and high housing costs and inflation are reducing people's spending power. Get building, get people into work designing and constructing those homes, build some high speed broadband plant.

They can also ditch their vanity project HS-2. Interesting they can find billions for the pet project whose business case has been ripped to shreds pretty much universally but there's apparently nothing in the kitty.

This coalition is like some sick parody of everything you didn't want.

Re: Economy is worse under us, says Cable:
 

Thats biggest question the only answer is they doing it to favour low interests in debt by sucking up to the banks who created the mess.

I fear we will again left lagging while the country crumbles hell the politians will laugh they all can up there bags live in caymen isles.

Damien all we can hope is by doing it together taking political mindsets they MAKE decisions which right for the Country.

They both shown they cant do it alone so we need them to stop there political persuations there retric atitudes think what will work. They tried the preverbal bashing/trashing agendas not hurt it why it was not there fault but they was soft targets.

I fear tories waiting and hoping 2012 olmpics/green windfarm projects will be the saviour in shining armour. Sadly think neither will olympics crippled greece I fear that foreign firms will get more out off the windfarm projects.

Countryfile sunday mentioned how many foreign firms do the wind farms that little money despite huge cost to uk will see return.

---------- Post added at 13:40 ---------- Previous post was at 13:30 ----------

yep sad thing they want another housing boom to try fudge a recovery which will then cause another false economy.

Governments dont learn sadly sustainable jobs, money in people hands who will spend it.

I would like to see interest rates at least 2% ofset it wages should be stabilised. I think house prices should be reduced tighter control on prices. Yes people will moan but they should realise its home not comodity.

It wont be popular but housing/land costs one single reason we in mess. Firmly think banks behind inflating them to get bigger mortages.

Re: Economy is worse under us, says Cable:
 

Per above, tearing up the BoE's gilts it bought with magical money would reduce the national debt substantially and George isn't making much inroads into the deficit anyway.

The cynical wotsit is, along with the BoE, eroding the debt and deficit with inflation. At 5.6% per year on official figures although of course we all know that's not the case for those of us who don't eat iPods and flat screen TVs.

Perhaps a good question for Merv the Swerve would be to ask why his pension is now 93% index linked, inflation proofed if you like, if he's so confident. This up from as I remember it 85% 12 months ago. What an arse.

Re: Economy is worse under us, says Cable
 

Vince cable wasn't that the chappie everyone a few years ago was saying was the perfect man to head the economy and since having some power has been a total joke. Lib dem to the core doesn't like having to be in a coalition to have power but won't do the honourable thing and give it up much better to stroll around making completely unhelpful comments all the time.

Re: Economy is worse under us, says Cable
 

He's got no political instincts whatsoever. He really doesn't know how to choose his words carefully and when to simply shut up and say nothing at all - c.f. bragging that he was going to 'declare war' on Rupert Murdoch whilst having ministerial responsibility for ruling on Murdoch's attempt to buy BSkyB.

It makes for interesting news stories from time to time, but for the good of the country I'm glad he stands no chance of ever actually becoming Chancellor.

Re: Economy is worse under us, says Cable:
 

just to play devils advocate for a mo ,If labour had not spent so much money we wouldn't have the new schools ,jails and hospitals .The best thing they did in my opinion was the huge investment in social housing improvement ,unfortunately instead of these types of investment being done steadily over a number of decades they tried to do them all at once which meant borrowing huge amounts ,i believe that most of the investment was done in 05/06 and 08/09 when they doubled investment when they should have started back in '98 .
Labour did some good work with investing our money and we realy did need it the problem is they went about it the wrong way

Re: Economy is worse under us, says Cable:
 

Indeed :clap:

Re: Economy is worse under us, says Cable
 

Who knows? End of the day it couldn't be that much worse.

Re: Economy is worse under us, says Cable
 

Oooooh.....

Be careful what you wish for.......

Re: Economy is worse under us, says Cable
 

l will second that.

---------- Post added at 21:30 ---------- Previous post was at 21:29 ----------

And whats that.:)

Re: Economy is worse under us, says Cable
 

Something that couldn't be much worse (is still worse)....

Re: Economy is worse under us, says Cable:
 

You sure thats accurate?

Noone in my immediate family has 2 cars, the only people I know off who have more than 1 vehicle are the ones who have a work vehicle seperate.

Multiple tv's and broadband sure, but the multiple smartphones and cars not so sure.

Also putting things in perspective a TV now days is not the same as it was in the 70s, today its something to expect from a very basic standard of living.

I would say the crisis is worse but the differences are better media shielding of the problem, available credit hiding the true wealth of the country, government policy aimed at doing things like shoring up a unsustainable housing maket. In addition intelligence is stepped up so anti government opinions are more managed and the unions are much weaker now than in the 70s.

Re: Economy is worse under us, says Cable
 

Fair point, could end up with a Lab-Lib coalition. That'd be an experience.

Doesn't change that we're all getting kicked in each and every way imaginable, and George is missing his deficit reduction targets due to a lack of growth, so he and the BoE have taken the cowardly and disgusting way out of inflating away debt.

George reckoned there was some room built into his plans so given he's inflating away the national debt like the wind and has 20% of it under his control to tear up I'm sure he'll be putting some investment down in infrastructure apart from their porn project HS-2.

Re: Economy is worse under us, says Cable:
 

They had a choice either raise taxes to pay for those improvements which the voters wouldn't like or spend it on credit so when the bill came in somebody else had to pay for it - they took the cowards way out

They borrowed the money, took the credit for spending it , then left someone else to take the blame when it came time to pay the bill

Re: Economy is worse under us, says Cable
 

Immigrants are needed to pay your pension and health care when you retire, that's the nature of the ponzi scheme and the lack of native born children to support the big baby boomer population bulge.

The idea is great to get people into jobs in the real economy, however those jobs right now are generally right at the bottom end of the scale, and ~87% of them are getting taken by immigrants as they are willing or able to accept the underhousing and other sacrifices required to accept such abysmal pay with such high costs of living.

People with families can't take a minimum wage job usually, they'll lose too much money from their welfare payments.

Re: Economy is worse under us, says Cable
 

What gets me is if we in the uknown situation with world fiancial issues how come all the experts know what to do. For all these experts might just be sending the world to oblivion. They guessing there might be educated guesses but at the end they dont know. Can you trust one person/organisation to get things right.

Would it not be good idea to tell some countries to spend there way ie push boat out some to do austerity some to do nothing but sit tight. That way we will see who rides the wave better compensate countries who got told wrong.

For all these experts Balls might be right he maybe proved wrong but unless we get general broad indicators of performance of countries doing it differently see how things 12/24/36 months on we will never know.

Re: Economy is worse under us, says Cable
 

Figures released today from the office of national statistics appear to tell a different story

http://news.sky.com/home/business/article/16093459

Re: Economy is worse under us, says Cable
 

And these figures from yesterday show UK retail sales stronger than expected, and stronger than September last year.

BBC

Re: Economy is worse under us, says Cable
 

perhaps Mr Cable needs to rethink his statement ? or is he just scaring the pants of everyone and being over cautious

Re: Economy is worse under us, says Cable:
 

That's Labour's prudence for you. :clap:

Re: Economy is worse under us, says Cable
 

Nope I'd say he's spot on, it's good but once you take away the 0.4% drop the previous month the picture isn't so pretty. A 0.7% rise over the quarter doesn't even cover the sales deflator for the period.

Regardless these numbers don't account for the stories on the ground, which are infesting even the affluent suburbs here now.

---------- Post added at 10:26 ---------- Previous post was at 10:19 ----------

Indeed, we are now enjoying 'prudent' austerity for the people while their living standards are inflated away and their taxes bail out banks.

Enough about Labour, getting boring now, the current government could be doing it better but are, as so many are, corporatist whores beholden to big business and banks, merrily screwing over their electorate as they tend to the needs of the people who bankroll them and supply the lucrative consultancy positions when they leave politics.

Confidential undocumented meetings with banks - corporatism, fast track access to ministers for 50 large corporations - corporatism. Government is supposed to remove barriers to corporations while ensuring they trade sustainable and sensibly, instead it's actively pimping itself to them to the detriment of us.

The only reason this lot are considered in any way competent is the astounding incompetence on the other side of the aisle.

Re: Economy is worse under us, says Cable
 

Of course it was New Labour who bailed the banks out - but heck why not blame the Tories for it

Re: Economy is worse under us, says Cable
 

Anybody seen the university of zurich study about would economy owned by just 147 super companies this the real power.

The world debt in my opinion is rousse to crush global governments power to such degree that they will go begging to the companies for there help eradicate it. Obviously they will have turn blind eye to thes super companies actions. Ultimately these companies will take control of governments if they aint already got puppets in there already.

http://www.dailymail.co.uk/sciencete...l-economy.html

Re: Economy is worse under us, says Cable
 

The Tories are the ones carrying on the trend, and telling us that the various pro-bank policies and BoE's low interest rates and further QE that are ramming inflation up our backsides are a good thing.

I blame the Tories because they, not Labour, are in government now. They've had over a year now which is more than enough to amend things, as it is they've stalled structural separation of banks and continued to act as the City of London's bitches.

New Labour started the trend, doesn't mean it had to be carried on by Blue Labour. Rather than making the City suffer for what it did, prosecuting fraudster bankers, etc, they've allowed the FSA to keep the conduct at RBS secret, done nothing to push a bank we own the majority of to get its act together, and are about as potent as a man with irradiated testes.

http://blogs.telegraph.co.uk/finance...a-and-ireland/
http://blogs.telegraph.co.uk/finance...about-the-fsa/
http://blogs.telegraph.co.uk/finance...unt-over-atms/

RBS - £45bln in direct cash support, £100bln in loans and insurance, over 10% of the entire national debt, and they are giving RBS yet more created money to try and 'encourage' it to lend to businesses. Stuff that, we own them, they do as they are told.

Re: Economy is worse under us, says Cable
 

One thing that keeps being overlooked is that Labour's excessive borrowing and spending made the economy look better that it actually was. So any comparisons are misleading. Just as an individual can appear to have a fantastic standard of living as long as they can keep borrowing money.

Re: Economy is worse under us, says Cable
 

Without a doubt, doesn't change that the same bubbles that fuelled this are being kept up by the current government as much as possible.

The recession is apparently over because the economy is growing, I would speculate that many would disagree with the GDP figures as they increasingly feel the pinch.

The government has made a conscious decision to bail out borrowers and to inflate away debt. They didn't have to choose this course, and it's frankly immoral that they have chosen the most insidious of tax rises, inflation.

Our current national debt is £977 billion according to http://www.debtbombshell.com/ - the BoE owns £177 billion of that and could tear it up tomorrow - https://mninews.deutsche-boerse.com/...ing-free-float - and will own more as that is again what it's planning to purchase.

It's kinda amusing when you think about it, not only are we allowing inflation to reduce the real value of our national debt, we're printing money to buy it back too.

Re: Economy is worse under us, says Cable
 

I will say it again ,take the banks out the picture.

Government wants money lent to business to stimulate economy.
Normally they want banks to do it and bank makes profit from interest.
Banks refuse to give out enough loans to keep government happy.
Soltion tell banks they no longer allowed to lend money to anyone as they been too picky, government directly lends to businesses or the BOE does and they do so at base interest rates or interest free even, take profit out of it.
Banks cry and cry, tough luck just go back to securing deposits.

That 100+billion welfare handout to the banks would have gave a far bigger stimulas if going direct to the population however I do respect it also probably would have pushed up inflation but thats going up anyway regardless.

Re: Economy is worse under us, says Cable
 

If you Google and read the copious amount of information on QE UK style it will slowly become apparent that the hope was that some of the QE money would emerge as cash into the economy and stimulate growth. The fact that it hasn't achieved the objective before does not hold out much hope that it will do it irrespective of the failed prior attempts. Without any other ideas try, try and try again appears to be the the way forward or backwards depending on your viewpoint.

I rather subscribe to the view that nobody who is worthy of borrowing money wants to do so and those that are of dubious worthiness would be rejected by the banks anyway.

Businesses tend only to borrow when they have a reasonable expectation of using such borrowings for growth above and beyond interest costs. Borrowed money has to earn way beyond its cost and in the current environment it obviously cannot so there is no demand.

The public are generally reported as battening down the hatches, paying off debt with any surplus and cutting on spending which is reflected in business reluctance to invest in growth.

The Treasury nor the government has any method of judging credit worthiness of businesses as that area is entirely in the domain of retail banking. I feel sure that if some hair brained idea came about to bypass banks, there would be a queue miles long to borrow money but equally I feel sure that most of the money would vanish into the pockets of Ltd. companies who are no stranger to bankruptcy procedures.

If it were directed to the public it would give some people a fillip but a heck of a lot would vanish into banks as debt repayment or savings.

The nature of the problem is mass psychology. I think it was either Cameron or King who referred to a crisis of confidence in the Eurozone. It may be with the leaders over there but it stalks every household and company over here and possibly in Europe. Cameron and co. cannot preach the virtues of prudence and the people who may or may not listen to them hearing or reading of daily references to an ongoing recession without morale slipping into the abyss.

Too much damage has been done and if anything is to be re-inflated it is a monumental task which needs to be built off mission accomplished which of course is obviously nowhere near the case.

We are between a rock and a very hard place and appear to have a crop of politicians both here and in Europe who are bereft of ideas.

Re: Economy is worse under us, says Cable
 

of course. confidence is the be all and end all.

If the banks were allowed to go bust and a new era started, then I think we would at this time be on the road to recovery.

But instead the government(s) patched up the current system and the population has lost faith in that system. Most notably as ignition said they sacrificing growth and wealth so those in debt can inflate away their debts which is mainly homeowners and the government itself. This country is too addicted to the property market and it needs to let go and let a property crash (correction) happen. Problem is too many influential people in both the media and government, as well as probably corporate have vested interests in property.

Re: Economy is worse under us, says Cable
 

The banks cannot be allowed to go bust under any circumstances.

There was a secondary banking collapse back in the 79\80's. The secondary banks were primarily involved with businesses and specialised in loans and dealing with non mainstream type deals. Their demise caused quite a few major businesses to go to the wall.

Collapses in the primary banking system would see thousands and potentially hundreds of thousands of ordinary people and many mainstream businesses going bankrupt overnight. Banks are the arterial flow of the lifeblood of the country and are trusted to hold in safety and facilitate transactions on behalf of everybody in the country. With them going bust we not only go back centuries in transaction capabilities but would become a third world impoverished country in the blink of an eye.

The problem that led to the banking crisis was the removal of protections in the mainstream banking sector which had been long seen to be a problem in brokers dealing with private traders accounts. Brokerages were able in the past to use client funds for in house trading and if they went seriously wrong could lose their money plus that placed with them by private individuals. One private trader could also rack up losses beyond what they could pay and take down the accounts of everybody else plus the broker.

Segregation was brought in as an option to place client funds where the broker could never touch the clients money and safety nets were also put in place to protect clients against the actions of other clients.

Having explained what I witnessed and on occasion was involved (innocently) with in the brokerage business, compare and contrast what the high street banks did when Labour facilitated America's desire for change.

In the past all the high street banks could do with clients money was retail banking plus parking surplus in government money at Libor rates. 100% safe .
In 1999 the USA repealed (discarded) the Glass-Steagall act which had ensured banking separation of funds into private and tradable since 1933. It had been created to protect the public post the carnage of the USA collapse into financial horror and depression in the 30's and they took the protection away and we followed suit.

Labour didn't stop to think that what had been seen as a cause for financial catastrophe may lead to another but as sure as night follows day it did.

Ironic that the government is now calling for laws to separate banking activities when time tested laws were in place for 66 years but were thrown away by Labour (at the desire of the USA).

We have to get back to banking segregation where they can no longer see client funds as a cash cow other than via Libor but unfortunately the almighty mess that they have managed to get themselves into will have to be bailed out if anybody ever works out who owes who what.

The Leeson affair was a drop in the ocean compared with the fiasco the banks are in. You may wish to see housing prices go down but I can assure you with total certainty that if the full extent of the problems were unleashed in a major banking collapse, owning a house would not be priority. Surviving the aftermath would prove to be much more of a priority as the country would be rather more than ruined. We have no choice but to pay the gambling losses of probably the biggest bunch of losers the world has ever known.

Re: Economy is worse under us, says Cable
 

I never said all banks go bust, some were in a healthy state and would be there to take the customers who need a new bank, so we would still have a banking system. I hope you realise the problem in having a profit making machine that knows it cannot be allowed to go bust, having the garuantuee of been bailed out.

Re: Economy is worse under us, says Cable
 

The banks are so interlinked that if one or more of the big ones goes under so do most of the rest.

There is little isolation in the banking network on either a countrywide basis or internationally. There is still an unknown sized elephant in the room called CDS (credit default swaps) which are highly leveraged traded instruments which are guestimated to insure the potential of sovereign debt failure for trillions. The sweat over the Greece situation is how to stop the triggering of those globally interlinked deals which are what has been described as weapons of mass financial destruction. The banks are into these instruments up to their eyeballs and beyond. They do not even know how big their risks are and would only know when the pass the parcel started with telephone number sized claims swirling around.

I like your idea that the few banks that would remain would be able to facilitate those who were in a bank that went bust. Not a lot of need for a bank if all your money has vanished into the ether.

Of course I know the problems of having a profit making machine that cannot go bust and thought that I had more than covered that in my post. You may not like and I do not either but the reality is that unless we (the government) bails out the losers we have a choice of lose a lot or lose it all.

You may wish to think the implications through a little more before assuming that all will be well if banks are allowed to go under. Savvy people have spread their money to take advantage of the government's assurance scheme for underwriting bank risk of failure to individuals. I haven't checked recently but I think its 90% up to £85K person per institution. Billions paid by you and I would go to those people if there was a collapse. There is no way out but to grin, bear it and hope that somebody sorts out the mess.

Re: Economy is worse under us, says Cable
 

Just thought I'd say thanks for your detailed and informative posts. The perspective and experience that you add to these financial threads is appreciated.

Re: Economy is worse under us, says Cable
 

Thank you.

The problem with keeping abreast of macro financial developments is that it not only makes one highly cynical but it expands laterally into an understanding of the why and wherefores of who does what and why on the global stage.

There are a couple of threads that I have chosen not to respond to because those who know also know when to leave the keyboard untouched;)

Re: Economy is worse under us, says Cable
 

I'm often reminded of a conversation I overheard a year or two back on a train by two city banker types, one saying to the other that the people who hoard and save their money are the selfish ones as apparently (according to these two) what people ought to be doing is "spend spend spend" to get the economy moving.

Idiots.

Re: Economy is worse under us, says Cable
 

Yeah, because when we own all that stuff we'll have found true happiness. :rolleyes:

Bankers.

Re: Economy is worse under us, says Cable
 

'Money makes the world go round'

Re: Economy is worse under us, says Cable
 

they are right on that.

I have said it many times. If everyone were to just save their cash, then its a recession. The economy works when money changes hands.

Thats why doing things like welfare cuts doesnt help the economy as thats stopping enforced money circulation.

That is why 1 million pounds is better given £100 to 10000 people then 1 million to 1 person.

Re: Economy is worse under us, says Cable
 

Hang on a minute. Welfare is paid out of taxation. Taxation is money taken out of the economy. Taxation, especially excessive taxation, puts the brakes on the economy because the system of collection and redistribution is less than 100% efficient (money goes on things like utility bills for HMRC offices etc, not entirely into the pockets of welfare recipients).

Spending of money generated by work (ie wealth creation) is what stimulates our present economic system.

Re: Economy is worse under us, says Cable
 

I think Chrysalis means that people on welfare are more likely to spend the money they have, and those being taxed are (slightly) more likely to save some. Hence the example of the distributed £1,000,000.

Re: Economy is worse under us, says Cable
 

Good grief !!!
I've just started reading up on these things.

http://en.wikipedia.org/wiki/Credit_default_swap

That's seriously scary stuff.

"Credit default swaps have existed since the early 1990s, and increased in use after 2003. By the end of 2007, the outstanding CDS amount was $62.2 trillion, falling to $26.3 trillion by mid-year 2010."

Re: Economy is worse under us, says Cable
 

Puts a different perspective on why Greece and the other PIIGS should be handled with great care;)

In trading generally even with gearing a little is risked often with the hopes that the eventual cumulative gains will add up to a lot. The super whizz kids in the major banks, always hungry for fast returns, created cannot lose instruments. The trouble with such instruments is that invariably because they are so safe they require risks of a great deal of money for a little reward. LTCM (long term capital management) went down that sort of route and vanished into the abyss with the Fed picking up the bill.

Humans never learn and betting on a supposedly sure thing with the ranch is the way to destitution. Shame the banks weren't limited to using just their own money:(

If the consequences of CDS being triggered wholesale is a potential financial Armageddon you can be sure that irrespective of all the posturing on the global stage, that it will be avoided. I wouldn't lose any sleep over it but it does show how just stupid or short term orientated the brightest and best can be.

Re: Economy is worse under us, says Cable
 

The problem was they decoupled risk and reward - if they got it right, they got huge bonuses; if they got it wrong, they didn't lose anything (except, occasionally, their jobs).

Re: Economy is worse under us, says Cable
 

your right to degree but THEY SPEND too and on the back of this JOBS CREATED.

Its worse in the disabled section how many been chucked off have been on motobility scheme. A system which is been staple diet for the motor industry.

Even those who aint likely got car to help transportation equally spent into that. Some buy disability equipment such motorbility scooters aids. How many have sky/virgin media as entertainment.

If you want to absolutely hit the bones every public sestor is basically welfare job from taxpayers. But EVERYONE PUT MONEY into economy help DRIVE IT.

Just shame narrow mindedness lose sight of this government dont see it that way.

People on lower wages likely to spend more if they get small say insignificant windfall would go out treat themselves.

Those bankers had more sense than the government maybe some bankers not all idiots.

It would be interesting how many companies would lose out if funds was throttled back. I personally know 5 main companies myself from garage, insurance etc. Thats not including food/goods you buy for shopping.

Its amazing when you analyse bills what you spend how many companies you provide they rely on your business money. That ceases yes maybe cushion 1 or 2 but add 1,000's and country hits issues. Private sector workers whinge about public sector/unemployed/pensioners/disabled start losing there jobs. Shame people dont see the bigger picture at times.

Re: Economy is worse under us, says Cable
 

mertle the public sector should be the size required to provide the essential municipal services and other services that are best provided by the state, such as health care and national level education, and no larger.

It's crazy suggesting that the private sector should pay higher taxes so that the public sector keeps people employed, or that welfare be higher purely to give its recipients more money to spend.

The more money that's left in people's pockets the more disposable income they have to spend as they see fit, the more of that they have the better off those producing things people want to buy will be, and they in turn create jobs.

There are of course a ton of issues at the moment, largely due to corporatism, but the public sector is massively oversized right now, it was swelled dramatically over the past decade and could do with a trim as there was quite literally not the infrastructure or resource to efficiently assimilate the influx of money and people.

Re: Economy is worse under us, says Cable
 

depends who is taxed from, the poorer someone is the more likely they will spend all their income. Thats basic logic as someone who is on JSA eg. will likely spend 100% just on essentials.

Whilst someone paid 100k a year their tax in all likelyhood would just goto savings if not on tax. Even at 20k a year, someone on 20k a year is less likely to spend all their income than someone on 4k a year.

Money in savings does nothing for the economy.

Re: Economy is worse under us, says Cable
 

Not true - savings are used by the banks to fund mortgages and loans.....

Re: Economy is worse under us, says Cable
 

exactly.

---------- Post added at 22:01 ---------- Previous post was at 22:00 ----------

not really, they create that money. Plus not really much loans going out at the moment ;)

I could put another way.

If everyone had just enough to live on, basically they could not 'afford' to save anything. There was no millionaires/billionaires, recessions would be much rarer as money would always be circulating instead of rotting in bank accounts. Inflation would also likely be lower as banks wouldnt be creating money all the time to replace the money in billionaires bank accounts. Its money that works an economy, it has to be circulating and what people dont understand is things like welfare and the public sector is enforcing the circulation. Those jobs eg. in the NHS that people moan about (admin workers) is enforced cirulation to those workers in their pay packet who then will spend that money. They will also pay tax circulating ti back in again and that goes onto welfare claimants who would otherwise be spending nothing. If every welfare claimant was kicked of benefit tommorow the likes of tesco would probably lose 1/4 of their profits over night.

Re: Economy is worse under us, says Cable
 

Well, what do you think happens to the money in savings accounts?

re loans - my daughter and her future husband have just been granted a £150k mortgage, with the rate depending on what deposit they can find (3.6% on 20%, 6.2% on 10%)

Re: Economy is worse under us, says Cable
 

It gets loaned out but most of loans are created money, only a small % is based on deposits.

Everytime in history where banks dont have deposits to loan out they allowed to just create the money anyway, so its hardly a showstopper for them. Not to mention the richest people dont save at the likes of barclays they will go offshore anyway.

whilst I am reffering to savings in general, the bulk of the problem is that the top 1-2% of richest people horde 90% of the money. When money is created the same thing is inevitable, 90% of it will always end up at that top 1-2%, when its there its out of the economy lost, it has to be replaced with new created money and hence inflation.

Re: Economy is worse under us, says Cable
 

There should be a balance for sure but the public sector jobs there because private sector dumped a load of jobs. Yes there should be essensial service but at what costs. Thats why its needed balance.

Not saying welfare payments increase drastically to claiments but merely pointing out we all contribute whether we work, ill, elderly or unemployed. They pay taxes not direct but inderect.

I agree Corporitsm is biggest obstacle set new thread about book coming out about RACE AGAINST the MACHINE comes out monday done by 2 MIT researchers. It worryingly what they say.

Not saying it was right to create the quango culture be it came about as many taxpayers moaned or merely papers championed a cause. That peple should work do something useful rather be on dole. Government struggling to get private sector come up with jobs so the quango culture came about. Government embarked on inflating public sector workforce job creation to get people work rather then let them sit around. Afterall people wanted it.

Now poeple moan it cant support it I agree the balance maybe wrong

However there many calling people who not working too now we have situation they dont want them on dole either what is government supposed to do if private sector wont employ in the quantities required.

Re: Economy is worse under us, says Cable
 

They probably want to do what america has done.

Time limited benefits then homeless or family cover living costs. Basically cut the weak off. We slowly heading there as currently on average we having a welfare reform every 4 years. Capitalism has simply moved on from benefiting this country. Shareholders want max profit, thats all they care about. Now manufacturing and employing workers is cheaper in asia than the uk. So ultimately job creation here will be limited. If someone ever invents teleportation mcdonalds will employ in asia and then teleport the food over, we would really be screwed then.

Re: Economy is worse under us, says Cable
 

Not a lot has changed, and we were no different from our cousins across the Atlantic. Shame the current lot have no interest in letting things adjust.

http://p.twimg.com/Ac3aUyTCAAExHIB.jpg

---------- Post added at 12:44 ---------- Previous post was at 12:36 ----------

It's a tad late for that, Keynesianism discusses stimulus for capital projects and infrastructure, not for state employment during bad times for business as usual activities.

There is a big disconnect between jobs.

By that token if I take say a tenner from you and give you a fiver I've contributed that five pounds. Let's stick to net contributions if we're going down that route, it's unfortunate but the majority are not net contributors and never will be.

A few things - going back to keeping people employed unproductively isn't one of them. Some construction and other infrastructure work would be good right now mind you.

Re: Economy is worse under us, says Cable
 

http://www.guardian.co.uk/politics/2...plan-b-economy

Re: Economy is worse under us, says Cable
 

Wouldn't be the same economists that were once praising him for his policy because it would stop the uk getting downgraded. Being honest i am a bit sick and tired of econoimists who say one thing one week and something totally different the next when things appear to change. So easy to be an expert when you only have to think short term or week by week bit harder though when you have to plan years ahead.

Re: Economy is worse under us, says Cable
 

Even moreso I'd imagine if you were the third choice for the job of shadow chancellor, had practically no business experience, no qualification in and precious little practical experience of economics and are too pig headed to take advice from people who are qualified to afford it to you.

Re: Economy is worse under us, says Cable
 

No, they would be the same economists that read the Grauniad and the Observer on Sundays and therefore are unlikely to be saying anything they haven't been thinking all along anyway.

Note, they haven't 'told the chancellor' anything - they wrote a letter to a newspaper. Nothing to see here, except the same people saying and doing exactly the same stuff as usual.

Re: Economy is worse under us, says Cable
 

The only function of economic forecasting is to make astrology look respectable - John Kenneth Galbraith.

Re: Economy is worse under us, says Cable
 

The problem with economics is that it is dynamic. In order to attempt to manage something which is made up of multiple variable inputs, only averages of all the often changing inputs, which happen every millisecond can be used. The longer the average the greater the room for error.

Chancellors have for many years been using relatively short term trends to organise fiscal policy often five years into the future. We are reaping the results of the grossly incorrect use of the averaging tool whereby Brown expected the good times to roll way beyond the normal cycle and borrowed against a rising graph line which nose dived off a cliff.

The other problem with economics is that from all the multiple factors, the selective use of what is good can be trumpeted whilst counterbalancing bad ignored. Common practice with politicians who invariably have a social agenda and cherry pick what suits the agenda.

I read the article putting forward their ideas and in theory I can see where they are coming from but it is all based on a false premise. They want a transactional tax on all financial transactions passing through the city of London. That is dubbed the Tobin tax and if the experience of Sweden is anything to go by it will kill the city of London stone dead with those trillions of money flow heading abroad. Sweden actually lost shed loads of money in taxes when they tried it and had to stop the Tax in order to get the other taxes lost to return. They were net losers big time and had to scrap Tobin to get back Capital Gains Tax.

We already have a stamp duty tax on paper transactions on shares and a comparable one on electronic transactions. A move beyond those taxes would be counter productive and as we are a clearer of transactions second only to the USA, it would be devastating. Those taxes are either global or not at all because electronically a transaction competed in milliseconds can be done anywhere in the world and they will be done where the host country is most tax friendly.

Within the fast changing dynamics of global economics the Eurozone crisis saw the can kicked down the road last week and the markets applauded the avoidance of immediate crisis with an almighty push skywards. The major indices have been plodding up the hill from three weeks before the outcome of the meeting with exhilaration at any news which although bad is not dire. It is called "climbing a wall of worry" but realistically everybody and their dog knows the the waffle and arm twisting in Europe solves nothing at all but at least sovereign debt CDS didn't get triggered which could have called time on the busted "fiat" system. The patient lives on and the life support systems are are in place but postponement is not cure.

The ongoing crop of problems swirling around the globe have exposed the underlying problems of globalisation coupled with politically inspired agendas particularly in Europe where strong and weak have a massive disparity in earnings but not aspirations. Until the financial elite and mega corporations work out how to re-organise their priorities it is best to do absolutely nothing to become insular and thereby anti competitive unless a willingness to be marginilised into third world country status is desired.

When a group of academics et al come up with anti competitive ideas it is obvious that although they may have impeccable credentials in some areas of economics they are obviously myopic when viewing the big picture. It works well if you are an island unto your self but not when you are a hub in a global network.

Re: Economy is worse under us, says Cable
 

these economists are not really any better than the average guy guessing whats right or wrong.

Re: Economy is worse under us, says Cable
 

Nail on HEAD felt that from day one that got air off read few books in university come out think gods gift to the economy.

Thing is this is NEW problem but they trying to go through ABC guide how to solve a crisis it just might not fit all the eyes and dots but they will try hardest to force it.

Now all these countries followed there advice off squarepegs in round holes its wrong they all end up the creek without a paddle.

Re: Economy is worse under us, says Cable
 

I know economics is a complicated affair but from my simple viewpoint if all these experts were so expert how exactly have we ended up in the complete mess we have while they were all about you cannot put it all down to politicians that do not listen.

Re: Economy is worse under us, says Cable
 

Because economics are like the weather - there are many variables, and every so often a storm arises from nowhere.

Re: Economy is worse under us, says Cable
 

Makes one wonder why a 'nobel prize for economic sciences' is awarded.

Re: Economy is worse under us, says Cable
 

Best guesser?

Re: Economy is worse under us, says Cable
 

Perhaps 'best gambler' would be more appropriate?

Re: Economy is worse under us, says Cable
 

Nah, as it is on Reseach, not application....

Re: Economy is worse under us, says Cable
 

Interesting set of 100 'economists'.

http://conservativehome.blogs.com/le...conomists.html

Rather dilutes the effect of having genuine economists there when you have academics from fields as diverse as cultural studies, history, applied social sciences and international development present, excluding out and out political commentators such as a former head of media for the Labour Party and a member of the Tax Justice Network.

Re: Economy is worse under us, says Cable
 

Good find.

That said I find it somewhat ironic that Mr Goodman, in defence of his non econmist colleague Mr Osborne who is "running" the economy, has a swipe at equally unqualified individuals whom (on that basis) he appears to think have no right to even comment on matters of an economic nature - nevermind run an economy.

Which ought it to be?

Re: Economy is worse under us, says Cable
 

Neither, hand the reins over to a non-political entity who have a clue what they are doing, have no desire to mould the economy to a preconceived notion, and lack the cynical need to find ways to bribe sections of the electorate every few years.

Re: Economy is worse under us, says Cable
 

Good luck with that.

Re: Economy is worse under us, says Cable
 

You didn't mention that it had to be realistic :)

Re: Economy is worse under us, says Cable
 

;)

Re: Economy is worse under us, says Cable
 

Whats that website is part conservative thinking as there another article on there. It seems quite horrendous but is this not point swiping at labour in there article. We still in mess coalision got equally bad advisors by all accounts so there article to try swipe at labour is bit veiled. End of day we got 3 parties non of them got clue.

http://conservativehome.blogs.com/th...in-danger.html

To me this telling piece shows if this part Concervatives they might just be waking up that things cant go on. Something has to give either regulation or businesses must think before they act.

I know governments miss managed even been led up the garden path by the ecomonists but big business had massive part to this mess too.

Its interesting read where does world go from here personally should have state owned infrastructure businesses water, gas electric etc that gives us the regularity power of building blocks think the move away from critical infrastructure into capitalism was very very bad move disaster waiting to happen. We have thatcher to blame for start privatising no doubt many countries followed suit got in same mess. Wonder if china still got state owned infrastructure businesses. Should mega businesses be broken up thats grey are, there certainly maybe need to llok into would it damage things. Do think more tighter regulations on what companies allowed to hoover competitors. Competition is healthy but businesses dont like it they buyout rivals this goto stop in my opinion. Also underhand cuts to force rivals out business all anti competitive but monitored that we dont lead to cartel situation.



There was article in lancashire magazine too about role banks played. I wondering if banks played the government in office namely labour at time knowing full well they be forced to bail out.

http://www.countymags.co.uk/articles...n-halifax.aspx

Sadly dont think coalision would called there bluff either. Some staggering crazy deals was done to negate tax obligations looking further down from us and USA treasurary. Why is the rich been allowed to do this.

Re: Economy is worse under us, says Cable
 

New Labour actively courted banks.

It was the tax revenue from the banks which powered Gordon's spending, this in turn powered by the cheap credit and asset bubbles policy makers created.

Re: Economy is worse under us, says Cable
 

Interesting message from the ILO about the global economy which it says is on the verge of a new jobs recession.




http://www.bbc.co.uk/news/business-15519699