George Osborne’s Slash and Burn Capitalism full-blown attack on the countryside will delight rentiers http://distributedresearch.net/blog/2011/12/03/george-osbornes-full-blown-attack-on-the-countryside-will-delight-rentiers
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George Osborne’s Slash and Burn Capitalism full blown…
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December 4 2011, 2:16am | Comments »
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George Osborne’s full-blown attack on the countryside will delight rentiers
The Conservative Party hate everything about Britain and are busy dismantling it. Now the coalition government intends to strip away protection from our most treasured places, as the chancellor establishes his Republic of Gideon, finally big landowners have their champion of slash and burn capitalism
This article titled “George Osborne’s full-blown attack on the countryside will delight rentiers” was written by George Monbiot, for guardian.co.uk on Thursday 1st December 2011 14.26 UTC What sort of a world would George Osborne like to live in? I imagine him fantasising about the Republic of Gilead in Margaret Atwood’s novel The Handmaid’s Tale. Unprotected workers, assigned their places in a fixed social system, crawl over toxic waste dumps, while the upper castes, though rendered sterile by unregulated pollution, live without fear of democracy, trade unions or the minimum wage. The Republic of Gideon began to take shape on Tuesday, when the chancellor launched a full-spectrum assault on both workers and the environment. In his autumn statement, he curtailed public sector pay and, once again, hammered the tax credits and benefits upon which the poorest people depend. At the same time he gave away £250m in yet another bailout for big business: in this case the UK’s most polluting industries. Read Damian Carrington’s withering exposure of this exercise in crony capitalism, and you will rage and gnash your teeth. He also snuffed out the government’s attempts to limit the amount of transport fuel the UK consumes, announced the construction of new roads, airports and power stations and reneged on the promise the energy secretary made just a month ago, that there would be “absolutely no backsliding” on carbon capture and storage at the UK’s power stations. Now the £1bn set aside for CCS will be given (in the Treasury secretary’s words) to “different sorts of projects”. Another corporate tax break perhaps? But perhaps the worst of Osborne’s environmentally destructive proposals was his attack on the laws protecting England’s wildlife and places of natural beauty. These were first introduced in 1994 by the previous Conservative government. He claimed that they are “gold-plating” European rules and “placing ridiculous costs on British businesses”. He is wrong on both counts. The Davidson report in 2006 found that the European rules had not been gold-plated. The laws defending our special areas of conservation and special protection areas impose costs on business only if business wants to trash the few corners of England which have been placed off-limits. That means spots such as Lyme Bay, the New Forest, Epping Forest, the Norfolk Broads and Flamborough Head. Why should corporations be allowed to do to these treasured places what they can do anywhere else? Osborne might as well complain that the rules forbidding developers to knock down St Paul’s cathedral and build a new bank there place “ridiculous costs on British business”. His intentions are spelled out in more detail in the Treasury’s national infrastructure plan 2011. To prevent the protection of our natural heritage from imposing “unnecessary costs and delays” on money-making projects, the Treasury will “give industry representation on a group chaired by ministers so it can raise concerns … at the top of government”. This, remember, is a government umbilically connected to big business, which has so thoroughly infiltrated Westminster and Whitehall that government and corporations are almost indistinguishable. Now the Treasury claims that business needs even more access? Worse still, bodies such as Natural England and the Environment Agency, which are supposed to defend our treasured wild places, will now “have a remit to promote sustainable development.” This is a complete inversion of their purpose – from restraint to promotion. The Country Land and Business Association, representing the class of rentier capitalists whom Osborne appears to see as his natural constituency, professes itself “delighted” with these proposals. I bet it is. The big landowners it represents have been pressing for slash and burn capitalism for years, while simultaneously insisting that the taxpayer stocks their wine cellars and cleans out their moats through farm subsidies. Now they have a government which gives them everything they ask for. These people will never be satisfied. No ancient woodland, no Bronze Age burial mound is safe: unless it is protected by the kind of rules Osborne now wants to dismantle. As for stimulating the economy, it’s hard to see how the UK can win the race to the bottom to which he appears to have committed us. If this country tries to compete by tearing up the rules protecting workers, the unemployed, the environment and our quality of life, it will be worsted by China and 100 other nations with cheaper labour and laxer regulation than ours. This seems obvious to everyone except ministers and officials. UK Trade and Investment, the government body which promotes this country to foreign investors, boasts that “compensation costs [ie wages] in the UK are less than most of the western European countries.” It has “one of the lowest main corporate tax rates in the EU, generous tax allowances and … low social welfare contributions.” And “the UK’s labour market is one of the world’s most flexible.” Come to Britain, where you can treat your workers like dirt. In the wake of this autumn statement, perhaps UK Trade and Investment will now seek to entice investors away from Guangdong with the promise that there are tax breaks for the biggest polluters, no planning laws worth their name, and special access to ministers if you want to trash England’s beauty spots. Even if foreign investors can be persuaded that the rules are slacker in the Republic of Gideon than in the grimmest export-processing zones of the developing world, what does “winning” look like in these circumstances? A bit like winning a nuclear war? “Yes, our nation has been reduced to a charred desert. But we’ve come out on top*. Rejoice, just rejoice! “*Customers should be aware that when, in the previous clause, the government states that “we” have come out on top, it is in fact referring to a subset of the population: namely those possessed of sufficient means to have invested in underground bunkers. The government cannot be held liable if the rest of the population experiences alternative results. If you are not fully satisfied with this outcome, please contact your nearest mortuary assistant.” In reality, the autumn statement, like much else that Osborne has delivered, has little to do with stimulating economic growth. It’s about transferring even greater powers and resources from the rest of us to an economic elite, the kind of people Osborne hangs out with on Nat Rothschild’s yacht. They are the only winners of the Chancellor’s pyrrhic victories. http://www.monbiot.com
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December 3 2011, 1:52pm | Comments »
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MPs step up pressure to remutualise Northern Rock
http://distributedresearch.net/blog/2011/05/02/mps-step-up-pressure-to-remutualise-northern-rock
Support grows for motion tabled by MP Chuka Umunna to return nationalised lender to the mutual sector. That means the Northern Rock Bank would become the Northern Rock Building Society again, a mutual building society without any shareholders.
This article titled “MPs step up pressure to remutualise Northern Rock” was written by Jill Treanor, for The Observer on Saturday 30th April 2011 23.06 UTC Political pressure for the remutualisation of Northern Rock is gathering strength: 100 members of parliament have signed an early day motion backing the return of the nationalised lender to the mutual sector. Chuka Umunna, the Labour MP who tabled the motion, said 19 MPs had lent their support in the past week. Northern Rock and UK Financial Investments (UKFI), which looks after the taxpayer’s interests in the bailed-out banks, have appointed Deutsche Bank to explore options for the Newcastle-based lender. Deutsche will present ideas to UKFI that could be used as the basis of any recommendations made about Northern Rock to the chancellor. The lender, notorious for granting 125% mortgages before the financial crisis, was nationalised by Labour in February 2008 after it suffered the first UK bank run in living memory and thousands of anxious depositors queued round the block to withdraw funds amid fears about its solvency. After it was rescued by the government, the bank was split to create Northern Rock plc, the “good” bank that has resumed lending, and Northern Rock Asset Management, the “bad” bank that was merged with Bradford & Bingley’s mortgage business, another nationalised casualty of the credit crunch. Deutsche is looking at the options for Northern Rock plc. While Labour was in office, the then Treasury minister Sarah McCarthy-Fry revealed that ways of remutualising Northern Rock had been considered, but warned: “I’m not pretending it’s going to be easy.” Coventry building society has presented itself as being interested in linking up with Northern Rock, although little information has emerged as to how it might facilitate any deal. An analysis by Landman Economics has suggested that “profit participating deferred shares” could help the government recoup the money tied up in the lender. Landman’s analysis concludes that a trade sale or stock market flotation would not raise enough funds to pay back the taxpayer in full. Labour ex-minister Gareth Thomas, who has campaigned for the Rock to be remutualised, said he had doubts about whether George Osborne was interested. “I do not believe the Treasury is taking this seriously,” he said. Another option is merging the 70 Northern Rock branches with the 600 that Lloyds Banking Group has to sell to comply with EU rules on state aid.
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May 2 2011, 9:51am | Comments »
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TV review: Jamie’s Dream School
http://distributedresearch.net/blog/2011/04/13/tv-review-jamies-dream-school-2
Some sort of review of the final episode of jamies dream school which aired tonight.
This article titled “TV review: Jamie’s Dream School” was written by Sam Wollaston, for The Guardian on Wednesday 13th April 2011 21.00 UTC Last week on Jamie’s Dream School, (Channel 4) Angelique said: “You’re a prick, mate” to Alastair Campbell. To be honest I was worried about Angelique at the start, so it’s nice to see her growing in confidence and getting the hang of things, as well as showing she’s a shrewd judge of character . . . Oh, you have got to be having a laugh – he’s only gone and banned her from the Downing Street trip. “I think calling a teacher a ‘fucking prick’ as you storm out of the class is not really an acceptable way to behave,” he says, sanctimoniously. Well, a couple of points there, Alastair. You’re not really a teacher – you’re a spin doctor. You’ve spent your life being rude to people, so maybe you should learn to take a bit too. Also, Angelique didn’t say “fucking prick”. You added the F-word, so go and wash your filthy mouth out. And one more thing: she did kind of have a point. But he’s not going to back down, because that would show weakness. It’s not all bad news, though, because Angelique’s going to get him. “Watch how I behave today in his lesson,” she says. “He thought last week was bad; he’s going to cry today.” Fight, fight, fight . . . Oh, the head intervenes, persuades Alastair to perform a spectacular U-turn and let Angelique go, but she does have to behave. So we don’t get to see her make Alastair Campbell cry. Boo! But then she is going to Downing street, so maybe she’ll make David Cameron cry. Or at least call him a prick. Yay! To be fair to Campbell (why are those words so hard?), he is one of Jamie’s better recruits. Not only are his classes good, but he also has a nice rapport with the kids, engages with them and clearly likes them too. Plus he realises that Jamie’s Dream School is much more dream than school and has little bearing on what does or can happen in a classroom. And that when it’s over it’ll be – to quote the great words of another member of the Dream School staffroom – back to life, back to reality. So off they all go to Downing Street and sit round the cabinet table. Oh, please let them run the country, just for one day – I like Henry’s idea of a skunk tax instead of the public sector cuts. He’s done the maths too – says it’ll bring in £1.6bn a year, and that’s just from him. In bounces the PM. “Hi, everyone, how you doing, hi Jourdelle, hi there,” he says. Not many people called Jourdelle at King Henry VI’s Dream School, his alma mater, I shouldn’t imagine. Jourdelle wants Cameron to guess how many GCSEs they’ve got between them. “I don’t know,” says Dave. “And I’m not going to guess, I don’t want to . . . er . . .” Oh, go on Dave, say something embarrassing, like “disrespect you”. But he saves himself just in time, gets Jourdelle to tell him. Damn. Harlem wants to ask something. “Harlem, take it away,” says Dave, relaxing into semi-youth-speak. Take it away, eurgh. But it’s just a bit cringey, rather than proper embarrassing. And they’re way too easy on him. Nothing about how can he possibly understand when he’s from where he is, or about whether he knows about skunk from back in the days with the Bullingham bredrin. Henry doesn’t even have a pop at Sam Cam (though to be fair to Henry, if she’d made an appearance he most probably would’ve done). The real disappointment is Angelique, who’s taking this good behaviour thing way too far. She doesn’t storm out, or make Dave cry, or even call him a prick. Angelique! What’s going on? You’ve let Jamie’s Dream School down, you’ve let your classmates down, you’ve definitely let yourself down, but most of all you’ve let the whole bloody country down. To be fair to Angelique (where’s all the magnanimity coming from today?) she does redeem herself outside No 10, showing that even if she’s not calling anyone a prick today, she can at least still recognise one. “Oh my God, it’s George Osborne,” she says. But then Henry goes and trumps her by getting the chancellor to unwittingly sign his legalise-skunk petition. Today – the last day – was Henry’s day; excellent work, well done.
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April 13 2011, 4:22pm | Comments »
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Inflation will drop to 1.5% as cuts hit spending, MPC member predicts
American academic Adam Posen calls on UK Chancellor George Osborne to embark on another round of quantitative easing (printing money) and insists the Bank of England should not raise interest rates
This article titled “Inflation will drop to 1.5% as cuts hit spending, MPC member predicts” was written by Larry Elliott, economics editor, for The Guardian on Sunday 27th March 2011 20.00 UTC The Bank of England’s leading dove has predicted that inflation will tumble to 1.5% by the middle of next year as George Osborne’s austerity drive and the underlying weakness of the economy stifle consumer spending. In an interview with the Guardian, Adam Posen admitted he had sleepless nights over his call for more money to be pumped into the economy and said he would not seek re-election to Threadneedle Street’s monetary policy committee if his view turned out to be wrong. Posen said: “If I have made the wrong call, not only will I switch my vote, I would not pursue a second term. They should have somebody who gets it right and not me. I am accountable for my performance. I’m holding my nerve because it is the right thing to do.” The American academic said he would be profoundly affected if it was proved that he had erred in voting repeatedly for bank rate to be pegged at 0.5% and for more money to be pumped into the economy through quantitative easing. “It would not just be terrible that I had messed up for other people but it is also my fundamental world view that I have been testing. “I would take it deeply and personally, which is why I have laid awake at night thinking about it.” But Posen said recent trends in the economy had left him convinced that inflation would fall back below the government’s 2% target in the second half of next year, as the temporary factors pushing up prices washed out of the system and the economy slowed down. This analysis, he said, chimed with the views expressed in recent speeches by the Bank’s governor, Mervyn King, and Charlie Bean, one of the two deputy governors. Three members of the MPC – Andrew Sentance, Martin Weale and Spencer Dale – voted for higher interest rates this month, but Posen challenged their view on four separate counts. He said so-called “core inflation”, which strips out the effects of fuel, food costs and taxes such as VAT, did not suggest that the economy was overheating; the recent strength in manufacturing only affected 13% of the UK’s total output and was not replicated in other parts of the economy; it was too simplistic to say that the economy was overheating if inflation was high; and it would only be costly to take a wait-and-see approach to raising interest rates if there was a risk of an inflationary spiral. “We could get inflation back to target really fast if we put the economy through the wringer,” he said. Posen added that the real debate inside the MPC was whether the increase in inflation to 4.4% would lead to consumers and businesses believing that there had been a permanent upward shift, and thus have knock-on effects on wages and prices. “I don’t see that as a material risk given all else that is going on, which is why I have been leaning the way I have.” He echoed King in calling a small increase in bank rate futile, as any rise would have to be reversed, damaging the Bank’s credibility. Posen said that whatever the merits of the government’s austerity plans, higher taxes and reductions in public spending would have a “meaningful” dampening effect on consumer spending and overall demand in the economy. “Household consumption is going to be pretty darn weak. It may even contract a little”. Consumers, he said, were unlikely to run down their savings in an attempt to maintain spending patterns, while the weakness of trade unions meant it would be hard for wage bargainers to push up pay settlements in response to higher inflation. “Wages will be the dog that doesn’t bark,” he said. Posen said he disliked the idea that interest rates had to be brought back to a more normal level after being cut to 0.5% in early 2009, the lowest level since the Bank was founded in 1694. “If I am a firefighter fighting a fire I don’t say I have pumped more water than I have ever pumped in my life so I must have pumped too much. You stop pumping when the fire is out.” Posen was also sceptical about some economists’ suggestion that the government’s deficit reduction plan could help growth by boosting confidence in financial markets, leading to a fall in long-term interest rates and higher investment.
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March 27 2011, 3:33pm | Comments »
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Firstbuy could lock young homebuyers into falling property market
George Osborne‘s Firstbuy scheme, designed to help cash-strapped first-time property buyers could end up just subsidising the building industry.
This article titled “Firstbuy could lock young homebuyers into falling property market” was written by Heather Stewart, for The Observer on Sunday 27th March 2011 00.06 UTC Campaigners are warning that George Osborne’s “Firstbuy” scheme to help cash-strapped young voters onto the property ladder is a subsidy for housebuilders that could lock vulnerable buyers into a falling market. The £250m scheme, under which homebuyers with a 5% deposit will be able to borrow a further 20% of the price of a new home from the government and housebuilders, was one of the few giveaways in the chancellor’s second budget last Wednesday. But the independent Office for Budget Responsibility expects house prices to fall by 2.3% this year, and grow by just 0.1% the year after, and many analysts are expecting sharper declines. Appearing before MPs at the cross-party Treasury select committee on Friday, Jonathan Portes, director of the National Institute for Economic and Social Research, criticised the chancellor’s scheme, saying “the main financial impact of giving help to first-time buyers is to pump extra money into the demand side and boost house prices. That’s the last thing future first-time buyers or the economy as a whole needs.” Osborne’s plan is very similar to “HomeBuy Direct,” a scheme introduced under Labour. Matt Griffith, of the pressure group Pricedout, said, “the experience of HomeBuy Direct has also been that it put too much power in the hands of the developers – who were often bringing forward the least sellable properties for inclusion in the scheme and selling at above market prices.” Matt Griffith, of the pressure group PricedOut, says some of the homeowners who took advantage of Labour’s similar scheme have been trapped in properties where prices fell substantially as the housing bubble burst. Asked whether the new scheme could also leave homebuyers lumbered, with depreciating new-build properties, a Treasury spokeswoman said: “I don’t think that level of detail is fixed yet.” The scheme will be operated under the auspices of the department for communities and local government. Paris-based think-tank the Organisation for Co-operation and Development, whose vote of confidence in the UK economy was cited by Osborne, urged the government to impose a tax on the value of all properties, to discourage speculation and tame the boom bust housing market.
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March 27 2011, 1:16pm | Comments »
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Eurozone crisis: Why we’re all in this together, too
http://distributedresearch.net/blog/2011/03/25/eurozone-crisis-why-were-all-in-this-together-too
Portugal‘s financial situation looks bleak – so can the eurozone muddle through yet again?
This article titled “Eurozone crisis: Why we’re all in this together, too” was written by Michael White, for guardian.co.uk on Friday 25th March 2011 12.19 UTC I see the eurozone’s sovereign debt crisis is safely off the front pages, so things must be getting serious. EU leaders, who have got their Nato knickers in a quite separate twist over Libya this week, are gathering in Brussels today to sort it out. Tin helmets on. It’s not primarily Britain’s problem, because Britain is not part of the eurozone. We have retained our own currency and our own central bank and are therefore free to make, and correct, our own mistakes, as 17 of our EU partners are not. Who kept us out of the eurozone, asked the veteran Tory fixer Tristram Garel-Jones, into whom I bumped at Westminster this week. “Gordon got that bit right,” said the clever new Labour MP in the conservation. “John Major, that underestimated man,” TG-J replied before popping outside the building for a fag. Fair dos – it was Major’s UK exemption, negotiated at Maastrict in December 1991, which left the option open for euro enthusiasts (as he then was) like Gordon Brown to exercise, except that he didn’t. Ed Balls talked him out of it, and Tony Blair’s enthusiasm clinched the Treasury veto. Not that Major will get much credit from assorted Tory airheads now jumping up and down, warning David Cameron that he mustn’t contribute a penny to the looming Portuguese bailout – “£300 for every family in Britain” as today’s Daily Mail puts it, as though the Lisbon bailiffs were knocking at the door like tinkers. The bailout will be £3.96bn, according to the eurosceptic (Rupert told them to be) Times, £6bn according to the Mail, though the paper’s City pages seem much calmer than the news pages – as usual. It’s a detail. In a crisis, Britain has commitments via the IMF and the European Stability Mechanism (ESM), which Alistair Darling signed on the last weekend of the Labour government and George Osborne would probably have signed had he taken over by then. But, as the BBC’s Robert Peston gently points out, it’s very indirect and the chances of losing any money via guarantees are remote, more so than the damage which would affect confidence in the wider EU economy – including ours – if Portugal defaulted on its debts, with or without a prior restructuring. Never mind. You can read here (under European summit) how Tory MPs like my old chum Bill Cash got over-excited in the Commons, denouncing the ESM as legally doubtful and urging Cameron to dig his heels in against more British financial support at today’s summit. As Ian Traynor reports, this week’s collapse of Portugal’s minority government after the opposition refused to back another austerity package leaves the EU without a government in Lisbon to negotiate with. As with Ireland last winter, the eurozone’s German paymasters (the French tagging along) want the Portuguese to seek a formal bailout for their debts for fear of “contagion” in the financial markets which could spread to much larger Spain or Italy. The cost of servicing Ireland’s 10-year debt rose again this week, to 10.1%, and Portugal’s is pushing 8% – a level at which it cannot realistically hope to grow its way to solvency. It’s like a mortgage in which the accumulated interest keeps enlarging the householder’s debt. Notwithstanding chancellor Osborne’s justified boast that his austerity package has kept ours closer to debt-free Germany’s at 3.6%, one of the soporific credit agencies, Moodys, warned him yesterday that the UK could lose its triple-A status if his growth predictions don’t come good. Few think they can. This is all grim stuff. Just as Greek voters rioted against their government’s enforced austerity and Irish voters kicked their government out after they agreed to underwrite their country’s grotesque banking debts, so the Portuguese are angrily resisting their doom. More austerity will be hard to bear and, as elsewhere, may not do much good anyway if they overwhelm hopes of resumed growth. Forty-eight hours after the UK coalition’s second budget reconfirmed a similar-sounding Plan A, and on the day the Guardian launches its own review of the cuts now descending on Britain’s public and third sector services, I know what you are thinking. But at least we are managing our own affairs. Because the debtor nations inside the eurozone are not the only ones cutting up rough. The creditors, not just those sober North German Protestants, but their Dutch neighbours, plus the French – and even the Finns – are finding that their voters are ill-disposed towards their profligate southern allies, who borrowed money they could not repay. Hopes of a “grand bargain”, whereby the new stability mechanism, due to come into force in 2013, will have a lot more money to shore up the edifice (€440bn instead of €250bn) remain in doubt. The Germans and Dutch want to restrict its capacity to buy bonds to buying them from ailing governments which must agree fresh austerity in return. And Finland’s normally-staid government has been hit by a surge of populist anti-euro rhetoric which threatens trouble at next month’s elections, and forced Helsinki, another triple-A rated state in creditworthiness, to block its increased contributions to the new stability mechanism. Meanwhile, Italy – whose respected central bank governor has kept the show on the road (he should be the next man to head the European central bank except the Germans won’t have a southerner) despite Silvio Berlusconi’s antics – is moving to block unpopular French takeovers of important Italian firms like Bulgari the jewellers, and the food company Parmalat. It’s what the French do, of course, but it’s very un-European. It’s not a currency issue but it is a nationalist one, explicitly protectionist and reflected in the currency battles. Britain has been allowed to devalue sterling by close to a quarter – thereby boosting exports – without triggering the protectionist charge which is levelled against the Chinese, who have been doing the same thing for years. We should be grateful, but we’re not. None of this is good for them, or good for any of us in our cold north Atlantic corner of an increasingly Pacific-orientated world. It’s no good saying “I told you so,” that it’s hard to imagine a single currency without a single state, at least for tax and spending purposes. But lots of people did say that (me included), and the German answer seems to be to say: “Ok, let’s construct a fiscal as well as monetary union.” There is logic to that position, but it won’t easily hold politically. The broken-backed Portuguese government, now facing a two-month general election campaign without a credible option, this week embraced even tougher cuts in return for a lower interest rate on its EU debts over a longer period. Ireland’s new Fine Gael-Labour government rejected similar terms because part of Berlin’s price would have been abandonment of the republic’s core economic strategy, the 12.5% rate of corporation tax which attracts inward investment so well. Irish voters have told all parties it is a red line for them but, to Germans, it is fiscal piracy. Osborne is offering a similar rate for Northern Ireland in returns for grant cuts elsewhere, a differential rate that will annoy the rest of corporate Britain, where the post-budget rate is still 26%. Tricky, isn’t it? Will the eurozone make sensible compromises it can sell to angry voters, north and south, ones not bound by ties of language or national culture? Will it fall apart? It shouldn’t. Portugal’s is a small economy, its debt problems less acute than those of Greece or Ireland, though its politics have been weak. But we should all hope it muddles through and support the process where we can, despite our own acute domestic problems. “Beggar my neighbour” policies are always tempting but rarely smart, because my neighbour does it back. By the way, which member of the G7 saw the largest rise in per capita income in the 20 years after Margaret Thatcher’s fall in 1990? Why, Britain did, according to new figures, by 36.5 % – just ahead of the US and Canada (32%), Germany (29.3%) and France (23.1%). Where did it go? Not fairly shared, I realise. Unsustainable? In part, yes. The coalition’s budget says the answer is austerity and supply side measures to boost growth. Here’s hoping.
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March 25 2011, 7:52am | Comments »
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Ireland, Portugal … Britain? George Osborne only has Plan A
The chancellor George Osbourne believes the only way to keep the ratings agencies happy is to stick to his tough deficit reduction programme … but after Ireland and Portugal, the UK needs a Plan B
This article titled “Ireland, Portugal … Britain? George Osborne only has Plan A” was written by Larry Elliott, economics editor, for guardian.co.uk on Thursday 24th March 2011 12.59 UTC Portugal loses a government and sees bond yields soar. Ireland announces a third straight year of economic contraction. Britain suffers a slump in high street spending as consumers get cold feet. The ratings agency Moody’s says the UK’s coveted AAA rating could be at risk if the weakness of the economy derails plans to put the public finances in good order. A leading Bank of England policymaker says rising inflation is putting the Old Lady’s credibility at risk. As far as George Osborne is concerned, making sense of this welter of post-budget news is simple. The lesson for Britain is that the only way to avoid becoming the next Portugal or Ireland is to stick to Plan A, the four-year deficit reduction programme that will run for the rest of the parliament. Yes, it will be tough. Yes, there will be occasional setbacks, but the only way to keep Moody’s, S&P and Fitch sweet is to stay the course. The chancellor remains confident that growth will gradually pick up during the course of the year and be better balanced than it has been in the past. That said, the news from Ireland, the warning from Moody’s and February’s sharp fall in retail sales do highlight the risks for the government. Like the UK, Ireland used to be the poster child for the deficit hawks at the Organisation for Economic Co-operation and Development and the International Monetary Fund, who ladled praise on Dublin for their courage in cutting the budget deficit. Today, Ireland provides evidence of the deflationary pit that a country can dig itself into if it cuts too hard too fast. In the UK, the assumption is that the economy can withstand the medicine Osborne has in store for it, but the 0.8% drop in spending last month was evidence of the weakness of consumer confidence following the slowdown in the economy in the second half of 2010 and the jump in VAT at the start of the year. It added to doubts among economists about the ability of Britain to meet the growth forecasts made for the chancellor by the independent Office for Budget Responsibility. In the past, Britain (along with other countries) has bounced back rapidly from recessions, but not this time. At 1.3% in 2010 and a projected 1.7% in 2011, the UK is, at best, on course for an extremely sluggish recovery. The risks to these forecasts are to the downside, because high inflation is squeezing real incomes, public sector workers are being laid off and next week sees taxes increased and benefits cut. There will be some pick-up in growth in the first quarter of 2011 following the weather-affected 0.6% drop in the final three months of 2010, but the portents are not good for the second and third quarters of 2011, particularly if the Bank does start raising interest rates in May as the City expects. Spencer Dale, Threadneedle Street’s chief economist, explained his decision to vote for a quarter-point increase in bank rate to 0.75% by saying that despite relatively weak growth the risks were that there would be an overshoot to the government’s 2% inflation target in the medium term. Two other members of the MPC – Andrew Sentance and Martin Weale – also favour higher borrowing costs, but the chances of them securing the five votes they need for a rate rise have lessened in recent weeks as evidence has mounted of the economy’s vulnerability. Add this all together and what do you get? The economy will grow less quickly than the government is hoping for. Interest rates will rise more slowly than the City believes. The deficit will prove stubbornly high, leading to more warnings from Moody’s et al. Calls for a Plan B will grow.
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March 24 2011, 1:41pm | Comments »
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Portugal teeters on brink of bailout
http://distributedresearch.net/blog/2011/03/24/portugal-teeters-on-brink-of-bailout
For Portugal, a bailout request is now seen as inevitable following the Portuguese prime minister’s resignation after his failure to push through another round of austerity measures
This article titled “Portugal teeters on brink of bailout” was written by Graeme Wearden, for guardian.co.uk on Thursday 24th March 2011 13.09 UTC City experts fear Portugal will be soon be forced to apply for a bailout package worth up to €70bn (£60bn), following the Lisbon government’s failure to push through its austerity measures on Wednesday. Portugal is teetering on the brink of becoming the third member of the eurozone to seek assistance from the EU – and as with Greece and Ireland the International Monetary Fund would probably also be involved. Prime minister José Sócrates’s resignation on Wednesday night has left the country in political limbo, and piled extra pressure on European leaders who are gathering at a summit in Brussels on Thursday. “The resignation of the Portuguese prime minister adds a political crisis to a fiscal crisis, and brings a bailout a step closer,” said Kevin Dunning at the Economist Intelligence Unit. Sócrates quit after opposition parties voted down his austerity measures. European commission president José Manuel Barroso quickly warned, though, that the country must stick to the latest reforms announced this month. Britain could be forced to contribute more than £3bn to a Portugal bailout package, according to the Open Europe thinktank. It claimed on Thursday that the UK’s share of any rescue package would be between €810m and €3.7bn, via the commission’s €440bn bailout fund. “Portugal will inevitably ask for a bailout,” said Open Europe’s Raoul Ruparel. “But the cases of Ireland and Greece clearly illustrate that the EU’s strategy – to throw good money after bad – is failing. Rather than simply taking a bailout, it would be better in the long run for Portugal to restructure its debt now,” Ruparel added. Sócrates had proposed a wide-ranging plan of tax rises and spending cuts, in an attempt to cut Portugal’s deficit and retain market confidence. The yields on Portuguese government debt has reached record highs, with the 10-year bond trading hitting 7.6% – widely seen as an unsustainably high cost of borrowing. Now that the austerity programme has been rejected, economists also believe Portugal must ask for help. “Portugal moved another step closer to needing a bailout yesterday,” said Gary Jenkins, the head of fixed interest research at Evolution Securities. “Even with complete political harmony it was always going to be difficult for Portugal to persuade investors to continue to fund them and thus yields are likely to rise further from what has already been described as unsustainable levels by Portuguese officials.” George Osborne concerned The chancellor, George Osborne, tried to calm nerves, saying talk of a bailout was “speculation” at this stage, but conceded that the situation was unsettling. “What is happening in Portugal is certainly concerning. It reminds us that we are not alone in facing these challenges,” said Osborne. Portugal needs to refinance £4bn of bonds in April. It has also emerged that the new European stability mechanism – to which Britain will not sign up – will not be signed off at the two-day meeting in Brussels, as had been planned. Instead, the deadline for a final agreement has been pushed back to the end of June. “When I started working in the City I was often told to follow the old ‘under-promise and over-deliver’ formula; the EU seems to be going for the opposite strategy when it comes to dealing with the crisis,” Jenkins added. Fears that the European debt crisis may spread to Madrid were heightened on Thursday morning, when Moody’s downgraded most of the Spanish banking sector. Holger Schmieding, chief economist at Berenberg Bank, argued that Spain was in much better shape than its Iberian neighbour. “You can never say anyone is safe in these times. There is always the danger of a run on a country. But Spain is in a significantly better position than Portugal, which in every likelihood will need a bailout now,” Schmieding told Bloomberg TV. Britain’s inclusion in the €440bn temporary stabilisation mechanism is controversial because Alistair Darling signed up for the plan on 10 May 2010 – during the hiatus between the general election and the formation of the coalition government. Osborne, who replaced Darling as chancellor later that week, has insisted that he would have taken a different decision. Britain is lending a total of £7bn to Ireland, partly through the European rescue and partly as a bilateral loan. Osborne has said that he expects Britain will make a profit on the agreement, as long as the money is eventually repaid.
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March 24 2011, 11:02am | Comments »
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Russia, China and Arab League condemn Libya attacks
http://distributedresearch.net/blog/2011/03/20/russia-china-and-arab-league-condemn-libya-attacks
US Coalition forces accused of mission creep and disproportionate action in Operation Odyssey Dawn against Libya
This article titled “Russia, China and Arab League condemn Libya attacks” was written by Patrick Wintour and Ewen MacAskill, for The Guardian on Sunday 20th March 2011 21.37 UTC America, France and Britain – the leaders of the coalition’s air attacks on Libya – were struggling to maintain international support for their actions, as they faced stinging criticism about mission creep from the leader of the Arab League, as well as from China and Russia. Critics claimed that the coalition of the willing may have been acting disproportionately and had come perilously close to making Gaddafi’s departure an explicit goal of UN policy. Russia, which abstained on the UN vote last week, called for “an end to indiscriminate force”. Despite denials from coalition forces, Alexander Lukashevich, Russia’s foreign ministry spokesman, said that the coalition had hit non-military targets. He suggested that 48 civilians had been killed. “We believe a mandate given by the UN security council resolution – a controversial move in itself – should not be used to achieve goals outside its provisions, which only see measures necessary to protect civilian population,” he said. The Arab League secretary general, Amr Moussa, also startled western governments when he denounced the air attacks only a week after the league had called for creation of a no-fly zone. Moussa, who is a candidate for the Egyptian presidency, said: “What has happened in Libya differs from the goal of imposing a no-fly zone and what we want is the protection of civilians and not bombing other civilians.” The Foreign Office later said Moussa claimed he had been misquoted, or had put his criticism more strongly in Arabic than in English. “We will continue to work with our Arab partners to enforce the resolution for the good of the Libyan people,” the FO said. The Arab League had, though, been called to an emergency session to discuss the scale of the attacks. The British defence secretary, Liam Fox, said the scale was in line with UN resolutions that had been “essential in terms of the Gaddafi regime’s ability to prosecute attacks on their own people”. He also said it was possible that Gaddafi himself could become a target of air attacks if the safety of civilians could be guaranteed. Ahead of a Commons debate and vote tomorrow, leading figures in David Cameron’s cabinet were under pressure to clarify whether the explicit purpose of the attacks was to render Gaddafi’s regime so powerless that it collapses. Speaking on the Politics Show, Fox said: “Mission accomplished would mean the Libyan people free to control their own destiny. This is very clear – the international community wants his regime to end and wants the Libyan people to control for themselves their own country.” He then added: “Regime change is not an objective, but it may come about as a result of what is happening amongst the people of Libya.” He said: “When the dynamic shifts and the equilibrium shifts, we will get a better idea just how much support the Gaddafi regime has and how much the people of Libya genuinely long to be able to control their own country. “If Colonel Gaddafi went, not every eye would be wet.” Fox said it was possible that allied forces might treat Gaddafi himself as a legitimate target for air strikes. “There is a difference between someone being a legitimate target and whether we go ahead and target him,” he said. “You would have to take into account what would happen to civilians in the area, what might happen in terms of collateral damage. We don’t simply with a gung-ho attitude start firing off missiles.” One UK defence source said: “If we are seeking to destroy a military resource and he [Gaddafi] is caught in the process, that will not be our doing.” Fox also made it clear that the allied attacks would extend in the coming days from Gaddafi’s air defence systems to his artillery. Britain has ruled out the use of ground forces, but some of the more hawkish cabinet members such as the chancellor, George Osborne, only said ground forces were “ruled out for the moment”. In the Commons debate Labour will call for an explicit guarantee that British ground troops will not be involved. But in a boost to the coalition, there were signs that some of the much-trailed practical Arab involvement in the air strikes had finally materialised – after Qatar last night sent four planes to work alongside the French in the second round of attacks designed to set up a no fly zone across Libya. Britain is hopeful of further input from the United Arab Emirates, following calls by Fox. Arab political support, and military participation is vital to reduce the credibility of Gaddafi’s claims that this is a western act of aggression against a Muslim country. In an effort to reassure Arab opinion, Fox stressed plans to hand some of the co-ordination of the operation to Nato would allow a wider group of participants. But the attacks were under UN auspices. In the US, the Obama administration was more restrained in its language. Admiral Mike Mullen, the chairman of the US joint chiefs of staff, appearing on NBC’s Meet the Press, insisted the campaign was only a limited, humanitarian operation, not a war, and was not aimed at regime change, as both Cameron and Sarkozy have suggested. “The goals of this campaign are limited. It is not about seeing him [Gaddafi] go. It is about supporting the UN resolution.” Asked if the mission could be accomplished with Gaddafi still in power, Mullen replied: “This is one outcome.” The Pentagon has been reluctant to become engaged in a third war against a Muslim country in the space of a decade and pressed Barack Obama on the dangers of mission creep. Carl Levin, the Democratic chairman of the Senate armed services committee, said that Obama had given them assurances on that and the Pentagon was satisfied. Mullen and other US commanders said that although the US had taken the lead in the first phase, there would be hand-over to the French and British, and the US would take a back seat role, restricted to tasks to which it was uniquely qualified, such as jamming Gaddafi’s communications and providing refuelling of planes in the air. John Kerry, the Democratic chairman of the Senate foreign relations committee, echoed Mullen over the mission goals, saying it was not a war. “This operation is not specifically geared to get rid of Gaddafi,” he said. The Republican senator Lindsey Graham, speaking on Fox News Sunday, said he was troubled by Obama’s lack of enthusiasm, after the president went ahead with a trip to Latin America. “I’m very worried that we’re taking a back seat rather than a leadership role,” Graham said.
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March 20 2011, 4:54pm | Comments »
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David Cameron has even less grasp of how government works than I’d thought
David Mitchell exposes David Cameron‘s astonishing attack on ‘bureaucrats’ betraying a serious lack of understanding of the public sector.
This article titled “David Cameron has even less grasp of how government works than I’d thought” was written by David Mitchell, for The Observer on Sunday 13th March 2011 00.04 UTC What was the most amazing thing about last weekend’s 24 Hour Panel People (highlights of which will be shown all week on BBC3 in the run-up to Friday’s Comic Relief)? Was it David Walliams’s incredible achievement of performing live in panel shows for a solid 24 hours – a feat of comic endurance not equalled since someone at the BBFC had to classify the DVD release of the complete Chucklevision? Or the generosity with which a host of Britain’s best-loved comedians and Nicholas Parsons gave their time to make the event such a success? Or the speed with which the people at Dave subsequently put together a business plan for a 24-hour live rolling panel-show channel entirely fronted by Chinese children? Well, I was there and I can tell you it was none of those things. The most amazing aspect of it, as a contributor, was the number of people bustling around with clipboards and headsets. Wherever I stood, unless actually on camera, dozens of them would immediately try to push past, politely but hurriedly, as if I’d obstinately positioned myself on the route of an air traffic controllers’ fun run. “What can they possibly all be doing?” I thought irritably, forgetting temporarily that I lack the knowledge or power to self-televise. It’s an easy attitude to fall into, assuming that everyone else is perversely inconveniencing you, rather than having jobs or problems of their own – sitting in heavy traffic thinking: “Where are all these people going? Do they really need to? I’m late! They’re getting in the way.” In the case of this particular TV studio, I was the one who was getting in the way, and also having the gall to question the necessity and urgency of what I was getting in the way of: “Where are they going with the clipboards? Who are they talking to on the headsets? None of this makes any sense! All this process requires is people like me going in front of cameras and talking some shit.” That’s precisely what David Cameron thinks about government. He simply can’t understand what all the guys in headsets – the civil service – are up to. And he says it’s not just him they’re annoying – they’re pushing past or obstructing the whole private sector. In an extraordinary speech to the Conservatives’ spring conference last weekend, he called them the “enemies of enterprise”. To him, they’re the Klingons. He said he was “taking on… the bureaucrats in government departments who concoct those ridiculous rules and regulations that make life impossible for small firms”. On the face of it, this is simple crowd-pleasing stuff. It’s easy to slag off the faceless bureaucrats, who supposedly waste our time and money with all their stupid rules. It’s convenient to forget that bureaucrats, or civil servants as they’re called when they’re not being victimised, don’t actually make rules, they just enforce them. Maybe, sometimes, they enforce them officiously. Maybe, sometimes, the processes they “concoct” for enforcing them are unnecessarily time-consuming. Maybe fewer of them could enforce the rules just as effectively. But they don’t make the rules, Parliament does. In seeking to blame the civil service for the rules as well as their enforcement, I think this speech is more sinister than Cameron’s usual second-rate demagogy and I’m surprised it didn’t attract greater attention. To me, these remarks are just as damaging as the prime minister’s disparagement of multiculturalism, which rightly drew criticism, and a truer reflection of his political standpoint. Here he’s breaking new ground for his evidence-averse Thatcherite ideological crusade. The whole premise of this government, of its NHS policy, of the “big society”, of the “free schools” initiative is that the public sector sucks. The private sector, according to the Tories, beats it for efficiency every time, can be just as compassionate and, at the top, “rewards enterprise”. Meanwhile the top of the public sector merely “pays people more than the prime minister”. But in this speech Cameron takes the argument further. By labelling civil servants as enemies of business, he’s trying to make them responsible, not just for the failings of the public sector, but also those of the private: “Every regulator, every official, every bureaucrat in government has got to understand that we cannot afford to keep loading costs on to business,” he says. “If I have to pull these people into my office to argue this out myself and get them off the backs of business then believe me, I will do it.” He’s always said that, when the state wastes money, it’s because of the bureaucrats. Now he’s also saying that, if private enterprise fails to grow, prosper or fill the gap that shrinking government creates, that’s not a flaw in George Osborne’s economic policy, that, too, is because of the bureaucrats. In short, whatever goes wrong is the bureaucrats’ fault. If he can get this to stick, it’s a masterstroke. It’s what Mao was doing when he declared war on sparrows or intellectuals. In difficult times, deft powermongers deliver up whipping boys for the disgruntled. By picking on civil servants, Cameron has made an excellent choice: they work for him, so it’s hard for them to complain; they enforce government policies so if policies fail, he can blame the enforcement; yet if they succeed, he can keep the credit. As a policy, however, it’s meaningless. He can’t act separately from bureaucrats, he has to act through them. Everything he does – every transparency initiative, every “big society” clarification document, every restructuring of the NHS or the welfare system, creates work for bureaucrats. He also said in the speech: “There’s only one strategy for growth we can have now and that is rolling up our sleeves and doing everything possible to make it easier for businesses to grow”, without acknowledging that it’s the bureaucrats’ sleeves he’s talking about, not his own or those of his party faithful. Cameron also doesn’t realise, or is wilfully ignoring, how important our large and basically effective bureaucracy is to our place in the front rank of free nations. Without the civil service, acts of Parliament are only words and elections just millions of little slips of paper, like they are in Afghanistan. Civil servants don’t merely oil the wheels, they’re the axles that join them. Without them David Cameron and his policies would be no more a government than Ian Hislop sitting in a field being sarcastic would be an episode of Have I Got News For You.
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March 16 2011, 3:27am | Comments »
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The fallout from the crash of 2008 has only just begun
The world impact of the biggest financial crisis since 1929 has only just got underway. Demand is falling. Talk of recovery is dangerously premature.
This article titled “The fallout from the crash of 2008 has only just begun” was written by Seumas Milne, for The Guardian on Wednesday 9th March 2011 21.45 UTC To listen to government ministers and boardroom barons, you’d think that the economic crisis that erupted in 2008 was as good as over. Recovery might be weak and choppy, they’d have us believe, but it’s nevertheless under way. Cuts might be painful, they insist, but they’re essential for a rebalanced economy – and anyway they’re all the fault of the previous government. As elsewhere, there is a determined attempt in Britain to restore the economic model so comprehensively discredited in the crash of 2008. But the evidence is piling up that the full impact of the crisis is only starting to make itself felt – and that both the economy and politics will be transformed before it has run its course. In Britain the loyalty to a failed past is most striking in the Tory-led government’s resolute refusal to bring to heel the banks that delivered the economic meltdown. Bankers’ greed might be the object of public revulsion and ritual political handwringing; and the banks’ survival might depend on the greatest public handouts and guarantees in history. But once again, their executives have awarded themselves hundreds of millions of pounds in pay and bonuses, while real wages are being forced down across the workforce. Even Stephen Hester, the chief executive of state-owned RBS, is pocketing £7.7m while failing to carry out the bank’s essential function of boosting lending to credit-squeezed businesses. And instead of directing the banks they own or underwrite to ditch bonuses and drive recovery, George Osborne and his Liberal Democrat lieutenants have in effect cut Labour’s bank levy, slashed corporation tax and signed a toothless agreement that will clearly achieve neither. Given that over half the Conservative party’s funding now comes from bankers, hedge fund managers and private equity moguls, perhaps that’s not so surprising. But, combined with a scale of brutal and counter-productive spending cuts only matched in Europe’s basket cases, the result for the British economy has already been disastrous. Put to one side the arbitrary convention that two successive quarters of economic shrinkage are needed to qualify for a recession. Britain has in fact already had a double dip, as the economy shrank by 0.6% in the last quarter of 2010 – and that’s before the effects of most cuts and tax increases have been felt. Greece and Portugal are the only other European Union countries whose economies declined in the same period. But it has taken the Bank of England governor Mervyn King of all people to nail the endlessly repeated falsehood that the deficit is the result of Labour profligacy – rather than the breakdown of an unregulated and unreformed financial system enthusiastically endorsed by the entire political class. King blamed the bankers for the cuts, and warned of the threat of further crises unless the financial behemoths were brought to book. And it was Richard Lambert, the outgoing head of the employers’ CBI, who took the government to task for absurdly relying on the ruthlessness of its cuts to deliver growth. David Cameron’s response has been to promise more deregulation and blame civil servants for “loading costs on to business”. That will be the theme of this month’s budget. It’s got all the makings of a 1980s revival, complete with the Thatcherite favourites of increased VAT, deep cuts in the poorest areas and mass privatisation. Ministers seem determined to reinstate a neoliberal order that is beyond repair, while the conditions that eventually allowed economic recovery in the 80s after the destruction of 20% of the country’s industrial base and the creation of 3 million unemployed under Margaret Thatcher – including a far more benign international economic environment – are simply not there. The latest slow-motion aftershock of the 2008 crash is being felt in the oil market. The Arab uprisings of recent months have targeted dictatorship and had multiple causes. But the trigger for the Tunisian revolution, which sparked the wider revolt, was economic: rising food prices and unemployment in the IMF poster-boy state, combined with declining workers’ remittances from recession-hit Europe. Now that the upheaval has spread to oil-rich Libya and is echoing across the Gulf kingdoms, oil prices have started to spike. If the Libyan stalemate continues, or the revolution reaches the main oil producing states, the impact of sharply higher prices on global recovery is likely to be dramatic – a boomerang effect of the original crisis, which would further squeeze growth and fuel inflation. Already European and British central bankers are preparing to make a renewed downturn more likely by threatening higher interest rates in response to rising energy and food prices. Add to that the continuing turmoil in the eurozone, and the damage of a new oil shock on a stagnant economy like Britain’s – already bled white by market dogma – could be far-reaching. The aftermath of the crash of 2008 demands a different kind of political economy. If Britain’s coalition government carries on imagining it can cut and deregulate its way out of emerging stagflation, it will fail and its unpopularity deepen. But Labour also has to break with policies that helped generate the crisis in the first place. David Miliband, the party’s failed leadership contender, this week defended New Labour’s record, arguing that European social democrats need to move away from reliance on high public spending and state power if they are to regain support in an era of economic crisis. But it isn’t public intervention that is behind the failure to invest or lend – it’s the lack of it. And it wasn’t New Labour’s over-regulation of the City that made Britain especially vulnerable to the credit crash. It was the opposite. Right now, publicly owned banks and their cash mountains should be at the heart of an investment programme to propel recovery. But that would mean moving on from an economic model broken by its own excesses. Instead, they’re being fattened for privatisation. Mervyn King expressed surprise last week that the “degree of public anger has not been greater than it has” over the costs of the system’s failure. But as those costs are rammed home, both in Britain and across the world, it will become clearer that the fallout has only just begun.
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March 9 2011, 5:15pm | Comments »
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I posted to distributedresearch.net
Bank of England governor blames spending cuts on bank bailouts
A few days old now but some are wondering why no one is making more of this.
This article titled “Bank of England governor blames spending cuts on bank bailouts” was written by Phillip Inman, for The Guardian on Tuesday 1st March 2011 21.25 UTC Mervyn King has risked reopening the bitter argument over blame for the financial crisis by saying that government spending cuts are the fault of the City and expressing surprise there has not been more public anger. The governor of the Bank of England said that people made unemployed and businesses bankrupted during the crisis had every reason to be resentful and voice their protest. He told the Treasury select committee that the billions spent bailing out the banks and the need for public spending cuts were the fault of the financial services sector. “The price of this financial crisis is being borne by people who absolutely did not cause it,” he said. “Now is the period when the cost is being paid, I’m surprised that the degree of public anger has not been greater than it has.” King has repeatedly pointed the finger at the City since the crisis erupted in 2007, but this was the first time he blamed bankers for the coalition’s spending cuts. It became clear during the hearing that King and his fellow members of the Bank’s monetary policy committee, which sets interest rates, believe the crisis will have a lasting impact on the economy. Asked when living standards enjoyed before the crisis would return, King said: “The research makes it clear that the impact of these crises lasts for many years. It is not like an ordinary recession, where you lose output and get it back quickly. We may not get the lost output back for very many years, if ever.” King faced tough questions from Labour MPs who believe the Bank should not have supported the Treasury’s cuts programme. Accused by Andy Love, the Labour MP for Edmonton, of giving George Osborne cover for spending cuts, King denied that meetings with the chancellor resulted in a cosy agreement to keep interest rates low to support austerity measures. He said: “There has never been any attempt on any occasion to influence the monetary policy committee on what decisions it should take.” In a further provocation to the financial sector, King set out plans for an overhaul of City regulation and oversight that would allow banks to fail when they get into trouble. He told MPs it was necessary to move away from rules designed to prevent banks failing, with a safety net provided by taxpayers, to a system that allowed banks to fail in an orderly way.
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March 4 2011, 6:03pm | Comments »
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