A mathematical question regarding national debt .
Discussion
steveT350C said:
over_the_hill said:
That is a tad concerning!
The media wave the term 'debt' about in a slightly alarmist manner. Nartional debt is financed by gilts, which have fixed, long-term repayment dates. At no point is a heavy-set man going to knock on the white cliffs of Dover and ask for the money back or he'll break our collective kneecaps.
UK debt is currently nearing 90% of GDP. Most big EU countries have 80%-90%; the UK is better off thean France and worse off than Germany but they're in the same ballpark. Italy, Greece and Japan are significantly weaker and as you might expect the USA is stonger. Developing nations have lower debt levels, because it's harder for them to borrow money. But our position at the moment is completely typical of developed, creditworthy European nations.
Nevertheless, the UK does owe the money so the next question might be, to whom? A good question, to which the answer is the holders of UK gilts. There were £1.39 trillion worth of gilts in issuance at the end of Q1 this year. £0.96 trillion of that was owned by... us! That's right. Your pension schemes, your insurance companies, your banks, you. The government owes money, but it mainly owes it to the population and is paying it back in accordance with the terms of the loans.
Admittedly the remaining £432 trillion lay in foreign hands. That's not ideal, sure, but if there was some huge day of reckoning when it all had to be paid back, remember that other countries' debts also lie in our hands. I can't a total number related to UK ownership of foreign goverment bonds but the US alone owes us over £100 billion so as much as the UK would be repaying, we'd also be receiving repayments.
TL:DR version - big national debt figures aren't as bad as they sound. If you need to worry about something, worry about the deficit...
UK debt is currently nearing 90% of GDP. Most big EU countries have 80%-90%; the UK is better off thean France and worse off than Germany but they're in the same ballpark. Italy, Greece and Japan are significantly weaker and as you might expect the USA is stonger. Developing nations have lower debt levels, because it's harder for them to borrow money. But our position at the moment is completely typical of developed, creditworthy European nations.
Nevertheless, the UK does owe the money so the next question might be, to whom? A good question, to which the answer is the holders of UK gilts. There were £1.39 trillion worth of gilts in issuance at the end of Q1 this year. £0.96 trillion of that was owned by... us! That's right. Your pension schemes, your insurance companies, your banks, you. The government owes money, but it mainly owes it to the population and is paying it back in accordance with the terms of the loans.
Admittedly the remaining £432 trillion lay in foreign hands. That's not ideal, sure, but if there was some huge day of reckoning when it all had to be paid back, remember that other countries' debts also lie in our hands. I can't a total number related to UK ownership of foreign goverment bonds but the US alone owes us over £100 billion so as much as the UK would be repaying, we'd also be receiving repayments.
TL:DR version - big national debt figures aren't as bad as they sound. If you need to worry about something, worry about the deficit...
nickbee said:
...
TL:DR version - big national debt figures aren't as bad as they sound. If you need to worry about something, worry about the deficit...
The worry about the big national debt IS the big deficit.TL:DR version - big national debt figures aren't as bad as they sound. If you need to worry about something, worry about the deficit...
If the market for gilts were to go south, owing money to ourselves will also rapidly become a concern for a lot of people. The country's finances need to be thought of like an individual's - get on an even keel then have a plan to clear the debt. We seem incapable of either...
Modern politics in the western world has become almost entirely based upon the giveaway politicians bankrolling totally unaffordable lifestyles for the electorate with massive external borrowings. This has become the cornerstone of most western economies. Grossly irresponsible overspending politically also enables massive vote buying by politicians with huge benefits, free childcare and the like being offered to voters in the hope of buying votes. Clearly it has worked for the politicians who personally move from failing in government into stratosphere earnings way beyond their previous income but a few years before being elected. Inevitably this process must fail in time because in reality sovereign debt has to be repaid or catastrophic failures will ruin the affected states.
The politicians are thus able to run their own personal income gravy trains through this opportunity because the electorate cannot (or do not wish!!) to see that this must end in the end. The "too big to fail banks are being supported by the too incompetent to succeed politicians" being a excellent quotation describing some of this madness, and invented by Andy Zarse on another thread. Good man!).
I cannot see how this will not end except with huge unpaid loans and massive defaults by the grossly overborrowed states. The politicians and the bankers will of course avoid any retribution and be well away with their nest eggs. Tony Blair being the clear leader in this approach. And personally much good it has dome him. Unfortunately the electorate will be left to solve the conundrum of insolvency as best they can. On their own.
The politicians are thus able to run their own personal income gravy trains through this opportunity because the electorate cannot (or do not wish!!) to see that this must end in the end. The "too big to fail banks are being supported by the too incompetent to succeed politicians" being a excellent quotation describing some of this madness, and invented by Andy Zarse on another thread. Good man!).
I cannot see how this will not end except with huge unpaid loans and massive defaults by the grossly overborrowed states. The politicians and the bankers will of course avoid any retribution and be well away with their nest eggs. Tony Blair being the clear leader in this approach. And personally much good it has dome him. Unfortunately the electorate will be left to solve the conundrum of insolvency as best they can. On their own.
Steffan said:
...
I cannot see how this will not end except with huge unpaid loans and massive defaults by the grossly overborrowed states. The politicians and the bankers will of course avoid any retribution and be well away with their nest eggs. Tony Blair being the clear leader in this approach. And personally much good it has dome him. Unfortunately the electorate will be left to solve the conundrum of insolvency as best they can. On their own.
It's a big Mexican stand off Steffan. Everyone is waiting for everyone else to fold first, meanwhile knowing it's in none of their interests to do so.I cannot see how this will not end except with huge unpaid loans and massive defaults by the grossly overborrowed states. The politicians and the bankers will of course avoid any retribution and be well away with their nest eggs. Tony Blair being the clear leader in this approach. And personally much good it has dome him. Unfortunately the electorate will be left to solve the conundrum of insolvency as best they can. On their own.
What all the big boys are hoping is that they can maintain this position until inflation rubs away the worst of the problems.
But you cannot just bemoan the bankers and politicos for making off with the booty. Many people have - freeloaders, sportsmen, pensioners etc etc. One way or another everyone's been on the take.
Murph7355 said:
Steffan said:
...
I cannot see how this will not end except with huge unpaid loans and massive defaults by the grossly overborrowed states. The politicians and the bankers will of course avoid any retribution and be well away with their nest eggs. Tony Blair being the clear leader in this approach. And personally much good it has dome him. Unfortunately the electorate will be left to solve the conundrum of insolvency as best they can. On their own.
It's a big Mexican stand off Steffan. Everyone is waiting for everyone else to fold first, meanwhile knowing it's in none of their interests to do so.I cannot see how this will not end except with huge unpaid loans and massive defaults by the grossly overborrowed states. The politicians and the bankers will of course avoid any retribution and be well away with their nest eggs. Tony Blair being the clear leader in this approach. And personally much good it has dome him. Unfortunately the electorate will be left to solve the conundrum of insolvency as best they can. On their own.
What all the big boys are hoping is that they can maintain this position until inflation rubs away the worst of the problems.
But you cannot just bemoan the bankers and politicos for making off with the booty. Many people have - freeloaders, sportsmen, pensioners etc etc. One way or another everyone's been on the take.
Got into the office this morning, fired up PH and looked at 'Contributions'. Ah! I've posted on the "A mathematical question regarding national debt" thread. It must have been a succinct, pertinent comment regarding the state of the UK's economy...
I'm rarely disappointed in myself, but this is one of those times.
I'm rarely disappointed in myself, but this is one of those times.
Asterix said:
Got into the office this morning, fired up PH and looked at 'Contributions'. Ah! I've posted on the "A mathematical question regarding national debt" thread. It must have been a succinct, pertinent comment regarding the state of the UK's economy...
No, but it was anatomically informative, nonetheless.Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff