Financial matters

[Fester]

Do you think that Ian was trying to make a point?    A POINT!    Get it?    A point!!   .... heres a few more of them .........   

[Blongb]

No Fester. he was just waiting for someone to spot his mistake   

[Trojan]

Perhaps he was on his period. 

[Ian]

It was just to make a talking point...


 :twoface:

[Trojan]

It was just to make a talking point...


 :twoface:

 L0L

[Ian]

For all those who think the spending cuts are inevitable and a result of the current economic situation, think again:

http://falseeconomy.org.uk/cure/how-big-is-the-problem

http://falseeconomy.org.uk/cure/what-do-the-experts-say

The latter is particularly interesting as no fewer than three Nobel Laureates give their opinions.  The most convincing is almost certainly this:

“By not taking a principled stand of this kind, the last government lost the rhetorical battle. It couldn’t openly say ‘without a large deficit there will be no proper recovery’. It left the running to those who simply said that ‘you can’t spend money you haven’t got’ and there is ‘no more money in the kitty’. This is rubbish. The rise in the deficit and national debt is mainly a consequence of the shrinking of the economy: as the economy recovers – partly because of the stimulus afforded by deficit spending – both will shrink simultaneously as a proportion of national income. Here are some interesting figures. In 1919 the National Debt stood at 135% of GDP – as a result of heavy wartime borrowing. By 1920, after a year’s inflationary boom it was down to 130%. By 1922 it was up to 171%? Why? Because there had been a huge deflation and rise in unemployment in 1921. In the deflationary decade of the 1920s, the debt hardly reduced at all. Nothing could more clearly illustrate the fact that the debt falls when the economy rises and rises when the economy falls.

“There are other points which could have been made. Unlike households, governments don’t have to repay their debt. They can borrow almost without limit, especially from their own people."

Lord (Robert) Skidelsky is the biographer of Keynes and a former Conservative spokesman on the economy in the House of Lords.

Or this one - the Financial Times is not noted for its socialist tendency:

“Very near the beginning of his speech introducing the comprehensive spending review, George Osborne attempted to the frame the exercise in the simplest of terms: ‘We are going to ensure, like every solvent household in the country, that what we buy we can afford; that the bills we incur we have the income to meet.’ Either you accept the chancellor’s analogy or you do not. I do not."


Samuel Brittan is a columnist on the Financial Times.

[DaveR]

A website mainly funded by the TUC and Unison, Ian? 

[Merddin Emrys]

As far as I can see, in the 'dark years' of the last labour administration, far too much money was spent on nonsense, I can't see how we as a country can carry on for ever on the never never. We now have to pay the price for the 'dark years'

[DaveR]

Quite right. Regardless of who's to blame, the fact is that we have to borrow £400m every day just to maintain current public spending...and it's hardly like we have world class public services. Such levels of borrowing cannot be right - the books should be balanced.

[Ian]

A website mainly funded by the TUC and Unison, Ian?

Is that relevant if the figures are correct? Can't you decide for yourself on the basis of the objective information? And the Financial Times is not exactly a Socialist manifesto...

I've often said that no one really understands international macro economics, but reading that site reveals a lot of information which, viewed intelligently, seems to suggest that there is more than one way to tackle the situation 

I can't see how we as a country can carry on for ever on the never never

That was the way Thatcher claimed to look at the nation's economy, and it is almost certainly  profoundly mistaken. The way you run your personal finance has very little similarity to the way it's prudent to run the finance of a country. "Every time a politician says we have to do with the nation's finances what a prudent householder would do with a credit card bill, you can stop listening. It's nonsense."

How can it be good for the economy to throw a million out of work as is likely to happen? The country loses the tax income, and we have to support the families that no longer have an income. The policies of this government could well be disastrous, as well as deeply, deeply unfair to the poorest and weakest members of society.

The Conservatives, for reasons of their own, are wildly exaggerating the seriousness of the situation. The British national debt is nothing like as big as that of many other countries, and it's mainly (70%) owed to its own citizens, not to foreign financiers. And it's way below what it's been in the past. In the past, in the last century, it's been 150 and 200% of GDP; at the moment it's just under 60%. That's a fact.

[DaveR]

How can it be good for the economy to throw a million out of work as is likely to happen?

Because the people in the public sector do not create any wealth for the country. The public sector just spends wealth (usually inefficiently) created by the private sector.

Saying that the debt figure is fine because its been higher in the past is a poor argument. It's like saying an alcoholic is doing ok because they are down to drinking 10 pints a day from their previous 20. Guess what - it's still going to kill them in the end. We have to pay Interest on every penny we borrow - over £42,000,000,000 last year.

And in absolute terms, of course, the National Debt has never been higher.

[Fester]

You can't express National Debt in absolute terms, as it is always relative to the value of the GDP, and the value of currency over time.

What is certain that in times past, when the national debt rose, there was always sufficient manufacturing industry to ensure that wealth would be created in order to rein it back in the future.

Now, a fundamental difference is the ageing population, and the massive pension deficit.
These are now being dealt with by the old trick of INFLATION.  Deliberate inflation.  Through taxation and commodity trading.  (yes the government trade on commodities such as oils and food)

So, the pension deficit will in future 'appear' smaller .... which in fact it will be, as the money owed and paid will be worth much less.

Its all down to the lack of wealth creating industies,  and the lack of future growth.

[Ian]

How can it be good for the economy to throw a million out of work as is likely to happen?

Because the people in the public sector do not create any wealth for the country. The public sector just spends wealth (usually inefficiently) created by the private sector.

But it's not only the public sector being hit.  It's also private industry.  Second, millions of public sector workers out of work are gong to become a massive drain on the economy, surely? Thirdly, there's proven link between unemployment and health.  As one rises, the other declines - markedly so. And that will cos even more.

[Ian]

Back in the '50s, Denmark had a massive public spending programme, a huge deficit and, without instituting any cuts, went on to become one of Europe's wealthiest countries. The real problem is not simply a lack of wealth producing industry:  I suspect it's more than no one really understands the consequence of what actions they take.

[Fester]

How can it be good for the economy to throw a million out of work as is likely to happen?

Because the people in the public sector do not create any wealth for the country. The public sector just spends wealth (usually inefficiently) created by the private sector.

But it's not only the public sector being hit.  It's also private industry.  Second, millions of public sector workers out of work are gong to become a massive drain on the economy, surely? Thirdly, there's proven link between unemployment and health.  As one rises, the other declines - markedly so. And that will cos even more.

I am equally worried about the very real link between unemployment and crime.
Especially when the police and armed forces are being reduced at exactly the wrong time.
Without benefits or quality employment, there will be crime, delinquency and public disorder.... and insufficient resource to conatin it.