Britannia Radio

More flesh on the bones of what Britain must face today.  Tinkering 
with penny packets here and there would be criminally neglectful.  
This is not a 'downturn' this is a catastrophe and my endless 
warnings about cutting expenditure drastically and reducing the 
state's part in our lives are overtaken by events.  It's austerity or 
inflation [NewLabour will wipe out the rest of people's savings by 
going for inflation] The growth we have taken for granted as a 
birthright is over!

But I'll bet the penny won't drop with the Darling-Brown-Mandelson gang.

xxxxxxxxxxxxx cs
=============================
TELEGRAPH 22.4.09
There are just two options remaining for Labour: austerity or inflation

By Damian Reece

There's a saying in business that bad numbers always take longer to 
prepare than good ones. [Becvause of the G20 - -] We've waited more 
than a month longer than usual for today's Budget numbers so brace 
yourself.

A Budget whose flim flam measures around the margins have been so 
comprehensively leaked is evidence of one thing: government advisers 
desperate to get airtime for mediocre policies well in advance of 
today's statement. Why? Because the real, horror story of our public 
finances will overshadow everything else.

After all the tax we've paid, after all the spending we've funded and 
after all the growth the real economy has delivered over the past 
dozen years, our public finances are spectacularly bust. The 
Government's finance department has failed to manage the money and 
there's only a near-£200bn deficit for this year left to look at. The 
recession-hit economy is in its worse state for 60 years.

The extension of a stamp duty freeze on property purchases worth up 
to £175,000 is window dressing. An existing plan to underwrite 
mortgage-backed securities is useful but can do no more than help 
stabilise a troubled market, likewise support for the credit 
insurance market.

Spending £500m on green initiatives, millions for JobCentre Plus, a 
hotly debated car scrappage scheme and help to pump a bit more oil 
and gas out of the North Sea is not going to get us out of this.

For a financial statement, the Budget's most interesting moments 
could come in the field of social policy, with statements of intent 
on getting young people into work. Good for the economy, good for 
society but completely unnecessary if the billions already spent on 
our, at best, patchy education system hadn't been wasted in the first 
place.

So where now? Borrowing our way out of debt is not an option; the 
gilts market would not allow it. The public sector must face a new 
austerity, as falling private sector tax receipts fail to support the 
size of our state and its debts.

For the private sector continuing austerity, as employers continue to 
grapple with recession. Higher tax rates for some, lower wage rates 
for others. If this sounds bad, it sounds even worse to a politician, 
so bad as to be untenable.

Which is why I fear that inflation could be Labour's lasting legacy.  
[On March 11th I stated flatly that inflation was certain,  Some said 
in 2 years - others in one but servere inflation there will be -cs] 
Inflating your way out of debt is the easy solution. RPI may have 
dipped into negative territory in March but core CPI inflation is up 
year-on-year. Sterling has been devalued 25pc against the dollar, 
nominal interest rates at 0.5pc compare to headline CPI of 2.9pc and 
central bank action has created an enormous magma chamber of 
liquidity, including £75bn of quantitative easing, ready to fuel 
price levels in the economy.

Austerity or inflation. That's the choice for the next government.
=============================
TELEGRAPH Blog 21.4.09
We are not even half-way through the banking crisis - IMF
Posted By: Edmund Conway

A month ago the International Monetary Fund was charged by the G20 
finance ministers with finding out precisely how the balance sheets 
of the world's major banks would look if they were to get back to 
lending again at more or less the rate they were in the pre-crisis 
days. Today the Fund delivered its verdict and it is both clear and 
terrifying.

The simple truth is laid out in page 33 of the Global Financial 
Stability Report, published today in Washington: "if banks were to 
bring forward to today loss provisions for the next two years, before 
expected earnings, US and European banks in aggregate would have 
tangible equity close to zero."

In other words, the entire global banking system would be bankrupt - 
kaput - if its institutions immediately wrote off all the toxic 
assets still sitting in their vaults without any government 
assistance. And bear in mind this already takes into account the 
money we have already thrown at the banks. So even after all this has 
been spent the financial system remains, effectively, insolvent, 
bearing in mind the amount of cash the banks have lost as a result of 
the bubble of the 2000s.

But, you might well respond, what about all the cash that has been 
thrown at the banks - almost $800bn across the world, including 
$110bn in the UK (just over £70bn)? Well, the problem is that 
according to the IMF this hasn't been enough to get the banks back to 
health again. In fact, it calculates that a further $125bn will need 
to be poured into Britain's banks if they are to start lending again 
at anything like a normal rate. If they are to bring their balance 
sheets back to a state as healthy as in the mid 1990s, it will take a 
further $125bn on top of this again.

In other words, if you thought the immense amounts of taxpayer cash 
funnelled into the system over the past couple of years was enough to 
bring us back to good health, think again. It is an extremely 
worrying verdict, particularly coming at a time when many had been 
assuming that green shoots were starting to sprout and the recession 
was coming to an end. But it underlines one simple but undeniable 
truth: that this recession is different. It is the consequence not of 
a simple one-nation housing crash or a consumer slowdown but a 
catastrophic collapse of the financial system. And with that system 
still in a wreck normal service will simply not be resumed without 
more costly bail-outs - or else we must accept the consequence that 
money will be far more expensive to borrow in the future, and that 
economic growth will be far less in the future.

To anyone with a keen sense of history this should hardly come as a 
surprise. The 1930s were marked by periods of optimism before reality 
set in again. The IMF's verdict may also take a while to sink in, but 
here it is, laid out in table 1.4 of the report: we aren't even 
halfway through the bank bail-out. Gulp...