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Dear Chief Secretary, there's no money left - 5/17/2010 9:41:49 AM   
LadyEllen


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Status: offline 		So reads the handover note allegedly left by the outgoing Labour Chief Secretary to the Treasury here in the UK to his successor. Apparently a joke, but evidently not a very amusing one to any but Labour party members who, with the Lib Dem/Tory coalition left to pick up the pieces can now look forward to pinning the blame for the unpopular remedies to come on anyone but themselves and their party.

There is to be an emergency budget on 22nd June. Apparently things are much worse than they were reported to be by the Labour government, and this is to exclude consideration of their wildly optimistic forecasts as to growth, which likely being far lower in reality only serves to make things even worse.

We can expect VAT to rise to at least 20% (netting around £12 billion towards Labour's Deficit) - this one is pretty much a no brainer. We can expect other tax rises - the usual areas of booze and tobacco of course, (including the cider tax), and perhaps even those sacred cows of the Tories, National Insurance and Income Tax. Capital Gains, Corporation Tax, reliefs for investment in plant and machinery - I expect increases to all, as well as to items such as vehicle excise, fuel duties and so on.

The problem we have is that the Coalition, inspired predominantly by the Lib Dem rejection of any cuts that might affect the worst off in the country, is left with few options but to raise taxes across the board. The spending commitments required to avoid the worst effects falling disproportionately on the poorer segments of society are also the largest - welfare benefits of all kinds, now paid to 1 in 5 people of working age not in employment, around half of whom are excluded from unemployment figures.

And we can expect soaring unemployment on top of what we have now as funding for non essential public bodies and employment feels the brunt of the cuts to come. This adds to the welfare benefit cost, but this rise is more than offset by the reduction in terms of salaries in the burden on public spending. Whilst there is a commitment to avoid cuts that would affect front line services, I do not see how this might be fulfilled at present given the reduction in infrastructure and back office functions that the cuts will mean.

And for our American readers I feel we can expect the UK to be pulling out of all foreign engagements very soon, unless someone else starts picking up the bill.

This is going to be one hell of a period of "adjustment" to be sure. The question is what the markets will make of it if we go for what I see as necessary - things they'd like - alongside the dire situation that it will bring with it as regards unemployment, investment and growth.

E

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 10:23:21 AM   
pahunkboy


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Status: offline 		Oh I am sure we will send a trill.   we have lots.

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 10:23:37 AM   
Politesub53


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Status: offline 		I think you are mostly correct Ellen. It was a certainty that whoever got in would have to makes cuts. VAT always looked like going up, even if brown had got back in. I cant see troop withdrawals any time soon though. I also suspect that Clegg will try and ensure the poorest are not hit the hardest.

As for Labour fiddling the books, this comes as no suprise. Unemployment is already at 2 1/2 million but it has been rising steadily since the financial crisis started. I expect it to level off soon, but maybe rise sharply in the short term. I just hope Osborne gets the next budget right, if not, we are all in trouble.

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 11:17:45 AM   
LadyEllen


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Status: offline 		Unemployment will rise I'm sorry to say - the growth since 1997 in employment has to great extent been accountable to the growth in public services under Labour. With the funding cuts must come swathes of measures by which redundancies in their hundreds of thousands will arise in the public services, alongside perhaps equal numbers in the private sector where elements of the private sector grew up to fill contracts to the inflated public services.

From what I recall of pre-election analyses, something like 1 in 5 people of working age are out of work, though they do not all appear on the unemployment figures, and another 1 in 5 are employed in one way or another directly from the public purse. 1 in 5 would be something like 5-6 million workers, funded by the taxpayer, and another 5-6 million not "economically active" as I believe the phrase goes, not including pensioners who also require taxpayer support.

Given salaries of £20kpa average for a public worker (allowing for £25k average across the board), the savings available from reducing even by 20% the number of people paid by the taxpayer are enormous, even accounting for only half that figure being saved by virtue of the added cost to the welfare benefits budget. Around £10,000,000,000-00 per annum in fact based on my "back of fag packet" calculation. That many private sector redundancies may accompany these public sector cuts is apparent - but the savings vs costs analysis should work out similarly.

The question will be just how many private sector jobs rely on public sector spending in an indirect way, rather than directly (as in contractors to the public services), such that the cuts may take out many more jobs as collateral effects of the cuts than those reliant on public spending, and the effects of this on the wider economy. If not handled properly then simple 20% cuts as have been discussed may result in unemployment levels of 20%, not counting those not currently counted, or 30% if they are (as has been discussed) put back on the figures having had their long term sickness / disability benefits stopped.

E

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 11:28:03 AM   
Sanity


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But hey, you've got free health care. 

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 11:30:31 AM   
LadyEllen


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Status: offline 		Indeed we have Sanity - and that will be maintained. It is one of few items that have been not only ruled out of bounds for cuts but which are planned to see spending increase with increasing expenses.

Your point?

E

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 11:37:13 AM   
pahunkboy


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Status: offline 		--  he means free.  not free.

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 2:37:57 PM   
lobodomslavery


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Status: offline 		Thats a load of doggerel Lady Ellen. Have you heard the news the recession is so OVER.
kevin

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 2:45:20 PM   
pahunkboy


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RE: Dear Chief Secretary, there's no money left - 5/17/2010 3:28:57 PM   
vincentML


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Status: offline 		It is all quite confusing to me LE.

In 1937 interest rates were raised in the States, the Markets tanked and we entered a second recession. We went to full war employment more or less in 1942 and grew out of the recession. But the UK, I presume, also went to war production earlier. Did your country come out of a recession? Or were you hindered, as I imagine, by German bombardment? Why did the States boom post war and UK did not? Did you not have manufacturing capacity and markets? Or was the US so dominant in Markets?

Reason for all those questions is I debate in my own mind the little I know and have heard of the Keynesian maxim. When you are in a recession and have high unemployment is exactly the wrong time for the Govt to worry about budget deficit. Will you (UK) not cause greater economic problems by fiscal tightening at this time? Would you not better stimulate your economy to grow with Keynesian applications? It seems a possible disaster to me if you cut public employment at this time exactly for the reason you cite...collateral damage.



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RE: Dear Chief Secretary, there's no money left - 5/17/2010 3:51:15 PM   
LadyEllen


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Status: offline 		We are in a bind V - if we dont cut but maintain spending then there is a risk that the market will become worried about lending us money for government spending and then we face the same problems as Greece with escalating borrowing costs without the benefit of being able to oblige the Germans to prop up our currency. If we cut spending as it needs to be cut then we shall surely see devastation across the economy. The trick we have to pull off is to cut enough to satisfy the markets but not enough to risk disaster. Our problem is that the deficit is way beyond anything to which we might wish to add even if we could in order to fund our way out of the problem.

As for the mid 20th century success of the USA spawned by WWII, the sad fact is that much of that success was funded from the liquidation of the British Empire to pay the US for the goods and services required to stay in the war. The UK was bankrupted by the end. The real kick in the knickers was that the money we paid over was then used to rebuild Germany at our expense! All ancient history now though.

The source of our problems - the reason this financial crisis hit us hard, is that the UK economy became ever more narrowly focussed on financial services to the exclusion of all else and the sector was given free rein to do as it would on the understanding that it would support our public spending growth. When the bubble popped we were left bailing out banks, underwriting their bad debts and up the swanny in terms of funding public spending to boot.

Happy days.

E

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 3:53:11 PM   
pahunkboy


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Status: offline 		Oh heavens.

Here we go blaming the poor Germans.  yikes.

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 3:54:20 PM   
X96X


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Status: offline 		You people just need to work harder. Don't you want money?

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 3:59:52 PM   
LadyEllen


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quote:

ORIGINAL: pahunkboy

Oh heavens.

Here we go blaming the poor Germans.  yikes.



Quiet down you poor deluded sap. Grown ups are talking.

But even so surely you dont get "its the Germans' fault" from my post?

Surely you see that in reality I'm laying the blame at the door of the Jewish bankers and of course those "India Pakis" upon both of which groups you are apparently an expert as to their subterfuges and trickery?

E

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 4:02:25 PM   
X96X


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Status: offline 		Yeah- you heard to battle axe. Grown ups are talking.

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 4:03:28 PM   
pahunkboy


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Status: offline 		So you would buy a car from a Paki?   Oh that is funny.

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 4:07:24 PM   
LadyEllen


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From: Stourport-England
Status: offline 		Quite pathetic, the pair of you.

I hear Stormfront has openings right now - you might fit in better over there; few of them can put sentences together or demonstrate any form of reasoning ability so you could each make quite a name for yourselves with just a little more effort.

E

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 4:11:24 PM   
vincentML


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quote:

The source of our problems - the reason this financial crisis hit us hard, is that the UK economy became ever more narrowly focussed on financial services to the exclusion of all else and the sector was given free rein to do as it would on the understanding that it would support our public spending growth. When the bubble popped we were left bailing out banks, underwriting their bad debts and up the swanny in terms of funding public spending to boot.


We have an unregulated Financial Services industry as well, LE. The six largest banks here, it is said, have assets equal in value to 66% of GDP. Additionally, the "banks" function as gigantic Hedge Funds gambling with money beggared at the window of our Central Bank. Yanno, the Fed. Furthermore, I hear, we have a ghost banking system bigger than the regulated unregulated one. I refer to the submerged market in credit default swaps. AIG had its CDS arm in London I think.

So we are all in the same boat. Wasn't it the housing devaluation that preciptated the credit meltdown in UK as it was with us? Boom and Bust.

Does not the Central Bank of the UK create its own Pound Sterling? As the US creates its own fiat money. I know Pahunk is hoarding more gold as I write this. Greece however did not have its own presses. It is dependent on the Euro. You are not. I don't see your situation as analogous to the Greeks' So, I am not convinced currency traders will be swayed by your budget deficit, although the wankers are like lemmings and run over one cliff after another.

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RE: Dear Chief Secretary, there's no money left - 5/17/2010 4:18:45 PM   
wittynamehere


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Status: offline 		OP, it sounds as if you're giving financial information without actually knowing much about it yourself, aside from what you've read on a couple websites this week. Do more research, and stay off BBC.com.

quote:

ORIGINAL: LadyEllen
Quiet down you poor deluded sap. Grown ups are talking.

*shudder* They let people like this post here? Ew.


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RE: Dear Chief Secretary, there's no money left - 5/17/2010 4:22:34 PM   
MistressJaynie


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Status: offline 		That Keynesian model was what Labour were advocating, of course, as the only sane fix; as were the Lib-Dems before their coalition re-think. Lab and Lib-Dem were both adamant severe cuts in 2010 would risk a double-dip recession. Clegg appears now to think otherwise, though nothing substantive has changed, one presumes. Coalition means compromise; and it's all about horse-trading. So no surprise he's trying to square a load of circles. Piggy in the middle isn't easy, but on this occasion it's taken him into no. 10, kind of. Clegg et al saw power on what ever basis. The rest was automatic, I'd guess.

I can't see how this will be a good thing for the Lib-Dems in the long-run. There'll be internecine, surely; and it'll end in tears before the five years. The Tories are already umming and arring about the 55% majority issue. Wait until there's some issue over Europe. The 1922ers haven't gone away, surely.

It'll be interesting, though, for all the worry.

Labour always spend; Tories always cut. Labour spent on things this country needed very badly. It was a muddle, through, and it never works as well as it should. So much is wasted in our society. It's sickening. But spending on what a society needs is better than the alternative. Tories tend not to think spending is as necessary because, bluntly, they often have other options, unlike the poor and uneducated. The Tories think their power is a form of natural varility; yet their advantages are based upon an unlevel playing-field skewed in their favour...from untaxed public schools to the natural advantages having family members in positions of power will bring. Many rebrand their success as if it is all self-made and individuated. Having a good start in life almost always means one does better. Having a bad start in life means one almost always does less well - often substantially and even fatally so. The poor are excluded from the best of society structurally and a priori, and some compensation for that is required.

The Tories' maxim that success is all about personal application is a disgusting myth. We do not live in a meritocrisy. Britain is riddled with nepotism and shady deals done on the nod. No party ever really solves these big issues. There's an immovable edifice in the UK; and once the bright young things get into power they see their idealism tempered by that reality.

Labour spent, and the crisis came along... not Labour's crisis, a world crisis. That's just a fact. The seeds of the buy now pay later mentality - of store-cards, credit-cards, 100% mortgages, crazy house-prices, of buy-to-let, and all that consumerist fantasy-land, which has left so many so prone now - were sown, tentatively, in the 1970s, but were developed into a cultural hegemony, under Thatcher, in the 1980s. The same is true of the turn in the UK from manufacturing to services. Blair came along, with his red flag of convenience, and knowing no-one having a great time on cheap credit wanted to hear anything as dowdy and unhip as perhaps do some saving for a rainy day, and just had to continue what Thatcherism had developed. The shit's firmly hit the fan, but it took more than 13 years of Labour rule, and it is more than the fault of that party, clearly.

There are personal issues to face, also. I never did get suckered into the free-for-all, and I'm doing ok because of that; though I'm saddened others are not, for whatever reason. But during that free-for-all, when others were spending like crazy and wondering why I wasn't, one pays a social price. It's swings and roundabouts, in essence.

Will there be riots, like in 1981?

J     

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