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Clearly I am no fan of Gordon Brown and the Labour Party but I must admit that I really fell about laughing yesterday on hearing the German Finance Minister Herr Steinbruck’s comments on Brown’s spend and borrow strategy particularly coming so close on the “We saved the World…” claim by Brown, no doubt using the ‘Royal We’.

Brown’s feeble attempts to project the blame for our current difficulties on the “American Sub Prime” fiasco rather than his own total incompetence as first Chancellor and now Prime Minister was convincingly taken apart by the American Economist Irwin Steltzer, a former ‘Brown Groupie’ the other day. However the scale of Brown’s failure is staggering…

This Man is Totally Nuts…

As per my previous piece on the two aircraft carriers which I disagree with on both economic – we could get better value and more ships plus the military grounds that these are the wrong type of assets, yesterday it was announced that their construction would be slowed down so that they would be delayed coming into service by two years.

Until the costs escalate as they tend to do, the budget for these two is £3.4 billion which excludes the 68 Strike Fighters that will fly from them at about the same cost I guess. However, let us hold on to that £3.4 billion figure for a moment.

As I have written before, the most ludicrous element of the Emergency Budget some weeks back was the reduction of VAT from 17.5% to 15%, there was absolutely no logic in doing that. Shops are discounting like mad, 20-30% is not unusual and I have picked up a camera for 50% of the ‘street price’ (=average in most shops) which also happens to be a third of the manufacturers ‘recommended retail price’.

The point is that right now the 2.5% reduction is irrelevant against the current retail background; it will motivate no one to spend money. Later with the ever falling value of Sterling when imported goods are replaced in the shops, they will likely be 15-20% more expensive anyway so the 2.5% won’t work there either.

The VAT Reduction Was Stupid…

My point has always been that reducing VAT would only have one effect, to reduce the amount of revenue the Treasury gets and the figure I understand is around £12.5 billion which expressed in another way means, they could easily have afforded to build 6 aircraft carriers, right now with no delays ! Okay, I know that is not the way things work but it is another way to look at it.

I loved this quote from an editorial in the Times:

“When he was shadow chancellor, in the mid-1990s, Mr Brown observed: “A weak currency arises from a weak economy which is in turn the result of a weak government.” His words were right then; they are right now.”

The Germans are Right

And so too are George Osborne and David Cameron, “doing little to nothing” is the right policy, in fact it is the only policy because Governments can actually do nothing about the underlying problem which is overvalued house prices and over borrowed consumers, getting that sorted is going to be painful as it always has been throughout history.

Even the idea that you can keep people who have fallen on hard times in their own houses for 2 years with deferments on mortgages of up to £400,000 is total lunacy. All that will happen is that they will accrue further debt which would be capitalised plus, prevent or delay house prices falling to a natural level where normal market forces and personal decisions can get the economy moving again.

Brown was wrong to claim that he had ended boom and bust in the UK economy because this is wholly “Brown’s Bust”, if he had wanted to prevent it, he would have stepped in 3 years ago. All the talk about helping “hard working families” is illusory, all Brown’s associated policies will merely prolong and deepen the Recession with the UK likely the last to recover in Europe. Whatever Brown says, the truth is that his “policies” are not driven by the “Needs of the Nation”, they are wholly driven by Gordon Brown’s demonic desire to preserve Labour at any cost, including bankrupting the Country.