Nick Clegg says cuts move 'painful but necessary'

Aurora · Post by **Aurora** » 23 May 2010, 19:40

BBC News - 23/05/10

Imminent spending cuts will be "painful and controversial", Deputy Prime Minister Nick Clegg has admitted.

Ahead of Monday's announcement of the details of £6bn in cuts this year, Mr Clegg said the squeeze was necessary to "bring sense" to the public finances.

Article continues ...

Roll on Monday morning.

UndercoverElephant · Post by **UndercoverElephant** » 23 May 2010, 19:57

Yeah get on with it already...

The thing is though...this is just the first tiny installment and they are already trying to psychologically prepare people for it to be really bad news. £6bn is peanuts, especially when you revise downwards the labour government's fantasy growth projections.

Quintus · Post by **Quintus** » 23 May 2010, 20:30

UndercoverElephant wrote:Yeah get on with it already...

£6bn is peanuts

Unless you happen to work for a university, quango or southern Regional Development Agency and are very likely to take the full hit. But - agreed - there is a lot more to come.

biffvernon · Post by **biffvernon** » 23 May 2010, 21:29

Ummmm....thinks....since pretty much all of government spending is, secondarily if not primarily, spent on somebody's wages, then cutting £6billion or whatever will mean some folk will no longer get their wages.

The people that don't lose their jobs may not notice much difference for a while, but for others the cuts will be a life-altering event.

It's a consequence which the ConDems don't seem to talk about very much. Well, they wouldn't, would they?

Vortex · Post by **Vortex** » 23 May 2010, 21:34

Govt income: £1.00
Govt expenditure: 1.36

This is a non-trivial mismatch.

The cuts will need to be VERY painful .. or we need to cheat somehow.

2 As and a B · Post by **2 As and a B** » 23 May 2010, 21:45

Cheating is over. Labour has gone. Now it's time to get real.

biffvernon · Post by **biffvernon** » 23 May 2010, 22:03

Vortex wrote:Govt income: £1.00
Govt expenditure: 1.36

This is a non-trivial mismatch.

The cuts will need to be VERY painful .. or we need to cheat somehow.

Ok, so the 36p gets cut - from somebody's wage packet.

Alternatively it doesn't get cut, nobody loses their job, and to remove the mismatch we allow inflation to reduce the value of £1.36 down to £1 and the loss is distributed amongst everybody.

Oh, with the first method you actually have to cut more than 36p because the unemployed need the dole so government spending increases so the cuts have to be bigger so more people lose their jobs and, you know what,
the economy shrinks till a whole lot more people who weren't on the government payroll lose their jobs because they can't sell their stuff to the newly unemployed.

The good thing is that recession is just what we need to slow down global warming.

RenewableCandy · Post by **RenewableCandy** » 23 May 2010, 22:08

Laying people off only saves money if they were being paid a lot to start with, otherwise by the time you've paid their dole, housing etc you're back to square one.

Neily at the peak · Post by **Neily at the peak** » 23 May 2010, 22:30

Is inflation becoming the most likely solution globally as governments are struggling with their deficits??

UndercoverElephant · Post by **UndercoverElephant** » 23 May 2010, 23:05

RenewableCandy wrote:Laying people off only saves money if they were being paid a lot to start with, otherwise by the time you've paid their dole, housing etc you're back to square one.

This is true, and very important. It is why the real pain is going to be felt not by the poorest or the richest but by the massed ranks of the middle class. There's only so far you can squeeze the poor, especially given the globalised trading system which means the UK can't make things any more because we can't compete with non-western labour costs. You can squeeze the very rich, but there's not that many of them and if you squeeze too hard they'll just bugger off somewhere else.

That leaves the middle class...

Have you seen the bigger piggies
In their starched white shirts?
You will find the bigger piggies
Stirring up the dirt
Always have clean shirts to play around in.

In their sties with all their backing
They don't care what goes on around
In their eyes there's something lacking
What they need's a damn good whacking...

http://www.youtube.com/watch?v=sXdKlpBOvs0

madibe · Post by **madibe** » 23 May 2010, 23:06

Ok. I'd love to know the economics of this, how the sums add up:

you make lots of people redundant to save money in the public sector... then the govenment (ie. those still working and paying tax) has to support them in a multitude of ways... meanwhile...

The private sector that essentially makes money, profit and hence provides employment for the grunts, has less people to sell to... so they lay off the workers... meanwhile...

the bankers and investors keep sucking the system dry, but when they realise that they cant make a buck, move out of the UK (lots have already - they just suck the uk to move their profits elsewhere to make better investments...) phew, and the government lacks returns from corporate sources... meanwhile...

The government see's that it's 1.5 trillion debt (and lets not get party political about that!) is still going up due to 'the deficit'. Jeez...everyone I have talked to thinks 'the deficit' is what we owe. Hahahaha! If I hear 'the deficit' once more...

So, meanwhile peak is kicking in. The powers that be continue to hide this from the public...who by now are for the most part unemployed, broke and looking for solutions because they want to keep the 4*4 on the road....or food on the table... or warmth in the winter (delete as appropriate for financial position).

Wind back.

No one - NO ONE is telling it like it is. BAU seems to be the case - and we here know that is not the case.

We are getting some good hits through the back door though: healthy eating, cut down on meat, cycle cos its good for you, bans on pesticides, Rhos, education at schools on how to grow veg, recycling, global warming, ash clouds, ba strikes (engineered?), new cycle lanes being built, big push to allotments, seeds from the BBC, big pushes to broadband in remote areas (dont move..work from home).

I'm sure I could think of a lot more subtle signs - sure you can.

All this is GOOD stuff - but at the end of the day the boys at number 10 need to tell the public just what is happening. Then, scrap any idea of home repossessions etc as once unemployment hits critical there will be more people on the street than living under a roof.

So...as I say. What do the figures tell us, and what honestly is the future?

UndercoverElephant · Post by **UndercoverElephant** » 23 May 2010, 23:23

Maudibe,

I started a thread yesterday asking people what they thought would happen to UK house prices in the coming years and even that was considered to be too much of a "three body problem" for more than about two people to feel able to offer a sensible opinion.

You're right, it doesn't add up and (almost) nobody is telling the truth. The Dark Mountain Project are having a go, but they're only offering art and mythology as a solution. There's also James Lovelock, may God keep him alive for another two decades at least.

I think that what is going to happen is that the mismatch between global supply and demand for light, sweet crude will eventually be impossible to hide. What will happen is that much of future oil supplies won't ever reach the trading floors of the world's economic powerhouses. Instead, secret deals will be signed between the remaining oil-producing nations and whoever is able to offer them something they want. Guarantees of future oil supplies will be traded off for political concessions. This will artificially send the free market price upwards and further increase political tensions.

I think the joker in the pack is Israel. There is already a simmering civilisation-level conflict between the muslim world and the west because of US support for Israel, and it is an unfortunate fact that most of the world's remaining supplies of accessible oil are located in the islamic world.

Geoff

madibe · Post by **madibe** » 23 May 2010, 23:31

Geoff,

Appreciated your reply and totally agree. At what point then is the genie out of the jar in your opinion? When will the world (and specifically the UK) leaders get straight with the population, rather than us peak oil awares carrying the message to unwilling ears?

Steve

UndercoverElephant · Post by **UndercoverElephant** » 23 May 2010, 23:35

ETA: you were asking about economics, not politics. The answer to that is that it is increasingly clear that the politicians are winging it. They themselves don't know what is going to happen, but are instead reacting to events as they occur according to their ideology and short-term political environment. The end result will be that the economic/financial system as we know it breaks down completely, but it is impossible to know which component will be the first to break for exactly the same reason that Biff refused to commit to an answer the question about house prices. If it was possible to know which component will break then everybody would flee from the relevant asset class, making it a self-fulfilling prophecy. The way the financial system works is that at any one time everybody is trying to protect their own financial arse. The collapse will occur immediately after it becomes clear where the critical failure will occur.

madibe · Post by **madibe** » 23 May 2010, 23:40

Another class reply. Thanks.