UK economy at high end of expectations, but...

The budget chopping only just arrived, so these numbers are about to change rapidly. Also, it's fair to credit the last government with the last two quarters as the new Tory government had yet to implement any serious changes until now. The fact that the growth was also moving in a downward direction from the second to the third quarter should be a warning though traders are always looking for some small detail to pocket money. If only those trading benefits trickled down to customers, but that's not how the system works today.

The Office for National Statistics said Britain's economy grew 0.8 percent between July and September, down from the 1.2 percent registered in the second quarter but at the very top end of economists' forecasts.

Sterling jumped against the dollar and the euro and gilts tumbled as investors reckoned BoE policymakers would struggle to make the case for more monetary stimulus next month, even if growth is expected to slow sharply at the start of 2011.

"It's much stronger than expected," said Alan Clarke, UK economist at BNP Paribas.

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British Conservative government to axe 500,000 jobs

That should really help an already bad economic environment. And the Tories actually think this is a good thing.

Britain will cut 490,000 public sector jobs over four years under austerity measures designed to reduce the country's record deficit.

George Osborne, the finance minister, told parliament on Wednesday that the job losses were "unavoidable when the country has run out of money".

"Today is the day that Britain steps back from the brink. It is a hard road but it leads to a better future," he said.

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British to slash defense spending

Unlike the Republicans, at least the Tories are consistent with chopping everything. BBC:

Unveiling the strategic defence review, David Cameron said defence spending would fall by 8% over four years.

The RAF and Navy will lose 5,000 jobs each, the Army 7,000 and the Ministry of Defence 25,000 civilian staff.

Axing the Harrier and Ark Royal means no planes will be able to fly from British aircraft carriers until 2019.

Mr Cameron opened his Commons' statement by denying the review was simply a "cost saving exercise", saying it was a "step change in the way we protect this country's security interests".

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Tory spending cuts will cut 1 million jobs in UK

It's a PWC study so it wouldn't be a surprise if the job cuts numbers could actually be worse. Why would anyone want to drive their economy into a double dip like this? The Independent:

Almost one million jobs will be lost as a result of the Government's programme of deficit reduction – many in the very regions and industries that have already suffered most in the recession, according to a powerful report from a leading firm of accountants.

Economists at PricewaterhouseCoopers say that a further half a million jobs will be lost among private sector contractors and suppliers as a result of the Chancellor's anticipated £84bn in cuts, due to be announced in detail in eight days' time. The Office for Budget Responsibility has already acknowledged that half a million public sector jobs will go by the time the cuts programme is fully implemented, by 2015. The outlook for the UK economy, PwC says, "remains in the balance". It adds: "There is no escaping the fact that the fiscal squeeze will have a significant adverse effect on many sectors and regions."

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Guardian: 'Turning up the heat on Rupert Murdoch'

There's always much talk about Rupert Murdoch (for example, here, here, and here). But it's hard to get a grasp on what he actually does.

We think of him as a propagandist, but he's so much more. And he's not primarily a propagandist; he's a media monopolist whose market product is propaganda. Here's his business model — he semi-monopolizes media in whatever country he gets into, and then sells propaganda services to government officials and hopefuls in exchange for increased monopoly control after they get elected.

Andrew Cockburn had a good analysis in a 2003 Counterpunch article (h/t Griffon for the link). Quoting a recent Murdoch biography:

Not only has Murdoch sought and received political favours: most of the critical steps in the transmutation of News Limited, his inherited business, into present-day Newscorp were dependent on such things. Nor is there essential change in his operations as the new century gets under way, and he prepares his sons to extend the dynasty.

There's not enough space here to detail the growth of News Corp in the U.K. and the U.S. But every step depended on the hand-shaking noted above — get into a market, sell propaganda favors to politicians (often, but not always, right-wing ones), get those pols elected, then extract further monopoly concessions. Repeat until his insatiable hunger is satisfied.

That's how he grows his empire. He's international, and no one has yet stopped him.

So now the U.K. is at another Murdoch decision point. The Guardian has an article that opens this way (h/t hector); my emphasis throughout):

It is March 2015, a couple of months before the general election. One media company bestrides British politics – spanning television, newspapers and the internet. It is more than twice the size of the BBC, with a turnover of £9bn. Controlled by Rupert Murdoch, it is called News Corporation.

Bound by none of the BBC's tradition of impartiality, the Murdoch family is deciding whether to endorse David Cameron for a second term. They meet in the knowledge that behind them lies the support of a company whose Sun and Times titles account for two-fifths of all newspapers sold in Britain and whose broadcasting operation is larger than the BBC, ITV and Channel 4 combined. This vision of financial and political power has so terrified rivals that they are already ganging up in alarm. From the Daily Telegraph to the Daily Mirror, from the Guardian to the Daily Mail, a joint letter has been prepared for the business secretary, Vince Cable. Sent today, the purpose of the memo is simple – to persuade Cable to block News Corp's proposed £8bn bid to take full control of BSkyB. ... What so frightens Britain's newspaper owners today is what would happen when the profits of Sky are aligned to the power of the Sun and the Times, creating a media company whose size and scale is unheard of in British history.

Sky is already larger than the BBC today, with a turnover of £5.9bn, while News International turns over £1.7bn.

And that's the decision before Cameron's government. At present, News Corp owns 39.1% of the company. Murdoch wants to spend £8 billion to buy the rest. Will Cameron's government, which owes Murdoch huge favors for recent election support, block this or not?

It's hard to trim this article to fair-use size, so please do read it through. There's so much there.

As a taste of how Murdoch operates, here's from the Krugman article I discussed a few days ago:

[I]n Britain, a reporter at one of Mr. Murdoch’s papers, News of the World, was caught hacking into the voice mail of prominent citizens, including members of the royal family. But Scotland Yard showed little interest in getting to the bottom of the story. Now the editor who ran the paper when the hacking was taking place is chief of communications for the Conservative government — and that government is talking about slashing the budget of the BBC, which competes with the News Corporation.

Which takes us back to Sky. Note that the BBC is the only real remaining competitor to Sky for satellite TV services in the U.K., the rest having been eliminated. Say goodbye BBC if this plays out as usual.

And so it goes. Murdock is not a propagandist; he's so much worse. He's a megalomaniac, an empire builder of tremendous capability, and a dynasticist — he wants to pass control intact to his children and his children's children. In our new century of crazed corporate beasts, Murdoch is among the worst — soulless, ruthless, relentless, and effective.

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British Conservatives open the floodgates for university price increases

What's nice about unlimited university fees is that this helps keep out the unwashed masses. You know, the type that Lord Browne would hope to never have to see let alone share a classroom with at school. It's refreshing in this day and age when someone of privilege - with a title no less! - can comfortably proclaim his adoration for the good old days when only the right people could afford to attend the right schools. Who better than Lord Browne could fully understand the dynamics of supporting or not supporting up-and-coming universities?

Some might say that because he was educated at Cambridge and Stanford he is an elitist and has no appreciation for the less fortunate who already struggle to fund their way through higher education. But really, as long as the right people continue to dominate the halls of Oxford and Cambridge, who really cares about the rest? Ahhh, change that feels so right. The Guardian:

Universities should be allowed to decide what they charge students under a radical shake-up of higher education which would see the existing cap on tuition fees lifted.

A new system of financing universities will allow for a 10% increase in student places to meet rising demand for a degree-level education, the Browne review proposes.

Graduates will start repaying the cost of their degrees when they start earning £21,000 a year, up from £15,000 under the current system, the review recommends.

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England and Wales have a major race problem

There's no other way to explain such statistics. The Guardian:

The proportion of black people in prison in England and Wales is higher than in the United States, a landmark report released today by the Equality and Human Rights Commission reveals.

The commission's first triennial report into the subject, How Fair is Britain, shows that the proportion of people of African-Caribbean and African descent incarcerated here is almost seven times greater to their share of the population. In the United States, the proportion of black prisoners to population is about four times greater.

The report, which aims to set out how to measure "fairness" in Britain, says that ethnic minorities are "substantially over-represented in the custodial system". It suggests many of those jailed have "mental health issues, learning disabilities, have been in care or experienced abuse".

Experts and politicians said over-representation of black men was a result of decades of racial prejudice in the criminal justice system and an overly punitive approach to penal affairs.

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British far right teams up with Teabaggers

Right wing Islamaphobic loons of the world, unite.

The English Defence League, a far-right grouping aimed at combating the "Islamification" of British cities, has developed strong links with the American Tea Party movement.

An Observer investigation has established that the EDL has made contact with anti-jihad groups within the Tea Party organisation and has invited a senior US rabbi and Tea Party activist to London this month. Rabbi Nachum Shifren, a regular speaker at Tea Party conventions, will speak about Sharia law and also discuss funding issues.

The league has also developed links with Pamela Geller, who was influential in the protests against plans to build an Islamic cultural centre near Ground Zero. Geller, darling of the Tea Party's growing anti-Islamic wing, is advocating an alliance with the EDL. The executive director of the Stop Islamisation of America organisation, she recently met EDL leaders in New York and has defended the group's actions, despite a recent violent march in Bradford.

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British Conservatives: We're all in this together...sort of

As long as you don't have too many children or you are one of the bankers who helped create the global recession, everyone will feel the pain of the austerity program. Oh, and don't expect any help from the government, you spongers. Is that inspirational or what? It's hard not to get choked up and have a little tear in your eye. The Guardian:

He told the party faithful in Birmingham that "the spirit of the big society" could "blast through" if everyone pulled together in the national interest.

The coalition, he said, was not all about cuts, but "an attempt to create a country based not on Labour's selfish individualism but one based on mutual responsibility". Labour, he said, was now the party of the status quo: "We are the radicals now, breaking apart the old system."

Tackling one of its most common criticisms, he said of his core idea: "The big society is not about creating cover for cuts but an attempt to create a citizenship that is not simply a transaction in which you put your taxes in and get your services out. When we say 'we are all in this together' that is not a cry for help, but a call to arms."

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Tories tax their own

Few would have expected such a move by the Conservative government. Perhaps like Obama and his dealings with the left, the UK government is confident that their supporters have nowhere else to go. Well, nowhere except sitting at home at election time. As for the criticism of the bankers, it does appear to be more hot air to win over the middle who are still fuming over the news of the 2010 banker bonus plans. Besides big talk, it's doubtful the bankers will be asked to join the cuts. The Independent:

George Osborne imposed the pain of his spending cuts on the Conservative Party's natural supporters yesterday by announcing that child benefit will be axed for families where one parent pays the 40 per cent tax rate.

In an attempt to reassure the middle classes, the Chancellor's high stakes gamble was coupled with a crackdown on workless families accused of milking the benefit system. Claimants will no longer be able to claim more than £500 a week in benefits – the median income for working families after tax.

In his speech to the Tory party conference in Birmingham, Mr Osborne said his "tough but fair" mantra would also apply to the banks. He warned: "We will not allow money to flow unimpeded out of those banks into huge bonuses, if that means money is not flowing out in credit to the small businesses who did nothing to cause this crash and suffered most in it."

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Report: UK banks may need another bailout next year

Much like in the US, good luck with that. There's very little appetite for helping the bankers after their behavior of continuing to reward themselves without real results. It's unfortunate that in all likelihood the only way to reform the financial industry is another collapse in that industry. The industry who caused the recession has proven itself to be incapable of reform or gratitude.

Many British banks may need another state bailout next year and their borrowing requirements could hit 25 billion pounds ($39.4 billion) a month, the New Economics Foundation (NEF) think tank said on Monday.

The NEF said it had examined Bank of England data and concluded that many UK banks appeared to face a funding cliff, as the NEF published a report on the British banking system.

Royal Bank of Scotland and Lloyds had to be part-nationalized as they ran up huge losses during the credit crisis, and others such as Barclays and HSBC have benefited from cheap credit provided by the central bank.

Quite a few US banks have also benefited greatly from cheap credit. They too have conveniently overlooked and ignored just how valuable that was for their livelihood. Read More......

British Conservatives floating plan to increase college tuition

Yes, because leaving families and students with this much debt after graduation has worked out so well in the US. Only the ultra-rich like the former BP CEO who is promoting this could find such a plan a good idea. The Guardian:

A free market in tuition fees in which universities will be free to charge more than £10,000 a year for courses is expected to be recommended by the government's official adviser on higher education next week.

Unveiling the most important report on higher education in decades, Lord Browne will say that universities should be allowed to keep all the income from tuition fees up to an annual level of £10,000. The current cap is £3,290. The Observer has learned that he will also recommend they be allowed to cross that threshold if they pay a rising proportion of the additional income into a central fund. The money could be used to support students from poorer families.

If they are accepted, the radical proposals by Browne, the former chief executive of BP, would amount to the most far-reaching shake-up of higher education in decades and could result in middle-class students leaving university with debts in excess of £80,000. It will be up to ministers how they respond to the plans.

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UK Conservative government welcomes Sudan trade delegation

It's a rather unique trade policy to invite trade partners who are wanted to The Hague. It's not that there aren't plenty of morally repugnant trade partners out there that we all rely on, but this does seem to be extreme. The Independent:

The Government is courting the regime of the indicted war criminal Omar al-Bashir by declaring that relations with Sudan have entered a "new epoch". The announcement came as Britain welcomed a trade delegation from the country which has near pariah status, for the first time since warrants for President Bashir's arrest were issued by the International Criminal Court (ICC) in The Hague, over atrocities in Darfur.

Khartoum's high-level delegation met British government officials and business leaders on Wednesday to encourage investment in a country still targeted by US sanctions. It was the clearest example yet of how problematic William Hague's new foreign policy, in which commercial interests are to trump ethical concerns, will be for the Coalition to implement. The change has already seen complaints that UK diplomatic missions have been reduced to commercial agencies to drum up business.

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Blair warned about torture in early 2002

That would be the same Tony Blair who is a Middle East peace envoy. The Guardian:

Tony Blair was warned a matter of weeks after American forces began rounding up terror suspects that British nationals held by the US in Afghanistan and Guantánamo Bay were being tortured, secret documents disclosed in the high court reveal.

He expressed concern about their treatment after initially being sceptical, he admits in a hand-written note on a Foreign Office (FO) document dated 18 January 2002. It appears among heavily redacted MI5 and FO documents released in court hearings in which British nationals are suing the government, MI5 and MI6.

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Bank of England Deputy tells Brits to spend, not save

So is he suggesting people ought to sacrifice their own personal well being and future in the name of the country? Is that responsible? As Gaius mentioned yesterday, this is the situation that we're in today with no easy or pain free way out. Doesn't it sound odd that the dirty masses are being asked to sacrifice though the bankers who are all neatly pressed were not asked to do the same? Funny how that works. The Guardian:

Britons should go out and spend to help invigorate the UK's economic recovery, the deputy governor of the Bank of England has urged. In unusually unguarded comments for a banker, Charlie Bean yesterday discouraged people from building up cash savings which generate little income due to historically low interest rates.

Bean, who sits on the Bank's monetary policy committee that set the base interest rate, admitted it was being held down in the hope families would use their cash and thereby help reflate the economy.

Low interest rates could persist for several years, he said. They have been at 0.5% for a year and a half. The next monthly rate-setting decision is due next week.

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Another banking executive payout?

If you are an HSBC customer, you may want to follow this story. It's not yet clear what the final number will be though it will be large enough to stand out during this recession. Again, why would anyone want to continue supporting such a bank?The Indepedent:

Last Friday, the bank confirmed that Mr Geoghegan would leave next March after it broke with 30 years of tradition and passed him over for the chairmanship.

In a statement, the UK's largest company said Mr Geoghegan would be paid £1.42m, "pursuant to the notice provisions of his service contract". He will also be eligible for a bonus, which will be calculated by the remuneration committee later in the year. Last year, Mr Geoghegan gave his £4m bonus to charity.

However, it emerged over the weekend that Mr Geoghegan will receive multiples of the amount announced by the bank on Friday, when longer-term incentive plans are added into the equation. The final value of the incentive plan is unknown and will depend on HSBC's performance in the next few years, but estimates over the weekend ranged from £20m to £36m.

A spokesman for HSBC yesterday described reports that Mr Geoghegan could eventually pocket £36m as "inaccurate and sensationalist".

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British Labour Party chooses new leader

The battle was between Ed and David Miliband, with the younger brother winning. As you might imagine, the legacy of Tony Blair was part of the debate with Labour going with the brother who appeared to have more distance from Blair decisions. Who would actually want more Blairism?

As the younger son of the Marxist writer Ralph Miliband, Ed has finally broken free of his brother's shadow, having followed a similar path to the heart of the Labour Party and the top of government. Former teachers at Haverstock School in north London more easily recall the elder Miliband, to whom Ed was always compared.

At work, both were policy-wonks who moved seamlessly from the back-rooms of government to safe Labour seats and into the Cabinet itself – all of this under the tutelage of a prime minister. For David, Tony Blair was his tutor. For Ed, Gordon Brown. Perversely, it was the elder brother's association with the more successful Labour leader that attracted the most negative attention.

During the four-month leadership contest, Ed, who became an MP only in 2005, was criticised for distancing himself from Labour's record, notably on the Iraq war, tuition fees and a third runway at Heathrow. He stood up to the criticism of Lord Mandelson while firing his own shots at Tony Blair's record.

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Largest wind farm in world opens in UK

It's a good thing this was started during the Labour government or else it may never have happened. Much like the Republicans, there are more and more flat-earth types in the Conservative party who would prefer staying with an oil based economy. The Guardian:

The official opening of the Thanet windfarm off the coast of Kent – the biggest offshore project in the world – means that Britain generates more power from offshore wind than the rest of the world put together.

Launching the project on P&O;'s Pride of Burgandy ferry, the energy and climate change minister Lib Dem Chris Huhne promised that Britain would shed its traditional "dunce" status on renewable energy.

"We have enough energy to power all the homes in Scotland, but we need a lot more than that," he told reporters as the ferry drifted close to the slowly rotating blades, "British consumers should be able to rely on a secure, low-cost source of energy in the future, and I'm sure offshore wind will be part of that." Behind him though the enormous grey turbines threatened to merge with the grey cloudy backdrop and grey seas.

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Should banker-bonus-bashing stop and change to policy reform?

The UK's FSA chairman has a point. Unfortunately, the longer the recession or "it still feels like a recession" continues, it's hard not to look at the banker bonuses which were completely unjust. While it would be nice to see policy changes, from a distance, it looks as though many politicians have slapped themselves on the back for taking action against the banks. Unfortunately out in the real world, that success is much less impressive looking. It also sounds like a reach that we should expect the same political leadership who signed off on the initial policies that led to the meltdown, then signed off on the bailouts which rewarded bad behavior, to effectively implement serious change.

In that context, how seriously should anyone expect policy reform? Heck, we now have the Obama administration wilting in the sun from criticism of his administration being too harsh on business. Rather than looking around at the support throughout the US and across party lines for serious reform, Obama has decided to listen to the Wall Street voices and be even more receptive to their needs. And we're to expect policy change? In the UK, does the FSA's Jonathan Turner honestly expect the Tories to propose serious reform?

In a speech to a City audience at the Mansion House, Turner said that there had been "some absurd bonuses for excessive risk-taking" and admitted that bonuses needed to be regulated to discourage the practice.

"There was an explosion of exotic product development, which last year I labelled as socially useless, a phrase from which I in no way draw back," he said. His criticism had been targeted at complex financial instruments such as collateralised debt obligations (CDOs), which were at the root of the credit crunch.

But he added: "We also need to move beyond the demonisation of overpaid traders to recognise, that in finance and economics, ill-designed policy is a more powerful force for harm than individual greed or error, and to ensure that we address the fundamentals of what went wrong."

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British Business Secretary speaks out against 'corporate short-termism'

At least there's one Liberal Democrat left who has a clue. It would be nice if the same attitude existed on the other side of the Atlantic but it won't be happening during this administration. It's laughable to listen to mainstream (and Teabagging) US politicians who fail to accept the basic truth that the economic system has always had deep government involvement when it's successful. Even today, the Republican economy has meant the government supporting big business.

The UK's Vince Cable is being criticized for an "emotional" speech but he's completely right. It's those who fear change from the current rigged system who are upset. The system as it stands today is most definitely rigged in favor of those who have the deepest pockets. The Guardian:

The business secretary will announce the launch of a major consultation on takeovers and executive pay, with the intent of ending "corporate short-termism".

"Let me be quite clear," Cable will tell the Liberal Democrat conference in Liverpool. "The government's agenda is not one of laissez-faire. Markets are often irrational or rigged."

The business secretary plans to identity the sort of malpractices that are causing harm to the wider economy. "Why should good companies be destroyed by short-term investors looking for a speculative killing, while their accomplices in the City make fat fees? Why do directors forget their wider duties when a fat cheque is waved before them? Capitalism takes no prisoners and kills competition where it can," he will say.

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