Well it seems they got away with it....

[Earl Aelfheah]

We have a huge deficit problem. Part of this is down to our having bailed out the banks with public money. Banking is now a hugely subsidised industry. The big banks are once again paying out huge bonuses.

The government seems to be doing virtually nothing to start clawing back the billions in public money that was sunk into these organisations. Cameron paints a picture of the 'hard done by' private sector, talking of "public sector boom ? and a private sector bust".

There are huge cuts coming to the public sector. Anyone who believes that this won't mean the loss of real jobs and a reduction in front line services is in my opinion, mistaken.

We are going to see public money funding city bonuses, whilst doctors, nurses and police are made redundant.

Why are the public accepting this. Have we forgotten the role bankers played in the recession? Where is the response from government which we were promised? Is it just me, or does this all seem quite unbelievable?

[HAL9000]

What's happening is more or less what I've been expecting. What can we do about it? Even the massive riots in Greece only managed to kill a few innocent bystanders - they achieved nothing else. A new government? Been there, done that.

As for the banks - they are the economy - they create money through debt. They've got the politicians and us over a barrel.

Reality has to be faced - the money has gone, the good times are over and things are going to get worse. The British economy is unlikely to regain its former glory any time soon - if ever.

[expat]

yes darn banks forcing people to take out mortgages and loans...

[SteveT]

HAL9000 wrote:- As for the banks - they are the economy - they create money through debt.

A few months ago property was deemed the economy, now it's banks.

I usually agree with most of your posts HAL but only when you're right.

The economy is driven by what we produce and sell abroad at a profit.

Banks will not produce anything like the revenue they have in the past from foreign investment, because they have been outed as lying thieving untrustworthy ne'er-do-wells, and I do not expect peoples perception of them will change anytime soon.

Banks roles originally was merely a safe place to protect the goodies we gave them to look after, and not as the prefect of the financial world.

That role has been bequeathed to them by successive improvident, lazy, lack-wit governments who seemingly new no better and were either ignorant of there behaviour or clean out of ideas, although probably both.

The banks have proved beyond all doubt they are not up to the job of managing their own businesses or any money judging by how much of our the tax payers hard earned has been stuffed into them free of charge.

All other companies being bailed out to a fraction of this extent would have been nationalized.

The chairman and board removed, and someone put in their place by the bank to run things until a buyer was found,

but essentially it would belong to the people who paid the piper until purchase was finalised from another source.

If what HAL says is true about banks being our economy, just harbouring the thought sends shivers down my spine.

The economy is not going to improve until we manufacture competetively to a high, world class standard and doing it on a large scale.

People sitting in front of screens as a full time job is essentially non-productive, and usually expensive. A person who weilds a kit of tools who is vital for production is frequently lower paid and has a shorter working life.

These imbalances are due to how we perceive the value of a job, and until we rethink these things on a national scale, and rapidly, then we will be no longer part of the G8 but a banana republic who cannot grow bananas.

[Jeremy]

Public money has certainly not been pumped into the banks free of charge. The government has taken a lot of equity in the likes of RBS, and once the situation is stable, they will release the stock, probably at a profit.

It does stick in the throat that many employees of a failed company are still getting paid very well, but at the end of the day they need to retain their staff, so what can they do? Sometimes you need to look at things from a logical - rather than an emotional - perspective.

[Loz]

I would point out that little to none of the deficit is caused by bailing banks out. The deficit is entirely caused by us spending more than we earn and, like it or not, most of that is expenditure on the public sector. And it's better to sit on our hands at the moment until those banks return to profitability so we can flog the shares off and get the dosh back, hopefully with a big profit.

Also, HAL is absolutely correct in saying banks create money. It's not an argument about what drives the economy, GDP, etc, it's just that our monetary system basically defines debt = money. When you take out a, say, ?250K mortgage the bank creates that on it's books and magics up the money out of pretty much nothing (not entirely true - it actually magics it up from reserves of about ?25K). When you pay your mortgage off, that money disappears from the system.

[HAL9000]

Loz - thank you, that's exactly what I meant.

All western economies rely on a system known as Fractional Reserve Banking, which operates through the banks ? it is the foundation of our economy.

[Jeremy]

Also, the OP shouldn't forget that workers in the private sector (including banks) have been made redundant too.

[Brendan]

I understand the need to not spend public money that does not exist. (As much as I understand the stupidity in banks being allowed to lend money they don?t have and then claiming the debt as an asset along with all the other contrived ways of magicing money from nowhere that they have)

What worries me is the knock on effect of large scale redundancies on the economy. It is all well and good saving X billion ? by sacking 100 thousand people but you?ve only saved the money that those people weren?t paying back to you in tax anyway which could be 50% and above, then they are going to claim benefits, they may require housing, they are going to stop contributing to commerce by buying cars and video games and pooper scoopers and borrowing money from banks, they aren?t going to use private healthcare or education etc etc.

So there must be a tipping point where it causes more damage than it solves.

[HAL9000]

The economy is very finely tuned - only a few percentage points separate growth, recession, depression and societal collapse: as previous civilizations have discovered in the final stage of their collapse.

[Earl Aelfheah]

Brendan Wrote:

-------------------------------------------------------

> I understand the need to not spend public money

> that does not exist. (As much as I understand the

> stupidity in banks being allowed to lend money

> they don?t have and then claiming the debt as an

> asset along with all the other contrived ways of

> magicing money from nowhere that they have)

>

> What worries me is the knock on effect of large

> scale redundancies on the economy. It is all well

> and good saving X billion ? by sacking 100

> thousand people but you?ve only saved the money

> that those people weren?t paying back to you in

> tax anyway which could be 50% and above, then they

> are going to claim benefits, they may require

> housing, they are going to stop contributing to

> commerce by buying cars and video games and pooper

> scoopers and borrowing money from banks, they

> aren?t going to use private healthcare or

> education etc etc.

>

> So there must be a tipping point where it causes

> more damage than it solves.

You are absolutely correct. Government debt also re-emerges into the economy and stimilutes private sector business.

The government have done nothing to prevent any repeat of the credit crunch. A proportionate response to the irresponsibility of the City, which largely got us into our current mess, would not lead to the collapse of our economy - in fact quite the reverse is true.

There is definitely an ideological element to the current government's approach to reducing the deficit, which is simply opportunism.

We do of course need a reduction in the deficit - there is no doubt about this. But so much of the response is not logical, but political. Why are we ring fencing the NHS for example. It was by far the biggest recipient of Labour's largesse. Billions was poured into feather bedding consultant doctors. Even more was lost, employing useless (private sector) management consultants, failed IT projects etc. It's the worst type of populurism to ring fence health.

To suggest that banks have played no part in the current deficit problem is nonsence. The reduction in tax recipts is down to the recession, which is largely a result of the credit crunch. Billions upon billions have now been poured into the banks, which leaves an even bigger hole in the public finances. And yet the government will not take action to curtail even the most extreme antisocial and irresponsible practices of bankers.

[Earl Aelfheah]

http://www.money.co.uk/article/1002877-bank-bailout-to-add-up-to-1-5-trillion-to-public-debt.htm

[DJKillaQueen]

I agree with bits and pieces from everybody really. What frustrates me as someone has said is that we know what the problem is, and we know how we got there, but government policy is doing nothing to curb those causes. Instead we are given the mantra of cuts, to public services mainly and the unforgiveable demonisation of welfare recipients, as the only solution.

The problem with many of the coalition measures are that they are self defeating. Public sector cuts will add half a million people to the dole at a time when they also want to cut the welfare bill. They can't reduce the base rate of benefit without a review - which they don't want to do because it almost certainly will find that benefits actually need to go up, in line with the rising costs of living. Fact...the money they save by cutting public sector jobs will be spent on benefits and schemes for the newly unemployed.

Then there's the cap on housing benefit of ?440 per month (whereas at present it is capped according to local average rents). No family property in the private sector, be it a flat or house can be rented in the south for anywhere near that. Suddenly 2 million familes, many of them low paid will find themselves unable to pay their rent and be forced to move, where? Yet another policy not thought through properly and made without any understanding of the shortages of affordable housing in this country.

Some landlords may begin to have some problems finding tenants who can afford the rent and then there are those who use benefits to top up mortagage payments. Expect to see reposessions soar over the next 18 months. And that will push others into negative equity.

How can the private sector grow in an evironment of repossessions and unemployment? Mr Cameron seems to think that we are suddenly going to see growth in exports as part of a recovery......export of what? and to whom? given that most of europe is suffering in the same way. Indeed Mr Osbourne thinks China are going to start buying British goods - what goods? We don't make anything (apart from military stuff), and if we do, they already can make it cheaper. Pure fantasy and folly. There has been no marked growth in private sector employment in two decades. And just like every other government before them that has talked tough on unemployment and jobs, they are going to fail miserably.

After the Wall Street crash in the 30's governments responded by bringing in regulation....and for 50 years it worked pretty much. Within ten years of deregulation we faced the first of the three recessions we've had in the last 30 years! The truth is that the government is scared of taking on the banks, and big business. Why? Becuase they and most of the privilieged set they come from depend on the growth in those sectors for their wealth. Same old Tories looking after their same old friends.

And what fools they've made of the Lib Dems.

[Jeremy]

DJKillaQueen Wrote:

-------------------------------------------------------

> Then there's the cap on housing benefit of ?440 per month

No, the cap is being set at between ?280 and ?400 a week. To be honest that seems perfectly adequate, you can get quite a nice house in London for ?400 a week.

[Brendan]

Well Tory policy is to keep the poor in subjugation. Having them working in salaried positions give them freedom whereas having them dependent on the sate keeps them trapped and under control to used as cheep labour or cannon fodder as and when necessary.

They go on about the evils of socialism that people should all work to support themselves. Just don?t mention that in order for that to work properly you would have to create economic conditions where someone on a dustman?s salary could buy a decent house and support his family without having to rely on handouts for survival and be treated like some sort of sponger for doing so as if the job he does is not worthy of dignity. Oh no then they get on the back foot because their philosophy is not about everyone in society. Because those below them* should be kept on the estates without the opportunity to compete on an equal footing.

*and yes conservatives, especially their leadership, are for the most part from a specific class and economic background which actively excludes and discriminates against others, regardless of what they say.

[DJKillaQueen]

Totally agree Brendan, although the scope for upward mobility decreased under Labour too - mainly because of rising property prices and the inability of those without parental money to get on the property ladder - and like Labour the Tories refuse any recognition of that. But without doubt the coalition Tory policy will create poverty in the same way Thatcherite policy of the 80's created a new social underclass.

Politically however I think the Tories have ensured they won't win an election for another 13 years. Suicidal policy when you didn't win with an overall majority in the first place. And many people are still very angry at the banks and feel not enough action has beeen taken. As for the Lib Dems - they are pretty much finished. I have heard many of my friends who voted Lib Dem say they'll never vote for them again.....they feel completely betrayed. Nick Clegg put his own career interests before that of his party. No-one buys his 'for the good of the country' mantra.

Jeremy you are quite right - I conceed my error. However there are many parts of the country notably some boroughs of London where the average rent exceeds that rate. Camden for example where it is ?825 per week for a family home. And indeed Southwark is only borderline at ?450 per week. At present HB is capped in line with local average rents anyway. So the only end result of this policy will be to remove the poor from the more leafy and central boroughs and increase pressure on those boroughs that already have shortages of social or affordable housing. It is effectively going to to make some boroughs poor ghettos. What can be the thinking on this? An attack on those who use HB to live in leafy more expensive parts of the country obviously. Again another policy that has more to do with class than any real economic benefit.

In London the increase between 2002 and 2007 in those recieving some form of Housing Benefit in the private rented sector almost exactly matches the shortfall in in social housing of around 67,000. Affordable homes are the real issue and if the government seriously want to tackle the HB bill then they should be tackling that along with curbing the 'right to buy' schemes that took almost half the countries council homes (and notably much needed family homes) out of the social housing loop in the first place.

They have mooted proposals to force those whose children have grown up and left home to downsize but face problems because of the lack of suitable smaller council properties to move them into. What strikes me most is that the Tories have an obsession with council housing and council tenants. They always have had. It comes from a belief that council housing should all be privatised and rents increased to match those of the private rented sector. Many tories also falsely believe that that all council tenants are unemployed benefits spongers (when more than half of council tenants are in fact in employment). So they have policies that exacerbate the lot of the poor, and then demonise them with false myths on top just to make sure.

[Jeremy]

DJKQ, I understand your point about housing benefits, but I disagree completely.

It is not effective use of public money to pay for people to live in expensive houses which are beyond the reach of the vast majority of us. It has nothing to do with class, or removing the poor from leafy/central areas... that's just paranoid nonsense. There are plenty of decent areas which are afforable within the new limits. Nobody needs to live in Hampstead or Pimlico.

According to a Guardian article, there are 80 families claiming over ?1000 per week housing benefits from Westminster City Council. That is much, much more than most people even earn. How can this have ever been permitted?

[DJKillaQueen]

hmm 80 families compared to how many HB recipients? That's sure going to make a huge dent in the HB bill isn't it? Plus I wonder how many of those 80 families were previously employed and happily paying their way until they were made redundant or worse still became ill. The average rent in Westminster is ?1100 per week. Hmm Camden is ?825. Are you going to suggest no umemployed live in Camden as well?

Don't get me wrong...I too agree that we look for somewhere to live that is within our means, but I suspect a good proportion of those families ended up in Westminster for other reasons and then found their circumstances changed. In terms of the unemployed I think it would make more sense for example to have a time limit for those people, say of a year, before reducing the HB and forcing them to move.

[Jeremy]

Yeah but even if those families were previously paying a high rate of tax, I still don't get it. The benefits system is not like some sort of piggy-bank you pay into, and then dip into when you need it... it is there to protect those in need.

Anyway... I'm in favour of the cap...

[DJKillaQueen]

I agree it's not a piggy bank but I also think that those who suddenly find themsleves unemployed be given a cushion to find new employment before being forced to move. Six months even would be reasonable. We all pay tax, some of us more than others but the deal with tax is that we don't get to say how it's spent. I have no children for example. Do I mind that a proportion of my tax has gone on education, child tax benefits etc? No.....because what I want is a fair society that affords opportunitiy to all in equal measure.

The problem with blanket caps that don't reflect the local market is that there will be individuals who are not spongers who suffer....along with creating ghettos that are off limits to the unemployed (temporary and otherwise) and low waged. That is immoral imo (where someone has lived in their home for a long time) and socially divisive. We need more affordable rented housing....not measures to drive the poor out of certain wealthy areas.

HB IS ALREADY CAPPED....the changes will only reduce the overall bill by a fraction....inneffective and designed to sound more than the good it will do.

[expat]

so in Camden they payed ?42.900/year and in Westminster ?57.200/Year on average both reflect a much larger than average income.

[DJKillaQueen]

Yes and both are linked to the over inflated private housing market. When there is a lack of social housing the only option is to rent privately....and the average rents reflect what landlords are having to pay in mortgages and other costs for that home. This is not rocket science and the last three governments have been made fully aware of the impact of the out of control housing market on the low waged. They have all chosen to do nothing about it. Capping housing benefit beyond it's current caps does nothing to address these issues.

[expat]

live somewhere else? I certainly could not afford to pay over 42.000/year in rent and I very much doubt the low waged could.

[DJKillaQueen]

Well that's why so many people in work are having their rents topped up by HB. The minimum wage for example leaves any rent of more than ?100 per week unaffordable....so HB steps in. Even in Boroughs where the average rents are lowest, a one bedroom flat in the private rented sector costs at least ?127 per week.

The real question here is what has gone so wrong that so many working people can't afford to pay their rents in full? As I wrote earlier, SHELTER predict almost two million tenants and families will be affected by this blanket cap - and they are not all living in leafy Westminster. But many more will continue to have their rents paid by HB in part because they don't earn anything like the ?450 plus rent needed each week. The end result is that our taxes are paying landlords mortgages really. It is the price of private housing, mortgages and rents that are responsible for the massive HB bill more than where people live.

I'll try and find some figures on just how many working people require HB.

[DJKillaQueen]

According to the office for national statistics, nationwide 17% of all households are workless and 33% of all employees earn less than ?7 per hour - that's less than ?280 per (40 hour) week before tax and other deductions. You don't have to be a genius to figure out that a society where a third of the workforce doesn't earn enough to pay their rent in full has a serious problem.

Our housing market outstripped wages a long time ago and has put home ownership out of the reach of a whole generation of people, and we the tax payers are picking up the bill. My personal view is that capping rents in the private sector would be a better option for reducing the HB bill. Controversial I know but it is ridiculous that we do nothing about the over-priced housing market. Where will it stop?