Bust? or not?

first posted on itsmyview

The independent Institute for Fiscal Studies (IFS) is saying that it expects that the UK government will need to raise taxes or cut spending by an extra £20bn to repair the public finances. It also says that it could be 2030 before the UK gets back to pre crisis levels.

The International Monetary Fund (IMF) has also predicted that the UK will have the worst fall in economic growth among advanced nations this year. Gordon Brown has rejected this claim by the IMF but this is the man who did not see the recession coming, so why should he be in any position to know what will happen next!

The IMF report also says that taxes are likely to go up more than has been said by the government.

Even if everything goes according to plan, the IFS points out that it will be “the early 2030s before debt returns below the ceiling of 40% of national income” that Gordon Brown set as one of his key fiscal rules in 1997.

We are clearly in a big mess, and it is a mess that is going to go on for a long time. Even once the recession has lifted, people will be paying, through their taxes, for the huge borrowings for a long time. In addition any taxes required to actually do anything new will also have to be levied (unless the country borrows yet more money!)

Proposed increases in bailiff and court costs

We are in a time when the problems with the economy are causing a lot of people financial problems. One potential problem is the forecasted huge increases in taxes  in order to pay for the bank bailouts and the money being borrowed to deal with the recession.

So Brown and New Labour are planning ahead!

They are proposing to increase bailiff and court charges for people who run into financial difficulties.

The cost of a debtor being summoned to discuss their finances is proposed to be increased from £30 to £10

If baillifs go to an address they they will charge £100 not £35. What happens if they attend several times? Maybe the person that they want to speak to is not in.   Could someone end up owing hundreds of pounds simply because a bailiff visits three or four times?

The government talk about concessions for poor people, apparantly only the rich need to pay the charges. I bet you that the bailiffs will charge everybody each time they visit and will take goods if they can’t get money!

When a person goes bankrupt and owes lots of money then I suppose that it may not matter too much if their debt is increased by a few hundred pounds.

But most people who attend court, especially if it is for non-payment of council tax, will have their problems compounded by massive increases in the debt that they owe. A £100 council tax charge may suddenly become £500 plus making it absolutely impossible for these people, generally on low incomes, to sort out their problems!

Because of it’s link with council tax debt, this is a basically a savage tax on poorer people which will seriously impact their lives.

Talk about a cynical prime minister;  Brown is already planning these savage tax increases even though he knows that council tax in particular is probably going to be significantly increased in the near future. Perhaps Labour believe that these additional charges will make people put every effort into paying their bills but what about those poorer families (and there are many more of them now!)  who simply do not have the money!

added later

And just in case anyone thinks that I am being unfair to this government, the following is a promise from Gordon Brown last November. He said 

I want every household facing difficulty at this time to know we are ready to help and are on their side.

Interesting quote

 

 

Interesting quote from a report on http://www.telegraph.co.uk by By Edmund Conway, Economics Editor   

Albert Edwards, a strategist at Société Générale, likened the British economy to a Ponzi scheme — a fraudulent debt mountain like that allegedly used by the New York hedge fund manager Bernard Madoff.

“What I find amazing is that people aren’t really nailing Gordon Brown and [Bank of England Governor] Mervyn King for this,” he said. “At least in the US they had the excuse of the arrival of sub-prime — a new sector of the market. We didn’t really have anything similar but we ended up with a bigger national Ponzi scheme than the US.”

Story headed:

Britain on the brink of an economic depression, say experts

last Updated: 9:49PM GMT 23 Jan 2009

It is a Recession – Official!

After all the forecasts and speculation over the last six months or so it is now official – the UK is in a recession!

Thinking back over all the statements from the government I cannot be sure if they knew that their failure to regulate the banking and financial sector was actually going to have such serious repercussion!

Brown, in both roles as chancellour and prime minister, was very keen to talk about the ‘end of boom and bust‘.  He presented himself almost as the ’saviour’ of the UK economy and I would have thought that the ’stable and successful’  UK economy was the main reason why Labour subsequently won two more elections.

Now we know that their actions have led to this current financial crisis!

The fact that a similar problem has occurred in other countries, notably the US, is not part of this debate. Yes, the American financial and banking systems have also had serious problems but the main blame for this is with the US financial and banking regulatory groups.

The UK  government failed to control the actions of the banking and financial sectors within the UK and this has allowed the current financial mess to occur!

Why does anyone believe that someone getting something so badly wrong is actually the correct person to fix the problems that they caused? I don’t! In fact it makes them the wrong people to be sorting it out!

credit cards – new security checks

I was amazed to hear some bank officials talking about the proposed new credit card security checks.
These checks will detect more fraud which of course would be a good thing.
But the spokesperson said that the checks will also cause some valid transactions to fail and the payment request to be rejected.
Are these banks and credit card companies living in the real world or do they simply have no concern whatsoever about the problems that they may give to genuine customers?
Apart from being extremely embarrassing to have a credit card payment rejected, what on earth is the customer going to do next?
They may have purchased petrol or need a ticket to travel or even be paying for a meal that they had just eaten.
If they haven’t got enough cash on them then they are really left in the lurch; they may even risk being arrested for non-payment of goods! There are all sort of unpleasant scenarios which happen now when a credit card payment fails because the person doesn’t have enough credit.
But for these problems to occur for people who do have sufficient funds to pay their bills is simply not acceptable!
There is of course a very simple way of resolving the problem. I suggest that people no longer rely on using their credit or debit card. They should have enough cash on them to pay their bills and then they would not have to use their cards.
In an ideal world people could dispense of their credit cards altogether; that would give a significant message to the banks and credit card companies and highlight the fact that their job is to provide a service to their customers!

the bank bailout – the wrong move?

I realise that I don’t fully understand why the banks were bailed out at such a huge cost to us all. (That cost does come from us, even if it is borrowed money, we have to pay for it in our taxes!)

I thought that it was to put the banks back on a sound footing so that they could do what banks are supposed to do – that is to lend money for investment and mortgages, to support businesses, to encourage new companies  to be set up, to allow people to buy expensive items from UK shops, etc.

But it seems to me now that all these billions of pounds simply allowed the banks to be rich again. All of their losses, their bad investments, their unregulated behaviour, their focus on huge profits and massive bonus payments would seem to have all simply been forgotten. They even spend millions on functions at Christmas! 

These poor banks have run into credit problems because of their own actions and, according to the government,  they must be salvaged!!!

And now the banks, as far as I am concerned,  are behaving in a totally hypocritical way! They got into financial trouble and needed rescuing.  We, that is the taxpayers of the UK, rescued them. And they have responded by refusing to lend money, by withdrawing overdrafts and  credit arrangements, insisting on huge deposits before providing mortgages, etc, etc etc.

Where is this government that we are suppose dto have in the UK? They seem powerless to act. The banks are walking all over them (and us) and this government is failing to respond at all.  It really is scandalous that so much money has been given to to banks to bail them out and they are not using this money to help the UK to get out of the recession that we are so plainly in.

Maybe this government should have had the courage to let the banks that had brought themselves to the brink of bankruptcy actually go bankrupt!! Then they could have used the billions that they gave to the banks to help the businesses of the UK to survive and to keep trading. 

We are now seeing bank staff being made redundant. Perhaps the banks should be forced to keep all of their staff at this difficult time. Perhaps they shouldn’t be allowed to make staff members, with the subsequent cost to the economy and and to their families, redundant. Perhaps they should be forced to keep their staff instead of expecting the tax payers of the UK to pay for them!

Perhaps the recession would not have become so serious if the government had rescued the economy instead of rescuing the banks!!

a test of character!

I see that nice Mr. Brown has been really considerate in going to all that trouble in allowing that nasty recession just to help me improve my character! I do hope that I can manage to pass this test of character that he has organised for me.

I am so looking forward to it. As a family we were far too settled and enjoying life. Work was fun, the children were behaving well  and my wife and I were enjoying each others company.

Clearly this had to stop! There has to be something more to life than this and the recession and the problems with jobs, money, paying bills etc is just the thing to end all this nonsense.

Thank you Mr Brown for helping me see what is really important in life!

Banks and charges for withdrawing cash

There are rumours that the banks are going to start charging people for withdrawing cash from their bank accounts.

Now I think that this is going to be an unpopular move for many people but it is going to seriously effect the lower paid and those on benefits. 

Most people used to withdraw their benefits from Post Offices in cash! This government worked hard to force people to have their benefits and pensions paid into bank accounts. Apart from the damage that this did to the local post office network, it means that most people now have their benefits and pensions paid into a bank account.

If the banks are allowed to start charging for cash withdrawals then this will hurt the lower paid and those on benefits. These people are struggling to survive in this ‘credit crunch’ environment where everything, especially energy bills, costs so much more now than they did a few years ago.

The banks want to get themselves back on a sound footing financially. But their greed for profits and bonuses was the primary factor for the ‘credit crunch’ and the recession. People have lost homes and jobs as a result. Businesses have failed as a result of banks withdrawing credit.

The banks have already done a lot of harm to many people, they should not be allowed to cause more damage to people’s lives just to rebuild their profit margins!

The prices increases and the recession generally have hit the lower paid and those on benefits more than most other groups.  

Yet the banks are now proposing what is effectively a tax on the lower paid families in the UK!

It is time that this government started governing. It is time that they dictated to the banks how they are allowed to make profits. The banks should know what is acceptable and what they are not allowed to do. There should also be a limit, a cap, on the profits of the banks to stop them from increasing prices too much.

The lower paid and those on benefits should not be used to rebuild the profits of greedy bankers!

Government plans tax cuts to help the economy

Recently the government have been very certain in their plans to borrow a huge amount to spent on building projects. The PM has been adamant that this is what needs to be done.

The opposition have said publicly that this would be wrong because it would not work and would leave a legacy of debt that would to be repaid in the future. 

It is now being revealed that the government has changed it’s mind and will be introducing tax cuts in an attempt to revitalise the economy.

I trust that they will publicly acknowledge that this was the stated policy of the opposition.

What I want to see the government do with the tax cuts is to only provide them to households with an income of  less than, say, £30K per annum.

Why?

• Because these are the people who need the money.
• These are the people who are being squeezed financially with increased costs for most things that they have to buy.
• These are the people who will need to spend the extra mony (those who can afford to live without extra handouts will simply save the money and won’t help the economy be spending it)

Those on benefits should also have a share of this spending power although this will need a decision by them to make money available to the benefits system. But they need to make this decision simply on compassionate grounds.

The banks should now be told that they are a public service

Base interest rates have been cut by 1.5%

So that should reduce people’s mortgages and loans and credit card payments. But the banks seem to be trying to keep the higher rates in place whilst taking advantage of reduced base rate.

The fact that  Lloyds TSB and Abbey have said they will pass the cut on in full means that every other bank could do the same if they wanted to!

Unfortunately the banks seem to want to get their profit margins restored. In my view this should not be allowed to happen. The banks failed the people of the UK by their greedy rush to make as much money as possible over the last ten years.

Record profits have been announced. Huge payouts in bonuses and incentives have been given to those who run the organisations.

But this has, in my view, been at a great cost to ordinary people and businesses. We are threatened by recession, many people have lost their jobs and many business have folded often at great cost to those who set them up in the first place.

The banks should not be allowed to go back to paying huge bonuses for directors and senior staff. They have had their day, the feeding frenzy should now be stopped! 

The regulatory bodies, who themselves have failed by allowing the banks to behave in such a greedy way, should now step in and dictate the limits that the banks are allowed to charge the public and businesses for their services.