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The key fact surely is that almost all of them are looking for the fiscal stimulus. Keynes would have said that public spending, preferably investment on infra-structure, would be the best way to do this. Surprisingly, given its history of insisting its borrowers cut back on government spending, so now does the IMF.

Such spending, however, takes time to bring on line, where monetary approaches can be put in place faster; so there is some justification for them too - in the shorter term. The problem is that some governments (especially right wing ones) are using this as an excuse to hold on to their failed monetary policies.

Paul,

If sterling was the international reserve currency our central bank might not be so worried about more discretionary stimulii. Gilts swell their balance sheets. QE coordinates with Debt Management operations forming liquidity platforms for new issuance . Monetary and fiscal policies intertwine and overlap.

Perhaps the Americans can afford some more risks, knowing the Chinese are tied into their solutions with their huge dollar asset pools. This is hacking off the Chinese who want a new international reserve currency built through the IMF and away from national credit-based currencies. Dont blame them, do you?

I agree with Danny that the CPI inflation target ignored equally if not more important factors which have brought us to our knees.

Whoever gets on to Newsnight tonight, I'll bet they won't do half as good a job as this guy in coming straight to the point. Yee hah!

And all because Gordon loved house prices... or rather, loves one particular house in Downing Street.

When the history of this crash is written one of the fundamental mistakes that will be talked about will be of the lunancy to try and prop up the biggest housing bubble in history.

Property prices should have been allowed to crash spectacularly - after all, the numbers of property rampers, buy-to-let landlords and so-called 'investors' are nothing compared to the millions who did not over-extend themselves on debt, compared to the millions who were prudent and saved, compared to the millions who are now being forced to suffer in terms of lower interest rates on savings, in higher bills and in lost jobs.

Why a Labour Government, with a PM of such 1960s and 70s' Socialistic leanings, seems even now hell-bent on proping up those who probably have little regard, and perhaps even contempt, for Labour as a party staggers disbelief. Perhaps the Cabinet is full of second-home owners? Or maybe the Cabinet is full of would-be Bank board members?

How silly of me to even contemplate such a thing!

no fiscal stimulus? Obumma.

Willie John McBride said "we have to get our retaliation in first" in regards to the infamous "99" call that the British Lions used in their tour of South Africa in 1974.

As for the comments from Mervyn King. They just re-enforce my fear that from here to the General Election in 2010, the government will behave like rabbits caught in the headlights.

I wrote to Alistair Darling a year ago stating that the only way to stimulate the economy was to reduce the debt burden on the UK citizens as that was the only way of stimulating the economy. That's as true today as it was then.

The ostriches in the Treasury have to focus on freeing the people from excessive debt in all forms.

Wow that Treasury Minister Eagle was truly hopeless. It was so bad she actually had to force herself back into the discussion after Jeremy had sensibly put her aside.

I think he might have rounded on her with a proposal: "if you promise to answer my only question I'll let you back in?"

Nevertheless last night was a sideshow distracting us from the big issue : scrutiny of medium term public finances (paying back whats already been commited).

Thats why the Tories were so gleefull.

The problem that I see with these stimuli is that they achieve so little. Let's face it, this government has a very poor record of achieving value for money. Unless, the gain from spending is greater than the cost of borrowing all the government is doing is digging us into a deeper hole than we're already in.

As far as I can tell this is more about Gordon Brown spending our money to try to win him the next election than to improve our lot.

Please excuse me if I've missed the point here, but what I'd like to know is how much the envisaged expansion of public debt is actually the creation of new debt for the "UK" balance sheet, and how much is in effect no more than a transfer of debt from the private sector to the public?

In other words, how much of the "fiscal stimulus" really is borrowing from future generations to consume now, and how much is more appropriately looked at as an offset of nett repayment of private sector debt?

The Prime Minister, and others, have made claims that UK Public Nett Debt, as a percentage of GDP, is lower than that of many other nations, and that therefore we, as a country, are comparatively well placed to weather the economic storms ahead.

How true is this conclusion?

Would not a more appropriate measure of our capacity for resilience be the level of overall nett debt, not just the public sector element of it?

If so, how do we stand on this measure, vis a vis other countries?

Is Mr Brown correct to call us well-placed, even if he has used the wrong measure as justification?

The only evidence that there has been a fiscal stimulus is that we have been told so. I see no direct evidence that this has reached the street. I appreciate it is early days but I don't get a sense of urgency from the government.

My view is that any fiscal stimulus has been eaten up by events or swallowed into ballooning government expenditure.

The whole point of a fiscal stimulus of the Keynsian variety is that money goes into infrastruture projects. Where are these infrastructure projects? Most that I know about are languishing for absent funding or pending political decisions.

I am inclined to the Merkel view that let's see what the first fiscal stimulus does before we do another one. That way we will get to know what we are dealing with, measure it and be able to match inputs to outcomes.

At the moment we just seem to be dumping money down a black-hole without the slightest measure as to how much this will cost and how long it will take. We are just hoping it might work. This sounds like panic.

MERKEL and MERVYN

doesn't bode well for any kind of consensus at the G20 or even for a face-saving communique at the end

looks like the Chinese are getting tetchy too

all that's going to happen on April 1st and 2nd is that the world's media will get a lot of memorable newsfeeds of the huge demonstrations and protests likely to take place in the City of London etc

perhaps interest rates should be put back up to 4 or 5% to encourage saving.......

truth is nobody has the faintest clue what to do

Fiscal stimulus, will it work?
QE, will it work?

I'll tell you what will work: let every insolvent bank, company and individual fall - clear the whole lot away in a horrible purge - not a global stimulus but a global reset...

Sure it will be painful. Cities will burn.

But that's going to happen anyway... the global economy is dead. All that's being settled now is whether we can afford an undertaker...

Our fiscal stimulus seems more aimed at re-inflating the credit bubble to protect the banks from losses on loans made on the dodgy assumtion that positive equity in peoples homes was real, and not some etherial figure written in smoke in the air.

Other countries, notably China and America are trying to lay the foundations for stable economic growth that will hopefully last for generations by, in China's case spending billions on building cheap affordable homes for its workforce. In America they are spending money to pay down peoples mortgage payments so they are no more than 31 per cent of a persons salary, which only makes sense if all new mortgages are going to be no more than 31 per cent of a salary too.

Every first time buyer I know who has bought a home in the last 6 years has a mortgage of between 6 and 9 times their annual salary. House prices have not fallen enough to make much of a differance to that. The question I have is this- What are the annual salary limits that will apply to these new mortgages that are being underwriten with our taxes? The interesting question for people like Paul Mason to look into is- just how sustainable is our recovery going to be if our economy is stimulated into another high debt low income mess?

This is all the more cause for concern, Paul.

For a long time many of us have been under the impression that the recovery plan was "for" the Treasury, the Banks, Investment Houses and big business, but not for individuals, savers, pensioners and small businesses. Even so, it did at least seem that those pulling the levers were broadly in agreement.

Now it seems that there's a split in the ranks: why the need to get the retaliation in first?

Aside from there being no more money left in the coffers (but I thought the taxpayer had bottomless pockets), perhaps there's the creeping realisation that the stimuli aren't working and maybe aren't going to work?

Paul, you miseed out the really big match in our current PM being given an Italy versus San Marino style thrashing by Daniel Hannon.

Its easy to find as apparently it is the top viewed clip on You Tube worldwide.

GORDY & DARLING HAVE TAKEN UK PLC

RIGHT TO THE BRINK!

ONE MORE PUSH,THEN IT WILL BE THE IMF.


OH I FORGOT THEY ARE BUST TOO!!

REGIME CHANGE

Why not bomb all the Banks in Shock and Awe style, from high altitude? I thought that made everthing alright?

The rest of the world does not owe us a living. It's all very well our leaders saying saying that we mustn't be protectionist, but we can't support ourselves and can't afford our imports. We certainly can't afford to make the private debt of the banks into public debt.

Any new British "fiscal stimulus" should be aimed at encouraging productive activity. And either we become protectionist, and have controls upon imports and foreign exchange, or the market WILL do it for us: the pound will fall until we can't afford the imports. This is a far less efficient way, and in the meantime, many who CAN relocate abroad with their own wealth will do so. Really, who can blame them? You have to look after your own family first. If I were younger, I certainly wouldn't sacrifice my family's future prospects to stay and help pay the socialised debts of the banks.

So, for those who have no choice but to stay in Britain, our belts will have to be tightened. The reality is that many items we now take for granted will become less affordable luxuries. We will have to consume less and waste less.

BUT the burden must be shared. MPs should set an example. If a significant and unproductive minority are allowed to live in obscene luxury, while most are condemned to poverty, then the rule of law WILL break down.

Paul,

No need to worry. I understand Prudence Gordon is being advised by Mugabe.

Save your notes. Toilet paper will be running short soon.

#14

''perhaps there's the creeping realisation that the stimuli aren't working and maybe aren't going to work?''

I think it is very slightley more subtle than that, I think they probably still feel it might work but they have now realised that even if it does there is still a huge ammount of pain to come in the 'real' economy already on the way down the pipeline.

The realisation is more on the lines of their own powerlessness to prevent that, tinged with fear about what may happen to their own very privaledged positions once the pain in the real economy starts to hit a peak

By my intuitive estimation that will be in 12 to 18 months time...about the same time as the next election.....

They are realising thier own careers are finished now, no matter what they do, and rifts are starting to appear because of that.



Jericoa

Paul

"a massively unconventional monetary policy - quantitative easing"

I assume you mean "daft" so why not say so?

You could try 'untested' or 'without any economic or intellectual or logical support'.

Or simply one that will make things worse!

Paul,

Congratulations on being shortlisted, I hope you don't win though or this place may get too popular and we all know how too much popularity spoils a good thing.

Just look at what happened to the main political parties, debt and the Costa del Sol :)

Jericoa

Mr Mason
A comment on your report from Slovakia.
The Centre of Europe is in Lithuania. I know, I have been to the spot.

In no way is Slovakia in Eastern Europe. If anything it is in Western Europe.

And they make high quality cars to the same spec as those produced in the UK.

It would be far better for consumers (note: Consumers!)if the whole UK motor industry was closed down and moved to Slovakia.
Unless our workers were prepared to work for Slovakian rates of pay.

The world is opening up. Wages are coalescing across Euroe and the World.

Thsi will be uncomfortab;e for some.
BUt for most it will lead to a massive increase in living standards.

#9 ExcellenceFirst

I think you've hit the nail on the head there. this version of QE has been designed to save the banks, not stimulate the economy. The hope is that the banks will increase their lending enough to benefit the rest of the economy. This is unlikely to happen soon.

John From Hendon "'...without any economic or intellectual or logical support'."

Not necessarily, Galbraith, Keynes, the Social Crediters and others have been discussing this for a long time. The problem is to match purchasing power, ie entitlement, to the goods and services available in the economy.

However, socialising bad private debt will not work, it will merely hamstring future generations. RBS and HBOS should have been allowed to go bust. Then QE could have been applied to the real economy.

Enjoy those Slovak beers, Paul - nostravia!


#23 jrharmer

"The centre of Europe is in Lithuania. I know, I've been to the spot."

According to its own publicity, the geographic centre of Europe is in SW Ukraine, almost on the border with Roumania. (Yep, been there, done that, and lost all my pictures courtesy of the Royal Mail).

I think Mervyn King knows what is coming so he engineers a little row with Gordon Brown/Alistair Darling and is forced to resign, taking away a pension that would make even Sir Fred Goodwin green with envy.

How's the airport in Bratislava ?

How come you can manage to miss the main point?

All this reference to 'job creation' needs to take account of the fact that jobs cannot be created for the UK under current EU rules. So let's have the real discussion, not what you are filling space with, with one eye covered.

There is free movement of labour within the EU, so as soon as jobs are created, there are Rumanians et al, on the spot, to do them. (Think Ive got it wrong about Rumanians? 200 were quietly sacked from Olympic site during srtikes unrest). So jobs for UK workers cannot be created under the current rules.

And infrastruture contracts have to be offered across the EU. And it is established that firms can bring in their own workforce.

These rules, with member state level spends dont match.

So what possible use is Brown's 'fiscal stimulus' infrastructure proposal?

Maybe this is why 'Danny' is saying the jobs must be in the public sector - because any private contacts, whowever much UK govt spending is involved, will not contribute to UK wellbeing. Maybe he doesnt want to identify this impossible situation re the EU.

The other EU countries, in their rejection of Brown's 'fiscal stimulus', have obviously recognised the way things are and are not going to waste their countries money.

Its a pity that you and the rest of Newsnight, and indeed the Ö÷²¥´óÐã haven't.

#10. stanilic wrote:
The only evidence that there has been a fiscal stimulus is that we have been told so. I see no direct evidence that this has reached the street. I appreciate it is early days but I don't get a sense of urgency from the government.

The fiscal stimulus was the VAT cut. It has mostly gone directly to the end-point retailers. This has enabled some of them to make their rent payments and so delay the inevitable crash in commercial property and CMBS markets and beyond. Unfortunately, business rates become due in a few days time and these will tip many retailers over the edge. We ain’t seen nothing yet.

Well Paul, you are either stuck in that fiendish no-mans land that is the airport departure lounge (exit visa stamped so you have left but not gone anywhere) or stuck in immigration in that other dante-esque place, airport arrivals. (entrance visa not stamped so can't go anywhere)

Time passes at a different rate in these places, minutes are stretched out into hours, the currency that you have is never the right one (having just got rid of your last local money you are stuck in departures or your pockets are full of change from the last country in arrivals), the staff are helpful but cannot help, customs have their own practices (and they are practising on you) nothing happens.

It feels like a different world when you eventually step blinking out into the light of the taxi rank.

And with the speed of current economic events, it could very well be a different world.

Obviously Bratislava has Pilsner Urquell pubs as well and Paul and crew have succumbed to temptation.
The VT editors in London are still trying to piece together an inchoherent piece in B&W (Bratislava is still in B&W as we all know).
Someone ring the Soundman (by his very jobtitle, he is the only one still capable of listening).
Paul, wake up, we need to know, just what is happening in Bratislava (if I could get google-earth to work I might even find out where it is)
Don't forget the clocks go forward this weekend which might totally mess up your itinary.