When will the Big Money Crisis start?

[JRM]

fbrs said:

cymtriks said:

will it all just be inflated away or the debts written off so we can start again?

national debt is 800bn, 200bn of which is index linked
public sector pension liabilites are roughly 1000bn, all of which is index linked

tricky to inflate index linked debt away

JRM said:

Frightening isn't, how can people be so naive.

not just naivety. i'm 35 and have no traditional pension. every company ive worked for has had a minimum age, had to have been at the firm 1 to 2 years before joining, one even took back all their contributions when i quit!. these days i take the view that cash is king, over the next 10-30 years uk taxes are only going up to pay for the last 10 years incompetence, so after pathetic returns from some 3rd rate pension fund youl end up being taxed into the ground on it... fk that.

Edited by fbrs on Thursday 22 April 17:07

Well that's true and even if you wanted to chuck tons into a pension fund you get less tax relief now since the sneaky budget changes - so much for removing the 17% limit!!

Tax in pensionable income really annoys me as well, talk about double taxation. Someone told me that in Aus they don't tax your pension when you draw it - does anyone know if that's true?

[cymtriks]

s2art said:

The big worry is the funding gap. And that is happening now. Basically government borrowing is hoovering up all the available money, leaving little for business loans, mortgages etc.
This means that any recovery will be slow and feeble. What is worse, the government will have to pay higher and higher interest rates to fund its borrowing. Its like a death spiral.
The only long term solution is savage cuts in public spending. The best short term solution may be further quantitative easing, or an IMF loan at better rates than the government can get (currently over 4% I think).

In other words we are screwed, and it gets a lot worse from here on in.

So if the big trigger is the state debt going high enough to trigger a collapse of the bond market then how far are we from this?

So far we are a trillion in debt plus another trillion in unfunded pensions, PFI, etc

So if two trillion dosen't burst the bubble what will? Three trillion? Five trillion?

[s2art]

cymtriks said:

s2art said:

The big worry is the funding gap. And that is happening now. Basically government borrowing is hoovering up all the available money, leaving little for business loans, mortgages etc.
This means that any recovery will be slow and feeble. What is worse, the government will have to pay higher and higher interest rates to fund its borrowing. Its like a death spiral.
The only long term solution is savage cuts in public spending. The best short term solution may be further quantitative easing, or an IMF loan at better rates than the government can get (currently over 4% I think).

In other words we are screwed, and it gets a lot worse from here on in.

So if the big trigger is the state debt going high enough to trigger a collapse of the bond market then how far are we from this?

So far we are a trillion in debt plus another trillion in unfunded pensions, PFI, etc

So if two trillion dosen't burst the bubble what will? Three trillion? Five trillion?

Its more a death by a thousand cuts. Just as what is happening in Greece, the bond market doesnt 'collapse' it just means that the government is forced to offer higher and higher returns to get investors to buy its bonds. We are currently at approx 4%, the Greeks are at over 7%. And the longer it goes on the worse it gets. Imagine if we had to fund a couple of trillion at 10%. Its a death spiral.

[Fittster]

s2art said:

cymtriks said:

s2art said:

The big worry is the funding gap. And that is happening now. Basically government borrowing is hoovering up all the available money, leaving little for business loans, mortgages etc.
This means that any recovery will be slow and feeble. What is worse, the government will have to pay higher and higher interest rates to fund its borrowing. Its like a death spiral.
The only long term solution is savage cuts in public spending. The best short term solution may be further quantitative easing, or an IMF loan at better rates than the government can get (currently over 4% I think).

In other words we are screwed, and it gets a lot worse from here on in.

So if the big trigger is the state debt going high enough to trigger a collapse of the bond market then how far are we from this?

So far we are a trillion in debt plus another trillion in unfunded pensions, PFI, etc

So if two trillion dosen't burst the bubble what will? Three trillion? Five trillion?

Its more a death by a thousand cuts. Just as what is happening in Greece, the bond market doesnt 'collapse' it just means that the government is forced to offer higher and higher returns to get investors to buy its bonds. We are currently at approx 4%, the Greeks are at over 7%. And the longer it goes on the worse it gets. Imagine if we had to fund a couple of trillion at 10%. Its a death spiral.

The Greeks are getting close to 9% but it's now a game of chicken. Bail us out or we default and do massive damage to French and German banks.

[jules_s]

I recently sat in a private sector commitee meeting where public spending was discussed in respect of the construction industry.

Every single one of the private sector managers admitted that their businesses would be nigh on bankrupt in the next 18 months if there wasn't PFI/public funded projects to undertake.

So, as a public employee, putting money back into the GDP...I employ private sector employees with your money which are...in no particular order

Private sector mechanical engineers

Private sector electrical engineers

Private sector structural engineers

Private sector quantity surveyors

Private sector planning supervisors

Private sector drainage engineers

Private sector acoustic engineers

Private sector landscape architects

I could go on....but all of the above are more expensive if the private sector do them as opposed to 'in house' public non profit LA services.

[Fittster]

jules_s said:

I

Every single one of the private sector managers admitted that their businesses would be nigh on bankrupt in the next 18 months if there wasn't PFI/public funded projects to undertake.

I'm sure Greek building firms made the same case to their government.

[WhoseGeneration]

Fittster said:

jules_s said:

I

Every single one of the private sector managers admitted that their businesses would be nigh on bankrupt in the next 18 months if there wasn't PFI/public funded projects to undertake.

I'm sure Greek building firms made the same case to their government.

Which demonstrates the size of the problems facing countries such as Greece, the UK and, no doubt, others in the developed world.
Remove Public Sector spending to any significant extent and it'll be chaos.
Frankly, I cannot see that there could, in a short to medium timescale, be enough new capacity in the Private Sector to compensate.
If I'm right, which Politician would admit that to their electorate?

[s2art]

WhoseGeneration said:

Fittster said:

jules_s said:

I

Every single one of the private sector managers admitted that their businesses would be nigh on bankrupt in the next 18 months if there wasn't PFI/public funded projects to undertake.

I'm sure Greek building firms made the same case to their government.

Which demonstrates the size of the problems facing countries such as Greece, the UK and, no doubt, others in the developed world.
Remove Public Sector spending to any significant extent and it'll be chaos.
Frankly, I cannot see that there could, in a short to medium timescale, be enough new capacity in the Private Sector to compensate.
If I'm right, which Politician would admit that to their electorate?

Canada managed to do this in the '90's. I think Australia did something similar too. The result of cutting public spending significantly was that the economy of those countries recovered very rapidly. I would have to read up on it, but my guess is that deregulation was implemented in parallel to big public spending cuts. That may be more difficult in the UK as long as we are in the EU.

[markcoznottz]

s2art said:

WhoseGeneration said:

Fittster said:

jules_s said:

I

Every single one of the private sector managers admitted that their businesses would be nigh on bankrupt in the next 18 months if there wasn't PFI/public funded projects to undertake.

I'm sure Greek building firms made the same case to their government.

Which demonstrates the size of the problems facing countries such as Greece, the UK and, no doubt, others in the developed world.
Remove Public Sector spending to any significant extent and it'll be chaos.
Frankly, I cannot see that there could, in a short to medium timescale, be enough new capacity in the Private Sector to compensate.
If I'm right, which Politician would admit that to their electorate?

Canada managed to do this in the '90's. I think Australia did something similar too. The result of cutting public spending significantly was that the economy of those countries recovered very rapidly. I would have to read up on it, but my guess is that deregulation was implemented in parallel to big public spending cuts. That may be more difficult in the UK as long as we are in the EU.

Gordo- Bliar and all those other c**ts intertwined the public and private sectors to such an extent its almost unpicakable now. Its cynical and irresponsible, and means that it is win-win for the public sector, as they dont take a fair hit during a recession. Not that theres time, but they better not print any more money, or the savings culture will be over for good in this country.

[WhoseGeneration]

s2art said:

Canada managed to do this in the '90's. I think Australia did something similar too. The result of cutting public spending significantly was that the economy of those countries recovered very rapidly. I would have to read up on it, but my guess is that deregulation was implemented in parallel to big public spending cuts. That may be more difficult in the UK as long as we are in the EU.

Low population density resources rich countries will always have an edge, if governed wisely.