UKIP's Farage on the Euro and ESM bailout vehicle

I'm not a supporter of UKIP (although I wouldn't entirely rule it out in the longer term), but Nigel Farage is one of the relatively few MEPs, along with Conservative Daniel Hannan, worth listening to. Here is Farage lambasting both Herman van Rompuy, President of the European Council and Manuel Barroso, President of the European Commission for their lack of credibility in the international markets for the latest moves to support the Euro to have much chance of bringing any more than very short term relief from the systemic problems inherent in the Euro. He also told Barroso, quite rightly, that he had made himself and all of us look like out-of-touch idiots by having the temerity to lecture others about 'democracy' when he is completely unelected himself! Anyway, watch Nigel Farage at work demolishing these small men, completely out of their depth to provide coherent strategies to even begin the job of rescuing the Eurozone from the mess it has got itself into and who seem intent on dragging the rest of us down with their doomed policies:



By the way, when is the European Union going to get its accounts in order - it has not done so these past SEVENTEEN YEARS! (Sources - here and here, but there are many more to choose from.) I repeat that - SEVENTEEN YEARS!

On the current craze for blaming "greedy bankers"

It is striking how fashionable it has become in the last week or so, indeed since the financial turmoil really got going in 2007 and 2008, to pile blame on "greedy bankers". The latest well-known people to indulge in this, both politicians, are the current Prime Minister, David Cameron, and the Leader of the Opposition and Labour Party, Ed Milliband. My motto tends to be: Always beware a politician making 'policy' by talking about 'morality' instead, as it is usually a sign that they have no idea what to do about a particular problem, or don't want to state an obvious truth for fear of upsetting the voting public.

A couple of days ago I read an article in the Douglas Carsewell blog (he is a Conservative MP) that reported on a Coffee House article by Spectator editor Fraser Nelson. Being a politician, Douglas Carsewell, really a sort of Essex 'bovver-boy' with presumably a decent education and defintely with decidedly 'radical' views, focussed on one particular aspect of what Fraser Nelson had actually written, that if one was going to blame bankers, then one should not forget to include central bankers as targets. Fair enough, but that is not the whole story, certainly of what Fraser Nelson wrote and even more so of how I think 'blame', if it is a worthwhile exercise at all (which I tend to doubt), needs to be placed, so I wrote a comment in Douglas Carsewell's blog which I reproduce below, because I think it is probably a fairer and more complete analysis. Politicians, in particular, don't like to tell the truth to their electorates, because they depend on public votes to get elected or re-elected - but sometimes 'naughty kids' (in this case 'the public') do require to be told a few home truths; the comment was my small effort at correcting this omission:

Well, it is convenient for politicians (of all political parties, but specially that of the government of the time), to blame 'greedy bankers' and they must obviously share some of the blame, but as you - and Fraser Nelson writes - the macro-ecnonomic policies put in place by central banks, specially in the US and UK, but even more specifically (as you conveniently forgot to mention) the governments of those two countries carry an even more major part of the 'blame' or 'responsibility'. It would be neglectful and dishonest too, although politicians who need votes always seem to gloss over the matter, not to mention the third major component of what went wrong - the borrowing public, which was very happy to run up enormous credit card debt and think that property investment and the high borrowing which almost always funded it was a one-way bet. No-one forced these borrowers to take on more debt than they could handle and in very many cases it wasn't to fulfil real needs, merely to take part in the consumer-led bonanza going on all around them. Not everyone did this and a few people, such as myself (for example) were counselling anyone who would listen amongst my acquaintances and family not to become swept up in it. And I'm not talking about 2007 or 2008, I'm talking about as early as 2002. - the signs were already very clear then of the way things were developing. All political parties in the UK, including the then Opposition (i.e. the Conservatives), were egging on the public to borrow more, but of course without the idiocy and greed of the borrowers the disaster could not have happened. Most politicians are venal, but then most politicians are no worse than most of the people they represent who, given the opportunity for what seems like 'easy money' will not hesitate to indulge themselves. Politicians (and central bankers) don't like to tell voters the truth, but them most voters don't really want to hear the truth!

Until the borrowing public who fund much of their discretionary expenditure by borrowing on credit cards or loans (for example to fund several foreign holidays a year, or regular clothes shopping for reasons of 'fashion' rather than utility, or to have a new car every year or other year, etc) realise they are just as responsible for the financial mess we are all in and, more importantly, accept they must modify their own behaviour in the light of this, then I am afraid to say it is 'they' the public (and far too many politicians) who still do not get it!

Eurozone agrees lend Spain upto 100 billion Euros

As a result of a lengthy (2 1/2 hour) 'conference call' yesterday afternoon between the finance ministers of the 17 Eurozone countries, it was agreed that Spain could borrow upto 100 billion Euros (about GBP 80.7 bn, or USD 125 bn) to shore up its shaky banking sector, specifically its 'savings bank' sector, hit particularly badly by the property crash.

Spain will be deciding over the next week, once an 'audit' has been carried out, precisely how much funding to ask for.

Assuming this plan goes ahead, it will undoubtedly put off the 'day of reckoning' for some time, but whether it will provide any long-term solution is less clear (to me at least), unless the productivity of the Spanish economy (just like the much smaller Greek) can be 'pole-vaulted' up much closer to German levels. It remains also to be seen how the German electorate will react in their elections next year. I fear all this latest scheme is doing is to 'kick the can down the road' a little farther. I think the Euro has fundamental flaws in its design which only stand a fair chance of being resolved either by:
- some of the weaker economies in the Eurozone leaving it and starting to use other currencies (presumably their former currencies or near relatives) and allowing them to find their own value against other currencies, including the Euro; or
- by the Eurozone countries agreeing, sooner rather than later, to pool their fiscal (and in reality their political) sovereignties into what would effectively be one unified political unit. Mrs Merkel broached this subject a few days ago, qualifying the process as 'gradual' - whether that would be good enough, even if the other countries (*) agree to go along with this idea, is anyone's guess, but their resolve would certainly be tested ferociously by the money markets along the way.

(*) - for example, both the French and the Dutch electorates already rejected the EU Constitutional Treaty in referenda, which effectively invalidated that idea then, although it was later resurrected under another name, the Lisbon Treaty.

Well it is warm and sunny here and the food and wine are good, so I suppose like most people who can I will simply carry on at least for the present enjoying myself. What will happen, though, should the music stop on the 'musical chairs' game being played trying to reconcile the irreconcilable?

Sources (just a few from amongst the hundreds, because this is a very major issue):
Spanish
- El Mundo
- BBC Mundo (in Spanish)

English
- Wall Street Journal
- Reuters

(This article is cross-posted from my Spanish blog, because of the importance of this issue)

Spain's economic bind succinctly outlined

See my article in my other blog 'casabill- the blog' here; Edward Hugh's interview with Paul Krugman covers more than just Spain and I think is interesting for anyone interested in the current economic recession or in the future of the Euro, in particular.

The party's over for coffee-shop laptop-users during the downturn ...

... at least it is in New York in some independent coffee-shops who provide free wi-fi access, not to mention power-points for customers to recharge their laptop batteries; some locations in San Fransisco are beginning to do likewise. The problem is customers who nurse one coffee sometimes for several hours whilst surfing the net, taking up seats that more profitable customers could occupy.

(thru Barcepundit)

Governor of Bank of England rubbishes Government's economic policy

The Governor of the Bank of England, Sir Mervyn King, seems finally to have lost patience with the Government and become willing to say in public precisely what he thinks of Darling and Brown's strategy for getting the country's finances back in ... well not exactly in some kind of order, because that's going to take a VERY long time ... but at least make a sensible start on reducing the frighteninlgy-high budget deficits. Here's what he said this afternoon before a House of Commons Treasury select committee and it's pretty explosive stuff:

"We are confronted with a situation where the scale of deficits is truly extraordinary. This reflects the scale of the global downturn, but it also reflects the fact that we came into this crisis with fiscal policy on a path that wasn't sustainable and a correction was needed." "There will certainly need to be a plan for the lifetime of the next parliament, contingent on the state of the economy, to show how those deficits will be brought down, if the economy recovers, to reach levels of deficits below those which were shown in the budget figures."

The extent of the rift between Threadneedle Street and Downing Street is clear from this FT report on today's meeting, too.

Quite extraordinary and one imagines that the Prime Minister and the Chancellor of the Exchequer cannot have enjoyed learning of what Sir Mervyn had said. He is of course quite correct and it needed to be said - one presumes that there will be consequences of one kind or another for him, tempered only by the fact that Labour is now very weak politically, even if whilst Brown remains Prime Minister he still retains a certain, now rather shabby, aura of power. Today, too, at Prime Minister's Questions, David Cameron tore into Gordon Brown and his usual spin in a manner that was most satisfying to behold.

The Governor of the Bank of England is not the only senior establishment figure to have seemingly lost whatever faith they may have once had in the 'Dear Leader', if the audience Her Majesty the Queen granted to Sir Mervyn King in March last is a guide.

Is Gordon Brown set to go down in history as the worst Prime Minister this country has ever had? I've thought he was complete rubbish ever since his first budget was announced in 1997 and it gives me absolutely no pleasure that my fears at the time that Labour's latest period in government would end, sooner or later, in financial ruin for the country have become a frightening reality. So the answer to that question is "Yes", at the very least as far as my own lifetime to date is concerned.

General Motors - the demise of a giant

It's been coming for a long time, from a company which in recent years (decades really) in its 'heartland' churned out technologically mediocre and inefficient products, led by a management which even very recently simply didn't get it, even when asking the US Government to bail it out with shedloads of public money. It had, despite its former might, become somewhat irrelevant in the wider US ecomony - but remained arrogant and unmindful of wider trends in the US and global automotive markets.

But it's still sad.

Here's a very recent ad. run in the US which illustrates just how desperate was General Motors' situation, specially within the context of an economy undergoing major recession and why the inevitable has happened today:



I don't think I've ever actually owned a GM product, although I've driven a few either as hire [rental] cars whilst on vacations in the US, or company cars when I lived in Saudi Arabia in the 1970s - 'tanks' such as the Chevrolet Caprice Classic or the Buick Le Sabre, which whilst powerful were, as even I could see (I make no particular pretence of knowing or caring how motor cars work or how they are engineeered - although I am not quite so ignorant as that in reality), not far below the superficial veneer of luxuriousness, quite crude vehicles with generally atrocious handling characteristics. My exepriences of driving Opel or Vauxhall products as occasional rental vehicles were only marginally more satisfactory. Why would I have considered buying a GM product when there were much more reliable, safe, comfortable and economical products readily available? And it's that reality that has brought GM to today's denouement.

PS/ This article was almost ready yesterday evening when my broadband connection went down - I'm publishing this courtesy of a neighbour's internet connection.

G20 result in summary - 'global quantitative easing'

Naturally this ongoing disaster is being hailed as some kind of 'success'. I'm afraid I view this whole catastrophe of a development with deep foreboding.

The BBC analysis is here and that of the Telegraph newspaper is here.

I haven't been writing about this in recent days, because ... well, what's the point?! It was clear to me weeks ago that 'compromises' would be cobbled together to allow announcement of some kind of Faustian pact. Watch out for rampant inflation in a few years time! This will not be a simple by-product of what has been agreed today - it is the whole purpose of it as it will help to reduce the debt-burden of our profligate governments and many individuals who have run-up debts (over-extended mortgages or 'maxing-out' of credit cards) far larger than was prudent and contributed directly to the rapid rise in property prices, thus pricing many younger 'first-time' buyers out of the market as the price for fooling most people into believing the economy was doing well (and giving their votes to the self-serving morons who directed this policy). Anyone who has been genuinely 'prudent' and saved to provide for their futures is going to see their assets decimated - but they have fewer votes than the majority debtors so even right-of-centre political parties are going along with this nonsense, even if there is token disagreement with parts of it, no doubt as a way of trying to distance themselves from it when it actually does result in even more urgent problems in a few years time.

What should happen? Public expenditure needs to be SLASHED across the board and there needs to be an immediate reduction in the tax burden to encourage the entrpreneurial elements amongst us, initially of a somewhat lesser degree than the reduction in public expenditure night seem to justify, to allow the public finances to begin to be made a little more healthy and to start moving in the direction of balance. Politically disastrous I accept for the political party that tried to do this, because the large 'client state' that successive governments have created (and particularly the current Labour government) has grown addicted to the destructive 'credits' with which the government buys their loyalty. I don't object to those that need it being given a helping hand, I do object strongly to the deliberate creation of a large dependent segment of society which no longer sees the need to strive to try and get themselves into a position where they no longer need State assistance.

I need a drink!

PS/ Samizdata has very much the same reaction to this as me.

Chile's President tells Brown a few home truths

Possibly without realising the political impact on her guest's already shattered reputation for 'fiscal prudence', Chilean President Michelle Bachelet in a few words encapsulated and differentiated the frighteningly disastrous policies that Gordon Brown has followed for the last 12 years (as Chancellor and now as Prime Minister) from those followed in wiser countries such as Chile in recent years:

"I would say that because of our decision during the good times, we decided to save same of the money for the bad times," Ms Bachelet told the news conference in Santiago. "And I would say that policy today is producing results. So when we develop our fiscal stimulus plan, we could make one that is 2.8% of GDP."

- and what a lovely blue dress the good lady is wearing; one is reminded of another famous female politician and her in some ways 'homespun' views on economics and 'balancing the housekeeping' money.

It comes to something when a centre-left politician from what not so many years ago was an economic basket-case has to state by implication to our own 'pillar of fiscal rectitude' just where his policies have taken his country. The Chileans have, for the moment (good for them), learned a valuable lesson from their years of fiscal recklessness and have turned their country around economically. We British had to do the same after the disastrous result bequeathed by the last Labour government in 1979 and succeeded in turning around our own economy and prospects - only for it all to be squandered AGAIN by another Labour government. How many disastrous Labour governments will it take for the British people to learn the lesson permanently and consign Labour and its failed socialist ideas to the dustbin of history where they belong?

(PS/ My views on Labour's competence to govern have unfortunately been given no reason to change over the years - here's what I wrote over eight years ago [first two articles] and although I didn't have a website then, my views on the probable disastrous consequences of the change of tax treatment relating to pension contributions announced in Brown's first budget in 1997 have sadly beeen amply borne out by the results which flowed. Here's what I was writing [scroll down to third article] 6 years ago during the last [mini-]recession about Brown's economic stewardship.)

Is Her Majesty tired of hearing Brown's relentless spin?

It looks as if She may be, for She has called in the Governor of the Bank of England for a personal audience, the first time She has ever done so in Her Reign. I have no doubt that She is just as angry and worried about Her own personal finances (no doubt she remains a very wealthy woman, of course) and those of the nation of which She is Head of State; it must be very depressing to know that Her Prime Minister is such a useless twat; I have no doubt She expresses Herself in some pretty colourful terms when thinking about this, however discrete She must remain in public.

It is pretty extraordinary for the Governor to feel it necessary to issue such a bald warming to a sitting Government:

"I'm sure the government will want to be cautious in this respect," he said. "There is no doubt we are facing very large fiscal deficits over the next two to three years. "Given how big those deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits. "The level of the fiscal position in the UK is not one that would say: 'Well, why don't we just engage in another significant round of fiscal expansion?'"

One thing which surprises me is that many 'experts' did not see the rise in UK inflation coming; the currency has slid 30 per cent in the last year and we import a great deal of our food. What's to be surprised about? The fact that mortgages have become much cheaper for those that [already] have them is fine - and indeed many people I have spoken to in recent months, whose employment is with the State in one form or another (teachers, civil servants, police, etc) are quite happy with the current situation, having seen their monthly outgoings fall substantially whilst largely continuing to enjoy very secure employment, but the situation is quite different in the diminishing private sector where few can be absolutely sure they will still have a job in a few months time. As for those who do not have mortgages (and that includes not just homeowners, but people who rent privately or are council or housing association tenants), they are fully exposed to the increased inflation of [officially] 3.2 per cent - undoubtedly much higher when only basic essentials such as food and heating/energy are considered, whilst similarly those amongst them who have savings are painfully aware that their cash deposits and other investments are quite literally a wasting asset with the twin perils of low interest rates and inflation eating into their values.

I think, even now, most people have no inkling of how bad things could get in the next few years for so many of us who have grown complacent over the recent decades of relative plenty in western societies. I'm afraid I've been thinking these thoughts for at least the past four or five years and it gives me absolutely no pleasure at all to see my worst fears beginning to become reality - and we are only just at the start of a very frightening process in my view. The UK and many western countries are going to be much different (and diminished) places in a decade or two and it's going to be a bumpy ride getting there.

Age-old anti-semitism rears its ugly head in Europe

According to a recent survey, reported on here, a startling near one third of Europeans blame Jews for the economic slowdown and geater numbers think Jews have too much power in the business world.

In Spain, 74 per cent of respondents feel it is 'probably true' that Jews hold too much sway over the global financial markets, the highest in the survey. The survey used a sample size of 3,500, with 500 drawn from each of Austria, Britain, France, Germany, Hungary, Poland and Spain.
(thru Barcepundit (English Edition) )

Worryingly like the 1930s; whilst I think there are undoubtedly self-serving party political motives (*) for Ed Balls having made remarks about the risk of the rise of 'far-right'(*) politics in the next few years, with the recession/depression probably impacting [negatively] on politics for at least the next 10 or 15 years, it is probable that he quite simply has a point that this is what could well happen. I've thought so for quite a while myself, too.

(*) - The spectre of the rise of 'far right' politics is always raised by left-wing socialist/labour politicians when cooking-up scare stories about threats to their own voter base by parties such as the BNP; however, such fascist parties are more accurately described as 'authoritarian-left' in my view and this is why their policies tend to appeal to renegades from left-wing parties such as the Labour Party - just as with the 'black shirts' in Britain in the 1930s and of course with the 'National Socialists' of the time in Germany. This fact bears repeating every time some jackanapes socialist tries to equate extremism exclusively with 'right wing' politics.

Boris Johnson on the merits of 'Free Trade'

... and the real danger that we are sliding into protectionism, as he worries here:

What kind of British industry do the protectionists think would emerge? Some sort of crazy autarkic system in which we tried to substitute imports with home-made PlayStations and home-made shoes and brassieres once again produced in the cotton mills of Lancashire? We would not only be forcing British consumers to accept second-rate goods; we would be impoverishing them by obliging them to pay more. It is terrifying that some serious politicians – including members of the Labour Cabinet – seem prepared to support these strikes, and to side with the Luddite trades unions and the far-Right BNP. Now is the time to stick up for free trade, and the huge benefits it has brought. Remember what happened in the Thirties, when they had exactly the same instinctive and panic-stricken reaction, and a recession was turned into a slump. Remember the old truth, that when goods, people and services are not allowed to cross borders, soldiers eventually force the way. It is vital now that we complete the Doha round of world trade talks, not so much because it will liberate a great pent-up wave of trade, but because without it a signal will have been sent around the world that protectionism is winning.

- it is worth a few moments of anyone's time to read the whole article. Note particularly the date in the footnote to the article; a 'typo', or simply someone foretelling where current actions in the US (the 'Buy American Act') and in the UK (the 'British Jobs for British Workers' strikes) are likely to lead? I'm pretty sure it's the latter - an all too believable scenario, unfortunately. I don't believe that history is likely to repeat itself exactly, but there are worrying similarities to the 1930s and the sense that governments now seem to be completely losing control of the situation is a very worrying development, not masked in any way by their frenetic activity.

PS/ There is a useful article, based on the same kinds of premises, in John Redwood's blog here.

The 'headless chicken' has a mind-dump in Davos

Our Prime Minister, Gordon Brown, has revealed just how directionless, and ineffective his government's recent measures have been during his premiership; the lengthy interview in the linked article with the excellent Christiane Amanpour I'm afraid also reveals how little he understands what has happened, and why - and consequently what to do about getting ourselves out of the mess we are in.

All the political flim-flam on both sides of the Atlantic seeks to mask from electorates a simple fact; living standards are going to have to drop significantly in a number of countries, specifically those countries which have been running significant balance of payments deficits for very many years - two prime examples of this are the US and the UK, both of which at a national and individual level have been living on borrowed money for many years; both have very low levels of individual saving. All this has led to a too-rapid growth in the economies of countries such as China which, because of their traditional low labour costs and large and generally well-educated populations were able to supply the goods the consuming nations wanted; obviously the producer nations (China, India etc) were anxious to raise their own populations' standards of living and in the process these countries have built up massive savings, both nationally and individually - which they have for many years loaned to the consuming nations to fuel their purchasing binge. All based on 'confidence' that the currencies of the consuming nations would retain their values in the light of all this national borrowing to fuel consumption. Of course this could not go on for ever - eventually people began to see that the whole structure was built on nothing more than a confidence based on historic assessments, rather than realistic current valuations.

The current mantra is that markets have failed and that the 'State' must step in to put things right. This is crazily wrong! The markets have been circumvented for so long by government by over-regulation that eventually the power of the market can no longer be resisted. Brown wants to keep public spending (and taxes) high and to fuel a continuing decifit with yet more borrowing, whereas the lenders are becoming increasingly reluctant to go on funding us (the consuming countries) - just look at bond spreads to see what is happening in the underbelly of the market and how it assesses the relative strengths of various economies. The civil unrest that started a few months ago in places such as Greece and in eastern Europe has now spread to France and the UK - not to mention the tensions that are building up in places such as China where many factories have had to close because we are no longer buying.

Brown wants to keep interest rates low to 'kick-start' the economy so individuals and companies can 'afford' to borrow to keep their consumption levels up. As I've written here before this is analagous to offering a drug addict more drugs to stave off the pain of withdrawal symptoms. Short-term relief, but a lot more pain to come in the future. This is all, so we are told, to prevent deflation. How is it going to work, though, if people fear they are going to lose their jobs (and increasingly ARE losing their jobs)? Beats me! How are savers going to be encouraged to continue to save (to do their small part in propping up the financial system)? They answer is they are not.

Unless we reduce our national outgoings significantly, currently funded by high taxes and government borrowing, this problem is only going to get worse. What's going to happen to our political and social stability in a few years time when the bills for this continuing fiscal folly start to come due? Well, I think the answer will be found in the euphemistically-named 'quantitative easing', or running the printing presses for paper money much faster to increase the money supply massively - and the burden of debt will be 'magicked' away by a massive increase in inflation which in the low interest climate the government wishes to maintain will be absolutely disastrous for those who have loaned the money to fuel the party, whether domestic savers or international lenders. Expect further falls in the value of the pound in coming years, too. Social unrest? We ain't seen nuthin' yet!

Wicked, but oh so true, thoughts on spending our way out of debt

Former Presidential-hopeful Fred Thompson tries to rationalise and explain for thickos like me (and indeed himself) why continuing and accelerating past borrowing into the future, at public and private levels, is the only way to get out of the recession and to return to the sunny uplands of economic prosperity:



Still not convinced? Nor me. I didn't like some of his antedeluvian views on social matters (OK, I'll come clean, on 'gay issues'), but he sure does talk sense on economics.

(Posted here for the benefit of those, probably few, people who don't read the writings of Guido on a regualr basis. I do, and so should you. That includes most of the Cabinet who, if what he writes irritates them almost beyond endurance, need to get a life and remember this is still, marginally, a democracy.)

Far from alone

Fraser Nelson nails it; Gordon Brown has much less support in the wider international community for his catastrophic economic policies than he would have us believe. Peter Hoskins follows through with a quotation from an article in today's Independent newspaper:

"Frustration is growing among Labour backbenchers over the Government's rescue plan for the economy. Several MPs believe a VAT cut was the wrong way of spending the bulk of the fiscal stimulus package, and others fear more should have been funded through tax reforms. 'Going shopping last week I was offered a little over a pound off a £35 item," the former environment minister Michael Meacher said. "It really isn't doing anything. It seems obvious that at a time when consumers are already being offered much bigger discounts, the VAT cut will have little effect.' John Battle, the former energy minister, said: 'I always favoured injecting cash in at the bottom by boosting benefits. We should be using this money to take on poverty.' The only major redistributive tax reform introduced by the Government is a new 45 per cent tax rate on those earning more than £150,000. Disquiet on the back benches could expand to wider disapproval if it emerges that the VAT cut has failed to boost trade over Christmas."

Whilst I accept all that Peter Hoskins says, I think it needs to be borne in mind that the loss of the support of a few Labour MPs is possibly regrettable, but not disastrous for Labour (because most Labour MPs and the bulk of its core vote will probably continue to vote 'Labour' until Hell freezes over), but the more likely loss of a significant proportion of the middle classes who, unfathomably, put this shower of incompetents into power with such sizeable majorities for going on 12 years is altogether more serious. Or indeed hopeful, if the eventual restoration of some level of economic sanity in this country is what one desires to see happen - as I do.

Recent opinion polls seem to show an increase in support for Brown's failed policies, a phenomenon that I find completely inexplicable; maybe I went to sleep in May 1997 and have re-awakened in some kind of parallel universe where the normal rules of economic management and basic self-interest don't apply. Frankly that explanation makes as much sense as anything else I can come up with.

Property values to fall further, Sterling through the floor ...

... We're doooooomed...!

The head of Barclays Bank is predicting that we are perhaps only half-way through the process of house price decline, with values to fall by 30 per cent in all, according to John Varley. He also thinks that unemployment may rise to 7 or 7 and a half per cent by the end of 2009, with an additional 700,000 becoming unemployed. One hope that he is being realistic in his assessment, but my worry is that he is instead being somewhat optimistic.

As for Sterling, after a week of steep falls during which it reached an historic low against the Euro, in early hours of currency trading today the Pound has remained near it record lows against it, even if the USD is showing losses based on speculation that the US Federal Reserve may cut interest rates further, whereas there are suggestions from European Central Bank officials that the interest rate for the Euro may not drop too much further, which seems to be supporting that currency. On the other hand that 'not too much further' implies it will drop, not that it will not drop at all. In any case Yvette Cooper MP, Treasury Minister, speaking on The Andrew Marr Show yesterday stated that the main focus of the government is not to support the Pound, but to target inflation so I suspect we have not seen the floor on the value of the Pound against the Euro just yet.

Incidentally, I just posted an article in my Spanish blog today about moves by the Spanish government to support the economy there, which I'm afraid I ended on a rather apocalyptic note:

In summary, who can tell if the Spanish government's plans will prove genuinely helpful or simply prolong the agony. I'm afraid what is happening now makes me ponder again on what is said to be an ancient Chinese proverb (or curse): May you live in interesting times. It may well be that before the present economic downturn runs its course that the world will go through a period of considerable tubulence of which economic dislocation will be only a small component. I'm tempted to end this with a trite 'Have a Nice Day', but that hardly seems appropriate.

- at the least, however, I can hope that you will Go in Peace.

National Debtline for Scotland: 0808 808 4000

The Scottish Executive (aka 'Government') has set up a national debt hotline to give people who have got major financial problems, or are rapidly approaching the stage of having them, advice on how to ameliorate their situation. I don't often have much good to say about the Scottish National Party and its activities, but this is an exception; I think the aims of this project are worthy and I hope the execution lives up to these. Introducing the hotline, Deputy First Minister Nicola Sturgeon is quoted as saying:

"As the recession bites, families across Scotland are feeling the pressure financially, with increases in food prices, rising bills and mortgage and lending uncertainty all adding to the headache. "National Debtline will provide the best possible support for people with debt problems. The advice is free, confidential and independent. "The main message we want to get across is for people to take control of their debt, before it controls them. "This government will do all it can to help those in difficulty, and that's why I would urge anyone experiencing financial problems to call National Debtline."

The National Debtline number is 0808 808 4000.