Discussion on Radio 2 – give the money to the people
Just listened to Jeremy Vine on Radio 2 discussing how to get the ecomony started and is giving the banks more of the public’s money the right decision.
One of the suggestions was to give everybody earning less than £50k a lump sum of £20k to spend or pay off debts etc. etc.
Not just because I fall into that category but I’m actually wondering if it’s not such a bad idea – anyone?Posted 9 years ago
I thought we’re all in the muck because too many people, companies, and even countries are in too much debt?
All those naughty banks have been forcing otherwise unacquisitive balanced individuals to borrow more and more money so they can afford the necessary modern kitchens, extensions, cars, holidays abroad etc that are so vital to the individual’s mental well being. So all of a sudden the whole house of cards come tumbling down, and lo and behold, as people/companies/countries are defaulting on debts, or have secured loans against assets that are currently not covering the exposure, or are at risk of not being able to pay anymore due to unemployment, no one in their right mind is willing to lend anymore as they’re already over exposed. (OK, poetic licence here, but you know what I’m getting at).
And the government’s answer is to encouragage more borrowing? Erm hellooo? Am I missing something?Posted 9 years agobreatheeasyMember
If people can’t stop buying things and have landed themselves in so much debt then I wonder how many would either blow the lot of nice frocks/tvs and still have the debt to pay off.
Then there’d be a number who’d just save it, thus not benefiting anyone.
And the rest of the people on benefit/earning over £50k who’ll be baying for someones blood….
Maybe a significant reduction in income tax for, say a year or two, might be better though that has flaws too.
I’m still not convinced we need to plough money into banks like Barclays who are expecting a ‘disappointing’ profit this year of FIVE BILLION POUNDS…Posted 9 years agofalkirk_markMember
I am with snowslave on this one, why does the government think we can spend our way out of a reccession by borrowing more money.The problem with this country is that each party when in power cannot think past the next election.Britain 2020 will be a scary place if the politicians don’t smarten up and have some long term well thought out plans.Posted 9 years agobillybouldersMember
OK I earn significantly less than £50K p.a.-not even half that last year. I have never claimed benifits and have worked since leaving school (20 years ago) But I have no debts. Do I still get given 20 grand?
If the government are going to use taxpayers money to bail out bad debts they should add up what everyone owes and tax them (or take it from their benifits) accordingly. Why should my taxes be used to bail out the greedy sods who ran up debts buying flash cars, TV’s etc they couldnt’t afford.
BTW my car is a bit of a banger, but I do have a nice new big telly. I saved for a bit payed for them both with my hard earned cash.Posted 9 years agogeetee1972Member
I earn more than £50k. Given that I don’t qualify for the cash, can I have a Papal dispensation for ALL ADULT RESPONSIBILITY? That way I could still run up ludicrous debt and live beyond my means yet still feel it isn’t my fault if I can’t then pay it back.
Oh and by the way, the percentage of people in the workforce that earn less than £50k is around 95%. There are something like 22 million adults of working age, which means the give away is going to COST £418bn. Remember that this is a dead cost, not a loan that will be paid back even if it does take the next 50 years, (like it did after WWII)Posted 9 years agotakisawa2Subscriber
Daft idea.Posted 9 years ago
Country, & in fact most of the developed world, is just going through a re-alignment after a period of excess/imbalance.
Throwing cash at banks still paying execs million pound salaries will not free the system up. FFS.
Things will settle down, but a we’ve got a hell of a storm to ride out till it does.
Cash would be better spent improving infrastructure / green transport etc for when things do pick up. Take the time to put some longer term measures in place.
Good luck chaps.skidartistMember
This might surprise you, but if your household income (thats two combined incomes or one if only one works) is £35k after tax, then you are withing the top 10% of earners.
People who earn more than £50k are a negligible proportion of the population.
The main flaw with the proposal is that the majority of the people who received a lump sum of £20K would just stick it in bank account and save it, put aside for college fees or some other rainy day strategy. A large proportion of the hand out wouldn’t be circulating so it would have very little effect.
Hand outs and tax breaks to the well off don’t work, as the well off don’t spend all they have from one month to the next, so they’ll just have more surplus to put by for a rainy day, and when that rainy day comes they’ll just emigrate to Spain, mumbling about immigrants under their breath. (They will if they listen to Jeremy Vine anyway)
Handouts / breaks to the the poorest have the most benefit to the wider economy as the poor inevitably spend all the money they have, so with things like the VAT cut might only put a few extra quid in most people’s pockets, but they’ll spend those few extra quid. And there are many many more poor people than rich people.Posted 9 years ago
Skidartist is right. It is down to an individuals marginal prospensity to consume.
The amount people spend on staples is relatively fixed. For example somebody on £35k probably spends the same as somebody on £50k. If the person £50 was to receive a pay rise of £150k then they would only spend a marginal amount of this extra on staples.
Giving money to individuals would just mean it would be saved and not spent, given the current climate. Thats why money needs to be spent on wealth creating projects such as road building etc by the Government.Posted 9 years agodruidhMember
FFS – this isn’t about “giving” the Banks money, it’s about guaranteeing against losses. There’s a bluddy big difference as most of that (say £200Bn) won’t actually be lost, it’ll be returned – WITH INTEREST. The problem at the moment is that the Banks are being expected to loan money for around 3% and yet have to pay the Govt 12%. I’m not an economist, but even I can see the problem in that.Posted 9 years ago
I get the Keynesian argument entirely. I seem to recall he argued that WW2 saved the 30’s recession because governments suddenly cranked up spending to rearm, and oh look all of a sudden everyone was employed etc etc. But he argued the cash needs spending by THE GOVERNMENT. That’s cos they can ensure that the money is spent on things that benefit the UK economy, whereas an individual might spend on imports, put it on the lottery, save it, or other stuff that does not do much to remedy our economic blight. Giving money to banks to lend money to individuals isn’t the Keynesian way I think?Posted 9 years ago
Kind of yes! I think the point is, you put £1m in the government’s hands, we see the benefit of £1m’s worth of train improvement for eg, they can ensure it’s built using uk products, workers etc all who then pay tax, spend their money in the local economy etc. You give the £1m to guarantee bank loans, **** knows how it will be spent.
I’m quoting Keynes verbatim of course.Posted 9 years ago
Wages. The answer is wages. If people have decent wages they don’t need to borrow.
Wages have been kept deliberately low for the last thirty years. To make up the shortfall people have been encouraged to borrow. This in turn has created credit-fuelled booms. Of course this is highly beneficial to capitalism, as not only do low wages maximise profit, but interest can then be charged on loans granted to those who need to borrow to make up the shortfall – more profit.
Whilst there has been a firm desire to control wages for the last thirty years, there has been no such desire to control borrowing, in fact the opposite is true – it’s been hugely encouraged. Resulting in a heady mix of profit, greed, and bust.
Pay living wages and control borrowing is the solution,Posted 9 years ago
but that ain’t going to happen since the Thatcher Revolution…….
Wages have been kept deliberately low for the last thirty years
I dont understand. wages rise when employers compete for available labour. Despite recent rising prices the amount of disposable income spent on food/fuel etc has reduced as a proportion of income. Wages will fall in some sectors as unemployment rises.Posted 9 years ago
In recent years the opposite of what you say has happened given the introduction of the minimum wage.
I dont understand. wages rise when employers compete for available labour.
Yes that’s how wages have been kept low for the last 30 years – mass unemployment, (generally between 1 and 3 million) plus cheap foreign labour, has guaranteed minimal competition for labour between employers.
And previously employees were able organise collectively to enhance their wages. Not so for the last 30 years.
We are in part, experiencing the shortcomings of a low-wage economy.Posted 9 years agoOxboyMember
How much of our money is being given to Gaza? I’m not against humanitarian aid but this goon seems to be spending money he hasnt got, nor will he ever be able to get back. Seems to me hes purposely damaging the country to give the Tories a hopeless starting position when they take over.Posted 9 years ago
Oh and yes £20k would be nice please!
Whether we as tax payers are underwriting loans on behalf of banks or re-capitalising the big banks, either way we are putting real tax payers money up in a risky environment. We are not guaranteed a return and this whole strategy could blow up in our faces big style. We do not have complete control of the situation. Even America doesn’t.
Banks and individuals that got themselves into the situation shouldn’t be rewarded for being wreckless and greedy. I’d much prefer to see some strategy that controls debt and ensures we never again see individuals or companies so badly exposed. Couple this with a bout of Keynesian public infrastructure investment might be good.Posted 9 years ago
How much of our money is being given to Gaza?
The total EU humanitarian assistance to Palestinians last year was $858 million.
You can thank the Israelis for that – if you keep 1.5 million people locked up in an area of 140 square miles and seal all the borders, then there’s no way that they are going to survive without outside assistance.
Now of course the Israelis are slapping themselves on the back saying “job well done” after they’ve destroyed homes, schools, and hospitals, but it means that all they’ve reduced to rubble, will have to be rebuilt.
I’m sure that if the Israelis were now forced to pay for all the damage, they would have thought twice about doing it.Posted 9 years ago
Are you saying that the illegal blockade had no effect on Gaza’s economy tyger ? I suspect that the Israelis might beg to differ – “putting the Palestinians on a diet” is how they described it.
And yes, the Palestinians receive a lot of aid from Arab nations. And no, they don’t receive much in the way of arms – hence the need to make their own home-made rockets.Posted 9 years ago
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