General Chat

John may have studied Keynesian economics but pretty obviously did not pass the exam.

OFITG is on the button but should go back just a little further tracing the roots of the current imbroglio.

These lie in the repeal of the Taft-Hartley Act in the US which prevented investment banks from using US retail bank funds to underwrite speculative securities.

This was followed up by two economists who developed the Black-Scholes equation for which they won the Nobel prize. Black–Scholes was first published by Fischer Black and Myron Scholes in their 1973 paper, "The Pricing of Options and Corporate Liabilities"

Possibly John will display his firm grasp of modern finance by explaining the relevance of "the Greeks" in this context. What is his understanding of "volatility" and its importance to the markets ?

Back in the UK the Tories followed up with their deregulation policy which allowed exactly the same thing to happen in the UK.

In essence what has been happening is a mega mega Ponzi scheme and as with all Ponzi schemes it can only endure so long as it is fed. That is one of the reasons that Osbourne has let the dogs out re: mortgages.

It was US government underwriting of Fannie Mae and Freddie Mae which pushed the US into near bankruptcy with consequences still very much with us.

No doubt when Ed Balls starts to retrench on this from 2015 there will be wailing and gnashing of the teeth from the Daily Wail and Frothy Expresso but he will have little choice unless he wants to repeat the mistakes of the Broon.

In any event beware the Ides of October 2013.

There are plenty of lamentable things about Labour, too many to list here. Nevertheless Ed Milliband, after a slow start, is showing signs that he understands the problems facing the country AND the democratic process in the UK and has some tentative answers. both for the short term and to be developed over time.

OTOH Brave Dave, Gorgeous George and their buddies like their political cousins in the US Congress have entirely lost the plot and live in the world of make believe. This is the UK, not Australia.

Tesco profits are down 25%.

I was never a great fan of Blair, Brown, and Balls, as to Miliband - let's say the jury is out at the moment so no comment, but I do wish people would stop putting all the blame for the deficit on Labour.

The financial crisis did not start in the UK, it started in the United States, and it's roots can be traced back to financial legislation introduced by Ronald Reagan and Margaret Thatcher jumped on Reagan's bandwagon and followed suit with her ideological free market economic policies.

The policies of Ronald Reagan led to a rapid rise in sub-prime mortgage lending and this type of lending coupled to the collapse of the housing market in the United Sates led to mortgage lenders like Fannie Mae facing bankruptcy and Lehman Brothers going to the wall, .

Where Tony Blair went wrong was continuing to follow Margaret Thatchers free market economic policies. As for Gordon Brown & Alastair Darling, Brown was my local MP and was never my favourite politician, Darling inherited my old friend Tom Oswald seat and I did not like him when he was a councillor on Lothian Regional Council and I still don't like him.

All that aside neither Brown or Darling really stood a chance as the rot in international financial institutions was already well entrenched, could they have done more to reduce the impact of the financial crisis, the answer is probably a big yes, but they took their eye of the ball, as did the FSA and the Bank of England.

Lehman Brothers crashed and financial markets went into meltdown and to this day I honestly believe that if Brown and Darling had not bailed out the banks cash machines would have shut down as bank, after bank, after bank, closed their doors. Thank goodness Barclays Bank withdrew its bid to buy the investment arm of Lehman Brothers, if they had gone ahead the consequences for everyone in the UK does not bear thinking about.

The bail out of the banks contributed in a large part to the deficit so let us stop putting all the blame for what happened on Labour, no political party or institution can act like Pontius Pilate and wash their hands of any blame, least of all the main culprits - The Bankers.

It may be utter twaddle to you, Rollo. But to someone who studied Keynesian economics back in 60's and was very impressed with most of his theories, 47% of GDP spent in the public sector is a certain recipe for disaster.

It never needed to happen. We could not afford it. We cannot afford it. Income £1,000 per month, mortgage £390. Result happiness. Income £1,000 per month, mortgage £470. Result - misery. Thatcher knew that, Balls knows that, Keynes has formed the thinking of my generation that anything over 40% is an absolute disaster.

And, if we want a healthy and competitive mixed economy of private investment and effective public services, 47% needs to be addressed by whichever politicians hold the reins during next 6 years and 7 months. There can be no let-up till after 2018, conveniently just before 2020 election ;-)

sorry John utter twaddle

Our Bullingdon boys seem utterly unable to tell the difference between government debt ( which includes such things as the note issue ) and the structural budget borrowing requirement. Neither can they tell the difference between the finances of a large company and state finances. Neither can US Republicans.

Mrs T for all her faults was very good at economics.

Whatever Osbourne does or doesn't do govt debt will go on rising as it is simply not possible to meet the many obligations from current income eg state pensions or come to that HS2. If and when the economy really starts to pick up then so will M1 money supply and thus government debt. The only way out of this is a return to the gold standard and we all know how that turned out.

If you have a look at world economies you will find out very quickly that those with low levels of debt are all poor going on very poor. Those with significant debt are prosperous.

Sound money is one of the siren songs of how to drive an economy on to the rocks. The current sorry state of €uroland is as good an example as any.

Even though the UK is thankfully not a €uro member Osbourne seems bent on applying the same disastrous Merkelism to the UK as for most of the €urozone.

I don't think it will fly and I doubt he will get the chance to fly his kite anyway and certainly not in the Rhondda..

In my lifetime, one party saves money and one party spends it.

Always more fun under Labour, as long as we never give them more than one term of government. We will be paying for the folly of Blair and Brown and Balls and Miliband for at least another decade until we get public spending below that magic 40% level*. For them to win in 2015 will be too soon - not enough retrenchment yet. Far better to continue to hone their "yahh booh" debating skills in the House and feather their nests.

New Labour were like children in a sweet shop when in power. All their targets were exceeded, so that was good. Or was it?

Edit * Currently public spending 38.9% of GDP in United States, 47.3% in UK. Tories will not relax on public service cutbacks until that 47.3% comes down considerably.

GlasgowLass, there is life on another planet - the planet Utopia where mpst of our politicians live, trouble with David Cameron, George Osborne, Iain Duncan Smith, and many others is that their definition of hardworking people bears no resemblance to what most of us define as hardworking people.

To be in their Hard Working People Club you must have a household income above £60,000 and that only entitles you to junior membership ;-)

I love the way they like to tell the rest of us (the 'normal' people) how feckless we are on our paltry wages, when they can't get their own housekeeping right. :-| :-|

I could survive quite well on my pay if I could claim for travel, clothes, furniture, phone, rent etc.
I'm sure my landlord would appreciate my saying 'I'll get all my rent arrears sorted by 2020'. :-D

In Winchester, apparently one of the richest (for 'richest ' insert 'expensive') cities in England, within 100 yards, there are 5 empty businesses. Quite a few more elsewhere on the high street too.

Well lets hope we never find life on another planet, for no doubt this government will start sending them money too... :-D :-D :-D

they could not run a p***up in a brewery they want to spend approx. 500 million on this high speed rail thing that money could go to paying the national dept. aslo they paid a security fim to guard their champers at the conferece waste of money.

He is also hoping to use the money from the Royal Mail sell of to reduce the deficit.

Selling off the family silver to pay off debts. Not good.

What pray are the good intentions of Osbourne & Co. ?

"The road to hell is paved with good intentions"

And I thought he told us he could do this by 2016, seems not, as yet again a target for getting rid of the deficit and balance the books has been announced by the Chancellor George Osborne.

In June 2010 the Chancellor, George Osborne, announced his plan for the government to get rid of the deficit and balance the books by 2016.

Yesterday the 30 September 2013 the Chancellor George Osborne said he will aim to balance the books and get rid of the entire deficit by 2020 and he believes he can do this without raising taxes.

If you are on low wages, if you are in one of the vulnerable groups, if you claim any kind of benefits, if you think the last 3 years have been tough, think again because "you ain't seen nothing yet."

The Chancellor George Osborne wants to, not only use the 19 months left of this parliament, to continue dismantling the welfare state, he wants this government to be re-elected for another 5 years so that they can make sure they "do a proper job of it" and fulfill their long held ideological dreams.

In some ways their ideological dreams remind me of The Whigs as they give me the impression that they would dearly love to take us back to those bygone times when everyone knew their place on the social ladder.

In those days the country was governed by the aristocracy and wealthy land owners who believed that only an elite few were born to govern, the rest were born to serve, and they legislated on the basis of favouring those who had plenty and paying lip service to those who had little - after all they had to maintain what they called the social order - ring any bells ;-)