A reader has pointed me to Matthew Parris's column in today's Times. He reckons we're stuffed. Economically, anyway. Reading his prose about the kind of hopeful language that politicians deploy in these circumstances made me think back to a question Ann Widdecombe was asked last night during our theatre show in Bournemouth.
"If you were Chancellor of the Exchequer, what would you do to get us out of recession?"
The audience was expecting Ann to announce a series of economic initiatives which would rescue the economy. But her answer was rather different.
"Haven't a clue," she said. "And the trouble is, nor has anyone else."
She accused politicians of announcing initiatives for their own sake, rather than because they were sure to have an effect. They were keen to be seen to be doing something, even if it turned out to be the wrong thing.
She has a point. No politician in government or those in the senior echelons of the Opposition can be seen to be shrugging their shoulders in despair or admitting they really don't know what should be done because we are in uncharted territory.
But that's exactly where we are. So when we hear Gordon Brown repeatedly saying that "we're doing everything we can" or "using all the weapons at our disposal" what he's really saying is "frankly, we ain't got a clue what to do either, but we can't be seen to admit it."
Well, 'everything we can' is totally meaningless anyway. What is probably meant is 'actually we can do nothing - so that's exactly what we're doing, in a big way. In the meantime we'll throw some taxpayers money about'.
ReplyDeleteSimilarly 'all the weapons at our disposal' means very little - if you have no weapons at all.
Brown is incapable of saying anything which is straightforward and honest. And Darling has learned from his master.
Perhaps the answer to the question will start in the USA like the problem. ho ho ho
ReplyDeleteIf brown had a quantum of courage he would resign instead he thrashes about like some wounded animal spraying the lifeblood of our nation over everything.
Could not the whole world be rolled back to jan01 1997 and try again but with blair/brown dead in a ditch.
'Politicians like activity. It's their substitute for achievement.'
ReplyDeleteI'm afraid this supposed desperation is typical of Conservative attitudes during a phase when the so-called omnipotent markets are failing to deliver, instead hugely enriching some at the expense of everyone else.
ReplyDeleteThe same behaviour was observed during the late-20s and early-30s, when Conservatives in the US and Europe greatly deepened the Depression by repeating the mantra that "nothing can be done", allowing banks to go to the wall, ignoring mounting unemployment and slashing government expenditure.
In fact, plenty can be done. But a good starting point is not following Conservative doctrine.
It was only when Keynsian policies began to be systematically adopted by the US and the UK in the mid-30s that the global economy started to recover.
In fact, it is crucial to do everything that the financial hawks advise against. For example, the banks should not willy-nilly be allowed to go to the wall.
And by the way, since when is Ms Widdecombe a fount of knowledge on global economic management??
thankfully Anne Widdecombe is not in a position of power then.
ReplyDeletewhat a stupid thing for herto say. Yeah that's right Iain - why bother doing anything at all?
ridiculous.
Despairing Liberal, could you quote me any politician who has actually said "nothing can be done"? You can't, because it hasn't happened. It's a Gordon Brown deflection tactic.
ReplyDeleteBut, you know, doing nothing can sometimes be better than doing the wrong thing. Think about it.
He should most certainly copy her dress sense, only go that tad further by wearing a bag on his head.
ReplyDeleteEven the visual genius that is http://tractorstats.blogspot.com/ struggles to make him look human.
The Penguin
"doing nothing can sometimes be better than doing the wrong thing"
ReplyDeletetell that to all the people who lose their jobs and homes and life savings.
This is a big reason not to vote conservative. Iain, you're doing your party no favours at all by posting really stupid articles like this one.
Iain, you seem to be contradicting yourself. Ms Widdecombe says nothing can be done and you (apparently) laud that attitude. Or do you in fact think she is mistaken?
ReplyDeleteIt wasn't Brown who invented the concept of Conservative inertia in the teeth of economic collapse. Read any leading book about the Great Depression, or watch that magnificent programme on the Beeb-you-love-to-hate last night about it, or read any of right-wing economist Niall Ferguson's books.
Despairing Liberal, Ann Widdecombe was not saying nothing should be done and nor am I. You are attributing things to her. She was saying that rushing to announce initiatives for their own sake is not the way forward.
ReplyDeleteThought you meant the diet thing following Gordo's unhappiness with the cartoonist's depiction of him!
ReplyDeleteIn the same way that we all see through his tortuous vocabulary, we can see that his suits are tailored to hide his paunch!
YOU CAN FOOL SOME OF THE PEOPLE etc….
Canvas, interesting comment, what you seem to be saying is G.Brown is right to lie when he say's he will save peoples houses by deferring their mortgage payments. He still has not arranged anything with the banks. I doubt he will.
ReplyDeleteHe will provide jobs at Mac Donalds and Tescos through apprenticships to flip burgers and £2500 subsidies. Comparing it to the numbers that are losing their jobs is downright dishonest.
People who have savings are not too amused at G.Brown for devaluing them and destroying any return they get from them.
So all in all, saying your doing something, then not doing it, or doing the wrong thing, is far worse than doing nothing.
I think there are a lot of people begining to realise this.
Iain,
ReplyDeleteI'm afraid I must disagree with you and Ann on this one.
The government needs to engender confidence in the markets. It is clearly failing, but we have the wrong man at the helm.
So a coherent strategy is needed. We ain't got one yet - I know.
John Redwood has repeatedly blogged some sensible co-ordinated steps to take.
Personally I'd be glad to see these steps as a starter for ten:
1. Massively cut governmental 'bell and whistles' spending on 'nice to have' policies.
2. Increase government spending on 'infrastructure' type projects that have immediate cash flow to to the real world.
3. Free up some of the capital adequacy constraints on banks, to allow them to lend.
4. Halt the VAT idiocy.
5. Government to move from the attitude of 'throwing billions' at a problem, towards a more thrifty (yet still constructive) state of mind.
All the Govts action thus far have been about.
ReplyDelete1, saving the banking system
2, saving the banks
These two are actually the same thing. You see the source of all the new cash that we all borrowed was China, if we had liquidated the banks like or an equity swop with the mainly Chinese bond holders, they would have brought the whole of the worlds financial system down. You might have noticed that the Chinese Govt can destroy the dollar with all the bonds and gilts it holds.
this was a political act, not a economic one
3, trying to reflate the bubble.
The distortion caused by the new money is roughly about the 20% mark, therefore we have to take a pretty large haircut, which for the govt would suicide, which it is.
The only thing we can do, is try to cushion some of the pain, clear the mess up when the correction is over, avoid over correction and cut our cloth accordingly and cut public spending in due course (not now however desirable) then make ourselves efficient and make sure we have learned the lesson of the crash.restructure our tax system towards LVT, The we can rebuild.
BUT the most important thing at the moment is to understand what has happened. Which is mainly systematic failure of our ruling elite, betrayal of the national interest, abdication of responsibility.
some good posts on the subject can be found here.
http://cynicuseconomicus.blogspot.com
"Haven't a clue," she said. "And the trouble is, nor has anyone else."
ReplyDeleteGordon hasn't a clue but what he's doing obviously isn't working!
What we do know is that political interference and regulation has got us where we are now.
ReplyDeleteSo is the cure more of the same, but in bigger doses?
Ann Widdecombe is right to say, "Haven't a clue, and the trouble is, nor has anyone else".
ReplyDeleteBut what follows is that Parliament should get a clue by examining the toxic assets held by the banks, which we now own.
Only when we know what the toxic assets are can we deal with them.
Brown won't do it, so Cameron should do it outside Parliament.
I hypothesise that most of the toxic assets are credit default swaps taken out by US banks who have bet on the value of assets they do not own. And they have paid for the swaps with leveraged money.
It is as if I have taken out fire insurance on Iain Dale's house, and paid for the insurance with borrowed money. Because Iain's house has now burnt down I claim the insurance money.
If and when we know that the toxic assets are like this, and that the claims are immoral (I cannot and should not be able to bet on Iain's house burning down even though the law says I can), then governments can legislate their cancellation, and unburden the banks.
Until then we are left with Ann's counsel of despair.
Tony
Leave my burning house out of this!
ReplyDeleteI've heard some economic drivel lately but that post definitely takes the biscuit. Tosh, more tosh and even more tosh.
ReplyDeleteKeynesian economics has got us in this mess. It can't get us out. Same as Brown being the problem, not the solution.
Go on the internet and google names such as Peter Schiff, Fred Harrison, Mish Shedlock, Jim Rogers, Jim Sinclair. These people saw this financial disaster coming years ago.
They have the answers but you won't believe them. Can't you see that doing the same thing every time simply means you end up with the same results? Only bigger?
Einstein it ain't!
But the video below gives you some indication of the problems facing the US. No words, just pictures. It may just provide some evidence of the beauty of keynesian economics and the massive crisis we are in!
And the UK is in a much, much bigger mess than the US!
http://www.youtube.com/watch?v=pZsY1rFr_yw
@ Despairing Liberal
ReplyDeleteWhere, exactly, in this story does Widdecombe say "nothing can be done"?
As Iain says, you're attributing comments without any basis whatsoever. Nothing unusual there, then.
You might, possibly, believe that the logical sequitur of her comment was that she thinks 'nothing can be done' - but even then you'd be wrong.
What is certain is that until we have full disclosure of the current UK economic postion (and how likely is that with this inept and mendacious regime?) no one can possibly begin to produce a solution.
Gosh the Liberals are busy today. Obviously missed Church.
ReplyDeleteAll I would point out to these people is two things. The Opinion Polls and the recent council by- elections in which the BNP drew greater support than their party (not forgetting the Labour Party also!)
From their remarks here it shows that one thing the Liberals have not got is a great sense of humour and common sense.
Ms Widdecombe has both!
Now Liberals all, Evensong for you. Your Party needs divine intervention!
Iain - how can we leave it out, when we all get on like such a house on fire?
ReplyDeleteSorry, couldn't resist.
Widdy is coasting toward retirement. She has given up.
ReplyDeleteBut this is an unduly negative remark I'd say. People all over the world are weighing up the real options and trying to tackle the real problems. That deserves respect and support.
What we are getting from the Tories is this nonsense of "confidence is the only thing that can save us, that's why we're undermining it for petty political gains".
Now that really is pathetic. It's not "do nothing" it is "seek to vandalise and sabotage".
Treasonous.
You are not only contemptible, you are an economic illiterate. You speak as if confidence doesn't matter. Confidence is the only think which will encourage foreign investors to come back to this country. And they will only have confidence if the public finances are in order. If you, even with your socialist blinkers on, cannot see that then I really despair.
ReplyDeleteIain Dale said...
ReplyDeleteIain, this is not about confidence. The wheels are coming off all over the western world. The obligations of these banks are simply staggering.
There is hardly a limit. Stephen Nolan said this to gerald Celente on Radio 5 the other day and was slapped down, asfollows: -
'This has nothing to do with confidence. It has all to do with $500 TRILLION of credit derivative losses that are about to explode into the open.'
Do some REAL research, Iain. Don't simply parrot the latest Labour economist stooge who appears on the BBC. Will Hutton comes to mind as he must be the only one still on message.
LET THE BANKS GO - IT IS THE ONLY HOPE.
Are you deranged? Let the banks go? I've read some drivel in comments on this blog but that takes the biscuit. The whole point is that we have to restore confidence in the banking system and the British economy. Otherwise we'll never be able to move forward.
ReplyDelete"Should Gordon Brown Copy Ann Widdecombe"
ReplyDeleteI had a horrible thought of Gordon Broon with blonde hair when I read this headline.
"Haven't a clue," she said. "And the trouble is, nor has anyone else."
ReplyDeleteThen she should stand down. There are plenty of people who do have a clue, know exactly where are problems have come form and can remedy the situation. They are generally not withing the ranks of elected politicians nor even associated with political parties.
Then, Alex, why not confide in us?
ReplyDeleteTell us of what these trillions of dollars of toxic debt comprise.
Are they CDSs on assets in which the person holding them has no interest? ie are they wide-arsed leveraged bets? Bets on bets ad infinitum?
If the British government disowns these CDSs, will the US government construe it as an act of war and retaliate?
Do please tell, because nobody is saying.
Tony
May I point to my blog article - Getting out of recession
ReplyDeletehttp://a-place-to-stand.blogspot.com/2008/11/getting-out-of-crunch.html
its 16 points mainly invilve cutting the size & even more the regulatory restrictions of government.
It would work - or at the very least anybody not wanting to do it should at least be able to say why it wouldn't.
I don't agree with you Iain about not letting the banks go. It is at least arguable that putting them through bankruptcy would leave what remains much smaller but much more worthy of confidence & that the immediate pain would be less than years of propping them up. An example we must, at all cost, avoid is that of Japan in the '90s where putting all policy towards propping up their banks meant 17 years of zero growth.
Its been ages since I last looked at blogs but this really does amaze. The corporal frazer counsel of despair. Get a grip man!
ReplyDeleteThe problem is a banking crisis. HMG is behind the curve. They think its a liquidity crisis. But things have moved one.
The core of the problem is the toxic CDOs etc that banks have lying on their books. Until those liabilities are sorted confidence will be in short supply to say least.
We need therefore to get inside the banks. We need to do what FDR in 1933 and pass an Emergency Banking Act. We close all the banks. Then send in the inspectors. They can work out who is solvent. Those banks can reopen. Other banks won't be. Those will need to be chopped up. For example, Nat West could probably be spun out of RBS. The toxic crap should then be parked in a bad bank. Now some of that crap will go bad. But not all of it.
The sooner we act the better. Because otherwise things we take on a momentum of their own. I'm betting things will go tips up in February and March. There were tremors last week. But this requires courage and leadership. Two things more scare than credit at the mo.
" Faustus said...
ReplyDeleteThen, Alex, why not confide in us?
Tell us of what these trillions of dollars of toxic debt comprise."
For working purposes we have to assumne they are all worthless, because if we are wrong there is onl;y economic upside.
We have to clean out the bad assets from the banks, and dump them in a bad bank, fire the senior management in the existing banks (or give them jobs at the bad banks sorting out the mess - bonuses only when they actually make a profit).
Change the capital adequacy rules to limit the effects of procyclicatlity and change bank measures of risk based entirely on market risk.
Enact measures that are favourable to industry and encourage industrial investment (lower taxes, higher investment allowances, streamlined planning regimes for areas zoned for industry).
Enact measures to promote investment in areas where there will be a commercial payoff (power, transport, energy saving) rather than spending money for the sake of boosting GDP (ID cards, NHS computers).
Slash public sector employment and freeze public sector salaries.
Iain Dale said...
ReplyDeleteAre you deranged?
Is Brown deranged?
Well, for starters:
ReplyDelete1. I would not have recommended increasing employers NICs making it even more expensive to employ people?
2. The VAT drop was a complete waste of £13 billion, benefitting no one, and the fuel duty offset was a direct cost to business.
3. Selling gold was a bad idea badly executed; who in their right mind would broadcast their intentions to sell 400 tonnes of gold? Any sensible person would have gradually sold it into rallies or grant options against it.
4. The ID card scheme seems like an unwanted and unnecessary waste of billions of pounds.
5. Withdrawal from the EU would save billions. With the declining value of the pound, all imports are going to cost more, including food. Let our own farmers and fishermen return to full production and reduce food miles and improve our balance of payments.
6. Close the FSA. It's contribution to the collapse is undeniable. Gordon should have left banking regulation to the Bank of England. It was pretty obvious that despite Gordon's constant assurances of "no boom and bust" that a major bubble was forming.
The FSA really needs to be called to account over this. How can they sit by and watch a bunch of spivs collecting million pound bonuses without smelling a rat. I don’t think they even tried to find out where the money was supposed to be coming from. No cash bonuses should have been paid until the profits were “realised” as opposed to “projected”.
Results of economic policies take time to have an effect, like sowing seeds, and our current economic woes can be traced directly back to Bill Clinton's administration. Mr. Dale blogged about it here Credit Crunch
Margaret Thatcher sold off most of the large utilities and Gordon Brown sold the gold. Time to buy back...
ReplyDeletespend spend spend on infrastructure.
Anne Widdecombe should retire asap.
We need a proactive government...but we don't need Gordon Brown - or complacent Tory policies.
EXCLUSIVE: Gordon Brown has just released a statement from Downing Street responding to this post:
ReplyDelete"I disagree very much with your analysis, Iain. You see, we in government are doing the right things, taking the tough decisions in order to help hard-working families who are in some trouble at the moment. This is totally unlike do-nothing Tories like you lot who would prefer to let this recession, which I used to say began in America but no longer do because President Obama wouldn't like it, take its course.
As for the idea of following a do-nothing Tory like Ann Widdecombe, I think the idea is ridiculous. Same as I think of that George Osborne saying that the UK faces going bankrupt thanks to my habit of spending money we don't have. Absolute rubbish. Now if you'll excuse me, myself and my fellow Scots have got a country to ruin, I mean, run."
Alex.
ReplyDeleteBefore accepting you prescription, we need to know your diagnosis.
I repeat; we must know what the UK banks have in assets and liabilities before we can diagnose the patient's illness and prescribe the medicine.
I thought you claimed to know what type of toxic assets the banks are stuffed with.
My hypothesis stands, that the trillions in toxic assets are no more than wild-arsed Credit Derivative Swaps that are nothing more than bets placed on the change in value of assets owned by somebody other than the person placing the bet.
Like the value of my house here in Topsham. Others, not me, have been betting on its burning down
If my hypothesis is true, then the prescription is to cancel the whole f****** lot of immoral CDSs taken out by those betting on my house burning down. And if the Americans have taken the bet and scream about losing their payout, then so be it.
We need Vince Cable as Chancellor of a Conservative/Liberal coalition Government.
Every asset in every bank in which the British public own shares must be published - now!
Tony
I was at the theatre show last Friday night in Bournemouth, and I must say that Ann's refreshingly truthful remarks went down a treat. It's a pity more politicians weren't so keen to say what they think, even if it might make them unpopular with the liberal elite.
ReplyDeleteI note you have some hattips to tractorstats blog. His blog seems to have been removed. It made me back-up my blog. The censoring of the interweb may have begun...
ReplyDelete