Thoughts on the UK economy while watching the US...

[Adam]

As always, we blame america for our faults because they generally do it first and we can't help but copy...

But, it seems to me that our Government has actually gained because of this. They have more or less copied the USA example of bailouts but Gordon Brown seems to be a bit more popular than before. Previously having a approval rating with the voting public similar to Bush and on course to taking the same nose dive as Bush's approval rating.

So, do you think it helped having an ecomomist type person as our PM or is it that our cynical nature has just softened the blow a bit because we all thought it was shit anyway, and getting a bit more shit is still shit so there is no difference and we actually feel a bit better cus we was right on how shit it was in the first place? While americans are normally so damn positive then are now on a massive come down hangover?

[HAL 9000]

The different perceptions to the bailout in the UK vs the US are very interesting. In the UK there has been almost no significant public or political opposition to the concept of a bailout but in the US, the public seems to resent the idea quite strongly.

It is hard to know why this is, it just seems that in the US people are quick to jump to the conspiracy/corruption conclusion. I guess this is because of the very obvious connections between elected officials and the financial backing of big business. People have got used to thinking that any action Bush takes must be in the interest of his cronies at the expense of the public, and after the Iraq war it is understandable to think this way.

In Britain, we tend to think of politicians as incompetent rather than corrupt. And frankly, Brown has managed to come out of this looking like he knows what he is doing so this has benefited him politically.

[Adam]

I am thinking also - UK are probably more social minded than the US (not a bad thing tho) and the nationalisation of things becomes the anti-thatcher model which is why I am embbed to not to ever vote tory...

[Burnout18]

The different perceptions to the bailout in the UK vs the US are very interesting. In the UK there has been almost no significant public or political opposition to the concept of a bailout but in the US, the public seems to resent the idea quite

Oh really? Here they showed us you guys rioting in opposition to the bailout

[HAL 9000]

You may be correct; I did not see or hear any of that though. Interesting though, have you got a link or something?

I genuinely have heard very little dissent from the bailout concept in the UK media but I would be interested if others have a different impression.

Edit - there was a protest, just found this. I dont think this got much news coverage here (unless I just missed it)

http://news.scotsman.com/uk/Protesters-stage-bailout--rally.4582183.jp

Is this what you were reffering to?

[Burnout18]

Yes, i believe that is what i saw.... I do not have a link, I was flipping through CNN and fox news and saw video footage on one of those two channels.

[roosta]

there was no rioting due to the bailout...

[Ali]

The difference between the UK and US bailouts was that people in the US had a say in the matter, wheras people in the UK read about it in the paper.

As for who is to blame for all this. Blame the Fools (Greenspan and Brown) who dropped interest rates to 1 or 2% after 9/11, left them like that long enough for a whole lotta people to take on debt that they might just be able to repay if interest rates stayed as they were, or if the price of their house kept going up.
Then these fukn clowns realised that inflation was getting bad (doh), turned up the heat so that the interest rates jumped from 2% to nearly 5% in one year. Guess what happened. People who could afford to meet a $1,000 monthly instalment found themselves having to pay three times that for a house whose value had not increased. In fact, so many houses were being repossessed that the houses that were now going to cost three times more to pay off were worth half of their original value, so even repossessing a house wasn't going to get the banks their money back. Cue anarchy when the Hedge Funds who had bought these repackaged debt instruments to hedge their more risky bets found them to be even ore risky than the bets they we supposed to protect! Cue massive insurance claims putting the likes if AIG out of business and the rest, as they say, is history.

It was not the fault of people who were lured into taking on mortgages by devious loan companies at rates of interest that increased at an unprecedented scale. The fault of this mess lies squarely on the shoulders of Alan Greenspan and Gordon Brown, who put economic growth before stability and now their house of cards is collapsing.

[HAL 9000]

As for who is to blame for all this. Blame the Fools (Greenspan and Brown) who dropped interest rates to 1 or 2% after 9/11, left them like that long enough for a whole lotta people to take on debt that they might just be able to repay if interest rates stayed as they were, or if the price of their house kept going up.


We have central bank independence in the UK (also in the US – but Greenspan was chair of the Fed) – so I don’t think you can blame Brown directly for the UK Monetary Policy. He did have a hand in setting up the Monetary Policy Committee including setting its inflation targets - but I cant help but feel that his move to ensure politicians keep their grubby mits off the economic accelerator was a good one.

Politicians tend to try and push up inflation ahead of elections to create jobs which means that they often order interest rate cuts ahead of elections.

What is really stupid (and Brown is guilty of this too) is the way we have been encouraged to keep spending whenever economic downturn looms. It has always seemed to me that a slowdown in retail sales volumes on high streets is a symptom rather than a cause of economic trouble and the British solution over the last 10 years seems to have been to encourage people to borrow to keep spending.

[Ali]

UK Central Bank 'independence' in name only, but I take your point.

They did follow the US interest rates pretty religiously, compared with the Eurozone but even there this pressure on people to spend money they didn't have to promote 'growth' led to trouble.

How can it be growth when people are spending money they have borrowed? That's like saying that 9/11 was good for the construction industry.