Saturday, 14 August 2010

Who Caused the Deficit?

The banks refusing to furnish businesses with loans, especially those banks that we refinanced, is an act bordering on the criminal. We bailed the banks out not so as they could re-stock their vaults with cash, I think re-liquidate was the term being used; we did so in order that they operate as banks, which is to give loans to companies for them to manage their cash flow situations.

The banks instead acted more like caricatures of the miser sitting in his heavily barred house counting his accumulated wealth by candlelight. Of course the government of the day must accept some of the blame; once they had the majority shareholdings of these organisations they should have put in place policy that ensured small businesses were not left high and dry; and, safeguards for homeowners whose mortgages we now had control over.

New Labour is not fully to blame for the world recession that we’re still enjoying. However, the neo-liberal economics it slavishly signed up to is to blame. The fact that when neo-liberalism finally came crashing down with the collapse of the banking, mortgage and insurance systems pretty much across the developed world opportunities, such as the nationalisation of banks etc, were not taken.

We all know that a period of restructuring will take place; and, government will use the recession and its attendant deficit to as an excuse for swingeing reform. The banks won’t be punished for their gross mishandling of affairs. Because, merging them and sacking half the staffs isn’t punishing the banks, no it is penalising the, for the most part, lower grade staffers who had the least involvement in the debacle.

No, we and people across all work sectors are paying the price of the speculators; you know the ones; the people paid ridiculous sums of money for gambling with other people’s money; who when they get it criminally wrong go crying to the us the tax-payers to bail them out; and, then expect to receive bonuses because their contracts demand this.

Ordinary working people and service users are the victims of these high rollers. The ConDem axis knows the situation full well. After all it was their kind that played hard and fast with our economy. They also know that the public deficit, though high, doesn’t have to be paid off quickly; excuses about a lack of confidence in the pound and City because of our debts is a smoke screen.

I’ve stated before our debt from World War 2 was over three times as large as the current one. Back in the 1970s we were in a worse situation than we are now; back then we had to go to the IMF for assistance. Periods of economic instability come and go. Yet, we as a country full of many natural resources manage to pull back to a position of relative stability; and, with our Welfare State, more or less, still intact.

The Tory government (because, let’s be honest, the other mob are a bolt-on of no real significance; there merely to give the Tories a majority therefore a ‘mandate’ to govern) is aware that it could ride out the recession and pay off the deficit, admittedly slower, by a series of income tax increases, a Robin Hood tax and National Insurance hikes.

It would still be hard on lots of people; but, it would spread the pain more evenly. While some jobs within the higher ranks of the public sector would inevitably be sacrificed; the mass redundancies this government proposes would be contained. People like paying taxes marginally less than death. But, if laid out properly with commonsense explanations the Tories could be on a winner by going down the less draconian route of taxation over mass unemployment and most likely a double-dip recession – which we’ll hardly be out of by the time of the next election.

Ideology, I’m afraid will stymie any thoughts of the Tories acting responsibly for the majority of the country. The need to capitalise on any given situation and in the process enrich their own narrow class is firmly embedded in their mindset. They look at Treasury figures; they see the high amounts of OUR taxes that go towards servicing OUR Welfare State; and, they don’t see a resource that benefits millions of people through direct employment, government contracts and services provided; instead they see exploitative opportunity.

They see, maybe the last, chance to smash the Welfare State; and, from the smashed fragments they can divert profits into the pockets of their class. Councils and the NHS will in the future be, a bit like the railway system but on a macro scale, fragmented into smaller organisations. Medical disciplines competing with one and other; what were council departments will be disparate sections fighting for the same funding streams whilst not operating holistically – which means the links between, say, health, housing, social care, the environment etc will be broken making life even more difficult for service users. Accountability will become the province of the anonymous.

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