Gordon, what have you done?As of June 2009, the UK government's "net debt" was over 56 percent of GDP. It is up around 20 percentage points of GDP in just three years.
Moreover, we are only three months into this fiscal year. The debt stock could easily hit 65 percent of GDP by next April. Next year's fiscal deficit will also be huge, and the government will probably need to borrow a further 15 percent of GDP. With GDP growth close to zero, the UK debt stock will almost certainly hit 80 percent within two years.
Lets be honest with ourselves. The government's borrowing binge isn't going to stop in 2011. Government debt will only keep growing, forcing the next generation to clean up our rotten mess.
However, I wonder how the next generation of taxpayers will react to the the debt disaster will they inherit. Will they generously continue to fund pensions as well as service our debts.
Somehow, I think not.
13 comments:
my old boss used to work for a major computer company with a very generous final salary scheme.
He finally decided to take early retirement and went home on Friday night ready to sign all the papers on Monday. But over that weekend his division of the company was sold, and he was transferred out along with all his contributions which went into the new company's money purchase scheme. The value of his pension plummeted overnight and poor old Frank had to work another five years before he could afford to retire on a much reduced income.
Now if that can happen in the private sector, what's to stop Parliament doing that to public sector pensioners in the future.
And to be honest, the sooner the better.
However, I wonder how the next generation of taxpayers will react to the the debt disaster will they inherit. Will they generously continue to fund pensions as well as service our debts.
If they are sane, they will repudiate the pensions, and cut the government's role to the bare bone.
And, good for them.
Our generation is victimizing the next three, all in the name of maintaining our own comforts.
If they are sane they will default on the debt to the banks. Why on earth should the government have to borrow its own currency?! Its mad! The power to create money should be taken away from the banks.
Tim
The bail-outs and borrowing are just a ploy to paper over the cracks because Gordon wants the gullible UK public to think everything is OK and go out and spend what they haven't got to kick start the UK economy/housing market.
Without house price inflation, the UK has no economy.
This madness will all end after the general election and that cretin Brown is consigned to the history books... taking with him the rest of the New Labour crooks with any luck !
Start by linking Gordon Brown's pension to the value of the pound when he took office. As the pound is eaten away by inflation, he can reap what he sowed.
There needs to be major civil service reforms to help cut the UK debt, and I think most people who dont work in the civil service would agree.
Problem is the unions are too powerful and will fight any changes tooth and nail (even if the changes are good for the country).
I think the pound will collapse before the election. Interest rates on gilts jumped yesterday, when the markets feared the BoE wouldn't buy them in August.
If the BoE isn't playing ball with the government anymore, then the crash is likely to be swift and brutal.
I think the trigger will be further banks losses on commercial property, triggering bank losses, further frightening foreign investors back to their home markets.
The poor children need not worry unduly: Most of them will never earn enough income to pay taxes anyway!
I think Keiko has it right. When the QE money runs out after August, there are two possibilities. Either they end QE, in which case at some point, probably in the autumn, the bond market blows up, or they print more money, which will frighten the markets even more, and cause an even bigger crash when that cash runs out some time next year.
QE is a very slippery slope. Very easy to start, very hard to stop.
Its ironic the same people who scream 'think about the children' when it comes to global warming etc don't give a stuff for the next generation when its a matter of loading them with massive amounts of debt.
Having messed up the economy fairly completely with dishonest practices, the private sector is now pressing its campaign in the media (especially on Sky UK) against supposedly excessive public sector pension provision.
But the dishonest yet apparently not illegal practices by which the private sector has maximised shareholder returns and (consequently) executive bonuses by closing down aspects of pension provision and crudely raiding pension funds in good times and bad provide no argument for reducing public sector oension provision to insufficient levels.
However, there is a strong argument against high public sector pension provision at the senior management level, where pay has been excessive - in imitation of the overpaid layers of the private sector - where senior executives made hay in a false credit boom which now has to be aid for by taxpayers.
B. in C.
Anon, 23/7/09 : 11:50
Which planet do you live on?
A planet where neurons are banned?
Neuronymus, 23 July 2009 12:44
If you have an argument or intelligible point to make, I am very intrested to hear it
B. in C.
Gordon doesn't care because his children are on course to growing up either in New York City or Washington (while Gordon heads some international agency). What will life be like?
Lots of cocktail parties, Sarah shopping and the kids in the international school, far away from the migrant and working class retards that pack state schools. He just doesn't care. Sorted mates.
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