Day 3375: Take a Chancellor On Me!

Monday:

The world-weary member of the Government, knowing that they're going to lose and just going through the motions; the smug Opposition candidate, so certain that they are entitled to walk into office and so clearly demonstrating their unfitness to do so, with all the same old, tired, prepared lines that just ring false; and the Liberal Democrat who's a star.

Yes, it's the 1997 Stevenage Election Debate between doomed Conservatory Mr Tim Wood; power-dressing Hard Labour wannabe Mrs Barbie wife-of-the-millionaire-author-Ken Follet; and Daddy Alex!

Well, they do say History repeats itself, first in the Grauniad, then on Channel Four.

Okay, okay, it was "Ask the Chancellors" on the telly, staring Mr Dr Vince "the Power" Cable, Sooty, Mr Frown's Glove Puppet, and someone who claims that Mr Balloon knows him.

That "someone" turned out to be Master Gideon "I've seen people do being the Chancellor so I could do it" Oboe – so called because he is wooden and windy. Presumably the young millionaire baronet would be confident that we could show him some footage of parachuting and then push him out of a plane!

In fact, most of the Conservatory coverage following the debate has been along the lines of: "Master Oboe did not actually come on stage and drop his trousers – what a magnificent triumph this is!"

Is it just me, or can we not aspire to MORE from the Shadow Chancer than passing the "barely competent" test?

After all, what kind of person can declare their "top priority" for Government to be a policy THEY DIDN'T EVEN HAVE YESTERDAY?

Remarking on Master Oboe's unexpected conversion to cutting taxes instead of reducing the deficit, Mr Michael Thick on the Newsnight Show said what a TERRIBLE SHAME it was that two big economic developments had occurred on the same day – like it was some kind of FLUKE that the Conservatories JUST HAPPENED to make this U-Turn mere hours before he was to go up against the grown-ups.

As Miss Piggy says in "The Great Muppet Caper" when the very transport she requires just happens to literally fall off the back of a passing lorry:

"What an UNBELIEVABLE coincidence!"

Quite obviously, Master Gideon had been prompted to make this announcement to make it LOOK like the Conservatories had something up their sleeve to reply to the Liberal Democrat policy of cutting taxes for millions by raising the basic allowance to £10,000.

Not that "not raising your taxes in a year paid for by cuts now" REALLY compares to "an immediate £700 a year back, NOW when the economy needs it to get growth started again".

(And I know it's a fiddly detail, but it's a further COMPLICATING of the tax system because he'd STILL be introducing an extra 1p on NI (EACH for employer and employee) on incomes above a certain level, effectively making another NI band. Remember: the SIMPLER the tax system, the FAIRER the tax system, as it is EASIER for the taxpayer to UNDERSTAND.)

Pulling this "rabbit-out-of-the-hat" trick of an announcement is yet another in a series of WILD and UNPREDICTABLE swings in Conservatory economic policy: first it's the age of austerity, then they're guaranteeing to match Hard Labour spending; first cuts are going to have to be faster and deeper, then they're not; last week, efficiency savings are fiction, this week they're the pot of pixie gold at the end of Mr Oboe's rainbow; cut the deficit first; no, cut taxes first!

It's becoming HORRIBLY OBVIOUS that the Conservatories DON'T HAVE ANY ECONOMIC POLICY AT ALL!

They're just desperately rummaging around for anything that they think might look good on an airbrushed poster!

Last week, someone – I think it might have been Mr Paxo on the Newsnight Show after the budget – asked why, after the implosion of the Credit Crunch and the Longest Recession in History™, are Hard Labour warming up to fight on the economy?

Well dur!

If they DON'T, then they SURRENDER that territory to the Conservatories!

What is surely far more ASTONISHING, is just how UNPREPARED the Conservatories are to fight them there.

Remember, this is a Hard Labour Government that has just delivered a budget including such gems as saving a half a billion pounds by people in the NHS being less poorly. Presumably, this means Lord Blairimort's return to front-line British politics is to be accompanied by him curing the lame and dying through the laying on of hands (fee: negotiable).

Because while Mr Oboe may be groping for the first clue about how to run the economy, Chancellor Sooty seems to have given up even trying.

You could see it in his eyes, really. The despair.

Take this business about the "Death Tax".

The Conservatories are WIDE OPEN here. "Death Tax", they say over and over. "Death Tax, Death Tax, Death Tax!" And yet, the Conservatories themselves have almost the same policy – they AGREE about charging for care for the elderly; they ONLY disagree about TIMING!

The policy that they label a "Death Tax" is the possibility that Hard Labour might – just might – increase care for the elderly paid for by introducing a twenty thousand pound exit charge. Yup, you get free care till you die, at which point you are charged for it.

The Conservatories policy is the ENTIRELY different policy of charging you eight thousand pounds on retirement. Yes, you pay UP FRONT. Even if you DON'T end up needing care in your old age. The Conservatories call this "Insurance" but if they're going to keep saying "Death Tax" then I'm going to have to start calling it the "Good as Dead Tax"!

Conservatory Shadow Death Secretary, Mr Angela Lansbury, explained it all on the The Today Programme:

"one in five will need residential care in old age, costing on average fifty thousand pounds over two years. So, so long as all five in five pay their eight thousand then that'll pay for itself! Hang on five times eight only makes forty… let's just remember that Hard Labour want to tax DEATH!"

So, look, to even just barely make SENSE the Conservatories would have to chare TEN thousand pounds each, not EIGHT. But TEN thousand is a number which sounds too much like the Hard Labour charge of TWENTY thousand and would reveal the SIMILARITY.

Yes, Hard Labour and Conservatory Parties in practically indistinguishable complete non-shock!

But does Chancellor Sooty point out that Master Gideon is being a noisome TWIT, copycatting the tactics of American Replutocrats by putting a SCARY NAME on a policy that he barely disagrees with just to FRIGHTEN voters into voting Conservatory when they'll end up with much the same?

No!

The exhausted glove puppet lets slip one of his trade mark confessions and admits that Hard Labour are going to chicken out of the policy because they're too scared to take on the snivelling little shouty-boy's half-baked argument!

It is really too much effort to crush him like one of his own pimples? For this end-of-the-line Hard Labour Government, apparently so.

He just waits to hand over to BUGGINS TURN in the knowledge that not a lot will change and no doubt he'll get a very nice retirement, perhaps on the board of one of these Banks Wot We Own.



At this point, do I REALLY need to point out just WHY Mr Dr Vince was universally seen as winning the debate?

(Oh yes, UNIVERSALLY – do you think those Conservatories would be SQUEALING about "Lib Dems stuffing the audience" if they didn't know, KNOW that our guy came in WAY ahead?)



That phrase of Mr Vince's, "Pinstripe Scargills", PERFECTLY sums up how Hard Labour and the Conservatories like the pigs and the farmers at the end of Animal Farm, have become indistinguishable.

As Mr Vince said himself in his closing remarks: the Liberal Democrats are DIFFERENT, not beholden to EITHER the Pinstipe vested interst in the City, NOR the Scargill vested interest in the Unions.

"We believe in a change of Government, but a REAL CHANGE!"

You CAN do better than Mr Frown's puppet or Mr Balloon's weakest link. You CAN have Mr Vince as Chancellor. You just have to VOTE LIBERAL DEMOCRAT!

.

Day 3370: Was it Fiscal Drag? No, He was Wearing a Suit and Tie!

Wednesday:


It's been described as "the Phoney Budget" or "the Pointless Budget" or most mundanely merely "the FIRST Budget of 2010". But in all fairness it wasn't MUCH of a Budget at all, was it?

So Chancellor Sooty pulled a sickly-looking rabbit from the Stamp Duty hat; SLAPPED cider-drinkers with a hike in Sin Tax; TINKERED with a scheme here and a relief there; and then CLAIMED he had nothing to say on VAT, National Insurance, Income, Capital Gains or Inheritance Taxes.

Except SNEAKILY, all allowances and threasholds are frozen, effectively using inflation to snaffle taxes from everyone in work, thus hitting the lowest earners hardest.

It's what is called "FISCAL DRAG" or to use the professional jargon "stiffing you with a stealth tax".

Liberal Democrat Ms Julia Good-as-Goldsworthy spotted this before Chancellor Sooty sat down. Sadly, Mr Balloon did not. It's the 10p tax debacle all over again!

How it works: suppose you are left with £500 a month after taxes. You spend £300 renting your home, £150 on food, £40 on travelling to work and you're left with a tenner!

But then along comes inflation! Let's say it's 2%

So you now have £306 for rent, £153 for food, £40.80 on travel. Now your costs are £599.80, and your tenner has been reduced to 20p!

But don't worry! Your boss at work sees what's going on and gives you a 2% pay rise too: that's an extra £10, so you're back where you started.

EXCEPT… because the tax allowance hasn't changed, ALL of your pay rise gets taxed at basic rate (20%) so Chancellor Sooty gets £2 out of your payrise, and you are left with £8.20 at the end of the month.

Somehow you are 20% WORSE OFF!

But NO! I have forgotten the NATIONAL INSURANCE - which is IRONIC, because that is what Sooty WANTS us to do!

National Insurance is another tax of 11% (rising to 12% in 2011), so your REAL tax rate is 31% NOT 20%.

And THAT means that you are really left with just £7.10! Almost a THIRD less than you started with!

Did Chancellor Sooty, the Badger with the Briefcase, mention any of this in his statement? Funnily enough, he did not. As usual with Hard Labour, you had to look in the Red Book to find the truth.

This is, of course, the EXACT OPPOSITE of Liberal Democrat tax policy to RAISE the Personal Allowance, LIFTING people out of tax altogether and cutting taxes for EVERYONE.

No wonder Captain Clegg replied to the Budget saying:

"Britain needed a Budget that gave us honesty in spending and fairness in tax; we have got neither."

Not that anyone heard him, as the country's main television channel flopped back into Red/Blue DUOPOLY mode.

"1350 Lib Dem leader Nick Clegg is on his feet," said the BBC live text coverage, "but many MPs are leaving the House." And so was the BBC, cutting away to the studio where Nick "Mate of Dave" and Stephanie Flounders were competing to read out their notes. Sigh.


What about Mr Bunny, the Stamp Duty Rabbit? Will he be any help for First Time Buyers? No, because the problem is shortage of supply; and this is just fuelling demand. That money will just end up in the pockets of developers who build rabbit hutches, and will drive up house prices again. Anyone who asks "what could be wrong with a little house price inflation" can go and live though the last two years all over again.

And then Sooty tries to have Mr Bunny shoot one of the Liberal Democrats' foxes by "paying" for his tax cut by raising Stamp Duty on homes over one million pounds. I say "paying" but – again concealed in the Red Book – the figures say that the cut costs £290 million and the rise raises £90 million. Oops.

And no, Chancellor Sooty, that's NOT a Mansion Tax; that's a one-off payment for the transfer, NOT a tax on keeping wealth bundled up unproductively in a whopping great property.


All of which was just flim-flam and fireworks to disguise the fact that he's doing NOTHING MUCH, certainly not addressing the fundamental questions of why the Government is spending too much and too stupidly and why at the end of a decade of Hard Labour Government the poorest still bear the heaviest burden.

If they CARED they'd have DONE SOMETHING in the last THIRTEEN YEARS.


But speaking of flim-flam, Mr Balloon didn't have a lot to say in reply. Or rather, he did, as his GAG-MEISTERS had clearly been workshopping the sound-bites for him over the last weeks and months.

"They want to tax your car, your phone, your business, your jobs. "

...he said in a speech written for him in 1996 by Mr Rockin' Robin Cook.

But here's betting that THIS one makes the headlines

"This prime minister will never get a medal for courage, although it has to be said that most of his cabinet get mentioned in Dispatches."

Ooh, "Dispatches" – do you, as they say, see what he did there? Tee very hee.

But he didn't have any ANSWERS, just more RHETORIC.

His BIG accusation: "like every other Labour government throughout history they've bankrupted the country".

This is a meme that the Conservatories have been pushing REALLY HEAVILY for MONTHS now. And fair enough: Mr Callaghan was brought down by the "Winter of Discontent" and Mr Wilson oversaw devaluation, "the pound in your pocket", and economic turmoil. And Mr Attlee, saddled with bullying demands from Americaland to pay for the whole cost of World War Part II was forced to extend rationing!

So, let's face it, Old Labour had all the economic competence of a SMASHED BADGER who'd been trained in adding-up by Master Gideon Oboe!

But what about CONSERVATORY Governments?

Well, Mr Major Minor in the 1990s crashed out of the ERM in Black Friday and finished with Fatty Clarke tripling the national debt

Queen Maggie in the 1980s succeeded in spawning three successive recessions and the Poll Tax.

Mr Grocer Heath in the 1970's brought the country to a screaming standstill with the Three Day Week.

Mr Super-Mac MacMillan created the STOP-GO economy, struggled with the balance of payments crisis, lost control of unemployment and had to tell us "we'd never had it so good".

In fact, the last time the Treasury was in credit, was when Mr Lloyd George was in charge!

The Conservatories, either alone or in coalition, ran the United Kingdom almost continuously for MOST of the Twentieth Century, interrupted only briefly for Labour Governments. If they were ANY GOOD at fixing the economy, THEY WOULD HAVE DONE SO BY NOW.

Quite simply, the Conservatories ALWAYS leave the country in a mess which would inevitably cause the next Government to crash and burn, even if Mr King SOLOMON was Prime Monster with Mr King MIDAS was Chancellor.

EVERY Government – Hard Labour OR Conservatory – leaves the Country BANKRUPT. That's WHY they leave the Country! They get VOTED OUT!

And quite right too. This is a DEMOCRACY. When the Government runs out of ideas and energy, when they lose their economic competence, when they start being more interested in their own pensions than the interests of their constituents, THAT is when it is time for the people to put them out of our misery.


Of course, what's SUPPOSED to happen is that Her Majesty's Opposition use the time IN opposition to come up with NEW ideas… which is where it all breaks down this year.

Which is why it is not really any wonder that more than 30% of people want the Liberal Democrats' Mr Dr Vince "the Power" Cable as Chancellor.



Only the Liberal Democrats have been HONEST about the need for cuts – and WHERE those cuts will fall – and only the Liberal Democrats have the PRINCIPLES and the POLICIES to make the tax system FAIRER. Only the Liberal Democrats have any IDEAS what to do now!


This was the Budget where the Chancellor TINKERED while Rome burned.

But if you don't like this one, don't be upset. There'll be another one along in a minute.


.

Day 2829: the Lesser of Two Evils? More like the Lesser of Two Eejits!

Monday:


So, Mr Evan Davies gave a good SPANKING to both Chancellor Sooty and Master Gideon on the The Today Programme on the radio this morning.



Far be it for fluffy little me to think that Sooty's MYSTERIOUS unavailability to talk about the IMPLOSION of another British Bank until after 8am was some insanely inappropriate SPOILER TACTIC for Master Gideon's big interview, but… presumably the Labour were assuming that when Sooty INEVITABLY shot himself in the foot, he might wing Gideon at the same time.

As it was, Mr Evan played the "Vince Cable" card and trumped BOTH of them.


Anyway, they're both MORONS.

For a start, Sooty has decided to split up the assets and the liabilities of the Badly and Bungling Building Society Bank.

I have to admit that Daddy Richard is being driven slightly NUTTY by all the reporting of this: in the first place, they keep taking about the bank's "savings business" and it's "mortgage business" as if these are not the front and back end of the same PANTOMIME HORSE. You wouldn't say that Tesco has a "getting food from farmers" business and a "selling food to people" business, now would you?

Sooty has clearly encouraged them in this by treating the assets and liabilities separately. Which is why HE is an eejit. He's essentially left the bank with a whole load of loans to collect, but no savings end means no new business means, in the end, no bank. It's like cutting a WORM in HALF. You do NOT get two worms, you get one half of a dead worm and ANOTHER half of a dead worm. Eejit.


But then, the reporting keeps implying that it is the GOVERNMENT that is getting the bank's LIABILITIES – saying that the taxpayer will be "responsible for £41billion worth of mortgages" – while they are handing over the bank's £20 billion of deposits to the Spanish as if these are ASSETS.

Quite obviously, the mortgages that the government is keeping are the ASSETS (i.e. the mortgages are money that is OWED to the bank and represent a future cashflow INTO the treasury coffers). And what they are handing over are the LIABILITIES (i.e. the liability to repay all the deposits that the bank owes back to its savers).

Now, you would have to ask, why would anyone "buy" the exciting right to have to repay twenty billion bucks?

The answer is because Sooty is going to pay them twenty billion bucks to do so. (This is a win for the Spanish, because most banks will have debts way larger than what they have in READY CASH; so although their debt goes up, the cash they get in exchange is a much bigger proportion of what they had on hand. This is called "improving their gearing" by smart City types who talk JARGON to stop you understanding that they don't know what they're talking about.)

So it LOOKS like Sooty has just had all of us, the Great British public, settle ALL of Badly and Bungling's debts at a stroke. Except… EXCEPT… actually, what has happened is this: the bank went BUST so the brand new bank-insurance-against-going-bust scheme ought to kick in. Except, begin brand new, it hasn't had any time to accumulate reserves and so, ironically, if it paid out then it would, er, go bust. So Sooty has "loaned" the insurance scheme the money to pay out to the Spanish. It's fiendishly complicated, this.

So what we are left with is RISK – not a bill right now, but the RISK that those £41 billion worth of mortgages are not worth £41 billion pounds.

As Mr Dr Vince "the Power" Cable pointed out, there's always a chance that they might actually turn out to be a GOOD deal for the taxpayer; those mortgage assets could be worth a lot MORE than we're going to pay for them, assuming that most of the people who borrowed the money manage to keep up with their repayments.

Nationalisation is BAD because Governments are not very good at running businesses. Although it turns out that sometimes businesses are much, much WORSE at running businesses.

Accepting that it is only a LEAST WORST option, though, a temporary Government ownership can be a safe harbour whilst the tempest passes.

As with the Northern Rock-and-a-Hard-Place Bank – to which these mortgages will probably get added – if the government just holds onto them for a while until the economy starts to swing up again, they SHOULD be able to sell them for good value. After all, people are always going to need houses.


Master Gideon, of course, is against this. It's not JUST that he is in opposition, and so against what Sooty is doing just because. No, he thinks that the Badly and Bungling should be sold privately. This is because (a) obviously people are just gagging to buy a bank that the market has valued as worthless; and (b) clearly there are just so many banks out there flush with cash at the moment anyway…

Or maybe he's an eejit too.

Take his idea to have the Bank of England "step in" whenever they think that a bank's lending is getting a bit risky. Can you, in fact, think of a clearer signal that a bank is going down than that? The minute the Bank of England says ANYTHING, the City goes into headless-chicken mode, the share price flatlines and the bank is as dead as Master Gideon's fashion sense.

Then there’s his WHEEZE to FREEZE: celebrating the Conservatories policy of returning power to local councils by, er, imposing on them a centralised, Big Government decision overriding their power to choose the level of their own Council Tax. Behold the Joined-up-Government in waiting.

But as if that wasn't bad enough, he's now going round writing articlessaying:

"We can no longer afford an economy built on debt"

"An economy built on debt is not an economy built to last"

It sounds like a good sound-bite, doesn't it?

And yet, if you take him at his word, it betrays a FUNDAMENTAL and TOTAL lack of understanding about how capitalism works.

Everything, EVERYTHING about our economy depends on the idea of DEBT.

What is MONEY itself, but a "promise to pay"? It is a note of a DEBT owed, that we use in order to swap our debts about. Does Master Gideon expect us to go back to BARTER?

You work for a living? The boss OWES you a DEBT for every minute that you work. Yes, even when Googling on FaceSpace. You LEND him (or her) your services and that debt is settled at the end of the week or the month.

And who could possibly afford a house without using DEBT to match the payments for your home over your working life?

(Although, these day, practically nobody can afford a house anyway, and for that matter the banks seem to have given up lending.)

But at a higher level, debt is what makes INVESTMENT possible.

If you want to start a business you have EXACTLY two options: (A) be very rich; (B) borrow some money.


Responsible is a word that Mr Balloon suddenly likes. RESPONSIBLE lending means advancing money to people who are able to repay the debt AND make a bit on top.

This allows people who have got good ideas and hard work but NOT Mr Balloon's inherited fortune to set up in business. This is how ALMOST ALL the businesses in Great Britain start, businesses that make and sell things, that pay taxes and even grow to employ other people.

A responsible level of debt is exactly what we need. It is the GRIT in the capitalist OYSTER. It is the OIL that lubricates the GREAT MACHINE.

It is the very HEART of the Credit Crunch Crisis that we have gone from FAR TOO MUCH debt to ABSOLUTELY NONE AT ALL.

It's like going from a hundred-and-ten miles-an-hour on the motorway to nothing (and that is a good analogy because a hundred-and-ten miles-an-hour is irresponsibly out of control, and nothing will get you nowhere): the only way you can achieve this is with a NASTY CRUNCH.


Far be it for fluffy little me to remind everyone that Mr Dr Vince was saying for quite some time that we needed a careful and cautious but above all MANAGED reduction in overall borrowing to a RESPONSIBLE level… so I'll just remind you that Mr Evan told everyone that this morning.

Day 2802: Sooty's Stamp Collection

Tuesday:


The announcement from the Treasury is pretty bald about it:

"The Chancellor of the Exchequer has today announced that stamp duty land tax will not apply to purchases of residential property of £175,000 or less."

Quite what the outcome will be is more difficult to tell.

For houses priced just a little bit OVER the new limit, it may actually push their price down further; on the other fluffy foot, for anything priced LESS than a-hundred-and-seventy-THREE thousand you might see the price ease a little up as SELLERS absorb the Chancellor's largesse. Or possibly NOT as GAZUNDERING overtakes GAZUMPING as the sharp practice du jour in a buyer's market.


What we DO know is that it probably won't work to re-inflate the housing market.

We know this because

a) Mr Norma "yoghurt-pot" Lamont tried it to no effect in the last housing crash;

b) Mr Gideon "empty yoghurt-pot" Oboe says we should try it this time.

More seriously, who would take Sooty's tax break when you could just WAIT A MONTH and the falling house prices would save you the same, if not more?


What we do know is that the UNDERLYING problem is LACK of CREDIT.

Remember that the whole "Credit Crunch" came about because banks were used to handing out cheap credit because they were loaning each other great pots of money in return for "mortgage-backed securities" that were made up of home loans parcelled up and sold on. The "parcels" contained some solid, dependable, sound mortgages from people who never missed a payment mixed in with some rather dodgy ones who might be able to repay you if they have a good day at the dog track mixed in with some that you were never going to see again and may as well have tossed the money down a wishing well. When the banks realised that the worthless sub-prime loans they were holding were – rather than transformed into some credit-worthy asset by the miraculous alchemy of the market – STILL actually worthless, they all stopped loaning each other money because they didn't know, and more importantly didn't BELIEVE, what any of the other banks' assets were supposed to be worth.

That would be why I would hope everyone will back slowly and carefully away from the unexploded proposals from the Royal Institute of Chartered Surveyors that the Bank of England kick start the credit boom all over again by issuing, er, "new mortgage-backed securities - home loans which are parcelled up and sold on to other investors". Sound familiar at all?


Anyway, lack of credit is where some people are getting into difficulty because of having to RE-mortgage, perhaps because they've come to the end of a fixed term deal. The fall in house prices could mean that the value of their home is less now so the bank won't offer them as much of a loan as the amount they already owe. So suddenly they have to find a chunk of capital that they don't have.

Higher monthly repayments for the family home, just as people are facing higher energy bills and higher costs for the weekly shop, are what push people into REPOSSESSION.


So I have a CAUTIOUS welcome for Sooty's package of measures to try and tide people over.

It's a bit of a hotch-potch and the numbers of people to whom a helping fluffy foot might be offered seem quite small, but broadly its heart is in the right place.

It just makes it seem very off that at the same time Sooty is trying to encourage people to get into MORE debt buying into a falling market – what Mr Clogg calls a "bribe to rescue the housing market".


Falling house prices are NOT in-and-of-themselves necessarily a crisis. If you've lived in your present house for a long time, or even not THAT long a time, you will have seen quite a step up in price so you'll just be making a bit less of a profit – and you'll still need another house so the price of the place you are buying will be lower too.

But if you bought RECENTLY, in the last year say, or if you took advantage when the banks were tempting you with seductive offers to increase your mortgage along with the rising value of your home then you COULD end up with a debt that's more than your house is worth.

But even negative equity doesn't HAVE to be a disaster. In the LONG TERM house prices are certain to rise again. No really, they absolutely are. There are quite simply more people who want houses than there are houses for them to have. And that's the very BASICS of a market-forces-led price increase.

So you should just – if you can – sit it out for a while.

Problems arise only if you need to sell your house NOW, perhaps because of a change of circumstances, illness or unemployment, so you can't keep up the repayments. You could end up left without a house but still having some mortgage left over.

Don't let Sooty bribe you into jumping in early; make sure you have a decent deposit saved up and buy only when you are good and ready.

Day 2799: Sooty Raises Eyebrows

Saturday:


It's possible that the strain has finally got to Chancellor Sooty…

The first rule of politics is: treat EVERY journalist you meet as a dangerously-feral berserk cat-monster, and every microphone pointed at you as a bazooka loaded with live snakes.

What you certainly DON'T do is invite a hack to your Highland Croft for forty-eight hours while you go into your best Victor Meldrew impression!

And you don't get to be a Cabinet Minister for eleven years without knowing this.

Though what's REALLY astonishing is the Editor of the Grauniad publishing something PLUTONIUM-level radioactive disguised as a LIFESTYLE puff-piece.


It's the way that the casual slap-downs for Ms Wendy "Douglas in a Wig" Alexander and Ms Cherry "On the Top" Blairimort are sandwiched between the light-hearted badinage about his wife's cooking and his dry wit; it's the way that the focus is more on Sooty's interrupted holidays than on the collapse of Northern Rock (even if we get the old canard that that was the first run on a British Bank in a hundred years. Which it wasn't.); it's the way that the real KILLER punch…

The economic times we are facing "are arguably the worst they've been in 60 years," he says bluntly. "And I think it's going to be more profound and long-lasting than people thought."

…is followed by some whimsy about his love of Leonard Cohen and favourite films.

Arguable? ARGUABLE? A statement so PROFOUNDLY likely to send the Pound through the floor, you would think anyone halfway interested would at least ask him to spell out what he meant rather than drifting off onto "Midnight Cowboy".


People have been trying to praise Sooty for his FRANKNESS, but – "frankly" – veering from euphoric denial to suicidal pessimism without skirting realism in between does not help anybody, least of all his boss Mr Frown who has gone from Iron Chancellor to Great Depression faster than you can say "bankruptcy".

Is this "the worst things have been in 60 years"?

Well…

…apart from Black Wednesday, obviously. And the house price crash of the Nineties…

…and the Lawson Boom and Bust. And the Miner's Strike. And Thatcherism, unemployment, cuts, recession, boom, recession again…

…and the Winter of Discontent. You can forgive Sooty for forgetting the Winter of Discontent. And the Oil Shock. And the General Strike. And devaluation, the Three Day Week, inflation, power cuts…

…and The Sixties stop-go economy, as trade declined outside of the EEC…

…and the loss of Empire. And Suez. And American demands for repayment of war loans. And rationing continuing until 1954.

So that's at best a QUALIFIED "yes", isn't it.


Seriously, what we want from the Chancellor is to recognise that times are going to be tough, that we've borrowed too much, that the Government has not set aside cash for the hard times and that some belt-tightening is going to be the order of the day.

What we need is a sensible set of proposals to tackle the urgent issues:

• the double whammy of higher interest rates and tighter lending means many people are at risk of losing their homes so we want something to reduce the likelihood of repossession and ease the hardship that follows if it happens;

• inflation is being driven up by international food prices and foreign energy spikes, so we could do with a plan to reduce our dependence on imported energy so that we can smooth out the turbulence on the economic field;

• we know that in the longer term the Government's spending plans are unaffordable and that Sooty's borrowing is making the current crisis worse not better so we have got to get some kind of a grip on spending plans and aim to borrow less and reduce the burden on taxpayers, particularly at the lowest end of the scale.

It is NOT being frank to wail "we're dooooom'd Cap'n Mannering" into the Highland gloaming. And it's not being HELPFUL to say: "I'll have a plan in September and you can all pis… go away until then".

Some people think that this is Sooty's REVENGE on Mr Frown for dropping him in it when he became Chancellor, leaving him to carry the can for all the mistakes the new Prime Monster had left behind him. Some people think that it is Sooty pre-emptively mounting a defence of his job in the light of rumours that it is to be dumped on Mr Millipede in Mr Frown's latest relaunch-reshuffle. Some people even think that Sooty has turned to the DARK SIDE and has done this as an ATTACK on his old friend Mr Frown.

The OTHER theory is that this is a new hoot on the old NuLabour tune of "Expectation Management" – you know, that's where they say "we are SOOOOO going to be completely wiped out in these local elections" so that when instead of losing all of their seat they retain just two, they can still claim that they have EXCEEDED EXPECTATIONS and it is a massive victory, a TOTAL, BRILLIANT SUCCESS (©Magus Greel) etc…

The trouble with this is that (a) you cannot SPIN with the Economy – the more you make dire predections, the more they tend to come WORSE; and (b) do try to remember you should all be singing from the same HYMN SHEET!

Personally, though, I suspect that he's just had enough of all the Westminster scheming and double-talk and in the clear fresh air of Scotland talked like a normal person would. Forgetting that as a member of the New Labour Cabinet… he isn't remotely normal at all!

Day 2775: Mr Frown Stamps on Housing

Wednesday:


Great Britain has a housing market where it is too expensive for essential workers to buy a house; where people were encouraged by greedy banks to take out mortgages that were way too much for them to afford; and where, thanks to runaway house price inflation*, investing in property was seen as SUCH a one-way bet that it led to the credit crunch and now no one can get a home loan at all and repossessions are going through the roof. Forgive my pun.

So… when did it become a BAD thing for house prices to be going down?

(* balanced against low ordinary inflation. What with houses being the only things you can't import on the cheap from China. And now BOTH kind of inflation are going a bit iffy.)


Mr Frown has announced through his puppet Chancellor, Sooty, that he's going to spend the next month dithering about whether to axe Stamp Duty on houses.

In case you don't know, Stamp Duty is a tax on buying a house. If you buy a house that costs between £125 thousand and £250 thousand, then you have to give 1% of what you spend to Sooty. If it's more than £250 thousand then it's 3% and more than half-a-million quid and it's 4%.

Thanks to rising house prices – the average house now costs £218 thousand pounds – Sooty raises almost a billion-and-a-half pounds from this, so it's not the cheapest tap to turn off. (And where, you may well ask, is the money to cover the hole left by this latest bribe going to come from?)

But as Citizen Alix points out, 1% off is not much of a SPECIAL OFFER.

On a one-hundred thousand pound flat, a thousand pounds extra in tax is an IMPOSITION, but a thousand pounds off is not going to change your mind to buy or not to buy.

And of course that is even assuming that the buyer GETS the thousand, rather than it being INSTANTLY ABSORBED into a one-off tiny, hardly-worth-the-effort increase in house prices. Essentially, the seller just pockets the Chancellor's money and the buyer, particularly the first-time buyer, ends up having to pay exactly the same.

But the worst thing is that this dithering, this "announcement that there MAY be an announcement", introduces UNCERTAINTY into the market.

Who in their right mind is going to buy a house in August when Sooty has let it be known he's (MAYBE) going to announce a 1%-off offer in September. I mean, it's not a very GOOD offer but you still wouldn't want to pay it for no reason. So now no one's going to want to buy any houses AT ALL for a month.

This is SO obvious that even the Conservatories have spotted it.

So we have to ask ourselves two key questions:

• Will this help to boost house prices?

• Would we WANT to do that, even if it DID?

And then, since the answer to BOTH of those questions given a moment's thought is NO, we ask: so why did Mr Frown let it be known that he was thinking about doing this?

That's the trouble with spin… spin, that thing Mr Brown said he was giving up!

Because, of course, by letting it be known that you are thinking about it you create a rod for your own back… or more accurately a GREAT BIG STICK for the DAILY HATE MAIL to hit you with when you decide not to do it… or "Perform another U-Turn" as they'll put it… or "Betray the Home-Owning Democracy" as they'll put it.

Remember folks: flying a kite CAN lead to you being struck by LIGHTNING!

Day 2754: Petrol Tanks as the Economy Tanks

Wednesday:


Mr Clogg foretells a "winter of economic misery" for the Prime Monster as inflation hits an 11-year high, nearly DOUBLE Mr Frown's target; as schools and libraries across the country close because council workers are on strike for a pay rise that will let them go on EATING; and as Sooty performs a TOTALLY UNSURPRISING U-Turn on green tax.

So, surprisingly, it's all going rather well for the man who claims to have written all the Government's economic policies: Master Gideon Oboe.

Really: you keep claiming they've nicked your policies; we're going to notice that those policies are RUBBISH!

And this is in spite of him being totally sliced to pieces by the URBANE Mr Gavin Essler on the Newsnight Show last night. (You can tell just HOW badly Master Oboe came unstuck from the fact that he actually had to use the "I couldn't disagree with you more" cliché. Sad.)

The Conservatory claim to economic competence relies on the FALLIBILITY of MEMORY.

It's not JUST that they hope people will forget (and people DO forget) how truly terribly they HORLICKSED up the economy with the recessions of the Eighties and Nineties, the Lawson Boom-and-Bust, Black Wednesday (with Mr Balloon in the shadows), or the Poll Tax debacle. But they also want to MAKE people misremember how history happened through constantly repeating (BIG LIE style) the totally false claim that the Labour's "economic golden era" was built on the foundations laid by the Conservatories.

That is TOTAL HONK!

The Conservatories left the economy in TATTERS in 1997. They had tripled the national debt to cover the fact that they had no way of making the economy work. They left in place plans for tax and spending that they themselves have admitted they could not have followed.

Everyone (and this is what revisionist Conservatory historians rely on) seems to have forgotten the STRINGENT and PRUDENT first term of the Labour, when Mr Frown actually EARNED his reputation. It was jolly painful for a lot of people then, but with a lot of perseverance (and a great deal of luck from the Dot-Com Boom and a whopping great raid on the nation's pensions) Mr Frown managed to pull the economy back from the brink of the GRAVE where the Conservatories' carelessness and incompetence had left it.

THAT is where the last decade of "good times" came from, not from ANYTHING that the last Conservatory government did.

Unfortunately, "spendaholics" are like alcoholics: you're never really CURED. So Mr Frown lost his mind and started spending with GAY ABANDON like money was going out of fashion – as apparently, it turns out, it has done! – and we should not have been at all surprised.

It was those MIDDLE years, those "please love us" years, those let's fight a pointless war in the Middle-East years that really blew the kitty. Ironically, if Mr Frown had LISTENED when people said he should start to spend money SOONER, then he could have spent LESS, not needing to splurge to make up for so many lean years, and then we would be in a more stable position now.

So Mr Frown earned his reputation in the PRUDENT years, but then threw it away when he abandoned prudence.

The Conservatories NEVER had that reputation to start with!

The so-called policy announcements (they're not REALLY policies since they STILL all get expressed as "aspirations" and "ambitions" and "at the appropriate juncture, in the fullness of times-es") that come dribbling out of Mr Oboe's office are all just so many populist mantras:

inheritance tax cut (big cheer from the Hate Mail) no matter that it's only for the toppermost six percent of the population;

let's fiddle with fuel duty so petrol never gets more expensive (big cheer from Jeremy "von" Clarkson) no matter how high oil goes or how much it might cost the exchequer and buggbad-word the green agenda;

let's import Americaland's get-out-of-bankruptcy-free-card Chapter Eleven for companies in trouble (big cheer from the good chaps in the City) no matter that Chapter Eleven is a parachute for incompetent management rescuing them from the consequences of bad decisions while still costing the workers plenty, that it DISTORTS the whole idea behind a FREE MARKET where failure is a painfully necessary part of the process, or for that matter whether Chapter Eleven actually makes ANY SENSE AT ALL in British Law where we already HAVE administration practice before insolvency!

Frankly, the only thing more TERRIFYING than Mr Oboe's LUDICROUS suggestions is that there is every appearance that, with Mr Frown apparently drunk-in-charge, Sooty really is implementing them!

No wonder it's all gone a bit PETE TONG!

Day 2726: If Your Mansion House Needs Haunting Just Call… Sooty

Wednesday:


Sooty's speech to the Mansion House dinner is a LITTLE overshadowed by bad tidings on the economic front…

Inflation up to 3.3%;

It's all a bit bleak, says Mervyn, King of the Bank;

And Barclays warns of financial storm ahead.

Day 2690: Sooty's Budget Take Two – Doing the Right Thing in the Wrong Way for All the Wrong Reasons

Tuesday:


What is really TRAGIC is that Sooty's fix doesn't even WORK: certainly the people who lose out are CUT from those earning between £5,000 and £17,000 to just those earning between £7,000 and £9,300, and the amount that the losers lose is a lot less (about £37 a year, rather than £157).

But that's still SUBSTANTIAL gains for those people earning £30,000 while the lowest earners are PENALISED.

I want to know whether this increase in allowance is permanent, or will it be reversed next year?

And there's a SERIOUS question about whether Sooty knows how to do MATHS.

You see our ESTEEMED Chancellor has said BOTH that Higher Rate Taxpayers will not benefit from the raising of allowances AND that he has therefore lowered the Higher Rate Threshold by £600.

Lowering the threshold by the SAME amount as you raise the allowance means that you pay BASIC RATE TAX (20%) on a SMALLER amount of money and HIGHER RATE TAX (40%) on the SAME amount of money.

This Drawing might help:

So you pay LESS basic rate tax and the SAME amount of higher rate tax. That means LESS in total.

In other words, if Sooty MEANS what he says about reducing the Threshold by £600, then ALL taxpayers, and this means especially Higher Rate taxpayers get some tax BACK – it's £120 for anyone earning more than about £6,000.

Not enough to compensate the worst off under Mr Frown's budget, but a nice little freebie for the already quite nicely off thankyou.

Here is a drawing of the WINNERS and LOSERS:

(That big downwards spike at around £40,000 in income comes from Mr Frown hiking up the top end of the National Insurance band. Higher earners pay 11% on an extra £5,200 this year, moving us closer towards having just TWO tax rates: 31% and 41%. Or had you forgotten that National Insurance is just HIDDEN Income Tax?

Average salaries are around £26,000 but I do wonder about the DEMOGRAPHICS. It would be AWFULLY cynical to suspect that that national average is made up of large numbers or workers getting paid around £20,000 and large numbers of managers getting paid around £40,000, because that would mean that FEWEST people benefit from the tax changes.)


Now, I guess it's POSSIBLE that Sooty doesn't ACTUALLY understand how the tax system (which he is notionally in charge of) works. Be FAIR: he's taken over from Mr Frown, who spent the last ten years trying to make it as tangled as possible.

What he PROBABLY wants is to CANCEL out that EXTRA £120 for Higher Rate taxpayers, but without changing the tax RATE. The only way to do that is to make them pay the higher rate on MORE of their earnings, and that means lowering the Threshold EVEN FURTHER.

In fact, you have to lower it by ANOTHER £600. That's £1,200 in total. (Because by making that money taxed at 40%, you are paying an extra 20% on top of the tax that's already being taken. So you need to lower it by £600 because £600 x 20% extra tax = £120)

That would give us a REVISED map of Winners and Losers that looks like THIS:

Obviously, this would draws more people into the band of Higher Rate taxpayers. But that is hardly anything new; it is so normal that it even has a name: "FISCAL DRAG" (which thankfully does NOT mean Mr Frown dressing up as LADY!).

You can probably bet your shirt that even if Sooty reverses the £600 extra on the Allowance, he WON'T reverse the £600 cut in the threshold next year!

Anyway, what is clear from this is that Sooty has not raised allowances by ENOUGH fully to compensate all of the people that Mr Frown DIDDLED in the first place.

And you know, Mr Frown ADMITTED as much in his answer to Mr Clogg at Prime Monster's Questionable Time.


What he or Sooty SHOULD have done, was raise allowances like this, as much as he could, and KEPT what was left of the 10p band. That would have avoided ANYONE having to pay MORE by DOUBLING their starting rate of tax.

By applying Fiscal Drag – though hopefully NOT at the Despatch Box – you could have done this in a way that was FISCALLY NEUTRAL, i.e. it didn't raise any EXTRA tax but didn't cost more EITHER and would have been REDISTRIBUTIVE – letting the people on lower earnings keep MORE of their salary and taking a little extra away from those who are better off.

Which, of course, brings me to the REAL disaster of this sorry business: where Sooty got the money from. And it's BANK of MAGIC MONEY TREE again.

Yes, basically, the Government has BORROWED £2.7 BILLION to hand over to us as a BRIBE to make us forget that they robbed the POOR to pay the RICH another BRIBE.

It's ALMOST "monetarist" (by which I mean "barmy"). Remember how the THEORY goes: to fight inflation, you cut government spending and borrowing to reduce the amount of money moving about; if the economy is stagnating, throw more money into the system to get it going again.

That's what the Monkey-in-Chief and his Neo-con Reaganomic Replutocrats are doing. And where the Monkey-in-Chief's administration leads the Labour are, as always, soon to blunder in after.

Of course, at the moment we have the economy going backwards BUT the cost of imports – particularly food and fuel – are going through the roof. This means that Inflation is going UP, even though the economy isn't growing, and Ms Caroline "Heart of" Flint foresees house prices falling at least 5-10%: it's the spectre of 1970's style "STAGFLATION".

Borrowing money to give away tax cuts at a time like this is as likely to cause an inflationary spiral (as people spend the money on already expensive imports and drive up prices further, leading to demands for wages to keep up) as it is to kick-start the housing market and get the economy back in action.

Still, VOODOO ECONOMICS always was a STAB in the DARK!

PS:

Naturally, all the media coverage has ignored all of this and instead focused on how EMBARRASSING it must be for Sooty to have to re-write the budget just weeks after saying, er, "I can't re-write the budget"

Pointing and going "Ha-ha!" is much easier than HARD SUMS.

Day 2628: Sooty's Budget: Izzy Whizzy Let's… not do anything

Wednesday:


Today's BIG news was, obviously, the GREEN LIGHT for latest in the long-running and much-loved series of Carry On Films.

But never mind THAT, we have the long-running and NOT much-loved Whitehall Farce to talk about instead.

It's funny how Sooty's budget seems to have fallen through the news agenda like a grey cloud through a sieve. The reason that it's become OLD NEWS so fast is that everyone knew what was in it because Mr Frown presented it all LAST year, so that – if things had gone to plan – we'd now be four weeks from a General Election.


Of course, even if things HADN'T got a bit ahead of themselves last Autumn, the plan didn't ever involve going to the country against a background of imminent American recession and consequent global economic implosion.

The main impact of the budget is, you will remember, the abolition of the starting rate of tax, raising tax from the lowest earners to pay for a tax cut in the basic rate for the better off.

I'll just remind you of that again: Mr Frown robbed the poor to pay to the rich.

The extra "help" for the less well off that Sooty offered in return amounts to little more than shaking a finger at the energy companies and saying "play nice!"

Similarly, the Chancellor's idea of tackling green issues is to wheedle at the supermarkets: "pleeeeese sort out the plastic bags problem!"

"It's been a cop-out on Green issues," said Mr Clogg.

Meanwhile, Sooty's extra "fun" taxes – on cigarettes and alcohol and cars – are all SMALL BEER (or cheroots or Smart cars), designed to do no more than plug a few of the gaps in the accounts. They're certainly NOT going to be an efficient way of changing anybody's behaviour.

I suppose you know what ELASTICITY of DEMAND means? That is, when you can stretch the price quite a LOT before people start looking somewhere else for their goodies. Alcohol, tobacco and petrol are all pretty darned elastic – choosing to do without them is a lot of trouble for people so mostly they just grimace and pay up.

But even if that WASN'T the case, you still have to think about what kind of CHOICE you are giving people. And in Sooty's case, it's no choice at all. Instead of a Green Tax Switch, giving people BACK their own money so that they can then SAVE it if they make the right green choices, Sooty is just ADDING to the tax burden.


So, given that Mr Frown wrote most of the Budget a year in advance, and that the rather dicey economy leaves no room for cutting taxes or increasing spending, and the fact that all the government credit cards are already maxed out… was there really nothing that Sooty could have done?

Well, and this is a clue, Master Gideon Osborne doesn't think so.

Rather oddly, he spent most of the week proclaiming that the Conservatories would match the Labour's taxing and spending plans… and at the same time saying that all Sooty's predictions were wrong and that things were much worse than the Treasury were claiming.

Which of course OUGHT to have begged the question: if you think that the economy is in a worse state than the Chancellor says, then HOW can you afford to match his tax and spend plans? If you say there is a BLACK HOLE in his plans… doesn't that mean there is a much BIGGER one in YOURS?

The Treasury really DOES have a record of being quite GOOD at predicting how well the economy is going to grow. Where they are RUBBISH is at working out how much more tax this means they are going to collect, and that means there is a shortfall every time and THAT is why borrowing keeps jumping ahead of predictions.

And that is going to be a problem for Sooty, because one of the government's "rules" is that they are NOT to borrow more than 40% of the Country's Gross Domestic Product.

Which is why ALARM bells ought to be ringing loudly at the news that Sooty intends to be borrowing a total of 39.8% of GDP by 2010.

This isn't just SKATING on thin ice… this is taking a POGO STICK out there and jumping up and down while DARING the ice to break!

There is every likelihood that we'll find ourselves with an even BIGGER borrowing requirement, though – being the Labour – they'll probably just change the rules at the last minute and claim they've not broken them.

It would all be a lot easier if Mr Frown hadn't ALREADY borrowed so much money to fill in the gaps between his spending SPLURGE and the revenue he was receiving.

Of course, young Master Gideon was all over that one too, criticising Mr Frown for not saving in the GOOD years now that we face the LEAN ones. Obviously, this would have been more credible if he'd been saying that AT THE TIME.

They really SHOULD have taken some advice from Mr Vince.
Our Dr Vince "the Power" Cable has been warning for YEARS that borrowing – personal debt as well as the government's – was spiralling out of control and that there was great danger of the banking sector getting itself mired in trouble through runaway greed.

But if Sooty is saying he'll do nothing, and Gideon is saying there's nothing that can be done, is that REALLY the case?

Of course not.

There are plenty of ways that you can improve the tax system while still remaining broadly neutral in the amount of tax that you raise. Mr Vince has thought up lots of them!

The most obvious method is to shift the burden of tax from the less well off to the super rich, and to move the tax you raise from Income to Green Taxes. You can make the tax system FAIRER so that people at the bottom end are not paying a higher percentage of their income in taxes than the people at the very top. And making the Green Tax Switch puts the power to help the planet into people's hands and rewards them for making good choices.

You can also SIMPLIFY the tax system – close all the loopholes that let very rich people pay very little tax on their property wealth, raise allowances so people pay less tax on their income at the bottom end and do away with the insanely complicated Tax Credits that take people's money and give it back to them and then take it away AGAIN because the Revenue overestimated how much they were supposed to give back.

In fact, giving people an income tax cut can help to stimulate demand in the economy, especially if people go out spending money on new environmentally friendly replacement goods.

And that's why it is such a CRYING SHAME that the news don't want to talk about the budget anymore, just because the Tweedle-Tories have a JOINT policy of SHAN'T and CAN'T.

We need a BETTER ANSWER than "can't be done". We need a RADICAL and REFORMING budget. We need the Liberal Democrats!