Who should pay the bills of the EU’s debt problem?


Many people in the EU think EU countries should be able to carry on with state spending at ever higher levels. They also seem to go along with a political class which by and large stands behind banks whatever balance sheet horrors they throw up, probably because the banks also lend lots of money to the governments.  There has been no serious and widespread political move to apply more normal approaches to the   near bankruptcy of some  banks –  requiring them to sell assets, cut costs, close down and write off poorly performing areas. All this could be done whilst still ensuring depositors were protected and a system collapse was avoided.

As a result we now have a combined banking and state debt crisis in several countries. The size of the banking problems guaranteed or supported by the state weakens the state. The size of the state’s borrowing and debt undermines the value of the state bonds the banks own. The two can move from  propping  each other up to threatening the solvency of each other.

So the argument is over who should pick up the bills for the excess spending and the losses? There are various candidates put forward:


1. Shareholders – after all they took the dividends in the good times, own the banks and have committed risk capital.Unfortunately now taxpayers own a lot of the shares in the weaker banks. Many shareholders have rightly lost out from poor banking.

2. Bondholders. So far junior bondholders have taken a hit in the weaker banks, but senior debt holders have not. Some say all bondholders should suffer losses in banks that need to restructure and write off losses. Others say to do so would make it much more difficult to refinance these banks. The EU seems to think bondholders after 2013  should be at risk but not current senior bondholders.

3. Depositors and other counter parties. There has been general agreement they should not lose money, other than in Iceland.

4. Taxpayers. In many cases taxpayers have been made to take troubled assets off the banks or to underwrite bank activities.


1. Some say the answer is simply to raise more in tax revenue. The private sector should shoulder more of the burden and pay up for the large public sector. Thoughtful politicians propose this should be done through more taxation resulting from growth in economic activity. Other politicians identify sectors like banks and oil companies, or rich people that they think could contribute more. All EU countries with a debt problem are aiming for more tax revenue. though the worst cases are suffering from falling output or slow growth making this difficult to achieve.

2. Some say there should be cuts in spending. Most countries at risk claim to be cutting spending, though it is often cuts in real terms not cash terms. The pace is variable by country but on the whole is slow compared to the scale of the debt build up.

3. Some say they should borrow more. If a country gets into trouble the IMF and EU should ride to its rescue with larger loans on easier terms. Otherwise countries should simply carry on borrowing very large sums on the public markets. The problem with this approach is you can get into a debt trap, where more and more spending is absorbed on paying debt interest, and forcing even more borrowing.

4. Some say countries should simply print more money to pay the growing bills. The sophisticated way of doing this is for the relevant Central Banks to buy in state bonds, keeping the interest rate lower than would otherwise be the case, and creating the money to do so. Critics say this simply results in inflation and a worse crisis in due course.

What should be clear to the political establishments is these problems do not suddenly vanish. If banks do not write off, cut costs and seek to get back to a profitable and sustainable level of business, they will need more support. If the action is delayed or ducked, it will be that much longer before the relevant economy has strong banks capable of normal financing of growth.

Nor does a state budget suddenly swing into balance or surplus because it has been able to borrow more. A sensible government works out what is its sustainable revenue, what level of taxation it can impose without damaging economic performance too much. It then budgets to spend that much and not more.

When will EU governments get it? Do you prefer any of the other options? How do you avoid a work out? Surely European countries need work outs not bail outs.


  1. lifelogic
    June 2, 2011

    Who should pay the bills of the EU’s tax problem? The people who caused it all the bureaucrats and pro EU politicians with their half baked EURO schemes and a failure to provide any sensible bank regulation and a few other Fred Goodwin types with a suitable windfall tax on them and their pensions.

    It is good to hear this morning that public sector median wages have stayed level over the last year and private sector (for those who still have a job) have risen by 3%. The reported state sector relative overpayment is 43% (often for rather less capable, dedicated, useful or even attending staff). So if they keep this up for 12 years we will finally be almost level.

    They also need to half the numbers by getting rid of the many whose job is doing nothing useful, or more often is just to noble or mug the private sector, or buy votes or indoctrinate the public (and often school children) with misinformation.

    1. lifelogic
      June 2, 2011

      We now clearly have a de facto immigration amnesty, as reported today by the home affairs select committee. Since this is now clearly the policy is there really much point in the huge fines and restriction on employers who employ them (or is this this just yet another back door tax and parasitic job creation scheme).

      What exactly does the government want for these people – that they remain here but remain black market or unemployed for ever more?

      1. alan jutson
        June 3, 2011


        I am informed that many work illegally for way below the minimum wage, often under the control of gangmasters who organise their lives completely, operate their own very basic housing system (many people to a room).

        The result, legitimate workers (who pay tax) cannot compete on price, do not get the work, do not earn money and thus then pay no taxes.

        Double whammy.

        Illegals work get paid, but pay no tax.
        Legitimate workers lose work, do not earn (may claim benefits) so also pay no tax.

    2. lifelogic
      June 2, 2011

      Yes more government madness this morning the “Green Deal” with sound business unable to borrow from banks and mortgages hard to get on sensible terms (for new buyers and old) the government has decided to have a scheme to lend money (up to £10,0000) to house owners. This to encourage them devalue their houses with green PV Bling and the likes. Most of these scheme do not make any economic or environmental sense (even with the subsidy and totally mad without). And even less sense if you have to borrow the money expensively too.

      Better to spend it on a month somewhere warm in the winter perhaps.

      Beyond a little sensible insulation, draft exclusion, good boiler & timing /temperature controls, a vest, a warmer duvet and an extra jumper you will generally be tipping money down the drain, increasing maintenance costs, spoiling your house and not saving anything like enough to make it worth while. All done with the government’s encouragement and your taxes.
      But why? Just to keep Huhne happy I assume – but will he be there long enough to be happy anyway?

    3. lifelogic
      June 2, 2011

      And from the Telegraph yet more expensive pointless nonsense from the state. Please can we abolish now the UK National Ecosystems Assessment (NEA) before they waste any more time and taxes putting an nonsense values on perhaps the sunshine, the rain, the fog, the sight of a butterfly, rabbit, kestrel, bluebottle, moth, carpet beetle, or the sight of some fox poo on your shoe perhaps.


  2. lojolondon
    June 2, 2011

    Most importantly, John, we need out, out of the EU. Brave Dave promised us a referendum, and we will never, ever forget that.

    1. Robert K
      June 3, 2011

      you might as well forget it – you’ll never get a n EU referendum withClegg & Co fiddling with the controls. (Despite the libdems favouring it as part of their posturing during the Lisbon debate)

    2. Morningstar
      June 3, 2011

      Seconded !

  3. Simon
    June 2, 2011

    “3. Depositors and other counter parties. There has been general agreement they should not lose money, other than in Iceland.”

    The general public have only agreed that depositors should not lose money . That does not extend to all types of counter parties .

    Has Westminster reached a general agreement that gamblers should not lose money if the counterparty cannot honour their gambling debts ?

    Is The House putting the taxpayer on the hook for unlimited liability for zero sum activities like synthetic credit default swaps ?

    There is a very important pricipal that needs to be establishes here – who are the preferential creditors .

    The answer has to be that depositors get paid before holders of synthetic counter party instruments and if there is not enough money to pay them then they lose out .

    What other way is there to stop two financial institutions which are effectively insolvent from getting the taxpayer to recapitalise one of them by getting the other to write bad counterparty business ?

    Sounds fantastic ? Some would say this has already happened in another country in the English speaking world .

    1. APL
      June 3, 2011

      Simon: “The answer has to be that depositors get paid before holders of synthetic counter party instruments and if there is not enough money to pay them then they lose out .”

      And these sythetics ought to be traded on a public exchange, where if either counterparty cannot put up enough collateral to cover the bet, then it should be void.

      1. Simon
        June 3, 2011

        I can’t see further than a Glass-Steagal type separation myself .

        People can make a straw man argument that retail and mortgage banks also failed and yes they need proper regulation too but none of that is justification for allowing banks to gamble with little peoples money .

        Nothing good will come to the man in the street as a result of this financial chicanery . It will just serve to enslave his children .

  4. Simon
    June 2, 2011

    The bail out industry has to stop . “sophisticated” creditors have to take a hair cut .

  5. norman
    June 2, 2011

    ‘Thoughtful politicians propose this should be done through more taxation resulting from growth in economic activity. Other politicians identify sectors like banks and oil companies, or rich people that they think could contribute more.’

    Careful, you’ll be called into the headmasters office for a castration!

    Now that Greek government debt has been downgraded to junk bond status should we really be ‘lending’ (I still chuckle when I remmeber George Osborne telling us all how many billions of profit we were going to make by giving money to Ireland) more to the EU bailout fund? Would we allow our banks to use taxpayers money to buy junk bonds in the hope that it will all somehow work itself out in the end? If we wouldn’t, why are we willing to allow our government to do it?

  6. John McEvoy
    June 2, 2011

    John, you forgot to mention that the main purpose of Government and State activity is to provide more and better jobs, with better terms and better and earlier retirement packages for Government and State employees. One of the important strategies therefore is to support the popular vote that allows this by maintaining benifit and subsidy spending. That is why the universal answer to the unfolding financial calamity is simply ‘more of the same’. To hell with the economy…

  7. Mike Stallard
    June 2, 2011

    I am just reading a long and very boring book on the financing of the First World War. Once the various parliaments had rolled over, it was really easy to increase taxes. Only the British and Americans managed to do this though and even then only 1/4 of their income came from taxes. They simply did not work. The rest of Europe didn’t bother much with direct taxes. Indirect taxes were soon got round too.
    After that came borrowing both internally and from abroad. I am not up to that bit yet though.
    But that is where most of the money came from.
    As goods were diverted to the front, things became scarce and people found that they had a lot of money (printing presses working frantically) and nothing much to buy so prices went up and inflation rocketed, especially in places like Austria and Russia and Bulgaria.

    Is this a sort of parallel today?

    Usually we Brits just keep b***ering on, as Churchill so tersely put it, until the inevitable crisis calls out the true spirit of the bulldog breed. I suspect that this is what is going to happen now too.

    Thank you for a clear and excellent analysis of a very difficult and obscure area of economics.

    1. Stuart Fairney
      June 3, 2011

      Mike, what’s the book called?

      1. Mike Stallard
        June 3, 2011

        “Financing the First World War” by Hew Strachan. ISBN: 0-19-925727-2

        You will, I hope find it as “wonderfully readable” as did the critic of the Observer, Robert McCrum…………

  8. Boudicca
    June 2, 2011

    The over-riding imperative of the EU Commissars is to protect their grande project for a Federal EU: all else is secondary to this objective. They will impoverish taxpayers throughout the EU in order to achieve their aim.

    It is a disgrace that Darling signed the UK up to contribute to propping up the Euro when we are not a member of the Eurozone and an absolute disgrace that Cameron has continued with this policy – borrowing billions to fund the EU whilst cutting spending here.

    I hate the wealthy, privileged elite who have enslaved the British people to the new ‘Soviet Union of Europe’ with a passion.

  9. alan jutson
    June 2, 2011

    Telegraph today

    “Banks snap up 91% of Government Bond sales” (in the last 6 months)

    Does this mean the Banks are buying government loans, so the government can pay its bills, that the Government Loans/Bonds purchased by the Banks would be underwritten by the Government should the Banks get into trouble, if the government defaults, and that the whole lot is underwritten by the taxpayer who in effect is a guarantor of Government spending for services to the taxpayer, which relies upon private business and its employees to spend their shrinking disposable income on goods and services to survive.

    Has anyone ever thought of asking why no one wants to fund government debt ?.

    Is it a fact that the Banks are spending so much on Government loans, that they do not have enough left to loan to private industry. That because of the mount they have to keep as cash reserves (against dodgy loans) their reserves have to increase because they purchased government debt.

    Please tell me I have got this wrong !

    See Greece has had its credit rating downgraded yet again.

    1. Stuart Fairney
      June 3, 2011

      Yep to the equivalent of Cuba’s rating. Ever been to Cuba under Fidel?

      These countries default about half the time

  10. Duyfken
    June 2, 2011

    Self-interest will dictate whatever course is taken—I reckon that is a truism or perhaps it’s just my cynicism. Self-interest could be at the personal level or corporate, state or national levels. Unless those with the powers to make and implement policy can be satisfied their self-interest is duly catered for, it would be highly unlikely that an otherwise rational policy—such as any of those which you so rightly recommend—would be adopted and followed.

    So it’s matter of who calls the tune, regardless of what might be the best option.

  11. Nick
    June 2, 2011

    You’re still in denial aren’t you?

    Bank bail out 50 bn. To put that in context, a tad over 2 months of your profligate spending.

    Government debts. 6,800 billion.

    Whilst you carry on thinking, hey, the UK isn’t as bad off as Greece, it must mean we’re paragons of virtue on debts.

    So why do you and other repeatedly deny that you owe the population their state pension by not reporting it as a debt?

  12. Andrew Duffin
    June 2, 2011

    How about taking a levy from all those who voted to join the EU, or to stay in the EU, or to join the Eurozone?

    That neatly lets the UK public off, since we’ve never been given the chance to vote for (or against) any of this mess; some of our Quisling politicians could be in for a big bill, though 😉

    Any shortfall after applying the levy, could be raised by paying off Eurocrats and selling all their assets. They could keep anything that’s left over after all the debts have been cleared. Ha ha.

    Only joking, but I wish I wasn’t; it’s not really a joking matter, is it – these clowns will drag us all down when they finally fall.

  13. Acorn
    June 2, 2011

    JR, please see this link. Does it or does it not sum up how we got here? I am told Mr Harvey is attracting a “next generation” audience; or to be precise, the next generation of voters. It may be time to wake up and smell the jasmine. There is a big prise awaiting the politician who can guide us to the promised land; avoiding the Marxism stop on route. (Hat tip The Automatic Earth: June 1st.)

    Reply: I watched the first bit of a Marxist polemic – saying the last crisis was a Marxist crisis of capitalism does not in my view get us much further in remedying the situation – few preferred the USSR as an alternative. I do not have time to watch long movies, and prefer it for people to summarise the point they wish to make.

  14. oldtimer
    June 2, 2011

    The right solution is the market solution. That means, so far as banks are concerned, once their management has exhausted the obvious steps (outlined by you many times) that the hits are taken by shareholders, bondholders, depositors (beyond the guaranteed sums) and in last resort the taxpayers. It means, so far as states are concerned, once governments have taken the obvious steps of selling assets, constraining spending and collecting taxes (the work out you call it), that they default.

    What we appear to be witnessing is the failure of the political class to measure up to the crisis that confronts them.

  15. Javelin
    June 2, 2011

    Perfect summary.

    I think the policy is to kick the can down the road and wait for the economy to recover.

    The problem as you say, is this is a huge gamble and nobody can tell which way things are going to go. I predict an extremely volatile economy with either a house price crash, or high inflation if there are any shocks to the system in the next 3 years (such as the US economy tanking or China normalising interest rates respectively). If there are no shocks there is going to be a slow 7 year recovery period.

    1. Javelin
      June 2, 2011

      If I step back I see Governments are doing crisis managent. All your options are crisis options. You have ask when are they going to get back to the day to day business of building the private sector?

  16. Bernard Otway
    June 2, 2011

    Cut public services to match revenue collection, in other words balance the books.If we as individuals only spend what we receive and no more that is called Prudent,so why can’t
    governments.IF we can’t afford things then that is it, for instance Foreign Aid,stupid military adventures, Libya,Afganistan ,the EU etc etc.In the case of greece public servants Retire at 65
    like me and millions of others,my 60 yr old wife[in sept 2011] will only get her pension in march 2013 so will be 61.5 yrs old why should the Nana’s of this world be different,unless of course they have themselves SAVED enough to retire early. SIMPLES

  17. Damien
    June 2, 2011

    JR: The rest of the world used to look to the west including the UK as the blue print for capitalism. Traditionally this meant that failing businesses would be allowed to fail and other more efficient businesses would take their place. The crisis you so well describe is because private losses are being passed to the public who in turn pass these onto central banks, who are being bailed out by the ECB and IMF. This has created a moral hazard and undermined the whole basis of the capitalist system.

    China is looking at the west and saying we don’t want the west’s version of capitalism because of the financial crisis it is witnessing. This explains why they are opposed to any UK bank moving HQ to its jurisdiction and thereby contaminating the financial integrity of China. They are able to manipulate their currency to swamp the west with cheap exports while blocking the west from listing on their exchanges or setting up business there.

    With the serenity prayer in mind, the very best that the UK can do is to restore financial integrity by allowing insolvent businesses to fail. The vickers report is good but does not report until September, and by then it may be too late. The economic indicators are showing a high level of volatility and living standards are falling at their fastest pace since 1920. Households are sinking under the weight of losses from banks and other organisations that have unfairly been passed onto them through austerity measures. It is worth noting that boardroom salaries have grown 40% this year which is not reflecting the strength of those companies but the pressure that can be exerted by CEO’s on their remuneration committees.

    In a time of war the country’s political parties would pull together for the sake of the nation. This financial crisis is a whisker away from a double dip recession and even a depression. Everybody would suffer no matter what their political constituency. It is now time for all the party leaders to show unity and resolve to find a way out of this crisis in the interest of the nation.

  18. Denis Cooper
    June 2, 2011

    I don’t think there’s any solution to this which could be regarded as anything like fair, because it’s impossible to even accurately identify everybody who gained financial benefit from the build-up of debt let alone make them pay their fair share of the costs of sorting it out.

    However in my view the least culpable are ordinary retail depositors, who should be protected, while reducing or entirely cancelling the entitlements of bondholders would tend to impact mainly on a relatively small number of very wealthy international investors who increased their wealth during the good times and who can now afford to take the losses.

    1. EJT
      June 3, 2011

      No bailouts for banks or foreign states. Compensate innocent losers directly, i.e. bust bank depositors, private sector pensioners if their scheme goes bust. Job done. We can exit zombie mode and get on with life.

  19. Mark J
    June 2, 2011

    John, I do admire your Eurosceptic stance however this is not shared by the top rank members of your party. David Cameron is happy to cut public services to save money, yet hand the money saved from cuts over to the EU on a whim to prop up other EU member states. We are not responsible for the dire finances of other EU nations, nor is it right that hard pressed UK taxpayers be made to pay for the mistakesm made by other EU nations. Greece’s refusal to cut spending in light of a multi billion EU bailout just highlights why they shouldn’t have been given a bailout in the first place. If they fall on hard times again then they should just be allowed to sink, with no one to blame but themselves.

    The EU is slowly starting to fall apart and I for one will not be mourning the death of this corrupt organisation.

    1. Stuart Fairney
      June 3, 2011

      Sadly the death of the Euro will not be the death of the EU, just one head of the hydra cut off

  20. Mark Parker
    June 2, 2011

    I think shareholders should be wiped out before anyone else is expected find any money. The shareholders elected the directors who ran the bank into the ground. They have first liability. The bond holders come next. The depositors last.

    If the government takes over any bank it should be on a “bankrupt” basis, ie they should buy the bank from the official receiver for £1, shorn of its debts.

  21. Richard1
    June 2, 2011

    An excellent summary. What is needed is for governments to accept that spending must be constrained by sustainable levels of tax & that economies (such as the UK’s now) where tax reaches 40% or more of GDP will become much less attractive to work and invest in, and will decline relatively therefore. At the same time it is essential to get the banking sector on a proper market-based system, i.e. to move away from a regime where banks’ cost of funds (and therefore profits – and of course the remuneration paid out as a result of profits) is subsidised by taxpayers. This must be done through a comprehensive restructuring of the banks, which will come at the expense mainly of shareholders – e.g. rights issues at a heavy discount, underwritten by bondholders & even depositors. Then we will have: 1) governments whose credit is good and economies which are attractive to work and invest in 2) proper market pricing both of sovereign and bank debt and therefore efficient allocation of capital and 3) removal of the huge and unknown contingent liability which hangs over taxpayers in countries with subsidised banking sectors (such as the UK & Eurozone) which acts as such a pall over economic outlook

  22. BobE
    June 2, 2011

    The problem is that the state sector will continue to borrow. If a reduction in debt is started to be seen then the public sector will just borrow more.
    I would do this:-
    Cut all public sector pay by at least 25%.
    Cap public sector pensions to a max payout.
    Cut council and public sector pay so none earns more that the PM.
    Withdraw from all wars, we are to small now to be world players.
    Withdraw as many worldwide embassies as is possible.
    Reduce the number of MPs from 650 to 500. Reduce the support staff accordingly.
    Public sector workers are banned from first class travel.
    Get rid of as many quangos as possible. Use MPs common sense to make decisions.
    The lords get £300 daily attendance allowance. Cut this to £150.

    1. sm
      June 5, 2011

      Just make the Lords allowance taxable! like the serfs/voters.

  23. REPay
    June 2, 2011

    Your analysis is spot on. The work out option will be avoided until forced though because the Euro is a political mechanism that will be defended to the death by the senior political class. Unfortunately it was not fit for purpose as an economic mechanism. For the left, still asking for lots more state spending also has the added benefit for the left of achieving the ort of Comicon economy that they could not achieve politically – however who will continue to lend without increasing interest?

    Unfortunately it seems we will all take a haircut because the idea of “punishing” the banks or the rich will only damage the recovery. We have reached a major degree of interconnectedness so picking on any one party is not feasible.

    It is time for a work-out.

    PS I heard you on Radio 4 the other day. I think you should explain work-out for the general listener next time.

  24. BobE
    June 2, 2011

    With the cuts to public sector pay there would need to be a minimum below which no cuts would take place. As a suggestion £35,000. Nobody would be cut below this.

    1. lifelogic
      June 2, 2011

      Why as high as 35K? Average salaries are only about 24K rather less in the private sector.

  25. Javelin
    June 2, 2011

    Interesting to see Trichet calling for a new Finance Ministry. Just as I’ve been predicting. He’s playing a dangerous game by upping the stakes – I can see the peasants in the PIGS revolting over this. It’s a political miscalculation – he should have waited for The PIGS to be in a deeper crisis before he made this move – because of his impatience as he leaves in July.

  26. forthurst
    June 2, 2011

    We have a government that can’t conrol its borders; it persists in its adherence to a treaty on ‘asylum’ based on the premise that those not wanted in their own countries can arrive here and sponge off the taxpayer. We should not be obligated to take people from wherever in the world simply because they have heard we are a soft touch. In the meantime put these people in very secure camps preferably rented somewhere in Africa where guards would be cheapest. Do away with the legal process; just put the lot in camps; that should reduce the flow subtantially.

    It is quite clear that the government has not done nearly done enough to control public spending. It is difficult to make headway and still have the public on side when most get their ‘news’ from the BBC, a Cultural Marxist organisation intent on changing this country in ways that are abhorent to the majority; I believe that getting public spending properly under control is far more important than the continuing existance of this organisation, certainly in its present form: BBC entertainment, most of which is built round subliminal messages in furtherance of its agenda, should be secondary to fiscal proberty. We live in dangerous times when investors have lost confidence in government debt and banks still harbour vaults of semi-worthless paper. The BBC should be more afraid about telling lies about this government’s attempts to control public spending than telling the truth about the previous government’s lies about its illegal war in Iraq.

    Any action we take on Europe should be designed to bring forward the demise of the Euro as a pan-European currency. Without this demise, Europe including ourselves wll become enwrapped in an unravellable web of debt. Unfortunately this might still happen because quoting Konrad Adenauer, “In view of the fact that God limited the intelligence of man, it seems unfair that He did not also limit his stupidity.”

  27. Anoneumouse
    June 2, 2011

    What happens when the ECB goes bankrupt


    EU-coli, the infection caught from handling dodgy currency

    1. EJT
      June 3, 2011

      ECB won’t go bankrupt. It’ll be allowed to print money. No doubt via a tortuous mechanism that enables it to say no it isn’t.

    2. Stuart Fairney
      June 3, 2011

      I just think the failure of the Euro and the ECB would be too much for them to contemplate and thus listed for the purr of the (electronic) printing presses.

  28. Bazman
    June 2, 2011

    Big business/banks aided and abetted by politicians have been plying their insider dealing for a long time now all filling their boots, and looking after their vested interests, and since it was the idea of the worthy taxpayer to let them get away with it, it is the worthy taxpayer who must pay the inevitable clean up bill.

  29. BlackRaven
    June 2, 2011

    why should creditors be treated differently in bankruptcy just because one happens to be a voter?

    depositors and senior bondholders should be and are pari passu, until we start advocating government making retrospective populist legislation destroying property rights.

    1. Andy
      June 2, 2011

      You seriously believe that 99% of people who use banks for current accounts and savings are even aware that there is a risk they might loose their deposits? When people put their money in normal (cash / savings) accounts they have a right to expect it to be safe and for government to protect it.

      Screw your property rights.

      1. Bazman
        June 4, 2011

        In Russia everyone is very aware you could loose your money in the bank or even by a changing of the currency. This leads to converting all spare money into dollars or spending as you get it with the attitude of better to drink it than have it stolen. How much money exists under mattresses is anyones guess.
        Funny how the fantasy world of capitalism of many people on here does not extend to this and they expect the state to back their savings. The next thing they will be expecting the state to be responsible for transport or even their health.

  30. Kenneth
    June 2, 2011

    In my view the only answer for the UK is to sharply reduce public spending in real terms (including much of the money being sent abroad).

    We will not only recover more quickly, we will have a more healthy society as a result. We certainly DO need a work out. We need a healthy, vibrant and innovative existance and this can only be done by cutting the fat and waste.

  31. Morningstar
    June 3, 2011

    Default, devalue and abolish fractional reserve banking to keep the money suppoly under control.

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