Tuesday, June 8, 2010

More aggressive cuts then?

Government plans to cut the deficit 'distinctly weak', says Fitch ratings agency

The Government has been issued with a veiled warning that Britains AAA credit rating is still at risk because of its distinctly weak deficit cutting targets. In a blow to George Osborne, the ratings agency Fitch said there was a real danger the Coalition would not do enough over the medium term to sufficiently reduce the £156bn deficit. Giving a clear signal that it wants to see a detailed plan for deeper cuts in the emergency Budget on June 22

Posted by mark @ 01:13 PM (2134 views)
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13 thoughts on “More aggressive cuts then?

  • This is like killing a vampire, you get one chance to stake it and if you miss you’re are dead.

    I would suggest old George goes that extra mile and empties both barrels into the public sector. The parasite has been killing the host for way too long.

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  • An interesting opposing view to that held by telegraph readers.

    Maybe the markets will be making the decisions on the level of cuts.

    And I don’t see why it’s a blow to Osborne, it’s clearly all the fault of Brown and his profligacy that’s got us into this mess.

    I guess the electorate may question us or anyone listening to a ratings agency who’s innacurate ratings of packaged mortgage products have got us into this mess in the first place.

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  • Not surprised.

    Cameron and his mates have never sounded convincing on the economy. Remember Osborne’s ‘share the proceeds of growth’ speech? And they totally failed to see the crash coming in 2007 or even 2008, even though the money supply had ben growing at about 14% during the run up to Northern Rock etc.

    Now I doubt they have the bottle to see through any meaningful cuts to government spending. Because you can rest assured that all those 800,000 new civil servants taken on by Nulab and all the welfare scroungers will scream like mad if they think the gravy train’s about to hit the buffers.

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  • I dont think they have a choice dammed if they do and dammed if they don’t all with thanks to gordon brown

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  • peter @3

    I think you’ll find it’s closer to 1,000,000 new civil servants

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  • Pity the ratings agencies didn’t cut the AAA rating last April. Then the blame could be placed where it belonged.

    Time to get some commodity investments? Gold touched $1250 today (spot). Who was the poster who reckoned it was going down to $800 ?

    ReCaptcha – sukiyaki oil

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  • Mr Flibble,
    I’m afraid I can hadly agree with the sentiments you have expressed… Whoever benefitted, ever, (banksters apart) from destroying the public sector? Doctors, teachers, rubbish collectors etc. We’re all in this together, old chap! Now, we mustn’t forget that these ratings agencies are the same ones that rated junk mortgaged backed securities as AAA products. Why should we believe their pronouncements, on anything, after that?
    Nick

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  • We’re all in this together – too right. Privatise the profit, socialise the loss.

    Not sure what all this consulting with everyone and their mother is either? Either the Tories are man enough to make the hard choices now or the IMF make them for us next year. The UK is out of excuses and out of time and the rating agencies are right to warn us.

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  • The time for discussion on spending was a few years back. We are now trying to bail out the boat and the policy hair splitting time is past.

    As Cameron said, we will soon be in a place where we spend more on debt interest than we do education. Gordon Brown deliberately bankrupted the country. The only people to argue against him this year were Hewitt and Hoon! Brown deliberately laid “bear traps” for the incoming political parties, so there has to be a few explosions that will come out sooner or later. yes, people will be hurt – the NuLabour cabinet designed it that way.

    I wish the coalition every success on 22nd. It isn’t an easy task reducing a bloated public sector – yes, I’ve been a consultant there too! And not all public sector staff should be stigmatised, a lot of them try to do a good job and don’t get big salaries. The top public sector bosses will ensure they are hurt most, while “friends” escape.

    ReCaptcha: Paunched Labor

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  • Skeptical First Time Buyer says:

    Consulting everyone is absolutely the right idea. If you get the public to express a view as too where cuts should fall, it significantly weakens the protests of those being cut.

    That is exactly how you get cuts and less strikes, (which in the long run means less cuts). It worked in Canada in the 90s.

    Thatcher stile hard cuts with no consultation, even if necessary left behind a sway of the public that now always vote Labour and are still blind to how sh1t Labour actually are.

    Also you end up cutting the good with the bad as battle lines get drawn, and it becomes a battle of wills more about who has the power than what is best decision given the limited resources.

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  • clockslinger says:

    Yep, never mind the hospitals, public service, public values, civic life, (real) education or anything else that makes living in a society worthwhile…just lets keep the AAA rating. How did we ever get into thjis Faustian pact with people who rated junk as AAA? When I think of strong government I don’t imagine an Etonian rich bot making the lives of a few low paid public sector workers worse (sorry, “fundamentally question the role of the state”)…the ultimate wet dream for your average HPC poster these days it seems. I think rather of a leadership willing to step up to the mark and question the basic assumptions about the financial system and how it’s unregulated activities and socially useless values came to become the accepted norm. Facing down a ratings agency, particularly highlighting past performance, seems to me to be a step in the right direction. Course, we could do what they say in order to keep on the endless loss socialising tread mill. Mmmmm, don’t need to woner what Spotty n Dave will do.

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  • @clockslinger
    Right. Who cares about the ratings agencies?Stuff em.(Should n’t our government,so bold when confronting its defenceless working-class, be taking a class action against the agencies for triple A rating sub-prime bonds which started disintegrating Doctor Evil style as soon as our banks got them in the vaults?).

    The government can issue its own money without borrowing from anyone else simply by buying things with cheques unbacked by anything except the credit worthiness of the nation.They are already doing this with QE (except ,of course,they are,unbelievably, giving the money to the banks!They could ,more effectively, pay for the public services with it)) The sky has n’t fallen in.Any inflation can be mopped up when it turns up in easily taxable house prices in the traditional British manner. If you are that bothered,you can issue time-limited money which whistles round the system really quickly obviating the need to increase the quantity of money by increasing its velocity.(You can make people pay a tax to keep the money in circulation,which is handy.) All of this was done in the weird old 1930’s .( Further back,Lincoln paid for the Union army by issuing his own notes rather than borrow the money at crippling rates of interest from the banksters. Look what happened to him) .
    If international financiers won’t lend us the money (and where do they get it from?Their cheques are n’t backed by anything either)its no big deal :we can issue our own unbacked money without paying for the private sector to do it for us.

    Its amazing that the people who believe in unfettered bank capitalism call themselves libertarians,when the private credit creators hold whole countries in their grip .

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  • I am not convinced by this effort by the Fitch ratings agency. If they wished to make a comment on the previous government they should have done it nearer to its April budget. If they wish to make a comment on the new one it would have been better to wait until its budget on June 22nd. So not a good effort.

    Also Japan is AA rated and yet I read earlier on the notayesmanseconomics web blog that her ten-year government bond yields went down to 1.2% yesterday with her front month government bond futures prices hitting an all time high. So there is more to government bond yields than ratings…

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