The Nasty Labour Party - what they really stand for.

Ha ha ha - yes a list of socialist desires and some I agree with, but - yet again, Labour were trying to pull the wool over the electorate's eyes with their dodgy maths for the 2017 manifesto. I am surprised no one has mentioned it.

Sums isn't Labour's strongest subject really, is it?

Corbyn's manifesto would cost £1 trillion over a decade to implement.

Forget the EUs £350 million a week which shocks us - Corbyn and Labour's plans would cost us £350 million every thirty hours.

When you see the noughts it is terrifying. One billion is 1,000,000,000,000 and one trillion is 1,000,000,000,000,000,000 so one trillion is one million times one billion.

Yes, lets have Labour bring the taxpayer and the country to it's knees with borrowing and higher taxes. Labour are looking after 'the many'? What a joke. They need 'the many' to pay for their policies.

From the Sun -

During Labour's party conference in Liverpool (in September)
Shadow Chancellor John McDonnell said he was embarrassed about how mediocre their manifesto had been in terms of spending pledges

And he hinted that the document was a mere "first step" toward promising to spend even more taxpayers' cash

Labour hid a trillion pounds of extra spending in their manifesto too! Ye Gods!

Well, no one can say we haven't been warned.

www.thesun.co.uk/news/7356686/labour-2017-manifesto-1trillion-hidden-spending/

Which ones do you like the look of?

Wouldn't it be nice to have £1 trillion sloshing around in the economy, though. People paid proper wages and no more food banks perhaps?

On the other hand, there is this:

People in the UK owed £1.529 TRILLION at the end of March 2017. This figure is up from £1.484 TRILLION at the end of March 2016 – an extra £886.84 per UK adult.

www.bankruptcyadvice-online.co.uk/debt-statistics.shtml

Something's got to give somewhere...

The myth about the well managed Tory money must surely be discredited soon

People in the UK owed £1.529 TRILLION at the end of March 2017. This figure is up from £1.484 TRILLION at the end of March 2016 – an extra £886.84 per UK adult.
Well, that looks like another credit crunch on its way

No more 'boom and bust'


It is cyclical

I think I heard Hammond say that borrowing had dropped this year.
But they say that our domestic economic systems are completely different from national financing/ economic systems. They don't worry about debt, because they can either print some more, or do some other fiddle.
All the other countries are doing the same.

The Sun! Really?!

When you see the noughts it is terrifying. One billion is 1,000,000,000,000 and one trillion is 1,000,000,000,000,000,000 so one trillion is one million times one billion.

You're running away with the noughts, Day6. One trillion is one thousand billion, not one million billion. I agree that we Brits have formerly designated one trillion as one million billion but the US calculation, one trillion = one thousand billion, is now the universal usage.

Full Fact have done an explainer on this story:

fullfact.org/economy/would-labour-borrow-trillion-pounds/

For those who don't like to follow links the salient points are these:

1) Labour said it would spend, not borrow.

2) Labour 'insiders' said that some spending commitments hadn't been fully costed

3) We don't know what time period the spending would have covered (vast difference between this mythical £1 trillion being spent in one year or over a number of years)

4) The book from which this story comes didn't actually analyse Labour's spending plans, just reported that an 'insider' said that the tories might have been able to claim Labour planned to spend £1 trillion ('if they'd been imaginative' adds the Professor who wrote the book)

5) There is no indication that £1 trillion would have been extra spending on top of the already costed elements.

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We already know that governments are able to create money as we have seen some £450 billion created by Quantitative Easing over the past decade.

I suspect that what the tories didn't like is the fact that, unlike in previous rounds of QE, Labour would probably work to ensure that the already wealthy wouldn't be able to get their grubby hands on the 'new' money and use it for speculation in the financial markets or squirrel it away in tax havens and thus divert it from the 'real' economy where it is desperately needed for investment in infrastructure and public services. Investment which leads to job creation, more business for the private companies which supply goods and services and better economic growth.

Maizie d

" Labour said it would spend, not borrow. "

" Labour 'insiders' said that some spending commitments hadn't been fully costed "
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I'm very confused by the contradiction there.

How can Labour say it ' will not borrow ' to spend but Labours spending costs are unknown? Will Labour only spend what it receives in taxes ?

I guess when McDonnell has said Labour will take private companies back into Nationalisation and not pay them the Market Value that will not cost the government as much as paying the full Market Value of a business but apart from the government saving money by doing that don't you think private companies will be running for the hills if Labour get back in?

Do you honestly believe Labour will not borrow money?

I assume you haven't been reading my passionate MMT posts, POGS. All governments 'borrow' money but in reality they aren't obliged to because they can create their own if they have a sovereign currency. They can run with a judicious mix of issuing bonds and pure 'creation'.

My confusing comment was meant to say that there is no evidence that the £1 trillion would be pure 'borrowing' because presumably there is income from the tax take to fund at least part of it. (I should have just said that, shouldn't I..?)

Though, as the £1 trillion appears to be fiction rather than fact it seems rather an academic point. We'd need to see a proper detailed analysis of the spending plans to establish the truth of it. I don't know if one actually exists.

Maizie d

" All governments 'borrow' money but in reality they aren't obliged to because they can create their own if they have a sovereign currency. They can run with a judicious mix of issuing bonds and pure 'creation'."
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So Labour are not going to borrow money because they will issue UK Bonds and creation.

Government Bonds are :-

' A government bond is a type of debt-based investment, where you loan money to a government in return for an agreed rate of interest. Governments use them to raise funds that can be spent on new projects or infrastructure, and investors can use them to get a set return paid at regular intervals.'

They are deemed as a low risk form of ' borrowing ' or am I mistaken?

As for ' creation ' if the markets do not believe in the policies or financial governance of any government they will not lend or invest in a country. Only time would tell if a Labour Government under Corbyn and McDonnells socialist policies would give ' the markets ' faith in UK PLC.

I agree with your last sentence albeit using it as a generalisation on my part.:-

" We'd need to see a proper detailed analysis of the spending plans to establish the truth of it. I don't know if one actually exists."

Goodness. You want it all spelled out in words of one syllable?

Yes, bonds are a form of borrowing. I thought you would already know that. I said 'a mix'. I thought that saying they don't have to borrow anything would frighten the horses too much. It's a difficult enough concept just getting across the idea that government spending doesn't have to be financed from tax receipts and borrowing.

People like bonds; they're safe; you will always get your money back at the end of the bond period because if the government doesn't have it in the coffers it will create it to repay the bondholders. If it didn't, nobody would buy them.

More about bonds here:

www.theguardian.com/world/2016/aug/13/what-are-government-bonds

And how bonds bought by the central bank aren't really a government debt any more:

www.theglobalist.com/qe-debt-cancellation-world-economy/

don't you think private companies will be running for the hills if Labour get back in?

I don't see that would be a useful thing to do.

If Labour intends to privatise the industry that they own they will get some money back. The big question, of course is 'how much money'? Will it be 'market value' based on the Stock Market valuation of their shares or will it be based on valuation of the company's assets? There is a very big gap between the two. I read something a while ago (but unfortunately didn't bookmark it as I should have done) that proposed that the value of company shares is often far in excess of the actual value of the company's assets. This is because shares, which were originally sold to capitalise a company,** have become a commodity in their own right and have no relevance to the company that issued them apart from its obligation to pay dividend to the shareholders. People don't invest in shares to provide capital for the enterprise, they buy and sell them in pursuit of profit on the deal and in the expectation of making unearned money from them in the form of dividend. The company gets nothing from the transaction. Companies can be sold for any price. Didn't Philip Green sell BHS for £1?

It seems to me that there are two 'economies' running all the time. One is the financial market economy which is mostly used by people using their money to make more money.

The other is the 'real' economy, which you and I inhabit, of the production of goods and services. We either run companies which sell into the 'real' economy or we work for them. Nationalised services are as much a driver of this economy as any other company; they employ people who spend their wages on goods and services provided by the private sector and they buy goods and services directly from the private sector.

It's a complex and fascinating topic, I think.

**Of course, shares are still sold for this purpose to finance new companies.