Bob Diamond resigns

[mjdgreg]

By the way. Break your habit and check your facts. Go check which party the Guardian supported at the last Election.

Got me on that one. I never read any newspapers or books and always assumed the Guardian was a Labour supporter. Glad to hear they've copped themselves on and stopped supporting them.

[BillyStubbsTears]

I never read any newspapers or books

You don't say...

[BillyStubbsTears]

If Billy's plan was fully implemented then houses wouldn't be becoming more affordable. There'd be that much money sloshing around, the housing bubble wouldn't deflate and would probably grow even bigger. Hopefully when prices have dropped even further (I predict a further 30% fall) first-time buyers will find it easier to get a roof over their heads.

Oi. Goldfish brain. Why do you think I said that the very first thing the Govt should do as a stimulus is build many new houses? That way, as well as putting people to work, we expand the stock of houses. The chronic shortage of decent low cost housing is the key driver behind the house price increase of the last 20 years, and has encouraged a generation of leech-like speculator/landlords who add nothing of value to the economy).

Build more houses. The price comes down.

Or do the rules of supply and demand not operate in Mickonomics?

[mjdgreg]

So are you saying that we should have borrowed even more money and taken the deficit over 12%?

[BillyStubbsTears]

Why not? For another year or two. In order to get the economy kick started. THEN you reduce the deficit, once the private sector is back on its feet. Reducing the deficit when the private sector was on its back was economically illiterate, ideologically driven madness.

Are you saying that you preferred us to rein back the deficit and flat-line the economy, as was predicted to happen and as actually HAS happened? Is that a better outcome?

[mjdgreg]

The chronic shortage of decent low cost housing is the key driver behind the house price increase of the last 20 years, and has encouraged a generation of leech-like speculator/landlords who add nothing of value to the economy).

I'll have you know that it is people like me that have made it easier for immigrants to come into the country and do the jobs that the English won't do. Buying a house is not right for these people who will one day want to go home. Mind you, the ones I've spoken to look like they like our high wages and welfare state so much that they are likely to stay.

Governments building houses to rent is not the way forward. You only end up distorting the housing market and encouraging people to rent instead of buy. How many nice council estates are there? I can't think of one. They're always rough and encourage a dependency culture.

There is no excuse for most people in Doncaster not buying their house instead of renting. IN MOST CASES IT IS CHEAPER TO BUY THAN RENT. Most of you renters out there need to cop yourselves on. It is far too easy for renters to claim welfare and expect the likes of me to pay their rent. The less social housing the better.

[BillyStubbsTears]

Mick. I know you don't read books but there's no excuse for not reading my posts. I didn't say the Govt should build houses to rent. I said they should build houses.

Those would primarily be for sale, thus bringing house prices down.

As for distorting the markets, a country in which the average house price is more than 4 times average earnings in almost 50% of council regions is already pretty distorted. The market has clearly not worked but needs intervention to correct it.

Simple really when you read instead of assuming.

[Filo]

By the way. Break your habit and check your facts. Go check which party the Guardian supported at the last Election.

Got me on that one. I never read any newspapers or books and always assumed the Guardian was a Labour supporter. Glad to hear they've copped themselves on and stopped supporting them.

It makes one wonder why you Keep copy and pasting from them, and how you came across them in the first place!

[mjdgreg]

If there's one thing guaranteed to distort the housing market it's if the government gets involved. Far better to let the housing bubble deflate a lot faster by raising interest rates now to get them back to a more affordable level. This will also sort inflation out.

It's not true that we need to build more houses. What we need to do is make use of all the ones that are standing empty. There are 79,000 in London alone.

[mjdgreg]

Why not? For another year or two. In order to get the economy kick started. THEN you reduce the deficit, once the private sector is back on its feet. Reducing the deficit when the private sector was on its back was economically illiterate, ideologically driven madness.

Are you saying that you preferred us to rein back the deficit and flat-line the economy, as was predicted to happen and as actually HAS happened? Is that a better outcome?

I'm a bit confused as to where you stand on the deficit. Even though it was heading towards 12% at the time of the election, you seem to be saying we should have spent more money and ended up with a larger deficit than 12%.

However when I discussed the deficit with you on a different thread you said:

Christ up above, here we go again. mjdgreg needing some lessons in how to do basic thinking.

Let's start with the headlines of what Lagarde of the IMF said.
"when I think back myself of May 2010 when the UK deficit was at 11%, and I try to imagine what the situation would be like today if no such fiscal consolidation programme had been decided. I shiver."

Quite. I don't think you'd find anyone who disagrees with that. You would also find no-one who had the policy of keeping that level of deficit. Labour certainly didn't have that policy.

One year after the coalition had been in office Lagarde was saying' Thank God Labour weren't in power because they weren't going to start cutting the deficit straight away. If they'd been elected I dread to think what state the county's finances would now be in.' As I pointed out to you at the time, Labour did have a policy of keeping the deficit at that level for the first year in power after the election. They were going to start cutting the deficit in the second year of their term in office. So you got that one wrong.

Can you see why I'm confused because then you were advocating cutting the deficit straight away from 11%. You said ' Quite. I don't think you'd find anyone who disagrees with that.' Whereas now you are saying that going over 12% is what we should have done and should still do. Seems like a massive contradiction to me.

I'd be grateful if you could clarify these two completely different views that you seem to hold.

[BillyStubbsTears]

Is that it Mick? Is that you hardening up and taking the gloves off? I'm quaking...

 Read the whole of my post. I said clearly that there was, and continues to be a need to balance deficit reduction with growth. I have said and continue to say that deficits must be brought down OVER THE MEDIUM TERM. Lagarde was saying that if there had been no deficit reduction plan, we would have been in trouble. I agree and I agreed then. The question always was when and how quickly. My comment in that post was addressing the fact that no one suggested that 12% deficits would go on in perpetuity. Of course they won't. They should come down once the economic recovery is established. And not before. Otherwise, reducing them is utterly self-defeating. That was why Labour would have kept the deficit higher than the Tories for longer. Because they knew then what has been proven to be the case - that reducing the deficit immediately would lead to economic growth collapsing.

By the way, why should we take the IMF word as being gospel? Why should we assume that they are correct in saying that if there wasn't a deficit reduction plan then things would have gone tits up? They have been wrong on every other prediction about the UK economy recently.

In 2009, they predicted a -0.4% contraction in the UK for 2010. They didn't believe that Brown's fiscal stimulus would work. Actual outcome? 2.1% growth, even allowing for the economy crashing into reverse in Q4 after the Coalition cuts started (remember Gideon blaming it all on the snow?)

In 2010, after the Election, they predicted that there would be 2.1% UK growth in 2011. They said that the Coalition deficit reduction plan would add confidence to the economy. Actual result? 0.6% growth as the economy went into flatline mode.

In 2011, they predicted that the UK would grow by 1.6% in 2012. Result? Well, we contracted by 0.3% in the first quarter, and even the most optimistic forecasts indicate that we flatlined at best in Q2. So we would need a pretty spectacular recovery over Summer and Autumn to come remotely close to the IMF prediction.

So, the IMF has been wrong on every call in predicting the UK performance. They didn't believe that Brown's stimulus would produce growth. It did. They didn't believe that Osborne's spending cuts would cripple growth. They have done.

Wrong at each turn. Why should we listen to them on the deficit?

Me, I've become increasingly bullish on the deficit and bond markets issue. Having spent a bit of time looking at how bond rates have moved over the last few years, I'm increasingly skeptical of the Austrian idea that we will end up in Bond Hell if we don't slash deficits as rapidly as possible. There is no evidence that this is actually the case. And, being an empirical scientist by trade, theories that are not back up by evidence go out the window for me.

[mjdgreg]

The question always was when and how quickly.

Your previous post is a load of old waffle. You clearly stated that Labour had a plan to bring the deficit under control as soon as they took office. A plan you clearly agreed with. 11% was too high.  Lagarde was saying how lucky the UK was that Labour didn't win the election and that the coalition did a good job in bringing the deficit down in the first year. If they hadn't done this then she dreads to think what state we'd have been in.

You agreed with every word she said. You said Labour would have brought the deficit down to under 11% in their first year. Actually Labour's plan would have kicked in one year after they took office. 11% was the minimum Labour wanted in the first year of taking charge.  YOU WERE WRONG.  You wanted it to be less. Therefore you were clearly agreeing with the coalition plan not the Labour one. pmsl.

Now you are saying we should have spent even more money and took the deficit over 12%. Unbelievable contradiction. We already had the biggest deficit in the whole of Europe and you wanted us to go out on even more of a limb. You are now saying the complete opposite of what you were saying a couple of months ago. Unbelievable contradiction.

Just admit that you have changed your mind in the space of two months and admit  that there is no consistency to your argument. It changes month by month whereas mine has been consistent from day one. You have conclusively been proved to be as changeable as the weather and your credibility is now at rock bottom.

Retire gracelessly from the battle and admit defeat. I have no wish to inflict further wounds on your severely tarnished reputation. It is time for someone else to step forward and receive a severe battering. You have fought well but at the end of the day you have been found to be seriously lacking in having the intellect to do battle with someone such as myself. 

[mjdgreg]

Me, I've become increasingly bullshitish on the deficit and bond markets issue.

[mjdgreg]

Having spent a bit of time looking at how bond rates have moved over the last few years, I'm increasingly skeptical of the Austrian idea that we will end up in Bond Hell if we don't slash deficits as rapidly as possible. There is no evidence that this is actually the case. And, being an empirical scientist by trade, theories that are not back up by evidence go out the window for me.

As am empirical scientologist, you can find no evidence that we will end up in Bond Hell. What about Greece, Spain, Italy, Ireland, Portugal, Cyprus etc. They all got into Bond Hell despite having lower deficits than the UK. We're not slashing deficits as rapidly as possible. The coalition have only cut spending by 0.8%. They've barely scratched the surface. Fair play to George he has managed to convince nearly everyone out there (except me) that he is cutting spending like a mad man.

Nothing could be further from the truth. His policy of keeping spending at pretty much what Labour were doing is exactly the policy you want, yet you constantly criticise him for it. He has managed to fool the bond markets into thinking he is being tough and has managed to keep our Triple AAA rating and low interest rates for now at least. He should be cutting much more savagely because one day soon the markets are going to wise up and then we will be in Bond Hell.

[mjdgreg]

Lagarde was saying that if there had been no deficit reduction plan, we would have been in trouble.

She was saying that if a deficit plan hadn't been implemented immediately (not over the medium term) she dreads to think what might have happened. You agreed then, but don't agree now.

[BillyStubbsTears]

Mick

A very great man who was right about most things once said:"When the facts change, I change my mind. What do YOU do sir?"

Two months ago, I was still unaware of the precise scale of the way that bond rates have done exactly the opposite of what the Austrians and the IMF say they must do in response to increased deficits. I have spent a long time looking at the long term trends in bond rates in many countries. And I have come to the conclusion that there is far, far more scope to put the deficit even more firmly into second place as the most urgent problem facing us.

I have always, ALWAYS said that dealing with the deficit is something that comes as a consequence of growth, not the other way round. Growth is THE most urgent thing that we need. That required us to go lighter on the deficit. No argument about that. Equally, it is silly to think that the deficit can carry in increasing indefinitely. So there is a balance to be struck between holding your nerve now and cutting in the medium term once the private sector is active again.

 Previously, I WAS worried that there would be bond market problems if put off the cuts too long. I was seduced by the persuasive arguments about the correlation between debt and bond rates. But it turns out that those arguments are based on piss and waffle and a particular political ideology. The evidence, when you look at it, doesn't exist. So, your hero has been preficting Bond Armageddon for 4 and a half years, and we're further away from it that ever.

At the same time, the evidence is mounting by the week that the economy is struggling even more than anyone thought. We are on our knees with no sign whatsoever of a recovery. Even I didn't think that there would be no growth whatsoever for 2 years once the Coalition's policies kicked in. I assumed growth would be anemic, not non-existence.

So. We now see that bond rates are not a clear and present danger. We now see that the cuts have been evening devastating than we expected.

The facts have changed. I have made a slight change in my opinion over the weight that we should give to managing the deficit compared to kick starting the economy. What do YOU do Sir? Presumably, keep insisting that the Schiff/Austrian/IMF analysis is correct, despite all the evidence against it?

You ever read Aesop's fable about the ass and the cliff face? Go dig it out.

[BillyStubbsTears]

Having spent a bit of time looking at how bond rates have moved over the last few years, I'm increasingly skeptical of the Austrian idea that we will end up in Bond Hell if we don't slash deficits as rapidly as possible. There is no evidence that this is actually the case. And, being an empirical scientist by trade, theories that are not back up by evidence go out the window for me.

As am empirical scientologist, you can find no evidence that we will end up in Bond Hell. What about Greece, Spain, Italy, Ireland, Portugal, Cyprus etc. They all got into Bond Hell despite having lower deficits than the UK. We're not slashing deficits as rapidly as possible. The coalition have only cut spending by 0.8%. They've barely scratched the surface. Fair play to George he has managed to convince nearly everyone out there (except me) that he is cutting spending like a mad man.

Nothing could be further from the truth. His policy of keeping spending at pretty much what Labour were doing is exactly the policy you want, yet you constantly criticise him for it. He has managed to fool the bond markets into thinking he is being tough and has managed to keep our Triple AAA rating and low interest rates for now at least. He should be cutting much more savagely because one day soon the markets are going to wise up and then we will be in Bond Hell.

Mick. You're a clever lad. Go and think REALLY hard about a really important difference between the economic flexibility of those countries, and that of the UK, USA and Japan (the countries for which there is no correlation between debt and bond rates). Think about it REALLY hard and see if a light bulb comes on above your head.

[BillyStubbsTears]

f***ing hell Mick, every day is Groundhog Day in an argument with you. Every day your arguments are systematically taken apart. Every day you start afresh with the same arguments. One day you might get inside Andie McDowell's kecks, but it's a really long, slow, boring process.

1) Osborne is following Labour's spending plans? No he isn't. We went through this two days back. Even 0.8% is a huge difference. Enough to account for a quarter of a million jobs or so.

2) Triple A rating. We went through this two days back. Japan lost its AAA rating years ago. It currently has the lowest bond rates in its history. America lost it 9 months ago. It's rates have come down since then. Why do we assume that the ratings agencies are omniscient beings?

3) Bond rates will rise eventually. We went through this yesterday. If you make comments like that, you need to provide supporting evidence. You need to explain why they have not done in Japan which has a worse debt problem than us. For 20 years, Japan's bond rates have come down. You need an explanation for that Mick. You need to explain why US bond rates have fallen since they lost their AAA rating. You need to explain why our own bond rates halved between 07-10 even when (you would say) our deficit was out of control. By your analysis Mick, the markets should have taken fright 3-4 years ago. Peter Schiff lost billions for his clients in 08-09 by advising them that US bond rates were go to explode when they didn't. How long do we have to wait for you to be proved right Mick/Peter?

Ignoring arguments and simply re-stating your belief over and over again without providing supporting evidence is what religious zealots do Mick. I thought you hated religion?

[mjdgreg]

1) Osborne is following Labour's spending plans? No he isn't. We went through this two days back. Even 0.8% is a huge difference. Enough to account for a quarter of a million jobs or so.

Look, we've still got far too many unproductive public sector jobs so the last thing we need is for the government to increase our borrowings to create even more non-jobs. 0.8% is tiny in the context of what we're talking about and to argue that it is a huge amount is extremely foolish.

You are totally wrong once again about the difference in the coalition’s deficit reduction programme and the one proposed by Labour at the time of the last election. There is hardly any difference. So to keep on banging on about the coalition cutting far faster and deeper than Labour is very wide of the mark (as usual).  Here's the evidence.

The 2009 Pre-Budget Report showed that Labour’s plan was to freeze TME (Total Managed Expenditure) in real terms from the years 11/12 to 14/15. A detailed analysis carried out by the Institute of Fiscal Studies found that  debt interest, social security and other items coming under the heading of AME (Annually Managed Expenditure) would have risen between 11/12 – 14/15. This meant that Labour would have had to cut DEL (Departmental Expenditure Limits) in the same period by £43.8 billion or 11.4% just to avoid increasing TME.

How different is this from George’s original plan? According to HM Treasury's Public Expenditure Statistical Analyses, George proposed to cut DEL in the same period by £43.27 billion or 11.53%. So this conclusively shows that when it comes to how fast and how deep the cuts are, there's hardly any difference between what Labour was proposing and what George actually started doing. In fact now that George has extended Plan A by two years the coalition are actually cutting by a lesser amount than Labour were proposing.

[mjdgreg]

2) Triple A rating. We went through this two days back. Japan lost its AAA rating years ago. It currently has the lowest bond rates in its history. America lost it 9 months ago. It's rates have come down since then. Why do we assume that the ratings agencies are omniscient beings?

I'd much rather have a Triple A rating than not. At the moment we are living in extremely worrying times and the normal rules of the game don't apply. It is very unwise to assume that if you lose your Triple A rating your bond rates will go lower. No-one knows what the future holds (and that even includes me). All I do know is that the fundamentals are badly wrong and it is better to try and get your house in order as soon as possible to enable you to weather the turbulent storms that lie ahead.

'Why do we assume that the ratings agencies are omniscient beings?' I don't. But unfortunately for us, a lot of key decision-makers do. I am the closest thing that I have ever come across that fits the 'omniscient being' description.

[mjdgreg]

3) Bond rates will rise eventually.

At last you are starting to see sense. Nothing is more certain. What goes down must go up. Especially when there is no logic behind why it has gone down in the first place. It's not a matter of if, it's a matter of when.

[mjdgreg]

mjdgreg. You're a clever lad. Go and think REALLY hard about a really important difference between the economic flexibility of those countries, and that of the UK, USA and Japan (the countries for which there is no correlation between debt and bond rates). Think about it REALLY hard and see if a light bulb comes on above your head.

The main difference is that we can print money to devalue our currencies and increase inflation. This only puts off the day of reckoning and means we stagnate a lot longer than we should if only we were prepared to take the medicine of a short sharp recession.

[Donnywolf]

SECONDS AWAY

ROUND TWO

DING DING

 

[BillyStubbsTears]

Not from me chief. Off on holiday later this week and am too busy making sure that everyone in my company knows what they are doing before I leave.

Plus, I thought it'd be interesting to stay quiet for a while and give Mick-Peter a chance to go a full 24 hours without making a dick of himself. I didn't think he had it in him, but I take my hat off to him.

I'm off the scene for the thick end of three weeks now. I'm leaving with particularly depressing news from the IMF today, who have (once again) had to downgrade their assessment of UK growth, just like they have had to do every year since the Election. Just like some of us were predicting would happen back then. For all the reasons that I've been trying to explain over the last few days.

The IMF are now saying (again...) that they got it wrong (again), and our economy is going to flat-line for a third year. But it'll be alright next year, because next year we'll rise off the canvas and have 1.6% growth. Until we get to next year and they say "ah yeah...we got that wrong...make that 0.3% growth." And in the meantime, they insist that they have been right all along to tell the UK Govt that bringing the deficit down is the most important thing...

This last two years has been like a slow motion car crash. Anyone who has ever glanced at Keynes's work knew what would happen if deficit reduction was placed above all else. But we went right ahead and did it anyway. With the likes of the IMF backing us and telling us it will all come right if we just do the right thing.

The entire ruling class this side of the Atlantic has wilfully forgotten the single most important economic lesson that was learned in the 20th Century. If it wasn't such an important issue, if the economic future of our country wasn't at stake and if perfectly decent and employable people weren't having their lives pissed away, it'd be f**king laughable.

[Donnywolf]

Have a great time .... and doubtless Mick will have set his alarm clock and will await your return

Dont forget to bring him something nice back 

[mjdgreg]

Plus, I thought it'd be interesting to stay quiet for a while and give mjdgreg a chance to go a full 24 hours without making a dick of himself. I didn't think he had it in him, but I take my hat off to him.

The reason you've stayed quiet is because you can't refute my arguments. You are the one that has made himself look a dick by contradicting yourself so conclusively on reducing the deficit in the space of less than 2 months. Fido has also made himself look a dick by being unable to find any contradictions in my posts. He was barking up the wrong tree on that one.

Now to a further contradiction. You have stated that if you were given a tax cut you would use the money to pay down your mortgage. This goes against everything you bang on about. According to you we need to be spending not paying off debt. It is hypocritical of you in the extreme to argue this point of view and then to totally go against this argument by paying down your debts. Unbelievable.

I on the other hand am the one that is spending and rescuing the economy!!! (according to you). Let's think about it for a minute. I'd didn't believe Brown when he said he had abolished boom and bust. I have never been in debt apart from a mortgage which I made an effort to pay off early. I now no longer have a mortgage. I can now live in my house 'rent free'.

I've always saved money. I used this money to buy other properties (all also mortgage free). I've also bough solar panels and will be buying another house soon just as soon as I've saved up some more money. I am saving the economy you are not. As a typical leftie you're wanting others to spend while you get your debts paid off. No wonder you have conclusively lost this debate.

We need to get a saving and production culture going in this country. Not a borrow and consume culture like the one you advocate. My strategy works. I don't have a mortgage or any debts. You do. I am spending. You're paying off your debts. It's a no brainer.

On that note, enjoy your 3 week holiday (3 weeks!!!). No doubt this will be costing a few quid and will be benefiting a foreign country. You may have been better off hardening up and not wasting this money and used it instead to pay off your debts. But then I forgot, you are a consumer not a saver. At least you'll have time to lick your wounds and come back refreshed for a further savage beating.

[BillyStubbsTears]

Oh! So close to 48 hours, but he couldn't quite make it.

Keep your opinions on what I do with my holidays, where I go and how I finance it to yourself, you stupid, arrogant prick. You haven't got the first idea.

[Filo]

I`ve got it! Who`s arrogant and has n`t got a clue? Mick?

Step forward George Gideon Osbourne! 

[big fat yorkshire pudding]

BST couple of things, you say you want to see more houses built for sale to reduce house prices.  Well chances are that may, but then that would cause a knock on effect wouldn't it?  Current householders on huge mortgages (That they should never have got) can't sell, are saddled with huge mortgages and you end up with another negative equity situation.....

Also, I'm not sure there is an issue in the housing market, supply is there it's the demand that isn't, because the reduction in prices needed to help the younger end of the market would bankrupt half the country.  Surely given the size of many people's mortgages it would be crazy to implement any scheme that reduces house prices, the key is to prevent them from growing unsustainably.

[mjdgreg]

Keep your opinions on what I do with my holidays, where I go and how I finance it to yourself, you stupid, arrogant prick. You haven't got the first idea.

Bit touchy aren't we! I was merely trying to offer you some excellent advice on hardening up.