Re: Gideon's autumn update : Wed Nov 30, 2011 5:50 pm  

DaveO wrote: 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: http://www.bbc.co.uk/news/business-11342237

DaveO wrote: 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: http://www.bbc.co.uk/news/business-11342237

Re: Gideon's autumn update : Wed Nov 30, 2011 6:15 pm  

DaveO wrote:

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.

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.

Re: Gideon's autumn update : Thu Dec 01, 2011 12:02 am  

Urmston Wire wrote:

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.

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.

sally cinnamon wrote:

the bankers have been lobbying to ensure that they don't have to suffer the EU imposed transaction tax

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).

sally cinnamon wrote:

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.

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.

Re: Gideon's autumn update : Thu Dec 01, 2011 9:26 am  

Urmston Wire wrote:

... Brown ran a surplus for four years- not beyond his ability to have carried on like that from 2002 onwards....

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.

Re: Gideon's autumn update : Thu Dec 01, 2011 9:46 am  

El Barbudo wrote:

Ah well ... that's because public sector workers do next to nothing and get "gold-plated" pensions.
Must be true, I heard Francis Maude say so.

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

Re: Gideon's autumn update : Thu Dec 01, 2011 9:51 am  

DHM wrote:

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.

Re: Gideon's autumn update : Thu Dec 01, 2011 9:54 am  

DHM wrote:

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

Anyone see the snivelling little twerp on Newsnight last night?

Re: Gideon's autumn update : Thu Dec 01, 2011 10:00 am  

cod'ead wrote:

Anyone see the snivelling little twerp on Newsnight last night?

All we saw on the news (not newsnight) all last night was Michael Gove bemoaning teachers and schools being closed. I was waiting for that immortal phrase "you've never had it so good" to come out of his moaning mouth.

Re: Gideon's autumn update : Thu Dec 01, 2011 10:12 am  

The real problem with the economy is that it's not just our economy that matters. If the US is in trouble we're in trouble. We managed to outperform the rest of Europe during the last decade but they weren't doing that bad themselves compared to now. Things have gone so t1t$ up in Europe that I believe there is little any Chancellor here can do to seriously revive the UK without a general world revivial (and in world I mean western europe and the US).

What Osbourne and the Tories need to do is to stop posturing and running around blaming unions and the last Labour government (and by definition all those who are in unions and who voted Labour) and to try and work their way into a second term without the LibDems (which seems to be their only objective as far as I can see), and help people feel better about how bad things are. They have to start by admitting that the recession was caused by global factors and only global factors changeing will really pull us out (they have difficulty doing this because they then can't blame Gordon for destroying the UK economy, which completely by chance went ar$e up at exactly the same time as the US and Euro-zone). Then they really have to start easing the pain of unemployment - not stigmatising people as slackers, workshy, spungers etc. and put a gag on dozy ***s like Edwina Currie. They're doing lots of little things to actually do the opposite, the other week it was sick notes - doctors are writing too many - how dare they! Workshy sicknote scroungers need dealing with.


Unfortunately once again we have a Tory government who are transparently working to usual Tory objectives. This government isn't serving us, it's serving itself. They owe as much to the people who didn't vote for them as to those that did.
I'm sick of these people. They can't even support the people they claim to really be the friend of - business. My industry has simply gone down the toilet. They don't represent industry or business, they represent the guys at the top and the big shareholders, who will all be better off if costs are cut by moving to China or India.

Re: Gideon's autumn update : Thu Dec 01, 2011 10:14 am  

So, the rich WILL get richer and the poor, poorer IFS Report

So, the rich WILL get richer and the poor, poorer IFS Report