If the mega-rich who caused this crisis paid the same level of tax as you and me, we wouldn't have a deficit.

[TapselteerieO]

U.K Uncut

An interesting article?

Our point is the "banking crisis" whoever and whatever caused it, is chicken feed compared to 1) the national debt 2) the deficit, but serves as a useful distraction from the real mess our country is in. It's marvelous to have a scape goat, isn't it?

Dear old Peter Hain thumped the table on Question Time last week and said 'it's all the fault of the banks!!!'... and got a sarcastic boo from the audience from his trouble. Three years down the track, bank-blaming is really old hat.

Must remember to have more fashionable opinions in future. :)

Tinierclanger - FYI, the truly trend setting lefties (or the Ed's B and M) have moved on from banker blaming, deficit denying and objecting to cuts.

They are now blaming the coalition for the rising cost of living. The 'squeezed middle' being the easiest to rouse into action, it seems.

Isn't it the bankers who decide whether or not a deficit is too big?

Surely the potential collapse of the banks was a symptom of the real economic crisis, not the cause? Economies which were not grossly over-extended coped better, despite their banks also being globalised.

"Isn't it the bankers who decide whether or not a deficit is too big?"

rabbit - if you mean the buyers of our bonds (pension funds and other long term investors) then I think you are right. They more risky the UK economy - the higher the interest rate the bond buyers demand for the new money we need to borrow.

Er, meditrina are you quite sure we are looking at the same graph?

And Chil Are you sure we were watching the same Question Time? I think the most resounding boos of the night were for the Tory lady when she began the 'labour's mess' blah blah line. And I'm no fan of Peter Hain btw

I was looking at the one I linked.

But not reading it?

So, if the bankers hadn't messed up as and when they did, we'd still be floating along happily thinking our deficits were manageable. Therefore it's all the bankers' fault we no longer think so... Unfortunately, it appears to be what people think that creates the "reality." Very tiresome to be buffeted about by the thoughts of men in pinstripe suits who think they are good at maths, but who can't calculate the value of confidence versus fear.

A slightly different perspective... if the banks hadn't messed up, some other aspect of the global economy would have eventually hit a downturn for which we were ill-equipped to withstand because we had 'an end to boom and bust' mentality and were operating a deficit in the deluded belief that the economy would only ever keep growing. The impending oil crisis in the ME, for example, is already knocking on to other areas, increasing oil prices, inflation, global instability and so forth. Sooner or later, growth phases always turn into decline phases. If anyone thought they were good at maths but turned out to be a duffer it was a certain G Brown esquire.

I entirely agree - anyone who genuinely thought there would never be a bust was being a deluded fool. Just as anyone who thought we weren't having an unrealistic boom was being deluded. It's the timing of the fall (or fool...) that's the only issue - everybody always seems to get caught by surprise on that one. And to always be prepared for the worst possible bust just in case is not thought to be that wise, either, in terms of long term economic planning, is it?

ps did Gordon Brown genuinely believe there would never be another bust, when we are so at the mercy of world events out of his personal control, because I'm not convinced?

You can only judge a man by his actions and decisions. He consistently overestimated growth and spent accordingly. I may be wrong but, for the majority of his time, I believe we were in a deficit rather than the surplus or break-even that his 'Golden Rule' strategy would indicate. A left-leaning government is always going to favour spending more on public services and raising taxes.... but when the economic philosophy appears to be 'spend lavishly when the economy is growing and spend more to get out of a recession' then it doesn't take much of an external blip or a drop in tax revenues before things get out of control. The Labour government of the mid/late seventies got caught in a similar trap.

"did Gordon Brown genuinely believe there would never be another bust?"

Paul Mason made a good observation on Newnight a few weeks ago. He held up the last government's 'Guide to Managing the Economy'(mainly authored by Ed Balls) and pointed out that there was no section on what the government should do in the event of a recession.

See for yourself:

I'm sure we can get lots of images of Tories saying they love the NHS, too. Some things you just discount as political rhetoric.

Rabbit - If he said it (repeatedly) and didn't mean it - then that is more than political rhetoric, as it was central to how he managed the economy. I don't think it's in his nature to systematically lie like that.

I think he genuinely believed it. As did many others. The Tory opposition took a long time to speak out about the dangers of recession. And even when they did the press didn't pay much attention.

Its Clegg who say he is trying to stop tax evasion /Avoidance...No real resulats yet, partly because the mega-rich would employ accountants and every off-shore trick in the book to get an unfair deal for themselves.
Plus the fact that the city gave £11m quid to the Tories. ( money talking filthy language, as it tends to)

The Sheffield Liberals should make Clegg keep to his oft-repeated word on this. It matters more than skiing. and arsing about, like an Ant and Dec refugee. cheers "Gabby"

Gordon Brown's biggest mistake, then, was to trust those who were making the money he was taxing to be doing it competently and responsibly. If you can sit back and trust to that happening, it's easier to believe a clever tax and spend policy will work, because you've got something reliable to tax, then.

Or should I say, slightly more reliable.

Gordon Brown saw the wave of the financial sector riding high and rubbed his hands together.
The tax take was £1 in every £4 coming from that sector.

He prided himself on his 'lightness of touch' which attracted more and more banks here.

To be fair to him, I think most chancellors would have done exactly the same.

But over reliance on any one sector is always fraught with problems. What happens when that sector hits a problem?

rabbit - I think it was the Blairite dream of delivering better public services paid for (in part) by the financial service sector. I think they believed that the economy (and even capitalism) could be run to meet the aims of a 'socialist' agenda.

Added to that was the 'financialisation' of welfare - increasing everybody's responsiblity for their pensions and housing, and of course the credit boom!

All fine until the economy crashed!