We make so little, these days, that we import most of what we buy (in terms of clothes etc – and, indeed, food). Which is a huge part of what is messing up the balance of payments, as we export much less.

If you can export a service – fine. But most cannot be exported.

Similarly, if we manufactured/produced stuff here – and sold it here, that would have a positive impact on the balance of payments.

If you had to build the server whether you run it on your clients behalf, lease it to them or sell it to them you are a manufacturer. In you buy the server to then sell on, lease or use in your data centre on your clients behalf then you are a service provider. The fact your accounts department may class you running a server you manufactured for your client as a service sale is semantics. It is who built it that counts.



If you don't build the servers (in your example) and say bought them in from a manufacturer in the USA then it definitely isn't as real.

If we sell that server as a service, then in the whole wrap up of "what is the UK economy" then it counts as a service. Even though in both cases we have built a server and it's utilised in the same way, just charged differently.

i've read everything you posted, still you carry on with the patronising 'i know so much than you' tack, that so many round here seem to buy into.

so, are we training everyone to install insulation or be farmers now? why not plumbers, they all earn 100k don't they?

just a few quick questions. when we've trained up all these home insulators, the ones who are rubbish at it, they fall through the ceilings and stuff like that, what happens when they can't get any work? then you've got those already doing this job who suddenly see their income drop as more flood the market, do we dole out the money to them too?

we're in recession and the deficit is actually decreasing. thought you might know that, or is it 'comprehension difficulties'?

it's good that you want to just magic jobs from thin air, you should really tell important people that.

I know - go and invest in some education. The amount you'll have to spend will have us out of recession and the deficit paid off in no time.

I may reply in detail later, but it's probably pointless in terms of your willingness/ability to comprehend the issues - but then I don't mind a touch of masochism.

We are, a double dip one when the last government had us on the up turn.



You may want to check that.

You're making a bit of a fool out of yourself now.

A bit?

That is the point. It's charged differently. How you charge for it doesn't alter whether you are a manufacturer or a service company. If BMW only leased their cars as opposed to selling them they would not become a service company. They would still be manufacturing the cars.

I suspect though that your company doesn't actually [imanufacture [/ianything. It just plugs components manufactured by other companies together to make a server. That is not the same thing as manufacturing.

Here's a way to spend our way out of recession.

Government, local and national, "own" thousands of hectares of land suitable for housing development (I say "own" but in reality they are only custodians of what belongs to us, the nation). If this land was leased at peppercorn rents to charities and other not-for-profit organisations, they could then attract the necessary investment from institutional investors, like insurance companies and pension funds, to cover the cost of building much needed housing. Remember, there is a very real shortage of truly "affordable" housing.

The cost of construction (labour and materials), of a new house is around 40% of the final value, the balance being the cost of the land itself. These houses could then be rented out at truly affordable rents of 50% of the prevailing rate. The institutional investors would see a far better return on their capital than if they invested in government bonds and with a 99 year lease, they would also have similar or better security as if they'd invested in gilts. These houses should carry a cast-iron convenant that prevents any future "right to buy" schemes, they and the land they sit upon should remain mutually owned.

Quite apart from mitigating the housing shortage, the knock-on effects would be an increase in direct labour for construction and provision of infrastructure, this then feeds into increased employment in industries supplying construction, such as brick-making, timber, plumbing, electrical equipment etc. Each new home will also require to be furnished and carpeted, so more people employed in manufacturing and selling these items.

As each new person comes off the dole and into employment, the exchequer wins by not having to pay benefits and hopefully (depending on their wage), gaining tax & NI receipts. As each new home is rented, at these truly affordable rents, the exchequer also gains by reducing the amount of housing benefit paid. It's also worth pointing out that it is not the claimant who benefits from HB payments, it is his (invariably private), landlord. Privately-owned rented properties would also see reductions in revenues as "the market" drives down private rents to match those of the mutual-property rents.

Of course there will be losers:

The way UK banks are currently structured, they view 25 year mortgages as long term, so they'd probably lose out to institutional investors or foreign banks (who are not averse to long-term investment).

Private landlords would see a reduction in their rent receipts, as would the letting agents who leech off the back of them. But I strongly contend that th overall benefits to the nation far outweigh these "problems".

The only thing preventing this happening is dogmatic ideology, not surprising when you look at the number of MPs who are buy-to-let landlords and the influence on those same MPs of the financial sector. Instead, we now see proposals to convert "social housing" to "affordable housing". You may think there's little difference between the two but [url=http://redbrickblog.wordpress.com/2012/10/09/82000-social-rented-homes-hijacked-to-pay-for-affordable-rent/THIS LINK[/url shows that there is a very real difference and you have to wonder at the mentality of raising rents from "social" to "affordable" and basically funding the difference through housing benefit. That's the politics and economics of the madhouse.

Considering the almost negative impact that QE has had so far, dropping that money from the sky would have produced a far greater stimulus to the economy. The only problem being, it would be us plebs, who tend to spend a far greater percentage of our income in the local economy, would have received some of it. As opposed to the already wealthy, who tend to salt their money away in offshore havens.

This forum is brilliant. It is widely accepted that Labour left the economy in a mess, even their own outgoing minister admitted there was 'no money left' but some people on here in an inexplicable desperate attempt to have more ammunition to attack the tories try and argue that Labour left the economy in a good state. Absoloutely unbelievable and quite frankly a very strange stance to take.

Maybe you could post from that far away place called Ajw71land and comment on the last post of the previous page, tell us if you think the proposal is sound or groundless ?

There is real and incotrovertible evidence that they left the economy in a far better state than it is now. The economy was growing, abeit slowly and unemployment was falling

ah, the issues. to be solved with a mass army of home insulators. ffs.

I agree that really there needs to be much more imagination in monetary policy.

On QE however I think we were right to pursue it and I'm suspicious of the lobby that attack it, especially the recent line of attack that "most of the benefits of QE have accrued to the rich". The rich didn't want QE they wanted monetary policy to be tightened so interest rates would rise, as they are net savers. It suits them to get people to think it is a policy that benefits them at the expense of the poor, so they can get a reversal of monetary policy that really would benefit them at the expense of the poor.

The stimulus effect of QE has not worked as well as hoped because banks are not lending. It is supposed to stimulate the economy by getting lending flowing for business investment. The BofE buys government bonds off banks and pays for them with cash, so this changes the composition of whats on banks balance sheets by having fewer illiquid assets and more cash. As cash doesn't pay interest unless its lent, you expect the banks to lend that out. But the banks are just hoarding cash reserves, partly as that makes their balance sheets look better so they can justify paying out bigger bonuses, but also it does insulate them against cash shortages if there is another banking crisis and the banks are not unreasonable in fearing that risk given the fragility of the Eurozone.

However whilst this stimulus effect has not really worked, QE has had two positive effects. One it has meant there is always a big buyer of UK government bonds, which has kept the rate of interest on those bonds low and so reduced UK government borrowing costs. That in turn means savers look for alternatives to UK government bonds so they chase other private sector assets and that pushes the demand for those up as well, which keeps generally borrowing costs low and also keeps the value of private assets high because of high demand. This is the point that has been picked up in the attacks on 'most of the gains have gone to the rich' but it is an important point. It has kept asset prices high, which has maintained the value of things like pension funds and also savings funds for small scale savers. But obviously those with more assets gain more hence the rich have gained more. BUT without this effect from QE, though those with more assets may have had more to lose in absolute terms, a slump in asset prices would expose those with fewer and less diverse assets much more, especially those coming close to retirement.

Mervyn King is a decent bloke who has resisted lobbying from the rich to push up interest rates when inflation was high, also importantly he gets the fact that the economic problems today are global and you need international action to redress the balances of some countries being large net exporters and some being large net importers, King has been banging this drum for a while but he gets ignored. The downside with King is he is not really very imaginative, he is a good man but safe pair of hands. He won't really think outside the box and use more unconventional monetary policy to try and make things happen.

I actually think both the front runners for the BofE, Adair Turner and Gus O'Donnell, would be good choices, it's also a good sign that the banks don't like either of them. Turner would be willing to shake things up with unconventional ideas and also he was the guy who said the UK banking sector was too large and most of it was overpaid and socially useless - a break from the standard line that it is crucial for the UK economy, great tax receipts etc. As for G O'D the main charge against him was he was "New Labours Man" when he was Cabinet Secretary and head of the Civil Service, he gets demonised in the Tory press as being responsible for wrecking the country etc etc which is another sign that they are worried he would not be easy to capture by vested interests. Since leaving the Civil Service and being free to speak out he has been calling for the top priority being the rich to actually pay their taxes, although he can't influence that as BofE governor it shows what side he is on. Another thing I like about him is he is a pretty normal bloke and not up his own backside like a lot of these guys at the high end of finance.

Still no actual suggestions of your own, eh?

Why I am not surprised about that? It would, after all, require a working brain.

No. There are some on here who understand facts – and don't believe all the rubbish spouted in certain elements of the media, which feed the stupidity of gullible imbeciles.

Haha, the old 'you have been brainwashed by the media' chestnut.

Guess the massive budget deficit is all a lie made up by the evil media, out to control my mind.

Jeeze another of you straw men. No one has denied there is a problem.

I'd love you to point to any post – mine included – where anyone has suggested that there is no deficit and that it is not rather large (and growing).

Feel free.

Off you go.

We'll wait. But I doubt any of us will hold our breath.

Oh goody, so you are not denying that Labour left a large deficit when they left office?

No.

I am pointing out the FACT that Labour's own policies and actions did not cause that deficit – except insofar as they continued the core economic policies of Margaret Thatcher and John Major.

Anyway, I wouldn't want to get in the way of your search for that evidence or see you trying to move the goalposts. So off you go ...

But the deficit would not have been as great if Labour had not inexpeicably build up a significant deficit in the 'boom' years. Spend Spend Spend.

Do you know the NHS ?

Thats the NHS that David Cameron swore to us voters, or plebs as his party members prefer to refer to us as, that was safe in his hands, thats the NHS that most voters of every political persuasion are so proud of and determined not to be undermined by any political party - hence the reason why all political parties spend millions on billboard advertising for , informing us that they won't touch the NHS and its safe in their hands.

That NHS ?

It was fooked when Labour came to government.

You'll be too young to remember that though.