Cameron: "Cuts will change our way of life"

[lifetime fan]

It's quite simple.

 

- Global market conditions are out of our hands.

- The UK's response to those market conditions is the responsibility of the UK government.

 

It's like if you have lions in the zoo. The zookeepers can't do anything about lions being vicious predatory carnivores, because that's the nature of the beast, but they are responsible for building cages that are strong enough to hold the lions.

 

If the lions get out of their enclosure and eat all the visitors, nobody blames the lions, because that's what lions do; they would (rightly) blame the zookeepers who didn't adequately protect people from being eaten.

 

That is a piss poor effort Stronts.

[Strontium]

That is bollocks and you know it!

 

Labour caused the recession through the economic policies of the Labour government and the global economic downturn was ignored, now the economic policies of the coalition government will be ignored because of the economic global downturn.

 

 

Not remotely, if the coalition government response is inadequate, then they too should come in for criticism.

 

Lets see what the Lib Dems do about this!

 

Osborne plans to cut 50p income tax rate - UK Politics, UK - The Independent

 

 

It says in the article what we intend to do:

 

Senior Liberal Democrats say they would not necessarily oppose the cut – provided any income tax cuts for the richest are offset by other measures that target them.

[Whelan]

Not remotely, if the coalition government response is inadequate, then they too should come in for criticism.:

 

 

Well Labour's repsonse was backed by yourselves, and led to economic growth in the next four quarters, since then!

 

Economic growth has fallen off a cliff, VAT has been raised for everyone, yet in the midst of an econonomic downturn we are talking about tax cuts!

 

The suggestion by itself is abhorrent.

 

It says in the article what we intend to do:

 

I know what is says you would do, I asked what you will do! You have form in this regard.

[Strontium]

That is a piss poor effort Stronts.

 

 

What's poor about it?

 

Brown was warned by Cable in 2003 that growth in the UK economy was underpinned by a housing bubble. Brown had plenty of time to reinforce the lion enclosure, but instead he accused Vince of being a scaremongerer. The result was that we were very badly prepared for the inevitable bursting of the bubble. Not a single element of this is in dispute.

[Major Tom]

I really can't abide Tories.

 

Their ethos is just so, so fundamentally wrong. Makes me weep. Tears of salty water.

[Major Tom]

What's poor about it?

 

Brown was warned by Cable in 2003 that growth in the UK economy was underpinned by a housing bubble. Brown had plenty of time to reinforce the lion enclosure, but instead he accused Vince of being a scaremongerer. The result was that we were very badly prepared for the inevitable bursting of the bubble. Not a single element of this is in dispute.

 

Not as simple as that unfortunately, SD.

 

If only we could breathe life into the housing market and that in turn would resurrect the stagnating economy. If only it were that simple.

[Guest Numero Veinticinco]

What's poor about it?

 

Brown was warned by Cable in 2003 that growth in the UK economy was underpinned by a housing bubble. Brown had plenty of time to reinforce the lion enclosure, but instead he accused Vince of being a scaremongerer. The result was that we were very badly prepared for the inevitable bursting of the bubble. Not a single element of this is in dispute.

 

You crack me up. Time and again you neglect to mention very important parts of the puzzle. Not because you don't know them, I'd wager, but because you know they make your position look more ridiculous.

 

Still, is there any point arguing economics with somebody who denies there was even a global financial crisis. I don't think so.

[L19red]

Not remotely, if the coalition government response is inadequate, then they too should come in for criticism.

 

 

hmmm the wider point for me is that the position being taken by Vince Cable on today's news, that this is a global problem and therefore caused by factors largely beyond the control of the UK government, is exactly the same as that taken by Labour for the period from the start of the credit crunch to the end of their period in office. A position the coalition had frequently condemned prior to the election.

[Strontium]

You crack me up. Time and again you neglect to mention very important parts of the puzzle. Not because you don't know them, I'd wager, but because you know they make your position look more ridiculous.

 

 

Go on, tell me what I'm neglecting to mention.

 

Still, is there any point arguing economics with somebody who denies there was even a global financial crisis. I don't think so.

 

 

Lots of countries escaped relatively unscathed from the crisis, because they hadn't built their economies on the dodgy foundations of over-inflated house prices. That's just a fact, and you can accept it or not.

[Major Tom]

 

Lots of countries escaped relatively unscathed from the crisis, because they hadn't built their economies on the dodgy foundations of over-inflated house prices. That's just a fact, and you can accept it or not.

 

Go on.. to what countries do you refer?

[Stu Monty]

It's quite simple.

 

- Global market conditions are out of our hands.

- The UK's response to those market conditions is the responsibility of the UK government.

 

It's like if you have lions in the zoo. The zookeepers can't do anything about lions being vicious predatory carnivores, because that's the nature of the beast, but they are responsible for building cages that are strong enough to hold the lions.

 

If the lions get out of their enclosure and eat all the visitors, nobody blames the lions, because that's what lions do; they would (rightly) blame the zookeepers who didn't adequately protect people from being eaten.

 

Haha!

 

Remind me, how many zoos are there where the Lions have the power to destroy the zookeepers, so the zookeepers have to ask whether it would be okay if they gave the impression to the public that the cages were locked at night? Obviously they wouldn't have the gall to actually lock them, but could they, pretty please, make it look like they were going to? How many lions sit in on the zookeeping meetings and decide zoo policy? The US had a novel idea, after the lions had eaten loads of people, they put little zookeeper outfits on them and let them run the treasury; because they were clearly very clever lions. The driving force behind getting Obama the head zookeeper job in the US was actually a superlion that trained other lions in being killing machines, so that was handy.

 

As we speak, the lions are downgrading zookeepers all over the continent and threatening them with the removal of their AAA status; all the while gambling on the collapse of companies, industries, and national currencies. If you have an issue with the lions' behaviour, they will threaten you that they will up sticks and leave your zoo a barren, bankrupt wasteland, because other zoos not only leave the cages open but actively feed them members of the public.

 

A laughably naive portrayal of the situation. You might as well try and put carbon monoxide in a cage.

Edited August 5, 2011 by Stu Monty

[Major Tom]

Go on.. to what countries do you refer?

 

Forget this question, it's actually irrelevant.

 

The fact is Britain's economy was built on the financial bubble not the housing one. The housing crash - or downturn - followed the economic one, not vice versa.

[dennis tooth]

Yep it was lending to people that couldnt pay back it, deliberately so, which then inflated the price housing bubble. The banks socially engineered it all well documented.

 

 

SD as usual with his one dimensional analysis. ANd thats being kind to him, fisher price my first economist.

[Section_31]

50p Tax Rate: Downing Street 'Want To Cut Levy To 45p In Next Year's Budget' | Politics | Sky News

 

David Cameron and George Osborne are considering cutting the top rate of income tax to 45p next year, it has been claimed.

 

 

David Cameron and George Osborne are examining ways to cut the 50p tax rate

 

 

The reduction in the levy, which affects people earning more than £150,000, could apparently be announced as early as the Budget next March.

 

Treasury officials are said to have been examining figures which show it could be reduced at a relatively low cost of only £750m to the Exchequer.

 

However, any tinkering with the top rate would be highly controversial and could risk upsetting the Tories' Liberal Democrat coalition partners.

 

[lifetime fan]

50p Tax Rate: Downing Street 'Want To Cut Levy To 45p In Next Year's Budget' | Politics | Sky News

 

 

 

 

They said they had no intention of cutting the 50p tax rate before the election.

[Section_31]

50p Tax Rate: Downing Street 'Want To Cut Levy To 45p In Next Year's Budget' | Politics | Sky News

 

 

 

 

Bandwidth cunts, this was the picture that says a thousand words.

 

[VladimirIlyich]

That is bollocks and you know it!

 

Labour caused the recession through the economic policies of the Labour government and the global economic downturn was ignored, now the economic policies of the coalition government will be ignored because of the economic global downturn.

 

At least have the decency to shrug and say 'whacha gonna do'!

 

Lets see what the Lib Dems do about this!

 

Osborne plans to cut 50p income tax rate - UK Politics, UK - The Independent

 

Labour caused the global recession? interesting.

[TheBitch]

Labour caused the global recession? interesting.

 

Sarcasm.

[VladimirIlyich]

Sarcasm.

 

Sorry it went straight over my head.:whoops:

[dennis tooth]

It is nearly four years since the day, 9 August 2007, which for many of us marks the start of the credit crunch - that in turn precipitated both the worst global banking crisis and recession for at least 70 years (see here for how I saw it on the day).

 

Banks and financial investors lost confidence that they could any longer value the trillions of dollars of financial products - asset backed securities, collateralised debt obligations - manufactured out of housing loans, especially poor-quality subprime housing loans.

 

So banks like Northern Rock and HBOS could no longer finance themselves by selling such financial products, which led directly to their respective collapses. And banks in general found it increasingly difficult to raise money, because of a generalised panic that their respective balance sheets were stuffed to the gunnels with near worthless assets.

 

When banks can't borrow, they can't lend. When businesses and households find it hard to borrow, an economic slowdown is the consequence. So over the subsequent nine months, credit crunch led to recession - which became acute in the autumn of 2008, when financial markets seized up altogether after the failure of Lehman (though all through the summer and early autumn of 2008, there was a steady erosion of confidence in the integrity of the financial system, especially after the collapse of the US state-backed housing-finance providers, Fannie Mae and Freddie Mac).

 

Today's financial crisis can be traced directly to those momentous events.

 

The response of governments around the world to the financial crisis and recession was to keep or even increase public spending, at a time of falling tax revenues, to compensate for the collapse of household consumption and private-sector investment.

 

In other words, they ran abnormally high public sector deficits - peaking at deficits in the UK, US and parts of the eurozone at 10% or more of GDP - to prevent a global recession becoming a global depression.

 

In that sense, it is fair to argue that the recent increases in the public-sector indebtedness of many developed economies is the consequence in large part of the decisions taken in 2007 and 2008 not to let the banks and the financial system collapse.

 

Arguably the deleveraging of the banks, the shrinkage in their balance sheets, has been transferred to the state.

 

The overall volume of indebtedness in the economy is therefore still with us - although it has been shuffled from financial sector to public sector.

 

And if you took the view four years ago that the quantum of debt in the system was unsustainably large, then you would argue that by propping up the banks, the day of reckoning was being postponed, not cancelled.

 

Few would disagree that it is impossible for any government (or business or individual) to spend massively more than it is receiving in revenues for an indefinite period.

 

There is an argument - which we see being played out between government and opposition in the UK - about the appropriate speed for reducing that deficit.

 

But even America, which was last to sign up to any form of austerity, is on some kind of deficit-reduction track.

 

Which has spooked investors for two reasons.

 

There is evidence that economic recovery in the developed, rich West is anaemic and becoming weaker, and that the economic weakness, in the short term at least, is being reinforced by public-sector retrenchment.

 

But also, just like the awakening in 2007 to the idea that many of the housing loans and associated financial products were worthless, so there is a growing fear that a number of financially overstretched governments, especially in the eurozone, will not be able to repay their debts in full.

 

There has been an official recognition of that in the case of Greece, with the decision to encourage its creditors to swap their Greek loans for bonds worth 21% less.

 

And the concern of investors and creditors - as shown in RBS's results today (see my post of last night and see below) - is that Greece needs to reduce what it is prepared to return to lenders far more than 21%, to get itself back to some kind of financial health.

 

Which in turn has prompted many to look at what Ireland, Portugal, Spain and Italy owe, and conclude that they too may need to write down their debts.

 

The problem is that when there are concerns about the solvency of states, such as these, lenders to banks from those states also tend to become uneasy. Which is why Morgan Stanley, the investment bank, has been warning about the emergence of a new credit crunch for southern European banks - which in turn could infect and undermine the ability of northern European banks to borrow.

 

And, to say it again, when banks can't borrow, they can't lend. And when households and businesses have trouble borrowing, economic slowdown follows.

 

Or to put it another way, fears about solvency of sovereigns translates into potential liquidity problems for banks - which can then turn the solvency fears into self-fulfilling prophesies.

 

What's required, according to many analysts, is a circuit breaker in the transmission mechanism of fear.

 

The problem is that bankers' view of the supposed optimal size of the circuit breaker, in the form of an expanded eurozone rescue fund, the EFSF, is growing by the day.

 

A few weeks ago, an EFSF with 1 trillion euros to lend to overstretched eurozone governments, purchase government bonds and recapitalise banks might have been enough to reassure creditors and investors. Now bankers tell me it may need 4 trillion euros of firepower.

 

The problem is that a 4 trillion euros EFSF would foist an enormous potential liability on Germany. And the German people may not be ready to make that kind of financial commitment to their southern European neighbours.

 

Which, to state the obvious, is why we are living through such nerve-wracking times.

 

PS Like Lloyds, Royal Bank of Scotland's recovery from the crisis conditions of three years ago back to solid profitability has suffered a setback.

 

In the first half of 2010, Royal Bank of Scotland made a tiny profit. This year it has slumped back to a loss of £1.4bn at what is known as the attributable level. The pre tax loss was £794m.

 

The causes of RBS's woes are an £850m charge for compensating those missold PPI credit protection insurance, a £733m loss from writing down the value of what it is owed by the financially stretched Greek government, and a loss of more than £100m on the cancellation of a financial insurance contract related to Greek debt.

 

It is striking that RBS is taking a more pessimistic view of what the Greek will be able to repay than big French banks, BNP Paribas and Societe Generale.

 

Without those negative factors, RBS made an operating profit of £1.9bn, up from £1.1bn.

 

But there is still some way to go before its business as normal at RBS.

 

As for RBS's battered shares, they are 40% what British taxpayers paid for their 81% stake in the bank during the 2008 rescue. Which implies it will be years before taxpayers get their money back.

 

BBC News - The origins of today's market mayhem

 

 

 

Told you about that, taxpayers wont be seeing that back. Ever. As usual I will be correct despite the disagreement of SD and Nueve.

[dennis tooth]

Paul Krugman Nobel Prize-winning economist

 

writing on his New York Times blog says: The economy isn't recovering, and Washington has been worrying about the wrong things. It's not just that the threat of a double-dip recession has become very real. It's now impossible to deny the obvious, which is that we are not now and have never been on the road to recovery.

 

1924:

 

Meanwhile, perhaps spare a thought for the world's richest man, Carlos Slim, who is estimated to have lost about $8bn this week. The Mexican's stock portfolio has dropped about 11% since 29 July, before Friday, and is currently valued at about $63bn, according to data compiled by Bloomberg.

 

.

[piscinin]

.

 

Well, the one thing you can be sure about macro-economists, nobel prize winning ones or otherwise, is that 99% of the time, 99% of them are wrong.

[dennis tooth]

Well, the one thing you can be sure about macro-economists, nobel prize winning ones or otherwise, is that 99% of the time, 99% of them are wrong.

 

Oh I agree with that, its just a form of entertainment however I think his assessment is valid even if you cant predict the future from it.

[Stu Monty]

I'd be interested to see how many people actually pay the 50% tax rate. How many people who earn that much money aren't able to set themselves up as a limited company and dodge the income tax?

 

It's laughable that they think that's an issue though. It'll do fuck all to kick-start the economy and is purely political posturing.

[lifetime fan]

I'd be interested to see how many people actually pay the 50% tax rate. How many people who earn that much money aren't able to set themselves up as a limited company and dodge the income tax?

 

It's laughable that they think that's an issue though. It'll do fuck all to kick-start the economy and is purely political posturing.

 

Would someone earning that kind of money all of a sudden start spending more to boost the economy?

 

Cut income tax by 5% for anyone earning under £20k (and fuck the rest) and see the amount that starts to be spent.