Clegg's moment of realisation

"Cannae dae that any mare, there's nae money."

So says Lib Dem leader (for how much longer?) Nick Clegg. According to Clegg, an extension of free childcare, rolling out free personal care for the elderly across England, a citizen's pension and cutting tuition fees are all too expensive while there is a recession on.

Is it just me, or does that beg the question as to what the Lib Dems are actually for? I mean, before Clegg's realisation (apparently a year after Vince Cable predicted it) that we're too skint to do anything, I probably couldn't have told you many Lib Dem policies, but I could have told you that they were for cutting tuition fees and... erm... um... yes, changing the electoral system to PR. But now what do they stand for? I can see their new slogan now:

"Vote for us 'coz we're, um... not as red as Labour. And not as blue as the Tories. And we're more yellow than the Nats!"

Maybe Howard (Russell, not Michael) was right...

(Incidentally, I meant to write this last week when I first realised Nick Clegg had just realised there was a recession on - looks like my timing is just as off as his).

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Labour election posters 2005

Found these online - A celebration of Labour's achievements and warnings about the consequences of a Conservative victory in the 2005 General election:

Yeah, I see what you are saying. Something like "vote Labour and avoid rising unemployment and recession" right?

Hmmm... unemployment to June 2009 increased to 2.47 million, and last time I checked, Chancellor Darling was still calling this a recession.

Oops.

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No tram funding

So, some news of the Edinburgh Tram scheme, and it is not good.

First, line 1B has been abandoned due to the "economic downturn." In business-speak, the line has been "postponed" but the expectation now (as indeed, when the plans were first mooted) is that line 1B will not see the light of day.

Second, after the collapse of these plans, further questions have been raised by Lothians MSPs over the funding for line 1A which is meant to run from Leith to the airport. The SNP's Shirley-Anne Somerville doesn't believe the line will be delivered "on time and on budget" while Tory MSP Gavin Brown suggests there may now be a £6m shortfall because of a deal negotiated for both lines 1A and 1B.

Meanwhile, the guys who are in charge of delivering the whole scheme have been paid nearly £1m in bonuses before a single piece of track has been laid.

I've said it before and I'll say it again. This is a damn fiasco that is worse even than the building of the Scottish Parliament - at least the city wasn't torn up for that vanity excercise.

Have we come too far to call the whole thing off?

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Royal Bank of.... Stupid

This makes sense.

This does not.

In the first instance, AIG is to end their £14m-per-year sponsorship of Manchester United on the back of their financial meltdown and subsequent bail-out by the US Government.

In the second instance, RBS, on the verge of announcing record-breaking losses of close to £8 BILLION and now 70% under public ownership, with share prices falling as low as 11.6p, has announced that it will continue to sponsor the Six Nations Championship - to the tune of £20m.

Obviously I'm not an economist and I don't know how these things work. But 70% of that £20m is public money. So why are they allowed to spend it on what is effectively advertising? I mean, I like rugby as much as a the next guy (and I can't wait to see us beat Grand Slam holders Wales in a couple of weeks) but surely, when you are making a loss that big, advertising should not be a primary concern?

Just a thought.

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Open up the cheque-ka-ka book

Must be nice to have no worries about the credit crunch.

£500,000 A WEEK just to kick a football? That's £2 MILLION every month. Minus tax, of course.

And he's not even the best player in the world any more. At least he appears like a nice bloke.

Crazy money. Actually, just crazy.

But here's a thought. Why doesn't Gordon Brown just ask Manchester City to go and spend some of the money in the nearest shopping centre? That way, he might not have to end up bailing out every industry in the country.

ps - not to lower the tone or anything, saying Kaka in Spain might lead to some embarrassment: "caca" is the Spanish word for "poo." True story.

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Not tonight Darling, I've got a(nother) headache...

I'm trying to get a handle on this economic situation, but as has probably been painfully obvious to you dear reader, I'm struggling to work out what's going on. I'm recounting what has happened over the last year - that I can remember anyway (with the help of the BBC):

• First (arguably) it was Northern Rock, whose collapse led the Chancellor Alistair Darling to bail it out to the tune of £25BN.
  
  
• Then Bradford & Bingley post losses of over £25m for the the six months to June 2008.
  
  
• Fast forward to August and Darling wakes up to the crisis - openly stating that the UK is in its "worst economic crisis in 60 years." To help out - and try to stimulate the housing market - the Treasury raises the threshold for stamp duty to £175,000. But the help barely registers. Bank of England holds interest rates at 5% in September.
  
  
• Then HBOS takes a nosedive, and, despite this BBC report from September, continues to negotiate a solution.
  
  
• Bradford and Bingley is taken under the government wing and nationalised in late September, with part of its operation sold to Santander.
  
  
• The PM - rather than the Chancellor - announces that a guarantee on savings will be raised to £50,000.
  
  
• Darling & Brown then announce a £37BN bailout for three UK banks - RBS, Lloyds TSB & HBOS. Stabilises RBS share price which had fallen dramatically.
  
  
• Unemployment rises to 1.79 million in October 2008, while the Bank of England cuts interest rates from 4.5% to 3% in early November.
  
  
• Which takes us up to this week, and the Chancellor's decision to cut VAT by 2.5%. Oh yeah, and now Woolworths have gone into administration, with MFI likely to join them shortly.

Now I know that none of this has happened in a vacuum, and that the global economy has gone, for want of a better phrase, tits up. And I'm not an economist so I don't fully understand the whole situation. But here's how it appears to me.

The government has acted when it feels like it has been forced - the bank bailout(s), the interest rate cut (which is technically independent, but probably lent on slightly by the PM and Chancellor), the savings guarantee and the VAT cut.

That action, it seems to me, is reluctant. I think they want the market to sort itself out. But the problem is, it doesn't seem to be doing so. Or, it does, but not in a way that helps the economy get out of a recession.

The problem, I think, is a lack of trust. The consumer doesn't trust the government not to raise taxes again, so they save instead of spend. The government doesn't trust the market to fix itself so it is interfering. And the banks, well, they don't trust anyone - let alone other banks - and so have dramatically cut their lending.

Seems like if we can learn to trust again, we can learn to love again... no wait, I've stumbled into a boy band single or something. Think the point is, trust matters. And I'm not convinced that I trust chancellor to be doing what is right just now

And I think a lot of people think the same way.

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Thoughts on the Pre-Budget Report

Enough has been written elsewhere regarding the government plans to stimulate the economy with a 2.5% cut in VAT (the first cut to VAT for over 30 years) and a 45% tax rate for all earnings over £115,000 so I won't really go into it in detail here.

Just wondering though, if either the government, the opposition or those reporting the story think people are stupid. Take these positions:

• The government: believes if it cuts VAT people will spend more money (despite it only making a 2.5% difference in cost!) rather than save it for what they think will be tough times later. They also think that further tax on the rich will boost government coffers.

• The opposition: believes that people won't spend more due to tax cuts - they'll save it for when the taxes not just returned to current levels but increased. They think the government plans are a short-term fix, and that increased borrowing will put a massive strain on the economy.

• Those reporting: think that if they report concerns that the economy will go to the ground if people don't spend more money then people are more likely to spend instead of saving, probably out of patriotism/ willing the economy to recover.

Have I summed up the respective positions correctly? And if so, don't they all presume people are, well, stupid? Because I don't think it is quite as simple.

People will probably spend a bit more now VAT has been reduced - in the short term - but they'd probably decided on a budget for Christmas, and will probably stay within that limit (and I know my limit is pretty low, regardless of any change to VAT). But after that, into the New Year, people are less likely to keep digging, fearing a huge tax hike - so instead put their money away in bank accounts.

So the government is probably right - their idea will stimulate the economy both short and long term. In the short term, it will be the British economy. In the long term - the Swiss (think about it).

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The economy: Is it stupid?

I'm not going to pretend I have a clue what is going on with regards the economy. Recession. Boom and bust. Fiscal stimulus packages. They might as well be talking Basque - I'd understand about as much. So when the Tories announced today that they are to scrap plans to match Labour's spending if they win the election I was left even more confused.

You see, "Dave" wants to create a "low-tax, low debt economy" and run away from Labour's "spend today, worry about tomorrow tomorrow" financial policy. Obviously I'm paraphrasing slightly - I don't have a clue what they're talking about.

The Chancellor, Lord Badger Alistair Darling slammed the plans, saying governments have to pump money into their economies to help populations struggling with the credit crunch. He is expected to announce a number of tax cuts and increased public spending. Which I'm not sure go together that well.

In fact, and I don't say this nearly often enough(!), I think Stephen Glenn is probably right when he says that if Labour go ahead with cutting taxes next week, they will inevitably have to raise taxes again soon, in order to pay for their public spending - which is not to be cut

Again, I'm not really in a position to evaluate each of the tax plans in detail. But simple household budgeting is evidence enough that if you cut the money coming in (say, by giving up your job to start a PhD) you have to also cut the money going out (like going to the pub/ rugby/ theatre). So how is it that a government cuts the money coming in, it can keep spending? Isn't that what got Aberdeen and Edinburgh councils into financial difficulties? Wait a minute... isn't that what got the UK into this financial mess? Banks - and indeed governments - spending money that they didn't have in the first place?

Not that I'm sold on the Tories idea at all, but if Darling made the mess, why should we trust him to clear it up?

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A joke that hits home...

My brother's fiancée told a joke at the weekend, which translated roughly as the following:

"Due to the Labour Government's Post Office Closure programme and the current financial climate, Postman Pat has been made redundant. What do people in Greendale now call him?

Pat."

Of course, it works with Fireman Sam too...

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Credit crunch eases?

While I was out seeing the bigger picture running today I saw something that I wasn't sure I'd see again for a long, long time.

At a petrol station on Ferry Road, Edinburgh, Unleaded petrol is now 99.9p a litre. That's less than £1. For the first time in... I don't know how long (and I can't be bothered finding out).

Bad news for James and his global Green movement. But maybe a bit of light relief for those who have been bitten hard by the credit crunch.

Who knows how long it will last though.

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The Economist says what we're all thinking

Now I know that the mass bail out of banks and interest rate cut announced on Wednesday will hopefully have the desired effect and start to turn around the financial markets, but I just found this picture and I thought it was hilarious.



I know I usually avoid swearing but I couldn't resist this. So Mum, if you're reading... sorry!

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Polls open in US election

5 weeks before polling day, voters in Ohio have started voting for the next President of the United States.

I wonder what will be foremost in their minds when voting today?

ps - I am aware that there is a crisis ongoing in the world's banking sector. I just don't see myself as knowledgeable enough on the subject to pass comment on it. There are plenty of people more knowledgeable than I that are being made to look not so smart because of it, so I'll find other things to blog about!

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