economonkey

21 Sep, 2009

The bank bailout, we’re finally paying the true price

Posted by: Lance In: News

Noticed how all of a sudden the politicians are bending over backwards to convince the public that they’re prepared to make even more severe spending cuts than their rivals? The political agenda seems to have flipped overnight from ‘doing what’s necessary to get economic growth back on track’ to ‘reigning in public spending to face the new economic reality’.

Education currently seems to the big target, with the politicians falling over themselves to hack down on the cost of educating future generations. This is probably because other areas, such as defence and healthcare are, politically speaking, a bit touchy at the moment, whereas nobody really cares that much about schools and universities. Nevertheless, you can bet that savings will have to be found from across the spectrum of public services.

There really ought to be more public outrage about all of this. Not so long ago the government was pumping endless billions of taxpayer money into the banking sector because, we were told, it was essential to ensure the stability of the banks. Pouring this vast sum of money into what are essentially privately owned commercial organisations would, apparently, get everything chugging along nicely again.

Only, it didn’t. So now, after throwing billions of pounds into a black hole with no discernable benefit beyond ensuring that the boys in The City don’t have to do without their bonuses this Christmas, we’re being told that there’s no more money in the kitty for luxuries such as education…

So remember, when you can’t find a place at a local school for your children, or you can’t afford to put them though university, or when you’re forced to pay for health insurance because the NHS it too badly underfunded to help you, or any other public service you’ve grown used to crumbles into uselessness – you’re finally paying the price for bailing out the banks.

And ask yourself if you think it was a price worth paying.

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2 Responses to "The bank bailout, we’re finally paying the true price"

1 | Ed Bowsher

September 22nd, 2009 at 9:34 am

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I strongly disagree with this comment:

‘Pouring this vast sum of money into what are essentially privately owned commercial organisations would, apparently, get everything chugging along nicely again.’

This is not what people were thinking in October 2008. I don’t believe that Mervyn King/Alistair Darling thought the emergency measures would get ‘everything chugging along nicely again’, but they did think that these measures might avert total disaster. And the measures achieved that objective.

Yes, it’s extremely irritating that the City bankers are now pocketing large bonuses, but it was absolutely essential that we stopped HBOS and RBS from going under. It’s easy to forget how bad things were a year ago.

I’d also add that the rescue packages aren’t the only cause of the government’s poor finances. When an economy contracts, tax revenue inevitably falls and the government has to spend more money on social security. Things have been especially bad this time round because the government was generating so much tax revenue from the City and that revenue has now fallen.

Do you seriously think that if the government had let RBS and HBOS go under, everything would be fine and dandy? I don’t think we’d be seeing nice chunky increases in spending on health and education. Quite the reverse.

Ed

2 | Alex

October 21st, 2009 at 8:03 am

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Well Ed, Mervyn King seems to agree with Lance and disagree with you, for what it’s worth:

http://www.guardian.co.uk/business/2009/oct/21/mervyn-king-attack-banks-bailout

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