George Osborne's £5bn gamble to stave off recession

[Alan Fry]

Originally Posted by Ignitionnet

We don't have any taxpayers' money to get everything rolling - Gordon increased state expenditure by 50% while the economy really only grew at 18%. Guess what that left? Yes, a great, big deficit!

Even during the boom periods when the financial services industry had almost doubled in size and taxes were absolutely pouring into the treasury, people were paying obscene amounts for housing which was his other 'growth' along with the other 2/3rds which was public spending he was still managing to outspend that boom.

Strangely enough when that boom stopped booming the tax receipts that were never enough to pay for his spending suddenly became nowhere near enough.

Strip away the public spending, during the boom, growth is slow. Basically Gordon was funding the majority of the country's economic growth through increasing public spending massively, the rest was being funded by private and company debt which went through an unprecedented increase.

What we weren't doing was producing.

My only concern is that the coalition seem to obsess over debt fuelled growth as well. The other big problem is that people think they are entitled to the client state that Labour brought in, one that is not and will never be affordable.

You can whine all you want about the cuts, they are the biggest since war time, but then we've just had the biggest increase in public spending in memory, 50% in real terms in 10 years, tons of regulations, red tape, ineffective, job costing regulations, increased taxation.

The cuts are rolling things back to mid-2000s spending level, still way too high but Labour have managed to create the entitlement client state UK where everyone expects to be able to live beyond our means and for the world to just hand us money so that we can. After all they did it for a decade. People as a whole expect more from the government now, so withdrawing that will be a slow process made more painful by selfishness within local departments who merrily cut front line services rather than all the unnecessary bureaucracy they acquired.

Every indicator also shows that the massive increase in funding within the public sector was partially offset by reduced productivity, this in a time when the private sector increased productivity considerably. Loads of unnecessary management, regulations, targets and inefficiency.

This ignores the over a hundred billion of PFI that the conniving crapsack kept off the balance sheet but are having to be paid by us, our children and our grand children.

I'm sure someone will correct me if I'm wrong but I can't think of such a splurge in government spending, outside of war time, since when Britain was ruled by a monarch not a parliament.

George Osborne has pulled an incredible confidence trick actually. He's blagged the world into lending a country with anaemic growth, the 3rd largest budget deficit in Europe behind Greece and Ireland, a public sector net debt that'll be closing on Italy's levels by the end of this parliament money at AAA interest rates.

In 1987 the combined debt of businesses, households and the government was twice our gross domestic product, if we put absolutely everything we produce towards paying debts they'd be clear in 2 years.

After a slow but steady rise during the 80s/90s Labour tinkered with the BoE and invented the FSA, rather rapidly a credit boom began, the BoE powerless to intervene as asset inflation wasn't their mandate only retail.

By 2009 the total owed by businesses, private individuals and government was 5.6 times GDP, sitting at £7.5 trillion. Oh, and yes, a large proportion of this was mortgages, people fapping themselves senseless over property porn. Indeed in 2008 less than 1/3rd of the mortgages taken were for houses people wanted to live in, the rest were buy to let and equity release.

It's expected that by 2015 this value could be £10.2 trillion - a lot of the coalition's deficit cutting plan consists of shifting debt from the government's books to private individuals, cutting public spending and hoping private debt will take up slack and provide more fake growth while they try and rebalance things.

The rebalancing isn't working, the environment isn't right to try and turn the UK into Germany, but to try and stop the austerity programme would be suicidal now even though I don't like it any more than anyone else, the only options are yet more QE inflicted inflation, I believe a total of £400 billion was mentioned as a possible target, along with some targeted tax cuts.

We're up the creek without a paddle. Gordon urinated away all the money so the government couldn't do the usual thing that's done to try and manage contractions in the private sector, which would be to spend money on infrastructure, so they're trying some schemes to increase private sector investment in infrastructure and reduce some burdens on businesses.

The way it's supposed to work, Arthur, is the economy goes through cycles of boom and bust. During the boom periods if you're a good Keynesian like Ed Balls claims to be you run a surplus, pay down debt and get some cash in the savings account, then when the bust comes you plough those savings into infrastructure and capital expenditure projects.

Please note I said infrastructure and capital expenditure. Absolutely not business as usual overweight government running with way more resources than are required, Keynes said that deficit spending fund productive CapEx only.

Of course it doesn't work so well when you run 2% deficits at the absolute height of the boom which then become 11% deficits during the bust when tax receipts drop leaving not much of anything for stimulus or investment and necessitating getting spending under control.

Historically the UK averages 40-42% of the economy paid in tax, without spending cuts that needs to go up to 50 which would bring us near to Sweden, Denmark, etc, and leave you jumping up and down over the increased taxes.

Well Said!!!

I would be willing to face tax rises rather than spending cuts

For some on this forum this coalition cannot do right for doing wrong and even when the coalition listen and start to do things some on here were calling for months ago times have changed and it isn't the right thing to do now. Seriously what do some of you want we have a government that finacially is hamstrung because of the last lot (that would be labour for those of you unable to remember) going stupid with the public finances. We have to make sure our deficit is being handled not to the satisfaction of the british public but to the satisfaction of the banks and those who set interest rates for national debt as an increase in that could really screw us all.

Look god knows there are elements of what this government is doing i am not happy about but on a lot of financial matters they are really screwed trying to make a foot of rope stretch round a three foot trunk to hold things in. If some of you could get over your acute bout of convinient memoryitis we might be able to sensibly debate but currently there is more chance of ed millipede coming out with something useful.

Originally Posted by Alan Fry

Well Said!!!

I would be willing to face tax rises rather than spending cuts

You may have missed the point (by quite a long way) of Ignitionnet's post....

btw, what rate of tax would you be willing to pay, and would you also accept an increase in VAT and Petrol Duty?

[Alan Fry]

Originally Posted by Hugh

You may have missed the point (by quite a long way) of Ignitionnet's post....

btw, what rate of tax would you be willing to pay, and would you also accept an increase in VAT and Petrol Duty?

I would not like to have a increase in VAT and Petrol Duty but that is better then spending cuts!

What rate of income tax would you be willing to pay?

[Alan Fry]

Originally Posted by Hugh

What rate of income tax would you be willing to pay?

Well I am prepaired to pay income tax whatever the rate (not that i want to, but it is the right thing to do)

Originally Posted by Alan Fry

Well I am prepaired to pay income tax whatever the rate (not that i want to, but it is the right thing to do)

Thank you for that non-specific answer- are you sure you're not a politician?

[Alan Fry]

Originally Posted by Hugh

Thank you for that non-specific answer- are you sure you're not a politician?

Alright then if you want a specific figure i would tolerate 75-85% of my annual income

Only I would the 75-85% to cover all employed workers!

[Ignitionnet]

Originally Posted by Alan Fry

Alright then if you want a specific figure i would tolerate 75-85% of my annual income

Only I would the 75-85% to cover all employed workers!

Why bother paying people at all, just have the state provide everything?

Why bother working at all?

[Arthurgray50@blu]

Osborne has found this money from somewhere, and will use to stave off ANOTHER recession under there leadership.

This money can be used to create employment, but cannot, as there is nothing out there, everything has gone, Industry as we know it has disappeared, to to high VAT and taxation, What they can do is reduce VAT, to help industry, and stop silly comments of a agency company that was on Question Time, that stated that young adults cannot be bothered to work.

Total rubbish, agency companies make a fortune out of young adults looking for work, by placing them in work at very low rates, while the company rakes in a fortune from the company.

Training schemes run by the government are a total waste of time, what has to happen is that the government has to invest in British Industry, not sell British company contracts to abroad. Bring in the work for British industry like a sales rep does, PROMOTE British Industry - not destroy it.

And finally, the pent-up rage and frustration got too much for Arthur - we tried to warn him....

[ntluser]

One spending cut I would be pleased to hear about is one to MP's salaries, pensions and expenses.

When George Osborne said we are all in this together he meant that the MPs would make the decisions and the public would suffer from the outcomes.

This government has no common sense. We are told that there are over a million unused empty houses but instead of putting money into renovating them to a standard that makes them usable, they decide that we must use our limited precious green belt land, which is already overstretched as it is.

We have over 2 million people out of work. Some, to their credit, are on apprenticeships or training courses trying to get back into work. The rest are just claiming their benefits for doing nothing. It's not rocket science for job centres to send them as a free worker to companies so that they can gain work experience and contribute to growth.It's a sad fact if things don't alter they will stay as they are. Unemployed people could use Youtube and post videos to advertise themselves to potential employers.They could do voluntary work in the community. They could even start their own one person businesses. All that is more useful than staying at home hoping that a job will turn up.

The government urges the private sector to pick up the slack and take on the unemployed but there are plenty of things the government could do on their own volition, rather than expecting others to clear up the mess which is of their making.

The banks may have caused the credit crunch but it was MPs who failed to regulate them properly and here we are once again heading for a recession and potentially another credit crunch. We often get told that lessons have been learned but sadly it's only too clear that they have not.

Oh for some MPs who really put their country before themselves. Maybe they will bring common sense and real strategic planning back to government.

[Alan Fry]

Originally Posted by ntluser

One spending cut I would be pleased to hear about is one to MP's salaries, pensions and expenses.

When George Osborne said we are all in this together he meant that the MPs would make the decisions and the public would suffer from the outcomes.

This government has no common sense. We are told that there are over a million unused empty houses but instead of putting money into renovating them to a standard that makes them usable, they decide that we must use our limited precious green belt land, which is already overstretched as it is.

We have over 2 million people out of work. Some, to their credit, are on apprenticeships or training courses trying to get back into work. The rest are just claiming their benefits for doing nothing. It's not rocket science for job centres to send them as a free worker to companies so that they can gain work experience and contribute to growth.It's a sad fact if things don't alter they will stay as they are. Unemployed people could use Youtube and post videos to advertise themselves to potential employers.They could do voluntary work in the community. They could even start their own one person businesses. All that is more useful than staying at home hoping that a job will turn up.

The government urges the private sector to pick up the slack and take on the unemployed but there are plenty of things the government could do on their own volition, rather than expecting others to clear up the mess which is of their making.

The banks may have caused the credit crunch but it was MPs who failed to regulate them properly and here we are once again heading for a recession and potentially another credit crunch. We often get told that lessons have been learned but sadly it's only too clear that they have not.

Oh for some MPs who really put their country before themselves. Maybe they will bring common sense and real strategic planning back to government.

Remember that when you are voting at the next General Election!