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The Masked Tulip

Think Greece Is In A Mess? Wait Till The Uk's Debt Mountain Explodes In Our Face

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Think Greece is in a mess? Wait till the UK's debt mountain explodes in our face

Our debts, national and personal, are huge. We can never pay them off. Our trade imbalance is just as bad. Our recovery is based entirely on a house-price balloon that could burst in a moment.

The main effort of the Government is to avoid any shocks until the Election is over – but what then?

I feel for the Greeks. I don’t blame them for refusing to endure more collective punishment, though they were foolish – as we are now – to let politicians lead them into a swamp of debt.

But I wonder whether, not far hence, it will be the Greeks who are sympathising with us.


Edited by The Masked Tulip

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Some people think it's just a demand issue.

That you can heap on £Multi-Billions each year to the national debt without consequence. 'More debt in pursuit of prosperity'.

It's all about protecting and seeking even more HPI for them.

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1/3 of the debt is already 'owned' by the Bank of England and those Gilts are never going to be repaid or sold on and 'sterlised' in the general market - i.e. It has been printed away for all intents and purposes.

Further printing will happen as needed so the real danger is of a collapse in the currency. However, with other major currencies either printing or likely to print too, that's unlikely to be a near term issue. Longer term, the value of money will be eroded even more and people's savings and incomes hit even harder.

Bottom line, I can't see the UK being called upon to repay it's debt in the same way as Greece which unwisely adopted a currency it had no real control over and for which it had to fudge the entrance requirements to join.

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1/3 of the debt is already 'owned' by the Bank of England and those Gilts are never going to be repaid or sold on and 'sterlised' in the general market - i.e. It has been printed away for all intents and purposes.

Further printing will happen as needed so the real danger is of a collapse in the currency. However, with other major currencies either printing or likely to print too, that's unlikely to be a near term issue. Longer term, the value of money will be eroded even more and people's savings and incomes hit even harder.

Bottom line, I can't see the UK being called upon to repay it's debt in the same way as Greece which unwisely adopted a currency it had no real control over and for which it had to fudge the entrance requirements to join.

Even if it was it could just print it and pay it down.

The basic premise of the article, that we can never pay off the national debt is nonsense- written to appeal to people who can only view the national finances in the same context as their own personal ones.

The government clearly can create money out of thin air and therefore could pay its sterling debts in an instant should it so choose.

This action, of course, would have some major consequences for individuals, but to say it is impossible to do is rubbish.

Back in the day, a government doing what the UK/Japan/EU/US is doing as regards QE would have been punished by the markets. But because just about every developed economy is now doing it, it no longer becomes a stand out policy that will result in a country being penalised.

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They are correct in saying that the debts can never really be serviced - except of course by printed money. This returns the nominal value but shafts the creditor by returning less value than they loaned.

The problem with the money printing 'solution' is that it also shafts the population of the country who earn and save in that currency. After all, holding cash or bank savings means that you are also ultimately a creditor of the national bank.

Of course, since the elite primarily hold their wealth as assets and thanks to money printing and financial repression can access funds to buy more assets at low rates, and the electorate are thick as two short planks and quite happy to elect politicians who support printing money - well, this isn't really a 'problem' to those who run the country, at all.

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It must be depressing to be Peter Hitchens. Shame this article reads so badly, as the subject matter is interesting. He had to bring his religion into it as well. Yawn.

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It must be depressing to be Peter Hitchens. Shame this article reads so badly, as the subject matter is interesting. He had to bring his religion into it as well. Yawn.

A little knowledge is a dangerous thing, especially when in the hands of someone on the far-right/left.

On one hand it's no bad thing to tell your average DM reader that we're in a house price bubble and it is being used to prop-up GDP figures. On the other the trouble is those most bothered by this will be asking election candidates what they'll do to stop the balloon from popping.

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Guest Jemmy Button

Always liked Peter Hitchens writings. Always liked him on Question Time.

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A little knowledge is a dangerous thing, especially when in the hands of someone on the far-right/left.

On one hand it's no bad thing to tell your average DM reader that we're in a house price bubble and it is being used to prop-up GDP figures. On the other the trouble is those most bothered by this will be asking election candidates what they'll do to stop the balloon from popping.

Agree.

Re: Peter Hitchens writing, his late brother was far more interesting to hear speak IMO.

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Guest Jemmy Button

His late brother was a drunken Iraq War supporter. Up his own derriere most of the time. Atheists love him but that's as far as it goes...

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His late brother was a drunken Iraq War supporter.

True on both counts!

I didn't agree with him, but drunk or not the point is I personally found him far more interesting to listen to than his brother who comes across like an up tight angry man.

I know who I'd have rather bumped into down the pub!

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We have our own floating currency, Greece doesn't

No. Its pretty obvious that if you have a floating currency that becomes fixed then the country costs i.e. wages are going to have to flex instead. It was so obvious I struggle to think what Greeks think they would have got away with from joing the EU - free money.

As far as the UK, we may be able to print our way our of the debt situation but we might find that our creditors want paying in a different medium, or ask for a much higher risk premium i.e. higher IRs. Nothings free; everything has costs.

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No. Its pretty obvious that if you have a floating currency that becomes fixed then the country costs i.e. wages are going to have to flex instead. It was so obvious I struggle to think what Greeks think they would have got away with from joing the EU - free money.

As far as the UK, we may be able to print our way our of the debt situation but we might find that our creditors want paying in a different medium, or ask for a much higher risk premium i.e. higher IRs. Nothings free; everything has costs.

Yeah but we've survived the odd sudden devaluation in the past, and will do so again Edited by Si1

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Not sure devaluation is an option any more, before that can even be thought about a bailout needs to take place with the usual conditions.

Good luck with that , there is no easy way out,

There was back in 2010, but that has long since gone.

Wages need to grow, in real terms and we need to export loads more.

Of course it would help if a few millionaires and corporations paid some tax.

All IMO of course.

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To win the game of capitalism you need to under consume and buy rent seeking assets.

This is all well and good until everybody tries to do it.

austerity can work for some it can't work for all. It's just a race to the bottom.

Here endith my sermon.

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Yeah but we've survived the odd sudden devaluation in the past, and will do so again

Survived but the regular gradual/sudden devaluations just helped to spur the UK's decline over time.

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Survived but the regular gradual/sudden devaluations just helped to spur the UK's decline over time.

Nah

That was two world wars and the retreat from empire that did that

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Nah

That was two world wars and the retreat from empire that did that

Those as well and probably a few other reasons. Of course the devaluations weren't the only reason or even the main reason but ultimately they made things worse.

Edited by billybong

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Think Greece is in a mess? Wait till the UK's debt mountain explodes in our face

That is rather the point though isn't it? Our debt explodes in our own british face not foreigners?

When it 'explodes' BANG BANG some portion of UK PLC are better off and some are worse off yes?

Why can't you get your head around the fact that what we are talking about here is a distributional issue between classes and generations within the UK?

Anyone who thinks that the young and the non-propertied elements of society have been getting a raw deal, should then also see that if they get a windfall at expense of previous beneficiaries how can it make any difference to how UK PLC is perceived externally as a whole? Of course various price levels would have to adjust.

In fact if the tax paying hard working elements become advantaged versus the feckless then the value of the pound should rocket should it not?

Also: Daily Mail, really?

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Guest Jemmy Button

That is rather the point though isn't it? Our debt explodes in our own british face not foreigners?

When it 'explodes' BANG BANG some portion of UK PLC are better off and some are worse off yes?

Why can't you get your head around the fact that what we are talking about here is a distributional issue between classes and generations within the UK?

Anyone who thinks that the young and the non-propertied elements of society have been getting a raw deal, should then also see that if they get a windfall at expense of previous beneficiaries how can it make any difference to how UK PLC is perceived externally as a whole? Of course various price levels would have to adjust.

In fact if the tax paying hard working elements become advantaged versus the feckless then the value of the pound should rocket should it not?

Also: Daily Mail, really?

Are you a Guardian reader per chance?

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