Infinite Unknown

GORDON BROWN’S “DECISIVE” strategy to recapitalise Britain’s banks and get them lending again with a £37 billion bail-out, which he claimed has been copied all over the world, has not worked - and the Treasury has no plan B yet.

“The government’s plan A has not worked, and there is, as yet, no firm plan B,” a government source told the Sunday Herald. However, a senior adviser to chancellor Alistair Darling insisted that lending shouldn’t be taken as the sole measure of success: “Plan A has not failed, because the banks are still standing.”

But although UK banks are open for business, Britain is still facing a lending drought with banks and building societies continuing to reduce the amount of credit available to businesses and would-be homebuyers.
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This has left Darling with a dilemma: does he throw more money at the banks, effectively admitting that £37bn of taxpayers’ money wasn’t enough, or does he wait?

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Tags: Alistair Darling, Banks, Economy, Gordon Brown, Government, Politics, Recession, Taxpayers, Treasury, U.K.

Gordon Brown and his Work and Pensions Secretary James Purnell were last night accused of behaving ‘like loan sharks’ over plans to slap punishingly high interest rates on vital loans to the poor.

In an astonishing move, rebel Labour MPs joined forces with David Cameron’s Tories to accuse the Government of penalising hundreds of thousands of families on benefits who get interest-free cash advances to cover the cost of unforeseen crises.

More than one million individual loans worth over £600million were paid out from the Government’s social fund last year to hard-up people - many of them disabled - who struggled to afford to repair a broken boiler or cope with some other domestic emergency.

Under Fire: Gordon the ‘loan shark’ and James Purnell

However, in a provocative move, Mr Purnell wants to start charging 26.8 per cent on new loans - the sort of punitive rate found on High Street store cards and way above normal credit-card rates.

This would add nearly £50 to the cost of an average £433 loan and saddle the borrowers, who are almost all on State benefits, with an extra four weeks of repayments.

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Tags: Gordon Brown, Government, Politics, U.K.

In 1992 Gordon Brown himself said: “A weak currency arises from a weak economy which in turn is the result of a weak Government.”

Sterling dipped closer to parity against the euro, with the single currency now worth more than 95p for the first time ever. The pound’s fall came amid fast-growing disquiet about the fate of the UK economy and consumer sentiment next year.

The pound has now fallen by 23pc against a basket of other currencies, according to figures from the Bank of England. The fall is sharper than the devaluations in 1992, after leaving the Exchange Rate Mechanism, 1976, when the International Monetary Fund was forced to intervene, and 1949, when a host of countries slumped against the dollar.

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Tags: Economy, Gold Standard, Gordon Brown, Government, Politics, Recession, U.K.

Just as Bernard Madoff is alleged to have relied on payments in from new investors to pay out returns and promote a $50 billion (£33 billion) fund that scarcely existed, our Government continues to issue promises which it hopes future generations will honour.

The biggest Ponzi scheme: Bernard Madoff’s or our Government’s? Photo: BLOOMBERG

Christmas came early this week for 95,000 public sector pensioners. After questioning in the House of Commons, Cabinet Office Minister Liam Byrne admitted that they had been overpaid a total of £126m since 1978 but emphasised that they would not be required to pay the money back.

Particularly at this time of year, it makes a pleasant change to see some pensioners actually gaining from the sort of bureaucratic bungling with which we are now so wearily familiar and utterly fed up. All things considered, most people will be willing to set aside any Scrooge-like tendency to ponder upon who is paying for the politician to pose as Father Christmas.

However, a slight chill is placed on this cheery scene when you consider the uncertainty which these pensioners now face over what they will have to live on next year after their incomes are cut to the correct level. Perhaps equally galling, from the point of view of the majority who live in England, is the news from Scotland that the minority who are in receipt of overpayments north of the border will continue to be overpaid for as long as they live.

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Tags: Alistair Darling, Gordon Brown, Government, Pension, Politics, U.K.

We’re all still plunging hither and thither, guzzling wine and wondering what preposterously expensive electronic toys the children will want to smash on Christmas morning this year. We can’t see the meteorite coming either.

I think mainly this is because the government is not telling us the truth. It’s painting Gordon Brown as a global economic messiah and fiddling about with Vat, pretending that the coming recession will be bad. But that it can deal with it.

I don’t think it can. I have spoken to a couple of pretty senior bankers in the past couple of weeks and their story is rather different. They don’t refer to the looming problems as being like 1992 or even 1929. They talk about a total financial meltdown. They talk about the End of Days.

December 7, 2008

Full article here: The Sunday Times

Tags: Economy, Financial Crisis, Gordon Brown, Government, Meltdown, Politics, Recession, U.K.

Germany has lambasted Gordon Brown’s response to the economic crisis as “crass” and “depressing” in an astonishing attack as EU leaders prepare to debate how to recover from the recession in Brussels today.

Peer Steinbruck, the social democrat German finance minister, warned that it would take Britain a generation to pay for the huge financial stimulus introduced by the government in its attempt to kick-start the economy.

Mr Steinbruck’s comments emerged as Mr Brown prepared to join European Union leaders at two-day summit where they are to debate a €200 billion EU-wide stimulus package aimed at fighting an economic downturn.

Mr Steinbruck, who has resisted pressure from Brussels, London and Paris to commit Europe’s biggest economy to a similarly large increase in borrowing, ridiculed Mr Brown’s gamble of cutting VAT to stimulate spending.

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Tags: Debt, Economy, Germany, Gordon Brown, Government, Politics, Recession, U.K.

The government and the Bank(sters) of England are intentionally ruining what is left of the economy and what is left of trust in the currency. Britain has become a worse credit risk than McDonald’s. The U.S. will fail and the U.K. is doing everything to follow suit. Who will pay for those billions of pounds? The government has to raise taxes or has to issue more bonds, which are nothing more than a promise to raise taxes in the future, because that money has to be paid back plus interest. Creating billions of pounds out of ‘thin air’ will further weaken the pound and will create massive inflation, which is nothing more than a ‘hidden tax’. The taxpayers will have to pay for all of it until the taxpayers will finally fail.
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The Bank of England

Dec. 10 (Bloomberg) — The U.K. government and central bank are considering plans to pump billions of pounds into the economy as the bank rescue package and the lowest interest rates since 1951 fail to halt a slide into recession.

The Bank of England and the Treasury are weighing a strategy known as “quantitative easing” where authorities increase money supply to boost bank reserves. The initiative was last used by Japan at the start of the decade.

Prime Minister Gordon Brown’s government is frustrated that banks are rationing credit after tapping the Treasury for cash and guarantees to prop up their own balance sheets. Policy makers both in the U.K. and the U.S. Federal Reserve are looking beyond traditional interest-rate tools to revive the economy.

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Tags: Alistair Darling, Bank of England, Economy, Gordon Brown, Government, Politics, Recession, U.K.

Kenneth Clarke, the former Conservative Chancellor, has warned the economy is on the brink of “meltdown” and unemployment could reach three million.

Mr Clarke, 68, said the British economy is headed for a “catastrophic crisis” that will be “far worse than anything that has occurred in my lifetime”.

“There will be a very serious recession next year,” he said in an interview with Telegraph TV. “I think the big problem in 2009 will be the catastrophic fall in consumer spending demand, spending in shops will get worse.”

Mr Clarke, who as Chancellor of the Exchequer between 1993 and 1997 led Britain’s recovery from Black Wednesday, called for a temporary cut in VAT to boost spending.

Speaking as the Office of National Statistics revealed unemployment has reached an 11-year high of 1.82m, Mr Clarke said the number of jobless could soon reach three million.

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Tags: Economy, Financial Crisis, Gordon Brown, Government, Politics, Recession, U.K., Unemployment

Business Secretary Peter Mandelson, is being urged to do more to help small businesses

Hundreds of small firms will go bust by the end of the year if ministers fail to deliver quickly on their pledge to increase bank lending, business leaders have warned.

Despite repeated calls for action from Gordon Brown and Chancellor Alistair Darling, it emerged that companies were still suffering from banks doubling overdraft charges and increasing interest rates.

The squeeze on bank lending puts huge pressure on the Government amid public expectation of a return for its £37 billion bailout with taxpayer cash.

Abbey yesterday increased rates by half a percentage point and Mr Brown was facing further embarrassment today as the nationalised northern Rock was expected to axe its tracker mortgages.

As Business Secretary Lord Mandelson prepared for a grilling by the House Of Lords, it emerged he had been personally warned by business leaders yesterday that firms were facing bankruptcy before Christmas.

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Tags: Alistair Darling, Banks, Economy, Financial Crisis, Gordon Brown, Government, Politics, Recession, U.K.

Stock markets across the world cracked yesterday, forcing Wall Street to suspend trading on a key futures contract to stem panic-selling while Moscow shut for business altogether.

Sharp losses in New York, London, Europe and the Far East raised the spectre that governments may be forced to impose emergency holidays to avert a meltdown across world stock markets.

Before Wall Street opened yesterday, American regulators suspended all trading of Dow Jones futures contracts, which had plunged. Such contracts allow traders to bet on the future direction of the Dow Jones index. The plunge had triggered an automatic circuit breaker, which halts trading to prevent a market sliding into freefall.

Nouriel Roubini, Professor of Economics at New York University, said that his prediction earlier this week that markets would have to be shut down is already coming true.

He said: “This morning, even before the markets in the US opened, the S&P futures fell by more than their daily limit. What I said yesterday has already started.”

A forced closure of stock markets in America would respresent the first time that Washington would have shut Wall Street since the terrorist attacks of September 2001. It would also have echoes of the 1930s, when President Franklin D. Roosevelt shut American banks during an enforced holiday.

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Tags: Bank of England, Barclays, ecomomy, Financial Crisis, Goldman Sachs, Gordon Brown, HSBC, Morgan Stanley, Nouriel Roubini, Russia, Stock Market, Treasury, U.K., U.S., Wall Street