How Much Is A Greek Urn?

The old Morecambe and Wise joke doesn't seem so funny anymore as one of the beneficiaries of the modern innovation of a single European currency is virtually bankrupt - Greece is on its knees and the Eurozone is having to bail it out.

It sounds chillingly familiar. I blogged on the subject of National Debt being the new sub-prime and Greece was not the first to succumb as arguably that was Dubai. In both cases to date, rich neighbours or alliances have had to bail the countries out, but in the case of Greece they are part of the Eurozone unpleasantly known as PIIGS or Portugal, Ireland, Italy, Greece and Spain where National Debt is about to send the countries into crisis. Greece, having gone effectively belly up first, is the beneficiary of a bailout but can the Eurozone and the Euro currency sustain a long, hard attack on it from all those countries? Can the rich, like Germany and France actually have deep enough pockets to help them all? Will it affect us in Britain?

As we sit here making pithy jokes at the expense of the Greek economy it's worth a thought that part of Greece's huge budget deficit problem was the cost of the Olympics and guess what is just around the corner for us. While we sit here doing nothing about our budget deficit in case the frail recovery falters, we share with Greece the nasty fact that both our deficits are over 12% of GDP. We are both in the current state through stupid spending, low savings and cheap money.

On a league table I saw of currency debt swaps, Britain's position in the league table is just behind Austria who, in turn, is just outside the PIIGS zone. In other words, speculators are beginning to rate our Sovereign Debt and our ability to pay as weakening and only marginally worse than those in the PIIGS zone.

While we sit here contemplating a General Election and the possibility of a hung Parliament leading to a further period of economic inertia and all the while no-one actually tackles the growing budget deficit, we are sending further alarming signals to the world markets that our National Debt is not only a huge problem getting bigger but that we really see paying it off as a low priority. That will not help us if a) we need to borrow more - even as we speak the cost of borrowing for Britain is far higher than say that of Germany whose economy Gordon Brown scoffed at for so long and b) if the frail recovery starts to falter as it has done last quarter in Germany.

Our current hope that growth will lead to our recovery alone has already been dented by Germany's latest figures of flat growth while France's advance of 0.6% last quarter was only slightly more encouraging. The fact of the matter is that Britain is not that far different to Greece and time is running out for us to address our problems.

In the week, we saw a cleverly timed documentary on Gordon Brown designed to show him in a more human light just two months before an Election and to dispel his imagine of a granite-faced, humourless old fart with about as much feeling as an ice cube. Yes, we saw that he has feelings - to be frank he has suffered tragedy and to have not been emotional would have been strange beyond belief. The program's aim was to present an alternative view to the PM than hustings or debate - this was a sugar-coated sell worthy of the masters of spin themselves, Blair and Campbell, stage-managed by the obsequious Piers Morgan.

I just wish he would take his eye off the Election and act. Britain is sinking fast - Dubai and Greece are the warning signs of a potential domino effect and we are in the line of dominoes waiting our turn.

Will someone not do something about it?

The Vision Never Achieved

When the dust has settled long after our memories will be able to recall the two years of financial disaster we have experienced, the country will have literally blown all the money spent by New Labour since 1997.

This is the stark reality we face of the Government's proposed spending cuts, the biggest squeeze on the UK's finances since the 1970s. Instead of a bold Utopian vision of the future we have slumped back into Life on Mars. For all the boldness of the Blairite, New Labour vision and all the 'investment' that went into it over the last 12 years, we will reclaim back every penny under the New New Labour proposals on spending cuts and tax increases to get our finances back below £100bn a year's worth of borrowing by 2014.

During the new years, national debt will rise to over 80% of GDP, the IMF reckons it will be closer to 99%. No matter as it will be just quibbles over how much interest we will pay which is where the cuts and taxes will be aimed. At the peak of borrowing, the estimated interest bill will be £60bn or approximately half the annual budget for the NHS.

The election will this time around be all about which party can pee over a fence higher in terms of sending cuts instead of bold new futures. Instead of shiny new 'It can only get better' and 'Cool Britannia' adverts with catchy songs, it will be all Hovis type dour music and austere themes.

Welcome to Britain under New New Labour - it has been a perfect exercise in how to blow a load of money on nothing and then reclaim every penny back so that we stepped exactly 5 paces forward and the same back.

Nice one. That story should win a few votes and if I hear once more 'It was Tory free market economics' or it was 'sub-prime in America' that caused it all, I think I will throw a brick through the TV. I have had my intelligence insulted far too often by these people - don't let the same happen to you.

Stoic Britain in 2009?

I think we all need a pat on the back. 2009 has to be one of the worst years in terms of crises for many a long time, yet the average person in the street, young or old, took it all with a traditional British stiff upper lip.

We have endured 6 successive quarters of GDP contraction. We have endured 4 years (and more) of serious decline in household income, with 2009 being by far the worst. We have added well over 1m to the dole queue and there are still more to come on that. We have seen major companies try to impose draconian cuts on staff at banks, the Royal Mail and BA as good examples; we have seen the loss of major household names like Woolworths, MFI, Threshers, Borders. We have seen the near collapse of the financial system, with 5 household named high street institutions falling largely or wholly into public hands. We have seen the exposure of long term, systematic abuse of the taxpayer by MPs on their expense claims with some stepping way beyond the point of common decency and into the world of crime. We have seen more deaths in Afghanistan in one year than all the previous years of that engagement added together - and totalling now as many as those lost in the Falklands conflict. Even as we watch with horror as that seemingly pointless engagement continues, that still our troops are not being given the right support, numbers and equipment to do the job they are asked to do. As the official inquiry into Iraq starts, it is already clear that the public were grossly misled into supporting a war that had no legal grounding - making Britain no better than a rogue state intent on imposing its will on others because it wants their assets.

Why have we put up with it all? Even in the Glasgow East by-election, the status quo was endorsed. During the year there was much talk of discontent amongst workers and potential riots in the streets as Britain suffered from the depths of the recession. We have seen that wile private firms have suffered badly from the effects of the recession and the credit crunch, the public sector has enjoyed an unscathed path with hardly any job losses, no major cuts, good salaries and fantastic pension rights as more private firms close their final salary schemes.

For many we have seen our assets corrode at an acidic rate - the stock market has regained ground but most of us look at our pension and savings statements with fear and depression. Our homes have lost some 25% in value and although they are back on the rise, many people are now in the mire of negative equity or under the cloud of delayed payments. Many firms have deferred their tax under the government schemes and face a big cash call soon that may yet send more companies under. The VAT reduction to 15% will be reversed as of the end of this month and prices will rise sharply.

And perhaps most depressingly, we have been shielded from the true cost of the massive bank bail outs we have been party too. The National Audit office have now fixed the current running total as £850 bn and rising - a spend totally unanticipated by anyone and we are still worried about further liabilities as now the next wave may not be sub-prime mortgages but sub-prime national debt as whole states or countries like Greece and Dubai start to falter on debt repayments. The result is that we are likely to be paying for the huge borrowing on all this until 2032 although Government calculations seem to be wrong each month as the borrowing requirement keeps exceeding estimates.

In amongst all this bad news - terrible news - the population seems to be unfazed and carries on regardless. Even terrible disasters like the Cockermouth floods seem to move us little anymore as we become numb to the pain around us. Perhaps we are in denial - all this bad news is being locked out so that we can focus on existing in our way. After all, there are no food shortages, we still have credit and we still have means of getting what we need. Indeed, the travel industry, with the exception of BA, reports that holidays have not fallen off at all - for most of us, life goes on.

One theory why we have not been up in arms and rioting in the streets is that we have a focus for our fury. The one benefit of the bizarre banking drama has been that we can collectively and unreservedly hate the people who caused the mess we are in - the bankers. The issue just won't go away. Even as the money still pours in from the taxpayer creating an artificial market condition where every bank in the world can make vast profits quickly with little investment and cost, they are demanding bonuses for effectively just pocketing our cash. They are not even demanding it - they are blackmailing us for it.

At one point in the year, I advocated that we do not pay our tax as enough was enough - why should we give our money and see the direct result as being MPs cheating us for cash and bankers queuing to buy shiny new sports cars? Why can't we see more care homes for the wounded returning from Afghanistan or better equipment and transport for them so that they can be protected against the unseen enemy? If money was so easy to be handed out, why did we have to pay so much tax before, if debt was so good for us?

I can only put it all down to the old spirit of survival and stoicism by the British people. At the direst moments we had the surreal moment of an open racist on prime time TV telling us that Hitler had a point in so many words. And still we carried on.

I think as the year closes, we should all pat ourselves on the back for our courage, fortitude and downright ignorance of what is going on around us. By putting our heads in the sand, young kids in Afghanistan will continue to die and rich people in the City will continue to earn a fortune off the back of our mindless handouts and behave as if they earned and deserved it. Why, when history is rewritten, we will find that the likes of Goldman Sachs, RBS and the other banks saved us, not we them.

And we will believe every word of it, just as we did of the rewritten history in the TV program, 'The Blair Years'. The one thing that Mandelson and Brown got right in the last year is that the public was stupid - the rest they got totally wrong.

Public Service Is The Place To Be

One of the most recession proof areas of the last 2 years of crisis has been the Public Sector. Makes you think we are a bunch of mugs in the private sector.

As unemployment hurtles upwards, very few jobs have been lost in the public sector as private firms have borne the brunt of the downturn in terms of laying people off and cutting costs. There are few firms in the private sector which have grown to any great degree while many have contracted or even disappeared. Meanwhile, despite a colossal budget deficit and borrowing now at 59% of GDP and rising, the public sector shows no sign of having to rein itself in - except of course if you are in the Armed Forces where there have been many crazy cuts as we attempt to fight two wars and have suffered as many casualties in Afghanistan as we did in the Falklands War.

The Sunday Times Appointments Section, barometer of how the job market is in terms of investment, has for some time been packed full of senior public sector appointments with salary packages that would make most business people look at least twice. The recruiters in this sector, like Rockpools, have been making a mint and the market for Health Interims is more healthy than the industry they supply - it's big, big business. Executives in the public sector are paid very well - far more than many of their private counterparts considering they create no wealth. Then there are the pensions. Let's not go there - I had a recent statement on my plans and frankly the prospect of retirement depresses me greatly. I can see myself never being able to stop work.

Workers in the Public Sector just don't get that point as they hassle for more pay citing the private sector as the yardstick.

It's not just redundancies - the public sector is like a vast sponge for money and it just keeps expanding. Latest estimates show that almost 1 in 4 jobs in the UK are in the public sector while the sector just absorbs more money and wastes a vast proportion of it on projects that deliver little and continually over run. In the MoD there is dreadful control of assets, huge contract overspends and then too few people at the business end with little enough equipment to do the job, while the civil servants back home pocket a share in a £48m of bonus payments. Injured troops or the families of the dead get precious little compensation for their losses when clerks in the MoD can sue for massive payouts for little than a bit of bullying or stress - try Helmand province for a bit of repetitive stress. MPs consume vast expenses for little to show for it and cannot see why the public is at odds with them - indeed, they want more pay and to continue to stand at the next election. The NHS is full of padding and overspends yet vital drugs are not given due to cost. Education is delivering mathematically sub-standard and illiterate graduates who cannot even get jobs - the list goes on. Yet we have not saved a penny despite a huge borrowing crisis.

Now we have the final insult. As soon-to-be 84% owners of RBS, we (the public) watch in sheer horror as traders and executives are to be paid over £1.5bn in bonuses from making profits that we (the public) have created for them by bailing them out and giving them free money to re-capitalise, none of which they have passed on to the economy.

It's a story that you could not write it's so idiotic and unbelievable. Globally £15 trillion has been spent on saving the banks and all we have done is lined their pockets by giving them profits as easy as spearing fish in a barrel. As Gordon Brown enjoys a resurgence in public opinion even though the public do not understand why we fight wars, his crony, Lord Myners, says that, 'Bankers should get into the real world'.

Let's just remind ourselves, this is the same Government that told us we could not get caught up in recession as our economy was so strong, then it would not hit us so bad for the same reason when it did and now of the G20 richest nations we are the only one still in recession which is the longest on record for the UK. Let's also remind ourselves that WE own a huge stake in most of the high street banks and WE are the major shareholders of these companies. WE have the capability to demand how they pay their people.

The Government continues to sit on the fence and just lob insults - as they should have done to have avoided the crisis we are in, they should ACT now. To hell with competition, stop the bonuses and reform banking.

A Dark Cloud Gathers

The news that personal insolvencies are up 28% is not a good sign that we are emerging from recession. While the rate of unemployment slowed last month, it still actually rose.

Many people talk about upturns and green shoots of recovery, but at the business coalface, some businesses are only now trimming their cloth after trying to grin and bear the recession. BA have just increased the number of layoffs planned and many of the High Street banks are culling serious numbers in staff despite making very high paper profits.

But perhaps the worst news is that as we exit the recession, hopefully in the next quarter, some of the Government initiatives are due to expire. At the consumer end, VAT is set to return to 17.5%, and there are rumours even of a hike. Meanwhile, for those businesses who have taken up the HMRC's offer to defer their corporation tax payments, pretty soon the calls will come to get those tax bills paid.

Far worse for businesses, much more than not making profits even, is the starvation of cash. It is, indeed, king - the fuel of any business. No bank will lend just to pay tax bills - it's money straight down a drain in their eyes and it is an act of desperation to ask for it. Many small businesses, in particular, will be fearing a call from the HMRC in the early new year. HMRC are notoriously rigorous about their follow up and not very forgiving. Now that the temporary arrangements are over, they will apply all pressure to get payments in. In fact, the tax coffers are so strained at the moment, that the Government is experiencing sharp shortfalls in revenue and this is a contributory factor.

Some suggest that as we come out of recession, there will be a new wave of company insolvencies as the demand comes to settle their tax bills. It may mean a re-invigoration of the rate of growth in unemployment - possibly around election time.

It needs an initiative right now.

Air Shots

Some while ago I blogged on how many golfers, when faced with an immovable object like a tree blocking their route to the green, will choose to hit through the tree rather than round it in the vain hope that there is more clear space than branch to be hit.

I argued that the reality is that by using a club of a specific loft and length you actually narrow the area of tree you are aiming at and in that 'corridor' of the shot you actually increase not decrease your chances of hitting branches as you increase the amount of space occupied by the branches in the corridor with respect to the total available space in that corridor. When you think about it, you are taking the very randomness of the tree's branch arrangement out of the equation by hitting at it. The logical course of action would be to take the tree completely out of the equation and go around it using two shots rather than risk wasting shots.

I would argue this is precisely what happened on Quantitative Easing (QE) by the Government. In piling a ton of cash at a problem, they viewed the financial crisis as a tree blocking their way to rescue. Their logic was that if you pile so much money at the problem some of it has to get through. But that was the wrong assumption as banks needed an extraordinarily large amount of money to shore up their huge lending gaps - RBS' alone was £161bn and the total QE to date has been £175bn.

What has happened is that the QE has been horded by the banks as free new money which they use to play casino banking or just keep. Very little of it has got into the wider circulation as the recent M4 figures on money supply has shown. In fact, the money measure M4 decreased despite QE.

This was the equivalent of a golfer hitting a ball directly at the tree and hoping they hit a gap to get through. If only someone had stopped and thought what the real cause of the banking crisis was then QE would not have been the best measure to deal with it or at least they could have thought of a better way to introduce it. In fact, by buying bonds in our own debt, they played right into the hands of the very banks that caused the entire problem who had been commanded by the Government and FSA to do precisely what QE allowed them to do - increase their capital to lending ratios without lifting a finger.

In hindsight it was obvious but it has been the modus operandi of the Government in this whole crisis. They have paid millions for duff advice from bankers and think they did the right thing. Now all the real measures of our economy like GDP and money supply show that what they did was either wrong or wrongly executed. You cannot argue with the figures, our management of the crisis was sheer panic measures.

Now we have the great bank sell off bonanza to come. The proposal is that new high street banks will be created in the new market conditions free of encumbrances. Investors are going to have a field day as we split profitable businesses from bad ones and sell them off nice and cheap and just watch how much profit foreign and private investors will make on our business. You can feel exactly what will happen and a few years down the line we will find every single one of our High Street chains of banks will be owned by foreign companies profiting out of our mortgages and lending needs.

You don't believe me? Our utilities have already gone that way in water and power, many High St banks are foreign owned already like Alliance & Leicester, Abbey, HSBC and the Royal Mail will be sold to a foreign company. In each case, the dirty end of the stick will be held by tax payers as we pay the profits of our mortgages to foreign companies.

You could not invent a better strategy to waste tax payers money by constantly leaving them with the bills while the profitable bits of the businesses they bought are sold off. But that is the key to the Government plan - the taxpayer is there to fund the rubbish.

As a quick for instance, the good part of Northern Rock will be sold for £1bn and we will still be owed £27bn when that happens plus the liabilities. Great deal, eh? Just watch the rest of them.

Meanwhile, us would-be golfers have learnt our lesson - it's better to hit round the tree than at it.

Who Should We Believe?

Depending on which set of figures you look at for the economy, you could be verging on the suicidal to the ecstatic. Certainly, we seem to be clutching at straws if we think Britain has emerged from its recession yet.

In the week, I highlighted The Sunday Times Appointments Section as being devoid of private sector jobs and full of public sector senior appointments, arguing this was a bad sign. Yet for the second month on the trot, there has been a marginal increase in the number of appointments available generally according to Government figures. Encouraging, if fragile.

But, the National Institute of Economic and Social Research (NIESR) has calculated that our GDP did not rise a jot in this last quarter. This falls in line with the worrying industrial output figures reported for August which were sharply down on July. True, we could argue it's holiday time but the level of drop, some 2.5%, surprised most economists. Bizarrely, the Government's response was to say that this prediction of stagnated GDP showed that the Government's policies are working.

We have also heard that house prices are now nearly back to levels experienced in 2008 - certainly there are plenty more placards up in my area - but this is still some 15-20% down on prices in July 2007. The number of mortgages being approved has risen but we know that lending to small businesses, despite Government indications to the contrary, is reckoned by the Bank of England to be £14.7bn down on last year. Are we putting the credit in the wrong places, you might ask?

Bank profits and bonuses are sharply rising, the price of gold has hit a peak (perhaps I should have followed those persuasive TV adverts), car sales are up 11.4% from this September to last, inflation has fallen to 1.6%, and the Services sector, such as restaurants, showed expansion for the 5th successive month and is now at a two year high - trashing my comment on empty tables for pre-theatre meals in London last Saturday. Or so it would seem.

The figures are all slightly baffling. The reality we see is a great deal of uncertainty as we face a great many cuts to public services no matter who gets into power which will inevitably hit jobs after 12 years of growth in bureaucracy in the public sector that now accounts for 1 in every 4 jobs in the UK. Our population is rising faster than expected due a new birth rate explosion, 25% of that growth coming from couples not born in the UK as immigration takes its toll on the UK. Unemployment continues to rise to nearly 2.5m and there are predictions of over 3m by this time next year which is well above 7% of the working population.

The budget deficit continues to rise and at a greater rate predicted by the Chancellor, indicating that it may well be getting out of control, which will see Britain borrow an extra £175bn this year - and rising. Many predict, contrary to Government promises to halve it by 2015, that borrowing will be nearly 99% of GDP by 2014. As we are faced with a rising Welfare bill due to more people on the dole claiming benefits, and greater immigration numbers than ever predicted, and therefore a shortfall in tax revenue, the squeeze is on. And there will be a need, due to the heavy borrowing, to find big cuts, some 10%, to try and manage the situation down.

I find the whole situation baffling but the one thing I believe to be true is that we are paying for 12 years of unsustainable and unreal economic growth that was based on a flawed financial system that relied on the unchecked ascent of asset values and the instruments which relied upon that principle. And we have set up the remedies to start the exact same cycle again, despite posturing to the contrary - banks are once again out of control.

It seems that even if we halt the decline this quarter, we are a full 6 months behind our competitor nations in recovering despite all reassurances to the contrary before we hit the recession - the one that we were reassured that we would not hit - and I believe we are focusing on the wrong areas to manage the situation. Time will tell, but the comedy of errors by the Government, Investment Banks and the FSA in calculating a bailout of the financial system literally over a few late nights and some pizzas will haunt us for a generation. Last Sunday's article in the Times was meant to reassure us that the parties took the banks on and dressed them down for 10 years of excess. What it showed was that having ignored the banks for 10 years, they suddenly became experts in their business to save them.

If you believe that, then you will believe that little green men have invaded Uxbridge and put up the price of rail tickets.

The Cuckoo Cloud Gathers

Only yesterday I gave some, if I say so myself, very good ideas for Labour to try and turn around their faltering ship and possibly pull off an unlikely election victory.

On the eve of the last Party Conference before the election, they have some rallying to do. However, apparently the News of the World has found just over 1,000 people somewhere, probably who do not read the news or live on this planet, 48% of whom give Brown a 'slim chance' of winning the election while another 11% are more unreserved, and perhaps crackers, in saying Labour will win.

The one piece of advice I failed to give yesterday is that Labour should not delude themselves. While such polls will give a straw with which they can clutch on, the last thing they need to do is to trivialise the task they have ahead of them, because if they truly believe that they can win the election from the current position they are in without a radical change in their approach, then we are talking a landslide to the Tories at minimum.

Mandy has rallied the troops - and he will be lurking in the corridors of conference bashing anyone who starts to talk of ditching the past and looking to the future. On that score, the Millibands, Ed and Dave, are both in line for slaps on the wrist with Mandy's wet Sunday Times (he reads nothing else as he is such good friends with the Murdochs) as they have already started gloom-mongering with speeches about how the party must now 'look to the future' - a known political euphemism for 'we've lost so let's have a leadership election and my name is in the hat.'

Mandy himself has shrewdly said that this election is 'not in the bag - either for us or the Tories'. He can congratulate himself for being at least 50% right with that statement but one thing he must realise also will be that the next few months, weeks even, may well hand the election to the Tories. And that's another matter than trying to rally his team to try and win. Literally, if ministers persist in trying to lie about the next steps based on the position we are in today, then Labour lose by handing the election to the Tories. What I mean by that is that Cameron really doesn't have a policy to think of, and yet he could still win the election simply by Labour handing it to him. In many respects, that could the worst thing that could happen.

But it would be easy to do, particularly if Labour start to believe their own rhetoric and do little to change the public's perception. In fact, if they believe their own bull too much, then they will probably do nothing and their arrogance will get them voted out.

A prime example of this is that Darling has talked of making a legal pledge to halve the debt by 2015. A LEGAL pledge - this is not his word, best endeavours or anything else, but this a pledge that essentially we could all sue him for. How daft is that kind of idiot behaviour? Given his current inability to work out the numbers from one month to the next, not only is he suddenly going to get a grip on his calculator but Britain will now emerge from recession like an Exocet and grow like topsy.

Why must that happen? Because in the same breath, his fearless leader is actually saying that his party will not make cuts in services - in fact, he has implied they will continue to invest. You do not have to be a genius to work out that if unemployment will peak in 2010, then less than 5 years later, we will have halved debt. All estimates by learned and quite sane economists say that by 2014 we will have DOUBLED debt from today's current position to almost 99% of GDP. Is Darling expecting us to believe that by a year later he will have performed a conjuring trick worthy of Gordon's namesake or David Copperfield and made our debt disappear like a rabbit in a top hat?

The answer lies in Labour electioneering. It appears that there will be a series of equivocal statements designed to cleverly say things which mean at least two things. The hand of Mandelson is very much in evidence as only he could be so damn devious and think he could get away with that as he has done many times before.

The tragedy is that it looks that rather than being honest with the electorate to get us all behind what needs to be done, we are going to be played for fools once again. I think that is a terrible mistake for as stupid as we undoubtedly are, we are fully aware of how dire the situation is. Wishful thinking and forlorn battle cries based around ambiguous statements will not fool s this time.

But wait a minute. The clouds in Cuckooland are gathering. Maybe we are that stupid after all. We'll see.

Where Has All Our Money Gone?

Wandering through St Albans market yesterday on a lovely September afternoon, I couldn't help noticing that the stalls, the shops and the restaurants seemed far busier than they have been for a while. Now that Lord Mandelson has decreed it, are we really out of recession?

There does seem to be some encouraging signs and we should be thankful that we may be through the worst of things even if 'The Dark Lord' and other like Stephen Hester of RBS warn that we should not assume that everything will be rosy from now on. Even so, perhaps there are signs that we are getting a little more confident and spending more.

Perhaps different to the last recessions when there were similar effects on jobs and industry, this time around we are left with an incredibly large bill as a long term legacy of the crisis we have been through. Some stark facts reveal the cost of the credit crunch and recession combined has been around £1.5 trillion which was the total amount we spent, collectively, on bailing out our financial system.

We recapitalised and provided loans to the banks to the tune of £289bn which included the nationalisation of Bradford & Bingley and Northern Rock as well as our shareholdings in RBS and Lloyds Banking Group - we are still around £10bn to £20bn down on this but the shares in RBS and Lloyds have recovered significantly and we may get our money back soon on those particular deals although the other two may take a good deal longer. We gave a further £200bn in general liquidity support to banks - which prevented those we rescued and others vital support to stop them going bust.

We spent a further £400bn in purchasing and lending money to buy assets. It is unclear how much of that money can be recovered. Then, of course, we have guaranteed a further £650bn to banks to cover their losses. In theory, we should get a good proportion of that money back providing banks remain solvent and there are no disasters ahead. Alan Greenspan, former head of the Fed in the US, recently said we would get another crisis at some point so we should still be wary that all this money is certainly at risk. It does make you wonder why we continue to condone and aid the machinations of the financial system when we know it has such inherent risk if it is not properly reformed and regulated as the last thing we need is for the whole thing to happen again - then the money would have truly been lost and we would require a great deal more to perform another economic resuscitation.

The £289bn of loans to risky banks is equivalent to £11,500 of liability for every household in Great Britain.

That's an awful lot of money for a society that already has around £1 trillion of unsecured debt, masses of mortgages, diminishing household income and more uncertainty on jobs. I certainly don't have the money lying around if it was required.

National Debt was around £466bn in 2007, £526bn in 2008 and we thought it was really bad when it would rise to £609bn in 2009. But by 2014, debt is forecast by the Treasury to rise to £1.37 trillion - and remember, we have revised these predictions every month so far as lower tax returns and higher benefits pay outs due to greater unemployment has affected the wishful thinking calculations to date.

In 2014, we will pay £60bn in interest on that borrowing alone.

£60bn in the context of the total bail outs does not seem much. But to put into proper perspective, that's equal to the entire Education budget for the year or just over half the budget for the NHS. It is that huge and it is why the world's formative credit agencies are beginning to believe that Britain's ability to service and repay the mounting debt will get progressively harder. As we borrow more and more, confidence will get lower and lower as there is only so much that everyone of us can afford to keep up with the repayments, particularly as we are all affected by the fall in the housing market and the uncertainty in the job market.

For us as individuals, our household net income has dropped over the last 10 years. We supplemented our earnings by a rich source of money - the rising equity in our homes. Sadly, in this crisis as much as 15% has been wiped off the value of our homes which is equivalent to around £422bn.

It means that we are collectively worth around 10% less in terms of our personal wealth or around £393bn has been wiped off our collective value. Finally, between 2007 and 2008, around £815bn has been wiped off our value in total.

That is equivalent to about £31,000 less wealth per household in Britain in just two years. Given that we are liable for £11,500 per household too, our actual drop in wealth is closer to £42,500 per household.

I don't suppose those milling around the market had actually thought that through as they started spending again as if there was no tomorrow.

"A Socially Useless Activity"

I don't think the FSA has done its job properly. I lay that responsibility directly at the feet of its Chairman, Lord Adair Turner, and his inept and idle CEO, Hector Sants. That said, it is a bugger's muddle to sort out the banking industry and get it properly regulated.

Why? Because it is so powerful and the people in it are powerful. So when Lord Turner finally speaks his mind and shows he actually has a modicum of understanding of how the general population feel about the kinds of bonuses people earn by simply pushing our money around, without a jot of accountability if they lose it but incredible bonuses if they gain some profit, he gets castigated by the industry as if he has suddenly put a pile of fresh horse manure on their dinner table.

Turner has suggested that some investment bankers perform 'a socially useless activity'. The industry was deeply offended but frankly it was a comparatively minor insult. For a few years, each morning I used to listen to some of the inane and positively insulting talk that bankers come out with when I attended a City gym. The locker room conversation was all about measuring manhood in terms of how much money they could blow in champagne bars, restaurants, on new cars and holidays while their lack of knowledge and understanding of the markets they operated within was clearly limited and each was looking for a lead from the other to actually do their jobs. You have only to read or listen to the disparity in opinions on the markets by so called analysts to know that much of the City aura is, in reality, guesswork and controlled by strokes of the buttons on computers.

That much was proven in particularly the UK's response to the financial crisis. We have burned money and printed more as if it were old wallpaper to save the financial system at a cost of real things like jobs and manufacturing. And now here's the rub.

The Telegraph yesterday printed an 'apology' for the bankers after Lord Turner's insults which included charging banks a 'special tax on pre-remuneration profit' (he must read my blog as I proposed the same, less elegantly) and they illustrated a heartstring-twanging litany of why we should feel sorry for bankers. You see, the financial sector employs about 1m people or around 5% of the workforce and 13.9% of the tax take came from the financial sector in the form of around £25,000 per employee, £12bn in Corporation Tax, £15bn in income tax and £3.2bn in National Insurance Contributions. The tears are welling up.

But before they start to tell us how important they really are, let's also remember that the financial sector only contributes 7.1% of the UK's GDP. And here's the reality - in the financial crisis triggered by the credit crunch, we are set to double our Sovereign Debt in order to pay for the losses incurred in the sector, which could take borrowing as high as 99% of GDP by 2014 if you believe some figures. To date we have printed £175bn of new money to heal the wounds caused by the industry while it is thought as much as £1.3trillion in capital, loans and guarantees has been used to prop up their industry, yet their net annual contribution to the tax budget is just £30bn.

We have helped them deskill their jobs even more as we have now fully guaranteed their future losses and given them virtually zero-cost money to replenish their cash and to go and play their games again as the markets bounce back. And once again earn the billions they feel they so richly deserve.

People argue that such taxes proposed by Lord Turner would drive 'talent' away from the City and I have argued 'good riddance'. If that is the cost of picking up the tab for them, then let them go. Reality will catch up with the financial industry - there is no such thing as zero sum accounting for taxpayers. When we lose money, we have to pay for it - there is no magnet that brings it back.

I think it is time we got some perspective here. These financial so-called gurus are not as brainy as they think. They have had the best jobs in the world which have catered to their greatest whims of making money. They are ordinary people, with no real intelligence who just have an unfathomable lust and greed for money. We have set up a global system for them to skim off a share in the profits of simply moving money around and placing bets and we have propped up the system with more money then we have for them to keep doing it. In doing so we have not checked the system for flaws or weaknesses or even bothered to understand it - we have just pledged money because they asked for it.

Enough with their sob stories of what they do for us - it's time they paid the cost for what we have done for them. If Turner is finally growing some teeth and claws, then let's hope he has the courage to use them this time around as last time he was just an ordinary guy who failed dismally to do his job, just like all those who pursued in 'socially useless activities' - the investment bankers.

It's heartwarming to know that while we would not give such people the time of day, Gordon Brown pays them £millions for their advice as to how to solve the financial crisis they got us into. Hasn't got us very far yet, has it?

Different Strokes

China will spend around 2% of GDP on Fiscally Stimulating its economy this year and the same next - USA exactly the same this year, dropping to 1.8% next while Germany will spend 1.5% this year and 2% next. Britain will spend 1.4% this year and zero next.

Germany's biggest issue is that the money it has pledged to stimulate the economy is not being used fast enough, as much of it is for driving renewable energy into public buildings, building more, refitting old buildings and other projects. Such projects are big public spends and their laws mean that tenders have to be written and due process observed. This has bottlenecked public spending and so they have introduced ranges of laws that say spend of less than €100,000 does not have to go to public tender, just a few quotes while some projects up to €1m can avoid the old tender process. In just 14 months, they need to spend €10bn in education alone and the rumour now is they will spend that money on anything that disperses the cash quickly meaning that German schools could become showcases for interactive learning for all Europe. The main thrust is that instead of just a few large construction or IT companies benefiting from the spend, literally thousands of small firms will benefit from the spend.

Along with direct Government subsidies to firms to pay wages in the recession, Germany has deadened the impact and unemployment has not risen appreciably despite spectacular insolvencies like Arkandor. Britain, meanwhile, has seen unemployment rise to over 2.4m and it continues to rise with predicted peaks at over 3m. In the same breath, we have seen tax receipts drop 20% in the last quarter, 3 times the level of drop predicted by the Chancellor, meaning higher borrowing again - rumours abound about Britain's ability to pay for all this debt which could see our credit rating moved down.

For Britain, it was all about saving the banks and stimulus has come only from the VAT decrease which is temporary. Credit was seen as the major issue and so it had to get flowing again. Instead of seeing more Fiscal Stimulus going directly to save jobs, we have seen new money pumped into the banking system via Quantitative Easing to the tune of £175bn and precious little has got down the line. In fact, credit has never been so expensive and hard to get with banks missing their lending targets consistently, loans at multiples of base rate not points above, fixed rate mortgages at a huge premium and loan criteria at their most stringent in years. Yet banks are awash with new cash from taxpayers and money markets again at the cheapest price in years.

What has happened? Why isn't the money getting into the economy at the points where it is needed? The answer is simple - banks are at their high risk games again, with cheap money and an unlimited guarantee against losses underpinned by the taxpayer - they cannot fail to make money, so why give it to us where they would earn comparatively less?

While even Adair Turner is now mooting a windfall tax to prevent excessive bonuses, and bonus schemes are getting a bit tighter but no one is regulating new salaries and inter-bank headhunting of new 'talent' with lavish guarantees and other perks. The fact is that while bonus schemes may look more difficult to attain the old heights on what is certain is that clauses defining that traders MUST get paid even if the banks are making losses are being set in stone. We actually will come out worse, not better thanks to the lack of thought being into the process by non-bankers.

The end result is that technically France, Germany and Japan have all exited the recession while we suffered a further 0.8% shrink in the same quarter. It seems Britain is more focused on fining and locking up music downloaders than tackling unemployment or real crime - it seems we are more keen on bank rolling the real criminals in banks who robbed us of billions to support their high risk gambles and we have allowed them to do it all again with impunity. Meanwhile, the money getting to the parts of the economy where it is needed is minimal, expensive and late.

We have paid the best part of £100m in fees to numb skull bankers and lawyers to plot a way out of trouble that has put money right back into the hands of those who broke us, and they are keeping it to spend on their lavish high risk derivative gambles to earn mega-bucks to lose again later.

It is anticipated that Angela Merkel will breeze the forthcoming election in Germany and she has around 83% of the anticipated votes in polls. Gordon Brown may take real note as she fought him hard on Fiscal Stimulus and bank bail outs at the G20 as did Sarkozy of France. They have been proved to be right, Brown wrong despite his belief he 'saved the world'. They thought about specific programs and directed spend to stimulate the economy and get money into all businesses while we focused billions on banks and the financial system which are failing us yet again as we did not set rules and regulate properly.

Despite the smug, self-congratulations, Brown has been proved to be lacking in real skill in economics and Britain will pay a very high price as a result.

Why Germany And France?

We could bore ourselves silly recalling Gordon Brown's fateful, progressively more desperate, words of how robust our economy was, how it we could out-run a recession, how we would handle one better than others and why we would recover first. The fact remains pretty much all the clap-trap he gave us was complete horse manure - and not the sort bought on MPs' expenses.

Rather than labour the point, let's just say he called just about every point in the credit crunch and recession wrong and that his understanding of economic matters was not as cerebrally enlightened as he led us all to believe. So much of all that leads to ask, well if he called it all so wrongly did he get the cure right? If not, have we spent all those £billions correctly or were they all wasted?

Two things this week brought this question into sharp focus. First, there are now doubts over whether Quantitative Easing (QE) is having the desired effect of getting us all spending with abundant credit again - as I blogged yesterday, there is now evidence that between banks missing lending targets and their hoarding of new money there is little stimulus reaching the likes of consumers and small businesses in terms of increased credit. Secondly, France and Germany have announced that they have, technically speaking, exited the recession. It must come as a hard blow to Brown's fallen economic ego that these two countries, who have typically led Europe in terms of their consistent economic sense and who fought him so hard on the issue of unlimited bail outs, have broken free of the grips of the financial chaos well ahead of Britain.

In fact, as France and Germany announced growth in their economies, Britain enjoyed a further significant decrease in its economy. So why did Gordon Brown call it so wrong and how little did he understand the pillars of sand upon which he had built what he thought was a robust economy?

Relative Cause and Effect

There is no doubt that the US and the UK had built much more unstable economies over the 10 years. The French and the Germans had struggled in relative terms over the same period, Germany particularly with the post-wall integration issues while France seemed to constantly wrestle with demons from within. We, meanwhile, enjoyed a bonanza pretty much built on thin air. Property prices began to rise on both sides of the Atlantic at alarming rates and many people dipped into their new found net worth by leveraging the equity increase in their mortgages - we effectively became our own banks. It caused a credit bonanza on an unprecedented scale as each new debt taken out was traded and traded again for incremental commissions each time and there seemed an unlimited supply of money.

What this illustrated for Britain was how important the finance sector is to us. Many assume that as it is contributes just 9% to our GDP it is not significant but the reality is that it was the pillar on which our whole system and people depended. As a society we saved negative amounts of what we earned and over the 10 year growth period our average household incomes had actually decreased in real terms - we were supplementing our incomes with our equity gains and that was purely finance driven and at the heart of which were our houses. As the world frenzy for cheap and unlimited money continued, the gamblers in the finance world thought they were cleverer than logic - they traded any old debt and in fact, there was no need to check the worth of an asset as while values rose if a repayer got into trouble they could just leverage more borrowing on each increase in asset value.

It was an upward spiral based on flawed thinking.

So when the bubble popped, US and Britain felt it hardest as we had been by far the most stupid. The other countries like France and Germany had stumbled and nearly lost banks but the reality was that their exposure to the whole 'scam' had been less due to their more conservative approach to simple things like mortgages, where in Germany around 60% deposit is required.

The cause and the effect of the credit crunch were much more exaggerated in the US and Britain.

Other Dependencies

Brown's frustration must have been that if there had been no credit crunch, then Britain was actually well set in terms of handling a recession - in theory. Germany, in particular, and France are the heart of the manufacturing engine in Europe. Their fortunes depend heavily on exports and so when the global economy dipped sharply, they were hit very badly. So much so that at the start of the year, while the British economy dropped 4.9%, the German economy dropped 6.7% and correspondingly, the fall in output was far greater too.

But any economist would tell you that as a recession ends, there is much sharper gains to be had as restocking occurs. Also, France and Germany quickly turned to within to stimulate demand and they introduced scrappage schemes immediately for their car industry that ensured that home sales never really dipped and so they weathered the storm more sensibly while Britain dithered.

Britain, meanwhile, more heavily dependent on the finance sector, saw a much slower recovery and this week we see that this recovery is merely banks recharging their batteries at the expense of taxpayers while the stimulus intended is absorbed by wounded balance sheets rather than getting money into the economy. It was really flawed thinking to believe that pumping so many billions into banks was going to mean an automatic resumption of the 'good times' but this has been the hallmark of the response to the whole crisis - wrong assumptions and undesired outcomes which seemed all too obvious from the amateur economists' armchairs and front bars.

Were The Bank Bails Out a Waste?

Individually, it is easy to identify that the knee jerk saving of Northern Rock was an unmitigated disaster and still is. For banks in general though, we had little choice but to act. However, the sheer quantity of money and immensity of the guarantees and loans required showed just how completely defunct our system had become purely because banks had strayed so far from the basic formula upon which all banks are founded - liquidity. It was as if the whole banking community had lost the ability to add up or to spot the obvious - the whole system had to collapse because it was trading on air not solids.

But getting back to how the countries tackled the issues they faced, Britain really did little more than Germany in terms of stimulation. We decreased VAT and this accounted for around a 1.6% of GDP stimulus while Germany pumped in around the same with around 2% next year while France was less bullish with just 0.7% of GDP. Our boost stops next year while Germany continues to recognise that it has to be a sustained boost.

In an odd quirk it is reckoned that the German and French social security systems helped consumers more than in the UK. As Britain sought to get glamour in loud shouts about how it was 'saving the world' and the PM was shuttling across the world on a fruitless journey for publicity, his continental counterparts just got on with the job logically and quietly. They became Brown's combatants at the G20 by forcing through toned down bank bail outs and wholesale squandering of money and they proved to be, annoyingly, right.

But here is the rub - as Britain pumped £billions in to save the banks, the Germans and French pumped some €5bn into the car scrappage scheme against the paltry £300m we have, of which, only £180,000 has been used to date. Meanwhile we have spent an estimated £1.5trillion bailing out the banks and this is the massive difference in approach in terms of % of GDP used.

Germany and France focused defined sums of money into specific key areas while protecting consumers well while Britain squandered £billions saving the necks of the very people who ruined us while umming and ahhing over whether to save any industries which would have provided direct stimulus to the economy and consumers.

It Was The Economy, Stupid

The problem stems back to Brown's belief that the British economy was in good stead and stable. It simply wasn't - it was built as a house of cards and every corner was a potential weak point as each depended on the unlimited supply of money which relied on no one questioning underpinning asset values, in simple terms. It was so obvious that it makes you scream but more gifted people than me seemed to think that all the great mathematicians of the past clearly had no idea how to add up - they knew best.

And they knew best because they were getting incredibly rich and the nation appeared better off. Indeed we seemed to be - every new gadget was bought voraciously, we bought second even third properties here and abroad, we holidayed more lavishly, we ate more at restaurants, became coffee and wine snobs foregoing staples like beer and tea and we shopped more avidly - like there was no tomorrow. And that was the formula - tomorrow never came. No matter that our wage packets were diminishing, there was always an endless supply of credit, loans, mortgages - all cheap at that and easily accessed thanks to the increased value in our homes. If the debt get on top of us, we simply took a little more money out of our 'banks' and postponed the whole thing.

Tomorrow was never going to arrive, was it?

Our economy had been bolstered alarmingly by all this to an extent that it could handle a recession, even higher interest rates but as long as property values rose, we were laughing. Nothing could stop that - except of course the money tap being turned off. The credit crunch was the 'Black Swan' in the system, according to apologists. The concept that a single, rogue and random event entered the system and proved to be the one thing that would bring it down. It wasn't a black swan at all, it was pure logic. The moment just one person questioned the value of underlying assets and then asked who was doing the due diligence and the whole thing imploded. It was simple accounting, adding up and logic - nothing more.

Sub-prime was just a manifestation of the whole banking flaw, it was not the cause.

Subsequently, we have the FSA squeezing out Independent Financial Advisers and making 30% of them leave the industry as they fingered bad guys but it was the clever people in the financial system who, unchecked, just traded anything for profit with no questions asked and became unfathomably wealthy in the process.

Britain's problem is that our over-reliance on that financial system to underpin our economy was our downfall and it is also the reason why it is taking far longer to recover. Unemployment has yet to peak and is already at 2.4m and the Fiscal Stimulus money will end next year - the pot is then empty. The danger is that if the German and French experience is a false dawn and they lurch into negativity again then the news is very bad for us. We need their recovery to drag us out of the mire too.

People who argue that our GDP is not dependent on finance as a contribution know little about how the economy works. The flow of money affects everything and so our economy became like a clogged engine, unable to operate without the financial lubricant. All that money came from the wrong sources and these are lessons we should have learnt, understood and applied new methods to avoid the problem in the future.

The problem is that in our blind, knee jerk haste to patch up a broken system, little thought was put into what caused it an so how to avoid it again because we had so little understanding of our own economy. Just take a quick glance at the renewed call for bonuses in banks here and the US and the soft regulatory response and you will see that little has been learnt and far less has changed.

We may yet recover, but we just have primed the system for the next fall.

The Big Guys Wade In

Apart from the usual suspects of George 'Baby Face' Osbourne, David 'Goody Two Shoes' Cameron, Vince 'The Enforcer' Cable and Nick 'Who?' Clegg, this weekend we had several political heavyweights of the past joining the fray largely to urinate on Gordon Brown's week of supposed fireworks.

Blasts From The Pasts


In the Telegraph, Norman Lamont was calling the PM an 'Arsonist posing as a Fireman' which was a description I had conjured with and still doesn't seem right as it tends to indicate that somewhere along the line Brown knows or knew what he was doing. It stills seems to me he lit a fire and rather than dousing it he's trying to stamp it out with his bare feet. Well something along those lines.


William Hague is given an interview and he's reminded of his beer-swilling, laddish days when he precociously addressed the Tory Conference as a thoroughly snotty 16 year old and told Maggie what for. Being of my generation he has one of those faces that Chris Tarrant would describe as 'The sort of face you would never tire of hitting,' or 'Looking much better with a fat lip'. It's always better to use someone else's descriptions but it was that McKinseyian Yorkshire drone that always annoyed me which sounded as if he was always looking down his snub-nose at everyone - probably was - but at least he married a Welsh, good taste even if it was a might contrived.


Ken Clarke has joined Hague as a Front Row man of experience and a little more girth. A much more believable beer drinker and former Chancellor of some incompetence he was commenting on the gleeful undercover work by The Sunday Times who had uncovered a 'Shock, Horror' scoop that was so obvious it was spine-chilling - 4 Labour Peers had allegedly indicated they were willing to take money to amend laws. Being of the naive type I actually thought this went on all the time in their roles as consultants or Non-Executive Directors and in The House of Commons it usually involves drinking minibars dry with your 'Big Brother Celebrity' wife and staying at your benefactors' expense in a swanky hotel. Somehow the benefactor was omitted from any charges of corruption in that case even though he openly admitted it. Given we have just witnessed Big Ken's opposite number, Lord Mandelson, somewhow omitting to let his EC colleagues know that he had met Oleg Deripaska prior to a crucial vote on aluminium tariffs, it now seems Mandy was much more qualified for the job as a Peer than I had previously thought as he has plenty of 'form'. Big Ken was very diplomatic when he fumbled for words and described what the Peers had allegedly done as 'Some might even call it corruption'. With that kind of biting comment, he's going to make a big impression on the Front Bench.


Dominic Lawson - OK I thought it was his Dad when I started writing this - was putting rabbit punches in and moaning that the PM is writhing around and showing his incompetence but going slightly further on the insult front. He claims that Brown, despite his widely reputed intellectual powers, is in fact rubbish at adding up and absolutely inept as a financial wizard being actually academically unqualified. Further, he goes on to agree with my habitual gripe that it was a flawed financial model in Britain that caused our version of the Credit Crunch and not small town America's sub-prime issues - it was only a matter of time before it all imploded on us and it had all to do with our spending associated with equity increase not the nation's apparent wealth.

And I thought he was just a decent cook. Oh, that's his rather lush sister.

Facts, Hercule, Facts!


'Facts!' was the watchword of Inspector Clouseau and this week we had some beauties. The pound has dropped 25% against a basket of currencies which is the worst devaluation in a century and from the pen of just about every reporter and former politician came Gordon Brown's old quote, 'A weak currency is the sign of weak economy which in turn is a sign of a weak Government'.


I am sure the PM had a fabulous weekend chattering away with his 'War Cabinet' of self-interested Investment Bankers who I pointed out had advised for a £30bn equity for debt swap for RBS in the second bail out and just days before the announcement the ban on shorting was miraculously, not in any waysuspiciously, lifted to allow RBS shares to be shorted so heavily that they lost 67% of their value on the day of the bail out announcement and ensure the Government had poured the £30bn into a 'Drain' valued in total at £5bn. If I can see the connection then surely someone else can? You mean these 'Advisers' are actually thinking about all those poor souls losing their jobs or having their houses repossessed? Yeah, sure.


The real nasty facts were that business confidence as measured by the Lloyds TSB newly publicly-owned survey has gone down 32% which is the lowest ever recorded by them which didn't stop their CEO, Eric Daniels, paying himself £12.3m in 2007, repossessions have gone up 92% compared to 1997 when the 'Brown-Blair Dynamic Duo' first assumed Presidential powers, unemployment is now 6.1% which is higher when the duo took over and the really gob-smacking one was that 440% is now the proportion of Britain's GDP which is made up by bank balance sheets - i.e. the taxpayers' liability. Woohoo!


The talk of Britain's solvency was on most 'Tory inflamed' reporters' tongues. Rumours that the credit agency, Standard & Poor, was going to downgrade British Sovereign debt was denied but Spain has had theirs cut and they are in a better borrowing position than us. With our Current Account Deficit at £7.7bn there is an argument that UK Government bonds will not sell for fear of us defaulting and that if the crisis gets worse then all our decreasing tax revenues will not cover our losses. There is a dawning realisation of the vision of Britain going to the IMF for money at Third World rates and the spectre of a 'Banana Republic' Island springs to mind or the equivalent of all of us following one of those Utopian TV adverts and despite our bad payment record rolling up our debts and signing the rights to all our possessions away for a lovely single debt repayment option that would bankrupt us if we default.


The General Gist


The general idea was that it was a free-for-all on the PM. His Financial credentials and credibility of the last 10 years were called into question and specifically his handling of the Bank Bail Outs which has stuttered and caused widespread jitters in the stock markets but worse still a great deal of external concern that Britain is slowly slithering toward insolvency. Many replayed Brown's own soundbites which are now becoming empty brags and his puerile taunting and bullying of previous Chancellors coming back to haunt him as they turned the tables on him.


I never, ever thought he was a good Chancellor. I think he had a false boom and his attempts to correct it show his basic lack of understanding of how economics works, not that I'm anyone qualified but even I knew what had made our economy apparently stable. Even I knew that this recession would hit us and harder because of our idiotically out of control housing market, our borrowing levels and the lunacy of the Banks as they fuelled the false boom. Even I know this was not CAUSED by sub-prime mortgages in the US - we caused it.


However, I have sympathy with him. I could not solve these problem. But I know one thing - I would not ask the people who directly contributed to the problem to come up with the solutions to it. We got another show of City greed this week over RBS shares and shorting - a very obvious outcome of the second bail out and the lift on the ban on shorting curiously so close together, yet for some reason the learned people allowed it.

It's what you get when you ask bankers to solve the problems they created - self interest. Brown fell into his own trap - again - and for that I have zero sympathy.