When Austerity Meets Reality

brit1234

HAMISH_MCTAVISH wrote: »

Austerity without growth was never going to be politically sustainable. And that which is unsustainable, cannot be sustained.

So what you are saying is these austerity measures across Europe will collapse, the cost of borrowing will shoot up and the credit crunch will be back stronger.

Far higher mortgage rates round the corner then. Something I never thought Hamish would be starting a thread on.

CLAPTON

Graham_Devon wrote: »

Innocent question as I have no idea....

Various people, mainly those who want to see this happen to help out property prices etc, suggest many of the french caught out by one particular tax (increase on those earning €1.3m or more) will arrive in London.

Why would they choose the UK over all the other surrounding countries?

I was surprised to see that there is a french population of over 400,000 in the uk mainly in london;

HAMISH_MCTAVISH

Graham_Devon wrote: »

The nazi thing is a relatively new addition, presumably to add substance to the previous attempts at getting the point across?

No.... It's to put things in context.

The entire purpose of the European Union is to prevent such people from ever gaining a foothold of power in Europe again.

Yet now we have this...

Greek neo-Nazi party Golden Dawn won its first seats in the Greek parliament since the end of the military junta in 1974, winning 21 out of 300 seats.

The party’s leader, Nikos Michaloliakos, warned rivals and reformers that “the time for fear has come” after his breakthrough.

“The time for fear has come for those who betrayed this homeland,” he said at a news conference, flanked by young men with shaved heads.

“We are coming.”

There is no economic price so high it is not worth paying to prevent a re-run of the 1930's in Europe.

A point Germany would do well to remember....

HAMISH_MCTAVISH

brit1234 wrote: »

So what you are saying is these austerity measures across Europe will collapse,

Almost certainly.

the cost of borrowing will shoot up and the credit crunch will be back stronger

For Eurozone countries?

Probably.

But in such a scenario you'd likely see an influx of capital to safe haven economies such as the UK.

The most likely result would be that the cost of borrowing for the UK would fall, and increased funds would be available to lend.

Far higher mortgage rates round the corner then.

Not in the UK.

But I wouldn't take out a mortgage in France or Greece just now...

brit1234

HAMISH_MCTAVISH wrote: »

Almost certainly.



For Eurozone countries?

Probably.

But in such a scenario you'd likely see an influx of capital to safe haven economies such as the UK.

The most likely result would be that the cost of borrowing for the UK would fall, and increased funds would be available to lend.



Not in the UK.

But I wouldn't take out a mortgage in France or Greece just now...

Hamish can I take you back to 2007-8. This whole credit crunch affected the world hence all the international banks co-ordinating there actions simultaneously. The clue with the International Money Markets is the word International. The money flows mainly through international financial hub such as New York and the far bigger one called London perhaps.

The cost of borrowing in the UK will go up. European turmoil doesn't help the UK as its biggest trading block is Europe which will reduce our economic growth predictions. Instability in Europe will make the cost of us borrowing for us. The only way to reduce that is to rely on British savers and we need higher interest rates here to encourage that saving.

http://www.bankrate.com/rates/interest-rates/libor.aspx
LIBOR rate set to rise higher tomorrow, it is already steadily rising forcing mortgage rates higher.

Graham_Devon

HAMISH_MCTAVISH wrote: »

The most likely result would be that the cost of borrowing for the UK would fall, and increased funds would be available to lend.

You appear to be suggesting that if the euro fails, the UK will have more money to lend?

I've read a fair bit about the Euro failing, and not once has this ever cropped up. On the contrary, quite the opposite pops up in almost every article written.

Who exactly would do the lending under your scenario?

Wookster

michaels wrote: »

Just like the BBC take:
http://www.bbc.co.uk/news/business-17980926

No mention of the fact that if you spend more than you receive then you have to borrow which means you need someone willing to lend to you which means there is a limit to how much more you can spend than you receive in tax. Ignore this 'little' problem and ending austerity sounds like a great idea.

Don't try explaining this to socialists, particularly champagne socialists like Ken Livingstone, Hollande, Milliband etc as the concept of a limited supply of money is just simply way beyond their ability to comprehend.

Graham_Devon

HAMISH_MCTAVISH wrote: »

No.... It's to put things in context.

The entire purpose of the European Union is to prevent such people from ever gaining a foothold of power in Europe again.

Yet now we have this...

The problem with your posts Hamish is the crash is the starting period for you. You will not, or don't want to look at what led to the crash, and what created all the problems.

You are concerning yourself far to much with blaming austerity, while trying to convince there was never a problem in the first place.

Austerity, at this moment in time, appears to be the only thing that will work. You cannot create growth from spending, if the spending that creates the growth creates further debt problems.

If your message was that we can create growth from spending money that is actually available, then I would agree with you. But that's not the message. The problems stem from debt due to too much spending.

You cannot create more debt to create more spending to create growth. All you are doing is ignoring everything which led to the problems and asking for more to solve the problems. Heroin works on the same basis.

abaxas

Graham_Devon wrote: »

The problem with your posts Hamish is the crash is the starting period for you. You will not, or don't want to look at what led to the crash, and what created all the problems.

You are concerning yourself far to much with blaming austerity, while trying to convince there was never a problem in the first place.

Austerity, at this moment in time, appears to be the only thing that will work. You cannot create growth from spending, if the spending that creates the growth creates further debt problems.

If your message was that we can create growth from spending money that is actually available, then I would agree with you. But that's not the message. The problems stem from debt due to too much spending.

You cannot create more debt to create more spending to create growth. All you are doing is ignoring everything which led to the problems and asking for more to solve the problems. Heroin works on the same basis.

The standard Hamish response.

The people who are trying to fix are the people to blame for the problem them didn't create.

In medical terms it's called 'mental illness'.

CLAPTON

let's remind ourselves that after the war the UK had debts of 250% of gdp

we started on a period of social change (NHS, education etc) and also a period of unprecedented economic growth and full employment

so there is nothing inevitable about debt of 80% of gdp and nothing evitable about a lost decade of stagnation and high unemployment


we have given huge sums of money to banks and to bankers;
we continue to allow a madman to decide monetary policy
there are better ways of spending that money that would directly affect the economic activity and employment of the country