You can’t have it both ways:
“They kept money too loose allowing a credit binge, and they are now keeping money too tight, assisting a Credit Crunch.”

Asset prices are only down 10% so if money policy was too loose this is now a correction back to an equilibrium price. Alternatively if prices are too low now, then previous monetary was not too loose. Once asset prices are down another 15% or look for sure as though they are heading that way, I would agree with you, but at the moment your judgement is premature.

Reply: Not so – the squeeze is too tough, as people are going to find out to their cost.

Alistair Darling finally looked as if the penny has dropped when he said people are “P’d off”. No doubt many will find this a very perculiar choice of phrase for any government minister to use however although it accurately describes public feeling ( eventually ), he doesn’t actually provide a remedy so what is the point of him saying it ?

He says it’s imperative to tackle the problems to get the “zeal” back into Labour if they want to win another term in office !! – Obviously the penny hasn’t dropped far enough on that one then since Labour have no chance at all in gaining power again I doubt unless some lucky star were to land on Labour HQ sometime in the next 100 years !!

There are things we can do to put this crisis right and I’m sure there’s a myriad of ideas out there, but patently none in government where it’s needed.

UK housing stocks are a complete mess and totally out of control to the detriment of ordinary people who need to make a home. They simply can’t afford to buy a home because prices have been inflated by speculators in the But To Let market buying houses off plan and using unlimited amounts of borrowing to fund their speculation.
It must be stopped if housing is to return to provide the needs of our society rather than the needs of greedy speculators without a social conscience.
Councils should quite rightly buy up loose housing stock but this should be done through an exchange for public shares and not with taxpayers money. Councils could quite easily raise the revenues needed for this and inject a lot of rental and shared ownership properties back into the market to give ordinary families a chance to get on the ladder, which will promotes home ownership, balance house prices, rid the market of speculators and still maintain the ability for private individuals and firms to produce wealth.

Secondly, the government should hit home on easy credit by putting a stop to credit card companies permitting transactions for non-essentials. Online gambling comes to mind as an example, and people should be encouraged to save and invest. The above housing scheme could carry tax free shares much like the current ISA’s but purely in local government housing stocks.

Revenue could also be generated by releasing shares in housing association stocks in much the same way.

Stamp duty should be switched to the seller and it should have a flat rate of 5%.

First time buyers should qualify for a reintroduced MIRAS scheme which would run for no longer than 10 years, and it should not extend to second homes or subsequent purchases.

Banks and building societies should be compelled to provide 5 year, 10 year, 15 year, 20 year and a 25 year fixed rated products for home purchase amongst their ordinary schemes to give stability to people who buy.

Secondary home improvement loans should be regulated only through banks and building societies which fund our housing market, and secured loans through any other source for home improvements or ownership should be banned.

Payment protection insurance should be mandatory for home purchase and no mortgage should be granted without it. It should be included in the ordinary buildings insurance scheme and validated as being in force each year by the lender as is the case now with building insurance.

I have to say this country is in a right mess now because of rampant spending, a culture of easy credit, a complete lack of any social conscience or proper control by government and a rackless attitude by government to carry on deceiving itself and the public that things are “fine”, when clearly our economy is built on debt.

The UK sits on a pile of sand !

Reply: I have been the one politician saying throughout the last 11 years that the Bank is not independent!

Today a bunch of MPs are calling for local councils and RSLs to be able to do a negative equity swap with distressed mortgage voters. Naturally, these will be “securitised” as taxpayer backed, trade-able (junk) bonds. These will find there way back to the BoE, where they will burn out the recently fitted turbo-chargers, on its pound note printing press.

You will remember that the US Fed stopped calculating M3 – broad money supply – back in 2006. The number was getting embarrassingly high. So when the BoE stops calculating our version – M4 – you will know we are really in the s***.
http://www.marketoracle.co.uk/Article4360.html

“It’s fair to say that when an economy is experiencing growth it’s hard to say that economy is in recession but America is set to show slowing consumer spending in July, the 3.3 gain will full to 1% in the next quarter & anyhow! when you strip out the necessary factors that should be factored in, the 3.3 gain only really works out to two tenths”!!

Was he wrong?

If you also factor in that some American companies are looking to lay people off as they tighten their belts, house repossessions are still rising, the tax rebate Americans got has all but faded away & the cheap brand supermarkets are about the only big companies seeing some sort of sensible rise in their share price, you have to wonder where to draw the line between thinking you are or aren’t in recession!
This is also hoping things like the weather don’t cause pipe lines to burst or oil rigs to fall over causing more price rises!

Many experts I have seen lately & over the last few months have said that the world is going into recession & point to things like India seeing their economy grow at its slowest rate in years, it seems impossible to find a happy side to what is slowly starting to envelope the world’s business structure at the moment!
I heard some financial experts say on a programme I was watching the other week that “at the moment the public are in denial, soon they will be desperate”
!! I KNOW!

It seems to me that our elders who said things like “save your money for what you want” & “it’s unhealthy to get in debt” are proving to be sound words, even our banks don’t trust each other at the moment & it seems the banks who will survive are the ones with some pennies saved for a rainy day, lesson to be learnt there!

I don’t change my mind that if we want a successful economy in the long term it will need real microeconomic reform. Cutting government spending, cutting corporation tax & other business taxes, cutting regulation, allowing the market to build new competitive power stations, allowing the mass production of houses, cutting the bureaucracy & regulations that meran public works cost up to 13 times what they used to even allowing for inflation, even technology X-Prizes. If we were to do all that I have no doubt we could match China’s growth rate.

Reply: I regularly said money policy was too loose – the published version is the Economic Competitiveness Report.

http://lettersfromatory.wordpress.com

Yes. Why didn’t you protest when the MPC, with its remit, was set up?

“I ask them, how much more evidence do you need of slowdown…”

No one is denying the slowdown. The argument is over what is the best solution. Do you follow the works of Mises, Hayek, and Friedman or the Keynesian economists? I would side with the latter but I’m not a politician.

Instead of artificially inflating the economy politicians should be concentrating on lowering trade barriers, taxes, and regulations.

reply: I have been a consistent critic of the Bank of England policy of this government.I have set out my proposals to bring about a recovery in these blogs.