Britain's budget deficit

[Walsingham]

BACKGROUND

 

Ok. Let's crack this deficit thing, boffins!

 

Gordon Brown (our Prime-Minister) has decided to demonstrate his commitment to 'front line services' like funding of the arts and aid to Mauritius he's going to cut pointless things like our control over the instituion which handles our nuclear fuel, and training for the Army reserves. Things must be pretty damned serious at number 10. He's even agreed to pay back 12 thousand pounds he should never have taken in expenses, claiming he hadn't realised that spending the money on televisions actually used up money which could have been spent on hospital cleaners.

 

CHALLENGE

 

So...

 

I want our considerable know-how applied to brainstorming solutions to the problem.

 

I suggest all us fat Britishers have our fat siphoned off to make soap like in that film, and then sell it to the French.

 

Alternatively we fatsos could be given tiny turbines to run on, or simply push round like in that other film. The one with Charlton Heston. Or am I thinking of the one where Sean Connnery throws young aldies about like cabers?

[Wrath of Dagon]

We laugh at your puny pathetic deficit.

[Guard Dog]

There is only one flaw to your plan, what possible need do the French have for soap?

[Walsingham]

There is only one flaw to your plan, what possible need do the French have for soap?

 

Curses! I suppose the Germans like soap, but i always assumed it was made of a mixture of monocles and bayonet steel.

[Humodour]

And here we are in Australia with fact that we now have a public debt being used as one of the rallying cries of the Coalition.

 

Don't get me wrong; it's good. But how could countries like America and the UK let the deficit get that bad unless there was some upside or benefit? Perhaps there's just no immediately obvious downside...? I can think of one: the biggest creditor for your countries is a secretive authoritarian communist regime.

[Humodour]

Interesting article on America's dollar and debt here. http://seekingalpha.com/article/165538-fal...front-page-news

 

Thoughts?

Edited October 13, 2009 by Krezack

[Hiro Protagonist]

Interesting article on America's dollar and debt here. http://seekingalpha.com/article/165538-fal...front-page-news

 

Thoughts?

 

Great time to go on a holiday to the States.

[Humodour]

Interesting article on America's dollar and debt here. http://seekingalpha.com/article/165538-fal...front-page-news

 

Thoughts?

 

Great time to go on a holiday to the States.

 

Actually, given the Aussie dollar's massive appreciation against the Zloty, I think a trip to Poland is in order.

 

Actually, it could seriously be a neat idea. Poland is developed, exotic, close to the rest of Europe, and everything is probably about half or a third as expensive there. Except it'll be winter by Christmas when I want to go. ****. Also, I don't speak a whit or Polish.

[Hiro Protagonist]

With the value of the US$ going down like a lead balloon and the aussie going through the roof, now is the time to get some Gold!!! Gold prices have sky rocketed. US$1053.00 an ounce and climbing. Even Silver has gone up to $17.00.

[Calax]

save money on energy by installing hydro electric plants on each toilet so that people generate bits of electricity every time they relieve themselves?

 

Install solar panels on everything facing south?

 

*goes back to watching his power meter move backwards because of the installed solar panels*

Edited October 13, 2009 by Calax

[Humodour]

With the value of the US$ going down like a lead balloon and the aussie going through the roof, now is the time to get some Gold!!! Gold prices have sky rocketed. US$1053.00 an ounce and climbing. Even Silver has gone up to $17.00.

 

But gold prices are at record highs. That seems like a **** time to buy unless the market is fundamentally reshaping itself for decades to come. Why? 'Cause the gains on gold from here on will be small. Also if gold is at record highs, then it has got a long way to fall.

 

I'm not economist, though. If there's something I'm missing, let me in on the secret.

[Darth InSidious]

Well, for starters we could sell the right to execute the Labour front bench to the highest bidder, and then sell the rights to televise it in a similar manner. That would raise some cash.

[Wrath of Dagon]

The dollar is falling because US is consuming more than it produces, and borrows from China to finance the consumption. This is only possible because the Chinese currency is tied to the dollar. As far as the deficits, they weren't that bad under Bush, mostly due to 9/11 security measures and the war and the recession it caused. In 2007 the deficit was only $160 billion. The problem now is the financial crisis and the liberals have been let off their chain, so they're spending like there's no tomorrow. http://www.cbo.gov/ftpdocs/100xx/doc10014/...ricalTables.pdf

[Humodour]

The dollar is falling because US is consuming more than it produces

 

Um, no? I suppose you'd be correct in a round about way.

 

One of the current reasons is zero cost of borrowing which is likely to last for a long time, meanwhile other currencies like the AUD, CAD, and NZD have high interest yields. Do remember that America's currency is freely floated; its value is market-determined. Another reason for America's falling dollar is that creditors are starting to lose faith en masse in the ability of America to meet future interest payments and sustain its debt levels. If you take a look at what the world's central banks are buying these days it's all Yen and Euros.

 

As far as the deficits, they weren't that bad under Bush

 

The public dubt in America started blooming out of control under Reagan and Bush Senior such that between the time Reagan first took power and Bush Senior handed the reigns to Clinton, American public debt had DOUBLED. It started increasing under Clinton but by the end of his second term, he'd gotten it back down the same level it was at when he took control. He was a good economic manager.

 

Under Bush Junior it DOUBLED AGAIN.

 

mostly due to 9/11 security measures and the war and the recession it caused.

 

The 9/11 security measures, many of which were an unconstitutional breach of civil rights, did not cost hundreds of billions of dollars. The wars in Iraq and Afghanistan themselves "only" cost about hundred billion each over their entire life-time, from memory. The Iraq war shouldn't have even happened! The recession was not caused by 9/11, it was caused by absolutely **** financial and banking regulation under successive US governments, both Democrat and Republican, but certainly culminating under Bush, leading to a massive housing bubble.

 

In 2007 the deficit was only $160 billion.

 

And what was it for 2008? What was it for each year 2000 through to 2008? The public budget debt under Bush consistently and conspicuously increased.

 

Bush's administration cared so little about balancing the books that Cheney argued that deficits don't matter.

 

To quote the site I link to below: "Politicians love to crow 'The deficit is down! The deficit is down!' like it's a great accomplishment. Don't be fooled. Reducing the deficit just means we're adding less to the Debt this year than we did last year. Big deal -- we're still adding to the Debt. When are we going to start seeing the Debt actually go down?"

 

The problem now is the financial crisis and the liberals have been let off their chain, so they're spending like there's no tomorrow.

 

Spending like there's no tomorrow? As opposed to, say, the Republican party?

 

Would you like to see a graph of public debt in America up to 2005, index to 2000 dollars (to account for inflation)? I'll leave you to figure out what years belong to which president, but that shouldn't be hard - just look for the spike after a flat area and you'll know that's a Republican taking office.

 

 

http://www.brillig.com/debt_clock/faq.html

 

I'll concede it's not my currency, it's not my country, it's not my debt - but your naive arrogance on this matter is irksome. If you're going to play the blame game make sure you've at least got a convincing argument to lie through your teeth with.

Edited October 13, 2009 by Krezack

[Moose]

Balancing the budget would be a good start. At the moment the government's spending 4 pounds for every pound taken back through taxes.

 

The level of cuts we would need to balance the budget would be pretty dramatic. We'd have to reduce our spending to a quarter of what it is now - frankly I don't see this ever happening.

 

I'd reckon a serious long term solution would be looking at ways of making more money. We should raise income tax to 75% so everyone is forced to live with their parents or stayed tied up north in some grotty house on the cheapest mortgage deal they can find. This will create more room in the city for bankers and professional businessmen to lay more golden eggs. It's the lack of golden eggs that's been killing this country.

[Amentep]

it was caused by absolutely **** financial and banking regulation under successive US governments, both Democrat and Republican, but certainly culminating under Bush, leading to a massive housing bubble.

 

As I recall, at some point in the last ten years the US government actually repealed a lot of the regulations that had been put in place after the Stock Market Crash of 1929 that was aimed at keeping the Real Estate market healthy (part of what contributed to the crash).

 

Would you like to see a graph of public debt in America up to 2005, index to 2000 dollars (to account for inflation)? I'll leave you to figure out what years belong to which president, but that shouldn't be hard - just look for the spike after a flat area and you'll know that's a Republican taking office.

 

 

Estimating a bit because the graph is small and my eyes are old -

 

1940-45 FDR, Democrat (.5T to 2.5T) +2T

1945-53 Truman, Democrat (2.5T-1.75T) -.75T

1953-61, Eisenhower, Republican (1.75T-1.75T) 0

1961-63, JFK, Democrat (1.75T-1.75T) 0

1963-69, LBJ, Democrat (1.75T-1.75T) 0

1969-74, Nixon, Republican (1.75T-1.75T) 0

1974-77, Ford, Republican (1.75T-2.0T) +.25T

1977-81, Carter, Democrat (2.0T-2.0T) 0

1981-89, Regan, Republican (2.0T-4.2T) +2.2T

1989-93, Bush, Republican (4.2T-5.5T) +1.3T

1993-2001, Clinton, Democrat (5.5T-5.5T) 0

01-09, GWBush, Republican (5.5T-7.5T) +2.0T

09- , Obama, Democrat (7.5T-???)

[Humodour]

The graph only goes to 2005, Amentep. So Bush's increase was about $4 trillion. Not a bad rough compilation, though.

 

Obama isn't doing too well at balancing the budget so far. Let's hope he can be like Clinton and at least get it back to where he started from by the end of his second term.

 

There is a way for America and Britain to solve this problem (along with good financial management). But it's one a lot of people in both countries won't like, and that's rising taxes. It's the kind of thing that will have to happen under the Republicans/Conservatives, in much the same way that only Nixon could go to China.

[Wrath of Dagon]

Republicans tend to run up higher deficits because they like to cut taxes and spend more on defense. Reagan had to cut taxes because the economy was in a horrible state after Carter and he needed to increase military spending to defeat the Soviet Union. Clinton was able to have a surplus because his spending was restrained by the Republican congress and there was an internet stock market bubble which increased revenues. None of this changes the fact that right now Democrates are spending like there's no tomorrow, and seriously threatening the economy.

[Wrath of Dagon]

Btw, that chart corrected for inflation is misleading. If you look at my link, there were significant budget deficits under Carter, but perhaps because inflation was even higher, it doesn't show up as a debt increase on Krezack's chart. If corrected numbers are shown, it would probably make more sense to show them as a percentage of GDP.

Edited October 13, 2009 by Wrath of Dagon

[Walsingham]

Balancing the budget would be a good start. At the moment the government's spending 4 pounds for every pound taken back through taxes.

 

The level of cuts we would need to balance the budget would be pretty dramatic. We'd have to reduce our spending to a quarter of what it is now - frankly I don't see this ever happening.

 

I'd reckon a serious long term solution would be looking at ways of making more money. We should raise income tax to 75% so everyone is forced to live with their parents or stayed tied up north in some grotty house on the cheapest mortgage deal they can find. This will create more room in the city for bankers and professional businessmen to lay more golden eggs. It's the lack of golden eggs that's been killing this country.

 

You've got a point there, Mooso. I can't stand this frankly childish attachment to the South, and particularly London. If this recession forces people to consider moving North to live for less then all ahead full!

 

Of course I should point out that I consider a good day's weather to be a nice fine rain followed by gale force winds. All of which means settling in a pub and drinking warming drinks.

[Calax]

Republicans tend to run up higher deficits because they like to cut taxes and spend more on defense. Reagan had to cut taxes because the economy was in a horrible state after Carter and he needed to increase military spending to defeat the Soviet Union. Clinton was able to have a surplus because his spending was restrained by the Republican congress and there was an internet stock market bubble which increased revenues. None of this changes the fact that right now Democrates are spending like there's no tomorrow, and seriously threatening the economy.

So, a republican congress (who you've said has been fairly constant about spending more money) SAVED money, and then clinton did nothing because he was on a bubble from the internet stocks....

 

And yet GW had the same bubble from the stock market but found that his deficit skyrocketed under his control, with a republican congress. Probably the only thing that will save us quickly (note quckly!) would be a good honest to god, going to the mattresses war between superpowers.

 

Not saying that's a good thing, but it'd probably be the only thing that'd refocus our industry and force us to create new jobs and factories here instead of in a foreign country.

[Humodour]

Btw, that chart corrected for inflation is misleading.

 

Adjusting for inflation makes the chart have actual meaning in present day dollars. Otherwise it's just arbitrary numbers. But if you insist...

 

If you look at my link, there were significant budget deficits under Carter, but perhaps because inflation was even higher, it doesn't show up as a debt increase on Krezack's chart. If corrected numbers are shown, it would probably make more sense to show them as a percentage of GDP.

 

Sure, here's public debt without adjusting for inflation. This is even worse for the Republicans mate.

 

[Darth InSidious]

I like how we're on the subject of the American economy. Again.

 

It's like some of you have a monomania about your own country...

[Walsingham]

I must agree, and remind you gentlemen we are trying to solve Britain's budget problems.

[Trenitay]

But you heard WoD. America's the best!