The Good News Keeps On Coming

[River Don]

IC1967

The worlds population is still growing at just above 1% I think. Quite a small rate compared with the last century but still growing all the same. Estimates suggest the worlds population will not peak until somewhere between 2050 and 2075, so there is quite a long way to go. At the same time people across the globe are consuming ever more stuff, striving to reach western levels of prosperity.

On the other hand global production of oil has plateaued since about 2004. Every day we use up more of the easily got oil and have to find ever more of the harder to get at and therefore more expensive stuff.

I can only see oil prices rising in the longterm and by extension the price of pretty much everything we consume. That or else prices going absolutely haywire as economies collapse.

[IC1967]

You could well be right about oil. I'm talking primarily about the UK. We will suffer deflation but that does not mean other countries will. Only the ones with an ageing population.

[River Don]

The UK doesn't live in isolation from the rest of the world. If oil prices and by extension commodity prices are rising then the UK won't be protected from that.

Perhaps an ageing population might mitigate some of the effects here in the UK a little but I think not that much. People need fuel and food to live, markets are global.

For the time being oil has dropped back a fraction, food prices have fallen too, Osbournes stimulus is happening at a relatively benign time. I have a feeling the economic news will remain quite positive for a while yet.

Here's an interesting little piece.

http://www.zerohedge.com/news/2014-01-22/britains-recovery-too-good-be-true

[BillyStubbsTears]

RD

Please not Tyler  Durden. He's been saying the "interest rates to go up NOW" line since the crisis began. Look what that did to the Euro Zone.

[IC1967]

It just keeps on coming and coming. Unemployment down to 7.1%!!! Labour must be getting seriously worried that things are getting better much faster than anyone anticipated. It's only 5 months ago that the BOE thought unemployment wouldn't hit 7% until 2016. Just shows what they know.

I love it when Ed Balls gets interviewed now about the pickup in the economy and he begrudgingly welcomes the good news. You can tell he is being very insincere and would like nothing better than for the economy to be going down the toilet. The only thing going down the toilet is Labour's chances of winning the next election.

http://www.bbc.co.uk/news/business-25841570

[BillyStubbsTears]

Politics eh?

Balls predicts in 2010 that premature Austerity delays recovery. Osborne says it won't.

We have Austerity.

The recovery is delayed for three years, during which time our economy falls 6-8% below the trend it had followed for 60 years, and we have the longer spell of 2+million unemployment.

Then, after 3 years, we get a very modest improvement.

Conclusion?

Obviously Balls was wrong all along and Osborne was right.

[River Don]

BST

In this case it isn't really Tyler Duerden, it's one Nick Beecroft, whoever he is. I think the first point is most pertinent.

[IC1967]

Conclusion?

Obviously Balls was wrong all along and Osborne was right.

At last you've seen the light. About time. The number of things Balls has been wrong about is too long to list.

[RedJ]

Only quoting the part of the post that suits you, that's not like you Mick.

Sarcasm klaxon.

[IC1967]

Then, after 3 years, we get a very modest improvement.

What planet are you on? Unemployment falling by a huge amount and the best growth rate of any European country and you say very modest improvement. Laughable.

[BillyStubbsTears]

Mick

I really don't expect any better from you, but the worry is that other people who DO have a brain seem to be losing their memory and forgetting the context.

Here, once again, is the context of this wonderful recovery.

http://niesr.ac.uk/sites/default/files/publications/gdp0114press.pdf

Three wasted years, in which we had Austerity to get the deficit eliminated by 2015 (and failed). And then we get a consumer spending splurge that lifts the economy modestly and it's called "success".

It is beyond laughable.

As I've said before, the precise analogy is running on the spot for three hours whilst everyone else sets off on a race, then starting to run at a slightly above average pace for 30 minutes and claiming to be the best runner in the race.

Par for the course for Mick's concept of logic. Idiotic to anyone else.

[BillyStubbsTears]

RD. Fair point. I hadn't noticed that it wasn't by Tyler Durden. And yes, of course the first point is incontestable.

That said, I generally find that a good working principle is "If Tyler Durden agrees with it, it's probably unreconstituted nonsense." I came to that conclusion after he (or they...whatever) referred approvingly to an article that called JK Galbraith a Marxist. When you're at that Mickist level of debate, intellectual content has left the building.

[IC1967]

The recovery is delayed for three years, during which time our economy falls 6-8% below the trend it had followed for 60 years, and we have the longer spell of 2+million unemployment.

You missed a few words out of that statement. Here's what you should have (not of) said.

The recovery is delayed for three years, because the Tories are having to clear up the monumental mess left behind by Labour, during which time our economy falls 6-8% below the trend it had followed for 60 years, and we have the longer spell of 2+million unemployment.

[BillyStubbsTears]

Mick.

"Clearing up the mess"? Give me strength.

The plan was to

a) eliminate the deficit by 2015. Failed.
b) have consistent growth from 2010 despite the cuts: Failed.
c) transform the economy by encouraging manufacture and exports (anyone remember "March of the Makers?"): Failed.

We have had catastrophic economic performance for three years,  predominantly self-inflicted, with the coup de grace applied by Europe's self-immolation (caused by following precisely the same Austerity path).

We then, finally, start to grow, NOT through a transformed economy, NOT through exports, but through a good, old fashioned consumer boom financed by falling personal savings, and we call that a success.

[IC1967]

"Clearing up the mess"? Give me strength.

You obviously need reminding of what the mess was. I'll explain it for you.

During their time in office they punished wealth-creation and created perverse incentives for welfare dependency. They supported  lax regulation of the financial system and  built up the largest structural deficit in the developed world. They created an unsustainable boom and steered the economy towards its biggest ever bust.

I could go on but I think that is more than enough to prove my point. You talk as if the coalition came to power with the economy performing normally. You forget the crash and the problems in the Eurozone and the rest of the world. It's no wonder it took longer to get things back to 'normal' as things turned out to be a lot worse than expected.

Just have the good grace to admit Labour badly screwed things up (like they always do) and give the coalition credit for getting us back on track.

[River Don]

IC

It's worth remembering the Conservative party pushed and lobbied hard for greater relaxation of regulations of financial institutions throughout that whole period of Gordon Browns government.

[IC1967]

It's worth remembering the Conservative party pushed and lobbied hard for greater relaxation of regulations of financial institutions throughout that whole period of Gordon Browns government.

It's not that simple. Gordon Brown very foolishly gave the FSA responsibilities that they clearly weren't suited for for or designed for. This meant that the banks weren't properly scrutinised. There is a difference between 'lax' and 'greater relaxation'. They are not the same thing. You can have less regulation of an industry and it can perform better. You can have lax regulation and it can turn into a disaster just as it did.

[BillyStubbsTears]

Hindsight eh? Int it great.

Now, who were those people 10 years ago screaming "The problem is that the well-known control freak Gordon Brown has set up a regulatory body that is way too lax, whereas he obviously should be copying the approach of other places in the world that have got regulation right and won't have a systemic banking crisis on a few years time. Like the USA. And the EZ. And Iceland."

Remind me Mick. Who were they?

Hindsight. The comfort of the intellectually bankrupt.

[IC1967]

You totally miss the point. It was the responsibilities that he gave to the FSA to oversee banking that showed he was totally incompetent.  It's not the regulations that were too lax it is the way they were implemented by the FSA that was the main problem. This organisation was not the one that should have (not of) been given responsibility for the banks. Something you obviously seem totally unaware of.

http://www.moneymarketing.co.uk/politics/gordon-brown-i-made-a-big-mistake-when-setting-up-fsa/1029361.article

[BillyStubbsTears]

Mick

And the hindsight issue?

[BillyStubbsTears]

And when you've finished with hindsight, you might want to think about examples of ANY Prime Minister or major politician who hasn't made a huge mistake.

Blair: Iraq
Major: ERM
Thatcher: Take your pick. Poll Tax will do, but the insane implementation of experimental monetarist policies in 1980-82 is a bigger one.
Callaghan: IMF and Winter of Discontent
Heath: Three Day Week
Wilson: Sterling Devaluation
Eden: Suez
Churchill: Gallipoli

MacMillan didn't make many huge mistakes, but then again he did little actively beneficial - just presided over a gentle decay.

[IC1967]

If I listed all the mistakes Labour made I'd be here all day.

[RedRover45]

If I listed all the mistakes Labour made I'd be here all day.

Go for it then Mick, you don't appear to have anything else to do with your time....yawn

[IC1967]

Hindsight eh? Int it great.

Now, who were those people 10 years ago screaming "The problem is that the well-known control freak Gordon Brown has set up a regulatory body that is way too lax, whereas he obviously should be copying the approach of other places in the world that have got regulation right and won't have a systemic banking crisis on a few years time. Like the USA. And the EZ. And Iceland."

Remind me Mick. Who were they?

Hindsight. The comfort of the intellectually bankrupt.

Hindsight? You are spouting your usual drivel and showing that you have a selective memory (or just a very bad one).

Gordon Brown was warned on banking collapse in 1997. He was warned that the changes to the banking system he was bringing in, in particular removing the role of bank regulator from the Bank of England and putting it into the hands of the FSA would lead to a systemic banking failure.

When discussing the bill that passed the changes to the banking system the Conservative Shadow Chancellor, Peter Lilley said:
"With the removal of banking control to the Financial Services Authority--the "super-SIB"--it is difficult to see how and whether the Bank remains, as it surely must, responsible for ensuring the liquidity of the banking system and preventing systemic collapse".

He also said, "We have no objection to the objective of trying to bring greater simplicity and one-stop shopping to the business of financial regulation, but we fear that the Government may, almost casually, have bitten off more than they can chew. The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day".

Now I require you to issue an abject apology immediately for your disproven 'hindsight' jibe. It will be immediately accepted.

[BillyStubbsTears]

Mick

Here we go again. You Google something. Find some info that sounds vaguely suitable and post it without a second's thought. How many times have we trotted down this boulevard now Mick? Twenty? Thirty? I've lost count.

You vomit up a comment from a political opponent that is utterly devoid of any content. It is the usual political cut and thrust of "condemn anything my opponent does whether I have anything concrete to offer or not".

Let's look at the one substantive point that Lilley made.

The BoE WAS always responsible for ensuring the liquidity of the banking system and preventing systemic collapse that was always clear. And that was precisely what it did in 2008. We didn't have systemic collapse precisely because the BoE provided liquidity to the system when the shit hit the fan. (By the way, YOU have always claimed to be totally against that policy.)

So let's have a think about it. Peter Lilley said that it was unclear whether the BoE would have the responsibility for something. In fact, it was perfectly clear and when we ran into the biggest crisis in 80 years, the BoE played exactly the role it was supposed to. So the criticism was...? No, me neither Mick.

And to cap it all, if Lilley's criticism HAD been correct, it would have meant that Brown had made precisely the sort of change that YOU Mick, tell us with depressing regularity that you would have liked to have seen - allowing banks to go bust.

How old are you by the way? You give every impression of being a moderately precocious 13 year old.

[RedRover45]

Think he mentioned somewhere that he was 26, this of course could be yet another fairy tale....

[IC1967]

You'd argue black was white if you thought you could get away with it. The greatest regulatory failure that Labour were responsible for is the abject dereliction of duty by the financial regulators. Gordon set up a tripartite system of regulation in which the BoE was deprived of responsibility for banking regulation (which almost precipitated the resignation of the governor) and gave it responsibility for managing inflation. The FSA was given responsibility for supervising financial markets and the Treasury was to design the overall structure of regulation.

This tripartite regulatory model broke so many of the most fundamental rules of management that its eventual failure at a time of stress was easily predictable. For starters the BoE was given the wrong target. It was told to monitor the Consumer Price Index rather than the Retail Price Index. The problem was that the CPI does not include housing costs whereas the RPI does. So year after year the BoE could merrily report that inflation was bumping along around the 2% target while, in fact, there was a massive, unsustainable bubble in house prices, which none of the regulators apparently noticed.

A second concern was that in a crisis you need a single line of command - one person or body must have a clear control and accountability. Yet by spreading responsibility between three quite different organisations in an unclear way, Gordon had designed a three-legged camel.

The most fundamental error Brown made was to give what was essentially a consumer  services regulator, the FSA, responsibility for macroeconomic management. The whole ethos, background and skill-set of the FSA was based on regulating the selling of financial products - pensions, savings, investments, unit trusts, mortgages, Ponzi schemes and so on. As mis-selling scandal followed mis-selling scandal with depressing regularity, it seems clear that the FSA was not even up to that job. Worse still, it simply didn't have the knowledge or experience to be given overall responsibility for the regulation of financial markets. This is the monumental mistake Gordon made. He made the FSA responsible for the overall stability of the main players in the financial markets - a role they were clearly not suited for.

The rest is history.

He was warned about the dangers of setting up the FSA as the bill went through parliament (also the BoE governor nearly resigned over the changes to its role). Here is a bigger transcript of what the then shadow chancellor said which proves this point conclusively. No need for hindsight.


"What happens if the needs of the banking system conflict with those of the inflationary target? That has happened in the past in the United States, and it could conceivably be happening in Japan. I understand that there is a suggestion that a committee is to be established to work between the Bank, the FSA and the Treasury to try to cope with that sort of problem. If that is necessary, why is it necessary to hive off powers in the first place?

That brings me to the creation of the FSA as a super-SIB. The Bill is only part of the process, but it will on implementation directly conflict with pre-election statements. More importantly, concerns expressed by the Chief Secretary when in opposition may, although he has disowned them today, prove well founded.

The coverage of the FSA will be huge; its objectives will be many, and potentially in conflict with one another. The range of its activities will be so diverse that no one person in it will understand them all. Its structure will be as complex as those of the organisations that it replaces, if not more so. Practitioner involvement is likely to diminish, and costs are likely to escalate as salaries are equalised upwards.

We have no objection to the objective of trying to bring greater simplicity and one-stop shopping to the business of financial regulation, but we fear that the Government may, almost casually, have bitten off more than they can chew. The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day. We shall observe closely what is going on in the development of the proposed legislation."

Game set and match.

[IC1967]

If I listed all the mistakes Labour made I'd be here all day.

Go for it then, you don't appear to have anything else to do with your time....yawn

I accept the challenge. However there is such a long list of mistakes that I will need to break it down into several bite sized chunks over a period of time. I will list the mistakes numerically but not in any particular order. Consider my previous post as number 1. Number 2 will follow shortly followed by many more. Feel free to try and argue against the points I make but be warned your credibility is already  at rock bottom and will only sink further if you try.

[BillyStubbsTears]

IC1967

You know when you have insisted in the past that you are not mjdgreg or  MadMick?

Are you still sticking to that line?

[IC1967]

I am IC1967.