Wednesday, July 01, 2009

Not A Bad Dream

Aren't they supposed to be green?

After a week dependent on BBC World for his news, Tyler had begun to wonder if it had all been a bad dream. Surely the BBC wouldn't be focused exclusively on environmental issues, arts projects in Africa, and celebrity gossip, if the world was really in economic meltdown.

On the plane back, five minutes with the Daily Mail reassured him he hadn't been dreaming. If anything, things have got even worse.

So what have we missed?

First, those green shoots have been cruelly blasted by the heatwave. The CSO says that when last sighted, GDP was still spiralling down. It fell by a scary 2.4% in Q1 (9.3% annualised):

So in the first year of Brown's slump, GDP has fallen by 4.9%. That's three times worse than the 1.6% decline in the first year (1990-91) of Major's recession. And 50% worse than the 3.3% fall in the first year (1979-80) of Thatcher's recession.

In other words, nomoreboomandbust Brown has smashed our economy far more comprehensively than most of us have ever experienced in our entire lifetimes.

Worse, whereas Thatcher and Major could both argue they'd simply been the unfortunate inheritors of someone else's recession, this one is of Brown's own making (yes, yes, I realise there are also global factors at play - but there always are).

So what else?

Well, the "government" is continuing its policy of rule by porkie pie. They have decided to ditch their scheduled review of public spending (the Comprehensive Spending Review), claiming that nobody knows how the economy will be in 2011.

The real reason of course, is that this side of the election they do not want to admit to the savage public spending cuts any government will have to make. It fools nobody, but since they are going to lose the election anyway, they presumably intend to spin the inevitable cuts as Tory Cuts made by The Evil Tories specifically to Grind The Faces of The Poor. Labour would never have done it.

Just how dumb do they think we are?

Meanwhile, the row between the government and the Bank of England is bubbling up quite nicely. As we've blogged before, the Bank thinks the government needs to get real about the dire fiscal outlook. They know only too well what happens once the markets lose confidence in a government's commitment to living within its means (cf the lamentable performance of H Wislon).

They're also concerned that Brown still hasn't understood just how pants his tripartite system of financial regulation actually is. They want their pre-97 powers of bank regulation restored - as do most outside commentators - whereas Brown is mainly concerned to save his own face.

His latest face-saving wheeze is to sell the Crock to Tesco. Not only would that show that his period of temporary public ownership really is temporary, but it would actually raise some much-needed cash.

Ah, but hang on a cotton-pickin' minute... will Tesco be taking the whole shebang, warts and toxic loans and all?

Er, no. Tesco will take the good stuff - ie the retail customer base - and we'll get left with all the rubbish. Which is more or less the self-same deal Branson and others wanted to do last year. The deal that stuffs taxpayers with all the losses, and none of the potential upside from the good bits.

You know, I'm so relieved I wasn't dreaming any of this stuff out there by the pool.

More to follow once I've caught up.

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