Why the outlook for the pound is now brighter

We still have far too much regulation and control by megalomanic politicians. Let business get on with it and bring us out. Just let financial policing be done in a manner which rewards honesty and diligence without the burden of excessive public sector expenses.I am sure we need some presence in local government but not the amount currently there with all the attendant costs to the real world

Dream on- just wait until Britain's economy collapses under the effects of draconian cuts and high unemployment coupled with a collapsing housing market. The pound has already lost most of its reserve currency appeal, Britain's once main source of income, the financial sector is no more - to think that such an indebted country that produces very little by way of real goods can promote its currency aims by crippling cuts is extremely foolish. Tax those that can really afford it and keep government institutions that employ sensibly going - try to make a start on the energy issue with good old fashioned British innovation perhaps ? - anything but simply perpetuating the hidden inflation and indeed bubble that is the housing market - Britons have been slaves to landlords or high house prices for too long. That is the source of much of todays dilemma - abnormal rises in asset prices due to excessive credit.

When oh when will Britain ever learn ? - abnormal asset price increases ( housing ) have distorted peoples idea of wages, work itself. Virtual wealth is what it is - virtual !

DebtMonkey:

"Virtual wealth is what it is - virtual"

Just in case no one has told you - the pound is a fiat curreny, dependent on the credit system, and is backed by nothing but hot air.

Glib self-serving politicians, especially Nulabour, are fond of pointing to the 30s and the folly of the then government's approach, with adulation for their guru JM Keynes. Let some facts speak for themselves. Here is Keynes in a broadcast talk in 1931:

“Whenever you buy goods you increase employment – though they must be British, home-produced goods, if you are to increase employment in this country.”

“After paying wages which are far higher than for example in France or Germany, after supporting a quarter of our population in idleness, after adding to the country’s equipment of houses and roads and electrical plant and so forth on a substantial scale, we still have a surplus available to be lent to foreign countries, which in 1929 was greater than the surplus for such purposes of any other country in the world, even of the United States.”

What was the result of that government's policies?

The peak of 2,995,00 unemployed of Jan 1933 had fallen to 1,276,000 by the autumn of 1937, when 11 million in insured occupations surpassed the figure of 1929. Four million people had been absorbed or reabsorbed into industry, Agriculture flourished; the acreage under wheat rose by 44%, home-produced bacon doubled. In the year 35-36, while local authorities built 52,000 houses, private builders produced 270,000, half paid for with money advanced by building societies to wage-earning owners, amongst them my father, who on a wage of about £150 a year bought for a little over £600 the house where I grew up; it now commands a price of around £180k. To keep the same ratio a single buyer today would need a salary of £45k. And that's the result of Nulabour's handling of the economy.

Sadly today instead of exporting energy we must import it. But every upward tick of the pound reduces the bill. In 1935 British industry still produced consumer and capital goods - but today, thank to the deliberate policy of Thatcher and Brown we produce or rather offer services, but prolific services depend on affluence - in hard times we quickly learn to do without them.

But what about the millions who were moved out of dead producing industries into services? There's no mass industrial employment as in the 30s and every year thanks to Nulabour more and more unemployables flood in.

Balls and his wife complain about restrictions on immigration, because we need people with special skills - why were they not trained in 13 years of Nulabour education that saw children enter school at 5 and leave at 18. Why were they not trained in special skills?

The road will be hard but I believe that it will get easier, sooner perhaps than we think. The secret will be productivity; at present many jobs are a form of unemployment benefit. Roadworks that take twice the time they would need in Germany or the US; bureaucracy needing double the staff that managed 15 years ago.

I had half the ceiling in a bathroom down from a water leak; the insurance claim went through three companies, an inspection by two men, before it got to the builders; they sent a man who arrived three hours late expecting to paint the finished ceiling. Of course he hadn't brought tools or materials for the job, so came the next day and did such a bad job that I complained to the builders, who sent a man to inspect the work. Next day another man came to do this simple job again.

I reckon that 11 people, not counting secretaries and typists, were involved in a job which cost about £450 and about three hours of hands-on work.

Was that an exception, a one-off experience? Of course not - it's a neat picture of the slack, shoddy, easy-going, over -manned, bureaucractic incompetence that has brought the country to its knees.

Let's hope the country listens to the wake-up call of of reality.

This

I'm sorry about the typos - at 85 my eyes are not what they were 60 years ago.

Luckily your ability to write good English and good sense is undiminished...

I'm not quite up to 85, Bernard, but I'm getting there. I enjoyed your long and thoughtful comment.

You are quite right when you say that 'the secret will be productivity'. I have no doubt that the private sector will drive on and will seek to get ever greater productivity. As you show in your nice example, productivity generally means getting more or better production from the same number or fewer workers. A 'full day's work for a full day's pay' if you like. And, of course, that will not enhance the cloud cuckoo land prospects of the private sector producing the additional 2.5 million jobs expects/hopes it will do to offset the massive, and necessary, reductions in public sector employment.

No doubt there will be some growth in the economy and some investment by the private sector as well. But the chances of it being at remotely the levels required are, in my not all that humble opinion, slim to nil.

I hope I'm wrong but I believe we are going to be faced with very high unemployment for many years to come, if not permanently. I think that there will need to be a great deal more economic stimulus if we are going to avoid falling back into recession.

I just hope that the government will be sufficiently pragmatic to recognise and act upon the danger signs which are likely to manifest themselves very soon. We shall see.

Difficult not to agree with much of what Bernard says. In relation to his criticisms of the way in which his ceiling repair was managed, I think it fair to note however that some service industries have improved. Ordering and obtaining goods is a much less painful experience than it was 20 years ago. This is a personal snapshot but, as an expat living in retirement in France, I buy a lot of stuff from England and some of it on Ebay. I have been pleasantly surprised by how helpful and honest so many ordinary people are, and efficient in delivering the goods.

Ian Duncan Smith, who (like Frank Field) seems to see the problem of unemployment with fresh eyes, is to be applauded. Whether he can overcome the indiscipline of the schools and the assumption of many young people that they are entitled to foreign holidays and expensive clothes etc. etc. etc., without having the drive or initiative to earn the money to pay for them, remains to be seen. What is clear is that, given the right incentives, the UK population will perform, as my Ebay example is intended to demonstrate. The real problem is:

i) the overcrowding in the south east and the assumption that you cannot redeploy of large numbers of people to the regions,

ii) the scandalous way in which the labour government permitted/encouraged widespread immigration from the EU accession countries without any thought as to how the local authorities were to cope, and what effect this would have on the indigenous unemployed population,

iii) the assumption that you can continue to build within flood plains (so as to house all the people presently without) and get away with it,

iv) The ruthless insistence on year on year growth in consumption, which will ensure that, eventually, we will live in a desert without the wildlife around us that is a vital part of our planet.

Very good post Bernard - however, as usual in these matters , too much blame for our manufacturing industries is attributed to Thatcher. Britains main manufacturing industries had been in serious decline for generations prior to Thatcher taking office. For eg - Britain's share of global shipbuilding in the 1900s was over 75%, yet had fallen to 5% by the 1960s. The coal mining / steel industries likewise had continually declined, and our 'British' car making industry had been a laughing stock for quite some time.

Our militant unions, which had rightfully fought for social justice in the work place, then supported overmanning measures, high wages without commensurate increase in productivity, restrictive work practices etc, whilst 'Management', became very complacent, weak and reluctance to invest in new technical breakthroughs.

Thatcher at least reduced over-manning in the nationalised industries, which unfortunately made them a prize for foreign investors, so the British consumer has unfortunately not noticed the real benefit .

May I add a comment on the decline oif British industries? Walter is right to remind us of the long decline of our industrial base. I think this can be explained but not defended, by the effect of two wars. The leaders of industry at the outbreak of war in 1914 were often highly successful entrepreneurs, whose names are remembered in their products. The next generation of young men who should have taken forward those great industries was wiped out in the trenches of Flanders; the old generation carried on, tired and backward-looking, without innovation, energy and enterprise. It's forgotten that in the 30s even Keynes, a passionate freetrader, agreed that tariff barriers were needed to reduce unemployment, and inevitably stifle enterprise. And just as another generation came to manhood the year was 1939. In 1945 the industry of our European competitors was destroyed and despite our own losses, we were ready to supply a wide-open hungry market - and didn't bother to update old factories and equipment. We were offered Volkswagen as a reparation, but turned it down. Marshall money paid for Germany 's economic miracle. a visionary enterprise created with passionate enthusiasm and German efficiency. We carried on with out-dated equipment, incompetent managers, and myopic unions.The old defence of our car industry, right-hand drive, was soon broken, when foreign technology began to produce right- and left- hand drive vehicles.

The great Austrian economist, Schumpeter, coined the phrase 'creative destruction.' Look only at the success in sport of the former communist satellites of Russia. Yesterday there was a brilliant semi-final at Wimbledon won by a Serbian who defeated a Czech. Look at the Czech, Slovak, Polish, even Bulgarian players on the women's side. For the first time for 60-odd years, there was not a single English player in the men's singles - but just one Scot. I sometimes feel we have been welfared into indolence and apathy.