"Cost of living crisis" nonsense

Thrugelmir

SGE1 wrote: »

By the way, I don't think the current cost of living is inevitable - the Government could have taken steps over the last 3 years to mitigate the downward pressure on wages

Sorry to burst your bubble. There's no such thing as painless austerity. We haven't recovered from the last recession. The next could strike at any time.

SGE1

Thrugelmir wrote: »

Sorry to burst your bubble. There's no such thing as painless austerity. We haven't recovered from the last recession. The next could strike at any time.

Ah! For god's sake. Who said anything about painless austerity? Why so keen to burst a bubble that isn't there in the first place?

I said, the Government COULD have made other choices that would have lesser the cost of living increase. COULD COULD COULD. Not should. My views on whether it should have or not didn't come into this, I was merely pointing out that things did not necessarily have to be this way. You agreeing or not agreeing with the choice the Govt ended up making is irrelevant.

On a slightly different note, I'm interested in why some people here think that debt is so bad and we need to pay it down much more quickly. The main driver to get the deficit down in the first place was about credibility in financial markets - i.e. being able to borrow cheaply. Which we now can - gilts yields have been pretty low for a while.

No right-thinking person would object to the concept of having some debt, surely? The issue is about being able to handle the amount, and not have too much of it; so sensible fiscal rules make sense.

But let's not go overboard and shun all debt completely. Most of us have some. We probably all have some at some point in our lives. I'm certainly pleased I was able to go in debt to buy a house, for example. Essentially that's my personal infrastructure - no different from the Government borrowing to invest in housing, transport, schools etc. So why do people object to that so much?

Or is the objection more about borrowing for things that aren't considered investments, i.e. the safety net, etc?

Thrugelmir

The Government (of any colour) has to take action. As the UK is living beyond it's means. Increasing the debt, merely adds to the servicing cost i.e. interest. The more spent on interest the less on schools and hospitals etc. The cycle has has to be broken.

The UK is addicted to debt. Or rather to inflation. As a way of partying today and not worrying about paying the bill. Trouble is when the policy was introduced post war the world was a different place. Very different now. There's a guy in India who'll do a call centre job for £1,500 a year, Toyota pay their Chinese car workers around £2,200 a year etc. These people access the internet. They want to enjoy the standard of living you have. They are hungry for it, work hard, are productive. Whereas the Western world has become use to being spoon fed , welfare benefits etc. Become lazy and bloated. With everyone believing there's a right to something. The world is becoming truly global.

lambourne

So sad to read this and see so many people have swallowed Osborne's nonsense gives me little faith in the future.

CLAPTON

Thrugelmir wrote: »

The Government (of any colour) has to take action. As the UK is living beyond it's means. Increasing the debt, merely adds to the servicing cost i.e. interest. The more spent on interest the less on schools and hospitals etc. The cycle has has to be broken.

The UK is addicted to debt. Or rather to inflation. As a way of partying today and not worrying about paying the bill. Trouble is when the policy was introduced post war the world was a different place. Very different now. There's a guy in India who'll do a call centre job for £1,500 a year, Toyota pay their Chinese car workers around £2,200 a year etc. These people access the internet. They want to enjoy the standard of living you have. They are hungry for it, work hard, are productive. Whereas the Western world has become use to being spoon fed , welfare benefits etc. Become lazy and bloated. With everyone believing there's a right to something. The world is becoming truly global.

The government debt post war was 250% of GDP and has been massively reduced.

The level of interest payments are the product of debt and the interest rate :
the interest rate seems to be dependent upon the markets perception of growth and security of repayment :
in the UK that means low interest rates: if we introduced real austerity which lowered growth prospects we might end up paying more interest.

there is no logic that says lower debt is better if that means lower growth.

Fella

Really? Comparing the debt from just after a war 70 years ago to now? Not much of a comparison really is it, things have changed just a tad.

Micro-analysing the situation to come up with the debt being anything other than "plainly far too high" is pointless IMO. If it looks like a duck & quacks like a duck, it's a duck. Or a debt.

lvader

lambourne wrote: »

So sad to read this and see so many people have swallowed Osborne's nonsense gives me little faith in the future.

Who's nonsense did you swallow?

lvader

Fella wrote: »

Really? Comparing the debt from just after a war 70 years ago to now? Not much of a comparison really is it, things have changed just a tad.

Micro-analysing the situation to come up with the debt being anything other than "plainly far too high" is pointless IMO. If it looks like a duck & quacks like a duck, it's a duck. Or a debt.

I have always thought the amount of debt is almost irrelevant, it's the cost of servicing the debt that is.

antrobus

SGE1 wrote: »

.....But let's not go overboard and shun all debt completely. .

I'm not sure anyone could accuse the government of shunning all debt completely. They're still running a deficit of £100 bn or so.:)

Thrugelmir

CLAPTON wrote: »

The government debt post war was 250% of GDP and has been massively reduced.

Agreed. Post war the policy has been to inflate debt away. However 70 years later the world is a very different place. Something Keynes probably didn't have in mind when he come up with concept.

GDP is a misnomer too. If it merely reflects a higher level of activity through an increased money supply.

My bet is on further QE. As nigh impossible to see who is going to fund the UK's deficit.

We are probably at the mid point of the current debt supercycle.

Worth remembering that the last similar event. Culminated in WW2. A sobering thought.