Calis Beach and Fethiye Turkey Discussion Forum
General Topics => The Debating Chamber => Topic started by: Colwyn on September 30, 2011, 11:48:23 AM
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As we all know the UK has a severe debt crisis. The Goverment is imposing pay freezes and cuts on those public sector workers it hasn't yet sacked. The private sector is not doing much better. People are going to have to pay more into their pension, retire later and get less money at the end of this. University students are going to to be burdened with debts that a great many of them will not have paid off by the time they are 51 or more when the 30 year rule clicks in. The list goes on and on it seems. Is it endless? No, the Government has "found" a little bit of money to introduce a new payment for vitally important work. Eric Pickles (is there a nastier MP currently in Parliament?) has come up with £250million - seems to have been in a Tesco bag at the back of a broom cupboard where it had been overlooked before - to hand out to councils that collect black bins weekly instead of fortnightly. (For those you living in Turkey, all the recyclable waste - food, glass, metal, paper, cardboard, etc. - are generally collected weekly anyway).
Meanwhile, our city council has decided to grant £60,000 (I don't know if this was found in a Tesco bag) to the park that our house overlooks. The relevant parks committee is going to recommend that this money is spent on - guess what: clearing the lake of toxic blue-green algae? cutting down and making safe the trees that have fallen during storms? renovating the sports pitches and replacing damaged equipment? Well, no. The have decided to appoint a Park Projects Manager. This will, I guess, be a professional/managerial level post with commensurate salary. Add the on-costs to this - employer's pension contributions, office space, access to secretarial services, an adverizing fund, and so on - and I estimate the full cost of this appointment will be ... £60,000. So we can stop worrying about what projects to plan, because there won't be any money left for them.
Still must remain positive about this. I'm off to look in the cupboard under out stairs to see if there are any bulky Tesco bags in there.
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Today's daft news is that the halfwit Osbourne - he of the two facial expressions, smirking or sneering - is going to save us council tax payers from paying more this year by subsidizing local authorities with money taken from income tax, national insurance, VAT and so on (i.e. from us). I am trying something similar myself; taking money out of my left hand trouser pocket and putting it into my right hand pocket. I'll let you know whether this is a good way of sorting out my finances.
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I assume your right arm is shorter than the left?
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Maybe Osbourne would not have had to do this if Brown and his bunch managed the economy properly. Brown preached we will never go back to boom and burst and that he would steer the ship on a steady course. He was right on that we can forget the boom,instead he led the economy one way to bust. The UK as a percentage of GDP has a higher debt position than Greece or Portugal.
He did not properly regulate the banks because the City of London was filling his pockets so that he could continue his wreckless spending spree.The twit thought that the golden goose would never stop laying. This financial crisis did not happen overnight. There were signs that it was about to happen 2 years earlier but he decided to bury his head in the sand and hope it would go away. His promises at the outset of the Labour government to balance the books each cycle of parliament just went out the window. He set the economic tests to ensure that economic growth and public spending could be effectively managed and then decided either to change them or totally ignore them.
We have Red Milliband and Ed Balls up telling what they would do differently. What they forget to mention is that if Labour had won the last election they would have taken exactly the same steps that the current lot are taking. There is no magic solution to this problem. The fact is that the country must live within its means.
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Points very well made.
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quote:
Originally posted by Ovacikpeedoff
Maybe Osbourne would not have had to do this
He didn't have to do this. In fact, in relation to the two policies I cited he is not actually doing anything at all except rearranging the deckchairs. Subsidizing weekly bin collections has nothing at all to do with the international banking crisis.
Who were the people whosaw this crisis coming two years before it happened? It wasn't sentral banks in Europe and Ameica, it wasn't right wing politicans (certainly not halfwit Osbourne), the CBI and IoD didn't spot it coming, and most of the banks that went down had AAA or AA ratings from Standard & Poor. So these "in the know" must have kept extremely quiet.
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Any responsible government will live within its means and balancing revenue and expenditure so to think that any government gives handouts without either raising it in taxes or extra borrowing is rather naive.Brown did not have to bust the economy with wreckless spending but he did. I certainly welcome the freezing of council tax as it is one of the few benefits that I actually get that puts money in my pocket.I would not have a problem if that money being handed out was given to frontline services.
To answer the part about who knew is difficult because it is complicated and would take several pages to explain. The current crisis is not a banking crisis it is a sovereign debt crisis and that is a totally different thing.It is the inability of governments to be able to pay their debts. There have been many books and TV programmes made on the subject. The BOE, FSA and most regulators knew we were living in a house of cards and that the first ill wind would bring it down. The problems started with US sub prime lending.Two years prior to the banking crisis the sub prime market had turned sour and the rate of default was increasing at a significant rate.Due to lack of regulation the city boys with 1st class maths degrees were dreaming up schemes to package these debts and sell on.By selling the debt on they were taking risk off the balance sheet and getting funds to lend more and develop even more elaborate schemes. The BOE and the FSA were actually having to get maths experts in to explain to them what was going on.King has stated this openly in the press and on TV. In the UK you had the Northern Rock lending 130% of the valuation of the property and other mad schemes. The financial institution that I worked for actually cut lending criteria back and the max LTV was about 75%. We withdrew and consolidated all exposures to these exotic products, As a result we did not suffer the losses that the big banks did.If our management could see it I am sure many of the others did. The financial markets turned into a feeding frenzy that was driven by greed. Greed by the bankers as they were generating massive profits, greed by the government because the tax revenues allowed them to borrow and spend wrecklessly.The rating agents were major players in this crisis.
The banking crisis led to the begining of the current sovereign debt problems because the banks have pulled the plug there is no money for countries to continue borrowing.
I am now going to stopas I could go on forever and just finish up boring you more than I already have.
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OPO
It comes as something of a surprise to me, and perhaps it will be to you, to find I agree with just about everthing in you last post - in truth, I haven't actually found anything yet with which to disagee. And I'm not going to scrutinize it any closer simply to find trivial points which to contest!
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Colwyn, I am not a fan of Osbourne and I get annoyed with his superior attitude and pragmatic views.I do think it unfair to call him a halfwit, I would have been happier with obnoxious.
So far it has been nothing but take to try and get us out of this mess we are in.The UK confidence level is very low and we all know that freezing council tax was given more as a tonic than an actual real benefit. As we both agree the money will have to come from somewhere.
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The Oxford dictionary defines a halfwit as a foolish or stupid person. And for me any person who is prepared to be foolish enough to not only throw on the handbrake of the economy, but to then put it in reverse, without thinking that there would not be both short and long term damage to the economy, comes across as pretty stupid. So all in all I think Osbourne deserves the title of being a halfwit[:(!]
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Anyone who says that the nation's deficit should continue to go unchecked is the halfwit. You live within your means and the UK has not been doing that.
All the major political parties in the UK and all the major financial bodies such as the IMF agree that the only way forward is to cut the deficit. So they all must be halfwits as well.
Maybe they are all wrong and CBF has found a new economic guru to solve the problems.
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OPO I don't think I said anything about not cutting the deficit. It is the rate - and the long term plan - that you apply to the deficit reduction that matters. Osbourne has applied the deficit reduction brake too hard - particularly at a time when the private sector is struggling to recover itself from the problems of 2008 - and in so doing is causing the economy to unnecessarily contract.
Combine this with the huge reductions in economic confidence - both business and consumer - which is in part caused by the government's own siren voices about the economic situation, has locked the economy into a continual downward spiral of contraction, at a time when we actually need growth to pull us out of the mess.
That is why I support the view that Osbourne is a halfwit, as defined earlier. Particularly as he is supposed to be getting us out of the mess, not putting us further into it.
BTW I was flattered that you should think of me as an Economics Guru, how nice!:D I always consider it a pleasure to inform and enlighten members of the Unwashed School of Economics.
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In the eyes of the IMF and other leading financial experts the measures taken by Osbourne are correct.If we had elected Brown again (luckily we did not)there is very little difference in the amounts of cuts that are to be made. In the first year the cuts proposed by Labour amounted to the same that the current lot has implemented. In future years all that was to happen under Labour is the cuts were to be slightly less and would be one year longer than the curent proposals.
National debt as a percentage is higher than 1976 when Healy had to go the IMF with cap in hand. In the last year of the last government the budget deficit was a whopping £170 billion. This amount has to be borrowed. Throughout the last governments time in office they managed to have a budget surplus in only two years.When they were elected in 1997 the budget was actually in balance.
Borrowing more and more is like living beyond your means with a credit card. Eventually you reach your limit and most of what you pay is not really paying off the capital but just paying interest. The less you pay off the longer the pain will be and you finish up paying more.
The real question to ask and answer:
Is it right for us to continue to run up debt that future generations will be lumbered with and having to pay it off?
UBT stand by your phone and make sure your passport is valid. I can see an invitation coming for you to address and enlighten the G20 on how to solve the worlds problems at the next meeting in Cannes :)
:)
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So good old George has got it right on the economy has he? Was that large whirring sound at lunchtime not the sound of the Bank of England printing presses being fired up to produce £75 billion - yes that's SEVENTY FIVE BILLION POUNDS - of Quantitative Easing. That's a real good indication of how successful George has been in his management of the economy.:-\:-\
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Sorry should have added above that the principal purpose of the £75 billion of QE is more to do with delivering greater liquidity into UK banks to help them deal with the potential eurozone fall outs in the next few weeks, than a fully viable attempt to increase growth into the economy.
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The £ has devalued against all major currencies since that announcement was made.
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QE was introduced by Darling, this is an extension of this.I wish people would make their minds up. You want growth and you want a deficit cut. There are not many ways this can be done. This is the only way you can have increase GDP without increasing borrowing.
It was not Osbourne who introduced this round of QE. It is a decision that was taken by the MPC.
One of the very few good things that Brown did was making the BOE independent of the government.
I know some of you think that I am an ultra right conserative but I am not. You cannot blame the guy who currently has the purse strings when for the previous 13 years the previous holders just made a big hole in the purse. The current crisis has got to be sorted.
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Wasn't UBT's point that this move suggests that Osbourne's policies are not working so the BoE felt it had to step in. Further we may question now who is in charge of UK economic policy (certainly with respect to growth) - is it HMGov or BoE. When G.Brown gave decision making powers to the BoE it was stictly in relation to inflation; not to be a shadow Treasury. This move will, almost certainly raise inflation which is already high (the BoE is quite relaxed about this) and is also likely to lead to devaluation of the pound (already has). This may a good thing - making our exports cheaper and thus encouraging growth. But I rather expect the government to make these sort of decisions. Perhaps the BoE doesn't trust HMG to do it.
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It was not. Brown gave decision making powers in relation to monetary policy and not just inflation.The main purpose being that governments raised and lowered interest rates as it pleased them. Whether it was Labour or Conservative we always seem to have a cut in interest rates just before the election. It did not matter whether it was good or bad for the country, it was an election ploy.
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''printing money is the last resort of desperate governments when all other policies have failed. It can not be ruled out in the fight against deflation, but in the end printing money risks losing control of inflation and all the economic problems that high inflation brings'' Gideon Osborne 2009[:o)]