I think the best perspective on this is when you realise that at the beginning of this year the national debt stood at £512 billion - that's the cumulative total of every government debt for the past 300 years.
Think about it every government, every war that couldn't be funded through taxation, every rifle, bomb, tank, plane, much of our nation's infrastructure, the roads, hospitals, museums, money borrowed during the good times and the hard.....and after 300 years it still only came to a little over £500 billion.
Alice - I would like to see the balnce of trade deficit figures of the UK compared to other countries - like Germany perhaps. Gordon "is a moron" Brown keeps telling us that the UK is better placed than most other countries to weather these uncharted times... but of course he would say that wouldn't he, having been the architect of the UK economy for so long ! I seem to recall that in 2006, Germany was the World's biggest exporter with a massive trade surplus, yet according to Brown, the UK economy was miraculous ! I think not - the only miracle I see, is that so many people were blind as to how this so called miracle economy came about... until now that is. I find it almost beyond comprehension that Brown is trying to re-ignite the housing bubble/smoke and mirrors economy using massive amounts of borrowed money... AGAIN. We need to actually start working again in this country to pay for stuff instead of hyping up house prices, patting each other on the back and kidding ourselves that we are all wealthy.
Alice, this is Al-Jazeera North getting up to their usual tricks. The green circles are SPENDING. It's just frittered awat. The orange circles are LOANS which may or may not be fully repaid.
Typical of the Bolshie Broadcasting Corp to deliberately conflate the two to exaggerate the bailout.
"Alice, this is Al-Jazeera North getting up to their usual tricks. The green circles are SPENDING. It's just frittered awat. The orange circles are LOANS which may or may not be fully repaid."
It can cut both ways. If you buy a new hospital, you end up with a new hospital. Even the spending on running costs comes back to the Government in terms of NI/Income tax and corporation tax.
However loaning out to someone who isn't going to pay it back, you end up with nothing.
As for how this might be misleading, I don't think anyone has been misled by this diagram after witnessing this months carnage.
It doesn't appear to be a political diagram to make the situation look worse than it really is, as borrowing and spending are in new territory and the amounts do reflect that.
The reason why both borrowing & spending get to feature together is because mixed in with the increase in prices, they show the engine of inflation.
To much of any of these leads to increases in one of the other, with the net result being a 1979 style double digit inflation and Interest rate.
Although the components of an inflationary spiral have been put in place, the markets and most commentators are expecting that falling commodity (energy & food) prices will result in deflation, and interest rates can then be lowered to start the next wave of lending.
If prices alone dictated inflation this might be true, however I'm swimming against the tide again on this issue by stating that this diagram shows the key ingredient missing from the equation.
There is also the issue of wage led inflation, but this has been stemmed by the biggest earners in society holding off on wage demands and taking home one off bonuses instead, and its not like they'll dry up now is it - oh wait, shit they have. Now we need a diagram showing us kissing our arses goodbye.
That is the middle class buyoff though. The public sector redirect substantial sums to lawyers/consultants of various types who are all in the private sector. However, the public sector is too useless to function with their own employees, who after all, will never get fired and never lose their jobs.
1. Private sector creates wealth independent of government 2. Government steals part of that wealth, called "taxation". This is a real transfer of wealth 3. Government spends money on public sector salaries, after deducting a nominal paper sum. They call that "taxation" too but there is no economic relation to point (2) because they are making paper sums not transfering wealth. 4. Government spends money on private contractors. Whatever taxes they pay is returning that portion of wealth back to the government. It's a slightly more circuitous route of the same nominal transaction oas (3). There is no wealth transfer.
Perhaps you mean "private sector" to be any company that pays dividends to shareholders / profit shares to partners, and thus includes parasitical contractors that suck on the taxpayer teat. There's no real economic difference between them and being employees of a government department (except possible efficiency gains through at least the potential for competition among vendors).
For Austrians "private sector" means private actors in voluntary exchange with other private actors on a free market: i.e. the bit of the economy that actually makes things.
And this is without considering all the usual overpayment/inefficiency/fraud of government.
This bailout needs some perspective. From the BBC website.
11 comments:
I think the best perspective on this is when you realise that at the beginning of this year the national debt stood at £512 billion - that's the cumulative total of every government debt for the past 300 years.
Think about it every government, every war that couldn't be funded through taxation, every rifle, bomb, tank, plane, much of our nation's infrastructure, the roads, hospitals, museums, money borrowed during the good times and the hard.....and after 300 years it still only came to a little over £500 billion.
That is what I would say to people!
Alice - I would like to see the balnce of trade deficit figures of the UK compared to other countries - like Germany perhaps.
Gordon "is a moron" Brown keeps telling us that the UK is better placed than most other countries to weather these uncharted times... but of course he would say that wouldn't he, having been the architect of the UK economy for so long !
I seem to recall that in 2006, Germany was the World's biggest exporter with a massive trade surplus, yet according to Brown, the UK economy was miraculous !
I think not - the only miracle I see, is that so many people were blind as to how this so called miracle economy came about... until now that is.
I find it almost beyond comprehension that Brown is trying to re-ignite the housing bubble/smoke and mirrors economy using massive amounts of borrowed money... AGAIN.
We need to actually start working again in this country to pay for stuff instead of hyping up house prices, patting each other on the back and kidding ourselves that we are all wealthy.
The name of the system is capitalism.
For uncensored news please go to:
www.wsws.org
www.takingaimradio.info
Rambo
Rambo. I suggest a dictionary.
Alice, this is Al-Jazeera North getting up to their usual tricks. The green circles are SPENDING. It's just frittered awat. The orange circles are LOANS which may or may not be fully repaid.
Typical of the Bolshie Broadcasting Corp to deliberately conflate the two to exaggerate the bailout.
Despite all he says...
... Brown's forever blowing bubbles
"Alice, this is Al-Jazeera North getting up to their usual tricks. The green circles are SPENDING. It's just frittered awat. The orange circles are LOANS which may or may not be fully repaid."
It can cut both ways. If you buy a new hospital, you end up with a new hospital. Even the spending on running costs comes back to the Government in terms of NI/Income tax and corporation tax.
However loaning out to someone who isn't going to pay it back, you end up with nothing.
Good find Alice - I like.
As for how this might be misleading, I don't think anyone has been misled by this diagram after witnessing this months carnage.
It doesn't appear to be a political diagram to make the situation look worse than it really is, as borrowing and spending are in new territory and the amounts do reflect that.
The reason why both borrowing & spending get to feature together is because mixed in with the increase in prices, they show the engine of inflation.
To much of any of these leads to increases in one of the other, with the net result being a 1979 style double digit inflation and Interest rate.
Although the components of an inflationary spiral have been put in place, the markets and most commentators are expecting that falling commodity (energy & food) prices will result in deflation, and interest rates can then be lowered to start the next wave of lending.
If prices alone dictated inflation this might be true, however I'm swimming against the tide again on this issue by stating that this diagram shows the key ingredient missing from the equation.
There is also the issue of wage led inflation, but this has been stemmed by the biggest earners in society holding off on wage demands and taking home one off bonuses instead, and its not like they'll dry up now is it - oh wait, shit they have. Now we need a diagram showing us kissing our arses goodbye.
"Even the spending on running costs comes back to the Government in terms of NI/Income tax and corporation tax."
Public sector does not pay tax. It's a nominal transaction.
Nick,
isnt a substantial proportion of spending on public services actually going to outsourced private sector firms? who will of course pay tax etc
That is the middle class buyoff though. The public sector redirect substantial sums to lawyers/consultants of various types who are all in the private sector.
However, the public sector is too useless to function with their own employees, who after all, will never get fired and never lose their jobs.
Roym,
Get things straight:
1. Private sector creates wealth independent of government
2. Government steals part of that wealth, called "taxation". This is a real transfer of wealth
3. Government spends money on public sector salaries, after deducting a nominal paper sum. They call that "taxation" too but there is no economic relation to point (2) because they are making paper sums not transfering wealth.
4. Government spends money on private contractors. Whatever taxes they pay is returning that portion of wealth back to the government. It's a slightly more circuitous route of the same nominal transaction oas (3). There is no wealth transfer.
Perhaps you mean "private sector" to be any company that pays dividends to shareholders / profit shares to partners, and thus includes parasitical contractors that suck on the taxpayer teat. There's no real economic difference between them and being employees of a government department (except possible efficiency gains through at least the potential for competition among vendors).
For Austrians "private sector" means private actors in voluntary exchange with other private actors on a free market: i.e. the bit of the economy that actually makes things.
And this is without considering all the usual overpayment/inefficiency/fraud of government.
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