I really do find some of the economic news difficult to follow. Let's look at the two big issues in the headlines today. Firstly, there's the cut in Base Rates to their lowest level ever. I cannot see what difference this will make, while the banks resist bringing down the cost at which they lend to business. The banks remain determined to rebuild their balance sheets - and you really can't blame them. They are doing what they have not done for years - running their businesses responsibly. All the Base Rate cut is going to do is turn the screw on savers ever tighter, hitting people who were behaving responsibly when bankers and their like were stuffing their pockets with massive bonuses. And now I'm watching this MPC member on Newsnight calling on the Government to start printing money - which he calls 'Quantitative Easing'. I need to properly understand the difference between this new strangely named activity and what's been happening in Zimbabwe.
And then there's the loss of jobs at Nissan in Sunderland. Nothing much to do with Wales you'd think - but my interest always perks up when I hear my old acquaintance, Professor Garel Rees on the radio. He was incredibly gloomy today. No pick up in the motor industry until 2011, and not properly recovered until 2014. The 1,200 jobs at Nissan will mean thousands more at component supply businesses like Stadco Powys, where 106 jobs are programmed to go in April. And this is nothing to do with access to money. Its just that the market (which is mainly in Europe) has evaporated. And its going to get worse. Nissan are not going to sell many of the £107,000 sports car launched by the company in Japan today. But its chances of becoming a best seller are probably rather better than the likelihood of the Chancellor's prediction that the UK will exit recession by July will be achieved.
7 comments:
I think it's Garel Rhys with an "e"?
Dewi -thanks - corrected.
".....But its chances of becoming a best seller are probably rather better than the likelihood of the Chancellor's prediction that the UK will exit recession by July will be achieved."
Where is this quote from Glyn? If he thinks we believe that the recession will end by July, he's got nothing but contempt for the electorate of this country!
The situation is indeed grim, and I fear some more high-profile casualties are not far away. Electrical retailers, clothing firms and at least one MAJOR manufacturer will be gone by March at the latest. Reducing the interest rate to improve lending is like lowering the price of milk when the cows have stopped producing through lack of grass! Printing more money, trying to offset deflation with Zimbabwean tactics is high risk. What we have to accept is that the defensive sea walls have been breached. Robbing stones from the houses to shore it up is futile. Retreat to a new smaller defensive line to fight the flood of recession. Re-capitalise the British banks to form a new national bank; improve the lot for savers even at the expense of borrowers. Government to provide low-interest loans to firms who can't get credit from the banks. This will allow the banks to improve their asset to leverage ratio. Face the facts that some jobs will be lost. Our economy was floating on a bubble of debt, it CANNOT be maintained at 2007 levels. Some shrinkage will happen. Don't burn your life boats to fuel the boilers of the water pumps!
Anon - It was what he said when delivering his Pre Budget Statement before Christmas. More importantly, it was the basis on which he predicted that next year's borrowing requirement woulfd be £118 billion, which is an unprecedented figure in itself.
The 'situation' for Wales can actually be brilliant. Wales is of a size and has assets of a certain magnitude that vast improvements in the economy are eminently possible. Wales just needs common sense and leadership from the Welsh Assembly Government (WAG). Sadly, we have as one reader put it today: "in Wales we have witnessed some of our AMs claiming for non-essential items, claiming for second homes when living within travelling distance from work and also claiming travelling allowances."
Source:
http://www.walesonline.co.uk/news/letters-to-the-editor/south-wales-echo-letters/2009/01/09/why-wales-is-now-behind-singapore-91466-22650089/
Oh brother, u read about this Glyn? In Today's Telegraph:
"The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy."
Post a Comment