Moneyweek - British interest rates & debt....are we all doomed?

cepheus

Macca37 wrote: »

I have just listened to the latest Moneyweek presentation about UK debt.

The theme was that due to the amount of debt that the UK has accumulated and the fact that we are still continuing to run up even more debt means that we will soon hit a crunch point where interest rates will increase leading to the UK becoming effectively bust.

They mention that this could lead to the abolition of the NHS, State pension etc just to try and cover the interest payments.

They go on to compare our position to Greece to try and emphasise how bad a position we are in. The coming crisis will in turn lead to a run on banks, a housing crisis, stock market collapse which will eventually leading to the complete breakdown of society within the UK.

From my own perspective it all seems very overblown to me but I would be interested to see what other people think?

It's all part of the propaganda campaign by the top 10%, so they can keep avoiding and evading taxes whilst the 90% pay through an Austerity drive. Here is a timely article to dispel that myth.

Mythbuster: "Britain is broke - we can't afford to invest"

The message we are often sold by politicians and in the media is that the UK is ‘broke’, and that we can’t afford to borrow any more in order to invest in productive assets like infrastructure and renewable energy. But in the first Mythbuster of this series, Howard Reed from Landman Economics and Tom Clark from The Guardian expose the ‘maxed-out credit card’ metaphor as both false and damaging.




Britain is not Greece – we have our own central bank

All evidence, then, suggests Britain is not ‘bust’. But shouldn’t the UK still fear going the way of Greece – losing control of the public finances, and then – after a delay – being savagely punished by the markets? Not really: the problems of Greece and other stricken continental economies arise because they have no flexibility to unilaterally loosen their monetary policy, owing to euro membership. In contrast, with its own central bank the UK enjoys more freedom to stimulate its economy. Indeed – while inflation remains depressed – if the UK were in a tight corner it could simply print the funds required to avoid outright default.

Masomnia

Ark_Welder wrote: »

As a percentage of GDP, government debt is lower now than at the end of WWII when the NHS came into being.

Mm but the average person wasn't dependent on the state then, as they are now.

richbeth

kidmugsy wrote: »

If Cameron/Clegg continue to apply Blair/Brown policies we shall end up in terrible trouble. But I doubt that the electorate will allow them to behave more intelligently.

Surely this is the nub of the problem, we are spending £125bn pa more than our income and the problem is that no-one has the political courage (or support) to make the really tough decisions. At some point we need to balance the budget but even then we will have way over a trillion of debt to pay back with inerest payments est at ca £70bn pa.

(The NHS costs ca £100 Bn pa so on paper is an easy target but I think a lot of other things would need to go before it was privatised.)

I struggle to see how get out of this mess but am certain that at some point the current cost cutting is going to look like the good old days.
Richard

Jegersmart

cepheus wrote: »

It's all part of the propaganda campaign by the top 10%, so they can keep avoiding and evading taxes whilst the 90% pay through an Austerity drive. Here is a timely article to dispel that myth.

Yes, I don't agree with the article longer term but sure - UK is nowhere near a Greece situation right now.

J

Milarky

The Gruaniad , quoted in cepheus' post:

All evidence, then, suggests Britain is not ‘bust’. But shouldn’t the UK still fear going the way of Greece – losing control of the public finances, and then – after a delay – being savagely punished by the markets? Not really: the problems of Greece and other stricken continental economies arise because they have no flexibility to unilaterally loosen their monetary policy, owing to euro membership.

This is scarcely an argument for strength of the UK's position (vis-a-vis Greece.) Whilst the problems of the UK may have been compounded had it joined the Euro, our ability to continually devalue our currency (and this in a county that imports nearly everything, btw) and so duck the 'bullets' which impose 'discipline' on other nations comes at exactly the same price every easy option in history ever did. We have become a nation a of drunks - just like the US with its 'reserve currency' status aka 'the printing press' - addicted to kicking the same can down the road.

Example: Whatever happened to that bain of governments from the 1800s to the 1980s - 'the balance of payments' problem? Did it miraculously fix itself so that there was no need to carry on monitoring it? No, the problem has continued to worsen but it was ignored and unreported after 1990 - that's why we hear nothing about that subject today. What would have happened if Peter Jay had not left the BBC as economics correspondent? Would we be claiming that the UK was not in a 'technical recession' simply because of nominal ('nominal' mind you) GDP growth, or would we still consider that 'below trend' GDP growth is recessionary - precisely since it means government spending has to increase faster than the (erm) 'real' economy?

And what went for concern over imports will assuredly go for concern over 'inflation' at some stage. First we had an RPI to deflate these numbers. But the numbers from this were 'all wrong' so, instead, a better measure, 'CPI' was substituted - to make the comparisons with other countries 'fairer' we we're told . Now CPI isn't pulling its weight either - it can't even reliably stay below 3%. Something is now 'very wrong' with inflation and growth. Look out students of economic history [and manipulation], here comes 'nominal-measure-of-GDP-growth' to the rescue. Hmm, that ought to be worth a few more kicks of the can, no?

[So the last word goes to Jim Callaghan: crisis? what crisis]

Ark_Welder

Masomnia wrote: »

Mm but the average person wasn't dependent on the state then, as they are now.

No. They just died early instead.

CLAPTON

richbeth wrote: »

Surely this is the nub of the problem, we are spending £125bn pa more than our income and the problem is that no-one has the political courage (or support) to make the really tough decisions. At some point we need to balance the budget but even then we will have way over a trillion of debt to pay back with inerest payments est at ca £70bn pa.

(The NHS costs ca £100 Bn pa so on paper is an easy target but I think a lot of other things would need to go before it was privatised.)

I struggle to see how get out of this mess but am certain that at some point the current cost cutting is going to look like the good old days.
Richard

most of the debt is owed to ourselves

6022tivo

They should bring Thatcher back into power, she had the balls to sort out a mess like this and challenge the issues head on.

Tancred

Devalue sterling and all this nonsense will be solved.

Tancred

Macca37 wrote: »

I have just listened to the latest Moneyweek presentation about UK debt.

The theme was that due to the amount of debt that the UK has accumulated and the fact that we are still continuing to run up even more debt means that we will soon hit a crunch point where interest rates will increase leading to the UK becoming effectively bust.

They mention that this could lead to the abolition of the NHS, State pension etc just to try and cover the interest payments.

They go on to compare our position to Greece to try and emphasise how bad a position we are in. The coming crisis will in turn lead to a run on banks, a housing crisis, stock market collapse which will eventually leading to the complete breakdown of society within the UK.

From my own perspective it all seems very overblown to me but I would be interested to see what other people think?

Moneyweek is a pile of extreme monetarist drivel.