Well, bgile, the financial situation is a debateable point.
Yes there has been a colossal cost in terms of government debt in propping up the commercial and investment banks. The decision to underwrite the losses of the banks by governments at taxpayer expense was the right decision - because letting leading banks go bust would vastly amplify a liquidity and confidence crisis not seen since the eighteenth century, resulting in a worldwide economic depression far worse than that of the 1930's.
Looking at Britain, I would make two points, and while this may seem to be a digression from the thread title, it does have a very direct bearing on it.
Firstly the Comprehensive Spending Review (CSR) our Chancellor (Finance Minister) announced on Wednesday this week rightly seeks to dramatically cut government expenditure. But the brunt of these cuts are loaded on to the so-called ''middle class'' and presented as a punishment we must take. What the CSR totally ignores is net annual cost to the UK of being a member of the European Union, currently about £16 billion. In the same week as the CSR the EU has increased its budget by 5.9%, with minimal publicity. Both of our coalition parties voted for this increase in the European Parliament, so clearly our government supports this EU budget increase. One immediate effect is that the increase will be funded in part by Britain....
By leaving the EU and cancelling this subsidy the British Exchequer will recover almost entirely this years cut in public expenditure. The implication of this is that the CSR cuts appear to be unnecesary. I think that cuts should be applied to the government bureaucracy and not so much to public services; at the same time instead of increasing the rate of VAT from 17.5% to 20% (effective 4 January 2011) I would instead cut VAT to 15%. I would also abolish employers national insurance contributions (which is a payroll tax) permanently for small businesses. This is to help stimulate the private sector.
And for the armed forces, I would increase their budget, not reduce it.
Secondly, when the Labour Government bailed out the banks it was done by converting the debt into equity in these banks, ie the government acquired the bulk of the shares in these banks, amounting to partial nationalisation.
The stated intention at that time was that eventually, when the banks were back into profitability and their share price had improved, the government would sell these shares through the London Stock Exchange and thus recover the cost to the taxpayer, indeed may even make a profit out of it!
Realistically this sell off of the government held shares would be feasible after 2013 or 2014. I suspect that this coalition government intends to hold a cheap cut price sell off of these shares a year or so before the next general election due in 2015. A cheap sell off will cheat the taxpayer and fail to recover the debt properly. That is why the CSR is intended to bite now - because the sell off of those bank shares will raise minimal revenue.
''Give me a Ping and one Ping only'' - Sean Connery.