How Will the National Debt be Paid Off?

Conrad

France has run a huge debt since the 1970s. We will become conditioned to the idea of paying a little more in Tax.

Government waste is a jelly fish that cannot be pinned to any wall. Waste is endemic and omnipresent and NO Govt will ever solve that one.

itsnever2lateisit?

Rochdale_Pioneers wrote: »

The banking shares owned by the government *should* return a fat profit. HMG has bought in at the bottom of the market on extremely preferential terms, so if we still have a banking industry on Earth after this then I expect a large revenue stream to materialise that way. The main problem is that at whatever price the shares are sold, some smartarses will say "you sold too early - 5 years later they're worth x"

Indeed they should, but it seems they wont. The Govt is already planning to sell off Northern Rock at a loss

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6169327.ece

Seems they (the Govt) are looking at doing this for political ends rather than sound economic reasons

mrposhman

princeofpounds wrote: »

I'm an equity analyst by profession, but I've got to admit I did not fully understand your method here...

I think you are forgetting that if the banks are found to be even more deficient in capital than so far assumed then even more shares will have to be issued, diluting those which HMG and everyone else owns pro rata.

I'm not forgetting anything. I'm making judgements based on what I believe at the current time.

Do you know what provisions the banks have built up for future losses?

Not only that but if you look at LBG it would be suicide for Daniels to arrange the APS now and have to take on another rights issue or open offer to further recapitalise the banks at a later point in time. They would most certainly not be retaining their jobs (I know daniels is getting on now though).

Do you work as an equity analyst on the banking sector or on other sectors?

I personally believe that we will not see a need to raise more capital at Lloyds. I don't know the situation at RBS however.

Generali

kennyboy66 wrote: »

Saudia Arabia, Russia, China - I'd take a country with spiralling government debt than any of those 3 - wouldn't you ?

That's a very different argument of course and the undesirability of living in those coutries has nothing (AFAIK) with their lack of national debt.

Of course I live in a country that usually comes very near the top in any list of desirable countries in which to live. They have only had a net national debt since recently and there is a plan in place to repay it.

It seems a bit silly to have an economic plan that involves an annual payment of about 1/7th of this year's Government revenues without any plan to fix it beyond a shrug of the shoulders and the hope that inflation will make the problem small enough by the next time that your particular party gains power that it won't be your problem.

Wookster

Rochdale_Pioneers wrote: »

But I thought you said it was "utterly inconceivable" for such a thing to happen? Could it be that you were talking out of your bottom? Again?

Just to make it clear - inconceivable under a labour government.

They (like you) simply do not understand the value of money or the need to keep borrowing to a minimum.

princeofpounds

I'm not forgetting anything. I'm making judgements based on what I believe at the current time.

Fair enough, I was not arguing against your post or your opinions, I just couldn't understand how your previous post was meant to argue the point.

Do you know what provisions the banks have built up for future losses?

Yes, it's easy enough for me to check. Again, I wasn't trying to point out they are woefully underprovisioned, they might be completely the opposite. With an hour or two's digging I could take a stance on that but I was merely registering confusion with your argument that it was self-evident the banks would return money to the taxpayer.

Not only that but if you look at LBG it would be suicide for Daniels to arrange the APS now and have to take on another rights issue or open offer to further recapitalise the banks at a later point in time. They would most certainly not be retaining their jobs (I know daniels is getting on now though).

I doubt the choice of whether to recapitalise or not is always within the gift of management decision but rather one of basic financial realities in the long run.

The APS is just recapitalisation contingent on the degradation of the 'toxic' assets, so sure the purchase of banks could gift massive returns stripped of the bad debt, but if you spend all those gains and more on losses on the insurance of the bad assets in the first place it is again not entirely self evident why it must be a win for the taxpayer.

Do you work as an equity analyst on the banking sector or on other sectors?

Most sectors, including banks, but not all.

Anyway, the point I want to get across is that you might be entirely right, for entirely the right reasoning, but I couldn't begin how to figure it out from the post where you said it would be pretty much inevitable they would generate big returns.