The Budget

Lord Soley

I await the budget with interest. I fear the Government is going to push us into a home produced recession following the international one. It is the combination of cuts and rising unemployment and lack of investment in the infrastructure (dare I mention Heathrow!). Put together they take a lot out of the economy just when the recovery is fragile.

I think the government needs to re – read Keynes.

28 comments for “The Budget

  1. 21/06/2010 at 8:41 am

    Really? Is this some sort of political or economic homeopathy?

    The cause of this problem is too much borrowing and too much spending. It’s not too much saving and too little spending.

    Why should the cure be more of the cause?

    Lord Blagger

    • 24/06/2010 at 9:54 am

      PM DC’s cure as TV-broadcast today Th24 June:

      (‘) C’mon everybody, sign-up to our new Welfare Reform Bill, which starts with Cutting as much welfare as we can(‘)

  2. 21/06/2010 at 10:03 am

    Any interests to declare when it comes the topic of Heathrow, Lord Soley?

    I hope you are not right about cuts causing a recession, but time will tell. However, I feel mentioning Heathrow is a little disingenuous given that the expansion is not being cancelled on financial grounds, and the current government would have done so even if the public purse was overflowing with spare cash.

  3. Chris K
    21/06/2010 at 10:51 am

    International one? I don’t think Australia had one. Possibly because they didn’t have a Chancellor who spent every single penny he got and then sold assets and borrowed more money to spend on dead-end projects. No, they had a sensible small-c conservative government right up until 2007.

    The truth is we’re paying the price for Gordon’s incompetence. The not-international recession merely exposed him sooner.

  4. Chris K
    21/06/2010 at 11:06 am

    Also I’m more of a Friedman-ite myself but I understand that one of the fundamentals of Keynes is that when revenues are good you should reduce borrowing for when times are bad.

    Any evidence of that in the last 13 years?

    • 21/06/2010 at 6:20 pm

      1051 Chris K:
      Aussie PM John Howard (‘Conservative’ “Liberals”) declared on TV before he got elected (‘)There’s Australians out there drawing the Welfare Benefit and thinking the World Owes Them A Living, and we’ll put a stop to that(‘).
      Therefore the Benefit is a sufficient human-living (mark that well: one only) & (ampersand)John Howard was drawing (being given)….. how many human-livings, two, four, eight, sixteen … ? and all business expenses paid, plus many free lunches and ‘free’ rides in posh aircraft, trains and cars ?
      {[( Incidentally, Britain’s excellently-balancing Freedom Bus Card is not ‘free’; it is Pre-paid out of taxes that the ‘oldies’ and many Others are still paying e.g. through VAT. And such fast-cards help the job of the Driver & the Flow of Traffic enormously, and save Time into the bargain))]}.

      1106: “…that when revenues are good you should reduce borrowing for when times are bad. Any evidence of that in the last 13 years ?”

      Keynesians and Friedmanites and Other past-theorists alike:
      Any evidence of that since GDP was invented ?
      Since the Sharemarket was invented ?
      Since the Industrial Revolution started ?
      Since true-blue conservative PM thatcher ‘blew’ most of Britain’s massive new income from North Sea Oil in far fewer than thirteen years ?

      You can’t eat money:
      but in eating the environment you can destroy whole food-chains and (within-view) the very Lifesupports upon which our main and essential food, clothing and shelter supplies depend.

      What’s that if its not ‘over-borrowing’ and ‘under-saving’ ?

  5. 21/06/2010 at 1:36 pm

    Evidently there are many levels of budgeting, both inside of The Budget and well-outside of it, Lord Blagger’s “political or economic homeopathy” level’s cause being excess spending and excess borrowing not insufficient spending and excess saving (I suggest in that order);
    which has deeper under-lying causes beginning with Hedonism; ‘Retail-Therapy’; Thrice-Removed Mind-Functioning (e.g. see-a-TV-ad, gotta-have-that) = Economic-Growth [Current excellent comparator ‘though I do not trust him in most other matters (“)Bloody Sunday…my generation only read about but never lived with…(we) are deeply sorry(“).

    Jonathan also indicates contrasting levels of budgeting.

    Most people budget only ‘in their heads’and on thei fingers; and practically All of us think ‘budgeting’ to mean ‘listing the Income and listing the Expenditure and then adjusting the expenditure-side of the equation so that the two sides balance.

    Some will even embrace Mr Micawber’s practical-budgeting philosophy “balance minus sixpence = misery, balance plus sixpence =happiness; and in my view quite rightly so.

    A few years ago, under pressure of isolation and victimisation as well as of minimal-income, I invented a five-finger budgeting mode,l which I called ‘Palmate’ and which more recently I notice an NHS department has called ‘Handy’ and has more or less agreed on putting the most-familiar matters last, Money thus coming fifth.
    One lists whatever one ‘uses’, personally:
    1 Energies 2 Timeframes 3 Things (chair, clock) 4 Places 5 Monies.
    It is flexibly workable.

    But THE Budget ?
    I thought I detected, within the melee of speeches, clarifications, comments, and questions on TV News or BBC Parliamentary channel, a glimmer of hope that there is still flexibility and ‘balance’ such that should the British Budget juggernaut list dangerously to one side, we may all rush to the other side, and thus bring the Sterling Ship-of-State back onto an even keel again ?
    The LibDems for instance had to trim one of their own major sails when they found that apart from the Conservatives finding there is no money left by Labour, very likely there is less than no money since the interest-on-existing-heavy-borrowings has already gone up from £42bn to £67bn (Lord Razall) ?

    Or does Plan B as well as Plan A mean “We are already walking the plank blindfold here… way past any point of no return…just waiting for the Big Splash (and even that might be a welcome cooling-down and, given a shark choosing to bite off one’s head first rather one’s legs could be a relatively quick deliverance” ?

  6. 21/06/2010 at 4:42 pm

    The real problem is far more serious than a 900 bn gilt debt.

    It’s the off balance sheet accounting for all the other liabilities that in the private sector would have got you in jail a long time ago.

    e.g. Civil service pensions – 1,200 billion – and rising.

    By keeping it off the books, the problem has been allowed to get completely out of hand.

    Not a peep from the Lords on this matter. Another reason why the argument that the Lords are full of experts from different areas of life doesn’t wash.

    Lord Blagger

  7. 21/06/2010 at 6:27 pm

    I beg pardon, in my previous keyboard error, not PM thatcher but PM Thatcher, please.

  8. Senex
    21/06/2010 at 7:14 pm

    LB: As you know Nigel Gooding the director of the parliamentary expenses watchdog IPSA recently resigned citing stress. I propose you apply for the job! Anybody prepared to second this?

    Just to get you up to speed:

    What would you do first? What’s that?! “Do a runner!”

  9. 21/06/2010 at 11:33 pm

    Bulldoze Heathrow and move operations up to Durham Teesside.

    Or is that too Keynsian?

  10. Gareth Howell
    22/06/2010 at 6:56 am

    I take exception to the idea that GB was incompetent at any time. His 13 year tenure as Treasury Secretary and first Lord of it,(1997-2010) was exceptional for its competence.

    “The cause of this problem is too much borrowing and too much spending. It’s not too much saving and too little spending.”

    On a side issue they say that the 1.5 million young Poles who so suddenly made this country their home, are just as suddenly taking their hard earned cash back to Poland, to buy value properties there, so somebody has been saving even if we Brits have not.

    Since we live on the rest of the world for most of the time, especially for the food requirements of the 5 million people who get such handsome state pay outs, perhaps we should ask the rest of the world to tighten their belts, and for us just to go on spending, spending, spending?

    My own approach is to attempt to grow everything I need in the back garden or barter in the village. My Cider and Plum wine
    are champions brews!

    There are hundreds of thousands of second home owners who could do the same, but do not. I wonder why, and I wonder why we buy all our food from abroad, whilst five million people do nothing at all except concoct fictitious illnesses to satisfy the conditions of sale of government National
    Insurance, purveyed through State “health” practicioners’ surgeries throughout the country?

    It is my own experience too that growing vegetables may be done sitting down in a wheel chair, or on my butt, if necessary.

    The centralization of living, and human existence, worldwide, with vast and burgeoning
    shanty cities, which probably resemble London 150-200 years ago, are surely proof that neither does anybody want to save what is best in human life, the rural ideal,
    nor does he want to take advantage of the very real improvements in human living conditions offered by mass immunization and control of disease, presented by the advances in pathology.

    The time has surely come, since we cannot turn the clock back again, to pre-imperial times, to join the Euro, and put our fears of the domination of the Bundesbank on that currency unit, behind us.

    If ever we need to re-invent the pound sterling a local LETTS money scheme in the UK would not be difficult to roll out.

    The EU is forming a foreign policy to Central Asia (Asia Minor) which is also our foreign policy, and in so doing may well in time, SAVE us the vast cost in human lives and military equipment being so profligately used
    in Afghanistan. An EU Central Asian policy
    can ONLY be an ECO (Economic Cooperation Organisation)sponsoring policy, and in so being, will alleviate the many conflicts with the mountain people of that international region.

    Saving should start with defence saving My Lords, gentlemen. The EU currency bail out of Greece in recent weeks is clear proof that there is now a real alternative and another
    monetary power in the world, even within its own political boundaries.

    Joining the Euro (Currency unit) should be the very first step this Chancellor (for whom I have great respect) should take to achieve
    real long term savings in the UK economy.

  11. Gareth Howell
    22/06/2010 at 8:31 am

    Drawing a very broad analogy about law in general Food Hygiene law has the very distinct effect of obssessing people with hygiene at the expense of good food for sustenance of the body. The problem with food hygiene law is the hygiene not the food. Go camping in the wild and find out!

    In the same way the various systems of money
    including the pound sterling have the problem of everybody understanding the system and not valuing the money.

    Thus every man Jack chases spending statistics, including his own, ie the system
    and completely ignores the money itself, which is what he should be saving.

    Nobody saves because they are smitten by their own second or third or fourth home ownership status.

    Even the weekly basket for the M markers
    include house prices in it, an item included
    in the basket in about 1998-9.

    So nobody is interested in saving, or frugality, or cutting the coat according to the cloth, but vice versa.

    You might say that joining the Euro ( a monetary system if ever there was one)would make matters even worse but I have never taken that opinion, however humble my opinions may be.

    Firstly it is not a corrupt system; secondly the conditions for saving in other European Union nation states are very different and a good deal better than those in the UK.

    I move that whatever out histories and whatever our future, joining the Euro is the one way that we will get our own economy and its foolish spending ethos under control.
    Join the people who know how to rein their economy in the post 1945 world, and eat humble pie, a la Greenaway without too much
    unnecessary hygiene, but plenty of good food!

    • 24/06/2010 at 7:46 am

      GH: D’accord, d’accord.

      I for one am (well, would be) interested in ‘comfortably sustainworthy’ frugality, Gareth.

      Appreciative regards,

  12. 22/06/2010 at 11:37 am

    Give tyneside their own currency and they can devalue. The problem is they have no flexibility because they are in a currency union.

    Lord Blagger

  13. Twm O'r Nant
    23/06/2010 at 8:00 pm

    Lord Blagger

    “tyneside their own currency and they can devalue. The problem is they have no flexibility because they are in a currency”

    I take that as an entirely serious comment, which can be elaborated.

    Flexibility is not what is needed to reduce the vast military spending in Afgh.

    A cup of tea may cost 40p in Tyneside and £10
    in Picadilly.

    • 23/06/2010 at 9:12 pm

      Well, it was serious as a comment, but it does surprise people.

      So where is it particularly relevant at the moment.

      The government pays the same benefits all over the country. Is that an efficient allocation of resources?

      I doubt it.

      It’s pretty similar to a devaluation.

      Lord Blagger

  14. 24/06/2010 at 7:03 am

    It has already been established that £200pw is 1 (one) human-living, sufficient for the recipient (Person A) to maintain his/her jobskill 25% timeframe and lifestyle 75% timeframe, healthily, happily and citizenlike (in Britain today 2010); and been established that this Person A is personally-efficient at drawing (and/or being given) money from the Common Purse and making-ends-meet, and is personally-least-destructive of the Common Lifesupports (Environment).

    It has likewise been established that Person E having-to-have £400pw from the Common Purse is (only) 50% personally-efficient, and is twice as destructive of the Common Lifesupports as is Person A; and been likewise established that the higher the givings/takings from the Common Purse the lower the personal-efficiency and the higher the lifesupports destructivity.

    It is also evident that where the Nation-State is providing all of that weekly income to the Person, the State needs to know firstly what items the money is to be spent upon, and secondly what other income (if any) the Person is receiving/has received/will be receiving, for the time-period in view.

    The following may not all be true of Britain.

    It is not at all evident, however, that the State needs the recipient to calculate and report any overpayments or underpayments but does not therein need to inform the recipient Person how to work out what their entitlements should be (on a weekly or monthly basis).
    Neither is it in the least bit evident that where the State has
    .(1) set a lifesupportive-entitlement to a Person
    .(2) without the instigation, complicity or knowledge of that Person, been overpaying/underpaying
    the Person recipient of that entitlement;
    .(3) concealing faulty law requiring overpaid/underpaid Person to take full responsibility for the
    overpayment/underpayment i.e. pay back the overpaid amount/lose the underpaid amount in full, unless
    .(4) The Person proves in a State court of Law that
    .(a) the State was 100% at fault at all times during the overpayment/underpayment, and (having
    proved that) that
    .(b) That Person had no idea whatsoever that s/he might be being overpaid/underpaid.

    It appears plain that
    .(i) the State, having possession of all bases and details as to what entitlement shall be made to the Person, and
    (ii) the Person having no reliable source of such entitlement-detail than the State;
    the State has a primary duty to provide the Person with such details regardless of whether the Person has applied for such details or not.
    .(iii) where the State has not provided such details to the Person, the following letter from the
    Person (or his/her advocate, representative, or lawyer)to the State would appear to be proper
    and in order, and should be replied to by the said State giving in full the details asked for:

    “Dear Sir,
    We need to know sufficient detail about our incomes-entitlements to enable us to continually calculate and check their components and to life-budget our expenditures accordingly.

    Would you therefore kindly provide full details of our respective entitlements showing:
    (1) What each entitlement, and component-amount within each entitlement, is meant to be expended upon;
    (2) How each such amount is calculated;
    (3) A sources appendix thereto, including inclusive/exclusive reasoning [e.g. for or against Method III (Gordon); Perceptual Control (Powers); Self Theory (Dweck); Sustainworthiness (Hamlyn, D.Smith, J.Stone in Australian Environmental Studies 26 weeks TV University course); and appropriately similar Others ]; i.e. what knowledge, formal-argumentation, moral-reasoning, and life-experience is included in and what excluded from the designing, deciding and administering of such welfare, and why?
    (4) Any other factors that may be taken into consideration.

    We also need to know in simple but clear detail exactly what you need to know from us, i.e. what you would wish us to tell you as well as but distinct from what we must tell you.

    Yours sincerely (and faithfully),
    { [ ( Ava Gardener(Ms). Ivan Idea(Mr. ) (noms-de-plume) ) ] }.
    The government does not call for the Claimant’s Expenses break-down;
    neither does It acknowledge them when the claimant submits them.

    Upon enquiring of the government how the Entitlements are to be determined and calculated, claimants have been told as follows:
    “The government pays you what it (the government) can afford, not what you need”; and
    “Your entitlement is based upon your Income, not upon your Expenditure”.
    “The exact figure is governed by what the State can afford to pay you”.

    Since the State Lifesupport Allowance (Pension, Benefit, Welfare-entitlement) happens to be Person A’s only income, the issue is back again to the government’s evidently false major premise-area of
    “Person A’s expenses are irrelevant to what Person A needs as income (or ‘a living’)”.

    Now, Person B’s year 10 schooling told him/her that the Government’s legislation and regulation is based on fallacy, one such being circular-argumentation, another being malfeasant entrenchment upon a philosophy of ‘In the country of the blind, the one-eyed man is king’.
    [ (And involved Persons recall a classmate on the way home saying “My dad’s in the Public Service, and a large part of his job is to nurture People like mushrooms – ‘Keep ‘Em In The Dark and Feed ‘Em Plenty of Bulls**t’).

    A week later they said the problem had been compounded, by another Parent having enquired of the State why we should be fed on such stuff ? To which the set Civil Service answer (not to be given in writing) was “Because it has a higher nutrient value than cow’s or sheep’s”.

    Wouldn’t the Blind here be the dependent People, and wouldn’t the One-eyed man be the Government’s Constitutional Roots ?

    In which latter case, would the House of Excellent Expertise (the British Upper House, of Lords) have ever dealt effectively with this kind of complex problem in the past ?
    And if not, will it be both willing and able to deal with it win-win-win now ?
    And if not then will it refer these badly-affected people to a more Responsible. Response-able, or Appropriate Body or Individual ?
    Please ?

    [ Faithfully, JSDM ].

  15. Twm O'r Nant
    24/06/2010 at 8:16 am

    “government pays the same benefits all over the country”

    I am surprised at that; at one time they did not. Even so that is only a small part of the
    cake.(150bn/annum) House prices increase in times of expansion in proportion roughly to their position to the demographic centre, London, and lesser centres.(in 10 years 1997-2007 by £10000s bn)

    It would be hard to compare the two very different bits of cake, “benefits” & “house prices” in the context of local devaluation.

    In Cornwall (one of the nine poorest counties/districts) in EU until Rom/Bul joined recently, house prices only increase
    in one of the 7-10 years in which much of the rest of the country’s property constantly increases.

    In that sense, of house prices then, there is a devaluation of Cornwall properties against the rest of the country. In that one or two years when it becomes clear that Cornish house prices are acting wildly, then the prices of cups of tea in Cornwall go up quite a bit as well.

    I call that devaluation and revaluation but the currency you use to buy the tea & the house remains the same, wherever you buy it in the UK.

    That is why I say “JOIN THE EURO”. European currency and the dollar is MACRO finance which is what is needed to contend effectively in Central Asia to eradicate idiotic and profligate spending in lives and money “defending The Freedom” of the people of Afghanistan.

    Cups of tea are smaller!My comment about humble pie is the same!

    • jm
      25/06/2010 at 8:39 am

      Two teas, one humple pie, one knife and two forks, please:

  16. Rich
    24/06/2010 at 8:42 am

    You simply cannot afford not to cut. Had Labour not resorted to borrowing and fiscal gimmicks in the good times, the new Government wouldn’t be in the position of trying to eliminate a structural deficit during trying economic times. Labour seem to think that growth will cure all ills, appearing not to understand what a structural deficit is. I say “seem” and “appear” because I doubt Labour are being honest. In fact, they are glad the government are cutting spending and raising taxes. The deficit will be cut, and they might get away with not being blamed for it.

    • 24/06/2010 at 9:19 pm

      It is recommended that a National Financial-and-Fiscal Emergency be called; in which every-one would be required to lend to The State via a British National-Financial Trust, for the Duration of the Emergency, every bit of excess income and capital-asset money/value they have and that can be ‘spared’.
      All Private purses and Private-assets should have already been ‘frozen’ for the Duration of this national emergency.

      Obviously the higher the income-and assets amounts, the better can they afford to bear compulsory-borrowings by the state than ever could the lowest-incomes-and-assets.
      Starting at the very Top amounts of Income and Assets, list downwards to the existing lowest-sufficient income level, every amount of income and assets.

      Now let the criterion be:
      The sufficient living for one person = £200 per week (excluding job or jobseeking costs) .
      Every £200 pw above that is one extra human-living: which for the “Emergency National Survival Authority (Financial & Fiscal Compulsory Borrowing)” equates to up to £200 pw that could be affordably collectable.
      Thus, a drawing/giving from the Common Purse of £20000 per week could be liable for up to £19800 pw compulsory borrowing by The State.

      Among the Citizenry and Parliamentary Tasks to be constructively tackled are
      .1 Add-up how much internally-borrowed Citizenry capital & cash-flow that would provide per year.

      .2 Equate that total-sum against the National Debt/Deficit/Shortfalls.

      .3 Should there be a surplus from such borrowings, think-out how best to re-direct that surplus
      (e.g. taper the amount compulsorily-borrowed from top-to-bottom such that at the Top a maximum of five-human-livings per week may be kept by the individual Person whilst below £500pw the individual kept-income could be protected from compulsory-borrowing/deductions/direct-debit-raiding and suchlike, such that the £200pw recipient might be awarded up £300pw (‘fiscal-security allowance’), the £300pw person be likewise allowed up to £200pw ‘f-s-a.’

      4. ‘Marry’ the above to a complementarily indexed Tax System.

      (Other factors will follow as the Steering of the Above forms-up and proceeds).

      * sufficiently large number, over and above the ‘critical-mass’, that must have set the Above into steady and steadfast cruising-speed Implementation.

      JSDM avers that the Above would clear the Deficit in no time at all.
      Cuts and certain Taxes legislations could be quickly amended or repealed.
      Into the bargain every-one would be brought survivally and thrivally within comfortable standing-reach of the Ultimate Perfectly Balanced Civilisation; and possibly even onto a longest-term sustain-worthy Strategy and Practique, achievable without every person needing to live off only one (1) sufficient human-living namely £200 per week.

      In addition, jsdm will contribute a percentage of his/her income and assets towards the Steering and earliest-possible implementation of such a Plan as the above, provided a winning-number* of higher-income’d British citizens do likewise.
      And we JSDM and jsdm (alias John Sydney Denton Miles) beg to stand as One in striving-company with All Peoples, everywhere and anywhere.
      ——————— (jsdm 2120Th240510).

      • 25/06/2010 at 10:53 am

        Isn’t giving more money to the people who caused the problem in the first place a little on the bonker’s side?

        eg. Bank bailout 80 bn secured against assets. So the net figure is much lower

        Government debts.

        930 bn – gilts
        1,200 bn – civil servants pensions
        1,600 bn – state pension (falling because they are defaulting)

        That’s why policitians are so keen on “its the banks fault”.

        There are enough people in this world who don’t question whether its true, and whether they are being lied to.

        Lord Blagger

        • 25/06/2010 at 11:07 pm

          Lord B. Thank you for that question.
          A few clarification-efforts before I try to encompass your whole philosophy.

          The many ‘levels’ of the People would only be lending money and securities [ bonds, title deeds,share-bundles, gold-ingots (from behind the wine-barrels in a widespread Network of stately and neo-stately Homes Of England…) and suchlike ] to their Nation-State, my lord; not to individuals nor cliques-of-individuals some of whom we know by name have in effect been ’embezzling’ much of The Peoples’ lifesupport-funds and savings. [ The Royal Bank of Shotland, Mis-Minded Government Executive-Bodies, and (by Mortal-Sin of Omission) PhD lands and islands and individuals, the Judiciary, the Media, the Private Eye and strings of Others, illegitimately making off (like the Pigs of Animal Farm, my lord) with not only the contents of the most of the troughs but many of the troughs themselves as well, fall within this latter shameful bracket.

          Such hugely-over-‘rewarded’ British ‘leading’-citizens and governance & marketplace top-brass, must lend to the Nation, and must do so on a minimum-or-zero interest basis for the duration of the Emergency; and, my good lord, such gangsterlike boardrooms as the RB of Shotland will not be allowed to leave the country, even on holiday, until the State has repaid their loan-money to them in full; my lord.

          I submit that we (The People & Honest Governance-personnel) have to trust that we are in sufficient numbers, strengths, and abilities, to carry through such a peaceful radical-reform as this Peoples Compulsory Lendings-to-State one is.

          Every British Isles resident will be required to lend to the British Nation-State whatever amount they can, or that is judged they can, afford/

          And not only that, for there must also be an in-depth non-legislative Peoples’ Participatory Democracy comprehension, clarification, discussion, scrutiny, deliberation and cooperative problem solving Network of Interactive-PCs and TV Screens, such as you yourself have recommended within this LOTB site, my lord ?

          (to be continued, somehow ?)

          It will take me rather more time to get my head around the other detail you have expertly and trustingly provided.

          Meanwhile, trustfully, (JSDM2255F2506).

  17. Lord Soley
    Clive Soley
    27/06/2010 at 5:03 pm

    A rich assortment of views here – many thanks.

    Let’s start with a bit of humour. I don’t think you can bulldoze a runway Tizzy – you have to take your spade to it!

    I think this argument about a double dip recession is going to continue for some time. I fear we are likely to have one partly because of the new government’s policies and partly because they are now rooted in Europe too.
    The central cause of the recession we were just emerging from was the international financial collapse – no one can seriously claim that Britain caused that or that most other countries were not also caught up in it. Although UK borrowing was too high the real crisis was caused by a sudden collapse in tax revenues when the banks went pear shaped. It is also important to remember that much of the money paid into the banks by the government will be repaid and that will help the current government – even though they did oppose it at first!

  18. Lord Blagger
    27/06/2010 at 5:50 pm

    Arguments over a double dip.

    You’re making some whopping assumptions. For a start, if the money has to be repaid to the government it takes it out of the economy. Makes a change from the usual leftist argument that the government not spending money takes it out of the economy. It doesn’t, since it leaves it with the generators of the cash.

    The real point is over a comparison. You’re making a hidden comparison. Namely that we won’t have a double dip if we carry on spending. Well, at somepoint you have to pay that cash back, and you have to pay it back with interest.

    That only works if the cost of borrowing is less than the growth it generates. ie If borrowing is less than the growth it generates.

    The proof is simple. I’ll offer you 2% on any investment you make with me. The same as the growth rate. Guaranteed. [I’ll just lend it to the government at 4.5%]

    In fact, I’ll do it for the government in big size. If they give me a billion, I’ll guarantee a return of 2%, and I’ll even help them out by lending them the cash to get this deal going at 4.5%.

    Lets see, 2.5% on a billion is 2.5 million a year. I think I can cope on that.

    The real crisis wasn’t the banks either. Nor was it the US.

    1. If its the US, explain Bradford and Bingley. A nice safe mortgage bank.

    2. If its investment bankers, explain NR, B&B who were not investment banks.

    3. What’s the common feature of the failure? It’s the regulator. They were not regulating even though we were paying them.

    4. What about the government spending on the basis that the golden goose is going to carry on layings its eggs. Making an assumption of future revenues is fairy tale economics.

    5. What about the size of the problem? 80 billion in bailouts against assets as you say.

    What about 1.2 trillion not secured against assets for civil service pensions?

    What about 1.6 trillion not secured against assets for accrued state pension?

    All hidden off the books, like Enron.

    80 bn bail out versus the deficit. Labour plan is to increase the debt to 1.4 to 1.5 trillion. An increase of about a trillion over the debt it inherited. Compared to 80 billion – gross not nett – of bank debt.

    And you still think that its the banks stopping paying taxes because of losses that is responsible for the state of government finances?

    Lord Blagger

  19. Lord Blagger
    27/06/2010 at 8:10 pm

    Although UK borrowing was too high the real crisis was caused by a sudden collapse in tax revenues when the banks went pear shaped.


    Or following your logic, we blame the unemployed for not working and paying taxes, in order to keep the public sector in pay.

    After all, if they don’t work, they don’t pay taxes (like banks making losses), and even worse we have to bail them out (like the banks).

    That the social security spend is larger than income tax isn’t a problem. Just borrow some more cash, let the next generation take all the cuts, inflated by interest payments, so all that money and expenses can keep flowing.

    This brings us back to the cost of the Lords. You cost us over 2,000 pounds a day, all up. Isn’t that sort of spending of tax payer’s money the real cause when we extrapolate it across all government spending?

    Lord Blagger

  20. Lord Blagger
    27/06/2010 at 8:12 pm

    The cause of this problem is too much borrowing and too much spending. It’s not too much saving and too little spending.


    One of those unanswered questions. Aparently Lords answer all the questions posed of them.

    Why should the solution be more of the cause?

    ie. Bank taxation was just taxes paid up front on future profits. (If you tax mark to market profits, then when the profits turn into losses you get no taxes. You’ve had them already)

    Lord Blagger

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