The Tories are sorting out the wealthy tax-avoidant

[LittleFrieda]

members of our society. Why on earth did Labour fail to act during their long term in office? Eh? Eh?

I can't believe people are complaining about George Osborne doing something about it.

All of these posts, plus many posts across other topics, seem to pre-suppose that the job of the Chancellor of the Exchequer is simply to maximise the amount of money that can be taken from the people to pay for the largess of the government. In other words, get the government to take as much from the people before further taxation becomes counter-productive and revenues fall - the very definition of concepts such as the Laffer curve etc.

What no one seems to be talking about is whether this is the best way forward for our country. Huge public sector spending is what got us into our current mess - whether you think it is because of poor fiscal management on behalf of the last administration, or you believe our predicament is caused by the government issuing a promise to underwrite the debt of our banks, this is all caused by having a powerful state spending huge reams of unearned cash with very little accountability to show for it.

I would rather we had a sensible debate about what we think the government should be spending money on (I'll offer Police, universal free healthcare & free under 18 education as an example), what we think the government currently provides but would make more sense being provided by private entities (Here's where the debate gets interesting but I'll offer privatising the Tote, the operational running of hospitals and schools) and what we think should not be funded at all (Again, I'll offer the usual suspects such as non-jobs, 5-a-day campaigns, public money funding the unions, fake charities and industrial subsidies).

I'm sure we can all have great fun discussing the last paragraph but I don't see the point in endlessly raising tax without having a sensible spending plan in place. This is an austere age where we will all have to learn to cut our coat according to our cloth. This has to include the government and to simply do a ttosca and deny this reality is not going to work anymore.

I think you will find our debt has been caused by the gambling bankers.

Multinationals will not become more accountable so long as their shares are traded on international markets by people who are only interested in the dividends they can get from the shares or the money they can make buying or selling as the markets go up and down. And pretty much anyone saving into a pension is involved in encouraging multinationals to put profit before ethics. We all encourage the system as it is, often without even realising it

There has been some recent campaigning from shareholders. Didn't a group of fancy dress Polar Bears turn up to the annual general meeting of BP in 2000 when they proposed to start drilling in the artic I guess we need more people in fancy dress and suitably savvy to start buying up shares in some sort of ethical consortium. And of course we need to start making sensible choices about where we spend our money too.

In terms of pension funds I can see that this Big Society bank and the introduction of financial products designed to get institutions (inc pension funds) to invest in social enterprise is going to throw up an interesting contradiction.

In years to come we could be saddled with the government having underwritten the debts to share holders, ie tax payers will have to bail it out because otherwise pension funds will collapse, whilst having the dual responsibility to fund a return of care to the state sector when the third sector care home provider has failed.

daffodilly2 The debts were created by some of the activities of some of the banks but it only became everyone else?s problem when the government agreed to underwrite those debts. Had RBS/HBOS been allowed to fail (and as a good capitalist, I believe they should have been) the government would be in a much better position.

minimathsmouse writes "In years to come we could be saddled with the government having underwritten the debts to share holders, i.e. tax payers will have to bail it out because otherwise pension funds will collapse, whilst having the dual responsibility to fund a return of care to the state sector when the third sector care home provider has failed." and is absolutely spot on. This is exactly why commercial decisions need to be taken by commercial entities - i.e. banks. A business plan must either stand or fall by its merits. If the underlying details of the plan are unsound then that business should not be taken any further. If, however, it is a sound plan then why can't commercial providers provide the capital?

This Big Society bank is a disaster waiting to happen.

Sorry - the last sentence of the first paragraph should end with "the government finances would be in a much better position."

daffodilly Yes, gambling banksters caused it, so why should we pay for it?

I think you will find our debt has been caused by the gambling bankers.

DebtBombshell

Not quite true. The bankers certainly caused a mess and added to our debt burden. But we were already creating a very nice pile of debt without their assistance.

All the banking crisis did was bring the whole issue to a head. If it wasn't them then it would have been another trigger, another day.

That's why government's are busy trying to eliminate the "structural" deficit which excludes one off events like the above.

Even without the 'help' of the bankers, we were still borrowing far too much money.

Mr Pants a committed Laissez-faire capitalist finds common ground with a Marxist Socialist. However the right of the markets to dictate life or death is yet to be thrashed out

Mr Pants, it was never one or two isolated banks that caused the problem and could have been allowed, discreetly, to fail. Banks all trade with each other, so they would have pulled each other down and everyone else down with them, as they are now pulling down the countries which took over their debts, and countries are pulling each other down because they also all trade with each other. It's all fantasy, anyway, since central banks can print as much money as they like and banks then lend out or keep this money as they fancy - in this country, we don't have much left in the way of natural resources, nor do we manufacture very much, we just have a good line in playing about with monopoly money, until we decide the Emperor has no clothes, that is.

Rabbit is spot on. Central banks print money and then lend it to governments. Mickey mouse money which is then used to turn the thumb screws on democracy. If the value of a currency continues to be backed by gold (remember we sold ours and fort- nox is empty too) the cycle of debt will continue.

Henry Ford observed ?It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.?

minimathsmouse Let's start a love in whilst it lasts!!! I believe both those on the left and the right have the same intentions at heart but disagree as to the best way to realise those intentions.

rabbitstew Caveat Emptor - It's just a pity that we, the taxpayers, weren't consulted before we were forced to buy.

Milton Friedman had some interesting things to say about fiat money. One thing is certain - our rising inflation rate (both the official government one and the unofficial one ) are heading north because of quantative easing.

I've given up trying to reason with 'niceguy', as he appears too thick to be able to change his opinion in light of contrary evidence.

I won't, however, allow nonsense - pernicious nonsense at that - to go unchallenged:

I think you will find our debt has been caused by the gambling bankers.

Not quite true. The bankers certainly caused a mess and added to our debt burden. But we were already creating a very nice pile of debt without their assistance.

No, we weren't creating a very nice pile of debt. GDP/debt ratio was at a low point in 1992. We weren't accumulating more and more unpayable debt.

Before the crisis struck, in 2008, the deficit - the structural deficit, which is outgoings - incoming tax revenue - shot up from 3% to 11%. That's an 8% rise.

The total public sector net debt (if you include bank bailouts) rose from 44.2% to 151.6% the year after.

www.guardian.co.uk/news/datablog/2010/oct/18/deficit-debt-government-borrowing-data#data

All the banking crisis did was bring the whole issue to a head. If it wasn't them then it would have been another trigger, another day.

No, not really. There is an argument that as the population gets older, public spending will increase, but this would happen over the course of a decade or two. Hardly the same as the financial crisis caused by gambling bankers.

That's why government's are busy trying to eliminate the "structural" deficit which excludes one off events like the above.

No they're not. The coalition govt. is trying to eliminate the 'structural' deficit because they are small state ideologues, and after successfully turning the financial crisis in to a sovereign debt crisis by states bailing out the banks, they are using the now high deficit as an opportunity to cut back on public spending. Useful idiots go around trying to claim that the reason we owe all this money is because of lavish state spending, which is not only a lie, but a pernicious and harmful one at that.

Even without the 'help' of the bankers, we were still borrowing far too much money.

No we wouldn't. We'd be 3% in deficit, which is about or just above the historical average. Had there been no financial crisis, and we had the same economic policies before the crisis, it may have been even less, since unemployment was going down at the time.

ttosca If we keep on spending 3% more than revenue year after year after year we do, eventually, end up with a very big deficit to pay back. The reason we haven't got there yet is because the deficit tends to get balanced out by the inflation rate meaning things don't appear to change so dramatically. What does happen is that every twenty years or so our money halves in value. With an ageing population, a pension?s crisis and an ever increasing number of us trying to see out our days on a fixed income, inflation promises to be a dreadful thing. In any event, it would have been better to pay down our debts in the boom years to allow more leeway when times get tough.

Finally, your 3% statistic only tells part of the truth. What about all the off balance sheet spending - the Enron economics. By this I mean PFI, Network Rail, future pension commitments from a bloating public sector etc. If you think that the total public sector net debt is everything you are sadly mistaken. There are several estimates out there that suggest our true debt figure approaches 4x that declared by the government.

If RBS had been allowed to fail it would have put other banks in jeopardy and the chaos would cause several businesses to fail causing unrest and unemployment costing the govt. more.

What Mr Capitialist do we do about the gap widening between wealthy and poor? Most people have not got the stomach for gated communities and rioters looking for rich man's bling.

We need a middle ground

I thought we were paying off our debts as we went along, MrPants? Otherwise we would have defaulted on our loans. So, if you don't like a debt level of 3% of revenue, surely that's because you want to work on the assumption that our revenue stream is too high, getting uncontrollably higher and is unsustainable, not because the percentage of our debt to our revenue has changed in any significant way in the last 100 years?

(That probably makes limited sense, because I'm supposed to be listening to my ds1 play the piano!...)

It's funny Ttosca. You say you give up with me then insult me then spend the next 10 minutes trying to argue your point. Again using half truths.

You take one snapshot in time to prove your point. Oh look we are only borrowing 3% just before the banking crisis. Let's conveniently ignore the graph which shows in the last 30 years we've only managed to balance our books twice.

And MrPants....just to be clear, before Ttosca starts to insult you as well that you do not understand between deficit and debt. If we borrow year on year on year, we end up with a big DEBT to pay back.

I suppose then Ttosca that the US efforts to reduce their deficit are also "small state ideologies"? What about Greece, Portugal, Ireland, Spain, Latvia, Italy and pretty much all EU countries who are implementing austerity measures. Are they also engaged in small state ideologies?

If you are correct then it would seem every major country in the EU and even USA are wrong to implement austerity. On the other hand you could be wrong.

I know which my money is on.

Oh and just to add. Part of why we're implementing these austerity measures is because of the predicted growth in the deficit. Left unchecked the deficit was going to mean interest repayments at an unsustainable level.

Now I don't know about you. But if I'm heading down a road and you see a big car crash ahead, it's usually better to take action early rather than crash straight into the messy pile and say "It's not my fault there's a big crash in the road. Anyway, all my friends are also in this pile up so it must be ok."

daffodilly2 The shock would probably have been harder if more banks had failed but it would have long been over by the time my daughter gets to my age- she's 15 months old. As things stand, she'll still be having tax forfeited to throw into the black hole to bail out some banks that got into trouble before she was even born when she is well into her twenties. I don't think that is very fair, do you?

rabbitstew I'm not sure I follow. Governments add to our national debt most years. Because over time and on average GDP expands whilst inflation whittles away at the value of that debt, we don't always need to balance the books to keep the numbers manageable. However, if we have a particularly financially hopeless government in power, the debt can pile up quite quickly - debt doubled in the years between 1997 and 2007 (boom years please note) for example.

In short though, if our country is in a hole caused by borrowing too much money, there comes a time when common sense has to prevail and we MUST 1) stop borrowing even more money and 2) think about paying back what we already owe. Long term, there isn't much of an alternative I'm afraid.

What about Greece, Portugal, Ireland, Spain, Latvia, Italy and pretty much all EU countries who are implementing austerity measures. Are they also engaged in small state ideologies

The pigs are not small state idealogues, (torries are though) The austerity is being imposed by the central banks the same people that have licence to print and lend money.

niceguy2 "And MrPants....just to be clear, before Ttosca starts to insult you as well that you do not understand between deficit and debt. If we borrow year on year on year, we end up with a big DEBT to pay back."

You are quite right, I confused the two terms. I do know the difference really - scouts honour! Chalk it up as a brainfart!

juliascur - actually why indeed are we paying for bankers. I think it is not a gross generalisation to say that most bankers are hard core Tories and the country had voted for the moderate left - they ( your bankers) pride themselves on aggression and empire building.why did we, who didn't want these type of people wheeling and dealing with our stocks have to pay for their sport?

Because we live in a democracy which swings slightly left and slightly right - if we had allowed collapse we would have created mayhem and the likes of Hitler taking hold - history has taught us this - chaos causes extremism and by managing a crisis we avert revolution which is usually violent in one form or another - look at poor Greece.
Mr Pants your daughter's world would be dire if we had a massive stock market crash - quality of life would be ruined for many - look at Greece! That is not to say that managed failure is not an option but it needs to not cause a shock - finance is built on confidence.

So, to clarify. Each year, this country owes more money to banks and other countries than it earns from any source, including from interest on any loans it has handed out? And thus it has to increase its debt solely to fund interest payments? Or is it not that simplistic? What sort of deficit is it that we run every year?

daffodilly2 "Mr Pants your daughter's world would be dire if we had a massive stock market crash - quality of life would be ruined for many - look at Greece! That is not to say that managed failure is not an option but it needs to not cause a shock - finance is built on confidence."

I'm sorry but I think you are putting the cart before the horse here. Yes, I agree that a stock market crash would cause hardship but that hardship would be limited only to the stock holders, not all of us whether we own stock or otherwise. This leads us back to my earlier point, Caveat Emptor - Buyer Beware. The value of stock can go up or down - it's in the small print.

You ask me to look at Greece - why? The problems in Greece don't stem from a stock market crash or even a banking crisis. Quite simply, Greece is a country where government spending has outstripped taxation (sound familiar?) for donkey's years. Unless we narrow the deficit in this country, we will get there ourselves soon enough.

Finally you say finance is built on confidence. To a point, you are correct but it must be acknowledged that underwriting that confidence are the British taxpayers of present and future generations. Our future prosperity is being pawned in the hopes that the banks don't massively fuck everything up again. We are all essentially insuring the banking industry against future catastrophes - what's more, we do it for free and we do it without any expectations of reward. I think that sucks the big one.

That, incidentally, is one big reason why I'm against big government.