Showing posts with label doubledipper. Show all posts
Showing posts with label doubledipper. Show all posts

Friday, 26 February 2010

Recession v2.0

I still don't believe that the 'first' recession has ended yet, however, even if you allow for a brief period of taxpayer stimulated 'growth', the next collapse into contraction is only moments away. But don't take my word for it. That's according to this Guardian report (yes, Guardian report), citing the talisman trader, Jim Rogers' predictions.
Fears of a double-dip recession and a sterling crisis in the run-up to the election were raised last night amid news of collapsing investment in British industry and a warning from one of the world's leading financiers that the pound could plummet within weeks.

The pound fell sharply on the foreign exchange markets after a day of grim economic news which saw an admission from RBS that it had missed government targets for business lending, a downgrading of the UK growth prospects by the European commission and a warning from the CBI that consumer spending was likely to remain weak ahead of polling day.

Sterling, already down by a cent against the dollar following the release of official figures showing capital expenditure plunging by almost a quarter between late 2008 and late 2009, saw its losses doubled after Jim Rogers, the former business partner of speculator George Soros, said sterling was a potential "basket case".

The rest of the article hardly makes for happier reading, either, at least if you're a Brownite, I suppose. If you're a realist, (like Rogers - and lots of other people), then you'll know that after Brown bet the Bank of England on spending his way to the winning of, finally, a mandate to ruin govern Britain, there is now nowhere else to go for him, his party and for the entire country but down the debt plughole. Labourists, of course, will be reading the article too, and may be (maybe already have been) convinced that from here on in, with Labour somehow narrowing the gap in a few polls (though they'd be very foolish to trust them), things can only get worse.

More reason to believe Guido's mysterious BBC source, then, who said that the election will be called this weekend.

Bring it on (finally).

Tuesday, 15 September 2009

You Turn If You Want To, Gordo

Before I pick up on the main theme of this post, I've got to tell you, it really has been one of those days today. This is the day, for instance, that my mother attended the cremation of a young Vietnamese man, murdered on the streets of my home town - an act of mindless savagery sadly all-too common in Labour's Britain. His family are too poor to make the trip from Vietnam to bury their son, so my mother's church arranged everything. About 50 people - mainly from the congregation but complete strangers to the boy, so I'm told - turned-out to pay their respects. That was a cause for some optimism, at least. There is some decency left among people in Britain; people who seem still to have some sense of duty. But I fear they almost exclusively belong to my mother and father's generation. And none of them is getting any younger.

Turning to happier events, it seems Brown has finally performed his much-awaited about face in the "cuts" debate - he's actually joined it, in other words. So he's filled the empty chair left for him by his enitre cabinet and set-out a clear plan for bringing public spending under control as soon as possible.

Well, no. Not really. The actual Brown outburst at the TUC was rather more muddled than that, as Iain Dale, among others, has already spotted. In the first place, he hasn't really changed his tune one iota. He's just tweaked the lyrics a little bit. And made them worse. Dale:
I had thought that Darling had persuaded him not to use the line about saving 500,000 jobs as it couldn't be substantiated, but he used it again in this speech. His criticism of the Conservatives was so laboured that it seemed as if he was just going through the motions. Indeed, it was a little odd for him to criticise Conservative public spending cuts, when his people were spinning that he was about to copy them. It's a major strategic error for Brown to go down this road.
Odd indeed. The Speccy's David Blackburn goes into a little more detail about why the cuts issue has become a no-win issue personally for Brown and generally for Labour, thanks to Brown's dithering and lack of courage.
Six months after a Politics Home/Spectator poll illustrated that ‘cuts’ was no longer a dirty word, Gordon Brown squared up and let slip the c-word.

A new Politics Home ‘insider poll’ reveals that 86% of respondents believe Labour would be in a stronger position now if they had admitted the need for future cuts at the time of the Budget. That is almost certainly true: the obvious contrivance that was ‘Tory cuts versus Labour investment’, together with the invention of 0% rise economics, torpedoed the government’s credibility. That said, the majority of Labour’s spending cuts will be delayed until we start enjoying the ‘proceeds of growth’ once more – a tactic that’s designed to emphasise a conceited division between ‘gleeful Tory scything’ and ‘Labour investment, regrettably stunted’. In short, little has changed.

The stubborn, pervasive anti-Tory mindset which characterises everything Brown does - he defines his political existence in terms of uncritical and often irrational anti-Toryism, rather than treating the issue on its own merits - has finally done for Labour. Treating the issue on its own merits would mean that he would not have felt the need even to mention the Tory party had he been setting out a genuine, new policy direction in a keynote speech to a major Labour constituency. But no. There it was - fumble the lines and then bash the Tories. The point is that that isn't working any more. It hasn't been working for some time.

Everybody knows that bringing spending under control is now an essential evil. In fact, in many cases, as the voting public now appears to suspect given the shape of the polls, there will be nothing evil about public spending cuts. Some things, like the Labour-infested quangocracy, are ripe for pruning.

But what about Mandelson's scare tactics (excellent ref.: Burning Our Money) - the dreaded 'double-dip', W-shaped recession? Well, a double-dip recession will not be caused by rising unemployment or by slashing spending. That is the neo-Keynesian mantra and it's never been proved (besides, the Keynesian system for pump-priming has never actually been attempted - you're supposed to do it during the upswing in the cycle, not in the middle of a slump). The "double-dipper", if and when it happens, or the stagflation - whatever you want to call it - will be caused by inflation, and inflation is on the way back with a vengeance. This has been known for months and Mervyn King more or less acknowledged it today, as far as I could tell. QE isn't working and Labour have lost control of the money supply. Next stop: devaluation. The "longer and deeper under the Tories" message is, quite simply, a lie. Of course it is - it's what Brown thinks; it's what Mandelson says. But it won't wash any more. Brown has been rumbled and the fact that in this non-U-turn/U-turn speech today all he could do was somehow blame the Tories for something they haven't actually done yet - and won't do anyway (and they haven't been in power for 13 years) will be seen by people as so utterly feeble that it will simply drive them into the welcoming arms of Cameron and Osborne.

Bravo, Gordon. Encore.

Incidentally, Benedict Brogan has written an interesting piece on this subject this evening. Check it out. Oh heck, I'll just rip it ;)
Time to dish out the awards for getting Gordon Brown to surrender on c*ts. First in the queue must be George Osborne and David Cameron, who stuck it to the Prime Minister for months, culminating in that remarkable series of PMQs confrontations in July. Mr Brown is credited with that line about “Oppositions move to the centre, while Governments can move the centre”: The Tories can claim to have pulled off the improbable, which is moving the centre while in Opposition. “Tory cuts v Labour investment” cost them the last two elections, and there was little enthusiasm for a third go. It’s not quite Charles Martel stopping the Saracens at Poitiers, but suddenly they are off the hook.

Labour is now trying to impale them on another one, namely cuts now v cuts later. But if, as Mervyn King suggested today, we are already seeing a return to growth, then Labour’s case for putting off cuts might look fairly empty by Christmas. Remember, 2009/10 is settled. What is in dispute is what happens in FY2010/11. Peter Mandelson tried to head that off with warnings of a double-dip, but Alistair Darling wasn’t buying that idea today. Of course, with Vince Cable beating Labour and Tories in the candour stakes with specific proposals for what might be chopped, there is still plenty of scope for testing the Tory line. But a big achievement nevertheless.

Also deserving of praise - and arguably the ones who got the PM to shift - are the Lord First Secretary and the Chancellor. Mr Darling is now Labour’s Mr Straight who has used quiet persuasion behind the scenes and incremental rhetorical shifts in public to herd the PM towards today’s statement (although even he must have known that blaming a media ‘game’ was frankly biscuit taking). Likewise Lord M, who has few hang-ups about talking cuts, and has been pressing Mr Brown with ill-disguised frustration to stop offering himself for Tory target practice. They plan now to turn the fire on the Conservatives by pressing for details of what would be sacrificed in that “emergency” Budget Mr Osborne confirmed today.

But there is someone else who deserves several minutes of applause in my book, and that’s my former Room 7 colleague Fraser Nelson. He was the one who earlier than most was banging on about the reality of what would happen to spending in 2011 and beyond. He provided the ammo that the rest of us used. What a potent combo it will be, to have a Spectator editor who is numerate (and who still blogs).

They're offering 4/1 odds at Paddypower on whether Brown will last through November. If you are a gambler, I suggest you take them - they'll only get shorter from here on in.

Saturday, 23 May 2009

Double Dippers


As the Spectator reveals the growing rift between the governor of the Bank of England and Brown, the latter, according to the Financial Times, having been left 'fuming' at the former's 'gloomy' (honest?) predictions for the UK economy, the reality of the deep political cynicism of Labour in their plans to dupe the electorate into a false choice between Labour 'optimism' and Tory 'austerity' begins to sink in.
Given this Government's track record on forecasts, as well as some of the worrying indicators coming out at the moment - not least the Standard & Poor revelation - I don't think it's too unreasonable for King to take a sober view of things. In which case, this becomes a telling sign of how Gordo likes his independent bodies: erm, toeing the Labour party line, and helping in the great struggle against the Tories. And it's rather dispiriting if he's letting these party poltical instincts damage relations with the Bank of England at a time of economic crisis.
So once we strip away Labour's lies and spin, what is the most likely direction of this, the worst recession in British peacetime history? What is it that Brown and his acolytes would like us not to know?

Brief research on some boffin economist websites reveals the most likely outcome in all its stark truth: a so-called double dip recession. Over to them:
Total GDP contraction to date now stands at -4% on a quarter on quarter basis...Whilst a bounce back in the economy is expected going into the 2010 election, however the tax hikes and spending cuts will in all likelihood trigger a double dip recession during 2011 to 2012 as illustrated by the above graph [top of page].

What this means is that there will continue to be a major shortfall in tax revenues and therefore continuing budget deficits a
nd hence deeper public spending cuts and therefore continuing downward pressure on prices and hence inflation may remain subdued even beyond 2010 after a temporary rise inline with the bounce in GDP.

UK Inflation Conclusion - Extreme Deflation as measured by RPI is near an imminent end, forward inflation will remain subdued despite economic recovery into the 2010, election as the risks of a double dip recession remain which would be accompanied by lower inflation.

Economist Robert Shiller, favoured by George Osborne, agrees. The Spectator again:
As for the Tories, their rhetoric may be about to get even more cheerless. One of George Osborne's favourite economists (whom he referenced here) warned today that Britain could face two recessions in quick succession. Seems like gloomy ol' King may be onto something...
It's vitally important that the Tories reveal the extent to which Brown's continued reckless overspending during a severe debt crisis will cause not recovery, but a brief respite in early 2010 - which was always his cynical plan - followed by another serious recession, leaving an entire generation exposed to negative growth and all its attendant personal, social and national pain. The only way to head off this desperate threat is for Brown to be ousted as soon as possible and his appalling, short-sighted and duplicitous, politically motivated programme to be torn-up and replaced with a new one that's genuinely designed to fix the problem now.

The Tories have to be honest with the people of Britain and warn them that Brown's short-termist economic insanity could lead to catastrophe for the British economy. The people must be convinced they cannot believe a word he says and the Tories must seek to force him out, preferably this summer, in the hope that the severe damage he has done can be confined to a single period of recession instead of the dreaded - and now eminently likely - 'double dipper', 'W'-shaped 'lost decade'. It will go much harder for us because in the absence of a Japanese-style manufacturing capacity to prop-up the deficit, the only thing Britain will be producing for the forseeable future is debt. Among OECD nations, that would be historically unprecedented - and utterly humiliating.

If you doubt the dishonesty of Brown and his glovepuppet, Darling, just remember the forecast downgrades (see below) between November 2008 and April 2009. They weren't just 'off-beam', they were lies. They're doing it again with the UK bank stress tests. We can't come through this without facing-up to reality, something the current regime ruining Britain is psychologically and morally incapable of doing. Until we are shot of them, no recovery will be possible and years of pain are almost guaranteed.