Bigotgate: The Musical

Many things have been said. Many things have yet to be said, but will be said.

But only Guido captures the summary with a beautiful number from another fallen King:



Farewell, Gordon. Peace be with you.

The end.

Toddler Tax? What About Brown's Baby Tax

All people need to know, and all the Tories need to do to counter this latest bit of lying Labour misrepresentation, is to remind them that every baby born for a generation or more will be in debt, from birth, to the tune of £32,000 and quickly rising (see counter at the bottom of this blog). The excellent Tory poster from January 2009 is now that far out of date. In 15 months, Brown's baby bill's nearly doubled.

It's Brown's baby tax, created as a consequence of his crazy scorched earth, debt-fueled spending spree after his mega-bust, and it's one of many reasons why he deserves nothing less than the total political oblivion to which the nation's about to consign him. And good riddance.

And let's hear no more pathetic, desperate lies about some phantom Tory 'toddler tax'.

There's only one conclusion worth reaching in this general election, and it's becoming clearer to people by the minute: it's time for the Tories to come in and clear up another fine Labour crisis. Failing that, it's just time for Brown to go.

Let's Talk About Debt

Who would have thought it? After years of denial Brown finally admits, sort of, responsibility for the banking collapse by deregulating them 'in the nineties', thus proving, incidentally, that the Tory banking regulatory checks and balances worked perfectly. If it ain't broke, Brown fixes it. Now Britain's broke.

Speaking of which, I am hoping tonight that Cameron nails Brown on the scale of the debt crisis this country faces and that his policies caused. The fact that the mainstream media can't seem to grasp this, nor most of the bizarre economic 'expert' commentariat of this country (the Anatole Kaletsky-types), should not frighten the Tory leader. He must make it plain to all that we really can't go on like this. Brown can't blame the banks for making him cave in on deregulation 'in the nineties'. And, as Dan Hannan I think said yesterday, if the banks' advice about deregulation was wrong - and Brown shouldn't have listened to it - why did he decide to listen to the same bankers over the public, trillion-pound bailout? Fool me once and all that. Two wrongs don't make a right.

Debt. Cameron's got to talk about it, not just to demolish Brown, but to be straight with the electorate about the scale of the challenge Brown's scorched earth policies have left for a Conservative government to repair and for future generations to pay off. We are, indeed, all in this together. Everyone. So what is there to be done?

Well, the first thing to do is to face up to reality. The other two parties can't do this because they are wedded to a particular ideology of big state interventionism, so the Conservatives, as always, will have to do it on their own - with a little help from the population. The reality is that public spending is bankrupting the country. I'm not saying that Cameron should be specific about where the axe will fall, but fall it must - hard and often. He's got to level with people, but in a positive way: a little pain now; pleasure later. Reform everything, abolish waste, get more bang for your buck and fix the public finances, starting with Labour's nightmarish overspending, currently putting us at a humiliating 20% bankruptcy risk (five times higher than France, Germany or the USA).

Labour's all about pleasure, pleasure, pleasure -now, now, now - until there's simply no money left to pay for it. That's just infantile.

If the infants are returned, therefore, with "economy killer" Brown at the helm, this country will effectively be bankrupt within a few years.

As it is we already face a period of Labournomic, fake growth (where every £1 of expansion in the economy actually costs the taxpayer £2 in 'stimulus' money. Hey, that's just what the figures say.) As it is we already face a period of stagflation. As it is we already face what could be another lost decade, just like the last time Labour was in charge.

Anyway, those are the sorts of things Cameron needs to talk about, along with all the optimistic stuff, obviously. People want an effective leader, not just a charming one.

Brown is neither. Cameron could be both.

Blair Knew

I nearly missed this extraordinary piece buried in the business pages of yesterday's Telegraph by half-decent economics commentator (and there aren't many of those) Edmund Conway. The thrust of the piece, supported by an interesting flashback to the days when Blair was, apparently, Labour's City spokesman, just when the '87 bubble burst, is that a series of FoI requests have revealed that Blair knew about Brown's mega housing bust as early as 2004, possibly before. Said Conway:

So concerned was the PM back in 2004 that the housing market was turning into a bubble that he asked the Treasury for a full briefing note (in fact he was prompted by an FT column by Martin Wolf, warning: “Nobody knows when the bust will come. But come, I believe, it will”.)

Fine, but nothing, as everyone no doubt recalls, happened. Why? I think we can guess. Conway continues:

Now, it probably isn’t a surprise to hear that the Treasury dismissed this view in its document, which PricedOut has attained under a Freedom of Information request. But I was surprised by the length of the document (eight chunky pages) and throughout its length a sheer unwillingness to countenance the possibility that the housing market would crash. It underlines the simple fact that the Treasury under Gordon Brown was blind to the possibility that things could go horribly wrong – even within the confines of Downing Street. It turns out no-one was allowed to challenge the “end to boom and bust” trope – even Tony Blair himself.

Blair's role in this debacle simply demonstrates how weak a prime minister, and person, he actually was. And, of course, it shows how far he would go to keep the title. He knew and yet he did nothing. If he'd had a spine, he would have fired Brown when he had the chance. But he didn't, and should be judged accordingly.

As for Brown. My God! Is it any wonder that I hate him (and I mean hate) and all he stands for? Is it really that surprising that I, and millions of others, believe he is the worst man ever to have held high office in this country? Should it really be that much of a shock that I am 100% sure that if this unelected, incompetent, vainglorious oddball is somehow given a mandate this year, the damage he will do to this country afterwards would make terrible harm he's caused so far look like the good old days?

At least the politics are therefore very straightforward: you vote Labour in your constituency and you will get five more years of the lying economic wrecker. Vote Tory, you don't.

As far as I'm concerned, it's a moral duty to vote Conservative this time around, and all that that implies if you don't. That what's at stake here. The documentary proof in Conway's article provides the proof, as if more were needed.

And now, just for a bit of extra entertainment, and in case you can't be bothered to click through to original article, is that video of Blair in '87. Who'd have thought a wet-behind-the-ears political unknown, who'd never had a proper a job in his life, would one day be prime minister.

Well, so much for David Cameron. But it is interesting to see Blair back then...



...about the same as he looks now, only less suntanned and without the Yank accent.

Kinnockisms

I thought I'd kick off the election season with some pearls of wisdom from the last Labour loser, Lord Kinnock. Yes, that's right, he's already told us, as reported this morning by Politics Home, that this "isn't 1992" and we all should line up in a row like obedient little sheeple and vote for Crash. Good luck with that line of campaigning, Neil, old boyo.

A couple of gems:

The situation is radically different, and I don't think we'd learn much from 1992. While we had a recession, it wasn't a global recession as it is now.

And there was me thinking the fundamentally dishonest, outrageously simplistic Labour narrative that it "started in America" had been comprehensively debunked, er, by everyone. Seems Kinnock's a bit off the pace.

Everyone now knows that Crash indulged in disastrous levels of deficit spending during a period of putative growth - unlike every other major world economy; that he incompetently deregulated the banking system, arrogantly destroying all the checks and balances built up carefully over the previous 20 years; that he subsequently presided over (encouraged, even) the biggest property and debt bubble in British history and that he failed to manage the bust when it actually came. The crash was, remember, just as terrible in Britain as it was in America, if not worse, thanks to Brown's deregulated banks' toxic assets and lack of real cash. RBS, HBOS, Northern Rock - two Scottish and one Geordie bank, all chummy with Brown so long as they kept giving him the funny tax money. And that was all it took to bring the country to its knees: bad, corrupt even , management, private and political. I could go on. Need I, though?

Brown's economic crimes run far deeper than this and go back far further: destroying the best funded pensions system in the world, selling gold at the bottom of the market, PFI, cuts to the armed forces in wartime and so on. And then lying about it all by, for instance, claiming that since he'd abolished boom and bust, it must have been someone else's fault in some other country, preferably the United States, that his entire house of cards fell to bits at the first sign of financial turbulence. This kind of attitude provided us with some of the evidence that with Brown, a pretty unhinged mind was at work. At least Kinnock was just a harmless windbag, ultimately.

I think it would therefore be sensible for Kinnock to shut-up about Brown's record on the economy. And he's wrong about the comparison with 1992 on at least one level, too. In that election, we voted for a government that would lead us out of recession, and it did. We'll be doing the same this time around. So I'm afraid the outcome won't quite tally with this other, priceless Kinnockism:

...if you want someone to effectively manage the economy, you will vote Labour.

Rofl. To (mis)quote that really funny guy on the Moneysupermarket.com ads: "Trust Labour on the economy? You're 'avin a laugh!"

No tax on jobs, just cuts in waste. That's what we need and only the Tories are offering it.

In fact, so far, they're policies, such as the cancer treatment availability promise and the Equitable Life compensation, seem to me to be all about righting 13 years of accumulated Labour wrongs. I think this is a damn good strategy, not least because between now and election day, they will not run out of Labour wrongs to right. There are so many to choose from.

So, Kinnock, pay attention: if anything, this election seems more like '79 than '92, but there are similarities from certain perspectives with both. It's between the Tories and the Labour party, for instance, just like it was then. See?

Joking apart, ultimately, it's pretty clear that this one is going to be very much its own election with its own characteristics and its own, probably surprising outcome. For me, that 'surprising outcome' will be the sheer scale of the Conservative victory, or the sheer scale of the Brown defeat - whichever makes you happiest.

Both suit me fine.

Carbon Junk Bonds

Carbon is universally ubiquitous. It is the fourth most abundant element in the cosmos and the fifteenth most common on this planet. It's the basis of all life as we know it. Yet it seems that this elegant combination of abundance and vital significance will not stop human beings, in their endless pursuit of ever greater levels of folly, from basing an entire new economic model on "trading" the stuff. It reminds me of the Golgafrinchans in The Hitchhiker's Guide to the Galaxy, where, having crash-landed on a primeval Planet Earth, decide to use tree leaves as currency, only to discover soon afterwards that they had a serious inflation problem. Their solution? Why, burn down the trees, of course.

So you would think that this comedy science fiction is just that, comedy science fiction. It could never happen in real life, could it? Well, yes, it could. Anthropogenic climate change hysteria (it was anthropogenic global warming, but since the warming abruptly ground to a halt a decade ago, the goalposts were conveniently moved) drummed-up by discredited, numbskull scientists and then exploited mercilessly by leftwing misanthropists and 'financial engineers' alike in pursut of their own agendas, is producing its own version of leaf-trading. Both groups have something in common: while their ultimate goals might be different, they both really don't give a toss about the environment. All the traders really care about is money and all the loony Trots really care about is power. About people in general, they both care nothing.

Leaving the Trots to their own devices for a moment, in Private Eye's latest edition is an interesting article on the father of derivatives trading (junk bonds to you and me), Richard Sander. For those that don't know, derivatives, in their many various forms, are the things that brought the global economy crashing down a couple of years ago, (beginning, interestingly, with Northern Rock in Britain (it didn't 'start in America', as such, you see)). Just to put things in some kind of perspective, the entire market, if memory serves, was worth an wapping $500Tn in 2007, while the real villain of the piece, the CDS (Credit Default Swap), which was a trading invention that effectively rewarded the trader who held them with a payout should there be a default over a set period of time on a 'bundle' of mortgages, which were sold as a package, was $50Tn dollars before the sub-prime crisis went off like a nuclear bomb and plunged half the world into depression.

Well, Sander's at it again. This expert in magicking money out of thin air by trading in worthless assets is the main mover behind all the new bit of 'financial engineering' currently known as 'carbon trading'. Private Eye has done what passes in that magazine for an expose on him, though its typically MSM-style, schizoid editorial stance on all-things climate change means that it doesn't seem to be able to reach any solid conclusions about where this latest global financial scam will take us. Anyway, click on the image to read the article, or on the link above:

Whatever the ins and outs of how this thing's mechanisms are expected to work, a few things stand out in particular. First, the usual suspects are involved (RBS etc). Second, it stinks. What CNBC's Federal Reserve expert, Steve Leisman, called in late 2008, at the height of the crisis, a decade of 'fake growth' amounting to $40Tn, is about to happen all over again. A worthless commodity, in this case a commodity that doesn't actually exist - these are bets designed to offset the 'production' of carbon, or, more accurately, carbon dioxide - (at least with sub-prime, there was a real house lying somewhere at the bottom of it all), will be traded furiously in a market that some are saying will be worth $100Tn (Christopher Booker for instance) before this decade is out. And they are not wrong: one decade was all it took in the case of sub-prime junk bonds, once Alan Greenspan and Bill Clinton (and Gordon Brown in Britain, of course) had created the CDS bonanza for their banking buddies. Lehman et al over there; Royal Bank of Scotland, Bank of Scotland, Northern Rock et al over here. So long as the tax rolled in, no one in government cared. They certainly did not have clue-one about the forces they had unleashed with their vandalism of carefully created regulatory systems. Brown certainly didn't, hence the biggest exposure was in Britain. Within a decade, that market had jumped from a few hundred million in the mid-nineties to trillions by the time of what I consequently like to call 'Brown's bust'.

It's happening all over again, beginning this year. And there is nothing anyone with any political power will do to stop it. Why? Because of the propaganda that is fuelling the scheme's growth and the amount of egg on collective faces there would be should someone decide to hold his hand up and simply say, "Hang on a minute, do we really want to go down this road again?" So it isn't carbon capture we should be worrying about, it's media capture. It isn't money men like Sander we should be worrying about - he's just doing what he does best. It's the crooks in our own government.

It isn't climate change we should be worried about, it's the vast scale of the next bust, which will be inevitable if (or when) these immoral, undemocratic and economically retarded transnational carbon trading schemes are permitted to gain a grip on the world.

We do need alternative energy production systems, of course, and we must work harder to conserve and preserve the planet's ecosystem and protect it from humanity's impact (some would say that that is a human duty). What we certainly don't need is, first, insane, pseudo-scientific thought diseases that will result in real envoronmental damage (as has been seen already), and second, to pour hundreds of billions of pounds of wealth into the stratosphere based on that lie, wealth that could and should be used to modernise the world's infrastructure today.

It is time for people the world over, the vast majority of whom don't believe the climate lies any more in any case, to start shouting out loud: not in my name!

UK For Sale: Labour's Betrayal of Britain's Industry

This comprehensive, enormous post from excellent libertarian US economist (my favourite kind), J. Ricardo Valenzuala, on the subject of the vulnaribility of vast swathes of UK corporate assets to foreign takeover, is fascinating and an absolute must-read. In my view, however, and partially in contrast to Valenzuala's, the massive shift over the past decade to the foreign control of British manufacturers - large, medium and small - while certainly providing some temporary benefits in terms of stability and new investment (or, in Rover's case, a stay of execution), overall amounts to no more and no less than a deeply damning indictment of Labour's 13 disastrous years in charge of policy for the UK's manufacturing base, humiliation for the nation, and relegation to economic dependency.

The huge decline in UK manufacturing over the past decade or so simply cannot be hidden, no matter how much Labour's many liars and spinners lie and spin. Even before Brown's bust, his useless policies ensured that the manufacturing sector was either actually shrinking, or that corporations became too weak to defend themselves and stay in British hands, Cadbury being the latest case in point.

History shows that when foreign companies feel the pinch, they do not cut at home, and, if they must, then only as a last resort. They begin abroad. That, to them, means us. Remember Tata Steel and Redcar Corus? No one else seems to. The point is that if and when there is another downturn (though there must remain some uncertainty as to whether we're out of this one yet), Britain will be shockingly exposed because it will be the first country in the firing line for investment cuts by foreign companies. For instance, if Kraft begins to feel the pinch at some point in the fiture, it won't be American factories it will be closing first, it will be British ones. Cadbury, a healthy, profitable, productive and well-managed company, is now vulnerable.

For this reason, we simply must follow the examples of Germany, France and Italy and protect what remains of our homegrown, home-owned manufacturing base from easy foreign takeover. This can be achieved through German-style takeover legislation (remember Vodafone and Mannesman? Vodafone won in the end, but not without one hell of a fight with the German government, who secured enormous, locked-in investment commitments as a consequence, something the current British government has never even bothered to do) wherever such a takeover is deemed to be not in the national interest, the latter measure being transformed into a far sterner test of commitment. This country's highly productive manufacturing workforce deserves nothing less.

Sure, there will be extreme cases where loss-makers can be given a second chance with foreign money, but it's a long-term view for the country as a whole that should shape economic policy in this area from now on, not more of Labour's short-termism, which has always been about the cheap politics of making corporate headaches go away in an election year (ala Rover, 2005) that has doomed far more British industry either to ruin or to second class status than it has ever saved in the long term.

What's therefore crystal clear is that such a paradigm shift, from inept political pragmatism, sold to the British electorate under a false banner of 'globalisation', to an aggressive British enterprise culture which actually creates secure British manufacturing jobs, can't happen under Gordon Brown, but might happen under David Cameron. And that's the chance we can't afford not to take.

We have to take a chance on the Tories, because more of the same under Labour means game over for British industry, and that means game over for Britain.

The True Cost Of The Labour Years? Unquantifiable

The British electorate trusted Labour to inherit the most stable and competitive economy in Europe and to invest wisely for the future. Yet over 13 wasted years our public finances have been squandered and our economy is in a dire state. The damage they have done is so extensive it is hard to quantify.

So writes John Major in an excellent article in today's Mail on Sunday. And who with half a brain could disagree with that? But, as he goes on, the gulf between reality and Gordon Brown's increasingly desperate political narrative nevertheless just keeps on relentlessly widening.

The Prime Minister feeds the public with a diet of nonsense, telling us that tackling the deficit is his priority, while promising increased expenditure for popular services. The disconnect between the Prime Minister's fantasy and the real world becomes ever wider.

And yet he continues to make claims that are easily contradicted by the evidence. How can trust possibly be maintained? And how have we come to this?

The former Prime Minister therefore raises three key points, which he does make some effort to answer in his piece, but not fully. First, he suggests that the vast damage caused to Britain in 13 years of this disastrous government will be very hard to quantify. Well, that could be the case - the damage is massive, in terms of our society, the law, education, productivity, the economy and so on and so on (ad infinitum - nearly) - but quantify that damage the Tories must, if there can be any hope of putting at least some of it right. The first thing they will have to do, once they have begun to bring Brown's debt chaos under control, is embark upon a great national audit, just to establish how deep in Brown's manure we have been left.

Second, he asks about trust. It's a good point, that, but it should be remembered that there is nothing wrong with parliament - never has been. The system of expenses, for instance, relied upon the integrity of MPs to function correctly. No one could have expected that fully 80% of those MPs had no integrity to speak of. Finding replacements that do, and then simply having a blanket cap on what they can be paid beyong their salaries in these years of austerity will provide an effective solution. As for Labour, its endless lies, spin and arrogant, shameless abandonment of the principles of ministerial and collective responsibility must be ruthlessly reversed by the next Tory government. Moreover, because of the vast assault on accountability - and the subsequent democratic deficit - by Labour with their creation of an enormous, extraordinarily expensive quangocracy, the third job for a Cameron government, if it hopes to repair the damage done to parliamentary democracy in this country by Labour, is to make these organisations democratically accountable (at the very least) and seek to abolish a large proportion of them. The former (democratic accountability) could be achieved, short term, by taking the 'N' out of QUANGO. Bring them under direct ministerial control; make them directly accountable. The 'quasi' bit, then, which has become meaningless under Labour, would then regain some sort of a truth value. Abolition and/or merging of these things could then be achieved more efficiently, and with fewer job losses in the long run, which is desirable in a broad sense. Ultimately, the savings to the taxpayer will be truly vast. A quote from wiki, for instance, on the subject:

In 2005 Dan Lewis, author of The Essential Guide to Quangos, for example, claimed that the UK had 529 quangos, many of which were useless and duplicated the work of others. In August 2008 a report by the pressure group the Taxpayers' Alliance, claimed that £15 billion was being wasted by the regional development agencies, quangos set up with the stated goal of encouraging economic development in their respective English regions.^[7]

There's clearly scope for the abolition of, say, half of these so-called - in government circles - "NDPBs" (non-departmental public bodies), which cost a staggering £100Billion+ in 2008 to run, according to the Times, most of which was poured down the drain. It's not just about slashing budgets: there is a point of principle here, too, and it should be trumpeted by Tories from now on: not one pound of taxpayers' money should be spent without democratic scrutiny ever again. Otherwise, we will simply have more of what we have now, vast amounts of our money funding unelected special interest groups. It's not so much that we can't go on like that, but that we just bloody well won't.

And in all that, Labour's abuse of parliament, Labour's vast, as-yet unquantified, abuse of public money, the abuse of the expenses system (worse by Labour than the Tories), Labour's abuse of the elecorate, and, most appallingly, two Labour Prime Ministers', in their different ways, utter contempt for and abuse of their office - not to mention a whole string of ministers' abuse of theirs: in all that lies the answer to John Major's third question: "How have we come to this?"

The challenges for Cameron are staggering; the scale of the destruction wrought by a corrupt, corrupting Labour government almost unimaginable. And that's all without even mentioning Europe, or the many dodgy wars. If Cameron has the stomach for the post-Labour reconstruction job, then he's a far better man the me!

I think he does, though, - and should certainly be given the chance to prove it with a clear mandate, which I am certain he will win.

CRASH ! Ah-Ah

Destroyer of the economy.
CRASH! Ah-ah...
He's a mentalist.
He hates every one of us, can't stand any one of us...
He'll steal every thing we've got from every man, every woman, every child,
He's a clown, he's Crash!

With deepest apologies to Queen.

Anyway, you get the idea, I hope. It's inspired (if that's right word) by this latest Randall demolition job on Crash Gordon's devastatingly terrible economic record to date. A taste:

We learn from a new book – Where Power Lies: Prime Ministers v The Media, by Lance Price, Labour’s former director of communications – that this Prime Minister is obsessed with controlling hour-by-hour media coverage and is prone to temper tantrums, shouting at staff and kicking furniture when a story runs beyond his spinmeisters’ control.

If true, Number 10 advisers might care to bring out the Ritalin and buffer the chaise longue with bubble wrap. Britain’s financial performance under Mr Brown’s stewardship has mirrored that of his local football team, Raith Rovers: a Premier League side in the 1990s, but now languishing in the bottom half of the division below.

Delicious. But that's just the tip of the iceberg. The ruination nutcase-Brown has brought down upon this nation since he and his fellow nincompoops conned their way into power (three times - somehow) is truly epic. Read the article, where Randall gives what I feel is a pretty abridged list of the major Brown damage. It seems it's down to the electorate to elaborate - and vote accordingly.

Just so what's left of Queen don't get too upset, here's the original Flash Gordon ditty:

Er, I know. Camp doesn't begin to describe it.

E. Balls, A. Balls, PIMCO and Gilts

I was just skimming through the comments beneath Jeff Randall's latest all-out assault on Labour's epic economic incompetence when I stumbled upon something rather interesting of which, in my ignorance, I knew not (thanks to the poster "BD MATHERS," I do now). The European portfolio manager (chief buyer) of the biggest bonds and gilts dealer in the world, PIMCO, is none other than one Andrew Balls, Ed Ball's much smarter little brother.

"So what?" you may well ask. Well, for one thing, PIMCO holds $183Bn of assets and, as such, is the biggest company of its kind in the world. What is more, it's playing a vital role in keeping the British economy's head just about above water, for now - (or, at least, keeping the Labour shipwreck afloat). However, PIMCO announced yesterday that it will be withdrawing from both the US and the UK markets. The US will just about be able to cope with this since it has many other options open to it. Not so the UK, a far smaller economy where debt dependency means we are orders of magnitude more leveraged than the States. As the "economic voice" blog says:

In what amounts to a massive vote of no confidence PIMCO has announced that it will cut back on its UK and US government debt holdings. They see government borrowing rising and the central banks no longer buying through quantitative easing, which will push the supply / demand balance into negative territory for them. They are expected to move into European government bonds as these have not had the same level of government support. If a flood of UK Gilts are dumped on the market we could see yields rise (prices drop) more than anticipated.

This leaves the questions of where will the government raise the circa £180 billion it needs for the next year? And how much more of a premium in the form of increased bond coupons (interest) are we going to have to offer before investors are happy to take the risk of buying new Gilts? Also, when will the Bank of England be able to sell its accumulation of Gilts back into the markets without suffering a massive loss?

Next stop the IMF?

Indeed. This is a very, very serious development which has all-but been drowned out by all the noise coming from Brown's latest pathetic leadership crisis over the last 24 hours or so, although some bloggers, most economists and some broadcasters did pick it up. It is a stark truth, but Jeff Randall is absolutely right: Britain is broke; the coffers are [worse than] empty. He was wrong, however, in his assessment that both main parties are too scared to talk about managing this calamity. As I said earlier, Philip Hammond was refreshingly candid, forensic and solid in appraisal of the Labour-led crisis in the PBR debate today. It's only Labour that's delusional about the scale of the problem, in particular the Prime Mentalist himself - oh, and one Edward Balls.

Which brings me back to the theme of this post: the embarrassment the Balls brothers connection might (should) cause the government. Why? Guess who will be steering through PIMCO's dumping of UK gilts. One Andrew Balls, European portfolio manager. The "economic voice" again:

Apart from the economic repercussions for Britain, it also embarrassingly appears that Andrew Balls (younger brother of Ed Balls, Secretary of State for Children, Schools and Families) will be overseeing this withdrawal as head of PIMCO’s European investment team.

But in a huge, gobbledigook in-house interview posted after Christmas on the PIMCO Europe website, Balls Minor puts a bit of English on what the company calls its "European Cyclical Outlook and Strategy" (aka, its "Get the hell out of the UK as fast as possible" plan).

...there is more uncertainty around the forecasts than usual, and it is even more difficult to identify the turning point in the economic cycle because larger, secular changes are also underway. Over the long term, we expect to see a major shift to lower growth in the developed economies, higher growth in the emerging economies and greater government intervention and regulation overall. PIMCO calls this new economic reality the New Normal.

Compared with the core eurozone countries Germany and France, we see the UK as having a more difficult adjustment to make to the New Normal due to weaker initial conditions, greater ongoing need for deleveraging and, in the household sector, the need to rebuild savings, which are low compared with the savings rates you see in Germany or France.

However, the UK has benefited from more aggressive policy interventions and related to this, the depreciation of the British pound versus the euro and the dollar. We also consider the UK a more flexible economy than Germany or France. That is a benefit for the UK in terms of handling the big shocks we have seen hit these economies.

Taking all these factors into account, the growth forecast ranges are similar for the UK and the eurozone as a whole, and their outlooks are broadly similar, but the midpoint for the UK is a little bit higher than that for the eurozone.

Another important point is that while we see unexciting growth at the eurozone aggregate level, we expect to see considerable differentiation across member countries because of weaker initial conditions and greater deleveraging requirements in some countries.

Get that last bit? "Weaker initial conditions and greater deleveraging requirements in some countries [in Europe]." For 'some countries,' read the UK. For 'weaker initial conditions,' read Gordon Brown's total cluelessness in his decade of lunatic spending into a massive property bubble that he helped to create and fuel. Seems spinning the facts could therefore be in the Balls family genes. To be fair to A. Balls, though, he is stuck between a very thick rock (filial loyalty to an older brother - and sister-in-law - who helped cause the UK's current economic chaos) and a very hard place (doing his job). It seems he plumps for the latter in the end, though, in his assessment, stating (in econo-nerd speak, naturally) that:

In the UK there is also uncertainty over what the Bank of England (BoE) will choose to do with the stock of gilts it has bought during 2010. The BoE has bought gilts across the curve, whereas the Federal Reserve’s quantitative easing purchases have largely been focused on mortgage-backed securities. So there is a bigger question mark over the exit strategy here for the BoE, whether it will continue to hold these bonds or whether it will at some point try to reduce those holdings.

Because the eurozone does not have large-scale quantitative easing programmes to unwind, we remain moderately bullish on eurozone duration. We also remain positive on covered bonds in the eurozone. The impact of ECB purchases of covered bonds is very minor compared with the quantitative easing programmes in the UK and the US...

This is why his bosses have told him to dump the UK (and US) and buy European debt instead. He goes on (boy, he goes on!)...

On the UK side, in addition to the risk associated with the end of quantitative easing, there is also political uncertainty surrounding the elections, most likely happening in May, and the implications there for fiscal retrenchment and for fixed income markets. The chance of renewed pressure on the British pound remains a source of tail risk, a risk that poses a market crisis or systemic event that can severely hurt portfolio returns, in the UK.

In other words, the UK is the most likely candidate for basket case status in the entire continent of Europe. I wonder if Ed knows what his brother's been up to? Andy knows what Ed's been up to, that's for certain. You know what, I think Britain ended up with the wrong Balls in the government.

Anyway, that's enough of that. It's all just too unspeakably depressing for words. My God this country has been fubar-ed by Labour. Again.

Ben Bernanke Bashes Brown

One of these two knows what he's doing

Having flailed around in my last blogpost banging on about some sort of 'new phenomenon' where there wasn't one, really, (I'll leave it for others to decide, but I reckon it was not my best effort to be brutally honest), it comes as something of a relief to see the Spectator doing what it does best and putting the boot in to old "saved the world" Brown himself. And all they had to do was flag up Bernanke's testimony to a Senate hearing about Brown's ultra-useless tri-partite banking regulation system. Here's what the report says:

Gordon Brown’s much heralded tripartite regulatory system failed the first time it was faced with a financial crisis, proof that taking away regulatory powers from the Bank of England was a massive mistake. Now, Ben Bernanke — who is trying to secure a second term as Fed Chairman and keep the Fed’s regulatory powers intact — is citing the Brown model as what not to do, telling the Senate banking committee:

"[O]ver the past few years the government of Britain removed from the Bank of England most of its supervisory authorities. When the crisis hit - for example when the Northern Rock bank came under stress - the Bank of England was completely in the dark and unable to deal effectively with what turned out to be a destructive run and a major problem for the British economy.”

As Paul Waugh points out, George Osborne and his team are rather pleased with this effective endorsement of their position by the Fed Chairman. Bernanke’s quote does rather show that Brown isn’t leading the world in quite the way that he likes to claim.

Very gently put by James Forsyth. In reality, what Bernanke is saying here is that Brown himself - personally - through his moronic regulatory mishmash, directly caused - not contributed to, mind, caused - the 'destructive run and the major problem for the British economy' we are all having to suffer through now. Namely, the worst peacetime recession in modern British history. That's how cognitively dissonant the Brown-Labour narrative is on the banking crisis and recession for which, I and many others maintain, Brown is directly responsible.

I'd say Osborne is absolutely, champagne cork-popping cockahoop tonight, and about a dozen Nokias have been obliterated on the bunker walls. It seems Bernanke and Obama alike are distancing themselves from the tainted loser that is Brown, just like that little French gnome Sarkosy did yesterday.

For them, at least, the penny really has dropped. They've abandoned Brown long before we'll get the chance to do precisely the same thing, in 2010.

Gordon Brown: Not Just An Idiot...

Just got back from a spell of Christmas shopping. I know, a bit early for a bloke, but I thought I would miss the rush and I knew what I wanted, so I thought it would only take an hour or so. Fat chance - it was hell out there! Then driving home I wondered to myself, is this a sign of economic recovery? Could be. Could be.

But...

...and it's a big "but" which is followed by the now all-too familiar name of the one-eyed Scottish incompetent, Gordon Brown. David Blackburn has proved that while he is many things, all bad, he's also something more, incredibly: he's politically naive. This king of bust, who presided over (as unelected Prime Minister) and largely was to blame for (as useless Chancellor who borrowed into a property bubble that his deregulation of the banks directly caused) the biggest peacetime crash since 1929 and the worst recession in post-war history, is now jeopardising the recovery as well with his stupidity and tribalism before it's even had a chance to start. Read it and weep:

The Times’ Ian King writes that Dubai’s predicament presents an opportunity for the City to attract new business. There is no reason why, with attractive incentives, London shouldn’t capitalise on Sheik Mohammed’s momentary lapse of reason. However, the appointment of Michel Barnier, an evangelical protectionist who makes Joseph Chamberlain look like the father of Free Trade, as EU regulating supremo is a disaster for Britain.

The appointment raises further questions about Gordon Brown’s acceptance of Baroness Ashton as the EU’s foreign minister. Michael Fallon is no doubt:

“Brown has been completely outwitted. We now have none of the three key economic jobs in Brussels. This has all happened at an incredibly dangerous moment when there are firm proposals which will govern regulations on banking, insurance, private equity and hedge funds.”

Despite its insistence to the contrary, Downing Street has failed to protect financial regulation from falling into foreign hands. The outmanoeuvred Prime Minister has left the City at the mercy of a politician who believes there is “too much free market liberalism”. No wonder the French are so keen on Gordon Brown. Recovery has been jeopardised by political naivety.

What we did to deserve this imbecile is anyone's guess. Oh, that's right, about nine and a half million idiots voted him in in 2005. Hang on...

Ah well, at least we'll get to vote the moron out some time next spring. I just hope that by then it's not too late.

Best Placed to Weather the Storm? Yeah, Right

As confirmation emerges that the Eurozone is now officially recovering, Guido has created a useful visual comparison between the current states of the world's economies for our convenience.
His conclusions are inescapable, for us and for Gordon "Best Placed" Brown.

As well as being the lamest economy in the G7 we share recessionary woes with economic powerhouses like Romania. Gordon Brown’s epitaph will be that he didn’t abolish boom and bust, that he didn’t save the world and he “lead the way” only in his imagination. The British economy has paid the price for his delusions.

Exactly.

Anyone but Brown.

Bank of England Doesn't Deserve Its Independence

As a new report from the Bank of England is released, predicting a slow and painful return to growth for Britain starting in January 2010, and, bizarrely, enduring low inflation, one is left wondering if any of them can have any credibility left at all. I say this cautiously; the real villain of this piece is, always was and ever shall remain Gordon Brown whose mixed signals (orders?) to the Bank for so many years have been leading it up the garden path ever since it was given its so-called independence. This was Brown's bust, following inexorably on from Brown's mega housing boom. But he could not have done it without a fairly tame governor and Monetary Policy Committee so they are not exactly blameless themselves.

However, bad though that is, it's not really the thing which annoys the most. No, what really gets to me is the total, ongoing arrogance of this bunch of overblown economists (soothsayers and pseudo-scientific charlatans, in other words) whose every prediction thus far about the state and direction of the economic condition of Britain since Brown's uber-bust began (which they did not see coming incidentally, an epic failure surely on a par with the CIA failure to spot the fall of the Soviet Union and the end of Cold War: exactly what they were there for!) have been wrong - and not just wrong, mind you, but massively, wildly wrong.

The question is, therefore, when Mervyn King says that growth is around the corner and inflation is "dovish", why on earth should anyone believe him? Sure, if you look at the graphs, what you see is a very long, drawn out version of the Darling "trampoline" V-shaped recovery (the trampoline's springs were a bit loose, eh Darling?). In fact, for most of 2010 and early 2011 all you really have is stagnation. If you look at the lower tolerances of said graphs (which betray the scale of the B of E's hedging), I suspect you are looking at something that more closely resembles what will emerge as reality: zero or weak growth for up to three years with the distinct possibility of a double dip recession by 2011/12. Factor in the inevitability of currency devaluation thanks to the deficit, the debt crisis and subsequent inflationary pressures, and yes, you have the old Labour disease back with a vengeance: stagflation. It's the word economists dare not utter. It is That Which Must Not Be Named - the Lord Voldemort of economics, whispered only by the brave or the foolish: "stagflation". Well, I must be Harry Potter, then, because I'll bloody well shout it from the rooftops: S T A G F L A T I O N!!

Point is, I wonder why this or, at least, something like this, isn't really being talked about, especially in the mainstream media. It is almost certainly the most likely outcome of the current, parlous economic state Britain finds itself in, with huge amounts of slack in the economy, no credit and virtually no demand, but with ever-active unions and wage inflation, a fragile currency and a world that's losing faith in Britain's ability to pay for its debts. So the question must be, just how much political pressure is being put on King and the MPC by Brown and Darling and Balls and Mandelson (what a bunch that is)? I would have to say a hell of a lot and it has helped to destroy their reputation.

Answer? Well, in the short term at least Osborne should bring the Bank back under his control, at least until a genuine, less tarnished, contaminated kind of independence can be designed. At the moment, the Bank simply doesn't deserve its independence, even if it is now independent only in name. A shake-up is definitely required, and a complete change in policy direction, if we are to have any hope of avoiding that which must not be named - urgently. So why not start with the Bank of England?

Mountainous Losses

The Royal Bank of Scotland. Bailed-out by the government with $71 Billion of our money - by far the biggest bank rescue in the world - and now to be asset stripped at the behest of Brussels right at the very bottom of the market. And this is just one banking example in the biggest British bust of all time.

The result? Well, you may ignore the bluster, the spin and the lies from our catastrophically incompetent Labour lords and masters. The result will be that British banks will lose more money than any other banks in any other country in history. The price of Brown's failure as Chancellor before his crash, and as Prime Minister after it, is there for all to see in the graph. As Mark Bathgate notes just now in the Spectator, the losses could be, according to the IMF, as much as 25% of Britain's entire GDP. That's more than three times the next most exposed country, the USA. This is, quite simply, the biggest financial disaster in British history. And it happened on Brown's watch. Thanks to Brown's overweaning arrogance and incoherent regulatory system married with, of course (inevitably), his total mismanagement of the public finances, a large but managable adjustment, which is what it would have been under a Tory government, became a meltdown - and it's not over yet.

Anyone, anyone who thinks voting for Brown in the General Election is a pretty neat idea should have their polling card confiscated. Why? Two reasons: 1) They represent a clear and present threat to the future recovery - existence even - of the country, and 2) They're obviously mentally impaired.

Anyway, Bathgate's brilliant article is worth quoting in full:

Two years after Northern Rock became the first bank failure of this crisis, another £30 billion of taxpayers’ money needs to be thrown at the banking system. Behind all the noise about improving competition and the European Commission lies one core fact: the UK banks have lost an astonishing sum of money. The above chart shows bank losses as a percentage share of GDP, and illustrates the scale of the crisis that has overwhelmed the banking system and the taxpayer. The IMF estimates that losses could be as high as 25% of UK GDP.

UK banks went on an orgy of lending around the world, becoming the biggest source of credit growth in many countries. RBS trebled its total lending in just three years, expanding its balance sheet to almost 1.5 times the size of the UK economy. Egged on by Gordon Brown – in whose tax receipts he felt he had found the “New North Sea Oil” to fund an ever grander government sector – money was thrown in almost every conceivable direction. In common with their cheerleader Brown, the banks decided there was no reason to worry about the day when the economy could decline because ‘boom and bust’ had ended. This led to many UK banks – the largest lenders at the height of the boom – facing the downturn with the lowest bad-loan reserves and the weakest liquidity position of any banks globally.

The list of bank failures that started with Northern Rocks is now long: Bradford and Bingley, Singer and Friedlander, Dunfermline Building Society, RBS, Lloyds, HBOS. With over £30 billion handed over today, the direct cost for the taxpayer approaches £90 billion, with no certainty of these sums being recouped. On top of this, there are still over £1 trillion of other subsidies being provided to these banks and others who have not needed direct bailouts, like Barclays, to try and hold the system together. This is not the end of the bill – most people will have noticed overdraft charges rising and the gap between mortgage rates and the Bank of England Base Rate soaring. UK banks have increased their margins to UK customers to pay for their losses. This is one of the key reasons that the UK economy remains, alone among the major economies, in recession. It’s not smart economics to refund the taxpayer the cost of the bailout by simply ramping up the costs of banking to the same taxpayer.

The UK bank crisis ranks as one of the most serious shocks to hit a developed economy in the post-war period. The scale of bank losses may even eclipse those of the Japanese banks in the 1990s - losses that cost the Japanese economy more than a decade of growth. Fixing the problem is every bit as important as addressing the government debt crisis, and will likely be the difference between stagnation and recovery.

"Egged on by Gordon Brown..."
True and absolute proof positive that if the bankers are the guilty ones for causing the actual crisis, on Brown's head rests the political guilt. He has yet to be brought to book for his crimes, as have many of those self-same bankers, at HBOS and RBS particularly, most of whom are Gordon's knighted chums. I think those facts are related. Don't you?

Brown: Bad To Worse To Terrible

Peter Hoskin in the Speccy has given a pretty tidy round-up of the latest assault on Brown's mindlessly tribal and dishonest approach to Britain's coming years of austerity and stagnation, thanks to his record-breaking debt crisis after his superbust caused by his credit megabubble. Here's a bit of it.

It's public spending time again, dear CoffeeHousers, with a couple of eye-catching articles in today's papers. The first is a comment piece by Steve Bundred, chief exec of the Audit Commission, on the necessity for extensive spending cuts. If you recall, Bundred claimed a few days ago that health and education shouldn't be ring-fenced from cuts, and here he repeats the point, adding a snappy conclusion:

"So don't believe the shroud wavers who tell you grannies will die and children starve if spending is cut. They won't. Cuts are inevitable, and perfectly manageable. We should insist on a frank and intelligent debate about how and where they will fall, which will then enable everyone to make more sensible plans."

And the second is the Sunday Times scoop that civil servants are already drawing up "doomsday" plans for 20 percent cuts in public spending, fearful that "politicians are failing to confront the scale of the budget black hole". The article also claims that Downing Street advisers are threatening to quit unless Brown sacks the man "they blame for encouraging him to make misleading claims about budget figures": one Shaun Woodward. And there was me thinking that Brown wouldn't need any encouragment to spin misleading yarns about his "investment vs cuts" dividing line...

More evidence, as if any were needed, that Brown has comprehensively lost the argument on cuts and that his administration is now in a state of total disarray: divided, rudderless and out of its depth. The clock is ticking...

Northern Crock Losses

Most gratifying (in a morbid sort of way) to see that my guesstimate that the sale of publicly-owned bank, Northern Rock, will raise only about £1Bn for the taxpayer has proved to be pretty accurate - somehow. According to tomorrow's Telegraph, analysts predict that this is all the dysfunctional bank is now worth. Northern Crock is more crocked than anyone imagined.

The government's highly dishonest plans to split the toxic portions of the business away from the healthy sections and assets and then sell off the latter, lumbering the taxpayer with huge liabilities indefinitely, might not now be possible. The overall performance of the bank this year has been horrific, despite vast amounts of liquidity being pumped in to prop it up. With Brown keen to offload the bank before the general election to wrong-foot the Conservative Party, however, it seems there is still some likelihood that plans for the creation of a 'bad bank' will be implemented. This is sheer lunacy born of political desperation. Any sale at this moment would lead to massive losses for British taxpayers.

Northern Rock is expected to heap further embarrassment on the Government next month when it reports losses for the half in excess of £500m, putting it in breach of even specially relaxed regulatory rules.

The nationalised lender revealed yesterday that its capital base, the key measure of financial strength, “has now reduced to a level below its minimum regulatory requirement”. The breach occurred despite a special waiver from the Financial Services Authority (FSA) that allowed the bank to flatter its reserves levels.

This is a disaster for Brown. There is only one narrative about his premiership left that apparently people still accept, regardless of the reality that it is total nonsense - that his "bold action" (nationalisations) saved the banking system. As this Northern Rock problem becomes a crisis, it will gradually dawn on people that the Brown "semi"-nationalisation method, where the public owns the bank and guarantees its loans but the management of the bank remains almost entirely independent, has failed, with catastrophic consequences for the treasury. People will now ask, why wasn't that bank allowed to fail? Bankruptcy protection would have protected everyone, including shareholders. They will want to know who is going to take responsibility for losing incomprehensibly vast amounts of public money, thanks to a policy that deliberately exposed taxpayers to galactic levels of toxic private debt.

One thing you can be certain of, Northern Rock is insolvent. It is tens of billions in debt (of its notional £67Bn mortgage liabilities, it is still unknown how much of that is actually toxic, despite what the Telegraph says), it is not generating enough new custom, despite public backing and it still can't be seen as a safe place for savers and investors alike to put their money. The business has failed and a two-year long policy of propping it up has failed with it. No wonder the stress test results were covered-up in April.

We all know Brown's policy was motivated by politics, not financial sense. It's hardly worth repeating that the North East is a Labour heartland. If the bank had been called "Southern Rock" it would have been given the Cheltenham and Gloucester treatment. Brown's moral-free calculations are that shallow.

Such political dishonesty is always eventually revealed by stark economic realities. But that dishonesty, which runs right through Brown's government as Cameron accurately pointed-out, also means that when the public demands someone take responsibility for this total disaster, no one will step forward, least of all its cowardly, untruthful, chaotic chief architect, Crash Gordon.

But this time round the money has completely run out. There is nowhere left for him to hide.

Railway Renationalisation

We learn today from the BBC that one of the post-Byers railway franchises is about to be renationalised. Its owner, National Express, which paid way over the odds for the loss-making East Coast lines in the first place in 2005, failed to win a credit note from the government to make-up for income shortfalls caused by the recession's impact on passenger numbers. The government instead has opted to take the company back into public ownership, presumably, but by no means certainly, because it's the cheaper option.

A one-off or part of a developing trend? Your guess is as good as mine. But this story is notable for at least one other thing, the hypocrisy of the (unelected) government minister behind the decision, "Lord" Adonis (another oily team-Mandelson member). He said:

The government is not prepared to renegotiate rail franchises, because I'm simply not prepared to bail out companies that are unable to meet their commitments.

I see. I take it banks aren't companies, then, are they? Priceless.

See, Labour idiots, it's all about consistency. Consistency denotes principle, which speaks to character. The conclusions to draw about Labour from that statement are surely obvious.

==Update==
Excellent Guardian article on this latest development here. And a reasonable Q&A BBC piece has popped-up here. Both clearly reveal that the government's shambolic franchise system is the chief cause of this latest calamity. They also imply that this could just be the beginning. After Mandelson's U-turn on privatisation of the mail, you'd be forced to conclude that Labour is definitely shifting on economic policy - to the left.

Weimar Economics

Scary Graph 1

The Speccy is on fine form this evening, with a post by Fraser Nelson about the economy that should make normal people's bowels turn to water. As he says,

The law of unintended consequences is one that Westminster unfailingly passes, and there are signs that the massive Quantitative Easing programme is making it harder for companies to raise money, because the government is flooding the market with its own IOU notes. The Bank of England today confirmed that less than 1% of the £44.5bn it has printed has gone to buy company loans – it had indicated that as much as a third of the £150bn pool would go to companies. Instead, it is a mechanism to help the government issue the £240bn of gilts it’s issuing this year. Why is this important? Because if the markets think QE is actually a way of one department of the government printing money for the other departments to spend (a la Weimar Germany), then confidence in the currency collapses. And right now, it looks very much like the Bank of England’s asset purchase

Scary Graph 2

programme is a device to buy state debt, masquerading as an attempt to target inflation.

If this is the case, then as the money supply spirals out of control and the currency is debauched, there is only one possible outcome: Britain's purchasing power parity will nosedive as debt levels multiply and inflation begins to soar. We will all become much, much poorer. Brown's mission to sabotage the economy for the next government by bankrupting Britain gathers pace.

If Nelson is right, Brown's bust is going to be simply devastating. God help the next government. And God help us, too.