Friday, March 7, 2014

Monetary policy after the collapse of Osbrown

After Osbrown: the Coalition has picked up where Gordon Brown left off

Article contains an interesting link to a paper with a history of UK monetary policy as practised by various administrations. So Douglas Carlswell the author that the recent policies of Osbourne and Brown are the same, and that they will shortly be clearly demonstrated to be total failures with a discussion of what may be next. Made me think that possibly Carney/Osbourne are already moving away the lever of interest rates and to (surprisingly) take Carney at his word he may indeed intent to use other measures to the blunt trauma of lifting borrowing costs. In which case state involvement with finance will inevitably increase further than the existing Funding for Lending/Help to Buy. Unfortunately this means that interest rates won't allow price discovery or resource allocatino.

Posted by stillthinking @ 07:12 AM (2363 views)
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16 thoughts on “Monetary policy after the collapse of Osbrown

  • Not Brown, not Osbourne – it’s actually US monetary policy all along.

    The UK is NOTHING other than a US puppet state, a stooge.

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  • stillthinking says:

    And will also mean that there will be a generational gap that our lovely elders will be able to hold on down 0% borrowing costs, but others will be denied access to credit.
    Which is a plus IMO because you can’t deny credit and also keep high prices. Winners and losers.

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  • mark wadsworth says:

    “Osbrown”.

    Good, I’ve been saying this for about three years and ten months, I’m glad it’s starting to catch on.

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  • Osborne is a lot worse than Brown. Brown got caught up with the Greenspan euphoria and genuinely believed in what he was doing. Brown was a conviction polician, whether you view him as cra!*! or not and when the crisis hit in 2008 showed leadership, even if the rest of his tenure was in question.

    Osborne on the otherhand has all the recent history to look at. He was in opposition when the financial crisis hit, so wasn’t saddled with past decisions. He knows the banks were out of control and has done nothing to address this, he knows that a housing led boom can lead to failure and social problems and is creating another one, He is revelling in a lot of ‘circumstantial’ GDP igniting the housing market and continuing the printing presses and has no long term vision of how the UK will look in the future. If another crisis hit, i would prefer Brown in charge rather than Osborne

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  • Agree with BB. The two are nothing like each other. Brown is widely regarded around the world for his actions in 2008. And he has a genuine concern for the least well off, which one most certainly cannot say for Osborne, who plainly does not give a damn. The last Labour govt made a lot of errors, the main one of which was following Conservative policy from the 80s.

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  • @4 Agreed. Brown was pig-headed and myopic, but at least he was principled. Osborne is wilfully manipulative and cynical. Brown would never have implemented Help To Buy. He might never have thrown his hands up and admitted to his mistakes, but he probably wouldn’t have doubled-down on them just to win an election.

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  • Can’t abide either, but agreed for very different reasons. Still don’t understand why, if the banks have to be able to pay top dollar to attract top talent, why do we not pay a basic salary of, say 250K for the Chancellor, with bonuses to take their earnings to a million or so? It’s the FD of the friggin country FFS. But no, we pay a measly salary so the only people that will do it, do it because it gives them power and they don’t really need the cash anyway because they’ve got a few companies and directorships on the go at the same time. If you ask me, you should be assessed to be an MP (to make sure you actually have the required skills and knowledge), and if you do it then it is your only job and only source of income, but you get paid as though you’re doing the most important job in the country, because you are.

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  • @7

    Yeah, that’s one of the biggest problems in UK politics. We’ve ended up with a government run by trustafarian rent-seekers, largely because no one qualified for the job would work for so little money, unless they’d already inherited/built-up/were still earning a fortune. I mean, the Tories, faced with a dire housing crisis, put a PR guru in charge of our housing policy and (surprise, surprise) he went swanning off to Vegas to give motivational talks whilst presiding over the worst construction figures in half a century. In some countries, he’d have been tried for gross negligence and conflict of interest, but instead they promoted him to party Chairman.

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  • @8

    Upon checking that, it would appear that I misremembered the story. He attended the conference just before being elected as an MP. The contentious point was that he had attended it under a pseudonym.

    The fact remains, they left a man with a background in internet marketing in charge of their housing policy because anyone who knew a thing or two about housing would have been too busy and too well-paid building them to consider earning £66k as an MP.

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  • There is precious little relationship between “talent” (which is defined in some odd ways these days) and pay. It boils down to economic power. Banks pay a lot because they control large money flows and can get away with it. Not so long ago bank pay was similar to other professionals. Same with footballers – the crop these days is certainly no better than fifty years ago.

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  • LTF – you’re probably right. But MP’s, and especially cabinet members, should be paid according to performance, and their KPI’s should be set by a GENUINELY independent body. And no external interests/distractions.

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  • stillthinking says:

    I am surprised at the poor view for Osbourne who didn’t get dealt a good economic hand surely and is still delaying austerity.

    I can remember 1997 when New Labour came to power. There was no problem with immigration crowding out public provision of services, no shortage of housing, the population of London had dropped to 6 million, pension funds were OK, there was a private sector in the North before the great bribe of state work. The Tories were famous for kinky sex scandals not the finger in the till of Labour. There was no endemic BTL.

    Osbourne took over from a situation where there were discussions about deploying police to maintain public order, the banks were insolvent, the government had created an impossible level of spending and PFI debt, pensions ruined and discredited, a collapse in the value of sterling, a housing crisis. The idea that Brown should be given credit for an immediate offering of the taxpayer to make good all losses is incredible ! Should we also congratulate the Irish president for handing over the Irish taxpayer heads on a plate?

    Its is insane and willful denial of New Labour running this country into an appalling state that we will be suffering from decades on. Osbourne is doing his best and doing his best responsibly, there is no more money left, he isn’t being tight or cruel, all of the money is gone. At some point Labour voters need to come to their senses about the Blair/Brown administration instead of being revisionist apologists.

    Having said that I prefer UKIP but please can we stick at least to what can be plainly observed. 1997 OK, New Labour term later the country is destroyed.

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  • mark wadsworth says:

    “Brown would never have implemented Help To Buy.”

    Woah! Blair and Brown presided over a massive land price and credit bubble and sold off as many council houses as Thatcher, and they invented just as many of these schemes as The Tories.

    For example:
    http://www.scotsman.com/news/163-100bn-bid-to-end-home-loan-misery-darling-to-guarantee-new-mortgages-1-1302955

    ALISTAIR Darling is set to back a £100bn gamble with taxpayers’ cash in a desperate bid to kick-start the struggling mortgage market.

    The Chancellor’s plan involves effectively underwriting the majority of new mortgages in the UK to encourage big investors to give badly needed money to lending banks.

    The proposed scheme means the UK Government would guarantee mortgage bonds, where banks parcel up individual home loans and sell them to investment firms. When the system works properly, banks have a source of money to loan to customers and investors get a return.

    But with many investors currently reluctant to risk their money on mortgages, Darling is preparing to guarantee the value of mortgage bonds to get the cash flowing again.

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  • ST
    I think you’re still-living in a blue-mist fantasy. Pensions were in a pretty bad state long before 1997 – mis-selling of private pensions, contribution holidays – you probably don’t remember those. Then there is the banking deregulation (which Lab unfortunately, though understandably, did nothing about). And people have been banging on about immigration since the 60s. Osborne is screwing the lowest paid, especially those on benefits, into the ground. That is what is so reprehensible rather than the simplistic austerity.

    UKIP – a party for narrow-minded bigots, not a serious political alternative.

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  • stillthinking says:

    I remember house prices well enough. I remember what I could buy with my salary even though I am way ahead professionally now (cough..). I can’t remember an immigration panic. I can’t remember discussions about deploying the police to maintain public order because the financial system is in collapse.

    Things were not so bad then. But whatever. I prefer to concern myself with pessimistic views of the future.

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  • @12/13 I agree with you both that the responses to the crisis were misguided. Many people pointed out that we were rewarding failure and propping up the finance sector under the pretence of saving the wider economy, when there were no guarantees that the insolvent banks would pass on the subsidies by way of corporate lending. I was amongst them. I think it would have been much more sensible to set up a state bank and let the private ones fail. I think that’s what pretty much what every country should have done. Instead, Labour were too afraid of the Tories accusing them of being ideologically-motivated to even nationalise the most insolvent banks entirely, which would surely have been better than the current compromise.

    But, it was a crisis. The financial press (Economist, FT etc.) still laud them for that decision, even though it contravened the neoliberal ideology they still somehow manage to cling to in the wake of that betrayal of its principles.

    NEWSFLASH to the financial press: allowing bankrupt businesses to fail is obviously a more central tenet of free market economics than ensuring that there are no state-owned enterprises competing with them.

    Help To Buy is a little different. It’s not a response to a crisis. Market conditions were stable. Help To Buy 2 is just naked vote-buying designed to appeal to the very people ruining the lives of the victims it ostensibly purports to help. That’s why it has been unanimously decried by journalists, economists, think tanks and charities, many of whom probably think Gordon Brown and Alastair Darling, responded well to the financial crisis, even if they believe, as you do, that it was of their own making.

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