Sunday, 2 May 2010

Prepare for Fiscalnacht

Over at The Devil's Knife, DK has posted a very good series of posts recently about the scale of the problem, referring to others who are doing the same, and a solution that has long been available to us.

Many of us have been banging on about the need for 20-25% cuts in spending to balance the books, and this is Libertarian Party policy. The recent quibbling about the £6bln NI tax has taken the biscuit. The so-called "leadership debate" just showed me that they are not leaders. If they were true leaders, they would be able to deliver bad news and they failed us and the nation.

The big three have been fiddling while our money burns. And why? Probably because no government does well in an election promising austerity. Ah, yes, getting into power is more important than being straight with the population.

This, however, is not about austerity, it is about SURVIVAL.

To survive we need those 20-25% cuts on average. We need to eliminate £170bln of spending even to have a chance of treading water.

Our debt is reaching £900bln in comparison to £600bln (if we are LUCKY) in revenue and £750bln or so in spending.

Interest on those debts is or will be around 4.5% for sections of that debt.

Growth? 0.2% so far.

Can anyone else see the other problem here?

Our debt interest will be higher than the rate in which revenues will grow. Growth will fail to cover the costs of servicing our debt even if we achieve zero deficit.

So we need to more than balance the budget, we need to shrink the DEBT and to do that we need to cut spending well below revenues to both service the debt and reduce it. After we cut £170bln out of spending to end the deficit we need to cut still further to attack the debt.

It is wishful thinking to presume that growth will grow fast enough to enable even a balanced budget to keep pace with the debt servicing costs on £900bln for some considerable time. To trust to that kind of luck with the Eurozone ills, international situations and the potential for all manner of external factors is a gamble too far, or should I say yet another gamble too far, for Gordon has already gambled too far and lost - where we are now is the result.

Forget "the bankers". We were bust. Period. Regardless of the Banking crisis.

Unless Cameron comes clean before May 6th he cannot say he has the mandate to face down the vast vested interests that will line up to prevent their gilt edged rice bowls being taken away from them. People may say he betrayed them. He needs as many people behind him as possible, or at least not attacking him and siding with those in the public sector who will want to remain in never-never land.

And no, the excuse of "not being able to see the books" does not count. We know this already. he knows this already - or damn well should do. It is no surprise.

I doubt he will.

The Libertarian Party has always been clear about our need for drastic cuts in State spending from both a practical, philosophical and common sense perspective.

Living within our means.

We are about to find out that the Social Democratic, Welfarist, Statist experiment was not, is not, will not, cannot, could not and, dare I say it, should not be afforded.

Prepare for Fiscalnacht.