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Britain To Emulate Canada's Radical Solution To Tackle Debt

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Guest The Relaxation Suite

"The Chancellor will announce a "once-in-a-generation" revolution in public spending inspired by Canada in the mid-1990s, when the government turned a budget deficit of nine per cent of GDP into a surplus."

Canada was able to sell its massive natural resources to fuel the gigantic boom from this period for many years. Luckily, Britain also has massive natural resources that it will be able to sell to fuel the massive boom we are currently in. Tally ho, George.

http://www.telegraph.co.uk/news/newstopics/politics/7807347/Britain-to-emulate-Canadas-radical-solution-to-tackle-debt.html

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Well if that is true things are gonna get very interesting indeed.

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Canada was able to sell its massive natural resources to fuel the gigantic boom from this period for many years. Luckily, Britain also has massive natural resources that it will be able to sell to fuel the massive boom we are currently in. Tally ho, George.

Actually, that's not really the case. At the point Canada was doing this, the oil sands, which is where the majority of the later resource boom came from, where not economically viable and wood pulp products were in decline. From my reading of it, it was actually a relative collapse in commodity markets that forced Canada into a position where it had no choice but to cut. I think the real difference is that, whilst it was doing this, it's major trading partner was growing strongly giving it a chance to export its way out of trouble. The same cannot be said of Britain right now. Still, it's better the elected government gets to decide what to cut than to wait a bit longer and have the IMF do it instead.

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The question NO one can tell me is WHEN is our debt due to ROLL OVER?

At that point we might face an attack on the £.

Mike

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"The Chancellor will announce a "once-in-a-generation" revolution in public spending inspired by Canada in the mid-1990s, when the government turned a budget deficit of nine per cent of GDP into a surplus."

Canada was able to sell its massive natural resources to fuel the gigantic boom from this period for many years. Luckily, Britain also has massive natural resources that it will be able to sell to fuel the massive boom we are currently in. Tally ho, George.

http://www.telegraph.co.uk/news/newstopics/politics/7807347/Britain-to-emulate-Canadas-radical-solution-to-tackle-debt.html

This is the UK, not Canada. We don't like this sort of thing, it might mean that house prices go down. That's not good, not good at all.

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The question NO one can tell me is WHEN is our debt due to ROLL OVER?

At that point we might face an attack on the £.

Mike

Between 1 month and 50 years or so. One thing McRuin did at least do right was issue a lot of long dated debt whilst he had the chance (you might even conclude that he f*cked with the way pension funds are regulated to force them to buy 50 year linkers). This means that, whilst the UK's budget deficit is much worse than France or Germany's, it actually needs to raise less net new debt over the next few years than either of them.

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The question NO one can tell me is WHEN is our debt due to ROLL OVER?

At that point we might face an attack on the £.

Mike

It never rolls over at any one point, there's a spread of maturities from 3 months to 10 years and beyond.

I think the figure quoted for average maturity is 14 years.

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Between 1 month and 50 years or so. One thing McRuin did at least do right was issue a lot of long dated debt whilst he had the chance (you might even conclude that he f*cked with the way pension funds are regulated to force them to buy 50 year linkers). This means that, whilst the UK's budget deficit is much worse than France or Germany's, it actually needs to raise less net new debt over the next few years than either of them.

Yes, that is quite true. When they talked about Greece's debt. they kept mentioning that ours was only half as big, in terms of relative to GDP and quite a lot of ours was due to expire in 14 years or so. That might make it not as bad, but we still have to issue fresh debt.

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They're already committed to not cutting some depts, such as health.

So they can't follow Canada's across the board cuts

Edited by newdman

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"The Chancellor will announce a "once-in-a-generation" revolution in public spending inspired by Canada in the mid-1990s, when the government turned a budget deficit of nine per cent of GDP into a surplus."

Canada was able to sell its massive natural resources to fuel the gigantic boom from this period for many years. Luckily, Britain also has massive natural resources that it will be able to sell to fuel the massive boom we are currently in. Tally ho, George.

http://www.telegraph.co.uk/news/newstopics/politics/7807347/Britain-to-emulate-Canadas-radical-solution-to-tackle-debt.html

Haha your more likely to see pigs fly than this proposal working. If the government cuts there just isn't anyone else out there to pick up our drop in consumption. Its either inflate to oblivion or deflate to oblivion - choose your poison.

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"The Chancellor will announce a "once-in-a-generation" revolution in public spending inspired by Canada in the mid-1990s, when the government turned a budget deficit of nine per cent of GDP into a surplus."

Canada was able to sell its massive natural resources to fuel the gigantic boom from this period for many years. Luckily, Britain also has massive natural resources that it will be able to sell to fuel the massive boom we are currently in. Tally ho, George.

http://www.telegraph.co.uk/news/newstopics/politics/7807347/Britain-to-emulate-Canadas-radical-solution-to-tackle-debt.html

Shame that Osbourne is not going to have a 1997 World Economy against which to run his once in a generation revolution.

It will be interesting to see how far this 'public consultation' will be allowed to go. For example, what happens if the British people decide they want to avoid any further costly foreign military adventures or that public money is probably not best spent bailing out financial institutions that have gambled their way to the brink of bankruptcy. One suspects the choices are not going to be cast that wide.

Is not this just another example of Britain's fifty year old neophiliac fetish for importing all its ideas from abroad ?

Does Osbourne actually have any ideas of his own, apart from not upsetting Telegraph readers worried about CGT hikes on their second homes ?

While Boy George is trying to smooth over the fall out from the last banking panic so it does not inconvenience his chums too much he may find himself swept away by another breaking wave of the financial storm.

Edited by realcrookswearsuits

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The question NO one can tell me is WHEN is our debt due to ROLL OVER?

At that point we might face an attack on the £.

Mike

Why not look it up?

A few dates cut&paste from the BBC website are:

07-Jun-2010

25-Nov-2010

07-Mar-2011

12-Jul-2011

07-Dec-2011

07-Mar-2012

07-Jun-2012

06-Aug-2012

07-Mar-2013

27-Sep-2013

07-Mar-2014

07-Sep-2014

22-Jan-2015

07-Sep-2015

07-Dec-2015

07-Sep-2016

25-Aug-2017

07-Mar-2018

07-Mar-2019

07-Sep-2019

07-Mar-2020

07-Jun-2021

07-Mar-2022

07-Mar-2025

07-Dec-2027

07-Dec-2028

07-Dec-2030

07-Jun-2032

07-Sep-2034

07-Mar-2036

07-Dec-2038

06-Sep-2039

07-Dec-2042

07-Dec-2048

07-Dec-2049

07-Dec-2055

22-Jan-2060

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Guest The Relaxation Suite

Well if that is true things are gonna get very interesting indeed.

Yes. If they're talking about 20% of deficit then interesting indeed. THere was enough pants-wetting when 6 billion cuts was talked about. 20% would be more like 32 billion, year after year after year.

No way can house prices be sustained in such an environment.

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Sure, our debt may not rollover so much, but (according to Conway) a shed load of it is index-linked. Not such a great let-off, some might say. No printing after all?

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Sure, our debt may not rollover so much, but (according to Conway) a shed load of it is index-linked. Not such a great let-off, some might say. No printing after all?

Index linked to an index the government is in control of.

They'll add house prices to RPI & CPI.

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Nolan on 5 Live is discussing this area now, for what it's worth..

iPlayer: Stephen Nolan - Sun, 06 Jun 2010

From 0:47:50 - 1:00:00

Broadcast on: BBC Radio 5 live, 10:00pm Sunday 6th June 2010

Duration: 180 minutes

Available until: 1:02am Monday 14th June 2010

Edited by Chester

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While the article credits the PM of the era (Jean Chretien), it was actually the Finance Minister (Paul Martin) who devised and implemented the strategy. He was the perfect man for the job as he was part of the business establishment as well as a minister in the centre-left government of the day.

The cuts were sharp and painful but deemed neccessary by a left wing government as they didn't want to raise taxes because they were of the opinion that the economy had already reached its maximum tax paying capacity. It took five years to get out of the mess that they inherited. The discipline that they imposed nearly 20 years ago lives on to-day even with a centre-right minority government in Canada.

Political labels do not make any difference to what needs to be done.

A left wing government reached the conclusion that the deficits were unsustainable in Canada. A right wing government in the UK has reached the same conclusion about this country.

It is a pity that the seriosu deficit problem in this country is going to be seen through the superficial lens of political labels. The problem is so serious that it deserves a more thorough examination.

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This policy will be a disaster. The Tories are using the deficit as an excuse to remodel the state. If they go ahead with their plans the likely result will be 10 million unemployed and a benefit bill so big that it cripples uk finances.

Remember that people can not be left to starve otherwise anarchy will follow.

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Political labels do not make any difference to what needs to be done.

A left wing government reached the conclusion that the deficits were unsustainable in Canada. A right wing government in the UK has reached the same conclusion about this country.

This is what I keep telling people when they accuse me of being right wing because I support big cuts. This isn't a left-right thing. You shouldn't spend money you don't have, and it's not progressive to build up huge debts for future taxpayers currently running around in schoolyards to pay back. It's just arithmetic.

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This is what I keep telling people when they accuse me of being right wing because I support big cuts. This isn't a left-right thing. You shouldn't spend money you don't have, and it's not progressive to build up huge debts for future taxpayers currently running around in schoolyards to pay back. It's just arithmetic.

Agreed.

I went a step further on another thread. When spending reaches a level of irresponsibility that an austerity budget is the only option, an unpleasant side effect is that merit based social mobility ends up being reduced. I think that we have probably reached the tipping point. The "right wing" will take the blame for inevitable consequences of the unsustainable spending by the previous government.

Progress needs to be self funded and not debt financed. There is also an organic cap on the rate of progress. Any amount of money spent yo try yo exceed this cap is completely wasted.

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Let me take a wild guess. The big Tory solution will be to privatize public services.

Da da.

The solution just conveniently being want they have wanted to do all along.

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Let me take a wild guess. The big Tory solution will be to privatize public services.

Da da.

The solution just conveniently being want they have wanted to do all along.

That's my worry. If they really think those services can be run more efficiently by the private sector they should just run them like that anyway. Selling them off is a very short-termist attitude that might make the government's finances look better but doesn't change anything much for the country as a whole (well, perhaps it does, by making it easier to run them cheaper simply by denying the poor access to them).

I'm all for cuts so that the numbers add up - as someone posted above, it's simply arithmetic, not politics. I'm not at all for selling off. Still, whatever the Tory solution is it's hard to imagine that a continual unaffordable Labour spend could possibly be better in the long run.

Edited by Riedquat

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"The Chancellor will announce a "once-in-a-generation" revolution in public spending inspired by Canada in the mid-1990s, when the government turned a budget deficit of nine per cent of GDP into a surplus."

Canada was able to sell its massive natural resources to fuel the gigantic boom from this period for many years. Luckily, Britain also has massive natural resources that it will be able to sell to fuel the massive boom we are currently in. Tally ho, George.

http://www.telegraph.co.uk/news/newstopics/politics/7807347/Britain-to-emulate-Canadas-radical-solution-to-tackle-debt.html

Actually I agree entirely with the position that the govt are taking regarding the deficit...... in other words we cannot afford to live as we are and must cut as quickly as we possibly can.

What I suspect we will see not a 25% cut immediately ( that would be some £180Bn) what Cameron is doing is merely setting expectations.

We'll see the £6Bn delivered and more by the end of the year, we'll see the debt figure rise through "re-counting".

Over the next few years the govt won't miss an opportunity to remind us that we are where we are becasue labour found a "priority" for every pound they could scape together........ what we'll see and again I entirely agree with this is we'll have a budget set and then and only then see what we can afford within that budget. This is an entirely different appraoch and one I think we should alol applaud.

If Govt can set a target for expenditure based on a combination of what we NEED to spend ( rather than what would be nice to have), what we have available to spend, the debt reduction needs we have and the investment needs we have then that will be a workable model going forwards. They must enshrine this sort of approach in law so that if a labour govt ever got in again ( which I hope they don't) then they'd never ever be able again to simply call something a priority becasue we had the money ( debt) to spend.

I also agree entirely with the idea of following some of the canadian approach, whereby the budget was given to depts and they had much greater control over how it was spent... the result I believe was 25% was cut but key services certainly didn't see a 25% degrade in service levels..... this isn't possible if central govt tells you line by line how to cut which is the type of all controlling appraoch the labour govt would have taken ( and not delievered on).

When we have less than 40% ( hopefully 35%) of people employed by the state, and 1 million less on unemployment benefit and 1 million less on incapacity benefit then you can say I think that we will have firmly moved in the right direction. people are going to lose their jobs ( no doubt about it) and I don't relish that but lets face facts they should never have been employed by the state in the first place , and hopefully the cuts can be managed sensitively through natural wastage etc and equally prehps some posts preserved through wage freezes and pensions changes. I think it might well take a full ten years to undo to damage labour has done and deflate the sheer of govt to something that is more manageable and workable going forwwards but cut we must and unfortunately some both in the private and public sector will feel some pain along the way.

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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