Public finances: The chickens coming home to roost

Rochdale_Pioneers

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).

Thats not at all what I am saying. I have never said that I want the UK to sustain the levels of debt that other countries are doing - ideally you want to keep debt low.

What I am saying is that we CAN borrow a lot more than we are currently doing without being bankrupt, calling in the IMF, having more debt than everyone else or scaring away investors? how do I know this? because half of the rest of the developed world has comfortably sustained borrowing in multiples of our own for decades, and is not having major problems in raising trillions of pounds between them for bailouts and stimuli.

The doom-mongering loons keep insisting that we CANNOT borrow any more money. This is a simple lie. We can, we are and we will do so again. As is France, unveiling a Eur22bn package on top of its other multi-billion banking packages. On top of a net government debt already 45% higher than our own.

Now I accept that each economy is different. But the notion that we are so knackered that we cannot manage to borrow several hundred billion less than France is laughable.

nickmason

Rochdale_Pioneers wrote: »

Thats not at all what I am saying. I have never said that I want the UK to sustain the levels of debt that other countries are doing - ideally you want to keep debt low.

What I am saying is that we CAN borrow a lot more than we are currently doing without being bankrupt, calling in the IMF, having more debt than everyone else or scaring away investors? how do I know this? because half of the rest of the developed world has comfortably sustained borrowing in multiples of our own for decades, and is not having major problems in raising trillions of pounds between them for bailouts and stimuli.

The doom-mongering loons keep insisting that we CANNOT borrow any more money. This is a simple lie. We can, we are and we will do so again. As is France, unveiling a Eur22bn package on top of its other multi-billion banking packages. On top of a net government debt already 45% higher than our own.

Now I accept that each economy is different. But the notion that we are so knackered that we cannot manage to borrow several hundred billion less than France is laughable.

Thanks for clarification.
I think you might be right. (Hope so :eek: )

So let's get ourselves out of the sh*t if we can - and if that means spending more, borrowing more then okay - then go austere to get ourselves into a stronger position in the future, rather than just accumulating debt because it's easy politics. Sounds reasonable.

Hope it works!

Wookster

setmefree2 wrote: »

As I said you are telling porkies!

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"

EDIT - I still think you're scaremongering.

Have a look at this article:

http://www.ft.com/cms/s/0/35788e96-fe6d-11dd-b19a-000077b07658.html

What is patently clear is that finances are in a significantly worse shape than forecast. As increasing numbers of people go onto benefits and tax receipts fall this will only increase the debt burden. I will wager you that without significant public spending cuts the UK's annual deficit will exceed 10%. £50 if you're up for the bet.

You might think I am scare mongering and yes I am a pessimistic, risk averse accountant however as long as 2005 I held the view that house prices in the UK were over valued, that the level of debt was destructive and that people had short memories and had forgotten that a repeat of the 90s house price correction was possible...

Wookster

Rochdale_Pioneers wrote: »

The doom-mongering loons keep insisting that we CANNOT borrow any more money. This is a simple lie.

Where have I said that?

I have said that we cannot borrow at the rate we are currently doing so.
We are currently living significantly beyond our means.

MrFonzerelli

Wookster wrote: »

Where have I said that?

I have said that we cannot borrow at the rate we are currently doing so.
We are currently living significantly beyond our means.

I take it by 'we' you mean the UK govt?

Most people on the forum are prudent (i think!).

If individuals are in trouble, maybe it is in part due to the UK government telling everyone that 'boom and bust' was over!

StevieJ

Wookster wrote: »

Where have I said that?

I have said that we cannot borrow at the rate we are currently doing so.
We are currently living significantly beyond our means.

I take it you recognised yourself there

setmefree2

Wookster wrote: »

Have a look at this article:

http://www.ft.com/cms/s/0/35788e96-fe6d-11dd-b19a-000077b07658.html

What is patently clear is that finances are in a significantly worse shape than forecast. As increasing numbers of people go onto benefits and tax receipts fall this will only increase the debt burden. I will wager you that without significant public spending cuts the UK's annual deficit will exceed 10%. £50 if you're up for the bet.

You might think I am scare mongering and yes I am a pessimistic, risk averse accountant however as long as 2005 I held the view that house prices in the UK were over valued, that the level of debt was destructive and that people had short memories and had forgotten that a repeat of the 90s house price correction was possible...

Anyhoo, moving along. Nobody said the budget didn't have to be balanced in the medium term. The labour party have said they are going to increase VAT and higher rate taxes to cover the shortfall - starting from November.I've started a poll - for fun :rotfl:- to see how posters would prefer the government to achieve a balanced budget.

Truly, I think everyone in the UK knew the housing bubble would burst and most people welcome it. I don't think too many would argue with you on that point:D

Wookster

MrFonzerelli wrote: »

I take it by 'we' you mean the UK govt?

Yup - I do.

Setmefree2 - how about that bet then? Are we on?

setmefree2

Wookster wrote: »

Setmefree2 - how about that bet then? Are we on?

Certainly not! I never said the UK budget didn't need balancing in the medium term -ever:p. Imho we need to spend in the short term, pray alot, then cut our cloth accordingly in the medium term.

stevsand

nickmason wrote: »

It's interesting - in some ways he's like Cameron's Mandelson. An easy target (possibly because someone needs to be a target for the ammunition to come out, at which stage the targetting becomes easier, and so it snowballs). And it's interesting that the oligarch smear that you use fits so well for Mandy.

But Osborne is also a key part of the Cameron team, in part for his fixing (cf Mandelson) and in no small part for his intellect. Labour have been targetting him because
1) they know he's important
2) they know that he's not winning the media/public perception battle.

Somebody earlier noted that politicians should be doing what is right for the country, a sentiment I absolutely applaud. Filling the next government with communicators, rather than thinkers and doers, is not actually the key to solving the country, even if it might be the best way to get into that position.

Back to your comparisons between Clarke (and I welcome his return hugely, for the communication value he brings in portraying this government in its real light) and Osborne:

"Clarke has gravitas, public respect, a common touch, an easy communication style and knows what he is talking about, and that Gideon doesn't."

Frankly, all of those are about communication (apart from the misleading bit about "knows what he is talking about"; Osborne's grasp of economics is undoubtedly superior to Clarke's).

I'm not Osborne's biggest fan. But when he is attacked for a weakness that is not the most important element to being a good politician, it seems right to defend him for his qualities and value.

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