Quote ="Red John"We indeed do have an economy dependent on consumer spending. So what's the point of this policy they've been signalling this week where they're offering to guarantee loans to small enterprises? This is supply side economics, yet the problems seems to be demand side. Unless I'm missing something, this is yet more economic illiteracy.'" It's pretty difficult to properly stimulate demand when personal debt levels are as high as this: www.creditaction.org.uk/helpful- ... stics.html ...and when our major markets are now in recession, not helped by the fact that every government back to Heath locked us so firmly into the protectionist European cartel. We've just spent the last decade on a credit binge and we're spent up. We need some serious structural reforms to unlock that demand and split it out, and the main one is to entirely reform the tax system. 1. Remove non-domiciled status. 2. Stop pretending that NI and income tax are somehow different and go to a different pot. Merge NI into income tax and create three new bands: 15% (up to 20k), 25% (up to 38k), 40% (up to 150k), 50% (150k onwards). Put anyone aged over 65 onto a separate tax code to reflect the fact that we don't charge them NI currently. Raise the personal threshold to 10k, abolish tax credits. Abolish all other loopholes, as per non-doms. Hundreds of thousands will suddenly have a significant amount of money available to them. 3. Increase the number of bands for council tax from A-E to A-J, reducing most people's contributions. 4. Make second-home owners pay full council tax. Those would probably annoy the rich AND the unions, so must be a good thing! On top of that: 1. Renationalise the railways by allowing the franchises to lapse- no more subsidising the operators' profits. 2. Repeal the ludicrous decision by Brown to allow property to count as part of a personal pension pot, which has driven up the buy-to-let market which caused the whole crash to start with. 3. Ban any mortgages over 100%. 4. Hurry up the ban self-certified markets. 5. Restrict the pay of local authority chiefs to £150k. 6. Merge NHS IT systems by county. 7. Merge the DTI into the Treasury. 8. Move the Ministry of Agriculture out of London. But none of this will ever happen, because it'd annoy too many powerful people in business and the unions.

Quote ="Red John"We indeed do have an economy dependent on consumer spending. So what's the point of this policy they've been signalling this week where they're offering to guarantee loans to small enterprises? This is supply side economics, yet the problems seems to be demand side. Unless I'm missing something, this is yet more economic illiteracy.'" It's pretty difficult to properly stimulate demand when personal debt levels are as high as this: www.creditaction.org.uk/helpful- ... stics.html ...and when our major markets are now in recession, not helped by the fact that every government back to Heath locked us so firmly into the protectionist European cartel. We've just spent the last decade on a credit binge and we're spent up. We need some serious structural reforms to unlock that demand and split it out, and the main one is to entirely reform the tax system. 1. Remove non-domiciled status. 2. Stop pretending that NI and income tax are somehow different and go to a different pot. Merge NI into income tax and create three new bands: 15% (up to 20k), 25% (up to 38k), 40% (up to 150k), 50% (150k onwards). Put anyone aged over 65 onto a separate tax code to reflect the fact that we don't charge them NI currently. Raise the personal threshold to 10k, abolish tax credits. Abolish all other loopholes, as per non-doms. Hundreds of thousands will suddenly have a significant amount of money available to them. 3. Increase the number of bands for council tax from A-E to A-J, reducing most people's contributions. 4. Make second-home owners pay full council tax. Those would probably annoy the rich AND the unions, so must be a good thing! On top of that: 1. Renationalise the railways by allowing the franchises to lapse- no more subsidising the operators' profits. 2. Repeal the ludicrous decision by Brown to allow property to count as part of a personal pension pot, which has driven up the buy-to-let market which caused the whole crash to start with. 3. Ban any mortgages over 100%. 4. Hurry up the ban self-certified markets. 5. Restrict the pay of local authority chiefs to £150k. 6. Merge NHS IT systems by county. 7. Merge the DTI into the Treasury. 8. Move the Ministry of Agriculture out of London. But none of this will ever happen, because it'd annoy too many powerful people in business and the unions.

Okay. You make some interesting and some good (IMO) points. But let's tackle this comment.

Why do you think the unions per se are opposed to what you suggest? And second, hy would annoying the unions be a good thing?

So George in a roundabout way is moving from plan A to plan A and a half, yet still won't go after the people in the financial sector who are the main cause of this debt. Instead further attacks the lower and middle classes, public sector and those who depend on the public sector. Grow some George and get our money back from those who sent this country to the dogs.

No why should he do that when all he has to do is freeze or reduce tax credits?

Glad there's some points that appeal!

On the first point- the replacement of tax credits with a higher threshold, and the amalgamation of NI into income tax, would necessarily remove some of their members' jobs.

On the second point- more jokey to be honest. In my own personal experience, I've found unions to be as much of a problem as the business- not because of the idea of unionised workers, but because (as in management) an awful lot of intransigent, bolshie s seem to rise to the positions of power. Although I would admit that I have a grievance with one particular union that will be on strike tomorrow over its disgusting treatment of one of my close relatives when she needed them most.

Quote ="Matt01"So George in a roundabout way is moving from plan A to plan A and a half, yet still won't go after the people in the financial sector who are the main cause of this debt. Instead further attacks the lower and middle classes, public sector and those who depend on the public sector. Grow some George and get our money back from those who sent this country to the dogs.'" Not quite. Have a glance at the below link (note- this is from Tulett Prebon, a City broker- if I can ferret out the official stats I will paste them here): www.tullettprebon.com/Documents/ ... rt_007.pdf In 2007, debt as a percentage of GDP is 103%. Which is manageable. It's high before the bailout- remember that Northern Rock goes in autumn of 2007. The lesson was missed then- you have to go through fiscal consolidation during the good times in order to be in a good place for the bad times (as the German SPD did), and we didn't leave ourselves in that position, either personally or as a government. The banks are a factor but not the only one. And not even every bank. We should have run a surplus rather than a deficit through most of the 2000s, but instead we assumed it was here to stay and spent accordingly- and then bailed the banks out. We also had political pressure to keep interest rates down, which made mortgages affordable to a lot of people who really couldn't afford them if the rates were even slightly higher (leading to the subprime crisis). And Osborne has renewed the bank levy- which considering most of them are running at a loss, you couldn't really expand.

Quote ="Matt01"So George in a roundabout way is moving from plan A to plan A and a half, yet still won't go after the people in the financial sector who are the main cause of this debt. Instead further attacks the lower and middle classes, public sector and those who depend on the public sector. Grow some George and get our money back from those who sent this country to the dogs.'" Not quite. Have a glance at the below link (note- this is from Tulett Prebon, a City broker- if I can ferret out the official stats I will paste them here): www.tullettprebon.com/Documents/ ... rt_007.pdf In 2007, debt as a percentage of GDP is 103%. Which is manageable. It's high before the bailout- remember that Northern Rock goes in autumn of 2007. The lesson was missed then- you have to go through fiscal consolidation during the good times in order to be in a good place for the bad times (as the German SPD did), and we didn't leave ourselves in that position, either personally or as a government. The banks are a factor but not the only one. And not even every bank. We should have run a surplus rather than a deficit through most of the 2000s, but instead we assumed it was here to stay and spent accordingly- and then bailed the banks out. We also had political pressure to keep interest rates down, which made mortgages affordable to a lot of people who really couldn't afford them if the rates were even slightly higher (leading to the subprime crisis). And Osborne has renewed the bank levy- which considering most of them are running at a loss, you couldn't really expand.

Not sure you disagree with me there. The banking sector are clearly to be a major part of the blame, I think all you are saying is that we should have assumed eventually they would probably fail and the government should have been in a better position to cover their failure.

I do agree, and I don't. I definitely agree that they play a major part in this, but so does government spending. What I think is:
- The mortgage market should have been better regulated to prevent excessive borrowing.
- Investment arms and retail arms should have been kept separate.
- Either spending should not have risen as much as it did, or tax should have been increased to compensate. Brown tried to have it both ways, and Darling tried to stop him.

My job is to test accounting systems for one of the banks- until last year, my old job was to test them for the NHS and factories. You'd be amazed at what the banks did before the crash- you'd be amazed at some of the stuff the NHS were still doing last year. The State and the banks between them have wasted so much money, they'd even struggle at Red Hall.

They are the major one by a country mile.

As a look at the government statistics since 1997 will show you the levels of government borrowing were over that period either lower in some years but never higher than they were in 1997 until the 2008 crash when they just went through the roof.

They went through the roof for two main reasons. A recession brought on by the financial crisis which sent tax revenues tumbling and to find money to bail the banks out. Without the banks screw up neither would have happened.

So pre-banking crisis things were par for the course with, very significantly, a level of spending the current government said it would match and post banking crisis we are up the creek without a paddle. It's blindingly obvious what caused it.

Also the idea any government could have put away enough cash to deal with the a banking crisis and resulting recession which more or less happened overnight is pure fantasy. None of them did because this wasn't a cyclic economic pattern but a wall street crash scenario of huge impact.

The banks should simply be being fleeced to pay for it. We basically own most of them so their profits should be being ploughed into the economy directly instead of cutting working tax credits to stump up £5b for projects.

With VAT rises, pay freezes, job losses and austerity we are basically paying a "deficit tax" when the vast majority of us had nothing to do with getting us into this mess in the first place. Those and the companies who did seem largely immune to the deficit tax.

Also the idea we will save much by limiting top local government salaries to £150K and other fiddling is just scratching the surface. Far better go after major money such as the £15bn (yes 15 billion) in lost tax revenue the government is legally entitled to but is being diddled out of. That is 10 times the amount of benefit fraud and these are also statistics you can find on the governments own web site.

IMO the most surprising part of todays statement was the Chancellor now talking of his five year target to balance the books as a rolling five year target.

He made a lot of how he had got Britain "out of the danger zone" with his commitment to remove the deficit by the end of the parliament, in his Emergency Budget in 2010. Now the Office for Budget Responsibility - which he set up, to be independent from the government and produce the figures - has produced figures that say there is still going to be a deficit in 2015. So his plans are based on balancing the books five years from now. This rolling target of course means you never actually have to balance the books, you just have to set a budget every year that plans to balance the books in five years time based on the forecasts you have available.

This is the same as Gordon Brown's "Golden Rule" that there would be no deficit over the 'economic cycle', you can run a deficit from year to year as long as your plans show it will come in to balance at a date in the future.

I wonder whether Osborne will still get this 'market credibility' now that the markets find his plan isn't actually to balance the books by 2015, but on a rolling five year basis including time after the next election when it might be a different government anyway.

Also the latest figures from the Office for Budget Responsibility must make him cringe at the fact he called the March 2011 budget "A Budget for Growth". It's like when Clive Woodward released a book called "Winning" when he was coach of the Lions on tour to New Zealand and they lose every game. There is no growth. Also didn't he spend the last election talking about Labour's legacy of failure, with 7.9% unemployment. The OBR now says it will be 8.7% next year.

The worst thing is, even all today's gloomy news and gloomy forecasts is based on the assumption that there is not a meltdown in the Eurozone in the new year, which there might well be. If there is then the UK is going to be in a worse situation than 2008, and the public finances will be in a much worse state. Given how much Osborne goes on about retaining AAA credit rating, taking the focus of the bond markets off the UK and having a credible plan to remove the deficit I think his position might be untenable if there is a Eurozone collapse, because we may well see the AAA rating go next year, see bond markets start to doubt the solvency of the UK government and a recession will push the deficit back up where it was at the last election.

Cameron says the effects of 2008 were much worse than anyone envisaged and that's why we're not seeing growth.
Translation : We didn't listen, we tried to cut too far, too fast and we choked-off what growth there could have been.

Osborne says that borrowing is coming down.
Translation : Borrowing is going up, dramatically.

They both say that We're all in it together.
Translation : You're all in it together.

I agree with what you say but what makes you think he will cringe or consider his position untenable? He will believe his own propaganda and think he has been right all along regardless.

When his five year plan became a rolling five year plan even the political commentators are saying that if you read the small print of what he said originally this is not actually breaking his word. Cameron was not so guarded as Nick Robinson on the BBC web site pointed out yesterday as he categorically said the books will balance by 2015.

Still, everyone including the markets took 2015 as a deadline not a rolling target but I have this vision of Osborne going over the small print of what he said previously and when he and his officials worked out he could have this rolling deadline without technically going back on his word them all jumping up and saying "HA! Got it!" with a smug look on his face. Never mind the country is going down the tubes he has covered his back so he can drink at the trough a while longer.

Truth is - there is no answer and anyone who says they have it is lying.

Truth is - there is no such thing as an "investment", only when you read the small print do you realise that the word "investment" does not mean that your money will magically increase while you sit and watch it.

Truth is - politicians speak bollax and tinker with things for three or four years and never look beyond that timespan, the house of commons is full of people who are in the job for the short term and financial benefits and with only a few exceptions have no great plans for society as a whole, its a job, no more no less.

Yup.
He is not as thick as people make out.
While people are distracted by the debate over his economic wisdom or lack of it ... he is ploughing on with his real agenda, which is to put the low paid in their place, i.e. broke and broken, to ensure that he and his echelon sit nice and comfy.
I haven't seen such clear-cut class war since the 1970s.

Short termism is the greatest failing of UK governments since the second world war. Some had long term vision like when Labour set up the NHS but in the modern era I don't think there has been one bit of significant long term plan that all parties push forward cutting across political lines.

The last attempt was care for the elderly but even that got scuppered when the Tories walked away from a cross party deal.

I think it all stems from entrenched political ideology that in the past did mean the incoming government ripping up much of what the last lot did. Maggie Thatcher for all her failings introduced the idea you could not spend a parliament undoing what was done so she allowed the grammar schools to continue to be replaced by comprehensives for example.

Unfortunately her government was just as bad in other areas as all the rest with a good example being BNOC (British National Oil Corporation) which was set up by Tony Benn to do a similar job to StatOil in Norway and make sure the country benefited from North sea oil. In Norway now as a result of StatOil there is no problem with pensions for anyone in the country. They have not got millions on strike because the government wants to cut pensions. Poverty in old age in Norway is gone. They have billions from StatOil's work in their state pension scheme.

In contrast Nigel Lawson sold BNOC off so in the UK private companies have raked in the revenue instead. Lawson and other Tories will say by letting the private companies have their way the markets will have ensured we will benefit because they provide jobs and tax revenue indirectly. The Norwegian experience shows you the markets can be easily beaten with long term planning. It's the biggest example of short term idealogical thinking doing damage there is in this country IMO. To have been an oil producing nation for most of my life yet bei n this state when judicious use of oil revenues could have had so much benefit is criminal and short termism at its worst.

It is certainly true that first the 2008 banking crash and resulting recession and now the Euro crisis are being used as an excuse for polices that are purely ideological based. The biggest two are the end of free University education (sadly set on motion by Labour) and the "reform" of the NHS. They plough along with the latter arguing that even though the main task is the economy they do have a right to govern as they see fit i.e. by applying their ideology to in this case the NHS. If there had been no banking crisis and no Eurozone crisis I doubt they would have been able to press on with this at all.

The economy is a huge smoke screen for lots of other right-wing agenda's such as scrapping planning laws and as they tried to do sell the forests off. All done in the name of sorting the economy out.

Them having to backtrack over the forest sell off is interesting because at the time we had no Eurozone crisis and no strikes over pensions. People were not distracted. The current situation allows a lot of nasty stuff to be ignored.

It's a similar situation with the promised vote on the repeal of the hunting ban, now most hunts feel that there'll never be the promised vote before the end of this parliament. They're trotting out the excuse of "we need to concentrate on the economy" but in their own minds they must know that a free vote would go nowhere close to repealing the ban

I suspect that quite a few hunts will be "accidentally" killing foxes anyway ... "The pack all got the scent and, before we could stop them, they'd caught him".
What with local constabularies not having the resource to police them, and all.

The economic crisis is this government's very own 9/11.

Nothing gives a government carte blanche to screw its citizens over than a climate of fear, perpetuated by the myth that if they don't do exactly what they're told then something reeeeallly bad is going to happen to them.

Bush Jnr used 9/11 as an excuse to introduce PATRIOT and PATRIOT II, this lot are using the recession as an excuse to exercise class warfare.

Quote ="DaveO"They are the major one by a country mile. As a look at the government statistics since 1997 will show you the levels of government borrowing were over that period either lower in some years but never higher than they were in 1997 until the 2008 crash when they just went through the roof. They went through the roof for two main reasons. A recession brought on by the financial crisis which sent tax revenues tumbling and to find money to bail the banks out. Without the banks screw up neither would have happened. So pre-banking crisis things were par for the course with, very significantly, a level of spending the current government said it would match and post banking crisis we are up the creek without a paddle. It's blindingly obvious what caused it. Also the idea any government could have put away enough cash to deal with the a banking crisis and resulting recession which more or less happened overnight is pure fantasy. None of them did because this wasn't a cyclic economic pattern but a wall street crash scenario of huge impact. The banks should simply be being fleeced to pay for it. We basically own most of them so their profits should be being ploughed into the economy directly instead of cutting working tax credits to stump up £5b for projects. With VAT rises, pay freezes, job losses and austerity we are basically paying a "deficit tax" when the vast majority of us had nothing to do with getting us into this mess in the first place. Those and the companies who did seem largely immune to the deficit tax. Also the idea we will save much by limiting top local government salaries to £150K and other fiddling is just scratching the surface. Far better go after major money such as the £15bn (yes 15 billion) in lost tax revenue the government is legally entitled to but is being diddled out of. That is 10 times the amount of benefit fraud and these are also statistics you can find on the governments own web site.'" And the reasons that the banks caused the recession itself is because they were under-regulated because nobody cared as long as money came into the coffers. Brown ran a surplus for four years- not beyond his ability to have carried on like that from 2002 onwards. Indeed, in those circumstances, it's exactly what he should have done. He should have raised taxes in line with spending- but he and Blair knew that it'd prove unpopular. The Social Democrats did that in Germany under Schroeder. The problem with Britain is that we expect the best possible public services but low taxes. The lost tax revenue is, however, worse than you thought: www.bbc.co.uk/news/business-11342237

Quote ="DaveO"They are the major one by a country mile. As a look at the government statistics since 1997 will show you the levels of government borrowing were over that period either lower in some years but never higher than they were in 1997 until the 2008 crash when they just went through the roof. They went through the roof for two main reasons. A recession brought on by the financial crisis which sent tax revenues tumbling and to find money to bail the banks out. Without the banks screw up neither would have happened. So pre-banking crisis things were par for the course with, very significantly, a level of spending the current government said it would match and post banking crisis we are up the creek without a paddle. It's blindingly obvious what caused it. Also the idea any government could have put away enough cash to deal with the a banking crisis and resulting recession which more or less happened overnight is pure fantasy. None of them did because this wasn't a cyclic economic pattern but a wall street crash scenario of huge impact. The banks should simply be being fleeced to pay for it. We basically own most of them so their profits should be being ploughed into the economy directly instead of cutting working tax credits to stump up £5b for projects. With VAT rises, pay freezes, job losses and austerity we are basically paying a "deficit tax" when the vast majority of us had nothing to do with getting us into this mess in the first place. Those and the companies who did seem largely immune to the deficit tax. Also the idea we will save much by limiting top local government salaries to £150K and other fiddling is just scratching the surface. Far better go after major money such as the £15bn (yes 15 billion) in lost tax revenue the government is legally entitled to but is being diddled out of. That is 10 times the amount of benefit fraud and these are also statistics you can find on the governments own web site.'" And the reasons that the banks caused the recession itself is because they were under-regulated because nobody cared as long as money came into the coffers. Brown ran a surplus for four years- not beyond his ability to have carried on like that from 2002 onwards. Indeed, in those circumstances, it's exactly what he should have done. He should have raised taxes in line with spending- but he and Blair knew that it'd prove unpopular. The Social Democrats did that in Germany under Schroeder. The problem with Britain is that we expect the best possible public services but low taxes. The lost tax revenue is, however, worse than you thought: www.bbc.co.uk/news/business-11342237

Because Osborne does not have many friends, including among the rich and the bankers. I know the less well off have been hit hardest but the well off have been lobbying hard to get the 50% top rate tax cut and that is now off the agenda, the bankers have been lobbying to ensure that they don't have to suffer the EU imposed transaction tax but I don't think the solution they wanted is the one Osborne came up with, to increase the bank levy by 10% to counter the argument of an EU imposed transaction tax. The right wing media commentators are saying that Osborne is strangling growth by taxing the 'wealth creators' and they will waste no opportunity to seize on poor growth figures to say, we were right, this is what happens when you have a tax policy that harms the rich. The problem Osborne has is he doesn't really have strong allies in the media, the right wingers are angry that they haven't got what they want. Remember Osborne spent his years in Opposition basing the Tories taxation policy around cuts in inheritance tax, even as late as the final Leaders debate, Cameron went head to head arguing with Brown and Clegg about this issue and defending why the inheritance tax cuts were important. But that policy was dropped in the talks to form the Coalition. There are right wing commentators that haven't forgiven Osborne for that.

So if things start really to go wrong, the guns will come out from the right for Osborne just like they will on the left, he won't have any defenders.

The small print of the rolling target won't mean anything to the markets (in fact over the summer I remember reading a government document about the fiscal mandate and it said something about a rolling target, but I assumed I had misinterpreted it, obviously not!) and if the UK loses its AAA credit rating and UK bond yields rise that will be a massive humiliation for the Tories, because it is what they are basing their credibility on. It will be exactly the same as falling out of the ERM, when John Major had spend the year before saying how ERM membership had restored exchange rate stability and reduced inflation, it was the centrepiece of defending the government's record and when it went the credibility was shattered. IMO politically it will be a disaster on that scale if the AAA rating goes and bond yields rise, because what will Osborne use to defend the government's record. He won't even be able to blame it on Labour either.

I think one of two things is going to happen
1) the Eurozone doesn't melt down, we have a tight four years and edge our way to a slow grim recovery
2) the Eurozone melts down, the UK has a recession on the scale of 2008 and the forthcoming unemployment and austerity will be on the scale of that seen in Ireland and southern Europe, that's when we really will see some unpalatable things happening, pension deals being thrown out, pension age increased till 70, public sector given 3% nominal pay cuts etc.

Yup, apart from even Blair thought their spending was too high in 2005 so it's not really fair to blame him for Brown's failings. Either way they shouldn't have been running a deficit from 2002 to 2007, during the boom years. If they hadn't we would now be in a much better position.



Surely a transaction tax is the worst possible thing you could do when you are suffering from a lack of liquidity. Indeed exchanges in a similar position will actually pay for trades done on them in order to encourage liquidity (as opposed to the normal transaction cost of trading on an exchange).



Either Germany takes control (politically unacceptable outside of Germany, politically unacceptable within Germany for them to bail out the rest of the Euro zone otherwise) or Greece leaves the Euro zone. Once Greece returns to their own currency they will have a short period of (painful) inflation to eliminate the debt and then they will be okay. The problem for the Euro is this will set a precedent that quite a few other countries will want to follow.

He did indeed and the right-wing press always referred to it as "Brown's war-chest" and often implied that he ought to be dipping into it for this-that-or-the-other idea that caught their eye ... or reducing taxes.

Isn't he a public sector worker? That would fit in that case.

A drag on the public purse then ... get rid.

Mind you, credit where it's due, Cameron is (or at least was) planning to reduce the number of MPs.
He's already created more peers in his first year than any PM has done before ... they'll bow to his bidding instead.
His idea of democracy and mine don't quite coincide.