2008's a year we'll never forget

Daily Mail
"Today, the entire British banking system is in crisis. The Exchequer faces an exposure of at least ten times what Northern Rock cost, and still counting.The British economy has entered a recession which threatens to prove the worst of modern times.Contrary to Gordon Brown's endlessly repeated deceits, this country is worse placed to weather the storm than any other major world economy, because as Chancellor he spent recklessly through the good times.The pound has fallen in value by more than a quarter against almost every other currency and is virtually equal with the much derided Euro.".....Just as we still have no idea how bad this recession could get, so the only certainty about the next General Election is that whoever wins it will inherit an empty Exchequer."
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UK stocks suffer their worst drop since the year of the three-day week as the worst economic crisis in living memory shook the UK's economic foundations.(Telegraph)
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Anger over knighthood given to Treasury chief, Nick Macpherson (The Times)

Printing Money...

Telegraph
"An email arrived for me the other day from a businessman...
He talked of the suffocating pile of debt, the empty order books, the collapsed currency, the disincentive of penal taxation and excessive regulation all helping to prevent recovery. He forecast, with some justification, the transition of our economy into one akin to the Third World, where the printing of money (the only policy, if it can be dignified with that term, that Gordon Brown seems to have) leads to hyperinflation, and thence to failures of infrastructure, law and order and democracy ..."Yet for all his denial, the Prime Minister.....when, in short, the full extent of his economic disaster can no longer be obscured, and when the completely dishonest Mandelsonian line about it all being the fault of the Americans has been exposed, even to the most dimwitted of our fellow Britons, as being entirely bogus."
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"The drastically weak pound is also driving up bills for imported goods, particularly for foreign food products, as well as for oil and petrol." (The Times)

Oil and the Dollar

Telegraph
"However, the Federal Reserve has slashed US interest rates and signalled that it could soon be printing money to try to stop the recession turning into a depression. Many analysts feel that this will be bearish for the dollar, and a dollar fall would once again boost the oil price."
Previous blog entry :
"....he now has one final, desperate roll of the
dice: to try to save the British economy by printing extra money.
Indeed, I can reveal that Bank of England officials are already
studying this option." (20/12/08)

The biggest slump in output since the aftermath of the Second World War could set Britain's economy back five years

Daily Mail
"But the CEBR's managing economist Ben Read said: 'Our emerging
central scenario suggests a contraction of 2.9 per cent, driven by a
steep fall in business investment of 20 per cent due to continued
restrictions on bank lending, as well as firms slashing budgets in
order to stay afloat.'This would be the biggest slump since 1946
when the UK was wrestling with the aftermath of the Second
World War and a freezing winter."
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Telegraph
Britain's economy is heading for its worst year since the notorious post-war winter-torn 1947 recession, experts warned on Tuesday, as official figures shed light on the scale of the downturn.

Financial 2008

Telegraph
"While Gordon Brown has taken a lot of the credit for the UK banking bail-out, the deal was devised by a group of bankers. Among them was the Standard Chartered chief executive, who should be dining out on it for years to come".

Voters revolt over taxes

Independent
"The survey suggests that David Cameron would win a huge majority if tax and spending became the key dividing line between the two main parties at the next general election"

"... asked how they would vote if the Tories committed themselves to a lower level of public spending than Labour and to try not to raise taxes – Mr Cameron's current policy – 49 per cent said Tory, 32 per cent Labour and 11 per cent the Liberal Democrats.

There was a similar result when people were asked how they would vote if Labour committed itself to higher public spending than the Tories and admitted it was likely to mean an increase in some personal taxes – Mr Brown's current position. The figures were: Tory 48 per cent, Labour 30 per cent, Liberal Democrats 13 per cent".

Britain's job 'bloodbath'

Independent
"Britain faces an unemployment "bloodbath" in the new year with many tens of thousands of jobs axed in the public and private sectors, according to a cabinet minister."
"The Federation of Small Businesses forecasts that 30,000 small firms could fold in 2009, with the loss of 160,000 jobs. Its spokesman, Stephen Alambritis, said: "It will be a very, very difficult year – there's a foreboding about February and March in particular."
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Telegraph
"Sir John Gieve said the Bank's policy-makers were well aware that dramatic rises in the price of houses and other assets were unsustainable, but still underestimated the danger this posed to the long-term health of the economy."
"Sir John, who is charged with ensuring financial stability and was heavily criticised last year by the Treasury Select Committee for apparently failing to control the Northern Rock crisis, admitted that taxpayers may not get all their money back from the bail-out of the bank and other institutions."

Darling's last roll of the dice and the spectre of wheelbarrows of banknotes

Daily Mail
"This week it became clear that both Alistair Darling and Gordon
Brown are beginning to lose control of the British economy.Their
attempt to end the crisis by bailing out the banks with £37 billion
of taxpayers’ money in October has failed."...."More terrifying still,
ministers have lost their grip of government finances.".........."As a
result, the Chancellor has lost almost all powers to recharge the
British economy — either through extra spending or through lower
interest rates.In this state of despair, and faced with a national debt
likely to rise rapidly, he now has one final, desperate roll of the
dice: to try to save the British economy by printing extra money.
Indeed, I can reveal that Bank of England officials are already
studying this option.Historically, it has been a sign of total
catastrophe when any government resorts to seeking financial
salvation through this disreputable method."
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PS. "Britain no longer has any stake in the production
of its nuclear warheads after the Government
secretly sold off its shares in the Atomic Weapons
Establishment in Aldermaston."
(Independent)

Sterling slide is worst since 1931

Telegraph:
"The pound has now fallen by 23pc against a basket of other currencies, according to figures from the Bank of England. The fall is sharper than the devaluations in 1992, after leaving the Exchange Rate Mechanism, 1976, when the International Monetary Fund was forced to intervene, and 1949, when a host of countries slumped against the dollar.The devaluation is only matched by the moment in 1931 when, under Ramsay MacDonald, the UK was forced to abandon the gold standard, plunging by more than 24pc against the dollar. "

UK public finances slump to worst state in 15 years as borrowing soars

Telegraph
"The Government borrowed £16bn in November, the most since records began 15 years ago, underlining the dire state of the public finances as the economy enters recession."
"While alarmingly high, the government deficit projections contained in November's pre-Budget Report are already looking too low as the recession looks certain to be significantly deeper and longer than the government forecast," said Howard Archer, chief economist at IHS Global Insight.
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Holidays hit as pound sinks to a new all-time low against the euro
Mark O'Sullivan, dealing director at Currencies direct, said: 'This is likely to get worse as more investors lose confidence in the pound.' (Daily Mail)

Taxpayers face new pain as Gordon Brown's bank bail-out fails to stop credit crunch

Telegraph
"Taxpayers face paying billions of pounds more to prop up Britain's banks because Gordon Brown's bail-out has failed to stop the credit crunch, the Bank of England Governor has warned".
"Mr King's warning that the bail-out is not working is a blow for the Prime Minister, whose reputation has been boosted both at home and overseas after his bail-out scheme was adopted by a range of different countries around the world."
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Must See : Fred Explains Bailout Economics
(Guido Blog)

Treasury's bank rescue plan is just not enough

Telegraph
"WHAT? "Additional measures"? So cutting interests to the lowest level since 1951, pouring billions into the banking system and slashing VAT was not enough?"

For anyone who thought its was Gordon Browns plan..... look at this
( appeared earlier in the blog, Oct.08)

Dumping the Pound by the back door?

Gordon Brown denies February election rumours as ministers claim recession will be 'worst ever'

Pound slumps to record low of £1.11 against the euro as currencies edge towards parity

Why joining the euro will makes things worse not better Daily Mail

Britain 'will not intervene to prop up pound' The Times (government excuses)

Just a reminder to everyone....

Official figures are only the tip of a terrifying iceberg of debt
"Take a look at this depiction of an iceberg. It provides a frightening illustration of just how much trouble we are in, and explains why the markets are in turmoil and the pound is in freefall as investors around the world lose confidence in Britain."
"There are a number of factors that Mr Brown conveniently ignores. For a start, public debt should include the Private Finance Initiative, Network Rail, the banking bail-out, the commitments that we took on when Bradford & Bingley was nationalised and future promises on public sector pensions (on all of which, more below).This comes to £2,366 billion. That's 157per cent of our GDP, a much less reassuring figure." (Daily Mail)

Germans turn the screw on Brown

The Independant
"Prime Minister stung by assault on Britain's reckless borrowing as sterling plunges to record low against euro"
"But Steffen Kampeter, the budget spokesman for Ms Merkel's Christian Democrats, said: "Peer Steinbrück's comments have nothing whatsoever to do with internal German politics as Prime Minister Brown has suggested."
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Germany has dispelled the myth of British-EU unity
"The Prime Minister and his Chancellor have so far been given an extraordinarily easy ride for what amounts to one of the most stunning policy U-turns in a generation – and one that now threatens a collapse of sterling. The way in which Mr Steinbrück's words leapt into the British headlines, however, shows that he struck a chord."

Anglo-German political row's new peak as Brown branded 'complete failure'

Telegraph:
"The row between Britain and Germany over the handling of the current economic crisis has reached a new peak, with a German politican calling Labour's policies "a complete failure". The comments were made by Christian Democrat Steffen Kampeter after Prime Minister Gordon Brown tried to pass off earlier criticism by finance minister Peer Steinbruck as a matter of internal German politics.Mr Kampeter, who is the budget spokesman for German Chancellor Angela Merkel, said: "Peer Steinbruck's comments have nothing whatsoever to do with internal German politics."In questioning the British government's approach, Peet Steinbruck is exactly expressing the views of the German Grand Coalition."

German Finance Minister spoils Gordon Brown's bid to save the world

Telegraph:
"There is also strong evidence that Mr Brown was wrong to persuade other countries, notably, the Americans, to drop plans to buy up the 'toxic' debt of banks and to recapitalise them instead."
Sky News:
'Why Germans Rent And Brits Buy'
Sky News:
"Gordon Brown has dismissed a surprise attack on his economic rescue plan by the German finance minister as a matter of "internal German politics".
Daily Mail:
"Britain and Germany were locked in a full-blown diplomatic crisis today as Gordon Brown was forced to defend his economic masterplan from a surprise attack by the German finance minister".

Gordon Brown must blame himself, not the USA

Telegraph:
"Enough! It's time to put an end to Gordon Brown's ridiculous blame game. As the Prime Minister tells it, Britain's woes started in America.." "Unfortunately for Mr Brown, neither his claim – he told Parliament yesterday, "Not only have we saved the world", modestly eschewing the "I" word – nor his Macavity act can survive scrutiny. It is beyond question that Britain's problems stem in part from its fractured regulatory system, with responsibility split between the Bank of England, the Financial Services Authority, and the Treasury. A close study of the relevant documents fails to reveal that this system was forced upon Brown by the US authorities. No, it sprang full blown from the brains of Chancellor Gordon Brown and his sidekick, Ed Balls".

The German finance minister has launched an outspoken attack on the UK government's plans to help pull Britain out of the economic downturn.

BBC

"In an unusual breach of standard diplomacy, Peer Steinbruck attacked the UK's decision to cut VAT and raise the national debt to record levels.Mr Steinbruck said the UK's switch from financial prudence to heavy borrowing was both "crass" and "breathtaking"."All this will do is raise Britain's debt to a level that will take a whole generation to work off."Saying the UK government was now "tossing around billions", Mr Steinbruck questioned why Britain was now closely following the high public spending model put forward by 20th Century economist John Maynard Keynes."The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking," he said."When I ask about the origins of the [financial] crisis, economists I respect tell me it is the credit-financed growth of recent years and decades."Isn't this the same mistake everyone is suddenly making again, under all the public pressure?"

Gordon Brown saves the World!

'Sir Ian, you have put the police in Labour's pocket': Britain's top Asian police officer reveals how Blair forced him out

Daily Mail:

"He was threatening my job because I had dared to put the needs of the police and public ahead of the wishes of the Government.I tried again to defend my position but he shouted me down with such contempt that I knew my future was in as much danger as the police's time-honoured independence from the State.Sadly the entanglement of the two has never been clearer than with the arrest last month of Conservative immigration spokesman Damian Green over leaked documents that embarrassed Downing Street, an act that has exposed the Met to intense scrutiny.As I walked out of Sir Ian's office I thought: 'This man has lost his marbles.' If it all hadn't been quite so serious, I would have felt sorry for him".

Culpability Brown

Culpability Brown

“Anyone looking for the G-20 to issue a mea culpa on the global financial crisis will be sadly disappointed,” said Kenneth S. Rogoff, a professor of economics at Harvard. The leaders “curiously downplay the huge culpability of the political leadership in the U.S. and Europe.”
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Oct '08:
And it's why Britain's Prime Minister Gordon Brown and his Chancellor, Alistair Darling, did not want to dwell Wednesday morning on how Britain's banking sector had got into such a parlous state that the government was compelled to spend up to $88 billion in taxpayers' money to secure it. Their emergency rescue plan was hatched over weeks but finalized in such a hurry that bleary officials labored overnight to finish it before the skittish markets opened. At a morning press conference, both men maintained that the problem started with the U.S. sub-prime crisis; Brown refused to answer questions about how Labour policy over more than 10 years in office might have contributed to the situation. "This is the time to talk about the future," he said.

http://www.time.com/time/world/article/0,8599,1848243,00.html

Damian Green arrest was caused by Labour's abuse of Parliament

Telegraph
"When New Labour won in 1997, I don't think it wanted to undermine parliamentary democracy, but it harboured a destructive hatred for the institutions, conventions and traditions of this country. Now we see the bitter and oppressive results."
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Speaker Michael Martin is a disgrace to his office amid Damian Green arrest scandal