UK War Debt

mr_goo

Just come across this story on Sky.
http://news.sky.com/story/1363938/uk-begins-paying-back-first-world-war-debt
Unbelievable that the country still owes a debt dating back nigh on 100 years ago. This probable means that the current debts owed will not be paid back for centuries.

Sleeper Cell

Military Force is an extension of Foreign Policy and War is a business.

lesfirth

Does anyone know what war debts the Germans and Japanese have?

random man

Germany have paid off their WW1 debt, even though they were heavily penalised and refused to pay it for years.

http://www.bbc.co.uk/news/world-europe-11442892

ben@31

When it costs £2bn, I wonder who that money ends up with? It has to go to someone. Somebody is making a huge profit out of our wars.

I read that the Rothschild Bank loaned money to both sides during the Napoleonic wars. Kerching ! Win-win for the Rothschild's especially the longer it went on for.

rick_chasey

ben@31 wrote:

When it costs £2bn, I wonder who that money ends up with? It has to go to someone. Somebody is making a huge profit out of our wars.

I read that the Rothschild Bank loaned money to both sides during the Napoleonic wars. Kerching ! Win-win for the Rothschild's especially the longer it went on for.

It's only Kerching if the debt gets paid, innit. No use if the war bankrupts both sides. Then they can't pay the bank back.

CiB

Until the country gets out of debt and turns a profit there will be govt debt. It makes sense not pay off the cheaper borrowing only to replace it with more expensive debt, so - exactly as referenced in the linked article - the right decision is not to replace cheap debt with expensive debt, but to replace cheap debt with cheaper debt.

It's an irrelevance that the original bonds were to fund the war. It's rolling debt, and as there's an outcry every time the govt makes attempts at reducing spending to clear the debt it looks as though some of these ancient obligations will continue, until it's cheaper to replace them with a new debt. That situation seems to have arisen.

rick_chasey

Did a bit of research on this this morning.UK govt does well out of it.

Issued in 1927 when UK was in a bad way, big economic turmoil post return to gold-standard.

Since then inflation has annualised at 4.77% and the coupon was 4% so the treasury sold for £100 each and has bought back at £1.82.

Good sense, in short.

apreading

CiB wrote:

Until the country gets out of debt and turns a profit there will be govt debt. It makes sense not pay off the cheaper borrowing only to replace it with more expensive debt, so - exactly as referenced in the linked article - the right decision is not to replace cheap debt with expensive debt, but to replace cheap debt with cheaper debt.

It's an irrelevance that the original bonds were to fund the war. It's rolling debt, and as there's an outcry every time the govt makes attempts at reducing spending to clear the debt it looks as though some of these ancient obligations will continue, until it's cheaper to replace them with a new debt. That situation seems to have arisen.

This only makes sense if the new debt is on a perpetually fixed rate, as the war bonds were. If not then the new debt would ultimately be more expensive if/when interest rates rise again...