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thecrashingisles

Osborne Attack On Debt And Leverage

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http://www.bbc.co.uk/blogs/thereporters/ro...ate_tax_re.html

George Osborne has said it twice now in major speeches, so I think the City has to take the threat seriously: a Conservative government is likely to make it much more expensive for companies to finance their activities by borrowing vast amounts rather than through equity funding.

Here's what he said in the spring: "the UK is widely regarded as having the most generous tax treatment of debt interest of any major economy", so it was "time to look again at the generosity of interest deductibility in our corporate tax system".

He acknowledged this wouldn't be easy, in a technical sense. And there would have to be serious and diligent consultation on the detail.

But here's a striking insight into his instincts: "one of the most damaging impacts of the credit boom" he said "was that real venture capital in exciting new businesses was squeezed out by highly leveraged private equity".

In other words, Osborne - unlike either Alistair Darling or Gordon Brown - has signalled strong distaste for the private-equity boom of 2005-7, when many of our biggest companies were taken private in deals that saw them loaded up with debt (if you go back to the archives of this blog for the first half of 2007, you'll find a good deal about all this).

If private-equity firms expected life to be any easier for them under a Tory government, well Osborne has made it clear they can expect no favours from him. His mooted tax reforms would undermine their business model, which relies to a great extent on the tax-deductibility of interest on the borrowings they take out to buy businesses.

You could say the same about the housing market - People with accumulated savings were squeezed out by over-leveraged borrowers.

Edited by thecrashingisles

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Regardless of the specifics, it's always nice to see someone who might actually find themselves in a position to influence things speaking about against the current "all we need is more debt and we'll all be happy" attitude.

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http://www.bbc.co.uk/blogs/thereporters/ro...ate_tax_re.html

You could say the same about the housing market - People with accumulated savings were squeezed out by over-leveraged borrowers.

Over 97% of our money supply is borrowed into existence at interest from the essentially unproductive commercial banking system.

Our whole economy is inescapably indebted and leveraged under the present monetary system.

We need an adequate publicly issued, permanently circulating debt-free money supply as a utility to facilitate investment by a multitude of venture capitalists (that means us) in free market productive enterprise.

http://www.moneyreformparty.org.uk/

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"time to look again at the generosity of interest deductibility in our corporate tax system"

Yes he is right time to look at that, and also same for personal tax system eg on BTL.

Would be shocking if companies couldn't get deduction for interest on properties held but individuals could!

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Whether it is hypocracy or not it is good to see an opposition actually opposing and highlighting these issues. Without debate policy will never be questioned and improved.

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Whether it is hypocracy or not it is good to see an opposition actually opposing and highlighting these issues. Without debate policy will never be questioned and improved.

Only a decade late as well.

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You could say the same about the housing market - People with accumulated savings were squeezed out by over-leveraged borrowers.

Indeed, and even if savers are not squeezed out entirely, they end up over-paying / settling for less, because borrowers drive prices higher.

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George Osborne? He is a complete fvcking kunt, far far worse than Badger....

Despair, complete and utter despair.

Agreed. A lifetime of non-jobbing in various political roles.

Can we really afford another Chancellor like that?

Its pure croneyism on Cameron's part, and again, we've been there before as well.

This isn't any sort of partisan attack on the Tories, I think they have plenty of superior alternatives. Such as the entire parliamentary party more or less. Is he really the best they've got? Doesn't the situation deserve the best?

His comments at the present time aren't without merit. Thing is, Gordon used to say some fairly wise things before he tasted power as well. At which point a political animal who has known nothing else becomes all politics and issues of economics and finance become mere inconvieniences that because they start getting in the way of ideology are sooner or later ignored.

Edited by Cogs

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Its pure croneyism on Cameron's part, and again, we've been there before as well.

This isn't any sort of partisan attack on the Tories, I think they have plenty of superior alternatives. Such as the entire parliamentary party more or less. Is he really the best they've got? Doesn't the situation deserve the best?

If you really believe that you obviously pay no serious attention to politics. Osborne is behind most of the strategy that has led to the Conservatives being in a position to win back power.

Have you forgotten how many other shadow chancellors Brown saw off over the years? Osborne was the first who was really able to expose Brown and get him out of his comfort zone spouting tractor production figures.

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Here's what he said in the spring: "the UK is widely regarded as having the most generous tax treatment of debt interest of any major economy", so it was "time to look again at the generosity of interest deductibility in our corporate tax system".

He acknowledged this wouldn't be easy, in a technical sense. And there would have to be serious and diligent consultation on the detail.

Translation: I have no clue how to do apply this plaster, but no doubt, the boffins will come up with something, just like they'll invent viable alternative energy eventually, if only given enough research grants. And if that fails, there are always the Harry Potter spells!

The only 'conserving' those NewTory guys manage will at best result in 'pickled Britain'.

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If you really believe that you obviously pay no serious attention to politics. Osborne is behind most of the strategy that has led to the Conservatives being in a position to win back power.

Have you forgotten how many other shadow chancellors Brown saw off over the years? Osborne was the first who was really able to expose Brown and get him out of his comfort zone spouting tractor production figures.

David Milliband, as Head of Policy, was the primary architect of the last three New Labour manifestos.

I wouldn't want him doing it either. Osborne's situation is much enhanced by circumstances. Considering he is whacking in penalties at an open goal I'm not overly impressed with the number of times he keeps hitting the woodwork.

Look, amongst all the offices of state, the Treasury is special. Its the point at which the rubber meets the road. You can be as ideological as you like practically everywhere else, but matters of economics don't bend to how you want the world to be, how you think the world is or how you think it got there, things are as they are in black and white (and red). Its perverse in that what it really requires is a politician who isn't especially political.

Edited by Cogs

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Osborne's situation is much enhanced by circumstances. Considering he is whacking in penalties at an open goal I'm not overly impressed with the number of times he keeps hitting the woodwork.

Look, amongst all the offices of state, the Treasury is special. Its the point at which the rubber meets the road. You can be as ideological as you like practically everywhere else, but matters of economics don't bend to how you want the world to be, how you think the world is or how you think it got there, things are as they are in black and white (and red). Its perverse in that what it really requires is a politician who isn't especially political.

And yet think back a few years. Most of the voters who the Tories needed to abandon Labour in order to win thought that Brown was exactly that - a non-political 'iron' Chancellor who put prudence first. It was Osborne who changed the Tory strategy to focus on undermining Brown's character for his deceitfulness and cheap politicking.

If Osborne is now kicking at an open goal you have to give him credit for hobbling the goalkeeper in the first place.

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And yet think back a few years. Most of the voters who the Tories needed to abandon Labour in order to win thought that Brown was exactly that - a non-political 'iron' Chancellor who put prudence first. It was Osborne who changed the Tory strategy to focus on undermining Brown's character for his deceitfulness and cheap politicking.

If Osborne is now kicking at an open goal you have to give him credit for hobbling the goalkeeper in the first place.

:lol::lol:

Osbourne is going to steal as much money as he can and then give it to his mates.

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This kind of opposition is 5 years too late. I'd like to have known what the Tories really would have done had they been in power. Not much differently I'd say. Leverage was the way the global economy worked. Nor have they forwarded much in terms of conrete policy were they to become the next govt. L

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http://www.bbc.co.uk/blogs/thereporters/ro...ate_tax_re.html

You could say the same about the housing market - People with accumulated savings were squeezed out by over-leveraged borrowers.

An interesting thought here. Who is the biggest debtor of all, today? Might he make it less easy for a government to go into denial and hock our collective future?

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Ok I've read this thread and whilst it is interesting the article it refers to itself is more so.

In my opinion Osborne's argument is right. From the very top to the very bottom of the economy the governance of finance over the last decade has been heavily skewed to rewarding debt and punishing equity.

From the high leverage of private equity and ridiculous tax rules for pension schemes, to the fact that the average Joe with 50k to invest can get a mortgage in 5 minutes to buy a property, exempt from stamp duty for which he can claim full tax relief and sometimes reduced VAT, whereas if he wanted to do put this in shares he would have to go through the pain of four hours with an IFA and then have to pay full stamp when he makes the trade.

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