Yellen Responds to Government's Budget

POLITICO | In an address to the Chamber of Deputies, Shadow Finance Secretary Janet Yellen voiced her and her party's criticisms of the Government's approach to the economy.
Originally posted by Janet Yellen:
Mr. Speaker, recent developments and findings about the state of our country's economy are shocking, and show the inability of this administration to deliver on the most basic duties of government. After nearly two years of government, the Chancellor and his Ministers have managed only to undermine our revenue streams, and to tarnish the integrity of our economy by threatening mass cuts to public services which are a vital part of our financial stability and growth. 
The Budget revealed by the Chief Secretary confirm everyone's fears, and his address Mr. Speaker was one which showed the total obliviousness of this coalition of chaos in regards to the delicate necessities of our country as a whole. As pointed out before by my honourable friend the Shadow Defence Secretary in his criticisms of the government's demobilisation plan, and later my honourable friend the Shadow Education Secretary in her criticisms of the government's privatisation of student loans, and now by myself in my criticisms of the government's budget -- the same innate issue which plagues this administration becomes ever more clear: a lack of insight to detail.
We acknowledge that the issue at hand is not one which can be solved overnight, or flawlessly. The structure of our economy has been inefficient for decades, and two wars within a single generation pushed our rotten system past it's limit. However, what has become glaringly obvious is the administration's disdain for expert opinions, for studies and fact-based policy making -- presenting a lacking budget which doesn't look like it took a week to put together let alone nearly two years.
Neither myself nor anyone in this house disagrees that as it currently stands we must make necessary cuts to wasteful programs in order to minimise the impact on our economy. However Mr. Speaker, it goes without saying that there is a right way and an ultimately wrong way of cutting expenditure in times of economic struggles. This government is crippling our growth by cutting services which are without a doubt essential for the growth of our economy. Education, which raises the intellectual value of our society, with all the implications it has for business, innovation and by extension the attractiveness of our country as an economic hub, is being targeted by this administration. Healthcare, a cornerstone of a healthy, productive and efficient workforce which shall continue to push the boundries of our economy through dedication, is also being targeted by this administration. We recognise the benefits to the cuts of our overbloated military, of which it's budget is irresponsibly high and crippling our economic growth, but do not share these sentiments in regards to our national police and emergency services that keep the people of this country safe and our streets clear of crime.
Finally, Mr. Speaker, I would like to address the troubling remarks made by the Chief Secretary in regards to the country finding new streams of revenue through borrowing. And the term "borrowing" itself, Mr. Speaker, can be misleading -- in particular to someone with no apparent understanding of modern economics like the Chief Secretary. In his speech, the Chief Secretary stated, quote: "In total, 2 Trillion Fall will be borrowed from our close friends and stable allies, Cantonos, Verzant, Arum along with Private Investors who we are not obliged to share details of." This shall be the first time, and I hate that the state of this government has come to this particular point, that I formally call for this government to reconsider the position of one of it's ministers. The honourable Chief Secretary has shown the fact that he does not understand how the economy works, that he does not understand how borrowing works, and that he doesn't understand how interest rates work. How can it be that a government which commands over half of the sitting eight-hundred-and-fifty members of parliament, would choose someone this oblivious of economics to lead the country on fiscal matters?
The problems in the aforementioned statements of the Chief Secretary in regards to borrowing are multi-dimensional in their erroneousness.
Firstly, Mr. Speaker, the Chief Secretarty states that we will be borrowing Two Trillion Fall from "close friends and stable allies". This seems to imply that borrowing money is some sort of bilateral transaction done in the fashion of a trade agreement. As if the government will send an envoy, for example our esteemed Chief Secretary, to Verzarent, Arum or Cantonos to beg for money. 
In order to spare the Chamber the technicalities and complexities of how borrowing actually works, Mr. Speaker, I shall summarise it shortly. When the government accumulates debt through borrowing, it's not because it asks other countries for money. What happens is that the country issues government-backed securities at a fixed interest rate with a yield that matures after a certain period of time depending on the type of security -- generally 5, 10 or 30 years. These securities are open for anyone to purchase, the money going to the government, and the interest being payed back to the owners of such securities when the bond has matured. These bonds can be purchased by domestic and foreign citizens, domestic and foreign companies, government institutions and programs, and even foreign governments. But why do people buy these? Simply because the government backs the repayment of the bond, and unless it defaults on it's debt, it is a guaranteed and safe investment for anyone who buys securities.
Another major point which demonstrates the lack of knowledge or insight into the subject of borrowing funds by the Chief Secretary, is his forecast for the total sum of loans. What is the justification of borrowing Two Trillion Fall? Surely we should be borrowing according to the needs of the fiscal period in particular. If we are, let's say, losing 200 billion Fall a year, then we should structure our securities and in particular their interest rates to meet that yearly rate as to be able to fulfill our expenditure goals. There is no logical reason, whatsoever, why we should be amassing 2 trillion Fall upfront without a clear direction of expenditure to possibly make the borrowing worth the interest rate.
Mr. Speaker, at almost every step of the way this administration's clueless approach to governance leaves myself and my colleagues in the opposition dumbfounded. We call on the government to get a grip, and if our clueless Chancellor can't see it, then we call for parties supporting him to hold him accountable to reason and common sense.
I yield, Mr. Speaker.
 
Category:The Imperial Constitution