Thursday 14 May 2009

'Rotten' parliament distracting from real danger

As the Telegraph has its moment in the Sun this week and exposes the pure egregiousity (very American, like it?)of our Serving Members, a darker, longer story has temporarily faded into the background.

The moats and non-existent mortgages are enough to get ones blood boiling. In fact the list of extra MP benefits; subsidised drinks, extra weeks paternity leave, platinum plated pensions, the list is endless. No doubt the rest of this week will be taken up with the first resignations like that of Andrew Mackay.

However, I think more sanguinely, this week has seen the end of the green shoots recovery:

- Property companies likes Land Securities see no upturn in business
- Manufacturing is still suffering an unprecedented downturn (see graph above)
- Unemployment is still increasing rapidly
- The Bank of England doesn't know what it is doing and has admitted as much by saying it has no idea whether inflation will rise or fall in the coming months.
- Bank shares have fallen back as the reality of the recession to come sinks in.
- The FTSE as a whole, very buoyant this past month, is on a big rest as the 'Sell in May and Go Away" tendency takes hold of the City.
- Food inflation continues unabated.
- The £ is falling again thanks to Quantitative Easing and Government debt requirements.

It is not a pretty picture. I would be surprised if we are half way through this recession. maybe the worst of the falls are over, but the downward trend is still well established. Anyone who thinks house prices, jobs etc are going to recover this year is living in a New Labour dreamworld.

Ans whilst the worst economic crisis of our lifetimes is going on? Our glorious leaders drink their subsidised beer and moan about getting caught stealing.


roym said...

"Anyone who thinks house prices, jobs etc are going to recover this year"

who thinks this?! even michael white wouldnt say as much

Bill Quango MP said...

There has been a large amount of positive news this week. News channels pushing the green shoots message.
USA retail figures are very bad. BT job losses look like another 10,000, making 20,000 so far.
There is a way to go yet, despite better mortgage approval figures.

not an economist said...

I have been expecting some sort of recovery but one that would be very much a poisoned chalice - riding on the back of massive inflation and short lived to boot as the economy then stagnates with a nasty combination of rising inflation and unemployment.

I think the positive news we keep hearing about is nothing more than the boom economics we had from 1997 to 2007. Pump money into the economy on the scale that Merv and Gord have been then there is bound to be some "good" news as the people who get the cash being shoved into the economy start to spend it. Note also that LIBOR is down now. That means bank lending is likely to revive soon and thats when the massive reserves built up by the banks as a result of QE etc..., will hit the real economy and all the price inflation will start.

Bill Quango MP said...

Just heard one of the Deloitte people
talking about 'less worse bad news.'
That could be a Mandelson official term.
"Things are getting less worse, less quickly than before."
It almost sounds like good news.

Electro-Kevin said...

Less worse.

Because they can't yet say 'better'. West country folks have difficulty saying better. I heard one talk of his Aunty Marge's illness "I can't believe she's not butter." (better ? seriously !)


Old BE said...

I have to say I disagree with the thrust of the post which seems to say that it should be up to Parliament to "solve" the economic crisis. The only way Parliament can get involved is to get out of the way. We need a bonfire of regulation, spending, debt and taxation. We do not need yet more "measures", "schemes", etc..

CityUnslicker said...

ROYM - I cite most newspaper and BBC columns I have seen this week. Even today there is talk about a 29% increase in mortgages approvals (that is a promise not a delivery as well..)and how the housing market is recovering. it is doing no such thing.

BQ - Quite, the bad news is being filtered out becuase it does not fit with the green shoots story. When this gets very out of kilter there will be a big switch in the newscycle story to looking at all the downsides.

CityUnslicker said...

NOE - I am in two minds still on inflation. A dead cat cannot be pumped up, to mix metaphors. Japan did QE for the same reasons as us and never got to inflation. I think we may be different for the reasons you cite, but we need more evidence on CPI and RPIX before I will make my mind up.

BQ - It is Rumsfeldian.

CityUnslicker said...

EK - BQ is now west country folk himself so I find that particularly funny..;o)

BE - That was not meant to be the thrust. The thrust is that MP's expenses are a sideshow, albeit one that has go me worked up. There are no debates in the commons about what to do, or to discuss is the right moves have been made. The government has huge sway, it spends 50% of GDP this year.
In a few weeks expenses will be forgotten , parliament in recess and the recession ticking on.
When was the last time you saw Alistair Darling in public?
Of course, I do agree that Goverment should be getting out of the way, they should be in parliament repealling reams of laws for a start...

Old BE said...

Given the make-up of the current parliament I would rather they did nothing. The next parliament might be more keen on repeal - I hope!!

CityUnslicker said...

BE - I am not betting on that- 70% of legislation comes from the EU!

Paul E. said...

Christ on a bike. Only some deluded bloggertarian could think that parliament is 'rotten' in a year that we've had to fork over about $40 squillion to your thieving mates in the banks!

hovis said...

Paulie: This parliament is rotten. I would have thought the fact the banks were not put into administration but were bailed out in such a kak-handed manner by Brown and his party of economically illiterates would illustrate the point. It seems you mistake free markets and libertarianism with corporatism for a weak and misplaced cheap shot.

Paul E. said...

I didn't use the word 'libertarian' - I said 'bloggertarian' and I did so for a good reason.

If you really think that ordinary families earning average and below average salaries should have their whole world turned upside down just so that your autistic creed can be satisfied, then bloggertarian is the right word for you and everyone like you.

I drafted a statement for you a few months ago. Be a love and sign it will you? It's here:

We're in this mess because your ludicrous way of looking at the world has been treated seriously for far too long, and our grandchildren will be paying for the outright larceny of your mates who were earning 50 >> 100 >> 1000 times what most people earn, paying themselves imaginary money.