What you say, A politician lying - surely not ?
Here is the article .. with my little explanations in Yellow
"A lie gets halfway around the world before the truth has a chance to get its pants on"
- Winston Churchill
- Winston Churchill
As a Conservative (I'm not by the way - the writer is ) I have no pleasure in exposing David Cameron's deficit claims. However, as long as the party continues to talk down the economy via the blame game, confidence will not be given an opportunity to return. For it is an undeniable and inescapable economic fact: without confidence and certainty there can be no real growth.
OK this is a simple one, they are lying to you about how bad the mess is via TV and Newspapers that their cronies control... and to justify the cuts they are imposing everywhere in order to line their own nests
Below are the 3 deficit claims - the mess. The evidence comes from the IMF, OECD, OBR, HM Treasury, ONS and even George Osborne. The claims put into context are:
CLAIM 1 The last government left the biggest debt in the developed world.
After continuously stating the UK had the biggest debt in the world George Osborne admits to the Treasury Select Committee that he did not know the UK had the lowest debt in the G7? Watch: Also, confirmed by the OECD Those who use cash terms (instead of percentages) do so to scare, mislead and give half the story.
OK this shows that the chancellor either flat out lied to parliament or to be fair was misinformed by his advisors ..
Its common sense, in cash terms a millionaire's debt would be greater than most people. Therefore, the UK would have a higher debt and deficit than most countries because, we are the sixth largest economy. Hence, its laughable to compare UK's debt and deficit with Tuvalu's who only have a GDP/Income of £24 million whilst, the UK's income is £1.7 Trillion.
This is fairly straightforward .. if you earn £100 per week and your loan payment is £50 per month and your neighbour earns £25 per week and his loan is £10 per week ..who has the largest debt ? ... if you took the Governments way of looking at it ...YOU HAVE as you owe £50p/m whereas your neighbour only owes £40p/m
Finally, Labour in 1997 inherited a debt of 42% of GDP. By the start of the global banking crises 2008 the debt had fallen to 35% - a near 22% reduction page 6 ONS Surprisingly, a debt of 42% was not seen as a major problem and yet at 35% the sky was falling down?
Finally, Labour in 1997 inherited a debt of 42% of GDP. By the start of the global banking crises 2008 the debt had fallen to 35% - a near 22% reduction page 6 ONS Surprisingly, a debt of 42% was not seen as a major problem and yet at 35% the sky was falling down?
CLAIM 2 Labour created the biggest deficit in the developed world by overspending.
Firstly, the much banded about 2010 deficit of over 11% is false. This is the PSNB (total borrowings) and not the actual budget deficit which was -7.7% - OBR Economic and Fiscal Outlook March 2012 page 19 table 1.2
Secondly, in 1997 Labour inherited a deficit of 3.9% of GDP (not a balanced budget ) and by 2008 it had fallen to 2.1% - a reduction of a near 50% - Impressive! Hence, it's implausible and ludicrous to claim there was overspending. The deficit was then exacerbated by the global banking crises after 2008. See HM Treasury. Note, the 1994 deficit of near 8% haaaaaah!
Thirdly, the IMF have also concluded the same. They reveal the UK experienced an increase in the deficit as result of a large loss in output/GDP caused by the global banking crisis and not even as result of the bank bailouts, fiscal stimulus and bringing forward of capital spending. It's basic economics: when output falls the deficit increases.
Finally, the large loss in output occurred because the UK like the US have the biggest financial centres and as this was a global banking crises we suffered the most. Hence, the UK had the 2nd highest deficit in the G7 (Not The World) after the US and not as a result of overspending prior to and after 2008- as the IMF concur.
If you read all of the above passage, its fairly straightforward .. it shows that the previous government far from being the bumbling fools that the Tories would have you believe were actually doing a good job in keeping the books balanced, and it was only the banking crisis that upset the economy here, as it did everywhere.
Claim 3 Our borrowing costs are low because the markets have confidence in George Osborne's austerity plan and without it the UK will end up like Greece.
Hows that for a scare tactic headline ? are you worried yet ;) - read on
Yes, the markets have confidence in our austerity plan and that's why PIMCO the worlds largest bond holder have been warning against buying UK debt.
Oops ..so that would be a LIE then ?
The real reason why our borrowing costs have fallen and remained low since 2008 is because, savings have increased. As a result, the demand and price for bonds have increased and as there is inverse relationship between the price of bonds and its yield (interest rate) the rates have fallen. Also, the markets expect the economy to remain stagnate. Which means the price for bonds will remain high and hence, our borrowing costs will also remain low.
Secondly, the UK is considered a safe heaven because, investors are reassured the Bank of England will buy up bonds in an event of any sell off - which increases the price of bonds and reduces the effective rate. Note, how rates fell across the EU recently when the ECB announced its bond buying program. Thirdly, because, we are not in the Euro we can devalue our currency to increase exports. Moreover, UK bonds are attractive because, we haven't defaulted on its debt for over 300 yrs.
In other words we are regarded as a safe buy..because we are honorable and always pay our debts
David Cameron would like people to believe the markets lend in the same way as retail banks lend to you and I.
Overall, when the facts and figures are put into context these juvenile deficit narratives and sound bites ("mere words and no evidence") simply fail to stand up to the actual facts. The deficit myth is the grosses lie ever enforced upon the people and it has been sold by exploiting people's economic illiteracy.
Are you tired of being lied to yet ?
JD :)
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