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Subject: Gordon Brown
Muhajir [del] to
All
Do you trust him to get the economy out of trouble??
Do keep in mind that he was the guy in charge of exchequer during which time decisions were made directly leading to this current situation in UK.
Do keep in mind that he was the guy in charge of exchequer during which time decisions were made directly leading to this current situation in UK.
Nah. He's just a dour scot.
By the way, I always get these kind of things wrong - ergo, I've just saved the economy !
By the way, I always get these kind of things wrong - ergo, I've just saved the economy !
LOL. Ah So English being ruled by the scots; makes up for the sokker World map. ;)
I think you give him too much credit. NCN is pretty much 100% accurate in his assessment. Probably the first time thats been said...
LOL . So not much faith in Gordon to save the economy then. :)
No the 'recovery' will be lead by America, we will just follow along like a small not so yappy dog.
(edited)
(edited)
Oh, that's a shame, I'd kind of liked China to be leading this one, why do the yanks get to be at the front all the time ?
Putting the yanks up front stops any potential "blue on blue" issues.
LOOOL - Good One! Man England got some hilarious managers.
LOL. I see. Another question comes to mind is why is it Brits like to be lead by the Yanks and talk of a "special relationship" when its clear its all one way?
NCN, my bet is on China to lead, after all if they don't lend to the Yanks how can they keep printing and spending all that money without collapsing the US $? US has debt, China has $ 2 trillion in savings excluding the $ 750 billion worth of US Bonds already "borrowed" by the yanks.
Reminds me of one thing I think I've heard some time ago. Is it true that Scotland, Ireland and Wales have their own parliament, not only UK parliament...? And that England is the only part without parliament?
Scotland, Northern Ireland and Wales have their own separate parliaments - however those have restricted abilities to set laws - i.e. not fully independent. Many decisions needs to go to the UK parliament which is made from MPs from Scotland, N.Ireland, Wales & England.
It can lead to an odd situation though where certain "devolved" laws are now controlled in Scotland, Wales, N.Ireland and voted for there just by local MPs, but then when the same law is voted on for England, the Scottish, Welsh & N.Irish MPs can vote.
Maybe it's payback ;)
And then I should add that The Republic of Ireland has a totally separate parliament as it's a separate country and has been since 1922 when it gained independence from Great Britain.
It can lead to an odd situation though where certain "devolved" laws are now controlled in Scotland, Wales, N.Ireland and voted for there just by local MPs, but then when the same law is voted on for England, the Scottish, Welsh & N.Irish MPs can vote.
Maybe it's payback ;)
And then I should add that The Republic of Ireland has a totally separate parliament as it's a separate country and has been since 1922 when it gained independence from Great Britain.
Well he's spent the last 18 months saving the world and nothing he's come up with so far has worked.
He's run the country into the ground and the rest of the G20 don't trust him.
Headlines about cutting civil service numbers by x 1000's, making them redundant at probably £100K each a time, then taking on twice as many to replace them would go down as a ridiculous idea.
But don't worry. Fuel duty is less in real terms than it was 10 years ago.
He's run the country into the ground and the rest of the G20 don't trust him.
Headlines about cutting civil service numbers by x 1000's, making them redundant at probably £100K each a time, then taking on twice as many to replace them would go down as a ridiculous idea.
But don't worry. Fuel duty is less in real terms than it was 10 years ago.
Do you trust him to get the economy out of trouble??
Do keep in mind that he was the guy in charge of exchequer during which time decisions were made directly leading to this current situation in UK.
So you don't then by that loaded question!
I don't trust him to get us out of trouble, as the problem is bigger and more ingrained than any one politician, one political party, or one country can solve.
Whilst there are many many things that he deserves a slap for, it's also frankly perfect 20-20 hindsight to blame him for the banking crisis once it occurred. No "sane" person was expecting that we would see a near total collapse in the finance system. Almost no-one was complaining of the UK-US "culture" of deregulated banking when it was creating large volumes of cashflow, equity & driving global world growth.
The scary thing is that most people don't understand the massive impact of what is going on. Here's a poor description, but shows some of the problem.
Forestman's probably inaccurate, but at least some idea of what's happened credit crisis post, during halftime in the England game
Bluntly, banks lend more money than the assets that they own. They have done ever since the gold standard ended. You can do this, as it is rare that everyone you lend to will go tits up. In the past, banks lent at 10,15 or 20x their assets. i.e. as they make money on the lending, and the chance that 1/10th. 1/15th or 1/20th of assets would go bad it was no problem. However some banks lent at 80x their assets, and lent to people / businesses with poor credit rating. The net impact was that the finance system was "losing money" - lending more than they could get back. Cutting through the why's and where's and packaging of debt etc. - basically this meant that more "money" was being created and lent, than the world economy could really cope with. This over-inflated world growth - we were investing, spending more than real value creation - world GDP growth was being over-inflated with invisible money.
Add to the mix, some countries have suffered ridiculous house price inflation (Uk, Ireland, Spain etc.) over the past few years which had also created "invisible money" which had been used by consumers to buy cars, holidays, houses etc. This was an impossibly unsustainable situation. At one stage the average UK house was increasing by more per annum than the average UK wage....
During this time, banks offered high LTV mortgages - 95%. 100% and 125% mortgages which they had always assumed safe due to a strong economy & rising house prices (only a few people struggle to pay, and by the time they get into trouble their house would be worth more than the debt - banks don't lose).
The plop hit the fans, equity dropped, which dropped banks assets further, banks panicked, tried to lower their debt / loans to assets, in effect meaning that banks stopped lending to customers, companies, countries and each other. Banks stopped lending at 80x multiples, and are targeting 10-20x. In essence, the money flow has dropped by trillions of dollars.
This money being lent was being invested by companies, and spent by consumers. Now it has "gone" companies cannot get access to debt to continue to invest, or continue to be "leveraged" at the same levels. Debt costs have gone up. Consumers cannot get access to debt either at the same rates. In essence, all of this means less investment in new factories, less ability to borrow to buy stuff from factories, and then less jobs. THIS IS A LONG TERM IMPACT. This will slow recovered economic growth for a long time.
This reduction in money flow also triggered a more standard recession. Some companies had started to make less profits due to debt costs, or couldn't get cash to buy raw materials or capital items, this caused a cycle of drops in investment, capex reductions. This then meant that a wider - domino effect of companies struggling, cost cutting triggering an overdue recession in industry which quickly went down the value chain to consumers. We saw this arrive as we got worried about jobs, spent less, dragging down the economy further.
Then in the countries with house price inflation, we saw house price deflation. Suddenly people were not able to release equity any more, they started to suffer negative equity. Banks now pooed' themselves. House prices falling means negative equity. Job losses means people failing to pay mortgages, i.e. repossessions. BUT some houses now have falled 30% since 2007. The banks repossess & end up not covering the debt. Therefore, banks are pumping up massively the "margin" on mortgages (the difference between the rate they borrow at and lend at (whilst more complex that it, you can assume it's the bank of england base rate versus their loan rate). They are also penalising 80%, 95% mortgages - sometimes 2% above - and it's now impossible to get a new mortgage above 95%.
This means that as people come to remortgage, despite record low interest rates, many people will be paying more as their old "good value" deals end, and their LTVs drop. This ironically will increase the number of people who cannot pay....
Governments are trying - lowering interest rates, buying "toxic debt" and printing money / lending to banks to try to get them to lend again, but its too late. They've also tried to stimulate demand - tax cuts, money give-aways etc. However we're in recession which is a cycle that is still going down - job losses are a lagging item AND we need to re-adjust the who economy - levels of debt in companies, consumers, cost of debt linked more closely to risk etc. There is no quick fix. It's going to be a tough few years.
So. My view...
2009 - we will continue to see job losses all year. Expect big rises in unemployment which lags. Then expect slowdown on high street. Weak £ will make it hard for shops to offer lower prices to stimulate us. Towards the end of the year - we'll start to see growth Year on year - but remembing that manufacturing is currently down 20% YoY and whole GDP down 5% YoY
2010 - flat YoY. Gordon Brown will get hoofed out. (See - I am on topic) Cameron in. Will make bugger all difference, although at least he won't do that strange jaw-drop thing when he talks.
2011 - maybe we'll get around 1% growth in UK.
2012 - we'll watch the olympics in our rags, talking about those heady days when we could afford to throw away the potato peelings, rather than brew our own vodka with them.
I'll go slit my wrists.
1-0 still :)
Do keep in mind that he was the guy in charge of exchequer during which time decisions were made directly leading to this current situation in UK.
So you don't then by that loaded question!
I don't trust him to get us out of trouble, as the problem is bigger and more ingrained than any one politician, one political party, or one country can solve.
Whilst there are many many things that he deserves a slap for, it's also frankly perfect 20-20 hindsight to blame him for the banking crisis once it occurred. No "sane" person was expecting that we would see a near total collapse in the finance system. Almost no-one was complaining of the UK-US "culture" of deregulated banking when it was creating large volumes of cashflow, equity & driving global world growth.
The scary thing is that most people don't understand the massive impact of what is going on. Here's a poor description, but shows some of the problem.
Forestman's probably inaccurate, but at least some idea of what's happened credit crisis post, during halftime in the England game
Bluntly, banks lend more money than the assets that they own. They have done ever since the gold standard ended. You can do this, as it is rare that everyone you lend to will go tits up. In the past, banks lent at 10,15 or 20x their assets. i.e. as they make money on the lending, and the chance that 1/10th. 1/15th or 1/20th of assets would go bad it was no problem. However some banks lent at 80x their assets, and lent to people / businesses with poor credit rating. The net impact was that the finance system was "losing money" - lending more than they could get back. Cutting through the why's and where's and packaging of debt etc. - basically this meant that more "money" was being created and lent, than the world economy could really cope with. This over-inflated world growth - we were investing, spending more than real value creation - world GDP growth was being over-inflated with invisible money.
Add to the mix, some countries have suffered ridiculous house price inflation (Uk, Ireland, Spain etc.) over the past few years which had also created "invisible money" which had been used by consumers to buy cars, holidays, houses etc. This was an impossibly unsustainable situation. At one stage the average UK house was increasing by more per annum than the average UK wage....
During this time, banks offered high LTV mortgages - 95%. 100% and 125% mortgages which they had always assumed safe due to a strong economy & rising house prices (only a few people struggle to pay, and by the time they get into trouble their house would be worth more than the debt - banks don't lose).
The plop hit the fans, equity dropped, which dropped banks assets further, banks panicked, tried to lower their debt / loans to assets, in effect meaning that banks stopped lending to customers, companies, countries and each other. Banks stopped lending at 80x multiples, and are targeting 10-20x. In essence, the money flow has dropped by trillions of dollars.
This money being lent was being invested by companies, and spent by consumers. Now it has "gone" companies cannot get access to debt to continue to invest, or continue to be "leveraged" at the same levels. Debt costs have gone up. Consumers cannot get access to debt either at the same rates. In essence, all of this means less investment in new factories, less ability to borrow to buy stuff from factories, and then less jobs. THIS IS A LONG TERM IMPACT. This will slow recovered economic growth for a long time.
This reduction in money flow also triggered a more standard recession. Some companies had started to make less profits due to debt costs, or couldn't get cash to buy raw materials or capital items, this caused a cycle of drops in investment, capex reductions. This then meant that a wider - domino effect of companies struggling, cost cutting triggering an overdue recession in industry which quickly went down the value chain to consumers. We saw this arrive as we got worried about jobs, spent less, dragging down the economy further.
Then in the countries with house price inflation, we saw house price deflation. Suddenly people were not able to release equity any more, they started to suffer negative equity. Banks now pooed' themselves. House prices falling means negative equity. Job losses means people failing to pay mortgages, i.e. repossessions. BUT some houses now have falled 30% since 2007. The banks repossess & end up not covering the debt. Therefore, banks are pumping up massively the "margin" on mortgages (the difference between the rate they borrow at and lend at (whilst more complex that it, you can assume it's the bank of england base rate versus their loan rate). They are also penalising 80%, 95% mortgages - sometimes 2% above - and it's now impossible to get a new mortgage above 95%.
This means that as people come to remortgage, despite record low interest rates, many people will be paying more as their old "good value" deals end, and their LTVs drop. This ironically will increase the number of people who cannot pay....
Governments are trying - lowering interest rates, buying "toxic debt" and printing money / lending to banks to try to get them to lend again, but its too late. They've also tried to stimulate demand - tax cuts, money give-aways etc. However we're in recession which is a cycle that is still going down - job losses are a lagging item AND we need to re-adjust the who economy - levels of debt in companies, consumers, cost of debt linked more closely to risk etc. There is no quick fix. It's going to be a tough few years.
So. My view...
2009 - we will continue to see job losses all year. Expect big rises in unemployment which lags. Then expect slowdown on high street. Weak £ will make it hard for shops to offer lower prices to stimulate us. Towards the end of the year - we'll start to see growth Year on year - but remembing that manufacturing is currently down 20% YoY and whole GDP down 5% YoY
2010 - flat YoY. Gordon Brown will get hoofed out. (See - I am on topic) Cameron in. Will make bugger all difference, although at least he won't do that strange jaw-drop thing when he talks.
2011 - maybe we'll get around 1% growth in UK.
2012 - we'll watch the olympics in our rags, talking about those heady days when we could afford to throw away the potato peelings, rather than brew our own vodka with them.
I'll go slit my wrists.
1-0 still :)