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Benn Admits Cuts Are Inevitable

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http://news.bbc.co.uk/1/hi/uk_politics/8122050.stm

Mr Benn conceded his own Department for Environment, Food and Rural Affairs was facing future cuts and would have to prioritise where it spent money.

The disclosure comes with Labour and the Conservatives immersed in a dispute over spending plans.

Mr Benn told the BBC programme: "If I look at my department's budget, it is going to go down a bit and therefore we will have to prioritise."

His comments come with Prime Minister Gordon Brown insisting the next general election will be fought on a platform of "Labour investment versus Tory cuts".

Mr Benn said the government faced "real choices" ahead and "when times are tough you need to tighten your belt".

I just wonder whether there is anyone left in the country who actually listens to Gordon Brown now? Even the BBC report this story and then relates it to the PMQs where Brown was rumbled over lying about capital spend.

Then again, for someone who wants much less government maybe the current situation is along the right lines for me.

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http://news.bbc.co.uk/1/hi/uk_politics/8122050.stm

I just wonder whether there is anyone left in the country who actually listens to Gordon Brown now? Even the BBC report this story and then relates it to the PMQs where Brown was rumbled over lying about capital spend.

Then again, for someone who wants much less government maybe the current situation is along the right lines for me.

A last some sense from ZanuLabour.

As any gardener knows, when a rose flower drops its petals, its time to dead head it to encourage more roses to grow, and as we move into winter (especially with the grafted varieties) its time to cut the stems right back to prevent it dying in the winter.

With Mr Brown having kept the flower alive over several winters, I think the bush is at serious risk of death. Ice crystals forming between the root stock and the graft.

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Guest sillybear2

They're obviously well aware of an imminent downgrade of our debt, especially if they fail to make cuts, the DMO and the BoE are aware of each others activities and share data, so they already know without QE supporting the market there would have been at least 2-3 failed gilt auctions by now. The bid/cover ratio is only as high as it is because dealers know they can instantly dump the debt straight on to the BoE at an instant profit, this type of fraud of buying fresh debt with fresh counterfeit money can only last so long before things blow up, there will no doubt have to be an emergency budget before Christmas.

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They're obviously well aware of an imminent downgrade of our debt, especially if they fail to make cuts, the DMO and the BoE are aware of each others activities and share data, so they already know without QE supporting the market there would have been at least 2-3 failed gilt auctions by now. The bid/cover ratio is only as high as it is because dealers know they can instantly dump the debt straight on to the BoE at an instant profit, this type of fraud of buying fresh debt with fresh counterfeit money can only last so long before things blow up, there will no doubt have to be an emergency budget before Christmas.

did it blow up in japan ?

i do however find it interesting that Mr. Benn has put his foot in it so decisively. Gordon will not be pleased that a minister has revealed that there is now no seperation between what a labour govt. vs a tory govt. are planning.

Both parties can now be accused of being the party of cuts [irrespective of whether they dress it up as 'efficiency savings' or bringing forward future spend] if it's possible to bring forward future spend on capital projects why not do it before rather than wait for a global economic downturn.

yet more bollix from a govt. that brought us utterly meaningless fiscal golden rules to appease the msm they are now scared 5h1tless of......the clowns are making it up as they go along and are more concerned in responding to the hysterical reaction re the debt and deficits in the msm than addressing the real problems.

don't forget the same msm who wring their hands over the 'monstrous' debt burden were the one's wowed by gordon the chancellor, and the ones who've been ramping a property bubble shamelessly for the best part of a decade. That these morons and the politicians who dance to their tune seem to have such influence is depressing.

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Guest sillybear2
did it blow up in japan ?

Japan ran a massive trade surplus and has a ridiculously high domestic savings rate, we have neither of those luxuries, even so QE and the carry trade succeeded in depressing the value of the Yen below its fair value to the benefit of their exporters, so in many ways it did 'blow up' because they've been stuck with crappy growth and zombie banks for over a decade.

i do however find it interesting that Mr. Benn has put his foot in it so decisively. Gordon will not be pleased that a minister has revealed that there is now no seperation between what a labour govt. vs a tory govt. are planning.

At this stage this is above the heads of domestic voters, it's all about giving the nod to the bond markets that spending cuts by the Establishment will be enforced regardless of the party in power. Debtor countries answer to their creditors not their voters, the former call all the shots.

Edited by sillybear2

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Japan ran a massive trade surplus and has a ridiculously high domestic savings rate, we have neither of those luxuries, even so QE and the carry trade succeeded in depressing the value of the Yen below its fair value to the benefit of their exporters, so in many ways it did 'blow up' because they've been stuck with crappy growth and zombie banks for over a decade.

i thought you meant the bond markets blowing up, in which case i'm not sure what personal savings rates has to do with it.

In times of crisis there's an insatiable desire for the most riskless type of investment, plus who are these bond investors who we supposedly must appease ? pension funds ? insitutional investors ? banks ? Banks, FFS!!! we own the banks.

This isn't the 80's/90's we're not constrained by fixed exchange rate and circling bond vigialantes.

I thought the BoE intervention was about maintaining/manipulating the overnight interest rate, and to discourage investors somewhat by making a more palatable risk reward scenario in markets elsewhere ie stocks. Rather than funding govt. spending.....the govt. don't really need to fund spending in this way, irrespective of what the DMO says in it's mission statement. :blink:

As for japan, they ran that savings rate down somewhat as their downturn/deflation wore on.

Edited by spivtastic

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Mr Benn told the BBC programme

I thought Mr Benn was a TV programme?

"As if by magic, the bailiffs appeared."

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Guest sillybear2
i thought you meant the bond markets blowing up, in which case i'm not sure what personal savings rates has to do with it.

In times of crisis there's an insatiable desire for the most riskless type of investment, plus who are these bond investors who we supposedly must appease ? pension funds ? insitutional investors ? banks ? Banks, FFS!!! we own the banks.

We don't own the banks, we own their liabilities, so they effectively own us.

The implications of a high domestic savings rate is that the government owes money and pays interest to its own citizens or corporations, it also goes hand in hand with a current account surplus. Japan doesn't have to worry about fickle foreign investors funding its largess, in fact the BoJ is naturally in a strong position and goes out of its way to weaken the Yen to benefit exporters.

If UK govt debt is downgraded as S&P recently warned, then it will no longer be considered risk free.

Edited by sillybear2

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Guest sillybear2
That bloddy Benn family... can't resist telling the truth from time to time.

Quite right, his father was in government the last time Labour bankrupted the country and were forced to cut spending and beg the IMF for a bailout, so he should know all about it.

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Japan ran a massive trade surplus and has a ridiculously high domestic savings rate, we have neither of those luxuries, even so QE and the carry trade succeeded in depressing the value of the Yen below its fair value to the benefit of their exporters, so in many ways it did 'blow up' because they've been stuck with crappy growth and zombie banks for over a decade.

I would argue Japan may still blow up, for all of there saving the country is still on the brink of imploding.

Japan On Verge Of Sub-prime Mortgage Crisis As Summer Bonuses Plunge

Even after 20 years Japan is still teetering on bankruptcy, if has never fixed it's debt bubble and as mentioned the Zombie banks.

This is not going to end well.

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Guest sillybear2
I would argue Japan may still blow up, for all of there saving the country is still on the brink of imploding.

Japan On Verge Of Sub-prime Mortgage Crisis As Summer Bonuses Plunge

Even after 20 years Japan is still teetering on bankruptcy, if has never fixed it's debt bubble and as mentioned the Zombie banks.

This is not going to end well.

I agree, so what does that say about the UK which now has Japanese style zombie banks, but combined with a huge current account deficit and a virtually negative savings rate? :o

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