High public debt = low economic growth ?

StevieJ

Thrugelmir wrote: »

The UK is borrowing more than it earns. The UK is enjoying a standard of living higher than it deserves.

We are the only the people that change the situation.

Politicians have deceived the electorate as to the fact there's not a a magic money tree.

So blaming Osborne simply doesn't wash.......

So you are free loading, what are you going to do do about it?

pqrdef

CLAPTON wrote: »

This doesn't seem to be happening, so I feel that it's rules and regulations that are preventing lending rather than actual shortage of cash within the banking sector.

What prevents lending is the lousy business climate. Every recession is a crisis of confidence, and the only way out of it is to rebuild confidence.

Instead, the first round of cuts is about to start biting, and all we get from Osborne is promises of more cuts, stretching into the indefinite future. People and councils are going to have less money to spend, by design. Much of the private sector depends on trickle-down from the public fountain. Businesses will fail The cookie will crumble, but nobody knows how. Who wants to make a 5-year loan to a company that may have no customers in 3 years?

The banks have remembered what they forgot 10 years ago, that just because they're awash with cheap money doesn't mean they can afford to lend it at high risk. They're hiding too much bad debt off the books already.

What they need isn't Funding for Lending, it's Insurance for Lending. But the government isn't going to put taxpayers' money at risk, it's wedded to the idea that taking risks is the private sector's job. Unfortunately we don't still live in the 18th century. The private sector is different now, and all it's going to do is whinge that it doesn't get enough support from the government.

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Generali

pqrdef wrote: »

What prevents lending is the lousy business climate. Every recession is a crisis of confidence, and the only way out of it is to rebuild confidence.
.

This recession wasn't caused by inventories though, the classic 'confidence recession', it was caused by malinvestment which led to a very real problem of insolvency among banks.

Some of those banks, like Northern Rock, simply sailed too close to the wind. Others, like Banksia and Bank of Ireland lent too much money to a group of politically connected developers who I believe will be seen to be gangsters in a few decades and the dust has settled.

The problem now isn't that we have a load of spare capacity waiting to be filled it's that we have a load of capacity that nobody wants or needs. Stimulating demand won't help because the problem is on the supply side: we are supplying what people no longer want to consume being Investment Banking in the UK and housing in much of the rest of the world.

So what to do about it? IMHO there isn't much you can do except make it easier to start new businesses supplying today's needs and wants rather than yesterday's and make the penalty for failure smaller.

Thrugelmir

StevieJ wrote: »

So you are free loading, what are you going to do do about it?

Cutting waste is normally part of my daily remit.


Public Sector is akin to the Private Sector in the early 90's. Plenty that can done to cut costs and improve productivity without impacting services. Issue seems to be a cultural one of self preservation.

StevieJ

Thrugelmir wrote: »

Cutting waste is normally part of my daily remit.


Public Sector is akin to the Private Sector in the early 90's. Plenty that can done to cut costs and improve productivity without impacting services. Issue seems to be a cultural one of self preservation.

That won't be helping the UK (or even Chinese) growth figures

OffGridLiving

Thrugelmir wrote: »

Cutting waste is normally part of my daily remit.

A good philosophy for everyone to follow. If people lowered their expenditure on regular monthly items they could afford to buy luxury items that would improve their quality of life, or at least their perception of their quality of life.

Someone who takes a brownbag lunch to work, forgoes the starbucks, turns down the thermostat, turns the TV off instead of leaving it on standby won't reduce their perceived standard of living over the course of a year, but will increase it if they invest the savings into a family holiday.

Same income, different outgoings and a positive impact on lifestyle.

grizzly1911

Thrugelmir wrote: »

Cutting waste is normally part of my daily remit.


Public Sector is akin to the Private Sector in the early 90's. Plenty that can done to cut costs and improve productivity without impacting services. Issue seems to be a cultural one of self preservation.

You can only get so much toothpaste out of the tube. Where they need to cut costs is the people squeezing the tube, or deciding what colour the tubes should be, or which logo to put on the tube.

Thrugelmir

grizzly1911 wrote: »

You can only get so much toothpaste out of the tube.

That's a defeatist attitude. The right management team can make a difference. Not least by employing the right people beneath them.

Good working practices can make that toothpaste last longer. As more comes out of the tube. Almost magically.

grizzly1911

Thrugelmir wrote: »

That's a defeatist attitude. The right management team can make a difference. Not least by employing the right people beneath them.

Good working practices can make that toothpaste last longer. As more comes out of the tube. Almost magically.

There will come a point of diminishing returns where extra squeezing isn't making any improvements. We can push the tube about a bit with new squeezers (new and ineffective costly management) for a while then we have a failure and a new system starts a fresh with a new tube called something else.

CLAPTON

there has been a fairly consistent reduction of costs per unit item for the last 300 years or so

there is no specific reasons why this will not continue to be so for some time