"Arrogant Posh Boys" ... Who Don't Care ... but Run the Country!

David Cameron is really on the back foot, and with poll ratings plummeting, he tried to pick himself up again yesterday only to be kicked in the teeth again - by one of his own MP's!

Speaking to BBC2's Daily Politics, Ms Dorries was asked whether she still believed the prime minister and chancellor were "two posh boys who don't know the price of milk".

She replied: "There is a very tight, narrow clique of a certain group of people and what they do is they act as a barrier and prevent Cameron and Osborne and others from really understanding and knowing what is happening in the rest of the country".

"Unfortunately, I think that not only are Cameron and Osborne two posh boys who don't know the price of milk, but they are two arrogant posh boys who show no remorse, no contrition, and no passion to want to understand the lives of others - and that is their real crime."

Well said ... and how true ... and Cameron had no real answer to this (except trying to guess at the price of milk)!

Cameron has overseen Osborne's mugging of pensioners (the 'Granny Tax') and tax cuts for millionaires (the slashing of the top rate of tax) ... and forced through the disasterous NHS reforms himself, against the advice given by every independent professional body (nb people will not forget this ... or forgive him for this).

Cameron is now saying they want a referendum over proposed Lords' reforms, arguing people's views should be solicited and listened to! However if Cameron was really interested in the views of the people he would have held a referendum on the NHS reforms ... as, unlike reforms to the House of Lords, the NHS reforms were not even part of an election manifesto ... and would have be rejected outright if they were!

Cameron and Osborne are manipulative, lying charlatans ... out of touch "posh boys" who really don't  care about ordinary people ... and who openly laugh at their levels of ignorance and apathy!

Destroying a country to satisfy your own self-interest/greed should be classified as an act of treason ... punishable by death - the Chinese have this ... so why don't we? 

[Answer: Because these type of people make the rules still ... and they have 'chosen' not to include rules like this! NB If there were such rules as this then Bankers, responsible for the mess we are now in, would have been brought to account ... and not receiving multi-million bonuses still!]

Tax the Rich more and the Poor less ... says US Billionaire

Warren Buffett has today called for the US to make him and his "mega-rich friends" pay more income tax. In an article for the New York Times newspaper, the billionaire investor and philanthropist said the rich should do more to help plug the deficits.

He called for a tax rise for those earning more than $1m (£600,000), and a higher rate for those on over $10m.

In a rebuttal of arguments made by Republicans, he said tax rises would not hurt investment or jobs in the US and he told the Government to "stop coddling the super-rich".

"Our leaders have asked for 'shared sacrifice'," he wrote. "But when they did the asking, they spared me."

Mr Buffett explained that, like many top earners, his income came entirely from investments rather than from employment, which are subject to lower taxes in the US. He said last year he paid an effective tax rate of 17.4%, less than the 33% to 41% paid by the employees in his office.

He dismissed arguments made by senior Republicans, including John Boehner, speaker of the House of Representatives, that taxing higher earners more would damage investment and job creation in the US.

"I have yet to see anyone... shy away from a sensible investment because of the tax rate on the potential gains," he said, adding "People invest to make money, and potential taxes have never scared them off". 

He pointed out that the effective tax rate paid by the highest earners was much higher in the 1980s and 1990s than in the last decade, and yet job creation was much higher in the earlier decades.

His proposed tax rises would not affect 99.7% of taxpayers, he claimed, adding that a 2% payroll tax cut passed in December should stay in place to help the poor and middle classes.

Warren Buffett's message is clear ... tax the rich more and the poor less ... and tax investments more (an example of 'money from nothing') and cut the tax on jobs ... as recommended in my last post ... and Buffett's message is the complete opposite to, and pours total scorn upon, Boris Johnson's and George Osborne's demands to cut the top rate of tax too. 

Their request is nothing to do with boosting the economy ... but everything do with lining their own pockets (they are both multi-millionaires) and the pockets of their ultra-rich friends ... at the expense of everyone else. Buffett's comments also show the hypocrisy of these people, especially when they also use a strap-line like we are 'all in this together' ....

Ignorance is unfortunately not bliss and, as we saw last week, is only going to create more trouble ...

Cashback ... for the ultra-rich who bankroll the Conservatives

With more and more people fighting to survive (due to higher taxes and escalating prices) Cameron has told the nation that significant tax cuts are not possible due the level of the deficit and the need to bring Government borrowing down ...

Yet, as my last post highlighted, he has handed out, through a carefully constructed smoke-screen, substantial tax cuts to his ultra-rich friends residing in tax havens and the City.

And by following the money we find out why ... why we are really 'not all in this together' !

Taxing times ... but not for everyone

Extracts of an article written by George Monbiot,  and published in the Guardian 8th February 2011.

In David Cameron we have a leader whose job is to quietly legitimise a semi-criminal, money-laundering economy.

“I would love to see tax reductions” David Cameron told an interviewer at the weekend, “but when you’re borrowing 11 per cent of your GDP, it’s not possible to make significant net tax cuts. It just isn’t.”

Oh no? Then how come he’s planning the biggest and crudest corporate tax cut in living memory?

If you’ve heard nothing of it, you’re in good company. The obscure adjustments the government is planning to the tax acts of 1988 and 2009 have been missed by almost everyone. They are, anyway, almost impossible to understand without expert help. But as soon as you grasp the implications, you realise that a kind of corporate coup d’etat is taking place. Like the dismantling of the NHS and the sale of public forests, no one voted for these measures, as they weren’t in the manifestos. While Cameron insists that he occupies the centre ground of British politics, that he shares our burdens and feels our pain, he has quietly been plotting with banks and businesses to engineer the greatest transfer of wealth from the poor and middle to the ultra-rich that this country has seen in a century. Here’s how it works.

At the moment tax law ensures that companies based here, with branches in other countries, don’t get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country. If, for example, Dirty Oil PLC pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match the corporate tax rate of 28%. But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches.

Foreign means anywhere. If these proposals go ahead, the UK will be only the second country in the world to allow money that has passed through tax havens to remain untaxed when it gets here. The other is Switzerland. The exemption applies solely to “large and medium companies”: it is not available for smaller firms. The government says it expects “large financial services companies to make the greatest use of the exemption regime”. The main beneficiaries, in other words, will be the banks.

But that’s not the end of it. While big business will be exempt from tax on its foreign branch earnings, it will, amazingly, still be able to claim the expense of funding its foreign branches against tax it pays in the UK. No other country does this. The new measures will, as we already know, accompany a rapid reduction in the official rate of corporation tax: from 28% to 24% by 2014. This, a Treasury minister has boasted, will be the lowest rate “of any major Western economy”. By the time this government is done, we’ll be lucky if the banks and corporations pay anything at all. 

David Cameron said “what I want is tax revenue from the banks into the Exchequer, so we can help rebuild this economy.” He’s doing just the opposite.

These measures will drain not only wealth but also jobs from the UK. The new legislation will create a powerful incentive to shift business out of this country and into nations with lower corporate tax rates. Any UK business which doesn’t outsource its staff or funnel its earnings through a tax haven will find itself with an extra competitive disadvantage. The new rules also threaten to degrade the tax base everywhere, as companies with headquarters in other countries will demand similar measures from their own governments.

So how did this happen? You don’t have to look far to find out. Almost all the members of the seven committees the government set up “to provide strategic oversight of the development of corporate tax policy” are corporate executives. Among them are representatives of Vodafone, Tesco, BP, British American Tobacco and several of the major banks: HSBC, Santander, Standard Chartered, Citigroup, Schroders, RBS and Barclays.

The world’s tax havens have not, as the OECD claims, been eliminated, but legitimised; with the City of London itself being a giant tax haven, which passes much of its business through its subsidiary havens in British dependencies, overseas territories and former colonies; its operations mesh with and are often indistinguishable from the laundering of the proceeds of crime; and the Corporation of the City of London effectively dictates to the government, while remaining exempt from democratic control. 

Tony Blair came to power after assuring the City of his benign intentions. He then deregulated it and cut its taxes. Cameron didn’t have to assure it of anything: his party exists to turn its demands into public policy. Our ministers are not public servants. They work for the people who fund their parties, run the banks and own the newspapers, insulating them from democratic challenge.

Our political system protects and enriches a fantastically-wealthy elite, much of whose money is, as a result of their interesting tax and transfer arrangements, effectively stolen from poorer countries and poorer citizens of their own countries. Ours is a semi-criminal money-laundering economy, legitimised by the pomp of the Lord Mayor’s show and multiple layers of defence in government. Politically irrelevant, economically invisible, the rest of us inhabit the margins of the system. Governments ensure that we are thrown enough scraps to keep us quiet, while the ultra-rich get on with the serious business of looting the global economy and crushing attempts to hold them to account.

And this government? It has learnt the lesson that Thatcher never grasped. If you want to turn this country into another Mexico, where the ruling elite wallows in unimaginable, state-facilitated wealth while the rest can go to hell, you don’t declare war on society, you don’t lambast single mothers or refuse to apologise for Bloody Sunday. You assuage, reassure, conciliate, emote. Then you shaft us.

Monbiot - another great web site uncovering the truth ... and more about how power is being misused ... for the benefit of the few (i.e. ultra-rich), and at the expense of everyone else.

IMF report raises risk of civil wars ... due to the imbalance of Power

As the aftershocks of the financial crisis continue to reverberate through real economies and government budgets (particularly in the West), it is becoming increasingly clear how the gap between the extremely rich and the poor is playing a major role in the crisis. Economists from the International Monetary Fund (IMF) now acknowledge that, while dysfunctional financial markets caused the crisis in an immediate sense, its deeper cause was inequality.

Banks took on financial assets whose risk they had no real way of assessing correctly. At the heart of these assets were mortgages in the so-called 'sub-prime' market – basically high-risk mortgages made to poor people with insecure and low-paid jobs. When these people started to default on their mortgages in large numbers in 2008, the whole complex (and fraudulent) system of securitised risk unravelled very quickly and dramatically.

An underlying question is why the sub-prime market arose in the first place, and the answer in part lies in the stagnation of incomes in the bottom half of the income distribution in the US (and also in the UK) since the early 1980s. A number of factors drove this, including the introduction of new technology. New technology (e.g. IT) has nearly always been targeted at cutting costs and getting rid of manual labour (increasing unemployment and squeezing wages), instead of using it to free up staff and unleash their (untapped) potential to continuously innovate and grow.  (NB the former is a blunt application of Poweromics, whilst the latter is a good example of Leanomics ... it's also worth noting that very few enterprises, or economies, will successfully find they 'cut their way to sustainable success').  

Michael Kumhof and Romain Rancière, the authors of the report Inequality, Leverage and Crises, pick up the theme of stagnant incomes at the bottom, but link these to the huge increase in earnings at the top, which provides the other half of the story. By 2006, the top 1 per cent of taxpayers in the USA received almost one quarter of all income in the US (see chart below). 

The wealthy needed to invest their money somewhere, and in Kumhof and Rancière go on to say: 'The key mechanism is that investors use part of their increased income to purchase additional financial assets backed by loans to workers. By doing so, they allow workers to limit their drop in consumption following their loss of income, but the large and highly persistent rise of workers’ debt-to-income ratios generates financial fragility which eventually can lead to a financial crisis'.

As a consequence the size of the financial sector, as measured by the ratio of banks’ liabilities to GDP, ballooned*, with the crisis characterised by large-scale household debt defaults and an abrupt output contraction (as in the U.S.)

During the build up to the 2008 financial crisis, the worlds of the rich and the poor were connected, but through the need to lend on the one hand and the need to borrow on the other, and IMF paper argues that the extreme gap between rich and poor was an underlying cause of the crisis (with its obvious parallels to the late 1920s - when the Roaring 20's was followed by the Great Depression) - see chart of Male Annual Earnings in the US below.

The paper goes on to explain how 'the crisis is the ultimate result, after a period of decades, of a shock to the relative bargaining powers over income of two groups of households, investors who account for 5% of the population, and whose bargaining power increases, and workers who account for 95% of the population' and argues 'because crises are costly, redistribution policies that prevent excessive household indebtedness and reduce crisis-risk ex-ante can be more desirable from a macroeconomic stabilization point of view than ex-post policies such as bailouts or debt restructurings'.

The paper concludes by suggesting 'Restoration of poor and middle income households’ bargaining power can be very effective, leading to the prospect of a sustained reduction in leverage that should reduce the probability of a further crisis.' and warns of "disastrous consequences" for the world economy if workers do not regain their "bargaining power" against rentiers. 

The International Monetary Fund (IMF) also warns that "dangerous" imbalances have emerged that threaten to derail global recovery and stoke tensions that may ultimately set off civil wars in deeply unequal countries (nb we can see this already starting to play out today**). 

Despite all the rhetoric and spin, in reality the UK (and US) Government chose to bail out the banks with tax payers money (allowing the rich bankers to profit heavily from gambling once again), whilst passing the cost of the bailouts onto poor and middle income households, in the form of job losses, higher taxes and reduced services ... Indeed, worse still, in the UK we have the Tory Government trying to suggest the way out recession is to cut the top rate of income tax to the rich ... and to restrict the rights of ordinary people to strike ... both quite the opposite of what the IMF suggests in its report ... unless they're trying to promote civil war that is!

* The situation was also made worse by Fractional Reserve Banking, with bankers pushing to increase lending in order to profit from money (created out of thin air)!

** With the current unrest in Egypt, it was interesting to hear the potential hypocrisy in which the UK/US told Egypt's leaders to return the internet/mobile communications to its people, and to respect these as basic human rights ... as I understand both Governments' have similar strategies planned if they face similar levels of unrest!

Taxes about to rise sharply

Taxes must rise sharply over the next decade to bring down borrowing, according to the National Institute of Economic and Social Research (NIESR).  In a report, the think tank said taxes would have to rise by the equivalent of 6p on the basic income tax rate to get the budget deficit below 3% by 2020.

It also said the UK economy faces sluggish growth and rising unemployment this year. The BBC's Nils Blythe said that although the large additional tax rises needed to get the budget deficit below 3% by 2020 would not necessarily come in the form of income tax increases, the think tank reasoned that the scale of the rise is equivalent to putting up the basic rate of income tax from 20p to 26p in the pound.

"Only with that type of increase will the national debt eventually fall below the 40% of national income that before the financial crisis was regarded as a prudent level," he said.  The think tank also said cuts to public spending, which will be necessary for cutting the size of the budget deficit, will push growth lower than it otherwise would have been.  

More reality/truth is slowing filtering out ... just not from the Government.

Adding Value or Destroying Value ?

A recent study by the New Economics Foundation (NEF) has examined the social value and financial cost of a number of professions ... with enlightening, but perhaps not surprising, results ... for instance they highlight how highly paid groups such as bankers and tax accountants systematically destroy value, rather than add value, to society ...

The Foundation applied a new form of job evaluation to calculate the total contribution various jobs make to society, including for the first time the impact on communities and environment. A spokesperson for the Foundation said: "Pay levels often don't reflect the true value that is being created. As a society, we need a pay structure which rewards those jobs that create most societal benefit rather than those that generate profits at the expense of society and the environment" ... and went on to say ... "there should be a relationship between what we are paid and the value our work generates for society".

A total of six different jobs were examined and their levels of pay, as well as the overall value they contribute to the society, were compared:

The elite banker - "Rather than being wealth creators bankers are being handsomely rewarded for bringing the global financial system to the brink of collapse. Paid between £500,000 and £80m a year, leading bankers destroy £7 of value for every pound they generate".

Childcare workers - "Both for families and society as a whole, looking after children could not be more important. As well as providing a valuable service for families, they release earnings potential by allowing parents to continue working. For every pound they are paid they generate up to £9.50 worth of benefits to society."

Hospital cleaners - "Play a vital role in the workings of healthcare facilities. They not only clean hospitals and maintain hygiene standards but also contribute to wider health outcomes. For every pound paid, over £10 in social value is created."

Advertising executives - The industry "encourages high spending and indebtedness. It can create insatiable aspirations, fuelling feelings of dissatisfaction, inadequacy and stress. For a salary of between £50,000 and £12m top advertising executives destroy £11 of value for every pound in value they generate".

Tax accountants - "Every pound that a tax accountant saves a client is a pound which otherwise would have gone to HM Revenue. For a salary of between £75,000 and £200,000, tax accountants destroy £47 in value, for every pound they generate."

Waste recycling workers - "Do a range of different jobs that relate to processing and preventing waste and promoting recycling. Carbon emissions are significantly reduced. There is also a value in reusing goods. For every pound of value spent on wages, £12 of value is generated for society."

The example professions chosen will certainly promote debate about this important (and philosophical) aspect of 21st century 'economics', and whilst such work is still clearly in its infancy, it already starting to highlight a number of potential ways pay (and taxation systems) are likely to evolve in the future ... e.g. becoming more closely aligned to the level of social (and environmental) value actually provided to the 'economy' ...

When places like the UK decide to progressively move towards becoming a 21st century 'economy' is a very different question however ... as the those currently in "Power" will resist it at all costs, and the level of failure/despair will have to become far worse before the majority of ordinary hard-working people (who are currently adding all the value!) decide to do something about it ... take a look at this post for instance - however, when they do decide to act ... change things will (e.g. take a look at another of my recent posts for instance, as well as this recent one from fellow blogger, writingsonthewall, too).

This post was referred to on Robert Peston's blog "New ice age for bankers" post 98.

House prices - An obsession with failure

Stephanie Flanders recently commented on the Nationwide saying house prices are the same as they were a year ago (i.e. no longer dropping), but asked if this is 'too good to be true' ... take a look at a few of the key issues raised below for instance:

"... house prices are rising in a market where very few properties are changing hands. As the Nationwide points out in today's report, the housing turnover rate - the percentage of the private sector housing stock changing hands on an annualised basis - is still only 4%. That's not much higher than it was at the end of last year, when literally no-one in the market wanted to do anything. Before the crash, turnover was 7-8% ...

... you might expect prices to carry on falling in a market with such little activity - because usually low turnover reflects the fact that everyone expects prices to fall. But the relationship breaks down if there's only a tiny number of houses up for sale. That seems to have been true for most of this year and it's still true ...

... if prices stagnate, or fall further, there'll be plenty who worry about the knock-on effects for confidence and the economic recovery. But it would be good news for young people who are otherwise bearing the brunt of this economic bust ...

... from an economic standpoint, the rise in house prices since the early 1990s has been a massive transfer of wealth from young wannabe home-owners to the older generations who bought when the going was good. It's worked like a tax on young people -and a windfall to large numbers of the middle-aged and old ...

... One way or another - whether through higher lifetime taxes or unemployment at a crucial time in the career - young people are going to be paying for this crisis for a long time to come. It would be no bad thing if they could at least come out of it able to afford a home".

To which I added the comments below:

A good article ... I've haven't read this blog for a while (partly due to poor journalism and partly due to blog spamming from a small minority) ... but having done so today it's good to see the quality of journalism appears to be improving slightly ... IMHO for economic recovery to resume in a sustainable way we need the folly/obsession with house prices to stop, we need to introduce a 'land value tax' into the economic system and challenge planning regulations / restrictions imposed to serve the interests of just a few (i.e. the landowners - e.g. Duke of Westminster et al).

More houses will then be built and young people will then be able to afford a roof over their head, without having to give most of their hard-earned money away each month to bankers in the way of interest. Some of revenues raised from a land value tax could also be re-invested into real value adding activities that create jobs and wealth (instead of manipulating wealth) which would create a more sustainable economy and reduce our debts, balance of payments and trade deficits.

A few areas your report does not refer to however are when interest rates start to rise again from their historic low (e.g. due to inflation from import costs rising with the increasing demise of the pound), continued job losses (and the impact/cost of this to the taxpayer and public debt), as well as lack of opportunities available to young people and the debt we are asking them to take on to go to University.

They will not forgive us, or the leaders who forced this upon them. We must also remember that hard-working people can choose where to live (ie. work and pay their taxes) and can move freely in the EU now too, and as more of them leave the tax burden placed on those remaining will start to spiral upward until they also decide to leave too ... the outcomes are entirely predictable, but an effective intervention strategy from this Government to deal with the problems we face is not.

UK budget deficit soars ... and drastic action's needed

The UK recorded an all time high budget deficit of almost £90,000,000,000 in 2008/09, and with the deteriorating state of UK public finances, the Centre for Business and Economic Research (CEBR) today highlighted the need for a £100bn programme of cuts and tax rises to repair the UK's public finances and get the UK's budget deficit back down to £50bn by 2014/15.

A Tale of Two Economies ...

Stephanie Flanders, following a recent visit to Germany, posted a great blog today entitled "The tale of Two Economies", which compares the very different economies of Germany (export led) and the UK (borrowing led).

The differences are stark, and the two countries also have very different strategies for dealing with the current financial crisis too (as highlighted by Germany's ministers - e.g. see the links provided below). 

In Germany most people tend to i) class a house as a home, ii) rent rather than buy, iii) save rather than spend and tend not to iv) invest or speculate in property.  In the UK (and the USA) however people have tended to do the complete opposite ... 

So who is positioned best to cope with the current financial crisis? ... and who has already indebted their nation for generations to come?  Take a look at these interviews with Germany's finance minister, and economics minister, and the fact that Germany's exports are already starting to grow again ...

... and take a look at Stephanie's blog too, and the additional comments that I have made and others have made below ...

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Post 14 (Leanomist) wrote: 

Thanks Stephanie - good work. We are now starting to address some of the real issues, which countries like Germany have understood for years (nb Germany also appear to understand the current crisis better than our Government does, and they are tackling it in very different ways - e.g. they are not taking the 'easy option' and burdening future generations with huge debts)!

To survive in a global economy the UK will have to be far more innovative and create more products & services other countries need and actually want to buy (e.g. beyond trying to sell Germany beer!) ... because they add value, solve problems and offer new (and unique) ways to improve people's lives! 

The UK cannot rely, and in fact really does not need, another credit fuelled consumer boom (e.g. based on more housing asset price inflation) and we need to avoid this happening (as it will only worsen our borrowing & trade deficits, and create even worse problems further down the line).

The answer is to stop focusing most of our time, energy and resources on 'gambling' (investment banking, house prices), 'banking' and other services that 'move money' or 'count money' (i.e. 'manipulating' wealth - activities which should arguably be taxed more from an ethical point of view), and focus them more on innovation and creating more products/services people value that we can export and which will actually bring in money (i.e. 'creating wealth' - which should arguably be taxed less).

But will anything like this happen any time soon? I don't think so - not until we have 'leaders' who are able to act responsibly and see beyond their own career/wallet (ie. who don't apply Poweromics*), or until things get so bad that apathy within the general public diminishes to a point where they decide to take responsibility for improving the situation themselves ...

David Clift, a Future 500 Leader

* Poweromics = People using position and power for their own personal gain, based on poor moral values, self interest and greed. http://poweromics.blogspot.com has more examples/information.

PS I agree with a number of comments already made, including 2, 6, 9 and 11 (nb I am one of those who, like yourself and many others, have raised this issue on a number of occasions - let's hope Stephanie goes further down this road now - please don't disappoint us now you've started Stephanie) ...

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Post 2 John_from_Hendon wrote:

Stephanie wrote

"most of the rise in borrowing over the past decade went into the housing market"

Oh dear, Oh dear, Oh dear,

It has vanished then into asset price inflatuion NOT into building productive capacity! We have thus seen nothing for all of our borrowing. If only we had bought something we could use or make something with!

I remember the German Housing market: Second-hand houses cost less than new ones as they are, how do I put it, "Second-Hand"!

The Germans have not dug a huge hole and filled it with debt then... Like we did.

We have stocked up a huge level of latent and actual inflation and currency depreciation which is disastrous. The money men (The Banks that we 'love' so much!) have siphoned off our houses to no advantage to us, indeed to our huge disadvantage!

Why did we let this happen? 

Why did you as a representative of an economical commentator not complain about this at the time?

It was, and still is, the hight of idiocy to see increasing house prices as a sign of something good - it is not, it is a terrible apocalyptic sign of national decline, and banking collapse!

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Post 6 Wee-Scamp wrote:

If Germany is the export champion then the UK has been the import champion. Our trade deficit is legendary. That apart we have of course allowed the financial services sector to make money out of selling our companies off to overseas buyers and there has been little real investment in new companies capable of becoming export meisters in their own right. It's been the economic equivalent of the slow train crash.

There's little doubt that the Govt (especially the Treasury) and the City have let the UK down badly in the last three decades or so and certainly since the big bang... In fact you can track the growth of the trade deficit since the big bang and watch it get bigger and bigger.. At the time of the big bang it was modest but by 1997 it was �11bn.... Now it's probably incalcuable. 

What we can be sure of is that when the economic recovery starts Germany will still have most if not all of its industry intact. We'll have a bunch of badly managed and crippled banks. 

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Post 11: hants_gw wrote:

This is quite a provocative entry.

"With consumers likely to be saving more and spending less, export-led growth is our main hope of a healthy rate of economic growth"

Exporting what exactly? And to whom?

My apologies to various people who have asked essentially that question over the last few months, but it never gets an answer. Supposing I were a wealthy German who wanted to do his bit for global economic balance by buying British, what is on offer? Novelty beers apparently.

Since "export-led growth is our main hope of a healthy rate of economic growth", what is the government doing to make sure that happens? I'm not aware of anything. Perhaps that is just ignorance on my part, but I seem to be well aware of plenty that the government is doing to prop up incompetently run banks.

By the way, what happens after the exports don't materialise?

"Germany's addiction to exports is a problem as well."

Ah yes. Those wicked, wicked Germans with their naughty habit of designing and building high-quality, well-engineered products that people want to buy. It's just not playing the game is it. The next thing you know they'll have banks run by financially literate people; banks that make real profits by investing in real businesses. Good grief, where does it end?

"Yet, on the basis of my trip, I don't think there's much chance of Germany becoming more like Britain or America, despite the big hit they have taken in the past year."

Yes it's a puzzle isn't it? Why would the ant want to become a grasshopper?

Some of the original entry makes a lot of sense, notably the observation that Britain needs to export more (actually lots more) - but having said that why not think through the consequences. If exports are so essential, why isn't that fact visible in the government's behaviour? Where is the support for exporters? As best I can tell the current government's top priority is to increase public spending. I have never heard a government representative talk about boosting exports.

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