Livingston on debt: Labour were cowards.

[Spursex]

He is to be applauded - a politician that finally understand that building up huge debts when you didn't have to simply kills the future of a country and it's future generations alike...

He maybe wrong about most things, but he's got this dead right.




Labour are cowards for racking up billions in debt, says Ken Livingstone

The former Mayor of London criticises Labour for spending billions to avoid tax and spending cuts in the 'boom years'


Ken Livingstone

Ken Livingstone, former Mayor of London Photo: PA



By Georgia Graham, Political Correspondent

11:52AM GMT 15 Nov 2013


Ken Livingstone, the former Mayor of London, has accused the Labour party of “cowardice” for building up billions in debts rather than taking difficult decisions on tax cuts and spending.


In a speech to a campaigning group on Saturday Mr Livingstone accused Gordon Brown of borrowing too much in the boom years.


Mr Livingstone said: “Gordon Brown was borrowing £20 billion a year at the height of the boom in the first decade of this century in order to avoid having to increase taxes, because he wanted to increase public spending.”


The former Mayor described the racking up of debts as “an act of cowardice” on the part of the Labour party.


Mr Livingstone appealed to Ed Miliband, the Labour leader, not to borrow more. Referring to Mr Miliband and Ed Balls, the Shadow chancellor’s, plans for the economy, he said: “I don’t believe that borrowing is your way to the future.”



The Brown government left a deficit of £157 billion, which was the largest in Britain’s peacetime history after eight years of spending more money than it received in revenues.

In his speech to Labour Assembly Against Austerity Mr Livingstone said past Conservative governments had also “borrowed money because they haven’t had the courage either to make the cuts that you need to balance the budget or the tax increases you need.”

Mr Livingstone told The Evening Standard: “I criticised both left and right. If it was up to me there would be a target of repaying all debt within 20 years. I’m in favour of borrowing to invest, but not to cover day-to-day spending.”

Conservative Party Chairman Grant Shapps said: "Even Red Ken admits what Ed Miliband refuses to acknowledge: It was Labour’s addiction to borrowing and spending that got us into this mess, yet now the Balls/Miliband plan is to do the exact same thing again. More spending, more borrowing and more debt, that’s an express train back to economic disaster.

"Ed Miliband was too weak to take difficult decisions then and he’s too weak to stand up for hardworking people now. It’s the same old Labour party.”

 

[Spursex]

“I criticised both left and right. If it was up to me there would be a target of repaying all debt within 20 years. I’m in favour of borrowing to invest, but not to cover day-to-day spending.”

I've had to have a lay down, can't believe that the day would come where I and Livingston would absolutely be in tune on any issue...

Fookin 'ell at this rate I'll have to change my voting address just to go vote for him!!

 

[Spursex]

Just heard him on the radio - have to say he was in full swing and ripped labour apart for the mess they've left us in...

Jesus, the man gets it - he admitted he now understood what debt would do for generations to come - the end of new build and affordable renewal for decades to come as the debt repayments suck the cash out of the UK economy....

Outstanding Ken, outstanding!!

 

[Innispurs]

But Ex, old son, Ken would increase taxes - remember the old adage, from each according to means to each according to needs.

As I have argued on here before the problem with NEW Labour was that they accepted the neo-liberal economic argument and unleashed free market forces, kept reducing income tax and tried to ride the bull market to pay for rebuilding the NHS and educational and transport infrastructure. Ken is old Labour and what he is doing here is getting his kicks in now to the Labour party that rejected him as 'yesterday's man'.

I wouldn't get carried away too much, if I were you, unless you want to join in the campaign for old Labour (Spirit of '45 group).

 

[Spursex]

Innispurs - 16/11/2013 14:33

But Ex, old son, Ken would increase taxes - remember the old adage, from each according to means to each according to needs.

As I have argued on here before the problem with NEW Labour was that they accepted the neo-liberal economic argument and unleashed free market forces, kept reducing income tax and tried to ride the bull market to pay for rebuilding the NHS and educational and transport infrastructure. Ken is old Labour and what he is doing here is getting his kicks in now to the Labour party that rejected him as 'yesterday's man'.

I wouldn't get carried away too much, if I were you, unless you want to join in the campaign for old Labour (Spirit of '45 group).

Of course, I'm glad that you admit that labour would increase taxes and we would go back up to 90% tax rates, of that there would be no doubt - but at least Ken is being honest about it and at least then the electorate wouldn't be conned yet again into thinking that labour could run anything

They'd soon realise (as they did before, but sadly forgotten) and as they didn't learn the lesson of history.. that taxes at that level are unsustainable and yes, they'd finally realise that when it came to finaces, labour can't run a piss up in a brewery - so the choice would be clear, contain the state and the vast number of projects that labour cook up to spend public money or keep rising taxes..

Ken has at least been intellectually honest, whereas labour haven't had an honest politician it seems until this last year: mandelson on immigration, Blunkett on the community consequences of it and even Straw admitting they got immigration and all it's effects wrong..all seem to have had pangs of honesty that they can't contain..

Ken at least offers a stark 'old labour' choice: UP taxes or cut the public bill (which they would never do)

This debt is going to bury this country for generations to come - The lesson is simple; Government OVER-spending = Over borrowing...

It’s clear: our public finances are still in an enormous mess. Anyone can see that. And to some extent, some politicians will admit it. But add in our financial, personal and private debts… and teh scale of the mess is staggering..

Britain is now one of the most heavily indebted countries in the Western world. That’s official. Our total debts stand at more than FIVE TIMES what our entire economy is worth.

Proportionally, that’s more debt than Italy… Portugal… Spain… and almost twice as much debt as Greece. Those are four countries already in the throes of financial crisis. We’re the odd one out because we haven’t collapsed – yet. But even if we avoid collapse, we'll only do it at the expense of our infrastructure and our young.

The only countries (per head) that have more debt than us are Japan, where the economy has stagnated for 20 years and the stock market has crashed by 75%... and Ireland, where the housing market has crashed 50%, and the government was forced to accept a bailout,.. another bailout may also be needed, despite the measure they've so painfully taken.

When you add in all of Britain’s “unfunded obligations” (huge PFI debts run up by labour) – as well as the future payment promises the Government made on things like public sector pensions – our debts swell to 900% of our economy.

That’s right – when you add everything up, we owe TEN TIMES what our entire economy is worth...

It's great that we're out of recession, but even if now grew at 10% p.a. for the next 10 years (never going to happen) it would still take 50 years to pay back the true £1.5- £2 trillion of debt we'll be in by the end of 2015...

Ken at least seems to understand this; so the choice is clear, shrink the state or up taxes to levels that no one wants of around 90% (as ken is proposing) and watch future generations struggle for decades to come..

 

[Welshtel]

I would like to ask how a government who is supposed to have an eye on making wealth for the country so it can be spent on getting the population better services etc, can rack up so much debt DELIBERATELY whatever side of politics they are on. I'm not being naive, I did economics in College, I know all about 'working' borrowing etc but it's a false economy, in fact it's not economical, you have to pay back with interest. Mrs Thatcher said, "If you wouldn't do it at home, why would you do it in the country?" It's the same thing, on a smaller scale. Don't borrow unless you absolutely HAVE to (like during the war) because you lose money in the long run.

SORRY, I MEANT TO SAY, "WELL DONE KENNY!" I'm amazed a Labour politician came out with that sort of sense!

[Youtube=FNtyV0CXfzU]

 

[Innispurs]

And for the more balanced perspective:


Government debt under labour 1997-2010

By Tejvan Pettinger on June 13, 2013 in debt

If I got a pound for every time someone said ‘it was debt that got us into this mess in the first place’ I could have made a significant contribution to bailing out the Irish banking system. Usually, when people say ‘it’s debt that got us into this mess. They tend to view all types of debt as the same – equating government debt to financial debt incurred from selling sub-prime mortgages in the US. However, this is deeply misleading. The consequence of bad debt defaults in the financial system, is very different to government debt financed through selling bonds.

Firstly, to what extent did the Labour government really plunge the economy into debt during 1997-2007?

Government debt

debt-under-labour

In 1997, public sector debt as % of GDP:

1997/98 – 40.4% of GDP
2007/08 – 36.4% of GDP
2010/11 – 60.0% of GDP.

At the start of the great recession in 2007, public sector debt had fallen from 40.4% of GDP to 36.4% of GDP. This was despite increased real government spending. After the start of the crisis, public sector debt almost doubled in the space of three years.

If we look at just actual government debt, there is a significant increase.

In 1997, total public sector debt was:

1997/98 – £352 bn
2007/08 – £527 bn
2010/11 – £902 bn

Debt to GDP statistics were helped by the period of strong economic growth – a reminder that economic growth is as important at debt levels. It is also worth bearing in mind UK public sector debt in comparison to the post war period.

UK national debt

Even public sector debt of 60% of GDP is quite low compared to the historical average of public sector debt in the UK during the twentieth century. The very high period of debt in the 1950s was not a barrier to economic expansion.
Budget Deficit

The level of Net government borrowing at 2011/12 prices

1997-98 – £ 7.8 bn
2007-08 – £ 40.3 bn
2010-11 – £ 145.1 bn


Commentary

At the start of 2007, there were few economists expressing concern at government borrowing running at 36% of GDP. By post-war standards, UK government debt was low and the government appeared to be meeting its own reasonable fiscal targets.

Given the period of strong economic growth, it is unsurprising that Labour wished to increase spending on health care and education. If the financial crisis hadn’t materialised, we may have looked back on the great moderation with kinder eyes.

However, a critic would point out that we did have a financial crisis and running a budget surplus during an unsustainable economic boom was irresponsible. In retrospect, Labour would have been better reducing the public sector debt further. This would have given the government even more room for manoeuvre during the crisis of 2008-12. Also, with growth strong, this was the best time to reduce the budget deficit. The mantra of Keynesians during the crisis has been – a recession is the wrong time to reduce a budget deficit. Given high growth in the 2000s, it would have been better to stricter with public spending. Even counter cyclical fiscal policy measures such as higher income tax, higher stamp duty may have reduced the housing and financial bubble and made the subsequent crash less dramatic.

This is a fair point. It was a mistake to be running budget deficits of 3% of GDP towards the end of the boom. However, the mistake is relatively minor. The boom was in finance and housing; inflation was running low (unlike that which we saw the 1980s boom) Most of the economic profession never saw the extent of the forthcoming recession. From a macro perspective it didn’t look like a classic boom and bust (high growth and inflation)

Of course, it is easier to be wise after the event. If we were more aware of the dangers inherent in the financial system, we should have exercised much more caution. But, when looking at the causes of the great recession – government spending levels and budget deficits of the preceding years bare little, if any cause.

It is also worth noting that when the recession hit, the government did initially pursue expansionary fiscal policy – there was no panic in the bond market. Bond yields have fallen throughout the crisis. Although debt increased rapidly, there was no danger of a fiscal cliff, like say Greece.

The switch towards austerity post 2010 was largely a self-created panic. Part of the motive for austerity was the desire to paint a grim picture of public finances. The problem is that economic pessimism can become self-fulfilling. A more balanced view of the overall state of public finances in 2010 would have led to less rash policy.

 

[Spursex]

test

 

[Galvin's Shinpads]

Jesus, you have a real hard-on for the British Labour Party, Ex.

And I mean a Jolly Rodger!

 

[Spursex]

Galvin's Shinpads - 22/1/2014 16:58

Jesus, you have a real hard-on for the British Labour Party, Ex.

And I mean a Jolly Rodger!

LOL!

Just setting up a test area to help Innis on how to embed video's and images...