Wednesday, Sep 15, 2010
He described the current deficit as unsustainable
Yahoo / reuters: Bank of England governor Mervyn King warns unions accept cuts or 'fail your children'
Market reaction to rising sovereign debt can turn quickly from benign to malign, as we saw in the euro area earlier this year. It is not sensible to risk a damaging rise in long-term interest rates that would make investment and the cost of mortgages more expensive, Mr King said.
The costs of this crisis will be with us for a generation.
Posted by mark @ 12:24 PM (1299 views) Add Comment
17 Comments
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1. sibley's b'stard child said...
"Britain also needs to save more", he added.
You duplicitous w*nker.
2. mark wadsworth said...
A lot of this debate is highly politicised and hence misleading.
I did a bit of digging on some stats published in an article in the FT, and according to HM Treasury, UK govt spending is as follows
Pensions and cash welfare £217 bn
Public sector salaries and pensions £169 bn
Debt interest £31 bn
Income less balancing figures negative £30 billion.
Private sector procurement £281 billion
Total £669 billion.
Yup, that's right.
For every £1 spent on public sector salaries (which can be sub-classified into "useful frontline stuff" and "glorified welfare system") they spend £1.66 on the "private" sector. Or, govt spending on "private" sector is more than one-fifth of GDP - on top of the one-in-five workers who officially work for the state. It's a heck of a lot or money and the biggest single item.
Not sure where they bury away the £17 billion gross EU contributions.
3. mark said...
MW can you enlarge on the "private sector" ?
4. Crunchy said...
The finger pointing begins.
Big trouble ahead.
5. will said...
Yes, we will all share the pain. How about a 90% tax rate for the bankers - they are all still laughing at us.
6. uncle tom said...
I don't think our Merv is a bad guy, but I don't think the historians will give him much credit either.
A good accountant, but a little too naive and inexperianced when it came to handling the big bad world outside.
Too inclined to go with the flow, rather than directing its course.
I suspect he'll retire when his current term is up.
7. mark said...
i don't think the bankers should take all the blame.
Going back in time rates were dropped to low levels because of terrorism, then they never came back up to a level to stop inflation, the banks merely reacted to the demand of customers, if they didn't lend the banks would have closed down, so they were trapped in a bad cycle. No way to stop no way out.
8. mark said...
The only time inflation was in our grasp was 2001, after this it went up and up, but they never took into account housing...
THE BOE do not have a clue and never have.
9. str 2007 said...
Well, the headline above suggests interest rates will be very low for a very long time. It really doesn't suggest any sign of increase.
Therefore I suggest we look elsewhere for the HPC catalyst.
BTW how long have interest rates been at rock bottom in Japan for?
10. quiet guy said...
I second what sibley's b'stard child said at #1
"Britain also needs to save more" while interest rates are negative in real terms.
Those are extraordinary words coming from a central banker who has been mercilessly mugging savers for nearly two years.
11. hpwatcher said...
I don't think our Merv is a bad guy, but I don't think the historians will give him much credit either.
A good accountant, but a little too naive and inexperianced when it came to handling the big bad world outside.
Too inclined to go with the flow, rather than directing its course.
I suspect he'll retire when his current term is up.
He did fail to use common sense!
12. Crunchy said...
6. mark said...i don't think the bankers should take all the blame.
Going back in time rates were dropped to low levels because of terrorism, then they never came back up to a level to stop inflation, the banks merely reacted to the demand of customers, if they didn't lend the banks would have closed down, so they were trapped in a bad cycle. No way to stop no way out."
That's assuming that some MAJOR banks and Co had nothing to do with terrorism and the profiting from wars based on lies and deception mark.
13. mark said...
Bank of England governor Mervyn King warns unions accept cuts or 'SELL your children'
14. nickb said...
So much for the central banks being politically neutral then.
15. Unbeliever said...
Nickb @12 A budget deficit is borrowing from the tax receits of a future, possibly un-born generations to pay for things that the current generation of tax payer / voter want but are not themselves prepared to pay for. There may be a Keynesian argument of smoothing the economy by borrowing during recessions and paying it back during the boom years but the years of borrowing over the last decade have been grossly inresponsible / immoral.
16. mark wadsworth said...
Mark, comment 3. I am just summarising what H M Treasury says. They refer to purchases from and subsidies to private sector and I totted up the figures. I would assume that they are correct as the other figures (welfare, public sector payroll and debt interest) are widely publicised and can be reconciled to reasonable estimates.
17. phils said...
For every pound "wasted" on the public sector, there are 10 pounds lost through tax evasion and avoidance.