Mar 23

Some good news for Britons what happened in Cyprus and what was proposed cannot happen here. This is because it already has. claim since 2009 the Banks have benefited/stolen/been handed £200 Bn by the suppression of interest rates. A big haircut.

We are still pouring in what conservatively £75 Bn a year plus QE into our banks -> in the form of loan guarantees, insuring their deposits for free, low rates to allow savers and borrowers to be ripped off, paltry fines for criminal behaviour, allowance of borrower rates loan sharks would be embarrassed by etc etc.

The £ itself has shrunk 15% and is set to fall further (were I over dramatic I’d say plunge) even as we run short of energy which is also rising in price. When fuel prices spike that is a further hair cut for people facing an effective inflation rate of more than CPI/RPI.

That we have not had a single crisis and the middle class still suffer money illusion from their house prices does not mean we’ve not had a more severe haircut than 10%. We’ve had 15% from the currency alone.

Indeed without the safety net of the Euro and an economy in thrall to Banking and House Prices as wealth creation stagnation maybe a dim hope for most Britons.

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Oct 21

Paying back the deficit will be a lot like a Mortgage it will appear like the amount is static before it dips. Thus in the early years the difference between brutal cuts and measured cuts will be small. Indeed the biggest danger to reducing deficits is another recession which by its nature will be prolonged.

Thus in many respects the Ed Balls keep spending policy is not so flawed except that it’s a policy  that never finds a reason and leads to a creeping public sector and a private sector that is at best moribund. It produces an economy that produces nothing and consumes a lot and eventually one assumes there will be a reckoning. The other flaw is that using Govt borrowing as a stimulous is OK when people will consume but if they save the money and are buying foreign goods, as they are, the Accelerator effects may not even outweigh the drag of Public Sector spending.

Essentially a position of no cuts is to defend the world of Gordon Brown where everyone is expected to doff the cap and be beholden to the magnificence of Govt. To have the Russian view of we need a strong leader and to be told what to do. Indeed the behavioural aspects of Brown’s National Social Democracy are disturbing. Britains litter everywhere despite bins. Despite London having more street furniture than the rest of the non UK world combined people hurdle barriers and Jay-Walk. Train stations are an unpleasant cacophony of announcements about what you should not do – as though you planned to forget your bag or missed the hundred no smoking signs. Brown and Balls would have created a dead world of form filling compliance and one must fear that Ed Say Anything is of that ilk.

Nonetheless just because Labour is an unrepentant party of dictatorial and depraved dislike of anything human does not make Osborne right. Given the difference in interest is so small over the next few years with the Darling  plan then the additional hundreds of thousands on the Dole is an unnecessary risk. The Darling plan is what Labour would have done. What the politician Johnson has come up with about merely taxing the Banks is of course focus group led nonsense. as Ed Miliband said Labour are only about positioning for electoral advantage and hence will make statements made of pure air.

The kind of neo con neo liberal neo stupid policies of Osborne have not worked very well for the most part. They have utterly reduced Iraq to a militia state. They did not work in Russia and led to the ‘Brownian’ Putin taking command – some tongue in cheek there for the sensitive Brownites out there.

I can understand Osborne’s ideas and drivers but all policies like his do is cement the position in society of a few rich people at the expense of jobs and industry. Sure the opportunistic and frankly hypocritical Keynesian arguments of an infantile left allow him space to get away with it but it’s far too risky a policy.

For the first time I question why the Liberal Democrats see this as necessary. It comes across as a fait accompli and there are reasons to think we need it. However  like most extreme politics this is based on believing the worst can and will happen.

Sadly for me I have to advocate a middle course and would suggest the Darling plan was the best. Precisely because unlike Osborne or Brown Darling was a career politician and as unreactionary as we can get.

Osborne actually agrees with my view we need to produce more in Britain and we need a more dynamic private sector. However this is not achieved with unrelenting economic gloom as I experienced growing up when the nightly drops in the £ and FTSE and rises in unemployment were as much as back drop as Punk and the New Romantics.

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