What did my £32k go on?

[Oswyntail]

From today's Times:-
"Revealing the true picture
It would be harsh to accuse Gordon Brown of Enron-style accounting. Every government for decades has conspired in placing public sector liabilities conveniently off the books. But while Mr Brown was Chancellor and Prime Minister, the concealed numbers ballooned. After 13 years of delay and prevarication, accounts giving a truer picture are at last being published. It’s not pretty. Debts parked off the balance sheet are bigger than those on it. Add them up and the total is £1.92 trillion, or £32,000 per Briton."
Are we really up s**t creek without a paddle? Is this serious cause for concern, or just the way all Governments carry on?

 

[SS4]

I like the way we're meant to take the Times' word for this of course. I accept that due to the paywall we may not be getting the full picture here.
Without clear working it's impossible for us to verify exactly where they got their figures from (presumably that's why it's unpublished!) and without verification we're left in the dark. For example they've not told use what the Tory government did when recession hit in the 90s? The answer being they sold huge chunks of public services - this has put us up the creek without a paddle - look at energy companies for example.

It's very rare for governments to be in the black. The debt Brown established was in huge part due to the worldwide recession

By the way, your £32k has gone to propping up the lifestyles of rich bankers worldwide (the same ones who caused this crash)
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Seriously look at the bit you've put in bold. It is not up to a newspaper to decide absolute truth - it is up to the reader to draw their own conclusions based on full, unbiased evidence. Typical garbage from the press

 

[Oswyntail]

OK - sorry, forgot The Times is tainted by being owned by "Spawn of Satan". Try much the same story in http://www.independent.co.uk/news/uk/politics/warning-over-public-sector-finances-2312912.html
or http://uk.reuters.com/article/2011/07/13/uk-britain-finances-long-term-idUKLNE76C02H20110713

Of course you can argue that previous Conservative governments did much the same thing, but not to the same extent and with the same dogmatism (see G. Brown and the London Underground passim). Yes, there was a recession, but it is naive in the extreme to park the blame mainly on that (or the "bankers"). There was a lack of fiscal probity in government throughout the time when Brown was Chancellor, that cannot be masked by saying we were trying to spend our way out of recession (which was only at the latter end of the period). And why do you think the Treasury was under instructions not to release the overall picture?
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Oh, and I put the bit in bold because it was the headline of a comment piece - I could copy the whole related story if you like - not because I was stressing its veracity.

 

[Ferret]

I like the way we're meant to take the Times' word for this of course. I accept that due to the paywall we may not be getting the full picture here.
Without clear working it's impossible for us to verify exactly where they got their figures from (presumably that's why it's unpublished!) and without verification we're left in the dark. For example they've not told use what the Tory government did when recession hit in the 90s? The answer being they sold huge chunks of public services - this has put us up the creek without a paddle - look at energy companies for example.

It's very rare for governments to be in the black. The debt Brown established was in huge part due to the worldwide recession

By the way, your £32k has gone to propping up the lifestyles of rich bankers worldwide (the same ones who caused this crash)
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Seriously look at the bit you've put in bold. It is not up to a newspaper to decide absolute truth - it is up to the reader to draw their own conclusions based on full, unbiased evidence. Typical garbage from the press

If only we could trust the press to present unbiased evidence! There always seems to be an agenda on the part of the press, and not enough of us cast a critical eye on what we read.

On this though, it's a bit simplistic to blame it all on bankers. I guess it's easy to make a scapegoat, but they were only part of the problem.

 

[Zoe]

On this though, it's a bit simplistic to blame it all on bankers. I guess it's easy to make a scapegoat, but they were only part of the problem.

The government could have regulated the banks but the question is would the Tories have done so had they been in power?

 

[Ferret]

The government could have regulated the banks but the question is would the Tories have done so had they been in power?

No. But then what about our own role in it all? Our own attitude to personal debt was a contributory factor to the recession after all!

 

[strange6]

Labour would like you to think that the bank bail-outs were the reason but they were spending money in the public sector like it was toffee. And what do we have to show for it?

 

[Oswyntail]

The government could have regulated the banks but the question is would the Tories have done so had they been in power?

Sorry, but why is that "the question"? New Labour were in government for a considerable time and appeared to turn a blind eye to the way the city was going. It was their job at the time to govern but they chose not to. Other parties may have chosen different approaches but we cannot know, and cannot tell what the effect would have been.

 

[Zoe]

Sorry, but why is that "the question"? New Labour were in government for a considerable time and appeared to turn a blind eye to the way the city was going. It was their job at the time to govern but they chose not to. Other parties may have chosen different approaches but we cannot know, and cannot tell what the effect would have been.

The point is that it's all very well to blame New Labour for not regulating but if the Tories didn't regulate either then how would the credit crunch have been prevented?

 

[SS4]

Labour would like you to think that the bank bail-outs were the reason but they were spending money in the public sector like it was toffee. And what do we have to show for it?

A top-heavy civil service.

The Coalition are making the ordinary public sector worker pay for the pay of those at the top who get massive bonuses. Labour created the top heavy status but the Coalition haven't stopped it. The public sector workers taking the brunt of the cuts have modest pensions, the pensions the media think that everyone gets are in fact limited to long service and those at the very top.
You'll find that many in the public sector would love to see the buffoons at the very top go.

Q: How much was Andy Coulson on before he resigned?

 

[Zoe]

they were spending money in the public sector like it was toffee.

That's what the Tories would like you to think. Money had to be spent to repair the damage done by 18 years of the Tories.

 

[strange6]

The point is that it's all very well to blame New Labour for not regulating but if the Tories didn't regulate either then how would the credit crunch have been prevented?

Pre-1997, the banks were not lending money like it was confetti to everybody and everything. That only started under Labour's watch and the day G.Brown stood-up in the commons and stated that 'there will be no more boom and bust' was the day it finally dawned on me what an incompetent and dangerous lot they are and will always be.
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That's what the Tories would like you to think. Money had to be spent to repair the damage done by 18 years of the Tories.

Pails into insignificance to the position we now find ourselves in. Especially regarding the welfare state, education and immigration.

 

[Zoe]

Pre-1997, the banks were not lending money like it was confetti to everybody and everything.

Do you really think the banks wouldn't have done the same if the Tories had stayed in power? The credit crunch is a global issue and in the United States was under the watch of George Bush's Republicans.

 

[SS4]

I would be interested to know how much the average person has to pay for their essential privatised services compared to if they had remained in public hands. Of course we'll never know

As for lending money there was little choice, in 1997 the housing market had nothing on the growth afterwards. What could you do? A huge discrepancy in the supply/demand of housing meant people had to borrow beyond their means simply to have a roof over their heads.

Yet nobody mentioned all the money the banks took off Labour under the guarantee that they'd lend more and yet they haven't. That is both the banks' and government's faults.

 

[table38]

The point is that it's all very well to blame New Labour for not regulating but if the Tories didn't regulate either then how would the credit crunch have been prevented?

How could the Tories regulate the banks whilst in opposition?

Also how would you have expected a party in opposition to know the scope of the problem? Consider:

By convention, opposition parties are entitled to enter into confidential discussions with senior civil servants in the run-up to a general election. Such discussions must be sanctioned by the Prime Minister of the day.

and

Gordon Brown is denying to the opposition the information on individual spending items in the government Budget that would help us plan for government, help us plan for dealing with the debt crisis. He has denied us access to that information. That makes our life as an opposition more difficult, but more to the point for the country, it means the country doesn't know the truth about where their money is going.

 

[Zoe]

How could the Tories regulate the banks whilst in opposition?

Also how would you have expected a party in opposition to know the scope of the problem? Consider:



and

I am saying if the Tories had been in power they would likely not have regulated either so how woul dit have been any different? Remember also as I say that the credit crunch is a global issue so would not have been something only the British government would have known about.

 

[SS4]

How could the Tories regulate the banks whilst in opposition?

Also how would you have expected a party in opposition to know the scope of the problem? Consider:

I think it was meant in a hypothetical sense - had the Tories been in power would they have regulated?

Gordon Brown is denying to the opposition the information on individual spending items in the government Budget that would help us plan for government, help us plan for dealing with the debt crisis. He has denied us access to that information. That makes our life as an opposition more difficult, but more to the point for the country, it means the country doesn't know the truth about where their money is going.

I hope you have a neutral source for that.

 

[Zoe]

A huge discrepancy in the supply/demand of housing meant people had to borrow beyond their means simply to have a roof over their heads.

The roots of this go back to Thatcher.

 

[table38]

I hope you have a neutral source for that.

It was Nick Robinson, so unfortunately not neutral

 

[strange6]

The roots of this go back to Thatcher.

It made a lot of money for the common man and woman. The mistake was not building more social housing thereafter with the money gained. And with labour's open door immigration policy now beginning to take its disasterous toll on the country, we're beginning to pay the price for it.

 

[SS4]

The roots of this go back to Thatcher.

I agree, selling off huge chunks of social housing to developers springs to mind which put housing into for-profit companies causing inflationary prices. Excellent if, like the stereotypical Tory, you had enough money to buy a few. Less so if you were too poor to do so but then screwing over the poor for the rich has been Tory policy since it's formation.
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It was Nick Robinson, so unfortunately not neutral

Cheers for that. I was expecting Tory party HQ.

It made a lot of money for the common man and woman. The mistake was not building more social housing thereafter with the money gained. And with labour's open door immigration policy now beginning to take its disasterous toll on the country, we're beginning to pay the price for it.

Now that is something I must agree with.

 

[table38]

The roots of this go back to Thatcher.

And yet, with 13 years to do something about it, construction of new social housing actually fell under the Labour government

 

[Zoe]

And yet, with 13 years to do something about it, construction of new social housing actually fell under the Labour government

As New Labour were basically Tory Lite.

 

[strange6]

As New Labour were basically Tory Lite.

Can't disagree with you there

 

[Oswyntail]

So, to summarise the discussion to date:-
It's all the fault of the Conservatives

• a) because they were in power for a long time before 1997 and
• b) New Labour were really Conservatives, and so felt justified in doing nothing.

Or what about a slightly different view.

• That the economy was in a fairly robust shape when Labour took over in 1997, which is why they adopted the spending plans of the previous administration, and the wheels only really started to fall off when they took spending way over previous estimates but claimed that it was within the previous government's guidelines because they had cooked up the ripping wheeze of keeping it "off balance sheet" (see start of this thread).
• That the "credit crunch" was not a "global phenomenon" but the result a simultaneous implementation of a "get rich quick" scam in two major players (UK and US) that neither government had a brain enough to spot and stamp on (sub-prime lending - don't you just love weasel words), and that, because of the dominant position of the US, had repercussions throughout the world.
• And that the "top heavy" Civil Service has been created by the New labour administration finding positions for their cronies (and giving them reward packages that brought tears to the eyes of proper Civil servants) so as to attempt to control what they (wrongly) thought of as a systemic opposition to their plans.

 

[Metrailway]

Sorry, but why is that "the question"? New Labour were in government for a considerable time and appeared to turn a blind eye to the way the city was going. It was their job at the time to govern but they chose not to. Other parties may have chosen different approaches but we cannot know, and cannot tell what the effect would have been.

Well I'm pretty sure the Tories were calling for less regulation on the banks before the financial crisis occured...

Indy article in '04

 

[table38]

Well I'm pretty sure the Tories were calling for less regulation on the banks before the financial crisis occured...

True, but even the Tories couldn't have dreamed up the mess that we ended up with, with no-one actually knowing who was responsible for what.

Under Gordon Brown’s early stewardship of the Treasury, back in 1997, responsibility for banking regulation was taken from the Bank of England – its brief was reduced to setting interest rates and “maintaining financial stability” – and handed to the financial regulator, the Financial Services Authority.

The result was a three-way power split, making it hard to know who has overall responsibility for UK banking.

When Tory MP Michael Fallon asked who was in charge during the crisis, Bank of England governor Mervyn King replied lamely: “What do you mean by ‘in charge’?”

Callum McCarthy, the head of the FSA, which did nothing to prevent Northern Rock rapidly building its high-risk mortgage business, did eventually pop up on the BBC after the Treasury had intervened, only to dismiss anxious consumers as “irrational”.

Overall, as The Observer concluded, the crisis made “the City’s top policemen look like the Keystone Cops”.

 

[Pumbaa]

• That the "credit crunch" was not a "global phenomenon" but the result a simultaneous implementation of a "get rich quick" scam in two major players (UK and US) that neither government had a brain enough to spot and stamp on (sub-prime lending - don't you just love weasel words), and that, because of the dominant position of the US, had repercussions throughout the world.

Umm yes it was - have you not noticed what has happened to Greece, Portugal, Ireland, Italy, Serbia now also looks in trouble, Ukraine over the last couple of months? All of these issues stem from the 2008 financial crisis.

Japan is also in a very bad shape from it, Australia, mining dependant South American countries as well as Honduras, Germany also suffered but thanks to good structural bolsterings made early on (ie not cutting everything in sight) are now powering back.

It was very much global/IS very much global. To say otherwise is fairly blinkered.
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Sub-prime lending was the factor that happened to be on the surface at the time, it was the pinprick that burst the bubble and easy talk for the (generally speaking) quite thick public. The issues behind it are far more complicated, far more in depth and stem back quite a way.

The single biggest contributor stems back to Thatcher and Reagan in office, and a decision they took regarding what can be used as collateral/what can be valued to allow spending.

 

[Oswyntail]

Umm yes it was - have you not noticed what has happened to Greece, Portugal, Ireland, Italy, Serbia now also looks in trouble, Ukraine over the last couple of months? All of these issues stem from the 2008 financial crisis.

Japan is also in a very bad shape from it, Australia, mining dependant South American countries as well as Honduras, Germany also suffered but thanks to good structural bolsterings made early on (ie not cutting everything in sight) are now powering back.

It was very much global/IS very much global. To say otherwise is fairly blinkered.

To a degree. I think that what you have described is more the result of hasty reactions to the major problem in the US (including that of the US Government), rather than evidence of an unattributable crisis springing up everywhere simultaneously. Too many senior people who should know better seem to take refuge in the "credit crunch is everywhere and we can't help it" line, rather than looking at the individual problems of individual countries.
....

The single biggest contributor stems back to Thatcher and Reagan in office, and a decision they took regarding what can be used as collateral/what can be valued to allow spending.

And here I also agree to an extent. IIRC (and I am VERY hazy) the liberalisation of lending was meant to be accompanied by market responsibility (a basic, albeit mythical, plank of free markets). That was abused, but no one seemed willing to step in to stop that abuse.

 

[Nonsense]

I would be interested to know how much the average person has to pay for their essential privatised services compared to if they had remained in public hands. Of course we'll never know

As for lending money there was little choice, in 1997 the housing market had nothing on the growth afterwards. What could you do? A huge discrepancy in the supply/demand of housing meant people had to borrow beyond their means simply to have a roof over their heads.

Yet nobody mentioned all the money the banks took off Labour under the guarantee that they'd lend more and yet they haven't. That is both the banks' and government's faults.

This is an over simplification. It was the availability of credit, particularly sub-prime like Northern Rock, that pushed prices up as buyers could offer more. There was never a shortage of housing, just a surplus of mortgages. The reverse is true now, prices falling because credit is restricted.

During the housing boom, many forgot that a house is only worth what a buyer can secure a mortgage for. Give everyone a 110% 10 x salary interest only mortgage and the effect on prices is inevitable.