Reactions to the PM's speech?

[CogitoErgoSometimes]

A few button-pushing moments. Plenty of optimism. Nice dig at Labour for booing Tony Blair. I rather enjoyed it. :)

[jackstarb]

Just found this great blog post analysing Cameron's speech and comparing it to Miliband's (more in common than either would like to acknowledge).

www.politicshome.com/uk/article/36870/that_hopey_changey_thing.html

[Disputandum]

Helpful transcription from the Guardian

[CogitoErgoSometimes]

The phrase about debts was a comparison... e.g. debt crisis being tackled by government the way householders pay off credit card bills. The original wording was amended very slightly because it looked more like an instruction than a comparison. Understandable.

It was a rallying call to his own party to 'stick with it' as much as a positioning statement for the rest of us. That's what conference speeches are for. I enjoyed the upbeat tone but, obviously, this being MN.. the DC hate-fest will rumble on regardless. :)

[Iggly]

Bit long.

NHS - well he lies about more and more funding. In real terms, it's falling.

Housing - how can he talk about property owning when it was lending to those who couldn't afford it which caused so much mess? And now he wants to sell even more social homes? Does he know what the average household income is?!

The economy - yes well of course he'll lay the entire blame at Labour's door but we hear Osborne blame everything from the weather to a royal wedding (?!) when growth falters.

Education - those dear free schools which aren't that well thought of in Sweden so why bring them here...

I could go on. I will not.

[Iggly]

And Cogito it's a bit simplistic to make sweeping statements about a DC hate fest. Polls show that DC and his party are just not popular with many women. I wonder why

[starrywillow]

Since the fees will be paid off at no more than £30 a month and only when the students are being paid £21,000 a year, I don't see the problem with the fee policy. Students now start paying their fees off when they earn £15,000 so it's a huge improvement on that.

[Iggly]

Where do those numbers come from starry?

I only ask because I was paying off a percentage of my salary (first year to have student loans), and £30 was not how much it was! Student loans further normalise the debt culture of our society.

[starrywillow]

Sorry, what I meant to say was, it will be 9% of the wage so you start on £30 at £21,000 and it goes up with the wage but is never more than 9%.

[starrywillow]

It's basically a graduate tax and apart from having completely free higher education, I find it the fairest system. It doesn't alienate anyone, it means no one's priced out and it's only taken off you if you're in work, earning over £21,000 which is a fair wage. It's not like having a credit card hanging over you. If you lose your job, you stop paying off the student loan until you get another one and if people want to go to university, I think if anyone has to pay, it should be them rather than come out of a tax on everyone. I understand why people were angry with Nick Clegg for going back on his pledge, but I think what is being implemented is actually a really good policy.

[niceguy2]

I was away yesterday so didn't hear it. I just watched a clip on Youtube.

From what I heard, he didn't tell people to pay their credit cards off, he was explaining about how the only way out of a debt crisis is to pay your debts off.

"The only way out of a debt crisis is to deal with your debts. That's why households are paying down their credit card and store card bills. It means banks getting their books in order. And it means governments ? all over the world ? cutting spending and living within their means."

The ugly truth is that he is right. The only way out of this is to clear our debts. And that takes time. If we dont want to, then perhaps we should have thought about it before taking loans out.

[starrywillow]

The discrepancy seems to be that his original speech could be interpreted as telling people to pay off their credit cards so he altered it before he presented it.

The problem is who is at fault for taking out those loans? Some people were aware that they couldn't pay them off but when credit card companies were willing to supply them, other people assumed they were ok because they didn't know enough about it and trusted it to the financial companies.

And then there is the problem that if we pay off our personal debts too quickly, it will be bad for the economy because we'll stop spending. It's very difficult. I don't envy George Osborne hor David Cameron their jobs right now.

[niceguy2]

Ok fair enough but you can't then go off something he may have said but then later altered. All we can do is go off what he actually said.

But ultimately for me the current crisis is all down to the fact governments all over the world have borrowed too much for too long. They've all focused on the next election rather than the long term prosperity of their nation.

Yes the banks must share some of the blame but just in the same way no-one forces me to take out a personal loan despite all the marketing which comes through my letterbox, noone forces governments to run at a deficit for 30 years plus.

[ElaineReese]

Did he say they are introducing tax breaks for married couples? haven't heard it properly yet.

[starrywillow]

Iain Duncan Smith announced tax breaks for married couples in his speech.

I agree with you niceguy2 that no one forces us but those of us less educated perhaps won't know how to tell the difference between what can be afforded and what can't and if the companies are telling them it's ok, they don't necessarily question it.

[jackstarb]

"And then there is the problem that if we pay off our personal debts too quickly, it will be bad for the economy because we'll stop spending."

This is known as the "Paradox of Thrift". A theory which most of us with a passing knowledge of economics accept.

However it is neatly debunked by Andre Lilico here:

blogs.telegraph.co.uk/finance/andrewlilico/100012380/forget-the-paradox-of-thrift-over-extended-households-indeed-should-pay-off-their-bills/

He's basically saying that people should act in their own best interests when it comes to paying off debt. The over-extended actually do benefit the economy by paying down their debt, if they can (as it frees up loan capital for others and improves the stability of the lender).

Of course, actually being able to pay it off is a different matter.

[starrywillow]

I am assuming though that if David Cameron wants us to pay off our credit cards, he doesn't intend for us to then get another credit card straight after it, but instead adjust to living within our means, so the first point in the article, that the companies would be able to lend us more after we were debt free, wouldn't apply and nor would it free up credit to lend to someone else as the debt would be seen as a negative and no one else would want to borrow.

Thanks for the link. I don't even have a passing knowledge of economics, unfortunately. ;D

[CogitoErgoSometimes]

@ElaineReese... it wasn't really that kind of speech with details etc., more a 'keep calm and carry on' motif. There were one or two announcements like 'we are not going to join the Euro' ... which was less of an announcement and more of a statement of the bleedin' obvious.

The paradox of thrift thing is interesting jackstarb.

[BBL1]

Empty vessels make the most sound.

[jackstarb]

Starry - Lilico points out that not everybody is in debt or living beyond their means. I think he's suggesting that people living within their means, might then be able to take out loans (possibly incentivised by cheaper interest rates) if more 'risky loans' were paid back.

So it's good for the health of the economy to encourage people to keep within sensible levels of debt. Even in times of recession. Which actually makes sense, as a high level of bad debts are not good for the economy.

But, easier said than done.

[starrywillow]

Yes, sorry, I meant to read the rest of the article later and haven't yet, it was just the first point I noticed. I suppose it depends on what we're being told about loans in general. I was always taught they are not desirable. We now have a society which relies on them though. It seemed to me that the government was encouraging the idea that we go back to using them only when necessary but maybe you're right and they are suggesting safe loans are fine.

[janewa]

I thought it was quite a good speech and I agreed with large parts of it. The amount of private debt in the economy is an elephant in the room with everyone obsessing about the budget deficit and national debt (which does need adressing). Britain has the highest levels of household debt in Europe I think and it will eventually catch up with us if its not dealt with. How to deal with it is an interesting question however.

[niceguy2]

@Starrywillow. I understand that the "less educated" may well accept what a company tells them they can afford without too much thought but ignorance has never been a valid defence. The responsibility is ultimately theirs and if they don't understand something, they shouldn't sign up.

My main point really though is that the gist of that part of DC's speech was that we all must live within our means, even governments. It wasn't a "All you poor people should pay your credit cards off"

[edam]

niceguy - so much for the endless mis-selling scandals then? From endowments and pensions to PPI and employment insurance, the personal financial services industry has a nasty, and sustained, business model of ripping people off. Impoverishing customers while creaming off fat profits and commission for the salesmen and companies, of course.

Cameron can fuck right off, oily, lying little creep. Who doesn't exactly advertise the fact that his party is largely funded by the kind of financiers who got us all into this mess in the first place. It's no wonder there hasn't been any reform of the City - he's not going to bite the hand that feeds his party, he's going to pour more and more money into the rotten, thieving banks while the rest of us lose our jobs or see our incomes falling as inflation runs way ahead of wages.

[jackstarb]

Edam - Moody's have just downgraded several UK banks because the UK governments is removing it's implicit support for them.

www.cityam.com/news-and-analysis/exclusive-moody-s-slashes-ratings-uk-banks

"Moody?s has decided to reduce the ratings of 12 UK banks and building societies by up to three notches, to reflect the removal of implicit government support in the event of possible failure."

[starrywillow]

NiceGuy, I do agree with you, we do need to all live within our means, but I do think as Edam says, that mis-selling to people who didn't know better, was a big part of what happened. On the other hand, I don't think this government's position is at all an easy one. The banks, if they are made to pay more, will either leave London or take the money from their customers. They are competing against banks in all countries and the whole thing is global for them, if our government comes down hard on them, they have no incentive to stay here in which case our economy loses out. It's a balancing act and I happen to think, unlike Edam, that the government is doing the best it can.