Where is the money coming from?

Everyone who is asked "Where did the govt get £500bn" in interviews with journalists ducks the question. Yvette Cooper and Gordon have both ducked it directly. Why won't they say?



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Re: Where is the money coming from? (#1)

Deficit spending, classic keynesian economics; to be used when nations face a depression.

Buy now, pay later. 

Re: Where is the money coming from? (#3)

Except in this case we're all praying that the bill doesn't end up that big in the end. That's the difference between Gordon's plan and Bush's, we hope!

Re: Where is the money coming from? (#2)

£250 billion of this doesn't come from anywhere. The Government has simply decided that it is prepared to guarantee up to £250 billion's worth of new debt issued by the banks themselves. No Government money is actually involved, unless of course, the banks in question do go bust sometime.

£200 billion of it comprises the commitment to the Bank of England's Special Liquidity scheme. The problem is that the pension funds, corporate treasury departments etc etc who previously placed their money with the banks, are now scared of losing money and are taking their money out of the banks and buying 'risk free' Treasury bills instead. The Bank of England's scheme allows the banks to swap their "illiquid assets" for Treasury Bills, which they then sell in the market. So its the same money, only it has to travel through an extra roundabout.

£25 billion of it, with a possible another £25 billion, comprises the amounts the Government intends using to re-capitalise the banks. To fund this the Government presumably intends selling some more gilts, which will be bought by the people who actually have the money these days, like the Saudis or the Chinese.

And it has nothing to do with Keynesian economics whatosever.

Re: Where is the money coming from? (#6)

So, it is like fantasy football, but with money?

I notcied that the reporters have picked up on this and are using lines like "Gordon's never so happy as when he is spending billions" and then they promptly followed it up clips of a genuinely smiling Gordon spending billions here, billions there, cracking jokes about banks going bust, and I wonder how this is going to play out with the public.

Taxpayers have never responded well to politicians that enjoy handing out huge sums of largesse unless it is going into their taxpaying pockets.

I know Gordon feels comfortable in the finance zone and that he feels (rightly so) that he has the tories on the back foot, but the potential for negative publicity is massive, especially since so much is out of Gordon's hands and depends on overseas markets.

Re: Where is the money coming from? (#4)

Could somebody inform me where we took a wrong turn and went into the room marked 1978 instead of 2008?

-Britain is on the verge of bankruptcy as it's entire financial system shudders to a halt under poor regulation. [I will personally hunt down whoever spouts the 'Thatcher's fault' line when the last 10 years or prosperity were under a Labour Govt, the new regulator which failed miserably, the FSA is the brain child of The Right Honourable James Gordon Brown]

- Unions are getting lary as mega-unions shut down entire sections of the state-owned aparatus. [Only this time not led by that idiot Scargill *spits*]

- Britain is locked in a major tussle with Iceland [only over councils moneys instead of fish]

- Economic recession looms.

- Unelected PM still on the ropes. [but looks like he might recover, albeit briefly]

 

Seriously. I want my 21st Century back thanks!

Re: Where is the money coming from? (#5)

It's coming from exactly the same place as the money that's caused all the problems to start with - Fantasy Land.

It doesn't exist and it never will do.

What will hapen is the government will magic some IOUs known as gilts. They will swap these IOUs with the banks for dirty IOUs.  The banks will then use these gilt IOUs to lend mone to a thing known as the 'dickhead'.  This thing will then use it to support weird things known as HDTV,  twoweeksonthepissinalgarve and other bizarre things.  The tab for all of this will be picked up by a thing known as 'AAA' rated 'dickhead' (also known as the lesser-walleted taxpayer),  because they are good for a few bob till pay day.  Then when it all goes wrong AGAIN, it will suddenly transpire that 'dickhead' is in fact the same thing as AAA dickhead and there is none of a scarce substance known as 'real money' (not to be confused with money) to actually cover it all.

In the middle are two completely self-sustaining species - wanker-banker & con-merchant-politician.  These co-exist by feeding on each others excreta in a mutually destructive relationship and because they go round in cirles, everything else is committed to go round in circles around them.

Occasionally there is fragmentation known as derivatives. These derivatives are preyed on by a disgusting creature known as trader.  Trader is a bit of a chameleon and while the sun is shining  both wankerbanker and con-merchant-politician submit to him and coo, apparently spell bound by his charming song.  However as soon as the clouds appear on the horizon they both become sullen and become aggressive/defensive with each other whilst trader disappears to the pub prior to downing 50 paracetomol and slashing it's wrists.

During the autumn they migrate to Iceland. 

Re: Where is the money coming from? (#7)

Frankly this is the usual anti-Labour right wing stuff we'd expect of you, Angry Voter. Why anyone thinks allowing you to spout this rubbish on here adds to debate still baffles me.



Re: Where is the money coming from? (#8)

Alternatively I'm making slight light of a dire situation...

Seriously, the similarities between 1978 and this present crisis is striking.

I know there's been a couple of other commentators on this website who are Labour-Loyal who agree with me on the bizarre "Back to the Future" we've taken in the last year or so.

To be honest it's mildly amusing and not understanding the mild bit of humour [added with the "I Want my 21st Century back!" line] just shows what a bore and killjoy you can be at times LabourStill.

Re: Where is the money coming from? (#9)

Put bluntly - and without exaggeration.. it will get worse..

And the money will come from reduced Government spending. Either voluntary  or - if screwed up - by IMF dictat.



Re: Where is the money coming from? (#10)

that's about the top and bottom of it.  you just need to add deliberae infkation and lower interest rates so that the bank's debts get smaller in real terms as do their payments.

Re: Where is the money coming from? (#11)

The idea that setting up the FSA is responsible for this crisis is desperate stuff from the Tories.  Did you happen to notice that the USA has an even bigger crisis on its hands.  The deregulation ball that was set rolling under Thatcher and Reagan certainly is the main reason how we ended up in this mess.

Re: Where is the money coming from? (#12)

" The idea that setting up the FSA is responsible for this crisis is desperate stuff from the Tories"

I think it is a fair point that the FSA is at least partly to blame. Surely they are supposed to monitor the sorts of financial products being traded, else what are they for? If you've done any bank related activity in recent years you know that there is no shortage of regulation, but it obviously is not in the right place...

Re: Where is the money coming from? (#13)

It's different. Notice how the demutualised banks which offered sub-prime mortgages, and believed you didn't need to finance saving deposits through lending have failed. Similarly, the mutual building societies are stable, and more and more people are joining credit unions. And as as big a supporter of the Co-op party as Labour, I think the shift to credit unions is a good thing.

Re: Where is the money coming from? (#14)

Some of the mutual building societies seem to have taken on quite a lot of wholesale funding - been sucked in by their dark sides. Guardian did a by society analysis on Saturday which is very interesting.  A few lowlights on wholesale funding are:

  • Britannia      34%
  • Chelsea      31%
  • Nationwide      31%
  • National Counties      31%
  • Skipton      32.8%