George Osborne and Mervyn King announce panic measures to try and save the UK economy. Great deal for the banks, give the BofE more worthless financial toxic crap as collateral to get a handouts in a desperate attempt to stop the housing market from crashing, which in turn would bankrupt said banks. Surely people must now be realising there is no way out of this global debt spiral. The only answer anybody seems to have is to add even more debt to the mountain of debt we already have! IMO it all boils down to this, AT LEAST 97% of what we call money is infact a bank created IOU. All savings accounts are merely promises to pay as are all pensions, government bonds etc. What we are seeing is a battle betwen who's IOU's are honoured and who's IOU's are ripped up. At the moment the bankers of the western world are using governments to ensure their IOU's are the ones honoured at the expense of the general public, who are seeing their savings disappear, their pensions cut and jobs destroyed. www.mirror.co.uk/news/uk-news/ge ... ion-884350

George Osborne and Mervyn King announce panic measures to try and save the UK economy. Great deal for the banks, give the BofE more worthless financial toxic crap as collateral to get a handouts in a desperate attempt to stop the housing market from crashing, which in turn would bankrupt said banks. Surely people must now be realising there is no way out of this global debt spiral. The only answer anybody seems to have is to add even more debt to the mountain of debt we already have! IMO it all boils down to this, AT LEAST 97% of what we call money is infact a bank created IOU. All savings accounts are merely promises to pay as are all pensions, government bonds etc. What we are seeing is a battle betwen who's IOU's are honoured and who's IOU's are ripped up. At the moment the bankers of the western world are using governments to ensure their IOU's are the ones honoured at the expense of the general public, who are seeing their savings disappear, their pensions cut and jobs destroyed. www.mirror.co.uk/news/uk-news/ge ... ion-884350

The weather's not bad, though.

The problem is when they came to power Osborne and Danny Alexander plus all the rest of them never stopped banging on about how we would be the new Greece if we didn't adopt their plan (Plan A as it has become known).



This put the fear of God into individuals and small businesses and no one wanted to invest in buying a new house or expanding their business.



Now he wants to give the banks £80bn to lend to people who STILL don't want to borrow.



If he can magic up £80bn then spend it directly on stimulating the economy. Do not give it to banks on the cheap in the vain hope there is actually a queue of people and businesses waiting for the money. Their isn't.



In short their polices and their rhetoric killed off what little demand there was in the economy and you aren't going to stimulate that demand by making money available to borrow when no one has a reason to borrow it.



Of course investing such vast sums directly into the economy would be the biggest U-turn of the lot and would be an admission that a Plan-B was needed.



I see from the press this injection of cash is being talked of as "Stretching Plan-A to the limit". It's as if the idiot Osborne would rather keep digging us into an even bigger mess rather than admit he was wrong.

so, let me get this right, we had a recession based largely on profligate lending and borrowing, and so we're going to lend/borrow our way out of it?



have I missed something, like them putting LSD in the water in Whitehall?

No – and, err, yes. Possibly.





Honestly, if someone can suggest a way of posting a PowerPoint presentation, I'll do so.



Labour's spending was not at record levels – much as they (for obvious reasons) allowed that myth to grow.



Whatever happens in the long term, in the short term, we need growth. We have an economy that is massively (not entirely, but massively – approx 75%) reliant on the service sector. So we need people to spend.



But as recession continues, as if the employment levels don't improve, that will not happen.



The best resource we have – as is the case with any nation – is ultimately its people. QE has done FA, mostly because the banks are simply not lending to small and medium-sized businesses.



It's an historically proven fact that you can spend your way out of recession and into growth. And indeed, look at the US (and I am no massive Obamaphile).



IMHO, we should look at a serious state house building plan. Employ people, who then have money to spend (and are paying tax but are not on benefits – if paid decently – which supports local business etc). But also because it tackles one of the real root problems of the crash and crisis.



There is also the point that hype about the 'national debt' is usually over simplistic – the 'national debt' was at over 100% levels for most of the first half of the 19th century – hardly a time of wild spending on public services. And nobody would cite it as such. But then, nobody would cite the national debt at that time as a massive problem.



And so on and so forth ...

The Greek election is looming and the credit markets will probably seize up. This is their attempt to help the UK system deal with that.



The only way to solve the debt crisis is to spread the losses over a period of a few years and in doing so make the bondholders, rather than the public directly, take the losses. Banks need to be made to go bust (lots have in the USA in the last 4 years, the UK has / is introduced/ing living wills to allow bank to be wound up, but the idiotic politicians in Europe are burying their heads and actually increasing the problem). The public (ie sovereign states) can't afford the losses.

so, if we can spend our way out, give the cash direct to anyone who pays tax, some will bank it and some will spend it.



I am a conservative, but this bunch do look more and more clueless by the week.

No because we didn't and not really because while the govt is going to borrow more it isn't necessarily going to get us out of it. It is relying on everyone playing ball but no one seems up for the game the chancellor wants them to play.

I agree and have said for 4 years that a big council house building programme is the only sensible way out of this. This would not need to be government funded, it could be privately funded in return for a rental income stream underwritten by the government. Trouble is neither Labour nor the Tories want council houses. It's up to people to start vociferously demanding them.

wont happen, once benefits start getting paid direct to claimants the ability of social landlords to borrow will collapse, we've just completed a £150m bond issue, it will be the last one we manage to get through unless the legislation is reversed.



add in the Green Deal and Tenants Cash Back and Welfare Reforrm and social housing is only going one way, backwards even quicker than it ever has before.

In an uncertain economic period like we have now, if you give individuals money (presumably through tax cuts) all they will do is save it, not spend it. By investing in a massive, short-term infrastructure project such as increasing the social housing stock, you get people off benefits and into work. These people then inject their newly disposable income into the retail and service sectors by buying goods and services. The Treasury gets back some of its investment through an increased tax take and reduced numbers on benefits.

and who would increase social housing stock, which builders, which contractors, the same one's that raped the exchequor for Decent Homes and we saw no economic benefit?

People would not spend or save but pay down debt (at least the majority, who have debt). That's the logical thing to do. It's what has been happening. On one level it's also a good thing, on another it means the economy is quite slow. In fact what we really need is to export. Consumer spending within a purely domestic context is fine, but the reality is consumers buy stuff from abroad creating a balance of payments deficit. We need to pay down debt and export alot more. If we ride out the huge storm ahead (and that won't be easy, given the Eurozone bank losses will stop somewhere - my guess is in the UK - given the increased frequency and panic within Osborne's speeches aimed at telling the EZ politicians) and get an export led economy steaming forward (we can dream!). Then we should engineer a huge reduction in real house prices over a period of years.

There is no demand abroad so we can't grow through exports.



We have a Treasury that is doing nothing and a central bank that is trying to support the economy but we're in a position where monetary policy is not being effective on stimulating demand (ie a liquidity trap).



We will be stuck in recession/low growth for years waiting for the market to 'self correct' and we will lose masses of lost output in that time.



The economy needs to be kickstarted by an increase in government spending ideally on some infrastructure to address problem areas etc the housing stock. As regards concerns over borrowing its a different situation to Greece, UK government borrowing costs are at record lows anyway so price signals are telling us that its a sensible time to borrow to get the economy moving again. You can tighten fiscal policy as the economy grows again, its much easier to rebalance a budget when you are back in a 3% growth spell.