Gillian Tett on Newsnight on Tuesday

Take a look here ( Link may only be current for 24 hours )- its a conversation that needs to happen more widely on how we organise our politics ( takes a few minutes to get to that point ).

The debt really is they key defining point of our politics these days - and yet all we get is misdirection from the likes of Clegg on the subject ...

I'm starting to wonder if default isn't something that needs to be considered - as I've said before we should question why we stand behind our politicians borrowing ...

Continunity Brown

Well those figures on debt were bad. Being delivered by a supposed Conservative chancellor they were a disgrace.

Spending goes up, the economy goes down. The parasitic state wastes more and more as its eats our very economic soul, egged on by the vampires of the public sector Unions and the BBC.

But Osborne isn't bothered. Why not ? Because he's playing one of Gordon Brown's very own tricks against Labour.

By spending like a drunken sailor he's forcing Labour to say binging even more on borrowed cash is the answer. ( A point his own failure to control spending proves to be false ).

Labour are politically trapped, much as the Conservatives were when Brown spent more money than the country could afford to dare the Conservatives to talk of cuts and taking things away...

The irony would be amusing if it wasn't all being played out over the soon to be corpse of our country's economy.

The problem is a real patriot ( which means a real Conservative ) would rather lose an election than betray hos country.

Not so the professional PPE born to politics brigade who are just in it for the personal glory.

What has our country done to deserve two Gordon Browns putting politics before country ?

The new Opium wars

Whilst some good things came of it, specifically the crown colony of Hong Kong - which has massively influence the welcome emergence of China, the Opium Wars were a moral low point for the British Empire. ( A much maligned Empire that we should in many ways be proud of - but its not an unblemished record ).

In short the Chinese were forced to take opium sold by British merchants. When they refused, due to the effects we are all to familiar with today of drugs on your society, we sent in the gun boats and changed their minds.

Well now something of a reverse of this is beginning to emerge. The West, and especially the left wing politicians of the West - though not exclusively, have become addicted to reward today and to hell with tomorrow. This is perhaps a result of the short term rewards our electoral system provides, combined with the mainlining of focus groups and market research - which lets the feckless demand the moon on a stick now. So the West has a debt habit.

Now the East has encouraged that habit, indeed it needs it for the current model of business it employs ( whilst quietly arranging for more and more raw resources to redirected to those businesses ). SO we have representatives of the Chinese govt promising Spain and encouraging Portugal with promises of support for their debt. Alls fine as long as you stay as a customer ....

This continued habit is undermining the long term future of our societies in the west. Like an opium addict we just lack the will power to refuse our next fix, and it looks like the supplies of new credit won't dry up from the East - so no chance of cold turkey sobering us up.

Of course the Chinese run a single party state, with central planning and mostly ex-Engineers at the top. They take a long term view, and as the Chinese showed with Hong Kong they have the patience to allow their strategy to bare fruit. Given their history its hard to blame them.

We just have a habit, and a growing problem and no easy way top break the dependence even though it is going to lead to our ruin.

You could argue this is economic warfare on a par with that Regan and the West used to defeat the Soviet Union, only this time its the West that's heading for defeat and unfortunately with debt enslavement.

Its time the right of centre started to raise this problem more forcefully.

See also Analysis -
China's support for euro a necessity, not a virtue Reuters.
Europe fears motives of Chinese super-creditor Daily Telegraph.

A slightly different analysis reported by Dan Hannan
China's purchase of euro bonds might not be a sign of confidence in Europe, but a prelude to a sell-off

The real problem

April 2008: Its really a debt crisis

I've been firing a few comments over at Conservative home about the new Bank of England regulations about lending for mortgages and been doing some thinking about debt.

Can you remember just two years back when Labour/BBC would have you believe this was "the credit crunch" ?

Here is my post from that time over two years ago reproduced below.

We need to do something about debt and its use in our country:

Monday, April 28, 2008

It's really a debt crisis !

We are all now aware of the credit-crunch. The official explanation, as far as I can gather, is that of blaming the Americans for their sub-prime mortgages. If you don't buy that then some complexity is added about slicing and dicing these mortgages up into a financial product that allows the debt to be sold (or bought perhaps ?) but with no one knowing who owes or owns what.

Still not convinced ? The you should blame all those evil young men with their testosterone in banks and perhaps city bonuses and the asymmetric nature of risk and reward in the city. ( I could almost buy into this idea ).

But what about our attitude to debt ?

After all we are calling the current problem a credit crisis. The problem being that there is suddenly no-one willing to lend money without a clear idea of what backs that request for cash (except central banks willing to either turn trees into bank notes or get the tax payer to cough up). But the underlying problem is we, as a society, have long term debts fuelled by short term credit, and we can't pay back the debts without some tricks like inflation or defaulting.

In addition we seem to, as a society, load up with all the debt 'we can afford'. In the economic competition for assets like houses - he who takes on the most debt wins the house.

It appears that the old building society model - savings and mortgages in balance - has been replaced with vast piles of foreign cash. Which foreigners have all the cash ? It'll be the gulf Arabs and China. They have been smart - getting out without having to cover the underlying problem of the debt - we're now doing that as tax payers.

They have learnt their lessons, it wasn't always like that - the last major debt crisis was in South America, and was funded by oil money badly lent out.

There are those worried about the large debts being taken on, by individuals and governments. The Archbishop of Canterbury has sensed something is wrong - but reaches for the usual woolly Marxism as his answer.

But debt is itself a problem, as the Arch Druid should understand! You are under obligation when you are in debt. In old testament times debts were not allowed to go on beyond a certain time period 7 years and money lenders weren't exactly popular in Jesus time. Islam outlaws it - but there are people willing to get round that. Perhaps Williams should focus on this aspect.

But we live in a world where being in debt in now normal. I can remember how keen the blue chip company I used to work for was to encourage its graduates to buy houses - get a mortgage and you won't leave (didn't work in my case). I almost wonder if it isn't seen as a wider stabilising factor by government.

Yet we see it as normal that everyone has a mortgage. If you don't you're missing out on the rising property market, and worse it will be impossible to climb aboard latter on.

But what if credit wasn't so freely available ? The answer appears to be the value of some things (assets where their is competition due to scarcity) will drop. Houses, for example, might cost less - as long as immigration (demand) is managed. Surely this would rebalance our society for the better ? People could buy their first house without signing away their future life's earnings for the loan which in effect comes from a foreign country.

So would tighter credit controls mean we would have cheaper houses ? (Sounds good). So who benefits if credit for house buying is allowed to be supplied in industrial quantities ?

1. The banks - who charge for all this.
2. The government - who taxes in proportion to property value (stamp duty, council tax, and being English old and ill NHS tax ).
3. The lenders who get interest.
4. Asset holders who buy cheap and can sell in a rising market.
   

I suspect we justify the damage this debt does by item 4. We all hope to enjoy large unearned benefits from holding property (greed - another point for you to note Dr Williams). So we are all in debt. Apparently many people with mortgages own less than 20% of their homes.

So here's the political (and moral Dr Williams) question - should the state allow credit to be housed around like this, especially considering who is ultimately supplying it ?

Eventually the left is going to come up with their answer, when they get round the problem of New Labours very close relationship with the 'Financial Industry'. ( By the way - Labour is almost insolvent and owes millions of pounds to a few key individuals. They are hardly in a place to lecture just yet - but soon they will dump Gordon Brown and New Labour and blame the whole episode on everyone else. Then Socialism will return to its vindictive roots.)

At that time the right of centre will need a better answer than just let the markets decide ( which clearly no government of whatever political make up is willing to do when push comes to shove and high street banks look like going bust ).

We need some thinking on debt, and the lack of savings. I can't help thinking Mrs Thatcher would have explained all this is straightforward terms that would have been denounced by every academic economist, and any hairy bishops, in the land and then proven to work - much to their annoyance.

Debt is the elephant in the room right now ... how odd that we are drowning in it and yet talk of credit.

Note: Sorry this is a little rambling - but I'm trying to get my head round what's going on at the moment - feel free to add links in comments to any good commentaries you've seen.

PS I know someone at a local Citizen's Advice and apparently the enquires on debt problems are rocketing right now ...

The debt is a demand against our future

Lib Dems reverse course on fiscal responsibility to use debt to buy votes

You knew it was unlikely to last. Nick Clegg has just performed a humiliating U turn as the Lib Dems back using debt on future generations to pay for votes for themselves and Labour.

Typical Lib Dems ! ( Perhaps the letter to the Guardian by his MPs to disassociate themselves from his policies won't be needed this time. )

Remember there is no substantial recovery - and the signs are that a second dip of the recession and a credit crisis in private industry are very likely. There is very unlikely to be a recovery strong enough to give a good time to stop mainlining on debt. All the while debt floods the compartments of the ship of state, which shortly may sink suddenly in a financial crisis.

Vote Lib Dem - get Gordon Brown's economic destruction of the country continued !

No Change at all with the Lib Dems then !

See also Do the LibDems want to cut spending or not? Daniel Hannan.
Vacuity That Works For You Burning Our Money
Vince wants it both ways Iain Dale

German MPs suggest Greece sell the Acropolis

See this report in the Daily Mail. All I can say is told you the German's would be calling the shots....

Just remember with Labour - we're next.

Will the Bank of England's printing presses be turned off soon ?

Rumours are circulating that the Bank of England will soon stop funding the government debt by printing money. ( We'll if you ask them or a Labour Treasury minister they will say the same thing, but with a hole load more guff ).

Anyone want to buy long term UK debt at low interest rates with the prospect of a hung parliament and no clear action to reduce the deficit being undertaken till yet another general election can be held ?

The risks are real as Greece is showing.

This will be interesting ... if you excuse the pun.

Bank of England to print money to stoke inflation

Well that's what the headlines should say.

The extra £50billion to be printed will mostly be given to the government to pay public servants in inefficient, but Labour voting sectors, and put off pulling the government finances out of their tail spin till after the June elections and maybe further.

The money will be taken by stealth from all those of us who have the misfortune to have their wealth denominated in Stirling.

It will also postpone the point at which the government can no longer finance its own debt.

None of it the happy clappy glad Gordon Brown is prime minister news the BBC paints.

The opportunity cost of Gordon Brown

Today we are warned that we could have to work till we are 70 to pay of the debts Gordon Brown has run up.

Labour ministers bleat about public sector "investment", which means client state spending.

But what a poor return on these so called "investments" they achieve.

Because they spend today, you will pay tomorrow as it becomes very clear that these investments were just overhead that is wasted on consumption rather than capital investment (I don't mean capital spending here - they are very good at that ) or process improvement.

Its what I learn't in my 'O' level economics as opportunity cost.

Because Labour chose to hose cash on unreformed public services and finance it by borrowing future generations will have to pay interest on loans rather than spend the money on improving the NHS or education ( little of which has been done by Labour ).

Its time to bring the government down

Things are now passing beyond just party politics towards national humiliation and disaster.

It is quite clear than Gordon Brown's government is at best incompetent and at worse insane or deliberately working to bring the country to ruin.

Its time for the "Norway debate". The country just can't go on like this, certainly not for 14 more months.

The best way would be for a vote of no confidence and for some of the Labour MPs who perhaps love their country more than themselves and their careers to throw Brown out of office.

Perhaps David Cameron needs to do a deal with the likes of Charles Clarke for a government of national unity, supported by a patriotic minority of Labour MPs.

Reading Jeff Randall's latest article in the Telegraph you just know something must be done.

We can't wait 14 months, Brown has to go now.

Educated in debt

Today two headlines awaited me on my yahoo email account:

Strict laws for credit card firms

The Government is planning to introduce tougher laws for credit card firms to reduce the temptation to get into debt, it has been reported.

Study suggests university fees rise

The first looks like Labour finally waking up to the disaster of personal debt in this country ( I guess its almost impossible even for the deluded New Labour project to ignore now). The two suggestions are sensible and indeed welcome enough, though very small beer.

Then we have a call ( though the Universities spokesperson on R4 denied he was doing that a few minutes ago - certainly looks like it to me) for higher tuition fees for students. Now I'm old enough to remember the massive row over student loans for living expenses under the last Conservative government - with all the lefties now in government lined up on the other side of the argument.

But it strikes me that the two are linked.

We have started launching people from University (which now bizarrely means about 40% of the population) in debt. Add to that credit cards and bank accounts that don't stop at zero, but are a continuum. When Man in a Shed went for a drink at Uni he got a fiver out of the cash machine (yes it was that long ago ) and when it was spent the night and beer where over. With electronic cash no such limit now exists, and with state enforced debt you no longer feel bad about it.

Add to that the until last year received wisdom that the bigger a mortgage you could grab the richer you'd be in the end through inflating house prices and you can see how personal debt has got into the problem we're in now.

Its hard, since now the government is taking out a loan in all our names -the value of which currently varies between £20k and £40k depending on who you talk to, but it needs doing.

We need to save more, which also means use debt less.

The politicians seem to be slowly grasping their way towards this point. Our religious leaders, especially the Church of England, might like to ask themselves why they haven't taken a stronger line on all this .

The Universities desire to be funded by loans needs to be seen in this light. Perhaps a graduate tax would be better to avoid the perception of debt - even if the Lib Dems have been in favour of it in the past.

Further: I note the plan to restrict mortgage lending by the FSA ( and therefore the government ) to three times salary. Well its a start. I was impressed that till recently property prices in Brazil where far lower as they had no mortgages, but have unfortunately for them just introduced them.

Remember the current crisis was causes by foreign savings looking for somewhere to be deployed. This gave us the asset bubbles and unmanageable debt that have brought us to our knees. ( It amazing how few TV/radio reports point out this now widely accepted fact ).

However all this measures can be filed under : Stable door closed after horse bolted and should have been enacted far earlier by a government that understood our economy and wasn't relying on the debt bubble to get reelected.

Gordon is a moron

Clearly this has to be shared (H/T to UK Bubble where I found this).

Germans describe Brown's fiscal stimulus as "senseless"

Get a load of this - apparently Angela Merkel is refusing to join Brown's drive for debt slavery.

She is quoted in the telegraph saying ( I assume its a translation ) "A bidding war ... a senseless race for billions – we won't take part in that,".

This would all be great politics - if it wasn't for the fact that we, and especially my children, are being enslaved in debt by the shameless Labour government.

I don't often wish I was German, but just now I wish I was.