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The economic data David Blackburn writes about in the <i>Spectator</i> blog was released today, but I’ve yet to hear any mention of it on Sky news and only a slight reference to it on the BBC news channel’s economic/business news.
So, is it really no big-deal, just a journo from the excellent (and Conservative supporting) <i>Spectator</i> or is just too boring and esoteric a subject to put before the general public. It MIGHT be major news that may have serious long-term consequences, but to explain why on the MSM just gets people reaching for the remote control to change channel. And news editors don’t want that!
Anyway, no apologies for once again highlighting something from the <i>Spectator</i> (The highlight is mine.)Can it get much worse than this?
David Blackburn
£4.3bn in the red, that is the gruesome fact of the government’s January accounts. <b>Never before has the government borrowed money in January</b>, usually a month of surplus as self-assessed income and corporation tax receipts line government coffers. Analysts forecast a surplus of £2.8bn, denoting just how bad the situation is. This is an exact copy of last July’s accounts, lending weight to the analysis that Britain’s recovery is slow and very precarious, an analysis confirmed by the weakest mortgage lending figures for ten years.Obviously tax revenues have collapsed. Mass redundancy, pay cuts and two years of heavy losses across the economy have decimated real incomes, making creeping inflation hugely worrying, despite the Bank of England’s jaunty outlook. The collapse of Sterling against the euro and the dollar means that the value of government bonds has fallen. The smog of gloomy facts suggests that deficit forecasts will probably have to be revised, upwards of course. Convincing the markets that Britain can get its house in order has just got much harder.
It’s hard to headline with this, insomniac, as you would need a grasp of monetary and fiscal policy, to appreciate the significance.
I’ve tried to gain an understanding of both – and the difference between them – but I find my thoughts turning to something else entirely, whenever Stephanie Flanders appears on my screen.
If hes refering to the recently published Jaunary mortgage lending figures, then that had been attributed to stamp duty rules and one month in isolation is neither here nor there. As we can possibly say with the borrowing figures
His reasons for inflation fears make little sense to me. Unemployment is a supressor of inflation
The depression we are in has been deliberately created.
The Bank of England created £200 billion out of thin air (quantitative easing). Therefore the Bank of England then had £200 billion for free. These funds created digitally were then used to purchase government bonds that already existed from the banks with the idea that this would free up funds for the banks to lend.
The net result is that the BOE now holds £200 billion of government bonds for a zero outlay. They will receive the interest on these bonds plus a return of the capital when they reach their end date.
The problem with this is the £200 billion has now become part of our national debt to be repaid by the taxpayer. Since the BOE are in public ownership (as stated on their website they were nationalised in 1946) then why does this debt need to be repaid to a bank we own? The reality is that they are lying about the banks ownership, the BOE is owned by a consortium of private banks headed up by the Rothschild family as is the Federal Reserve in the USA and virtually every central bank on the planet.If you really want to understand why we are in such a mess you need to watch the video the money masters, link below, this is the most educational film you will ever see.
http://video.google.com/videoplay?docid … ull+movie#
Or if you have a short attention span watch the video called money as debt, link below
As Einstein said "condemnation without investigation is the height of ignorance"
You clearly haven’t watched either of the video links, if you did you would understand why the economy is in such a mess.
Maybe curiosity will get the better of you.
Britain is screwed due to the spending policy of the Labour Gov.
No Spending Cuts in a recession is almost lunacy….the debt mountain is piling up just like every other country other than Germany in the European Union
Thats not quite true wallace. Increased government spending is the keynesian way out of recession, as has been the case in the USA under Obama. It stimulates demand which is essential
The cuts in spending in your country were becuase Ireland was effectively bankrupt. it was an immediate necessity. it was that or IMF and exit from euroxzome (could still happen)
Having said that, there are areas where brown should have made some cuts whilst stimulating the economy elsewhere
Oh Yes Ireland is a awful mess….The Property "idea" was a huge part of our Economy…once that went everything fell in behind more or less.
I think spending to get out of a recession is well and good but take Ireland. We need foreign investment as we have no natural resources other than agriculture. We need to reduce costs of everything…to become competitive with the new Poland and India etc.
USA has invested in new roads and infrastructure etc…which make sense but its cost mind boggling sums that will have to be paid back.
I am not sure what Brown is spending the vast sums on….The cuts have to come either way…..Conservatives are going to be painted the bad guys but its responsible governing.
I think you are right there wallace. There will have to be cuts in certain areas
I would be looking at public service pay and pensions first. But we need to be moving out of recession a little quicker first, beacuse such cuts will hit demand.
A lot of Browns spending has been irresponisble. To take one example in isolation, but one we can realte to…
Was it really necessary to increase GP’s pay by such a huge amount in the last ten years? Was that justified by any indicator?
If we had an honest government then the recession could be ended within a few weeks. The present recession will get considerably worse as the country will inevitably get deeper into debt and a downward spiral.
Where is the wealth for a recovery going to come from?
Britain is already in Chapter 11 Bankrupcy
Do any of your "video links" explain how a country can get out of "bankruptcy" or even just a recession, within a few weeks by dint of a little "honesty"?
I think you will find we are dealing with numbers here….
i suspect he/she is talking about monetary reform::
– take the power of creating money away from the central bank, and restore it to government; and
– replace fractional reserve banking with full-reserve banking.
its in his/her first couple of video links.
Full reserve banking (as i understand the phrase) is crazy. The system prospered well for decades on fractional resrve (around 12 % i think Basel agreement). The crisis was caused by off balance sheet transactions not properly analysed and regulated (if at all)
full reserve would grind most economies to a complete halt. how on earth would that stop a recession?
All enterprise requires credit and risk otherwise nothing develops
Ok Clive, how to end the recession see below:
Firstly we have a national debt somewhere in the region of £1 trillion (more if you include pension liabilities)
Step 1: Cease the practice of fractional reserve banking whereby banks can only lend the money they actually have on deposit.
Step 2: The Government creates (out of thin air just like the BOE)enough funds to repay the debt. Because the Government is creating the money there is no interest or capital to repay. They also create say another £200 billion just for a kickstart to the economy.
Now I’m sure you’ll say creating all this cash may cause some inflationary pressures but it would be insignificant after all the £200 billion of Quantitative easing has had little impact on inflation.Most of the national debt repaid would probably end up back with the banks so the banks would have plenty of money on deposit to lend.
Step 3: The annual revenues for income tax is around £80 billion, if the national debt is repaid then income tax could be cut by as much as 50% if we assume the cost of servicing the national debt is £40 billion p/a. However this would be too inflationary so some modest cuts would be in order. The balance of the annual saving could be actually saved as reserve and to cut the rates of corporation tax and free government start up grants for manufacturing.
Step 4: The £200 billion raised to be used for a massive investment in Britains infrastructure (Roads, Rail, Schools,Hospitals, Sports Facilities and Council houses.
The keynsian accelerator effect of this would quickly get Britain back on it’s feet.Im sorry, but this is beyond ridiculous
Without having to get past para one, if the banks could only lend the cash on deposit, then credit would seize up immediately, leading to an economic collapse. You do not replace that by the goverment printing moneu of course
There is abolsultely no reason why any back needs 100% reserve, none at all. Anyone who believes that believes that cash is the only economic asset. That is sub O level stuff frankly. By doing so you are treating all other assets as worthless which is crazy
four questions:
why do governments choose to borrow money from private banks at interest, when government itself could create all the interest-free money it needs ?
why create money as debt at all ? why not create money that circulates permanently and does not have to be perpetually reborrowed at interest in order to exist ?
how can the present money system, dependent as it is on perpetually accelerating growth, be used to build a sustainable economy ? its a finite world – perpetually accelerating growth and sustainability are incompatible.
what makes the current monetary system totally dependent on perpetual growth, and what needs to be changed to create a sustainable economy ?
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the only real purpose of money is to facilitate the exchange of real goods and services.
making money simply from having money – ie the charging of interest – is a big systemic problem.
a problem hugely compounded by fractional reserve banking, where interest is charged by banks on money that doesn’t exist outside of their invention. that invented money is 95 per cent of the money supply.
you can’t keep paying principal and interest from a pool of only principal, unless you run a ponzi scheme and hope you can keep churning out principal fast enough to beat the time-lag for its repayment along with interest on it.
like a ponzi scheme, fractional reserve banking and the charging of interest work only so long as the music is playing. meaning only so long as natural resources can be made to go ever faster from the ground to the rubbish tip.
and even without the recent additional greed and deception behind derivatives and CDS schemes speeding things up, that orchestra has been well into the finale.
the only way forward is to restrain expenditure to present day income – for society to live within the limits of its non-renewable resources and for the population to do no more than replace itself. basically the "full reserve" solution.
the fractional-reserve alternative means systemically a lot (and ever increasing number) of very poor people, dictated to economically to a few very, very rich
people, who then still need periodically to cull back the masses.but of course all that must be ridiculous because its not what is taught in school – well, not in Western schools anyway.
as to the state of the UK economy, for one stab at what’s coming, try this:
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