George Osborne’s Loadsamoney Economics

by Charlie_East_West on June 20, 2013

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As the news broke this morning that bankers’ bonuses had soared to record levels in April as the government’s cut in the top rate of income tax from 50p to 45p came into effect, the image of Harry Enfield’s Loadsamoney character entered my head. That tasteless, braying, ostentatious charactature could easily morph from a late 80’s shell-suited braggart to a 2013 pin-stripe suited City poppenjay.

Good old Gideon Osborne. He is one of them. While the news that bankers are continuing to slosh around in a cesspit of money is about as surprising as a bear entering the woods with an urgent need to eliminate solid waste, it was still enough to make my own bowels groan.

We have a bunch of toadying idiots in government giving a gargantuan tax cut to millionaires in the City at a time when ordinary families are seeing their own limited budgets disappear. According to the Office for National Statistics, the average weekly bonus in the financial sector was £143 in April – a rise of 64.4 per cent compared with April 2012. The ONS said many businesses were deferring bonuses normally paid in March to April – to maximise the benefits of the implementation of the top rate of tax cut.

Let me spell this out to George Osborne and David Cameron. We are in a never ending recession, caused by the huckster antics of those in the City, and yet, they are still being rewarded while everyone else (who were not to blame for the recession) feels the pinch. This is totally unacceptable. It is bloody scandal. And yet, nothing changes. The pattern continues. Everyone just sits on their hands and lets these cowboys lasso themselves another bonus, Ferrari, house in Tuscany, speedboat, private jet or high class hooker.

George Osborne survives by false influence only. The greed of the City Loadsamoney’s within the top 1% of earners benefit from Osbornomics. The remaining 99% wonder what the hell is going on. While city bonuses rise, it is a very different story on the other side of the tracks. The UK is experiencing the deepest and most protracted economic downturn in a century. The decline in wages is even greater than that resulting from the Great Depression of the 1930s. A report by the Institute for Fiscal Studies highlighted that workers in Britain have suffered unprecedented pay cuts of 6 percent in real terms over the last five years. With inflation, the figures point to a more than 15 percent drop in wages since the global financial crash of 2008.

So, we have big business avoiding tax, the rich getting tax cuts, the City getting unprecedented bonuses, and yet, we have corporate mandated and politically motivated mass austerity for everyone else. Well played Gideon. Take a bow son. You are the worst chancellor in history.

In 2006, George Osborne stated the following:- “I believe, in a simpler, fairer and flatter tax system.” – I am not sure how things are looking simpler, fairer or flatter today. We have George Osborne practising Loadsamoney economics, as Loadsamoney continues to boastfully wave those notes in all of our faces. It is not a good look.

{ 12 comments… read them below or add one }

George_East June 20, 2013 at 9:53 am

‘Simpler, fairer, flatter’ – what he actually meant was just the last. The Tory aim is for a single rate of income tax. 30% has been spoken about – which would have the effect of substantially increasing tax for the vast majority of people, while slashing it for the wealthiest.

You may have also noted today that the two big nationalised banks have huge capital shortfalls (over £20Bn), so when Gideon announces the privatisation of Lloyds/HBOS tonight, you can absolutely guarantee that the taxpayer is going to be left holding the baby. As I predicted they are also talking about splitting RBS into a good bank (to be privatised down the line) and a bad bank (to be left on the public books).

The bankers gamble with other people’s money. Get huge bonuses whether those gambles are successful or fail and the taxpayer is left with the debt. Privatise the profits, nationalise the losses. You can’t fail. Genius.

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Charlie_East_West June 20, 2013 at 9:58 am

Recently, I have been banging on about the obvious stunt that the Tories will try and pull off – privatising RBS and LTSB/HBOS and get the accounts from these fire sales through before the next election – this will falsely cook the books towards bringing the deficit down. Osborne will then claim that austerity has worked, the deficit is down, and we march into the 2015 election.

Any fucker can sell banks at a bargain basement rate. Not any fucker can come up with the plan to save them in the first place. Osborne would have done nothing in 2008. Brown and Darling were the credible men in the arena on this one.

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George_East June 20, 2013 at 10:06 am

The thing is its worse than that. He can’t sell RBS as it is. RBS is bust. He can only sell RBS by splitting it, so that the public is left with the Bad Bank. Horrendous. The taxpayer will effectively be paying for it twice.
And I completely agree with you about 2008. Osborne was calling for more de-regulation in the financial sector as Northern Rock was going down. If he had been in charge in October 2008 when the whole system teetered on the edge of a precipice, we would surely have headed right over and be back to a barter economy by now.

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Charlie_East_West June 20, 2013 at 10:24 am

The taxpayer will not see any profit from the huge loan they gave the banks just to keep it afloat. The only people who will do well out of the deal are 1) top brass – currently enjoying a bonanza of bonuses along with the rest of the City. 2) the private equity firms who buy the banks and begin unregulated asset stripping and speculating. 3) the Tories – who will fiddle the deficit books to take these fire sales into account.

Use the public to prop up a bank. Ignore the public when selling the bank. Use the public to prop up the unsellable components of the bank – ecomomic skulduggery.

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Alex w June 20, 2013 at 5:29 pm

Surely if they want to privitise it they could do this by issuing shares equally between all taxpayers, most would probably sell them on, but as a result a big economic spending stimulus could occur, rather than just cooking the treasury.s books.

George_East June 20, 2013 at 10:49 am

And (4) the merchant banks who will generate enormous amounts in fees for dealing with the floatation, as well as, no doubt indulging in proprietary trading themselves – the kind of conflict of interest that would simply not be allowed in most other industries.

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Charlie_East_West June 20, 2013 at 11:21 am

And (5) the obvious target politicians who will end up as financial services board members, consultants and non executive directors – either now, or in the future, once their political careers run their natural course.

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Anonymous Banker June 20, 2013 at 4:43 pm

You say that “bankers’ bonuses had soared to record levels in April”, but it’s worth noting that bonuses for the people who do the socially useful bits of banking (i.e. clerical staff and those who work in branches) did not share in this record. As one of those clerical staff, my bonus over the last few years has been substantially lower than it had been before (and even then, it was what took me above the level of the living wage).

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Charlie_East_West June 20, 2013 at 4:46 pm

Fair comments – Anonymous Banker. I was however referring to the fat cats at the top – and the record levels of bonuses through executive pay in the City.

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George_East June 20, 2013 at 6:59 pm

Absolutely right Anonymous Banker – we need to distinguish between ordinary staff who work for banks, and the speculators of the investment bank arms and senior executives.

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Charlie_East_West June 20, 2013 at 5:41 pm

Alex – Osborne has a sinister choice – throw £500 worth of shares to each fickle taxpayer, or, cook the books – and wipe out the deficit. I suspect he will try to do a combination of both.

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George_East June 20, 2013 at 7:03 pm

The question in balance sheet terms is whether it is in fact possible to do it in respect of RBS. The Bad Bank assets will be added to public debt, but the Good Bank profits will not be on the other side of the accounts.

Lloyds/HBOS is a lot easier, but even there the substantial capital requirements of the Bank make it less than straightforward.
I very much doubt that Osborne will give the shares away – they will be commercially sold, mostly to institutional investors.

Giving £500 (cash not RBS shares) to every taxpayer, on the other hand (the so-called helicopter drop), is a perfectly respectable Keynesian way of getting demand back into the economy.

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