Skip to main content

A bit more on the financial position

Consituents remain interested in the situation for the country hence I am going to repost and update a posting I made on 23rd July (on The Stirrer forum).

The financial crisis had really four components. Three were international and one national. The international ones were

1. CDOs (the credit crunch issue - causing a big hole in banks' balance sheets). This is the issue that causes all the fuss about banks and bonuses as people were basically making money out of thin air. This is also the mistake of the ratings agencies.

2. The illiquidity of the land market and associated bubble. This has a cycle that is often international, but can be local (as was the case in Sweden). That has a knock on effect on the capital of lending institutions. It runs on about a 15 year cycle with the previous periods being 89-92 and the mid 1970s. Because it ran for slightly longer the fall back was higher.

3. Oil prices. Jumps in oil prices cause recessions. Energy affects economic activity. The calculation as to how much energy is needed for each pound of GDP is called the energy intensity of GDP.

Then nationally there is the question as to how "prudent" the government is with the public finances.

What is interesting in this situation is that the varying policy responses in different countries can to some extent be tested against each other.

You can see in this that Labour's strategy placed the UK in the same category as Ireland, Italy, Greece, Portugal and Spain rather than France and Germany.

The bank customer rescue (which did not bail out the owners of the banks viz the shareholders) was an international requirement although it raises questions about the comparative merits of bank regulation.

Then you have various demand management measures.

The big mistake people think in considering the coalition's policy is to think that in some ways it is not neo Keynsian. The proposals are to reduce the deficit, not to pay back debt. The objective is to ensure confidence in the government's (UK's) solvency. That is necessary to keep interest rates down. Ireland is having to issue debt at about 5.5% at the moment. Our 10 year rate is more like 3.5%.

On a trillion pounds of debt that difference in interest rate is £20 bn a year. A big sum to find from the cuts that Labour would be forced to bring in as a result of their having lower market confidence.

It is important that people remember that having a higher deficit also leads to higher interest rates not just a higher principal upon which interest is calculated.

In terms of the ideological "size of the state" issue. Government spending at the end of the cuts will be around the same as at the end of Tony Blair's government in 2007. I haven't managed to get the precise figures on this, but will at some stage.

Hence the govenment's financial strategy is simply a rational approach to deal with reality not an ideological drive towards a smaller state.

To be fair to Alistair Darling it appears from Mandelson's memoirs that he understands this.

Hence it is quite clear that Labour's financial strategy would result in greater cuts to public services than will be implemented by the coalition government.


Popular posts from this blog

Statement re false allegations from Esther Baker

Statement by John Hemming
I am pleased that the Police have now made it clear that there has been a concerted effort to promote false criminal allegations against me and that the allegations had no substance whatsoever.
I would like to thank Emily Cox, my children, Ayaz Iqbal (my Solicitor), my local lib dem team and many others who supported me through this dreadful experience. There are many worse things that happen to people, but this was a really bad experience.
It is bad enough to have false allegations made about yourself to the police, but to have a concerted campaign involving your political opponents and many others in public creates an environment in which it is reasonable to be concerned about ill founded vigilante attacks on your family and yourself. Luckily there was a more substantial lobby to the contrary as well, which included many people who were themselves real survivors of abuse, which has helped.
I am normally someone who helps other people fight injustice. …

Statement re Police investigation into Harassment and Perverting the Course of Justice.

It was recently reported that the police were not investigating the allegations of Perverting the Course of Justice that I had made. This came as a surprise to me as I had been told for some time that my allegations were to be considered once the VRR had been rejected. I have now had a very constructive meeting with Staffordshire police on Friday 29th June 2018 and the misunderstandings have been resolved. At that meeting the evidence relating to the perversion of the course of justice and the harassment campaign against my family were discussed. The police have decided to investigate both the perversion of the course of justice and also the harassment campaign. I would like to thank them for changing their decision and I accept their apology for the way in which they did that. I am also in possession of written confirmation a police force would be investigating allegations that a vulnerable witness has been harassed for trying to expose the campaign against me. I hope that the aut…

R v SUSSEX JUSTICES ex p McCARTHY [1924] 1 KB 256

I have only just found this one which I think is accurately reported below (but if it is not please give me an accurate report).


R v SUSSEX JUSTICES ex p McCARTHY [1924] 1 KB 256

November 9 1923

Editor’s comments in bold.

Here, the magistrates’ clerk retired with the bench when they were considering a charge of dangerous driving. The clerk belonged to a firm of solicitors acting in civil proceedings for the other party to the accident. It was entirely irrelevant that there had been no evidence of actual influence brought to bear on the magistrates, and the conviction was duly quashed.

It is clear that the deputy clerk was a member of the firm of solicitors engaged in the conduct of proceedings for damages against the applicant in respect of the same collision as that which gave rise to the charge that the justices were considering. It is said, and, no doubt, truly, that when that gentleman retired in the usual way with the justices, taking with him the…