FT: The cost of burgeoning national debt

benood

Sir_Humphrey wrote: »

As well as absolutely every other person who has ever been involved with running a country's budget, anywhere in the world, for at least the last 100 years. You do not seriously think that governments (or companies for that latter) pay 27% APR do you. Take off the tin foil hat and read some books on the subject. Sheesh.

I find your patronising tone rather offensive, and in any case any MSE user knows to extend their debt on a 0% card. I'm glad that you consider the current state of the nation to be A.OK, doubtless your namesake would have been relaxed in his ivory tower as well.

There are a number of countries which have come unstuck when exceeding their capacity to service debt, of course countries have a number of policy options not open to individuals, inflation, default, tax increases. However, fundamentally my analogy is valid as a way of illustrating the point that the UK public finances would have been better placed to withstand the credit crunch in 1997 than now, or perhaps you disagree?

Wookster

Sir_Humphrey wrote: »

A lot lower than most other advanced countries. Most of the recent increase is down to the bank rescues, a policy supported by both Labour and the Tories.

HAHAHAHA

Our budget deficit is increasing at an alarming rate, in fact the UK is running the second largest budget deficit in the world, after the US. The collapse of tax revenues has a good deal to do with the burgeoning budget deficit.

Wookster

LauraW10 wrote: »

Haha - the second largest deficit in the world after the US! Have you forgotten Japan;)

You're not reading my posts - running the second largest deficit i.e. the second largest current deficit (and forecast for 2010 as well).

Rochdale_Pioneers

Wookster wrote: »

You're not reading my posts - running the second largest deficit i.e. the second largest current deficit (and forecast for 2010 as well).

What a good job then that we started out with less debt than so many of our competitors. We can afford a higher budget deficit for longer with the lower debt we started out with.

Its quite a thing to behold when the FT points out that at the rate Labour is borrowing it might actually pass the level of borrowing it inherited from the Tories. Yet to believe the Tories we're already effectively bankrupt.

Wookster

Rochdale_Pioneers wrote: »

What a good job then that we started out with less debt than so many of our competitors. We can afford a higher budget deficit for longer with the lower debt we started out with.

Its quite a thing to behold when the FT points out that at the rate Labour is borrowing it might actually pass the level of borrowing it inherited from the Tories. Yet to believe the Tories we're already effectively bankrupt.

All tune in to planet Rochdale, where his fantasy becomes reality :rolleyes:

Have you read Generali's signature? Perhaps you should check it again :rolleyes:

benood

JACKBLACK wrote: »

and heaven forbid that you should actually be grateful for the cushion that socialism provides you with:rolleyes:.

Why when our taxes have more than paid for it? Of course socialists want everyone to be grateful for handouts from the state - there lie votes.

Generali

JACKBLACK wrote: »

A curious statement from someone who is unemployed and living "of the state"

As a recent immigrant to Australia I am unable to claim Australian benefits.

Generali

Wookster wrote: »

HAHAHAHA

Our budget deficit is increasing at an alarming rate, in fact the UK is running the second largest budget deficit in the world, after the US. The collapse of tax revenues has a good deal to do with the burgeoning budget deficit.

At present the figure stands at roughly £710,000,000,000. According to most forecasts, the UK Government will borrow in the region of £500,000,000,000 (I think it will be substantially less as I don't think bond investors will be willing to lend it, unless the Government forces pension schemes to buy the bonds which is a distinct possibility). That means Government debt excluding unfunded liabilities will be approximately £1,200,000,000,000.

At 7.31% interest for long term Government borrowing (the average price since 1945 - link) that will cost £87,720,000,000 pa to service if the debt isn't ever going to be repaid. That is more than VAT will take in 2008/9 according to the 2008 budget.

Gilt yields can be substantially higher than that - from 1970-1992, yields never fell below 9%. At the average rate for that period (10.96%), Government debt will be costing a massive £131,520,000,000 in annual interest charges. That's more than National Insurance and Council Tax combined will take in 2008/9!!!

Rochdale_Pioneers

Generali - its worth pointing out that your figures are based on the technical measure of borrowing (all nationalised bank loans worthless, all bank assets worthless, all government investment worthless) rather than the actual amount the government will have borrowed.

Wookster

Rochdale_Pioneers wrote: »

Generali - its worth pointing out that your figures are based on the technical measure of borrowing (all nationalised bank loans worthless, all bank assets worthless, all government investment worthless) rather than the actual amount the government will have borrowed.

Is your head buried in the sand Rochdale?

Oh I forgot, you're a socialist, you just don't see that being an inefficient, non productive economy that borrowing on such a massive scale cannot be unsustainable indefinitely.

So long as someone else pays there's no problem is there?