In 1997, the Labour government with Gordon Brown as Chancellor of the Exchequer made the Bank of England independent

 

Dear Helen Hayes MP,

What many politicians don't seem to undertand is that:

1) The Bank of England was made an independent organization. It was Gordon Brown MP as Chancellor of the Exchequer that made the Bank of England independent in 1997.

2) The moneys lent by banks don't belong to banks. Banks borrow money to lend. The banks gave people huge amounts of money for people to buy property and must return the said moneys when people pay back loans and pay interest to those they borrowed money from.

Because of this, when people started to default loans, Gordon Brown had to prop up banks so that the financial system would not collapse.

Was Rachel Reed an MP under Tony Blair? Does she know how tha banking system works? If she was an MP then and if she knows how the banking system works, she shoudn't come up with the load of nonsense she has come up about 'banks helping people'. If banks have to borrow money - provided they can come up and borrow money - they will have to borrow money at market values, thus increasing their vulnerability and cutting down their margins. Does the Labour Party want the banking system to collapse?

When banks where capitalized under Labour, there were new rules implemented by :Labour about reserves that had to keep in order to protect peoples' accounts. The division was made between conventional banking and investment banking. Is Rachel Reed suggesting, that safety rules imposed then by the Labour government have to be abandoned?

Is the Labour Party if in government ready to face a massive financial crisis without having reserves to bail out the financial system? I see an unavoidable financial crisis that will lead to a tsunami of strikes in 2024 and beyond. 

 Best regards

Karl Hohenstauffen

UK: the eve of an absolute financial nightmare

Mortgage payments increases and a whole set of new environmental taxes implemented by local authorities will push hundreds of thousands of families over the edge. If something is not done urgently, the financial crisis of years past that compromised the financial system and forced the Labour government to take extraordinary measures to rescue financial insitutions will be nothing compared to what is coming.

Prime Minister Gordon Brown had savings and the economy in general was in pretty good shape. The same does not apply now after Covid and lockdowns and consecutive rises generated by energy cost rises. If families are pushed into default, the impact felt by financial institutions will be massive. The definition of what is affordable has been changing at every faster pace. 

For many, once we take all increases into account, disposable monthly income for food will be limited or non existing. The choice will be between having enough to eat and having a place to live in. Whoever is in power in the coming months will have to design alternative ways to deal with inflation. Government and Parliament will have to do the unimaginable to keep things under control. Market economics will not be nearly enough to prevent widespread unrest.

Jeremy Hunt: November 17th 2022 - Tax Day

 

November 17th 2022 - Tax Day

A hole in public finances of  more than 50 billion Pound will have to be plugged. Apart from the prospect of budget cuts affecting services, the alternative is a massive amount of tax increases.

Kwasi Kwarteng was slaughtered, thrown to the wolves, because he wanted to implement Liz Truss policies of tax reductions. What will happen to Jeremy Hunt when he announces a budget that contains punitive measures?

Let us remember that on the first round of the leadership election that led to the Premiership of Liz Truss the now Chancellor of the Exchequer didn't manage to progress beyond the first round. He was not popular among MPs and was not popular among the Membership of the Conservative Party. Now, the same man is going to propose a budget that goes against what is the declared ideological stance of the Conservative Party. Rising energy costs, rising interest rates plus rising taxes. If you are a business owner struggling to survive in the present financial environment, how are you going to react? Will you minimize your business to reduce fixed costs and in doing so sent your staff to the queue of the unemployed? A very harsh winter coming for those who lose their jobs when families are already struggling to pay for rental accommodation because they don't have the means to afford mortgage payments.

Wasn't Rishi Sunak the one who suggested that we should have a long term approach instead of shock therapy? Will such a budget be compatible with long term thinking? If Jeremy Hunt goes to far, this could the end of Jeremy Hunt and also the end of an already wavering Rishi Sunak? What next? Another leadership election?

Just a few months ago it was reported that recent interest rates will put more than 500,000 mortgages in jeopardy. Will more taxes and more unemployment make the situation better or worse? If the mortgage business falters, the financial system as a whole will be in serious trouble. We don't need even to explain what a wave of mortgage and load defaults will do to the economy.