Think Left is a site I enjoy. I hope they'll forgive me borrowing a little but of one of their blogs this morning, but it's good and compelling. As they say"
"Ann Pettifor chose this graph as the most significant one of 2011.
“This is the chart that struck me most forcibly, both for what it tells us about the debts of the private sector, in particular the private finance sector; but also because of what the Treasury chose not to tell us: that the public debt to GDP ratio is tiny compared to private sector debt to GDP ratio.”
Ann Pettifor http://www.debtonation.org/2011/12/my-graph-of-2011-along-with-top-economists/
In other words, the Brown government did not ‘max out the credit card'. The increase in the debt to GDP ratio is the result of debt created by the financial sector, aka The City of London.
The UK's staggering debt is now nearly 1000% of GDP as the Morgan and Stanley chart below indicates… but it is notable that neither the UK government debt or personal household debt to GDP are very different from the other countries compared on the chart. It is solely the size of the financial sector debt which pushes up the total.
It was also financial sector debt which brought down Ireland and Iceland. Privatisation of profits and socialization of losses. Unfortunately, under our present system, governments always end up having to rescue their financial sectors when they are about to fail from their risk-taking gambling … and that is the very good reason why our banks are unlikely to leave the UK in a mass exodus if they were properly controlled. What country would want to take on the risk of bailing out the UK's financial sector?
http://articles.businessinsider.com/2011-12-04/markets/30473957_1_household-debt-uk-safe-haven
Precisely.
This was a bank made crisis. And we're stuck with that.
Which is why they must pay for it still.
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If we accept that the crisis was made by the banks and that financial sector debt is proportionately much bigger in the K then elsewhere, then why “must the banks pay for it still”?
Isn’t that the same argument that Germany is using against Greece? “They are your debts, you sort them out”. But as you frequently say, austerity does not create the growth needed to pay off the debts. In other words, how can the financial sector pay off their indebtedness other than through growth? And surely “paying for” the crisis means curtailing that growth.
Isn’t the truth more straightforward: you either give the banks free rein to grow with the proviso that the growth is used to pay off their debts, or you accept bank failure – let them go bankrupt, nationalise them, you choose. But asking them to “pay for” past sins while expecting them to pay off huge debts and increase lending to small businesses…well, it doesn’t add up, does it?
In the Courageous State I argue curtailing finance would create growth
Read it
Chapter 12
Think Left are always delighted to have their posts ‘borrowed’. Anything that will help in the fight back against the City-led machine which is causing such damage to the 99% globally as well as in the UK!
These two charts are confusing.
The first one shows around 450% debt to GDP ration yet the Morgan Stanley one states a near 1000% ratio! Even if you add the Gov debt to the first one that wouldn’t take you that much over 500%.There’s a 600% estimate of financial liabilities as a percentage of GDP on the M.S. chart rather than a little over 200% for financials on the first chart???
Bases of estimation vary – I agree
The conclusions from the scale of the issue do not
Given that the difference between 200% and 600% of GDP = £1.4 trillion that is a pretty significant variance!
Given the amount of re-re-hypothecation………I doubt if even those with the assets know how much they have, or owe, and probably to who as well.
Or even if they have anything.
Isn’t financial system debt payable to the financial system, and therefore cancel itself out?
The trouble is no one knows where the other side is……
That’s tax havens,m in part, for you
Think Left is a site I enjoy too. And so is Tax Research UK.
Nice to know some people somewhere are talking sense.
It is arguable much of this debt is odious and should be cancelled. However, if private finance debt has to be paid off by the public, then the finance sector is in hock to the public sector for its contnued supply of money, therefore government should demand significant changes to the financial system – the break up of retail banks from investment banks, very strict regulation, bigger fractional reserves, a large tax on their fiture profits. Their should be new municipal and public banks created, such as a revival of the Post Office Bank. We should also demand that a large proportion of their profit from interest payments be redistributed into the community (they laughingly claim they already do this) rather than into the pockets of their shareholders.
If they want to keep usinf derivatives, which is nothing less than casino gambling, then let them pay through the nose for it, in fact, tax it so highly as to not being worth them bothering!
If the financial sevtor want our tax money and our QE money in order to keep them afloat, then by god let them pay through the nose for it!
After all it was them who created this mess with their naked greed. Let them pay for it.