Newsnight: Ed Miliband argued twice for a VAT rise in Cabinet

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Peter Mandelson has spilled the beans!

Oh deary deary me, Mr Miliband, oh deary deary me.

"Or the one who talks about maybe starting to pay in 4 years time if his economic situation allows and providing it doesn't hurt too much?"

Did Labour say they'd start to pay back in 4 years time? Can you show me some evidence of this, NiceGuy2?

Only I was under the impression they'd already worked out to start paying back. Just not at the cut throat rate the Tories are.

The cuts are completely ideological. You'd have to be a chump if you don't see that. The Tories want to reduce the presence of the State in all sectors - always have done - and all those who have some level of dependence on it can fuck off sink or swim.

"Did Labour say they'd start to pay back in 4 years time? Can you show me some evidence of this.."

In the last Labour budget, Darling proposed paying off the 'structural deficit' by roughly 2017/18. I'm not sure when they would have started.

"it wasn't people on benefits who came within a gnat's crotchet of destroying the world economy"

So, who was it borrowing all the money in the sub-prime sector? The money they had no hope of paying back?

I think reducing the input of the state is generally a good idea. Tax credits for people who earning more than close to minimum wage are a dreadful idea in the long run, because in a capitalist market, people charge what customers can afford. So the nurseries (for example) charge a bit more, because people's maximum spend has been increased by tax credits. So, people are still stretched to the limit AND now dependent on the government, despite earning what should be a decent living wage.

Americans, lucky.

Did Northern Rock lend to many Americans, then?

LFN - I think they actually did via 'asset backed securities'. Northern Rock were a pretty incompetent bank.

As I said, it wasn't people on benefits who brought the economy crashing to its knees. They weren't buying houses. Or creating ridiculous packages of high-risk debt that the financiers didn't understand but were happy to earn millions of pounds trading.

Aren't they all pretty incompetent banks considering?

Winky - not all. For example, Abbey went through a de-risk exercise shortly before the credit crunch. They sold off most of their asset backed securities (and other structed debt).

I guess Abbey realised that they were over-exposed and Northern Rock didn't.

There are similar stories across the banking industry.

"As I said, it wasn't people on benefits who brought the economy crashing to its knees."

Yes, but you said that it was only the wealthy bankers at fault, and I was pointing out that it really wasn't.

I think most people believe that the banks really are at fault for much of the global crisis. Subprime lending etc etc.

I just think that it's a become a great way to absolve everyone else's responsibility with "Oh, we only borrowed all this money beause the banks offered it to us. They MADE us. We had no choice. We needed to buy a big house/take out 37 store cards etc. It wasn't our fault. Nasty nasty bankers."

I think that if people were a bit better at holding their hands up and admitting that while the going was good they were fighting to take advantage of easy credit, 115% mortgages, soaring house prices and had no interest in reading the small print or taking the long view then we might not be in the same mess we are.

Why should subprime lending be more at fault than subprime borrowing? The banks couldn't have lent it if there weren't people there taking advantage of the loan knowing they had no ability to pay it back.

I don't think it's a matter of those nasty banks made people take out loans/mortgages they couldn't pay back at all.

I think it's more a matter of, "Well, if they say I can, then it must be alright."

Which of course isn't alright. And yes, consumers need to be more savvy and wary and take responsibility, absolutely.

But ultimately, the banks knew the risks of lending and, as the suppliers of credit, should have been aware and alert. But they simply passed on the 'bad' credit.

Meanwhile, those who are responsible and do save are rewarded with risible interest rates. Lose lose for the consumer again? And again? And again?

And the banks refusal to extend flexible credit to the private sector is massively choking economic growth. Lose lose for the economy again. And again. And again.

I think the banks are very responsible.

I've been reading Ann Pettifor. She speaks a lot of sense

"The banks couldn't have lent it if there weren't people there taking advantage of the loan knowing they had no ability to pay it back."

The banks shouldn't have lent it. If they were selling products with conditions that couldn't be met i.e. paid back, then that's their look out too, isn't it?

Are they completely absolved of all responsibility? Really? Why? Are they not professional? Because that kind of lending really isn't professional.

I don't think they're absolved of responsibility at all, I totally agree they shouldn't have been lending the money in the first place, I'm not giving them an out at all! I just hate the attitude that the entire mess is solely the fault of the banks, where if people had acted responsibly then they wouldn't have racked up tens of thousands of pounds on credit cards, bought houses they had no way of affording and generally lived beyond their means then there would have been no subprime crash in the first place.

I just think without recognizing that borrowers need to take responsibility for their part in the whole disaster, the same thing will just happen again.

Yes. It will happen again. There is no regulation of the banks.

Consumers often think that if they are being sold a product, it's all above board and ticketty boo. They will believe the banking professionals who work and breathe the industry.

This crisis has definitely shown that individuals need to be far more circumspect about their finances but that the professionals are not to be trusted, are they? After all an individual is responsible for themselves but the banking industry is a WHOLE industry upon which so much rests.

We are saying mostly the same thing.

But look who is suffering more now? Not the banks! Everyone else apart from them and the ultra wealthy.

That's what sucks.

It wasn't as simple as that Winky.

It was local US banks who sold these sub-prime mortgages. These mortgages were then bundled up with other loans, by other financial companies, and sold on to banks such as Northern Rock and RBS.

Initially these were profitable investments. So the UK banks bought more - which meant the US banks had more funds to offer more sub-prime mortgages.......Then interest rates went up and mortgage holders could no longer afford them.

With hindsight - it was an accident waiting to happen. And many banks did avoid getting sucked in.

I think we have to be careful about totally absolving those who took out these mortgages - unless we are prepared to accept that there are some people who are too poor or poorly educated to be given a mortgage.

"Then interest rates went up and mortgage holders could no longer afford them."

This interests me. For want of a better expression. I mean, interest rates are at the lowest ever now. They are going to go up. I think there'll be many many many who will struggle to pay, not just the poorly educated and poor.

"....unless we are prepared to accept that there are some people who are too poor or poorly educated to be given a mortgage."

I don't see why the poorly educated should be condemned to not being able to have a mortgage. I mean, the professionals should be able to supply a mortgage within their means and not seek to be irresponsible and take advantage of that. Unless they are liked used car salesmen of course.

I too think consumers of banks should be far more aware. I mean, for example, if some knew what our monies were invested in, I think they'd be horrified.

Perhaps many more people will become mattress savers. They may as well.

Unless they are like used car salesmen is what I meant to say.

"I mean, interest rates are at the lowest ever now. They are going to go up. I think there'll be many many many who will struggle to pay, not just the poorly educated and poor."

Oh definitely, all hell is going to break loose as soon as the interest rates go up. There are tens of thousands of people (at least) who are only surviving as they're currently paying back a pittance a month. As soon as it comes to refinancing or the interest rates shoot back up, then there are going to be people defaulting all over the place in all income brackets.

And then what?

Is it really the terrifying picture that it appears to be to me?

It feels like the social landscape of Britain is going to be changed forever - into something of desperation and such poverty because of this crisis. Apart from those still get bonuses.

Will we eventually change into a renting culture like many European countries? With regulated landlords of course.

You see, I now believe in regulatory intervention in the private sector more than ever. Because I believe that piss will be taken by the private sector - crass expression but I'm tired! - at every opportunity and we'll be sold up the Swannee.

"I too think consumers of banks should be far more aware. I mean, for example, if some knew what our monies were invested in, I think they'd be horrified. "

That's certainly true of Northern Rock. People thought their savings were safe - not tied up in high risk North American home loans.

What I'm trying to say is it was a system failure. It's hard to pin down a single responsibility. The bankers who sold the mortgages weren't the one who funded them.

Whether US retail banks have learnt how to lend responsibly - I don't know. At the moment, starved of funds - I doubt its so much of a problem.

I think the lawyers and bankers who created the packages of debt and sold on this merry-go-round, imagining that somehow the music would never stop or at least they wouldn't be holding the parcel when it did, are chiefly to blame. Look at Goldman Sachs designing a product that was created to fail and then persuading people to buy it.

The responsibility of any ordinary member of the public, who doesn't do this for a living or have a clue what they are getting into, pales into insignificance compared to the actions of those who deliberately exploited ordinary consumers and bank customers. They hid behind an incredibly complex series of transactions that the man or woman in the street had no chance of unpicking.

Btw, the sub-prime borrowers in the US were lied to as well - if you look back, you'll see people who wanted to borrow £100,000 were persuaded and cajoled to borrow far more, even more than the property was worth, even when the broker knew full well any interest rate changes would make it impossible to pay back. It's mis-selling just as much as happened with personal pensions, endowments, PPI and all the other sodding scandals. Financial services industry has a habit of exploiting its customers.