market forces britain to slash deficit

[willi22]

The markets have forced greece to slash the deficit why not uk or america.
If an economic recovery depends on borrowed money to spend your way out of recession, what happens when lenders won't give you any? With a flawed growth model, ageing population, unrealistic social welfare why shouldn't they stop lending.

The world is reckoning with more than a consumer debt bubble, more like the end of a consumer spending era

 

[Gratis Guidance]

It is MUCH more complex than that!

The Eu have already forced the UK to agree to a deficit payment which should get the UK back to 60% of GDP by 2014-15 - the way the UK are looking to do that is by printing more money, quantative easing.

This fresh money is being used to give to banks to buy government bonds. This is quickly lowering the deficit without actually costing anything. The other side of this formula is that by putting the money in the system, GDP goes up - this also helps lower the percentage of the deficit.

While we can moan about it, there is very little we can actually do about it.

The reality is that the current recession is based on actions taken by governments back in 1932, however, rather than letting the markets sort the mess out properly, we get so far and then governments manipulate the markets to create a new bubble.
The end result is the next bust becomes bigger than the last!

While the current one is bad, the next one, probably around 2023 or so will make what we are going through at the moment look like a walk in the park!!

 

[PewPew]

It is MUCH more complex than that!

The Eu have already forced the UK to agree to a deficit payment which should get the UK back to 60% of GDP by 2014-15 - the way the UK are looking to do that is by printing more money, quantative easing.

This fresh money is being used to give to banks to buy government bonds. This is quickly lowering the deficit without actually costing anything. The other side of this formula is that by putting the money in the system, GDP goes up - this also helps lower the percentage of the deficit.

While we can moan about it, there is very little we can actually do about it.

The reality is that the current recession is based on actions taken by governments back in 1932, however, rather than letting the markets sort the mess out properly, we get so far and then governments manipulate the markets to create a new bubble.
The end result is the next bust becomes bigger than the last!

While the current one is bad, the next one, probably around 2023 or so will make what we are going through at the moment look like a walk in the park!!

Am I right in thinking that if the Government prints too much money, it does more harm than good?

 

[willi22]

So you mean the government is printing money, giving it to the banks which is then lending it back to the government (bonds) to stimulate the economy. (in the process bankers taking a hansom wage/bonus without any risk)

There is no such thing as lowering the deficit without costing anything, thats trying to inflate your way out, inturn devaluing the pound(even more)

I too would be interested to see what kind of world we would have been living in if the governments hadn’t bailed out the likes of general motors and bear stearns.

 

[Dawg]

I'm not sure if it will take until 2023 for the proverbial to hit the fan. If they change the game plan (again), and continue quantitative easing well past the £200billion mark we've got to, the markets will start to mark the UK credit rating down, as happened to Greece some time ago.
This will make servicing the overall debt more expensive, which will mean more competition for money, which means the price of money, interest rates will go up.
When interest rates go up mortgages will become more expensive and we'll start seeing more defaults and property prices dropping. As a lot of company balance sheets are secured by property value quite a few companies will breach their lending covenants, agreements, and the lenders will have to force them into the bin.
Unemployment, expensive mortgages, negative equity,...oh I reckon the full caboodle of Mugabe/Brown economic turmoil in around Olympic time, while the world watches, mostly with glee.

But on the down side....

 

[Gratis Guidance]

What should happen - Brownonomics, where everything goes to pot and we have queues for £1m loaves of bread - isn't going to happen.

If economic rules were actually going to be followed, it would already be in full flow! The difference is that banks and the government both know that they are both bankrupt - and neither wants to rock the boat too much and prove that point. Therefore they are keeping quiet and letting the game continue.

House prices are perfectly safe because it is in too many people's interest for them to stay where they are. The big difference between this recession and the last one, is that this time, the majority of UK mortgage market is state owned. The incentive now is not to make as much profit as possible, its to make sure the government doesn't look too bad!
This means that people really have to take the piss big style before the banks repossess them. 6 months behind on the mortgage is the new average.

All the real finance companies, the profit centred ones, have already left the UK and gone to Geneva where there are less taxes to worry about! The ones that are left behind are working in a market where as long as they tow the government line, they will not go bust - shame it doesn't work for SME's!

The pound will eventually be manipulated until its totally worthless which might be something that happens in the next recession - at which point, the government of the day decides its in the UK's interest to move over to the Euro. And the game starts again!

 

[telemax]

All this will be paid for by our kids, they will have no idea that 2 p or 3 p in every pound of their income tax will be paying for this crisis, and they probably won't care either. The next generation always pays for the previous' mistakes and crises.

 

[directmarketingadvice]

All this will be paid for by our kids

Fantastic! I'm happy with that.

(I don't have kids)

Steve

 

[seiretto]

...UK's interest to move over to the Euro. And the game starts again!

Oli,

Not at all sure this is a "game" - with families becoming homeless and teenagers unable to get jobs.

I fail to see anything which will bolster the UK's GDP where it reaches a level where we are able to payback loans!

Unless you, or someone else, can tell us where/what the big saviour is?

Dave Walker

 

[seiretto]

Fantastic! I'm happy with that.
(I don't have kids)
Steve

neither do I, so I'll second that.

 

[Gratis Guidance]

Oli,

Not at all sure this is a "game" - with families becoming homeless and teenagers unable to get jobs.

I fail to see anything which will bolster the UK's GDP where it reaches a level where we are able to payback loans!

Unless you, or someone else, can tell us where/what the big saviour is?

Dave Walker

You wouldn't believe how much of a game this is - the players will not end up on the streets, and at most risk not getting a New Years Honour if they rock the boat at all! I dislike it as much as you to, but as I said, there is nothing you can do about it. Just don't bite off more than you can chew!

GDP is just the UK's turnover - its meaningless in real terms. As a business person, I'm sure that you are aware of the saying Turnover is Vanity, Profit is Sanity and Cashflow is King?

As a business, its quite easy to raise your turnover - just sell stuff very cheaply and watch the turnover rise to the skies. Your profit will be negligible, and your cashflow will be wrecked, but look at that turnover - huge or what? Do it long enough and you will go bust through over trading!

That is what the current government is doing because the debt is being measured against turnover. Imagine, that your bank told you that you could borrow no more than 60% of your turnover? What would you do?

You would increase your turnover to lower the percentage of debt you were in - therefore making the bank happy with you!! Insane but true!!

As for your other comments, youth unemployment is still lower than it was in the 90's - which is cold comfort to any of today's youth, but basically, we went through the same thing 20 years ago and survived!

 

[Gratis Guidance]

All this will be paid for by our kids, they will have no idea that 2 p or 3 p in every pound of their income tax will be paying for this crisis, and they probably won't care either. The next generation always pays for the previous' mistakes and crises.

Just like we paid off the bill for World War 2 as the final payment was made only a year or so ago!