 BUSINESS 4NETWORKING [Apologies to those not interested but............] |
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Posted on 20th Nov 2008 at 21:55
had this through on an email and it made me smile!
Foresight or short sight?
Astonishing what you can get away with. A 2% cut in interest rates within a month indicates to me that someone is either being very clever in revitalising the economy or they don’t know what they are doing, nor have they for quite some time.
There should be a lot of red faces in the country at the moment. I can’t help feeling that there are a lot of people in charge who are squeaking their way out of trouble when they should be held to account.
For a start our “super” regulator as they were announced in the late 90s, has failed miserably. It is all very well giving a light touch approach to regulation and then only reacting with a heavy hand when something goes wrong, but it depends upon which part of the financial services industry you are talking about. If it is a sector which through incompetence, deviousness or greed can bring the nation to a grinding halt, then one would perceive that a little more prescriptive regulation and control would be a good idea! Yes I know the credit crunch all started in the USA, but the fact is the UK and elsewhere jumped on the gravy train. Little thought was given to the impact of re-packaging such high-risk debt or enough attention paid to the risk rating of capital to ensure sufficient reserves were retained by banks. No one could foresee the global impact of this debacle as it unfolded last month, but let’s face it, there have been some clues along the way and one would imagine that our “super” regulator would have had access to information enabling them to deal with potential risks before they got out of hand. It would seem they have at least admitted their own incompetence with senior individuals working in banking regulation leaving over the last 12 months.
Now what about the Bank of England? They all seem like jolly good chaps. But for years we have heard the MPC telling us that the changes (or lack of them) being made to interest rates are with foresight to cope with the economy in 18-24 months time and meeting inflation targets. They have also been very quick to point out the boom and bust impact that large interest rate cuts would have on us all. Industry has been crying out for cuts for months with a lot more foretelling despite the BoE’s protestations of what this might do to inflation. In the main the cries fell on deaf ears until….
….Mr Brown, Mr Darling and their band of merry men appeared suddenly all to save us and get us out of a crisis. They have had absolutely nothing to do with us getting into the crisis apparently. They have come up with several new and innovative ways to halt a recession and give us long lasting stability and growth. Cutting interest rates (sorry the MPC is supposed to do that aren’t they?) and telling the banks to pass those on immediately will save a bit of face. Borrowing huge sums to prop up the financial system in the short term will save a bit more. I get the feeling that someone has recently realised just how unpopular he is and is trying to win us all over. Whatever next – tax cuts?
email: charmian@poldenfs.co.uk
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Posted on 21st Nov 2008 at 00:41
Charmian, it might be even more amusing if you told us who wrote it!!
There are a few things to add:
1. Whatever happens, Gordon never got us into the problem, OK?
2. If Gordon did get us into it over his 10-year span, Alastair will take the rap for his 1 year of tenure.
3. If Alastair gets us out of it, it will be because Gordon told him what to do.
4. If Alastair has got it wrong, he will be hung out to dry on his own.
5. Even if it somehow is shown to be Gordon's fault, it was only because the MPC gave him wrong information.
After all, you can't be Chancellor for 10 years and allow things to get into this kind of mess unless you are either ill-advised, (politically) greedy or stupid. Or, maybe, the job description for Chancellor of the Exchequer just didn't include "safeguarding the economy".
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Posted on 21st Nov 2008 at 06:03
Brown failed to mend the roof as Chancellor when the sun was shining. He now seems hell bent on destroying the foundations of free enterprise by state meddling.
My believe is that he'll go down in history as the most dangerous politician we have had since the last appeaser!
If somone rounds up a firing squad I'd like to volunteer and would like one of the live rounds.
We will all be paying the bills for his mismanagement for a generation.
It is frightenning that the majority appear to be unaware and react mindlessly to political manoevering.
End of rant.
Chris Slay, Director | Specialist Provider of Polish Jobs | 07977 131 389 | enquiries@skillsprovision.co.uk
Skills Provision Ltd is registered under the Gangmaster Act 2004
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Posted on 21st Nov 2008 at 07:46
Interesting - I kind of go with the spend and borrow now, pay for it in the next upturn - hopefully higher taxes at that point would stop the next boom being so large.
Of course that assumes a politician had the capability of taking a long term view
Graham Smith Business Services
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Posted on 21st Nov 2008 at 08:37
The Keynsian idea is to save up when things are good, to be able to spend when things are bad, thereby stimulating the economy. Good thinking.
This involves building up a surplus. We don't have one. Thus Government spending now involves robbing Peter to pay Paul, rather than putting money into the system to stimulate it. So it isn't going to work. It is also an accepted fact that Government spending is less effective than private spending.
In my opinion, the Government's only concern is to save its own neck. The consequences will be someone else's problem. Ours.
Oh and the only thing that saved the world economy last time was a big war. And we don't want that.
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Posted on 21st Nov 2008 at 09:09
I would be happy with the spend out of recession idea, if we were spending accumulated savings.
I think what is being hidden from us all, although it is obvious, is that the levels of tax needed to put right current borrow levels would be intolerably high. Not a penny or three on income tax, which would be bearable if unwelcome. That would not come near it. Not even close.
It would need to be 2 or maybe 3 times that level of tax. Obviously, income tax would not be where it fell - stealth taxes are where its at.....
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
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Posted on 21st Nov 2008 at 09:10
There's a lot of talk about 'boosting' the economy through tax cuts, thus giving the public more cash in their pockets.
I suspect that this is doomed to failure because a) many of those in employment have been scared, and so will sit on this as a windfall, and either boost their savings or try to reduce their debt or mortgage, and b) those out of work, and the news bulletins talk about 3m by mid 09, won't be paying tax, and therefore won't benefit.
Economist Peter Jay (ex Ambassador to USA and ex son-in-law of Jim Callaghan) suggested that handing out time-limited vouchers would be a better way of getting people to spend.
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Posted on 21st Nov 2008 at 10:24
Based on a £15billion giveaway and the accumulated deficits already in place have been estimated at £0.08 on income tax by the business writers in the Sunday Telegraph - no idea how valid the number is.
Chris Slay, Director | Specialist Provider of Polish Jobs | 07977 131 389 | enquiries@skillsprovision.co.uk
Skills Provision Ltd is registered under the Gangmaster Act 2004
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Posted on 21st Nov 2008 at 11:37
Big problem is that looking with hindsight, you are always then informed by the way events unfurled.
However the legacy of such stunningly incompetent decisions as Mr Brown selling half our gold reserves at a point when gold prices were at an all time low and then telling us the Boom and Bust was sorted, gives me very little confidence that politically we have a plan that is strategic. Only a plan that is knee jerk and one borne from a blame culture of 'it is not my fault', or look at me I can be seen to be doing 'something'!
If government were an SME, the banks would have withdrawn credit and the receivers would be in by now; whoever fault it turned out to be.
Time for good men and women SME business leaders to stand up and be counted and do good old fashioned leadership. We have precious little quality leadership from government currently! The problems is that it moves outside the economic situation into general public issues where no one will take responsibility ie Child protection, energy inflation management, local government and regulatory officials who buck pass the responsibility they are handsomely paid for, organisationally targeted to deliver and funded accordingly, to anyone but themselves.
This is where as business leaders (on the micro stage) we can make a difference by being: good leaders, competent strategic decision makers and maintaining business credibility.
My personal view (of course) and not that of Twentyfive. R
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Posted on 21st Nov 2008 at 11:57
In tough times especially it is both an opportunity and necessary for good leaders to emerge.
I agree with Rubert, there is little good leadership emerging in government right now, and less sound economic comment. Whilst I understand the desirability of moving in to support business, the kind of public borrowing currently happening is going to cripple UK business for a generation potentially.
Our challenge is, I agree, to run our businessess by sounder principles. To generate cash, not debt. To generate value, not empty theory. To provoke excellence, not mediocracy. To think long term, not about tomorrow's crisis alone.
The economic recovery will, in fact, be driven from those kinds of actions ultimately. The government will do whatever random knee jerk reaction seems to get them off the hook for another 24 hours. We have to learn to adapt to each new situation and still succeed.
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
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Posted on 21st Nov 2008 at 12:07
OK - so the surpluses aren't there to spend, so to stimulate the economy we have to give tax cuts or spend. Tax cuts may ot filter through tospend (as state) so the only way to guarantee is to spend.
Now I have lost concentration on this, but I thought I heard that our borrowing isn't that excessive (I guess dependent on whether you are talking about spending on investment or not) The borrowing for bailouts will probably repay at some point in the future. The conservative proposal to cut government spending doesn't seem to show a way of boosting the economy (with my wife as a public servant, it doesn't enthral me!).
£0.08 on income tax, keep corp tax where it is so as not to scare off investors - doesn't seem that scary in order to shorten a depression/recession, and control the next 'boom'.
And as I have said before I am generally a conservative and capitalist supporter!
Graham Smith Business Services
Helping To Make Your Accounts A Useful Tool For Business Success
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Management Accounts
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Posted on 21st Nov 2008 at 12:13
The new borrowing figures announced yesterday were massively higher than government predictions. And enough to be scary.
Even if 8p tax hikes would clear it, that is a big reduction in personal income. Which would scare people back out of the shops.
I think the reality is, the goverment has little choice. But, who has been in charge for the last 10 years?
Actually, I suspect the roots of this collapse are older than that, but in 10 years I have seen little evidence of accurate economic judgement in the halls of goverment. I actually expected Brown to be a good Chancellor. History will have to judge I guess
Paul Norman 4N North Tyneside and Oxford
Gibside Associates - a different approach
www.gibside.co.uk
Training for business with, no jargon. Consultancy that makes you think. Helping you be deliberately excellent.
Check here for training courses that might just suit you!
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Posted on 21st Nov 2008 at 12:56
Well hopefully the rumours on an election are true so we can make a change, but what are the alternatives as you dont ever seem to get enough info from any of them on what they will actually do, its just short term will it win me a vote stuff.
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Posted on 21st Nov 2008 at 13:22
I'll vounteer to make the firing squad
Simon Barber
FILEBASE
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simonbarber@filebase.biz
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Posted on 21st Nov 2008 at 16:11
OK Simon , that makes 2 of us - where are the other 10?
Chris Slay, Director | Specialist Provider of Polish Jobs | 07977 131 389 | enquiries@skillsprovision.co.uk
Skills Provision Ltd is registered under the Gangmaster Act 2004
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