Very good critical analysis of the current economic crisis we're in

[ttosca]

From Crisis to Slump - James Meadway:

He says the cuts are not ideological. He agrees with Eddie George that we have to have the cuts in case there is another banking crisis around the corner.

No claig. That's wrong. He's saying that the Capitalist class wants to implement cuts in order so that the government will have money to bail out the banks again when the next crisis occurs (and which is expected to occur).

He also says that the problem is systemtic and that another crisis cannot be avoided until changes are made to the system which will prevent the same sort of gambling occurring again.

Yes he swallows teh official line. He believes that Lehman went bankrupt due to the poor people of Atlanta not being able to pay back their sub-prime mortgages. He's probably been reading the Guardian. He believes what Eddie George says that we have to endure cuts or there will be another banking crisis. The Guardian probably quoted that as well. It's the boy who cried wolf syndrome. When is he going to stop believing that, because otherwise we will have to keep enduring cuts and cuts in case the mythical next crash appears. He says it's not ideological and Ed Miliband can't make a difference. If Ed can't make a difference, then who can? Who is going to wave the magic wand and fix teh "systemic" problem? He doesn't understand the real politics behind it. He reads too much of teh Guardian.

Oh my god.

Claig - he's not arguing in support of cuts. He's saying that the public are being told the cuts are necessary because, in reality, little has changed in the finance sector, and another crisis is going to happen and the public will (again) be expected to bail them out.

What he is actually arguing for is a change in the financial system so that another financial crisis cannot occur again: for example, putting back into place the Glass?Steagall_Act which required banks to separate citizen's deposits from casino gambling.

A lot of what he says is right too, and it is interesting. But I think he misses the big picture.

'He's saying that the public are being told the cuts'

Yes but he says that it is true and he says that it is because of the systemic financial system that it is true.

Yes he says we must change the system. We all know that. But he says that Ed won't be able to help. So who is going to change it? Him.

Him?!?!

Are you completely paranoid? Are you insane?

But more importantly, will property prices come down???

[eager beaver future byer emoticon]

buyer. am tipsy. sorry

Yes, you told me I was once before. I haven't changed, I still am.

He is not serious. he says we have to build a movement "on the left" to "break open the machine". If he was serious he would back Ed Miliband and make sure that Ed miliband was on board to change the system. He is accepting the rationale for the cuts, it's not ideological he says, and without cuts it will happen again he says, and he says teh only thing that can be done is to 'break open the machine'. He's whistling in the wind and has got no chance of 'breaking open teh machine' without the support of people like Ed Miliband, and when he wakes up, he will realise that Ed miliband won't join him either.

claig

Yes, you do appear to be completely insane - and incoherent.

He is serious, and that's why he doesn't support Ed Milliband, because Ed Milliband is not going to substantially change the system. The two main parties are essentially neo-liberal parties and do not represent any kind of threat to the system or established order.

He is not accepting the rationale for the cuts, for the 100th time. He is saying that we are being told that we must accept the cuts to pay for the crisis. There is a big difference. If you can't understand the difference, perhaps you should stop commenting.

The only thing which can cause drastic social and economic change is great pressure from below - that is, the public rising up and saying that they have had enough.

Now I am completely insane.
He believes that that is why the cuts are happening. He doesn't understand why they are really happening. He needs to question why, not just accept that Lehman went bankrupt because of the sub-prime mortgage crisis and accept that cuts are being made because of teh next imminent crisis.

So this movement on the left, does it not include the massive Labour party? How will he achieve success without them?

Ttocsa - what makes you think that it is possible to engineer economic crisis out of the system?

I think 'the cuts' and 'the banking crisis' are two separate issues. It keeps getting dumbed-down to the populus that everything would be peachy if only the banks were better managed, paying more back into society or giving up bonuses... but it ain't that simple. The cuts aren't being implemented to pay for the banking crisis, past or future. They are being implemented, together with tax-rises, to balance the national books better and reduce the deficit - the ongoing difference between tax revenues and government spending. They don't eliminate the deficit, not even close. And they don't do anything to reduce the national debt whatsoever.

Reorganising the banks so that they are more stable makes sense. Setting up self-financing funds so that they don't expect bail-outs in future makes sense. However, depositors' money has to be protected. People the world over are campaigning not to have capitalism abolished and all work for the collective.... quite the reverse.

Oh dear....zzzzzz another case of class war! As he says 'the answer is socialism' I thought these old dinosaurs were as dead as the dodo. When I and others see he's from Socialist Worker,we switch off and demand my butler bring me another g&t!

Butler.

Ttocsa - what makes you think that it is possible to engineer economic crisis out of the system?

I don't. Crisis is endemic to Capitalism.

I think 'the cuts' and 'the banking crisis' are two separate issues. It keeps getting dumbed-down to the populus that everything would be peachy if only the banks were better managed, paying more back into society or giving up bonuses... but it ain't that simple. The cuts aren't being implemented to pay for the banking crisis, past or future. They are being implemented, together with tax-rises, to balance the national books better and reduce the deficit - the ongoing difference between tax revenues and government spending. They don't eliminate the deficit, not even close. And they don't do anything to reduce the national debt whatsoever.

Well, you're wrong, because the deficit was at 3% before the financial crisis. It was the financial crisis which caused it to jump to 11% and made interest payments unpayable.

The UK doesn't spend that much on public spending. For example on health, in 2007, it spent (as a percentage of GDP), the same as Malta and Portugal, and less than:

Iceland, France, Norway, Germany, Austria, Palestine, Sweden, Luxembourg, Denmark, Timor, Malawi, and São Tomé and Principe.

www.infoplease.com/ipa/A0934554.html

The financial crisis contributed to a downturn in tax revenues but prior to 2008 the finance sector led the boom both through lending and through tax contributions. We should have been running a fat surplus if Brown had stuck to his promised 'Golden Rule', not a deficit at all

But whatever happened or didn't happen in 2008, the bald truth is that there is a lot less money coming into the system. Tax rises and public spending cuts were on the cards whoever was at the helm. I don't think invoking socialism is the answer. Look at Spain's socialist worker government struggling to appease the people and balance the books at the same time - and failing on both counts.

Crisis are inherent in all economic systems - they are a result of complexity, not a particular set up. Thinking you can eliminate them is the same intellectual arrogance that led to the crisis.

Spending on health as a % of gdp across western Europe only varies by a few % points, which is easily within the range that can be explained by including different things, different accounting, margin of error etc. Comparing health services is really hard as their is a lack of international standards. Maternal death statistics for instance are measured entirely differently in different countries. Poorer countries can easily end up spending higher % of gdp on health, while still spending a lot less than in developed countries.

The deficit went up after the banking crisis, as it exposed the fact that a lot of wealth that people thought they had, and paid tax on, never existed in the first place.

The UK economy was picking up, right until umm... the election in fact. Then it dived and flatlined. If it was a patient, the tories would have killed it.

Cause thats what tories do - wreck things.

And let bankers make bigger profits, cause thats the most important thing in this country, according to those piggies.

The economy was always going to go back down again, tories or no tories.

The debt levels - both public and private - are simply unsustainable. The trick Labour pulled is in convincing the more gullible of the public that the recovery was 'close to being locked in', knowing full well that it would be political suicide for the tories to say 'actually, things are going to get a lot worse before they really get better, no matter who is in charge'.

GDP is a false measure of economic health because it includes borrowing. Of course you can make it go up if you borrow enough money. The trick is getting it to go up while you're borrowing LESS money.

If you take two of the biggest sources of debt growth out of the GDP measure - house price inflation and government borrowing - you can see that the economy has actually been in a recession for the best part of a decade. The bubble has just been pumped bigger with more borrowing, slacker lending criteria, and lower interest rates.

Cause thats what tories do - wreck things.
No that's what Labour does. The Tories are the nasty party as they're the ones who have to pick up the pieces.

Remember the winter of discontent? Britain borrowing money from IMF like some 3rd world country? Labour ran the economy into the ground then Tories had to make harsh choices to fix the economy.

Roll back to the Blair/Brown era. Credit fuelled expansion, benefits handed out like confetti. Public sector expanded by borrowing rather than raising taxes.

Now the Tories have to fix the deficit and if they survive long enough, pay the actual debt back.

Blaming the Tories for wrecking the economy is like blaming your mum for having to make cut backs to repay the debts your dad made shortly before he buggered off.

And once again, it was the financial crisis which caused the recession and surge in deficit, not public spending.

Your narrative is both wrong and dishonest. In fact, the Tories, right up until the financial crisis, claimed that they would match public spending pound for pound.

You are stuck, niceguy, with this false narrative in your head that the UK has or had out of control public spending, and that this spending caused us to be in the financial situation we're in now. It seems you're unwilling to be corrected on this matter, now matter how many times (and it has been done many, many times) the reality of the situation is presented to you.