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[Priced Out Of Housing?] Blame Labour.

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Im getting a little bit pi55ed off with Labour apologists. It seems people have short memories.

Here is a selection of Posts, knocked together, from numerous bloggers and sources:

1.] In his 1997 budget, Brown abolished dividend tax credits on pension funds. Companies saw the writing on the wall and immediately ended their final salary pension schemes to new employees shortly after the 'Brown raid'. They also started to cut down on the number of people with long final salary pension service and worked towards ending a scheme which would no longer be viable.

* The CBI opposed Browns Tax credit cuts. Even the treasury and No.10 opposed them. [but Brown made the cuts anyway.]

2.] By abolishing the pensions tax credit, the yield for institutional funds across the entire market fell by 20 per cent. Few people outside the City understood the change and hardly any MPs protested. But Whitehall papers produced under the Freedom of Information act showed that Mr Brown was warned by his officials and by the Treasury that there would be dire consequences.

They warned it would wipe £50bn off the value of funds, and that shares could drop by up to 20 per cent and public sector pensions would need topping up. [brown chose to ignore this warning]

* The value of pension funds have since lost around £5bn per year since the 1997 tax relief cuts. Pension funds holding the cash that almost everyone in the country had planned to use for our retirement have lost around £100 billion over 12 years. [1997-2007]

3.] The advice Brown was given by this Treasury Paper, in 1997 was as follows:

'The changes in incentives are likely to lead to substantial changes in portfolios. Pension funds will find equity relatively less attractive, and will prefer other assets – particularly interest bearing securities and foreign equity – and may also be prompted to consider more direct property investment.'

Those funds were then channelled into fuelling an unsustainable property bubble, {BTL portfolios,} which developed because of Labours complete lack of regulation of the Banks.This was followed by rising house prices, ever increasing toxic mortgage debt, and this was followed by the bank bailouts.

Roughly 60% of houses historically acquired by First Time Buyers, were then acquired by the Buy To Let brigade.

This is just one example of Gordon Browns incompetent decision making which helped to create the cornerstone of the debt bubble.

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Browns comment that: 'It started in America, is more typical Labour Lies, half truths and spin.

Excerpt from a Letter written by Lord Derwent, sent to the Telegraph:

"In America, the Glass-Steagall Act had protected deposit-taking commercial banks from the risky activities of the investment banks. Congress was effectively obliged to repeal the Act in 1999 because New York was losing its business to London, which had no such restrictions and the "light touch" regulation encouraged by Gordon Brown. Had Britain [brown] enacted similar legislation to Glass-Steagall, the US Act would not have been repealed, the City would have made less money but the banking collapse in both America and Britain would have been avoided"

So there is a valid argument here, to state that Browns meglomaniac short sighted incompetent behaviour, was a direct cause of the crisis.

Saved the World Gordon? [Or a Freudian Slip, real meaning, I destroyed the World]

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In the ten years previous to Browns Raid on pensions, From 1987 to 1997 the Average House Price rose from £40k to £55k.

A 33.3% rise over ten years.

From 1997 to 2007, the Average House Price rose from £55k to £190k [Nationwide Building Society figures]

A staggering 245% increase over the same period. [Ten years.]

The UK should not be facing the debt we are facing, and The Labour Party are guilty of gross fiscal mismanagement and criminal negligence.Taking the power to watch inflation away from the BOE, and giving it to the truly incompetent FSA allowed anyone who could scrawl their sign to take out a so called liar loan.

A direct consequence of a complete enforced lack of regulation, of the Banks, by the Labour government. Brown and Co, did not understand what was happening, or chose to ignore it, even though they were sent letters by noted economists, warning what would happen. Which is why as late as 2006, he was still making speeches like this:

Gordon Brown

Speech to the CBI, 5 June 2006

Last year we set out radical proposals for changing the way we regulate: minimising the administrative burdens of regulation; and ensuring that the realities of regulation, as you experience them on the ground, are transformed -- by moving away from the 'old' blanket approach, of 100 per cent form-filling and 100 per cent inspection that is inefficient and wasteful of your time, to a new approach based on RISK…

And I believe, too, we should consider how we can continue to extend our RISK-based approach, applying the concept of RISK not just to the enforcement of regulation, but also to the design and indeed to the DECISION ON WHETHER TO REGULATE AT ALL… "

Brown had every opportunity to face the problem. Instead in 2003 Brown switched the housing inflation figures from RPI to CPI, hiding the debt.

[One can only assume by that time he was beginning to realise the magnitude of what he had done, and like a naughty schoolboy, the plan was to hide everything, and deny deny deny.]

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Brown and PFI:

People forget what PFI was intended for:

Big, capital projects with a relatively high level of uncertainty and risk - such that it would be unacceptable to leave the taxpayer with the bag if things went sour.

The epitome of PFI was the Channel Tunnel. A risky venture, as the scale of engineering work was in uncharted territory, with enormous cost. The govt of the time set it up as a PFI scheme - so that the private sector, in the form of Euro Tunnel, would finance and oversee the construction. Investors were attracted as the venture looked attractive at the time.

As it was, the project went massively over budget and was completed late. Euro Tunnel collapsed and the investors took a massive haircut on their investment. However, taxpayers were protected from the spiralling costs, which was one of the key drivers for selecting PFI for this project.

For more conventional infrastructure and state operations, PFI is less suitable due to the higher costs and lower control, which are not outweighed by the risks of the projects. E.g. building a school or hospital is not a high risk project - projects on this scale can be managed fairly easily and the costs predicted accurately.

The problem has been a breathtaking level of misuse of PFI for low-risk projects, which can be more cheaply and more effectively provided by conventional government procurement. And, most galling of all, the bailing out of bust PFI private sector firms because their projects collapsed due to financial mismanagement. Not only had the tax payer paid a high price so that the private sector could take the project risks, Gordon simply took the risk back when things went bad - completely undermining the whole point of PFI.

Lets put Labours use of PFI into perspective shall we?

On Gordon Browns orders, the government, up to 2007 signed more than 750 public sector deals with private companies under PFI.

Including:

64 out of 68 hospitals in Browns first 8 years as chancellor. As were 230 new schools, 185 new hospitals, health centres, 43 roads and bridges

It was PFI which enabled Brown to keep public borrowing below 40% of GDP.

[An acccounting fiddle. Enabled him to keep infastrusture spending off the governments 'current' account books.]

Debt acrued by 2007, owed by government to private companies was in excess of £55Billion. [All basically hidden]

Many roads and bridges which were owned, ALREADY paid for by the taxpayer, prior to Browns stint as chancellor were then sold off to private companies, on the quiet, who now charge us for using them.

Point being Brown, as chancellor, using PFI has spent all the money, was selling off the family silver, on purpose, knew what he was doing, and it still has not even begun to be repaid.

The bankers who financed these deals walked away with absurd profits.

[One group of Bankers/Finaciers walked away from one PFI deal with 662% profit]

PFI is a perfect fascist tool. Everyone wins except the populace. It is a sign of a fascist government when government and business are merged in such a way.

The bankers outwitted Brown the Clown at every opportunity.

The equity in the rebuilding of the M40 has been sold at least five times. With different building contractors making huge profits. One company sold a prison for six times what it had paid.

Brown just let it continue......

By the time Brown stopped being Chancellor he had lumbered £54billion in debt just for the cost of buildings onto the taxpayer.

[in reality, to repay that debt will be closer to £160Billion]

Governments can always borrow money more cheaply than private companies. If Gordon Brown had half a brain he would know that by allowing private companies to borrow money on his behalf, all he did was increase the cost to taxpayers.

Brown was also a fan of PPP Public private partnerships.

Brown supported metronet, the ppp london tube project. Against advice.

In july 2007 the development had to call in an administrator. Taxpayers paid the £2billion over run and the £2.6 billion debt and administrators bill.

Under Brown, [as opposed to the Tories] PFI became a £4bllion a year industry. [Look at companies like Conaught plc, who service council houses, whose share price has now been wiped out last month or so.]

If Brown was in business he would have been bankrupt in months.

PFI was just a massive hire purchase scheme which allowed brown to keep public spending, mainly infastructure off the books. AKA Fraud.

And acrue debt, to be passed onto the next governmnet. It makes you think, it must have been Labours plan all along.

The only people who made money out of this were the bankers and financiers.

The taxpayer got royally screwed.

He was like Nick Leeson. Brown got in way over his head, was seduced by the slick way PFI enabled him to be careless with other peoples money, whilst lying out of his ****

Just the Interest on the debt alone, will cost the UK close to £50 Billion, this coming tax year.

PFI: Is Gordon Brown Economically Literate?

http://www.david-mor....uk/pfi/pfi.htm

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The Total amount of Debt the UK is now facing, is estimated to be £5-£6 Trillion.

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Apologies to those of you who have read all this before.

Edited by Dan1

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I've never voted Labour in my life, but let's not forget:

1. Brown's attacks on private pensions may have made property more attractive as an investment, but it was easy credit and low interest rates that made the boom possible. It would have been one thing for a fairly ordinary punter to sell £100k worth of equities and buy £100k of property, but only easy credit let him turn that into £1m with leverage. The leverage created the boom, not shifts between asset classes.

2. PFI was first implemented by the Major government in 1992, 5 years before Labour came to power.

Frankly, I don't believe we would be in much of a better state now had the Tories been in power during 1997-2007. We would have had low interest rates, a house price boom, and the inappropriate fiscal policy to go with it (maybe with tax cuts rather than handouts to the poor, but either way the government would have been overspending relative to likely non-boom tax receipts). Every major political party in the developed world was singing from the low interest pwoperdee bubble hymnsheet during those years. Blaming all of our woes on the UK Labour Party seems a bit shortsighted.

Edit: Really the politicians were just giving the majority of voters what they wanted. Labour politicians did it, but Conservative/Lib Dem politicians would have done the same.

Edited by Dorkins

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I've never voted Labour in my life, but let's not forget:

1. Brown's attacks on private pensions may have made property more attractive as an investment, but it was easy credit and low interest rates that made the boom possible. It would have been one thing for a fairly ordinary punter to sell £100k worth of equities and buy £100k of property, but only easy credit let him turn that into £1m with leverage. The leverage created the boom, not shifts between asset classes.

2. PFI was first implemented by the Major government in 1992, 5 years before Labour came to power.

Frankly, I don't believe we would be in much of a better state now had the Tories been in power during 1997-2007. We would have had low interest rates, a house price boom, and the inappropriate fiscal policy to go with it (maybe with tax cuts rather than handouts to the poor, but either way the government would have been overspending relative to likely non-boom tax receipts). Every major political party in the developed world was singing from the low interest pwoperdee bubble hymnsheet during those years. Blaming all of our woes on the UK Labour Party seems a bit shortsighted.

I simply do not agree with the argument that any other government would have left us in exactly the same position. Its infuriating. How can you possibly know that another government would have decided to end pension tax credits and steal over £100Billion? [For Instance]

The Tories had years to do that, if they had wanted to. [i'm not a Tory BTW]

Ive purposefully highlighted the huge differences between Labours criminal mis-use of PFI, and the Tories use of it!

Would another government taken the power to watch inflation away from the BOE and handed it to the truly incompetent FSA? No. Of course not.

I disagree with you. I think its very short sighted to suggest anyone else would have done exactly the same.

But, most importantly, I hold people responsible for their own actions. Its called accountability.

Edited by Dan1

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I simply do not agree with the argument that any other government would have left us in exactly the same position. Its infuriating. How can you possibly know that another government would have decided to end pension tax credits and steal over £100Billion? [For Instance]

The Tories had years to do that, if they had wanted to. [i'm not a Tory BTW]

Ive purposefully highlighted the huge differences between Labours criuminal mis-use of PFI, and the Tories use of it!

As shocking as it was, £100bn is pretty small fry unfortunately... That is the fiscal deficit every 8 months now. Fair enough what you are saying about PFI, who knows how that would have gone if managed properly.

Nonetheless the biggest problem we have is the housing (and associated financial sector) bubble which has gutted the real economy, bankrupted the financial sector, and is threatening to bankrupt the state. Look at the PIIGS, France, Germany, Japan, the USA. They are all in exactly the same situation: big fiscal deficits and broken banks being kept alive by central bank and taxpayer support. The UK Labour Party was not in power in those countries. It's not a coincidence that all of those countries were pursuing similar policies at the same time. It was the natural logic of a fiat currency managed by a democratic government. What did the people want? Cheap money. When did they want it? Now. And boy, did they get it.

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I guess what I am saying is don't get mad at the Labour Party, get mad at the fiat currency system that allowed them to do such insane things.

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"Congress was effectively obliged to repeal the Act in 1999 because New York was losing its business to London, which had no such restrictions and the "light touch" regulation encouraged by Gordon Brown. Had Britain [brown] enacted similar legislation to Glass-Steagall, the US Act would not have been repealed, the City would have made less money but the banking collapse in both America and Britain would have been avoided"

Blaming Brown for this is weak. It was the Tories that deregulated the City that ultimately forced the US to act. It wasn't even a bad idea. Deregulation created a hugely successful industry for the UK, and if we hadn't been first, Germany or US would have deregulated at some point any way.

Also, the Tories were the first to reduce tax credits on pension funds and the Tories introduced PFI.

The fact is, Labour were a Thatcherite government through and through. They were simply taking the baton off John Major. The idea that another Major government would have changed course is extremely doubtful.

I think Labour's third term was a disaster. But their first two terms were acceptable, and I am sure similar to whatever a Major/Clarke government would have done. The Tories even publicly agreed with 99% of Labour's economic decisions.

Edited by pablopatito

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Around 80% of UK problems were created by previous Labour and Tory governments. What made Blair, Brown and their disciples so spectacular however was that somehow they managed to make these problems ten times worse. This of course whilst adding a fair few social and economical gremlins of their own.

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I guess what I am saying is don't get mad at the Labour Party, get mad at the fiat currency system that allowed them to do such insane things.

It is entirely reasonable to become Furious at the Labour Party for a LOT of reasons, I have not even posted.

Even though I understand your point about FIAT money. There were still plenty of warnings.

Your argument that the UK would be in the same position seems defeatist. One could just as easily argue the opposite. If we had a competent Chancellor at the helm, he should have recognised the inherent dangers of Fiat money.

Is it not entirely acceptable, to expect that the Chancellor of the Exchequer, would have known of the inherent dangers of FIAT money, and have been able to avoid such a calamitous outcome?

Not Every Country in Europe has had such a disastrous Boom and Bust. [some countries have not even experienced a housing bubble]

[With the experience of hindsight what could have been done to avoid this?]

Winston Churchill, as Chancellor of the Exchequer, reintroduced the gold-standard in 1925. In 1932, Churchill testified the following before the House of Commons:

When I was moved by many arguments and forces in 1925 to return to the gold standard, I was assured by the highest experts, and our experts are men of great ability and of indisputable integrity and sincerity, that we were anchoring ourselves to reality and stability, and I accepted their advice. I take for myself and my colleagues of other days whatever degree of blame and burden for having accepted their advice. But what happened ? We have had no reality, no stability. The price of gold has risen since then by more than 70 per cent. That is as if a 12-inch foot rule had been stretched to 19 or 20 inches, as if the pound avoirdupois had suddenly become 23 or 24 ounces instead of 16. Look at what this has meant to everybody who has been compelled to execute their contracts upon this irrationally enhanced scale. Look at the gross unfairness of such distortion to all producers of new wealth, and to all that labour and science and enterprise can give us. Look at the enormously increased volume of commodities which have to be created in order to pay off the same mortgage debt or loan. Minor fluctuation might well be ignored, but I say quite seriously that this monetary convulsion has now reached a pitch where I am persuaded that the producers of new wealth will not tolerate indefinitely so hideous an oppression. . . . I therefore point to this evil, and to the search for the method's of remedying it as the first, second and third of all the problems which should command and rivet our thoughts.

Edited by Dan1

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I guess what I am saying is don't get mad at the Labour Party, get mad at the fiat currency system that allowed them to do such insane things.

But they steered the ship onto the rocks - how can you not blame them?

Who created the regulatory framework which allowed the bubble to form? T'was the man who ended boom and bust - surely he must shoulder the blame?

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Not Every Country in Europe has had such a disastrous Boom and Bust. [some countries have not even experienced a housing bubble]

The Germans have their own housing bubble, they were the ones who lent the Irish, Greeks, Spaniards and Portuguese the money. Plus a lot of Germans have invested in Mediterranean holiday apartments.

I think your point about Chancellors of the Exchequer from the 1930s is problematic. In those days there was still some feeling that sound money was necessary. Since the 1960s/1970s that has totally disappeared, to the point where maybe 1% of MPs (if that!) could explain to you how a gold standard works and why it might be a good thing. We are about to pay the price for society's collective ignorance of how money actually works. Which MP during 1997-2007, from any party, would have been a sound money Chancellor? None of them. Vince Cable is probably the closest to "getting it", but even he seems convinced that governments can fix everything by spending money they don't have. And even if there had been an Austrian economist MP, would he have got the job, or would it have gone to a feelgood chancellor who promised low interest rates and goodies for everyone? Like I say, the politicians were just giving people what they wanted.

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I think your point about Chancellors of the Exchequer from the 1930s is problematic. Since the 1960s/1970s that has totally disappeared, to the point where maybe 1% of MPs (if that!) could explain to you how a gold standard works and why it might be a good thing. Which MP during 1997-2007, from any party, would have been a sound money Chancellor? None of them.

England expects that every man will do his duty........[Even a Scot]

Will have to agree to disagree.

I cannot forget nor forgive the Labour Party, based upon the premise that there was no other electable person, to the position of Chancellor who understood how money works........................

[it was the Labour party who appointed Brown as chancellor, not the public]

Blame lies firmly with Labour

Edited by Dan1

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But they steered the ship onto the rocks - how can you not blame them?

Every country's ships have been steered onto the same rocks. That tells me it's not down to individual captains, there's a fundamental problem with the way we navigate. Saying "oh it was all Labour's fault, those red guys sure are evil!" while voting in a party of a different colour with a similar economic philosophy is clearly not going to help.

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The blues may well have made similar mistakes leading up to 2007, We'll never know. It is Nulabias scorched earth policy following northern rock that is so unforgivable. They,tried every dirty trick in the book to keep things inflated long enough for them to get re-elected. This caused untold amounts of damage which is only just starting to become evident.

EVIL buyers of votes with money stolen from children.

Edited by sbn

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Great piece of work.

This should be pinned.

This is New Labour's legacy.

+1 Broon's economic policy served only to rig votes. Nu Labour ruined the country in so many ways, I don't even want to live here any more.

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The blues may well have made similar mistakes leading up to 2007, We'll never know. It is Nulabias scorched earth policy following northern rock that is so unforgivable. They,tried every dirty trick in the book to keep things inflated long enough for them to get re-elected. This caused untold amounts of damage which is only just starting to become evident.

EVIL buyers of votes with money stolen from children.

Agreed. The average house price started to fall by roughly 20% until Brown implemented policies which stole £300Billion of taxpayers money into the mortgage lenders

simply for popularity!

Re-election by theft

He puts his own parties interests above the interests of the poorest in society, and was fully backed by his party. This has not 'remedied' the situation/

There are so many individual acts of blatant sabotage by Labour, each of which in themselves, are unforgiveable, and downright evil.

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I guess what I am saying is don't get mad at the Labour Party, get mad at the fiat currency system that allowed them to do such insane things.

My view is that Gordon Brown is responsible for fraud or at best gross financial incompetence. The fiat currency has nothing to do with this part of it. He should go to prison. Is there any legal grounds for this?

The Labour Party is guilty of not taking its democratic responsibilities seriously. I don't think the Labour Party is fundamentally bad, but the rest of the party should have dealt with him before he got too powerful. This actually goes for all MPs, they are our representatives and should be looking after our interests. They have failed us.

The media is also responsible for not picking this up and complaining about it, but normally they just act as headless chicken-sheep anyway, so maybe I'm being unfair on them.

I don't think a fiat currency system is particularly to blame. Under-regulated banks were and Gordon was responsible for that..

I do think that a system such as the Bank of England Act would have made this slightly less of a problem but wouldn't have prevented it.

Gordon Brown's main faults were trying to deceive the electorate with PFI and then bailing out failed PFIs. Cutting the regulation to the banks and then bailing them out. Refusing to take responsiblity for his own actions.

So he made mistakes and them spent vast amount of ( borrowed ) tax payers money on fixing them, often the city profited from this. The fact that we have to pay the interest on this money ( to banks ) that was used to save either the banks or companies they financed just feels wrong.

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My view is that Gordon Brown is responsible for fraud or at best gross financial incompetence. The fiat currency has nothing to do with this part of it. He should go to prison. Is there any legal grounds for this?

I believe one of the terms is 'Grand Larceny'

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Who created the regulatory framework which allowed the bubble to form? T'was the man who ended boom and bust - surely he must shoulder the blame?

Good question, who was it? (i'll give you a clue, it wasn't the mad sociopathic scot!)

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Im getting a little bit pi55ed off with Labour apologists. It seems people have short memories.

I guess you could call me an apologist in that I wouldn't call that last bunch of tossers 'labour'. I think we got the government we deserved - the consensus that a genuine commitment to the working class would make the labour party unelectable, and that analysis may have been correct.*

So... out went anything that wasn't directly related to winning elections - and we're surprised that the result was a populist jam-today-jam-tomorrow set of policies.

I would vote like a shot for a proper socialist party that prided itself on realistic economics** and a commitment to the working class - the class that actually needs help.

* another poster on another thread had that interesting list of fairly socialist principals that were backed by the majority of tory voters iirc. I think the real problem with socialist ethics is that they are vulnerable to attack - it's not that they are objectionable on their own behalf.

** and before anyone goes on about the welfare state, in my experience the working class can be some of the harshest critics of the benefits culture. Its middle-class twits who won't face the inevitable consequences

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Agreed. The average house price started to fall by roughly 20% until Brown implemented policies which stole £300Billion of taxpayers money into the mortgage lenders

simply for popularity!

Re-election by theft

He puts his own parties interests above the interests of the poorest in society, and was fully backed by his party. This has not 'remedied' the situation/

There are so many individual acts of blatant sabotage by Labour, each of which in themselves, are unforgiveable, and downright evil.

Yep, here is a graph showing changes in public sector employment, source http://www.statistics.gov.uk/cci/nugget.asp?id=407

407.gif

Massive increases in 2008 just to keep unemployment figures down, and yet another folly to be paid for now.

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Im getting a little bit pi55ed off with Labour apologists. It seems people have short memories.

Here is a selection of Posts, knocked together, from numerous bloggers and sources:

<snippped>

Apologies to those of you who have read all this before.

Great post. Thanks for your effort. One for my files.

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Yep, here is a graph showing changes in public sector employment, source http://www.statistics.gov.uk/cci/nugget.asp?id=407

407.gif

Massive increases in 2008 just to keep unemployment figures down, and yet another folly to be paid for now.

The 2008 Q4 employment increase reflects the classification of the Royal Bank of Scotland Group and Lloyds Banking Group to the public sector (with effect from 13 October 2008).
Edited by Reck B

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I've never voted Labour in my life, but let's not forget:

1. Brown's attacks on private pensions may have made property more attractive as an investment, but it was easy credit and low interest rates that made the boom possible. It would have been one thing for a fairly ordinary punter to sell £100k worth of equities and buy £100k of property, but only easy credit let him turn that into £1m with leverage. The leverage created the boom, not shifts between asset classes.

2. PFI was first implemented by the Major government in 1992, 5 years before Labour came to power.

Frankly, I don't believe we would be in much of a better state now had the Tories been in power during 1997-2007. We would have had low interest rates, a house price boom, and the inappropriate fiscal policy to go with it (maybe with tax cuts rather than handouts to the poor, but either way the government would have been overspending relative to likely non-boom tax receipts). Every major political party in the developed world was singing from the low interest pwoperdee bubble hymnsheet during those years. Blaming all of our woes on the UK Labour Party seems a bit shortsighted.

Edit: Really the politicians were just giving the majority of voters what they wanted. Labour politicians did it, but Conservative/Lib Dem politicians would have done the same.

The tories would not have raped the pension pots (in 1997 the envy of all Europe) and they would not have allowed such lax lending. There is a good probability that a housing boom would still have ocurred and the City would have been lauded as our saviour. There is a good probability that manufacturing would have continued to decline as a % of GDP.

It is though Brown who IS responsible for just how deep our current crisis has become. History will not forget it.

We must now learn that manufacturing is a required part of the economy and that high house and land prices are bad for our international competitiveness. They, the banks and lending can all be controlled within a capitalist landscape.

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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