Wednesday, July 14, 2010

Pass it on to the next generation?

Britain’s debt: The untold story

"The true scale of Britain's national indebtedness was laid bare by the Office for National Statistics yesterday: almost £4 trillion, or £4,000bn, about four times higher than previously acknowledged"

Posted by alan @ 08:21 AM (3336 views)
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29 thoughts on “Pass it on to the next generation?

  • Remember, 3 trillion of that was spent on bailing out the banks that were victims of the black swan event which couldn’t be foreseen etc.

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  • If you read the article Paul, you will see that the most of the money is pension liabilities.

    People will have to retire later, and state sector pensions will have to be less generous. Now, at last, we have a govt. that is willing to face up to the problems instead of constantly trying to conceal them.

    Note the £200bn in PFI liabilities – this was GB’s little trick to keep spending while pretending he wasn’t – now its payback time..

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  • Perversely it is not the Bank of Mum and Dad that will help with mortgages in the future now, it is your baby little Sophie that’s sleeping

    snuggly in her cot.

    She will in effect also be borrowing her own money at interest whenever the need for ir arises, which seems to be very likely.

    In the past it was the same through our taxation but the game has geared up.

    Who benefits? And people wonder why there is no reform.

    Recaptch-‘time untrusted’

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  • 2. uncle tom….. And what of Browns generous pension pot. Disgraceful!!

    Someone here has said that politicans pay and pensions should be performance related. I could’nt agree more.

    The bonus culture is alive and well in politics as it is in finance.

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  • letthemfall says:

    Actually the bailout debt is of the same order as the pension liability.

    Other points I note from this article:
    The public sector is still solvent.
    Transfer of wealth has been a major problem (I see little attempt to redress that – indeed this Govt is doing the opposite).

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  • I see it’s mostly blamed on those pesky baby-boomers. I wonder what our resident expert Mr G has to say on the subject?

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  • letthemfall says:

    peace and love man?

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  • ‘We would’ve gotten away with it………., if it wasn’t for those meddling kids!’……….

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  • All – The article is not accurately reflecting the ONS release, the subject matter of which is not the actual quantity of the debt, but rather an analysis of the measures available and, as per the title, suggestions for wider measures . Adding up what they have in table 13 (i.e. the widest possible measure) and stating it /is/ the national debt is misguided and naïve. I expect better from a broadsheet to be honest as I’m sure many of you will agree.

    Paul, not £3tr, “£1 – 1.5tr (est)” – as per your previous post, you misquoted the article posted, which, in turn, misquoted the ONS report.

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  • ^^ cont…
    Mind you, none of what I said should stop any discussion of why our national liabilities are huge, because they are, and what we should be doing about them.

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  • charlie brooker says:

    “The true scale of Britain’s national indebtedness was laid bare by the Office for National Statistics yesterday: almost £4 trillion, or £4,000bn, about four times higher than previously acknowledged”

    There should be hangings for this.

    RC: when thoraxes (When Thor Axes. Geddit!?!?!)

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  • here’s a thought…

    the government know that house prices are going to fall irrelevant of whether tehy raise interest rates (they can’t really palm it off on the BoE being independent). So if they let IRs rise it looks like they caused the crash. If they keep them low, and prices crash, they are absolved from blame. Then they can raise them.

    Alternatively they would need to engineer a crisis to justify raising them. Something complicated but plausible so the people won’t understand.

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  • still renting says:

    Thanks for the link 5ick-6-5ix. I was wondering how they’d come up with such a high cost for the bank bailout. The press release makes it clear that the the £1 – 1.5 trn is not, in fact, a debt that will have to be repaid by future generations. Here is the relevant part:


    The full impacts of the public sector classification of LBG and RBS on the Public Sector Finances statistics are expected to be incorporated for the first time in autumn 2010 and will be accompanied by an article explaining the methodology applied. As mentioned above, ONS’s initial broad estimate of the size of the effect of the classification to the public sector of LBG and RBS to PSND was around £1 trillion to £1.5 trillion.

    The interpretation of this initial estimate – and the more accurate estimate that will follow – needs, however, to be treated with caution because of the way in which PSND is defined. O’ Donoghue (2009) points out:

    “The way in which PSND is defined means that illiquid assets held by these banks – in the form of mortgages and holdings of corporate bonds – are not taken into account. This is important because the banks’ liabilities are generally matched by their assets. What PSND shows is the extent to which the public sector’s liabilities are matched by assets that can be realised quickly. The effect on PSND of classifying these banks to the public sector should not be interpreted as meaning that the Government (and by implication the taxpayer) has been saddled with a substantially greater debt burden. The Government has also made clear its intention to return these banks to the private sector, so in the long run the impact on PSND is unlikely to be permanent.”

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  • @still renting
    The so-called independent’s coverage of this release fits the general pattern of hysterical exaggeration of the UK’s national debt position. Serving the interests of…?

    recaptcha: “up wormhole”. Quite.

    Nick

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  • charlie brooker says:

    Its a sign of what we’ve come to as a nation that news like this can be published and the country just carries on grazing the grass.

    RC : Yippidee Doodah (no, honest!)

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  • Britain is a banckrupt nation, I sometimes think the country would be better off admiting this and defaulting on its debt, because I truly believe that the debt will still exist in 100 years. It is not possible to repay it, I made a quick calculation the other day and the result was that even if public spending was cut by 100% it would take the private sector well over 5 years to repay the deficit and the debt. If that is not a banckrupt country then I do not know what is. I can hardly beleive that I will repay my own personal debt faster than the country will repay its own.

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  • I have just noticed my bad spelling.

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  • jallan said, “Britain is a bankrupt nation”
    – No it’s not, it’s just got a lot of liabilities. Many of these liabilities should be easily taken off the books (for example disposing of the bank shares held). Do not believe this doom-mongering.
    “I sometimes think the country would be better off admitting this and defaulting on its debt”
    – I don’t think so somehow. Also remember that the debt does not need to be cleared, the interest payments just need to be manageable (much like someone who has a steady job need not clear their debts, just keep up with payments).

    I am not saying the situation is perfectly fine by the way, it needs addressing, but default should always be a last resort, not trying to manage the accounts first would be criminal.

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  • ^^ actually replace “steady job” with “reliable income stream” 🙂

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  • 3. Munchy said…

    Perversely it is not the Bank of Mum and Dad that will help with mortgages in the future now, it is your baby little Sophie that’s sleeping

    snuggly in her cot.

    She will in effect also be borrowing her own money at interest whenever the need for ir arises, which seems to be very likely.

    Just musical chairs, Ed….and the piano has been repossessed.

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  • Welcome to debt slavery in neo-feudal uk. Pay your taxes to your new masters

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  • @Cyril “I see it’s mostly blamed on those pesky baby-boomers. I wonder what our resident expert Mr G has to say on the subject?”

    Not a lot, it’s in the Independent.

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  • @20
    Steady on ! We have laws about child labour!

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  • i remember the 90`s says:

    The only answer to our countries debt is default imo.

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  • UT, do the maths.

    So we have £1.5tr in Lloyds and RBS. What about Northern Rock, Bradford & Bingley and remaining banks’ exposure to lehman, AIG and Freddie and Fannie debt?

    Do the maths. Look at the numbers.

    Public sector expenditure is an utter red herring. The overspend last financial year is 0.023% of what has been spent on the banks. The current austerity measures are a distraction from the fact that your children and grandchildren will be paying for this.

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  • uncle tom,
    too right state pensions will get substantially reduced, indexing is a fantasy now, that’s why I won’t trust the state to fund my retirement, if I can even afford that!

    It’s all Ponzi, and the UK state will have to default, or eventually by destroyed an unsustainably increasing compound (rolled over) debt!

    .. percent unfolded .. aka debt deflation!

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  • Can anyone tell me why default should be a last resort? It seems to me that the only disadvantage would be greater difficulty in getting credit in future.
    Personally I think I might prefer it if we could not get credit! – It would surely prevent our politicians from spending on credit and asking for taxes just to cover interest. – Which goes to who?

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  • 27. Chuckit

    The only way out for euroland and us is default but that doesn’t stop them from draining out the last drops first or imposing endless taxes.

    Our (black hole) debt (or should I say the investment banks fiat debt) is impossible to pay back. That’s how the current system is

    designed, now with exotic extras. Hence no effective reform…. IMHO.

    Check out “The Money Masters” full version free on utube on a rainy day, if you haven’t already.

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  • Chuckit @27

    Sad but true , the politicians have set up a joint credit card with the unborn .

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