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carted off to the looney bin

this is a shocker

you're right, in the very near future somethings goner give on gilts

the other thing that will probably crash the market is the 2nd qtr GDP figures, reality will hit that Darlings growth forcast was actually the result of a bad lsd tab

Edited by I Told You So

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The Bankrupt of England had to engage a string banks to get the last lot away, the DMO didn;t seem too keen on handling themselves.

Go out and find some suckers to buy this shit, anybody, we don;t care how you do it, just do it. Same as the banks did with the mortgage and credit crud that they wanted off their books.

It will end badly, in total failure at some stage.

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Gordon Brown shold be dragged out and shot. This is just not funny any more.

http://news.bbc.co.uk/1/hi/business/8106607.stm

How much longer can we continue to sell gilts at this rate? Serious question.

And while all this goes on the government is trying to legislate away poverty - with all the government spnding that this implies.

You couldn't make this up...

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and yet Cameron and Brown are having a public cóck waving contest arguing who is going to have the greater public spending commitments

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I wouldnt get too worried about this.

We are facing the biggest financial crisis in our history. I blame a lot of that on Gordon Brown's time at the Treasury, which took oversight of the Commercial Banks from the Bank of England and gave it to the FSA.

But now Gordon is away from the Treasury, he cant cause so much damage.

Alistair Darling is doing a much better job, and I suspect those in the Treasury who know how to run the finances of the country, are now able to get things done properly now they have a chancellor that listens to them.

And we are facing an economic meltdown due to a financial meltdown. The destruction of aggregate demand, due to falling confidence worldwide, has to be addressed. The only solution that is available is to make up the missing demand through government actions.

That means more government spending and less taxation. That is to say Government Deficits and, given the nature of the problem, financing some of that deficit through printing money. This is badly needed given the de-leveraging in the financial sector which is causing a whiplash affect on money and credit in our financial system.

And the results of this policy are starting to come through. Things are bad, thats for sure, but things are a lot worse elsewhere in the world. Without these policies, things would be a whole lot worse too.

I was disappointed to hear Mervyn King talk about cutting these deficits. Surely he should know better. Where does he expect the extra demand to come from? And given gilt yields, there still appears to be plenty of appetite for UK government debt.

The only bugbear I have is where the money is being spent. I would much rather see a clampdown on salaries in the Government sector, particularly at the top end, and more money being spent on capital projects. I would like to see 200000 people employed converting our railway network to broad gauge. Lets exit this recession with something worthwhile that the nation can use. Hitler left Germany Autobahn's, the UK can do the same (no war please!).

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Holy Crap, that is insane, I thought I had a handle on these figures, that's just blown me away.

Lets look at it again.

£19,900,000,000 Borrowed in the month of May

£641,935,483 a day

£26,747,311 an hour

£445,788 every minute

£7,429 every second.

The governemnt is spending half a million pounds it does'nt have every minute.

It is increasing the debt our children will have to pay back at half a million pounds a minute.

Christ on a bike, you could by a 3-bed flat in canary wharf for that money!

Edited by KingBingo

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I was disappointed to hear Mervyn King talk about cutting these deficits. Surely he should know better. Where does he expect the extra demand to come from?

Sorry, but why on earth do we NEED to maintain X level of demand?

And given gilt yields, there still appears to be plenty of appetite for UK government debt.

So why is the BoE printing money to buy billions and billions of gilts if demand is fine?

QE was suppose to be spilt between public and private sectors on a 67:33 ratio. Its actually 99:1. Something has gone very very wrong.

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Corporation tax receipts fell by 27%, VAT revenues were down 18%, and income tax fell 11% compared with the same month in 2008.

Meanwhile, government spending was boosted by additional outlays for unemployment benefit, with spending on benefits up 8% or £1bn. Unemployment has risen sharply to a 12-year high of 2.26 million.

Overall, government spending was up 16% in May to £50.6bn, while government tax receipts were just £30.6bn.

"Thinnnnggssss..............

can only get..."

err...

worser.

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Sorry, but why on earth do we NEED to maintain X level of demand?

So why is the BoE printing money to buy billions and billions of gilts if demand is fine?

QE was suppose to be spilt between public and private sectors on a 67:33 ratio. Its actually 99:1. Something has gone very very wrong.

We need a certain level of aggregate demand to keep people employed. Most people view employment as a good thing. Of course Keynes would have been appalled to see so much of the Governments spend go on things like benefits and exorbitant salaries for doctors judges and BBC superstars. Far better to pay people a moderate salary to provide something more positive for our economy rather than leave them on the dole claiming benefits.

And the BoE is printing money to counter the fall in the total money supply. Total money = base money x leverage.

Given the attempt by banks to delever, the figure for Total money has fallen sharply. The paradox of thrift reveals its ugly head, and there is a danger of a deflationary collapse. The policy counter for this is to print money.

If confidence returns, and leverage starts to rise, that should be countered by quantitative tightening.

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We need a certain level of aggregate demand to keep people employed. Most people view employment as a good thing. Of course Keynes would have been appalled to see so much of the Governments spend go on things like benefits and exorbitant salaries for doctors judges and BBC superstars. Far better to pay people a moderate salary to provide something more positive for our economy rather than leave them on the dole claiming benefits.

And the BoE is printing money to counter the fall in the total money supply. Total money = base money x leverage.

Given the attempt by banks to delever, the figure for Total money has fallen sharply. The paradox of thrift reveals its ugly head, and there is a danger of a deflationary collapse. The policy counter for this is to print money.

If confidence returns, and leverage starts to rise, that should be countered by quantitative tightening.

this and your previous post happen to be the biggest load of ***** i have read in a long time

the paradox of thrift is true in the short term only

long term we are on a more stable footing if individuals have savings. The savings can then be used to increase production/efficiency. Without savings we are doomed to a hyperinflationary bust.

printing money ultimately results in the destruction of the currency and this has been proven countless times in history

money supply fallen?

uk_money_supply_growth_dec08.gif

post-2696-1245325259_thumb.png

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Sooner or later leicestersq, we will have to cut our coat according to our cloth, we can't go on forever spending more than we have. About time some people got a reality check.

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the numbers just get ever greater and the state will do what most despot states usually do: order the central bank to print the money which will result in hyperinflation

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We need a certain level of aggregate demand to keep people employed. Most people view employment as a good thing.

By taking money from wealth creators and giving it to wealth destroyers you prolonger the depression. Rather than have un-productive people employed by the state, put them on the dole where they can be employed by the recovering productive economy.

Far better to pay people a moderate salary to provide something more positive for our economy rather than leave them on the dole claiming benefits.

If only that were so, burecaray does not provide positive anything for our economy. Sack the non-jobs and middle managers and let the front line staff get on with the job not box ticking. These non-jobs would cost us far less, and do less harm on the dole.

And the BoE is printing money to counter the fall in the total money supply.

No, total supply has massively increased, it just appears to be down because its not being spent as fast. All this is inflating away the savings of the prudent to bail out the debt of the feckless.

danger of a deflationary collapse.

The danger of monet returning to its true value?

If confidence returns, and leverage starts to rise, that should be countered by quantitative tightening.

The moment the QE stops the market will not absorb all the government borrowing. There will be a gilt market collapse and the government will have to make massive (and I do mean massive) cuts.

QE will not stop, we will just have high inflation instead.

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http://www.telegraph.co.uk/finance/finance...ols-budget.html

According to Treasury figures, debt interest payments will soon exceed the budgets of every Whitehall department but three, overtaking even spending on the Ministry of Defence.

Alistair Darling, the Chancellor, set out plans on Monday to borrow more than £500 billion over five years to support the economy during a recession. According to calculations from the TaxPayers Alliance, a pressure group, that is more than double what the British Government borrowed during the First World War.

Pretty soon if this keeps up interest repayments will be biggest of whitehalls spending and unlike other depts will be impossible to cut, unless we default.

No problems there then.

Keep on spending.

Debt is wealth.

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http://news.bbc.co.uk/2/hi/business/8106607.stm

Several possible scenarios IMO.

1. Government cuts spending dramatically, reshapes economy over a number of years, and the debt starts to be paid back.

For this to happen, taxes will rise, unemployment will rise, and houseprices will fall.

2. Government prints money, sterling tanks, inflation rises, UK loses AAA rating, interest rates rise dramatically, houseprices will fall or at best will remain static in nominal terms while inflation rises.

3. UK defaults on debt - see scenario 2 apart from the AAA rating which becomes irrelevant.

4. Systemic collapse social breakdown war pestilence famine blah blah blah...

What possible scenario exists where borrowing 20bn a month will result in a healthy economy and rising houseprices?

The very best we can expect is scenario 1 IMO.

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This is VERY bad! In his budget AD said he needed to borrow £175bn on the year (compared to a budgeted PSBR of less than £50bn last year!)

But if May's £19.9bn net borrowing is scaled up to the whole year you get.... £223bn!

That's a £48bn overspend - assuming no growth on the curve!

It looks like the wheels have come off the budget just two months in!

:(

Of course I'm out of sterling so I don't GAF ;)

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This is VERY bad! In his budget AD said he needed to borrow £175bn on the year (compared to a budgeted PSBR of less than £50bn last year!)

But if May's £19.9bn net borrowing is scaled up to the whole year you get.... £223bn!

That's a £48bn overspend - assuming no growth on the curve!

It looks like the wheels have come off the budget just two months in!

:(

Of course I'm out of sterling so I don't GAF ;)

parity parity, with some Euro charity. ;)

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By taking money from wealth creators and giving it to wealth destroyers you prolonger the depression. Rather than have un-productive people employed by the state, put them on the dole where they can be employed by the recovering productive economy.

If only that were so, burecaray does not provide positive anything for our economy. Sack the non-jobs and middle managers and let the front line staff get on with the job not box ticking. These non-jobs would cost us far less, and do less harm on the dole.

No, total supply has massively increased, it just appears to be down because its not being spent as fast. All this is inflating away the savings of the prudent to bail out the debt of the feckless.

The danger of monet returning to its true value?

The moment the QE stops the market will not absorb all the government borrowing. There will be a gilt market collapse and the government will have to make massive (and I do mean massive) cuts.

QE will not stop, we will just have high inflation instead.

"By taking money from wealth creators and giving it to wealth destroyers you prolonger the depression. Rather than have un-productive people employed by the state, put them on the dole where they can be employed by the recovering productive economy."

Millions of people on the dole are not creating any wealth. The aim of any government is to have as many people economically active as possible. I think your view is very similar to the Austrian school of economics that thinks supply and demand in the labour market will always lead to people being employed and put to good use. I guess it might work if wages dropped to a level where people need to eat grass to survive, but far better to use Keynesian policies to put idle labour to work. You really dont want to witness a debt deflationary spiral that would result if the government started cutting spending at this point.

As confidence returns to the economy, as a result of people having jobs to do, you will find that people decide to take risks and invest more, and start to demand more labour. Tax receipts rise, and the government can then cut spending to free up much (now once again) needed labour.

"No, total supply has massively increased, it just appears to be down because its not being spent as fast. All this is inflating away the savings of the prudent to bail out the debt of the feckless."

You are on planet la-la land if you think that the money supply has massively increased. Notes and coins and central bank credit is only a tiny fraction of the money supply. The vast majority of the money supply is credit provided by banks. The more banks lever up their capital, the more money they can create. As bad debts pile up, and support is withdrawn from financial institutions with low capital ratios, banks have had to withdraw the total amount of credit they can provide.

The hope is that by creating more base credit, the deflationary spiral that could have resulted from this deleveraging, will now not happen.

"The danger of monet returning to its true value?"

Are you referring to the pile of bones that is the dead artist, or his works? I wouldnt know anyway, as I am not an art collector.

"The moment the QE stops the market will not absorb all the government borrowing. There will be a gilt market collapse and the government will have to make massive (and I do mean massive) cuts. "

I dont know how you can leap to such conclusions. If government policy is successful, employment will rise, output will rise, and tax returns will be higher. It might even be able to cut spending. Gilt investors are looking for a return on their money above inflation, and also want to know that their capital will be safe. When QE stops, it will be when the Bank of England and the Treasury feel that a debt-deflationary collapse is no longer a possibility. That will only happen when the level of economic activity has picked up, and tax receipts are once again rising.

You may be surprised at how well and quickly that government finances recover.

At that point the government then really needs to cut its bloated expenditure program. But for now, we really need the government to have a bloated expenditure program.

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Gordon Brown shold be dragged out and shot. This is just not funny any more.

http://news.bbc.co.uk/1/hi/business/8106607.stm

How much longer can we continue to sell gilts at this rate? Serious question.

Yes, the UK situation is difficult - but not desperate.

Too many poster on HPC have no idea how these figures compare to other European countries.

In the early 90's the Gross Public Debt/GDP ratio in Belgium and Italy was 140% and 120% respectively

OECD is forecasting Italy's GPD/GDP ratio to reach 115% again next year, up from 106% in 2008.

http://www.oecd.org/document/6/0,3343,en_2...1_1_1_1,00.html

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