OT - George 'disappointing' Osborne once more

[Lost in Transportation]

lets go back to Mr Brown and Ms Merkel way back when the banks started to fail.

Our angela says cut now and get it out the way and we will rebuild a lot quicker.

Gordon says no no no that will never work, spend spend spend.

Now we are up the creek with barely a canoe let alone a paddle and the germans? well they are the ones holding all the cards and pretty much holding the eurozone together.

Nice one Gordon

Nice fallacies there - shame they aren't true.

The Germans didn't cut their spending in light of what happened in 2008 and nor did anybody else at the time and the Germans haven't needed to impose austerity on themselves since. Everybody instead bailed out the people who should have gone bankrupt and that's the banks themselves. As a result, we haven't had a proper market correction as governments have interfered to protect "value" (the Americans have been distorting the stock markets since the crash of 87 - Ronnie Reagan signed that particular Presidential order into being).

And if you recall, all three 'major' parties went in the 2010 elections promising cuts - just at different paces. The Darling plan followed the same sort of mix of spending cuts & tax rises that Lamont and Clarke pursued back in the 90s. That was for a shallower recession and loss of productivity from the economy.

What is being argued now is that there isn't enough aggregate demand in the economy. The money supply isn't growing at a healthy rate (it needs to expand by 4-5% per annum according to the Bank of England). Because money is borrowed into existence (98% of the UK money supply has been created through debt) if you don't see enough new borrowers, the money supply contracts and depresses the economy (read Milton Friedman on the 1930s in the USA) and restricts economic activity.

So households are deleveraging their debts having borrowed too much from the credit boom in the 2000s; businesses are not borrowing enough because they don't see demand to justify that; businesses that do want to borrow are struggling against a banking system attempting to deleverage its position; and you have government which is borrowing just to keep the economic stabilisers going (debt repayments, benefit payments etc).

Welcome to the Zombie economy...

[HappyHour@TheBreweryOfLife]

What about 3G licenses? They were sold for about £17bn above the predicted price, way more than any hypothetical loss on gold reserves.

Labour got it wrong there too then. I really don't think we can give them any credit for the telecoms spending big for licences.

[... and chips]

What about 3G licenses? They were sold for about £17bn above the predicted price, way more than any hypothetical loss on gold reserves.

Labour got it wrong there too then. I really don't think we can give them any credit for the telecoms spending big for licences.

But you can blame them for gold traders spending big on gold for the last decade?

[... and chips]

So households are deleveraging their debts having borrowed too much from the credit boom in the 2000s; businesses are not borrowing enough because they don't see demand to justify that; businesses that do want to borrow are struggling against a banking system attempting to deleverage its position; and you have government which is borrowing just to keep the economic stabilisers going (debt repayments, benefit payments etc).

And those businesses not borrowing are hoarding their cash. There was a report yesterday that UK businesses are currently holding about £750bn (iirc), which is about half the value of GDP per year, and twice as much as they normally hold.

[ddavis]

What about 3G licenses? They were sold for about £17bn above the predicted price, way more than any hypothetical loss on gold reserves.

Labour got it wrong there too then. I really don't think we can give them any credit for the telecoms spending big for licences.

But you can blame them for gold traders spending big on gold for the last decade?

Now why would one of the worlds few limited resources, one that's always been valuable, be purchased when everything else on earth is seemingly not worth the paper it's written on?

Damn those traders and their foolish purchasing. Tin is where the money is at!

[Lost in Transportation]

So households are deleveraging their debts having borrowed too much from the credit boom in the 2000s; businesses are not borrowing enough because they don't see demand to justify that; businesses that do want to borrow are struggling against a banking system attempting to deleverage its position; and you have government which is borrowing just to keep the economic stabilisers going (debt repayments, benefit payments etc).

And those businesses not borrowing are hoarding their cash. There was a report yesterday that UK businesses are currently holding about £750bn (iirc), which is about half the value of GDP per year, and twice as much as they normally hold.

Its a highly rational response to a low demand/low profit situation on an individual basis. That isn't a response to 2008 though according to the likes of Martin Wolf, this "saving glut" has been increasing since the 1990s.

[Mr Nuts]

Seriously, the gold? That was in 1999. Are you going to cite how much that cost the country based on current figures?

What about 3G licenses? They were sold for about £17bn above the predicted price, way more than any hypothetical loss on gold reserves.

I'm pretty sure Balls and Miliband apologised (in so many words) for some of the mistakes of the last government. And we all know why the deficit was so big, there was a stimulus from the government when the private sector was in recession. Imagine the state of the economy had government spending fallen in line with falling receipts from a contracting economy. Over £60bn of cuts would have happened over two years - look at the state of the economy now, even before the big cuts have happened.

I've always leaned to the right but I have to say I completely agree with you here , Mr chips and labour on this . Thatcher started all this anyway by selling of our industry .

[ddavis]

What about 3G licenses? They were sold for about £17bn above the predicted price, way more than any hypothetical loss on gold reserves.

Labour got it wrong there too then. I really don't think we can give them any credit for the telecoms spending big for licences.

Yep.

I sold a radio on ebay the other day, thought it'd go for about £50 but it went for just over £90.

Am I a master radio sales tactician or did I just value it poorly.

[HappyHour@TheBreweryOfLife]

What about 3G licenses? They were sold for about £17bn above the predicted price, way more than any hypothetical loss on gold reserves.

Labour got it wrong there too then. I really don't think we can give them any credit for the telecoms spending big for licences.

But you can blame them for gold traders spending big on gold for the last decade?

I blame them for selling half our national reserves at the time of a market slump (against much advice). I blame them for announcing a major gold sale (against much advice), which depressed the market price even more (as the advisors predicted) and I blame them for continuing the sell-off regardless (against much advice).

Who was on the Treasury team who made these decisions?


'kay?

[... and chips]

What about 3G licenses? They were sold for about £17bn above the predicted price, way more than any hypothetical loss on gold reserves.

Labour got it wrong there too then. I really don't think we can give them any credit for the telecoms spending big for licences.

Yep.

I sold a radio on ebay the other day, thought it'd go for about £50 but it went for just over £90.

Am I a master radio sales tactician or did I just value it poorly.

Maybe you judged the state of the market well so sold you radio at the correct time. Perhaps the mode of sale was important. You might have included particular trading rules which created a bidding war. Maybe yours was the only radio on sale. Perhaps that is why commentators' predictions were so far off.

[HappyHour@TheBreweryOfLife]

What about 3G licenses? They were sold for about £17bn above the predicted price, way more than any hypothetical loss on gold reserves.

Labour got it wrong there too then. I really don't think we can give them any credit for the telecoms spending big for licences.

Yep.

I sold a radio on ebay the other day, thought it'd go for about £50 but it went for just over £90.

Am I a master radio sales tactician or did I just value it poorly.

Maybe you judged the state of the market well so sold you radio at the correct time. Perhaps the mode of sale was important. You might have included particular trading rules which created a bidding war. Maybe yours was the only radio on sale. Perhaps that is why commentators' predictions were so far off.

Do you want a hand moving those goalposts and that 'Diversion' sign?

[Lost in Transportation]

I blame them for selling half our national reserves at the time of a market slump (against much advice). I blame them for announcing a major gold sale (against much advice), which depressed the market price even more (as the advisors predicted) and I blame them for continuing the sell-off regardless (against much advice).

'kay?

So what were the consequences of those actions? The UK increased its holding in foreign currencies. Unlike the 3G sell-off which saw money used to reduce the national debt (when Prudence was still young and in favour), the Gold was used to increase the UK's foreign reserves holdings.

That has turned out to be useful recently as its those UK foreign reserves that the IMF has been drawing upon from the UK to meet its funding obligations (which it will get a return on). Hence why Osborne could tell his backbenchers that no additional borrowing had occurred to meet the UK's contribution to the IMF.

[ddavis]

So what were the consequences of those actions? The UK increased its holding in foreign currencies. Unlike the 3G sell-off which saw money used to reduce the national debt (when Prudence was still young and in favour), the Gold was used to increase the UK's foreign reserves holdings.

That has turned out to be useful recently as its those UK foreign reserves that the IMF has been drawing upon from the UK to meet its funding obligations (which it will get a return on). Hence why Osborne could tell his backbenchers that no additional borrowing had occurred to meet the UK's contribution to the IMF.

Don't forget all the Yen we bought (then immediately sold). Snigger.

[Lost in Transportation]

Don't forget all the Yen we bought (then immediately sold). Snigger.

And? The Treasury buys and sells all the time with regards to its basket of foreign reserves. Its the liquidity of holdings which has been useful with regards to the IMF. We're not borrowing to service that requirement.

[HappyHour@TheBreweryOfLife]

I blame them for selling half our national reserves at the time of a market slump (against much advice). I blame them for announcing a major gold sale (against much advice), which depressed the market price even more (as the advisors predicted) and I blame them for continuing the sell-off regardless (against much advice).

'kay?

So what were the consequences of those actions? The UK increased its holding in foreign currencies. Unlike the 3G sell-off which saw money used to reduce the national debt (when Prudence was still young and in favour), the Gold was used to increase the UK's foreign reserves holdings.

That has turned out to be useful recently as its those UK foreign reserves that the IMF has been drawing upon from the UK to meet its funding obligations (which it will get a return on). Hence why Osborne could tell his backbenchers that no additional borrowing had occurred to meet the UK's contribution to the IMF.

Relevance to Labour's poor decisions costing the country billions? Could they not have sold off our 400 tons gold at a later price, say when the market was not at rock-bottom? Or, even better, not sell off the gold at all considering the price is so, sooo much higher today?

Have our currency reserves also increased 500% in value?

(Why are certain people obsessing about the 2000-01 3G licence auction now? What have they got to do with the economy today??)