Okay, it’s not the same Fred Goodwin. This one works as an analyst at Nomura, apparently.

But the Tories have seized upon Goodwin’s report which suggests “the prospect of a UK fiscal crisis is a clear and present danger”. The report suggests that a fiscal crisis is “far more likely” in the UK than in the US - because the dollar is a reserve currency.

“The UK fiscal dynamics are unsustainable. The fiscal balance is plunging deeply into the red in a spectacular and frightening way. Who will fund it? Without QE (quantative easing) the possibility of failed auctions is not trivial.”

Apparently the government’s mega-programme of gilt issuance (selling bonds) has not yet been fully tested - because it has been exceeded by QE (buying bonds).*

When the government turns net seller we will see whether there truly is a market appetite for UK gilts.

George Osborne described the Nomura report as a “wake-up call” with Britain’s “international reputation” at stake. Privately, however, the Tories must be as worried as the government is - given that the situation may still be with us in eight months.

UPDATE

The exact figures are as follows:

* As of September 10 there has been £145bn of QE (assets purchased by the creation of central bank reserves), of which £143bn has been gilts. The process began on March 11.

* Since that date the Debt Management Office has sold £95bn of gilts.

He finally said it. There will be cuts. But Gordon Brown waited until he was nearly half an hour into his speech to admit it. (Bottom of page 7 out of 8).

And he wedged the stuff about deficit, hard choices, sustainable finances, cutting costs into a handful of paragraphs. The rest of the speech was the usual glorious talk about saving the global economy, the national economy and the range of initiatives which Labour has thrown out in the last year. And - to be fair - there were two genuinely big policy pledges.

More paternity leave and the swift implementation* of the temporary workers directive will please unions and, you’d have thought, workers. The business lobby might not be so happy but neither concept is exactly a surprise (the only question on the directive was its exact timing).

*UPDATE

My eagle-eyed colleague Jean Eaglesham points out that the government is only putting the temporary workers directive on the statute book in the next Parliamentary year. This is not the same as the implementation date. We still don’t know when that is going to be. In other words, this may not be much of a gift to the unions (and temps) as it sounded at first.

Expectations are for a Gordon Brown “recovery” speech on Tuesday when he faces the TUC Conference in Liverpool.

For all the (slightly) better economic/financial data out there, there is still an obvious dichotomy that Britain faces. Do you define the downturn by GDP figures (the formal definition of recession beging two quarters of contraction) or on unemployment figures?

With the dole queue set to grow for years to come, it’s a vital question.

Brendan Barber, head of the TUC, made the point this morning on the BBC’s Politics Show:

I don’t think that’s a real recovery until we begin to see unemployment coming down, and I fear that we, we’re a long way off that.

Alan Johnson was on similar ground, albeit in a slightly garbled way:

I don’t think we’re through the worst of the recession, I, I mean it’s a matter, I think Alistair Darling has led us through this, with Gordon Brown, in, in, absolutely calling every single turn of this the right way. When, when we look at this now, there.. I don’t think we can say that we won’t get any more bad labour market figures, I don’t think we can say that we’re in a situation now where manufacturing is going to recover completely, what we can say, I think, is we’ve seen the early signs, in the construction industry, in consumer confidence, in my own constituency here we’ve seen that the, that the increase in unemployment has kind of levelled off. Now I’d like to think that’s the early signs, but I think there’s a long way to go and what I think the British public need to do as we approach the next Election is listen to the various … plans of the parties for how to get through this…

Of course, no minister wants to prematurely call the recovery. Spotting green shoots is a risky business, as Baroness Vadera found out earlier this year.

Precisely how Mr Brown will address this question on Tuesday will be fascinating to watch. I suspect there will be more rather more about how Labour prevented a financial catastrophe than premature optimism about the imminent future.

According to Sky the speech will include this:

Today we are on a road towards recovery - but things are still fragile not automatic and the recovery needs to be nurtured. People’s livelihoods and homes and savings are still hanging in the balance, and so today I say to you: don’t put the recovery at risk.

“Road towards recovery” is a phrase which covers all options pretty well. It could be a swift road - but also a long and winding one with many potential setbacks etc etc

A brief passage in George Osborne’s last Andrew Marr interview stands out: In it, the shadow chancellor heaps praise at the feet of the world’s central banks for preventing financial meltdown.

“But we say the most effective form of stimulus is monetary policy, is the low interest rates, which both here and around the world I think have been the most effective tool at bringing the world back from the brink of depression.”

A statement of the obvious, you might think. But was Osborne playing up the actions of Mervyn King and others to belittle those of Gordon Brown? A Tory MP suggests that this strain could grow louder as the party seeks to rob Brown of the credit for halting the apocalypse.

For some time now I have been asking the Treasury for an explanation of Alistair Darling’s Budget claim that government actions have saved “up to 500,000 jobs”.

My questions:

1] What research is this based on?

2] Is 500,000 at the upper end of a wider range of estimates; eg “350,000 to 500,000″?

3] How much of the 500,000 is down to political action and how much is due to the actions of the Bank of England - ie quantatative easing and interest rate cuts?

It’s been at least three weeks and the Treasury still hasn’t answered the question. Although they say they may provide more detailed analysis later in the autumn.

Gordon Brown has pledged tough action to clamp down on excessive remuneration for bankers as part of an international effort to rectify the systemic weakness that led to the global financial crisis. Read the interview on ft.com

The Times has splashed this morning on criticism of the government over its imminent alteration to the housing benefit system (which was in the April Budget) which will save £140m a year.*

Frank Field and others are protesting about the change which will mean that people will no longer be able to keep any surplus housing benefit over and above the cost of their rent.

Over a year ago Frank led a successful campaign to overturn the 10p tax policy. I’m not sure he’s on such firm ground this time.

Firstly bear in mind that this quirky windfall has only existed for the last year or so - until then the benefit was paid to landlords rather than tenants.

Secondly we are in the middle of a recession with public finances worsening by the day. It seems ludicrous to argue that people on housing benefit should receive more money than they actually need for their rent.

ASIDE

Yesterday I mentioned that Teresa May was considering reversing the policy so that landlords once again receive the benefit. Not only would this be good news because it would encourage more landlords back into the sector (I’m told many have quit since the original change). It would also render Field’s new mission irrelevant.

* Currently, half of those receiving the housing allowance, around 300,000 people, have managed to get their property at a rent lower than locally-set thresholds. This allows them to pocket some of the saving; up to £15 a week.

UPDATE

Citizens Advice disagree with me. Here is their take:

“Under current LHA rules, claimants can keep up to £15 of their benefit, if the LHA rate is higher than the rent they pay. This allows for choice, encourages fairer rents and rewards careful spending.

“Plans to remove this excess are ill thought-out, and risk having a considerable impact on levels of poverty without delivering any real savings to the DWP budget.”

It’s not every day that I’m accused of “incompetent journalism in its most insidious form” by a (more) famous author*.

But it seems that Nassim Nicholas Taleb is unhappy with the way his comments from yesterday have been reported by the British press. Here is his critique.

I’m still not sure why he included the FT.

Firstly he says he is not a climate change denier (I never said he was).

I wrote instead that he “suggested that climate change was not necessarily man-made.”

This was his precise quote: “I don’t want to mess with Mother Nature..I don’t believe that carbon thing is necessarily anthropogenic (man-made)”.

Is there any difference?

Secondly he argues that he has been misquoted to say he loves crashes.

“Another statement made backwards concerns my position on ‘robustness’. I said that free markets generate fads, crashes, massive movements. Attempts to control the cycle proved futile - what we need is citizens to become ROBUST to them, to be immune to their impact. My point is that we cannot predict Black Swans, but we KNOW their impact and can be prepared for them. Again taken backwards: “Taleb loves crashes.”"

Except Taleb also said, verbatim: “I like crashes. I just like the world to be robust about them.”

Paul Waugh is another journalist to have recorded the quotes, with a dictaphone I should add.

* joke

UPDATE

Incidentally, Taleb did make one interesting point about the crucial role of debt in crashes. The collapse of the dot-com boom did not have major repercussions on the global economy because it involved people betting primarily with equity (ie buying shares in tech companies), he argued. The latest crash was gruesome because of the huge amount of leverage in the system. Absolutely right.

FURTHER UPDATE

Channel 4 have deployed a broadcaster to question Taleb.

My favourite question: “Do you find because your ideas are complicated they are easily mis-represented?”

FINAL UPDATE

Another Taleb spat on FT Alphaville today

In case you’re wondering what lessons Taleb could hold for politicians, here is one attempt to answer the question on Huffington Post

I haven’t had a chance to number-crunch today’s unemployment figures yet. But there was an interesting chart in the Audit Commission report - also out today - on how councils are faring in the recession.

For all the talk of the public sector cutting jobs and sharing the general pain, the figures seem to show a rather different story.

The chart on page 19 (based on ONS figures) shows a fall in employment of about 210,000 in manufacturing, 195,000 in distribution and hospitality and 180,000 in finance and business services.

Meanwhile there was a rise of about 170,000 workers in public administration, education and health.

This is likely to fuel the suspicion in some quarters that state-employed workers are cossetted from the downturn; a claim which is bitterly contested by the public sector unions.