Recession now

Bankers played a leading role in the crisis, but they aren't criminals

noreply@blogger.com (Seashorepics) — Sun, 6 Mar 2011 09:24:00 -0800

Inside Job director Charles Ferguson caused a stir with his Oscar speech, but his suggestion that people should be jailed over the financial meltdown is simplistic
It was an easy line for an eager crowd. Picking up an Oscar for his scattergun credit crunch documentary Inside Job, director Charles Ferguson got a cheer from Hollywood's finest for a rant about the absence of prison time handed down to Wall Street banking bosses.

"Forgive me," Ferguson told his fellow movie-making luminaries. "But I must start by pointing out that three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail. And that's wrong."

The baldness of his sentiment, widely shared by the public on both sides of the Atlantic, has caused a stir in the financial community. Interviewed afterwards by the Wall Street Journal, Ferguson expanded on his theme, declaring that "there should be dozens or even perhaps hundreds of senior financial executives in prison now".

Unfortunately, it's just not that simple. Ferguson's remarks are in tune with his entertaining, polemical film, which contains interviews with financial players ranging from George Soros to Christine Lagarde, Nouriel Roubini and Eliot Spitzer. Using the briefest of quotable snippets from each, the documentary builds a crude argument that the global financial meltdown was a conscious "inside job" caused by greedy, ruthless, mendacious, out-of-control bankers.

But responsibility for the global debacle is as diffuse as liability for the typical sub-prime mortgage derivative – it can be sliced, diced and attributed to recklessly overstretched homebuyers, sly on-the-ground mortgage salespeople, flawed credit rating agencies and blind regulators as well as avaricious, bonus-hungry bankers.

Much as we might like to see some big names doing porridge, prosecutors have struggled to build convincing cases of willful lawlessness. In the US, the department of justice thought it had struck gold with a string of emails sent by two Bear Stearns hedge fund managers – Ralph Cioffi and Matthew Tannin – who privately worried that the sub-prime market was "pretty damn ugly" and "toast" while telling clients that everything was sunny. Their funds, which had investments of $20bn, collapsed, contributing to the subsequent demise of Bear Stearns in its entirety.

But during a trial in Brooklyn in late 2009, a jury decided that private expressions of self-doubt didn't amount to criminal fraud. That acquittal seems to have put paid to efforts to lay charges elsewhere on Wall Street – including the top brass at defunct Lehman Brothers.

In Britain, the RBS chief Fred "The Shred" Goodwin escaped sanction from the Financial Services Authority despite driving the bank into the ground. Although the FSA is yet to publish its findings in full, the authorities clearly felt that dreadful misjudgments and foolish lending policies didn't amount to criminality. Simon Bevan, an expert in fraud investigation at accountancy firm BDO, says: "There are many degrees of recklessness that may be reprehensible but aren't dishonest."

A 545-page tome landed on my desk last week: the full text of the US Financial Crisis Inquiry Commission's findings. This bit of bedside reading concludes that the credit crunch was down to "human mistakes, misjudgments and misdeeds that resulted in systemic failures". It adds: "A crisis of this magnitude cannot be the work of a few bad actors."

Demanding imprisonment isn't the answer to this fiasco. Neither is it particularly constructive. However frustrating it may seem, we can't invent laws retrospectively to snare our chosen villains. But what remains so desperately disappointing is the lack of remorse shown by those who made such errors – and the failure of the government to implement lasting reforms. The head of America's biggest sub-prime lender, Angelo Mozilo, still thinks his business was "one of the greatest companies in the history of this country", responsible for delivering dream homes to thousands.

The Bank of England's governor, Mervyn King, declared last week that he was surprised that public outrage over bankers' failures had not been greater. On the single issue that most enrages the public – bankers' bonuses – there's been precious little reform, with the government crumbling in the face of threats by institutions to shift investment elsewhere in the world. But, encouragingly, Sir John Vickers's independent commission on banking is showing signs of backbone. Its members are said to have threatened resignation when George Osborne suggested he might take a break-up of banks off the table during the Project Merlin peace talks with the City. We could yet see some radical action.

As to whether the crisis was truly an inside job, Ferguson's own documentary cites a remark during the boom years by Citigroup's former boss, Chuck Prince: "We have to dance until the music stops." As George Soros subsequently pointed out, unbeknown to Citigroup, the music had already stopped.

If Clive can't survive, HMV has little hope

Sad tidings for music lovers in the Shetlands. The islands' main independent music store, Clive's Record Shop, has been put up for sale. Joint owner Clive Munro has decided that "the shop, as it stands, is no longer viable". Digital downloads, together with an expansion of the local Tesco store, are to blame. One local customer, on Clive's Facebook page, expresses regret: "I love comin in fir a yarn and a nosey aboot fir stuff."

Clive's shop isn't alone. HMV has sounded its second profits warning in as many months and is expecting to breach its banking covenants.

Since the demise of Zavvi at the end of 2009, HMV has been the only remaining nationwide high-street music chain. And if the last man standing can't make a decent return, music on the high street is surely not much longer for this world.

We'll end up trying to explain to our children that there were actual shops that sold physical discs loaded with musical recordings – as anachronistic as a blacksmith's forge or a wooden abacus.

To us, it's an obscure shift of tax law. To the City, it's the heist of the century.

noreply@blogger.com (Seashorepics) — Sun, 13 Feb 2011 01:34:00 -0800

In David Cameron we have a leader whose job is to quietly legitimise a semi-criminal, money-laundering economy

'I would love to see tax reductions," David Cameron told the Sunday Telegraph at the weekend, "but when you're borrowing 11% of your GDP, it's not possible to make significant net tax cuts. It just isn't." Oh no? Then how come he's planning the biggest and crudest corporate tax cut in living memory?

If you've heard nothing of it, you're in good company. The obscure adjustments the government is planning to the tax acts of 1988 and 2009 have been missed by almost everyone – and are, anyway, almost impossible to understand without expert help. But as soon as you grasp the implications, you realise that a kind of corporate coup d'etat is taking place.

Like the dismantling of the NHS and the sale of public forests, no one voted for this measure, as it wasn't in the manifestos. While Cameron insists that he occupies the centre ground of British politics, that he shares our burdens and feels our pain, he has quietly been plotting with banks and businesses to engineer the greatest transfer of wealth from the poor and middle to the ultra-rich that this country has seen in a century. The latest heist has been explained to me by the former tax inspector, now a Private Eye journalist, Richard Brooks and current senior tax staff who can't be named. Here's how it works.

At the moment tax law ensures that companies based here, with branches in other countries, don't get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country. If, for example, Dirty Oil plc pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match our rate of 28%. But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches.

Foreign means anywhere. If these proposals go ahead, the UK will be only the second country in the world to allow money that has passed through tax havens to remain untaxed when it gets here. The other is Switzerland. The exemption applies solely to "large and medium companies": it is not available for smaller firms. The government says it expects "large financial services companies to make the greatest use of the exemption regime". The main beneficiaries, in other words, will be the banks.

But that's not the end of it. While big business will be exempt from tax on its foreign branch earnings, it will, amazingly, still be able to claim the expense of funding its foreign branches against tax it pays in the UK. No other country does this. The new measures will, as we already know, accompany a rapid reduction in the official rate of corporation tax: from 28% to 24% by 2014. This, a Treasury minister has boasted, will be the lowest rate "of any major western economy". By the time this government is done, we'll be lucky if the banks and corporations pay anything at all. In the Sunday Telegraph, David Cameron said: "What I want is tax revenue from the banks into the exchequer, so we can help rebuild this economy." He's doing just the opposite.

These measures will drain not only wealth but also jobs from the UK. The new legislation will create a powerful incentive to shift business out of this country and into nations with lower corporate tax rates. Any UK business that doesn't outsource its staff or funnel its earnings through a tax haven will find itself with an extra competitive disadvantage. The new rules also threaten to degrade the tax base everywhere, as companies with headquarters in other countries will demand similar measures from their own governments.

So how did this happen? You don't have to look far to find out. Almost all the members of the seven committees the government set up "to provide strategic oversight of the development of corporate tax policy" are corporate executives. Among them are representatives of Vodafone, Tesco, BP, British American Tobacco and several of the major banks: HSBC, Santander, Standard Chartered, Citigroup, Schroders, RBS and Barclays.

I used to think of such processes as regulatory capture: government agencies being taken over by the companies they were supposed to restrain. But I've just read Nicholas Shaxson's Treasure Islands – perhaps the most important book published in the UK so far this year – and now I'm not so sure. Shaxson shows how the world's tax havens have not, as the OECD claims, been eliminated, but legitimised; how the City of London is itself a giant tax haven, which passes much of its business through its subsidiary havens in British dependencies, overseas territories and former colonies; how its operations mesh with and are often indistinguishable from the laundering of the proceeds of crime; and how the Corporation of the City of London in effect dictates to the government, while remaining exempt from democratic control. If Hosni Mubarak has passed his alleged $70bn through British banks, the Egyptians won't see a piastre of it.

Reading Treasure Islands, I have realised that injustice of the kind described in this column is no perversion of the system; it is the system. Tony Blair came to power after assuring the City of his benign intentions. He then deregulated it and cut its taxes. Cameron didn't have to assure it of anything: his party exists to turn its demands into public policy. Our ministers are not public servants. They work for the people who fund their parties, run the banks and own the newspapers, shielding them from their obligations to society, insulating them from democratic challenge.

Our political system protects and enriches a fantastically wealthy elite, much of whose money is, as a result of their interesting tax and transfer arrangements, in effect stolen from poorer countries, and poorer citizens of their own countries. Ours is a semi-criminal money-laundering economy, legitimised by the pomp of the lord mayor's show and multiple layers of defence in government. Politically irrelevant, economically invisible, the rest of us inhabit the margins of the system. Governments ensure that we are thrown enough scraps to keep us quiet, while the ultra-rich get on with the serious business of looting the global economy and crushing attempts to hold them to account.

And this government? It has learned the lesson that Thatcher never grasped. If you want to turn this country into another Mexico, where the ruling elite wallows in unimaginable, state-facilitated wealth while the rest can go to hell, you don't declare war on society, you don't lambast single mothers or refuse to apologise for Bloody Sunday. You assuage, reassure, conciliate, emote. Then you shaft us.

• A fully referenced version of this article can be found on George Monbiot's website

Sourced from The Guardian

10 Ways to Save Money Now

noreply@blogger.com (Seashorepics) — Sun, 13 Feb 2011 00:20:00 -0800

10 ways to save money

1. Learn to cook your own food: Now I know this may sound daunting, and I know everyone things cooking takes hours. Simple look in a cook book or even better on the internet and cook nice simple food. Pasta (buy dried or fresh) is always a good starting point. Preparing food in larger quantities saves money in the long run. You’ll have to spend a day or two cooking for the month, but you’ll save both money and time over the course of the month by having all your meal prepared and frozen.

2. Write a shopping list: Monthly food shopping forms a significant part of the a house holds outgoing. Write a shopping list prior to shopping - also very importantly NEVER shop when you are hungry. Always plan your weekly meals and most importantly look at what you are buying, don't think that the 2 for 1 is cheaper, the individual KG or 100g prices could be significantly more.

3. Use a market: Not only can you buy much healthier food, but it is also much cheaper. The cost of most fruit and veg in the supermarket starts from £1.50 but at your local market get a whole bowl of fruit or veg for only £1. Also don't forget you are also supporting a smaller local company.

4. Consider own brand products: If you don't have access to a market, buy supermarket own brand food. Tin tomatoes cost 33p across all supermarkets.

5. Set up a direct debit : Set up direct debts for all your bills and other out goings to avoid charges.

6. Use Skype or other internet service: The best choice for long distance calls with family and friends. The quality is amazing, it’s like they’re in the next room. Also with Skype you can text each other instantly over the net.

7. Don’t play the lottery: Your chance of winning is extremely small. Save that money.

8. Never impulse buy: If you see something you like - wait a couple of weeks, if your want it or even remember it then maybe reconsider buying it.

9. Cut down your drinking: A few beers after work a few nights a week is a financially debilitating state of affairs. Set limits and stick to them or buy a beer making kit and make it at home.

10. Wear more layers: In cool or cold seasons keep thermostat 68 or lower and wear more layers in the house to save on heating bills.

Sourced from Recession2009

NHS faces more cuts to avoid £10bn shortfall, report warns

noreply@blogger.com (Seashorepics) — Mon, 27 Dec 2010 01:59:00 -0800

Exclusive: Leaked Whitehall document says cancer research and social care could be hit

Health secretary Andrew Lansley has come under pressure from David Cameron to prove he can deliver his NHS reforms. Photograph: Lewis Whyld/PA

A "complacent" Department of Health will face an annual £10bn shortfall unless it speeds up efficiency savings across the NHS and considers cuts to social care and cancer research charities, according to a secret Whitehall report leaked to the Guardian.

The damning report warns that ministers will face an "unpalatable trade-off" between longer waiting times or a massive increase in the NHS budget unless dramatic savings are found.

It also warns that the central reform proposed by health secretary Andrew Lansley – to devolve 80% of the NHS budget to GPs – could have "patchy" results.

The findings are outlined in a blunt letter to Danny Alexander, the Treasury chief secretary, from the Independent Challenge Group, which was set up at the time of the budget in June to question Whitehall thinking.

The letter, leaked as David Cameron expresses private concerns at Lansley's failure to drive reforms, quotes a senior Department of Health official outlining the scale of the challenge. The proposed changes are "greater and more rapid than those achieved in any national health service in any country in the past," the official said. But the group showed impatience with the department when it warned:

• Proposed savings under the Quality, Innovation, Productivity and Prevention (QIPP) programme "may not be achievable". This is due to account for the bulk of the £16bn annual efficiency savings the department needs to make by 2014-15.

• The benefits from the transference of spending powers to GPs will be variable. The letter says: "We fear that the results will be patchy with some commissioning consortia performing very well, but others performing poorly, again reducing the pace of overall cost benefit realisation."

• Ministers will have to consider "even greater" cuts to the social care budget than a so far unannounced £3.4bn in service cuts because £2.2bn of efficiency savings "must be in doubt".

• The NHS cannot afford to spend up to £200m a year supporting research by big charities such as Cancer Research UK.

• The government should scrap the "very bad policy" of employing all doctors when they graduate.

The letter says the costs of meeting the current level of demand for healthcare will rise from £100bn to around £115bn a year by 2014-15. But a combination of new policies and an ageing population will increase that to £126bn a year. With the budget due to rise at least in line with inflation to roughly £110bn a year, efficiency savings of £16bn a year will be needed. The reforms are expected to bring £6bn of savings, leaving a £10bn shortfall.

In its letter, the Independent Challenge Group warns: "We believe that the projected level of QIPP savings may not be achievable. We also have concerns about the costs of the switch from PCT [primary care trusts] to GP commissioning; and the pace at which the associated benefits will be achieved; and about the impact on NHS costs of the planned cuts to the social care budget – which DH only intends to add to its submission once the funding gap is clear … Taken together, the NHS could therefore face a significant budget shortfall by the end of the SP [spending period].

"The NHS typically deals with such shortfalls by limiting treatments, leading to increased waiting times. The government will be faced with a choice between dealing with the fallout from increased waiting times or increasing the DH budget, perhaps by as much as £10bn a year. To avoid this unpalatable trade-off, the DH settlement needs to build in much greater non-QIPP efficiency savings from the outset."

The letter has been leaked as Lansley faces intense pressure to prove that he can deliver his reforms to transfer commissioning powers to GPs. Cameron recently spoke to Lansley to push him on his planned efficiency savings, and coalition policy chief Oliver Letwin has been tasked with examining Lansley's plans to shift power to GPs.

Cabinet Office sources voiced concerns about a "complacent" attitude in the Department of Health towards QIPP, introduced by the last government, which could jeopardise Lansley's GP reforms.

A source said: "Ministers are very worried that the Department of Health does not seem to be taking it seriously. The risk is that if there is a cash problem in the NHS it will be blamed on Andrew Lansley's reforms, when actually the problem is a lack of will on efficiency savings."

The Independent Challenge Group makes clear that ministers will have to consider tough savings, including in social care, because of varying levels of efficiencies among local authorities. "Even the planned £2.2bn of efficiency savings must be in doubt, leading to fears of even greater service cuts," the letter says.

The letter was written on 7 September by the former APAX chief investment officer Adrian Beecroft, the chief executive of the Legal Services Commission, Carolyn Downs, and the director of climate change adaptation at the Department of Energy and Climate Change, Robin Mortimer.

A Department of Health spokesperson said: "The independent challenge group was established as part of the spending review process. The points raised by the group were considered as part of the spending review process. Its work has now concluded. We consulted on our reforms and received a huge number of responses: over 6,000. These have helped us to refine our plans. We have responded to concerns around implementation and are testing several areas of reform to make sure we have the best arrangements in place.

"GP pathfinders are already leading the way to making our reforms a reality, with 52 of them taking on commissioning responsibilities and testing consortia arrangements. More will follow. They demonstrate the level of enthusiasm in the system for taking these ideas forward. Many GPs are ready and willing to take on commissioning responsibilities so that they can improve services to better reflect the needs of local communities."

John Healey, the shadow health secretary, said: "This document is extra evidence that the high-risk, high-cost reorganisation Andrew Lansley is forcing on the NHS is a massive distraction from improving patient care and making the sound efficiency savings Labour previously planned.

"It also confirms concerns that the health secretary is running a rogue department and operating in isolation from his ministerial colleagues. For the sake of patients and the future of healthcare, David Cameron needs to get a grip on his government's NHS plans."

Sourced from The Guardian

FTSE 100 ends above 6,000 for first time since mid-2008The FTSE 100 index has closed above 6,000 points for the first time since June 2008.

noreply@blogger.com (Seashorepics) — Sun, 26 Dec 2010 02:10:00 -0800

Continue reading the main story FTSE 100 Index

Last Updated at 24 Dec 2010, 12:36

*Chart shows local time

value change %

6008.92 +

+12.85 +

+0.21

Top winner and loser

Resolution Ltd.
239.50 p + +4.70 + +2.00

Randgold Resources Ltd.
5265.00 p - -235.00 - -4.27

The index of blue chip shares broke through the symbolic mark to finish up 12.85 points, or 0.2%, at 6008.92.

A late rally in retail stocks helped the index as investors bet on a late surge in consumers' Christmas spending.

However one analyst forecast that there would be a correction in share prices after an overly-strong rise in December.

Giles Watts, head of equities at City Index, added that the lack of trading volume meant that Friday's rally was built on "hot air".

The index has risen 8% so far this December, its strongest for the month since 1987.

With its move above 6,000 points, some observers are claiming London has regained a poise not seen since before the collapse of Lehman Brothers in September 2008, which caused turmoil on world markets.

The FTSE 100 is up 10.8% on the year, with several bullish market analysts predicting that the index may end 2011 between 6,600 and 6,900.

On Friday, Marks & Spencer, Next, B&Q parent Kingfisher, and supermarket giant Tesco were all in strong demand.

And troubled sports retailer JJB Sports added 22.6% after saying it hoped to raise more than £31.5m in a share sale.

Friday's FTSE close is the fourth straight weekly advance.

"The prolonged Santa rally has left the market looking strong ahead of the holidays and there is still the potential for further gains before the end of the year," said David Jones, equity strategist at IG Index.

France's Cac 40 index slipped 0.3% to 3,900.4, but there was no trading in Germany where on Thursday the Dax index had slipped 0.2% to 7,057.7.

Sourced from The BBC

Euro and shares rise after Irish rescue deal

noreply@blogger.com (Seashorepics) — Mon, 22 Nov 2010 01:04:00 -0800

European shares and the euro have both risen in value, as markets welcomed the bail-out for the Irish Republic.

Following Sunday's deal, the UK's FTSE index was up 0.8%, while Germany's Dax had added 0.7%, and the euro strengthened to $1.376.

The exact amount and terms of the European Union-led package will be negotiated in the coming days.

Irish Finance Minister Brian Lenihan said his government would be getting less than 100bn euros ($136bn; £85bn).

The UK and Sweden have also offered direct loans.

The crisis in the Irish Republic has been brought on by the recession and the almost total collapse of the country's banks, analysts say.

Once known as the Celtic Tiger for its strong economic growth - helped by low corporate tax rates - a property bubble burst, leaving the country's banks with huge liabilities and pushing up the cost of borrowing for them and the government.

Smaller banks

The Irish Prime Minister, Brian Cowen, said the government would be publishing a four-year budget plan that would restructure the banking industry.

EU Finance Commissioner Olli Rehn, speaking in Brussels, said the loans would be provided to the Republic over a three-year period and the assistance would help preserve the stability of the eurozone - the group of 16 nations using the euro as their common currency.
The Reuters news agency quoted senior EU sources as saying the loans would total 80-90bn euros.

Mr Cowen said the Irish Republic's banks would be made smaller, as part of a restructuring of the banking industry.

The other part of the bail-out package would help to reduce the government's budget deficit to a target of 3% of GDP by 2014, Mr Lenihan said.

Under the bail-out scheme, income tax will increase but the country's low 12.5% corporation tax - controversial for some other countries but "non-negotiable" for the Irish government - will not be touched.

It is a sign of the crisis facing the Irish Republic and some of the other highly-indebted European nations that the rescue plan had to be announced late on Sunday, before the financial markets opened on Monday, without many important details having been worked out, says BBC Europe correspondent Jonty Bloom.

Announcing the bail-out on Sunday, Mr Cowen appealed for public solidarity.

"To the Irish people I say simply this: We should not underestimate the scale of our economic problems, but we must have faith in our ability as a people to recover and prosper once more," he said.

"The task of rebuilding our economy falls to our own efforts as a people," he told a news conference following a cabinet meeting on the rescue plan.

"That is where the focus of our efforts must turn over coming weeks, beginning with the four-year plan and then the budget. And now we need to show the solidarity in our own country that our neighbours have shown to us at this time."

Although the country's government claims to be fully funded until the middle of next year, it has provided a blanket guarantee to the Irish banks, some of whom are now finding it impossible to borrow money in the markets.

On Thursday, Mr Cowen's government admitted for the first time that it may need outside help.

Previously the government had said it did not need any financial support from the European Union and IMF.

Portugal concerns

Some EU officials fear the Republic's financial problems might spread to other eurozone countries with large budget deficits, particularly Portugal.

BBC business editor Robert Peston said "it would be a very foolish individual" who predicted that the Irish bail-out was "the solution to all of the eurozone's problems".

He added: "The reality is that Portugal also has excessive debt, although not to the same scale as Ireland.

"But Portugal also has real structural problems that they will struggle to get through on their own."

Our business editor added that the EU still had sufficient funds to bail-out Portugal, but that it would then leave other nations such as Spain and Italy to "muddle through on their own".

The EU and the IMF launched a 110bn euro rescue programme for Greece in May after the government was faced with the prospect of bankruptcy.

Big government spending cuts sent large numbers of Greeks onto the streets in protest.

Sourced from The BBC

Tory MP Liddell-Grainger fears benefit tax 'disaster'

noreply@blogger.com (Seashorepics) — Sat, 9 Oct 2010 10:08:00 -0700

A Tory MP has warned the effects on the tax system because of the changes to child benefit are a "disaster waiting to happen".

Ian Liddell-Grainger, the Parliamentary All Party Tax Group chairman said the tax authorities would not cope.

If a claimant or their partner earns more than £44,000 a year, the benefit will be lost under the plans.

But if taxpayers will continue claiming the benefit, this will then be clawed back through extra tax.
Some of the people who pay tax through Pay-As-You-Earn (PAYE) will continue claiming the benefit, which will then be reclaimed by HM Revenue & Customs (HMRC) through extra tax from them or their partner.

The government said most families would not be affected by the changes.

Mr Liddell-Grainger said: "It'll be a shambles, it'll collapse. What will happen is parents won't get the money they need. Other parents will get money that they don't need. The thing will fall between two stools.

"Everybody will turn round and blame the HMRC as we have just seen in the last few months and we'll have a complete pig's ear."

Unanswered questions

Chas Roy-Chowdhury, from the Association of Certified Chartered Accountants, said the problems would be compounded because there were too many unanswered questions.

"Clearly, where people aren't sure what they need to do there could be requirements to contact the call centres. Mistakes will have to be ironed out where HMRC has the wrong information.

"Is it going to be based on gross income before things like pension payments? Is it going to include things like benefits in kind, such as company cars or medical benefits? What is it that's going to be taxed? And I think the threshold itself is a bit ambiguous and it's clearly not been thought through properly yet."

Sarah Jackson, chief executive of the charity, Working Families, said it should be fairly simple, involving HMRC changing the tax code for people affected.

"If you're getting child benefit, keep claiming it - it's really important to keep claiming it. Especially if you're a woman who's staying at home to look after your children, your pension in later life depends on your child benefit status. You get pension credits if you're not working and it's really important to keep those going," she advised.

A spokesman for the Treasury said: "Withdrawing child benefit from households with a higher rate taxpayer can be done within the existing PAYE and self-assessment systems... the majority of families will be unaffected by this policy therefore insuring that the most vulnerable households on low incomes will not have their claims interrupted."

Sourced from The BBC

Wall Street giant Goldman Sachs fined £20m by UK's FSA

noreply@blogger.com (Seashorepics) — Thu, 9 Sep 2010 00:53:00 -0700

Wall Street giant Goldman Sachs has been fined £20m ($31m) by the UK City regulator, the Financial Services Authority, the BBC has learned

The fine is for failing to tell the FSA it was under investigation for fraud by the US financial watchdog this summer.

In July, Goldman settled the fraud charge with the Securities and Exchange Commission by paying $550m (£356m).

The £20m is one of the heaviest fines ever imposed by the FSA, said the BBC's business editor Robert Peston.

Both the FSA and Goldman Sachs declined to comment on the fine.

Goldman agreed to pay the US fine to settle civil fraud charges of misleading investors.

The charges concerned the bank's marketing of complex mortgage investments, just as the US housing market faltered.

The FSA said Goldman also did not tell them that Fabrice Tourre, the trader who helped to create these mortgage derivatives, was under investigation.

This it said was particularly relevant as Mr Tourre moved from the US to London, and therefore came under the auspices of the UK regulator.

Goldman has admitted that it made a mistake, our correspondent added.

Heavy losses

In April, the SEC charged Goldman with failing to disclose "vital information" that one of its clients, Paulson & Co, helped to choose which securities were packaged into a mortgage portfolio that was then sold to investors in 2007.

It claimed Goldman did not disclose that Paulson, one of the world's largest hedge funds, had bet that the value of the securities would fall.

The SEC alleged that investors in the mortgage securities, packaged into a vehicle called Abacus, lost more than $1bn (£646m) in the US housing market collapse.

In paying the SEC fine, Goldman did not admit legal wrongdoing but acknowledged that its marketing material for Abacus contained "incomplete information".

Many commentators felt at the time that the bank got off lightly.

The bank made a profit of $3.5bn in the first three months of this year, but saw its profits slump to $613m between April and June.

This was due to a drop in trading revenues, the $550m fine and a $600m hit from the bonus tax in the UK.

Despite the fall in profits and the fraud charges, Goldman Sachs is still considered by many to be world's preeminent investment bank.

sourced from the BBC

Despair at the coalition government

noreply@blogger.com (Seashorepics) — Sat, 10 Jul 2010 01:15:00 -0700

So we have now had this coalition government in power for just over a month, and the true out dated Tory views are coming to light again.

As the Health Secretary Andrew Lansley says that we should give children a choose for school dinner, why do the Tory's have this idea that 'choose' is good. Would you let your 6 year child choose what to have for dinner at home, I guess the answer is no, so why let them choose at school. And for the government to say that feeding our children at school is not a matter for the government just says it all about this coalition government. I believe that Jamie Oliver was correct to try and deal with the situation.
When I was at school we had school dinners, we would never dream of going of going out to near by shops,

IMF raises global economic growth forecast

noreply@blogger.com (Seashorepics) — Thu, 8 Jul 2010 02:51:00 -0700

The International Monetary Fund (IMF) has raised its forecast for global economic growth this year, from 4% to 4.5%.

It said the world economy grew strongly in the first part of this year, mainly due to robust growth in Asia.

Developed economies maintained a modest but steady recovery in the same period.

But it warned risks had increased and there had been a setback in progress towards financial stability.

Debt concerns
Concerns over the sustainability of government finances in the developed world, especially Greece and others in Europe, were the major threat to global recovery the agency argued.

It said governments should focus on improving their finances, but warned them not to make cutbacks too rapidly.

In recent weeks, a number of governments have introduced austerity measures to cut deficit levels.

The IMF said that European banks in particular were being affected by the concerns about government debt and so were less wiling to lend to each other. Less credit available to the wider economy could undermine the recovery, it argued.

Although contagion to other regions of the world was likely to be limited, there was a risk that Europe's troubles could have a more substantial impact on global economic growth, it said.

Sourced from The BBC

UK economy continues to grow, says BCC

noreply@blogger.com (Seashorepics) — Tue, 6 Jul 2010 02:38:00 -0700

The UK economy continued to grow in the second quarter of this year, according to a survey by the British Chambers of Commerce (BCC).

The organisation, which collected data from 5,600 businesses across the country, predicted growth for the three months to the end of June of between 0.6% and 0.7%.

However, serious concerns over sustained recovery remained, it warned.

It found that the service sector presented the biggest worry.

The BCC's members reported sluggish growth in retail and services, which account for around three quarters of the country's gross domestic product.

Another, more tangible problem was the rising cost of raw materials, cited by 80% of its manufacturing members as putting pressure on prices.

Set against that, manufacturing export sales rose to their highest level in almost four years, largely thanks to what the BCC called a "more competitive exchange rate".

Employment also rose within the manufacturing sector.

David Frost, the director general of the BCC, said: "With very austere times ahead, no one should kid themselves into thinking that the UK's economic recovery is totally secure."

The survey comes two days before the Bank of England's Monetary Policy Committee, which is responsible for setting interest rates, is due to give its latest decision on what they should be.

Sourced from The BBC

Born Again Thatcherites are preaching fiscal austerity to the unconverted

noreply@blogger.com (Seashorepics) — Sun, 4 Jul 2010 02:47:00 -0700

George Osborne's dedication to fiscal masochism is overlooking the markets' worries about growth.

As the Conservative-Liberal Democrat coalition embarks on Margaret Thatcher's Economic Experiment Part Two, and Lloyd George, Roy Jenkins and the departed members of the generation of "wet" Conservatives turn in their graves, I am occasionally asked whether I regret having been so hostile to Thatcherism, Mark One. The answer remains a resounding "no".

When the subject was raised the other evening, there came to mind a conversation I had with a former cabinet minister after the fall of Thatcher in 1990. He was a senior figure, and certainly not in the wet bracket with my friends Ian Gilmour, Peter Walker and Jim Prior. "She must be suffering," I ventured. My interlocutor stared hard at his lunch and picked up his glass. "Yes," he replied, "but is she suffering enough?"

This particular politician had once been a believer but was horrified by the extent of the social damage. It had not been as easy as he thought to reform the public sector without pain; and the simple monetarism he had espoused turned out to be seriously flawed. Now, it appears, it is a case of "here we go again", with our new chancellor congratulating himself in public for "taking the necessary courageous action".
Whatever one's view of the prospect of Born Again Thatcherism, you have to hand it to this lot for their consummate propaganda skills. The way in which they have transformed the public debate from discussing whether there should be such a savage attack on public spending as to how it should be conducted makes New Labour's spin doctors look like raw amateurs.

The pretext for Thatcherism Mark One was the threat of accelerating inflation in 1979/80. The acceleration in inflation was assisted in no small way by some injudicious decisions taken by the Thatcherites, decisions that served to embed an inflationary shock emanating from the second oil crisis. This time the pretext is the fiscal deficit, the significance of which our new government has been grossly, and irresponsibly, exaggerating.

Last week, I pointed out how minor the public debt "crisis" of today appears when compared with the situation that faced chancellor Neville Chamberlain when he introduced his deflationary budget of 1932. Chamberlain, and the "Treasury View" that lay behind his budget strategy, have rightly been castigated by economic historians for that deflationary approach. Yet the debt problem facing our strange coalition is hardly on the same scale.

Prosecuted

The figures are worth repeating: the latest budget red book puts UK debt at 61.9% of gross domestic product in 2010/11 (against 177% in 1932) and debt interest at 6.3% of total public expenditure in 2010/11 (against 40% in 1932).

And the invaluable annual report of the Bank for International Settlements (the "central bankers' bank", based in Basle) contains some impressive charts and tables that suggest our new prime minister and chancellor, along with their Lib Dem collaborators, should be prosecuted under the Trade Descriptions Act for distorting the scale of our fiscal problems.

I give you chapter and verse: on page 68 (Part V) you will find that Britain is top of the league when it comes to the length of time before its debt has to be refinanced. The "average maturity" of the UK's debt is 14 years; by comparison, other leading industrial countries, including the US and Germany, have maturities of under 9 years. This is not to say there is anything wrong with the US or German position – few can gainsay the fiscal rectitude of the Germans; and the US, whatever its fiscal problems, remains the pre-eminent reserve currency. But it shows how hysterical the debate in Britain has become.

Again, on the same page, the BIS report contains a graph comparing different countries' dependence on overseas finance. "Non-residents" hold approximately 70% of Greek government debt, just under 50% of US government debt, and below 30% of UK government debt.

We need to aim to balance the books in due course, and former chancellor Alistair Darling set out a perfectly reasonable plan for gradual reduction in a manner that was designed not to harm our economic growth prospects. I say "perfectly reasonable", though I was concerned that even Darling's plan was taking risks with the recovery; how much more so when it comes to Thatcherism Mark Two.

While Osborne has been fomenting fears of how the markets might react to insufficient austerity, the theme of the market reports last week – following the commitment to fiscal masochism that emerged from the G20 meeting at the weekend – was that those financial markets that brought us the crisis and then called for austerity are now concerned about the effect this might have on economic growth – and hence on those budget deficits they seek to reduce!

The US government was the lone voice in the crowd in Toronto – where, in my view, the Canadians offended against the rules of hospitality by being so keen to preach austerity for others. When Canada combined belt-tightening with growth some years ago, they had the advantage that the US economy, to which Canada is largely an appendage, was booming. The message now is of slowdown in the US and China, and renewed fears of a double-dip recession. Thus, at the annual meeting of the Society of Business Economists in London last week, Trevor Greetham, asset allocation director of Fidelity International, said in no uncertain terms: "The best tonic for deficit reduction is growth – it is a misreading of the situation that people want to see more aggressive fiscal tightening."

By the way: the phrase "double dip" implies delayed recovery. The nightmare would be prolonged stagnation as a result of misguided fiscal tightening.

Sourced from The Guardian

Departments told to draw up plans for 40% spending cuts

noreply@blogger.com (Seashorepics) — Sun, 4 Jul 2010 02:08:00 -0700

The Treasury has told most government departments to prepare "illustrative plans" to cut spending by 40% - as well as the expected 25% - within the month.

Education and defence have been given some protection, and must produce plans to cut 10% and 20%. International aid and health budgets are being protected.

The full 40% plans are unlikely to be implemented but will inform future decisions on cuts, the BBC understands.

Labour says the news will raise fears about the future of frontline services.

'Swingeing cuts'

The government says cuts are needed to reduce the UK's £156bn annual budget deficit - the amount it must borrow each year to plug the gap between public income and spending.

However, public sector unions are threatening "co-ordinated industrial action" if ministers try to implement cuts as deep as 40%.

BBC political correspondent Gary O'Donoghue said ministers were told by the Treasury at a cabinet meeting in Bradford last Tuesday to draw up what are being called illustrative plans, and have them ready by the end of July.

Sources have stressed that Labour's pre-election plans had already implied cuts of 20% around Whitehall, he said.

Privately, they say that no department will actually face 40% cuts.

However, all departments have also been told to look at cutting their administration costs by a third, or even a half.

These are not final settlements - but they will allow ministers to see the concrete results of cutting budgets, our correspondent added.

Prior to the election, the Conservatives pledged to cut an additional £6bn above Labour's planned spending reductions.

Labour and the Liberal Democrats campaigned on the basis that to cut spending so deeply this year would threaten the economic recovery.

However, the Lib Dems - now in coalition with the Conservatives - have argued that since the election, the markets' loss of confidence in Europe's economies calls for swifter action.

A Labour Party spokesman said the talk of "swingeing, across the board cuts" would worry people that the government would not protect frontline public services and that tackling the deficit had to be done in a fair way.

"Already, we have seen the government showing an appetite for cuts and tax rises that particularly hit families on middle and modest incomes," he said.

"When it comes to departmental spending, the government should be willing to sacrifice some of its unworkable pet projects - like Swedish schools or political police commissioners - before making cuts that will damage the quality of the frontline services people rightly expect."

'Social consequences'

John Philpott, chief economist at the Chartered Institute for Personnel and Development, said the government had made clear that as well as cutting the fiscal deficit it wanted a "once in a generation reform of the public sector".

"Clearly it means the government has in its sights quite swingeing cuts," he said.

But he added that the option was only what "might" and not what "would" happen.

"If you delivered job cuts of that size it would not only hit back office functions, management and admin but it is inevitable it would be acting to the detriment of front-line services which would be politically unpopular," he said.

The Office for Budget Responsibility has forecast 610,000 public sector jobs will be lost by 2016, assuming departmental spending cuts of 25%. Mr Philpott said 40% cuts would put more like one million jobs at risk.

Mr Philpott said the "big economic debate" was over whether cuts would affect jobs in parts of the private sector closely dependent on the public sector.

"If the government's right then we can have cuts in the public sector and actually have a growing economy and more jobs.

"If the government is wrong, then unemployment is likely to rise, and the ecomony, if not facing a double-dip recession, is at risk of very slow growth for a long time," he said.

Industrial action

Austerity measures imposed in Greece after its economy was bailed out by the European Union and International Monetary Fund have been met with violent protests and strikes.

Public sector workers in Spain have also been on strike in protest at pay cuts averaging 5%.

Mark Serwotka, general secretary of the UK's Public and Commercial Services union, said there was "no economic case to put people on the dole queue".

"We are already drawing up plans with other public sector unions to ensure that if the government attacks our pensions, our jobs and public services, they will face resistance the like of which we haven't seen in this country for decades," he said.

"We will see not just co-ordinated industrial action by unions but campaigns in every community."

Chancellor George Osborne used his first budget to impose a tough package of spending cuts and tax rises, including raising VAT from 17.5% to 20% next January.

Other measures included a two-year pay freeze for public sector workers earning over £21,000, a three-year freeze in child benefit, a cap on housing benefit and a reduction in tax credits for families earning more than £40,000.

Mr Osborne said decisive action was required, given the dire state of the public finances.

sourced from The BBC

Tax concerns jeopardise US financial reform effort

noreply@blogger.com (Seashorepics) — Wed, 30 Jun 2010 03:29:00 -0700

Members of Congress are revising an agreement on reform of the US financial sector after Republicans objected to a tax on large financial institutions.

After a marathon 19-hour negotiating session by House and Senate legislators on Thursday, Democrats were confident their bill would pass both chambers.

But Republican Senator Scott Brown now says he will withdraw his support if his concerns over the tax are not met.

The bill would bring the biggest change to financial regulation in decades.

The reforms are intended to impose strict limits on banks' ability to take risky speculative bets on markets.

The legislation had been expected to pass both chambers of Congress this week in time for President Barack Obama to sign it into law by 4 July.

But without Mr Brown, Democrats have no Republican votes for the package in the Senate - and with the death of Senator Robert Byrd on Monday, they are two votes shy of the 60 required for passage.

Mr Brown said on Tuesday he would no longer back the bill if his concerns over the $17.9bn (£11.9bn) tax on large financial institutions were not addressed.

The tax, which helps finance the bill, was included during Thursday's all-night negotiating session.

Senate Finance Committee Chairman Chris Dodd has said he is assessing alternatives to the tax.

One option under consideration is to put an early end to the Troubled Asset Relief Program (TARP) - often referred to as "the bank bailout" - to help offset the bill's price tag.

White House spokesman Robert Gibbs told reporters on Tuesday that if the controversial tax was stripped from the bill, it could still be pursued as a separate piece of legislation.

1.3m jobs 'could go due to spending cuts', report says

noreply@blogger.com (Seashorepics) — Wed, 30 Jun 2010 01:26:00 -0700

Cuts announced in the Budget could lead to up to 1.3 million jobs being lost by 2015, a newspaper report claims.

The Guardian says leaked Treasury figures predict that up to 120,000 public sector jobs and 140,000 private sector jobs could disappear annually for the next five years.

Labour figures said the true cost of George Osborne's Budget was now clear.

But the government said independent experts expect "unemployment to fall in every year and employment to rise".

The Guardian says the figures come from a slide which was part of a Treasury presentation on the Budget.

It claims the Chancellor would have seen the presentation before delivering his Budget last week.

A Treasury spokesman said on Tuesday night that the department could not immediately confirm or deny whether the slide was genuine.

'Wishful thinking'

Mr Osborne announced real terms cuts across all government departments of 25% over four years - except health and foreign aid which are ring-fenced.

He did not say how many public sector jobs were expected to go - but the government has previously insisted that the bulk will come from not filling vacant posts, rather than by making redundancies.

At the same time, the government is predicting that 2.5 million jobs will be created as a result of private sector growth by 2015.

But TUC general secretary Brendan Barber said that was "absurd", given the reduction in the availability of government contracts and the likely fall in public spending as a result of the austerity measures.

"This is not so much wishful thinking as a complete refusal to engage with reality," said Mr Barber.

"Much more likely are dole queues comparable to the 1980s, a new deep north-south divide and widespread poverty as the Budget's benefit cuts start to bite."

In response to the Guardian story, the Treasury cited a report by the independent Office for Budget Responsibility, set up by Mr Osborne, which predicts that unemployment will peak this year at 8.1% and then fall in each of the next four years to reach 6.1% in 2015.

But shadow chancellor Alistair Darling said that "far from being open and honest", the Chancellor had "failed to tell the country there would be very substantial job losses as a result of his Budget".

"The Tories did not have to take these measures. They chose to take them," Mr Darling said.

"They are not only a real risk to the recovery but hundreds of thousands of people will pay the price for the poor judgment of the Conservatives, fully supported by the Liberal Democrats."

sourced from The BBC

Duncan Smith considers incentives to relocate jobless

noreply@blogger.com (Seashorepics) — Mon, 28 Jun 2010 00:35:00 -0700

The new government has announced a new plan to move unemployed people from their council houses to another part of the country with work.

From my understanding we don't have enough council housing in the first place, and what about the family's other family's, friends and more importantly the children's schooling.

Is the government promising, a new job, a place for each child at the nearest school, funding to help for travel, funding to help for child care and a new council house, I don't think so.

This feels like another short sighted attempt by the government to reduce its unemployment numbers without really helping the people that need it.

These are my questions below:

What happens if one person has a job, but the other partner doesn't are their still expected to move.
A lot of working people use their family and friends to look after children, under this system the government will have to pay for extra child care.
What happens if you turn down the job (do you then loss your benefits and housing)
Were are all these jobs, Britain no longer has mass factory's or manufacturing sites.
Will the government also give them money to put a car on the road or pay for public transport, because you can't say well we have a job and a council house for you, but they are twenty miles apart and we are cutting all the public transport systems.
Also this migration will be from the north to the south, since the north was so heavily hit by the Tory's back in the 80's the jobs on scale needed just don't exist.
Are you guaranteed a school place for your children in the nearest school, which then will have a knock on effected, do we just add more children to the class or will local family then get turned down.

written by Recession2009

Please read press story below

Duncan Smith considers incentives to relocate jobless

Unemployed people living in council homes could be offered incentives to move to areas where there are jobs, the work and pensions secretary has said.

Iain Duncan Smith said millions were trapped in "ghettos of poverty" unable to move for fear of losing their homes.

Labour's Ed Balls called the idea "profoundly unfair" and likened it to Tory calls in the 1980s for people to "get on your bike" to look for work.

But Mr Duncan Smith said such comparisons were "ludicrous".

The coalition government has promised bold welfare reforms to ensure work pays better and to tackle generations of unemployment in families.

'Trapped'

Mr Duncan Smith said that the fact that there were five-and-a-half million people who were not working showed that current policies were not working.

Britain had one of the most static workforces in the western world, with people "trapped" in areas with high unemployment, he said.

Under the last government, he told Sky News, "almost ghettos of poverty" had appeared "where people are static and unable to get work because there is not work there".

The government wanted to distribute unemployment more evenly across the country and to make it as easy for people on low incomes to travel to do a job as the better-off, he added.

Mr Duncan Smith said he did not expect people to relocate to different parts of the country, nor did he want everyone to move to the south east of England.

'Desperate for work'

But where work was available some 10 or 15 miles away from where someone lived, people would need support to take advantage of the opportunity.

"People are desperate to be able to work and be with their families," he said.

"We need to look at ways to find that for them."

Labour has warned that people could lose their rights to housing benefit unless they were willing to travel to find work and there were no commitments to rehouse workers should they decide to do so.

But Mr Duncan Smith said his plans were about assisting people, not forcing them to uproot.

"It is not threatening people; far from it," he told Sky News.

"Most people I talk to on housing estates desperately want work but they are trapped. It is about trying to help them to find a way out."

Asked about the idea, Chancellor George Osborne - who is attending the G20 summit in Canada - said anything that encouraged social mobility should be looked at.

"We want to give people freedom of choice and we want to give that freedom of choice to people in social housing just as people in private rented housing or who own their own home have," he said.

"It is about giving people on lower incomes in our society the kind of opportunities and aspirations that other people in our society take for granted."

'On your bike'

But shadow education secretary Ed Balls accused Mr Duncan Smith of "on your bike" politics, a reference to former Tory minister Lord Tebbit telling the unemployed in 1981 to get on their bikes to look for work.

"It goes further than on your bike," he told Sky News.

"It is on your bike and lose your home. That seems to be profoundly unfair and the wrong way to deal with the unemployment problem."

"It is back to the 1980s," he added. "The idea somehow that the only solution to unemployment is to cut benefits and say to people, 'go and do it yourself'. We know that does not work."

Instead, he said ministers should be focused on bringing more investment into unemployment blackspots to create jobs.

The BBC's Political Correspondent Mike Sergeant said the issue could create tensions within the coalition, with the Conservatives willing to move at a much faster pace on welfare reform than the Liberal Democrats.

Sourced from The BBC

Welfare cuts put added health strain on population

noreply@blogger.com (Seashorepics) — Fri, 25 Jun 2010 01:01:00 -0700

Cutting welfare budgets could cost lives, say researchers.

Analysis of European data showed that a £70 reduction in welfare spending per person is associated with a 2.8% rise in alcohol-related deaths and 1.2% rise in deaths from heart disease.

Writing in the British Medical Journal, the UK research team said ordinary people may be paying the ultimate price for budget cuts.

One expert added that social support was vital for health.

The study comes after the government announced sweeping budget cuts, including reductions in tax credits for families, housing benefit and maternity grants.

To pick out the effects of welfare funding on health, researchers looked at government spending in 15 European countries, including the UK, from 1980 to 2005.

Generally the trends showed that when social spending - including support for families and the unemployed - was high, death rates fell, but when they were low, rates rose substantially.

In fact, for every £70 drop in spending per person there was a 1.19% rise in overall deaths.

The biggest effect was seen in illnesses linked to social circumstances, such as heart disease.

And a more in-depth look showed that this link was specific to social welfare spending and independent of healthcare spending.

The analysis also showed that reducing other forms of government spending, such as on the military or prisons, had no such negative impact on the public's health.

There are currently around 200,000 heart disease deaths each year in the UK and around 9,000 deaths from alcohol.

Ringfenced budgets

Study leader Dr David Stuckler, a lecturer at the University of Oxford, said that although governments may feel they are protecting population health by safeguarding the healthcare budgets, welfare spending may actually be more important.

In addition, he warned that the added burden of poor health linked to welfare cuts could place more strain on the NHS.

"So far the discussions around budget cuts have largely focused on economics.

"But social circumstances are crucial to people's health and our study shows there could be quite significant harms.

"If we want to promote a sustainable recovery in Britain, we must first ensure that we have taken care of people's most basic health needs."

Professor Alan Maryon-Davies, president of the UK Faculty of Public Health, said: "Health is much wider than the health service and social support is crucially important.

"It would be tragic if we find ourselves in this recession dismantling the welfare state."

Sourced from The BBC

Budget cuts: top Lib Dems fire warning to Tories

noreply@blogger.com (Seashorepics) — Thu, 24 Jun 2010 15:15:00 -0700

Fears among senior Liberal Democrats about the coalition with the Tories were brought into the open today when Simon Hughes, the party's newly elected deputy leader, raised the prospect of rebelling against the budget. Hughes issued a blunt warning to the Tories that the government would break up if key pensioner benefits in the coalition agreement were cut.

He launched the most significant intervention since the formation of the coalition in the debate that followed George Osborne's emergency budget on Tuesday when the chancellor of the exchequer said that welfare would bear the brunt of cuts. Although Hughes, the veteran Lib Dem MP for Bermondsey and Old Southwark, said he supported harsh budget measures to help deal with Britain's weak public finances, he indicated that he was prepared to table rebel amendments to promote fairness.

"If there are measures in the finance bill where we can improve fairness, and make for a fairer Britain, then we will come forward with amendments to do that because that is where we make the difference," he said. The Lib Dem high command denied that there were any divisions. A spokesman said: "Given that fairness has been built into the budget there are no plans to lay any amendments.

" The intervention by Hughes, which reflects the private misgivings of the former leaders Charles Kennedy and Sir Menzies Campbell, comes amid concerns among senior Lib Dems that Nick Clegg is wrong to claim the budget is progressive.

Many MPs were alarmed after Robert Chote, the director of the Institute for Fiscal Studies, described the budget as "somewhat regressive". Lib Dem spokesmen pointed out that Chote had said the budget was regressive if the effects of Labour's budget in March were stripped out.

Hughes endorsed this view when he said: "This government has continued with those elements of the budget passed earlier in the year. On that basis it is a budget that produces greater fairness." He said he had hoped that the budget would not raise VAT, which is "clearly less progressive".

But he added: "It is a measure that is necessary when we have to fill a huge debt the Labour party has left us." While the Lib Dem leaders ensured last night that there would be no rebel amendments to the budget next week, there may be concerns after Hughes warned that the coalition deal would collapse if the freedom pass and winter fuel allowance for pensioners were deemed unaffordable.

"The coalition deal is a deal," he said. "There cannot be any unpicking of items in that deal, otherwise the whole thing risks falling apart." The Lib Dem deputy leader said he was commenting on speculation about the threat to the bus pass and fuel allowances.

The chancellor told the BBC on Wednesday that he could soften the impact of cuts on government departments if further cuts could be made to the welfare budget, which already accounts for more than a third of the £32bn of cuts. As Hughes spoke in the Commons, the work and pensions secretary, Iain Duncan Smith, indicated that pensioner benefits could be threatened.

Asked on Radio 4's The World at One whether such benefits were sustainable, he said: "That is something I have to look at obviously." Ed Miliband, for Labour, said: "It takes a long time to establish an honourable political tradition. But it takes a very short time to destroy it. Are [Lib Dems] still the party of Keynes, Beveridge and Lloyd George? We all know these three men would turn in their graves at the idea that the inheritors of the Liberal tradition were supporting this budget."

Sorced from The Guardian

noreply@blogger.com (Seashorepics) — Wed, 23 Jun 2010 03:03:00 -0700

The three men that put Britain back into recession, laugh and joke.

'Don't blame me... blame Gordon': Osborne attacks Labour 'snipers' as he warns everyone will pay for his 'bloodbath' Budget

noreply@blogger.com (Seashorepics) — Wed, 23 Jun 2010 02:57:00 -0700

Osborne insists economy cuts are 'tough but fair'

FTSE down 40 points to 5207 on opening

Two-year pay freeze for public sector workers earning over £21,000

Child benefit frozen for three years and tax credits cut

Corporation tax cut from 28% to 24% over four years

Capital Gains Tax hiked to 28% for top-rate taxpayers

Income tax threshold raised £1,000 to £7,495

Pension link to earnings restored or 2.5% rise from next April

Whistlestop tour: George Osborne did a series of interviews today to defend his emergency budget

George Osborne today revealed the agonising decisions behind his 'bloodbath' emergency Budget as he faced a backlash from ordinary families stung by his tax hikes.

The Chancellor insisted that he had been forced to raise VAT and freeze child benefit because of the 'massive mess' the country's finances had been left in by Labour.

Millions of middle-class families will bear the brunt of his emergency Budget, losing tax credits, facing a three-year child benefit freeze and paying £500 a year more in VAT.

But Mr Osborne today defended his decision to slash £11 billion from the annual welfare budget and said he had been left with no choice but to take 'tough but fair' decisions.

'It is not because I want to do these things, it is because this country faces a very, very serious debt problem,' he told GMTV.

And Mr Osborne said it would be better if Labour could come up with something constructive instead of 'sniping from the sidelines'.

'The damage to the economy, the people losing their jobs, will come if we do not sort out our problems in this country, and the welfare bills have got out of control,' he said.

'The hole in the public finances was so great and the debts were so large, and people at home know, if you have got a debt problem, you have got to deal with it.'

The Chancellor was forced to listen as he was played angry messages by GMTV viewers, worried by the decision to freeze child benefit.

'I didn't want to get rid of it. Some people were telling me 'abolish child benefit',' he said.

'I care about helping mothers who receive that benefit. For many people it's the one thing they get without asking.

'Instead of abolishing it I've frozen it, which keeps child benefit, and means hopefully in a couple of years' time we'll be able to increase it.'

The decision to cap housing benefit was simply because the country could not afford big bills any more, Mr Osborne said, adding that working people were paying for some families to receive more than £100,000 per year.

'That's not acceptable any more. We can't afford it any more. And we have got to take steps to control the costs of welfare to get people off those out-of-work benefits into work, to get this economy moving again.'

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Cuts in tax credits and freezing of child benefit leave millions of average earners counting cost

QUENTIN LETTS: Whack! Tory and LibDems bit hard on the leather strap

Mr Osborne told BBC Breakfast: 'Everyone in our society is having to make a contribution to paying off this national debt which we have inherited.

'We have only been in office for seven or so weeks but we have inherited a massive set of debts, the worst in Europe, one of the worst set of debts in the world, and everyone in our society has had to make a contribution.

'But the total package I announced yesterday hits the rich hardest and I have tried to be as fair as possible'

The FTSE was down 40 points to 5207 on opening. But the drop was blamed on losses on the Dow Jones after weak US home sale figures added to nerves about the recovery.

The axeman cometh: Chancellor Osborne grasps his 19th-century predecessor William Gladstone's battered Budget case as he heads to the Commons

Savage: The Chancellor delivering his first Budget with Nick Clegg and David Cameron seated behind him

Wink and a prayer? George Osborne appears to wink at David Cameron as he sits down

Earlier shadow chancellor Alistair Darling sounded a warning on the emergency budget.

Speaking on the Today programme he said: 'This government is taking a risk. This is not pain free - get this wrong and the consequences could be dire for many people and businesses.

'With a coalition government I just wonder if they will be able to deliver.

'The problem is whether or not by taking so much more money out of the economy you risk damaging growth.'

Mr Osborne defended his decision to raise VAT: 'I had a choice. It was either VAT or income tax going up on low and middle earners - because the top rate has already gone up to 50p - or a big hike in National Insurance, which would have put people out of work.

'So I thought VAT was the best instrument available to me to increase the tax take.

'I didn't come into politics to increase taxes, but I came into politics to do the right thing for my country.'

In the most brutal Budget for 30 years, Chancellor Osborne froze public sector pay for two years and set out plans to claw back £120billion in spending cuts and tax rises.

Such ‘tough but fair’ action over the next five years was unavoidable after the calamity in the public finances left behind by the last government, he said.

Anyone earning more than £49,700 will be £1,600 a year worse off thanks to tax rises which will reach £29billion a year by 2014.

And 700,000 workers could be dragged into the higher rate of income tax by next year after the Chancellor announced a three-year freeze on thresholds.

Within hours of Mr Osborne sitting down, the ratings agency Fitch said the Budget would ‘materially strengthen confidence’ in Britain’s public finances and protect its gold-plated AAA credit rating.

And Angel Gurria, secretary general of the Organisation for Economic Co- operation and Development, described the Budget as courageous, adding: ‘It provides the necessary degree of fiscal consolidation over the coming years to restore the public finances to a sustainable path, while still supporting recovery.’

Setting out what the Treasury called the steepest programme of fiscal retrenchment ever seen in peacetime Britain, Mr Osborne vowed to balance Britain’s books within five years.

He promised daunting reductions of 25 per cent in all areas of government spending except health and overseas aid to drag the country back into the black – a target many will regard as unachievable.

'BETRAYED' LIBDEMS THREATEN REVOLT

Liberal Democrat MPs are threatening to revolt over the Budget amid accusations that they had ‘betrayed’ voters.

A crisis meeting of the party was called in the House of Commons last night so that MPs could air their grievances over the VAT hike and proposed spending cuts.

A briefing from Danny Alexander, Chief Secretary to the Treasury, failed to convince some of the Lib Dems over the more punitive Budget measures.

They are angry because during the election Nick Clegg launched a poster campaign warning against a ‘Tory VAT bombshell’.

Alistair Darling, the Shadow Chancellor, is expected to make a speech today in which he will try to encourage worried Lib Dem MPs into a mutiny.

Bob Russell, a left-leaning Lib Dem MP, warned he could rebel.

He said he was ‘unhappy’ with a rise in VAT as it hit the poor disproportionately more.

Colleague Tim Farron said he was also uncomfortable with it. Deputy leader Simon Hughes admitted the rise was the ‘less preferred’ option but insisted the Budget reflected Lib Dem priorities.

A source close to the Deputy Prime Minister admitted Lib Dems were bracing themselves to be the ‘whipping boys’.

Mr Clegg emailed party members saying there had been ‘no choice’ other than to ‘clear up the financial mess that Labour left us’.

He added he had softened what would have been an even harsher Budget.

He promised daunting reductions of 25 per cent in all areas of government spending except health and overseas aid to drag the country back into the black – a target many will regard as unachievable.

The degree of pain being inflicted to prevent what Mr Osborne called a ‘catastrophic collapse’ in international confidence in Britain will put the coalition under severe strain.

Many Liberal Democrat MPs are privately horrified at the rise in VAT from 17.5 per cent to 20 per cent taking effect from next year, having campaigned against the idea in the general election.

And ministers face a pitched battle with militant union leaders, who have amassed a £25million war chest to fight attempts to rein in the bloated public sector.

After being insulated from the recession by Labour, 6million state employees now face the same pay freezes and pension cuts as their private sector counterparts.

Only those earning £21,000 or less will escape the two-year pay freeze across the public sector.

And Mr Osborne confirmed a review of gold-plated public sector pension funds, to be headed by ex-Labour Cabinet minister John Hutton, which is expected to mean state workers having to contribute far more of their salaries to retirement funds.

The scale of the rebalancing of the economy from the public to the private sector envisaged by Mr Osborne is immense – and implies hundreds of thousands of public sector jobs will go.

The tough decisions on where the axe will fall will come in a comprehensive spending review to report in the autumn.

To boost the private sector, corporation tax will fall from 28 per cent to 24 per cent over the next four years, the lowest rate of any major economy.

The small companies’ tax rate will be slashed to 20 per cent.

The Chancellor promised his nervous coalition partners that he would offer special protection for pensioners and poorer children.

He announced a restoration of the link between earnings and the state pension – broken by Margaret Thatcher – from next year.

And he promised a £150-a-year boost for those still receiving child tax credit from 2011, costing £2billion.

'Tough but fair': George Osborne outside No11. He is the last Chancellor to use Gladstone's battered briefcase

Mr Osborne also announced a £1,000 increase in the basic rate income tax threshold, lifting almost one million lower earners out of tax altogether.

In a message to Conservative supporters, David Cameron acknowledged the Budget could cost the Government support.

‘Will it cost our coalition some popularity? Possibly,’ he said.

‘But is this the right thing to do – for the health of our economy, for the poorest in our society, for the future of our country? I passionately believe it is.’

Your tax at a glance

These tables show how tax and National Insurance changes announced for April 2011 will affect your income.

The income tax personal allowance will rise by £1,000 to £7,475 cutting bills for lower earners.

Those on bigger incomes won’t benefit because of a cut in the higher rate tax threshold.

Child tax credit is being removed for households with incomes between £40,000 and £58,000.

Their income will fall by more than those on £75,000, who did not receive this credit.

A 1 percentage point increase in National Insurance set up by Labour will push the basic rate to 12 per cent.

Lower earners will be protected by an increase in the starting threshold.

Everybody should read table 1 and then whichever of tables 2-8 most closely applies.

If the primary goal of George Osborne’s Austerity Budget was to prevent Britain being marked out as the next weak link in the European economy, he came through the challenge with flying colours.

Last night, plaudits were pouring in both from the credit ratings agencies, which assess Britain’s borrowing power, and international watchdogs like the Paris-based Organisation for Economic Co-operation and Development.

Osborne certainly donned his hair-shirt – and the markets, which turned so viciously against Greece and the other Club Med economies this spring, seem satisfied for the time being.

'Bloodbath Budget': The Chancellor and Chief Secretary to the Treasury Danny Alexander with their team

Nevertheless, there is still huge cause for concern over the future of the British economy.

For the devastating truth is that even if all the assumptions in the Budget turn out to be true, and even if the Chancellor succeeds in imposing his ferocious spending cuts, our current national debt of £900billion will still rise to £1,300billion by 2014/15, because the annual shortfall between tax receipts and public spending – allied to the interest on the debt – will continue to accumulate.

In other words, after all the pain, Britain will still be a hugely indebted country.

Staggeringly, our interest payments alone on this debt in 2014/15 will be £66billion.

Another problem is that the Tories have dug themselves a very deep hole by committing themselves – as part of their election promises and the coalition deal with the Lib Dems – not to cut the NHS or overseas development budgets, and to leave education largely unchanged.

Because of this, the burden of cuts has to fall much more heavily on Whitehall, where Osborne has promised to cut other departmental budgets by 25 per cent over the next four years.

Slashing spending by this much in areas such as defence and transport, however, could prove simply impossible.

The Chancellor must be hoping that he can force through reforms of public sector pensions to ease the need for such enormous cuts.

He is also hoping to take even bigger chunks out of the welfare budget than those already announced yesterday.

The other slightly suspect area of the Chancellor’s Budget is the economic forecast.

Admittedly, the numbers have far more credibility than in the recent past, because they have been produced by Sir Alan Budd’s new Office for Budget Responsibility, which was set up to provide an independent assessment of the public finances.

But next year’s growth forecast of 2.3 per cent – although sharply down on Alistair Darling’s prediction of 3.25 per cent – could still be too optimistic.

And if the public sector shrinks, the big question is whether Britain’s moribund manufacturing sector and a shrunken City of London can take up some of the slack and generate jobs and taxable revenues.

£2.5BN TAX ON BAILED-OUT BANKS

Banks will be hit with a tax of £2.5billion a year to help atone for the damage they did to the national finances.

From January, the Government will slap a levy on all big banks operating in the UK, reflecting some of the unprecedented support lenders received during the financial crisis. Coinciding with similar moves in France and Germany, the British charge will raise £1.2billion in its first year, rising to £2.5billion by 2014.

But the City largely shrugged off Mr Osborne’s raid, which was far less punitive than many in the Square Mile had feared. Bankers had been braced for an annual hit of as much as £5billion.

Under Treasury projections, the levy is expected to raise £8.3billion between now and 2015, but that pales into comparison with the taxpayer support lavished on the financial sector since the 2008 collapse of Lehman Brothers.

Mr Osborne said: ‘This was a crisis that started in the banking sector and the failures of banks imposed a huge cost on the rest of society.’

ONLY A DENT IN THE DEBT MOUNTAIN

By the time George Osborne puts the national debt back on a downward trajectory, it will stand at an unprecedented £1.3trillion.

That is more than 70 per cent of gross domestic product – over twice the level a decade ago.

Draconian as the measures are, they are making only a modest dent in the state’s debt mountain.

By 2015-16, public spending cuts and tax hikes will have shaved the Treasury’s debt back from 70.3 per cent of GDP to 67.4 per cent.

But that reduction still leaves the public debt hovering far above the 40 per cent ceiling that Gordon Brown used to describe as ‘prudent’ under his now-defunct borrowing rules.

The Treasury’s huge debt pile stands as a testament to an explosion in public spending under Mr Brown when he was Chancellor, coupled with disappointing tax receipts.

The recession and banking collapse made matters worse. Last year the Treasury added another £155billion to the national debt.

If they cannot, and the economy fails to grow sufficiently, there will not be enough money flowing back into the Treasury to bring the budget back towards balance.

As yesterday’s Budget Red Book makes clear, much will depend on keeping interest rates low: George Osborne’s moves to cut our national debt are done with this aim in mind.

In his Mansion House speech last week, Bank of England governor Mervyn King made it clear that if the deficit was reduced, the Monetary Policy Committee (which sets interest rates) would try to keep down the cost of borrowing.

Osborne is trying his hardest to do the right thing. But he is asking for a transformation in the economy larger than anything seen in his own lifetime.

Bleak... and brief

George Osborne’s first Budget was not only bleak – it was also brief. His report ran to only 112 pages, just half the length of Alistair Darling’s March effort of 228 pages and paling in comparison with Gordon Brown’s 320 pages in 2007.

The new stripped-down Budget, with a plain red cover, was a deliberate symbol of more austere times.

Read more: http://www.dailymail.co.uk/news/budget/article-1288756/BUDGET-2010-George-Osborne-warns-pay-bloodbath.html#ixzz0rfVGG5e6

The budget announced

noreply@blogger.com (Seashorepics) — Wed, 23 Jun 2010 00:09:00 -0700

Read about the budget, The Big Cut

China yuan stability pledged

noreply@blogger.com (Seashorepics) — Sun, 20 Jun 2010 12:18:00 -0700

China's central bank says it plans to keep the Chinese yuan "stable" and there will be no immediate revaluation of the currency.

The comments come just a day after the bank announced plans to make the exchange rate more flexible.

But Chinese authorities have ruled out a large, one-off adjustment in the exchange rate.

China has come under increasing international pressure to change its currency policy.

The US in particular has complained that China is artificially keeping the value of the yuan low to help its exporters at the expense of foreign competitors.

On Saturday, US President Barack Obama welcomed China's promise of increased flexibility in exchange rates, but the Chinese central bank's latest comments cast doubt over the scale of its plans.

"There is at present no basis for major fluctuation or change in the [yuan] exchange rate," the bank's website said.

G20 agenda

The "basic stability" of the currency would be maintained, it added, and keeping the yuan at a "reasonable, balanced level" would help ensure economic stability.

"The management and adjustment of the [yuan] exchange rate needs to be done in a gradual way."

China has effectively pegged the yuan to the US dollar for the last two years.

In 2005, it briefly allowed a controlled appreciation of the currency, but ended that policy when the global economic crisis threatened demand for its goods abroad.

The yuan has stayed at around $0.147 since then, and would be expected to rise higher given a totally free exchange rate.

Analysts expect the yuan to appreciate slowly - by around 0.2% a month - in line with a recovery in demand from Europe.

"A stronger yuan would not only help prevent trade tensions from developing later in the year, but, more importantly, would help to keep China's recovery on a sustainable path and to rebalance its economy," commented Brian Jackson, a strategist at Royal Bank of Canada in Hong Kong.

China's currency policy was expected to be high on the agenda at the G20 summit to be held in Toronto later this month.

According to the BBC's economics editor Stephanie Flanders, the timing of China's concession is no coincidence.

"As usual, the wording is vague," she said.

"But the assumption must be that China plans to move back to the policy of allowing its exchange rate to appreciate in real terms against the dollar."

Sourced from The BBC

U.K. Panel Faces Big Test Next Week

noreply@blogger.com (Seashorepics) — Sun, 20 Jun 2010 06:30:00 -0700

By LAURENCE NORMAN sourced from Wall Street Journal

LONDON — When the U.K.'s brand-new fiscal council, the Office for Budget Responsibility, laid out its fiscal and economic forecasts a week ago Monday, it was widely praised for its careful, comprehensive work.

Yet the same office will face a bigger test Tuesday when Treasury chief George Osborne delivers his emergency budget statement and the OBR revises its forecasts in light of those plans.

That will force the OBR to give its judgment on the central question in U.K. politics for the last year, including the recent election campaign: whether stepped-up deficit reduction will lift the jobless rate and derail a still-fragile economic recovery.

The OBR was set up by Mr. Osborne last month to add credibility to government fiscal plans. The independent fiscal council was given the power to make the key growth and borrowing forecasts that underpin the budget plans, a power previously exercised by the Chancellor of the Exchequer.

In its debut act on Monday, the OBR lowered the growth forecasts the previous government had given in its March budget. The OBR surprised some by cutting borrowing forecasts for coming years but raised the estimate of the closely watched structural budget gap—the estimate for the size of the deficit once the economy returns to a rate of growth in line with its long-term trend.

However, Monday's OBR forecasts were based on the economic and fiscal plans set out in the March budget by Mr. Osborne's predecessor, Alistair Darling.

Mr. Osborne has been crystal clear that he sees Tuesday's emergency budget as a turning point in grappling with a budget deficit that reached £156 billion ($230 million)in the last financial year.

The chancellor has said that the key danger to the U.K. economy isn't early fiscal consolidation and spending cuts but inaction on the budget deficit, which could see the U.K. lose its AAA credit rating, leading to spiraling borrowing costs and falling economic confidence.

Michael Sanders, U.K. economist at Citigroup, said Mr. Osborne will announce an extra £25 billion in fiscal tightening, split between £10 billion in tax hikes and £15 billion in spending cuts. Around half of those cuts have already been outlined by the new government.

However, those plans have been fiercely opposed by the opposition Labour Party. Throughout the election campaign, Labour vowed to stick by its plan to halve the deficit over the next four years and delay spending cuts until 2011.

Labour has consistently argued that major spending cuts this year could stymie the recovery and said that the private sector isn't yet in a strong enough position to offset public-sector job losses.

There was further evidence of improved U.K. public finances in May, with borrowing coming in below expectations and the previous month's numbers revised down, official data showed Friday.

However, with interest payments on the debt rising, and the budget deficit having exceeded 10% of gross domestic product in the last financial year, the improved data are unlikely to dissuade Mr. Osborne from announcing deep spending cuts

For several months now, increased tax receipts--including from the bankers' bonus tax and a strong pickup in value added tax--have slimmed U.K. borrowing and left the public finances looking healthier than many economists had predicted.

That was the case again Friday. The Office for National Statistics said the public sector borrowed a net £16.0 billion in May, down from £17.4 billion in May 2009. Economists surveyed by Dow Jones Newswires had expected net borrowing of £19.5 billion

Budget 2010: Britain on 'road to ruin' without cuts

noreply@blogger.com (Seashorepics) — Sun, 20 Jun 2010 02:55:00 -0700

Britain is "on the road to ruin" unless action is taken in the Budget on Tuesday to cut the deficit, Chancellor George Osborne has told the BBC.

Mr Osborne said the coalition had inherited "a truly awful financial situation" and he would set out a four-year plan to deal with it.

Tough action was "unavoidable" but he aimed to provide "prosperity for all".

He also announced ex-Labour minister John Hutton would head a commission into public sector pensions.

Mr Osborne told the BBC's Andrew Marr Show that Mr Hutton's involvement would mean the commission into future pensions would be independent and have cross-party input.

'Decisive action'

The chancellor refused to give more details of the coming Budget, although the BBC understands it will include Conservative election proposals to ease National Insurance for new businesses.

It is expected the employers' threshold for NI will rise slightly - by £21 and there will be a three-year scheme to exempt start-up firms outside the South East from paying NI for the first 10 people employed.

Mr Osborne did not comment on that but did confirm there would be a levy on banks and an increase in non-business capital gains tax.

Asked about the "badness" of the Budget, he said: "I don't see it as badness, I see it as decisive action to deal with Britain's record budget deficit.

Mr Osborne said the coalition had inherited "a truly awful financial situation" and he would set out a four-year plan to deal with it.

Tough action was "unavoidable" but he aimed to provide "prosperity for all".

He also announced ex-Labour minister John Hutton would head a commission into public sector pensions.

Mr Osborne told the BBC's Andrew Marr Show that Mr Hutton's involvement would mean the commission into future pensions would be independent and have cross-party input.

'Decisive action'

The chancellor refused to give more details of the coming Budget, although the BBC understands it will include Conservative election proposals to ease National Insurance for new businesses.

It is expected the employers' threshold for NI will rise slightly - by £21 and there will be a three-year scheme to exempt start-up firms outside the South East from paying NI for the first 10 people employed.

Mr Osborne did not comment on that but did confirm there would be a levy on banks and an increase in non-business capital gains tax.

Asked about the "badness" of the Budget, he said: "I don't see it as badness, I see it as decisive action to deal with Britain's record budget deficit.

Sourced from: The BBC

The weekends newspapers

noreply@blogger.com (Seashorepics) — Sun, 20 Jun 2010 01:07:00 -0700

Click to see all the latest newspaper headlines