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interestrateripoff

How UK debt has increased over last 3 decades from 1980

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Data from the OBR PSF data bank figures in billions.

1980-1989/90
126.2
186.7
48% increase

1990-1999/00
188.3
397.4
111% increase

2000-09/10
386.5
1076.6
179% increase

Given the exponential nature of debt, this is what we should be seeing.  The Tory govt narrative about them fixing the sick man of Europe on these figures seems to be complete and utter b0110cks, they just turned the man into a debt junkie requiring an ever increasing debt fix.  It will be worth seeing what the figures for 2010-19/20 show.  Although you could run this analysis from 1974 when the debt figures where recorded.  The figures I used was from the Maastricht treaty debt figures.

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Why earn it when you can borrow it.....Spend it without earning it, or spend it in the hope what you bought with it can earn it....;)

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You do not have to be a genius to see how this all ends. History shows this occurred many times before and always ends the same.

Be careful what your holding when the music stops.

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I should also add that my figures do have missing debt, as the increase between each starting point is missing from the figures.

Not done the percentages for this, but the OBR data figures start from 1974, so here's the figures for those time periods.  So a large jump at the start, a middle period of relative slow growth and then it escalated at the end.  Perhaps the slow growth in the middle was an illusion or did the recession wash out in the early 90's purge the economy of malinvestments?  Again it shows timepoints influence data.

1974-1983/84
53.7
155.1
 

1984-93/94
166.5
298.7


1994-03/04
339.9
450.1

2005-13/14
505.2
1522.5

 

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31 minutes ago, doomed said:

You do not have to be a genius to see how this all ends. History shows this occurred many times before and always ends the same.

Be careful what your holding when the music stops.

Yep - make sure its not Sterling or Sterling denominated assets unless its a company with overseas revenue

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56 minutes ago, interestrateripoff said:

Given the exponential nature of debt, this is what we should be seeing.

I always thought that exponential growth involved a growth constant k. The problem here is the growth constant is... well.... not constant...

This is exponential exponential growth, or second order exponential growth for want of a better name.

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How can this be the case, we had Tory governments for most of this time? I thought they "could be trusted with the economy"? :unsure:

(no sniggering at the back).

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Interesting to see how this stacks up against other countries:

http://www.tradingeconomics.com/united-kingdom/government-debt-to-gdp

Plenty of drill-down stats in each case. You can see how even mighty Germany's debt went up post 2008, but has subsequently been reduced.

'The United Kingdom recorded a government debt equivalent to 89.30 percent of the country's Gross Domestic Product in 2016. Government Debt to GDP in the United Kingdom averaged 50.26 percent from 1980 until 2016, reaching an all time high of 89.30 percent in 2016 and a record low of 31.30 percent in 1991.'

Seems in the modern period Maggie did turn things around a little, the debt reached its lowest vs GDP, early after Major took over. An although the actual debt went up during her tenure, inflation back then was generally much higher, so the £s were devalued significantly year on year.

Spending though can be seen in this graph, and clearly shows how after being 'Prudent' for a couple of years, Gordon's borrowing to invest strategy turned the graph the other way.

http://www.tradingeconomics.com/united-kingdom/government-spending-to-gdp

So overall I conclude the country is in a right old mess, but Labour are more dangerous than the Tories. Yet both are insane, I fail to see the benefit of importing more mouths to feed, with all the resulting additional state spending, when we have plenty of idle hands here already. But I course I don't benefit from mass immigration, the manager-ing classes in the public services plus big businesses in receipt of govt. spending & wider public consumption do.

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4 minutes ago, Unbowed said:

Interesting to see how this stacks up against other countries:

http://www.tradingeconomics.com/united-kingdom/government-debt-to-gdp

Plenty of drill-down stats in each case. You can see how even mighty Germany's debt went up post 2008, but has subsequently been reduced.

'The United Kingdom recorded a government debt equivalent to 89.30 percent of the country's Gross Domestic Product in 2016. Government Debt to GDP in the United Kingdom averaged 50.26 percent from 1980 until 2016, reaching an all time high of 89.30 percent in 2016 and a record low of 31.30 percent in 1991.'

Seems in the modern period Maggie did turn things around a little, the debt reached its lowest vs GDP, early after Major took over. An although the actual debt went up during her tenure, inflation back then was generally much higher, so the £s were devalued significantly year on year.

Spending though can be seen in this graph, and clearly shows how after being 'Prudent' for a couple of years, Gordon's borrowing to invest strategy turned the graph the other way.

http://www.tradingeconomics.com/united-kingdom/government-spending-to-gdp

So overall I conclude the country is in a right old mess, but Labour are more dangerous than the Tories. Yet both are insane, I fail to see the benefit of importing more mouths to feed, with all the resulting additional state spending, when we have plenty of idle hands here already. But I course I don't benefit from mass immigration, the manager-ing classes in the public services plus big businesses in receipt of govt. spending & wider public consumption do.

You're somewhat missing the point. Financial risk is almost entirely concentrated in the private sector. Private sector debt exploded uncontrollably from 1979 onwards in the UK, rising from ~60% of GDP where it had been for the previous century, to ~165% in 2007, where it remains today. Prior to Margaret Thatcher UK private debt had never exceeded 73% of GDP.

The peak of 192% in 2010 was a consequence of economic contraction following the GFC.

BIS statistics via Steve Keen's Patreon page.

IMG0033_2107074953.png

 

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28 minutes ago, Gribble said:

Dont forget Germany has massive reserves of gold unlike the UK

Germany has close to 3,380 tons in gold reserves, which makes up about 70% of the country’s total reserves.

In dollars, this amounts to $138,194,274,400.

Edited by Errol

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1 hour ago, zugzwang said:

You're somewhat missing the point. Financial risk is almost entirely concentrated in the private sector. Private sector debt exploded uncontrollably from 1979 onwards in the UK, rising from ~60% of GDP where it had been for the previous century, to ~165% in 2007, where it remains today. Prior to Margaret Thatcher UK private debt had never exceeded 73% of GDP.

The peak of 192% in 2010 was a consequence of economic contraction following the GFC.

BIS statistics via Steve Keen's Patreon page.

IMG0033_2107074953.png

 

This^^^^^

It's hilarious when with bang on about the public debt soundbites spoonfed to them by the media, ignoring the private debt elephant in the room. 

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1 hour ago, zugzwang said:

You're somewhat missing the point. Financial risk is almost entirely concentrated in the private sector. Private sector debt exploded uncontrollably from 1979 onwards in the UK, rising from ~60% of GDP where it had been for the previous century, to ~165% in 2007, where it remains today. Prior to Margaret Thatcher UK private debt had never exceeded 73% of GDP.

The peak of 192% in 2010 was a consequence of economic contraction following the GFC.

BIS statistics via Steve Keen's Patreon page.

IMG0033_2107074953.png

 

OK, I was looking at the horrible public debt, the above graph though is pretty drastic.

So how much of this private debt, underpins HPI, car purchases and fancy holidays? How much is down to consumption and speculation and how much is down to genuine  business investment.

The only way to call a halt to that is to raise interest rates ... but instead every time the boom looks over they cut.

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It's impeding economic growth in the US so it'll be doing the same in the UK.

Quote

 

https://en.wikipedia.org/wiki/Economy_of_the_United_States

A 2012 International Monetary Fund study concluded that the US financial sector has grown so large that it is slowing economic growth. New York University economist Thomas Philippon supported those findings, estimating that the US spends $300 billion too much on financial services per year, and that the sector needs to shrink by 20%. Harvard University and University of Chicago economists agreed, calculating in 2014 that workers in research and development add $5 to the GDP for each dollar they earn, but finance industry workers cause the GDP to shrink by $0.60 for every dollar they are paid.  A study by the Bank for International Settlements reached similar conclusions, saying the finance industry impedes economic growth and research and development based industries.

 

 

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Total UK debt.  Unfortunately like a lot of graphs it's not upto date and stops in 2011 but it's useful to see the rough general proportions of debt for the different sectors.

 

Image result for total uk debt 2016 IMAGES

 

Then in the international context.

article-2088871-0F8867F800000578-363_468

Edited by billybong

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3 hours ago, zugzwang said:

You're somewhat missing the point. Financial risk is almost entirely concentrated in the private sector. Private sector debt exploded uncontrollably from 1979 onwards in the UK, rising from ~60% of GDP where it had been for the previous century, to ~165% in 2007, where it remains today. Prior to Margaret Thatcher UK private debt had never exceeded 73% of GDP.

The peak of 192% in 2010 was a consequence of economic contraction following the GFC.

BIS statistics via Steve Keen's Patreon page.

 

And to a large part all underpinned on the assumption that nanny will bailout the banks.

I do wonder if the IMF crisis was engineered by the finance system to ensure we became on message and embraced debt bondage.

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 August intervention adds an additional £76.6bn to the national debt.

Quote

As noted earlier, the 3.0 per cent rise in the debt-to-GDP ratio reflects the implementation of last August’s monetary policy measures. By the end of March, these had the following effects:

Use of the demand-led Term Funding Scheme(TFS) had reached £53.5 billion, adding that amount to PSND. This compares with our March forecast of £50 billion (rising to£90 billion by end 2017-18); and the other elements of the August package (corporate bond purchases of up to £10 billion and further gilt purchases to take the stock of purchases to £435 billion) raised PSND by £23.1 billion. Corporate bond purchases add one-for-one to PSND, while gilt purchases raise PSND by the difference between the nominal value of the gilts purchased and the market price paid by the Bank.

http://budgetresponsibility.org.uk/docs/dlm_uploads/April-2017-Commentary-on-the-Public-Sector-Finances-Final.pdf

moved.jpg

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23 hours ago, Gribble said:

Yep - make sure its not Sterling or Sterling denominated assets unless its a company with overseas revenue

Most of the country's with their diff currencies are doing the same thing this time around so together we all sink.  Interesting will be, if everyone is doing it and feel the pain will it all be relative when it implodes under its own weight

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22 hours ago, Gribble said:

Dont forget Germany has massive reserves of gold unlike the UK

Brown sold ours for 3 months tax credit payments.Brown bankrupted this country on his own.At least every council house garden got a trampoline out of it though.

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38 minutes ago, WinstonSmith said:

Yes, the garden trampoline is almost mandatory in this country.

Don't forget the satellite dish with a Sky HD box and 100 quid a month TV subscription.

A nice big flatscreen telly (or two) to watch it on.

The latest iPhones for all the family plus a couple of iPads.  Tied in to expensive 48 month contracts (which is how you got the latest phone).  Nintendo DSes for all the kids of course - maybe a £300 Switch too, now they've been released.

A couple of foreign holidays per year.

Takeaway food delivered most evenings.  Pub lunches at the weekend.  Loads of unused food from a massive weekly shop dumped every week as it spoils in the fridge.

And a new car (or two) on PCP parked out front.

 

Oh yeah, and a whopping credit card bill which thanks to ultra low interest rates, it's just about possible to make the minimum payment (which doesn't reduce the actual debt) on because you've got so many other monthly commitments you're just about able to scrape by.  Better hope there are no financial shocks like a broken central heating (don't worry, payday loans or similar 'quick cash' lenders here to help) or a loss of one of the two incomes (both parents working all the hours available - kids either left at home or in expensive childcare).

Ahhhh ... Utopia.  How did people manage to live in the past, before all this 'wealth'?

 

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1 hour ago, Sour Mash said:

Don't forget the satellite dish with a Sky HD box and 100 quid a month TV subscription.

A nice big flatscreen telly (or two) to watch it on.

The latest iPhones for all the family plus a couple of iPads.  Tied in to expensive 48 month contracts (which is how you got the latest phone).  Nintendo DSes for all the kids of course - maybe a £300 Switch too, now they've been released.

A couple of foreign holidays per year.

Takeaway food delivered most evenings.  Pub lunches at the weekend.  Loads of unused food from a massive weekly shop dumped every week as it spoils in the fridge.

And a new car (or two) on PCP parked out front.

 

Oh yeah, and a whopping credit card bill which thanks to ultra low interest rates, it's just about possible to make the minimum payment (which doesn't reduce the actual debt) on because you've got so many other monthly commitments you're just about able to scrape by.  Better hope there are no financial shocks like a broken central heating (don't worry, payday loans or similar 'quick cash' lenders here to help) or a loss of one of the two incomes (both parents working all the hours available - kids either left at home or in expensive childcare).

Ahhhh ... Utopia.  How did people manage to live in the past, before all this 'wealth'?

 

Not to mention the vast extravagance of the modern wedding.

http://www.telegraph.co.uk/news/2017/04/26/three-day-wedding-celebration-do-learn-restraint-says-country/

Quote

Not so long ago, weddings consisted of a simple ceremony followed by a daytime reception. Skip to the present day, and a three-day extravaganza is the norm, complete with social media hashtags and shameless pleas for guests to fund a round-the-world honeymoon.

Now Country Life magazine has stepped in to call for restraint, warning couples that weddings have turned into “the nuptial equivalent of an arms race”.

A classic country wedding should prioritise “quality over quantity”, the publication said.

Unnecessary add-ons include glitzy stag and hen parties in foreign locations, professional-looking websites detailing the couple’s romantic history, and an “army” of adult bridesmaids and ushers.

Meanwhile, parents or grandparents of the happy couple will have married at a time when a stag night comprised a couple of pints in the pub, the most extravagant item on the wedding list was a canteen of cutlery, and the guests were home by teatime. An evening party was the exception, not the rule.

“The possibilities for upgrading every aspect of a wedding now appear to be infinite,” the magazine said.

“Why have a stag night in your favourite London restaurant when you and 12 of your oldest mates could go boar hunting in Morocco?”

The worst development in modern nuptials, it argues, is the three-day wedding. This involves a Friday night get-together, a Saturday wedding with reception lasting until the early hours of Sunday, rounded off - “horror of horrors” - by a daytime event the day after, before the shattered guests embark on the journey home.

 

Edited by zugzwang

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6 hours ago, durhamborn said:

Brown sold ours for 3 months tax credit payments.Brown bankrupted this country on his own.At least every council house garden got a trampoline out of it though.

Spot on. Funny enough I lived in an ex-council house in Guildford (about £420K market price now) and my neighbours got a trampoline. It was an eye opener especially accidentally opening a misdirected letter with tax credit payment info. Wonder what the point is working. There were some decent people old school there but lots of single mum breeders too

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