Lewes Forum thread

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Lewes Forum New message

Bankers gain, we get the pain (again and again)

On 2 Mar 2011 at 5:36pm MC wrote:
Mervyn King, the Governor of the Bank of England thinks the cuts are mainlyy the fault of the banks, not the Labour party (unlike the Daily Mail and Newmania).


And he's surprised we are not rioting.

We should be. The banking system has screwed us right over and is still doing it and we have just rolled over and asked for more. The banks still get the gain while we get nothing but the pain (and to be sure, the pain has not even started yet)

Is there no anger about what has happened or, if there is, have the media just chosen not to reflect it... and if so, why would that be?

Sorry. Needed some relief from cat poo.

Check it out here »
On 2 Mar 2011 at 7:27pm Newmania wrote:
We are confronted with a situation where the scale of deficits is truly extraordinary. This reflects the scale of the global downturn, but it also reflects the fact that we came into this crisis with fiscal policy on a path that wasn't sustainable and a correction was needed,"
Mervyn King June 2009
Fancy that .
On 2 Mar 2011 at 9:42pm MC wrote:
He says "also reflects". We must interpret this differently as I feel that it does not detract from the fact the Merv thinks that the *single most important factor* in the creation of our current debt was the banking crisis.

Another link for you below NM.

Check it out here »
On 2 Mar 2011 at 10:26pm Newmania wrote:
Yes MC you have utterly misunderstood the position here on at least two levels. Mervyn King has been conspicuously and constantly critical of New Labour.The above mentioned remarks are far from the only ones. This was during the run up to the GE and a comment directed straight at Alistair Darling whose proposed fiscal strategy he rubbished. That quote was retrieved from many considered on Duncan Weldon`s New Labour loyalist Economic Blog and the normally mild mannered geek was duly outraged . With good reason .
King went far beyond his remit in attacking the fiscal strategy of the government , strikingly so.Think of the timing and his authority! Compare it to this vague weak hand wringing to no purpose .
He has remained strongly supportive of coalition Policy and provided low interest rates despite the incipient threat of inflation as they would have hoped
( Darling`s plan, you recall ,was far tighter than the objection to every cut New Labour currently indulge in would imply and opposed by the Brown cabal and most of all by the shadow Chancellor.)
Now it is of course true that the growth of the deficit was caused by the collapse of revenues in a down turn. It is, as a statement of maths true that excessive spending did not cause the Grecian deficits we experience.
Had we lived through a perpetually over heated boom, had there been no end to brisk growth , had benign conditions of low inflation , high employment and apparently victimless asset inflation persisted then all might have been well (personally I doubt it ... but still)
Its like saying if I went out on the open sea in a tiny canoe with no life belt and did not check the weather then I cannot be blamed if I drowned .Had the sea remained serene then all would have been well .It was the choppy conditions that were to blame 100%
In a sense that is true , but, as any fule do know it gets choppy only a complete ijjit sets sail equipped thusly .
King has ,on numerous occasions made it crystal clear he felt New Labour were like the canoeist.
That position is quite consistent with his remarks above which if you think carefully about them mean very little . It is a painless way of appearing not to be the friend of the City or the Conservative Party (by whose patronage he is accused of benefiting ). His interest rates are accused of risking calamitous inflation into the Economy which will hurt low income groups and it is in that context that this gesture should be made . he sees no choice clearly and what he does is how we know what he thinks .
Incidentally I do not agree that events are "Caused by the Banks" although they certainly made an ill earned killing during the bubble . It was caused by a speculative property bubble which governments on both sides of the Atlantic allowed to let rip. Leaving aside legitimate difference about the role of the players it is agreed by all that this is part of the same picture
Do you not then , find it rather disgusting that many of the dippy baby boomers sit on mountains of unearned property cash (which the young pay for ) and have pensions the young will not get are quick to deride the greed of everyone else.
The banks were not the only winners from the screw-tommrow decade.
On 2 Mar 2011 at 11:43pm sfb wrote:
Indeed, many of those radical Lewes Uncut baby-boomers will have done very from said property bubble, buying their Lewes townhouses in the seventies with change from a couple of grand and bag of Fairtrade lentils, then sitting back and watching their home turn into a cool £400 grand. Cashback!
I wonder if they felt obliged to pay Capital Gains Tax on their near half-million pound gains? No? Thought not.
On 3 Mar 2011 at 1:15am JS wrote:
Hi sfb. It's the old "hindsight is a wonderful thing" argument. The best "investments" I made were done with eyes wide shut. CGT on a property "home" made 30 yrs ago? Perhaps you should put yourself up for election next time round. Bonne Chance.
On 3 Mar 2011 at 4:31am Newmania wrote:
...yes JS but when those same people are demonstrating every Sunday in defence of their pensions ? A Teacher on £35,000 at retirement gets a pensions that would cost about £750,000 to buy and will be paid for by tomorrow `s tax payer.
This would be the same young man or woman taking on debt if they want a further education , unable to acquire property until their 30s if they are lucky and with no hope of any remotely comparable retirement .
It is an act of intergenerational theft and whilst I understand greed I am unimpressed by the apparent pride these people take in their own selfish attitudes .
On 3 Mar 2011 at 8:51am sfb wrote:
JS. Don't get me wrong, I'm no advocate of paying a penny more tax than is legally required. All I'm suggesting is a whiff of hypocrisy from those baby-boomer Lewes Uncut members who very vocally believe that individuals and corporations should pay more tax than is legally required. By that logic, I'd suggest there's a moral case to contribute a portion of their quarter/half million pound property gains, made by no more than speculating and sitting on their "investments"/arses.
On 3 Mar 2011 at 10:02am Home Owner wrote:
I don't quite understand your logic sfb. If I bought the house I live in in the seventies and, since that time its value has increased, you think I should pay tax on that?. So how would I pay that tax? I would have to sell my home in order to afford it, then pay the tax, then as a result have to buy a smaller home at todays inflated prices. What if I don't want to move home? and why should I have to move to a smaller house? I would hardly call buying a home and living in it "no more than speculating and sitting on my "investments"/arse."

My house might have increased in value by whatever factor you care to mention, but if I have got to buy into that same market when I move, it is not really any benefit to me is it? In fact I will already pay more tax if I should do this due to the increased stamp duty.

So, sorry if I am being thick, but please explain where the benefit to me is in all of this that you want me to pay tax on? and what happens if there is a property slump after paying this tax.., would the government start giving me money back?

On 3 Mar 2011 at 12:30pm JS wrote:
I was also trying to that across that perspective is often dependent on ones own position. Some people just appear to get "luckier" than others financially. It's called envy and it's not attractive. As tricky as it is to do and I am still practicing daily to get it right, it's how we react to others perceived "luck" or position that makes us stronger.
On 3 Mar 2011 at 4:29pm bastian wrote:
I'm angery,and I think alot of other people are to,but they also feel impotent to do anything about it.There's been a lot of coverage on the middle east recently and then all of a sudden the NHS is under serious threat and we barely heard a thing.too much bread and circuses,ie.apps and TV designed to numb the brain....some people don't care and are apathetic,some are well off enough that it won't affect them and others are just feeling thwarted.At least Merv had the guts to admit the root of the problem...it will take years to ammend and we won't get any regulation under the tories so pin your hopes on getting them out at the next election,don't vote tactically,vote with your heart and mind.
On 3 Mar 2011 at 8:58pm sfb wrote:
Er, nowhere did I suggest people paying extra tax. I'm just pointing out the hypocrisy of some of Lewes Uncut types, ie lefty asset-rich baby boomers who have done very well, thank you very much, out of Gordon Browns financial and property bubble, who are now whinging and protesting about the banks.
On 3 Mar 2011 at 9:15pm MC wrote:
JS. Its not entirely about getting lucky. Once you are out of the trap of long working hours, low wages, high mortgage (or outgoings) speculation becomes a possibility. Most people can speculate wisely. Unfortunately most people are trapped and are not able to.

Starting your own business is one way to leave the "poverty trap". Working your way up the greasy pole is another. The easiest way is to be born into it... public school and family networks are so important.... and entirely not fair. Success is so much about accident of birth. Doesn't matter if you are mediocre if you were born into the right circumstances.

jrs, you were unusual, in that you broke out of your huge family Irish Catholic family origins. You made it. Most don't. But many from similar backgrounds given the smallest chance would prove their mettle against the silver-spoon-in-mouth inherited inbreds that hold the power in our society.
On 3 Mar 2011 at 9:20pm not from around here wrote:
It can be damn hard breaking-out of a low-income cycle. But.. I'm a firm believer in "anything's possible" having done it myself.
On 3 Mar 2011 at 9:24pm MC wrote:
It'd be more possible if more were given a break and things were not so heavily weighted in favour of the already privileged.
On 4 Mar 2011 at 9:42am Puzzled wrote:
So MC, you think you should be entitled to free drinks in pubs, free food in Tescos, and now you want to be given heads start over others in the jobs market? How come such an advantage would be OK if you got it, but not when the 'already priviliged' do?
On 4 Mar 2011 at 10:22am Ed Can Do wrote:
Home Owner, in the current system you only pay capital gains tax when you sell your asset, i.e. when the gain actually materialises. All the time you live in a house, any proft you've made on it is only theoretical. You never actually make any money until you sell it (Which is why all the doom and gloom in the press about the property market is such nonsense, falling house prices are only a problem if you sell your house. If you're worried about it, don't move, simple as that. A poor property market is actually really good news for the people like me who can't afford to buy a house but for whatever reason, the press have decided that it must always mean the apocolypse is nigh when house prices shift a fraction downwards).

At present, you don't pay any tax when you sell your main residence, no matter how much gain you make on the sale. If you're fortunate enough to own more than one house then you will pay CGT when you sell the one you don't live in if you make a profit. Except you won't, because you can change which of your properties is your principal residence up to once a year so you just say that you're living in the spare house a week or so before you sell it and don't pay the tax, thereby joining Boots et al in the wonderful world of tax avoidance.

Now if your house is worth more than half a million, as so many round here are these days, you will pay tax on it when you die and leave it to someone. It's normally a massive inheritance tax bill that leads to country estates getting sold off when the older generation carp it. Luckily for the brown-rice munching activists of Lewes, you can get around that pretty easily too. If you give your house to your kids seven years before you die there's no tax to pay (Although they'd have to charge you rent while you still lived there), put the house in a trust then you can swerve it too and if you can somehow make a business out of the building then there's a lot less tax to pay for transferring a business than there is for gifting property.

Obviously all the people standing outside Boots of a Sunday would never dream of doing any of these things because they all think everyone should ignore legal means of paying less tax and pay the full whack as is their civic duty...
On 4 Mar 2011 at 12:01pm Home Owner wrote:
Thanks Ed Can Do, but I know all that (although perhaps wasn't savvy enough to avoid paying cgt on a flat that I used to rent out). I was actually responding to sfb's suggestion that anyone living (ie. not planning to move) in a house that they bought in the 70's should cough up something because it has appreciated in value. Just because the house is worth more now, it doesn't mean the occupant is any better off, unless as you say, it is a second property.
Quite agree with you on the subject of the Boots protesters by the way, I bet if you did some kind of audit on them you would probably find most, if not all, had benefitted from tax avoidance in one form or another.
On 4 Mar 2011 at 2:39pm Ed Can Do wrote:
Ah, sorry if I came across as patronising then. I suppose theoretically you could impose a levy on the current commercial value of your property but it'd be a nightmare to enforce and would result only in a lot of very rich surveyors.

And I suppose that technically you pay your rates based on the value of your house so there already is a scheme of sorts in place of that nature, although the rateable values of a lot of property in town are hilariously off the mark. Anyway, you're right, it would be a very silly idea. I'd personally be in favour of some kind of CGT on gains over a certain threshold on one's principal residence as that would help push house prices down much like having a cut-off point for stamp duty and I'm all in favour of falling house prices but I can't see the idea catching on while people are still thinking in terms of their house as an investment, rather than somewhere to live.

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