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Tory cuts could be mighty unpleasant

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Comments

  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Does personal debt affect in the slightest bit the ability of national governments to borrow money in 25 year gilts? No? Lets move on then shall we?

    Yes it does.

    As who is going to buy the gilts?

    Our situation is compared often to Japan. Yet the Japanese Government was able to sell bonds to domestic savers to fund the deficts. Something that the UK does not have the luxury of. We are reliant on international investors for funding.

    GB himself has made 2 major decisions which have changed peoples perceptions to long term saving and quite possibly added to HPI. Removal of pension fund tax credits and removal of share tax credits on ISA's.
  • robin_banks
    robin_banks Posts: 15,778 Forumite
    Part of the Furniture Combo Breaker
    There must be an election on the way!;)

    Without wishing to sound facetious I think we're all well aware of that.
    And this one ain't gonna be pretty, as both main parties have all sorts of merde to throw at each other.
    "An arrogant and self-righteous Guardian reading tvv@t".

    !!!!!! is all that about?
  • kabayiri
    kabayiri Posts: 22,740 Forumite
    Part of the Furniture 10,000 Posts
    edited 16 October 2009 at 12:27PM
    I can see logic in arguments about would Tory have been any different. Truth is, we just dont know.

    To me, the immediate to future prosperity relies on one key thing.

    We are going to be relying on external creditors to prop up the UK, by buying our IOUs, in whatever form...

    To do this, they must have implicit trust in our ability to repay it back. This is reflected in our credit rating.

    The mere fact that some economists have suggested we could lose our premier rating, shows how fragile this is. Things could change.

    The nightmare scenario to me is if international confidence in UK collapses, and we go cap in hand to the IMF again. After all, we have been in that situation before. All of a sudden, controlling your expenditure is no longer an option.

    I think this is partly why the Tory rhetoric has been about reducing public expenditure so quickly. It has as much to do with reassuring the markets.

    With so much to be borrowed, any movement in the cost of borrowing that money will hit us dearly.

    Genuinely, rather than discussion on whether party A would have been better than party B, I'd like to know what people think the key issues facing us are. I could be off track, but then we are all trying to make sense of the situation.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    kabayiri wrote: »
    I think this is partly why the Tory rhetoric has been about reducing public expenditure so quickly. It has as much to do with reassuring the markets.

    Something which the markets have already factored in. Though the details still need to be published. So the jury is still out.
  • Without wishing to sound facetious I think we're all well aware of that.
    And this one ain't gonna be pretty, as both main parties have all sorts of merde to throw at each other.

    It was more an attempt to be ironic. Apparently it didn't come across.
    Northern Ireland club member No 382 :j
  • Wookster
    Wookster Posts: 3,795 Forumite
    Thrugelmir wrote: »
    As who is going to buy the gilts?

    The banks will of course, courtesy of the new FSA liquidity rules!
    We were running a deficit before the crisis (which should not have been the case), but overall national debt was under 40% of GDP. This was a low figure by any international and historic standard. Even if you added in PFI/PPP debts, the figure was still low compared to similar countries.

    Rochdale, even Sir Humphrey can accept that we should have been running a surplus before the crisis. The point I am making is that we were running a massive deficit based on a budget which assumed much of the revenue was permanent (taxes from financial services).

    You are showing your financial illiteracy yet again: if a surplus (or much smaller deficit) had been run in the good times the state would be smaller now.

    Or do you disagree?

    The UK might have a lower total debt (to GDP) than many other nations however its deficit is (by some distance) the biggest of all the G20 nations, and to top it off we have a PM that insists there are no tough times ahead.
  • robin_banks
    robin_banks Posts: 15,778 Forumite
    Part of the Furniture Combo Breaker
    It was more an attempt to be ironic. Apparently it didn't come across.


    Fair do's irony does not come across well on t'interweb thing.

    Anyway imho there will be all manner of dirty tricks employed in the next election.

    'Slugger Prescott' may need to do some sparring.
    "An arrogant and self-righteous Guardian reading tvv@t".

    !!!!!! is all that about?
  • Wookster wrote: »
    The banks will of course, courtesy of the new FSA liquidity rules!



    Rochdale, even Sir Humphrey can accept that we should have been running a surplus before the crisis. The point I am making is that we were running a massive deficit based on a budget which assumed much of the revenue was permanent (taxes from financial services).

    You are showing your financial illiteracy yet again: if a surplus (or much smaller deficit) had been run in the good times the state would be smaller now.

    Or do you disagree?

    The UK might have a lower total debt (to GDP) than many other nations however its deficit is (by some distance) the biggest of all the G20 nations, and to top it off we have a PM that insists there are no tough times ahead.

    That's because Gordon Brown really believed the good times would never end because he was an economic genius. Unfortunately, he's been exposed, and he's no better than anyone else.
    Northern Ireland club member No 382 :j
  • Sir_Humphrey
    Sir_Humphrey Posts: 1,978 Forumite
    Wookster wrote: »
    Rochdale, even Sir Humphrey can accept that we should have been running a surplus before the crisis.

    Careful, I doubt we'd agree on how we should have run a surplus (except I suspect by squeezing BTL'ers with tax).
    Politics is not the art of the possible. It consists of choosing between the disastrous and the unpalatable. J. K. Galbraith
  • Careful, I doubt we'd agree on how we should have run a surplus (except I suspect by squeezing BTL'ers with tax).

    There wouldn't have been a surplus. Governments elected to massively invest in infrastructure and public services do not run a budget surplus and survive in the long term. Money gets spent on the things that need money spending on them. Various NHS trusts and even the odd central government departmental budget ran to surplus and were flayed alive in the press for not spending available money when people were still waiting for operations.

    Wookie is bleating on about illiteracy by painting a political scenario which could never exist. Even the Tories didn't run a budget surplus by cutting back spending - Thatcher grew the size of the state during her tenure. So the notion that the state would/could/should have been smaller is the delusion.

    A delusion shared by Cameron apparently. His speech was cracking. On one hand he berated the power of the state and railed against its growth in size. On the other hand he lauded the NHS, Surestart, the minimum wage and an explosion in apprenticeships - all the products of the big state he is supposedly opposed to.

    A smaller state is a fine principle - withdrawing from certain things to allow charity and community solutions to emerge. The problem is that we have trained several generations of grasping middle-class !!!!!! to believe in themselves and noone else - there will be no charity to fill the gap because too many people couldn't give a flying !!!! about other people.
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