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A fairer society?

Robert Peston | 16:30 UK time, Friday, 17 October 2008

One of the most striking trends of the past three decades - which became particularly pronounced again in the last few years - has been a widening in the gap between the poor and the rich, with the gap between the very poor and the super-rich expanding at an almost exponential rate since 2003 or so.

Well, in this grim year of serious economic slowdown and rising inflation, our society is becoming more equal again, on most measures of income and wealth gaps.

Part of the reason is that the super-rich have been battered by the turmoil in financial markets and by falls in the prices of shares, commodities, properties and other assets, just like the rest of us.

So investment bankers are lucky if they're still in a job - and bonuses this Christmas will be shrivelled and rare.

There'll be fewer humungous payouts to partners of hedge funds and private equity firms. In fact, with debt so difficult to raise, many of these firms will be lucky to be alive in a year or so.

Also the oligarchs and plutocrats of the newer, faster-growing economies are nursing losses on their exposure to markets, such as the Russian stock exchange, which are melting down.

A duo of oligarchs, who only recently were giants of global capitalism, Oleg Deripaska and Alisher Usmanov, have faced demands from bank creditors to hand over substantial assets (the odds of an Usmanov bid for the Arsenal are now presumably rather longer than they were).

Lakshmi MittalThe king of steel, Lakshmi Mittal, is less flush than he was.

And with the oil price having more than halved in just a few short months, there's less wonga bulging in the pockets of the potentates of the Middle East.

So the crunch is coming, later than for most of the rest of us, to the very very top end of income and wealth spectrum (though don't weep too much for them, because most stashed away enough cash in the boom years to weather the storm in some style).

But what about the very bottom?

Well for those in low paid, insecure jobs, the outlook consists of below-inflation pay rises and possible redundancy.

However, if you are living on benefits or you depend on a state pension, there's strikingly good news.

Your state-funding income will rise in line with September's retail prices index or an adapted measure called the Rossi index. And both inflation measures have been rising at a faster rate than we've seen since the early 1990s.

So the RPI, which determines increases in child benefit, incapacity benefit, disability allowance and state pensions, is up 5 per cent.

And income-related benefits (such as housing benefit, income support and jobseeker's allowance) should be increased by the 6.3 per cent increment in the Rossi index.

What that means is that after many years of receiving a smaller and smaller share of the national cake, those who depend on the state for their income will actually receive bigger pay rises than almost anyone else - and their share of national income will rise.

It may seem rather odd that those on benefits tend to do best when the economy is in the pits - but actually that's not unusual (it happened in the early 1990s too). But this time they'll do disproportionately better, because of the inflation we've imported from rising energy and food prices.

So what we're seeing is something of an uplift for those who are poorest, and some of the froth blown off for those with fabulous wealth.

In the middle, however, which is where most of us live and work, it'll be a year of squeezed incomes and fears of redundancy.

So most won't see this narrowing in the gap between rich and poor as a sign that our society is becoming fairer.

PS These increases in benefits and pensions will probably lead to further increase in public sector borrowing. But many economists would see that as a good thing, since the recipients of increased benefits and state pensions usually have to spend the lot just to have a dignified existence - and that additional spending would be good for all of us if it were to inject a bit of extra oomph into a weak economy.


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  • Comment number 1.

    Good. Although I really doubt there will be significant change in the difference between rich and poor as a result of this.

  • Comment number 2.


    A good trader / investment banker working over the past 10 years can retire if they want to.

    The "bankers" that have been hurt will be the support staff, dreaming of that golden ticket, whilst leveraging up the family for posh private schools and bigger houses.

    Not sure a pensioner on state pension is really going to "catch up".

  • Comment number 3.

    Interesting article Robert. Just one observation though.

    Everyone's inflation rate is different and those at the bottom of the imcome brackets are likely to spend proportionately more on food and energy.

    These inflation rates are still much higher than average.

    That said, were commodity prices to continue to fall, this could back up your argument even more.

  • Comment number 4.

    A deep inequality, Robert, is that between guaranteed public pensions or private final salary schemes, and private money purchase pensions/annuities which are at the mercy of the markets. So even in the middle ground where there is now greater equality between public and private pay, the inequality in retirement will be vastly increased.

  • Comment number 5.

    I see. So your definition of fairer appears to mean that those who sit on their backsides and do nothing are taking an increasingly large amount of dosh from those of us who do?

    Oh, and that we're having to borrow to pay it?

    Only on the BBC....

  • Comment number 6.

    It's interesting you bring up the super rich becoming much poorer. Does this mean that the secondhand market in megayachts has collapsed? Maybe they will be repossesed and sold off at knockdown prices...hhmmm, I wonder what the LTV requirement will be in these new tough times. If only we still had self certified ninja 125% loans. Admittedly I would have defaulted in the first month....but what a month that would have been!

  • Comment number 7.

    I see you've been doing as suggested, Robert. Well, if the Upper House doesn't appeal, how about persuading Dinger Bell to stand again for the Lower House? Thirty years of Conservative policies under whatever name should not be followed by five more under the Tories under these circumstances, we need a true Socialist party as well.

  • Comment number 8.

    "PS These increases in benefits and pensions will probably lead to further increase in public sector borrowing. But many economists would see that as a good thing, since the recipients of increased benefits and state pensions usually have to spend the lot just to have a dignified existence - and that additional spending would be good for all of us if it were to inject a bit of extra oomph into a weak economy.."

    Pensioners certainly need the help after years of derisory pension increases while MP pension pots get fat at our expense. They've paid their NI stamp, they deserve a decent retirement.

    For some in the benefits system it is less equitable. For the last decade Brown has in part used the benefits system to keep the retail industry ticking over.* The incentive is there to spend all that they are given or their benefits get reduced, and by God they do spend it. On drink, Sky, plasma tellys, mobile phones and foreign holidays if the ones round here are anything to go by. There is nothing dignified about their existence.

    It's meant to be a hand up not a hand out.

    * Much as he has been happy to see house prices bubble so mortgage equity withdrawal could do the same.

  • Comment number 9.

    If those on fixed incomes were to get this meagre increase immediately then fair enough but any increase does not come into effect until April 2009.
    If some haven't frozen or starved to death by then there will certainly be no scope for them to spend.
    This one had to come out of Downing Street Robert.

  • Comment number 10.

    Don't let the first breeze fool you, there is a storm coming. What will rich-poor gaps matter when we have higher than 10% unemployment and a million repossessions?

    Fair and equal are not the same. Equal poverty means fairness in your world? What is fair about being in the middle and having your wealth taken away because the guy at the bottom has nothing because the guy at the top has lost money and fled? Face it, those of us who are lucky enough to keep our jobs will be forced to pay for this mess. I don't call that fair whatever the shape of some think tank's fancy diagram. I call that hard luck.

    "A rising tide floats all boats," that saying works well in reverse too.

  • Comment number 11.

    If we do not impose heavy taxes on the rich immediately they will rush out and waste all their money on structured investment vehicles, collateralised debt obligations and all the other acronymical soup that has recently bedevilled our lives.

  • Comment number 12.


    The Middleclasses who might be small shareholders or who might have a mortgage or who might have a pension plan, have been wiped out by the financial crisis.

    Yes, we are more equal, the middleclasses are now as poor as everyone else, and getting poorer.

    The real rich people, who own farms, vineyards, private companies, Treasury Bonds etc, etc, are still rich and likely to stay so, inflation or crisis notwithstanding.

    The people in the middle, will have lost on their Pensions, their Shares, their House value, and possibly their career if they are laid off in the downturn.

  • Comment number 13.

    Of course Inflation will wipe out Money on deposit far faster then money invested in Farmland..............

    And ordinary folks are most likely just to have a Savings Account if they have anything at all.

    Interest rates are on there way down, they will fall faster on deposit accounts than on Mortgages as people are already seeing.

  • Comment number 14.

    Does anyone else feel that Cameron and Osbourne are just making up their latest speeches from various postings on these blogs?

    Its uncanny!!!

  • Comment number 15.

    Robert is looking for a silver lining but I think he has only found an anomoly the reduction of some relative poverty within our borders, wheras I fear that what is happening will throw more people worldwide back into absolute poverty. The possible silver lining that I see is the growing awareness of our global economic interdependence, China and the middle east need our markets we need their products, damage one and the rest suffer also that we can only thrive in a mixed economy with private enterprise as well as international regulation and international initiatives from governments in cooperation with each other, if we can really learn this we could be at the beginning of something really good.

  • Comment number 16.

    FrankFisher dont make the assumption that all ppl who claim benefits sit on their backsides and do nothing, i certainly don't i have two children to bring up. am i wrong for wanting too raise my own children?

  • Comment number 17.

    The extremely rich may be having a tougher time of it, but you wouldn't think so if you were running an air charter business.

    A friend, who runs Day Aviation, reports that there is no decline in business despite the economic turmoil we're living in, and he's still flying clients including top business executives and Royalty.

    If anything, he says, using a bespoke air charter service might even be cheaper for them than flying business class, particularly as they can fly where they want, when they want, without having to arrive hours early at an airport that might be out of their way in the first place.

  • Comment number 18.

    Dear Robert-have you ever lived on benefits? Contrary to the picture painted by the Daily Mail, not everyone is sitting on their backsides sipping champagne and smelling the roses.

  • Comment number 19.

    Will we be throwing the quarter of a million or so people who will have lost their jobs by Christmas and be forced to sign up for jobseekers allowance in under the comfortable umbrella of 'scroungers'?

    Or has the Daily Mail come up with a fluffy term for them yet?

  • Comment number 20.

    So the salary earners who have lost their pensions will be laid off, but that means they'll get bigger benefits rises, but they won't be able to pay their mortgages, and the banks that are short of cash will be repossessing their homes, and the only market for houses will be social housing projects, because nobody will be able to get a mortgage.

    Fortunately the lower price of cheap whiskey , protected for so long, will mean that we can all drink ourselves to oblivion which will boost the economy.

    Truly a Nu-Labour paradise.

  • Comment number 21.

    If we live in a meritocracy, then winners will win and losers will lose, everyone finds their level. Or are you arguing for equality of outcome, in which case whats the point of making any effort? Over taxing someone who is successful to placate the bleeding heart liberal's concern for the unsuccessful is a recipe for a brain drain - remember the 1970's? The fact that Mittal/Gates/Duke of Westminster have billions has no effect on my life, yours or anyone elses, except in that what they purchase in cars, planes, yachts, expensive jewellery, furniture, electronics, etc provides work for hundreds or thousands...

  • Comment number 22.

    I am not sure the Hon. Robert Peston is really the most appropriate person to talk about this - coming from a family that bought my family's home some years ago as their seaside retreat.

    This sort of posturing as 'one of the people' doesn't really help his credentials as a reliable source of information and sensible perspective on the very real issues impacting on the majority of people.

  • Comment number 23.


    well if thats the case maybe at last we will get a true leader. even though i very much doubt it.

  • Comment number 24.

    so the hyper rich will loose a bit, in reality they wont even notice.
    where the low paid getting below inflation rises will feel the crunch heavier due to cost of living increases.
    sadly the government will fail to do anything substantial becouse it would involve them making real decisions that would upset there paymasters.
    the gap therefore remains and this coming winter will see many older or less well off having to suffer unduly having to reduce amount of food and power they have or use, who will help them.
    this government has failed the people it is in place to protect infavour of helping inept bankers and market traders, being greedy is fine but at the expence of the people i think its insulting and contemptable, and any deaths due to poverty in the coming winter should be fully placed at the door of number 10 and the rest of the government.

  • Comment number 25.

    Ask yourself - just how sustainable is all this debt when the economy is sliding into depression because of all the debt we have build up. Rich, poor, in the middle, it won't make a blind bit of difference. The most likely to survive the forthcoming turmoil are those who are self-sufficient in water, heat and food.

    How long before the good old US of A defaults on their $trillions of loans? 'Cos when they do, and it really is when not if, we won't be far behind them. How much longer can governments create more debt in order to attempt to bail us out of the position of having created too much debt? Who will buy all this new-for-old debt - surely the Chinese and Middle East are starting to run out of money themselves!

    Furthermore, we are already seeing massive declines in shipping rates - and if the ships ain't moving then neither is any of the stuff they usually haul around the world. The ships ain't moving because the banks won't issue credit notes, and the suppliers won't ship without a guarantee of payment. If there ain't any stuff to buy, it doesn't matter how much you have in the bank - you'll end up hungry and cold just the same and the depression will get worse.

    There are plenty of good websites out there explaining what is really going on - try or or for starters.

  • Comment number 26.

    Well i must say the way you have wrote this blog robert you have to feel sorry for the ones in the middle. there getting it from both sides. if its not the rich taking the lion share then its the poor. even though i suppose people must also understand that jobs will go and that these people did have good jobs untill the rich and the goverment sealed their fate. i guess some on here must be rich. because if not how do they know there job is safe?

  • Comment number 27.

    so, the 'super-rich' are slightly less super-rich than they were. so what? they've still got waaay too much money! they've got no concept of how ordinary people 'have' to live, and what they have to put up with. don't get me wrong-i've no problem with people doing well by working hard, coming up with a good idea or two, or by creating employment for others. it's just that there's a limit to how wealthy someone can be before it becomes vulgar, and even disgusting!

    i'm not one of those bitter types who'd like to see them lose it all, but i'd dearly love them to pay their fair share in tax! ...while some of us pay a disproportionately high level of tax.
    it'll NEVER happen, of course!

  • Comment number 28.

    re the growing gap in income distribution:

    on a more serious note, robert forgot to mention that fiscal policy in an economic downturn is normally designed to favour the poor, as they are more likely to spend the extra money they get from the government (and not just save it), thereby boosting aggregate demand.

  • Comment number 29.

    I'd sure like to think that the rich are going to bear the brunt but it never turns out that way, does it?

  • Comment number 30.

    Sorry Robert - Just what point were you trying to make.

  • Comment number 31.

    deutsche bank has been one of the most responsible of all the leading banks throughout this crisis imho:

    disclaimer: i used to work for them.

  • Comment number 32.

    Blanket statements about what is happening to each section of society seem to be prevalent at this time. Of course, society cannot be pigeon-holed so easily, "middle class" neighbours with similar income and similar family situations might have very different responses to the current situation because one works in a 'safe' industry, whilst the other is in self-employed, one might take luxury holidays whilst the other goes camping so they can pay down their mortgage.

    I think one impact of the current crisis will be that many more of us will manage our lives with a basic consideration of 'risk' - less personal leverage, diversification of our investments/ pensions, keeping higher levels of assets in cash - and diversifying where the banks at which we hold that cash.

    We are all risk managers now.

  • Comment number 33.

    The four phases of Capitalism over the centuries:

    The rich exploit the poor,
    The rich exploit other countries poor,
    The middle class exploit each other,
    The middle class pretend to exploit each other and the super rich get richer.

    Somehow Robert I can not feel a great deal of sympathy for the super rich - they are probably being exploited by the maga rich.

    Now dont't get me wrong I am not a socialist but I am worried about the world my small grandchildren are going to have to navigate!

  • Comment number 34.

    Robert Peston writes a sympathetic article and the Daily Mail moaners are out!

    You might not admire the lifestyle of the poor, but if ANY who complain about working hard for loafers read some history then you'd see that the poor are people who have lost every battle in history, have had everything taken, have had to borrow just to keep their self-esteem - and they're about to suffer for that by the way - because they had parents that a) didn't love them b) abandoned them and see a) c) parents who beat them, moaned at them incessantly and treated them with contempt d) are terrified of trying because they've been humiliated so many times by the people that supposedly 'love' them e) don't know anything and have missed out on the brain growth of early years.

    That is my experience of the poor. No one says you have to like them. But think of this too, there are constant adverts chasing down benefit cheats - most of whom make a weekly wage out of it. Not a fortune. I've never seen an advert about a corporate tax dodger (evading millions of tax), an offshore fund that contributes nothing to where it takes its profits from (evading millions of tax), or the an arrest warrant for Russian oligarchs who stripped Russia bare and sold up to international companies for hundreds of millions having bought something that they had no right to buy from those that had no right to sell while over 60% of the country tumbled below the povery line. And YES, it does have an effect that someone like Bill Gates has $56 Billion because as we are finding out the hard way, the Romans were right - wealth is public. Its power is social and what people do with it can destroy not just a life, not just a few lives, but millions of lives. See the next few years for a quod erat demonstrandum. (And that's not envy speaking.)

    There isn't an equal starting line and anyone who thinks there is needs their head examined...or a book.

  • Comment number 35.

    Half of U.S. bank deposits are in those nine large banks, with the remainder spread across the country in smaller firms. Any delays by the Treasury in getting money to the local level threaten to slow economic growth in areas where job losses are mounting and consumer spending weakening.

  • Comment number 36.

    I agrre it is tough living on GBP 60.50 max a week Jobseekers Allowance but, given the cost of living increases, do you really think that a potential increase of 6.3 p.c i.e. GPB 3.81 per week is a cause for celbration by the 939,000 JSA claimants ... a million by Christmas!!

    We'll still be on the breadline!

    The biggest issue for newly unemployed home owners, which few in the media have picked up on, is paying their mortgage interest - currently no state help for 39 weeks i.e. nearly 10 months and then only for GBP100K advances!

    NB Payment Protection Insurance is acknowledged to be yet anither rip-off so why does the Govt rely on it when making policy?

    Super Gordo feels for us so much, this qualifying period will only be reduced to 13 weeks from April 2009 for GBP 175k advances.

    How much savings do you have? Covered?

    A cynic may observe that the lights in Whiehall will not burn this weekend because immediate action/ bail-outs for UK victims of the recession is not vote winning or worth bragging about to other world leaders!

    Why do we just have to wait for the repossesion crisis to hit the front pages before this government wakes up?

    We would be a true Banana Republic if Gordon had not mortgaged them to save the bankers!!
    Disgusted and broke!

  • Comment number 37.

    Oh for goodness sake it's simple... Unless you happen to believe the CPI, RPI figures and other mythical beasts like fairies and unicorns.

    Inflation moves value to assets, money becomes exponentially more worthless (14% per year in the UK[1]) and the value of people's savings and salaries plummet with it.

    Deflation does the opposite. It moves value to cash and devalues assets. Hence all the screaming and shouting by banks and governments.

    The whole purpose of the stock market since 15th August 1971 has been to capture inflation. It is called "capital growth". In fact it's simply the devaluation of the currency.

    Most of the poor suckers who have to work for a living have no idea what's going on. 2.5% pay rises while the money supply has been running at 12% - 14%.

    [1] Bank of England money supply statistics:

  • Comment number 38.

    Somehow I can't make myself feel sorry for the super rich who may have lost the odd billion from their multi billion pound fortunes. They can all still afford to live in the kind of luxury that most people can't even dream of, let alone aspire to.

    As for the bankers and traders, the ones who are responsible for this mess have got fortunes in the millions from the bonuses they made from dealing in things that they probably didn't fully understand, with someone elses money, most likely it was hard earned pension fund money belonging to ordinary folk, and can afford to still live comfortably and have few money worries.

    The people who are going to suffer are the lower middle class and the ones on the bottom and on benefits. Anyone who has never had the misfortune to be on benefits might think it is a cushy number, but as someone who worked hard for the first 20 years of my life, only to end up medically unable to work due to failures in the NHS, it is far from cushy, and 5% of not a lot is surprisingly enough, not a lot!

    Before people go on, I don't smoke, I don't drink, and I don't have a huge plasma or LCD TV or the latest i-gadget, my TV has seen over a decade of use, and so have the rest of my few possessions, all bought before I got unwell.

    Anyway, back to the business in hand, this crisis is just a typical market re-adjustment. The super rich and the rich never actually end up much the worse off, other than a few who took far too many risks. The banks still get their pound of flesh from people who default on their mortgages by repossessing their home and selling it on, lets face it, the "money" they lent to the defaulter only came into existence the moment that they signed the mortgage contract, it was created out of thin air using the miracle of fractional reserve banking. The biggest loss maker will be your pension funds, that is the money that you thought was going to give you a nice little nest egg to retire on after a life spent working.

  • Comment number 39.

    It's still a long, long way to a fairer society, I'm afraid.

  • Comment number 40.

    It might come as a bit of a shock Robert, but trickle down works. Not just the good comes down but the bad too.

    Inflation and the lack of credit will hurt the poor more than the rich, and that is very much for sure.

  • Comment number 41.

    Re my earlier post ... I forgot you're a numbers man so any advance on the following

    UK GDP GBP 1,401bn

    UK Bail-out package GBP 387bn
    (maybe more, I've lost count!)

    Annual Jobseekers Allowance payments to July 2008 GBP 2.3bn

    Who was it that said ... The mark of a civilised country is how it treats its poorest citizens.
    More disgusted and still broke!!

  • Comment number 42.

    "PS These increases in benefits and pensions will probably lead to further increase in public sector borrowing. But many economists would see that as a good thing"

    Given the parlous state of public finances thanks to Mr Brown deficit spending during the years of growth, I really don't see how any economist could see a "further increase in public sector borrowing" as a good thing - after all, Government borrowing is simply deferred taxation and putting the day of reckoning off into the future.

    As for people on benefits, I really cannot see any extra spending by them compensating to any degree for the general slowdown in the economy.

  • Comment number 43.

    Everyone keeps concentrating on a handful of rich bankers that might lose their bonus this year. Some of them have turned their bonus down voluntarily, how great of them. After they have driven their business to the wall and cost the taxpayer billions.

    I have a few problems with the way the media is trying to present the situation.

    Firstly, there are not just a handful of bankers responsible - there is a small army of middle and upper managers and traders that created and traded the toxic assets and credit swaps, and for which they got enormous bonuses for many years.

    Secondly even if we put all those bonuses together we still cannot amount for the billions of pounds lost.

    Thirdly, where is Brown going to get all that money from to buy shares and loan to the banks? 50 billion pounds here, 250 billions there. The answer: he will print the money, that is where. He encourages other governments to also print money so the pound does not collapse in isolation.

    What will be the price of a loaf of bread and a pound of cheese, once this money has been printed and has circulated? Probably double what it is now.

  • Comment number 44.

    Surely Robert the banks have got to start lending soon otherwise the wheels of the economy will well and truely sieze. thing is i really do think that the banks really are short on the dose. and even if they have money then why when the likehood the price of a house is going to drop by some 40%.Would they do this. and not only that even if they was to then you have to ask why would anyone want to buy a house knowing its going to lose money straight away. the outlook looks very grim indeed.the funny thing is we are at least 500,000 houses short in the uk. there are many younger adults still living at home with there parents. reason being quite simple they where priced out of the market. so i suppose soon they will soon have a chance to buy. but this wont be till houses hit there real value. this could well be at least 12 months away. by that time i exspect some 5 to 10 million houses to be in negitive equity. which in it self could bring house down by a that is actually below what they should be.

  • Comment number 45.

    Always the lower middle classes who suffer.
    Single mother Sharon and city type Crispin will do fine. As for the super-rich - a new moral landscape will surely evolve out of this mess, and these men will be held to account in some way.

  • Comment number 46.

    Dear Mr. Peston,
    I find your blog unusually succinct and informative. Thank you.

    Re the credit crunch. How about sorting out the problem at its roots. I belive the sub-prime mortgages started off at a low rate for 2 years or so and then jumped. Why not keep all these mortgages at this same low rate then there will be less angst, less repossessions and these sub-prime mortgages should now be not so sub.

    In the US the Bank rate is low enough to support this and all we have to do is drop our Bank rate a bit here and then we are all in the money.

    I did read one reason why this should not be done is that it is not the government's business. Well, a lot of other things seem to be, so why not this?

  • Comment number 47.

    #22 "I am not sure the Hon. Robert Peston is really the most appropriate person to talk about this - coming from a family that bought my family's home some years ago as their seaside retreat."

    This is a contemptible remark - a personal attack on Mr Peston and his family - shame on you! Mr Peston is qualified to talk about this because he understands his subject. It is his duty to talk about this because he is being paid by the BBC ie us, to help inform the public - carry on the good work Robert!

    #40 #It might come as a bit of a shock Robert, but trickle down works. Not just the good comes down but the bad too.#

    If trickle-down works, why is it more difficult for young people from poor or even not rich backgrounds to go to a good university to study a real subject? In the 1970s, I was paid a grant to go to King's London and study Maths and Chemistry. I then went into teaching in the state sector. It would not be possible today. The costs of studying in London are now prohibitive, even if you are prepared to take on a huge burden of debt. King's Chemistry dept, one of the best in the world, closed down, partly because it was expensive to run, and partly because it couldn't get enough properly pre-qualified students to maintain its standards. This is a not untypical story. As a consequence, there is a shortage of qualified teachers in specialist subjects on the National Curriculum.

    My point is, that while the very rich were taking an ever increasing share of the allegedly increasing national wealth, there was not enough of that wealth to invest in the real education necessary for the future of this country. I have a horrible feeling that the apparent expansion in "higher" education is partly a scam to keep young people off the unemployment register and, by the student loan scheme, eventually to pay the costs of this scam themselves.

  • Comment number 48.

    What I see is the frightening speed of job losses and home repossessions as they are happening.
    We have a government that has been in complete denial of recession and is totally unprepared for the mayhem to come.
    I was around in the 80's recession but believe me it was nothing like this.
    Large numbers from the mines and the shipyards to steelworkers and other manufacuring industries lost their jobs but they were highly compensated. The unions saw to that.
    What we see now are redundancies and business failures from across the whole spectrum with little or no help to get them through what will be traumatic experiences.
    It doesn't matter which class you belong to any more no one is immune from this.
    Gordon Brown can kid people at the moment but as it dawns on everybody that no one is really there to help them and they are well and truly on their own he will have a lot of public dissent on his hands.
    It is only a matter of time now.

  • Comment number 49.

    Pretty soon the deadbeat in the gutter next
    to me shall be able to relate an interesting
    career history.

    This almost makes me want to masquerade
    as an AIG executive so that I can get a bit of the
    good life at one of their career retreats before
    the party ends.

  • Comment number 50.

    Oh dear.

    Oh dear, oh dear.


    You will note I am at a loss for words.

    Mr Peston has left me gob-smacked.

    A first.

  • Comment number 51.

    Have no fear Gordon has a cunning plan to torpedo this - change the increases to be in line with average earnings not inflation. Supposedly because earnings grow faster than inflation in the good times.

  • Comment number 52.

    don't you think this post is a bit of a wind up, to deliberately provoke responses!
    It certainly had that impact whether it is or not.
    Those who are super rich will stay that way by most normal measures. Unless of course they choose otherwise and decide to give/gamble/fritter etc.
    My details can be made available for this.
    But as we say round these parts.
    Yer dont get somit for nowt.

  • Comment number 53.

    The day that this blog became overtly a political trumpet for Gordon Brown's Labour.

    Shame on you.

  • Comment number 54.

    Labour's obsession with 'fairness' is a misplaced and counterproductive notion. Since when was life fair? What's the point of artificially manufacturing society to be 'fair', so that we can't distinguish between reward for effort and zilch for idleness.

    According to Labour, everyone deserves to be somewhere in the middle - that's 'fair' - and the normal rules of human psychology and behaviour have to be suspended whilst Labour rules the nation. As my dear old mum used to say "Life isn't fair".

    The best approach is to create the economic and social conditions that allows each person to pursue their own goals. Some will strive for greatness (financial or non-financial) and others will loaf about. Leave it at that. That's fair.

    Let's not let the Labour Party try to shoehorn us all in to the Fair Box. How communist (dire) is that?

  • Comment number 55.


    Have you ever been to a council estate and actually had to speak and deal with these people on a daily basis? They don't sit destroyed because they feel social and economically deprived. This is just a means of explaining and justifying the feral lifestyle they choose to live.

    See the evil poor link below:

    If you give the good poor some power things will improve, but if Society is prepared, because of guilt to let the evil poor run riot over the good poor then you can forget it.

    The reason that benefits cheats are chased down is because they are cheating. The Government quotes the average household incomes, but this does not reveal the true picture. I personally know of a pub in which 14 of the regulars are claiming benefits whilst working as roofers, window cleaners, gardeners, builders, metal tatting, decorators, carpenters. They regard it as a way of life to have the housing benefit, council tax benefit and job seekers allowance paid. Plus with children they get a lot more.

    Far from suffering from a lack of confidence and self esteem they take great pleasure in taking the system for a ride. Not everyone does but many do.

    The revenue has indeed being advertising that they will crackdown on offshore dealings:

    Probably not reported in the Guardian.

  • Comment number 56.

    I hate to say it, but there’s little point moaning on these blogs about the injustices of the current situation.

    Those in power will simply not be diverted or swayed from their already predetermined paths by the written or spoken word, however eloquently laid out or argued. They do not listen to your protests. If they did, we would not have gone to Iraq. They do not listen to logic, if they did, they would not have scrapped the 10p tax rate. They do not heed the results of surveys, polls, or Have Your Says.

    In this crisis they will do what they have always done from the very beginning, which is put themselves and their sponsors first in everything; normal people are not a consideration.

    We do not count. We do not matter. Even our votes are of no concern. Party A or Party B are indistinguishable. Our taxes and our grudging compliance is all they require.

    There is only one thing that will turn their heads.

    And it ain’t roses.

  • Comment number 57.

    Northern Rock are 'aggresively' reposessing properties as no other, saying it is an action of last resort. Lending at 125% , and x5 joint salaries weren't exactly going to lead to secure repayments now were they? Is this the 'fairer society' you speak of Mr Preston?

  • Comment number 58.


    "remember the brain drain of the 1970s"

    Don't make us laugh, unless we actually start making something again in the UK the brain drain will just carry on, remember the 1970s when we actually made things, designed things, exported things - there has been more of a brain drain since May 1979 than at any time before (true the brains might still live in the UK but they do no work in / for the UK.

  • Comment number 59.

    We have always had super rich and desperately poor. We have also always had bad times - I remember between 1937 and 1950 which was the longest period of depression in my life time, measured by having just a ration book and what the State said you could have. This is just a blip which will soon be forgotten. There will be a new set of people we can envy, except that just like the old class rich the oligarchs will have one thing missing from their lives. However much they have they will never be as happy as I am. Incidentally, when Brown talks about child poverty, and it still exists eleven years after he became responsible for ending it, he ought to take off his Superman cloak and ask whoever is up there for forgiveness. PS I am still on the hunt for the guilty parties who stole my Lloyds TSB savings

  • Comment number 60.

    Evil Poor. Ha ha, you're a bit like the Aga Saga woman off the Catherine Tate show.

    You should be more concerned about the evil rich. They do far more damage.

  • Comment number 61.

    I can not help but feel that the net result of the current crisis is that the poor of the world will suffer most and for longest - we have just not seen the full effects of the chaos created work through yet. The rich may see their wealth reduce by several magnitudes, it will be the poorest that die as the global recession bites deeper over the next few years. Our leaders seem to be rather too busy congratulating themselves on avoiding the immediate threats to the lifestyle of the proviledged to contemplate the future disaster they have unleashed on the powerless.
    Hindsight may be a wonderful thing but when we view this period with the benefit of it I fear we will have much to be ashamed of.

  • Comment number 62.

    Mr philanthropist Peston

    Having been in both worlds of having all and having nothing, I can tell you that life is so much better having to ride a bike rather than pedal my soul!

    If the super rich realised how full their lives would be without anything other than the basics that they REALLY need by giving away their surplus together with the super poor giving up benefits taking one of the 600000 jobs currently available and give up their meagre taxes to REALLY help the needy, what a wonderful place this would be.

    The coming world Depression is going to be a great leveller where wealth will have to be redistributed and the real support will go to the those REALLY unable to produce something tangible from their heads or their hands or any other part of their body that somebody, somewhere can make use even Darling can benefit out of it

    Its like changing the line in Animal Farm to " Pigs are not equal, they never were, but the farm will support all equally by means of either support or penalty"

    That is the Panacea, all we need to do is mend the parts at each end and stop the competition to emulate at each pole.

    Easy Peasy

  • Comment number 63.

    Interesting that you seem to think there was an escalating divergence in wealth during the last five years, which seems to suggest there had been some change in the way the economy was being handled.
    Couldn't possibly have been an incumbant government seeking re-election not applying sufficient financial restraint?
    By the way,isn't it possible that those lucky pensioners will have already spent their fabulous windfall? How much is 5% of the state pension?

  • Comment number 64.

    Downing Street Rob is a good name indeed.

    Maybe the shareholders of LloydsTSB and possibly HBOS too should be suing you or your source for damaging stories released for maximum downside effect to the markets and maximum upside to your ego.

    Relative wealth versus an absolute standard of living is not mentioned by you in this article and should be part of the discussion.

  • Comment number 65.

    55. gastank-1970

    Your Times story was dated June last year. Have you got any updates, because I'd be interested to see if there were many actual prosecutions. And if the investigations are still continuing.

    Taxing the super rich is simply something the government haven't got the stomach for. Too many friends and sponsors in hedge funds dissuading them I expect.

    Besides, these super rich types are quite sensitive and huffy.

    When someone yells tax at them they simply throw a hissy fit and relocate to the nearest tax haven.

    I guess they'd rather do that than contribute their fair share to society like the rest of us.

  • Comment number 66.

    Under Capitalism Man exploits Man
    Under Socialism the reverse is true.

  • Comment number 67.


    re the 1980s

    Trying to re write history again, there seems to be a lot of Tory supporters doing that of late.

  • Comment number 68.

    Sorry Robert, but I believe you are well wide of the mark here.

    Setting aside benefit scroungers, the hard working people in the real economy are being absolutely ruined by the crunch.

    The bankers who have been milking the system for the last 15 years already have far more than they would ever need to live in comfort for the rest of their lives, whether or not this years' bonus is reduced.

    It's not only the bankers - senior public servants and MP's also have their snouts in the trough, and their gold-plated pensions represent a massive future cost to the rest of us.

    I honestly believe we have sown the 'grapes of wrath' in this country, When millions start losing their homes and jobs they will take matters into their own hands and it won't be pretty. The Government will need all those new 'anti-terrorist' measures to try to keep them down. We all know that's what the laws were enacted for in the first place, not for catching some half-wit in a loo in Exeter.

  • Comment number 69.


    If you think that you should try reading Nick Robinson's blog - but then again you were probably in the Young Conservatives with him!

  • Comment number 70.


    Dog eat dog is not fair either, especially if one dog is tethered - as many of the 'poor' are.

  • Comment number 71.

    maroon 3 do they?

    Annual cost of crime in UK £60bn
    Welfare spending social exclusion 17.1bn Central Govt
    Social Protection Local Govt £41.2bn

    £118.3bn per year total cost

    According to Robert Peston £600bn committed by Government to credit crunch. So just over 5 years cost on these areas. Yet Evil Rich do more damage. Over what period and on what figures to you substantiate your argument?

    Ah Catherine Tate! Do you like Big Brother as well? Jeremy Kyle?

  • Comment number 72.

    Don't rest on your laurels Robert, OPEC have brought foward their meeting so expect oil to spiral again.

    I am stocking up with heating oil at todays prices. Expect inflation to stay at higher levels than expected after OPEC.

  • Comment number 73.

    the utopian dream of every one being equal and wanting for nothing is just that a dream, sadly reality is as far removed from the dream as the chances for a cure for the common cold.
    the chances of a utopean world failed from the onset as soon as anyone thinks themselves better than the next person.
    so i find it funny when papers and magazines harp on about how the gap is closing becouse for the gap to close there would have had to been a massive shift in human behaviour, and from what i observe the truth is the opposit of what they say.
    i hope the human race can grow up before it drowns in its own stupidity and lifestyle of overindulgence, greed and uncaring.

  • Comment number 74.

    65. maroon3

    "When someone yells tax at them they simply throw a hissy fit and relocate to the nearest tax haven. "

    Of all the failings of the 70's, taxing the super rich to 80% was the very penalty we need together with ensuring the sub poor didnt sit on their backsides and claim from the middle ground equality biased 'society'.

    It was the latter that brought this country to its knees not Mr Millionaire relocating to Switzerland.

    The sub poor lost their local communities and their UN-cherished amenities, whether by sea or canal, by lake or forest and have been 'taken' and cherished by the wealthy.

    The landscape has not changed its been cleaned up, but scarred in many places.

    Replacing the supermarket trolleys in the canals by refurbishing the canal side factories into luxury flats is not that much a difference. One pole unaware of the beauty that surrounds them, the other building their edifices to compliment their material led lives. One contaminates the water, the other contaminates the landscape.

    The "awe" of the Brookside housing estates has been replaced by love of the simple cottage- the poor strive to move into redbrick conformity - the rich put their spare cash down on fishermans cottages (as second homes- or actually weekend hotels).

    BRING BACK EQUILIBRIUM TAXES and you will see a reversal of those that have having more than they need and those that need have the ability to get that they deserve.

    The ones that decide to leave for their "tax haven" will not be missed as they all have their tax havens already.

    Easy Peasy

  • Comment number 75.

    maroon 3 apologies for the comments at bottom of my previous posting I got a little carried away!

    Following link is up to date. HMRC are going after everybody who did not own up during the amnesty period when pay back of the tax owed without prosecution was possible. This followed on from the German authorities who paid bribes for customer lists from bank employees in Switzerland and Liechtenstein. I think HMRC customs threatened Banks in the UK with offshore businesses in order to get them to cough up the details.


  • Comment number 76.

    A fairer society?

    You must be having us on, as many of the preceding blogistas seem to believe. Has someone slipped you something in your carrot juice?

    Fairness is in our society reserved as a concern for religion. There is no égalité in our constitution - indeed there is no constitution. I remind you that The Levellers were put down long ago in about 1650 (I think). Are you asking for another British Commonwealth, who do you see as filling the role of Oliver Cromwell?

    Fairness is not a very British concern (much as the morally upright bloggers might wish it to be). Capitalism is not fair. Life is not fair.

    Viva La Revolucion! - Liberté, égalité, fraternité as the French chanted in the streets of Paris in 1789 - A bas la égalité! C'est un fantôme! (A film that Luis Buñuel did not make in 1974! - It is a wonderful film in my opinion!)

    In the late 30's many idealistic British men and women went to fight and die for the International Brigade against Franco's fascist forces, that was fighting for fairness, but a little economic disruption for the wealthy and you think the World will end in 2008 ! It will not, and nor will fairness be increased or reduced.

    Fairness strikes terror into the bourgeoisie it is what they most fear and most resist. It so frightens the anti-Europeans that because of Article 8 of the Lisbon Treaty they will oppose it absolutely. Article 8: In all its activities, the (European) Union shall observe the principle of the equality of its citizens, who shall receive equal attention from its institutions, bodies, offices and agencies etc.

  • Comment number 77.

    Ah, that famous Peston black humor rears its head again!

    You would have been superb blogging on the Black Death epidemics those centuries ago!

    Seriously, congrats on a superb job explaining a most difficult situation.

  • Comment number 78.

    66. At 9:57pm on 17 Oct 2008, hitthebid wrote:

    Under Capitalism Man exploits Man
    Under Socialism the reverse is true.


    Under Capitalism individuals exploit EVERYTHING they are able to

    Under Socialism individuals exploit EVERYTHING they are able to

    Under Share-ism excess is force ably redeemed, Moderation is force ably excelled and the share-ists support both

  • Comment number 79.

    A fairer society? Successive UK governments have presided over a tax system that allows the super rich to pay less tax than the average check out girl, and a financial regulatory system that allowed the banks to engage in reckless risk taking whilst manipulating their own credit ratings and regulatory capital requirements - the FSA is hopeless, as is the regulation of the mortgage market.

    Yet the system forces pointless and mind numbing regulation on us for the pettiest of transactions. Today I went to my bank to withdraw cash to buy veg in the market. I needed a £20 note changed into £10 notes so I could pay a stallholder who didn't have change. Clutching my cashpoint receipt I asked the cashier to change my £20 note - the one that just come out of its cashpoint. I was told that in order to do that they would have to put the £20 back into my account, and then make a counter withdrawal for the 2 £10 notes!!

  • Comment number 80.


    re OPEC reducing production, thus causing another price-hike.

    I suspect that OPEC will be speeding their own demise, the 'west' are already accepting that they need to reduce their oil consumption (even in the USA, relatively speaking), if recession/depression comes then not only will there be less need for oil but many countries could well use Roosevelt type public works to speed Eco projects along or infrastructure works that will lessen the need for oil when the country comes out of the down-turn. Also there are non OPEC oil producing states that have geo-political positions were they would be prepared to supply their oil for far less to their 'political friends'.

  • Comment number 81.

    Still they have cash, they will use it to by poor peoples assets at a bargain; so when this settled they will be even richer.

    Saddest part is we pay tax and they don't; there isn't much point in keeping them in this country as their business are else ware. The once that has business in UK live in another country as tax exile.

  • Comment number 82.

    Just watched Newsnight, Peston was right, he must get it straight from Alastair Darling, the Government is going to go on a spend, spend, spend spree on schools and hospitals (as though that is the sort of spending this country needs). There might be some argument for spending on infrastructure such as a high speed rail line, but not more spending of the sort favoured by Brown just to save his political skin. The strategy is this - massive spending announced in the autumn statement to counter the "global" recession - then "isn't the Government doing its bit for ordinary people?". Needless to say, this strategy is unsustainable, since given our Government's indebtedness it is a scorched earth policy which would leave the country in a basket case mess - but Brown doesn't care about that, all he wants to do is win an election next Spring - then he can have his place in history and another 5 years to complete wrecking the country.

    If you don't believe me, get a copy of Saturday's Financial Times.

    This is stupid, wrong and bad

  • Comment number 83.

    Robert, I think you are missing the fundamentals of the stock markets.

    Buy low and sell high.

    I think last year it was already recorded that the super rich were leaving the UK and heading to far flung destinations to await the bottom.

    Then you'll see them come sailing back and buy up what's left at rock bottom prices, ready for the next round.

    Let's take Phillip Green and his tax free dividend of 1.2 billion or so some years ago. The pound has dropped since then against the Euro. The guy has already made 20% profts without lifting a finger.

    Now if that is with my knowledge I'm guessing this guy is making a mint on loaning that money out.

    Sorry mate but if you have money you can't help but make money.

    All the government have done is ensure anyone who was clawing their way up out of the pit has been either dragged right back down (Any surprises there ?) or has had a serious set back.

    BTW I know a guy who sold up his properties last year and moved to Switzerland. He's made money on selling at the peak and money on the exchange rate. People like me can't even begin to compete.

    Why even begin to theorise that the super rich are even exposed in the market atm ? The only ones seriously exposed will be the pension funds who have no choice but to have shares.

  • Comment number 84.

    Getting interns to write for you now?

  • Comment number 85.

    It seems reasonable that those on benefits should see a bigger increase in income. In fact based on the gearing that means that those on low incomes spend more of their income on food and fuel, 6% will probably mean a significant real-terms reduction in disposable income.

    The inflation rate is closely related to the cost of what you're buying. If you're spending £10 then you're probably buying food and inflation is about 15%.

    If you're spending £1,000 then you're probably buying white goods and inflation is zero.

    If you're spending £100,000 then you're probably buying a house and inflation is about -15%.

    Even in the bad times, the poor get poorer faster than the rich get less rich.

  • Comment number 86.

    #55 The answer to your question is yes. Plenty of times, and I do know how feral some of their lives are. But I'm also aware that they weren't born feral and that how they behave now has reasons behind it and not excuses. Though they use plenty of them.

    You've actually made my point for me. The benefit cheats in your local pub, although still cheating, will spend their money and pay V.A.T. Not entirely fair, but more so than the Billionaire who pays no tax and pays no V.A.T., spends a relatively miniscule amount here, and uses wealth to accumulate further wealth which means transfers from the less wealthy at an unfair price or at a cost of their greater indebtedness.

    There are many aspects of the working class now that are uninspiring to say the least; but why are they always hammered while hedge funds are fawned upon? They are cheats too. A millionaire once said to me, 'I'm not ashamed to say it: I use tax loopholes to avoid paying tax.' So there you go - no shame.

    While I'm on a roll: can we scotch the myth of economic growth? There's no such thing. There's money supply expansion and there's wealth transfer from poor to rich - but economic growth, as presented in the media, doesn't exist .

  • Comment number 87.

    71., gastank-1970

    You have to ask yourself, who actually has the power in the country? You can blame the poor if you want for society’s ills. You can blame dole scroungers all you want. But it’s a cop out I’m afraid.
    You are blaming the symptoms, rather than the cause.

    Do the dole scroungers decide education policy or set education standards? Do benefit claimants dictate governmental or economic policy? Do they have any influence over immigration or tax rates? Do they set the laws? Do they own or control media organizations? Do they decide inflation targets or set interest rates? Did people on council estates decide to illegally invade another sovereign nation causing the deaths of x number of civilians and y number of combatants? Did the poor create Credit Default Swaps or off balance sheet vehicles to get around reserve ratios and inflate the money supply in secret, or create a derivative time bomb so big we can barely comprehend it?

    No. The government, their rich sponsors and the financial elite did all that.

    You might argue that in a democracy we all have our part to play. But the UK barely functions as a democracy since the majority of government manifesto pledges disappear like smoke the morning after ballot day, and the ideological space between the parties is wafer thin.

    The working class used to have a party that represented its interests in parliament.

    They called it the Labour Party.
    That party hasn’t existed since the NHS was formed after the Second World War.
    The current version is a deception and a fraud.

    You can use the poor as scapegoats for all life’s problems if you wish. Let them be society’s whipping boy if it makes you feel more comfortable. But make no mistake, the power lies where it always has. At the top. With the rich elite.

  • Comment number 88.


    "This is stupid, wrong and bad"

    Why, because a 'few' will have to pay more tax at sometime in the future or that you don't believe that NHS hospitals and state schools should be fit for purpose?...

  • Comment number 89.

    Banks are de-leveraging and hence expect the stock markets to continue to go down. Any short term boom will continue selling until banks stop de-leveraging is my guess.

    See bloomberg:
    "Armageddon' Prices Fail to Lure Buyers Amid Selling"

    While central banks injected $3 trillion into the global economy, credit markets are tumbling because banks are clamping down on lending, forcing investors to unload assets they bought with borrowed money. The Federal Reserve said Aug. 11 that its quarterly survey shows most ``domestic institutions reported having tightened their lending standards and terms.''

    ``There has been widespread liquidation of assets that has nothing to do with fundamentals,'' said Scott D'Orsi, a partner at Boston-based Feingold O'Keeffe Capital, a hedge fund which has $1.3 billion in assets. ``Investors in bank debt are being presented with a vast number of extraordinary opportunities; opportunities that I would characterize as once in a lifetime.''

    The selling is being compounded by hedge funds and mutual funds dumping holdings to meet redemptions, which may push prices even lower, according to analysts at UBS AG.


    It then goes on about some Barclays stuff that is not confirmed yet. Interesting article, also read something showing how UBS is de-leveraging at a huge pace yesterday - but can't remember where this is now 8(.

    I guess this once in a lifetime stuff means the rich just get richer. BTW it says that:
    "Because bank debt holders typically recover about 70 cents on the dollar in bankruptcy, almost every loan in the market would need to default before investors would lose money, LCD said."


    Wall Street firms have curbed lending after taking $661 billion of credit losses and writedowns since the beginning of last year, according to data compiled by Bloomberg. The collapse last month of Lehman Brothers Holdings Inc., the fourth-largest securities firm, sparked a new round of selling as investors became concerned that more banks may fail, curbing lending even more.

  • Comment number 90.

    I can't believe that a year ago I bought your book Robert.

    You really should be sacked for writing this contemptible rubbish.

  • Comment number 91.

    Re 55 - Man, what is your problem? Who are the evil poor and in what way are they different from the evil rich?

    Why pick on poor people? Why not take a look at some of the mega rich and see how they live their lives.

    What harm do poor people do to you? The answer is not very much compared to what they could do if they go fed up with people like you sneering at them and villifying them at every turn.

    So they try and stay alive? What do expect them to do, sit in the gutter and starve?

    How may benefit cheats will it take to equal the amount of money that people like Dick Fuld have taken out of the system?

    Easy stuff to have a go at poor people who offend your sensibilities - why not look up the life and times of Mr. Usmanov? You try offending him and you'll find yourself in a world of trouble - that's why the BBC can find nothing more interesting to say about him than his relationship with a football club.

  • Comment number 92.

    more oomph into the economy? how long is Keynesiasm going to dominate the BBC? Granted it's state financed so it's to be expected I guess, but I'm getting sick of the stupidity of the BBC. Why not fill up a bath by taking water from one end of a bath and pouring it into the other side? "further increase in public sector borrowing. But many economists would see that as a good thing" are these the same economists who didn't see this crises coming? yea, thought so.

    The entire premise of the article is pure nonsense, a shrinking of the gap shows that "So what we're seeing is something of an uplift for those who are poorest" is this even a thought out statement? The idea that everyone is worse off and that a narrowing is just a result of that not occur to you? the porrest aren't better off if the richest are worse of. Economics isn't a zero sum game of, the worse my neighbour is the better I am.

    Anyone reading this use your brain when reading this kind of garbage. Also don't buy their ignorant explanations of why this crises is happening. This crises is happening because central banks manipulated interest rates and kept them too low causing people to borrow too much and make bad investments. Now that it's clear we have inflated our economy with manipulated interest rates the bubble is bursting and governments are pointing the finger at free markets and saying you need to give us more power to control this thing. Don't be a complient sheep, look for the source of the problem, it IS goverment, mainly in the US but in the UK and elsewhere too. Now they're using this to scare everyone into paying through massive government debt and government created inflation and to legitimise an international central banking system where central banks will have massive control over the global financial system.

    Try reading beyond the single explanation and single solution media that dominates and manipulates everything you see and hear. If you have any fondness for your own liberty and prosperity try educating yourself and reading something like this

  • Comment number 93.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 94.

    "fair" - what is the definition being used?? Is it fair that those who produce are punished by way of governments by having portions of their earnings expropriated and that money distributed to those who do not produce? And the more someone produces the more s/he is taxed (greater percentage)? And governments by way of their various welfare benefit programs encourage many to collect handouts (benefits) rather than to change work type (retrain themselves if necessary) or look for temporary employment in a different field while continuing to search in their primary work field or location.

    "national cake" - ?? Is this supposed to mean that the the productivity output of individuals belongs to the government who, like some supposedly wise parent, distributes it directly to the non-productive or creates any number of different type of projects that a private company would do if the owner(s) thought that gain could be had by offering the product/service. Government getting into the marketplace in an area will always discourage some (often many, even all) business enterprises being created - it's pretty difficult to compete with an entity that has a virtually endless source of money, the taxpayer.

    And a free market does not exist anywhere in the industrialized world - all are interfered with by the resident government, mostly quite heavily. In fact those countries with the most heavily interfered marketplaces are well on their way to fascism. The UK and the US are in the forefront of these....

    Governments (the people in it elected, appointed or simply hired) have the mindset of making and keeping the vast majority of the citizenry dependent, ignorant and fearful. And maintaining ignorance regarding economics is one of the primary needs of government, else everyone would realize that all governments do NOT make money - they can only expropriate it. Governments cannot create credit - this can only come from savings of people who produce, and governments by their interference in the marketplace definitely discourage this. Current "credit loosening" by governments is a farce - it is another round of currency printing with the inevitable increases in prices that this currency inflation brings. But most people do not know enough about real economics to see that the emperor is wearing no clothes, and I'm sad to see that you and most other economic journalists (along with the recent Nobel Prize economics winner, Paul Krugman) do not recognize this either.

    In regards to your PS, Robert, it does not sound like you are familiar with the broken window fallacy - the idea that replacing broken windows adds to the productivity in the world. If one does some reasoned thinking, s/he will conclude that the resources not having to be spent replacing windows that some hooligan (or even a storm) broke can be spent by the owner of the residence/business on some item to actually increase hir lifetime happiness, not simply restore it to what it was before the window was broken.

    Kitty Antonik Wakfer
    Casa Grande AZ USA

    PS - #92's suggestion re. mises. org is a good one. I'd suggest their daily article. A very recent one by economist Frank Shostak on credit was exceptionally informative -

  • Comment number 95.

    It seems to me that the current circumstances we all find ourselves in is proof that privatization or outsourcing works. American private capitalism has accomplished what American domestic, foreign, and militiary policy couldn't, it has managed to bankrupt the entire world simultaneously. Most impressive is how its major competitors grabbed the poison bait not merely wililngly but eagerly. Friend and foe alike, those America does business directly with and those it doesn't do business with at all will all find themselves in the same boat, sinking and drowning together. And when the dust finally settles, who will be on top? Does anyone think they planned it that way is that giving them too much credit? :-)

  • Comment number 96.

    This article sounds like one straight from the manifesto if the Socialist Workers Party !! This is exactly the kind of thinking that drove the rich from Britain in the 70s, leading to a collapse of the economy and the then Chancellor Dennis Healey going cap-in-hand to the IMF to borrow 6 billion quid !!

    If this happens and there isn't a strong pro-economy, anti-waste government in power, then, based on the experience of the 70s, Britain will be in for at least 10 years of suffering. The worst case scenario is that Britain will become a Third World country that rival the Eastern European states !!

    With virtually no real industries and no hope of new investments because of punitive government taxes and an anti-rich government stance, Britain will never work its way out of the economic mire.

    Make-work industries will only sink the country further into the smelly stuff and the products they produce will be the new laughing stock of the works alongside the Trabants, Ladas and other late Soviet manufacturing wonders !!

    Food rationing will be imposed because much food have to be imported and there will be little or no hard cash to pay for the imported food.

    One bit of "good" news will be that the unofficial population of Britain will drastically reduce as the illegal immigrants flee in droves to where making a living is much easier.

    Then everyone will be equally poor except for the corrupt Party members and the Union of Soviet Socialist Britain will become a reality, complete with the local equivalent of the KGB and gulags in the remote Scottish isles !! And their first valued customers will be the separatists and "terrorists" who wish to "destroy this Great Socialist Homeland" !!

    Hooray for a Great Leap Forward into the Past !!

  • Comment number 97.

    Further to my recent comments concerning the FSA recruiting bankers, we now discover, despite what has been said, that they have watered down the Prime Ministers' instruction that bankers are not to get bonuses into something which doesn't even form a formal guidance - ie please ignore - and are allowing them to take equity instead. Under these circumstances, that's regulator-approved theft. As I've said before, and doubtless will say again, the

  • Comment number 98.

    Sorry, Mr Moderator, please tack on tp the preceding:
    We must fire the FSA lock, stock and barrel.

  • Comment number 99.

    One thing about the differences between rich and poor in earlier blogs is that in one respect we are all equal. We all have just one vote come the General Election. The signs suggest to me that He who would be King may be clearing the decks to have an early election, perhaps in weeks.

    Each day a new announcement comes that would give credence to such a proposition, in addition to the dramatic change in fortunes in opinion polls (Cameron and Osborne have suffered as Brown's popularity has risen). SATS for 14 year olds have been abolished, government pressure is being put on utilities to drop prices, and today we have an announcement on immigration - a subject that is normally off limits to all parties save the BNP.

    The only hope for those of us who think that He would be King should pay for his eleven years of carnage to pensions, savings, stealth taxes, debt, child poverty etc is that 60 million people will wake up from three weeks of amnesia and send him to the same insititution, with secure exits, in which the Board of Lloyds TSB should be incarcerated.

  • Comment number 100.

    For those of us on pensions or benefits the anticipated increases come because we have lost out through inflation in the last year (usually by more than the official rate if we are at the lowest end of the income ladder) ie we are worse off than we were a year ago. Seems a funny interpretation to say we are in a fairer society as a result. I shall look forward to waving to the mega-rich as they pass my upward moving escalator on their way down.


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