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Post by Belgian Yellow on Oct 23, 2010 10:12:40 GMT
"The banks" clearly have a lot to answer for. But what happened to people taking responsibility for their own actions? No matter how much you want "that house", wouldn't you feel a little uneasy borrowing five times your income? The banks shouldn't have lent it, but "we" shouldn't have borrowed it. Come on YH! This is systemic. Yes, individuals did x, y and z and I don't have a great deal of sympathy. But the whole financialisation of capital is based on these principles. The crisis was caused by the system creating a massive credit bubble of non-existent money. That's what hedge funds, derrivatives, futures markets are all about. The ethos of this current phase of financialisation is "speculative risk". Moobs' point is just ignorance. If banks were nationalised they wouldn't invest? I thought the problem was caused by exactly that - private banks not lending? So where did the banks themselves get their investment from? From the national banks, IMF, government, etc - i.e. the national sector. If we put the money into the banks to prop them up, then we should have control of them. |
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Post by Agadoo on Oct 23, 2010 11:11:40 GMT
"The banks" clearly have a lot to answer for. But what happened to people taking responsibility for their own actions? No matter how much you want "that house", wouldn't you feel a little uneasy borrowing five times your income? The banks shouldn't have lent it, but "we" shouldn't have borrowed it. Come on YH! This is systemic. Yes, individuals did x, y and z and I don't have a great deal of sympathy. But the whole financialisation of capital is based on these principles. The crisis was caused by the system creating a massive credit bubble of non-existent money. That's what hedge funds, derrivatives, futures markets are all about. The ethos of this current phase of financialisation is "speculative risk". Moobs' point is just ignorance. If banks were nationalised they wouldn't invest? I thought the problem was caused by exactly that - private banks not lending? So where did the banks themselves get their investment from? From the national banks, IMF, government, etc - i.e. the national sector. If we put the money into the banks to prop them up, then we should have control of them. No what I meant was why would investors invest in a bank that used their money in government spending, they would want their money invested in the financial markets so they could get the best returns, otherwise it wouldn't be a bank.... |
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Post by Agadoo on Oct 23, 2010 11:15:38 GMT
"The banks" clearly have a lot to answer for. But what happened to people taking responsibility for their own actions? No matter how much you want "that house", wouldn't you feel a little uneasy borrowing five times your income? The banks shouldn't have lent it, but "we" shouldn't have borrowed it. Labour are completely responsible for this, they encouraged people to buy their own property, they ended a good Tory policy of right to buy which was a sensible and responsible way of owning your own home and they didn't regulate the banks. They sat back and watched the bubble get bigger |
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Post by Belgian Yellow on Oct 23, 2010 12:05:24 GMT
Come on YH! This is systemic. Yes, individuals did x, y and z and I don't have a great deal of sympathy. But the whole financialisation of capital is based on these principles. The crisis was caused by the system creating a massive credit bubble of non-existent money. That's what hedge funds, derrivatives, futures markets are all about. The ethos of this current phase of financialisation is "speculative risk". Moobs' point is just ignorance. If banks were nationalised they wouldn't invest? I thought the problem was caused by exactly that - private banks not lending? So where did the banks themselves get their investment from? From the national banks, IMF, government, etc - i.e. the national sector. If we put the money into the banks to prop them up, then we should have control of them. .. Not at all. I've just had a letter from my pension fund saying my contributions have to go up because they want to invest in less risky ventures. |
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Post by Yellow River on Oct 23, 2010 12:09:17 GMT
Interesting article from The New York Times.
Always good to get an independent objective view without UK party political bias.
British Fashion Victims By PAUL KRUGMAN
Published: October 21, 2010
"In the spring of 2010, fiscal austerity became fashionable. I use the term advisedly: the sudden consensus among Very Serious People that everyone must balance budgets now now now wasn’t based on any kind of careful analysis. It was more like a fad, something everyone professed to believe because that was what the in-crowd was saying.
And it’s a fad that has been fading lately, as evidence has accumulated that the lessons of the past remain relevant, that trying to balance budgets in the face of high unemployment and falling inflation is still a really bad idea. Most notably, the confidence fairy has been exposed as a myth. There have been widespread claims that deficit-cutting actually reduces unemployment because it reassures consumers and businesses; but multiple studies of historical record, including one by the International Monetary Fund, have shown that this claim has no basis in reality.
No widespread fad ever passes, however, without leaving some fashion victims in its wake. In this case, the victims are the people of Britain, who have the misfortune to be ruled by a government that took office at the height of the austerity fad and won’t admit that it was wrong.
Britain, like America, is suffering from the aftermath of a housing and debt bubble. Its problems are compounded by London’s role as an international financial center: Britain came to rely too much on profits from wheeling and dealing to drive its economy — and on financial-industry tax payments to pay for government programs.
Over-reliance on the financial industry largely explains why Britain, which came into the crisis with relatively low public debt, has seen its budget deficit soar to 11 percent of G.D.P. — slightly worse than the U.S. deficit. And there’s no question that Britain will eventually need to balance its books with spending cuts and tax increases.
The operative word here should, however, be “eventually.” Fiscal austerity will depress the economy further unless it can be offset by a fall in interest rates. Right now, interest rates in Britain, as in America, are already very low, with little room to fall further. The sensible thing, then, is to devise a plan for putting the nation’s fiscal house in order, while waiting until a solid economic recovery is under way before wielding the ax.
But trendy fashion, almost by definition, isn’t sensible — and the British government seems determined to ignore the lessons of history.
Both the new British budget announced on Wednesday and the rhetoric that accompanied the announcement might have come straight from the desk of Andrew Mellon, the Treasury secretary who told President Herbert Hoover to fight the Depression by liquidating the farmers, liquidating the workers, and driving down wages. Or if you prefer more British precedents, it echoes the Snowden budget of 1931, which tried to restore confidence but ended up deepening the economic crisis.
The British government’s plan is bold, say the pundits — and so it is. But it boldly goes in exactly the wrong direction. It would cut government employment by 490,000 workers — the equivalent of almost three million layoffs in the United States — at a time when the private sector is in no position to provide alternative employment. It would slash spending at a time when private demand isn’t at all ready to take up the slack.
Why is the British government doing this? The real reason has a lot to do with ideology: the Tories are using the deficit as an excuse to downsize the welfare state. But the official rationale is that there is no alternative.
Indeed, there has been a noticeable change in the rhetoric of the government of Prime Minister David Cameron over the past few weeks — a shift from hope to fear. In his speech announcing the budget plan, George Osborne, the chancellor of the Exchequer, seemed to have given up on the confidence fairy — that is, on claims that the plan would have positive effects on employment and growth.
Instead, it was all about the apocalypse looming if Britain failed to go down this route. Never mind that British debt as a percentage of national income is actually below its historical average; never mind that British interest rates stayed low even as the nation’s budget deficit soared, reflecting the belief of investors that the country can and will get its finances under control. Britain, declared Mr. Osborne, was on the “brink of bankruptcy.”
What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it"
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Post by peterdevo on Oct 23, 2010 13:26:38 GMT
What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it"
An economist in the Mail today suggested as much. But the majority are not of the same view.
The figures being banded about of 500000 losing their jobs has no justification. We still have a AAA rating and I would imagine the government would not allow things to get too bad, although it is better we take action now than the EU jump in and tell us to do something much worse further down the line
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Post by Sheik Djibouti on Oct 25, 2010 8:54:54 GMT
What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it" An economist in the Mail today suggested as much. But the majority are not of the same view. The figures being banded about of 500000 losing their jobs has no justification. We still have a AAA rating and I would imagine the government would not allow things to get too bad, although it is better we take action now than the EU jump in and tell us to do something much worse further down the line Honest question - What can the EU do that would be much worse down the line? Does having our own currency make a difference to what they can do as opposed to what they imposed on Greece? |
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Post by Yellow River on Oct 25, 2010 9:45:48 GMT
Nobel prize winning economist Professor Christopher Pissarides gives his view......
Osborne 'exaggerated crisis risk'
George Osborne has been accused by Britain's new Nobel Prize winning economist of having "exaggerated" the risk of a Greek-style debt crisis.
Professor Christopher Pissarides said that the prospects of a sovereign debt crisis hitting Britain - used by the Chancellor to justify his spending cuts - were "minimal".
In an article for the Sunday Mirror, he warned that Mr Osborne's swingeing cuts package, announced last week in the Commons, was taking "unnecessary risks" with the economy.
The Chancellor has said drastic action to tackle the deficit was necessary to avoid a Greek-style collapse in investor confidence, leaving Britain facing punitive interest rates to finance its borrowing.
However Prof Pissarides said he believed that the Chancellor had over-stated the dangers.
"It is important to avoid this 'sovereign risk'. But in my view Britain is a long way from such a threat, and the Chancellor has exaggerated the sovereign risks that are threatening the country," he said.
He said that Mr Osborne should have been more concerned about the current weakness of the UK economy.
"Unemployment is high and job vacancies few. By taking the action that the Chancellor outlined in his statement, this situation might well become worse," he said.
"These risks were not necessary at this point. He could have outlined a clear deficit-reduction plan over the next five years, postponing more of the cuts, until recovery became less fragile. The 'sovereign risk' would have been minimal."
His comments were echoed by Labour leaders Ed Miliband who accused the Government of driving through big cuts for ideological reasons. "Of course the deficit is high and needs to be brought down. Our approach, based on halving it over four years, would bring it down every year," he said in an article for The Observer. "But the idea that we are about to go bankrupt is pure political spin to justify a familiar ideological project of a smaller state."
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Post by Agadoo on Oct 25, 2010 10:05:59 GMT
What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it" An economist in the Mail today suggested as much. But the majority are not of the same view. The figures being banded about of 500000 losing their jobs has no justification. We still have a AAA rating and I would imagine the government would not allow things to get too bad, although it is better we take action now than the EU jump in and tell us to do something much worse further down the line Honest question - What can the EU do that would be much worse down the line? Does having our own currency make a difference to what they can do as opposed to what they imposed on Greece? You need a currency that reflects the local economy. No one wants to visit or do business with Spain, Portugal or Greece as much because they are tied in to a strong currency which does not reflect the value of their economy. The Euro is crippling these countries |
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Post by Agadoo on Oct 25, 2010 10:06:32 GMT
What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it" An economist in the Mail today suggested as much. But the majority are not of the same view. The figures being banded about of 500000 losing their jobs has no justification. We still have a AAA rating and I would imagine the government would not allow things to get too bad, although it is better we take action now than the EU jump in and tell us to do something much worse further down the line Honest question - What can the EU do that would be much worse down the line? Does having our own currency make a difference to what they can do as opposed to what they imposed on Greece? You need a currency that reflects the local economy. No one wants to visit or do business with Spain, Portugal or Greece as much because they are tied in to a strong currency which does not reflect the value of their economy. The Euro is crippling these countries |
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Post by Sheik Djibouti on Oct 25, 2010 10:24:35 GMT
Honest question - What can the EU do that would be much worse down the line? Does having our own currency make a difference to what they can do as opposed to what they imposed on Greece? You need a currency that reflects the local economy. No one wants to visit or do business with Spain, Portugal or Greece as much because they are tied in to a strong currency which does not reflect the value of their economy. The Euro is crippling these countries So quite different to our own situation then? |
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Post by amarillo on Oct 25, 2010 10:38:51 GMT
Good article, totally agree with his point of view.
Everyone knows that we need to sort out the debt, but in a country with a widening gap between rich and poor and massive social problems, what the Tories are doing is extremely risky. Regardless of the scare stories about the interest cost per day, there is no reason why we need to clear the debt so quickly.
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Post by wemnotwembley on Oct 25, 2010 18:33:38 GMT
Clegg scares me even more than doughboy Cameron......the living proof that power corrupts and that power-addicts will behave like yer average junkie to hang on in there.
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