Darling has money troubles

Rhoda Klapp

There's no money because they will not contemplate anything sufficiently bold to make a difference. Strike out the regulations which stifle enterprise. Cut a lot of useless government and council payroll. Put public sector pensions on the same level as private. Scrap the money-laundering regs, get that black money out into the system again.

All impossible, of course.

HJ

Darling "has money troubles"?

I don't think so. He's the one with a taxpayer (and government borrowing) funded salary and a gold plated pension scheme.

It's us poor devils who will have to pay for the likes of him and Brown and the mess they have created who have money troubles.

RW

Poor, poor Gordon. Why does everything always go so wrong for him? His grand global bargain seems to be rapidly going down the tubes, if the DT is to be believed; "the White House said President Barack Obama will not seek any "specific commitment" at the [G20] meeting".

Mark my words, it will all end in tears; "one big, calamitous showdown"; The Shootout at Downing Gulch?

Ian C

This has always been my bet - and it is getting closer.

RW

Great Jeff Randall quote in the DT:

Q: What's the difference between Bernard Madoff and Gordon Brown?

A: One has drained fortunes from gullible victims, plundering their income and savings to create an illusion of prosperity. The other is going to jail.

Chris

This government has been wasting money for all its worth. There are plenty of ways to find savings without doing any damage. They could start by abandoning the completely pointless identity card scheme.

Denis Cooper

"There's no money"?

Bloody ridiculous - just tell Mervyn King to print some more!

Sorry, I didn't mean to say that - it just slipped out.

What I meant was:

"To ensure that the Monetary Policy Committee can meet the inflation target, authorise an expansion of the Bank's programme of Quantitative Easing through the Asset Purchase Facility."

A tax cut equivalent to 2 per cent of national income - that would be about £13 billion, chickenfeed.

Treasury holds an additional 5 auctions, selling £3 billion of gilts each time; Bank holds an additional 5 reverse auctions, buying £2 billion of gilts each time - that's £15 billion raised to fund the tax cuts, with some to spare, but a net drain on the capital markets of only £5 billion, which investors should be willing to tolerate.

Even better - Treasury holds an additional 7 auctions, selling only £2 billion of gilts each time; Bank holds an additional 7 reverse auctions, buying £3 billion of gilts each time - that's £14 billion raised to fund the tax cuts, still with some to spare, but a net injection of £7 billion of new money into the banks, freeing up lending to companies and homebuyers and boosting the economy.

It does make me wonder about the real value of book learning and paper qualifications - Darling was awarded a First Class degree in economics by the University of Harare, so surely he should be able to work that one out?

JONNY

Even so I very much doubt if Darling has the necessary cojones to stage a Geoffrey Howe Moment.

oldrightie

Darling is not a mad, delusional, anti-public, control freak. He could pass as an almost Frank Field, decent Labourite. Trouble is he is a puppet and his pension pot size, though generous will not be as good if he upsets Browbama.

Tom Pride

It is not actually funny. The only thing standing between a Brown induced financial Armageddon (as Denis Cooper illustrates) is Alistair Darling and the senior staff at the Treasury.

A battle looms between their integrity and Brown’s hubris.

TrevorsDen

You keep saying this Mr Cooper but I have yet to see a financial journalist who says this is what's happening.

Printing money strikes me as a dangerous thing. Its going to lead to inflation and it seems to me it must reduce the value of money 'in my own pocket'. But come on Mr Cooper - show us sources other than you which are making the same predictions.

Back in the real world MY prediction is that hidden behind a smoke and mirrors haze of bogus 'economies' and 'savings' Browns glove puppet, Darling, will cut some taxes - ie create the very same unfunded tax cuts that they have been accusing the Tories of for the last 12 years.
Of course for some miraculous reason these will not affect skulsn'ospotals.

One does wonder though just what is happening behind the scenes in the Treasury, just what are the mandarins and civil servants saying? Will they influence Darling? Indeed do they have a duty of care to the economy?

Finally - Just how Darling will get the words describing the public deficit out of his mouth will be worth seeing.

Denis Cooper

Yes, TrevorDen, I do keep saying it.

I shouldn't have to, because financial journalists in every newspaper and on TV should be saying it, but only a few are; and the Official Opposition should be saying it, but they aren't.

Maybe the Tories haven't yet realised that their prospects of winning the next election will significantly diminish over the coming year, as the government buys back support using the extra money created by the Bank of England.

You ask for references to somebody else who's saying it.

For starters, you know that Fraser Nelson said it in his article on Wednesday, on which you offered comments:

http://www.spectator.co.uk/coffeehouse/3431681/how-brown-plans-to-borrow-more-money-than-the-market-would-ever-let-him.thtml

"How Brown plans to borrow more money than the market would ever let him"

"And let’s not forget what the £150 billion “quantitative easing” package does – provides money that is to be spent on, well, government debt. Using the G20 as political cover, Brown now has the tools he needs to launch a massive pre-election tax cut - and post the bill to a Conservative government."

Not all of it, actually, only the £100 billion which is to be spent on buying government debt.

And the manager of a gilt fund also said it, in the Telegraph article from which I've previously quoted:

http://www.telegraph.co.uk/finance/financetopics/recession/4967505/Inflation-will-kill-the-gilt-rally-in-the-end.html

"The reason the market became so excited was that the method chosen to implement QE would involve the Bank of England buying billions of gilts in the open market to put on its own balance sheet."

"But before everyone gets carried away it is important to understand that while the Bank of England may be a net buyer of gilts, the Government is still a net seller. At the start of the year gilts were heavily sold as the full implications of the Government's truly dreadful fiscal position dawned on the investing public.

"Indeed numbers were being bandied around suggesting gilt issuance in the region of £120bn or more and even the head of the Government's own Debt Management Office (DMO) warned of the possibility of failed gilt auctions in 2009 as the sums required seemed to be unmanageable.

So instead the Government is in effect deliberately under funding its fiscal deficit by printing a significant proportion of the money required. It is having to do this in a convoluted route as the Treasury cannot sell gilts directly to the Bank of England as this is not allowed (for very good reason) under the Maastricht treaty."

The Telegraph's Economic Editor, Edmund Conway, wrote about the effect on pension funds:

http://blogs.telegraph.co.uk/edmund_conway/blog/2009/03/07/how_printing_money_could_make_banks_even_less_willing_to_lend

"Had the Bank instead been able to buy some other asset - coporate bonds or perhaps something else entirely, maybe even, dare I say it, commercial property - it would not have these unfortunate consequences."

but he still just missed the point - that the Treasury isn't offering to sell corporate bonds, or commercial property, so it wouldn't help their sales to have the Bank buying them back; it is trying to sell gilts, and so that's what the Bank has been told to buy back out of the market.

Tom Pride

TrevorsDen

Hope it is clear now – Denis Cooper is pointing out the potential abuse of QE to fund the Government deficit. You share similar views.

As I understand it the difference between QE and “printing money” is a matter of intent. The QE proponents argue that the intent of QE is to boost the money supply, facilitate bank lending, drive down gilt yields etc – all designed to reverse deflation and the downward recessionary spiral.

The intent may not be to create money for the Government to circumvent its inability to fund its deficit but as Denis Cooper points out that is what happens when the Bank of England buys gilts so facilitating the issue of new gilts by the Treasury.

Sceptics like myself believe that whatever the intent of QE, Gordon Brown is going to use it to fund the deficit so he does not have to cut spending or raise taxes ahead of the election. The QE supporters have given him the keys to the printing presses. Only the integrity of Alistair Darling and the Treasury civil servants stand in his way.

seb

The Treasury? Captain Badger [aka Wendy Darling]? Integrity? I thought the Kirkcaldy Autist had spent half a generation compromising The Treasury's integrity. Wendy is, like most of the other vegetables, far too timid to do some noble knife-wielding. A doormat, not a Brutus.

Kirkcaldy's leading Autist will without a doubt try to cobble together some tax-bribe. Pollsters will record a short-lived, small and embarrassing rise in the number of boneheads supporting Labour.