Eurozone debt crisis

[Iron]

Tony - I'd recommend this video: http://www.channel4.com/programmes/brit ... -story/4od

We and the European countries shouldn't have run up these debts. They were totally avoidable, had we more or less lived within our means, rather than borrowing money on the assumption that the good times would never end.

IMHO, Labour's spending was basically an electoral bribe. By handing out goodies to the electorate, and ensuring that their friends in the civil service were well looked after, they knew that they'd win a lot of votes. Sure, the economy might go down the toilet as a result, but the main thing was to keep voters happy until at least after the next general election. And anyway, when things did go bad, they could always blame the banks and the global economy, and argue that yet more spending was the solution...

Jeff

[CaerMyrddin]

This is why I think the idea of writing in the countries constitutions a deficit limit makes perfect sense. Maybe it should also be settled that when the economy grows the government should run a superavit so that the deficits could be bigger when recession hits.

Imho, the problem is the politicians. They keep blaming the markets for their mistakes. They much have strict rules, our future can't de so dependant on (in most cases) incompetent leaders.

[superfrank]

it's also the fault of the central banks who allowed the credit boom to get out of control by keeping rates far too low for far too long. the politicians (especially Brown/Balls) just rode the credit boom for all it was worth believing such nonsense could continue indefinitely. it was the job of the (supposedly independent) central banks to keep control but they failed miserably (because they are in the pockets of bankers who also wanted the boom to continue, for personal gain and safe in the knowledge that they would still be fine even if economies went belly up).

[Iron]

I agree.

That way, there would be no way that politicians could go on spending sprees to win votes, at the expense of the long-term economic health of the country...

Jeff

This is why I think the idea of writing in the countries constitutions a deficit limit makes perfect sense.

[LeTiss]

I had to laugh watching the news last night - Labour politicians having the cheek to criticise the Coalition for not going far enough with banking reforms!

Are Labour full of retards, or do they actually think this complete economic mess had nothing to do with them whatsoever?

[enzabella2009]

Jeff tx for the video, I feel much better now.
Each Italian debt worth 33,333euros compare to the 77,000 pounds of each British debt...I am going to go out and celebrate.I am having dog sht canapes instead of caviar canapes and a fine glass of pee bull instead of champagne....I can` t wait...Like to join me? you can order double portions if you like...My treat...

Tony - I'd recommend this video: http://www.channel4.com/programmes/brit ... -story/4od

We and the European countries shouldn't have run up these debts. They were totally avoidable, had we more or less lived within our means, rather than borrowing money on the assumption that the good times would never end.

IMHO, Labour's spending was basically an electoral bribe. By handing out goodies to the electorate, and ensuring that their friends in the civil service were well looked after, they knew that they'd win a lot of votes. Sure, the economy might go down the toilet as a result, but the main thing was to keep voters happy until at least after the next general election. And anyway, when things did go bad, they could always blame the banks and the global economy, and argue that yet more spending was the solution...

Jeff

[Iron]

Actually, ours is more like 118,000 euros per person! See http://www.bbc.co.uk/news/business-15748696

It's easy to understand why the French are annoyed about the UK having an AAA credit rating when theirs is being threatened!

Jeff

Each Italian debt worth 33,333euros compare to the 77,000 pounds of each British debt...

[Iron]

PS If you look at the chart though, the reason why Italy is in trouble but the UK isn't is that, although your personal debt per person is lower, your government debt is higher as a proportion of GDP than ours.

That means that bond holders can lend to the UK government with fewer worries about whether they'll get their money back, meaning we pay lower interest rates than Italy.

Jeff

[superfrank]

Are Labour full of retards?

yes.

PS If you look at the chart though, the reason why Italy is in trouble but the UK isn't is that, although your personal debt per person is lower, your government debt is higher as a proportion of GDP than ours.

That means that bond holders can lend to the UK government with fewer worries about whether they'll get their money back, meaning we pay lower interest rates than Italy.

Jeff

but mainly because the BoE is buying UK bonds and the ECB isn't buying Italian ones. anyone else buying UK bonds has to accept that they will be paid back in a diluted currency.

[Iron]

From the Telegraph:

The Moody's report calls the UK "one of the most competitive of the large advanced economies in the world", adding that the pound and central bank provide "substantial flexibility in developing responses to economic and financial shocks" and debt refinancing risks are limited due to the long average maturity.

But it also warns that it faces "formidable and rising challenges"; A significant increase in the government's deficit since 2008 has eroded its ability to absorb further macroeconomic or fiscal shocks without "rating implications".

[superfrank]

i.e. you may not get any significant growth for years and you can't print/devalue indefinitely or we, and the markets, will call your bluff.

[Iron]

I bet there were smiles in Paris when that assessment was released...

Once Merv is forced to switch off the printing presses, this country will be so screwed!

What I think most people fail to realise is that the Bank of England are basically paying the market through the nose for low interest rates, and that can't carry on forever...

Jeff

i.e. you may not get any significant growth for years and you can't print/devalue indefinitely or we, and the markets, will call your bluff.

[SilentDave]

If the assessment of the French is correct and our economy is in worse shape than theirs then why do they want money from us to bail out their currency that we didn't agree with in the first place?
If they are in such great shape let them sort it out while we worry about our own mess.
They can't have it both ways

[Iron]

They might not like us, but that doesn't mean that they don't want our money!

Jeff

If the assessment of the French is correct and our economy is in worse shape than theirs then why do they want money from us to bail out their currency that we didn't agree with in the first place?
If they are in such great shape let them sort it out while we worry about our own mess.
They can't have it both ways

[superfrank]

have a look at this BoE video where they "explain" QE - in it they actually admit that the plan is to boost house prices and share prices so that those with assets have more to money to boost consumer spending (i.e. pursuing exactly the same flawed policy that got started this mess in the first place).

http://www.bankofengland.co.uk/educatio ... /video.htm

BOE Bean: Will Do More QE If Needed In February
https://mninews.deutsche-boerse.com/ind ... d-february

In other comments he belittled the rating agencies, saying that their rating actions were not that important and often amounted to them simply catching up with reality.

He argued that the comments from the European Central Bank's Christian Noyer, suggesting the UK rather than France should face a downgrade, were misconstrued as Noyer was attacking the rating agencies rather than the UK.