Labour Party/government Watch

[kenneal - lagger]

The current government has lost sight of the fact that the proportion of the deficit can be reduced by increasing the government's income. If they invested QE money into schemes like building for Housing Associations and a National Insulation Scheme they could increase their income greatly and boost the economy by leaving ordinary people with a larger proportion of their income to spend into the VAT collecting economy.

A huge proportion of the money that the 99% spend goes to pay interest to banks and in rent to the private sector which all then gets lost in the financial economy where the 1% pay very little tax. The more money there is in the real economy the more the government has to tax and the less they have to pay out in benefits.

[Blue Peter]

Are you suggesting he picked the wrong graph when he made his point?

I am suggesting that he is confused between debt and deficit and fails to understand the difficulties when cutting the deficit.

You're suggesting that the "Professor of Economic Policy at the Blavatnik School of Government, Oxford University" is confused between debt and deficit? Prima facie that seems unlikely. What evidence do you have for it?


Peter.

[johnhemming2]

You're suggesting that the "Professor of Economic Policy at the Blavatnik School of Government, Oxford University" is confused between debt and deficit? Prima facie that seems unlikely. What evidence do you have for it?
Peter.

The article seems a good start.

The allegation of profligacy arises from increasing spend as a proportion of GDP during boom periods.

This is an issue about spend and then to some extent the consequent deficit prior to the financial crisis. I accept entirely that the excessive spending did not in itself cause the crisis, but it made it harder to deal with.

[UndercoverElephant]

The allegation of profligacy arises from increasing spend as a proportion of GDP during boom periods.

Then a more accurate criticism would be that New Labour falsely believed they'd put an end to "Tory boom and bust". They didn't believe it was a boom period, apparently. At least, that's what they kept telling everybody, ad infinitum.

I accept entirely that the excessive spending did not in itself cause the crisis, but it made it harder to deal with.

"Excessive spending" wasn't the primary cause. The primary cause was bailing out privately-owned banks with public money, which amounts, quite simply, to the privatisation of profits and socialisation of losses at the same organisations. The people who benefited from those profits were the wealthy, and the people bearing the brunt of the pain due to the losses are the poor.

Which means Jeremy Corbyn is morally correct and the tories, establishment and New Labour are all morally bankrupt.

And the public knows this, regardless of the fact that people like you are trying to mislead them, or at least sweep the full injustice of the situation under a carpet called "Labour overspending". The real "overspending" was by banks on their own profits and employees - money that could have been put aside to see them through when their gambles went wrong. But hey, why bother acting responsibility when you are "too big to fail" and some useless Scottish c*nt and traitor-to-socialism will bail you out with public money?

[johnhemming2]

"Excessive spending" wasn't the primary cause. The primary cause was bailing out privately-owned banks with public money, which equates, quite simply, to the privatisation of profits and socialisation of losses at the same organisations. The people who benefited from those profits where the wealthy, and the people bearing the brunt of the pain due to the losses are the poor.

There is almost zero truth in this.

The financial crisis was kicked off by the peak in conventional oil production causing an energy price spike.

This opened up two difficulties in the banking environmnent.

Firstly, the loans in the USA under Bill Clintons laws to people who could not pay them back. These had been packaged up as Collateralised Debt Obligations and insured against non-payment. That hid the risk from the regulators (not necessarily intentionally).

Secondly, over valued properly more generally and over borrowed mortgages which chewed into back capital buffers.

The first caused the liquidity crisis. The second caused a mass of problems and required the partial nationalisation or full nationalisation of many banks.

This knocked back the GDP, (a recession) and caused a lot of unemployment cutting tax revenues and increasing government spending hence a recession.

Because the UK had a smaller cushion as a result of overspending we had a greek sized deficit rather than a German sized deficit.

[Little John]

Putting aside the banking reasons you have just cited, you are clearly indicating Labour were unprepared for the crisis in a way that was particular to them. That being the case, can you cite a single non-labour administration in the UK over, say, the last century, who had built up a sufficient surplus such that, had that surplus been available in 2008, the UK's current situation would be entirely different to what it is?

[johnhemming2]

What I am saying is that Labour made the crisis harder to deal with. Otherwise 87-92 looks reasonable. They did, however, make a real mess by trying to shadow the ERM.

[UndercoverElephant]

"Excessive spending" wasn't the primary cause. The primary cause was bailing out privately-owned banks with public money, which equates, quite simply, to the privatisation of profits and socialisation of losses at the same organisations. The people who benefited from those profits where the wealthy, and the people bearing the brunt of the pain due to the losses are the poor.

There is almost zero truth in this.

The financial crisis was kicked off by the peak in conventional oil production causing an energy price spike.

"Kicked off", yes. As in, like the starter's pistol in a 100m race. Anyone who claims that, as such, it was an important "cause" of the race, has completely missed the point.

This opened up two difficulties in the banking environmnent.

Firstly, the loans in the USA under Bill Clintons laws to people who could not pay them back. These had been packaged up as Collateralised Debt Obligations and insured against non-payment. That hid the risk from the regulators (not necessarily intentionally).

And what the f*** does this have to do with what happened in the UK?

Nothing.

Secondly, over valued properly more generally and over borrowed mortgages which chewed into back capital buffers.

And why was the property overvalued?

Answer: because of the irresponsible behaviour of lenders, specifically the major high street banks who were subsequently bailed out with public money. If the banks had given any thought at all to responsible lending, instead of just doing anything legal to fill their pockets with no regard whatsoever to the potential risk, then it wouldn't have happened.

F--k...*I* could see it coming. Why couldn't the banks? Answer: because they didn't want to see it, because all they care about is making money, which led to rich people getting richer.

Anyway...none of this has anything to do with Labour overspending.

[UndercoverElephant]

What I am saying is that Labour made the crisis harder to deal with.

Gordon Brown should have let those banks go under. He should have protected people's savings, but allowed the total loss of all shareholders and all employees, and sold off the assets to offset the cost of the lost savings.

To do so would have made the wealthy - the same people who benefited in the boom - shoulder their share of the pain, and sent out a warning to banks in future that they will not be bailed out with public money if the same mistakes are made again.

That man is a traitor. He should be hung, drawn, quartered and forever remembered as the man who betrayed British socialism. He's worse than Blair. He invented "socialism for the rich", at the expense of the poor.

[johnhemming2]

Do try to do a bit of studying of the issues. The information is available on the internet.

The reason why oil prices affect other things is that people have to pay for the oil (or petrol) and are short of money to pay for other things such as mortgages.

Here is a bit on the CDOs and toxic debt
https://en.wikipedia.org/wiki/Collatera ... obligation
Gretchen Morgenson described the securities as "a sort of secret refuse heap for toxic mortgages [that] created even more demand for bad loans from wanton lenders".

Remember banks tend to have international interests.
http://www.thetimes.co.uk/tto/business/ ... 311784.ece
Royal Bank of Scotland could face fines of more than £5 billion over its involvement in the sale of toxic mortgage-backed debt in the United States, according to people familiar with the situation.

[johnhemming2]

Gordon Brown should have let those banks go under. He should have protected people's savings, but allowed the total loss of all shareholders and all employees, and sold off the assets to offset the cost of the lost savings.

To do so would have made the wealthy - the same people who benefited in the boom - shoulder their share of the pain, and sent out a warning to banks in future that they will not be bailed out with public money if the same mistakes are made again.

That man is a traitor. He should be hung, drawn, quartered and forever remembered as the man who betrayed British socialism. He's worse than Blair. He invented "socialism for the rich", at the expense of the poor.

I did point out to you previously that the shareholders in the banks stopped getting dividends and were either wiped out or got a heavy cut in the value of their shares.

You are now arguing that the banks should have sacked everyone. Do you really think that is a rational solution? Basically bank closures exacerbated the great depression which is why it has been avoided this time. The banks were not "rescued" their customers were - and some of the employees.

[UndercoverElephant]

Do try to do a bit of studying of the issues. The information is available on the internet.

Do stop patronising me. I'm not stupid, Mr Hemming, and neither am I ignorant.

The reason why oil prices affect other things is that people have to pay for the oil (or petrol) and are short of money to pay for other things such as mortgages.

Of course they are. But that doesn't mean that the banks had not been lending irresponsibly in the years leading up to the financial crisis of 2008. I bought a house in 1997, and at that time the maximum it was possible to borrow was three and half times your salary. By 2007, the banks were lending people seven times their salary, because they'd got involved in a process whereby they were competing with each other to be the most irresponsible bank of all.

You might argue it is the job of the regulators to stop this happening, but guess what....the regulators and bankers are the same bunch of people, going through a set of revolving doors. And the politicians who could have intervened to stop it happening did not do so, because they'd sold their soul to the city.

Here is a bit on the CDOs and toxic debt
https://en.wikipedia.org/wiki/Collatera ... obligation
Gretchen Morgenson described the securities as "a sort of secret refuse heap for toxic mortgages [that] created even more demand for bad loans from wanton lenders".

Remember banks tend to have international interests.
http://www.thetimes.co.uk/tto/business/ ... 311784.ece
Royal Bank of Scotland could face fines of more than £5 billion over its involvement in the sale of toxic mortgage-backed debt in the United States, according to people familiar with the situation.

I am well aware of all of this. None of it has anything to do with Peak Oil or Labour overspending, and a lot of it doesn't have anything to do with the UK. The situation was entirely avoidable had the bankers had any sense of responsibility, had the regulators not been asleep at the wheel, had New Labour not had its tongue inserted right up the bankers' backsides. It was an accident waiting to happen, and the only relevance of oil prices is that they were the most immediate, proximal trigger of that accident, just as the starter's pistol is the most immediate, proximal cause of a 100 metres race. Peak Oil determined only the timing of the financial crisis; the crisis itself would have happened anyway, even if Peak Oil had not happened. Something else would have triggered it instead.

[johnhemming2]

Peak Conventional Oil kicked it off. I am not quite sure what you are saying. I gave you a link to a story linking one UK bank to the CDO issue and yet you still seem to be claiming it is nothing to do with the UK.

There are indeed issues about LTV and income multiples.

[UndercoverElephant]

Gordon Brown should have let those banks go under. He should have protected people's savings, but allowed the total loss of all shareholders and all employees, and sold off the assets to offset the cost of the lost savings.

To do so would have made the wealthy - the same people who benefited in the boom - shoulder their share of the pain, and sent out a warning to banks in future that they will not be bailed out with public money if the same mistakes are made again.

That man is a traitor. He should be hung, drawn, quartered and forever remembered as the man who betrayed British socialism. He's worse than Blair. He invented "socialism for the rich", at the expense of the poor.

I did point out to you previously that the shareholders in the banks stopped getting dividends and were either wiped out or got a heavy cut in the value of their shares.

They should have been wiped out COMPLETELY. Why were there any private shareholders left AT ALL?

You are now arguing that the banks should have sacked everyone.

No I am not. I am arguing that in a capitalist, free market system where the shareholders and employees of banks do very handsomely indeed during boom times when they act irresponsibly, those same banks deserve NO PUBLIC SUPPORT WHATSOEVER if they get into trouble during hard times. They should be allowed to go bust, and STOP EXISTING just like any other company that goes bust.

Do you really think that is a rational solution?

Of course it is a rational solution. Do you really think it is rational to have privatised profits of private banks and socialised losses of private banks? Really???

Cos it isn't. It is neither rational nor moral. It's f***ing outrage.

Basically bank closures exacerbated the great depression which is why it has been avoided this time. The banks were not "rescued" their customers were - and some of the employees.

LIAR. You're a great big f***ing liar, John Hemming.

It was entirely possible to save all of the customers - to protect all of the saver's deposits - and allow the banks themselves to go bust, selling off the assets (the offices and branches) to cover the deposits. And yes, the employees would have lost their jobs. Guess what John...THAT IS WHAT IS SUPPOSED TO HAPPEN WHEN PRIVATE COMPANIES GO BUST IN A CAPITALIST ECONOMIC SYSTEM. You know why it didn't happen in this case? It wasn't to protect ordinary savers, for the reasons explained already. Oh no. It was to protect the rich - the 1%, the bankers and the rest of the people who go to those conferences in Davos.

I don't believe in Capitalism. I am not a capitalist. I don't believe in the existence of private banks. But given that I live in a capitalist system, where there are private banks, I do believe that when those banks go bust because of their own responsible behaviour, they should not be bailed out with unimaginable amounts of public money.

Neither do I believe that politicians should be allowed to get away with portraying this "socialism for the *ankers" as "protecting savers".

[johnhemming2]

Do stop patronising me. I'm not stupid, Mr Hemming, and neither am I ignorant.

Firing all the employees of the banks was not one of the best policy suggestions, however.