Alistair Dahlink was a little sneaky in the commons. He described how the economy would be rapidly back on track and the borrowing requirements would be back to normal by 2015. The important caveat quickly exiting his mouth was along the lines of 'excluding borrowing for investment purposes'.
Looking through the full PBR to see how they treat Northern Rock and the like I am astonished. Yes astonished that they actually admit the figures.
Government debt on a Maastrict basis is 43.2% of GDP now, rising to 68.5% in the fiscal space year 2013-14.(Though they predict it will already be North of 65% by 2010-11.)
I have become enamoured with the phrase 'fiscal stance' and will endeavour to include it in as many conversations as possible.
For once I'm agreeing with George Osborne: he's on BBC R4 saying govt should get the money moving out of the banks into the real economy. This has reminded me of a discussion that has been ongoing about another arm of govt, namely DfT - that dept appears to be frightened of the large public transport operating groups, and thus will not ensure that they operate public transport as a public service. It seems now that at the heart of govt there is fear of the banks - but maybe history tells us that the king is always afraid of the bankers, and I think there was a recent claim that the results of wars in this century are sometimes determined by the bankers.
So how would a Tory govt do the necessary deal with its banking friends?
I was speculatingo on my blog this morning about what life would be like through this crisis if Blair was still around to keep Brown in check - and I have to admit that I think things would be a lot better.
Does it make me a bad person for wanting Blair back? (don't worry, I'll probably sleep it off).
http://www.lettersfromatory.com
LFAT: Yes
dreamingspire
One of the reasons for this mess was that the banks incontinently lent to anyone or anything who could get in the banks' front door. "Lending" is not a cure-all - lending to businesses to keep them going until they collapse in 2 years time helps no-one, least of all the banks. The commentariat has confused government assistance to get over the reluctance of banks to lend to each other and government assistance to recapitalise the banks to compensate for their enormous losses and the stricter capital ratios imposed by the regulators.
In the end - keeping our fingers crossed - the assistance will restore interbank confidence AND restore the banks balance sheets. Osborne is bleating that the banks should now start lending to all and sundry (compelled, if necessary by the government) irrespective of the banking principle that banks expect to get repaid. Instead of guaranteeing the jobs of diversity outreach workers by keeping on spending, the government (encouraged by Osborne) should have put spending power direct into the hands of the consumer and decreased public sector expenditure and life-style benefits dramatically. Although this would have still increased borrowing enormously, at least the short-term expenditure excess would not be totally wasted by being added to that supporting not only the unproductive part of the economy but nurturing the best underclass money can buy.
This recession is likely to last through all of 2009, deflationary pressures will further reduce tax revenues and "Old Labour" will be most reluctant to take an axe to it's spending plans (particularly if unemployment hits 3m.)
Things look set to get much, much worse.
and still they will all finish up in the Lords with index linked pensions whilst the rest of us take the pain.
It is wrong to blame Darling when Brown is pulling the strings.
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