Sunday 11 March 2012

Deficit, debt, banks, austerity...Still trying to sort it.


The last government had a deficit.
Was this deficit significantly bigger than deficits of other UK governments of the past? and/or of equivalent regimes?
(as far as I can glean - no. If someone knows otherwise - tell me care/of facebook or twitter where this is posted)

Then the banking crisis happened.
Was this caused by a kind of multiplier of debts loaded on to what was in the final analysis loans to people who couldn't pay it back? It was the banking and financial sector's own lending and buying of debts that made these original debts get bigger and bigger...especially where people borrowed in order to buy debt.

Now this is the crunch question: was it at this point that the deficit became a problem? In other words the deficit wasn't some kind of objectively bad thing for capitalism. After all, government debts are usually rather tasty for banks because they are guaranteed sources of income for them. They lent the government money. The government pays the interest. Nice.

So the 'deficit' that the Tories have got away with describing as the problem - and it's the platform from which they justify privatising, cutting, sacking, and wrecking the public sector - wasn't the problem? It was the banking crisis that made it a problem - in their terms?

And it's the banks who are in effect demanding austerity in order that they can become less in debt themselves? ie they want to lend countries less money in the present climate? ie that sovereign debt is so high (some of which was caused by countries bailing out the banks!) it's too risky to lend more to them? Is that it?

Answers in a tweet or a facebook comment please?

Keep the language simple,please.