Can he fix it?

by Tom Murphy

When Alistair Darling delivers his budget on 22 April, any voters who aren’t too preoccupied with the price of petrol and cigarettes will be looking for some effective plans to revive the economy.

At least he’ll have a bit longer to do his sums. This will be the latest spring budget since Labour came to power in 1997, coming after parliament’s Easter break and the G20 meeting of the world’s leading economies.

He’ll probably appreciate the extra time. Since the date was announced, the Treasury has revealed that tax revenue in January fell by an eye-watering £6.7bn, or 11%, from the same month a year earlier.

It seems likely that voters will eventually blame PM and former Chancellor Gordon Brown for what’s happened to the UK economy. The crisis will be the main election issue for one in three voters, according to the Guardian, and the poll also claims that Brown is a liability to Labour.

But is it fair to blame the PM for an unprecedented breakdown in the global financial system? HBOS whistleblower Paul Moore certainly thinks so. He claims to have proof that Brown’s lax regulation of the financial system created a culture of reckless lending, excessive debt-fuelled consumer spending and inflated property prices.

In the Independent, Darling blamed attributed the difficult conditions to “bad decisions by international banks”, who took on too much risk without fully understanding the possible consequences. Their exposure to each other’s losses created the credit crunch, which soon became a global recession.

However, he has also located some of the blame a bit closer to home, telling the Daily Telegraph  that bankers, regulators and the government bore a “collective responsibility” for the culture that led to the credit crunch.

Darling also remains optimistic that he can turn things round. As well as increasing government spending to stimulate the economy (adding to public debt already in excess of £700bn), he plans to reform the banking sector, support key industries and use the UK’s presidency of the G20 group to co-ordinate a global response.

So what do you think? How much blame should Brown – as both Chancellor and PM – take for the crisis? And can Darling do enough to get the UK economy through its present disorder and leave it ready to face whatever’s waiting on the other side?

Block busted

by Alan Tyers

Ginormous video rental chain going the way of all flesh…

In 1994, Blockbuster was sold to Viacom for $8.4 billion: its investors must have thought that this gravy train would never hit the buffers.

15 years later, having muscled thousands of high street video stores out of existence, the video rental giant is considering filing for bankruptcy.

How could the chain have predicted that people would stop renting videos and DVDs? Well, not one but two better inventions came along: downloading and, fatally for video stores, postal rental. Why would you schlep to the shop – and be fined like a criminal if you didn’t return your rental in time – when you can sit on your botty and have the postman bring you things that you can keep for as long as you like? A good idea, undone by a great one.

It’s hard to feel much sympathy for Blockbuster, pandering as it always did to the lowest common denominator, shoving the biggest, dumbest movies down customers’ throats and barely stocking anything off the beaten track.

Once the entertainment industry really cottons on to downloading, postal DVD services will surely die too. The game marches ever on. I suggest a fun exercise to enliven these gloomy financial times: which corporate big beasts will be deader than Betamax in a decade’s time? I’ll get the ball rolling with one of the major cinema chains. Why would you pay a tenner to sit in a sticky seat when you can watch it at home on your 42' TV screen for a fraction of the cost?

Time to go home, bankers

By Greg McDonald

When he recognised it was time to waltz off the Strictly Come Dancing stage last year, John Sergeant displayed a graceful spin on knowing when to quit: the time to leave a party, he said, is before the fight starts.

But Britain’s greedy bankers, too drunk on avarice and blind with greed to tell whether that totty on the dancefloor is actually Darren Gough, don’t seem to realise the party’s over.

Here’s a clue, boys: the music’s stopped, the bar’s shut, and that chick whose rear you just slapped is Johnny Taxpayer looking for a nose to break.

Yet still now, as the world enters a depression, Royal Bank of Scotland (RBS) pays out billions of our money in bonuses. It’s daylight robbery.

The message to the bankers is simple: get your noses out of the trough, you greedy pigs. You’ve had more than enough swill for one meltdown.

In a world where Merrill Lynch boss John Thain also just handed $4bn of taxpayers’ bailout money to colleagues as bonuses, the suggestion that bankers are being made scapegoats is surreal.

Likewise the arguments that RBS’s bonuses are necessary to attract talent: our children are picking up the tab to keep RBS’s talent out of the dole queue.

The party’s over, boys – and it’s too late for Alistair Darling’s “slimmed down” bonuses. What you’ve got coming is an 18-stone scrap with the taxpayer.

Go on, Johnny, take a swing at him – he’s calling your bailout a poof.

Unemployment: mountain or dolehill?

By Greg McDonald

Today’s unemployment figures put the number out of work at 1.9 million, as employees at Ericsson, Sainsbury’s and Woolworths join the lines at Britain’s Job Centres.

But while our hearts must go out to the ever increasing number of applicants going for an ever decreasing number of jobs, and while we must demand the Government does everything it can to help families affected, nothing is more harmful in a recession than sapping confidence – and for that reason, if no other, we must also keep today’s numbers in perspective.

Early in 2008, as the initial dash to scenes of economic bad news became a stampede to proclaim the end of the pound/system/universe as we know it, economic sages breathlessly informed us that unemployment figures would smash through the two million mark before Christmas. They didn’t.

So while today’s numbers contain within them thousands of personal tragedies, let’s at least be thankful that the national Armageddon we were told to prepare for has not – at least, not yet – materialised.

The current figure is now only where it was in Tony Blair’s 1999 heyday – hardly recalled as a time of crushing societal deprivation. And while it will worsen, crying Armageddon at every new set of figures only serves to sap confidence and sink us deeper into the mire.

For those whose best chance of getting back into work is a confidence-driven recovery, we should take care not to overstate the problem.

A loan again

By Alan Tyers

Taxpayers are today rightly asking why we have to give banks another massive bailout…

It seems that the £37bn forked over in October was merely a sub to tide them over until the giro.

Prime Minister Gordon Brown now unveils a package of £50bn for the Bank of England to buy up bank loans, while the Government – that is to say, the taxpayer – will underwrite about £250bn of dodgy bank debts.

This will thus free up the banks to lend more money to households and business. Again, with the taxpayer as underwriter. This, it is taken on faith, will kick-start the economy.

Is this not the worst of all possible words?

We have effectively nationalised our banks, allowing them to have a financial makeover at our expense.

And the master-plan for escaping a situation brought about by indiscriminate lending seems to be… lend more money!

This would be all very well if the people doing the lending hadn’t shown themselves to be such awful judges of a bet. Who is actually getting taken to task for this mess?

What evidence is there to suppose that the same idiots will not make the same mistakes again? Will we just keep handing the same banks and bankers money until they get lucky?

Woolly thinking

By Alan Tyers

Not to speak ill of the dead when the body’s still warm or anything, but we shouldn’t shed a tear for Woolworths.

The chain’s remaining stores shut for the last time on Tuesday, with predatory ghouls canny bargain-hunters picking over the corpse to the extent of snaffling up the fixtures and fittings. It’s bad news for Woolies’ 27,000 employees, no doubt. But the outpourings of sentiment about “this high street institution” are mawkish, and to blame its demise on the credit crunch is just plain wrong.

Woolworths has shut because it had become, let’s be fair, a rubbish shop. It failed to move with the times and couldn’t make up its mind as to what it actually sold. Our local branch seemed to focus mainly on ironing boards and germ-ridden pick’n’mix, with a pathetic smattering of CDs. Amazon it wasn’t.

Capitalism needs its losers to have its winners, just as it needs a pool of unemployed people to keep workers jumpy and wages down. In every war there must be casualties, and Woolworths has paid the price for falling behind the pack.

Let’s not blame everything on sub-prime mortgages: it just encourages doom-mongering journalists and pundits, and they really are getting about as boring and useless as a Woolies gift voucher.

Cold front approaches from all sides

Today’s icy start is right on cue. As we begin our first working week of 2009 with a shudder, many Brits’ biggest hope for the new year is simply of hanging onto their jobs – and for once you can definitely trust Gordon Brown when he says he knows how you feel.

Unemployment forecasts aside, the PM begins 2009 with an in tray that almost justifies talk of a Government of national unity.

Falling house prices, failing businesses, hard-hit pensioners, intransigent banks, a weak pound, and record national debt suggest a Prime Minister 18 months from a general election should be heading for the dole queue.

Yet the more uncomfortable life becomes, the more comfortable we voters seem to get with the idea of Gordon Brown staying in his job. As long as the world economy is collapsing, terrorists are driving flaming jeeps into our airports or the country’s underwater, Brown is looking at a majority – or at least a hung parliament.

And here Brown’s future position could be tied up with that of another British politician whose reputation has been bolstered by the recession: Lib Dem treasury spokesman Vince Cable hinted over the weekend that he’d like the job of chancellor. And the promise of a hung parliament Lab-Lib pact might just be enough to convince Brown to reapply for his own job sooner rather than later.

For those who doubt Gordon has the audacity to make a Lib Dem his chancellor, here are two words to send an icy shiver down George Osborne’s spine: Peter Mandelson…

The wonder of Christmas

By Greg McDonald

Wham! are on the air and John Sergeant’s making a record.

It can only mean one thing: in keeping with tradition, this first week of December marks the suspension of good sense and good taste across Britain, and thank the little Lord Jesus.

Credit crunch? What credit crunch? As Brits part with their minds and money until January Ladbrokes have been forced to slash the odds against Birmingham seeing a white Christmas to 8-1, as the number of supposedly recession hit punters merrily throwing their cash away snowballed with news that it was drizzling a bit in the Highlands.

That’s the spirit. And after November’s scrooge-like VAT gift to David Cameron, it’s good to see Old St Gord and his chief elf Little Darling finally getting into the swing of things with yesterday’s repossession help plans delivering a more generous package.

But not everyone is moved. 165 years after Charles Dickens penned A Christmas Carol in protest at the fading of hospitality and charity for society’s poorest, 2008’s banking Scrooges still refuse to fully pass on the help ordinary people and businesses desperately need.

If today’s visit from the Ghost of Hard Times Past, in the form of the biggest interest rates cut since the days of rationing, fails to persuade these monetary chickens to share their fiscal turkey, it’s surely time their future Christmas bonuses were crossed of Old St Gord’s list.

For now though, gloom is off the menu. Hand me the sherry and turn up Noddy Holder: It’s Christmas!

Woolies’ woes mark new low

By Greg McDonald

High street icon Woolworths being taken into administration marks the moment – more than the combined woes of Northern Rock, HBOS and the FTSE – that the global recession hits Britain.

Childhood memories of wet Saturday afternoons being dragged round the household goods section lend Woolies’ death a nostalgic sentimentality, but that’s beside the point for staff unlocking the doors this morning with no idea if they’ll still be in a job at lunchtime.

And unlike financiers whose greedy complicity in bringing the world crashing down is rewarded with protected bonuses, there’ll be no golden handshakes at the pick 'n' mix counter when the lights go out tonight – just the dole queue, the loan shark and the repossession letter, as hard-working, honest people pay a miserable price for the unscrupulous excesses of the few.

Gordon Brown is at least right that this is no time for inaction, and his Government’s newfound taste for boldness is welcome. But greater lessons about propriety must be learned from the hurt currently being felt on British high streets.

The era in which the rich creamed off the profits in the good times and the rest of us bailed them out when things get rough must end, to be replaced with a new era of fairness and equality. Well, we can dream…

Brown’s possible saving grace

By Greg McDonald

Today’s £37bn Government bank buyout is a lifeline for British finance – and if the EU’s loudest members now sing from Britain’s hymn sheet, a potential redemption song for Gordon Brown.

Indeed, if his plan comes together expect Brown to be heralded the saviour of Europe, no less than the Churchill of the market – at least by Peter Mandelson.

Of course, when every other rescue package has failed and an Iceland moment may be yet to come, there’s no more reason to feel confident perching on this week’s “rock of stability” than last week’s. Ultimately, somewhere down the line someone’s going to have to pick up the tab for all these rescues – and the underlying problem remains a global economy designed to enable the rich to steal from the poor.

But today’s plan is more than just “another week, another bail-out”. With a 60% take of RBS and Government-appointed board members, this is at least part-nationalisation, and more hands-on than what we’ve seen to date. Today the banks, tomorrow the energy companies?

That’s for the long term; in short-term politics, it’s always the economy, stupid. And just as historians will trace John McCain’s defeat in the 2008 US election to the day he called the US economy “strong” hours before it fell apart, will we attribute victory at the next election to the day Brown liberated Europe?