I think it is unrealistic to expect a fully costed proposal on an internet forum.

😆

Pure capitalism – job fixed. If it needs doing then it will get done and paid for by those who want it.

…and end up like the US with crumbling roads, massive poverty, no healthcare for a huge chunk of the population and a totally polarised society. Sounds great!

Z11

Can you please go away and find out what GDP is, because you clearly haven’t a clue.

GDP has sod all to do with national debt or balance of payments. In fact, it doesn’t measure anything useful at all.

What country has the biggest GDP?

What country has the biggest national debt?

Notice anything?

There seems to be a strong vibe on here that capitalism is wonderful and the ‘cure’ for all ills. As such it is black or white.

I’m not saying it would be my personal choice (it wouldn’t) but everyone calling for cuts so long as its not the bits they use that are cut is a ridiculous.

Either have public services or don’t.

BTW, the country with the biggest national debt isn’t a socialist country.

No i don’t think so. What were trying to get through is the concept of living sustainably. Hence the position that pensions need to be paid for at a constant proportion of GDP. This has nothing to do with debt or austerity …it is making the pension system sustainable otherwies there will be a much bigger problem in the future.

RPRT – the relevance of GDP here, is the fact that the only “proof” being posted that the public sector pension program is affordable, is the fact that a graph in the Hutton report showed that the cost as a proportion of GDP might fall a little bit… which I’ve already said is irrelevant because total government spending is still completely and utterly unsustainable.

Once we’ve cut the public sector to the point whereby we can at least begin to live within our means, we can start to worry about pensions liabilities forty years down the line

doesnt this all come back to recklessness and instability in the banking sector, certainly private pensions lost 10s of billions overnight in the last crash

which I’ve already said is irrelevant because total government spending is still completely and utterly unsustainable

By what measure? Less than Germany, France, Netherlands, etc etc.

Easily affordable and IMO desirable. I like good healthcare education and welfare

kimbers Nope,

Definately all the fault of socialist ideas and public sector workers.

Pure capitalism

…and end up like the US with crumbling roads, massive poverty, no healthcare for a huge chunk of the population and a totally polarised society.

The US is not a pure capitalist society.

Your heavens-to-Betsy characterisation of the country is so contextless as to be useless.

I predict a RIOT 😈

By what measure? Less than Germany, France, Netherlands, etc etc.

By the measure that its one hundred and fifty **** billion quid more than total government income

expenditure more than income means debt, borrowing is, be definition, never a “sustainable” financial position, as, sooner or later, you have to pay it back.

As mentioned above – The trouble with Socialism is that eventually you run out of other people’s money

DB – the calling for cuts is an interesting one, especially if we can step away from the dogma of the “its all the bankers” versus “its all the public sector’ fault.

I think there is starting to be an important shift in economics/politics away from the initial focus on the deficit towards a more growth agenda at least in some countries.

I can understand why the debate started as it did (see this week’s Economist) but equally Greece shows us what happens if you don’t have growth. The primary fiscal surplus that is required to stabilise the public debt ratio is given by the following formula:

1/100 x public sector debt as % GDP x (Interest rate – nominal GDP)

The fallacy that Greece cn possibly survive is very simple maths:

They have PDR of 160%, and IR of 4% (did) but GDP of -5%. Put it into a spreadsheet and it quickly becomes apparent that the math doesn’t work despite what the EU politicians were saying.

As economies elsewhere slow, the same maths starts to become troubling. Just play around with -ve GDP assumptions.

We can argue on here as to the cause of the problems depending on our persuasions but that matters not a jot. The simple fact is that EU governments of all parties are losing basic credibility.

This is why The Economist is arguing this week, that focus needs to start with growth. Without that they argue that credibility will not be restored. The next problem though is have we exhausted the traditional Keynesian and/or monetarist levels for growth?

The US is not a pure capitalist society.

And look at the state of it. Christ knows what it would be like if it was.

The problem I think is that people take public services for granted. Things like free education, healthcare, security etc have become so ‘normal’ that people forget what life would be like without them, or how much they would cost if purely private.

people forget what life would be like without them

You mean, like the 13 million people in poverty in the UK would increase more?
http://www.oxfam.org.uk/resources/ukpoverty/povertyfacts.html

At the moment we have Socialism for the bankers, capitalism for everyone else.

Oh the ironing

Dazh: “The problem I think is that people take public services for granted.”

….’cos, it’s free, innit? 😉

[Lovely afternoon BTW – anyone fancy a ride?]

Given that poverty is defined as a calculation of 60% of median income – do you think that it would be mathematically possible to eradicate poverty in the UK?

Think about that one for a minute…

AT PMQ’s last week Ed Milliband asked not one single question about the economy. Not like its anything important. Why not? Because Ed Balls is sat next to him. Its inexcusable

No, it was because Darling’s book came out that week.

while people are thinking about that ZU, how do you feel when you learn that…

“Around a quarter of adults live in households where nobody has a high enough income to pay tax” (IFS this week)

…I find that more thought provoking than the definitions/mathematical possibilities

[straight ? BTW – no BIFF intended]

Z11

By the measure that its one hundred and fifty **** billion quid more than total government income
expenditure more than income means debt, borrowing is, be definition, never a “sustainable” financial position, as, sooner or later, you have to pay it back.

I explained this to you yesterday (or was it the day before?)

NO, YOU DO NOT PAY IT BACK – it’s impossible. Our global economy only works by the creation of debt.

I’m confused now 🙁

Greece shows us what happens if you don’t have growth.

No. Greece shows what happens when a small agriculturally based country where everyone is getting on quite nicely gets conned into thinking that growth is the answer to everything and that it should borrow loads of money in order to enjoy the same access to consumerist gewgaws as its “rich” neighbours.

No. Greece shows what happens when a small agriculturally based country where everyone is getting on quite nicely gets conned into thinking that growth is the answer to everything and that it should borrow loads of money in order to enjoy the same access to consumerist gewgaws as its “rich” neighbours

………….. Lies about it’s finances and allows mass tax evasion

If you’ve got 38 minutes you might want to have a look at this:

Crash Course

I think he talks a lot of sense.

(if you can get over the production values of the video)

Binners banks lend money out [ they dont really have*] and it works as long as everyone believes everyone will pay everyone back and savers dont ask for their money back. Once this stops being believable and people panic and ask for their money back or stop paying it crashes like this.
When it crashes like this we blame the public sector for crippling us and talk about how only capitalism can save us.
The logic of all of this is lost on me mind but thats the story.

RPRT – is the stuff you are smoking legal? 😉

Isn’t Greece actually just an example of people wanting good public services etc, while not wanting to pay any tax?

They all retire when they’re 50 and tax evasion is endemic at every level of society. And now they’re getting uppity because the Germans don’t want to pay for it

THM,

What’s your point?

Quite happy to debate ad infinitum, but I’ll go elsewhere for comedy if you don’t mind.

Binners banks lend money out [ they dont really have*] and it works as long as everyone believes everyone will pay everyone back and savers dont ask for their money back. Once this stops being believable and people panic and ask for their money back or stop paying it crashes like this.

A Ponzi scheme?

Isn’t Greece actually just an example of people wanting good public services etc, while not wanting to pay any tax?

Or more akin to the US subprime situation?

Maybe they shouldn’t have been allowed to borrow loads of money?

Didn’t I read somewhere during the crash that Goldman Sachs had been helping the Greek government keep their debt off the balance sheet?

Hang on a mo……

I thought they did

It’d be cheaper in the long run to cut Greece loose

It does make you wonder how much longer they can keep pouring cash down the money pit? All the stuff I’ve read seems to suggest its a case of ‘when’ rather than ‘if’ Greece defaults

JY – Of course, banks lend money that they do not have. That is their function – to intermediate between those that have excess savings (eg depositors) and those that have a deficit (borrowers). So their liabilities are capital (owned by shareholders), deposits (owned by those with excess savings) and other investors who provide debt. The reason why these are “liabilities” is of course that they need to be paid back. On the other side of the balance sheet are the assets – cash, loans, investments and a tiny % of fixed assets.

This role combined with the inherent leverage in their business model means that they are also a highly geared reflection of what is going on in society. Of course, the current reforms are trying to make them less geared. Banking then becomes a business of analysing, pricing, taking and managing risk. It was always thus and will remain so.

I do not believe the chain of thought you describe though. I have not read anywhere an analysis that says that the banking crisis was the fault of the public sector crippling us. It has multiple, inter-related factors but this is probably one too far.

Instead we are in the middle of an ongoing crises with different epi-centres and different causes. It started with a crisis at the household level, specifically those people who have historically found it difficult to afford housing, became a banking problem and has now moved to be a sovereign problem. It is because of this that attention moved from the ability of individuals to repay, then banks, then countries. As part of that trend, focus shifts to the question on whether the deficits being run at the country level are sustainable or not. Hence, the issue of the costs of public sector (including pensions) become part of the analysis.

banks lend money out [ they dont really have*] and it works as long as everyone believes everyone will pay everyone back and savers dont ask for their money back. Once this stops being believable and people panic and ask for their money back or stop paying it crashes like this.

A very nice and concise description of the capitalist financial system. And yes, also a nice and concise description of a classic Ponzi scheme. God help us all when it all comes crashing down.

JY – Of course, banks lend money that they do not have. That is their function – to intermediate between those that have excess savings (eg depositors) and those that have a deficit (borrowers).

You seem to have missed out any mention of “fractional-reserve banking”. You know, the bit that means banks really can lend money that doesn’t even exist.. It is quite important.

God help us all when it all comes crashing down.

It did – and the next phase is still to come.

..If you’ve got 38 minutes you might want to have a look at this:

I like this one…

http://www.youtube.com/watch?v=F-QA2rkpBSY