The scale of Brown’s broken economy

Seasurfer1

The printing of Money and pumping it into the Banking System is the direction Brown will take, with all its exponential effects on Inflation. Oil price increases and the lower value of the Pound have not transalated into higher prices for the consumer yet. Astro-inflation is inevitable with real estate the best channel to protect assets.
Get ready for another big big Financial Instituition to go pop in the wake of Freddie and Co.

oldtimer

Spot on.

Government needs to tighten its belt, just like the rest of us. There are no painless remedies for the debt debauchery practised by Mr Brown.

Fraser Allonby

Osbourne is in a straitjacket of his own making. The Tories need to own the political agenda with something more substantive than IHT reforms. Thatcher did not behave in a restricted manner, indeed, when the economy is in a dire mess, the only way to behave is to be bold. The free market needs to work, house prices need to plummet, it is unpalatable for politicians to say it but hairshirts need to be donned and realities faced. Japan has not recovered from its colossal asset bubble because they did not let the free market work, instead they have continued to pump money into the system and prop up ailing institutions. We need to see strikes and public sector militancy as these are symptoms that the government is taking on the unproductive bloated state sector. Unfortunately politicians are too interested in short term gimmicks to tackle the real issues such as unfunded state pensions, benefit dependency and a client state of non-jobs.

The Laughing Cavalier

Among the first things that George Osborne must do when he becomes Chancellor is give us the true position, using honest statistics for the first time since Brown "rebased" and debased them in 1997. Then at least we shall know where we are. In the meantime he must keep calling Brown to account, especially when he begins cranking up the printing presses

Terence

At last - PFI and pension liabilities getting publicity. Keep going with this!

Hereford

What amuses, and gratifies me to a degree, is the change in the view of GB, as a person, over the past 12 months or so.

I remember bleating that 'it isn't so,' when pundits, including you, I seem to remember Fraser, would say that, although he may have flaws, Brown was, at his heart, a good man with the welfare of the country at his heart.

I knew then, what I know now. He is a vindictive, bitter, venal, sulky and nasty little man who will do anything, ANYTHING to stay in his position of power.

He doesn't care if he leaves us all in penury, as long as he hangs on to power, by his ragged fingernails for just a little longer.

He doesn't care full stop.

Hereford

Sorry missed the quote I was basing my post on:

"remember there is nothing Brown would not do to save his own skin."

A Conviction Politician?????

ML

Its often said that Gordon didn't save during the good times but what exactly DID he do with our money? We don't seem to have anything to show for his wanton spending spree or the colossal debts he's run up. He hasn't spent it on public transport or the causes of crime or national security or English speaking medical staff or flood prevention or keeping UK land and property out of the hands of foreign crooks or anything that might have improved our standards of living and wellbeing.

Man_on_Richmond_Bridge

Fraser,

Please do us all a favour and publish the following to reveal the reality of this man's woeful management of the economy over the last 10 years.

Debt
1) The 1997 figures for Debt per head of population
2) The 2007 figures for Debt per head of population
3) Take the result in 2) and divide it by the average annual income in this country to gives the number of years that is needed to pay off this debt

Taxes
4) The 1997 figures for total taxes per head of population
5) The 2007 figures for total taxes per head of population

http://www.iea.org.uk/record.jsp?type=news&ID=320

http://www.adamsmith.org/tax-freedom-day/

"If public spending had only grown in line with inflation since 1997, we could have abolished income tax, corporation tax, capital gains tax and inheritance tax, leaving the taxpayer £200 billion better off."
Courtsey of the Adam Smith Institute

Laughing Larry

Mervyn King is right now the most important man in Britain. Team GB and the CEO's of our 'great' banks must hate the man with a passion. I just love him - he is my Sarah Palin.

Austin Barry

In less mature democracies the tanks would now be rolling towards the Prime Minister's residence, the pro-government broadcasting station seized and a curfew imposed. It is though amusing to imagine Gordon and his chums being frog-marched from Downing Street, with Gordon protesting that he 'just wants to get on with the job", Jack Straw waffling about "changing pilots in mid-flight" and little Hazel Blears, chirpy as ever, defiantly whistling the Colonel Bogey March.

Nicholas

" . . . what exactly DID he do with our money"

Increased the tiers of bureaucracy, management and enforcement in central and local government, lots of advisors, PR & spin, miles (sorry kilometres) of red tape, great big f*****g (useless) quangos and the many fat-bottomed, clipboard wielding staff in the NHS black hole (more tiers of bureaucracy and management plus consultants and targets), Scotland, benefits for the wives in the harems of bigamous asylum seekers, not to forget the cost of translating government literature and forms into several hundred third-world languages.

You should know by now that the national socialist politburo spends a whole lot of taxpayers money on "progress" (which is a euphemism for the BS that infests and impedes every aspect of our daily lives) and trying to control peoples thoughts and words to conform to Greenham Common Wimmin-speak. These "Great Leaps Forward" cost money.

My tongue is in my cheek - but only just.

Verity

Surely Gordon Brown can be charged with criminal negligence? Couldn't a CEO who ran a public company into the ground will such mind-boggling ineptitude and willfulness be so charged? What about Great Britain PLC?

Laughing Larry - Does he wear ultra cool eye glasses?

Jeremy Poynton

Fraser,

Given Osborne is not in power, how can anything be "of his own making"? Indeed, he has come out today to confirm what we all know - that Brown and his bunch of thugs have wrecked the economy, and that there will be no easy fix.

For starters, we need to lose half of our public sector employees - starting with the Quangos.

IEA estimates public sector pension bill already over £1 trillion.

http://www.iea.org.uk/record.jsp?type=release&ID=136

BCS

I can't help but feel that all this is slightly hysterical. It seems reasonably certain that, with the exception of a couple of quarters of tiny contractions (less than 0.5%), the economy will continue to grow, despite Brown's incompetence. Inflation, despite everything, seems unlikely to climb above 5% or so (admittedly the headline measure is questionable). Falling house prices are not necessarily disastrous. All the 'broken economy' really amounts to, from a wider perspective, is the fact that we will become more prosperous more slowly than in recent times. Whilst this might be painful, it is hardly apocalyptic.

Promise of Avalon

AAAAAAAAAAGGGGGGGGGGHHHHHHH

glenn earey

All told, the UK government may bail out Northern Rock but there is no one to bail out the UK government.

That is the most serious problem, it's not Government money, there is no Government money, it's all taxpayers money. Not only has GB spent todays Tax he has taken out massive deficits on the promise of tomorrows Tax. The consequences of GB being chancellor will be far reaching and not fully understood for years to come. Really it's quite remarkable how Labour Governments achieve massive deficits, sinking ecomony and sliding sterling.

Fraser Nelson

Jeremy, the IEA figure is prob more accurate because it uses gvt gilt yields to calculate liabilities. Treasury uses normal borrowing figures, which is daft as it can only borrow in gilts.

Colonial

Seasurfer 1's opinion is that property - I assume here he means residential property - will be the best hedge against a coming inflation. Will it I wonder? Is what we are seeing not the end of a many year deluge of money created for the housing market? If we have come to the end, what will prop up future prices? The value of some Japanese property is still below pre crash levels. Its all rather like desert blooms - a burst of rain and there is mass flowering. Which quickly wilts, dies and disappears.

What also seems to get overlooked is that this massive cash stream - and in far greater quantities from the US - flowed through the whole property industry and onwards into general consumer spending. Which flow has now ended. Add to this payment on paper held by foreigners.

The third leg is that this wealth, staggering quantities of it, is now in the hands foreign governments, sovereign wealth funds, oil producing countries, wealthy individuals and the like.

Will the best stores of wealth not be the ultra scarce and sexy residential and leisure property, selected shares in listed companies and gold?

And inflation? Well, some would surely suit the US and the UK?

Toss pandemics, global warming, Muslim fundamentalism, peak oil, bolshy Russians, Chinese and US interests clashing, many new means of waging war, a Europe to sloppy to defend itself, etc, etc into the pot - and we are indeed headed for interesting times.

Does anyone know any good books on future scenarios!

Ian C

All in the name of socialist egalitarianism. What a price!

Tony Goodson

Why has Osborne only just realised that to continue Labour's spending plans would be impossible? He should have twigged this many months ago, the fact that he didn't ,doesn't bode well

Seasurfer1

Re Colonial, an interesting diatribe, but not economic reality.
Astro-Inflation will devalue the currency the likes of which none of us have known before.
A pound/euro/dollar will be as currency worth a fraction of itself. but the real value of a brick will hold itself up well.

Lance Grundy

This ‘how Brown bust Britain’ stuff is all well and good but it is only one side of the story. Commentators seem to be far too soft on the British people themselves - particularly our spendthrift young. Encouraged by lax lending by banks and credit card companies and mimicking their spendthrift parents they have landed themselves with debts of frightening proportions - the consequences of which, I believe, are likely to be felt by the economy for years to come.

There is now a whole generation of young people in Britain weighed down by massive amounts of unsecured personal debt - and I mean thousands and thousands of pounds. Through their reckless lifestyles - unpaid mobile phone bills, store cards, credit cards, defaults on personal loans, debts with retailers, deferred this and deferred that, they find themselves incapable of carrying any more debt - either because they are financially ‘maxed out’ or, as a result of their defaults, they have such appalling credit histories that no lender would touch them with a barge pole.

Few, if any, commentators have grasped the likely effect of this terrifying debt overhang on the housing market. Huge numbers of the next generation of first time buyers will be simply unable to buy anything. Either they will be unable to secure a mortgage due to their poor credit histories or, even those that are able to get the mortgage, will find it impossible to afford even a relatively low monthly payment and still service their enormous personal debts [and let’s not forget the rocketing cost of household bills]. With so little fresh blood flowing into Britain’s housing market the ’jam today’ lifestyles of our over-indulged young are about to cost us dear and, short of paying off the personal debts of an entire generation, there is nothing the government can do about it. This is a new phenomenon

TrevorsDen

PFI debts are being repaid - typically over 30 years - and these payments also include running and maintenance costs as well. Government debt is ever growing heaven knows when it is going to be repaid. I am not sure they should be added together.

The point is that these repayments are being paid for out of the government expenditure which is not being covered by revenues. That the economy despite alleged growth is not generating the funds to match the governments ambition and our dreams.

You may of course say that these buildings should have been procured differently. Fine - but then they just would not have been built, and you try putting an utility cost value on the new oncology unit shortly to come on stream in Oxford (just one example) complete with its 6 linear accelerators.

And before anyone tries to tell me that it would be cheaper to do it differently, just remember that you have to add at last 15% professional fees to a conventional tender plus inevitable costs associated with delays and variations (which even Frank Dobson had to admit added another 7%) plus PFI includes full maintenance.

PFI was a Tory idea, it may be Brown is misusing it - but thats another story.

Jonathan H

Guys n gals, pop over to Guido now. His Gordonness has been quoting from Mein Kampf and Guido has found a fantastic vid which will make you wet yourself

Rex Burr

Property prices in Japan can be stable, albeit at a low level, because the population of Japan is stable.
Unfortunately we have a booming population and left to market forces coupled with our inability to build houses, property prices will again tend to the insane.
I remember hearing a report in the early nineties, when the country was recovering from the previous property crash, that from then on we would value houses as places to live in and not cash machines. That report was wrong then and similar reports will, I regret, be wrong again.
How can Spain have a housing surplus and we a serious housing shortage?

TGF UKIP

Fraser, that you should get well and truly stuck into Brown is entirely justified. Indeed, the concensus of Coffee Houser posts seem to indicate that the depth of crisis as you describe it is understated.

What then seems not just bizarre but positively perverse to me is that you should then so lionize Osborne.

Brown can continue unhindered on his reckless and destructive path for one simple reason - he has no effective oppostion. Indeed he has had nothing more than de facto encouragement in his accumulation of debt from HM Opposition.

By accepting 2010/11 cash spending of £679.8bn (£27k per householed) your friend Osborne not just implicitly, but explicity condones its associated borrowing.

What Osborne and your other friend Cameron should be doing is screaming bloody murder over Browns debauching of the British state. What do we get though instead of alarums and calls to arms - the merest squeks of protest of what Blue Labour will inherit.

The most interesting question of all though is why Britain's worst government should be matched by an opposition which seems almost deliberately feeble in calling them to account.

My conclusion is that we have a Tory media (we certainly have virtually no right wing media) that sees its function and duty not as spurring and gingering up the Tory opposition but only as lionizing and applauding the present Tory Leadership.

In short, Fraser, as Labour continues to get away with it you are just as culpable as your best friends.

BCS

The thing is, Verity, the Tories screamed blue murder (or rather squeaked very quietly) about Labour's reckless spending in 2001 and 2005. As a result they were demonised as cutters and got nowhere. Now that economic conditions have changed and the government has lost credibility this devastating effect might be less powerful next time, but you can surely understand why Osborne and Cameron are cautious. Rightly or wrongly, there is not an electoral majority in favour of really dramatic cuts in tax and spending (spending, incidentally, has almost never been cut, ever, as a proportion of GDP). Nor would the electorate even believe the Tories if they did promise such reductions.

BCS

Sorry I meant TGF UKIP not Verity

Tim Carpenter LPUK

What the Man on Richmond Bridge says.

Cut spending, abolish Income Tax, IHT and Capital Gains Tax. The economy would be revitalised and then increased revenues from sales/VAT and elsewhere will enable the vast debt mountain to be reduced over time.

Only the Libertarian Party is proposing to do what is necessary. Cut taxes, cut spending, cut debt and most of all cut government!

Man_on_Richmond_Bridge

Tim Carpenter LPUK

What we actually need is a Tax Payers party to represent us the ordinary people.

This along with restricting the level of Government spending as a proportion of the average annual wage (not GDP as most people cannot do mental arithmetic never mind understand what GDP means) would be decided by the people in a Referendum on the same day as the General Election and this is fixed for the lifetime of the Parliament.

The only exception to this would be where things suddenly get very bad and then a second Referendum is called allowing the people to decide to increase / decrease or leave the level alone.

Where some people feel that the level of Government spending is too low then they have the option to get their cheque books out and send their donations to Alistair Darling Esq. anytime they like.