Yesterday's announcement by David Cameron that the Tories are to propose abolishing basic rate tax on the interest earned on savings has got to be welcomed. Many people throughout the land have saved their money so that they can enjoy a good retirement living off the interest. And while the young 'uns, like myself, welcome lower Interest rates so that our mortgages are cheaper, it can decimate a pensioner's income. Reducing the tax on interest won't solve the problem, but it can certainly help.
There is also the moral case that someone shouldn't be taxed on earnings and then taxed again if they choose to save it rather than spend it. It will inevitably get taxed when it gets spent anyway, though VAT. This Government inherited a household savings ratio of nearly 10% of income in 1997, which is now down to just below 2%, showing just how much our savings culture has all but vanished. With figures also showing that household debt has ballooned is it any wonder why we're in a credit crunch built recession?
We need to learn to save again and rid ourselves of debt, saving to spend rather than borrowing to spend needs to be the new mantra. Let's each do our bit, I'm now going to put the money saved from the reduced mortgage interest payments into paying the mortgage off sooner. The Government needs to do likewise and reduce spending on extraneous projects (not NHS and Schools, but ID cards and expensive IT projects) and reduce its borrowing.
Only then will we have learnt the lessons of this credit crunch induced recession.
Squiffy.
Tuesday, 6 January 2009
Friday, 2 January 2009
No time to join the Euro
In yesterday's and today's papers there are two articles about whether we should join the Euro. In yesterday's Times Oliver Kamm states that we should join now. In today's Mail Peter Oborne says that the Euro will not see another 10 years and that we should not join.
Oliver Kamm believes that the first ten years of the Euro have been a success and it is now challenging the Dollar as the world's reserve currency.
Peter Oborne believes that the stresses of the recession will lead to break-up of the Euro Zone and the death of the Euro.
I think it is useful to separate the Euro as a currency from EMU (Economic and Monetary Union) to align these two views.
I think that after a shaky start the Euro has indeed proved to be a successful currency. That's as it should be, representing 16 nations, now that Slovakia has joined, and 300 million people it should be successful. Many people who wish us to join the Euro believe that it should be easier to travel without changing from one currency to another, and that without the cost of changing money from one currency to another the costs to business can be reduced. For this reason the Euro looks attractive.
EMU is the overarching principle for which the Euro was created. One single market, one currency and one central bank to align the economies of Europe. Thus far, though, EMU has only had to contend with relatively benign economic conditions.
The next few years will determine whether EMU and the Euro have a long term future. There are four main levers that Governments use to affect their economy; Interest Rates, Exchanges Rates, Tax Rates and spending. EMU has removed control over Interest Rates and influence on exchange rates and so Euro Land Governments only have control over their spending and tax levels. If the Euro Zone countries cannot effectively manage their tax and spending in these difficult times strains will be placed on EMU and the central bank. The central bank has to cope with the demands from 16 different countries and may not be able to help as much as necessary. Stresses may become amplified in such circumstances (such as those that affected Britain's exit from the ERM).
Countries which were closely aligned when EMU was launched should cope well, those that fudged their budgets and entry criteria to become members of the club may find themselves diverging from the economies of the Euro Zone and finding it ever more difficult.
If EMU survives with all 16 members still operating the Euro at the end of the recession, then it will have passed the test and may become the world's reserve currency (although I think the Chinese Yuan is more likely to supplant the Dollar) . Otherwise Peter Oborne will be proved right.
Until the recession is over and we're well into recovery it is too early to say which is right. For now, I prefer to have all four economic levers at our disposal even if our Government are not using them correctly!
Squiffy.
Oliver Kamm believes that the first ten years of the Euro have been a success and it is now challenging the Dollar as the world's reserve currency.
Peter Oborne believes that the stresses of the recession will lead to break-up of the Euro Zone and the death of the Euro.
I think it is useful to separate the Euro as a currency from EMU (Economic and Monetary Union) to align these two views.
I think that after a shaky start the Euro has indeed proved to be a successful currency. That's as it should be, representing 16 nations, now that Slovakia has joined, and 300 million people it should be successful. Many people who wish us to join the Euro believe that it should be easier to travel without changing from one currency to another, and that without the cost of changing money from one currency to another the costs to business can be reduced. For this reason the Euro looks attractive.
EMU is the overarching principle for which the Euro was created. One single market, one currency and one central bank to align the economies of Europe. Thus far, though, EMU has only had to contend with relatively benign economic conditions.
The next few years will determine whether EMU and the Euro have a long term future. There are four main levers that Governments use to affect their economy; Interest Rates, Exchanges Rates, Tax Rates and spending. EMU has removed control over Interest Rates and influence on exchange rates and so Euro Land Governments only have control over their spending and tax levels. If the Euro Zone countries cannot effectively manage their tax and spending in these difficult times strains will be placed on EMU and the central bank. The central bank has to cope with the demands from 16 different countries and may not be able to help as much as necessary. Stresses may become amplified in such circumstances (such as those that affected Britain's exit from the ERM).
Countries which were closely aligned when EMU was launched should cope well, those that fudged their budgets and entry criteria to become members of the club may find themselves diverging from the economies of the Euro Zone and finding it ever more difficult.
If EMU survives with all 16 members still operating the Euro at the end of the recession, then it will have passed the test and may become the world's reserve currency (although I think the Chinese Yuan is more likely to supplant the Dollar) . Otherwise Peter Oborne will be proved right.
Until the recession is over and we're well into recovery it is too early to say which is right. For now, I prefer to have all four economic levers at our disposal even if our Government are not using them correctly!
Squiffy.
Thursday, 1 January 2009
10 predictions for 2009
Here's some predictions for 2009, let see if I can do better than 4 points for 2008!
- There will be no general election in 2009. Although Gordon Brown will have been lining up a May/June election for seven months, the polls won't look good enough to risk it, and so GB will go until the last moment in 2010.
- The recession will last throughout 2009.
- Several other high street names will experience problems. I'm guessing at HMV, W.H.Smiths, and Robert Dyas. I just hope I'm wrong.
- Interest rates will reduce to 0.5%, the CPI will also go down to 0.5%, and the RPI will briefly go negative.
- Robert Kubica will win the F1 World Championship.
- A bad set of economic figures in the beginning of the year will signal a reversal to Labour's recovery, the polls will go back to a good Tory position of Con 45%, Lab 26%, LD 17% by year's end.
- Ken Clarke will come back as shadow Business secretary.
- David Blunkett will come back as Home Secretary.
- The Tories will win the Local/Euro elections on a percentage share of 43%. Labour will get 22% with the LibDems at 26%.
- Peter Mandelson will be forced to resign over some business dealings as EU Comissioner.
Wednesday, 31 December 2008
Let's mark last year's predictions
In January I made some predictions for 2008. Let's see how I got on...
1. Gordon Brown's government will continue to unravel slowly. By the end of the year, the polls will look like Labour 28%, Lib Dems 18%, Tories 45%.
If I'd taken the snapshot in August this would have been true, the bank bail out seemed to reverse the position - though I don't think for too much longer. 1/2 point
2. The economy will slow, but avoid a recession. GDP for 2008 will be 1.5%.
Wrong. We're in recession. 0 points.
3. Interest rates will end the year on 4.5%, CPI 1.9%, RPI 3.9 %.
Wrong. Interest rates are 2%, CPI 4.1%, RPI 3.0%. 0 points.
4. Several ministers will resign, stating irreconcilable differences of opinion with the PM.
Wrong. Somehow, they all stuck in there. 0 points.
5. Charles Clarke, Alan Milburn and Stephen Byers will all pipe up asking for a real revolution in New Labour and stating that GB is not the change the country needs.
Right. They did ask for this through the beginning of the year. 1 point.
6. Nick Clegg will move the Lib Dems to the right whilst being put under pressure from his party for moving too far.
Half right, he did move the party to the right. 1/2 point.
7. Funding scandals will claim a scalp on the Labour and Conservative front benches. Probably Peter Hain, but not George Osborne.
Right. This was not the Yachtgate affair but I got this one right. 1 point.
8. Barack Obama will face John McCain and beat him to become President-Elect by the end of the year.
Spot on. When everyone though Hilary would win, and John McCain was out of it. 1 point.
9. Ken Livingstone narrowly beats Boris Johnson for Mayor of London.
Wrong, but who'd have thunk it? 0 points.
10. Kimi Raikkonen wins the F1 championship by 10 points from Lewis Hamilton. Felipe Massa comes third, Fernando Alonso fourth, Heikki Kovalainen fifth and Nick Heidfeld sixth.
Wrong. Kimi was with the fairies and Lewis claimed it in spectacular fashion. I'm glad I was wrong. 0 points.
Overall, 4 points. Not too bad but I think the events of September skewed quite a few outcomes. Tomorrow for the 2009 predictions!.
Squiffy.
1. Gordon Brown's government will continue to unravel slowly. By the end of the year, the polls will look like Labour 28%, Lib Dems 18%, Tories 45%.
If I'd taken the snapshot in August this would have been true, the bank bail out seemed to reverse the position - though I don't think for too much longer. 1/2 point
2. The economy will slow, but avoid a recession. GDP for 2008 will be 1.5%.
Wrong. We're in recession. 0 points.
3. Interest rates will end the year on 4.5%, CPI 1.9%, RPI 3.9 %.
Wrong. Interest rates are 2%, CPI 4.1%, RPI 3.0%. 0 points.
4. Several ministers will resign, stating irreconcilable differences of opinion with the PM.
Wrong. Somehow, they all stuck in there. 0 points.
5. Charles Clarke, Alan Milburn and Stephen Byers will all pipe up asking for a real revolution in New Labour and stating that GB is not the change the country needs.
Right. They did ask for this through the beginning of the year. 1 point.
6. Nick Clegg will move the Lib Dems to the right whilst being put under pressure from his party for moving too far.
Half right, he did move the party to the right. 1/2 point.
7. Funding scandals will claim a scalp on the Labour and Conservative front benches. Probably Peter Hain, but not George Osborne.
Right. This was not the Yachtgate affair but I got this one right. 1 point.
8. Barack Obama will face John McCain and beat him to become President-Elect by the end of the year.
Spot on. When everyone though Hilary would win, and John McCain was out of it. 1 point.
9. Ken Livingstone narrowly beats Boris Johnson for Mayor of London.
Wrong, but who'd have thunk it? 0 points.
10. Kimi Raikkonen wins the F1 championship by 10 points from Lewis Hamilton. Felipe Massa comes third, Fernando Alonso fourth, Heikki Kovalainen fifth and Nick Heidfeld sixth.
Wrong. Kimi was with the fairies and Lewis claimed it in spectacular fashion. I'm glad I was wrong. 0 points.
Overall, 4 points. Not too bad but I think the events of September skewed quite a few outcomes. Tomorrow for the 2009 predictions!.
Squiffy.
Thursday, 18 December 2008
Could we be in store for a May/June General Election?
Many commentators are wondering if there will be an early election, possibly in February 2009. I don't think that will happen, the history of elections in cold February point to the ruling party losing out. It could be advantageous to Labour though as it's likely that the recession will get worse before it gets better, and as it gets worse the polls could swing against Labour's recovery.
I think the timing of the withdrawal of troops from Iraq may be pointing to a May or June election. Normally you wouldn't play politics with the armed services, but Gordon Brown has form - remember his visit to Iraq to announce the return of 1000 troups during the Tory Party conference of 2007?
I think Gordon Brown will want to ride the wave of gratitude to the troops on their return and put the whole error of the Iraq war behind him. After their return the pressure will be on for a full inquiry into the lead up to the war and its conduct. If he delays an election to 2010, the outcome of any inquiry could be very embarrassing at the very moment when he goes to the country.
Also, the month of May has often seen General Elections, as the season of Spring brings forward feelings of optimism. The elections of 1997 and 2005 were in May and the 2001 election probably would have be had it not been for Foot and Mouth creating a delay.
Of course there are European Elections in June, so Gordon Brown may want to combine all the elections into one and create less spending/hassle for the councils. Saving money isn't really in GB's nature though so he may still go for May.
Squiffy.
I think the timing of the withdrawal of troops from Iraq may be pointing to a May or June election. Normally you wouldn't play politics with the armed services, but Gordon Brown has form - remember his visit to Iraq to announce the return of 1000 troups during the Tory Party conference of 2007?
I think Gordon Brown will want to ride the wave of gratitude to the troops on their return and put the whole error of the Iraq war behind him. After their return the pressure will be on for a full inquiry into the lead up to the war and its conduct. If he delays an election to 2010, the outcome of any inquiry could be very embarrassing at the very moment when he goes to the country.
Also, the month of May has often seen General Elections, as the season of Spring brings forward feelings of optimism. The elections of 1997 and 2005 were in May and the 2001 election probably would have be had it not been for Foot and Mouth creating a delay.
Of course there are European Elections in June, so Gordon Brown may want to combine all the elections into one and create less spending/hassle for the councils. Saving money isn't really in GB's nature though so he may still go for May.
Squiffy.
Monday, 15 December 2008
How low can you go?
That's a question for Sterling. For the last six days the Pound has dropped to increasingly record lows against the Euro. It has now plunged by 30% in the last few months, even the drop when the currency was withdrawn from the ERM was not as great.
The worry is that the low value of sterling will create the need for higher interest rates than would be good for times in a recession. But why is the pound plunging? Because our economy is in a terrible state, and the markets know it! The huge levels of debt is creating a lack of confidence, where others such as Germany have until recently been running a surplus.
I'm afraid that the pound will continue to drop whilst the Government fanny about with small measures and extra borrowing. They need to solve the credit crunch before tinkering at the edges of VAT, the Tories' Loan Guarantee Scheme would be one such solution. Unfortunately the Government seem determined to land the future tax payers with a level of debt greater than those from World War 2. We're doomed Mr Mainwaring.
Squiffy.
The worry is that the low value of sterling will create the need for higher interest rates than would be good for times in a recession. But why is the pound plunging? Because our economy is in a terrible state, and the markets know it! The huge levels of debt is creating a lack of confidence, where others such as Germany have until recently been running a surplus.
I'm afraid that the pound will continue to drop whilst the Government fanny about with small measures and extra borrowing. They need to solve the credit crunch before tinkering at the edges of VAT, the Tories' Loan Guarantee Scheme would be one such solution. Unfortunately the Government seem determined to land the future tax payers with a level of debt greater than those from World War 2. We're doomed Mr Mainwaring.
Squiffy.
Friday, 12 December 2008
There EU go again
Not very surprising, I know, but the decision by the Irish Taoiseach, Brian Cowen, to hold a second referendum on the Lisbon Constitutional treaty just typifies why the EU doesn't do democracy. The Irish people voted against the ratification of the Lisbon treaty by a margin of 54% to 46%, but are now going to be asked to think again. I bet there wouldn't be a second referendum had they voted in favour!
It's been happening for a while now, when the EU doesn't get a result it wants from a referendum the result is simply ignored (as in the case in France over the Lisbon treaty who then ratified it) or the question is put again. The Yes camp invariably says that there was a lot of scare mongering about proposals and, true, sometimes some of the predicted horrors are some way from the truth. But both sides are culpable, the British weren't exactly told the truth about our own referendum in 1975 (when I was two years old!), little did we know that we would be put on a course of political union rather than the free tree block most thought we would be joining.
Luckily for the Irish, they at least can express a view. We have been denied ours from the Government's election manifesto. Regardless of the merits and pitfalls of the Lisbon treaty, I urge the people of Ireland to vote the treaty down to demonstrate to the faceless bureaucrats that democracy matters and ignoring the wishes of the people cannot be treated lightly.
Come forth EU democracy.
Squiffy.
It's been happening for a while now, when the EU doesn't get a result it wants from a referendum the result is simply ignored (as in the case in France over the Lisbon treaty who then ratified it) or the question is put again. The Yes camp invariably says that there was a lot of scare mongering about proposals and, true, sometimes some of the predicted horrors are some way from the truth. But both sides are culpable, the British weren't exactly told the truth about our own referendum in 1975 (when I was two years old!), little did we know that we would be put on a course of political union rather than the free tree block most thought we would be joining.
Luckily for the Irish, they at least can express a view. We have been denied ours from the Government's election manifesto. Regardless of the merits and pitfalls of the Lisbon treaty, I urge the people of Ireland to vote the treaty down to demonstrate to the faceless bureaucrats that democracy matters and ignoring the wishes of the people cannot be treated lightly.
Come forth EU democracy.
Squiffy.
Monday, 24 November 2008
It's bloody awful
The key message from today's Pre-Budget report. The amount of borrowing is truly astronomical leading to a total of £1 trillion debt.
Ok, so the answer to my previous question was that the Government doesn't care about strict rules on keeping budget details under wraps. The only major figure not leaked was the 0.5% increase in National Insurance Contributions. A tax paid by employees and employers just as they will (hopefully) be leading the country out of recession.
I'm highly sceptical that the VAT reduction will work and I also think the economy will go down before it rises again - so the timing may be all wrong for a stimulus.
Just like the last three budgets (including PBR's), I think this budget will quickly unravel. The NIC and 45% tax is a timebomb waiting to go off as the Government heads to the left.
I think this may be a game changer, but probably not in the Governments direction.
Squiffy.
Ok, so the answer to my previous question was that the Government doesn't care about strict rules on keeping budget details under wraps. The only major figure not leaked was the 0.5% increase in National Insurance Contributions. A tax paid by employees and employers just as they will (hopefully) be leading the country out of recession.
I'm highly sceptical that the VAT reduction will work and I also think the economy will go down before it rises again - so the timing may be all wrong for a stimulus.
Just like the last three budgets (including PBR's), I think this budget will quickly unravel. The NIC and 45% tax is a timebomb waiting to go off as the Government heads to the left.
I think this may be a game changer, but probably not in the Governments direction.
Squiffy.
PBR Leaks
The leaking of the cut in VAT and proposed increase in high rate tax to 45% for those earning more than £150,000 have been widely leaked. The fact that they have been picked up by most newspapers and broadcast media suggests that the leaks have come from the Government. But why?
It years gone by, this would be nearly a criminal act, but in recent years small details have been leaked to the press. It is wrong and the city takes a very dim view on it. This time big measures have been leaked - either the Government doesn't care about previous procedures, is completely incompetent with details or is trying to wrong foot George Osborne.
I wouldn't be surprised if the VAT cut is not announced and another measure takes its place. This would be almost unheard of, but they really want to knock George Osborne off his feet as his prepared response has to be ditched!
Which reason will be revealed in the next hour.
Squiffy.
It years gone by, this would be nearly a criminal act, but in recent years small details have been leaked to the press. It is wrong and the city takes a very dim view on it. This time big measures have been leaked - either the Government doesn't care about previous procedures, is completely incompetent with details or is trying to wrong foot George Osborne.
I wouldn't be surprised if the VAT cut is not announced and another measure takes its place. This would be almost unheard of, but they really want to knock George Osborne off his feet as his prepared response has to be ditched!
Which reason will be revealed in the next hour.
Squiffy.
Sunday, 23 November 2008
VAT to 15%
If the papers are to be believed, we are in for a cut of VAT to 15% in tomorrow's Pre-Budget report.
I'm not an economist, but I don't think it is going to work. Firstly, making items slightly cheaper isn't going to make everybody to rush out and buy goods when the economy looks dreadful. I also think that the drop in prices would have a bigger effect on inflation than desired.
If you're going to have fiscal stimulus package you need to put a large amount of money, a windfall, in people's hands. Some people would save the money, but a lot of people would go out and spend it.
Gordon Brown last week mentioned that the bigger threat to the economy now is deflation rather than inflation. Wouldn't the cut in VAT compound this possible problem?
What happens if none of this works? Another stimulus package, more borrowing and lots more tax later.
Squiffy.
I'm not an economist, but I don't think it is going to work. Firstly, making items slightly cheaper isn't going to make everybody to rush out and buy goods when the economy looks dreadful. I also think that the drop in prices would have a bigger effect on inflation than desired.
If you're going to have fiscal stimulus package you need to put a large amount of money, a windfall, in people's hands. Some people would save the money, but a lot of people would go out and spend it.
Gordon Brown last week mentioned that the bigger threat to the economy now is deflation rather than inflation. Wouldn't the cut in VAT compound this possible problem?
What happens if none of this works? Another stimulus package, more borrowing and lots more tax later.
Squiffy.
Wednesday, 19 November 2008
Back to the Future
The 80's are upon us, the BBC should start re-running Dallas and Dynasty. Shoulderpads will be back, along with the mullets, perms and rock ballads.
To aid us in this trip down memory lane, the two big political parties have obliged by reverting to 80's economic policies. Labour has ditched the policies of golden rules and trying to balance the books (although they did this a while ago but didn't admit it). In fact they have for the last few years been doing the old tax-and-spend tango, with a quick chassé of tax cuts before the big tax rises after the next election.
The Tories have catapulted the policy of sharing the proceeds of growth and reverted to 'sound' money, only allowing tax cuts paid for by savings in the current budget. It's back to Thatcher.
So as we listen to Duran Duran, there is now a clear dividing line in politics again. The past two elections have been fought with Labour standing in the centre and the Tories to the right - a position which it could never win from, which is why the Tories also had to move to the centre. But now the Labour party have moved to the left, and so the Tories can move to the right and still win.
I'm hoping the British public will see through the current boost for the Government and appreciate that times will be getting significantly harder with the burgeoning debt. We need 'sound' money now more than ever.
Squiffy.
To aid us in this trip down memory lane, the two big political parties have obliged by reverting to 80's economic policies. Labour has ditched the policies of golden rules and trying to balance the books (although they did this a while ago but didn't admit it). In fact they have for the last few years been doing the old tax-and-spend tango, with a quick chassé of tax cuts before the big tax rises after the next election.
The Tories have catapulted the policy of sharing the proceeds of growth and reverted to 'sound' money, only allowing tax cuts paid for by savings in the current budget. It's back to Thatcher.
So as we listen to Duran Duran, there is now a clear dividing line in politics again. The past two elections have been fought with Labour standing in the centre and the Tories to the right - a position which it could never win from, which is why the Tories also had to move to the centre. But now the Labour party have moved to the left, and so the Tories can move to the right and still win.
I'm hoping the British public will see through the current boost for the Government and appreciate that times will be getting significantly harder with the burgeoning debt. We need 'sound' money now more than ever.
Squiffy.
Thursday, 13 November 2008
Shameful
Yesterday's performance by Gordon Brown at PMQ's was shameful. To not answer David Cameron's questions about the horrible death of baby P, and then accuse the opposition leader of party politics shows just how low this man can go. Tony Blair would have handled the situation with his usual aplomb.
If anyone still believes that this man has the necessary requirements to be Prime Minister, then think again.
Squiffy.
If anyone still believes that this man has the necessary requirements to be Prime Minister, then think again.
Squiffy.
Friday, 7 November 2008
Gordon Brown's 18 percent
This week at PMQ's Gordon Brown re-iterated a figure that he used in the previous week's PMQs. He has now stated twice that UK interest rates rose to 18% on the day of Black Wednesday.
On the day of Black Wednesday, interest rates started the day at 10%, went up to 12%, then up to 15% before we withdrew from the ERM. After that decision in the evening, they went down again to 12% before diving to around 6% within several months. Gordon Brown is supposed to be a master of figures but these lapses show either that he's not up to basic economic facts, economic history, or honesty. Either way, it shows that he's not the man to guide us through troubled times.
Squiffy.
On the day of Black Wednesday, interest rates started the day at 10%, went up to 12%, then up to 15% before we withdrew from the ERM. After that decision in the evening, they went down again to 12% before diving to around 6% within several months. Gordon Brown is supposed to be a master of figures but these lapses show either that he's not up to basic economic facts, economic history, or honesty. Either way, it shows that he's not the man to guide us through troubled times.
Squiffy.
Tuesday, 4 November 2008
My Presidential Prediction
Tonight it's the US general election and I'm still sticking to my prediction of a win for Barrack Obama. I'm predicting a popular vote of 52% for Obama and 44% for McCain, and 340 electoral votes for Obama with the remaining votes going to McCain.
If this happens it will be consistent with my prediction for the election from the beginning of the year. Back then I predicted an Obama vs McCain fight with Obama coming out on top - this was when Hillary Clinton was the overwhelming favourite for the Democratic nomination and McCain was out of it for the Republicans.
A strange fact was unearthed in the Times this week. In all Presidential elections, apart from 1960, a Democrat has won the presidency when a Brit has won the F1 world championship!
Squiffy.
If this happens it will be consistent with my prediction for the election from the beginning of the year. Back then I predicted an Obama vs McCain fight with Obama coming out on top - this was when Hillary Clinton was the overwhelming favourite for the Democratic nomination and McCain was out of it for the Republicans.
A strange fact was unearthed in the Times this week. In all Presidential elections, apart from 1960, a Democrat has won the presidency when a Brit has won the F1 world championship!
Squiffy.
Sunday, 2 November 2008
Wow!
As an avid Formula 1 fan, I'm really glad that I got my prediction wrong at the start of the year. I thought that Kimi Raikkonen would be even stronger this year after finally winning the championship in 2007. I was wrong, gladly.
The race today, in Brazil, was fantastic. Even if Felipe Massa had won, the race would have been momentous. Massa would have been a great champion, but as a Brit I'm ecstatic that Lewis Hamilton won. After missing out with bad luck (from a dodgy gearbox) last year, this year he deserved it after some fantastic drives in Monaco and Silverstone. Also he deserved to win after losing a total of 7 points to Massa after being penalised unfairly by the FIA at Spa (overtaking Raikkonen) and Fuji (Bourdais being penalised for Massa's dodgy move).
The race was brilliant and heart stopping. After sitting in despair with two laps to go, thinking how could it go wrong again - just like last year - to complete elation on the last corner before checkered flag.
The champagne is flowing tonight.
Squiffy.
The race today, in Brazil, was fantastic. Even if Felipe Massa had won, the race would have been momentous. Massa would have been a great champion, but as a Brit I'm ecstatic that Lewis Hamilton won. After missing out with bad luck (from a dodgy gearbox) last year, this year he deserved it after some fantastic drives in Monaco and Silverstone. Also he deserved to win after losing a total of 7 points to Massa after being penalised unfairly by the FIA at Spa (overtaking Raikkonen) and Fuji (Bourdais being penalised for Massa's dodgy move).
The race was brilliant and heart stopping. After sitting in despair with two laps to go, thinking how could it go wrong again - just like last year - to complete elation on the last corner before checkered flag.
The champagne is flowing tonight.
Squiffy.
Thursday, 30 October 2008
Those golden (chipboard) rules
Alistair Darling has announced that the Government is not going to be applying the golden rule (to keep borrowing below 40% of GDP) and the sustainable investment rule (to balance the books over an economic cycle) rigidly. Well you could blow me down with a feather, the Government stopped following the rules rigidly in 2001 when they started plowing money into this and that.
At first, the Government created PFI projects which took debt off the books (although the future debt will be with us for years). They took the nationalisation of Network Rail off the public books, the nationalisation of Northern Rock and Bradford & Bingley are likely to be taken off too. Public sector pension liabilities have also been removed. If you add all that up the borrowing is well above 100% of GDP. Bye Bye golden rule.
As the Government borrowed more money while the economy was growing, the sustainable investment rule looked under threat. So the Government changed the start point of what is termed the economic cycle. All the while stating that they had got rid of boom and bust, so they really didn't believe that the economic cycle still existed. The present oncoming recession has now changed all that. The economic cycle has reasserted itself - it had never really gone away.
So never mind that the Government didn't understand when the economic cycle started, they didn't understand the economic cycle. Full Stop. Which is why we're in such a mess; investors have decided that UK Plc is a bad bet and are selling Sterling and buying Dollars at a startling rate. Bye Bye sustainable investment rule.
The Government keep saying that the current economic turbulence started in America which is true. Unfortunately they don't say that over the last 10 years, politicians have believed their own statements of "no more boom and bust" and allowed the economy to be built on a house of (credit) cards, it only needed one shock to bring the whole edifice falling down. The US Government bringing down Lehman Brothers was that shock.
The Government is culpable for letting borrowing get out of control in a boom, and they think spending more of our money on the tick is the answer. Borrowing always increases in a recession, but usually from a low base - this time it's from high levels and will need some strict management to get the books balanced again when the economy starts to recover. This Government doesn't understand basic housekeeping, they only understand how to spend other people's money. Will somebody rid us of this turbulent Government?
Squiffy.
At first, the Government created PFI projects which took debt off the books (although the future debt will be with us for years). They took the nationalisation of Network Rail off the public books, the nationalisation of Northern Rock and Bradford & Bingley are likely to be taken off too. Public sector pension liabilities have also been removed. If you add all that up the borrowing is well above 100% of GDP. Bye Bye golden rule.
As the Government borrowed more money while the economy was growing, the sustainable investment rule looked under threat. So the Government changed the start point of what is termed the economic cycle. All the while stating that they had got rid of boom and bust, so they really didn't believe that the economic cycle still existed. The present oncoming recession has now changed all that. The economic cycle has reasserted itself - it had never really gone away.
So never mind that the Government didn't understand when the economic cycle started, they didn't understand the economic cycle. Full Stop. Which is why we're in such a mess; investors have decided that UK Plc is a bad bet and are selling Sterling and buying Dollars at a startling rate. Bye Bye sustainable investment rule.
The Government keep saying that the current economic turbulence started in America which is true. Unfortunately they don't say that over the last 10 years, politicians have believed their own statements of "no more boom and bust" and allowed the economy to be built on a house of (credit) cards, it only needed one shock to bring the whole edifice falling down. The US Government bringing down Lehman Brothers was that shock.
The Government is culpable for letting borrowing get out of control in a boom, and they think spending more of our money on the tick is the answer. Borrowing always increases in a recession, but usually from a low base - this time it's from high levels and will need some strict management to get the books balanced again when the economy starts to recover. This Government doesn't understand basic housekeeping, they only understand how to spend other people's money. Will somebody rid us of this turbulent Government?
Squiffy.
Saturday, 18 October 2008
Wednesday, 1 October 2008
The party season
Apologies for it being so long to make a post, it's been a very busy time for me. Working hard, getting married and then a honeymoon.
Unfortunately, I missed the Lib Dem conference as I was still away. I did manage to catch Nick Clegg's speech, however, and he was trying to do the same as David Cameron last year - unfortunately I saw the autocue at the back of the conference hall.
The speech seemed to be fine, and secured his place as Lib Dem leader. Promising tax cuts is a great idea, although looks highly optimistic in the current economic turmoil. Especially as Vince Cable's plan for any bank in trouble is Nationalisation.
The Labour Party conference seemed less fevered than I expected, although I was not in the bars and meeting rooms afterwards. The speeches were not very exciting, although the happy chipmunk - Hazel Blears - made a good speech.
Gordon Brown did his best speech ever, and came up with the best line of the conference season - "No time for a novice". He still manages, though, to make me want to throw something at the TV screen when he tells some mis-truths. His whole little section on universal and women's suffrage was full of inaccuracies (being generous) or lies (being truthful).
I think he has secured his position for the time being, the financial situation seems to have given him a new narrative as the man of experience. The talk of 'change' on the steps of 10 Downing Street on becoming PM, must now be fully consigned to the dustbin - he is now the man of continuity.
The Conservative party conference has had to content with the backdrop of dire financial turmoil and this has made it difficult to be heard. Nevertheless, I believe the tone has been right - sober but sound, non-complacent but confident.
David Cameron's hastily written little speech on Tuesday was a masterstroke, he looked statesmanlike offering bipartisan co-operation. All that is pretty irrelevant, but ensuring 2 minutes on the daily news cycle after the bailout package was voted down by Congress was brilliant.
Today's speech by David Cameron was again excellent and fitted the mood of conference. It was on a par with last year's fantastic effort but against a completely different set of circumstances - showing that he catch the mood when necessary.
At the current moment the polls show that the Tory party lead is down to roughly 10 points, but as Mike Smithson says on the PoliticalBetting.com the Labour party always gets a 7% boost after conference. I do believe that within a week, the polls will be similar to those before the conference season - only changes by the economic turmoil will sustain through the polling period.
Let's see what happens next week.
Squiffy.
Unfortunately, I missed the Lib Dem conference as I was still away. I did manage to catch Nick Clegg's speech, however, and he was trying to do the same as David Cameron last year - unfortunately I saw the autocue at the back of the conference hall.
The speech seemed to be fine, and secured his place as Lib Dem leader. Promising tax cuts is a great idea, although looks highly optimistic in the current economic turmoil. Especially as Vince Cable's plan for any bank in trouble is Nationalisation.
The Labour Party conference seemed less fevered than I expected, although I was not in the bars and meeting rooms afterwards. The speeches were not very exciting, although the happy chipmunk - Hazel Blears - made a good speech.
Gordon Brown did his best speech ever, and came up with the best line of the conference season - "No time for a novice". He still manages, though, to make me want to throw something at the TV screen when he tells some mis-truths. His whole little section on universal and women's suffrage was full of inaccuracies (being generous) or lies (being truthful).
I think he has secured his position for the time being, the financial situation seems to have given him a new narrative as the man of experience. The talk of 'change' on the steps of 10 Downing Street on becoming PM, must now be fully consigned to the dustbin - he is now the man of continuity.
The Conservative party conference has had to content with the backdrop of dire financial turmoil and this has made it difficult to be heard. Nevertheless, I believe the tone has been right - sober but sound, non-complacent but confident.
David Cameron's hastily written little speech on Tuesday was a masterstroke, he looked statesmanlike offering bipartisan co-operation. All that is pretty irrelevant, but ensuring 2 minutes on the daily news cycle after the bailout package was voted down by Congress was brilliant.
Today's speech by David Cameron was again excellent and fitted the mood of conference. It was on a par with last year's fantastic effort but against a completely different set of circumstances - showing that he catch the mood when necessary.
At the current moment the polls show that the Tory party lead is down to roughly 10 points, but as Mike Smithson says on the PoliticalBetting.com the Labour party always gets a 7% boost after conference. I do believe that within a week, the polls will be similar to those before the conference season - only changes by the economic turmoil will sustain through the polling period.
Let's see what happens next week.
Squiffy.
Monday, 21 July 2008
Will the re-writing of the rules be the real Black Wednesday moment?
There has been a lot of speculation surrounding the re-writing of the two fiscal rules that Gordon Brown has used to underpin the economy for the last eleven years. The speculation stems from the fact that the Government does not have enough money to handle the downturn without breaking the Golden Rule.
There has also been past talk of Gordon Brown's Black Wednesday, from myself too. I suspect that if the rules get re-written we will really witness the Black Wednesday moment. It will be the point in time when the Government's economic policy is destroyed completely.
If only the Government had actually stuck to it's rules and planned for the bad times, their policy would have worked. But they didn't - so it won't. And another thing, I'm not an economist, but how can the current economic cycle be ending now and have started in 1997? In 1997 the economy had been growing for 4 years and was looking towards 11 years more growth - surely the cycle started in 1990 when we were heading into recession! Maybe that's why I'm not an economist.
Anyway, watch out for the Brown Wednesday when the rules get re-written. It will happen.
Squiffy.
There has also been past talk of Gordon Brown's Black Wednesday, from myself too. I suspect that if the rules get re-written we will really witness the Black Wednesday moment. It will be the point in time when the Government's economic policy is destroyed completely.
If only the Government had actually stuck to it's rules and planned for the bad times, their policy would have worked. But they didn't - so it won't. And another thing, I'm not an economist, but how can the current economic cycle be ending now and have started in 1997? In 1997 the economy had been growing for 4 years and was looking towards 11 years more growth - surely the cycle started in 1990 when we were heading into recession! Maybe that's why I'm not an economist.
Anyway, watch out for the Brown Wednesday when the rules get re-written. It will happen.
Squiffy.
Thursday, 10 July 2008
And as if by magic
A month or so ago I railed against new yellow markings at Kilburn tube station showing where the doors would be when a train stopped.
I disliked the way that the only advantage that the trod upon London commuter had in knowing where the doors were had been taken away, as well as the possibility for accident on a crowded platform of everyone surrounding small areas.
On Monday night, YouGov asked me what I would suggest as policies for Boris Johnson to pursue. Imagine my surprise on Tuesday when all the yellow markings had disappeared. Someone out there is listening - not to me though probably.
Also, incidentally, I asked for Boris to scrap bin taxes (although it's not in his power) and encourage council tax rebates for recycling. Two days later, George Osbourne announced a similar policy. Common sense seems to be prevailing.
Squiffy.
I disliked the way that the only advantage that the trod upon London commuter had in knowing where the doors were had been taken away, as well as the possibility for accident on a crowded platform of everyone surrounding small areas.
On Monday night, YouGov asked me what I would suggest as policies for Boris Johnson to pursue. Imagine my surprise on Tuesday when all the yellow markings had disappeared. Someone out there is listening - not to me though probably.
Also, incidentally, I asked for Boris to scrap bin taxes (although it's not in his power) and encourage council tax rebates for recycling. Two days later, George Osbourne announced a similar policy. Common sense seems to be prevailing.
Squiffy.
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