LEAVE the Conservative Party and save your country!
Comments
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Cheers - good articleStevo_666 said:Part 3
"The UK is in a stronger position than most nations to handle higher rates, as it typically offers long-term bonds to lock in low borrowing costs for many years to come.
But that does not mean it must be invulnerable forever.
The Government insists there will be no repeat of the austerity years. Given that ‘austerity’ in practice meant Government spending steadily increased but merely at a slower pace than the previous Labour administration wished, this implies we are in for a period of sustained hikes in spending, with borrowing surging to match.
It is a big bet that GDP will rise quickly enough to make those debts sustainable in the long run."0 -
But you are only looking in the short term. When we Reed this debate I expressed my fear that the next black swan would push us to 100% and the one after 120%. I was wrong as we are likely to be at 120% very soon.rick_chasey said:Unless you start talking in terms of cost-of-servicing it’s hard to have a conversation about it that isn’t shouting past each other.
If borrowing costs double then we will be shelling out £100bn a year.
What happens when we roll over the debt?0 -
I agree, you have to think long term because the principal amount of the debt is going to be around for around for long, long time.surrey_commuter said:
But you are only looking in the short term. When we Reed this debate I expressed my fear that the next black swan would push us to 100% and the one after 120%. I was wrong as we are likely to be at 120% very soon.rick_chasey said:Unless you start talking in terms of cost-of-servicing it’s hard to have a conversation about it that isn’t shouting past each other.
If borrowing costs double then we will be shelling out £100bn a year.
What happens when we roll over the debt?"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
How do you explain Japan with the logic you are applying to the U.K.?surrey_commuter said:
But you are only looking in the short term. When we Reed this debate I expressed my fear that the next black swan would push us to 100% and the one after 120%. I was wrong as we are likely to be at 120% very soon.rick_chasey said:Unless you start talking in terms of cost-of-servicing it’s hard to have a conversation about it that isn’t shouting past each other.
If borrowing costs double then we will be shelling out £100bn a year.
What happens when we roll over the debt?
I appreciate the answer to your Q with another Q is a pain but that is the answer.
In this specific instance the borrowing is either going to happen publicly or privately (or the firms will go bust) and the state can borrow at massively reduced costs compared to the private sector, so it makes sense.
In the long term the compound effect on growth will reduce the underlying to an insignificant number.
That is obviously affected by how heavily the state engages in effective counter-cyclical spending.0 -
Many people do not see Japan as a success story.
As you know my issue is not the current spending but the annual deficit in “normal” years. We used to have a rule that the total debt would grow slower than annual deficit, that got torn up by politicians acting like politicians.
With a long term growth rate of 1.5-2% the impact of your compounding is going to take a while and that is assuming no annual deficit.
I think politicians will continue to show all the restraint of a drunken sailor until something terrible happens.
I don’t believe any UK Govt is capable of allocating resources better than the market (yes there are exceptions).0 -
It is the private sector who is choosing to lend to the UK gov't at negative rates.surrey_commuter said:Many people do not see Japan as a success story.
As you know my issue is not the current spending but the annual deficit in “normal” years. We used to have a rule that the total debt would grow slower than annual deficit, that got torn up by politicians acting like politicians.
With a long term growth rate of 1.5-2% the impact of your compounding is going to take a while and that is assuming no annual deficit.
I think politicians will continue to show all the restraint of a drunken sailor until something terrible happens.
I don’t believe any UK Govt is capable of allocating resources better than the market (yes there are exceptions).0 -
Agree re: Japan.surrey_commuter said:Many people do not see Japan as a success story.
From the article I linked/pasted above:
"Harvard economists Ken Rogoff and Carmen Reinhart - the latter now on her way to becoming chief economist at the World Bank - found that economies in which the Government has debts of more than 90pc of GDP typically grow significantly more slowly than those with lower debts.
Japan is an exception. Its national debt of more than 200pc of GDP has not led to disaster, with the central bank intervening heavily to keep interest rates low in a fruitless quest to boost inflation in recent decades. That said, while it is a prosperous nation, it is not the most dynamic economy going.
Optimists would hope the UK is more like Japan, as it is not tied into a currency union like Italy."
Japan has succeeded in keeping interest rates low so far to keep the cost of debt servicing low, but has not managed to drive inflation to inflate the debts away. So they have kicked the problem down the road for now.
The issue is also that countries with high debt tend to have lower growth, which has certainly been the case for Japan for some time. And will be an issue for the UK if we want to take the approach over the long term of trying to create growth by fiscal stimulus as clearly this will create more debt.
Also bad news for the likes of Italy as I have said before."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
I also think generally, there has not been enough pro-growth policies, and too many policies focused on various debt/gdp ratios which don't mean anything in the real world.
Growth is the solution to all these problems. Growth should always be the macro focus.0 -
What would a pro-growth policy look like?rick_chasey said:I also think generally, there has not been enough pro-growth policies, and too many policies focused on various debt/gdp ratios which don't mean anything in the real world.
Growth is the solution to all these problems. Growth should always be the macro focus.
In the last 40 years I can only think of pushing the SM, attracting overseas car manufacturers and Silicon Roundabout.
I am umming and aching about Docklands as much of it is probably an internal redistribution.
Have not thought about it a lot so happy to be presented with a list of what has been done and what could be done.0 -
I am unconvinced about that 90% figure and think we could be back on our old favourite of cause and effect.Stevo_666 said:
Agree re: Japan.surrey_commuter said:Many people do not see Japan as a success story.
From the article I linked/pasted above:
"Harvard economists Ken Rogoff and Carmen Reinhart - the latter now on her way to becoming chief economist at the World Bank - found that economies in which the Government has debts of more than 90pc of GDP typically grow significantly more slowly than those with lower debts.
Japan is an exception. Its national debt of more than 200pc of GDP has not led to disaster, with the central bank intervening heavily to keep interest rates low in a fruitless quest to boost inflation in recent decades. That said, while it is a prosperous nation, it is not the most dynamic economy going.
Optimists would hope the UK is more like Japan, as it is not tied into a currency union like Italy."
Japan has succeeded in keeping interest rates low so far to keep the cost of debt servicing low, but has not managed to drive inflation to inflate the debts away. So they have kicked the problem down the road for now.
The issue is also that countries with high debt tend to have lower growth, which has certainly been the case for Japan for some time. And will be an issue for the UK if we want to take the approach over the long term of trying to create growth by fiscal stimulus as clearly this will create more debt.
Also bad news for the likes of Italy as I have said before.
Japan or any other country hits structural problems with their economy which means that the revenues are not there for the country to carry on living in the manner to which it has become accustomed or feels that it deserves. The politicians craving popularity then keep the goodies flowing whilst talking about investing etc. You could argue that many countries around the world have hit the buffers with this policy but as yet the Greeks have been closest to a modern western economy going under.
Japan has well documented structural problems I guess it is nice of them to act as a rabbit down the mine to see if there is any limit to how much a country can borrow.0 -
Counter cyclical spending. So, big stimulus during crashes. Could be as simple as cash hand outs or cheap loans to hold companies over or investment in training and re-training, or spending on big relevant infrastructure projects, etc etce tc. Both focused on demand and supply side.surrey_commuter said:
What would a pro-growth policy look like?rick_chasey said:I also think generally, there has not been enough pro-growth policies, and too many policies focused on various debt/gdp ratios which don't mean anything in the real world.
Growth is the solution to all these problems. Growth should always be the macro focus.
In the last 40 years I can only think of pushing the SM, attracting overseas car manufacturers and Silicon Roundabout.
I am umming and aching about Docklands as much of it is probably an internal redistribution.
Have not thought about it a lot so happy to be presented with a list of what has been done and what could be done.
For those industries in secular decline, a lot of extra investment to accelerate skill and occupation changes.
etc.
Row back from all of that during decent growth. Any growth above the 2-3% trend line means you start bringing spending under control and reduce the deficit to zero or make it positive.0 -
Have you been reading Alice in Wonderland?surrey_commuter said:
I am unconvinced about that 90% figure and think we could be back on our old favourite of cause and effect.Stevo_666 said:
Agree re: Japan.surrey_commuter said:Many people do not see Japan as a success story.
From the article I linked/pasted above:
"Harvard economists Ken Rogoff and Carmen Reinhart - the latter now on her way to becoming chief economist at the World Bank - found that economies in which the Government has debts of more than 90pc of GDP typically grow significantly more slowly than those with lower debts.
Japan is an exception. Its national debt of more than 200pc of GDP has not led to disaster, with the central bank intervening heavily to keep interest rates low in a fruitless quest to boost inflation in recent decades. That said, while it is a prosperous nation, it is not the most dynamic economy going.
Optimists would hope the UK is more like Japan, as it is not tied into a currency union like Italy."
Japan has succeeded in keeping interest rates low so far to keep the cost of debt servicing low, but has not managed to drive inflation to inflate the debts away. So they have kicked the problem down the road for now.
The issue is also that countries with high debt tend to have lower growth, which has certainly been the case for Japan for some time. And will be an issue for the UK if we want to take the approach over the long term of trying to create growth by fiscal stimulus as clearly this will create more debt.
Also bad news for the likes of Italy as I have said before.
Japan or any other country hits structural problems with their economy which means that the revenues are not there for the country to carry on living in the manner to which it has become accustomed or feels that it deserves. The politicians craving popularity then keep the goodies flowing whilst talking about investing etc. You could argue that many countries around the world have hit the buffers with this policy but as yet the Greeks have been closest to a modern western economy going under.
Japan has well documented structural problems I guess it is nice of them to act as a rabbit down the mine to see if there is any limit to how much a country can borrow.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
https://liquiditypreference.wordpress.com/2020/06/20/how-do-we-escape-recession/
SC and others may find this blog interesting/thought provoking/nonsense.
Worth a quick read.0 -
maybe it's me but I really don't think that counter cyclical spending counts as a pro-growth policy. To me pro-growth policy is something that increases the trend rate of growth.rick_chasey said:
Counter cyclical spending. So, big stimulus during crashes. Could be as simple as cash hand outs or cheap loans to hold companies over or investment in training and re-training, or spending on big relevant infrastructure projects, etc etce tc. Both focused on demand and supply side.surrey_commuter said:
What would a pro-growth policy look like?rick_chasey said:I also think generally, there has not been enough pro-growth policies, and too many policies focused on various debt/gdp ratios which don't mean anything in the real world.
Growth is the solution to all these problems. Growth should always be the macro focus.
In the last 40 years I can only think of pushing the SM, attracting overseas car manufacturers and Silicon Roundabout.
I am umming and aching about Docklands as much of it is probably an internal redistribution.
Have not thought about it a lot so happy to be presented with a list of what has been done and what could be done.
For those industries in secular decline, a lot of extra investment to accelerate skill and occupation changes.
etc.
Row back from all of that during decent growth. Any growth above the 2-3% trend line means you start bringing spending under control and reduce the deficit to zero or make it positive.
I don't think I will see the annual deficit reduced to zero in my lifetime and no political party has a current policy of borrowing a % smaller than annual growth.0 -
utter nonsenserick_chasey said:https://liquiditypreference.wordpress.com/2020/06/20/how-do-we-escape-recession/
SC and others may find this blog interesting/thought provoking/nonsense.
Worth a quick read.
try this - Gov admits Govt would not have raised the funding with his intervention
https://www.thetimes.co.uk/edition/business/banks-200bn-qe-staved-off-meltdown-w6bmg77bf0 -
Jenrick - bang to rights. If he manages to stay after being caught it will be impressively brazen even for Johnson. Surely Desmond must have donated more than £12,000? If you are going to intervene to deprive the public purse of £45m, don't do it so cheaply.
https://www.telegraph.co.uk/news/2020/06/24/robert-jenrick-write-select-committee-full-details-knowledge/1 -
http://www.coppolacomment.com/2020/06/britain-was-not-nearly-bust-in-march.htmlsurrey_commuter said:
utter nonsenserick_chasey said:https://liquiditypreference.wordpress.com/2020/06/20/how-do-we-escape-recession/
SC and others may find this blog interesting/thought provoking/nonsense.
Worth a quick read.
try this - Gov admits Govt would not have raised the funding with his intervention
https://www.thetimes.co.uk/edition/business/banks-200bn-qe-staved-off-meltdown-w6bmg77bf
Coppola is good on this.However, as I have explained before, not being able to raise immediate funds for an urgent purchase is not insolvency, it is illiquidity. Relieving temporary illiquidity is what central banks do, and have done since the time of Bagehot. Historically they have done so not only for banks, but also for governments. And in the UK, the Bank of England still bears this responsibility.The market meltdown was weakening central banks' hold on interest rates. They had to act, not to protect government finances but to prevent monetary conditions from tightening sharply, potentially triggering a dangerous debt deflationary spiral. The first responsibility of central banks in this crisis has been to prevent an exogenous shock to the real economy from triggering a financial crisis that would amplify the shock and significantly deepen the inevitable recession. That's what the exceptional interventions by central banks, including the Bank of England, since March have been all about.Fiscal policy is pre-eminent. The Bank of England's job is to ensure the smooth functioning of markets and keep the economy as stable as possible so that the Government can support people through this crisis. And that is what it is doing - successfully. This, not "Britain nearly went bust", is what should be on the front page of every newspaper.0 -
either that or the canary down the mine is starting to get sleepy.rick_chasey said:
http://www.coppolacomment.com/2020/06/britain-was-not-nearly-bust-in-march.htmlsurrey_commuter said:
utter nonsenserick_chasey said:https://liquiditypreference.wordpress.com/2020/06/20/how-do-we-escape-recession/
SC and others may find this blog interesting/thought provoking/nonsense.
Worth a quick read.
try this - Gov admits Govt would not have raised the funding with his intervention
https://www.thetimes.co.uk/edition/business/banks-200bn-qe-staved-off-meltdown-w6bmg77bf
Coppola is good on this.However, as I have explained before, not being able to raise immediate funds for an urgent purchase is not insolvency, it is illiquidity. Relieving temporary illiquidity is what central banks do, and have done since the time of Bagehot. Historically they have done so not only for banks, but also for governments. And in the UK, the Bank of England still bears this responsibility.The market meltdown was weakening central banks' hold on interest rates. They had to act, not to protect government finances but to prevent monetary conditions from tightening sharply, potentially triggering a dangerous debt deflationary spiral. The first responsibility of central banks in this crisis has been to prevent an exogenous shock to the real economy from triggering a financial crisis that would amplify the shock and significantly deepen the inevitable recession. That's what the exceptional interventions by central banks, including the Bank of England, since March have been all about.Fiscal policy is pre-eminent. The Bank of England's job is to ensure the smooth functioning of markets and keep the economy as stable as possible so that the Government can support people through this crisis. And that is what it is doing - successfully. This, not "Britain nearly went bust", is what should be on the front page of every newspaper.
what i don't get is that you are a big believer in learning from history and if the history of financial crises has taught us anything it is to beware anybody who invents a magic new way of doing something. I would add to that it has taught us to ignore the jargon and if it looks, sounds and walks like a duck...0 -
The point is it is entirely not magic or new. It has happened, in various guises for a long long time. It's just the mechanism changes as the financial markets change.surrey_commuter said:
either that or the canary down the mine is starting to get sleepy.rick_chasey said:
http://www.coppolacomment.com/2020/06/britain-was-not-nearly-bust-in-march.htmlsurrey_commuter said:
utter nonsenserick_chasey said:https://liquiditypreference.wordpress.com/2020/06/20/how-do-we-escape-recession/
SC and others may find this blog interesting/thought provoking/nonsense.
Worth a quick read.
try this - Gov admits Govt would not have raised the funding with his intervention
https://www.thetimes.co.uk/edition/business/banks-200bn-qe-staved-off-meltdown-w6bmg77bf
Coppola is good on this.However, as I have explained before, not being able to raise immediate funds for an urgent purchase is not insolvency, it is illiquidity. Relieving temporary illiquidity is what central banks do, and have done since the time of Bagehot. Historically they have done so not only for banks, but also for governments. And in the UK, the Bank of England still bears this responsibility.The market meltdown was weakening central banks' hold on interest rates. They had to act, not to protect government finances but to prevent monetary conditions from tightening sharply, potentially triggering a dangerous debt deflationary spiral. The first responsibility of central banks in this crisis has been to prevent an exogenous shock to the real economy from triggering a financial crisis that would amplify the shock and significantly deepen the inevitable recession. That's what the exceptional interventions by central banks, including the Bank of England, since March have been all about.Fiscal policy is pre-eminent. The Bank of England's job is to ensure the smooth functioning of markets and keep the economy as stable as possible so that the Government can support people through this crisis. And that is what it is doing - successfully. This, not "Britain nearly went bust", is what should be on the front page of every newspaper.
what i don't get is that you are a big believer in learning from history and if the history of financial crises has taught us anything it is to beware anybody who invents a magic new way of doing something. I would add to that it has taught us to ignore the jargon and if it looks, sounds and walks like a duck...
I can't make it any plainer; it's a financial plumbing solution, not a fiscal problem/solution.0 -
I think I am suffering from the boy who cried wolf syndrome. There's been so many recent scandals that aren't actually scandals if you spend five minutes investigating, that I haven't bothered to spend any time on this one. I'm starting to think it might actually be a scandal though. This is the danger of non-scandal scandals.kingstongraham said:Jenrick - bang to rights. If he manages to stay after being caught it will be impressively brazen even for Johnson. Surely Desmond must have donated more than £12,000? If you are going to intervene to deprive the public purse of £45m, don't do it so cheaply.
https://www.telegraph.co.uk/news/2020/06/24/robert-jenrick-write-select-committee-full-details-knowledge/0 -
That was my thought too. If you're going to risk a bribe then it should at least be proportionate to what you're providing. It made me think it might just be incompetence but then depriving a Labour council of £45 million could be seen as a 'win' to some Tories (and maybe personal accounts need to be looked into as well). It does also show the problem with CIL though.kingstongraham said:Jenrick - bang to rights. If he manages to stay after being caught it will be impressively brazen even for Johnson. Surely Desmond must have donated more than £12,000? If you are going to intervene to deprive the public purse of £45m, don't do it so cheaply.
https://www.telegraph.co.uk/news/2020/06/24/robert-jenrick-write-select-committee-full-details-knowledge/0 -
The whole donation system has all the incentives aligned for grease and bribery. I'm surprised it doesn't happen more often.0
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Which ones were you thinking of? I can think straight away (large and small) of the closing of parliament, Johnson lying about Jennifer Arcuri, Cummings not obeying his own official guidance, Rees Mogg blaming Grenfell victims for obeying official guidance, Priti Patel coming back into government after pursuing a shadow foreign policy.TheBigBean said:
I think I am suffering from the boy who cried wolf syndrome. There's been so many recent scandals that aren't actually scandals if you spend five minutes investigating, that I haven't bothered to spend any time on this one. I'm starting to think it might actually be a scandal though. This is the danger of non-scandal scandals.kingstongraham said:Jenrick - bang to rights. If he manages to stay after being caught it will be impressively brazen even for Johnson. Surely Desmond must have donated more than £12,000? If you are going to intervene to deprive the public purse of £45m, don't do it so cheaply.
https://www.telegraph.co.uk/news/2020/06/24/robert-jenrick-write-select-committee-full-details-knowledge/0 -
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(Plus getting most things wrong with the pandemic, but I guess that's normal business.)0
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I'm not sure that Nadhim Zahawi has helped massively by saying that anyone who wants the same access to government should try going to their local Conservative party fundraising event.0
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I reckon even Trump would be impressed by a deal where a £12k 'donation' secured you a £45 million saving.rick_chasey said:The whole donation system has all the incentives aligned for grease and bribery. I'm surprised it doesn't happen more often.
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Various stories suggesting grant shapps wants to take charge of the railways. Maybe Jezza did win the argument!0
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So even the one big thing Major managed to do really badly won't be permanent after all.Jeremy.89 said:Various stories suggesting grant shapps wants to take charge of the railways. Maybe Jezza did win the argument!
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No maybe about it, we have had tax rises, massive borrowing, vanity infrastructure projectsJeremy.89 said:Various stories suggesting grant shapps wants to take charge of the railways. Maybe Jezza did win the argument!
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