UK Debt and the Cuts that have to be made!

a reply to: crazyewok

That's low risk with our level of debt.

However, for countries with a “safe” level of government debt — which include the UK, Germany and the US — the advantages of the extra insurance from cutting the national debt are relatively small, as investors will continue to lend money cheaply, even in the event of an extreme shock.

The risk has to be weighed with the slowing effect paying down the debt has on economic growth. The IMF has conceded that austerity is not the best policy, and paying off debt quickly is not the best approach for the UK.

“It does not follow that once the debt is accumulated, it should be paid down to restore growth,” the IMF said. “On the contrary, where countries retain ample fiscal space, the cure would seem to be worse than the disease — the taxation needed to pay down the debt will be more harmful to growth than living with the debt.”

www.ft.com...

a reply to: Cobaltic1978

An accounting black hole would quickly become apparent.

originally posted by: Soloprotocol

originally posted by: crazyewok
a reply to: Soloprotocol

Let me put it in a more polite way.

Those who are able bodied and on jobseekers CAN GET A JOB!

JSA is not meant to fund a long term life style it meant as a stop gap between JOBS.

Disabled people can’t get jobs. Therefore there benefits needs to fund a long term life style.

Stephen Hawking seems to be doing alright and he's the most disabled person i've seen. I was at School with a girl with severe disability. She works for the DWP and has done since leaving school (35 years).

So many so called disabled sit all day on computers talking about their benefit cuts and what is wrong with them, Maybe they should get a job working at a computer all day. What's to stop someone with no legs working in a call centre. ?

just last week i saw a woman with two sticks run for a bus. Do you get what i'm saying yet.

Oh there are quite a number of folk you are talking about, but rather than tackle that problem, they punish everyone.

I worked for the DWP for more than 10 years, in one capacity or another, and believe me it's easier and more cost effective to punish everyone.

It's an ideology more than a requirement, but people voted them in after being sold it was the latter.

originally posted by: ScepticScot
a reply to: 83Liberty
No because the deficit is a net transfer into the private sector.

Besides which as the private sector went into recession tax receipts inevitably declined. If we ran a balanced budget then government spending would have had to decline also and so deepen the recession.

Not all the deficit goes to the private sector though, we can cut some of the deficit without it impacting on the private sector or the people. Like I said we could continue to invest in the good stuff but reduce/stop the waste.

originally posted by: grainofsand
a reply to: Cobaltic1978

An accounting black hole would quickly become apparent.

They've existed since day one, it's become apparent and ignored. I say ignored, but the Bank of England usually start off some Q.E programme and everything seems calm again.

We all know it isn't, but the establishment will not be exposed without punishing everyone else. Once the black hole becomes too large to ignore, we'll pay for it all. The rich, well at least the old money, will survive and prosper, for the rest of us it will be a lottery.

a reply to: Cobaltic1978

Oh but it is accounted for in the books, so it is 'okay' if you look at the global economic system that way.
What you suggested was the UK unilaterally to cook the books itself, outside of the accepted international governmental sham agreed at the moment.
Good luck with that lol.

originally posted by: 83Liberty

originally posted by: ScepticScot
a reply to: 83Liberty
No because the deficit is a net transfer into the private sector.

Besides which as the private sector went into recession tax receipts inevitably declined. If we ran a balanced budget then government spending would have had to decline also and so deepen the recession.

Not all the deficit goes to the private sector though, we can cut some of the deficit without it impacting on the private sector or the people. Like I said we could continue to invest in the good stuff but reduce/stop the waste.

No some of it goes overseas, but as that is relatively self regulating then it is not a major issue.
No disagreeing at all that some government spending is wasteful, but we should replace the wasteful spending with effective spending. Or if we think the state is in general to large a share of GDP then the solution is to lower taxes and spending.
Attempting to balance or worse achieve a surplus while we have un/under employment, low productivity and trade deficit is only going to make things much much worse.

a reply to: OtherSideOfTheCoin

They could try the city of London. The richest square mile in the world and pretty much tax exempt.

a reply to: ScepticScot

The latest figure we have shows 25.5% of our deficit is being bought by oversees holders.
How does that provide any value to our economy?

a reply to: Cobaltic1978

It is the same all over the world, the greater part of debt is in private hands, investors such as pension funds.
The default is not because it isn't repaid, it is because one cannot pay interest on debt.
There is of course the possibility to borrow more and widen the deficit but it will come at a price, namely interest rates through the roof because of risk.
It essentially means, game over! last resort, the central bank monetizing debt to keep interest rates low and in doing so destroy the purchasing power of the brits.

originally posted by: 83Liberty
a reply to: ScepticScot

The latest figure we have shows 25.5% of our deficit is being bought by oversees holders.
How does that provide any value to our economy?

That is a very good question. In order to buy UK debt overseas holders would buy sterling which would increase/support the value of sterling.
So the answer is it depends on whether you want a stronger or weaker pound (whole different discussion).
Ultimately overseas investors wanting to UK sovereign debt is a sign of confidence in the UK economy.
Answers to economic questions aren't always as straightforward as they first appear.
Should also clarify that being in favour of running a deficit when required is not always the same as being in favour of creating more government debt.

a reply to: Soloprotocol

Lol, I imagine there aren't as many Tory voters affected by the benefit cuts compared to Labour and SNP voters!
Certainly all the people I know on benefits are Labour supporters, that is the key demographic of their membership.

a reply to: ScepticScot

Firstly thank you for your direct answers to my questions. It has made me do a load of research and I feel I have a better understanding of our current financial situation with regards to our deficit and debt.

I still don't quite understand how "the only reason the financial crash wasn't much worse was because we were running a deficit" though. I can totally understand if you had written investment instead of deficit.

After listening to this guy, things are making a lot more sense.

Channel 4 news main story tonight, Osbourne may not get the disability cuts through parliament so potential good news.
On live now.

*Edit*
...looks like at least 20 Tory MP's will vote against it.


*Edit*
...apparently many more Tory MP's are making rumblings that they are uncomfortable with the disability cuts, so I'm keeping my fingers crossed he backs down on it and finds the cuts elsewhere. I've never voted Tory, for the record, just giving an update on MSM broadcast media.

Oh well. One Arsehole down. Osbourne next. ?

Ian Duncan Schmitt Resigns