Sunday, February 21, 2010

Is the Debt and House Price Bubble an accident?

Hague - PM 'Poisoning The Wells' For Tories

"William Hague has accused Gordon Brown of pushing the UK into "as much debt as possible" in an effort to make life tough for a Tory government". The de facto deputy Tory leader compared the Prime Minister and his Labour administration to a retreating army "poisoning the wells". "For the 10 months of the financial year so far, public sector net borrowing has reached £122.4bn with the UK's net debt now £848.5bn, which is equivalent to 59.9% of the country's annual output - the highest proportion for a January since the 1974 financial year" ( and what about the new housing bubble?)

Posted by alan @ 09:42 AM (989 views)
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8 thoughts on “Is the Debt and House Price Bubble an accident?

  • Nadeem Walayaat of Market Oracle has been saying for some time that:

    “In the course of updating the UK Recession Watch published last February that forecast peak to trough GDP contraction of 6.3%, and an economic recovery by the end of the this year, with subsequent analysis suggesting both a stealth stocks bull market and a bounce in the UK housing market, the most recent analysis to be published during June is increasingly suggestive of a clear strategy by the Labour Government of delivering a scorched earth economy to the new Conservative government whilst at the same time seeking to maximise the number of opposition MP’s that the Labour party will able to field post May 2010.

    The key evidence of the scorched earth policy is in the record 12% budget deficit that the government will run this year and the deployment of quantitative easing for the primarily purpose of monetizing government debt so as to prevent government bond auction failures which would force interest rates higher. Both of these are aimed at generating a false bounce in the economy as the eventual consequences of both is higher inflation and interest rates.”

    Of course the culprits would never say this, not even to each other. In respect of the various conspiracy theories that the government and other powers are trying to engineer inflation or deliver a poisoned chalice to their successors, I believe that these are to an extent true but in the minds of the guilty, these facts are hidden from their other brain hemisphere and is never mentioned to one another let alone the public. It is the denial of an alcoholic. Somewhere inside himself he knows the truth but goes to great lengths to hide it from himself and his family.

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  • letsgetreadytotumble says:

    From Wikipedia.
    “Fabian strategy is sometimes combined with scorched earth tactics that demand sacrifice from civilian populations.
    Fabian Socialism, the ideology of the Fabian Society which originated in 1884 and launched the UK Labor party in 1904, utilizes the same strategy of a ‘war of attrition’ in their aim of the ends of a socialist state.”

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  • I never thought I would wish for a Labour victory but I do this time so that these half wits have to sort out their own mess.

    I can’t wait for the howls of protests from the unions when a Liebour government has to impose swingeing cuts on the public sector.

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  • Mr G, I agree with you (and also thought it is something I would never wish for). None of the main political parties have policies which I find palatable (and certainly not in respect of housing) so whilst New Labour may be the worst of a bad lot, I think another five years of them could bring this whole car crash to a head a lot quicker (rather than a slow motion crash prolonging the agony).

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  • I despise this government as much for their illegal war and their PPP free for all as anything else. However, does anyone really think that with a Conservative government at the helm, you would have seen a) the banks face the consequence of their own lending policies and go to the wall where necessary and/or b) no monetising of government debt, or a significantly (and I mean significantly) lower extent of such action? If so, where is your evidence that, in Dave and Spotty, we have in fact two creative and ruthlessly independent economic thinkers prepared to consistently persue a policy at variance with that being followed by America (or the rest of Europe for that matter)? We are not talking about a Spectator editorial…can you see them really persuing a radically different approach to virtually every other country? No, thought not.
    I bitterly resent the irresponsible creation of a prolonged housing bubble at my expense, but lets be realistic about what might have really otherwise been under the other buggers, or we may as well just start posting Tory party election propoganda on here.

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  • Clockslinger, none of the main political parties have the will to challenge the ingrained home-owner-ist ideology. Come to think of it, neither do any of the fringe parties. Vince Cable was about the closest thing to sane on the subject of housing but even he seems to have given up his struggle against the tide. The housing bubble may have been worse and would certainly been just as bad under the Tories.

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  • Clockslinger – spot on. I think people want to imagine that the current situation is unique to Labour because they desperately want to believe that a tick in another box will make it all go away. People don’t want direct engagement with big issues, they just want to get on with their lives. An alternative vote is enough, an angry blog is ‘action’.

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