Once you account for debt interest, and inflation then current expenditure goes like this: from 10/11-11/12, it goes up 0.3%. From 11/12-12/13 (the present period) it goes up 1.3%. It drops 2.7% over the period 10/11-16/17. To blame these so-called deep cuts (when spending is increasing currently) is absolutely barmy.
(Original post by bkeevin)
The numbers may be going up but remember so is the interest to service our debt in the budget and the wages of the bulk of the public sector/pensioners who are very low paid. The aggregate is it big cuts in various departments and the economy as a whole taking inflation into account.
Re-inflating the bubble is NOT better stewardship. Having a hangover is not best treated by swigging down more vodka. We're only in this bloody double dip because we already tried to re-inflate it once in 09/10. Of course we're going to be in a bloody big recession because we were in a huge bubble, producing all the wrong things and with huge price distortions (all thank you, central banking). It's inevitable that we have a recession, the bubble-boom caused it. Re-inflating the bubble won't stop that happening, it'll just make the pain worse later on.
The economy of course is a bubble but the new labour lot have been better stewards of it compared to their counterparts. So what according to you is real growth if that one wasn't?
Real growth is that based on voluntary trade (which creates wealth) where money is sound - that is that the interest rate (price of time) is not distorted by some central authority.
Last edited by jesusandtequila; 25-07-2012 at 13:44.
In Japan, the vast majority of government bonds are purchased domestically. With such an ageing population in Japan, the demand is very very high, hence the low borrowing costs.
(Original post by bkeevin)
The fact is the cost of borrowing fell following the US being downgraded. Japan with a massive debt over 200% of their GDP is paying less than half of what we pay for their 10year bond and even witnessed a 4% growth thanks government borrowing and spending last year. Japan's credit rating is about 3 notches below AAA. Keeping this elusive AAA will not serve us one bit if our economy remains in the duldrums.
America is seen as the safest of havens because, even if they don't have enough money in the coffers to pay their debts, they can quite easily print more money to pay it all off. Yes, Britain can do the same, but you saw the outrage at the high levels of inflation we have had over the past couple of years (coming down now as most people in the know predicted), so doing something like that is seen as less of an option here compared to America. The reason the yields went up was because people saw the downgrade as an opportunity to buy - it *should* mean the price falls, meaning a better deal for investors, which obviously didn't happen.
Last edited by thegaffer91; 25-07-2012 at 15:53.