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By John Jappy

When Mrs. Thatcher became Conservative Prime Minister in 1979, one of her first acts was to abolish exchange controls.  Using government figures, which were readily available, I found it simple to calculate that £60 billion had left our shores within 6 months, monies which would otherwise have been invested in British industries.  Thatcher went on to start the deregulation of the banks.  With these two acts the seeds of financial ruin were sown.

Sadly when Labour eventually took over, Chancellor of the Exchequer, Gordon Brown, who later  became Prime Minister, had no real conception of financial matters.   Politics got him to his position, not economic or financial ability.  Brown was known to ignore sound advice given him, and lived in awe of the City of London.  

A typical example of this occurred just months before the credit crunch broke.  Prime Minister Brown held a lavish party at 10 Downing Street.  Invited were all the top bankers and financiers in the City.  By Brown's side was his trusty advisor Sir Fred Goodwin, whom Brown had earlier recommended for a peerage.  As Hansard shows, Brown lost no opportunity to heap praises on his friend, who with his unbridled capitalism led the Royal Bank of Scotland into bankruptcy.   

It was Brown of course who had supervised the final deregulation of the banks, which even the High Priestess of Capitalism herself, Lady Margaret Thatcher, dared not do.  It did not take a lot of vision to see what was going to happen.   

The year before the credit crunch broke, I spent two days working out the amount of debt in the country covering every aspect of borrowing.  I estimated this to have reached £1 trillion, which I described in an article as a "giant financial bubble, ready to burst".  

When the credit crunch broke, the Treasury estimated the national debt at £1.4 trillion, but then very recently we were told it had just reached £1 trillion, so what are we to believe?  One thing that is certain is that on current borrowing the national debt continues to rise month by month, year by year, a position which is unsustainable.  The extent of Britain's debt was revealed by the disclosure that out of all the G20 countries, this country's debt was the largest per capita.  Why have we not by now been plunged into total chaos?  

The answer is that were it not for the Scottish oil revenues currently pouring into the London Treasury, we could now be in a similar position to Greece.  

Perhaps you now understand why David Cameron has said: "I will strain every sinew of my body to keep Scotland within the UK."

 

Comments  

 
# Ben Power 2012-03-04 07:16
There must be some poetry of justice to be judged so negatively within ones lifetime, but not enough to warn off similar behaviour in the future.
Leaders of similar ilk will probably follow, now if we could just get our legal justice system to prosecute for the blatant excesses in the use of power heaven knows an example might get set and we might get an even better future.
 
 
# clootie 2012-03-04 07:29
If you do not learn from the mistakes of the past then your destiny is to repeat the same mistakes.

We have fallen for the "Jam tomorrow"
We believed the re-distribution myth.
We accepted the subsidy story.

If we buy the current tactics then we have learnt nothing and are doomed to repeat the cycle.

The wealth of Scotland never helped people anywhere in the UK. It lined a few pockets and allowed Westminster to strut on the world stage with the 3rd/4th. highest defence budget in the world. (I use the word defence in a departmental sense!)
 
 
# Briggs 2012-03-04 13:06
Thatcher often wondered why History is still taught in our Universities and thought that it was all a waste of Public money.

She always was a remarkably shallow Philistine of a woman.
 
 
# cynicalHighlander 2012-03-04 09:04
Feudalism Still Lives on in Western Financial Institutions - An Interview with Max Keiser: mnhopkins.blogspot.com/.../...
 
 
# amfraeembro 2012-03-04 10:23
Man, that guy should get off the fence!
 
 
# freeussoon 2012-03-04 14:51
Quoting amfraeembro:
Man, that guy should get off the fence!


And yet,the louder that Max shouts,the quieter the MSM becomes!

And that was Max on a quiet day!!
 
 
# bringiton 2012-03-04 12:22
The only reason that the UK economy is not in the same place as Greece is because the UK debt is underwritten by North Sea Oil.
For this reason,HM Treasury will never agree to any political settlement which takes most of the oil revenues out of it's control.
In my opinion,we can forget any Devo deal which includes a geographic share of Scotland's oil/gas resources and as such would be worthless.
Once people realise that this is not on offer,independe nce will be seen as the only option.
 
 
# birnie 2012-03-05 17:32
This is the absolutely central issue in the struggle for independence. I cannot see any limit to the lengths to which UK will go to hang on to their only economic lifeline. We ain't seen nothing yet and we should remember that armed conflict has been undertaken for very much less. UK fought to retain the Falklands - is Scotland any less valuable?
 
 
# Islegard 2012-03-04 12:30
Just to reiterate Gordon Brown and Alastair Darling's legacy:-

UK Current Debt

The current spending cuts take place against the context of a national debt estimated by official government figures as £772bn (54% of GDP). In fact the national debt more accurately estimated by including pension liabilities, and a reasonable estimate of the likely liabilities to be incurred by the government in respect of the banking sector is actually £4.8 trillion (333% of GDP) (1 trillion = 1000 billion), over six times the size of the declared national debt. iea.org.uk/.../....

www.channel4.com/.../4od

UK Deficit

The budget deficit is forecast to be £163 billion (11.1% of GDP) this year 2011. parliament.uk/.../....

In the calendar year 2010 the UK recorded general government net borrowing of £148.9 billion, which was equivalent to 10.2 per cent of gross domestic product (GDP). statistics.gov.uk/.../....

Military Costs

Trident
£100 billion.

Aircraft Carriers
£7 billion. bbc.co.uk/.../....
dailymail.co.uk/.../....

Fighter Aircraft
£23 billion.
theregister.co.uk/.../....


Iraq
Whitehall figures released in June 2010 put the cost of British funding of the Iraq conflict at £9.24bn ($14.32bn), the vast majority of which was for the military but which also included £557m in aid. bbc.co.uk/.../....

Afghanistan

£11.1 billion between April 2001 and March 2010. www.bbc.co.uk/news/10359548.

Libya
£1.25 billion.
guardian.co.uk/.../....

Scotland collects a surplus in tax while England for years has been running at a huge deficit. Scotland has more natural resources such as oil and gas than Norway one of the richest countries on Earth.

England only has the credit rating it does and the ability to meet debt repayments because of Scotland’s resources. It wouldn't have survived the recent crash without them.
 
 
# Jimbo 2012-03-05 11:08
Hi Islegard,

The IEA have updated their report since the one you quote.

They now claim that the UK Debt is almost £5.5 trillion.

iea.org.uk/.../...
 
 
# Islegard 2012-03-05 22:47
Hey Jimbo,

Thanks it was a while since I took note of this!
 
 
# xyz 2012-03-05 21:27
This is not a comforting read .. seems like the UK is furiously spending Scotland's oil revenues like there is no tomorrow. When can we cut the umbilical chord!? - only on independence .. even then we would need to support our currency .. Sterling.

One question for you Islegard .. you say: "Scotland has more natural resources such as oil and gas than Norway" but I read a BP report recently that indicates that Norway has more than double our oil reserves. Search google for: BP Statistical Review of World Energy June 2011 xls ..

are you using old data on that point?
 
 
# scottish_skier 2012-03-05 22:25
Those are proven reserves, i.e. what has been found and calculated as recoverable.

There is much yet undiscovered and lots of areas that haven't even been looked at/re-explored with up to date methods yet in the NS/WoS.

Norway is though likely to have more overall though, if only simply due to a larger geographical area.
 
 
# Islegard 2012-03-05 22:52
It would maybe be useful finding how how Norway has extracted to date compared to the UK. Then compare the net result one a broken country the other one of the richest it's then worth considering it should have all been for Scotland. Another thing is there appears to be at least as much again still there as over the same time period Norway has taken to become one of the richest countries in the world. Once again you can conclude if Scotland gets control over its resources in the next couple of years It can still create an oils fund and circumstances comparable to where Norway is now.
 
 
# xyz 2012-03-05 23:11
Cheers scottish_skier, I'm sanguine about comparing Scotland's abundant oil and gas with Norway's more abundant oil and gas. I was only concerned to gently guide readers to the current information on oil and gas so that arguments for independence are bullet proof.
 
 
# chicmac 2012-03-07 16:10
Good post, cannot be stated often enough.

Would just add that, because 'National Debt' (a.k.a. 'Public Debt' or sometimes 'Government Debt') is not a constant but is subject to Government definition, a key factor the IMF (and the Troika) look at for assessing national economic performance is Total External Debt (TED). [For example, as mentioned above, pensions provision is not included in the UK's definition but it is in many other's.]

TED is the total debt of any kind or subjective classification to any organisation or individual external to the nation concerned. It is therefore much harder to fiddle or spin.

The largest TED in the World belongs not surprisingly to the USA, at around 15 Trillion dollars.

The next largest, is the UK at around 10 Trillion dollars, i.e. about 2/3 of the American TED.

Note this is NOT normalised for population size. The USA at 312 million has 5 times the population of the UK at 62 million and also has a higher GDP per capita.

The only reason the UK does not have the largest absolute TED in the World is because the USA has many times our population size.

Just think about that.
 
 
# Legerwood 2012-03-04 13:18
It is not just the oil revenues that are shoring up the UK. You have to include QE and the debasement/devaluation of the currency. Both measures which stoke inflation. In other words the UK is trying to inflate away its debts.

The BofE would like us to think this is a controlled process but once started it is difficult to keep contgrol and other external events will further stoke inflation, for example, the currfent rise in oil prices has a much greater ability to adversely affect the economy because the currfency has been debauched and the £ does not have the same purchasing value as it did pre-QE.

The other danger is that the powers that be become wedded to QE and reach for the on tap whenever any adverse situation arises. This is what they did in Germany between the wars and we all kniow how well that turned out!
 
 
# freeussoon 2012-03-04 14:54
Have you noticed something else about the current crisis in Greece?

Cut everything back to below basics,but make sure there's enough dough for the military!

Are they expecting trouble perhaps?
 
 
# Stevie Cosmic 2012-03-04 21:31
erm...no.

Guess who Greece gives it's military contracts to?......

Answer: France and Germany

Greece pays these countries inflated prices for military hardware, much of which is still to be delivered, just like Greece paid Germany 2.1 billion for Athens airport, a project that was costed at 200 million, and paid France for Athens' new Metro and Tram system that went 3 times over budget.

It is well known here, but not reported elsewhere, that the bailouts are secured partially on the basis that Greece will honour it's defence contracts with France and Germany. It is also well known, globally, that the entities who benefit most from the bailouts are the French and German banks, who have the greatest exposure to Greek debt.

Oh the irony.
 
 
# freeussoon 2012-03-04 23:39
Thanks for that info.

It's a shocking irony indeed.
 
 
# Dubai_scot 2012-03-05 05:29
I have said it before, the last three Chancellors do not fit any competency criteria I can think of. One clear indicator is the person holding such a key position should be seen to be competent. The first thing to look for is the qualifications of a person. The last three Chancellors had no such qualifications, nor anything remotely relevant to the roles and responsibilitie s of the Exchequer.

They might just get a job at Tescos as a check out girl, at a push.

As an aside, I just found out Scotland, had it's own Exchequer under the Treaty of Union until Thatchers time. Anyone know what the reason was for getting rid of it?
 
 
# Barontorc 2012-03-05 10:48
Trying to deal with such an enormous debt burden would put off any sensible aspirant exchequer, (step up dumbo Danny Alexander), except for a delusion beset individual who recognises there's personal gain from getting involved. That's it in a nutshell.

In a funny kind of quantative way - the costs of trident and carriers seem small beer when in this massed "zeros" world and the next stop has to be, should be, the funny farm.

What is the plan to eliminate this chronic and growing deficit of £1.004 Trillion noted by Islegard above as "...the national debt more accurately estimated by including pension liabilities, and a reasonable estimate of the likely liabilities to be incurred by the government in respect of the banking sector is actually £4.8 trillion (333% of GDP) (1 trillion = 1000 billion), over six times the size of the declared national debt."

And we're supposed to carry on up the river with this scenario - no thanks, mam!
 
 
# cokynutjoe 2012-03-05 21:35
Fair do's, at least Broon ended the cycle of Boom & Bust as promised!
 
 
# Jim Johnston 2012-03-05 22:00
The funny thing is that the last few words in The Wealth of Nations are Smith's advice to Great Britain's, (Westminsters), Empire dream makers that they should ".... endeavour to accommodate her future views and designs to the real mediocrity of her circumstances."

Now who may have said they have "much to be mediocre about" ?

(Your'e right of course, I paraphrase old Winston himself.)
 

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