A conspiracy of silence

Well here’s my guess as to how they may try and make it all fit:

2010: Tax returns £450 billion + QE £175 billion + cuts £0 billion
2011: Tax returns £460 billion + QE £150 billion + cuts £15 billion
2012: Tax returns £470 billion + QE £125 billion + cuts £30 billion
2013: Tax returns £480 billion + QE £100 billion + cuts £45 billion
2014: Tax returns £490 billion + QE £75 billion + cuts £60 billion
2015: Tax returns £500 billion + Borrow £50 billion + cuts £75 billion

Everyone knows cuts and tax rises are coming. And they also know that it doesn't matter who wins the election or what coalition(s) may appear, because whichever politician(s) they asked about the issue before the election would lie to them anyway. Caledonian Comment

By far this is the most frustrating issue of the election and the one that is most likely to cause me to vote against the major parties.

I WANT TO DECIDE WHERE MY MONEY GOES!

It's the choice that has been denied to me since this crisis started and the politicians are trying to do it again.

To any party officer reading this please pay close attention (because I know I'm not the only one): I refuse to even consider voting for your party until I have the detail of your spending cuts / tax raises.

"it is a shock that there has been so little interest in what happens in the months and years after that" SF... well either you read our posts or you don't, we have been talking of little else on your blog for months. The markets won't get us out of this mess, the banks will not help (private held debt is still too big for them even now) We need a national plan. It will not be growth in the market for mobile phones, or for new Tesco stores.
Growth will have to be in high value added services and stuff we can make here that we will no longer be able to afford to import. SF you trail the BBC news team referring to the future. What do you think will come after the swingeing cuts? The vaunted private sector was successful in the asset bubble, what about in the 'age of austerity' where every last GBP of profit will have to be fought for, and investment decisions will have to take on much higher risk? The public sector will not offer the rich pickings for the private sector that it has in the recent past.

I used to think the politicans weren't telling the public the truth for fear of causing a panic and creating further problems.

This seems reasonable....until you consider the real reason behind it.

When the general public finally cotton on to the "greatest robbery of all time" - they will sit back, consider the situation and then.....they will want to know who, how and why this was allowed to happen.

Public racked with anger and revenge will turn on those who betrayed them.

...and that's what the politicians fear most of all. They're not scared of a panicking public, they are concerned that the public might actually ask the fundamental questions that politicians have been ignoring all these years.
Why did you persist with Capitalism when you knew it was unsustainable? Why did you tell us it was going to be alright when you clearly had no control and therefore no authority to say so?

Never mind this particular set of cuts and tax rises- what about every set of cuts and tax rises we've ever experienced

It's no good removing the weed by cutting off it's head - you have to go to the root of the problem - and that root is Capitalism itself and the contraditions inherent within it.

...or you can keep banging your head against a brick wall with endless legislation and regulation to try and alleviate these contradictions.

Put it this way - surely, with the impressive rise of technology over the years replacing manual labour - we should all be working 2 days a week to 'produce enough for personal need' - and yet most working people are slogging themselves 5 - 7 days a week and longer and longer hours for diminishing (real) wages.

If you take the need for food - originally man only had his bare hands - now he has tractors and combine harvesters which can harvest food at an astonishing rate. 1 man can produce enough food for thousands.

Our population isn't growing much - so why are we continually chasing 'growth beyond our means' - if it's not to suppress Capitalist urges through the medium of consumption and ultimately waste.

None of them are going to give us the real figures - they wouldn't dare. So all we can decide on is their intent - at least Clegg (savage cuts) and Osborne (austerity) have broached the subject however unpalatable - unlike Brown who continues to try and deceive - pretending that he his going to spend more on this or that - even if the increase is 0%

Who wants higher taxes, who wants cuts - prepare for both.

Also, what level of growth are these figures based on - surely not Darlings prediction of 4 years at 3.5%??

Gordon Brown, Labour, only seems to talk about ring-fencing and new expenditure (investment). David Cameron (Conservative) seems only to talk about ring-fencing and abandoning proposed NI increase. Nick Clegg seems only to talk about a 17 billion tax cut (!!!) based on specious tax increases.

No wonder the voters are in total ignorance.

Rhetorical question but :

Which is the better investment ?

A 10 year Greek Govt bond at 10% or
A 10 year UK Govt bond at 4%

Some months ago the Daily Mail published pie charts of income and expenditure for 2009 - 10 using Treasury figures. "Social Services" (£219Bn) and "Health" (£119Bn) together accounted for HALF the total expenditure; the third largest was "Education" (£88Bn). Common sense dictates that it will have to be these areas that come under the closest scrutiny for savings, or "cuts", if only because the sizes of those three budgets points to their being best able to reduce costs without fatal damage occurring. For Trident - haters it is worth noting that Defence accounted for just over 5% of the total planned expenditure at £38Bn; it would take about 40 years before the savings obtainable from scrapping a Trident replacement were fully realised.

It may be painful to realise but I can see no way that "Social Services", "Health" and "Education" can avoid being the main source of cuts, or to put it into language GB might recognise "reduced investment".

And not a single banker in jail....the government is the fall guy for the bankers as they skip off to summer resorts spending their most recent bonus.
Step number one would be that the governments reduce the banks in size and let the governments represent the people and not the banks. Reduce any exposure of depositors to bankers get rich quick schemes. Make the personal wealth and property of bankers and their boards subject to atacchment when wrong doing has been proven.
The governments have covered for the bankers from day one, why would one expect a turn of honesty from the political employees of the bankers.
The banks are a cancer on society and will surely kill it if allowed to grow.

"The IFS is sceptical that the Tories will be able to achieve their aim of cutting spending by £4 for every £1 raised in extra tax. In the early 1990s, under the (then) Chancellor Ken Clarke, the ratio was 1:1."

...so basically the Tories propose cutting 4 times more than they have ever acheived in the past? No wonder they continue to hide behind emtpy statements with no figures attached. Admitting to their real intentions would be an instant vote loser, though the sadest thing here is that a large proportion of the general public haven't already figured this out for themselves!

I see the seriousness of the financial situation as a powerful reason why a balanced parliament may well be a preferable outcome.

The alternative - a majority government elected on a minority vote trying to push through a programme of tax rises and spending cuts, mostly hidden from the voters until after the election, with the other two parties powerless in opposition screaming protest at all the bad news, is hardly a recipe for either success or market stability. And if the majority is small (as seems almost certain), they could be held to ransom by small groups of backbenchers with all manner of peculiar axes to grind.

Since the voters won't really have had a say on how the deficit is going to be dealt with during the election, wouldn't it be better for two parties commanding majority support both in terms of votes and in Parliament to thrash out a common programme to tackle possibly the biggest financial crises we've ever faced?

'But, again, the Conservatives would make their case more credible if they showed more clearly where they expect the axe to fall.'

Perhaps Labour would be more credible if they could explain why they caused the deficit that in the first place, Stephanie.

We need to stop giving money to the "EU"-Dictatorship - NOW!!!!!!!!!!!

I am amazed that you are surprised!
Very few people's decision on who to vote for is based on anything other than their immediate self-interest - this is not a criticism. On this basis anyone who works for the state or is dependant on the state for welfare or pensions or any other benefit would be foolish to vote for any party other than Labour. They have proved during Brown's tenure of office to be prepared to spend up to and beyond what is prudent to finance the state sector. This is where nearly all their votes are and they are unlikely to tell their core supporters that they are going to have to suffer some hardship in the future or admit the degree to which they have overspent. Any other party wishing to take votes from Labour is hamstrung by this silence and by their need to pick up votes.
All we will ever hear are the same pathetic promises about helping "hard working British families". Nobody will tell the truth because as a country either we don't want to know what the truth is or we don't believe it when we hear it.
So its back to the X Factor then.

And just to point out the obvious yet again. Who got us into this mess by spending way beyond the country's means for year after year ? Yes, Gordon Brown.

A conspiracy of silence, or just questions without immediate answers.
Seeing the instability in Greece, being unsure what may come out of the G-8, or especially the G-20 in June, politicians may very well think its best to wait it out "in the dark".
Yes, there will be a need to
- cut borrowing drastically,
- possibly raise taxes and
- maybe cut spending.
There will be tough choices, but how much taxation, borrowing, cutting – these are the questions that cannot be answwed RIGHT NOW.
The IFS estimates are only that "estimates" with key factors still unkown.
On what information do the LibDems detail their proposed budget?
On what information does Labour detail its proposed buget?
And the same question applies to the Conservatives.
Having written this, I do see cuts to “borrowing” as key because unless you pay down the debt, the debt may become unsustainable.
Suppose, for example, that a tax levy comes out of the G-20, or even a Tobin Tax, or both. This is revenue not expected. This is revenue that would go into debt reduction and social programs. Something is going to happen at thr G-20, but exactly what? None of the three parties can foresee the type of banking levy that will result, but the EU has already stated that some sort of banking levy is coming and if necessary the EU will go it alone.

In practice the Conservatives would not need to implement such savage cuts as they are surely planning to raise VAT, as they did stealthily after winning the 1992 election, to boost revenue. This hits people on low incomes hardest.
Separately, - have the IFS factored into their calculations the impact of asset sales in reducing the deficit during the next 4 years, including the £35 billion (at least) state shareholding in the banks?
A radical (Tory?) government could additionally embark on a new round of privatizations starting with the Royal Mail and possibly ending with the motorway network (or franchises to operate parts of it as in France).

Thanks for an excellent blog (as usual). Are the opposition parties really to blame for not making all their policies clear if HMG wouldn't hold the spending review before the election? Strikes me that we're being taken for fools (by all of them); it's obvious there's going to be some nasty surprises after the election and it probably doesn't matter too much who gets in. What we really need is a confident, but not arrogant, administration that stops treating the electorate like numpties, stops spinning and caving in to the more excitable sections of the media, and concentrates on running the country (and not trying to micro-manage it). Surely that's got to be based on encouraging diversity of production (i.e. not just the City), not leaving tax loopholes wide open or exploiting the worst off? Could this be achieved with a coalition government, or one elected by PR?

'I pointed out last autumn that the parties were keeping a large area of potential savings under the radar: the welfare bill'

No chance of this being cut under Labour. Welfare junkies form too large a slice of their irreducible core vote.

No, people capable of work who choose to spend all day in bed, in the pub or watching daytime TV having nothing to fear from another 5 years of Labour (or Lib/Lab for that matter).

The banks stole everyones money.....the governments gave the banks your money.....the governments want to cut services and raise taxes to pay for the money they gave the banks. Bankers are at their retreats bought with recent bonus money so the governments are waiting to be told what to say. Pimps and prostitutes....better educated but the same value systems.

Stephanie,

Another excellent article. However, please don't follow the Government's policy of confusing Government borrowing with the deficit.
"All three parties seem to want to cut government borrowing by £71bn over the next few years" should of course say "All three parties, while continuing to increasing Government borrowing by a collosal amount over the next Parliament, seem to want to cut the rate of increase in government borrowing by £71bn over the next few years".

The problem with all governments is that they are very good at turning the money taps on, but have great difficulty turning them back off again. So the private sector gets 'crowded out'.

The main reason why the parties won't spell out exactly what is needed is because they would simply not get elected by doing so. Everybody wants their fluffy pillows, and they want somebody else to pay for them. The lack of rationality amongst the voting public is breathtaking, surpasses only by the lack of honesty amongst those who seek to rule over us.

We even have one party claiming that they won't raise income tax - which is about the fairest tax there is. That point alone should count them out of the running for anybody's vote completely. All parties will have to raise taxes *and* slash spending to get the deficit under control.

And until you have eliminated the deficit completely, and replaced it with a surplus, you will not be able to pay down the debt that has accumulated during Brown's days in power.

So the three main parties are planning to cut spending by roughly £50bn; and to raise tax receipts by roughly £20bn: cutting borrowing by roughly £70 billion.

Borrowing is roughly £163 billion - so when the dust has settled in five or six years time we'll still be borrowing roughly £93 billion a year, no?

Is this really all we need "to make the numbers add up"?

One hour later ....
No-one mention the public sector

I still really believe that still ALL the Parties whatever they might say in this now the run - up period to the pending General Election that they themselves don't have ALL the information and Answers required to say for sure just where over the whole life of the next Parliamentary Term they will be making Cuts.

I have arrived at this position and decision simply because our current Debt levels, and any added further compounded Debt levels will remain a moving target to meet with the Interest owned upon our current Deficit repayments we are currently facing, and the future pending growing Total Deficit Levels figures [ currently unknown ], that we will have to endure and pay back.

This is most proberly why with ALL this lack of Information in Negative Campainging between ALL the Political Parties is looking like it is Check - Mate for them, and Stale - Mate for the Public at Large in trying to understand just what and where these Parties Agendas really add up to in Laymans Terms, while at the same time the Party Leaders are trying to talk limitedly about what in reality adds - up again to be of nothing of great important in REAL substance.

Therefore, any CHANGES will amount to a future Rolling Programme based upon the need of any given moment in the future in Real - Time.
This Off-the-Cuff and Ad-Hoc: approach will effect ALL Departments concerning Government Policy thinking across the board, and will include [ as they arrive ], future as you go unforeseen Events.

Two quotes from your blog stick out like a beacon

'The blame for that lies primarily with the government for refusing to hold a spending review before the election.'

'...any responsible government would face up to it, and seek to reduce it, not use it as something to hide behind'

And he could have added that any responsible electorate would turf Labour out of office for well and good.

And what will happen if we don't cut?

The most important words of the IFS are "the blame for that lies primarily with the government for refusing to hold a spending review before the election."
How can Cons or Lib Labs be specific when they haven't seen the books or there has been no spending review which Darling should have published at last budget.
Labour are trying to cover up the truly catastrophic position the economy is in by (a) lying and (b) not having a spending review weeks before an election. Why would their opponents take flak for revealing too much when Labour who know the figures refuse to be more specific.
When the government broke for their 12 week rest break in August, weren't there 5 departments whos' figures didn't balance, which was anounced on the very last day to avoid an outcry?

IFS - A leading 'Think Tank'

Telling us now that big cuts are needed when dozens of us have been writing about this for up to a year or more?

God help us!

And in all of this ... the fat cats will get fatter, the NHS Administrators will grow, the Quangocracy will survive and grow, the private sector will flourish and the MPs will learn new ways to skin the electorate.

Cleggy won't get the seats he and his party deserve, we'll be screwed by the referendum (IF it happens), the banks will continue to award obscene bonuses to the already failing 'people we have to pay in order to recruit and keep the best', the poor will get poorer, the rich richer and the public will be royally 'done over' yet again.

Of course we'll (many of us, at least) whinge and say 'We need another Lord Protector' but the Lords will still scam us, the MEPs will hide for a while hoping we don't see them claiming their 'expenses' and we'll all carry on being turned upside down and shaken until the last penny falls from our pockets.

Me? Cynical?

Never!

Well they can save £110 Billion right away by cancelling the trident replacement and closing the Scottish Office in London (which ironically is several times larger now than it was when it actually ran Scotland).

It was evident over two years ago that the public sector was going to need major cuts, once the financial crisis hit. Anyone bothering to do a little reflection about Labour's increasing investment in bureaucracy could see that it was becoming unsustainable for the long-term. The financial crisis has merely accelerated the timing of when the axe will fall. Further research will show that some specific areas of the UK which employ more than 50% of their workforce in the public sector may face significantly rising unemployment; although one also has to consider the specific breakdown between central and local government employees and their roles, the picture is nevertheless bleak.
This is why I have not been able to believe in the financial market's recovery; so long as the prospect of major cuts in public sector spending and an associated rise in unemployment will be in front of us, so is the double dip recession. Clearly consumer spending is not strong, economic growth is weak and the reduction in government spending will simply weaken aggregate demand in the economy across many sectors. This includes the private sector companies who have made a business out of servicing outsourced public sector activities. The most probable outcome from these cuts and associated derivative effects will therefore be to see unemployment rise towards 4 million from the current 2.5 million. If this does not take us into a recession, I should be surprised, especially since any future government would be hard pressed to replay the printing press game, unless they want to see sterling sink even lower. Of course, given Bernanke's behaviour, such idiotic policy is not impossible from policy makers.
The main parties are only too well aware of these issues and therefore it is not surprising that they will do their best to avoid talking directly about the costs, both financial and social: at least, until after the election.

33 comments - none of them passed by the moderator in an hour and a half - a conspiracy of silence indeed!!

This is why none of them should become PM. This is why no one has made a case for voting for Cameron or Brown - because no one knows what they are going to do (even they do, which I doubt).

It is like the X Factor would be if all we heard about was how much they want it and that they deserved it and they are doing it for their dead ..... without actually hearing them sing.

OK 2011 to 2015 will need to see the deepest cut in public spending since the '70s. You don't quantify how historically high the hosing around of public money has been in the last 10 years!
It is obviously easier to cut back a bloated and inefficient public sector now than at any time in recent history.

Some things about this election really do beggar belief -

- None of the parties have been challenged about the ridiculous holes in their manifestos because our media prefers to debate who the best public speaker is

- It's just accepted that whoever gets in will be doing pretty well to cut the rate of overspend to £90bn per year when two years ago this would itself have been seen as a crippling deficit

- The current government's assertion that it couldn't possibly take any difficult decisions on the deficit until after the election because it wasn't in the national interest

....Maybe not such a surprise when the idea that someone else will pick up the tab for our 'entitlements' has become so engrained in this country

On the basis that the deficit has to be paid for eventually, I'm going to vote on the assumption that:
- Labour and the Lib-Dems will raise the £160bn by doubling my and everyone else's income tax bill; and
- the Tories will reduce every department's public spending to 2002 levels

Stephanie

Thanks for that. Not too much point in placing store in these projections.

After 13 years of Labour and Gordon Brown's 'Golden Rules' I think most of us have had enough of distorted economic projections. Its a mess. Thats what we know. Thats what many saw happening. Its cyclic really. Another Labour period of office draws to an end and another period of great austerity begins.

I do believe that the Conservatives will win a majority next Thursday. The popular poll which is usually the only fairly accurate one says that the Conservatives have about 32% support which is exactly where they were in 2005. Labour are at 28%, down 7% from 35% and the Liberal Democrats are up from 22% to 29% compared to 2005 gaining a whopping 10% in a week after the debate jumping from 19% to 29%. This means that Labour have lost 7 out of 35 or 20% of their voters to Clegg. Thats one big swing. The young have no interest in Labour and why would they. Would you. They are voting for Clegg and a 3rd debate will change nothing for most of them. The young are not worried by Europe or Immigration but about getting jobs and buying a house one day and living in a world where anyone under 30 has no real chance. They feel it is not fair. They are right. Greedy baby boomers with a house and 4 buy to lets while the next generation are turned into serfs.

Labour has over 220 seats in which Conservatives come 2nd last time around. If things stay as they are this hung parliament consensus may well prove wide of the mark. Last time Labour got 55% of seats with 35% of the vote. This is why the conservatives have switched tactics today and are now attacking 'safe labour' seats and warning of the dangers of a hung parliament. They simply are attempting to consolidate their own share of former labour voters while conceding that they cannot win Liberal voters. Cameron would have done a bit better tonight attacking Clegg directly on immegration. Its the nuclear option that acutally has been scaring the life out of Liberal Democrat strategists because it has the ability to win large number of voters. Only in the 3 way marginal seats is it a problem for Cameron that Clegg has done so well because it is these seats in which the liberals could go from 3rd to 1st easily; powered by the collapsing Labour vote swinging largely to them. For about 150 other Labour seats a 20% swing to Clegg will simply let the Conservatives in.

Paddy Power are offering 13/8 against a conservative victory. I might have a bit of that.

Win or lose my bet i will be raising a glass to Gordon Brown leaving number 10 forever.

A billion is a difficult number to comprehend,

But putting that figure into some perspective

A.
A billion seconds ago it was 1959.

B.
A billion minutes ago Jesus was alive.

C.
A billion hours ago our ancestors were living in the Stone Age.

D.
A billion days ago no-one walked on the earth on two feet.

E.
A billion Pounds ago was only 13 hours and 12 minutes, at the rate our
government is spending it.

I agree. It really is amazing how little information we have been given, though quite understandable given the politics. The IOD/Taxpayers Alliance report issued last autumn will probably become the bible of whichever government takes over after the election - it includes such nuggets as transferring child benefit to family tax credit (saving £12 billion a year), means testing pensioners' free travel and winter fuel allowance and axing final salary pensions for government employees. In addition of course to cutting "waste". Oh well, we will have a better idea in a few weeks' time.

Could you or one of your colleagues actually put some of these things to the politicians in the course of interviews: e.g. do you rule out doing this that or the other if you are elected? I am sure they would find ways around giving you a straight answer, but at least you would have tried.

So , Osbourne says that the bank levy would miraculously pay for everything. So it's basically a stealth tax and not a way of funding a 'bank safety net' then. The hypocrisy is outrageous.

Agreed this election far from being exciting is extremely disappointing not a single politician is addressing public spending. I think only yourself Stephanie and the FT are making any sense. This should be an area the Tories should naturally be happiest with but Dave & George can't address it. Lib Dems supposedly the honest broker are merely moving around the tax take with bizarre increases in the basic tax allowance but cutting tax relief on pensions and attacking bankers bonuses again. Who do they think will be left to pay any tax?? As for Brown, hopeless...

The big spending departments cannot be left alone. The NHS cannot be ring-fenced, there have got to be cuts here and there must be some charging introduced if we're going to sustain the quality of care. I suggest a punitive charge for anyone missing a GPs appointment. The social security budget really needs going over at least Tories and Lib Dems are toying with idea.

Public sector pay has got to be frozen and pensions rights address so they're line with the private sector. The continued mis-match in public and private sector pay & conditions unsustainable. There have to got to be more flexible pay deals in the public sector, so the best staff can be rewarded and the dross kicked out.

Attacking the defence and education budgets is merely window dressing and counter productive. At least with education spending its an investment for the future. Education is one area I would ring-fence.

But unlike Greece, so far we can choose how to get out of the mess

Thank you, Stephanie, for drawing attention to this. The IFS's findings really put the campaign into perspective, with the interminable squabble about the £6bn. measure on employers' NI contributions and the even more puerile debate about when to start reducing the deficit.

There are a few salient points to make.

Firstly, the idea that a reduction of this size could leave the social security budget untouched is pure fantasy. Following on from that, the idea that the single biggest component of that budget, namely basic retirement pension, can be increased at a faster rate than over the last 30 years is not credible, even allowing for the programme to raise women's pension age from 60 to 65.

Secondly, we need some mechanism, akin to that the Canadians set up when in similar difficulties 20 years ago, to determine expenditure priorities in a strategic manner - salami slicing as an answer to this crisis won't generate enough money.

Thirdly, tax increases will need to play a part, over and above those introduced by Labour so far; we need to think which is the best and fairest way to raise the money, and how much needs to come from taxes, compared to spending cuts.

Lastly, and most alarmingly, the percentage of the public involved in this debate is a small part of 1% of the electorate. When the cuts happen, the rage at the political system for not holding a proper debate about this "elephant in the room" at election time may well make the current discontent look insignificant.

The current wave of "solution" talk is mere waffle. The first thing required: HONESTY! Then, an admission of what really caused the banks to dip into the public purse: GREED-they spent all their depositors' money by taking risk. Now, lets regulate and fully protect depositors funds and those who threaten to leave? Well, the door's always open! And of course: NO bonuses for loss makers or public purse plunderers!
Also, when will the media come clean about the real state of affairs?

The 3 parties are in complete denial over the crisis we are facing. In fact, what is worse, this report by the IFS is also deceitful since it merely confronts the accumulating annual deficit (£163bn 2010/11), but does nothing to address the problem of the sitting debt of over £900bn, which, without serious remedial action now, will accumulate to over £1.4trn within 4 years!

Simply put, we need to cut over £163bn NOW just to stop accumulating any more debt, let alone pay off the £900bn+!!!

Yet Messrs' Brown, Cameron and Clegg merely plan to cut between £6bn to £15bn from the annual budget, and all without massive tax hikes and job cuts!

If they truely believe what they are saying then they are utter idiots, otherwise they are taking us for being utter idiots. Perhaps it is that they are scared stiff of the civil unrest that will ensue as and when the seriousness of the crisis is brought home by the money markets forcing their hands?

Make no mistakes we are facing massive public spending cuts and with it collosal job losses, and rising taxes. All this will put us into the depression we should have had.

This is the price of Gordon Brown's utter incompetence as chancellor, when he decided to merely spend, spend, spend, each and every year, without any thought as to how this would be paid for.

The fact is that our economy is the equivalent of a brain-dead patient on life support, propped up by government spending, take it away and the whole thing collapses. Indeed, I would love to know where exactly David Cameron expects all these private sector jobs to come from, given that even in the boom years the majority of jobs were in the public sector.

Of course, add together government debt and all the personal and business debt and we have a crisis running at 450% of GDP!

The chances of this being resolved without the country and its citizens being declared bankrupt is next to non existent.

The naivety of the political elite beggars belief.

It looks like a Greek default then:

FTSE 100 -150.33 -2.61%
Dax -172.59 -2.73%
Cac 40 -152.79 -3.82%
Dow Jones -148.35 -1.32%

https://news.bbc.co.uk/1/hi/business/8647441.stm

Listen to the deathly silence of the optimists....

"S&P warned holders of Greek debt that they only had an "average chance" of between 30% and 50% of getting their money back in the event of a debt restructuring or default."

Uh oh.....

Real question to SF and RP

Is there any chance that you could mention the gist of what the majority of posters on your blogs think about the financial situation of this country on your BBC News slot?

It would be nice to know if you think we are all barmy or not or even just a small recognition would be appreciated.

Had the Government taken all the collateral in the banks a couple of years ago instead of just using quantitive easing, the money could have been taken out of circulation by floating off the banks again once they returned to profit.

This would have meant that the pending high levels of taxation would not be necessary. And the banks concerned were effectively either insolvent or bankrupt.

Currently, we have far too much money in circulation and once the log jam is cleared and the velocity of that money increases we will not only have huge taxes forced upon us but inflation ("too much money chasing too few goods") will be rampant once again.

Quick question about the Stephanomics rather than the parties:

You say the Lib Dems will cut "£12bn per year", but this is "only a quarter of what they need to cut". Are you saying they are committed to cuts of £48bn a YEAR????

Otherwise the £12bn a year would be close to the overall £51bn target wouldn't it? Or is something lost in translation here?

Excellent and seemingly unbiased analysis.

Correct that no one wants to talk about it.

There can be no winners - The Tories will claim it's Labour's legacy if they win. Labour will claim it's the global crises that caused it if they win. Lib Dems will claim it's a result of old politics and blame the banks.

So there will be no winner.

The likely outcome is a hung parliament and a weak minority Labour government, or a coalition between Lib Dem and Tories because they can both blame Labour together!

This campaign is all about politics rather than policy.

Under Labour unemployment remained lower, inflation lower and interest rates all lower than under a Tory recession. A simple fact no one seems to remember, but will soon recall under Cameron, Osborne and Clegg.

Thanks Stephanie for consistently bringing the facts to wider attention.

Lets face facts:

Some of the current deficit is bank related and once we stop bailing out the banks it will naturally fall away. Problem is I think this is a lot less than politicians are hoping.

My best guess is that £100-120bn is needed to be either cut from public spending or raised through extra taxes (or possibly a bit of both).

At least Cable admits that (or he did once), the other two are just burying their heads in the sand, or more probably they know my figures are right but do not want to tell the public.

Before the credit crunch Lab was spending 44% of GDP now it is 52%. In other periods at the peak boom time govt spent c 35% of GDP which rose to around 44% of GDP when a rescession hit. So the best guess is that even before the rescession Labour was over spending by 8-10% of GDP which is roughly £100-140bn.

It is very easy to say raise taxes but who will pay? The middle class are already over taxed, the rich do not pay in any case and increasing taxes on corporates is, as Labour has already shown, counter-productive. That leaves VAT.

And then if you are not sufficiently depressed, as the vastly higher debt servicing costs slowly kick in that will leave either even less for public spending or more taxes.

Of course a period of hyper inflation would get rid of the debt problem!

Ultimately politicians are wimps. Look at the private sector. If someone said that after 5 years cutting costs by 10% (which is all our politicians are suggesting) represented a really tough target that person would get laughed at. Cutting public spending by double what our politicians are suggesting is entirely feasible but it requires some rationale debate on what the state should (and more importantly should not) be doing. Which means it will not happen

Re. writingsonthe wall:

It's not fundamentally capitalism that's to blame for the budget crisis (although it has many flaws), it is irresponsible governments spending more than can be afforded over long periods of time. Not just the current Labour administration, although they are egregious exponents of fiscal irresponsibility. Along with most European governments, we are racking up both current and long-term commitments through the welfare state which are not affordable. This may turn out to be a fatal flaw of the democratic model.

What exactly do we expect from the parties - the decision to have the Fiscal Review after the elections has made it impossible to discuss this issue - the Tories tried with the Age of Austerity speech and saw their ratings drop as a result.

You know that Labour are going attack anyone talking about real cuts as inhuman enemies of the common people whilst lying about their own plans to do exactly the same and it's been that thats scared the other 2 parties off telling the truth.

The real conspiracy of silence on why we are not trying to get our money back.

This is like the current and past keepers of the warehouse allowing it to be emptied and then turn around demanding that the owners replenish the warehouse but determined not to talk about who empty it and how to get back the contents.

There's a saying “A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing."

Carter found that he could not sell austerity and politicians have learned this just look at Greece. That's why all politicians are keeping quiet. It is clear from the problems in Greece that we need to deal with the problem quickly and not let it drag on. The sooner we make credible plans and stick to them the better for us it will be, conversely the longer we take the more it will cost us in the end.

IMHO Labour and the LibDems are parties that fundamentally believe they know best how to spend our money while the Conservatives leave us with a little more. Labour have spent prodigiously in their heartlands to ensure the voteriat completely relies on the state and are therefore unlikely to vote for change - to my mind gerrymandering to an infinite degree more than Shirley Porter (one time Tory Leader of Westminster council was prosecuted for this and had to pay a huge fine). They have also delayed a boundary review; we saw at the last election that they could get fewer votes but many more seats than the Conservatives.

Anyway the issue of financing the deficit will come to the fore when Greece defaults and the cost of borrowing increases. We need to get rid of our annual deficit and start reducing our debt.

Tell a double glazing salesman that you have trouble sleeping and he'll sell you windows for a quiet night, tell a doctor and he'll sell you sleeping pills, tell and shop-keeper and he'll sell you a relaxing CD... so here we are with two wars on the go, 600 unborn babies per day every day getting killed in abortion chambers, genocide in Gaza... and the bean counters down at the IFS tell us : "Repairing the public finances will be the defining policy task of the next government" - horses for courses I suppose.
Though, in reality, it's not actually the biggest show in town, it is worth addressing. But to do it properly you have to understand the basic Equation of Economics : The Sisyphus Equation . This equation (which I just recently invented) essentially states that Net Profit = Fixed Assets + Debt - (I prove it on the site using some basic figures from the National Accounts). Assuming a small steady fixed asset building programme, it's not far off "Profit = Debt" or in long hand "Retained Net Profit of Commercial Companies = Consumer Debt + Government Debt" i.e. Non-Corporate Debt - Hence it's name - the moment the whole Business World of an Economy is doing well and making nice Profits it collapses due to the Debt of the non-Corporate World around it that funded those Profits.
So if the IFS are calling for less Government Debt then they should also either call for more Consumer Debt to replace it, or a massive de-profitisation of Commercial Business. Unless a NEFS system is used this is just basic maths and a mathematical certainty.
"Work hard" they say, "Make Cut backs" they say... "and things will get better". It's like saying to 10 kids "If you run fast you'll find a seat in musical chairs"
- it's not true, no matter how fast the 10 kids run, if there are only 9 chairs one will not find a seat. No matter how well Business produces goods and services someone outside the Business World - Government/Consumers/Foreigners needs to go into more debt to fund this profit as a whole for Business- Unless you use a NEFS system.

Before the crunch the UK economy was kept reasonably buoyant, with moderate inflation, with the assistance of large amounts of credit supplied by financial institutions. It is unlikely that these institutions will restart lending on a similar scale for many years to come, even if they are allowed to do so by a regulator. This means that in terms of managing the economy we are now in an entirely new ball game, and I doubt whether the IFS have fully factored this into their forecasts.

To get unemployment down to the levels we have been accustomed to, it will be necessary to supplement the smaller amount of credit available in some way. The obvious solution would be to keep the unfunded budgetary deficit above the level formerly considered safe for some years to come, probably over the whole of the next parliament.

A possible problem is the exchange rate of sterling, if other currency zones do not follow similar policies to those applied in the UK. The drop in value of the pound since base rates were reduced to nearly zero is already causing some inflation. If this becomes more serious the UK will have to reduce overseas expenditure but avoid reducing domestic expenditure.

Clearly a very serious spending review needs to take place with thorough analysis by the Treasury and all spending departments. This can't be done via political soundbites.

How convenient that such a review was scheduled for 2009/2010. How deeply,deeply shameful that the incumbent labour Govt led by the Brown/Darling axis chose to postpone such a review at a time of national crisis for selfish party reasons. But don't let them deny other parties to do such an assessment sensibly : the Tory time frame of 50 days for the emergency budget seems ambitious but necessary in the circumstances. Let Brown retire to work alongside the Elvis impersonators who share his commitment to avoiding policy questions,while someone serious is allowed to get back to work in the national interest.

"At 4:13pm on 27 Apr 2010, DevilsintheDetail wrote:

Rhetorical question but :
Which is the better investment ?
A 10 year Greek Govt bond at 10% or
A 10 year UK Govt bond at 4%"

Well the market is telling you they want 4% from the Uk but two and a half times more from Greece for the risk of being repaid. In the UK we can print GBP to repay our debts but Greece cannot, it has to earn that money just like any other country that has borrowed in another currency.

Today Standard & Poor's Ratings Services lowered its long and short-term sovereign credit ratings on the Hellenic Republic (Greece) to 'BB+' and 'B', respectively, from 'BBB+' and 'A-2'. "The outlook is negative. At the same time, we assigned a recovery rating of '4' to Greece's debt issues, indicating our expectation of "average" (30%-50%) recovery for debtholders in the event of a debt restructuring or payment default."

Our problems need sorting out PDQ and not allowed to drag on.

It's easy to see why no party wants to be the bringer of bad news - this is like a poker game in action, with no-one showing their hand.
What I think is the most reprehensible is to hear Labour murmuring about the need for cuts while simultaneously not making any NOW, when an early attack on the problem would be more efficacious.

By delaying their own cuts till after the election they are clearly hoping to be voted back by those who think "no cuts now with Labour means no cuts later".

So sad that this is all about getting in power, not about having a country fit enough to use that power in the world marketplace.

Our country is completely over extended, , and the only thing shielding us from a similar melt down to Greece will be an intact credit rating. That credit rating is as meaningful and reflective of our economic strength as the AAA ratings applied to sub prime mortgages, but it will need to be defended rigorously if we aren't to become another default nation. That means we face tax rises and spending cuts way beyond even what Brown is vaguely touting (having seen the books) and the lib dems and tories are currently hazarding a guess at, (not having seen the books).

Change is coming in a euro storm cloud, and I would rather have Clegg and Cable at the wheel than be pummelled with the same mindset from Brown that created this mess. Thats right, Browns govt is not a victim of global recession, he is one of the primary architects of the conditions resulting in recession - and then some.

Let's put the 'need' for cuts debate into perspective.

Trident £97bn
Typhoon Fighters £21bn
War in Afghanistan £4.5bn

Tax evasion £70bn
Tax avoidance £25bn

ID cards £5bn

N.I. on earnings over £844 p.w. £8.5bn
60% top rate of income tax £19bn

The richest 1% get 12.6% of all income
In 1979 it was 4.2% - well done Labour!

The richest 1% own 21% of all wealth.
The poorest 50% own 6%.

There is no need for the ordinary person in the street to pay; the rich must pay!

Of course they won't talk about this just before an election. No one has really addressed this issue for years. Anyone who thought about it has known Gordon Brown's budget deficits were increasingly unsustainable. At the start of the recession the deficit was huge and it was growing for years before that.

It angers me that Gordon Brown, first as Chancellor and then as PM did nothing to address this issue. This was never something that was going to be solved by growth - so far as I am aware the deficit was even growing in the good times. Encouraging everyone to carry on spending money (they didn't have) while increasing this country's debt is one of the biggest crimes of the last few governments - just an idiotic level of irresponsibility. Hadn't anyone in the Labour party heard of saving money for a rainy day?

What really makes me despair is that the other major parties have largely ignored this issue too. I only hope the cuts aren't as bad as in Ireland.

The three lack lusters, that's what they are to me and I'm being asked to vote for one of them, none of whom do I like that much , I'm being asked to vote for a party that has taken us to war twice and I am still seeing the union jack draped coffins regularly going past the end of my road en route to the JR hospital for the inquest/autopsy, and I feel sick to the tomach every time I see it, this is also a goverment that has rewarded the very people that has put this country into the mess it's in, ie the bankers, they are sitting pretty and have not been effected by the reccession as I have as a self employed plasterer for the last 40+ years, I have never known it so bad, I have not had work for months , my wife is supporting us, and we are just about existing,do I vote for them?the labour party whom are supposedly for the working class??? or do I vote for Cameron,Someone once said never trust someone with thin lips as they are usually liars, but then thats one of the neccessary credentials for being a politician isn't it? I am asking myself do I want another 18 years of cut backs and high unemployment and high crime/plus riots like we had under the Thatcher goverment? as for the Libs: well a wasted vote me thinks, so probably better the devil I know is gonna get my vote albeit very reluctantly. I think browny needs to be actually properly voted in then I then maybe we will see some good leadership I hope. gw
PS; Personally I couldn't give a toss about any of them.

Finally here we are! Some sense and realism being spoken! The only way to get the economy back in shape is reduce the public sector borrowing and that means savage cuts to get that £890bn under control. Heavy taxation will stifle the private sector recovery that in fact produces the country's wealth not the public sector as many politicians have us believe. All of the main parties have hedged around the subject saying it will be okay services will be protected. Ken Clarke seems to be a lone voice even within the Conservatives who are not open about what needs to happen! Alastair Darling seems to think it is okay just to make the minimum payments on the credit card debt and keep borrowing! The Liberal Democrats are hiding behind the personality of Nick Clegg and behaving very much as Tony Blair did in 1997 when he duped the public with his clean and marketable persona that many failed to see through. Had the current government wisely used the surplus that they inherited in 97 then this financial fiasco would be more easily controlled. The highest public sector borrowing since the last war in this country is down to lack of control over the public purse. I hate to say it but I think we are winding the clock back to 79 and now have a long tough journey ahead. Also do not forget the enormous level of personal debt out there that has yet to land! I'm not convinced by any of the parties and believe the country is on the precipice of a financial black hole.

If we got out of Europe we would be saving upwards of £120 Billions a year. That would go a long way to solving the money crisis.

DreamOfUtopia 11

'...so basically the Tories propose cutting 4 times more than they have ever acheived in the past?'

They've never HAD to cut this much in the past. The size of the cuts needed now are the direct result of the incompetence of Gordon Brown and New Labour over the last 13 years. Most people are sensible enough to realise this. Of course there's always a clueless and gullible minority of which you form a part, but I doubt it will be big enough this time around to save Gordon Brown's skin.

If they told us, the suicide rate would soar as a result!

Ultimately they are all going to have to do similar things, so you need to decide whether you want VAT increased, but NI left alone, would prefer NI increased, or perhaps you don't want trident and a lower tax for the very lowest paid. Everything else will be much the same.

Or you could decide which chancellor you would feel most comfortable with. Can't help thinking that the tories would be doing better if Cameron had appointed Ken Clarke as shadow chancellor rather than his old school chum George Osborne, who, probably totally unfairly, comes across like Tim Nice-But-Dim from the old Harry Enfield shows.

Otherwise you could just ignore the economy and vote on the social issues, there is at least some clear difference in that area.

As I write there are 16 published comments and 46 (47 if you count this one) comments waiting to be moderated. Has the Beeb already started the savage cuts on the moderating team, or does everyone go home at 4.30 on the assumption that an afternoon-filed blog won't get any comments until tomorrow morning?

Every politician knows that the floating voters of UK plc are going to vote for those who tug their heart strings, NOT their purse strings! A nation weaned on the cult of celebrity and "text-your-vote-now" is going to bring exactly the same attitude to how it votes for the next government. Every people gets the government it deserves. The responsible citizen is now in the minority in this country, which is why Cameron's "Big Society" idea has not taken off. So many years of welfare-statism means that all of us expect to be nannied from cradle to grave.
None of the parties will give us the truth about anything - because not many of the voters want to hear it.
Look at the truth of it; if Thatcher had spelt out exactly what her plans would mean for manufacturing and industry in this country, she would never have been voted in.
The frustrating thing is, all those years of us as a nation taking our horrible medicine and eventually becoming cured from being the sick man of Europe...all that pain, loss and grief have been squandered over the course of the past 13 years.
For a snapshot of the condition in which the last Tory Government left UK plc, have a look on Youtube at Major's resignation speech outside Number Ten. Compare and contrast that with where we now are!

Thank you, Stephanie, a most illuminating, and finally complete, analysis of the mess the UK economy is currently in.

No point in trying to join the Euro, they've already got too many lame ducks to look after.

And don't believe any sightings of green shoots of recovery or a light at the end of the tunnel .... they'll just be knotweed or another train coming the wrong way.

Is it time to place head firmly between knees and kiss your #### goodbye?

Politicians from all three major parties fear the electorate when talking about the economy and the electorate are confused by the technical "speak" about the economy. All involved should talk in plain language enabling voters to better understand the situation we face.
The "national debt" is an "overdraft" and the "fiscal deficit" is an "overspend". The country's overdraft has doubled in three years and the interest payable on it is now approaching one thousand million pounds PER WEEK. This time next year the interest payable on the higher overdraft will be an additional 200 million pounds PER WEEK. If my business had a proportionate overdraft and a proportionate overspend going forward I would be called in by my lender to present a business plan incorporating a cash flow forecast (defined as a manifesto)this cash flow forecast would need to include several scenarios based upon varying degrees of positive/negative developments within the plan.
All parties are guilty of suppressing the likely cuts and/or tax hikes post the election that will be necessary to address the problem but Labour is fundamentally flawed as, having access to the books, they choose not to begin the debate. I hope this matter is forcefully put in the tv debate on Thursday which will have a more widespread audience. The excuse that "there are so many unknowns in the economy we can't forecast the necessary savings" simply won't wash....

"Today Standard & Poor's Ratings Services lowered its long-term local and foreign currency sovereign issuer credit ratings on the Republic of Portugal to 'A-' from 'A+' {two notches}. At the same time the local and foreign currency short-term ratings were lowered to 'A-2' from 'A-1'. The outlook is negative."

Unfortunately the voteriat force us to wait a few days more until after the election. We are going to have deep cuts in spending AND tax increases - there's just no alternative we can't keep borrowing money to spend. Finance is becoming scarce and costs are increasing. Here's my choice for £45billion:
5% cut in public sector pay for a year
2.5% levy on public sector pensions
cut public sector jobs to reduce pay bill by 7%
freeze all benefits and tax credits for a year
means test child benefit
increase withdrawal rate for pension credit
scrap contributory incapacity benefit
cut spending on law courts by 25%
halve spending on roads
cut higher education by 25%
cut spending to Scotland, Wales & N Ireland by 10%

And that's not even really trying, why are we spending billions on foreign aid when we are broke, why are we giving billions to the EU, no new family aid after 9 months, freeze NHS budget.

#23, Neil Wilson,

"The problem with all governments is that they are very good at turning the money taps on, but have great difficulty turning them back off again. So the private sector gets 'crowded out'."


Oh come on! Leaving aside party politics that last comment is really silly. Many private sector firms earn much, if not all, their revenue from the public sector. After that you have to consider what those who work in the public sector do with their wages - you may find they spend them in private sector enterprises.

fundemental change is needed,in general terms the future holds high personal taxation and lower business taxes on ni and business rates.

Most pressing cuts are

Civil service management at whitehall 1 billion a year
Jobcentre plus and means testing for core benefits 16-20 billion a year
NHS cuts in computer projects 2 billion a year
Identity cards real cost unknown say 1 billion
Cut back on immergration 3 billion a year
Re negoiate or withdraw form EU 8-14 billion
Overseas budget cut 1 billion
mod procurement 10 billion over 3 years
5 % cuts in all department budgets 20 billion
Pension cuts in civil service and local government 10 billion

Head count reduction in civil service and directly employed labour in government 20 billion

These things must happen there is no escape as the money has run out!

Just go to the Institute for Fiscal Studies (IFS )website if you are looking for silence? This over-inflated web-site, within the last hour, had nothing to offer in the way of real information?

Am disappointed that our BBC Stephanie Flanders is reporting, referring to, therefore, giving credence to this organisation?????

I vote we go to plan B right after Greece default ;-)

I'm sorry. Are we the only people disappointed with the website of Institute for Fiscal Studies (IFS) all over the BBC today, including the Daily Politics?

Are we the only visitors to the IFS site in the last hour who are extremely disappointed about lack of information about:

1) Who runs the IFS?
2) Who funds the IFS?
3) Who the IFS are responsible too?
4) Access to public accounts of the IFS?

Well, Stephanie Flanders would not refer to the IFT in her blog unless her readers could access or understand the IFS website?

Its simply clear that whoever gets in will need to make cuts that much is a certainty.
As the interest will force them to make cuts now or later, its really as simple and sadly as tough as that.

Think about it if your paying a substatial amount of money in interest payments out of what you earn and you have debts.

Save you have roof repairs(nhs, education, etc to fund)and you'd like to mend/ improve your roof whilst the sun is shining (lol)

You can carry on borrowing to fix the roof and then take the hit and maybe have to cut spending deeper....

...or.... you can cut spending now more harshly now and fund the roof that way.

it really doesn't matter the shopping basket you go to the supermarket with is going to have to be squeezed now or later.

so you have a choice between longer or deeper..cuts

But this is all already know

What i would really like to know is how are they going to generate more income .
Of course to generate more income it means feeding or dripping money into new areas which means the cuts already taking place will have to be even harder or deeper !!! unless it (being the funding) doesn't come from the goverment.
In other words if LARGE COMPANIES were made to fund growth that would probably work.
Ofcourse if this new income can be generated that would alleviate the problem, as there would be more taxes and therefore more revenue etc etc .
Music is another place where sales are made as David rightly says, as is innovation as David and Gordon have said where as Nick seems to be calling for a more wider base than the square mile. So essentially each has some ideas we pray!!

However , this is all quite vauge i mean how they intend to go the extra mile it would be nice if we had some direction on how they intend to fund the recovery to get us out of this mess, will there need to be more cuts.
Banks are reluctant to lend as they may go bust plus they are likely to be regulated more carefully.
Any innovation however, will need to be sponsered .. clearly we need more innovation and risk, sadly at a time of austerity.

Its going to be a very hard task for whoever gets in as they have to match expectations with cuts whilst funnding innovation.

Is it a good idea actually to win this election?

Pity the winner, especially if it's the Liberals. After a century out of power, there's a sniff of a chance of government. And all at a time when who ever wins will become so unpopular for their spending cuts that they'll never win again. Or, at least, not for another century.

Should I vote for someone that I don't like?

28. At 4:40pm on 27 Apr 2010, Davidethics wrote:
And what will happen if we don't cut?

-------------------------------------------------------

The reality of it is that it could end up that it makes very little difference indeed.

Since, ANY Savings are not just a one day process, for while there will be Cuts this means that in the Medium to Long - Term we will have to spend yet more again fixing things.

Look at it this simple way, - for lets say you spot a small hole in the middle of the Street. Now lets say that due to Cut-Backs their is NO Money being allowcated for Minor Repairs, so what happens - well of course this small hole gets larger and larger whereby for safety reasons it must be repaired.

But wait a minute here - this hole because of its previous neglect for a simple minor repair costing back away very little will now cost a small fortune to fix, and so therefore as Public Expenditure will be cut back from Day one, we will need a much larger Bubget to fix things in the end as all these one "Small Things" have now turned into "Large Things" which will stop the movement of Goods and Traffic.

Peter @ 32: "Well they can save £110 Billion right away by cancelling the trident replacement...". Sorry, but that is complete tosh. Please read my posting #9 to see why. If you want to get rid of Trident all well and good, but please don't invent bogus financial arguments in support of your dislike of it. We need savings *now* not in 10, 20, and 30 year's time.

How much greek debt does the UK own........? Anyone?

I heards we owned wads of it, cheers Gordon!

So Standard and Poor have declared the Greek Economy to be at Junk Level.

Now, I wonder what the Termed level for the next level downwards and the one after that and so on will be called, for however much any Country is in Financial Deficit, it is still there for all to see as there is no way it can be removed from the REAL World with any rubbing effects.

Why don't the World agree to cancel ALL Debts between them, and start again, or are we all going to spend the rest of our lives trying to work out who owes what to whom every 5 minutes of every Day,

#54 Simon Turner

"It's not fundamentally capitalism that's to blame for the budget crisis (although it has many flaws), it is irresponsible governments spending more than can be afforded over long periods of time. "

I disagree.

The 'true' productive rate of profit has been in trouble for some time.
It has been the increasing asset prices that has supported profit rates - many of the big multinationals profits were more than half made up from financial assets.
This is what is known as fictitious capital, i.e. not capital put to productive use.

The inevitable collapse in asset prices (the bursting of the bubble) resulted in a dramatic fall in profits, particularly for the banks & other financial institutions.
They have been more than propped up with taxpayers money.
Hence the government money given to bankers is just a continuation of the attempt to support profit rates.
It just transforms the crisis.

They hope that they can make the public pay through spending cuts & higher taxes, but they may well not be able to avoid government default or at least put the economy back into recession.

And remember the tax fall is due to the fictitious capital (speculative bubble) inflating profits & so the tax take.
So, yes in that sense the government is living beyond its means but so is the entire capitalist system.
Capitalism cannot afford social democracy - the Keynesians cannot resolve this crisis.

And the amount of capital that needs to be destroyed to restore a 'true' productive profit rate is probably too great for capitalism to survive.
People's consciousness lags behind the objective conditions, but it will catch-up.
And with no-one being able to resolve the capitalist crisis its end is inevitable.

Capitalism is very much the problem.

Its simple really...No clarity pre election = No mandate post election.

Are we really to believe that none of the parties has a clue what their plans are today, yet a few weeks after the election whoever wins will unveil tens of billions of spending cuts in full detail? Come off it!

The public have been asking for clarity and detail about this for at least 18 months, and have been promised time and again that all would be laid out before the election. The media have to take some of the blame for soft peddling this subject with the politicians, their argument that they just don't know what they are going to do simply is not credible, and yet they get away with it.

We all know the sums of money involved, yet we have no debate and no choice, and in the end whoever wins will have no mandate. Well I'm not going to be a part of it...I will be voting on May 6th but it won't be for one of the three main parties, unless they are honest with me...Why should I?

It does not matter what some parties say before the election because they do the opposite when they get in. In 1979 unemployment was reducing at 4.5% but the Tories got in saying unemployment was too high. Geoffrey Howe increased interest rates to 17% and unemployment increased to 12%. It never came down to the same level that the Tories had inherited while they were in power. I fear that history is repeating itself with the Tories claiming to be the party of employment.

Do the people blaiming Brown only read their local newspapers? From what I have read, other countries are having problems too and they are not blaiming Brown.

Besides that, I have had children going through school and my family have used the NHS under both parties and I can tell you there have been fantastic improvements.

A deeper silence...

At least the British Government can dig itself out of a hole by raising taxes and cutting expenditure - but their hole pales into insignificance when compared to the private debt that will have either to be repaid or defaulted upon before this is over!

We all need to get real and understand the financial imperative that we are being forced to undergo - that is the de-leveraging of private debt!

Th Greeks, Portuguese, Spanish, Italians and Irish have the comfort of the EU around them we have nobody to protect sterling! (25 percent devaluation so far isn't it. This just helps the bankers - but harms the people.)

What is most stupid thing of all is that the political parties are all going about saying that by keeping interest rates low they are helping us all - they are not, and are simply demonstrating their innumeracy - they may be helping the few over-indebted (you know who you are and I will not embarrass you by naming you), but there are far more savers than there are borrowers and both groups have just one vote each - but the political fools think that keeping rates low they helps us all - when it actually harms far more people than it helps...

At last the grisly subject of the out of control public debt has finally surfaced and not before time.
Unless there is a credible plan to tackle the problem all other bets are off but we are being fed a diet of tax cuts and spending tinkering that we all know will have no effect.
The bottom line is that unless we do get down and face reality then the markets will do the job for us.
The sad thing about the reaction of all the main parties to today's IFS reality check was to yet again pretend that the problem is manageable without any pain.

#68. Happy wrote:

"If we got out of Europe we would be saving upwards of £120 Billions a year. That would go a long way to solving the money crisis."

WRONG

54. At 5:36pm on 27 Apr 2010, Simon Turner wrote:

"Re. writingsonthe wall:

It's not fundamentally capitalism that's to blame for the budget crisis (although it has many flaws), it is irresponsible governments spending more than can be afforded over long periods of time."

If only that were true - then it would be simple to stop this by ensuring Governments don't spend.

"Not just the current Labour administration, although they are egregious exponents of fiscal irresponsibility."

....but it's not fiscal iresponsibility, it's continued debt expansion in order to provide the requirements of society which the private sector cannot, or does not want to provide.

"Along with most European governments, we are racking up both current and long-term commitments through the welfare state which are not affordable."

This should be "along with all governments..." - but what is the alternative to provision of the welfare state - leaving our citizens to die in the streets, hungry and homeless? - I have a little more respect for my fellow man.

"This may turn out to be a fatal flaw of the democratic model."

I don't even know if this is a Democracy anymore, it certainly doesn't feel like it, it's more like a dictatorship of the private sector.

I mean if you compare the private sector - provsionally banking - they have adorned themselves with wealth and treasures with surpplus labour value, and now they expect the people to pay for it with their livelihoods. If they refuse they will be turfed out into the street as bankrupts.

Apart from the methods? - what is different to a dictatorship? Even though the vast majority of people want to see harsh punishment for those who have sinned against them - where is it? why hasn't it been done?
Watch the Goldman trial film from today and se the results of Obama's reforms and tell me the only world superpower hasn't been tamed by the banks.

14

The UK exports more value in goods and services each year to the EU, than the entire annual EU budget. The way that the majority of this is spent is controlled by the Member States.

Should we become the 51st State of the US, or lose any say in decision making in the EU?

Of course no politicians are talking about this! They are politicians! They are interested in being elected as politicians! Nothing else!

Don't vote. It only encourages them.

Writingsonthewall

There is no inherent contradiction in capitalism. Marx was wrong. There is an inherent contradiction in the crony capitalism that is being practiced in the west, but this is a product of the left not the right. Instead of poorly performing companies and banks going to the wall they are propped up by special interests, government money and interest rate manipulation. Bad companies going bust is the sign of a healthy economy. Profit is not an inherently bad thing and it is not abusing someone to employ them. When the government interferes and tries to prop up prices it ensures that the bust is bigger somewhere along the line. We are here and it is going to be messy.

Back to the issue of public spending cuts. The reason that the parties are not prepared to talk about where and how much is because

1) We are bankrupt
2) Millions of people rely on public spending for their living - turkeys do not vote for Christmas
3) There is an increasing infantilism amongst people, rendering them unable to take bad news. There is an increasing dependency culture among people as statist politicians constantly add to their "rights" not their responsibilities
4) Statist politicians love the adulation that interested parties gives them for handouts of other peoples money. The more they give the less they are able or want to take back.
5) Statist politicians calling public spending "investment" as opposed to calling the majority of of it what it is - bribing people with their own money
6) The transformation of public spending from being solely for providing essential things that individuals could not pay for themselves, into things that the private sector would not waste money on i.e. ridiculous olympic towers

In short I have no party to vote for so rather than tuning in to 3 puppets, who basically believe the same things, lying to people, I spend my time much more profitably preparing to survive the coming collapse.

Does any one think or believe honestly that people want to be told exactly to the nearest lets say 10 million pound how bad/ tight it is going to have to be, i don't think so not when it is the whole country. People just would not vote for you that sadly is the psychology of the masses, there would be always a special group/ case claimimg to be protected and so on.

Well, Brown addressed a gathering of nurses yesterday and told them they were "Angels in nurses uniforms." True story, he did use those words.

They gave him a standing ovation at the end of his sycophantic mewlings.

How do you suppose he'd have faired in he'd called them a flock of gorged harpies, corrupt, lazy and viciously eating the liver out of the nation?

I venture to suggest he'd not have received a standing ovation.

And what possible blame or penalty can possibly befall Brown or any other party member who likewise avoids the hard truth in favour of sickly sweet fantasy designed to entertain the lurid mass? After all, it isn't their own money they are spending with reckless abandon.

Brown, Clegg and Cameron all have specific jobs to do, and we ought not hold them to a higher standard than they hold themselves. To do so is to completely misunderstand the political system under which the UK people live.

Those worthies are up on stage to amaze and entertain, to thrill and to please the crowd whilst they borrow money from the investment class so that tax revenue can be distributed to that class as interest repayments.

That is their role, and they are doing an admirable job.

Anyway, there is no point talking seriously to a population who have no power to vote on the laws under which they live. What is the aim of that? To make them upset, and angry?

If the people of the UK must have representation because they are not fit to vote on laws themselves, then it seems decent and proper not to torment them with the truth about public finances.

You don't show your beef cattle videos of the slaughter house, not unless you are a sadist.

Regarding your Conspiracy of Silence blog, Gordon Brown won’t tell the truth of our economic plight as to do so would guiltily implicate him in the causes. Nothing is more humiliating and anger inducing than to publicly face a culpability one believes one has succeeded in hiding. Instead our intelligence is insulted with “investment” promises for non wealth creating, money wasting, vote buying initiatives the country can’t afford for many years. He is without the credibility he arrogantly accuses his rivals of lacking.

David Cameron and Nick Clegg won’t tell the whole truth because, like Gordon Brown, they know most of the electorate don’t want to know the truth or probably don’t understand the complexities of GDP, Billions here, Trillions there etc. Like the near bankrupt allowing bills to pile up on the doormat unopened we are afraid to know the truth for fear of something worse – a letter from the bailiff. The electorate are like rabbits caught in the headlights wondering in panic mode which way to jump into the darkness to the softest option that preserves their own situation and preferences.

Politicians and commentators conflate Annual Deficits and National Debt, Gross Domestic Product and Tax Revenue Income to the point where the electorate are bamboozled. The bottom line like any household budget, is surely what is Government total liability and what is the ability out of its Tax Revenues to service that liability?

According to published ONS figures on Annual Deficits, Accumulated National Debt, Current expenditure, Public Service Pensions, Public/Private Finance Initiative, Bank Bailouts, QE and overall interest on liabilities, excluding future capital projects, one can calculate Government liabilities are over 3 Trillion. This is around 5 times its annual tax revenue. In 1997 we had none of these burdens after 18 years of rebuilding the economy following the previous Labour administration economic debacles.

The IFS statement to day seems only to suggest that Annual Deficits and The accumulated National Debt would be solved by 2032 under Tory, Labour and Lib-Dem plans. No indication exists from the IFS or the politicians of how other liabilities are to be paid for, not to mention long term capital plans in defence, transport and infrastructure.

The Government didn’t set out spending plans, not because they were uncertain about the economy in the years ahead. Who is? Surely that’s is what the Government is paid to attempt even if it can’t be 100% accurate. The reason no plans were set out was so Gordon Brown could not be challenged accurately about these details and his 13 years of mismanagement in election year. A final Macavity act if ever there was one.

We need to know out of this Tower of Babel now and without obfuscation, what is necessary to get back to a sound economy and sound money. If Gordon Brown, David Cameron and Nick Clegg are sincere about honesty in politics in future, they must answer this on Thursday. £46.5Bn to £63.7Bn of cuts progressively spread over 5 years doesn’t seem to get anywhere near what is needed.

The ultimate solution has to be to rebalance the economy back towards earning our way in the world instead of borrowing to feed our fecklessness indulgences. That means capital projects, private sector activity and exports that in turn means as soon as some growth allows, tax cuts and breaks to stimulate economic activity. We should demand investment only in activities that will increase national income. Ministers and would-be ones, won’t say any of this because they only have to finagle and inveigle the situation for a few short years to earn a useful index linked pension and some other sinecure.

It is time we stopped allowing ourselves to be appeased by each set of charlatans selling us the bag of sweeties that appeals most to our sectional appetites for the sake of their egos and incomes.

I fear there is some truth in the adage we get the governments we deserve. We don’t trust politicians. But it is also said “they who do not trust cannot themselves be trusted”. Politicians are humans like the rest of us drawn from the same stock. Just maybe we are as responsible for this mess as they are. Cameron is right on one thing, - “ we are in this together ”. They party’s over and the Piper must be paid.

How much would be saved by cancelling the Olympics?