So much for George Osborne being a lightweight...

[beorhthelm]

What like the solid economic foundations the banking industry gave us recently, oh and is that the banking industry that is in the private sector?

why drag the banks into it? as said, there is a private sector beyond and not all the banks behaved badly. the economic foundations im talking about is a broader brushstoke of investment. i'd rather see government (any) invest, some say subsidise, private companies and industries than just spend on more government. that way, even though they may not be completely profitable and self sufficient, they at least pay some of their way, unlike the public sector.

... it is just a tad unfair that the public sector workers did not cause this problem yet they are now going to have to suffer

it is unfair, but thats Labours legacy. they have created an army of bureaucrats and agencies to reduce unemployment (especially in Labour heartlands), without worry about where the money to pay for it all comes from. here's the elephant in the room: the deficit would still be there without the banks didnt have their liquidity crisis. most of the bank bail out is loans and guarantees, only small portion is actually cash paid and now on the government debt. the public sector has balloned in an unsustainable manner, the trigger for this process might have been elsewhere, but sooner or later we'd have to rein it in.

 

[sten_super]

Oh,leave it out.

This thread was bubbling along nicely with a mish mash of economic "truths" and political wisdom,and you have to spoil it by being right.

Except he's not. Presumably his logic in blaming Greek/Spanish excesses on the bankers is that it was their overt risk taking in the valuation of property that caused the bottom to fall out of the market? If that's the case then equally (IMO, more) culapble are the construction companies which hired thousands of workers in a boom industry and never stopped to consider what might happen to house prices if they incessently built property after property.

However, the debt taking on in bailing out banks was only the final straw; the real problem (particularly in Greece, where the public accounts were fiddled for years) is that there was already a mountain of public sector debt. This applies as much to the UK as to anywhere else. The level of public spending seen in 2007 or 2008 was already unsustainable.

 

[simmo]

So why would someone go to work for the FSA when they'll be paid something factorily more at Citibank, RBS or whoever. You just won't get the best people working for the regulatory agencies in this sector; they'll be headhunted by the finance companies who, prior to the banking collapse, were actively working to avoid regulatory scrutiny of their businesses by the Fed reserve, FSA etc. Personal greed and lack of corporate governance are not a good mix. Fools Gold by Gillian Tett is a decent if worrying read on this subject.

Ok I sort of see where you coming from but the it's not really an argument about the FSA, the FSA are to me like the police of the financial industry. If you believe they are not very good at their job then I guess that is really something that should be laid at the head of the FSA. If you truly think that the FSA is irrelevant i.e can't catch dodgy bankers then again governments MUST step in (with legislation if necessary) and make the FSA have teeth

It is the governments attitude (basically those that can make laws concerning banking) I am pointing out and it is they with whom the ultimate buck stops.

 

[Southover Street Seagull]

Those people have not caused the problem, agreed. But some of them have been living a life of riley on 30k jobs that produce jack shit, now they are gonna have to join the real economy again where only the truly productive earn decent money.

There are people who have the life of riley and get paid 30k per year in both public and private sectors, surely you can't believe that this is solely the realm of the public sector?
I would also say there are some fairly unproductive people in the private sector who get paid far too much money.

 

[simmo]

Oh,leave it out.

This thread was bubbling along nicely with a mish mash of economic "truths" and political wisdom,and you have to spoil it by being right.

But is not only the lowest paid public sector workers in Greece and Spain whom are bearing the brunt of the economic situation...we all are... Do you not know of anyone whom has lost their job recently whom works in the private sector/had a pay freeze/been made redundant/had their business fail? If you don't I would suggest you need to get out a bit more!

That is why when Unions (as I think inevitably will happen) think that they are going to come out on mass strikes over a for e.g below inflation pay rise, (or what is happening in the present BA strike) do not be surprised if there is not much public support for them in the present economic climate.

 

[Southover Street Seagull]

I work for a private sector company but I don't work for a bank! I have never, ever wanted to work for a bank nor ever will.

Since Autumn 2008 I have had had no pay rise and I have seen a 20% reduction in staff numbers. I know I am one of the lucky ones.

Most of my friends whom work in the private sector (in fact I actually don't really know anyone whom works in a bank) have similar situtuatons, redundancies, businesses failing, pay freezes or cuts.

Have public sector services had to face a 20% slashing of their budgets etc? The real chance of business failure?

We are all in this together, there is no use saying it was the banks (private industry). The banks operate(d) under the laws of the land implemented by the governement of that time whom were.... Labour (and Brown actually made it easier, with a laissez faire attitude for them to do what they did!) The buck stops with the law makers i.e the government not those whom operate under their guidelines. If the guidelines were wrong (which they obviously were) the government should change them before it is too late, that is why we elect them, to look after (all of our) interests.

I agree with you about the lack of government control on the banking industry and would like to add that I do not blame the vast majority of private sector workers, only the few who carried out the reckless lending in banking. They do have some part to blame however lax the controls were.

 

[Southover Street Seagull]

And I don't remember the public sector workers generating 9% of our GDP on their own for the past two decades either, unlike the financial sector. I do imagine that these public sector workers sent their kids and families to up-to-date hospitals and the well looked-after state schools that the finance industry generated in tax, though.

In any case, it is a ridiculous argument. The entire private sector didn't cause this either - only the financial industry, and the fact that we've been living on credit as a nation for far too long, which is a collective failure.

Going back to larus's original post, where he was crowing about Osborne, please lets not forget that while we have these cuts promised, he was still championing inheritance tax cuts FFS. What an absolute twat.

No I don't think the public sector did generate 9% of our GDP, but most public sector jobs are related to public services, whose main aim is to provide for the general public and not make profits.
I have never said the entire private sector caused this, in fact in one of my posts I have pointed out that.
Perhaps we should not have relied so heavily on the finance sector to boost the economy and gone with tried and tested manufacturing. I don't remember CEOs or MDs of manufacturing firms getting the obsecene bonuses that the bankers get.

 

[simmo]

However, the debt taking on in bailing out banks was only the final straw; the real problem (particularly in Greece, where the public accounts were fiddled for years) is that there was already a mountain of public sector debt. This applies as much to the UK as to anywhere else. The level of public spending seen in 2007 or 2008 was already unsustainable.

That is spot on. The problem (now) is not the banking crisis (the liquidity of the banks was the problem and dealt with in Autumn 2008 and let us hope that is the end of that).

The banking crisis was to all intents and purposes the starting gun that has precipitated this present situation. What matters now in Greece/Spain/UK and all other countries is the mountain of debt that was built up before the situation and after i.e spending/wasting (as per you political preferences) money when times were good, now times are bad the cupboard is bare.

Those that didn't build up that mountatin of debt before hand e.g Australia sit in a much much much better situation and deserve praise.

 

[sten_super]

Perhaps we should not have relied so heavily on the finance sector to boost the economy and gone with tried and tested manufacturing. I don't remember CEOs or MDs of manufacturing firms getting the obsecene bonuses that the bankers get.

This is a great line, and one that always provides a chuckle. There's one adjective that you missed out of that description. Tried, tested and FAILED manufacturing. Yes, we should have persevering making cars. It would be really easy to sell British made cars to the Germans or the French (let alone the Americans or the Japanese) at 20% above the going rate, wouldn't it? There's some kind of preoccupation with having to have something 'visible' in our economy. There is nothing wrong, fundamentally, with having a service-based economy, as long as those skills and applications are transferable and therefore exportable.

 

[Southover Street Seagull]

We had a discussion about the railways a years or so ago and agreed that our views were not that far apart, although I would view my politics as right and you as left.

I believe that if you can take the vitriol out of the argument (btw, that's not aimed at you), you'll find that most people are similar in their goals, although the emphasis would be different.

IMO, most people aspire to have a successful economy (which must be predominantly private sector) - we need to make/sell things to the rest of the world to pay for the things we import. The public sector CANNOT do this.

Agreed!

We all desire good public services which should be good value for money. The perception of a lot of people is that the public sector it often cushy (I would definately exclude the front-line services from this generalisation).

Perception may not be the truth though, although I agree that there will be people on cushy jobs in the public sector. This must also be the case in the private sector too.

For example. I believe that a Fireman can work for 25/30 years, then retire on 2/3 final salary, index linked. So, retire at 50, and say 25 years on 2/3 pension. We can't afford that as a country.

Agreed, as people get older we probably can't afford it. But the fireman joined up when this was the case and now he is being told that after 25 years service his pension is being cut back. There needs to be new ways to overcome this sort of shabby treatment on pensions.

Most people are willing to pay taxes to provide a safety net for those that fall on hard time, but too many use welfare as a lifestyle choice. This is what aggravates many people.

Totally agree, I hate spongers too!

A lot of people want a good education system/healthcare system, but accept that the Schools/NHS can never afford to provide the level of service which we would all like, so are willing to pay twice (they're already paid in taxes), to have a better education for their children or healthcare.

If people want to pay for private health and education, then that is there choice. However we still need a health and education system for people who can't afford this.

However, too many left wingers say that this is wrong. The simple fact is that the country cannot (and will never be able to) aford to provide the highest level serviecs to everyone via the state. So those with money will always be able to get better. This is no different to the communist/socialist model. The higher up in society you are, the more you have; always benn that way, always will.

Agreed.

The socialist utopia does not exist - however, uncontrolled captialism will fail as well, due to mankinds inbuilt greed mechanism. This is not just bankers; we see it in all levels of society :

Sick days in the public sector.
Cowboy builders.
People who pay for cash jobs.

It is funny how as you say when you talk to people of different political viewpoints, their aspirations are very similar.

 

[Chicken Runner61]

What makes me laugh is that the tories here think that cameron and the tories are different from Blair and New labour.

The biggest laugh is that in order to get the power they desperately fought and lost for they have done a deal with a party who in the main has policies far more left wing than New Labour!

 

[Ex-Staffs Gull]

What people seem to focus on is the rights and wrong of what has gone before and the best way to redress this, being fair on those who have not caused it. The trouble is, we are where we are, do we tax the top 5% of earners a disproportionate amount (and it would have be be a shed load) so the rest of us pay less (that sounds remarkably like a political system that failed in the last century).

We are all going to suffer, private sector has already had pay cuts (I have had one), redundancies (over 40% of my office were put to the sword) in the last year. No doubt we will all see a VAT of NI rise. Why should things be more protected, safe and better in the public sector at the private sectors expense. If a business is expected to cut it's costs to survive, when income reduces / expenditure rises, the government has to do the same. Why should the majority of the burden always seem to fall on the private sector. If business taxes go up, or NI contributions etc, business will cut costs again, leading to more private sector redundancies and pay cuts.

The public sector has been topped up by borrowing to maintain jobs, pensions, contracts etc, as a lots less was coming in from taxes. What is required is

a) Natual wastage of jobs. Recruitment freeze in designated sectors.
b) Pension changes, with % contributions coming from the employees (protect what is already there)
c) 2-3% wage reduction replaced by benefits in kind (i.e. additional leave days)
d) Cancel all unstarted road building programmes.


I am sure there are many other actions you could take. The point is that we need to get the deficit down, or we will end up paying larger amounts of interest on our debt and therefore the cuts will become twice as harsh.

 

[Southover Street Seagull]

This is a great line, and one that always provides a chuckle. There's one adjective that you missed out of that description. Tried, tested and FAILED manufacturing. Yes, we should have persevering making cars. It would be really easy to sell British made cars to the Germans or the French (let alone the Americans or the Japanese) at 20% above the going rate, wouldn't it? There's some kind of preoccupation with having to have something 'visible' in our economy. There is nothing wrong, fundamentally, with having a service-based economy, as long as those skills and applications are transferable and therefore exportable.

Or how about a properly managed car making industry that is competitive? We can make cars in this country competitively, you only have to look at Honda, Nissan and Toyota for the evidence. All built by British workers.

 

[sten_super]

Or how about a properly managed car making industry that is competitive? We can make cars in this country competitively, you only have to look at Honda, Nissan and Toyota for the evidence. All built by British workers.

Why ISN'T someone doing it then, if it's possible? Why can the Japanese do what we cannot, even in our own country?

My point is really broader than that; we're unlikely to go back to be a manufacturing-dominated country, at least in the short-term, because there are people that will do the job for less than we will. There will continue to be relatively niche operations (and that is what car manufacturing is now realistically in this country) that do well, but attempts to mass produce things are likely to fail while our costs are so easily undercut.

 

[Southover Street Seagull]

Why ISN'T someone doing it then, if it's possible? Why can the Japanese do what we cannot, even in our own country?

My point is really broader than that; we're unlikely to go back to be a manufacturing-dominated country, at least in the short-term, because there are people that will do the job for less than we will. There will continue to be relatively niche operations (and that is what car manufacturing is now realistically in this country) that do well, but attempts to mass produce things are likely to fail while our costs are so easily undercut.

Agreed, if a company can make it cheaper elsewhere they will go elsewhere, but when will this stop?

 

[User removed 4]

Agreed, if a company can make it cheaper elsewhere they will go elsewhere, but when will this stop?

When the koreans/indians/chinese standard of living equals ours and it becomes cheaper to make things here.

 

[Ex-Staffs Gull]

Everybody saying our manufacting industry is dead, we are the 7th biggest manufacturing economy in the world ($ PA).

We just don't make as many 'dirty' products as before like cars such like. We also don't export raw materials and minerals, but we are world leaders in drug manufacture, precision engineering items, components (especially automotive) etc.

Don't sell all the people, 24% of the workforce who work in manufacturing, down the river.

 

[sten_super]

Agreed, if a company can make it cheaper elsewhere they will go elsewhere, but when will this stop?

When wages (and living standards, and expected living standards) have equalised across countries. The average (reported) wage in China rose by 16% in 2009, while I'd guess (without the numbers in front of me) that in the UK wages were either stagnant or fell. Still we are some years away from any equalisation, which is why I said 'at least in the short term'.

 

[simmo]

My point is really broader than that; we're unlikely to go back to be a manufacturing-dominated country, at least in the short-term, because there are people that will do the job for less than we will. There will continue to be relatively niche operations (and that is what car manufacturing is now realistically in this country) that do well, but attempts to mass produce things are likely to fail while our costs are so easily undercut.




That's a good point James Dyson moved his company lock stock and barrel from the UK because he can pay his employees much less in a 3rd World company. In this age of globalisations and planes etc etc. it is much easier to set up a manufacturing company abroad where the workers don't want first world wages like they would in the UK. Why do think Nike etc. go to China??

http://news.bbc.co.uk/1/hi/business/1801909.stm

That's not to say manufacturing industry is dead in the UK not at all, it just really needs to be specialised (and good quality) not mass production of things were the market may already be gloabally saturated and cheap (because of our wages we will never be able to undercut 3rd world countries).

 

[simmo]

When wages (and living standards, and expected living standards) have equalised across countries. The average (reported) wage in China rose by 16% in 2009, while I'd guess (without the numbers in front of me) that in the UK wages were either stagnant or fell. Still we are some years away from any equalisation, which is why I said 'at least in the short term'.

Correct, in the 70's everything was "made in Taiwan" nowadays because the wages that the workers got rose not much is "made in Taiwan" anymore because it is not so cheap.

Nowadays the phrase in "made in China" but that may not be so in 2035, it may be "made in Brazil" or somewhere else.