The OECD published the financial balance sheets of its member states from 2007 to 2014 this morning. I have not, of course, had time to review all this data as yet but this snapshot for the UK government is telling (page 311):
The bottom line (quite literally) is this: in 2007 the government had negative worth of £495 billion. Now that sum has risen to £1,477 billion, an increase of £982 billion from 2007 and of £618 billion from 2010.
At the same time note this set of balance sheets for UK households and non profit institutions servicing them:
Again the bottom line is key: household net worth (which we know to be very concentrated in the hands of a small part of the population) grew significantly over this period, from £2,860 billion in 2007 to £4,497 billion (£4.5 trillion) in 2014, or by £1,637 billion in al, with £1,329 billion of this being post 2010.
What can be concluded? I suggest three things. First, Conservative led management of the government’s finances has been exceptionally poor.
Secondly, there has been a massive transfer of wealth from the state to the private sector during this period: austerity has paid handsome returns to the UK’s wealthiest people.
Third, the case for redressing his with wealth taxation is very large indeed.
Truly cretinous. The numbers themselves are from here. Pages 311 and 314.
so, why has the government’s net position declined? Because it’s been issuing bonds out like there’s no tomorrow. Obviously. Who says that they should issue more? Ritchie. So, $Ritchie advocates that the government’s net position should get worse.
What has been the major part (£1.3, £1.4 trillion or so) of the rise in household wealth? Nope, not stocks etc. It’s the value of pension funds.
What happens when interest rates decline? The capital value of a pension fund rises, doesn’t it? If it’s DB then the value which is promised, as a capital value today, in the future is higher. If it’s a DC then higher asset prices, a result of the lower interest rates, will do it. And who is it who says that people should have better pensins? Ritchie again.
So, Richie is using his two pet policies to argue that wealth taxation must increase. That is, that QE (and PQE would have exactly the same effect on the government balance sheet) means that wealth taxation should be higher. And people getting higher capital values in their pensions means that wealth taxation should be higher.
Man’s a fucking idiot.
Don’t accountants have to pass a test to show they can read numbers?
Wait a while.
This man over here has more money than he did last year. That man over there has less. Isn’t it obvious that this man here stole the money from that man there?
How much more obvious can it be?
I am fairly sure that Murphy has moved into politics for the same reason that Blair moved away from the law.
Tim
My comment was going to be the same as yours – he claims to be an accountant but seems unable to interpret a balance sheet, and second order consequences are well beyond his capability Tim, you have to know that by now.
Might be some mileage from the ‘Harry Potter politics’ and his post on Teresa May’s post Brexit outline as well if you are requiring more ROR material….
John Fembup,
More than 50 years ago Ronald Reagan said: “We have so many people who can’t see a fat man standing beside a thin one without coming to the conclusion that the fat man got that way by taking advantage of the thin one. ”
We still have many people who think that way.
The government owes money to the private sector, but its not a transfer of wealth to the private sector as the money borrowed came from the private sector.
“Conservative led management of the government’s finances has been exceptionally poor.”
I agree. So Richie wanted the government to spend less all these years? But…AUSTERITY!!
The government has no money, it’s all our fucking money, which we give to them on the basis in theory that they are going to do something useful with it. In practice of course they don’t – but it’s still our fucking money.
For those of you, like the Gang of Four, who are probably having nocturnal emissions as you wait for publication in November of the latest authoritative (expect “seminal”) book on tax avoidance, a video for you of the man in performance to tide you over:
http://www.telegraph.co.uk/technology/2016/08/30/tax-expert-all-the-talk-from-apple-is-bluster/
Isn’t part of the increase in household wealth due to rising house prices? OK, less in the last few years, but still some.
So when is Murphy going to campaign to tax the profits on house sales, including a retrospective charge for those tax avoiders who have made tax-free profits in recent years?
Gareth>
That’s actually a mis-quote. What he really said was “We have so many people who can’t see a fat man standing beside a thin one without wanting to see them try to walk through a doorway together”. Big Laurel and Hardy fan, was Reagan.
“@Dave
Big Laurel and Hardy fan, was Reagan.”
“Chin up.
Both of them.”
Best Stan Laurel line.
Yes, a complete idiot.
In addition to the points above about PQE / bonds etc – that report is simply “financial” assets and liabilities. it excludes non financial assets such as housing when talking about “wealth”.
Hence, if I have £100K, buy a house for £300K with a £200K mortgage, on that report my “wealth” will drop from +£100K to £-£200K. Very useful!
This might be more helpful:
http://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/nationalbalancesheet/2015estimates
There is a pdf download at the top, link here:
http://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/nationalbalancesheet/2015estimates/pdf
Drop down to the lower half of that for the detailed numbers.
Table C in particular is quite useful, giving a more complete balance sheet for each of the different sectors.
Hence, we can see that most of the wealth of what Richard calls UK households is property (plus (within “financial”) pensions & deposits minus loans on such properties).
And the tables (1, 2, 3 etc) following that give the 2008-14 trend for each of the sectors. Table 10 is households 2008-14.
BF
I don’t think I’d seen him speak without losing his temper before – he does sound a bit bizarre even before one considers the ‘substance’ of what he has written
It’s hard to believe that the government has negative net worth – is this true? Looking through the off-balance-sheet assets was one solution proposed to Greece, for example.
OK, it might be emotionally difficult, perhaps treason, to sell Buckingham Palace but it could at least be used as security if really necessary.
Unless its already under a Sharia mortgage of course.
BiG, it might be; Brown sold off the Treasury under a sale and leaseback deal. To a tax haven company, if I remember correctly.
off topic but can anyone help? New girl at work is a Jehovah’s Witness. So doesn’t believe in Christmas. She is f’ing gorgeous. Wearing a skin tight dress showing off an amazing big boob figure.
So. Jehovah’s witnesses don’t believe in Christmas. Do they believe in infidelity? (she’s married)
“Do they believe in infidelity? (she’s married)”
As long as Jehovah isn’t looking.
Andrew C – sorry, no extra-marital nookie allowed, it seems:
“Many practices commonly associated with dating are actually serious sins. This includes not only intercourse but also other unclean acts between unmarried people, such as fondling the genitals of another person or engaging in oral or anal sex.”
http://www.jw.org/en/jehovahs-witnesses/faq/jw-dating/
But I guess in practice it depends on how devout she is.
Well, no, not really, in fact not at all. The rest of us might view it as a cheery bit of legover while they really believe in fornication. That’s why they don’t do it and we do.
@ Rob, Richard and Tim.
Goddamnit.
Jehovah himself would be tempted……
I shall just have to add her to the bed time memory bank.
Infidelity as frowned on as in any other marriage.
Used to know one who wore ben wa balls to work. Every day.
Interesting girl, never stopped moving in her seat.
Martin, out of curiosity, how did you know about the ben-wa balls? Did they click?
He also seems to think that he has discovered some new information whereas these financial balance sheets are very old data.
All OECD and EU countries (plus a few others) regularly publish full financial accounts, usually within six months after the end of the year. Major countries publish quarterly updates. 2015 data are already available for most countries.
Perhaps this is why she prefers Jehovah.
Interesting girl, never stopped moving in her seat.
Sounds like she needed worming.
“the bed time memory bank.”
Is that second ‘b’ a typo?
Richard
True, so much that a change request for a new light bulb costs 300 quid
The dcf could be fascinating for obsessives, the charges for new light bulbs etc over 30 years v. Sale and leaseback. Maybe it’s a conspiracy theory but why are interest rates held so low?
“That’s why they don’t do it”
Oh yes they do, from personal experience.
As Matthew L says.
My first lover, a delightful girl, was in the Salvation Army…