Recently in Economics Category

Welcome policy makers, journalists, influencers, opinion formers....in short, everyone that the City of Birmingham has always wanted to get to see our city........and love it.

Well here they are, thousands and thousands of them. The Conservative Conference is indeed causing excitement.

And I know that Birmingham will not let itself down. And here is a countdown of some of the greatest things about this city which they will love:

1. The bill will not arrive before you have finished your coffee after dinner

2. The ICC is actually a world class venue

3. Authentic Baltis

4. If you ask someone for directions, people will be happy to help

Ok over to you, what else will they love?

My colleague over on Lifestyle (look to the right and scroll down), Jo Ind is having a bad week understanding the financial news.

Believe me Jo, you're not the only one. I read the newspaper three times yesterday and I still don't get this 'short selling' stuff. Thank goodness for children's tv.

Like a slow-to-die Hollywood movie monster thrashing around until the credits roll, the bubble created by central bankers and politicians who mistake living on tick for prosperity may have been pricked, but it is going to do a lot more damage before it deflates to manageable proportions.

The worse of the credit squeeze may be over, with inter-bank three-month spreads well off their peaks, but the retail banks are only now starting to count the cost of their near-criminal profligacy.

"History has rarely seen factors like this occur at the same time" BMW's financial director Michael Ganal told a news conference last week.

He spoke as BMW's first half pre-tax profits fell to €1.24 billion, down some 35% compared to the same period last year. Net profits also took a nose-dive, down 26%. They were not alone. GM and Nissan also announced dire results last Friday. GM's spectacular $15.5 billion second quarter loss is the third-worst in its 100-year history. Meanwhile, despite increasing market share in the US, Nissan's net income still fell by over 40%.

Ganal was in effect referring to a number of events that have come together at the same time. A 'perfect storm' might be another way of describing things for some major auto manufacturers.

News yesterday that MGs were being produced at Longbridge seemed to catch everyone on the hop. Even the City Council, which has done so much to develop a positive relationship with owners Nanjing and Shanghai, seemed to be expecting the announcement next week.

A rather bungled PR operation by Shanghai should come as no surprise; afterall Chinese state-owned firms going international are very new to dealing with the media, as Duncan Tift notes on the front of Today's Post.

Maybe the experience they gain during the Olympics shortly will help with that. Better communication by Shanghai with the local media, and indeed their own workers, would help a lot here.

Leaving this aside, how much can we actually read into the news that a limited edition run of 500 'new' MG TFs has finally kicked off?

Have the banks - still reeling from the sub-prime fiasco - got another money-losing trick up their sleeves?

Quite possibly, according to Roger Bootle, the MD of Capital Economics and the man who acts as adviser to Deloittes.

He was writing in The Daily Telegraph on the theory that commodities, including oil, have come to resemble yet another speculative bubble that is now about to burst.

The golden rule for those at the top of the quangocracy that rules so much of our lives is that the more you are paid the less you are expected to spend your own money - on anything.

We learned last week that the chairman of the governors of the BBC, Sir Michael Lyons, is putting his subscription to Sky on his taxpayer-funded expenses. It cost us £459, including installation fees, to enable the former chief executive of Birmingham City Council to put his feet up at home and find what the opposition is doing. He doesn't have to fork out for a television set or a DVD recorder. According to the BBC's accounts, they're "lent" to him.

Last Thursday, I was a guest at Drivers Jonas's annual crane survey for Birmingham. As its name suggests, this is a review of development in Brum's city core (measured by the number of cranes in the skyline) over the past 12 months. The survey results themselves were upbeat. This isn't a surprise (or shouldn't be) - there have been (and continue to be) lots of cranes in the sky.

And the survey wasn't all doom and gloom for the next 12 months. Although the residential market is going to slow significantly (just how many more studio apartments does the city centre need?), there is plenty of Grade A office space coming on stream.

However, the people I talked to over breakfast were uniformly downbeat about prospects for the next 12 to 24 months. Predictions ranged from the jokey - "I will be spending a lot of the next 12 months reducing my golf handicap" - to the downright suicidal - "It's 1929 all over again".

It's not just Brum's property and construction industries that are worried. A quick scan of the headlines suggests that people are concerned about at least some or all of the following: house prices are falling; interest rates are on the up; the price of fuel and food is increasing radically; you can't get a mortgage for love nor money; America's economy seems to be in an even worse state than ours; and the great and the good all seem to be predicting doom and gloom.

If you believe the pessimists, we are either in recession already or headed that way at a rate of knots. But, with all the authority I can muster from having got an A in an economics exam 21 years ago, I'm not so sure.

Hopefully more persuasively. I've also come across this very interesting article by Anotole Kaletsky in which he (with a lot more authority, knowledge and ability than I can) challenges the assumption that America is in recession. His basic argument is that a downturn in the housing and banking industries is just that: a downturn (albeit a painful one) but not a recession.

I can't help but wonder if the same argument doesn't apply to the UK. That's not to decry the difficulties people are facing, or that we live in challenging times, but are we really in recession? To pinch the definition used in Kaletsky's article - "A recession is a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income and wholesale-retail trade. A recession influences the economy broadly and is not confined to one sector." - the argument goes that we have not actually seen evidence of that.

Which brings me onto the question posed at the start. If we are not actually in recession, isn't there a danger that we will convince ourselves that things are worse than they really are? What do people think?

This week David Cameron laid into Regional Development Agencies. The Tories, it now seems, would strip RDAs of their transport and planning powers and might even scrap some of them completely, aiming to unravel Labour's regional agenda "piece by piece'.

Cameron went on to say that "the whole experiment with regional assemblies has been a complete mistake. The halfway house we've now got, where RDAs are being given planning powers, is a disaster too... there's a very strong case, at least in parts of the country, that RDAs should go altogether".

Hang on a minute. Scrapping RDAs could well lead to a recentralisation of policy making and delivery in London. Do the Tories really think that this will help the West Midlands economy?

Rather, this proposal seems to miss the point; a lot of good has actually been done by developing policies at the regional and local level rather than in Whitehall, and in providing strategic oversight regionally.

I wrote an entry on my own blog last week that's been niggling away at me ever since. Catching up on the many pictures of the train derailment in Digbeth in March I mused over how the hole in the wall created by the goods wagon would be the right place for an entrance to a Custard Factory train station. I was writing with tongue slightly in cheek, particularly when pointing out how that same train line may one day have a direct connection to the boho enclaves of Moseley and Kings Heath.

However, it does make some sense and there is precedent here as the Jewellery Quarter station has only been there since 1995 and was built not on the site of a previous disused station but was created specifically to serve that creative quarter. The same could happen at Custard Factory. Imagine a direct connection from CF to JQ - a truly well connected, joined up Brum. It might even open up the Custard Factory to more visitors and before long we'd have more than two cafés and the newspaper shop would open before 9am and have some ice-creams in its freezer. In essence we might get what we don't want (and it's a leap but bear with me) - a long slow slide towards gentrification.