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John The Pessimist

Infinite Debt Ok For Uk-Dt Article

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No one wants to work for their money, I can only suppose it's because they are stupid and useless.

To be fair, the Cockney saying "only fools and horses work", which must date from at least the period before the advent of the internal combustion engine, suggests that doing actual work for a living has not always been universally admired.

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IMF economists say some countries can 'just live with' high debt

WASHINGTON - Some countries with high public debt levels might be able to "just live with it," because cutting back carries its own risks, three IMF officials said in a paper that disputes decades of dogma about the benefits of austerity.

Staggering, it's now OK for advanced economies to carry perpetual debt!

It's like someone is making this 5h1t up as they go along!

Edited by interestrateripoff

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http://www.imf.org/external/pubs/cat/longres.aspx?sk=42931.0

When Should Public Debt Be Reduced? Author/Editor: Jonathan David Ostry ; Atish R. Ghosh ; Raphael A. Espinoza Publication Date: June 02, 2015 Electronic Access: Free Full text (PDF file size is 1,200KB).
Use the free Adobe Acrobat Reader to view this PDF file
Summary: What considerations should guide public debt policy going forward? Should debt be reduced to achieve normative anchors (such as 60 percent of GDP), should it be increased further to finance a big public investment push, or should the existing debt be serviced forever? We argue that, for countries with ample fiscal space (little risk of encountering a fiscal crisis), raising distortive taxes merely to bring the debt down is a treatment cure that is worse than the disease. High public debt of course is costly, but it is a sunk cost only made worse by efforts to pay down the debt through distortionary taxation. Living with the debt is the welfare-maximizing policy. In decisions vis-à-vis the big push for public investment, golden-rule considerations remain salient, with due account taken of the additional servicing costs (and associated distortive taxation) from the resulting buildup of public debt.

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Except if you're Japan, Greece, Italy or Cyprus. :lol:

Blanchard's idiot mob appears as much in the dark today as they were in August 2008 when he authored his now infamous paper declaring the worst of the crisis over.

CGf41BMVAAA0Ae7.jpg

Edited by zugzwang

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No one wants to work for their money, I can only suppose it's because they are stupid and useless.
To be fair, the Cockney saying "only fools and horses work", which must date from at least the period before the advent of the internal combustion engine, suggests that doing actual work for a living has not always been universally admired.

Debt requires even more work to pay it back. If I borrow £10,000, I might pay back £11,000 including interest. That's £1000 extra worth of future work to pay it back. You could say....only fools and horses get into debt.

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So clearly they can see that adding to the debt of 2007 by the colossal sums we have has fixed things.

Scary thought that this kind of filth is in control of us.

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Debt requires even more work to pay it back. If I borrow £10,000, I might pay back £11,000 including interest. That's £1000 extra worth of future work to pay it back. You could say....only fools and horses get into debt.

Only fools and horses pay it back.

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Debt requires even more work to pay it back. If I borrow £10,000, I might pay back £11,000 including interest. That's £1000 extra worth of future work to pay it back. You could say....only fools and horses get into debt.

I think you might be missing the point, the debt is never going to be paid back. At best the interest will be paid and capital rolled over for ever. This will work just fine as long as interest rates remain below our GDP growth rate for ever - or at least until after the next guy takes charge.

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To be fair, the Cockney saying "only fools and horses work", which must date from at least the period before the advent of the internal combustion engine, suggests that doing actual work for a living has not always been universally admired.

Very good point. London always been full of chancers

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So clearly they can see that adding to the debt of 2007 by the colossal sums we have has fixed things.

Scary thought that this kind of filth is in control of us.

Even worse, who voted for them?

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What happens to the IMF if they make a bad bet?

Or does it not work that way and is it all a debt/monetary smokescreen and method of control.

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banker...who earns a living from debt, writes a report proving tanks on the streets if you stop buying his wares.

Note to Venger: its the peoples fault for falling for this. No pressure though. our press will provide a counter voice, they wont publish this propaganda, nobody is influenced by advertising.

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I think you might be missing the point, the debt is never going to be paid back. At best the interest will be paid and capital rolled over for ever. This will work just fine as long as interest rates remain below our GDP growth rate for ever - or at least until after the next guy takes charge.

Bingo! First sensible comment so far.

Really, this idea isn't much of a surprise, is it?

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Bingo! First sensible comment so far.

Really, this idea isn't much of a surprise, is it?

it is, but of course, GDP is distorted by adding debt....but if debt goes up by x% and GDP rises by (x-y)%, then the parting of these two exponentials becomes very dramatic all of a sudden....perfectly manageable today, overwhelming next year...such is the danger of exponentials. And if the lower line is in part assisted by the upper line, then the parting is in reality much more serious than the headline divergence would seem.

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Bingo! First sensible comment so far.

Really, this idea isn't much of a surprise, is it?

For greater sums of debt will require greater sums of consumption......fix that one when the indebted are unable to consume and the rest don't want or need it . ;)

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it is, but of course, GDP is distorted by adding debt....but if debt goes up by x% and GDP rises by (x-y)%, then the parting of these two exponentials becomes very dramatic all of a sudden....perfectly manageable today, overwhelming next year...such is the danger of exponentials. And if the lower line is in part assisted by the upper line, then the parting is in reality much more serious than the headline divergence would seem.

The Keynesian fallacy is always to assume that individuals and firms will borrow to finance growth not speculation. But organic growth is difficult, time consuming and risky whereas financial speculation is merely risky. Thus, over time, the malinvestments responsible for the crisis become reinvigorated rather than unwound.

http://www.bloomberg.com/news/articles/2015-06-03/companies-borrowing-spree-darkens-stock-market-future

Companies' Borrowing Spree Darkens Stock Market Future

June 3, 2015 — 5:00 AM BST

A dark shadow is lurking behind the happy façade of rising stock prices.

U.S. companies are borrowing money faster than they’re earning it -- and they’re doing it at the quickest pace since the aftermath of the financial crisis.

Instead of deploying the debt to build factories, hire new workers or expand product lines, companies are funneling more of their money to shareholders or using it to fund deals. Stock buybacks reached an all-time high last year and the volume of global mergers and acquisitions announced so far this year would make it the second-busiest ever, according to data compiled by Bloomberg.

The debt undermines future growth and could dent company income when borrowing costs rise. Higher interest rates will make already indebted companies less desirable to lend to. The consequence: profitability, buoyed by cheap money since rates went to near-zero in 2008, will sink.

“Companies have said, ‘We don’t have an ability to grow organically, so we can distract shareholders instead,’” according to Jody Lurie, a credit analyst at Janney Montgomery Scott LLC, which manages $63 billion. “When they buy back shares, all it does is optically make earnings per share look better.”

Companies reacted to the Federal Reserve’s rumblings about raising interest rates by going on a borrowing spree.

“There are a lot of pressures on management to lever up to improve returns,” said Charles Peabody of New York-based investment researcher Portales Partners LLC. “They’ve taken on more leverage because the cost of transactions is very low. If that changes because rates go up, it’s going to be hard to sustain that gain.”

Edited by zugzwang

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That's good.

they're not just trying to kick the can down the road..but do keepy-uppies with it as well.

....'ave it!!

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02

The Keynesian fallacy is always to assume that individuals and firms will borrow to finance growth not speculation. But organic growth is difficult, time consuming and risky whereas financial speculation is merely risky.02 Thus, over time, the malinvestments responsible for the crisis become reinvigorated rather than unwound.

02

http://www.bloomberg.com/news/articles/2015-06-03/companies-borrowing-spree-darkens-stock-market-future

02

the greatest theft in the history of the world. Ceo's can goose their stock options without doing the hard graft like....er....making products!

This is what usury does, it destroys society and everything else, except the 1%. They get it all, while you are left starving in a dank cave. People are too stupid to wake up.

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That debt space graph thing reminds me of the letters credit card companies send through to get you to extend your credit limit (fine by me, pay it off every month), or the "equity release" scams...release all that trapped capital. I can just imagine Osborne looking at that and thinking, mmm, maybe I should use that "trapped unused debt" and set it free.

Edited by HovelinHove

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"More importantly, for countries that have ample fiscal space, the cost of insurance is likely to be much larger than the benefit. It is much better in these circumstances to just live with the debt, allowing the debt ratio to be reduced organically through higher growth."

"reduced organically"

UK seems to have given up on that.

The IMF should supply the mathematical definition of "ample". It seems to change so often.

Maybe there's another UK somewhere that the IMF is referring to.

Edited by billybong

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