The week Labour lost the next election

Telegraph
"Last week's opinion polls have shocked even the Tories in the uniformity of their hostility to the Government. In the ComRes poll in Monday's Independent, Labour fell below 30 points for the first time since September. In The Guardian, an ICM survey had the Tories on 44, up six points since last month, with Labour trailing on 32. The YouGov poll in Friday's Telegraph indicated a similar lead for the Conservatives (43 versus Labour's 32) and – no less important – a seven point advantage for David Cameron over Brown on perceived economic competence. ...But they do suggest, strongly, that a collective decision has been made. ....The voters know it. They see it in their bank statements, the falling value of their properties, the spectre of unemployment lurking at a million doors, the collapse of businesses large and small. On their television screens they see refinery workers striking over the use of foreign labour. Wasn't it only yesterday that Britain was waving migrant workers across its borders to fill the jobs created by a growing economy?"
------------------------------------
Government needs to prove it can pay back debt, Lord Mandelson admits

Government to print more money in £50bn bid to end lending freeze

Daily Mail
"The fund lays the groundwork for so-called quantitative easing-style tactics, where money supply is increased.But the plan stops short of pure quantitative easing and is instead seen as a potentially crucial new monetary policy tool to help bring inflation back in line when interest rates cannot be cut further."
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Comment: "Quantitative easing" has been in progress for some time by Mr Brown
-----------------------
So Alastair Darling might just like to hang on to the jargon 'quantitative easing', which he's now given the Bank of England the green light to do – because it masks the inconvenient truth that, yes, the government is indeed printing money. :Dr Eamonn Butler (January 2009)

A question for Gordon Brown: whatever happened to prudence?

Telegraph
"...my 18-month old daughter, will be graduating from university by the time our national debt returns to pre-recession levels, according to the gloomy forecasts from IFS. Like the Treasury Select Committee the IFS appears to have little faith in the government's forecasts."
-----------------------
Alistair Darling has pulled out of the World Economic Forum, within hours of being warned that the UK faces a worse recession than any other major country in the world.
------------------------
Gordon Brown is a busted flush – and he's taking us down with him
"...Worse still, our Armed Forces are expected to police the world's hell holes on a budget (£33 billion) that is just one fifth of what we hand out for "social protection" (£169 billion). The military is showered in warm words, but suffers from a freeze on real (inflation-adjusted) spending. Of all Labour's wicked deceits, this is the one I find most offensive."

Britain's recession will be deepest, IMF warns

Telegraph
"Britain's recession will be deeper than any other major country this year, the International Monetary Fund warned today as the banking crisis continues to send shudders through the rest of the economy. ...The new forecast deals a blow to Prime Minister Gordon Brown who has insisted that the UK is no more exposed to the sweeping global downturn than other economies. Critics have argued that the intensity of the decade-long housing boom, a failure of regulation and the size of losses accumulated by UK banks have left Britain deeper in the mire."
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Taxes to soar by £20BILLION as IMF warns Britain faces deeper recession than any other country
'If the public finances evolve as the Treasury hopes, this tightening would have to remain in place until the early 2030s before debt returns below the ceiling of 40 per cent of national income Gordon Brown set as one of his two fiscal rules in 1997,' said the report." (Daily Mail)
-------------------
Now Gordon Brown's own MPs brand him a 'headless chicken' over recession
"Labour ministers and MPs have echoed David Cameron's jibe that Gordon Brown is behaving 'like a headless chicken' over the recession, it emerged today." (Daily Mail)

Car firms get £2 billion loan support

Telegraph
"The Government has unveiled a long awaited package of support for the car industry worth £2 billion amid warnings of a "catastrophe" for the sector with the loss of tens of thousands of jobs."

Hummmm.....

"However, some have argued that making it easier to buy cars will mainly aid foreign manufacturers who account for 80 per cent of Britain's cars".

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Now Government delivers £2.3bn package for Britain's struggling car industry
"Britain's beleaguered car industry became latest recipient of Government help this afternoon when Lord Mandleson unveiled a multi-billion pound rescue package.
.....'That this wave of panic-stricken announcements has pledged the taxpayers' credit for billions - tens of billions - of pounds, and someone's said to BERR [the Department for Business Enterprise and Regulatory Reform], "We cannot afford anything but modest loan guarantees with all these provisos about how you give it out".
(Daily Mail)

Rioting Greeks, angry Germans and why the euro may well collapse

Daily Mail
"This month Portugal, Spain and Greece have seen their credit ratings downgraded. It is likely the ratings agencies will hit Ireland's next. They will then find it not only more expensive to borrow money, but more difficult to find any investors willing to lend to them."
...In the days before the euro, when Italy had the lire and Greece had the drachma and so on, a country in such trouble could devalue its currency to help increase its exports and take pressure off its jobs. Escape from the euro would also allow a country to regain control over its own monetary policy."

Voters lose faith in bailouts and VAT cut

Independent
"Tories extend lead to 15 per cent as economic turmoil causes Labour collapse, 'Independent' poll reveals"
.."Forty-nine per cent of people doubt whether the Government's attempts to solve the banking crisis will work. The reservations are shared across the political spectrum: by a margin of 48 to 43 per cent, Labour voters do not believe in the measures on the banks."

Financial crisis: just how big is Britain's toxic debt?

Telegraph
"An army of accountants is combing through the books, trying to establish just how much the toxic assets of the bailed-out banks are actually worth. At stake, says the Government, is the future of Britain's economy.
..In other words, until the number-crunching is done, there is no prospect of an end to the crisis. "The problem is that we don't really know just where these bad assets are, and the banks are not going to 'fess up," explains Peter Spencer, professor of economics at York University. "As things stand, it is a near-bottomless pit, and no one knows how smelly the stuff at the bottom is."

Unbelievable Britain

Daily Mail
80 foreign murderers welcomed to Britain: Albanian killers allowed to stay despite being on Interpol 'wanted' list
"The scandal came to light when Albania's chief of police complained that 100 criminals from his country have been granted British citizenship and now live here."
----------------------------
150,000 foreigners swell UK workforce: Record number get permits as Britons lose jobs
"Tory MP Nicholas Soames and his Labour counterpart Frank Field, who jointly chair the cross-party group on Balanced Migration, said the Government had to ensure British workers got the 'first chance' to apply for any new vacancy."

Britain on the brink of an economic depression, say experts

Telegraph
"Families must brace themselves for a slump of far greater severity and longevity than the recessions of the 1980s and 1990s, they warned. They said the current crisis will be of a scale to rival the biggest peace-time crisis in modern history — the Great Depression."

Tumbling sterling brings a warning of $1.20 rate

Daily Mail

"The pound dived to a 23-year low of $1.3503 after GDP figures showed the British economy shrank by a worse than expected 1.5 per cent in the last quarter. Sterling also hit a low against the Japanese yen of 118.90 yen, a level not seen since 1971 when fixed exchange rates ended. The beleaguered British currency was trading down 0.28 of a cent against the euro at €1.0632."

UK recession: It's now officially the worst since 1980 (So far)

Telegraph
"Today’s figures are the final nail in the coffin for Prime Minister Gordon Brown’s claim to have ‘ended boom and bust’; the United Kingdom economy is most definitely bust at the moment,"said Charles Davis at the Centre for Economics and Business Research said. "
--------------------------
Sky News
Vince Cable, Lib Dem Treasury spokesman
"Britain is exceptionally vulnerable and one of the reasons we're exceptionally vulnerable is the Government allowed a big binge of personal borrowing, much of it related to the boom in the housing market which got completely out of control, and that was a very British problem. In addition to all the problems that are happening globally, we have a banking system which is exceptionally large and has frankly has been appallingly mismanaged and its difficulties are now feeding into the UK economy."
Labour MP John McDonnell, Left Economics Advisory Panel
"The Government has consistently failed to recognise the seriousness of the light of the UK economy and has consistently failed to recognise the need for radical measures to tackle the crisis. Today's figures not only confirm a recession, but point to a depression."
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Brown admits: 'I never saw it coming,' as figures confirm we're in the worst recession for 28 years. (Daily Mail)

COMMENT: Gordon Brown WAS warned by the Bank of England in 2006 about a possible 'Credit Crunch', AND the effect it would have on the economy.

How Ireland was destroyed by obscene greed and the euro

Daily Mail
"Just look across to Ireland and see how much worse things would be now if Britain had joined the euro. ..Share prices for all banks have crashed. The third largest bank, Anglo Irish Bank, was nationalised this week after it was discovered, among other shocks, that the chairman had hidden more than £100m in personal loans from the auditors for eight years. Shareholders were wiped out. ...The tax revenue from the property boom has vanished. Unemployment is forecast to hit 20 percent next year. The Government is facing a national deficit of 10.5 percent of GDP this year. The money markets are increasingly reluctant to finance Ireland's debt. International ratings agencies have threatened to downgrade the country's credit rating."

Gordon Brown brings Britain to the edge of bankruptcy

Telegraph
"The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic."
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Gordon Brown failed to spot that Labour's housing and credit boom was 'fraught with systemic risk', the City's financial watchdog has suggested.
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Pound barely recovers after after hitting 24-year low against dollar
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Interest rate cuts have robbed 'innocent' savers of £22billion, say Tories
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Car production drops by HALF in just one month while manufacturers report bleakest trading outlook in 28 years

New Bank of England powers will start in weeks

Telegraph
"The Bank of England will embark on unprecedented new measures to pump cash directly into the economy in "a matter of weeks", Mervyn King has pledged. ... However, most attention will be focused on his description of how the Bank will conduct quantitative easing - whereby it pumps cash directly into the economy to boost growth and lending."
---------------------------
Q&A The Bank of England and Quantitative Easing
"Q So what exactly is quantitative easing?
A In short, the nuclear button for central banks."
---------------------------
COMMENT: You have been warned

Can we afford Gordon Brown.....

A desperate attempt to revive a corpse
(Vince Cable, The Times)
"Yesterday's announcement of a second round of bank bailouts was, unlike the first, badly received both politically and in the markets. This partly reflects growing pessimism about the state of the banking system and the state of the UK (and global) economy.But there is also widespread scepticism about whether the Government is still on the right track - it now looks like someone giving the kiss of life to a corpse."
------------------------
The nation has a bad case of mad Treasury disease
(The Guardian)
------------------------
How much rope does Gordon Brown need?
(Telegraph)
"And as we recall the Prime Minister's outrageous and pathetic performance over the past couple of days, as our banking system and currency have tottered, and he has proved unequal to the task of stabilising (let alone clearing up) a mess of his own making,...."

Lloyds shares almost halve after fears of nationalisation shift

Daily Mail
# Lloyds shares almost halve as nationalisation fears shift
# RBS falls another 10% after Monday's massive plunge
# Barclays and HSBC also post losses as traders panic
'Market behaviour sent a firm yet very precise, if somewhat unfortunate, message to the Government that they neither believe the latest bail-out plan will work nor, perhaps more importantly, that it is affordable and that it potentially contains too much risk.'
...The removal of the ban on short-selling as of last Friday - by which traders bet on falling shares - has added to the sense of panic."

Sterling slumps to eight-year low after second bank bail-out

Telegraph
"Sterling tumbled below the $1.40 mark against the dollar for the first time in almost a decade and fell against the rest of the world's major currencies as the UK Government's second bail-out of the country's banks underlined the dangers facing the economy."

Britain will suffer worst slump in Europe, warns Commission in damning report

Daily Mail
"Britain will suffer the steepest economic slump of any major European economy this year, the European Commission has warned."
-----------------------------
RBS on the brink as shares plummet by 69% and City is warned: 'You're about to become
Iceland-on-Thames'
-----------------------------
Shares in Royal Bank of Scotland collapsed almost 70pc after the bank warned its 2008 losses may reach £28bn, raising fears it may eventually face full nationalisation.
-----------------------------
Bank bailout Part II: What it means for savers and investors
----------------------------
Second bank rescue: the key features
"QUANTITATIVE EASING
* The BoE's asset purchase facility also gives a framework for the Monetary Policy Committee to use asset purchases for monetary policy purposes should it see fit."
Comment- this is already taking place.

A £300bn rescue package has been announced by the Government

Sky News
"Mr Darling is staking hundreds of billions of pounds of taxpayers' money in an attempt to free up "blocked" credit markets and head off a worsening recession."

RBS loses £28billion in a YEAR as Darling warns British economy will collapse if second bank bailout fails
"Alistair Darling warned the British economy would fall apart if the rescue of the banking system fails. " (Daily Mail)

Alistair Darling has admitted he has no idea how much money the Government will need to pour into failing banks to stave off a collapse in the sector that could bring down the entire economy.
(Telegraph)

Action needed now to avoid depression, warns ITEM economist

Telegraph
"Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club said that quantitative easing is needed immediately...The Government and the Bank of England have got "days not weeks" to take action to revive the economy or face a prolonged depression..."
---------------
Comment: Can someone tell E & Y that 'quantitative easing' (printing money) has been going on for some time in secret....for over a year now. They really should read this blog.

Confused?

Daily Mail:
VINCE CABLE: As another bank bail-out looms: Confused? You may very well be... but most of Britain's bankers are, too
"Our own Government will announce new proposals to save the banks and restore bank lending, as its existing plans are clearly not working.The market speculation in banks’ shares of the past few days has been compounded by a foolish own goal by the British Government. ...The financial regulator, the FSA, decided, with spectacularly bad timing, to allow previously banned short selling: the practice of borrowing shares and selling them for speculative gain.The immediate result of this was to contribute to a run on Barclays shares, which lost a quarter of their value in one day.It beggars belief that the FSA thought it sensible to invite a new wave of speculative attack on bank shares in the middle of this crisis, in effect licensing gambling against the taxpayer."

£200bn to save banks from bad debt

Telegraph
"The taxpayer will be forced to underwrite up to £200 billion of bad banking debt under a government plan to take control of assets belonging to Britain's major high street lenders".
...That equates to about £33,000 per taxpayer. The total sum is equivalent to more than two-thirds of Britain's annual GDP of £1.4 trillion."
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As there is zero money in the kitty,how much money does Gordon plan to borrow or print ?
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British banks are 'technically insolvent'

Britains biggest banks are "technically insolvent", Royal Bank of Scotland said yesterday, as the global banking industry was rocked by another day of turmoil, including the announcement of $23bn (£16bn) of new losses from Merrill Lynch and Citigroup, the giant US institutions. Analysts working for RBS, one of several British banks to have received emergency funding from the UK Government last year, told the City that "the domestic UK banks are technically insolvent on a fully marked-to-market basis".(Independent)

--------------------------

Darling wrong on recovery, Gieve warns

"Some independent economists are even more gloomy. One widely respected body will warn this weekend that it now expects negative growth in every quarter of this year, with the recession continuing into 2010."

Barclays shares slump 25pc in last hour

Telegraph
"Barclays shares tumbled in the last hour of trading on the FTSE 100, leaving the stock down 25pc on the day and more than 40pc on the week."
The Times:
"Barclays shares dived by 25 per cent in the last hour of trading, a day of broad weakness in the banking sector." .....The final hour capped a day of fluctuating share prices after the ban on the short-selling of UK financial sector shares was lifted."
----------------------
What is Gordon's cunning plan this time ?.

Ireland plans drastic cuts to prevent debt crisis

Telegraph:
"Ireland is to demand pay cuts for civil servants and public employees to prevent the budget deficit soaring to 12pc of gross domestic product by next year – becoming the first country in the eurozone to resort to 1930s-style wage deflation to claw back competitiveness."

This information surfaced yesterday, just as Gordon Brown was stating to the House of Commons at PMQ's that his way was the world's view of handling the credit crunch.....
.......and read the following:

The GB book of Fantasy Economics (Revised-frequently-Edition)
First take an economy that has being growing for at least four years,
has low inflation and falling unemployment. Tell everyone that you
intend to sell off the gold reserves to make sure the price you get is
rock bottom,and lose £7 billion. Impose a raft of stealth taxes and
adopt an open border policy, later allowing all new EU State's
residents to come here to work and stay.
Do not under any circumstances adopt a sustainable economic
policy, keep your fingers crossed and hope the music does not
stop. Make the Bank of England 'independent' (cough), and
set up the FSA etc likewise. Now, most importantly spend all
the money you rake in and do not under any circumstances
save anything,in fact you must borrow as much as possible and
pile up the debt, this will be most useful later on. Also adopt
a policy that masks all this, and call it your 'golden rule' - this
can be anything, it's yours and you can make it up as you go
along. If it gets tricky, then keep irksome sums off the balance
sheet. Oh, and yes, always announce that you have abolished
'boom and bust' at every opportunity.
You will notice that about four years into this, the banks have
run out of their own money,and now have to borrow from the
money markets to resell onto their customers, do not be alarmed,
and don't listen to those boring IMF people about it being
unsustainable. Rake in the tax and spend, spend, spend.
About five years after that things may be getting a little tricky,
and that nice Bank of England sends you a BIG warning about a
'Credit Crunch' or something.This is the time to very quietly get
BofE to print shed loads of money,that's what printing presses
were made for. (This will come in very handy when you have to
bail out the banks).
You have a good year to prepare for the first bank to go under,
but dither as long as possible to give the impression that it is a
complete surprise. Get together a group of city Bankers and get
them to devise a rescue plan, you could give them a copy of
a Swedish plan that is in the IMF papers, but get them to water
it down a bit. Don't forget to pass it off as your own work later
on if it seems to work. If it fails blame the USA.
Now the really clever bit - as the economy circles the drain,
and it will, you must now borrow likes there's no tomorrow.
This will not fix the problem, and there may quite a few of
those, but as there is a massive debt anyway what's a few
trillion more. Call it PFI for our children to pay off.
Have a nice day.

Gordon Brown gives peerage to Banker,and makes him a Minister

"The Telegraph can disclose that Mr Davies will become a peer and serve as Trade Minister under Lord Mandelson after the personal request from Prime Minister Mr Brown"
....He was central to the original banking bail-out in the autumn."

So, "Gordon Browns plan", a pale copy of the Swedish bank rescue plan of 1992,was the product of the thinking of a group of Bankers. Now our Prime Minister - in an obvious panic- wants one of those responsible for the first failed plan to come up with another or two. And throws in a peerage as inducement.

Alistair Darling refuses to apologise for state of British economy

Telegraph
"Alistair Darling, the Chancellor, repeatedly refused to apologise for the Government's conduct in the run-up to the economic downturn during an interview."
--------------------
The UK’s trade deficit widened to a record level in November as a weaker pound failed to boost exports at a time when world demand for goods is collapsing.
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Britain is now "bankrupt" following the sharp increase in Government borrowing, the Conservatives claimed.
------------------------
Taxpayers' money will be put at risk if Gordon Brown goes ahead with a new £2 billion package to unblock the financial system.
------------------------
Gordon Brown bounce fades as Conservatives return to huge poll lead (The Times)

Now we know... the Government IS Printing Money

Far from considering quantitative easing, we now know that Gordon Brown has been implementing it for some time. The facts as laid out in the Redwood Diary are indisputable as they come from the Bank of England's own weekly statements. The very same Bank of England informed the Government back in 2006 warning of the 'Credit Crunch', that's a full year before 'Northern Rock'. Printing Money (quantitative easing) is a form of devaluation in all but name,and it would require the full knowledge, and sanction of, the Prime Minister himself. Remarkably, the Banks devised the first 'Bank Bail Out', and alongside that, we now know that Gordon Brown was printing money as part of his grand financial plan.
------------------------------------
Meanwhile in the USA:
"Since September, the Fed’s balance sheet has ballooned from about $900 billion to more than $2 trillion as the central bank has created new money and lent it out through all its new programs. As soon as the Fed completes its plans to buy up mortgage-backed debt and consumer debt, the balance sheet will be up to about $3 trillion. " (New York Times)

Quantitative easing is well underway.

Read it here
"I would urge all those about to broadcast or write on this subject to take the precaution of first reading the latest Bank of England Weekly statements. These show that quantitative easing is well underway. The Bank’s balance sheet has ballooned from well under £100 billion last September, to nearly £240 billion by the year end. Just picking up tittle tattle from “sources” can be very misleading.......Actual printing of bank notes has been more limited, but these are up over the year by more than 10%, well ahead of the fall in economic activity and price increases. "
(Redwoods Diary)

Reform plan raises fears of Bank secrecy

Telegraph
WARNING: "The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy. .....The Government is set to throw out the 165-year old law that obliges the Bank to publish a weekly account of its balance sheet – a move that will allow it theoretically to embark covertly on so-called quantitative easing.".....However, some have warned that it means: "there is nothing to stop an unreported and unmonitored flooding of the money market by the undisciplined use of the printing presses."
-----------------------------
Bank has little option but to ready the printing presses
(04/12/08)

Gordon Brown preparing new taxpayer-backed bank rescue package

Telegraph
"Gordon Brown is preparing to unveil a new bank rescue package which will lead to taxpayers underwriting billions of pounds in bank loans to homebuyers and businesses. "
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The Pound in your Pocket
"Nothing tolls the bell for Labour governments more often than the devaluation of sterling.
...As it is, rates are already getting close to the point where printing money becomes a necessary contingency - a form of devaluation in all but name.
...The trouble for the Government is that a repeat of the plea to the IMF in 1976 is now within the bounds of feasibility. If that were to happen, the Prime Minister would become, in effect, a lame duck". (The Times)

Recession: Borrowing caused the crisis - it cannot be the solution

Telegraph
"The country faces a severe economic decline. The Government is trying to print money, slash interest rates, expand public spending and borrowing, inject capital into certain banks, nationalise others, boost demand by an expensive tax cut, prop up certain companies and industries, while lecturing the banks to lend more. So far, none of this is working. The cruel logic of past mistakes is pushing the economy into a vicious downward spiral.".......Nationalising Northern Rock and the loan book of Bradford and Bingley were bad mistakes. Neither of these institutions can now make a contribution to new mortgage lending on current policy and given competition rules.".....Cutting VAT was about the worst way to try to stimulate demand, and has left us with a costly hole in the national accounts for little benefit. The escalation of the government borrowing requirement, mainly through the mistaken bank nationalisation policies and the VAT reduction, is alarming."
--------------------------

Interest rates and the economy: Does anyone in charge have a clue what to do?

Telegraph
"In fact, even Mr Darling, the Chancellor, admitted this week that he really didn't have a clue what to do to put our economy back on the straight and narrow. ...... I am not sure he can even read a balance sheet. I certainly wouldn't put money on many of his Cabinet colleagues being able to do so."...Given this country has no money, what does Mr Brown think he is playing at in running up more debt carting his vapid Cabinet around Britain for its meetings? What difference can it make to our governance that, at a an estimated cost of £70,000 excluding police protection, they went to Liverpool this week?"
-----------------------

UK manufacturing activity slumped at its fastest annual pace in 28 years in November, shocking the market and suggesting that the economy shrank more than already feared in the final quarter of 2008.
----------------------

Brown goes from boom to bust
"A ComRes poll of leading businessmen for The Independent shows that trust in the Prime Minister and the Chancellor, which rose after the Government rescued Britain's banks last autumn, is now on the slide."
----------------------

Business chiefs' confidence in Brown's handling of economy collapses
"There is growing dissent among Labour MPs and in the City over the temporary VAT cut, which many retailers claim has had no effect whatsoever in boosting spending."

Bank of England's rate cut will fail to help, experts warn

Telegraph
"But experts said the move would do little to help borrowers as banks fail to pass on the lower borrowing costs on to customers while savers see their accounts head towards zero per cent. "
"The Bank is now likely to consider other, less conventional attempts to boost the economy, including printing money, known as quantitative easing. "

Interest rate cut leaves few options on the table
"Rates are now at their lowest level in the Bank’s 394-year history and there is precious little evidence that monetary policy is working properly. "Apart from driving the value of the pound down at an alarming rate, the rate cuts are not leading people to borrow money to buy homes or start spending. The only people really noticing are savers who are left with virtually nothing from their nest eggs. "....and the Chancellor is struggling to keep pace with events as they unfold." Therefore, every time the Bank acts and the base rate gets closer to zero, the more the pressure ratchets up on the Government. They now only have weeks to act or risk a more serious recession developing.The Vat cut is increasingly looking like a costly mistake which Mr Darling and Mr Brown can ill-afford to repeat."
----------------------------
A year of reckoning (The Guardian)
"There is no progress without sustainability, and there was nothing sustainable about Brown's economic policies, which have devoured rather than built Britain's capital - human, social and financial."

Brown plans to print more money amid fears rate cuts won't work

Daily Mail
"The Government may resort to printing extra money if interest rates keep falling. It is being considered as a desperate measure if base rates fall so far that they cease to work as an economic lever."
"Chancellor Alistair Darling and Bank of England governor Mervyn King are considering whether to embark on a new policy of expanding the money supply, or quantitative easing, sources today told the Evening Standard."
"Vince Cable, the Liberal Democrat shadow chancellor, said: 'It would be a very dangerous course of action and if it went wrong there could be high inflation afterwards. "
"But Investec chief economist Philip Shaw said: 'We are sceptical that quantitative easing in the strict sense... will give the real economy a significant push, especially as this did not appear to have a material effect in Japan earlier this decade.'
(See previous blog entries on Brown printing money)

Gordon Brown's excuses for the financial crisis won't cut it

Telegraph
...Mr Brown's very own regulatory system had hard evidence of an unsustainable credit bubble a full year before the run on Northern Rock. Yet the Bank, the FSA and, indeed, the Chancellor took no action. " ......the Prime Minister should perhaps devote less energy to "spinning" the economic crisis for political purposes and more to producing effective policies for getting us out of it – something he is so far signally failing to do."

PS: Government Admits It Blew $7 Billion on Gold Sale (Iain Dale's Diary)

Brown 'ignored warnings over sale of gold reserves' (Independent)

Tony Blair is to receive America's highest civilian award - the Presidential Medal of Freedom

A medal for Blair? No, he should be on trial for war crimes (Daily Mail 8th Jan)
"How bitterly ironic that now he is supposed to be a Middle East envoy - a task at which he has proved to be so totally ineffectual. He has made no difference to the situation there and is routinely ignored by everyone involved - just look at the invasion of the Gaza Strip by the Israelis."

What is the point of Tony Blair's Middle East Mission ? (Telegraph)


Tony Blair's getting a medal from Bush for being Presidential Poodle. How shaming - and how lucrative (Daily Mail)

"The Medal of Freedom award will only help boost the Blair coffers. It is yet another shaming footnote to one of the most shameful episodes in our history.But, as the Presidential Poodle preens himself to accept it, the rest of us will again be reminded that shame is one thing that Tony Blair doesn't do."

No gold medals for UK's economic performance as hopes turn to ashes

Independent
"...while the global downswing is partly a trade-related issue, it is mostly being driven by the spreading tentacles of the credit crunch. These seem to have an uncanny knack of reaching into any economic crack and crevice, no matter how far away they are from the world's major financial centres."....there's now a serious risk of debt deflation." ....The lack of clarity over policy is particularly disturbing." ...In the UK, however, the room to manoeuvre is seriously curtailed."
Then,......., there's the nuclear option of printing money and getting the Government to spend it. If there's a perceived shortage of money, the printing press is the most obvious way of shifting people's beliefs." ....the Bank of England will find itself moving back to a world of opacity. Rather than merely placing a gentle hand on the interest rate tiller from time to time, the Monetary Policy Committee will have its work cut out explaining how these peculiar policies are supposed to work. That will be no easy task."
----------------

Weakness of pound a further blow for retailers
"Retailers engaged in the biggest discounting frenzy in memory are facing the further nightmare of sharp increases in the prices they will pay for products in 2009 following the fall in the value of sterling." (Telegraph)

Taxpayers set to hand over MORE cash to bail out Britain's failing banks

Daily Mail
'But we also have to ensure there is enough money in the system so that businesses and people looking for mortgages can get the money."
----------------
Question: Is Gordon Brown already printing more money, exploiting the 'new for old' and deemed 'lost' money in circulation ?. A 'relaxation' of the monetary rules to put more money into the system without appearing to break the rules ?.
----------------
Gordon Brown (Daily Mail)
"We've got other means by which we will try to get liquidity, cash into the system."Mr Brown refused to take any of the blame for the downturn, despite his decade in the Treasury.

Britain mulls fresh bail-out for banks:

Yahoo News
"Britain is considering another bail-out for the country's banking sector, reports said Saturday, amid fears that October's multi-billion-dollar cash injection has failed to boost credit flows."
BBC
"A further bail-out for the UK's banks is being considered by the government, Treasury sources have confirmed."
The Times
"Alistair Darling has been forced to consider a second bailout for banks as the lending drought worsens. "

Credit crunch to intensify, Bank of England warns

Telegraph
"Britain's major lenders have tightened credit availability significantly in the past three months, and intend to make borrowed cash even harder to get hold of in the coming quarter, according to a survey from the Bank of England."...Economists have said the UK is trapped in a so-called negative feedback loop, with the economy slumping further as banks restrict mortgage and other loan availability in an effort to repair their balance sheets. This in turn causes further defaults, which causes more damage to their accounts, and worsening the vicious cycle."
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Prepare for the sequel to the UK bank bail-out
"Instead what we received was a chilling reminder that the financial crisis and the credit crunch have a good way to run yet."

Bank of England knew precisely what risk was posed by the dangerous build-up of debt which was brewing in the economy.

Telegraph
"...I came across a rather important article which I had half forgotten about. It dates from 2006, when the credit crisis was a mere apple in the financial system's eye".....
"The report completely debunks the notion that the financial crisis came as a surprise to the City, or indeed the Bank. The Government had been warned explicitly not by some crackpot economist but by its own employees in Threadneedle Street about precisely how the crisis could erupt. Not only this, but the report also revealed that its "war games" plotting out scenarios including a credit crunch revealed that a debt-fuelled crisis could cause a severe UK recession, a 25pc fall in house prices and a wiping out of a third of banks' tier one capital - around £40bn at the time. It is difficult to think how it could have made more noise about the possible risks the debt build-up entailed."
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'City faces meltdown if debt crisis hits' (2006)
"It could cause a 1.5pc contraction of the UK economy, a 25pc fall in house prices and a 35pc drop in commercial property prices over three years, according to the scenarios mapped out by the Bank. Other major countries would suffer similar effects, it says."
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Labour's boom years were down to luck, not Brown's economic expertise, says Tony Blair

Daily Mail
"Labour's boom years were down to 'luck' rather than Gordon Brown's
stewardship of the economy, Tony Blair has claimed...Mr Brown's
critics have long pointed out that he was lucky to inherit benign
public finances from the outgoing Tory government...John Major's
administration had achieved four years of growth with low inflation
before Mr Brown took office...Shadow Chancellor George Osborne
said: 'In one revealing sentence, Tony Blair has exposed the
damning truth about Gordon Brown's chancellorship."