Sunday, October 18, 2009

Can the nation handle the necessary belt-tightening?

Government debt ‘nearly three times higher than official figure’

The true level of Government debt is equivalent to 157 per cent of national output and nearly three times as large as the £805 billion figure reported by the Office for National Statistics, according to a new book published by a centre-right think tank. Mr Newmark argues that the UK’s public sector net debt is equivalent to £85,610 per household...

Posted by devo @ 10:39 PM (1530 views)
Please complete the required fields.



14 thoughts on “Can the nation handle the necessary belt-tightening?

  • Careful – “centre-right think tank” means Tory-sponsored.

    Reply
    Please complete the required fields.



  • Those figures, if correct, won’t help any party.

    Reply
    Please complete the required fields.



  • Absolutely, that’s agreed devo.

    Q. What’s the difference between liquidity and solvency (or cashflow and bankruptcy)?
    A. Depends how much influential your creditor is.

    Reply
    Please complete the required fields.



  • The truth is out there – somewhere!

    Reply
    Please complete the required fields.



  • So let me see now.

    The average house price is what? As Rolf would say – Can you see what it is yet?

    Reply
    Please complete the required fields.



  • I get really fed up with this sort of drivel. Everything in the public sector is financed in the same way as pensions and is therefore ‘unfunded’ (except of course by future tax revenue). So why not include everything in your calculation and have done with it?

    Reply
    Please complete the required fields.



  • cyril,

    I agree with your point. However this “true” figure is important to answer critics who trot such nonsense as “the deficit was higher after the Napoleonic wars” (that was the argument in the Independent a few days ago). In the past we didn’t have PFI, public-sector pensions, state pension, etc.

    Fundamentally the principle seems flawed. Even if we can rack up more debt, it doesn’t mean we should!

    Reply
    Please complete the required fields.



  • Does anyone else get that sinking feeling. I have been involved in 2 bankruptcies in my life and it all seems so familiar.

    Reply
    Please complete the required fields.



  • The only way out that the Government has is to print money, lots of it, and inflate away the liabilities.

    Reply
    Please complete the required fields.



  • fallingbuzzard says:

    As a historian I’d point out that after 13 years of Napoleonic Wars, the UK had become as the hyperpower, being economically, militarily and technologically dominant within the world. Even with that, it was a struggle to reduce the deficit and Lord Liverpool, the then PM, didnt exactly have an easy time through 10 years of recessions, riots, radicalism and massacres. oh and 2 years of arrest without trial that made people disappear. Can’t wait.

    Reply
    Please complete the required fields.



  • Meanwhile in the USA an even more gloomy picture emerges:

    * An officially recognized national debt of $11.8 trillion, which will likely exceed $12 trillion sometime this month.

    * Unfunded national obligations of $104 trillion!

    * Another $9 trillion in cumulative deficits over the next ten years.

    * Plus another trillion dollars for health care reform, no matter what bill finally makes it through Congress.

    Grand total: $125.8 TRILLION of public debts!

    All told, that means that each and every household in America is now indirectly responsible for more than 1 MILLION DOLLARS in government debts and obligations. And that assumes no new government spending, no new social programs, no new wars, no new economic disasters or bailouts. Worse, it assumes no new deficits in the meantime!

    Put another way, even if the government could somehow pay off that debt at the rate of $100 million PER DAY, it would take 3,446 years before the total government debts and obligations are paid off.

    Even if Washington were to pay off $1 billion per day, it would still take nearly 345 years to pay off those debts!

    Patently unsustainable debts? Yes! Patently unpayable? You bet it is!

    Of course, Washington will never default outright on its obligations. But it doesn’t have to. By devaluing the dollar, Washington can effectively pay off its debts with a cheaper currency.

    Source: Larry Edelson
    Money and Markets
    18th October 2009

    Reply
    Please complete the required fields.



  • nopensionnohouse says:

    Larry Who?

    Reply
    Please complete the required fields.



  • I would rather go to prison than pay £85,000.00 in tax for somebody elses toxic housing debt.

    Whilst the government ensure that those people who borrowed lied on their mortgage applications, can stay in their massively overpriced houses.

    I truly hate the Labour party.

    Reply
    Please complete the required fields.



  • As you can present the numbers in different ways, it is not easy to make a quick assessment, other than by going through the numbers line by line.

    Some of the US doomsters seem to be taking mundane, everyday, tax funded expenditure, and totalling it up for years ahead. This gives a humungous figure, but tells you very little.

    The real numbers to be concerned about are the future obligations that government has to meet, that are not covered by the current level of taxation.

    In the UK, the most alarming of these are the public sector pension promises. The difference between what is currently paid in state sector pensions and what is likely to be paid in a few years time is of very serious concern, especially when one considers that one major source of tax revenue – North Sea Oil and and Gas – will have dried up by then.

    The only sensible solution is to require the public sector to retire later. Unfortunately, I don’t see the Dave and George show as the right team to deliver the bad news – without a very bad reaction…

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>