Government Cuts - How angry are you?

[davieG]

The Guardian - http://www.guardian....ames-banks-cuts

Bank of England governor blames spending cuts on bank bailouts

Mervyn King tells MPs: 'The price of this financial crisis is being borne by people who absolutely did not cause it'

Mervyn King has risked reopening the bitter argument over blame for thefinancial crisis by saying that government spending cuts are the fault of the City and expressing surprise there has not been more public anger.

The governor of the Bank of England said that people made unemployed and businesses bankrupted during the crisis had every reason to be resentful and voice their protest. He told the Treasury select committee that the billions spent bailing out the banks and the need for public spending cuts were the fault of the financial services sector.

"The price of this financial crisis is being borne by people who absolutely did not cause it," he said. "Now is the period when the cost is being paid, I'm surprised that the degree of public anger has not been greater than it has."

King has repeatedly pointed the finger at the City since the crisis erupted in 2007, but this was the first time he blamed bankers for the coalition's spending cuts.

It became clear during the hearing that King and his fellow members of the Bank's monetary policy committee, which sets interest rates, believe the crisis will have a lasting impact on the economy.

Asked when living standards enjoyed before the crisis would return, King said: "The research makes it clear that the impact of these crises lasts for many years. It is not like an ordinary recession, where you lose output and get it back quickly. We may not get the lost output back for very many years, if ever."

King faced tough questions from Labour MPs who believe the Bank should not have supported the Treasury's cuts programme. Accused by Andy Love, the Labour MP for Edmonton, of giving George Osborne cover for spending cuts, King denied that meetings with the chancellor resulted in a cosy agreement to keep interest rates low to support austerity measures.

He said: "There has never been any attempt on any occasion to influence the monetary policy committee on what decisions it should take."

In a further provocation to the financial sector, King set out plans for an overhaul of City regulation and oversight that would allow banks to fail when they get into trouble. He told MPs it was necessary to move away from rules designed to prevent banks failing, with a safety net provided by taxpayers, to a system that allowed banks to fail in an orderly way.

[Bellend Sebastian]

I don't think it's that people aren't angry, I think it's more of a case that generally they don't understand public finances, what has caused the current situation or the impact that the cuts will actually have. Unless you're directly affected in a way that you cannot ignore (e.g, you're a public sector worker about to lose their job, or the cost of you going to university is suddenly rocketing) it's very easy to be apathetic.

It's interesting that Mervyn King has said so explicitly that the current situation is down to the banking crisis, as it's cemented in many minds that it was the result of Labour profligacy, plain and simple. You just pick the option that sits best with your political standpoint and off you go - I don't think the likes of us have a clue about it, really, but I'd hope Mervyn does, given his position and supposed independence.

I was speaking to a fund management house rep last summer, and he reckoned their economists were predicting that there would be riots by Christmas (they got that bit right) but by the time the next General Election comes round that the government will have cut spending to such an extent that they'll be able to afford to give us all very generous tax breaks so that we vote for them again.

We shall see

[Bob Weasel Fox]

I don't think it's that people aren't angry, I think it's more of a case that generally they don't understand public finances, what has caused the current situation or the impact that the cuts will actually have. Unless you're directly affected in a way that you cannot ignore (e.g, you're a public sector worker about to lose their job, or the cost of you going to university is suddenly rocketing) it's very easy to be apathetic.

It's interesting that Mervyn King has said so explicitly that the current situation is down to the banking crisis, as it's cemented in many minds that it was the result of Labour profligacy, plain and simple. You just pick the option that sits best with your political standpoint and off you go - I don't think the likes of us have a clue about it, really, but I'd hope Mervyn does, given his position and supposed independence.

I was speaking to a fund management house rep last summer, and he reckoned their economists were predicting that there would be riots by Christmas (they got that bit right) but by the time the next General Election comes round that the government will have cut spending to such an extent that they'll be able to afford to give us all very generous tax breaks so that we vote for them again.

We shall see

Well thought out response Bellend Sebastien and i agree us "Normal Folk" dont really understand. My job is being directly effected by the cuts so its a sore subject gotta admit - too much politics involved in my job at the best of times (and they are probably monitoring sites like this so im saying nothing officially!!!). Your last paragrapgh though sorry dont believe that for a minute (not what you put - just it coming true)

[James.]

For most people it seems to be a choice between blaming the government and blaming the bankers. For me it's the regulators that have a lot to answer for, yet no one seems to bother with them. Probably because it's harder to demonise an organisation like the FSA that people know little about compared to the more easily digestable, media friendly "evil bankers" or "inept politicians".

As for the cuts from a personal perspective they probably won't affect me but I wouldn't say I'm apathetic. The probability is that many very valuable organisations in the charity sector will see their funding cut significantly, and that bothers me.

[Bellend Sebastian]

Well thought out response Bellend Sebastien and i agree us "Normal Folk" dont really understand. My job is being directly effected by the cuts so its a sore subject gotta admit - too much politics involved in my job at the best of times (and they are probably monitoring sites like this so im saying nothing officially!!!). Your last paragrapgh though sorry dont believe that for a minute (not what you put - just it coming true)

Cheers, CW.

I usually stay out of political debates because all too often it's difficult if not impossible to win an argument or even convincingly get your point across, as most of the time we don't have access to the hard facts that would strengthen our case.

As for the last paragraph, of course no-one knows, but given that they didn't get a majority at the last election and are presiding over a programme that is proving deeply unpopular, you would expect them to have to offer something tempting to the electorate if they're going to have any hope of getting in again, so maybe it's not that unrealistic

[Zingari]

I agree that that most of us haven't got a clue as to who is really to blame and who we should be venting our anger towards . The whole world of finances is so steeped in mystery , but I'll chip in anyway.

The financial crisis was probably caused the banks being allowed to operate unfettered by regulation, who took the opportunity to line their own pockets by using bonuses to encourage their staff to take unacceptable risks.

OK that is probably stating the bleeding obvious

The only fair solution to the banking debacle is to put in place all of the necessary regulations needed to control credit, bankers pay/bonuses and to tax the Banks until they have fully compensate the Tax Payers who bailed them out.. This 'pay back' should also include sufficient amounts to compensate all of the workers who have lost their jobs, all of the businesses that have failed and to restore all of the public services that have been destroyed, as a result of the banksters greed and selfishness.

Yes , i'm very fookin angry , but not really sure who to throw stuff at , so basically i'm stitched up along with most people i suppose

[Finnegan]

I loved how quickly it shifted from "oh it's all the bankers fault, it's an international situation!" to "oh it's just us, we're screwed and it's all Labour's fault" the closer we got to the general election and the further we get into the Tory's term.

[Jon the Hat]

I loved how quickly it shifted from "oh it's all the bankers fault, it's an international situation!" to "oh it's just us, we're screwed and it's all Labour's fault" the closer we got to the general election and the further we get into the Tory's term.

If you are talking about the Global Financial Crisis, then clearly the banks have gone nuts, no one regulating has a clue what they were up to. and they have basically been creating paper money based on nothing and selling it to each other, making huge paper profits which inflated pay and bonuses beyond recognition.

A separate issue to this is the state of the economy when the shit hit the fan. This was the fault of the Labour Government who took us into the crisis with huge debts and a large deficit caused by a massively bloated public sector most of which wouldn't recognise efficiency if it bit them on the arse.

The first is non political becuase no major government anywhere of whatever leaning did understood what banks were doing or did anything regulatory about it. In fact the Tories would probably have been even more lax on this.

The second for me you really cannot argue with. And re King's point, no we should probably not expect the standard of living we had before becuase we were borrowing to pay for it, and now we have to pay it back.

Is it shit? Yes. Does getting angry help? Not really. Would heavily punishing the banks make it worse? Without a doubt because they would all sod off to the far east and we would be even more in a hole than we are anyway.

[Guest BlueBrett]

The cuts have to be made and they have to be made now. It would be completely immoral to hand on the structural deficit to the next generation. Obviously some people are going to lose out but that's just tough luck I'm afraid. Why should public sector workers be privileged to job security that isn't enjoyed by people in the private sector anyway? It's time the country was run by the same principles as the majority of peoples' personal finances - If we can't afford something then guess what, we can't have it.

[davieG]

The cuts have to be made and they have to be made now. It would be completely immoral to hand on the structural deficit to the next generation. Obviously some people are going to lose out but that's just tough luck I'm afraid. Why should public sector workers be privileged to job security that isn't enjoyed by people in the private sector anyway? It's time the country was run by the same principles as the majority of peoples' personal finances - If we can't afford something then guess what, we can't have it.

Unfortunately it would appear that the country has been run on those principles considering how many people are living on credit (not counting mortgages). The principle in many peoples finances seems not if they can afford if but how much credit on their credit card do they still have.

[Finnegan]

Why should public sector workers be privileged to job security that isn't enjoyed by people in the private sector anyway?

Worked in the private sector most of my life, up until the last year, and most of the people I know also work in the private sector. Most of them have pretty secure jobs, didn't really bat an eyelid at all through the recession.

The last twelve months in the public sector, however? Heh. Cut, cut, cut, review, review, review, don't know many people that haven't had to apply for their own job, quite a few who have lost theirs or been down graded or cast aside. Moreover, it's not really "finished", most of these people know it's probably coming again in the summer and it's immensely distressing.

It's not about being "privileged," don't sit there and finger point at the public sector as if it's full of overly pampered lay-abouts who want some sort of easy ride because that's absolutely miles from the truth.

[dave the caveman]

People seem to forget a couple of things. Firstly that while the large financial institutions did allow and trade toxic debt, it was ordinary people that caused the debt to become toxic in the first place. Lots of people borrowed more than they could afford to repay. You really can't then complain about bankers being greedy when it was your own greed that caused the problem in the first place. Should the banks or regulators have stepped in and stopped what was happening? With the benefit of hindsight it's easy to say yes, but at the time, I don't think it would have gone down very well at all.

Secondly when talking about bail outs or Quantitive Easing, a lot of people seem to be under the impression that both of these methods involve taking money from tax payers or printing money and then just giving it to the banks with no hope of a return. That's not the case. Both methods involve repayment in the medium term.

I also agree with what was said above about the cuts being timed for political reasons. In fact I think that is patently obvious. If you're looking at it from a purely economic point of view, making such cuts right now is a dreadful decision. The timing could barely be any worse. The government were lucky that they had the weather to use as a scapegoat for the huge 0.6% drop in GDP in Q4. We might return to a minimum amount of growth in Q1, but this is all still before the cuts have really bitten. Then with inflation soaring as well.... I honestly dread to think where we'll be by the end of the year, and I'm no doom mongerer, this is happening - a 0.6% drop in GDP combined with 4% inflation, with worse to come... if you're not feeling this already, then you will. You will certainly see a noticable reduction in your living standards in the next 12 months.

[Finnegan]

People seem to forget a couple of things. Firstly that while the large financial institutions did allow and trade toxic debt, it was ordinary people that caused the debt to become toxic in the first place. Lots of people borrowed more than they could afford to repay. You really can't then complain about bankers being greedy when it was your own greed that caused the problem in the first place.

I'm sorry but, on an entirely social, ethical level, I massively, massively disagree with that point of view.

I'm not saying people shouldn't be held accountable, to a certain extent, for their own decisions. But removing blame from unscrupulous businesses who should be educated enough to know better and finger-pointing at the easily duped masses is more than a pinch out of line, really.

Particularly when those who couldn't afford to pay it back were frequently, intentionally targeted by vulturous and exploitative companies looking to cash in.

[lcfc"weasel"]

Very, Planning on going uni. in 2 years and it's now going to be twice as expensive.

[ousefox]

Very, Planning on going uni. in 2 years and it's now going to be twice as expensive.

Same, but don't expect too much sympathy on here, apparently all students are drunk and lazy, deserve the debt, and won't get a job after their degree anyway

[Webbo]

I'm sorry but, on an entirely social, ethical level, I massively, massively disagree with that point of view.

I'm not saying people shouldn't be held accountable, to a certain extent, for their own decisions. But removing blame from unscrupulous businesses who should be educated enough to know better and finger-pointing at the easily duped masses is more than a pinch out of line, really.

Particularly when those who couldn't afford to pay it back were frequently, intentionally targeted by vulturous and exploitative companies looking to cash in.

In reality though the banks can't win. The banks are criticised for lending lots in the middle of a boom when, seemingly, the risks were lower, and yet now they are criticised for not lending when times are hard.

[dave the caveman]

I'm sorry but, on an entirely social, ethical level, I massively, massively disagree with that point of view.

I'm not saying people shouldn't be held accountable, to a certain extent, for their own decisions. But removing blame from unscrupulous businesses who should be educated enough to know better and finger-pointing at the easily duped masses is more than a pinch out of line, really.

Particularly when those who couldn't afford to pay it back were frequently, intentionally targeted by vulturous and exploitative companies looking to cash in.

I'm not trying to shift the blame from banks onto people, I'm highlighting the fact that greed was the root cause. Greed caused people to take the loans and greed caused the banks to profit from them. One side then attempting to blame the other is classic pot, kettle and black.

[Zingari]

In reality though the banks can't win. The banks are criticised for lending lots in the middle of a boom when, seemingly, the risks were lower, and yet now they are criticised for not lending when times are hard.

Really ? They can't win ?

When times are good and profits high, they got huge bonuses.

When times are bad and they made huge losses , the taxpayer bailed them out and they got huge bonuses .

Seems to me that they can't lose

[Jon the Hat]

Very, Planning on going uni. in 2 years and it's now going to be twice as expensive.

Congratulations on the very well paid career you are clearly planning to have. Well done you. What is it - Doctor? Lawyer? Banker?

I do like a man with aspirations.

[Jon the Hat]

Unfortunately it would appear that the country has been run on those principles considering how many people are living on credit (not counting mortgages). The principle in many peoples finances seems not if they can afford if but how much credit on their credit card do they still have.

Yep. They are all going to see their standard of living drop as well.

[FoxyPV]

There's no point in getting too annoyed about it as there is nothing we can do. The unions are fucking useless, society spent too much, developers borrowed too much and when everything went tits up the only to people to come out on top are those in the City.

The Lib Dems will not break the coalition as they can't actually get any lower in people's opinions so they might as well enjoy being in power meaning that we are stuck with the current bunch.

[phillip j fry]

what cuts,spending was up in the last quarter and the future cuts will only bring spending down to '07 levels which still isnt enough to really get to grips with the national debt when you factor in pfi obligations and public sector pension provision.the governing classes have totally screwed it up for generations.

[Webbo]

Really ? They can't win ?

When times are good and profits high, they got huge bonuses.

When times are bad and they made huge losses , the taxpayer bailed them out and they got huge bonuses .

Seems to me that they can't lose

Well in money terms then your obviously right, I was talking in terms of public perception.

[Zingari]

Well in money terms then your obviously right, I was talking in terms of public perception.

i don't think they give a flying fook about how we perceive them

[l444ry]

The right wing (and those who’ve fallen over the right wing edge) love to claim that the current crisis was not caused by bankers. George Osborne, Jon the Hat and Webbo are included in their number. According to these people it’s all Labour’s fault. Which indicates extraordinary faith on their part on the power of they UK and social democracy, but it is also absolutely wrong.

How do I know so? Because the Bank of England are sure of it.

DavieG's report states that Mervyn King yesterday told the Treasury Select Committee: "that the billions spent bailing out the banks and the need for public spending cuts were the fault of the financial services sector".

I think that closes the debate.

Unless you have, like George Osborne, Jo the Hat and Webbo, fallen off the edge of reason.