howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#1
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#2
Utter rubbish, the man has a screw loose.
Is he suggesting that a fully nationalised bank will lend to businesses that are a poor risk. Not a clever idea and it is that kind of thing that helped damage the banks liquidity in the first place.
Guest 714- Registered: 14 Apr 2011
- Posts: 2,594
#3
The man is a complete fool, we're in the mess we are because of irresponsible lending and now he wants more of the same.
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#4
what's the alternative in the short term chaps, growth is nil and small businesses are not starting up to stimulate the economy.
i didn't read cable as saying that he believed money should be lent irresponsibly.
Guest 714- Registered: 14 Apr 2011
- Posts: 2,594
#5
Why is growth important howard?
Its a myth that we need growth, what is actually needed is fiscal responsibility ie only spend what we have. For the banks to lend we have to borrow which incurs even more debt. Eventually the decisions will be taken out of our hands, the sooner the better imo
Ross Miller
- Location: London Road, Dover
- Registered: 17 Sep 2008
- Posts: 3,709
#6
Lending aka borrowing creates a debt, debt that can only be repaid from profits, the self same profits small business needs to reinvest in themselves to make them selves stronger and allow themselves the opportunity to take advantage of any upturn in the economy.
"Dream as if you'll live forever. Live as if you'll die today." - James Dean
"Being deeply loved by someone gives you strength,
While loving someone deeply gives you courage" - Laozi
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#7
David - yes we need fiscal responsibility, absolutely right, but we also need growth to help bridge the deficit and stop more and more debt piling up as it all cannot be done with spending cuts alone.
Split borrowing by businesses from borrowing by government, one can be helpful while the latter happens to be part of the problem.
Howard - the real problem here is that a fallacy is being expounded on small business lending.
.... Businesses are not borrowing because many have been building up cash reserves and clearing down existing debt. This is the same thing many individuals have done and is a sensible response to difficult times when survival is at stake. This therefore means that 'net lending to businesses' is down if you look at the figures.
.... Banks are lending to businesses but those businesses who get turned down, often for good reasons - a poor business plan - poor credit record - structural business problems, will often complain while the banks are not able to respond with the reasons for that in individual cases. The fact is that there is a difference between borrowing to expand and borrowing to survive in bad times and both types of pending has to be judged by the banks as a business case. As I have said a lot of the problems we have were brought about by poor lending practices in the first place.
We need to get entrepreneurs to expand their businesses with new product lines and development and start new businesses. There is cheap funding available for this provided a good and viable business plan is forthcoming so bank lending is there as is 'business angel' funding. DDCoC has helped at the business clinics find business angel funding for some projects incidentally. But of course, this lending must be done on a responsible basis.
The problem is elsewhere and is in respect of a range of issues: but the big one is ... Confidence, or lack of it - that really is the big killer. The economic environment created by the Eurozone crisis and the pressure on key export markets are a massive disincentive to expand. It is this that is causing business to conserve cash as a matter of survival and survival is for many businesses the name of the game.
If businesses do not want to borrow and are worried about the environment for expansion then you cannot make the do so.
This is why the government needs to make supply-side reforms to encourage business expansion and to boost confidence. At the same time as 'de-risking' the employment market. This is a matter of leadership, tax cuts aimed at incentivising business expansion, planning reform and so on are all essential. We have seen Cable block such supply side reforms and his idea is like trying to push a rope uphill instead of pulling it.
More public spending cuts are needed for this so deficit reduction can go hand in hand with the tax cuts. This is also being blocked by Cable and his cohorts.
Guest 745- Registered: 27 Mar 2012
- Posts: 3,370
#8
We need to ban all imports from china and the other out of balance currency countries
And start producing the things we need
These countries will never play fair in trade, and will only be using the money to grow there military .
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#9
too late now keith our manufacturing base has gone, china and india now are the powerhouses but are struggling to keep costs down as their workforces are wising up.
next will be brazil and the rest of south america.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#10
You cannot ban imports. Trade wars can only damage further the economy. Look at history, I have said it before and the evidence is clear, protectionism and trade restrictions do not work and only damage the economy.
Guest 725- Registered: 7 Oct 2011
- Posts: 1,418
#11
For some time now the received wisdom has been that India, Brazil and other South American nations, China etc. will become world leaders.
I think this is wrong. It's never going to happen in our lifetimes. In fact it's more hope over expectation.
As an example India has had a massive power outage affecting over 300 million people. They do not have the political base in order to take a lead position in the world. The same is true of China I suspect. Sure they are doing fabulously well in terms of growth but this is dependent on their exports to the rest of the world which is why their growth is slowing substantially. They have property bubble set to pop any time but who knows when. They are a command economy and this does translate well into becoming leaders on the world stage.
As for the rest of the tiger economies the same is true but really it's all to do with export of natural resources alongside other exports and again this is no guarantee of success when the crash comes, which it will.
Unfortunately, we and the rest of Europe, are stuffed. Truly stuffed. Too much debt and red tape and regulations and trade restrictions help to make us uncompetitive. Combine that with a welfare state culture and increasingly ridiculous environmental legislation this will set us up, in this side of the world, to third world status.
If I were a bank there is no way I'd think of lending in this climate unless the company could prove to me that what they had really was worth lending them money to.
Look at Facebook for example.
All those clever people, economists, talking heads on the financial channels, investment institutions and others reckoned that facebook would deliver the goods.
How wrong they were. Any damned fool could see a crock in the middle of the road, except all the clever people.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#12
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
#13
"This is why the government needs to make supply-side reforms to encourage business expansion and to boost confidence."
So, if we were to throw away the rule-book and make paying taxes an entirely voluntary arrangement our economy would...
In the film, The 39 Steps (the Robert Donat version, I think) there are two corset salesmen heading off to Edinburgh. One of them sees an advert in a newspaper that tells him that he is too late, a competitor has cornered the market, with a superior product, to boot.
One has to feel for the poor sap-tappers, the dockside porters of Rangoon and the entire workforce of the firm which he represents.
I suppose that, even with an inferior product, had he caught a much earlier train all would have been well for those mentioned above, albeit less so for the women of Scotland.
So...even with tawdry wares and competitive pricing, fortuitous timing is all.
All, that is, while there is a market for the 'good' you have to sell.
With all this talk of lending or not lending, saving or investing and confidence or dread: Where is the consumer and from where are these same (patient) consumers to get their wherewithal to purchase?
If a company does not intend to sell to much the same people that it employs, who is there to buy?
P.S.
These dot-com crashes are surely just another facet of the 'Ponsy -Scheme' of share dealership. He who gets in early can earn off of those who come late?
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#14
Tom - I really do recommend that you pick up a copy of 'Free to Choose' by Milton Friedman and have a good read. It will enrich your understanding of these things.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
#15
" Milton Friedman was perhaps the most brilliant and productive libertarian ever.
He strongly challenged Keynsianism, helped to invent the payroll withholding tax system. was an intellectual leader of the Chicago School, and swayed the economic policies of Reagan, Thatcher, and Pinochet.
Paul Krugman provides a really good overview in Who Was Milton Friedman? in The New York Review Of Books. He writes: "Moreover, Friedman's effectiveness as a popularizer and propagandist rested in part on his well-deserved reputation as a profound economic theorist. But there's an important difference between the rigor of his work as a professional economist and the looser, sometimes questionable logic of his pronouncements as a public intellectual... Friedman's laissez-faire absolutism contributed to an intellectual climate in which faith in markets and disdain for government often trumps the evidence." The last section of the article has some stern criticism of Friedman's popularization. "
From...
http://world.std.com/~mhuben/mfriedman.html
In B Nelson's, Five Myths About Free Enterprise, point number 4 strikes a chord. [accord, even]
"4. The free market caused the financial meltdown.
It wasn't free enterprise that was at fault; it was the lack of free enterprise. Statism and its co-dependent spouse — corporate cronyism — melted down our economy.
As my American Enterprise Institute colleague Peter Wallison has documented, two decades of misguided government policy contributed to a massive bubble in housing. When it began to deflate, so did the whole financial system. And who showed up first in the bailout line? Large corporations, including car companies and mortgage giants Fannie Mae and Freddie Mac. Find me an opportunistic politician chumming the waters with tax loopholes, and I'll show you a corporate shark.
This isn't the free market at work — not even close. It's a toxic mix of big government and its corporate clients. We need more free enterprise, not less — free enterprise where entrepreneurs put their money on the line and earn a profit or suffer a loss."
[I wish I could make the last 18 words bold.]
From...
http://www.valuesandcapitalism.com/dialogue/economics/five-myths-about-free-enterpriseIgnorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#16
Tom - Friedman was more than a theorist, he was a practical economist who had hands on experience. He was certainly proven right.
Clinton was the President whose policies led to the Fannie Mae and Freddie Mac problems and the USA toxic debt issue that spread to the UK. Also I have previously identified all the specific errors of Brown that placed us in such a terrible position at the start of the slowdown in 2007. Big government is the enemy causing far more problems than it solves.
Do read Friedman, it is worth it.
