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No more money

Robert Peston | 09:15 UK time, Monday, 7 June 2010

They're certainly united in telling us we're all going to be poorer for some time to come.

Robert PestonLast week Vince Cable pointed to households' record and arguably excessive debts (equivalent to 170% or so of disposable income) to explain why consumer spending can no longer be the engine of our economy.

Which is why as business secretary he is to an extent picking up where his predecessor, Lord Mandelson, left off, by arguing for industrial interventionism, or the use of scarce government resources to help exports and exporters (though not, he insists, through some kind of government-sponsored Britain's Got Talent for manufacturers).

As for David Cameron, he is today shutting down the other engine of economic growth, the public sector: a state that grew and grew and grew under New Labour is set to shrink and shrink and shrink, says the prime minister.

Why?

Yes, for the state as for the individual, frugality is necessitated by past profligacy - whose disturbing manifestation is the national debt rising by an unsustainable 11% of GDP per annum.

So debt is our problem. And its effects have been particularly painful for younger people.

Robert PestonWhich is why I have made a new programme for BBC3 - On the Money, tonight at 1900 BST, clips here and here. It looks at some - by no means all - of the causes and triggers of this mess and discusses the implications with an audience of those at the start of their careers.

Some would say they have every right to be furious with my older generation - since it is plausible to say that the parents of today's young adults had more than their (our) fair share.

The argument would be that we undermined the foundations of the economy by borrowing more than we could afford - and it is our children who have born the brunt of rising unemployment.

And, if you see rising public sector debt as an inter-generational transfer of a future tax bill or reduced public services, it is younger people who will pay for the more generous state provision we've enjoyed.

And that's to ignore the prospectively massive burden for our kids of funding our pensions.

The insult added to injury is that all that household borrowing led to a trebling of house prices over the 10 years to 2008's peak - but the subsequent fall of 16% doesn't even begin to make homes affordable for first-time buyers.

Here's the funny thing. Those in our audience for On the Money weren't on their way to the barricades, as far I could tell.

They were strikingly optimistic about their personal prospects - and primarily interested in practical solutions to their immediate problems (such as how to avoid being classified as a poor credit risk - yes they want to borrow more).

One of the conclusions I drew was that the general-election campaign had not prepared them in any serious way for the public spending cuts and lean years to come.

So as and when the harsh reality of today's speech by David Cameron sinks in, the anger of youth that is conspicuous by its absence may be ignited (oh, and that pernicious disillusionment with our elected representatives - which is particularly characteristic of a younger generation - is probably not going to evaporate).

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Comments

Page 1 of 3

  • Comment number 1.

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

  • Comment number 2.

    Yes, this swindle of the younger generation does require their complicity. This complicity has been won, for now, by the promise that, while their generation as a whole may have been stitched up, they individually can somehow dodge the bullet. The poor propping up the rich in the belief that, someday, they will be the rich ones being supported by the system.

    How long this irrational belief will survive soaring youth unemployment allied to reduced benefits, shrinking university places, and the ongoing lack of affordability in housing, remains to be seen.

  • Comment number 3.

    Time to cut some of the over generous pensions which can last 50% of a persons life

  • Comment number 4.

    Finally some truth and facts are emerging. For many, this will not be a surprise as this has been discussed at great lengths on the BBC blogs. Will the UK citizens who have buried their heads in the sand wake up now, as it dawns on them the gravity and scale of this economic mess?

    Is the even more cynical side of me thinking that Cameron's planned speech is timed to coincide with the excitement (for many) associated with start of the Football World Cup?

  • Comment number 5.

    So David Cameron's party is over... There is no money. The previous Chief Secretary to the Treasury was just being honest. OK I've been saying this for two years so I am pleased, if that is the right word, that at last the idea that we have to live more within the means that we have been reduced to by the banking collapse is recognised.

    The 'original sin' that we are now forced to escape from is based upon the creation of excess money during the last decade. This led directly to the crash and this crash was inevitable. The pity is that those who let the money supply run completely out of control are still running the system - clearly Mervyn King and his bunch of 200 failed economists etc. must go. They either did not recognise the problem during the last decade and a half or if they did they failed to properly manage the problem. Either way they are a disaster.

    David Cameron, as indeed Mervyn King said a while back is about to hurt the pockets and consumption levels of everyone (if Nick Clegg is to be believed!). (The fact the Mervyn King said this months ago does support my view that he and his economists actually knew that the huge money bubble to did nothing to limit would inevitability a crash - and thus in his own words he is unfit to continue.

    The problem is that taking consumption out of the economy to 'pay back' the debts accumulated in the public sector will hurt the private sector (i.e. us) in much the same was as increasing taxes. It may sound nicer to cut spending. But that spending was oiling the wheels of commerce and thus commerce will be constrained too, just as it Taxes had been raised. Cutting spending is no different to raising taxes.

    How much? Well this year's increase in debt was £ 156 Bn, but we have a huge underlying public debt too and over a trillion needs to be brought down, not just this years debt. Expenditure will have to be cut by us to 25% - even if the very modest cuts are undertaken. That's right one pound in every four pounds spent will have to be cut.

    Nick Clegg says this should be done fairly - the best way to maintain fairness is NOT to sack public sector workers, but to cut their pay - that is an arithmetic fact. Will this new mob do this - my guess is NO. We have already seen the pusillanimous way that the capital gains tax issue has already been allowed to pervert policy - that is a tax that impinges of 0.25% of the population is pilloried and the 99.75% of the population will have to pay for the tax benefit of the 0.25%!

    The further and bigger problem is that interest rates will need to go up and this will make things worse fro the over-borrowed in both the public and the PRIVATE sector. We ain't even started to see the recession yet! The de-leveraging of debt has to occur - it is an arithmetic certainly, not only in the public sector, but the private sector too. Debt financing of business will be severely impacted, Private Equity will be the sick joke of the teens.

    Affordability as a criteria fro montage borrowing levels will become a sign of impending personal bankruptcy. If your mortgage is (or becomes after the pay cuts) more than 3.5 times you salary bail out now and the future will get far far worse and your personal situation will deteriorate. Find some purchaser with the cash to buy you house and trade down ASAP as house prices will inevitably fall and by quite a long way. Above all live with you means and reduce your borrowings - or go bankrupt and loose everything - remember you and your 'lifestyle', will be economically slaughtered if you don't! Timescale: a couple of decades of real pain.

  • Comment number 6.

    PS what's with the orange picture at the top of the page?

  • Comment number 7.

    I think Robert is right that most people have no idea what is in store. We all know the deficit is £150bn – it is less clear what cutting it means to us all as individuals.

    Once people start to see their own pay cut, their own job lost, their own sports centre closed then the anger will come out. Everyone accepts that cuts are necessary – few will accept that THEY should be the one to suffer.

  • Comment number 8.

    I am 25 years old. I spent 14 years in state education during which time I learnt very little of any relevance. I then went to university to study Economics.

    I watched as the party went on around me, every month a higher rise in house prices and more debt fueled growth. I wrote a paper on the problems that our banks could face and how it would impact on future generations.

    I left university with £20,000 of debt (£16,000 student loan, £2000 overdraft and £2000 credit card). I wasn't lazy and worked 30 hours a week throughout my time at university.

    I got a good job that pays the average £25,000 salary and discovered that after interest and minimum repayment on debt this is only £20,000 per year.

    As I anticipated I arrived at the party too late, everyone was fleeing and things turned nasty. A month into my new job the banking crisis hit and the subsequent recession.

    I am angry at the greed that has been prevalent but I'm also conflicted because that means being angry at my parents who I know are in no way greedy.

    I think it just comes down to the basic flaw in human nature- Humans and individually intelligent but collectively stupid. We always have been and might always be. And I can accept that and work hard to pay off my debts regardless of the unfairness.

  • Comment number 9.

    Robert,

    '... the anger of youth that is conspicuous by its absence may be ignited...'

    Remind me what bailing out the bankers was supposed to achieve again?


  • Comment number 10.

    If (as seems the case) we are borrowing too much then why not simply raise interest rates a few percentage points and start to bring it under control?

    Prudent borrowers will have allowed for a modest rise in interest rates so it can only harm the foolish after all. Better a little pain now than much more pain later.

  • Comment number 11.

    The youth of those who were middle class are few to be found, and the youth of those who were working class have become accustomed to being the workless class.

    So when an economist finally focusses on youth, it is only because that economist suddenly realises he has lost his?

    In London, where I suppose Robert bases himself, the youth of all classes are far too confused about everything, because their parents in the last 15 years have been subjected to rampant Globalist Adaptations that have seen the disappearance of more than three quarters of local economic activity. They live in streets and estates where people even if they want to know each other, have not had the time or language skills or social skills to do so.

    The problem with David Cameron's upcoming speech is that there is no problem with it, because it hasn't happened yet. If you were running this country, what can you do but manage the people's expectations, by giving them a forewarning? You could, of course, tell them lies and allow them to fester in their fantasies and delusions, but that method was worn out by the 14 years of Blairite and Brownite Labour governments.

    The truth is, that a global economy is beyond the design capabilities of economists, yet the local economies whose demise they so happily encouraged, are now gone and also beyond their restoration, because they threw out the babies with the bath water. So now economists are fantastically imagining that there are a "youth" that will somehow engage in a mass/group emotional action? Why? They're too busy on Facebook etc..

  • Comment number 12.

    The economic consequences of the mess are a lot clearer to the public now, but I feel that they still believe that life can continue as before, but more prudently.
    Unfortunately I believe it will be worse than the 1930's; people will become polarised internationally, nationally and locally. There will be poverty, strikes, unrest, crime and violence and perhaps even war. Dictatorships may arise.
    What is so disappointing is that all the 'clever' people who analyse or influence or run our country did not see this coming and apply the credit brakes years ago. Labour are still in denial even now. So much for Economics. Now we have to pay for decades of having what we can't afford and our children will suffer the most. My message, having lived though the post-war era is - "The best things in life are free".

  • Comment number 13.

    I earnt my pension by contributing to the NI, over 50 years. I expect to receive until I pop my clogs. It does not have to be massive, just manageable.
    A load of bankers and politicians have been wangling huge sums of money by deceipt and subterfuge.
    I can just imagine the furore from HMRC if I had tried to cheat on my returns.
    Robert, I can't say I agree with your politics which seemed to be driven by the Government. You have not changed your tune to align with the coalition, so I guess the unions must be paying for your spin.
    I don't like your style on TV either, sounds like you are about to nod off for a few zzz's all the time.
    You at least put the opposite point of view to me which set's it up like I was used to in our College debating society.

  • Comment number 14.

    I am sorry Robert but a lot of this is just tendentious rubbish.

    Everyone knows that money borrowed has to be paid back.

    This is why one never borrows too much and one certainly never borrows to pay the grocery bill. Yet this is what New Labour did and now the bill is about to be presented by the coalition as New Labour never had the moral courage to present that bill themselves.

    Indeed there are those who will engage in the ritualised anger of knee-jerk leftism similar to what we have seen in Greece. These people will be seen as absurd for the simple reason they will be identified as the self-same people who got us into this mess in the first place.

    In the reality of everyday life ordinary people are adopting strategies that will get them through the trouble as best they can. This is the natural pragmatism which will eventually see us through the bad times. This will mar, alter and constrain lives but that is the responsibility of New Labour and their supporters in big business and big government.

    I do not expect social unrest for some time as the historical evidence is that the uprising comes after the main difficulties have passed and as the aspirations and ideas of a new rising economic class are stifled by the older rigidities which will have by then become redundant.

    Speaking as one of the generation that paid for the Second World War as opposed to my parents who had to fight it, I have always been puzzled by government borrowing and the social-democrat passion for spending other peoples' money. I have long failed to comprehend how the state could be allowed to have such a constraining grip on our lives as it does not produce anything much and even conspires to reduce our economic capabilties through over-rewarding its supporters and penalising the taxpayer. I have long feared that the social-democratic concept of the state would eventually break the economy and it just took a Labour third-term to ensure those fears were realised.

    I am looking forward to change in which once again our manufacturing industry can take a leading role in our economy, where the people who make the money which pay all the bills are recognised and rewarded for what they bring to everyone else.

    I think a Campaign for a Real Economy is well overdue in modern Britain. It remains to be seen how committed the coalition is to such a concept.

    As for the housing market; well, it always was a Ponzi scheme. It is now just 10% down on the peak of 2007. This is plain silly and does not reflect economic conditions. Reality is never that far away from asset values.

    Forward to the double-dip: lets get the horrible thing over and done with so we can all aspire like the CEO of BP to get our lives back!

  • Comment number 15.

    Debt, borrowing, call it what you like, the political classes of the last 40 years have been doing it themselves (on our behalf) and probably encouraged us, they and the banks certainly never discouraged us, from borrowing! They always banged on about the need for consumer spending and "market confidence" to "end the recession." Now they want us to stay calm about the pain!?

    In reality did we have a genuine choice NOT to borrow?

    I'm not one of the younger brigade, but neither am I a parent of a young adult, a twentysomething, yet. However, if these young adults do decide to question who dealt them this set of circumstances who will they choose to point the finger at?

    It seems all they want to do is carry on borrowing with gay abandon...... Does no one else see debt as slavery?

  • Comment number 16.

    What happened to the billions generated by the sales of items such as the 3G licenses? The then government were so ecstatic about these revenues putting so much into the economy, yet we never saw any benefit. Instead they were used to fund – what the government saw - as election winning tax cuts.

    Sweden earned billions from North Sea gas and oil and used it to reduce their national debt. But our governments thought short term and wasted our proceeds. Let’s hope this coalition will finally do the right things.

  • Comment number 17.

    >12. At 10:22am on 07 Jun 2010, fanofstephanie wrote:

    "What is so disappointing is that all the 'clever' people who analyse or influence or run our country did not see this coming and apply the credit brakes years ago. Labour are still in denial even now. So much for Economics."

    Surely you don't actually believe that they didn't see it coming?? Burying your head in the sand isn't the same as not knowing what's coming. Most people new that it couldn't go one forever (only economists believe that economic growth can go on forever) but there was no motivation to do something about. Gordon Brown was either stupid or a coward and lying. Either way we're paying for it now.

  • Comment number 18.

    The irony being the huge debts incurred by the Govt and the Bank of England simply to keep up house prices! The youth of today now must pay much higher house prices, higher interest rates than their parents will be paying on their mortgage and higher taxes than those who filled their portfolios with Buy to Let property with CGT at 18%......

    Its theft.

  • Comment number 19.

    If David Camerons 'massive cuts in public spending' are to have any credibility with the great unwashed, he is going to have to start at the top. The house of Lords must go, If you get rid of the unelected 'ermine Boy's' at least people will think we are all in this together. I am not sure how much this will save the taxpayer ( any figures anyone ?) but it would give him the respect of the working man and woman, who know that we all have to tighten our belts.

  • Comment number 20.

    Its no different than the early eighties, exactly the same happened. I know.

    Youngsters were as disillusioned then as now, just as broke and yes, many unemployed.

    Politics plays its part, but the truth is, that like then, the cause is purely the inability or lack of foresight to invest heavily in the future
    FOR the future (whether manufacturing, industry or technology sectors) and instead those with the 'purse strings' empty the coffers on political gestures.

    So yes in some ways you are correct Robert.

    The older generations (like yourself) have had the 'benefit' of the taxpayers dosh, instead of 'putting it into the piggy bank' so that your offspring can benefit too!

    After all, did YOU really NEED that savings cheque for each child and perhaps those child tax credits/benefits on your wages?

  • Comment number 21.

    Robert, you say 'So debt is our problem'.
    But, as you know, our means of exchange, the broad money in general circulation, is almost all borrowed at interest from the commercial banks. That's how it comes into being, how it is created, maintained, expanded and contracted. Without debt to the banks there is no money to facilitate economic activity, no money to conduct our business.
    Is not this rather peculiar system of commercially issued, debt-based money the more fundamental problem? An increasing number of people now think that we need to change to a system of 100% publicly issued , persistently circulating money together with 100% reserve commercial banking.
    For example, what do you think of the (proposed) Bank of England Act 2010:
    http://www.bankofenglandact.co.uk/act/

  • Comment number 22.

    Looks like we are well on track for the double dip.

    So called 'private' sector still failing, conspiracy government now pulling the plug on the only remaining source of economic activity - the public sector.

    Prospects for the young? Well certainly no proper jobs in either 'private' or public sector: unemployment is on the way UP not down. Usually that means more young people stay on in education, deferring the search for jobs. Unfortunately the CON-DEMs are cutting back on university/training places as well.

    Economic collapse AND a continuation of all the labour political correctness. Can't really see an up side to this new government.

  • Comment number 23.

    "And, if you see rising public sector debt as an inter-generational transfer of a future tax bill or reduced public services, it is younger people who will pay for the more generous state provision we've enjoyed."

    No it will be the poor and ill that will pay for the swingeing glegg-moeron cuts to public services in the futile replay of Micawber moneynomics which attempts to ignore the key role of state spending in economic recovery and getting some of the 8 million non productive citizens back to useful work.

  • Comment number 24.

    I see the Taiwanese electronics firm based in Southern China, which has had a string of suicides linked to difficult working conditions, is giving their workers a 70% pay increase... to a whopping £200 per month for a 60 hour week. I doubt many people would entertain getting out of bed for that salary here, in fact we pay people more than that to do absolutely nothing productive whatsoever.

    It's clear that those particular workers in China are being exploited, but it's also clear that there's a massive discrepancy between the standard of living we expect and that which people in other parts of the world will put up with. Eventually we'll all have to meet in the middle but that means a big decline for us and a great deal of suffering on the way down.

  • Comment number 25.

    All this user's posts have been removed.Why?

  • Comment number 26.

    "One of the conclusions I drew was that the general-election campaign had not prepared them in any serious way for the public spending cuts and lean years to come. "

    Anyone with half a brain cell could see that - no political party was going to spell out exactly how bad things were. But Labour still seem to believe that cuts are not necessary - still I suppose they have to say that, as to do otherwise would be an admission that their years in government was the unmitigated disaster that it has turned out to be.

  • Comment number 27.

    Even in an article claiming to focus on the problems of youth, the complete inability to get onto the bottom rung of the property ladder is woefully downplayed, given but a three-line aside titled "insult to injury".

    Insult? It IS the injury. I'm in my mid-20s with an "average to decent" income for the age and haven't got a shred of hope of getting enough to meet the (now rising again) deposit requirements probably until my mid-30s. Friends my age are all hoping for good inheritances (though these are now taxed a lot more!) or, y'know, lottery wins.

    Until then, to get by we're forced to pay inflated rents, thereby paying the mortgages (and giving profit!) for the local property tycoons who deserve a fair amount of the blame for the problem!

    It stuns me that nobody seems to care about this issue. The cost of entry in the last 10~20 years has been nothing short of frightening and nobody seems to care - with much of the "economic recovery" apparently focused on keeping the prices astonishingly high!

  • Comment number 28.

    Can't really see all these massive cuts hurting the likes of the millionaires we now have in the ConDem coalition, or the highly paid civil servants who will be implementing them, or the bankers who have sacked thousands of the their poorly paid staff and then just carried on regardless. It's always Joe Public who end up paying for the calamitous mistakes of those who we trust to run things.

    Still think we need a good clear out, Russian style, as in 1917.

    Remember the chorus of 'real change' from Cameron and Clegg before the election, hollow, empty words, no change for them, ruined lives the rest of us.

  • Comment number 29.

    Robert,

    It seems the older generation, me included, have taken food from the plates of our kids, in part, to fund our illnesss (OCHD). Otherwise known as Obsessive Compulsive Housing Disorder. It seems to be an illness of aspiration and might be linked to the Brits prediliction for middle aged binge brinking (whilst watching 'Escape to the Country'), football craziness and an inability to go out into the sun without burning ourselves or a nearby town centre.

    We just don't do things by halves, do we?

    Much in the same way that we need to be saved form ourselves by tougher rules/taxes on alcohol, perhaps the young need to be saved from the previous generation by preventative taxes on housing speculation. I have never worked out why employed, middle aged people think it's their right to have a 'portfolio of properties' whilst the young have none. Someone said you know we're heading for doom when the bellboy gives you share tips. I knew we were heading for a fall when my colleagues and mates took up the hobby of 'landlording'.

    So, CGT - absolutely yes, apply it to housing speculators and bring prices to a level that means those on modest (and by the look of it falling) incomes can afford them.

    That will at least transfer back some of our wealth.

  • Comment number 30.

    A far wiser man than I (Thomas Jefferson) once wrote:

    "It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world. "

    Sadly it is far easier not to do this and for politicians to buy popularist support by paying for people to enjoy a standard of living beyond a country's contemporary means by mortgaging the next generation's future.

    Even sadder, there are still left-of-centre politicians who still beleive this is both rational economics and ethically sound...

  • Comment number 31.

    I am sure this programme will be very worthy.

    I was also wondering if you had any views on the outcome of the G20 Meeting last week, the EU Finance Ministerss Meeting this week and the plight of the euro.

  • Comment number 32.

    I think you have to remember that even if property values fall there is still a considerable amount of money that a larger percentage of the population will inherit in future years.
    Home ownership has expanded dramtically over the last 50 years-my parents purchased their ex local authority property.When they died I and my children benefitted from the estate.In spite of the vast sums of outstanding personal debt this is offset to some degree by the latent wealth held in property.Can anyone provide an estimate of the value of equity(or mortgage free ) held in property in the UK? Both my children will have debt from university,but they have both inheirited money that will off-set this.I know this is not true for all students(probably the minority),and other family members of my generation benefitted from free university education and left with no debt.
    I have always borrowed money sensibly and have also saved regularly-I am mortgage free with as much again in savings as the value of my property, a situation that is not as un-common as you might expect, but thats in the north of the country, perhaps those that live in the 'rat race south' should take a step back and reconsider their mad rush into debt.
    It's not as grim 'up north' as many might lead you to believe.
    But please don't think I'm proposing a mass exodus from the south. We don't want all those United fans from London and the South being able to claim they are now REAL reds!!

  • Comment number 33.

    Would someone kindly explain, as simply as possible, to whom national debts are owed?

  • Comment number 34.

    "They live in streets and estates where people even if they want to know each other, have not had the time or language skills or social skills to do so"

    Utter rubbish. Seriously who comes up with this piffle?

  • Comment number 35.

    The solution is not just to think the unthinkable but to do soemthing about it as well. Let's stop this nonsense of encouraging people to breed through ridiculously generous tax credits (which don't top out until you earn over £50k) and scrapping benefits for single parent families. This would save untold billions and, at a stroke, make working appear so much more attractive to the workshy and scroungers.

    We have plenty of people in this country who take personal responsibility for producing children and paying for the privilege. Why the State should bribe people to do this, particulary when we are doing it out of borrowed money is beyond me.

    We should be taking a leaf out of China's book by restricting breeding rather thsan encouraging it at the expense of every taxpayer in the country (present and future).

  • Comment number 36.

    I am not a fan of New Labour but I did think that the case for not cutting the deficit too early or too fast was right. On balance I think the election result also showed people were worried about early cuts. However, I had not anticipated the about turn by the Lib Dems desperate for a sniff of power, and I feel their justification for the change in position utterly feeble (markets reaction to greek crisis etc - we have never been in same place as Greeks -just look at the data - we have never defaulted on debt and have a large tax base, from which taxes are collected effectively). I fear the Osborne/Cameron/Cable cuts will be like Churchill's decision to return to gold standard at pre-first war parity - well-intentioned but appallingly timed. I would acknowledge that a bigger problem is probably Mrs Merkel's fiscal conservatism - to be cutting when you have no structural deficit and to enforce large cuts on others will be catastrophic for demand in Europe - I find her decisions bizarre -with an economy hugely reliant on exports who does Mrs Merkel think will buy all those German goods. It is all very well to talk about good growth prospects in Brazil, China and India, but two of these three are smaller than the German economy and all of them together smaller than the European economy.

  • Comment number 37.

    I am sometimes dissapointed with the huge expectations of some of todays young people.They want the cars the holidays the tv's the phones,
    Don't parents encourage their children to save anymore, borrowing money has become a lifestyle, what is wrong with starting at the bottom,you can buy a 2 bedroom terrace house in Manchester and not need to earn more than £20k.
    But for many this isn't enough they want a 4Ded detached and thay want it Now.as well as keeping the car, phone holidays etc.

  • Comment number 38.

    My post below is better suited to this blog rather than on Stephs:

    Cameron has just confirmed that Government Debt stands at £770billion... £80billion less than initially declared (£850billion?)... Happy days??? Cameron still thinks that it is bad news. In Eton economics, £770billion is more than £850billion ;-)

    Along with this, £285billion is owned by The BoE.. so actual debt is £485billion which is roughly equal to gross annual revenue. Lets assume interest payments of 3%pa... £15billion?? Not Bad I would say..

    Expect more good news in the emergency budget.. or will Cameron and Osbourne budget for a slush fund of £150billion to exaggerate the deficit. Based on the 08/09 outturn expenditure, we only require about £450billion to balance the books. Lets see what number Os/Cam comes up with.

    Something tells me that these boys are not very clever. This will reflect badly on Eton and Oxbridge :-)

  • Comment number 39.

    I really do enjoy the manner in which the 'youth' are described. Although you are all of course entitled to your opinions, I think it is a fair presumption to make that non of you would consider yourselves as one of the deluded youths, and therefore do not really know how we feel and what our concerns are.

    Maybe what you see as dellusional optimism, is rather, the only and most appropriate sentiment to encompass your outlook in such a period of economic turmoil in which, as it has rightly been stated the 'youth' will suffer from most greatly.


    I therefore do not commend such stereotypical comments as the lazy youth or the youth which aspires to live off benefits. I would suggest that such suggestions come from people who are wildly out of touch with our modern day society who have never experienced the realities faced by the vast majority of our countries youth.

  • Comment number 40.

    a) It is not just the young who have been harmed by allowing the fake expansion caused by debt fuelled spending in fact if the problem is dealt with rapidly they may have time in the future to prosper. The definite losers are people who have lost their jobs in their late forties or early fifties who have little time to get reemployment. (you guessed: I am one of them ).
    b) Public spending cuts really do need to be done fairly; the fairest way would be through pay cuts to those public sector workers who have been employed a long time accruing pay rises just for being there. The problem is, it is probably easier due to employment contracts to sacrifice groups of people whose role can be described as redundant rather than cutting the pay of those who are over paid for what they do. And even more difficult to cut back on their over generous and unfunded pension entitlements. All in all our society has grown more unfair in the last decade, as the government has encouraged the financial industry to make money out of enslaving others in debt so as to use the tax take from these activities to fund an every growing public sector, with bloated salaries for those at the top

  • Comment number 41.

    I was always taught to "live within my means". If I earn £1 and spend £1.50, then I'm in debt. Both personal finance & Government finance are the same - only with the Government, the numbers are greater. Our route cause of the problem has been one of "Personal Greed" and "Corporate Greed" and living beyond our means. This has always been unsustainable. I'm open to debating this.

  • Comment number 42.

    "So as and when the harsh reality of today's speech by David Cameron sinks in, the anger of youth that is conspicuous by its absence may be ignited..."

    Lets hope so but I'm not holding my breath

  • Comment number 43.

    Your report may be gloomy but is pretty much spot on and highlights many reservations about how the deficit should be tackled and who should pay for it. The key to debt reduction is actually economic growth alongside fiscal tightening. Investment in the public sector to aid growth will be now be a thing of the past and the public sector will take the brunt for financial misdemeanours that were instigated in the city largely

    Historically, the best way to reduce deficits is via broadbased economic growth, with low unemployment a vital component of this. Cameron seems to disreguard this his strategy for the coalititon

    Our debt and deficit is not out of line with international or historical comparators. Total debt is an entirely pointless measure. Instead we need to look at Deficit and total debt as a proportion of GDP. By that measure we are either better off, or in line with, our main comparators.

    I just hope that the savage nature of cutting is for the right reasons and not just a moral idealogical crusade which will cause up to go back into recession

    We also need to consider the consequences of debt caused by war which some will argue we can't ever win...

  • Comment number 44.

    Rather than ring fencing money for international aide and giving corrupt governments cash, why not use it to stimulate manfuactoring in this country.

    Instead of giving away money invest in manufactoring something of value to the developing world. Say, solar panels or water purifiers then but them off UK producers to give to that other country. Oh and the businesses created might actually sell some to other people, helping the deficit.

  • Comment number 45.

    I was born in 1957

    I started my apprentiship in 1974

    Let me think 3 days weeks, black outs, IMF loans, strikes etc

    At no time was I told by the BBC that I had to blame anyone for the mess the country was in.

    We carried on working and ejoying life and gusee what

    Every morning the sun comes up!!!!!!!

  • Comment number 46.

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

  • Comment number 47.

    #10. At 10:12am on 07 Jun 2010, Chris wrote:

    "If (as seems the case) we are borrowing too much then why not simply raise interest rates a few percentage points and start to bring it under control?

    Prudent borrowers will have allowed for a modest rise in interest rates so it can only harm the foolish after all. Better a little pain now than much more pain later."

    I quite agree with you, Chris. The only problem with this is that it will also hit business investment. Perhaps we need a 'two-tier' system, with differential interest rates for business and personal customers.

    At the same time, if the banks (&c) are to be allowed to charge more for loans, thus boosting their profits (and no doubt bonuses)they should, at the same time, be forced to increase savings rates considerably. The gap between borrowing and savings rates has, I think, widened considerably over the past few years whenever bank rate has fallen.

  • Comment number 48.

    Somethings never seem to change. I thought this was the ''new politics'' and was about 'change'.

    ''It's worse than expected''. Blame the last lot. But didn't the Tories critize Labour's future growth forecasts ? So they should have know it was going to be a ''different'' starting point.

    Surely it's not worse, but ''as expected''.

    The point I'm making is that, in time's of change, every government has calculated deeper cuts/changes for ideological reasons. So in a few years time they can hand out the freebies worth billions to their perceived supporters.

    As expected.

  • Comment number 49.

    Today's young people may be angry with today's 50-somethings for taking more than their share of the pie... but I think most anger should be reserved for the generation before that. I'm not sure what you call the parents of the baby-boomers, but it was them that gave away the UKs competitve position in the world economy.

    In 1949 the UK had a huge chunk of the world market in manufactured goods, yet by the 70s, when the boomers were entering the workplace, the UK was pretty well bust.

    The boomer-parents, if I can call them that, enjoyed full employment, job security, absurdly cheap housing... you name it. In the 1950s there would have been no question that a man in a white-collar job could buy a house and support a non-working partner and family. He would have had a very good expectation of 40 years of full employment and a final salary pension at the end. His 3 bed semi might have cost £1000.

    It was through that generation paying themselves too much, having too much security... and in particular the dire quality of management in British industry that it was all given away.

    OK, the baby-boomers still had things a lot better than today's young adults will have it. But let's put most of the blame where it belongs.

  • Comment number 50.

    I suspect David Miliband will be secretly delighted with the Lib/Con agenda for faster cuts and tougher austerity measures (although it does seem a bit like a 'good cop/bad cop' Govt double act at times). Remember that story just before the GE about Mervyn suggesting that which ever party that got into Govt next, they would probably be out of office for a generation there-after; such were the austerity measures required to rebalance the books. That certainly doesn't bode well for Cameron and Osborne!

  • Comment number 51.

    "it is plausible to say that the parents of today's young adults had more than their (our) fair share."

    Fair share of what? Are you saying one has to predict future wealth levels and then backward divide equally that over each generation? Simply not possible.

    ‘Their (our) generation’ have not only paid for their own parents’ pensions and healthcare but their own children’s educations and also repayment of the vast WW2 loan from the USA and, certainly in my case, 3 previous Labour government debts.

    The younger people must work out for themselves that all debts have to be paid for and that collateral free and deposit free loans with interest rates less than 2.5% are not a 'human right' but a historical rarity.

  • Comment number 52.

    I agree with davidbrent #24

    I would also revise my earlier post #32 Its not just the young who seem to have inflated expectations in regard to their so called 'standard of living'
    For to long the gap between the haves and the have not's has been allowed to grow- We do need to correct the discrepancy and soon.

    There are a few (Bill Gates for instance) who seem to have a feel for what needs to be done and there are many with even the lowest levels of wealth who work hard to do somthing about this. But we need to change the culture of 'Profit' at the expense of all else.

  • Comment number 53.

    @ #24 davidbrent

    David,

    You must realise that £200 goes a long way in this part of Southern China. It's all a matter of relative values. You have to understand the relative buying power of the Yuan over here, compared to the pound in the UK to get a clearer picture of the situation.

    China has now introduced minimum wage legislation, and the Shenzhen region has set the minimum wage at 1000 Yuan per month. The Foxconn workers will be on a good salary relative to their fellow workers in the electronics manufacturing industry.

    Already the large factories are looking for cheaper manufacturing bases, and many have moved over the Vietnam border where they are unhindered by minimum wage and employment law.

    I have been a frequent visitor to southern China in the last decade, working directly with the electronic manufacturers. In real terms salaries have increased considerably in the last 10 years. In 1999, two dollars a day for a 12 hour shift was common.

    My work puts me directly on the factory floor, working with the line workers on a daily basis - I am a production Engineer, I solve problems on the line when they arise.

    I have spent the last 3 weeks working alongside the line workers in a factory near Shenzhen, producing a new product for the UK market. Our manufacturing partner's workers work a 40 hour week, with the opportunity of 15 hours overtime in the evenings. Saturday, Sunday and night shift working has now become a thing of the past.

    As long as we desire flat screen TVs, iPods, laptops and iPhones at rock bottom prices - then the youth of South East Asia will be shackled to the economics of low cost production. This is the reality of globalisation, and my career has been swept along by the tide.

  • Comment number 54.

    38. Supersage64

    You're Gordon Brown, aren't you?

  • Comment number 55.

    27. At 11:04am on 07 Jun 2010, Miraglyth wrote:
    It stuns me that nobody seems to care about this issue. The cost of entry in the last 10~20 years has been nothing short of frightening and nobody seems to care - with much of the "economic recovery" apparently focused on keeping the prices astonishingly high!
    _________________________________________________________________________

    Well I do "hear" what you say and even agree with you. There is something frankly inhuman about it being impossible for a human being, being unable to buy/build his own house. But you only have to read the right wing newspaper media, who squeal from the rooftops the moment anyone threatens to relieve the wealthy of their assets, be it through Tax, (capital gains, inheritance,) or even stops them wanting to pour their excessive amounts of money into buying such scarce assets in the first place.

    Such basic human needs, like a house, MUST be put ahead of the needs of the wealthy to invest their capital in future? Only when there is an excess supply of houses should the rich be given the opportunity to buy up the excess, wouldn't you say? Or at the very least they should be banned from buying when there is a recognised shortage, like we have now?

    If you are one of the lucky ones and prosper in life, will you still think this in 30 years time when you are thinking about a pension?

    The only advice I could give you now is, if/when interest rates rise, house prices will collapse, not suddenly but they will fall.

  • Comment number 56.

    A massive reform of the public sector pension scheme is needed otherwise the problems with our overspending will get even worse. Another problem we have is with PFI to build new schools, hospitals etc. This is a very expensive way of borrowing and is unsustainable in its current form. The debts we have built up for our children to repay in generations to come must be reduced. I certainly think that the government is right to address this issue now and make cuts where appropriate. Working for a university as I do, vice chancellor's pay and perks would be a good start!!!

  • Comment number 57.

    I am leaving university this year and have landed myself a graduate job which is great news. I don't blame our parents generation for their debts - sadly it was (and probably still will be) the culture we live in. I do think, however, that the retirement age should be instantly forced up by two years and then again incrementally over the next 10. We will all face problems and it would be entirely wrong if our generation was left entirely responsible. This might encourage people like John_from_Hendon to start contributing to the taxman rather than spending his whole time commenting on BBC blogs and (probably) receiving a nice hefty state pension.

  • Comment number 58.

    Further to post 37 and my post 27:

    Given how plainly you profess to not being "one of those young expectants", I find your criticism to be insulting and perhaps a case of glass-houses.

    For my part, I don't take wasteful holidays abroad, my technology expenditure has been careful (though I admit peers might describe it as frugal) and I don't even have a car yet. With the savings I've managed to accumulate over the last few years I could afford a decent car, but not the deposit on a mortgage for anything greater than a bungalow.

    Further, even if I could get the deposit down, it's a far less comfortable option than it once was. With job losses and tough conditions seeking employment there's a greater risk of losing that income, and with house prices as they are, there's no longer any ability to build up a safety buffer of a few months while we are employed.

  • Comment number 59.

    I loved this line for a "youngster":

    > I wasn't lazy and worked 30 hours a week throughout my time at university.

    30 hours would be "working hard"???
    I can't remember when it was last time "I worked as hard" as this guy, must have been around my primary school years!

    That really sums up the problem with this Country: no one really fancies working hard, they all want "the State" to help them out, work for some Public Sector outfit where they can push paper around or getting their benefits to watch Eastenders...

    Roll up your sleeves, chaps, do some _productive_ work (ie, in some private sector firm, maybe start your own company) and all will be fine; I did exactly that, and sailed through TWO bubbles-cum-recession...

    But, for God's sake, stop whingeing like lost children...

    Be that as it may, I'm leaving this sorry place... Labour has done a complete mess of the Country; it'll take another 13 years to fix it, if ever.

    Good luck, boys, it's been good while it lasted....

  • Comment number 60.

    I fear that the programme will only be fiddling as Rome burns. The current economic model which relies on growth - growth of individual wealth, growth of national wealth, via growth of GDP is fundamentally flawed. The 'constant growth model' is only valid where there are infinite resources to support the growth. Take note of the bacteria on a petri dish - because of lack of infinite resources they end up drowning in their own emissions (excrement). We will do the same if we carry on as we are- Global warming is a warning.

    There is is only one resource which can constantly produce more resource on this planet, and that is the power of the sun falling on the surface. I am not promoting solar cells but I am saying that fundamentally the solar/agrarian economy is the only sustainable one. Even then there is a limit to how much of this energy we can capture.

    Perhaps economists should rethink their position.

  • Comment number 61.

    Judging by the computer games my youth wants to play i suspect the youth too would blow up the planet at the first opportunity. I know this is flippent but i do agree with the earlier comment that we felt exactly the same way in the early 80's. To understand the debt being handed to future generations we also need to consider the infrustructure too. Personally i'm more worried over the increased inequality being passed on to future generations. High house prices have less of an impact when the parents can help out with the 10% deposit and one day you are likely to inherit a proportion of that estate than when you are starting out from scratch and am unlikely to every to get help

  • Comment number 62.

    37. At 11:28am on 07 Jun 2010, creditunionhero wrote:

    "I am sometimes dissapointed with the huge expectations of some of todays young people.They want the cars the holidays the tv's the phones,
    Don't parents encourage their children to save anymore, borrowing money has become a lifestyle, what is wrong with starting at the bottom,you can buy a 2 bedroom terrace house in Manchester and not need to earn more than £20k.
    But for many this isn't enough they want a 4Ded detached and thay want it Now.as well as keeping the car, phone holidays etc."


    I think thats a little unfair. It may be true of upper-middle class youths who have spent their lives getting everything for free from mum and dad, but that simply isn't the case for large numbers of young people.

    With a salary of £20k, saving 20% of take-home pay is £240 per month, which is £2880 per year. The average house price of a terraced house where I live in Watford is £220 000, so the required minimum deposit (20%, £44 000) would take a little over 15 years to save. Of course, house prices in Manchester are half that value, so might only take 7 and a half years to save for, but that would be a long commute for the large numbers of young people who can only find work in or around London!

    I think that most young people today have realised that they will not be able to own their own homes in the forseeable future, so choose to spend money on other things. With the average age of a first-time buyer now at 36, I can't blame anyone who makes that choice!

  • Comment number 63.

    I have long said that an economy dependent on spending and debt was a recipe for disaster longer term.

    How is that hard to see?

    I'm pleased and relieved to hear that Cable is redirecting towards a more sensible approach. Now, if we could just see the light on targeting zero growth as well we wouldn't have these mountains of money looking for an investment home and being surprised when they cannot forever find one.

  • Comment number 64.

    I expected the pound to fall if for no other reason than due to enormous debts accumulated over years by the UK government and people. But its still around 1.45 to a dollar, lower than 2.1 a couple of years back, but still quite high.

    Reducing the deficit requires more exports and less imports, but with Pound still being one of the strongest currencies in the world, one wonders how UK can bridge the gap?

  • Comment number 65.

    59. At 11:57am on 07 Jun 2010, massenz wrote:

    "I loved this line for a "youngster":

    > I wasn't lazy and worked 30 hours a week throughout my time at university.

    30 hours would be "working hard"???
    I can't remember when it was last time "I worked as hard" as this guy, must have been around my primary school years!"


    I suspect the original poster meant 30 hours per week on top of the 20-30 hours of university work. That equates to approximately 50 - 60 hours of work in total each week. As a full time employee working 37.5 hours a week, I certainly would consider that as working hard.

    Those doing media studies for 6 hours a week supported by mum and dad are another matter!

  • Comment number 66.

    Now beginning to realise that Dave IsTheCameraOn and Negative Nick's "real change" spree actually means that, now that their generation has benefited from state hand outs, the younger generations are going to suffer from these being cut.

    "I'm all right Jack" at it's worst.

  • Comment number 67.

    If household debt is so high, why does the government continue to excessively support homeownership? Not exactly a way to reduce debt. How about giving tax breaks to all forms of investment rather than a £2500 stamp duty bribe?

  • Comment number 68.

    55. At 11:51am on 07 Jun 2010, spareusthelies wrote:
    "Only when there is an excess supply of houses should the rich be given the opportunity to buy up the excess, wouldn't you say? Or at the very least they should be banned from buying when there is a recognised shortage, like we have now?"
    _________________________________________________________________________

    Absolutely.

    Of course basic supply/demand makes such a suggestion hugely unattractive to existing property owners for exactly the same reason that it is equitable to the first-time buyer.

    One could also argue by now that the long-term damage has already been done and that such legislation would be too late.

    A minor clarification to the quoted part of my post 27: When mentioning "the cost of entry in the last 10~20 years" I am of course referring to how much it has changed (i.e. sudden increase) in this time period.

  • Comment number 69.

    5. At 10:07am on 07 Jun 2010, John_from_Hendon wrote:

    We have already seen the pusillanimous way that the capital gains tax issue has already been allowed to pervert policy - that is a tax that impinges of 0.25% of the population is pilloried and the 99.75% of the population will have to pay for the tax benefit of the 0.25%!


    I agree with you John_from_Hendon, the Conservative newspapers and numerous Conservative MP's have been up in arms over a possible CGT increase that isn't even known yet, who's going to speak up for the 99.75% of us who are going to pay? I suspect the unemployed are going to take the brunt of the cuts that are coming, so there goes my mansion. (Sarcasm doesn't come across with the printed word, does it?)

  • Comment number 70.

    Post 50, I tend to agree.

    I wonder how long before this idiotic shambles of a government collapses.....

    It a certainty that osborne's favour of defaltion over inflation is disasterous at best, this cretin will cause a full blown depression in the UK.

  • Comment number 71.

    If there's no more money, Dave and Nick will have to get Mervyn to PRINT SOME MORE, then.

    This is called various things, from Quantitative Easing to Hyperinflation. Gordon has already prepared the way.

    If you have any money, buy National Savings Index-linked bonds (tax free too!) or even gold, while you can still get them, and look out for the day when they change the wording on you banknote from "I promise to pay the bearer... " to "We'll do our best.....".

    Nil carborundum!

  • Comment number 72.

    "Borne" not "born"
    Have borne the brunt

  • Comment number 73.

    @massenz

    "30 hours would be "working hard"???
    I can't remember when it was last time "I worked as hard" as this guy, must have been around my primary school years!"

    30 hours + 60 hours studying. You don't think that's working hard?

    Fitting in time to study, and do well at your degree around a 30 hour a week job isn't easy. I bet you work a 45 hour week and think you're a hard worker.

  • Comment number 74.

    38. At 11:30am on 07 Jun 2010, Supersage64

    You seem to have forgotten that we're going further into debt at a rate of £450 million per day. Within 5 years maybe the current government may get it down to £200 million per day borrowing.

    Check out the overall debt figure then.

  • Comment number 75.

    Messenz wrote:

    "I loved this line for a "youngster":

    > I wasn't lazy and worked 30 hours a week throughout my time at university."

    Let's see: 30 hours at work, call it 15 hours at lectures and the same completing independent studying in the library and the like. That's a "lazy" 60-hour week.

    Personally, I "lazily" only worked 20-hour weeks in employment at university, so I only had 50-hour weeks.

    If it's true you're leaving, goodbye, the country won't miss you, don't let the door hit you on the way out, it might deflate your smug sense of superiority. You'd best sell this supposed business of yours quick before the CGT change...

  • Comment number 76.

    @ #49 StealthTax wrote:

    In the 1950s there would have been no question that a man in a white-collar job could buy a house and support a non-working partner and family. He would have had a very good expectation of 40 years of full employment and a final salary pension at the end. His 3 bed semi might have cost £1000.

    This is true - I bought my 3 bed semi in suburban Surrey in 2000 for £125K - before prices went mad. The previous owner of 44 years, had bought it in 1956 for £1000. He was a postman all of his working life - and financed the place on a postman's earnings.

    Now you need 2 professional salaries just to pay for a modest house.




  • Comment number 77.

    Cameron needs to decide whether an additional 300,000 unemployed is better than a 90% corporate tax rate for the City. How about a 90p tax for earnings over £250k.. Austerity measures seemingly mean misery for the poor and additional Gucci for the rich(Lets not kill the goose that lays the golden egg type of economics??). If them Gucci eggs turn out to be rotten as was the case with the last bail-out, do we get the poor to clean up the stink again.

    Tough decisions Mr Cameron???.. or does misery excite you.

    Conservative economics 101: Create distance between rich and poor.

    My bit of wisdom: The more links you put in the chain between you and the ball, the less control you have over the ball. When the ball rolls over the edge of the cliff, so do you.

  • Comment number 78.

    Robert,

    I believe that this current Adult(I use the term very loosely) generation and the baby Boomer generation have been very irresponsible in the way they have borrowed or benefited from rising house prices and unsustainable and unrelenting pension perks.

    Back 20-25 years, if you had a decent job, you could borrow 3 times salary and afford a modest flat to call your own. Not anymore. So why should this new generation suffer, because the previous generations have enjoyed a false economic boom in final salary pensions and rising house prices.

    I went to Lanzarote for a weeks holiday in April. Checking in to return home, there were 20 queues of about 100 passengers per queue. I noticed 95% of these passengers were over the age of 65. And they get free bus passes!!

    We should be ashamed of ourselves??

  • Comment number 79.

    @ Treading Water

    "I wasn't lazy and worked 30 hours a week throughout my time at university."

    So why do you expect to earn more than 20,000 when that's your idea of hard work? Try 60 hours a week if you want to get somewhere.

  • Comment number 80.

    Interesting how Canada is not having the same problems as so much of the world. Some years ago it stopped the "lets keep spending till it hurts" and got itself out of the considerable debt it was in. Perhaps a lesson to be learnt.
    As for Ed Balls - But several European countries have since announced austerity measures - including Italy, Spain and Portugal. Mr Balls told the programme: "I think what's happening in Europe is really really dangerous and big mistake."
    In what way?

  • Comment number 81.

    The problem is that many of the 'youth' have been the most over indulged generation ever to exist.

    They had more material goods than people in the past could imagine - lovely clothes, trainers, mobile phones, computers, ipods, foreign holidays, cars on their 17th birthday, the list goes on.

    They are going to find a more 'normal' life difficult to adjust to as they were told that 'things could only get better'.

  • Comment number 82.

    74. At 12:30pm on 07 Jun 2010, RobKirton wrote:
    38. At 11:30am on 07 Jun 2010, Supersage64

    You seem to have forgotten that we're going further into debt at a rate of £450 million per day. Within 5 years maybe the current government may get it down to £200 million per day borrowing.

    Check out the overall debt figure then.

    ________________________________________________

    Supersage64:
    We seemingly reduced our debt by £80billion in 1 month.. I am looking forward to 22 June ;-).. more good news??

  • Comment number 83.

    Och... I am sure that we can get a bail-out ... say from China perhaps...?

  • Comment number 84.

    The government are painting as bleak a picture as possible in order to try and pass the blame back to the Labour Party, so as to say it is not our fault when the cause the double dip. Typical politicing, the real state of finances is only known by a few, but will be made worse by another cut caused recession.

  • Comment number 85.

    I'm 60, but I've not enjoyed an increased level of public services, nor will I get a huge pension. A lot of the money has just been wasted, or given away to the indigent (same thing really). The anger of both young and old shouild be focused on the spendthrift government of the past 10 years (the first 3 years were OK, before they returned to the usual tax and spend profile of a labour government)

  • Comment number 86.

    54. At 11:50am on 07 Jun 2010, the_fatcat wrote:
    38. Supersage64

    You're Gordon Brown, aren't you?

    _________________________________________________

    No I am not... but equally famous ;-).. I also have a God/Gord complex though.. ready to save the world... from morons

  • Comment number 87.

    "Last week Vince Cable pointed to households' record and arguably excessive debts (equivalent to 170% or so of disposable income) to explain why consumer spending can no longer be the engine of our economy."

    ...and many on here (including myself) have been pointing this out for months and months. What a shame it's taken the 'greatest talent in Britain' this long to cottom on.

    "The argument would be that we undermined the foundations of the economy by borrowing more than we could afford - and it is our children who have born the brunt of rising unemployment."

    Wrong Robert - the argument is that citizens were forced to borrow to replace their diminishing (real) wages. Whether it's a 'pay day loan' or borrowing to go to University or even borrowing so you don't have to live in a landlords pocket forever - we had to borrow

    Don't blame the people for 'undermining' anything - oh misleading media. We did not insist on Capitalism being protected at all costs. I don't remember signing up to "keep the unsustainable and contradictory system going" in any election since I was born.

    Adam Smith identified the diminishing profit - Marx showed how this would lead to violent fluctuations in the Economy and that until the Bourgoisie stop making "profit without effort" that this would continue.

    All credit has done is help the failed system go a little bit longer - but to simultaneously make the end far, far worse.

    Still, why should we listen to the logic and reason of scholars whose intelligence and insight put's today 'intelligenta' to abundant shame - surely it's much better we simply crowd around the 'wealth creators' and applaud their 'intelligence' for 'fixing Capitalism', taking their word for it as nobody feels clever enough to challenge them - except they haven't, and they won't, not now - not ever!

    I did predict this would happen, once the Tories get in they would play the "there's no money left" in order to impose the harshest austerity cuts in history. Still if the voting public were stupid enough to realise that the pathetic £6bn of cuts earmarked for this year were so insignificant that they needn't have bothered - then they deserve it.

    What is fascinating is how the tories need to play this "we're skint and it's all Labours fault" in order to dampen the effect of the pain and turn it into 'Labour anger'.
    This shows how inept and foolish the Coalition is - if they had bothered to look back through history they would see that the debt burden is increasing from generation to generation - regardless of who is in power

    I have a suggestion for the Coalition - start making the cuts at Westminster - once I see that every single MP is walking around in sack cloth and meeting on the green outside the HoP (because it's been let out to raise money) - then they can start looking to cut our public services.

    ....now how many of you think this is possible - I mean the wealthy making true sacrifice - not simply refusing the ministerial car - I mean proper sacrifice.

    If they complain, they can receive the 'standard line' for all public sector workers - "You should feel lucky you even have a job" - which is so commonly banded about these days.

    The Government are totally witless morons - and note I'm not even specifying which one!

  • Comment number 88.

    If history is anything to go by, it takes a good 10-15 years of Tory government before people start to head for the barricades.

  • Comment number 89.

    Cutting deficits for the sake of it, without involving supply side steps to boost growth is not a good idea, especially where demand is weak.

  • Comment number 90.

    The parallels to Germany in the 30s are quite disturbing...

    - A Govt. and population service the roaring 20s through credit from US banks;

    - A major financial crash of said banks that causes such credit to go fizzle;

    - Major austerity to come with rising unemployment;

    - People feeling disenfranchised by Govt. which seems aloof and not able to solve the problems;

    - An increasing desire to compete with neighbouring countries rather than co-operate;

    - The small rise of the extreme right in resorting to direct action in the major urban areas of the country;

    It is a scary prospect indeed. I think Robert is right on the money with his analysis. Some may feel it is doom mongering but then this may very well be a Cassandra moment ...

  • Comment number 91.

    When humanity finally gets rid of money as medium of exchange, we can continue our social progress. For now progress is on halt.

    This crisis is a bliss to humanity!

  • Comment number 92.

    Somehow I suspect that those more in need of a wake-up call won't be seing your program.

    They'll be more interested in the latest gossip about some big-breasted quasi-celeb and her unshaven (boy)friend or the latest speculations on which tactics Fabio Capello has in store for England in the World Cup.

    Why try and understand the world if there's nothing you can do about it and it's so much easier to just passivelly consume the kind of mental-pap that covers most of our newspapers' front pages and floods most of our airwaves?

  • Comment number 93.

    If the UK is in such dire economic straits, according to the current PM, do we (the taxpayers/electorate) have recourse to the previous PM and or Exchequer for dereliction of duty/mismanagement?

  • Comment number 94.

    59. At 11:57am on 07 Jun 2010, massenz wrote:

    "I loved this line for a "youngster":"

    I hope your joking. 30 hours a week on top of uni work is a lot. Its easy to scoff but remember that on top I was taking on debt that you will have received as a grant. This student didn't go very far given the much higher cost of living.

    Obviously I understand that 30 hours a week isn't much on its own but I thought you might have the intelligence to realise that this was on top of my degree work. Apparently not.

  • Comment number 95.

    I think we are forgetting something here. We can't just blame the bankers, their role was just to take an unreasonable wage from the system but who can say they wouldn't in the same position?
    The problem was two-fold:
    Government failing to regulate properly, and no the market can never regulate where you don't see any pain from the course you are taking for several decades and even then you are too big to fail.
    People failing to keep their own finances in order, remortgaging beyond their long term means to buy that bigger car or plasma TV. And no no-one forced them to borrow, I know lots of people that resisted.
    We should feel as much anger at these people as the greedy bankers. They got the bigger houses, cars, foreign holidays and its the rest of us mugs that tried to anticipate a less rosy future by trying to be prudent that will have to foot the bill. Its not just a generational thing. Some of us that tried to be careful will have to take the pain for those in the same generation that did not.

  • Comment number 96.

    John_from_Hendon is spot on with his analysis of the the causes of the current mess. However I'm afraid he does not factor in the lack of spine of our political class: when push comes to shove they will go for the distorting chimera of inflation over a painful-but-honest debt work-out. All that nasty public and private debt will be magically inflated away; it will be all the easier as we will have plenty of international bedfellows in adopting this tactic.

    Meanwhile the underlying problems of this country will not be addressed.

    We will still have a poor education system caused by ideological turf wars being fought out through a mixture of union intransigence, social engineering and constant political meddling, instead of allowing the educators to educate those who will best utilise that education.

    We will still have a huge and overweening state bureaucracy that will remain what it has always been but has become more so over the last decade: largely a racket to allow left-leaning busybodies to feather their own nest comfortably, by extorting others' hard-earned resources for nannying, sometimes bullying and generally poking their noses into far too many areas of ordinary peoples' lives, with usually insignificant or negative overall outcome.

    Conjoined with the overbearing state will still be an unreformed public healthcare system that is hobbled by political meddling and ever-increasingly devours resources with little gain to the overall health of the nation.

    We will still have an overpriced and unresponsive housing market that disadvantages the ordinary person (and particularly the young, south-moving northerners, inheritance-less and those without wealthy parents), which has been distorted by an unholy alliance of long standing over-regulation and myopic Tory-shire NIMBYism.

    We will still have poor infrastructure from underinvestment in the kind of projects that matter for economic growth.

    And finally we will still have a tax and benefit system that entrenches a culture of entitlement and career benefit dependency. One where a large and ever-increasing group of people, all too often through repeatedly taking the easy or most pleasurable but least responsible options in life's myriad of choices, find it easier to have their lifestyle maintained by the ever-decreasing group of fools who actually bother to take responsibility for themselves.

    But by then the seeds of the next bubble will have been sewn and the ashes of the previous bust will have been swept under the carpet. Flush again with debased pounds, the poll-fodder will bleat their way into the polling booth and apply their cross for more of the same.

  • Comment number 97.

    Your blog was alright Robert...kind of seems like a plug for your show at one point though :)

    I'm 24 so consider myself as part of the youth of this country and agree with you last paragraph:

    "So as and when the harsh reality of today's speech by David Cameron sinks in, the anger of youth that is conspicuous by its absence may be ignited (oh, and that pernicious disillusionment with our elected representatives - which is particularly characteristic of a younger generation - is probably not going to evaporate). "

    The absence of our "anger" (as you put it) is rather conspicuous...I know alot of people who are "angry" and very disillusioned with whats going on and has been going on in the country the past 9 or 10 years but don't and probably won't do anything about it. Why aren't we out there getting our point accross? peaceful demonstrations, speaking to people like politicians, who the youth are so disassociated with. Your anger is a gift if used responsibly.

    I think it's because we are so disassociated with the massive class divide and the thought that "is there actually anything we could do?" that is why our "anger" is conspicuously absent.

    It's simple divide and conquer if you think about it.

    It shouldn't be like that, we should all speak up together if we agree on the same point. Why don't you start for us Robert? we need people in the media as they can branch out to the whole country. Your voice is louder so to speak. Unfortunately though, with this comment-

    "Some would say they have every right to be furious with 'MY' older generation"

    You have already caused a divide. Yes we will no doubt take the brunt of it when all you oldies are living off your pensions and we're struggling to find work ;) but we need people from "your" older generation to help us.

    us_them-

  • Comment number 98.

    All this theory that the housing stock is a bonanza waiting to benefit the young is flawed. It is a lottery. Yes some will benefit, those with childless aunts who die young. Both my parents and parents in law had to continually down-size to finance their modest retirement into a ripe old age, having only the state pension to live on, and there was nothing left for us. I can see the same happening to my children.

  • Comment number 99.

    "If David Camerons 'massive cuts in public spending' are to have any credibility with the great unwashed, he is going to have to start at the top. The house of Lords must go, If you get rid of the unelected 'ermine Boy's' at least people will think we are all in this together. I am not sure how much this will save the taxpayer ( any figures anyone ?)"

    No but I can make some reasonable assumptions - even if you assume that the total cost of the members of the House of Lords is roughly equivalent to that of the members of the House of Commons it doesn't actually save "the taxpayer" very much at all.

    When the great expenses scandal was going on last year I did some rough calculations which can be summarised like this:

    650 MPs at £65,000 each = £42.25 million
    650 MP's expenses at an average of £25,000 each = £16.25 million

    Total = £58.25 million.

    £58.25m out of a deficit of £156 bn is about 0.04% (or put another way, is equivalent to a person who owes £25,000 on his credit cards having his debt reduced by £10), and it would save each tax payer about £2 a year.

    I know (as Tesco would say) "every little helps", but if you're going to reduce a spend you need to look at some of the really BIG saving chunks first, rather then mess around with bits that save the odd 0.01 % here and there, just because it happens to fit with your own political agenda.

  • Comment number 100.

    The range of posts highlight the diverse views and opinions about the real problems, the causes and the solutions.

    I believe the only certainties in the longer term are that the rising levels of affluence (not the wealthy I hasten to add though tracking the increasing number of global billionaires is interesting in itself!) mean that the share of the pie for leading economies can only diminish.

    Increasing consumption rates and consumerism around the world will lead to price increases. As do increased salaries in developing economies for providing the gadgets and services we provide.

    I echo the view that developed economies will depress slightly and meet developing economies at some point nearer the top end than the middle.

    The problems highlighted by this and the posts are that the problem is complex as are the solutions. Balancing the changing global economy, and do we know for sure how certain countries are funding their expansion? Is growth built upon borrowing and therefore has some speculative component to it, in other words, if all goes well then the debt is repaid.

    Time for a global economy that is built upon real and substaniated economics. No more zeroes and ones in computers only please but an economy based upon finite resource and not built on growth but sustainability (sustainable growth is a paradox in itself in the long term).

    Inter-generation borrowing is long established and I suspect the old economic models are largely to blame. Complicit in this is the "what is in it for me?" debate which often shapes the debate about borrowing versus saving - interest rates being a good example. The problems are again complex and simple rules cannot provide rules that work for the differing situations that exist.

    Capatalism is partly failing but has not failed. Greed has let some of the younger generations down but hopefully it can be recovered.

    Sustainabiltiy and economics built upon finite resources and some degree of equity are required. If the laws of nature teach us anything then the elements are continually trying to level the contours of the earth, greed that is selfish and destructive does exist and that the majority are at the mercy of powers greater than theirs - unfortunately for us is that the power often is not held by those capable of being alturistic and holistic.

    Lots of other good sense stated as well. We should listen to what many people are saying.

    As for my firm conclusions, sorry, I have none because I do not have enough information to act upon. Housing is potentially an issue for social unrest because it is a requirement. As for interest rates, I do not know because I sympathise with some borrowers if a rate goes up and I symapthise with some savers when the rate goes down.

    The other concern is that national economics and what we do may be prudent and wise for us but are all nations playing by the same rules? As with many issues, finances and economics are not transparent enough and frequently this experiment of life throws up the results far too late to change the course of action.

    Some good common sense principles should be adhered to and hopefully a collective call for well thought through and fair change should have the right impact. As for voting with my feet, I have done so by trying to invest in sustainable and green projects, I have moved my money out of greedy financial institutions but I still buy too much stuff and I have a large mortgage (that I can afford to pay with an interest rate increase).

    What a pickle?

 

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