UK Government Debt - Putting it in perspective

HAMISH_MCTAVISH

Generali wrote: »

The big differences now are that debt is being run up without total war being fought

-The size of the debt being run up is vastly smaller than it was when we were at "total war". A third the size of previous peaks.

-We have spent most of the last decade in a "partial war" that thanks to the widespread use of high technology is extremely expensive to fight.

-I'm fairly sure we weren't at "total war" for most of the last 350 years. Yet debt levels remained comfortably above todays levels for most of that time.

The fact is that markets are refusing to lend to countries at far lower debt levels than was the case in the C19th or C20th.

No they're not.

Japan doesn't have a problem borrowing, despite debt pushing 250% of GDP.

The USA has been downgraded by a credit agency and is on track to run massive debts, even by historical standards, yet their debt service costs remain at near record lows.

The UK might be able to buck the trend and borrow a few hundred percent of GDP but it would be wise not to stake too much on it.

Nobody is suggesting the UK government should borrow a few hundred percent of GDP.

It wouldn't take anywhere near that to invest in the infrastructure projects and housing we'll need anyway soon enough, so may as well build now to stimulate the economy and get us back to growth.

To put it another way, if you're not prepared to lend to Spain or Italy at present, and there is money to be made if the market is wrong, why would you want your Government to put you into the same position?

Remind me again, which of those two countries has control over it's own monetary policy and currency?

Is it Spain, or Italy?

CLAPTON

tightrs wrote: »

a lot of the same people or should i say families that we borrow from today


Out of interest, in the days before a truly international finance system, for a balance of payments who were we borrowing the money from? It sounds like we spent a lot of time at war with the other countries with money. (I'm hoping someone will save me the hassle of reading a huge Niall Ferguson tome to find out).

we borrowed from our european neighbours
the germans and dutch and scandinavians mainly


if you read a little 18th century history and in particular the wars between France and England you find
- france had a much bigger population
- was a much richer country
- was much larger country

but defaulted on its debts repeatedly
had difficulty in collecting taxes
had high borrowing costs

It's arguable that the french revolution would never have happened if the rich actually paid their taxes


england
-never defaulted on its debts
-had low borrowing costs
-had a very efficient tax collecting service

Wookster

The really significant point that debt junkies (hamish/ clapton etc) fail to grasp is that bond markets have turned on countries incredibly quickly, in some cases (Ireland/ Portugal) in less than 6 months, yet it takes several years to eliminate a budgetary deficit as we are seeing in the UK (if it is actually eliminated).

A wise person would conclude that at the moment there is a febrile atmosphere and it is much more risky than normal to 'depend on the kindness of strangers.'

homelessskilledworker

Well is there just one person on here who has now had things...

"Put into perspective"

:rotfl:

I actually go to the trouble of talking to my parents and the older generations, and nobody has ever witnessed anything like the debt problems we have today.
Of course people had tougher times, but it was not made worse by loading them up with debt.

I listen to the 24/7 armchair warriors on this board who like to think they are clued up, and yet they have no understanding of what is about to hit us.
Hamish wants us to have 300 year plus time frame for a better understanding of where we are in life, yet he and all his mates can't see past the small period around the turn of the millennium where we borrowed ourselves into oblivion. Those days are never going to come back, yet they are all sitting tightly praying they do.

CLAPTON

Wookster wrote: »

The really significant point that debt junkies (hamish/ clapton etc) fail to grasp is that bond markets have turned on countries incredibly quickly, in some cases (Ireland/ Portugal) in less than 6 months, yet it takes several years to eliminate a budgetary deficit as we are seeing in the UK (if it is actually eliminated).

A wise person would conclude that at the moment there is a febrile atmosphere and it is much more risky than normal to 'depend on the kindness of strangers.'

it is widely reported that the 'bond' market has turned on countries with little or no prospects of growing their economy and hence repaying their debts

what rational person thinks that even if greece's debts were wiped out today, will they return to growth or will start to pay taxes?

similarly spain is unlikely to return to growth as so much of their economy was based on building un-needed infrastructre and houses

CLAPTON

homelessskilledworker wrote: »

Well is there just one person on here who has now had things...

"Put into perspective"

:rotfl:

I actually go to the trouble of talking to my parents and the older generations, and nobody has ever witnessed anything like the debt problems we have today.
Of course people had tougher times, but it was not made worse by loading them up with debt.

I listen to the 24/7 armchair warriors on this board who like to think they are clued up, and yet they have no understanding of what is about to hit us.
Hamish wants us to have 300 year plus time frame for a better understanding of where we are in life, yet he and all his mates can't see past the small period around the turn of the millennium where we borrowed ourselves into oblivion. Those days are never going to come back, yet they are all sitting tightly praying they do.

the facts are that after the war we had debts of about 250% of gdp (as opposed to 80% now)

the fact that your grandparents /parents didn't know about this is because they got on with their lives and started to invest in britain, build a NHS system, expand schools and universities, build massive numbers of houses, motorways etc
the debts also were reduced but over a very long period

so they proved beyound all possible doubt that it is possible to pay debt down, invest for the future and have a continuously improving economy.

Generali

CLAPTON wrote: »

the facts are that after the war we had debts of about 250% of gdp (as opposed to 80% now)

the fact that your grandparents /parents didn't know about this is because they got on with their lives and started to invest in britain, build a NHS system, expand schools and universities, build massive numbers of houses, motorways etc
the debts also were reduced but over a very long period

so they proved beyound all possible doubt that it is possible to pay debt down, invest for the future and have a continuously improving economy.

You might want to read up a wee bit on post-war austerity if you think that this was some sort of costless exercise.

Paying down the debts after the Napoleonic Wars and the expansion of the British Empire were quite expensive too but those costs mostly fell on brown and yellow people who don't seem to matter.

An interesting, if slightly off topic, example of shifting the cost of debt onto others is the acts of King Leopold and his placemen in the Belgian Congo.

pqrdef

homelessskilledworker wrote: »

Of course people had tougher times, but it was not made worse by loading them up with debt.

Certainly not. There were no rent arrears, because if you didn't pay the rent, you got the slate wiped clean when you were chucked out on the street. And if you couldn't pay for the furniture, none of this mucking about with DMAs and CCJs, the bailiffs just came round and took it back. And if your purse was empty till pay day, you pawned your wedding ring. Who needs debt?

Kennyboy66

Generali wrote: »

An interesting, if slightly off topic, example of shifting the cost of debt onto others is the acts of King Leopold and his placemen in the Belgian Congo.

http://www.amazon.co.uk/King-Leopolds-Ghost-Heroism-Colonial/dp/0330441981

A stunningly good book.

During expeditions, Force Publique soldiers were instructed to bring back a hand or head for each bullet fired, to make sure that none had been wasted or hidden for use in rebellions. A soldier with the chilling title “keeper of hands” accompanied each expedition.
A wasted bullet would often mean mutilation for someone alive.

Something to remind people when they think Africa's problems are nothing to do with colonialism.

CLAPTON

Generali wrote: »

You might want to read up a wee bit on post-war austerity if you think that this was some sort of costless exercise.

Paying down the debts after the Napoleonic Wars and the expansion of the British Empire were quite expensive too but those costs mostly fell on brown and yellow people who don't seem to matter.

An interesting, if slightly off topic, example of shifting the cost of debt onto others is the acts of King Leopold and his placemen in the Belgian Congo.

Rather silly comments.

I have read up on post war austerity and I can tell you the debts were paid down, the NHS was established, uni education was expanded, GDP grow consistantly, unemployment was generally contained; the ordinary citizen gained a much better standard of living.
which other bits do I need to read up on?

is that different from australia selling raw materials to China?
yellow people paying your income?