General Chat Thread, To whom exactly do we owe money? in General; I haven't really taken much of an interest in the so-called "global financial crisis" because it's at a level at ...
7th June 2010, 06:29 PM #1
To whom exactly do we owe money?
I haven't really taken much of an interest in the so-called "global financial crisis" because it's at a level at which I have no influence whatsoever, so I just let it wash over me.
However, I do have considerably more of an interest in what is going on a bit closer to home, i.e. Britain's deficit, but I am slightly puzzled by what I hear.
Am I right that this mess as caused by the private sector being greedy, so the govt bailed them out, that in turn has left us with a huge debt and as a country we have been spending too much anyway?
Who do we actually owe this 'deficit' to? The banks? The Treasury? Some foreign conglomerate in Abu Dhabi? Iceland?
And what is the anticipated effects of the cuts Cameron is talking about? Mass unemployment in the public sector, pay freezes, pension cuts, budget cuts?
Why is the public sector bailing out the private sector? Or isn't it quite as clear cut as that?
How are the cuts likely to effect employment in schools? Less teachers, less teaching assistants, less ICT technicians? Or are the cuts aimed more at wasteful 'bureaucracy' in Whitehall and local govt?
I appreciate that we may not be replacing a couple of our suites this year with spanky new kit, but how much further are the cuts going to go?
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7th June 2010, 06:46 PM #2
I suspect we owe most of the deficit to the oil producers and cheap manufacturers, especially China.
7th June 2010, 07:11 PM #3
There are several parts to the deficit, the first is that the gov has been spending far more than it generates through tax revenues, so has to borrow money by issuing gilt bonds which investors buy and are in effect a loan with interest. This is what the 160 billion deficit last year is made of.
We then have the bank bailout, which is where the government bought shares in the banks and also injected capital into them and guarantees, which will eventually come back to us when the shares are sold.
Then there is the 'hidden' debt, which is the pensions for civil servants, teachers, police etc and things like the PFI schemes which are off book debt.
This is why Cameron is now saying its much worse than they envisaged as Labour had refused to open the books to them before the election, so yes we are up the creek without a paddle for a few years. Once the private sector gets back on its feet and tax revenues start coming back in then we will be ok again.
7th June 2010, 07:14 PM #4
There is a few countries owe to the UK as well, one the them being an Arabian country. So when that money comes in it will help.
7th June 2010, 07:22 PM #5
Would this be an Arabian country where there were DEFINITELY no bribes paid when we sold them some 'planes? I'd not count my chickens...
7th June 2010, 07:55 PM #6
What I don't understand is the big panic. We had almost no growth in the economy last year but it seems reasonable to expect it to grow by perhaps 2% this year and maybe more next year. This then brings in much more tax revenue and that helps to pay off the debt.
Originally Posted by teejay
Before Cameron was elected, he was promising to increase public spending without having to put up taxes because he could just make the economy grow and use that income to pay for the spending. Now I know that since then we've spent goodness knows how much on buying banks but those are assets we can sell again (as I understand it, even if we sold today we'd be in profit by several billion; if we wait 2-3 years we'll be in many, many billions of profit).
Perhaps I'm being cynical but this smacks of a government that for political reasons wants to be able to cut tax for the richest few (eg the capital gains tax which is paid by about 2% of the population) or sell off shares in the banks at a give away price so that people who buy the shares get rich (as happened in the 80s with gas, BT etc, etc) rather than one that's concerned about doing the best for the whole country.
7th June 2010, 08:05 PM #7
He's saying it's worse because Labour didn't open the books to opposition parties before the election, which would usually happen so they can draw up plans based on real figures. Now they've got the books, they are finding things to be far worse than even they expected.
Originally Posted by srochford
Yes you are being cynical, capital gains tax will be rising to around 40%, there are plans to introduce the lib dems first 10k tax free and the pupil premium for disadvantaged children. Yes, there re going to be freezes on benefits etc along the road as well, but also things like small businesses not paying tax on the first 10 jobs they create to help stimulate business growth.
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