Fiscal Cliff

dtsazza

HAMISH_MCTAVISH wrote: »

On a one to ten scale of serious SHTF economic events with the potential to hurt most of the economies on the planet, this would be in the 8-9 range, which is why it's newsworthy all over the globe.

Does anyone else think that things are seriously messed up, if a major economy actually spending no more than it takes in, is considered almost the worst possible thing that could happen?

While I am aware of all the doomsaying, a perverse part of me would be very happy to see the cliff sailed over, just to end the Neverland fantasy of continuous borrowing. (Well, I probably wouldn't, because doubtless the USA would push through some even worse laws in the aftermath. All I really want is some hardcore sanity/frugality, however that may occur.)

HAMISH_MCTAVISH

Graham_Devon wrote: »

Aye, I'd agree. But were not withdrawing any stimulus yet....are we? Were simply doing more?.

Well we already withdrew some of the emergency financial support measures, increased taxes, cut services, and went back into recession as a result.

Our economy is not yet recovered to the point where we can withdraw more stimulus, so I'd say we are right not to.

In the case of America, as they have stimulated more, and recovered better as a result, then they will now be able to withdraw some stimulus, and the negotiations as to how much are ongoing.

The final deal will result in some tax rises, some spending cuts, but a sensible middle ground, rather than the unsustainable "austerity crisis" that will result if no deal is done at all, or if they cut too much too quickly and make the same mistake we did.

ILW

HAMISH_MCTAVISH wrote: »

Well we already withdrew some of the emergency financial support measures, increased taxes, cut services, and went back into recession as a result.

Our economy is not yet recovered to the point where we can withdraw more stimulus, so I'd say we are right not to.

In the case of America, as they have stimulated more, and recovered better as a result, then they will now be able to withdraw some stimulus, and the negotiations as to how much are ongoing.

The final deal will result in some tax rises, some spending cuts, but a sensible middle ground, rather than the unsustainable "austerity crisis" that will result if no deal is done at all, or if they cut too much too quickly and make the same mistake we did.

I have seen no real austerity in the UK. Just a bit of trimming around the edges.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Well we already withdrew some of the emergency financial support measures, increased taxes, cut services, and went back into recession as a result.

Our economy is not yet recovered to the point where we can withdraw more stimulus, so I'd say we are right not to.

Can it recover to that point? What is this "point". And was this point only in situ due to the mass of borrowing which led to the crisis?

Most seem to want to go back to where we were in 2007, and then that will be a "recovery". What if that point itself was artificially high (which it likely was).

GeorgeHowell

Graham_Devon wrote: »

Can it recover to that point? What is this "point". And was this point only in situ due to the mass of borrowing which led to the crisis?

Most seem to want to go back to where we were in 2007, and then that will be a "recovery". What if that point itself was artificially high (which it likely was).

No doubt it was. Growth based on public sector non jobs, consumerism of rubbish/valueless goods, and mindless hedonism is not worth having. Growth that actually enhances the quality of life for the majority is. Agonising over a couple of tenths of a percent on the GDP figure each quarter is another indication of how this country has completely lost the plot.

dtsazza

BertieUK wrote: »

Now 'die by date' laws would appear to be a good idea because here in the UK we have so many laws that are outdated and would cost a fortune to change that could this be an idea that we may adopt?

This might be veering off-topic, but I think that it's possible to introduce laws that reflect universal principles. That is, a good law shouldn't really become outdated, short of a significant change in society's values (which you couldn't predict anyway).

That said, anything that is meant to be temporary should have a die-by date. I was rather cynical about Labour's "temporary" 50% tax rate that had no expiry conditions attached to it. If it's really temporary (and not, I don't know, a political trap for the incoming government), then outline the conditions - either a date, or an economic measure - by which it will cease to exist.

spacey2012

The question nobody can answer is :
all the countries in the world owe billions in debt ?
To whom do they owe it ?
Is there some guy sat somewhere with a huge pile of worldwide IOU ? and if so who underwrites him.

Graham_Devon

spacey2012 wrote: »

The question nobody can answer is :
all the countries in the world owe billions in debt ?
To whom do they owe it ?
Is there some guy sat somewhere with a huge pile of worldwide IOU ? and if so who underwrites him.

It's just numbers at the moment. To be paid for by future generations.

At least, thats what Peston told me once on Newsnight!

It's like the ECB. They just magic up bailout money from nowhere. A lot of it is new money, money that will be paid back by future generations as it's "unwound". Though it's unlikely it will ever be unwound IMO. Living standards will just decline instead, hence 3rd world countries.

PaulF81

spacey2012 wrote: »

The question nobody can answer is :
all the countries in the world owe billions in debt ?
To whom do they owe it ?
Is there some guy sat somewhere with a huge pile of worldwide IOU ? and if so who underwrites him.

China were bankrolling the us of a for a while with t bills. Not sure they have the same appetite for us debt now the fed have gone all printy printy.

dtsazza

spacey2012 wrote: »

The question nobody can answer is :
all the countries in the world owe billions in debt ?
To whom do they owe it ?
Is there some guy sat somewhere with a huge pile of worldwide IOU ? and if so who underwrites him.

It is all owed to someone - China is the simplistic answer. (In fact most Asian countries aren't in debt, they tend to run budget surpluses, especially from an international perspective.)

Also a lot of government debt is held by "individuals" - though usually on their behalf by pension schemes. Plus insurance companies that offer annuities for these pensions almost always back these up by government bonds.

So it's all owned by someone, and I think there's a nice pie chart somewhere that breaks down who owns UK debt, if you're particularly interested. It's not really a secret or an unanswerable question.