If anyone doubted what a pair of dimwitted, public school-educated plonkers we have running our country, then Osborne's pathetic performance yesterday, with Cameron sitting next to him nodding and smiling, must have convinced them that their optimism was misplaced. This was not a budget to solve our nation's economic and fiscal ills, in fact, none of his budgets have ever done so. The final insult for me, and also the point when I switched the 'tellie' off, was when he knocked a penny off a pint of beer! What an utterly pathetic example of totally useless 'gesture politics' that was an insult to our intelligence! Here we have a government spending more and more and needing to borrow more and more. All the sins of omission and commission perpetrated by the last profligate and corrupt Labour government repeated ad nauseum.
Economists make economics ferociously difficult for non-economists to understand but let me assure you it is quite simple. Governments have no money of their own. They only have three sources, your money wrenched off you by taxation, the money they decide to print and the money they can borrow - in your name! There is a limit as to how much money they can raise by taxation, as President Hollande is finding out the hard way in France, because beyond a certain point the higher the rates the less you will collect. It is that realisation that sends politicians scurrying cap in hand to the Shylocks for loans because they are desperate to convince you that they are wonderfully warm-hearted, generous people positively eager to be as liberal as possible with largesse for needy causes - and you fall for it by voting the bastards back in! Alas, as the debts mount the Shylocks begin to assess the increasing risk involved and their interest rates begin to rise. It is usually at this point that the political crooks start to print money and, of course, the more money there is the less it is worth, which means you need more of it to buy the things you need - it's called inflation - and it's inflation that causes the Shylocks to demand even higher interest rates to compensate for the fall in value. So far, so bleedin' obvious, although it is a mystery to me that so few people are able to grasp it.
As I have said before on this blog, when the new government came in at the height of the global financial crisis they had the oportunity to be truly radical and to go to the very source of all our troubles - government spending. The people knew there was trouble and whilst they would have moaned and groaned most of them would have recognised the reality of the times, gritted their teeth and put up with it. But no, Cameron and Osborne fudged it. They cut some government spending, mostly off easy targets like the military but baulked at the real heavy spenders - welfare and the NHS - and for the sake of their image (not the country's as they would have you believe) they ring-fenced overseas aid to places like India which is busy sending rockets into space!
What the government spends each year above and beyond what it receives from revenues is called the 'deficit'. In his first two years Osborne cut the deficit by about a measly quarter but still continued to live above his means! Thus, the national debt which is the accumulation of all those annual deficits added together continued to mount ever higher and higher.
As of yesterday, it is now clear that even Osborne realises that he cannot even maintain a reduction of our annual deficit and that the only way out is to borrow even more. (Of course, there is another way out and that is to spend less but that is quite beyond the wit and courage of these two public-school spivs who run our affairs.) In case you comfort yourself with the notion that even if things are bad here, it's much worse in the rest of Europe, then cast your eye over this diagram:
At this point we must look to an unlikely gang of saviours - the Shylocks! If our posh boy spivs haven't the guts to do what it is required then we must rely on the money-lenders to do the dirty deed. They should slash our ratings and begin to charge a realistic rate of interest on our loans. Then, and only then, will minds be concentrated in the Treasury and the BoE, and possibly, even in the empty heads of the politicians. The other day there was a rather melancholy story concerning the finding of the long-lost violin owned by the leader of the band which played on the deck of the SS Titanic as it went down. Apparently, the man concerned strapped it to his body and it was recovered later. They should present that violin to George Osborne to play as SS Great Britain sinks beneath the financial waves.
My thanks for the diagrams to The Coffee House - and an excellent article by Fraser Nelson
I think that what will keep us afloat is the fact that for rich people and their money, the alternatives to London are not that numerous.
Posted by: backofanenvelope | Thursday, 21 March 2013 at 11:55
Alas, BOE, it might (and is!) keep the West End flourishing but it doesn't do much for 'Uddersfield!
Posted by: David Duff | Thursday, 21 March 2013 at 12:04
But then 'Uddersfield doesn't do much for 'Uddersfield.
Posted by: dearieme | Thursday, 21 March 2013 at 12:58
The trouble is, I think the politicians do 'know what they're doing' in the lack of 'austerity measures'. Not economically but electorally.
As an example, in my area there has long been no major industry (originally steel, coal and armaments. We do still have one tyre factory but that, literally, is it). We have no major 'service industry' employers, a couple of very small manufacturers, a middling transport outfit and a few jobs in retail. The rest of the ostensibly employed 'work' for the council or the government (be that the NHS, tax, benefit, council offices, social service depts or community carers, .......).
So, in common with many areas, most of the 'employed' are the very groups which would need to be drastically cut for any reasonable expectation of a balanced budget to work.
What are the chances of any politician proposing to sack these 'voters' let alone cutting the 'incomes' of the vast majority here on benefits?
I've read proposals, mainly on American blogs, suggesting that anyone reliant (either wage or 'support') on government largese should be barred from voting (excluding emergency services and military). I feel anything less drastic is simply 'bound to fail'.
The Alexander Fraser Tyler quote springs to mind, democracy: "It can only exist until the voters discover that they can vote themselves largesse from the public treasury"/
As an employee of the NHS would I vote for a drastic reduction in my income? Possibly, but only if it was a guaranteed 'system wide' reduction, and since the likelihood of that is virtually nil I fear a 'reorganisation' will need a full collapse to initiate. (At least give me a point for being honest that my 'self interest' trumps any enlightened 'selective', 'limited' cuts).
Posted by: Able | Thursday, 21 March 2013 at 21:56
If we are to go in for sacrificial cuts, then they have to start at the top. How about a 25% cut in the pay of MPs and ministers?
Posted by: backofanenvelope | Friday, 22 March 2013 at 07:22
To be honest, DM, I'm not at all sure exactly where 'Uddersfield is!
Interesting idea, Able, to deny the vote to government employees. It would have stopped those political crooks, Brown & Balls, from pursuing their plan to cram as many people into government employ as they could. Off subject, I see that one of your 'old lot' has just been awarded an MC - well done, that man!
BOE, an excellent suggestion but alas:
When you wish upon a star
Makes no difference who you are
Anything your heart desires
Will come to you
If your heart is in your dream
No request is too extreme
When you wish upon a star
As dreamers do
Lyrics from eLyrics.net
Posted by: David Duff | Friday, 22 March 2013 at 08:48