The way the Conservatives transformed a crisis of the banks into a crisis of public spending was a stroke of political genius. This year, bankers got away with awarding themselves nearly £14bn

[Tortington]

"The way the Conservatives transformed a crisis of the banks into a crisis of public spending was a stroke of political genius. This year, bankers got away with awarding themselves nearly £14bn of bonuses with barely a word of complaint. Meanwhile, the Tories have carefully constructed the image of a public sector workforce made up of idle, pampered pen-pushers who can easily be disposed of."

Guardian link below

am also liking 't's also classic Tory divide-and-rule politics. Make low-paid call centre and supermarket workers resent nurses and firefighters, and you will destroy any potential unity on issues such as cuts, pensions and rights in the workplace.'

its ok working class people, the rich people still get richer

Can anyone really not see the foolishness of spending more money than we having coming in even during an economic boom?

Clearly not.

I have come late to this thread and haven't read it all but here is my take.

If we are not seen by other countries to manage our debt in a sustainable way, we will literally go bankrupt because other countries (like China and Germany) will not lend to governments who might default on payment. A very rational position and one that you would expect our own govenrnment to take if we were in a position to lend taxpayers money to other countries. Another consequence of not managing the debt responsibly is that the interest that we pay on our debt will raise (as more is risk involved in lending to us) so more future UK tax payers money is spent on interest payments rather than future public services. It is not just the UK that is facing this readjustment but many other Western economies to a greater or lesser degree. If we do not address our problems, the day will come when we literally run out of money and the chaos and anarchy that would follow that is unthinkable. If they weren't in the EU ,Greece would already be in that situation, closely followed by Portugal and Ireland.
Yes it seems unfair that cuts are made and I don't, so yes it can happen. I don't doubt that some of the cuts are idealogically driven by an opportunist government, but we all have played a part in getting to this situation; banks, governments and consumers. What gets me about the likes of ttoscas rantings is that there is just anger at bankers and no real plan to correct the situation. Many, like her, seem to want to cane the banks, which although superficially attractive to most, would kill any economic recovery as banks lending money to business is an essential component of any economic recovery. Taking £170 Billion off them per annum (even if it was possible) would cause our economy to shrink further and exasserbate the situation no end.

I just want to add, before the mud starts to fly, that I am not a Tory, never have voted for them and most likely never will. I am personally affected by many of the austerity measures taken and will be significantly poorer as a result. Like everyone else do not like taking this medicine but I am afraid that it is inevitable (or something else like tax rises which essentially have the same effect).

Just wanted to add that I should have deleted the sentance below before posting;

Yes it seems unfair that cuts are made and I don't, so yes it can happen.

Ah Elburro welcome to the logic club. Unfortunately it seems we are in the minority. It just seems the concept that if you borrow money you have to pay it back is too much for the socialists amongst us to understand.

Thanks niceguy
It would have been good if we could have thrown some money at the recession to smooth its effects (a keynsian approach) but as has been pointed out by others we were actually running a deficit during an economic boom. Without getting into party politics, logically you can really only do that if you know that your economy will grow indefinitely and as none of us can predict the future it is not advisable. And now we are finding out why.

I consider myself a socialist and think that the money should be paid back.

However I do not see the evidence that handing money over to the private sector makings thing more efficient. The public sector is driven by different motives so applying a profit driven business model doesn't make sense.

I wish that governments would go for the most efficient proven approach instead making naive splits along the lines of private v public v third sector. It's too wide ranging and simplistic.

I agree Iggly,
One example that always baffles me is the PFI boom encouraged by both Labour and Tory governments. This is an attractive scheme to government ministers because it keeps capital expenditure off the balance sheet and the voters are happy with shiny new facilities but it is one of the reasons why our structural deficit has got out of hand. It is effectively like buying a hospital (or whatever) on a HP agreement and (as we all know) having to keep paying for it long after the novelty of having it has worn off and at a far higher price than buying it outright.
Governments could have borrowed the money to do this things at a far cheaper rate by issuing bonds and also not put vast amounts of money into the pockets of private individuals.

Iggly, the problem is how do you know which is the most efficient?

You don't really. You can only guess. I would argue that the privatisation of companies like BT, British Gas, British Airways were all great successes.

Water, bus & rail....not so much. Especially the latter.

L O L @ Greece and Italy being "fucked over" by the bond vigilantes.

If that is the extent of your understanding of what is going on you are a great deal thicker and more ideologically blinkered than the guardian reader you like to make yourself feel clever by patronising.

Look at the evidence - what has happened to our bond yields?

Why has this happened? Because investors are giving us a lollipop for our austerity policies? Or because they think the Central Bank won't be in a position to raise interest rates for years?

Custardo. You now have about five threads on here, all talking about the same issues.
1)Do you work for the Guardian?
2) Do you work for the Labour Party?

Please will someone/anyone start up other threads, possibly original?

It feels like a mob of socialist workers have invaded MN!

The papers are beginning to call for Cameron, Osborne and Cleggy to cut their holiday short. I doubt if they will

To do what? Stop the global correction based on the fact people are realising that even the mighty US cannot run a deficit indefinitely and that in fact the new reserve currency should be the Renminbi

Something I can't work out and perhaps someone can enlighten me.

Cuts are be made / slashed in a rather vigorous fashion in the public sector. Some of these are long overdue, many others are frankly insane.

However what no-one talks about are the costs of making these cuts and surely the redundancy costs must be shocking? Or am I simply missing the point here?

i) Custardo - I've never met anyone who begrudges the salary of a nurse, a police officer, a fire officer or any other valuable front line service person. I've met none who believe we need 5-a-day co-ordinators and the like and the enormous masses of pen-pushers in the public sector. In fact, the recent demonstration in london whereby the protestors were encouraged to "dress like a worker" simply displays the irony of the situation. Dress like a "real worker".

ii) Riven. If your council are not employing respite workers then this is something you need to bring up with them, not central government. Local government control their purse strings as they see fit. Many, many Labour councils are currently "hiding" money so they can blame it on the "evil Tories". Pathetic isn't it? Posturing and posing and you need help in your home +/- 8 hrs a day.

Still having just spent the day in a mind numbingly dull training session that I have to pay for to attend and have to concentrate to do, with 50% of the attendees being public sector so paid for, all with an attitude that made my hair stand on end (3 left halfway through because they were 'fed up and going to the pub' perhaps I really am living in an alternative universe!

Made me want to stuff the invoice for the course somewhere deeply dark and demonstrate the £10,000 that was wasted today would have been better spent elsewhere on those who can be bloody bothered.

gymbunnynot, yes cuts are ridiculously self-defeating in the same way that Thatcher's closing the coal mines without putting something in its place has cost our country dearly both financially and in terms of quality of life for many many people.

The cost of sacking people and then re-training them, re-employing them somewhere else, them learning new skills, or the skills that someone else had that was sacked, is going to add to our public spending bills in the long term. Initially it will save a bit, but long-term it is a pointless exercise.

I say raising tax would have been the most fair and the most efficient way to keep the country on an even keel whilst putting cash in the coffers.

Regarding Germany, Germany is surviving because its industries are not all run by shareholders. Shareholders expect quarterly returns and can't handle dips so what you get is short-termist industries that boom and bust. German businesses plan profit over decades rather than months. So whatever Germany did with its banks it didn't matter, because the Germans don't need to be nice to the banks because they don't need to borrow as much. They still have independent, shareholder-free industries and businesses. People shouldn't be upset if they put up interest rates, high interest rates prevent people from borrowing and it's borrowing too much that got us into this quagmire.

The sad thing is that however many brilliant solutions we find now, it's too late. The damage was done when the Tories loosened the banks regulations back in the 90s simply to keep up with the Joneses. The economy was then completely battered when the labour government failed to vote in favour of Gordon Brown's proposals to bring the leeches under control.

I agree with Custardo that a major re-writing of history is underway here.

Instead of vapouring about a plague of pen-pushers and five-a-day co-ordinators and other problems that exist only in their own imaginations, people should look at some data.

Here is a chart from ONS (the one on the right) showing what happened to UK public sector net debt between 1999 and now.

www.statistics.gov.uk/cci/nugget.asp?id=206

First of all, look at what happened between 2003 and 2008. This was the period when, if some posters are to be believed, public spending was careering out of control because of the last Government's profligacy. Net debt went from 30% of GDP to about 36%.

Now look at what happened between 2008 and 2011. Net debt went from 36% to more than 60%.

Do you remember what happened in 2008? Was it:

a) the Government went mad and started spending all of our money on lesbian clog-dancing;
b) the buccaneering, free-market financial system became insolvent and had to be bailed out by taxpayers?

Note that the data underpinning the chart excludes the effect of "financial interventions" (the direct cost of bailing out banks), so the story here is about the much larger indirect effects of the "credit crunch", specifically:

• collapsing tax receipts;
• business failures;
• higher unemployment.

Oh, and printing vast amounts of money through "QE" to avoid a collapse in demand and Great Depression 2.0.

That this is being written up as a result of excessive public spending on services shows how far we are being taken for fools. Goebbels would have been proud.

Part of me wishes we had let the banks and the entire financial system fail in 2008. Then we wouldn't have all this tiresome and ignorant moralising about the state being "the problem".

ironman Fri 05-Aug-11 17:09:56
Custardo. You now have about five threads on here, all talking about the same issues.
1)Do you work for the Guardian?
2) Do you work for the Labour Party?
--------

1. no, i should do - i have no journo qualifications and i can't spell 2)no, neither am i a member of the labour party, in fact at THIS partic time, i feel very deserted by the labour party

Custardo - I've never met anyone who begrudges the salary of a nurse, a police officer, a fire officer or any other valuable front line service person. I've met none who believe we need 5-a-day co-ordinators and the like and the enormous masses of pen-pushers in the public sector. In fact, the recent demonstration in london whereby the protestors were encouraged to "dress like a worker" simply displays the irony of the situation. Dress like a "real worker".
-----
and are the efficiencies that you want being put into place at no detriment to the patient or the 'real' workers?

genuine question, would have to wait for a #real' worker like sallystrawberry to tell me, or EDAM who is ver knowledgable, a bit like the all omnipotent health service guru god and i worship at her brainyness

What do you geniuses think "pen-pushers" do?

How do you think organisations should be run without any administration?

Nice post nepkoztarsasag. Whilst I don't completely agree with what you've said, at least there's some thought, logic and support behind your position. Make's a nice change than "It's all the banks fault"

I'm not convinced there is a rewriting of history. What I think has happened is that the banks triggered the crisis. Yes it has cost us and no-one has said it hasn't. I've always simply maintained that it's not been JUST the banks fault and those who think we were doing fine before are just too simplistic.

Again it's very much like pre-crash bank loans. Everyone was getting them with very little oversight. The more credit cards you had, the better customer you were...here's another. Spent up? Here have a raise on your credit limit.

What's happened now is that lenders have tightened up for governments too. They're no longer just assuming that sovereign nations will not default and taking a risk based approach when setting interest rates for loans.

So now the size of our national debt, the structural deficit and long term growth prospects all play a role when we go to borrow money.

Those who argue that our deficit was small and therefore manageable neatly ignore the fact we've been borrowing "small" amounts practically every year since the war.

Lender's probably wouldn't have been bothered about a spike in our deficit during a deep recession, had the UK been budget neutral or heaven forbid running a surplus during the boom years. But given we were borrowing money during the good times and now even more during the bad then you can forgive lenders for being cautious.

So the austerity is necessary to give lenders confidence that we are taking our situation seriously. If we don't like the idea of austerity then it would have been better not to borrow in the first place. Then we can stick one finger up to the banks/bondholders and do what we like. But if we borrow money (and at the moment we must) then we have to demonstrate we are able to pay it back.

Tory council Alpine.

shecut well in my experience, a team of 7 'cycling coordinators for a hilly town with no bike lanes and 2 friends who are NHS 'management' whose jobs thankfully seem safe as I'd hate for them not to be able to complete their endless training courses... meanwhile nurses are getting cut. So, as in riven's case I'd be blaming poor management covering their own arses. :(

Where is the evidence that lenders are being cautious about UK government debt?

A town with no bike lanes sounds like the kind of