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If you look at the graph it can be seen that the last 10 years have seen a significant acceleration in the rate of gov't spending. It is this acceleration that has caused the structural deficit which we are all now having to "pay" for in cuts to gov't spending.


The long term trend is inexorably upwards - fine if it matches Britain's economic growth as it demands no more than taxpayers can afford. Essentially this is what UK can cope with. Bad if the spending rate exceeds economic growth as someone, somwewhere has to fund the gap. In the short term borrowing can cover off the shortfall but not forever.


From roughly 1982 through to 1998 the short term trend was less than the long term upward trend, public sector spending was growing but at a slower rate than economic growth. From 1998 till recently the rate at which gov't spending was growing looks to have been about twice the long term rate - unsustainable in the long term, it was bound to end in tears.


There have been periods in the past when gov't spending growth exceeded the long term trend and the areas above the line therefore represent "unacceptable / unrealisable" spending rates. The areas below the trend line represent periods where though slower gov't spending the tax payer was retaining more of their money.


I would suggest that any government can only change the long term trend with the agreement of the electorate - and since the long term trend hasn't changed in 50 years perhaps the electorate doesn't want it to move much in either direction, one being toward sustained higher taxes and higher gov't spending or alternatively, lower gov't spending and lower taxes.


It would be nice to think that post 2014 when this era of austerity may be coming to an end that it can be used as a platform to get back under the long term trend.

I?m not going to agree with just attacking banks but how has this whole deficit thing been recast as a UK fiscal issue, with the government at the time solely responsible?


Osborne and Cameron supported the Labour spending plans back in 2008 for starters


And in case it has escaped anyone?s notice but most countries around the world are in similar choppy waters ? to lesser or greater degree, but just before the finiancial crisi hit, Britain was well positioned. I doubt we would have been in a significantly different position whoever was in power

If Osborne and Cameron had opposed Labour's spending plans, would they have done something different? When you're in power, you take the consequences of your actions - thems the rules. Are Labour going to be accepting joint responsibility for those bits of the current cuts that they would have implemented if elected?


In any event, the deficit goes back well before 08, and the argument is that the UK was not as well-placed as other developed economies precisely becuase govt spending and borrowing had been allowed to accelerate from about 2002 based on GB's 'end to boom and bust'.

In 2008, it was about limiting the damage to the UK economy following Gordon's reckless spending. Now it's about redressing the balance so that government spending is more in line with government revenue. It's somewhat disingenuous to take 2008 as an example - I'm sure you're not suggesting that Osborne and Cameron were supporting the spending plans between 1998 and 2008 that got us into the huge deficit in the first place?


And as for the question about what you get when you walk into the Bank of England with your tenner - in theory, gold, as felt-tip says. Except that Uncle Gordon only went and flogged it all at rock-bottom prices a few years ago.

I've posted this before, but I think that Labour gets in, spends lots of wonga and does good things until the cash runs out and leaves us in a mess. The Tories come in and cut everything back and fix the economy, then keep cutting until people suffer and leave a different mess. Then, we are ready for Labour to come in and spend lots of wonga, etc, etc. This means that for the mid-term of each of the parties is pretty good government, until they overdo things.


It's a bit like the Matrix. Maybe. So who is Neo? Maybe it's Clegg, bringing in whole new order before crashing down to sacrifice himself.


Or maybe not.


PS Gordon certainly ended the "boom and bust" cycle. He got rid of the 'boom' bit...!

peckhamboy Wrote:

-------------------------------------------------------

> And as for the question about what you get when

> you walk into the Bank of England with your tenner

> - in theory, gold, as felt-tip says. Except that

> Uncle Gordon only went and flogged it all at

> rock-bottom prices a few years ago.


Actually, it used to be pure silver - hence Sterling, but that arrangement was abrogated years ago - now one just gets a crisp new note of the same denomination as the one handed in.

Jah,


Unfortunately, they've changed the Robin Hood Tax site - it used to be hilarious. The FAQ on "how we will spend the money" was completely nuts. They've changed it now to something a little more sober:


Our campaign proposal is that the money be split:

? 50% to be used to protect the poorest and most vulnerable in the UK;

? 25% to be used to help those in developing countries hit hardest by the financial crisis;

? 25% towards much needed resources to fight climate change at home and abroad.


In other words, they will spend all the money! Sod bringing the deficit down, just p**s it up the wall like the rest of the dosh. What is that saying again? "The problem with socialism is that eventually you run out of other people's money to spend."

just before the finiancial crisi hit, Britain was well positioned. wrote SeanMacGabhann


I don't think so Sean it was already up the creek paddle free but had not been announced,


but anyone with any knowledge of finance suspected it was all going mamaries skywards it was only a question of when.


Anyhoo the term 'quantitive easement' was our saviour according to Brown, anywhere else pulling the same stunt would have been known to have devalued by about 20%.


I remember when you could get four gallons (32pints) of petrol for a quid,

you cannot get a pint of it for that kind of dough today.


The pound in your pocket today is worth about one thirty second of a nineteen fifties pound.


It's good 'ere innit.

I remember when you could get four gallons (32pints) of petrol for a quid,

you cannot get a pint of it for that kind of dough today.


The pound in your pocket today is worth about one thirty second of a nineteen fifties pound.



But what was the average wage back then? Well, from this site it was ?101. Today it is about ?21000 (from this site).


So, if four gallons of petrol was a quid, it was roughly 1% of your annual income in 1950.

That is about 18 litres, so about ?22 today, or around 0.1% of annual income.


I'll stick with today's pound, thanks.

Is it going far enough? writes Jah Lush



Not nearly enough.


If I ruled, Brown and his financial crew along with some of the key players would be in the stocks,


not the market or the exchange but the ones I would have the convicts building all along the river banks.


I would bring back flogging and hard labour and show Brown and co. what real work is.


Is that far enough or have I missed something?

Jeremy Wrote:

-------------------------------------------------------


> I could also remind you that the banks did not run

> away with tax payers' money. The government took a

> lot of equity in return, and will - at some point

> - actually make a profit from these shares.



i don't understand why people ignore this fact when they bang on about bail outs

Jeremy Wrote:

-------------------------------------------------------


> I could also remind you that the banks did not run

> away with tax payers' money. The government took a

> lot of equity in return, and will - at some point

> - actually make a profit from these shares.



i don't understand why people ignore this fact when they bang on about bail outs


Agree - the sale of "our" shares in banks in about 2014, just before the next election should provide some cash for pre-election sweeteners

What do you mean, "we won't get that money back"? In the majority of cases, it wasn't "ours" in the first place.


The banks which have been bailed out have already slashed bonuses (and headcount).


And let's not forget the 2010 bonus tax... and income tax on top of that... actually maybe we did "get it back" after all...

I know we will never see eye to eye on it


But if RBS awarded themselves over 1 billion in bonuses, where did that money come from again? And why did they need rescuing? What is the bonus for? Paying staff, regardless of the job they did, for a company that shouldn't even exist because of ineptitude


My first post on this thread specifically said i didn't want to single out banks - I'm all in agreement that society at large played the part in the financial collapse - but when peopel start absolving the banks of their part I get a bit annoyed

Hmmm - if you have no money to pay the mortgage, the bank doesn't lend you the money again, ittakes the house off you


You COULD borrow the money from friends or family, but they will be rightly pissed off if they see you driving a new car the following month

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