2015 Election - antidotes?

Not slovenly regulation but de-regulation. There was nothing slovenly about it, as that suggests it was done carelessly and without thought. But I would argue that there was indeed thought behind de-regulation mainly based on monetarist policies and an ideology carefully followed by mainly Tory and Republican governments.

Yes it was a worldwide banking crash, for goodness sake we all agree to that point.

What some people and the Labour Party who were in government at the time of the crash cannot admit to or don't seem to understand is the 'prolific spending' and lack of fiscal control which Labour undertook caused the UK to have the biggest debt/deficit in Europe and worse than most other countries. That's why we have had to endure austerity measures to try and rebalance the books.

We have had Liam Byrne leaving his pathetic little note informing us the country is broke, PFI agreements/contracts that only a madman would have signed. Yet no lessons have been learnt by some who still to this day think that status quo should have carried on or be repeated. Insanity.

Ed Balls and Miliband were at the helm with Blair and Brown and one can only assume that if the polls are right the majority of people do not trust them on the finances.

I try very hard to listen to all the policies from parties of all colours but when it comes to finance I don't have one happeth of faith that Balls and Miliband have learnt any lessons.

POGS when you say prolific spending do you mean the amount Labour put into the banks in order to save them?

It was nothing to do with slovenly lack of financial control - the whole movement at the time was towards lesser banking control started as I said by Regan and Thatcher etc.

The 'whole movement' was started by a school of economics, taken up and exploited by polemical governments (Reagan and Thatcher). Every government that followed had a choice of either following in the steps of their predecessor or changing course. It was a deliberate POLITICAL course to continue to follow those policies.

^ The subsequent governments simply continued with the process as there was nothing that suggested that this was a wrong move and the world economy was buzzing if you remember with the odd blip.^

From around 2000 onwards commentators and pundits were warning of the dangers of the this policy of no regulation. Remember the crash, on both sides of the Atlantic, was based on reckless mortgage lending and bundling these mortgages and selling them on as financial 'products' that were traded and traded and traded. Most of these mortgages were 'self certified' mortgages where no evidence was asked for claimed income and at the extreme end there were dishonest brokers filling in forms for applicants and grossly exaggerated applicants income who then could not meet their payments right from the start and rapidly fell into debt. The level of foreclosures in the USA was horrific. In some neighbourhoods up to 50% of homes had foreclosure orders. There were responsible and knowledgeable financial journalists writing articles in all the main papers, including the tabloids about the dangers of reckless mortgage lending and the laxness of the banks in controlling personal debt. Do you remember all those television programs with presenters like Alvin Hall advising people with incomes of £15,000 a year and credit card debts of £30,000 and more? All the information was there for those who cared to look - and it is government responsibility to look and listen but there are none so blind as those who will not see or as deaf as those who will not listen - and governments throughout Europe and the USA refused to look or listen.

On the 1.00 news today minutes of a key Bank of England committee meeting the day before the crash published today showed that the Bank was smugly content that everything was hunky dory even though the crash was only hours away. A financial journalist or economist interviewed about the minutes said that it showed just how out of touch the Bank of England was. The warnings had been there, but they and the overnment had chosen to ignore them.

Banks of course were enthusiastic and gave governments every insurance that it was the correct course of action in order to ensure a vibrant and growing economy.

It is a sign of very poor government if it relies on bank, or, business leaders, or anyone assuring them all is well. It is government's job to have their regulators, advisors and civil servants making their own stringent inquiries and investigations to check everything is working well.

I just dont know where to go, very wary of Ed Balls, think Ed Milliband is well meaning but weak, but have high regard for the likes of Andy Burnham. Used to vote LibDem as the 'none of the above' party, but would rather take my own appendix out with a garden spade than vote for the Tories and their return to Victorian values such as the workhouse and unsecured jobs. Suspect I am not alone in this dilemma!

Ye gods aren't we all different.

I hold a totally different view of Andy Burnham.

flick yes you are correct about Thatcher and Regan, and subsequent governments that did not take cognizance of any warnings around at the time. But are you suggesting that the Labour government was entirely responsible for the crash worldwide?

I would argue rather that some of those responsible were the central banks, credit rating agencies, and also academics and financial economists, who gave AAA ratings to many banks which subsequently became junk. Yes of course governments would have relied on these judgements, and still do.
Even Gideon was keen to keep his AAA rating which as we all soon disappeared down the shoot.

I always associate Andy Burnham with his attempt to smear Shami Chakrabarti during his campaign to foist ID cards on us.

I wonder if he still supports such cards

I have very little confidence in the Labour Party as they do not represent a real alternative to this government which has bent over backwards to advance the interests of the rich and powerful, at the expense of everybody else.

However, I don't understand how anyone can on the one hand acknowledge that there was a worldwide banking crash but at the same time state that Labour bore responsibility for the ensuing financial crisis in this country. Aside from Germany, most of Europe and, of course, the US, were very seriously affected.

Like papaoscar, I sometimes feel tempted to say, what the hell - we and our children are doing OK, we won't be around for ever so why get worked up about it. But what about other people and their children - and what about everybody's grandchildren if this country (and indeed most of the world) continues to be run for the sole benefit of the rich and powerful? As the 6th richest country in the world, it appears that Britain is nevertheless unable to provide decent homes, a good education, proper healthcare and adequate food and heating to significant numbers of its population. There is surely something wrong somewhere.

I have NEVER suggested that the Labour government was entirely responsible for the crash worldwide.

I have said that the British government WITH most European governments and the USA are responsible for the crash because of a mixture of slovenly regulatory control and a willful refusal to take any notice of the warnings coming from market watchers on all sides, from financial and market experts to popular television programmes. All governments ignored the warnings, and were deaf and blind to all the signs and warnings.

EU governments knowingly allowed heavily indebted countries like Greece and Italy to rig their criteria to gain membership of the euro. Banks afford to service them and were likely to default. lent these countries money they must have known was unlikely to be repaid and these governments took out these loans to finance reckless social spending to gain votes and avoid making the cuts necessary for economic stability. The banks failed not just because of the mortgage 'products' but because they had loan books full of loans to countries like Greece and Italy who could not

whitewave

We do have a AAA credit rating don't we.??

I remember the likes of Christine Lagarde apologising for the fact the IMF had assessed the UK's finances so widely off the mark. The left wing economists were made to look pretty stupid for a while.

Eloethan

Your comment re our grandchildren is realistic/happening/a cause for concern now because of the UK's debt/deficitdeficit, which was at the time of the banking crash known to be the worst in the EU and most other countries.

There are two halves to the story of the UK's debt/deficit levels at the time of the world banking crisis. One is the failure of governments to have a hold of any meaningful regulatory control of the banks , the other was the prolific spending the Labour government had undertaken.

As the Prime Minister Mr. Gordon Brown said 'There will be no more boom and bust'. Then the fool Liam Byrne confirmed what we all now know 'There was no money left' Nada, zilch even our gold reserve had been sold off.

POGS

No we don' t have a treble A lost that a couple of years ago.

When you say the prolific spending by the Labour government I am not sure exactly what you are getting at and what figures you are using.

whitewave Gordon Brown tried to spend his way out of trouble. We have a huge deficit on our annual income/expenditure each year because he was spending more than taxation was bringing in and was borrowing money on the international markets to fund it. He wasn't alone. Most European and the US governments were doing exactly the same thing.

No matter what the political persuasion of the government elected in 2010 they would have been faced with having to cut the deficit. The only way to do that is by increasing taxation or decreasing expenditure.

To use the well-known, and now somewhat hackneyed quote from Dickens' Mr Micawber

Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

We are currently undergoing the misery. There isn't an alternative that does not involve further borrowing.

Many people, not just the government, were gripped by a certain madness and borrowing to the hilt to 'better themselves' (see other thread).

My thoughts entirely, FlicketyB, although expressed so much better!

(The UK still has triple A rating with Standard and Poor, BTW)

FLICK you can't treat all debt the same ( Mr Micawber) financial sector debt is very different to government debt where bonds are sold on the market.

When the recession hit in 2008 the government initially pursued expansionist fiscal policies, and there was no panic on the bond market. The vigorous counter-cyclical and interventionist action taken by the Labour Government had a real effect on confidence which meant that output and unemployment did not fall nearly as much as it could have, and by 2010 growth was positive. It was Labour's stated intention to get rid of the deficit within 8 years.

However, the Tories maintained that it should be got rid of in 4 years. Something they have clearly failed to do This resulted a a self induced panic and was a key factor in the double dip recession with the Tory government pursuing unnecessarily strict austerity measures. The pace was self defeating and unnecessary, and has lead to no or little growth throughout this parliament.
The Tory painting a grim view of public finances is motivated by an ideology in pursuit of a smaller state.
Undoubtedly a more balanced view would have resulted in less rash policies and we would not now be looking at panic in the NHS, Food banks, housing crises local public spending cuts etc on such a large scale

whitewave

In response to your post to me

We do have a AAA rating with Standard and Poor , a fact I knew and obviously Ana too.

I accept that we have AA+ with others but your post was incorrect.

My belief is the 'double dil' recession you mentioned was eventually proven to be incorrect but the recession figures for 2008 were revised in the opposite direction and were much worse than reported.

How long before Standard and Poor and the others will alter their present ratings is any bodies guess, the Euro is battling away and I think Greece will leave this year. The fact we have an election in May is said to be causing 'jitters' and most countries are seeing a downturn in production on the cards for 2015 even in China.

We will each have our opinions as to which party we think will/can run the economy better and I guess there will never be a meeting of minds. 'Perhaps' after May we will see as it looks like a Labour/SNP coalition being the government of the day if the numbers being spoken of come true. There by hangs another debate

Cheers! see you (almost certainly) for the next debate! Keeps the brain ticking over.

Yes, whitewave, the Tories used the world financial problems as an excuse to push through their vicious, divisive agenda for social change. It hasn't worked and now they're panicking because we have seen through their paper-thin piffle. The sooner we dump them in the trash-can of politics the better.

whitewave Debt is debt is debt. If you borrow, whether at a personal, corporate or government level, the money has to be paid out of future income with interest.

If your income is £20 and you spend £21, you are in big trouble. If your income is £612 billion and your expenditure is £720 billion (UK government expenditure and income in 2013, www.theguardian.com/news/datablog/2013/mar/20/budget-2013-tax-spending-visualised ) you are are also in big trouble. Remember this is an annual figure. In 2013 the government had to borrow £108 billion to meet their expenditure commitments. In the years before it borrowed more and in the years up to about 2020 it hopes to reduce the deficit. Think about it, over 10 years we are borrowing, probably in excess of £1,000 billion. Interest payments alone are costing the government £43 billion a year, nearly as much as the annual deficit.

If a person's debt gets too big they go bankrupt. If a country's debt gets too big and you become a basket case like Greece became then you are bailed out on condition that you undertake externally imposed drastic cuts. In Greece. The length of this post to date would increase four or five fold if I were to list all the measures imposed on Greece, but the details can be found at www.bbc.com/news/business-13940431 but for a taster interest rates rose to over 10%, public sector wages were cut by 20%, pensions in excess of £800 a month were cut by 20%, those under 50 who are likely to have a pension over £800 a month will have their entitlement cut by 40%.

The numbers may be bigger but the results are the same.

The government borrowed £108 billion in 2013, but it did not have to. It preferred not to pursue those rich people who do not pay their taxes. If it had done, it might not be in the fix it is in.

Neither did Balls , Brown and Miliband for heavens sake.

Antidotes or Anecdotes, I think we may have many of them, quite looking forward to the 'discussions' from A Distance....

If the government were to obtain every unpaid or evade or avoided penny of tax from anyone earning above the average wage the sum raised would be about £14 billion. A significant figure but less than 15% of the annual deficit and since we are never going to reach the point where no-one ever fails to pay every penny of tax due, even with far more stringent tax gathering we will be lucky if the actual figure of extra tax collected reaches £10 billion.

The item where most tax is avoided (£20 billion) is indirect taxes, VAT and Excise duty and, of course that is mainly avoided by the mass of the population. Smuggled cigarettes and tobacco, paying workman cash for a price reduction, farm diesel in the car, small businesses siphoning some of the takings before VAT into the housekeeping each week. Barter arrangements where no money changes hands. A kitchen fitter fits a kitchen for free and the flooring contractor whose kitchen has been fitted recarpets the kitchen fitter's living room. Fraud, just as likely to be the poor as the rich.

It is nice to think that all our problems can be solved by squeezing the rich but actually they can only be solved by squeezing everybody.

If everything in your post is true, FlicketyB, and I have no reason to doubt that it is, then it should be referred to every time someone gives their opinion that the country's debt problem would be solved overnight if only unpaid taxes were collected.

Thank you for such a knowledgeable and reasoned post.