Public borrowing £20.3 billion in November alone!

HAMISH_MCTAVISH

Governments have, largely unwittingly, sewn safeguards into the debt market which make an inflation strategy pointless. Since the 1970s, we have issued an increasing amount of debt in the form of index-linked bonds, which now account for a quarter of the debt market. These are inflation-proof: the debts increase automatically alongside inflation. Then there are the country's other liabilities: public sector pensions (circa £800 billion), the state pension (£1.4 trillion) and the costs of private finance initiatives (£140 billion), all of which are tied to inflation.

In fact, around four fifths of the state's debt bill is inflation-proof. The only way ministers and mandarins could inflate their way out of the crisis would be to rip up all the contracts that tie these debts to inflation: possible in the case of the state pension (which is one reason why Gordon Brown's pledge to link it to earnings is probably doomed), difficult for all the rest.

Or they could just change the way inflation is measured, as many of the bears claim is already happening with manipulation of the basket of goods for RPI and CPI.;)

Graham_Devon

Rochdale_Pioneers wrote: »

I still struggle with why frothers keep on about our 60% debt like the sky is going to fall in. We're still in less debt than half of Europe, and as Generali pointed out we have a fraction of what Japan has.

I'm not sure if I am classed as a frother on this subject. But to me, it's not where we rank in terms of Europe or the world on debt, and whether one country, i.e. Japan may be worse off.

It's how it is going to effect me, my pocket, and my living standards and expectations, and what I can best do now, to prepare for whatever may happen as a consequence of this debt.

For now, all we are doing is creating more debt, which I believe has allowed us in the UK to carry on as normal, allbeit, we all know were in trouble. I know that this can not continue and at some point, that debt cretion to allow us to carry on as we were is going to have to stop. Therefore, we cannot continue on how we were, and it's that which I would like to sort now, rather than finding out later.

It's a difficult task, as no one knows, you can only gain from others experience and thoughts. But whether we as a country are a bit better off than Japan I could not care. I know were in trouble, THAT's what I care about.

Generali

All excellent points Graham_Devon.

There is one other thing that many people miss. The Japanese people have been willing to buy Japanese Government Bonds (JGBs) at very low rates of interest and so they Japanese Government has been able to afford to service very high levels of debt.. For example a 10 year JGB has a yield of 1.245% and a 5 year just 0.49%.

By comparison, 10 year Gilt yields are around 4%.

As a result, similar proportions of GDP are spent on servicing the two debts.

The UK generally has to have interest rates (Gilt yields) considerably above Japan, Germany and the US - it is a legacy of the economic mismanagement of the 1970s.

princeofpounds

I still struggle with why frothers keep on about our 60% debt like the sky is going to fall in. We're still in less debt than half of Europe, and as Generali pointed out we have a fraction of what Japan has.

Also, do not forget that government debt is not the only debt burden on a national economy. Government, commercial and personal debt all add up into servicing requirements and we are very, very, very high in this respect.

leveller2911

1984ReturnsForReal wrote: »

NHS is much much better than when the cons were in charge.

There is no doubt about it.

Really? tell that to my son who was referred by the Hospital to see a specialist In June 2009, the appointment to see the specialist is for March 4th 2010...........

Sorry but I don't agree..How many people died in Hopsital from infections that they didn't have when the were admitted?.
My Local Hospital has 3 levels(floors) the entire top floor is all office staff..... For the money it costs to run the NHS its not a good,efficient system at all...When will people wake up and see it doesn't work....

The local PCT even tried to shut either the Hastings or Eastbourne maternity units,both of which are a desperatley needed purely to save a few quid.I would also say in my locality we have an ambulance station, pre 1997 we had 2 ambulances with 24hr cover.From May -September near-by Camber Sands population can rise by 10,000 or more.We needed those 2 ambulances.We now have one which has day cover together with a co-response vehicle manned by two firemen with basic 1st aid training..........We basically have 1 ambulance and a mickey mouse service for around 20,000 people.

Feel free to pop down this way for a holiday, lovelly towns like Battle,Rye,Hastings etc but God help you if you need the NHS......

The Tories didn't spend money on the NHS that is true, probably because they know it doesn't work.......Its NOT the envy of the world at all