Corbynomics: A Dystopia

System

LHW99 wrote: »

See
http://www.telegraph.co.uk/business/2017/08/09/legal-general-profits-soar-uk-life-expectancy-stalls/

Anyone who can spot an inefficiency in a market and bets on it deserves to profit. The customers took the bet and lost (maybe).

What L&G have done is taken two bets. The first is related to their assumptions when selling policies and the second is that latest data can be extrapolated such that reserves earmarked for future payments can be released. They could, yet, be wrong on both.

Interesting letter in the FT.

https://www.ft.com/content/d9636de8-6ca3-11e7-bfeb-33fe0c5b7eaa

Further to “Gains in life expectancy stutter in past 7 years” (July 18): it is possible that the data the UCL report is presenting are being over-interpreted. Yes, there does appear to have been a drop in the rate of increase in life expectancy in the past few years — from about 2011 onward. But there have been increases of approximately the same size in earlier years — as any longer-term analysis of Office for National Statistics data shows.

Indeed, looking at the data over a longer term shows considerable volatility in changes in life expectancy over any three-year period (from which the ONS data are generated).

I'm not sure that L&G's customers are dropping dead early due to sex and drugs and rock n roll. I doubt there are many druggies realistically buying annuities and, if you look at the smoking demographic, I make an assumption that non-smokers will be saving a higher proportion of income.

antrobus

.string. wrote: »

..I can't help but query Murphy's objectivity.

Murphy is not a source. He is merely an accountant with a degree in economics from Southampton ( I think) who writes a blog.

TrickyTree83

antrobus wrote: »

Murphy is not a source. He is merely an accountant with a degree in economics from Southampton ( I think) who writes a blog.

Credited by some as being the brain behind Corbynomics.

He's also the gentleman who thinks Scotland subsidises the rest of the UK.

The man is an idiot.

antrobus

Anyone interested in the UK's fiscal position should read the Fiscal sustainability report of January 2017.
http://budgetresponsibility.org.uk/fsr/fiscal-sustainability-report-january-2017/

Pay particular attention to section 23,

An ageing population and health-specific cost pressures will put upward pressure on public spending. We project total non-interest public spending to rise from 35.8 per cent of GDP at the end of our medium-term forecast in 2021-22, to 43.8 per cent of GDP by 2066-67. That would represent an overall increase of 8.0 per cent of GDP – equivalent to £156 billion intoday’s terms.

Of course, that is only a projection. But it does conclude that

if left unaddressed our latest projections suggest that the primary deficit would rise to 7.2 per cent of GDP and PSND to 234 per cent of GDP in 2066-67 and continue rising thereafter.

£156 billion is a lot of money, although 2021-22 to 2066-67 is a long time. So taxes would need to increased by about £3.5 billion a year. More if you wanted to reduce PSND.

And of course they only focus on the primary deficit. Interest paid is on top of that.

Austerity may not go way any time real soon.

cogito

If you want to borrow, you have to find a lender. The more you borrow, the risk of default increases as lenders want to be sure of being repaid. The rate of interest goes up so borrowing costs more. The more borrowing costs the more interest is required to repay it so money has to be diverted from elsewhere to pay the interest.

There's also a risk that high borrowing will result in the country's credit rating being downgraded. This may result in increased interest payments. This has a knock on effect on business as a business based in the UK cannot have a higher credit rating than the country itself. Businesses have to pay more to borrow money which affects their profits which may in turn result in loss of jobs.

Now will someone please explain to a simpleton like me why the kind of borrowing proposed by Corbyn must be a good thing.

Rusty_Shackleton

cogito wrote: »

If you want to borrow, you have to find a lender. The more you borrow, the risk of default increases as lenders want to be sure of being repaid. The rate of interest goes up so borrowing costs more. The more borrowing costs the more interest is required to repay it so money has to be diverted from elsewhere to pay the interest.

There's also a risk that high borrowing will result in the country's credit rating being downgraded. This may result in increased interest payments. This has a knock on effect on business as a business based in the UK cannot have a higher credit rating than the country itself. Businesses have to pay more to borrow money which affects their profits which may in turn result in loss of jobs.

Now will someone please explain to a simpleton like me why the kind of borrowing proposed by Corbyn must be a good thing.

If an individual wants to borrow, they need to find a lender. If the state wants to borrow and controls the currency, they are the lender. This country is borrowing more than ever before, and interest rates are lower than ever before. Yet again, household finances and government finances are nothing alike.

Without getting into a debate of whether you believe Corbyn's borrowing would achieve this, the whole argument against austerity is this: austerity cuts govt. spending but also reduces tax receipts. If govt spending contributes to economic growth, tax receipts go up. The idea that that the deficit can only be tackled by cuts to govt spending is objectively false.

Also, comparing credit ratings of businesses with that of countries? I don't know where to start. Less apples and oranges, more like apples and Tesco.

Rusty_Shackleton

.string. wrote: »

Re Richard Murphy's blog, ... He concentrated in borrowing without, if seems, proper account of the effect of deficit, regrettably a common befuddlement.

Clearly if the deficit goes up so does borrowing. It is certainly true that the Tories have borrowed more, but this is the consequence of the Labour deficit.

I can't help but query Murphy's objectivity.

And the last Labour government spent billions compensating for chronic under investment for decades under the Tories.

The only people that have had austerity in this country have been the poor and middle classes. Though the Tories sure are keen on socialism for the rich and corporations, just not for anyone who actually needs help.

bobbymotors

If an individual wants to borrow, they need to find a lender. If the state wants to borrow and controls the currency, they are the lender.

misguided drivel. I'm going to lend myself some money later.....

Malthusian

cogito wrote: »

Now will someone please explain to a simpleton like me why the kind of borrowing proposed by Corbyn must be a good thing.

You're pretending that running a country is like running a household and ignoring the fact that money is a Jewish plot blah blah blah.

Rusty_Shackleton

bobbymotors wrote: »

If an individual wants to borrow, they need to find a lender. If the state wants to borrow and controls the currency, they are the lender.

misguided drivel. I'm going to lend myself some money later.....

:rotfl: notice I said "if the state wants to borrow", perhaps you'd prefer it if I phrased it as the government can borrow from the BoE - both are arms of state. I don't think I need to explain why you as a person can't be the borrower and lender on the same transaction.