UK Economy

[superfrank]

It's quite laughable that Osborne has started calling Britain a safe haven. It's not his fault of course, we must never forget that it was Brown who broke Britain, but a nation's currency is the measure of safe haven status and the £ has been well and truly slaughtered during the financial crisis and even makes the $ look strong (thanks Merv).

As Vince Cable said in his speech today, total debt, public + household, is 400% of GDP which makes Britain the most indebted nation in the world.

[Iron]

When you look at how the pound has been dropping against the US dollar, you could be forgiven for thinking that business must be brisk for our exporters...

Jeff

[superfrank]

It's because of the QE hints from the BoE.

[Iron]

Ministers consider £5bn spending boost for economy - http://www.bbc.co.uk/news/uk-14985709

'Some ministers believe up to £5bn in extra capital spending, on top of what was announced in March's Budget, could be channelled towards the nation's roads, rail and broadband.'

Now why do I suspect that this won't result in fewer train delays, but will result lots of roadworks, with all the fun that brings to commuters?

Jeff

[Iron]

UK government borrowing rises in August - http://www.bbc.co.uk/news/business-15000130

'Government net debt now stands at 61.4% of annual economic output, up from 55.3% a year ago.'

When will Mr Osborne admit that his policies aren't working?!?

The article also says that 'July's figure was first reported as a £20m deficit but has now been revised to a £2.4bn surplus'.

Did we get a 16 year old on work placement to calculate the figures or something??? How can we be £2.4 billion out? If Greece had made a mistake of that magnitude, it would have been called a scam...

Jeff

[superfrank]

When will Mr Osborne admit that his policies aren't working?!?

Oh no, you're not a plan B merchant are you?

What isn't working are the stupidly optimistic OBR forecasts (as implausible as the BoE's).

The government's course is Ok - it needs to go faster with deficit reduction, not slower. Watch Peter Schiff again!...

[Iron]

Yes, but my Plan B isn't the Guardian's Plan B!

My Plan B is 'austerity heavy & to hell with Lib Dem objections', as 'austerity light' clearly isn't working!

Jeff

Oh no, you're not a plan B merchant are you?

[Iron]

FTSE 100 suffers biggest quarterly fall for nine years

http://www.telegraph.co.uk/finance/fina ... years.html

[Iron]

UK financial firms downgraded by Moody's rating agency - http://www.bbc.co.uk/news/business-15211230

Curiously, the FTSE seems pretty indifferent to the news...

Jeff

[superfrank]

Moody's said it now believed the UK government was less likely to support some firms if they got into trouble.

However, the firm emphasised that the downgrades did not "reflect a deterioration in the financial strength of the banking system".

Odd analysis - the financial strength of the banking system has deteriorated hence why the EZ has promised unlimited loans to banks for the next year (this, and yesterday's new UK QE, proves that governments everywhere will print until the banks are solvent again).

[Iron]

Perhaps Moody's decision shows that they think you can't print your way to solvency (except by effectively defaulting)...

Jeff

(this, and yesterday's new UK QE, proves that governments everywhere will print until the banks are solvent again).

[superfrank]

GDP, imputed rent and house prices...
http://docs.google.com/viewer?a=v&q=cac ... OWwCMdrPXg

Some of the transactions which count towards GDP are notional. This occurs particularly in relation to the imputed rent of owner occupiers. If you live in a house which you own yourself, then the national accountants who compute the GDP figures count towards GDP a notional payment made to yourself, as if you were renting the house from yourself. We should stress that this in itself is not wrong – without this sort of convention it would be impossible to make meaningful comparisons between different countries with radically different patterns of house tenure. A problem does arise, however, because the imputed rent allowance for owner occupiers is calculated as a function of the value of the housing stock. This means that, if house prices increase, so does the imputed rent element in GDP: so part of the observed increase in GDP, at a time when house prices are rising, does not actually represent any real increase in economic activity at all.

you couldn't make this stuff up... no wonder governments do all they can to support house prices.

[superfrank]

UK rating downgrade 'unavoidable'
A downgrade of Britain's top notch credit rating may be unavoidable because the country can not grow out of its debts, a leading asset manager has claimed.
http://www.telegraph.co.uk/finance/fina ... dable.html

James Carrick, economist at LGIM, said that stimulus spending of about £17bn a year would help lift growth but "hasten" any ratings action. "Under all scenarios, we think the Chancellor will miss his projections," he said.

"We expect the debt-to-GDP ratio to remain on an explosive path no matter what the Government does. [As a result] ratings agencies might negatively review the UK's AAA sovereign rating in coming years."

Mr Carrick said the Government can not meet its growth targets because they require the "biggest private sector boom ever". To compensate for the largest fiscal squeeze since the Second World War, the private sector will have to grow "not just at its fastest rate in one year, but for four in a row".

sooner or later the bond bubble is going to burst... it's not just Greece who will never be able to repay their debts (by conventional means) - it's half the world. devaluation and inflation is the coward's way out (and it doesn't work anyway).

[superfrank]

The UK economy has stalled at a dangerous junction with the latest bout of quantitative easing unlikely to work, independent forecaster Ernst and Young warns.

http://www.bbc.co.uk/news/business-15326778

this is the possible nightmare scenario IMO - tptb won't accept that proper growth is not possible without restructuring the economy (which takes years and years and still might not produce results because of globalisation) but plough ahead with yet more stimulus/monetary easing just hoping that things will improve while taking massive risks with debt and inflation.

it won't take much more stupidity before we, like Greece and others, are in a compound debt spiral with no way out other than default.

George Osborne, January 2009: “Printing money is the last resort of desperate governments when all other policies have failed. It can’t be ruled out as a last resort in the fight against deflation, but in the end printing money risks losing control of inflation and all the economic problems that high inflation brings.”

George Osborne, October 2011: “I think it is the right way forward for this country that the Bank of England undertakes quantitative easing.”

are we fighting deflation?!!!

guy from Item Club on BBC News, said the housing market is the key to recovery, suggests stamp duty incentives. FFS!

[Iron]

Shock rise in inflation - CPI inflation at 5.2 per cent, highest since Sept 08.

So I would say not...

Jeff

are we fighting deflation?!!!