The Osborne Delusion


I am not going to comment on the Clive Goodman letter, needless to say, Cameron’s decision to bring Coulson into the heart of government, is just another example of the blatant hypocrisy the Prime Minister is exhibiting recently, in his new self appointed role as guardian of all morality.

So I will focus my attention on the Chancellor instead.

Every couple of years a mad American Christian will insist that the end of the World is fast approaching. They will it, because their religious delusions, they believe, could not possibly fail them. Logic and evidence are shunned for dogmatic religious doctrine that they refuse to give up on, despite the failure time and again of their religion to provide any substantial justification for its existence and its claims. George Osborne is a Tory whose doctrine is about as far right economically as one could possibly get. He will insist his doctrine is the only one that works, despite its massive failures time and time again. Neoliberalism is a religion, George Osborne is a manic preacher who cannot let go.

It was more than obvious before the general election, to most free thinking Englanders, that George Osborne’s assessment that the UK was on the brink of bankruptcy was entirely false. The 6th largest economy in the World, with a triple A credit rating coupled with low inflation and falling unemployment, after the deepest recession in living memory, is not on the brink of bankruptcy. It was a nice little phrase to use in order to attempt to win an election….. which they didn’t.

We knew that England wasn’t Greece. We knew that 80% of our debts matured in 14 years as opposed to Greece’s 3 years. We knew that Greece is in the Euro zone and so has no exchange rate flexibility. We knew Greece is ranked 109th in the World for ease of doing business, with the UK ranked 4th. We knew that Greek public debt is 142% of GDP whilst the UKs was 76%. We knew that Greece was a CCC rated country according to credit rating agency Fitch, whilst the UK was AAA rated. We knew that what George Osborne was saying, his comparison of the UK to Greece, was simply the case of the Tory machine trying to win an election.

But it didn’t stop there. He’s still at it. Either he knows he’s very very misleading, or he’s genuinely insane. Osborne has been insisting recently that he has apparently saved the economy from total collapse. He claimed recently, in an article in the Telegraph, that:

In retrospect, the use of political capital to implement immediate efficiency savings, pass the emergency Budget, agree the most difficult Spending Review for generations and put in place long-term fiscal reforms to pensions was an excellent investment in our country’s economic stability. Thanks to these decisions, the credit rating agency Standard & Poors took the UK off negative outlook and reaffirmed our AAA rating.

– The problem with that statement is, Standard and Poors reputation as a credible source for credit ratings, is rather inadequate. Ezra Klein writing in the Washington Post, said of Standard and Poors and the bursting of the credit bubble:

Standard Poor’s didn’t just miss the bubble. They helped cause it

– They did this, by assigning Triple A credit ratings, to collaterised Debt Obligations, that were risky enough to cause the entire system to crash. Investors bought up the CDOs thinking they were safe, when in fact they were standing on the edge of a cliff, with a hurricane behind them.
Just this month, the US Treasury found that the downgrading of the USA’s Triple A credit rating by Standard & Poors was based on a $2tn mistake in their calculations. The US Treasury said:

The magnitude of this mistake – and the haste with which S&P changed its principal rationale for action when presented with this error – raise fundamental questions about the credibility and integrity of S&P’s ratings action.

– To use Standard and Poors as a sign that our credit rating was saved by the Tories, Osborne is quoting a woefully incompetent source.

So how well is “Plan A” working?
Osborne claimed that Britain was leading the way in growth. He also claimed the latest 0.2% growth figures for the second quarter were a good sign. Here is how that “good sign” looks on a graph:

– Do you see the blue line edging ever so slightly downward? How in the first quarter of 2011, growth was at 0.5%? How it fell 0.3% and how Osborne thinks that’s a “good sign”?
0.2% is apparently great news, for Osborne, yet when growth in January 2010, under Labour, was 0.1% following the recession, Osborne said this:

If you’re looking for the reason why the British economy couldn’t have weaker growth at the moment, literally statistically, it’s only 0.1%, the reasons for that is that businesses are uncertain about the future, there’s no government plan for the recovery, there’s no government plan that is credible when it comes to dealing with the deficit and answering those things would help job creation.

– So the difference between terrible economic growth, and fantastic news, is +0.1%? Fickle Osborne. What about his insistence that the UK is leading the way out of the mess in Europe? Well, whilst the UKs second quarter growth figures were 0.2%, the second quarter growth figures for Italy were 0.3%. Spain was 0.2%. Poland was 1%. Ireland was 1.3%. Finland was 0.8%. Estonia was 2.4%. Sweden (with its large tax rates and well funded public sector) was 1%. In fact, the entire Euro zone growth was 0.2%. Suddenly, Osborne acting as if he is Superman is a little bit more comical than when he blamed the snow.

The inflation rate – the Consumer Prices Index – rose by 0.2% in July from June. It is now at 4.4%. Clothing and footwear measured for CPI saw the biggest rise on record.

The BBC reported today that rail users will see prices increase by 8% next year due to the inflation statistics. A great example of the “efficiency” of the privatisation project over the railways.

The Office For National Statistics revealed that manufacturing in the UK fell by 0.4% in June, and the trade deficit in goods and services grew from £4bn in May to £4.4bn in June. The ONS also point out that overall production output in June 2011 was 0.3 per cent lower than in June 2010. Mining took a hit, at 13% lower production levels than June 2010.

Imports are down. Exports, due to austerity across the World, is down. So to base a Nation’s recovery on manufacturing (Osborne insisted on an export led recovery), whilst exports are down – leading to the fall in production, is walking a very very thin tight rope. We will be relying on the service sector, because the manufacturing base of the UK was absolutely destroyed under the previous Tory administration.

According to today’s figures, unemployment rose to 2.49 million, a rise of 38,000 in the three months to June. Soon to hit the 3 million mark? Unemployment among 16-24 year olds rose to 949,000, up 15,000. Welcome to the 1980s.

The Council of Mortgage lenders said that repossessions had dropped by 24% to 36,300 in 2010. That figure is now rising, and is expected to reach 40,000 by the end of 2010.

Doingbusiness.org ranks countries by their ease of doing business. In 2010, under Labour we were ranked 4th in the World. In 2011, we are ranked 4th in the World. Absolutely no change. Despite drastic cuts, tax breaks, the desirability to do business in the UK has stayed the same. Yet, ease of starting up a business in 2010, we were ranked 16th. Now, in 2011, after the Chancellor saved us…. we are ranked 17th. Brilliant. We dropped a place.

The big six energy companies have announced plans to increase prices. Npower stated it would increase electricity prices by 7.2% and gas by 15.7% by October. This increase comes after they announced first quarter profits, up by 130%. The rise will add an average £140 onto bills. And Npower’s hike, is the lowest of the big six (other than EDF, who haven’t announced yet).

The Office of Budget Responsibility, created by Osborne in May 2010, said that the target of 1.7% growth this year, was highly unlikely, and that growth would be relatively weak. The Chancellor announced a target of 1.7%…. the Chief of the OBR said there there “aren’t many people” expecting that to happen. To hit 1.7% growth rates, the UK needs 1% growth rates over the third and fourth quarter. Given that it was 0.2% in the second quarter, it would appear that the Chancellor was so miserably wrong, it actually hurts to think of how we managed to be stuck with such a person in charge of the Nations finances.

According to BBC Panorama, when adjusted for inflation, the average UK employee takes home £1,088 a year less than two years ago.

So, to sum up, inflation is rising; if it hits 5% the increase in earnings compared to the increasing in prices will reach 3%, exports are down, unemployment is getting worse, manufacturing is falling, train prices are beyond ridiculous, wages are stagnant, disabled children in poor areas are suffering more, people ARE losing their homes, growth is all but flat lining, and energy and gas prices are going to bankrupt most of us. Is this what leading the way to recovery is like? Can we swap it please?

With stagnating wages, rising inflation, rising unemployment and harsh austerity, is it any wonder that growth figures are so low? Where does the demand come from, when people have no money, no help, and are constantly afraid of losing their jobs and their homes? Is it any wonder that imports are down? There is no demand. When the Government “saves” money, so does the public. Under the atmosphere of stagnating wages, rising energy and gas prices, high inflation and harsh austerity, it is indescribably insane of the Chancellor to have expected growth of 1.7%.

Phrases like “difficult decisions” for millionaires like Osborne, who watch the poorest, riot in London from his holiday home in California, are beginning to sound very tiresome. It is impossible to justify taking vast amounts of money from disabled children, from EMA, and at the same time back the bail out of Portugal and invest in a war in Libya that has achieved absolutely nothing. To continue to allow the very wealthiest to get away with tax avoidance, by changing the rules on profit brought back to the UK so those profits are now not taxed at all, whilst keeping VAT high, is not a plan to deal with the economic woes of the Country, it is simply Tories being Tories. We’re in safe hands, as long as George “I avoid paying £1.6m tax on my trust fund…we’re all in this together” Osborne is in control.

Is there any good news? YES!!!…….. oh wait, no, no there isn’t.

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