Two Cheers for Government Back Downs

TUESDAY, OCTOBER 14, 2008

Two Cheers for Government Back Downs

So the fight for 42 days detention without trial has been abandoned, theplan for secret trials dumped as well. What next?

McCain - Is He Really Out of the Race?

Betfair is offering 5/1 on a McCain victory. That seems a bit steep for a two horse race. Sure he is behind, sure Palin is appalling the East Coast liberal media and the BBC, but 5/1?

Tempting odds for a value bet. When you drill down in some of the most likely to vote groups, McCain is strong, older voters for instance. Even if almost all Hollywood stars are voting for The One, they are not thatnumerically strong. Do you really think this going be a wipe-out for the Republicans?

Where's Our Bail-Out? 
The Bankers Got Theirs...

Now Brown is bailing out the bankers with the taxpayers money the question Guido wants to answered is: Where is our bail-out?

Billions in future tax payments are being risked to bankers. They are supposed to pay back the debt to the Treasury when things pick up. Hopefully. 

The economy won't pick up until the housing market picks up. Kick-starting the housing market is going to take one helluva kick. In America Obama is talking about a 90-day moratorium on home repossessions and McCain is advocating government-backed mortgage rescheduling, another policy idea doing the rounds is giving home buyers $15,000 tax relief, effectively making a mortgage deposit tax deductible.

Something glaring that strikes Guido as unfair in the British tax system* is that whereas the bank corporations will be able to deduct loan interest payments from their tax bills, individuals can't. Why not bail-out homeowners too by making their mortgage interest payments tax deductible? Consumers are feeling the pinch, if they could claim the same tax relief that the bankers will, they would spend it and boost the economy. Boosting the economy is key to keeping the recession short. Unlike the banker bail-out this isn't a handout from taxpayers, it lets taxpayers keep their money flowing into the economy.

*Gordon took away mortgage interest tax relief in 1999.

UPDATE : The comments below from some call this proposal neo-Keynesian, suggest it would re-flate the housing bubble and call it a middle-class subsidy.

The idea that people should be taxed less to promote spending growth is pretty straight forward. Keeping people's earnings in their pocket to spend promotes growth in a much healthier way than the government taxing their earnings more to spend inefficiently. Some people fetishisise taxes as if they were a good thing in and of themselves. The property market is not going to bubble again in our lifetimes, have no fear. A subsidy is what public sector tenants have, taking less in taxes off people is not subsidising them.

MONDAY, OCTOBER 13, 2008

Lehman Derivatives Defusing Safely

The unwinding of Lehman's credit default swaps appears to be going well. Marketnervousness about systemic risk was said to be at the heart of banks hoarding cash, no financial detonations have been reported. Market authorities reckon the net losses could be as low as $6 billion.Hardly anything...

Taxes Will Rise After this Socialist Indulgence - Peter Oborne
I Have Lost Faith in the Obamessiah - Ed Heathcoat-Amory
I Don't Think Obama Will Win - Sir Michael White
Tories Will Counter Attack on "Real Economy" - ConservativeHome 
Blair's Ecclestone Bung Lies Could Be Investigated - Sky News
Unions Tell Brown "No Repossessions" By People's Banks - Chris Hope
Bloggers Libel Liability Insurance - Media Bloggers Association
IRA's Huge Wall Street Investment Losses - Irish Indy
Prop Watch : Gordon's Human Interest Family Feature - Machiavelli
Will Lewis Editorship of the Telegraph is a Disaster - Quentin Letts
Peston Profile - Indy on Sunday
Friday's Lehmans CDS Auction - Forbes