So, it’s finally time I talked about politics on here. Apologies to those who don’t think a blog is the place for politics, or those who I offend with my views. I will declare that I am LEFT of centre with SOCIALIST tendencies. There I said it. I wonder how many of you are now put off?
Two things have made me think about this. Firstly I discovered a blog where it revealed to me where Governments borrow their money from. There is a lot of talk about the national debt of several countries (including the UK) and all of the ‘austerity’ measures that are ‘necessary’ to pay back this debt. No one ever seems to mention who we owe it to?
This week it was announced that UK government debt reached a TRILLION pounds. That’s £16,000 for each person in the population. This is affecting me personally. As a public servant I am subject to a pay freeze. No pay rise for me for a while. And my pension will cost more while I have to work longer to get it. I should say that compared to most, I am still doing ok, at least I have a fairly secure job (for now).
There are cuts in public services everywhere, including caps coming in welfare. Unemployment is rising sharply, particularly for young people. In contrast in the private sector, top executive pay increased by 12% in 2011.
I don’t want to seem like I am just moaning, but everyday something in the news depresses me, actually makes me feel unhappy and even angry. All of this seems to be happening because of the ‘National Debt’. So who exactly do we owe all this money to?
Well the Government issues ‘bonds’, known as ‘gilts’, and anyone can buy them and cash them in at a later date. So who buys these? It seems that the biggest investors are banks, insurance companies and pension funds. In the UK this means that the Government borrowed money from these institutions. Now here’s the fun bit. Some banks were in trouble, so the Government bailed them out with money they borrowed from the banks. Yes you did read that right. For example, the Royal Bank of Scotland buys gilts from the Government, the Government paid millions into the RBS to stop it going bust.
Is it just me or does that sound bonkers? And who is paying for all that? Seems like we are, all us ordinary folks.
The other thing I thought about was the language that is used to describe all of that mess. Firstly ‘SOCIALISM’ has become a dirty word, especially in the USA, but increasingly here too. For example Republican candidates regularly accuse President Obama of being a ‘Socialist’. I would argue there isn’t really any Socialism to be seen in the USA.
Socialism has varying degrees to it, it is not simply some failed or flawed political system from a bygone age. For example, in the UK we have the National Health Service. We all pay for it via national insurance and we all benefit from its services. We all own it, it serves us all. That is socialism. The NHS is a Socialist institution. Socialism is where the state (the taxpayer) owns institutions that work and provide services for all the citizens. What’s so wrong with that?
If we were more ‘Socialist’ we could nationalise banks like the RBS and make them work for EVERYONE, not just the rich few. The cuts and ‘austerity’ are talked about as if they are ‘inevitable’, as if we have no choice. Anyone who objects or complains is described as extreme, like Micheal Gove (UK Education Secretary) calling teachers like myself ‘Trots’ (Trotsky), as if we are somehow ‘loony left’ revolutionaries.
To cap it all we now live in a world where ‘financial analysts’ from New York (Standard and Poors) decide the credit rating of whole countries (they recently downgraded the credit rating of France for example). This affects whether banks will lend to countries or not. Which in turn affects ordinary citizens jobs and lives. My question is this; who elected them? What happened to democracy? Unelected banks, big business and financial institutions are more powerful than the ballot box. Something is wrong.
So, enough ranting, guess I just had to share it. I will freely admit that I am no financial expert, and have no doubt that some will criticise me for my simplistic analysis. BUT if there is any truth to what I say here and if you believe that Governments are there to SERVE all that elect them then it seems hard not to agree something is wrong.
Whether you agree with what I say or not, please simply think about this – the language politicians and the media use to describe things define what those things are. And they define them according to to certain agenda. What they say may not be true. What they say will NOT give a full picture of what is happening. Dig deeper, read wider, make up your own mind. Please…
As ever your comments are welcome…
If you are interested in these issues please visit SturdyBlog written by @sturdyAlex he explains in a most eloquent and witty way and I thank him for the inspiration for my thoughts…
© 2011 Simon Poore
simon tall 
Hi Simon! Looks like you got my attention today 🙂
Hmm let’s see, where should I start. With our presidential elections coming up in Nov. I too wonder who elects these people and it is probably the biggest complaint I have. We are told, “GO vote” and yet if you think about it, our vote for president doesn’t count. I know people will argue with me on that, but our president is elected by the delegates, not the people. Bailing out the banks…The US did it too and yet people still lost their homes and got their cars repossessed. Maybe the government should have split up all that money between the people, then mortgages would have been paid, cars payments would have been paid , credit card payments would have been made , which in turn means, the banks would have gotten their money and people wouldn’t have lost their homes. Sorry from just another disgruntled person. Hang in there.
Economics is a really tricky subject, especially when it comes to why banks in trouble were able to buy those bonds that in turn bailed them out. But in a nutshell as I understand it, banks need to keep a certain percentage of their deposits in reserve. When that percentage falls, you can get a run on the bank which might collapse it. But when the govt gives the money to the banks in the form of a bailout, the banks can then buy those bonds because they are liquid enough to serve as a reserve.
So basically the UK govt created some money out of thin air to keep it afloat. At least that is how I understand it…
Simon, you have aired what many people just think. It saddens me that you worry people will stop reading what you write just because of your political views (I know your concerns are valid -I too try to avoid such writings on my blog); but still, it’s a sad thought.
The world of Politics and economy is complex and often has me asking why; but I always knew there’s ulterior motives hidden out of view. Some say I’m a cynic but as each day passes by we see what they have previously dismissed and laughed at. Things are changing; but I sense the worse is yet to come. Great post. I wouldn’t worry too much about putting your thoughts out there (I’ve recently written a rant -a guest post, on the NHS and how it makes money)
and it felt good. 🙂
Apologies -I’m commenting on my phone so I’m still pressing wrong buttons accidently!
Thanks for your comments lovely people.
So, today we find out:
1. Royal Bank of Scotland (mostly owned by UK taxpayers) used about $4 million to pay lobbyists to try and influence US government financial policy….hmmm
2. The chief execitive of RBS got a ‘bonus’ of nearly £1 million….hmmm
Just seems unbelievable to me…