Tuesday, June 15, 2010

Would we have 'cuts' had it not been for the bank bailout?

Read the papers and it's as if the real reason behind the "drastic" cuts in public spending, the big bank bailout, never happened.

Just a passing thought.

In the past few days, Prime Minister David Cameron and his coalition chums have been warning of "drastic" measures and "decades of pain" as the £6bn cuts get underway in an attempt to rein in the country's £156bn annual deficit .

Cameron admits that the decisions "will affect every single person" (though I'm sure he's hardly going to trade that radiator for an extra jumper himself). However, he's also very clear in laying the blame on the previous Labour government and their "reckless" spending.

But here's the thing.

Less than two years ago, at the height of the financial crisis, the Labour government pumped £37bn directly into the banks. Earlier on, an estimated £50bn had already been spent to rescue Northern Rock (fine purveyors of high-risk 110-per-cent mortgages) from disaster.

That alone would cancel out the forthcoming "drastic" cuts by a mile. Do you hear anyone talking about it?

Not to mention the gigantic £850bn announced at the end of 2009, the official cost to the British taxpayer that included - amongst other things - buying duff shares off banks, indemnifying against losses, providing guarantees and insurance cover for assets.

Yet - in a textbook case of collective goldfish memory - this now seems to have slipped away from public consciousness. It's been literally sanitised from the dominant discourse. It's as if it never happened. The only thing that happened, apparently, was a "reckless" Labour government living beyond its means and wasting homongous amounts of money.

That they did that to rescue "reckless" banks is not something David Cameron will remind you of.

14 comments:

Jackart said...

This argument is either leftist cant or demostrative of an abject failure of understanding.

Northern Rock was bailed out because it provided a lot of jobs in Labour's heartlands. It was not systemically important. It should have been broken up, and the rump given to Richard Branson.

Lloyds and RBS ARE systemically important, but it is likely that the government will make a positive return on these. THe Markets are Comfortable to not put the bank bailouts on the national balance sheet because these are actual investments. THere may even be a profit for the tax-payer.

The reason that there are cuts is that the Idiot, Gordon Brown ran a defict from 2000 to 1010, most of which is structural, ie happens during a boom.

Don't try to shift the blame for the lousy state of Britain's finances onto the Banks. It is ALL Gordon Brown's fault.

Your lot overspent for a decade, now the grown-ups have to come along and pay it back.

claude said...

"Northern Rock was bailed out because it provided a lot of jobs in Labour's heartlands."
Oh I see. Nice re-writing of history there. 2,400 jobs axed in the wake of its nationalisation must have been some sort of marginal footnote.

"THere may even be a profit for the tax-payer."
Don't forget to send me an e-mail when that "may" happen.

"Don't try to shift the blame for the lousy state of Britain's finances onto the Banks. It is ALL Gordon Brown's fault."
"ALL" his fault. The banks were impeccable, of course.

Seriously. If you think I'm the one who's going to stick up for Gordon Brown and (vile) Ed Balls' management of the economy, you've got the wrong target there.

But to have people buying into the the banks' propaganda machine pretending that they are not only innocent but totally beneficial to the economy is ridiculous.

You can be in denial as much as you please, but it's a fact that the banks wreaked havoc across the whole Western world. And what we saw in 2007-09 was only a fraction of it.

If you have time try and watch (if you havent already) last night's Dispatches "How the Banks Won". Instructive.

Daniel Hoffmann-Gill said...

What a surprise that the Tory defends the bail-out of the banking sector and refuses to see the correlation between that massive bail-out and the deep, deep cuts our economy will have to incur.

The defence is pretty weak, Jackart seems to be suggesting that job losses would have made our economy suffer but of course, not on the scale of the bail-out.

I also love how everything, of course, is Brown's fault and the defence of the banking sector is, with no sense of irony, it is ALL Gordon Brown's fault.

I can't stand this partizan idiocy at all, seemingly all about blame and creating false heroes and pathetic ideas of 'grown-ups' coming in to save things.

Grow up you cretin!

The fact you argue, with a straight face, that the tax payer will profit for propping up the banking sector speaks volumes about your lack of knowledge of the most basic level of economics. You are picking ideas out of thin air in order to justify your beliefs.

The fact is, as much as I hate to say it, if our government had not bailed out the banking sector, a key part of our economy would falter. That said, the fact that it was so poorly run and that is failed and needed public investment speaks volumes about its talent pool.

To ignore the impact of that bail-out, upon our current financial malaise, is ignorant at best and smacks of wishful thinking.

donpaskini said...

Jackart is wrong - Brown ran surpluses between 1997 and 2002, before running deficits between 2002 and the present. But national debt as percentage of GDP was lower in 2007 than at any time since the First World War.

Worth noting that Gordon Brown ran more budget surpluses than Thatcher's chancellors.

http://www.ifs.org.uk/bns/bn26.pdf

But ONS suggests that the bank bailouts aren't the reason for the deficit:

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

But the main cause of the deficit is not "out of control" spending, but collapse in government revenue.

thepatriot said...

Re-writing history?
The wet liberal homie in charge of this sub-blog's got a nerve to be sayin something like that.

Gordon Browns management of the economy sucked. And if the banks did go OTT its because he let them. Just count how many bankers or mba sloths were whacked a peerage or at least a consultancy job by Labour.

Not that your beloved Wet Tories would do anything different, Jackast. You can graffiti your facial in Union Jack colours but you lot sold off this country to Europe. You're as bad as Labour, except southern.Try disputing that.

Then we have Hoffy as usual gettin his undies in a bundle calling everyone cretin, idiot, f*cktard and all the rest of his Elefonkey repertwah. Shocking. If his deficient lot had it their way we'd now be £345,000,000,000,000,000 in the red.

Feel ashamed, Hoffy, feel ashamed.

And more ashamed should be 'pesky' peskini. So what Gordon Brown got a surplus in 2002. He bleedin wastd all that and burnt an extra few zillion in the following 8 years. Clever guy eh?

If you were playing football and got trounced 8-2, would you walk around boasting you were 2 nil up?
No? I didnt thnk so either.

Lefties. If they didnt exist they'd have to invent them.

Daniel Hoffmann-Gill said...

Claude is kind to the idiotic racist, to let his vomit through, no doubt to hoist the cretin by his own petard.

How the bigot loves to keep visiting and commenting at a blog he hates! He hates it so much and think sit is so bad he keeps coming back, as you do...What a retard.

Sucked? Is that the most coherent you get you spaz? Sucked? On one hand you are clearly not a fan of regulation, on the other you blame Brown for not regulating.

Now that sucks.

As to your regional prejudice and spewing your garbage in random directions like some sort of ignorant garden sprinkler.

You are a funny racist!

And thanks for the shout out racist, you love me don't you, you weird obsessive? I tell you what, if you're a good boy, I'll sign a photo for you to sell to feed your mum.

Also, you never read the post do you and you also seem to never be able to understand the comments left?

Can you not read and if not, do you want me to pay for you to have some lessons you scumbag?

Jackart said...

Why are you calling me a racist?

and I don't hate this blog. It's called 'debate'. I may disagree with Claude, vehmently, but I'd be delighted to buy him a beer and discuss it.

claude said...

Jackart,
thanks for the ale, much appreciated, but I think Daniel Hoffmann Gill was having a go at that twat/clown who calls himself "the patriot" (bless him) and his 9:07pm comment.

Edward said...

The bailout of banks increased the public debt.

The annual deficit (running at circa £150 billion p.a.) also increases public debt.

Cutting spending is aimed at reducing the annual deficit and thereby slowing the increase in public debt.

The need to cut spending would have existed without the bank bailout.

Daniel Hoffmann-Gill said...

Claude has it down with regards who is the racist twat round these parts but Jackart, you're a wee bit sensitive on the issue...

david cameron's forehead said...

Who do you support then, patriot?

Jackart said...

Sorry DHG!

*hangs head in shame*

Daniel Hoffmann-Gill said...

Don't worry about it duck.

romanhousing said...

"Don't try to shift the blame for the lousy state of Britain's finances onto the Banks. It is ALL Gordon Brown's fault.

Your lot overspent for a decade, now the grown-ups have to come along and pay it back."

The Grown-ups Jackart? Like that nice Kenneth Clarke who appears to have run a deficit every year from 1990 to 1997? There's a revisionism that paints him as such a great chancellor when he was borrowing more (in %GDP terms) than Labour in their first 10 years.

Now. Recessions are funny things. They tend to have an impact like lowering the tax take and increasing spending on benefits neither of which do a lot for the national debt.

It'd be nice in this new era of openness if the LibCons actually said how much of the increase in debt over the last 3 years is due to the recession and how much down to increased departmental spending.

But I doubt they will as it's easier just to blame the last lot.