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Obr Warns That Osborne's £35Bn Cash Grab At The Bank Of England Risks Saddling Britain With Higher Interest Payments


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http://www.telegraph.co.uk/finance/budget/9725492/Autumn-Statement-George-Osborne-warned-over-cash-grab.html

Mr Osborne’s move flattered the headline public finance figures, but the nation might therefore have to borrow at greater cost further out, said the Office for Budget Responsibility (OBR).

The warning came after the Treasury decided to transfer the £35bn built up at the Bank through its quantitative easing (QE) programme, under which it has made a return on the gilts - UK government bonds - it buys.

More than £11bn of this money comes in the current fiscal year. As a result, the OBR cut its forecast for this year’s central government net cash requirement – which drives the amount the UK needs to raise in the debt markets – by £15bn to £106bn.

However, the OBR said there could be negative consequences further out, as Britain currently enjoys extremely low rates of interest when it issues debt.

“The Government is now likely to issue fewer gilts in the near term and more in the longer term than it otherwise would have done,” the OBR warned. “As gilt rates are expected to rise, debt interest payments will be higher … than they otherwise would have been, possibly outweighing lower costs in the preceding years.”

Osborne won't care it will be someone else's problem. His objective is the short term and nothing else matters.

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Osborne won't care it will be someone else's problem. His objective is the short term and nothing else matters.

It's heartwarming to see that a problem caused by accounting trickery is being solved by accounting trickery.

Who needs jobs and industry when you can move numbers around from one column to the other? <_<

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Good luck with that, the government are 100% committed to helping homeowners and BTLers. Because this is the category the majority of their voters fall into.

I disagree, they are helping the banks, they have been for years. If they had wanted to help the mortgage owners they would never had allowed house prices to shoot up. if they wanted to help people they would let prices correct.

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http://tullettprebon...ings-in-denial/

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A real Autumn Statement, part 1 – lemmings in denial

by Tim Morgan on December 5, 2012

As things stand, Britain is going bust.

This was the first message that George Osborne didn't – couldn't – deliver today. The second, equally-undeliverable verity was that most of Britain's problems have been self-inflicted.

Instead, the chancellor tried to seem upbeat in his Autumn Statement, even as he conceded that growth, debt and the deficit hadn't, thus far, gone according to plan. In terms of realpolitik, there was no other line that he could take. In his reply (which anyone could have pre-scripted), Ed Balls called yet again for a shift from austerity to stimulus (meaning, of course, that the government should borrow even more than it already is).

Businesses fail when they are grotesquely mismanaged, and the same is true of countries. The difference here is that Britain's disastrous mismanagement has been the responsibility at least as much of the shareholders (in this context, the electorate) as of the directors (the politicians).

Let's start with the politicians. With a minority of honourable exceptions (few of whom have reached cabinet rank), Britain has suffered from two decades of leadership (if such it can be called) which has been delusional, short-sighted, vainglorious, obsessive and spineless.

This said, though, a country tends to get the leaders it deserves. The really intractable problem is not that Britain is going bust, but that, in many ways, it seems to lack a collective willingness to change direction.

Britain has become obsessed with consumption whilst turning its back on production. In inflation-adjusted terms, manufacturing output declined by about 19% between 1997 and 2007, whilst the real estate (+37%) and finance (+41%) sectors thrived, and there was a 27% real increase in retailing.

Where did Britain's obsessive consumerism come from? To be sure, the advertising industry now spends at least £15bn annually in pushing the gospel of "you are what you own", but this message is surely so vacuous that only no sensible person would fall for it.

Yes, it did appear that the economy grew (by 27%) over the decade to 2007. But that "growth", of £423bn, looks pretty meagre when compared with an £876bn increase in individual and government debt over the same period (see chart).

Even in the supposedly "good" years, then, each £1 of "growth" involved borrowing an extra £2.07 (a ratio which worsened steadily as time went on, averaging £3.14 between 2002-03 and 2007-08). Within that additional borrowing, individuals took on an extra £669bn for the wholly futile purpose of inflating house prices by 133% (over and above inflation), and then used the comfort of inflated equity to rack up an extra £128bn in unsecured credit. People then professed themselves both surprised and dismayed when a debt-fuelled boom came to an end.

Far from moderating this recklessness, the Labour government got in on the act, increasing public spending by 42%, in real terms, between 1996-97 and 2006-07. Then, when the imaginary – borrowed – growth of the pre-2008 period fell away, government, professing itself just as bemused as almost everyone else, slumped into a larger deficit than any other major economy, and started racking up stupendous amounts of public debt.

This process has left Britain in a hole, but hardly anyone has stopped digging. Needless to say, debt continues to escalate, and the current government has been criticised by many for "cuts" which actually left real public spending higher in 2011-12 (£696bn) than it was in 2008-09 (£673bn), let alone 2000-01 (£498bn).

For all of this public sector largesse, defence has been cut to (and beyond) the bone by a country which needs to use reservists to replace the soldiers that it cannot afford, and whose budget no longer runs to a single aircraft carrier. You wouldn't guess any of this, of course, from Britain's continued posturing on the world stage, or from the apparently-serious consideration being given to the mind-bogglingly unaffordable idea of replacing the Trident nuclear deterrent.

Serial mismanagement over two decades has left the British economy not only debt-addicted but grotesquely skewed towards ex-growth industries. The state-dominated health, education and public administration sectors account for about 20% of the economy, whilst construction, real estate and finance contribute a further 38%.

Britain's exports fall far short of paying for essentials such as energy and food, and businesses are hampered by socially-interventionist regulation, and by the burden of paying for a level of government that the economy simply cannot afford. Many big companies, British as well as foreign-owned, seem to regard the payment of corporation tax as an optional extra.

The free market economy has degenerated into something that has been called "spiv capitalism", a system in which companies shelter behind "terms and conditions", the public is exploited on an epic scale, and Britain's over-grown legal trade is allowed to use "no win, no fee" terms as it feeds a national obsession with compensation. Even the pensions system is in disarray, with private schemes drained of funds by taxation whilst government continues, cynically, to promise public sector workers generous pensions that the taxpayers of the future will be neither able nor willing to afford.

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Don't worry printy printy will save us all!

Indeed. Print the money, 'loan' it out, then get them to repay the interest with it - voila! £35bn 'built up' at the BoE*! Magic!

* '£35bn built up at the Bank through its quantitative easing (QE) programme' - who comes up with these sentences? It's as if they know that it's all b*llocks, so they have to come up with these sort of daft phrases.

Edited by Traktion
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So the banks were not to blame at all??

The banks were doing what the state had given them incentive to do - they insured their deposits, implied they would be bailed out, ensured limited liability, while the 'regulators' encouraged low reserves (see Basel requirements for details).

If you don't want the banks to act irresponsibly, then make them take responsibility and don't say you will pay for all of their mistakes. Let them gamble with their own money and put their house on the line.

Edited by Traktion
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The banks were doing what the state had given them incentive to do - they insured their deposits, implied they would be bailed out, ensured limited liability, while the 'regulators' encouraged low reserves (see Basel requirements for details).

If you don't want the banks to act irresponsibly, then make them take responsibility and don't say you will pay for all of their mistakes. Let them gamble with their own money and put their house on the line.

This just won't do! Ignoring the fact the banks have powerful lobbies and influence the "decision makers" to a very considerable degree.

Edited by Secure Tenant
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This just won't do! Ignoring the fact the banks have powerful lobbies and influence the "decision makers" to a very considerable degree.

That fact that it is advantages for companies to lobby/influence politicians is very much part of the problem.

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The banks were doing what the state had given them incentive to do - they insured their deposits, implied they would be bailed out, ensured limited liability, while the 'regulators' encouraged low reserves (see Basel requirements for details).

If you don't want the banks to act irresponsibly, then make them take responsibility and don't say you will pay for all of their mistakes. Let them gamble with their own money and put their house on the line.

This will fix it for you :

The banks were doing what the banks lobbied the state to give them incentive to do

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http://www.telegraph.co.uk/finance/budget/9725492/Autumn-Statement-George-Osborne-warned-over-cash-grab.html

Osborne won't care it will be someone else's problem. His objective is the short term and nothing else matters.

Merv took the same attitude, couldn't see a problem with monetising the 35 billion coupon the government owed on QE debt. No appeasing the entitled masses, jam today, kick the can down the road and f**k it up for your followers.

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So who are the problem here? The people pointing guns at people or those asking them to be pointed at people?

Problem is a lot of people WANT the status quo.

An awful lot of the British public want an overeaching fascist all seeing totalitarian state.

Why do you think they've been voting for one for the past 50 years. They want it, they love it, they desire it, they want the gun pointed at their head. Its almost like masochism.

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Problem is a lot of people WANT the status quo.

An awful lot of the British public want an overeaching fascist all seeing totalitarian state.

Why do you think they've been voting for one for the past 50 years. They want it, they love it, they desire it, they want the gun pointed at their head. Its almost like masochism.

They want the gun pointed at other people's heads to pay for the unfunded priviledges they now enjoy.

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Problem is a lot of people WANT the status quo.

An awful lot of the British public want an overeaching fascist all seeing totalitarian state.

Why do you think they've been voting for one for the past 50 years. They want it, they love it, they desire it, they want the gun pointed at their head. Its almost like masochism.

Sure, I agree. It's nuts, but true*.

However, when you have an over-reaching, fascist, all seeing, totalitarian state, they are clearly the ones who should be blamed for all ills. If such a state is being influenced inappropriately, they are to blame.

EDIT: * Not that the majority loving a bit of looting makes it any more right.

Edited by Traktion
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Good luck with that, the government are 100% committed to helping homeowners and BTLers. Because this is the category the majority of their voters fall into.

Not when the section of society that are priced out start to become a very sizeable sector to take notice of....one vote to one person with one property, one vote to one person with ten BTL properties.....one vote to everyone who would like to own their own home but find they are unable to close to the place where they work.

The gap is growing. ;)

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Not when the section of society that are priced out start to become a very sizeable sector to take notice of....one vote to one person with one property, one vote to one person with ten BTL properties.....one vote to everyone who would like to own their own home but find they are unable to close to the place where they work.

The gap is growing. ;)

It needs to grow fast, the boomer and retired vote is worth 1.6 of those under 35 because they don't vote, hence an easy target to shaft.

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It needs to grow fast, the boomer and retired vote is worth 1.6 of those under 35 because they don't vote, hence an easy target to shaft.

They would vote if there was a party to vote for that they could see were on their side, a party that speaks up for them or even acknowledges them.....there is no party that I can see that want to help support the young, those graduating today with few jobs, high debt, and little affordable housing. :(

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I disagree, they are helping the banks, they have been for years. If they had wanted to help the mortgage owners they would never had allowed house prices to shoot up. if they wanted to help people they would let prices correct.

That's the way I see it ,the helping the home owners bit is just smoke and mirrors as soon as the banks are in a position to do so( finished rapeing the tax payer via the government) they will be circling like vultures, they are on the runway in ROI as open season has now be declared on the BTL part of their loan book as soon as the numbers add up they will do the same here and they will start with the commercial/BTL side of their loan book first just like they are doing in the ROI know

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  • 433 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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