+++ 1/5 Young Unemployed – 943,000 Under 24s on Dole +++

ONS numbers reveal that youth unemployment continues to rise, with the number of 16 to 24-year-olds up by 15,000 to 943,000, giving a rate of 19.8%, a record high. 

Gordon says youth unemployment is his priority…

With No End to Recession, Labour Attack Strategy Misfires

The coordinated attacks this week on George Osborne were pre-planned to coincide with the end of the recession as predicted by consensus economists. Except that the economy did not oblige.  On Friday the ONS reported numbers that shocked Gordon Brown, who has long clung to the belief that a rising economy will save him.   His curse prevailed.

Osborne AttackUnlike in the rest of the recovering industrialised world, UK GDP fell by a shock 0.4 % last quarter, meaning the economy had now contracted for six successive quarters, the longest recession in British recorded history.  Labour’s strategic plan, into which Guido understands Alastair Campbell and Peter Mandelson had input, was to use the reported official end of recession to claim victory in the battle against the crisis.  On the back of that they would launch a ferocious attack on George Osborne’s response to the crisis.

GO Wrong
There was no recovery reported.  Op-eds had already been lined up in friendly papers, “lines to take” established, Bad Al Campbell himself lined up a letter in the FT focusing on Osborne’s shadow chancellor / campaign manager roles. Labour produced publicity material (above) and digital animations to be used in online campaigns.  Mark Hanson, a backroom adviser on Labour’s online strategy, had placed a pre-written article on LabourList that he failed to revise to reflect the terrible Q3 GDP figures; “The campaign looks at what the real consequences would have been if George Osborne’s misjudgments had been enacted and led to a deeper, longer and more painful recession.”

That quote looks revealingly silly in the light of the figures showing Britain is suffering the deepest, longest and most painful recession ever recorded.   Attack dogs Liam Byrne and Alastair Campbell nimbly recalibrated their attack lines.  Instead of attacking Osborne as wrong on the recession, he was they claimed wrong on bailing out the banks (Byrne), wrong on political strategy (Campbell).  With Gordon proved wrong on the recession by the numbers, with Britain shown to be worst placed of all the G7 nations, with our economy now smaller than Italy’s economy, the whole “Gordon was right on the recession” line is in tatters.  Maybe they will try to resurrect it when the economy does finally bottom.  Too late for Gordon, who by some accounts took the released figures very badly.  At PMQs he stuck to the “I’m right, you are wrong, wrong, wrong” line even when the numbers showed differently.

With the new German government announcing a massive multi-billion growth package of tax cuts to boost the economy it will no longer be credible to paint the Tories as out of touch and isolated.  The Tories have a surprise for Gordon, which Guido will spoil, footage of President Obama time and time again saying in recent months that you have to cut taxes to help people in a recession.  With two of the industrialised world’s biggest economies – Germany and the United States – now implementing growth orientated policies, Gordon’s big government tax, borrow and spend will look out of kilter and isolated.  His last hope of a political recovery strategy is now past its sell by date…

+++ Shock Figures Show UK In Worst Ever Recession +++

From Reuters:

The Office for National Statistics said British gross domestic product fell by 0.4 percent between July and September, meaning the economy has contracted for six successive quarters for the first time since records began in 1955.

This was much worse than analysts’ expectations of a 0.2 percent rise. Not a single analyst out of the 35 polled by Reuters before the data had expected a negative reading.

This is now the longest recession since records began. Despite the Prime Mentalist’s lies that Britain is “best placed to weather the global turbulence” it looks increasingly like Britain will be the last G7 country out of recession…

+++ PSBR New September Record £14.8 Billion +++

Data released today showed that public sector net borrowing rose to £14.8 billion in September, the highest ever level of borrowing on record for the month, increasing from £8.7 billion a year ago. Gordon’s big and bloated government is overspending by £493 million a day or £20 million an hour, 24 hours a day, every day. More money is going out on the costs of failure – welfare payments – than is coming in from income tax.

GDP Down 0.6% Q2 ’09, Fifth Successive Quarter
Worst Recession Since the 30s

Gordon’s economics are a sham based on debt, government debt and consumer debt resulting from cheap credit.  Remember prudence?  The nation is now more indebted than ever before.  Remember an end to boom and bust?  This is the mother of all busts.

Thatcher was right: The trouble with socialism is that you eventually run out of other people’s money.”

Government Overspending £258 Million Per Day

The Public Sector Borrowing Requirement for July came in at £8.016 billion.  That means the government was over-spending by more than £258 million per day last month, which is living beyond our collective means by more than  £10 million an hour, 24 hours a day, seven days a week.

Gordon Brown and Ed Balls reckon the government should spend even more.  John Redwood blogs “No wonder the Governor thinks we ought to print some more money – who is going to lend us all this?” The Zimbabwean dollar rose 15% against the British pound last month…

UPDATE : The FT reports that this morning “saw another lacklustre gilt sale from the UK Debt Management Office.”  Surprised?

Double Digit Inflation is a Black Swan

The Bank of England and most consensus economists, including most right-of-centre monetarists, are stoking deflation fears. The MPC voted to print £50 billion more this month.  Which is very convenient for Gordon Brown and Alastair Darling, it allows them to justify printing money, which they can then use to buy their own escalating government debts.  Which is a little like eating your own leg to stop you starving.

The economic debate on this is confusing, the data is mixed and to some extent depends on your time frame.  The drop in oil prices and other commodities post-crunch had a deflationary effect.  Against this you have U.S. and U.K. government debt levels which are extraordinary.  Terrifying.  Gilt yields (interest rates) are being held down by the Bank of England printing billions of pounds to buy gilts from the Treasury and artificially hold up gilt prices.

The Bank of England’s own pension fund however is heavily invested in inflation protected securities – which is odd given their public stance is that deflation, not inflation is the threat.  Consensus economists are sheep and we need not worry too much about their bleating, more surprisingly some right-wing monetarist economists, such as those on the IEA’s shadow monetary policy committee (who tend to work in the City for investment banks) are also believers in deflation.  Guido’s theory is that the reason they have supported expanding the money supply so drastically is they panicked, remember all those articles in the Guardian and the FT about the “end of capitalism”and the end of investment banking as we know it?  Their morale was low, they were afraid.  Printing money and flooding the market with liquidity would be a short term fix that would shore up the banks and save their jobs.  Hence all these right-wing economists became born again Keynesians and could be found all over the Square Mile screaming at the Bank of England to turn on the printing presses.

Well capitalism survives and thrives.  Some of those economists are now wondering about the wisdom of printing all that money.  Nigel Lawson’s biographer, Eamonn Butler of the Adam Smith Institute, changed his mind on quantitative easing a few months ago, the IEA’s shadow MPC is no longer unanimously in favour of quantitative easing.

black-swanNassim Nicholas Taleb yesterday warned of the inflation threat, Cameron conceded the possibility of a British debt crisis.  Guido thinks it highly unlikely Britain would ever default on it’s debt so long as it has a sovereign currency – we would just devalue and pay foreigners in devalued pounds.  Though Britain could have, as Cameron said, foreign investors demanding higher risk premia, higher yields.  That could see mortgage rates above 10% again – both here and in the U.S.

Warren Buffet yesterday was quoting John Maynard Keynes’ road map for political survival amid an economic disaster of just this sort: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens…. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

Protect yourself from the coming inflation.  Like the Bank of England’s pension fund…

5.4 Million Unemployed, 17.3% or 1 in 6

Officially there are 2.38 million unemployed, in reality there are 5.4 million not in work who should be available for work. That is equivalent to 17.3%, or one-in-six of the labour force.  The left leaning economist Chris Dillow argues that capitalism can’t provide enough work to go round.  In reality it is only economic growth that can provide jobs.  You can’t tax and subsidise your way to sustainable economic growth…

Lies, Lies and Damned Statistics

Public Expenditure AnalysesThe sheer madness of Gordon’s state of denial became clear yesterday.  He stood there at PMQs and claimed spending would grow 0%.  He has set himself a dividing line alright, it is the line between economic reality and economic […]

+ READ MORE +

Economy Contracting Worst Since 1958

The UK economy contracted an horrific 2.4% in the first quarter of 2009, its biggest quarterly decline in 51 years, according to the latest ONS data released today. This comes on top of the OECD saying we can expect a […]

+ READ MORE +

Mervyn on the Economic Shambles

Mervyn King’s testimony yesterday was shocking, he made public that the Bank of England was not consulted on Alistair Darling’s plans for the reform of banking regulation.  Call Guido old fashioned, but he somehow thinks that it might be a […]

+ READ MORE +

Bailout : Gordon’s £1.4 Trillion Fail

giltsHere is the futures price chart for the generic Gilt.  All that is stopping that chart going further south faster is that the Bank of England is printing money (though printing isn’t the way it done nowadays, the Bank just […]

+ READ MORE +



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