Jan 25th 2012, 12:34 by Buttonwood
FIGURES released today show that the UK economy contracted 0.2% in the fourth quarter of 2011, with many people predicting a further decline in the current three months. That would meet the technical definition of a recession and would not be good news for the government's austerity strategy.
So what's to blame? The temptation will be to look at Europe so it's unfortunate that Germany's Ifo survey, also released today, shows the third consecutive rise. Britain may export a lot to Europe but so does Germany, which is performing a lot better.
So is it all down to cuts? The public finance numbers were published on Tuesday and showed that current expenditure in the first eight months of this year was £6.7 billion higher than in the previous financial year. Admittedly, that was down to higher interest spending and benefits; other spending was down. But, of course, in Keynesian terms, people who receive social benefits are likely to spend most of their income and thus bolster demand. In terms of closing the deficit, tax revenue seems to have contributed more; in the first eight months of the financial year, revenues were £18.1 billion higher than in the previous year, a tightening of more than 1% of GDP. It was the VAT rise that did it.
In this blog, our Buttonwood columnist grapples with the ever-changing financial markets and the motley crew who earn their living by attempting to master them. The blog is named after the 1792 agreement that regulated the informal brokerage conducted under a buttonwood tree on Wall Street.
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Blame the Queen!
http://www.larouchepac.com/files/20120129-weekly-ad-2_0.pdf
US/UK are trying to slowdown the decline of USD supremacy and City iinfluence
by a currency war against the Euro by using hedgfunds and investment banks
attacking Euro t-bonds with short selling and CDS speculation creating an
erosion of trust and confidence in institutional investors market decision in
2009. at the same time anglo media and establishments started their campaign
against Euro zone's inherent imbalances blaming Germany being the root cause
of that mess not taking crucial counter measures to solve that crisis en
plus..
anglos do not distract from your own system default! tell your people the
truth why you became weak economically because of giving up your
manufacturing base in favour of wallstreet and city business you have created
the root cause of global trade imbalances..
anglos do not camouflage you have poisoned the world with the outcomes of
your voodoo economics - an economy of growth fueled by no
underlying value creation based on credit and speculation bubbles - triggering
the debt crisis southern europe is suffering from!
anglos show some solidarity via IMF and EU contributions instead of calling
them PIGS and fourth Reich agitating your fleed of banksters against them by blocking
politically any financial market regulations which would help to extinct its
parasitic and unsocial behaviour against the value creating economies and the
working people of the world..buddies your time is up unless you change..
Hey, you forgot to blame the Euro?!
Go back to the desk and include a Euro-bashing spin that this article may fit to the TE-guideline.
Out ! Out! Damned VAT !!!!
Yep, always the VAT - and more austerity to come!
Be happy about the austerity... otherwise your country looses its rating as well. VAT is simply the wrong form of austerity, a wealth tax would be smarter and stimulate wealthy people to spend their savings.
I agree with you, 100%.
And just so you know it, I'm Portuguese, expat in London :)
I guess the WEF at Davos begins today.
DAVOS, Switzerland (AP) -- Some of the world's top CEOs are admitting that capitalism is worsening inequalities, but they say it's better than any alternative.
I trust Buttonwood will fill us in on the things that fly under the radar and don't make the general news.
Regards
This coincides with a rapid fall in bank to business lending in Q4 (the worst quarter of the credit crunch yet).
In that context, and given public sector retrenchment and weak global markets, 0.2% contraction is an awesome result. With such strong headwinds, the only reason the economy hasn't completely folded is that it's already so far below potential (2nd order effects).
Consumption might be weak, exports unimpressive and government contractionary; but by far the biggest drag comes from collapsing business investment.
And for bank tightening, we can only blame accumulated bad debts from the years of exuberance, and institutions which refuse to make proper write downs/ go bankrupt/ impose proper losses on the rich people that invested badly.
On current trends, finance will get worse over the next 2 years (though 2nd order effects - underlying factor productivity growth - will mean flat rather than rapidly falling GDP).
It's rapid and accelerating deleveraging what done it!
Error bars ? Revisions ?
Please use the expression "uncertainties" , or perhaps margin of uncertainty, rather than "error bars".
Money has been made from strange things - wood, leather, tobacco leaves, salt, ceramic tiles and a wide variety of other materials. This reflects money's origin as a token of debt, an agreement to pay based on trust in the issuer of the coin - as opposed to the inherent worth of the coin. Even coins made of gold or silver would usually trade at a premium to the value of the metal – reflecting trust in the strength of the king/money-redeemer who issued the coin: "Within the Roman empire, a silver coin stamped with the image of Tiberius might have circulated at a value considerably higher than the value of the silver it contained. Ancient coins invariably circulated at a value higher than their metal
content. ...But this there was a fear of the Creator and we were afraid to steal or waive off the debts without the owner. Gone are those day. Now it is dog eat dog world. Well it mentioned inflation falling, wonder where that little gem came from, because all the prices for my food, clothes, and heating are getting higher each week. My wages are frozen this year so I will not be helping to stimulate the economy any time in the near future. A THOUGHT FOR TODAY:
In this world, you must be a bit too kind to be kind enough. -Pierre Carlet de Chamblain de Marivaux, dramatist and novelist (1688-1763) .I thank you Firozali A.Mulla DBA