Wednesday, 30 July 2014

If we own all this money

Posted in: Need to Know | Ask the Experts

21/10/2010 5:03 pm

Unsuitable or offensive? Report this discussion

Sort: Newest first | Oldest first

Author

Message

Anonymous

Anonymous

24/10/2010 7:11 pm

I think you should take some lessons in economics before you make anymore posts.

Unsuitable or offensive? Report this reply

Junior

Junior

Posts: 649

24/10/2010 11:12 pm

Always the Anonymous - I looking for a answer not one of the Anonymous people making remarks

Unsuitable or offensive? Report this reply

Sancho

Sancho

Posts: 226

25/10/2010 10:47 am

Junior,

The money is owned to literally millions of people.  Quite a lot of it (about £100bn) we owe ourselves.  Government borrowing is in two main strands; one is national savings such as Premium Bonds, where the people of a country are themselves lending money to the Government.  The other strand is in gilts issued to overseas investors and Governments. 

Owing money is not really a big deal for countries as long as they can servcie the debt.  For example, using any indicator, Japan owes a lot more money to a lot more people than the UK and is not considered to be in economic trouble. 

Just think of it like a mortgage and it should make sense.  Basically, the level of mortgage doesn't matter as long as you earn enough to pay it off.  The Labour approach was to try to keep everyone working to pay the mortgage off and to borrow more to make sure that it happened.  The Conservative approach is try and get rid of the mortgage by selling everything off and cutting as many costs as possible. 

Which approach is 'right' is a matter for debate and not something we will ever know.  There are natural cycles in the country's economy and people vote on the basis of where we are on that cycle when the election is held.  This time, the election came at a fairly low point in the economy so people voted Conservative thinking that the Labour approach was 'wrong'.  In all probability, things will still be quite bad at the next election and Labour will be hoping that they are bad enough for them to portray the Conservative approach as 'wrong'.  The Tories for their part will argue that the Labour approach was so wrong that they need to staty in longer to sort it out.

The short answer is that who we owe money to, and how much, is not really relevant.  It's a political red herring. 

Unsuitable or offensive? Report this reply

Sidney Webb

Sidney Webb

Location: South East England
Posts: 224

25/10/2010 12:28 pm

Thanks Sancho - I bet anonymous did not know any of that!

Unsuitable or offensive? Report this reply

Anonymous

Anonymous

25/10/2010 12:56 pm

I think anonymous is right to suggest a better understanding of economics would be pertinent before defaulting on national debt! Have a quick look at the Argentinian economy before suggesting that.

Unsuitable or offensive? Report this reply

Sancho

Sancho

Posts: 226

25/10/2010 1:28 pm

My point is that we are not even close to defaulting on our National Debt, hence it being fairly irrelevant at the moment. 

Most people look at the headline of national debt as % of GDP and chuck a figure of about 60% at it.  Labour's idea was to grow the GDP to get this percentage lower.  The Conservatives' it to reduce the debt.  They both work, but have different effects on real life people.

Unsuitable or offensive? Report this reply

Sidney Webb

Sidney Webb

Location: South East England
Posts: 224

25/10/2010 1:50 pm

Does anyone remember cries of 'edge of bankruptcy' 'we are all doomed' 'there's no money left' when the country owed 250% of GDP, dwarfing the current borrowing. Those Tory governments through the 1950's borrowed to that degree without any worries - Junior is right to raise the question, and Sancho is correct with the answers - anonymous seems to believe the spin!

Unsuitable or offensive? Report this reply

Anonymous

Anonymous

25/10/2010 2:20 pm

Whether we default or not isn't the relevant bit, it's the risk associated with a default and the potential downgrade of government debt from it's current AAA rating. If that happens it will increase the rate of interest on all money borrowed in stirling, meaning all companies operating in the UK will have to pay more than if they were to operate in a currency with AAA rating. This is highly likely to lead to any organisation that can leaving UK shores, with the resultant loss of jobs and corporation taxes.

No doubt lefties will tell us all this won't happen, saying it's all a conspiracy. A friend of mine works in a senior posistion for one of the ratings agencies and assures me this is a very real possibility. I know who'd I rather believe.

Unsuitable or offensive? Report this reply

Sancho

Sancho

Posts: 226

25/10/2010 2:33 pm

The fact that we have a triple A rating is a reflection of the risk of our defaulting.  i.e. not much.

I honestly don't care about this from a political point of view.  As I said, there are two ways of dealing with national debt and they both work.  It's quite possible, in fact, that the alternating between the two actually helps our economy by ensuring that we never borrow too much and never cut too much.  Moderation in all things...

Unsuitable or offensive? Report this reply

Sidney Webb

Sidney Webb

Location: South East England
Posts: 224

25/10/2010 3:49 pm

When did the UK last not have a triple A rating? What were the debt levels then? How does this relate to now?

As Nigel Lawson said 'the economy is no where near as fragile as when we [the Thatcher government of 1983 sic] made our massive cuts in services and spending'. The main man of conservative economic policy is clear that our economy is stronger now that 27 years ago - what does the anonymous friend say to his guru?

Unsuitable or offensive? Report this reply

Anonymous

Anonymous

25/10/2010 3:57 pm

I'd say that the "guru" - your word not mine - isn't the one deciding whether to downgrade the national debt. That's a decision based on a private company, not a government body. He can bang on all he likes, it won't change any decision on that front.

I'm afraid I don't know enough about rating choices to be able to compare the situation in 1983, but it wouldn't surprise me if debt was structured in a different way or different criteria were applied.

I'm not saying we should all rush out panicing into the streets, or do exactly as all the ratings agencies say to avoid at all costs a downgrade. I'm just trying to point out it's a lot more serious than a lot of people seem to realise, and it's a very real possiblity. I'd agree with Sancho about everything in moderation, it's just something else to take into account.

Unsuitable or offensive? Report this reply

Progressive Solutions Required

Progressive Solutions Required

Location: All over the place
Posts: 379

25/10/2010 9:03 pm

So are you implying Anonymous that if the debt was restructured differently then the circumstance and effect of that debt would change, potentially removing the urgency of spending being reduced?

Are you also implying that maybe Norman Lamont is a more reliable economist than Nigel Lawson?

Unsuitable or offensive? Report this reply

Anonymous

Anonymous

28/10/2010 9:31 am

No Christopher, I'm not implying anything of the sort. I'm saying I don't think defaulting on national debt is a good idea, and I don't think a lot of people understand the consequences of such an action.

Unsuitable or offensive? Report this reply

Sancho

Sancho

Posts: 226

28/10/2010 10:01 am

I notice that Standard and Poor's have just upgraded our creditrating in light of a growth in GDP.  Hey-ho.  Panic over until another election.

Unsuitable or offensive? Report this reply

Anonymous

Anonymous

28/10/2010 10:37 am

After downgrading it in January, while Labour were still in power and spending money hand over fist. Perhaps it's not about some grand consipiracy to change people's votes, more about economic prowess of the government in power.

Again, I'm not saying it's the ultimate concern, but a number of posters here seem to adopt the "I don't understand it so I'll ignore it and pretend it doesn't matter" principle. Happily I'd be quietly confident they're not in a position to make important financial decisions.

Unsuitable or offensive? Report this reply

Andy Wickham

Andy Wickham

Posts: 4

28/10/2010 10:58 am

Are these the same rating agencies that contributed to getting us in this mess by giving the banks toxic debt a triple A rating?

Unsuitable or offensive? Report this reply

Anonymous

Anonymous

28/10/2010 11:32 am

The very same Andy. And yet I'd still value their opinion on the risk of debt far above yours. Would you be of the opinion that any organisation that makes a mistake (albeit in your example a pretty massive one!) should be instantly disbanded and completely ignored?

I believe that's called "throwing the baby out with the bathwater".

Unsuitable or offensive? Report this reply

Andy Wickham

Andy Wickham

Posts: 4

28/10/2010 12:05 pm

No I say they were (and here's the irony) discredited.

So if you got financial advice from someone and it was bad advice you'd go back to them for more of the same? I wouldn't.

Unsuitable or offensive? Report this reply

Anonymous

Anonymous

28/10/2010 12:48 pm

Fair enough Andy - although I'd guess you (like me) aren't in the market for such advice.

It may interest you to know that Standard & Poor had a revenue in excess of $697 million in the last quarter. That's quite a lot to charge people for duff advice.

Perhaps you should put that economic mastermind of yours to good use and try and persuade some of their clients your opinions are worth more. Good luck if you try, I suspect you'll need it.

Unsuitable or offensive? Report this reply

Andy Wickham

Andy Wickham

Posts: 4

28/10/2010 3:19 pm

"Fair enough Andy - although I'd guess you (like me) aren't in the market for such advice."

Agreed with me

"It may interest you to know that Standard & Poor had a revenue in excess of $697 million in the last quarter. That's quite a lot to charge people for duff advice."

Patronised me.

Perhaps you should put that economic mastermind of yours to good use and try and persuade some of their clients your opinions are worth more. Good luck if you try, I suspect you'll need it.

Insulted me.

Your a politician aren't you? Come on you can't hide behind anonimity anymore tell us who you are?

Unsuitable or offensive? Report this reply

View results 10 per page | 20 per page | 50 per page

Rate this topic (5 average user rating)

  • 1 star out of 5
  • 2 stars out of 5
  • 3 stars out of 5
  • 4 stars out of 5
  • 5 stars out of 5

You must be signed in to rate.

Post a Reply

You must sign in to rate this topic or make a post

sign in register

Why not register?

Registration allows you to sign up for newsletters, comment on articles, add posts in the forums, quiz our panel of experts, and save articles and jobs in the My IH section.

Register now

Newsletter Sign-up

More Newsletters

Most active members

Most recent posts

  • From Dean Lawes , 23/07/2014 11:44 pm in succsession

    Hi this is a letter I just wrote in complaint to the council if you have a read you'll fully understand my situation.

  • From Terri Parkinson, 23/07/2014 2:48 pm in Preserved Right to Buy

    UPDATE:

  • posted Anonymously, 21/07/2014 12:29 pm in 42 Day Mutual Exchange Law!!! HELP

    It's an interesting situation because The Right to Exchange provisions of The Housing Act 1985 apply only to Secure Tenants not Asuured. I would say therefore that you might be on dodgy ground claiming deemed consnt because the landlord has not responded within 42 days although ironically your neighbour might make that argument.

  • From F451, 17/07/2014 12:54 pm in Jobs for Relatives in Housing Associations

    Now you are presenting a different case Andrew.

  • From F451, 16/07/2014 2:10 pm in Tenancy agreements social housing/housing associations

    Just one is acceptable - but which one?

  • posted Anonymously, 16/07/2014 1:43 pm in Arrears - 2 week NSP

    From my understanding,  if an NSP is issued for tenancy breaches, then the notice period is 14 days.

  • posted Anonymously, 08/07/2014 4:19 pm in Housing Association Secure tenancy into Shared Ownership - Rent Help and Advice.

    Shared Ownership rents are calculated from the general market rent.

  • posted Anonymously, 01/07/2014 1:16 pm in Weekly rent, monthly Direct Debit

    It just doesn't work, the only way you will get this to marry up is to change the charge element upon agreeing payments by DD to monthly payments.

  • From Housing Troll Returns, 30/06/2014 10:03 am in mutual exchange???

    Or perhaps of course, its been determined the other MEx partner would overcrowd a 2 bed or even there are reasons why the other partner is not being allowed to move that you cannot be told.

  • From Rose007, 28/06/2014 11:00 am in Succeeding the tenancy

    You'll find there are some experts and they are clearly marked.  You'll also find others that work within the housing field.  Just because someone works within housing doesn't mean the advice they provide is correct.  I myself work within housing and have done for some time.  With regards my comments on RTB, my brother succeeded to my mother's tenancy.  It was a 4 bed property and he lived in it with my other brother. 2 bed need.  I went to the succession appointment with him and was very surprised how unsympathetic the housing officer was.  She was adamant my ...

IH Subscription