How to bluff the media and economists without tackling the problem.
Come to think of it Greece’s actions on debt has striking similarities to United Kingdoms.
Government has already spent £25.1 billion and it is only a month out from the summer budget – the budget estimated deficit was £74.5 billion.
Debt reductions for the prior year for ‘on balance sheet’ debt was only £0.8 billion – with off balance sheet debt stationery (plus no accounting for interest on this particular debt) – actually – do you know Fuk?
Fuk knows how the Treasury accountants actually ‘accounts’ for this debt.
This is not dissimilar to Greece borrowing money and paying back IMF. . Yes granted that tax collections increased – but net debt increased – yes granted it was in the budget – but no mention of the interest on ‘off balance sheet’ debt – British tabloids are a tad gun shy to take the matter up.
One wonders what the government will pin their hopes on come late September?
The off balance sheet debt includes various loans but none more dubious than the RBS bailout monies. Georgie Boy mentions that the RBS shares will be sold to reduce this debt – one wonders when – leave it too long and no investor would touch Bank stocks.
It was interesting that the business lobby group, the British Chambers of Commerce, says despite progress in cutting the UK deficit, “major challenges” remain for the government.
Its chief economist David Kern says:
“We must not understate the big challenges that the UK faces in restoring stability to our public finances. Britain’s financial sector was hit hard in the recession and, together with lower oil and gas output, our ability to generate tax revenues has been seriously constrained. Therefore, we have to continue to focus on other means to tackle the deficit – including cutting current government spending.
“The government must also put more emphasis on policies that will boost economic growth, most obviously infrastructure investment and supporting exports. Only by doing this will the UK be able to create an enterprising economy which can deliver sustained growth over the long-term.”
Well let us look at this statement – lower oil and gas output – no mention of the trend on oil prices – which will ‘compound’ the ability to raise income from this source.
I like the bit about cutting government spending – pity that it will be directed to government benefits – those that worked hard all their life seeking to retire on promised pensions.
No mention at all of cutting the bureaucracy – reducing a bloated government.
Then Mr Kern does the unthinkable- mentions exports – would that be Mr Kern – manufacturing exports?
Manufacturing exports have declined each successive year and are just barely a two digit figure – then who would buy at the current exchange rate of the GBP?
Sorry can’t see that happening even with plant and equipment tax breaks – Osborne deleted the goodwill amortization tax credits – so again I should ask Fuk.
Seeing Osborne is a vacuous twit and a monetary theorist to boot – using bastardized Keynesian policies to ‘save the U.K.’ – I can not see anything that will save the U.K. – in fact everything done by him since the budget will only make matters worse.
My assumption on the UK stays the same – and I really wonder what excuse Osborne will come up with when it all turns to shit.
Maybe Fuk knows. . .
No – not going to review other ‘economists’ comments – they do not cover the problem because they cannot see the problems.
The vacuous twat Osborne has a supporter – I was surprised but still do like to set the record straight.
The arguments in support of Osborne are condensed below in point form – my comments in italics.
Brown Darling Government had no choice in the takeover and this was inherited by Cameron Osborne Government. Full history here (*)
The government of the day always has a choice – they broke the rules of the Bank of England in undertaking emergency funding, let alone ‘bailing out’ the corporate clients.
The simple fact of the matter this ‘problem’ was acquired by Osborne – umm how long has he been in this position? – and he has done sweet ‘Fuk All’ in restructuring the Bank and onselling the preference shares to crystallize the government’s losses.
He knows full well it was a lemon and refused to make a hard decision -,but kicked the can down the road and has only now seen fit to seek an orderly sale which will take several months.
Bear in mind that this lemon is not making profits £3.5 billion loss for 2014, significantly lower than previous year’s loss of £8.2 billion – regardless of the loss it makes in 2015 – it is a bloody mess and cost the UK taxpayers far more than is being disclosed.
Opportunity cost for the government was to stabilize the banking system and economy.
Regret that I cannot see the benefits of supporting the Bank – the bank was mismanaged with malinvestments and bad lending practices – under capitalized and in an international arena.
I can see that the British taxpayer has the attitude that everything is rosy in consumer spending and borrowing – consecutive government’s actions in ignoring the situation deferred hard decisions in 2008.
Now the British taxpayer are over geared to buggery – on low interest rate loans- partying through the world financial crisis (which has not ended by the way) and are heading for oblivion when interest rates increase.
By not acting sooner the government has just made the problem bigger – more suffering when the crunch comes.
Accounting wise RBS assets (by way of preference shares) and liabilities (monies utilized to acquire) are set off. Asset and liability are equal – no need to account more than that.
Well to my mind that comment is utter bullshit.
Governments should be fully accountable for their actions and the acquisition of the RBS should have been dealt with in normal ‘accrual accounting’ method – to show the true cost and continuing cost to the taxpayers – plus the opportunity cost of using taxpayer funds – inflation – and interest.
Instead we have governments fraudulently utilizing creative accounting to hold this asset off the balance sheet – out of sight – out of mind. In other words ‘it does not recognize RBS as ‘it’s own assets and liabilities’. (**)
Atypical brash and arrogant attitude that the U.S. government held with Fannie and Freddie Mae.
Sends a good message doesn’t it – one wonders whether the Toshiba CEO could use this as an example of overstating that companies earnings over a few years.
Supported by the UK National Audit Office.(***)
Well what can I say – yes it appears that way.
In wrapping this matter up – Osborne’s attitude is hard to rectify – his supposed commitment is to ‘fiscal rectitude’ – yet this episode speaks wonders of his hypocrisy.
Then again what should one expect from a politician?
My opinion is that the RBS’s present share price at £3.58 and this is not adequate for the government to recover the amount it invested in the bank during its 2008 bailout.
In order to recover the initial cost of £45 billion spent on RBS, the government will have to sell the shares at an average of £4.55 apiece.
This is not accounting for holding costs – loan interest – opportunity costs of using public funds plus inflation- and no – I am fully aware that the government can just print money – but the way that this transaction has developed it just stinks.
What people ignore is that the ‘sale to the public’ is a long process – it ain’t going to happen overnight. Quite happy to get a beer on the outcome – it will be an unmitigated disaster for the Government should it not be sold before September 2015.
And Rothschild’s analysis of RBS – read the report – political white wash ignoring the real impact of a public bank, making losses and under scrutiny by the regulators – still awaiting a hefty fine for past breaches.
Their claim that the combined sales of UK banking assets will generate a “profit” of of £14 billion – even if RBS is sold at a loss – made me trip on my dick from laughing that much – me thinks that Osborne should definitely get a second opinion.
Yes ask Mr Fuk?
They should have done that when they sold Royal Mail. . . .
(*) RBS history and takeover by the Government – please note how many government rules were broken in saving this elephant.
(**) IMF not for release paper on creative accounting in Government. I googled key words RBS – Accounting – Governments, the paper discussed accounting treatments by government of assets.
(***) National Audit Office – political bullshit.