'Britain is totally insolvent'

TRUSt_NO_1_2

http://www.thisismoney.co.uk/news/article.html?in_article_id=519495&in_page_id=2&ito=1565

What took you so long Jim to come up with this pearl of wisdom ?

StevieJ

Ok let us just look at one side of the balance sheet and completely ignore UK home and overseas assets. More DM claptrap.

While debt owed by the British government is less, relatively, than the amounts faced by Ireland, Greece or Japan, the UK's debts in total are 466% of annual economic output once consumer debt is included. That's second only to Japan.

Reaper

Jim Rogers loves sound bytes and headlines. The trouble is he gets is wrong far too often to deserve the level of press coverage he gets.

diable

Yawnnnnnnnnnnnnnnn............

sabretoothtigger

Totally insolvent would mean we lack the cash to pay the bills. Which is not the case so long as we can still renew our gilts which so far seems ok

Private debts dont affect the country (so much) because individuals can default on their debt and they probably will to some extent. It might mean the cost of money rises to those people especially but I dont think that makes us all broke

I do agree partly with him in that bailing out the banks probably made things worse not better in the long term. Short term it looks better. What they did was take private debt and elevate its status to government which is wrong, it puts everyone at risk then because it becomes more a possible currency default or threat

We're nothing like Japan. Japanese people have net wealth I believe, uk people borrow more then they own on average so thats not the same.
That makes us much worse but like I say who cares, thats personal risk and people will bare that cost


The more important part is government and therefore currency default risk and that is where uk is better then Japan by miles. Japan is going to blow up before uk as far as I can tell or guess at such things. They have negative population growth which is important, especially if government involves itself in healthcare or pensions which I think Japan does.

I think uk average debt is 7 years to expire and Japan is a few years, they are in much greater danger of paying more in interest then they take in taxes only reason they dont is their own people are loyal and rich

Masomnia

With gilt yields the lowest in generations I find this hard to believe. I notice he doesn't actually back this claim up with any evidence.

Loughton_Monkey

To say we are "Insolvent" is not quite how I would put it.

Britain is the equivalent of an extremely sick "Company". One that has been losing money for years. One where the staff and directors are being screwed down on salaries as far as is reasonable. Where the shareholders are getting no income, but can't sell at a reasonable price. One that has sold off virtually all the assets. Has sold its buildings to lease back.......

That company would go bust. Inevitable. But is not quite bust yet. It is not "Insolvent" until all the 'family silver' has been sold.

Countries are different. They cannot go bust. What they can do is (a) default on debts absolutely, or (b) create high inflation, which ultimately shows through in currency value. Debtors get back their loans eventually, but the money is worth much less. This is basically printing money. The population progressively has to take a 'hit' in higher taxation, and bigger costs - especially for imports.

Since Britain will never choose option (a), it will (alongside most other European Countries) choose option (b). Britain has a lot of 'silver' to keep it going for a while. Ultimately, though, the whole population will suffer - bit by bit. Slowly but surely. We are all seeing this already. We are getting poorer as time goes on because Britain has been "running at a loss" for the last 15 to 20 years. Every Quarter sees another £7 billion to £15 billion net go to foreign countries.

While this is all going on, the Governent will continue taxing us to the hilt. Allow our currency to devalue. Allow high inflation so that we all suffer equally according to our means (spending/savings).

The only big question, is how long it will take (a) for our debts to become relatively insignificant in real terms, and (b) for labour to get cheap enough, and our currency to be cheap enough, to start exporting more than we import again. Only then will we then start to get better as a country, because every month, there will be more money to go round.

In the meantime, all that can be done is to take a large 'Government Spoon' and stir the existing (but dwindling) 'wealth' around, using taxation, incentives, benefits, and financial law. This is all Blair and Brother Brown did for the whole of their tenure. Cameron and Cleggy seemed to have latched on (at last) and at the very least there's 'talk' that shows that they realise we are getting poorer very fast, and that all we are doing is arranging the deck chairs on the Titanic.

Most of this applies to Europe as well. To an extent we are in the same boat. The Eurozone are chained together a bit more. But we are all sinking. I am far from a 'conspiracy theorist', but I do very much blame the Labour Government (although Major may have started it - let's forget the politics for a moment). Britain's Balance of Payments was always positive - only because of 'Intangibles' - but the minute the whole lot turned negative, it was never broadcast again, generally, on the BBC or in the press. All that is mentioned is GDP. Our large negative Balance of Payments is available, but simply not widely published any more. Ultimately, it is the true measure of the nation's increase (or decrease) in wealth - in the same way "Net Profit" is for the corner shop.

As we all know, an ailing corner shop can boast for ever more about increasing turnover (GDP), but if it's losing £100 a week, then it cannot survive any longer than when all the assets are gone.

It is perhaps an irony that China was once the most economically powerful country - extremely rich because it traded positively throught the world. It is a sad fact that over many hundreds of years, it declined right back to the minimum 'peasant' subsistence economy. One has to wonder if we give it another 200 years, then Europe might be almost that poor again?

antrobus

sabretoothtigger wrote: »

Private debts dont affect the country (so much) because individuals can default on their debt and they probably will to some extent. It might mean the cost of money rises to those people especially but I dont think that makes us all broke

Have a look at what happened to Iceland.

And bear in mind that Ireland actually has less public debt than we do. But it's still apparently banrupt.

diable

Loughton_Monkey wrote: »

To say we are "Insolvent" is not quite how I would put it.

Britain is the equivalent of an extremely sick "Company". One that has been losing money for years. One where the staff and directors are being screwed down on salaries as far as is reasonable. Where the shareholders are getting no income, but can't sell at a reasonable price. One that has sold off virtually all the assets. Has sold its buildings to lease back.......

That company would go bust. Inevitable. But is not quite bust yet. It is not "Insolvent" until all the 'family silver' has been sold.

Countries are different. They cannot go bust. What they can do is (a) default on debts absolutely, or (b) create high inflation, which ultimately shows through in currency value. Debtors get back their loans eventually, but the money is worth much less. This is basically printing money. The population progressively has to take a 'hit' in higher taxation, and bigger costs - especially for imports.

Since Britain will never choose option (a), it will (alongside most other European Countries) choose option (b). Britain has a lot of 'silver' to keep it going for a while. Ultimately, though, the whole population will suffer - bit by bit. Slowly but surely. We are all seeing this already. We are getting poorer as time goes on because Britain has been "running at a loss" for the last 15 to 20 years. Every Quarter sees another £7 billion to £15 billion net go to foreign countries.

While this is all going on, the Governent will continue taxing us to the hilt. Allow our currency to devalue. Allow high inflation so that we all suffer equally according to our means (spending/savings).

The only big question, is how long it will take (a) for our debts to become relatively insignificant in real terms, and (b) for labour to get cheap enough, and our currency to be cheap enough, to start exporting more than we import again. Only then will we then start to get better as a country, because every month, there will be more money to go round.

In the meantime, all that can be done is to take a large 'Government Spoon' and stir the existing (but dwindling) 'wealth' around, using taxation, incentives, benefits, and financial law. This is all Blair and Brother Brown did for the whole of their tenure. Cameron and Cleggy seemed to have latched on (at last) and at the very least there's 'talk' that shows that they realise we are getting poorer very fast, and that all we are doing is arranging the deck chairs on the Titanic.

Most of this applies to Europe as well. To an extent we are in the same boat. The Eurozone are chained together a bit more. But we are all sinking. I am far from a 'conspiracy theorist', but I do very much blame the Labour Government (although Major may have started it - let's forget the politics for a moment). Britain's Balance of Payments was always positive - only because of 'Intangibles' - but the minute the whole lot turned negative, it was never broadcast again, generally, on the BBC or in the press. All that is mentioned is GDP. Our large negative Balance of Payments is available, but simply not widely published any more. Ultimately, it is the true measure of the nation's increase (or decrease) in wealth - in the same way "Net Profit" is for the corner shop.

As we all know, an ailing corner shop can boast for ever more about increasing turnover (GDP), but if it's losing £100 a week, then it cannot survive any longer than when all the assets are gone.

It is perhaps an irony that China was once the most economically powerful country - extremely rich because it traded positively throught the world. It is a sad fact that over many hundreds of years, it declined right back to the minimum 'peasant' subsistence economy. One has to wonder if we give it another 200 years, then Europe might be almost that poor again?

Why do you think the people who can survive skirt around tax etc etc, claim nothing but pay nothing in to the system and thats how "people" survive and grow richer, you need to know how to play the game in this new world order.

purch

I notice he doesn't actually back this claim up with any evidence.

You don't get onto CNBC by making well thought out, rational arguments backed by facts and evidence. :eek:

Unless you claim that "something is going to the moon", or "falling through the floor" they don't want you.