From this morning's Guardian, by George Osborne:
Where we can all agree is that these are difficult times for family incomes. There are two root causes. One is global: rises in food and commodity prices. The other is specific to the UK: the unwinding, through a 25% currency depreciation and an unavoidable fiscal consolidation, of economic imbalances built up under Labour.
No mention of bankls?
Or regulation - which he demanded be relaxed?
Or of over selling of mortgages - which he demanded be freed from all constraints?
And no mention of the failure of the market?
Or the opacity of financial commodities that made failure inevitable?
I give him full marks for audacity.
And the same for the telling of untruths.
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By and large the net benefit to families of bank failures will have been a cash inflow (simply because the money has to go somewhere). If families “borrow too much” then they are receibving more cash up front than they shoudl take on and the amount that they pay over the odds goes to a seller who may sopend the surplus on consumer goods. The net effect of the banks overlending was to put far too muchmoney into the economy.
When the banks had problems and were refinanced by the tax payer any cash used by the government was borrowed on the debt markets, so there will be a future cost to households and business, but deferred over many years and in many cases paid by our children. But by definition, the amount of extra cash enjoyed by households through lavish lending was higher in real terms to those households than the cost of repaying that money, becuase some of that cost is going to fall on others.
Bit cheeky not to mention banks, in fact its outright politicking of the worst kind on his part.
So lets say there were 3 reasons, and Banking excess/lax regulation was the third of those.
So Labour were not 50% to blame, but maybe 33% (overspending is their full third and half the baking issues were caused by lax regulation and pandering to the square mile along with the BoE independnace whose record in hindsight was largely a lie as we recently found out Inflation was 0.3% higher for a full decade than reported by the ONS). Yes the Tories probably would have done the same on regulation, so its a bit rich (pardon the pun) of Osbourne to use this against Labour without any mea culpa on his parties position as well. BUT Labour were indeed in power, they were the gatekeepers to regulation and they failed.
@Anand
Yes, they did fail
And they should admit it and move on
But Tories asked for it to be even worse