economic situation is dire

[snowychap]

not sure of the timing snowy and it may even have been the day before, I'm on nights this week so its all a bit of a blur............

No worries. I thought I could have tried to find it on the old 'iplayer' thingy.

They'll probably defer a decision until they've worked out how much money they owe me (£440 on the electricity account, still waiting on the gas..

Blimey that's a fair old whack.

Still, safer than a bank.

[ianrobo1]

I heard the same report as Bicks on R5 and the Energy companies spokeswomen confirmed that Southern are reducing prices in Jan due to their different business model

[snowychap]

I heard the same report as Bicks on R5 and the Energy companies spokeswomen confirmed that Southern are reducing prices in Jan due to their different business model

Any idea when it was on or which programme?

[ianrobo1]

yes it was on the evening show, around 5.20 I think

doubt it will be on a listen again function

[PaulMcgrathsknees]

Woodrow Wilson:

Like Roosevelt before him, Woodrow Wilson regarded himself as the personal representative of the people. "No one but the President," he said, "seems to be expected ... to look out for the general interests of the country." He developed a program of progressive reform and asserted international leadership in building a new world order. In 1917 he proclaimed American entrance into World War I a crusade to make the world "safe for democracy."

Wilson maneuvered through Congress three major pieces of legislation. The first was a lower tariff, the Underwood Act; attached to the measure was a graduated Federal income tax. The passage of the Federal Reserve Act provided the Nation with the more elastic money supply it badly needed. In 1914 antitrust legislation established a Federal Trade Commission to prohibit unfair business practices.

From www.whitehouse.gov

What they don't attribute on this site is this quote:

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."

And now we are reaping the rewards.

[ianrobo1]

yep you can not live on credit forever the point is no oe has suggested any other way that would work i relaity without great pain in the interim

[ianrobo1]

shows you how bad it is but our compay is going to cut 300 jobs, been there for 10 years now and never did this happen before

and as I understad never in the companies history

[Gringo]

Woodrow Wilson:

The passage of the Federal Reserve Act provided the Nation with the more elastic money supply it badly needed. In 1914 antitrust legislation established a Federal Trade Commission to prohibit unfair business practices.

From www.whitehouse.gov

What they don't attribute on this site is this quote:

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."

And now we are reaping the rewards.

The USA money supply grew more in the last 3 months by more than existed 7 years ago. So now they owe 'the man' even more.

[ahamaad]

Bumped. Apparantly VAT is going to be cut to 15%. Not sure how much it will help. Government borrowing is already a stupid figure. While i would welcome such a cut not sure if it's the right thing long term. Thoughts?

[drat01]

Ali - a lot of these initiatives are being called for by bodies like the CBI according the media this morning.

There is a real danger though that any benefits the gvmt bring in will not be passed on to thh man in the street by the greed still being shown by areas such as banks, energy etc. They are fundamental to both business and the Joe Bloggs's of this world.

Let's see more pressure from the media, and us towards making these people, who have been major contributors to the difficulties.

[Gringo]

The CBI calling for tax cuts - well there's a shocker. If the economy was the biggest booming economy in the world they'd be calling for tax cuts.

But as you say, any marginal cut in VAT rates will be stolen by the companies - not the banks.

New problems need new solutions - keynesian solutions were not implemented in the 30s and won't work here. Overhaul of the system of state finance needs to be implemented. Remove sales tax (ie VAT) and charge people on what they earn, not what they spend.

[snowychap]

Tomorrow, Mr Darling must introduce morality into the City

The pre-Budget report is the most important economic moment in the 11-year life of the Labour government. Chancellor Alistair Darling has to walk the finest of lines. He has to marshal well-directed and overwhelming financial force to limit recession, while simultaneously and credibly persuading everybody that he has not lost control of the longest sequence of big Budget deficits outside wartime.

Get it right and Labour has a chance of winning the next election. Get it wrong and his party will be back in the wilderness.

For the last six weeks, Treasury economists and officials have been assessing and reassessing the outlook for the economy and the government's rapidly deteriorating finances. Meanwhile, the wider economic news has got ever gloomier. It will be no surprise that the Treasury is forecasting a significant recession and slow recovery. The problem is that the banking crisis has wrecked the relationships and assumptions on which economic forecasts are made. Reality could be very much worse than expectations.

The City of London has landed our country in a mess. Nobody has yet gone as far as the Swiss UBS and invited the incompetent, overpaid monsters at the top to repay their bonuses. They should. Sir Tom Mckillop, outgoing chair of the Royal Bank of Scotland, is so far alone in saying sorry to his investors. Yet having mistakenly once lent far too much, banks are now mistakenly lending far too little.

Addressing this crisis - as much moral as economic - should be at the heart of the pre-Budget statement. Keynesian economics, I have repeatedly argued, is not so much borrowing and printing money in recessions - although vital in an emergency - it is using every tool possible to persuade and cajole banks and building societies to lend.

Darling must concentrate his limited funds on creating instruments and policies to stop the destabilising herd effects. The more effective and imaginative he is, the more he will be able to argue that the downturn will be limited and the more the public finances can be stabilised.

He has already signalled a willingness to overhaul the cautious and punitively expensive small business loan guarantee scheme. Young small businesses pay 2 per cent on top of their borrowing rate as an insurance policy to reassure the lending bank it will get its money back. The insurance premium needs to be slashed and every small business should qualify. Banks would start to provide much needed working capital.

But Darling needs to go much further. For a relatively small amount of money - low billions - he could radically extend cheap insurance schemes across targeted areas of bank lending so that banks would know that, come what may, they will get their loans repaid and thus lend with more confidence. For example, banks used to issue securities to raise money for mortgage finance; the market is shut, but could be reopened, as Treasury adviser Sir James Crosby has urged, with a guarantee. Darling should do it.

The same principle should extend to home owners. Darling should create a scheme to allow ordinary borrowers to insure the equity in their homes so they can lock in some wealth. We also need to take the first steps towards the reinvention of the bust British banking system. Darling should announce a new national infrastructure bank along the lines Barack Obama has suggested in the US.

He should also announce a major inquiry into British corporate governance. We can't go on with a system in which directors essentially award themselves bonuses for non-performance. I would introduce a financial services bonus tax - 75 per cent for one year bonuses, but tapering downwards to the standard tax system for long-term bonuses.

These measures won't stop the recession, but they could mitigate it. And Darling badly needs a powerful story about why this will be a nasty recession but not worse. As it is, the character of this downturn is devastating the government's tax receipts. More than a quarter of corporation tax came from the financial services sector in 2006/7. No more. Capital gains tax folds in an era of plunging property and share prices. Income from stamp duty on house sales will fall by two-thirds. This recession is going to hit the tax base much more savagely than the last one in the early 1990s.

Then the peak budget deficit, driven by social security spending and falling tax receipts, rose to nearly 8 per cent of GDP, which in today's terms would be around £120bn. This time round, it is bound to be higher. The peak deficit in this economic cycle could rise to 10 per cent of GDP or a mind-boggling £150bn. Only between 1940 and 1945 will the UK have borrowed so much for so long.

The Conservatives' political bet is that if there are further tax cuts and spending increases, financing these moves is going to force the government into a corner. Which is why Darling's extra borrowing has to be used effectively and boldly; although the deficit is necessarily high, we are at the limits of normal finance without resorting to the money printing press and there may be more demands on the state further to recapitalise a bust banking system before the recession is over.

His firepower has to be directed overwhelmingly on boosting bank lending. He should not be seduced into permanent tax cuts but, instead, offer a one-off tax credit for the low paid who are most likely to spend it. Anything left should be focused on incentives for employers to retain workers, public works programmes and bringing forward whatever capital spending he can. Don't underestimate the capacity of very low interest rates and a devalued pound to help to put a floor under the economy.

There are no easy fixes. The next 18 months are going to blight all our lives. Which is why there must be a moral dimension to tomorrow, along with the economics. Darling cannot legislate for those bonuses to be repaid or history to be rerun, but the truth should be baldly stated. It was the greed of a few that has plunged the many into hard times.

Fighting this recession should lay the foundations for a different way of doing capitalism in the future, one that is fairer, longer term and less skewed towards the interests of the City. The rebuilding of the financial system and a more moral system of taxation must begin tomorrow.

If Alistair Darling and Gordon Brown dare to say it, they would find not just their party but the whole country behind them.

I think it was the exceptional greed of the few, the general greed of the many and the stupidity of governments (and their complicity in the exceptionally greedy actions of the few) which have plunged us into hard times.

[snowychap]

The CBI calling for tax cuts - well there's a shocker. If the economy was the biggest booming economy in the world they'd be calling for tax cuts.

Indeedy.

When the harshest of times are over, will the CBI be calling for tax increases? I doubt it.

Remove sales tax (ie VAT) and charge people on what they earn, not what they spend.

That would have to be an EU wide solution, surely?

I.e. the UK could not remove sales taxes completely without either removing itself from the EU or the EU changing its rules.

[Gringo]

I'm sure the eu mandarins would be very upset. But there isn't vat-rate harmony across the eu at the moment, so not impossible to implement.

Anyway why should VAT be 17.5% - it was 8% before maggie decided to tax the poor to shore up the govt finances.

[snowychap]

Of course, one answer could also be selling off assets to partially fund tax cuts/reduce deficit (I think they used to call that privatisation).

Treasury in state-owned assets sell-off

A STRING of state-owned household names including the Met Office, mapmaker Ordnance Survey and the Forestry Commission, are being prepared for sale by the government in the next two years to raise cash for the stretched public purse.

Alistair Darling, the chancellor, is thought to have drawn up a list of 10 companies to offload, including the Queen Elizabeth II Conference Centre in Westminster. He will outline the programme in the prebudget report tomorrow alongside details of a Whitehall efficiency drive.

Several companies will now be groomed for sale by the Shareholder Executive, the body charged with improving the government’s performance as a shareholder.

Gordon Brown set a target of raising £36 billion from disposals by 2011. More than £18 billion has been raised so far, much of it by offloading surplus land and property.

The current financial turmoil means it is far from an ideal time to be selling assets. It is also a sensitive time to streamline assets for sale if that means job losses. A renewed disposal programme will draw comparisons with Brown’s cut-price gold bullion sale in 1999.

Many of the smaller assets being considered for sale were sized up by the Conservatives in the mid-1990s, when Lord Heseltine succeeded in privatising the commercial arm of the Atomic Energy Authority but failed to sell the Forestry Commission.

Channel 4 is excluded for the moment but will be assessed by the new communications minister, Lord Carter, before a decision is made. A backlog of maintenance will probably keep British Waterways from being sold, while the Royal Mint and the Land Registry are more likely to be offloaded.

[Gringo]

Oh dear that is desperate. Like selling your furniture to pay your credit card bill. Except you have to rent it back and so your debt grows long term instead of shrinking.

[snowychap]

I'm sure the eu mandarins would be very upset. But there isn't vat-rate harmony across the eu at the moment, so not impossible to implement.

I realise there isn't harmony but I was under the impression that 15% was the minimum allowed?

Anyway why should VAT be 17.5% - it was 8% before maggie decided to tax the poor to shore up the govt finances.

Don't get me wrong, I'm with you on the VAT front - I was just looking at the practical and legal implications of such a move.

[ianrobo1]

thats why it will be 15% for a year or so

of course it will also have a real positive effect on inflation as well

tomorrow is a budget of course and an emergency one, I predict we will see personal allowances raised by a large margin tomorrow, again temporary ...

from a polticial point of view the interesting to see how the tories react to tax cuts

[snowychap]

I predict we will see personal allowances raised by a large margin tomorrow, again temporary

Would you like to flesh that out, Ian?

Do you believe there will be a change to the personal allowance again this year?

Or is this a yearlong extension to the £600 increase for this year?

thats why it will be 15% for a year or so

What's why? You haven't really made it clear.

[villanfromluton]

After all the taxes this government have introduced, are we supposed to show gratitude. Always been a labour supporter, think it would take winning the lottery to make me do it again