Bailouts say banks can borrow as much money as they want, if the government can’t pay the loans back directly the banks know the government can & will force the citizens to pay for the loans.
TARP and the Northern Rock bailout has proved this to be the case.
The banks can’t loose and if they happen to want to force the population into slavery that is an added bonus. For them.
Imagine you could lend money to a degenerate gambler/power-hungry politician knowing that if he/she/it doesn’t pay you back you know that he can & will force his family/people who voted for him, to pay the money back for him, with the threat of imprisonment.
If you know a degenerate gambler/power-hungry politician has the ability to pay back the loans you have made to him by threatening others with imprisonment, would that make the degenerate gambler/power-hungry politician a huge target for banks/lenders?
Wouldn’t the politician with the biggest compulsive spending problem be thee number favorite among lenders?
Can you imagine the promises that are made to the compulsive spending politician in order for him to take out loans. I bet he would be promised the moon. At the end of the day the lender and the politician have nothing to lose and everything to gain.
The lender makes money on the loan, (the proceeds of which are amplified because everyone else has less money because he has taken the money from the entire population) and the politician gets popularity by the public getting the “benefits” of the huge loans.
This whole situation is awesome for everyone.
Lenders make money
Gamblers/politicians get into power by having the money to buy votes
The public gets roads and bridges and pensions and hospitals
But as Greece is showing, this model of eternal prosperity is broken.
Which part is broken?
Without wanting to state the obvious the parts that are not broken are the parts that involve the lenders and the politicians, they are just fine.
No the problem is faced by the electorate who have been fooled by unrealistic promises and unsustainable government programs.
In Greece the whole government system is collapsing. The population has a poor infrastructure, the government has no money to honour the befits it has promised and yet despite all this, the tax burden is increasing rapidly.
But how did it get this far?
Lets look at what the Greek population and the population of every western country for that matter, lets look at what the population believes.
Take the UK for example. People believe the NHS is free.
People in the UK believe that the health care they get does not cost them a penny, when in reality its costs everyone an absolute fortune and the poorer you are the bigger the cost.
How much does “free” healthcare cost in the UK?
Lets look at some figures. The NHS absorbs a massive 17% of the government budget. If the government balanced its books that would mean 17% of all taxes go on funding “free” healthcare.
In reality, the government spends more than it takes in tax revenues meaning that this number is actually larger than 17%.
But lets say 17% off all taxes that the average UK citizen spends goes to the NHS.
To labour the point.
If you earn 12,000 pounds a year in the UK, you pay, conservatively, 50% of your income to the government (VAT,income tax,national insurance,fuel duty,road tax,property tax etc etc etc)
So free healthcare in the UK costs someone earning 12K a year 17% of 6,000 pound. Or 1020 pounds.
That is how much free health care costs.
How would it cost to go private. Around 1700 GBP for a top of the range policy.
http://www.uk-insurance-index.co.uk/articles/article-8.html
The average premium is around 719 GBP. http://www.guardian.co.uk/society/2002/oct/12/lifeandhealthinsurance.jobsandmoney
So supposedly educated populations are making stupid decisions.
Instead of asking to keep 17% of their taxes in return for being able to opt out of NHS healthcare, the majority of the UK population are in love with a system that is charging them well over the odds for the service they receive.
And it is these types of mistakes which perpetuate massive government spending, huge taxes and a constant reduction in personal freedom.
Pensions is another easy target. People in the UK pay National Insurance tax which is supposed to be for their retirement, the key word here being their. ie not someone else’s retirement.
In other words the money you as a a UK taxpayer pays towards your pension, the government actually spends that money to pay someone else’s pension.
When you reach 65 years old after paying your national insurance contributions for 45 years+ there is actually nothing to show for it.
Your money is not sitting in a bank account somewhere earning interest ready for you to spend.
No the only way you as a UK pensioner will get your pension money is if new people enter the workforce to pay your pension.
But what happens if the number of people entering the workforce decreases? What if there is not enough new entrants entering the “scheme” to pay off the original investors/contributors?
Then that is the end of the Ponzi scheme.
I could talk about the taxes on motorists. Only a third of taxes paid by motorists are actually spent on the roads.
So why, when a politicians says he is going to give free healthcare do people think this is a good idea?
There are an infinite number of examples showing that if the government gives you something for “free” it is actually going to cost you more.
Or more likely the, the government offers to give you something you don’t want for “free”. That will definitely increase your living costs.
Only when the electorate start waking up to the fact that nothing given to them by the government is free. And anything that the government provides them is actually more expensive than it would be if they bought it themselves, only when people recognise this is the actual state of affairs will taxes start to come down.
Only when the electorate realises the more the government does the poorer they become, only then will the vicious circle of government borrowing and public poverty be stopped.
When people realise that they will actually be better off when the government does less will the best politicians get to power and not the politicians who promise the most free things.
At the moment voters are vote for the politician that promises them the most free stuff.
Until this stops and people understand what this actually means, government debt and austerity will continue to be a bigger problem.
As long as people want the government to do more for them, the more freedom they will lose and the poorer they will be.
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