What happens if the UK goes bankrupt (if it isn't already)?

Generali

mr.broderick wrote: »

Ok i'll risk looking stupid, what the bloody hell are you on about gen?

Protectionism is 'protecting' home industry at the expense of foreign industry through the use of tarrifs and import controls. These are very popular during difficult economic times as people think it will protect their jobs. However, these sorts of policies are always disastrous as they make everyone poorer.

fc123

drc wrote: »

What happens if the UK goes bankrupt if it isn't already? If a company goes bankrupt there are legal proceedings for closing it down and sorting out debtors and so forth. If the UK as a whole has more debts than income, what does that mean for the country?

This was in The Sunday Times Mag...A A Gill feature on how Icelanders are coping. As it's A A Gill, it's a pleasure to read...only IMHO.

http://business.timesonline.co.uk/tol/business/economics/article5329762.ece

Kaupthing, Landsbanki and Glitnir sound like elf characters from The Lord of the Rings, and there is an element of fairy-tale comeuppance to these three backwater banks. Only when you’re shown their headquarters do you realise how bizarre and unworldly their success was. They look like small city shops, branches of Bradford & Bingley. One of them was run from the floor above a fast-food restaurant.

As with every great disaster the world over, the moment after it happened, the scales fell from every eye and all could see that it was inevitable. Where were the white-collar jobs for the commute back from the brave new garden suburbs to come from? Where was the black-tie audience for the opera? How could Iceland have the sharpest cashiers in the world?
How could this nation sustain just two main industries: cod-fishing and international high finance? And, most importantly, most damningly, how did they ever think they could buck the Icelandic luck? Now everyone looks back at the road they’ve just travelled and wonders why none of them mentioned it was made of marzipan and Rolexes.

The designer interior-decorating emporiums that sprung up in the last five years now stand empty and sulky, like party-dressed girls with panda eyes waiting at morning-after bus stops. There’s a large new mall on the outskirts of Reykjavik, neon-bright and desolate. The girl who takes me there says, “A mall — nothing could be less Icelandic than a mall. All this will go,” and waves a mittened fist at the prefab warehouses, the new homes and the loneliness of the long-distance car park with its flapping flagpoles, “and we can stop pretending to be little Americans, or Danes, or British.”

There is something invigorating about Iceland at this moment — like being with people waking from a dream. It’s exciting and instructive. It’s a patronising clich! to say that people have wealth beyond mere riches. Nobody is better off for being poor.

But this tight-knit, undemonstrative community at the edge of the world has been woven together from sterner stuff than I think we could muster. “We’ll be all right — we’re not going to starve,” a shopkeeper told me. “We have fish and rye and mutton and barley. We can grow the odd tomato in a polytunnel. We have skills — useful skills, practical skills. And, you know, they’re under-heating the pavement outside my shop so it won’t freeze in the winter. All our energy is thermal and free. So maybe I can’t have a new mobile phone, but when I get drunk and fall over, the pavement will keep me warm.”

EDITED TO ADD; I just noticed 84 comments at the base of the online article (I read the paper one), many from Icelanders, written in fantastic English. Very uplifting. Those Bauger types have so much to answer for.

fc123

Generali wrote: »

My summation of the world economy is that things are worse than you think but not as bad as you'd imagine just as long as protectionism doesn't come into play. If it does then things will be very, very bad indeed. If you suspect your MP is very anti protectionism then vote for him even if he's ZaNu Labour.

You mention this in another thread (sellers on strike) and talk about Obama bringing in trade 'tarriffs' (import taxes?) which will make things worse.

Why would it be so bad? Giving home producers (whether that be pork or jumpers) a price advantage must, surely, be a good thing?

I read Undercover Economist and he said for a country to do well it needed cast iron copyright laws and 'free trade' (IIRC)......so, without wanting to sound like a fficko here, I don't get it.

Cheap imports undercutting products that we CAN make in UK has caused all sorts of problems. The biggest being the Fred Harrison theory that every product that increases it's margin (whether by efficiency or buying it cheaper elswhere) the extra profits eventually end up being absorbed into higher ''land prices'' (rents/values). That has happened in UK retail sector.

Trouble is, I am never on-line at same time as you now! Every post will have a 24 hr gap.

I can't see why it's such a bad thing.

sabretoothtigger

Protectionism was the worst mistake and greatest cause of the 30's depression imo

International trade is the reason for modern wealth, destroying that trade would damage all parties.


Amazing good could come from these troubles if the world as a whole was less western based economically and it is not a simple cause and effect but if the world is better off as a whole then we should all do well as the uk would have more customers for its exports and all sorts of mutual (long term) benefits.

Free trade definitly has strong benefits, knee capping the opposition as an alternative is flawed from the start and doesn't get any better imo.
Of course the chinese are a threat but extremes wont solve this

http://www.usatoday.com/money/world/2008-12-04-china-urges-washington-to-protect-investments_N.htm

ianian99

the bankruptcy board on mse will be mobbed

Generali

fc123 wrote: »

You mention this in another thread (sellers on strike) and talk about Obama bringing in trade 'tarriffs' (import taxes?) which will make things worse.

Why would it be so bad? Giving home producers (whether that be pork or jumpers) a price advantage must, surely, be a good thing?

I read Undercover Economist and he said for a country to do well it needed cast iron copyright laws and 'free trade' (IIRC)......so, without wanting to sound like a fficko here, I don't get it.

Cheap imports undercutting products that we CAN make in UK has caused all sorts of problems. The biggest being the Fred Harrison theory that every product that increases it's margin (whether by efficiency or buying it cheaper elswhere) the extra profits eventually end up being absorbed into higher ''land prices'' (rents/values). That has happened in UK retail sector.

Trouble is, I am never on-line at same time as you now! Every post will have a 24 hr gap.

I can't see why it's such a bad thing.

Well let's imagine a really simple economy where there are 4 things you can spend money on: food, clothes, wine or cars. You have an income and you decide what proportion of that income to allot to each item. If you are into cars then perhaps you spend a little less on wine. A fashionista perhaps goes home to a Value Ready Cottage pie in a 15 year old car.

Now let's introduce 2 countries into this imaginary world, let's call them France and Germany. Now the French are very good at making food but rubbish at making cars. The Germans can make a great car but the food is terrible. The joy of free trade is that the French can sell the Germans food and use the money to buy German cars. The Germans get better food and the French get better cars as a result - both parties are better off.

If you stop the trade between France and Germany then the French are stuck having to drive their inefficiently produced cars. As they are bad at producing cars they have to give up producing much more food, wine and clothing to make them than if they had sold the food to Germany and got cars in return. French car makers are happy in the short term but everyone else has paid a hefty price.

A bloke called Ricardo came up with the idea of comparative advantage. Look him up if you get the chance. He's a very bright lad.

fc123

Generali wrote: »

A bloke called Ricardo came up with the idea of comparative advantage. Look him up if you get the chance. He's a very bright lad.

I will do..I stayed up to see if you would be around...it's 1am (and cold).
I understand it better now.

So why can't the top brains in USA see it this way too?
We don't have these policies though...or have they been hinted at?
I haven't read anything recently.

BTW, Down here in The Bottom of The Pond...it's not so bad. It's changing and it all feels a bit scary....but, on the whole, things are settling down a bit........or is it because we are adapting quickly?

Haven't been on here much as have been trying to start ''Why most things fail'' by Paul Ormerod......but I am lacking concentration at the mo.

Regards to Generali famille.....hope it's all going well. You sound positive in your posts.;)

Generali

fc123 wrote: »

I will do..I stayed up to see if you would be around...it's 1am (and cold).
I understand it better now.

So why can't the top brains in USA see it this way too?
We don't have these policies though...or have they been hinted at?
I haven't read anything recently.

There is another school of thought which basically goes along the lines that [insert name of country] is best and everyone else is a duplicitous fool trying to drag Us down. They will illegally subsidise any exports to [name of country] as anything that someone else can produce cheaper or better must, by definition, be wrong as [name of country] is best so everything they do is best by definition.

As a result [name of country]'s workers must be protected from illegal competition by strong laws.

fc123 wrote: »

BTW, Down here in The Bottom of The Pond...it's not so bad. It's changing and it all feels a bit scary....but, on the whole, things are settling down a bit........or is it because we are adapting quickly?

Things should settle down for a bit.

The next problem is likely to be in trade - it's becoming harder to pay for traded goods across the world as nobody wants to extend credit to their fellow man. People need credit to bridge the time between buying and selling their goods as I'm sure you know.

The problem after that will be Government borrowing. All Governments are trying to borrow huge sums of money and I'm not sure the cash is there.

Those are my predictions. Time will tell if I'm right or not. Watch out for protectionism and Governments printing money. Those will be the 2 things that turn a drama into a crisis.

fc123 wrote: »

Haven't been on here much as have been trying to start ''Why most things fail'' by Paul Ormerod......but I am lacking concentration at the mo.

Regards to Generali famille.....hope it's all going well. You sound positive in your posts.;)

Thanks. It's hard not to be positive when the sun is shining and the Generalissimos are happy!

Anyway, am off for a siesta. I did a big training ride this am and need some kip.

Regards to Mr fc123 too.

neverdespairgirl

fc123 wrote: »

This was in The Sunday Times Mag...A A Gill feature on how Icelanders are coping. As it's A A Gill, it's a pleasure to read...only IMHO.

.

That's a wonderful article, thanks for the post.

This bit's fantastic:

This was all financed by Landsbanki, one of the raiding banks that spent like mullered fishermen and borrowed like agoraphobic Vikings, who leveraged the economy into the stratosphere without a Keynesian parachute, along with every other bank in the monetarist world.

And I love his new collective noun:

Further down the shore is a speculation of modern flats, expensive, insubstantial urban penthouses that may well remain empty for ever.

and his flattering description of the Icelandic govt:

The Icelandic government is a dozen shepherds and a couple of grocers in Specsavers and M&S suits.

MRSTITTLEMOUSE

Kez100 wrote: »

We'd call in the IMF. As we did under Labour in the 1970's (I think)

it usually is Labour,when we we have big money problems.