Re: UK Budget- The Axe Falls
Quote:
Originally Posted by
Myrddraal
That article is full of the bias we have come to expect from the Torygraph. Let's just look at some of the fine examples of impartial journalism.
The article starts by comparing the UK deficit with other western states, then by comparing national debt with other western states, noting that whilst the UK debt is 80pc of GDP, the US debt is 100pc of GDP.
The article says this is due to "general fiscal irresponsibility" (presumably globally, or at least in western states) and the sub-prime meltdown.
The 13 years of labour in which government debt more than doubled are called "Gordon Brown's reign of fiscal terror"
The predicted 4 to 5 years in which government debt is set to double again is called "George Osborne's recent "austerity budget""
How does this statement match up to the accusation that the government debt is to be blamed on Gordon's mismanagement? How can they possibly say that it was the previous government, not the recession, when the next government's dramatic cut backs are predicted to have no effect? If anything, since we can blame the national debt solely on the government, surely the LibCons are even worse than labour, since under them debt is set to double in only four years compared to thirteen?
Note that I don't disagree with the need for cuts, but the endless witch hunting of anyone who isn't a conservative politician is tiresome.
you have a failure of understanding.
there is a qualitative difference between a deficit and government debt, although the former leads to the latter.
gordon decided his magnificent tenure of the treasury had forever broken the economic cycle of boom and bust, he therefore continued in times of rising prosperity to increase government spending as a proportion of government spending and to borrow wildly on top of that. saving the surplus from summer to mend the roof in winter didn't matter to gordon because he had broken the economic cycle, he was that good!
as a result, even though osborne is starting to chop the deficit it does get around the accumulated government debt that has already built up, and will continue to increase until the deficit is gone, but in the mean time we still have to roll over debt that is coming due for which we do not have the money to repay, and we must do so at much less benign interest rates given the markets perception risk of a sovereign debt crisis.
the best that osborne can do is reduce the deficit as quickly as possible, and create a growth friendly business enviroment to permit a surplus from which debt can be paid down. and given our demographic problem he also needs to reduce the state sector (with its truly enormous pension liabilities) and reduce business unfriendly regulation because we need a minimum of 2.00% annual growth from here on in to maintain living standards at current levels (the eurozone by comparison will have an average of ~1.5% long-term so their standard of living will drop far more dramatically).
it is not GB's fault that the crisis happened.
it is his fault that:
> interest rates were too low for too long encouraging private debt accumulation
> that his tripartite system failed at its first crisis
> that britain didn't go into the crisis with a surplus
> that business regulation from brussels is ludicrous
> that the public sector employs 1m too many people
> that there collected pension liabilities are stupendous
there is plenty to blame GB for.
Re: UK Budget- The Axe Falls
Quote:
Originally Posted by
Myrddraal
How does this match up with their own explanation of the national debt in the US, in Spain and the predicted national debt in the years to come?
Spain will pay with lower long term growth and watch its standard of living deteriorate as a result.
America is playing a dangerous game that depends on its reserve currency status allowing it to borrow at low rates even when everyone else is crippled.
Re: UK Budget- The Axe Falls
No no, I assure you I don't have a failure of understanding of the difference between deficit and debt. Quite to the contrary, you should re-read your own article, that states that despite the austerity budget, the debt is set to double in 4 to 5 years time.
EDIT: just to be absolutely clear, the article uses relative terms, such as 'double'. The debt is not 'doubling' due to the size of the existing debt.
Quote:
the best that osborne can do is reduce the deficit as quickly as possible, and create a growth friendly business enviroment to permit a surplus from which debt can be paid down
What I am arguing is that the second is by far the more important of those two things.
Re: UK Budget- The Axe Falls
Quote:
Originally Posted by
Myrddraal
EDIT: just to be absolutely clear, the article uses relative terms, such as 'double'. The debt is not 'doubling' due to the size of the existing debt.
What I am arguing is that the second is by far the more important of those two things.
the total debt is due to go from something around 68% of GDP to a total of somewhere north of 110%, but no this is not solely due to rising interest on debt servicing, it is however a problem compounded by previous debt insomuch as the public programs it was used to fund have now caused a debt overhang resulting from collapsed public revenue collection, and that overhang largely results from the previous two years of recession, and it is going to continue to be a problem because you cannot sensibly or legally just dump 1+ million people immediately back on the labour market.
i agree it is important, but not much more so than avoiding the BIS prediction of a public debt that eats up 15% of GDP (and therefore ~ 35% of gov't spending) on debt interest repayment by 2050.
