The Staggers

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What did we learn today? Osborne will defend the banks. Again.

The Chancellor's Autumn Statement shows a commitment to backing the unregulated and reckless financi

By Ann Pettifor Published 29 November 2011 18:42

Forget the bluster, the spin, the deflection of blame. Forget the bleat that "there is no money". Forget the "fake metrics". Forget "the plan to ensure we keep Britain safe from the sovereign debt crisis".

This Autumn Statement represents a welcome, if still inadequate, u-turn.

Underlying all the carrots and sticks is the Treasury's frank admission of error, the Bank of England's £75 billion (with a promise of more to come), and a frantic volte-face.

Of course, the Chancellor has had to disguise his about-turn by dressing it up as austerity, but he has dramatically relaxed fiscal consolidation -- even though public finances are, by his own admission, in far worse condition than they were just six months ago.

The Autumn Statement goes some way to acknowledging the cause of the rise in government debt and of turmoil in markets, noting that there was in the UK "the greatest expansion in debt of all the world's major economies over the last decade" and that "the full scale and persistence of that impact is slowly becoming clearer."

But while Treasury orthodoxy is finally "becoming clearer" about the scale of the crisis -- one deepened by synchronised austerity -- the Chancellor seems unable to learn the lessons and fully reverse course. While acknowledging that "the financial sector has acted as a drag on growth," the Chancellor today promised to ensure Britain "remains the home of global banks and that London is the world's pre-eminent financial centre".

In other words, the government is committed to subsidising, bailing out and rewarding the City of London -- at grave cost to public sector workers, pensioners and private firms. Their analysis, reactions and policies to this crisis remain profoundly inadequate.

For make no mistake, we stand at a pivotal moment in world history, and today our politicians and economic authorities are revealed to be disgracefully ill-prepared for it.

We remind them again: Britain is not facing a sovereign debt crisis. This is not a eurozone crisis. It is a private banking crisis: the catastrophic unravelling of the private, liberalised financial system. Governments, including our own, are not the cause of turmoil: they are victims of the turmoil in private financial markets -- in the City of London, "home to global banks".

The unregulated financial sector has lent recklessly and expensively for some thirty years to itself, to firms and to households. As a result, private indebtedness -- as both the Autumn Statement and the McKinsey Global Institute carefully document -- is at its highest as a share of income ever in history.

The unfolding and related crisis of sovereign debt is a consequence; the result of four years of futile attempts by western governments to maintain, compensate and support this bankrupt system. Osborne, in his statement today, persists in his backing of this failed order.

As rising unemployment, falling incomes and despair begins to crush western societies; as "indignants" in Britain, Europe and the US lead protests against more cuts in pay and pensions and are brutally assaulted by police for their pains, we are confronted by a frightening reality.

Our leaders and their advisers simply cannot absorb the lessons of the crisis. As a result they have abrogated any responsibility to lead. Instead, they struggle manfully to maintain and uphold the old, catastrophic financial system -- and are incapable of constructing a new, global order.

The resulting policy vacuum is frightening. No wonder the Polish foreign minister warns of "a crisis of apocalyptic proportions".

Ann Pettifor is executive director of Advocacy International and a fellow of the New Economics Foundation

Tags: Autumn Statement British economy George Osborne

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25 comments

Wed, 2011-11-30 15:49 — p j wall (not verified)

The LUDDITEometer is now reading at a level of 'Very Agitated', moving towards 'Temper Tantrum', be alert!!.

Wed, 2011-11-30 17:55 — matthew fox (not verified)

Stu, do you understand the concept of timelines?

I can't be held responsible for your ignorance on such a substantive issue as the eurozone.

I appreciate that Cameron is still behind the issue, and has left the eurozone develop into a crisis.

If only he had spent more time at his desk, then going on all these sun kissed holidays, we acutally might not be in trouble.

Tue, 2011-11-29 19:55 — Luddite (not verified)

Who transferred that private debt into the public domain the banks should never have been bailed-out.

Tue, 2011-11-29 20:50 — Livers (not verified)

Now is not the time for "its all Labour's fault", Luddite.

Its time to realise that the policies of this Govt. are making things worse, not better.

And we're gonna get new forecasts and actuals in another 6 months with worsening news. That's been the sad, pathetic trend ever since the amateur hour started in Parliament 18 months ago.

We need someone in charge that knows what they are going.

Sadly, this Chancellor is not the man. He's not even a gifted amateur.

Tue, 2011-11-29 21:02 — Tesco Shelf Stacker (not verified)

I agree with Luddite - the banks should never have been bailed out. They should have been broken up when they were obviously insolvent.

Tue, 2011-11-29 21:04 — REPAY

I wonder when the penny is going to drop round here that the entire western world has largely spent and borrowed itself into this crisis. Our governments and the politicians who bribe us with our won and borrowed money are as much if not more to blame than the bankers. It is time we woke up to the fact that the party is over. An that includes the unfunded pensioners who are striking so that the young will have to work even harder to support them. The constant calls for more borrowing is rubbish. Lets cut all public sector pay for anyone over 60k indefinitely and cap all public sector pensions at 60k...or tax at 50% all unfunded public sector pensions over 30k.

Tue, 2011-11-29 21:50 — crazyenglishmf (not verified)

I am so angry! As a life long labour supporter that they let the door open to these jackals. The banksters and the landownerists have stitched up the political system. All those years of Labour government and this is where we are. The Conservatives destroying what is left of the welfare state. Whatever Labour did do to get us here, they certainly didnt leave a country prepared to weather the storm. So much lives and money wasted in wars. Deregulated financial system, comfortable with the historic rich/poor divide. Rather than real wages and real jobs, tax credits and bloat. The Tory jackles are just being true to their nature, rolling back worker and environmental protection, cutting the welfare state.

Where is the labour thinking that will provide for the long term future of this country? It just feels like politics games point scoring.

How about a Land value tax that some have argued for here? How about expansion of upper council tax banding, tax of empty property and vacant plots with planning permission? How about Green new deal with investment in precision engineering.

Tue, 2011-11-29 21:59 — matthew fox (not verified)

Another bad day for Luddite, the working poor are going to be worse off due to the tax credits being frozen.

All the praise Luddite lavished on Osborne will haunt him.

Tue, 2011-11-29 22:09 — David (not verified)

Of course they aren't going to do anything to hurt the banks (the levy is going up by something like 0.008% according to Channel 4 News, which Danny Alexander had the barefaced cheek to say was fair), because that's who donates to the Tory party. The whole thing is one great big conflict of interest and they are fooling nobody but themselves.

Tue, 2011-11-29 22:15 — Benjamin Rae (not verified)

Repay,
the problem being that those who weren't invited to the party are the people who are taking the hit. Who isn't is those who caused the problem.

Tue, 2011-11-29 23:42 — John (not verified)

Why, in all the analysis and number-crunching, is no one talking about the financial cost of 10 years of war?

Wed, 2011-11-30 01:13 — Dickie1

What a total an utter loser. Even now he is quoted as saying 'the boom was bigger, the bust greater...yada yada'

Still blaming Labour, but they told him so. Now the world is to blame (when not Labour) Blame blame blame

To quote Oasis 'When you're on your own, who you gonna find to blame'

Again, what an abject failure of a man.

Loser

http://www.youtube.com/watch?v=a5J0mWoZn7g

Wed, 2011-11-30 02:53 — Sue Davies (not verified)

Great analysis ... this is the banking crisis all over again with the second credit crunch. We need to eliminate private debt from the system not give the banks still more to stash away in their tax havens.

It seems that George Osborne is intending to wreck the economy and finish the intention of turning the UK into a plutonomy/neo-feudal state. It also seems more likely that there will be a 'Coalition' party standing in 2015 ..

Wed, 2011-11-30 08:31 — Luddite (not verified)

"We need someone in charge that knows what they are going" So who's that miracle worker Livers? Judging by Ed Ball's sweaty performance in the commons Labour needs to keep looking..

Wed, 2011-11-30 09:33 — matthew fox (not verified)

Poor Luddite, he's frozen to the spot, Gideon raids the low paid, and all we see is lashings of codswallop.

I see the bank levy has been increased yet again, not bringing in the money it was suppose too.

Another dark day for Luddite and the conservative movement.

Wed, 2011-11-30 09:50 — Luddite (not verified)

Hello 1% how's the ducks... What are you so worried about you've got a 5% increase.. 1%. Your Labour party spent the whole of 3 parliaments screwing the working-poor. You are up early have you shit the bed, it's the meths, it just doesn't turn you blue.

Wed, 2011-11-30 09:59 — Stu (not verified)

Dare I put a conspiracy theory in and say that the people that are really pulling the strings are the banks? lol...

@Livers, who do you think should be in charge then? BALLS?! if so you must be having a laugh, we all know he put us in it...

@crazyenglishmf, yup... Labour started it and Tories are picking up the pieces, then Labour get it back and feck it up again and then... never ending.

@whatever, yeah we shouldn't forget Labours part in this at all, just because the Tories have been in power for 18months it was Labour who were in power for 13 years. Thats 10 years of boom and and still we find ourselves in a mess, not a brilliant record for Labour is it? You can also argue that although Labour 'tried' to resolve the recession (that Brown thought would last 6 months), the Tories are facing global meltdown, vastly different circumstances don't you think?

Yes we do have to acknowledge that paying for wars is a bad idea, as we see in the US. Yet again.... thankyou Labour!

Wed, 2011-11-30 10:55 — Luddite (not verified)

matthew fox: 'Stu' fully understands the truly potentially catastrophe economic situation we find ourselves, you do not!! you are stuck in a little Labour bubble of self-denial and pretence. Osborne is wrong on borrowing, but how much is that due to the Liberals.

Here's a few questions for you 1%. Will Labour reinstate retirment for all at 65.

Would Labour cancel the spending cuts

Would Labour reverse the public-sector reforms.

Would Labour end reforms to benefits system.

Wed, 2011-11-30 12:55 — p j wall (not verified)

Poor Luddite, confused and dissapointed?, your hero Gideon has let you, and all of your other Tory apoligist friends down again!!, Gideon is now totally discredited!, all of the usual Tory apoligist groupies on here Bloviating about Gideon the great one!, Ed Balls destroyed Gideon with Facts yesterday, the best Gideon can come up with is, It would be worse under Labour!, Yawn, Yawn, 18 months in power and Gideon has basically put the UK economy in the poo pot!!, even his predictions from a few months back have been way off the mark!!, but, It`s not my fault Gideon, doesn`t accept any responsibility whatsoever!!, his Hubris is is very touching!!, Gideon has failed COLOSSALY!!!.

Wed, 2011-11-30 13:12 — Stu (not verified)

@p j wall,
Aren't you missing a small detail? Ed balls was partly to blame for this over spending during the Labour govt and still he insist on borrowing more... those days are over i'm afraid and Labour can only scoff and criticise whilst they themselves have little to offer on the table. If Labour want to be in power (and not under red Ed) they need to think of some serious plans

Wed, 2011-11-30 13:44 — matthew fox (not verified)

@Stu, you seem to be missing a few details old chap.

David Cameron is on the same page as Ed Miliband, he wants the ECB to solve the eurozone crisis. A few weeks ago DC10 wanted the IMF to get sort out the eurozone, but that died a death at the G20 summit.

Luddite and Stu ignorance of these matters are of great concern.

Wed, 2011-11-30 13:34 — p j wall (not verified)

@ Stu
Has i said, Your hero Gideon has made all of you Tory apoligists groupies look a tad silly and betrayed, your sychophantic loyalty to Gideon along with his Excuse of it`s all Labours fault, won`t wash anymore?, just like your heroes statement of "You can`t borrow your way out of debt", Er, yep, sure.

Wed, 2011-11-30 13:45 — Stu (not verified)

@p J wall,
now now, I didn't say it was all Labour's fault but merely pointed out they they can't be vindicated and not accept some blame just because theres a global crisis and the Tories had 18 months to sort it out. Whereas Labour had 10 good years to sort it all out but never got round to it because of a stupid war.

Eddies make Labour unelectable so as soon as they get rid of them and then brainstorm proper policies the sooner they will look like a proper party in contention

Wed, 2011-11-30 13:48 — Stu (not verified)

@matty,
Great something that Ed agrees with the Tories and it's supposed to vindicate Labour of any blame... I think everyone wants the Eurozone crisis to be sorted out trouble is everyone hates us Brits and if Ed was at the helm I think they would start laughing even harder...

Wed, 2011-11-30 13:58 — Luddite (not verified)

Stu: matthew fox and p j wall are one and the same, not even in these educationally challenged times do you think there could possibly be two alike. I don't care which doppelganger answers the four questions, but please do.