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Osbourne's new savings scheme
Comments
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If they can borrow on the markets at sub-2% then why would they pay savers any more than that?
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Because they can't borrow large amounts at sub 2%.
Financial institutions like Banks have to buy them because they have to keep a certain amount in solid investments - the fact they are denominated in Sterling and liable to inflation doesn't matter in that respect, because their liabilities are in Sterling. The Government has restricted the supply of gilts by printing money to buy them, so this has kept the price high (interest rate low). If they wanted to sell more gilts the price would fall (interest rate rise) - because the interest rate would then have to be high enough to tempt those who are not forced to buy them. The interest rate on British gilts is already higher than America, Japan, Germany, etc etc. So the Government cannot really borrow at the present price of gilts - certainly not the large amounts needed.“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
gadgetmind wrote: »However, in the case of non-toll roads/bridges, hospitals, schools, barracks, etc. there usually are 25 year plus contracts in place,.
I recall some opposition politicians threatened to renegotiate these contracts to get the taxpayer a better deal. I cannot see that happening, but it is a risk that needs to be stated..
What I don't know is what happens at the end of the 25 years?“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0 -
Glen_Clark wrote: »I recall some opposition politicians threatened to renegotiate these contracts to get the taxpayer a better deal. I cannot see that happening, but it is a risk that needs to be stated.
It is, and when people thought those with the contracts might buckle, prices did drop. However, HMG were told in no uncertain terms that any attempt to renege would end up in court..
What I don't know is what happens at the end of the 25 years?
Ownership of the asset reverts back to the public sector, but the value of the asset is written-down over the period of the contract to reflect this.
I'm not putting any more money into this sector right now (though I did grab some BBGI last year) because of the premiums, but I've been very happy holding them during the recent turmoil. I've also kept such investments to less than 3% of my investments.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
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MoneySaverLog wrote: »You got to admire the audacity
I think that infrastructure should be paid for by those who use it. Light users pay a little, heavy users pay a lot. What's not to like?I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
They could stick up some more inefficient, ugly Wind Farms that blight the countryside/seashore and half the turbines don't appear to be working......ed0
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gadgetmind wrote: »I think that infrastructure should be paid for by those who use it. Light users pay a little, heavy users pay a lot. What's not to like?
that works fine when somebody thinks they can make a profit by building infrastructure and then charging the users. so in the nineteenth century, a lot of ppl thought they could make money by building railways. in fact, most investors in railways didn't do so well out of it. but the infrastructure got built, which is what matters.
when nobody thinks it's worth their while paying for infrastructure, it may be worth the public sector paying for it instead. why? because the knock-on effects on the economy can be wider and longer-term than the advantages gained by its initial users, and so greater than the initial users would pay for it. any gain for the broader economy will eventually raise tax revenues, so there is an indirect payback. and the public sector is not only supposed to manage its own finances sensibly (not that they often do that), but also to consider the broader public interest (dont' laugh!).0 -
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grey_gym_sock wrote: »i think they're quite elegant.
though this is not a popular view, i suspect!
I also think they have a certain grace, unlike their detractors.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
:D:D:D:D:D:D:D:D This discussion has been closed.
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