Question about the defecit?

Emy1501

Somerset wrote: »

I watched This Week hosted by Andrew Neil after the 'leader's tv debate'.

He asked Michael Portillo why none of the contenders were really addressing the deficit question, merely skating around it.

Answer '' Because they wouldn't be elected''.

If that is true, people don't want to hear/believe that public services will be annihilated. But it's fairly inevitable.

Think I watched part of the same programme. Had a bit from Robert Peston where he pointed out that each party had a black whole in their spending and if we did not watch out we could end up like Greece. James Purnell was also on the show and was asked if Peston was scare mongering. Purnell said yes but when asked why He basically said because we are Great Britian. Portillo seemed to find this amusing pointing out that he did not know what this great British past we had which meant that we could not become like Greece, Spain Ireland etc. He said he believed that none of the parties were telling the truth because of this and that it would not be a problem because we were so great. Portillo Also said that all we needed was an economic accident and he belives that we will one day look back to these days when the main parties were arguing about when they would start to cut and laugh that they actually thought they would have had a choice of when to do it.

Entertainer

Kohoutek wrote: »

Japan is a basket case? That's probably news to most of the people that live there. Japan is still the second largest economy in the world, and their expertise in manufacturing and electronics is highly impressive to say the least. Crucially, Japan has a population that is able and willing to fund its debt at extremely low interest rates - 93% of their debt is domestically held.

Government debt in the United States is far from rosy...especially if take into account the disastrous fiscal situation in many of the states, e.g. California and Illinois. And like the UK, the fact that the US has to resort to funding a large proportion of its debt from foreigners means it has to pay significantly higher interest rates than Japan.

But you don't deny they have had moribund growth for 20 years? My point is that compared to what they should be achieving they are severely underperforming. Of course they had enough post war growth "banked" to still have a decent residual standard of living. But then by that token we had a decent standard of living in the1960's- people felt they had never had it so good, would it be acceptable to us to regress back to then? And don't neglect the importance of economic growth, there are alot of hugely expensive challenges coming up in the next century- peak oil, energy shortages, climate change, look at the warning of swine flu. We just had a volcano erupting that has thrown the whole of Europe into chaos- no one saw that display of the omnipotence of mother nature coming. We need our economies to be as productive as possible to deal with all this.

Somerset

Emy1501 wrote: »

Think I watched part of the same programme. .

That was the one. We have enormous debt. The only way to service it, much less reduce it ...... is to increase taxation and slash the public services take.

But nobody wants to hear that, or suffer it. So the politicians can't have that at a platform - it would be political suicide.

If we genuinely can't face the truth, we deserve the lies that are being trotted out. But there is a rude awakening coming.

http://forums.moneysavingexpert.com/showthread.html?t=2402073&highlight=medical

I think it's already underway. But in a sly, underhand way.

CLAPTON

mbga9pgf wrote: »

The reason they are in this state is because they listened to Keynes instead of friedman and went down the supporting bad practice route.

Like we did with the banks. Its not what we should aspire to. Its were we are headed. Lets face facts.

we are in this state because of the banking collapse but

yes, we did listen to Keynes and I think rightly so

last time we didn't and we suffered the consequences in the 30's and 40's.

things are nothing like as bad as then and I doubt they will be; that doesn't mean that we don't need to take action but I believe that whoever wins the election will act to reduce the deficit.

Kohoutek

Entertainer wrote: »

But you don't deny they have had moribund growth for 20 years? My point is that compared to what they should be achieving they are severely underperforming.

The population in Japan is decreasing, not increasing. If that's happening, then it's one very important reason why you wouldn't expect much economic growth.

Entertainer wrote: »

And don't neglect the importance of economic growth, there are alot of hugely expensive challenges coming up in the next century- peak oil, energy shortages, climate change, look at the warning of swine flu. We just had a volcano erupting that has thrown the whole of Europe into chaos- no one saw that display of the omnipotence of mother nature coming. We need our economies to be as productive as possible to deal with all this.

But it's not as simple as being productive as possible or growing as much as possible, it's making sure that financial and human capital is allocated to the sectors of the economy that need it. As a result of the real estate bubble in the US and the UK, their economies grew significantly in the last seven years or so, but what long term good did that growth do to our economy?

In terms of peak oil and energy shortages, economic growth in terms of increased consumption (70% of our economy) will make the problem worse, not better. The best way to mitigate peak oil is to emphasise energy efficiency and conservation and to move away from such a consumption based economy.

The whole notion of economic growth can't function in a environment of peak oil, because there's nothing to replace conventional oil at anything like the same volume or price. When the price of energy becomes much more expensive, then a consumption based economy like ours will be hit extremely hard.

mbga9pgf

CLAPTON wrote: »

we are in this state because of the banking collapse but

yes, we did listen to Keynes and I think rightly so

last time we didn't and we suffered the consequences in the 30's and 40's.

things are nothing like as bad as then and I doubt they will be; that doesn't mean that we don't need to take action but I believe that whoever wins the election will act to reduce the deficit.

So why did malaisia bounce back after going for the austrian approach in the 1990s then and why is Japan mired still in debt an deflation?

Keynes got it so wrong its unbelievable.

CLAPTON

mbga9pgf wrote: »

So why did malaisia bounce back after going for the austrian approach in the 1990s then and why is Japan mired still in debt an deflation?

Keynes got it so wrong its unbelievable.

perhaps you would enlighten us on the Malasian issues and the Austrian approach

Thrugelmir

kabayiri wrote: »

It's about time our investment in the banks started to pay back. Much of the debt increase has been due to the bank bailouts.

Include the amount that the UK taxpayer is still underwriting the UK banks for ( around £800 billion) and the figures are truly frightening. We cannot afford for the banking system to collapse.

PrivatisetheNHSnow

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Generali

CLAPTON wrote: »

just for the record

the EU 3% only applies to members of the Euro

and there's no specific consequence of being 100% of GDP ..it's just another number with no real significance... after the second world war we had debts of over 200% of GDP and then we grew for 60 years.

That is true but it required a program of austerity to bring the debt under control after the war. AIUI, things were pretty tough for over a decade after the war was won.