Tuesday, 21 April 2009

Vince's Budget breakfast

CU was at a breakfast in the City today with old timer Vince Cable doing a speech on the Budget and state of the country. Due to excessive sausage sandwich consumption my notes are more illegible than usual due to spillage:

Anyway, on the economy Vince, who repeated his Shell never made predictions when I worked there in the 1930's and so I won't now said:

- UK GDP 2009, -4%

- Unemployment by end 2009, at least 3.5 million

- Government borrowing, £175 billion

- House prices have a long way to fall, he thought back to 3 or 4x average earnings (CU- 50% fall + in total as they reached 8.5x at height of boom)

He thought it would be a very unexciting budget as the Chancellor has fired his guns last year and has no ammo left. He also suggested it was a Monetary solution that was being followed and not a fiscal one. he thought he was very clever talking about Friedman and Keynes.

(CU- And wrong too. What is blindingly obvious is that the Treasury that has the money has splurged in a Keynesian fashion and the Bank of England that has the monetary supply has done QE as a cure. So we have a nice messy mix of both. Might work, might not; definitely the expensive option)

As for the Lib Dems, he said raise no tax threshold to £10,000 and pay for it by removing pensions incentives and harmonising capital gains with income. This is arch Brownian redistribution which even Labour have not tried. So much for Vince being an orange book man. Clearly a long-time since he had to work for a living in the private sector.

The only other thing he said of note was to agree with Reform who have a report out suggesting ways to cut public spending. happily he said all this can wait a while, big questions like public pensions, mass uni education, defence spending all need rationalising. But no now, not with an election in a year. Pathetic. At this point he made one or two partisan jibes, all aimed at George Osborne. Don't think he mentioned Darling once in the speech.

So now you know what a Lib Dem approach would be. Raise taxes, massive redistribution of wealth, promise to cut spending but never do it, bash the Tories. A vote for Vince is a vote for Gordon; can't see how they would ever go into Government with the Tories with these policies.

He had one good answer when someone asked if we should stop talking down the economy. he said all that sort of talk was nonsense, the economy was in a right state and we should admit it and try to fix it, rather than bullshit (quote) that thinking happy thoughts will make things right.

Guess he agrees with my short position on the FTSE then....


Alex said...

Cable's "predictions" are hardly forecasts, they simply reflect current consensus. At least that shows he reads the financial press.

Jibes at Osborne are to be expected. Darling is doing his best to cover for his boss and his imprudent profilgacy, whereas Osborne manages to put the ball round the post whenever he is faced with an open goal. Osborne's points are entirely political and neer economic, which does little to inspire confidence.

CityUnslicker said...

Alex - you will find no candle held for Osborne here. I called for him to be sacked ages ago.

Anecdotal story told to me by a hedgie a few weeks back was that he had been at a dinner with GO, asked him 4 questions on economics. GO got them all badly wrong - hedgie was polite at the time but sad to think that GO will be Chancellor at such a dangerous time.

I hope in mitigation that at least GO is well advised and hopefully will take advice.

Bill Quango MP said...

A friend once had to do a joint team exercise with a right plonker. On presenting the points to the session, each time one of the points that he knew was a total lemon,but that the other guy had insisted on including, was read out, he swiveled his eyes towards the lemonhead. It was brilliant to watch.
So, lets focus on AD's eyes.
"these are tough times. Unemployment may rise{1/2 swivel} in the short term, but fall back sharply by December{3/4 swivel}.
GDP will see a decline of between 1% {full mad eye swivel} and 4% {sage nod of the head} before returning to 2.5% growth in the autumn. {full turn round, points directly at Gordon. Touches finger to temple and makes circular motion, shrugs shoulders.}

Steven_L said...

I don't think team Obama agree with your short bet on stocks.

Hence Geithner opening his mouth as soon as it looked like the rally was over today.

Just as I was having thoughts about pressing the chicken switch too!

Anonymous said...

"GO got them all badly wrong - hedgie was polite at the time but sad to think that GO will be Chancellor"

Am a novice at all this but out of interest, were they subjective questions that had very clear cut yes/no answers or just answers that did not sit well with your friend? I'm no fan of GO by a long shot, but following on from the old adage that ..'if you put 2 economists in a room with one question... you get 3 answers', then how can your friend be sure they were wrong? Economics is to some degree, subjective and not an exact science isn't it?

Exciting times ahead anyways. :)
All the best for the blog.