Southend against the cuts

[osymandus]

The links were to a series of polls and a slide show put together for some unions that entirely misses the point. They are not in any way useful.

It is easy to reference debt levels in 1870 or the deficit in 1946, but the fact remains that in 2010 the UK had the largest structural deficit in the G20 at the time of existing high debt levels. This was against the background of sovereign meltdowns and bond markets looking to dump anything that looked even slightly likely to default.

I keep saying this and I'll say it again: yes, the departmental cuts (there are actually no nominal spending cuts) will be tough but nothing like what would have happened if the bond markets had doubted the government's ability to close the structural deficit. It would have meant interest rates rising to continue to borrow to finance revenue spending, which would have killed the economy through reduced liquidity and monetary contraction. The UK would have been locked in a deflationary spiral that would have required fiscal amputation to correct.

By all means protest about the pace of fiscal consolidation or the way it has been allocated (I personally think that cuts should have been frontloaded and that the scope should have been widened to include the NHS and aid), but the economic reality is that we didn't have a choice.

It was actually a video that also refernce 1981 1987 1991 2006 but glad you watched it, and are not dismissing the arguments it makes on one slide and assumptions (as one of teh comments says are you actually going to respond with an argument or simply rhetoric ?). As it also said , and as both the video and Barna point out there is actually little economic sense in cutting so quickly over 4-5 years when a more sensible level is decided to be 10-11 . Cuts do need to be made but the so does normally house hold spending , profits of all levels of business economic models of growth for industry and our reliance as a country on banking trade (again the video displays the figures that our growth has been 2.6% and other countries with manufacturing (not just China ) have on average 6% rise).

The economic reality is the methods are purely political ideology , not as many like to quotes "common sense"

 

[Neil_F]

but glad you watched it, and are not dismissing the arguments it makes on one slide and assumptions (as one of teh comments says are you actually going to respond with an argument or simply rhetoric ?).

You don't think my response was an argument? I'll fisk the whole slideshow if you want but I need to do my actual job today

As it also said , and as both the video and Barna point out there is actually little economic sense in cutting so quickly over 4-5 years when a more sensible level is decided to be 10-11 .

And what would the bond market reaction have been if a plan were to eliminate the structural deficit over ten years rather than five???????????????? Is this not the point I repeatedly make?

 

[MK Shrimper]

And what would the bond market reaction have been if a plan were to eliminate the structural deficit over ten years rather than five???????????????? Is this not the point I repeatedly make?

Oh the bond market. Does that police our streets, or protect our troops, educate our children, provide care for our elderly and a myriad of other real things that normal people rely on. No doubt you'll tell me that the bond market is highly important, and I have no doubt that in the absolute maze of high finance that it is, but will leave literally thousands of people being made redundant due to the behaviour of the rich betting on money that actually doesn't exist anywhere but on a computer screen.

These cuts will be too harsh, too quick and will leave this country in tatters.

 

[osymandus]

You don't think my response was an argument? I'll fisk the whole slideshow if you want but I need to do my actual job today



And what would the bond market reaction have been if a plan were to eliminate the structural deficit over ten years rather than five???????????????? Is this not the point I repeatedly make?

Who cares what one market thinks it is not the sole dictator of value or commerce . Futures and hedge dictated more in the last ten years then bonds. Bonds don;t mean diddle unless the government has a way of making money , make the point all you want don't make it right.

Well if you join a debate it is normally best practice if you criticise a point to actually have read/watched or researched (mind you given our current finical institutes maybe it isn't :P). And despite rumours yes I too now have a job.

 

[Neil_F]

Who cares what one market thinks it is not the sole dictator of value or commerce

They matter a great deal when you depend on them to finance revenue spending. MK asked whether the bond markets matter to everyday services and ordinarily the answer is no. However, we depend on debt financing (via the markets now that we are no longer pursuing quantitative easing) to maintain those services. The amount we borrow corresponds to the entire education, defence budgets and half the NHS. That is paid for through borrowing. That means that the bond markets are absolutely vital.

If the UK did not have a clear plan to return to fiscal stability then the cost of borrowing would increase or may be withdrawn altogether. The markets matter right now because we are so dependent on them, it's as simple as that.

Well if you join a debate it is normally best practice if you criticise a point to actually have read/watched or researched (mind you given our current finical institutes maybe it isn't :P). And despite rumours yes I too now have a job.

I did read the first link and it was just polling results. The slideshow I did scan. When I referred to a job I meant mine as I wouldn't be able to review the whole slideshow and respond in detail to every point it made.

 

[osymandus]

They matter a great deal when you depend on them to finance revenue spending. MK asked whether the bond markets matter to everyday services and ordinarily the answer is no. However, we depend on debt financing (via the markets now that we are no longer pursuing quantitative easing) to maintain those services. The amount we borrow corresponds to the entire education, defence budgets and half the NHS. That is paid for through borrowing. That means that the bond markets are absolutely vital.

If the UK did not have a clear plan to return to fiscal stability then the cost of borrowing would increase or may be withdrawn altogether. The markets matter right now because we are so dependent on them, it's as simple as that.



I did read the first link and it was just polling results. The slideshow I did scan. When I referred to a job I meant mine as I wouldn't be able to review the whole slideshow and respond in detail to every point it made.

Hence my point of referring you to the video , it brings counters to teh points you raise and that the bond's market is an example of our countries over reliance on it Finical services, which is part of the issues , it also explained in fiscal terms why we don't need to pay it back as quickly as possible and we maybe being mislead for political ends on what in material reality the debts mean, i.e. who we pay back and what happens if we "default". It's a 20 minute video with commentary a bit more then just a slide show.

 

[Neil_F]

I'll go through it later, but my initial scan impression was that it deliberately confused debts and deficits and drew historical comparisons that were not relevant.

It's a bit late to say we are over-reliant on the markets (which I agree we are) as we are already in this position.

 

[Yorkshire Blue]

Oh the bond market. Does that police our streets, or protect our troops, educate our children, provide care for our elderly and a myriad of other real things that normal people rely on.

Yes it does.

Unless you are proposing an even greater extension of Cameron's Big Society when these are done for free.

 

[MK Shrimper]

Yes it does.

Unless you are proposing an even greater extension of Cameron's Big Society when these are done for free.

I thought they were paid for by our taxes.

 

[Yorkshire Blue]

I thought they were paid for by our taxes.

If our taxes paid for them we wouldn't be having this conversation.

 

[MK Shrimper]

If our taxes paid for them we wouldn't be having this conversation.

So our taxes are used to pay off a huge debt that was racked up by hedge fund managers betting on money that doesn't exist anywhere but on a computer screen. Couldn't make it up really.

 

[osymandus]

I'll go through it later, but my initial scan impression was that it deliberately confused debts and deficits and drew historical comparisons that were not relevant.

It's a bit late to say we are over-reliant on the markets (which I agree we are) as we are already in this position.

Yes but its never to late to say the sun rises everyday (one day it won;t of course or iot will cook us with a solar flare ) reiterating a possible fact that can alter what your currently in is never a bad thing.

Given his Professor of Economics I hope not and who endorsed the article I find it unlikely.

 

[osymandus]

So our taxes are used to pay off a huge debt that was racked up by hedge fund managers betting on money that doesn't exist anywhere but on a computer screen. Couldn't make it up really.

Suddenly feels Fight Club should be required viewing ;)

 

[Yorkshire Blue]

We were operating at a deficit prior to the banking crisis as well.

And even if we weren't operating at a deficit we'd need short-term borrowing to see the government over between costs being incurred up front and taxes being collected. We're therefore reliant on the bond market in both the short-term and medium to long term.

 

[MK Shrimper]

Soooo money types....who do we exactly owe this money too if everyone is skint? Is there an island off of Fiji where everything is covered with gold and diamonds and the toilet paper is made from the flayed skin of the proletariat?

 

[Yorkshire Blue]

Soooo money types....who do we exactly owe this money too if everyone is skint? Is there an island off of Fiji where everything is covered with gold and diamonds and the toilet paper is made from the flayed skin of the proletariat?

Probably your pension fund.

 

[Rusty Shackleford]

Before the game against Gillingham i and several others will be handing out fliers advertising a march through southend protesting against the government cuts and the attack on the welfare state.

These cuts will affect everybody including SUFC who will be hit by the knock on affect of people losing their jobs and less money flowing around in the local economy.

Anyone coming along would be greatly appreciated.

Meet at 12.00 noon at peir hill on saturday the 12th of march.

I would suggest that you don't want to give me one of your poxy leaflets as I will merely wipe my arse with it and give it back to you. Wake up from your entitlement dreamland.

 

[Neil_F]

Soooo money types....who do we exactly owe this money too if everyone is skint? Is there an island off of Fiji where everything is covered with gold and diamonds and the toilet paper is made from the flayed skin of the proletariat?

Good question. The answer is all kinds of institutions. I'll try to find a breakdown of it but there are typically four categories:

- individuals
- UK investors
- foreign investors
- Bank of England

Individuals in the form of people investing with NS&I. This is obviously a small group.

The Bank of England's quantitaive easing programme was actually authorising the electronic creation of funds to purchase UK gilts (effectively loaning the UK government money).

UK investors (such as pension funds etc) don't tend to matter too much as you can largely inflate the debt away as prior to 1970 gilts were only issued in nominal terms (i.e. you lend the UK government £1bn to be paid back in 10 years with 3% interest. In ten years £1bn is only worth £800k after a hefty dose of inflation). Most gilts still are nominal but some are now index linked. The Bank of England's own pension fund trustees only invest in index linked gilts, so that gives you a pretty good idea of where they think inflation is going.

Foreign investors holding sterling denominated gilts applies as above. However, debt instruments that are not denominated in Sterling (a lot of the stuff that technically sits on the UK government account post bailouts) can't be inflated away.

 

[Neil_F]

Yes but its never to late to say the sun rises everyday (one day it won;t of course or iot will cook us with a solar flare ) reiterating a possible fact that can alter what your currently in is never a bad thing.

This is not the same thing. We are dependent on the debt markets to finance our deficit, which does exist! Your statement refers to a cyclical (and predictable event). The current UK financial predicament that cannot be changed (as we're on a physics theme, it's the Second Law of Thermodynamics - you can't undo what has been done).

 

[osymandus]

This is not the same thing. We are dependent on the debt markets to finance our deficit, which does exist! Your statement refers to a cyclical (and predictable event). The current UK financial predicament that cannot be changed (as we're on a physics theme, it's the Second Law of Thermodynamics - you can't undo what has been done).

Both are temporal based on perception if you wish to be pedantic about it, and both can be changed given the correct method or circumstance (an economic model is of course far easier to change then a celestial body) . And we are not solely dependant on them as we are still one of the largest military producers and exporters so we do make something. Nor as we have already said solely based on Bond's trading alone. AS I said the video is one argument against what you are proposing.