Cuts (money type)
- Thread starter flibbage0
- Start date
![[FnG]magnolia](/styles/overclockers/avatars/9.png){kind=avatar}
Caporegime
- Joined
- 29 Aug 2007
- Posts
- 28,768
- Location
- Auckland
What do you think OP?
Cuts are absolutely needed, we are one of the few countries which Credit agencies see as stable.
While the US continues its degradation and the EU continue its stupid agendas.
Cuts arent enough though, inefficiency in training and education is VASTLY evident around public sector jobs, we need people who actually know what they are doing.
While the US continues its degradation and the EU continue its stupid agendas.
Cuts arent enough though, inefficiency in training and education is VASTLY evident around public sector jobs, we need people who actually know what they are doing.
Caporegime
- Joined
- 13 May 2003
- Posts
- 34,593
- Location
- Warwickshire
These prudent tactics could pave the way for Britain to become a superpower again, leading the west into the competition war with China for the next century! Or something.
This - as much as I dont like it we need to do this stop us turning out like one of the above countries - how long will it take before we see any evidence that these cuts have or have not worked though?
think about it in terms of your own personal debt
you have a credit card with a 10K limit. You spend up to the limit and pay back the min monthly of say 2% = 200 quid. You then decide you want a new TV, Clothes and Car. However you haven't got any liquid cash so you get another credit card with a 5K limit and apply for finance for a car
so you max out cc number 2 and pay back min payments of say 100 a month plus your car finance at 150 month
now you are paying 450 a month and still have no liquid cash. Now your central heating blows up and you need to replace the boiler at a cost of 700 quid, so you go out and get an overdraft extension / loan from the bank to cover it.
You still have no liquid cash but you don't want to change your current lifestyle of going out drinking with your mates so the only way to fund this is to get CC number 3 and use it for cash withdrawals to support your social activities.
If you now after 2 years of living beyond your means want to settle your accounts the only way to do it would be to make some kind of personal sacrifice AKA cuts i.e rather than go our boozing on Friday and Saturday you have to only go out on Friday to save cash.
I think you can apply the same principle to UK Gov debt but with obviously larger numbers
you have a credit card with a 10K limit. You spend up to the limit and pay back the min monthly of say 2% = 200 quid. You then decide you want a new TV, Clothes and Car. However you haven't got any liquid cash so you get another credit card with a 5K limit and apply for finance for a car
so you max out cc number 2 and pay back min payments of say 100 a month plus your car finance at 150 month
now you are paying 450 a month and still have no liquid cash. Now your central heating blows up and you need to replace the boiler at a cost of 700 quid, so you go out and get an overdraft extension / loan from the bank to cover it.
You still have no liquid cash but you don't want to change your current lifestyle of going out drinking with your mates so the only way to fund this is to get CC number 3 and use it for cash withdrawals to support your social activities.
If you now after 2 years of living beyond your means want to settle your accounts the only way to do it would be to make some kind of personal sacrifice AKA cuts i.e rather than go our boozing on Friday and Saturday you have to only go out on Friday to save cash.
I think you can apply the same principle to UK Gov debt but with obviously larger numbers
Garee
Garee
If all these counties are in so much debt - who do they owe it all to?
Each other and everyone else.
Yes this is right but for the everyday persons those situations are not really comprehensible due to the enormity of the scale they are on. The government should use day to day relevant examples to explain why cuts are needed and not just use fear tactics by saying look at greece as to be fair the general population couldn't giv a stuff about greece even though its collapse woul dmean a serious financial crisis for UK / EU / Global economies also
You, corporations whatever. You can go buy government bonds, anyone can buy them.
Bonds allow you to give government your money, then they give you the money back at a later date with interest. In the UK they are called GILTS.
Debt is not quite the same as with house holds, debt can make things more efficient if used effectively. If government takes on debt to invest in a project, which gives are higher return then the debt, then its increased efficiency. Most house holds don't use debt like that.
Last edited:
There's no simple answer to your question.
I don't think anyone will claim that the current budget deficit is sustainable, but there's very little agreement over how it should be dealt with.
* Option 1 (George's approach): balance the deficit rapidly using sharp cuts and a small amount of tax rises. The counter-argument is that rapid cuts will depress growth meaning that tax take drops and it takes a long time to balance the books.
* Option 2 (Darling's approach, Cable's approach before the election): a bit more taxation, cuts delayed for a year or so. The idea is that delaying the cuts allows the recovery to take hold, ensuring decent GDP growth to balance the books. The counter-argument is that delaying the cuts means that the debt grows in the meantime. A small chance of spooking credit agencies.
* Option 3 (Ken Clarke's approach after the last recession): mix cuts and tax increases about 50/50. I'm not really sure why this hasn't been more discussed since it was successful last time. Allows more provision of public services, and less upheaval. Opponents will claim that tax rises would depress the economy.
* Option 4 (The Green Party way): no cuts, instead raise taxes to balance the books. Has the advantage of protecting public services but tax rises could choke the economy and drive mobile businesses overseas.
* Option 5 (The Keynesian way): sod the deficit. Spend now to kick the economy into growth, deal with the deficit once the economy has recovered. This is the approach we almost certainly should have taken except that New Labour undertaxed heavily after their first term and left us with a deficit going into the recession. It would still look an attractive option except that the ratings agencies and bond market are howling for balanced books now and so any attempt to go down this route would result in unacceptable increases in bond yields pushing the deficit higher still.
I don't think anyone will claim that the current budget deficit is sustainable, but there's very little agreement over how it should be dealt with.
* Option 1 (George's approach): balance the deficit rapidly using sharp cuts and a small amount of tax rises. The counter-argument is that rapid cuts will depress growth meaning that tax take drops and it takes a long time to balance the books.
* Option 2 (Darling's approach, Cable's approach before the election): a bit more taxation, cuts delayed for a year or so. The idea is that delaying the cuts allows the recovery to take hold, ensuring decent GDP growth to balance the books. The counter-argument is that delaying the cuts means that the debt grows in the meantime. A small chance of spooking credit agencies.
* Option 3 (Ken Clarke's approach after the last recession): mix cuts and tax increases about 50/50. I'm not really sure why this hasn't been more discussed since it was successful last time. Allows more provision of public services, and less upheaval. Opponents will claim that tax rises would depress the economy.
* Option 4 (The Green Party way): no cuts, instead raise taxes to balance the books. Has the advantage of protecting public services but tax rises could choke the economy and drive mobile businesses overseas.
* Option 5 (The Keynesian way): sod the deficit. Spend now to kick the economy into growth, deal with the deficit once the economy has recovered. This is the approach we almost certainly should have taken except that New Labour undertaxed heavily after their first term and left us with a deficit going into the recession. It would still look an attractive option except that the ratings agencies and bond market are howling for balanced books now and so any attempt to go down this route would result in unacceptable increases in bond yields pushing the deficit higher still.
Before we go any further, let's remind ourselves what those cuts actually involve:
(Source).
Notice that Cameron's austerity plan also involves extra funding. It's not all cuts.
Yes.
You'd end up with unsustainable government debt.
Similar, yes. Not identical, but once you're past the point of no return the numbers are meaningless anyway because there's no hope of paying it all off.