Deficit, what deficit?

Discussion in 'Current Affairs, News and Analysis' started by Compo Mick, Jun 10, 2013.

Welcome to the Army Rumour Service, ARRSE

The UK's largest and busiest UNofficial military website.

The heart of the site is the forum area, including:

  1. I am not posting this to start an argument, but hopefully a debate about the Deficit and the reality. This link will offer you a clear and concise account of the UK's debt [austerity] and the reality of life before Gormless Gideon and Call me Dave took over.
    Many try to label me a Marxist, because of my credulity, over the National debt rising rapidly to £1tn, under this bunch. But let the facts speak for them selves.
    Ramesh Patel: Finally! Exposed! The Deficit Myth! So, David Cameron When Are You Going to Apologise?
  2. I have seen these figures before. The current fiscal policy will continue. The article changes nothing it only provides further evidence of the fact that politicians cannot be trusted to tell the truth. Perhaps politicians trust the public about as much as we trust them!
  3. That article is from October 2012.
    So is this one - Did Ramesh Patel Get Paid For This? :: A Very British Dude
  4. That article could have been written by a 17 year old politics A-level student: badly constructed, badly referenced, biased and it reads like a badly translated from Chinese instruction manual. Patel makes much of being an economist and a journalist, but unfortunately seems to be shit at both jobs. He falls into the trap of not being able to separate economic decisions from political bluster.

    As ever the comments are the most informative part of the article.
  5. Don't worry. They aren't.
  6. Not so much the debt which whatever way anyone tries and dresses it up is still **** off huge but retaining the confidence of the markets to lend to us.

    There has to be a plan to deal with it and this is what the austerity is all about. The bond markets can see the Government of the day are serious (although to date all they have managed is to slow the rate the debt was expanding) about dealing with it they are happy to buy UK gilts which we use to fund the day to day economy.

    Firstly not many people understand what the deficit is. The Government raises income by taxation, it spends this on welfare, education defence the kaboodle.
    The annual deficit is the difference between what they can raise in taxation and what they spend.

    That difference is borrowed with a promise to pay it back at interest. Currently the UK has record low interest rates but not to be confused with the rate they offer on the gilts.

    If Labour had been re-elected in 2010 and had carried on spending like it was 2007 no austerity no cuts ect by now we would have had a sterling crisis.

    The markets would have refused to buy UK gilts at the low interest rates and the Government would have to have raised these to make them more attractive.

    In turn this would have forced up UK internal interest rates potentially quite markedly.

    And therein lies the problem, even if interest rates were to rise 1% it would burn a lot of the housing market. Due to Labours lax regulation of the banks through their 13 year term many many people were able to borrow eye watering amounts of money to purchase property, they nurtured bubble economics with that idiot Brown really believing his own mantra that he and he alone had ended boom and bust.

    Consequently the lower the interest rate the easier it is to service that debt.

    The current state of the UK economy will not be improved significantly until this bad debt is flushed from the system.

    Ultra low interest rates are uncommon history tells us they will have to rise at some point but the Government is doing all in its power (the latest wheeze is the help to buy scheme which has the unintended consequence of allowing foreigners to buy UK property with a UK taxpayer guarantee backing them up) to try and keep property values high mainly to protect vulnerable UK banks exposure if there is a widespread crash.

    So the bottom line is do not expect any significant traction or recovery in the UK economy until such time as the bad debt has been flushed out.

    If people are working 70+ hours a week to service a large debt at ultra low interest rates then they do not have additional money to spend back into the economy.......Simples
    • Like Like x 2
  7. I will call you a Marxist as you have decided to use derogotary nick names for the PM and the Chancellor, which is fair, as I like the One-Eyed Son of the Manse Gordon McDoom Brown, Ed Balls on Chin and Ed "I'll stab you, like I stabbed my brother" Millipede. But Camermong and Gideon are no better, primarily because they are politicians and therefore should not be given the time of day lest they come up with some new fangled idea that will lead to somebody, somewhere getting shafted!

    Had you started in the vein of these politicians aren't getting it right, what is the alternative? I would have given you some credibility but you didn't, so you failed.

    FORMER_FYRDMAN LE Book Reviewer

    Given that his opening quotation is both wrong and mis-ascribed, it's unlikely that he's right about anything more complex.
    • Like Like x 1
  9. Confidence in a ponzi scheme.........

    Lots of people keep whining on that the banks won't lend and that this is stalling the recovery in the economy....

    The banks will lend to what they see as feasible businesses and investment ideas. What they won't do is extend over draughts to prop up zombie companies or for people wanting to buy houses unless they have a significant deposit.

    It was the banks lax lending which got us into this mess in the first place. Opening the taps will not fix it but make it worse.

    If you have 40% of the purchase price of a house you will have no trouble getting the other 60% in mortgage from practically any bank in the land. Provided you meet their other terms such as having a job and verifiable income.

    The 40% figure is interesting as this is the banks 'hedge' against the crash when it comes.... You can probably land mortgages up to 30% but the repayment terms will worsen the closer you get to that figure.

    The days of 100% interest only mortgages are long gone and won't be returning anytime soon.
  10. The figures quoted are pretty fair in that article. Labour had reduced debt in % of GDP terms to 2007 although in monetary terms it was higher than 1998. Whichever party is gong to use the spin that suits them best to portray them to us. Hence Labour now quoting £1.3 trillion as a figure not a % when they say how big a mess Osborne will leave in 2015.

    The fact is that the Conservatives had decided they were going to dismantle much of what Labour had done and slash public spending long before 2008. They had 13 years in grudging opposition, a long time for a party that believes it has the right to govern, in which to plan this. The economic crisis and increased defecit built up between 2008 and 2010 was just the excuse they used to justify it. It would not have mattered if we were still at the peak of an economic upturn they would still have done it and they would still have used the cash figures for debt rather than the % of GDP terms to justify it as they were the most frighteneing way to represent the numbers.

    Labour relied on continued growth to bring down the defecit and that worked effectively until 2008. The Conservatives came in determined to cut. Their problem is that they not only cut and stifled the publically funded elements of the economy they also frightened the private sector to death too and sent us back in to recession with a rise in benefits spending as a result of increased unemployment and underemployment through part time working.

    Labour had it right in the sense that a growing economy sees it's debt diminish in significance much as a mortgage holder sees their debt fall over time as their salary increases. Problem is that growth can't be relied on forever. They would have had to cut spending if they had come back into power and they had acknowledged that all be it with a less aggresive plan.

    Whoever won in 2010 was not going to make it rosy by now but in this case I believe the Tories have cocked it up more than Labour would have.
  11. The Labour Party of the UK, always leaves a financial mess after they have been voted out of office. So it was after James Callaghan and Denis Healey after Thatcher took over, and so it was after Gordon Brown, Ed Balls and Blair et al.

    Yes, the International Banking crisis happened, and it started in America with the Sub prime mortgage lending scandal etc. Even if this International Banking scandal had NOT occurred, Labour would still have screwed the UK's Public finances. After all, when Brown took over as PM etc, his 'chains' were beginning to be pulled by the lef of the PLP. Mr Brown himself is old labour in my opinion. Even now Mr Balls as Shadow Chancellor still appears to be in denial about his fiscal and economic policies, being a re-run of those under Brown, if Labour got back into office post the 2015 general elections. (Tax, Tax and Spend like drunks on a pub crawl).

    Personally, I would not beleive anything even the current bunch of Tory - Lib-dem coalition government say. The OECD is a more a reliable scource of statistics than the OBR here in the UK. governments, including the current Uk one will always put a spin on statistics to make themselves look good. It is called 'politicking' or in plain language - Telling Porkies!
  12. Only if the "growth" or "salary" is based on real value and real money which it patently was not and which Bliar and Cyclops and the rest of their mob were perfectly well aware of. They have tried to blame "the bankers" for the whole thing when it is perfectly obvious that the whole Labour concept was predicated on growth of consumer spending on the "never-never" to fund an army of make-work functions for their friends.

    Economic activity is based on multiple exchanges of the same bit of money adding value. But that bit of money has to be earned in the first place. Something that a diminishing proportion of society was actually doing. Whether CMD and his mob will be any better remains to be seen. At least they appear to have acknowleged that you have to pay for your discretionary spending somehow.
  14. Labour have to play to two opposing audiences. They have to effect faux outrage at the starving kiddies and mass suicides apparently caused by the Tories' genocidal cuts.

    At the same time they have to offer a reach around to the toiling classes that they are shafting but who believe Dennis Healey is still Chancellor and taxing them at 98% so that Osama bin Laden can have a multi million pound goat lair and bomb factory in Belgravia.

    Labour are stuffed. No single electoral clique can elect them. Unless they pull off a stunt to equal Stalin joining the Allies after signing the non-aggression pact with the Nazis they wont be getting a whiff of No 10's floor polish any time soon.

    "Spend your way out of debt" is fooling nobody.
  15. this thread has already been done but...
    BBC News - UK's debts 'biggest in the world' a look at debt in the UK,

    UK National Debt - Economics Blog

    The future Chancellor was on the Sunday Politics show yesterday and although he did not come over very well he did get his point across.

    tax revenues have been hit and we are just not... earning... tax revenues to enable repayment of debt.

    National debt has come down but needs to come down far further and faster... Question. How?