Thursday 4 February 2010

The Welfare State and the Debt Crisis

The aim of introducing the Welfare State was simply to ensure the bankers retain perpetual control over the British nation.

By ensuring that the masses are never again thrown into poverty and destitution such as during the Great Depression which led to the rise of Fascism and Communism, the Welfare State was created in order to tranquilise the masses.

By ensuring the masses are not plunged into poverty, and then become a seething revolutionary mass ready to vote for ideologies that remove the rule of the bankers ( and today the media ), the Welfare State and its alms were aimed at ensuring the masses did not take up arms and take down the Plutocracy and their parasitic oligarchy.

The credit crisis which has meant the bankers which caused the crisis have been rewarded with trillions of pounds from the taxpayer, has now become a debt crisis and the Tory government will have to cut public services to enable it to keep its international credit rating.

Therefore the Welfare State and public services will be cut creating a rise in support for the last remaining ideology to resist the power of the international bankers and the money markets - BRITISH NATIONALISM.

The only solution to the debt crisis when it comes is to use the BNP National Bank of Britain to establish a series of regional currencies that are used solely to develop local economies.

With the pound devastated then only a network of regional currencies can be used to stabilise the internal economic system of Britain and allow us to continue our Energy Infra-structure and industrial re-development projects to ensure our nations long term prosperity and independence.

Fascism and Communism are the ghosts of history, spectres used by idiots in the media to try and terrify people into being slaves for the media / corporate / banking system that controls politics in Britain.

But the more the Tories cut away the Welfare State - the more our power will rise.

We are in pre-revolutionary times.

All they can do is use their media attack dogs to bark 'racist / fascist' at us.

This has no effect on us anymore, as we do not care what the media dogs call us, and the public will sooner or later realise that the more they listen to the media / corporations / bankers and vote for their puppet parties of the Establishment - the more they merely perpetuate and prolong their own servitude and suffering.

The masses are about to awaken.

A new era is about to begin.

It was one of those moments that can only happen in a place like Davos. There I was last week, having a coffee and minding my own business, when from a nearby table I heard a desperate voice. I assumed it belonged to a beleaguered bank executive, or a stricken hedge fund manager. “We are doing everything we can,” he said, “but the markets don’t care.”

I looked up and realised the voice belonged to the Greek prime minister. His arms crossed defensively, George Papandreou was now listening as one of the world’s top economists told him he thought his best bet was to seek an emergency bail-out from the International Monetary Fund.

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Greece is indeed buried deep in the financial mire. At first gradually, and then with alarming speed, the country has lost credibility with investors to such a degree that it is now having to offer an interest rate of 7 per cent to persuade them to buy its debt, compared with 4.5 per cent a few months ago.

Some, including Papandreou, characterise this as a speculative move aimed at splitting up the euro; others see it as a statement of economic disgust at a country whose public finances, always bad, have now dipped into no-hope territory.

There is some truth to both theories, but, more important, at least for both Gordon Brown and David Cameron, there is a broader lesson: the only thing that matters more than knowing what to do about the deficit is persuading the markets that you know what you’re doing about the deficit. Because there but for the grace of God goes Britain. There is no knowing how and when investors will lose their faith in a government, but when it’s gone, there isn’t much you can do to get it back.

Greece, in other words, is the fiscal Petri dish that reveals in gory detail what could happen in the UK if this Government – or the next – fails to maintain the confidence of investors. It is not merely that those interest rates are already inflicting an awful toll on borrowers in Athens and beyond. It is that they are sending the national government towards a full-blown debt spiral, in which the cost of its annual interest bill becomes so unmanageable that it can hardly afford to supply its citizens with basic services.

I have pointed out before that countries, like individuals, occasionally reach the point where they have borrowed so much that their debt simply becomes impossible to whittle away. Greece, the markets seem to think, has now passed that point. And an IMF bail-out would only layer new debt on top of the old. In the end, the only solution is to find some way to slash spending and raise taxes without a) sparking riots or revolution and b) critically damaging the economy.

Should markets pass the same verdict on Britain as on Greece, the results would be almost identical. In its Green Budget yesterday, the Institute for Fiscal Studies, with the help of Barclays Bank, attempted to map out what would happen if the Government failed to achieve the necessary cuts in its budget in the coming years. The verdict: a “very large, and fast-acting” impact on interest rates, pushing them even higher than Greek rates today.

Still, we are not there yet. And there are four reasons to be cautiously optimistic about Britain’s chances. The first is that much of the population is already reconciled to some form of austerity. Both main parties want to cut the deficit sharply, and although the Tories talk a little tougher, in economic terms there is actually not that much clear water between their proposals and those already laid out by the Treasury.

Second, the UK started the crisis with national debt below 40 per cent of gross domestic product, compared with Greece, whose national debt was already close to the 100 per cent of GDP – near the tipping point for a debt spiral. Third, it is a little-appreciated quirk of the British market that, rather like a homeowner on a long fixed-rate mortgage, the Government has to roll over its debt far less regularly than other countries, so is significantly insulated from a Greek-style crisis.

And fourth, unlike Greece, Britain has its own currency, which affords it more leeway to adjust.

But as Greece has shown, a credibility collapse can take place even when you least expect it. Despite George Osborne’s pledge earlier this week to safeguard Britain’s credit rating, some still reckon there is an 80 per cent chance of the UK losing its coveted triple-A status – something that could trigger an investor panic.

So both main political parties should, as a matter of course, prepare detailed emergency plans saying what overnight cuts they would impose in the event of a similar crisis.

However, avoiding such a credibility collapse will not spare Britain from having to drag itself through an economic transformation with the same end: to reduce debt and to live within its means. For some countries, the financial crisis was painful because people suddenly started spending less. For Britain, it uncovered the fact that the nation had duped itself into believing it was more prosperous than it really was. We mistook a debt bubble and the proceeds of financial engineering for sustained and lasting growth. Time to get real.

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Anonymous said...

forget the issue eh? just harp on about a simple spelling mistake,of course thats all that matters!
Wonder what 'anonymous' thinks about the issue written about?

What a twat!

Andraste said...

Excellent article. Keep up the great work Lee.