The Austerity Disaster

Graham_Devon

grizzly1911 wrote: »

I think this is a big part of the reason for the wheels falling off in this country.

The North South divide. Yes we have smart areas up here , the Golden Triangle south of Manchester for instance but there is a lot less of it.

So many of the economic arguments are based on and centered around the SE. I wonder how many outside the SE are affected by the benefit cap proposals for instance, yet it consumes so much energy whilst real problems in the NE, for example, get little real interest.

This is very true. I was watching an article about car insurance for the young. Average policy now for a male under 21 being £3,000.

Someone asked how young people are supposed to cope. The answer was our great transport system.

This is fine. If you live in London, where the question was based. But no thought is given to anyone outside of London.

How on earth can we expect young people to mobilise themselves to get hobs (hmmm, spelling....and jobs) when the insurance is now often 3x the cost of the car they are buying?

On a side note, I also noticed that the timescale for stopping referral fees and whiplash claims has been kicked back again. The government states this is the problem and how wrong it is....so stop it!! But they won't. They will stop it in 2013 now. Just give it another year to get worse and worse.

ILW

HAMISH_MCTAVISH wrote: »

An interesting piece on Jeff Randall just now with a Barclays analyst noting that any further Austerity measures would be both undeliverable and counterproductive.

The man is clearly an Idiot...

Greek austerity crossed the threshold of undeliverable and counterproductive quite some time ago. :cool:

I believe that many of their public servants are still retiring on full pension in their early fifties and taxes are failing to be collected. It was the bloated public sector and a fair measure of low level corruption that scuppered Greece.

nicko33

Graham_Devon wrote: »

Average policy now for a male under 21 being £3,000.

Someone asked how young people are supposed to cope. The answer was our great transport system.

Well they won't be buying a house, so they should be living with their parents, so they can get a lift to work, or walk, or cycle, like so many of us had to.

HAMISH_MCTAVISH

ILW wrote: »

I believe that many of their public servants are still retiring on full pension in their early fifties and taxes are failing to be collected.

You should really stop getting your "news" from the Mail.

Here's the reality about the set of austerity measures agreed last year....

The calls for more austerity would go further.

Social security will be cut by 1.09bn euros this year, 1.28bn euros in 2012, 1.03bn euros in 2013, 1.01bn euros in 2014 and 700m euros in 2015.

There will be more means-testing and some benefits will be cut.

Monthly pensions above 1,000 euros to be cut by 20%

Existing retirees aged under 55 to lose 40% of any pensions over 1,000 euros.

The statutory retirement age will be raised to 65, 40 years of work will be needed for a full pension and benefits will be linked more closely to lifetime contributions

The public sector wage bill will be cut steadily to shrink it by more than 2bn euros by 2015.

Nominal public sector wages will be cut by 20%.

Wages of employees of state-owned enterprises will be cut by 30% and there will be a cap on wages and bonuses.

The number of civil servants to be suspended on partial pay will rise to 30,000 by the end of this year, from 20,000 planned initially.

They will receive 60% of pay for one year, having been promised a job for life.

All temporary contracts for public sector workers will be terminated.

Only one in 10 civil servants retiring this year will be replaced and only one in 5 in coming years.

Taxes will increase by 2.32bn euros this year, with additional taxes of 3.38bn euros in 2012, 152m euros in 2013 and 699m euros in 2014.

A solidarity levy of between 1% and 5% of income will be levied on households. It will be raised twice next year.

The tax-free threshold for income tax will be lowered from 12,000 euros to 5000 euros, rather than the original plan of 8,000 euros.

There will be higher property taxes.

VAT rates are to rise: the 19% rate will increase to 23%, 11% becomes 13%, and 5.5% will increase to 6.5%.

The VAT rate for restaurants and bars will rise to 23% from 13%.
Luxury levies will be introduced on yachts, pools and cars.

Some tax exemptions will be scrapped.

Excise taxes on fuel, cigarettes and alcohol will rise by one third.

Special levies on profitable firms, high-value properties and people with high incomes will be introduced.

Defence spending will be cut by 200m euros in 2012, and by 333m euros each year from 2013 to 2015.

Health spending will be cut by 310m euros this year and a further 1.81bn euros in 2012-2015, mainly by lowering regulated prices for drugs.

Public investment will be cut by 850m euros this year.

Subsidies for local government will be reduced.

Education spending will be cut by closing or merging 1,976 schools.

http://www.bbc.co.uk/news/business-13940431

ILW

HAMISH_MCTAVISH wrote: »

You should really stop getting your "news" from the Mail.

Here's the reality about the set of austerity measures agreed last year....

The calls for more austerity would go further.

http://www.bbc.co.uk/news/business-13940431

It appears that none of the measures have been put in place yet.

A decade or so of living way beyond ones means has to come to an end a some point. Greece is a good example to all those that thought it could go on forever.

Graham_Devon

Conrad wrote: »

I can't be bothered to go into detail but lets just say a take home actual pay of £1500 per week (£120k gross), especially between ordinary couples, is absolutely and completely normal in the South East where I am. .

Well it's not, as the statistics don't show anything like it.

Graham_Devon

nicko33 wrote: »

Well they won't be buying a house, so they should be living with their parents, so they can get a lift to work, or walk, or cycle, like so many of us had to.

Right.

Cycle or walk. Fantastic.

Thanks for the input.

HAMISH_MCTAVISH

ILW wrote: »

It appears that none of the measures have been put in place yet.

They were mostly put in place last year. Some of the plans call for further reductions over time.

When you cut someones wages in nominal terms by 30%, then dramatically increase their taxes and costs of living, then add a decade to their pension age, then decrease their pension by 20%, and then start cutting all the services, facilities and infrastructure..... It's no surprise that the economy and thus tax revenue has fallen faster than the savings from the cuts. Their debt position is worsening, not getting better.

The cuts are counterproductive.

ILW

HAMISH_MCTAVISH wrote: »

They were mostly put in place last year. Some of the plans call for further reductions over time.

When you cut someones wages in nominal terms by 30%, then dramatically increase their taxes and costs of living, then add a decade to their pension age, then decrease their pension by 20%, and then start cutting all the services, facilities and infrastructure..... It's no surprise that the economy and thus tax revenue has fallen faster than the savings from the cuts. Their debt position is worsening, not getting better.

The cuts are counterproductive.

It is worsening at a slower rate than if they had just gone on as they were. It just had to fall over at some point.

Zorz_2

HAMISH_MCTAVISH wrote: »

You should really stop getting your "news" from the Mail.

Here's the reality about the set of austerity measures agreed last year....

The calls for more austerity would go further.

Being Greek, I am more familiar with the situation and I 'll give you a couple of analogies to understand what is going on.


-The greek government is like a father, alcoholic and addicted to gambling. He just recently lost his crappy job and the family is barely surviving with some temporary benefits. Now, he must make some serious decisions, get his act together. Cut the booze, get a decent job, etc. So, after contemplating the gravity of the situation, he gathers the family around. He says:
Well, kids... ...breakfast is overrated, isn't it?


-The greek government is like a very obese person. His health is in risk and must change his eating habits. Somehow though, he is forced to run in London Marathon, this April. So, a cardiologist advises him that he must lose weight, eat more healthy foods, gradually start excersising, etc. A couple of weeks later, he returns to the doctor for a follow-up, except this time is in a wheelchair. He says to the doctor:
You told me to lose weight, so I did. I had my legs amputated.


I hope you get the point. Some facts now. The greek economy is very inefficient and skewed (Italy has many similarities actually, only it's a lot bigger and more industrialised). There has been a lot greek-bashing in western european media, and although there are indeed actual problems too, a lot of it is just stereotypes or outright BS.

For instance, the myth of southern laziness. Actually, the Greeks are the second most hardworking nation (in hours worked per week) after the South Koreans.
http://stats.oecd.org/Index.aspx?DataSetCode=ANHRS
http://en.wikipedia.org/wiki/Working_time

Or the salary freqency (and the nonsense of 13 and 14-month years). What is the most meaningful metric, the total annual income or in how many installements it is paid? What whould you say to someone who gets paid weekly? "OMG, you are being paid almost 50 paychecks a year???" :rotfl:

Also the average actual retirement age age is not younger than most other european countries. Yes, there are some privileged categories, like the armed forces who retire around 50 or even earlier. But the vast majority work until 65. Oh, and by the way, according to the Constitution, MP's are not allowed to work outside of their parliamentary duties during the time they serve in the office. So it makes sense that the Parliament should pay whatever pension credits they were paying in their previous jobs, in their private lives, right? Well, not exactly. If you serve for at least 48 months (1 full term), you are entitled to an extra pension, starting at 1400€/mth!!!!

The problem now is, that the greek government in order to avoid having to confront the unions and all it's political buddies, didn't tackle almost none of the actual problems but instead hit hard the easiest targets. It royally screwed the PAYE employees and pensioners (who are really the phytoplangton of the tax system), the healthcare system, education and public works.

It has delayed tax returns for months in order to hold on to the cash, it has effectively stopped almost all public works funding, it doesn't pay VAT returns for exporting businesses, it has practically defaulted on suppliers etc. It did cut labour costs, but instead of getting rid of "consultants" with fat paychecks, it is more keen on slashing the wages of nurses and front line doctors, school teachers, policemen etc. :mad:

Here is a very recent example:
http://news247.gr/oikonomia/oi_xryses_amoives_toy_oaka.1596964.html (you can translate it with Google Translate http://translate.google.com/#gr|en)
The public organisation that manages a large stadium pays 3900€ per month to secretaries and 3400€ to night security guards.

Now, there is a misunderstanding that these are typical salaries in Greece. Far from it. These aren't even typical public sector salaries, but just one of those "golden clubs" for friends and relatives of those in the government. :cool:

Meanwhile, the tax-free income allowance, last year has been reduced, twice, both times retrospectively from the start of the year! Instead of tackling down VAT evasion, what did they do? They raised VAT rates (and moved a lot of products, including many foods, to higher VAT rates) up to 23%. This way they reward the cheaters who now have even more incentive to keep cheating and penalise those who pay their taxes...

It's no surprise then that unemployement has skyrocketed to 1960's levels, income from indirect taxation (VAT, excise in fuel, alcohol, tobacco, stamp duty, import duties for cars, etc) is slumping, the economy is spiralling down very fast, the GDP has collapsed, the government is still running a deficit (since now it has to pay unemployement benefits to laid off people, instead of receiving income tax if they were still working) and all that restructing negotiations will reduce the public debt at best to roughly 120% of GDP (around the same ratio or slightly more since this whole mess began, what at the time was considered unsustainable)...