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"No your point was that Labour didn't overspend because the Conservatives agreed with their spending totals."

Err, no, obviously......

That is a complete misrepresentation. Prior to the global recession hitting, the Labour government did not overspend full stop, irrespective of what the Tories view was on that spending. That is my point.

By all objective comparisons with G7 countries in 2008 and by comparisons with the vast majority of previous UK governments since time immemorial, the Labour government did not overspend as you suggest in your initial response to my post.

However, the current Tory led government narrative is that we have been left a mess by the Labour government. This ignores two things:

1. Up to Nov 2008 they never gave any indication whatsoever of what they are now saying.

2. I dont know what part of the phrase "the global recession" Cameron doesnt understand, but if he carries on like this, his mother would be wise to reclaim his Eton school fees.

Clear now?
Cheers
D

> So if the banks give out bonuses of ? 7 billion (which is one
> figure put out there by the papers) then the tax man will get ?
> 3.5 billion.
>
> That ? 3.5 billion might even pay for the MPs expenses this
> year.

Fantastic! Only another 230 years to go till this tax bonanza will have payed back the banking bail out (assuming that was interest-free).

YawnFuck wrote:

> Wrong, the bailout will be repaid when the banks are sold at a
> profit probably withing the next 5 years, meanwhile the annual
> levy continues.

At a profit? Within the next 5 years?
I reckon you still believe in Father Xmas, the Tooth Fairy, that premiership clubs are profitable businesses, and that foxnews is impartial...

Yes, I can see them being sold within 5 years, at a gargantuan loss, and I can already visualise DC explaining grudgingly to the public that that was the best deal on offer...

David Johnson wrote:

> 2. if you adapted your spending to take into account the
> possible, imminent collapse of the world financial system and
> subsequent worst global recession for nearly a century for
> every year you were in power, government would be paralysed in
> terms of spending.

That is a point on which I cannot give absolution to either the former government, or indeed the City. This is just a blatant case at the application of common sense where it does not belong.

In everyday life we are used to simply dismiss low-probability risk as a way of keeping our individual sanity. Yes, a lion escaped from a zoo could kill us, but that's just a case of shit happens. On the society as a whole it has no impact, it recovers instantly from individual deaths. For high-impact events our usual low-probability dismissal strategy is unsound. That was a problem with the global banking crisis, and similarly for BP with the big oil spill in the Gulf of Mexico. So, how does one deal with the threat of high-impact damages? Strategy 1 is to throw the kitchen sink at preventative measures that make them less probable (deregulation of the financial sector did the opposite). Strategy 2 happens when you evaluate that the expected damage (probability of the event times the actual damage) is higher than the expected gain - in that case you stop it altogether: you ban deep-sea oil-drilling, you do not bail out the banks at all.

The banking collapse is actually a worse case than that, because it was not caused by some random low-risk event, it was caused by a hugely flawed business model - pretty close to a pyramid scheme. I remember a banker telling a tv audience how their industry was creating wealth, at which point I was throwing bananas at the telly. Banks do not create any wealth whatsoever, they just move money from A to B. One might make a case for banks facilitating wealth by financing worthy investments, but I had the distinct impression that the guy was simply believing in his own pyramid scheme.

That lending money at next-to-nothing interest rates to people who couldn't possibly pay it back was economic insanity should have been clear from the start; to find out that and why those repackaged mortgage products from investment banks were worthless you just had to listen to John Bird+Fortune at the time - politicians did not debate it then. The reason this insanity happened at all was that the brokers (and the individuals employed by the banks) profited from it personally, and the banks' owners failed to stop them.

"Your argument to me was that I should accept Labour didn't overspend because the Tories accepted their spending plans. So I'm afraid by default you agree that Labour policies can easily be validated by checking if the Tories think the same."

If you read the thread again, you will see that the subject of my reply to you was the "Tory narrative" which is primarily its all Labour's fault.

I explained why this is a deeply dishonest narrative because:

a. in no way was the deficit out of the ordinary compared to G7/G8 levels in early 2008.

b. the Tories themselves did not speak out against the government spending in early 2008.

So obviously I am using the comparison between the Tory attitude now with that in 2008 to highlight their dishonesty NOT to argue that it must have been fine because the Tories didnt object to it in 2008. As far as I am concerned, anybody who relies on a Tory party for economic advice is asking for a P45.

I will leave you to carry on arguing with points I didnt make.

Cheers
D

In summary, I believe that

1. Government spending up to 2008 produced a deficit largely in line with G7 and G8 deficits and British governments over many decades.
2. The deficit worsened substantially due to the near collapse of the financial system and the government bailout to and insurance for the "casino" banking sector.

Britain was hit harder than a number of countries because of:

1. The size of its banking sector and the lack of close regulation.
2. The over-reliance of government on the banking sector as opposed to other areas such as manufacturing where little was done in support.

The Labour government as previous governments such as Thatcher's that decimated manufacturing in the UK and kickstarted banking deregulation, must accept responsibility for those failures.

Cheers
D

beutelwolf wrote:

> YawnFuck wrote:
>
> > Wrong, the bailout will be repaid when the banks are sold at
> a
> > profit probably withing the next 5 years, meanwhile the
> annual
> > levy continues.
>
> At a profit? Within the next 5 years?
> I reckon you still believe in Father Xmas, the Tooth Fairy,
> that premiership clubs are profitable businesses, and that
> foxnews is impartial...
>
> Yes, I can see them being sold within 5 years, at a gargantuan
> loss, and I can already visualise DC explaining grudgingly to
> the public that that was the best deal on offer...

Cannot help but feeling smug about that now, though it's not a happy form of smugness.

Yep and if for example the government's share in RBS was sold at current prices, we would see a loss of over ?20bn on an outlay of ?45bn.

And we havent even had the advantage of saying well at least the problems that caused the financial collapse in the first place, casino banking have been sorted. They haven't. Lending to Joe Public whether it be for a mortgage or small business is still woefully limited as banks concentrate on their casino banking arms to prop up their balance sheets.