Cuts? What Bloody Cuts?

[South Lorne]

Still, I am sure that they know exactly what they are doing.

...it requires a 'cut' tracker ...Mortgage Payment Support was cut by 50% from 1st October.....

[non frog]

..... It would be interesting to see just how much Gordon fecked up over the last few years.

Less than you would imagine. Brown's mistake was to assume the HPI driven boom was real and to commit to expenditure based on a projection of the growth (in tax take) that came from that boom. Tax take fell sharply when the banks went bust and the expenditure followed its previous course. If you follow this forward to match pre 2004 figures (ie before the lunacy of derivatives backed HPI) government expenditure needs to halve to get back to a "sustainable" level (ie where real tax take is likely to end up). The proposed cuts put forward by the present government are not really that much different or severe than those proposed by Darling prior to the election.

None of the three parties have really articulated the level of spending reduction needed to balance the books. Assuming a genuine reduction of 50% in government spending is even possible it would then only begin to pay down the previous debt if it were accompanied by economic growth of a similar level the HPI boom created. So another bubble is needed to pay off the sh1t from the current bust.

Look around the world at other countries and you can see that centre right governments and centre left governments are all in the same predicament. Belgium, Spain, Ireland, Iceland, Dubai, wherever. Brown is a jolly good scapegoat for the Mail and Telegraph readers but he did not have any influence over these other countries. Look what is happening in Eire and then reflect on the fact that UK banks are owed the equivalent of one year's GDP by the Irish government. If Eire defaults the UK goes down with it.

The whole "New" Labour thing was crass and Thatcherite - I loathe it. However if Blair had been interventionist and regulatory and dropped the control rods in the UK banking system in 2005 when it was needed he would have drawn howls of anger from his chums in the city and so much flack from the Tory media I doubt he would have stayed in power many weeks. If the "New" Labour people had been booted out at that point the incoming Tories would have ramped up the machine again and we would still have the same situation as we do now. Remember that despite the appearance to the contrary Thatcher did not cut spending she increased it and her administration actually passed a lot of new laws - or "red tape" if you are Ruth Lea.

The demographic time bomb has been ticking away for years. Ignored by all the governments since the 50s in all the countries with a bomb. It's gone off. Warren Buffet called derivatives "financial weapons of mass destruction". They too have gone off.

So many people on here credit Brown with so much. If only governments really had that much power. Yes he messed up, but he was just another tiny little cog in a big machine that has finally found it cannot eat spanners forever. Fixing the damage will cost many times more than the tiny savings made on maintenance over the years. What is coming will not be pleasant.

[dissident junk]

I used the word 'foundation.'

Imagine a house, then imagine removing 'part of the foundation' then it's likely that the whole house will fall down.

The point is that up to now the benefits system has been regarded as 'an add on' which which could be removed but has in fact, over the past 40 years, become an integral part or indeed part of the foundations.

I think the relationship between the benefits system and the rise of the 'consumer' is underestimated. The illusion was created that the state would take of stuff like sickness, old age and the care of relatives, leaving the individual free to stop saving and start spending.

So the welfare state and the consumer society are two facets of a single whole- had the first never existed, the second would never have been either- people would have too concerned with securing their future to spend their money on mountains of 'consumer goods.'

That's why we see so many 'free market' economists calling on china to create it's own welfare state- they realise you will never get the chinese to load up with debt so long as they are worrying about saving for their old age and healthcare.

Two bang-on-the-money posts.

[council dweller]

Less than you would imagine. Brown's mistake was to assume the HPI driven boom was real and to commit to expenditure based on a projection of the growth (in tax take) that came from that boom. Tax take fell sharply when the banks went bust and the expenditure followed its previous course. If you follow this forward to match pre 2004 figures (ie before the lunacy of derivatives backed HPI) government expenditure needs to halve to get back to a "sustainable" level (ie where real tax take is likely to end up). The proposed cuts put forward by the present government are not really that much different or severe than those proposed by Darling prior to the election.

None of the three parties have really articulated the level of spending reduction needed to balance the books. Assuming a genuine reduction of 50% in government spending is even possible it would then only begin to pay down the previous debt if it were accompanied by economic growth of a similar level the HPI boom created. So another bubble is needed to pay off the sh1t from the current bust.

Look around the world at other countries and you can see that centre right governments and centre left governments are all in the same predicament. Belgium, Spain, Ireland, Iceland, Dubai, wherever. Brown is a jolly good scapegoat for the Mail and Telegraph readers but he did not have any influence over these other countries. Look what is happening in Eire and then reflect on the fact that UK banks are owed the equivalent of one year's GDP by the Irish government. If Eire defaults the UK goes down with it.

The whole "New" Labour thing was crass and Thatcherite - I loathe it. However if Blair had been interventionist and regulatory and dropped the control rods in the UK banking system in 2005 when it was needed he would have drawn howls of anger from his chums in the city and so much flack from the Tory media I doubt he would have stayed in power many weeks. If the "New" Labour people had been booted out at that point the incoming Tories would have ramped up the machine again and we would still have the same situation as we do now. Remember that despite the appearance to the contrary Thatcher did not cut spending she increased it and her administration actually passed a lot of new laws - or "red tape" if you are Ruth Lea.

The demographic time bomb has been ticking away for years. Ignored by all the governments since the 50s in all the countries with a bomb. It's gone off. Warren Buffet called derivatives "financial weapons of mass destruction". They too have gone off.

So many people on here credit Brown with so much. If only governments really had that much power. Yes he messed up, but he was just another tiny little cog in a big machine that has finally found it cannot eat spanners forever. Fixing the damage will cost many times more than the tiny savings made on maintenance over the years. What is coming will not be pleasant.

Sad and true.

[dissident junk]

Less than you would imagine. Brown's mistake was to assume the HPI driven boom was real and to commit to expenditure based on a projection of the growth (in tax take) that came from that boom. Tax take fell sharply when the banks went bust and the expenditure followed its previous course. If you follow this forward to match pre 2004 figures (ie before the lunacy of derivatives backed HPI) government expenditure needs to halve to get back to a "sustainable" level (ie where real tax take is likely to end up). The proposed cuts put forward by the present government are not really that much different or severe than those proposed by Darling prior to the election.

None of the three parties have really articulated the level of spending reduction needed to balance the books. Assuming a genuine reduction of 50% in government spending is even possible it would then only begin to pay down the previous debt if it were accompanied by economic growth of a similar level the HPI boom created. So another bubble is needed to pay off the sh1t from the current bust.

Look around the world at other countries and you can see that centre right governments and centre left governments are all in the same predicament. Belgium, Spain, Ireland, Iceland, Dubai, wherever. Brown is a jolly good scapegoat for the Mail and Telegraph readers but he did not have any influence over these other countries. Look what is happening in Eire and then reflect on the fact that UK banks are owed the equivalent of one year's GDP by the Irish government. If Eire defaults the UK goes down with it.

The whole "New" Labour thing was crass and Thatcherite - I loathe it. However if Blair had been interventionist and regulatory and dropped the control rods in the UK banking system in 2005 when it was needed he would have drawn howls of anger from his chums in the city and so much flack from the Tory media I doubt he would have stayed in power many weeks. If the "New" Labour people had been booted out at that point the incoming Tories would have ramped up the machine again and we would still have the same situation as we do now. Remember that despite the appearance to the contrary Thatcher did not cut spending she increased it and her administration actually passed a lot of new laws - or "red tape" if you are Ruth Lea.

The demographic time bomb has been ticking away for years. Ignored by all the governments since the 50s in all the countries with a bomb. It's gone off. Warren Buffet called derivatives "financial weapons of mass destruction". They too have gone off.

So many people on here credit Brown with so much. If only governments really had that much power. Yes he messed up, but he was just another tiny little cog in a big machine that has finally found it cannot eat spanners forever. Fixing the damage will cost many times more than the tiny savings made on maintenance over the years. What is coming will not be pleasant.

Another brilliant nail-on-head comment, particularly the bits in bold.

I will disagree with you ona few points though ... Brown did do some very dodgy things: as an example off the top of my head, the telecoms spectrum auction (which quite a few claim kickstarted the main phase of IT outsourcing), and the extent to which is pushed PFI for projects that it was never meant for and has left us with hideous maintenance bills in key service areas.

[Guest spp]

The game now is to at least stall the collapse later than everyone else.

I've concluded that the US system is utterly collapsing. There is talk of a 90 day moratorium on foreclosures, a one in five rate of default is expected, class action lawsuits have been filed in two states against the major mortgage lenders and processors (robo signers), and South Carolina has just introduced legislation to use silver and gold coins as legal tender. The engines of the financial system are seizing up and the wheels are coming off.the bus. Nobody has any idea who owns what in the mortgage market, And Europe bought most of these turds.

We haven't even started talking about the $1.4 quadrillion derivatives market.

There is no doubt that the TBTF banks are going to collapse. This will have major impact on the UK, which stands at the very epicentre of the current global banking system.

Financial Hurricane To Collapse the System?

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/6_Norcini%2C_Sinclair_-_Financial_Hurricane_To_Collapse_the_System.html

[FreeTrader]

Quelle surprise.

http://www.ft.com/cms/s/0/6d914844-d18a-11df-96d1-00144feabdc0.html

Move to delay UK spending cuts

The Treasury is working on plans to “reprofile” spending cuts next April, spreading the pain of deficit reduction more evenly over the next few years, senior Whitehall officials have told the Financial Times.

Confronted with the difficulties of quickly cutting spending – including financial penalties for breaking contracts and redundancy costs – ministers have been forced to consider delaying some of the big savings until later in this parliament.

Whitehall officials understand the presentational difficulties of delaying spending cuts given the coalition government’s tough rhetoric on reducing the deficit and maintaining the confidence of financial markets.

Labour politicians would surely accuse the government of backsliding and the political pain of the cuts would be pushed close to the next general election. But ministers are also weighing the dangers of cutting the wrong items if pushed to do so early and the risk that deep deficit reduction in 2011-12 could undermine the fragile recovery.

A decision on what is known in the Treasury as “reprofiling” the spending cuts has not yet been taken. An aide to George Osborne said on Wednesday that the spreadsheets underpinning the spending review did not factor in any reprofiling.

However, he added that he could not guarantee that the timing of the spending cuts would be exactly as laid out in June’s emergency Budget because the government needed to take a hard look at contracts and redundancy costs.

(More at link)

[non frog]

...

I will disagree with you ona few points though ... Brown did do some very dodgy things: as an example off the top of my head, the telecoms spectrum auction (which quite a few claim kickstarted the main phase of IT outsourcing), and the extent to which is pushed PFI for projects that it was never meant for and has left us with hideous maintenance bills in key service areas.

Sorry to disappoint you - we are in total agreement about these matters as well PFI (introduced by the Thatcher administration) is a sleight of hand to hide borrowing and is a disaster. That the Blair administration continued it and indeed expanded it is reason enough for the electorate to vote against Labour. Blair destroyed his own party....

The telecoms thing is interesting. Doesn't often get a mention on here. The carriers were basically (and I think still are) run by barrow boys and chancers who recognised the way to make huge sums was to control the market. Buying up all the 3G spectrum would bring untold riches (didn't work though did it?) The one thing that has really shifted the balance of power has been the massive growth of VoIP. The Internet really has changed the world in my lifetime. By comparison a few washed up old politicians really are not worthy of a mention.