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Still no plan - maybe an emergency budget?

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Paul Mason | 17:18 UK time, Wednesday, 27 August 2008

Following last night's attempt on Newsnight to recreate the brainstorm process in advance of Labour's mightily trailed economic rescue package I have been summarily informed, yet again:
1) There is no "economic plan"
2) The Treasury is working separately on both an "energy package" and a "housing package"
3) It's highly unlikely they will be launched together
4) I was reminded yet again that one option in the Crosby report on the mortgage shortage was to "do nothing"
5) Nobody has contradicted my assertion yesterday that Thursday 4 September is "pencilled in" for an economic statement, initiative or package (or against all odds a "plan"). I stand by it.

However....

... if it really is the case that any kind of economic package is to be launched by government in the first week of September (and the political timing, let me remind you, gives the PM and his allies momentum going into a TUC conference whose wheelers and dealers are far from convinced by the government's current performance) - then it follows that some departure from the norm is afoot.

We've already had, in effect, an unofficial mini budget with the U-turn on the 10p tax rate. Any solution on energy has to involve tax and spending decisions; likewise unless they are going to tinker with the housing market, any solution on housing has to address the substantive report on the matter - Crosby, which toyed with really mega solutions like government bonds to underwrite all primary mortgage issuance.

The problem here is that, although you could do some of this before any budget you can't really do it until parliament is sitting. Yet, having adopted the duvet strategy throughout August - if we're not around nobody can find fault with us - it's hard to see Gordon Brown coming to both Labour and TUC conference without something new to say on the economy.

So... deductive logic exercise:


  • Major Premise: Gordon Brown/Alistair Darling wish to make an announcements pertaining to tax and spend in September

  • Minor Premise: All tax and spend announcements have to be made with parliament sitting

  • Conclusion: There's going to be an emergency budget/PBR in September.

Discuss. (In fact, if you're an MP, discuss with your travel agent!)

Comments

  • Comment number 1.

    still no plan, eh, well that could be good news...can't we keep it that way?

  • Comment number 2.

    FOR EVIL TO BE DEFEATED IT IS SOMETIMES REQUIRED THAT WISE MEN DO NOTHING.

    At last. Perhaps some small political brain has realised that 'good men' sometimes do a lot of harm by refusing to recognise the value of the 'nothing' option. Remember Tony - "doing nothing is not an option" - Blair? That was another clue to the desperate, driven little boy inside that insubstantial, charisma-coated illusion; a little boy terrified of the pointed finger saying: "and you stood by and did nothing".

  • Comment number 3.

    ...one option in the Crosby report on the mortgage shortage was to "do nothing" ...

    because nothing can be done.

    The engine of the mortgage market was credit. That has evaporated. In the language of the markets cash used to be trash and so it was lent out. Now cash has a premium.

    So currently the mortgage market is like having a car but no petrol.

    This is the same problem in the other markets. Funds use borrowed money to trade. That money has dried up so there is no trade. Some think one or more Fund houses will fold.

    So we have forced liquidations in commodities and equities through margin calls as banks demand their money back.

    Some say if 'the money' is coming out of the markets where is it going? its going nowhere because it was credit. its just evaporated.

    The only plan the uk govt can have is to get out of the carbon energy market to prevent the daily transfer of the little disposal cash in the uk to the energy countries. They should have a 2 way grid that generates 23 billion euros and 1/4 million jobs in germany but we all know they want nuclear.

    The Govt look like dinosaurs fighting yesterdays wars with yesterdays thinking.

    this winters fuel bills will push some over the edge.

  • Comment number 4.

    If Darling needs an autumn budget, that is tantamount to admitting he got it wrong in the spring. This being the case, should he really be in post and does a political party more interested in saving theirs butts than running the country deserve to be in office?

  • Comment number 5.

    Until and unless the Treasury starts keeping proper accounts I really do not see the point! PPP/PFI is a nonsense and a huge burden on future generations - only because the Treasury wilfully does not keep its accounts in a proper manner.

    The price of oil has rocketed and the money supply is uncontrollable. No control of the money supply is no control of inflation. They keep the wrong inflation indices! What hope is there! This has kept interest rates far too low for a decade and caused our unsustainable debt bubble.

    The best they can do is to give some money to the poorest sections of society as we as a Nation do not like to see starving women and babies on the street.

    Your deduction about the timing of a budget may be a little off as you have not, I think, allowed sufficient time to get back from their holidays and get going again - my guess is after both conferences and at the normal time for the autumn statement.

    The problem is that the finance markets are so constipated that there is nothing any government can do. They have tried to apply a 'laxative' - zero interest rates (which taking into consideration inflation they are at the moment) and still there is no improvement.

    Chancellors have very little control of stimulation or depressing the economy as they are unable to increase or decrease money supply in one country at a time without exchange control. What they can do is soften the blow and that is what he should do - in the energy market - increase benefits so the poor (in and out of work) and aged do not freeze to death this winter.

    What he should absolutely not do is attempt to 'get the housing market going' as this would be disastrous. (Space is a bit limited here to examine all the ways of doing this and why all actions will be counter-productive.)

  • Comment number 6.

    All this reminds me of the President's secret plan to fight inflation....




    And let's not forget that the Bartlet regime had pretty appalling approval ratings throughout it's first year in the White House.

  • Comment number 7.

    Labour doing something is akin to rearranging the deckchairs on the Titanic.

    Labour have no plan nor any policy. They're sole rule about restricting Govt debt has imploded. So that's it. 15yrs of zero.

    Take a look at Energy policy. Ethanol was foisted on the British public, no democratic choice but forced down motorists throats, but in the month they launched their 'green fuel' policy both the UN and Greenpeace told them it wasn't green but a farce.

    Labour claimed it was "ethical and sustainable" and they'd "worked harder than any other Govt to ensure it was sustainable". Every word a lie.

    50% of the Ethanol fuel they didn't know where it came from. So Ethanol grown by slave labour or fallen off the back of a tanker in Uganda! And growing fuel drives up food prices in Third World countries.

    So these Labour losers can't be trusted running any part of this flogged bankrupt economy.

    Pster saying Labour should do nothing is about the best idea I've heard for 15yrs of this clown-show called Labour Govt!!!

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