The two-faced Chancellor

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Commentators are poring over the Chancellor’s Budget speech, trying to calculate who wins and loses. The Chancellor claimed it was a “Budget for business”. His own family’s business, of course, is Osborne and Little; how appropriate, because there was little in it for savers. The speech did not mention savers once, nor how the country has been kept afloat for the past three years by the near-£100 billion theft from savers. As so often with cannon-fodder, the sacrifice goes unrecognised.

Looking behind the actual measures, there was a strange, contradictory tone to the Chancellor’s remarks. He concluded by saying: “This country borrowed its way into trouble. Now we’re going to earn our way out.” But what caused that surge in borrowing? As the Chancellor told us. “This country became seduced by… the illusion of cheap finance.”

Cheap finance is bad. Cheap finance is good.

Yet what was that same Chancellor’s proudest boast throughout his speech? Cheap finance. “Mr Deputy Speaker, our commitment to reduce the deficit is keeping interest rates low. In this Budget, we take measures to ensure that the benefits of those low market interest rates are felt across our economy.” Elsewhere he said, “The Treasury has been borrowing money more cheaply than at any previous time in (its) 400 year history.” That tends to be the result when your central bank aggressively buys half of the debt you issue.

So low interest rates are both bad and good. Is the Chancellor trying to have his cake and eat it? Perhaps that’s something pupils learn at Eton. He cannot, in all honesty, point out how appalling the effects of cheap finance were in the recent past and, at the same time, claim how wonderful low interest rates are now.

Fortunately for savers, there are signs that market rates are beginning to stir, as the country’s financial institutions discover that they need savings to function adequately. While it’s still impossible for taxpayers to beat inflation, any move upwards and towards a more normal interest rate environment is surely welcome.

The Bank of England may continue to keep base rate at 0.5% but perhaps it, Sir Mervyn King and the MPC, are becoming an irrelevance.

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5 Comments

1. frances

   March 21, 2012 at 7:25 pm

   Its abundantly clear that George Osbourne has stuck 2 FINGERS up to all the savers and pensioners who struggle to exist on interest from savings

   He has equally stuck 2 fingers up at the young who no matter how many GCSEs they have and no matter how hard they worked simply cannot get even work experience never mind jobs

   I doubt even his family company Osbourne and Little are giving work experience places

   This means that David Cameron , Nick Clegg and George Osbourne are RENEAGING on the promises they made to help savers and pensioners and the plight of the young

   In short they are downright LIARS who only care about filling the pockets of the rich and the bankers

   While the entire MPC have seen their salaries rise year on year while Pensioner incomes have plummeted because the true increases in basic living costs have outstripped any CPI increase in state pension add on the loss of interest on their savings and pensioners are suffering

   I hated the previous administration but this lot are far far worse

   Recommend (14)
2. Edward

   March 22, 2012 at 12:16 am

   Ouch, that stealth ‘Granny Tax’ in the chancellor’s budget! The government must believe that they can pick on the pensioners, as they are not a threat as they aren’t as mobile so they can’t riot, so will just put up with it! Haven’t (vulnerable) pensioners been penalise enough with low interest rates and therefore lower annuities? I think so!

   Recommend (12)
3. John.

   March 22, 2012 at 1:38 pm

   What we’re seeing is the inevitable process of decay from fractional reserve banking, the collapse has already started, money printing is a sure sign things are on the slide, but people are waiting for a massive and sudden calamity which isn’t going to happen until all the real wealth has been transferred to those staggeringly wealthy individuals behind central banks. At which point the game is up and you’ve lost the lot. What we’re seeing is the theft of whatever wealth the nation has “invested” in fiat “paper” currency, being used without scruples to prop up an already failed banking system and feed the central banking ghouls behind the scene with the complicit government doing all it can to support and sustain them.

   The only solution if you are able, is to take as much of your “investment” in paper money out of their corrupt and failed system as possible, by having it invested wisely elsewhere in a basket of international cash paying dividend stocks and shares, this unfortunately is no light undertaking and can be done very badly but done properly it’s the only sustainable way, long term, in this system.

   Perhaps a very small percentage of your total wealth in precious metal but not a recommendation I would make personally as it’s little more than a punt on future value.

   I don’t profess to be an expert on how best to achieve this and everyone has different circumstances and requirements but one thing for absolute certain is that the central banks and criminal cartels running them, with complicit government approval, are usurers and thieves – definitely no friends of savers or those trying hard to preserve a lifetime of accumulated and hard won wealth.

   Basically you need to use your wealth to purchase things with real, unshakable value, like stocks and shares in other words peoples hard graft and effort. In a way that will allow you to live and also increase value broadly in line with inflation.

   Why would anyone willingly “invest” anything in paper money, with an increasingly worthless promise from some central banking “governor” acting as spokesman for the crooks running it, to pay a sum that is absolutely cast iron guaranteed to continue to fall in real value towards zero, beyond the absolute minimum required to live week to week.

   The most important thing to realise imo is that banks are parasitic and fiat “paper” money or currency is failing, all the money in the system is heading for a value of zero, a scenario that simply cannot be avoided with crooked fractional reserve banking and paper money backed by sweet f..all – which is what Mervyn Kings promise on that piece of paper is worth.

   The less of it you willingly hold the better.

   Recommend (6)
4. AbolishIncomeTax

   April 5, 2012 at 8:03 am

   If, as Osborne says, we were seduced by cheap finance, how is this not the fault of those who lent via ‘credit generation’ out of thin air?
   To paraphrase Mr Miyagi in Karate Kid – There is no such thing as an irresponsible borrower, just irresponsible lending. Bank employees are the lending professionals, there to ensure their money is going to be repaid by the borrower. Of course, bank employees know that the Tax Payer Guarantee the banks put in place ensured that children yet unborn will be liable for the fictional debt they created. If that is not slavery then what is? It has been going one since before the Roman Empire and resulted in the Greek and other Empires collapsing under their own debt. So there is some good news in here.

   Andrew Osborne (no relation)

   Recommend (0)
5. frances

   April 5, 2012 at 12:55 pm

   The Bank of England Quarterly Bulletin says the country needs to save more
   Yet George Osborne is killing every saver and particularily Pensioners
   The entire Pensions Industry was ripped off by Gordon Brown and now GO is killing it furthur
   Ministers have awarded themselves a massive Pension Increase
   Bank of England are sticking to RPI increases while everyone else is forced into CPI and its declining standard of living ethos
   True pensioner inflation costs are above 7%
   The Government has no problem sending Millions in Aid to India who openly say they dont want or need it
   they are also sending 80 Million to Zimbawe which we all know will be in Mugabes Hands
   Seems to me now that the entire Government and the MPC and every single set of Bank Directors are totally and utterly corrupt
   As for the budget claims that Pensioners have not been hit by Austerity and must suffer more loss of income in the name of Tax Simplification whilst really its a ruse to feather bed those on 150K a year with a massive tax cut

   The new Government Mantra is ” Rip off the poor to benefit the Rich ” and while they are at live like Kings on a gravy train of expenses and 2nd home mortgages paid for by the taxpayer

   A plague on all their houses

   Recommend (2)