UK loses AAA credit rating

[TheMan]

Now, was anyone else aware of this, I can't really remember this cropping up too much or Cameron actually coming out with ways to tackle this.

http://www.bbc.co.uk/news/uk-politics-21714549

This is what happens, when the person in charge of the economy couldn't run a tap.

About time we started calling this for what it is. Lunatics running the asylum.

 

[Stelios]

My reaction to this news in 2 words.

Spoiler

About time

 

[IanB]

And thankfully the damage is minimal due to the Governments determination to tackle the ever increasing amount of debt. The important thing is what interest rate the government is having to pay back on its debt, around 2% currently, which is a record low.

Labour want to borrow more, to borrow less. If Labour had won the last election, and had continued with their spending plans, the country with have gone bust, and we would be in a worse situation than Spain, and we would have to join the Euro to get any bailout money from the EU.

I think the image below shows the challenge facing the government, and the thought of an extra interest they are going to have to pay servicing that debt is not great. The important thing, is that because the banks, which lend to the government, have faith the country is dealing with its debt problem, they continue to lend at a record low interest rates, and as long as this is the case, less cuts to public services are required.

Its a scary sight that, and clearly shows the Labours last year in power, they were just trying to buy votes by spending money they did not have.

When I see the Labour party on TV, they don't have any plans on how to tackle the deficit, how to keep the countries credit rating low, and avoid wasting money on higher interest rates.

Economic Policy is a challenge, and funding public service is a challenge, but I think its time to get rid of the deficit, reduce our debt burden, so during the next financial crisis, we have something in reserve that we can use.

I don't think the Labour party can manage the economy, I think the Conservative party can make the tough choices, and I see David Cameron as someone who can sell Britian better to the rest of the world than Ed Miliband.

The previous Labour government scrapped the 10p tax rate, this government will have increased the limit before you start paying tax to £10,000 by the end of the government. I think we have the Lib Dems to thank for this, and its a shame people tend to overlook this.

The previous Labour government sold Gold when it was at a record low, and got one of the biggest windfalls from the sale of the 3G network. The 4G sales were modest compared to the 3G.

The 50p tax rate failed to bring in the increased revenue it was expected. Labour estimated it would generate £3 billion, and it was less than£1 billion, but those figures do not take in to account business been relocated, and it has been speculated that when looking at the wider picture, it could of lost revenue due to business moving offices to lower tax locations. This government has made Britain Open for Business.

The conclusion that can be drawn from the Self Assessment data is therefore that the underlying yield from the additional rate is much lower than originally forecast (yielding around £1 billion or less), and that it is quite possible that it could be negative.

Source http://www.hmrc.gov.uk/budget2012/excheq-income-tax-2042.pdf

Unemployment was higher when Labour left power, then when they took over, and strangely, this has always been the case when Labour come and leave power. Unemployment is down for this government, and employment is at a record high.

When you borrow money on a credit card, or get a loan out, you have a few months of the good time, while you spend all that money, once that money is gone, you then have 3-4 tough years of paying that debt back, where you can not do everything that you want, as you have to pay the debt off. The conservative party is trying to pay it off, from what I understand, the Labour party wants to borrow more, to have another 3-4 months of good times, but 6-7 years of tough times paying it off.

Sorry for this turning in to a bit of a political propaganda but I have spent fare to long writing this to try and make it balanced. The problem with politics is that doing something unpopular, will mean you do not win the next election. Reducing the deficit, and reducing debt is never going to be popular, and never going to be a vote winner, but if we do not do it, everyone is going to lose out later on, whether it be higher taxes or reduced spending on public sector.

For what its worth, I think a Lib Dem/ Conservative coalition in the next election would be a good thing, as you get the best of two parties, and I will probably vote Lib Dem, as they seem to have more policies that I currently agree with.

Ian

 

[TheMan]

The problem with this Ian is you forgot one thing.

Banks. Before this Labour had sensible figures butinvested in th future. Economic figures were pretty decent.

Without the Lib Dems we'd b screwed. Especially if you are unfortunate to be legitimately unemployed disabled sick or otherwise not having the best of luck.

They are a socially backward economically inept set of front benchers whom even the OBR has spoken out against.

And the global state of affairs mean greedy rich take money out of the economy then bugger off leaving the people who bought their services poorer and pushing many 100s thousands more into poverty as Cameron and his cronies attack societies most vulnerable.

Seriously Ian the wider picture js nothing like that. I supported the essence of what the coalition wanted to do. That was never ruin the NHS make the poor poorer and rich richer and continually shrink the economy withhorrific non sense policies.

There is a reason so many top entrepreneurs supported Labour till they lost it with the US banking crisis. They invested in longterm prospects and could se further than the end of their noses unlike this pair of farcical morons presently running our country.

Awful policies awful people.

 

[IanB]

Banks, Which the Labour government were happy to let loose, and do what they want?

Why did Labour not regulate the banks? Because they were happy with all the profit they were making as they could use that to fund all the stuff they wanted to do. If they stopped the banks, they would have to cut there spending.

Labour is controlled by the Unions, so public sectors workers tend to favor them as they get a better deal when Labour is in power

Conservative is funded by big donations, so the private sector tends to favor them, as they cut taxes, and reduce public spending.

Lets look at what the OBR said:

"To summarise, we believe that fiscal consolidation measures have reduced economic growth over the past couple of years."

But the OBR also said that it believed other factors, such as inflation, the weak global economy and the financial crisis, were "more likely explanations" for the fact that growth has been weaker than had been forecast at the end of 2010.

So they are saying that its less likely to be the Conservative polices causing the issue, than other factors.

Ian

 

[Ash]

The Steps to Returning to a Gold Standard?

Start and end of the story, we need to return to gold standard.

 

[GaryH]

I dont actually bother much with politics, they are all a bunch of liars, but i actually think Labour had the right idea - Gordon Brown during the election said that people must keep spending in order to secure jobs, keep investment going, and to keep the economy afloat.

The current government have done the opposite, with people having less money in their pockets, so less people buy things, more companies shut down, more people loose jobs, more benefits paid out, the economy sinks like a brick.

Like i said, im no labour (or any other party) supporter, but I think their idea of allowing people to keep spending and buying things may have been a better option that what we currently have and the mess we are now in...

 

[TheMan]

I dont actually bother much with politics, they are all a bunch of liars,

I totally agree, Labour did waste money, did impose ludicrous amounts of red tape, but also did an awful lot for young kids, and those struggling - and even where they failed, they at least tried.

This lot, well I actually thought they had some good ideas before they came in - guess where they went? Yup, out the window, I have never in my life witnessed so many policy u-turns, such an aggressive socially inept bunch of people, throwing 100s of thousands into poverty.

I am an entrepreneur at heart no question, so I like free trade and all the rest of it, but not when it comes at the expense of the countries most weak and defenseless.

I don't read newspapers, follow political blogs, or read the news as such - I research independently of the tripe the comes out of their mouths.

Labour are however playing a clever game, simply giving the Tories the noose with which to hang themselves - let's hope they never, ever have a place in political decision making again.

The only reason, and I think people need to realise this, that we aren't totally screwed is because the Lib Dems temper them.

Those who think the Tories are working, should research how much the debt has grown since they came to power and squashed the economy.

Borrowing has increased, revenues have gone down, ability to pay it off has gone down, and as for the unemployment situation when Labour left, they were just reeling from the effects of the banking crisis.

And Ian

Banks, Which the Labour government were happy to let loose, and do what they want?

Labour had absolutely no control over the American banking system, the Tories deregulated The City (I should know, I worked in it lol - Cue something else in TheMan topic haha but true none the less), it is a complete misnomer that Labour created this mess - I love how people blame them for a global economic collapse. I respect your views and opinions, and goodness knows you are very well mannered and polite Ian, but it is at that point I tend to cease listening to much to any facts presented.

This began with the Sub Prime market collapse, through severe over lending, and because banks lend other banks money and this crazy paper trail begins that appears to invent money - it never gets paid back. It can't, there was simply not the money there to pay for it in the first place.

It never existed. I am sure most of you know what the Sub Prime market is, but in case you don't, it is high risk, high interest mortgages for those with poor/little credit history etc. Think of them in similar leagues to the ludicrous high interest credit card accounts you can get to correct or build a rating. They oversold them massively, into a very risky market. Over here, Sub Prime was quite a bit less common - to the degree when I worked around Finance, I remember setting up one, from 100's and 100's.

Labour however, did screw the pensions (over regulation etc, meaning Independent Financial Advisors never made much from them and they took ludicrous amounts of time to set up, meaning profit was seldom made - there is the crux of your pension issues for those who didn't know) - but the USA Sub Prime market collapse that knocked on amongst other dodgy dealings (such as the Wall Street/City stockbrokers working up billions of pounds of losses unchecked) is what created the crisis.

I'd love to know how Labour caused all that ha-ha!

City Dereg: Tory. Global Banking crisis: USA Sub Prime. Nowt to do with Labour, they were unfortunate to be in power when it hit, that's all. Pensions though, yup, you can nail them to the wall for that.

 

[Meat Pie]

To really understand the current economic situation, you have to go back to Thatcher's crushing of the Unions and deregulation of pretty much all private buisness. Now the key goal of Capitalism is to pay as little as possible but make the biggest return. So once the Unions were left as useless, powerless entities, it left it free for buisness to demand tiny wages. However, the problem with tiny wages is that the normal people can no longer afford to buy the products that the employers produce, so this left capitalists with a significant dilemma. They sorted this out however by introducing widely available and unreasonble credit deals to the poor, so they could continue to be consumers, but without removing any from the big greedy corporate pot. But of course, since the people had no means to payback the loans, they would just dig deeper and deeper into debt. The banks started trading in the money they were owed, rather than the money they had. They even started insurance scams where it was actively in their interest to get people into bankrupting levels of debt, so that they could claim insurance money for when the account finally went under.

Eventually, with no intervention from successive governments, both Conservative and Labour, all of this became unsustainable and the banks started to collapse once the money they never even had became worthless. So what was the response of western governments? To stop the banks going under and creating financial chaos, they bought all the debt-clad accounts, leaving the banks only the profitable ones. We are now the investors in unpayable debt. Now I actually think stopping economic meltdown by buying it was a good idea, however since we are essentially propping up the banks, as far as I'm concerned those banks should now be heavily taxed (or even a light financial transaction tax would be a start) and their profits go toward paying back the massive debt that they've made for the country. Combined with other forms of progressive tax on other types of corporations and super-wealthy, not a single cut would need to be made and those that caused the crisis will have been those who payed for it.

And finally, if you want to stop it happening again, then it is a must that people are paid a livable wage and that workers are empowered against the might of short-termist corporates. Labour's borrowing probably was too high, but it was an entirely seperate issue to the massive debt that we are dealing with now.

 

[TheMan]

For the record, Meat is absolutely on the money there.

Mate you show an understanding of things that, no offense meant obviously, were way before your years.

Most people who lived through it bar a few, don't remember this, that's how these idiots are back in again.

Then they suck up the rhetoric and rubbish they feed to people that you will notice is mostly brazen rubbish, and people end up like sheep going.

"Economy better, must not borrow, even if people suffer except rich - right thing to do, no choice".

Me and Meat for the record share different views on many things, that are matters of choice and principles - however, we are both talking here about facts as they happened, not party politics.

Cannot believe how many people still believe it when the Tories come out and blame Labour! If that does not prove what a dishonest bunch of charlatans they are, then nothing will.

This is a GLOBAL crisis - Labour cannot create a GLOBAL crisis. Not even when Darling took over from Brown.

 

[Meat Pie]

I would just like to make the point though, that whilst Labour did not cause this, they certainly did nothing to stop it and are only marginally less clueless than the Tories on how to solve it. Labour's current economic plan is essentially the same as the Tories only over a longer period of time. Though I'm not surprised since Labour for a while has been a centre-right party with some left leaning tendancies.

 

[TheMan]

I would just like to make the point though, that whilst Labour did not cause this, they certainly did nothing to stop it and are only marginally less clueless than the Tories on how to solve it. Labour's current economic plan is essentially the same as the Tories only over a longer period of time. Though I'm not surprised since Labour for a while has been a centre-right party with some left leaning tendancies.

They are playing a politically brilliant game really. Sometimes playing the long game, and letting your competition fall flat on its face of it's own accord is the best way to succeed.

They have also created the problem now, that anyone less than filthy rich are banking their cash now instead of spending because confidence is so low. Confidence is key to any economy working well, with the GP less willing to spend, this is exacerbating the issues at hand. Folk literally don't know who will be targeted next.

I am with you though Meat, I don't hear Labour coming out with any fantastic solutions to this issue either.

I always say though, if these people were so brilliant at running things - they would have their own self made businesses employing tons of people - but they don't. How is it then, they end up running the entire economy?

You should have a track record of success to have such a position of responsibility. I wouldn't care if a Chancellor got paid 200k a year, if they actually had a clue, experience, and provenance in an area of such importance.

This is something I have never gotten to grips with or understood... how we let our success as a country be defined by party politics I will never know.

 

[Martin]

The Steps to Returning to a Gold Standard?

Start and end of the story, we need to return to gold standard.

This is basically just childish libertarianism. "But why can't I keep ALL my money?!"

Deregulate banks? Erm, no thanks. When banks are left to their own devices bad things happen.

 

[Ash]

I dont want to de-regulate the banks?

Gold standard essentially regulates the banks and inflation by intertwining the value of money to something else, it can be bananas for all it matters. But as a society we have used gold throughout time so it makes sense we carry started using it again.

Without the gold standard we cant protect savings from inflation and governments (no matter how much they say the Fed has nothing to do with govt) can just print and print more money with no consequence. Whereas the gold standard ties its value to how much gold their is to back it up! Having a full FIAT currency has led to the chaos of the 21st century and along with a late dash for fossil fuels is going to be the major problem for our children and grand children. FIAT currency is only backed by the fact we continue to use it and people believe in it, whereas gold is a finite resource we can hold and has the ability to keep things in check.

What has changed in a hundred years when a family could exist with one wage?

We moved from only one parent needing to go to work to both parents in a family had to go to work and now families have to borrow to keep their head above water. This is a disgrace and one of the great travestys of the our past that this has happened slowly infront of our eyes and continues to do so. Living standards have risen, wages and minimum wages have stayed low and not risen inline with inflation or kept at a level to give people a living wage.

Our money is being extracted from the top and this has been happening for decades. The destruction of the unions means there is no ability to withold labour which is one the last industrial rights we have and should not be shirked at. As we move into a more mechanised and autmoised world and as technology changes this is going to be more and more important.

The banks want less regulation, no meddling central government but have their hand out when they gamble our money away. Hypocrites at their best, Bank Of Dave has been an interesting watching recently for anyone interested in the subject. The Money As Debt is a great place to start learning about the monetary system and would recommend it to anyone.

Money As Debt - Full Length Documentary

"Give a man a gun and he can rob a bank, give a man a bank and he can rob the world."

 

[Martin]

The video clearly states that banks, in his opinion, should be deregulated and the government's job of looking after money and the economy be handed over to private companies.

Which, quite frankly, is a very very very very bad thing.

 

[Poisson]

The way I see it the lack of regulation plus massive borrowing has caused this. Now we are finally getting a government who are tackling this issue, but they aren't popular so will go at the next election and we will probably crash back into debt. I think we need a complete rethink of it all and banks need TIGHT regulation to stop stuff like libor happening again.

For when things go horribly wrong, check out the hyperinflation in Germany in the 20's...

 

[Ash]

The video clearly states that banks, in his opinion, should be deregulated and the government's job of looking after money and the economy be handed over to private companies.

Which, quite frankly, is a very very very very bad thing.
[/quote

Does it, apologies didn't realise when I was watching it, 'twas late. My post above clearly sets out my opinions more regulation and a return to the gold standard. That was the point

 

[Martin]

The way I see it the lack of regulation plus massive borrowing has caused this. Now we are finally getting a government who are tackling this issue, but they aren't popular so will go at the next election and we will probably crash back into debt. I think we need a complete rethink of it all and banks need TIGHT regulation to stop stuff like libor happening again.

For when things go horribly wrong, check out the hyperinflation in Germany in the 20's...

Hyperinflation and what's happening now are two completely different things though.

The video clearly states that banks, in his opinion, should be deregulated and the government's job of looking after money and the economy be handed over to private companies.

Which, quite frankly, is a very very very very bad thing.

Does it, apologies didn't realise when I was watching it, 'twas late. My post above clearly sets out my opinions more regulation and a return to the gold standard. That was the point

It did, but the main point of the video, about gold, from what I understand of economics, probably is a good idea. But I'm not an expert. I do plan on watching the second video you posted.

 

[Ash]

*delete*

 

[Ash]

The video clearly states that banks, in his opinion, should be deregulated and the government's job of looking after money and the economy be handed over to private companies.

Which, quite frankly, is a very very very very bad thing.

Does it, apologies didn't realise when I was watching it, 'twas late. My post above clearly sets out my opinions more regulation and a return to the gold standard. That was the point