Cameron’s global crash warning: He’ll do nothing about it

"Our long-term economic plan is working!" says Cameron - and the debt keeps rising.

“Our long-term economic plan is working!” says Cameron – and the debt keeps rising.

It’s more accurate to say he’ll do nothing right.

David Cameron is warning that another global financial crash is on the way. It’s an accurate warning – others have been forecasting it for a while but, seeing him saying it, didn’t you ask yourself who he’ll be blaming this time?

It can’t be Labour’s fault – Labour has been out of office for a few years and besides, Labour policies were sorting out the fallout left by the last right-wing-precipitated global financial catastrophe until the Tories lied their way into office and then twiddled their thumbs for four long years.

He reckons emerging markets that sustained the recovery (what recovery?) are slowing down but the British economy is growing and needs to be insulated from any crash. He says employment is up massively and new businesses are proliferating – but if you scratch the surface of that claim you’ll see that the number of hours worked is no higher than in 2010 and new businesses are being ‘run’ by people who are claiming tax credits as self-employed because then they won’t be hassled by the DWP while claiming JSA. There are new businesses, of course, but not nearly as many as Cameron wants you to believe.

Cameron’s article in The Guardian, if read properly, is comedy. It certainly isn’t to be taken seriously.

“When we faced similar problems in recent years, too many politicians offered easy answers, thinking we could spend, borrow and tax our way to prosperity,” he writes. Which politicians? Gordon Brown is the only Chancellor in recent history to manage a surplus, rather than a deficit; his policies brought the UK unexpected prosperity (which, unfortunately, led to the EU surcharge that has so badly embarrassed George Osborne); and his successor Alistair Darling introduced policies that knocked £38 billion off the deficit created by the right-wing bankers’ gambling binge.

Cameron must be referring to Conservative politicians in his own government.

Yes, look, here’s a bit where he writes: “It is more important than ever that we send a clear message to the world that Britain is not going to waver on dealing with its debts.” He could have cut that sentence down to read: “Britain is not dealing with its debts.” The national debt has more than doubled since the Conservatives started running the economy – from around £800 billion to £1.8 trillion by 2015, meaning George Osborne’s pitiful attempts to tackle the national deficit by cutting public services and selling off the country’s assets have achieved less than nothing.

“This stability is vital in attracting the business and international investment that delivers growth and jobs, and which keeps long-term interest rates low.” You couldn’t make this up. Interest rates are low because lenders know the UK has its own sovereign currency and will always be able to pay its debts, one way or another, even if it means printing more money (quantitative easing, anyone?) – remember when the UK’s triple-A credit rating went downriver despite all Osborne’s efforts to keep it? He claimed this meant the cost of borrowing would leap, but the effect has gone unnoticed.

There’s a lot more waffle and you can read it on The Guardian‘s site. It’s amazing a paper of its standing bothered to publish it.

For a more informed opinion, let’s go to Richard Murphy of Tax Research UK, pausing for a moment to wish him well in his recovery from recent surgery.

“His focus is instead on highlighting problems in Europe and on signing TTIP – the trade treaty that will require the privatisation of the NHS whatever he says now,” writes Mr Murphy – possibly from the recovery ward.

“This is a man who can see a crisis coming and who must know that his austerity programme can only make it worse (anyone but a fool can see taking money out of a failing economy, as he plans to do,  is bound to make it worse) but who is resolutely refusing to recognise the issues that will cause this next wave of economic collapse.

The wrong people have the money… The people who spend least of their incomes have had the biggest pay rises and are the only ones to enjoy effective tax decreases over the last few years. These people are the highest income earners in the UK.

“At the same time, cutting benefits for the poorest and increasing VAT (which together with deliberately enforced wage cuts have reduced the net disposable income of most people) and cutting taxes for the wealthiest, this has been the inevitable outcome. And we know this outcome has not happened by chance: this is deliberate.

“When there’s a shortage of spending in the economy to let the wealthiest get wealthier, [it] simply means that the imbalances within it get worse. And it’s imbalances that cause crises.

“Corporation tax cuts and reforms to our corporation tax system that means that multinational corporations based in the UK can, since 2010, find it much easier to make effective use of tax havens to cut their UK tax bills have also made the problem worse. I reckon these cuts are costing at least £10 billion a year. What these cuts do is transfer money that would have belonged to the state to companies in the hope that they will be encouraged to invest it as a result. But they aren’t doing any such thing.

“Companies are taking the tax cuts and banking them. They aren’t even giving them back to their owners. They’re just hoarding it. Like the wealthy (perhaps, unsurprisingly) large companies are simply sitting on their cash.

The tax gap is another indication of this. What really belongs to the government is in the hands of crooks and cheats, with massive economic consequences.

“What can be done? I’ve always pointed out that there are only four drivers of the economy: consumer spending, investment, net foreign flows and government spending.

  • “Investment is not happening; business will not do it: that’s why they havecash.
  • “Net foreign flows are broadly neutral: the trade deficit is dire but hot money still comes to the UK, although we cannot rely on that.
  • “Consumer spending is poor and may get worse: most people do not have the money.
  • “And that leaves the government to put matters right. It has to generate new economic activity.”

Mr Murphy proposes more quantitative easing – printing money and then investing it in a new, sustainable infrastructive (not the kind that Cameron is pushing); rebalancing tax by increasing taxes for those who can pay; and closing the tax gap.

You won’t see any of those under a Conservative government!

Get ready to batten down the hatches for another round of financial catastrophe, and this time, be prepared to put the blame where it really belongs – on Conservative politicians whose supposed reputation for financial competence is a myth and who should never have been allowed near the national economy.

And remember where the blame lies when you vote next May.

Follow me on Twitter: @MidWalesMike

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  1. itsalllies994 November 17, 2014 at 3:45 pm - Reply

    The private debt is the elephant in the room. As banks control 97% of money in the economy, if it either defaults or is paid back, the money disappears. We are heading for a big correction and it will probably be blamed on public borrowing (again).
    Listen to economist Steve Keen says about it:

  2. chopale November 17, 2014 at 3:56 pm - Reply

    You can only blame the chicken for a spoiled egg! But you can’t keep blaming the same old story; on lies!

  3. jaynel62 November 17, 2014 at 4:13 pm - Reply

    He will Mike – He continue to push his Cabinet to LIES :-( x

  4. jaypot2012 November 17, 2014 at 5:11 pm - Reply

    We have never come out of the recession in the first place! The only people who can afford to live a life of luxury are the billionaires and millionaires – they can spend whatever they want but they get it all back via tax evasion and by the public paying the bill.
    We need the economy to rise, we need to build homes for housing associations with low rents. The building trade would kick start, as would the furniture and everything else that is needed for a home.
    People need to have decent wages that they can spend therefore putting more in the public purse.
    Anyone with an ounce of sense saw that was needed when the coalition decided to run this country (into the ground).
    The rich are the ones that have benefited all along, it’s time they paid their fair share back now.

  5. hstorm November 17, 2014 at 6:22 pm - Reply

    If Labour get in at the next election, the crash will happen on their watch and the Tories can blame them for it. And if the Tories stay in power, they’ll use a second crash as an excuse for more reckless spending cuts.

  6. Gordon Powrie November 17, 2014 at 7:25 pm - Reply

    I thought that said ‘ruining the economy’ for a moment!

    • Mike Sivier November 17, 2014 at 11:20 pm - Reply

      Either version would be accurate.

      • hstorm November 18, 2014 at 12:36 pm - Reply

        No, Mr Powrie’s version would be accurate. ;-)

        • Mike Sivier November 18, 2014 at 1:11 pm - Reply

          Then I bow to the weight of public opinion!

  7. jray November 17, 2014 at 7:34 pm - Reply

    Mike,I think that Cameron/IDS/Osborne and Co have been spinning statistics for so long that it is about to unravel. You can only cook the books for so long before the s**t hits the fan. Carney never raised interest rates after the supposed fall in unemployment and the so-called recovery. I am not a fan of Carney, but he was not willing to throw himself under the bus.

  8. Michele Witchy Eve November 19, 2014 at 4:13 pm - Reply

    Asset-stripping the country for the last four years can hardly be called ‘twiddling their thumbs’.

    You have to ask, also, why choose the Guardian? What’s that about?

    As for the next crash, we’re probably being softened up for a bail-in this time. Didn’t the govt. set up a mechanism for a bail-in after what happened in Cyprus? Whether that will run concurrent to QA is anyone’s guess.

    Finally, a question: those who are self-employed but claiming tax credits – there’s a persistent assertion that those claiming tax credits while self-employed will have some kind of audit/assessment at the end of the year. If they haven’t earned as much as was expected they will find they have been ‘over-paid’ and will have to repay the DWP that difference, much as happens now with tax credit over-payments generally. Is this true?

    • Michele Witchy Eve November 19, 2014 at 4:16 pm - Reply

      Amendment: I think I mean if you haven’t worked as many hours as expected rather than earned as much as expected. Anyone clarify either way?

    • Jeffrey Davies November 19, 2014 at 5:33 pm - Reply

      its a universal credit the dwp minister has set up if one claiming any benefit then you can be called in to the jcp to be asked whot are you doing to get off benefits then has you say if ones claiming a benefit whilst being self employed then if your money isnt up to whot they state then they can ask for you to pay it all back once dwp hadnt with jcp telling people to self employed they can get all those benefits ontop well they didnt tell the whole truth jeff3

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