Why the government is lying

WinkyWinkola in this case can you please explain, how the bank's greed got them and the country in this mess, when others are innocent of any wrongdoing? Because I really have trouble understanding it.

It is not "convenient" to blame the banks at all. Rather it is accurate and until regulations are in place, there is nothing to stop it happening again.

Not the banks alone but they are responsible for a very large proportion of the crisis. And it will happen again due to the failure of the last AND this government to ensure regulation particularly as the banks still refuse to accept responsibility in any way.

Individuals too fail to recognise their personal levels of debt as a problem for both themselves and the country. Again, facilitated by retail banking.

The economy is smothered and will not grow under this government. The retail sector is complaining of reduced spend activity and further unemployment in this sector as well as the public sector is imminent.

It's very grim and I do not believe Osbourne has got a clue, frankly.

Sorry, but it is a fallacy that 'banks' alone caused the financial crisis. Irresponsible borrowing and irresponsible lending did. It takes two to tango. On top of this the last Labour government was throwing the good money after the bad on meaningless projects (ie GP contracts) rather than listening to the economists warning about the inevitable crash and a) adjusting the policy accordingly (including banking regulation), b) preparing the financial cushion to break the fall.

It is very convenient to blame the banks, but what about all the individuals and businesses who were cheating and lying on applications to borrow to get this house, car, holidays abroad and all the other 'necessities' of life?

Agree with ttosca and WinkyWinkola, it was not all Labour's fault due to their public expenditure. The crisis was due to the banking crisis and the collapse of Lehmans and the shocks that that caused to the world's financial system.

If you believe it was due to public expenditure, do you also believe that Iceland's and Ireland's collapses were due to public expenditure?

'The IMF calls the collapse of the banks the biggest banking failure in history relative to the size of an economy. In 2007 Iceland?s three main banks made loans equivalent to about nine times the size of the booming economy, up from about 200% of GDP after privatisation in 2003 (see chart 1).'

The Daily Telegraph again gives good analysis.

'Big though the IMF estimate of the size of public sector support for the banks is, it actually understates its true, much bigger scale, for the main prop to the banking system is not through asset protection and recapitalisations, but funding. Markets are still essentially closed to many banks for funding of much more than a few months. The gap is being filled by the Bank of England and the Government, which are providing alternative liquidity. Throw this in, and the grand total of public money is somewhere in the region of £1.3 trillion, or not far off the the UK?s annual GDP.'

The comments for this article also show that most Telegraph readers don't buy the argument that it was due to Labour's public expenditure.

blogs.telegraph.co.uk/finance/jeremywarner/100001204/banking-crisis-has-cost-uk-taxpayers-more-than-a-quarter-of-gdp/

If the overall cost to the public is not so great, if we are going to make a profit from it all, then why are the cuts the worst we have seen since the 1930s? Are they then ideological?

But Labour also had plans for cuts. So it's not true to say they didn't believe in bust.

Here for example.

The commitments include buying £76bn of shares in Royal Bank of Scotland and the Lloyds Banking Group; indemnifying the Bank of England against losses incurred in providing more than £200bn of liquidity support; guaranteeing up to £250bn of wholesale borrowing by banks to strengthen liquidity; providing £40bn of loans and other funding to Bradford & Bingley and the Financial Services Compensation Scheme; and insurance cover of over £280bn for bank assets

£76bn was spent on buying shares but the rest was to guarantee borrowing, offer loans and insurance cover. That's not quite the same thing as 'spending'. The total comes to £850bn but the National Debt over that time it didn't jump up by £850bn.

The banks were almost wholly responsible for the credit crunch, triggering the crisis and the subsequent recession. Few disagree with that. But when the government of the day believes that there is no such thing as 'bust', spends as if recession is a thing of the past and relies on consumer debt and an inflated public sector to generate growth then you have to say that was an accident waiting to happen.

Why do Tories consistently underplay the enormous role the banks have in this global mess? Why? Because it's very convenient politically to blame the previous government for its entirety. Not that the previous government is blameless. No government is.

Precisely. And tribal Tory supporters/New Labour haters are more than happy to jump on the bandwagon. What better way to prop up the current government and bash the opposition?

Cos there's lots painting a different picture

and here

Why do Tories consistently underplay the enormous role the banks have in this global mess? Why? Because it's very convenient politically to blame the previous government for its entirety. Not that the previous government is blameless. No government is.

Oh only £80 billion? Would love to know where you get your figures from Chili.

It was more like £80bn that bailed out the banks in the form of buying shares. Other money was made available to borrow in the form of short term loans.... that is back in the public purse.

Blame the banks? I'd say £850 billion from the public purse to bail out the banks is kind of a large public spend, wouldn't you? Or doesn't that count? Ah, yes, we'll be making returns on that money, won't we? If you believe that.. ... .. .. ...

And we're in debt because we gave a lot of money to the poor? Utterly risible. There'll be a hell of a lot more money being doled out in JSA over the coming year.

White collar crime costs this country £60 billion a year - only a 5% detection rate - but instead, we focus on the few who rip off the benefits system. It's ludicrous. I'm certain the benefits system needs a deep review and an overhaul but not slash and burn.

It's only time that will tell if Osborne has it right or wrong - I mean, how the coalition's policies will be in full effect by 2013 and there's only so long they can keep blaming the previous government after their policies have been fully implemented.

And I guess eminent economists like Joseph Stiglitz are also talking rubbish too unless they concur with policies espoused by people like Osbourne

Paul88 - hi

I lived in a Labour controlled borogh for years ( Lambeth ). I bought my first property ( years ago ) on the Streatham/Wandsworth Borders - unfortunately for me, my house came under Lambeth Council whilst the houses opposite came under Wandworth. I paid around £200 a yr more in council tax than they did, even though we shared the same street and facilities. What shall we blame that on? I'm afraid it's a fact that Labour controlled councils are badly run ( in the main ) and that Tories are known for being more efficient.

& What statistics you quote will depend on where you stand politically - Migrant watch for example claim that Migrants cost the economy 100 million pounds a year ( migrant watch UK, 2006 ) and as the UK opened its Borders to migrants from eight Eastern European countries back in 2004 I'd say they were about right.

But let's just blame the Banks for everything - so much easier.

oh is that what I meant. it all makes perfect sense now.

tempted to tell you to Orff (humour alert - hope people get it)

It isn't funny though. Deliberately taking money from more deprived areas in the midst of a recession caused by rich bankers. Incredibly divisive. If this carries on we will be back to the riots of the Thatcher years.

Or to put it simply - Labour councils are notorious for wasting money and will now have to justify every penny.

You are quite right - Tory councils are not having to make as many cuts as Labour ones.

But it is not because Labour ones want to make a political point, it is because Pickles has very carefully changed the way councils receive central funding. Basically the more tory voters in a county, the more money the council gets.

www.nlgn.org.uk/public/2010/poorest-areas-hit-hardest-by-finance-settlement/

Of all the things this government is doing this is perhaps the most obscene.

Change the formula so that labour councils have to make more cuts than tory ones. So yes Richmond on Thames loses almost nothing while Liverpool, Manchester and Birmingham are hammered.

But Gabby, which councils are closing SureStart? As far as I can see it's mainly councils who oppose the government and are trying to make a political point. I think it's shameful. My own council is (sadly!) Conservative and is not closing a single Sure Start. And, off the top of my head, I can't think of any that are in the Tory areas, so they're not even saving their own bacon.

yes Hari is his own man. Not all the political columnists are. (Is Rupert M still ringing in?)

I think Camerons policies are to a large extent Idiological. (Not many people survive Eton as non Tories)

Is she visit every Sure Start he closes; and talk to the mums. Be brave Dave; and stop hiding from the people whose lives you are ruining.

Yup, I agree Carmina. I'd love to support myself and my family more. Unfortunately it would seem I (and other taxpayers like me) are continually asked to pay more & more in tax to other "less fortunate" or whatever hair brained scheme we've no input into.

I don't mind paying a fair share of tax to support those who are in temporary need or too ill to look after themselves but I see so much wastage and so much tax being paid and so little in return that you have to question if more tax is the answer.

If someone said "Look, if we introduced a tax rate of 50% then every school will be great, NHS will be world class and no child will go to bed hungry." then I'd jump at it. But as it stands, I guess no matter if the tax is raised to 50% or 75%, all we'll see is another cry of "Tax the rich!!!"

(disclaimer: I am not rich in anyway shape or form)

I'm no Tory apologist but I do believe the structural deficit needs to be tackled. The demographics are quite alarming. We cannot afford to simply increase spending on everything year on year and hope it will all be OK. It's certainly about common sense in my book.

I agree with carminaburana, although I wouldn't use the word thicko.

We need to change the way we do things.

Nothing to do with being a Tory apologist - it's about common sense. Although sadly common sense isn't that common anymore.
You have to Stop relying on the state for everything - wake up and start paying your own way. I'm of the opinion that only the very intelligent should go to university - not every thicko in the country who go just to waste a few years & come out with some ridiculous 'degree' that isn't worth the paper it's written on.

Thanks OBA for the link.

Surestart is not a complete waste of money. I'm sure for some families it's been a total lifeline. But it's a good example of something which we must ask ourselves...."Is this something the govt should be providing and is it value for money?"

Given we all managed fine before Surestart and the cupboards are bare, it's hard to justify them. As much as I personally would like to see them stay.

Sure start is mis-directed at the moment, there was a minister due to meet the mummies of Mossley Hill in Liverpool and he didn't turn up so they interviewed the mums protesting, everyone of them white, educated, well spoken and perfectly capable of managing their own lives.

One boden clad woman complained that she needed SS because she had twins, imagine !

The cuts are necessary and well overdue. I pay my council tax to ensure my rubbish is collected and other essential services are provided. Poor children finger painting Nelson Mandela is not essential. Surestart is a complete waste of money. Councils will now have to justify where their money is going, and about time.