Tuesday, Jun 30, 2009
Home Thoughts, From Abroad
Bloomberg: Sterling Crisis Looms as U.K. Unraveling Points to Budget Cuts
The state of the U.K. economy fills British financial historian Niall Ferguson with foreboding.
“The probability of a real sterling crisis is around one in three, and the probability of major tax hikes and cuts in public spending is roughly one in one,” the Harvard University professor says.
Posted by devo @ 01:20 PM (880 views) Add Comment
8 Comments
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1. night said...
“We [Britain] had debt of over 200 percent of GDP after World War II and we didn’t default,” he says.
Really? I never realised that. How did we manage to pay it off? Any insight welcomed.
2. lenny said...
Weren't around in 1945 but didn't the Yanks give Britain a massive loan where the final payment was made just quite recently?
3. need-a-crash said...
That's right the Marshall Plan was where the US issued debt to Western European nations to help them recover from WWII and ensure they didn't turn Communist - as half of Europe was effectively run by the USSR from 1945.
However the rate of interest was only 2% as the US recognised that it's security was entwined with ours. It was finally payed off a few years ago.
This is different from our current situation because we are not issuing debt to one country that wants to help us, rather we are issuing debt to all and sundry who don't give a stuff about our future prosperity and presumably the interest rate is much higher than 2%?
4. 51ck-6-51x said...
night
- furthermore:
All those men that came back and started working?
The increase in the female labour force?
5. tenyearstogetmymoneyback said...
and rationing was actually increased after the end of the war.
"Two new commodities were rationed after the war. Bread was rationed from 1946 to 1948 and potatoes for a year from 1947. The points system ended in 1950. Rationing continued in this country for 14 years until 1954, when meat was finally de-rationed."
Also I think there was a big push on exports. Despite shortgages of everything a large proportion of manufactured goods like cars were exported in order to get foreign currency to pay off the debt.
6. enuii said...
Have researched post WW2 industrial history extensively over the last few years and most major UK heavy manufacturers exported virtually everything they made until 1949 or so. Even so most companies could have sold up to 3x what they could actually manufacture due to extreme shortages of steel that restricted the orders they could accept.
The UK literally manufactured it's socks off just to survive after WW2.
7. night said...
Thanks, that's a pretty comprehensive list. I do wonder how many of those same ideas could/would be recycled this time around to get our debt down. A few thoughts:
Again, interested to hear people's thoughts or any pertinent information on this.
8. Mr Plumbase said...
The slogan used in the post war years was "export or die". We could be in serious trouble this time round.