More than one person above has said that we're f__ked. They're right - there is no easy way out - at the end of all this we, as a nation and as individuals, will be poorer. We already are. Look at the value of the pound against the Euro. I went to Dublin last week (really enjoyed it, thanks) - 5 euros a pint, which these days is almost 5 quid. QE will have that effect.
Long term, for decades, my lifetime and my children's lifetime the UK is going to be in the sh1t. I very much doubt if any political party has the solution, but I fear that people will turn to the more extreme parties in the forlorn hope that they have some magic formula. As Janis would say "get it while you can" - make the most of whatever it is you've got.
My very clever older son (dunno how that happened) is an economist and there's a lot of talk in his world about the "myth of growth". Seems logical - you can't grow forever.
It is all about world economics, we in the west have been relying on cheap imports and stopped producing low end products. All the time we buy more consumer goods from cheap manufacturing countries like China, their economy will grow and the people get wealthier than they were, starting from a very low base obviously. There is only so much money in the world and it is being spread about more than it was before. We used to take advanage of russian and chinese mineral wealth, but things have changed.
We do still manufacture, we actually export more cars than we import for the first time in decades, but we have to hope that Europe picks up soon as they are our main market, the emerging economies do not have the numbers of wealthy consumers to be able to buy our products in large enough quantities yet.
Things will turn round, it is human nature for those producing to demand better for themselves, wages, working conditions, benefits etc and this will ultimately lead to their economies becoming less productive and more democratic, but I think we are in for a lot of pain yet.
Corruption is the biggest problem for those countries, the people will only put up with so many oligarchs or socialist party officials living in opulence before things change.
Cyprus could be interesting, but you get the feeling the russians will bail them out again for their gas, especially as there are so many oligarchs living there. But the writing is on the wall for larger Euro economies turning up with the begging bowl in future.
<blockquote class="Quote" rel="Anna_Kissed">Hi, DA1. Here's my summary of it:
1) Scrap your manufacturing base. 2) Import cheap goods. 3) De-skill your workforce. 4) Import more cheap junk. 5) Grant mortgages to people who have no deposit. 6) Privatise your public utilities 7) Pay ££££ zillions to speculators in the City of London's Futures Exchange. 8) Cut taxes to the rich 9) Watch homeowners earn more in one year in house price rises than most people earn in one year 10) Get re-elected on a manifesto of more of the above 11) Gift mortgages to people who have no deposit 12) Have a foreign war under the name of Regime Change. 13) Import more cheap junk 14) Cut taxes of the rich
Simmer, stirring occasionally, for 25-30 years
Serve cold.
p.s. Party in Trafalgar Square on the Saturday after Th**cher dies.
</blockquote>
Alternatively you could:
1) Endlessly subsidise a manufacturing base producing crap goods that no one wants to buy because the rest of the World build them better and cheaper. 2) Invest and develop a manufacturing base where foreign owned companies want to manufacture their cheap goods. 3) Re-skill your work force to enable them to complete in the 21st Century 4) Try to encourage people not to own things they don't really need and are produced overseas 5) Provide mortgages to help people who want to support themselves and free up valuable social housing space 6) Provide the opportunity for people to own part of the nationalised industries and enable large amounts of investment improving the infrastructure at the same time. 7) Pay large sums in bonuses to a couple of hundred people in the city who have helped to significantly improve investment and income of millions whilst developing the City as a World Financial Centre 8) Completely remove taxes from the 'poor' and increase tax income from the 'wealthy'. 9) Watch homeowners increase the equity in the property they own enabling them to ensure a happy retirement without the need for future drain on the Country's benefit system. 10) Get democratically re-elected as the majority of the population believe what you're doing is right. 11) See 5) above 12) Uphold democracy and prevent genocide 13) See 2) and 4) above 14) See 8) above
Typical radical ideas. Keep singing the mantra and repeat ad infitum.
Never once offer a single viable constructive alternative, just everything 'they' do is wrong.
My question is, who do we owe the cash to? Assuming its banks and George Soros type individuals, why can't we tell them to f*** off? What are they going to do, send a pinstripe army to invade?
My question is, who do we owe the cash to? Assuming its banks and George Soros type individuals, why can't we tell them to f*** off? What are they going to do, send a pinstripe army to invade?
Because it isn't. It's owed to other sovereign countries, like China and the oil producing states in the Middle East plus all our pension funds and, to an extent, local authorities hold their cash reserves in Gilts. (I take it you agree that viable retirement income and having your rubbish collected is important?) Personally I'd suggest not defaulting to the Chinese or Middle East states. Not if you ever want to see a manufactured item or drive a car or heat your house ever again. If you doubt that defaulting is a very bad idea indeed, check out what's happened to the Argentian economy since their last default. (This alone is a good reason why The Falkland Islands want to stay British.) The UK has never really defaulted, even eventually paying back the huge loans to the US and Canada arising from WWII. (At the end of the Napoleonic war, WWI and WWII our debt was in excess of twice GDP, much, much higher than now.) The closest the UK probably came to a technical default was in the 1930s when Neville Chamberlain thought it would be a good idea if everyone swapped their 5% War Loan 1947 for a new stock called 3.5% War Loan. It was pushed as being one's patriotic duty to swap and the interest rate was still not bad so, trusting the Govt., everyone did. Trouble was the new stock did not have a redemption date (I think it was merely "after 1952"). So, it still exists with £1.9bn nominal value but at the height of inflation its actual value was down to around £30 per £100. Bizarrely it's now at £90 but of course, what's £90 worth now compared to £100 in 1932? Everyone got stuffed and hardly any private investors have touched British Govt Securities ever since. The number of private holders is miniscule. So, yes, there was a pinstripe army but it was more of a cardigan army if you'd like to express it like that and you could argue that it cost the UK dear in terms of reducing potential sources of borrowing. And, of course, Joe Public might get a little bit upset if all their premium bonds and national savings accounts suddenly became worthless.
BTW, I quite like The Daily Mash t-shirt with the slogan "theguardian Wrong about everything. All the time."
1) Scrap your manufacturing base. 2) Import cheap goods. 3) De-skill your workforce. 4) Import more cheap junk. 5) Grant mortgages to people who have no deposit. 6) Privatise your public utilities 7) Pay ££££ zillions to speculators in the City of London's Futures Exchange. 8) Cut taxes to the rich 9) Watch homeowners earn more in one year in house price rises than most people earn in one year 10) Get re-elected on a manifesto of more of the above 11) Gift mortgages to people who have no deposit 12) Have a foreign war under the name of Regime Change. 13) Import more cheap junk 14) Cut taxes of the rich
Simmer, stirring occasionally, for 25-30 years
Serve cold.
p.s. Party in Trafalgar Square on the Saturday after Th**cher dies.
Nothing better then listening to someone being bitter
My question is, who do we owe the cash to? Assuming its banks and George Soros type individuals, why can't we tell them to f*** off? What are they going to do, send a pinstripe army to invade?
..... At the end of the Napoleonic war, WWI and WWII our debt was in excess of twice GDP, much, much higher than now.."
.......true but at the end of WWII we didn't have the humungous unfunded public sector and state pension liabilities, which take the National debt from £1trillion to £4.8trillion (333% of GDP) as at end of 2010, according to the Office for National Statistics.
My question is, who do we owe the cash to? Assuming its banks and George Soros type individuals, why can't we tell them to f*** off? What are they going to do, send a pinstripe army to invade?
Because it isn't. It's owed to other sovereign countries, like China and the oil producing states in the Middle East plus all our pension funds and, to an extent, local authorities hold their cash reserves in Gilts. (I take it you agree that viable retirement income and having your rubbish collected is important?) Personally I'd suggest not defaulting to the Chinese or Middle East states. Not if you ever want to see a manufactured item or drive a car or heat your house ever again. If you doubt that defaulting is a very bad idea indeed, check out what's happened to the Argentian economy since their last default. (This alone is a good reason why The Falkland Islands want to stay British.) The UK has never really defaulted, even eventually paying back the huge loans to the US and Canada arising from WWII. (At the end of the Napoleonic war, WWI and WWII our debt was in excess of twice GDP, much, much higher than now.) The closest the UK probably came to a technical default was in the 1930s when Neville Chamberlain thought it would be a good idea if everyone swapped their 5% War Loan 1947 for a new stock called 3.5% War Loan. It was pushed as being one's patriotic duty to swap and the interest rate was still not bad so, trusting the Govt., everyone did. Trouble was the new stock did not have a redemption date (I think it was merely "after 1952"). So, it still exists with £1.9bn nominal value but at the height of inflation its actual value was down to around £30 per £100. Bizarrely it's now at £90 but of course, what's £90 worth now compared to £100 in 1932? Everyone got stuffed and hardly any private investors have touched British Govt Securities ever since. The number of private holders is miniscule. So, yes, there was a pinstripe army but it was more of a cardigan army if you'd like to express it like that and you could argue that it cost the UK dear in terms of reducing potential sources of borrowing. And, of course, Joe Public might get a little bit upset if all their premium bonds and national savings accounts suddenly became worthless.
BTW, I quite like The Daily Mash t-shirt with the slogan "theguardian Wrong about everything. All the time."
But my lack of understanding of the situation has nothing to do with Michael Meachers letter in the Guardian?
I still don't get how it all works though. Why can't we make our own cars and stuff? And as for heating, surely the fuel companies ( which are multinational private companies, arnt they? ) buy the gas and oil from the producers, slap on a massive profit, and sell it to the consumer, why would defaulting change that? I also don't see why it would make a difference to national savings either? Other than the moral obligation to pay the debt, I genuinely don't understand why it would make any difference ?
We do make cars and stuff - UK factories built 1.46 million cars in 2012, of which 1.21 million were shipped abroad, which was a record. Rolls Royce aero engines have a £60bn order book, etc, etc. Anyway, back to the default idea. When you see fluctuations in exchange rates, that's only partially caused by people buying and selling currency, either forward or otherwise, it's people selling, say, UK Govt debt and buying US, european or Japanese debt instead. If we defaulted, our debt would have no or little value, so sterling's value would plummet big time, maybe an instant 30/40% devaluation, maybe more, who knows? But, of course, pretty much everything we buy, for example oil, raw materials, etc is priced in US$. So, even if people were prepared to trade with us, everything we rely upon would become horrendously expensive and possibly totally unaffordable. The consequences for inflation rates do not bear thinking about. If the Govt, was to default on its debt, it would have to do so on everything. Premium bonds and national savings are no more than loans to the Govt., whatever fancy names you like to give them. In any event, in the panic, people would be queuing to get their money back (like Northern Rock) thus exacerbating the situation. A good way of looking at the status of savings is the statutory definition of a deposit: "A sum of money, paid on terms under which it will be repaid either on demand or at some agreed future date." Sorry, I've done that from memory and it's not entirely accurate but you get the idea. (It's the "terms" that are important not the reality of what might happen in the event of bankruptcy/default.) So a deposit is actually no different whatsoever from a loan. So, we are just lending money to the Govt. banks, etc. (Obviously stuff like advance payments for goods or services, also commonly called deposits are different and are excluded from the legislation.)
I find these constant references to the super rich both irrelevant and frustrating.
The national debt hasn't been run up by those that are worth billions so why is there such a clamour for them to clear the debts?
Depending on one's political ideals there is a different view of which public spending needs to be cut and who needs to be taxed. There is, however, no justification in allowing a precedent that those with lots of money, literally, give it away to those that have less because they don't work as hard.
I know people on benefits getting close to £1,000 a month that just don't want to work. They have no intention of ever working again. They watch TV all day, smoke cigarettes (and illegal drugs), and drink alcohol. They have little (or no) stress and they pay no taxes at all. In fact they make no contribution to society at all. Over a ten year period (and they have been on benefits for much longer than that) they must cost well over £150k - once you include the cost of their health care etc.
On what basis can anyone defend that ? And how can anyone expect those with a lot of money to pay for lazy bums to do nothing for years and years yet receive money and be provided somewhere to live. Please bear in mind that I'm not talking about a safety net for those that want to work but have short periods where they can't fine employment. I'm talking about those that don't work at school then find a way to never work.
And I'm not even going to share how I feel about those with three or more children in big houses all paid for by the state. For those of us that stopped at one child because we couldn't afford to have more yet have a decent income later in life, the thought of paying higher and higher taxes to pay for those work shy with many children......
On the original question, when the economy grows, it's a sign that the country is growing richer.
One important caveat though, is that when your population is growing, you need the economy to grow similarly or else GDP per person/capita is actually declining. During the Blair/Brown boom years, the population also grew significantly (the mass immigration from Eastern Europe) so the GDP increase her head was nowhere near as impressive. And this performance wasn't constant across the nation.
There is, however, no justification in allowing a precedent that those with lots of money, literally, give it away to those that have less because they don't work as hard.
Millions of people work far harder than multi millionaires for far smaller rewards. Most of the super rich have either inherited wealth or accumulated it by making sure they take a bigger slice of the pie to the detriment of those lower down, over years and years. The people Meacher refers to have more money than they and their decendents for five generations will know what to do with. A lot of them have been afforded opportunities denied to 99% of the population due to the old school tie, and no other reason.
The latest tax cut will put an extra £40k a year in the pocket of people earning a million pounds a year. £40k increase, for doing nothing! I have never earned £40k a year at any point in my life, let alone been given an increase like it by the government in the midst of the deepest recession in living memory.
The scum at the bottom are more than annoying, but if the super rich were to pay off 70% of the debt, couldn't that free up more cash to deal with them?
Thanks cafcfan for you explanation by the way, I still don't get all of it, but it's clearer to me now.
There was a good Evan Davis? tv programe about this last year. Basically 1) We all want the rich to pay more tax, 2) "The rich" meaning richer than ourselves, as nobody means themselves when it comes to tax rises on the rich. 3) The rich already may a disproportionate amount of tax 4) There are limits on how much more tax can be charged on them 5) You have to raise basic rate or VAT to bring in large amounts of extra taxation
Interesting article, and I am certainly guilty of getting the stats to fit my thinking. i.e. how much are these people earning already to pay that amount into the coffers!
Some good comments to, the bottom couple are funny, but some good points in the rest.
One of the problems NLA, is that the mugs in power don't have the balls to do what is necessary to sort the problem out because the mugs that vote will kick anyone out if they were to take the appropriate action. People want all this sorted out, but they don't want pensions and healthcare cut or taxes to rise. They want the whole thing to be sorted out by cutting waste or taxing some kind of mythical rich who are at "fault" for this. Problem with democracy.
That's the nub of the matter. Whatever the party, they tend to offer what might seem to be attractive to their core voters. Labour: tax the rich, more benefits for the poor, big Govt; Tories: less benefits, less tax, small Govt. Lib Dems: The ludicrous tax on "mansions" which would bring in little more than nothing, and, well, nothing of merit. UKIP: let's all become hermits (and destroy our economy in the process). Thus the over-arching well-being of the economy gets stuffed.
Here's my cure (I can dream or maybe I've drunk too much champagne tonight): We need more energy, Cyprus has plenty of gas. They need, what £10bn? BP's turnover is nigh on £400bn, and even after they paid US fines for the Gulf oil spill, profits were still £13bn last year. They have £19bn of cash in the bank. So, and it's been done before, (remember the Hudson Bay Co and the East India Co?) Let's suggest to BP that they buy Cyprus - lock stock and barrel. BP take control of all the Russian owned assets in Cyprus (in revenge for BP getting stuffed by the Russian oil companies) and make it available to us. Cyprus starts using proper pounds rather than the euro. We all get free villas and move somewhere warm!
Why do you believe UKIP will destroy the economy when they have representatives who had experienced more life than the LibLabCon put together?
Oh, and before you jump in and believe leaving the EU will be bad for us. For starters we pay £50m a day to the EU.
1) Scrap your manufacturing base. 2) Import cheap goods. 3) De-skill your workforce. 4) Import more cheap junk. 5) Grant mortgages to people who have no deposit. 6) Privatise your public utilities 7) Pay ££££ zillions to speculators in the City of London's Futures Exchange. 8) Cut taxes to the rich 9) Watch homeowners earn more in one year in house price rises than most people earn in one year 10) Get re-elected on a manifesto of more of the above 11) Gift mortgages to people who have no deposit 12) Have a foreign war under the name of Regime Change. 13) Import more cheap junk 14) Cut taxes of the rich
Simmer, stirring occasionally, for 25-30 years
Serve cold.
p.s. Party in Trafalgar Square on the Saturday after Th**cher dies.
One day, you will suddenly realise why Thatcher was good economically.
One day, you will suddenly realise why Thatcher was good economically.
After three decades of neo-liberal economics that "one day" must be due soon, right?
In the meantime we've seen record numbers of unemployment, the growth of a benefit culture, the destruction of the economy, the deepest recession since the 1930s...
If that is what Thatcherism has brought us I'd rather we tried a different approach...
One day, you will suddenly realise why Thatcher was good economically.
After three decades of neo-liberal economics that "one day" must be due soon, right?
In the meantime we've seen record numbers of unemployment, the growth of a benefit culture, the destruction of the economy, the deepest recession since the 1930s...
If that is what Thatcherism has brought us I'd rather we tried a different approach...
You can't be serious! Thatcher never caused this current problem! It was Labour's looney policies that got us into this mess in the first place followed by the coalition who are letting the huge borrowing continue and not producing any growth.
One day, you will suddenly realise why Thatcher was good economically.
After three decades of neo-liberal economics that "one day" must be due soon, right?
In the meantime we've seen record numbers of unemployment, the growth of a benefit culture, the destruction of the economy, the deepest recession since the 1930s...
If that is what Thatcherism has brought us I'd rather we tried a different approach...
You can't be serious! Thatcher never caused this current problem! It was Labour's looney policies that got us into this mess in the first place followed by the coalition who are letting the huge borrowing continue and not producing any growth.
Her policies badly affected manufacturing, social housing and the railways. She also sold off the utilities in order for her mates to cash in. She ain't without fault in all this.
I suppose the 3.5 million unemployed in the 1980s that were a direct result of Thatcherism were a figment of the imagination - along with the destruction of many industries, from that we have never recovered economically.
The benefit culture started then - and to pay for it we squandered billions in NS oil reserves and denationalised assets. The fact remains if after thirty plus years we have massive deficits and a deep recession then you have to conclude that neo-liberalism doesn't work.#
Labour are culpable as well, but to suggest that because the recession began on their watch that they are solely responsible ignores the long term causes.
1) Scrap your manufacturing base. 2) Import cheap goods. 3) De-skill your workforce. 4) Import more cheap junk. 5) Grant mortgages to people who have no deposit. 6) Privatise your public utilities 7) Pay ££££ zillions to speculators in the City of London's Futures Exchange. 8) Cut taxes to the rich 9) Watch homeowners earn more in one year in house price rises than most people earn in one year 10) Get re-elected on a manifesto of more of the above 11) Gift mortgages to people who have no deposit 12) Have a foreign war under the name of Regime Change. 13) Import more cheap junk 14) Cut taxes of the rich
Simmer, stirring occasionally, for 25-30 years
Serve cold.
p.s. Party in Trafalgar Square on the Saturday after Th**cher dies.
One day, you will suddenly realise why Thatcher was good economically.
One of the problems NLA, is that the mugs in power don't have the balls to do what is necessary to sort the problem out because the mugs that vote will kick anyone out if they were to take the appropriate action. People want all this sorted out, but they don't want pensions and healthcare cut or taxes to rise. They want the whole thing to be sorted out by cutting waste or taxing some kind of mythical rich who are at "fault" for this. Problem with democracy.
I think that's what many people fail to realise. They want it sorted, but only if it doesn't affect them. Standards of living will fall as our money doesn't quite stretch as far. People will need to make more sacrifices and re-adjust their expectations. Some people are already living on the edge though, so not sure how they cope.
One day, you will suddenly realise why Thatcher was good economically.
After three decades of neo-liberal economics that "one day" must be due soon, right?
In the meantime we've seen record numbers of unemployment, the growth of a benefit culture, the destruction of the economy, the deepest recession since the 1930s...
If that is what Thatcherism has brought us I'd rather we tried a different approach...
You can't be serious! Thatcher never caused this current problem! It was Labour's looney policies that got us into this mess in the first place followed by the coalition who are letting the huge borrowing continue and not producing any growth.
Her policies badly affected manufacturing, social housing and the railways. She also sold off the utilities in order for her mates to cash in. She ain't without fault in all this.
I think you will find that it was the 2007-09 crash which crippled the government but that there are answers - sell back the bank shares, help the City to fight off threats and it will continue to pay massive taxes - maybe the government should scale back the increases in public expenditure in the 2nd half of the Labour administration
I think the railways were Major but things have moved on! The point is that Reagan and Thatcher started the financial deregulation process without putting in a new framework to manage the bigger numbers. I seem to recall one person on here having issues with moving €40,000 around because of some bank charges... Before Thatcher came in you couldn't move more than £500 around in one go. So freedom to move money but that means that UK, in fact EVERY country has to behave responsibly else capital just flys away.
The whole health, education and benefits thing goes back to 1945, so perhaps time for a re think? Trouble is none of the mainstream political parties can do it without risking their core support and UKIP with nothing to lose don't have any policies except leave the EU... when you have a landlord paying £300K for a 3 bed in Westminster and then billing the council nearly £300K in just three years there are clearly massive design flaws in a system that was originally meant to help people on the fringes.
Part of the long term answer will be that corporation tax will come down OR more unlikely...tax havens are shut down - too many global companies are not paying enough... and driving local companies out of business as local companies pay corporation tax as well as PAYE and VAT.
I expect taxes like VAT and IPT will continue rise - easy to collect and they are payable in the country where the transaction is made. To avoid default, governments will have to sell off anything that moves - buildings, railways, roads - surprised that Cyprus have not cut a deal on their gas reserves to cover their issues but at least they have their bailout money so that the EU can lurch on to the next crisis!
So, yes, people will have to take more responsibility for health, pensions and education (for their kids and themselves) unless they are happy with a very low basic provision. Will people have to work harder? Yes to compete... But countries will need to offer a high standard of living to compete for the best talent which is what the UK and US have been doing for quite a while. Let's hope the UK continues to pull through leading on education, financial services and creative arts / technology.
One of the problems NLA, is that the mugs in power don't have the balls to do what is necessary to sort the problem out because the mugs that vote will kick anyone out if they were to take the appropriate action. People want all this sorted out, but they don't want pensions and healthcare cut or taxes to rise. They want the whole thing to be sorted out by cutting waste or taxing some kind of mythical rich who are at "fault" for this. Problem with democracy.
That's the nub of the matter. Whatever the party, they tend to offer what might seem to be attractive to their core voters. Labour: tax the rich, more benefits for the poor, big Govt; Tories: less benefits, less tax, small Govt. Lib Dems: The ludicrous tax on "mansions" which would bring in little more than nothing, and, well, nothing of merit. UKIP: let's all become hermits (and destroy our economy in the process). Thus the over-arching well-being of the economy gets stuffed.
Here's my cure (I can dream or maybe I've drunk too much champagne tonight): We need more energy, Cyprus has plenty of gas. They need, what £10bn? BP's turnover is nigh on £400bn, and even after they paid US fines for the Gulf oil spill, profits were still £13bn last year. They have £19bn of cash in the bank. So, and it's been done before, (remember the Hudson Bay Co and the East India Co?) Let's suggest to BP that they buy Cyprus - lock stock and barrel. BP take control of all the Russian owned assets in Cyprus (in revenge for BP getting stuffed by the Russian oil companies) and make it available to us. Cyprus starts using proper pounds rather than the euro. We all get free villas and move somewhere warm!
Why do you believe UKIP will destroy the economy when they have representatives who had experienced more life than the LibLabCon put together?
Oh, and before you jump in and believe leaving the EU will be bad for us. For starters we pay £50m a day to the EU.
That's one way of looking at it. An alternative is that NET (we do get money back from the EU) we pay about £8mn a day. Another way of looking at it is around 50 euros per person a year. Not much is it? And on a per head basis puts us at about 7th in the list of contributor countries. It's interesting I think that the largest contributor is Luxembourg at around 200 euros per head. So, if, for the sake of a few quid, you feel you want to experiment with whether we lose out on future investment on a large scale in the UK by foreign manufacturers who want to have a base in the EU, vote for a party that wants to withdraw England, Wales & Northern Ireland from the EU. I suspect the Scots will stay in if they get independence. Talking of Northern Ireland, if we really wanted to rid ourselves of a heavy drain on resources for no material gain plus a lot of grief on the side, I'd cut Ulster adrift. Interestingly, Northern Ireland costs English tax payers about £8bn a year. That's nearly 3 times as much as the EU and all we get is aggravation. This from somewhere that has the same population as Essex or a handful of London boroughs. As for UKIP's representatives having great experience of life, that, unfortunately, is not really of much assistance. The vast majority of parliament's work is discussing, drafting and redrafting legislation. That's why a significant percentage of MPs are lawyers and financiers by trade. It's what they will have to do when they get there. On the other hand there's not much demand for making a bacon sandwich.
The problem with the chart is that it's comparing the tax paid by the top 1% of people with the tax paid by everybody else, without taking account of their income compared to the other 99%. It also doesn't take into account the other taxes that we pay, VAT, fuel duty etc, that mean the tax burden on lower paid workers is higher than the headline rate.
Comments
Long term, for decades, my lifetime and my children's lifetime the UK is going to be in the sh1t. I very much doubt if any political party has the solution, but I fear that people will turn to the more extreme parties in the forlorn hope that they have some magic formula. As Janis would say "get it while you can" - make the most of whatever it is you've got.
My very clever older son (dunno how that happened) is an economist and there's a lot of talk in his world about the "myth of growth". Seems logical - you can't grow forever.
We do still manufacture, we actually export more cars than we import for the first time in decades, but we have to hope that Europe picks up soon as they are our main market, the emerging economies do not have the numbers of wealthy consumers to be able to buy our products in large enough quantities yet.
Things will turn round, it is human nature for those producing to demand better for themselves, wages, working conditions, benefits etc and this will ultimately lead to their economies becoming less productive and more democratic, but I think we are in for a lot of pain yet.
Corruption is the biggest problem for those countries, the people will only put up with so many oligarchs or socialist party officials living in opulence before things change.
Cyprus could be interesting, but you get the feeling the russians will bail them out again for their gas, especially as there are so many oligarchs living there. But the writing is on the wall for larger Euro economies turning up with the begging bowl in future.
1) Scrap your manufacturing base.
2) Import cheap goods.
3) De-skill your workforce.
4) Import more cheap junk.
5) Grant mortgages to people who have no deposit.
6) Privatise your public utilities
7) Pay ££££ zillions to speculators in the City of London's Futures Exchange.
8) Cut taxes to the rich
9) Watch homeowners earn more in one year in house price rises than most people earn in one year
10) Get re-elected on a manifesto of more of the above
11) Gift mortgages to people who have no deposit
12) Have a foreign war under the name of Regime Change.
13) Import more cheap junk
14) Cut taxes of the rich
Simmer, stirring occasionally, for 25-30 years
Serve cold.
p.s. Party in Trafalgar Square on the Saturday after Th**cher dies.
</blockquote>
Alternatively you could:
1) Endlessly subsidise a manufacturing base producing crap goods that no one wants to buy because the rest of the World build them better and cheaper.
2) Invest and develop a manufacturing base where foreign owned companies want to manufacture their cheap goods.
3) Re-skill your work force to enable them to complete in the 21st Century
4) Try to encourage people not to own things they don't really need and are produced overseas
5) Provide mortgages to help people who want to support themselves and free up valuable social housing space
6) Provide the opportunity for people to own part of the nationalised industries and enable large amounts of investment improving the infrastructure at the same time.
7) Pay large sums in bonuses to a couple of hundred people in the city who have helped to significantly improve investment and income of millions whilst developing the City as a World Financial Centre
8) Completely remove taxes from the 'poor' and increase tax income from the 'wealthy'.
9) Watch homeowners increase the equity in the property they own enabling them to ensure a happy retirement without the need for future drain on the Country's benefit system.
10) Get democratically re-elected as the majority of the population believe what you're doing is right.
11) See 5) above
12) Uphold democracy and prevent genocide
13) See 2) and 4) above
14) See 8) above
Typical radical ideas. Keep singing the mantra and repeat ad infitum.
Never once offer a single viable constructive alternative, just everything 'they' do is wrong.
Simple isn't it?
My question is, who do we owe the cash to? Assuming its banks and George Soros type individuals, why can't we tell them to f*** off? What are they going to do, send a pinstripe army to invade?
Personally I'd suggest not defaulting to the Chinese or Middle East states. Not if you ever want to see a manufactured item or drive a car or heat your house ever again.
If you doubt that defaulting is a very bad idea indeed, check out what's happened to the Argentian economy since their last default. (This alone is a good reason why The Falkland Islands want to stay British.)
The UK has never really defaulted, even eventually paying back the huge loans to the US and Canada arising from WWII. (At the end of the Napoleonic war, WWI and WWII our debt was in excess of twice GDP, much, much higher than now.)
The closest the UK probably came to a technical default was in the 1930s when Neville Chamberlain thought it would be a good idea if everyone swapped their 5% War Loan 1947 for a new stock called 3.5% War Loan. It was pushed as being one's patriotic duty to swap and the interest rate was still not bad so, trusting the Govt., everyone did. Trouble was the new stock did not have a redemption date (I think it was merely "after 1952"). So, it still exists with £1.9bn nominal value but at the height of inflation its actual value was down to around £30 per £100. Bizarrely it's now at £90 but of course, what's £90 worth now compared to £100 in 1932?
Everyone got stuffed and hardly any private investors have touched British Govt Securities ever since. The number of private holders is miniscule. So, yes, there was a pinstripe army but it was more of a cardigan army if you'd like to express it like that and you could argue that it cost the UK dear in terms of reducing potential sources of borrowing.
And, of course, Joe Public might get a little bit upset if all their premium bonds and national savings accounts suddenly became worthless.
BTW, I quite like The Daily Mash t-shirt with the slogan "theguardian Wrong about everything. All the time."
I still don't get how it all works though. Why can't we make our own cars and stuff? And as for heating, surely the fuel companies ( which are multinational private companies, arnt they? ) buy the gas and oil from the producers, slap on a massive profit, and sell it to the consumer, why would defaulting change that? I also don't see why it would make a difference to national savings either? Other than the moral obligation to pay the debt, I genuinely don't understand why it would make any difference ?
Anyway, back to the default idea. When you see fluctuations in exchange rates, that's only partially caused by people buying and selling currency, either forward or otherwise, it's people selling, say, UK Govt debt and buying US, european or Japanese debt instead.
If we defaulted, our debt would have no or little value, so sterling's value would plummet big time, maybe an instant 30/40% devaluation, maybe more, who knows? But, of course, pretty much everything we buy, for example oil, raw materials, etc is priced in US$. So, even if people were prepared to trade with us, everything we rely upon would become horrendously expensive and possibly totally unaffordable. The consequences for inflation rates do not bear thinking about.
If the Govt, was to default on its debt, it would have to do so on everything. Premium bonds and national savings are no more than loans to the Govt., whatever fancy names you like to give them. In any event, in the panic, people would be queuing to get their money back (like Northern Rock) thus exacerbating the situation.
A good way of looking at the status of savings is the statutory definition of a deposit: "A sum of money, paid on terms under which it will be repaid either on demand or at some agreed future date." Sorry, I've done that from memory and it's not entirely accurate but you get the idea. (It's the "terms" that are important not the reality of what might happen in the event of bankruptcy/default.) So a deposit is actually no different whatsoever from a loan. So, we are just lending money to the Govt. banks, etc. (Obviously stuff like advance payments for goods or services, also commonly called deposits are different and are excluded from the legislation.)
Too many people not taking responsibility for themselves.
The national debt hasn't been run up by those that are worth billions so why is there such a clamour for them to clear the debts?
Depending on one's political ideals there is a different view of which public spending needs to be cut and who needs to be taxed. There is, however, no justification in allowing a precedent that those with lots of money, literally, give it away to those that have less because they don't work as hard.
I know people on benefits getting close to £1,000 a month that just don't want to work. They have no intention of ever working again. They watch TV all day, smoke cigarettes (and illegal drugs), and drink alcohol. They have little (or no) stress and they pay no taxes at all. In fact they make no contribution to society at all. Over a ten year period (and they have been on benefits for much longer than that) they must cost well over £150k - once you include the cost of their health care etc.
On what basis can anyone defend that ? And how can anyone expect those with a lot of money to pay for lazy bums to do nothing for years and years yet receive money and be provided somewhere to live. Please bear in mind that I'm not talking about a safety net for those that want to work but have short periods where they can't fine employment. I'm talking about those that don't work at school then find a way to never work.
And I'm not even going to share how I feel about those with three or more children in big houses all paid for by the state. For those of us that stopped at one child because we couldn't afford to have more yet have a decent income later in life, the thought of paying higher and higher taxes to pay for those work shy with many children......
One important caveat though, is that when your population is growing, you need the economy to grow similarly or else GDP per person/capita is actually declining. During the Blair/Brown boom years, the population also grew significantly (the mass immigration from Eastern Europe) so the GDP increase her head was nowhere near as impressive. And this performance wasn't constant across the nation.
The latest tax cut will put an extra £40k a year in the pocket of people earning a million pounds a year. £40k increase, for doing nothing! I have never earned £40k a year at any point in my life, let alone been given an increase like it by the government in the midst of the deepest recession in living memory.
The scum at the bottom are more than annoying, but if the super rich were to pay off 70% of the debt, couldn't that free up more cash to deal with them?
Thanks cafcfan for you explanation by the way, I still don't get all of it, but it's clearer to me now.
news.bbc.co.uk/1/hi/magazine/8417205.stm
1) We all want the rich to pay more tax,
2) "The rich" meaning richer than ourselves, as nobody means themselves when it comes to tax rises on the rich.
3) The rich already may a disproportionate amount of tax
4) There are limits on how much more tax can be charged on them
5) You have to raise basic rate or VAT to bring in large amounts of extra taxation
Some good comments to, the bottom couple are funny, but some good points in the rest.
Oh, and before you jump in and believe leaving the EU will be bad for us. For starters we pay £50m a day to the EU.
After three decades of neo-liberal economics that "one day" must be due soon, right?
In the meantime we've seen record numbers of unemployment, the growth of a benefit culture, the destruction of the economy, the deepest recession since the 1930s...
If that is what Thatcherism has brought us I'd rather we tried a different approach...
The benefit culture started then - and to pay for it we squandered billions in NS oil reserves and denationalised assets. The fact remains if after thirty plus years we have massive deficits and a deep recession then you have to conclude that neo-liberalism doesn't work.#
Labour are culpable as well, but to suggest that because the recession began on their watch that they are solely responsible ignores the long term causes.
I think the railways were Major but things have moved on! The point is that Reagan and Thatcher started the financial deregulation process without putting in a new framework to manage the bigger numbers. I seem to recall one person on here having issues with moving €40,000 around because of some bank charges... Before Thatcher came in you couldn't move more than £500 around in one go. So freedom to move money but that means that UK, in fact EVERY country has to behave responsibly else capital just flys away.
The whole health, education and benefits thing goes back to 1945, so perhaps time for a re think? Trouble is none of the mainstream political parties can do it without risking their core support and UKIP with nothing to lose don't have any policies except leave the EU... when you have a landlord paying £300K for a 3 bed in Westminster and then billing the council nearly £300K in just three years there are clearly massive design flaws in a system that was originally meant to help people on the fringes.
Part of the long term answer will be that corporation tax will come down OR more unlikely...tax havens are shut down - too many global companies are not paying enough... and driving local companies out of business as local companies pay corporation tax as well as PAYE and VAT.
I expect taxes like VAT and IPT will continue rise - easy to collect and they are payable in the country where the transaction is made. To avoid default, governments will have to sell off anything that moves - buildings, railways, roads - surprised that Cyprus have not cut a deal on their gas reserves to cover their issues but at least they have their bailout money so that the EU can lurch on to the next crisis!
So, yes, people will have to take more responsibility for health, pensions and education (for their kids and themselves) unless they are happy with a very low basic provision. Will people have to work harder? Yes to compete... But countries will need to offer a high standard of living to compete for the best talent which is what the UK and US have been doing for quite a while. Let's hope the UK continues to pull through leading on education, financial services and creative arts / technology.
So, if, for the sake of a few quid, you feel you want to experiment with whether we lose out on future investment on a large scale in the UK by foreign manufacturers who want to have a base in the EU, vote for a party that wants to withdraw England, Wales & Northern Ireland from the EU. I suspect the Scots will stay in if they get independence.
Talking of Northern Ireland, if we really wanted to rid ourselves of a heavy drain on resources for no material gain plus a lot of grief on the side, I'd cut Ulster adrift. Interestingly, Northern Ireland costs English tax payers about £8bn a year. That's nearly 3 times as much as the EU and all we get is aggravation. This from somewhere that has the same population as Essex or a handful of London boroughs.
As for UKIP's representatives having great experience of life, that, unfortunately, is not really of much assistance. The vast majority of parliament's work is discussing, drafting and redrafting legislation. That's why a significant percentage of MPs are lawyers and financiers by trade. It's what they will have to do when they get there. On the other hand there's not much demand for making a bacon sandwich.