It was only a few weeks ago that I wondered when the 'red-braces brigade' would come after us the way they had the French and today, lo and behold, Moody's Credit Rating Agency has put the UK on warning. Happily for little 'Georgie Porgie' busy playing at bankers in the Treasury the inflation figures also came out today and showed a further 'drop'. I use inverted commas because, of course, that 'drop' is mostly his stupid VAT rise dropping out of the 12-month figures. The inflation that it caused has not suddenly disappeared, we all felt it and the scars are still vivid. Commodity prices are still on the up as you will notice when you fill your car. The fact is that this so-called government has flinched in the face of difficult decisions. They could have seized the opportunity offered 18 months ago when people were braced to expect genuine austerity. Instead the government kept singing the austerity anthem but in fact there has been little or no such thing.
Once again, Liam Halligan in The Telegraph, tells it the way it is, with my emphases throughout:
QE [Quantiative Easing, or, printing money] has also facilitated circular financing, with the state effectively borrowing from the state, so allowing the UK government to dodge the really big fiscal decisions. The Coalition talks a good game on “austerity”. When debt interest costs are included, though, government spending is still going up.
This is true even though QE is suppressing official borrowing costs, by keeping demand strong. Yet very little of that demand is coming from genuine buyers exercising their independent judgment.
The whole exercise is a circular racket designed to allow the government to keep on printing money which it lends to itself thus allowing it to keep on spending and keep on avoiding the difficult decisions which need to be taken:
Since early 2009, the Bank of England has bought more than half the £475bn of IOUs sold by the UK government. Another £100bn or so were bought by high street banks either owned by the government, and/or forced to buy more in the name of “macro-prudential regulation”. UK pension funds, run by professional investors acting largely as they wish, have reduced their gilt holdings over the last three years.
So QE is designed to pump money into badly-run banks above and beyond the headline “bail-out” numbers. It also means the government can keep borrowing at historically high levels while not immediately feel the impact in terms of more punitive borrowing costs.
Mervyn King should have his knighthood rescinded for being a party to this monstrous fraud. 'Dave and his Dimiwts' should be swept from office for being the pusillanimous poltroons that they are but one huge difficulty would still remain - trying to find anyone else on the political scene with the brains and the balls to do what is really needed.
This wouldn't have anything to do with the constant whine about how the pension funds are charging enormous fees and cheating poor old fogies like me would it?
Full disclosure time. Yes, I have a (pitifully small) private pension and yes, I pay an inordinate amount in fees, but the entity I pay those inordinate fees to is HMFnRC who seeem to think that anything over and above the state pension, (which I also religiously paid into, including all the extra bells and whistles), makes me into some kind of over paid bankster* earning extortionate wages.
*(oops, Goodwined the thread. Sorry.)
Posted by: Kevin B | Tuesday, 14 February 2012 at 14:32
No, Kevin, it just means that they wouldn't touch a British government IOU even with your money!
Posted by: David Duff | Tuesday, 14 February 2012 at 16:15
I probably didn't put that very well David, but what I was trying to get at was that when the pension companies stopped buying government IOUs, there seemed to be a rash of stories saying how nasty the pension funds were and how they were ripping off poor pensioners.
Purely coincidence I'm sure.
Posted by: Kevin B | Tuesday, 14 February 2012 at 16:59
Absolutely! Who could doubt it?
Posted by: David Duff | Wednesday, 15 February 2012 at 09:03