Friday, October 30, 2009

Yup. Just as bad as the other lot.

Why Britain’s recession is lasting longer than others

George Osborne makes a promising start, actually "Why are we faring worse than our competitors? Partly because we had a bigger housing boom, larger credit bubble and a more unbalanced economy than any other major country." So what's the solution? Burst the housing and credit bubbles? Nope. Keep them inflated: "As the Conservatives have argued throughout this recession, the continuing shortage of credit is still the single biggest barrier to recovery. That’s why we need to accelerate the recapitalisation of the banking sector and provide more guarantees for new lending."

Posted by mark wadsworth @ 02:45 PM (1548 views)
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11 thoughts on “Yup. Just as bad as the other lot.

  • Roberto Birquet says:

    What a boring analysis by Osborne. “As the Conservatives have argued throughout this recession, the continuing shortage of credit is still the single biggest barrier to recovery”. Oh, well done Sherlock! No mention that when the crisis hit, the tories were actually silent, and when they piped up, it was “let the Rock go bust, and don’t touch the deregulated bonus culture”. Since all we have had on that is: “If you take out huge bonuses, we reserve the right to act through the tax system” They must be shaking in their booties.

    And the pathetic, “we are the only party to set out a radical plan on spending”, or the nuLabour type mantra “difficult choices” that he uses, has amounted to about £7 bn spending cuts when £100s million are supposedly required. And who to hit, the rich? er, no big tax cuts for inheritance to go to millionaires. the bankers? don’t make me laugh! (see above), noo let’s hit public sector workers on middle and lower wages. I work in private sector so probably will only get a pay freeze in 2010. But I want the real culprits hit – the financia sector. And hard.

    We deserve a better choice than this. NuLabour propping the system up, and the Tories denying that it weas the financial sector that did and that is purely big government. What nonsense!

    Cut lower and middle earner taxes, introduce tax on land, and Vince Cable’s million-pound house tax – it is nonsense to say that it would be impossible to collect. It would be a lot easier than collecting via bonuses in offshore accounts or used to buy up BTL portfolios.

    But the Tories have not changed. We risk getting rid of Brown and being stuck with a bunch of people too close to bankers, who cannot think any differently. Depressing!

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  • “Other countries are out of recession”. Pull the other one. Ask anybody in the US if it feels as though the country is out of recession. Tell ’em employment will follow official GDP figures upwards because employment is a “lagging indicator” and they’ll call you an oxymoron.

    Recapitalise the banks some more in order to get money to SMEs in need of re-financing? More big write-downs are in the pipeline, so banks will get involved in senior lending only to the biggest and most secure companies, which would be able to go to the bond and equity markets anyway.

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  • Icarus @ 1

    Agree with the gist of your comment but I’m not sure whether the average Brit let alone the average Yank would know the word oxymoron.

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  • “Partly because we had a bigger housing boom, larger credit bubble and a more unbalanced economy than any other major country.”

    This is making the same statement in 3 different guises. The credit bubble largely funded the housing boom and the economy was unbalanced because all the wealth creation was in, yes, you guessed it, housing!

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  • mark wadsworth says:

    @ n-a-c. That was my point. Georgie Boy correctly pins the blame on Home-Owner-Ism. And then goes on to explain how and why he will keep house prices high.

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  • The problem is, regardless of reality or what any manifesto states, the masses see the other side of this same coin as a real alternative, just look to the polls.

    Three words: sick, sick, sick.

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  • happy mondays says:

    I don’t like assuming, but i assume if house prices are kept inflated, then the cycle of debt shall continue ? IE House owners who have had there house 10 yrs or more think they are wealthy & spend on the back of there property, less than 10yrs people have to keep mortgage repayments up, & Ftb’s borrow a stupid amount to buy, & so we keep spiralling !
    Again i only assume as we all know assumptions make an ASS out of U & ME

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  • For decades now you’d have done better investing in assets and paper than in producing goods and services, especially in the US and UK. Banks make more by churning old bonds than they make by lending to companies. Practically all governments have policies to support asset prices in order to support consumption and keep GDP from sliding. China is one of the few states supporting the real economy – but a lot of that is due to credit to state companies to build bridges to nowhere and to take over private companies that don’t have access to the same pool of credit.

    If you’re looking for a rational (from the viewpoint of society as a whole) approach it’s hard to find.

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  • markj69 str05 says:

    [email protected] – Agreed.

    So are they saying that the housing market is the main/most important industry contributing to the countries economy?

    Manufacturing eroded away yr after yr. Public services expanding to support growing and aging population (Soon to decline). Are we becoming a service sector country???

    Where on earth is the money coming from to keep the wheel turning??? Certainly not in the engineering sector.

    Something must give way soon – and without external interference, artificially prop’ing up this ‘rotten’, ‘Sick’ industry.

    Can’t wait for the ‘Gen Elec’. Then the whole truth can be reveiled, with out the government of the day being worried about loosing their position.

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  • The Tories are attempting to reassure homeowners that the ponzi won’t disappear overnight. It’s about vote winning, not about what’s actually going to happen when they win.

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  • Brightonrentfodder says:

    well perhaps markj69 str05, that “something ” to stop them in their tracks with QE etc. will be the gross devaluation of the pound
    and hyper inflation. It amazes me how few economists talk about that possiblity nowadays, but then they all think we’re about to pull out of this recession based on fudged statistics!

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