Rolling UK Economy Into The Shitbin Thread

i think we have jizzed about a trilli on saving the bankers?

Not really.

It's 850bn and that figure represents all the guarantees and insurance that we offered ie it is the notional cost if the doomsday scenario happened. We haven't actually "spent" that money. It also includes the money spent directly on part-nationalising Lloyds and RBS, but doesn't count what they're worth, either now or when we eventually sell them (which will fingers crossed be at a huge fucking profit).

The commitments include buying £76bn of shares in Royal Bank of Scotland and the Lloyds Banking Group; indemnifying the Bank of England against losses incurred in providing more than £200bn of liquidity support; guaranteeing up to £250bn of wholesale borrowing by banks to strengthen liquidity; providing £40bn of loans and other funding to Bradford & Bingley and the Financial Services Compensation Scheme; and insurance cover of over £280bn for bank assets. From an independent article on the NAO report.

Also, Germany, Italy and Japan had worse recessions than us, last time I checked, so he makes two major fuck-ups in the first two paragraphs, at which point I can't be bothered to read the rest.

similarly tbh you guys are such labour stans im unlikely to believe yr posts: i've seen the bailout put at well over a trillion, for example:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a0_DlDun684Q

even if it is a mere £850bn, no-one is being held accountable for encouraging it to happen

It depends what you mean by a worse recession - dunno about Italy but while Germany and Japan may have fallen further they've also recovered faster.

xpost - I'm not sure there's really a convincing argument against the bailout, and Jenkins going "pics or it didn't happen" certainly isn't it, but the failure to adequately control the banks in which the government is a majority shareholder is surely a huge fuck-up?

xp - i've taken such a time to write my post Jamie's done it for me. But just to emphasise.

We haven't SPENT a trillion, we've loaned it (I know, I can hear the hollow laughing of laxalt from here - maybe this revive will tempt him back?) and, of course, we may never see it again, but it's a bit different from what Jenkins says.

As for shops, I was thinking about this only this morning as I was driving to work along what is euphimistically called the "Golden Mile" in Leicester (google it if you like). This is a long road of various businesses ranging from takeaways to banks to sari shops to jewellers. I counted three new businesses along there to-day, a new restaurant, a clothes shop and, believe it or not, a bank. I've never known a street change so regularly over the years, but there's very few empty shops on it. This contrats with several more salubrious areas I've visited recently where I noticed various, er, "boutiques" were closing. So, yeah, you're right (and so is Jenkins) I can see a lot of shops closing, but I don't think it's going to be across the board, or that they might not replaced by something else (something people need for instance - I'm sure no-one would argue we had a glut of shops selling nice mugs in recent years). harsh though that may sound.

I'm really trying not to be such a stan these days HM but you know, it's hard, it's been a long time...

xpost

It might be over a trillion, god knows the numbers are so large it's unimaginable, but I think the same point stands, that that isn't all money that we have actually "spent", and it doesn't include all the fees and interest that the banks have had to pay to receive this support.

I dunno, the "narrative" to me seems to be colossal private-sector fuck-up followed by strong collective internationalist state action saving the day. I'm sure questions should be asked and people strung up, but as a leftist I'm pretty happy with how it went.

Matt - yeah fell further (just) recoverd faster is probably right. Not up on latest figures, though.

xp

HM even in that Bloomberg article it doesn't say anyone has spent £1 trillion.

The Treasury, in the budget submitted to Parliament yesterday, estimated the bailout may cost taxpayers 50 billion pounds. That contradicts with the International Monetary Fund’s estimate that the bill may climb to 9.1 percent of GDP, or about 132 billion pounds.

I dunno, the "narrative" to me seems to be colossal private-sector fuck-up followed by strong collective internationalist state action saving the day.

no -- this is too simple. it was a "private-sector fuck-up" colossally encouraged by the state. and the "day" may have been saved -- the stock market is doing well, bankers got their bonuses -- but in the next few years the people who suffer are the people whose money was used to prop up the banks. ie muggins ere.

But Jenkins's argument isn't really "we have spunked and wasted a trillion", it's "we have committed a trillion so why are the government not taking a firmer line on how these banks are run?", which is fair, surely? Especially if we're looking to restore the banks to health and get them off the public balance sheet as soon as is sensibly possible.

as a leftist I'm pretty happy with how it went

!!!!!! You do know what this has done to the consensus on public spending don't you?

idk where our exciting "printing money" policy comes into the whole question of how much this has cost

everyone basically agrees that

- hiving off the casino functions of banks
- creating a transaction tax on all trades
- regulating derivatives just like everything else
- increasing capital leverage ratios

are the answers, right? any chance of these things happening?

i mean fuck, the tobin tax alone would plug the deficit bigstyle

Matt - In reply, while we're linking Guardian articles ... http://www.guardian.co.uk/commentisfree/2010/mar/11/defeatist-nonsense-leftwing-thinking

I don't agree with everything, but I kind of feel like the intellectual argument has moved in the left's favour. It's just capitalising on it ...

xps

No-one seems to have any idea what the cost of not bailing out would have been. I'd be very interested to read a good analysis of that scenerio if anyone has one to hand?

On the US Shitbin thread, I made the point that in the States there seems to be this mix of hatred of banks/big business AND hatred of the state that fuelled the anger at the government intervening in the banks, or bailing them out or whatever, but that that didn't seem to be the case here. More a general anger at incompetence.

I don't know if that's still the case, and certainly articles like the Jenkins one seem to be an attempt to whip up that kind of fervour.

Part of it has to do with the fact that in the US you had guys like Paulson and Geithner who literally a year or so before were running the companies that were now getting handed blank checks. It was like Halliburton all over again.

Ned - I think the argument is that the cost of not bailing them out would have been a collapse of the whole financial system, which on one level would have been a laugh, but on many others would have been quite shit.

I can't quite imagine what that would mean. Maybe others can help?

similarly tbh you guys are such labour stans im unlikely to believe yr posts:

Charming as ever

Part of it has to do with the fact that in the US you had guys like Paulson and Geithner who literally a year or so before were running the companies that were now getting handed blank checks. It was like Halliburton all over again.

― Tracer Hand, Friday, March 12, 2010 3:07 PM (49 minutes ago) Bookmark

true. here we have... lord myners! and a mania for paying city consultancy firms. and a relatively supine media -- at least on matters of substance. there *ought* to be more fervour against the government over what just happened here. and there probably will be once the cuts really begin. but it's too late for it to have any purpose.

I hardly think Lord Myners is equivalent in importance and influence to Geitner and Paulson. Not that I'm disagreeing with you, by and large.

The thing is Myners is wandering around slamming people for ludicrous salaries whenever he gets the chance, Adair Turner is basically working out what exotic financial practice to ban first for not being "socially useful" and even Mervyn King is arguing for a Tobin Tax. Hell, even the IMF is calling for exchange controls and higher inflation targets. I feel that to a great extent, the left has won loads of the arguments.

That's why it's particularly galling to have people nominally on the left essentially parroting Dan Hannan or whoever.

The thing is Myners is wandering around slamming people for ludicrous salaries whenever he gets the chance

slamming people is all well and good but the bonuses were paid. if you're right, great. but i don't personally think there's a snowball's chance of anything much happening: the political agenda for the election is about who will cut when. if there is movement towards regulation it's being kept very quiet.

Yeah anyone who thinks all of this represents this represents a triumph for the left will be celebrating a pyrrhic victory, and losing the argument over welfare and public service funding strikes me as defeat bigger than the 'victory' represented by state intervention in the market.

Why is there such a huge deficit in the public finances? I'm sure this has been covered before, but I can't remember.

Obviously there have been a lot of one-off costs over the last 18 months or so where the government has had to step in to stop the collapse of the banking system, but presumably these aren't costs that will continue to be paid each year (and so don't contribute projected future deficits) and presumably also a lot of it is effectively equity in the banks which can be sold in the future (perhaps at a profit) and so isn't really money which has disappeared down the drain.

In terms of the actual deficit, I can appreciate that in a recession tax receipts fall and benefit payments rise and this can lead to a shortfall, but this must have been true in every other recession as well, and unemployment is nowhere near 1980s levels at the moment. So what is the problem?

lol overpaid public servants

lol equity in banks

Since the last recession, the government's become more reliant on tax generated by the financial sector and its problems have contributed to the hole that's opened up in the public finances. Probably a huge fall in the amount generated through stamp duty as well.

Also the interest payments on that debt have to be enormous.

Also the interest payment on that debt have to be enormous

Ah, yes. That's probably the big thing I forgot.

Lol Glazerite.

Yeah, you'd have thought I could have figured that one out for myself.

There is certainly an argument to be had about how the UK cuts its overdraft, but voters aren't getting that debate – instead they have to contend with the Mafioso-like figure of the market.
http://www.guardian.co.uk/commentisfree/2010/may/18/brain-food-markets-politics-religion

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7862246/How-a-broker-spent-520m-in-a-drunken-stupor-and-moved-the-global-oil-price.html

The 34-year old broker at first claimed he had spent the night trading alongside a client. But the story began to fall apart when he refused to put the customer in touch with his desk for official approval of the trades.
By 10am it emerged that Mr Perkins had single-handedly moved the global price of oil to an eight-month high during a "drunken blackout". Prices leapt by more than $1.50 a barrel in under half an hour at around 2am – the kind of sharp swing caused by events of geo-political significance. Ten times the usual volume of futures contracts changed hands in just one hour.

In this circumstance it seems only fair to hate the game and not the playa

ya was gonna say wld kick it with tbh

Well done BBC on only showing this in Scotland:

In an interview due to be broadcast on BBC Scotland on Monday, Mr Tate - group executive director of Lloyds - told reporter Mark Daly: "There are a whole lot of people, myself included, who would love to get the kind of return on their investment that the taxpayer has made into this bank.

Here we go again kids

did you ever hear that thing about the british being the only group who feel schadenfraude toward themselves? totally all i am getting out of this whole thing, some kind of sick pleasure in being proved right that the people in charge are terrible. it's like willing your driver to crash.

Nah, don't think it's just a British thing, I don't really believe any opposition politician anywhere who says he wants the economy to do well, they want to go down the toilet so they can get elected!

here's the interest rate on 10-year UK bonds right before the con-dems got elected:

http://www.bloomberg.com/apps/chart?h=200&w=280&range=1y&type=gp_line&cfg=BQuoteComp_10.xml&ticks=GUKG10:IND&img=png

can someone explain to me where the "crisis of confidence" is here? a crisis that required austerity budgeting?

Feb-May 2010 looks pretty bad TBF although so does Nov 10 - Present. Feb May looks like response to uncertainty, Nov 10 - Present looks like the response to the certainty of Cuts and Contraction.

August 3, 2011, 7:25 am
Osborne’s Delusions

Britain’s experiment in austerity is going really, really badly. But the Chancellor of the Exchequer is finding solace in well, fantasy. Interest rates on UK debt are falling, and:

“This is proof that we are now seen as a safe haven, we’re not seeing the increase in yields seen in Europe and the US,” said Mr Osborne’s spokesman.

Yields in the US have, of course, plunged rather than risen. And they’ve plunged for the same reason UK yields have plunged: a scarily weak economy suggests that it will be years before the central bank raises rates.

For what it’s worth, credit default swaps suggest that perceived risk of a UK default has been low all along, except for a panicky few months after Lehman.

It’s sad, actually: the wolf is at the door, and Osborne thinks it’s the confidence fairy.

was about to say 'who dat?' but then read 'confidence fairy'

and knew

Anyone else cynical enough to think Osborne is happy to have austerity now and a few green shoots before the election followed by a campaign that says Labour got us into the mire and can't be trusted to maintain the "recovery"? It's worked for the Tories before. It's not about what's best for the economy, it's about getting your timing right.

Osborne long term plan is surely to sell off the bank stakes or some of them and use some of that to pay off debt but also a large chunk to fund tax cuts right before the election. But he'll still be wanting better growth than this regardless - as it is we're teetering on the brink of another recession and that'll be disastrous for them. Assuming Labour can actually string together a narrative that sticks on this, which is a huge huge 'if'.

this'll sound student-y, but i think the crisis is so vast that the 'solution' (aka means of muddling through) has to be more than even the labour party of ed balls can offer. i don't think we're going to see really 'green shoots' at any time -- house price inflation, sure -- and much as i loved the last ~15 years, i don't think another round of what we had will see us through.

hollow laugh: george osborne is coming home from his hols early to... do whatever the fuck he does

so has ed milliband actually said anything about this yet?

ha, wrong thread, but i guess it works here too.

awaiting policy review iirc

there are a few 'i agree' kinda things on his twitter account. really feel like he could seem sorta persuasive if he said like, thoughtful things he probably thinks, but he seems a bit trapped in trying to sound like a guy who is able to say the right boilerplate politician things, for the most part, as a demonstration of his grown-up real-and-viable politician skills. like banal 'my heart is with the people of _____' platitudes.