Brown's big lie

How long can a Prime Minister in a democracy lie to his country and get away with it? Gordon Brown is trying to find out.  His Big Lie - that his published plans do not involve a cut in public services - would not have withstood a Spending Review, which would have spelled out departmental budgets from April 2011-April 2014. So, it has been postponed.

Current sending is being run on budgets set out in the 2007 review (itself delayed) which lasts until 2010-11. Since it was drafted the forecast for 2010-11...

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The case for pessimism

Amid all the talk of green shoots and renewed economic growth, Vince Cable and Martin Wolf pop up today to warn that the nightmare is, potentially, far from over.  

Of the two, Wolf's is the more useful article; linking, as it does, to a paper by the economic historians Barry Eichengreen and Kevin H. O'Rourke, entitled A Tale of Two Depressions.  I recommend that all CoffeeHousers check that paper out, as the graphs in it are, as Wolf puts it, "worth more than a thousand words". They suggest that - across a range of indicators, from...

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It's ending in America

As the whole expenses scandal rumbles on, the economic crisis has been knocked off the front pages. But it hasn’t gone away. Today there’s an interesting article in the Washington Post saying that while the worst is over in America, the recession in Europe will be longer and deeper. (The numbers the Post mentions about Britain are particularly grim). Here are the key paragraphs of the article:

“Nine months into the worst economic downturn since the Great Depression, the free fall in the United States appears to be giving way to a

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Downgraded finances

Standard & Poor has just become the first credit rating agency to downgrade the UK from a "stable" assessment to "negative" - and given that the Tory borrowing proposals until 2014 are virtually identical to Labour's, it is a warning that should chill Cameron. It's feasible to fund your government with IOU notes now, with the Bank of England printing money to buy them, and a global flight-to-safety making a bull market in bonds. But after the next election, with equity markets recovering and the QE policy exhausted, how will Cameron find buyers for...

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The causes of the crisis 

Niall Ferguson has a typically sharply-argued piece in the New York Times Magazine disputing the idea that the current financial crisis was caused by deregulation. Here’s the nub of his argument:

“The reality is that crises are more often caused by bad regulation than by deregulation. For one thing, both the international rules governing bank-capital adequacy so elaborately codified in the Basel I and Basel II accords and the national rules administered by the Securities and Exchange Commission failed miserably. It was the Basel system of weighting assets by their supposed riskiness that

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