Originally Posted by staker
tbh the saying 'its the economy stupid' is what happening right now, we are in the worst economic situation since labour took power and as the economy goes bad then we all think its the governments fault so we need a change.
I'd say that that's
part of what's happening right now.
But there's several aspects to it, even if you blame it on the economy, and in my view, you can't put the whole blame on the economy. There's too many other things been going on. After Brown's initial honeymoon on gaining power, he's presided over one disaster after another. I won't list them all, but it ranges from the 10p tax farce to the loss by HMRC of 25 million people's personal data to the political scandals over expenses, and so forth.
IS Brown personally responsible for all that? Directly, nope. But the old "buck stops here" principle means he's the man where the buck stops. And some of it, he was directly and personally responsible for, like the 10p tax débâcle.
When you add up all that, when you add in the dithering over the election that never was (and how I bet he now wishes he'd found the balls for it from somewhere and called it back then) we have a leader where at the very least the perception is that he couldn't lead a dog on a chain. And, given the accumulation of events (and it has been one thing after another, over and over and over again), that perception is very damaging.
But even if you leave all that to one side, and just focus on the "economy, stupid",
he spent the last 10 years running it!
And not only that, at every opportunity, while times were good internationally and much of the much-vaunted stability that he personally claimed credit for was because of international factors, yet as soon as the international situation turns sour, all of a sudden, it's magically nothing to do with him, it's all international factors.
Sorry, Gordon, but though it may shock you, we're not all morons. You've been claiming "prudence" in the managing of the economy for years, and now the reality of it is coming home to roost. Staker, his management has been anything but prudent. He's spent fortunes, increased taxes again and again and again. We've seen some of the best economic times in recent history, but the problem comes when you start to look at
why we have.
Some of it has been that international situation I mentioned, and that's now gone bad. Really bad. But some of it has been because we've been taxed at every opportunity and it's then all been spent. Nothing has been put aside for the proverbial rainy day .... and we're now facing a prolonged deluge.
But some of it has been structurally bad. A significant proportion of our current problems are due to the collapse in confidence, and in house prices, due to the credit crunch. Well, Brown isn't responsible for the crunch, but he is responsible for the extent of the effect it's having on us. During his 10 years as Chancellor, the housing market inflated to the point where everybody referred to it as a "bubble", and most people half-expected that it was going to burst at some point .... while, as a house-owner, furiously hoping it didn't.
And a LOT of that house price inflation is Brown's direct fault. Why? Because, as Chancellor, he has the final say over the rules under which the banking sector operate. He allowed banks to lend 125% of the value of the home, and to do it on daft multipliers of income, like 5x or 6x. 20 years ago, you wouldn't have got anywhere NEAR that sort of possibility of credit. Yet, with house prices apparently going up, faster than earnings, year on year, people became increasingly desperate to get on the housing ladder because they could see the first rung getting higher and higher, apparently inexorably, and wanted to get on before it disappeared out of reach permanently. And that coaxed people into those stupid mortgage deals, precisely because it was the only way they could get on the ladder.
But there's more to it even than that. because house prices were going up as they were, you could buy a house and, a couple of years later, have made tens of thousands in "equity". Never mind that such gains are totally illusory, unless you either sell up and radically downsize, or move abroad, because we all need a roof over our heads and those roofs were getting dearer and dearer. If you sell one roof, you usually don't realise that equity because the price of your next roof has similarly gone ....erm ... though the roof.
Now think. Every time one of those roofs gets sold, the Exchequer gets a nice, fat stamp duty payment. And, over the years, the percentage of houses on which stamp duty is payable has gone way up, as has the number that pay higher duty. In many cases, a house that 20 years ago would not have hit the stamp duty threshold at all is not in the higher rate. So not only have the Exchequer gained by more houses becoming eligible for stamp duty (because the threshold fell dramatically behind house prices) but the rates have gone up too. If you look at government accounts for the last 20 years, you'll see the HUGE rise in government revenue from stamp duty.
That rise has been part of how Gordon has paid for everything he's spent (whether it gained results or not) while Chancellor, and he;s done it as the [rice of profiting from the housing bubble, and I remind you, while he was the one responsible for setting the circumstances that permitted that bubble.
But it doesn't even end there. Because everyone felt so "wealthy" due to all that lively free equity, most of the nation has been on a credit binge. Whether it's cars, holidays, huge flat-screen TVs or whatever, average credit card debt in this country is now at epic levels. And again, the government benefit. Every time we buy something, they get their VAT, and as like as not, import duty too, and never mind that we bought it on tick.
Brown could have reined this back. He has direct control over things like the liquidity ratios the banks operate under, and could have increased them. He has direct control over the climate in which the financial industry operate, and could have implemented a tighter regime to clamp down on all that easy credit, but it would have slowed the housing market, clobbered his stamp duty revenues, tightened consumer belts, slowed the credit-fuelled consumer spending patterns and reduced his tax take.
So he didn't actually manage the economy prudently at all. Instead, he actively encouraged the entire nation buy everything in sight, rather like a greedy child in a sweet shop.
And while all that is going on at a consumer level, the government were at it too. From all that extra tax take, they too went on a spending binge. True, some things (like the health service) needed it., but the issue isn't just what they spent, it's where they got the money and whether they spent it well. not content with the money from all that consumer credit-talking, the government went on a borrowing spree too. And they pretty much max'ed-out their credit cards too, starting to get very close to Brown's own golden spending rules.
But, having done so, did Labour and Brown slow down on the spending? Did they hell. They went in for private finance initiatives, where they get private companies to spent the capital to build ... whatever, but that private company then gets a lucrative contract to "manage" it for the next several decades. Some of those contracts are incredibly lucrative in the rates those companies can charge for doing jobs. And because it's a monopoly situation, by virtue of those contracts, they've really milked it. So much so, in fact, that there;s a very profitable market in buying up the contracts. Getting one of those government finance deals is a licence to retire, because you build the ... whatever, charge gouging rates for a year or two, then sell the contract on and take many, many millions in immediate profit.
We, the taxpayer, however, will be paying those gouging rates for 20 or 30 years. And the beauty of this little scheme? Because the government didn't spend the capital, and because they didn't borrow the money (they just contractually committed us to paying it) the sums spent are "off balance sheet". They don't count towards Brown's much-boasted-off Golden Rules.
So staker, you're right, and a lot of current discontent is because of "the economy stupid". But, whether they realise it or not, the blame for that is being laid at EXACTLY the right door.
Brown can't be
personally and directly responsible both for what he did, and what he should have done but didn't, and then claim responsibility for the good bits while it seems to be working, and then deny it's anything to do with him when the chickens he grow come home to roost.
Sure, he didn't create the credit crunch, or the demand that's spiking fuel and food prices. But he did
personally ensure that we're not only poorly placed to deal with it, but as a nation at both government and personal levels, and up to our eyes in expensive debt commitments.
So in relation to Brown's and Labour's current woes, "it's the economy stupid" is not only largely (though not entirely) true, but poetic justice.