Public finances: The chickens coming home to roost

setmefree2

Wookster wrote: »

We are running the second largest deficit in the world, behind the US - it just simply cannot go on at this rate indefinitely!

That's a lie. I am sitting watching Nouriel Roubini (DR Doom) on Bloomberg right now - he said that the UK is fine and used the 40% figure which certainly does not make us the 2nd largest deficit. Why are you scaremongering?

purch

Nouriel Roubini

What does he know !!!!!!!

setmefree2

purch wrote: »

What does he know !!!!!!!

I assume you're joking Funnily, !!!!!!? - Wookster has used him in the past to back up his arguments. so he can't now say he's pants:rolleyes:

setmefree2

nickmason wrote: »

Laura,

The Tories are determined to do what's right for the country. Just as Labour want to. How daft does it sound to say "Labour really are determined to take us back to the '70s?".

The difference in opinion is how to do it. Emotions are not the language of economics.

Nick - I'm sorry everyone who is anyone is saying we need a short term stimulus - including Roubini who I'm watching right now;)

However, I don't know if the Tories are saying they would cut spending right now? Does anyone know if that is true?

setmefree2

chewmylegoff wrote: »

it's not just what the govt has raised in sterling denominated debt that affects the market's appetite to take up further sterling denominated debt.

once you factor in corporate and personal debt, we become severely indebted compared to the countries you have mentioned. in my view the government is going to have to start paying a very high coupon compared to what it is offering now, if it wants to keep filling the void with debt.

Yes, well posters have been saying that about the US and the UK for about a year and it still hasn't happened has it? In fact, the opposite keeps on happening - yields just keeping get cheaper. Down alot today by the way.

setmefree2

nickmason wrote: »

Nice rhetorical flourishes. But are you really saying it's okay to keep on borrowing - putting the whole world on the "never never"? Does that stand up to any economic or logical rigour? Is this the emperor's new clothes? Somehow the argument that "short-term borrowing is good" has become "we can keep on borrowing forever". (Note that I'm not making relative comparisons against other countries, or assessments as to which have or have not yet hit the "event horizon" of economic implosion, simply investigating this "borrowing is fine" argument).

In the spirit of rhetorical flourishes, I've always been quite partial to the native indian proverb "We don't inherit the planet from our parents, we borrow it from our children". Maybe some people have taken that a bit too literally...

The majority of reputable economists are off the opinion that it is the right thing to spend in the short term and cut back in the medium term.

EDIT - Why has !!!!!!? changed his user name to Wookster?

Wookster

Here are current and forecast budget deficits (2009 & 2010) courtesy of the Economist:



40% is the cumulative government deficit, however the annual deficit is ~8.5% (4X Germany!) AND the proverbial !!!!!! hasn't really hit the fan yet (lower tax receipts, higher welfare payments). We are gaining ground on those with higher national debt burden's very quickly.

setmefree2 wrote: »

That's a lie. I am sitting watching Nouriel Roubini (DR Doom) on Bloomberg right now - he said that the UK is fine and used the 40% figure which certainly does not make us the 2nd largest deficit. Why are you scaremongering?

nickmason

setmefree2 wrote: »

Nick - I'm sorry everyone who is anyone is saying we need a short term stimulus - including Roubini who I'm watching right now;)

However, I don't know if the Tories are saying they would cut spending right now? Does anyone know if that is true?

I agree we need a short term stimulus (phew, I might still be someone )

I think the Tory position is broadly the same. But I recognise that if it is, it's not very clear!

It's not very attractive, but there are lots of political rather than policy issues going on here - not to mention a whole plethora of civil servants and think-tankers trying to work out what's going on.

I am amazed, frankly, that the opposition has ever managed to research and test an idea to the extent that the hugely better-resourced government sees it and says "oh, that's a good idea, why didn't we think of it?" In fact I'm so amazed that even my belief that the best brains are right-leaning is eclipsed by a suspicion that these ideas were leaked out by civil servants.

Where there might be a difference is where the stimulus goes, and what the medium term plan will be. I think the Conservative view - then - is likely to be more inclined towards having to cut services than the governmental one - but even that's probably because that positional distinction is both comfortable in economic philosophy (Labour like state expenditure more than the conservatives) and in political positioning (the Conservatives will like to say the problem is worse than the government admits).

My point to Laura was simply that it doesn't help to see the political agenda of parties as destructive or regressive; to do so invites yourself to caraciture them and miss what they're actually saying, doing, aspiring towards. For example, I don't actually believe the "scorched earth" policy that some accuse Brown of (even though, through their eyes, the evidence is compellign).

Old_Slaphead

setmefree2 wrote: »

The majority of reputable economists are off the opinion that it is the right thing to spend in the short term and cut back in the medium term.

Where does this sweeping generalisation come from?

Anyway I thought the raison d'etra for economists was to disagree about everything and generally muddy the waters for the rest of us

setmefree2

Wookster wrote: »

As I said you are telling porkies!

What the article says is:-

"If "Britain’s bill turns out to be more like Japan’s than Sweden’s,the Treasury would gulp but could swallow it, for Britain’s official debt has been relatively smaller than that of other G7 countries. In 2007 Britain’s gross government debt was 47% of GDP; in France, for example, it was 70%.

That is no cause for complacency. Even excluding financial bail-outs, public debt as a share of GDP may rise by 20-30 percentage points by 2011, as recession pushes up public borrowing (see chart 4). "



SO the chart shows something that might happen - the WORST possible outcome. AND NOT as you stated "We are running the second largest deficit in the world, behind the US - it just simply cannot go on at this rate indefinitely"

Here's the article for anyone who's interested
http://www.economist.com/world/britain/displayStory.cfm?story_id=13110366&source=hptextfeature

EDIT - I still think you're scaremongering.