Leading financial historian says UK next in sovereign debt crisis, then US

Graham_Devon

Rochdale_Pioneers wrote: »

Its blindingly obvious that a country of our size selling government debt in a currency that we both control and print is not the same as a small country owing debt in a currency they neither control nor print. We are not Greece. We cannot go bust. We can sustain both the deficit and our debt to GDP ratio (which even now remains lower than France, Germany, America et al).

We can't go BUST no.

But we can go bust.

Thrugelmir

dannykos wrote: »

Cuts also cost money - as to slash 10% of the NHS workforce for instance will lead to a massive initial outlay on redundancy payments.

Unfortunately there's no simple solution, hence why I'd like to see more detailed plans from all parties in the run up to the election.

Cuts also save money - as to slash 10% of the NHS payroll for instance will lead to a massive saving and avoid the need for redundancy payments.

We are over paid for what we do. If everyone took a cut then the economy would soon roar into life. As the spare capacity would generate growth.

Rochdale_Pioneers

Graham_Devon wrote: »

We can't go BUST no.

But we can go bust.

No. We can't. set aside politics and ask an economist how Britain - which prints Sterling - can possibly default on its debts - which are payable in Sterling.

he ratings agencies have already said that they can no more downgrade us than they can the US and its for the same reason. Its the same reason why Japan can run a deficit for a decade and borrow triple what we do and not go bust.

Sure, its not advisable. Its not smart. But we physically cannot default and go bust. Despite all the Tory froth about how appalling the UK economy is, with the various fictional figures of how much debt we really have, the reason why the markets are talking about the PIGS, then the Baltics and Eastern Europe - and not the UK is very simple. We - unlike them - have no risk of going under.

It would be nice to have a sensible debate about economics without having to discuss paranoid wet dreams about bankruptcy and the IMF. Its not going to happen.

Kohoutek

Rochdale_Pioneers wrote: »

It would be nice to have a sensible debate about economics without having to discuss paranoid wet dreams about bankruptcy and the IMF. Its not going to happen.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7198359/Britains-economy-now-as-bad-as-1970s-JP-Morgan-warns.html

"JP Morgan, said that in “many” ways “the UK’s fiscal position is currently worse than observed around the IMF loan in 1976”. The bank warns that Government debts, when compared to the total size of the economy, are higher than during the 1970s crisis..."

I think most people are trying to have a sensible debate too. If gilt investors lose confidence in the UK and we have another sterling crisis and the government starts monetising debt, then it could conceivably lead to double digit inflation like 1976. Why is our position now any inherently better than the events leading up to the 1976 bailout?

purch

We went bakrupt in the 70's

I think you're reading the wrong history books :eek:

davilown

aelitaman wrote: »

In a perverse way the fact that we have not had a massive house price crash has helped the economy because bank losses have been less than they would have and indebted people have been able to sell thier house at a better price meaning they may not have relaised a loss on the house at all or had much smaller residual debt from thier property than they would have with a 50% fall in price meaning thier repayments on the loss are less meaning they can spend more in the economy or avoid bankruptcy.

Strange how things work out.

Wow that was one long sentence - but I think I get your drift;)

aelitaman

purch wrote: »

I think you're reading the wrong history books :eek:

IMF 1976. When a country calls in the IMF it is akin to a business calling in the reciever.

Thrugelmir

Rochdale_Pioneers wrote: »

No. We can't. set aside politics and ask an economist how Britain - which prints Sterling - can possibly default on its debts - which are payable in Sterling.

he ratings agencies have already said that they can no more downgrade us than they can the US and its for the same reason. Its the same reason why Japan can run a deficit for a decade and borrow triple what we do and not go bust.

Sure, its not advisable. Its not smart. But we physically cannot default and go bust. Despite all the Tory froth about how appalling the UK economy is, with the various fictional figures of how much debt we really have, the reason why the markets are talking about the PIGS, then the Baltics and Eastern Europe - and not the UK is very simple. We - unlike them - have no risk of going under.

It would be nice to have a sensible debate about economics without having to discuss paranoid wet dreams about bankruptcy and the IMF. Its not going to happen.

Japan has funded Government debt by selling debt in the main to Japanese savers. Japan has not had to go to international markets to borrow on the scale that the UK will do. This is a different scenario to the UK where consumer debt in the long term has to be reduced (and the savings ratio increased).

Rochdale_Pioneers

aelitaman wrote: »

IMF 1976. When a country calls in the IMF it is akin to a business calling in the reciever.

Do you know the facts behind the IMF loan? Or just the spin? I'll give you a starter for 10 - there were other options than the IMF, and we didn't spend most of the money they made available to us.

aelitaman

Rochdale_Pioneers wrote: »

Do you know the facts behind the IMF loan? Or just the spin? I'll give you a starter for 10 - there were other options than the IMF, and we didn't spend most of the money they made available to us.

Yes I do know the history. You know the rose tinted version.