Tag Archives: Politics

It’s All Labour’s Fault says George

26 Feb

So yesterday our downgraded Chancellor tried to insist that everything’s on track and we’re only in this situation because of Labour’s failure. Really.

Let’s look at George’s claims, first of all he insists it’s all ok because they were expecting the downgrade. He repeated the tried and tested party line that it’s down to the “difficult decisions they were taking because of the mess they inherited from Labour”.  Well it’s George who insisted he be judged by whether we managed to keep the triple A rating, not Labour so it’s only right that Labour hang him with it now but let’s look at where the “mess” came from.

It’s too simplistic to just say “The banks created this mess with their casino practises” as so many like to bandy about. The Investment Banks gambled on lending more and more money to people who could not afford to pay the money back. They then decided to sell the risk on these loans to third parties who sold them on again. You will hear phrases like derivatives and credit swaps and many others if you research a little more, I won’t cover that here, that’s a story in itself. If you want to know the full story I suggest you watch the excellent documentary Capitalism  – A Love Story by Michael Moore.

In the 1970’s successive Governments, Ted Heath’s Conservatives and Jim Callaghan‘s Labour party, were brought down by the Unions. Strike after strike, the three days week, the Winter of Discontent, all these created a situation where Governments were running scared of Union power and rightly so. The Trade Unions had amassed immense power and taken Britain by the throat. Margaret Thatcher had a solution.

The reason that people went on strike so easily at this time was because there wasn’t that much to lose. Few families among the working class owned their homes, the majority lived in Council houses or Privately rented homes. You could only get a mortgage from a building society, banks were not allowed to sell mortgages and in order to qualify for a mortgage, most building societies required that you save with them for at least two years before they would lend you the money for a mortgage, you would have to have a sizeable deposit, sacrifice a goat and present your first-born child. Well the last two I made up but you get the idea. Quite responsible really wasn’t it? If you couldn’t prove you could afford to pay a mortgage by saving while also paying rent and your bills they wouldn’t lend you the money.

Margaret Thatcher decided this was far too complicated and arcane, if she was to beat the unions she would first of all have to give union members something to lose. Most houses for sale were out of the reach of the working classes so she came up with the idea of selling them their council houses and create a middle class aspiration within the working classes. So first Margaret toddles off to Parliament and gets them to loosen the restrictions on banks selling mortgages and gets them to allow people to apply straight away, she even encourages 100% mortgages, mostly through back door price manipulation of “5% deposit paid”  then she legislates to allow people to buy their council houses. We start to hear the “renting is dead money” rhetoric and people duly go off and start getting mortgages.

So now we have a working class with something to lose, of course that’s not enough, she also encourages banks to start giving people credit cards and loans and makes car finance and hp easier to obtain. For the first time we have the concept of the “Credit Slave”. In order to solidify this, next we see a boom in construction due to re-mortgaging becoming easier so people start to have extensions put on their homes and are encouraged to invest in their properties, house prices go through the roof and along comes a recession in the late 80’s/early 90’s and they drop through the floor again. People lose their jobs and their houses and now we have “Boom and bust“. Through all of this, nothing is done to replenish the housing stock of the council houses that have been sold, pushing those who’ve lost their homes into the private sector. Rents remain high and the housing benefit bill goes through the roof.

Labour come to power in 1997 and suddenly there’s hope, Gordon Brown promises “No return to Boom and Bust” then promptly returns to Boom and Bust. Nothing is done to curb the wanton borrowing created under the Thatcher government and the City suggest the Labour would be ill-advised to rock the boat. Labour court the City to try to shake off the old image of Labour being City-averse and everything’s fine. Labour are bewitched and things continue along the same path but something has to break, people can’t keep borrowing beyond their means and in the early to mid 2000’s hard selling banking practises are exposed where people are literally being forced into borrowing beyond their means and this time Labour act. Crackdowns are initiated and the hard selling is supposed to stop, it doesn’t completely but there is a reduction.

The problem is though, through all this people are being encouraged to borrow money and where there’s an increased risk, the interest rates are astronomical which increases the risk and creates a self-fulfilling prophesy. The 1980’s deregulation chickens come home to roost. While Labour made mistakes, their biggest was continuing Conservative party policy. The people at the bottom of the ladder are the one’s neck-deep in water while those at the top hardly notice any difference in their own circumstances. They are quite literally untouched and as they and the banks get off scot-free, we suffer for their predatory behaviour, particularly where hard selling tactics are concerned. So how do we combat this in the future, what would prevent this kind of thing happening again? I have some suggestions:

  1. Create a legal maximum interest rate for each type of borrowing.
  2. If a Bank or Credit card company fails to do due diligence, make them responsible for every penny above what you can afford.
  3. Custodial sentences for CEO’s and Board members of Banks who are caught using predatory practises
  4. Implement the Robin Hood Tax in full
  5. Build more social housing
  6. Bring back the savings period before being given a Mortgage
  7. Hold Bank CEO’s and City Trading Mangers personally to account for the failure of their banks, freezing their assets and making them pay for their mistakes

It seems all too easy to make the poorest in our society pay for the mistakes of the wealthy, it’s time that this was reversed before the poor decide to reverse it for themselves.


Time To Sack This One Trick Pony Chancellor With A One Track Mind

23 Feb
Osborne Laughs at Ed Balls' Stammer during the Autumn Statement

Osborne Laughs at Ed Balls’ Stammer during the Autumn Statement

Well the inevitable happened finally. Yesterday Moody’s downgraded Britain’s Triple AAA credit rating. In 2010 Chancellor George Osborne made it the measure with which him and his Prime Minister should be judged. They embarked on an ideological crusade of cuts as they imposed the most draconian austerity measures in modern times. They insisted that this would balance the budget within four years and bring prosperity back to Britain. George became the darling of an international collusion of conservative thinkers in this great economic experiment as they watched with anticipation of the great success that would allow them to impose cuts of the same magnitude on their own populations.

As two years passed and the much anticipated benefits failed to materialise the much predicted double dip recession came, only to be interrupted by the Olympics and the economic boost they brought and yet, even with the Olympics, George only managed to achieve 0.9% growth, far from the 2.8% he inherited from his predecessor.  Still, George wasn’t for turning, patience would see us ride it out George said, staying the path would see a return to prosperity. Then came the Autumn Statement. George had got his sums wrong and it would take an extra three years to balance the budget but the pain would be worth it, but the poor would have to give more, they would have to have their benefits and tax credits limited to rises of only 1% as opposed to inflation but it wasn’t all bad news, George had managed to stuff £3.5 billion in his back pocket from the sale of 4G licenses in February of 2013 allowing him to claim that the Fiscal Deficit had fallen only February came and George had got his sums wrong again. The sale of 4G licenses came in at £2.34 billion a whole £1.16 billion short. Perhaps somebody needs to have a word with George about chicken counting and hatched eggs.. and buy him a new calculator.

Yesterday International Credit Rating agency Moody’s dropped Britain’s AAA rating to AA1. What this means for Britain is higher interest rates on its debt, increasing the pressure on the nation’s finances and almost certainly the first triple dip recession in modern times. What this means for George is a complete loss of credibility. George himself said we should judge him on whether he kept that AAA rating. Well we have George, you’ve failed, now do the decent thing and resign.