Questions on the lines of “Why are you using the Consumer Price Index (which ignores mortgage and council taxes etc) to calculate inflation, instead of the far more representative Retail Price Index?”

The reason of course is simple: the CPI gives an artificially low inflation rate, keeps interest rates artificially low at the expense of skyrocketing house prices, and gives Labour a credit-fuelled Boom. Oh look at that nice Mr Brown, look at the decade of prosperity he’s given us!

The dark side here is one Labour would really, really like to ignore. If you use the RPI to calculate inflation, then interest rates increase drastically and the housing market comes back to earth with a bump. Consumer spending drops sharply because nobody has spare money, and the only way to increase it again is to cut taxes to decrease the financial load on the consumer.

Once you force the country and Government to live within their means, you then have the highly uncomfortable (for Labour) prospect of having money supply drive public policy. The tax system needs reform (flat tax, removal of silly taxbreaks, removal of tax credits) and this reform will inevitably result in reductions in tax.

This is a traditional Conservative policy, and one which wants pursuing if you’re to win the next election. The fact is this: most people are sick up the the back teeth of Labour and their tax-grabbing ways, and we’d jump at the chance of getting (RID OF THEM), if we but thought we’d have something different in power.

Cameron isn’t telling us this.

Cameron is saying daft things like “Things will remain pretty much the same on tax policy and it may even have to go up”, and wittering on about so-called green taxes.

What the hell is the point of voting for (him)if we’re just going to get more of the same old NuLabour (RUBBISH) that we’ve had a decade of?

reply; I HAVE EDITED THE ABOVE WHERE WORDS ARE IN BRACKETS as this is a family site!
David Cameron has demanded a statement from the Chancellor on the last few days events, and is very critical of the way Labour are handling this.

It about RETURN OF CAPITAL, rather than RETURN ON CAPITAL.

The problem is one of RISK.

Businesses borrow money to invest and earn a return.

The insane collapse in lending sanity, at very low interest rates, has created a lot of low return debt with a much higher default rate, involving losses on capital.

At a time when Labour are in trouble, all I seem to hear from the high command is that petrol tax need to go up! (sic), flying should be discouraged and supermarkets need to charge people to park for the indignity of buying groceries!

This is no more than a doomed attempt to appease ultra-viros who would never vote for you anyway. Election winning policies these are not.

There is a whole raft of articles in the press today along the lines of ‘government finance policies coming home to roost’. Your contributions on this blog are as clearly stated as any.

However, Gordon Brown is more slippery than a greased piglet. As a former Conservative voter - and one increasingly inclined to vote Conservative again - I’m afraid that I don’t hold out much prospect of Cameron or George Osborne being able to inflict permanent reputational damage on the ‘clunking great fist’.

You have analysed the problem and its causes beautifully. Please would you follow up with some clear political advice on what the Shadow cabinet should do collectively to translate this into electoral advantage.

On a lighter not, now might be the time to tap Northern Rock for an unsecured loan!

The 4th August 2005 will go down in history as one of the Bank of Englands worst errors. They reduced interest rates from 4.75 to 4.50 and the debt housing boom rose ever more just at a time when the housing market was showing some signs of slowing. Please we cannot repeat this mistake.

The Conservatives should be hammering Labour on their economic record. We cannot survive on an island of inflated house prices.

Gordon Brown promised no more boom and bust. Well we have had the boom we know await the…

Reply: I agree that they made a big mistake keeping rates too low. Now they are too high. Anyone who doubts that should look at the credit crunch problems we see daily on our TVs.