A healthy squeeze?
We'll be debating the timing of Britain's fiscal budget squeeze until at least the next election. But what about the how?
On the Today programme this morning, Richard Murphy, director of Tax Research UK, made the case for raising an extra £47bn in taxes to fill the fiscal hole, almost entirely from the top 10% of earners or corporations. It has a good populist ring to it. But it doesn't seem likely to win over the public - or most economists.
True, the Liberal Democrats' tentative plan for a mansion tax drew a lot of support in our special BBC poll last week. No doubt a windfall tax on the banks would also go down well - especially if the revenue raised were used to fund, say, an extension of the cut in VAT. (I'd be surprised if the Treasury were not exploring something similar for the pre-Budget report. January could well be a fragile time for the economy - it won't help matters to have VAT go back up to 17.5%.)
Even Martin Wolf, the FT's chief economic commentator, now thinks that a bank windfall tax is a "ghastly idea" whose time has come. As he notes, "it's hard to argue in favour of exception interventions to bail out the financial sector at times of crisis, and also against exceptional interventions to recoup costs when the crisis is past. 'Windfall' support should be matched by windfall taxes".
Some say a tax on bonuses would be better - because that, by definition, is not money that could help underpin new lending. But even if a windfall tax on banks or banker bonuses were feasible (and some say it's not), it's going to have more a cathartic value than a fiscal one. It's never going to be more than a populist warm-up act for the main feature - namely years of higher taxes and/or spending cuts that will be felt by all of us.
When it comes to that, our poll showed that most people favoured spending cuts over tax rises. Policy Exchange, the centre-right think-tank, now has a report out [1.49MB PDF] claiming that economic history is on their side.
The authors look at 12 historical cases where governments have cut public spending sharply - on average by more than 6% of GDP, or £90bn in today's terms. They find that, on average, countries grew 3% a year over the four years following the cuts, "suggesting that getting debt under control helps recovery and growth".
They also find that the "successful" tightenings (ie where borrowing has not gone back up) have tended to place most of the burden on spending cuts - about 80% versus 20% on tax rises. This echoes a respected study by Alberto Alesina and Robert Perotti, first published in 1996 [215MB PDF]. It concluded that "fiscal adjustments which rely primarily on spending cuts on transfers and the government wage bill have a better chance of being successful and are expansionary. On the contrary, fiscal adjustments which rely primarily on tax increases and cuts in public investment tend not to last and are contractionary."
The Policy Exchange authors are especially taken with the Swedish example in the mid-to-late 1990s. There, spending was cut by 10% of GDP in five years (about 3% in real terms), and the government deficit moved from a peak of more than 11% of GDP to surplus in just five years. Yet the economy grew, on average by 3% a year.
So, does this settle yesterday's argument between Gordon Brown and David Cameron once and for all? Alas, no.
The study sheds some interesting light on what works and what doesn't - for example, the authors observe that the British have usually taken a very centralised approach to their budget cuts. Other countries - notably Canada, but also Sweden - have often left it up to individual departments to decide what to cut, apparently with some success. It can put pressure on departments to come up with savings that bureaucrats might never have thought of.
If they win the election, senior Conservatives are keen to decentralise the tough decisions as much as possible. One I spoke to told me it was the natural corollary to Labour's targets:
"when you're spending a lot more money, there's a case for targets to show that it's not being wasted. But when you're cutting budgets, you want to give officials in individual departments the freedom to cut in the least costly way."(Assuming, he might have added, you have a public sector wage freeze so they can't spend it all on pay...)
But, this research does not answer - cannot answer - the multi-million pound question of whether a tighter budget squeeze next year will stall the economy. Why? Because, by definition, none of the case studies they explore are exact parallels to Britain's situation today.
In nearly all of these earlier examples, the countries concerned had two big advantages that Britain next year will almost certainly not have: room for a dramatic reduction in long and short term interest rates, and an external environment of healthy global growth.
In the Swedish case, as the authors point out, the budget's cuts halved the interest rate on government debt from 10% to 5% between 1994 and 1998. In Finland, which had also suffered a financial crisis, rates fell from 9% to 5%. There is no chance of that here.
A serious plan to curb borrowing could take something off gilt yields, but they are already historically low. Yes, it could prevent a rise in both short and long-term rates which might otherwise have occurred. But barring a major run on the pound, no-one can seriously suggest that the rise prevented would be on the order of five percentage points.
Between 1995 and 2000, when Sweden and Finland were doing their thing, growth in the OECD countries averaged 3.2%. Now, the OECD predicts on average its members will grow by 1.9% in 2010 and 2.5% in 2011 - and for our major trading partners in the Euro area, the forecast is for just 0.9% growth in 2010 and 1.7% in 2011.
Sweden is an awkward example for another reason too. They raised taxes almost as much as they cut spending - according to the report, the ratio of spending cuts to tax rises was about 55:45, though, looking at OECD figures I find that tax revenues did not rise very much as a share of GDP, probably because GDP was growing at the same time.
That, of course, is the key point. The report suggests that spending cuts can be consistent with economic growth, and maybe promote it. That much is true. But by definition, the 12 examples do not include all the times where governments have been preventing from cutting spending by a declining economy. It is almost impossible to lower spending (either in real terms or as a share of GDP) for any length of time when GDP itself is falling, and unemployment is going up.
As it happens, the Conservatives and Labour seem to agree that most of the budget squeeze should be achieved through tighter spending. In the chancellor's own budget plans for 2011-2014, the ratio of spending/investment cuts to tax rises is roughly four to one.
But history alone isn't going to tell us when the squeeze can safely begin. Pity.
I'm 
Comment number 1.
At 16:32 24th Nov 2009, MrTweedy wrote:"Parsimony, and not industry, is the immediate cause of the increase of capital. Industry, indeed, provides the subject which parsimony accumulates. But whatever industry might acquire, if parsimony did not save and store up, the capital would never be the greater."
Adam Smith: The Wealth of Nations, Book II, Chapter III
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Comment number 2.
At 16:59 24th Nov 2009, ghostofsichuan wrote:Everyone should remember this is the same group that created the mess and have avoided all responsbility, they pretend this was some collision of events rather than a scheme of bankers and politicians. The bankers, paying out bonuses as rewards for the successful theft of retirement accounts, seem to be a likely place to start with increased taxes. One must remember that lending of money can be considered separate from the income of bankers. A well-paid, or over-paid banker, has already proven that salary is not a reflection of ability. So income or salary apparently has nothing to do with performance in that field. Economist, tend to side with the monied as they are the ones who go to economist to affirm their schemes and projections, by asking what would those paying for advice like to hear. Not many economist were waving their arms warning of the impending financial collapse, in fact most were encouraging further deregulation of the industry..so not a group to be trusted...circus barkers. The middle class has been soaked for about as much as it can take. The wealthy are going to have paying some fair share of this burden and the corporate world will also need higher taxes. The average consumer spends and the economy grows. Over-tax the average consumer and no growth. Businesses continuely argue that taxes prevent growth but businesses do grow and pay taxes. Everyone needs to understand that the stimulus went into the pockets of bankers and investment firms....basically a double steal of funds...nothing will come of that money. Politicians like the idea of having departments make cuts, not because it is a more fair way of doing things, because the politicians will protect people and programs, but because they can blame someone else when the public becomes angry. These are cowards who avoid responsbility whenever possible, it is why things are the way they are. We have some well educated people promoting stupid ideas that are in their own self-interest and the self-interest of the wealthy. Class is becoming a very obvious structure again and that is never good news. The two parties are offering variations of the same theme....raising taxes and cutting services on the working class. They will continue to reach into your pockets until you slap their hands. If the general public works real hard and saves their money the bankers will have the opportunity to steal it once again because no rules have changed. The Bishop is hiding his mistress under his robe but we all know she is there.
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Comment number 3.
At 17:02 24th Nov 2009, JavaMan wrote:* The word TAX appears sixteen times in this document, this is a scandal!!!
* When the Vat Rises,this will produce a feedback loop back into inflation.
The plan is proceeding as devised ;-)
Mr Inflation!
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Comment number 4.
At 17:08 24th Nov 2009, Oblivion wrote:Along with windfall taxes, the banks under state control should be forced to drop interest rates on all loans to encourage faster 'deleveraging.' The monthly repayment amounts would remain similar, but a large amount would be going to repayment of principal than interest. The total monthly repayment would be dropped somewhat to allow an increase in income tax, which in turn would be used to shore up the creditworthiness of the government and assist in public spending in much needed areas.
This would be coupled with general regulation limiting credit extension in such a way that overextension becomes much less likely to happen ever again.
One should never lose sight of the fact that leveraged asset speculation and the lack of regulation to restrict it is at the core of the problem: https://en.wikipedia.org/wiki/Irving_Fisher
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Comment number 5.
At 17:18 24th Nov 2009, stanilic wrote:Why do I keep feeling that I am trapped in an academic economic exercise? The simple truth is that nobody knows what to do for the best as nobody has been here before.
If we cut government spending there might be a fall off in demand for goods and services. If we cut taxes then we will have to cut spending more.
On the other hand if we don't cut spending then the debt gets bigger and if we don't cut taxes then any recovery will be delayed and diminished.
In other words you are damned if you do and damned if you don't. In my experience in such situations the only solution is to do something, anything.
There is only one way to get the economy moving again and that is by getting the value adding part of the country back fully working again. This might require fiscal stimuli such as tax cuts, allowances for investment and government funds to kick start the process. This will all require focus and measurement but it we will at least be doing something other than spinning around wringing our hands like Pontius Pilate on speed.
I have said previously that if we cannot afford the size of state that we have then it just has to shrink. We will not get out of the current mess by any measures short of those imposed by Ken Clark some eighteen or so years ago. Indeed the measures will have to be more severe as the problem is a whole lot worse. However, rather than go for blanket cuts we should target those areas of government that do not touch ordinary people and whose absence will not have anything more than a marginal effect on the wider economy. I think there is far more of that about than is realised.
What I do know is that this cannot go on. Government must shrink and industry and commerce must be allowed to expand. The latter is going to be a lot harder to achieve than we think but if we do manage even some modest improvement then the prospect for future development will be good. This might be enough to keep the bailiffs from the door; for now.
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Comment number 6.
At 17:30 24th Nov 2009, Justin150 wrote:Lets start on the mad and bad ideas
1. Raise tax on higher earners. Will not work - indeed the likelihood is that the announced tax rise to 50% will reduce tax revenues not increase them, classic example of populist knee jerk reaction
2. Windfall tax on banks - hang on I thought we were trying to get banks to increase capital. Capital is either various form of equity (or funny forms of debt) and retained earnings. How exactly does taxing the earnings help increase bank capital?
There are clear examples of govt largesse that is indefensible. Lets start at the MOD. Roughly 1 civil servant for every 2 members of armed forces. Most other countries run at ratio of 1 civil servant to 4-5 members of armed forces. This implies you make 50% of the MOD redundant at least.
DTI (or whatever it is called). For the last 10-15 years people have called for it to be closed - lets do so.
Based on the numbers it looks like we need to chop spending by 10-15% compared to 2007 levels, that is 6-7% simply to eliminate the structural deficit and the balance is recession specific spending.
Totally agree that a lot of the decision making should be decentralised subject to one point. Head office (in this case whitehall) has to bear a substantial level of cuts. Whether that is 10% of staff or 50% of staff is up to politicians but it will not be acceptable if whitehall does not shoulder its fair share.
One of the most difficult aspects of these type of cuts is that it will almost certainly involve govt (either local or central) deciding to completely withdraw from some types of service. That will be painful and political dynamite even if it is clear that either govt should never have been involved or that the public sector would do a much better job.
Sadly two of the long term issues will almost certainly not get addressed: public sector pension arrangements are indefensible. Now I have no problem with public sector workers being part of good quality pensions but they should be on the same basis as private sector. Govt has essentially made old style final salary schemes completely uneconomic for the private sector so that we are all on money purchase schemes, public sector should be the same.
The other issue is the NHS which is a sacred cow of UK politics. Personally I believe that the principle that access to appropriate health care should not depend on ability to pay is a sacred cow (it is a vital moral principle of UK society) but the manner in which that principle is delivered should always be questioned. Instead what we have is that no-one is allowed to suggested that the NHS is the wrong solution without being howled down as some sort of moral degenerate. Well I believe we should look at how other countries deliver their health programs and learn from their successes and failures. I have no doubt that the NHS is now the wrong solution, and maybe was always the wrong solution, what I do not know is what the better solution looks like (although USA would appear to be a very bad place to start from)
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Comment number 7.
At 17:39 24th Nov 2009, Oblivion wrote:https://en.wikipedia.org/wiki/Debt_deflation
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Comment number 8.
At 17:42 24th Nov 2009, GRIMUPNORTH77 wrote:Photo that accompanies article - I know they really look like this but if it was a TV drama there is no doubting who is the goody and who is the baddy!
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Comment number 9.
At 17:47 24th Nov 2009, expatriates wrote:A safe beginning to the 'squeeze' will never become available, some other factor will always intervene to delay implementation. It has to start NOW to get ahead of further deterioration of the UK financial situation - balance of payments, level of exports vs. imports, £ exchange rates. Currently sterling still acts as a reserve currency, but if faith in that function ever wanes, then all talk of whose fault is the current situation will be very historical, the fall in the value of the currency will be vertiginous.
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Comment number 10.
At 17:53 24th Nov 2009, DevilsAdvocate wrote:On the day Mervyn revealed that secretly he lent 61 Billion to HBOS & RBS and Darling guaranteed any losses, but didn't bother telling anyone, do you really believe anything that comes out of the mouths of Government?
I've a much better idea, place all the names of the top bankers and politicians on a list in alphabetical order, tell them that the bottom tenth of the names will will be executed, but they can bid such that the list gradually moves from alphabetic order to 'bid to save my skin' order. Then when the bidding has ceased, we collect the cash and the bottom 10% of bidders get executed, and their estates subject to the normal inheritance taxes. I bet that would raise a fair bit. Come to think of it, we could apply a similar process to elections, if you are an MP and you don't get re-elected, we execute you to save on pensions and severance pay.
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Comment number 11.
At 17:58 24th Nov 2009, watriler wrote:Evidence of balance sheet mentality again and the Right are jumping on the bandwagon for cuts in services which of course do not affect the wealthy and those on high incomes (declare an interest?). The economy will start to grow when there is internally and or externally demand for goods and services so it makes sense to stimulate spending especially for low income earners including the growing reserve army of those dependent on benefits (and not trying to hard to stop the pound dropping). Why not upgrade benefits and pensions in advance of inflation then allowing inflation to return spending power to parity over a number of years (Why not if we can stimulate people to buy cars they probably do not need!).
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Comment number 12.
At 18:04 24th Nov 2009, ThoughtCrime wrote:Why is there so much talk about raising more money when we haven't even begin to cut the waste yet?
Why do councils need 5-a-day outreach coordinators and diversity managers? Why do we have ever-more trivial activities turned into crimes, with ever-more public sector workers hired to enforce them? If we start by cutting all the useless unproductive areas in the public sector we could save a huge amount of money before we even begin.
It'll never happen, because it will highlight what a lie Labour's "achievement" on reducing unemployment really was. But if we can unshackle the productive private sector from the dead hand of ever-more government control we're at least in with a chance.
Before people go off about private sector waste, if MegaCorp plc hires more people than it needs it has to raise prices to compensate and its customers go elsewhere. If the government hires more people than it needs we don't get a choice to pay taxes elsewhere unless we physically emigrate. Big difference.
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Comment number 13.
At 18:05 24th Nov 2009, GotToTheEnd wrote:Oh, dear, Mervyn has spilt the beans, Stephanie!
This is queue jumping stuff:
Mervyn King was calling for secret powers from Northern Rock onwards.
Where did he get these dictatorial ideas from?
At Birmingham University he was a Professor of Investment and de facto Head of Department.
In the department the Professor of Mathematical Economics was someone brought half way across the world (Australia) to guide the Department to a view about voting and democracy.
The view was simple (but purportedly backed up by some dandy mathematical theorems), namely that majority voting, John McFall, is irrational and irredeemably dishonest.. Only dictatorial decison making can avoid dishonesty and be rational.
Of course if you aim to take dictatorial powers in a democracy you have to keep quiet about it until you have.
So that may well be where the attitude came from. The moral hazard of having one man taking taking the 'departmental view' (and he insisted on such a view, generated by him) in matters (the theory of democracy) in which he was unlearned.
But we get the worst of both worlds, dishonesty and dictatorial decison making.
The BoE as lender of last resort fiddles with the discounting institutions and houses holdings of Treasury Gilts. That is its method, not leaping barriers and doling out 62 billlion to failed banks,
We are constantly lectured about moral hazard. Mervyn now apparently believes it's all right to rescue banks provided it's done secretly.
He may believe in splitting the banks' up intp hermetic departments but still beleives banks should be allowed to run (separate) casino joints, backed secretly by...him.
We should have been told at the time. To fail to tell us is dishonesty.
Oh, dear, we might have had to take the bank into complete public ownership, split it and declare the casino part bankrupt and just back the 'narrow' banking part.
What would be wrong with that then?
No more secret government. Isn't that a journbalist's mantra? Let's tackle the elitist views of Cable king and Darling (and, no doubt, the Tories), anyone who says crises ewntitle governemtns to be secret. That is NOT democracy.
But tackle the matter with with what?
I've told you what with, above. The alternative of public ownership, splitting hte banks and letting casinos go to the wall when they lose out. But your journalistic beliefs may be over-ridden by a mistaken belief in markets.
Larry Summers and Oxford in the Thatcher years is a lot to get over. But ask your colleagues at Nuffield College - public ownership of the finance industry is the only way to go.
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Comment number 14.
At 18:15 24th Nov 2009, Rugbyprof wrote:Stephanie
Interesting academic exercise in economics which of course provides very little in terms of decision-making.
So let's apply a reality scenario. Let's imagine UK is a company that has been borrowing heavily to cover losses (excess public sector expenditure) as sales income (annual tax raised) is nosediving.
However, overdraft borrowing is now at such a point that it is nearing M&M's (Modigliani and Miller) bankruptcy risk inflection point. What would an insolvency practitioner do to save the company?
Well - raise current product prices (i.e. increase taxes) to the point that the market would be expected to stand even allowing for some sales to lapse (thus lose some higher rate tax payers and lose general productive effort in GDP speak). Growth scenarios are off the menu for the next few years (Go with where you are is a safe maxim).
Then look at what costs need to be cut to get to break even as fast as possible. There is no other scenario.
If break-even is not achieved quickly in turnaround more losses occur with the result that potential bankruptcy occurs with significant downsizing post event as lenders may either:
(a) increase cost of borrowing that becomes prohibitive or
(b) pull the plug.
Result is that shareholders (i.e. taxpayers in this scenario) lose big.
As has been noted several times on various blog entries the only people actually buying UK national debt in volume currently, appears to be BoE/HMDO/Treasury (i.e. ourselves) through QE. If that is not a warning sign then I'm not sure what is?
In banking there is a term when a company pays itself through different divisions to appear healthy when it is in fact in breach of banking covenants. It's called CROSS-FIRING (which is regarded as fraudulent). Perhaps you could comment on the similarity with the scenario above?
I also read today of Japan raising its indebtedness to some 170% GDP and to some observers eventual default. This seems to be the same road we are treading unless we reverse our current practice.
May I suggest that in future you speak to insolvency practitioners for the parallel before economists when referring to finding a solution to the UK's current predicament?
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Comment number 15.
At 18:30 24th Nov 2009, steelpulse wrote:Ms Flanders,
I chuckled when your colleague Eddie Mair suggested to a few interviewees that the unknown "loan" to two banks should have been made public - back in the day.
I remember that period - well it was ONLY - last year and talk about the cherry on the cake to problems being encountered then - allegedly and the normally rather unwise behaviour of our Media outlets at every turn.
The Media in my estimation - a cross between light the blue touch paper and retire to the Algarve and Private Frazer from the TV Show Dads Army "We're Doomed!" - I am sure the decision NOT to tell us all was wise! We know now and watch hindsight kick in. Had we known - everything would likely have been analysed and judged to distruction - and as for the we should be told shareholders - lol - no offence shareholders but pleeze!
I use as my template for suspecting the above reaction someone "making a serious decison on something" in the USA. Even I have commented on said ruminations and I never comment as you well know! On anything! lol
SUBJECT: A HEALTHY SQUEEZE - QUESTION MARK - NEANDERTHAL FESS PI
ANAGRAM: HEY FAITHLESS QUAKERS UNSENTIMENTAL OPERA HAZE QED
Neanderthal? An extinct human species I hear. A current favourite ditty has the second line "I am not gone!". The first line is "Come hold me now!" Yup, a healthy squeeze or not - Neanderthal seems to suit.
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Comment number 16.
At 18:45 24th Nov 2009, hughesz2 wrote:Government is to BIG its as simple as that...
Taxing the top 10 % is madness , they will either leave the country or find ways of avoiding the tax.
The answer to the massive borrowing is in the text , cut the budget by 10 % for the the next 5 years,at this stage we will be in a surplus and we can start paying back some of the debt back.
This government have not helped the poor over the last 5 years they have simply made them depandent on the state...
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Comment number 17.
At 18:51 24th Nov 2009, shireblogger wrote:No-one pretends that these are easy judgments. Its a question of which medicine to apply and when/how to take the patient off life-support.
If it were me I would start at first base. The CBI and business are planning for weak government and consumer demand going forward held constant by the need to deleverage balance sheets.Both are supported by existing high credit levels. Lack of new bank credit will create a serious headwinds to growth. No-one argues that the deficit should not be brought back to balance. Exports could deliver good news. My view: encourage exports, business investment/trade/ and fix credit gaps/dont over tax spending/dont over tax the average consumer but make targeted tax rises planned - QE has failed and stop denying it ; start reducing government debt/spending cuts at the same time as the former comes on stream ; if inflation ticks up raise interest rates but sell QE gilts very sensitively over a long period of time - long burn on QE unwinding.
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Comment number 18.
At 18:51 24th Nov 2009, Diversities wrote:This is an excellent time to be talking a good fiscal squeeze , but a very poor time to be executing one. There are five reasons:
1. Demand in our economy is weak, and demand overseas is not yet strong enough for us to substitute much overseas demand for a shortfall in the UK. So we still need fiscal and monetary stimulus in the UK.
2. There is a clear prospect that the markets will get worried about the volume of Government borrowing if there is no credible scenario pointing to control and reduction of that borrowing. So we need to put that scenario in place.
3.Expenditure cuts work much better if there is time to plan their implementation; they are more effective and they cause less unintended damage to programmes.
4. Tax increases also work better if planned and announced in advance.
5. In addition, the prospect of higher expenditure tax shifts some expenditure forward into the time when we need additional domestic demand; and so reduces the need for fiscal stimulus.
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Comment number 19.
At 18:57 24th Nov 2009, John1948 wrote:#5 stanillic
"What I do know is that this cannot go on. Government must shrink and industry and commerce must be allowed to expand. "
I agree with you, but there is a problem.
Yes, industry can expand. But we cannot compete in the mass markets as wages in this country are historically high. We will never be able to compete with the lower production costs of emerging countries however great or productivity increases and wages are forced down. Yes we may become a centre of excellence in new technologies, but these get exported to other (cheaper) countries. Even then new technologies are never going to be enormous employers.
Commerce is even dodgier. I believe that one of the consequences of the mess we are in will be the return to simpler, more understandable financial products. The internet means that there is going to be more direct selling so the prospects for 'commerce' ie middle men are not good. And anyway the big 'City of London' type commerce is easily exported.
So the question I have to ask is that if we are to have reasonably full employment what is it that people are actually going to be doing? If we don't have full employment we will have to have big government through social work, benefits etc. The point is that the CBI might be arguing for what will be good for individual businesses, but will that be good for individuals? Or put more simply how do we balance a high GDP and full employment because I do not believe that the two necessarily go hand in hand.
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Comment number 20.
At 19:13 24th Nov 2009, ThoughtCrime wrote:Hahaha, tax the rich, good one. Which group of people will be the first to disappear off-shore and thereby pay 0% rather than 40%? Take a wild guess.
And don't think this is going to be anything to do with rich people not living here any more. When someone has their assets tied up in a corporation or trust of some kind, it can move abroad pretty much at the stroke of a pen.
Look out for more wealthy folks setting up trading companies in Sark, Gibraltar and the like.
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Comment number 21.
At 19:26 24th Nov 2009, DevilsAdvocate wrote:This comment was removed because the moderators found it broke the house rules. Explain.
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Comment number 22.
At 19:34 24th Nov 2009, ukponzi wrote:How about this for a radical solution?
1. Scrap all the walfare benefit systems/tax credits/employment benefits and introduce a citizen allowance for everyone, say 10k pa each. Enough to just get by on. Anything extra you have to earn. You need to be a UK tax payer for say 12 months to qualify. Only concessions will be for those who require extra care. Promotes self reliance rather than benefit dependency and a sense of fairness for all too. Will also be simple to administer and reduce the current admin costs.
2. Scrap retirement age..... you work as long as your fully able to, (addresses the pension problem). In return everyone gets an extra two months off work per year, on top of current A/L entitlement. This will mean a reduction in employee wages but at least we can still enjoy our free time whist we are healthy and young. Salery will be topped up via citizen allowance (above). 17% extra staff will be needed to fill the gaps (addressing unemployment) thus sharing wealth around a bit more.
I'm sure this is flawed and will be pulled apart by more knowledgable bloggers but at least I'm trying to think outside the box. I can't see any solutions being found by going down the conventional routes.
Anyone else got any better ideas or additions?
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Comment number 23.
At 19:52 24th Nov 2009, Oblivion wrote:stanilic
Well maybe it is an economic exercise.
Have a look please at the model described in the latter half of this post:
https://www.debtdeflation.com/blogs/2009/09/19/it%e2%80%99s-hard-being-a-bear-part-five-rescued/
According to these models cash injections to businesses/individuals makes more sense than to banks.
The decision makers are operating according to models (and mindsets) prescribed by mainstream neoclassical economics.
What in the opinion of readers here is wrong with the model proposed in the above article?
If you disagree with it, then do you support the current QE policies?
If you agree with it, the why are you not yelling and screaming for debt write-offs and tax holidays?
If you don't understand it, then why are you here?
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Comment number 24.
At 19:55 24th Nov 2009, Oblivion wrote:#22
Yes.
a) Force banks, especially the state intervened banks, to lower interest rates on all existing and new loans to individuals and businesses
b) Keep the repayment rates almost as high as they were prior to the drop in interest rates so that the principal of debt is repaid quickly, dropping the level of private debt to GDP
c) Raise income tax to take some of the extra income gained from the slight drop in monthly repayment rates to cover recent government expenditures
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Comment number 25.
At 20:03 24th Nov 2009, CComment wrote:Scrap nuclear weapons, ID cards and all foreign aid. Stop spending on foreign wars. Attack the parasites at both ends of the social scale - the giro valley New Labour voting won't-works and the Tory City spivs. Then clear out all the local government jobsworths and stop wasting millions on futile green "initiatives". Surplus in no time. [Unsuitable/Broken URL removed by Moderator]
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Comment number 26.
At 20:09 24th Nov 2009, Dempster wrote:To my fellow bloggers
I have noted that blame is oft placed at the feet of both the incumbent Government and the financial institutions for the current economic malaise.
It is placed in error. If you want to find liability, look at me. I didn’t vote labour, I didn’t vote tory. I did worse, I didn’t even vote. I came home consumed my evening meal, watched the TV and went to bed. I couldn’t even be bothered to put an X in a box.
And in the distant past when I did vote, I usually followed the path of my parents. I voted for a career politician who likely had little if any interest in the country they were supposed to serve.
If I had allowed a homicidal maniac to pick up a loaded gun, I would be no less liable for the consequences of his actions than I am for this nation’s current problems.
I apologise, I have however learned the error of my ways.
I intend to raise my voice at every opportunity and speak out for that which I believe to be right.
I will not go quietly to bed with a horlicks anymore.
I intend to speak on behalf of an average working Joe and the younger generation.
Because I am an average working Joe and a father of three.
You want an answer to this economic problem?
Well you could sack two million public sector workers, but that would likely result in strikes, civil commotion and not least a lot more people out of work, the public sector employees and those in the private sector where they spend their money.
You could tax everyone more, but then they would spend less at the shops resulting in a deeper recession and more private sector workers unemployed.
It’s not the working Joe and Jane (public or private sector) which should penalized, it’s everyone.
Mervyn King (god bless him) oddly enough has kept this country afloat for one year and has received no thanks from the public.
He’s even reduced public sector debt by 5%.
Oh yes he has. Check the DMO website and Devils Advocate speech post No.476 on Stephanomics Three Way Split article.
And if you don't believe me, I will explain.
For the average working Joe & Jane I raise my voice.
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Comment number 27.
At 20:11 24th Nov 2009, ukponzi wrote:3. Get rid of big government...it dosn't work, becomes self serving, and costs too much! Central government should only be there for things that can't be acheived by a community...e.g defence and passing laws for the good of all. Nothing else!
4. Encourage communities to work together to make decisions for the good of all, run schools, policing etc... Introduce a community budget...elected members of the community to form a committee to agree the best use of their budget.
5. Get rid of income tax, tax only to be applied to bought stuff.... higher levels for luxuries, non green goods (that have high carbon footprint, i.e cars/imports) Property tax on luxury homes etc...Lower taxes on essentials i.e food, basic clothing, bicycles etc.
7. Encourage everyone to use their extra spare time to become more self sufficient, e.g planting fruit trees in green spaces, allotments etc... . Use the community budget for this. Get the community involved as much as possible...it will help community cohesion and make us better people and happier in the long run!
8. Invest in green energy...use the sea, wave technology ...via government.
A brave new world?
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Comment number 28.
At 20:30 24th Nov 2009, mellowtraveller wrote:Banks have the parastic ability to generate astronomical and unethical profits (Barclays made 4.5Bn in the first nine months of the year). This removal of funds from the businesses which they serve is a significant brake on the economy.
They then spread the goodies to their staff (5Bn set aside for this year).
In addition to controls on interest rates charged there has to be a windfall tax on the unethically rewarded whose pay is socially damaging.
99% tax on pay and bonuses over, say, 10 times national wage?
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Comment number 29.
At 20:31 24th Nov 2009, GreGrenada wrote:"Elephants never forget", or so they say.
https://news.bbc.co.uk/2/hi/science/nature/7300570.stm
Random quote: "We're not the only ones here and we're not the only ones who deserve to survive. The sooner we realise that and stop our ever-expanding population from becoming unsustainable the better off all life will be."
Discuss!...
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Comment number 30.
At 20:33 24th Nov 2009, GreGrenada wrote:The enemy is Growth, the symptom is overpopulation, the cure ???
Discuss! ...
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Comment number 31.
At 20:35 24th Nov 2009, GreGrenada wrote:SoylentMajority ;)
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Comment number 32.
At 20:41 24th Nov 2009, Oblivion wrote:#28
Only in recent months do people in general begin to realise that society is and always has been elitist. There is the elite and the proletariat. Today the elite includes bankers and executives of financial institutions and global corporations. One aspect of the financial crisis is that politicians also now realise this and they seek to wrest their power back.
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Comment number 33.
At 20:44 24th Nov 2009, StephenBlencowe wrote:As always, I'm impressed with the ideas and depth of knowledge displayed on these blogs.
Only problem is that none of it will ever happen.
The world has always been run by the the few for their own benefit.
The few have changed around a bit, Church, Kings, Parliament, Oligarchs, family owned Banks, combinations of the previous but the serfs are still serfs and always will be.
Nothing very much changes for the average serf in the street. Wat Tyler very literally got the point, and was the average Frenchman better of after the revolution, or an englishman after Cromwell or russians after their revolt. Chinese Revolution anybody?
For those who say that the serfs can change things I'd suggest you check out what the 2000 Fuel Protestor now does for a living and what happened in the General Strike (involved Tanks on our streets I think you'll find)
Things may change if push really really comes to shove but I am certain there will be no radical changes on the political agenda in the meantime.
And of course the bloggers have made it very easy to round up the subversives..
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Comment number 34.
At 20:55 24th Nov 2009, Oblivion wrote:#33 StephenBlencowe
I don't quite agree. The serfs won't instigate change, the change is here regardless.
I think the world is in the process of moving to a new system, some kind of new change. The legacy of post WW2 Bretton Woods is over, and new structures must supplant the old.
We should expect for example
- Moves away from USD as international reserve currency
- Steady deleveraging and ongoing credit restraint
- Moves away from oil as a consequence of moves away from dollar
- Multipolar global power with Asean+China block, EU and USA as main players
- Global central bank with shared control of new international reserve currency
- General increase in activity in 'hard sciences', less in communications, more in new types of energy, transport, food production
I don't see the UK as being particularly much of anything in this picture. If the UK wants to avoid decline, it needs to align itself and integrate with the one of the power centers. Being in the middle between the EU and the USA is just an indecisiveness that makes the UK even less attractive. Soon it will have to make the rational choice, abandon Sterling and meld with the EU fully.
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Comment number 35.
At 20:59 24th Nov 2009, ghostofsichuan wrote:FranksZ:
It is not the government that needs to regain power from the bankers but rather the people who need to regain power from the government. The government serves the interest of banking and big business, the people have no representation. When there is a great imbalance in government, one way or the other, bad things happen. Just a historical fact.
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Comment number 36.
At 21:01 24th Nov 2009, ukponzi wrote:Change will happen...of that I am certain. When exactly I'm not sure but it will come soon. It has to. The British people still have resiliance when needed.
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Comment number 37.
At 21:10 24th Nov 2009, ukponzi wrote:35 ghostofsichuan
I agree... it might be ugly but change will happen. People will get angry as they realise they have been robbed and their children too, that's why this government is proping the economy up, they are frightened of social unrest.
QE can't last forever, it's making a dire situation worse. Once it stops and the cut's/tax increases start to happen.... thats when the change will happen.
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Comment number 38.
At 21:16 24th Nov 2009, Oblivion wrote:#35 GhostOFSichuan
Truth is though, if you found yourself in the politicians' position, you would have bailed the banks out too. You would not have risked allowing the prevailing fabric to unravel.
They know that things are not sustainable and great tectonic shifts are taking place, but they are not in much of a position to do anything about it.
The politicians are actually far too much under the sway of the general public. I am sure that there are many things they would love to do (like seize all banks and kill all bankers), but they cannot.
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Comment number 39.
At 21:34 24th Nov 2009, leanomist wrote:A great deal of insight again in these posts e.g. post 2 (ghostofsichuan) and post 12 (ThoughtCrime2008) for instance ... I also agree with post 36 - change will come, but things will have to get much worse before it does (which it will, and soon) ... solutions are at hand, they are just not palatable to those in 'power', abusing power and seeking to maintain power ... e.g. as far as tax increases go Land Value Tax is a 'no brainer'* - it's just the complete opposite to what the ultra-rich landowners/gentry want to see ... as it will hit them, they can't avoid it, or pass it on ... (nb land is also one of the few things Government has allowed to remain virtually exempt from inheritance tax too - perhaps that needs to change too).
* take a look at https://poweromics.blogspot.com/2009/11/land-value-tax-no-brainer.html for instance.
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Comment number 40.
At 21:37 24th Nov 2009, leanomist wrote:I agree with post 35 and 37 too.
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Comment number 41.
At 21:53 24th Nov 2009, armagediontimes wrote:38 FrankSz What evidence do you have for your somewhat strange claims. If politicians are too much under the sway of the general public then why did they invade Iraq. Why is no public vote allowed on the EU, and why do all "mainstream" parties offer the exact same agenda.
Do you think the public are busy writing to their politicians urging them to tell more lies in the House of Lords or more generally beseeching them to increase the rate of fiddling their expenses.
There are different methods by which it is possible to temporarily shore up a financial system. One of those could have been to bail out the banks and immediately move to address the too big to fail problem i.e. by splitting them up along the lines of the old Standard Oil dismemberment. Not even discussed much less acted upon.
The banks could have been bailed out by directly funding the debtors. It would have cost less and been more effective. Not even discussed.
Are the bail outs over. Not a chance, where is the public demand to fund more bail outs.
Why is it that the CEO of the IPE can make extraodinary, but evidence based claims, about the manipulation of the oil price and the only response is that he loses his job.
Do you see the public clamouring for higher oil prices.
Why have real wages been in constant decline since the late 1970's Is this in response to public demand that they impoverish themselves. Why is wealth inequality at its highest ever levels. Is this because the public have noticed that great wealth inequality is historically the harbinger of material economic reverses and have consequently begged their politicians to hasten economic collapse.
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Comment number 42.
At 21:55 24th Nov 2009, riverside wrote:26 dempster
I have answered your post 182 on the last thread. Regards
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Comment number 43.
At 22:10 24th Nov 2009, Carol Wilcox wrote:I was disappointed with the Compass report since it ignored the question of property taxes (except for endorsement of the Cable 'mansion tax'). Property taxes are important since they are difficult to avoid, landed property being difficult to hide in a tax haven. In particular the report fails to suggest a tax which meets all the criteria for a good tax, i.e. annual land value tax. This was also somewhat surprising since Compass recently published an excellent article on housing and LVT, which just goes to show their lack of joined-up thinking.
No serious economist would disagree with my characterisation of LVT as a superior form of taxation, yet very few of them, it appears, have the guts to come out on this. Time and again I hear that LVT is just politically infeasible. Yet surely economists should not concern themselves with politics, just with the facts.
Stephanie, when is the BBC going to ask the question 'Why Not Tax Land?'.
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Comment number 44.
At 22:10 24th Nov 2009, Dempster wrote:To others blogging on this post
We blame the incumbent Government and the financial institutions for the current economic malaise.
This blame is placed in error. If you want to find liability, look at me. I didn’t vote labour, I didn’t vote tory. I did worse, I didn’t even vote.
If I had allowed a homicidal maniac to pick up a loaded gun, I would be no less liable for the consequences of his actions than I am for this nation’s current problems.
In God’s sweet mother earth, stop discussing who is to blame, think what can be done to change things.
Because if you can’t, the plain truth of the matter is you’re a bunch of lemmings, and as such you deserve to get well and truly stuffed by what’s coming.
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Comment number 45.
At 22:18 24th Nov 2009, ukponzi wrote:38. At 9:16pm on 24 Nov 2009, FrankSz wrote:
#35 GhostOFSichuan
Truth is though, if you found yourself in the politicians' position, you would have bailed the banks out too. You would not have risked allowing the prevailing fabric to unravel.
They know that things are not sustainable and great tectonic shifts are taking place, but they are not in much of a position to do anything about it.
The politicians are actually far too much under the sway of the general public. I am sure that there are many things they would love to do (like seize all banks and kill all bankers), but they cannot.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
How can you defend the politicians? They should of shared the bail out with everyone... on the condition that either they spent it by paying down debt, or put it in a pension fund. This might just of worked!
When the pain starts to be felt by more and more people, they will remember this betrayal...it's crucial that a government is seen to be fair when people are suffering.
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Comment number 46.
At 22:25 24th Nov 2009, armagediontimes wrote:5 Stanilic. The problem is that the value adding part of the economy is too small to support the total population.
This has been a problem for a long time. The only solution proposed was to mask the problem by creating a sizeable underclass which everyone could then ignore, squandering North Sea oil and gas revenues and creating a mirage of productive activity in financial services.
The financial services bubble has now burst and the North Sea is in decline. Billions can be produced at the drop of a hat for a few banksters, but nothing is available to fund R and D in leading edge technology.
You have a stifling beaurocratic approach to anything new. I know some guy who was literally hounded out of the country by the Environment Agency. He went to the US and picked up all kinds of research grants and development aid. This is an ingrained culture it cannot be changed overnight. Creative people leave because their creativity is crushed. But everyone keeps banging on about rich people leaving because of high taxes. Who would be more useful to you some guy with a suitcase full of money, or some guy that can create things and make things work.
The workforce has been dumbed down and deskilled. Some City headhunter types have been scouring the English speaking world for people with nuclear new build experience. May as well look for experienced gas lighters.
How are you going to compete with places like Germany for value added manufacturing, and how are you going to compete with China for mass produced low grade manufacturing. It is not even a fantasy.
Even if you could somehow overcome all of these obstacles all you will do is produce more. No one is going to close down just because it would be a nice thing to do to help out the British. There is already overproduction of most things and capacity needs to close, not open.
You are looking at a period of supply destruction NOT creation. Things are going to get a lot worse, and the population remains delusional and obsessed by a narcissistic sense of entitlement.
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Comment number 47.
At 22:36 24th Nov 2009, EmKay wrote:To all posters:-
There will be pain, a wailing and gnashing of teeth.
what if you have no teeth?
TEETH WILL BE PROVIDED
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Comment number 48.
At 22:38 24th Nov 2009, CComment wrote:I see the moderation is as politically correct as ever. Amazing how people who claim to uphold democracy do it by curtailing freedom of speech.
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Comment number 49.
At 22:46 24th Nov 2009, DebtJuggler wrote:Merv has scandously spilled the beans!
All of the banks should have been nationalised.
The £60bn that was kept secret from the public (this was public money for Christ's sake) and was hiddden from the national accounts.
This stinks.....Brown oversaw this fraud.
Small shareholders....go suck!
robbed share holders should litigate, litigate and litigate again!
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Comment number 50.
At 23:04 24th Nov 2009, brownloadofrubbish wrote:some interesting posts...
I wanted to ask a question about this 'Land Tax' that several people are proposing
Does this only apply to those who own land? Wondered how this generates any tax from those who rent, live in council, military etc property?
Would there be any exemptions e.g. National Trust?
Ultimately I guess we'd all pay. For example should I rent, I'm sure my Landlord would pass the charge onto me (one way or another) through higher service charges or rent. Ultimately at this point, they are still getting an income and I'm paying the tax. At this point I'm out of pocket....not the landlord.
I'm not against the tax as such, but I'd like to see how people think it would be implemented
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Comment number 51.
At 23:11 24th Nov 2009, leanomist wrote:Post 44 - IMHO there are plenty of potential solutions available ... it's just the current politicians/'leaders' have no interest, desire or capability to bring them about.
However the key point you raise is a valid one - and I call this the battle against Ignoromics (which allows Poweromics - the misuse of Power - to flourish). This consists of Type 1 (Ignorance) and Type 2 (apathy) - see definition below:
Ignoromics = People are either 1) effectively ignorant of the situation (e.g. the overall environment) or 2) not prepared to take responsibility to make sure it changes for the better.
Change will occur (when the 'pain' gets bad enough), we just need to figure out how to accelerate change (without the pain!) ... IMHO identifying the solutions that need to be implemented are not the hardest bit, but accelerating change is ... e.g. this will clearly involve reducing Type 1 and Type 2 Ignoromics (e.g. through the power of the internet and modern communication technology for instance) ...
I believe the point you have made is summed up by the following too ... 'For evil to flourish, all it needs is for good men to do nothing' [Edmund Burke]* ... and this is what personally frustrates me the most (nb can you blame them for doing it, if the people can't be bothered to challenge it).
* take a look at here ... https://poweromics.blogspot.com/2009/06/for-evil-to-flourish.html for instance and if you have lots of ideas for accelerating things I suggest you post privately/call, rather than blog all about them, because the current politicians/'leaders' would love to know what they are, so they can attempt to block/sabotage them (as a post above also highlighted)!
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Comment number 52.
At 23:47 24th Nov 2009, brownloadofrubbish wrote:#49
- you state that all the banks should have been nationalised
This is a point that has cropped up several times, quite a lot last year.
Its an interesting point, and one I'd like to question
- Is this just banks? Does it include the Building Societies (as we've seen, a number of those were proved frail, and forced under the wings of stronger parties)
- What good do people think nationalising the banks would really do?
I know these are slightly off-track, but I didn't start it :-)
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Comment number 53.
At 00:21 25th Nov 2009, riverside wrote:46 arm n leg times
That seems a fair summary. It also says where things can work, but despite everybody squalling it the reality is actually very few are intersted in what can work. HMG certainly isnt because they are only interested in big business and tax revenue. Cheaper to keep people on the dole and use them for odd jobs. And how many people on the street are motivated to do anything. I dont think the problem is the public sector, that is dead easy to deal with, it gets cut, by a thousand cuts. The problem which you point out is the issue of growth and work and I see NO open discussion about it at government level. This is the British disease, the management of decline following the steady loss of the British Empire, and the culture cannot change easily it would appear. The promotion within the social and business structure has been if you can manage decline then your our man, maybe v occasionally your our woman. For some reason the British generally despise products that are made here. I even knew man who specified he wanted a new Ford but it had to be imported from Germany when the same model was made here. For some reason the British have always been quite happy to exploit their countryman. I wont bore you with the quote but before the Romans invaded they had noted how cheaply the Brits would sell a countryman for - an amphora of wine, far cheaper than anywhere else. You have to ask what is new.
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Comment number 54.
At 00:55 25th Nov 2009, riverside wrote:51 leanomist
''Change will occur (when the 'pain' gets bad enough), we just need to figure out how to accelerate change (without the pain!)''
No chance imho. The buffering systems in place eg social welfare etc and the governments appetite for borrowing means this will delay the pain and build up debt, as soon as debt is shoveled away another lot will magically appear. This is the morbidly debt obsese problem. A gastric bypass is needed for HMG and the risk of mortality has to be right there before any wish to participate occurs.
Successive government have repeatedly sold off anything they can get their hands on to plug gaps or butter up voters. That will continue. Who in their right mind discusses privatising something like Porton Down. So anything can be sold and will be sold. It is a form of self cannibalism. It is everywhere.
As it is almost inconceivable the architects of the current mess can reverse the buuble machine the question is can the others if they get near the problem. Otherwise - This is likely to be generation versus generation. The mechanism appears to be wealth polarisation and wealth removal. Neither will be welcomed will they.
It really is odd that the problem is so bad that the discussion is about passing law to protect paying deficits down.
If you look at the behaviour around the bailout in the US you can see what will come. Protest groups, floating politicans, fear marketing. I cannot see it being different, other than somebody will have time to plan it so it may be more slick.
But keep up the battle.
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Comment number 55.
At 01:21 25th Nov 2009, SpartacusmartyrAAAs wrote:53.
I wont bore you with the quote but before the Romans invaded they had noted how cheaply the Brits would sell a countryman for - an amphora of wine, far cheaper than anywhere else. You have to ask what is new.
sfadgdfhggdhkfjhlkkl;hlk;j'jl;'#][ty387476987po97;,dfhxykyfilililbzzzt
Glan
No doubt if we examine the Anglo saxon cronicle for the time we could read about how cheaply the romans sold their wine and exploited their vineyards and an amphora bartered for a thousand guiness plus vat and woad tax.
Afterall wine was the dot com revolution and fiat currency of its day, providing the vestal virgin server didnt let them down.
Im sure that the BenBERNINKARUS of CENTRAL BANKUS WINE RESERVES OF THE DAY PROMICED HE WOULD DROP off the hard stuff using balvista if he could not invent a helicopter.
So what is new ..... A HELICOPTER
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Comment number 56.
At 06:45 25th Nov 2009, Oblivion wrote:Armagediontimes
If politicians are too much under the sway of the general public then why did they invade Iraq. Why is no public vote allowed on the EU, and why do all "mainstream" parties offer the exact same agenda.
The above three questions are easy to answer:
a) Because the general public wanted an invasion of Iraq. Yes there were protests, but the majority (especially of Americans) believed that the best thing for anything with a turban on its head was a slow roasting. I remember it very clearly.
b) Because the general public don't have an opinion, don't know anything about the EU treaties, and/or don't care
c) Because they are slaves to a nation of spoilt, nervous brats who have lost values like individualism and creativity in favour of following mass-produced consumerist herds.
Everything else in your post, if you hadn't actually noticed (re-read what you wrote) actually supports my argument.
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Comment number 57.
At 08:33 25th Nov 2009, Oblivion wrote:#52 Brownloadofrubbish
Any institution involved in the creation of deposit money through debt.
https://en.wikipedia.org/wiki/Criticism_of_fractional-reserve_banking
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Comment number 58.
At 08:57 25th Nov 2009, silent-majority wrote:There has been calls on this blog for a land tax. I suppose that one reason this has not been done is that the top land owners in the UK are, The State, The Church of England and The Crown.
Taxing the State is just taxing ourselves. The Church is bust because of some spectacularly bad investments. They could sell some property. Would you like to see St. Paul's Cathedral demolished and replaced by some office blocks? The Crown has money but so much of the Crown estates are paid for by us. We end up taxing ourselves again.
Which ever way you look at it, the bill ends up with the taxpayer.
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Comment number 59.
At 09:43 25th Nov 2009, MrTweedy wrote:Bank bailouts and QE are not stimulus measures, they are preventative measures. Their aim is to prevent the collapse of the financial system. The bailouts stop businesses and households from losing their life savings, and QE prevents asset prices from falling to ridiculously low levels.
The VAT cut to 15% and the car scrappage scheme are stimulus measures, aimed at stoking aggregate demand.
The reduction in the BoE base rate aims to help reduce the effects of indebtedness by reducing the interest payable. If interest liabilities are reduced then businesses and consumers have the choice to either increase savings, increase spending and investment, pay off more of their debt principal, or borrow more money at cheaper rates.
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Comment number 60.
At 10:32 25th Nov 2009, writingsonthewall wrote:The banks, the Government, The justice system have all just
DECLARED WAR ON THE CONSUMER!
https://news.bbc.co.uk/1/hi/business/8376906.stm
No appeal to the Eurpopean court of human rights allowed?
This is totalitarianism in the making - this would discust the justice in Zimbabwe.
Forget this pointless blog - the rights of all consumers have just been railroaded by corporate greed and near criminality.
This is their reasoning:
"The Supreme Court's president Lord Phillips said that bank customers agreed to pay overdraft charges as part of the price of having a current account,"
Agreed - when? and why is there a 'price for having a current account' - I was offered a fee free bank account, not one with hidden charges.
It's taken 2 years to stall us and then a bizzare decision is handed down by a kangaroo court of 'appointed peers'.
You all thought Europe was stealing our rights and laws - oh how mistaken you were, the real enemy is within.
Jack Straw shall be the first victim of the 'new justice system'.
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Comment number 61.
At 10:37 25th Nov 2009, Dempster wrote:60. At 10:32am on 25 Nov 2009, writingsonthewall wrote:
The banks, the Government, The justice system have all just
DECLARED WAR ON THE CONSUMER!
Well put.
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Comment number 62.
At 11:00 25th Nov 2009, EmKay wrote:To all land taxers:-
This is really just a tax on property but instead of when sold, annually - just like ground rent for leaseholders - I actually support this because the property bubbles just keep on appearing and keep on popping, ratcheting up the debt. I have previously posted about capital gains tax on property gains (Which I still believe in) which would also give a mechanism for taking heat out of property market.
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Comment number 63.
At 12:02 25th Nov 2009, DevilsAdvocate wrote:59. At 09:43am on 25 Nov 2009, MrTweedy wrote:
Bank bailouts and QE are not stimulus measures, they are preventative measures. Their aim is to prevent the collapse of the financial system. The bailouts stop businesses and households from losing their life savings, and QE prevents asset prices from falling to ridiculously low levels.
The VAT cut to 15% and the car scrappage scheme are stimulus measures, aimed at stoking aggregate demand.
The reduction in the BoE base rate aims to help reduce the effects of indebtedness by reducing the interest payable. If interest liabilities are reduced then businesses and consumers have the choice to either increase savings, increase spending and investment, pay off more of their debt principal, or borrow more money at cheaper rates.
---------------
My Loan and overdraft Interest rates have not changed despite the BOE rate changes, and my previously negotiated overdraft limit, designed specifically to cope with the peak nature of tax and fee charges that all fall on quarter days has been unilateraly cut by the bank , causing me to pay punitive charges because my previously agreed limit was agreed to match the peaks and wasn't simply a random number written into a Government or BOE policy document, now it is no longer there I exceed my overdraft and pay handsomely for it. If Mr Brown and my Bank think that I won't remember this at a) Election time, b) when I'm back earning, then they are in for a surprise. Still given that work is non-existent at the moment, the surprise may be some time off for my bank, hopefully is is still June or earlier for Mr Brown.
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Comment number 64.
At 12:44 25th Nov 2009, Pat Bell wrote:If a bank lends me money, I have to pay it back with interest. Why talk of euphemisms like 'Windfall tax'? The BoE bailed out the banks (who clearly have money to spare now, witness Bankers' bonus's), so the banks pay it back until the debt is cleared. Simples!
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Comment number 65.
At 13:14 25th Nov 2009, riverside wrote:61 J Dempster
Have I seen you two at the bungery by any chance.
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Comment number 66.
At 13:50 25th Nov 2009, minchella wrote:Stephanie suggests that raising £47bn through tax rises for the richest 10% would not attract public support. I think it could be an election winner.Warren Buffet made the case for tax reform when he said that his cleaning lady (in terms of percentage of income)paid more tax than he did.That's not fair.
We need an overhaul of the tax system which best reflects the needs of the nation based on the ability to pay.This may not be popular with the top brass but would be welcomed by the majority.
We are told that a cap on bonus payments for bankers would lead to a brain drain. That it would stifle competition and hinder innovation.
I would argue that their was little innovation and no real competition. They merely followed each other like sheep and that is why they all failed at the same time. They want us to believe that they are vital to the success of this country. Sorry I don't buy it.
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Comment number 67.
At 17:09 25th Nov 2009, stanilic wrote:19 Boilerbill
I wholly agree with you that this is a difficult and complex issue. However, we have no choice but to face up to it and try to find a solution, or rather a sequence of solutions.
The big disadvantage of the so-called cheaper nations is that we have to burn a lot of CO2 to bring their product to market in this country. This should begin to tip the balance back in favour of domestic manufacture. Local supply chains have to be greener supply chains. This should help to engender more small, local businesses.
The one truth that is not being spoken at the moment is that a lot of people are going to be on low wages for the forseeable future. This was apparent even before the recession as the minimum wage was slowly becoming the maximum wage for a lot of folk. My fear is that the cheaper nations are exporting not just their unemployment but also their grinding poverty.
We need to find work rather than welfare handouts for the simple reasons that work occupies and creates a purpose, it can add value for both the worker, the proprietor and the government, it generates communal values and self-respect. It is positive: welfare only helps those with another agenda such as musicians and erstwhile writers, the rest it makes apathetic and destroys.
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Comment number 68.
At 17:19 25th Nov 2009, stanilic wrote:23 FrankSz
I would love to read your link but the computer says `no'.
I always liked the idea of those little black helicopters showering out fivers as a far better way of getting the economy moving than giving money to banks with broken backs.
What does concern me is that the navel-gazing is getting us nowhere when a strategy is needed, followed by the requisite actions. All I am seeing at the moment is a determination to keep the old, failed structures in place because it suits certain people.
I am agitating for change but accept that it won't happen without a head of steam developing. This can and will only come from argument and discussion.
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Comment number 69.
At 18:00 25th Nov 2009, Optimist wrote:#49. BankSlickerminustheR wrote:
"The £60bn that was kept secret from the public (this was public money for Christ's sake) and was hiddden from the national accounts.
This stinks.....Brown oversaw this fraud."
This is not fraud. The Bank of England lent - lent! - money to two struggling banks, fully collateralised and now fully repaid, in order to prevent the complete collapse of the British financial system.
It's what the Bank of England does - they've done it before (a lot more recently than many people realise) and they will undoubtedly do it again, and we should be thankful that they do it. The alternative would be unthinkable.
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Comment number 70.
At 18:04 25th Nov 2009, Optimist wrote:#60. writingsonthewall wrote:
"The banks, the Government, The justice system have all just
DECLARED WAR ON THE CONSUMER!"
No, they haven't. Like parking and speeding fines, overdraft fees can be avoided by not spending more than you have. I thought you would have been all in favour of individual financial responsibility.
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Comment number 71.
At 21:35 25th Nov 2009, Carol Wilcox wrote:I suggest that those wanting to know more about land value tax, go to labourland.org, landvaluetax.org or just google it.
But just one bit of explanation: LVT does not impose an extra tax burden - it would replace bad taxes, firstly current property taxes: CT, NNDR, SDLT, and since it would be levied on all private landowners the tax base would increase and the average homeowner would pay less Council Tax. So yes, landlords may try to pass on the tax to tenants, but the market will not bear new rent > (old rent + Council Tax).
For Stephanie: I've never heard the words 'land value tax' pronounced on radio or telly. Why's that?
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Comment number 72.
At 06:37 26th Nov 2009, GreGrenada wrote:https://www.google.com/search?q=slowmoney
:-)
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Comment number 73.
At 17:25 27th Nov 2009, Runcible wrote:Tax all those with houses worth a million! What rubbish. Many of us have lived in houses for 30 years or more - which we bought from hard earned savings. In some cases these houses have risen steeply in value but now, as pensioners, are we are expected to move out because we cannot simple pay even more tax from our fixed incomes. Will there be government homes for the homeless pensioners created by this crazy idea. Another poorly thought through idea by low grade politicians!
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