Brown's spend, spend, spend during his Chancellor's days has brought us into the current economy we are facing today. His appeal at a Downing Street meeting for the lenders to pass on cuts appeared to fall on deaf ears with HBOS, which owns the Halifax, increasing its rate on some mortgages from 6.09 to 6.59 per cent. Borrowers taking out this type of deal will now pay 46 more a month. On a two-year tracker, the rate will increase from 1.49 points above base rate to 1.99 points, giving a current rate of 6.99 per cent.

Other lenders are expected to follow Halifaxs lead.

If the Government wants the banks to lower mortgage rates to home owners - why not just offer them through Northern Rock? Everyone would rush to the Rock to get the loans forcing banks to match the rates or lose the business? Or maybe the government would then run into bigger credit crunch?

'Double dip' recession is occuring now, me thinks.


There are several reasons to doubt Greece's ability to push through its deficit-cutting plans. So expect more turmoil from that direction.

But more importantly, just because the EU has given the nod to the countrys spending plans doesnt mean the entire eurozone is saved. Quite the opposite in fact.

Now the markets are looking to call the EUs bluff. Portugal is the next target. Yields on its debt spiked yesterday. Its as if investors were saying: OK, so you might bail out Greece. But will you bail out Portugal too? Can you even afford to bail out Spain? And we havent even started on Italy.

After the Greeks came out with new, tougher plans, the markets started to look for the next weakest economy in the eurozone to sell. Portugals recent budget was not that impressive.

You have to feel sorry for Portugal. As Ian Campbell put it recently on Breakingviews.com, the country has suffered a bust without ever really having a boom. It didnt take much of a part in the European property bubble for example. Well before the fly-to-let psychosis was gripping property investors in Britain, the Algarve was a well-established, luxury property market.

And in dodgy debt terms, Portugal isnt Greece. In fact, Portugal isnt even Britain. Its fiscal deficit for 2009 looks like coming in at 9.3%, worse than the 8% expected, but hardly the worst offender in the world. Portugals real problem is long-term weak growth. Real GDP per head was actually lower in 2007 than in 2000, as Campbell points out. Over the same period, Spains standard of living had gone up 8%, Greeces by 10%, Irelands by 13%. Now of course, you could argue that Spain, Greece and Ireland are likely to lose all those cheap-credit-fuelled gains over the next few years.

But the real takeaway from Portugals situation is that the living standards of the population wont improve until the system works better. Growth has simply been too low to make the countrys population better off. The challenge now is to make this round of austerity useful for future growth. Pruning Portugals cumbersome state and excessive bureaucracy and trimming labour laws are priorities.

Things havent got any better for Gordon

Why would they?
The man is his own worst enemy.
And ours.

Gordo has made such a mess of things, perhaps he ought to be forced to stay to
clean things up

a financial asbo ?
:-)

Mervyn King is warning that the victor in next week's election will be forced into austerity measures that will keep the party out of power for a generation, according to the US economist David Hale.

perhaps merv thinks whoever wins will give him the sack.

BIGOT =

Brown
Is
Gone
On
Thursday

(Cribbed from elsewhere with thanks)