Friday, August 9, 2013

Will You Answer My Four Questions Mr Carney?

I'm not an accountant, I'm not an economist, I'm not a stats boff and I don't profess to be,  like a great many other people I am just ordinary and readily admit to being a bit of a "numbers simpleton", however, I don't think that this should disqualify me (or anyone else) from  asking questions of this government. Someone must ask the obvious questions because it's plain that the Tory supporting right wing press and broadcast media are not going to ask them.

People like me can have an advantage over economists and statisticians, because we can sometimes clearly see  the "bleedin obvious" which is usually staring us in the face and is missed by people that quite simply know too much. We do not have all the data and counter data floating through our minds and cluttering them up, preventing us from seeing the trees for the woods!

Mark Carney, the new Governor of the Bank of England (put there by George Osborne) has said that he will do nothing about raising interest rates until unemployment falls to 7% (it is currently 7.8%). This is crucially important because interest rates govern the costs of our mortgages, loans and credit cards etc.

So if I could ask Mr Carney a question it would be:

  • As he is basing his entire 'forward guidance' policy for the economy on the number of  unemployed falling to 7% from 7.8%, which set of unemployment figures is he using to base all his calculations on?

Is he going by the government's preferred number of around 2.5 million unemployed, or the real number of unemployed which some analysts estimate as over 4 million?

This is not point scoring this is a deadly serious question, if Mark Carney is going to use the government figure which is currently 7.8%, (around 2.5 million unemployed) then his entire calculations are wholly incorrect from the outset. Far be it from me to contradict the new Governor of the Bank of England and call me a cynical old pedant, but I'd still like to know the answer to this question.

The Office National Statistics (ONS) are not disputing that hundreds of thousands of unemployed people are being forced onto various government workfare schemes and  are not counted on the unemployment register, in fact the ONS have confirmed this.

Zero hour contracts are not few in number as some Tory MPs who are also company directors whose firms are benefitting from zero hour contracts would have us believe, they are being heavily abused and there is estimated to be over one million people on them and this figure is creeping up each week, as more unscrupulous firms cash in on cheap unfettered labour. People stuck on zero hour contracts are not counted as unemployed, even though they may not have any work, so this is another way that the government are manipulating the unemployment statistics.

Self employment is also another area where the workforce is being abused. Jobcentre are using self-employment as a means to keep people off of the unemployment register, these people do not receive JSA (job seekers allowance), so again they are not counted as unemployed.

Part-time - The number of people now being employed in low waged part-time positions is soaring, once again these people are not on a sustainable income, but crucially for the government are not counted as unemployed.  Likewise the rising number of people employed in temporary positions are transient and may have long periods between work, but the government has now increased the length of time they must wait before they can claim unemployment benefit (JSA) and if they cannot claim they cannot be registered as unemployed, which is a yet another way this government have found to distort the unemployment figures.
The government is rolling out workfare on a massive scale 
Tens of thousands of forced unpaid work placements have already taken place. 
The government intends 250,000 workfare placements on the Work Experience scheme alone. If each placement is 8 weeks of 30 hours work, this is 60 million hours of forced unpaid work. 
850,000 people were expected to be referred to the Work Programme by the end of 2012. However, due to the “black box” approach the government uses with the private providers, it has so far refused to publish how many of those are being forced to work without pay. 
The Mandatory Work Activity scheme was expanded in summer 2012 to a capacity of 70,000 places a year
Taking all of this into consideration even the real number of unemployed which has been estimated as around 4 million is looking like a very conservative figure, it's probably a lot higher and if this is the case, then our economy, far from being in recovery, is in a very bad way, we are just not being told about it.

Mr Carney has also said it would require 750,000 new jobs to bring the unemployment figure down from 7.8% to 7%. This seems a remarkable small figure and it must be a figure which has been based on incorrect unemployment data. The government has been telling us each month for almost three years that millions of new jobs have been created. Are these so-called "new jobs" that have been miraculously created in a recession really new jobs, or just mainly public sector jobs being reclassified as private sector jobs and as such is Mr Carney going to go by the official number of new jobs created, or the unofficial number - the real number? Is Mr Carney going to be using reclassified public sector to private sector jobs in his calculations? Or is he once again basing his calculations on a set of figures that mathematically and economically do not exist, or only exist politically in the minds of the prime minister and the chancellor? I want to give Mark Carney a chance, but I'm finding it difficult to do that when he seems to be starting from a point where he too is trying to pull the wool over the public's eyes.

Back in October 2012, Cameron and Osborne told us that a million new private sector jobs had been created since the Coalition had come to office, it simply wasn't true, it was a complete lie!  In fact at that point, 200,000 of the jobs they were claiming as "newly created private sector jobs" already existed in the public sector in Higher Education - they just relabelled them!  It is not only in Higher Education that we see this reclassifying of labour titles,  in 2012, the number of public-sector workers declined in a variety of sectors; the armed forces were down 10,000, the police 28,000, the civil service 63,000, the NHS 42,000. (As time has passed these numbers have increased)
Now this practice is now picking up speed, as companies like Virgin Care and other private health companies like H5  the Private Hospital Alliance (David Cameron's lobbyist election strategist Lynton Crosby's client) are taking over the running of huge swathes of our NHS, hospitals, care homes, walk in centres, clinics etc and all the staff  who were previously classified as public sector employees are now  being reclassified as private sector workers. This is another political stunt and sleight of hand being used by George Osborne, he wants us to believe that the previous Labour government "bloated the public sector" and that the Tories have slimmed down the public sector at no extra cost, as well as keeping unemployment down, it is a huge lie, the public have been deliberately deceived, all that has happened is that public sector employees have been bullied into becoming private sector employees and have had their working rights stripped and their pay lowered in the process.

So are these the newly created jobs that Carney is talking about? If so, his figure of 750,000 has already been surpassed, as Cameron and Osborne tell us that the number of private sector jobs newly created increases by at least one million on a quarterly basis, so will Mark Carney be adjusting interest rates to try and stop rising inflation? Inflation being stoked by this chancellor interfering in the housing market and deliberately over inflating the housing bubble to make it look like the economy is recovery  when it really isin't, all  that is happening is that the chancellor is "bucking the market" and even his heroine Margaret Thatcher once famously said "you cannot buck the market".

 Another puzzle is that the figure Mr Carney says may trigger action on interest rates has already been surpassed and he has done nothing about it - why?

Basically what Carney is doing is keeping interest rates low on the back of unemployment, because he thinks that the UK economy may be recovering but not quickly or strongly enough. He has also given himself caveats which allow him to go in and change interest rates if need be. Looking at the way both sets of inflation figures are rising and at the way the chancellor is over inflating the housing bubble, if I were thinking of taking out a business loan, a personal loan or a mortgage, I would be very nervous. Quite how his actions are being portrayed as good for loans and mortgages etc when he has the option to change it all at a drop of a hat is being completely over-egged.

I cannot believe that a man in Mr Carney's position with all of his know how would make such a basic schoolboy errors, so this brings me to this last question:

Does Mr Carney know something that we don't? Has George Osborne and Liberal Democrat Danny Alexander known the true number of unemployed and the true number new jobs creation all along and provided mark Carney with these figures? I hope not, because if this is true it makes Mark Carney complicit in a lie and in the deliberate deception and misleading of the British people by their government.

Mr Carney has also failed to even mention the housing bubble that George Osborne is creating. Even the outgoing Governor of the Bank of England who spent most of his time kowtowing to George Osborne and David Cameron, warned against Osborne's Help to Buy scheme and the problems it was likely to cause and Mr Carney says nothing -  why?

Is it because he knows only too well that an economic recovery based on lies and deception, slave labour, zero hour contracts, a housing bubble and consumer credit and mounting debt is not an economic recovery, it is a massive economic deception and a huge gamble? If Carney is now a part if that gamble, I would like to know if he has been brought in to explicitly clean up the mess that Osborne's previous gambles with the economy has caused? In which case he'd better be aware of this saying "don't go throwing good money after bad". When this Osborn gamble fails (and it will), it is not only his reputation on the line, it is now that of Mark Carney's.

According to a report from the European Commission, the UK's ratio of debt to gross domestic product (GDP) is still climbing and is out of control, from a projected share of 95.4% this year to 98% in 2014 and any relief from debt hangover may have to wait until 2016 and if things continue as they are even that is highly unlikely!

The national debt and the deficit is rising and Osborne will be forced to borrow at least £248 billion more over the course of this parliament than Labour did in their entire 13 years.

With the madness going on in the  housing market right now, thanks mainly to Osborne's 'Help to Buy' schemes where he's using taxpayers money to underwrite private sector loans to the construction industry, inflation is rising, it is hard to see how Carney will be able to avoid raising interest rates in the very near future as living standards in this country are already at a historic low and we are now 5th from the bottom in Europe, above only countries like Portugal, Spain, Greece etc. If inflation is allowed to increase unchecked then living standards will be further eroded and this will have a detrimental effect on consumer spending and confidence. This is what happens when idiots like Osborne are allowed to buck the market, drive down living standards to create a false impression of an improving economy, pretty soon the wheels start coming off!
Am I the only one to have concerns over Help to Buy? Apparently not, read what Allistair Heath of City AM has said:
The Coalition has responded to an overvalued, broken property market by subsidising credit further, nationalising risk, artificially bolstering the number of housing transactions and pushing up prices, while failing to liberalise the market to allow the increase in the supply of properties that is so badly needed. No wonder many existing homeowners are feeling happier – boosting their wealth and allowing them to remortgage and spend is clearly at the heart of Osborne's re-election strategy but it will only make the inevitable day of reckoning even more traumatic.
Can Mark Carney explain his feelings about the chancellors Help to Buy schemes and what their effect is going to have on a housing market where house prices were already grossly over valued? Cameron and Osborne have spoken much about the British economy needing to re-balance and the British economy is based on it's housing market, how can it rebalance if Osborne is helping to artificially raise house prices still further? If this government and the Governor of the Bank of England really did want to help first time buyers, they would limit the value of the property involved in the scheme to considerably lower than the £600,000 it currently is. Now all it is, is free for all taxpayer underwritten loans for rich people to buy bigger houses, EU property developers to buy British property to let to Brits at an inflated rents and for the construction industry to use taxpayers money to gamble with. Once again this so-called economic recovery is shown to be a massive deception with Osborne's help to buy at the e centre, is Mark Carney now allowing himself to be part of this deception? How is this not going to have a detrimental effect on inflation? How is this is any way shape or form going to increase the number of houses built this country desperately needs?
Help to Buy should really be called Help to Sell, as the main winners will be developers and existing homeowners who will find it easier to sell at inflated prices. Pumping more money into a housing market with chronic undersupply has one surefire outcome: house prices will go up. At best it may help a small number of new buyers, but it will mean housing becomes more expensive for all those who follow.
All of which raises the thorny issue of when to stop Osborne's house-buying schemes, does the government have an exit strategy, if so when will it be implemented?  Has Carney pencilled this into his factors for 2016?

Then there is the even thornier issue of Quantitative Easing, which is the only thing that is helping Osborne pay down some of the deficit, without that it would be rising out of control. So when does Carney plan to stop QE?

The only people who will gain from the Help to Buy schemes are the private sector construction industry who are now in receipt of taxpayers money to help rebalance their books, if this was happening in the public sector, there would be "outraged meltdown" in the Tory supporting press. It will be interesting to see all these right wing journalists all scrabbling around trying to find ways of saying they predicted the inevitable crash (when in fact they have been toadying up to the Tories) and trying to find a way to blame Labour for the catastrophic mess which is in the process of being created, when this all goes pear shape - and it will!

It really is a mystery, why is Carney going to sully his reputation by becoming involved in George Osborne's attempts to pump up the market causing a pre-election credit boom just in time for the next election? Is it just for the money?

Labour may win that election, if so they should be now pointing out exactly what Osborne and Cameron are doing, so they do not get saddled with the blame for things that are not their fault (yet again). Because as sure as "eggs is eggs" we are heading for an almighty crash shortly after the next election (if it doesn't start happening before).

Osborne and Cameron really are taking the mother of all gambles with the economy, they really are gambling recklessly with the livelihoods of the British people, while making those least able, with least money pay the stakes for their gamble.

Anyone who thinks this country's economy is in recovery must reside in the same place as Osborne and Cameron - La La Land, postcode DEN 1AL.

Carney is the Tory prodigy of the fiscally illiterate Conservative chancellor George Osborne, that alone fills me with foreboding, I can't help it, it just does, most likely born out of the fact that everything Osborne touches ends up in tatters. I do not trust anyone who tries to dig George Osborne out of his political hole, the chancellor is a pillock - pure and simple, oh he may be nice to kittens and small children, but he's still a pillock.

That said I would still like Mark Carney to answer my four questions, in my opinion, the whole British economy is dependent upon them!
  • Is he going by the government's preferred number of around 2.5 million unemployed, or the real number of unemployed which some analysts estimate as over 4 million?
  • Has Osborne and Cameron supplied Mr Carney with the true number of jobless?
  • Is Mr Carney going to go by the official number of new jobs created or the unofficial number?
  • Has Mr Carney made allowances for when Osborne's house-buying schemes end? Because when they do this could tip the economy back into recession (if we ever came out of it)


Nick said...

Funny you mention the bank but that is where i worked back in the seventies/eighties before retiring with ill health

The governor who i served back then was the very best this country has ever had but today the standard today falls well short sad to say

Eddie George was very good and then things started to go downhill with mervyn king

The main problem with king was he could not tell things as they were and with his eye always off, the ball he was always late with the news, which was always going to be his downfall

He didn't see that things were getting very serious in the early part of 2008 his excuse was it was for the FSA to deal with bad banking practise and his hands were tied

now my governor lord Richardson spent his 10 years in governorship seeing and overcoming a whole load of serious worldwide problems and he just got on with it with the deputy governor sir jasper hollom and no one not ever the BBC were any the wiser as to what was going on as it was being dealt with in a commanding manor in which our overseas gusts the prime ministers and presidents of the world were in Orr of

he also had a knack for reaching out to the likes of labours Dennis healy who much admired him and were good friends

they were good days for me as i grew up in the bank with my father and became a very respectful figure in my own right with distinguished references and till this day i represent a solid figure way above the likes of David Cameron who despite his Oxford background could never match the likes of myself for honesty and integrity

yes my retirement was a huge blow because i was the only one at that time who the governor and directors trusted a conversation to and although i knew nothing i was an expert at any cock and bull story floating about which came in very useful in 1979 when Mrs thatcher came to power as she was full of bullxxxx

Luckily, the governor saw through her and she made no impact on the way he worked
There is some further reading from his obituary in which Gracie you may like to read up on

Gracie Samuels said...

Thank you Nick, I will certainly read up the links you so kindly left me.

It sounds like you really enjoyed your time at the BoE under Eddie George. You are right people did trust him, far more than they ever trusted Mervyn King who politicised his position as is Mark Carney, who George Osborne brought in and no way would Osborne bring in Carney unless he was a Tory! Osborne is a real tribal politician.

I remember Eddie George had (and very much earned) the nickname "Steady Eddie", he helped steward this country through some really hard times. We just do not have anyone of his integrity or calibre left.

I don't understand why Carney is placing all his eggs in one basket of lowering unemployment from 7.8% (approx 2.5 million) to 7%, anyone with half a brain knows that unemployment is much higher than 7.8%, so his calculations are out before he even begins. Why is he sticking to government line when he knows it's wrong?

Nick said...

I have a lovely photo of the queen mum who visited the bank back in 1982 for an evening reception and governor Richardson on my lounge wall and when you look at it you come to realize those days are very much over

What we have now is a sort of mish mash with both the government and bank in much decline and not leading in a positive and transparent way after all it's not that difficult when you have the right people around you

as for the new governor sticking to a unemployment model which is incorrect is anyone's guess and anyone with a brain can see it's wrong as these figures are always down played just is the housing numbers

it's about time the true unemployment figure was out at around 10% and we need at least 1 million new house to be built hopefully like mine on a fifty fifty estate a mix of social and private housing with me playing a main role in giving those around them the best advice on their needs for free

it's not always popular but it's decent and honest and by us all pulling together it's a good estate to live on with no crime or litter etc

here are some more links Gracie of the directors i served under in my time at the bank

Sir Kit McMahon

Sir George Blunden

Christopher Dow

sir jasper hollom