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I have never taken to John Redwood but his statement makes sense to me whereas Boy Osborne is just banging the drum for Yah Boo politics.

Can some constitutional expert explain how it is that the Government can spend, borrow and commit our money, and print yet more money in our name, without a Finance Act? I thought that changes to expenditure and taxation had to be approved by Parliament.

Probably the answer is something to do with Royal Prerogative exercised by the PM but, if so, this was surely never intended to cover the Trillions of pounds now being committed. The government has no democratic backing for its policies and is certainly contravening the sprit of our constitution, if not the letter. We should petition Her Majesty to dissolve Parliament and call a General Election.

Thanks (see this morning's other debate)

Just whar we need. Unstinting and considered loyalty.

I'll try again!

"I have never taken to John Redwood but his statement makes sense to me whereas Boy Osborne is just banging the drum for Yah Boo politics."

Just what we need. Unstinting and considered loyalty. Oppose and it's yah boo! Get a grip to get this lot out of office.

http://news.bbc.co.uk/1/hi/uk_politics/7929664.stm

Has anyone read this! Am I reading it right? because it sounds like he wants everyone who earns over this arbitrary line in the sand to be told, "to hell with your right to privacy we must fuel the politics of envy and tell everyone you earn this much money and must be publicly shamed for it!" shamed for what exactly? Being successful? Working hard? Earning money!?!? Blimey what a prat.

Redwood can say all these things because he is not important and nobody is taking him seriously. Osborne couldn't say it because there would be immediate demands that he clear up the loose ends and nobody, including Redwood, has any idea how to do that. You have to remember that Labour, the BBC and Peston are waiting to jump on Osborne for picking his nose.

I suppose David_at_home is a Conservative minded guy. But unfortunately he has that Conservative tendency to be tempted by targets that don't bite back - like the Conservative party. With this sort of teenage behaviour it will be more difficult to get Brown out, indeed, the David_at_home types are an imporyant reason we have a Labour government at all.

May I suggest that you read the blog IRONIES TOO.

It may also make us all consider that we no longer live in a democracy, when such decisions can be made without any debate whatsoever.

It is time to wake up and recognise that we can no longer blindly go about ignoring everything, and just commenting. David Cameron, Nick Clegg everyone who truly believes in democracy should now join forces and bring a swift end to this dictatorship in all but name.

"take the losses and create a more stable and smaller footing from which they can trade sensibly."

As Mr Redwood says the consequences of taking a hit are going to be far less damaging in the long run than playing roulette with the money supply and our currency.

I do not see how Labour can hope to end the recession by extending the life of bad-debt.

I also think it unwise for the Conservative leadership to be passive and compliant over this issue. The Conservative party should be pinning the blame where it lies, with the government, and not allowing Labour to create a smokescreen with ad hoc policies that are going to make a bad situation far worse.

Sorry. I forgot the link:-

http://www.ironiestoo.blogspot.com/

"I suppose David_at_home is a Conservative minded guy. But unfortunately he has that Conservative tendency to be tempted by targets that don't bite back - like the Conservative party."

Not so, David Sergeant, the local Tory activists, or some of them, are really quite unpleasant when I stand as a UKIP candidate!

" David_at_home types are an imporyant reason we have a Labour government at all."

If Her Majesty’s Opposition had not been asleep on the job, they would have seen this economic tsunami coming before the 2005 GE and created merry Hell in Parliament and the country. Unfortunately the policy has been not to frighten the horses.

Anyway, Boy Osborne’s second statement is a bit better than his first so I suppose we must be thankful for that.

Are the local Tories really upset when you stand as a candidate, David at Home? Perhaps you are a serial loser and they may even be pleased when your name appears.

I suppose they may be unpleasant to you personally since you seem to espouse no policy at all except to harp on about the terrible Tories. Labour usually comes under your jaundiced eye only when the EU comes up, today being a rare exception.

"take the losses and create a more stable and smaller footing from which they can trade sensibly."
Maybe those losses are unsustainable and nationalistaion would be the only answer, as "too big and interconnected to fail" would be the alternative. Ergo try all other options first.
As I understand it the toxics are still not valued, the asset insurance figures are a guess, almost more to provide some confidence than a genuine insurance scheme.
I didn't like the lady from Oxford Uni who said if this doesn't provide the necessary confidence, the good parts of the toxic will decline rapidly as repossessions rise when people lose jobs and then their houses. Keeping the jobs market going seems to be the main engine required, followed by identifying the floor of the housing market which means trying not to flood the market.

I think George needs to stop being afraid of turning voters away (that's the main reason he doesn't state a lot of facts)

give facts, give statements that show what and how the changes/improvements can be done and prepare your answers to the obvious statements/soundbites that labour will make in response.

politics isn't about popularity, that just leads to failure (as has been seen)
let the people know how badly the goverment is not just screwing up the situation but how they are screwing peoples future.
the truth may hurt, but more people need to know as it will wake them up.
people would also rather hear the truth instead of the constant lies from this goverment and the weak response that the shadow cabinet often gives in return.

here is a hint George, those who you are trying to get to vote for you, won't.
they are bought and paid for by the goverment already, you never had their vote and you will never get it until their job is in danger through this goverments constant cock ups.

Timms was floundering and totally exposed on the Today programme.Running blind I wonder what will be hit.

The comments about Osborne and Redwood are justified. Redwood realises that throwing ever larger amounts of capital (including now the entire share captal of LLoyds) at the problems created by RBS and HBOS to absorb the losses is only half of the problem. Osborne's grasp still appears to be poor and he isn't scoring points despite the government leaving themselves open to criticism all the time.

RBS and HBOS are shot to pieces and will not be lending any more. Lloyds' commitment to lend in the next year is probably no more than they would have lent if they had not bvecome involved with HOBOS. It seems that we would have been better off with a functioning Lloyds if the government had never got them involved with Lloyds. Lloyds problems started when they placed too much faith in the idea that the pronlems of a regulaed bank would be limited, but events proved them wrong.

Let's also not forget in this context that if the Government had allowed Lloyds TSB to acquire Northern Rock in the early days of that crisis, rather than let its fear of branch closures and job losses in its heartlands prevail, we may have been looking at a much less ruined banking sector now.

So - are the Tories for or against bailing out the banks and/or quantitative easing or whatever its called? If against, what is their alternative?

Does anyone know the answer to these questions?

Why can't Osborne just come out and level with us. The bailouts haven't worked, have cost the taxpayer billions and should not continue. We should not be throwing good money ater bad.

Please could we have regular links to John Redwood's articles - oe even the articles themselves - so that we can raise the level of our debate on the country's economic woes?


If Mark Williams's assertions are correct, the QE will not work.
From the RBS Annual Results:

"All our divisions were profitable except Global Banking and Markets (GBM) and Asia
Retail & Commercial Banking. Even in GBM, underlying income reached £10.2 billion on the back of many strong
business performances. Unfortunately these profits were more than wiped out by credit and market losses in
concentrated areas around proprietary trading, structured credit and counterparty exposures. Over 50% of these
losses pertained to ABN AMRO-originated portfolios."

The GBM loss maker will be spun off into a "Non-Core Division": (Q2)

"This Division will have approximately £240 billion of third party assets, £145 billion of derivative balances and £155 billion
of risk-weighted assets, comprising individual assets, portfolios and businesses of the Group that we
intend to run off or dispose of during the next 3-5 years."

The question is, will the spin-off of the GBM into the "Non-Core" Division mean the RBS will successfully create its own internal bad bank (fully separated) ,and the Core Divisions start operating independently of it with clean balance sheets? If so then QE may work as new money is working from fresh start.
If this spin-off does not work, and the profitable divisions are still contaminated and the new money just leaks into the Non-Core Division to limit further writedowns, it probably won't. What is the market saying? I don't know.
Now getting that assessment would be interesting..

I expect that it's all perfectly legal; at some point Parliament has passed one or more Acts, in the depths of which there are passages saying something like:

"The Treasury may by order ..."

and those powers granted by Parliament are now being used by Darling.

That doesn't make it right, of course.

If I eat a diseased chicken then I am likely to become ill. HBOS was a diseased chicken and Lloyds TSB was the fit man who ate it and became ill.

And even though the government is using "quantitative easing" by the Bank of England to manipulate the market in gilts, so that it can continue to borrow money to fund its excessive and rapidly rising expenditure at a time of falling tax revenues, I expect that's also perfectly legal.

As my wife just said "The Government keeps buying us taxpayers presents, don't think I need another bank." Quite.

Eg Bank of England Act 1998

http://www.opsi.gov.uk/acts/acts1998/pdf/ukpga_19980011_en.pdf

Treasury's reserve powers

19.—(1) The Treasury, after consultation with the Governor of the Bank, may by order give the Bank directions with respect to monetary policy if they are satisfied that the directions are required in the public interest and by extreme economic circumstances.

(2) An order under this section may include such consequential modifications of the provisions of this Part relating to the Monetary Policy Committee as the Treasury think fit.

(3) A statutory instrument containing an order under this section shall be laid before Parliament after being made.

(4) Unless an order under this section is approved by resolution of each House of Parliament before the end of the period of 28 days beginning with the day on which it is made, it shall cease to have effect at the end of that period.

Etc

The government have been preparing for this printing for months (including the removal of the bank of england weekly report).

Surely there can be no justification to use a reserve power for something that could have been handled in the proper way...

snegchui asked:
"The question is, will the spin-off of the GBM into the "Non-Core" Division mean the RBS will successfully create its own internal bad bank (fully separated) ,and the Core Divisions start operating independently of it with clean balance sheets? "

Well its not a bad bank if it is part of the same bank for regulatory purposes. Part of this will be covered by Asset protection, but not the derivatives, and there may well be more losses to come from the other £1.8 trillion of assets, because there always are in a recession. £1.8 trillion of gross unweighted assets is a lot of assets when you only have capital measured in the tens of billions.

As the RBS term is Non-Core Division, perhaps I should have said a part of RBS acting as an internal bad bank, isolated as completely as it can be from the rest of the business.
As I stated elsewhere, I believe the Govt to be very leery of operating a State Bad Bank.
I wonder how much the difference in behaviour between the current crisis and the Swedish crisis is down to how domestic the Swedish crisis was.

Another little clip - about 10 mins on how it all began:

http://crisisofcredit.com/

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Sarah

http://blanket.ws

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