Osborne Wants Country Less Reliant On Debt

[grizzly bear]

http://www.telegraph.co.uk/news/newstopics/politics/conservative/georgeosborne/7758617/George-Osborne-size-of-state-must-shrink-to-pay-for-debt.html

In the longer term, he said that he wanted a country that was less reliant on debt – among households as well as the national economy – and a society that took on more responsibilities from the state.

I am guessing that a reduction in household debt in the long run means lower house prices and less money to spend on tat!

[council dweller]

http://www.telegraph.co.uk/news/newstopics/politics/conservative/georgeosborne/7758617/George-Osborne-size-of-state-must-shrink-to-pay-for-debt.html

In the longer term, he said that he wanted a country that was less reliant on debt – among households as well as the national economy – and a society that took on more responsibilities from the state.

I am guessing that a reduction in household debt in the long run means lower house prices and less money to spend on tat!

Tories making all the right noises so far....I don't believe it!

They've got the weather right too!

[Injin]

Tories making all the right noises so far....I don't believe it!

Right noises is right.

Not believing is also right.

They've got the weather right too!

Perfect brick chucking weather!

Did Little Georgie outline when he would be issuing the first non debt based, interest free currency?

No?

[CrashConnoisseur]

So why wasn't he saying this when in opposition? Presumably too busy singing the praises of Ireland's debt-fuelled "economic miracle"...

'Gordon Brown's policies are wedded to the past' [February 2006]:

http://www.putneyconservatives.co.uk/record.jsp?type=cchNews&ID=585

Shadow Chancellor George Osborne has fired a fresh broadside at Gordon Brown's economic policies and called for Britain to learn the lessons of Ireland's stunning economic success.

[...snip...]

"Ireland stands as a shining example of the art of the possible in economic policy-making. With its vision of a highly-educated, innovative, open, dynamic, low-tax economy, and relentless focus on the long-term drivers of prosperity, Ireland's economic miracle has shown that it has the right answers to the challenges of the new global economy.

"The new global economy offers us great challenges, and also great opportunities. Ireland has shown the world that wise economic policy-making can produce outstanding results that surpass all expectations, so that we can meet our potential, achieve our goals, and share rising prosperity in an increasingly competitive world. We in Britain would do well to listen and learn from our Irish neighbours."

[council dweller]

Right noises is right.

Not believing is also right.

Perfect brick chucking weather!

Did Little Georgie outline when he would be issuing the first non debt based, interest free currency?

No?

Didn't you predict brick chucking for June 2009?

[Injin]

Didn't you predict brick chucking for June 2009?

No, I predicted the start of hyperinflation in the US 2009.

And it happened.

[ingermany]

Most people do not think of a mortgage as debt, it is investment. Debt is things like credit cards and loans for cars. If theses are reduced they will have more to invest in property - so house prices will increase as more money will be available.

When you use money that is yours to buy an asset, that is investment. When you borrow money for something, that is debt. You're right "most people" probably don't realise this, and the last government has muddied the waters by using public bailouts to write off mortgage related debts for individuals and banks. This is the sort of thinking that allowed RBS to make a 24 billion loss in 2008, but still pay 2 billion in bonuses to its staff. Not to mention the Greek government's enormous "investment" in its public services (no debt there). I notice that student loans are also talked of as not being debts, but investments.......I guess they have much in common with mortgages in that the taxpayer will end up paying the bill for these loans when they are eventually written off for a large proprtion of students. However, in all these examples, the sums concerned are liabilities and debts, and somebody has to pay. I don't think we will get anywhere until that is acknowledged by "most people".

I suspect Osbourne is well aware that the banks have run out of money to lend, and is preparing the way (hopefully) for a refusual of government to get further involved in pumping up the economy with imaginary government derived liquidity. It looks like a statement of the obvious..........there will be less borrowing and lending from now on.

[Sledgehead]

Most people do not think of a mortgage as debt, it is investment. Debt is things like credit cards and loans for cars. If theses are reduced they will have more to invest in property - so house prices will increase as more money will be available.

You are probably right in thinking most people imagine mortgages to be some kind of investment. This does not detract from the fact that mortgage interest is still a financing cost even if you view the principal, to use a Precter term, as "self-liquidating" (via rental).

The point to be made here is not what the financing is used for, but what the financing is.

People seem to assume that in order to start a business or make any "investment" (including buyinga house), one must start with debt. This is despite programs like Dragon's Den which have attempted to popularise the opposite of debt : equity.

Clearly a reduction in bank lending will help increase the attractiveness and, eventually perceived value of equity investment.

That said, I find it hard to imagine how raising CGT will promote a shareholder revival ...

[Sledgehead]

So why wasn't he saying this when in opposition? Presumably too busy singing the praises of Ireland's debt-fuelled "economic miracle"...

'Gordon Brown's policies are wedded to the past' [February 2006]:

http://www.putneyconservatives.co.uk/record.jsp?type=cchNews&ID=585

nice post

[DaisyB]

12.17pm: The National Housing Federation has welcomed the fact that an extra £170m is going to social housing. David Orr, the federation's chief executive, said: "This hopefully signals the government's long-term commitment to protecting public spending on social housing and to tackling the country's chronic housing crisis."

Graunaid

How many houses does that represent?

[tim123]

So why wasn't he saying this when in opposition? Presumably too busy singing the praises of Ireland's debt-fuelled "economic miracle"...

And why doesn't he act by bring in lending controls.

It isn't hard (procedurally) to do this.

Simple things like compulsorily increasing the minimum payments on credit cards could be done virtually overnight and will have a immediate effect.

tim

[MinceBalls]

On this (and Sach comment); if you talk to most people they do not understand the concept of mortgage debt. They see it as a 'savings' account - one which they pay into until they own the property when they retire. When they have finally paid off the mortgage they think that the following formula applies: valuation - what they originally paid = their profit. They do not realise that they have been paing interest all that time and they seem to think they have been paying into a savings account.

It is because people have such little grasp of finances that banks get away with encouraging people to borrow more and more which only serves to pay more interest to them.

When you use money that is yours to buy an asset, that is investment. When you borrow money for something, that is debt. You're right "most people" probably don't realise this, and the last government has muddied the waters by using public bailouts to write off mortgage related debts for individuals and banks. This is the sort of thinking that allowed RBS to make a 24 billion loss in 2008, but still pay 2 billion in bonuses to its staff. Not to mention the Greek government's enormous "investment" in its public services (no debt there). I notice that student loans are also talked of as not being debts, but investments.......I guess they have much in common with mortgages in that the taxpayer will end up paying the bill for these loans when they are eventually written off for a large proprtion of students. However, in all these examples, the sums concerned are liabilities and debts, and somebody has to pay. I don't think we will get anywhere until that is acknowledged by "most people".

I suspect Osbourne is well aware that the banks have run out of money to lend, and is preparing the way (hopefully) for a refusual of government to get further involved in pumping up the economy with imaginary government derived liquidity. It looks like a statement of the obvious..........there will be less borrowing and lending from now on.

[Uriah Heap]

And why doesn't he act by bring in lending controls.

It isn't hard (procedurally) to do this.

Simple things like compulsorily increasing the minimum payments on credit cards could be done virtually overnight and will have a immediate effect.

tim

Indeed.

One of the immediate effects would be unemployment increasing of course.

[hilltop]

Isn't Vince promising to get the Banks to lend more?

Are the Libcons on the same hymn sheet?

[Georgia O'Keeffe]

http://www.telegraph.co.uk/news/newstopics/politics/conservative/georgeosborne/7758617/George-Osborne-size-of-state-must-shrink-to-pay-for-debt.html

In the longer term, he said that he wanted a country that was less reliant on debt – among households as well as the national economy – and a society that took on more responsibilities from the state.

I am guessing that a reduction in household debt in the long run means lower house prices and less money to spend on tat!

Fortunately for him one of the guaranteed results of a complete credit cycle bust is complete and utter debt revulsion that lingers for decades due to the memory of pain that it brings so in 5 years time people will be less willing to take on debt than their great grandparents, which is handy becuase the banks that are left wont be lending much either.

I think this is therefore one pledge that will be fulfilled with bells on over the term, well done Georgie

[scepticus]

Isn't Vince promising to get the Banks to lend more?

yes, but boy george said the same thing.

of course an economy that is less dependant on debt each year is one that is shrinking each year. George's pronouncements rather fly in the face of how the economy actually works. Thats why VC called them 'schoolboy economics'

But never mind, I'm sure GO won't do anything stupid.

[Guest Skinty]

No, I predicted the start of hyperinflation in the US 2009.

And it happened.

You mean American citizens have been carrying their spare change in a wheel barrow since summer 2009?

Or do you mean high inflation?

Even then ...

Edited May 24, 2010 by Skinty

[Injin]

You mean American citizens have been carrying their spare change in a wheel barrow since summer 2009?

Or do you mean high inflation?

Even then ...

No I mean a greater than 25% increase in the money supply.

[Olebrum]

Osborne can say whatever he likes. What he wants doesn't matter. What the big money boys want, now that is a different thing altogether.

Usury and serfdom for all.

[Injin]

yes, but boy george said the same thing.

of course an economy that is less dependant on debt each year is one that is shrinking each year. George's pronouncements rather fly in the face of how the economy actually works. Thats why VC called them 'schoolboy economics'

But never mind, I'm sure GO won't do anything stupid.

Eh?

You can have a debt free economy.

Where'd you get this weird notion that debt = growth?

[Pick It Down]

No I mean a greater than 25% increase in the money supply.

To counteract a greater than 25% decrease in money velocity?

[TheEmperorHasNoClothes]

To counteract a greater than 25% decrease in money velocity?

I guess it's like trying to stir Nitro-Glycerine without it going boom!

[ingermany]

And why doesn't he act by bring in lending controls.

It isn't hard (procedurally) to do this.

Simple things like compulsorily increasing the minimum payments on credit cards could be done virtually overnight and will have a immediate effect.

tim

The only lending controls needed are market forces. One presumes that bankers have some concept of accounting and balance sheets. The problems now are entirely caused by recent political decisions to make banking and lending a function of HM Government. Saturday's article in the Independent highlighted that banks have insufficient reserves to support mortgage lending next year, and proposed that it was Government's responsibility to provide the necessary liquidity. For God's sake, why?

I am not a Tory but I hope that the Conservatives introduce the concept of free market economy. Maybe without theThatcher level of pain for those who are vulnerable, but at least with enough honesty to say that when the money has run out that we need to cut spending, rather than just print more money.

Edited May 24, 2010 by ingermany

[Georgia O'Keeffe]

The only lending controls needed are market forces. One presumes that bankers have some concept of accounting and balance sheets. The problems now are entirely caused by recent political decisions to make banking and lending a function of HM Government. Saturday's article in the Independent highlighted that banks have insufficient reserves to support mortgage lending next year, and proposed that it was Government's responsibility to provide the necessary liquidity. For God's sake, why?

I am not a Tory but I hope that the Conservatives introduce the concept of free market economy. Maybe without theThatcher level of pain for those who are vulnerable, but at least with enough honesty to say that when the money has run out that we need to cut spending, rather than just print more money.

its comical isnt it, the banks not having the reserves for mortgages is fundamentally the market working perfectly and trying to fix itself, the apparent free market that doesnt work, so the solution is clearly to not actually let it fix itself, create more malinvestment through govt and then blaming the free market when it also takes down the sov states

Edited May 24, 2010 by Tamara De Lempicka

[Guest absolutezero]

Are the Libcons on the same hymn sheet?

Yes. Is that a surprise?