Monday, September 22, 2008

How will this work ?

Financial crisis: Alistair Darling promises not to raise taxes

Darling announces that he will not be reducing public services, and that taxes will not rise. He conceded public debt will rise. So Darling must think that government borrowing is at no cost. Well, I think he is going to be borrowing a massive amount. This borrowing will crowd out mortgage funding and I am sure we will be paying borrowing costs. Public sector workers need to understand that they are killing the economy, and that we just cannot afford such a huge state sector. Also, the government, because of chronic stupidity, ignore the fact that you need to consider total UK debt, not just government debt. Wait... Oh yeah, house prices ! Ummm. Going down like the poor old private sector.

Posted by stillthinking @ 11:35 AM (1050 views)
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10 thoughts on “How will this work ?

  • Stillthinking – I watched him interviewed on SKY and BBC and he managed to weasel out of giving a YES, or NO answer, just that at the momnet due to economic hardsgip felt by everyone (caring NULAB) he had no intention of raising taxes, but what about in a few months time. I see some pretty major ‘stealth’ taxes being introduced to pay back deficit, but you can be sure the bankers/ traders, hedgies etc will have their salaries/ bonuses nicely stashed away so the people who really pay will be those who can least afford to, t’was always thus. Another thing, the BBC reporters were actually laughing at the front of Darling refusing to give a straight answer. Show me a politician who gives staright answers and I’ll vote for him/ her, but the old adage stands; “How can you tell if a politician is lying?” ‘His/her lips are moving”. Not LOL.

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  • Public Debt will rise inexorably, taking it well outside allowable EU limits. (So fines may be imposed?) There will be no immediate repercussions. But, as a few years pass and another party takes over running the country, our state infrastructure will get tired and underfunded as the country’s economy needs rebuilding. Redundancies will rocket and retiring civil servants not replaced. All the ensuing pain will be felt by the people and the incumbant government at the time will be castigated for it and replaced by the spendthrifts. Now where have I heard this before? I’m sure it happened in a country near here.

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  • stillthinking – we should distinguish between useful (usually low-paid) and useless (often well paid) public sector workers.

    The line that caught my eye was Caroline Flint’s “the financial sector needs to take a long, hard look at itself”. Not much evidence of that in certain bars in Mayfair last week as hedge fund managers almost drowned in champagne as they watched Lehman Brothers disintegrate and land some of their hefty bets.

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  • Stillthinking – you think we need LESS not MORE public service. If the last few years has shown us capitalism (the kind that Oliver James calls Selfish Capitalism) leads neither to happiness, or long term prosperity. If you think that stripping the public sector further won’t lead to massive social unrest you don’t understand what’s already happened…

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  • “Public sector workers need to understand that they are killing the economy”

    Eh? So it’s NOT the fault of the brainless politicians, two weak chancellors, greedy bankers, selfish hedge fund managers and morally-bankrupt private equity bosses after all! It’s those millions and millions of Civil Servants who sit around doing nothing all day while banking a huge wage cheque every month waiting to retire at 45 on a final salary pension with free healthcare! Well at least it’s gone quiet on the “it’s all those immigrants and foreigners” front. Welcome to the Daily Mail.

    On a serious note, you miss the point. You don’t blame the things the government provides that cost money, you blame the things that mean we cannot afford them. Yes there are too many NDPBs (i.e. Quangos) and a big scythe through their number would do the country very well, but the Daily Mail set choose to ignore one salient fact: an awful lot of the increase in the public sector wage bill in the last ten years is due in no small part to an increase in schoolteachers, classroom assistants and NHS nurses (I believe the number of these is a healthy six figures).

    Trust me, I’m no “big government” socialist or Labour voter (in fact, precisely the opposite), but even I have had to accept that the days of cutting government to the bone and leaving the voluntary and private sectors to pick up the pieces are well gone. Indeed, which would HPC-ers prefer? A public sector service directly paid for by The Treasury or one provided by the private sector which we will pay even more for in the long run (hello juicy PFI deal) – you know, run by the people who run the railways, hospital PFI-deals, IT projects for the MoD, training for the military. They are the same companies everyone blames for the current mess, for job cuts, for poor wages, for closing down pension schemes and for fat cat bonuses.

    Which is it? Services by the state (expensive) or services by Amey (again, very expensive, fewer jobs, poor pensions for employees and profits go to fat cats and offshore, tax-evading accounts)?

    PS I’ve always thought that, when it comes to the national attitude to the Civil Service, the saying “moral indignation is just the politics of jealousy with a self-affixed halo” really does apply so well. Now, shall we get back to those bankers and private equity houses?

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  • You should’ve seen him on GMTV, they kept asking “Just tell us yes or no!”. He looked very flustered and nervous when they asked for the third time.

    Honestly, GMTV really do give them the stick they deserve.

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  • I totally agree that there is a distinction between useful and useless public workers, and that it makes sense to get rid of the useless ones. However, -even if- they were ALL useful, we can’t afford that amount of public services. We are just pretending we can.
    I am saying that we need to reduce the size of the public sector on grounds of simply excessive cost. Talking about the efficiency of funding is different. Quite aside from the housing crisis, and the credit crunch, the UK is structurally skewed.
    public sector+finance sector+others. (others is dominated by the service sector)
    All of our energy and food imports need to be provided by finance(collapsed) or services(not generally export orientated). The reason why we have food + fuel inflation is because we buy these from abroad and so we can’t affect their prices with domestic policy.
    What is so frustrating is that this reduction in the public sector is unavoidable, and so we are missing the best time to restructure which is now, immediately. We pay 15% of taxes on debt servicing. What level of tax towards debt servicing is acceptable? 30% ? 50% ? For nothing just debt servicing.
    The activities of the top 1% of earners have very little to do with the way we organise ourselves as a society, and anger against these traders is just a redirection from the most culpable, i.e. the incompetents in the Labour party and the dumb fools who voted for them. How about public rage at Labour voters, selfishly voting to the terrible detriment of their country.

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  • Simple, print more money! They did it in Zimbabia and it worked didn’t it? 1,000,000% inflation Hmmmmmmmmmmmm yes!!!

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  • stillthinking – that’s another debate. We all have our ideas about what’s wrong. I think the top 1% do have a lot to do with it, including the structural skewing. It’s not just financial services but corporatism in general. Take the food industry. Fast food, processed food – every move to add value leads to obesity and carcinogens in food and massive public expenditure on health and clearing up environmental and social problems left in its wake. Most EU CAP money goes to transnational food processors. In the US and Israel in particular the war, weapons and security industries enrich the few at the expense of the many. And so on – lots of oligopoly, price collusion, no-bid contracts.

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  • planning4acrash says:

    This means that we will be taxed by the most stealthy of all stealth taxes. We will be taxed by inflation via fiat funny money printed for free by the B(w)ank (not) of England.

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