New Years Wish List
Start the new year as I mean to go on. Time to start laying into the UK Governments fiscal policy. It is time for yet another piece on which I have an opinion but quite possibly little understanding.
The Facts
- The government owes too much money
- There is too little growth in the economy
The Cure
Now this is where it all starts to get messy. The following is my take on the solution.
First all I would like to say that the present Government have handled the crisis rather well. I would like to say that but unfortunately it would be an outright lie. In my humble opinion the coalition have sat tight and effectively done nothing. The UK national debt has grown to even bigger proportions than it was in 2010 when they took power. We have been through a double dip recession and I haven't had a pay rise for 2 years! As far as my pay rise is concerned it was a small hit compared to what many had to endure since 2008. But since it helped the situation not one jot it rather feels like I have cut my nose off to spite my face.
One of the governments "Big Ideas" was quantitative easing, where the Bank of England prints money like it is going out of fashion and gives it to the banks. The concept was that with all that money sloshing about in their coffers the banks would once again fall over themselves to hand it out to just about any Tom, Dick or Ponzy that was in need of large sums of cash. Since investment in Europe is largely funded in a ratio of 80:20 banks/private (a number I found on the BBC website) it would seem it was not such a bad idea. Current estimates in the press put the value of that Quantitative Easing at £380 billion! It seems the banks are being ever cautious and sitting on large piles of money because that feels the right thing to do. Which is a shame. I could think of a lot of things that could have been done with that.
In times of recession one of the things governments can do is spend on Infra structure. There is currently a debate going on about a high speed rail line to London from Birmingham. Present estimates put it at £30 billion. If the Government was prepared to hock itself to the tune of £380 billion. They could have built a nationwide network of high speed lines. Just think what that would have done for the economy. All that construction? all those tax paying construction workers?
Spending out of a recession is not a new idea and has been around since the great depression of the 1930's. It is contentious, I admit. But the path chosen by this government has seen austerity placed upon us and the national debt has got worse. All this talk of not spending more than we earn is all hogwash. The dogma has been followed and we are are worse off than before they got started.
So cure number 1 would have been to try and spend out of recession. It would seem to amount to the same thing either way and at least we would have a nice shiny new railway system. Ask Ireland. Austerity only goes so far. Without growth there is always a gap. Austerity programs are by their nature recessionary so you mustn't set down that path unless you can be sure that growth will eventually lead you out of the pit. Austerity on it's own just digs your hole deeper.
Many financial experts I have heard on the radio were looking for the government to invest NOW so that once the economy was rolling again the government could trim it's cloth and meet the economy half way.
My final trick would be to tax the rich. Tax them out of existence. If they wish to become tax exiles so be it. The last thing this country needs right now in this time of "we are all in it together" is a load of visible wealth on display.
I heard a report about novelty Christmas jumpers on BBC Radio 4 just before Christmas. It was purported that £1000 a time was being spent on jumpers with silly Christmas designs. I believe the shops selling these items should be bound by law to supply the names and addresses of these purchasers so that HMRC can knock on their door for some more "donations" to the national cause. This country needs novelty jumpers like a fish needs a bicycle.
To think we are only halfway through this government. The worst part is that I have no great faith in the opposition at the moment. It would be nice if they could at least represent an alternative view.
One of the governments "Big Ideas" was quantitative easing, where the Bank of England prints money like it is going out of fashion and gives it to the banks. The concept was that with all that money sloshing about in their coffers the banks would once again fall over themselves to hand it out to just about any Tom, Dick or Ponzy that was in need of large sums of cash. Since investment in Europe is largely funded in a ratio of 80:20 banks/private (a number I found on the BBC website) it would seem it was not such a bad idea. Current estimates in the press put the value of that Quantitative Easing at £380 billion! It seems the banks are being ever cautious and sitting on large piles of money because that feels the right thing to do. Which is a shame. I could think of a lot of things that could have been done with that.
In times of recession one of the things governments can do is spend on Infra structure. There is currently a debate going on about a high speed rail line to London from Birmingham. Present estimates put it at £30 billion. If the Government was prepared to hock itself to the tune of £380 billion. They could have built a nationwide network of high speed lines. Just think what that would have done for the economy. All that construction? all those tax paying construction workers?
Spending out of a recession is not a new idea and has been around since the great depression of the 1930's. It is contentious, I admit. But the path chosen by this government has seen austerity placed upon us and the national debt has got worse. All this talk of not spending more than we earn is all hogwash. The dogma has been followed and we are are worse off than before they got started.
So cure number 1 would have been to try and spend out of recession. It would seem to amount to the same thing either way and at least we would have a nice shiny new railway system. Ask Ireland. Austerity only goes so far. Without growth there is always a gap. Austerity programs are by their nature recessionary so you mustn't set down that path unless you can be sure that growth will eventually lead you out of the pit. Austerity on it's own just digs your hole deeper.
Many financial experts I have heard on the radio were looking for the government to invest NOW so that once the economy was rolling again the government could trim it's cloth and meet the economy half way.
My final trick would be to tax the rich. Tax them out of existence. If they wish to become tax exiles so be it. The last thing this country needs right now in this time of "we are all in it together" is a load of visible wealth on display.
I heard a report about novelty Christmas jumpers on BBC Radio 4 just before Christmas. It was purported that £1000 a time was being spent on jumpers with silly Christmas designs. I believe the shops selling these items should be bound by law to supply the names and addresses of these purchasers so that HMRC can knock on their door for some more "donations" to the national cause. This country needs novelty jumpers like a fish needs a bicycle.
To think we are only halfway through this government. The worst part is that I have no great faith in the opposition at the moment. It would be nice if they could at least represent an alternative view.
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