UK 'must cut spending or raise taxes,' say experts

tomstickland

bubblesmoney wrote: »

the only way i feel to break the spiral is to treat the cause ie debt. stop taking a lot more debt, let companies that need to go bust go bust, dont bail out companies and consequently the debt doesnt come on to the govts books and share owners take the hit. either way the outlook is bad but this way the govts books look better and consequently the tax payer might be better placed in the longer run.

Isn't that the nasty, do nothing Tories though?

bubblesmoney

nature takes its own course many times irrespective of what we do or plan. sometimes it is better to get it over and done with and use the available funds to fund surviving companies than bail out the !!!!!! ones. bailing out the bad ones just incentivises poor management and encourages risk taking behavior and actually harms the better companies in the longer run.

for example do we keep giving bonuses to employees that lose money for the company or do we give incentives for employees who are good for the company. using the same logic in what way is this different from spending money on bad companies or good companies.

bubblesmoney

california is already going bust and having forced 2 days unpaid leave for all workers every month after the court approved the governors plan regarding this recently.

many more states will face the same situation as described here due to limited funds but maximum demands like pensions. http://www.forbes.com/forbes/2009/0216/078.html

it wont be long before the uk sinks under the pEnsions and welfare bills. but doubt any politician will have the guts to bell the cat as surely then they will lose the next elections. but doing nothing on this front eventually risks bancrupting the country as is already happening in california etc in the usa.

the debt fuelled party is over. oops there is one last gulp of the heady mixture with the inevitable looking printing and debt issues and only one way to go from there and thats down the drain hole eventually. the emperor can go without clothes for only so long before his bits fall off in the winter months and then even he will have to realise that he is not wearing clothes what ever anyone says to the contrary till then.

tomstickland

Just imagine a Gordon Ramsay kitchen nightmares makeover of government....

"You can't go on f*cking spending all this f*cking money we haven't got you f*cking idiots."

Wookster

StevieJ wrote: »

So when looking at debt you don't consider the current purchasing power or NPV of that debt ? It could be the main bonus in mortgages in the future when inflation starts to take off. I thought in the original post RP was talking about the period 1997 -2007 not 1999 compared to 2000.

Stop muddying the waters.

Labour has increased debt very significantly. Public finances have got significantly worse and are set to deteriorate yet further. Had Gordon saved for a rainy day we would be able to have a much stronger simulus package that would have a much greater impact on everyday people's lives.

(my 1999/2000 was simply an example to show how ludicrous Rochdale's suggestion was)

Sir_Humphrey

bubblesmoney wrote: »

california is already going bust and having forced 2 days unpaid leave for all workers every month after the court approved the governors plan regarding this recently.

AIUI US State governments are unable to undertake normal deficit spending, which is why many are having to cut back. The only borrowing they can carry out is via bonds (frozen in the credit crunch) or from emergency loans from Federal govt.

You are comparing apples with oranges.

sdooley

Wookster wrote: »

Had Gordon saved for a rainy day we would be able to have a much stronger simulus package that would have a much greater impact on everyday people's lives.

The Government with the strongest financial position in the Western world, with budget surpluses and a generous, fully funded old-age pension scheme, prior to the banking blow up was... AAA-rated Iceland.

Its banks and companies borrowed their way to the hilt and are the cause of the country's problem; it is fiction to suppose that the problems caused by its banks could have been resolved by greater government saving.

The UK's less-extreme problems are also predominantly caused by private borrowing, which has increased by a factor of four compared to state sector borrowing. Private debt so dwarfs state debt that even a government that had run balanced budgets since 1997 would not have the reserves to bail out the banks without huge national borrowing. If RBS alone have to be nationalised, it will double the national debt.

tomstickland

Oh, personal debt in the UK is something like 400% of GDP, and that really is the no1 spot.

Generali

Sir_Humphrey wrote: »

AIUI US State governments are unable to undertake normal deficit spending, which is why many are having to cut back. The only borrowing they can carry out is via bonds (frozen in the credit crunch) or from emergency loans from Federal govt.

You are comparing apples with oranges.

What is "normal deficit spending" for a US state as you understand it, please?

AIUI, a US State has three sources of funding:

- taxes
- Federal grants (most often to pay for Federally mandated programmes)
- borrowing

How does "normal deficit spending" fit around this? A state can't print money so where else could the finance come from?

I think you're comparing your elbow with your bottom!!!

WTF?_2

tomstickland wrote: »

Oh, personal debt in the UK is something like 400% of GDP, and that really is the no1 spot.

I think the 400% figure is total debt - state, corporate and personal.

That's going to be the killer when it comes to recovery. With a debt load like that, a lot of productivity is going to be soaked up making repayments and servicing the debt.