I see three main things Labour got very wrong before and during the financial crisis:
Reckless expansion of the use of public-private partnerships, which in effect create a disguised debt which doesn't show up on the balance sheet (instead of borrowing the money to build a hospital, have a private company build it and lease it to the taxpayer, who gets to keep it at the end of the lease term — looks like a debt, smells like a debt, isn't officially a debt).
Carping on about how "prudent" they were being, while being spendthrift.
Overspending dramatically when the crisis hit
It's instructive to look at Greece to see how badly things can go wrong if a government tries to borrow and spend its way out of a crisis. Greece has the impediment that it's in the Eurozone; we don't have that problem, but we have the rather bigger problem that international finance is a major component of our economy.
If you look at this graph, there's a major step in our net debt. OK, it's not as ruinously vast as that caused by two world wars, but the current blip looks a lot more like an unforced error to the financial markets. And, of course, the current government now has to service that debt as well as keep the lights on in various government departments.
It feels to me as though the present Chancellor has done a pretty good job of juggling several very angry weasels. The cuts may be very high profile, but they're actually a lot shallower than by rights they should be. Our creditors haven't quite come banging on the door.
We're treading water and gambling that we can fix things properly when the recession is over and the next boom comes. It's been a long, long wait.
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timeasmymeasure
Re: Unappealing medicine
Date: 2016-02-07 01:15 am (UTC)It's instructive to look at Greece to see how badly things can go wrong if a government tries to borrow and spend its way out of a crisis. Greece has the impediment that it's in the Eurozone; we don't have that problem, but we have the rather bigger problem that international finance is a major component of our economy.
If you look at this graph, there's a major step in our net debt. OK, it's not as ruinously vast as that caused by two world wars, but the current blip looks a lot more like an unforced error to the financial markets. And, of course, the current government now has to service that debt as well as keep the lights on in various government departments.
It feels to me as though the present Chancellor has done a pretty good job of juggling several very angry weasels. The cuts may be very high profile, but they're actually a lot shallower than by rights they should be. Our creditors haven't quite come banging on the door.
We're treading water and gambling that we can fix things properly when the recession is over and the next boom comes. It's been a long, long wait.
That doesn't feel like ignorant idiocy to me…