Thursday, July 28, 2011

Thinking the unthinkable: Might there be no way out for Britain?

Project Armageddon - The Final Report

A bear feast. George Osborne's Plan A is nonsense, because it depends on growth of 2.5%, 2.9%, 2.9% and 2.8% in 2012-15. Which sectors does Osborne think are going to grow exactly? Construction? Financial services? There were six major growth sectors in the 2000s, but they all depended on ever higher public or private borrowing. All are therefore now ex-growth. Since the electorate will not accept the necessary 20%+ cuts in state spending, we are inevitably going to follow Greece, Italy and the rest down the plughole. Large falls in property prices are forecast.

Posted by monty032 @ 02:04 PM (2672 views)
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26 thoughts on “Thinking the unthinkable: Might there be no way out for Britain?

  • A generally well written piece that seems fixated on the likely absence of the growth predicted by the Treasury – on that I agree..

    ..but it ends in doom and gloom style without attempting to chart an exit route that would work..

    The piece does not consider the role inflation can play in dealing with the problems at hand, and while the growth projections may not come in on time, it is not the end of the world if the targets are two or three years late in realisation.

    We urgently need to get a significant percentage of those who are currently either employed or supported by the taxpayer into a position where they become nett tax contributors.

    The government is already playing the tough love card on incapacity claimants, and with startling results – over a third of those called for assessment have abandoned their claims, and a greater number have been found to be fully fit for work.

    What is needed now is the mother of all home building projects – we have a housing shortage and an employment shortage – two birds that can be killed with one stone – and as a very high percentage of building materials are manufactured domestically, the knock-on effect on the economy would be huge..

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  • Thecountofnowhere says:

    That’s the most sensible thing I have read in a while. It points out the real problem. The cuts aren’t actually cuts, yet, we need cuts.

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  • general congreve says:

    Doesn’t it say that the voters aren’t prepared to accept 20% public spending cuts? That’s why there’s no exit route, because cutting back government spending is the exit route, but it’s off the table because of democracy and everyone looking out for themselves, which is only to be expected, as personal survival is the number one trait of any living creature.

    You say we urgently need doleys to become nett tax contributors. You need growth for that to happen, and the only way is to cut back on government spending. Just saying we need it is not a solution in itself.

    Of course, we can and are using inflation to try to dig ourselves out of the hole we are in. But that is a faux solution. When all is said and done our debt might be smaller, but our economy will have shrunk and standards of living will be lower. Where’s the win in that?

    Fair enough, some good work on incapacity, but dole is on £50Bn a year of social security commitments. Shaving a couple of billion off that is certainly a good thing, but when you consider that public pension commitments that aren’t so easily cut such up £150Bn a year (roughly the size of our deficit) and how we are busy galavanting round the world spending billions stealing oil, such actions start to look more like p1ssing in the wind.

    I think more houses may be helpful, but a huge building project? Go on then, stick in on the tab!

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  • general congreve says:

    Just to add I think I trust the views of Tullett Prebon a little more than I trust a view not too dissimilar to that of those economic geniuses, Balls and Millipede.

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  • general congreve says:

    The bottom line is we need to balance our books sharpish or we are in trouble, inflation or no inflation. I think Dickens summed it up perfectly:

    “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

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  • GC,

    The beauty behind a big house building project is that it doesn’t cost the government a penny, indeed it can make money for the Treasury
    – all they have to do is auction off surplus MoD land as individual building plots, with the covenant that every house must be commenced within 12 months and occupied within 24..

    As far as the ‘doleys’ are concerned, require everyone to show up for work or re-training every day, and give them clean-up jobs to do – most unemployment blackspots are awash with litter and graffiti..

    ..by getting them back into the routine of going out to work every day, I’d wager that a large proportion would soon use their initiative to either find proper work or create a business of their own..

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  • Thinking the unthinkable: Might there be no way out for Britain?

    Always a way in, but never a way out.

    Funny that!

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  • general congreve says:

    @5 – What would happen once the houses were built? Bit of a boom, bust thing going on there maybe? Not that I’m saying the way you propose it wouldn’t be beneficial in many respects.

    Agree, with your doley sentiments, but how do you actually get them to work and enforce how much graffiti of litter they should clear a day? It might end up costing extra money to enforce. A simpler solution would be to set up roll-call centres, doleys must attend to be counted every weekday 8am to 10am in the morning and every afternoon at 3pm to 5pm in order to get money paid on a daily basis. This would make claiming nearly as much an inconvenience as working, but without the effort of making sure they’re picking up litter or the accusations they’re being used as cheap labour to pick up litter.

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  • GC,

    We need more houses in total, and once that objective has been satisfied, the focus should then move toward renewal, as we have a lot of housing stock that has either reached or exceeded its design life, and there’s a huge amount of post-war construction that will be crying out for renewal over the next fifty years.

    If the ‘doleys’ don’t get their benefits if they don’t show up, then show up they will! I would advise the government to only take responsibility for ensuring they clock in and clock out each day, and to delegate the task of keeping them gainfully deployed in between those times to the relevant local authority.

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  • @5 …by getting them back into the routine of going out to work every day, I’d wager that a large proportion would soon use their initiative to either find proper work or create a business of their own..

    I’ll take that bet UT.

    Treating the unemployed like chain-gang criminals is not the answer. Forcing large businesses to provide adequate job training and apprenticeship schemes for the roles that they are wishing to fill would probably be more constructive.

    I’m sick of hearing Business bleating on about the UK workforce not having the skills they need, having largely closed down their apprenticeship schemes, and still offering very little in the way of skills training as part of any recruitment policy.

    The Workforce lost the skills when they stopped being trained & they stopped being trained when business decided it was cheaper to just poach other Companies staff after they had already qualified with somebody else. And, when this well dried up too (because everyone stopped training as a result) they switched to importing the skilled labour from abroad

    Now, It is now demanded that the Government ‘do something about the problem’ – turning Schools into the sort of training centres that decent forward looking Companies ought to have invested in themselves many, many years ago. Its not that I think that this will actually be a bad thing, in fact many will probably benifit a great deal from a greater vocational emphasis on their education, but it sticks in the throat that UK business seem to think that the tax payer should always foot the bill for training their future workforce, and that nobody ever seems to want to point out that the problem is largely a result of the short term, dividend blinded, policies of UK PLC themselves.

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  • tick tock,

    The reason companies stopped investing in long term training was because so many trainees either dropped out or went on to work for someone else.

    The problem is a complex one – you can’t just heap the blame on big employers..

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  • A good friend of mine left school in 1983 and has been unemployed ever since. He never really wanted a job. The only thing that’s going to change him is the certain knowledge that in six months the money is going to stop. For those less inured, you should gradually ramp up the requirement so that in the end they are signing on at 9am and signing off at 5pm every day. If they miss the time, they lose half a day’s benefit. They may be required to do some simple job during the day and they may not. They will very soon realise that the dolie lifestyle is gone for good and they may as well get a job.

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  • general congreve says:

    @10 – Oi, that was my doley idea! 😉

    As for your friend, if the option is there, I don’t blame him. The politicians are to blame, if they didn’t pay your friend to be idle (and no doubt pay for his house too via some scum to let landlord) then we wouldn’t be over run with immigrants and have as many issues with housing as a result. Nothing against foreigners – I’m all for skinny polish birds showing up our girls for the fatties they are – but why do we import so many people to do work while paying our people to be idle?

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  • uncle tom @ 9,
    There are plenty of ways round that. You can train your staff but charge them for the training, to be repaid out of future salary. If they quit immediately after training then they have to repay the cost. Simples.

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  • I haven’t had the chance to read this myself yet but I did listen to a commentary on the debt figures and graphs from the ‘Mystic’ economic commentator: World News (Thu 28th. July ‘ 11)

    Mystic is an MMTer and his comments about the debt graphs (01:20 to 08:00) are damning.

    Hopefully, the rest of the report is a bit better. I’ll have a look later.

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  • UT, why build more houses to house more and more people that the country cannot support, what the UK needs is depopulation back to a level that is sustainable. Again houses are paid for via long-term debt, albeit private debt and not exactly conducive to economic growth.

    On a side note have been out over the last few weeks cycling around the Cheshire/Welsh border and have noticed a large number of empty noughties blinged up properties and unfinished or abandoned projects. Cannot tell why they have been left the way they are but they are there and if you look closely there are a good number of them, sufficient to be noticeable.

    One even had a for sale sign with an auction date on it, only when I read the little sign under it closely did I realise the July auction date was 2010 not 2011.

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  • general congreve says:

    @13 – Seems to be the same sort of circular arguments we get here. One side will be proved right in the end, but which one, DUN, DUN, DAAAAAAAAAA!!!!

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  • Drewster,

    Your logic seems eminently sensible, but as it doesn’t seem to happen, I suspect there’s a legal issue somewhere.. However, a good angle, so why not make a name for yourself and work on it..?

    Enuii,

    A certain guy in Norway did a bit of depopulation recently, and it didn’t make him very popular!

    You can argue till the cows come home about what the UK can or can’t support, but the only credible way to reduce the population is to encourage people to retire overseas – which is sensible, as healthcare costs are cheaper in most retirement destinations.

    Migration is a hot issue that politicians of all colours are painfully shy at addressing. A first step should be to re-define the UN charter on refugees so that anyone claiming asylum should not have the right to choose their country of destination. Logic says that if you’re that desperate, you should be happy to go anywhere..

    – How many ‘asylum’ seekers would be happy to go to Uzbekistan, I wonder?

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  • UT

    A fair point, and I wouldn’t by any means claim that lack of business instment is the ONLY cause of current state of affairs, but those people who were trained and then poached, were poached by other business seeking to avoid the costs of the training themselves. In many instances, it is those same companies that now complain the loudest about the general skill levels of the UK workforce.

    Granted, there isn’t an easy solution to this problem given the commercial realities of an advanced market economy, and there will always be slackers like Montys old pal for sure, but I think it at the least reasonable to remind these Companies of the true origins of the problem, particularly when everyone is so eager these days to blame the unemployed, for being unemployed.

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  • general congreve says:

    @16 – The depopulation plan is already in place here. When Russia went broke lots of vulnerable old people died from cold and lack of money and the birth rate collapsed, due to people not being able to afford as many kids. So, going broke will be good for the HPC in more ways than prices just adjusting down due to a lack of credit and job loss, there will be additional home vacancies too to drive prices further south, although I expect some redecorating to get rid of floral wall paper and such chintz will be necessary in those cases.

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  • @Uncle Tom

    “as it doesn’t seem to happen, I suspect there’s a legal issue somewhere.. ”

    I’ve come across people that are subject to exactly the sort of repayment clause that Drewster describes on IT training courses (tailor made for industry exam qalifications.) Typically, if the staff quit within two years, they must repay the training course costs though possibly this is just an IT thing.

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  • All this talk of growing, or inflating, ourselves out of debt are just stop gap measures. You can’t keep growing forever, balance is the key. Nature shows that systems that are balanced and sustainable work best and provide a more harmonius existance.

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  • general congreve says:

    Recommend everyone reads this report, at least the executive summary, which will only take you 3 minutes.

    Flashman, any thoughts on this report?

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  • What I marvel at about this country is the willingness of so many – usually those who are well off – to condemn a slice of the population as feckless and lazy. Consider that education is becoming more difficult to access for school leavers; university fees will load students with enormous debts, jobs are being offloaded abroad by powerful employers, except for the rich wages are dwindling (and this Govt is determined to reduce them further for the public sector). The ethos of living on benefits in some quarters has grown up over the years, along with cuts in incomes, growing inequality, deteriorating social structures. Hardly surprising that some people decide to opt out, or decide they have no choice even. Making life intolerable for the unemployed won’t improve anything; but I don’t see this country being prepared to invest in its own population, which is an indictment of us all.

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  • P13 – column 6 – Apparently, criticising bankers because they earn excessive amounts of money is about as rational as a football supporter demanding the sale of their top scorer because they earn more than they do

    Well, strangely enough, my club’s footballers are paid to play football. When they start using the club’s finances for the purposes of reckless gambling, then too bloody right I’ll be criticizing them.

    The report also goes on to say that downsizing Britain’s financial services, would be akin to Saudi Arabia downsizing oil or Iceland downsizing fish.

    While this may be true in the short term, it has been our reliance on the financial services sector in this country is a millstone around the neck of our economy and is exactly what has led us to where we are now. All of the major growth nations of the modern world are manufacturers. The 100+ chinese imported items in my office from where I am typing this, prove this fact.

    This ‘airy fairy’ making money from thin air business has run its course. Don’t defend it – it won’t be the thing that saves us.

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  • @LTF “Consider that education is becoming more difficult to access for school leavers”

    Could that possibly be a reflection on the standard of education they have received up to that point, which makes them unsuitable for or incapable of further learning or indeed employment in some extreme examples?

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