Bolitics The New Condem Government

[peterms]

Not only is there no Plan B, they don't even recognise the need for one.

Treasury rejects civil service chief's call for economic 'Plan B'

Treasury turns down Sir Gus O'Donnell's suggestion that ministers should come up with a strategy to adopt if the economy slips into recession next year

The Treasury has rejected unsolicited advice from the head of the civil service, Sir Gus O'Donnell, suggesting the coalition government needs to prepare a "Plan B" in case the economy tips into recession in the new year.

O'Donnell has unusually written a confidential appeal urging ministers to think about the strategy they should adopt if the forecasts set out by the Office of Budget Responsibility turn out to be wrong early in the new year.

Apart from further quantitative easing by the Bank of England, he has suggested the Bank look at direct commercial loans to business, and the government consider restarting some capital investment programmes and even introducing some direct tax cuts.

A Downing Street spokesman refused to confirm the existence of the memo, saying it was not government practice to confirm the existence of leaked papers. But the spokesman added that ministers had not asked for any advice, adding it would be normal for civil servants to prepare contingency plans.

The No 10 spokesman added that "recent experience in the sovereign debt market suggested the government had the right plan. No one is suggesting we should go slower."

The leak of the memo suggests there may be wider tensions in the government about whether to prepare plans for a humiliating reversal of its economic policy.

Vince Cable, the business secretary, already at war with the Treasury over banking policy, is said to have described Treasury officials as "1930s fiscal fundamentalists".

O'Donnell is a former permanent secretary at the Treasury and played a big role in helping Gordon Brown stay out of the euro, so as to ensure Britain had fiscal and monetary flexibility.

The only cabinet minister to speak of the need for a plan B is Chris Huhne, the energy secretary, who warned of the government lashing itself to the mast.

Alan Johnson, the shadow chancellor, seized on news of the leak, which came in a column in the Financial Times by Philip Stephens. He said: "Even David Cameron's top civil servant thinks he needs a plan B on the economy. The truth is that he should not be gambling with growth and people's jobs in the first place.

"No other country is following the risky path the Tories and the Liberal Democrats have set the country on. They should think again about their plan for a £13bn VAT rise in just three weeks' time."

[TrentVilla]

I may be wrong but it appears more than a few posters are relentlessly looking to make political capital out of each and every reduction in spending without a) accepting that cuts need to be made or suggesting where those cuts should come that would be sufficient and 'fair'.

I'll be honest mate, I can't think of one single poster in this thread that the above statement applies to. I don't think I've seen anyone say cuts don't need to be made or even suggest that they hold that view.

Personally I accept cuts need to be made and in some instances some of the cuts I don't object to, it has nothing to do with playing party politics. I judge each thing policy on its own merit and what my perception is of its fairness.

You may find it odd that some are against everything this government are doing but it could also be seen as odd that others seem to agree with every policy, every decision and every cut. I struggle to see how either position is different from the other.

[peterms]

I may be wrong but it appears more than a few posters are relentlessly looking to make political capital out of each and every reduction in spending without a) accepting that cuts need to be made or suggesting where those cuts should come that would be sufficient and 'fair'.

I'll be honest mate, I can't think of one single poster in this thread that the above statement applies to. I don't think I've seen anyone say cuts don't need to be made or even suggest that they hold that view.

I don't think cuts need to be made to public services. On the contrary, we should be expanding them.

Where cuts need to be made is in the stunning amounts we are throwing at the banks' wealthy owners. I've posted the graphic before, but consider this: leaving aside the £289 billion spent on nationalising (temporarily) some of the banks, the amount thrown at the rest for asset purchases and cash bailouts is more than twice as great as the annual spend on pensions, health, defence, schools, police, local government and income support added together!

Most people know we have bailed out the banks. How many have the slightest appreciation of the breathtaking scale of what has been done?

[blandy]

I must have missed that graphic last time, but it's interesting.

Aside from your comment about the bank bailout, it's interesting that the budget deficit is greater in size than all the income tax collected, for example and about a third of the size of all Gov't revenue.

it doesn't seem that far fetched to believe that at some point the value of the banks shares bought will be recouped, eventually, perhaps with some return on the "investment".

The political point about neither Labour nor the TorLib gov'ts having the bottle/expertise/desire to put through changes based on the huge brown wodge spent on the bailout of banks and financial institutions is very valid. If it's just a UK problem, then we should act, and if it's global, then the buggers can't really run off elsewhere. The global political failure of will on this is appalling. As with climate change, the politicians utterly let down the people.

On the UK budget and the defecit, an annual overspend of 175 billion is completely unaffordable, and for me the Gov't is right to address this. The pace at which they do it is something that can be argued, the nature behind (ideology) some of the decisions taken can also be argued.

Given that we've splurged so much on the banks, it's imperative that we get reform of them, that they contribute to the recovery plan, but sadly also imperative that the annual defecit is cut (it would have needed to be cut anyway, regardless of the banks).

As you said earlier, the idea that exports will save us is not really credible. There are growth areas - China, India, Oil rich and mineral rich nations, but they dictate the terms, and we seem unprepared to pay that price (I don't know if that is good or bad).

[snowychap]

Roy Hobbs, a £2500-a-day Restructivisational Consultants brought in to protect core council bullshit, said: "If you leave an infinite number of overflowing dustbins outside an infinite number of houses, sooner or later someone will take them away. Also bin men are probably a bit sexist.

[peterms]

I must have missed that graphic last time, but it's interesting.

Aside from your comment about the bank bailout, it's interesting that the budget deficit is greater in size than all the income tax collected, for example and about a third of the size of all Gov't revenue.

it doesn't seem that far fetched to believe that at some point the value of the banks shares bought will be recouped, eventually, perhaps with some return on the "investment".

That would be possible if the banks had properly valued the "assets" they claimed to have. The whole point is that they didn't. They stopped lending to each other because they knew they were all lying about their balance sheets.

Their shares are worthless. They don't have the assets they claim. The problem they face is not liquidity, but solvency. It's a massive scam, and Bernie Madoff is no more than one snowflake in a blizzard. We have been cheated and lied to by the people we trusted to safeguard our pensions and our investments, and they are being protected by their lackeys in government and the tame regulators. And now we are being fleeced to protect them from the consequences of their own thieving behaviour.

The political point about neither Labour nor the TorLib gov'ts having the bottle/expertise/desire to put through changes based on the huge brown wodge spent on the bailout of banks and financial institutions is very valid. If it's just a UK problem, then we should act, and if it's global, then the buggers can't really run off elsewhere. The global political failure of will on this is appalling. As with climate change, the politicians utterly let down the people.

Here's a graphic for the US.

It's global, and they can run off elsewhere, in that capital is unconstrained by national boundaries. The shit being piled on us, the Irish, the Italians and others is purely to advantage an international elite of bloodsucking parasites.

On the UK budget and the deficit, an annual overspend of 175 billion is completely unaffordable, and for me the Gov't is right to address this. The pace at which they do it is something that can be argued, the nature behind (ideology) some of the decisions taken can also be argued.

Get away from then idea that the principles that govern a household, firm or local authority budget also govern a national budget. They don't. Deficits are ok. They are a necessary part of the national economy. They are a tool of economic management, not a sign of corrupt or incompetent administration. Yes, I know it flies in the face of what we have been told.

Given that we've splurged so much on the banks, it's imperative that we get reform of them, that they contribute to the recovery plan, but sadly also imperative that the annual deficit is cut (it would have needed to be cut anyway, regardless of the banks).

Absolutely we must control the banks. But that will be a political struggle, in which the cards are stacked in favour of the banks and their gofers. Deficit, see above.

As you said earlier, the idea that exports will save us is not really credible. There are growth areas - China, India, Oil rich and mineral rich nations, but they dictate the terms, and we seem unprepared to pay that price (I don't know if that is good or bad).

There are some areas where we have a competitive advantage, still. You work in one. It seems from what you say that we are destroying the things we have made which really are world class and which we could sell abroad. At the same time, I don't hear that we are trying to refocus this engineering knowledge on for example alternative energy, so that we can prepare for the next crisis rather than the one that happened a few decades ago.

[leviramsey]

Get away from then idea that the principles that govern a household, firm or local authority budget also govern a national budget. They don't. Deficits are ok. They are a necessary part of the national economy. They are a tool of economic management, not a sign of corrupt or incompetent administration. Yes, I know it flies in the face of what we have been told.

Where does the money come from? The government either borrows or prints it. Either way **** over the people (be it through future taxation or inflation).

Economic management? Bwahahahahahahahahahaha!

[peterms]

Where does the money come from? The government either borrows or prints it. Either way **** over the people (be it through future taxation or inflation).

Well, where does money come from?

Governments don't borrow to get money, any more than they send out teams of tax collectors on horseback to raise tithes.

They don't print it, except as a means to have something transferable for people to use in shops, at least those where some physical exchange is still required.

Where does private money come from? The kind untainted with the hand of government?

[leviramsey]

Where does the money come from? The government either borrows or prints it. Either way **** over the people (be it through future taxation or inflation).

Well, where does money come from?

Governments don't borrow to get money, any more than they send out teams of tax collectors on horseback to raise tithes.

They don't print it, except as a means to have something transferable for people to use in shops, at least those where some physical exchange is still required.

By print, I mean "create" regardless of whether notes are physically printed. I don't believe you're eight years old, Peter.

The question stands: there's x units coming in from current taxation and y units going out in expenditure, with y being greater than x. From whence came x-y?

Where does private money come from? The kind untainted with the hand of government?

Private money is anything used as a means of exchange from fiat currency to gift certificates to so-called precious metals to straight-out barter. Only one of those three is tainted by the hand of government.

[snowychap]

From whence

Buzz.

Tautology.

[leviramsey]

From whence has a strong literary precedent, appearing in Shakespeare and the King James Bible as well as in the writings of numerous Victorian-era writers.

As this:

is my typical costume, I'm sure you understand.

I am a gentleman of wit and learning, and am known to jape and jest at the expense of others. I wear only the finest doublets and waistcoats, and my devastating bons mots are feared by ladies and gentlemen of good standing everywhere. I tip my cap at jaunty, rakish, or even, at times, saucy angles and compose satirical quatrains while prancing merrily, gadding about gaily, and kicking my heels to and fro. I have also been known to flout good taste by wearing the gaudiest and most ostentatious monocles. Furthermore, I comport myself in a boorish manner, staying up all night drinking vermouth and squandering my family fortune at whist.

[Awol]

Correct me if I'm wrong but fiat money is created as debt, ie, it doesn't actually exist until someone agrees to pay it back.

^ EDIT: Looking good, Levi.

[leviramsey]

Correct me if I'm wrong but fiat money is created as debt, ie, it doesn't actually exist until someone agrees to pay it back.

It does in a central bank environment, but there's nothing in the abstract that requires that to be so.

[Awol]

I think the rise in inflation yesterday - the first of many I suspect - should put the skids under the idea of any more QE by the BoE, so chalk that one off the "plan B" scenario.

[Demitri_C]

Where cuts need to be made is in the stunning amounts we are throwing at the banks' wealthy owners. I've posted the graphic before, but consider this: leaving aside the £289 billion spent on nationalising (temporarily) some of the banks, the amount thrown at the rest for asset purchases and cash bailouts is more than twice as great as the annual spend on pensions, health, defence, schools, police, local government and income support added together!

you start doing that peter then all the big companies will start leaving the country and do their business elsewhere which will make it even worse

[snowychap]

From whence has a strong literary precedent...

Oh, I don't disagree. It's still, however, tautologous (and another one of me bêtes noires).

[snowychap]

...chalk that one off the "plan B" scenario.

There is no plan 'B'. :winkold:

p.s. Shouldn't the decrease in the chances of further QE by the BoE send gilt yields up further (if the prospect of them had been factored in previously)?

[avfc89]

By-election Jan 13th. Time for the Fib Dems and Cons to go down.

[snowychap]

By-election Jan 13th. Time for the Fib Dems and Cons to go down.

Though I agree with the sentiment, I wouldn't recommend Labour running with that line during their campaign. :winkold:

[drat01]

Normal protocol is for the party that held the seat before to call the date of the by-election. It seems that this Gvmt, AGAIN, are breaking these rules and deciding the date. The significance is that they have called it when the student vote is basically not there. How convenient and another example of the way this lot are sinking day by day lower and lower