Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Feb 4, 2023 11:01:11 GMT
National Debt will take care of itself if you deal with government deficit
The best way to deal with the deficit is a combo of (1) Growth & (2) careful spending
The problem is that growth throughout the entire period since the Conservatives came to power has been very poor, in fact we almost slipped back into recession, and we are heading into one now.
The UK came out of the last recession under the stewardship of Gordon Brown and Alistair Darling, emerging from negative growth in the 3rd quarter of 2009.
Growth then accelerated, and when the coalition government took over, growth was at 0.7%, but then dramatically fell back directly due to, and because of government policies, and at the end of 2010 the UK avoided a "Double Dip" recession by a cats whisker.
These are facts, not opinions
So when Conservatives keep talking about cuts, but Labour talk about growth, you know which is the more important.
The Tories have had 13 years and to be fair to them, they have had the Pandemic to deal with, but so have other industrialised countries, all of whom are doing better than the UK.
On the 3rd aniverssary of Brexit, Peston on ITV, Newsnight on BBC, Channel 4 News and SKY all did pieces on whether or not Brexit has been a major factor in the performance of the economy ... They all came to the same conclusion.
|
|
|
|
Post by Orac on Feb 4, 2023 11:08:04 GMT
If you are being paid by the government, you are quite likely to prefer the government to take on more debt to allow the payments to continue (or perhaps even increase).
|
|
|
|
Post by zanygame on Feb 4, 2023 11:09:35 GMT
We could bypass that by just getting some decent politicians back into power. Personally I think many people go into politics to change the world, but it seems only the cronies and the corrupt get to positions of real power. As you load up the debt, the difference made by politicians gets smaller and smaller until their role becomes ceremonial proxies for the creditors. You might feel better with your favourite smiling psychopath at the helm and that's got to be worth something? Right? Well yes, but not at 3.9% of their income. And as my property developer mate used to say. Owe the bank £200k and you're worried. Owe the bank £2m and they're worried.  And I probably on balance wouldn't vote for a smiling psychopath. |
|
|
|
Post by Orac on Feb 4, 2023 11:24:44 GMT
Well yes, but not at 3.9% of their income. If you are paying the minimum payment on a credit card on an eternal debt that is steadily rising, what happens to your finances if your interest rate just happens to go up? How much autonomy do you now have from your creditors? When scaled up to a nation, this situation amounts to a governmental capture. |
|
|
|
Post by Equivocal on Feb 4, 2023 11:26:39 GMT
Heard an interesting take on public debt the other day from one of our financial advisors. He claimed the BBC's proffered view that debt in the country in unsustainable is wrong. He stated a debt to GDP of up to 300% is perfectly acceptable provided the lenders are confident that the country can make the payments. He was keen to point out that comparisons between public and private debt are not absolute, but he did say you can do some comparison. So he pointed out that someone earning 40k a year and having a 300k mortgage would not be considered in trouble even though their 'debt to GDP' equivalent would be 750%. My immediate reaction would be to carefully consider any 'advice' the advisor were to give, and to get a second opinion. |
|
|
|
Post by Pacifico on Feb 4, 2023 11:31:21 GMT
Currently we are spending around £20 Billion on servicing Government debt - at some point you have to start living within your means. Yes, that's 3.9% of the governments income. So what in your opinion is living within your means? Well we saw from the markets reaction to the Truss budget that just a small increase in debt can start an avalanche. So perhaps 2% is a good target - then its the same as the targets for growth and inflation. |
|
|
|
Post by zanygame on Feb 4, 2023 11:55:20 GMT
Well yes, but not at 3.9% of their income. If you are paying the minimum payment on a credit card on an eternal debt that is steadily rising, what happens to your finances if your interest rate just happens to go up? How much autonomy do you now have from your creditors? When scaled up to a nation, this situation amounts to a governmental capture. If that credit card debt represented only 3.9% (£1560.00) of my annual income and the interest rate was only 3% (£46.80 pa) nothing would happen if the interest rate climbs For someone earning £40,000 pa the monthly payment amounts to £3.90 a month out of an income of £3333.00 a month. The interest rate would have to sky rocket to have any real effect |
|
|
|
Post by zanygame on Feb 4, 2023 12:01:59 GMT
Yes, that's 3.9% of the governments income. So what in your opinion is living within your means? Well we saw from the markets reaction to the Truss budget that just a small increase in debt can start an avalanche. So perhaps 2% is a good target - then its the same as the targets for growth and inflation. That had nothing to do with the increase in debt, but a loss of confidence due to what the increase was to be spent on. All creditors are far more interested in your future ability to pay than they are in your debt to earnings ratio. (assuming they are not ridiculous) Liz Trusses actions scared the creditors into thinking the UK economy would tank under her leadership. |
|
|
|
Post by Orac on Feb 4, 2023 12:10:58 GMT
If you are paying the minimum payment on a credit card on an eternal debt that is steadily rising, what happens to your finances if your interest rate just happens to go up? How much autonomy do you now have from your creditors? When scaled up to a nation, this situation amounts to a governmental capture. If that credit card debt represented only 3.9% (£1560.00) of my annual income and the interest rate was only 3% (£46.80 pa) nothing would happen if the interest rate climbs For someone earning £40,000 pa the monthly payment amounts to £3.90 a month out of an income of £3333.00 a month. The interest rate would have to sky rocket to have any real effect I'll try again. If you rely on that line of credit (business would become an impossible shit show if its price changed), and the creditors can change the rate, then are a potentially a subject of creditors Your analogy isn't good because a person with a personal loan can't be removed from office and banks don't usually have any interest in the actions of one person with a personal loan (beyond repayment). In summary: the more you allow your nation to be in debt, the less democratic discretion the government is likely to have. |
|
|
|
Post by borchester on Feb 4, 2023 13:30:52 GMT
According to the Office for Budget Responsibility (OBR), only the NHS and education cost more than servicing the National Debt.
So since the NHS is on strike and the kids aren't learning anything anyway, the best idea might be to close down those two departments, pay off the debt faster and treat ourselves to a tax rebate into the bargain
|
|
|
|
Post by zanygame on Feb 4, 2023 13:40:12 GMT
If that credit card debt represented only 3.9% (£1560.00) of my annual income and the interest rate was only 3% (£46.80 pa) nothing would happen if the interest rate climbs For someone earning £40,000 pa the monthly payment amounts to £3.90 a month out of an income of £3333.00 a month. The interest rate would have to sky rocket to have any real effect Try as many times as you like. Firstly what price changed? Do you mean interest rate changed? If so you could easily switch supplier for that credit especially as the payments represent such a tiny proportion of your income. You are not a subject of your creditors because as soon as they began laying impossible conditions you would switch. Not to mention the government bond system does not have a single or even a few creditors, is comprises of thousands of creditors, so if you are imagining all these disparate parties somehow coming together to influence the government then you living in fantasy land. I only used the personal debt analogy to demonstrate how small the influence would be in terms you might understand. Only if that debt becomes untenable. Which is what this thread is about. At 3.9% of GDP I don't think your theory holds water. |
|
|
|
Post by zanygame on Feb 4, 2023 13:43:02 GMT
According to the Office for Budget Responsibility (OBR), only the NHS and education cost more than servicing the National Debt.
So since the NHS is on strike and the kids aren't learning anything anyway, the best idea might be to close down those two departments, pay off the debt faster and treat ourselves to a tax rebate into the bargain
Surely not.  |
|
|
|
Post by Orac on Feb 4, 2023 14:02:07 GMT
Not to mention the government bond system does not have a single or even a few creditors, is comprises of thousands of creditors, It only needs significant interests to say nay to change the market price for everyone else. From then on, the problem can only then be salved by borrowing more money or raising taxes. Perhaps the UK could ask the Chinese communist party for a hand? None of these scenarios actually need happen at all for the influence to flow because these interests would let the government know ahead of time the kind of policies they preferred to avoid all unnecessary unpleasantness. My point is that, as you take on more debt, you become more and more subject to such. This is how democratically un-popular and seeming financially irrelevant, or even financially destructive, policies are held in place in notional democracies. I think someone educated suggesting the UK take on more debt presently, quite likely wants the UK's democracy to circumvented entirely |
|
|
|
Post by om15 on Feb 4, 2023 14:08:11 GMT
Well they would do wouldn't they? That doesn't mean it was the right conclusion, in fact their agenda driven bias would render their conclusions absolutely valueless to all but those that share their agenda.
|
|
|
|
Post by zanygame on Feb 4, 2023 15:00:05 GMT
Not to mention the government bond system does not have a single or even a few creditors, is comprises of thousands of creditors, price for everyone else. From then on, the problem can only then be salved by borrowing more money or raising taxes. Perhaps the UK could ask the Chinese communist party for a hand? None of these scenarios actually need happen at all for the influence to flow because these interests would let the government know ahead of time the kind of policies they preferred to avoid all unnecessary unpleasantness. My point is that, as you take on more debt, you become more and more subject to such. This is how democratically un-popular and seeming financially irrelevant, or even financially destructive, policies are held in place in notional democracies. I think someone educated suggesting the UK take on more debt presently, quite likely wants the UK's democracy to circumvented entirely Sorry I can't figure that out. |
|
