Some things are worth repeating because they are that important and some things should be repeated because they were not heard, or listened to, the first time. Some fall under both categories.
Some things are worth repeating because they are that important and some things should be repeated because they were not heard, or listened to, the first time.
Some things fall under both categories.
It is testament to a failure in communication on the left that in the years immediately after the financial crisis the consensus was allowed to form that under Labour spending got out of control. The hangover from this communication failure persists in the public’s continued reluctance to trust Labour on the economy.
It is seemingly forgotten now, but the Tories promised to match Labour’s spending plans right up until 2008; in the aftermath of the 2010 election, however, a drawn-out Labour leadership contest allowed David Cameron to define the post-crisis landscape as the hangover of a spendthrift Labour Party.
The country was in a mess and the only ones who could clear that mess up were the Conservatives, who would reign in the excesses of the Blair and Brown years and bring some temperance to proceedings.
It is worth repeating, then, something pointed out by Martin Wolf in today’s Financial Times (£): in the years leading up to the 2007/08 financial crisis – the supposedly out of control, spendthrift years – UK net public debt was close to its lowest ratio to GDP in the past 300 years.
As the graph below shows, government debt as a percentage of GDP was well below average under Labour and rose, predictably, as a response to the collapse in GDP – as it would. And why does this matter? Because the relevance of the amount of money spent by government is related to how big a proportion of GDP it is, not how much is spent in total.
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While debt is now higher than it has been for a considerable period of time, the blatant dishonesty in the claim that spending was out of control under Labour has more to do with finding a rationale for stripping back the state than it does with dealing with any perceived ‘debt crisis’.
60 Responses to “Once again on Labour’s ‘out of control’ spending”
OldLb
No. Under the accounting standards, you have to report accrued debts. That’s debts you have run up in the past, but have payments in the future.
e.g Take out a mortgage 10 years ago, with 10 years to run.
You have to report what is outstanding on the debt.
However, if you are planing on taking out a mortgage tomorrow, you don’t report it.
Similarly, if you are planning a new extension in the future, you don’t report that either.
Now the should report does apply to the government. Read the accounts however, and its we report to GAAP etc, but not for pensions We won’t report those debts.
One excuse, is they are defined as contingent liabilities. Dentition of that is less htan 50% probability of paying anything.
However even that should be reported under the accounting standards. That’s the fraud.
So let me ask again.
In your world, whats a past debt and what’s a future debt? Why would you use a ‘post modernist’ accounting standard and not the ones prescribed?
Bob Edmiston
Fascinating. Some debts can be disregarded as debts in order to “make a point” I see. Especially when the point being made is that an “assertion” that a government “ran up some hefty debts in a short space of time” is either er, wholly false, or “partly true, but only because they had no choice.” And that “up” section at the end of that IMF graph is “quite steep”.
But actually “the facts don’t matter” do they. It’s “the story we want to get into (or out of) the public conscious” that is. The facts? Bugger the facts!
OldLb
It’s not absurd.
It’s all about being truthful and not lying.
Here we have governments lying about their debts. Pure and simple.
They have taken the money in the past, and promised to pay that back as pensions. Just as they have borrowed money in the past, and promised to pay it back in the future.
They have omitted these debts from the books because of what it would reveal. That’s part of the fraud. See section 2 and 3, 2006 fraud act.
Now the question is then, can they pay theses debts? The answer is no. The reason is that like household debts, they can’t afford to pay it off. Even with what I suspect you will say, they can always print, that doesn’t work. The debts are linked to inflation. Printing money doesn’t pay off inflation linked debts. You end up with the situation that as fast as you print, the debts get bigger just as quickly. In the process too, you destroy the economy. See Weimar and Zimbabwe.
ie. The basic question, is the debt affordable?
You need a ratio (or a multiplier) as a number to check. e.g 3 times income for a mortgage.
What’s the equivalent for the state? It’s 14 times income. On top they are spending 130% of revenue. It’s screwed.
So when you look at the debt / income ratio, here’s how to fiddle it.
1. Make the debt smaller. e.g. Only report on borrowing.
2. Make the income larger. Use GDP, everything. Lump in everyone’s income, it makes the ratio smaller.
3. Compare it with someone else whose even more in the mess.
e.g Why are you complaining?
I’m being hung in the morning
But you should be happy.
Why?
The guy in the next door cell is being hung drawn and quartered. You’re better off.
4. Ignore expenses.
For example, people want some services for their taxes. Will people pay 50% tax, for it all to go on pensions and get no health care?
No they won’t. So you need to consider what’s left after paying for core services to see if its affordable.
Just to show you how bad it is. 2005-2010, we have the estimates of the pensions debt. The increase each year, was 736 bn.
Reference if you want to check.
http://www.ons.gov.uk/ons/dcp171766_263808.pdf
So the affordability arguments being made are lies. Designed to deceive in order to keep the cash flowing in, to extend the Ponzi.
OldLb
It’s not absurd.
It’s all about being truthful and not lying.
Here we have governments lying about their debts. Pure and simple.
They have taken the money in the past, and promised to pay that back as pensions. Just as they have borrowed money in the past, and promised to pay it back in the future.
They have omitted these debts from the books because of what it would reveal. That’s part of the fraud. See section 2 and 3, 2006 fraud act.
Now the question is then, can they pay theses debts? The answer is no. The reason is that like household debts, they can’t afford to pay it off. Even with what I suspect you will say, they can always print, that doesn’t work. The debts are linked to inflation. Printing money doesn’t pay off inflation linked debts. You end up with the situation that as fast as you print, the debts get bigger just as quickly. In the process too, you destroy the economy. See Weimar and Zimbabwe.
ie. The basic question, is the debt affordable?
You need a ratio (or a multiplier) as a number to check. e.g 3 times income for a mortgage.
What’s the equivalent for the state? It’s 14 times income. On top they are spending 130% of revenue. It’s screwed.
So when you look at the debt / income ratio, here’s how to fiddle it.
1. Make the debt smaller. e.g. Only report on borrowing.
2. Make the income larger. Use GDP, everything. Lump in everyone’s income, it makes the ratio smaller.
3. Compare it with someone else whose even more in the mess.
e.g Why are you complaining?
I’m being hung in the morning
But you should be happy.
Why?
The guy in the next door cell is being hung drawn and quartered. You’re better off.
4. Ignore expenses.
For example, people want some services for their taxes. Will people pay 50% tax, for it all to go on pensions and get no health care?
No they won’t. So you need to consider what’s left after paying for core services to see if its affordable.
Just to show you how bad it is. 2005-2010, we have the estimates of the pensions debt. The increase each year, was 736 bn.
Reference if you want to check.
http://www.ons.gov.uk/ons/dcp171766_263808.pdf
So the affordability arguments being made are lies. Designed to deceive in order to keep the cash flowing in, to extend the Ponzi.
OldLb
It’s not absurd.
It’s all about being truthful and not lying.
Here we have governments lying about their debts. Pure and simple.
They have taken the money in the past, and promised to pay that back as pensions. Just as they have borrowed money in the past, and promised to pay it back in the future.
They have omitted these debts from the books because of what it would reveal. That’s part of the fraud. See section 2 and 3, 2006 fraud act.
Now the question is then, can they pay theses debts? The answer is no. The reason is that like household debts, they can’t afford to pay it off. Even with what I suspect you will say, they can always print, that doesn’t work. The debts are linked to inflation. Printing money doesn’t pay off inflation linked debts. You end up with the situation that as fast as you print, the debts get bigger just as quickly. In the process too, you destroy the economy. See Weimar and Zimbabwe.
ie. The basic question, is the debt affordable?
You need a ratio (or a multiplier) as a number to check. e.g 3 times income for a mortgage.
What’s the equivalent for the state? It’s 14 times income. On top they are spending 130% of revenue. It’s screwed.
So when you look at the debt / income ratio, here’s how to fiddle it.
1. Make the debt smaller. e.g. Only report on borrowing.
2. Make the income larger. Use GDP, everything. Lump in everyone’s income, it makes the ratio smaller.
3. Compare it with someone else whose even more in the mess.
e.g Why are you complaining?
I’m being hung in the morning
But you should be happy.
Why?
The guy in the next door cell is being hung drawn and quartered. You’re better off.
4. Ignore expenses.
For example, people want some services for their taxes. Will people pay 50% tax, for it all to go on pensions and get no health care?
No they won’t. So you need to consider what’s left after paying for core services to see if its affordable.
Just to show you how bad it is. 2005-2010, we have the estimates of the pensions debt. The increase each year, was 736 bn.
Reference if you want to check.
http://www.ons.gov.uk/ons/dcp171766_263808.pdf
So the affordability arguments being made are lies. Designed to deceive in order to keep the cash flowing in, to extend the Ponzi.