Clegg or Kenny??

[GRUMPY BLADE]

I was born in Sheffield and voted Tory. It's a sad day imho but doesn't change my politics. By next week we are all going to be moaning and the only people who I'll be calling c***s are the people who got us in this mess, namely the banks and certain members of a political party who allowed it.

These are not been targeted and never will be by the Tories. Why should civil servents pay for it?

Anyone see the Channel 4 Dispatches program on the banking sector, summed it up nicely.

 

[alcoblade]

These are not been targeted and never will be by the Tories. Why should civil servents pay for it?

Anyone see the Channel 4 Dispatches program on the banking sector, summed it up nicely.

Because civil servants are primarily funded by tax raised by the private sector. The private sector has to fund pensions, job security and now higher salaries for the public sector. None of these privileges are lavished on themselves, yet they have to provide it for others. The private sector has been hit hard, the public sector has bloated beyond belief. This situation can't go on, it's simply not fair - and my wife is currently a beneficiary of a gold plated, public sector pension - but that doesn't alter the unfairness of it all.

UTB

 

[JJ Sefton]

Come on you financial boffins out there, how much interest will the country have lost by not loaning the money.

Having £80m in a loan for Xyears is hardly going to push us over the edge.

£80 million might not but you can guarantee that in every town and city up and down the country there are people saying the same thing; "We know there need to be cuts but not for us!"

It all adds up.

 

[Deleted member 2102]

These are not been targeted and never will be by the Tories. Why should civil servents pay for it?

Anyone see the Channel 4 Dispatches program on the banking sector, summed it up nicely.

The banks didnt get us in this mess the Labour government did.

 

[JJ Sefton]

The banks didnt get us in this mess the Labour government did.

As you know I agree with you on an awful lot but we have to say that the banks are responsible for some of this. I remember an advisor for Barclays saying (around 2006) that personal debt was no big problem because it was secured against assets, like houses, that were rising in value. Of course, it never seemed to have occurred to her what the consequences of this debt would be if the assets backing it werent rising in value.

However, Im not sure that simply kicking the shit out of bankers will do anyone any good. In my view we have a fundamentally shaky monetary model and unless we tackle that we will go through this all again in a few years.

 

[Bayingblade]

As you know I agree with you on an awful lot but we have to say that the banks are responsible for some of this. I remember an advisor for Barclays saying (around 2006) that personal debt was no big problem because it was secured against assets, like houses, that were rising in value. Of course, it never seemed to have occurred to her what the consequences of this debt would be if the assets backing it werent rising in value.

However, Im not sure that simply kicking the shit out of bankers will do anyone any good. In my view we have a fundamentally shaky monetary model and unless we tackle that we will go through this all again in a few years.

But weren't the banks just taking advantage of the relaxation of the rules that took place when the FSA took over regulation from the Bank of England Walthy?

 

[alcoblade]

But weren't the banks just taking advantage of the relaxation of the rules that took place when the FSA took over regulation from the Bank of England Walthy?

But what if they were? Just because the rules allowed them to over leverage and take the country to the brink doesn't mean that they should do, does it?

I do think the banks make a great scapegoat, much as they contributed enormously. Vast swathes of the public, who remortgaged several times to buy things they neither needed or could afford, love to blame the bankers and take no responsibility themselves.

UTB

 

[JJ Sefton]

But weren't the banks just taking advantage of the relaxation of the rules that took place when the FSA took over regulation from the Bank of England Walthy?

Indeed they did but in the background of it, in my view, is low interest rates set artificially by central banks. This goes for the Federal Reserve as well as (more so in fact than) the Bank of England. Easy credit plus deregulation is a recipie for disaster.

 

[Bayingblade]

But what if they were? Just because the rules allowed them to over leverage and take the country to the brink doesn't mean that they should do, does it?

I do think the banks make a great scapegoat, much as they contributed enormously. Vast swathes of the public, who remortgaged several times to buy things they neither needed or could afford, love to blame the bankers and take no responsibility themselves.

UTB

No it doesn't Alco, but they didn't break any rules, apart from perhaps moral ones but they aren't guided by them. And a certain Mr Brown was happy because the tax revenues they generated helped to swell his coffers to unprecedented levels. Sadly, it wasn't quite enough to fund his spending frenzy. And yes, those who believed that credit was open ended must take some personal responsibility but they will be paying for their profligacy over the next few years.

 

[Deleted member 2102]

As you know I agree with you on an awful lot but we have to say that the banks are responsible for some of this. I remember an advisor for Barclays saying (around 2006) that personal debt was no big problem because it was secured against assets, like houses, that were rising in value. Of course, it never seemed to have occurred to her what the consequences of this debt would be if the assets backing it werent rising in value.

However, Im not sure that simply kicking the shit out of bankers will do anyone any good. In my view we have a fundamentally shaky monetary model and unless we tackle that we will go through this all again in a few years.

The current mess is a huge structual deficit. Worse then Greece's, Spains etc etc. That is the fault of the last government. Germany had to bail out many of its regional banks plus a huge bank in HypoRealEstate plus assume the liabilities of other EMU nations. We are not alone in having a banking crisis which required the public to assume private sector losses. We are alone in the size of our structural deficit.

 

[Deleted member 2102]

But what if they were? Just because the rules allowed them to over leverage and take the country to the brink doesn't mean that they should do, does it?

I do think the banks make a great scapegoat, much as they contributed enormously. Vast swathes of the public, who remortgaged several times to buy things they neither needed or could afford, love to blame the bankers and take no responsibility themselves.

UTB

Banks should be regulated much more tightly. Unfortunately thats a tad too inconvenient for all politicians of the left and right. Look at how Europols go after hedge funds when their own domestic banking systems are levered more highly. Cheap and plentiful credit suits everyone in the short run.

 

[blader]

This is a great debate lads and one which i have a very firm stance on. I was slating any of my mates/associates who were voting tory up to the election as i knew, i just knew, that yorkshire would be hardest hit. As someone rightly said, the tories have never won an election based on votes from sheffield and the rest of yorkshire, therefore we were always gonna get fucked. Clearly this budget has a lot of political interest behind it and they were always gonig to protect the strong tory areas, it does make sense from their point of view. I can see why some people vote tory ok, its not my place to tell them its wrong. However, if you live in a working class area such as barnsley, rotherham, north east and many more, regardless of your political views, it is in your personal interest to vote against tory as this was inevitable. Hope any silly twat who voted tory feels happy now and if their family got personally affected by this cut then thats partial justice.

Just to add, my uncle has worked for FM for 19 years and is now likely to lose his job because of it which has been a large contributor to my opinion and my despise for that c*** Cameron. Wanker.

 

[JJ Sefton]

"As someone rightly said, the tories have never won an election based on votes from sheffield and the rest of yorkshire, therefore we were always gonna get fucked"

Look, when youre cutting government spending it stands to reason that this is going to be felt most in areas with lots of government spending. Perhaps you should ask yourself why it is that areas such as those you mention seem to be unable to get by without vast infusions of cash from elsewhere.

"Just to add, my uncle has worked for FM for 19 years and is now likely to lose his job because of it"

No he isnt. If the Forgemasters project offers the high returns people are saying then raising private capital shouldnt be a problem. If it doesnt offer these high returns then we shouldnt be doing it in the first place.

And if we keep on merrily spending money we havent got interest rates will rise and how many people do you think will lose their jobs then?

 

[raul]

But what if they were? Just because the rules allowed them to over leverage and take the country to the brink doesn't mean that they should do, does it?

I do think the banks make a great scapegoat, much as they contributed enormously. Vast swathes of the public, who remortgaged several times to buy things they neither needed or could afford, love to blame the bankers and take no responsibility themselves.

UTB

Vast swathes?

And if the lenders had spotted these vast swathes on their nth remortgage, would it not have been sensible to stop lending to them rather than just thinking of their bonuses?

 

[JJ Sefton]

Vast swathes?

And if the lenders had spotted these vast swathes on their nth remortgage, would it not have been sensible to stop lending to them rather than just thinking of their bonuses?

It really does take two to tango. A dodgy loan needs a borrower just as much as it needs a lender.

 

[Bayingblade]

This is a great debate lads and one which i have a very firm stance on. I was slating any of my mates/associates who were voting tory up to the election as i knew, i just knew, that yorkshire would be hardest hit. As someone rightly said, the tories have never won an election based on votes from sheffield and the rest of yorkshire, therefore we were always gonna get fucked. Clearly this budget has a lot of political interest behind it and they were always gonig to protect the strong tory areas, it does make sense from their point of view. I can see why some people vote tory ok, its not my place to tell them its wrong. However, if you live in a working class area such as barnsley, rotherham, north east and many more, regardless of your political views, it is in your personal interest to vote against tory as this was inevitable. Hope any silly twat who voted tory feels happy now and if their family got personally affected by this cut then thats partial justice.

Just to add, my uncle has worked for FM for 19 years and is now likely to lose his job because of it which has been a large contributor to my opinion and my despise for that c*** Cameron. Wanker.

Blader, the CURRENT government is making these drastic cuts as a result of the policies of the LAST government, who were in power for 13 years, had unprecedented levels of tax revenues to hand yet left us with the largest deficit since the war. I would suggest responsibility for your Uncles predicament lies with the last government but if the project is as good as is suggested, private investment should be forthcoming. Which should have been the way Forgemasters should have gone in the first place, as a private company.

 

[blader]

"And if we keep on merrily spending money we havent got interest rates will rise and how many people do you think will lose their jobs then?"

Not necessarily. A increase in spending often leads to an increase in R&D and training, which therefore increases productivity of the economy and the output will increase. This means our Long-Rung Aggregate supply will shift outwards therefore stimulation economics growth. Short term spending is often a good long term investment. Increased productivity will therefore lead to more proficts and more investment whcih will REDUCE interest rates.

A cut in spending can mean a reduction in employment, the govt will have to spend more on benefits and get less tax revenue. They have less money to spend and invest and the economy will suffer deflation.

Now you tell me which will be the best way to go....

 

[Deleted member 2102]

Vast swathes?

And if the lenders had spotted these vast swathes on their nth remortgage, would it not have been sensible to stop lending to them rather than just thinking of their bonuses?

In an ideal world it wouldnt matter if a bank lend too much cash to people who couldnt pay it back. In the real world banks are implicitly gurantenteed by the state so will be bank to raise debt finance too cheaply. Hence they become too large and then too big to fail. Remove the guranantee and the cost of finance will rise so the majority of people will not be able to buy houses and lcd tvs. This would be political suicide. In the ideal world banks should be boring utilities and the risks should be taken by pension funds, hedge funds etc.

 

[Bayingblade]

Vast swathes?

And if the lenders had spotted these vast swathes on their nth remortgage, would it not have been sensible to stop lending to them rather than just thinking of their bonuses?

And if the government hadn't been so reliant on the tax revenue from the City (20%+ of ALL tax revenue) then maybe they would have stepped in. Unfortunately, they were too busy spending the lot!! And more!!!

 

[Deleted member 2102]

"And if we keep on merrily spending money we havent got interest rates will rise and how many people do you think will lose their jobs then?"

Not necessarily. A increase in spending often leads to an increase in R&D and training, which therefore increases productivity of the economy and the output will increase. This means our Long-Rung Aggregate supply will shift outwards therefore stimulation economics growth. Short term spending is often a good long term investment. Increased productivity will therefore lead to more proficts and more investment whcih will REDUCE interest rates.

A cut in spending can mean a reduction in unmenployment, the govt will have to spend more on benefits and get less tax revenue. They have less money to spend and invest and the economy will suffer deflation.

Now you tell me which will be the best way to go....

An increase in state spending at the levels we currently enjoy will crowd out private investment. Basically all you are doing is increasing the size of the unproductive state sector at eth expense of the private sector. As for this nonsense that by sacking state employees you will receive less tax revenue, well isnt it a tad circular?

 

[JJ Sefton]

"And if we keep on merrily spending money we havent got interest rates will rise and how many people do you think will lose their jobs then?"

Not necessarily. A increase in spending often leads to an increase in R&D and training, which therefore increases productivity of the economy and the output will increase. This means our Long-Rung Aggregate supply will shift outwards therefore stimulation economics growth. Short term spending is often a good long term investment. Increased productivity will therefore lead to more proficts and more investment whcih will REDUCE interest rates.

A cut in spending can mean a reduction in employment, the govt will have to spend more on benefits and get less tax revenue. They have less money to spend and invest and the economy will suffer deflation.

Now you tell me which will be the best way to go....

Youre using a static model there. You talk about shifting the Long Run Aggregate Supply Curve (LRAS) to the right (an expansion in the economy's productive capacity) but you propose to pay for this with borrowed money. Now if these borrowing push up interest rates then you will see a contraction in the Aggregate Demand Curve (a shift to the left of the standard diagram) which will offset your intial shift in LRAS. Raise taxes to pay for it and you get the same effect.

 

[blader]

But then i refer you to my second point and the possible drastic effects that a large reduction in spending could do. This CFP (contractionary fiscal policy) is having positive results for the richer areas because the government is freeeing up more money to spend. As an economist, i would say this is great, but my Initial arguement was that if you are a working class yorkshireman (as i am) then this is going to be disastrous for you on a personal level which is true.

The government plans will yield positive and negative effects for the economy, unfortunately it seems that yorkshires economy will suffer more than most. Thatcher mark II anyone?

 

[Deleted member 2102]

But then i refer you to my second point and the possible drastic effects that a large reduction in spending could do. This CFP (contractionary fiscal policy) is having positive results for the richer areas because the government is freeeing up more money to spend. As an economist, i would say this is great, but my Initial arguement was that if you are a working class yorkshireman (as i am) then this is going to be disastrous for you on a personal level which is true.

The government plans will yield positive and negative effects for the economy, unfortunately it seems that yorkshires economy will suffer more than most. Thatcher mark II anyone?

What would you do instead?

 

[blader]

What would you do instead?

Well look, im not going to claim to know everything (or even alot) about the financial problems the governemnt face. My arguement is based on a simple cetirus paribus. Governement policy depends on the exchange rate, the base rate fo loans from the world bank, the amount of outgoings in aid etc. theres so many more facts and figures which i simply dont know enough about to comment. As i say, my arguement is coming from a yorkshire opinion rather than labour/tory/liberal. Im saying there are many other places in the country where spending is not required anywhere near to the extent areas of SYorks does that could have needless spending taken from it. As well as this, raising the bottom tax band to 10k and lowering corporation and inheritance tax is doing the economy no favours either and should ALL be knocked on the head.

 

[JJ Sefton]

"But then i refer you to my second point and the possible drastic effects that a large reduction in spending could do."

Look at the effects of continuing this spending. It just isnt viable.

"This CFP (contractionary fiscal policy) is having positive results for the richer areas because the government is freeeing up more money to spend."

Not sure what you mean by this. If you have £X in an economy does it matter who is spending it? Does it matter if its George Osbourne who got it from taxing people or some bloke in Wiltshire who got it through working or investing (which carries the risk the investment may not pay off and he will lose his capital)?

What were talking about is borrowing and the upward pressure on interest rates if it continues. This would screw everybody, mostly those who need credit to get by.

"unfortunately it seems that yorkshires economy will suffer more than most."

Possibly but not, as some seem to think, because the coalition especially dislike Yorkshire but because the economy in Yorkshire has, for many years, been pumped up with money transfers from other areas. The solution, long term, is to enable Yorkshire to stand on its own two feet economically like other areas do. I can see no reason why Yorkshire is doomed to be forever some sort of charity case.

 

[JJ Sefton]

Im saying there are many other places in the country where spending is not required anywhere near to the extent areas of SYorks does that could have needless spending taken from it.

Really? How much public spending goes on it Hampshire or Surrey? As for removing their needless spending well thats what the coalition is planning to do with cutting Child Tax credits for the middle class.

 

[blader]

"The solution, long term, is to enable Yorkshire to stand on its own two feet economically like other areas do. I can see no reason why Yorkshire is doomed to be forever some sort of charity case."

When a baby is learning to walk, you dont keep tripping it up do you? You are correct, but Yorkshire needs help in order to be able to become more delf-dependant, not by taking away mass-loads of spending from it!

As for the CFP, i mean that the governemnt is relieving a lot of its pressure without the richer areas forgoeing any major cuts. Its a win-win for people living in these areas.

 

[JJ Sefton]

"When a baby is learning to walk..."

So Sheffield is a baby, economically speaking?

"As for the CFP, i mean that the governemnt is relieving a lot of its pressure without the richer areas forgoeing any major cuts"

If they arent in receipt of government money in the first place, which they arent for the most part, what cuts are possible?

 

[Deleted member 2102]

Well look, im not going to claim to know everything (or even alot) about the financial problems the governemnt face. My arguement is based on a simple cetirus paribus. Governement policy depends on the exchange rate, the base rate fo loans from the world bank, the amount of outgoings in aid etc. theres so many more facts and figures which i simply dont know enough about to comment. As i say, my arguement is coming from a yorkshire opinion rather than labour/tory/liberal. Im saying there are many other places in the country where spending is not required anywhere near to the extent areas of SYorks does that could have needless spending taken from it. As well as this, raising the bottom tax band to 10k and lowering corporation and inheritance tax is doing the economy no favours either and should ALL be knocked on the head.

The lowering of death duties has been knocked on the head. I would have thought that lowering corporation tax would be welcomed in all areas as private firms would be more likely to expand and invest in the UK? Unfortunately there are areas in the country that are totally dependent on the state such as the north east, scotland etc. Cutting government spending is going to really hurt these areas. I do not know how this can be avoided unless you dont cut spending and ramp up taxes instead which I believe would be even more detrimental to the UK economy. Whatever the pols promise the next few years will not be pleasant, hospitals wil close, council employees will be laid off, state pensions will look just like private sector pensions.

 

[alcoblade]

Vast swathes?

And if the lenders had spotted these vast swathes on their nth remortgage, would it not have been sensible to stop lending to them rather than just thinking of their bonuses?

Do you think that very high levels of personal debt are solely the fault of the banking system?

Nobody was forced to take out loans they couldn't afford. "Vast swathes" or call it whatever you will, far too many people, have taken on too much personal debt. That was their own fault.

UTB